From CIMB

Healthy new products pipeline

■ Inari’s diversification into automotive is gaining traction with the potential maiden contribution from its newly-created SOM division at P55 in 1HCY22F.

■ Reiterate Add, with an unchanged RM4.95 TP, still based on 38x CY23F P/E.

1QFY6/22 results briefing

● We attended Inari-Amertron’s virtual 1QFY6/22 post-results briefing, hosted by Group CEO KC Lau this morning. We learnt that Inari’s new system-on-module (SOM) assembly division at P55 is on track to begin production in 1QCY22. SOM division is running a reliability testing process that could take up to 12 weeks before it can start production, but we are encouraged to learn Inari’s new customer is expediting the number of products qualified. We see SOM division as a new growth driver for Inari to diversify and grow its exposure in the automotive segment. We expect Inari to utilise a portion of placement proceeds for SOM division expansion from CY22F onwards.

Key takeaways

● The group is allocating RM100m capex for investment in new technology platform and capacity expansion and value-added processes such as electromagnetic interference (EMI) shield coating for RF chips. The group recently added two new system-inpackage (SiP) lines in Oct and Nov 21, which raised its total SiP assembly to 24 lines. In addition, Inari is also investing US$5.8m (RM24.4m) in a new double-sided molding packaging platform that could be utilised in the next generation RF chips in 2022/23F.

● The group expects utilisation in 2QFY6/22F to stay elevated, driven by RF content value growth going into 5G mobile devices. The group highlighted that its RF division’s utilisation is hovering close to 90% currently.

● Meanwhile the group does not expect a significant impact from the Makmur Tax implementation given that Inari’s wholly-owned subsidiary, Inari Technology Sdn Bhd which houses its RF division, still enjoys a pioneer tax exemption until 3QCY22F. The group is also looking to apply for new tax incentives with the commercialisation of newer RF chips for use in 5G mobile devices. The group is guiding for an average of 9-10% effective tax rate in FY22-23F, broadly in line with our expectations.

Reiterate Add and RM4.95 TP

● We reiterate Add, with an unchanged RM4.95 TP, still based on 38x CY23F P/E, which is 2 s.d. above its 3-year historical mean. We see an earnings-accretive outsource semiconductor assembly and test (OSAT) JV in China, stronger-thanexpected RF chip demand, consensus earnings upgrades and new customer wins as potential re-rating catalysts for the stock. Slowing demand for 5G smartphones, ringgit appreciation vs. US dollar and delays in new customers’ diversification are key downside risks to our Add call.

https://www.msci.com/index-review

Cheaper way to increasw shareholding tru warrant

https://www.google.com/amp/s/www.oedigital.com/amp/news/491718-record-number-of-floating-production-system-awards-expected-over-the-next-18-months

Quite number of outlets doing good

From CIMB report
Oil & Gas ‘Makmur Tax’ may negatively impact Petronas Dagangan’s FY22F core EPS forecast by 10.7%; no or little impact on Velesto, Bumi Armada, Yinson, Sapura Energy, or Dialog

Petronas Dagangan (PDB) may be negatively affected by the ‘Makmur Tax’, as we forecast group pretax losses excluding associates at RM893m for FY22F. Virtually all of the group pretax losses are housed under the one single holding company, rather than split up across several subsidiaries. As a result, we estimate that the ‘Prosperity Tax’ may reduce PDB’s FY22F core net profit by up to RM71m (7 sen/share), or 10.7% of our current core net profit forecast of RM668m. The negative impact to our DDM-based target price is also c.7 sen/share, which is immaterial against our current target price of RM19.90.

Velesto is unlikely to be affected by the ‘Makmur Tax’, as we forecast group pretax profits for FY22F to be below the RM100m threshold for the application of the aforementioned tax. In any case, each of its jack-up rigs are housed in separate legal entities, and the RM100m threshold is to be measured on per-legal entity basis.

