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Gas Malaysia Berhad (GMB) was established to sell, market and distribute natural gas and Liquefied Petroleum Gas (LPG). GMB is also responsible for the construction and operation of the Natural Gas Distribution System (NGDS), which is a system comprising 1,800km of gas pipelines and stations within Peninsular Malaysia owned by GMB. NGDS is connected to the Peninsular Gas Utilisation (PGU), which is the gas transmission pipeline across Peninsular Malaysia owned and operated by PGB. GMB’s core business to sell, market and distribute natural gas to industrial, commercial and residential customers in Peninsular Malaysia via NGDS. In other words, GMB purchases natural gas from PGB and sells to GMB’s own customers at a profit margin. There are currently two players in Peninsular Malaysia’s natural gas distribution industry, comprising GMB and PGB. However, both serve different sets of customers, whereby GMB’s customer base consists of us...

In the recently concluded 1Q2012 reporting season, a similar  number of companies under our coverage underperformed, at 31% versus 32% in 4Q2011 and  34% in 3Q2011. The percentage of companies that outperformed fell to 14%  from 17% in the  previous quarter (see Fig 1) and 15% in 3Q2011. Surprisingly, there were more earnings  letdowns among the big caps , with 27% missing estimates versus 17% in the preceding quarter  while among the small caps, more companies trumped estimates - at 20% - compared with 12%  in 4Q2011. The notable positive surprises among the big caps were Maybank and JCY while the  negatives were from MAS, the Genting Group and MISC. Steel, plantations and oil & gas disappointed. The steel, plantations and oil & gas sectors were  dogged  by industry-specific issues and the macro-economic environment. Most steel  companies that we cover continued to be mired in losses due to weaker selling prices and high...

With oil prices hovering around USD80-85 per barrel currently, what is the outlook for Malaysia oil & gas (O&G) industry? Dubbed as " Black Gold ", crude oil is one of investors favorite asset classes, which is highly volatile.  Here, we examined the implications of lower oil prices, current scenario of the industry, and sustainability of oil price going forward. Feel free to share this out via our Facebook page ( www.facebook.com/financemalaysia ). What drags down oil prices? As most of you already know, US and Europe is main culprit for the sliding oil prices. High debt issues still lingering the global economy since 2008 global financial crisis. As such, the potential slowdown in the global economy as per investors perception, droves oil prices lower to current level. What is the implications? Actually, the correction of oil prices is driven by sentiment of traders, whom thinking that the demand is going ton be weak soon. What would you do if you're a CEO ...

Bumi Armada Bhd (BAB) is seeking a listing on 21st July 2011 with an enlarged share capital of 2.93bn shares of RM0.20 each on the Main Market of Bursa Malaysia. Based on the retail IPO price of RM3.03 per share, BAB will have a market capitalization of RM8.87bn . It expects to raise gross proceeds of about RM1.95bn from the flotation. Some 38% of the proceeds will be used to pare down bank borrowings while 29% and 28% will be used for capital expenditure and working capital respectively. The balance 5% will be used to pay listing expenses. Company Profile Bumi Armada Berhad is the largest owner and operator of offshore support vessels in Malaysia and is an established and trusted service partner in the oil and gas industry. It had established a strong position in FPSO systems, a growing Transport & Installation business and competency in management of large projects. With head office in Kuala Lumpur, Malaysia and shore-bases in several countries around the globe, BAB curre...

Unlike real estate, assets type such as commodities and resources investments tend to be highly volatile . This kind of assets classes is suitable for high risk takers. Knowing the characteristic of the assets classes is important to suit your investment objectives so that a correct investment decision was made. However, I noticed that many investors confused about Commodities and Resources, and they often lumped them as SAME . Is it true? Let's look at it separately (not together). Commodities vs Resources? Yes. Both is similar, yet there are some differences between them. First, let's talk about commodities. Commodities for me were comprised of metals such as copper, iron ore, silver, gold, platinum... Although many of us includes energy assets such as oil and gas into it, we can categorize it as an asset class which we can't consume with our mouth. Sometime, it was called hard commodities. Meanwhile, Resources are soft commodities. They comprises agricultu...

