Saturday, August 20, 2011

What’s Up? Bintai Kinden

Bintai Kinden

What’s Up? … dated July 2011


BKC is selling its 69.85% stake in BKPL to Lerento Bio Chem Ltd for rm150 million in new shares with free warrants. This will make Lereno which is controlled by BKC’s major shareholder a 60.62% owned unit of BKC.

Lereno’s net tangible assets as at March 31, 2011 will rise from negative S$2.15 million to S$33.62 million after Lereno sold its biofuel processing related businesses. That puts the value of BKC’s 60.32% share in Lereno at S$20.28 million.

Lereno’s market cap should theoretically be a S$102 million based on the price of half sen piece at which it is issuing new shares to buy BKPL and its enlarged share base,

That values BKC’s 60.32% stake at S$61.54 which is sizeable considering BKC’s market cap stood at rm35.84 million as its 34.5 sen close. BKC is trading at a discount to its net asset per share, which is expected to rise from 66 sen to 67 sen following the acquisition.

BKC may not lose much earnings contribution from injecting its BKL stake into Lereno given its 60.32% equity interest Lereno.

Lereni will in turn end up owning 100% of BKPL after buying the remaining 30.18% stake from Biz Investment Pte Ltd.

In total, Lereno is buying BKPL for rm215 million in new shares issued at half a cent apiece with free warrants.

Friday, August 19, 2011

Its Prospects.. KLCCP

KLCCP

Its Prospects … dated July 2011


It is one of the few companies that have benefited from revaluing its property portfolios despite the softening real estate market.

In its March 31, 2011, KLCCP recorded a rm547 million gain from revaluation of its assets, which boosted its bottom line to rm707 million.

The annual revaluation of KLCCP’s assets has increased the market value of its assets by 8% to 15% against their book value.

Gains or losses arising from changes in the fair value of properties are recognised in the statement of comprehensive income in the period which they arise.

This means that when the market value of a property falls, KLCCP will have will have to revalue its assets downwards which is unlikely.

It is worth nothing that KLCCP recorded a whopping rm750 million gain its last quarter ended March 31, 2010 from the revaluation of its assets, which include the Petronas Twin Towers , Suria KLCC, Menara ExxonMobil and Menara Dayabumi.

The question is, given the softening property market, can KLCCP continue to make big gains from the revaluation of its assets? Are its assets nearing their peak?

Property prices will continue to go up as raw material prices increase. Furthermore, KLCCP has a pool of quality assets. The company is sitting on over rm14 billion worth of properties (versus rm12 billion book value).

KLCCP’s net assets per share stood at rm5.60. Its shareholders’ funds stood at rm5.23 billion as at March 31, 2011. Based on a share base of 1.295 billion – after full conversion of RCULS – this translates into a book value of rm4 per share.


Like many other property companies, KLCCP is trading below its book value.

One can easily see that KLCCP’s profits have been inflated by asset revaluation gains. In FY2011, gains from revaluation of KLCCP’s assets accounted for almost 80% of its earnings. In the year before, a gain of rm758 million from a fair value readjustment was more than earnings which stood at rm648 million.

It is worth nothing that KLCCP earns steady income and healthy operating cash flow from leasing out its retail and office spaces.

In FY2011 ended March 31. KLCCP’s operations generated rm631 million in cash, boosting its cash position to rm673 million.

The company has also been consistently paying out about 40% of its earnings as cash dividends.

However it is beginning to lose its luster against the backdrop of a softening property market and potential share overhang from the RCULS conversion.

Catalysts for KLCCP going forward include the long term lease renewal by its key lessor Petronas.

Also KLCCP is also beginning to see income from its Lot C development, which is expected to generate recurring income of about rm100 million annually. The company is also expecting more income from the refurbishment of its Dayabumi complex.

KLCCP plans to develop its Lot 1D parcel, which will be another mixed development.

There is also talk that KLCCP may acquire Petrona’s assets or buy properties in the KLCC vicinity as a way to bump up its asset portfolio but this has been denied.

Thursday, August 18, 2011

What’s Up? Ivory Properties

Ivory Properties

What’s Up? … dated July 2011


It got the approval to undertake a mixed development spread 102.56 acres on Penang island. The Penang Development Corporation (PDC) had approved the purchase and development of the land in Bayan Mutiara, near the Penang Bridge . Of the 102.56 acres 67.56 acres are existing land and 35 acres are to be reclaimed for a proposed mixed development. The site is at the coast way of the Tun Dr Lim Chong Eu Expressway to the north of Techware Sdn Bhd’s Gold Coast Development.

Ivory and its partners will have to pay PDC about rm1 billion over five to eight years as the land is being developed. Ivory is in discussions with certain parties to become co-developers of this project. In addition to managing the development, Ivory will also undertake the construction work.

The company will manage construction on the land but it intends to outsource the reclamation works at sea. Ivory will pay cash for the reclamation works and will not swap the valuable land as payment in kind.

While the land will cost about rm1 billion or rm240 psf, the gross development value for the project is estimated at rm10 billion over five to eight years. That would generate sales of about rm1.2 billion a year on average if the project is completed in eight years,

Ivory is targeting sales of about rm600 million to rm700 million in 2011 from its existing projects.

The land cost for Nayan Mutiara is a significant sum for Ivory as its shareholders’ funds are only rm200 million and its total market value is about rm220 million. Besides having co-developers, it will consider a corporate exercise to raise funds. It will also need a syndication of bank borrowings.

Ivory’s equity and borrowings will enable it to pay PDC for each parcel of land as it gets vacant possession of it prior development in a form of bridging finance.

There is no need to allow more time for settlement of the reclaimed land. The 67.5 acre tract was reclaimed by PDC some years ago and there are already houses built on adjacent land that was reclaimed by PDC at the same time.

Ivory will mainly build condominiums on the land as it is too expensive for landed property.

Wednesday, August 17, 2011

JIT News - MPHB, Lion Group, Genting, YTL Pwer ...

MPHB: The MCA is said to be keen on buying MPHB’s Menara MPHB. It is learnt that the price tag could be in the range of rm350 million to rm400 million. The agreement is being drafted now. Should the deal be sealed, MPHB may be able to sprung a surprise by declaring generous dividend to shareholders.


Lion Group: Tan Sri Rafidah Aziz is expected to be named Megasteel Sdn Bhd’s new chairman as the company seeks an additional 35% duty of imported HRC, which currently have zero duty when imported from within Asean. If sourced elsewhere, a 25% tariff is levied.

One of the key electricity transmission projects in Sarawak is the 500kV Bunut-Kuching line, which will connect all the smaller transmission lines there. SCB is part of a consortium bidding for the roughly rm2.5 billion job to build transmission lines and substations on the 600 km line. The consortium has reached the pre qualification stage and that the winner will be announced later 2011.

Genting Bhd bought some 2.63 million shares at between RM10.02 a share and RM10.22 a share. In total, Genting spent more than RM26.8 million to buy back its own shares in 09 Aug 2011. IOI Corp Bhd bought 1.77 million of its own shares at between RM4.68 and RM4.81 a piece. In total, the company had spent some RM8.4 million in 09 Aug 2011.


YTL Power: The Employees Provident Fund (EPF), the second largest shareholder of YTL Power, disposed of 30.13 million shares from June 30 up to Aug 4 2011.Filings with Bursa Malaysia showed the EPF’s stake was reduced to 729.17 million shares or 10.09% from 759.31 million units or 10.51%. The 30.13 million shares accounted for 0.42%. The share price was trading from RM2.20 to RM1.97 as at Aug 4 2011. The largest shareholder is YTL Corp with 44.98% or 3.275 billion shares.

JIT News - Kulim/Sindora,DVM,MISC,O&G,Credit Rating Of Malaysia ....

Kulim/Sindora: Kulim is said to be privatizing Sindora. This could mark the start of a new corporate strategy for Kulim and its parent JCorp which in the past was seen as pushing for an asset divestment strategy. Kulim should be able to muster this amount as the end of March 2011, Kulim had cash and cash equivalent amounting to some rm424 million although it has also debts of rm1.96 billion.

