Stocks In Focus MY (Gamuda, Karex, Muhibbah Engrg) – 02/12/14
GAMUDA (5398), KAREX (5247), MUHIBAH (5703)
Gamuda Increases Landbank With RM392m Purchase
Gamuda is building up its landbank with the recent purchase of 104.1hectares of leasehold land in Kuala Langat, Selangor, for RM392.2 million, by the group’s wholly-owned unit, Setara Hati.
The land is envisaged to be developed into an exclusive signature address, catering to those residing within a 10 kilometres radius, with homes providing privacy and character, creating an unmatched value and investment gain.
Gamuda said the acquisition would be partly funded by bank borrowings and expected its gearing not to be materially impacted. Couple of months prior, the firm had also proposed to buy the entire equity interest in Salak Land for RM784 million cash.
Significance: Gamuda said the acquisition will enable it to establish its position in the property development scene and increase its investment portfolio to provide long-term earnings growth.
RHB Research Expects High Growth At Karex
For the first quarter ended 30 September, Karex recorded revenue of RM70.1 million and net profit of RM12.8 million. RHB Research noted that the firm’s performance came in within expectations and anticipates a stronger 2H15, backed by additional new capacity at Karex’s Hat Yai plant.
For the quarter, revenue increase was mainly driven by higher sales volume whereas the increase in pre-tax profit was attributed to sales of higher-margin products, favourable currency exchange rates and low raw material costs.
The research house stated that Karex is also venturing into new products and markets to stimulate its growth, with plans to launch new polyisoprene condoms by early next year and set up a new base in Europe within the next three months to expand its market.
Significance: Given the positive prospects, RHB Research has maintained its ‘Buy’ call on Karex with a target price of RM3.43, pegged to a 20 times FY15F price to earnings ratio (P/E), a slight discount to Hartalega Holdings’ target P/E of 21 times, which is justifiable for its high expected growth rate.
Alliance Research Upbeat On Muhibbah, Maintains ‘Buy’ Call
With its Petronas license and marine engineering expertise, Muhibbah Engineering (M) is poised to clinch a sizeable share of the refinery and petrochemical integrated development (RAPID) project subcontract works, according to Alliance Research.
The research house noted that the group appears to be the strongest contender for civil and fabrication works for Package 3 of the RAPID project.
The group is also in the running for three other packages as it had worked before with some of the foreign engineering, procurement and construction contractors and is a strong contender for the RM1.1 billion jetty works for the Pengerang regasification terminal package.
Significance: Alliance Research said that Muhibbah’s 3Q14 earnings of RM20.3 million takes 9M14 net profit to RM61.4 million, in line with expectations and thus maintained its ‘Buy’ call on the group with a target price of RM3.50 based on 15 times FY15F earnings per share.
http://www.sharesinv.com
GAMUDA (5398), KAREX (5247), MUHIBAH (5703)
Gamuda Increases Landbank With RM392m Purchase
Gamuda is building up its landbank with the recent purchase of 104.1hectares of leasehold land in Kuala Langat, Selangor, for RM392.2 million, by the group’s wholly-owned unit, Setara Hati.
The land is envisaged to be developed into an exclusive signature address, catering to those residing within a 10 kilometres radius, with homes providing privacy and character, creating an unmatched value and investment gain.
Gamuda said the acquisition would be partly funded by bank borrowings and expected its gearing not to be materially impacted. Couple of months prior, the firm had also proposed to buy the entire equity interest in Salak Land for RM784 million cash.
Significance: Gamuda said the acquisition will enable it to establish its position in the property development scene and increase its investment portfolio to provide long-term earnings growth.
RHB Research Expects High Growth At Karex
For the first quarter ended 30 September, Karex recorded revenue of RM70.1 million and net profit of RM12.8 million. RHB Research noted that the firm’s performance came in within expectations and anticipates a stronger 2H15, backed by additional new capacity at Karex’s Hat Yai plant.
For the quarter, revenue increase was mainly driven by higher sales volume whereas the increase in pre-tax profit was attributed to sales of higher-margin products, favourable currency exchange rates and low raw material costs.
The research house stated that Karex is also venturing into new products and markets to stimulate its growth, with plans to launch new polyisoprene condoms by early next year and set up a new base in Europe within the next three months to expand its market.
Significance: Given the positive prospects, RHB Research has maintained its ‘Buy’ call on Karex with a target price of RM3.43, pegged to a 20 times FY15F price to earnings ratio (P/E), a slight discount to Hartalega Holdings’ target P/E of 21 times, which is justifiable for its high expected growth rate.
Alliance Research Upbeat On Muhibbah, Maintains ‘Buy’ Call
With its Petronas license and marine engineering expertise, Muhibbah Engineering (M) is poised to clinch a sizeable share of the refinery and petrochemical integrated development (RAPID) project subcontract works, according to Alliance Research.
The research house noted that the group appears to be the strongest contender for civil and fabrication works for Package 3 of the RAPID project.
The group is also in the running for three other packages as it had worked before with some of the foreign engineering, procurement and construction contractors and is a strong contender for the RM1.1 billion jetty works for the Pengerang regasification terminal package.
Significance: Alliance Research said that Muhibbah’s 3Q14 earnings of RM20.3 million takes 9M14 net profit to RM61.4 million, in line with expectations and thus maintained its ‘Buy’ call on the group with a target price of RM3.50 based on 15 times FY15F earnings per share.
http://www.sharesinv.com
