Friday, 2 December 2011

Market Commentary

The FBM KLCI index gained 3.76 points or 0.25% on Friday. The Finance Index fell 0.27% to 13292.9 points, the Properties Index dropped 0.62% to 955.39 points and the Plantation Index rose 0.12% to 7826.77 points. The market traded within a range of 10.14 points between an intra-day high of 1493.62 and a low of 1483.48 during the session.

Actively traded stocks include DPS, DPS-WA, SYF-WA, WIJAYA-WA, SANICHI, SYF, PROTON-CH, HIBISCS-WA, VERSATL and MUIIND. Trading volume increased to 1708.70 mil shares worth RM1357.53 mil as compared to Thursday’s 1662.28 mil shares worth RM1792.95 mil.

Leading Movers were DIGI (+13 sen to RM3.73), PETGAS (+68 sen to RM14.00), GENTING (+16 sen to RM10.86), SIME (+8 sen to RM9.12) and PETDAG (+68 sen to RM17.30). Lagging Movers were MAYBANK (-9 sen to RM8.30), PBBANK (-6 sen to RM12.68), AXIATA (-3 sen to RM4.90), TENAGA (-4 sen to RM5.64) and BAT (-100 sen to RM47.10). Market breadth was positive with 386 gainers as compared to 356 losers.

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MAHB chairman backs Bashir to stay on as MD

SEPANG (Dec 2): Malaysia Airports Holdings Berhad (MAHB) chairman Tan Sri Dr Aris Othman has extended his full support to a proposal to extend the service of Tan Sri Bashir Ahmad as the company's managing director.

"I can say with confidence that the entire Board of Directors will extend their full support to him being retained as the managing director.

"In my opinion, the current situation is critical from the aspect of our standing and development. We should not make any changes whatsoever, particularly for this position," he said.

Aris was speaking at the 6th joint signing ceremony with the Peninsular, Sabah/Labuan and Sarawak, Malaysia Airports Holdings Berhad Workers Unions, here on Friday.

Bashir's position as managing director came under question again following a media report that he would be replaced by Pos Malaysia Berhad Chief Executive Officer (CEO), Datuk Syed Faisal Albar Syed Albar, whose contract ends at the end of this month.

Bashir's contract with MAHB ends in June next year.

The proposal to extend Bashir's service was voiced by the President of the Peninsular, Malaysia Airports Holdings Berhad Workers Union, Hussin Shaharn at the same ceremony.

It was also proposed at the event that a memorandum be sent to the Prime Minister, Datuk Seri Najib Tun Razak, on the proposal.

Hussin also proposed that another memorandum be sent to the Prime Minister on the confusion at the Low Cost Carrier Terminal (LCCT) on Thursday in relation to the, "Say No To Airport Tax Increase", by Air Asia.

Air Asia is protesting MAHB's decision to raise the airport tax by between RM7 to RM14 at its five airports in the country, effective Thursday.

Meanwhile, the joint agreement signed today will see 2,705 non-executive workers of MAHB, receiving a new salary structure involving increases of 7-43 per cent.

There is also a salary adjustment of six per cent for 4,051 workers not involved in the restructuring. - Bernama

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MMC’s Tanjung Bin seals 25-yr power purchase deal with Tenaga

KUALA LUMPUR (Dec 2): MMC CORPORATION BHD []’s Tanjung Bin Energy Sdn Bhd has sealed a power purchase agreement (PPA) with TENAGA NASIONAL BHD [] to supply electricity over 25 years.

MMC said Tanjung Bin – a unit of its 51% owned Malakoff Corporation – had on Friday signed the PPA to supply power from its 1,000 MW coal-fired power plant in Tanjung Bin, Johor. The expected commercial operation date was March 1, 2016.

They also signed a coal supply and transportation agreement with TNB Fuel Services Sdn Bhd for the supply of coal to be used by Tanjung Bin Energy.

On Oct 14, Tanjung Bin Energy had received the Department of Environment’s approval for the project’s detailed environmental impact assessment.

"The PPA and coal supply and transportation agreement are expected to contribute positively to the earnings and net assets of the company from financial year ending 2016 onwards,” said MMC.

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Mah Sing: Conditions for joint devt of Jln Tun Razak project not met

KUALA LUMPUR (Dec 2): MAH SING GROUP BHD []’s proposed joint development of 4.08 acres of prime land along Jalan Jalan Tun Razak-Jalan Pahang faced a setback after the conditions were not met.

It said on Friday the conditions in the joint venture agreement to develop the land with Asie Sdn Bhd and Usaha Nusantara Sdn Bhd “have not been fulfilled”.

“Notwithstanding the above, however, we are exploring options to move forward on this,” it said about the proposed joint development, which is part of the RM9-billion 58 acre riverside urban regeneration project.

To recap, on Aug 2, Mah Sing announced it would undertake a niche development – M Sentral -- with an estimated gross development value of RM900 million.

M Sentral would comprise of smaller sized and more affordable serviced residences as there is strong demand due to lower entry prices, as well as some retail units.

Under the deal, Usaha Nusantara would grant Grand Pavillion the sole and absolute right to develop the land for an entitlement of RM106.60 million to be settled via 60% in cash (RM63.96million) and 40% stake in Grand Pavillion.

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Affin Bank MD Zulkiflee Abbas to drive group’s strategic, devt agenda

KUALA LUMPUR (Dec 2): Affin Bank Bhd managing director and chief executive officer Datuk Zulkiflee Abbas Abdul Hamid will take the lead in driving the group’s strategic and developmental agenda.

AFFIN HOLDINGS BHD [] said on Friday that Zulkiflee Abbas was given the mandate to push ahead with the agenda of the Affin Banking group, which comprises of Affin Bank Bhd, Affin Islamic Bank Bhd and Affin Investment Bank Bhd.

“Pursuant to this, Zulkiflee Abbas will oversee, among others, the overall performance of the Affin banking group and focus on optimising synergy among entities within Affin banking group,” it said.

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Glomac 2Q net profit rises 49.7% to RM23.78m

KUALA LUMPUR (Dec 2): GLOMAC BHD []'s net profit for the second quarter ended Oct 31, 2011 rose 49.7% to RM23.78 million from RM15.88 million a year earlier, due mainly to on-going projects particularly Glomac Damansara, Glomac Cyberjaya, Saujana Rawang and Bandar Saujana Utama.

It said on Friday its revenue for the quarter however declined 4.3% to RM134.83 million from RM140.89 million in 2010, due to completion of two projects namely Glomac Tower and Glomac Galleria. Earnings per share for the quarter increased to 4.08 sen year-on-year from 2.72 sen, while net assets per share were RM1.06.

For the six months ended Oct 31, Glomac’s net profit rose 32.4% to RM41.65 million from RM31.44 million in 2010, on the back of revenue RM262.66 million.

Reviewing its performance, Glomac group executive chairman Tan Sri F.D. Mansor said the company’s Glomac Cyberjaya 2 and B.U.Centro @ Bandar Utama projects would further drive its sales growth and enhance its unbilled sales which currently stood at RM555 million.

He said this was a reflection of the strong market interest in Glomac’s development projects, as well as its continuing success in building ourselves as a quality, reliable and innovative developer.

“Albeit that global economic uncertainty persists, we believe Glomac’s prospects remain promising and that we would continue to sustain our earnings growth momentum.

“Excluding the RM1.4 billion worth of PROPERTIES [] we have and will launch in this current financial year, Glomac has a strong pipeline of strategic projects with a total gross development value (GDV) of RM2.6 billion for launch beyond this year.

He said the company’s balance sheet had also continued to improve, having amassed RM385 million in cash.

Glomac Cyberjaya 2, which was officially launched in November 2011, comprises of 3 to 4 ½ shop offices with a total GDV of RM130 million.

The initial phase of B.U.Centro @ Bandar Utama has an estimated GDV of RM370 million, comprising of shop offices which were soft launched in November 2011, and serviced apartments which is targeted for launch in early 2012.

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KLCI edges up as regional markets reverse losses

KUALA LUMPUR (Dec 2): The FBM KLCI closed in positive territory on Friday as some key regional markets reversed their earlier losses, but gains at the local market remained muted as investor sentiment stayed cautious.

World stocks extended gains on Friday and looked set for the biggest weekly rise since mid-2009 thanks to coordinated central bank action that cut the cost of money market funds, according to Reuters.

There were also widespread investor hopes that a key European summit next week could finally yield a concrete solution to the euro debt crisis, it said.

The FBM KLCI rose 3.76 points to close at 1,489.02, lifted by gains at select blue chips.

Gainers edged losers by 386 to 356, while 298 counters traded unchanged. Volume was 1.71 billion shares valued at RM1.36 billion.

At the regional markets, Japan’s Nikkei 225 rose 0.54% to 8,643.75, Hong Kong’s Hang Seng Index was up 0.20% to 19,040.39 and Singapore’s Straits Times Index added 0.42% to 2,773.36.

