More To SCORE
Company Update
We hosted a group visit to CMS’ operation in Samalaju. Its OMS is now at progressive commissioning stage and its phosphate project under MPA is making good progress – both are set to enjoy attractive power tariffs at SCORE. We expect its property development in Samalaju to reach a larger scale and be completed earlier than expected. Maintain BUY with a higher SOP-based TP of MYR5.00, implying a 16.6% upside.
SKP Resources (SKP MK, BUY, FV: MYR0.85)
A Synergistic Acquisition
Company Update
SKP, which was suspended on Monday, has proposed to acquire three of Tecnic’s operating companies for MYR200m. Maintain BUY. Following the earnings upgrade from the proposed acquisition, we raise our TP to MYR0.85 (from MYR0.75), pegged to a FY16 P/E of 11x, a 21% upside. We are positive on the acquisition as it enables SKP to consolidate its position as a leading plastic component manufacturer.
Economic Highlights - Fuel Prices Hike Causing Upward But Manageable Pressure On Inflation (Published 2 Oct 2014)
The Government raised the retail prices of RON95 petrol and diesel by 20 sen each to MYR2.30 and MYR2.20, respectively, effective 2 Oct 2014. We expect inflation pressure to hold up in 4Q, but the impact will likely be more muted due to the higher base effect in 4Q of 2013. We now expect inflation to come in at the higher end of our forecast of 3.0-3.4% in 2014, compared with +2.1% in 2013. Our forecast, made earlier in the year, has already factored in expectations of another round of fuel price hike. We continue to expect the OPR to be kept at 3.25% for the rest of the year.
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