On The Platter
MISC (FV RM7.45 –
BUY) Company Update: Tanker Rates on The Rise Tanker rates are rising due
to strong demand from China, the return of the Libyan oil and the build-up of tensions in Iran resulting in oil being sourced from elsewhere. We believe the
tanker market hit bottom in 3Q, noting that forward freight agreement (FFA) rates
have been inching up since end-Sept 2011. This increases the possibility of the
tanker segment recovering faster than expected by early 2014. We are still of
the view that at current levels, MISC is trading at an attractive P/BV of less
than -2 std deviations. With a 37% upside to our unchanged fair value at RM7.45
which is based on 1.5x P/BV, we still advocate a Buy on MISC.
MAS (FV RM0.90 –
SELL) Corporate News Flash: Ditches Plan For Premium Airline
PENERGY (FV
RM1.50 – BUY) Corporate News Flash:
Holding Hands With Baker Hughes
SOP (FV RM7.09 –
NEUTRAL) Corporate News Flash: Buys Shipping Assets
TELKOM (FV IDR8500 –
BUY) Company Update: Higher Dividends in Store
Market Review
Another high. As expected, the FBM KLCI scaled to yet another new high yesterday, ending the
day at 1,606.63 pts on improved regional
sentiment. However, the market breadth
was mixed with decliners beating advancers 379 to 354,
with a
slightly lower share turnover of RM1.36bn compared to RM1.4bn a day before. Today’s
headlines for include: MAS is abandoning its plan to set-up a regional premium
service carrier, DRBHicom has appointed forensic consultants to conduct a due
diligence on Lotus Group, and Navis said it has not decided on buying out
SEGi. On the global front, the Dow slipped
after the Fed signaled less support for another round of quantitative easing.
MEDIA HIGHLIGHTS
Petronas to cut
dividend as it holds on to cash
Petroliam Nasional (Petronas), Malaysia’s state oil company,
plans to lower its annual dividend paid to the government to RM28bn this year
as it holds on to cash to help reverse a production slump. “We need to grow”, Datuk
Shamsul Azhar Abbas, the group’s CEO said. “Energy reserve is not infinite, it
will deplete. You can’t be sucking us dry”, he added. (Malaysian Reserve)
MAS drops regional
premium airline plan
Malaysia Airlines (MAS) has dropped its plan to establish a
short-haul regional premium airline and will instead offer such services
in-house as a division under the national carrier. Without offering any reason,
MAS COO (short-haul) Ignatius MC Ong said there was already a slight business module realignment
for the regional airline initiative. “Strategy and objective of the short-haul
operations will remain unchanged but there will be no new airline”, he said.
(Malaysian Reserve) Please see accompanying report
MRCB open to selling
EDL
Malaysian Resources Corp (MRCB) is open to options for its
Eastern Dispersal Link (EDL) in Johor Baru, including the sale of the highway.
MRCB said the government could also consider charging a levy on
foreignregistered vehicles going into
Singapore using the highway. Originally, all vehicles, except motorcycles,
using the Causeway were to pay toll on the EDL. (Financial Daily)
Petra Energy inks MoU
with BHM
Petra Energy has entered into a memorandum of understanding
(MoU) with Baker Hughes (M) SB (BHM) to undertake oil and gas (O&G)
projects in Malaysia. Petra Energy said the companies would cooperate to
provide capability development services including deploying their respective
expertise and knowledge for O&G projects for the operators in Malaysia
within the duration of the MoU. (Financial Daily) Please see accompanying
report
Ekuinas aims to be
the biggest player with more acquisitions
Ekuiti Nasional (Ekuinas) plans to create one of Malaysia's
largest education entities and is now eyeing a third education group just after
completing its acquisition of a 90% stake in Cosmopoint SB for RM246m. Among
the education groups that Ekuinas is eyeing are Masterskill Education Group
(MEGB) and HELP International Corp. MEGB has some 11k students as of 2011 while
HELP has 13k students. If Ekuinas were to acquire either one of these education
groups, its student enrolment would increase to almost 30k from about 20k
currently, making it the biggest listed education player. (StarBiz)
SOP, Shin Yang in
palm oil shipping venture
Sarawak Oil Palms (SOP) has signed a shareholders and
subscription agreement with Danum Shipping SB for a proposed JV for palm oil
tanker shipping services. SOP said it would take up a 45% stake in the JV
company, Micaline SB, with the balance held by Danum, a wholly-owned subsidiary
of Shin Yang Shipping Corp. They added that it would subscribe and pay in cash
for 7.65m shares of RM1 each in Micaline, while Danum took up 9.35m shares.
