AXREIT (5106) AXIS REITS
DAIBOCI (8125) DAIBOCHI PLASTIC & PACKAGING
DAYANG (5141) DAYANG ENTERPRISE HOLDINGS BHD
CIMB Research Maintains ‘Add’ On Axis REIT, Target Price RM3.86
CIMB Equities Research noted that Axis Real Estate Investment Trust (Axis REIT) ‘s performance is in line, after recording a core net profit of RM61.9 million in 9M14, which makes up 62 percent its full-year estimates. It anticipates stronger earnings in 4Q14 as Axis completes its acquisition of a few properties.
Axis recently announced that it had entered into an agreement for the proposed acquisition and leaseback of an industrial property located within Kawasan Perindustrian SiLC, Nusajaya, within the Iskandar area.
The property, with an existing yield of around 7.2 percent per annum will be yield-accretive for Axis. The group will fund the acquisition through bank borrowings, which will increase its gearing level to 38.6 percent.
Significance: The research house has maintained its ‘Add’ rating on Axis, with its target price raised slightly from RM3.82 to RM3.86, expecting stronger earnings in the fourth quarter.
Daibochi Expects Revenue Growth From Customer Based Expansion
For the three-month period ended 30 September, Daibochi Plastic and Packaging Industry’s revenue declined 4.8 percent to RM83.1 million, due to lower contributions from its property business, which is being phased out.
Profitability was further eroded by higher raw material costs as well as increased operating expenses of electricity and labour in the quarter, as net profit fell 32.2 percent to RM5 million.
The group expects its customer based expansion to drive the group’s revenue growth in the near term and has accelerated its efforts to boost productivity even further by reducing wastage, and installing industrial electricity savers for its key machinery.
Significance: In a separate report, CIMB Research has upgraded the firm’s rating to an ‘Add’ as it expects the export markets to drive future top line growth while anticipating that raw material prices should fall after the recent sharp decline in crude oil prices.
Possibility For Dayang To Takeover Perdana Petroleum
AllianceDBS Research stated that Dayang Enterprise Holdings is likely to accumulate more shares in Perdana Petroleum, as it is attractively priced at only 10 times its FY15 price-to-earnings ratio. Perdana currently contributes to 12 percent of Dayang’s net profit.
The research house said it does not rule out a general offer for Perdana in the future as it would be synergistic for Dayang since the group is chartering vessels from Perdana to support its activities.
Else, AllianceDBS Research expects Dayang to acquire other synergistic businesses to beef up capabilities. Currently, the group has been looking to expand into the engineering, procurement, construction and commissioning market sub segment.
Significance: AllianceDBS Research noted that the group’s earnings profile is resilient despite current weak crude oil prices, due to exposure to shallow water and maintenance market. It also commented that the recent aggressive sell down makes Dayang’s shares a bargain buy at current levels, adding that it has reduced its target price for the shares to RM3.80. - Shares Investment,
