Potential For Media Prima To Offer Attractive Yields
• Maybank Research notes that Media Prima may report 2013’s fourth quarter core earnings of some RM70 million and 2013 core earnings of RM220 million in February, which will be above its previous estimate of RM210.9 million.
• The house also raised its 2013 radio advertising expenditure growth forecast for the company from 4.5 percent to 20 percent for the year.
• Furthermore, its dividend payout ratio policy is likely to be raised from 25 percent to 75 percent to a range of 60 percent to 80 percent. Should Media Prima declare 80 percent of its 2013 earnings as dividends versus the house’s assumption of 70 percent, dividend per share estimate could rise to RM0.153 and would then offer attractive yields.
Significance: Maybank Research upgraded its call on Media Prima to “Hold” from “Sell” and increased its target price for the stock by three percent to RM2.48, based on expectations that the company’s 2013 financials may be above expectations.
Petronas Dagangan’s FY13 Profit Falls
• Petronas Dagangan reported a 9.6 percent increase in revenue to RM32.3 billion from RM29.5 billion for the full year ended 31December 2013. Earnings, however, fell 3 percent to RM811.8 million from RM836.8 million.
• The increase in revenue was due to an increase in average selling price by 1 percent and increase in sales volume by 8.5 percent. Earnings, however, were depressed by higher operating expenditure by RM82.8 million offset slightly by higher gross profit.
• For the quarter, it reported a net profit of RM151.3 million, down 14.3 percent from RM176.5 million a year ago. Revenue rose to RM8.4 billion from RM7.7 billion.
Significance: The volume and revenue growth represented the company’s resilience in defending its market leadership. Petronas Dagangan will continue its cost optimisation efforts and improvement of terminal operational excellence to further improve cost of operations.
UMW OG Enters Rig Vessel Agreement For US$218m
• UMW Oil & Gas Corporation (UMW OG) announced that its unit has entered into a vessel construction agreement with Keppel KFELS for the design, engineering and construction of a rig vessel, KFELS B Class jack-up rig for US$218 million.
• The rig vessel is designed for UMW Drilling 8 (L) owned by UMW Rig Asset (L), which is a wholly-owned unit of UMW OG. The terms of payment will include a first installment of 20 percent upon the award of the contract and no later than 7 February 2014 and a final installment of 80 percent upon the delivery of the vessel in September 2015. This will be financed in part by the proceeds from its offering and borrowings.
• This is expected to contribute positively to the earnings and net assets of the group for FY15 and thereafter.
Significance: The purchase of the rig vessel is in line with UMW OG’s plan to raise revenue and contributions from its drilling operations. It will enhance its asset portfolio and facilitate the firm’s expansion in Malaysia and globally.