Star 2Q net profit up 10.3% to RM55.25m, declares 9c dividend

KUALA LUMPUR: Star Publications (Malaysia) Bhd net profit for the second quarter ended June 30, 2011 rose 10.3% to RM55.25 million from RM50.08 million a year earlier, due mainly to lower newsprint cost.

It said on Thursday, Aug 18 that revenue for the quarter dipped slightly to RM294.25 million from RM295.74 million due to the decline in the revenue of event, exhibition, interior and thematic segment.

Earnings per share was 7.48 sen while net assets per share was RM1.41.

Star declared an interim dividend of 6 sen per share, single tier and a special tax exempt dividend of three sen per share to be paid on Oct 18.

For the six months ended June 30, Star's net profit rose to RM95.52 million from RM87.91 million in 2010, on the back of revenue RM522.28 million.

On its prospects, Star said the economic outlook over the next six months is mixed, adding that domestically, the Malaysian Institute of Economic Research (MIER) has projected that the economy will expand by 5.2% year-on-year in the second half of 2011, underpinned by projects under the government's Economic Transformation Program (ETP).

Globally, however, the economic outlook is less certain because of problems in the European Union and the United States of America, it said.

'The company will take the necessary measures to ensure that business will continue to grow amidst the uncertainty and challenges.

'Barring any unforeseen circumstances, the board of directors expects the company to perform satisfactorily for the remaining period of financial year ending Dec 31, 2011,' it said.

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MISC earnings dn 71.7% on losses from petroleum biz

KUALA LUMPUR: MISC BHD []'s earnings fell to RM121.07 million in the quarter ended June 30, 2011 from RM427.98 million a year ago as it was affected by losses in the petroleum business as freight rates fell.

It said on Thursday, Aug 18 that revenue declined to RM3 billion from RM3.27 billion. Earnings per share shrank to 2.70 sen from 9.6 sen.

'The decline in its profit was mainly due to losses in the petroleum business due to the weakening freight rates and higher losses in the liner business,' it said.

As for the lower revenue, MISC said this was due to a decline in revenue from the heavy engineering and liner businesses. However, higher revenue from the chemicals and offshore businesses helped to cushion the impact.

As for the outlook, it said market conditions for the liner, petroleum and chemicals businesses were expected to remain weak and would have an adverse impact of the group's performance.

However, its long term contracts in the liquefied natural gas and offshore businesses combined with the relatively steady revenue and margins from the heavy engineering segment would continue to provide stable income stream to the group.

Genetec's order book rises to RM74m on new orders

KUALA LUMPUR: ACE Market-listed Genetec TECHNOLOGY [] Bhd's order book rose to RM74 million after the company secured new orders worth RM14 million from its new and existing customers.

The company said on Thursday, Aug 18 that the orders were expected to contribute positively to its earnings for the financial year ending March 31, 2012.

Its executive chairman Ron Ortscheid also said the company's revenue for the first quarter ended June 30, 2011 rose 51% to RM39.52 million from RM26.13 million a year earlier, due mainly to a strong demand''for automation from existing and new customers.

However, he said its net profit fell 60% to RM1.62 million from RM4.01 million a year earlier due to higher operating costs incurred upon consolidation of Genetec's newly acquired subsidiaries in the previous financial year ending 31 March 2011.

Genetec acquired CLT Engineering Sdn Bhd, Systems South Inc. and IP Systems Inc, with a combined value of approximately RM38.2 million.

Ortscheid said the company was experiencing strong demand in the segments in operated in as a result of its overseas expansion plan.

'Our customer base is growing and orders from the non-HDD segment now contribute approximately 30% to our total orderbook.'

'Moving forward, we are optimistic that the group will enjoy further benefits from these strategic acquisitions, which include larger orders, operational efficiency and cost savings. Hence, we remain confident of our future growth prospects,' he said in a statement.

Genetec designs and builds customised factory automation equipment and integrated vision inspection systems

Perdana Petroleum turns around in 2Q

KUALA LUMPUR: Perdana Petroleum Bhd (formerly PETRA PERDANA BHD []) returned to the black with net profit of RM8.37 million in the second quarter ended June 30, 2011 compared with net loss of RM32.98 million a year ago.

It said on Thursday, Aug 18 turnover rose 28% to RM73.3 million from RM57.4 million due to an improvement in the utilization of vessels and charter rates.

'The higher turnover enable the company topmost pre-tax profit of RM8.9 million compared with a loss of RM34.9 million a year ago,' it said. Earnings per share were 1.86 sen compared with loss per share of 11.08 sen.

