Salcon Bhd

SALCON Bhd is drawing the interest of some investors because of its ability to clinch a series of significant deals lately.

Already boasting a sizeable orderbook, the water infrastructure builder and concessionaire is seen to be able to generate a stream of sustainable and possibly growing stream of earnings from its exposure to the booming water and water-related businesses in Malaysia and also abroad. This could be the main reason that justifies the holding of the penny stock. As at its financial year (FY) ended December 2008, Salcon’s orderbook stood at RM1.1bil.

Last week, Salcon won a RM35.8mil contract for the remedial works for a vacuum sewerage system in Sepang, Selangor, via its indirect 60%-owned subsidiary Envitech Sdn Bhd. That was the second contract win for the company in FY2009 after it secured the RM94.3mil sewage treatment plant project for Medini Development in Iskandar Malaysia in May.

Although there are only about five weeks left before the year ends, Salcon believes that the Sepang project would still be able to contribute positively to its FY2009 earnings. Positive earnings from the Sepang project are expected up to its FY2011.

Some analysts argue that Salcon’s share price is generally undervalued, as it does not reflect the company’s potential earnings-generative assets and strong net cash position of RM34.7mil. For three months to June 2009, Salcon’s revenue and net profit stood at RM111.6mil and RM7.2mil, respectively, compared with its revenue and net profit of RM61.9mil and RM4.1mil in the same period last year.

● The comments above do not represent a recommendation to buy or sell.

SALCON :  [Stock Watch]  [News]

Source: thestar

Saturday November 21, 2009
Eye on stock
By CECILIA KOK

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AirAsia, TM, Uzma, Sino Hua-an

KUALA LUMPUR: The third-quarter GDP data for Malaysia, which beat expectations, should provide some support for investors to nibble on equities for the coming trade-shortened week, starting Nov 23.

Hovever, the continued weakness on Wall Street could check the buying interest after US stocks fell for a third straight day on Friday following weaker-than-expected results from Dell and homebuilder D.R. Horton.

The Dow Jones industrial average fell 0.14% to 10,318.16. The Standard & Poor's 500 Index dropped 0.32% to 1,091.38. The Nasdaq Composite Index slipped 0.50% to 2,146.04.

As for the Malaysian economy, the worst is over as GDP contracted moderately to 1.2% in the 3Q, mainly due to a decline in the manufacturing sector. However, the economy showed signs of recovery after shrinking 3.9% in 2Q and 6.2% in 1Q.

As for corporate news, there were some positive results from AIRASIA BHD [ ], TELEKOM MALAYSIA BHD [ ], PLUS EXPRESSWAYS BHD [ ] and PPB GROUP BHD [ ]. Meanwhile, UZMA BHD [ ] reported successful drilling in Mongolia while in Sino Hua-An, Lembaga Tabung Haji had continued to increase its stake.
Other earnings expected this week are from Sime Darby, IOI Corp, KL Kepong, MAS, Axiata and Proton.

AirAsia Bhd posted net profit of RM130.07 million in 3Q from net loss of RM465.53 million a year ago  as revenue improved and it reported forex translation gain.Its 3Q revenue rose 4% to RM739.67 million from RM707.91 million while earnings per share were 5.30 sen versus loss per share of 19.6 sen. Core operating profit was RM34 million, a reversal from a loss of RM82 million in 3Q08. The strengthening of the ringgit against the US dollar has resulted in a translation gain of RM102 million during the quarter.

In Telekom, its operating profit before finance cost rose 186.1% to RM212.3 million from RM74.2 million a year ago. The better peformance was mainly due to higher revenue, lower depreciation charge in current year quarter and loss on disposal of an equity investment in 3Q08.

PLUS Expressways Bhd reported net profit of RM311.5 million vs RM241.75 million. It has thus far achieved 28.1% lane-kilometre growth against the target of 30% growth in lane kilometre
by end 2009.

