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Tuesday, June 28, 2011

Stocks to watch: MSM, Kim Loong, Berjaya Land, SILK (Edge)

MSM Holdings Bhd will in focus when it makes its debut on the Main Market of Bursa Malaysia on Tuesday, June 28 which will see it having a market capitalisation of RM2.4 billion at its IPO price.

Other companies which could see trading interest include KIM LOONG RESOURCES BHD [], BERJAYA LAND BHD [] and SILK Holdings Bhd.

MSM’s institutional price was fixed at RM3.50 and for retail investors at RM3.38 per share after the book-building exercise.

AmResearch has valued MSM at RM4.53 per share based on a price earnings ratio (PER) of 10 times financial year 2012 earnings per share. Its PER of 10 times is about 23% below the regional average PER of 13 times ex-Japan and Australia.

The research house said MSM was expected to be a high dividend-yielding stock. It added that the group’s estimated FY11 to FY12 dividend yields of 6% to 7% (based on the IPO price of RM3.50) would be higher than most of the consumer and numbers forecast operator companies. It said MSM plans to pay out 50% of its net profit as dividends every year.

RHB Research Institute had accorded a fair value of RM4.90 to the shares. It said based on its analysis, MSM’s regional peers are trading at an average PER of 11.6 times FY11 and 10.6 times FY12.

“As such, we attribute a target PER of 11 times FY12 to MSM’s earnings, in between its regional peers’ valuations for FY11 and FY12, and obtain a fair value of RM4.90. This implies a 40% upside from the IPO price of RM3.50/share. At our fair value of RM4.90, investors would also benefit from a dividend yield of 4%-5% per annum,” it said.

As for Kim Loong, its earnings jumped 49% to RM19.91 million from RM13.36 million a year ago boosted by its PLANTATION []s business, underpinned by the strong crude palm oil (CPO) prices.

Revenue rose 37.9% to RM175.15 million from RM127 million while earnings per share were 6.52 sen versus 4.39 sen a year ago. Pre-tax profit rose 68% to RM35.16 million from RM20.89 million.

“The 38% and 68% increases in revenue and PBT respectively were mainly due to higher CPO and palm kernel oil prices which were about 38% and 91% respectively higher than the corresponding period last year,” Kim Loong said.

Berjaya Land Bhd sunk into the red in the fourth quarter ended April 30, 2011 with net losses of RM4.68 million compared with net profit of RM72.07 million a year ago due various factors including impairments and loss on disposal of certain quoted investments.

Revenue fell 5.83% to RM1.062 billion from RM1.128 billion. Loss per share was 0.09 sen compared with earnings per share of 1.44 sen.

SILK’s unit Jasa Merin (Malaysia) Sdn Bhd has secured an RM24 million contract from Talisman Malaysia Ltd to provide one anchor handling tug supply vessel (AHTSV).

The contract was for a primary term of one year with two extension options of one year each, exercisable at the discretion of Talisman and subject to prior approval from Petronas.

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