♦ We met up with Muda’s management recently. Key takeaways from the
meeting are:
♦ New expansion plan for its Kajang mill. The company is embarking on an expansion of its Kajang paper mill, which will increase capacity by 140,000 tonnes, from 155,000 tonnes currently. Total capex for this new expansion is approximately RM180m, of which RM60m has been spent so far. The management expects the new plant to be fully operational by 4QFY10. The company plans to finance the remaining capex via internallygenerated funds and borrowings. According to industry sources, Malaysia
consumed 1.1m tonnes of medium and test liner paper in 2009, of which 23% was imported from countries like Thailand, Indonesia and Taiwan. The management believes that with the new expansion plan, the company would be able to replace the imports by leveraging on its past track record, expanded capacity, quality of its services and pricing of its products.
Muda Holdings Berhad : New Paper Mill Plant To Boost Capacity By 47.4% - 7/5/2010
Showing posts with label Muda Holdings. Show all posts
Showing posts with label Muda Holdings. Show all posts
Friday, May 7, 2010
RHB Equity 360° - 7 May 2010 (Timber, Unisem, Sime Darby, Muda, MISC; Technical: Faber)
Top Story : Timber – Highlights from timber conference
Sector Update
♦ We recently hosted a Timber and Furniture Day with management from Samling Global/Lingui and WTK.
♦ Low inventory in Japan is shoring up selling prices in near term. There is a risk that the Japan market could remain weak in the near term, unless construction activities start picking up more aggressively.
♦ In the medium to longer term, given that Japan’s housing starts are at such a low level, downside risk in sales volumes would be relatively limited.
♦ Cost of production is on a rising trend, mainly due to higher logging costs, caused by higher fuel, labour and machinery costs but would be offset by rising economies of scale, given the high fixed costs involved.
♦ We reiterate our Outperform call on WTK based on unchanged fair value of RM1.55 (14x CY10 EPS).
♦ We also derive Lingui’s fair value of RM0.80 based on 14x CY10 consensus EPS. However, we note that consensus numbers may not have factored in the potential upside from the rising plywood prices. There is also a possibility of privatisation by Samling Global which could generate further interest in the stock.
♦ Maintain Neutral call on timber sector.
RHB Equity 360° - 7 May 2010 (Timber, Unisem, Sime Darby, Muda, MISC; Technical: Faber)
Sector Update
♦ We recently hosted a Timber and Furniture Day with management from Samling Global/Lingui and WTK.
♦ Low inventory in Japan is shoring up selling prices in near term. There is a risk that the Japan market could remain weak in the near term, unless construction activities start picking up more aggressively.
♦ In the medium to longer term, given that Japan’s housing starts are at such a low level, downside risk in sales volumes would be relatively limited.
♦ Cost of production is on a rising trend, mainly due to higher logging costs, caused by higher fuel, labour and machinery costs but would be offset by rising economies of scale, given the high fixed costs involved.
♦ We reiterate our Outperform call on WTK based on unchanged fair value of RM1.55 (14x CY10 EPS).
♦ We also derive Lingui’s fair value of RM0.80 based on 14x CY10 consensus EPS. However, we note that consensus numbers may not have factored in the potential upside from the rising plywood prices. There is also a possibility of privatisation by Samling Global which could generate further interest in the stock.
♦ Maintain Neutral call on timber sector.
RHB Equity 360° - 7 May 2010 (Timber, Unisem, Sime Darby, Muda, MISC; Technical: Faber)