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Stocks In Focus MY - CIMB (1023), SUNWAY (5211), TM (4863) – 19/11/14

CIMB (1023), SUNWAY (5211), TM (4863)

CIMB 3Q14 Earnings Down 16%

For the third quarter ended 30 September, CIMB Group Holdings recorded a 16.1 percent fall in net profit to RM890.3 million largely due to higher loan impairments at PT Bank CIMB Niaga, despite a 1.3 percent increase in net operating income to RM3.5 billion.
   
For the nine-month period, the group registered a larger decline in its bottom line by 17 percent to RM2.9 billion. The sharp drop was partially attributable to the absence of a one-off gain RM365 million from the sale of CIMB Aviva in 9M13.
   
The group’s nine-month profitability was also largely impacted by the difficult operating conditions in Indonesia coupled with the weakened rupiah, as well as a weak regional capital market volumes and volatility, which resulted in the softer performance at both investment banking and treasury and markets.

Significance: Looking forward the group believes it can achieve steady growth, while CIMB Singapore was expected to maintain a positive momentum. CIMB also sees signs of economic recovery and improving consumer confidence in Thailand but expects challenging conditions for CIMB Niaga in Indonesia.

Sunway 3Q14 Net Profit Jumps 54%

For the third quarter ended 30 September, Sunway recorded a 6.4 percent rise in revenue to RM1.1 billion, while net profit surged 54.3 percent to RM143.7 million.
   
The better performance was due to higher profit contribution from most of the group’s business segments and treasury operation. The group’s property investment, construction, quarry segments recorded higher revenues and profit before tax.
   
Property development segment, the largest contributor to turnover, recorded lower contributions, mainly due to slower progress billings, which is expected to improve in the next quarter. However, profit contribution from the segment grew due to higher profit recognition in some of the projects.

Significance: The group remains optimistic on the back of positive growth expectations for the Malaysian economy in 2015 and has noted that several infrastructure projects announced in the recent Malaysian Budget 2015 presents opportunities for its construction segment given its proven track record.

Telekom M’sia Inks RM1b Digital Terrestrial TV Deal

Telekom Malaysia (TM) has inked a framework agreement with MyTV Broadcasting to provide digital terrestrial television (DTTV) services in Malaysia in the near future.
   
Under the agreement, TM will receive RM1.1 billion over 15 years (RM70.5 million annually) for the provision of terrestrial distribution, satellite distribution and broadcast contribution network services, as well as station facilities and infrastructure, operation and maintenance services.
   
The agreement also entails TM developing a terrestrial distribution network to connect MyTV’s digital multimedia broadcasting hub to all 37 main transmitter sites, 10 regional hubs and two earth stations via a nationwide STM-1 ring network.

Significance: The deal is expected to contribute positively to future earnings, and have impact on operational cash flow on a consistent basis for the next 15 years.

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