News Bits | 23 May 2012

Highlights of the day

§  Malaysian Airline System RCPS (Company Update): Our bet pays off! (Non-rated, TP: RM1.00) [download report]

In a media release yesterday on its Funding Plan Proposals, Malaysian Airline System (MAS) stated that with respect to its Redeemable Convertible Preference Shares (RCPS), it intends to fully redeem the said RCPS on its due redemption date on 30 October 2012.  MAS added that it has sufficient working capital and accounting reserves to do so.  Our Trading Buy on the RCPS has thus paid off.  With this confirmation and with six months till redemption, the RCPS is likely to jump to 97.5 sen today, in which case one could Take Profit for a capital gain of 10% (annualized return of 58%) from the date of our Stock Idea, or Hold till redemption for a capital gain of 12% (annualized return of 18%) from the date of our Stock Idea.

§  Gas Malaysia (IPO Note): Regulated Dividend Stock (Non-rated, IPO Price: RM2.20) [download report]

Gas Malaysia distributes natural gas to industrial customers in Peninsular Malaysia.  It has a long term supply contract from PETRONAS and profit margin is determined by the Government.  We have valued it at RM2.28 per share, based on a net dividend yield of 5.2%, slightly higher than PETRONAS Dagangan’s 4.8% to take into account the former’s smaller market cap and higher profit margin risk.

Other reports

§  WCT (Results Review): 1QFY12: Met expectations (Maintain BUY, TP: RM3.20) [download report]

§  Axiata (Results Review): 1QFY12: Within expectations (Maintain HOLD, TP: RM5.22) [download report]

§  Parkson Holdings (Results Review): 9MFY12 results came in within expectations (Maintain HOLD, TP: RM4.85) [download report]

§  Newz Bits [download report]

Other Malaysian news

§  SapuraKencana: Secures RM157m Australia contract

§  Maybank: IB gets HK investment banking license

§  MAS: Plans to issue RM2.5bn in sukuk by June

§  MAS: Cancels Brahim’s minimum revenue provision

§  Multi-Purpose: To spin-off non-gaming assets

§  Construction: RM4bn plan for river projects

§  Education: Ekuinas expands education portfolio further

§  Oil & Gas: Petrofac secures US$220m contract from Petronas Carigali

§  IPO: FGVH listing book-building to start end May

§  Economy: 1Q GDP likely 4% to 5%, says Nor Mohamed

§  Economy: Malaysia's international reserves rise to US$136.1bn

Global news

§  US: Existing home sales rise as market stabilizes

§  Europe: Consumer confidence remained little changed in May

§  China: Leading economic index rose 0.8% in April, same as March

§  China: Government will allow smaller-company bond issues starting next month

§  Japan: Rating cut rings alarm for lawmakers gridlocked on taxes

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