The improvement was also due to the accretion of refundable deposit of RM5.6 million which mainly resulted from the termination of vessels under the sales and leaseback arrangement, as compared to an impairment loss of charter deposits of RM8.7 million a year ago.

For the first half, net profit was only RM10,000, though small was a stark contrast to the net loss of RM29.38 million in the previous corresponding period. Revenue was RM140.35 million compared with RM108.28 million.

MARC cuts Tg Langsat Port's ratings, outlook negative

KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has downgraded its ratings on Tanjung Langsat Port Sdn Bhd's debt notes to reflect a further erosion of its credit and operating profile.

MARC said on Thursday, Aug 18 it lowered the ratings of the RM250 million Sukuk Musyarakah bonds and RM135 million Musyarakah commercial papers/medium term notes programme (MCP/MMTN) to A-IS and MARC-2ID/A-ID from AA-IS and MARC-1ID/AA-ID respectively.

The outlook on the ratings remains negative, said the rating agency, pointing out the 'negative outlook on the ratings reflects increased concerns over Tanjung Langsat Port's ability to stem its operating losses and cash flow deficits'.

MARC also pointed the downgrades were to reflect further erosion of Tanjung Langsat Port's credit and operating profile during 2010. This, it said, was due to the still lingering effects of the 2008 fire incident at its tank terminal complex and its depleting unencumbered land bank.

Of concern, said the ratings agency, was Tanjung Langsat Port's larger-than-expected revenue decline and operating cash flow deficit in 2010.

It said this had raised concerns over the cash flow and liquidity risks related to certain long outstanding balances due to its contractors for port CONSTRUCTION [] and dredging works.

Due to its depleted unencumbered land bank and current operating challenges, MARC expected Tanjung Langsat Port to become increasingly dependent on liquidity support from parent, Johor Corporation (JCorp), to fund cash flow and debt service shortfalls.

'The negative outlook on the ratings reflects increased concerns over Tanjung Langsat Port's ability to stem its operating losses and cash flow deficits,' it said.

MARC said it came to understand although one of the eight tanks at Tanjung Langsat Port's tank terminal complex was certified as ready for operations in March 2010 followed by four more tanks in May 2010 and the sixth tank in early 2011, the storage facilities were not in use by the sole lessee, Trafigura Pte Ltd.

MARC said it was informed the remaining two tanks which were earlier damaged by fire should be ready to resume operations by end-2011.

Consequently, Tanjung Langsat Port's tank terminal complex operations have not generated any revenue since the fire incident in August 2008, resulting in estimated monthly revenue losses of RM550,000.

Tanjung Langsat Port recently sold its remaining unencumbered land holdings, raising total proceeds of RM134.9 million to partially pay down the RM216.1 million due to contractors.

The company urgently needs to restore its cash flow and earnings through higher utilisation of its tank terminal complex, and dry and liquid cargo wharves beginning from the second half of 2011 to maintain compliance with its financial covenants and to meet its 2012 note maturities of RM20.0 million.

MARC said it expected Tanjung Langsat Port to further require further financial support from its parent to maintain compliance with its financial covenants.

Based on its latest consolidated audited financial statements ended Dec 31, 2010, Tanjung Langsat Port's revenue declined to RM63.59 million (FY2009: RM100.15 million) due to lower land sales.

Higher administrative expenses and finance costs, as well as RM14.7 million of write-offs from insurance receivables relating to the fire incident led Tanjung Langsat Port'' to record pre-tax losses of RM24.3 million (FY2009: pre-tax profit of RM16.1 million).

Tanjung Langsat Port had initiated legal proceedings against its insurer on May 5, 2011 to recover these sums.

MARC noted the conversion of amounts due to Tanjung Langsat Port's parent into equity during 2010 which had the effect of lowering Tanjung Langsat Port's debt-to-equity ratio to 1.68 times (FY2009: 3.33 times) against its covenanted debt-to-equity ratio of 4.0 times.

'At the same time, the rating agency considers the parent's probability of providing further support as low to moderate in light of JCorp's own heavy debt burden,' it said.

MARC said it would continue to monitor Tanjung Langsat Port's operating trends as well as key financial metrics.

It added that it would 'consider revising the outlook to stable if Tanjung Langsat Port is able to stabilise its financial and operating performance, and halt further erosion in its credit profile'.

MARC also said for Tanjung Langsat Port to maintain its current ratings, the latter had to show it could generate adequate earnings and operating cash flow on a consistent basis.

