Reflections on Volume

Big volume without further upside equals distribution
Big volume without further downside equals accumulation

Volume tends to peak at turning points
Volume often precedes price movement
Volume is a relative study

Tuesday, May 29, 2012

Gas Malaysia's 25.68m shares oversubscribed 21.64 times

KUALA LUMPUR: Gas Malaysia Bhd's offering of 25.68 million shares to the public under its listing exercise was oversubscribed by 21.64 times.

Malaysian Issuing House (MIH) said on Tuesday there were 44,561 applications for 581.39 million shares from the public for the 25.68 million shares.

Of the 25.68 million shares, MIH said 12.84 million offer shares were set aside for Bumiputera individuals, companies, co-operatives, societies and institutions. MIH said there were 15,034 applications for 175.62 million offer shares was received under the Bumiputera category, or an oversubscription of 12.68 times.

Under the public category, there were 29,527 applications for 405.76 million offer shares, representing an oversubscription of 30.60 times.

It also said the sole bookrunner Maybank Investment Bank Bhd had confirmed that the institutional offering of 303.31 million offer shares was completed.

"The institutional price was fixed at RM2.20 per offer Share. Accordingly, the final IPO price for the retail offering is fixed at RM2.20 per offer share," said MIH.
Maybank Investment Bank was also the principal adviser and joint underwriter for the IPO. The other joint underwriters were Bank Muamalat Malaysia Bhd and Kenanga Investment Bank Bhd.

The listing exercise involved the offer for sale by the vendors of 333.84 million shares, of which 147.67 million shares were to Bumiputera institutional and selected investors approved by the Ministry of International Trade and Industry.

The remaining 155.63 million shares were offered to institutional and selected investors; 4.84 million shares were reserved for eligible directors and employees of Gasa Malaysia and 25.68 million shares to the public.


Friday, May 25, 2012

Scomi: 4-car trains on track

SCOMI Rail Bhd will deliver the first batch of four-car trains for KL Monorail to Syarikat Prasarana Negara Bhd by year-end.

Its unit, Scomi Transit Projects Sdn Bhd, won a RM494 million contract from Prasarana in November last year to supply 12 sets of four-car Generation 2-type trains for its KL Monorail fleet expansion.

The contract is also to upgrade the existing monorail stations as well as the electrical and mechanical system, and build a new depot.

Read more: Scomi: 4-car trains on track

Tuesday, May 22, 2012

MAS only to pay caterer what it takes for in-flight services

PETALING JAYA: Malaysia Airlines (MAS) is said to have re-negotiated its catering contract after nine years where it will no longer pay a guaranteed monthly amount for catering services and only for what it takes from LSG Sky Chefs-Brahim's Sdn Bhd (LSGB) for its in-flight catering services.

It is learnt that renegotiations have been concluded recently by the new team at MAS and will help MAS to restructure its cost base.

The amount MAS used to pay as the guaranteed figure under the catering contract is not known, but the contract between LSGB and MAS has long come under fire for the exclusivity as well as the long-term nature of the deal.

LSGB, an inflight catering service provider, had in 2003 signed an agreement with MAS for the exclusive right to supply and provide inflight catering and cabin handling services to MAS at both the Penang airport and the KL International Airport in Sepang for 25 years.

“It is a significant development for the airline as it no longer needs to pay for catering services based on the minimum baseline revenue (MBR) a term used in the catering business and that burden is now removed.

“With good inventory planning it will only uplift what it needs and this whole exercise helps it cut wastage and hopefully it translates in reduced cost for the airline,'' said a source.

Another source said the contract was initially crafted to “include a guarantee amount because there was a need for certainty, and also for sustainability and profitability.”

During Brahim's Holdings Bhd's AGM recently, company officials side-stepped questions when asked if there was a renegotiation over the catering contract.

The official then said: “Just wait for the announcement, we are always open to working together with MAS and I can't say more. ”

The MBR removal will have an impact on LSGB's bottomline but the quantum is not known. As for Brahim's, the MAS contract accounts for about 80% of revenue. For 2011, Brahim's earned RM336mil in revenue, RM314mil in 2010 and RM294mil in 2009.

