Are Dividend Investors Making A Mistake With Dutch Lady Milk Industries Berhad

QoQ. Top line gained 8% to RM16.7m driven by expansions recorded by electronic transaction processing (ETP) and solution & services’ (S&S) with growths of 30% and 65%, respectively. This was partly offset by EDC’s contraction of 16%. Core net profit inched up by 4% to RM2.9m thanks to higher contribution from high-margin products and lower D&A as the expected useful live of software was increased from 2-3 years to 5 years, matching industry norm.

Downgrade to market perform with a higher target price (TP) of RM2.75: We downgraded Dayang Enterprise Holdings Bhd to a “market perform” rating, albeit with a higher sum-of-parts TP of RM2.75, from RM2.35 previously, upon an earnings upgrade, implying a price-earnings ratio of 15 times on the financial year ending Dec 31, 2020 (FY20E).

Genting Malaysia (GENM) with an Outperform rating and a target price (TP) of RM3.75. Despite the company’s margins performing below their structural potential, MQ Research sees a lot of opportunities in the longer-term and is positive on GENM, and believes that the company is focused on rebuilding investors’ confidence, which reduces near-term risks.

TDM Bhd plans to buy a 70% stake in THP-YT Plantation Sdn Bhd from TH Plantations Bhd (THP) for RM7 million to expand TDM's oil palm plantations in Terengganu.

London Biscuit (Trading Sell, TP: RM0.12): London Biscuit defaulted a payment of RM5.06m to KFH (Malaysia). The default of the payment was on 23rd Aug 2019. (Bursa)

Comment: This comes as no surprise given its two earlier defaults. Cumulative amount in arrears is now RM183.6m. With severe cash flow constraints cited in its recent announcement, it will impact repayment of outstanding debts moving forward, hence the likelihood of more defaults ahead. Our Trading Sell call on LBB Is retained.

To recap, on Nov 21, Ekovest announced that its subsidiary, Timur Terang Sdn Bhd, had entered into a conditional sales and purchase agreement (SPA) with Iskandar Waterfront Holdings Sdn Bhd (IWH) to acquire parcels measuring 36.81ha in Danga Bay for a total of RM1.05 billion.

Upgrade to BUY with a revised TP of RM1.49

Property losses. We understand that completion of the Star Tower and the remaining 3 blocks could take longer than expected with the initial target now being pushed back to 1H2020. We are disappointed by the delay but believe that it is adequately discounted for in our forecasts. Unbilled sales as at 3QFY19 stood at RM115m (from RM121m a quarter ago). Loss at property development was RM17.9m; mainly due to the LAD provided and lower rental income during the quarter. Separately, occupancy at the Evolve Concept Mall remains at 85%, though up from 62% in 1QFY19 with recent signing of an anchor tenant which took up 154k sf.

China-based footwear manufacturer Xidelang Holdings Ltd’s net profit for the third quarter ended Sept 30, 2019 (3QFY19) rose 39.3% to RMB8.33 million (RM4.94 million) from RMB5.98 million a year ago, on higher average unit selling prices.

Its earnings per share improved to 0.46 sen from 0.34 sen for 3QFY18, according to the company’s filing with Bursa Malaysia.

Revenue was flat at RMB121.39 million from RMB120.26 million.

It posted a net loss of RM167,000 for 1QFY20 compared with a net profit of RM1.98 million a year ago. As a result, it posted a loss per share of 0.02 sen compared with an earnings per share of 0.2 sen a year ago.

Revenue for the quarter, however, rose 3.9% to RM95.73 million from RM92.16 million in 1QFY19, thanks to contribution from the sexual wellness segment which grew by 5.1% year-on-year due to stronger condom sales from the commercial and own brand segments.

The Malaysia-based international offshore energy facilities and services provider posted a net loss of RM2.3 billion in financial year ended Dec 31, 2018, compared to a net profit of RM352.25 million in the previous year.

Bursa Malaysia-listed engineering solutions provider, Pansar Berhad (Pansar) registered a net profit of RM3.6 million for the second quarter ended September 30, 2019 (2QFY20), which is 187 per cent higher than RM1.25 million posted in the same period last year.

