•* Hartalega Holdings Bhd* announced its net profit for the third quarter ended Dec 31, 2020 (3QFY21) leapt to a record high of RM1 billion, up nearly 84% against RM544.96 million in the preceding quarter, 2QFY21. Its revenue grew by 58.2% to RM2.13 billion quarter-on-quarter against RM1.35 billion in 2QFY21. The brisk glove sales boosted Hartalega's cash pile to RM2.14 billion. Quarterly earnings per share (EPS) ballooned to 29.31 sen, from 15.95 sen in the preceding quarter. This brings the cumulative EPS to 51.68 sen, from 9.49 sen. Hartalega declared a second interim dividend of 9.65 sen, bringing the cumulative dividend payout for the nine months ended Dec 31, 2020 (9MFY21) to 15.6 sen, versus the 5.5 sen registered in 9MFY20.
•* IGB Real Estate Investment Trust's (REIT)* net property income for the fourth quarter ended Dec 31, 2020 slipped 3.12% to RM93.09 million, from RM96.09 million a year ago, mainly due to a higher allowance for impairment of trade receivables. Quarterly revenue rose 5.65% to RM147.51 million from RM139.61 million a year ago, the REIT said in a filing with Bursa Malaysia. The manager has approved a distribution of 95% of the trust's quarterly distributable income, amounting to RM74.3 million or 2.08 sen per unit, to be paid on Feb 26. For the full year, IGB REIT's net property income fell 20.59% to RM316.68 million, from RM398.79 million in the previous year. Revenue for the 12 months dropped 15.74% to RM465.24 million, from RM552.13 million previously.
•* Bioalpha Holdings Bhd* announced that it has entered into a two-year procurement and distribution agreement with Shanghai Bukun Trading Co Ltd for the procurement and distribution of vaccines in Malaysia, which include the Covid-19 vaccine developed by Sinovac Biotech Co Ltd, subject to approval by the relevant authorities, including the Ministry of Health (MoH) and the National Pharmaceutical Regulatory Agency (NPRA). Bioalpha managing director William Hon said the company is currently liaising with MoH and NPRA and preparing to submit the clinical data for all three clinical trials to secure approvals to distribute the vaccines here.
•* Key ASIC Bhd's* wholly owned subsidiary Key ASIC Semiconductor Ltd has entered into a contract worth US$5.25 million (approximately RM21.22 million) with Canvas Technology Pte Ltd. The project entails the technology and design of internet protocol development and licensing.
•* KNM Group Bhd's* Italian unit has clinched RM30.22 million in contracts for a plant in the United States. The process equipment manufacturer's unit FBM Hudon Italiana SpA, which manufactures process equipment such as condensers, spheres and process tanks, inked two agreements with Dutch oil and gas firm Stamicarbon BV to supply a high-pressure carbanate condenser and a high-pressure stripper. The contracts are expected to contribute to KNM's earnings for the financial year ended Dec 31, 2021 (FY21) and FY22.
•* Sunsuria Bhd* is disposing of two parcels of agricultural land in Kuala Lumpur to Kerjaya Prospek Property Bhd for a total of RM30.14 million. Sunsuria said its 70%-owned subsidiary Sunsuria Genlin Development Sdn Bhd has entered into a sale and purchase agreement with Kerjaya Prospek Property's wholly owned subsidiary Kerjaya Property Sdn Bhd to dispose of the two vacant freehold agricultural lands located in Setapak measuring a total of 9,092 square metres. "The disposal of properties will enable Sunsuria Group to unlock capital resources from being tied up as long-term assets and realise the value of the properties at a fair market value whilst enhancing Sunsuria Group's liquidity and strengthening its financial position," it said.
•* Bintai Kinden Corp Bhd* is teaming up with Australian-based company, International Equities Corp Ltd, to jointly undertake two mixed property development and management projects with healthcare facilities and wellness services in Melaka and Penang. Bintai Kinden will take lead in the project to be developed on two parcels of freehold land spanning 2.16 hectares in Melaka and Penang with an estimated gross development value of RM470 million. International Equities, on the other hand, will provide technical consultation, planning, design, development, and other services to assist Bintai Kinden in developing and promoting the project.