Toll collection in 3Q was higher by RM61.7 million or 11.4% as compared to the third quarter 2008. The increase was mainly due to higher contribution from PLUS of RM55.0 million attributable to a traffic growth of 14.2% in the current quarter as a result of the high travelling during the Hari Raya festive. Total revenue for 3Q of RM815.2 million was RM98.0 million or 13.7% higher than a year ago.
In PPB Group, 3Q net profit rose surged 187.5% to RM595.1 million from a year ago due mainly to a higher profit contribution of RM943 million from its associate Wilmar International Ltd as well as improved results of its sugar refining operations.

Uzma reported it has successfully completed the Baiyin Chagan Da-9 drilling in Inner Mongolia. The drilling consist of five wells cluster aimed mainly at establishing a pattern for further field development and one strategic well at the neighboring field, Da-13 to extend UZMA's vision in looking ahead for more opportunities to develop into the future.

In Sino Hua-An, LEmbaga Tabung Haji bought six more million shares from Nov 16 to 18, increasing its stake to 7.29% or 81.8 million shares.

Source: thestar
Written by Joseph Chin
Saturday, 21 November 2009 22:00

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Bursa Malaysia Stocks to watch: MRCB, Telekom, Putrajaya Perdana, Tanjong

MALAYSIAN RESOURCES CORP [ ] Bhd (MRCB) has priced its share rights issue with an entitlement basis of one-for-two at RM1.12 per share. It said the right issue would raise gross proceeds of about RM540.7 million and RM508.3 million under the maximum and minimum scenarios, respectively.

Telekom Malaysia is scheduled to release its results on Friday. OSK Investment Research is maintaining its neutral call on TM with a target price of RM2.88.
It expected the telco's margin to come under pressure from higher high speed broadband operating expenditure and increased advertising and promotion as as TM slugged it out to defend its fixed broadband business and to drive uptake of its voice service.

"TM’s core earnings are likely to come in lower year-on-year in 3Q09 due to weaker EBITDA margin and lower interest income but higher quarter-on-quarter with the normalisation of the high effective tax in 2Q09.
"We suspect TM conceded its dominant share of fixed broadband addition in 3Q09 to a nimble and more aggressive Packet One (P1)," it said.

Putrajaya Perdana's 3Q net profit jumped 110% to RM12.2 million for its third quarter ended September 30, 2009 (3Q2009). Its revenue however fell 16% to RM199.9 million.

For its nine months period, its net profit increased 71% to RM26.96 million compared to the previous corresponding period. Meanwhile, its revenue increased 15% to RM679.8 million for the same period

Tanjong plc has appointed ASTRO ALL ASIA NETWORKS PLC [ ]'s former chief operating officer Goh Seow Eng as the chief executive officer of its entertainment division, responsible for both its wholly-owned subsidiaries Pan Malaysian Pools Sdn Bhd (PMP) and TGV Cinemas Sdn Bhd (TGV).

It is interesting to note that analysts had earlier said if Tanjong's power and gaming operations were split, this could create greater value. The power business, if spun off, would attract Syariah compliant funds.

GAMUDA BHD [ ]'s 40%-owned  Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) has filed a suit against PUNCAK NIAGA HOLDINGS BHD [ ]'s 70% subsidiary Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) with a claim of RM196 million owing, excluding interests, in relation to the supply of treated water to the latter.

Written by Joyce Goh

Source : thestar

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Maxis in focus this week

Maxis Bhd makes its debut on Bursa Malaysia on Thursday, Nov 19 and it will be on the investors' radar screen this week.

The telco raised RM11.2 billion, with the final selling price at RM5 per share for institutions and RM4.75 for retail investors.

On the external front, US stocks rose in light volume on Friday to achieve a second straight week of gains as upbeat retail news reinforced hopes for strong sales in the key holiday season.

The Dow Jones industrial average added 0.72% to end at 10,270.47. The Standard & Poor's 500 Index rose 0.57% to 1,093.48. The Nasdaq Composite Index rose 0.88%, to close 2,167.88. For the week, the Dow rose 2.5%, while the S&P 500 advanced 2.3%, and the Nasdaq gained 2.6%.

Investors would also look for directions following the release of the latest batch of earnings from local corporations and also fresh news.

