Brahim’s, Super Enterprise, DNex, Parkson and Zecon

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KUALA LUMPUR (April 1): Based on corporate announcements and news flow today, companies that may be in focus tomorrow (Thursday, April 2) could include: Brahim’s, Super Enterprise, Dagang Nexchange (DNex), Parkson and Zecon Bhd.

Brahim's Holdings Bhd and Malaysian Airline System Bhd (MAS) have extended their negotiations for a new catering agreement by another month to April 30, 2015.

This confirmed a report by The Edge Weekly on March 30, 2015, which stated the negotiation of the new catering contract was unlikely to be concluded by the March 31, 2015 deadline. It was reported one reason for the delay was that MAS and Khazanah Nasional Bhd have yet to agree on the billing method for the in-flight meals.

In a filing with Bursa Malaysia today, Brahim's (fundamental: 0.35; valuation: 1.2) said its 70%-owned subsidiary, Brahim’s Airline Catering Sdn Bhd (BAC), has yesterday (Tuesday, March 31) signed an extension agreement with MAS to facilitate negotiations for the new catering agreement to be executed between the two parties.

Brahim's and the national carrier had earlier entered into a settlement agreement dated Feb 26, 2015 to provide for the settlement of certain disputes and the negotiations of a new agreement to replace the existing catering agreement.

Meanwhile, Super Enterprise Holdings Bhd, which manufactures product decorating and labelling solutions and sells labelling machines, has attracted interest from NASDAQ-listed Multi-Color Corp (MCC).

Super Enterprise (fundamental: 2.5; valuation: 1.8) said in a filing today that it has received a non-binding indication of interest from MCC dated March 27, 2015 to “explore a potential transaction” involving its shares.

MCC requires, among others, a due diligence to be satisfactorily completed before it can proceed to the stage of making a definitive offer involving the shares of Super Enterprise, if applicable,” Super Enterprise said in a statement, adding it has agreed for MCC to undertake a due diligence exercise.

The scope of due diligence would include the operations of Super Enterprise and its subsidiaries, customers, suppliers and financials of the group.

DNex Oilfield Services Sdn Bhd, an 80%-owned subsidiary of Dagang Nexchange Bhd (DNex), is acquiring drilling tools, equipment and ancillaries from Baker Hughes (Malaysia) Sdn Bhd for US$4.2 million (RM16 million) cash.

In a filing today, DNex (fundamental: 2.6; valuation: 0.3) said it entered into a sale and purchase agreement with Baker Hughes for the purchase on March 31, 2015. Subsequent to that, DNex entered into an equipment rental agreement on April 1, to rent the said equipment to Baker Hughes for the latter’s business operations at US$87,860 per month.

The rental agreement period is for four years and comes with an option to extend for two more years.   

DNex said the purchase would be funded by internally-generated funds.  

Parkson Holdings Bhd said the earnings of the group for the financial year ending June 30, 2015 (FY15) will be lower by about RM45 million, following the arbitral award which ruled its 52.71%-owned Hong Kong unit has to pay approximately 140 million yuan (RM83.82 million) to its landlord in Beijing.

In a filing with Bursa Malaysia today, Parkson (fundamental: 1.8; valuation: 2.4) said the earnings of the group for FY15 will be lower by approximately RM45 million, which is equivalent to 4 sen per share.

"On a proforma basis, the net assets of the group based on the audited consolidated statement of financial position as at June 30, 2014 will be lower by approximately RM45 million or 4 sen per share," it said.

PRGL issued a profit warning after the China International Economic and Trade Arbitration Commission ruled it has to pay the 140 million yuan to its landlord Metro city Shopping Plaza in Beijing, China, for the continued occupation by Parkson Retail Development Co Ltd of four floors of the shopping plaza, after termination of its tenancy agreement.

Sarawak-based construction and engineering company Zecon Bhd has tied up with Perbadanan PR1MA Malaysia to build 2,000 affordable housing and retail units on a 54-acre land in the Salak Land District in Kuching.

In a press statement today, Zecon (fundamental: 0.32; valuation: 0.6) said its wholly-owned subsidiary Zecon Land Sdn Bhd will have four years to build the units and transform the land into a total built-up area of 3.7 million sq ft.

It said PR1MA had purchased the parcel of land from Zecon at RM46 million.

Zecon chairman Datuk Hamzah Haji Drahman said the joint development project with PR1MA is the largest development for the group to date, and one that is closest to home for the company.

Under the joint development agreement, Zecon and PR1MA will share the cost and expenditure for the construction and completion of necessary and common infrastructures for the development.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)