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Saturday, September 29, 2012

Masteel bullish about growth

Source: http://biz.thestar.com.my/news/story.asp?file=/2012/9/29/business/12082558&sec=business


DATUK Seri Tai Hean Leng is looking forward to the next two years, as he is optimistic that Malaysia Steel Works (KL) Bhd (Masteel) will hit RM1.7bil to RM1.8bil in annual revenue after the group's second rolling mill becomes operational by end-2013 or early 2014.
Tai, who is Masteel's managing director and chief executive officer, says the new RM100mil rolling mill in Klang with an annual production capacity of 200,000 tonnes, should increase the group's annual revenue by around RM450mil.
The integrated long steel manufacturer achieved record revenue of RM1.25bil last year after posting RM1bil in 2010.
Masteel manufactures and markets prime steel billets as well as high tensile and mild steel bars for property and infrastructure development.
Tai had told StarBiz recently that Masteel is optimistic about achieving a third straight year of record revenue in 2012 due to anticipated higher sales of long steel products in the regional and domestic markets, from construction and infrastructure spending.
He also noted that in June, Masteel had sealed a RM500mil offtake agreement with Switzerland-based Trafigura Pte Ltd, the world's second-largest bulk commodity trader for a three-year supply of 270,000 tonnes of steel billets and steel bars.
Masteel would be one of the major steel product suppliers to Trafigura's Asia-Pacific clients, with the first batch of supply to commence in the second half of this year.
For the first half of this year, the group's revenue increased 11% year-on-year to RM684mil although it posted a 34.9% drop in net profit to RM14.1mil, as the group had suffered red ink of RM4.88mil in the first quarter mainly due to lower selling prices.
However, for its second quarter ended June 30, Masteel had posted a 22.7% year-on-year jump in net profit to RM19mil, while revenue increased 1.8% to RM344.1mil, mainly due to higher steel product prices and increased activity in the construction industry.
“As you can see, our revenue is going up. We are on track to reach our target,” says Tai.
It should be noted that last year, the group posted a lower net profit of RM24.5mil compared with RM28.1mil in 2010, and in Masteel's annual report 2011, Tai had pointed out that declining margins due to external economic headwinds had impacted the group's profitability although steel demand continued to be positive as a result of increased construction and manufacturing activities in the region.
In 2009, the group had posted a net loss of RM8.09mil, on the back of revenue of RM687.3mil and the weaker financial performance was attributed to the poor demand and low margin of steel products during the first half of 2009 as a result of the global financial crisis.
“Concerning earnings, we have recovered quite well from the tough year of 2009. We are confident, barring unforeseen circumstances, to continue to perform well,” says Tai.
Tai says in the next four to five years, construction activities in the Klang Valley will be very intensive as a result of strong demand in the property sector and major infrastructure projects such as the Klang Valley My Rapid Transit (MRT), light rail transit (LRT) extension, new low-cost carrier terminal KLIA2, 1Malaysia People's Housing scheme (PR1MA) and the Tun Razak Exchange.
“We are poised to enjoy the benefits of all these initiatives by the Government. With our plants in Petaling Jaya and Klang, we are in good stead to be one of the key suppliers of steel bars for the major projects.”
Tai pointed out that Masteel is in the process of tendering to supply toUEM Group Bhd which is a contractor for the Sungai Buloh-Kajang MRT line.
“We get a lot of business because we are located in the Klang Valley, when compared with steel mills in Penang or Kuantan. Our delivery is very quick. We get the order in the morning, and in the afternoon, the steel bars are at the construction site.”
Regarding the regional front, Tai said the demand for long steel products in Asean was still strong as there were many infrastructure investments.
“Also, China is trying to pump prime its economy while the United States economy is expected to be cushioned by the third round of quantitative easing or QE3,” he said.
The group exports 20% to 30% of its products to Australia, Indonesia, Sri Lanka, Singapore, New Zealand, Fiji, Vietnam, the Philippines, Thailand, Bangladesh and Myanmar.
The group presently exports about 150,000 tonnes of billets annually to countries such as Thailand, Myanmar and Sri Lanka while about 35,000 tonnes of steel bars are sold to countries like Australia and New Zealand.
Another 50,000 tonnes of billets are sold annually to local rolling mills.
Masteel is known as one of the top five integrated steel mills in Malaysia for long steel products.
“We have the certifications needed such as Australia Certification Authority for Reinforcing Steels Ltd (ACRS) standards.
Not many steel mills have this certification for the Australian market. So, we have been exporting steel bars to Australia for the last three years.”
Increasing production
Presently, the group has a meltshop in Bukit Raja, Klang which produces billets that are the feedstock for the rolling mill in Petaling Jaya.
The group's meltshop in Bukit Raja, Klang would have a 10% increase in annual capacity by end-2012 to 600,000 tonnes from 550,000 tonnes presently.
Tai said this would be further increased to 650,000 tonnes by end-2013.
When the new rolling mill in Klang becomes operational by end-2013 or early 2014, the group total annual production capacity of steel bars would be increased to 550,000 tonnes, from 350,000 tonnes presently.
Last year, the group had announced a three-year capital expenditure plan amounting to RM230mil to grow and upgrade its production capacity.
“In the last three years, we have increased the production capacity of the meltshop from 450,000 tonnes to almost 600,000 tonnes presently. This is a result of our annual capital expenditure,” he said.
Tai pointed out that the bulk of the group's capital expenditure was from internal funds.
“Our gearing is 0.5 times. The RM100mil second rolling mill is funded with the mix of bank loan and internal funds.”
Tai said the second rolling mill was needed for the group to grow its earnings.
“Billets are lower priced. When you convert them into finished steel bars, the uplift is about 35% higher in terms of selling price.”
Tai also said the group's challenge lies in growing its production capacity.
“Our utilisation is very high - about 90% for the meltshop, and 85% for the rolling mill. We are near maximum utilisation.”
He also noted that there was plenty of room for the group to grow as in terms of steel mill scale, Masteel was considered as a medium-sized one.
“An international steel mill would have one to two million tonnes of production capacity.”
Tai also pointed out that Masteel uses scrap metal as feedstock, and thus, suffered minimal impact from price fluctuations for iron ore in the past year.
“The price fluctuations for scrap is not as erractic or extreme as iron ore, which has dropped by 40% in the past one year, from US$167 to the US$100 per tonne level nowadays. For scrap, the price drop in the past one year is about 17%, from US$445 to the US$370 per tonne level nowadays.”
Tai also pointed out that Masteel was not affected by the issue of cheaper imports affecting producers of flat steel products in Malaysia.
Flat steel products are used for shipbuilding and in the manufacture of containers, gas cylinders, pipes, cars, machinery parts and consumer durables.
“That is a big difference. We are doing steel bars and focussing on infrastructure.”
Regarding mergers and acquisitions, Tai said the group prefers organic growth but is open to options provided there is a strategic fit.
Public transport venture
In January 2011, Masteel had announced that the group and KUB Malaysia Bhd will jointly bid for the 100km inter-city rail transit network project in Iskandar Malaysia, with connection to the MRT (Mass Rapid Transit) line in Singapore.
A joint-venture company, namely Metropolitan Commuter Network Sdn Bhd, was set up and its 60% owned by Masteel and the rest by KUB.
The joint venture is to build and operate the rail transit system, estimated to cost over RM1bil and consist of up to 25 commuter stations in major towns in Iskandar Malaysia.
The operation of the inter-city rail transit will be based on a 25-year concession.
The project is to be undertaken in three phases and expected to be completed within 24 months from project's commencement.
News reports have said more than 25 million commuters a year are expected to use the proposed rail transit system, excluding cross-border passengers if the system is connected to the MRT line in Singapore.
Concerning the status of the proposed project, Tai said he hoped a working paper can be completed and submitted to the Government before end-2012.
The Johor state government and Iskandar Regional Development Authority (IRDA) have given their approval for the project.
“Now we are co-ordinating with agencies and ministries such as the transport and finance ministries and the Land Public Transport Commission to finalise the working paper.”
In his statement in the company's annual report 2011, Tai had said Masteel is also seeking to augment its core business with ventures that would yield higher returns and are less cyclical in nature, such as the proposed rail transit system.
Tai told StarBizWeek that the proposed rail transit system project would enable Masteel to leverage on its core competencies.
“We have a 40-year history, and we have spent this time perfecting our core competencies. One is the production and supply of steel bars for infrastructure. Another is our heavy engineering know-how. When you operate trains, which are mechanical equipment this is well within our capacity. We are operating plants that are worth close to RM500mil in investments. The steel plants are far more complex, as the high temperature environment are harsh and have high wear and tear.”
Tai said there was potential to develop public transport infrastructure in foreign countries in the future, if “we do well with this.”
“The possibility to expand overseas is always there. For example, if there is an opportunity in Vietnam or Indonesia to build or operate urban public transport, and we have the track record to replicate that kind of business overseas, and if the returns are reasonable...”
Tai pointed out that the group can also look at other opportunities that are a good fit to its core competencies.
“However, these opportunities need to have high barriers to entry.”
Tai cited the property development as an example of a sector with a lot of players, and one that does not really have high barriers to entry.
“People always ask me - You can produce steel bars; why don't you go and buy a piece of land and develop condominiums?”
Tai also said venturing into property development would mean going against the group's internal ethics.
“We never want to compete with our own customers. We have to grow with our customers.”

