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Stocks In Focus MY (Malaysia Airports Hldgs, Pestech Int’l, PJ Development) – 24/12/14
Malaysia Daily Bulletin | 24 December 2014

ISG Deal Paves Way For MAHB’s Expansion

  • Malaysia Airports Holdings (MAHB)’s move to gain full control over Istanbul’s second largest airport has paved the way for the airport operator to invest in more quality assets abroad. MAHB has started to receive enquiries from international parties for similar deals but declined to divulge more details.
  • The company currently owns 60 percent of Istanbul Sabiha Gokcen International Airport (ISG). The company will be buying the remaining 40 percent stake from Turkey’s Limak Group for €285 million. The acquisition is expected to complete early next year after the group receives approval from the Malaysia and Turkey governments.
  • The firm predicts that the acquisition will boost its overseas revenue contribution from currently less than 3 percent to more than 30 percent.

Significance: MAHB said that the acquisition has put it in a stronger position to capitalise on the growing opportunities in airport privatisation globally. This acquisition is part of an overseas portfolio which it has been building slowly but steadily over the years as it seeks to strengthen its position as a world- class airport operator.

Pestech Upgraded To ‘Buy’ After Recent Selldown

  • RHB Research Institute is upgrading Pestech International to ‘Buy’, with its stock’s target price unchanged at RM4.16. It said that Pestech’s shares have become attractive following the recent market selldown.
  • According to the research house, industry prospects remain intact, with Tenaga Nasional reportedly planning to spend RM23.3 billion as capital expenditure between 2014 and 2017. It believes that the company would benefit from this.
  • As at end-September 2014, the company has a total order book of about RM546 million. Meanwhile, the company is focusing future growth by focusing on two new business segments, namely embedded system software and product development as well as power generation and rail.

Significance: RHB Research noted that the company’s earnings sustainability looks secure since it has recently reshuffled its focus to look into its two new business segments.

PJ Development Banks On Aussie Project To Lift Earnings

  • PJ Development Holdings (PJD) is banking on its A$1 billion (RM2.8 billion) property project in Australia to boost earnings from 2016. It is targeting a mixed development in Melbourne’s Southbank on a 2 hectare carpark site which it acquired for RM439.3 million.
  • The project, which could potentially house more than 3,000 units, is in the planning stage. Given the project’s sizeable scale, the group expects that the development will take nine to 10 years to complete, with construction works commencing in early 2016.
  • In Malaysia, the company is working on seven projects comprising hotels and residences, with gross development value of more than RM1.2 billion.

Significance: Additionally, the firm notes the increasingly challenging approval process for new projects in Malaysia due to the higher requirements and standards set by both authorities and purchasers, but views this as a healthy process that will help nurture the property industry into a stronger and healthier model which will benefit all stakeholders.

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