Felda IPO Update: Felda Global Ventures Holdings launches IPO prospectus today, retail price at RM 4.55, total 2,188 million shares for sale, only 73 million shares available to the public, application date from 31 May till 12 June, listing on 28 June 2012

Felda Global Ventures Holdings Bhd's (FVGH) initial public offering (IPO) of 2.188 billion shares would raise nearly RM10bil based on an indicative retail price of RM4.55 a share.

According to the prospectus issued on Thursday, the institutional offering would be 1.915 billion shares to institutions and the retail offering of 273.61 million shares.

The indicative retail price is RM4.55 per share and subject to refund to the difference if the final retail price is less than the retail price.

This would see a total of RM9.959bil to be raised from the listing exercise, of which RM5.50bil will accrue entirely to the vendors. The remaining RM4.459bil arising from the public issue would be fully utilized for the core business of FGVH.

The prospectus said the 2.188 billion shares under the IPO are in conjunction with the listing of the entire 3.648 billion shares of RM1 each on the Main Market of Bursa Malaysia Securities Bhd, comprising an offer for sale of up to 1.208 billion existing shares and a public issue of 980 million new shares.

Under the IPO, the institutional offering of up to 1.915 billion shares comprises of up to 1.208 billion offer shares and 286.85 million issue shares to Malaysian and foreign institutional and selected investors at the institutional price to be determined by bookbuilding; and 419.537 million shares to Bumiputera institutional and selected investors approved by MITI.

The retail offering of 273.611 million share comprise of 200.648 million shares to eligible employees, eligible Felda settles and persons who contributed to the success of FVGH and its subsidiaries; and 72.963 million shares made available to the public.

FVGH reported net profit of RM1.014bil in the financial year ended Dec 31, 2011 compared with RM929.367mil in FY2010. Its revenue was RM7.474bil in FY11 compared with RM5.804bil in FY10.

According to the prospectus, the gross proceeds from the offer for sale of RM5.50 bil would accrue entirely to the selling shareholders.

FVGH said the gross proceeds of RM4.459bil arising from the public issue would see FVGH using 49.1% of RM2.19bil for acquiring plantation assets while RM840mil would be used to acquire oil and fats, manufacturing and logistics businesses.

Another RM780mil would be used to build or buy mills and refineries and RM260mil for loan repayment of its overseas operations.

FVGH said RM100mil would be used as capital expenditure to increase the efficiencies while RM129mil would be used as working capital and RM160mil as estimated listing expenses.

Source: www.thestar.com.my

Integrated Healthcare Holdings (IHH) IPO Update: RAM's Chief Economist Yeah Kim Leng says the reason why IHH Bumiputra shares were offered only wealthy Bumiputra is to ensure that only bona fide players were allowed to take part

The conditions set for bumiputra shareholders in the coming initial public offering (IPO) of Integrated Healthcare Holding (IHH) are meant to create genuine players in the capital-intensive healthcare industry, according to a prominent economist.

This would ensure that only bona fide players were allowed to take part in the scheme, said Dr Yeah Kim Leng, group chief economist of RAM Holdings Bhd.

He was responding to criticisms by some bloggers who questioned the wisdom of setting such conditions like RM250,000 cash and net asset of RM3mil for individual bumiputra applicants. For bumiputra companies, the net asset is set at RM10mil.

The listing of IHH in Singapore and Malaysia is expected to be the fourth biggest IPO in the city state's history and Malaysia's second largest this year after the planned listing of Felda Global Ventures Holdings. Bernama

Source: www.thestar.com.my

AirAsia Bhd's 49% owned joint-venture with ANA set to launch operations on Japan's domestic routes with daily flights from Narita to Fukuoka, Okinawa and Sapporo starting 1 August 2012

(AIRASIA opening stock price today (31.5.2012) was RM 3.51)

AIRASIA Bhd is confident of rapidly growing its operations in Japan via AirAsia Japan, although it faces competition from other low-cost carriers such as Peach Aviation and JetStar Japan.

AirAsia group chief executive officer Tan Sri Tony Fernandes said AirAsia has the advantage of networks as well as a fleet of 100 aircraft, making it easier for people to travel to various places and at an affordable price.

"We can fly on AirAsia X to Kuala Lumpur (KL) and from KL to Bali. From Bali you can go to Australia. You can't do that with Peach Aviation. You can do a little bit with JetStar but no one has the network that we have," he told reporters after the launch of AirAsia Japan's direct flights to Sapporo, Fukuoka and Okinawa yesterday.

This year marks the beginning of an era for budget air travel in Japan with the launch of three low cost airlines that includes Peach Aviation, JetStar Japan and AirAsia Japan.

Peach Aviation started its operations last March. The company is a joint venture between All Nippon Airways (ANA) and First Eastern Investment Group. It started operations in March this year.

JetStar Japan will start operations in July this year. The company is owned by Qantas (33.3 per cent), Japan Airlines (33.3 per cent), Mitsubishi Corp (16.7 per cent) and Century Tokyo Leasing Corp (16.7 per cent).

Speaking on Japan's aviation market, Fernandes said it is undergoing rapid transformation and developments, thus AirAsia is confident that it will derive excellent load factors and stimulate tourism in the country.

"I think the operations in Japan will be very big. The population of Japan is five times that of Malaysia," he said.

AirAsia Japan is a joint venture between AirAsia and ANA. AirAsia holds 49 per cent of the share while the latter owns 51 per cent.

Based at Narita International airport, AirAsia Japan will start its operations in August this year with three aircrafts. It also plans to have 25 aircraft over the next three years.

Without any restrictions to fly only in Japan, Fernandes said AirAsia Japan have plans to fly to China, Korea, Taiwan and Russia while hinting that the airline might also fly to Vladivostok due to the big market there.

AirAsia Japan is set to launch operations on domestic routes with daily flights from Narita to Fukuoka, Okinawa and Sapporo starting August 1.

The airline is offering promotion for 10,000 seats from as low as RM0.20 (YEN5).

To ensure that the new airline offers access domestically across its new destinations in Japan, AirAsia X, the long-haul low offers promotional fares from as low as RM399 (YEN 14,000), one way from Kuala Lumpur to Haneda International Airport (Tokyo).

Source: www.btimes.com.my

DRB Hicom's wholly owned Proton Holdings Managing Director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir and chief financial officer (CFO) Azhar Othman resigns

(DRBHCOM opening stock price today (31.5.2012) was RM 2.43)

Proton Holdings Bhd yesterday confirmed the resignation of Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir as group managing director, with effect from July 4 2012.