Meanwhile, the Shanghai Composite Index fell 1.1% to 2,360.66. Taiwan’s Taiex lost 0.53% to 7,140.68 and South Korea’s Kospi shed 0.01% to 1,916.04.

On Bursa Malaysia, Petronas Dagangan and Petronas Gas added 68 sen each to RM17.30 and RM14; Proton was up 51 sen to RM3.61, Nestle and Dutch Lady 40 sen each to RM52.60 and RM24.80, Tradewinds PLANTATION []s 25 sen to RM4.17, Panasonic 22 sen to RM19.96, Parkson 19 sen to RM5.84 and TDM 18 sen to RM3.80.

Among the decliners, BAT fell RM1 to RM47.10, PPB down 20 sen to RM16.38, Amway 14 sen to RM8.96, Malaysia Smelting Corp 11 sen to RM4.01, while SHL, United Plantations, NSOP and Tradewinds fell 10 sen each to RM1.15, RM18.10, RM5.68 and RM9.90 respectively.

The actives included DPS Resources shares and warrants, Sanichi, SYF Resources and MUI Industries.

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YTL may sell Orchard Boulevard project

YTL Corp may begin selling its luxury home project in downtown Singapore in the first half of 2012, more than four years after buying the site, as the Malaysian developer expands its holdings in Asia.

The project, converted from an old apartment building on Orchard Boulevard that the company purchased in 2007, will have 78 units targeting wealthy Asian buyers from countries including China, Indonesia and Malaysia, according to Kemmy Tan, the head of YTL’s real estate unit in the city-state.

YTL Managing Director Francis Yeoh has been expanding outside of Malaysia into the real estate markets in countries including Japan, China and neighboring Singapore to take advantage of Asia’s growing affluent property investors. The group also has businesses in utilities and cement. “Wealthy Asian property buyers have now gained more exposure to more sophisticated life-style and design,” said Tan, adding that she estimates buyers will probably be willing to pay a 20 per cent premium compared to regular prices for the design by a renowned architect. The project will be designed by Antonio Citterio, an Italian architect whose work includes the Bulgari Hotel in Milan and Bali and the Ermenegildo Zegna Group’s new Milan headquarters, marking his first residential project in Asia.

Record Purchase

YTL bought the original Westwood Apartments building for S$435 million (US$339 million) in 2007, a record at the time for the purchase of an existing apartment through a so-called en- bloc sale. It had since leased out the units. Tan declined to say how much YTL will sell the units for, which will have areas of between 1,000 and 3,500 square feet, adding that the average prices of luxury apartments in the area range between S$3,800 and S$5,000 a square foot. St. Regis Residences, a five-minute walk away, was last purchased at S$2,776 a square foot in September, while the Marq on Paterson Hill and Orchard Residences, about 1 kilometer (0.6 mile) away, sold homes at more than S$4,000, government data showed.

The Kuala Lumpur-based company is the biggest shareholder of Starhill Global REIT, a Singapore-based property trust that owns stakes in the city’s retail malls such as Ngee Ann City and properties in Tokyo’s Roppongi and Daikanyama shopping districts. -- Bloomberg

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Marginal gains for FBM KLCI, Proton in focus

KUALA LUMPUR: The FBM KLCI closed the morning session almost flat gaining 2.01 points to 1,487.27 on continued regional market weakness on the back of profit taking after gains in the week.

Stocks in focus include Proton Holdings Bhd which gained 29 sen to close midday at RM3.39. Proton's warrants were also up and actively traded on the local bourse. Proton-CH added 4 sen to 11 sen while Proton-CG climbed 3.5 sen to 13 sen.

Proton continued its ascent despite reporting losses in the recent quarterly net profit announcement, rumours are rife that the national car company could be taken over or merged with another entity.

Other stocks in focus include Harvest Court Industries Bhd which also surged 20 sen to RM1.10 while FBM KLCI constituents Hong Leong Financial Group Bhd rose 20 sen to RM11.78, Petronas Gas Bhd added 18 sen to RM13.50, Petronas Dagangan Bhd gained 18 sen to RM16.80.

Tenaga Nasional Bhd pared its gains made in the early trade, the national power company closed midday at RM5.69 gaining 1 sen.

Small caps dominated the actives list in the morning trade.

Regional markets were mixed with a negative bias; Singapore's STI declined 0.74% to 2,741.57, Indonesia's JCI lost 0.38% to 3,766.65, Thailand's SET was flat paring gains made in the morning at 1,019.89.

North Asian markets were more mixed with Japan's Nikkei 225 adding 0.33% to 8,625.66, Hong Kong's Hang Seng declining 0.5% to 18,909.07 and China's Shanghai Composite SE losing 1.44% to 2,352.52.

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Daihatsu reiterates rejection of Proton-Perodua merger

TOKYO: Daihatsu Motor Co Ltd of Japan, a key stakeholder of Perusahaan Otomobil Kedua Sdn Bhd (Perodua), is standing firm against the idea of a merger between Perodua and national carmaker Proton Holdings Bhd.

“Perodua has given its view on this issue [against a merger with Proton], and we [Daihatsu] respect that. I shall not comment on this further,” Daihatsu president Koichi Ina told a press conference for Malaysian journalists attending Daihatsu’s technology showcase at the Tokyo Motor Show on Wednesday.

While Proton’s management has claimed there are potential merits on the grounds of industry consolidation, Ina’s remarks have reaffirmed the position of Daihatsu on this subject.

“Perodua is one of our highest priorities in the overseas market. We would like to further strengthen our ties with Perodua,” he said.

Daihatsu, a unit of Toyota Motor Corp, owns a major though non-controlling stake in Perodua’s sales and distribution operation in Malaysia, which counts UMW Holdings Bhd and MBM Resources Bhd as the other key stakeholders. Daihatsu holds 51% equity interest in Perodua’s manufacturing operation, however, and has installed a team of managers from Japan to run the plant in Rawang. This partnership arrangement has yielded good results for both Malaysia and Japan.

“In my opinion, a merger between Proton and Perodua won’t work because both companies have very different cultures and product lines. It’s better to keep the individuality,” said a top official in Japan’s motor industry during a casual chat in Tokyo. He added that differentiation is good for consumers as well.
Ina: We would like to further strengthen our ties with Perodua.

Once operating only in the small car category in Malaysia, in recent years Perodua has been making inroads into the 1300cc segment with the Myvi and subsequently the 1500cc segment with the Alza mini MPV and lately the Myvi 1.5 litre model. This product expansion strategy has taken some market share away from Proton’s bread and butter segment, and Proton could view Perodua as a direct competitor.

Masahiro Fukutsuka, senior executive officer of Daihatsu, declined to comment on what’s next for Perodua’s product line-up. But he did reveal that there are plans to get Perodua more involved in areas of product development, to make cars catering for the regional market instead of producing just Daihatsu models. These are long term efforts due to the challenge of economies of scale.

“It’s under our 10-year blueprint for Perodua,” said Fukutsuka.

For this year’s Tokyo Motor Show, Daihatsu has adopted the slogan “Big Answer from Small”, which expresses its roadmap for technological innovation that offers motoring enjoyment in a compact car style.

It showcased the D-X two-seater compact sports car that is equipped with a revolutionary two cylinder-direct injection turbo engine, which aims to strike a balance between the joy of driving and fuel efficientcy. It also showcased the PICO two-seater electric vehicle for city commuting, and the FC ShoCase, which employs a next-generation liquid fuel cell technology that contains no precious metals.

This article appeared in The Edge Financial Daily, December 2, 2011.

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Star buys up Red Tomato to strengthen position in Chinese media segment

KUALA LUMPUR: Star Publications (M) Bhd is strengthening its position in the Chinese publication segment by acquiring a controlling stake in Red Tomato Media Sdn Bhd, the publisher of a free weekly Chinese newspaper.

Yesterday Star, whose flagship publication is the English daily The Star, announced it had entered into a conditional share sale agreement with Red Tomato Media’s shareholders to acquire 83.61% equity interest.

The publishing company is paying RM1.49 million cash for the 83.61% stake of about 2.48 million Red Tomato shares. The deal values the entire privately held media company at RM1.78 million or 60 sen per share. Star is acquiring the stake in Red Tomato from the latter’s shareholders, namely its executive chairman and managing director Gan Chin Kew, Red Tomato CEO (management, operations, branding and marketing) Tang Swee Lan and Yew Chin Theng.

Gan will continue to hold a 9.66% stake in Red Tomato Media from the 38.63% stake he had earlier while Yew’s entire 54.63% stake in the company will be taken up by Star. Tang’s stake in Red Media meanwhile remains at about 6.73% after selling one share to Star.

“The investment provides Star with an immediate opportunity to enter into the Chinese print adex [advertising expenditure] market,” Star said in a filing with Bursa Malaysia yesterday.

Star added that Red Tomato will add synergy to its existing stable of media assets which will enable the group to leverage diverse multimedia offerings and identify new markets.

