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Headliners (Hock Seng Lee, Tenaga Nasional, Dijaya Corp)
Malaysia Headliners | 08 November 2011
By: Gerald Teo
Articles (40) Profile

Hock Seng Lee Wins RM90.3m Contract In SCORE
Hock Seng Lee (HSL) is the latest company to win a contract valued at RM90.3 million in Sarawak Corridor Renewable Energy (SCORE) to provide a reliable supply of treated water for industrial and household usage. The project, which involves the construction of a treatment plant and associated mechanical, electrical and earth works will bring the group’s order book to RM1.7 billion. In the group’s press release, HSL managing director Datuk Paul Yu Chee Hoe said that, “We seek to have a strong presence in infrastructure project for SCORE, and procuring this project after an open tender exercise demonstrates HSL’s ongoing competitiveness in sophisticated engineering and construction activities”. The Malaysian Government is investing heavily in SCORE and this new deal signifies another step forward to make SCORE a success.

Office Rental In Klang Valley To Face Downward Pressure
CB Richard Ellis executive chairman Christopher Boyd forecasted that rental yields for office spaces in Klang Valley would face downward pressure in 18 months’ time in a recent talk. At the end of June 2011, the aggregate supply of office space is at 80.8 million sq ft. With the exclusion of office space derived from Kuala Lumpur (KL) Financial District, Naza KL Metropolis and Warisan Merdeka, this figure is expected to increase by 25 million sq ft (30.9%) to 105.8 million sq ft by 2015. Coupled with vacancy rates of less than 13% in KL, Boyd expects that tenants will be ‘kings’ in Klang Valley. The drastic increase of aggregate supply of office building in Klang Valley is expected to impact rental yields and vacancy rates negatively. The companies who are most likely impacted will be those from the property industry and real estate investment trusts whose profitability is expected to take a downturn.

Tenaga Nasional Reports Poor Earnings Dragged By High Costs
Tenaga Nasional (TN)’s net profit for the year ended 31 Aug-11 fell by 84.3% to RM499.5 million versus last year’s RM3.2 billion, after the national utility company booked higher operating cost to buy energy-related commodities such as oil, distillates and coal to cushion the limited supply of gas. To ensure continued supply of electricity, TN had spent on more expensive alternate fuel and coal, which costs five times more than gas. TN’s results were dragged down largely by the very poor 4Q11 results: a net loss of RM453.9 million, compared to a net profit of RM555.2 million in 4Q10. Meanwhile, electricity demand in 2012 is expected to grow by 4%, proving to create more challenges for TN. While the national utility is in talks with Petronas Nasional on compensation issues, there are currently no known solutions yet. Hence, TN’s following quarter remains a challenge with the limited gas supply and costly alternatives for fuel.

Dijaya Corp To Beef Up Its Market Capitalisation
Dijaya Corp (Dijaya) aims to enlarge the company’s market capitalisation to between RM2 billion and RM3 billion in the next five to six years from the current RM900 million. Chief executive Tan Sri Danny Tan believes that the target is achievable if Dijaya adopts the right land-banking expertise to buy land in the right location and leverage on its strong brand advantage. To raise funds for new land acquisition, Dijaya is undertaking a private share placement exercise to expand its share base from 457 million shares to 594 million shares and will enable Dijaya to raise RM200 million, which will improve its liquidity and promote greater investor interest. Meanwhile, Dijaya is actively looking for opportunities to further expand its land bank in the growth markets of the Klang Valley, Johor and Penang as well as continuing to roll out projects under its Tropicana brand which already has at least 18 years in the market.

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