Stocks To Watch - TM, Axiata, BIMB, Gas M’sia, KKB, Pav REIT, OSK Prop and Daya

KUALA LUMPUR (August 1): Based on news flow and corporate announcements today, the stocks that may come under focus tomorrow could include TM, Axiata, BIMB, Gas Malaysia, KKB, Pavilion REIT, OSK Property and Daya Materials.

TELEKOM MALAYSIA BHD []’s shares may come under pressure after a downward revision by Fitch Ratings on its long-term foreign-currency issuer default rating (FC IDR) outlook to negative from stable.

However, Fitch said it has affirmed TM's FC IDR and senior unsecured rating at 'A-'.

The revision on government-controlled TM follows Fitch's recent downward revision on Malaysia’s public debt outlook to negative from stable.

"Should the sovereign's FC IDR be downgraded to 'BBB+', the government's credit strength would be the same as TM's standalone profile and Fitch would therefore not provide any uplift for government support to TM's ratings," Fitch said.

Axiata Group Bhd’s unit Celcom Axiata Bhd expects its reload transaction volume per day to increase by 5%-6% following the new partnership agreement signed with Bank Simpanan Nasional (BSN) today.

Chief executive officer Datuk Seri Shazalli Ramly said the agreement will provide Celcom users with even more convenient locations for prepaid reloads via BSN's nationwide network of registered banking agents (EBB), Bernama reported.

"With 4,209 selected EEB BSN premises available nationwide, the frequency of reload will increase, especially in the areas that are not reachable," he told reporters after the signing ceremony here today.

Shazalli said a total of 600,000 reload transactions were done a day with an average amount of up to RM13,000.

BIMB HOLDINGS BHD [] is acquiring the remaining 49% in Bank Islam Malaysia Bhd from Dubai Financial Group and Lembaga Tabung Haji (LTH) for US$884.6 million (about RM3 billion).

BIMB said it had yesterday signed a conditional sale and purchase agreement with Dubai Financial, and LTH. The deal, upon completion, will give BIMB full control of Bank Islam.

BIMB said it plans to finance the purchase via a proposed rights issue of new shares with warrants, and sale of Islamic bonds or sukuk. Both fund raising exercises are expected to generate some RM3 billion.

The rights issue will be done on the basis of two rights shares and two warrants for every five existing BIMB shares held. The exercise is expected to raise RM1.54 billion while the 10-year sukuk is expected to generate up to RM1.47 billion.

BIMB intends to complete the acquisition and fund raising exercises by the fourth quarter of this year.

Gas Malaysia Bhd posted a 10.11% year-on-year rise in net profit to RM44.96 million for the second quarter to June 31, 2013. Its revenue rose by 13.26% year-on-year to RM593.84 million.

The company declared a tax-exempt interim dividend of 6 sen, higher than 5 sen a year ago.

Gas Malaysia said both the profit and revenue rose because of higher sales in gas.

For the six months to June 2013, net profit posted totalled RM85.11 million compared to RM75.37 million in the first half of 2012.

KKB ENGINEERING BHD [] announced that it has received an order from JGC (Malaysia) Sdn. Bhd. for the “Shop Fabrication of Steel Structures for the Proposed Petronas LNG Train 9 Project” in Bintulu, Sarawak.

The completion date for the RM17.1 million contract will be mid-November 2014.

The award is expected to contribute positively to the earnings and net assets of KKB for the financial year ending Dec 31, it said.

Pavilion Real Estate Investment Trust (Pavilion REIT) reported a 9% rise in second quarter net profit from a year earlier as revenue rose.

In a statement to the exchange, Pavilion said net profit climbed to RM51.96 million in the second quarter ended June 30, 2013 (2QFY13) from RM47.77 million. Revenue rose to RM91.1 million from RM82.83 million.

"Income before taxation for the quarter under review was RM51.9 million, RM4.2 million or 9% higher than 2QFY12, mainly due to higher net property income and lower finance cost,” Pavilion said.

The firm said distributable income for 2QFY13 came to RM53.7 million or 1.79 sen per unit.

Cumulative first-half net profit increased to RM106.23 million from RM95.57 million. Revenue was higher at RM185.86 million versus RM168.16 million.

Looking ahead, Pavilion foresees some rental loss. This is due to relocation and replacement of tenants, it said.

OSK Property Bhd’s majority owner Tan Sri Ong Leong Huat has denied that he and his family intend to privatise OSK PROPERTY HOLDINGS BHD [], despite recent purchases made by his family on the open market.

Ong, the managing director and chief executive officer of OSK Property, told Nanyang Siang Pau that he “has never planned” to take the company private when asked to comment on recent market talk on the subject.

Land Management Sdn Bhd, owned by the Ongs, had raised their stake to 45.7% from 41.59% in late July.

Ong said in an interview with Nanyang: “Buying and selling shares is a normal activity. It is a fact that my family and I have raised our stake in OSK Property, but this does not mean anything. It is a normal transaction.”

The Ong family collectively owns at least 72%, or 172.6 million of the shares in the property firm.

DAYA MATERIALS BHD [], which rose to a near 4-year high today with a 24% surge in price, may see its share rising further tomorrow or succumb to profit-taking.

At market close, Daya ended up 6 sen or 24% at 31 sen per unit on trades of 152.1 million shares.

This market behaviour emerged after a report by HwangDBS Vickers Research, which said Daya is an “up-and-coming oil and gas play” with bright earnings outlook and gave it a fair value of 45 sen/share.

The research house said Daya, with order book of RM1.3 billion, is an “under-appreciated O&G proxy with solid fundamentals and strong growth prospects.”

The company posted a 71% year-on-year increase in net profit for the first quarter to end-March 2013, on the back of a 233% jump in revenue at RM100 million.

On the stock, it said trading at 7x FY14 PE Daya is among the cheapest O&G stocks with strong earnings visibility and healthy balance sheet (10% net gearing).




Written by Ho Wah Foon of theedgemalaysia.com