(StarBiz) Please see accompanying report
Navis has not decided
on buying out SEGi
Navis Capital Partners, which has already announced its
acquisition of a 28% stake in SEG International (SEGi), has yet to decide if it
will buy out the rest of the shares in the company. “We have not made a
decision on that yet,” said Nicholas Bloy, the managing partner of Navis Asia
VI Management Company Ltd and who has also been appointed to the board of SEGi
since Monday. Bloy said Navis liked the education sector, especially in emerging
markets, because of the growth potential and the “sticky” customer profile.
(StarBiz)
DRB-Hicom conducts
due diligence on Lotus
DRB-Hicom, the ultimate owner of Proton Holdings, has hired
two top-notch forensic teams to conduct a due diligence on Lotus Group
International. Lotus, the British sportscar maker owned by Proton, has been a
major strain to the national carmaker’s cashflow over the years. Proton gained
control of Lotus in 1996 from the liquidators of Bugatti Automobili SpA. The
national carmaker has not made any profit from the British unit over the past
15 years, which has been struggling to compete against other sportscar makers
such as Porsche AG and Ferrari SpA in Europe. (BT)
ECONOMIC
HIGHLIGHTS
Japan: Auction demand
at 4-month low signals yield gain
The lowest auction demand in four months for Japan’s 10-year
debt foreshadows a gain in yields this fiscal year as the central bank’s
monetary easing curbs demand for yen-based assets. The JPY2.1trn (USD26bn) sale
of the securities was the first debt offering in the year started 1 April and
drew bids valued at 2.73 times the amount on offer. That’s the lowest ratio
since the auction on 1 Dec and below the average of 3.08 for the past 10 sales.
Benchmark yields rose two basis points to 1.03%, the highest since 21 March.
The bid-to-cover ratio for 10-year US debt has been over 3 at every sale this
year. (Bloomberg)
China: Economy grows
8.4% in estimate cited by NDRC Official
China’s economy may have expanded about 8.4% in the first
quarter, the least since the first half of 2009, according to an estimate given
by an official 10 days before the data are due. Zhang Xiaoqiang, vice chairman of
the National Development and Reform
Commission, cited “relevant China research institutes’ initial figures” for
the estimate and predicted a gain of about 3.5% in consumer prices. (Bloomberg)
Australia: Holds key
rate at 4.25% as domestic growth weakens
Australia’s central bank
signalled it may resume cutting interest rates as soon as next month if
weaker-thanforecast growth slows inflation, sending the local currency and bond
yields lower. “The board judged the pace of output growth to be somewhat lower
than earlier estimated, but also thought it prudent to see forthcoming key data
on prices to reassess its outlook for inflation, before considering a further
step to ease monetary policy,” Governor Glenn Stevens said in a statement after
leaving the overnight cash-rate target at 4.25%. (Bloomberg)
UK: Construction
growth accelerates to fastest in 21 months
UK construction expanded at the fastest pace in 21 months in
March, adding to signs the economy returned to growth in the first quarter. A
gauge of building activity rose to 56.7 from 54.3 in February, Markit Economics
Ltd. and the Chartered Institute of Purchasing and Supply said. The median
forecast in a Bloomberg News survey of nine economists was 53.4. A reading
above 50 indicates expansion. Markit said confidence at companies increased to
a 22-month high. (Bloomberg)
US: Factory orders
rose 1.3% in February on capital goods
Orders to US factories climbed in February for the third
month in the last four, boosted by demand for business equipment. Bookings rose
1.3% after a revised 1.1% decline in January, figures from the Commerce Department
showed. The median of 60 economists’ projections in a Bloomberg News survey
called for a 1.5% advance. Orders excluding transportation equipment increased
by the most in five months. (Bloomberg)
Source: OSK188
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