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Stocks In Focus MY (7-Eleven M’sia, Brahim’s Hldgs, Hong Leong Bank) – 02/03/15
Malaysia Daily Bulletin | 02 March 2015
By: Tan Jia Hui
Articles (82) Profile

    7-Eleven Malaysia 4Q14 Earnings Jump 71%

  • For the fourth quarter ended 31 Decemeber 2014, 7-Eleven Malaysia Holdings registered a 71.1 percent rise in net profit to RM17.9 million, underpinned by sales growth, gross profit margin expansion and growth in other operating income.
  • Total store count stands at 1,774 at end FY14, increasing by about 200 year-on-year. Coupled with improved merchandise mix and consumer promotion activity, revenue for the quarter expanded 14 percent to RM481.1 million.
  • For the full financial year, top and bottom lines grew 13.2 percent and 43 percent to RM1.9 billion and RM63.1 million respectively. Despite some softness in consumer sentiment and in the overall retail market, the group remains positive in its outlook for 2015.

Signifiance: For 4Q14 the firm has declared an interim dividend of RM0.025 per share and a special dividend of RM0.026 per share. Going forward, the continuing roll-out of new stores to increase the existing, increased promotional and merchandising activities along with the expansion of in-store services and a further expansion of the group’s food and beverage offerings are expected to help drive revenue and profit growth.

    Brahim’s Swings Into Net Loss For 4Q14

  • In-flight caterer Brahim’s Holdings posted net losses of RM40.3 million in 4Q14 – compared with earnings of RM12.7 million in 4Q13 – mainly due to settlement of disputes with Malaysian Airline System (MAS). Revenue for the quarter fell 27.5 percent to RM79.1 million.
  • The losses resulted largely from concessions given to MAS under its recovery plan amounting to RM56.1 million by its 70 percent subsidiary, Brahim’s Airline Catering. Under a settlement agreement, Brahim’s has agreed to a 60 percent cut in payments withheld by MAS and a 25 percent reduction in its final monthly bill.
  • For the full year, the group reported a net loss of RM33.6 million compared to net profits in FY13. It commented while that meals volume and revenue from MAS is expected to be consistent with the previous period, profit margin from flight catering and cabin handling may be affected due to the implementation of new pricing methodology in the new catering agreement currently under negotiations.

Significance: Outlook for Brahim’s in-flight catering segment continues to remain challenging despite the expected increase in passenger load in 1H15. Revenue from foreign airlines is expected to rise in 2015 airing from new clients.

    Hong Leong Upbeat, Expects Non-interest Income Improvements

  • Hong Leong Bank (HLB) is unperturbed by the 28.9 percent plunge in its non-interest income in the first six months ended 31 December 2014 and is optimistic that its portion of the non-interest income will improve in the current year and position it for better earnings growth.
  • The bank believes it can ride out the challenging economic conditions and have s stronger footing in the industry, supported by its various strategies and initiatives. It will continue to drive growth in fee income, driven by expansion in transactional banking and wealth management.
  • HLB expects non-interest income to improve for the rest of FY15, which could help boost earnings growth. At the same time, the bank would continue to drive its small and medium enterprise and Islamic banking businesses through the community banking approach.

Significance: Affin Hwang Capital has maintained its ‘Buy’ rating on the stock with a a raised target price of RM17 (from RM15.50), noting that the bank remained aggressive in domestic retail banking expansion, targets higher bancassurance fees and leverages on active net interest margin management amid a challenging outlook.

Armed with a bachelor in mathematics, Jia Hui keeps close tabs on the oil & gas, and manufacturing sectors in Singapore.

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