Stocks Analysis

  • Business
  • Wednesday, 05 Apr 2006

Mesiniaga Bhd 

MSNIAGA :  [Stock Watch]  [News

MESINIAGA is expected to benefit from the Ninth Malaysia Plan (9MP) as contracts are expected to flow in from financial year 2007 onwards. With the allocation for computerisation of government agencies surging 169.9% to RM5.7bil, Mesiniaga stands as one of the strong beneficiaries.  

Its share price closed at RM2.62 yesterday, following active trading in the last three months.  

Volume was high towards end-March due to anticipation of information and communication technology (ICT) contracts expected to be awarded to the company under the 9MP, according to an analyst. 

Based on a report from a local research house, the only major risk of investment would be the timing of awarding the contracts, as 9MP was a five-year project. But, the research house maintained that the downside risk on the share price was limited. 

The company has been benefiting from the government sector as contribution from this amounted to about 50% of total revenue in the last five years.  

It was set up for IBM to meet the vision of the New Economic Policy (NEP) to increase bumiputra participation in the Malaysian economy and is currently the sole agent and dealer for IBM in the country. One of Mesiniaga's major achievements is the completion of a computerisation project for the Statistics Department. 

This company's board of directors comprises non-executive chairman Datuk Dr Mohamad Zawawi Ismail, who had previously served in bodies such as the National Higher Education Council and National Scientific Research and Development Council. Zawawi is currently the chairman of IRPA Strategic Research Technical Committee of the Science, Technology and Environment Ministry.  


Heitech Padu Bhd 

HTPADU :  [Stock Watch]  [News

ALTHOUGH its share price had under-performed in the last two years, this IT service provider is expected to be one of the more visible beneficiaries of the 9MP.  

The Government's allocation of more than RM5bil in computerisation of government agencies is expected to benefit this company, which had completed a number of the projects from government agencies in the past 15 years. Revenue contribution from the public sector was 60% over the past five years. 

According to a report from a local research house, this under-performance was due to various factors, among them, stiff competition to get contracts. 

With the 9MP in place, the local research house said its share price was expected to rebound, especially when the investment climate had been favourable to smaller capitalised stocks. Like other tech stocks, Heitech's shares also saw active trading in anticipation of the 9MP in the last three months. 

This company's board of directors included executive chairman Datuk Mohd Hilmey Mohd Taib, who had held several positions in Permodalan Nasional Bhd, and senior independent non-executive director Datuk Mohd Zuki Kamaluddin, who was former Pahang State Assembly Speaker. 


CWorks Systems Bhd 

CWORKS :  [Stock Watch]  [News

THIS Mesdaq-listed company is also a possible beneficiary from the 9MP's government contracts in the ICT sector. The share price has been on a steady rise in the last three months. It closed at 23.5 sen yesterday with more than 3.9 million shares changing hands. 

Despite making headlines when it traded limit-down on its first day of listing last year, CWorks had attracted attention last May when Nizam Razak bought a 9.48% stake in the company.  

According to Bursa Malaysia filings, Nizam, who is Deputy Prime Minister Datuk Seri Najib Tun Razak's brother, had bought 4.74 million shares through a direct deal on May 11 last year. Sources said Nizam's influential circles could help CWorks secure contracts. 

CWorks offers computerised maintenance management system (CMMS) services such as work, material, service and asset management. 

Other than potentially benefiting from government contracts in these areas, CWorks is focusing on research and development in web-native products, mobile applications and expanding the range of existing CMMS projects. 

Last year it ventured into the US market, and set up CMMS in 50 countries such as Saudi Arabia, Taiwan and Ireland. Its overseas markets contribute some 20% to CWorks' revenue. 


Iris Corp Bhd 

IRIS :  [Stock Watch]  [News

THE government's plan to push the development of new applications for MyKad is expected to benefit smart card manufacturer and applications provider Iris Corp Bhd.  

An analyst said he expected Iris to continue to benefit from contracted sales of hardware and application software from both MyKad and Malaysian Passport projects. 

Apart from providing smart card-based solutions, Iris also supplies smart card readers that range from immigration auto gates and key chain readers to card personalisation equipment and biometric scanners. 

Malaysia was the first country to introduce such a passport using Iris' chip technology in 1998. 

