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Thursday, April 17, 2014

Nearly RM1b Langat 2 water treatment plant awarded to Salcon-MMC-AZRB JV (Star Update)

Its all systems go for the much-awaited Langat 2 Water treatment plant and water reticulation system in Selangor with the awarding of the RM993.88mil contract.

Salcon Bhd said on Thursday its joint venture with MMC Corporation Bhd and Ahmad Zaki Resources Bhd (AZRB) had received the letter of acceptance from Pengurusan Aset Air Bhd.

Salcon has a 36% stake in the JV, MMC 34% and AZRB 30%.

The contract involves building the 1,130 million litres per day water treatment plant and water reticulation system in Selangor under phase one

“The project is expected to contribute positively towards the earnings and net assets of Salcon Group for the financial years ending Dec 31, 2014, 2015, 2016 and 2017,” said Salcon.

L&G aims for similar success (Edge)

Not rated with target price of 68 sen: Following the success of its maiden foray in Ampang, Kuala Lumpur, with its residential development called Elements @ Ampang, L&G is taking another jab at Ampang.

The group recently acquired a 5.66-acre (2.29ha) leasehold commercial land adjacent to Elements @ Ampang for a proposed mixed development project to be developed on a joint venture basis with Malaysia Land Properties Sdn Bhd (Mayland), which is known for its expertise in studio serviced apartments. This will mark L&G’s second collaboration with the latter after Elements @ Ampang.

The residential development has an estimated gross development value (GDV) of RM788.7 million.

We are expecting the per sq ft pricing for the residential component of the development to be in the range of RM800 to RM900, which will ensure a good take-up rate.

Other planned launches are Phase 2 of Damansara Foresta condominium in Bandar Sri Damansara (GDV: RM500 million) and the Tuanku Jaafar Golf & Country Resort project in Negeri Sembilan.

In the meantime, unbilled sales of RM600 million (as at February 2014) are expected to last the company through the next 15 months.

We are valuing L&G at a fair value of 68 sen, pegging 2014 earnings per share of 8.5 sen to 2014 price-earnings ratio of 8 times, which is the average of its closest peers.

L&G is a good trading stock, with the price uptrending in a cyclical fashion. It is a good stock to pick up on dips. The important thing is that at current level, we believe the stock is trading below its fundamentals. Provided that the broader market remains sound, we expect the cyclical uptrend in the price of L&G to continue. — MIDF Research, April 16

Tuesday, April 15, 2014

JCY International back in focus (Star)

CIMB Equities Research said JCY is showing signs of a recovery following the strong earnings recorded in the first quarter of1QFY14 on the back of higher sales and better operational efficiencies.

" We expect stronger HDD demand growth from the enterprise segment, a weaker competitive environment and a potential entry into the tablet market to drive JCY's earnings recovery," it said.

The research house expects its valuation to remain attractive due to a strong earnings recovery over the next two years. It said JCY currently trades at 8.7 times CY15 price-to-earnings (P/E), which is a 30% discount to its peers and a 23% discount to HDD manufacturers and original equipment manufacturers (OEMs).

"Applying a blended multiple method, we get a valuation range of 99 sen to RM1.07 which indicates a decent 31%-42% upside. Our stance on the stock is mainly trading-oriented," it said.

Monday, April 14, 2014

Ahmad Zaki - Sowing The Seeds For Growth (OSK)

Maintain  BUY.  Ahmad  Zaki  is  a  good  small-cap  proxy  to  public infrastructure  spending  given  its  involvement  in  the  construction  of  the Klang  Valley  MRT  project  and  various  government  facilities.  Its  current outstanding  construction  orderbook  of  MYR1.9bn  (that  can  already  last for  2-3  years)  will  surge  by  80%  to  MYR3.5bn  when  the  MYR1.55bn EKVE hits the ground over the immediate term. We also like Ahmad Zaki for  its  stable  of  concession  assets  comprising  a  highly  profitable bunkering  operation  at  the  Kemaman  Supply  Base  in  Terengganu,  the IIUM  Teaching-Hospital  under  construction  (26%  completed)  and  the EKVE  under  planning.  In  addition,  there  is  tremendous  value  in  its 21,000-ha  oil  palm  plantations  (23%  planted)  in  West  Kalimantan, Indonesia.  Our  FV  is  rationalised  down  by  28%  to  MYR0.96  (from MYR1.33) based on SOP valuation.