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Friday, September 9, 2011

Stocks to watch: Telcos, BDRB, KLK, DRB-Hicom (Edge)

Telcos could be in focus on Friday, Sept 9 after their announcement that the 6% service tax will be charged for all purchases of prepaid reloads and prepaid starter/SIM packs for all telcos from Sept 15.

Analysts said this would be positive for the telcos which had been absorbing the service tax. CIMB Equities Research is maintaining its Overweight stance on the telcos sector following the latest development.

However, the research house was not raising its earnings numbers, having increased its core net profit forecasts earlier by 6%-8% for DIGI.COM BHD [], 4% for Maxis Bhd and about 3% for Axiata Group Bhd on the assumption of a 50% recovery rate.

DiGi would also be in focus when it resumes trading on Friday after it announced a 1-for-10 share split which would increase in the number of shares from 777.5 million shares to 7.775 billion shares.

Its unit, DiGi Telecommunications Sdn Bhd (DiGiTel), is proposing to undertake a capital management initiative whereby DiGiTel will distribute RM509 million to

The proposed capital distribution entails the issuance of redeemable preference shares from DiGiTel to, which upon redemption will result in a cash payment of RM509 million to intends to distribute the excess proceeds from the capital distribution to all its shareholders by the first half of 2012.

Other stocks which could see trading interest are BANDAR RAYA DEVELOPMENTS BHD [] (BRDB), KUALA LUMPUR KEPONG BHD [] (KLK), DRB-HICOM BHD [] and IREKA CORPORATION BHD [].

RAM Rating Services Bhd is cautious about BDRB’s corporate exercise with its major shareholder Ambang Sehati Sdn Bhd. It said Ambang Sehati’s acquisition of BDRB’s investment PROPERTIES [] would have a mixed impact on the group’s credit standing.

“While the potential divestment may be an immediate positive to BRDB’s financial profile, it would exert a negative effect on its business risk profile over the longer term,” it said.

Meanwhile, DRB-Hicom is in talks with Audi to assemble Audi cars in Malaysia. DRB-Hicom has been the local sole importer and distributor of Audi vehicles since 2003 through wholly-owned Euromobil Sdn Bhd, achieving a total sales of 745 units in the financial year 2011. This accounted for a 55 per cent increase from the previous year's 480 units.

On the property division, DRB-Hicom has lined up several new property launches and initiatives for the current financial year ending March 2012, with a total gross development value (GDV) of RM500 million.

These include the subsequent phase of Glenmarie Garden bungalows, Laman Glenmarie residential units, semi-detached houses and commercial developments in Proton City and bungalows in Glenmarie Cove in Carey Island.

KLK is investing RM706 million in developing oleo derivatives with the establishment of three new plants in the country and setting up a centralised research and development (R&D) centre

The project includes a plant to produce integrated methyl ester sulphanate and fatty alcohol; a plant to produce specialty fatty ester; and a plant to produce high grade tocotrienol and isomers. The fourth is the centralised R&D centre.

Ireka is acquiring a parcel of freehold land in Kajang for RM22.43 million for a proposed gated and guarded mix-use industrial development.

Its unit Ireka Engineering & CONSTRUCTION [] Sdn Bhd (IECSB) had entered into a sale and purchase agreement with Borncity Development Sdn Bhd to acquire the parcel of land measuring 83,339.82 sq metres (0.008ha) located with the Bukit Angkat Industrial zoning.

Ireka said the acquisition would be financed via internally generated funds and bank borrowings.

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