Stocks In Focus MY (Berjaya Sports,Tenanga Nasional, Wah Seong) – 19/12/14
Berjaya Sports 2Q15 Net Profit Up 21%
Berjaya Sports Toto recorded a 20.6 percent year-on-year jump in net profit from RM82.6 million to RM99.7 million in the second quarter ended 31 October 2014, as revenue rose 44.7 percent to RM1.3 billion.
The increase in revenue was mostly due to the consolidation of the firm’s prestige car dealership in the UK, HR Owen, while the rise in earnings was attributable to higher contributions from Sports Toto Malaysia due to lower prize payout, which offsets the fall in turnover from this business.
Earnings per share in the quarter climbed from 6.19 sen to 7.39 sen and the company declared a second interim dividend of 6 sen per share. The payout will amount to approximately RM154.8 million, representing 87 percent of the attributable profit in the quarter.
Significance: Berjaya Sports said it remains cautiously optimistic about its prospects for the rest of the financial year, considering that inflation was weighing down on domestic consumer spending, not to mention the uncertainty over the effects of the implementation of goods and services tax on 1 April 2015.
TNB To Invest More In Renewable Energy
Tenaga Nasional (TNB) will increase its investment in alternative sources of energy to ameliorate the effects of a fossil fuel shortage going forward.
TNB is now seeking cooperation with other renewable energy (RE) developers as the cost of electricity from RE sources is currently higher than from coal-fired power plants. At the moment, it is embarking on the Jengka bio-mass project and two other projects with Sime Darby.
The company is also looking into importing energy from Sarawak’s hydroelectric projects. Group chairman, Tan Sri Leo Moggie, said that technical discussions with Sarawak Energy are ongoing but it is not going to be realised soon until probably five years to come.
Significance: TNB’s focus on RE is in line with the government’s aspiration to increase RE contribution to overall generation from currently less than 1 percent to 5 percent by 2020. The company has begun to seriously develop RE by investing in a project in Sri Lanka for wind-powered energy generation.
CIMB Maintains ‘Add’ On Wah Seong
CIMB Research has maintained its ‘Add’ call on Wah Seong Corporation with a target price of RM2.65 and urged investors to accumulate the stock.
According to the research house, with the Polarled project going without a hitch, FY14 is set to be a record year for the company. It added that with the RM232 million North Malay Basin contract completed in 2Q14 and the bulk of the RM627 million Polarled contract now being executed in Norway, the firm’s Kuantan facility will have the capacity to meet global demand.
The group has been appointed as an exclusive manufacturer and marketer for Petronas’s new coating technology, Remcoat. Although it is premature to gauge Remcoat’s impact on the company’s earnings, CIMB is of the opinion that it will provide a steady income in the long run, thus lending more stability to bottom line currently driven by lumpy pipe-coating contracts.
Significance: CIMB Research expects more exciting times in FY15 to FY16 for the company when substantial annuity-like contributions from the joint venture between Petra Energy and Alam Maritim flow through. It noted that the shift from project-based income to annuity-like earnings is a long-term positive and a potential re-rating catalyst that supports its ‘Add’ rating.
Berjaya Sports 2Q15 Net Profit Up 21%
Berjaya Sports Toto recorded a 20.6 percent year-on-year jump in net profit from RM82.6 million to RM99.7 million in the second quarter ended 31 October 2014, as revenue rose 44.7 percent to RM1.3 billion.
The increase in revenue was mostly due to the consolidation of the firm’s prestige car dealership in the UK, HR Owen, while the rise in earnings was attributable to higher contributions from Sports Toto Malaysia due to lower prize payout, which offsets the fall in turnover from this business.
Earnings per share in the quarter climbed from 6.19 sen to 7.39 sen and the company declared a second interim dividend of 6 sen per share. The payout will amount to approximately RM154.8 million, representing 87 percent of the attributable profit in the quarter.
Significance: Berjaya Sports said it remains cautiously optimistic about its prospects for the rest of the financial year, considering that inflation was weighing down on domestic consumer spending, not to mention the uncertainty over the effects of the implementation of goods and services tax on 1 April 2015.
TNB To Invest More In Renewable Energy
Tenaga Nasional (TNB) will increase its investment in alternative sources of energy to ameliorate the effects of a fossil fuel shortage going forward.
TNB is now seeking cooperation with other renewable energy (RE) developers as the cost of electricity from RE sources is currently higher than from coal-fired power plants. At the moment, it is embarking on the Jengka bio-mass project and two other projects with Sime Darby.
The company is also looking into importing energy from Sarawak’s hydroelectric projects. Group chairman, Tan Sri Leo Moggie, said that technical discussions with Sarawak Energy are ongoing but it is not going to be realised soon until probably five years to come.
Significance: TNB’s focus on RE is in line with the government’s aspiration to increase RE contribution to overall generation from currently less than 1 percent to 5 percent by 2020. The company has begun to seriously develop RE by investing in a project in Sri Lanka for wind-powered energy generation.
CIMB Maintains ‘Add’ On Wah Seong
CIMB Research has maintained its ‘Add’ call on Wah Seong Corporation with a target price of RM2.65 and urged investors to accumulate the stock.
According to the research house, with the Polarled project going without a hitch, FY14 is set to be a record year for the company. It added that with the RM232 million North Malay Basin contract completed in 2Q14 and the bulk of the RM627 million Polarled contract now being executed in Norway, the firm’s Kuantan facility will have the capacity to meet global demand.
The group has been appointed as an exclusive manufacturer and marketer for Petronas’s new coating technology, Remcoat. Although it is premature to gauge Remcoat’s impact on the company’s earnings, CIMB is of the opinion that it will provide a steady income in the long run, thus lending more stability to bottom line currently driven by lumpy pipe-coating contracts.
Significance: CIMB Research expects more exciting times in FY15 to FY16 for the company when substantial annuity-like contributions from the joint venture between Petra Energy and Alam Maritim flow through. It noted that the shift from project-based income to annuity-like earnings is a long-term positive and a potential re-rating catalyst that supports its ‘Add’ rating.
