Faber Group subsidiary faces RM11.2m suit from sub-contractor

KUALA LUMPUR (Jan 12): FABER GROUP BHD []’s subsidiary Faber Ltd Liability Company is facing a suit from a sub-contractor, Sweet Home Technical Works Ltd Liability Company, for services provided for housing projects in Abu Dhabi.

Faber said on Thursday that it had received a statement of claim dated Jan 10 for AED13.12 million (RM11.21 million), which Faber LLC is disputing.

“The Al Dhafra Court of First Instance, Justice Department, Emirate of Abu Dhabi had fixed the hearing of the statement of claim on Monday, Feb 6, 2012,” it said.

Sweet Home was a sub-contractor of Faber LLC for the contracts relating to the civil, mechanical and electrical maintenance services for low cost houses at Liwa and Madinat Zayed in Abu Dhabi.

“There is no financial and operational impact arising from the statement of claim as Faber Group has made provision for the contract costs in relation to the contracts amounting to AED4.50 million (RM3.84 million).



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Supermax’s 340m bonus shares to go ex on Jan 26

KUALA LUMPUR (Jan 12): SUPERMAX CORPORATION BHD []’s 340.07 million new bonus shares will go ex on Jan 26.

The company said the shares were issued on a one-for-one basis. The entitlement date is Jan 30.



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Atlan 3Q net profit dips 9.9% to RM8.33m

KUALA LUMPUR (Jan 12): ATLAN HOLDINGS BHD [] net profit for the third quarter ended Nov 30, 2011 fell 9.9% to RM8.33 million from RM9.25 million a year earlier, mainly due to lower revenue in the duty free segment.

The company said on Thursday that its revenue for the quarter dipped 5.35% to RM177.57 million from RM187.63 million in 2010.

Earnings per share fell to 3.31 sen from 3.67 sen a year earlier, while net assets per share was RM1.60.

Atlan said that its net profit for the nine months ended Nov 30 surged to RM109.61 million from RM49.31 million in 2010, due mainly to the gain on disposal of land by two wholly-owned subsidiaries of the company in the quarter ended May 31, 2011.

Revenue for the nine months dipped to RM527.39 million from RM539.15 million.

Reviewing its performance, Atlan said the drop in revenue for the current quarter and year-to- date was mainly due to the lower revenue from the duty free segment, as the prolonged flooding in Thailand had adversely affected the performance of the duty free outlets located in the northern region of Peninsular Malaysia.

On its prospects, Atlan said barring unforeseen circumstances, the company was expected to continue to perform positively.



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TAS Offshore’s earnings improve, RM2.2m net profit in 2Q

KUALA LUMPUR (Jan 12): TAS Offshore Bhd’s earnings continued to improve, with net profit of RM2.227 million in the second quarter ended Nov 30, 2011 compared with net loss of RM184,000 a year ago, boosted by sale of its tugboats under CONSTRUCTION [].

It said on Thursday its revenue was 27.7% higher at RM31.57 million compared with RM24.72 million a year ago. Its earnings per share were 1.26 sen compared with loss per share of 0.10 sen.

TAS’ second quarter net profit of RM2.227 million was higher by 75.3% compared with RM1.27 million in the first quarter while its revenue rose 79% or RM13.91 million from RM17.67 million.

It said the higher revenue in the second quarter when compared with the first quarter was due to contract revenue recognised on sale of nine units of tugboat under construction during the current quarter.

“Profit before tax increased by RM1.61 million, or 103% to RM3.175 million due to higher revenue being recognised and gain on foreign exchange due to strengthened US dollar,” it said.

For the first half, it posted net profit of RM3.50 million, up 287% from the RM905,000 in the previous corresponding period. It recorded revenue of RM49.25 million, up 3.9% from RM47.38 million a year ago.



