TH Plantations 3Q earnings up 53.8% to RM33m

KUALA LUMPUR: TH PLANTATION []s Bhd’s earnings rose 53.8% to RM33.12 million in the third quarter ended Sept 30, 2011 from RM21.53 million a year ago as it benefited from higher prices for crude palm oil, palm kernel and fresh fruit bunches.

It said on Thursday, Oct 20 that revenue increased 37.7% to RM115.97 million from RM84.22 million. Earnings per share were 6.51 sen compared with 4.41 sen.

For the nine-month period, its earnings jumped 85.6% to RM87.12 million from RM46.93 million while revenue increased by 27.9% to RM303.73 million from RM237.44 million.

Its cash and cash equivalents increased to RM207.09 million as at end-September compared with RM47.75 million a year ago.

DiGi to see another good quarter

DiGi.Com Bhd (Oct 19, RM31.76)

Maintain buy at RM31.90 with target price of RM34: DiGi is expected to release its 3QFY11 results in the coming week. We are expecting 9MFY11 earnings to come in at 75% to 77% of our full-year estimates or RM846 million to RM868.5 million, translating into growth of 0.0% year-on-year for the nine months and 2.7% y-o-y for the full year.

We are not worried by the flattish to marginal growth as it will be due to the accelerated depreciation seen in 2QFY11. Hence, we are expecting a 3.8% y-o-y decline to RM278.3 million in its 3QFY11 earnings.

We are not concerned by DiGi’s decision to accelerate depreciation of its network assets. In 2QFY11 the accelerated depreciation totalled RM145.5 million in regard to the future de-commissioning of existing network assets, in anticipation of the ongoing network modernisation as well as infrastructure sharing arrangement with Celcom Axiata Bhd. We believe that DiGi accelerating its depreciation is a good move as this may lead to possibly lower depreciation charges in the future and subsequently higher dividends.

We expect DiGi’s 9MFY11 revenue to hit RM4.3 billion, or a growth of 7.9% y-o-y. For 3QFY11, we expect revenue to grow by 3.2% y-o-y to RM1.4 billion. The strong revenue will ride strong data revenue momentum which we believe will see double digit growth in all its segments, particularly mobile Internet and broadband. We opine that data revenue will be driven by the festive season in 3QFY11.

Data revenue contribution will continue improving in 3QFY11, possibly by another 0.5 percentage point to one ppt, translating into a contribution of 28.3% to 28.8% or RM394.6 million to RM401.6 million. We expect that the increase in data revenue will compensate any further decline in voice revenue.

Operationally, we believe DiGi will register another quarter of improvement in its earnings before interest, tax, depreciation and amorisation (Ebitda), where we expect a growth of 5.1%% y-o-y to RM1.4 billion for 9MFY11 coming from improved operating efficiencies.

Pending the 3QFY11 results, we are maintaining our FY11 forecast for now. Taking a cue from previous actions, there is a possibility that DiGi will announce another interim dividend for 3QFY11. We expect dividend yield to reach 4.5% in FY11, based on current price.

We continue to like DiGi as a strong defensive stock with a commitment to reward shareholders and strong operations. It is also one of the stocks that we have identified to outperform during difficult times. Hence, we maintain our “buy” recommendation although the potential upside of 12.5% is lower than our recommendation definition.

Our valuation is based on the discounted dividend model, with an estimated long-term dividend payout ratio of 100% and a weighted average cost of capital of 9.35%. — MIDF Research, Oct 19

FBM KLCI, Asian markets end lower on Thursday

PETALING JAYA: Asian markets were red towards the end of Thursday, as lingering eurozone debt fears caused investors within the region to maintain a cautious front.

On the local front, the FBM KLCI was down 0.63% or 9.07 points to 1,441.18 at 5pm.

As for regional markets, Tokyo's Nikkei 225 fell 1.03% to 8,682.15 and Hong Kong's Hang Seng Index was down 1.78% to 17,983.10.

Shanghai's A index was down 1.94% to 2,331.37 while Taiwan's Taiex Index slipped 1.48% to 7,244.32.

Seoul's Kospi Index dipped 2.74% to 1,805.09 with Singapore's Straits Times Index falling 0.84% to 2,697.36.

Nymex crude oil lost 45 cents to US$85.66 per barrel. Spot gold fell US$17.28 to US$1,623.47 per ounce. The ringgit was quoted at 3.129 to the US dollar.

BAT 3Q net profit up 3.3% to RM176.2m, dividend 60c

KUALA LUMPUR: BRITISH AMERICAN TOBACCO (M) [] Bhd’s earnings rose 3.3% to RM176.27 million in the third quarter ended Sept 30 from RM179.65 million.

It said on Thursday, Oct 20 that revenue increased by to RM1.104 billion from RM993.59 million, earnings per share were 61.70 sen compared with 59.80 sen. It declared an interim dividend tax exempt of 60 sen a share compared with 64 sen a year ago.

For the nine-month period, its earnings declined 1.7% to RM538.96 million from RM548.38 million. Revenue, however, increased by 4.6% to RM3.139 billion from RM3 billion.

BAT said the group’s market share had grown on-month to 60.6% at end-August, up 0.6 percentage points from a year ago. It said from a low of 58.7% in January 2011, impacted by high excise-led price increase in October 2010 and pricing activities of certain sub-value for money brands sold below the government mandated minimum price, the group’s market share registered 62% in August due to stronger enforcement efforts by the authorities.

APM falls on downbeat auto sector outlook

KUALA LUMPUR: Auto parts supplier APM fell 3.9% on Thursday, Oct 20 on the downbeat outlook for the domestic sector as analysts viewed the weak market sentiment may see consumers avoiding discretionary stocks.

