Genting, TIME dotCom, TM, Mega First, E&O, Oriental Holdings, BTM Resources and Axis-REIT

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KUALA LUMPUR (Mar 3): Based on corporate news flow and announcements today, stocks in focus tomorrow (Wednesday, Mar 4) could include: Genting Bhd, TIME dotCom Bhd, Telekom Malaysia Bhd (TM), Mega First Corp Bhd, Eastern & Oriental Bhd (E&O), Oriental Holdings Bhd, BTM Resources Bhd and Axis Real Estate Investment Trust (Axis-REIT).

Genting Bhd (fundamental: 2.1; valuation: 0.6)’s 49.3% subsidiary Genting Hong Kong Ltd (GHK) is acquiring luxury cruise line Crystal Cruises Inc from Nippon Yusen Kabushiki Kaisha of Japan (NYK) for US$550 million (RM1.99 billion).

The company will retain the existing management team and crew of Crystal Cruises, after the acquisition. The group aims to add another ship to Crystal Cruises' fleet.

Currently, Crystal Cruises has two award-winning vessels, Crystal Symphony and Crystal Serenity, with an approximate 1,992 lower berths.

Telekom Malaysia Bhd (TM) (fundamental: 1.00; valuation: 0.90) has signed a Memorandum of Understanding (MOU) with TIME dotCom Bhd (TIME) (fundamental: 2.70; valuation: 0.60) for the development and construction of a new submarine cable system dubbed the “Sistem Kabel Rakyat 1 Malaysia (SKR1M)”.

With the signing of the MOU between TM and TIME’s wholly-owned subsidiary TT dotCom Sdn Bhd, the parties will proceed with the tender exercise to determine the preferred technology partner to supply, deliver and implement the SKR1M network.

During the MOU period, the parties will also develop the principles for the construction and maintenance agreement (C&MA). This C&MA is to establish the rules which shall govern the implementation and management of SKR1M. The MoU will expire in three months or upon execution of the C&MA, whichever is earlier.

On Dec 30, 2014, TM was awarded the contract to develop and construct the SKR1M cable system by the Malaysian Communications and Multimedia Commission (MCMC), after an open tender.

The SKR1M would serve to enhance the existing domestic submarine cable connectivity between Peninsular Malaysia, Sabah and Sarawak, and cater to future bandwidth growth requirements. It will span approximately 3,500km, with an initial capacity of 4 Terabit per second (Tbps).

The new submarine cable system is expected to start carrying commercial traffic by mid-2017.

TM will also raise up to $750 million with a multi-currency Islamic bond programme for capital and operating expenses, via its newest wholly-owned unit Tulip Maple Bhd, which had secured approval from the Securities Commission for the sukuk wakala programme.

Diversified group Mega First Corp Bhd (fundamental: 2.5; valuation: 1.8) has finally been given the greenlight by the Laos government to hold the concession for a 260MW run-of-river hydropower plant in the country, five years after signing a memorandum of understanding (MoU) with the state-owned energy company to develop the plant.

Mega First’s wholly-owned subsidiaries Ground Roses Ltd and Silver Acreage Ltd had signed a shareholders’ agreement with state-owned Electricite du Laos (EDL), to regulate the parties’ participation in the project company that will be undertaking the development and implementation of the Don Sahong Hydropower project.

The project will be handled by Don Sahong Power Co Ltd, which Mega First said will eventually sign a concession agreement with the Laotian government, to develop, build and operate the hydropower plant. No timeline for the agreement was given, nor the expected timeframe for the project.

The Don Sahong Hydropower project is a run-of-river hydropower project, located at the Hou Sahong channel of the Mekong River in Khong District, Champassak Province, Lao People’s Democratic Republic. It will have a capacity of 260MW and capable of generating about 2,000 GWh of electricity per year.

Concessionaire Don Sahong Power is owned by Ground Roses (with a 79% stake), Silver Acreage (1%) and EDL (20%).

