Gold Futures (FGLD)

FGLD is a small-sized Ringgit Malaysia (“RM”) denominated gold futures contract traded on Bursa Malaysia Derivatives, providing market participants exposure to international gold price movements at a lower entry cost.

The pricing of the FGLD contract in local currency removes the need for Malaysian participants to purchase foreign currency and therefore removing exposure arising from foreign currency fluctuations.

Each FGLD contract is equivalent to 100 grams of gold bullion. The small size has been designed to provide accessibility to all, but also flexibility for those wanting greater exposure. For the retail player wanting smaller exposure, the small size provides affordability. For the industrial user requiring larger exposure, the contract can be traded in multiple lots at a time (e.g. 5 lots, 10 lots etc).

As a cash-settled contract, no delivery of physical gold is required. Instead, the FGLD contract will be settled on expiry using the cash equivalent of the amount of gold purchased (e.g. 100 grams), calculated using the London AM Fix price (in USD) on the final trading day converted into RM.

For example: 

On the Final Trading Day, if the London Gold AM Fix price is USD1,300 per troy ounce and the exchange rate is USD1 = RM3.0800:

1. Conversion of the gold price from USD to RM will be: 1,300 x 3.0800 = RM4,004 per troy ounce.
2. Conversion from troy ounce into grams: RM4,004/31.1034768 = RM 128.731589260786 per gram (1 troy once = 31.1034768 grams)
3. Final Settlement Value will be RM128.75 per gram (rounded to the nearest RM0.05),
4. Contract Value will be RM128.75 per gram x 100 grams = RM12,875.

The London AM Fix price is the global benchmark for spot gold prices, and the settlement of the FGLD contract in accordance with this price characterizes the FGLD contract as an instrument that tracks the international gold market closely.

The final trading day for each FGLD contract will be the last common business day in London and KL. Please refer to bursa website for the final trading day for each contract month.

Contract Specification: http://www.bursamalaysia.com/misc/system/assets/7205/derivatives_commodity_derivatives_FGLD_specification_english.pdf

Caring Pharmacy IPO Target Price

Kenanga give Caring Pharmacy fair value at RM1.55 based on 13x CY14 EPS of 11.9 sen. They expect Caring to register net profit of RM23.8m and RM27.4m in FY14 and FY15, respectively. They conservatively forecast a 17% revenue growth each in FY14 and FY15, which is conservatively lower than the past three years average of 20% on the back of same-store-sales growth and opening of new outlets. They have factored in marginally lower margins taking into account higher advertising and promotion activities in an effort to increase or sustain its market share in our forecasts. Based on their earnings estimate and a 30% dividend payout assumption, they expect FY14 and FY15 net Dividend Per Share of 3.3 sen and 3.8 sen respectively, translating to an average Caring Pharmacy dividend yield of 3%.

Their fair value is RM1.55 is based on 13x CY14 EPS of 11.9 sen. The Caring Pharmacy PE ratio of 13x multiple is at 22% and 30% discount to Berjaya Food’s 1-year forward PER of 17.0x and Berjaya  Retail’s 18.5x PER valuation, respectively, when it was taken private.

Caring Pharmacy Group Bhd IPO

Caring Pharmacy Group Bhd is offering for sale 35 million new shares at RM1.25 each to raise RM43.75m as it seeks a listing on the Main Market of Bursa Malaysia Securities.

According to its prospectus issued on Friday, it is offering 10.88 million new shares to the public while 5.71 million would be offered to eligible directors and employees, another 4.2 million shares offered to approved Bumiputera investors.

The pharmacy chain operator said that the remaining 14.198 million shares could be placed out.

Caring Pharmacy said of the RM43.75mil, 41% of the proceeds would be used for new pharmacy outlets while 26.76% would be used for working capital.

On its dividend policy,  the company said shareholders can expect dividends of not less than 30% of its annual profit.

Caring Pharmacy managing director Chong Yeow Siang said the pharmacy is ranked amongst the top three community pharmacy operators in Malaysia with an estimated market share of 4% based on the number of community pharmacy outlets.

“We are encouraged by the overwhelming response that we received from investors and fund managers for our shares offered through the private placement where the book has been covered multiple times,” he said.