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Bina Puri confirms talks with Pakistan over highway privatisation deal

KUALA LUMPUR (Jan 12): BINA PURI HOLDINGS BHD [] is negotiating the financial and legal aspects of a privatisation concession agreement with the National Highway Authority in Islamabad, Pakistan.

In confirming The Edge Financial Daily report on Thursday entitled “Bina Puri to bag Pakistan highway deal”, it confirmed that it had received the letter of intent dated Nov 11, 2011 from the highway authority.

It said the letter of intent was for the conversion of existing four-lane Karachi-Hyderabad super highway into a six-lane motorway (M-9) on build, operate and transfer (BOT) basis.

“We are currently negotiating the financial and legal aspects of the concession agreement with them. We will make further announcement on the progress of the concession,” it said.



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Tebrau Teguh’s land sale 143% above net book value of RM11.6m

KUALA LUMPUR (Jan 12): TEBRAU TEGUH BHD [] is disposing of two parcels of commercial land in Plentong, Johor for RM28.27 million, which is estimated to be RM16.67 million or 143.7% above the net book value of RM11.60 million as at Dec 31, 2010.

The company said on Thursday, the RM28.27 million was based on a valuation report by Messrs. Raine Horne International Zaki + Partners dated June 17, 2011.

“The total net book value as per audited financial statements for the year ended Dec 31, 2010 is RM11.60 million,” it said.

On Sept 30, 2011, Tebrau Teguh’s unit Bayou Bay Development Sdn Bhd had signed a sale and purchase agreement (SPA) with Delta Bestari Sdn Bhd to dispose of two plots of commercial land of 2.139 acres.

On Jan 6, 2012, it had also signed an SPA with Northstar Frontier Sdn Bhd to dispose of two plots of commercial land with total land area of 8.115 acres.

Tebrau Teguh said the updated market value, based on Raine Horne International Zaki + Partners’ valuation, was RM6.05 million for the 2.139 acres and RM20.75 million for the other 8.115 acres.

The justification was that the valuer had taken into consideration of the redevelopment potential of the PROPERTIES [].

The consideration was higher than the potential return from the development of the 5.674 acres of land based on the discounted cash flow method.

The DCF method was based on the assumption that 62 units of three-storey shop office would be built, expected total profit before tax of RM8.08 million, cash flow period of three years and a discount rate of 8%.



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KLCI advances in late trade, extends gains for fourth day

KUALA LUMPUR (Jan 12): The FBM KLCI extended its gains for the fourth consecutive day on Thursday as late buying of select blue chips, including Genting-related counters lifted the index.

At 5pm, the index rose 3.27 points to 1,525.56.

Market breadth however remained weak with losers leading gainers by 418 to 351, while 339 counters traded unchanged. Volume was 1.52 billion shares valued at RM1.58 billion.

Regional markets mostly ended lower, while European shares were flat on Thursday, pausing ahead of a Spanish debt auction that is the first test in the new year of demand for peripheral euro zone debt, the latest stage of a crisis that remains a key drag for equity market sentiment, according to Reuters.

At the regional markets, Japan’s Nikkei 225 fell 0.74% to 8,385.59, the Shanghai Composite Index lost 0.47% to 2,275.01, Hong Kong’s Hang Seng Index was down 0.30% to 19,095.38 and Taiwan’s Taiex shed 0.02% to 7,186.58 and Singapore’s Straits Times Index fell 0.13% to 2,743.66.

Meanwhile, South Korea’s Kospi rose 1.03% to 1,864.57.

On Bursa Malaysia, Genting PLANTATION []s gained 21 sen to RM9.10, Genting up 20 sen to RM10.96, Proton and Hartalega 18 sen each to RM5.46 and RM6.40, Bursa Malaysia 17 sen to RM7.03, Malayan Flour Mills 15 sen to RM7.55, Pos Malaysia and Can-One up 13 sen each to RM2.70 and RM1.78, Southern Acids 12 sen to RM2.29 while Allianz gained 11 sen to RM4.88.

