OSK Research is maintaining its Buy call on Alam Maritim with an unchanged target price of RM1.50.
Alam Maritim recently accepted an extension of a spot charter contract to supply of one straight supply vessel worth a contract value of RM11.0m.
OSK Research said the company's announcement of the one-year contract however did not identify the customer, but it believed it is likely be Petronas or its PSC contractors since this is a renewal of contract and the bulk of Alam's existing vessel contracts are from the domestic market
'After the company undertook a kitchen sinking exercise in FY10, we believe the worst is now over. However, as we mentioned earlier, we do not expect Alam's 1H11 results to be very good as it was still affected by the monsoon season in 1Q.
'Also, Petronas' focus is now on the initial stage of marginal oilfield developments and not towards the tail-end of activities, which would more of a 2H11 focus. We maintain a Buy on the company for now, with an unchanged target price of RM1.50 based on the existing PER of 15x FY11 EPS,' it said.
Tuesday, March 29, 2011
HELP to have better 2Q results
HELP International Corp Bhd
Maintain buy at RM2.54 with revised fair value of RM2.82 (from RM2.59): HELP's 1QFY11 earnings were within our expectations, although accounting for only11.9% of our full-year forecast due to seasonal factors related to its twinning courses conducted with foreign institutions. Revenue grew marginally by 3.3% year-on-year while net profit was up by 12.7%, supported by improved margins.
We believe the better margins were largely attributed to prudent cost management and the increasing number of HELP University College's home-grown courses, which generally command higher margins as the company does not have to pay royalty for them, unlike twinning or foreign courses developed by other institutions. As a result, earnings before interest and taxes margin in 1QFY11 improved to 18.5% from 16% in 1QFY10.
As the company's revenue and net profit were significantly lower quarter-on-quarter (q-o-q) due to seasonality, given that fewer classes were conducted owing to the summer holidays associated with courses conducted in collaboration with institutions in the southern hemisphere, particularly Australia and New Zealand.
Q-o-q, revenue dropped by 11.1% while net profit plunged by 57.9% in 1QFY11. This is due to the nature of the business. The company continues to incur high fixed costs, thus causing a bigger contraction in profitability when revenue falls. Moving forward, we expect the 2QFY11 results to be significantly better q-o-q as more classes are conducted during this period as the new semester for its Australian and New Zealand courses commences.
We maintain our forecast and 'buy' recommendation at a higher fair value of RM2.82 from RM2.59 previously after rolling over our earnings per share from FY11 to FY12 at 14 times price-earnings ratio, plus its net cash of 32 sen per share as at end-FY10.
We believe the company's robust and clean books, as well as solid management will stand it in good stead in expanding comfortably without straining its balance sheet. ' OSK Research
Maintain buy at RM2.54 with revised fair value of RM2.82 (from RM2.59): HELP's 1QFY11 earnings were within our expectations, although accounting for only11.9% of our full-year forecast due to seasonal factors related to its twinning courses conducted with foreign institutions. Revenue grew marginally by 3.3% year-on-year while net profit was up by 12.7%, supported by improved margins.
We believe the better margins were largely attributed to prudent cost management and the increasing number of HELP University College's home-grown courses, which generally command higher margins as the company does not have to pay royalty for them, unlike twinning or foreign courses developed by other institutions. As a result, earnings before interest and taxes margin in 1QFY11 improved to 18.5% from 16% in 1QFY10.
As the company's revenue and net profit were significantly lower quarter-on-quarter (q-o-q) due to seasonality, given that fewer classes were conducted owing to the summer holidays associated with courses conducted in collaboration with institutions in the southern hemisphere, particularly Australia and New Zealand.
Q-o-q, revenue dropped by 11.1% while net profit plunged by 57.9% in 1QFY11. This is due to the nature of the business. The company continues to incur high fixed costs, thus causing a bigger contraction in profitability when revenue falls. Moving forward, we expect the 2QFY11 results to be significantly better q-o-q as more classes are conducted during this period as the new semester for its Australian and New Zealand courses commences.
