Scomi Grp: Tan Sri Abu Sahid who emerged as a substantial shareholder in Scomi Grp has declared that the is not interested in taking control of the company, nor he is opposed to the entry of construction giant IJM Corp into Scomi. He does not seek a board seat or representation and that his acquisition was merely as an investor.
Currently (01 Oct 2012), Abu Sahid holds 8.75% stake and an associate of his, Datuk Siew has 5.61% stake in Scomi Grp. Many viewed their entry as a threat to controlling shareholder Shah Hakim who has about 14.87% stake in Scomi Grp. Hakim’s partner is DAtuk Kamaluddin Abdullah, son of former prime minister Tun Abduallah.
Dijaya: It is open to M&As in the property sector if an opportunity arises. It had completed its amalgamation at end Aug 2012 and involved an injection of rm1 billion worth of Tan’s privately held properties into Dijaya. The exercise increased Dijaya’s landbank to 913 acres with an estimated GDV of rm38 billion to be developed over 10 to 15 years. It will also ink its rm500 million notes of which part of the proceeds will be used to develop the properties in the company and fund its expansion plans.
MSM: It will remain resilient to the 20 sen per kg reduction in sugar subsidies as announced in Budget 2013. There has been a corresponding increase since in retail prices to rm2.50 per kg effective 29 Sept 2012. This will likely induce some pressure on domestic consumption but MSM should experience little impact on its earnings.
The magnitude of the decline in MSM’s total volume is not likely to be overly substantial. It is attributed to two factors. First only about 56% to 60% of the company’s volumes are subsidized. Thus the remaining will not be negatively impacted by the cut in subsidies to 34 sen per kg. Secondly, the demand for sugar is fairly inelastic. There are few alternatives for sugar and that rm2.50 is already quite cheap. Even though the higher selling price cover the subsidy cut, it may lead to slower demand growth as consumers and industries may induce the content of sugar in food and beverage products to offset the higher costs.
MSM’s share price is supported by its relatively defensive earnings, dividend yields and potential M&A. MSM has a dividend policy of at least 50% payput in earnings.
Meanwhile while raw sugar prices had fallen 16% year to date, MSM will likely not benefit from this as it has locked in 64% of its raw sugar needs for 2012 under the LTC for 2012 to 2014 which translates to 80% of its domestic volume. On top of that, only 6% to 10% of its total sales volume is exposed to variable cost as large industrial users are no longer entitled to subsidized sugar since Jan 2012. This effectively estimated MSM’s risk to varying raw sugar prices.
The unique condition about the 2012 – 2014 LTC however is that it allows MSM to reduce raw sugar sourced from the contract to just 48% of total volume starting in 2013. This exposes 8% to 12% of MSM’s total volume to a fixed price and varying cost situation again.
TA Ann: It has entered into three JVs, with a 55% stake in each, to develop a total of 23412ha of plantable Greenfieldland. Capex will be staggered over the development periods. They will boost Ta Ann’s landbank by 54% and ensure its long term sustainable growth. The JVs are only expected to contribute to earnings after 2020 as Ta Ann aims to start planting in 2016. They will ensure continuity of its new planting target of 3000ha per year till 2022.
The JV companie do not require any initial capital outlay but will bear the development expenditure in phases as the projects progress.
The JV’s reaffirm the increasing importance of palm oil’s contribution to Ta Ann. Its palm oil division now contributes over 70% of yearly profit.
IHH: Its subsidiary has acquired four subsidiaries in Turkey for a total cost of to rm31.1 million. The principal activity of the acquired subsidiaries is the provision of outpatient services. The acquisitions will strengthen Acibadem’s foothold in primary healthcare services in Turkey. With rm1.64 billion in cash holdings after its IPO, the acquisitions will have no material impact on IHH’s financial position.
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