'The ratings may be lowered if Tanjung Langsat Port is unable to stabilise its performance in the near-term and turn itself around,' it said.

KLCI bucks the trend among regional markets

KUALA LUMPUR: The BM KLCI bucked the trend among the key regional markets and closed higher on Thursday, Aug 18, spurred by a late surge in buying activities.

European equities followed Asian stocks lower on Thursday as investors fretting about the global growth outlook cut exposure to riskier assets, while the Swiss franc fell on talk the central bank was intervening in the forwards market, according to Reuters.

Nagging worries about the U.S. economy and dim prospects of a quick fix for the euro zone's debt crisis prompted investors to lock in profits following this week's rally in European stocks to one-week highs, it said.

The FBM KLCI edged up 0.23 point to 1,503.30, lifted by gains at select blue chips.

The broader market was weaker with 445 losers, 265 gainers and 308 counters unchanged. Volume was 860.56 million shares valued at RM1.71 billion.

At the regional markets, Japan's Nikkei 225 fell 1.25% to 8,943.76, South Korea's Composite Index lost 1.7% to 1,860.58, Taiwan's Taiex declined 1.64% to 7,614.97, the Shanghai Composite Index fell 1.61% to 2,559.47, Hong Kong's Hang Seng Index down 1.34% to 20,016.27 and Singapore's Straits Times Index shed 0.13% to 2,824.96.

On Bursa Malaysia, PPB was the top gainer and added 32 sen to RM17.50; Metrod rose 30 sen to RM3.70, UMW 22 sen to RM7.45, BAT, MISC, Lafarge Malayan Cement and Tradewinds PLANTATION []s added 20 sen each to RM44.20, RM7.30, RM7.30 and RM3.49 respectively, while Aeon and MAHB rose 15 sen each to RM7.15 and RM6.65.

Esso was the top loser and fell 92 sen to RM4.03 after the initial euphoria over San Miguel's offer to buy a controlling 65% stake from ExxonMobil International Holdings Inc in the company fizzled out following its disappointing offer of RM3.50 per share.

Tenaga lost 15 sen to RM5.73, Panasonic and WCT lost 12 sen each to RM23.80 and RM2.72, QSR, Inno and HELP fell 11 sen each to RM5.99, RM1.28 and RM2.11, while BDB and Ann Joo were down 10 sen each to RM1.08 and RM2.64.

MAA was the most actively traded counter with 27.7 million shares done. The stock added five sen to 61 sen.

Other actives included DVM, Axiata, Petronas Chemicals, Kurnia Asia, Esso and AirAsia.

Kimlun Corp order book swells to RM1 billion

KUALA LUMPUR: Kimlun Corporation Bhd's outstanding order book swelled to RM1 billion after the company secured its latest CONSTRUCTION [] contract worth RM54.43 million.

It said on Thursday, Aug 18 that its wholly-owned subsidiary, Kimlun Sdn Bhd had accepted the letter of award from Tanah Sutera Development Sdn Bhd to build 116 units of houses in Mukim Pulai, Daerah Johor Bahru, Johor.

Kimlun said the scope of works comprised of building construction using industrial building system method, and ancillary works for the houses.

It said the project would be completed by August 2013.

Kimlun said the contract was expected to contribute positively to its earnings for the financial years ending 2011 to 2013.

Tradewinds Plantations 2Q net profit surges

KUALA LUMPUR: Higher prices and production of palm oil products pushed Tradewinds PLANTATION []s Bhd's second quarter earnings 223% to RM90.08 million from RM27.84 million a year ago.

The company said on Thursday, Aug 18 revenue increased by 73.6% to RM335.79 million from RM193.44 million while earnings per share were 14.32 sen compared with 4.42 sen.

'The increase in revenue was mainly due to the increase in prices and production of palm products. In line with the increase in revenue, the Group recorded a three-fold increase in profit before tax to RM138.3 million for the current quarter from RM44.5 million for the same quarter last year,' it said.

For the first half ended June 30, net profit jumped 162.8% to RM138.71 million from RM52.78 million in the previous corresponding period while turnover was 50.1% higher at RM565.72 million compared with RM376.83 million.

"The increase in revenue was mainly due to the higher prices and production of palm products,' it said.

Tradewinds Plantations had borrowings totaling RM758.80 million as at June 30.

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European shares fall on global growth fears

LONDON: European shares fell sharply on Thursday, Aug 18 as a downbeat sales outlook from a U.S. tech bellwether Dell, fiscal tightening pressure in China and global growth downgrades inflamed investor fears over stalling economic recovery.

