Malaysia stock market and companies daily report

Deal Off For AirAsia-MAS Share Swap?
At the request of the companies, shares of AirAsia and Malaysian Airline System (MAS) have been suspended for trading this morning due to a ‘pending material announcement’. This heightened speculation that the proposed MAS’ US$364 million (RM1 billion) share swap with AirAsia is falling off the cliff. In recent weeks, speculation is rife that a deal-off is near the edge as it has encountered strong resistance from the 20,000-strong MAS union. The labour group fears that the deal is akin to a takeover by AirAsia, and is particularly unease with its founder Tan Sri Tony Fernandes and his brand of aggressive cost cutting. A source with direct knowledge noted that MAS would soon announce the cancellation of the deal.
Significance: MAS reported its worst ever results in February – a RM2.5 billion loss in FY11 – despite earlier restructuring efforts. The share swap proposal was floated in hopes to regain its lost competitiveness and help both carriers to compete against rivals like Tiger Airways and Singapore Airlines once the Southeast Asian open-sky policy comes into effect in 2015.

Scomi Engineering Eyes Oil And Gas Business In Brazil
Scomi Engineering, an integrated monorail system provider and oilfield services provider to the oil and gas industry, is looking beyond monorail projects in Brazil and has set sights on the oil and gas business of the country. The company has already two monorail projects in Brazil – in Sao Paulo and Manaus worth a combined RM5.2 billion – and is eyeing for its third that is estimated to be worth RM2.5 billion. According to Scomi Brazil country president Hilmy Zaini Zainal, the company has been exploring oil and gas opportunities in Brazil in the last one year. Though the company has no firm up undertaking, it is hopeful that due diligence that will complete within the next few months would help to decide the best partners for its venture.
Significance: Scomi Engineering highlighted that its next phase of growth in Brazil is the oil and gas segment. It intends to target oil and gas operators as well as drilling contractors in Brazil, and discussions are underway to set up a blending plant to develop the right fluids for the market.

Felda Global Boosting Productivity To Grow Earnings
Felda Global Ventures Holdings (FGVH), the soon to-be-listed plantation company that filed its draft prospectus with the Securities Commission last week, will be boosting its productivity to grow its earnings. Slated for listing by the end of June, the company is expected to garner a market capitalisation of RM18 billion and raise proceeds of over RM12 billion. According to sources, half of the company’s 355,846 hectares of oil palm estates are past their prime at over 25 years old while another 17 percent are at their prime production between 20 and 25 years old. Together, these estates contribute approximately 85 percent of its net profit last year and their contributions are expected to grow in view of the planned replanting. Specifically, the company intents to harvest productivity gains by using its award-winning Yangambi oil palm seeds, which can boost oil extraction rate to 23 percent from the current 20 percent.
Significance: OSK Research noted that 52.8 percent of FGVH’s planted oil palm areas will have to be replanted in the immediate future up to the next five year – this represents a significant avenue for productivity gains and in turn a boost to its earnings. On its initial public offer, the house opined that a 12 to 13 times price earnings is achievable and issued a ‘Neutral’ recommendation.