We maintain our forecast and 'buy' recommendation at a higher fair value of RM2.82 from RM2.59 previously after rolling over our earnings per share from FY11 to FY12 at 14 times price-earnings ratio, plus its net cash of 32 sen per share as at end-FY10.
We believe the company's robust and clean books, as well as solid management will stand it in good stead in expanding comfortably without straining its balance sheet. ' OSK Research
Kencana awarded RM216m Petrofac job
Kencana Petroleum Bhd has announced that wholly-owned Kencana HL Sdn Bhd (KHL), has secured a RM216 million contract from Petrofac (Malaysia-PM304) Ltd (Petrofac), for the engineering, procurement and construction (EPC) of well head platforms for the Cendor oil field.
In its filing to Bursa Malaysia, the company said KHL is to undertake the EPC of two units of wellhead platforms for the Cendor Phase 2 Development Project, located off the coast of Terengganu.
It said the one-off construction contract is expected to be completed within the second quarter of 2012.
Meanwhile, the contract is expected to contribute positively to the earnings and net assets per share of Kencana Petroleum Group for the financial years ending July 31, 2011 and 2012.
In its filing to Bursa Malaysia, the company said KHL is to undertake the EPC of two units of wellhead platforms for the Cendor Phase 2 Development Project, located off the coast of Terengganu.
It said the one-off construction contract is expected to be completed within the second quarter of 2012.
Meanwhile, the contract is expected to contribute positively to the earnings and net assets per share of Kencana Petroleum Group for the financial years ending July 31, 2011 and 2012.
Friday, March 18, 2011
SP Setia a 'buy' at HwangDBS, OSK
Several research houses have maintained "buy" calls on SP Setia Bhd, reflecting its within-expectation first quarter 2011 results.
Both HwangDBS Vickers Research and OSK Research today left their target prices unchanged at RM7.90 and RM7.23 respectively.
"SP Setia is in a good position to win more land deals given its strong execution track record and solid balance sheet which is set to be enhanced further by a RM1 billion placement," HwangDBS Vickers said in its note today.
OSK Research said SP Setia was set for an impressive showing this year, driven by unbilled sales of more than RM2.2 billion and new launches.
ECMLibra Research, meanwhile, maintained its "hold" recommendation on SP Setia and said RM6.00 would be its fair value.
"Although we expect more landbank acquisitions but we believe this has been priced-in and the impending 15 per cent private placement may cap further upside in the near-term," ECMLibra added.
Both HwangDBS Vickers Research and OSK Research today left their target prices unchanged at RM7.90 and RM7.23 respectively.
"SP Setia is in a good position to win more land deals given its strong execution track record and solid balance sheet which is set to be enhanced further by a RM1 billion placement," HwangDBS Vickers said in its note today.
OSK Research said SP Setia was set for an impressive showing this year, driven by unbilled sales of more than RM2.2 billion and new launches.
ECMLibra Research, meanwhile, maintained its "hold" recommendation on SP Setia and said RM6.00 would be its fair value.
"Although we expect more landbank acquisitions but we believe this has been priced-in and the impending 15 per cent private placement may cap further upside in the near-term," ECMLibra added.
OSK Research maintains Trading Buy on Faber, unch TP RM3.02
KUALA LUMPUR: OSK Research is maintaining a Trading Buy on FABER GROUP BHD [] at an unchanged target price of RM3.02 based on SOP valuation.
The research house said on Friday, March 18 that it still thinks'' Faber should be able to get its existing concession renewed in view of its track record and excellent execution of the existing concession, which should provide the upward catalyst for its share price.
On Thursday, Faber announced a capital reduction by way of cancellation of 75 sen of the existing par value of each RM1 ordinary share, and ii) a share premium reduction of RM116m to reduce the accumulated losses in Faber Group.
