RHBInvest Research

Top Story: Plantation – CPO stocks cross the 2m tonne mark Neutral

Sector Update

¨ Malaysia’s CPO production was relatively flat on a mom basis in June, rising just 0.7% mom, while exports rose by a larger 12.4% mom. On a yoy basis however, the recovery was very much stronger, as production rose by 23.5% yoy, while exports rose by 9.5% yoy. Despite the smaller mom increase in production vis-à-vis exports, closing CPO stock levels rose 6.8% mom to 2.05m tonnes in Jun (from 1.92m tonnes in May)s



Sector Call



Oil & Gas: A merger of two giants Overweight

Sector Update

¨ Sapuracrest and Kencana announced yesterday that Integral Key Sdn Bhd (IKSB), a special purpose company, has made an offer to merge the two companies via an acquisition of their entire businesses and undertakings for RM5.9bn and RM6.0bn respectively. The proposal involves: 1) share swap of Sapuracrest and Kencana shares into new IKSB shares; and 2) cash payments. The offer is open until 15 Aug.



Utilities: No immediate catalysts Neutral

Sector Update

¨ Despite a volatile political landscape, the Government has pressed ahead with two out of three industry reforms: 1) reduction of subsidies for natural gas; and 2) a formal fuel cost pass-through (FCPT) formula.

¨ With these factors already largely priced into TNB’s stock price, we believe the market is watching closely the trend of coal prices and the implementation of the FCPT formula.



Corporate Highlights



KFC Holdings: Buying land in Bandar Dato’ Onn for RM9.1m Market Perform

News Update

¨ KFCH announced that it has entered into a SPA with JLand for the purchase of a piece of freehold vacant commercial land measuring 135k sf located within Bandar Dato’ Onn, Johor, for RM9.17m which translates to RM68 psf.