At 3.12pm, APM was down 19 sen to RM4.60. There were 137,100 shares done.

The 30-stock FBM KLCI, of which APM is not a component, fared worse. It fell 16.12 points to 1,434.13. Turnover was 890.64 shares valued at RM630.69 million. There were 142 gainers, 531 losers and 206 stocks unchanged.

RHB Research Institute was negative on prospects for the motor sector in 2012 on the back of rising global macroeconomic uncertainties and escalating downside risks to equity valuations.

“Investor sentiment surrounding the motor sector going into 4Q11 is likely to remain weak, with the market’s increasingly defensive posture not favouring consumer discretionary stocks,” it said.

RHB Research had an under perform rating on APM and fair value of RM4.20.

IHS Global: Malaysia to grow 4% in 2011, 2012

KUALA LUMPUR: Malaysia’s economy is expected to grow at a slower pace of 4% for 2011 and 2012 due to external factors including Europe and the US which are expected to reduce their manufactured imports, an economist said.

IHS Global Insight Asia-Pacific chief economist Rajiv Biswas said on Thursday, Oct 20 that over a medium-term five-year period, the GDP growth would be about 5%.

Malaysia’s GDP growth in 2012 would be affected due to the crisis in the Eurozone, which is weighing down Malaysia’s exports, particularly the manufacturing sector here.

However, Rajiv said this would be offset by China’s strong growth and commodity imports, and the reCONSTRUCTION [] efforts in Japan.

He was speaking to reporters after the European-Union Malaysia Chamber of Commerce and Industry (EUMCCI)’s quarterly economic panel discussion.

Asian markets down at midday on lingering eurozone debt fears

PETALING JAYA: Asian markets were in the red at midday, Thursday, as lingering eurozone debt fears caused investors within the region to maintain a cautious front.

On the local front, the FBM KLCI was down 1.04% or 15.09 points at 12.30pm.

As for regional markets, Tokyo's Nikkei 225 fell 0.94% to 8,689.99 and Hong Kong's Hang Seng Index was down 1.96% to 17,949.76.

Shanghai's A index was down 1.95% to 2,331.23 while Taiwan's Taiex Index slipped 1.06% to 7,275.29.

Seoul's Kospi Index dipped 0.58% to 1,845.11 with Singapore's Straits Times Index falling 0.74% to 2,700.06.

Nymex crude oil lost 31 cents to US$85.80 per barrel. Spot gold fell US$21.15 to US$1,619.60 per ounce. The ringgit was quoted at 3.130 to the US dollar.

Malaysia can achieve 5% GDP growth

KUALA LUMPUR: Malaysia can achieve the target of a minimum 5% Gross Domestic Product (GDP) growth for this year, said Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah.

He expressed confidence that the second half GDP growth, which needs to reach 5.6% to meet the full-year target, will be sufficient, supported
by resilient private consumption and strong investment.

"It will also be supported by accelerated public projects and sustained strong exports of commodities and resource-based manufactured goods," he said in his opening address at the European Union-Malaysia Chamber of Commerce and Industry (EUMCCI) quarterly Economic Panel Discussion.

He said Malaysia has recovered well from the recent 2008 to 2009 crisis.

"Our growth momentum has since been sustainable. In the first half of this year, our GDP grew at 4.4 per cent," he said.

Ahmad Husni said Malaysia's total trade with Asean countries has increased dramatically.

"For the period 2005 to 2010, Malaysia's total trade value with Asean countries averaged at US$82 billion per annum.

"In the first full year the Asean Free Trade Area came into force, this number grew by 24 per cent to just above RM305 billion," he said. - Bernama

UOA Devt at near 2-month high, very active

KUALA LUMPUR: Shares of UOA Development Bhd surged to a near two-month high on Thursday, Oct 20 and it was very actively traded with more than 11 million shares done in the morning session.

At 12.30pm, it was up 13 sen to RM1.64, the highest since Aug 23. There were 11.29 million shares done.

It bucked the cautious overall market, where the FBM KLCI fell 15.10 points to 1,435.15. Turnover was 762.27 million shares valued at RM459.98 million. There were 144 gainers versus 477 losers.

This is the second time in six trading days that the share price had surged. It jumped to RM1.45 on Oct 13, a day after it announced that it would acquire 10 acres of Kepong land for RM73 million.

UOA Development had entered into a conditional sale and purchase agreement with Tago (Malaysia) Sdn Bhd for the proposed acquisition of a freehold land in Kepong for a cash consideration of RM72.9 million (RM170 psf). The freehold land measures approximately 428,801 sf (9.8 acres).

Affin Investment Bank Research said it was Neutral on acquisition and maintained a BUY with an unchanged TP of RM2.07.

However, the share price is sharply below its offer price when it was listed in June. Its institutional price was fixed at RM2.60 and the final retail price at RM2.52. At RM2.52, this was below the indicative retail price of RM2.90.

Minho fined RM5,000 for DOE offence

KUALA LUMPUR: MINHO (M) BHD [] was fined RM5,000 for an environmental offence over the failure to change the work processes for the boiler furnace.

It said at the court hearing on Thursday, Oct 20, it had pleaded guilty to the offence committed at its plant - Syarikat Minho Kilning Sdn. Bhd -- in Kapar, and was fined RM5,000.

To recap, on Sept 3, the company’s factory -- -- was instructed by the Selangor Department of Environment (DOE) to change the method of loading the fuel at the boiler furnace for the solid fuel from manual to fully automatic.

The company was also directed to implement performance monitoring for the control device at the boiler furnace in line with the DOE guidelines.

It also had to carry out monthly sampling for the chimney of the boiler and monthly report must be submitted to the DOE of Selangor.