DVM: Two of its substantial shareholders had called for an EGM to oust the company’s entire board of four directors. Both held 15.04% stake in DVM. The two substantial shareholders are seeking shareholders’ approval at the EGM to be appointed as directors along with two others to replace the four existing directors.

Bursa Malaysia had issued a query after observing the sharp increase in the price and volume of DVM.

On Aug 12, 2011, the company proposed a private placement involving 10% of its existing issued and paid up capital. It proposed of the issuance of 17.6 million new ordinary shares for 14 sen each, in order to raise rm2.46 million for working capital. It had not identified investors for the exercise.

For 1QFY201, DVM posted a new loss of rm1.59 million on revenue of rm7.13 million. Its net assets per share stood at 8 sen as at March 31, 2011. It made a net loss of rm2.14 million on revenue of rm4.75 million for FY2010.


MISC: Speculating that national carrier MISC Bhd may put in a bid for a fleet of eight liquefied natural gas (LNG) ships owned by shipping giant AP Moller Maersk. The bids are understood to be due by end-August 2011, with initial estimates valuing the fleet at US$1.3 billion (RM3.9 billion) to US$1.7 billion. AP Moller is understood to have roped in Deutsche Bank to assist with the sale.


O&G: Petroliam Nasional Bhd (Petronas) is expected to announce the second contract to develop a marginal oil field soon. Petronas is currently finalising the second risk services contract (RSC) and will make an announcement in due time.

Credit Rating Of Malaysia: Standard & Poor’s has cautioned that Malaysia could join India and Japan which may have lower sovereign ratings because they have yet to come out of the 2008 economic meltdown. Fitch Ratings affirmed Malaysia ’s sovereign ratings with a stable outlook but expressed its concern about the structural weaknesses in the public finances as well as over dependence on petroleum-linked revenues.

Tuesday, August 16, 2011

About Sunway Holdings/Sunway City ...

Share prices of both have been falling in the market, raising the question of whether investors are feeling nervous about the impending merger between the two companies. Sunway Holdings and Sunway City closed at rm2.14 and rm4.20m both counters are trading at discount to their respective offer prices of rm2.60 and rm5.10 under the offer by Sunway Sdn Bhd (SSB).

To recap, in Nov 2010, SSB proposed to take over the assets and liabilities of Sunway City for rm5.10 a share and Sunway Holdings for mr2.60 a share. In addition to that, SSB also offered to buy Sunway Holdings and SunCity warrants at rm1.50 and rm1.29, respectively.

The proposed deal will be done via the issuance of new shares in SSB valued at rm2.80. Eighty percent of the offer will be settled by the new shares and the balance in cash. In addition to that, SSB will also issue new warrants for all Sunway Holdings and SunCity shareholders on the basis of one SSB warrant for every five shares.

Does the recent selling pressure reflect the market’s cap doubts about the merger?

Industry observers in general are positive on the proposed merger, citing improved liquidity, a stronger balance sheet and synergistic values. The merger of the two companies will result in a bigger and better capitalized entity with a potential market cap of over rm3.5 billion. In addition, operations and profit margins could improve, as well as bringing about cost savings. The offer is good opportunity for investors to move to a larger and more liquid company.

So when is the right time to buy the stocks? The respective offer prices might not be the right price for the stocks, or an indication of their fair values or where they should be trading at. This is because the values they are swapping into are relative values into a new entity. The relative values and the ultimate valuation of the merged company matter most, rather than determined offer prices.

Ultimately, the valuation of the merged entity is of paramount importance to investors. But is the merged unit worth over rm3.5 billion in market cap?

The EGM to vote on the proposed merger is only expected to be held in April 2011 or May 2011. A 50% plus one share of the minorities would have to vote in favor of the merger for the deal to go through. When that happens, both Sunway Holdings and SunCity will be delisted and the newly merged entity will need to seek a new listing on Bursa Malaysia , which is subject to approval.

The listing is expected to happen in July or Aug 2011. Until then, there is no certain way to determine what assets and liabilities will be assumed under the new entity. As such, the best way for investors to enter into the merged company at the moment is to look at the discount on the two stocks relative to their offer prices for any possible arbitrage opportunity.

As of now, both counters’ 17.6% discount to their respective offer prices means the market has been quite efficient and there is no arbitrage between the two prices. This could indicate possible arbitrage opportunities between the two stocks, as well as the cheaper entry into the merged Sunway group.

Monday, August 15, 2011

JIT News - Umza ... 3/3/2011

Umza has been awarded a contract estimated rm200 million with Petronas. The tenure of the contract is from Feb 18, 2011 until Feb 17, 2014, with the option to extend the contract for another two years. The contract was expected to contribute positively on its earnings FY11 ending Dec 31 and future years.

JIT News - MAxbiz,SP Setia,UMZA,EON Cap,IJM Corp,Mudajaya.. 28/2/2011

MAXBiz: Sources say it have sent a letter to Bursa Malaysia, highlighting discrepancies in the company’s accounts detailed which had led to the removal of its auditors Gomez & Co at an EGM. However, a director confirmed that such a letter had been sent. These discrepancies highlighted could change the future of NAxbizm as it would no longer be deemed a PN17 company. Sources say company officials are trying to reverse the PN17 classification.


SP Setia will be a net cash entity upon completion of its share placement to existing major shareholders. The exercise is expected to raise some RM1 billion to finance the company’s existing and future projects. Based on the expected proceeds of RM1 billion and S P Setia’s cash pile of RM1.06 billion at Oct 31 2010, the developer will have a cash pile of RM2.06 billion versus debts of RM1.64 billion. This translates into net cash of around RM420 million or 41 sen a share.

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)


UMZA Bhd stands a good chance of getting contract jobs from Petronas for oil recovery enhancement in domestic brown fields as well as idle fields. The total value of the contracts could be worth up to rm500 million.


IJM Corp: The toll rate cut will have little impact on IJM Corp’s bottom line due to the compensation. And with the reduction in the toll rate, traffic volume will increase, which could contribute to higher turnover for the NPE toll.

IJM Corp: 5.01 (RHB), 7.50 (HDBS), 5.24 (MIDF), 7.52 (AmResearch), 5.51 (TA), 6.60 (OSK), 6.40 (MBB), 7.70 (Credit Suisse)


EON Cap: It is learnt that CCB, China ’s second largest lender, may submit a letter of application to BNM to start negotiations with EON CAP soon, even as the latter is in the midst of a possible takeover by HL Bank. Sources say CCB may offer a far more superior price than HK Bank’s of rm7.30 per EON Cap share. It is possible that CCB will be given the nod to start negotiations with EON Cap under a government to government initiative. It is not known how big a block CCB is eyeing, or from whom. Sources say however, the situation is very fluid as CCB’s possible entry as a buyer could complicate matters at EON Cap.


Mudajaya: Mudajaya’s 4Q2010 latest numbers will go a long way towards quashing any doubts about its continued performance after its 3QFY2010 results came in below estimates. Mudajaya’s balance sheet remained solid with no borrowings and cash and bank balances increasing to rm254 million from rm116 million y to y. The growth catalysts for Mudajaya include the award of more projects from the 10MP and ETP. Other rerating catalysts include the possibility of securing the three Indian road projects each worth up to rm1 billion, from the National Highway Authority of India and the possibilities of its delayed ultra mega power plants of 4000MW each taking off earlier than expected.

Mudajaya: 7.94 (CIMB), 7.44 (OSK), 6.54 (HLB)

Sunday, August 14, 2011

JIT News - MRCB/Ekov,MEGB,Transmile,SP Setia,Ramunia,Ranhill .... 24/2/2011

MRCB/Ekovest: MRCB together with Ekovest are likely to be awarded a portion of the Klang Valley beautification project from the government. It was previously reported that the valued is at a potential rm8 billion. A rm5 billion rehabilitation and development plan for the Klang Valley river was announced by the government as part of the ETP.


MasterSkill: For the year ended Dec 31, 2010, its net profit rose to rn102.4 million or 33 sen per share with a historical PER of 5.6 times. Revenue increased to rm315 million. As at Dec 31, 2010 the company had net cash of rm99.41 million and net assets per share of rm1.27.