•High-precision plastic components maker Ge-Shen Corp Bhd announced that 10 employees of its 70%-owned subsidiary Demand Options Sdn Bhd have tested positive for Covid-19. The infected 10 employees work at Demand Options' primary operations in Desa Cemerlang, Johor Bahru. In a filing with Bursa Malaysia today, Ge-Shen said mass testing has been conducted after the first case of Covid-19 was identified at Demand Options.
•* Prestariang SKIN Sdn Bhd*, a unit of AwanBiru Technology Bhd (Awantec), is entitled to damages of between RM733 million and RM922 million after the Pakatan Harapan government unilaterally terminated a concession agreement for the provision of a comprehensive immigration system over 15 years with the company, said its lawyer. At the start of Prestariang SKIN's hearing against the government, its counsel Datuk Lim Chee Wee in his opening statement said the company had completed 22.37% of the project since 2017, based on an assessment by an independent expert.
•Koon Hoi Chun via AKK Capital Sdn Bhd is buying a 60.41% stake in carpet maker Paragon Union Bhd from major shareholders in an off-market deal which led to a planned unconditional mandatory takeover offer from the buyer to acquire the remaining shares in Paragon Union at 55 sen each. Paragon Union said it then received the notice of the unconditional mandatory takeover offer from Hong Leong Investment Bank Bhd on behalf of AKK. AKK's offer of 55 sen a share values Paragon Union at about RM36.4 million based on the company's latest reported number of issued shares at 66.18 million.
•* Censof Holdings Bhd* has proposed a private placement to raise up to RM25.09 million, partly to fund the acquisition of an additional stake in a subsidiary. The group said it is placing out up to 100.35 million new shares or 20% of its shareholding to third-party investors. The indicative issue price of the placement shares is 25 sen apiece, it said. Censof said it will be using RM14.06 million of the proceeds of the placement to acquire an additional 30.87% interest in its 58.20%-owned subsidiary Asian Business Software Solutions Pte Ltd. Asian Business Software is involved in the development and supply of financial management and accounting softwares for small and medium enterprises.
•* Dagang NeXchange Bhd (DNeX)* has inked a consortium agreement with PT Infrastruktur Telekomunikasi Indonesia to maintain submarine cables there. DNeX signed the agreement via a consortium comprising its unit PT DNeX Telco Indonesia (PT DTI) and PT Samudera Mbiantu Sesami (PT SMS). The group said the agreement is for the deployment, management, maintenance and repair, as well as other value-added works, for the sea cable communication system maintenance support within and outside of Indonesia. Under the deal, the consortium is established for a period of three years and may be extended over the next three years.
HEVEA (RM0.65 – BUY- HLIB RESEARCH TP RM0.83) – Potential downtrend line breakout
Continue to shine. Hevea risk-reward profile is more attractive now after tumbling 22% from its 52-week high of RM0.835 to RM0.65 last Friday, supported by undemanding valuations of 12.3x (ex NCPS of 18.5sen or ~28% to share prices) FY21E P/E (vs 5Y mean of 15.1x) and 0.88x P/B (20% below 5Y mean of 1.1x), coupled with a strong 19% EPS CAGR from FY19-22
We expect Hevea to post a seasonally better 4Q20 results particularly in the RTA division, benefitting from pent-up demand, stocking up activities and work-from-home arrangements as a result of disruption of supply chain and trade diversions
However, growing pressures from stronger RM, higher freight costs and raw material prices remain a challenge to the group
LT objective: 0.80
S1-S2: 0.61-0.60
Cut: 0.58
Trading Catalyst
• 17 manufacturing operations located in Malaysia, China and Thailand with products exported to 70 countries worldwide.
• Earmarked a sizeable expansion plan with planned CAPEX of RM150.0m for 2021 & 2022 with RM30-40m will be allocated to set up a manufacturing plant in Myanmar that provides lower cost of production and better margins.
• Healthy balance sheet with net cash position of RM118.3m, translating to net cash per share of RM0.31 (c. 12.4% of share price) in 3QFY20.
• Technically, a consolidation breakout above RM2.54 may drive share price higher towards the next resistances at RM2.70-RM2.88 with long term target at RM3.26.