Among the decliners, Carlsberg fell 33 sen to RM8.43, GAB down 26 sen to RM12.06, KLK 18 sen to RM24.52, New Hoong Fatt and BHIC 13 sen each to RM2.31 and RM3.68, Nestle and BAT 12 sen each to RM55.80 and RM49.84, Litrak 11 sen to RM3.74 and Dutch Lady 10 sen to RM26.10.

Ingenuity Solutions was the most actively traded counter with 41.32 million shares done. The stock added one sen to 8 sen.

Other actives included Proton, Nextnation, Pos Malaysia, Bursa Malaysia and OSK.



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Building materials: Cement preferred for better fundamentals

Building materials
Maintain neutral: We expect the construction sector to be buoyant on the whole in 2012, but the steel sector will be in a contraction mode.

The cement sector is expected to be more shielded through minimal import threat and falling coal cost. Lafarge Malayan Cement Bhd (“buy”, target price: RM7.60) is our top proxy to the construction sector.

We maintain our “sell” call on Ann Joo Resources Bhd (TP RM1.30) and “hold” call on Kinsteel Bhd (TP 49 sen).

Local building materials demand was subdued from 2009 to 2011 due to low government construction spending. But the momentum is expected to pick up in 2012 as large-scale Economic Transformation Programme (ETP) projects (the MRT, Kuala Lumpur International Financial District, Warisan Merdeka, Sungai Buloh Rubber Research Institute land) are expected to be awarded progressively from 1Q12 onwards.

On the flip side, the pick-up in demand from the ETP projects could be partially negated by a softer property market (which accounts for about 40% of the construction sector). As newly awarded projects take three to six months to hit the ground, we expect the building materials sector to only see meaningful demand growth in 2H12, at the earliest.

In our view, the cement sector offers better fundamentals due to its oligopolistic market structure. Though new capacity is expected to come onstream in early 2013 (+7% in Peninsular Malaysia’s capacity), we expect this to be well-absorbed by demand growth.


Additionally, there is earnings upside for cement players in view of falling coal costs (December 2011: -20% year-to-date). With energy accounting for about 40% of production cost, we estimate that every 1% decline in coal cost contributes to a 0.8% rise in earnings for Lafarge.

Despite expectations of stronger local demand growth in 2H12, we see downside to steelmakers’ earnings owing to a weaker export market (which accounts for 30% to 40% of sales volume).

We are of the opinion that local demand growth will not make up for the export loss in 2012 and margins may be squeezed by a surplus in global supply. We also see dumping risk from China steelmakers, resulting in industry-wide losses, similar to 2005.

We have a “buy” call for Lafarge and derive our TP of RM7.60 by pegging the stock at its peak 17 times 2013 price earnings ratio. The cement maker is also supported by a high net dividend yield of 5.6%. Ann Joo is a “sell” (TP RM1.30) while Kinsteel is a “hold” (TP 49 sen) as we peg the stocks to their trough cycle price to book value valuations of 0.6 times and 0.55 times. We think there is potential upside to Kinsteel’s share price if the official mining award comes through, potentially in 2012. — Maybank IB Research, Jan 11


This article appeared in The Edge Financial Daily, January 12, 2012.



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Bina Puri to bag Pakistan highway deal?

PETALING JAYA: Bina Puri Holdings Bhd is close to securing the privatisation concession for the Motorway 9 (M-9) highway in Pakistan sources told The Edge Financial Daily. The M-9 links Hyderabad to Karachi, the country’s largest city and seaport.

It is understood that Bina Puri has already received the letter of intent (LoI) from the National Highway Authority of Pakistan but is still negotiating the finer points of the contract.

According to the source, the construction firm will have a 28-year concession to operate the highway, three years of which will entail Bina Puri upgrading the M-9 from four lanes to six lanes, at a cost of some RM600 million.

