KUALA LUMPUR (July 15): Based on corporate announcements and news flow today, the companies that may be in focus tomorrow (Thursday, July 16) could be the following: Parkson, MMC Corp, TNB, Zhulian, WZ Satu, Oldtown, Perwaja, Maxis and Bursa.
Retailer Parkson Holdings Bhd (Parkson) announced today that it intends to dispose of its entire 67.6% stake in Parkson Retail Asia Ltd (PRA) to another subsidiary, Parkson Retail Group Ltd (PRG) – in which it holds a 53.1% interest – for a cash consideration of RM641.42 million.
In a filing with Bursa Malaysia, Parkson said the PRA stake is now being held by its wholly owned unit East Crest International Ltd, and that the proposed disposal is intended to consolidate the retail business of PRA, which has a presence in Southeast Asia, with that of PRG, which operates a similar business in China.
The stake, comprising 457.99 million shares, will be sold to Oroleon (Hong Kong) Ltd, a wholly-owned unit of PRG. The shares are sold at $0.499 each, a slight 6.2% premium over its last closing price of $0.47 in the Singapore stock exchange.
Upon completion of the proposal, PRA will become a subsidiary of PRG and will remain a subsidiary of Parkson through Parkson’s interest in PRG. However, Parkson’s effective equity interest in PRA will be diluted from 67.6% to 35.9%, which would result in lower earnings contribution going forward.
It said the consideration payable for the sale shares shall be satisfied in cash by Oroleon at completion of the proposal. In addition, Parkson proposes to utilise the cash proceeds from the proposed disposal for business expansion, new investment opportunities and/or working capital.
The proposed disposal is conditional upon the relevant approvals being obtained, including shareholders of Parkson and PRG.
PRA, through its subsidiaries, has an extensive network of 67 stores (including one supermarket) as at the last practicable date prior to the announcement, spanning across cities in Malaysia, Vietnam, Indonesia and Myanmar, said Parkson.
Parkson (fundamental: 1.8; valuation: 1.7) expects the proposed disposal to be completed by the fourth quarter of this year.
MMC Corp Bhd is buying Kumpulan Wang Persaraan (Diperbadankan)'s (KWAP) 9.08% stake in NCB Holdings Bhd for RM186.5 million cash or RM4.37 per share, confirming The Edge's report on June 29, 2015 which said MMC was eyeing KWAP’s stake in NCB.
Upon completion of the acquisition, MMC’s interest in NCB will increase from 21.05% to 30.13%. NCB owns both Northport (M) Bhd and Kontena Nasional Bhd.
MMC (fundamental: 0.4; valuation: 2), which is controlled by tycoon Tan Sri Syed Mokhtar Albukhary, on July 1, 2015 issued a clarification on The Edge’s article to Bursa Malaysia, stating that it has not approached KWAP to acquire its interest in NCB, as reported in the article.
In a filing with Bursa, however, MMC said its wholly-owned subsidiary, MMC Ventures Sdn Bhd, today signed a sale and purchase agreement with KWAP for the acquisition of 42.68 million shares representing 9.08% equity interest in NCB via an off-market direct business transaction.
MMC said the consideration of RM4.37 per share was arrived after taking into account the closing price of NCB at the end of business trade of RM4 as at July 14, 2015, which entails a premium of 9.25%.
The purchase consideration is to be paid by MMC via internal funds.
Tenaga Nasional Bhd (TNB) is keen to buy the power assets of debt-ridden strategic investment fund 1Malaysia Development Bhd (1MDB), which are held under its power-generation division Edra Global Energy Bhd.
In a filing today, the national utility said it has submitted an indicative non-binding proposal to acquire five domestic and eight international power assets from Edra.
TNB (fundamental: 1.3; valuation: 1.8) said Edra’s power assets would be a strong fit for TNB’s growth strategy, as it would help ensure the long-term continuity of steady and competitively priced power to domestic customers and consumers.
The proposed acquisition also allows TNB to establish its international presence in areas where the demand for power is growing.
However, it said it is in the initial stages of its assessment of Edra’s power assets, adding that there can be no assurance that any transaction will be concluded.
“Any potential transaction would need to make strong commercial and financial sense and be value accretive to TNB’s shareholders. Any transaction would also be assessed based on the highest standards of corporate governance,” said TNB.
It added that any transaction will only be completed following TNB’s in-depth due diligence on the assets.
Maxis Bhd’s second quarter revenue rose 1.3% to RM2.11 billion in the second quarter ended June 30, 2015 (2QFY15) from RM2.08 billion a year ago, on higher service revenue which grew 2.2% year-on-year.
However, net profit fell by a marginal 1.1% to RM441 million or 5.9 sen a share in 2QFY15 from RM446 million or 5.9 sen a share in 2QFY14 due to higher mobile telecommunication network operation cost and finance expenses.
Maxis registered an earnings before interest, tax, depreciation and amortisation (ebitda) of RM1.1 billion and an ebitda margin of 52.2%, against RM1.06 billion and 51.1% in the year-ago period.
The group also declared a second interim dividend of 5 sen per share for the financial year ending Dec 31, 2015 (FY15), payable on Sept 25, 2015.
In a statement today, Maxis (fundamental: 1.15; valuation: 1.1) said service revenue for Q2FY15 of RM2.09 billion was marginally lower than 1QFY15 of RM2.13 billion as its prepaid quarterly growth momentum was impacted by the recent goods and services tax (GST) implementation on the prepaid service.
Nevertheless, the number of revenue generating subscribers grew further in 2QFY15 to reach 12.2 million. Maxis now has 9.1 million mobile internet users and its smart-phone penetration stood at 65% in 2QFY15.
