BAT (4162) ECOWLD (8206) TAANN (5012)
BAT Records 10% Jump In 3Q14 Earnings
For the third quarter ended 30 September, British American Tobacco (M) (BAT) posted a 9.9 percent increase in net profit to RM241.1 million as revenue for the quarter rose 3.3 percent to RM1.2 billion.
BAT noted that price disparity in the market negatively impacted the group’s competitive position, bringing volume down by 3.9 percent and affecting revenue for the third quarter, which declined 1.3 percent quarter-on-quarter.
For the quarter, BAT has declared a third interim dividend of RM0.78 per share and also reiterated its concern about the overall decline in the legal market due largely to the impact of the illegal cigarette trade.
Significance: In a separate report, CIMB Equities Research noted that BAT’s leadership position in dictating future cigarette price hikes could be eroded following the reluctance of its competitors to follow suit when it increased its selling prices recently. Coupled with the view that legal cigarette volume will continue to be under pressure, the research house has maintained its ‘Reduce’ call on BAT, with a target price of RM58.10.
Eco World To Subscribe 30% Stake In RM2b SPAC
Eco World Development Group has proposed to acquire a 30 percent stake in Eco World International (EWI), a real-estate special purpose acquisition company (SPAC), for RM562.5 million.
EWI currently has no operations or income generating business, but it is raising funds to acquire real estate assets such as vacant land and/or redevelopment projects overseas in countries such as the UK and Australia.
Eco World said the proposed subscription would enable the firm to venture overseas via investing in a property SPAC with a management team that has a proven track record, gaining a wide exposure to global property markets without the need to incur the cost of maintaining its own international management team.
Significance: Apart from income contribution towards the group, management believes that the investment in EWI has the potential of boosting sales in Malaysian projects, through its association with the EWI brand when it is established globally.
Affin Hwang Keeps ‘Buy’ On Ta Ann
According to Affin Hwang Capital, Ta Ann Holdings’ log production for first eight months of 2014 surged 28.1 percent year-on-year (y-o-y) to 338,061 cubic metres (m3), partly attributed to better weather conditions, which have helped to increase the log supply.
Myanmar’s ban on log exports from April, resulted in total log exports from Sarawak to rise 7.9 percent y-o-y to 1.7 million m3. Demand from India, a key importer for logs has helped keep log average selling price firm at US$245 to US$255 per m3
Ta Ann’s total log exports for 2Q14 increased by 30 percent to 50,283 m3, due to strong demand for logs, especially from India, that comprise about 69 percent of Ta Ann’s total log exports.
Significance: Affin Hwang said that Ta Ann remained a stock to watch, with the potential for generating core net profit growth of 35 percent in 2015 on the back of robust demand from India. The research house maintained its ‘Buy’ rating for Ta Ann with a sum-of-the-parts-derived target price of RM4.63. - Malaysia Daily Bulletin | 17 October 2014
