Potential Companies Likely To Be Take..

Company	NTA (RM)	Key Director	Key Shareholder
YTL Land Development	1.150	Tan Sri Francis Yeoh	YTL Corp (57.89%)
GOLDIS	2.310	Tan Lei Cheng	Tan Chin Nam Sdn Bhd (17.54%)
ASB	0.890	Datuk Ahmad Sebi Bakar	Suasana Dinamil Sdn Bhd (15.23%)
Kuchai Development	2.270	Lee Soo Hoon	Kluang Rubber (41.91%)
Sungei Bagan Rubber	6.070	Lee Soo Hoon	Kluang Rubber (31.89%)
Kluang Rubber Co	6.420	Lee Soo Hoon	The Nyala Rubber (41.59%)
Minho	2.730	Datuk Sei Ismail Yusof	Minho (29.39%)

YTL Land

As YTL Land seeks to take private some of its listed companies to create more values for its shareholders, could YTL Land & Development Bhd becomes the next candidate?

Its MTA stood at rm1.15 per share.

It has more than 809ha of strategic land development in Malaysia with an estimated sales value of rm12 billion.

Meanwhile YTK Corp’s MD Tans Sri Francis Yeoh made no secret about the company’s plan to take private some of its listed companies to consolidate its businesses and distribute more dividends to its shareholders.

Going forward, its bright prospects will be its development in Sentul, KL In addition, it is developing a premium residential condominium project on Orchard Boulevard in Singapore.

GOLDIS Bhd

It is linked to Tan Sri Tan Chin Nam. He has been buying back its own shares since July

2012. As at April 2013, the company bought back 35.12 million shares which are held under treasury for a total of rm4.41 million.

Its NTA stood at rm2.31 per share as at April 2013.

GOLDIS has been thinly traded due to lack of corporate developments.

ASB

Since making a turnaround in financial year ended 2009, the group with diversified businesses in hospitality, property and ICT has been revamping its operations.

Its group chairman Datuk Ahmad Sebi Bakar is a major shareholder of Suasana Dinamik Sdn Bhd which in turn is a substantial shareholder of ASB.

Kuchai Dev/SBagan/Kluang

All three companies have common shareholders. Kluang Rubber and Sungai Bagan hold 41.91% stake and 9.38% direct stakes respectively in Kuchai Development Bhd.

With two parcels of land of about 3.24ha, one leased out in Singapore and the other an unused mining land located in Ulu Langat Selangor, there are not many fixed assets that Kuchai Development is holding to developed and expand its business.

Currently (April 2013), the company’s revenue is derived from rental income from its property in Singapore and dividend income from investment in securities.

There is a possibility of the company being taken private.

Meanwhile Kuchai Development director Lee Chung Shih has 0.19% direct interest and 51.28% indirect interest in the company. Lee is also a director of Sungai Bagan and Kluang Rubber.

Sungai Bagan’s NTA stood at rm6.07 and Kluang’s NTA stood at rm6.42.

Minho

Its NTA stood at rm2.73 per share.

It is involved in timber manufacturer. It had also diversified into property development.

What's NEXT For MISC After The Failed GO ....

MISC Bhd's 800,000 shares were traded off-market at RM4.15 each on 24 April 2013.

MISC had been in focus after Petroliam Nasional Bhd launched a takeover offer for the company. However, the takeover did not get through. Market observers said many event-driven and short-term funds had recently taken positions in MISC to play the GO and did not expect these shareholders to hold on to their stakes.

Petronas would not be able to make another offer for one year from April 2013.

Dated Jan 2013 ... Prior To The General Offer.

The cessation of its liners business and sale of 50% of Gummusut-Kalap Semi-Floating

Production System Ltd to Petronas in the last 14 months could well be the last major divestures undertaken by MISC Bhd.

But questions have emerged on the future of the state run shipper’s relatively unknown integrated logistics business. With its container shipping days and liner losses now (Jan 2013) behind it, there could be a push to divest the remaining non core unit.

At some point, it is only logical to get out the remaining integrated logistics business. Previously it was part of the value chain. MISC had containers and wanted to move them, hence the use of prime movers. But there is no point in holding onto it now.

The reason they still have it could be because they are not able to find a buyer. MISC could potentially sell the business to logistics companies like Kontena Nasional or NCB Holdings Bhd.

That said, integrated logistics is a small part of MISC’s business, contributing less than 5% to the group revenue and profit.

It is not as though MISC is losing a lot of money in logistics. Most importantly, it exited the liner business to stop the losses.

MISC officials said there are no immediate plans to sell the business. It still brings value to the Petronas group but there is a good price for it … it will.

MISC is always dynamically reassessing its portfolio of businesses to ensure that it delivers the best returns and value to its shareholders. Therefore it will certainly evaluate offers and opportunities that come along.