Minho had also to ensure that smoke alarm recorder was functioning and a copy of readings from the smoke alarm recorder must be submitted to the DOE on the 15th of every month.

Syarikat Minho Kilning replied to the DOE on Sept 17, 2010 that it agreed to comply with all the instructions, except the method of loading the fuel at the boiler furnace.

Syarikat Minho Kilning appealed to the DOE to allow the company to use the existing semi-automatic fuel feeding system but this was rejected.

On Jan 11, 2011, the DOE inspected the factory and found that the fully automatic fuel feeding system was not installed.

Asian markets dip further on eurozone worries

KUALA LUMPUR: Asian markets, including Bursa Malaysia, extended their losses on Thursday, Oct 20 as investors wary of the fragile global economy off-loaded riskier assets ahead of the European G20 summit this weekend.

The decline at regional markets underscored the growing lack of confidence of a swift solution to the European debt woes.

The FBM KLCI fell 1.04% or 15.10 points to 1,435.15 at the mid-day break. Losers beat gainers by 477 to 144, while 204 counters traded unchanged. Volume was 762.27 million shares valued at RM459.98 million.

The ringgit strengthened 0.19% to 3.1050 versus the US dollar; crude palm oil futures for the third month delivery fell RM50 per tonne to RM2,842, crude oil slipped 51 cents per barrel to US$85.60 while gold fell US$16.93 an ounce to US$1,623.82.

At the regional markets, Hong Kong’s Hang Seng Index lost 1.96% to 17,949.76, the Shanghai Composite Index fell 1.95% to 2,331.23, Taiwan’s Taiex was down 1% to 7,280.00, Japan’s Nikkei lost 0.98% to 8,686.86, Singapore’s Straits Times Index fell 0.74% to 2,700.12 and South Korea’s Kospi shed 0.25% to 1,851.32.

Among the decliners on Bursa Malaysia this morning, DiGi fell 42 sen to RM31.34, MISC 30 sen to RM6.43, Panasonic 22 sen to RM19.98, Petronas Dagangan, Tradewinds and HLFG lost 20 sen each to RM16, RM8.35 and RM11.38 respectively, APM Automotive 19 sen to RM4.60, Malayan Flour Mills and Hong Leong Bank 18 sen each to RM7.46 and RM10.54, while Cycle & Carriage fell 15 sen to RM3.15.

JCY International was the most actively traded counter with 36.94 million shares done. But the stock declined half a sen to 57.5 sen after CIMB Research downgraded the stock to a Trading Sell and said a concern was the potential negative impact of a drop in orders from its two HDD customers, WD and Seagate, especially if the halt in production is protracted.

Other actives included Karambunai, Asia EP, Dutaland, Sinotop, Harvest Court and Olympia.

Gainers included AIC, UOA Development, Degem, Apollo, CCM, TMC Life and Uli-Corp.

Kurnia still in M&A talks

KUALA LUMPUR: Kurnia Asia Bhd (KAB) is still in talks with interested parties regarding a possible merger and acquisition (M&A) following news in the last few months that the company was looking at selling its insurance arm.

“There are negotiations going on. We are quite an attractive company now,” said Kurnia Insurans (M) Bhd (KIMB) chairman Datuk Dr Sharifuddin Wahab.

“Those who are interested, we are equally interested in them. Whether they are local or foreign, we are alright (for negotiations) as long as we are getting an attractive deal at the end,” he said.

Following a report in The Edge, KAB had on July 21 announced that it received expressions of interest from certain parties to explore the possibility of acquiring an equity interest in KIMB. It added that Bank Negara Malaysia said it had no objection in principle for KAB to commence preliminary negotiations with the interested parties.

Sharifuddin was speaking at a press conference after the official launch of KIMB’s second mobile application, Kurnia One Touch, yesterday.

KIMB started developing the application in June after a soft launch in August. A total of RM70,000 was invested in the application.

“KIMB has about 800,000 motor comprehensive policyholders and with the new mobile application, we plan to widen our new private car comprehensive policy customer base by 20% to 30%,” said its CEO Wong Kim Tech. He added that the increase in the customer base is expected within 12 months.

The application enables KIMB motor policyholders to send information on the location of the car accident through a GPS function to the Kurnia Auto Assist team who will get in touch with the user within minutes and will then send help.

Users are also able to report a claim by photographing and sending pictures of the damaged vehicle, accident scene, and third-party’s details to KIMB branches and workshops via emergency numbers. The application is the first to be launched by an insurance company in Malaysia.

Maxis, KIMB’s partner in the promotion, is offering KIMB policyholders a special bundled package that includes smartphones, tablets and data plans.

The application, which can be used on the iPhone, Android and Blackberry phones, is now available for free download from KIMB’s website.

For the six months ended June, KAB posted a net profit of RM29.46 million on RM573.98 million in revenue. In contrast to the corresponding period a year ago, net profits strengthened almost 9% while revenue gained 8.46%.

KAB said the better showing was a result of improved underwriting and investment performances.

Wijaya Baru seeks partner for Indonesian venture

Petaling Jaya: Wijaya Baru Global Bhd (WBG), which has clinched a deal to log and clear 80,000 hectare of land in Indonesia to make way for an oil palm plantation, will seek partners for the cultivation venture.

Chief executive officer Datuk Faizal Abdullah said the company is in talk with Malaysian entities for a possible joint venture.

Early this month, WBG signed two deals to buy Suffolk Pte Ltd (SPL) and Wealthgagte Pte Ltd (WPL) for US$40 million (RM124.4 million) each.

SPL has a joint-venture deal with PT Trimegah Karya Utama, where it has been granted exclusive rights to extract and sell timber in the district of Jair, Regency of Boven Digoel, Province of Papua, Indonesia on 40,000ha.