Thursday, September 27, 2012

DMG starts Ausgroup At Buy, Target $0.755

Source: http://www.theedgesingapore.com/the-daily-edge/business/40125-dmg-starts-ausgroup-at-buy-target-0755.html


DMG & Partners initiates AusGroup at Buy with $0.755 target.

“AusGroup has effected a turnaround that has gone unnoticed by the market,” it says, estimating it trades at 6.6x historical and 4.9x forward P/Es. DMG forecasts 29% net profit CAGR for the next three years, noting fiscal-FY12 net profit of A$23.3 million ($29.8 million) was its highest ever.
“With a strong earnings growth profile, AusGroup joins our top picks with a high potential to double in two years.” DMG notes its forecasts are based on conservative FY13-15 net margin estimates of 4.3%-5.2%, compared with AusGroup’s price target increase to 6%-7%; it notes net margins have improved over the last four quarters. It says the industry backdrop is strong, with a record A$261 billion committed to capex for 98 major mineral and energy projects between 2012-2016, with another A$243 billion in uncommitted capex for 295 potential projects.

It notes its target price is based on 9X FY13 EPS, undemanding compared with Civmec’s 19x P/E. “We expect both the earnings growth and multiples re-rating to drive a massive share price outperformance.” The stock is up 20.7% at $0.495.

DMG starts AusGroup with ‘buy’ rating

Source: http://www.theedgesingapore.com/the-daily-edge/business/40153-dmg-starts-ausgroup-with-buy-rating.html


DMG & Partners initiated coverage of AusGroup, which provides services to the mining and oil and gas industries, with a ‘buy’ rating and a target price of $0.755, citing a positive industry outlook.

By 10:10 a.m., AusGroup shares were up 2% at $0.505, and have surged 60% since the start of the year, compared to the FTSE ST Industrials Index's 20.5% rise.
A record A$261 billion ($333 billion) has been committed towards capital expenditure in 98 major minerals and energy projects between 2012 and 2016 in Australia, DMG said, which will benefit AusGroup.

The brokerage expects AusGroup to see net profit growth of 29% on an average a year over the next three years, helped by improving net margins.

The company also said it was planning to spin off its operating subsidiaries in a listed entity on the Australian Securities Exchange.

“If this plan goes through, AusGroup shareholders stand to gain as the industry average forward price-to-earnings on the ASX is 10 times versus AusGroup’s 5.4 times today,” said DMG.

CIMB raises target price on Ezion

Source: http://www.theedgesingapore.com/the-daily-edge/business/40154-cimb-raises-target-price-on-ezion-.html


CIMB Research raised its target price on Ezion Holdings, an offshore services firm, to $1.65 from $1.19 and kept its ’outperform’ rating, citing strong contract wins.

At 11:39 a.m., Ezion shares were up 3.1% at $1.33 in a broader market that was down 0.7%. Its shares have more than doubled since the start of the year, compared with the FTSE ST Oil & Gas Index’s 29.5% rise.
Ezion said on Tuesday it secured a charter contract worth about US$201 million ($247 million) and a letter of intent valued up to US$82.1 million to provide two service rigs to a national oil company based in Southeast Asia.

