TA ENTERPRISE Bhd (TAE) (4898) expects its financial services segment to benefit from a stronger market this year, especially with the launch of the 10th Malaysia Plan (10MP) and the New Economic Model.
Executive director Yaw Chun Soon said the benchmark KLCI may increase to 1,350 points by year-end from the current 1,320 points.
Corporate earnings growth is expected to be robust, while more initial public offerings are anticipated this year.
"The market is currently quite quiet with the European debt crisis, while a lot of funds are being channeled to the World Cup betting.
"The World Cup will end in two weeks and the launch of the 10MP and the New Economic Model is expected to generate more interests and further growth in the market," he told reporters after the company's shareholders' meeting in Kuala Lumpur yesterday.
Currently, financial services contribute a third to the group's profit, while the rest comes from the hospitality and property development and investment segments. The group's property business is handled by its 70-per cent subsidiary, TA Global Bhd, which was listed seven months ago.
In the last financial year ended January 31 2010, TAE registered RM95 million net profit on revenue of RM437.3 million, compared with RM91.9 million net profit and RM535.4 million revenue in the previous year.
Asked if the group anticipates better performance of its financial services business in the current year should Bursa Malaysia perform strongly this year, Yaw said: "It should at least match last year's performance."
He said the group is "pleased" and "comfortable" with its first quarter results. In the quarter ended April 30 2010, TAE reported RM22.7 million net profit on a revenue of RM142.3 million. The previous corresponding quarter saw the group posted RM30.5 million net profit and RM72 million revenue.
On yuan appreciation, Yaw said in the medium term, it could lead to more funds moving to Asia as the region is seen as the centre of growth.
This would benefit Malaysia, especially the Islamic bond market as bond issuers may shy away from the traditional conventional financing due to the US crisis.
He said issuers would opt for sukuk issuance in Malaysia, especially when the country's law does not allow US-denominated sukuks to be issued.
Meanwhile, TAE chief executive officer Datin Tan Kuay Fong expects the hospitality segment to continue to be the main driver of TA Global's performance in the next three years.
By 2012, property development is expected to take the driver's seat when the projects start to come on stream. This is because under the new FRS standard, profits from property projects can only be realised when they are completed.
Tan said the gross development value (GDV) of the group's existing and future property projects amounted to RM4.5 billion. The future projects would be launched between now and the next five years.
For this year, TA Global would launch retail, office and apartment projects with a combined RM400 million GDV. Another three projects would be launched next year with a combined GDV of RM600 million.
By Hamisah Hamid
Business Times
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