Local

26/09/2017

Golden Palm Growers’ investors to meet SSM, trustee within the week

PETALING JAYA: Investors of the shrivelling Golden Palm Growers Scheme have selected 10 representatives to meet the Companies Commission of Malaysia (SSM) and the investment scheme trustee MTrustee Bhd within the week, to file their complaints and enquiries.

Some 60 growers who attended the forum are against terminating the scheme and are mulling options open to them to ensure their investments and returns are intact.

The decision was made at a forum facilitated by Minority Shareholder Watchdog Group (MSWG) today.

The meeting, that would need to be convened before the investors’ general meeting with the management company Golden Palm Growers Bhd next Monday, will also be facilitated by MSWG.

GPB had issued a notice dated Sept 6 to investors, for a general meeting of the growers to determine the future of the scheme, with a recommendation to close or terminate the scheme. In the notice, the company stated that while the value of the plantation has increased to RM220 million, it is unable to make payment obligations of repurchase requests from growers of up to RM22 million and RM18 million for net yield payable to growers.

“A failure to make these payments will result in the scheme being liquidated and wound up. Therefore by closing the scheme, all growers will be treated equally and benefit from a sale of the plantation,” the company stated in its explanatory notes on the notice of meeting to be held on Oct 2, 2017.

The management company had said that its objective is to find a proposal that gives growers back 100% of their initial investment.

In the note, GPB also cautioned that if growers vote against its plan to terminate the scheme, it will be wound up and growers will be at risk of losing their investment in the event that the concession owner, Perbadanan Pembangunan Ladang Rakyat Negeri Kelantan, terminates the 90-year concession agreement due to GPB being insolvent or in default of the agreement. The oil palm plantation scheme is a 11,000 acre land in Gua Musang, Kelantan.

The management company will need 75% approval from investors attending the general meeting in person or by proxy to go ahead with the sale.

An investor who attended MSWG’s forum today, speaking on condition of anonymity, told Sunbiz that the investors had only managed to earn a 6% dividend plus a bonus of 2% during the first two years of their investment, since its launch in August 2010.

“For the past four years, we didn’t received any bonus as promised … (we) only (received) the 6% dividend,” he said, adding that from this year, the investors are supposed to receive a minimum dividend of 9% if the average annual crude palm oil price exceeds RM1,500 per tonne up to 2033.

He also noted that most of the investors did not receive proper updates regarding the investment scheme from the management company during the six years investment period, and they only rely on the company’s website to get any information and updates.

“After we subscribed to the scheme, we have nobody to turn to, except to the website. Other than that, we don’t have much information until the letter (of the general meeting) came,” he added.

Another investor who declined to be named said he is quite surprised with the news on termination of the scheme, as the management company was still selling plots and recruiting new investors in the recent months.

“We are very shocked. There was no indication that the company is going to foul up this way. Four months ago, they still ask (us) to buy the lot.

“Some of them (investors) who had just purchased new lots, those are the people who are really angry,” he added.

Sunbiz learnt from the investors that a number of (the 60) investors who attended the forum, had initially invested in the Country Heights Growers’ oil-palm farm sharing scheme, which went bust five years after its launch in 2007.

Asked whether they will continue investing in such schemes, the investors said they have learnt their lesson and prefer to look for other opportunities.

26/09/2017

Selangor Properties bottom line halves in third quarter

PETALING JAYA: Selangor Properties Bhd’s net profit for the third quarter ended July 31, 2017 fell 54.6% to RM19.51 million from RM42.98 million a year ago, mainly due to a decrease in profits from its investment holding business as a result of lower foreign exchange gains of RM2.9 million compared with RM31.8 million in the previous year’s corresponding quarter.

Revenue, however, was 22.5% higher at RM31.86 million compared with RM26.01 million in the previous year’s corresponding quarter.

For the nine months period, the group’s net profit jumped sevenfold to RM72.16 million from RM9.96 million a year ago, thanks to its investment holding business that saw a foreign exchange gain of RM30.1 million, while a foreign exchange loss of RM27 million was registered in the first nine months of 2016.

Its revenue increased 10.7% to RM94.94 million compared with RM85.79 million in the previous year’s corresponding period.

Selangor Properties said the property investment division of the group is expected to remain stable and will continue to contribute positively to the group.

The group’s investment properties in Menara Milenium at Damansara Heights and Claremont Shopping Centre in Perth, Australia continue to enjoy high occupancy rates. The sales of AIRA Residence project and its ongoing construction progress, are expected to contribute positively to the group’s current year financial results.