'The proposals came in as no surprise given that we had mentioned in our last March 16 report that Faber was in the midst of finalising proposals to strengthen its balance sheet, largely with regard to 'legacy' accumulated losses at the company level.
'As we had mentioned earlier, despite the company's willingness to pay a higher dividend payout, its ability to increase the payout ratio had been constrained by its accumulated losses at the company level,' it said.
OSK Research said the main rationale for the proposed corporate exercise is to enable Faber to beef up its capacity to raise its dividend payout and provide higher dividend returns to its shareholders.
The research house said on Friday, March 18 that it still thinks'' Faber should be able to get its existing concession renewed in view of its track record and excellent execution of the existing concession, which should provide the upward catalyst for its share price.
On Thursday, Faber announced a capital reduction by way of cancellation of 75 sen of the existing par value of each RM1 ordinary share, and ii) a share premium reduction of RM116m to reduce the accumulated losses in Faber Group.
'The proposals came in as no surprise given that we had mentioned in our last March 16 report that Faber was in the midst of finalising proposals to strengthen its balance sheet, largely with regard to 'legacy' accumulated losses at the company level.
'As we had mentioned earlier, despite the company's willingness to pay a higher dividend payout, its ability to increase the payout ratio had been constrained by its accumulated losses at the company level,' it said.
OSK Research said the main rationale for the proposed corporate exercise is to enable Faber to beef up its capacity to raise its dividend payout and provide higher dividend returns to its shareholders.
Bursa Malaysia: Credit Suisse: AirAsia can weather high oil price, keeps TP of RM4.30
KUALA LUMPUR: Credit Suisse Research remains positive on AirAsia as it believes the low-cost'' carrier'' can weather the high oil price environment.
In a research note issued on Thursday, March 17, it said AirAsia's management was not in favour of imposing a fuel surcharge, preferring instead to raise loads and ancillary income (higher baggage fees, new services, etc).
Credit Suisse Research said AirAsia management was comfortable with its margins with jet fuel at US$150 per barrel but could impose a surcharge if prices are sustainable at around these levels.
"We estimate that the company needs to raise total fares by merely RM1 to compensate for a US$1 per barrel increase in jet fuel prices. If jet fuel averages at US$120, fares would have to rise by RM10 to compensate. This is less than the price of a large McValue meal (RM11.20), thus, in our view, would not significantly impact demand,' it said.
Credit Suisse Research forecast US$110 for FY11-FY13 jet fuel (+20% on-year versus FY10). AirAsia effectively pays the market rate, as it only hedges 25% of its forward quarter requirements.
It also said AirAsia's management had been actively addressing market's various concerns over the company by improving transparency, strengthening its team and reducing aircraft rollout in an effort to contain gearing.
The research house said AirAsia had also proposed to monetise its 'other business units' including the AirAsia Academy (pilot and crew training) and 16%-owned sister-company, AirAsia X (AAX, unlisted).
The future listing of its long-haul carrier AAX, and its subsequent spin off, is the final part of the restructuring to counter the perceived dilution in AirAsia's short haul business model.
Credit Suisse Research said AirAsia was considering paying its first maiden dividend. In its view, the potential dividend would be a small but symbolic amount to signal the market that it is on a better financial footing.
'We estimate that a 10% payout ratio would result in a dividend yield of 1.2%. We believe that this move will be well received by local institutional funds in Malaysia, which could reverse the stock's low local shareholdings and provide fresh impetus to the share price,' it said.
The research house said it remained positive on AirAsia, which has the second largest airline fleet in Asia, with a combined fleet of 93 aircraft. Although Singapore Airlines has110 aircraft, the company 'only' carried 16.6 million passengers in 2010 which is 35% less than AirAsia's combined total of 25.7 million.
In a research note issued on Thursday, March 17, it said AirAsia's management was not in favour of imposing a fuel surcharge, preferring instead to raise loads and ancillary income (higher baggage fees, new services, etc).