In a press statement, Star group managing director Ho Kay Tat said the acquisition of Red Tomato complements Star’s Chinese-language media assets including the Chinese radio station 988FM and monthly Chinese business magazine Shang Hai. Founded in 2008 by Chinese media industry veterans, Red Tomato Media publishes Red Tomato, a free weekly 24-page Chinese newspaper featuring economic and lifestyle content distributed in the Klang Valley and Penang on Fridays.

For FY10 ended June 30, Red Tomato posted a net loss of RM2 million on the back of RM1.82 million revenue, according to information filed with the Companies Commission of Malaysia.

As at June 30, 2010, Red Tomato Media had current liabilities of RM2.15 million, non-current liabilities of RM97,168 and total assets of RM940,035.

Among the conditions stipulated is that the vendors shall obtain the Ministry of Home Affair’s approval for the deal and secure the renewal of the printing permit for Red Tomato Biz Health and Beauty newspaper.

Star said its impending entry into the Chinese newspaper market is “very timely” given that the two major sporting events to be held next year are expected to provide a healthy boost to adex growth. The two sporting events are the UEFA European Cup 2012 and the London Olympics 2012.

Star said the investment in Red Tomato is expected to strengthen the group’s potential to improve its revenue streams and profit prospects.

Nevertheless, Star noted that the print media industry is facing intense competition from within the as well as from other media particularly the Internet and television, which are increasingly getting a bigger slice of the total adex pie.

Star’s latest venture forms part of the group’s plans to position itself as a multimedia group, diversifying from its traditional revenue base of print media.

In the past year, Star had been active on the acquisition trail. It recently picked up a 4.99% in stake in Catcha Media Bhd, a magazine publisher and online media firm.

Star also bought an 80% stake in radio station operator Capital FM Sdn Bhd and a 51% stake in Li TB Holdings Ltd, which operates the Life Inspired lifestyle television channel. Star’s shares yesterday fell one sen to RM3.20.

This article appeared in The Edge Financial Daily, December 2, 2011.

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Sozo Global looks to better year ahead

KUALA LUMPUR: Sozo Global Ltd, which specialises in producing convenience foods, is expecting a better year ahead following flattish third quarter earnings. This is on the back of its recent capital expansion, which will help the group to secure a more constant supply of its chief raw material, duck meat.

“Sozo’s performance for the third quarter is within expectations as duck meat continues to be scarce. This will only be a short-term effect however, as our plans to control the supply of duck meat through our own farm will come into effect by the second quarter of next year,” said Sozo CEO Shen Hengbao.

During 3Q, the group invested some 181.4 million yuan (RM90.5 million) that covered the acquisition of seven parcels of land and construction costs for new facilities. These comprise modern poultry farming and breeding facilities, which will help to bring down the group’s raw material costs.

For 3QFY11, the group only saw a slight year-on-year increase in its net profit to RM29.1 million from RM28.2 million a year ago, while revenue from the period in review declined slightly to RM110.5 million from RM110.9 million.

For the nine months ended September, Sozo posted a net profit of RM90 million on the back of RM313 million in revenue.

Despite the worries over supply, Shen said the company is expected to show growth in the current quarter as the year wraps up.

“Despite the scarcity of duck meat and optimum utilisation of the existing capacities, we are optimistic about our growth in FY11. We are confident that with our expansion plans in place for duck farming in Rizhao and [our] halal plant in Malaysia, we should expect greater growth for next year,” Shen said.

This article appeared in The Edge Financial Daily, December 2, 2011.

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Accept offer, Jerneh Asia shareholders told

KUALA LUMPUR: Jerneh Asia Bhd’s shareholders have been advised to accept the RM1.45 per share take- over offer by the group’s major shareholder, Kuok Brothers Sdn Bhd, for a quicker way out of the cash-rich company that has been without a core business for a year.

OSK Investment Bank Bhd, the independent adviser to the Kuok Brothers’ offer, said the takeover offer is preferable to the “uncertainty and lengthy” procedure of receiving proceeds via the route of asset disposals, capital repayment and winding up. Jerneh Asia shares closed unchanged yesterday at RM1.43.

This article appeared in The Edge Financial Daily, December 2, 2011.

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E&O: Hot property in Penang

Eastern & Oriental Bhd (Dec 1, RM1.41)
Maintain outperform at RM1.39 with revised target price of RM2 (from RM1.98): Although annualised 1HFY12 core net profit was only 30% of our forecast, it is in line as future quarters should be stronger. We make no change to our target basis of 30% realisable net asset value (RNAV) discount or “outperform” call. But we adjust our target, RNAV and earnings per share for housekeeping and ICSLS conversion.

E&O sold RM380 million worth of properties during 1HFY12, 52% more than its RM250 million sales in 1HFY11. Unbilled sales leaped from RM650 million a year ago to RM880 million. The bulk of 1HFY12 sales came from Penang, with the remainder coming from unsold units of St Mary Residences in Kuala Lumpur. As expected, E&O did not propose a 2Q dividend, in line with last year’s practice and our expectations.

Take-up rates for both the St Mary Residences and Phase 1 of the Penang Quayside condos have reached 80%. Phase 2 of the Penang condos will be launched this month and indications are that demand should be strong.

Although minority shareholders may be disappointed that there was no general offer, we view positively the recent emergence of Sime Darby Bhd as a 30% shareholder of E&O. This provides E&O with a strong parent which could come in handy for the upcoming Phase 2 of Seri Tanjung Pinang. Also, we would not discount the possibility of joint ventures between the two companies as Sime Darby has 37,000 acres of undeveloped land with an estimated gross development value of RM100 billion. E&O’s expertise in high-end residential projects will provide a good fit with Sime, especially for its landbank in the Klang Valley. — CIMB Research, Dec 1

This article appeared in The Edge Financial Daily, December 2, 2011.

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Money Services Business Act comes into force

KUALA LUMPUR: The Money Services Business Act 2011 came into force yesterday, announced Bank Negara Malaysia (BNM), along with the repeal of the Money Changing Act 1998.

According to the statement by BNM, the new Act will comprise a single, uniform regulatory framework for current licensees, who were governed under three laws — Money Changing Act 1998, the Payment Systems Act 2003 and the Exchange Control Act 1953.

These licensees are in the business of money changing, remittance and wholesale currency.

“The new Act supports the development of a more dynamic, competitive and professional money services business industry, while strengthening safeguards against money laundering, terrorist financing and illegal activities,” said BNM.

Although the exact details of the Act were not up yet on BNM’s website at the time of writing, the main thrusts include stronger prudential requirements, greater transparency and protection for customers and a wider scope of activities for those that meet the necessary requirements.

In terms of the prudential requirements, BNM said, “This will focus in particular on ensuring the effective oversight and control of the conduct and operations of licensed entities to safeguard the integrity of, and confidence in the money services industry.”

As for the increased transparency, BNM said it would be supported by wider enforcement powers provided for the central bank to take action against non-compliance or breaches of regulatory requirements.

“Also in line with the efforts to further develop and modernise the industry, licensed entities that can demonstrate the financial and operational capacity to effectively manage and control risks in the business with high professional standards of conduct, will be able to expand their current scope of activities to provide a wider range of services that can include money changing, remittance and wholesale currency services under a single licence,” said BNM.

The central bank said those entities would also be allowed to enjoy greater operational flexibilities and a broader outlook, which would then allow them to appoint existing smaller licensees as agents.

“The new landscape thus provides opportunities for greater synergies to be reaped through business arrangements that are more efficient, while evolving a more advanced and viable industry that will complement the banking sector in delivering convenient and high quality financial services to individuals and businesses,” said BNM.

According to information from BNM, the number of non-bank remittance service providers had increased to 39 as at end-2010 from three as at end-2005.

“Consequently, total outward remittance through the formal channels has grown significantly by 119.7% to RM13.4 billion in 2010 from RM6.1 billion in 2005,” said the central bank. As for those who offer money changing services, there are over 800 licensees operating at more than 1,000 premises. “As at end-August 2011, the total turnover of the industry stood at RM17.7 billion, an increase of 49% from 2005,” said BNM.

The central bank initiated the review of the legal and regulatory framework for the industry in 2009, which culminated with the new Act being passed in July this year.

This article appeared in The Edge Financial Daily, December 2, 2011.

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Ireka: Unexciting earnings but good yields

Ireka Corp Bhd’s results for 2QFY12 were within our expectations on an annualised basis, as our forecasts were conservative to begin with.

However, earnings were substantially lower than 1QFY12 due to lower contributions from London-listed associate Aseana Properties Ltd (ASPL), as well as RM5 million in provisions for liquidated and ascertained damages arising from late delivery of Seni Mont’Kiara.

For 2QFY12, Ireka turned in a net profit of RM1.1 million on a revenue of RM112.7 million. This was a marked improvement over the net loss of RM87,000 posted a year ago, which was also hit by one-off provisions, but a substantial decline from a net profit of RM7.5 million in 1QFY12.