MasterSkill: 4.90 (HDBS), 2.47 ( Alliance ), 3.59 (OSK), 4.48 (CIMB)


Transmile faces suspension with effect from March 3 and delisting on March 7 2011 for failing to submit a regularisation plan to the regulators for approval by Feb 22 2011. It failed to submit the revamp plan to Securities Commission or Bursa Malaysia Securities by the Feb 22 2011 deadline. However, it has until March 2 2011 to submit an appeal to Bursa Securities. If it submits an appeal to Bursa Securities within the appeal timeframe, the removal of the securities will be deferred pending the decision on the company’s appeal.


S P Setia Bhd’s proposed private placement of new shares of up 15% of its paid-up to existing major shareholders (also a proposed bonus issue on a one-for-two basis after the placement) will enable the property developer to raise about RM1 billion. The corporate exercise would enable S P Setia to raise funds with minimal dilution to the company’s share capital base. The private placement would involve a bookbuilding exercise which includes a roadshow involving about 30 global funds.


Ramunia: Ramunia Energy and Marine Corp Sdn Bhd disposed of 13.5 million Ramunia Holdings Bhd from Feb 16 to 21 2011. A filing with Bursa Malaysia showed its stake was reduced to 59.62 million shares or 8.99% after the disposal of the shares. Ramunia Energy sold 3.5 million shares on Feb 16 2011 and two million shares the next day. On Feb 18 2011, it disposed of one million shares and seven million shares on Feb 21. It was trading between 67 and 68.5 sen during the period.


Ranhill: It is not ready to say anything about its operations in Libya as it is unsure of the situation in the country. Ranhill is involved in a US$1.2 billion (RM3.66 billion) Tajura Housing Project, which involves the design and construction of 10,680 units of residential apartments in Tripoli , Libya . The project, due for completion in February 2013, was contracted by the Housing and Infrastructure Board of the Libyan Government to Amona Ranhill Consortium, a Ranhill subsidiary.

JIT News - Genting SP, Tanco ... 23/2/2011

Genting SP: It reported higher revenue from its casino in Singapore but it now lags rival Marina Bay Sands in terms of profitability. It had adjusted Ebitda of S$389.8 million on revenues of S$775 million for the three months ended Dec 2010.

Genting SP: S$1.55 (JP Morgan), S$1.75 ( Macquarie ), $3.00 (CLSA), CITIgroup $2.60, $1.01 (Nomura), S$2.38 (OCBC), S$2.55 (RHB), S$1.73 (Goldman Sachs), S$2.60 (AMResearch)


Tanco: Tanco reached an agreement with Lehman Brothers for the settlement sum of rm144.63 million which would involve the payment of rm44 million cash as well as the transfer and vesting of certain properties at an agreed value of rm100.63 million. It would be paid in five installments over a 12 month period from or at an extended period as might be agreed upon. The cash settlement would be funded through internally generated funds and bank borrowings.

The successful conclusion of the settlement scheme would enable the Tanco Parties to substantially settle all its existing secured debts and there would be a positive impact to the net assets per share of the group as well as a significant reduction in its gearing.

JIT News - Maybank,MTD Cap,Zelan ... 22/2/2011

Maybank: Its president and CEO Datuk Seri Abdul Wahid said the signs are positive that Mitsubishi UFI, a major shareholder of Kim Eng Holdings Ltd, will likely accept Maybank’s takeover.


MTD Capital: The valuation of MTD Cap may rise to rm16.17 per share assuming the potential disposal of the toll road assets and liabilities of MTD Prime Sdn Bhd and Metramac Corp Sdn Bhd is completed at rm3.53 billion. However the valuation of rm16.17 per share takes into consideration a number of assumptions and proposals which still have many hurdles to clear.

Zelan: It had reversed rm80.15 million in revenue from its power plant project its Rembang Central Java Province, Indonesia during the 3QFY2011 ending March. Zelan has 70% equity interest in the US$560 million coal fired power plant while the remaining 30% is held by PT Primanaya.

JIT News - POS,Ramunia,MEGB,Star,MBSB,IGB/KrissAssets .... 21/2/2011

POS: Khazanah has entered into the second stage of the divestment process of its 32.21% stake in POS, starting with the restricted tender process for bidders.

DRB-Hicom,SapCrest,Ekuinas,Scomi Group,Konsortium …


Ramunia is in talks with Coral Allinace Sdn Bhd (Linked to BLD) – believed to be linked to Tengku Ibrahim Petra and Robert Lee, former director of Petra Energy Bhd – for a possible synergistic tie up or even an acquisition of the latter … through the issuance of shares. A JV or an acquisition of Coral Alliance by Ramunia will benefit the latter as Coral Alliance is said to be the fronrunner for a hook up and topside maintenance contract from Petronas.


MEGB: Masterskill Education Group Bhd group chief executive officer Datuk Seri Edmund Santhara is considering to up his stake in the group. Anything below RM2 doesn't justify keeping the company listed.


AHB: Speculation that AHB is bringing in a financially strong white knight to implement the compensation scheme the next course of action that the minorities shareholders have in mind.


Star: Star Publications’ cash pile will shrink substantially after paying the hefty special dividend that it declared in Oct 2010. There has been market talk Star is likely to raise rm600 million to rm700 million.


MBSB: The rights issue proposed by MBSB means its major shareholders, the EPF is prepared to pump in more money into MBSB. That being the case, it would to a large extent halt speculation that the EPF is divesting its stake in MBSB. Such speculation should not come as a surprise as the EPF controlled MBSB has improve its performance in recent years. But with further upside anticipated, why would the EPF want to sell a stake in MBSB at this juncture?


IGB/KrisAssets: IGB is a big winner in this deal than its 2 75% owned subsidiary KrisAssets. The reasoning is that IGB is unlocking the value of its asset and will be cash rich with the proposed sale. Essentially, IGB is transferring the weight of the Gardens Mall off its balance sheet to KrisAssets. The proceeds would also come in handy to speed up the group’s asset acquisition or expansion plan – where it has been fairly quiet over the past few years – apart from fuelling investor expectations of a bumper dividend. IGB will still have exposure to the steadily growing cash flow of Gardens Mall via its 75% stake in KrisAssets.

Saturday, August 13, 2011

MPHB/Magnum


MPHB/Magnum

Contrary to wide market expectations, Multi-Purpose Holdings Bhd (MPHB)'s plan to relist its numbers forecast operator (NFO) Magnum Corp Bhd has been put on hold, as the company shifts its focus to reformatting its business structure.

MPHB managing director Datuk Surin Upatkoon said there is no plan to relist Magnum for the time being.

Following its proposed acquisition of the balance 49% stake it does not already own in Magnum Holdings Sdn Bhd, MPHB expressed its intention to make gaming its core business, while it would work towards the rationalisation of its non-core assets such as insurance and stockbroking through a divestment programme. It gave no hint of the widely expected relisting of Magnum shares on Bursa Malaysia.

MPHB planned to raise about RM1bil by selling its non-core assets to focus on gaming.

MPHB could look more attractive now, given increased contribution from cash-cow Magnum and the potential divestment of its non-core assets.

Based on MPHB's results for the third quarter ended Sept 30, 2010, gaming contributed 91% to the group's total revenue and 65% to pre-tax profit. MPHB's revenue for that period stood at RM850.7bil, while earnings were RM126.5bil. This compares with revenue of RM813.2bil and earnings of RM51.6bil in the previous corresponding period.

The acquisition expected to be concluded by May 2011, does not include rm675 million of nominal value RCULS in Magnum.

The deal essentially values Magnum at rm3.34 billion. This translates to 11 times of Magnum’s 2010 forecast earnings based on MPHB’s nine month profit before tax from its gaming operations.

While its is not surprising that CVC is looking to exit as the three year timeframe for its investment is up, its willingness to sell its stake at a relatively low valuation could be rather puzzling for some.

But close scrutiny reveals that CVC is making a least 60% return of its investment in Magnum within three years, plus it will still have about 10% to 15% in MPHB.

Given that CVC is letting go its valuation stake in Magnum at a lower valuation, CVC would most likely be betting on the potential value of the MPHB stake it will be getting from the deal.

As a result of the acquisition, MPHB will immediately be earnings accretive for MPHB even after taking into account the enlarged entity.

