21 January 2009 Newz Bits

January 22, 2009 at 12:33 am 5 comments

TALKING POINT
Public Bank 4QFY08 – Still going strong
4QFY08 results were within expectations. Loans growth remained strong at a robust 19.1% y-o-y. However, signs of waning growth are already emerging on a q-o-q basis. Despite the weakening
economic climate, asset quality continues to improve. 3-month net NPLs are currently 0.86%, 1/3 of industry average. Loan loss coverage now stands at 159.7%, well above industry averages. A final cash dividend of 25sen and a 1:35 share dividend were declared in the current quarter, bringing gross dividends for the year to 88.7 sen and translating into a yield of 10.2%. We maintain our buy call and target price of RM10.40 as we continue to favour the bank as one of our preferred picks for its attractive dividend yields and strong management.

HIGHLIGHTS

On Malaysia
· Fertiliser importers are expected to reduce prices this quarter
· Tenaga and MOF will have majority stake in Bakun undersea cable project
· Public Bank plans to raise at least RM1bn from bond sale
· Government is finalizing another round of stimulus measures
On The Global Front
· U.K. inflation rate falls the most since 1997 in December
· China’s urban unemployment rate jumps to 30-year high
REPORTS
· Public Bank – 4QFY08 Results (Buy; RM8.70; TP: RM10.40)