The first quarter saw contributions of RM7 million from ASPL, following the completion of Phase 1 of Seni Mont’Kiara. ASPL recognises profits according to IFRIC 15 (International Financial Reporting Interpretations Committee 15), where profits are recognised on full completion of the project, rather than on a progressive completion basis.

Contributions from associates declined to RM621,000 in 2Q. For the first half of FY12, Ireka posted pre-tax profit of RM9.4 million compared with a loss of RM2.9 million a year earlier. Net profit came in at RM8.6 million from a loss of RM3.1 million, while revenue was relatively flat, rising 1% to RM211.7 million.

Excluding the RM5 million provision, Ireka’s construction division would have fared better, with six-month estimated pre-tax profit of RM7.2 million compared with RM5.9 million a year ago, with roughly flat revenue of RM198.7 million.

Concerns over sustainability of ASPL rebound, Vietnam
We are raising our net profit forecast for FY12 by 34% to RM13.1 million, or 11.5 sen per share. This places the stock at a forward price-earnings ratio (PER) of 6.4 times.

We also note, however, that Ireka’s earnings tend to be lumpy and volatile on a quarterly basis, and FY13 could see a dip in earnings as ASPL will not be recognising profits from the completion of projects then.

ASPL has completed the second and final phase of Seni Mont’ Kiara and obtained the certificate of fitness in October 2011. The units sold are currently being handed over to buyers. This could result in a stronger quarter ahead for Ireka and ASPL as the earnings are recognised by ASPL.

Continued concerns over the sustainability of ASPL’s turnaround after the completion of Seni Mont’Kiara, as well as Vietnam’s economy and property market woes will likely put a dampener on ASPL — and Ireka’s share price.

Still, downside risks are low with the stock trading at single digit PER, and well below its book value of RM2.01. Plus, Ireka offers consistently high dividends, with a yield of 6.8% expected this year, based on five sen per share.

The sustainability of ASPL’s turnaround is key to the re-rating of Ireka. However, ASPL will see lumpy earnings due to the adoption of IFRIC 15, which recognises profits on full completion, rather than on a progressive completion basis.

As such, the recognition of profits from both phases of Seni Mont’Kiara will boost earnings this financial year — in 1Q and 3Q. Going forward though, it will be difficult for ASPL to fill the void from Seni Mont’Kiara given its size, although it has several projects under construction in KL Sentral and Sabah.

ASPL’s current ongoing projects include Sandakan Harbour Square, KL Sentral and International Hi-Tech Healthcare Park in Ho Chi Minh City, and a planned launch of condominiums in Jalan Kia Peng, in the KLCC area, in a 70:30 joint venture between ASPL and Ireka.

Moreover, the projects in Vietnam have mostly been deferred due to the weak economic outlook there.

The slump in Vietnam’s property market since 2008 has affected sentiment for companies with exposure there, including ASPL. ASPL’s shares fell as much as 89% to US$0.11 (34.5 sen) during the crisis, from an IPO price of US$1. They have fallen over the last three months from around US$0.46 to US$0.38.

The Jalan Kia Peng project on a one-acre site will comprise condominiums of 500 to 1,500 sq ft with an earlier estimated GDV of US$79 million. Launch of the project has now been deferred to the second half of 2012 due to planning delays.

This project should boost the bottomline of both ASPL and Ireka in FY15/FY16. Ireka is also embarking on projects in Nilai and Kajang.

For Ireka’s construction arm, order book replenishment is key, but remains relatively slow. Nonetheless, its order book has been sustained at the RM400 million mark over the past three months, and it has secured three jobs worth RM400 million in the past year.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.

This article appeared in The Edge Financial Daily, December 2, 2011.

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Petronas sees crude oil at US$75 next year

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is cautiously optimistic on its prospects in 2012, amid worsening economic conditions in Europe and the US, and expects crude oil prices to fall to US$70 (RM220) to US$75 per barrel.

Datuk Shamsul Azhar Abbas, Petronas president and CEO, said the current crude oil price is too strong for the market and expects it to fall from the current level of around US$110 per barrel.

“We are cautiously optimistic about next year. The situation in Europe and US is worsening while China is also showing signs of breaking. There is a possibility of a recession next year,” he said.

However, Shamsul said Petronas is on track to achieve its profit before tax (PBT) target of RM70 billion to RM75 billion for FY11 ending Dec 31. The company is changing its financial year-end to Dec 31 from March 31.

Petronas posted a net profit of RM18.35 billion for 2QFY11 ended September, up 54.4% from the RM11.88 billion a year earlier underpinned by improved margins.

Its revenue grew 26% to RM71.8 billion, from RM56.99 billion a year earlier on the back of higher realised prices of crude oil and condensates and other energy commodities, particularly petroleum products and liquefied natural gas (LNG).

“The second quarter results have been excellent and were beyond expectations. We should be able to meet our PBT target based on current market conditions,” said Shamsul.

It posted a 47% higher operating profit of RM27.11 billion compared with RM18.44 billion a year earlier.

For the six-month period ended Sept 30, 2011, Petronas’ net profit grew by 50.8% to RM40 billion from RM26.51 billion a year earlier. Revenue rose 25.3% to RM144.8 billion from RM115.54 billion on the back of higher realised prices of petroleum products, crude oil and condensates, LNG and petroleum products.

The national oil company said its total assets increased from RM439 billion as at March 31, 2011 to RM472 billion following the profit generated during the quarter, net of dividend distributed to shareholders.

Total debt to total asset ratio remains at 0.11 times. During the period ended Sept 30, 2011, it paid a third interim dividend of RM6 billion for the financial year ended March 31, 2011. It also paid a tax-exempt final dividend of RM22 billion between June and Nov 2011. It declared and paid a first interim dividend of RM2 billion for the financial period ending Dec 31, 2011.

Datuk George Ratilal, executive vice-president for finance, noted that Petronas will have a dividend payout amounting to 30% of its net profit for the next two years.

Shamsul said Petronas’ growth agenda remains intact to meet rising long-term demand for oil and gas. He said its capital expenditure of RM300 billion for the next five years is still intact, and it is committed to spend RM30 billion in the current calendar year.

Shamsul said these investments are vital for Petronas to increase its upstream and downstream activities in order to ensure sufficient gas and petrol supply.

Wee Yiaw Hin, executive vice-president of exploration and production, said the company has put in a bid for an onshore energy field in Myammar.

“There has been a bid for the onshore block and we are looking at opportunities. We currently have an offshore operation and the business has been good,” he said.

He added that the company will be bidding for the onshore block with its offshore partner.

This article appeared in The Edge Financial Daily, December 2, 2011.

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ECM Libra up on news of sale of IB

KUALA LUMPUR: ECM Libra Financial Group Bhd’s price and trading volume increased sharply yesterday on the news that K&N Kenanga Holdings Bhd is looking to acquire its investment banking business.

ECM Libra’s share price closed two sen higher at 80 sen, reaching an intraday high of 82 sen with 2.12 million shares traded.

Yesterday’s trading volume was 3.5 times more than Wednesday’s 596,100 shares and 91.1% higher than the 30-day average volume of 1.11 million shares.

Meanwhile, Kenanga’s shares were largely unchanged, falling only half a sen to 69.5 sen on a thin volume of 34,600 shares.

The Edge Financial Daily had reported yesterday that the two groups have been given the go-ahead by Bank Negara to proceed with the transaction which will be settled in cash.

According to sources, ECM Libra, which will end up cash-rich after the disposal, will be seeking to acquire a new business.

This article appeared in The Edge Financial Daily, December 2, 2011.

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Maxis yield the saving grace

Maxis Bhd (Dec 1, RM5.49)
Maintain hold at RM5.50 with a revised target price of RM5.40 (from RM5.50): Results were below expectations, with 9MFY11 net profit accounting for only 69% of our full-year forecast. Although earnings before interest, tax, depreciation and amortisation (Ebitda) margin still led the industry at 50%, it has slipped further. We expect less than 49% in 2012 on higher home broadband start-up costs and cut our FY11 by 7% and FY12 by 13%. Discounted cash-flow-based (DCF) fair value is lowered to RM5.40 but Maxis is a “hold” for the dividend yield of 7.3%.

Maxis continued to lose prepaid voice subscribers, while the postpaid subscriber base was stable. Efforts to improve revenue are working to an extent, as both post and prepaid tariffs under its new stricter definition have improved. Still, it is too early to say this will be sustained as call minutes also suffered slightly following the higher tariffs. This trend bears watching for at least one more quarter.

Not surprisingly, given that Maxis is known for having the best 3G network, non-voice revenue rose 18% year-on-year (y-o-y) and 8% quarter-on-quarter (q-o-q) to 44% of mobile revenue in 3QFY11 from 42.7% in 2QFY11. Non-SMS Internet and data services contributed 59% of non-voice revenue, a higher percentage than before, but y-o-y growth is definitely slowing due to the higher base. On the SMS side, higher demand pre and post-Hari Raya bolstered revenue with healthy q-o-q growth.