MISC is now (Jan 2013) well on the way to recovery and is focused on its key businesses of LNG, petroleum shipping, chemical shipping, offshore , tank terminal and marine and heavy engineering through MMHE.

MISC’s LNG prospects seem squarely linked to those of its parent company Petronas with Petronas’ 100% acquisition of Canadian natural gas producer Progress Energy Res Corp, market observers are not ruling out the possibility of MISC shipping gas from Canada to Asia.

MISC had 27 LNG carriers as at end Dec 2011, excluding its two floating gas storage units (FSUs). The FSUs are time chartered to Petronas Gas and deployed at Malaysia’s maiden regasification terminal at Sungai Udang in Melaka.

With part of the proceeds from the sale of half of Gummusut-Kakap channeled into its offshore business, this segment – with a steady income stream – appears to have the necessary ingredients for expansion. MISC’s remaining 50% interest in Gummusut-Kakap will allow it to equity account the profits of the floating production unit once it begins charter to Shell from April 2013.

MISC and its joint venture partner Vitol, the world’s largest oil trader, plan to almost double the capacity of their Johor terminal by middle of 2014. MISC and Vitol are planning on more tanks and capacity by mid 2014 with the intention of leasing them.

MISC’s petroleum shipping business, operated through American Eagle Rankers which MISC acquired in 2003 was loss making as it weathered a shipping downturn plagued by depressed charter rates and vessel overcapacity. The segment was still in the red in 2012.

In 2012, it took delivery of four shuttle tankers which are on a 15 year time charter to Petrobras. On order was another four VLCCs for delivery in 2013 and two DP shuttle tankers slated for 2014 to 2015.

Valuation wise it is a boomed out stock among the FBM KLCI components.

Its net assets per share stood at rm4.84.

The shipping gaint is still sailing in choppy waters as reflected by its earnings that have been trending downwards over the past five years prior to Dec 2012 amid prolonged overcapacity and flow freight rates.

Nonetheless, most of the negative news has been factored into the stock (07 Jan 2013) The market had oversold the stock on the basis of negative news from MHB. MISC has 66.5% equity stake in MHB. The earnings of which have not met expectations.

In such a tough operating environment (Jan 2013), MISC has made valiant efforts to strengthen its financial footing.

The group took the bold step of exiting the liner business in which it had been making losses. It also sold its 50% equity stake in the Gumusuit-Kakap semi floating production system to a wholly owned subsidiary of Petronas Carigali Sdn Bhd pockeing rm5.29 million cash. Expect the deal to reduce its gearing ro 30% from 50%.

LBS prospects.. dated April 2013

LBS




If things go according to plan, LBS’s proposed divestment of a tract of land plus a 36 hole golf course in Zhuhai should be a sweet deal. This is because it is priced at rm644 million.

However shareholders may not enjoy an instant windfall because a large portion of the cash proceeds will be paid over four years.

It will receive a cash consideration of HK$500 million upon the completion of the divestment and HK$850 million in four tranches – HK$250 million at the end of 2014 and HK$200 million each in the following three years.

The company will also receive 225.56 million new shares in the HK listed Zhuhai Holdings worth HK$300 million. As a result, it will emerge as the third largest shareholder with a 16.78% stake.

The first payment of rm200 million will be utilised for general working capital and to reduce bank borrowings and settle expenses arising from the deal. As at Dec 31 2012 it had total bank borrowings of rm430 million.

The divestment will boost the company’s net tangible assets per share to rm1.70 from rm1.17 now while its net gearing ratio will drop to 0.37 times.

Its earnings in FY2013 should see a jump considering that the company will recognise an extraordinary profit of rm240 million from the deal.

The holding interest in Zhuhai Holdings, will allow LBS Bina to ride the development of the tract in Zhuhai.

LBS Bina will not only benefit from cash proceeds of rm538 million but also the upside potential of Zhuhai Holdings share price.

What's NEXT For MAS ...

It has fixed its rights issue price at 23 sen per shares for every one existing share held. The cash will enable MAS to raise gross proceeds of rm3.07 billion. MAS also gave a 34.3% discount from its theoretical ex rights price of 35 sen for its rights issue price.

The rights issue will be undertaken on a minimum subscription basis based on Khazanah Nasional Bhd’s full entitlement to the rights issue. In the event only Khazanah subscribes for its full entitlement to the rights shares, the rights issue will result in the issuance of 9.27 billion rights and will raise gross proceeds of rm2.133 billion.

Khazanah holds 69.37% stake in MAS.

The fund-raising exercise is crucial for the growth and efficiency of the national airline in an increasingly competitive aviation industry.

The capital raised from the rights issue would be spent on growing its fleet towards a more cost-efficient operation besides paring down its debt.

MAS' quarterly financial performance has been improving of late and that the market has been taking it positively.

