Reports » Malaysia

Malaysia stock market and companies daily report (September 26, 2012)

Contributed by Shares Investment

RM3.25b Wood Furniture Exports In 1H12
Malaysia’s wood furniture exports for the first half of 2012 rose 11.3 percent to RM3.25 billion, as compared to the same period last year. Malaysia now stands as the world’s eighth largest furniture exporter, according to the Plantation Industries and Commodities Minister in a speech at a seminar on “Sabah: A Potential Hub For Outdoor Furniture”. Last year, RM 6.2 billion worth of wood furniture was exported accounting for 31 percent of the country’s exports of wood products. The main markets overseas for wood furniture such as the US (RM1.8 billion), Japan (RM775 million) and Australia (RM418 million) remained significant to the domestic industry, despite the local market being worth some RM13 billion. For last year’s wood furniture exports, Peninsular Malaysia accounted for RM6.13 billion or 98.9 percent of total exports while Sabah and Sarawak contributed the remaining, worth RM 72.1 million. The minister further added there are currently 2,260 wood furniture manufacturers in the country, however among those; only 29 are in Sabah despite the state being rich with raw materials and manpower. He therefore believes that there is a huge potential to raise export shares.
Significance: Malaysian furniture manufacturers are beginning to gain prominence overseas as prices of locally-made furniture are cheaper when compared to the ones made in developed countries, and especially better in quality than others produced in Indo-China. Local manufacturers such as Hup Chong Furniture and DPS Industries are well received in Australia, the Middle East and Europe.

Genting Group Shares Rise Before Ex-Dividend On Wednesday
Shares of companies under the Genting group rose on Tuesday, 25 September as investors chased their dividends before the stocks went ex-dividend the next day. The last lodgement date for these companies’ dividends falls on Friday, 28 September. Genting climbed as much as six sen to RM8.76 before closing at RM8.74 at lunch break. Genting Malaysia added as much as three sen to end at RM3.43 while Genting Plantations added 10 sen to RM 9.32 before closing unchanged at RM9.22. On Monday 25 September, investors had continued to sell the Genting stock, pushing its share price down as much as 1.7 percent in morning trade on updates that the casino operator suffered loses when reducing its stake in Australia-based Echo Entertainment Group. The conglomerate’s unit Genting Singapore PLC said last Wednesday the group sold 39.6 million shares or 4.8 percent at A$3.99 each in Echo. Following the sale, Genting still owns about 5% in Echo.
Significance: Although the sale resulted in a realised loss of A$12.51 million for Genting Singapore, analysts however opined that disposal was a positive move which cleared uncertainties on a potential bidding by rival gaming firm Crown.

Bernas To Perform Better In H2
Padiberas Nasional (Bernas) stocks were downgraded to hold at RM3.20 with a target price of RM3.40 by Maybank Investment Bank research. This came after an informative meeting with management gave the research house some clarity on Bernas’ lead lag in cost recognition from the time of rice procurement. This supported Bernas’ positive outlook for the second half due to the lower cost of rice procured earlier this year. Rice prices continue to fall since June as the global rice inventory piled up due to bumper harvests, low import demand and high inventory levels. Currently, rice prices have retreated by 5.6 percent for year-to-date, providing Bernas better opportunities to procure attractively priced rice, thus improving profit margins in the near future. Furthermore, Thai rice stockpile has reached a maximum level and is expected to be pared down soon, consequently compounding the already oversupplied market.
Significance: According to management, Bernas’ procurement cost of rice has a seven to eight month lag before reaching the profit and loss statement. Moreover, Bernas successfully extended its concession up to January 2021. The company has allocated RM100 million in 2012 to invest in viable businesses to diversify its income stream and reduce its reliance on concessionary income.