On The Platter
MSM (FV RM4.96–
NEUTRAL) 1QFY12 Results Review: Less
Sweet With New Contract Price
MSM registered 1QFY12 earnings of RM66.6m (-24.8% y-o-y), in
line with both our and consensus estimates. The newly signed LTC contract price
led to significant raw sugar cost increases, thus dampening earnings on a y-o-y
basis. Historical 1Q earnings have, however, represented more than 30% of
full-year earnings given the higher utilization of LTC sugar during the
quarter. Quarterly earnings should be more evenly distributed in 2012 given the
proximity between the new LTC and market prices. Maintain NEUTRAL with FV of
RM4.96.
ARMADA (FV RM4.37–
NEUTRAL) Corporate News Flash: Bags a Mexican Job
Astra Agro Lestari
(FV IDR22,939 – NEUTRAL) Corporate News
Flash: Kicks Off New Expansion Phase
Market Review
Jitters in Europe.
The FBM KLCI retreated 6.17pts yesterday to 1548.87 following the weak US jobs
data released and the fallout from the public discontent that resulted in the change
in government for France. Among the
notable headlines are: AA Anthony is said to be in a management buy-out deal
with its parent – MPHB, Bumi Armada inked a USD65m contract to provide a
workboat to a Mexican oil and services provider and Keretapi Tanah Melayu
(KTM)’s takeover by MMC is on track with the due diligence exercise to be
completed in July. With protracted concerns over external developments and the
unsettling changes within the political
arenas in France and Greece as votes were cast against pro-austerity candidates, we would
expect Asian markets to languish further in the interim.
MEDIA HIGHLIGHTS
Bumi Armada clinches
RM198m contract
Bumi Armada subsidiary, Bumi Armada Navigation SB, has been
awarded a contract valued at USD65m or RM198.9m.
The contract is for the provision of an accommodation workboat from Mexican oil
and gas services company Tecnologias Relacionadas con Energia y Servicios
Especializados, S.A. de C.V. The contract is for a period of five years with an
extension option of an additional five years. The vessel, which will be
provisioned by Bumi Armada, will provide accommodation and offshore support
services in Mexican territorial waters.
(StarBiz) Please see accompanying report
Perodua to invest
RM1.2bn over the next three years
Perusahaan Otomobil Kedua SB (Perodua) will be investing
between RM1.2bn and RM1.5bn over the next three years as it gears up for the
imminent liberalisation of the local automotive industry. Perodua managing
director Datuk Aminar Rashid Salleh said the investment would be to upgrade its
production line and equipment, improvement to its sales and service outlets
nationwide as well as for research and
development for new models.“The reality is that liberalisation will happen
sooner or later. It's just a matter of time and we need to transform,” he told
StarBiz yesterday, adding that Perodua had also submitted its five-year roadmap
(outlining its growth strategy for that duration) to the Government. (StarBiz)
Strong demand
expected for Gas Malaysia's IPO
MMC Corp is optimistic regarding the proposed listing of its
subsidiary, Gas Malaysia, this year due to encouraging demand for Malaysian
stocks and ample liquidity in the local market. "Based on the feedback
from Miti (Ministry of International Trade and Industry), Gas Malaysia stocks
are oversubscribed," said MMC group managing director Datuk Haji Hasni
Harun recently. He said Malaysian stocks were currently on foreign investors'
radar, although they were not that aggressive in buying the shares as they
needed certainty on the impending 13th general election before making
investment decisions. (BT)
MMC plan for KTMB on
track
MMC Corp expects to complete due diligence on Keretapi Tanah
Melayu Bhd (KTMB) by between July and August this year, its group managing
director Datuk Haji Hasni Harun said. The due diligence is for MMC to participate
in the proposed privatisation of the national rail company. “We have appointed
consultants. We are at 30% of the (due diligence) exercise now. There are still
70% to complete before we can forward our privatisation proposal to the
government,” Hasni told Business Times. KTMB is currently incurring losses
averaging RM200m a year and Hasni said MMC’s proposal will be aimed primarily
at turning around the rail company. The company, together with Gamuda Bhd, was
eyeing to privatise KTMB and take over its assets in 2003. (BT)
AA Anthony in MBO
talks
AA Anthony SB's management Datuk Lim Tiong Chin is
negotiating a management buyout (MBO) for the Penang-based stockbroker with its
parent Multi-Purpose Holdings (MPHB), financial executives involved in the corporate
plan said. The proposed MBO, which is expected to be finalized by mid-June, is
part of MPHB's rationalization to focus its business on gaming. Also, Lim who
