SAAG: In 2010 its cashflow difficulties due to the recession and high borrowings relative to issued capital and reserves impacted the company. This was made worse by the cancellation of projects which adversely affected cashflow. The management said its focus then was to conserve cash and are now (Aug 2010) refocusing and looking at a turnaround in 2011. The Jan 2011 rise in SAAG's shares could just be a rotational play as oil and gas counters were the focus following the third Economic Transformation Programme update, where entry point projects for the oil and gas industry were among those announced.
However, despite the company having returned to the black in recent quarters on a year-on-year basis, its funding was still “quite tight” and, therefore, getting financing for capital-intensive projects would be difficult. Without the financing, big projects will be hard to come by
Hing Yiap: The questions remain why did the major shareholders of Hing Yiap agree to sell their stakes at a discount? This is especially after considering that the block of shares that changed hands is a controlling stake suppose to command a premium? Its net cash position is rm7.59 million and short term borrowings of rm4.37 million and shareholders’ fund of rm98 million as at Sept 30, 2010. It also has receivables of rm34.26 million. It has stable of parcels of land measuring less than two acres in Kepong valued at rm10.8 million. The last revaluation of these pockets of land was more than seven years ago. However, its garment and fashion business does not warrant a premium to valuations. It has been constantly paying dividend over the past decade.
Will the takeover of Hing Yiap pave the way for Asia Brand corporation Bhd’s comeback to the stock market? Asia Brand, privatized in 2008, is controlled by Ng chin Huat, who in turn is a major shareholder of Everest that has acquired a controlling in Hing Yiap.
SP Setia: It is learned that the other 50% of Sentosa Jitra could be owned by Tan Sri Syed Mokhtar. To recap, in return for the development of the new health complex in Setia Alam, Sentosa Jitra will get the development rights for the government land along Jln Bangsar.
SP Setia: 7.23 (OSK), 8.00 (CIMB), 6.90 (MBB), 4.94 (Inter Pacific), 7.39 (RHB), 5.50 (Kenanga), 6.80 (AMResearch), 6.00 (ECM)
Axiata: Axiata Group will decide on whether it will impair its holding value in Indian mobile operator Idea Cellular at a board meeting in February 2011. Axiata was expected to take a charge on its stake in Idea, which it acquired at 100 rupees per share in 2008. Although Axiata’s businesses in Indonesia and Bangladesh are on an upward trajectory, there are still concerns about Indian unit Idea Cellular Ltd. While India ’ mobile market is booming, intense competition that put pressure on pricing has caused Idea to stutter as it seeks grow its market share.
In fact, Axiata has stated that it intends to write down the value of its 19.1% stake in Idea during its fourth quarter, which be announced in Feb 2011. Based on current market value (early Dec 2010) for Idea, the impairment charge would slash its FY2010 earnings forecast to a loss of RM695 million. Another forecasting lower earnings for Axiata’s local unit Celcom on the back of weaker margins as it seeks to aggressively push its data services via attractive subsidies.
While expecting Axiata’s Indonesian unit XL Axiata to take off, most were pleasantly surprise by the growth of its Bangladesh brand Robi. And while Axiata’s stake in Singapore’s M1 Ltd is still small at 29.5%, exciting developments down worth could it into a sleeper hit. Even Axiata’s overseas segments such as Dialog in Sri Lanka , which has been making losses have been showing improvement. Foreign interest in Axiata has risen to 16.1% as at end Oct 2010. The good news is that Axiata’s dividends will not be affected by its planned impairment of Idea since it is non cash item.
Axiata: 5.80 (OSK), 4.52 (Inter Pacific), 5.90 (CIMB), 4.50 (HDBS), 6.40 (AMResearch), 4.95 (ECM), 5.72 ( Macquarie ), 5.65 (Credit Suisse), 5.52 (RHB), 5.90 (JP Morgan), 5.45 (MBB), 5.50 (MIDF)
O&G Players: Petroliam Nasional Bhd (Petronas) is expected to award multi-billion ringgit contracts for the development of marginal oil fields by the end of Jan 2011 to several consortia comprising local and foreign companies.It is also believed that Petronas will unveil a new business model on the development of the marginal oil fields and possibly, more incentives for the industry.
It is believed that Kencana Petroleum Bhd and SapuraCrest Petroleum Bhd may form an alliance together with a foreign oil and gas major. SapuraCrest and Kencana have been busy raising capital to fund their expansion plans and are widely speculated to be one of the front runners.
Other potential beneficiaries, according to industry analysts, include Tanjung Offshore Bhd, Petra Energy Bhd, Malaysia Marine and Heavy Engineering Bhd and Perisai Petroleum Teknologi Bhd.
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