Maybank Investment Bank Issues 8 New Call Warrants
Kuala Lumpur, 15 January 2014 – Maybank Investment Bank Berhad (“Maybank Investment Bank”) is issuing eight new European style cash-settled call warrants (“CW”) over ordinary shares of Berjaya Corporation Berhad (“BJCORP”), Genting Malaysia Berhad (“GENM”), Genting Berhad (“GENT”), Hartalega Holdings Berhad (“HARTA”), Kossan Rubber Industries Berhad (“KOSSAN”), Magnum Berhad (“MAGNUM”), Supermax Corporation Berhad (“SUPERMX”) and Top Glove Corporation Berhad (“TOPGLOV”). The warrants will be listed on Thursday, 16 January 2014 with an issue size of 100 million each.
This tranche focuses on the gaming and rubber glove manufacturing segment. Gaming remains an attractive sector due to its resilient nature. With the Malaysian government announcing year 2014 as a Visit Malaysia Year (VMY2014), gaming operators with tourism industry exposure are expected to benefit from the increased tourist arrivals. Four of the underlyings for this Tranche are rubber glove manufacturers as they are expected to benefit from more competitively-priced products in international markets with the recent moves in the USD/MYR exchange rate.
HARTA’s new production plant in Sepang is expected to begin operations in September 2013 and increase production capacity by 15% over eight years. RM1.9 billion has been budgeted for the new facility.
KOSSAN has been loss-free since 1980. Its consistently strong operating performance is one of the attractions of this manufacturer. For financial year 2014, KOSSAN is expecting to expand glove production capacity to 27 billion pieces by end 2014.
SUPERMX has an annual production capacity of 17.6 billion pieces. SUPERMX will be involved in Glove City and Supermax Business Park projects to increase production capacity.
TOPGLOV is the world’s largest latex glove manufacturer with annual production capacity of 43.9 billion pieces.
Maybank Research believes that the RM5 billion rejuvenation plan of Resort World Genting and the historical correlation between the number of rooms and revenue will be the key earnings drivers. As for GENT, Maybank Research has a HOLD call due to the uncertain outlook of Genting Singapore (GENS) and potential overhang in shares as the warrants are deep in the money. A potential re-rating for GENT would be a casino license for GENS in Japan.
MAGNUM and BJCORP have been beaten down in December 2013 and January 2014 respectively due to uncertainty of the effect of the NFO sector. BJCORP is a holding company which holds a major stake in Berjaya Sports Toto (BST). These are opportunities to collect on any surprise catalyst for the sector.