Caring Pharmacy said based on its IPO price and enlarged issued and paid-up share capital of 217.7 million shares, its total market capitalisation is about RM272.133mil.

It noted the “IPO price of RM1.25 per share represents a premium of 172% to the pro forma consolidated NA per share, and price to book ratio of about 2.72 times”.

Caring Pharmacy said based on its profit after tax and minority interest of RM20.55mil for 2013 and its enlarged issued and paid-up share capital of 217.7 million shares upon listing, its net price-to-earnings stood at 13.24 times.

The pharmacy chain is expected to list its shares on Nov 13.

Kenanga Investment Bank Bhd is the principal adviser, managing underwriter, joint underwriter together with MIDF Amanah Investment Bank Bhd and joint placement agent together with Inter-Pacific Securities Sdn Bhd for the IPO.

Motivasi Optima Sdn Bhd and Jitumaju Sdn Bhd are the promoters of the IPO.


Listing Detail:
Listing Sought: Main Market
Issue Price: RM 1.25
Par Value: RM 1.00

Dates:
Offer Period Open: 18-10-13
Offer Period Close: 30-10-13
Tentative listing date:  13-11-13
Number of shares:
Public Issue: 35,000,000
Stock Code: CARING

Karex IPO Target Price

TA Securities said due to the lack of pure listed condom manufacturers, they base their valuation on their targeted glove industry PE ratio of 14x. They give Karex fair value at RM2.40 per share based on a 25% premium to their targeted PE multiple. Incorporating proceeds from capital gains and dividend yield, this translates into a total return of 31.9%. They believe their PE multiple is justified given the following arguments: 1) Largest condom manufacturer in the world; 2) Aggressive expansion plans to double capacity within three years; and 3) Access to key licenses and accreditations to export products across 110 countries. Nevertheless, key threats include: 1) Inability to fully utilize incoming capacity; 2) Delays in construction of new facilities and 3) Fluctuations in currency exchange rates and material prices.

2014 Karex dividend yield is about RM2.2%, assuming a 30% payout ratio. Currently management does not have any Karex payout ratio policy.

TA Securities initiate coverage on Karex with a target price of RM2.40 per share. They like the group for its aggressive expansion plan to double capacity to 6.0bn pieces of condoms/annum by 2015. Assuming a utilization rate of 70% and average selling prices (ASPs) of 3 cents (9.6 sen) per condom, the additional capacity will boost revenue by RM201.6mn once completed (FY13: RM231.4mn).

=====================================================================

 JFApex Research is recommending that investors subscribe to condom-maker Karex’s IPO, which is priced at RM1.85, saying it has determined fair valuation for the stock at RM2.07.

The retail offering of the IPO opened on Oct 11 and will close on Oct 23, with allotment of the IPO shares to be done on Nov 4.

The research house says the world’s largest condom manufacturer, which is seeking to raise RM75m from its IPO, provides a good alternative to investors searching for a proxy to the rubber-related healthcare products in Malaysia.

Like other local-listed rubber glove manufacturers, Karex is 1) exposed to the fluctuation of rubber prices, 2) exports most of its products, and 3) is in an industry in which demand growth remains resilient.

According to JF Apex, Karex has enjoyed overwhelming earnings growth, with FY2013 net profit jumping 141.7% year-on-year to RM29mil from RM12mil, on the back of higher sales volume as well as higher margins from easing latex prices and higher production utilisation.

“Moving forward, we project a three-year CAGR (compound annual growth rate) of 21% in its bottom line from FY2014F-FY2016F as the group is embarking on an explosive capacity expansion, resulting in economies of scale which shall improve cost efficiency and thus its competitiveness and profitability,” the research house says.

It also notes Karex’s share of business from the tender market (NGOs, international agencies and governments), which contributes 36% of total revenue.

JF Apex says its fair valuation of RM2.07 is derived by pegging 15 times price-earnings ratio to Karex’s FY2014 forecast earning-per-share of 13.8 sen.

“The valuation applied is a 10% discount to the valuation we ascribed to Top Glove (16.5 times). Our fair value renders a potential upside of 12% from the IPO price.

