Genting: This “real” blue chip company last week confirmed interest of the possibility of acquiring a stake in Australia-based Loy Yang power station via its subsidiary, Sorona Ltd. GK Goh Research said the acquisition would be positive for Genting if the latter could generate a better return from the power plant than fixed deposit interest of around 3% to 4% earned from its current cashpile of RM1bil. Although the research unit is currently neutral on the acquisition, given its preliminary stage, it still maintained a buy recommendation on Genting for its attractive valuations.
IOI Corp: An exciting stock with a well-trusted name and good liquidity. The group will continue to be the bellwether of the plantation sector, given its full involvement in the industry, from planting right up to manufacture of speciality oils and fats. Analysts expects that by year 2005, earnings contribution would be more spread out, with plantations taking a 40% share and the remaining 60% shared equally between property and manufacturing. This will help IOI to mitigate the impact of fluctuating CPO prices on its group earnings and ensure a more steady and consistent earnings performance.
OYL: Malaysia's second largest air-conditioner maker's earnings prospects remain intact following anticipated growth in its Asian operations, margin recovery in the European operations and lower interest expenses. AmResearch expects OYL's Asian operations alone this year to register revenue and pre-tax profit growth of 14% and 16% respectively. It said OYL had growth opportunities aplenty, particularly in China, which is one of the world's largest markets for air-conditioner products. OYL's European operations are also stabilising and will be in a better position to concentrate on increasing profits.
BNB: The share price of this utility group has appreciated by 14% since its lows in November last year. GK Goh Research said Tenaga's profitability could be dampened by higher payments to independent power producers (IPPs) this financial year but on the other hand, absence of new IPPs until year 2005 would enable Tenaga to control its costs. The group's increasing use of coal will also mitigate the increased cost from higher gas prices in financial year 2005. The research unit has recommended a “buy” based on Tenaga's fair value of RM11.20.
MRCB: Many questioned MRCB's move to acquire a 24.9% stake in UDA Holdings Bhd via Landas Utama Sdn Bhd for RM88mil cash, particularly when the group is in the midst of a major restructuring exercise and saddled with RM1.1bil in debts. OSK Research, while not in favour of the acquisition, however, said MRCB's ongoing restructuring and its well-connected status made the stock an interesting trading buy. Opera- tionally, the group has secured about RM1.5bil worth of power and road projects including the Sabah East-West Interconnection Grid and KL North East Expressway.