In a filing to Bursa Malaysia recently, Iris announced that it had secured a number of smart card supply jobs, notably a US$20mil project to supply Electronic Identification cards for civil servants in Indonesia. It also added a RM80mil job to supply e-passports to Turkey. The company was also awarded a contract worth RM15.9mil to provide ticketing solutions for the Rapid KL bus service about a month ago. 

Iris continued to see active off-market trades. The counter closed 2 sen higher at 73 sen on the day's most heavily-traded counter with 99.9 million shares done.  




Sapura Technology Bhd 

STANDARD and Poor's (S&P) expects Sapura Technology Bhd's ICT activities to pick up with the 9MP revealing a 64% jump in ICT expenditure.  

However, S&P said the bulk of Sapura Technology's 2007 earnings would still come from its oil and gas segment. 

In its notes, S&P said: “In the absence of further restructuring charges and a 10% rise in ICT revenue, we expect ICT segment profit to rebound to an earnings before interest and tax of RM10mil. This should help lift net profit by 83% year-on-year to RM18.1mil. With higher finance cost and minority interest assumptions, our profit forecast has been revised lower from RM46.3mil previously.” 

The research house added that it believed the improving ICT segment outlook might lead to some upward re-rating. 

Sapura Technology shares closed 1 sen lower yesterday. The counter touched a high of 77 sen and a low of 75 sen before closing at 75.5 sen. 


AKN Messaging Technologies Bhd  

AKNMTEC :  [Stock Watch]  [News

SOME analysts expect AKN Messaging Technologies Bhd to be one of the beneficiaries among IT service providers under the 9MP.  

TA Securities in its research notes said the Government's desire to push for development of local content and applications for the cellular industry, embracing the Internet protocol Version 6 and development of new applications for MyKad would benefit the related technology companies. 

According to Net Research, AKN Messaging share price had recovered from its recent low. AKN Messaging’s share price closed at a six-month low of 25.5 sen on Dec 5, 2005, as certain large institutional investors sold down their holdings after the company shocked the market by posting a net loss for the quarter ended Sept 30, 2005. Since then, the share price has rallied to a high of 54.5 sen on Feb 9, 2006, as selling pressure abated, before settling to a trading range of between 40 sen and 53.5 sen last month. 

Net Research said AKN Messaging was expected to post an improved earnings on higher earnings from its Malaysian operations and reduced losses from its overseas subsidiaries. For the financial year ended June 30, 2005, AKN posted a net profit of RM16.6mil on RM42.3mil in sales, which was an improvement of 14.5% and 32.6% respectively from a year ago. 

An analyst said some semblance of stability had returned to the share price of AKN, but remained cautious on the company's prospects.  

Its share price rose 1.5 sen to close at 50 sen yesterday, off its low of 48 sen. 


MEMS Tech Bhd 

MEMS :  [Stock Watch]  [News

ANALYSTS expect MEMS Tech to be one of the beneficiaries under the 9MP as well because MEMS' activities are closely related to those of AKN Technologies Bhd.  

The former uses microelectronic mechanical systems technology to manufacture infra-red cameras, pressure sensors and silicon microphones, which are used in mobile phones. At present, its products are exported to China and Hong Kong. 

Like AKN Messaging, MEMS' share price had depreciated from not meeting investor expectations. Its share price fell 63% last year, largely on disappointment over a lack of large contracts from major phone manufacturers. 

This was despite early optimism after the company became one of the few in the world to develop its own miniature acoustic components on a commercial basis. 

At the close, the stock was up 0.5 sen, or 1.04%, to 48.5 sen. Trading was active with 6.67 million shares changing hands. 


Scicom (MSC) Bhd 

SCICOM :  [Stock Watch]  [News

TA Securities expects Scicom Bhd to benefit from the government's initiatives to boost the shared services and outsourcing business under the 9MP.  

Scicom, which is part of the AKN group of companies, is a business process outsourcing provider, which performs non-core operations of other companies, such as customer services. 

Its clients comprise local conglomerates and multinational corporations such as Pearson plc, Hilton Group plc, Petroliam Nasional Bhd and Hewlett-Packard. 

Scicom shares closed 1 sen higher yesterday. The counter touched a high of 79.5 sen and a low of 75.5 sen before closing at 77 sen.

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