AirAsia, Handal Resources, Sunway, F&N, Spring Gallery, Fajarbaru and Versatile Creative

KUALA LUMPUR: Based on corporate announcements and news flow today, stocks in focus on Friday (August 4) may include: AirAsia Bhd, Handal Resources Bhd, Sunway Bhd, Fraser & Neave Holdings Bhd, Spring Gallery Bhd, Fajarbaru Builder Group Bhd and Versatile Creative.

AirAsia Bhd carried 14% more passengers in the second quarter of 2017 (2Q17), with seating capacity up 11% year-on-year. It flew 15.81 million passengers in 2Q17 compared with the 13.91 million passengers flown in 2Q16.

The seat load factor improved accordingly, rising 3 percentage points (ppts) to 88%, compared with the year-ago period. Meanwhile, the available seat kilometers, a measure of passenger capacity, were also up 9%, while passenger traffic, measured by revenue passenger kilometres, rose 12%.

Combining its Malaysian, Indonesian and Philippines operations, AirAsia carried 10% more passengers to 9.61 million in 2Q17, from 8.73 million in 2Q16, while capacity rose 8%.

AirAsia attributed the higher number of passengers carried to strong demand for air travel, which led to an improvement of its seat load factor by 2 ppts to 89% in 2Q17.

Handal Resources Bhd is servicing ExxonMobil Exploration and Production Malaysia Inc's (EMEPMI) offshore cranes under a three-year contract.

Its wholly-owned subsidiary Handal Offshore Services Sdn Bhd has signed the goods and services outline agreement with EMEPMI.

Handal said the contract involved provision of onshore overhaul, major repair and refurbishment services for offshore cranes to EMEPMI.

The agreement is for the primary term of three years, until July 26 2020, with an option for a one-year extension.

Sunway Bhd is disposing of its Sunway Clio property to Sunway Real Estate Investment Trust (Sunway REIT) as it wants to eliminate any conflict of interest with regards to the property.

Sunway said its wholly-owned subsidiary, Sunway Forum Hotel Sdn Bhd, will receive RM340 million for the property which comprises the Sunway Clio Hotel, a three-storey retail space and a multi-storey carpark.

Sunway explained that the property is located in close proximity to Sunway Resort Hotel & Spa and Sunway Pyramid Hotel, which are owned by Sunway REIT.

It also pointed out that Sunway Clio Hotel is currently leased to Sunway Resort Hotel Sdn Bhd (SRH), which is also the lessee of Sunway Resort Hotel & Spa and Sunway Pyramid Hotel.

“Although the Sunway Clio Property was developed as a long-term investment asset by the vendor (Sunway Forum) on a parcel of land it owned since 2001, in view of the circumstances above, the proposed disposal was undertaken to eliminate any potential conflict of interest situations or any perceived conflict of interest,” Sunway said.

Sunway REIT, meanwhile, said that the proposed acquisition of the property will be fully funded by its existing debt programme.

According to Sunway, Sunway Forum plans to use the proceeds from the proposed disposal to repay its existing borrowings and for working capital.

Following the proposed acquisition, Sunway Clio Hotel will be leased to SRH for an initial term of 10 years, with an option of renewal by SRH for an additional 10 years.

Additionally, Sunway REIT has also entered into a conditional carpark tenancy agreement with Sunway Leisure Sdn Bhd, which is also wholly-owned by Sunway, for a period of three years commencing from the date of completion of the acquisition, with the option of renewal of a further three years.

Pursuant to the exercise, Sunway City Sdn Bhd (SunCity), which is the holding company of Sunway REIT, Sunway Forum and Sunway Leisure, is providing Sunway REIT a guaranteed net property income (NPI) of RM20.23 million per annum for a period of four years.

Fraser & Neave Holdings Bhd (F&N)’s net profit for the third quarter ended June 30, 2017 (3QFY17) declined by 25.8% to RM69.4 million from RM93.6 million a year ago, due to weak consumer sentiment and higher input costs in Malaysia.

