George Kent targets to double profit every 3 yrs

KUALA LUMPUR: GEORGE KENT (M) BHD [] is planning to double its net profit every three years on the back of stronger order book for both its water meter manufacturing and CONSTRUCTION [] divisions.

It has also confirmed that it has submitted a bid for construction jobs for the MRT Ampang line.

'We are one of the bidders for the MRT Ampang line. We cannot say anything else about that but wait for the announcement. In any case, we are keen on jobs announced by the government and have placed competitive bids,' said its chairman Tan Sri Tan Kay Hock on Thursday, July 7.

George Kent is also said to be one of the bidders for the RM5 billion double tracking job from Gemas to Johor Bahru.

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RAM Ratings reaffirms AAA(s) rating of Muhibbah's Islamic bonds

KUALA LUMPUR: RAM Ratings has reaffirmed the AAA(s) rating of MUHIBBAH ENGINEERING (M) BHD []'s (Muhibbah) RM130 million Islamic Bonds with a stable outlook.

In a statement Thursday, July 7 the rating agency said the AAA(s) rating was supported by the irrevocable and unconditional guarantee from Maybank, to honour Muhibbah's irrevocable and unconditional undertaking to purchase and cancel all the Islamic Bonds at the exercise price upon the declaration of an event of default.

'The trustee, on behalf of the bondholders, will be able to call on the bank guarantee to honour Muhibbah's Purchase Undertaking.

'The guarantee from Maybank enhances the credit profile of the Islamic Bonds beyond Muhibbah's inherent or stand-alone credit standing,' it said.

Muhibbah is principally involved in CONSTRUCTION [], crane manufacturing and shipbuilding.

The group also has associate stakes in a Malaysian road-maintenance concessionaire, and an operator as well as concession holder of 3 international airports in Cambodia.

RAM Ratings said that excluding the bank guarantee, Muhibbah's credit profile was underpinned by its established track record within the construction industry, specialising in oil-and-gas-related jobs, as well as marine-engineering and civil-engineering works.

It said Muhibbah's outstanding order book of RM2.9 billion as at May 19, 2011 should sustain it through the next two years.

'Looking ahead, the group is deemed well poised to secure some expected jobs amid the brighter prospects of the local construction sector and the anticipated uptick in domestic oil and gas (O&G) activities.

'Muhibbah also derives earnings diversity from its involvement in cranes and shipyards, and enjoys recurring dividend income from its associates,' it said.

Nevertheless, RAM Ratings said Muhibbah's credit profile had been affected by its weaker-than-expected profit performance, balance sheet and debt coverage, not to mention its tight liquidity.

Its margin on operating profit before depreciation, interest and tax has also been narrowing in recent years, compared to 6.73% in fiscal 2007, it said.

The rating agency said that given the competitive operating environment for the construction and O&G sectors, Muhibbah's ability to earn healthier margins for future jobs remains to be seen.

'The group also faces collection issues, including a large sum for a petroleum-hub project in Johor.

'All said, the group is exposed to the cyclical nature of the construction and O&G sectors, and foreign-exchange risk from its overseas operations,' it said.

#Update* Sapura Resources edges up in afternoon session

KUALA LUMPUR: SAPURA RESOURCES BHD [] shares advanced on Thursday, July 7 after the company said it was acquiring the business assets of a hangarage and training services provider for RM28 million as part of its plans to expand the scope of its business in property management and industrial training.

At 2.55pm, Sapura Resources added three sen to RM1.19 with 1.52 million shares done.

In a filing Thursday, July 7, Sapura Resources said its unit Nova Embun Sdn Bhd had entered into a sale of business agreement with DNest Aviation Services Sdn Bhd and DNest Aviation Training Centre Sdn Bhd (DATC) to acquire their business assets .

It said the acquisition would be financed a combination of internal funds and bank loan.

The principal activities of DNest Aviation are the provision of hangarage services, while DATC's principal activities are the provision of training services.