bought the stockbroking company in 1990, has been keen to bring the company
back into his family holdings, the financial executives said. Pricing remains sketchy,
but several analysts who track MPHB estimated AA Anthony to be worth around
RM170m in terms of shareholders' funds. (Financial Daily)
ECONOMIC
HIGHLIGHTS
Indonesia: Posts
slowest GDP in six quarters
Indonesia posted its slowest growth in six quarters in 1Q12,
as exports fell due to weaker global demand. The central bank might have to
hold its policy rate steady for the whole year to spur the domestic economy. Government
data yesterday showed 1Q growth was 6.3% from a year ago, as expected, and
still among the highest in the region, but exporters expect a shrinkage this
year due to the weak recovery in the US and the ongoing debt problems in the
Eurozone. (Bloomberg)
India: Vows cuts in
Iran-oil imports as Clinton talks sanctions
India will curtail its imports of Iranian oil by 20%,
officials said, as US Secretary of State Hillary Clinton held talks in New
Delhi to enlist India’s help with sanctions aimed at pressuring Iran over its
nuclear program. Asia’s thirdbiggest oil importer will cut purchases of crude
from Iran to 14m tonnes from 17.5 m tonnes in the 12 months ending 31 March,
according to two Indian diplomats and two refinery officials who asked not to
be identified because they weren’t authorized to speak publicly. The officials
said Iranian crude would account for 7% of India’s imports in fiscal year 2013,
down from 10% currently. (Bloomberg)
South Korea:
Producer-Price Inflation eases before rate decision
South Korean producer-price inflation cooled to the slowest
pace in 26 months on a decline in meat and fish costs, according to a report
released two days before a monetary-policy meeting. Prices climbed 2.4% in
April from a year earlier, the smallest gain since February 2010, after a 2.8%
increase in March, the Bank of Korea said in a statement in Seoul yesterday. Prices
fell 0.1% from March. Consumer prices rose 2.5% in April from a year earlier,
the slowest pace in 21 months, a government report showed on 1 May. (Bloomberg)
EU: Europe, IMF vow
to pursue budget checks on next Greek government
Europe and the International Monetary Fund pledged to resume
checks on Greece’s eligibility for more aid disbursements when a new Greek
government emerges after voters split
over the rescue conditions. The European Commission in Brussels said it “hopes
and expects” Greece will fulfill the budget-austerity requirements for a loan
payment due in June following the 6 May election. The Washington-based IMF said
“we look forward to being in contact with the new Greek government once it has
been formed.” (Bloomberg)
EU: German factory
orders rose more than forecast in March
German factory orders rose more than economists forecast in
March as demand from outside the euro area helped Europe’s largest economy
weather the debt crisis. Factory orders, adjusted for seasonal swings and inflation,
jumped 2.2% from February, when they gained a revised 0.6%, the Economy
Ministry in Berlin said today. Economists surveyed by Bloomberg News predicted
a 0.5% increase, according to the median of 37 estimates. From a year ago,
orders dropped 1.3% when adjusted for work days. (Bloomberg)
EU: Merkel rejects
stimulus in challenge to Hollande’s growth plans
German Chancellor Angela Merkel rejected government stimulus
as the way to spur economic growth in Europe, setting up a clash with French
President-elect Francois Hollande before he’s even taken office. In her first response
to Hollande’s victory in yesterday’s French election, Merkel rejected a return
to the “huge” stimulus programs following the financial crisis in favor of
business-friendly economic changes. She and Hollande will talk “very openly”
about the form of growth to pursue, a discussion now taking place across Europe
and “to which the new French president will bring his own accents.” (Bloomberg)
EU: ECB financing to
Portuguese banks declined in April
The European Central Bank’s financing to Portuguese lenders
fell in April from the previous month, the Bank of Portugal said. ECB financing
decreased to EUR55.4bn (USD72.2bn) from a record EUR56.3bn in March, the Lisbon-
based Bank of Portugal said today on the BPStat portion of its website.
Financing reached a record in March after the Frankfurt- based ECB awarded
EUR529.5bn to 800 financial institutions at the end of February. The central
bank’s second round of three-year loans was designed to avert credit paralysis
and ease concern that Europe’s banks would run out of cash or curb lending as
the debt crisis drove up borrowing costs.
Source: OSK188
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