Before Government making the decision on two of the most important necessity of Rakyat, let us make a guess first. I know this would be a hot debate on whether Government should increase the electricity tariff and RON95 petrol price. Actually, both are linked closely with crude oil - the black GOLD. Electricity Tariff For TNB, the revise is crucial for its sustainably of the company to continue electrified Malaysia's economy. In fact, this is a long overdue issue, delay and postpone until now. But, why now? I believes that Government, initially wanted to review the tariff once the much anticipated general election. But, the Sarawak state election result could have derailed the early election plan. If we don't review now, TNB may facing financial difficulties which may impact the cash flow and credit ratings of its debts. High natural gas price is affecting the bottom line of the company. Petrol RON95 price Comparing to its brother (RON97), we should be more than happy to sti...

After being hit by a few Black Swan events, markets rebounded in March with the KLCI ending 1Q in the black. Moving into 2Q, we still see some short term volatility but are confident of an eventual rally to close in on our year-end KLCI target of 1680 points. We advise investors BUY Big Caps on potential rebounds while focusing on the more defensive Small Caps given their superior performance over the past few months. The favorite sectors remain Banks, O&G, Property and Construction in the mid-to-short term while the longer term buys are Media and Healthcare. This strategy is reflected in our April top buys as well. Timber the BIG winner... For March, timber stocks were actually the big winners, including names such as Suber Tiasa, Jaya Tiasa, TaAnn, WTK and Lingui, on hopes for better timber demand in view of reconstruction efforts in Japan. Nonetheless, these counters are not part of the FBM100. Instead, among the FBM100 constituents, media player Media Chinese and Petronas compa...

In conjunction with Earth Hour today, would you do your part by switching off lights from 8.30pm to 9.30pm? I heard people are talking about earth hour since weeks before, and many shopping malls and hotels are organizing some amazing events during this special dark moment. Actually, the idea of Earth Hour came out as a way to showcase a growing global community's commitment to taking environmental action and protecting the planet we are living in. And, this year, the one-hour is just like a moment for us to remember the lost lives in Japan earthquake and tsunami disaster, which killed more than 10,000 lives. Of course, the nuclear radiation treat are still looming in Japan, and we really needs to evaluate the effects. But, isn't nuclear power GREEN ? As I know, nuclear power is much more environmental friendly than Coal/Gas power plant. Although Hydro power is renewable, it is devastating to the nature when construction by greatly changes the topography of the surrounding are...

Launched on 11th March 2011, RHB Dynamic Oil-Gold Capital Protected fund is investing in oil and gold, which have the potential to perform in both areas that have great bullish and bearish markets. This is a 3 years capital protected fund . As usual, it will invests at least 85% of the NAV in zero-coupon negotiable instruments of deposits. Meanwhile, up to 10% of the fund's NAV will invest in an over-the-counter (OTC) option that gave investors returns (if any). The OTC option will provide exposure to the performance of the Option Strategy, which is an index, maintained by the issuer of the OTC option and is subject to a dynamic risk adjustment linked to the realized volatility of the underlying. Option Strategy This Option Strategy is a rules-based strategy computed and developed by the option issuer / counterparty. It aims to tap into the growth of oil and gold through the use of a " momentum " based strategy to capture the trends of the Underlying and also, volatilit...

As usual, another episodes of tension in the Middle East pushes global oil prices higher, and surpassing $100 per barrel this time. We did seen this kind of scenario before in the Middle East during 1973-74, 1979, and the Iraq war in 1990. Are there any different this time? Libyan leader Muammar Qaddafi By Credit Suisse ,  We believe the rise in oil prices is manageable . Each 10% rise in oil prices only takes about 0.1% off global GDP and 0.2% off US growth. With Western wage growth muted, central banks are unlikely to raise rates on account of oil alone. Our analysts see oil prices below $100 pb this year, supported by the following reason which differs from previous oil crisis:- There is enough spare capacity in the global oil market to deal with supply-side disruptions as long as they are not too extreme The energy intensity of global GDP has fallen by around 40% over the past 40 years There is unlikely to be the same inflationary follow-through as in the 1970s Oil producer...

By OSK Research, Despite relatively strong results from a number of Blue Chips in February, the market still retreated and ended up in the red so far in 2011. Selling was largely attributed to concerns arising from political unrest in the Middle East although we continue to see limited risk if this does not spread to Saudi Arabia. Go out and BUY? Trading Strategy - Buy on Weakness OSK continue to advise investors to Buy on Weakness in the current volatile market with focus on Banks, especially those that have been sold down recently as we still see robust loans growth of 8.5%. OSK also advise trading in Oil & Gas , Construction and Property counters as the news flow should remain good although they caution that profits will likely to kick in only in 2H of 2011. March 2011 Top Buys OSK's top buys did poorly for February, with only 2 stocks matching or exceeding the KLCI namely KPJ and Kencana. For March, as we remain hopeful of a market rebound, we are keeping CIMB , Kencana an...

