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KUALA LUMPUR (Dec 21): Based on corporate announcements and news flow today, companies that may be in focus on Tuesday (Dec 22) include the following: Axiata, Handal Resources, SMTrack, Tecnic, KKB Engineering, YNH Property, Berjaya Land, Utusan, Ajinomoto, Pestech, Scan Associates, MRCB ( Valuation: 1.40, Fundamental: 1.30) and MCT.

Axiata Group Bhd ( Valuation: 1.70, Fundamental: 1.15) is set to gain entry into Nepal's telecommunications market with the purchase of a controlling stake in Nepal’s number one mobile operator Ncell Private Ltd for US$1.37 billion (RM5.91 billion).

Ncell is the number one player in the market with 13 million subscribers representing 48.8% of the subscriber market share and 57.5% of the revenue market share, according to Axiata’s Bursa Malaysia filing today.

Axiata said its wholly-owned subsidiary Axiata Investments (UK) Ltd has entered into a conditional sale and purchase agreement (SPA) with TeliaSonera UTA Holdings BV and SEA Telecom Investments BV to purchase Reynolds Holding Ltd, which holds an 80% stake in Ncell.

The purchase consideration shall be satisfied in cash and shall be funded via a combination of internally generated funds, debt instruments and external borrowings.

The remaining 20% stake in Ncell, held by Niraj Govinda Shrestha, one of the directors of Ncell currently, will be transferred to Sunivera Capital Venture Pvt Ltd prior to the completion of the proposed acquisition. The purchase is subject to approval from Axiata shareholders and transfer of the remaining 20% stake to Sunivera.
The SPA would be automatically terminated if all parties fail to fulfil all conditions by the long stop date of June 30, 2016, unless otherwise agreed by all parties.

Axiata said the purchase meets all of Axiata’s merger and acquisition (M&A) criteria of brownfield investment, management control, growth market, attractive valuation, being earnings accretive and is within its target footprint.

Axiata said Ncell’s strong cashflow generation with an operating free cashflow of over NPR22 billion (US$217 million or RM923 million) per annum, would further support Axiata’s dividend paying policy.

In a statement, Axiata said Ncell would contribute more than 9%, 13% and 19%, respectively to its financial year ended Dec 31, 2014 pro forma revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA) and profit after taxation and minority interests (PATAMI).

Handal Resources Bhd ( Valuation: 1.10, Fundamental: 1.00) said its wholly-owned subsidiary Handal Offshore Services Sdn Bhd has secured a RM22 million contract for the provision of offshore crane maintenance and repair services from Talisman Malaysia Ltd.

In a filing with Bursa Malaysia today, Handal said the contract is for an initial duration of two years with an extension option of one year. The contract is effective Dec 10, 2015.

Loss-making tracking solutions provider SMTrack Bhd ( Valuation: 0.00, Fundamental: 1.40) is expecting an order book of RMB250 million (RM165.78 million) by financial year ending Mar 31, 2018 (FY18), after forming a strategic partnership with Guangdong RFID Technology Service Centre (GDRC) to provide tracking and traceability services for Malaysian and Southeast Asian food exporters.

Speaking to reporters at a press conference, SMTrack vice president Winsen Tan said the company is targeting to provide its services to RMB25 billion worth of trade from Malaysia to the Guangdong province.

ACE-market listed SMTrack has today entered into a strategic partnership agreement with China's GDRC for the exclusive rights to be the latter's partner to link up importers and exporters from Malaysia and other Southeast Asian countries under a single common window platform, South China Logistics Platform, to facilitate and expedite the entry of goods, especially food items, which require traceability into Chinese ports.

Tecnic Group Bhd ( Valuation: 2.10, Fundamental: 1.95) said it is still in the midst of finalising the due diligence inquiries and the terms and conditions of a definitive agreement with Rohas-Euco Holdings Sdn Bhd in relation to a proposed reverse takeover of Tecnic by the latter.

This follows a mutually agreed extension to execute the definitive agreement to Jan 31, 2016.

In response to an unusual market activity query by Bursa Malaysia, Tecnic said it is unaware of any unannounced corporate development that could account for the unusual trading of its shares, but had noted its non-binding memorandum of understanding (MoU) with Rohas-Euco that was announced on Sept 21.

To recap, the MoU between the two parties was for Tecnic to acquire all of the equity interest held by Rohas-Euco in Rohas-Euco Industries Bhd, comprising 68,377,406 shares for RM200 million.

The exercise is a part of Tecnic's proposed regularisation plan to maintain its listing status on the Main Market of Bursa.

Besides the particular corporate exercise, Tecnic said it is unaware of any other rumour, report or any other possible explanation for the sharp rise in its share price.

