Stocks to watch: Gadang, Green Packet, Destini, London Biscuits

Gadang, Green Packet, Destini, London Biscuits

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KUALA LUMPUR (Nov 7): The FBM KLCI remains at above 1,600-level at mid-morning today with minor gains, although most regional bourses are in the red. 

Gadang Bhd’s share price has rebounded recently after a 25% fall from this year’s peak of 90 sen. Interest in the construction stock that has emerged of late, pushes the stock to above 70 sen from the low of around 66 sen-level. 

Gadang is trading at 74.5 sen, up 2.5 sen or 3.47%. Some 3.97 million traded as at 10.15 am. 

Gadang has been shortlisted for the East Coast Rail Link (ECRL) project. It is currently waiting to submit its bid for the rail infrastructure project, according to Khew Check Kiet, managing director of Gadang’s construction division who met the media yesterday, after the company’s AGM. 

The construction group is also eyeing a slice of the action in the Sabah Portion of the Pan Borneo Highway. The construction group wants to participate in the open tender for the three work packages worth RM925 million in the first quarter of 2020.

This is in addition to some RM1 billion worth of construction jobs which it has already bidded for currently.

Green Packet Bhd, which has been in the thick of action in recent months, saw a substantial 14.23% equity stake change hands through off market transactions yesterday. A big chunk of 131.66 million shares was transacted in five blocks for a total of RM95.52 million. 

The transactions were carried out at between 72.5 sen (discount of 0.68%) and 75 sen (premium of 2.74%) a share.

It is not immediately known as to who the parties involved in the transactions were.

Green Packet’s share price dropped 0.5 sen this morning to 72.5 sen, with 1.74 million shares traded as at 10.30am. 

A rising tide raises all boats. Destini Bhd seems to be one. Its share price has regained some upward momentum, it rebounded from 18.5 sen-level to 24 sen this morning. Trading volume stands at 13.77 million shares as at 10.30am, making it the 15th most-traded counter on Bursa Malaysia this morning.

Comparing with its oil & gas peers, Destini’s upward trend is relatively mild. For example, share prices of Bumi Armada Bhd, Velesto Energy Bhd and Carimin Petroleum Bhd have at least doubled this year to multi-year high. However, Destini is substantially below this year’s peak near 35 sen. 

The latest job that Destini has secured from Petronas Carigali Sdn Bhd is an umbrella contract to provide integrated well services for intervention, workover and abandonment for petroleum arrangement contractors.

The contract commenced on Sept 20 and would expire on Sept 19, 2024, unless extended or terminated.

Under the contract, Petronas Carigali is not committed to guarantee any minimum quantity of works to be performed by Destini. Any instruction for works shall be made on a call-out basis through the issuance of work orders, according to the company's filing with Bursa.

London Biscuits Bhd, which owns total assets of RM812.47 million which including receivables amount to RM295.9 million, announced to the stock exchange it has defaulted on principal payments to seven banks, amounting to a total of RM89.19 million.

Its share price has tumbled from this year’s peak at around 60 sen in the first quarter this year. The stock is unchanged at 5.5 sen, giving it a market capitalisation of RM16 million. Still, there were 1.91 million share traded as at 11.15am. 

The payment defaults range from RM4.33 million to RM29.87 million, owed to seven banks: Bank Islam Malaysia Bhd, Bank of China (M) Bhd, Malayan Bank Bhd, United Overseas Bank Bhd, OCBC Bank (M) Bhd, OCBC Al-Amin Bank Bhd and HSBC Bank Malaysia Bhd.

The confectionary maker attributed the default in payments to cashflow constraints. 

However, from the financial year ended Sept 30, 2014 (FY14) to FY18, London Biscuits’ asset acquisition ranged from RM23 million to RM59 million, averaging at RM43.25 million a year. The bulk of the asset additions to the company is found in its plant and machinery, with the additions averaging RM23.97 million per year.

This raises the question on why so much money to be poured into asset acquisition? Did the independent directors assess the company’s financials to ensure the public-listed entity will not fall into such a dire situation?