In the long term, home fixed services are definitely the way to go in order to combat failing voice revenue. In the near term however, we expect subscriber acquisition costs to weaken margins and hurt profit. While execution could finally start tracking ambitions, unless it offers significantly more attractive bundling discounts, Maxis’ fixed broadband packages are simply not attractive relative to UniFi. With IPTV likely to be launched only in mid-2012, we expect start-up losses to continue.

While we have cut our 2011/12 forecasts, management is guiding for lower capital expenditure of RM1.1 billion in 2011, with expectations it will be significantly lower than RM1 billion in future. This serves to support cash flow and dividends. — Maybank IB Research, Dec 1

This article appeared in The Edge Financial Daily, December 2, 2011.

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KLCI gains, struggles to stay above 1,490 level

KUALA LUMPUR: The FBM KLCI pared down initial gains yesterday and slipped below the 1,490 point level, while regional markets chalked up strong gains as coordinated liquidity action by the major central banks boosted investor sentiment.

Analysts said the sentiment on the local market remains bullish for now, with the good run expected to sustain until the Lunar New Year in 2012.

Asian markets rose after the US Federal Reserve, the European Central Bank and the central banks of Canada, the United Kingdom, Japan and Switzerland said on Wednesday they would lower the cost of existing dollar swap lines by 50 basis points from Dec 5, and arrange bilateral swaps to provide liquidity for other currencies, Reuters reported.

The FBM KLCI closed 13.16 points higher at 1,485.26, lifted by gains at banking and select blue chips. The index had earlier risen to its intra-day high of 1,502.53.

On the regional markets, Hong Kong’s Hang Seng Index surged 5.63% to 19,002.26, Taiwan’s Taiex rose 3.98% to 7,178.69, South Korea’s Kospi gained 3.72% to 1,916.18, the Shanghai Composite Index added 2.29% to 2,386.86, and Japan’s Nikkei 225 was up 1.93% to 8,597.38 and Singapore’s Straits Times Index rose 2.2% to 2,761.88.

Dr Nazri Khan, Affin Investment Bank Bhd vice-president and head of retail research, said, overall, the market is bullish now.

“We see a good reliable bottom at 1,310, second bottom near 1,400, now all set for 1,530 by year-end, and 1,700 by Chinese New Year … we are going for a good run,” he said.

Nazri said the unprecedented move to lower the cost of existing dollar swap lines clearly demonstrates prevailing central banks and policymakers’ recognition of the need to undertake more aggressive monetary policy actions to avert a potential collapse of the global financial system — where money markets as well as credit markets have recently faced elevated levels of stress not seen since Lehman Brothers failure.

He said this is highly positive in not only greatly reducing banks’ liquidity risk, but importantly, acting as a major confidence booster to financial markets that central banks are prepared to take over the role of governments or politicians to address the problematic eurozone sovereign debt strain.

However, Nazri added that the move by global central banks coming into a consortium to provide a greater dosage of “morphine” to save the ailing patients will not resolve the underlying eurozone problem.

“The crux of the issue lies in the uncontrolled fiscal spending over the years that has resulted in overly indebted and leveraged governments who are facing insolvency risk (by extension of banks holding the weak sovereign bonds, their solvency is also in question).

“Clearly, a re-acceleration in global liquidity through the latest move and quantitative easing (UK and Japan) will stoke renewed inflationary pressure,” he said.

Among the banking stocks, Hong Leong Bank Bhd rose 32 sen to RM10.78, Public Bank Bhd added 20 sen to RM12.74, Hong Leong Financial Group Bhd up 18 sen to RM11.58, RHB Capital Bhd added 11 sen to RM7.42, Malayan Banking Bhd nine sen to RM8.39, CIMB Group Holdings Bhd eight sen to RM7.22 and AMMB Holdings Bhd up four sen to RM5.98.

Other gainers included British American Tobacco (M) Bhd, Nestle (M) Bhd, Dutch Lady Milk Industries Bhd and JobStreet Corp Bhd.

Among the losers, Genting Bhd fell 26 sen to RM10.70; Lafarge Malayan Cement Bhd lost 24 sen to RM6.70, MSM Malaysia Holdings Bhd down 19 sen to RM4.81, Axiata Group Bhd lost 17 sen to RM4.93, Fraser & Neave Holdings Bhd slipped 14 sen to RM18.02, IJM Corp Bhd, Tan Chong Motor Holdings Bhd and Malaysia Airports Holdings Bhd fell 11 sen each to RM5.80, RM4.24 and RM6.08 respectively, while Southern Steel Bhd shed 10 sen to RM1.98.

This article appeared in The Edge Financial Daily, December 2, 2011.

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Benalec calls south Johor home

Benalec Holdings Bhd (Dec 1, RM1.36)
Mantain buy at RM1.35 with fair value of RM2.85: Maintain “buy” on Benalec Holdings with an unchanged sum-of-parts-derived fair value of RM2.85. Reuters recently reported that at least three loaded oil storage supertankers have been allowed to remain anchored in southern Malaysian waters.

This came three months after the government ordered the eviction of seven converted very large crude carriers (VLCCs) off Pasir Gudang in August. These vessels held a combined capacity of 1.9 million tonnes of crude/fuel oil.

Two vessels have since secured licences to stay in the area — the One Emerald leased by Mercuria and Nasa Unity (jointly utilised by Thailand’s PTT and Azerbaijan’s Socar). A third vessel, the Front Queen, chartered by Arcadia was also issued a similar permit although it was not one of the original seven VLCCs asked to leave the area.

Three of the original seven VLCCs have since moved to a new home. The Brilliant Jewel (housing Vitol’s fuel oil) has moved to the Port of Tanjung Pelepas.

The other two, Mayfair and Titan Venus, chartered by ConocoPhillips and Trafigura respectively, have moved to Linggi on the southwest coast of Peninsular Malaysia near Port Dickson.

This latest news strengthens our view of the immense development potential of Benalec’s Johor landbank as a future oil hub for landed storage, specifically for its Tanjung Piai landbank (3,485 acres). While the three VLCCs mentioned earlier have been granted an extended stay in Johor, they will eventually have to find a new permanent base, we believe.

Most of the VLCCs squatting near Johor are incumbents within the overcrowded Jurong petrochemical hub. To be sure, we gather that ConocoPhillips may not be ending its Mayfair lease soon.

The quit notice issued by the Malaysian government is to improve access along the shallow waterways of south Johor, possibly to accommodate Petroliam Nasional Bhd’s RM60 billion refinery and petrochemicals integrated development project.

New IMO requirements that require the gradual phasing out of single-hull vessels may somewhat curb demand for floating storage. The location of these fuel-carrying vessels is also farther away from the main bunker markets.

Singapore traders looking for more alternative storage space may still favour Johor over Indonesia’s Karimun island as reports indicate that cargo owners would have to pay 30% to 35% more for operational logistics. — AmResearch, Dec 1

This article appeared in The Edge Financial Daily, December 2, 2011.

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Petronas comes to TNB’s rescue

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will shoulder part of Tenaga Nasional Bhd’s (TNB) higher operational costs caused by the shortage of gas.

TNB announced yesterday that it had received a letter from the government about a fuel cost sharing mechanism where Petronas, TNB and the government will equally share the RM3.07 billion the utility company incurred in cost overruns from Jan 1, 2010 to Oct 31, 2011.

The lifeline was thrown to TNB, which is swimming in a sea of red ink due to high costs, as it had to seek alternative fuel to make up for the shortage of subsidised gas supplied by Petronas to generate energy. TNB posted a net loss of RM453.9 million for 4QFY11 ended Aug 31.

Under the cost sharing mechanism, TNB will recoup RM2 billion, or 36.6 sen per share, of the cost overruns it incurred in the 22-month period.

“As a national entity, we are willing to share the cost. We are talking to the government and TNB, and we will take up one-third of it as it is good for the people,” Datuk Shamsul Azhar Abbas, Petronas president and CEO told a media briefing yesterday.

However, he noted that Petronas will not bear any further costs caused by inefficiency at TNB’s plants. “We need to state to TNB that we will only share part of the RM3 billion costs. Beyond that, we are not prepared,” he said.

TNB had to import costlier oil and distillates as Petronas had reduced the supply of subsidised gas due to the maintenance of its plants. The national oil company spends up to RM20 billion a year to provide subsidised gas to TNB.

“The subsidy has created a massive distortion of gas prices in the country. And because of that, TNB has been encouraged to be inefficient and we have to fund that inefficiency,” said Shamsul.

Shamsul said the country needs to shift to a market driven mechanism and “the era of cheap and subsidised gas is over”. He noted that the government had introduced a gradual reduction of gas subsidies from June this year in order for it to reach market prices by 2015.

The first cut in the gas subsidy was in June and another reduction is slated for this month.

However, observers have noted the government may not reduce the gas subsidy due to the upcoming general election.

