Stocks in Focus (25-01-2018)
KUALA LUMPUR (Jan 24): Based on corporate announcements and news flow today, stocks in focus on Thursday (Jan 25) may include: Ireka Corp Bhd, Fraser & Neave Holdings Bhd, Hock Seng Lee Bhd, Boustead Plantations Bhd, KLCCP Stapled Group, Gadang Holdings Bhd, Handal Resources Bhd, Hua Yang Bhd, Zhulian Corp Bhd, Econpile Holdings Bhd, Salcon Bhd, P.A. Resources Bhd and UOA Real Estate Investment Trust.
Ireka Corp Bhd has entered into a Memorandum of Understanding with CRRC Urban Traffic Co Ltd (CRRC UT) and Shentong Express Co Ltd to establish a formal working relationship to explore opportunities in the logistics sector.
The parties are looking into opportunities in investment and development of logistics warehouses, distribution centres, other ancillary real estate facilities, and infrastructure and equipment to support STO’s expansion in Malaysia and Southeast Asia.
CRRC UT — a member of China’s CRRC group — has a strategic stake in Ireka with an 8.48% equity interest. The CRRC Group is the world’s largest manufacturer of rolling stock, rail and transportation solutions.
Fraser & Neave Holdings Bhd (F&N) said the stronger ringgit is a boon for the food and beverage company given its position as a net importer.
This is especially so for its dairy products segment as F&N obtains its raw materials from outside Malaysia compared with the soft drinks segment, as there are local sugar suppliers in the country.
“The stronger ringgit is definitely good for the group and its overall business. For example, we import a lot of dairy products especially raw materials from several foreign countries, and transactions are predominantly done in US dollar,” its chief financial officer Tan Hock Beng.
Hock Seng Lee Bhd (HSL), which suffered from margin squeeze last year, is confident of improving its profit margin to double digits in the financial year ending Dec 31, 2018.
The confidence hinges on expectation that its three mega projects in Sarawak would progress smoothly.
Last year, the delays in phase 2 of the Kuching centralised wastewater management system project, as well as Package 7 of the Pan Borneo Highway dragged HSL’s net profit margin to around 9% in the second and third quarter of FY17.
Boustead Plantations Bhd (BPB) plans to sell plantation land to pay off debts and tax.
It intends to dispose of three parcels of freehold plantation lands measuring 138.89 hectares on mainland Penang for RM136.04 million to repay RM127.5 million bank borrowings, and RM6.8 million real property gains tax.
BPB has entered into two sale and purchase agreements with Sunrich Conquest Sdn Bhd and Titanium Greenview Sdn Bhd for the sale of 82.84 hectares, and 56.05ha of land, for RM81.14 million and RM54.9 million, respectively.
KLCCP Stapled Group‘s net profit remain relatively flat at RM345.52 million for the fourth quarter ended Dec 31, 2017 (4QFY17) compared with RM347.13 million in 4QFY16, despite stronger performance in its hotel segment.
Earnings per share fell to 19.14 sen from 19.23 sen.
The higher revenue and earnings for the hotel segment came about after Mandarin Oriental Hotel, Kuala Lumpur completed the first phase of guestroom renovation.
Quarterly revenue came in at RM352.07 million, up 2.1% from RM344.69 million in 4QFY16.
The group maintained its momentum in 2017 and distributed 97% of its overall distributable income with a distribution per stapled security of 36.15 sen representing an increase of 1.4% compared to 2016.
Despite a drop in revenue, Gadang Holdings Bhd’s net profit for the second quarter ended Nov 30, 2017 (2QFY18) grew 1.7% to RM28.37 million from RM27.91 million a year ago, thanks to lower cost of sales.
Gadang said cost of sales incurred during the quarter was 12.8% lower year-on-year, compared with RM104.93 million reported in 2QFY17.
Quarterly revenue declined 2.9% to RM142.87 million from RM147.12 million, mainly on lower contributions from the group’s property division.
Offshore crane manufacturer Handal Resources Bhd is acquiring a 51% stake in a pipeline engineering firm for RM5.1 million, which is in line with the group’s plan to expand its business via, among others, acquisitions, joint ventures and strategic alliances in the oil and gas (O&G) industry.