All are going very well for Malaysia construction sector last year in line with the recovery of economy until it hit the first " hard bump " last week. We all know that construction sector is very volatile, influenced by the health of global economy, government's pump-priming projects, and of course the huge overhead costs such as labor and building materials costs. Somehow, unrest at Middle East are hogging the bright future of Malaysia's construction counters. First, surging oil prices put pressure on the bottom-line of the companies. Second, projects from that oil-rich nations will dampened the outlook with a slew of Malaysian companies venturing successfully into that region. The Game still going on? According to CIMB Research , the selling pressure on construction stocks is overdone as jobs in the Middle East account for 3 - 41% of the order books of WCT, IJM Corp, Gamuda and Muhibbah Engineering and the projects are mostly at the tail end with no payment is...

By Finance Malaysia, Driven by better economy prospects, Malaysia successfully escape recession two years ago, particularly March 2009. Strong GDP growth and numerous government's initiatives is the main reason why local market experiencing a spectacular run-up since then. Today, our KLCI break another record high , by closing at 1551.89 points. So, what is the outlook for Malaysia in 2011? Maybank expects KLCI will hit 1,700 mark in 201 1 KLCI The Malaysia Index will continue to perform in line with the overall economy. More IPO will be issue. More merger & acquisitions activities will be seen. KLCI will be driven by the following factors:- Improving sentiment Follow through momentum from all time high Hot capital inflows Improving liquidity Boost by plantation and oil & gas heavyweights, such as IOI, Sime and PetroChem Preferred sector(s)... Finance sector will continue to do well in line with the economy 2011 will be a "Grammy Awards" show for construction ...

After a long suffering period, KNM investors can be very joyous coming this Christmas celebration with another good news announced today. In a statement after trading hours, KNM announced that its wholly owned subsidiary, KNM Process Systems Sdn Bhd (KNMPS), had landed a RM2.19 billion job in the United Kingdom. The contract is for the engineering, procurement, construction and commissioning of works towards the development of an 80MWe gross capacity energy from biomass and waste recycling centre project known as EnergyPark Peterborough . Duration of the contract is about 4 years. KNM drive into Renewable and Clean Energy Sector... This mark another important milestone for KNM to venture into renewable energy sector, which is so popular in this energy-hunting world. This came as a surprise to investor because KNM had never been in that sector, and even surprising us was the multi-billion value contract. Illustration of EnergyPark taken from Peterborough Community Website The projec...

Recently, KNM is coming back to the limelight in Bursa Malaysia. After the 4 to 1 share consolidation exercise, KNM is inching up since securing a contract worth RM 680 million in Uzbekistan. Then, KNM held a briefing with research outfits indicating that the company was on the road to recovery after a hiatus one-and-a half year. Good facts: Order book had grown to RM 2.4 billion Tender book grown to RM 16 billion Better capacity utilization Re-surging of crude oil price which touches USD 90 per barrel now Malaysia government's intention to spur oil & gas sector Listing of Petronas' subsidiaries enhancing the viability of local listed companies Impending projects roll-out by Petronas soon Planning to tap into nuclear industry in Africa IR. LEE SWEE ENG Executive Chairman / Chief Executive Officer Bad facts: Foreseeable losses in its operations in Brazil, Canada and Indonesia High debt levels with RM1 billion borrowings, against net cash balance of RM300 million Future...

The government has endorsed a new plan of tax incentives proposed by Petronas which will be incorporated in the Petroleum Income Tax Act , Prime Minister said today. “By lowering risks and increasing the rewards for investment, this initiative will potentially lead to additional petroleum-generated revenue of more than RM 50 billion for Malaysia over the next 20 years” he said when announcing 9 new developments and Entry Point Projects of the Economic Transformation Program. Najib said there would be a notional trade-off of about RM 8 billion in the form of revenue foregone from investment tax allowances, reduced tax and the export duty waiver for marginal fields. The 5 new incentives are:- Investment tax allowance of capital expenditure. Reducing tax rate from 38% to 25% for marginal oil field development Accelerated capital allowance of up to 5 years from 10 years. Qualifying exploration expenditure transfer between non-contiguous petroleum agreements with...