FBM30 1546.84 +7.93points (+0.52%) Volume 912mil Value 1,280mil
1) Markets were firmer as investors sentiment improved in hope of positive outcome from Wednesday's European Union summit where leaders are expected to discuss measures to promote growth and ways to keep Greece in the euro zone. KLCI ended at day's high on mark up of BAT, CIMB, GENM. Volume remained thin with broader market staying positive as gainers nearly doubled losers 479:245. Futures closed 1535.5 (11 points discount).
2)Heavyweights: CIMB+1.4% RM7.25, IOICORP+1.01% RM5.00, SIME+0.53% RM9.45, GENM+1.97% RM3.62, MAXIS+1.48% RM6.16, BAT+2.72% RM52.80, DIGI+0.77% RM3.91, TM-0.57% RM5.25
3) DBT: DIJACOR 4.7mil @ RM1.05 (54% discount), PERMAJU 3mil @ RM0.93 (9% discount)
4) Situationals:
GAMUDA+2.68% RM3.45: share price was firmer after MMC-Gamuda JV denied claims that it may be seeking a variation order amounting to RM1.5bn from the government due to cost overruns in the Ipoh-Padang Besar electrified double track project. Instead it is an expense and loss claim associated with the earlier extension of time from 2013 to 2014.
HTPADU+1.56% RM0.975: Share price rose to a high of RM1.00 after winning RM34.48mil software replacement and maintenance services contract from the inland revenue board (IRB). The contract was for 3 years.
5) MAS
1Q MAR 2012 Tover -2% RM3.11bn Net (RM171.8m) EPS (5.1sen) 47% worst off (f) loss of (RM466m)
The company achieved a lower loss of RM171.8 million for the first quarter ended 31 March 2012, compared to RM242.3 million YOY. The after tax loss is inclusive of fair value change of derivative of RM23.8 million loss (Quarter ended 31 March 2011: RM92.6 million gain) and unrealised foreign exchange gain of RM199.6 million (Quarter ended 31 March 2011: RM45.1 million gain).
Operating loss of RM306.9 million was also lower compared to RM340.5 million loss for the quarter ended 31 March 2011.
Lower turnover resulted from higher Operating revenue in Airline Operations was mainly attributable to 4% growth in passenger yield but a decrease in operating revenue in Cargo Services due to 21% decline of load tonnage and 19% decline of capacity coupled with reduced load factor by 2 percentage point to 66.9%.
Lower operating loss was due to i) in Airline Operations was due to lower non-fuel cost by 4% or RM63.1 million despite an increase in fuel cost by RM28.7 million or 2% over the same quarter last year in which average fuel cost has increased from USD120 per barrel to USD 135 per barrel and ii) Cargo Services was mainly due to decrease in fuel cost by 36% or RM49.0 million over the same quarter last year in line with the reduction in capacity. Non-fuel cost in Cargo Services also reduced by 5% or RM25.9 million compared against the same quarter last year.
The company will continue to try to improve revenue and cost management as part of its business recovery plan.
On a separate note the company also laid out its much anticipated funding proposals; The funding plan will consist of 3 pillars, namely :-
a) a Sukuk program of up to RM2.5bn to shore up its capital base. It also clarified that it expected to fully redeem its RCPS due on 30 Oct 2012.
b) To lease new aircraft from an external entity. Currently in discussions with MOF to lease 6 new Airbus A380s and 2 new Airbus A330 with a total capex value of RM5.3bn from an SPV owned by MOF. The SPV would issue bonds/Sukuk and be asset backed or collateralized by aircraft assets. The operating risk and residual value risk of the aircraft assets are borne by MAS. MAS has already received a specific capital expenditure bridging loan of RM1bn from a consortium of banks to fund delivery of 2 aircraft to be delivered in end May 2012. The bridging loan will be repaid by the SPV sometime in July 2012.
c) Commercial funding of aircraft expenditure for remaining capex of 2012. Khazanah will continue to lend its support by providing financial support in the form of an equity injection should there be any shortfall in the 3 pillars of its funding plan. +ve commitment by the Government to turn the company around by providing it full financing support and relief for minority shareholders from an expected cash call earlier. BUY MAS-PA trading at RM0.935 redeemable at RM1.00 when expires in October, providing a 7% yield.
6) Market - KLCI to continue to underperform regional markets which are deemed to be higher beta and offer better value after recent sell off. Upside resistance remains at 1564pts levels.
