Reports » Malaysia

Malaysia stock market and companies daily report (September 14, 2012)

Contributed by Shares Investment

Kenanga Research Downgrades Property Sector To Neutral
Kenanga Investment Research has downgraded the property sector to Neutral from Overweight over heightened fears of the Budget 2013 risks and closing general elections timeline. The biggest concern for the sector is the hike in the buyers stamp duty, however the research house opined that the odds of real property gain tax increase are much higher. This would have minor impact on developers since the heftiest hikes tend to occur during the first 2-3 years of holding which coincides with the construction period. Nevertheless, market sentiment in this sector will still be affected where near-term fluctuations of developer share price are expected in any poor scenario. The research house still expects the physical market to perform favourably given the liquid banking sector and attractive rates. Furthermore, most developers are seen hitting their sales target, except for UEM Land which was partly the reason behind the research house’s downgrade of the sector.
Significance:The upcoming Budget 2013 may impose fresh measures to curb speculations in the property market, as such, an increase in either real property gains tax or stamp duty would likely prompt knee-jerk selling of property stocks.

Scomi Continues On An Uptrend Despite Credit Downgrade
Scomi Group stocks which climbed 56 percent over the past month, continued to rise on active trade on Thursday 13 September, despite a credit rating downgrade to its medium term debt programme. Shares were up half a sen to 33.5 sen with over 6 million shares traded late morning. Malaysia Rating Corp(MARC) had reduced Scomi’s RM500 million medium term note programme to BB+ from BBB+ and maintained a negative rating watch on the company.The downgrade indicated serious concerns over the delay in addressing remaining contingencies to the closing of earlier announced equity divestments, which affects RM200 million worth of outstanding notes due Sept 28. Previously, Scomi had witness sizeable trading of its stock in recent weeks upon news of gaining a RM130 million contract from state-owned Qatar Petroleum late August, which it expects to boost its drilling fluids business in the Middle East. The stock price in 15 Aug was at 21.5 sen.
Significance: Scomi is not widely covered by analysts although it has currently attained over RM 400 million in market capitalisation.As at 10 Sep, the economic value added dimensions of the company is set at underweight, according to Bloomberg. Furthermore, should the repayment not be met as its due, its debt rating would fall to D.

I-Bhd Gets JV Partner For Mall Project
I-Bhd, plans to seal a joint-venture agreement with Thailand’s retail developer, Central Pattana Public Company Ltd (CPN), within two months to develop a mall within its flagship i-City Cybercentre in Shah Alam, Selangor. The joint venture will be set up through a special purpose vehicle (SPV) to develop the mall, in which I-Bhd will hold a 40 percent stake while the remaining 60 percent is owned by CPN. CPN was chosen as a preferred partner given its expertise and experience of operating 20 malls in Thailand including the Central World, which is one of the largest malls in Southeast Asia at 5.9 million square feet. The mall which carries a gross development cost of RM500 million is scheduled to begin construction works early next year with a targeted completion date by end of 2015. Currently, the company is seeking out another joint-venture partner to develop a data centre at I-city.
Significance: It is noted that 40 percent of the group’s net profit will come from its leisure business where profits have more than tripled year-on-year to RM7.62 million, from RM2.25 million previously. The company plans to invest RM25 million more in the second half of 2012 to enhance the attractions, including launching a theme park called WaterWorld @i-City.