Revenue was down by 6.1% to RM1.04 billion from RM1.11 billion recorded in 3QFY2016.

The operating profit for the food & beverages business in Malaysia contracted by 61.3% to RM24.2 million in 3QFY17 from RM62.6 million a year earlier as revenue dropped 14% year-on-year to RM592.5 million from RM688.7 million.

The weaker revenue was due to continuing weak sentiment during the Hari Raya festive season coupled with intense pricing pressure from competitors. Growth in F&B Malaysia exports mitigated the decline in domestic sales. The operating profit saw a huge drop on lower revenue, higher input costs, particularly sugar, and restructuring costs.

Similarly, the operating profit for its F&B business in Thailand dropped 2.4% to RM51.5 million in 3QFY2017 from RM52.8 million in 3QFY2016. This was despite revenue growing by 6.8% to RM451.2 million in 3QFY2017 from RM422.3 million.

Higher raw material costs resulted in lower operating profit, partially mitigated by cautious trade spending.

For the first nine months of the FY17, F&N’s net profit was lower by 9.5% to RM303.7 million from RM335.8 million a year ago. Revenue fell 2.1% to RM3.13 billion from RM3.19 billion.

Spring Gallery Bhd is planning to acquire developer Klasik Ikhtiar Sdn Bhd for RM3.5 million cash to tap into a RM144.5 million GDV Perumahan Penjawat Awam 1 Malaysia (PPA1M) project in Sentul.

Spring Gallery announced today that it has entered into a share sale agreement with Annathan Sinivesan and Nurul Shahiza  Muhammad Adib to acquire 100,000 shares or a 100% stake in Klasik Ikhtiar.

The loss-making developer was awarded the contract for the PPA1M project from the Government on Feb 8 this year. The project has a  total GDV of RM144.48 million, on the back of gross development cost of RM126.88 million.

Spring Gallery expects the proposed acquisition to be completed by September this year. The purchase consideration will be funded either via internally generated funds or proceeds received from the conversion of its irredeemable convertible preference shares, or both.

Klasik Ikhtiar recorded a net loss of RM15.83 million for the financial year ended Dec 31, 2016. As at Dec 31, it had net asset of RM57.88 million.

Year-to-date, Spring Gallery has seen two jobs relating to residential development — a RM176 million contract in Johor, and another joint venture in Perak — cancelled in July this year.

On July 27, it inked another RM100.17 million deal to gain the rights to carry out and complete a concept masterplan for a development in Melaka.

Fajarbaru Builder Group Bhd has launched its maiden residential project called Rica Residence @ Sentul, a 39-storey building with 473 units in Sentul, which has a GDV of RM280 million.

Its executive director Eric Kuan Khian Leng said to date, 70% of the units have been sold during its private preview roadshows.

Aimed towards young families and investors, prices of Rica Residence @ Sentul units start from RM600 per sq ft with built-up spaces ranging from 657 sq ft to 1,238 sq ft, the layout types include studios, two-bedroom units and dual-key homes.

Kuan said the group has lined up more projects to be launched, but did not elaborate.

Versatile Creative Bhd is partnering Iris World Marketing Sdn Bhd (IWMSB) to explore the possibility of developing concept stores throughout Malaysia for a mobile payment platform.

Its wholly-owned unit Versatile Smart Resources Sdn Bhd (VSR) has signed a Memorandum of Agreement with IWMSB to look into the development of some 250 IRISPAY station E-Concept Stores, prior to entering into a definitive agreement by both parties.  

The development has an estimated GDV of between RM62.5 million and RM70 million, Versatile Creative said, with IWMSB being responsible to procure financing for the project.

Versatile Creative, which is principally involved in manufacturing of paper and boxboard packaging products, noted this project appears to be different from its core business.

IRISPAY, according to its official website, is developed by Iris World International Group Bhd. The mobile payment service is presently available in Malaysia and Singapore.