Mega First signed a memorandum of understanding with EDL for the development of this plant, in June 2010. However, the project was put on hold, because of protest from locals due to environmental concerns.

Oriental Holdings Bhd (fundamental: 2.5; valuation: 2.4), controlled by the family of the late tycoon Tan Sri Loh Boon Siew, has acquired a 90% equity interest in Sumatera-based PT Surya Agro Persada, from PT Kencana Sawit Abadi for RM98.32 million.

Oriental Holdings’ indirect subsidiary OAM Asia (Singapore) Pte Ltd (OAMA) had yesterday (Monday, March 2), received nod from Indonesia's Ministry of Law and Human Rights for the stake acquisition.

OAMA is a wholly-owned unit of Oriental Boon Siew (Mauritius) Pte Ltd (OBSM), which in turn is a 50.5%-owned subsidiary of Oriental Holdings. The remaining 49.5% in OBSM is owned by Boon Siew Sdn Bhd.

Subsequent to the acquisition, OAMA will own 90% of Surya Agro Persada and the remaining 10% is held by Kencana Sawit Abadi, said Oriental Holdings in a filing with Bursa Malaysia today. Kencana Sawit Abadi is 99%-owned by PT Tradisi Bina Usaha and 1%-held by Ruddy Samuel.

Surya Agro Persada is involved in the cultivation of oil palm plantation. It holds a concession for parcels of land totalling 11,889ha in Rawas Llir and Muara Lakitan, South Sumatera.

The group plans to fund the acquisition by bank borrowings.

BTM Resources Bhd (fundamental: 0.2; valuation: 0.6)’s unit Besut Tsuda Wood Products Sdn Bhd has called of the agreement to dispose its woodwaste fired cogeneration system to Khas Promosi Sdn Bhd for RM4.2 million.

Both parties have mutually agreed to terminate the Asset Sale Agreement dated April 29, 2013, due to business of the purchaser having dropped significantly, severely affecting their cash flow and making it no longer feasible for the Purchaser to proceed with the Assets Sale Agreement.

The Employees Provident Fund (EPF) had ceased to be a substantial shareholder in Eastern & Oriental Bhd (fundamental: 1.5; valuation: 0.6) as of Feb 26, following the disposal of 675,000 shares, representing 0.06% interest in E&O.

EPF emerged as a substantial shareholder in the property developer on Jan 23 this year, with a 5.09% stake or 62.25 million shares.

The provident fund started disposing shares in E&O on Jan 29, selling 1 million shares or 0.08% stake.

Following the latest disposal, EPF should still have 61.11 million shares in E&O, which worked out to a 4.99% interest in the company.

Logistics and office property trust Axis Real Estate Investment Trust (fundamental: 0.9; valuation: 0) (Axis-REIT) has proposed to split each of its existing units into two, do a 20% placement of the enlarged base, and issue new units via a unit reinvestment plan.

Axis-REIT is proposing to split its 547.76 million units to enlarge its unit base to 1.1 billion, to attract a wider group of investors, as the unit price will be more affordable.

It also plans to do a placement to raise funds for debt repayment. If the unit split happens, Axis-REIT will issue up to 219.103 million placement shares; while 109.55 million placement shares will be issued, if there is no unit split exercise.

These exercises will require Axis-REIT’s unitholders’ approval and are expected to be completed in the second half of this year.

Next, Axis REIT manager wishes to obtain unitholders’ approval to issue up to 155.19 million units for the trust’s income distribution reinvestment plan (IDRP). Should the unit split not go through, the IDRP could see up to 77.6 million Axis-REIT units issued.

There will also be 3.04 million new subdivided Axis-REIT units to be issued for the payment of management fee authority. The number of units for the payment will be reduced by half, if no unit split occurs.

All in, Axis-REIT’s units could balloon by up to 1.47 billion, if the unit split happens; or 736.43 million, with no unit split. The IDRP and payment of management fee authority will be completed by the end of the year.

(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.)