The national carmaker, in a statement, also announced the resignation of its chief financial officer Azhar Othman, effective July 6 2012.

Proton said its executive chairman, Datuk Seri Mohd Khamil Jamil, who is also DRB-HICOM managing director, would continue to lead the company.

“Syed Zainal has been with Proton for over six years and we are grateful for his contributions to the company.

He has decided to leave Proton on his own accord to pursue his own interests and we respect his decision,” the company said.

On Monday, Proton said Lotus Group plc chief executive officer Dany Bahar had been temporarily suspended to facilitate an investigation into a complaint about his conduct made by DRB-HICOM, which is Lotus’ penultimate parent company.

Proton also reiterated that its holding company, DRB-HICOM, was not planning to sell Lotus.

This dismissed fresh speculations on its intention to dispose of Proton’s whollyowned sportscar unit.

“Lotus is an iconic brand with global presence and positioning,

coupled with unsurpassed engineering expertise and a talented workforce,” he said in the statement.

Earlier this month, Mohd Khamil visited Lotus facilities at Hethel in Norfolk, Britain. During the visit, he met with South Norfolk member of parliament Richard Bacon and British Business Secretary Vince Cable.

“They were both very supportive of our views with regard to the future plans for Lotus. And subsequent to the meetings, the British Government has agreed to consider reactivating the £10

million (RM49.41 million) Regional Growth Fund pledge to support Lotus’s vehicle development plans in Norfolk,” he said.

Mohd Kamil said both Proton and DRBHICOM would continue to review Lotus’ existing business plans and financial position.

“DRB-HICOM has sent in a team comprising local and international consultants to Lotus from March 2012 to conduct an operations and legal audit on Lotus group of companies,” he added.

According to him, the review is important in view of Lotus’ existing financial obligation in the form of a £270 million syndicated loan taken at the end of 2010, for which Proton has given its corporate guarantee.

Proton, when releasing its third-quarter results, noted that Lotus was in a technical breach of certain post-drawdown covenants on its existing long-term loan.

The British sportscar maker has been a major strain to Proton’s cashflow over the years.

Source: www.btimes.com.my

Malaysia's 30 per cent foreign ownership limit in local banks may be raised in the near future provided that there is reciprocity in the region - Prime Minister Datuk Seri Najib Razak

Malaysia's 30 per cent foreign ownership limit in local banks may be raised "in the near future" provided that there is reciprocity in the region, Prime Minister Datuk Seri Najib Razak said.

"We're willing to look (at it). At the moment, it's at 30 per cent ... it's possible that we might increase it in the near future. But it's also important within Asean to have reciprocity. I'd like to see more reciprocity," he said at an open dialogue session with fund managers and other investors at the start of the two-day Invest Malaysia conference here yesterday.

Najib's comments come as Indonesia mulls lowering the single ownership limit in its banks. Recent press reports from Indonesia suggest that the country will next month announce plans to limit the ownership in banks to less than 50 per cent for financial institutions.

This poses a major problem for Malayan Banking Bhd (Maybank) and CIMB Group as they each have controlling stakes in Indonesian banks. CIMB owns 97.9 per cent of CIMB Niaga, while Maybank owns 97 per cent of Bank Internasional Indonesia (BII).

"There are some voices of concern (about this), but I hope it won't materialise," Najib said, adding that any such move would be "regressive".

"I don't like to see countries within Asean changing the rules, being more regressive ... I think that's the wrong direction. If at all, stick to the existing rules, but don't go back and be regressive. That's the message we send.

"Because, if they do so, then other countries are going to do the same and that will undermine our efforts for greater integration within Asean," he remarked.

Maybank's president and chief executive officer Datuk Seri Abdul Wahid Omar, speaking to investors later, said Maybank is continuing to engage with the Indonesian authorities on the matter.

"It is our hope that should any percentage be imposed, that percentage should not apply to banking groups," he said.

He noted that if Indonesia's intention in lowering the limit was to improve corporate governance, in terms of limiting control by any single entity or individual, that concept was not new.

"That concept is being embraced by every country, including Malaysia, but it does not apply to banks," Abdul Wahid said, pointing out that OCBC Bank in Malaysia, for example, is fully owned by its parent company.

Last year, there was much speculation that Australia and New Zealand Banking Group (ANZ) may want to up its stake in lender AMMB Holdings Bhd after Najib, on a visit to Australia in March that year, said he was open to the foreign lender raising its stake to 49 per cent.

Najib later clarified that the limit may be evaluated on an individual merit basis.

ANZ, which became a shareholder in 2007, holds a 23.8 per cent stake in AMMB.

Source: www.btimes.com.my

Related post- 

Prime Minister Najib Razak jokes and says opposition's promises to reduce petrol price overnight, abolishing student loans, abolishing toll rates and increasing minimum wage to RM 4,000/month are too far fetched

Here is the link to the video- http://www.youtube.com/watch?v=JpUSkaDKgiY

Gas Malaysia IPO Update: Gas Malaysia's 25.60 million shares offered for sale to public oversubscribed by 21.64 times, retail offering price at RM 2.20

Gas Malaysia Bhd's offering of 25.68 million shares to the public under its listing exercise was oversubscribed by 21.64 times.

Malaysian Issuing House (MIH) said on Tuesday there were 44,561 applications for 581.39 million shares from the public for the 25.68 million shares.

Of the 25.68 million shares, MIH said 12.84 million offer shares were set aside for Bumiputera individuals, companies, co-operatives, societies and institutions. MIH said there were 15,034 applications for 175.62 million offer shares was received under the Bumiputera category, or an oversubscription of 12.68 times.

Under the public category, there were 29,527 applications for 405.76 million offer shares, representing an oversubscription of 30.60 times.

It also said the sole bookrunner Maybank Investment Bank Bhd had confirmed that the institutional offering of 303.31 million offer shares was completed.

"The institutional price was fixed at RM2.20 per offer Share. Accordingly, the final IPO price for the retail offering is fixed at RM2.20 per offer share," said MIH.

Maybank Investment Bank was also the principal adviser and joint underwriter for the IPO. The other joint underwriters were Bank Muamalat Malaysia Bhd and Kenanga Investment Bank Bhd.

The listing exercise involved the offer for sale by the vendors of 333.84 million shares, of which 147.67 million shares were to Bumiputera institutional and selected investors approved by the Ministry of International Trade and Industry.

The remaining 155.63 million shares were offered to institutional and selected investors; 4.84 million shares were reserved for eligible directors and employees of Gas Malaysia and 25.68 million shares to the public.

