Stocks to watch: Better results may put spotlight on SapuraKencana, B Auto

by **Cals** Mon 09 Dec 2013, 09:42

Business & Markets 2013

Written by Ho Wah Foon of theedgemalaysia.com

Monday, 09 December 2013 09:24

KUALA LUMPUR: SapuraKencana Petroleum Bhd may be the focus of today’s market after it reported a stronger set of results for the third quarter and announced a top management change.
The other companies that could also attract interest include water-related stocks such as Puncak Niaga Holdings Bhd and Gamuda Bhd as the Selangor menteri besar is expected to announce a new offer today for the takeover of water assets held by these two companies.
Plantation stocks, as well as Berjaya Auto Bhd (BAuto) and Hektar REIT are also likely to be stocks to watch out for.
SapuaraKencana said its net profit for third quarter ended Oct 2013 of financial year 2014 (3QFY14) rose 34.5% year-on-year to RM245.6 million.
Revenue for the same quarter also rose to RM2.38 billion, from RM2.22 billion a year ago.
For the nine months (9M) to October, total profit jumped to RM749.7 million, up from RM400.7 million in the previous corresponding period. Revenue also rose sharply to RM6.49 billion from RM4.95 billion.
In its explanatory notes, the oil and gas player said profit had risen in tandem with the increase in revenue.
For 3QFY14, revenue rose RM166 million or 7.5% compared with a year ago mainly due to the inclusion of financial results from its tender rig business after the completion of an acquisition in April 2013. Profit also rose in line with the revenue increase.
In a separate announcement, the company said Datuk Mokhzani Mahathir and Yeow Kheng Chew have decided to relinquish their management roles in SapuaraKencana.
The company said prior to the merger between SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd, it was decided that the leaders of the merging entities would jointly refine the strategy and spearhead integration of the companies.
Before the merger, Kencana was headed and controlled by Mokhzani while SapuraCrest was controlled and helmed by Tan Sri Shahril Shamsuddin.
“With that integration now successfully completed, what remains is the execution of the strategy that was set by the two leaders.
“Execution of this strategy involves the streamlining of our company’s management. Thus, Datuk Mokhzani Mahathir and Mr Yeow Kheng Chew have decided to relinquish their management roles in the company,” SapuraKencana said in its announcement.
It added that Mokhzani and Yeow will continue to actively support the company as non-executive non-independent directors, and Shahril will remain as president and group chief executive officer.
“This development is consistent with the strategy set by the leaders pre-merger, and is not in any way a response to any conflict of interest queries raised in the past,” said company chairman Datuk Hamzah Bakar.
Plantation stocks are likely to come under scrutiny on news that palm oil imports by India, the world’s biggest buyer, may climb amid a delay in the domestic oilseed harvest.
Shipments of the main crude and refined oils jumped 15% to 700,000 tonnes in November from a year earlier, according to the median of estimates from five processors and brokers compiled by Bloomberg.
Rising Indian demand may trim stockpiles in Indonesia and Malaysia, and help extend the first annual increase in futures in Kuala Lumpur in three years.
Palm prices are set to extend a bull market rally as output drops in Indonesia and biofuel mandates expand globally, according to Dorab Mistry, director at Godrej International Ltd.
Following this piece of news from Bloomberg, crude palm oil futures rose across the board on Bursa Malaysia. February futures rose RM26 to RM2,667 per tonne in afternoon trades.
BAuto’s net profit soared 251% for its 2Q ended Oct 31 of FY14 to RM27.6 million from RM7.9 million in the previous corresponding quarter. Revenue for the quarter under review also rose to RM282.4 million from RM217.3 million.
The group announced a dividend payment of 1.75 sen per share payable on Jan 16, 2014.
“The higher revenue was mainly due to good demand for Mazda CX-5 and Mazda6 models in Malaysia and sales contribution from Berjaya Auto Philippines Inc (BAP) which began operations in January 2013,” said the group in its statement.
It attributed the higher profit for the quarter to favourable sales mix, improvement in profit margin, consolidation of BAP’s results and a share of profit in Mazda Malaysia.
Cumulatively, net profit for the six months to October 2013 was sharply higher at RM53.7 million, compared with RM21.1 million in the previous corresponding period. Revenue also increased to RM710.9 million from RM431.5 million last year.
“The board is of the view that the performance of the group for the remaining quarters will be satisfactory with it’s plans to launch a few models going forward,” said BAuto.
Hektar REIT has gained RM14.4 million after it carried out a revaluation exercise of Subang Parade, Mahkota Parade, Wetex Parade, Central Square and Landmark Central.
The REIT said the total revaluation of the properties represented a surplus of 1.4% over the unaudited net book value of RM1.033 billion as at Sept 30, 2013 (before revaluation).
“The net asset value per unit was increased to RM1.5285 from RM1.4926 upon incorporation of the revaluation surplus of RM14.4 million or equivalent to 3.59 sen per unit,” said Hektar REIT.
It said the revaluation was conducted to determine the current market values of the properties for accounting purposes.
Hektar REIT said it will undertake an annual revaluation of all investment properties in its portfolio.

This article first appeared in The Edge Financial Daily, on December 9, 2013.