Bumi Armada is unlikely to be affected by the ‘Makmur Tax’, as its floating production storage and offload (FPSO) vessels are all based outside of Malaysia. Most of Yinson’s FPSOs are also based outside of Malaysia, with the exception of the FPSO Helang; we estimate that the FPSO Helang does not earn more than the RM100m threshold for the tax to apply.

Sapura Energy is unlikely to be affected by the ‘Makmur Tax’, as most of its work is outside Malaysia. For its Malaysian business, it may be able to use its carriedforward tax losses to offset any potential taxable profits, in our view.

Dialog is unlikely to be affected by the ‘Prosperity Tax’, in our view, despite our forecast of group pretax profits of RM726m in FY6/22F (RM446m from subsidiaries and RM281m from associates). This is because we expect the individual companies to either generate less than RM100m in pretax profits in the 2022 year of assessment, or for the individual companies to enjoy significant unutilised capital allowances and investment tax allowances that can be used to almost-fully offset taxable profits.

From CIMB report

In our view, the introduction of “Prosperous Tax” should have minimal impact on Malaysian OSAT like Inari-Amertron and Malaysian Pacific Industries (MPI). They still have pioneer tax exemption benefits that will last till 2023 for Inari and 2025 for MPI. However, Unisem could be the most affected by the potential increase in effective tax rate. We estimate the potential increase in tax expense could reduce Unisem’s 2022F EPS by 8-9%.We estimate Unisem derive 40%-45% of its earnings from Malaysian operation. Meanwhile we see muted impact towards Malaysian Automated Test Equipment (ATE) manufacturers given the lower earnings base, below the RM100m threshold set by the government. Overall, the Malaysian OSAT and Automated Test Equipment sector enjoys a relatively lower effective tax rate (vs. statutory tax rate).

EPF is deemed as balance fund. This is jow they managed the fund. FF is net buyer last week

Looking forward FSRU for LNG project...huge market. Armada ald has one. Hopefully the can conclude the may 21 announcement soon

CU is a distribution channel for korea products be it beauty products or others. CU can also increase the FPC utilization rate which can help mynews to weather the losses. Prior to FPC being setting up. Mynews's profit was around 25M without RTE

https://www.gasworld.com/requirements-for-specialty-gases-in-semiconductor-manufacturing/2020964.article

https://themalaysianreserve.com/2021/10/22/infineon-technologies-to-expand-manufacturing-base-in-malaysia/

Patami 1B in 3yrs no doubt

From cimb

Moving forward, we expect MNHB to resume its store expansion drive as the lifting of movement restrictions nationwide enables construction and refurbishment activities to resume. MNHB opened only four CU-branded stores in 9MFY21. We gather that MNHB is looking to accelerate the opening of CU-branded outlets and is hoping to cross the 50store mark by Dec 2021F. It targets to open more than 15 CU outlets in Oct 2021F alone across identified locations in the Klang Valley. The group shared that metrics for the first four stores opened up to 3QFY21 exceeded expectations, and our on-the-ground checks found large crowds for some of the newly-opened outlets, suggesting strong reception and potentially shorter gestation periods for the early outlets.

Accelerating CU store expansion After months of not being able to open new outlets due to the movement restrictions nationwide, MNHB is looking to aggressively resume its CU store expansion rollout. We gather that MNHB is targeting to open c.50 CU outlets by December, after having managed to open only four up to 3QFY10/21. MNHB at its recent analyst briefing also shared that it has secured more than 100 sites nationwide for its CU outlets and targets to have a CU store count of at least 150 stores by end-FY22F. We believe the bulk of the initial store openings will be in the Klang Valley, and will be supported by its own FPC. We think the key store metrics for its CU outlets, such as average revenue per store, gross margin and footfall, greatly outpace those of its existing myNEWS-branded outlets, supported by CU’s novel ready-to-eat (RTE) food offerings.