Credit Suisse Research said AirAsia management was comfortable with its margins with jet fuel at US$150 per barrel but could impose a surcharge if prices are sustainable at around these levels.
"We estimate that the company needs to raise total fares by merely RM1 to compensate for a US$1 per barrel increase in jet fuel prices. If jet fuel averages at US$120, fares would have to rise by RM10 to compensate. This is less than the price of a large McValue meal (RM11.20), thus, in our view, would not significantly impact demand,' it said.
Credit Suisse Research forecast US$110 for FY11-FY13 jet fuel (+20% on-year versus FY10). AirAsia effectively pays the market rate, as it only hedges 25% of its forward quarter requirements.
It also said AirAsia's management had been actively addressing market's various concerns over the company by improving transparency, strengthening its team and reducing aircraft rollout in an effort to contain gearing.
The research house said AirAsia had also proposed to monetise its 'other business units' including the AirAsia Academy (pilot and crew training) and 16%-owned sister-company, AirAsia X (AAX, unlisted).
The future listing of its long-haul carrier AAX, and its subsequent spin off, is the final part of the restructuring to counter the perceived dilution in AirAsia's short haul business model.
Credit Suisse Research said AirAsia was considering paying its first maiden dividend. In its view, the potential dividend would be a small but symbolic amount to signal the market that it is on a better financial footing.
'We estimate that a 10% payout ratio would result in a dividend yield of 1.2%. We believe that this move will be well received by local institutional funds in Malaysia, which could reverse the stock's low local shareholdings and provide fresh impetus to the share price,' it said.
The research house said it remained positive on AirAsia, which has the second largest airline fleet in Asia, with a combined fleet of 93 aircraft. Although Singapore Airlines has110 aircraft, the company 'only' carried 16.6 million passengers in 2010 which is 35% less than AirAsia's combined total of 25.7 million.
Friday, March 11, 2011
Asian markets skid on flurry of negative news
KUALA LUMPUR: Asian markets skidded on Thursday, March 10 as a spate of negative news spooked investors already worried of high crude oil prices as a result of escalating tensions in the Mid-east that could stem global economic growth.
A contraction in Japan’s 4Q GDP growth, China posting its largest traded deficit in seven years in February as well as Moody's downgrade of Spain's rating further dampened already jittery investor confidence.
The FBM KLCI fell 6.78 points to 1,516.91, weighed by losses including at MISC, DiGi and Petronas Gas. Losers beat gainers 483 to 253, while 280 counters traded unchanged. Volume was 1.09 billion shares valued at RM1.56 billion.
At the regional markets, the Shanghai Composite Index fell 1.5% to 2,957.14, Japan’s Nikkei 225 lost 1.46% to 10,434.38, Taiwan’s Taiex fell 1.22% to 8,642.90, South Korea’s Kospi Index was down 0.99% to 1,981.58, Hong Kong’s Hang Seng Index lost 0.82% to 23,614.89 and Singapore’s Straits Times Index fell 0.56% to 3,075.44.
Regionally, China swung to a trade deficit in February of US$7.3 billion, its largest in seven years, as the Lunar New Year holiday dealt an unexpectedly sharp blow to exports.
European shares declined on Thursday as Moody's downgrade of Spain's rating raised concerns about the health of peripheral euro zone economies, while higher oil prices on
Libya unrest stoked worries about global growth, said Reuters.
At Bursa, among the major losers, BAT fell RM1.40 to RM46.24, Nestle 48 sen to RM45.02, DiGi 44 sen to RM27.36, Panasonic 26 sen to RM19.70, MISC 21 sen to RM7.70, PPB 20 sen to RM17, BLD PLANTATION []s 18 sen to RM5.20 and Petronas Gas 14 sen to RM11.58.