Source: www.thestar.com.my

OSK Holdings will maintain its listed status after the merger with RHB and look for other businesses - founder and major shareholder Ong Leong Huat

(OSK closing stock price yesterday (28.5.2012) was RM 1.74)

OSK Holdings Bhd plans to maintain its listed status and look for other businesses to embark on once it sells off its investment bank, its founder says.

The group will be without a core business once it sells off OSK Investment Bank Bhd to RHB Capital Bhd (RHBCap), which leaves it at risk of becoming a Prcatice Note 17 (PN17) company.

Still, founder and major shareholder Ong Leong Huat, 67, points out that the group will still have some other businesses remaining like property, property-management and money-lending.

"Along the way, my board and I - which also comprise a lot of good business people - will look at what other businesses we can embark on.

"Today, the (investment banking) deal is not fully completed, (so) we can't tell you what we are going to do next. As a businessman, if you have the resources, definitely you'll know what to do," Ong told reporters after the group inked a conditional share purchase agreement with RHBCap here yesterday.

The veteran stockbroker, which has a 32.1 per cent stake in OSK Holdings, is ranked the 30th richest person in Malaysia by Forbes, with a net worth of US$265 million (RM832 million).

According to a source, the group is looking to develop land next to its headquarters in Jalan Ampang here.

OSK Holdings is selling OSK Investment to RHBCap for RM1.95 billion and will be paid for it with 245 million new RHBCap shares and RM147.5 million in cash. The deal is expected to be completed in the final quarter.

"It is the intention of OSK Holdings to maintain the listing status... and apply to Bursa Securities for a waiver from being classified as an affected listed issuer pursuant to PN17 of the listing requirements," OSK Holdings said in a stock exchange filing yesterday.

Ong built up the group into a regional business with a revenue of over RM1 billion since taking it over in 1982. It now has about 80-90 outfits across eight countries.

"This (investment banking) is a very volatile business. The market can enter into a tsunami at any time, any moment... just look at how many such turbulences have occured in the last 10 years," he remarked.

OSK Holding's shares, which have shed 2.2 per cent so far this year, lagging the FBM KLCI's 1.6 per cent gain, closed four sen higher to RM1.74 at noon yesterday before they were suspended pending the announcement.

Source: www.btimes.com.my

Axiata's Celcom will launch Samsung Galaxy S3 (a.k.a. Samsung Galaxy S III) in Malaysia on 31 May

Celcom Axiata Bhd (Celcom) announced it will offer Samsung Galaxy S III to customers in Malaysia end of this month with a range of plans tailored for Celcom customers.

To celebrate the launch of this latest Samsung model, Celcom welcomes all customers to its launch that would be half on May 31 at South Court, Mid Valley Megamall at 10am.

The launch would also concurrently take place in the Shopping Complex at Sutera Mall, Johor Bharu and Aeon Station 18, Ipoh, Perak.

Those who dress in blue might walk away with Samsung Galaxy S III at the price of RM888.

“Backed by the widest most stable network coverage plus continuous network upgrades and armed with unbeatable competitive packages, customers will get to enjoy the best smartphone experience in Celcom Territory,” Celcom chief marketing officer Zalman Aefendy Zainal Abidin said in a press release yesterday.

The latest Samsung Galaxy S III cames with new intelligent features that were not only user friendly but also remarkably robust with maximised processing power, uninterrupted performance enriching users experience through its organic

design inspired by nature.

It is designed with 4.8 inches HD Super AMOLED display, the 8MP camera and 1.9MP front camera captures special moment instantly, 1.4GHz Quad-core application processor, 16GB internal memory and 50GB dropbox.

Source: www.theborneopost.com

RHB OSK Merger Update: RHB Capital to purchase OSK's Investment Banking business, to be settled via RM 174.3 million cash and 245 million new shares to be issued by RHB (10% stake)

(OSK closing stock price today (28.5.2012) was RM 1.74)

(RHBCAP closing stock price today (28.5.2012) was RM 7.40)

OSK Holdings Bhd (OSKH) is disposing of its investment banking business to RHB Capital Bhd for RM1.97bil to be satisfied via new RHB Cap shares and RM174.3mil cash, which would see OSKH getting a 10% equity stake.

OSKH said on Monday it would dispose of its 100% stake in OSK Investment Bank Bhd (OSKIB); 20% of OSK Trustees Bhd; 20% of Malaysian Trustees Bhd and 100% stake in OSK Investment Bank (Labuan) Ltd.

The total disposal consideration of RM1.977bil would be satisfied through the issuance of 245.0 million new RHB Cap shares to be issued at an issue price of RM7.36 per RHB Cap shares and cash of RM174.3mil, it said.

"The proposed disposal will enable OSKH to unlock the value of its investment in OSKIB Group, whilst the consideration shares to be received by OSKH will allow OSKH to equity account a prospective 10% stake in RHBC, which is a more liquid investment form compared to OSKIB," it said after entering into a conditional share purchase agreement with RHB Cap.

OSKH said the disposal consideration was based on OSKIB's unaudited consolidated net assets of RM1.102bil as at Sept 30, 2011 or at a price to book ratio valuation of about 1.77 times.

It added the issue price of the new RHB Cap shares of RM7.36 and the number of new RHB Cap shares to be received as part of the disposal consideration would be 10% equity interest in RHB Cap as at Dec 31, 2011.

"The issue price of RM7.36 represents a slight premium of 0.27% to the five-day volume weighted average market price of RHB Cap shares up to and including May 25, 2012 of RM7.34," it said.

OSKH added the cash portion of RM174.3mil would be used to defray the estimated expenses for the proposed disposal, repayment of bank borrowings of OSKH group and to fund OSKH's on-going businesses.

It also said the unaudited net assets of OSK Trustees, Malaysian Trustees and OSKIB Labuan as at June 30, 2011 were about RM5.13mil, RM9.15mil and RM21.61mil respectively.

Source: www.thestar.com.my

Integrated Healthcare Holdings (IHH) IPO Update: International Financial Corp (IFC) to take part in IHH IPO, amount of stake and price not determined yet

International Financial Corp (IFC), a member of the World Bank Group, is planning to take part in the planned $1.5 billion listing of Malaysia's Integrated Healthcare Holdings (IHH) in a move to help validate IHH's emerging markets strategy, according to IFC's official website.

The largest global development institution focused on the private sector in developing countries said the move would help the healthcare firm with its pan-Asia expansion strategy.

"Project cost and the amount and nature of IFC's proposed investment cannot be disclosed at this time due to confidentiality and regulatory requirements," IFC announced on its website, adding that the estimated date for board considerations was June 12.