UOB reports indicate that SOP DY would be around 7% for FY 2021

Only export refined product

https://www.theedgemarkets.com/article/indonesia-plans-stop-all-crude-palm-oil-exports-eventually

Will armada move to green energy also....

Dividend is coming!

KGB does offer construction service under GC

Newbie. Within core biz. A turnkey project including uhp, gc and etc

40m project

82

Malaysia Plantations 12MP: Accelerating the circular economy Opportunity to help green and grow the economy The oil palm sector has a role under the 12MP (2021-2025) to accelerate the circular economy initiatives by turning waste into energy and higher value biomass products while helping to reduce overall GHG emissions. The use of green fuel via higher B30 mandate at the end of 12MP may just be possible if a carbon tax is introduced to provide sustainable funding to the government. Farmers are expected to accelerate the adoption of modern technology (ie smart farming) to raise productivity. Stay POSITIVE on the sector. Top BUYs are KLK, SOP and BPLANT. Biomass and biogas potentials identified On average, ~80 million dry tonnes of biomass were produced annually from oil palm plantations, of which five states, namely Sabah, Sarawak, Johor, Pahang and Perak accounted for 85% of the palm biomass. During the 11MP, a total of 29 biomass-based projects with investments amounting to MYR1.0b were implemented. About 15% of the available biomass was used. The government recognizes the biomass potentials while cognizant of the existing issues and challenges to achieve higher export of biomass-based products. Under the 12MP, a national biomass policy will be formulated as a comprehensive framework to ensure the sustainable development of the industry and unlock its economic potential. And on the renewable energy (RE) front, apart from large hydro and solar projects, focus will now be on increasing the contribution from other renewable sources, such as biomass and biogas (ie generated from palm oil mill effluent (POME) waste). Under the 12MP, a new mechanism for green energy will be explored to encourage corporate consumers to buy energy directly from RE generators to meet their ESG obligations. Carbon tax to help raise biodiesel mandate to B30? To promote greater usage of cleaner fuel, the plan is to raise biodiesel blend for the transportation sector from B15 to B20 (in stages), and eventually to B30 at the end of the 12MP. As for the industry sector, the biodiesel programme will be expanded from B7 to B10. Besides the reluctance of engine manufacturers to warranty the use of B30, the industry was skeptical of the government’s commitment to fund the higher mandate given the wide POGO (palm oil-gas oil) spread (28 Sept: USD641/t). Unlike Indonesia which collects palm oil export levy to fund its B30 mandate, Malaysia lacks similar sustainable funding mechanism. Under the 12MP, a feasibility study will be conducted on carbon pricing, such as carbon tax and the Emission Trading Scheme. A carbon tax may just be the solution to address the biodiesel funding gap. Smart farming – accelerating adoption of technology A dedicated smart farming fund will also be introduced to support the acceleration of modern technology adoption in the agriculture sector. For instance, the application of precision agriculture technology in plantations under FELDA through geospatial information systems will be rolled out to improve operational efficiency. This initiative will enable FELDA to utilise detailed plantation data including tree counts, vacant areas and tree health indicators to optimise resources use.

Olom fpso from 85k bpd to 100K bpd.

https://www.google.com/amp/s/www.oedigital.com/amp/news/490873-eni-brings-online-another-oil-field-in-angola-via-armada-olombendo-fpso

Biodisel part of 12th mp plan.

https://www.google.com/amp/s/www.theborneopost.com/2021/04/13/lee-greater-miri-development-plan-in-the-offing/%3famp

Look beyonds palm oil. Miri estate gonna boom with more development fund going into miri

https://www.klsescreener.com/v2/news/view/884021

A tech company like frontken

Pls check back all my comments for KGB. While many said this not recurring that not recurring over the past

Halal cert is important. The group want 30% of biz from industrial gas. GPM 30% double from other segment.

