Stocks to Watch: Sime Darby, KLCCP, DKSH, Tambun Indah, Tradewinds, Southern Acids


Written by Surin Murugiah of theedgemalaysia.com   
Tuesday, 27 November 2012 19:01


KUALA LUMPUR (Nov 27): The FBM KLCI could slip further on Wednesday to trend lower for the sixth day running on weaker local investor sentiment as the index heads for its worst November in nine years.

The index fell to below the psychologically important 1,600-mark level on Tuesday, as key blue chips dragged the FBM KLCI lower.

Regional and European markets continued to remain mixed and slightly upbeat after global lenders clinched a deal to reduce Greek debt and disburse the country's next aid instalment, according to Reuters.

After 12 hours of talks, the lenders agreed measures to cut Greek debt to 124% of GDP by 2020, and promised further steps to lower it below 110% in 2022.

However, the Organisation for Economic Cooperation and Development (OECD) slashed its global growth forecasts on Tuesday, warning that the debt crisis in the recession-hit eurozone is the greatest threat to the world economy, said Reuters.

In light of the dire economic outlook, the OECD urged central banks to prepare for more exceptional monetary easing if politicians fail to come up with credible answers to the debt crisis, it said.

Among the stocks that could be in focus at the local market on Wednesday are Sime Darby Bhd, KLCC Property Holdings Bhd (KLCCP), DKSH Holdings (Malaysia) Bhd, Tambun Indah Land Bhd, Tradewinds Corp Bhd and Southern Acids (M) Bhd.

Sime Darby Bhd’s earnings for the first quarter ended Sept 30, 2012 slipped to RM990.25 million from RM1.07 billion a year earlier on the back of a 6.9% revenue growth to RM11.83 billion as lower crude palm oil (CPO) prices resulted in lower profits from its plantations division.

According to the company, earnings from its plantations division fell 28% year-on-year to RM671.9 million even as average CPO prices fell to RM2,707 per tonne from RM2,946 in the previous year’s corresponding period. The midstream and downstream segments made a smaller loss of RM24.9 million for 1QFY13 compared with a net loss of RM38.2 million last year, hit by competition from Indonesia’s refined products.

Nonetheless, its president and CEO Datuk Mohd Bakke Salleh said the group remained positive on the plantations division, “in view of the improving productivity and effective cost management”, pointing out that fresh fruit bunch [FFB] production rose 6% to 2.94 million tonnes in 1QFY13 ending June 30.

“This, coupled with the resilient performances of the industrial, property, motors and energy & utilities divisions, reflects the effective execution of our strategy and the inherent strength of the group’s diversified portfolio of businesses. We are confident of achieving the long-term goals established in the Strategy Blueprint,” Bakke said in a statement accompanying its results.

KLCCP will resume trade on Wednesday after being halted on Tuesday ahead of it making a material announcement on its 50.5% owned subsidiary, Midciti Resources Sdn Bhd (MRSB) entering into a triple net lease agreement with Petroliam Nasional Bhd (Petronas) in respect to the renewal of triple net lease arrangement of Petronas Twin Towers (PTT).

The company said the current triple net lease agreement for the PTT was for 15 years and was due to expire on Sept 30, 2012, and that Petronas had committed to continue the lease for a further period of 15 years expiring on Sept 30, 2027.

DKSH Holdings (Malaysia) Bhd and France-based Normalab have inked an inked an exclusive agreement to expand the latter’s market presence and market share in Malaysia, Australia and New Zealand.

In a joint statement Tuesday, DKSH said that under the agreement, it would provide Normalab value-added market expansion services such as sales, marketing, project management and after-sales services in the petrochemical sector of each country.

Normalab furnishes laboratories installed in plants from the refining, extraction, chemicals, petrochemicals and other sectors, and has half a century of experience in manufacturing petroleum testing equipment.

Normalab Asia sales manager Sebastien Le Vern said the company was deeply impressed to see DKSH’s sales and service teams’ commitment and efforts to create maximum customer satisfaction.

“We are therefore confident that this partnership will help us raise the standard and quality of sales and services to our customers,” said Le Vern.

DKSH global head for the business unit technology Dr Adrian Eberle said petrochemical testing was an important market segment for the company.

“We are pleased to be able to add Normalab’s high-quality products to our portfolio,” said Eberle.

Tambun Indah Land Bhd net profit for the third quarter ended Sept 30, 2012 surged 105% to RM10.91 million from RM3.26 million a year earlier.

The company said on Tuesday that its revenue for the quarter jumped to RM76.64 million from RM47.35 million in 2011.

Earnings per share was 3.52 sen versus 1.48 sen a year earlier, while net assets per share was 70.21 sen.

Tambun Indah declared a first interim tax-exempt single-tier dividend of two sen per share in respect of its financial year ending Dec 31, 2012.

In a statement its managing director Teh Kiak Seng said that 3Q12 saw Tambun Indah benefit greatly from the strong take-up at our developments in Simpang Ampat, Butterworth and Bukit Mertajam.

“This achievement reflects not only our success in envisioning Mainland Penang as a growth enclave, but also our efforts in selling products that are acceptable to the market.

All these positives indicate that the group is on track to outperform this year, barring any unforeseen circumstances,” he said.

Going forward, he said plans were already in place to ensure that the firm would be able to ride along with Penang’s continuing housing demand with at least five projects to be launched in the first half of next year.

“These projects, with a total GDV of RM252.9 million, should allow Tambun Indah to take advantage of the growing demand for mid-range and higher-end developments in Mainland Penang,” he concluded.

Tradewinds Corp Bhd net profit for the third quarter ended Sept 30, 2012 surged 321.5% jump in net profit for the third quarter ended Sept 30 to RM9.99 million from RM2.37 million previously despite lower revenues due to a RM7.1 million fair value gain on its investments.

Revenue for the period declined 4.2% to RM123.7 million from RM129.1 million in the previous corresponding quarter after lower revenue contributions from three of its business divisions.

“The decrease in revenue was mainly due to lower revenue from hotel, properties and manufacturing & trading divisions. However, this has been offset by better result from financial services division as compared to the corresponding quarter last year,” said Tradewinds in a filing to Bursa.

Southern Acids (M) Bhd’s net profit for the second quarter ended Sept 30 rose by 15.6% to RM7.4 million from RM6.4 million in the previous corresponding quarter due mainly to higher contributions from its plantation and milling divisions.

The group’s revenue for the quarter was also up 5% to RM156.4 million from RM148.9 million while earnings per share improved to 5.46 sen from 4.73 sen previously.

“Plantation and milling division continued to be a major contributor to the results of the group. Yield of fresh fruit bunches [FFB] from our estates continued to increase as a result of the planned fertiliser programme started two years ago,” said the group in a filing.