(i) TGUAN (S: RM2.41, R: RM2.70-2.88, LT TP: RM3.26, CL: RM2.40)
S: Support, R: Resistance, LT TP: Long term target price, CL: Cut loss
•* Tenaga Nasional Bhd's (TNB)* foreign shareholding fell to 12.87% as at Dec 31, 2020 from 13.81% as at end-November 2020, according to the Malaysian Government-controlled utility's latest updates on overseas investors' ownership of the company's shares. The December and November 2020 updates, which were published on TNB's website on Monday (Jan 18), showed that its latest foreign shareholding figures had fallen from 17.62% as at end-February 2020.
•* Supermax Corp Bhd* spent RM53.92 million to buy back its own shares today, its first share buyback exercise this year. In a bourse filing, the glove manufacturer said it bought back 8.15 million shares at between RM6.24 and RM6.70 apiece. It now holds 102.98 million cumulative net outstanding treasury shares, which is equivalent to 3.79% of its total share capital of 2.72 billion shares.
•* CIMB Group Holdings Bhd* has appointed Paul Wong Chee Kin as president and CEO of CIMB Thai effective Feb 1, 2021, succeeding acting president and CEO Sutee Losoponkul after the departure of the previous CEO, Adisorn Sermchaiwong. The group said Losoponkul will remain with CIMB Thai and assume the role of advisor to the president and CEO, until Dec 31, 2021. Wong is currently CIMB’s group chief operations officer, overseeing activities across functions in payments, digitalisation, strategy, customer delivery and process improvements.
•* Dagang NeXchange Bhd (DNeX)* is acquiring an additional 60% of the issued share capital in Ping Petroleum Ltd for US$78 million (RM314.3 million), as the group looks to further strengthen its presence in the upstream oil and gas (O&G) segment. DNeX said it entered into a conditional share sale and purchase agreement with the other shareholders of Ping to acquire the stake, which upon completion will increase its holdings in the latter to 90%. It said the transaction price for the 60% stake represents a discount of around 40% of the market valuation of Ping’s proved and probable (2P) reserve. The purchase will be satisfied by a combination of US$40.95 million in cash, and the issuance of new ordinary shares in DNeX and new redeemable preference shares in its wholly-owned unit DNeX Energy Sdn Bhd, for the remaining US$37.05 million.
•* SC Estate Builder Bhd* has proposed to undertake a private placement of up to 20% of the total number of issued shares to third-party investors at an issue price to be determined later. The construction group said that based on the indicative issue price of 5.5 sen per placement share, the proposed private placement is expected to raise gross proceeds of RM10.54 million.
•* FGV Holdings Bhd’s* non-interested directors have recommended that minority shareholders reject the proposed takeover offer for the plantation group’s shares at RM1.30 each by the Federal Land Development Authority’s (Felda), saying the offer is not fair and not reasonable after taking into account FGV’s fair value and initial public offering (IPO) share price of RM4.55 each. Independent adviser RHB Investment Bank Bhd said the FGV non-interested directors contended that the offer price is not fair because it is below the fair value of RM1.42 to RM1.60 per FGV share as determined by independent adviser RHB. RHB, however, said while Felda’s proposed takeover offer for FGV's shares at RM1.30 each is not fair, it is reasonable in the absence of an alternative proposal and Felda's intention not to maintain FGV's listing status. Hence, RHB recommended minority shareholders to accept the offer.
•* Serba Dinamik Holdings Bhd* said today its proposed private placement involving 336.83 million new shares was oversubscribed by 1.85 times. In conjunction with the completion of the private placement’s book-building exercise, the oil and gas service provider said the issue price of the private placement shares was fixed at RM1.51 per share, and that it is expected to raise gross proceeds of RM508.61 million from the exercise.
•* HB Global Ltd* has proposed to raise RM12.17 million via a private placement to repay creditors, and for use in future investments and working capital. The loss-making China-based frozen food maker said it would be issuing 93.6 million placement shares or 20% of its total share capital, at an indicative issue price of 13 sen to third-party investors.
•* PLS Plantations Bhd* has proposed to place out 19 million new shares in the durian planter to CIMB Group Holdings Bhd's ex-chairman Datuk Seri Nazir Razak at 95 sen each under a private placement of up to 10% of the total number of issued shares in the company to improve its public shareholding spread and raise money to finance the expansion of its existing business. PLS said the placement, which includes share placements to other independent third-party investors, will also enable the company to raise funds to partially repay the group’s bank borrowings, which stood at about RM121.48 million as at Dec 31, 2020.
