Saturday, 31 January 2015

New pump prices: Ron95 at RM1.70

PETALING JAYA: The Government announced a revision of retail petrol prices with effect from Feb 1.

The new price per litre for Ron95 is RM1.70 (from RM1.91), Ron97 at RM2 (RM2.11) and diesel at RM1.70 (RM1.93).

This follows the Domestic Trade, Cooperatives and Consumerism Ministry's decision to set the market price of Ron 95 and diesel based on a managed float, starting Dec 1, last year.

It warned oil companies and petrol station operators that strict action would be taken against parties that fail to comply with the new prices.


Tuesday, 27 January 2015

AirAsia earnings still intact

PETALING JAYA: Industry analysts generally concur that AirAsia Bhd’s earnings prospect remains intact despite its decision to abolish fuel surcharges across all airlines in the group.

The total removal of surcharge effective yesterday also includes low-cost long-haul affiliates AirAsia X, Thai AirAsia X and Indonesia AirAsia X, in line with declining global oil prices.

Largely, the analysts had already factored in the removal of surcharges to some extent in their previous estimates and believed that this would boost sales for the budget airline group.

AirAsia domestic flight fare could now go to as low as RM19 one way all-in, and international flights from RM49 one way all-in, said AirAsia in a statement.

MIDF Research analyst Tay Yow Ken said there wouldn’t be any changes in the company’s estimates published in a report last Friday as he had expected the fuel surcharge abolishment to be implemented soon.

“We have already factored it in our estimates,” he told StarBiz yesterday.

In the report, the research house said the removal of fuel surcharge would be positive for AirAsia.

“Even with the lower fuel surcharge, management expects yields to remain resilient.

“This is mainly due to the higher passenger volume expected in anticipation of Malaysia Airlines’ (MAS) planned capacity reduction,” it said.

MIDF Research explained that when AirAsia last removed its fuel surcharge in November 2008, Brent crude prices averaged at US$54.7 per barrel for that month.

“Despite that, yield was sustained at 14.1 sen before rising to 16.2 sen in 2010 due to higher passenger volume and the introduction of new routes. Furthermore, AirAsia, which adopts a lean operating cost structure, would have an edge over its rivals.

“We also believe that the fuel surcharge removal would generate positive publicity for AirAsia in the wake of the QZ8501 crash,” it said.

According to MIDF Research, the management guided that for every dollar of change in jet fuel price, earnings would be impacted by RM15mil.

Crude oil prices have plunged by more than 50% over the last seven months to around US$45 per barrel currently due to oversupply of the commodity in the international market amid weak demand. About 50% of AirAsia’s jet fuel requirements for 2015 are hedged at US$88 per barrel while it is presently hovering at US$60 per barrel.

On whether MAS would follow suit, Tay said MAS had, to some extent, lowered its fuel surcharges, adding it was hard to predict the immediate action now that the airline had been taken private.

MAS’ community airline, Firefly, had announced special fares with the removal of fuel surcharges under a Chinese New Year promotion deal recently.

MIDF has maintained its “buy” call on AirAsia with a target price of RM3.70 pegged to financial year 2015 price-to-earnings ratio of 10 times.

Monday, 5 January 2015

Malaysia's IHH eyes Thai hospital operator

PETALING JAYA: IHH Healthcare Bhd is believed to be looking at acquiring an 11.5% associate stake in Bangkok Dusit Medical Services Pcl (BDMS), the largest hospital operator listed on the Stock Exchange of Thailand, to gain a foothold in Thailand, sources said.

It is understood that the acquisition could be funded by a combination of cash and issuance of new shares.

The 11.5% stake in BDMS has a market value of 30.64 billion baht (RM3.27bil) based on the last closing price of the company’s shares at 17.20 baht.

IHH has a market capitalisation of RM39.26bil on Bursa Malaysia while it is valued at S$15bil (RM39.72bil) on the Singapore stock exchange.

The acquistion will be funded internally and externally, the quantum of which will be determined later by the company.

“IHH has been wanting to gain an entry into Thailand and this move would give it an instantaneous exposure to the country. Acquisition of an entire stake can take longer and will be more tedious in regulatory terms,” the source said.

“The IHH brand name is well recognised, especially since its successful IPO (initial public offering), and this acquisition will help it solidify its presence in Asia,” he added.

Analysts said that the acquisition made sense as the baht had been strenghtening in the past year against the ringgit and Singapore dollar.

“The healthcare sector excels on both fronts of being defensive in nature as earnings are backed by a growing exposure to insurance-based clients, and they can be viewed as growth companies as well,” said MIDF Research healthcare analyst Ahmad Annuar Rahman.

The purchase of the Thai asset could be a catalyst for the stock moving forward, he added.

The acquisition into BDMS will be the second associate stake buy for IHH after its 10.85% interest in India-based Apollo Hospital Enterprise Ltd.

At present share prices, BDMS is valued at a forecast FY14 ended Dec 31 price/earnings ratio of 36.52 times and price-to-book ratio of 5.82 times, according to Bloomberg data.

IHH was last traded at a forecast FY14 ended Dec 31 price/earnings ratio of 51.06 times and a price-to-book ratio of 2.07 times.

BDMS operates six major hospital groups in Thailand – Bangkok Hospitals, Samitivej Hospitals, BNH Hospital Phyathai Hospital, Paolo Memorial Hospital and the Royal Hospitals with a total of 29 hospitals – and two in Cambodia with a bed count of almost 5,000.

A presence in BDMS would also ease targeting of medical tourism dollars from the north Asean region for IHH indirectly, given the bigger similarity of country cultures of Cambodia, Laos, Myanmar and Vietnam to Thailand.