“The LoI was given sometime late last year. Since then there have been negotiations between the Pakistani officials and Bina Puri. It should be concluded soon,” the source, who is familiar with the matter, said.

The M-9 is known as a superhighway, and is among the most vibrant highways in Pakistan.

It is learnt that the national Highway Authority of Pakistan had called for expressions of interest in May last year, in an international tender. It is not known who the other bidders were.

Bina Puri has a 99.9%-owned unit, Bina Puri Pakistan (Private) Ltd, but whether this is the company that has bagged the job is unclear.

Pakistan is not unfamiliar terrain for Bina Puri. In September last year, the company completed the construction of 174 villas called Phase 6, Defence Raya Golf Resort, Defence Housing Authority, in Lahore, the country’s second largest city. The contract was valued at RM194 million.

In 2010, it completed construction of the Nippon Paint Factory at Lillani Kasor, Lahore, for a contract sum of RM340 million.

Indeed, Bina Puri has been fairly active in the Indian subcontinent, having completed three major highways in India, including the Vijayawada-Eluru Expressway and Tada-Nellore Expressway in Andhra Pradesh and Chittorgarh-Mangalawar Highway in Rajasthan.

The low-profile company has a small market capitalisation of just RM110 million, but a large order book of RM2.7 billion as at end-November 2011. More noteworthy is the fact that Bina Puri is quietly shaping up as an infrastructure player with an international presence.

Established some 35 years ago as a local construction outfit, Bina Puri has since branched overseas and diversified into concessions to boost its income. Other than Pakistan and India, Bina Puri also has a presence in China, Brunei, the United Arab Emirates, Nepal and Thailand among others.

In 2010, the company secured RM2.59 billion worth of projects, compared with RM1.56 billion in 2009. Of that amount, 93% were overseas contracts.

If Bina Puri bags the Pakistan contract, it will be its second highway concession after the KL-Kuala Selangor Expressway (Latar), in which the company has a 50% stake in the concessionaire, in this case KL-Kuala Selangor Expressway Bhd.

Opened mid last year, the 33km toll expressway, valued at RM958 million, spans from the north of Templer’s Park, Rawang, to Assam Jawa in Kuala Selangor.

In 2010, Bina Puri also diversified into the power business in Indonesia when it procured three power plants of 2 MW capacity each, in Tobali, Mentok and Bengkalis.

Nevertheless, despite its growing presence in many countries and its large order book, Bina Puri’s margins have been thin. For the financial year ended Dec 31, 2010, the company registered record revenue of RM1.23 billion and net profit of RM10.6 million, its highest since 1995. Earnings per share (EPS) came in at 10.09 sen.

For its nine months ended September 2011 though, Bina Puri posted lower net profit of RM7.57 million on the back of RM888.34 million in revenue. EPS for the nine-month period stood at 6.95 sen.

In contrast, for the corresponding period a year ago, net profit was higher at RM8.13 million, from RM860.9 million sales while EPS stood at 7.76 sen.

Bina Puri’s shares closed 0.5 sen lower at 90 sen yesterday, with 315,300 shares traded. Over the past year, the stock has traded between a low of 85 sen and a high of RM1.65.

The stock is also trading below its net assets per share of RM1.07 as at Sept 30, 2011.

In November 2011, the company undertook the placement of 9.6 million new shares at RM1 per share.


This article appeared in The Edge Financial Daily, January 12, 2012.




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Tan Chong denies bidding for Proton stake

KUALA LUMPUR: Tan Chong Motor Holdings Bhd yesterday denied that it was joining the race to bid for Khazanah Nasional Bhd’s 42.7% stake in national carmaker Proton Holdings Bhd.

Tan Chong’s announcement to Bursa Malaysia yesterday was made in response to press reports that quoted a AmResearch report on the matter.

AmResearch’s report on Tuesday said Tan Chong has been invited to submit its bid and is working on a proposal to buy the strategic stake in Proton.

