Construction Weekly Review: 17th – 23rd November 2008

December 1, 2008 at 8:49 am Leave a comment

Construction Weekly Review: 17th – 23rd November 2008

• Another disappointing week.
All construction stocks under coverage ended lower last week. On notable filings by major shareholders last week, Employees Provident Fund bought 1.5m and 2.6m shares in Gamuda and IJM Corporation respectively. These purchases raised its stake in Gamuda and IJM Corporation from 5.7% to 5.8% and from 21.5% to 21.8% respectively.
• In the news.
There were two notable pieces of news last week. This first involved Zelan Bhd (ZELN MK, not rated) which saw its share price tumble 24.5% following the exit of its chief executive officer Albert Chang. This has
sparked speculation that MMC Corporation (MMC MK, not rated), may either inject MMC Engineering Group Bhd into Zelan or to launch a takeover offer to take Zelan private. The other news is on the Pahang-Selangor Raw Water Transfer project. So far, there is still no sight of when the project will take off as the government has not secured the much needed soft loan from Japan Bank for International Cooperation.
• Contracts awarded.
New contracts awarded last week were minimal, at RM99.5m only.
• Maintain UNDERWEIGHT.

All construction stocks under coverage ended lower last week. On notable filings by major shareholders last week, Employees Provident Fund bought 1.5m and 2.6m shares in Gamuda and IJM Corporation respectively. These purchases raised its stake in Gamuda and IJM Corporation from 5.7% to 5.8% and from 21.5% to 21.8%
respectively.

Notable construction news
• Zelan Bhd (ZELN MK, not rated) tumbled 24.5% last week following the company’s announcement that the employment contract of its chief executive officer Albert Chang will not be renewed when it lapses on 31 Jan 2009. Albert Chang who owns about 5.72% of the company via Noble Gem Sdn Bhd has also disposed of most of his shares in the past few days. It is widely believed that following the departure of Albert Chang,
MMC Corporation Bhd (MMC MK, not rated) will have management control of Zelan since MMC is the largest shareholder with a 39% stake in Zelan. Speculation is also rife that MMC may either inject MMC Engineering Group Bhd into Zelan or to launch a takeover offer to take Zelan private.
• Funding for the Pahang-Selangor Interstate Raw Water Transfer Project has not been secured as of to-date as the government is still negotiating with Japan Bank for International Cooperation (JBIC) on the soft loan to finance the project. According to Deputy Energy, Water and Communications Minister Datuk Joseph Salang Gandum, should the government fail to procure the soft loan; the project will still go ahead as the government had backup plans.

Contracts awarded
New contracts awarded last week were minimal, at RM99.5m only.

Comments:
HSL reported 3QFY08 earnings which were within consensus estimates. Although revenue and net profit increased 27.6% and 7.5% y-o-y respectively, margin continued to be under pressure. Gross margin for the quarter was 22.1% as compared to 26.2% a year ago. HSL’s order book replenishment has continued to be robust with RM905m of new projects procured so far in 2008

Entry filed under: Business, Finance, Stock Market. Tags: , , , , , , , , , , , .

Banking Weekly Review: 17th – 23rd November 2008 Economics – US: Expecting A Soft Recovery In 2H09

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed



%d bloggers like this: