Pavilion REIT: Analysis by Hwang DBS Vickers Research

Construction has begun to add 300,000 sq ft net lettable area (NLA) between the main entrance and The Connection (alfresco food and beverages area) by the third quarter of 2015.

Assuming RM20 per sq ft (15% premium to current average rental of RM17.40 per sq ft given lower proportion of anchor tenants) and 68% margin, the extension could boost Pavilion REIT's net property income (NPI) by RM50mil (23% of 2012 forecast NPI).

We value the extension at RM768mil (based on 6.5% acquisition yield hurdle) which can be easily absorbed by the REIT's low gearing (70% debt financing would only increase gearing by 9 percentage points to 28%).

We believe the injection of the extension is inevitable given its proximity and synergies to Pavilion KL (REIT has right of first refusal to acquire from sponsor).

We also do not discount the possibility of new retail space being created should an underground connection between Pavilion extension, fahrenheit88 (owned by sponsor which REIT also has right of first refusal) and the upcoming Bukit Bintang MRT station is built.

There will also be a short-term boost from Pavilion KL's asset enhancement initiative (AEI) and rental reversion.

AEI of turning 68,000 sq ft NLA into a Fashion Street consisting of specialty stores by September will also contribute 2.5 times more rental than previous anchor tenant Tangs which was about RM1.1mil per month.

We understand the area has been fully taken up by 35 tenants, with 40% being new entrants in Malaysia. In 2013, 75% of the mall's NLA is due for renewal with headroom to increase tenant occupancy cost to 15%-18%.

We have assumed a conservative 5% growth in rental in the forecast for 2012 to 2013 and 10% in 2014.

The REIT is riding on strong demand for bigger retail lots. Pavilion KL extension and Fashion Street will complement the mall's profile as a hub for fashion and food and beverages.

High-end brands such as Canali and Sincere Watches are seeking to expand their concept stores to 15,000 sq ft NLA from the usual 5,000 sq ft to 6,000 sq ft, in line with the general retail trend in Asia.

Retail sales at Pavilion KL have ballooned to RM1.6bil per annum, rising 4% quarter-on-quarter in the first quarter of 2012 alone.

Source: www.thestar.com.my

Naim Indah Corporation Bhd plans to raise RM21.41mil from a proposed placement of 70.20 million new shares or 10% of its paid-up to third party investors, RM12mil would be used for working capital expenditure, RM5.81mil for capital expenditure for business expansion and RM3mil to repay borrowings

Naim Indah Corporation Bhd plans to raise RM21.41mil from a proposed placement of 70.20 million new shares or 10% of its paid-up to third party investors.

It said on Tuesday that assuming the placement shares were issued at an indicative price of 30.5 sen, the corporate exercise would raise gross proceed of RM21.41mil.

Naim Indah said the proposed placement might be implement in several tranches within six months from the date of approval.

Of the RM21.41mil, it said RM12mil would be used for working capital expenditure, RM5.81mil for capital expenditure for business expansion and RM3mil to repay borrowings. 

Source: www.thestar.com.my

Media Chinese International Ltd has proposed to undertake a distribution via a proposed special dividend to shareholders of approximately US$219.78mil (RM700mil) or US$0.13 (41 sen) per share, to undertake a capital reduction of about US$219.78mil to facilitate the proposed dividend

Media Chinese International Ltd has proposed to undertake a distribution via a proposed special dividend to shareholders of approximately US$219.78mil (RM700mil) or US$0.13 (41 sen) per share.

The company said in a statement that it would undertake a capital reduction of about US$219.78mil to facilitate the proposed dividend.

“The credit arising from the proposed capital reduction and thereafter the credit standing in the contributed surplus account of Media Chinese will be applied towards the proposed dividend,” it said, adding that the proposed dividend would be part financed by internal funds amounting to approximately US$62.8mil and new bank borrowings of approximately US$157mil.

“By part financing the proposed dividend via new bank borrowings, the company would be able to enhance its capital structure and mix without unduly burdening the group in terms of its cash flow and earnings capability,” Media Chinese explained.

“Moreover, with the company's track record of having a strong Ebitda (earnings before interest, tax, depreciation and amortisation), the company should be able to support a net debt of US$124.85mil resulting from the new borrowings,” it added.

The increase in gearing was not expected to impede the company's ability to embark on new business opportunities. Moreover, the company said it would still maintain a reasonable cash balance to embark on any new business opportunities and to meet its capital commitments after the proposals, which were expected to complete by the fourth quarter of this year.

Trading in Media Chinese shares has been suspended since last Friday pending the above announcement. It will resume trading today

Source: www.thestar.com.my

Lion Group had proposed to the Government for an immediate action to regulate the flat steel products industry through a consistent duty regime across the board, restructuring plan for Lion Group's steel manufacturing operations was still ongoing with a merchant banker appointed to look into the matter - chairman and chief executive officer Tan Sri William Cheng

A majority of domestic flat steel producers support Lion Group's proposal for stricter enforcement of the National Steel Policy on imported hot-rolled coils (HRC), cold-rolled coils (CRC), plates, coated steel and pipes, according to Lion Group chairman and chief executive officer Tan Sri William Cheng.

“We have garnered more than 60% of our customers' support,” Cheng said

There are four CRC producers, two steel plates makers, five coated steel producers, 26 steel pipes manufacturers and 21 steel service centres in Malaysia.

Measures to curb excessive imports would enable equal treatment of all flat product sectors and users, prevent manipulation of import documents and leakages through exemption and create a level playing field for local manufacturers to compete against cheaper steel imports, Cheng told a press conference yesterday.

Lion Group had proposed to the Government for an immediate action to regulate the flat products industry through a consistent duty regime across the board.

The specific flat steel products are hot-rolled coils, cold-rolled coils, coated steel as well as pipes and tubes.

“Bear in mind that Lion Group is not seeking protection for only the upstream or HRC by Megasteel Sdn Bhd, the country's sole producer of HRCs, but for all domestic flat steel producers involved in HRCs, CRCs, coated steel and pipes.

“They (flat steel producers) are also suffering from under-utilisation due to rampant imports and leakages,” he explained.

Cheng has proposed that the Government invite all local flat steel product manufacturers to sit on the technical committee on duty exemption for the respective flat product sectors. Under the National Steel Policy, duty exemption is only granted to those grades which are not available locally and for imports of raw materials for processing for export.

“Hence, submissions for duty-free imports of flat products, i.e. HRC, CRC, coated sheets and pipes that are available locally, threaten not just the sectors concerned but the entire local flat steel industry and violate the National Steel Policy.”

The apparent total consumption for flat products is over four million tonnes annually compared with imports of about three million tonnes.

Of the total imports, local producers can supply about 80% or 2.4 million tonnes, Cheng pointed out.

Earlier this year, CRC producer Mycron Steel Bhd had sought for duty-free iron-ore based HRCs the import into Malaysia claiming that the local HRC producer was not able to manufacture quality product as required by its customers.

According to Cheng, it is quite disappointing some CRC producers do not want to acknowledge or purchase local HRCs which are of comparable in quality with imported ones.

“We have a HRC capacity of about 3.2 million tonnes but a current utilisation of 1.2 million tonnes or less than 40% capacity.”

He pointed out that Megsteel had a product development roadmap to constantly develop new grades and was producing American Petroleum Institute's grades for the oil and gas sector, and Corten grade for marine cargo containers.

“We are using direct reduced iron and iron ore based scrap to produce grades of quality required by customers in the automotive inner parts, oil and gas and the pipes sector.

“So far, we have no problem supplying to the overseas market, but it is ironic why a few locals would question our product quality,” he added.

On the corporate front, Cheng said the restructuring plan for Lion Group's steel manufacturing operations was still ongoing with a merchant banker appointed to look into the matter.

He said several foreign parties from China and South Korea had indicated interest to take up stakes in Lion Group's steel subsidiaries but “these prospective investors wanted to see a clearer iron and steel policy to be put in place by the Malaysian goverment before investing.”

Lion Group is also eyeing for iron ore concessions in Terengganu, Pahang and Johor to secure consistent and cheaper supply of iron ore for its Megasteel's blast furnace plant in Banting, Selangor.

He also explained that Megasteel would still need to service its term loans with high interests and depreciation.

Source: www.thestar.com.my

Interview with Glomac group MD and CEO Datuk FD Iskandar on current major projects and property sector outlook in Malaysia

Featuring Glomac group MD and CEO Datuk FD Iskandar.

Based on your recent acquisitions, is Glomac on a land buying spree?

I would not call it a buying spree as we have been a property developer for 24 years so obviously we have to replenish our landbank.

All this while, our future gross development value (GDV) hovered around RM3bil to RM3.5bil and while we are sitting on a pile of cash, we saw many opportunities in the last 12 months or so. We have bought four parcels of land in the last 18 months and we spent over RM240mil. This has doubled our future GDV to RM7bil.

For a property company, it is not important what's happening today but be in the right places to be developed into spectacular projects.

Going forward, if the price is right and reasonable and within the areas of our focus namely the Klang Valley and the Greater Kuala Lumpur, we will consider acquiring more.

What are the strategies behind your focus on the Greater Kuala Lumpur area?

There are several reasons behind our focus; the first is we are more familiar with the area and we foresee an increase in the trend of urban migration.

Last year, residential sales for the country went above RM107bil for the first time where majority of it, about RM70bil was in Klang Valley.

By 2020, if 70% of development within the Greater KL kicks off, the population here is expected to swell to about 10 million from the current 5.5 million.

As we have about eight years to go to 2020, we need about 120,000 houses per year assuming the household average consists of four people.

Can you give a brief rundown on your current major projects?

We are working on 14 to 15 projects currently but I will highlight a few of our current flagship projects.

As middle-size property developer in Malaysia with a market cap RM550mil to RM600mil, we can still manage to react to what the market wants.

I always tell my staff that property development is the only business we do and we had better be very good at it. I want to develop value for money properties.

About two years ago, the hottest selling property was commercial and last year was shop houses. Today, the demand is more for landed properties; everybody is looking for landed houses. Condominiums are still selling but only in very specific areas within the matured community.

Because of that, in the last 18 months we have bought a 200-acre land to expand our Bandar Saujana Utama. The expected GDV for this 200-acre is RM800mil. Bandar Saujana Utama is currently sitting on about 1,000 acres with a GDV of RM1.4bil out of which we have developed about RM1.1bil.

We are also working on Glomac Damansara, where our new office is located. This project is developed on a seven-acre freehold land with a GDV of RM900mil. Currently we are in the fourth stage, out of a total of six phases, of the development. The mix-development project includes eight-storey shop offices, a 17-storey tower, another 25-storey tower that we already sold en bloc, 272 units of apartments and a mall. The development is next to a MRT station.

In middle of last year, we bought a 200-acre piece in Puchong where the sale has been recently completed. The land that is strategically located just behind Tesco, Puchong is 150m away from LRT extension and has a lake of almost 40 acres. We are planning to do a proper landed property township with jogging tracks and a clubhouse. We plan to launch this by year-end.

Also, in April we launched our Reflection in Mutiara Damansara, which consists 299 apartment units of which 97% has been sold.

What are some of your other interesting future projects?

We have 192 arces in Sepang, which is about 3.5km from Cyberjaya and 4.5km from the airport. We are planning for a landed project here. We have a project in Rawang on 350 acres with a total GDV of RM800mil.

Can you comment on speculation that you are a candidate for the post of Menteri Besar of Selangor?

Put it this way; I am a realist and I think there is no perfect political party. I think there is a lot more to be done to take Malaysia from being a good place to live in to that of a great one and this is my personal view.

It has been shown that a corporate figure doesn't necessarily make a good administrator. At the end of the day, you have to do what its right for the country.

But today, under the current Prime Minister, we are working towards what the country needs. We have been caught in the middle income trap for a long time and we need to get out of this. As the most developed state in the country, Selangor has a lot more to do to make it an investment friendly state. One person cannot make the change. I think Barisan Nasional will find the right candidate for Selangor but they have to win first.

What are the three most important lessons you learnt from your father as a developer?

Well, I think the family values taught to us not only by my father but also by my elders are important. My father specifically instilled the culture of working hard in me.

Something that I would like to instill in our team is the habit of putting ourselves in our customers' shoes. This is because property is most probably the single largest investment that a person makes in his life, so we must deliver our products well.

Thirdly be sincere. Sometimes we can be a bit aggressive and blunt but if you realise you are wrong, you must apologise.

When you were in university, did you have the idea that one day you will be required to step in your father's shoes for the company?

Well, I am a lawyer by training and I used to be a barrister. But when I came back, even the company that I worked for was involved in property. Most of my portfolio involves property. I think it is something that was already inborn. Fortunately, I am very passionate about property and I love what I am doing.

What is Glomac's view on affordable housing?

First, we have to define what is affordable housing. When low-cost housing was introduced in Malaysia in 1983, it was selling at RM23,000 each. Then in 1993, due to inflation and I am talking about Selangor and the Klang Valley, the pricing was revised. In the municipality of city areas, it was RM42,000. But since then, after almost 20 years, there has never been a revision in the pricing of low-cost houses.