Fertiliser importers are expected to drop prices by more than 15% this quarter. This will benefit oil palm plantations as they use up some 3.5m tonnes or 90% of the country’s chemical fertiliser imports. Plantation Industries and Commodities Minister Datuk Peter Chin said fertiliser prices in the world market, except for potash, have fallen significantly and it is only logical to see these savings passed on to the plantations. “In the last quarter, they’ve dropped prices by 15%. They are now calculating the quantum of price drop for this quarter. It’s likely to be more,” Chin told Business Times after meeting with Agriculture and Agro-based Minister Datuk Mustapa Mohamed and Fertiliser Industry Association of Malaysia (FIAM) in Putrajaya yesterday.. (BT)
Thoughts: This comes as positive news for planters should importers shave off their prices by another 15%. However, we believe that the quantum of decrease still does not reflect the drop that has been seen in global markets and expect that there ought to be continued pressure on them (fertilizer importers) to reflect global market prices. To note, there has already been a
close to 5 months lag in prices dropping locally as compared to in the global market much to the disdain of planters. Currently, plantations are going through the rainy season and during this time, minimal fertilizer is usually used due to the unfavorable weather. Hence, we believe that big planters can hold off major purchases untill March hence increasing the pressure on fertilizer importers. Companies we have spoken too say that they are not yet locking in supply for the year as they expect further downside in fertilizer prices. In view of this, we believe that 2009 can see maintainable costs as compared to 2008 hence we keep our RM1,100 cost per tonne expectation largely across the board. Maintain overweight on the plantations sector.
* * * * *
Malaysia’s palm oil exports fell 33% in the first 20 days of January compared with the same period the previous month according to cargo surveyor Intertek. A total of 738,255 mt of palm oil was tracked in the first 20 days of January compared to 1.1m mt seen in December. (Financial Daily)
Thoughts: This is much expected given the sharp increase in CPO exports seen in December due to pre-stocking activities in India that were driven by the expectation of an import duty to be imposed on CPO. We expect that export numbers will continue to be choppy in coming months given these measures as well as due to slow economic activity in major importing countries. On
the flip side, we also see the potential for the substitution effect to kick in stronger given CPO’s continued discount to soy oil hence keeping exports on a cumulative level steady in 1H09. Maintain overweight on the plantations sector.
* * * * *
Tenaga Nasional Bhd (TNB MK, Buy, TP: RM8.20) and the Finance Ministry will have a majority stake in a special purpose vehicle set up to build the undersea cable for the RM16bn Bakun hydroelectric project. The Sarawak government, which has a majority stake in the Bakun dam, will hold a minority stake. It is believed the Economic Planning Unit (EPU) has given an agreement in principle and an official announcement will be made soon. The cable involves the
development of two 700km underwater cables, estimated at RM9bn, which will transmit power from the 2400-MW Bakun dam to the peninsula. According to sources, Tenaga will possibly take a stake of about 30%-40% if the majority stake is tied up with the Finance Ministry. (Starbiz)
* * * * *
UMW Holdings Bhd (UMWH MK, Hold, TP: RM5.30) plans some RM600m in capex this year to beef up its oil and gas (O&G) business, according to managing director and chief executive officer Datuk Dr Abdul Halim Harun. Over 50% of the capex will be used for plant and machinery, namely the group’s two jack-up rigs, Naga 2 and Naga 3, while the balance will be for ongoing projects, such as the construction of its pipe-manufacturing plant in India, fabrication yard in Lumut and a land rig under unit UMW Petrodril Sdn Bhd, a hydraulic workover rig contractor. Abdul Halim said the capex would be funded via bank borrowings and internal funds. He expects 2009 to be a good year for the O&G division as some of its projects should be coming onstream soon, and expects revenue and profit contribution from the division to surpass the contributions from auto division in the next two to three years. On the group’s listing of its O&G business, Abdul Halim does not expect to list this year unless the market improves in 2H09, adding that the listing would most probably be on Bursa Malaysia. (StarBiz)
* * * * *
Public Bank Bhd (PBK MK, Buy, TP: RM10.40) plans to raise at least RM1bn from a bond sale this year to improve its capital position. The debt will take the form of Tier-1 capital securities and subordinated debt securities, Public Bank chief operating officer Leong Kwok Nyem said. The bank may even be able to raise more than RM1bn as it has the highest credit rating of “AAA”, he said at a briefing in Kuala Lumpur yesterday. (BT)
* * * * *
Gamuda Bhd’s (GAM MK, Buy, TP: RM2.28) property arm Gamuda Land Sdn Bhd will continue with its projects despite the softening market. Managing Director Chow Chee Wah said there were enough funds to complete its projects, some of which would be on a long-term basis. “Based on our experience during the last financial crisis, it is better to finish the projects soon so that when the market is stable, the products are ready for the buyers,” he said. (Starbiz)
* * * * *
AirAsia (AIRA MK, Buy, TP: RM1.90) has launched its direct daily flights to Bali from Bangkok. In a statement yesterday, AirAsia said the route, which was opened for booking on December 17, 2008, would further strengthen its aggressive expansion plans. The airline said yesterday also marked the start of its maiden flight to Guangzhou, China, from Bangkok. Both routes are operated by Thai AirAsia, an associate of the AirAsia group. (BT)
* * * * *
The government is finalising another round of stimulus measures to support businesses and the overall economy, which may lead to the widening of the budget deficit beyond the targeted 4.8% for this year. The Economic Planning Unit (EPU) in the Prime Minister’s Department is drawing up the proposals that could be submitted to the cabinet for approval within the next few weeks. One of the measures could be the proposed price reduction of the gas supplied by Petroliam Nasional Bhd (Petronas) to Tenaga Nasional Bhd that could lead to lower electricity tariffs, thereby reducing the cost of doing business. The authorities will also work with exporters and manufacturers to curb any layoffs of skilled personnel. Minister in Prime Minister’s Department Tan Sri Amirsham A Aziz, who is in charge of the EPU, said if necessary, extra funds could be channelled to the various ministries for the implementation of ready-to-roll projects. The theme of the measure was to save jobs and not so much pump price, he said. He added that the deficit would still be manageable as we still have the capacity and flexibility to spend. Amirsham also said that the funds for the RM7bn stimulus package announced last November had been given to the ministries and agencies involved. (Financial Daily)
* * * * *
The local water industry may need more than RM50bn for capital expenditure (capex) over the next 30 years, says Pengurusan Aset Air Bhd (PAAB) head of finance Kevin Lee. According to Lee, all water operators have to submit their business plans to the industry regulator, National Water Services Commission (SPAN). “In that business plan, they need to set out their capex requirements over the next 30 years and once it is approved, we will know for sure the exact amount required…but based on studies, over the next 30 years we are looking at more than RM50bn,” he said. On funding the capex, Lee said it would be a combination of short and long-term loans. “We are going to the capital markets to raise funds. We don’t really see a problem in this area,” he added. (Starbiz)