The re-launch of the Bukit Permata project, expected in early 2018 depending on market conditions, may further contribute to the results.

26/09/2017

Tank terminal disposal slight positive for MISC

PETALING JAYA: Hong Leong Investment Bank (HLIB) Research opined that MISC Bhd’s disposal of its tank terminal business is a slight positive to the group as the disposal value is higher than the expected RM100 million.

On Monday, MISC announced that it was selling its 45% stake in Centralised Terminals Sdn Bhd (CTSB) to its joint venture partner Dialog Group Bhd for RM193 million.
This marks the group’s exit from the tank terminal business to focus on its core business in the energy-related maritime solutions and services.

Nonetheless, HLIB Research said the impact would be minimal in terms of earnings loss as Tanjung Langsat Tank Terminal only has a capacity of 640,000 metric tonnes, relatively immaterial as compared with its previously owned tank terminal VTTI, which has a capacity of eight million metric tonnes.

“Based on our estimation, profit after tax impact of the disposed tank terminal would be circa RM20 million per annum, 1% of both FY18 and FY19 earnings forecast.”

Despite the positive impact of the disposal, HLIB Research maintains a slightly negative view on the company given that the vessel oversupply in the liquefied natural gas segment is expected to persist globally with ongoing new deliveries in 2017-19.

For the tanker segment, the research house said high fleet growth will continue to put pressure on overall tanker rates.

“Heavy engineering will continue to be marginally profitable while offshore will improve slightly in 2017 due to full-year recognition of Gumusut-Kakap Semi-Floating Production System (L) Ltd (GKL) and improvement in charter rate of GKL post successful variation order claim.”

HLIB Research, which is maintaining a “hold” call on MISC with a higher target price of RM7.54, noted that earnings headwinds persist with petroleum tanker rates expected to remain depressed this year.

“The LNG division will face long-term headwinds as its long-term charters come to expiry while new LNG contracts are significantly less profitable.”

Meanwhile, MIDF Research said with the proposed acquisition totalling RM193 million (assumed funded by bank borrowings) and the consolidation of CTSB’s outstanding loans, Dialog’s financial position will shift from a net cash position to a net debt position with a net gearing ratio of about 0.1 times, which would imply it will need to take on an additional RM315 million in borrowings.

The research house is maintaining a “neutral” call on Dialog with a higher target price of RM2.16.

MISC shares closed unchanged at RM7.38 on some 587,500 shares done, while Dialog shares were up one sen to close a RM2, with some 22.9 million shares changing hands.

26/09/2017

KPJ Healthcare to provide long-term gains

PETALING JAYA: HLIB Research has initiated coverage on KPJ Healthcare Bhd, citing exposure to a pure Malaysian hospital play and its niche regional hospital network that channels patients to its urban specialist centres.

“While its gearing is high relative to its peers, it is manageable and should taper off once assets are injected into the REIT (real estate investment trust) or disposed. However, we initiate with a ‘hold’ as we believe that at this juncture the stock is fully priced,” the research house said in an initiation report today.

HLIB said KPJ, with 25 private hospitals in Malaysia, is the leading domestic player with 23% of market share. With the exception of Malacca and Terengganu, its presence is felt nationwide.

It added that KPJ has expanded into less densely populated tier-2 cities (such as Manjung and Muar). This regional feeder network operates in a less competitive environment and serves as a pipeline to refer more complex cases to its specialist hospitals. This network affords KPJ almost uncontested brand loyalty in the second-tier towns.

Relative to Malaysia’s peers within the region, the level of health insurance penetration is low. Singapore and Hong Kong have both achieved an insurance penetration rate of above 10% of GDP, whereas Malaysia as at 2016 stood at 4.5% of GDP in 2016. HLIB expects this gap to narrow as Malaysia marches towards developed status.

Newly installed capacity from greenfield and brown field network expansions are expected to boost KPJ’s total capacity from 3,000 beds currently to over 5,000 beds by 2020, representing an 87% growth in total capacity.

To combat sluggish growth and earnings drag from greenfield hospitals, the group has steadily shifted its capacity expansion strategy towards brownfield hospitals, which are less capital intensive and have a faster ramp-up period.

“This strategy, in our view, is expected to be earnings accretive in the near term whilst allowing the group to manage its gearing levels,” said HLIB.

