Palm oil companies, Hup Seng, Brahim’s, Amway, CME Group, Paramount, Syarikat Takaful and Puncak Niaga

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KUALA LUMPUR (Feb 10): Based on corporate announcements and news flow today, the companies that could be in focus tomorrow could be: palm oil companies, Hup Seng Industries Bhd, Brahim’s Holdings Bhd, Amway Malaysia Holdings Bhd, CME Group Bhd, Paramount Corp Bhd, Syarikat Takaful Malaysia Bhd and Puncak Niaga Holdings Bhd.
 
Palm oil companies could see increased trading activity tomorrow, following the release of data by the Malaysian Palm Oil Board (MPOB) today, which said Malaysian crude palm oil production dropped 14.96% to 1.16 million tonnes in January 2015 from 1.365 million tonnes in December 2014. The number came in lower than forecasted, as flooding in East Malaysia disrupted harvesting, exarcebating what is already a seasonally low output.
 
MPOB also said Malaysian palm oil inventories  dropped 12.18% to 1.77 million tonnes in January, from 2.02 million tonnes in December last year. The stock level was its lowest in six months, following flooding in the East Coast of Peninsular Malaysia, Sabah and Sarawak, coupled with the seasonally low output.
 
Biscuits maker Hup Seng Industries Bhd (fundamental: 3; valuation: 1.3) posted a net profit of RM12.6 million in the fourth quarter of its financial year ended Dec 31, 2014 (4QFY14), up 34.76% from a year ago, thanks to increased domestic and export sales for its Cream Crackers. Quarterly revenue also rose 10.4% to RM73.65 million compared to RM66.69 million in 4QFY13.
 
However, for the full year, Hup Seng’s net profit rose only marginally by 3.82% to RM38.15 million, compared to RM36.75 million in FY13, while revenue rose 4.3% to RM262.2 million compared to RM251.4 million in the previous corresponding period.
 
In a circular to shareholder, Brahim’s Holdings Bhd (fundamental: 0.8; valuation:1.8) said it would embark on a set of turnaround strategies that would include cost-cutting measures as a means to revive the business of Burger King restaurants in Malaysia and Singapore.
 
Brahim’s, together with private equity fund Quantum Angel, has proposed to buyout the Burger King franchise for RM95 million cash from Rancak Selera Sdn Bhd, a unit of Ekuiti Nasional Bhd.
 
Under the proposed acquisition plan, Brahim’s wholly owned subsidiary Brahim’s Trading Sdn Bhd and Quantum Angel will form a special purpose vehicle (SPV) to take over the franchise. Brahim’s will hold 80% and Quantum Angel the balance 20% in the SPV.
 
Amway (M) Holdings Bhd (fundamental: 2.7; valuation: 0.9) saw its net profit for the fourth quarter ended Dec 31, 2014 (4QFY14) decreased 19.7% to RM23.28 million or 14.13 sen per share, due to higher operating expenses. Revenue for 4QFY14, however, rose 16.1% to RM229.88 million from RM197.43 million.
 
Amway declared a collective interim dividend of 25 sen per share for the quarter, bringing the full year payout to 55 sen per share, down 12% from the 62.5 sen per share it declared in FY13.
 
For the full FY14, Amway registered an 8% drop in net profit to RM99.95 million or 60.74 sen per share, while revenue improved 2.6% to RM855.8 million from RM834.22 million previously.
 
Amway expects a challenging 2015, due to the volatile foreign exchange and the implementation of the goods and services tax (GST) on April 1.
 
CME Group Bhd (fundamental: 0.2; valuation: 1.2) has entered into a joint-venture with Tanah Mestika Sdn Bhd to undertake a mixed development worth RM124.42 million in Kuantan, Pahang.
 
The land was acquired by CME in 2013 at a cost of RM6 million. Based on the preliminary planning stage, the estimated gross development value and gross development cost of the project are approximately RM124.42 million and RM100.17 million respectively,
 
The agreement was entered into on a joint-venture basis between CME as the landowner and Tanah Mestika as the developer. CME is a fire and specialist vehicle manufacturer.
 
Paramount Corp Bhd (fundamental: 1.6; valuation: 3) is exploring the possibility of selling some of its education assets worth RM300 million to RM500 million, in line with the group’s asset-light strategy for its education business.
 
Currently, 30% of Paramount's revenue comes from its education business, with the rest from property development.
 
Syarikat Takaful Malaysia Bhd (fundamental: 1.1; valuation: 1.95) saw its net profit for the fourth quarter ended Dec 31, 2014 (4QFY14) fall 28% to RM29.75 million or 18.24 sen per share due to higher expenses.
 
Revenue in 4QFY14, however, climbed 6% to RM401.49 million from RM378.5 million on higher sales generated by the general takaful business, as well as higher net investment income which grew by 4.5%.
 
For the full FY14, Takaful Malaysia saw its net profit inched up 1% to RM140.52 million or 86.27 sen per share, while revenue dropped 3.5% to RM1.65 billion from RM1.71 billion.
 
The company declared a total dividend of 40 sen per share in FY14, compared to 42 sen per share in the previous year.
 
Puncak Niaga Holdings Bhd (fundamental: 1.5; valuation: 1.2) announced that the disposal of its water assets to Pengurusan Air Selangor Sdn Bhd has been extended by one more month to March 9, 2015.
 
In a filing with Bursa Malaysia today, the company said the extension with the Selangor state entity was because there were still pending issues related to the water asset transfer between Selangor and federal government.
 
According to Puncak Niaga, the sale of its 70% stake in Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) were still pending the consent from the Prime Minister’s Department.
 
Puncak Niaga had on Nov 11 last year signed a conditional sale and purchase agreement (SPA) with Pengurusan Air, to dispose of its entire equity interest in Puncak Niaga (M) Sdn Bhd and 70% stake in Syabas to the latter, for a cash consideration of RM1.55 billion.
 
Under the terms and conditions of the SPA, all conditions precedent were supposed to be fulfilled on Jan 12, 2015. This was however extended to Feb 9, 2015.
 
(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.)