'The proposed acquisition will therefore enhance the value of the company's business proposition and contribute positively to''Sapura Resources,' said the company.

Sapura Resources buys hangarage & training services company for RM28m

KUALA LUMPUR: SAPURA RESOURCES BHD [] is acquiring the business assets of a hangarage and training services provider for RM28 million as part of its plans to expand the scope of its business in property management and industrial training.

In a filing Thursday, July 7, Sapura Resources said its unit Nova Embun Sdn Bhd had entered into a sale of business agreement with DNest Aviation Services Sdn Bhd and DNest Aviation Training Centre Sdn Bhd (DATC) to acquire their business assets .

It said the acquisition would be financed a combination of internal funds and bank loan.

The principal activities of DNest Aviation are the provision of hangarage services, while DATC's principal activities are the provision of training services.

'The proposed acquisition will therefore enhance the value of the company's business proposition and contribute positively to''Sapura Resources,' said the company.

Axiata slips, Affin Research maintains reduce rating

KUALA LUMPUR: Axiata Group Bhd shares slipped in late morning on mild profit taking activities on Thursday, July 7 while Affin Research maintained its anti-consensus reduce rating.

At 11.55am, it was down four sen to RM5. It rose to a high of RM5.05 earlier. There were 5.15 million shares done.

Affin Research explained its anti-consensus reduce rating on Axiata due to inferior dividend yields at 2% which do not support its valuations and also high risk to earnings downgrade.

'We think that street (12% above ours) is overly optimistic (1Q11 net profit accounts for 19% of FY11 forecast),' it said.

Other factors were a potential share overhang from Telekom Malaysia's disposal of its remaining 101.5 million shares in Axiata while there was a renewal fee for 70% owned Robi's spectrum (estimated at US$278 million) although it believed the market had already priced in this info.

'The high foreign shareholdings of 23% pose great risk should there be a reversal in short-term protfolio flows ' we also note that foreign shareholding has progressively risen over the past 12 month and is near its all time high of 26% prior to its demerger.

'We also believe that the recent uptick in share price was also driven by an increased weighting on the FBM KLCI index rather than spurred by intrinsic fundamental improvement,' it said.

Axiata's weighting in the 30-stock KLCI is 6.21%.

Bursa Securities strikes off dealers' rep from register

KUALA LUMPUR: Bursa Malaysia Securities Bhd has struck off Yap Boh Hian from the Register as a Dealer's Representative for his involved in unlawful/unethical trading activities/practices.

The stock exchange said on Thursday, July 7 that it had also publicly reprimanded and imposed a fine of RM50,000 on Yap.

It said he had engaged in the activities through non-permissible contract amendments.

'In this regard, Yap had transferred numerous profitable trades from his other clients' accounts to his wife's accounts through non-permissible contract amendments carried out by him,' it said.

Bursa Securities said the finding of the breach and the imposition of the aforementioned sanctions were made under Rule 1301.2 of the Rules of Bursa Securities.

It said Yap had carried out amendments to numerous purchase and sale contracts in his clients' accounts (first named clients) which had day trade gains so that these gains were thereafter transferred to his wife's account.

It added that through the process of abusing the contract amendment facility in the trading system, Yap had unlawfully transferred/amended profitable trades in the first named clients' accounts to his wife's account resulting in illegal/unlawful gains in his wife's account to the disadvantage of the first named clients.

'Yap had carried out frequent and numerous contract amendments which resulted in a change of the original party to the contract, most of which involved the same clients/common clients thus indicating that the contract amendments carried out were not due to execution error,' it said.

Mild profit taking halts FBM KLCI's rise

KUALA LUMPUR: ''The FBM KLCI succumbed to some mild profit taking at the mid-day break on Thursday, July 7 as Japan's Nikkei 225 snapped its seven-day rally as investors began selling down on worries of an overheating market.

The FBM KLCI shed 0.04% or 0.63 point to 1,590.71, weighed by losses at select blue chips.

