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Stocks In Focus MY (Benalec Hldgs, GHL Systems, IGB REIT) – 28/01/15
Malaysia Daily Bulletin | 28 January 2015

Benalec Gets Approval Tanjung Piai Project’s Reclamation Works

  • Benalec Holdings’ 70 percent-owned subsidiary Spektrum Kukuh and the Johor state government has received the Department of Environment’s (DOE) approval to commence reclamation work for its Tanjung Piai petroleum hub and industrial park in the Straits of Johor.
  • The company said that Phase 1 of the proposed project is scheduled to commence in February 2015 and predicts that the project will provide impetus for growth and investment opportunities as well as act as a springboard which will give rise to recurring income streams.
  • The group noted that the approval was conditional on the inclusion of the building of an oil terminal, a jetty and a bridge linking the island to the mainland as well as dredging in the reclamation works belonging to Phase 1 of the proposed project. It added that such approval was effective for two years from the date of the letter of approval.

Significance: The approval represents a major milestone for Benalec and takes it a step closer to realising its business plans and to be in sync with the country’s aim of establishing itself as a storage and trading hub in Asia Pacific.The group plans to develop an integrated petroleum & petrochemical hub and maritime industrial park on the reclaimed land to enable the company to earn recurring income.

GHL Systems Targets Up To 4,000 Merchants

  • Payment solutions provider GHL Systems’ wholly owned subsidiaries GHL Cardpay and GHL Epayments have taken up an agreement with Global Payments Card Processing Malaysia whereby the company will offer the latter sales, marketing and on-boarding services to help it acquire eligible new merchants. The company added that the agreement will expedite transactions and settlement of funds between Global Payments Malaysia and the new merchants.
  • The firm said it hopes to acquire between 3,000 and 4,000 merchants on behalf of Global Payments Malaysia during 2015. The merchants will subsequently be able to receive payments from the various international card associations. It foresees that merchant acquisition activity will heighten towards the end of 2015, adding that the agreement does not have any initial sales value.
  • The revenue the group earns will be derived from terminal rental and merchant discount rates that will continue as long as it enrols merchants for card acceptance as a third-party acquirer or payment service provider with Global Payments Malaysia.

Significance: The agreement signals the group’s venture into providing payment services and facilitating banking payments, thus enabling it to expand its presence in Malaysia’s cashless payment environment.

IGB REIT’s FY14 Net Profit Slightly Above Expectations

  • For the financial year ended 31 December 2014, IGB Real Estate Investment Trust’s (REIT) gross revenue and net property income grew 7.2 percent and 9.4 percent to RM461.8 million and RM312.6 million respective, on the back of higher rental income which outpaced the expansion in property operating expenses.
  • Consequently, FY14 realised net profit grew 12.4 percent to RM232.6 million, which was marginally above expectations, according to Affin Hwang Research. The research house said that the company will continue to go strong due to its main strengths like consistent occupancy rates coupled with strong visitor and retailer attraction.
  • It also noted that even though the forthcoming implementation of the goods and services tax on 1 April may put a drag on retail between 2Q15 and 3Q15, consumption is likely to normalize thereafter since there’s a possibility that lower petrol pump prices due to the worldwide drop in crude oil prices might boost consumption.

Significance: As a result of the above, Affin Hwang Research has kept IGB REIT’s ‘Buy’ rating with a target price of RM1.38 as it rolls forward its valuation window to 2015. Separately though, five other research houses including RHB Research have a ‘Hold’ rating on the stock, with target prices ranging from RM1.26 to RM1.40.

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