Capital markets executive summary | Wed 24 May 2023

Capital markets executive summary | Wed 24 May 2023

Coastal Contracts 3Q net profit up 347%

Larger share of joint venture (JV) profit of RM129.87m boosted net profit from RM44.32m in 3Q ended 31 Mar 2022 to RM153.66m in 3Q ended 31 Mar 2023. The company earned higher interest income from a loan to a JV and a larger profit share from its JV in the gas processing division. Revenue however rose slightly by 3.5% from RM53.84m to RM55.74m. Profit before tax for the vessel chartering division soared 483% from RM600k to RM2.9m. The shipbuilding and ship repair segment recorded a loss before tax of RM3.7m. For 9MFY2023, net profit jumped from RM78.07m to RM433.66m even though revenue fell from RM180.85m to RM170.03m. The outlook for the company is driven by growing demand for gas alongside the expansion in industries and as demand for gas-fired electricity increases. The oversupply in the offshore support vessel market is stabilising as reactivation costs for vessels laid up during the downturn rise and in view of oil majors’ reluctance to hire vessels which have been out of service for a long period. The counter closed at RM2.35.

Pelikan moves forward to sell its businesses

Pelikan International Corp Berhad is appointing an investment bank as the principal adviser to advise the board of directors on the disposal and negotiate the terms of the transaction. The company supplies paper, stationery and office products under the Pelikan, herlitz, Geha and Susycard brands, and is in talks with potential buyers to dispose of substantially all of its assets and business interest. Pelikan turned around from a net loss of RM6.12m in 1Q ended 31 Mar 2022 to a net profit of RM4.65m in 1Q ended 31 Mar 2023. It posted earnings per share of 0.77 sen compared to a loss per share of 1.01 sen. Revenue climbed 18.1% from RM200.37m to RM236.66m. The results are attributed to a 75% rise in revenue in the Latin America region which surpassed pre-Covid levels. The European market is still challenging with high inflation and the Ukraine war. The recovery in Asia should drive sales of high end fine-writing instruments. The counter closed at 79.5 sen.

Star Media 1Q net profit fell 55%

The figure was down from RM2.52m in 1Q ended 31 Mar 2022 to RM1.14m in 1Q ended 31 Mar 2023. Its main business segments reported lower earnings. Earnings per share declined from 0.35 sen to 0.16 sen. The result was caused by lower revenue from RM52.67m to RM51.99m. Increased newsprint costs and a 1% lower revenue reduced the profit before tax of the company’s print, digital and events segment from RM1.5m to RM500k. The radio broadcasting segment also reported lower profit before tax from RM2.2m to RM800k due to seasonality. Revenue was down 11% from RM8.5m to RM7.6m. A silver lining appeared in the property development and investment segment with a narrower loss from RM1.1m to RM500k as occupancy rates increased. Despite cautious consumer spending affecting its results, Star Media remains bullish and will improve operational efficiencies. It has also launched Star Business Hub – which is an industrial freehold development – to diversify. The counter closed at 41 sen after gaining 36% since the beginning of 2023.

Uchi Technologies net profit up 41%

Higher demand for products and services, plus gains of RM11.3m from the disposal of assets pushed net profit higher from RM26.77m in 1Q ended 31 Mar 2022 to RM37.80m in 1Q ended 31 Mar 2023. Earnings per share rose from 5.91 sen to 8.29 sen. Revenue jumped 19.8% from RM47.94m to RM57.43m. The company specialises in original design manufacturing and in designing electronic control systems. It expects the geographical distribution and product groups’ revenue contribution ratios to remain unchanged, although fluctuations in the US dollar exchange rate, material shortages and changes in material and labour costs could affect performance. The counter closed at RM3.32.

China’s import of chipmaking equipment from Singapore hits 8-month high

The country bought USD407m worth of machines, 9.6% higher than in Mar 2023. Overall however, China imported 27% less chipmaking gear in Apr 2023 year-on-year. Singapore also shipped 3.5% more integrated circuits to China compared to Mar. Every other country recorded a drop in chip exports to China. The top companies in the world are diversifying globally away from China and highly-concentrated chipmaking hubs like Taiwan and South Korea. Among others, Applied Materials Inc, Soitec, GlobalFoundries and ST-Microelectronics operate in Singapore. Taiwan Semiconductor Manufacturing Co is evaluating building a 12-inch wafer fab in the country due to tax incentives and subsidies on utilities. ASML is also looking towards Southeast Asia for its new plants instead of China.