Gainers led losers by 325 to 279, while 319 counters traded unchanged. Volume was 721.66 million shares valued at RM920.12 million.

The ringgit strengthened 0.11% to 3.0078 versus the US dollar; crude palm oil futures for the third month delivery rose RM7 per tonne to RM3,035, crude oil gained 73 cents per barrel to US$97.38 while gold added US$2.45 an ounce to US$1,531.35.

At the regional markets, Japan's Nikkei 255 fell 0.19% to 10,063.72 and Taiwan's Taiex lost 0.65% to 8,767.12.

Elsewhere, Hong Kong's Hang Seng rose 0.66% to 22,666.14, the Shanghai Composite Index up 0.24% to 2,817.32, South Korea's Kospi gained 0.40% to 2,179.90 and Singapore's Straits Times Index up 0.54% to 3,131.59.

Among the losers, MMHE fell nine sen to RM8.58, MISC eight sen to RM7.50, Petronas Chemicals six sen to RM7.13, IOI Corp five sen to RM5.30, Hong Leong Bank four sen to RM13.72, while YTL, Petronas Gas, Petronas Dagangan and RHB Capital fell two sen each to RM1.55, RM13.44, RM17.14 and RM9.09 respectively.

Other decliners included Nestle, Cepco, Sindora, GAB, KYM, Sunway City and Shell.

Among the gainers, AFG rose 25 sen to RM3.68, DiGi 20 sen to RM29.96, Malayan Flour Mills 17 sen to RM8.43, MPI and UOA Development 13 sen each to RM4.50 and RM2.22, while Ibraco, Genting PLANTATION []s and APM Automotive added 12 sen each to RM1.12, RM7.99 and RM4.99 respectively.

The actives included Flonic, KBB, Timecom, AFG, MSM warrants and Time warrants.

FBM KLCI stays above 1,590-level at mid-morning

KUALA LUMPUR: The FBM KLCI stayed above the 1,590-level at mid-morning on Thursday, July 7 in line with the slightly firmer overnight close at Wall Street.

However, investor sentiment remained cautious at key regional markets following China raising interest rates and Japan's Nikkei 225 succumbing to profit-taking, snapping its 7-day positive run.

The FBM KLCI rose 1.59 points to 1,592.93 at 10am.

Gainers led losers by 253 to 169, while 221 counters traded unchanged. Volume was 288.99 million shares valued at RM280.96 million.

At the regional markets, Japan's Nikkei 225 shed 0.10% to 10,072.37, the Shanghai Composite Index fell 0.27% to 2,802.77 and Taiwan's Taiex lost 0.58% to 8,773.26.

Meanwhile, Hong Kong's Hang Seng Index rose 0.43% to 22,614.58, South Korea's Kospi added 0.49% to 2,181.82 and Singapore's Straits Times Index edged up 0.34% to 3,125.15.

BIMB Securities Research in a note July 7 said Wall Street disregarded China's rate hike and the downgrade on Greece's debt to junk status to stage a recovery yesterday after a weak opening.

On the local front, all eyes will be on Bank Negara Malaysia today as the central bank will convene and decide on the OPR and SRR, it said.

'Therefore, this may hinder the FBMKLCI ascension after another record breaking performance yesterday.

'Nonetheless, we believe even if BNM does hike the OPR with another 25 basis points, impact on the local bourse is seen minimal. As mentioned, 1,600 should be no problem,' it said.

Among the gainers at mid-morning, MSM rose 48 sen to RM6.09, DiFGi 24 sen to RM30, AFG 15 sen to RM3.58, Boustead 13 sen to RM6.06, Malayan Flour Mills 12 sen to RM8.38, Puncak and Affin 11 sen each to RM2.10 and RM3.55, while MNRB added 10 sen to RM3.