CIMB said Ezion has secured 12 contracts worth over $1 billion in 10 months, underscoring its growing traction with Southeast Asian national oil companies.

The brokerage also likes Ezion for its growing track record and its management’s networking in Australia and Denmark, and resourcefulness in securing funding.

Muhibbah, unit in deals to sell vessels

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/20120927011628/Article/

KUALA LUMPUR: Muhibbah Engineering (M) Bhd and its subsidiary, CB International Engineering Sdn Bhd, have collectively secured contracts for the sale of two units of anchor handling tug supply vessels. The vessels were completed last year for about RM240.6 million, it told Bursa Malaysia in a filing yesterday. 

The company said the contracts are expected to contribute positively to the earnings and net assets of the group for the current financial year. “The contracts do not have any impact on the share capital and shareholding structure of Muhibbah,” it said.

Read more: Muhibbah, unit in deals to sell vessels http://www.btimes.com.my/Current_News/BTIMES/articles/20120927011628/Article/#ixzz27cuTqIVg

Wednesday, September 26, 2012

Wilmar up 1.3% to $3.23; Sets JV with Kellogg

Source: http://www.theedgesingapore.com/the-daily-edge/business/40111-wilmar-up-13-to-323-sets-jv-with-kellogg.html


Wilmar is up 1.3% to $3.23 after it said it set up a 50:50 joint venture with Kellogg to make, sell and distribute cereal and snacks in China.

Wilmar will contribute its China infrastructure, supply chain and distribution network, while Kellogg brings a portfolio of globally recognised brands and products.
How important the deal will be to Wilmar is “anybody’s guess,” says Carey Wong, an analyst at OCBC. “No mention of numbers, no mention of when it’s going to start,” he notes. But he adds, “that could provide some way for them to monetise their extensive distribution network, but the impact is still unknown.”

He notes the press release said the China snack food market will hit US$12 billion ($14.7 billion) by end-year, “but it doesn’t look like Kellogg is in China in a big way yet.” He adds, “definitely, it’s a pretty competitive market.”

However, Wilmar may face headwinds to any positive sentiment after the JV announcement due to a market downdraft and concerns over CPO prices.

Ezion wins contract and letter of intent to provide 2 service rigs

Source: http://www.theedgesingapore.com/the-daily-edge/business/40112-ezion-wins-contract-and-letter-of-intent-to-provide-2-service-rigs.html


Ezion Holdings said it has secured a charter contract and a letter of intent to provide two service rigs for one customer.

The first contract with a value of US$201 million ($247 million) is to provide a service rig over a five-year period to a Southeast Asian based national oil company to support its oil & gas activities in the Caspian Sea.
The service rig is expected to be deployed and working in the fields of Garagel-Deniz (Gubkin), Deyarbekir (Barinov) and Magtymguly (East Livanov) by the 4th quarter of 2013 after its refurbishment and upgrading.

Ezion said it also received a letter of intent with a value of up to US$82.1 million over a five-year period to provide another service rig to support the oil & gas activities of the same oil company. The service rig is expected to be deployed and working by 4Q 2014.

The projects will be funded through internal resources as well as bank borrowings.

CPO prices to recover by year-end: CIMB

Source: http://www.theedgesingapore.com/the-daily-edge/business/40126-cpo-prices-to-recover-by-year-end-cimb.html


CPO futures’ sharp drop is a negative surprise, CIMB says. “We had expected support for CPO price given its current attractive discount to soybean oil.”

The decline may be partly on soybean oil’s and crude oil’s recent weakness, but a big part may be on speculative CPO selling on concerns over sustained weak demand on weaker global growth, higher oilseed-crushing activities and lower biodiesel demand, leading to inventories’ sharp build-up, it says.
Market players may be taking cues from downbeat views at a conference, with speakers predicting a 4Q12 CPO price fall to MYR2,600/ton ($1,040/ton), with the most bearish tipping prices as low as MYR2,285/ton, it notes. But CIMB expects Malaysian palm-oil inventories will peak in October, with demand picking up by year-end and CPO prices to recover to around MYR2,800-MYR3,000/ton by year-end.

CIMB currently expects 2012-2013 CPO prices to average MYR3,130/ton and MYR3,160/ton respectively; it estimates every MYR100/ton price change could spur a 5%-6% earnings downgrade for pure planters under coverage, although it notes Indonesian planters are partially shielded by lower export-tax rates. It continues to recommend Sime DarbyIndofood Agri and Astra Agro.

