FBM30 1589.91 +0.69 points (+0.04%) Volume 1,288mil Value 1,792mil
1) KLCI managed to close positive despite the region markedly lower led by HSI-2% and STI-2% as investors worry over declining US factory orders and slowing economies in China and Europe. Index clawed back from its low of 1580.51 (-8.71pts) at noon on the back of selective buying of heavyweights led by GENTING, TM, PCHEM. Selling pressure was more evident in the broader market with decliners doubling gainers 519:257. Futures closed 1582.5 (7.5 points discount).
2) Heavyweights: GENTING+1.49% RM10.92, TM+1.55% RM5.25, ARMADA+1.7% RM4.20, CIMB-0.8% RM7.42, TENAGA-1.11% RM6.24, BAT-0.6% RM52.52, DIGI-0.48% RM4.11
3) DBT: PMCAP 16mil @ RM0.10 (1.9% PUC), COMPUGT 8mil @ RM0.035 (12.4% PUC, 65% discount), FAJAR 7.4mil @ 1.00 (4% PUC)
4) Situationals:
TENAGA-1.11% RM6.24: Share price was weaker after Petronas CEO, Datuk Shamsul Azhar Abbas clarified that it will not be paying any more compensation to Tenaga for the cost of alternative fuel used by Tenaga. The payment of RM1bn was supposed to be a one-off affair.
KIMLUN+1.32% RM1.53: Its wholly owned subsidiary, Kimlun Sdn Bhd, accepted the letter of award from Dynasty View Sdn. Bhd, a subsidiary of United Malayan Land Bhd for the construction of apartments and ancillary buildings in Johor Bahru, Johor for the sum of RM68.3mil. The construction work is expected to be completed by December 2014. With the award, the Group's estimated outstanding book order is approximately RM1.5 billion.
5) Dijaya Corporation
Announced the execution of an Amalgamation Exercise Agreement, which aims to streamline and rationalise majority of the lands and properties held privately by YBhg Tan Sri Dato' Danny Tan into Dijaya.
Under the Proposed Amalgamation Exercise, Dijaya will acquire 73 properties in key demographic areas in Klang Valley, Penang, Johor and Sabah held privately by YBhg Tan Sri Dato' Danny Tan for a total consideration of approximately RM948.7 million, to be satisfied by RM250 million cash and the balance via the issuance of a 10-Year 2% coupon Dijaya Redeemable Convertible Unsecured Loan Stock ("RCULS"), with a staggered conversion price range of RM1.30 to RM2.50 over a 10-year period. The purchase consideration takes into account the adjusted net assets of the various companies and the indicative aggregate market value of the property assets of approximately RM1.1 billion as appraised by the independent professional valuers, namely CH William, Knight Frank, CBRE and Rahim & Co.
Dijaya will undertake an equity fund raising exercise via a renounceable rights issue of up to 491,302,655 new ordinary shares of RM1.00 each in Dijaya ("Dijaya Shares") ("Rights Shares") at an issue price of RM1.20 per Rights Share, together with a bonus issue of up to 122,825,664 new ordinary shares of RM1.00 each in Dijaya ("Bonus Shares") to be credited as fully paid-up, on the basis of four (4) Rights Shares for every five (5) existing Dijaya Shares held and one (1) Bonus Share for every four (4) Rights Shares subscribed. YBhg Tan Sri Danny Tan and the parties related to him will provide Dijaya with undertakings to subscribe for RM250 million in value pursuant to the Proposed Rights Issue, which will constitute the minimum subscription level for the Proposed Rights Issue.
Upon completion of the Proposed Amalgamation Exercise, the size of the land bank will increase to 870 acres and the Gross Development Value ("GDV") will increase to RM37 billion. In addition, the investment properties' lettable areas will increase to 1.4 million square feet. The additional investment properties to be acquired from the private property companies are estimated to generate a more stable and recurring income for Dijaya. To further meet the business investments and long-term capital requirements of the Group, Dijaya also proposed a debt funding via the issuance of up to RM500 million guaranteed commercial paper / medium term notes programme ("CP/MTN") with an option to issue detachable warrants.
Comments : A detailed analysis of the land bank and pricing is need to have a better picture on the injection. On face value it looks to be negative for the listed entity to invest a hefty amount in non strategic land banks scattered across Malaysia and at a time when the Central bank is clamping down on financing. Sell into strength as price has already rallied 29% in the past week prior to announcement.
6) Market - We continue to remain bullish in the short term with a target of 1600-1625pts target.