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Shares in JKG Land Bhd rose 12.5% in active trade this morning after the company’s net profit for the third quarter ended Oct 31, 2019 surged to RM3.03 million from RM705,000 a year earlier.

Revenue Group Bhd, whose first-quarter net profit jumped more than 50%, is not resting on its laurels.

The cashless payment solutions provider plans to further deploy its all-in-one digital payment terminals for the current financial year ending June 30, 2020 (FY20).

Entitlement description, BONUS ISSUE OF UP TO 250,000,000 NEW ORDINARY SHARES IN Mi TECHNOVATION BERHAD

Its revenue contracted a marginal 2.8% to RM475.37 million from RM488.84 million, on lower contributions from its property developments which were at their early stages of construction, the group said in a stock exchange filing yesterday. Revenue from its plantation and downstream manufacturing segments, however, improved year-on-year mainly on higher fresh fruit bunch (FFB) production and an improved sales volume of derivative palm products.

Overall, we continue to like Dayang with it being a prime beneficiary of Petroliam Nasional Bhd’s (Petronas) increased upstream activities, giving it a very exciting earnings outlook. We are looking towards Petronas’ upcoming activity outlook report (expected to be released in one to two months) for further assurance of job flows.

The earnings improvement came despite an 18% drop in quarterly revenue to RM716.31 million from RM870.34 million, due to lower palm products' average realised prices and lower volume of palm products sold.
For the first nine months of FY19, its net profit fell 25% to RM40.93 million from RM54.33 million last year, as revenue fell 20% to RM2.05 billion from RM2.55 billion.

Kumpulan Powernet Bhd (KPower), which is looking to diversify its business portfolio, is targeting an order book of RM1 billion from the energy and utilities, as well as infrastructure and logistics sectors.

The group just landed a RM254.32 million project from Signvest Sdn Bhd to build sewerage treatment facilities and a 12-floor green building here. The project is part of its plan to venture into a new business area, said KPower in a stock exchange filing yesterday, adding that it will be seeking shareholders approval for the diversification.

Magni-Tech likely to benefit from the coming Tokyo Olympics

Dayang Enterprise Holdings Bhd posted one of its stronger (if not the best) quarterly results for the third quarter ended Sept 30 of financial year 2019 (3QFY19), with a core net profit of RM96.1 million (arrived at after stripping off non-recurring items such as gains on bargain purchases, unrealised foreign exchange and so on), bringing its cumulative nine months of FY19 (9MFY19) core net profit to RM144.4 million, exceeding expectations at 99% of our and 108% of consensus full-year earnings forecasts. The better-than-expected earnings were due to strong offshore topside maintenance service (TMS) work orders and high utilisation of marine vessel charters. No dividends were announced as expected.

“Nonetheless, the increasing e-commerce demand will lead to more spending and activities which will ultimately require more packaging services,” the analyst told TMR.

Among the companies expected to benefit from the e-commerce market, both locally and globally, are plastic packaging manufacturers Scientex Bhd and Thong Guan Industries Bhd, and paper packager Master-Pack Group Bhd.

Shares in these companies have already made significant gains this year, supported by strong corporate earnings and lower raw material costs.

Continued e-commerce growth is also providing a bullish outlook for the packaging industry despite lingering global trade risks.

The type of packaging product to be used, be it BOPP (biaxially oriented polypropylene) film or corrugated paper cartons, will depend on the use-case, costs and branding purposes, not to mention environmental considerations.

Packaging companies are only one segment of the economy to benefit from the expanding e-commerce market which is quickly establishing itself as an integral part of the Malaysian and global economies.

Ornapaper’s net profit grew 68% year-on-year to RM3.44 million for the third quarter ended Sept 30, 2019, attributed to lower raw material cost. Its revenue for the quarter fell 7.5% to RM81.25 million from RM87.81 million.

For the cumulative nine months, its net profit rose 21% to RM7.89 million from RM6.53 million. Its revenue fell 6% to RM240.67 million from RM256.12 million. Ornapaper is trading at 0.44 times its net asset value.