* * * * *
Property prices and demand will weaken by 5% to 10% in 2009 due to slower economic growth and a decline in foreign investment, says an industry official. Association of Valuers and Property Consultants In Private Practice Malaysia (PEPS) president James Wong ruled out a property price plunge but said he expected a gradual correction as prices had peaked in the third quarter of last year. Real estate investment trusts cutting back on property acquisitions, which had been a significant factor in the rising property market for the past two years, was partly to blame for the slowing demand, he told a press conference yesterday. “Many potential buyers and investors are adopting a wait and see strategy,” he said. (Starbiz)
* * * * *
Malaysia attracted an estimated US$12.9bn in foreign direct investment (FDI) in 2008 despite the global FDI inflows falling by 21% last year to an estimated US$1.4trn, said the United Nations Conference on Trade and Development (Unctad). Unctad said Malaysia’s FDI was 53.4% higher than the US$8.4bn in 2007 while China remained the hottest spot for investors in the region, receiving US$92.4bn. (Financial Daily)
* * * * *
Permodalan Nasional Bhd (PNB) may restructure companies in its portfolio that are not performing amid the global crisis, president and chief executive officer Tan Sri Hamad Kama Piah Che Othman says. PNB has stakes in various companies, from plantation and property to consumer and banking, among others. (BT)
* * * * *
Malaysia and Qatar have agreed in principle to set up a US$1bn (RM3.6bn) investment fund for mutual investment, Foreign Minister Datuk Seri Dr Rais Yatim said. He said details of the fund will be finalised at a meeting between Prime Minister Datuk Seri Abdullah Ahmad Badawi and his Qatari counterpart Sheikh Hamad bin Jasim bin Jabir Al-Thani. Among matters to be fine-tuned are the type of projects and where they are to be implemented. (Financial Daily)
* * * * *
MK Land Holdings Bhd yesterday sold a 23-acre land in district Petaling, Mukim Sungai Buloh, Selangor to a company linked to its major shareholder Tan Sri Mustapha Kamal Abu Bakar for RM150m cash via open tender exercise. According to the filing to Bursa Malaysia, the sale and purchase agreement for the land was signed yesterday between Saujana Triangle Sdn Bhd, a wholly owned subsidiary of MK Land, and Ketara Megah Development Shd Bhd, a company related to Mustapha. (Financial Daily)
* * * * *
Pengurusan Aset Air Bhd (PAAB), which is wholly owned by the Ministry of Finance, has acquired its second tranche of water assets worth RM1.21bn from Negri Sembilan state government as part of the consolidation plan for the country’s water assets. Under the agreement, PAAB would take over from Syarikat Air Negri Sembilan Sdn Bhd (SAINS) 26 water treatment plants, 430 water tanks, 126 booster stations and some 6,408km of clean water mains, Deputy Prime Minister Datuk Seri Najib Razak announced yesterday. As consideration for Negri Sembilan’s water assets, PAAB would assume the outstanding loans attached to those assets of the same value. (Financial Daily)
* * * * *
Aeon Co (M) Bhd is still in negotiation with See Hoy Chan Holdings to renew its lease of the first phase of 1Utama shopping complex in Bandar Utama. It was reported that See Hoy Chan, which owns the shopping complex, was unlikely to renew Aeon’s lease as it preferred to run the mall on its own to present the mall as an integrated and wholesome centre. The 15-year lease between Aeon and See Hoy Chan will end sometime next year. (Financial Daily)
* * * * *
Stocks slumped to two-month lows Tuesday as investors looked beyond President Barack Obama’s historic inauguration to the battered economy he inherits. The Dow Jones industrial average lost 4.0% (-332.1 pts, close 7,949.1), closing at the lowest point since Nov. 21. The Standard & Poor’s 500 index lost 5.3% (-44.9 pts, close 805.2) and the Nasdaq composite lost 5.8% (- 88.5 pts, close 1,440.9). In currency trading, the dollar gained against the euro and fell against the yen. U.S. light crude oil for February delivery rose US$2.23 to settle at US$38.74 a barrel on the New York Mercantile Exchange. (Bloomberg)
* * * * *
The U.S. government wouldn’t be able to spend at least one-fourth of a proposed US$825bn economic stimulus plan until after 2010, according to a new report that suggests it may take longer than expected to boost the economy. A Congressional Budget Office analysis of President Barack Obama’s plan found that most of the approximately US$355bn in proposed discretionary spending on highways, renewable energy and other initiatives wouldn’t be spent before 2011. The
government would spend about US$26bn of the money this year and US$110bn more next year, the report said. About US$103bn would be spent in 2011, while US$53bn would be spent in 2012 and US$63bn between 2013 and 2019, the report said. Republicans said the analysis showed that the plan, unveiled last week by House Democrats, won’t get money into the economy quickly enough. (Bloomberg)
* * * * *
The U.K.’s inflation rate fell the most since at least 1997 in December as tax cuts and the deepening recession eased price pressures across the economy. Consumer prices rose 3.1% y-o-y, compared with 4.1% the previous month, the Office for National Statistics said yesterday. That was still more than the median forecast of 2.6% in a Bloomberg News survey of 33 economists. On the month, prices fell 0.4%. Inflation is slowing as Britain faces a recession that may be the worst since the aftermath of World War II. The pound fell to a record against the yen yesterday. (Bloomberg)
* * * * *
The Bank of Canada slashed its key interest rate to the lowest since the institution was founded in 1934 and signalled that more cuts may be needed to jolt the economy out of recession and stabilize credit markets. Governor Mark Carney cut the target rate on overnight loans between commercial banks by half a point to 1%, lower than the previous record of 1.12% in 1958 when the rate was based on treasury-bill yields. The move was anticipated by 19 of 20 economists surveyed by Bloomberg News. Canada’s move mimics efforts in the U.S., the U.K. and Japan to revive lending as credit markets reel from about US$1trn of write-offs and losses. (Bloomberg)
* * * * *
China’s official urban unemployment rate jumped for the first time since 2003 and may climb to an almost 30-year high as exports slump and a slowdown deepens in the world’s third-biggest economy. Registered unemployment rose to 4.2% as of Dec. 31, Yin Chengji, spokesman for the Ministry of Human Resources and Social Security, said yesterday. It was 4% three months earlier. A rate as high as the government’s 4.6% target for this year, which was announced by Yin, would be the worst since 1980, official data show. Premier Wen Jiabao said Monday that the government must do more to preserve social stability in the face of a “very grim” job outlook. (Bloomberg)
* * * * *
The Japanese government said the economy is “worsening rapidly” and the collapse in exports and production is likely to prompt companies to fire more workers. The government lowered its economic assessment for a fourth month, capping off the longest stretch of downgrades since May 2001, according to a report released by the Cabinet Office yesterday. It cut the evaluation of exports, industrial output and consumer spending. The government said shipments abroad and factory production are “decreasing substantially,” while the manufacturing slump could lead to “significant” job losses. Economic and Fiscal Policy Minister Kaoru Yosano said all economic indicators point to a rapid deterioration, and that it is hard to imagine a recovery in the
next few months. (Bloomberg)
* * * * *