Although MPHB will raise its borrowings by another 809 million, do not expect any increase in interest expenses as the debts in Magnum that carry a 11% interest rate will be retired and likely to be financed at a lower rate.

MPHB would most likely take on borrowings to finance the rm809 million cash portion of the purchase consideration as its cash pile art end Sept 2010 totalled rm765 million against long term borrowings of rm1.85 billion. But this is widely expected to be secured against Magnum’s strong cash flow.

While investors may be disappointed that the much talked about relisting of Magnum did not materialize, the acquisition would see the incarnation of Magnum in the form of MPHB – shareholders of Magnum would have full exposure to the NFO via MPHB.

The acquisition would make gaming MPHB’s core business. This presents an opportunity to rationalize its non core assets through a divestment programme to be initiated later. MPHB plans to raise some rm1 billion by selling its no core assets to focus on gaming. If there is any divestment, the funds will be used to pare down any outstanding borrowings.

MPHB also has business in the financial services, securities broking and property and leisure segments. Its largest revenue contributor, however, is the gaming business. Its second largest revenue contributors is the financial services division. It has also large landbank within its property division.

The divestment and landbank development will be the next re-rating catalyst for MPHB.

Thursday, August 11, 2011

What’s Up? Redtone


Redtone

What’s Up? … dated Feb 2011


It has been dragged down by losses in the new segments it ventured into, such as its WiMAX operations in Sabah and Sarawak and its Chinese oriented IPTV service.

It has also not stayed the same as a telco, which means consumers can count on RedTone to always innovate and try something new. Although it burnt its fingers in the Pakistan market some years ago, the company’s entry into China in 2006 appears to be finally bearing fruit.

Redtone’s valuations of Redtone Asia Inc, which houses its China operations, was US$22 million (rm67 million) in 2010 – close to Redtone’s market cap of rm90 million. This valuations was derived in Redtone’s reverse takeover of Hotgate Technologies Inc.

Its China ’s operations contributed 16% to Redtone’s top line in 2010 and was the most profitable segment, posting. Now into 2QFY2011, China looks set to contribute more to Redtone’s bottom line.

The good performance in China is attributed to ultra low capital expenditure and a highly scalable and replicable business model.

Redtone’s cap expenditure for China is only around rm1 million to rm2 million a year.

In Malaysia , the group is in the red in two of its segments – its IPTV business and WiMAX operations in Sabah and Sarawak . Their losses overwhelm the profits from China ’s at parent company level.

However, Redtone has a few options to turn the tide.

First it is planning to pare down its stake in RAI to around 70% from the current 90% through a share placement exercise in 2011 that could boost its coffers and results. A 20% stake could fetch around US$4.4 million.

Second, the company’s IPTV market will grow. TM’s goes into the mainstream market, so it foes head to head with Astro. Redtone’s is estimated to have invested some rm20 million in the IPTV business over the last three years. The service was launched in 2010.

The other options is to cut its losses in Sabah and Sarwak. It hints that parties have expressed interest in acquiring the company’s WiMAX operations there, which have seen rm20 million in investment till Feb 2011. This presents another opportunity for Redtone to turn things around.
As for its 4G licence in Peninsular Malaysia , Redtone hopes to roll out the services by 2011, pending approval from the MCMC. It is targeting corporate and SME customers.

With so many possibilities, it is likely that RedTone will kee

JIT News - Redtone,Maybank,Kencana,S & G Election. 14/2/2011


Redtone: Redtone’s China ’s operations contributed 16% to Redtone’s top line in 2010 and was the most profitable segment, posting. Now into 2QFY2011, China looks set to contribute more to Redtone’s bottom line.


Maybank: Maybank has sent out a request for proposals for the secondary placement of at least 17% block in BII, which could net some rm2.35 billion in proceeds. Maybank has until June 2011 to reduce its stake in BII to 80%, hence the placement are likely to be done in the next few months (Feb 2011-June 2011).


Kencana: Kencana plans to finance the US$200 million required to jointly develop and operate the Berantai oil and gas field through an equity/debt fund raising exercise. The detailed breakdown between the various sources of funding has yet to be determined at this juncture, pending completion of the company’s proposed fund raising exercises in its entirety.


Sarawak & General Election: Najib meets Umno division leaders in mod Feb 2011 ahead of polls. Prime Minister Najib Abdul Razak starts his meet with the Umno division leaders in Kuala Lumpur this morning with the Kedah contingent kicking off the proceedings. Prime Minister Najib Abdul Razak in mid Feb 2011 hinted at the Sarawak state elections are around the corner, saying that Chief Minister Abdul Taib Mahmud is “inspired”. The Prime Minister says the Sarawak Chief Minister Abdul Taib Mahmud has received a "certain inspiration" on when to call for polls.

 Meanwhile key infrastructure works in SCORE will be intensified with the award of several major road projects said to be worth some RM2bil. These projects include access roads to the proposed hydroelectric dams in Kapit and Limbang and to a coal mine in Kapit. Tenders for these projects were closed between August and October 2010. It is understood that leading construction firms from Sarawak and Peninsular Malaysia were among the bidders. Sarawak Infrastructure Development andCommunications Minister Datuk Michael Manyin said the Public Works Department was evaluating the various tenders. It is learnt that Hock Seng Lee Bhd (HSL) and Naim Holdings Bhd are among the bidders for the road projects.

HSL: 2.32 (OSK), 1.90 (MBB), 2.28 (AMResearch), 2.30 (MBB)
Naim:  5.09 (AMResearch), 3.52 (OSK), 4.10 (Kenanga)

The Sarawak Election Stocks: CMSB, KKB Eng, Naim, Dayang, TA Ann, Sarawak Plantations, Encorp, Zecon, Sarawak Cable, Sarawak Consolidated, SIG Gases, Petra Energy

What’s NEXT! MRCB


MRCB

What’s NEXT! … dated Feb 2011


It is looking to expand its landbank given that it has only 12 acres left in its flagship KL Sentral development.

According to sources, MRCB is in “advanced negotiations” for a sizable parcel of land in Petaling Jaya, although details are still unknown. Indications are (that) an acquisition is likely by end-2011.

Outside the Klang Valley , the group is vying for land along the Eastern Dispersal Link (EDL) in Iskandar Malaysia , Johor, and in Terengganu. Funding is not an issue given the RM200 million balance of proceeds from the rights issue.

MRCB is also said to be eyeing another five to six acres of land near Brickfields, Kuala Lumpur , following its recent acquisition of an acre near Jalan Kia Peng at RM750 psf for a high-rise development.

It posted net profit of RM42 million on revenue of RM433 million for the quarter on stronger margins. For FY10, its earnings nearly doubled year-on-year to RM67.3 million on revenue of RM1.07 billion.

The construction player and property developer is thought to be poised to participate in the mega development of the 3,300-acre Rubber Research Institute of Malaysia land in Sungai Buloh.

It was widely regarded that MRCB, together with IJM Land Bhd, which shares a common substantial shareholder in the Employees Provident Fund (EPF), would combine forces to jointly participate in developing certain parcels of the land, which will be allocated to the EPF by the government.

The two had announced a proposed merger at the end of 2010, although the deal fell through. However, the parties have not ruled out the possibility of future collaborations.

Meanwhile, MRCB also announced that it was targeting RM1 billion in orderbook replenishment in FY11, coming from its environmental projects in Kuala Sungai Pahang and Perai, Penang, as well as civil works on the mass rapid transit (MRT) and light rail transit (LRT) lines.

Besides the LRT and MRT contracts, which most contractors are vying for, MRCB is the frontrunner for the RM300 million Penang Sentral project, for which the sweetener is the eventual development of the surrounding land.

The other project is the Klang River cleanup project - the MRCB-Ekovest JV is rumoured to be close to securing the award worth RM1 billion to RM2 billion for just the initial stage. The project to clean up and develop Klang river ( River of Life project) was estimated to be worth around RM8 billion to RM10 billion with Phase 1 estimated at RM1 billion to RM2 billion.

Its earnings surged 230% to RM41.50 million for the fourth quarter ended Dec 31, 2010 from RM12.41 million a year ago, boosted by improved profit margin and property development projects.