Similarly, WPL also has a joint-venture deal with PT Manunggal Sukses Mandiri where it will have rights to another 40,000ha of land adjacent to SPL's land.

Timber activities can only happen after it receives an approval letter from Indonesia's Forestry Ministry.

After issuing the approval letter, the National Land Authority will issue the rights to plant oil palm trees on the same land.

In June this year, WGB appointed Datuk Che Abdullah@Rashidi Che Omar to its board. He has some 37 years of experience in the plantation industry.

Faizal feels that his appointment will help steer the group in the right direction, in terms of roping in a partner and establishing WBG's expertise in oil palm.

WBG, which has 20 years of experience in the timber business, expects to set up a joint venture that will see the plantation company holding a majority stake in it.

Faizal said once WBG gains expertise in this field, it may consider venturing into oil palm cultivation on its own.

However, he added that since Che Abdullah is a non-executive director at Sime Darby Plantations, WBG is unlikely to form a joint venture with Sime as it would be a conflict of interest.

According to Faizal, the likely scenario could see WBG divide the land into few blocks of possibly 10,000ha each.

"The land is huge ... from the north to south it is about 30km and from east to west, roughly 60km," he said.

The entire clearing of the land has to be done within six years.

Ringgit falls on slow export concern

Malaysia’s ringgit fell after a report of a split among European leaders on a plan to resolve the region’s debt crisis dimmed the outlook for the global economy. Government bonds rose by the most in almost two weeks.

Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of euro-area finance ministers, said an impromptu meeting of European leaders in Frankfurt last night failed to resolve differences.

The Federal Reserve said yesterday U.S. companies reported more doubt about the strength of the economic recovery. The MSCI Asia-Pacific Index of regional stocks dropped 0.9 percent. “There’s no progress in Europe’s rescue fund talks,” said Akira Banno, a treasury adviser at Bank of Tokyo-Mitsubishi UFJ in Kuala Lumpur.

“Export growth may slow because of the deteriorating outlook for the global economy.” The ringgit weakened 0.5 percent to 3.1225 per dollar as of 9:32 a.m. in Kuala Lumpur, according to data compiled by Bloomberg.

It strengthened 0.9 percent yesterday, the biggest advance since Oct. 10. The currency has climbed 2.3 percent so far this month after slumping 7 percent in September, the worst monthly loss since June 1998. Malaysia’s exports grew at the fastest pace in four months in August, rising 10.9 percent from a year earlier after gaining 7.1 percent in July, the trade ministry reported Oct. 7.

“Overall economic activity continued to expand in September, although many districts described the pace of growth as ‘modest’ or ‘slight,’” the Fed said in its Beige Book survey released yesterday in Washington. “Contacts generally noted weaker or less certain outlooks for business conditions.”

The yield on the 3.434 percent notes due August 2014 dropped six basis points, or 0.06 percentage point, to 3.13 percent, according to Bursa Malaysia. -- Bloomberg

Bursa's price estimate cut at Maybank

Bursa Malaysia Bhd, the nation’s stock exchange manager, slid 1.1 percent to RM6.34.

The stock’s share estimate was cut to RM6.55 from RM8.30 at Maybank Investment Bank Bhd, which said earnings may be hurt by the “weak” market. -- Bloomberg

'Take profit' froom JCY rally: CIMB

JCY International Bhd, a Malaysian disk-drive components maker, fell in Kuala Lumpur trading after CIMB Group Holdings Bhd advised investors to “take profit” after the stock jumped 27.5 percent yesterday.

Its shares fell 1.7 percent to 57 sen at 9:07 a.m. local time.

CIMB downgraded the JCY to “trading sell” from “trading buy,” following yesterday’s price rally which it was triggered by expectations that the company may benefit from increased orders after its Thai competitors were hit by floods. -- Bloomberg

McDonald's joins sustainable CPO group

McDonald’s Corp, the world’s largest restaurant chain, became a member of the Roundtable on Sustainable Palm Oil following its announcement to source food from certified sustainable sources, the industry group said in an e-mailed statement.

McDonald’s uses palm oil in the Asia Pacific, Middle East and Africa, and Latin America regions, it said.

Tenaga to miss earnings estimates

Tenaga Nasional Bhd, Malaysia’s biggest power producer, fell 1.6 percent to RM5.46.

The company’s full-year earnings due on Oct. 28 will miss consensus estimates on higher fuel costs, CIMB Holdings Bhd wrote in a report today.

Tenaga will report a loss for the second straight quarter and may post a loss in 2012 for the first time in more than a decade, Chief Executive Officer Che Khalib Mohamad Noh said in an interview on Oct. 18. -- Bloomberg

Weaker external sentiment weighs on KLCI

KUALA LUMPUR: The FBM KLCI remained in negative territory at mid-morning on Thursday, Oct 20 as the opaque global economic outlook continued to keep investors at bay.

Asian stocks fell on Thursday, as growing investor caution about taking risks ahead of a key European leaders' summit at the weekend weighed on riskier assets across the board and supported safe-haven government bonds, according to Reuters.

The FBM KLCI was down 7.36 points to 1,442.89 at 10am.

Losers led gainers by 229 to 164, while 167 counters traded unchanged. Volume was 311.28 million shares valued at RM142.33 million.

At the regional markets, Hong Kong’s Hang Seng Index fell 1.38% to 18,057.44, Japan’s Nikkei 225 lost 0.87% to 8,696.65, the Shanghai Composite Index was down 0.71% to 2,360.52,Taiwan’s Taiex lost 0.62% to 7,308.13, Singapore’s Straits Times Index fell 0.31% to 2,711.71 and South Korea’s Kospi edged down 0.21% to 1,851.98.