The company is also diversifying to boost its revenues by 2015 by banking on its new venture into sugar refining.

The renegotiation of contracts is part of the recovery plan as outlined in MAS December 2011 business plan.

In the plan, MAS said it was “acting on two key levers to reduce costs. First, we will renegotiate our procurement costs in catering, ground handling and maintenance ...”

MAS needs to bring down its cost as it is spending more than what it earns and the airline's revenue per seat km is 20 sen while its cost per seat km is 26 sen.

How much savings MAS will receive from renegotiating its catering contract is not known, but in its business plan MAS did say that “our base case target is for the core business (passenger airline without cargo, catering and other ancillary businesses) to generate a significantly reduced loss of approximately RM340mil in 2012.”

Besides the catering contract renegotiation, MAS has also made significant improvements on its customer service front and once it takes delivery of its flagship A380 aircraft, there will be a host of new initiativ es in a bid to push for higher sales, sources said.

MAS is expected to release its financial results for the first three months ended March 31, 2012 soon and analysts are expecting another quarter of losses to the tune to RM330mil.

The airline in 2011 reported a net loss of RM2.5bil and analysts expect MAS to only return to the black in 2013.

Tuesday, 22 May 2012 1st Q
6:04PM KHAZANAH NASIONAL BERHAD (200,519,020 Shares Transacted)
5:27PM 1Q net loss 171.793 million (decreased 29.11%)

2x Aug 2012 2nd Q
2x Nov 2012 3rd Q
2x Feb 2013 4th Q

Saturday, May 19, 2012

'Sell' call on MAS

KUALA LUMPUR: Maybank Investment Bank, which is expecting a deep loss for the first quarter of 2012 for Malaysia Airlines (MAS), is recommending a "sell" for the national carrier's stock in the run-up to the expected announcement of its results next week.

"The first quarter of 2012 is expected to be severely loss-making due to the impact of a 20 per cent higher fuel price year-on-year and a weak yield environment," it said in its research note.

Maybank Investment has also cut its full-year forecast for the airline, predicting that MAS will end the year with about half a billion in net losses for 2012, instead of a break even of RM5 million previously.

This is despite a better showing expected in the second half of the year when it removes most of its old aircraft from the fleet.

"We think MAS is struggling to get its turnaround strategy in place. We have cut our earnings forecast due to higher than budgeted fuel price and a tougher yield environment," the note said.

Maybank Investment said MAS is expected to announce a bridging loan arrangement to the tune of RM1.5 billion and raise perpetual bonds amounting to RM3 billion to address its low cash reserves issue.

Maybank Investment is more positive of MAS' prospects in 2013 though, estimating it to break even, with a completely brand new fleet that will bring down unit cost by a considerable amount.

The research house has also lowered its target price for MAS to RM1.

The stock closed six per cent lower at RM1.05 yesterday.

Read more 'Sell' call on MAS

Monday, May 7, 2012

APFT to fly high on deal with Canada firm

ASIA Pacific Flight Training (APFT) Sdn Bhd, a subsidiary of public-listed company APFT Bhd, has clinched a five-year contract with CAE Inc of Canada to train AirAsia cadet pilots.

Under the contract, CAE will provide the complete syllabus and equipment to APFT to conduct the latest and most sophisticated training to AirAsia cadet pilots to become first officers.

The latter, upon graduation, will be classified as licensed officers that permit them to fly as co-pilots with the guidance of the flight captain.
He said the financial aspects of the contract would be positive for APFT as the revenue generated would put the company on a stable footing for the next five years.

"We won't see the money rolling in now but at the end of 2013 when the first batch of cadet pilots are expected to graduate."
From APFT, it costs RM250,000 to train a cadet pilot from scratch to MPL level. With 200 pilots to train over a five-year period, a steady stream of income is assured for APFT. But for AirAsia, the total outlay to train a pilot costs US$160,000 (RM480,000) as the figure includes other phases of pilot training up to a total of 20 months.

But AirAsia isn't the only source of income for APFT as Faruk clarified that the terms of the contract permits APFT to accept cadet pilots from other local and foreign airlines and training schools.

"Without doubt, MPL training will enhance the reputation of APFT and put it in a good stead for other airlines to send their cadets to us."


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