Revenue rose 53.7% to RM433.12 million from RM281.67 million. It proposed a dividend of 1.5 sen per share.

For the financial year ended Dec 31, 2010, its earnings jumped 94% to RM67.27 million from RM34.62 million. Revenue rose to RM1.967 billion from RM921.62 million.

Its cash and cash equivalents rose to RM487.27 million from RM232.57 million.

The commendable result for the current quarter was mainly contributed by improved profit margin coupled with advanced stage of activities of its engineering and construction ongoing works and property development projects at Kuala Lumpur Sentral.

The higher operational margin was achieved on the back of crystallization of its ongoing value engineering and efficient project supervision and cost saving initiatives.

The higher revenue was contributed mainly from its construction and engineering division with ongoing work progress reaching maturity stage at relatively higher percentage of recognition compared to previous year.

The same impact was also contributed by the group’s ongoing property development projects at Kuala Lumpur Sentral.

It posted losses of RM1.26 million in the third quarter ended Sept 30, 2010 on the back of RM5.12 million in revenue. However, its net assets per share were RM1.21. It was in deficit of RM2.94 million as at end September while its short-term borrowing totalled RM12.03 million.

What’s Up? MK Land

MK Land


What’s Up? … dated Dec 2010

MK Land Holdings Bhd is not ruling out the possibilities of merging with other property players. However, he said the group had yet to receive any proposals. They would look at the potential value if such an opportunity arose.

Meanwhile, Lau said the group hopes to achieve better results in the current financial year ending June 30, 2011 (FY11) boosted by ongoing projects and new launches.

The group had achieved improved financial results year-on-year since FY08. For the first quarter ended Sept 30, MK Land posted a net profit of more than doubled to RM3.4mil from RM1.2mil a year ago. However, revenue for the period was lower at RM61.7mil against RM80.8mil previously. It posted a net profit of RM11.2mil on revenue of RM323.5mil in FY10.

Its main contributions would come from its projects in the Klang Valley as its other projects was somewhat weaker.

The group has also sold some of its assets and the cash generated was used to pare down its borrowings. It sold 23 acres of its land in Damansara Perdana and five acres of land in Cyberjaya.

The group had managed to pare down its debt to RM398mil as at June 30 from RM550mil in FY08 and intends to trim it further. Its gearing is 0.36 times.

The group had managed to lock-in over RM300mil from the sale of its land and joint venture projects.

The money from selling its land had come in but expects cash inflow from its joint ventures to flow in over a period of time.

The group still has capacity to borrow more.

MK Land has a total landbank of about 5,000 acres worth some RM800mil on its book. Some 4,000 acres of its land were in the northern part of peninsula.

Wednesday, August 10, 2011

What’s Up? RGB


RGB

What’s Up? … dated Oct 2010

RAM Rating Services Bhd has lifted the Rating Watch (with a negative outlook) on the ratings of RGB International Bhd’s RM200 million Commercial Papers/Medium-Term Notes Programme (2007/2014) (CP/MTN).

At the same time, the respective long- and short-term ratings have been downgraded, from A1 and P1 to BBB3 and P3; the long-term rating carries a negative outlook.

RGB is involved in sales and marketing, the provision of technical support, as well as maintenance and management services for gaming and amusement machines/equipment.

The Rating Watch had been placed on 22 September 2010, prompted by concerns over RGB International’s deteriorating financial and liquidity profiles following delays and changes in the proposed disposals of its 40%-interest in Chateau De Bavet (Chateau) casino and the slot machines in 5 Macau Technical Support and Management Services (TSM) concessions. The proceeds from the disposals had been earmarked for the partial repayment (RM49 million) of outstanding CP by end-September 2010.

The rating downgrade is premised on RGB International's very tight liquidity position, deteriorating balance sheet strength and poorer-than-expected recovery of its cashflow-protection measures. RGB International’s funds from operations had thinned substantially following the regulatory setback in Cambodia .

The Group continued to chart slower-than-expected progress in replacing its lost income due to persistent delays in the redeployment of the affected slot machines and the commencement of its new TSM outlets.

Meanwhile, with the proposed asset disposals failing to materialise according to the terms and timeframe initially envisaged, the Group will not be able to improve its financial position in the near term although the Group has made some progress with potential buyers for its proposed asset disposals.

RGB International’s liquidity position is tight with only cash balances of about RM30.14 million against RM153.75 million of short-term debts as at end-June 2010.

The Group’s short-term debts mainly comprised non-underwritten CP. As such, its CP remains susceptible to rollover risk. At the same time, the Group is highly dependent on the continued support of its suppliers, as observed from its lengthier payables cycle since 2009.

The Group’s weak operating performance for 1H FYE 31 December 2010 (1H FY Dec 2010) brought its annualised funds from operations (FFO) debt coverage ratio to only 0.14 times as at end-June 2010. As plans to reduce its borrowings have fallen through, its FFO debt coverage is unlikely to recover to about 0.4 times in FY Dec 2010, as previously envisaged.

Meanwhile, the Group has been suffering pre-tax losses for the past 2 years, depressed by impairment expenses and losses from its TSM division after the closure of some TSM concessions in Cambodia .

Given that its losses are likely to persist over the next few years (2011-2012), RGB International’s balance sheet is expected to weaken further, with its gearing ratio envisaged to rise to about 2 times in FY Dec 2011.

In the meantime, the ratings remain supported by RGB International’s stable concession revenues over the longer term from its TSM concessions.
The Group’s good rapport with its customers and suppliers is also expected to give it an edge over the longer term. Given RGB International’s presence in various countries, it is less vulnerable to changes in regulatory conditions in any particular nation.

The negative outlook on RGB International’s long-term rating reflects concern that the Group’s financial profile may deteriorate further with the continued delays in its proposed asset disposals, the redeployment of affected slot machines and if its TSM concessions continue to underperform. Should this happen, there may be further downward pressure on its ratings.

However, the outlook may be reverted to stable should the Group be able to address its immediate liquidity strain and demonstrate sustainable improvements in its business and financial profiles.

JIT News - Ariantec, Zeland,CSC Steel ...18/2/2011


Ariantec Global: Its executive director Vincent Loy ceased to be substantial shareholder after disposed of 66.54 million shares or 11.7% stake. He is left with 0.87% stake.


Zeland: Loss-making Zeland recorded negative revenue from its continuing operations in Indonesia totaling RM39.2 million in the third quarter ended Dec 31, 2010 and warned of more losses in the current fourth quarter. This was due to a reversal made on the revenue recognised earlier as a result of additional foreseeable losses for the Indonesian project. Net losses for the 3Q were RM41.29 million compared with RM60.38 million. Loss per share was 7.33 sen versus 10.72 sen. here was minimal revenue recognised from other existing projects during the 3Q and warned it was expected to continue to make losses in the final quarter as its revenue was expected to come only from its existing secured order book. The group recorded a loss after tax from continuing operations of RM40.5 million as compared to RM64.4 million losses in the preceding year’s quarter.

Due to the delays suffered by the group over the project in Indonesia , the group had applied for an extension of time. However, in December 2010, the owner of the project issued a notice, indicating their intention to take over the outstanding works. It had been negotiating with the owner for a supplementary agreement to set out the remaining outstanding works and the cost to be incurred to complete the works and a revised timeline for completing the outstanding works. It cautioned there was a possibility that liquidated ascertained damages of a maximum of about RM125 million may be imposed and the performance bond issued by the group to the owner of the project of RM132 million may be drawn down. It may also result in delays in the collection of the outstanding progress billings previously certified by the owner of the project of approximately RM181 million, potentially pending ascertainment of costs to completion by the independent consultants.

As at Dec 31, 2010, IJM Corp shares listed in Zeland’s balance sheet under available for sale investments were worth rm429 million. It also had rm36.51 million in cash and rm552.79 million in receivables, as well as rm203 million in borrowings and rm471 million in payables.


CSC Steel: Its net profit for its 4Q2010 ended Dec 31, 2010 plunged almost 77% to rm8.56 million from rm37 million a year ago due to lower selling prices and high raw material costs. Its net asset per share stood at rm2.12 as at Dec 31, 2010.