IHH is the healthcare arm of Malaysia's state investor, Khazanah. Its assets include Turkish hospital group Acibadem AS, Singapore's Parkway Holdings, India's Apollo Hospitals Enterprise Ltd and Malaysia-based Pantai Hospitals and International Medical University.

The listing of IHH in Singapore and Malaysia was expected to be the fourth-biggest initial public offering in the city state's history and Malaysia's second-largest this year after the planned listing of Malaysian plantation group Felda Global Venture Holdings.

Southeast Asia has seen a burst of IPOs since the start of the year, despite the protracted euro zone debt crisis and the debacle over Facebook's recent market debut.

IHH, which is expected to debut on the Malaysian and Singaporean bourses by the end of July, has started to invite approved "Bumiputra" investors to submit expressions of interest in subscribing for its shares, according to the website of Malaysia's Ministry of International Trade and Industry earlier.

Premarketing is currently being held for a second tranche that will be open to institutional and other investors.

The IPO will be one of the first after elections in Malaysia that are widely expected to be held in June or July. Analysts and investment bankers have said Malaysia's IPO pipeline has slowed ahead of the poll because of concerns of market volatility.

IFC officials were not immediately available for comment. Japan's Mitsui & Co Ltd owns a 26.6 percent stake in IHH, Dubai-based Abraaj Capital holds 7.1 percent and Acibadem chief Mehmet Ali Aydinlar 4.2 percent. Khazanah owns the remaining 62.1 percent.

Bank of America-Merrill Lynch, Deutsche Bank AG and CIMB are joint global coordinators and book runners for the deal. Goldman Sachs, DBS and Credit Suisse are joint bookrunners, a source told Reuters in December.

Source: www.thestar.com.my

Property developers buying up land amid slowing real estate market in Malaysia

Research analysts and property consultants have mixed views about developers that have been buying sizeable parcels of land recently, as the real estate market has slowed down and prices are relatively reasonable.

“It is a good time to acquire land when the market is slow. Some property developers may just be able to get a bargain price for their purchases,” said property consultancy CB Richard Ellis (M) Sdn Bhd executive director Paul Khong.

Khong told StarBiz via e-mail that real estate sellers would also be more realistic concerning prices, as there were not too many buyers around.

He pointed out that the property sector was moving slowly back to a “buyer's market” and the principle of “cash is king” would rule again.

In recent months, property developers such as Mah Sing Group Bhd, SP Setia Bhd, WCT Bhd and Hua Yang Bhd have been actively expanding their land bank particularly in the Klang Valley.

Last week, Mah Sing announced that it was paying RM333.26mil or RM18.55 per sq ft for 412 acres targeted for a mixed township near Bangi, Selangor.

SP Setia recently acquired 21.3 acres freehold land in Penang for RM185.6mil, and said this was for a mixed residential development project with a gross development value (GDV) of RM1.1bil.

Meanwhile, WCT recently acquired two parcels of 468 acres and 57 acres in the Klang Valley.

WCT executive director Choe Kai Keong had told StarBiz that the land costing RM450mil has a potential GDV of RM5.2bil.

The 468 acres in Rawang, Selangor would be developed into an integrated township with an estimated GDV of RM1.2bil, while the 57-acre in Overseas Union Garden in Kuala Lumpur is planned for a mixed development worth RM4bil.

Hua Yang also has been acquiring small parcels of land in the Klang Valley since last year.

Hua Yang, which is known for developing residential properties in the affordable segment, recently agreed to pay RM15.2mil for 21 acres of freehold land in Ipoh, Perak.

“Prices and sales of properties have obviously slowed down in 2012 as the number of buyers has been halved, with stricter bank lending guidelines. This is rather sensitive in the mid-high and high-end segments (such as above the RM3mil category) of the residential market,” said Khong.

Khong said property developers were now moving quickly to look at larger land banks to develop new projects, and were looking at cheaper locations where there was still demand from the mass market in the mid and lower-mid sections.

“Landed properties especially in the RM2mil and below categories should still do relatively well, as investors will still continue their quest but at a slightly lower segments.”

He also noted that the recent land sales were centred in secondary locations outside the city centre, but were in reasonably “good locations” and were in respect of big parcels where the developers could develop the “evergreen” landed segments again.

Khong pointed out that regardless of market conditions, property developers needed to take a long term view about their land bank.

“They have to continue to acquire land and develop, to sustain their operations and cover overhead costs.”

However, one property analyst contacted by StarBiz said there were concerns that developers might be too aggressive in expanding their land bank.

“In good times, when the property market is hot, developers can increase their gearing without much worry as they can launch and sell properties quickly. Now, the market has cooled and they should be careful about increasing their gearing too much,” he said.

Maybank Investment Bank (IB) Research said in a recent report that it took a neutral view of SP Setia's recent land buy in Penang.

“Despite its strategic location, the RM200 per sq ft land cost (in Penang) appeared to be on the high side. It is 33% to 60% higher than the RM125 to RM150 per sq ft asking or transacted prices in the area.”

However, Maybank IB noted that SP Setia's net gearing was still very healthy, as this was expected to increase to 0.14 times post-acquisition of the Penang land (from 0.08 times as at January 2012).

Meanwhile, Kenanga Research said it took a neutral view of Mah Sing's recent land buy near Bangi as the deal is expected to result in the company's net gearing reaching 0.6 times (from the 0.3 times in the fourth quarter of 2011), based on an assumed 70:30 debt-equity financing.

“This has exceeded our comfort level of 0.5 times net gearing,” said the research unit.

However, Kenanga Research said Mah Sing's expected net gearing of 0.6 times is manageable amd should fall below 0.5 times over the next two quarters, on the back of continuous billings.

Source: www.thestar.com.my

Weekly Stock Picks Commentary Report (21-25 May 2012)

Malaysia Stock Picks

Week 21 (21-25 May) Stock Picks Commentary

Hi! Welcome to Malaysia Stock Picks site. We have officially clocked in more than 10,000 page visits since the blog’s inception slightly more than a month ago. Thank you for your continuous support.

We have the Weekly Stock Picks Commentary archive section if you would like to view our previous commentary

Here is the stock picks commentary for Week 21 (21-25 May).

Stock Pick #1

Multi Purpose Holdings (MPHB)

Week high : RM 3.27 (Up 39 sen – 11.9%)

To recap last week- “On 8 May, MPHB's finance executives (who are involved in the corporate plan) told TheEdge that Datuk Lim Tiong Chin is negotiating for a management buyout for MPHB's stockbroking firm AA Anthony which analysts estimates to worth around RM 170 million.