Stocks to watch include MEDIA PRIMA BHD [ ], The New Straits Times Press (M) Bhd, KUMPULAN JETSON BHD [ ], BIMB HOLDINGS BHD [ ], HUBLINE BHD [ ], Sino-Hua An International Bhd, THREE-A RESOURCES BHD [ ] and WCT BHD [ ].

Media Prima raised it stakes in the outdoor advertising business with the acquisition of Kurnia Outdoor Sdn Bhd -- the country's second largest outdoor advertising company -- for RM46.37 million. The acquisition will enable it to increase its total market share in the outdoor advertising business to increase from 33% to 42%.

The integrated media company, which had on Thursday sweetened the deal for its takeover of NSTP, projected revenue from outdoor acquisition to exceed more than RM100 million from the Kurnia acquisition.

The Minority Shareholders Watchdog Group said Media Prima's revised offer for NSTP was positive. It said the revised offer of RM2.90 per share was 7% above adjusted NSTP's net tangible assets per share of RM2.70 (excluding the printing plant and machinery of about RM419 million). NSTP shares rallied when it resumed trading last Friday.

Kumpulan Jetson Bhd's shares has rallied in recent weeks, fuelled by speculation about its involvement in a multi-billion project to be undertaken by common shareholders in Naza Group. The company has come under the scrutiny of the regulators following the surge in the share price and volume.

BIMB clarified its 65.2% subsidiary SYARIKAT TAKAFUL MALAYSIA BHD [ ] would not make any announcement of a new equity partner by the end of the month. Interest in the companies perked up last Friday on speculation of the new partner.

NFC Shipping Fund A LLC, which is registered in Marshall Islands, has increased its stake in Hubline to 123.9 million shares or 6.64% pursuant to the  1:2 rights issue of shares and warrants.

In Sino-Hua An International Bhd, Lembaga Tabung Haji upped its stake to 6.5% or 72.938 million shares after the recent acquisition of 5.52 million shares.

Wilmar International Ltd now owns 61.6 million shares or 16.66% in Three-A Resources, after subscribing for the 20 sen shares at 75 sen each via a private placement.

Kumpulan Wang Persaraan has ceased to a substantial shareholder in WCT after disposing of 3.5 million shares, reducing its stake to 4.76% or 37 million shares.

Investors, however, should heed the caution from RAM Ratings. It said despite more upbeat signs of recovery in the credit market, 16% of RAM Ratings issuers are still on negative rating outlook.

It cautioned certain credits remained weak links where corporates – particularly those in the export and property-related sectors – were not completely out of the woods yet.

RAM Ratings said the replenishment of order books may be protracted and the external sector is unlikely to recover to any large extent in the near term because the G3 countries have yet to fully recuperate.

Source: thestar.com.my

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CIMB Group Bhd

(Nov 11, RM13.02)
Outperform at RM12.82: Third-quarter (3Q) net profit of RM726.8 million (+9.6% quarter-on-quarter; +62.3% year-on-year) took nine-month net profit to RM2,003.9 million (+22.7% y-o-y) or accounted for 82.3% and 78.9% of our and consensus net profits respectively. This is due to sustained non-interest income (NIM), growing net interest income and profit from the sale of PT CIMB Sun Life.

3Q profit was a record with strong sequential improvement from both CIMB Niaga and the treasury and investment division. These were supported by stable q-o-q earnings from consumer bank as well as the asset management and insurance divisions. CIMB Thai turned around while contributions from its China associate almost doubled. The only setback was the corporate and investment banking division where earnings were impacted by provision for non-Asean loans.

Overall asset quality has improved slightly (albeit an increase in absolute gross non-performing loans) and if it excludes CIMB Thai, the improvement would have been more apparent. The strong earnings imply that CIMB is on track to meet the higher end of FY09 return on equity (ROE) key performance indicator (KPI) of 14% to 15%.

