Sharp jump in SapuraKencana shares

SAPURAKENCANA PETROLEUM BHD
WITH
the Barisan Nasional win in the just-concluded 13th general election
(GE), the first oil and gas (O&G) stock to bounce back on the radar
screens of fund managers would undeniably be SapuraKencana Petroleum
Bhd.
The stock staged a sharp jump, closing 40 sen to RM3.45 on a volume of 89.75 million shares.
Prior
to the GE, there were concerns that politically-linked SapuraKencana
would be in trouble should the opposition come to power, as a
significant portion of its contracts came from Petroliam Nasional Bhd (Petronas).
SapuraKencana's substantial shareholders include former Prime Minister Tun Dr Mahathir Mohamad's son Datuk Mokhzani Mahathir.
Dr Mahathir is adviser to Petronas, and until today, continues to wield influence on the country's political scene.
SapuraKencana is a merger between SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd, and is the largest O&G services provider in the country with some RM4bil in assets.
It
has capabilities in offshore fabrication, subsea pipeline installation,
hook-up commissioning, oilfield engineering and drilling.
The
company is looking to double its orderbook and is now bidding for some
RM18bil worth of new contracts in countries mainly outside South-East
Asia.
It presently has an orderbook of some RM18bil. Some 40% of
the contracts it is bidding for is in Brazil, while another 30% is for
works in India and Africa.
Last week, filings showed that the Employees Provident Fund (EPF)
had acquired 109.27 million SapuraKencana shares, although the pricing
and nature of the acquisition of the block was not revealed.
This purchase has increased the EPF's stake to 12.45% from 11.52% previously, the filings showed.
On
April 3, SapuraKencana had proposed to raise RM1.64bil via a placement
of 587 million new SapuraKencana shares, representing 11.7% of the
company's total issued capital.
The EPF's acquisition of the close to 110 million shares means it has taken up close to 20% of the entire placement.
The placement is to part fund the company's US$2.9bil (RM8.63bil) purchase of the tender rig operations of Seadrill Ltd.
SapuraKencana's purchase of the tender rig operations of Seadrill will make it the world's largest operator of tender rigs with a global market share of 51%.
MAH SING GROUP BHD
ONE
property stock that is now a hot favourite among analysts will be Mah
Sing Group Bhd, for its increasing exposure to the Iskandar Malaysia as
well as anticipation of strong pre-sales momentum. With the Government
pursuing closer ties with Singapore to develop Johor, property
development down south will continue to gain momentum.
Mah Sing closed the day up 11 sen to RM2.41 on a volume of 8.66 million shares.
With
the development of the Iskandar Malaysia region, Mah Sing would be a
big beneficiary, particularly with its southern projects such as
i-Parc@Johor and Meridin@Medini. Mah Sing is targeting new sales of
more than RM3bil this year, and this will also be driven by new
projects and launches such as Feringghi Residence@Penang, M-Residence
2@Rawang and Southville City@Bangi.
Mah Sing had recorded new sales of RM2.5bil in financial year 2012, representing a growth of 11%.
RHB Research
has upgraded the property sector to “overweight”, saying that with the
general election results, sentiment is likely to buoy the high-beta
property sector.
“Our upgrade is also supported by solid sector
fundamentals, which include an uptick in population growth cycle, an
influx of liquidity and consistent gross domestic product growth. Other
catalytic developments are also substantial enough to boost property
demand and prices in the related areas,” said RHB Research.
In
its first land-banking exercise for this year, Mah Sing bought 2.65ha
in Sungai Buloh for RM85mil. The land, which is adjacent to the Rubber
Research Institute of Malaysia, will be used for an RM800mil integrated
development called D'sara Sentral.
It will comprise three
components, and be developed over three-to-five years. It will be
linked to an upcoming mass rapid transit (MRT) station via a pedestrian
bridge.
This would be the first station after the Sungai Buloh
terminal, and D'sara Sentral would be one of the first developments in
the Klang Valley with a direct link to an MRT station, the company said.
MALAYSIAN RESOURCES CORP BHD
MENTION politics and Malaysian Resources Corp Bhd (MRCB) will immediately come to mind. So, not surprisingly, the stock closed up 14 sen to RM1.56 on a volume of 15.2 million shares.
It's
good news too for the company, as reports have indicated that it had
received a letter of intent (LOI) from the Government to upgrade the
Klang Valley double-tracking system for around RM850mil. It seems that
the LOI was issued by the Transport Ministry last week to the MRCB-DMIA Sdn Bhd joint venture (JV). The budget was done in June last year under the National Key Results Areas.
CIMB Research
is of the opinion that this is a positive surprise and follows up on
earlier news that MRCB had submitted its proposal for the project.
“This
appears to be a directly negotiated job, and pre-tax margins are likely
to be higher than the typical 5% to 6% for open-tender projects.
However, given that the contract is still at the LOI stage, we do not
expect an award so soon, as timing of the implementation remains
unknown,” said the research outfit.
CIMB said that assuming a 50:50 JV, securing this job would raise MRCB's outstanding orderbook by 28% to RM1.9bil.
MRCB had proposed in February to buy out private developer Nusa Gapurna, which is 60% owned by businessman Datuk Mohamad Salim Fateh Din and 40% by the Employees Provident Fund, in a deal valued at RM729mil for shares and cash.
Under
the agreement, Nusa Gapurna will receive RM111mil in cash and 398.7
million shares in MRCB at an issue price of RM1.55 each, with 113.9
million free warrants on the basis of two free warrants for every seven
MRCB shares.
The merger is seen as a shot in the arm for MRCB,
whose KL Sentral transport hub is nearing completion.If shareholders
approve the acquisition at an EGM in June, MRCB would obtain four
parcels of prime land in the Klang Valley worth RM459mil, including PJ
Sentral, and more crucially, a boost to its potential gross development
value.
DRB-HICOM BHD
DRB-Hicom Bhd, the flagship company of tycoon Tan Sri Syed Mokhtar Al-Bukhary, is another company which will likely see more momentum, both in corporate activity and buying interest.
The conglomerate, which now includes national carmaker Proton Holdings Bhd, has three core businesses - automotive, services and property.
Proton aside, the other car marques that the DRB-Hicom group distributes or assembles include Honda, Volkswagen, Mitsubishi, Isuzu and Suzuki.
DRB-Hicom
has over 80 subsidiaries which are involved in businesses such as
insurance, construction and banking. The company is now in the midst of
divesting some of its non-core assets.
Just recently, DRB-Hicom and Volkswagen AG announced that they were pumping in an additional RM600mil into their RM1bil investment in an assembly plant in Pekan.
It currently assembles the Volkswagen Passat large sedan and plans to produce the Polo and Jetta for the local and regional markets.
The
conglomerate is also a property giant in the making, with its 613.91ha
township development in Glenmarie, Shah Alam. It is expected to make
its mark soon, with the kick-start of projects worth a total gross
development value of some RM13bil. It has large development land banks,
with the hot ones being in Iskandar Malaysia, and Glenmarie, Shah Alam.
Further, DRB-Hicom has sold four parcels of land in Johor and Kuala Lumpur to Eco World Development Sdn Bhd
for a combined value of RM604.7mil. Two parcels of land totalling
248.39ha in the Iskandar region has been sold for RM534.7mil and
another two parcels measuring 3.88ha in Batu, Kuala Lumpur sold for
RM69.9mil. The original cost of investment for the four parcels of land
was collectively RM118.6mil.
The valuation of the land in Iskandar works out to RM20 psf and is at a premium for its agricultural status.