On 9 May, Kenanga Research initiated coverage on MPHB and estimated its non-gaming assets to worth RM 1.44 billion (equivalent to RM 1.77 per share).

Their analysis showed that if the entire non-gaming assets are disposed under their asset rationalisation exercise, the proceeds is enough to repay their entire debts and borrowings to a net cash position of RM 805 million. This position gives them the ability to pay a special dividend of up to 56 sen per share.

Kenanga Research favours MPHB’s move to become a pure NFO play citing that this will trigger the market to re-assess MPHB’s valuation to be up to par with current favourite Berjaya Sports Toto Bhd’s valuation.

MPHB is currently traded 23% discount in terms of valuations against Berjaya Sports Toto. Market reacted positively on MPHB’s ongoing asset rationalisation exercise where non-gaming assets are planned for disposal to enable MPHB fully focus on its Number Forecast gaming business and proceeds from sale of assets will enable MPHB to pare down its borrowings or to be repaid to its shareholders.

It currently has a 100% stake in Magnum, which is one of the largest Number Forecast Operator (NFO) in Malaysia. MPHB stock rose 4.9% (14 sen) since 8 May to week’s highest RM 3.02 on the same day and closed at RM 2.91 at the end of this week.”

Subsequently this week, Multi-Purpose Holdings (MPHB) announced a proposal to list its non-gaming business on Bursa Malaysia stock exchange. Managing director Datuk Surin Upatkoon said that the demerger will allow MPHB to position itself as a "gaming-dividend" stock with a sustainable dividend payment policy of at least 80 per cent of its profit annually.

Market took this news as positive as the listing of MPHB non-gaming assets may potentially realise the value of its assets.

Take note that even though Kenanga Research estimated its non-gaming assets to worth RM 1.44 billion, the exact valuation of the assets and how much each shareholder will get from the deal are not finalised and known yet and the demerger is subject to shareholders approval.

MPHB stock price had a total surge of 11.9% from 8 May to three week high of RM 3.27 on 25 May and closed at RM 3.19 for the week.

Click Here for all latest posts on MPHB

Stock Picks #2

AirAsia Berhad (AIRASIA)

Week high : RM 3.60 (Up 21 sen – 6.2%)

On 24 May, TheStar reported that Thai AirAsia will go for an initial public offering (IPO) exercise to list on the Thailand Stock Exchange. The listing is expected to complete by end of May.

AirAsia currently owns a 49% stake in Thai Airasia and its stake will reduce to 45% after the IPO. The IPO will raise RM 450 million, offering 1.2 billion shares valued at 3.7 baht (37 sen) a share, out of which 462.5 million shares are from existing shareholders.

Market is positive on this because if the listing goes through, AirAsia has the opportunity to cash out part of its stake in Thai AirAsia. The additional funds raised in the IPO for Thai AirAsia itself is encouraging.

AIRASIA stock price rose 6.2% since 24 May to week high of RM 3.60 on 25 May and closed at RM 3.60 for the week.

Click Here for all latest posts on AirAsia

Stock Picks #3

JT International Berhad (JTINTER)

Week high : RM 7.34 (Up 52 sen – 7.6%)

On 24 May, JT International announced a special dividend totaling 62 sen (24 sen per share less 25 per cent tax and 38 sen per share, tax exempt)

Market took this news as positive on anticipation of the windfall cash payout to JT International shareholders. The ability to payout cash dividends goes a long way in demonstrating robust cash flow management of JT International.

JTINTER stock price surged 7.6% since 24 May to week high RM 7.34 on 25 May and closed at RM 7.27 for the week.

Click Here for all latest posts on JT International

On Other stocks:

JCY International-

“To recap, on last week commentary, we wrote that On 17 May, JCY International quarterly earnings surged 1,209% to RM 163 million on better HDD component selling prices and higher sales volume due to shortages in supply from Thailand floods

Take note that even though JCY net profit recovered strongly compared to previous year, current quarter’s net profit (RM 163 million) is rather flattish if compared with its preceding Q4 2011’s net profit (RM 162 million).

Surge in net profit from Thailand floods had started since Q4 of 2011. Market talk has it that the benefit from this event could have peaked and whether or not such robust results can be sustained and replicated for the next quarters ahead is questionable.

JCY stock price dropped 2.6% since 17 May to a week low of RM 1.47 on 18 May. Nonetheless, JCY stock price had surged by 268% since Oct 2011 when Thailand’s flood took effect from around 40 sen in Oct 2011 to RM 1.47 closing on 18 May.”

Click here to read Week 20’s stock picks commentary report

Subsequently, this week on 21 May, CIMB reports that JCY's competitors revealed that their capacity in Thailand will be back in full swing by the end of the third or fourth quarter 2012.

Market took this news negatively as they earlier questioned whether the benefit from the Thailand flood event could have peaked and whether or not such robust results can be sustained and replicated for the next quarters.

As a result, JCY stock price dropped further this week to a total drop of 18% since they announced their quarter results on 17 May to RM 1.33 closing and week low on 25 May.

FAQ: Why and when do stock prices get automatically adjusted?

Have you ever wondered why stock prices get automatically adjusted?

I get asked this question many times before so I figured its best to share this information on this site.

In general, stock prices are automatically adjusted for rights issue, bonus issue, share consolidation and share split. The stock prices are adjusted retrospectively, which means that all historical stock prices before the ex date is adjusted.

As for the case of regular dividends, previous stock prices on the historical chart will not be adjusted, instead, the stock price will automatically adjust upward to the amount of dividends per share when declared. As soon as the stocks reaches its “Ex” date, the stock price automatically drops by the same amount it increased earlier on.

In contrast, special dividends warrant a historical price adjustment because it is ought to be one-off and non-recurring.

Take note that the above only applies to the Malaysia stock exchange or Bursa Malaysia. It may not be applicable to other stock exchanges elsewhere in the World.

Maxis launches Loker, Malaysia's first personal cloud storage service, free 5GB storage and priced at RM15 a month for 10GB and RM 25 a month for 25GB

Maxis Bhd has launched Loker, Malaysia’s first personal cloud service which is available on multiple devices.

The company said in a statement yesterday that Maxis customers who signed up for Loker would received free 5GB of storage space, allowing them to sync, store and share their digital content including pictures, videos, music and contacts from their mobile phones, tablets or PCs. Customers will also be able to share their content on social networking sites and via email.

Product, device, innovation & roaming head T. Kugan said recent trends had shown Malaysians were one of the most active in sharing their experiences online using pictures and videos and that Maxis customers had led the way in this area.

“With Loker our customers will have the freedom to store a much higher volume of digital content. A 5GB storage space is equivalent to 5,000 pictures or 2,500 songs, so you can imagine the sheer size of it,” he said.