“We hope that the government will have the political will [to cut subsidies] and move towards market parity,” Shamsul said.

To address the shortage of natural gas, Shamsul said its liquefied natural gas (LNG) import terminal in Malacca will be commissioned in July with a capacity of 3.6 million tonnes of LNG.

He stressed that the output from the terminal will be sold at market prices.

“Our understanding with TNB and industry is that any molecules from the terminal will be sold at the full market price as we are importing it at full market price. In addition, the terminal will have open access for all to import their own gas, or to buy from supplying companies. As such, Petronas will no longer have a monopoly on gas supply to domestic users,” he said.

Apart from Malacca, Shamsul noted that Petronas is planning to build another two LNG regassification terminals in Pengerang and Lahad Datu, and is mulling over a fourth one in Lumut.

He noted that the Pengerang and Lahad Datu terminals will have a capacity of 3.6 million tonnes each and are expected to be completed by 2015.

“These terminals are vital to ensure that Petronas has a 15% safety buffer of natural gas in case of crisis,” he said, adding that Petronas has been supplying all its natural gas with no safety buffer for the past five to six years.

Datuk Anuar Ahmad, executive vice-president of gas and power business, noted that Petronas currently supplies 1,050 million standard cu ft per day (mmscfd) of gas to TNB, which is below its requirement of 1,250 mmscfd.

“This is the maximum supply by Petronas. Depending on maintenance, the supply could fall to as low as 900 mmscfd,” he said.

Shamsul said apart from buying gas on the open market, Petronas will extract gas via its first floating LNG plant in Kanawit, Sarawak, with a capacity of 1.3 million tonnes. Petronas is targeting for the plant to be commissioned in 2015.

“We are also planning to have a second floating LNG plant in Sabah with a similar capacity, and we hope to commission this in 2016. However, we have not made any final investment decision on this,” he said.

This article appeared in The Edge Financial Daily, December 2, 2011.

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MAS introduces 'MAS, Fly Me There!' contest

Malaysia Airlines (MAS) is introducing its "MAS, Fly Me There!" contest to customers in Malaysia, Australia and the United Kingdom.

To enter the contest, "like", the Malaysia Airlines' Facebook page and click on the "MAS, Fly Me There!" tab, on the left panel of the website.

Then, select one or two of the available destinations you wish to fly to. If you are residing in Malaysia, choose to visit your friends in the United Kingdom or Australia, or both.

Upon completion, participants need to rally for votes from their family and friends, residing in the respective countries chosen, via the Facebook page.

The top 10 participants with the highest number of votes on one of the two destinations will be the winners.

Each winner will receive a pair of return tickets to the mentioned destinations on economy class, MAS said in a statement today.

The contest ends on Dec 18, 2011, and customers can log on to for more information. -- Bernama

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SYF Resources jumps, active trade despite recent query

KUALA LUMPUR (Dec 2): SYF RESOURCES BHD []’s shares and warrants jumped in active trade on Friday as speculators chased up the securities after the recent announcement that it was venturing into property development.

At 3.24pm, SYF was up 15.5 sen to 63.5 sen with 41.69 million shares done while SYF-WA surged 14.5 sen to 41.5 sen with 66.59 million units done.

The FBM KLCI was down 1.66 points to 1,483.60. Turnover was 1.07 billion shares valued at RM774.01 million. Declining stocks beat advancers 398 to 261 while 278 counters were unchanged.

On Nov 14, Bursa Malaysia Securities had queried the board by over the sharp rise in the volume and price.

In a response, SYF said it was buying 3.92 ha of freehold agriculture land in Semenyih, Selangor for RM5.06 million while the open market value was RM4.89 million using the comparison method of valuation.

“The property which has been zoned for industrial use, is located off the Jalan Sungai Lalang main road and adjoins the existing newly completed Semenyih Hi-Tech Industrial Park. As the surrounding area is already developed with several industrial PROPERTIES [], the property has good potential for conversion and development into an industrial park,” the SYF board said.

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Proton up amid cautious market on takeover rumours

KUALA LUMPUR (Dec 2): Shares of PROTON HOLDINGS BHD [] advanced amid a cautious market on Friday as speculation of its takeover lured traders, especially after Daihatsu Motor Co Ltd of Japan reiterated its rejection of a Proton-Perodua merger.

At 3.05pm, Proton was up 34 sen to RM3.44 with 7.63 million shares done.

The FBM KLCI was fluctuating in the positive and negative zones after the early spurt. The 30-stock index was just 0.01 of a point up at 1,485.27. Turnover was 960 million shares valued at RM700.96 million. There were 256 gainers, 372 losers and 287 stocks unchanged.

Meanwhile, The Edge Financial Daily reported on that Daihatsu, a key shareholder of Perodua, was standing firm against the idea of a merger between Perodua and Proton.

Daihatsu president Koichi Ina was quoted saying both companies have very different cultures and product lines and it's better to keep the individuality.

On Nov 29, UOB Kay Hian Research Malaysia upgrade Proton to a Hold from Sell previously raised its target price to RM3.05, after imputing a 15% discount (vs 30% previously) to RNAV.

“Should Proton be able to dispose the loss-making Lotus Group, every RM100 million raised from this potential disposal could add 20 sen/share to Proton’s RNAV,” it said.

The research house said there was some truth to the constant speculation of Proton’s impending takeover, after seeing Proton’s somewhat bullish share price action (uptrend but with high volatility) over the past two weeks, recent consolidation in the auto industry (MBM Resources buying Hirotako), ongoing reforms by ailing GLCs (eg Malaysia International Shipping Corporation (MISC) has just announced its decision to cease its liner operations, once thought to be a “sacred cow”).

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KL shares remain mixed at mid-afternoon

The key FTSE Bursa Malaysia KLCI (FBM KLCI) remained in positive territory while the broader market trended mixed at mid-afternoon today.

At 3pm, it was up 0.65 of a point at 1,485.91 after opening 4.18 points higher
at 1,489.44.

Losers led gainers by 372 to 353 while 287 counters traded unchanged with
951.79 million shares worth RM688.65 million changing hands.

A dealer said the sentiment weakened as investors retreated to the sidelines
awaiting for US jobs data due later today and developments in the euro zone for fresh leads.

On Bursa Malaysia, the Plantation Index rose 3.26 points to 7,820.89 and the
Industrial Index increased 17.04 points to 2,686.30 but the Finance Index shed
40.19 points to 13,288.15.

The FBM Emas Index was 1.79 points higher at 10,140.71 and the FBM Mid 70 Index was up 3.46 points to 10,960.84 but the FBM ACE Index lost 33.56 points to 4,120.74.

Among active stocks, Wijaya-Warrants slipped one sen to 23 sen while
SYF-Warrants gained 11.5 sen to 38.5 sen and DPS Resources rose two sen to 17 sen.

As for heavyweights, Maybank fell seven sen to RM8.32, CIMB lost three sen
to RM7.19 while Sime Darby advanced seven sen to RM9.11. -- Bernama

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Xingquan confident of continuing double digit growth, says CEO

KUALA LUMPUR (Dec 2): Xingquan International Sports Holdings Ltd is confident that it can maintain its double digit growth in revenue for FY12 ending June 2012, said its chief executive officer Wu Qingquan.

Speaking after the company’s third AGM on Friday, Wu said its compound annual growth rate from 2006 to 2011 was 39%.

“Based on the recently concluded spring and summer sales order, we got about a 10% increase in sales order from our distributors,” he said.

On its expansion plans, Wu said its immediate target was to add another 200 sales outlet in China from 2300 outlets currently, for its outdoor casual wear brand, GERTOP.

Wu said it will spend about RMB25 million in subsidies for the 200 sales outlets.

Wu added that Xingquan will its expand production capicity for outdoor shoes by 20% to 30 million pairs of shoes from 24 million pairs of shoes currently.

Moving forward, Wu expects its apparel division to be the main driver in revenue for the company.

In FY11, apparels contributed to 28% to Xingquan's revenue, while shoes (40%), and soles (19%).

Xingquan is involved in manufacturing of shoes and shoe soles, and the sale of shoes, shoe soles, apparels and accesorries. Its main products are outdoor sports shoes and apparels.

Xingquan became the first conmpany from China to be listed on Bursa on July 10, 2009.

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Muted gains on KLCI as profit taking sends Asian markets lower

KUALA LUMPUR (Dec 2): Gains on the FBM KLCI were muted at the mid-day break on Friday, while most Asian markets fell as investors took profit ahead of the US employment data set to be released later in the day.

Although Asian stocks are poised for their first weekly rise in a month buoyed by coordinated central bank actions, the release of mixed economic data from the United States and China spooked some investors and profit taking started chipping off the gains at some of the regional markets.

The FBM KLCI was up 1.86 points at 1,487.12 at the mid-day break. Gainers trailed losers by 234 to 332, while 277 counters traded unchanged. Volume was 810.72 million shares valued at RM541.42 million.

