Stocks in Focus (24-01-2018)

(Jan 23): Based on corporate announcements and news flow today, stocks in focus on Wed (Jan 24) may include: KPJ Healthcare Bhd, DiGi.Com Bhd, IGB Real Estate Investment Trust, Axis Real Estate Investment Trust, Caring Pharmacy Group Bhd, TH Heavy Engineering Bhd, Hengyuan Refining Co Bhd, Seacera Group Bhd, Crest Builder Holdings Bhd, Pos Bhd, Lotte Chemical Titan Holding Bhd, Samchem Holdings Bhd, DRB-Hicom Bhd, Asiamet Education Group Bhd, Green Packet Bhd and Cabnet Holdings Bhd.

-based private equity firm Quadria Capital Investment Management Pte Ltd is investing RM119.92 million to take up a 49% stake in KPJ Healthcare Bhd‘s diagnostics unit, Lablink (M) Sdn Bhd.

The investment is undertaken via KL Kappa Sdn Bhd, which inked a subscription and share purchase agreement (SSPA) with Lablink and Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB). KPJ owns Lablink via KPJSB.

“The proposed SSPA marks the beginning of the partnership between KPJ and Quadria Capital to grow Lablink’s pathology and diagnostics businesses in Malaysia and explore new growth markets in Southeast Asia to become the region’s leader in pathology and diagnostics services,” it said.

DiGi.Com Bhd‘s net profit fell 3.9% to RM360.08 million in the fourth quarter ended Dec 31, 2017 (4QFY17) from RM374.63 million a year ago, on higher finance cost from adverse fair value changes on interest rate swaps of RM12 million and settlement costs of RM6 million.

It posted service revenue of RM1.51 billion, which was down 2.7% year-on-year (y-o-y).

Earnings per share was lower at 4.63 sen in 4QFY17 compared with 4.82 sen in 4QFY16. Quarterly revenue also slipped 1.5% to RM1.64 billion from RM1.67 billion a year ago.

Despite a weak quarterly performance, DiGi declared a fourth interim dividend of 4.6 sen per share totalling RM358 million for the ended Dec 31, 2017 (FY17), payable on March 23.

IGB Real Estate Investment Trust‘s net property income (NPI) rose 4% to RM95.19 million in its fourth quarter ended Dec 31, 2017 (4QFY17), from RM91.48 million a year ago as rental income improved.

The group’s revenue rose 7% year-on-year (y-o-y) to RM134.35 million from RM125.65 million, as gross rental income grew 8% to RM105.8 million from RM97.8 million.

It announced an income distribution of 95% of its distributable income for the second half ended Dec 31, 2017 (2HFY17), which amounted to RM172.1 million or a distribution per unit (DPU) of 4.9 sen, to be paid on Feb 28.

Axis Real Estate Investment Trust‘s (Axis REIT’s) net property income (NPI) for the fourth quarter ended Dec 31, 2017 (4QFY17) slid 1% to RM35.31 million from RM35.61 million a year ago, as realised property income declined marginally.

Realised property income came in at RM41.91 million during the quarter versus RM42.23 million a year ago.

Income available for distribution for the quarter came in at RM22.52 million versus the year ago’s RM23.23 million.

The REIT proposed a final distribution per unit (DPU) of 0.92 sen, which represents 99.86% of income available for distribution from performance of properties for the period Nov 16 to Dec 31, 2017. The DPU is payable on Feb 28 this year.

Caring Pharmacy Group Bhd‘s net profit jumped 55% to RM4.27 million in its second quarter ended Nov 30, 2017 (2QFY18), from RM2.76 million in the previous year, as revenue strengthened while gross profit margin rose.

Earnings per share rose to 1.96 sen per share in the quarter from 1.27 sen per share in 1QFY17.

Quarterly revenue rose 8% year-on-year to RM123.45 million from RM113.86 million, which it said was mainly due to higher sales generated from existing outlets “due to aggressive and extensive promotional campaigns launched”.

TH Heavy Engineering Bhd is in the final stages of negotiations with Yinson Energy Sdn Bhd for the latter to take over TH Heavy’s floating production storage and offloading (FPSO) vessel with JX Nippon Oil & Gas Exploration (Malaysia) Ltd.

The offshore fabrication and marine services company, 29.81%-owned by Lembaga Tabung Haji, was responding to a recent report that said the proposed JX Nippon contract novation could be scuppered by TH Heavy’s growing legal issues.

TH Heavy chief executive officer Suhaimi Badrul Jamil said TH Heavy will be seeking its shareholders’ approval for the proposed JX Nippon contract novation upon finalising the salient terms of the agreement to be entered into between TH Heavy, Yinson and JX Nippon at an extraordinary general meeting (EGM) to be convened.