On Friday, Tecnic shares gained 31 sen or 29.8% to close at its intraday high of RM1.35. Today, the counter extended its gains by as much as 14 sen or 10% to touch an intraday high of RM1.49.

KKB Engineering Bhd ( Valuation: 2.00, Fundamental: 1.95) has bagged a job for the manufacturing of steel pipes and obtained an additional purchase order for cylinders worth a collective value of RM31.8 million.

In a filing with Bursa Malaysia today, KKB said it has received a letter of acceptance from Auxicorp Construction & Engineering Sdn Bhd (Auxicorp) for the proposed fabrication and supply of steel pipes and specials from Logi Batu Kitang to Tangki Bukit Entingan, Kuching, Sarawak.

The additional purchase order, meanwhile, is from PETRON Malaysia Refining & Marketing Bhd (Petron) for the fabrication, supply and delivery of new Petron cylinders.

Besides the provision of civil engineering works and construction, KKB Engineering is also into the manufacturing of steel pipes and pipe specials for water supply and sewage system.

The completion date for Auxicorp is scheduled within the third quarter of 2016, and for Petron within the fourth quarter of 2016.

YNH Property Bhd ( Valuation: 1.10, Fundamental: 0.10)'s wholly-owned unit Kar Sin Bhd (KSB) has signed a memorandum of understanding (MoU) with Ruby Premium Sdn Bhd (RPSB) to develop three parcels of land here.

In a filing with Bursa today, YNH Property said KSB had also entered into sale and purchase agreement (SPA) with RPSB, wholly owned by Singapore-based Fong Yu Investments Pte Ltd, for the sale of 25/100 undivided share in the land as part of the development plan.

YNH Property said it held full development rights on the land, measuring 2.39 acres in total, after signing a turnkey construction agreement with landowner Suileem Realty Sdn Bhd on Aug 28, 2013.

"This MoU is to record the agreement in principle between KSB and RPSB for the sale of the additional 24/100 undivided share of the land to RPSB (second SPA) and also the building and renovation contract agreement (B&RCA).

"The B&RCA is to be executed by both parties upon the conditions being fulfilled within one year commencing from the date of this MoU," it said, adding that the parties are obligated to sign the second SPA on or before March 31, 2016 for the sale of the additional 24/100 undivided share in the land to RPSB.

YNH Property added that a RM28.65 million performance deposit, which is to guarantee RPSB's performance of the second SPA and the B&RCA with KSB, would be paid upon the execution of the MoU.

It also said RPSB would bear the cost of investment incurred for the proposed development while KSB was responsible for the cost of investment for the balance of the 51/100 undivided share of the land.

Berjaya Land Bhd ( Valuation: 0.90, Fundamental: 0.55)'s (BLand) net profit for the second quarter ended Oct 31, 2015 (2QFY16) jumped 23 times to RM208.3 million or 4.17 sen per share from RM8.97 million or 0.18 sen per share a year ago, mainly due to gain on disposal arising from the dilution of its stake in Berjaya Kyoto Development (S) Pte Ltd.

In a filing with Bursa Malaysia today, BLand said the better earnings was also due to higher contribution from H.R Owen Plc and its property development and investment businesses.

This was, however, offset by lower profit reported by Sports Toto Malaysia Sdn Bhd (STMSB) and its hotels and resorts business arising from lower revenue due to lower average room rates.

Revenue for 2QFY16 rose 14.9% to RM1.62 billion from RM1.41 billion in 2QFY15.

For the cumulative six-month period (6MFY16), BLand's net profit increased 4.7 times to RM218.211 million or 4.37 sen per share from RM46.64 million or 0.94 sen per share in 6MFY15 for the same reasons.

Revenue for 6MFY16 was 11.1% higher at RM3.13 billion from RM2.82 billion in 6MFY15.

Moving forward, BLand is of the view that the operating performance of the group will continue to remain challenging in the remaining quarters of the financial year ending April 30, 2016.

Utusan Melayu (Malaysia) Bhd (Utusan) has disposed of its entire 20% stake in Maqamad Sdn Bhd to MHA59 Sdn Bhd for RM48 million to improve its operating cash flow and strengthen its financial position.

In a filing with Bursa Malaysia today, the loss-making publishing company said its unit Utusan Land Sdn Bhd had entered into a share sale agreement with MHA59 for the proposed disposal last Thursday (Dec 17).

The deal involves the disposal of Utusan Land's entire 20% equity interest or 100,000 shares in Maqamad to MHA59.

Utusan said the original cost of investment in Maqamad was RM100,000 incurred in April 2015.