The ringgit strengthened 0.31% to 3.1301 versus the US dollar; crude palm oil futures for the third month delivery fell RM10 per tonne to RM3,048, crude oil slipped 7 cents to US$100.13 while gold fell US$2.13 an ounce to US$1,742.70.

At the regional markets, Japan’s Nikkei was up 0.27% to 8,620.25.

Elsewhere, the Shanghai Composite Index lost 1.44% to 2,352.52, Taiwan’s Taiex fell 0.94% to 7,111.55, Singapore’s Straits Times was down 0.65% to 2,743.84, Hong Kong’s Hang Seng Index fell 0.49% to 18,909.07, and South Korea’s Kospi lost 0.30% to 1,910.36.

On Bursa Malaysia, Nestle was the top gainer at the mid-day break and was up 60 sen to RM52.80; Dutch Lady gained 30 sen to RM24.70, Proton up 29 sen to RM3.39, Tradewinds PLANTATION []s 23 sen to RM4.15, Panasonic, HLFG and Harvest Court 20 sen each to RM19.94, RM11.78 and RM1.10 respectively, while Petronas Dagangan and Petronas Gas added 18 sen each to RM16.80 and RM13.50.

Among the decliners, Aeon Credit fell 20 sen to RM6.10, Shangri-La and Genting Plantations down 13 sen to RM2.25 and RM8, Inno 12 sen to RM1.23, SHL and BAT fell 10 sen each to RM1.15 and RM48, Timwell down nine sen to 76 sen, while PPB and TSH lost eight sen each to RM16.50 and RM1.91.

The actives included Wijaya warrants, DPS Resources, SYF Resources, Compugates and Tiger Synergy.

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PLUS to be suspended Dec 8 for dividend distribution

KUALA LUMPUR (Dec 2): Trading in the securities of PLUS EXPRESSWAYS BHD [] will be suspended from Thursday, Dec 8 for the distribution of the cash proceeds.

A Bursa Malaysia circular on Friday said the suspension was from distribution following the disposal of the businesses, assets and liabilities via a special dividend and selective capital reduction and repayment.

Under the distribution, PLUS shareholders, other than the Employees Provident Fund Board, UEM Group Bhd and Khazanah Nasional Berhad, will be entitled to receive RM4.45 for each PLUS share held on the entitlement date.

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TSH falls after 1-for-1 bonus, OSK Research FV RM2.21

KUALA LUMPUR (Dec 2): Shares of TSH RESOURCES BHD [] fell to a low of RM1.90 on Friday after its bonus shares, which were issued on a one-for-one basis, went ex.

At 12.08pm, it was down eight sen to RM1.91. There were 513,100 shares done at prices ranging from RM1.90 to RM2.01.

OSK Research said that following its calendar year 2012 crude palm oil (CPO) price assumption upgrade to RM3,000 per tonne, it was raising its FY12 earnings forecast for TSH by 10.4% and revising upwards its fair value to RM2.21.

“The company possesses one of the youngest tree age profiles among planters under our coverage, but its valuations are starting to appear a little rich following its recent strong price appreciation. Still a BUY at the moment with a potential 10.8% upside,” it said.

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KL shares remain mixed at midday

Share prices on Bursa Malaysia ended the morning session mixed today amid weak regional market sentiment and mild profit-taking, dealers said.

The key FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.01 points, or 0.14 per cent, to close at 1,487.27 on selective buying in heavyweights despite the bearish sentiment.

It had opened 4.18 points higher at 1,489.44 in the morning.

A dealer said the local bourse was likely to move narrowly in line with the major regional markets following a mixed performance on Wall Street overnight and absence of market-stimulating news.

Hong Leong Investment Bank Research said the key FBM KLCI was likely to encounter profit-taking but any selling pressures would likely be well-absorbed as technical indicators remained positive.

"As long as the index is able to maintain its posture above the uptrend line support near 1,440, we remain short-term positive on the market," it said in a research note today.

Trading was moderate with volume stood at 810.72 million worth RM541.42 million. Losers led gainers by 332 to 234 while 277 counters were unchanged.

The Plantation Index increased 12.84 points to 7,830.47 and the Industrial Index added 14.69 points to 2,683.95. Finance Index, however, slipped 44.62 points to 13,283.72.

The FTSE Bursa Malaysia Emas Index gained 8.53 points to 10,147.45 and the FTSE Bursa Malaysia Mid 70 Index was 7.73 points higher at 10,965.11. FTSE Bursa Malaysia Ace Index, however, declined 19.66 points to 4,134.64.

Among active stocks, Wijaya-Warrants rose 0.5 sen to 24.5 sen, SYF Res-Warrants up 10 sen to 37 sen and DPS Resources added 1.5 sen to 16.5 sen.

For heavyweights, Maybank dropped 7 sen to RM8.32, CIMB eased 4 sen to RM7.18 while Sime Darby advanced 6 sen to RM9.10. -- Bernama

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Bursa Malaysia wins 4 international awards

Bursa Malaysia Bhd has bagged four awards in the 13th annual edition of the IR Global Rankings (IRGR) for Outstanding Corporate Governance in Asia-Pacific and Best Ranked Corporate Governance by Industry (Financials) and Best Online Annual Report in Asia-Pacific for 2011.

Bursa Malaysia also won the Bronze Award for Investor Relations website in Asia-Pacific.

The awards were given in recognition of Bursa Malaysia’s exemplary best practice on corporate governance as well as online annual report structure.

In a statement today, chief executive officer, Datuk Tajuddin Atan, said as a proponent of sound corporate governance and investor relations practices, Bursa Malaysia was honoured to receive these international recognitions.

"They are a testament of our steadfast commitment to embody the values of accountability, integrity, transparency and governance in our business operations.

"As we aspire further towards building an exchange of quality, these awards are a reminder of our contributions to the development of good corporate governance and investor relations practices in the country," he said.

Tajuddin said he would like to attribute this recognition to all Bursa Malaysia employees for their efforts in ensuring operational excellence and exemplary execution.

The IRGR is the most comprehensive ranking system for investor relations website, online annual report, corporate governance practices and financial disclosure procedures.

The ranking is based on extensive technical proprietary research of publicly traded companies through a clear and transparent methodology. The ranking is supported by key global institutions such as Arnold & Porter, KPMG, MZ and Sodali.

Over 600 companies from over 30 countries participated in the 2011 edition of the IRGR. The participants were benchmarked against companies in the global and Asia-Pacific region in four main categories-Best Ranked IR Website; Best Ranked Online Annual Report; Best Ranked Financial Disclosures Procedures; and,
Best Ranked Corporate Governance Practices.

In 2010, Bursa Malaysia won awards for Outstanding Corporate Governance in Asia-Pacific and Best Online Annual Report in Asia Pacific. -- Bernama

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PLUS shares to be suspended on Aug 8

Trading in PLUS Expressways Bhd shares will be suspended from 9am next Thursday to facilitate cash distribution from its business disposal, Bursa Malaysia said today.

The cash proceeds from the entire business disposal and undertakings includes PLUS Expressways' assets and liabilities via a special dividend and selective capital reduction and repayment.

At 12.02pm, PLUS Expressways' shares rose 1 sen to RM4.45, with 5,414 lots traded. -- Bernama

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Analysts upgrade ratings on Tenaga

Tenaga Nasional Bhd may be in line for a payment of about RM2 billion (US$641 million) after the government and Petroliam Nasional Bhd agreed to share extra fuel costs that have driven the Malaysian utility into losses.

Tenaga received a letter from the government agreeing to a fuel-cost sharing mechanism, with extra costs of RM3.069 billion caused by a gas shortage to be split equally between the three, according to a statement from Tenaga yesterday. As the company’s financial situation is “critical,” it will liaise as soon possible with the other two parties to implement the agreement, it said.

“It’s a welcome relief,” Lim Tee Yang, a Kuala Lumpur-based analyst at RHB Capital Bhd, wrote in a report today. “The fuel cost mechanism indicates that the government is sympathetic to Tenaga’s troubles and will step in when necessary.” Lim raised his rating on Tenaga to “strong buy” from “underperform”.

Disrupted production at gas platforms owned by Petroliam Nasional, or Petronas, has forced state-controlled Tenaga to buy costlier oil and distillate fuel for electricity generation. This incurs additional costs of RM400 million every month, chief executive officer Che Khalib Mohamad Noh said on Oct 28.

Tenaga’s stock gained 1.4 per cent to RM5.76 at 9:42 a.m. in Kuala Lumpur trading.

Tenaga’s shares were upgraded to “buy” from “hold” at Maybank-Kim Eng, which cited an improvement in its balance sheet health. The stock was raised to “neutral” from “underperform” at Credit Suisse Group AG, which increased its estimate for Tenaga’s profit for the year through August by 87 per cent.

Tenaga is facing higher costs from running plants on alternative fuels and from importing electricity from Singapore and Thailand, yesterday’s statement said. The extra costs covered by the fuel-cost sharing mechanism were incurred between Jan 1 last year and Oct 31 this year, it said.