Target Price: 1.97 (OSK), 2.00 (AMResearch), 2.10 (RHB), 2.17 (HLB)

Tuesday, August 9, 2011

Just-In-Time News - Ramunia,GPacket,Merge Energy,Zeland ... 17/2/2011


Ramunia: Its major shareholder Datuk Azizul Rahman has pared down its stake significantly recently, raising expectations that he may exit the group soon. His indirect shareholding fell to 11.06% from 14.28% as at Dec 30, 2010. Sources say he did not make as much profits as he could from the selldown. His move also indicated that he was paving the way for LTH to chart the company’s direction. LTH has 25.17% stake in Ramunia.


GPacket: It has deferred its target of breaking even at the Ebitda level to the end of 2011 as opposed to the 1Q2011. The deferment was due to the more competitive environment and lower price point in the portable broadband segment planed to grow forward. It posted net loss of RM77.68 million in the fourth quarter ended Dec 31, 2010, which was lower compared with the RM100.71 million a year ago. Revenue rose 58% to RM116.25 million from RM73.54 million, loss per share was 11.8 sen compared with 15.3 sen. However, the loss from continuing operations were RM100.11 million compared with RM103.82 million a year ago. For FY10, it managed to reduce its net loss to RM134.97 million from RM182.64 million in FY09, while revenue increased 80.8% to RM393.97 million from RM217.81 million. Loss from continuing operations increased to RM209.67 million from RM187.41 million in FY09. Total group accumulated losses increased to RM274.67 million as at Dec 31, 2010 from RM196.53 million as at Sept 30, 2010.

GPacket: 0.800 (HDBS), 0.78 (OSK)


Merge Energy: Several interesting changes have been observed lately at civil engineering outfit Merge Energy Bhd. Its CEO Yusof Badawi, who has led the company since May 2003, stepped down, paving the way for Datuk Abdul Jalil Abdul Karim to take over the helm of the company. Merge Energy also stated that Abdul Jalil had surfaced as a substantial shareholder after acquiring 50% of the paid-up capital of private company Desa Binapuri Sdn Bhd which has 19.4% equity interest in Merge Energy. Then in October 2010, Maseri Basirah hived off his 10 million shares or 14.93% in Merge Energy to Datuk Mohd Said Mat Saman. Maseri had been a substantial shareholder in Merge Energy since September 2002.

It remained unclear at this juncture what Abdul Jalil and Mohd Said’s plans are for Merge Energy. Abdul Jalil also controls MPRI Pipes Sdn Bhd (formerly known as Musa & Rahman Plastic Industries Sdn Bhd). MPRI Pipes posted a net loss of RM1.03 million from RM16.67 million in revenue for its financial year ended December 2009. MPRI has its mainstay in the manufacturing of plastic products and pipes. Mohd Said meanwhile controls Sri Sekamat Enterprise Sdn Bhd, a company involved in general construction and which in FY08 suffered a loss of RM2.07 million from RM20.79 million revenue. Several of Sri Sekamat Enterprise’s jobs have involved the water sector as well such as rehabilitating reservoirs.


Zeland: Loss-making Zeland recorded negative revenue from its continuing operations in Indonesia totaling RM39.2 million in the third quarter ended Dec 31, 2010 and warned of more losses in the current fourth quarter. This was due to a reversal made on the revenue recognised earlier as a result of additional foreseeable losses for the Indonesian project. Net losses for the 3Q were RM41.29 million compared with RM60.38 million. Loss per share was 7.33 sen versus 10.72 sen.

JIT News - POS,Latexx,AMMB.. 16/2/2011


POS : Sources say the deal would likely be completed before the Invest Malaysia 2011 conference that was scheduled to begin on April 2011 in Kuala Lumpur .

DRB-Hicom,SapRes,Knosortium,Ekuinas, Scomi Marine.


Latexx : LTH has been agressively increasing its stake in Latexx. Since early Feb 2011, LTH has mopped up about 4.62 million shares in Latexx to 7.39%. Its acquisitions from the open market have been between rm2.83 – rm2.90. This meant that LTH is in a position to make arbitrage gains, as there is an offer by Navis and Mettiz Capital to acquire the entire business and undertakings including the entire assets and liabilities of Latexx for rm3.10 a share. This is a bit risky as it is not necessary for the company to pay the shareholders rm3.10 a share.

AMMB : The EPF has been accumulating shares in AMMB likely driven by expectations that it would post strong quarterly financial results. The pension fund owns a 12.93% stake in AMMB. AMMB is likely to announce its numbers within the next few days.






AMMB : 5.78 (OSK), 6.10 (UOB Kay Hian), 7.26 (RHB)

Monday, August 8, 2011

What’s Up? SapRes/SapInd


SapRes/SapInd
What’s Up? … dated Nov 2010

Ekuinas is moving into the RM7.2 billion private education sector with its acquisition of a 51% stake in an integrated education provider APIIT/UCTI Education Group for RM102 million.

Ekuinas was acquiring the stake in APIIT/ Asia Pacific University College of Technology and Innovation (UCTI) Education Group from Sapura Resources Bhd

Ekuinas inked a share sale agreement with Sapura Resources to acquire the 51% for RM102 million, which hinges on the approval of Sapura Resources shareholders at an EGM to be held later and the completion of final due diligence.

This proposed investment provides the ideal entry for Ekuinas to move into the fast-expanding private education sector currently estimated at RM7.2 billion.

This is Ekuinas’ fourth investment in 2010. Its three other investee companies are Alliance Cosmetics Group, TGOFFs and Konsortium.

The APIIT/UCTI Education Group provides an ideal investment platform for Ekuinas given its highly experienced management team with a strong track record of delivering growth and its established market position as a quality education provider.

APIIT/UCTI Education Group is profitable, with combined revenue growing at more than 40% per annum over the last three years, to hit RM83 million for the year ended Jan 31, 2010.

Ekuinas CEO Datuk Abdul Rahman Ahmad said the proposed investment in APIIT/UCTI Education Group provides an opportunity for Ekuinas to enhance equitable Bumiputera participation within the Malaysian private education sector.

To recap in Aug 2011 it is one of the parties interested in acquiring Khazanah Nasional Bhd’s 32% stake in POS.

Sapura has three listed united – Sapura Industrial Bhd, Sapura Crest Petroleum Bhd and Sapura Resources. Sapura’s primary expertise is in O&G.

It is understood that Sapura is due in part to the fact that Sapura has plans to turn POS Malaysia into a translogistics company. However, the real allure of POS may lie in its landbank, which an industry observer say is probably the driving force behind many bids.

Sapura’s Shahril and his family are also said to be close friends of Najib. Sources said that the Shamsuddin family has persevered through many prime ministers. And there is also a business link. Many years ago, a unit of the Sapura Group had produced portable radios for Mindef. Najib was previously Defence Minister.

Its Prospects.. Daya Materials


Daya Materials

Its Prospects … dated Nov 2010

A handful of development may prove to be catalysts for the company going forward.

It started out with operations primarily in the polymer business, has always been open about wanting to branch out further upstream and downstream in the O&G business. Currently, the company is more focused on downstream activities, where it supplies catalysts and chemicals for the O&G sector among others. It also remains a market leader in the polymer business where it supplies to power cable producers.

For the first six months of FY2010, it posted a net profit of rm6.8 million from rm7.2 million as a result of higher operating expenses.

Industry observers say coming year Daya Materials will see the results of the aggressive acquisition trail it has been on for the better part of three years.
The group’s current order book stands at RM285 million and it is in the run fro another handful of projects worth a potential RM600 million.

It still has some Rm16.7 million cash in its coffers while its current debts stands at RM18.8 million and a gearing of 17.9%.

The group is also scouting for possible targets in the US , Australia and China for either acquisition or partnership.

Beside from its more traditional businesses, it is embarking on a new business, offering tank services, in an effort to further diversify its earnings base. It has signed up the world largest tank players – Stolt Nielson, Sutton, Hoyer, Eurotainer, NCHO and Tanklex and is in talks with Sinochem and Bulkhaul to secure new contracts. OFr the latter, the successful negotiations could involved in second tank service depot in Kemaman.

Another possible earnings stream is the company’s new 350 tonne crane, which Daya is negotiating to lease to a local fabricator.

