AmBank (M) Berhad (“AmBank”) is issuing five new European style cash-settled structured call warrants (“CW”) over the ordinary shares of AirAsia Berhad (“AIRASIA”), Pos Malaysia Berhad (“POS”), DRB-Hicom Berhad (“DRBHCOM”), Dutch Lady Milk Industries Berhad (“DLADY”) and NCB Holdings Berhad (“NCB”). The structured warrants will be listed for trading on 22 January 2013, via the market making method, with issue size of up to 100 million each and tenures of approximately 12 months. The Bursa stock short names for the five CWs are AIRASIA-C2, POS-CJ, DRBHCOM-CW, DLADY-CA and NCB-CA.
“The FBMKLCI continues to hover near recent record highs as investor sentiment remains positive on the back of positive Chinese trade data and US quarterly earnings results to date. The Chinese government reported better than expected trade data for December 2012 as export and import figures came in higher than consensus estimates.
US fourth quarter earnings to date have also been encouraging with Dow bellwether Alcoa the first to report with revenues topping expectations. For AmBank’s upcoming tranche of warrants, AmBank will be offering call warrants over AirAsia Berhad, Pos Malaysia Berhad, DRB-Hicom Berhad, Dutch Lady Milk Industries Berhad and NCB Holdings Berhad, companies with strong brand names and good growth prospects for 2013,” said Ms Ng Ee Fang, Director/Head, Equity Derivatives, AmInvestment Bank Berhad.
AIRASIA remains on track with its aggressive expansion plans in the face of impending competition in the low-cost carrier space from Malindo Air as it recently confirmed an additional order of 100 A320s from Airbus. The new A320s are expected to be fitted with sharklets that will significantly reduce fuel consumption and improve cost savings for AIRASIA. AIRASIA currently enjoys high growth in the Thailand and Indonesia markets while operations in Japan and Philippines are still in initial stages.
Other countries in the region such as Myanmar, Cambodia and South India could present potential investment opportunities for AIRASIA. Meanwhile, Indonesia AirAsia is targeting to list in the second or third quarter of 2013. AmBank’s CW on AIRASIA is priced at 15 sen each with gearing of 3.91 times.
DLADY is a market leader and well established brand in the Malaysian dairy market where it commands close to 20% market share. DLADY has diversified from its initial offering of sweetened condensed milk to liquid milk drinks, infant milk powder and even yoghurt and fruit juices which provide higher margins.
The bulk of DLADY’s raw materials consist of imported milk where it is able to tap-on parent company Royal FrieslandCampina NV’s expertise and purchasing power to control its costs and price to consumers. DLADY’s growth remains promising on the back of Malaysia’s rising population and the steady growth of milk consumption. AmBank’s CW on DLADY is priced at 15 sen each with gearing of 3.16 times.
For its 6MFY13 (ended 30 September), POS registered a net profit of RM67 million
which was up 38% year-on-year. Although general mail remains the main source of
revenue POS is seeing strong growth in its courier and logistics divisions. The
growth in online, e-commerce transactions is helping to spur demand for POS’
courier services while its logistic contract with DRB-HICOM group is helping to
drive the logistics segment.
POS had also launched its Islamic pawn-broking service called [email protected] in 3Q12 with 50 [email protected] branches expected to be set up by end of FY13 and another 50 more in the following year. AmBank’s CW on POS is priced at 15 sen each with gearing of 5.93 times.
NCB has two main subsidiaries in the port and container haulage sectors with Northport (Malaysia) Bhd as the port operating subsidiary and Kontena Nasional Bhd as the haulage subsidiary. Northport’s Wharf 8A is expected to be fully operational by middle of 2013 which will increase container handling capacity by 600,000 TEUs (20-foot equivalent units). Overall capacity is expected to increase by over two million TEUs upon completion of the new Container Terminal 4, which encompasses Wharf 8A, by mid-2013. AmBank’s CW on NCB is priced at 15 sen each with gearing of 2.95 times.
DRBHCOM recently signed an agreement to purchase Petronas’ engine technologies, providing it and Proton ownership of more powerful, fuel-efficient 2.0 and 2.2 litre engines. As a result, Proton may be rolling out new models such as the Preve hatchback and Exora facelift model fitted with Petronas developed engines in 2013. Besides Petronas, DRBHCOM has also entered a strategic tie-up with Honda to explore collaboration opportunities in new product line-up, platform and facilities sharing as well as technology enhancement.
As DRBHCOM focuses on the automotive industry there may be further rationalisation and restructuring within the group where potentially non-core assets such as insurance arm UniAsia and part of its Bank Muamalat stake could be divested. AmBank’s CW on DRBHCOM is priced at 15 sen each with gearing of 3.53 times respectively.
This offer is aimed at sophisticated traders who want totrade on the direction and volatility of AIRASIA, POS, DRBHCOM, DLADY and NCB. The new CWs have gearings ranging between 2.95 and 5.93 and are targeted at investors who want to enjoy leveraged exposure to the underlying stocks.