KUALA LUMPUR: Vietnam's currency valuation by 9.3% will have minimal impact of Malaysian companies which have their operation in the country, says Maybank Investment Bank Research.
It said on Monday, Feb 14 the impairment for investments for the property developers can be 'compensated' via higher subsequent selling prices which are usually denominated in the US dollar.
'No change to our earnings forecasts and recommendations for the Malaysian corporate,' it said of the devaluation which was announced last Friday, Feb 11.
Maybank IB Research said Malaysian companies which have presence in Vietnam are the banks including Maybank, Public Bank, CIMB, RHB and Hong Leong Bank while the consumer based companies are QL Resources, Malayan Flour Mills.
As for property players, Gamuda, WCT, SP Setia, Ireka and Berjaya Land have property development projects there. AirAsia and Malaysia Airlines fly to Ho Chi Minh City and Hanoi.
'The dong devaluation will affect the financials of Malaysian corporates via: (i) foreign exchange loss in the P&L, and (ii) impairment on the balance sheet for investments sunk in,' it said.
Gamuda has two property projects in Vietnam: (i) Yenso in Hanoi where it has 'invested' up to RM800 million in infrastructure CONSTRUCTION [] in return for land, (ii) Tan Thang in Ho Chi Minh City where it paid RM277 million for a 60% stake. The maiden launches at Tan Thang are scheduled for March 2011 and Yenso in July ''2011.
'Of the RM800 million spent at Yenso, we estimate RM600 million were transacted in Dong and the balance in US dollar. Our back of envelope calculation shows an RM80 million potential impairment (4.0 sen per Gamuda share) for Yenso and Tan Thang but we expect this to be 'off-set' by higher US dollar-based gross development value.
Maybank IB Research said PROPERTIES [] are priced in US dollar in Vietnam, which are converted into the dong on the signing of the sales and purchase agreement. For WCT, its investment to date is below US$1 million.
As for SP Setia, it has two property projects in Vietnam, which are Eco Lakes and Eco Xuan. It has invested up to RM60 million, comprising land and development costs.
The research house said the remaining GDV in Vietnam is RM3.2 billion while sales in the past two years totaled RM42 million (Eco Lakes).
'We estimate a potential impairment of RM5 million (0.5sen per share) but believe SP Setia will factor in higher selling prices for future launches in response to the dong devaluation. The forex (P&L) impact is negligible, at just 1% of total FY11-12 net profit. SP Setia's projects are in JV with the state, and profits are recognised on completion,' said Maybank IB Research.
It said on Monday, Feb 14 the impairment for investments for the property developers can be 'compensated' via higher subsequent selling prices which are usually denominated in the US dollar.
'No change to our earnings forecasts and recommendations for the Malaysian corporate,' it said of the devaluation which was announced last Friday, Feb 11.
Maybank IB Research said Malaysian companies which have presence in Vietnam are the banks including Maybank, Public Bank, CIMB, RHB and Hong Leong Bank while the consumer based companies are QL Resources, Malayan Flour Mills.
As for property players, Gamuda, WCT, SP Setia, Ireka and Berjaya Land have property development projects there. AirAsia and Malaysia Airlines fly to Ho Chi Minh City and Hanoi.
'The dong devaluation will affect the financials of Malaysian corporates via: (i) foreign exchange loss in the P&L, and (ii) impairment on the balance sheet for investments sunk in,' it said.
Gamuda has two property projects in Vietnam: (i) Yenso in Hanoi where it has 'invested' up to RM800 million in infrastructure CONSTRUCTION [] in return for land, (ii) Tan Thang in Ho Chi Minh City where it paid RM277 million for a 60% stake. The maiden launches at Tan Thang are scheduled for March 2011 and Yenso in July ''2011.
'Of the RM800 million spent at Yenso, we estimate RM600 million were transacted in Dong and the balance in US dollar. Our back of envelope calculation shows an RM80 million potential impairment (4.0 sen per Gamuda share) for Yenso and Tan Thang but we expect this to be 'off-set' by higher US dollar-based gross development value.
Maybank IB Research said PROPERTIES [] are priced in US dollar in Vietnam, which are converted into the dong on the signing of the sales and purchase agreement. For WCT, its investment to date is below US$1 million.
As for SP Setia, it has two property projects in Vietnam, which are Eco Lakes and Eco Xuan. It has invested up to RM60 million, comprising land and development costs.
The research house said the remaining GDV in Vietnam is RM3.2 billion while sales in the past two years totaled RM42 million (Eco Lakes).
'We estimate a potential impairment of RM5 million (0.5sen per share) but believe SP Setia will factor in higher selling prices for future launches in response to the dong devaluation. The forex (P&L) impact is negligible, at just 1% of total FY11-12 net profit. SP Setia's projects are in JV with the state, and profits are recognised on completion,' said Maybank IB Research.
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