The proposed deal gives it the opportunity to work with Simflexi Sdn Bhd, which has a patented technology of crude oil storage in reducing O&G industry operating and capital cost.
Handal entered into a conditional share sale agreement with Kemuncak Lanai Sdn Bhd to buy 51,000 shares or a 51% stake in Simflexi. It will fund the purchase consideration through internal funds.
The proposed acquisition comes with a profit guarantee of three years: not less than RM2.5 million for the financial year ending Dec 31, 2018 (FY18), not less than RM3.5 million for FY19 and not less than RM5.75 million for FY20.
Property developer Hua Yang Bhd slipped into the red in its fiscal third quarter ended Dec 31, 2017 (3QFY18), posting a net loss of RM957,000 compared with a net profit of RM10.42 million a year ago.
It recorded a loss per share of 0.27 sen in 3QFY18 compared with earnings per share of 2.96 sen in 3QFY17. Quarterly revenue was down 31.3% to RM50.8 million from RM73.95 million in 3QFY17.
“Our financial results are reflective of the soft property market that continues to impact the industry. While we expect the remaining FY18 to be relatively flat, we are optimistic of remaining profitable,” said Hua Yang chief executive officer Ho Wen Yan.
Total unbilled sales as at Dec 31, 2017 stood at RM161.62 million.
Zhulian Corp Bhd‘s net profit for the fourth quarter ended Nov 30, 2017 (4QFY17) declined 44% to RM11.48 million or 2.5 sen per share, from RM20.47 million or 4.45 sen per share a year ago.
The group, nevertheless, has declared a fourth interim dividend of 1.5 sen and another special dividend of 1.5 sen per share, both payable on March 9 this year.
Zhulian did not state the reason for the profit decline in its quarterly report to Bursa Malaysia but there was a 41.73% drop in its operating profit to RM12.17 million from RM20.89 million in 4QFY16.
Piling and foundation specialist Econpile Holdings Bhd has bagged a RM119.1 million contract from Bayu Mantap Sdn Bhd to undertake substructure and basement works for the redevelopment of Tenaga Nasional Bhd’s quarters here.
It said its wholly-owned subsidiary Econpile (M) Sdn Bhd has received a letter of award from Bayu Mantap for the proposed job.
“The contract entails works for a planned mixed development with two tower blocks, comprising a 45-storey corporate tower with a seven-storey multi-level carpark and a 57-storey tower containing serviced residences and a hotel, as well as a two-storey commercial development with a four-storey basement carpark,” it said.
Salcon Bhd’s 60%-owned unit Envitech Sdn Bhd has secured an RM7.09 million contract from Jurutera Perunding Tegap Sdn Bhd for works related to the construction and upgrading of sewage infrastructure in Banting, Selangor.
The works comprise the design, construction and completion of a sewage pumping station and pumping main, and the upgrading of an existing pumping station and treatment plant.
The contract is for a 12-month period commencing January 30, 2018.
P.A. Resources Bhd has bagged a RM600 million contract to supply materials to Nasdaq-listed First Solar Inc, First Solar Vietnam Mfg Co Ltd and First Solar Malaysia Sdn Bhd for the latter’s use in the production of solar photovoltaic modules.
PA Resources said its wholly-owned subsidiary P.A. Extrusion (M) Sdn Bhd has entered into a supply agreement with the three companies for the job, which is for a period of three years.
“The agreement is expected to contribute positively to the group’s earnings and net assets for the current and future financial years,” it added.
UOA Real Estate Investment Trust‘s net rental income for the fourth quarter ended Dec 31, 2017 (4QFY17) fell 39.9% to RM8.98 million, from RM14.94 million in 4QFY16, on lower gross rental and higher borrowing cost.
UOA REIT said gross rental slipped 2.54% to RM20.7 million, from RM21.24 million in the same quarter a year ago.
UOA REIT declared a final income distribution of 4.37 sen (comprising 4.12 sen taxable income and 0.25 sen tax exempt income) to be paid on Feb 28.
Source: The Edge Markets