For every low cost unit, a developer loses anything between RM15,000 and RM50,000 per unit depending on the location, soil condition and capital contribution. This has been going on for too long and we are losing money. But I think most developers are not trying to run away from social responsibilities but we need a better system.

What are your suggestions on affordable housing?

Instead of asking developers to build, why don't we have this fund where for every low cost unit that a developer does not build, it can be contributed to this fund. It has been done in the UK and Australia where the fund is used by the Government to build affordable homes on government land in specific areas where affordable housing is most needed.

And for the pricing, I think people on average basically earn between RM1,500 and RM2,000 per month (at entry level). With this kind of salary, they can afford a RM150,000 house.

What is your outlook on the property market?

I expect the property market to remain stable for the rest of the year. There will be growth but the increase will not be as fast as in 2010 when Klang Valley property prices went up between 20% and 30%. Prices rose last year too, but not as much as in 2010. It is expected to continue to grow this year.

Source: www.thestar.com.my

United Malayan Land Bhd (UMLand) has received a takeover offer from Seleksi Juang Sdn Bhd and parties acting in concert – which have a combined 77.52% stake – at RM2.50 a share, Seleksi Juang’s equity interest are equally held by Datuk Ng Eng Tee and Tan Sri Syed Mokhtar Shah Syed Nor

United Malayan Land Bhd (UMLand) has received a takeover offer from Seleksi Juang Sdn Bhd and parties acting in concert – which have a combined 77.52% stake – at RM2.50 a share.

The company said yesterday that Seleksi Juang had acquired 62.58 million shares or a 20.75% stake, for RM156.45mil cash or RM2.50 a share.

According to a filing with Bursa, Seleksi Juang’s equity interest are equally held by Datuk Ng Eng Tee and Tan Sri Syed Mokhtar Shah Syed Nor.

It also said in the statement that UM Land’s substantial shareholder Wawasan Perangsang Mewah Sdn Bhd would cooperate with Seleksi Juang to exercise control over UM Land for this takeover process.

These parties held a net interest of 77.52% in the company and is offering to privatise UMLand by buying over the rest of the 22.48% or 67.81 million shares not yet owned by them for a cash consideration of RM2.50 per share.

The offeror had also stated it did not intend to maintain the listing status of UM Land.

Source: www.thestar.com.my

Singapore’s CapitaLand sold its 20.75 per cent stake in United Malayan Land Bhd (UMLand) to a private firm, Seleksi Juang Sdn Bhd, that is now making a takeover offer for the rest of UMLand.

It intends to take UMLand private at RM2.50 a share, a 5.9 per cent premium to its last traded share price of RM2.36.

It bought the stake from CapitaLand also at RM2.50 a share, or RM156.45 million in total, in a direct business transaction yesterday.

Seleksi Juang’s shareholders include Datuk Ng Eng Tee, who is UMLand’s major shareholder and deputy chairman and executive director.

Source: www.btimes.com.my

IHH Healthcare IPO Update: IHH Healthcare Bhd has fixed its final institutional and retail price at RM2.80 a share following the completion of its book building exercise as its initial public offering (IPO) raises RM 6.3 Billion

IHH Healthcare Bhd, Asia's largest hospital operator has fixed its final institutional and retail price at RM2.80 a share following the completion of its book building exercise as its initial public offering (IPO) raises a whopping US$2bil (RM6.3bil).

The price is five sen below the indicative price of RM2.85/S$1.118 per share but at the upper end of the of the indicative range of RM2.67 to RM2.85 a share.

As the final retail price of RM2.80 was lower than the retail price, there would be a refund of the difference of 5.0 sen/cents per share for applicants under the Malaysia and Singapore public offering.

Based on the final offer price of RM2.80/S$1.113 per share, the gross proceeds of the IPO would be RM6,257mil/S$2,487mil.

The IHH IPO will be the third largest IPO in the world this year after Facebook Inc and Felda Global Ventures Holdings Bhd. Facebook raised US$16bil from its IPO earlier this year while Felda, which has since been listed on Bursa Malaysia since June 28, US$3.3bil.

There has been tremendous demand for the IHH shares from cornerstone, institutional and retail investors. A report said the take up rate was “most popular” by the 22 cornerstone investors of any recent IPO in the region in recent times. The cornerstone investors snapped up US$1.39bil, or 62%, of the 2.23 billion shares offered.