The group also want to be a bigger player so they will continue to targer bigger project

Firing on all cylinders China operation has been uninterrupted despite the rise in recent Covid-19 cases. SMIC, which currently makes up c.25% of its outstanding order book, is on track to have all its work completed by end-2021. Elsewhere, KGB is currently tendering for a separate fab expansion contract, and will look forward to tender for the 2022 hook up package to replenish its order book from SMIC. Malaysia operation (which accounts for 30% of revenue) was the most impacted in the recent concluded 2Q21 results, seeing a 14% YoY revenue decline. With the relaxation in lockdown measures, its Malaysia operation is now running at 100% capacity since late August and should see revenue normalise in 4Q21.

We estimate the LCO2 plant utilisation to rise to 75% in 2022 through securing 1-2 MNC clients in the F&B industry KGB has successfully secured the halal certification from JAKIM after much delay due to the Covid-19 outbreak affecting its application process. KGB had intended to secure the certification last year, in time to negotiate with potential MNC customers upon the expiry of its contract with their current supplier, Linde. However, we gather that a couple of its F&B customers have already signed a renewed 3-year contract with Linde which could complicate a potential offtake agreement. Nevertheless, management remains confident that MNCs will resort to using dual suppliers to mitigate the single supplier risk. We believe that KGB can achieve an average 75% utilisation rate in 2022, and the need to expand into a second LCO2 plant in 2023 could be a re-rating catalyst. We have yet to factor in the second plant’s contribution into our forecasts.

3/9/21
Kelington (KGRB MK) BUY (maintain) Price Target: RM1.50 Up/Downside: +13% Previous Target (Rating): RM1.42 (BUY) The year has yet to end  Kelington’s (KGB) outstanding order book has grown to RM402m while its tender book stands at a record RM1.5bn  China and Singapore operations are running at optimum efficiency. Malaysia operation has resumed 100% capacity since August 2021 following the easing of the lockdowns  We raise our 2022-23E earnings by 3-6% imputing a higher contract replenishment. Reiterate BUY rating with a higher target price of RM1.50 Expect some contracts to materialise from its RM1.2bn tender book KGB has secured a total contract value of RM264m in 8M21, representing 54% of the wins last year and bringing the current outstanding order book to RM402m. Its prospective tender book has hit a record high of RM1.5bn (from RM900m as of end December 2020) in August. We gather that the tender results for a few of the Ultra High Purity (UHP) bids are expected to be finalized by end-2021, which could help with KGB’s 2022 earnings. Taiwan (which make up small 2% of order book) has gained traction lately after securing contracts worth <RM10m. The UHP segment will continue to be the main earnings growth contributor moving forward. Secured halal certification for its LCO2 plant The utilisation rate for the liquid carbon dioxide (LCO2) plant fell to 40% in 2Q21 (1Q21: 60%) as both domestic and export market demand weakened. Domestic construction activities were halted amid the lockdown measures, and border restrictions have affected export sales. With the recent resumption of economic activities, the plant utilisation has returned to the 50-55% level. KGB has received approval for its halal application from JAKIM, which is a positive moving forward as it would allow KGB to start marketing its product to larger F&B MNC clients.

Affin hwang reports dated 3/9

KGB has received
approval for its halal application from JAKIM, which is a positive moving forward as
it would allow KGB to start marketing its product to larger F&B MNC clients.

Osat not ems. Their esg compliance very high especially inari.