Tuesday, September 25, 2012

重赏之下必有举报者•蒂姆·哈福德

Source: http://www.nanyang.com/node/479245?tid=462


“美国国税局(IRS)对瑞银(UBS)一位前银行家奖励1.04亿美元,以表彰其揭发一项逃税计划。该计划导致美国政府损失数十亿美元的税收,最终引发针对瑞士各银行和高管的刑事指控。”
———英国《金融时报》9月12日报道这是“毒蜘蛛”?
对,这就是“毒蜘蛛”。
“毒蜘蛛”这个名字是谁起的?
是这样,5年前,一个名叫布拉德利波肯菲尔德(BradleyBirkenfeld)的老兄致电英国《金融时报》,开场白是:“我叫毒蜘蛛。这不是真名。”
说真的,他有没有确认自己的真名不是“提线木偶”、“疯人”或者“吹牛大王”?
如果你知道此人如今坐拥1.04亿美元,肯定会感到愤愤不平。
对于一个曾因帮助亿万富翁逃税而入狱、刚刚被放出来的人来说,这算是不小的一笔财富。不过,这笔钱其实是美国当局给他的奖金,用于奖励他揭发前雇主瑞银(UBS)协助美国公民利用瑞士银行账户逃税的不法行为。
很好———不过奖励他1亿多美元,是不是傻了点?
这个问题很有意思。你可以把这个问题分解为两部分。第一,我们是否需要举报者?
第二,举报者是否需要拿到相当于中头彩的那么多钱才会举报?
监管机构失职
举报似乎有些过时了。发现不当行为难道不应该是审计机构和监管机构的职责吗?
亚历山大戴克(Alexander Dyck)、阿代尔莫尔斯(AdairMorse)和路易吉津加莱斯(Luigi Zingales)对此进行了一项研究。
他们研究了200多起公司欺诈案件(不过这些公司是骗投资者的钱,而非逃税),并调查案件最初是如何东窗事发的。
发现此类案情是审计机构和金融监管机构的职责,但他们很少履行这一职责。欺诈行为直接损害受害者公司股东和债券持有者的利益,但这些人发现案情的例子也并不多见。
事实上,许多欺诈案是实施欺诈的公司的员工发现的。这合情合理:监管和审计机构只能看到经过精心美化的报表,而员工是真正干活的,欺诈行为的蛛丝马迹逃不过他们的眼睛。
医疗业举报奖金最高
发现欺诈行为的途径不是唯一的,但举报是其中非常重要的一条。
但我们用得着出这么高的奖金吗?
迪克教授及其同事也研究了这个问题。到他们研究这个问题时为止,美国政府针对医疗行业的举报提供的奖金是最高的,因为这是其最有可能受骗的领域。
根据所谓的“公私共分罚款”(qui tam)规则,举报者可从政府追回的资金中分得不错的一份。
研究发现,医疗行业里的欺诈行为被举报的可能性比其他领域高出三倍。考虑到在“公司共分罚款”案件中,举报成功者平均能获得近5000万美元的奖励,这个结果并不令人意外。
为何必须高额悬赏?
也许有更便宜的方式可以鼓励人们举报,但举报显然是一项有风险的活动。很多自称干过这事的人都为此吃过苦头。
什么样的苦头呢?
波肯菲尔德自称人身安全没有保障,也蹲过监狱。哈利法克斯苏格兰银行(HBOS)风险经理保罗摩尔(PaulMoore)被炒了鱿鱼。
揭发葛兰素史克(GlaxoSmithKline)生产问题的谢里尔埃卡德(Cheryl Eckard)丢了工作。
20世纪70年代,分析师雷德克斯(RayDirks)揭发了美国公平基金公司(EquityFunding)的欺诈行为,而美国证监会(SEC)指责其传播内幕信息。
动机不纯 举报前都会衡量
戴维斯-贝斯(Davis-Besse)核电站反应堆发生严重腐蚀事故时,安德鲁谢马什科(Andrew Siemazko)正在该核电站任工程师。
有人为谢马什科辩护,称其曾试图举报核电站存在安全问题,但却被美国核管理委员会(US Nuclear RegulatoryCommission)判为说谎。
但这些故事总是有两个版本,不是吗?我的意思是,举报者是因为举报而丢掉工作,还是因为丢掉工作而决定举报?
的确,许多举报者动机不纯。有些是心怀怨气,有些则是试图戴罪立功,减轻处罚。
但无论每个案件的真实情况如何,举报者在决定举报之前都可能会衡量举报值不值得,这是人之常情。
1亿美元的奖励很有可能促使他们决定举报。
或许会有很多人愿意无偿举报。
希望渺茫:《多德-弗兰克法案》(Dodd-Frank Act)出台后,今后举报金融机构应该需要更高的奖金。这看上去是合理的。
每当我们面对的是复杂、变化多端的体系,鼓励人们对未来的麻烦发出预警就变得非常重要———而这就意味着要重赏举报者。
文:蒂姆·哈福德 (《金融时报》 专栏作家) 

Singapore O&M plays are choice picks for QE3: UOB-KH

Source: http://www.theedgesingapore.com/the-daily-edge/business/40096-singapore-oam-plays-are-choice-picks-for-qe3-uob-kh.html


Singapore’s offshore & marine segment is a choice sector to play QE3, UOB KayHian says, expecting the liquidity impact will be sector-wide as O&M plays are typically high-beta and move together. It adds, O&M stocks were among the best performers in both QE1 and QE2.

It believes small-caps are equally attractive as large-cap shipyards Keppel and SembMarine this time around, even though they underperformed during QE2 amid a sector-wide derating on fleet overcapacity and cash-strapped balance sheets.
During QE2, the oil-service segment was at a higher valuation than currently, trading at 1.7x P/B at the early-2010 derating’s start, it notes; the segment now trades at a relatively low 1.0x 2012 P/B, a 44% discount to its 1.8X long-term mean P/B, it says.

“The segment is at the tail-end of fleet overcapacity and balance-sheet woes. We believe the segment is on the cusp of a new OSV upcycle with vessel charter rates at the nascent stage of recovery.” Its top picks remain Keppel, Nam Cheong, Ezion and Kreuz.

Keppel is down 0.2% at $11.43, Nam Cheong is up 2.4% at $0.2150, Ezion is down 1.2% at $1.2650 and Kreuz is flat at $0.37.

Thai Beverage +5.2%; stock is cheap: CIMB

Source: http://www.theedgesingapore.com/the-daily-edge/business/40101-thai-beverage-52-stock-is-cheap-cimb.html

Thai Beverage s up 5.2% at $0.405 in strong volume of more than 7% of the shares changing hands on the SGX.

The key share price driver isn’t F&N’s announcement it will proceed with the capital reduction vote at its upcoming EGM and that TCC Assets would not be required to increase its bid to take the proposed capital reduction into account, says Kenneth Ng, an analyst at CIMB.

“We’ve been highlighting it’s cheap,” he says, noting he has a target price of $0.60. F&N is down 0.6% at $8.89, just a hair above the Thai group’s $8.88/share bid for the company. In its announcement, F&N noted it would delay implementing the proposed capital-reduction, if approved at the EGM, until after the resolution of the Thai group’s offer as shareholders accepting the Thai bid prior to the capital reduction would receive a higher payment.

Palm-oil plays mostly lower; Inventory concerns

Source: http://www.theedgesingapore.com/the-daily-edge/business/40100-palm-oil-plays-mostly-lower-inventory-concerns.html


Singapore-listed CPO plays are mostly lower, likely at least partly due to the broader market downdraft, rather than reacting to news over the weekend that Dinesh Shahra, managing director of India’s largest palm-oil refiner, Ruchi Soya Industries, expects rising inventories among major producers will weigh on CPO prices; he estimated producing countries’ palm oil stocks at 4.5 million tons.
A leading industry analyst also said over the weekend Malaysian palm-oil stockpiles could rise to three million tons by early January amid softer-than-expected demand; Malaysia is the world’s second-largest CPO producer after Indonesia.

