Stocks In Focus MY (Eversendai, Gabungan AQRS, Karex) – 17/03/15
SENDAI (5205), GBGAQRS (5226), KAREX (5247)
17 March 2015
Eversendai Wins Contracts Worth RM864m YTD
Eversendai Corporation has clinched RM864 million worth of contracts since January 2015, with the most recent being two contracts in Saudi Arabia worth RM246 million. The company’s said its subsidiary had secured the first contract, valued at RM203 million, to construct the East, North and South Depots of the Riyadh Metro project – Package 1 (Lines 1 and 2) for the Riyadh Development Authority and is targeted to be completed by October 2016.
The second contract, worth RM43 million, entails the connection design, supply, fabrication, erection of structural steel and complete envelope cladding works of roofing and walling for a conversion hangar in Riyadh which will be has been designated for the servicing and maintenance of aircraft.
The group also disclosed that it has clinched structural steel works contracts for Nas Indoor Futsal and Volleyball Arena in Dubai, the Reliance Convention Centre in India, PKT Logistics’ fourth-generation warehouse dubbed the 12 Waves in Malaysia and the Al Wadha Arches and Visitors Centre in Qatar.
Significance: Eversandai continues to be optimistic about its prospects in 2015. The new metro system it will be working on according to its first Saudi Arabian contract will meet the demands of the growing population and will alleviate traffic congestion as well as improve air quality.
Gabungan AQRS-Suria Capital Forms JV For RM1.8b Sabah Project
Gabungan AQRS and Suria Capital Holdings are collaborating on a mixed development in Sabah known as the “One Jesselton Waterfront”, estimated to have a net sale value (NSV) of RM1.8 billion. The 2.8 hectare project, part of the 9.4 hectare allocated to Suria Capital by the Sabah state government, will feature a shopping mall called “One Jesselton Mall” and will also comprise serviced suites and apartments, a condo residence, car park facilities and a ferry ticketing office.
Suria Capital said the proposed development would add the finishing touches to the proposed international cruise terminal. The whole waterfront area was to become an iconic landscape which will serve as the city’s premier tourism frontier catering for both local and foreign tourists.
Suria Capital will be entitled to 18 percent of the total NSV of the project under the joint venture. There will be an initial cash payment of RM12 million, followed by a RM166.4 million payment in kind to be settled three years following the execution of the initial cash consideration. On the fifth anniversary of the completion of the payment-in-kind transaction, there will be a final cash payment of the higher of RM19.6 million and the remaining 18 percent of the total NSV for the project.
Significance: For Gabungan AQRS, the development will further strengthen its property division, which is one of its twin growth engines, adding to its asset base and generating significant recurring income upon completion.
Karex Eyes More M&A Deals
Karex, the world’s top condom manufacturer, may be searching for more merger and acquisition (M&A) deals, following a recent placement exercise where it raised RM158 million. The company will be reserving RM44.5 million from the proceeds for working capital requirements, which includes marketing the ONE condom brand. A total of RM3.5 million will be used to meet the costs of the placement exercise, while the remaining RM110 million will be set aside for development and business expansion.
RHB Research noted that it was possible but questionable that the firm may buy over another player and expand its original equipment manufacturing (OEM) operations since the firm is already one of the most efficient producers in the industry. However, it reckons that the firm may be interested in an OEM player which has ‘assets’ that it does not have, like a growing clientele or licences/certifications/accreditations for instance.
Although the group has gone public with its ambition to move into the original brand manufacturing (OBM) space, the research house feels it is unlikely that it will acquire another flagship brand to boost OBM income, since it may cannibalise its marketing efforts for the ONE condom which it acquired as part of a 55 percent acquisition of US-based Global Protection Corporation (GP) in October 2014.