Hengyuan Refining Co Bhd has secured US$430 million (RM1.7 billion) financing facilities from three banks to partly refinance its existing term and its planned capital expenditure (capex).

The bilateral agreements were signed with Ambank (M) Bhd — Labuan Offshore Branch, Construction Bank (Malaysia) Bhd (CCB) and Maybank International Labuan Branch.

The facilities consist of a term loan and a revolving credit line. The term loan will be used to refinance the company’s existing term loan and planned capex, while the revolving credit facility is for working capital.

Seacera Group Bhd is now qualified to participate in government tenders allocated for bumiputera companies, after being granted bumiputera-controlled public listed company status by the government.

To qualify for the status, the company is required to maintain a minimum of 35% of its voting rights by bumiputera shareholders.

Crest Builder Holdings Bhd has bagged a RM328.8 million contract to build two blocks of 40-storey residential apartments and a car park in Desa Parkcity.

The project was awarded to its unit Crest Builder Sdn Bhd by Perdana ParkCity Sdn Bhd.

Crest Builder said the 33-month contract, which starts in February 2018, is expected to contribute positively to its earnings for the financial year ending December 31, 2018 and onwards.

Pos Malaysia Bhd has appointed Al-Ishsal Ishak, 49, as its group chief executive officer effective from Feb 2 after the resignation of its former chief Datuk Mohd Shukrie Mohd Salleh that had sparked some selling pressure on the postal group’s shares.

Mohd Shukrie had resigned from the group on Dec 11, 2017.

Additionally, Datuk Azlan Shahrim, who had been acting group CEO will also cease the position and continue as group chief operating officer, postal & courier of Pos Malaysia.

Lotte Chemical Titan Holding Bhd (LCT) has signed a deal with one of its biggest suppliers, Abu Dhabi National Oil Company (Adnoc), for the purchase of refined products and paraffinic naphtha.

Its wholly-owned subsidiary Lotte Chemical Titan (M) Sdn Bhd (LCTM) has signed the three-year sales contract — effective Jan 1, 2018 till Dec 31, 2020 — with Adnoc today.

According to the contract, pricing will be based on market price as at loading month, while the estimated quantity to be supplied to LCTM will be between 600,000 tonnes and one million tonnes per year.

Chemical distributor Samchem Holdings Bhd is exploring the possibility of listing its indirect 63.25%-owned subsidiary Samchem Sphere JSC on the Ho Chi Minh Stock Exchange.

The proposed listing will enable it to capitalise on the fast-growing Vietnamese economy and the potential growth of the industrial chemical sector there.

Samchem said a corporate adviser licensed in has been appointed to evaluate and advise on the proposed listing.

DRB-Hicom Bhd‘s subsidiary Proton Holdings Bhd has terminated its equity joint venture (JV) contract with China’s Goldstar Heavy Industrial Co Ltd to produce and sell Lotus cars in China.

Lotus Group International Ltd has also issued a termination letter to Goldstar.

DRB-Hicom said the contract, signed in 2015, was terminated because the JV company Goldstar Lotus Automobile Co Ltd had failed to obtain the required manufacturing licence in China in time.

Asiamet Education Group Bhd said it has obtained valuation reports for all six assets it has put up for sale, including its main campus in Cheras, Selangor.

Asiamet is also “still considering various options available to the company,” it said in a filing to Bursa Malaysia today, clarifying an article by The Edge weekly in its Jan 22-28 edition.

The weekly had reported that the group is selling all six of its assets in Selangor, Perak, Sabah and Kelantan as part of Asiamet’s asset-light policy, which could fetch as much RM135 million.

Green Packet Bhd has bagged a contract to supply and assemble DVB-T2 (T2000) set-top boxes to television broadcasting company MYTV Broadcasting Sdn Bhd.

However, Green Packet did not disclose the contract value except to say that it will depend on the issuance of purchase orders by MYTV.

This confirmed The Edge Financial Daily’s report, quoting sources, on Jan 18 that Green Packet had bagged a deal to supply set-top boxes to MYTV, which will help the communication and technology services firm become profitable again. The deal is said to be worth RM300 million.

Cabnet Holdings Bhd has won a RM7 million contract to supply and maintain security systems at a commercial building in Johor Bahru.

The contract was awarded to its wholly-owned subsidiary Cabnet Systems (M) Sdn Bhd by Potensi Hijau Sdn Bhd.

The contract involves the supply, installation, testing, commissioning and maintenance of the SMATV, CCTV, lift access, door access, vehicle access, intercom and FTTH systems for the building developed by Trident Success Sdn Bhd.

Source: The Edge Markets

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