Shared the reporr link in klsescreener. Tq

In a solid balance sheet
position
Undervalued. BUY!
While SOP has revised down its FFB output guidance for FY21E, it is still
anticipating better HoH output in 2H21. And SOP will likely continue to
enjoy the high CPO ASP thus far in 2H21 given its minimal forward sales.
We are keeping our earnings forecasts, and TP of MYR5.80 on unchanged
14x FY22E PER peg, its 5Y mean. It trades at just 8x FY21E PER and
unadjusted EV/ha of MYR28,000 (near replacement cost). BUY.
Briefing takeaways
We hosted a briefing for SOP last week. Key takeaways: (1) SOP has
minimal forward sales. It will continue to reap the benefits of high spot
CPO prices presently; (2) FY21E’s FFB output target is now revised down
to 1.25m-1.30mt (MKE: 1.32mt) from 1.40mt due to shortage of
harvesters. This revised forecast translates to 1H:2H output ratio of 47-
49:51-53; (3) Overall, SOP is experiencing a 30-35% shortage in workers;
(4) It has decided to stop its replanting plan for 2021 (2020: 419 ha) to
capture the high CPO ASP; (5) SOP expects to be in a net cash position by
year end (June-21: 6% net gearing); (6) With improving balance sheet
and limited capex planned (FY21E: MYR100m-150m), it will likely
establish a dividend policy soon to reward shareholders; (7) Downstream
margins will be more challenging in 2H21 compared to 1H21.
Major shareholder has further raised its stake to 46%
SOP’s major shareholder, the Shin Yang Group, has further raised its
stake to 46.4% in Apr 2021 (May 2020: 45.3%; Mar 2019: 43.3%) whereas
the State Government of Sarawak has maintained its 2nd spot at 28%.
SOP is clearly undervalued
Although we doubt there is any impending plan to privatise SOP, the
gradual accumulation of stocks by the major shareholder is a testament
of SOP’s undervaluation. We believe the formulation of a generous
dividend policy will help to re-rate SOP’s equity value over time. The
market is currently attaching zero value for the property development
potential of its 4,858ha Taniku Estate, located at the fringe of Miri city.

Sarawak plantation no where near SOP. SOP is an intergrated plantation company. When CPO hit 2900 3000 theu can still make 250M and above. Looking at this number. SOP is rank no 6 in plantatiom industry. So its about whether who want to drive this stock price

What to do enning22.

Globalfoundries awarded 45M to KGB in Aug21. Now another 49M to KGB. More to come

Key takeaways(cimb)
● The group attributed the lower qoq sales from RF division in 4QFY6/21 mainly to lower
workforce availabilities, which were capped at 60% during the full movement control
order (FMCO) implementation in Jun 21. However we expect a stronger qoq RF
division performance in 1QFY6/22F, in view of higher workforce availabilities, given
that Penang has moved into Phase 2 of the national recovery plan on 7 Jul 2021,
which allows the group to operate with a higher 80% workforce capacity. In addition,
management highlighted that over 90% of its workforce in Malaysia has completed two
doses of Covid-19 vaccine as at early-Aug 2021.
● We expect a higher contribution from value-added processes, such as electromagnetic
(EMI) shield coating for the RF division, in FY22F, following positive feedback from
Inari’s customer. The group expects a higher percentage of RF chips to undergo EMI
shield coating process in FY22F. Inari is allocating RM100m capex in FY22F, mainly
for three new system-in-package lines, eight EMI shield systems and wafer processing
equipment.
● The group is upbeat about the new integrated system for its module division at P55, a
new 50k sq ft 5-storey building extension, located next to P13 in Bayan Lepas. The
group is preparing for the pilot line to qualify for assembly and testing of automotive
power module for a new US customer. We estimate this could be a new growth engine
for Inari — contributing 15% of the group’s revenue within the next three years.

KGB warrant has 5 years duration vs 3 years
KGB is building their recurring incomes which is why funds are into it

“Semiconductor players will always be our major clients. What we love about semiconductors is that the industry has to keep expanding as technology evolves. It is not the typical manufacturing industry where you build a factory and it could last for 20 years. For semiconductor firms, they have to keep investing in new wafer fabs, which means more projects for us. It is like a forever sunrise industry, because we are always chasing them,” says Ong.

Different production line will require different hook up to support

Its about technology changes or production line expansion both required UHP...whenever there is a change in product due to different process new UHP will come in

M&A + organic....sizeable...double top and bottom line

Dawchok...u play again after 7min