Significance: RHB Research has maintained its ‘Buy’ rating on the stock with a target price of RM5.50 and proposes a hypothesis in which Karex would be searching for either local OEM/OBM players with less efficient production so that they could optimise the business or overseas OEM/OBM players which produce cost synergies that will benefit both parties, much like the deal with GP. Meanwhile, Karex’s management has hinted that there might be more than one M&A deal.
http://www.sharesinv.com
SENDAI (5205), GBGAQRS (5226), KAREX (5247)
17 March 2015
Eversendai Wins Contracts Worth RM864m YTD
Eversendai Corporation has clinched RM864 million worth of contracts since January 2015, with the most recent being two contracts in Saudi Arabia worth RM246 million. The company’s said its subsidiary had secured the first contract, valued at RM203 million, to construct the East, North and South Depots of the Riyadh Metro project – Package 1 (Lines 1 and 2) for the Riyadh Development Authority and is targeted to be completed by October 2016.
The second contract, worth RM43 million, entails the connection design, supply, fabrication, erection of structural steel and complete envelope cladding works of roofing and walling for a conversion hangar in Riyadh which will be has been designated for the servicing and maintenance of aircraft.
The group also disclosed that it has clinched structural steel works contracts for Nas Indoor Futsal and Volleyball Arena in Dubai, the Reliance Convention Centre in India, PKT Logistics’ fourth-generation warehouse dubbed the 12 Waves in Malaysia and the Al Wadha Arches and Visitors Centre in Qatar.
Significance: Eversandai continues to be optimistic about its prospects in 2015. The new metro system it will be working on according to its first Saudi Arabian contract will meet the demands of the growing population and will alleviate traffic congestion as well as improve air quality.
Gabungan AQRS-Suria Capital Forms JV For RM1.8b Sabah Project
Gabungan AQRS and Suria Capital Holdings are collaborating on a mixed development in Sabah known as the “One Jesselton Waterfront”, estimated to have a net sale value (NSV) of RM1.8 billion. The 2.8 hectare project, part of the 9.4 hectare allocated to Suria Capital by the Sabah state government, will feature a shopping mall called “One Jesselton Mall” and will also comprise serviced suites and apartments, a condo residence, car park facilities and a ferry ticketing office.
Suria Capital said the proposed development would add the finishing touches to the proposed international cruise terminal. The whole waterfront area was to become an iconic landscape which will serve as the city’s premier tourism frontier catering for both local and foreign tourists.
Suria Capital will be entitled to 18 percent of the total NSV of the project under the joint venture. There will be an initial cash payment of RM12 million, followed by a RM166.4 million payment in kind to be settled three years following the execution of the initial cash consideration. On the fifth anniversary of the completion of the payment-in-kind transaction, there will be a final cash payment of the higher of RM19.6 million and the remaining 18 percent of the total NSV for the project.
Significance: For Gabungan AQRS, the development will further strengthen its property division, which is one of its twin growth engines, adding to its asset base and generating significant recurring income upon completion.
Karex Eyes More M&A Deals
Karex, the world’s top condom manufacturer, may be searching for more merger and acquisition (M&A) deals, following a recent placement exercise where it raised RM158 million. The company will be reserving RM44.5 million from the proceeds for working capital requirements, which includes marketing the ONE condom brand. A total of RM3.5 million will be used to meet the costs of the placement exercise, while the remaining RM110 million will be set aside for development and business expansion.
RHB Research noted that it was possible but questionable that the firm may buy over another player and expand its original equipment manufacturing (OEM) operations since the firm is already one of the most efficient producers in the industry. However, it reckons that the firm may be interested in an OEM player which has ‘assets’ that it does not have, like a growing clientele or licences/certifications/accreditations for instance.
Although the group has gone public with its ambition to move into the original brand manufacturing (OBM) space, the research house feels it is unlikely that it will acquire another flagship brand to boost OBM income, since it may cannibalise its marketing efforts for the ONE condom which it acquired as part of a 55 percent acquisition of US-based Global Protection Corporation (GP) in October 2014.
Significance: RHB Research has maintained its ‘Buy’ rating on the stock with a target price of RM5.50 and proposes a hypothesis in which Karex would be searching for either local OEM/OBM players with less efficient production so that they could optimise the business or overseas OEM/OBM players which produce cost synergies that will benefit both parties, much like the deal with GP. Meanwhile, Karex’s management has hinted that there might be more than one M&A deal.
http://www.sharesinv.com