IHH managing director Lim Cheok Peng said: “We are delighted with the response that the IHH IPO has received. We believe it underscores the strength and quality of our offering, as well as the depth of investor interest in the opportunities we present.”

The company will have an initial market capitalisation of about RM23bil according to Bloomberg and IHH is expected to join the benchmark FTSE Bursa Malaysia KLCI Index on Aug 1, a week after its July 25 listing. Felda will join the index in its next reshuffle.

The IHH IPO comprised of institutional placement, Malaysia public offering, Singapore public offering and cornerstone offering. IHH offered 2.23 billion shares under its dual listing on Bursa Malaysia and Singapore Exchange. Of the combined 2.23 billion shares, 1.39 billion were for cornerstone investors and 498.01 million for local and foreign institutional investors including those approved by the International Trade and Industry Ministry (Miti). Under the 498.01 million portion, 360 million shares were for Miti investors, while the balance 138.01 million units were for global institutions.

Some of the local cornerstone investors included billionaire T. Ananda Krishnan's Usaha Tegas group, Chua Ma Yu and the Employees Provident Fund, while the others included Blackrock Inc and AIA Group Ltd. It is said that cornerstone investors had agreed to hold the stock for a minimum time period in return for a guaranteed allocation.

IHH would use 90% of the proceeds to repay bank borrowings and a small portion would be used for its expansion drive to build 17 hospitals and increasing the number of beds to 8,200 by 2015. As at March 31, IHH operates 4,900 beds in 30 hospitals across Asia and Turkey.

Source: www.thestar.com.my

Design details on new 2012 Malaysian Bank Notes

Bank Negara Malaysia is pleased to announce the introduction of Malaysia's new currency series. Launched by the Prime Minister of Malaysia, YAB Dato' Sri Mohd Najib Tun Haji Abdul Razak today, the new currency series comprises newly designed banknotes and coins. 

The banknotes issued are in the denominations of RM1, RM5, RM10, RM20 and RM100 and will be available for circulation in the second half of 2012. The RM50 denomination banknote for the new currency series is already in circulation. For this new series, polymer substrate is used to make the RM1 and RM5 banknotes.

The coins for this series, with denominations of 5 sen, 10 sen, 20 sen and 50 sen, were launched earlier on 25 July 2011 and will be introduced into circulation in January 2012.

The latest series of Malaysian banknotes draws its inspiration from the distinctive features of Malaysia, incorporating elements of the country's natural treasures, culture and heritage. Themed 'Distinctively Malaysia', the banknotes features traditional expressions in the art and craft, natural wonders, flora and fauna and the economy.

The new series of banknotes incorporated enhanced security features in line with the latest advancements in banknote technology. The security features for the new banknotes include shadow image, clear window, watermark portrait with pixel and highlighted numerals, colour shifting security thread, micro lens thread, perfect see-through register, coloured glossy patch for public recognition. Other features include tactile identification which enables the visually impaired to identify and distinguish the different denominations.

Bank Negara Malaysia is issuing commemorative banknotes to mark the introduction of the new currency series. Three types of commemorative banknote collections will be offered for sale as follows:

• A collection of two banknotes (RM1 and RM5 denomination) - 500,000 sets priced at RM15.00 each.
  
• A collection of a single banknote (RM20 denomination) - 500,000 sets priced at RM30.00 each.
  
• A collection of six banknotes (RM1, RM5, RM10, RM20, RM50 and RM100 denominations) - 50,000 sets priced at RM300.00 each. For each set of this collection, all the banknote denominations will carry the same serial number.

Banknotes Design

• The Obverse Side of the Banknote

All banknote denominations in the new series retain the portrait of the first Seri Paduka Baginda Yang di-Pertuan Agong, Tuanku Abdul Rahman ibni Tuanku Muhammad, the national flower Rosa-sinensis hibiscus (known locally as the 'Bunga Raya'), the face value of the banknote, the words 'Bank Negara Malaysia' as the issuing authority of the banknotes and patterns of traditional woven fabric the 'songket' which are in the background and edges of the banknote to reflect traditional Malaysian textile handicraft and embroidery. Other features include the tactile identification for the visual impaired, watermark portrait with pixel and highlighted numerals.

• The Reverse Side of the Banknote

The reverse side of each banknote features different elements of nature, tradition, culture, flora, fauna and the economy that are distinctively Malaysian. The new banknotes also retain the Bank Negara Malaysia logo, serial numbers, Jawi wordings and songket weave patterns on the reverse side of the banknotes.

