Stocks To Watch - Luxchem, E.A. Technique, Hubline and Premier Naflin

Stocks To Watch - Luxchem, E.A. Technique, Hubline and Premier Naflin

KUALA LUMPUR (Feb 18): Based on corporate announcements and newsflow today, stocks in focus on Monday (Feb 23) could include: Luxchem Corporation Bhd , E.A. Technique (M) Bhd, and Hubline Bhd .

Luxchem Corporation Bhd (fundamental:1.7; valuation: 2.4) recorded an 8.68% increase in earnings to RM6.38 million in the fourth quarter ended Dec 31, 2014 (4QFY14) compared to RM5.87 million in the previous corresponding quarter, underpinned by higher contribution from the manufacturing segment.

It told Bursa Malaysia today that its 4QFY14 revenue grew 14.17% to RM147.12 million from RM128.86 million in 4QFY13, primarily from higher sales from its trading segment.

Full-year earnings grew 12.3% to RM22.06 million from RM19.65 million in 2013, while revenue grew 14.97% to RM603.2 million from RM524.94 million in 2013.

Going forward, the industrial chemicals provider expects fluctuations in exchange rates and raw material prices to continue posing challenges, but it remains positive on its prospects.

Marine vessels operator E.A. Technique (M) Bhd said it has secured a US$191.8 million (RM688.56 million) contract for the provision of engineering, procurement, construction, installation and commissioning (EPCIC) of a floating storage and offloading facility (FSO) for a Full Field Development Project in the North Malay Basin.

It told Bursa that it has received a letter of award, dated Dec 22, 2014, for the job. Subsequently, the contract was signed on Feb 13, 2015. It is for a period of 20 months, with work having commenced on Dec 22, 2014, and shall expire on Aug 22, 2016.

The contract is expected to contribute "positively towards the earnings and net assets per share of E.A. Technique for the duration of the contract".

Hubline Bhd (fundamental: 0.35; valuation: 1.2) has decided to exit from the container shipping business as it views the container liner industry to be suffering from an economic crisis as well as bloated by overcapacity. The exit will have a one-off costs of RM350 million in its current financial year ending Sept 30, 2015 (FY15), it told Bursa.

It said the losses incurred by its container shipping division over the last few years has forced it to reassess its financial and operational strategies, adding that its continued participation in the container shipping market without immediate turnaround plan will eventually "harm" the profitable operations of its break bulk division.

Hubline (fundamental: 0.35; valuation: 1.2) added that its break bulk division has the potential to develop and grow without being challenged by the pressures of subsidising the container shipping division.

The exit process will involve withdrawal from various trade routes, termination of related service and operational contracts, as well as the disposal of container shipping related assets.

“On average, the container shipping division had in the last four years contributed 79% to Hubline’s overall revenue, as well as -134% to its pre-tax profit, thus dragging the overall net results to negative,” it added.

Going forward, Hubline said it will still be in the shipping industry, but the focus will shift towards break bulk shipping business, in which it says will be viable and sustainable, as well as having good growth prospects.

Hubline returned to the black in FY14 after posting a net profit of RM3.26 million or 0.1 sen per share from a net loss of RM207.67 million or 6.53 sen per share.

Premier Naflin Bhd (fundamental: 1.5; valuation: 2.4) said its proposed restructuring scheme is still “intact” as the Federal government and Kidex Sdn Bhd has yet to resolve to cancel the concession agreement entered into between both parties.

Kidex Sdn Bhd, the concession holder of the Kidex highway project that has failed to get the approval from the Selangor state government, was supposed to be injected into Premier Naflin under the latter’s restructuring scheme.

“However, in the event the concession project is cancelled, Premier Naflin’s proposed restructuring scheme will then have to be revised. A new proposed restructuring scheme will then be formulated and submitted to the relevant authorities for approval as well as presented to the shareholders of Premier Naflin for consideration,” the company said in response to a query from Bursa.

The cash-rich company which is without a business, also explains that it is not expected to be impacted financially or operationally in the event the concession project is cancelled.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations)

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