THE EDGE summaries 3 March - 9 March (1/2)

RM1b Petronas job for Alam Maritim

• Alam is said to have secured 1bil contract from Petronas
• Jobs include provision of underwater maintenance works and support vessel services among others
• Contract awarded by Petronas Carigali Sdn Bhd, it is for 3 years
• According to the EDGE, the actual award may take place after the general election (we'll have an answer from Alam well before election date when SC demands a response following this article!)
• This contract would be the largest secured since the company floated its shares in 2006
• Aseambankers puts Alam's target price at RM3.13 (Friday's close was RM2.17), rumours of Alam getting this job apparently have been circulating for sometime now
• FYE Dec 2007, company net profit was RM51mil on the back of RM249.9mil revenue (3% gain in net profit despite revenue jumping by 65%)
• Despite those figures, Alam maintained a bright outlook for the company and it has also been expanding its fleet size
• With the fleet expansion exercise, Alam's gearing swelled;l and EDGE reported that Alam may sell its equity to perhaps a Middle Eastern group
  

KL Kepong (KLK) to privatise LPF

• KLK is looking to take the helm of Ladang Perbadanan-Fima Bhd (LPF) and privatising the company
• The privatisation comes about as KLK is in the midst of buying a controlling block in LPF (31.9% interest) from Glamour Green Sdn Bhd
• The agreement was expected to be signed last Tuesday but minor changes postponed it
• KLK's offer of RM4.20 is a premium of 11% to LPF's close of RM3.78 (last Friday)
• At end of Dec last year, LPF had a net asset of RM1.67 per share
• Main assets are its 3 plantation estates in Perak, totalling about 8,171.3ha (KLK now has 150,000 ha)
• The motivating factor for KLK is LPF's landbank, whichj is synergistically located near KLK's own landbank
  

Gamuda a potential takeover target?

• Some fund managers and analysts feel that Gamuda could be a takeover target as the company has a fragmented shareholding, with the bulk held by local and foreign institutional investors
• Potential acquirer may not necessarily have to acquire a 33% stake and make a general offer for the rest of the shares
• One party acquiring a 15-20% block will make it the largest shareholder and will allow it to wield significant influence and control of the company
• The valuation of Gamuda also looks appealing after several bouts of panic selling following Lin's move of selling his stake
• Provided that Gamuda delivers what it promised, the base dividend of 25 sen a share translates to an attractive yield of 6.5% based on current share price
• One remark made was that to regain investors' confidence, Gamuda management must deliver in the near future in terms of securing new projects
  

Buoyant mood at Pelabuhan Tanjung Pelepas (PTP)

• MMC Corp had earlier announced that its 70% unit PTP and MISC Bhd had set up a joint venture company to manage a container terminal at the port.
• Details are still vague but a JV could potentially lead to a significant improvement in PTP's earnings and through put levels
• A number of possibilities emerge with MISC tying up with PTP as the Grand Alliance (a group of shipping giants) could start off some services from PTP, or shift some existing business from Singapore's PSA (busiest container terminal in the world) across the Johor Straits to PTP
• The impetus for shipping lines to shift from PSA to PTP are better trans-shipment rates and better efficiency
• Also PTP's vast hinterland also enabled it to offer a large cargo base for industries to set up shop in its free zone
  

HELP 'miles' better than three other listed education players

• HELP International Bhd is generating double digits return of equity (ROE) and the other -Inti, SEGI, Stamford College - are generating insignificant returns or even making losses
• Recently, the major shareholder of Inti agreed to part with its 51.9% stake in the company for RM1.20 per share which is the exit price based on its asset value, not earnings potential
• So why is HELP so much better than the rest?
• Asset heavy player e.g. Inti, is less resilient when student enrolment drops as most assets are financed with borrowing hence there will be a borrowing cost; furthermore depreciation and operating cost will also be higher
• HELP shareholders provided funds amounted to RM73.2mil, of which RM44 mil is invested in fixed asset, in comparison to Inti's has spent some RM233.54 mil in assets and its shareholders need to provide more funds
• Also, the emergence of government linked educational institutions such as UTAR made it harder for private players to compete on price alone
• HELP is regarded as an institution that targets well-off parents whereas the others caters for the more price-conscious, hence its ability to withstand the impact from UTAR