Firms gain from buoyant industry, property projects

Firms gain from buoyant industry, property projects



By SUSAN TAM

PETALING JAYA: The buoyant oil and gas industry and significant property developments in east Malaysia have benefited stocks like Muhibbah Engineering Bhd and Suria Capital Holdings Bhd.

In a recent report, Standard & Poor’s (S&P) said Muhibbah was reaping the benefits from the spillover effects from a buoyant oil and gas sector, the global shortage of vessels and the increasing need to replace old vessels.

The company’s order book has risen to RM3.3bil to-date, with RM322mil from its shipbuilding division. S&P said the company’s total order book of RM3.3bil was 134% higher than orders of RM1.4bil recorded at the end of last year.

“We assume that Muhibbah will clinch an additional RM2bil worth of contracts over the next two years,” it said.

S&P is revising upward its net profit forecast for Muhibbah by 17% and 18% for 2007 and 2008 respectively due to the positive sentiment in the shipping sector.

Port operator Suria Capital Holdings Bhd is attracting investor interest as it is benefiting from significant property developments and recently approved special tax incentives.

The property developments included the Brunei-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) and the Jesselton Waterfront project, Aseambankers said a recent report.

Aseambankers said Suria Capital, through Sabah Ports, operates eight ports in Sabah and would benefit from the commissioning of the new Sapangar Bay Container Port last month.

“This allows Sabah Port to capture a sizeable amount of transshipment trade from the BIMP-EAGA,” it added.

The investment bank also said the Jesselton Waterfront project, with a gross development value of RM1.5bil, could contribute some RM225mil to Suria Capital’s net profit.

Aseambankers said Suria Capital’s net profit this year was estimated to increase by 57% due to a recently approved special tax incentive for its ports operation. It is also to receive a tax refund of RM32mil while its port earnings will be exempted from tax for the next 10 to 15 years.

An industry observer said that steady growth was also seen for other ports.

“The sentiment on local ports is bullish. With consistent growth, the Third Industrial Master Plan’s target of 36 million 20ft equivalent units (TEUs) should be achieved in the next decade or so,” he said.

Last year, Malaysia's ports handled container throughput totalling 13.6 million TEUs.

Recent reports stated that Westport and Northport in Port Klang were expected to achieve the targeted seven million TEUs this year.

Westport is expected to contribute 4.2 million TEUS, with the remainder from Northport, based on estimates given by Port Klang Authority chairman Datuk Chor Chee Heung