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Stocks In Focus MY (WCT Hldgs, Yinson, Dialog Grp) – 23/12/14
Malaysia Daily Bulletin | 23 December 2014

RHB Research Maintains Neutral On WCT

  • RHB Research Institute has maintained its ‘Neutral’ call on WCT Holdings with a target price of RM1.64 based on 12 times revised fully-diluted FY15F earnings per share of 13.7 sen.
  • It said that with new job wins of only RM994 million, WCT has missed its construction order book replenishment target of RM2 billion in FY14.
  • Additionally, although the construction sector has strong prospects, underpinned by the RM73 billion Klang Valley MRT project, WCT is not an ideal proxy as it has yet to secure any Klang Valley MRT jobs. Its property business is facing headwinds amid various sector cooling measures.

Significance: RHB Research said that the recent collapse in crude oil prices will impede the ability of certain oil exporting countries in the Middle East to continue with their spending on lavish projects. The Middle East where WCT is currently bidding for RM1 billion worth of basic infrastructure works remains an important market to WCT.

Yinson Earnings Soar On Unit Disposal Gains

  • Yinson Holdings saw its net profit soar more than four-fold from RM15.5 million in 3Q13 to RM85.8 million in 3Q14, thanks to a RM199.2 million gain from the disposal of a subsidiary, Nautipa AS, RM24.8 million forex gains and an improvement in its marine segment business.
  • The company said its revenue from the marine business for the period under review rose by RM223.4 million due to higher contribution from its new subsidiary, Yinson Production AS, which it acquired in December 2013.
  • The firm was recently awarded three Petronas licences that qualify the company to tender and participate in upcoming works related to floating offshore facilities, mobile offshore facilities and naval architecture as well as marine engineering.

Significance: Moving forward, the group expects operational results for its current financial year to improve due to contributions from its newly acquired business and its joint venture in floating production, storage and offloading operations.

Dialog’s Participation In RAPID Project Lauded

  • Dialog Group’s subsidiary, Dialog Equity (Two), has inked a shareholders agreement with PRPC Utilities and Facilities and Vopak Terminal Pengerang to develop a RM6.3 billion project for the handling, storing and distribution of crude oil and petrochemical feedstock/products to and from Refinery and Petrochemical Integrated Development (RAPID).
  • RHB Research Institute said the news marked for the company’s three key phases of the Pengerang Deepwater Terminal as it aspires to be Asia’s largest oil and gas storage hub. The research house expected the construction to complete by mid-2018 but given the long development period, major earnings accretion may only come in late 2017.
  • RHB has upgraded its FY15 to FY17 forecast of the firm’s profit by 2 percent to 4 percent, assuming the engineering, procurement, construction and commissioning (EPCC) cost would be spread out within four to five years. It has revised its assumption of EPCC contracts per annum to RM1 billion.

Significance: RHB has maintained a ‘Buy’ call on Dialog with a target price of RM1.64 (stress test scenario target price at RM1.40). It said its sum-of-part now reflects Dialong’s 25 percent stakes for Pengerang phases two and three.

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