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Stocks In Focus MY (BIMB Hldgs, Ibraco, KNM Grp) – 16/03/15
Malaysia Daily Bulletin | 16 March 2015

BIMB 4Q14 Earnings Surge 156%

  • BIMB Holdings reported a more than two-fold increase in net profit to RM153.9 million for the fourth quarter ended 31 December 2014, on the back of a 4.4 percent rise in revenue to RM761.5 million. The better performance was the result of the acquisition of a 49 percent stake in Bank Islam Malaysia.
  • For the full year, top and bottom lines expanded 5.6 percent and 90.6 percent to RM3 billion and RM532.3 million respectively. The group noted that Bank Islam recorded a 3.8 percent growth in before zakat and taxation (PBZT) to RM702.8 million in FY14, mainly due to growth in business activities. Takaful Malaysia group posted a FY14 PBZT of RM188 million, an 8.2 percent increase year-on-year.
  • Moving forward, the BIMB commented that the overall banking sector would continue to experience intense competition and margin compression. Despite the challenges, it projects industry loan to grow at between 7 percent and 8 percent in 2015 and expects Islamic banking financing to register double digit growth as a result of the government’s support of the industry.

Significance: In a separate report, AllianceDBS Research has maintained its ‘Hold’ rating on the stock, with a lowered target price of RM4.10. The research house sees little re-rating catalysts for the bank as it foresees that Bank Negara’s tightening measures on consumer loans could dampen loan growth coupled with softer consumer sentiments.

Ibraco In RM212m Commercial Hub Project

  • Property developer Ibraco is embarking on another major joint-commercial centre project with a gross development value (GDV) of RM212 million in the prime greater Tabuan area along the Kuching-Kota Samarahan Expressway, which will comprise 112 units of three-storey shop-offices, as well as a parcel set aside for a private school/institute of higher learning.
  • The group’s shareholders gave approval for the project on 12 March and the firm noted that the shop-offices, which would be priced between RM1.1million and RM2 million, would be available for booking soon.
  • Updating on the group’s other projects, Ibraco’s managing director Chew Chiaw Han commented that the 66 hectares Tabuan Tranquility, with a GDV of some RM520 million, is in the final stages of a five-phase development and is expected to be completed in 2017. Additionally, most of the first phase comprising 74 units of three-storey shop-offices and one block of shops in the Bintulu Town Square project has been sold and a second phase will be launched in the near future.

Significance: Construction for the project will commence soon with estimated completion by 1Q17, according to the company. Good demand is expected for the proposed shop-offices due to the prime location, as the area is now matured with about 1,200 residential homes, a hypermarket, a petrol station and other amenities.

KNM Ventures Into Thai Renewable Energy Sector

  • KNM Group plans to enhance its participation in Thailand’s renewable energy sector through the acquisition of two Thailand companies, ABL Bio-Fuels and Asia Biofuels II (ABL Group) for US$24 million (RM88.5 million).
  • ABL Group owns a combined 72 percent equity interest in Impress Ethanol Co (IEL), a firm involved in the production and sale of fuel grade and industrial grade ethanol, and a 49 percent stake in Impress Farming Co (IFL) that is engaged in the trading and supply of cassava for bioethanol purposes.
  • The proposed purchase will be financed through internal funds and/or borrowings and/or KNM shares and is expected to be completed by 2H15. The group noted that shareholders’ approval will be sought in the event that KNM shares needs to be issued for the purpose of the acquisition.

Significance: KNM hopes that the acquisitions will provide it with recurring income in the long term. It also cautioned investors that the deal may affect the share capital of KNM and dilute the equity interest of the substantial shareholders in the company if the consideration is partly settled in KNM shares to be issued up to the sum of US$12 million (RM44.2 million).

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