• The motifs for each of denomination are as follows:

Denomination	Icon
RM100	Mount Kinabalu and pinnacles rock formations of Gunung Api valley
RM50	Oil Palm and Biotechnology
RM20	The Hawksbill and Leatherback Turtle
RM10	Rafflesia
RM5	Rhinoceros Hornbill
RM1	'Wau Bulan' (Moon Kite)

The new series banknotes are legal tender and will co-circulate with the existing series. The existing series will be gradually phased out.

Bank Negara Malaysia is working closely with financial institutions, businesses and cash handling vendors to ensure a smooth transition to the new currency series. Vendors of cash handling machines will be given six months to calibrate their machines to ensure convenience for the use of the new banknotes.

Source: Bank Negara - www.bnm.gov.my

New Malaysian banknotes will be issued in circulation on Monday

The new banknotes series, which will be issued into circulation on Monday, comes with the latest banknote technology to enhance security features, Bank Negara said on Thursday.

The new technology would include shadow image, clear window, watermark portrait with pixel and highlighted numerals, colour shifting security thread, micro lens thread, perfect see-through register and coloured glossy patch, the central bank said.

Themed "Distinctively Malaysia", the latest banknotes series drew its inspiration from the country's diverse culture, heritage and nature, it said.

The bank said the visually impaired are able to use specific features such as tactile identification to identify and distinguish the different denominations.

The new banknotes series are in RM1, RM5, RM10, RM20 and RM100 denominations. The RM20 banknote is reintroduced in this new series and polymer substrate is used for the RM1 and RM5 banknotes.

"The current RM50 banknote has been issued since December 2007 and will continue to remain in circulation," it said.

Bank Negara urged the relevant parties to expedite their machine calibration to accept the new banknotes series for the people's convenience.

The new banknotes will co-circulate with the existing banknotes which remain as legal tender.Bernama

Source: www.thestar.com.my

Timber producer Jaya Tiasa Holdings Bhd plans to raise RM332.15mil from a proposed share placement exercise, of which RM225.85mil will be used to build palm oil mills, about RM100mil would be used to repay its borrowings, issue price for the placement of 42.04 million shares has been fixed at RM7.90 per placement share

Timber producer Jaya Tiasa Holdings Bhd plans to raise RM332.15mil from a proposed share placement exercise, of which RM225.85mil will be used to build palm oil mills.

The company said in an announcement to Bursa Malaysia that the book-building exercise for the placement of 42.04 million shares, or 15% of its paid-up capital, had been completed.

“The issue price for the placement shares has been fixed at RM7.90 per placement share,” it said, adding that this was about 11% below the five-day volume weighted average market price up to Tuesday prior to the price-fixing date of RM8.87.

Jaya Tiasa said that of the RM332.15mil, about RM100mil would be used to repay its borrowings and the remaining RM6.30mil would be used for estimated expenses for the placement and bonus issue.

Analysts, although not overly excited about the development, agreed that the share placement was a necessary move by the company.

“It's a neutral move. I won't say it's positive or negative but it is necessary to reduce their gearing,” said an analyst, who pointed out that Jaya Tiasa was allocating a portion of the proceeds from the share placement exercise to repay its borrowings.

For its financial year ended April 30, 2012, Jaya Tiasa's loans and borrowings stood at RM658.34mil. Total liabilities were at RM1.16bil.

Another analyst said it was the right move at the right time to raids funds.

“They're aggressively expanding their working capital, so the funds are necessary for them.”

Jaya Tiasa recorded a lower pre-tax profit of RM38.90mil for the three-month financial period ended April 30, 2012 compared with RM72.84mil in the same period of 2011.

The company, which changed its financial year end from April 30 to June 30, said in filing with the stock exchange last month that its revenue for the period was higher at RM274.54mil compared with RM255.52mil previously. It attributed the growth to significant increase in log sales volume.

According to the company, net profit was however lower due to fall in logs, fresh fruit bunches (FFB) and crude palm oil average selling price, as well as a reduction in plywood sales volume.

The analyst said the timber sector would likely remain flat, going forward, in light of tighter log supply and the anticipated increase in demand for wood products from Japan, which is undergoing reconstruction efforts.

“We expect better growth in the oil palm sector, spurred by an increase in FFB production, going forward. The construction of the palm oil mills is timely in light of this,” he said.

Source: www.thestar.com.my