“Karex shares similarity with Top Glove as both are the largest players in the rubber-related healthcare products in Malaysia by having the class-leading production capacity. However, we reckon that the lower valuation is justified in view of the relatively lower market capitalisation of Karex, and the Group has not fixed any dividend policy to reward its shareholders as compared to the 50% dividend payout ratio Top Glove is currently implementing,” it concludes.

UMW Oil and Gas IPO Oversubscribed table

INITIAL PUBLIC OFFERING (“IPO”) OF UP TO 843,180,000 ORDINARY SHARES OF RM0.50 EACH IN UMW OIL & GAS CORPORATION BERHAD (“UMW-OG”) (“IPO SHARES”) COMPRISING AN OFFER FOR SALE OF UP TO 231,380,000 EXISTING SHARES (“OFFER SHARES”) AND A PUBLIC ISSUE OF 611,800,000 NEW SHARES (“ISSUE SHARES”) IN CONJUNCTION WITH THE LISTING OF AND QUOTATION FOR THE ENTIRE 2,162,000,000 ORDINARY SHARES OF RM0.50 EACH IN UMW-OG (“SHARES”) ON THE MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHAD, IN THE FOLLOWING MANNER:

 

(I) INSTITUTIONAL OFFERING OF UP TO 648,600,000 IPO SHARES TO MALAYSIAN AND FOREIGN INSTITUTIONAL AND SELECTED INVESTORS, INCLUDING BUMIPUTERA INVESTORS APPROVED BY THE MINISTRY OF INTERNATIONAL TRADE AND INDUSTRY AT THE INSTITUTIONAL PRICE TO BE DETERMINED

 BY WAY OF BOOKBUILDING (“INSTITUTIONAL PRICE”); AND

 

(II) RETAIL OFFERING OF 194,580,000 IPO SHARES TO THE ELIGIBLE DIRECTORS AND EMPLOYEES OF UMW-OG GROUP, THE ELIGIBLE DIRECTORS AND EMPLOYEES OF UMW HOLDINGS BERHAD (“UMWH”) AND ITS SUBSIDIARIES, THE ENTITLED SHAREHOLDERS OF UMWH AND THE MALAYSIAN PUBLIC, AT THE RETAIL PRICE OF RM2.80 PER SHARE (“RETAIL PRICE”), PAYABLE IN FULL UPON APPLICATION AND SUBJECT TO REFUND OF THE DIFFERENCE BETWEEN THE RETAIL PRICE AND THE FINAL RETAIL PRICE IN THE EVENT THAT THE FINAL RETAIL PRICE IS LESS THAN THE RETAIL PRICE,

 

SUBJECT TO THE CLAWBACK AND REALLOCATION PROVISIONS AND OVER-ALLOTMENT OPTION. THE FINAL RETAIL PRICE WILL EQUAL THE LOWER OF:

 (I) THE RETAIL PRICE OF RM2.80 PER SHARE; AND

 (II) THE INSTITUTIONAL PRICE,

 SUBJECT TO ROUNDING TO THE NEAREST SEN.

=================================================================================

MIH is pleased to announce that Westports' initial public offering ("IPO") to the Malaysian public ("Public Retail Offering"), comprising 68,200,000 Offer Shares has been oversubscribed.

A total of 32,835 applications for 429,799,600 Offer Shares were received from the Malaysian public representing an oversubscription rate of 5.30 times.

 

If you look at the subscription rate, chances of striking the IPO is not very low. Saw from web site that if apply public 1,000 shares, the chances are 5.97%

 

1,000  5.97%

2,000  6.97%

10,000 9.96%

100,000  13.73%

1,000,000   66.67%

 

 

Bumiputra portion:

1,000  26.19%

2,000  27.12%

10,000 30.24%

100,000  76.11%

1,000,000   100%

Karex Berhad

Karex Bhd, rubber products manufacturer is scheduled to be listed in Main Market of Bursa Malaysia on 6th November 2013.

The Initial Public Offering (IPO) consists of public issues of 40.5 million new ordinary shares and offer for sale of 27  million ordinary shares at an IPO price of RM1.85 per share.

Out of this, 13.5 million shares are allocated for application by Malaysian public and 6.8 million shares reserved for the eligible directors, employees, business associates and person contribute to the company. The remaining shares are for institutional & private placement.

