Market Roundup | 10 June 2013

FBMKLCI    1787.80       +12.21pts  (+0.69%)      Volume  2.418b            Value RM2.532b

 

1) The FMBKLCI continued its rally for the 2nd day with stronger momentum after US index rebounded on better job data number. Regionals saw NIKKEI closed nearly 5% higher spurred by plans for corporate investment tax breaks later this year while SHCOMP is closed for the next 2 days. In the local market, CONSTRUCTION+1.35% lead by IJM +1.57%, MRCB +5.26%, WCT +1.16% while the PLANTATION soared +1.84% after the release of the MPOB report which saw inventory falling 5% MoM boosting stocks such as IOICORP +3.39%, GENP +4.70%, KLK +1.4%. Market breadth was positive with gainers stomping losers by 667 : 224. Futures closed 1786 (1pts discount).

 

2) Heavyweights : IOICORP +3.39% RM5.49, CIMB +1.34% RM8.27, SIME +1.26% RM9.61, GENTING +1.53% RM10.60, ARMADA +3.92% RM3.97, DIGI +1.07% RM4.72, PPB +2.18% RM 14.04, KLK +1.39% RM 21.74

 

3) DBT : WINSUN 23.555mil @ RM0.096 (7.85% PUC), AMBANK 13.5mil @ RM7.40 (0.44% PUC), TGOFFS 10mil @ RM0.58 (13% discount)

 

 4) Situational:-

 

PUNCAK +7.41% RM2.03 - Puncak Niaga Holdings Bhd has signed a memorandum of agreement (MoA) with Yiu Lian Dockyards (Shekou) Ltd to venture into the oil and gas (O&G) industry. In a statement, Puncak Niaga said the MoA, signed via its unit GOM Resources Sdn Bhd, would be to co-operate in O&G engineering, procurement, construction, installation and commissioning projects in Malaysia.

  

5) YINSON

 

Entered into a transaction agreement with Fred Olsen Production ASA (“FOP”), a public listed company in Norway, to acquire all the ordinary shares of NOK1.00 each in FOP for NOK9.40 in cash per FOP Share (equivalent to RM5.20) via a conditional takeover offer subject to the Offeror obtaining 90% or more of the total issued share capital.

 

In the event YHB manages to obtain 100% acceptances, the total consideration for the Proposed Acquisition will amount to an aggregate of NOK995.74 million (equivalent to RM551.34 million).

 

FOP and its subsidiaries own and operate a fleet of three floating production, storage and offloading vessels (one of which is owned on a 50/50 joint venture) in the international oil and gas markets. The FOP Group also operates a mobile offshore production unit for an oil company client. The FOP Group manages its activities from offices in Singapore, Norway, Nigeria, Gabon and Houston.

 

As at the LPD, the authorised share capital of FOP is NOK 105.93 million (approximately USD18.73 million) comprising 105,930,000 FOP Shares, of which all FOP Shares are fully paid-up.

 

The largest shareholder of FOP, First Olsen Ltd  (holding approximately 61.54% of the issued and paid-up share capital of FOP) has agreed to provide an irrevocable and unconditional pre-acceptance of the Offer for all FOP Shares held by First Olsen at the Offer Price vide a letter dated 7 June 2013.

  

 The Proposed Acquisition is expected to be funded via the proceeds to be raised from the proposed private placement which was announced on 22 May 2013 and the Proposed Share Issuance, bank borrowings and internally generated funds.

 

 The Proposed Acquisition is in line with YHB and its subsidiaries‟  plan to expand its marine based business to different geographically countries with continued focus on the oil and gas industry. The YHB Group currently owns three offshore support vessels as well as a floating storage and off-loading facility via a joint venture with Petrovietnam Technical Services Corporation. In addition, through a joint venture with PTSC entered into in June 2012, the YHB Group jointly with PTSC also own a FPSO which is currently under construction and scheduled to complete by end of 2013.

   

Post private placement and proposed share issuance, Yinson’s gearing will be reduced from 1.59x to 1.01. With the proposed acquisition, total borrowings will reach RM1.28bn with gearing hitting 2.47x.

  

Overall positive as these two transactions of Kencana Capital emerging as a substantial shareholder and new asset base of the group will thrust it into the limelight of a keenly sought after sector. We recommend accumulate on weakness.

 

 

6) Market – Rotational play to continue with KLCI regaining its upward momentum and current interest resurfacing in the plantation sector likely to push the index into new record territory.