Stocks In Focus MY (7-Eleven M’sia, Genting, UMW O&G) – 24/11/14
SEM (5250), GENTING (3182), UMWOG (5243)
7-Eleven M’sia 3Q14 Earnings Jumps 109%
For the third quarter ended 30 September, 7-Eleven Malaysia Holdings posted a 11.7 percent rise in revenue to RM487.3 million, driven by growth in new stores, improved merchandise mix and consumer promotion activity.
Net profit surged 109 percent to RM17.1 million on the back of sales growth, gross profit margin expansion, higher other operating income as well as lower administrative and other operating expenses.
Going forward, the group remains positive in its outlook for the remainder of the year given the continuing roll-out of new stores to increase the existing network as well as the on-going store refurbishment programme and other promotional strategies.
Significance: In a separate report, CIMB Equities Research has maintained its ‘Hold’ rating on the group, stating that the firm’s growth came below expectations, mainly due to the lower-than-expected commission income, other operating income and margin expansion.
CIMB Research Downgrades Genting To ‘Hold’ As Earnings Came In Below Expectation
For the nine-month ended 30 September, Genting recorded a 7.8 percent contraction in bottom line to RM1.2 billion, despite a 7 percent rise in top line to RM13.6 billion and was below expectations of analysts at CIMB Equities Research.
9M14 earnings came in at 62 percent of the group’s previous full-year and consensus forecasts on poor performance across the board at Genting Malaysia, Genting Plantations and Genting Singapore, according to the research house.
CIMB research notes that continued operational headwinds faced by Genting Singapore and concerns about the competitive landscape at the Las Vegas strip will continue to weigh on investor sentiment.
Significance: Due to the above factors, the research house has downgraded Genting to ‘Hold’ with a lower target price of RM9.90 and advised investors to switch to Genting Malaysia for exposure to the gaming sector.
Lower Oil Prices Opens M&A Opportunities For UMW O&G
Lower oil prices are stoking demand for mergers and acquisitions (M&A) in the oil and gas (O&G) industry and for UMW Oil & Gas Corporation (UMW O&G), opportunities to expand are opening up amid falling prices.
The cash-rich company is looking to acquire new drilling assets at prices cheaper than what it used to pay. As of 30 June, the group had RM1.1billion in cash and a gearing level of some 0.5 times, which is seen as very manageable for the sector.
The group noted that in poorer market conditions, rig built by non-operators, who are looking to sell the rigs for a quick profit will have lesser demand and this may give the firm a chance to buy rigs at a discount.
Significance: Going forward, the group is now making inroads into Saudi Arabia, and is confident of being able to secure its first contract by the end of next year. The company will also resume with its plan of buying one rig a year from 2016 onwards and continues to strive towards its goal of being a renowned global rig player by 2018.
http://www.sharesinv.com
SEM (5250), GENTING (3182), UMWOG (5243)
7-Eleven M’sia 3Q14 Earnings Jumps 109%
For the third quarter ended 30 September, 7-Eleven Malaysia Holdings posted a 11.7 percent rise in revenue to RM487.3 million, driven by growth in new stores, improved merchandise mix and consumer promotion activity.
Net profit surged 109 percent to RM17.1 million on the back of sales growth, gross profit margin expansion, higher other operating income as well as lower administrative and other operating expenses.
Going forward, the group remains positive in its outlook for the remainder of the year given the continuing roll-out of new stores to increase the existing network as well as the on-going store refurbishment programme and other promotional strategies.
Significance: In a separate report, CIMB Equities Research has maintained its ‘Hold’ rating on the group, stating that the firm’s growth came below expectations, mainly due to the lower-than-expected commission income, other operating income and margin expansion.
CIMB Research Downgrades Genting To ‘Hold’ As Earnings Came In Below Expectation
For the nine-month ended 30 September, Genting recorded a 7.8 percent contraction in bottom line to RM1.2 billion, despite a 7 percent rise in top line to RM13.6 billion and was below expectations of analysts at CIMB Equities Research.
9M14 earnings came in at 62 percent of the group’s previous full-year and consensus forecasts on poor performance across the board at Genting Malaysia, Genting Plantations and Genting Singapore, according to the research house.
CIMB research notes that continued operational headwinds faced by Genting Singapore and concerns about the competitive landscape at the Las Vegas strip will continue to weigh on investor sentiment.
Significance: Due to the above factors, the research house has downgraded Genting to ‘Hold’ with a lower target price of RM9.90 and advised investors to switch to Genting Malaysia for exposure to the gaming sector.
Lower Oil Prices Opens M&A Opportunities For UMW O&G
Lower oil prices are stoking demand for mergers and acquisitions (M&A) in the oil and gas (O&G) industry and for UMW Oil & Gas Corporation (UMW O&G), opportunities to expand are opening up amid falling prices.
The cash-rich company is looking to acquire new drilling assets at prices cheaper than what it used to pay. As of 30 June, the group had RM1.1billion in cash and a gearing level of some 0.5 times, which is seen as very manageable for the sector.
The group noted that in poorer market conditions, rig built by non-operators, who are looking to sell the rigs for a quick profit will have lesser demand and this may give the firm a chance to buy rigs at a discount.
Significance: Going forward, the group is now making inroads into Saudi Arabia, and is confident of being able to secure its first contract by the end of next year. The company will also resume with its plan of buying one rig a year from 2016 onwards and continues to strive towards its goal of being a renowned global rig player by 2018.
http://www.sharesinv.com
