Developer harvests Klang Valley growth
Market: Malaysia Company: Sime UEP Properties Recommendation: Buy Brokerage: S. G. Warburg A 15 per cent rise in the price of its residential developments should guarantee margins and earnings growth for Sime UEP Properties.
The company is a prime beneficiary of the rapid development and improved infrastructure in the Klang Valley which has attracted population migration from other states: 92 per cent of the company's land bank is in the Klang Valley.
The buy notice does not assume potential profits from the government's compulsory acquisition of a possible 100 hectares for the Shah Alam expressway (from Subang to Langat) and central link. If valued at 50 per cent discount to the current market value, the potential profit at the pre-tax level would be M$61 million (HK$184 million).
Market: Indonesia Company: Mayora Indah Recommendation: Buy Brokerage: Smith New Court A LEADING confectionary manufacturer, Mayora Indah operates in a market where per capita demand always exceeds supply.
Last February's 300 billion rupiah (about HK$900 million) rights issue and the acquisition of related biscuit and coffee interests will increase the 1994 turnover 80 per cent, double profits, and reduce gearing to near zero.
Earnings growth rests on a strategy of 20 per cent annual organic expansion and conservative price increases in line with maintaining margins.
Market: Thailand Company: Jutha Maritime Recommendation: Buy Brokerage: Sun Hung Kai Research ONE of Thailand's largest flagged shipping lines, Jutha, is expected to achieve 24 per cent earnings growth in the 1995 fiscal year as a result of growing regional trade.
A sharp increase in fleet capacity, higher contributions from time charters and a five to six per cent rise in freight rates should secure earnings growth through 1996 and 1997.
Jutha has reduced risk and improved margins by moving away from competitive Thailand-Japan routes. Tonnage on the Malaysia-Japan route rose 50 per cent in fiscal 1994, accounting for 21 per cent of Jutha's total cargo volume.
Profitability has improved by diversifying into time charters, which offer gross margins up to 25 per cent compared to 12 to 20 per cent for freight services.
Market: New Zealand Company: Telecom New Zealand Recommendation: Buy Brokerage Salomon Brothers INTERIM results were at the top end of market expectations. Revenues and cash flow growth also exceeded expectations because of the high level of depreciation employed by the company.
Both national and international call growth benefited from smaller reductions in call prices, although these were about five per cent lower than the same period last year.
Rationalisation of the workforce continues with the number of employees down by 170 since March. The market has underestimated the earnings growth potential of Telecom New Zealand and so it will continue to surprise analysts over the next year.
Market: Malaysia Company: Gamuda Recommendation: Buy Brokerage: Schroders GAMUDA remains on track - highway construction, toll profits and the development of land in the Tunas Prestasi area remain the reason for its attractiveness.