Reports » Malaysia

Malaysia stock market and companies daily report (September 13, 2012)

Contributed by Shares Investment

Sarawak Oil Palms Eyeing RM242million Worth Of Acquisitions
Sarawak Oil Palms (SOP) has proposed a conditional share sale agreement with Shin Yang Holding to acquire the remaining equity interest in its two plantation companies for a total amount of RM242.5 million. SOP will obtain 40 percent stake in SOP Plantations (Beluru) for RM122.4 million, and RM120.1 million for the 35 percent stake in SOP Plantations (Kemena). Through the increased shareholdings, SOP is expected to boost its equity position and expand its ownership in palm oil related activities in Sarawak. Furthermore, the plantations estates held by the acquired companies consists of a mixture of immature and young mature oil palms ranging from the age of one to five years, this in turn is expected to improve the age profile of the oil palms held by the group.
Significance: Through this acquisition, the group is able revitalise its fresh fruit bunch production. Sarawak Oil Palms is projected to generate smooth revenue and earnings to the group in the medium to long run.

RHB Research Maintains Outperform On IJM Land Despite Slip
IJM Land (IJM) stock price was down four sen to RM2.17 in the late morning of Wednesday, 12 September. The fall in share price was consistent with the weak market sentiment despite analysts’ optimism on the company’s outlook. The property developer had recently inked a joint venture deal whereby IJM (40 percent) and Amona Development (60 percent) will develop a parcel of leasehold land at Kerinchi/Pantai Dalam. The 57.8 acre lease-hold land is owned by Amona Development under its privatisation agreement with Datuk Bandar Kuala Lumpur (DBKL) which will receive RM331 million in six months from the project, as well a sum of 20 percent for the difference in actual profit and minimum guaranteed profit. Other than the guaranteed profit, the amount also includes charges such as land cost and constructing access to the New Pantai Expressway (pre-approved). Although the recent plunge in share price, RHB Research rates IJM to Outperform based on its strong fundamentals and revises its target price to RM2.89 from RM2.80.
Significance: The venture can be seen as an excellent opportunity for the group to fortify its presence in the Klang Valley and to play a part in a development that is strategically located in the Kerinchi/Pantai Dalam corridor.

MAHB Shares Welcomes Malindo Airways Plan
Shares of Malaysia Airport Holdings (MAHB) rose on Wednesday following analysts’ positive take on the setting up of a new airline in Malaysia which could instigate a price war with AirAsia. The new airline which is set up via a joint venture between Indonesia’s largest privately run airline group PT Lion Group with National Aerospace & Defence Industries (NADI) will be beneficial to the airport operator. MAHB stocks rose 12 sen to RM5.35 at mid-noon on 12 September. The soon to be registered airline will be based in KLIA2. According to Maybank Investment Bank, the intensified competition is expected to promote higher traffic volumes and hence better earnings prospects for MAHB. Furthermore, AirAsia may face a loss of bargaining power on the prospects of Malindo Air becoming an anchor tenant for KLIA2 if its planned 12 aircraft deliveries per year materialises.
Significance: No matter what the outcome of this price war, MAHB will continue to enjoy the entrance of new competitors to challenge AirAsia’s dominant position. With the expected higher usage of the airport, the company can expect a reasonable profit for the next financial year.