RHB Research maintains "neutral" call on UMW's oil and gas subsidiary listing

by **Cals** Fri 17 May 2013, 15:52

RHB Research maintains "neutral" call on UMW's oil and gas subsidiary listing
Business & Markets 2013
Written by Bernama
Friday, 17 May 2013 13:42

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KUALA LUMPUR (May 17): RHB Research has maintained "neutral" call on UMW Holdings as its oil and gas subsidiary listing on Bursa Malaysia will take effect on the company's share price.

It said the listing company would only include UMW's profitable core oil and gas businesses in offshore drilling and oilfield services while unprofitable, non-core loss-making oil and gas businesses would be retained in UMW.

"The listing is only expected to be completed in the fourth quarter this year. Our forecast remained unchanged with a fair value estimate of RM13.15," it said in a research note today.

Meanwhile, Hong Leong Investment Bank has maintained "sell" call on UMW with unchanged target price at RM11.80 as it is expecting the high crude oil price to affect margins of UMW's oil-based products.

"The existing oil and gas business has contributed 9.4 per cent to the UMW's profits and eight per cent last year. However, we do expect earnings expansion in 2013 to 2015 due to higher charter rate for Naga 3, commencement of Naga 4 and the extension of Naga 1 at highher charter rate.

"We believe UMW-OG initial publis offering has already been widely anticipated and priced-in while we expect Toyota sales to disapoint the market," it said in a research note.

Another research firm, Kenanga Research, maintained "market perform" call on UMW as the listing would enable the group to unlock the value of its investment in UMW-OG and provide opportunity to expand its business and its market position.

"With the listing, UMW-OG will have direct access to the equity capital market, which will enable it to have greater capital management flexibility," it said in a research note.

The research house also expect UMW Toyota and Perodua to retain their leadership in the non-national and national passenger car segment, respectively. -- BERNAMA