Reports » Malaysia

Malaysia stock market and companies daily report (September 18, 2012)

Contributed by Shares Investment

NUSA Gapurna Mulls Forming A REIT
NUSA Gapurna is considering grouping its assets to form a commercial real estate investment trust (REIT) by 2015. The assets which could potentially be worth more than RM2.5 billion, comprises six high-rise buildings that are being planned at PJ Sentral Garden City, by PJ Sentral Development which is a 70:30 joint venture between NUSA Gapurna Development (NGDSB) and the Selangor Economic Development Corp (PKNS). The construction of the project that is located behind PJ Hilton Hotel will take seven to eight years commencing next year-end. The project includes five custom-built office towers each ranging from 20 to 45 floors, as well as a five-star hotel, a 7,000 car park complex, a 1.6 hectare public park and a supportive retail element for food and beverage. Nusa Gapurna would either form its own REIT as the primary option or sell the towers block by block to REIT managers or institutional investors with ready tenants, according to sources familiar with the matter.
Significance: The company will more likely form a REIT as it has ready tenants to provide good yield income. Currently, NUSAGapurna is in negotiations with local public listed companies and corporate players to lease the buildings for a period of between 10 and 15 years.

Mixed Views On Astro’s IPO
Fund managers and analysts are mixed on whether to subscribe for the relisting of Astro Malaysia Holdings. On one hand, some fund managers have expressed concern about Astro’s optimistic valuation and its lacklustre prospects in Malaysia while on the other hand, some research reports published gave a bullish outlook in their assessment. These reports highlighted Astro’s improved average revenue per user (ARPU), removal of loss-making operations, and consistent growth-rate over the past 5 years of with average subscriber growth of 8.2 percent and subscription revenue of 11.7 percent. Nevertheless, the entrance of more IPTV players also spells competition and probably result in Astro losing its monopoly over broadcasting content. Astro has since then signed a strategic partnership agreement with Maxis, enabling it to broadcast television content on Maxis’ IPTV. The mutually-exclusive partnership means that Maxis will become Astro’s exclusive partner for B.yond IPTV while Astro will be the exclusive IPTV provider for Maxis.
Significance: Astro is being listed without its Indian and Indonesian operations at RM 18.7bilion, which is 125 percent higher than the RM8.3 billion price of the old Astro All Asia Networks plc that was privatised two years ago. At an indicative price of RM3.60 and based on its earnings of RM629.6 million FY12, this translates to a price-earnings ratio of 38 times.

Earnings Drop In Gas Malaysia Expected To Be Temporary
The fall in Gas Malaysia ’s second quarter earnings ended June 30 is anticipated to be temporary as an additional 110 million standard cubic feet per day (mmscfd) of gas supply from a deal with Petroliam Nasional (Petronas) should fuel the company’s 2013 to 2015 earnings growth, according to Kenanga Research. In addition, the back-to-back ‘take-or-pay’ agreements with Petronas and off-takers have limited the risk of its gas off-take not finding buyers. Meanwhile, the proposed Pengerang regasification terminal should be a new growth catalyst for the company in the post-2015 period. Additionally, the New Gas Supply Agreement (NGSA) signed with Petronas in February 2012 to obtain natural gas supply effective January 2013 for 10 plus five years would effectively increase 29 percent in volume from the existing 382 mmscfd agreement with Petronas. The added gas supply is mainly from the Melaka regasification terminal, which will be charged at market price with the profit spread untouched at RM2.00 per one million british thermal units (MMBTtu).
Significance: Financial year 2012 earnings are expected to come off 33 percent year-on-year on the lower revised prices effective June 2011. However, the new gas supply from Melaka regasification terminal should boost 2013 and 2014 estimates by 7 percent to 15 percent.