Daya Materials is set to benefit from the listing of Petronas Chemicals as it will possibly train the spotlight on its suppliers. Daya Materials supplies to various companies within the Petronas Chemical group. It is well positioned to benefit from the potential of more Petronas contract awards.

JIT News - PJI, Ho Hup ... 11/2/2011


PJI: The RM55.9 million sub-contract win from IJM Construction Sdn Bhd may be a sign that PJI Holdings Bhd is poised for a turnaround in fortunes in 2011, after having endured six years of losses. PJI is in the process of finalising procedures for its rights issue and capital reduction, with hopes that the exercise will be completed by the end of March 2010 which would be the end of its third financial quarter.

It has secured a RM55.89-million sub-contract from IIM Construction Sdn Bhd for a college in Kedah. The proposed project is not expected to have any significant impact on the net asset per share and share capital, but is expected to improve the consolidated earnings and gearing of PJI Group.



Ho Hup: Practice Note 17 (PN17) company Ho Hup Construction Company Bhd hopes to complete its restructuring exercise by the third quarter of 2011. The disposal of 3.32 acres of land in Bukit Jalil for RM9.55 million would include the acquisition of assets from its white knight as well as a capital reduction. Following this, the company will focus on property development, as well as growing our ready-mix concrete business and niche construction works. The company was also in the midst of seeking a three-month extension from Bursa Malaysia Securities for its PN17 regularisation plan to May 4, 2011.

About MPHB


Dated Jan 2011

Market talk that the group could be firming up plans to relist its gaming subsidiary Magnum Corp Sdn Bhd. However, sources say that the group had yet to firm up plans to relist Magnum Corp but could be negotiating with CVC Capital Partners for a deal to pare down the latter’s stake in the gaming firm, before a potential relisting, to a much lower shareholding in the region of 20%.

This could possibly mean MPHB buying back some shares in Magnum Corp from CVC. The pricing would be higher (compared with when Magnum Corp was privatised) because Magnum’s performance has improved. CVC may want to divest some stakes in Magnum Corp given that it has been more than two years since it invested in the privatised gaming outfit in 2008.
Industry observers say it is unlikely that relisting plans are already on the table but believe it is ‘the right time’ for the parties involved to firm up the agenda on the back of a bullish market.

MPHB had told Bursa Malaysia in August 2010 that it was at a “very preliminary stage” of looking at the possible relisting of Magnum Corp and was exploring various options for it.

The group also said it had the intention to maintain a 51% investment in Magnum Corp in the event the listing exercise was undertaken. MPHB pointed out that when Magnum Corp was privatised in 2008, CVC, which owns a 47% stake in the gaming outfit, had its own exit strategies based on timing and expected return.

One of the exit strategies contemplated by CVC was through the relisting of Magnum on the Main Market of Bursa Malaysia . Magnum Corp, the first operator of four-digit numbers forecast betting in the country, was taken private in 2008 in a deal worth RM4 billion.

According to an industry observer, the strong showing in the gaming sector and prevailing market sentiment augured well for CVC to sell its shares but that did not mean MPHB was pushing for a timeline for CVC to exit.

MPHB’s net profit for 3QFY10 surged 70.5% to RM86.49 million from RM50.72 million a year ago on the back of a stronger revenue of RM850.70 million versus RM813.24 million. It posted basic earnings per share of 8.1 sen while net assets per share stood at RM2.14 as at Sept 30.

The sale of four-digit forecast tickets contributed RM3.02 billion or about 90% of the group’s revenue of RM3.32 billion in FY09. As for FY08, the sale of such tickets accounted for RM2.87 billion of MPHB’s revenue of RM3.13 billion.

While there could be many ways to relist Magnum Corp, there was a possibility that the parties involved might explore the possibility of issuing new shares to shareholders as a dividend-in-specie or via placement.

Sunday, August 7, 2011

JIT News - Gent Mal,Tanco,Pallete,Naim,MTD Cap ... 10/2/2011

Genting Mal: It is expanding its share buy back activities while at the same time committing fresh investment into gaming assets in the US and UK. As at Feb 8, 2011, total Genting Mal shares retained in the Treasury account amounted to 252.95 million shares, which is worth rm872 million. Genting Mal shares retained in the treasury account currently represented about 4.3% of the group’s total issued shares of 5.92 billion.

The group had said in Jan 26, 2011 that it intends to purchase up to a further 340.86 million of its shares within the next five months (Feb 2011 – June 2011). As at Jan 26, 2011 Genting had 4.24% of its shares in the treasury account. Such further purchase is expected to cost the group at least another rm1.7 billion, assuming if Genting’s shares do not fall from its current level, and its total treasury shares to the permitted 10% level.

Genting Mal: 2.40 (MBB), 3.40 (Kenanga), 3.54 (ECM), 3.05 (JP Morgan), 3.94 (Nomura), 3.40 (HDBS), 2.40 (MBB), 11.70 (Goldman Saches), 3.24 (OSK), 12.54 (UOB), 3.30 (Credit Suisse)


Tanco: It is still in negotiations with Lehman Brothers for the proposed settlement of an amount of rm314 million owed to the later. Tanco said talks with LBCC on the proposed settlement agreement are still ongoing and it would make the appropriate announcement should the company reach an agreement. The filing was in reply to an unusual market activities query by the Bursa . Earlier it was reported that Tanco may get a haircut on the rm314 million from its settlement with LBCC. However, Tanco did not mention a possible haircut from LBCC.


Pallete Multimedia is close to securing a contract from Telekom Malaysia Bhd (TM) to supply high speed broadband equipment for the latter's high speed broadband project (HSBB). HSBB is a flagship project of the National Broadband Initiative that aims to boost the country's competitiveness. The RM11.3 billion national HSBB project is a joint effort between TM and the government to develop next generation high speed broadband infrastructure and services for the nation.


Naim: Permodalan Nasional Bhd (PNB) has emerged a substantial shareholder in Naim Holdings Bhd, a Sarawak-based property and construction firm, after acquiring 12.5 million shares or a 5% stake. PNB paid RM3.40 per share for the stake from Naim managing director/chief executive officer Datuk Hasmi Hasnan on Jan 28 2011. With the divestment, Hasmi's stake (direct and indirect) in the company has been reduced to 22.86%. Naim's other local substantial shareholders included Lembaga Tabung Haji, Employees Provident Fund and unit trust funds. Foreign holdings in Naim are more than 12%. The shareholders include insurance and pension funds from Singapore , Australia , Europe and the United States .


MTD Capital: Its subsidiary MTD Manila Expressways Inc can proceed with the implementation of its 290% toll rate hike along the South Luzon Expressway in the Philippines after a motion seeking to restrain the hike was rejected by the Philippines Supreme Court. Manila Toll Expressways System is a 30% associate of MTD Manila Expressways and 40% associate of the Philippine National Construction Corp. South Luzon Tollway is an 80% subsidiary of MTD Manila Expressway

JIT News - MPHB,Auto Industry,CyPark ... 9/2/2011

MPHB/Magnum: Speculation that MPHB may soon announce a corporate exercise involving its NFO Magnum Corp.

The Auto Industry: The government may bring forward the liberalization of the auto industry to several years earlier than 2020, amid mounting pressure for a level playing field between national and non national players, and as foreign automakers express keen interest to set up or expand their manufacturing presence in Malaysia .
Earlier than scheduled liberalization is being called for to prepare Proton and Perodua for the post liberalization era. It is learnt that financial benefits such as R&D grants under the Industrial Adjustment Fund as well as soft loans from the Automotive Development Fund, the main beneficiaries of which have been local companies, are likely to ease with liberalization. Protective measures would have to be abolished to ensure fair competition between local and non national players in the local auto industry.

What liberalization means is that eventually, the price gap between national and non national cars will start to narrow.


CyPark: Speculation that CyPark will win a sizeable chunk of the RM15.6 billion national solid waste management infrastructure. The government intends to pump money into the development from 2011.

JIT News - Genting SP/Genting Bhf,Premium,PUC,kencana,BHIC ... 8/2/2011

Genting Bhd/Genting SP: Concerns of a possible reduced volume in its VIP customers at Genting SP resort caused its share prices to fell. A leading research house revised Genting’s performance forecasts came after Sands Corp reported q-to-q drop in its VIP gaming business in its Singapore casino Marina Bay Sands, sparkling concerns that RWS could see similarly weak performance.