HeiTech Padu Bhd will be teaming up with Indonesian company PT Kirana Investama Nusantara (PT KIN) to set up a joint venture company in Indonesia to explore business opportunities there, including the development and deployment of a syariah compliance cooperative system.

In a stock exchange filing today, the company said the cooperative system or Baitulmal Wat Tamwil, will earn revenue on a transactional basis.

Allianz Malaysia Bhd’s net profit jumped 43% to RM142.81 million for the third quarter ended Sept 30, 2019 (3QFY19), from RM99.88 million in the previous year’s corresponding quarter, mainly contributed by its life insurance segment.

Jaya Tiasa’s shares experienced a sell-off in the middle of this year, as it posted its second consecutive loss-making financial year in the period ended June 30, 2019 (FY19).

FY19 net loss widened to RM275.65 million from RM80.16 million, while revenue dropped 24.23% to RM637.74 million from RM841.69 million, no thanks to wider losses and lower top line from both its palm oil and timber operations.

Widad Group Bhd is planning to take over Menang Corp (M) Bhd’s concession, which is housed under the latter’s 71%-owned unit Inovatif Mewah Sdn Bhd, on management and maintenance of UiTM Seremban 3 campus in Negeri Sembilan for RM122 million cash.

MCT Bhd Says Qtrly Net Profit 18.4 Mln RGT

Dufu Technology Corp Bhd’s net profit shrank 23.5% to RM14.78 million for the third quarter ended Sept 30, 2019 (3QFY19), from RM19.32 million for the same period last year, due to lower realised foreign exchange (forex) by RM1.6 million.

Genting Plantations Bhd (“buy”; TP: RM11.18)

MyEG said the launch of the service is the realisation of a partnership between MYEG Philippines and Land Bank, which entails the implementation and integration of MYEG Philippines' Electronic Payment and Collection System by Land Bank.

As the official depository bank of the Philippines and a fully government-owned entity, Land Bank has more than 400 enrolled merchants, comprising national government agencies, local government units, as well as private enterprises.

ASTRO Malaysia Holdings Bhd might see a decline in subscriptions revenue in the second quarter of financial year 2020 (2QFY20) despite higher pay-TV churn rate.

UOB Kay Hian Securities (M) Sdn Bhd, in a report on Wednesday, noted that the decline would be due to the premiumisation on its subscriber base and piracy.

The rationalisation of Astro’s customer base is still ongoing but is expected to see further subscription revenue decline in the next two quarters, the brokerage added.

Astro’s premiumisation involves revamping its pay-TV customer base and service to focus on highvalue premium customers.

DUTCH Lady Milk Industries Bhd (Dutch Lady Malaysia), whose share price has fallen 6% so far in 2019, warns that its profits could take a hit in its financial year ending Dec 31, 2019 (FY2019) because of rising raw milk prices and a weaker ringgit against the US dollar.

“This year is going to be tougher in terms of profitability on rising raw milk prices and fluctuation in foreign exchange (forex) rates. However, the biggest yardstick for us now is that we are able to drive more volume,” says Dutch Lady Malaysia managing director Tarang Gupta.

Hong Leong Bank Bhd (HLB), via its subsidiary Hong Leong Bank Vietnam (HLB Vietnam), has launched its mobile banking platform, HLB Connect, in Vietnam, which enables customers to enjoy fee-free financial services and shop for e-vouchers in a single platform.

The mobile banking platform takes only two steps to sign up, and comes with a ready-to-use Visa virtual pre-paid card, HLB said in a statement today.

On top of that, upgrading to a savings account is also done in HLB Connect, so customers would not have to step into a branch while the physical Visa debit cards will be delivered to them, it said.

Jaks Resources is due to reveal its 3QFY19 earnings figure by the end of the month. The investing fraternity is waiting to see whether the construction firm's 3QFY19 performance is equally good.

The corrugated paper packaging producer’s net profit jumped 171% to RM3.48 million in the second quarter ended June 30, 2019 (2QFY19), from RM1.28 million a year ago, as it records higher revenue following a surge in demand from existing customers.

