Monday, 12 March 2012

Stocks to watch: HWGB, SKP, MSC, Gefung

KUALA LUMPUR (March 10): After a bumpy ride over the past week, which saw the FBM KLCI retracing the most in 2012, the market could receive a boost from firmer external developments, especially from the US markets.

Affin Investment Bank head of retail research, Dr Nazri Khan expected the KLCI to advance, underpinned by local projects newsflow, stronger US jobs data and rising optimism that Greece would avoid a disorderly default.

“Despite the last three days broad sell-off (Tuesday-Thursday), we generally view the distribution as a healthy correction to neutralise the overbought market condition (five months of KLCI uptrend with 12.5% gains since October 2011),” he said.

Nazri said based on his technical analysis, since the KLCI is holding above the 20, 50 and 200-day moving average is an indication the longer-term trend is still positive with KLCI aiming for 1,600 level as the ultimate near term target.

On Wall Street, for the week ahead, Reuters reported that US stocks may still sell off in the near term, but it's not likely to be a drastic decline.

Reuters said much of the optimism has come from signs of further improvement in the US economy. Friday's stronger-than-expected jobs report - the most widely watched U.S. economic indicator - gave the stock market more wind in its sails.

The S&P 500 ended the week with a gain of 0.1%, even though on Tuesday, it marked its weakest day so far in 2012 on concerns about a default by Greece on its country's debt.

Investors had also brushed aside Friday's news of a technical default by the country was mostly brushed aside by investors.

Reuters reported that while concerns about Greece aren't going away, the worst-case scenario has been averted, and the payroll report is another reason for investors to be confident.

As for Malaysia, among the stocks to watch on Monday are HO WAH GENTING BHD [] [] (HWGB), SKP RESOURCES BHD [], Malaysia Smelting Corp Bhd (MSC), GEFUNG HOLDINGS BHD [] and DIJAYA CORPORATION BHD [].

HWGB, whose shares had seen very active trade, said it is not in talks to sell its tin mining business for US$75 million (RM227 million) to Yunnan Tin Group.

HWGB said it was not negotiating with Yunnan Tin’s subsidiary Sino-Platinum Metals Co. Ltd to dispose of the business at this point in time.

A news report said Yunnan Tin had plans to buy HWGB’s tin mining business for US$75 million.

Meanwhile, The Edge weekly reported that the emergence of Dyson, the British innovative designer of electrical appliances, as a major new customer has launched a strong stream of earnings for SKP Resources.

MSC will rope in Optima Synergy Resources Ltd as a joint venture partner to undertake tin mining operations in Indonesia.

MSC signed a strategic alliance agreement with Optima Synergy, which is owned by Indonesian shareholders.

The deal will allow Optima Synergy to acquire up to 23% of MSC’s unit Bemban Corp Ltd for US$1.38 million, according to MSC. Bemban in turn has a 75% stake in PT Koba Tin which has secured a mining contract from the Indonesian government.

Gefung will not go ahead with the proposed joint venture for a mixed development project on 50.74 acres of land in east of Jakarta.

Gefung said the company and PT Greenworld Development “could not reach an agreement on the terms and conditions for the proposed project, the parties have mutually agreed to terminate the MoU with immediate effect”.

The Edge weekly reported that judging from the present share price movement, investors seem cautious about Dijaya’s proposal to acquire 73 PROPERTIES [] from major shareholder Tan Sri Danny Tan and family for an indicative consideration of RM948.7 million, mostly via the issuance of loan stocks.

BOUSTEAD HOLDINGS BHD [] sees its profit breaching the RM1 billion level within the next two years.

Deputy chairman/group managing director Tan Sri Lodin Wok Kamaruddin was quoted saying by Bernama that 2011 was a record year for the group.

“My personal target is that we’ll breach the RM1 billion profit level within the next two years. It could be this year or next year,” he said.

Lodin said Boustead would remain focused on PLANTATION []s, financial services, property, manufacturing and trading, pharmaceuticals and heavy industries.

In FY Dec 31, 2011, Boustead posted a pre-tax profit of RM831 million, up 14.43% from the RM726.2 million in FY10.

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