At 0815 GMT, the FTSEurofirst 300 index of top European shares was down 1.4 percent at 958.21 points.

The euro zone's blue-chip Euro STOXX 50 index was down 1.5 percent at 2,295.97 points.

"At the start of the week, we were expecting a selloff and it hadn't materialised, with people selectively putting money into a few stocks keeping the froth alive, and so I think it is overdue," the head of institutional trading at a UK-based investment bank, said.

In the United States on Wednesday, Dell's sales gloom fanned worries weak economic growth will hurt earnings in the third quarter, prompting a lacklustre close on Wall Street.

China's benchmark stock index fell 1.6 percent on Thursday, as a rise in central bank bill yields sparked worries over a potential interest rate rise, which is seen as crimping appetite from the world's fastest growing economy.

Separately, Deutsche Bank cut its projection for China GDP growth to 8.9 percent for 2011 from 9.1 percent and to 8.3 percent for 2012 from 8.6 percent, largely reflecting the downgrade in export outlook due to slower growth in the United States and Europe.

Adding to the concerns over economic outlook, analysts at Morgan Stanley became the latest to cut their macro growth forecasts, traders said.

Citing a note from the broker, traders said Morgan Stanley cut its GDP forecasts for the euro area by a full percentage point over 2011/12 and expects GDP growth to average only 0.5 percent next year.

Reflecting the macro challenges at the corporate level, Swiss cement maker Holcim was the biggest faller across all sectors, sliding 7.3 percent after it reported forecast-lagging second-quarter results, hit by a strong Swiss franc and raw materials costs.

Vallourec shed 3.2 percent as Goldman Sachs downgrades its rating on the maker of seamless industrial tubes for the energy sector to "neutral" and cuts its earnings forecasts by up to 47 percent between 2011 and 2013.

"These are periods when profits fall by 10 percent or more. Our analysis suggests the probability of a global profits collapse is rising but low," said Robert Buckland, analyst at Citigroup, adding he believes a recovery in stock prices is the most likely outcome from here as a corporate profits recession is unlikely.

Around Europe, the UK's FTSE 100 index was down 1.3 percent, Germany's DAX index down 1.7 percent, and France's CAC 40 down 1.5 percent.

"I think we need to get the (FTSE) down to around 5,000. The world's slowing down; unemployment rates are going through the roof, all the leading indicators in the U.S. are suggesting times are tough and you've got to rerate the market accordingly," said the head of institutional trading at a UK-based investment bank.

Equity valuations on Thomson Reuters Datastream showed the STOXX Europe 600 carrying a one-year forward price-to-earnings of 9.6, against a 10-year average of more than 13.

Investors fled to safe haven areas such as gold as they looked to take defensive positions in the face of macro economic difficulties.

The Swiss franc remained near recent highs although weakened against the dollar on hopes the Swiss central bank would take further steps to cool the currency's recent surge. - Reuters

WCT down on disappointing 2Q results

KUALA LUMPUR: Shares of WCT BHD [] fell in afternoon trade on Thursday, Aug 18 after analysts viewed its second quarter results as disappointing, which were impacted partly by foreign exchange (forex) losses.

At 3.42pm, it had fallen 12 sen to RM2.72 with 2.20 million shares done.

The FBM KLCI fell 3.83 points to 1,499.24. Turnover was 631.11 million shares valued at RM1.09 billion. Losers beat gainers 454 to 204 while 295 stocks were unchanged.

WCT's second quarter revenue amounted to RM375.9 million (down 26.8% on-year but up 19.1% on-quarter) while earnings came in at RM37.8 million (up 12% on-year, up 1.1% on-quarter).

OSK Research said on a cumulative basis, the earnings of RM75.2 million were higher by 9.4% y-o-y. Margins over the same horizon also expanded, with EBIT and net levels at 18.7% and 10.9% (FY10 comparatives at 13.9% and 7.5%).

'Overall, the results were below expectations, making up only 41.4% of our estimates (41.7% of consensus),' it said.

OSK Research said the lower than expected results were partially due to forex losses amounting to RM9 million for the quarter (RM14 million in 1H) due to the depreciation of the QAR (USD pegged) from its Qatar operation.

'Management expects more forex losses in 3Q-4Q but at a lower quantum,' it said.

The research house said CONSTRUCTION [] revenue accelerated 33.5% on-quarter, mainly driven by domestic jobs such as the Medini infra works, LCCT earthworks and KLIA2 complex. Its RM1.4 billion building job in Qatar has yet to go into full swing.

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