The IPO exercise is expected to raise RM74.92 million and the proceeds will be used for capital expenditure (RM42mil), working capital (RM14mil), repay bank borrowings (RM10mil), listing expenses (RM5mil) and research and development (RM4mil).

Karex is the world’s largest condom manufacturer with which currently has 10% of the global market share.

For the capital expenditure, Karex will develop its largest factory in Pontian, Johor, which was not far from the company’s existing plant. Upon completion of the expansion of the factory, the total annual production capacity will increase from the current three billion pieces to six billion by end-2015.

Besides Pontian, the company also has factories in in Klang, Selangor and Hat Yai, Thailand.

On top of condoms, Karex also produces catheters, latex probe covers and lubricating jelly.

More information about Karex can be found in their website.

Currently, Karex Berhad does not have any fixed dividend policy.

RHB Investment Banks is the principal adviser, underwriter and placement agent of the IPO. For those who are interested in Karex IPO, you may subscribe at ATM machines or via Internet Banking. The subscription period is opened until 23rd October 2013 at 5pm. Tentative balloting date is on 25th October 2013 while the allotment date is on 4th November 2013.

==============================================================

Listing Detail:
Listing Sought: Main Market
Issue Price: RM 1.85
Par Value: RM 0.25

Dates:
Offer Period Open: 11-10-13
Offer Period Close: 23-10-13
Tentative listing date:  6-11-13

Number of shares:
Public Issue: 20,250,000
Offer for Sale:  27,000,000
Private Placement: 20,250,000
Stock Code: KAREX

UMW Oil & Gas

TA Securities initiate coverage on UMW Oil & Gas Corporation Bhd (UMW-OG) with a Buy recommendation and Target Price of RM3.36 based on 22x FY14 P/E. They believe that 22x FY14 PER is not excessive given that Malaysian-listed mid-large cap upstream O&G counters with market cap between USD2bn-3.5bn currently trade at an average of 21x CY14 P/E. This includes Bumi Armada (19x), MMHE (20x), Dialog Group (25x). Their Target Price translates into 19.8x FY15 P/E whereby FY15 would see the full-year contribution of UMW-OG’s entire fleet of 6 drilling rigs and 5 HWUs. They expect UMW Oil & Gas dividend yield zero for the next few years.

Kenanga give UMW-OG fair value at RM3.33 per share, based on CY14 21.0x PER. This is at a small discount to the PER of 22.0x which they ascribed to Sapurakencana (SKPETRO; OP; TP: RM4.72), in terms of relatively smaller size than the latter. Whilst this is at a premium to its global peers’ weighted average CY14 PER of 7.7x, they believe UMW-OG should be rated against domestic peers given that the major contributor to group earnings is mainly derived from Malaysia. They also expect UMW Oil & Gas dividend yield zero for the next few years. 

HLIB expects price to earnings ratio (P/E) to fall to 14 times in FY15 with a conservative assumption of additional one rig per year after FY14. HLIB initiated coverage on UMW O&G with a “buy” call and a target price of RM3.36 based on 20 times average FY14 to FY15 P/E as the full contribution from Naga 5 and Naga 6 will only be reflected in FY15.

Stochastic Oscillator

1. Developed by George C. Lane in the late 1950s
2. Stochastic Oscillator is a momentum indicator that shows the location of the close relative to the high-low range over a set number of periods. 
3. Stochastic Oscillator "doesn't follow price, it doesn't follow volume or anything like that. It follows the speed or the momentum of price.
4. As a rule, the momentum changes direction before price." 
5. As such, bullish and bearish divergences in the Stochastic Oscillator can be used to foreshadow reversals. This was the first, and most important, signal that Lane identified. 
6. Lane also used this oscillator to identify bull and bear set-ups to anticipate a future reversal. 
7. Because the Stochastic Oscillator is range bound, is also useful for identifying overbought and oversold levels.

Setting

Calculation:

%K = 100[(C - L14)/(H14 - L14)]

C = the most recent closing price
L14 = the low of the 14 previous trading sessions
H14 = the highest price traded during the same 14-day period.

%D = 3-period moving average of %K

The default setting for the Stochastic Oscillator 
is 14 periods, which can be days, weeks, months or
an intraday timeframe. A 14-period %K would use 
the most recent close, the highest high over the last
14 periods and the lowest low over the last 14 periods.
%D is a 3-day simple moving average of %K. This line is
plotted alongside %K to act as a signal or trigger line.