BIMB Securities Research in a note Oct 20 said it was a case of news indigestion for many investors as developments in Europe, the economic progress and earnings reporting in the US had overwhelmed the markets.

In the end, investors preferred to pay heed to the reported earnings figures which are deemed not too sanguine by most, it said.

It said that as a result, the Dow Jones Industrial Average dipped 72 points to close the session a tinge above the 11,500 level.

Meanwhile, the prolonged bailout package for Europe was still being deliberated and further delays would aggravate investors’ prevailing uneasiness, it said.

Nonetheless, major European indices all ended on a high with the Asian counterparts closed at a mixed, it said, adding that locally, the FBM KLCI closed just above the support level of 1,450, up 10.31 points.

“However we noticed that institutional participation was rather subdued with bulk of yesterday’s volume dominated by the lower liners.

“Today we believe the index may gravitate to the south with the 1,440 as the immediate support,” it said.

On Bursa Malaysia, the top loser at mid-morning was Dutch Lady that fell 34 sen to RM18.30; Malayan Flour Mills fell 21 sen to RM7.43, Petronas Gas 16 sen to RM12.94, MISC 15 sen to RM6.58, Shell 14 sen to RM9.32, PPB 12 sen to RM16.58, IJM Corp 11 sen to RM5.28, Petronas Dagangan 10 sen to RM16.10 and Lafarge Malayan Cement eight sen to RM7.12.

Hard disk drive maker JCY continued to be actively traded with 26.2 million shares done. The stock added 1.5 sen to 59.5 sen.

Other actives included Sinotop, Asia EP, Jotech and Uli-Corp.

Gainers at mid-morning included AIC, BAT, Aeon, CI Holdings, Batu Kawan and IJM PLANTATION []s.

JCY continues to chalk up gains

KUALA LUMPUR: JCY International Bhd shares continued to be actively traded on Thursday, Oct 20 as investors viewed the hard disk drive manufacturer as less affected from the severe flooding in Thailand which had impacted other players.

At 9.40am, JCY rose 2.5 sen to 60.5 sen with 21.79 million shares done.

The floods in Thailand have forced the shutdown of the facilities some of the Malaysian HDD makers with operations in that country.

An analyst with MIDF Research on Wednesday said while JCY’s plant located in Saraburi, Thailand was also affected, it was possible that the impact was not as significant.

“Looking at their latest quarterly result, Malaysia accounts for 76% of its revenue, while the rest are lumped together as others and individually fall below the 10% threshold of a reportable segment.

“So with the flooding in Thailand affecting HDD makers there, it could redirect some of the demand towards Malaysia based manufacturer such as JCY to fill in the gap,” he said.

Meanwhile, CIMB Research on Oct 20 downgraded the stock to Trading Sell and said that while JCY’s Thai plant is, unlike most of its rivals, unaffected by the flood, a concern was the potential negative impact of a drop in orders from its two HDD customers, WD and Seagate, especially if the halt in production is protracted.

“JCY’s share price may have reacted positively to news that it could benefit from its competitors’ woes due to the flood in Thailand.

“Investors should take advantage of the recent share price spike to take profits. We downgrade the stock to Trading Sell,” said CIMB Research.

RAM: F&N to weather impact of Thai floods

KUALA LUMPUR: RAM Rating Services is monitoring the flood situation in Thailand, which has affected Fraser and Neave Holdings Bhd’s dairy plant.

It had on Thursday, Oct 20 cited F&N’s announcement that its plant in Rojana Industrial Park, Ayutthaya, had ceased production following severe flooding.

“At this juncture, the extent of the damage is still unknown as employees have yet to gain access to the facility. Similarly, it is uncertain whether F&N Holdings can resume operations there in the immediate term,” it said.

RAM Ratings noted that the affected plant accounted for about 25% and 15% of the group’s revenue and profit, respectively.

“While we understand that F&N Holdings has insurance coverage on its Thai-based facility, it is too early to determine the success of its claims and the timing of the corresponding insurance compensation.

“For now, the group will increase production at its Petaling Jaya dairy plant and also source from other suppliers to help cater to demand from Thailand. However, this may cause its Thai-based facility to operate at a loss due to heftier logistics costs although this may be compensated under the insurance policy,” it said.

RAM Ratings said due to the group’s robust financial profile, it should have sufficient headroom to weather this temporary disruption.

However, its concern was that a prolonged state of such affairs that could lead to loss of market share or deterioration in its financials might have negative impact on the group’s credit profile.

RAM Ratings said it would reassess F&N Holdings’ credit profile upon more clarity on this issue.

F&N Capital Sdn Bhd is a treasury company wholly owned by F&N Holdings. F&N Capital’s RM1 billion commercial papers/medium-term notes programme (2008/2015) (CP/MTN) currently carries AA1(s)/P1(s) ratings from RAM Ratings.

The CP/MTN is backed by a corporate guarantee from F&N Holdings. As such, the debt ratings are based on the credit-risk profile of F&N Holdings as a group.

Hua Yang rises on strong 2Q earnings

KUALA LUMPUR: HUA YANG BHD [] shares advanced on Thursday, Oct 20 after the company’s net profit for the second quarter ended Sept 30, 2011 surged to RM13.89 million from RM4.31 million a year earlier, due mainly to steady CONSTRUCTION [] progress and better sales.

At 9.20am, Hua Yang added four sen to RM1.64 with 670,800 shares traded.

Its revenue for the quarter more than doubled to RM76.13 million from RM35.63 million in 2010.

Reviewing its performance, Hua Yang said the sales achieved during the quarter under revised was 119% higher year-on-year with total unbilled sales of RM395.24 million, giving it improved earnings visibility in the remaining period of FY2012.