Even if the minorities did not fully take up the proposed rights issue, market observers did not foresee any problems, as Khazanah Nasional Bhd, which has a 69.37% stake, had unconditionally committed to taking up its full entitlement, and could also potentially take up the entire entitlement of the minorities as well.

Should the take-up rate for the offer by the minority shareholders be low, Khazanah might end up0 holding more of MAS than the maximum 75%. Further, to maintain MAS' listing status, the company would rectify the situation within the timeframe allowed by the authorities.

Khazanah might pare down its enlarged stake later to other potential investors as well.

The other substantial shareholder of the company is the EPF with a 6.89% stake.

It is believed that most of the negative news (including on the rights issue exercise) has already been reflected in its share price (early April 2013).

Market observers expect MAS to turn around in financial year 2013, as the airline continues to improve on reducing costs and improving revenue.

However, the risk to its recommendation included an increase in jet fuel prices which could hinder the group’s turnaround.

In February 2013, the number of passengers carried by MAS grew by a sharp 24% to 1.1 million passengers, driven by a 22% growth in international travel and 27% growth in domestic travel.

The load factor in February 2013 registered a commendable increase to 77% on the back of a 22% growth in revenue passenger km or RPK, which was ahead of the 10.2% contraction in capacity. Demand for cargo also improved in February 2013, registering a modest 14.7% growth, while load factor improved to 74.4%.

Despite the improving operating statistics, industry observer remains concerned on the current (April 2013) competitive operating environment among airlines, with three legacy airlines – Air France, Turkish Airlines and Philippines Airlines – returning to the KL International Airport, and potentially two more airlines in the next few months from April 2013.

Expect competition to be stiffer among legacy airlines, especially to international destinations.

Meanwhile the High Court of Malaya at Kuala Lumpur had granted an order confirming MAS' proposed capital restructuring. The corporate exercise involved reducing 90 sen of the par value of RM1 each, the proposed reduction of the share premium account and a renounceable rights issue of 10 sen to rasie uo to RM3.10bil after the proposed capital restructuring.

Oldtown prospects..

Its aggressive store rollout strategy and expansion into China may be impressive, but not its same store sales growth. However now that it has 100% halal certification for all its outlets, the group expects SSS growth to enter double digit territory.

While new outlets will help grow revenue, the question is can they sustain sales without cannibalizing the old outlets?

The thing is there is not much SSS growth at the moment. However with its soon to be launched halal campaign, it is expecting at least double digit growth.

Halal certification will provide the group with access to a much wider market. This will boost its organic growth significantly considering its current customer base its mainly non Malay.

In the past couple of months, OldTown has also been focusing on its China efforts. In fact two new deals will soon position the group for expansion in China’s F&B and fast moving consumer goods sectors. This capex will funded by rm64 million that the group had raised via a private placement.

Expect to see a small shift in its earnings – moving towards FMVG – with its new factory in Ipoh and its China operations.

Its prospects are bright with two key drivers: the strong growth of its FMCG segment, which is expected to get a boost from its growing regional mark shares, including an untapped markets like China, South Korea and Vietnam and the opening of more outlets in Malaysia, Singaporem Indonesia and China.

Whether not OldTown’s halal certification helps maintain sales in its local F&B business, its expanding FMCG segment and prospects in China will certainly speed up its pace of growth.

China-Based Companies: China Ouhua, China Stationery, XiDelang, XingQuan, HB Global (Sozo), K-Star, Maxwell, MSports

All these companies are cash rich with minimal borrowings.

The depressed share prices of these China stocks have made them easy takeover targets or privatization candidates.

	Cash as at Sept 30 2012 (RM mil)	Borrowings (RM mil)	Net Cash per share (sen)
China Ouhua	124.58		18.65
China Stationery	883.7	19.7	69.57
XiDelang	323.5	19.3	41.9
XingQuan	340.2	14.6	105.96
HB Global	138.9	7.64	28.05
KStar	910.3	12.15	29.61
Maxwell	220.5		55.25
MSports	236	13.4	43.01

Property Developers’ LandBank

KSL: Owns 1900 acres near Iskandar Malaysia. The company is developing a nixed use development in Klang with a DGV of rm2.5 billion.

Net Cash/(Net Debt): -182.5

Daiman Development: Onws 2286 acres in Johor booked at an average price of rm5.92 psf.

Net Cash/(Net Debt): 61.3

Crescendo Corp: Owns 3000 acres in Johor. The company is set to launch its rm3 billion Bandar Cemerland Development in 2014.

Net/(Net Debt): -78.8

Hua Yang: Expands GDV by 67% to rm3.8 billion with the purchase of a 29.2 acre tract in Puchong.

Net Cash/(Net Debt): -rm31.2

LBS: The company has a huge war chest for acquistions after raising rm539 million cash through the disposal of two property subsidiaries in China.