Maxis Loker is available on Android and BlackBerry devices and tablets, as well as PCs and Macs, with more device platforms to be made available soon. There is also an option to upgrade the 5GB storage space at any time to 10GB at RM15 a month or 25GB at RM25 a month.

Source: www.thestar.com.my

RHB and OSK Merger Update: RHB Capital and OSK Holdings receives approval from Securities Commission for merger

(OSK opening stock price today (25.5.2012) was RM 1.64)

(RHBCAP opening stock price today (25.5.2012) was RM 7.42)

RHB Capital Bhd and OSK Holdings Bhd have received approval from Malaysia's Securities Commission (SC) to merge RHB's banking group with OSK's investment bank, according to a filing with Bursa Malaysia.

"Further details on the possible merger will be announced upon the execution of a conditional share purchase agreement between OSK and RHB," OSK said yesterday.

The Finance Ministry gave its approval on April 28.

The merged entity will become the country's biggest domestic stockbroker, overtaking CIMB Group Holdings Bhd

Source: www.btimes.com.my

RHB and OSK earlier on 27 April obtained approval from Ministry of Finance for the proposed merger.

JT International (JTINTER) proposes special cash dividend of 62 sen per share (24 sen per share less 25 per cent tax and 38 sen per share, tax exempt)

(JTINTER closing stock price yesterday (24.5.2012) was RM 6.82)

JT International Bhd (JTI) is proposing a special cash dividend of 24 sen per share less 25 per cent tax and 38 sen per share, tax exempt, the company said in a statement to the stock exchange.

Meanwhile, for the first quarter ended March 31 2012, JT International posted a net profit of RM37.75 million versus a net profit of RM34.51 million in the same period a year ago.

Source: www.btimes.com.my

Thailand rubber exporters have started purchasing on the Tokyo and Shanghai Rubber exchanges to shore up prices of the Rubber commodity - Thai Rubber Association

Rubber exporters from Thailand, the world's largest producer, have started purchases on the Tokyo and Shanghai exchanges to shore up prices of the commodity used in tyres and gloves, according to the Thai Rubber Association.

"Exporters have bought the rubber on the exchanges as it is cheap," president Prapas Euanontat said by phone from the southern province of Nakhon Si Thammarat. He declined to specify the amount. Shippers will continue buying on overseas bourses "until local prices climb to 120 baht (US$3.80) a kilogramme, the level the government would like to see."

Futures have plunged 51 per cent from a record in February 2011, cutting costs for tyre makers such as Bridgestone Corp, Goodyear Tire & Rubber Co and Michelin & Cie.

Prices slumped as China, the biggest user, expanded last quarter at its slowest pace in almost three years and Europe struggled to contain its debt crisis. Chinese vehicle sales dropped 1.3 per cent in the first four months, the worst performance since 1998, according to the China Association of Automobile Manufacturers.

Thailand announced plans last week to buy more than 10,000 metric tonnes in Tokyo and Shanghai and to continue purchases from local farmers at above-market rates to drive prices higher. The country will also work with Indonesia and Malaysia to tackle the slump, according to Deputy Farm Minister Nattawut Saikuar. The three nations represent about 70 per cent of global supply.

"At current prices, producers in Malaysia and Indonesia don't want to plant new trees," said Pongsak Kerdvongbundit, the group's honorary president. "Currently there is no shortage. But when the world economy recovers there won't be extra supply to fill any gap," he said on Wednesday on the sidelines of the 2012 World Rubber Summit here.

Rubber for delivery in October lost as much as 3.9 per cent to 259.1 yen a kilogramme (US$3,261 a tonne), the lowest for the most active contract since January 5, on the Tokyo Commodity Exchange.

Global natural rubber consumption is set to expand 3.4 per cent to 11.3 million tonnes this year, while production climbs 3.2 per cent also to 11.3 million tonnes, the International Rubber Study Group said. Bloomberg

Source: www.btimes.com.my

Kuala Lumpur Kepong (KLK) quarterly earnings fell 42.5% to RM 214.91mil, Indonesian export duties reduced selling prices of CPO and PK in the Indonesian domestic market

(KLK closing stock price today (24.5.2012) was RM 22.16)

Kuala Lumpur Kepong Bhd's (KLK) earnings fell 42.5% to RM214.91mil in the second quarter from RM373.85mil a year ago due to higher operating expenses.

It said on Thursday its revenue rose 10.8% to RM2.624bil from RM2.368bil. Earnings per share were 20.18 sen compared with 35.10 sen. It declared an interim single tier dividend of 15 sen per share.

Its operating expenses rose to RM2.18bil from RM1.79bil.

In the notes to the accounts, KLK said the plantations sector registered a profit of RM300.7mil which was 20.7% below the RM379.1mil year ago.

The decline in profit was due to a reduction in commodity selling prices. The realised selling prices for CPO and PK were diluted by the Indonesian export duties which had effectively reduced the Indonesian domestic CPO and PK prices.

KLK also said it was impacted by rising cost of production due to inflationary factors such as higher wages.

Another factor was lower refinery contributions. Last year's quarter results was aided by the gain of RM70.2mil arising from the changes in fair value on outstanding derivative contracts.

In the first half, its earnings fell 18% to RM555.89mil from RM678.04mil in the previous corresponding period. Turnover was however higher by 15.7% to RM5.547bil from RM4.791bil.

Source: www.thestar.com.my

PPB Group's quarterly net profit fell 32.7% to RM 178.50 mil due to lower profit contribution from its 18.3% owned Wilmar International

(PPB closing stock price today (24.5.2012) was RM 15.70)

PPB Group Bhd's net profit fell 32.7% to RM178.50mil in the first quarter ended March 31, 2012 from RM265.23mil a year ago following lower profit contribution from its 18.3% owned Wilmar International Ltd.

PPB said on Thursday that the Singapore-listed Wilmar's profit contribution came in at RM141mil compared with RM216mil a year ago mainly to lower oilseeds and grains margins. PPB's earnings per share were 15.06 sen compared with 22.37 sen.

"Group profit before tax decreased by 30% to RM200mil in Q1, 2012 compared with RM283mil in Q1, 2011," it said.

PPB's revenue rose 20.2% to RM696.95mil in Q1, 2012 from RM580mil a year ago mainly due to higher revenue from the grains trading, flour and feed milling division.

The property division's revenue increased significantly due to the sale of its newly launched high-end residential properties in Bukit Segar, Kuala Lumpur.

All other divisions recorded higher revenue in the quarter under review with the exception of chemicals, livestock and investments divisions.