The theory behind this indicator is that in an upward-trending market, 
prices tend to close near their high, and during a downward-trending 
market, prices tend to close near their low. Transaction signals occur 
when the %K crosses through a three-period moving average called the 
"%D". 

Further reading : stockcharts.com 

Westports IPO Target Price

As I have mentioned in my previous post, analysts will come out with different methods in giving Westsports fair value, rather than the common PE ratio. This is because Westsports based on IPO price of RM2.50, Westports PE ratio is high. Westports fair value is RM2.84 by Alliance Research. They say based on Westports policy to payout 75% of net profit as dividend, they expect Westports’ FY13-FY15 DPS of 9.0 sen, 9.8 sen and 9.9 sen respectively. Based on the Westports IPO retail price, this translates into to a dividend yield of 3.6%, 3.9% and 4.0%, for FY13 to FY15, respectively. They derive a fair value of RM2.84, using dividend discount model. This implies an upside potential of 13.6% to the retail IPO price of RM2.50.Their fair value of RM2.84 translates into FY14 P/E of 21.7x and FY14 dividend yield of 3.5%, which is in line with Westports’ peers.

One thing is the IPO price is not fixed yet, and have chances of a lower IPO price depending on the bidding by institutional clients.

JF Apex Securities said subscribe with a target price of RM2.97. Their non-rated target price is based on Dividend Discount Model (DDM) with discount rate, WACC of 7.2% and terminal growth rate of 2.5%. It translates into implied PER of 19.4x for 2014F which is above its peers’ average of 16.5x. They view the higher PER is fair given the Group’s status as a leading port operator in Malaysia shall render premium valuation to the Group.

Their target price translates into potential upside of 22.8% (capital appreciation of 18.8% and dividend yield of 4%) to the listing price. They believe the Group’s dominant position as a leading port operator in Malaysia with commendable earnings track record and decent dividend yield would attract investors’ interest.


====

According to HWANGDBS Vickers Research, recommendation subscribe: Fair value of RM2.75. The Westports fair value is based on DDM valuation (assuming sustainable dividend payout ratio
of 75%, initial 5-year growth rate of 8.2%, 6.6% discount rate, long-term growth rate of 5.5% and a concession period until 2054). This translates into potential total return of 13% (inclusive of dividend yield). Thier target price – which values Westports’ market cap at RM9,378m – implies FY13 net dividend yield of 3.0% and 19.8x FY14 P/E. We value Westports at a premium to NCB Holdings (15.2x FY14 P/E; market cap of RM1,872m), which operates out of Northport (with a handling capacity of 5.5m TEUs per annum) in Port Klang, because of Westports larger market cap and strong earnings track record.


Source:  ht**://politemarket.blogspot.com/2013/09/westports-ipo-target-price.html

Malaysia's Westports prices share-sale at top end

KUALA LUMPUR: Westports Holdings Bhd, the operator of Malaysia's busiest port, has raised about 2.03 billion ringgit ($628.77 million)in its IPO, pricing it at the top of expectations, two sources with direct knowledge of the deal said on Monday.

The IPO for Westports is likely to be the country's second largest this year behind UMW Oil & Gas Corporation Bhd, an offshore and drilling services firm, which is looking to raise $740 million.

Westports, which is partially owned by Hong Kong billionaire Li Ka-shing, priced the offering at 2.50 ringgit per share versus an indicative price range of 2.30-2.50 ringgit said the sources, who were not authorised to speak publicly on the matter.

All proceeds from the offering will go to existing shareholders and not to the company which has said it is listing to raise awareness of its brand.

The company leaned heavily on cornerstone investors, ranging from Utilico Emerging Markets to Genesis Investment Management, who accounted for close to 48 percent of the total institutional tranche.

Westports, which counts state investor Khazanah Nasional Bhd and Li's Hutchison Port Holdings as shareholders, could not be reached for comment.

Credit Suisse, Goldman Sachs and Maybank were joint global co-ordinators. Bank of America Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and RHB are joint bookrunners.

The offering accounts for 23.8 percent of its total share base. ($1 = 3.2285 Malaysian ringgits) - Reuters