Far East Corp was the top gainer and rose 20 sen to RM7.50; HELP was up 17 sen to RM2.53, Pos Malaysia 15 sen to RM3.20, Media Prima 13 sen to RM2.38, Top Glove 11 sen to RM5, Ewein and Batu Kawan 10 sen each to RM1 and RM15.38, while Bintulu Port added nine sen to RM6.59.
SAAG was the most actively traded counter with 67.76 million shares done. The stock shed half a sen to 9.5 sen. Other actives included Borneo Oil, Perisai, Sumatec, Axiata and HWGB.
A contraction in Japan’s 4Q GDP growth, China posting its largest traded deficit in seven years in February as well as Moody's downgrade of Spain's rating further dampened already jittery investor confidence.
The FBM KLCI fell 6.78 points to 1,516.91, weighed by losses including at MISC, DiGi and Petronas Gas. Losers beat gainers 483 to 253, while 280 counters traded unchanged. Volume was 1.09 billion shares valued at RM1.56 billion.
At the regional markets, the Shanghai Composite Index fell 1.5% to 2,957.14, Japan’s Nikkei 225 lost 1.46% to 10,434.38, Taiwan’s Taiex fell 1.22% to 8,642.90, South Korea’s Kospi Index was down 0.99% to 1,981.58, Hong Kong’s Hang Seng Index lost 0.82% to 23,614.89 and Singapore’s Straits Times Index fell 0.56% to 3,075.44.
Regionally, China swung to a trade deficit in February of US$7.3 billion, its largest in seven years, as the Lunar New Year holiday dealt an unexpectedly sharp blow to exports.
European shares declined on Thursday as Moody's downgrade of Spain's rating raised concerns about the health of peripheral euro zone economies, while higher oil prices on
Libya unrest stoked worries about global growth, said Reuters.
At Bursa, among the major losers, BAT fell RM1.40 to RM46.24, Nestle 48 sen to RM45.02, DiGi 44 sen to RM27.36, Panasonic 26 sen to RM19.70, MISC 21 sen to RM7.70, PPB 20 sen to RM17, BLD PLANTATION []s 18 sen to RM5.20 and Petronas Gas 14 sen to RM11.58.
Far East Corp was the top gainer and rose 20 sen to RM7.50; HELP was up 17 sen to RM2.53, Pos Malaysia 15 sen to RM3.20, Media Prima 13 sen to RM2.38, Top Glove 11 sen to RM5, Ewein and Batu Kawan 10 sen each to RM1 and RM15.38, while Bintulu Port added nine sen to RM6.59.
SAAG was the most actively traded counter with 67.76 million shares done. The stock shed half a sen to 9.5 sen. Other actives included Borneo Oil, Perisai, Sumatec, Axiata and HWGB.
KNM sees potential EBITDA of RM363m for FY11, RM564m for FY12
KUALA LUMPUR: KNM GROUP BHD [] has set an internal target of potential earnings before interest, tax, depreciation and amortisation (EBITDA) of RM363 million for FY11 against expected total revenue of RM2.4 billion.
It said on Thursday, March 10 the potential EBITDA for FY12 was RM564 million on the back of an expected revenue of RM3.4 billion.
KNM said the potential EBITDA was released during its recent briefing for analysts on March 7.
“The above EBITDA and revenue figures are strictly KNM Group’s internal management targets based on its current order backlog and tender book, and these figures have not been reviewed or confirmed by the external auditors.
“The targets are merely internal management targets or aspirations set to be achieved by the company and are not intended to be an estimate, forecast or projection,” it said.
It said on Thursday, March 10 the potential EBITDA for FY12 was RM564 million on the back of an expected revenue of RM3.4 billion.
KNM said the potential EBITDA was released during its recent briefing for analysts on March 7.
“The above EBITDA and revenue figures are strictly KNM Group’s internal management targets based on its current order backlog and tender book, and these figures have not been reviewed or confirmed by the external auditors.
“The targets are merely internal management targets or aspirations set to be achieved by the company and are not intended to be an estimate, forecast or projection,” it said.
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