KLCI slips in early trade as Asian markets fall

KUALA LUMPUR: The FBM KLCI slipped into negative territory in early trade on Thursday, Oct 20 in line with lower overnight close at Wall Street and the weaker opening at regional markets.

Asian stocks fell on Thursday, as growing investor caution about taking risks ahead of a key European leaders' summit at the weekend weighed on riskier assets across the board and supported safe-haven government bonds.

At 9.05am, the FBM KLCI lost 12.58 points to 1,437.67, weighed by losses at blue chip stocks.

Losers beat gainers by 117 to 51, while 81 counters traded unchanged.

Among the early decliners were DiGi, KLK, PPB, MISC, Petronas Gas, Hong Leong Bank, UMW, Genting and Petronas Dagangan

CIMB Research has technical buy on Scomi Group

KUALA LUMPUR: CIMB Equities Research has a technical buy on Scomi Group at 29 sen at which it is trading at a price-to-book value of 0.4 times.

It said on Thursday, Oct 20 Scomi Group is still consolidating in a huge descending wedge pattern.

“Looking at the chart, we think a short term bottom may have formed near the 25 sen low,” it said.

CIMB Research said aggressive traders may start to accumulate now while others should wait for a push above its 200-day SMA before going long. Buying momentum should pick up when prices push above the resistance channel, now at 30.5 sen.

“As long as prices hold on above the 25 sen low, we think the bulls have the upper hand. Once the RM level is taken out, prices should re-rate towards 32.5 sen and 36 sen next,” it said.

HDBSVR: KLCI to come under selling pressure, may test 1,445

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) said the key FBM KLCI will likely come under selling pressures on Thursday, Oct 20.

“Technically speaking, the benchmark index could test and break below its immediate support level of 1,445 ahead,” it said.

HDBSVR said on the external front, sentiment is expected to turn cautious following news that it would not be easy for the European nations to come to an agreement on how to resolve the regional sovereign debt problems.

Reacting to this concern, major U.S. equity indices dropped between 0.6% and 2.0% at the closing bell last night.

Back home, stocks that may be of interest today include: (a) Redtone International, after its managing director said the telecommunications service provider might return to the black this year; (b) Harvest Court, whose managing director cum major shareholder has offered to buy the entire stake held by Affin Bank comprising 31.4m shares and 7.9m warrants at RM0.20 per share; and (c) BAT Malaysia, which is due to announce its financial results for the Jul-Sep quarter this evening.

Affin Research maintains Buy on Bonia, TP RM2.50

KUALA LUMPUR: Affin Investment Bank Research is maintaining its Buy call on Bonia Corp with an unchanged target price of RM2.50, pegged to a PE target of 10 times on CY12 EPS.

It said on Thursday, Oct20 Bonia will continue to benefit from: 1) its 2010 acquisition of the Singapore-based Jeco Group, and; 2) sturdy consumer spending from income growth and upcoming festive sales.

“Key risks to the stock are a slowdown in consumer spending and potentially higher food/fuel prices due to the government’s agenda in rolling back subsidies,” it said.

Bullish tone for REDtone

Puchong: REDtone International Bhd, a telecommunications service provider, believes the worst is over and it might return to the black in the current financial year, boosted by revenue from its broadband business.

"This is definitely a turnaround year for REDtone. Barring unforeseen circumstances, we are likely to break even or be profitable this financial year (ending May 31 2012). As you know, we suffered a net loss of about RM11 million last year, so if we break even, it would mean an improvement of RM11 million ... that's a huge improvement," said its managing director Datuk Wei Chuan Beng in a Business Times exclusive.

The company suffered a net loss of RM11.7 million for the fiscal year ended May 31 2011 against a net loss of RM5.4 million a year ago.

REDtone has been posting net losses since its 2008 financial year and the market will be keenly watching its first-quarter results, due to be announced sometime this month, for an indication that the company has indeed made a turn for the better.

Wei said the wider net loss previously was partly due to the roll-out of its wireless broadband network in East Malaysia, impairment of past investments in China and provision of doubtful debts, among others.

"Our core businesses are showing positive signs. Voice business has been profitable for many years.

"Our data business is also profitable now, our WiMAX broadband business in East Malaysia is very close to breaking even, and that's a very good progress."

He said its broadband business was in an investment mode over the past few years, especially in East Malaysia.

REDtone has now stabilised and Wei believes it is at a tipping point where the business can be profitable.

REDtone now offers broadband services to close to 10,000 residential customers and 1,000 companies.

Wei said that broadband will be a major growth driver for the firm.

"Currently, the business contributes about 20 per cent to its overall revenue. Moving forward, especially when the LTE spectrum is awarded, we are looking at revenue contribution of more than 50 per cent in three to five years."

REDtone is also banking on its new board of directors to push it to the next level.

In July, it announced the appointments of Datuk Wira Syed Ali Syed Abbas Al Habshee as its deputy chairman and Datuk Ismail Osman as its senior executive director.

"With the new board (members), I believe REDtone now has all the ingredients needed - the people, the technology, and the experience - to take itself to the next level and become one of the big boys in the telecommunications industry," said Ismail.

Asian shares lower, euro capped ahead of Europe summit

TOKYO: Asian stocks fell on Thursday, as growing investor caution about taking risks ahead of a key European leaders' summit at the weekend weighed on riskier assets across the board and supported safe-haven government bonds.

The euro struggled to make much headway, having pared gains on Thursday on fresh reports suggesting Europe remains a long way from resolving its debt woes. The single currency was up 0.1 percent against the dollar at $1.3770.

