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Wednesday, February 16, 2011

Stocks to watch: MPHB, Ramunia, MBSB, oil and gas (Edge)

Stocks with recent corporate developments and could see trading interest on Wednesday, Feb 16 include Multi-Purpose Holdings (MPHB), RAMUNIA HOLDINGS BHD [], Malaysia Bulding Society Bhd (MBSB) and oil and gas related counters.

MPHB has temporarily shelved its preliminary plans to relist Magnum Holdings Bhd after making a RM1.66 billion offer to buy the 49% stake in the latter. It said the proposal has been on hold for the time being.

On Feb 9, MPHB had offered RM1.66 billion in cash and shares to acquire the 49% stake in Magnum as it sought to have 100% ownership of Magnum to make gaming the group’s core business.

Credit Suisse Research said in a recent report the transaction (if successful) would be earnings accretive for MPHB as it would control 100% of Magnum, compared to 51% currently.

“According to reported 9M10 results of MPHB, its gaming division (Magnum) generated pre-tax profits of RM275 million compared to RM185 million in 9MFY09, an increase of 49% on-year. Annualising this suggests full-year pre-tax profits of RM360 million and net profits of RM270 million, implying a 2010 P/E of 12.4 times. If Magnum grows in line with the Malaysian economy, which is in line with our assumption for BToto, net profits could be as much as RM284 million in FY11E,” it said.

Credit Suisse said the deal values Magnum at 12.4 times 2010 PE and 11.8 times 2011E PE, compared to BToto's calendarised 2011E PE of 17.3 times.

In Ramunia, a recent filing showed Ramunia Energy & Marine Corp Sdn Bhd disposing of eight million shares on Feb 9 in a direct deal, reducing its direct stake to 69.62 million shares or 10.5%.

Meanwhile, MBSB posted a strong set of earnings in its financial year ended Dec 31, 2010, with net profit surging 155% to RM146.02 million from RM57.20 million a year ago as it staged a turnaround as it focused on retail products. Revenue rose 43% to RM769.94 million in FY10 from RM537.96 million in FY09.

For the fourth quarter ended Dec 31, 2010, it recorded net profit of RM12.81 million, a contrast from the net loss of RM9.71 million a year ago. Its revenue climbed 31.5% to RM208.91 million from RM158.79 million. Earnings per share were 1.83 sen compared with loss per share of 1.39 sen.

MBSB also proposed a corporate exercise involving a a renounceable rights issue of new shares together with new free detachable warrants to raise gross proceeds of approximately RM500 million. Its paid-up was 700.29 million shares.

Oil and gas counters could continue to see heavy trading interest after Petroliam Nasional Bhd made major oil and gas (O&G) discoveries offshore Sarawak, giving it a major boost as it targets over 50 exploration wells to be drilled offshore Malaysia in the next three years.

Petronas had made major O&G discoveries through the drilling of NC3 and Spaoh-1 wells in Blocks SK316 and SK306 offshore Sarawak.

It said the Spaoh-1 well of 3,000m drilling depth, located in Block SK306, shows similar promise. It was drilled in December 2010 and found both O&G.

“The preliminary evaluation indicates around 100 million barrels (mmstb) of oil and 0.2 trillion standard cubic feet (tscf) of gas in place, respectively. Currently, the well is being prepared for production testing,” it said. In March 2010, a successful drilling of the NC3 wildcat well and a subsequent appraisal found 2.6 tscf of net gas in place.

Supermax Corp Bhd saw its earnings decline by 24.8% from RM43.54 million to RM32.72 million in the fourth quarter ended Dec 31, 2010 due to the continuous high latex prices and unfavourable exchange rates. Its revenue rose 18.4% from RM196.42 million to RM232.67 million. Its earnings per share were 9.62 sen versus 16.22 sen

IGB Corp Bhd posted RM53.09 million in net profit for the fourth quarter ended Dec 31, 2010 compared with RM31.14 million a year ago while revenue was RM215 million compared with RM166.31 million. For FY10, the earnings rose to RM174.32 million from RM158.98 million while revenue was also higher at RM720 million versus RM642.44 million.

Meanwhile, KUMPULAN EUROPLUS BHD [] continue to reduce its stake in Talam Corp Bhd, after disposing of 65 million Talam shares on Feb 7. On Feb 8, Kumpulan Europlus had converted 75.26 million redeemable convertible preference shares of 20 sen into 75.26 million shares. The recent transactions saw Kumupulan Euro’s direct stake at 22.2% or 773.49 million shares.

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