“We’re seeing a little bit of pressure on CPO companies,” says OCBC analyst Carey Wong, but he adds “we don’t (expect) very big downward revisions in estimates,” unless the market has been pricing in very bullish CPO price forecasts.

“The market will probably just be a little more realistic,” he says; “there’s hope that with the high soybean prices, CPO prices could get a little bit of support, but it doesn’t look to be holding very well.”

Among CPO plays, First Resources is down 0.5% at $2.13, Indofood Agri is off 1.1% at $1.375 and Golden Agri is down 1.5% at $0.66.

Masteel hat-trick?

Source: http://biz.thestar.com.my/news/story.asp?file=/2012/9/25/business/12076116&sec=business


PETALING JAYA: Malaysia Steel Works (KL) Bhd (Masteel) is optimistic about achieving a third straight year of record revenue in 2012 due to anticipated higher sales of long steel products in the regional and domestic markets
The integrated long steel manufacturer achieved record revenue of RM1.25bil last year after posting RM1bil in 2010.
Masteel manufactures and markets high tensile and mild steel bars as well as prime steel billets for infrastructure development.
Masteel managing director and chief executive officer Datuk Seri Tai Hean Leng told StarBiz that the demand for long steel products would be driven by the property sector and major infrastructure projects such as the Klang Valley My Rapid Transit (MRT), new low-cost carrier terminal KLIA2, 1Malaysia People's Housing and the Tun Razak Exchange.
“We are in the process of tendering to supply to UEM Group Bhd which is a contractor for the Sungai Buloh-Kajang MRT line.
“We are poised to enjoy the benefits of all these initiatives by the Government.”
Tai also cited a recent StarBiz report that quoted Construction Industry Development Board chief executive Datuk Seri Judin Abdul Karim as saying that he expected the construction industry to experience a year-on-year growth of at least 20% this year compared with an expansion of 19% in the first half.
Tai also noted that on the regional front, the demand for long steel products in Asean was still strong as there were many infrastructure investments.
“Also, China is trying to pump prime its economy while the United States economy is expected to be cushioned by the third round of quantitative easing or QE3,” he said.
The group exports 20% to 30% of its products to Australia, Indonesia, Sri Lanka, Singapore, New Zealand, Fiji, Vietnam, the Philippines, Thailand, Bangladesh and Myanmar.
Tai said the group was increasing its production capacity to meet the anticipated demand.
The group's meltshop in Bukit Rajah, Klang would have a 10% increase in annual capacity by end-2012 to 600,000 tonnes from 550,000 tonnes presently.
Tai said this would be further increased to 650,000 tonnes by end-2013.
A new rolling mill in Klang, with an annual production capacity of 200,000 tonnes is expected to be operational by early 2014.
This would bring the group's total annual production capacity of steel bars to 550,000 tonnes.
Last year, the group had announced a three-year capital expenditure plan amounting to RM230mil to grow and upgrade its production capacity.
“This is why we want to put up our new steel mill quickly.
“We believe that in the next four to five years, construction activities in the Klang Valley will be very intensive.”
For its second quarter ended June 30, Masteel had posted a 22.7% year-on-year jump in net profit to RM19mil, while revenue increased 1.8% to RM344.1mil, mainly due to higher steel product prices and increased activity in the construction industry.
For the first half of this year, the group posted a 34.9% year-on-year drop in net profit to RM14.1mil although revenue increased 11% to RM684mil as the group had suffered red ink of RM4.88mil in the first quarter mainly due to lower selling prices.

Saturday, September 22, 2012

KSH jumps to 32-month high, OCBC upgrades

Source: http://www.theedgesingapore.com/the-daily-edge/business/40067-ksh-jumps-to-32-month-high-ocbc-upgrades-.html


Shares of KSH Holdings jumped as much as 8.2% to a 32-month high, after OCBC Investment Research upgraded it to ‘buy’ and ‘hold’, citing a resilient construction order book and better-than-expected execution for its real estate business.

By 9:58 a.m., KSH shares were up 6% at $0.26. The shares have jumped 36% since the start of the year, compared to the FTSE ST Fledgling Index’s 18.6% rise.
The brokerage also raised KSH’s target price to $0.50 from $0.26 and said it expects KSH’s earnings to surge 68% in the year ending March and 73% the year after, helped by a rapid pickup in sales at a condominium in Singapore. 

OCBC expects KSH to see a re-rating as it transitions from a cash rich construction contractor to a property developer with more active capital management.

Downside to KSH’s shares is also limited, with management actively buying back shares at near current levels, OCBC said, adding that it expects the stock to payout a dividend yield of about 6.1%.

Vitrox focuses on R&D

Source: http://biz.thestar.com.my/news/story.asp?file=/2012/9/22/business/11928859&sec=business