It said risks to the stock include lower- than-expected ramp-up in patient revenue due to a laggard price revision, higher-than- expected drug costs due to the weak ringgit and longer-than-expected gestation period for its greenfield hospitals coupled with strong pricing competition from smaller niche hospitals.

“We project a modest FY17-20 earnings growth of 9%, 11% and 10%, driven by newly opened hospitals and higher revenue intensity. All in all, this implies three-year earnings CAGR of 11%,” said HLIB.

It initiated with a target price of RM1.18, which it said is justified due to KPJ’s relative illiquidity, lower return on equity and higher net gearing.

The stock closed down five sen to RM1.03 with some one million shares changing hands. It has a market capitalisation of RM4.34 billion.

26/09/2017

Bursa Malaysia closes lower on heightened geopolitical tensions

KUALA LUMPUR: Bursa Malaysia closed lower today as investor sentiment on stock markets globally soured following heightened United States-North Korea geopolitical tensions.

At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) eased 3.55 points to 1,765.59 from Monday's close of 1,769.14.

The key index opened 0.59 of-a-point lower at 1,768.55 and hovered between 1,761.21 and 1,769.12 throughout the day.

Market breadth was negative with 603 losers and 276 gainers, while 366 counters were unchanged, 599 untraded and 30 others suspended.

Volume, however, increased to 3.69 billion units valued at RM2.73 billion from 2.46 billion units worth RM2.36 billion on Monday.

In a note today, Public Investment Bank Bhd said most markets eased off as resumption in rhetoric between the US and North Korea grabbed headlines again to put investors off the stock market, making them to switch towards safe-haven assets.

It was reported that North Korea warned on Monday that it could shoot down US war planes after calling US President Donald Trump's tweet on its leaders as a “declaration of war”.

Regionally, the Singapore Straits Times index was 3.02 points or 0.09% lower at 3,212.89, Japan's Nikkei dipped 67.39 points or 0.33% to 20,330.19 and South Korea's Kospi index fell 6.08 points or 0.26% to 2,374.32.

However, oil and gas-related counters suffered little impact from the geopolitical risk, as the benchmark Brent Crude oil price soared to a 26-month high today, after Turkey threatened to cut crude oil flows from Iraq's Kurdistan region to the outside world.

Bucking the weaker overall market, oil and gas-related counters, including Petronas Dagangan leapt 20 sen to RM24.46, Hibiscus rose 3.5 sen to 66.5 sen, KNM advanced one sen to 29 sen, Bumi Armada inched up 1.5 sen to 75.5 sen and Sapura Energy was five sen better at RM1.71.

Of the heavyweights, Maybank improved two sen to RM9.80, Tenaga was flat at RM14.40, Public Bank fell four sen to RM20.56, Sime Darby eased six sen to RM9.04 and Petronas Chemicals was three sen lower at RM7.32.

The FBM Emas Index shed 34.77 points to 12,567.74, the FBMT 100 Index slid 32.68 points to 12,225.34, and the FBM Emas Syariah Index retreated 37.76 points to 12,783.88, as the FBM 70 dipped 70.62 points to 14,976.25 and the FBM Ace declined 58.44 points to 6,522.90.

Sector-wise, the Plantation Index slipped 11.68 points to 7,874.69, the Industrial Index trimmed 16.70 points to 3,210.79, while the Finance Index was 2.49 points higher at 16,643.59.

Among active counters, Hubline gained 1.5 sen to 10 sen, UMW Oil and Gas eased 2.5 sen to 31.5 sen, as Sino Hua-An and Alam Maritim improved 1.5 sen each to 22 sen and 23 sen respectively and Icon Offshore rose four sen to 30.5 sen.

Main Market volume increased to 3.08 billion shares worth RM2.63 billion from 1.78 billion shares worth RM2.25 billion on Monday.

Volume on the ACE Market narrowed to 387.87 million units valued at RM83.26 million versus 525.63 million units valued at RM95.42 million.

Warrants improved to 222.76 million units worth RM20.13 million from 156.62 million units worth RM17.28 million.

Consumer products accounted for 61.88 million shares traded on the Main Market, industrial products (642.63 million), construction (72.16 million), trade and services (1.88 billion), technology (184.90 million), infrastructure (7.62 million), SPAC (303,000), finance (113.93 million), hotels (1.17 million), properties (88.98 million), plantations (12.25 million), mining (79,800), REITs (12.59 million), and closed/fund (nil).

The physical price of gold as at 5pm stood at RM170.85 per gramme, up RM1.98 from RM168.87 at 5pm yesterday. — Bernama