Genting SP: S$1.55 (JP Morgan), S$1.75 ( Macquarie ), $3.00 (CLSA), CITIgroup $2.60, $1.01 (Nomura), S$2.38 (OCBC), S$2.55 (RHB), S$1.73 (Goldman Sachs), S$2.60 (AMResearch)


Premium Nutrients: It has received an offer from Indonesia incorated Agro Asia Pacific Ltd to take over Premium’s core businesses for a total rm118 million. Should Premium accept the offer, it would be formalized in the form of a share sale agreement. The current offer values each share at about 35 sen. This does not take into account long and short term borrowings of rm194 million. It has cash of rm42 million and receivables of rm95 million as at Sept 30, 2010.


PUC: London ’s AIM RedHot Media Intl Ltd’s move to take control of PUC will enable it to tap the latter’s major shareholder’s presence in China ’s media and advertizing industry. The corporate exercise would see RHM disposing of three subsidiaries to PUC for rm95 million. In return PUC would issue 950 million new shares of 10 sen each to RHM.

Kencana plans to finance the US$200 million required to jointly develop and operate the Berantai oil and gas field through an equity/debt fund raising exercise. The detailed breakdown between the various sources of funding has yet to be determined at this juncture, pending completion of the company’s proposed fund raising exercises in its entirety.


BHIC: Expectations the ship builder could secure more government defence contracts. Defence Minister Datuk Seri Dr Ahmad Zahid Hamidi said the government has agreed to allocate RM6 billion to build six second generation patrol vessels for the navy. Construction of the ships will boost the economy while benefiting 632 vendor companies. Thus, the government will ensure that at least RM2 billion of the allocation will benefit these vendor companies which are strategic partners of Boustead Naval Shipyard Sdn Bhd. The project is due to start next year (2012).

BHIC: 5.50 (AMResearch), 4.40 (HDBS)

JIT News - Sarawak Election,MRT,GPacket, WellCall, Bernas,Maxbiz ... 7/2/2011

Sarawak Election: Prime Minister Najib Abdul Razak had a closed-door meeting with 63 Sarawak state assemblymen from BN at a leading hotel in Miri. BN secretary-general Tengku Adnan Tengku Mansor also joined the prime minister at the meeting.

The Sarawak Election Stocks: CMSB, KKB Eng, Naim, Dayang, TA Ann, Sarawak Plantations, Encorp, Zecon, Sarawak Cable, Sarawak Consolidated, SIG Gases, Petra Energy


MRT: The second MRT line, which circles the Kuala Lumpur city centre (KLCC) orbital and known as the “circle line”, is already in the final planning stage. The details are expected to be announced in March 2011. The funding structure for the MRT would be disclosed by end-February 2011. Tenders for the preliminary and main works will likely be called by Syarikat Prasarana Negara Bhd at the end of April 2011, with the awards to be announced "around mid-May 2011.

Key Beneficiaries: Sunway City Bhd, Bstaed, MK Land, Glomac, Mulpha, Malton, Selangor Properties, GuocoLand, E&O, MRCB, YTL Land, SP Setia, TAGB, IJM Land, Metro Kajang, Bertam Alliance, Mah Sing, UDA, Gamuda Land, Bolton, IGB

Green Packet would reveal more details on its break-even levels when it announced its full-year results for 2010 in Feb 2011. Green Packet would likely record another Ebitda (earnings before interest, tax, depreciation and amortisation) loss in 4Q10 although broadband subscribers achieved was close to its 280,000 target.

GPacket: 0.800 (HDBS), 0.78 (OSK)


WellCall: The market is speculating whether WellCall will earmarked all its earnings as dividends this financial year ending Sept 30. The company will release its first financials in Feb 2011. This comes on the backdrop of costlier natural and synthetic rubber, the company’s primary raw materials.

Wellcall: 1.30 (Inter Pacific), 1.22 (CIMB)


Bernas: Bernas is sitting on a stockpile of rice that is growing in value due to the commodity’s uptrend on the international market. Although the commodity is on the government’s price control list, Bernas is posed to gain from higher prices on the international market because of its low cost inventory. However, the extent to which it can do so is controlled by the government, as some of the lower grades of rice are price controlled items in Malaysia . Bernas, which has been holding ample stock of the commodity will eventually benefit as rice prices climb in tandem with soaring food costs around the world and inflation rises.


Maxbiz: The future of Maxbiz hangs in the balance awaiting the outcome of an EGM likely to be held at the end of Feb 2011. It has announced to that it will seek shareholders’ approval at a meeting to remove its current auditor, Messrs Gomez & Co, and appoint STYL Associates as its new auditor. While this seem like a non even, such a change could have far reaching implications. In a nutshell, the company could be out of the doldrums if all goes as planned. What its officials are trying to do is to reverse its PN17 status, which Gomez & Co placed on Maxbiz.

Just-In-Time News - Genting Bhd/Genting Mal, 31/1/2011


Genting Group: The Genting group is making a bid for Pan Malaysian Pools Sdn Bhd. It is not known the price that Genting group is paying, sources said its bid is in the highest end among bids that have been submitted.  The next question is which company in the group will be the vehicle to acquire the asset? From the balance sheet, it appears Genting and Genting Malaysia should have no difficulty in financing the purchase since the two listed entities can afford to gear up.

Genting’s cash and cash equivalent stood at rm15.3 billion while it had borrowings of rm14.5 billion. Genting Malaysia is in a net cash position. Its cash pile stood at rm4.5 billion against borrowings of rm619 million.

What’s Up? … Tanco


What’s Up? … dated Jan 2011

Sources say Tanco which is bogged down by a rm270 million loan it took from a unit of Lehman Brothers in 2007, may have secured a substantial reduction in its debt obligations.

In its books, Tanco has booked a sum of rm314 million under current liabilities as “deferred benefit pending outcome of litigation”. The amount is owed to Lehman Brothers Commercial Corp Asia Ltd, a unit of Lehman Brothers. It is believed that the sum owed has grown over the years due to interest cost.

However, sources say, there is an agreement in principle for Tanco – which is involved in property development and manages and own resorts – to get a substantial haircut after lengthy negotiations.

Tanco officials had not responded to queries.

Tanco’s shareholders’ funds amount to rm173 million, so a cut in its debt obligations would lighten its balance sheet significantly. 

For instance, if Tanco were to get a 50% haircut, this would mean it only has to settle some rm158 million, which should be more manageable for the company. A cut of about 10% in its debt obligations would translate to slightly less than a 10 sen increase in exceptional gain. The net tangible assets of the company would also increase. Tanco’s net tangible assets or net assets value per share stands at about 52 sen as at Sept 2010.

The caveat remains that Tanco had negative operating cash flow during the first nine months of 2010 – a deficit of rm19000 as at Sept 30, 2010. Its cash and cash equivalents were rm9.9 million.

For the nine months period, Tanco posted net loss of rm1.64 million. Revenue fell to rm11.76 million.

However, Tanco has landbank that it could monetize to help settle its outstanding debts owed to Lehman. As at Sept 30, 2010, Tanco had rm239 million worth of land held for property development. It also had receivables of rm19.72 million.

The question is, how much can Tanco realize from disposing of its assets.

Currently, its unit Tanco Resorts Bhd has eight resort properties – five in Malaysia , two in the UK and one in Australia – as well as three timeshare-based clubs and one recreation based club, all of which are owned, operated and/or managed by Tanco.

It has yet to attract any institutional shareholders. Its main shareholders include Datuk Tan Jing Nam , the group’s MD with a 26.55% stake and Datuk Neo with a 31% stake.

Accordingly, the company has also ceased accruing interest and exchange differences arising from the loan.

Tanco had also obtained an injunction to restrain Malaysian Trustees Bhd, as trustee of Lehman, from exercising any rights and/entitlements pursuing to the loan facility. Lehman, in response, appealed against this decision. The litigation is still ongoing and there has not been any development on the case to date.

One thing is for sure: Tanco will definitely get a big break in the event that Lehman agrees to give it a massive haircut for the loan.