Pos Malaysia looks for a catalyst

From Star Online: Business
15th Feb 2014

Pos Malaysia Bhd, best known for having an extensive reach throughout the country, faces the daunting task of carving out a catalyst to maintain its earnings growth.

Since June 2012, it has appreciated more than 120%, peaking at RM6, recorded at end-November last year, as investors bought into its growth story of a rosy earnings outlook due to a hike in postal rates and potential savings from synergies with parent DRB-Hicom Bhd.

With that run-up in its stock price, the company has seen rating downgrades by analysts from research houses, namely HwangDBS Vickers Research and AmResearch, with both recommending a “hold” and citing that the company’s share price has reached fair valuation.

According to data tracked by Bloomberg, the company has a consensus 12-month target price of RM5.90, rated by six research houses. It closed up three sen at RM5.58 yesterday.

“Going forward, there could be pressure on earnings due to staff and transportation costs.

“We estimate these account for 61% and 12% of total operational expenditure.

Move to reduce toll rate hike burden on public

From The Star Online: Business
13th Feb 2014

"CIMB Research expects Gamuda Bhd and IJM Corp Bhd, which are owners of major urban highways due for toll rate increases, to get the lion’s share of the compensation."

PETALING JAYA: The Government will meet toll road concessionaires on Monday to discuss how to smoothen toll rate increases so they do not burden the public.

“The Government intends to invite proposals from the concessionaires on how best to restructure their agreements so that toll hikes won’t be as severe as scheduled,” said an industry source.

Tong Kooi Ong blogs: Anxious period of uncertainties

From The Edge Malaysia
6th Feb 2014

THIS week, The Edge Malaysia carried a special report, The State of The Nation. It addresses the various issues of what you need to know about the economy, stock market and politics today.

Here are a few highlights:

1. There is no imminent or immediate economic crisis. However, the risk bandwidth has widened substantially.

2. Malaysia has a grace period of up to two years to successfully reform, rejuvenate and implement its transformation policies. These include widening its tax base, reducing subsidies, cutting wastages and leakages in government spending, instilling fiscal discipline, improving its current account surplus and increasing private sector competitiveness by eradicating rent-seeking and monopolistic practices.

Highlight: Genting’s expansion leaves little cash for dividends

From The Edge Malaysia
5th Feb 2014

"If it continues to succeed, the investments put in today could be the seeds for future bumper crops. For now, though, chances are that rich dividends will not be in the horizon for some years to come as the group puts its money to work."

UNLIKE the regular consumer companies with sizeable cash flows, the Genting group has hitherto chosen to return relatively little cash in dividends to its shareholders.

Instead, the billions made by its flagship hilltop casino resort and its four-year-old cash cow in Singapore are channelled to grow other casino resorts.

Billions of ringgit have been spent and committed to expanding the “Resorts World” brand across the globe since the success of Resorts World Sentosa in 2010, and indications are that billions more will be spent in Genting’s bid to make its mark abroad.

Not everyone is complaining, though. In fact, some analysts see opportunity amid the cash needs.

Expectations are that the Genting group would have a local listing for each of its foreign operations — once they are sizeable enough to stand on their own — to realise some value as well as create a new vehicle to tap the capital markets for further expansion. Such was the case for Genting Singapore plc and Genting Hong Kong Ltd’s associates Travellers International Hotel Group Inc (which houses Resorts World Manila) and Norwegian Cruise Line Holdings Ltd (NCL), which listed on Nasdaq last January.

This is why market watchers expect Genting Bhd and its 49.3%-owned Genting Malaysia Bhd to eventually pool their US-based assets for a combined listing.