Maqamad is principally involved in property development and general trading, and is actively seeking to increase its land bank for future business expansion, said Utusan.

MHA59 is a Subang-based private company, principally involved in the leasing of intellectual property and similar products (except copyrighted works), business management consultancy services and the development of building projects for its own operation.

The sale proceeds will be utilised for Utusan group's day-to-day operation. Utusan said the disposal is expected to result in an improvement to its earnings by approximately RM48 million for the financial year ending Dec 31, 2015, and contribute positively to its earnings per share.

The publishing company, which is 49.77%-owned by Umno and publishes the Utusan Malaysia ( Valuation: 0.90, Fundamental: 0.35) and Kosmo! newspapers, has been loss making since 2012.

Fidelity Management and Research (FMR LLC), the second-largest mutual fund and financial services group in the world, has emerged as a substantial shareholder in Ajinomoto (Malaysia) Bhd ( Valuation: 1.40, Fundamental: 2.80) with a 5.04% stake.

In a filing with Bursa today, Ajinomoto said FMR LLC emerged as the company's shareholder after acquiring 3.04 million or 5% stake on Dec 7.

The monosodium glutamate (MSG) manufacturer said the financial services group then acquired an additional 15,400 shares or 0.04% stake in the company via three separate transactions between Dec 10 and Dec 11.

None of the filings stated the price of the transactions. Following the purchases, FMR LLC is now in control of 3.06 million or 5.04% stake in the company.

Ajinomoto was slapped with an unusual market activity query by Bursa Malaysia last Thursday (Dec 17) on the sudden rally in its share price.

The counter saw its share price rise to an all-time high of RM9.30 last Wednesday (Dec 16) from RM7.31 on Dec 10.

Pestech International Bhd ( Valuation: 1.50, Fundamental: 1.10) is tendering for contracts worth US$20 million in the Philippines, said the group's executive director Ir Paul Lim Pay Chuan.

Its customer in Philippines, the National Grid Corporation (NGC), has a set of guidelines for international bidders and one of the requirements is for the bidder to have a branch office there.
NGC is a Philippines government corporation created in 2001 by the Electric Power Industry Reform Act. The company currently operates the country's power grid.

Information and communications technology (ICT) security solutions provider Scan Associates Bhd ( Valuation: 0.00, Fundamental: 0.00), which is embroiled in a boardroom tussle with former chief executive director and co-founder Datuk Dr Norbik Bashah Idris, hopes to break even this financial year ending June 30, 2016 (FY16) backed by cost cutting efforts.

Its executive director Mak Siew Wei, who is a substantial shareholder in the company with a 6.19% stake, said Scan Associates is looking to reduce its operating costs.

A July 24 filing with Bursa Malaysia showed that Norbik, together with former director Hussin Othman, has requisitioned an extraordinary general meeting to be convened to vote on the removal of four company directors including Mak. Norbik holds a 5.89% stake in Scan Associates as at Sept 22, 2015.

Scan Associates is currently being managed by its executive committee after the resignation of Norbik in June this year.

Malaysian Resources Corp Bhd (MRCB)'s executive director Mohd Imran Mohamad Salim said that it is a continuous effort for the group to simultaneously grow its business yet pare down debts that stood at 1.13 times its equity.

After MRCB's extraordinary general meeting (EGM) today, Mohd Imran told reporters that the group has been in talks with Indonesian and Thai companies to enter the property and construction businesses there.

He said MRCB was looking at executing a deal with parties in Indonesia and Thailand sometime in 2017.

Meanwhile, MRCB, which is saddled with debts of RM3.06 billion, is open to selling the Eastern Dispersal Link (EDL) highway in Johor, said chief financial officer Ann Wan Tee.
Mohd Imran added that, however, the focus now is on restructuring EDL's debts.

The highway, which was completed in 2012, had RM1.21 billion of outstanding debts.

In total, MRCB's net borrowings stood at 1.13 times of its RM2.27 billion in shareholders' fund as at the end of the third quarter of its financial year ending Dec 31, 2015 (3QFY15).

MCT Bhd has dismissed the concerns of a possible mandatory takeover by its single largest shareholder Ayala Land Inc after the latter raised its stake in the company to 32.95% on Oct 16 from 9.16% previously for US$92 million.

Ayala Land's shareholding is just 0.05% below the 33% threshold of a mandatory general offer (MGO).

Today, MCT executive director Datuk Lim Kok Boon discounted the possibility and does not think Ayala Land will trigger a MGO.

(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.)

Companies in the news - Axiata, Handal, SMTrack, Tecnic, KKB Eng, YNH Prop, BLand, Utusan, Ajinomoto, Pestech, Scan Associates, MRCB and MCT
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