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Stocks In Focus MY (AirAsia X, DGB Asia, Eco World) – 26/03/15
Malaysia Daily Bulletin | 26 March 2015

Maybank Research Predicts Better 2H15 For AirAsia X

  • Maybank Investment Bank Research predicts a better second half year of 2015 for AirAsia X (AAX), mentioning that business recapitalisation was crticial for survival while its rights issue was progressing on schedule.
  • Investors are waiting on the side lines for the completion of the rights issue before having a relook. AAX’s first quarter outlook was determined grim by the research house as the yield environment remains weak with rock-bottom fares advertised by Malaysian Airlines (MAS) and other regional airlines.
  • AAX also hedged 50 percent of its 1Q15 fuel requirement at US$98 per barrel, putting it at a disadvantage against its main competitors (MAS and Malindo Air), which purchases fuel on the spot market.

Significance: The crux for AAX’s survival is the upcoming rights issue, where progress was on schedule, implying that a price fixing date for the rights issue is coming soon. Maybank Research has upgraded the stock to ‘Hold’ with an unchanged target price of RM0.46 and believes that downside is limited at current levels.

DGB Asia To Expand Overseas Contribution

  • DGB Asia is looking to ramp up its operations in Vietnam and Thailand, as part of its plan to increase overseas revenue contribution to 50 percent within a year from the current 30 percent.
  • The group has also expressed confidence in turning around its fortunes in the financial year ending 30 September 2015. The firm had been incurring losses for the past few years, but for 1Q15, it returned to the black with a net profit of RM139,000.
  • DGB will open its offices in Vietnam and Thailand to cater to the growing demand in the two markets and believes that the two markets can get bring in multi-million profits. The group is also on the lookout for other expansion opportunities in Indonesia and Vietnam.

Significance: The firm recently received shareholders’ approval for a rights issue exercise to raise up to RM37 million to be utilised for working capital and capital expenditure. DGB revealed that no intention of diversifying its business at the moment, given the promising outlook its current businesses offer and is considering dividend payout for the current financial year on the back of improved financials.

Eco World Undertakes 300-unit Residential Project In Australia

  • Eco World Development Group’s associate company Eco World International will undertake its second international project, the development of a 300-unit residential project in Paramatta, Sydney.
  • Having gross development value (GDV) of A$300 million (RM866 million), the project will likely be launched mid-year and occupy a one-acre plot, compromising mainly apartments.
  • The group also has four more launches lined up for the rest of the year – Eco Sanctuary in Klang Valley (GDV at RM8 billion), Eco Terraces in Penang (GDV at RM338 million), Eco Tropics (GDV at RM3.4 billion) and Eco Business Park III (GDV at RM2 billion) in Iskandar Malaysia.

Significance: Eco World Development is very optimistic about the current year’s prospect despite this year being a challenging one, underpinned by the strategic locations of its projects, attributable to a big population surrounding the locations.

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