Net Cash/(Net Debt): -270.5

Tambun Indah Land Bhd: Owns 500 acres near Penang’s Second Bridge with good development potential.

Net Cash/(Net Debt): 12.2

I-Bhd: Has exclusive rights to develop the 72 acre I-City in Shah Alam which has a total GDV of rm5 billion.

Net Cash/(Net Debt): 16.1

KEN Holdings: It is planning an integrated project in Johor Baru with a GDV of at least rm12.2 billion.

Net Cash/(Net Dedt): 4.2

Ho Hup: Owns exclusive rights to develop a 10 acre tract in Bukit Jalil and to develop another 50 acres with Malton Bhd via a JV. Total GDV for the 60 acres in Bukit Jalil amounts to rm4 billion.

Net Cash/(Net Debt): -6.7

CapitalLand: Owns 71 acres in Danga Baym Iskandar with GDV of rm8.1 billion;

 

Dialog: Its massive rm5 billion Pengerang project has a 60 year concession;
Gamuda: 50% of Horizon Hills in Nusajaya (710 acres of unsold land, rm4.3 billion balance GDV);

IWH/Tebrau: Of the about 1,700ha, IWH has about 809.37ha in Danga Bay. Of the balance land-bank, 768.9ha are in the Johor Baru city centre and the eastern side or Tebrau Coast of the southern tip of Johor Baru, and it also has 121.41ha in Desaru;

Genting Plantation: Owns 6571 acres of land near Senai Airport. Owns the Johor Premium Outlet;

E&O: Owns 210 acres in Medini that will be developed into a wellness project;

IOI Corp: Owns 1955 acres of land in Kulai, near the Senai airport;

Mah Sing: Owns 433 acres in Johor including 8.2 acres in Medini;

SP Setia: Sominant developer in wider Johor with over 1000 acres of landbank;

Sunway: Owns 1858 acres of land in Iskandar with total GDV of rm30 billion;

UEM Land: Has the largest landbank of any developer in Iskandar with over 7000 acres undeveloped;

WCT: Owns 46 acrers of land in Johor including 34 acres in Medini

stop work order on TRC

TRC Synergy Bhd is the contractor undertaking the LRT extension at that site. Prasarana Negara Bhd has since issued a stop work order on TRC's portion.

Aside from potential delays in revenue recognition, TRC could potentially suffer from lawsuits, loss of reputation and termination by Prasarana. The LRT extension makes up 36% of TRC's orderbook.

TRC is currently (March 2013) meeting up with Prasarana to explain the situation and will bear full responsibility for the incident. Risk of termination by Prasarana is slim as there is no such provision clause in its contract and it will be costly and time consuming for Prasarana to retender the job out.

To recap, the accident occurred when construction equipment hoisted by a crane fell and crushed two cars at the Kelana LRT line extension site along KM15 Jalan Lapangan Terbang Subang. The first driver unfortunately died from the accident while the second driver survived but suffered serious injuries.

TRC was currently (March 2013) meeting up with Prasarana and the Works Safety Department to explain the situation. It also guided that the suspension by Prasarana only applies to that particular stretch of the extension, namely along Jalan Lapangan Terbang Subang.

At this juncture (early April 2013), management is unable to provide concrete guidance on how long the suspension will last. Works on the non-affected stretches (ie Subang and Summit USJ) will continue.

This could result from extended suspension of works along the affected stretch and review and implementation of tighter safety measures for the job.

The job was awarded to TRC in December 2010 and was 28.4% complete as of end 2012. The LRT line extension makes up 35.8% of TRC's RM1.9bil orderbook balance.

Reduction in its 2013 earnings is expected.

Fund Flow of first quarter 2013

The current market (till end March2013) rebound is attributed to foreign buying and possibly window dressing activities by funds. As the first quarter of 2013 is drawing to an end, foreign funds are actively buying into the market. Foreign funds want to make up for the subdued market performance the last two months (Jan – Feb 2013) and probably want to end the first quarter 2013 to a positive note.

The current market (till end March 2013) rally could also be local institutional funds doing their window dressing activities. This is also supported by foreign funds buying on selected stocks. Hence this is a fight between foreign funds and local funds at the moment.

Local institutions’ participation rate has been rising in the last few days prior to 29 March 2013. On March 18 2013, local institutions’ participation rate was at 40.37% while foreign funds had 48.3% participation on Bursa. On March 27 2013, participation rate of local institutions was up to 53.3% while foreign funds were at 32.8%.

However retailers increased their participation rate. On March 27 2013, their rate was 13.8% compared to 11.33% on March 18 2013.

The GE remains one of the biggest risk factors for investors to trade and invest in Bursa Malaysia which could limit the uptrend of the KLCI once the date of the dissolution of Parliament is announced.