Revenue grew 54.16% to RM50.56 million from RM32.8 million. The group has paid an interim dividend of two sen per share amounting to RM1.09 million for FY19.

JAKS Resources Bhd’s net profit jumped almost 200% for the April through June 2019 period, fuelled by overseas and local contracts, and the engineering company expects its financials to be positive for the balance of the year.

Net profit for the second quarter (2Q) ended June 30, 2019, rose 193% year-on-year (YoY) to RM37.2 million from RM12.7 million recorded in the same quarter a year ago as the company construction segment delivered earnings growth.

Tex Cycle Technology (M) Bhd is targeting to kick-start the operation of its first waste-to-energy plant in the UK by end-2020.

The plant is estimated to cost about £5 million (RM25.83 million), and to generate 20% of the company's net profit after it commences operations, said its chief financial officer Geraldine Hii Siaw Wei.

RCE Capital Bhd - up eight sen to RM1.70

The list of stocks with momentum is generated using a proprietary mathematical algorithm highlighting stocks with a build-up in trading volume and price. The algorithm differentiates between stocks that exhibit positive (+ve) momentum and negative (-ve) momentum.

This list is not a buy or sell recommendation. It merely tells you which stocks are seeing higher than normal volume and price movements.

SP SETIA Bhd’s net profit jumped 67.1% year-on-year (YoY) to RM108.93 million in the third quarter ended Sept 30, 2019 (3Q19), from RM65.19 million a year ago, contributed by a RM37.8 million foreign-exchange (forex) gain.

Sin Heng Chan (Malaya) Bhd (SHC) is selling a tract of land in Melaka for RM14.39 million.

The group said it was selling the 2.4ha leasehold plot to Sumber Setiamas Sdn Bhd for a gain of RM4.6 million.

Proceeds from the sale would be utilised to finance its day-to-day operations, as well as pare down its borrowings

Cycle & Carriage Bintang Bhd’s (CCB) shares surged 29.46% this morning after its controlling shareholder Jardine Cycle & Carriage Ltd (Jardine CCL) proposed to the board to undertake a selective capital reduction and repayment (SCR) at RM2.20 per share.

At 9,02am, CCB rose 38 sen to RM1.67, valuing it at RM168.24 million.

Magni-Tech likely to benefit from the coming Tokyo Olympics

Favelle Favco Bhd has bagged nine supply contracts worth a total of RM77.2 million.

The group announced in a stock exchange filing today that the contracts are for the supply of tower cranes, offshore cranes, programmatic logic controller system, as well as hardware upgrading.

The contracts were awarded to its wholly-owned Favelle Favco Cranes Pty Ltd, Favelle Favco Cranes (M) Sdn Bhd, Favelle Favco Cranes Pte Ltd and Exact Automation Sdn Bhd.

Revenue for the quarter ended Sept 30, 2019 was flat at RM5.61 billion against RM5.62 billion previously, according to the bank’s filing with Bursa Malaysia.

Net profit for the first nine months of the year was down 1.9% at RM4.11 billion against RM4.19 billion in the same period last year, while revenue rose 2.3% to RM16.78 billion from RM16.41 billion.

PLANTATION counters are likely to record a weaker year-on-year (YoY) financial performance in the third quarter of 2019 (3Q19) due to price volatility of crude palm oil (CPO) and palm products

Kumpulan Powernet’s offer ‘fair’ as stock rally continues

Hartalega Holdings Bhd’s net profit eased 13.6 per cent in the second quarter (Q2) ended September 30, 2019 to RM103.87 million from RM120.22 million a year ago.

In a filing to Bursa Malaysia, the nitrile glove manufacturer said this was mainly due to lower average selling price and higher packaging and natural gas cost.

Its revenue in the same quarter eased 0.7 per cent to RM709.42 million from RM714.24 million due to to lower average selling price.

For the six month period, Hartalega’s net profit dropped 19.2 per cent to RM197.93 million from RM245.09 million, while its revenue decreased five per cent to RM1.35 billion from RM1.42 billion.