VITROX Corp Bhd is spending more on research and development (R&D) compared with a year ago to strengthen its global position as one of the world's leading automated vision inspection equipment manufacturers.
Vitrox chief executive officer Chu Jenn Weng says in an interview withStarBizWeek that the group has spent about RM6mil, or 19% of its revenue, for the first six months of 2012 on faster speed three-dimensional advanced X-ray inspection (AXI), which is an advanced optical-inspection equipment.
For the first six months of 2012, the group generated RM9.3mil in pre-tax profit on the back of RM31.4mil in revenue, compared with RM15.3mil pre-tax profit and RM48.7mil revenue in the previous corresponding period.
Last year, the group spent RM10.5mil, or 13% of its revenue, on R&D activities.
”We will be spending more in the second half on R&D to enhance our competitive edge in the global market with new products,” he adds.
Vitrox is currently one of the top three manufacturers of the 3-dimensional AXI inspection machine with an integrated conveyor system for checking printed circuit board assembly (PCBA) products used in the telecommunication infrastructure, military and consumer electronics sectors.
“To maintain our competitive edge and positioning, we have to constantly produce high quality equipment and solutions.
“The machines developed must also be upgradable at a cost,” he says.
Chu says there are five prominent players in the world today manufacturing 3D AXI inspection machine with an integrated conveyor system and are located in Germany, the United States, Japan and Taiwan.
“In this competitive environment, it means being able to develop and produce new models in six to 12 months as the technology in the consumer and telecoms world changes rapidly,” he says.
As of June 30, Vitrox has RM43mil cash for new product development, manufacturing and operational expansion activities.
The new AXI equipment, currently being developed to be 15% to 20% faster than the existing range, generates 3D images to check hidden solder-joint defects of PCBA products, Chu says.
Chu adds that the group is also developing the next generation of 3D advanced optical inspection (AOI) equipment.
“The new equipment under development will be able to generate full 3D view of the components measuring 0.4mm (length) and 0.2mm (width) and solder joints on PCBA products for inspection.
“Current AOI equipment can generate 2D images.
“The new AOI equipment, scheduled for release later this year, will also be 15%-20% faster,” he says.
Chu says both the AXI and AOI equipment segment contributes about 60% of the group's revenue.
“For our machine vision system (MVS) business, we have just introduced our new vision inspection system, which has tape and reel features that provide more output options for semiconductor packaging purposes,” he says.
The MVS, generating about 30% to the group's revenue, is used for checking cracks and cosmetic and mechanical defects in semiconductor's back-end packaging of components.
The remaining 10% of the group's business is contributed by its electronic communication system (ECS) division.
Seven patents
The ECS division produces high-speed digital X-ray cameras, high-speed digital interface cards, and high-speed motion controllers for image acquisition, data communication and motion control.
In 2011, Vitrox obtained one patent and filed three new patents for its AOI, AXI, and MVS products.
“To date, we have obtained seven patents and are working on more than 17 new technology researches that can potentially be converted into patents in the next one to two years,” Chu says.
Vitrox expects 2012 to be a flat year, compared to 2011, due to the global economic crisis.
“The first quarter 2012 was bad for everyone in the semiconductor industry. The second quarter saw a strong pickup, but the momentum slowed down in the third quarter, which will likely to be flat compared with last year's corresponding period.
“We can't see into the fourth quarter yet, but it is expected to be a flat quarter too against last year's final quarter,” he says.
Chu says the fourth quarter normally can be relied upon to generate sales, but with the global slowdown, orders might come in the last minute and with a short delivery lead time. That means a shorter time to produce the equipment and to deliver.
“The last-minute orders usually come four to six weeks before Christmas,” he says.
Due to the global economic crisis and pressure from competition, pricing power may erode in the near future, Chu adds.
The international pricing of AOI and AXI equipment is between US$70,000 and US$490,000.
The group's new markets for 2012 comes from North and South America.
“The traditional markets from Asia are stagnant this year, in particular the China market,” he says.
The telecom infrastructure market segment is a key driver for the group's business.
“The implementation of 4G telecom infrastructure worldwide is driving the consumption of telecom devices and support solutions.
“Smart phones and tablets are driving the growth of the semiconductor industry, while the PC segment is slowing down,” he says

Thursday, September 20, 2012

Coastal Contracts secure RM111m in vessel orders

Source: http://my.news.yahoo.com/coastal-contracts-secure-rm111m-vessel-orders-102821928--sector.html

KUALA LUMPUR (Sept 20): Coastal Contracts Bhd has secured contracts for the sale of two Anchor Handling Tug Supply (AHTS) units and one Subsea Support Vessel (SSV) unit worth approximately RM111 million. 

The contracts were collectively secured by the group's wholly-owned subsidiaries Coastal Offshore (Labuan) Pte Ltd and Thaumas Marine Ltd, and will be sold to customers in Indonesia and United Arab Emirates.

"This is Coastal Group's third major vessel sales win in relatively quick succession, following our previous major win of RM141 million announced last month. This is an encouraging milestone to accelerate our orderbook momentum after a setback in the early part of this year," said Ng Chin Heng, executive chairman for the Coastal Group.

The three vessels are expected to be delivered in 2012 and 2013, and the group expects the vessel contracts to start contributing to its top and bottom line performance for the financial years ending Dec 31, 2012 and 2013.

According to a press release from the group on Thursday, Coastal currently has RM743 million worth of vessel orders awaiting delivery to customers up to 2013.

2產業計劃2013年推介‧華陽財測微修

Source: http://biz.sinchew-i.com/node/65312


(吉隆坡19日訊)隨政府可能在即將來臨的預算案宣佈數措施以支援首次購屋者,以中低價產業為重心的華陽(HUAYANG,5062,主板產業組)有望從中受惠,惟因兩大產業計劃需至明年才推介,達證券略下修未來兩年的淨利預測。
達證券表示,由於華陽旗下的產業價格介於10萬至30萬令吉,加上客戶中高達70%為首次購屋者,若政府為首次購屋者提供更多津貼,相信華陽的產業需求將走高。
華陽首季攫獲的新銷量達8千400萬令吉,城鎮發展計劃是銷售主力。達證券估計,該公司最近推介的Flexis將貢獻次季銷量約1億令吉,柔佛和怡保的住宅城鎮計劃的反應也料不俗。
不過,該公司總值1億6千萬令吉沙亞南的服務公寓計劃推介因相關批准展延,需延至2013年1月才推介,而值1億6千萬令吉的Desa Pandan產業計劃月料在明年1月才面市。
達證券基於這兩項計劃貢獻2013財政年推介約40%,下調2013財政年銷售預測,自5億9千萬令吉降低到5億3千萬令吉。
在4億7千600萬令吉的未進賬銷售支撐下,達證券保持2013財政年淨利預測7千160萬令吉,但下調2014和2015財政年盈利預測1至6%,以反映新銷售走低。
未進賬總值將增至32億
達證券也估計該公司今年的額外貸款能力介於1億2千萬至1億4千萬令吉,相信該公司能夠收購發展總值達10億令吉的地段,一旦計劃實現,該公司目前未進賬的產業發展總值也將增加45%到32億令吉。
另外,該公司股價在過去1個月落後大市,達證券相信,這是因為投資者隨該公司派息後套利,加上預算案令投資者保持觀望。
達證券表示,以基本面言,華陽的淨利成長雙位數、週息率超過8%,惟估值只有2013年每股盈利的本益比3.5倍,頗具吸引力,因此保持“買進"評級,目標價為2令吉63仙。