The grains trading, flour and feed milling, property, and investments recorded higher revenue.

On the oulook, PPB said the global economy continues to be uncertain in 2012, particularly with the Eurozone problems and slower growth reported by the advanced/emerging economies.

"The volatility of commodity prices and foreign exchange rates will continue to present challenges to the group's businesses," it added.

Source: www.thestar.com.my

Star Publications appoints Tan Sri Tony Fernandes as independent non-executive director

(STAR opening stock price today (24.5.2012) was RM 3.22)

AirAsia Bhd co-founder and group chief executive officer Tan Sri Tony Fernandes, 48, has joined the board of Star Publications (M) Bhd as an independent non-executive director with effect from yesterday.

In a statement to Bursa Malaysia, Star said Fernandes replaced Datuk Wira Syed Abdul Jaabar Syed Hassan, 72, who did not seek re-appointment after nearly 15 years as a non-executive director.

“Tony (Fernandes) is a far-sighted entrepreneur who has built a global brand in AirAsia and we hope to tap on his insights and exposure in the global stage to grow in Malaysia and beyond,” Star chairman Tan Sri Dr Fong Chan Onn said.

Fernandes, on the other hand, said he hoped to contribute in whatever way he could as Star sought to expand from a print to a multi-channel media company.

All the other existing directors had been re-appointed to the board at the company's 40th AGM held here yesterday.

Star's core business is its English daily The Star.

According to the Audit Bureau of Circulations, The Star was the only English newspaper in the country to register a growth in sales in the second half of 2011.

From July to December 2011, The Star's daily editions (Monday to Saturday) marked a year-on-year increase of 8,243 copies or 3% to 287,204 compared with 278,961 copies in the previous corresponding period. Its weekly (Sunday) edition, however, registered a marginal decline of 1% or 2,722 copies to 289,979 copies from July to December 2011, compared with 292,701 copies in the previous corresponding period.

Meanwhile, for the first quarter (Q1) ended March 31, 2012, Star reported a lower net profit of RM32.45mil compared with RM40.27mil for the corresponding period last year. The lower net profit was attributable to higher operating expenses and finance cost.

Star's revenue for Q1 rose a marginal 0.9% to RM229.98mil from a year ago. Earnings per share stood at 4.39 sen for the quarter compared with 5.45 sen a year ago.

Star's pre-tax profit was RM44.79mil compared with RM54.92mil a year ago.

Of the four main business segments within Star, print and new media was the only one with positive results. The segment registered a pre-tax profit of RM53.58mil, down 9.7%, on revenue decline of 3.2% to RM188.93mil. This was attributable to lower advertising spending, as the close proximity of Chinese New Year in January and Christmas during the preceding month, and the holiday season resulted in a shorter window for promotions by advertisers.

Its broadcasting segment, on the other hand, was hit by higher expenses, especially after including the amortisation of Capital FM radio licence. Excluding the amortisation costs of the licence, the segment would have made a small pre-tax profit of RM250,000 for Q1.

Star's event, exhibition, interior and thematic segment, while seeing its revenue growing 32.4% year-on-year to RM26.38mil for Q1, was hit by higher cost of sales and operating expenses, resulting in a 36.9% decline in pre-tax profit.

Its television channel segment from Li TV Holdings Ltd saw a loss of RM380,000 due to higher operating, transmission and marketing costs. Revenue contribution from this division was RM1.87mil for Q1 2012.

Source: www.thestar.com.my

No interim dividend was declared for the quarter in review.

Star gained one sen yesterday to close at RM3.22.

AirAsia's 49% owned Thai AirAsia to list on Thailand Stock Exchange by end of this month, initial public offering (IPO) price has been set at 3.7 baht (37 sen) a share

(AIRASIA opening stock price today (24.5.2012) was RM 3.39)

The offer price for Thai AirAsia's initial public offering (IPO) has been set at 3.7 baht (37 sen) a share, said its major shareholder Asia Aviation Pcl, as the Thai affiliate of AirAsia Bhd prepares for a listing at the end of this month.

A total of 1.2 billion shares would be offered to investors during the subscription period from May 23 to May 25 for trading on the Stock Exchange of Thailand soon, Asia Aviation said in a statement.

Of the total public offering, 750 million are new shares and 462.5 million shares from existing shareholders, bringing the public float to 25% of its paid-up capital.

Reuters reported last week that the IPO, expected on May 31, would raise 4.5 billion baht (RM450mil).

Asia Aviation CEO Tassapon Bijleveld said the company planned to use part of the IPO proceeds to buy new shares in Thai AirAsia, which will raise its stake to 55% from 51% currently.

Subsequently, the equity held by AirAsia International, AirAsia's wholly-owned unit, would be pared down to 45% from 49%.

“Thai AirAsia aims to be the low-cost airline with the largest market share.

“Our strength is our cost control, which makes us the airline with the lowest operating cost while the service quality remains intact,” Bijleveld said.

“We offer the highest flight frequency for domestic and international routes that take less than four hours of flying.

“Today, we are ready to offer our shares to the public and will be listed on the Stock Exchange of Thailand.

“This is another crucial step that will stabilise Thai AirAsia's financial status and allow the company to march forward to its planned goal.

“We aim to grow at least 20% to 25% from 2011.

“This will be supported by our new fleet, new route plans and flight frequency increase on potential routes.”

Thai AirAsia will also utilise its listing funds to double its Airbus A320 fleet size to 48 aircrafts by 2016, as well as for working capital and operations.

The airline had reportedly said that some 1.5 billion baht (RM150mil) would be used to finance the purchase of new aircraft in the near term, and it hoped to add five to six new aircraft annually for the next five years.

The financial advisor for the IPO, Thanachart Securities Pcl, also said the listing had drawn an overwhelming response from local and overseas investors, as evident in the oversubscription of the shares by 10 times.

Thanachart Securities and CIMB Securities (Thailand) are the co-lead underwriters for the domestic market while ten other brokerages are acting as co-underwriters including Maybank Kim Eng Securities (Thailand) Plc and UOB Kay Hian Securities (Thailand) Plc.

Analysts have noted that the listings of Thai AirAsia, Indonesia AirAsia and AirAsia X may be re-rating catalysts for AirAsia shares.

Source: www.thestar.com.my

Felda IPO Update: Felda forms joint venture (MyBiomass) with Sime Darby and Malaysia Industry Government High Technology to undertake biofuel research and development project

Federal Land Development Authority (Felda) has teamed up with fellow plantation giant Sime Darby Bhd to make industrial sugar from oil palm biomass.