Zhulian Corp Bhd, which is involved in the manufacturing and trading of costume and fine jewellery, saw its net profit increase by 34.3% to RM11.1 million for its second financial quarter ended May 31, 2015 (2QFY15) from RM8.27 million in 2QFY14.
In a filing with Bursa Malaysia today, Zhulian (fundamental: 2.7; valuation: 1.4) reported a 15.8% decrease in revenue to RM55.27 million in 2QFY15 from RM65.65 million in 2QFY14, mainly due to the drop in local market demand.
The group declared a dividend of 1.5 sen per share, payable on Aug 27, 2015.
For the first half of its financial year ending May 31, 2015 (1HFY15), Zhulian reported a net profit of RM23.65 million, 7% lower than its 1HFY14 net profit of RM25.46 million, due to lower revenue.
Revenue for 1HFY15 fell by 16.2% to RM110.49 million from RM131.8 million, mainly due to the drop in local market demand, which was offset by revenue to new overseas markets such as Myanmar and the strengthening of the US dollar.
On prospects, Zhulian said the future market situation remains challenging and is taking prudent measures in evaluating initiatives and opportunities to ensure its business continues to attract new distributors as well as retain existing ones.
WZ Satu Bhd has won a RM46.8 million award for the construction and completion of road widening works at the existing Federal Route FR3 in Kuantan, Pahang.
The contract was secured by its wholly-owned subsidiary, WZS KenKeong Sdn Bhd, from Laksana Amanhina Sdn Bhd, the company said in a filing with Bursa Malaysia today.
“The project includes earthworks, pavement works and landscaping works. The project is expected to be completed within 120 weeks,” said WZ Satu (fundamental: 1.7; valuation: 1.1).
“The award is expected to contribute positively to the future earnings and net assets per share of the group for the financial years ending August 31, 2016 to August 31, 2017,” it added.
Food and beverage company Oldtown Bhd has entered into a conditional share sale agreement (SSA) to buy the remaining 30% stake in China-based Advance City Ltd (ACL) for RM15.52 million.
Coffee product distributor ACL is already a 70%-owned subsidiary of Oldtown. Upon completion of the acquisition of the remaining 30%, ACL will become a wholly-owned subsidiary of Oldtown, according to Oldtown's filing with Bursa Malaysia today.
Oldtown said it entered into the SSA with Chan Koon Hung, Law Cho Hong and Lee Siu Chung to acquire the 30% ACL stake from them. According to Oldtown, the purchase will be financed via the issuance of 9.64 million new shares in Oldtown at RM1.61 each.
“The proposed acquisition will enable Oldtown to have complete control of ACL group’s operations (including future marketing and distribution plans) as well as its future strategic directions for the Hong Kong and Greater China region. This is in line with Oldtown and its subsidiaries' strategy to grow its sales in China said the group.
"The proposed acquisition also presents an opportunity for the Oldtown group to consolidate ACL group’s earnings in full as its wholly-owned subsidiary company. This, in turn, is expected to improve the earnings of the Oldtown group going forward," Oldtown said.
Following the new share issuance, Oldtown (fundamental: 2.8; valuation: 1.1) said the company would see its issued and paid-up share capital increase to 463.24 million shares from the current 453.6 million shares.
China's Tianjin Zhi Yuan Investment Group Co Ltd has inked a master framework agreement (MFA) with Perwaja Holdings Bhd to restructure the loss-making Malaysian steel company.
Perwaja's (fundamental: 0; valuation: 0) group executive chairman Datuk Alan Ong said the group was eyeing a turnaround in its business by current financial year ending June 30, 2016, after the completion of the restructuring.
"In 2016 itself, we can expect Perwaja to turnaround, by the time the scheme is completed. So we'll be seeing some small profit for FY16," said Ong at a press conference today, after the MFA signing ceremony.
According to Ong, Practice Note 17 entity Perwaja's restructuring scheme will include a proposed regularisation of its balance sheet and reduction of accumulated losses.
He said the scheme, which involved a debt restructuring, included a recapitalisation, which aims to raise up to RM2.2 billion for Perwaja via a special issue and proposed rights issue with warrants.
Ong said Tianjin Zhi Yuan would subscribe for the entire special issue amounting to RM1.7 billion, besides its entitlement of up to RM100 million under the proposed rights issue with warrants.
The subscriptions will give Perwaja a capital injection of RM1.8 billion, according to him.
Bursa Malaysia Bhd reported a 5.6% growth in its net profit for the second financial quarter ended June 30, 2015 (2QFY15) to RM49.49 million or 9.3 sen per share, from RM46.85 million or 8.8sen per share in 2QFY14, on lower operating expenses.
In a filing today, the integrated exchange regulator said its revenue had increased by 3.1% to RM127.02 million in 2QFY15, from RM 123.15 million in 2QFY14, mainly due to the increase in its listing and issuer services revenue, as a result of higher perusal and processing fees earned from a higher number of new structured warrant listings and corporate exercises in 2QFY15.
For the first half of its financial year ended June 30, 2015 (1HFY15), Bursa reported a 4.9% increase in net profit to RM96.54 million or 18.10 sen per share, from RM 92 million or 17.30 sen per share in 1HFY14, due to higher operating revenue recorded.
Its 1HFY15 revenue increased by 3.2% to RM254.11 million, from RM246.32 million in 1HFY14, on higher revenue from its depository services, which was brought about by higher Central Depository System custody fees, additional issue fees and Securities Borrowing and Lending Fees.
Bursa Malaysia (fundamental: 2.3; valuation: 2.1) declared that an interim dividend of 16.5 sen per share was declared for 1HFY15, payable on Aug 12,2015.
(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. )