Plans to tackle the euro zone debt crisis have stalled, with Paris and Berlin at odds over how to increase the firepower of the region's bailout fund, French President Nicolas Sarkozy said on Wednesday, heightening concerns about how much progress could be made at a summit of European leaders on Sunday.

Investors are looking for more details from the meeting of plans to contain the euro zone sovereign debt crisis, particularly beefing up the rescue fund, a vehicle to guarantee national governments' sovereign debt issuance, although many believe a rapid solution is unlikely.

The meeting is also expected to agree on a plan to recapitalise European banks, but a report in the Financial Times said on Thursday that the plan to strengthen Europe's banking system is set to fall short of market expectations.

MSCI's broadest index of Asia Pacific shares outside Japan fell 0.6 percent, with the materials sector leading the decline, falling 1.5 percent.

Australian shares fell 1.2 percent on Thursday as miners sank after copper and gold prices fell, while Japan's Nikkei stock average opened down 0.4 percent.

The MSCI world stocks index was down 0.3 percent at 297.88, while U.S. stocks ended lower on Wednesday as sentiment was also undermined by the Federal Reserve's Beige Book report, which suggested the outlook for the U.S. economy grew dimmer in September.

Oil edged up in early Asia on Thursday, after falling the day before on concerns about growth. Brent crude futures were up 0.4 percent to $108.88 a barrel, while U.S. crude futures edged 0.2 percent higher at $86.30 a barrel.

In Asian credit markets, spreads on the iTraxx Asia ex-Japan investment grade index , a gauge for whether investor risk appetite is returning, widened a tad by 1 basis point.

U.S. Treasury prices rose modestly on Wednesday, with benchmark 10-year Treasury notes trading up 4/32 in price to yield 2.16 percent, down from 2.18 percent late Tuesday.

Gold fell for a third consecutive session on Wednesday, moving once again in tandem with riskier assets, as jittery investors sold on a lack of progress over euro zone debt talks and an uncertain U.S. economic outlook. Spot gold was steady at $1,641.49 an ounce. – Reuters

CIMB Research has technical buy on Muhibbah

KUALA LUMPUR: CIMB Equities Research has a technical buy on Muhibbah Engineering at RM1.21 at which it is trading at a FY12 price-to-earnings of 6.1 times and price-to-book value of 1.0 times.

It said on Thursday, Oct 20 Muhibbah Engineering broke out of its medium term downtrend channel recently. The rebound also lifted prices above its 30-day and 50-day SMAs.

“Looking at the chart, we think there is still room to the upside. Prices are likely to charge towards RM1.28 and RM1.36 in the near term. If these levels are taken out, the 200-day SMA (at RM1.45) will be the next target,” it said.

CIMB Research said the MACD signal line has returned to the black while RSI is also above the 50pts mark. The positive technical reading reflects its stance on the stock.

“Traders with higher risk appetite may start to nibble now. However, always put a stop at below RM1.11, just in case,” it said.

CIMB Research has technical buy on Latexx

KUALA LUMPUR: CIMB Equities Research has a technical buy on Latexx Partners at RM1.49 at which it is trading at a FY12 price-to-earnings of 4.8 times and price-to-book value of 1.2 times.

It said on Thursday, Oct 20 the recent rebound lifted Latexx above its 30-day SMA. Since then, prices have been consolidating in a bullish flag pattern.

“We are of the opinion that this upswing can be extended. If we are right, prices should take out the 50-day SMA soon, before charging towards RM1.56 and RM1.68 next,” it said.

CIMB Research said the MACD signal line has turned flattish, reflecting its earlier consolidation mode. Meanwhile, RSI is above the 50pts mark.

“Risk takers may consider taking some position now ahead of the breakout run. Be quick to cut loss if the RM1.42 level is violated,” it said.

MIDF Research maintains Neutral on Bursa Malaysia

KUALA LUMPUR: MIDF Research has maintained its Neutral rating and target price of RM5.90 on BURSA MALAYSIA BHD [] and said it expects the percentage of derivatives trading revenue to total operating revenue to trend higher to 13.9% in FY11 and 15.3% in FY12 (FY10: 11.4%).

However, the equity market is expected to be volatile due to external events before gaining momentum in 2HCY12, it said in a note Oct 20.

The research house said the rise in derivatives trading revenue would not be sufficient to offset a lower revenue from the equity market in FY12 as the latter will still account for significant percentage of Bursa’s total operating revenue.

MIDF Research said it had already rolled over its valuation period to FY12.

“With no changes to our forecast, we maintain our TP at RM5.90 based on FY12 EPS of 24.5 sen pegged to a PER of 24.0x (1 standard deviation below historical 5 years average mean) or PBVR of 3.6x.

“We retain our view that the stock is still pricey by regional peers standard, hence our Neutral rating,” it said.

US stocks sink on Fed's report

NEW YORK: US stocks fell sharply Wednesday after the Federal Reserve's "Beige Book" portrayed a still-weak economy in September, as big losses from tech stars Apple and Amazon pulled the Nasdaq down more than 2.0 per cent.

Reports of ongoing discord over the coming comprehensive rescue plan for the eurozone also helped push shares lower, analysts said.

The Dow Jones Industrial Average lost 72.43 points (0.63 per cent) to close at 11,504.62.

The broader S&P 500 shed 15.50 points (1.26 per cent) to 1,209.88, while the tech-heavy Nasdaq Composite sank 53.39 points (2.01 per cent) to end at 2,604.04.

The Nasdaq was down from the beginning of the session, but the other indices mostly stayed positive until the last two hours.

"Momentum from the prior session's broad-based bounce was lost this morning as reports regarding plans to boost bailout funds in the EFSF (European Financial Stability Facility) were contradicted," said Briefing.com.