新加坡上市完成‧成功多多派息企穩95%

Source: http://biz.sinchew-i.com/node/65313


(吉隆坡19日訊)成功多多(BJTOTO,1562,主板貿服組)首季淨利揚升20.18%至1億1千零68萬7千令吉,符合市場預期。
雖然該公司僅派發6仙中期股息,相等於77.6%派息率,低於全年80至87%預估,惟分析員相信在完成了在新加坡的上市活動後,接下來派息額將向上正常化,派息率可企穩在85至95%。
次季市佔率按年上升1%
黃氏唯高達研究認為,該公司未來季獨將展現更強穩表現,2012年次季市佔率也按年上升1%至40%,領先馬化控股(MPHB,3859,主板貿服組)旗下萬能(Magnum)的35%。
馬銀行研究則指出,另一競爭對手大馬彩(PMP)早前推出的全新6D積寶測字遊戲,未顯著侵蝕成功多多的市佔率。
隨經濟取得成長,興業研究相信成功多多仍呈營業額成長空間,特別是來自4D積寶遊戲,不過也不排除增長幅度將放緩,歸咎於地下廠可提供各種積寶遊戲,包括4D、5D及6D。
該股今日僅窄幅游移,終場報4令吉41仙,揚2仙。
全年25仙派息額仍可期
聯昌研究認為該公司首季派息額較低,主要是受到現金流走勢影響,不影響全年25仙派息額,而且預計會在6個月內派發45仙特別股息。
“成功多多將成為現有及未來博彩營運的控股公司,且會維持高息政策。"
配合以商托方式在新加坡展開的掛牌活動,成功多多須釋放該商托的20.5%股權,這將導致其盈利下滑28.7%,惟此企業活動料會帶來11億令吉現金。
僑豐研究指出,該公司釋放的龐大現金,可透過積極的資本管理方式推升股本回酬,包括派發特別股息或近100%派息率。
“目前其股價獲6.2%淨週息率支撐,若以100%派息率計,淨週息率有望增長至7.3%。"
雖然獅城上市計劃有望帶來約50仙特別股息,但興業卻認為此利好已反映在成功多多當前的股價走勢中;以每股0.50新元發售價計,若將商托的10%股權回退予股東,這將相等於4令吉39仙。"另外,聯昌提到,儘管菲律賓業務表現出色,不過卻僅佔該公司核心淨利的6%,貢獻並不顯著。
(星洲日報/財經)

Wednesday, September 19, 2012

CIMB tips value plays as QE not a game changer

Source: http://www.theedgesingapore.com/the-daily-edge/business/39965-cimb-tips-value-plays-as-qe-not-a-game-changer.html


While QE3 is boosting sentiment, it won’t result in a sustained bull market when macro fundamentals are still trending down and it isn’t a major game changer, CIMB says in a note.

“Current valuations (Asean P/BV now at 1.5x-3.2x) are much higher than QE1, macro fundamentals are still not looking up and there are the nagging European debt concerns in the background. Value hunting remains a key strategy.”
It screens its coverage for Asean stocks with good fundamentals, an ROE uptrend and reasonable P/BV. “In Singapore, we see value across a wide spectrum.”

It says the offshore segment’s value offerings focus on smaller-mid cap plays such asSwiberASL MarineMermaidEzion and Ezra.

Among commodity plays, it sees value in the supply chain managers/planter, Noble,Olam and Wilmar.

Among property stocks, it tips OUEHo Bee, Singapore Land and CapitaLand, with other value picks including Tat HongBiosensorsBroadwayDBSUnited EngineersYongnam, and Midas.

Singapore equities to underperform region: JP Morgan

Source: http://www.theedgesingapore.com/the-daily-edge/business/39969-singapore-equities-to-underperform-region-jp-morgan.html


Singapore equities will continue their recent underperformance and investors should cut their exposure relative to the region, JP Morgan says. It expects MSCI Singapore to underperform MSCI Asia ex-Japan over the next six to nine months, noting Singapore tends to lag the region during QEs.
It suggests investors looking to maintain exposure to the Singapore market put at least a portion of that exposure into “cheap beta” plays. “This QE move occurs at a time when Beta is the cheapest in years (relative valuation high beta vs low beta).”

It tips the best Beta plays, with a high upside to their target prices, as Noble,SembMarine and Indofood Agri. It remains cautious on NOL given its limited upside. It notes developers and banks tend to outperform during QEs, with its preferred exposures as CapitaLand and CMA among developers and DBS in banks. It would avoid telcos as it remains cautious on M1StarHub and SingTel; it also tips avoiding industrials ex-Noble.

Menara Wawasan Merdeka

Scientex net profit hits record RM83.9m

Source: http://www.btimes.com.my/Current_News/BTIMES/articles/scien18/Article/


KUALA LUMPUR: Industrial packaging manufacturer and property developer Scientex Bhd has posted a record net profit of RM83.9 million in its year ended July 31 2012.

Group revenue rose 9.6 per cent to RM881.0 million, the company said in a statement yesterday.

Scientex's fourth quarter profits alone went up 12.6 per cent to RM23.39 million, thanks to higher residential house sales.

Scientex managing director Lim Peng Jin said the performance was helped by several factors. These include increased demand for its products overseas and the benefits of economies of scale following capacity expansion initiatives at its facilities in Pulau Indah in Klang and Malacca.

The company's profits in the fourth quarter could have been better if not for a one-off cost in relocating its woven production from Malaysia to Vietnam.

The relocation was to achieve better operational efficiencies and comparative cost.

The group's industrial packaging profits in the fourth quarter ended July fell to RM9.9 million from RM12.2 million a year ago.

Despite the current global economic uncertainties, the group remains focused on its expansion plans.

Scientex said it had started construction of its new plant in Pulau Indah.

Once the new stretch film cast lines start production in the second half of 2013, its annual capacity will jump 25 per cent to 150,000 tonnes.

Meanwhile, the group enjoys good take-up rates for its affordable homes in Pasir Gudang and Kulai.

The government's campaign to promote affordable housing resulted in more young families and middle and lower income housebuyers placing their downpayments with the group.

Scientex's higher-end residentail units in Skudai also posted good sales.