Forecasts for FY09-FY11 were raised by 9% to 10% to reflect more robust capital market prospects, higher net interest income and lower loan-loss provision (LLP). Consequently, FY09 ROE was raised from 13.8% to 15.1%.
Earnings volatility has declined with more stable and strong growth trajectory given traction from the consumer bank, a significantly lower trading book and excellent asset/liabilities management (protecting NIM against OPR cuts) as well as a very promising outlook for CIMB Niaga, which is already showing strong growth in the early stage of scaling up its regional platform.

CIMB’s fair value has been raised from RM13.50 to RM14.70 following the upward revision in our forecasts, based on unchanged 17 times CY2010 earnings per share (EPS).

With the record 3Q profit, the banking group reiterated that it is on track to meet its FY09 KPIs given that deal flow is strong in 4Q. Although loan growth (11.7% excluding Bank Lippo and CIMB Thai) is ahead of KPI (8%), it expects loan growth in 4Q to slow due to corporate repayments and the negative impact of the 5% real property gains tax (RPGT) and higher interest rate for mortgages. Deposit growth KPI is the only area where it has fallen behind with only 2.1% expansion (excluding Bank Lippo and CIMB Thai), well below the 18% target. However, if it includes the newly launched retail banking in Singapore, the difference would have been significantly lower.

Regional contributions are gaining traction, especially CIMB Niaga whose contributions grew substantially partly due to currency translation gains and sale of legacy bonds (at Bank Lippo). However, excluding the above two items, contributions still expanded despite additional allowances for receivable as well as commitments and contingencies. CIMB Thai has turned around in 3Q and coupled with profit from the sale of an office building, it is expected to contribute a small profit for FY09 rather than breaking even.

Although Singapore is still in the red and likely to remain so, its deposits and loans have grown tremendously since the launch of retail banking. The strategy in Singapore is different from other countries whereby its role is to complement the regional platform that the group is building. As for Bank of Yingkou, it is already contributing positively five months after completing the acquisition.

Future potential non-recurring profits would be part of capital management. These include the sale of an office building by CIMB Thai (to be recognised in 4Q09), sale and leaseback of CIMB Bank branches in 1Q10 and 20 million Sime Darby shares in FY10. All these will release capital and enhance ROE.

The group is expected to obtain approval for corporatising a bad bank that will initially house RM1 billion net legacy loans in 4Q. Post-corporatisation, CIMB Bank’s gross and net NPL ratios would improve significantly or almost halve from 5.2% and 2.2% to 2.8% and 1.3%. – RHB Research, Nov 11

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UEM LAND HOLDINGS BHD by MIDF research

(Nov 12, RM1.69)
Neutral at RM1.69: We revised downwards our earnings estimates for financial year (FY) ending December 2009 by 62% to reflect fewer land sales by the company for the rest of the year and higher expenses which translated into lower profit margins.

We believe the weaker market sentiment played its role in suppressing the attractiveness of the Nusajaya enclave in Johor, while progressive development cost and intense promotional and marketing activities by UEM Land had added downward pressure on its earnings. We maintain our FY10 estimates as we are confident that the developer’s land sales will rebound, helped by the company’s promotional and marketing activities in recent months.

Despite the real estate entity’s lacklustre cumulative earnings for the nine-month period ended September, we believe it will grow, by virtue of its master developer status in Nusajaya as it continues to benefit from the federal government’s support in the form of allocated funds amounting to RM8.2 billion from the stimulus package and the Ninth Malaysia Plan.

It is also worth noting that UEM Land, with its substantial landbank, would benefit from the appreciation in the value of its tracts, and continue to attract foreign investors. We are downgrading our recommendation for shares of UEM Land to neutral from buy with a lower target price of RM1.88 compared to RM2.30 previously. Our latest fair value is derived from a 75% discount to the company’s revised net asset value (RNAV).

The discount is by virtue of high execution risk in relation to the completion of the economic corridor within the stipulated timeframe, and concentration risk of the landbank in a single geographical area.

Looking ahead, we believe there is limited upside in the near term for the stock. This is because shares of the company had more than doubled so far this year and any pullback in the price would offer an opportunity to accumulate at lower levels. However, UEM Land remains an attractive growth story over the longer term. — MIDF Research, Nov 12

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