"Headlines indicative of conflicting goings on at meetings between eurozone officials played a part in an afternoon sell-off that left stocks to end the session at lows."

Also souring sentiment was the Beige Book September report, which compiles assessments of the economy from the central bank's 12 regions.

While there was still growth in all the areas, "many districts described the pace of growth as 'modest' or 'slight,'" the report said.

The report said business contacts "generally noted weaker or less certain outlooks for business conditions."

The Nasdaq was dragged down by Apple, which fell 5.6 per cent after its quarterly report fell below expectations, and Amazon, which lost 5.1 per cent.

Abbott Laboratories shares rose 1.5 per cent after the company said it would split into two companies, one for its pharmaceutical research and branded drugs, and another for the rest of its medical products, drugs, and infant formula.

Takaful to pay RM9.36mil dividend

KUALA LUMPUR: Syarikat Takaful Malaysia Bhd announced its declaration of interim dividend of 7% which will result in a payout amounting to RM9.36mil for its financial year ending Dec 31, 2011.

The company said in a statement yesterday that dividend payments would be made on Dec 2 to depositors who transfer shares into their securities account before 4pm on Nov 11. “The group recorded operating revenue of RM636.2mil comprising RM532.5mil in gross contribution and RM103.7mil in investment income during the financial period ended June 30, representing an increase of 8.3% over the same period last year of RM587.2mil,” said Takaful Malaysia group managing director Datuk Mohamed Hassan Kamil.

He said the group also attained a favourable profit before zakat and taxation of RM49.9mil, representing a growth of 134% over the same period last year of RM21.3mil.

On the six months financial result, Mohamed Hassan said the gross contribution was mainly attributable to its Family Takaful Group business, motor and fire class of business.

He added that the company’s new distribution channel, the Wakalah or retail agency model launched in March 2010, was the main contributor to its Family Takaful Group business.

Stocks to watch: Kencana, Bursa, Hua Yang, Hai-O, Bonia

KUALA LUMPUR: Trading on Bursa Malaysia on Thursday, Oct 20 could see some downside pressure after stocks on Wall Street fell overnight on worries that Europe remains far from a solution to its debt crisis.

The Dow Jones industrial average shed 75.49 points, or 0.65 percent, at 11,501.56. The Standard & Poor's 500 Index fell 15.63 points, or 1.28 percent, at 1,209.75. The Nasdaq Composite Index was down 54.41 points, or 2.05 percent, at 2,603.02.

On Wednesday, several Asian markets slipped into the red yesterday after Hong Kong's government said it expects economic growth in the territory to be affected by weaker exports, with gross domestic product anticipated to grow at lower end of its own forecast range.

On Bursa Malaysia, among the stocks that could be in focus are KENCANA PETROLEUM BHD [], JCY International Bhd, BURSA MALAYSIA BHD [], HUA YANG BHD [], HAI-O ENTERPRISE BHD [], BONIA CORPORATION BHD [] and AT SYSTEMATIZATION BHD [].

The Edge FinancialDaily reports Kencana is in talks to acquire more than 130 acres (52ha) of land adjacent to its fabrication yard in Lumut, Perak, sources said.

It also reported Malaysia’s country's largest listed hard disk drive component maker by market capitalisation, JCY International Bhd, chalked up impressive gains on Bursa Malaysia yesterday with its share price rising 12.5 sen or 27.5% to close at 58 sen.

Bursa Malaysia’s net profit for the third quarter ended Sept 30, 2011 rose 39.37% to RM38.61 million from RM27.71 million a year earlier, driven mainly by higher revenue, but it was cautious on the outlook on concerns of further downside risk.

Revenue for the quarter increased by 23.68% to RM107.31 million from RM86.76 million in 2010. Earnings per share were 7.30 sen compared to 5.20 sen in 2010, while net assets per share was RM1.56.

For the nine months ended Sept 30, Bursa’s net profit rose to RM114.82 million from RM83.26 million in 2010, on the back of a 25% increase in revenue to RM324.47 million from RM259.14 million a year earlier.

Hua Yang’s net profit for the second quarter ended Sept 30, 2011 surged to RM13.89 million from RM4.31 million a year earlier, due mainly to steady CONSTRUCTION [] progress and better sales.

Its revenue for the quarter more than doubled to RM76.13 million from RM35.63 million in 2010.

Reviewing its performance, Hua Yang said the sales achieved during the quarter under revised was 119% higher year-on-year with total unbilled sales of RM395.24 million, giving it improved earnings visibility in the remaining period of FY2012.

Meanwhile, Hai-O Enterprise is expecting to see higher profits for FY2012, on the back of improving sales for its consumable products, said its co-founder and group managing director Tan Kai Hee.

He said the multi-level marketing (MLM) group was now focusing on marketing its consumable products such as health supplements and herbs which had higher margins and ensure repeated sales for recurring income.

He said Hai-O’s profit for FY2011 ended April 30 had fallen 60% due to the implementation of the new Direct Sales Act by the government in April 2010.

Bonia is acquiring PROPERTIES [] in Cheras for RM44.29 million for its expansion plans and to reduce rental expense.

Its unit Luxury Parade Sdn Bhd had entered into 15 sale and purchase agreements with Platinum Starhill Sdn Bhd to acquire freehold units in two blocks in Cheras.

ACE Market-listed AT Systematization became the latest casualty of Thailand’s flood casualty, after its wholly-owned subsidiary, Automation TECHNOLOGY [] Systematization Industries Limited (ATSi) temporarily closed its operations there.

ATSi procures design and assembles automatic machines according to purchase orders.

AT Systematization said ATSi had shut down the manufacturing operations from Oct 13 due to the unexpected severe floods in Thailand.