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Saturday, September 29, 2012

Masteel bullish about growth


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


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


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


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


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

Wednesday, September 26, 2012

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


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


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


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



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。
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。
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。
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。
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。
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


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


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


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?


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


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


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


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.



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。




Wednesday, September 19, 2012

CIMB tips value plays as QE not a game changer


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


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


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

CPO tumbles to lowest level since October last year


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’


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


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


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


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.