SBB Securities believes that the share price of Matsushita Electric Co (M) Bhd (MECB) will ascend further on the back of solid fundamentals, savvy management and strong backing from institutional investors. MECB has the highest net cash per share at RM8.95 (with net cash of RM544mil) on Bursa Malaysia and the second highest in terms of dividend payment with a yield of 17.5%. SBB Securities expects the group's generous dividend payout to continue as MECB is likely to return to the black in FY06 after its restructuring exercise in FY05 that had resulted in a net loss of RM4.9mil – its first since FY1990.
PROTON'S share price has appreciated by over 10%, after its board of directors resolved not to renew Tengku Tan Sri Mahaleel Tengku Ariff’s contract as its chief executive officer. Avenue Securities said the market had reacted positively to a potential revamp of Proton although it is still unclear on the next course of action. The brokerage is upgrading its recommendation on Proton to an “outperform” given positive developments like the potential joint venture with German car maker Volkswagen. This is pending announcement of the Malaysian Automotive Policy this month which will help reduce Proton's current huge discount rating compared with regional peers.
ANALYSTS are positive over Gamuda's prospects, driven by its ongoing overseas projects. It is believed to be in the final leg of clinching another overseas contract worth at least RM400mil. This will come just after its latest construction of RM400mil Dukhan Highway in Qatar. It is pre-qualified for between Rm10bil and RM12bil worth of construction projects which could yield a 5% to 10% success rate. A Singapore-based research house said Gamuda's impending contracts would lead to improved sentiment in its stock. It added that Gamuda was likely to pay 40% of net profits as dividends, with yield of close to 5% to its shareholders.
MALAKOFF'S growth momentum will be driven by SKS Power (its 2,100MW power plant), which will help boost FY07 earnings. Avenue Securities said that beyond 2007, the group's overseas expansion ventures would help fuel the group's earnings growth. In March, a Malaysian consortium comprising Malakoff, Khazanah and Tenaga Nasional, together with Arabian Company for Water and Power Projects Ltd, had submitted a bid for a 60% stake in Shoaiba Phase 3 Independent Water and Power project in Saudi Arabia. Malakoff's 12% effective stake would cost about US$55.2mil.
MAYBAN Securities said it made sense for Tanjong Plc to raise long-term US dollar borrowings rather than local currency bonds to finance its overseas projects under the present environment, given the potential of ringgit appreciation in the near to medium term. It was reported that Tanjong may sell its first bond overseas to fund the purchase of two electricity plants in Egypt. It is currently negotiating with Electricite de France (EDF) to purchase the plants with 1,366MW capacity by the first quarter of next year. The bond issue will be conditional upon the completion of Tanjong's deal with EDF.