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SP Setia : Easing financing to boost sales Public Bank 4QFY08 : Still going strong

5 Comments Add your own

  • 1. » 21 January 2009 Newz Bits  |  January 22, 2009 at 12:45 am

    […] Cybertration wrote an interesting post today onHere’s a quick excerpt TALKING POINT Public Bank 4QFY08 – Still going strong 4QFY08 results were within expectations. Loans growth remained strong at a robust 19.1% y-o-y. However, signs of waning growth are already emerging on a q-o-q basis. Despite the weakening economic climate, asset quality continues to improve. 3-month net NPLs are currently 0.86%, 1/3 of industry average. Loan loss coverage now stands at 159.7%, well above industry averages. A final cash dividend of 25sen and a 1:35 share dividend were declared in the current quarter, bringing gross dividends for the year to 88.7 sen and translating into a yield of 10.2%. We maintain our buy call and target price of RM10.40 as we continue to favour the bank as one of our preferred picks for its attractive dividend yields and strong management. HIGHLIGHTS On Malaysia · Fertiliser importers are expected to reduce prices this quarter · Tenaga and MOF will have majority stake in Bakun undersea cable project · […] […]

  • 2. Commodities » 21 January 2009 Newz Bits  |  January 22, 2009 at 12:57 am

    […] Dare Something Worthy Today Too! wrote an interesting post today onHere’s a quick excerpt21 January 2009 Newz Bits TALKING POINT Public Bank 4QFY08 – Still going strong 4QFY08 results were within expectations. Loans growth remained strong at a robust 19.1% y-o-y. However, signs of waning growth are already emerging on a q-o-q basis. Despite the weakening economic climate, asset quality continues to improve. 3-month net NPLs are currently 0.86%, 1/3 of industry average. Loan loss coverage now stands at 159.7%, well above industry averages. A final cash dividend of 25sen and a 1:3 […]

  • 3. 21 January 2009 Newz Bits | CONFERENCE CALLING  |  January 22, 2009 at 1:14 am

    […] 21 January 2009 Newz Bits Posted in Tech on Gen 22nd, 2009, 01:33 by     […]

  • […] 21 January 2009 Newz Bits « Sought Content […]

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