Felda Global Ventures Holdings Bhd president and chief executive officer Datuk Sabri Ahmad said returns from the venture would be big if the total costs including logistics to convert the biomass is below US$100 (RM314) per tonne.

Oil palm biomass is agriculture wastes such as tree trunks, empty fresh fruit bunches and fronds.

Felda and Sime Darby have a formed a special purpose vehicle (SPV) with Malaysia Industry Government High Technology (Might) to undertake the venture.

Sabri said the groups are doing a feasibility study.

"The three parties are evaluating whether we can convert biomass into non-edible sugar. We are studying all aspects from logistics and systems in the field to transporting the biomass to a central collection centre and processing factory in Pasir Gudang, Johor.

"If all can be done under US$100 per tonne, then it is commercially viable and the returns are big," Sabri told Business Times in an interview yesterday.

If feasible, MyBiomass will set up a plant that is expected to require 60,000 tonnes of feedstock a day to produce 1.2 million tonnes of sugar a day.

Sabri said the parties had signed the pact during Prime Minister Datuk Seri Najib Razak's visit to New York on May 17.

Felda and Sime Darby will each own a 40 per cent stake in the SPV called MyBiomass Sdn Bhd. Might will take up the remaining 20 per cent stake.

Sabri said industrial sugar potentially to be produced by MyBiomass is meant for oleochemicals, paints and chemicals industries, with players such as Petronas Chemicals, Badische Anilin-und Soda-Fabrik, British Petroleum, Archer Daniels Midland and DuPont.

"This venture is not the first of its kind in the world as Thailand is converting tapioca into sugar and Brazil is converting corn into ethanol. But it is the first for oil palm. So it has to be done at below US$100 per tonne because otherwise it is not competitive compared to other countries.

"We hope this will generate a new business opportunity for the palm oil industry," Sabri said.

Malaysia's oil palm sector churns out 100 million tonnes of biomass a year. MyBiomass aims to take up 20 per cent or 20 million tonnes of the waste to be turned into industrial sugar, which is known as isobutanol, butanediol and ethanol.

Source: www.btimes.com.my

Ramunia Holdings (PN 17) expects to complete regularisation plan by end of July after obtaining approvals from shareholders yesterday, pre-tax profit of at least RM 28 million expect this year - Chairman Datuk Azizan Abd Rahman

(RAMUNIA opening stock price today (24.5.2012) was 39 sen)

Ramunia Holdings Bhd, partly owned by Lembaga Tabung Haji, expects to complete its regularisation plan by end-July, after which it hopes the stock exchange will remove its Practice Note 17 (PN17) status.

The offshore oil and gas fabricator also expects to return to the black this year with a pre-tax profit of "RM28 million to RM29 million", chairman Datuk Azizan Abd Rahman said.

PN17 denotes companies that face financial difficulties and need to regularise their accounts to help justify their existence as ongoing business entities.

Ramunia yesterday obtained all the approvals needed from shareholders to implement its regularisation plan.

It involves the company buying a fabrication yard in Pulau Indah, Port Klang, from Oilfab Sdn Bhd for RM83.6 million.

"Now that we have got the approval, we will proceed as scheduled. We expect to have no further hitches, and hopefully (we) will complete (the plan) by end of July. Then, we will apply to Bursa Malaysia (for PN17 upliftment)," Azizan told reporters after the company's annual and extraordinary general meetings here yesterday.

The chairman was "optimistic" that Bursa Malaysia would lift the status as Ramunia would have already complied with all the conditions set by the stock exchange.

Ramunia slipped into PN17 in March 2010 after selling its Teluk Ramunia fabrication yard to Sime Darby Bhd for RM530 million in cash.

It submitted its regularisation plan in July last year, and Bursa Malaysia approved it in January.

Ramunia currently has projects valued at RM208 million in hand, either through letters of award or intent.

Its floating production, storage and offloading unit has yet to secure any international contracts but is pursuing three projects from three oil companies in Malaysia, the company's chief executive officer Nor Badli Mohd Alias said.

Part of the regularisation plan involves a rights issue that is expected to raise between RM106 million and RM150 million. It may also seek bank borrowings.

About RM62 million of the fund will be spent to upgrade the Pulau Indah fabrication yard, which will take up to 18 months to complete.

The move is considered crucial to increase its competitiveness in the industry, Nor Badli said.

Source: www.btimes.com.my

Axiata valued its 19% stake Idea Cellular at 120 rupees although the shares were traded at only 80 rupees over the past four months, no impairments necessary as Axiata takes long term future prospect into consideration - President and CEO Datuk Seri Jamaludin Ibrahim

(AXIATA opening stock price today (24.5.2012) was RM 5.44)

*Idea Cellular closed at 75 rupees yesterday.

Axiata Group Bhd said there is no need for the company to make further impairment charges on Idea Cellular Ltd for now, even though its investment's market value has shrunk by about one-third.

However, it does not discount the possibility of a further impairment in the future, depending on how the India telecommunications industry progresses.

Axiata, via a merger between Idea Cellular and Spice Telecoms in 2008, acquired 19 per cent stake in Idea Cellular for about 143 rupees (RM8.03) a share in 2008.

Unfortunately, Idea's share price has been on a declining trend since the merger.

Last year, Axiata decided to book a RM1.1 billion impairment on Idea. Post impairment, Axiata's 19 per cent stake in Idea is now valued at about 120 rupees (RM6.73) a share.

For the past 12 months, Idea shares have been trading at an average of about 90 rupees a share and for the past four weeks, Idea shares were traded at about 80 rupees a share.

"For now, there's no need for further impairments, but we will continue to evaluate periodically.

"When we evaluate, it's not over a short-term basis, it's a long-term basis where we look at the whole prospect of the company and industry," said president and chief executive officer Datuk Seri Jamaludin Ibrahim after the company's annual general meeting yesterday.

Some Indian mobile operators have written off part of their investments after the country's Supreme Court order to cancel 122 mobile permits in February this year.

Among the biggest "casualties" was Uninor - a company majority controlled by Norwegian firm Telenor ASA. Uninor has lost all its telecom licences as a result of the Supreme Court's decision.

As a result, Telenor has reported a 79 per cent fall in its first quarter net profit at 583 million kroner, due to a 3.9 billion kroner (RM2.14 billion) write-off.

UAE-based Etisalat Group also announced that it will write off about US$820 million (RM2.57 billion), as part losses incurred from its India operations.

On how Axiata plan to utilise its cash pile, the company said it is expected to use part of the cash to reduce borrowings that are incurring higher interest rates, and will continue to be prudent on how it spends the money.

Source: www.btimes.com.my