Read more: Scientex net profit hits record RM83.9m http://www.btimes.com.my/Current_News/BTIMES/articles/scien18/Article/#ixzz26rzTU8SU

CPO tumbles to lowest level since October last year

Source: http://biz.thestar.com.my/news/story.asp?file=/2012/9/19/business/12047565&sec=business


PETALING JAYA: The coveted RM3,000 per tonne price level for palm oil may remain elusive until later in the year as supply concerns abate and on the likelihood that production will be higher this month.
The commodity reached a peak of RM3,612.34 in mid-April but crude palm oil (CPO) futures for third month delivery tumbled yesterday to its lowest since October last year.
The December-delivery contract fell to a day-low of RM2,827 per tonne before rebounding at the close to RM2,861 per tonne for a 4.19% decline over Friday. Markets were closed yesterday for the Malaysia Day celebration.
The drop also precipitated losses in several plantation stocks such asKuala Lumpur Kepong Bhd and Sarawak Oil Palms Bhd, which slipped 12 sen and 10 sen respectively to RM22.24 and RM6.60.
Kuala Lumpur Kepong was more heavily traded with 1.93 million shares changing hands while Sarawak Oil Palms saw 4,000 transactions.
Kenanga Research analyst Alan Lim told StarBiz the main reasons behind the steep decline in palm oil included better prospects for soybean oil, the slump in crude oil prices and expectations of higher palm oil inventory in September.
Soybean dwindled 4% in Chicago on Monday after reports said there would be additional rain over Brazil’s soybean-growing regions, alleviating worries about a supply crunch for edible oils.
“Month-on-month production of palm oil is set to normalise this month as September has more working days than August,” Lim said.
On whether palm oil prices would continue to be pressured, Lim said he saw the commodity trading at a discount to soybean, although it should see a reprieve from November as demand picked up.

Tuesday, September 18, 2012

JP Morgan starts Ezion at ‘overweight’

Source: http://www.theedgesingapore.com/the-daily-edge/business/39933-jp-morgan-starts-ezion-at-overweight.html


JP Morgan initiated coverage of Ezion Holdings with an ‘overweight’ rating and a target price of $1.60, saying the company owns the largest and most sophisticated class of liftboats in the world and is one of the first to promote their usage in Asia and the Middle East.
Ezion shares were up 1.2% at $1.275 on Monday. The stock has nearly doubled so far this year, versus the 23% gain in the FT ST Small Cap Index.

Increased offshore construction activities and ageing platforms are likely to drive demand for liftboats, JP Morgan said, adding that US$1.3 billion ($1.6 billion) worth of charters will drive a 33% earnings per share compound annual growth rate for Ezion.

The proceeds from Ezion’s issue of perpetual securities can also be used for an additional 3-5 liftboat contracts to be announced over the next 3-6 months, JP Morgan said.

It added that Ezion is well positioned to benefit from Australia’s need for liquefied natural gas infrastructure.

Monday, September 17, 2012

Singapore’s commodity plays surge; OCBC turns bullish

Source: http://www.theedgesingapore.com/the-daily-edge/business/39898-singapores-commodity-plays-surge-ocbc-turns-bullish.html


Singapore’s commodity plays surge amid a flurry of QE3 euphoria.

“With the Fed agreeing to undertake a new round of debt-purchase at last night’s FOMC, we are once again bullish on commodities, especially precious metals,” OCBC Bank says in a note.
The Fed’s move spurred commodity-linked currencies, such as AUD, NZD and CAD, higher against the USD, it notes. Wilmar is the best-performing STI component, surging 6% to $3.18.

Peer Noble, which could see its Australian earnings benefit from a stronger AUD, is up 5.1% at $1.345. Olam is up 4.6% at $2.07. Small-cap gold play CNMC is up 5.8% at $0.365 and LionGold is up 2.1% at $1.23.

OCBC raises Ezion target to $1.53

Source: http://www.theedgesingapore.com/the-daily-edge/business/39896-ocbc-raises-ezion-target-to-153-.html


OCBC Investment Research raised its target on offshore services firm Ezion Holdings, which is now a $1 billion company, to $1.53 from $1.20 and
maintained its ’buy’ rating.

Ezion shares were up 0.8% at $1.27. The stock has surged 92% so far this year versus the 29% gain in the FTSE Oil and Gas Index.
If Ezion succeeds in issuing perpetual securities, it will be the first offshore and marine company to issue such securities and this projects the strong confidence that the management has in the growth of firm, OCBC said.

Ezra Holdings Ltd’s proposed listing of its engineering and fabrication unit, TRIYARDS Holdings, on the Singapore Exchange may have helped sentiment recently due to the increased awareness of the self-elevating unit, OCBC said.

TRIYARDS and Ezion are involved in building or chartering self-elevating units, commonly known as liftboats. But OCBC warned of a near-term pullback due to the recent run-up in Ezion’s share price.

Singapore’s exports decline more than estimated on electronics

Source: http://www.theedgesingapore.com/the-daily-edge/business/39909-singapores-exports-decline-more-than-estimated-on-electronics.html


Singapore’s exports fell more than economists estimated in August as shipments of electronics dropped and companies sold fewer goods to Europe.

Non-oil domestic exports slid 10.6% from a year earlier, after a revised 5.7% increase in July, the trade promotion agency said in a statement today. The decline exceeded all 15 estimates in a Bloomberg News survey, where the median was for a 4% drop.
Europe’s protracted debt crisis, a US jobless rate stuck above 8% and a slowdown in China are damping demand for Asian goods and commodities. Singapore’s exports may rise 4.2% in 2012, a central bank survey of economists released last week showed, compared with a 5.6% gain predicted in June.

“I don’t think there is a sharp turnaround shortly in sight,” Selena Ling, a Singapore-based economist at Oversea- Chinese Banking Corp., said before the report. Exports may only recover in 2013, she said.

Singapore’s electronics shipments by companies such as Venture Corp. fell 11% in August from a year earlier, after climbing 2% the previous month.

Non-electronics shipments, which include petrochemicals and pharmaceuticals, decreased 10.4%. Petrochemicals exports gained 1.3%, while pharmaceutical shipments slid 3.2% after rising 1.3% in July.

Singapore’s non-oil exports fell a seasonally adjusted 9.1% last month from July, when they dropped 3.6%, today’s report showed.