“Although the compensation mechanism is a positive development for Tenaga, the deal only covers for costs up to October 2011,” Annuar Aziz and Tan Ting Min, Kuala Lumpur-based analysts at Credit Suisse, wrote in a report. “We remain concerned as the gas shortage is expected to persist.” -- Bloomberg

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Proton on our radar now: UOB-Kay Hian

Proton Holdings Bhd, Malaysia’s state-controlled carmaker, surged 6.1 percent in Kuala Lumpur trading, set for its highest close in two weeks.

The stock jumped 19 sen to RM3.29 at 10:19 a.m. local time.

It’s set to be the second-biggest gainer on the FTSE Bursa Malaysia Top 100 Index.

Proton is “on our radar now” as it’s a “beneficiary” of merger and acquisitions of government-linked companies, UOB-Kay Hian Holdings Ltd wrote in a report today. -- Bloomberg

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DRB-Hicom rises after RM500m sukuk issue

DRB-Hicom Bhd, an automotive, construction and property group, advanced 2 percent to RM2.04, headed for its highest close since Nov. 29.

The company issued RM500 million of Islamic notes, according to a stock exchange filing. -- Bloomberg

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KLCI trims gains as Asian markets pause

KUALA LUMPUR (Dec 2): The FBM KLCI trimmed its gains at mid-morning on Friday, in line with the breather at the key regional markets, following the overnight dip at Wall Street ahead of the US employment data due out later in the day.

Asian stocks paused on Friday, a day after posting their biggest single-day rise in more than two months, as investors cashed in some gains and looked ahead to a key European summit next week for more progress on tackling the euro-zone debt crisis, according to Reuters.

The FBM KLCI was up 0.94 point to 1,486.20 at 10am.

Gainers trailed losers by 164 to 181, while 203 counters traded unchanged. Volume was 289.71 million shares valued at RM183.62 million.

At the regional markets, Japan’s Nikkei 225 was up 0.50% to 8,640.52.

Elsewhere, the Shanghai Composite Index fell 1% to 2,362.97, Hong Kong’s Hang Seng Index lost 0.32% to 18,941.52, Taiwan’s Taiex was down 0.43% to 7,147.70, Singapore’s Straits Times Index lost 0.47% to 2,749.00 and South Korea’s Kospi shed 0.04% to 1,915.33.

RHB Research in its third quarter earnings review said that looking forward, global economic conditions were still unusually fluid, and that the US economy was still struggling and the euro debt crisis is approaching a critical stage.

The research house said in a note Dec 2 that a series of measures had been introduced to avert a liquidity crunch, but not the underlying problems of insolvency and uncompetitive economies.

Whether the ECB will bow to market pressures and be a lender of last resort remains to be seen, it said.

Meanwhile, Eurozone economy had started to contract and without a growth strategy, the risk is a deeper and protracted recession, it said.

“In our view, investors may still be too sanguine on the damaging impact from the euro debt crisis and a deeper recession in the Eurozone would leave few countries unscathed,” it said.

RHB Research said that as a result, the local equity market would still be held hostage to external developments and will likely remain volatile.

“Given a number of significant risks in the horizon, we continue to ascribe a lower PE valuation of 13 times for the local market, translating into a FBM KLCI target of 1,430 for end-2012, slightly higher than our previous target of 1,385 on account of an upward revision in earnings.

“Given the challenging external environment, we continue to advise caution and prefer resilient and defensive stocks to ride through the volatility,” it said.

On Bursa Malaysia, Nestle was the top gainer at mid-morning and was up 60 sen to RM52.80; Dutch Lady gained 30 sen to RM24.70, Tradewinds PLANTATION []s 27 sen to RM4.19, KLK 22 sen to RM22.02, Panasonic 20 sen to RM19.94, Proton 17 sen to RM3.27, Petronas Dagangan 16 sen to RM16.78, HLFG 10 sen to RM11.68 and F&N added eight sen to RM18.10.

Decliners included Hong Leong Bank, Maybank, Public Bank, Atlan, Bumi Armada, Ekovest and IOI Corporation.

Meanwhile, the actives included Compugates, Sycal, MUI Industries, Wijaya warrants, MBF Holdings warrants and DPS Resources.

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Tradewinds leads planters higher

Tradewinds Plantation Bhd rose the most in ten months in Kuala Lumpur trading, leading a gain by plantation stocks after palm oil futures climbed for the first time in eight days.

Tradewinds jumped 8.4 percent to RM4.25 at 9:30 a.m. local time, set for its steepest gain since Feb. 2.

Kuala Lumpur Kepong Bhd added 0.9 percent to RM22 and Sime Darby Bhd advanced 1.2 percent to RM9.15.

Palm oil futures rose 1.3 percent in Malaysia yesterday, snapping a seven-day slump. -- Bloomberg

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KL shares higher in tight-range trading

Share prices on Bursa Malaysia opened higher today in tight-range trading as investors sought for fresh direction, dealers said.

After 10 minutes of trading, the FBM KLCI rose 0.55 per cent or 8.16 points to 1,493.42 from yesterday's 1,485.26 close. The key index opened 4.18 points higher at 1,489.44 this morning.

A dealer said the local bourse is likely to remain steady in narrow trading as investors retreated to the sidelines ahead of the closely watched US non-farm payroll report.

Sentiments could turn bearish in the absence of market-stimulating news from the local front and in Asia, coupled with the weaker overnight close on Wall Street, he said.

HwangDBS Vickers Research said after posting cumulative 53.7 points gains or 3.8 per cent over three straight days, the benchmark FBM KLCI could swing sideways with a marginal downward bias ahead.

"The immediate support and resistance levels are currently seen at 1,475 and 1,500, respectively," it said in a research note today.

The research house, however, said Tenaga Nasional could support the local bourse as the power utility company would benefit from the fuel cost-sharing mechanism with Petronas and the government, which would translate to substantial cost savings.

Tenaga Nasional was among the major contributors to the key index, gaining 9 sen to RM5.77.

On Bursa Malaysia, the Finance Index gained 10.38 points to 13,338.72, the Plantation Index added 24.84 points to 7,842.47, and the Industrial Index climbed 31.06 points to 2,700.32. The FBM Emas Index jumped 42.72 points to 10,181.64 and the FTSE Bursa Malaysia Mid 70 Index rose 7.50 points to 10,964.88.

The FTSE Bursa Malaysia Ace Index, however, slipped 15.64 points to 4,138.66. Trading was moderate with 91.51 million shares worth RM57.37 million.

Gainers led losers by 119 to 61 while 96 counters were unchanged, 1,203 untraded and 15 others were suspended.

Volume leaders, Wijaya rose 0.5 sen to 24.5 sen, Sycal Ventures was 2.5 sen higher at 22 sen, while Compugates was flat at 8.5 sen.

For heavyweights, Maybank declined 3 sen to RM8.36, CIMB lost 2 sen to RM7.20, while Sime Darby gained 12 sen to RM9.16. -- Bernama

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Affin Research maintains Reduce on Axiata, lowers TP to RM4.39

KUALA LUMPUR (Dec 2): Affin Investment Bank Research is maintaining its Reduce recommendation on Axiata and lowered the target price to RM4.39.

It said on Friday it had revised lower its sum-of-parts derived target price to RM4.39 because of the earnings downgrade (higher capex, lowered Celcom sub assumptions), and maintain our Reduce rating on the stock.

“In our view, stock lacks any re-rating catalyst and is pricey at 16 times FY12 EPS, considering that dividend yields are merely 2%.

“Moreover, our forecast implies a core net profit decline of 3.3% in FY11, but rising to +5.2% on-year in FY12, although not compelling enough to warrant this as a growth stock. At our target price, stock trades at a more compelling 14 times FY12 EPS,” Affin Research said.

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RHB Research maintains Outperform on Petronas Gas, FV RM14.50

KUALA LUMPUR (Dec 2): RHB Research is maintaining its Outperform on Petronas Gas with a fair value of RM14.50 following Petronas’ consideration of a third LNG regasification plant in Lumut, Perak.

News reports on Friday said the third plant, if built, would address the shortage of gas supply to the power sector and industrial users in Peninsular Malaysia.

RHB Research said this proposal would be long-term positive for Petronas Gas as it ensures that the LNG business segment will continue to expand beyond the first LNG regasification plant in Melaka that is expected to come onstream July to August 2012.

Under the proposal, Petronas Gas is will manage the distribution via its pipelines. At present, Petronas Gas is not involved in the second plant in Sabah.

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Tenaga gains on fuel-cost sharing deal

Tenaga Nasional Bhd rose to its highest level in more than two weeks after the government and Petroliam Nasional Bhd agreed to share extra fuel costs that have driven the Malaysian power producer into losses.

The stock gained 2.1 percent to RM5.80 at 9:05 a.m. local time in Kuala Lumpur trading, set for its highest close since Nov. 15. -- Bloomberg

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