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Stocks In Focus MY (Eco World, Kulim, QL Resources) – 11/12/14
Malaysia Daily Bulletin | 11 December 2014

Eco World Eyes RM7b Sales In Next 2 Years

  • Eco World Development Group has set new sales targets of RM3 billion and RM4 billion for the next two years respectively, including existing phases that have not been launched.
  • The group said that while revenue and profits were muted this year, the strong sales achieved in FY14 would boost earnings growth significantly in the years ahead upon completion of the proposed merger with Eco World, where the group will acquire development rights to eight projects.
  • The merger will allow the group to scale up its business operations in the Klang Valley, Iskandar Malaysia and Penang as well as increase the group’s land bank by 3,106 acres and generate an additional gross development value of approximately RM30 billion.

Significance: Moving forward, the group is confident that it will be able to achieve its targets, despite the slowdown in the property sector, as the group bought land parcels that are next to highways, mass rapid transit stations and already have an existing catchment, which the firm thinks will be well revceived.

Kulim To Acquire 60% Stake In Indonesian O&G Firm

  • Kulim (Malaysia)’s unit, Kulim Energy Nusantara, is proposing to acquire Indonesian oil and gas (O&G) outfit PT Citra Sarana Energi (CSE) for US$133.6 million (RM462.7 million), to strengthen its footprint in Indonesia’s expanding O&G sector.
  • CSE is engaged in the exploration and development of the South West Bukit Barisan Block Production Sharing Contract in Central Sumatera, where its wholly-owned subsidiary PT Radiant Bukit Barisan E&P is the operator.
  • The group said that the proposed acquisition is consistent with its long-term business plan to diversify business activities into other sectors, apart from oil palm plantations, to cushion the impact created from any earnings fluctuations.

Significance: The acquisition, which will be funded with internally-generated funds, is expected to be completed in the 1H15 and will grant the group with a controlling interest in CSE.

QL Fails In Lay Hong Takeover Bid

  • Agrifood giant QL Resources failed in its attempted takeover offer of poultry producer Lay Hong, as it had not received more than 50 percent of acceptances at the closing date of the voluntary offer at 5pm on 10 December.
  • QL launched a voluntary conditional general offer for Lay Hong shares at RM3.50 a share on September and had steadily increased its stake to 38.2 percent in November, as compared to the founding Yap family who owned some 45 percent in the poultry company.
  • Independent adviser Mercury Securities had recommended that shareholders accept the offer by QL, as the offer price is above its fair value range of RM2.91 and RM3.21 per share.

Significance: QL said it would return all Lay Hong shares to the respective holders who had accepted the offer within 14 days from 10 December. After the failed bid, QL still does not have board representation in Lay Hong, after its sole representative failed to be re-elected, which triggered the subsequent takeover offer.

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