Losers were led by GAB that fell 20 sen to RM10.40, SOP 10 sen to RM4.11, KYM down nine sen to RM2.21, George Kent and Hong Leong Industries six sen each to RM1.09 and RM4.08, Maxwell 5.5 sen to 39 sen, whiekl Notion, Subur Tiasa, BToto amd IOI Corp fell five sen each to RM2.03, RM2.62, RM4.44 and RM5.30.

The actives included MSM warrants, ASB, AFG, Focus and Timecom.

RAM Ratings reaffirms BAT Malaysia's AAA/P1 ratings

KUALA LUMPUR: RAM Ratings has reaffirmed the AAA/P1 ratings of British American Tobacco (Malaysia) Bhd's RM100 million Commercial Papers/Medium-Term Notes Programme (2007/2014).

It also reaffirmed the AAA rating of BAT's RM700 million Medium-Term Notes Programme (2007/2020) has also been reaffirmed.

Both the long-term ratings have a stable outlook.

In a statement Thursday, July 7, RAM Ratings said BAT's credit profile was supported by its entrenched market position and superior financial profile.

Although its share of domestic sales contracted 0.6 percentage points year-on-year in 2010, the group remained the clear leader with a 59.7%-share of the market, it said.

'Its flagship Dunhill remained the most popular local premium brand last year, with a 65.6%-share (2009: 64.8%) of this segment.

'The group also garnered a significant 33.5%-share of the value-for-money segment (2009: 33.7%). Despite the challenging landscape of the tobacco industry, BAT's adjusted funds from operations and operating cashflow debt cover ratios stayed superior at above 1 time as at end-December 2010,' it said.

RAM Ratings said that offsetting the above strengths were the increasingly difficult operating environment and regulatory risks of the local tobacco industry.

The industry's sales volumes are still vulnerable to excise-duty hikes and the proliferation of illicit cigarettes, it said.

Industry sales volumes declined for the seventh consecutive year in 2010, following a steep 16% spike in excise duty last October, it said.

'While the incidence of illicit cigarettes had reduced slightly from its peak of 37.5% in 2009 to 36.3% in 2010, they still accounted for a significant portion of local tobacco consumption.

'Despite the minimum pricing imposed on cigarettes last year, we understand that certain manufacturers of extremely-low-priced cigarettes have been selling their output below floor prices, in a bid to gain market share,' it said.

The rating agency said that should this persist, the sales volumes of the 3 major domestic tobacco manufacturers ' BAT, JT International Berhad and Phillip Morris Sdn Bhd ' may be affected.

At the same time, BAT Malaysia's margins are expected to be squeezed by a full year's effect from the withdrawal of 14-stick packs (which yield higher margins than 20-stick packs), it said.

Nonetheless, the group's profitability is viewed to remain commendable relative to its AAA-rated peers.

RAM Ratings' Head of Consumer & Industrial Ratings Kevin Lim said that looking ahead, RAM Ratings expects BAT's cashflow-protection measures to stay superior, supported by its well-established market position and strong brand equity.

UOA Devt rebounds after hitting post-IPO low

KUALA LUMPUR: Shares of UOA Development Bhd rebounded to RM2.23 in late morning on Thursday, July 7 after falling to new post IPO low of RM2.06 earlier.

At 11.15am, it was up 14 sen to RM2.23 with 3.74 million shares done on some institutional buying support.

The call warrants UOA Development-CA rose 3.5 sen to 14 sen with 10.38 million units done.

The FBM KLCI scaled new historic highs, up 1.33 points to 1,592.67. Turnover was 513.38 million shares valued at RM554.48 million. There were 310 gainers, 238 losers and 304 stocks unchanged.

UOA Development was listed on June 8 and ended the first day atRM2.59.

The institutional price was fixed at RM2.60 and the final retail price at RM2.52 after the bookbuilding. The indicative retail price was RM2.90.

The listing exercise of UOA Development included an offer for sale of up to 407 million existing shares of 5.0 sen each.

RHB Research Institute had valued UOA Development at RM3.45, at its RNAV per share and in line with its valuations on IJM Land Bhd.