Stocks In Focus MY (Brahim’s Hldgs, Gas M’sia, MBSB) – 08/05/15
08 May 2015
Brahim’s Still In Talks With MAS On New Catering Deal
Brahim’s Holdings has confirmed that its 70%-owned subsidiary, Brahim’s Airline Catering (BAC), is still in discussions with Malaysian Airline System (MAS) to mutually extend the cut-off date for talks on the former’s new catering agreement, which expired 30 April.
It has been speculated that one of the reasons for the delay is that MAS and parent Khazanah have not yet agreed on the billing method for the in-flight meals.
BAC has a 25-year contract that expires in 2028 to serve meals and related services at the Kuala Lumpur International Airport and Penang International Airport, with MAS as its biggest customers.
Significance: To recap, the two parties had inked a settlement agreement to resolve certain disputes and the negotiations of a new agreement to replace the existing catering agreement in February. However, the delay in the conclusion of a new catering agreement might not augur well for Brahim’s, which already faces tight cash flow problems, as opined by some analysts.
Gas Malaysia 1Q15 Net Profit Dips 32%
Despite a 31.2 percent increase in turnover to RM761.6 million, underpinned by higher volume of gas sold and the upward revision of natural gas tariff, Gas Malaysia’s earnings fell 31.5 percent to RM28.5 million for the first quarter ended 31 March 2015.
The earnings were below expectations at 20 percent and 22 percent of CIMB Equities Research and consensus’ full-year forecasts, respectively, with the main reason for the variance being the higher-than-expected operating costs due to higher gas costs.
The research house noted that the group’s gross margin fell by 4.6 percentage points to 6.1 percent from 10.7 percent, arising from the higher use of liquefied natural gas (LNG) (higher feedstock costs), which caused the decline in net profit. Additionally, the possibility of the introduction of an incentive-based regulation for the gas sector could negatively impact the group’s returns.
Significance: CIMB Research maintains its view that Gas Malaysia’s earnings are at risk given the higher portion of LNG that it will utilise. Hence, it maintained its ‘Hold’ call on the stock with a reduced target price of RM2.81, after cutting FY15 to FY16 forecasts.
MBSB 1Q15 Earnings Down 37%
For the first quarter ended 31 March 2015, Malaysia Building Society (MBSB) registered a 36.8 percent fall in net profit to RM124.3 million, mainly due to higher allowances for impairment losses on loans, advances and financing and lower operating income.
The higher allowances were in line with the group’s ongoing impairment programme under its strategy to align its policies with industry best practices and banking standards. On the other hand, revenue rose 3.5 percent to RM690.6 million, which reflected the firm’s efforts in penetrating the corporate segment that resulted in a slight asset growth.
Separately, MBSB is said to be looking at Kuwait Finance House (Malaysia) as an option for a merger exercise according to sources. The group aims to become a full-fledged Islamic bank.
Significance: The company has noted that the implementation of its new five-year business plan 2015 to 2019, which focuses on sustaining profitability and maintaining a return on equity within the industry level, has shown positive progress. A satisfactory performance is expected for FY15 barring unforeseen circumstances.
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08 May 2015
Brahim’s Still In Talks With MAS On New Catering Deal
Brahim’s Holdings has confirmed that its 70%-owned subsidiary, Brahim’s Airline Catering (BAC), is still in discussions with Malaysian Airline System (MAS) to mutually extend the cut-off date for talks on the former’s new catering agreement, which expired 30 April.
It has been speculated that one of the reasons for the delay is that MAS and parent Khazanah have not yet agreed on the billing method for the in-flight meals.
BAC has a 25-year contract that expires in 2028 to serve meals and related services at the Kuala Lumpur International Airport and Penang International Airport, with MAS as its biggest customers.
Significance: To recap, the two parties had inked a settlement agreement to resolve certain disputes and the negotiations of a new agreement to replace the existing catering agreement in February. However, the delay in the conclusion of a new catering agreement might not augur well for Brahim’s, which already faces tight cash flow problems, as opined by some analysts.
Gas Malaysia 1Q15 Net Profit Dips 32%
Despite a 31.2 percent increase in turnover to RM761.6 million, underpinned by higher volume of gas sold and the upward revision of natural gas tariff, Gas Malaysia’s earnings fell 31.5 percent to RM28.5 million for the first quarter ended 31 March 2015.
The earnings were below expectations at 20 percent and 22 percent of CIMB Equities Research and consensus’ full-year forecasts, respectively, with the main reason for the variance being the higher-than-expected operating costs due to higher gas costs.
The research house noted that the group’s gross margin fell by 4.6 percentage points to 6.1 percent from 10.7 percent, arising from the higher use of liquefied natural gas (LNG) (higher feedstock costs), which caused the decline in net profit. Additionally, the possibility of the introduction of an incentive-based regulation for the gas sector could negatively impact the group’s returns.
Significance: CIMB Research maintains its view that Gas Malaysia’s earnings are at risk given the higher portion of LNG that it will utilise. Hence, it maintained its ‘Hold’ call on the stock with a reduced target price of RM2.81, after cutting FY15 to FY16 forecasts.
MBSB 1Q15 Earnings Down 37%
For the first quarter ended 31 March 2015, Malaysia Building Society (MBSB) registered a 36.8 percent fall in net profit to RM124.3 million, mainly due to higher allowances for impairment losses on loans, advances and financing and lower operating income.
The higher allowances were in line with the group’s ongoing impairment programme under its strategy to align its policies with industry best practices and banking standards. On the other hand, revenue rose 3.5 percent to RM690.6 million, which reflected the firm’s efforts in penetrating the corporate segment that resulted in a slight asset growth.
Separately, MBSB is said to be looking at Kuwait Finance House (Malaysia) as an option for a merger exercise according to sources. The group aims to become a full-fledged Islamic bank.
Significance: The company has noted that the implementation of its new five-year business plan 2015 to 2019, which focuses on sustaining profitability and maintaining a return on equity within the industry level, has shown positive progress. A satisfactory performance is expected for FY15 barring unforeseen circumstances.
http://www.sharesinv.com