But yesterday, Tan Chong’s board announced that it “has neither received any formal invitation nor has any plan to bid for the stake in the national carmaker Proton Holdings Bhd”.

Tan Chong, which distributes Nissan and Renault cars, was cast by AmResearch as a dark horse in the race for the strategic stake in Proton.

Other suitors for Proton include its chairman Datuk Seri Mohd Nadzmi Mohd Salleh, tycoon Tan Sri Syed Mokhtar Al-Bukhary’s DRB-Hicom Bhd and the Naza group.

The Edge weekly recently reported that businessman Tan Sri Arumugam Apavoo Packiri and Genii Capital’s Gerald Lopez could submit a joint bid for the 42.7% block in Proton.

On the back of the news, Tan Chong shares gained 11 sen yesterday to close at RM4.29 on a thin volume of 17,500 shares. Proton rose three sen to RM5.28 with 4.84 million shares traded.


This article appeared in The Edge Financial Daily, January 12, 2012.




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Jaya Tiasa and Ta Ann to benefit from plantations

Timber
Maintain neutral: Given the recent rally in the plantation sector, we believe this will spur investor interest in quasi-plantation stocks such as Jaya Tiasa Holdings Bhd and Ta Ann Holdings Bhd. While both companies are perceived as timber companies, their earnings profiles have changed over the years, with more than 70% of earnings likely to be contributed by their plantation divisions.

We have a favourable view on the plantation sector in light of the risk of supply shortages with the onset of the La Nina weather phenomenon amid inelastic demand that is unlikely to fall off the cliff. The plantation sector is supported by high crude oil prices and continued strength in liquidity flows in the market.

Notwithstanding our relatively flat crude palm oil (CPO) price assumptions of RM3,100 per tonne in 2012 and RM2,900 per tonne in 2013, we highlight that Jaya Tiasa and Ta Ann will still enjoy relatively robust earnings growth due to significant increase in their fresh fruit bunch (FFB) production volumes over the next few years as a result of increasing mature hectarage.

This could provide “earnings comfort” to investors and help to cushion the more volatile earnings from timber. We believe this will help support the share price performance of Jaya Tiasa and Ta Ann, vis-a-vis pure timber play companies such as WTK Holdings Bhd and Lingui Development Bhd, given the current lacklustre earnings from timber.

We maintain our earnings forecasts. The risks include: (i) lower than expected improvement in Japan’s housing starts; and (ii) price discounting from neighbouring countries with lower cost of production, resulting in lower exports from Malaysia to its major export markets.

In line with the upgrade in our target price earnings ratio for the plantation sector, we adjust our target PER (from 12 to 13 times) for the plantation division of Jaya Tiasa and Ta Ann accordingly. Hence, our fair value for Jaya Tiasa is raised to RM7.80 (from RM7.28) and for Ta Ann to RM6.97 (from RM6.49).

We maintain our “neutral” call on the timber sector as we remain cautious that the recovery in Japan housing starts could stall due to a protracted slowdown in the global economy. This could weigh on timber prices and earnings over the longer term. Nevertheless, we still like Jaya Tiasa and Ta Ann, as there will be a significant boost to their earnings from the plantation division due to increasing FFB production volume and favourable CPO prices. — RHB Research Institute, Jan 11


This article appeared in The Edge Financial Daily, January 12, 2012.



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Petra Energy appoints new CEO

KUALA LUMPUR: Integrated brownfield oil and gas service provider Petra Energy Bhd has appointed Datuk Anthony Firdauz Bujang its new CEO, the company announced to Bursa Malaysia yesterday.

Anthony’s appointment fills a vacant position after the termination of Petra Energy’s former CEO Kamarul Baharin Albakri on Dec 20 last year.

Anthony has had a lengthy career in the media as well as in the oil and gas sector.

He has had a lengthy career in the media as well as in the oil and gas sector. From 2008 till the end of last year he was group CEO of The New Straits Times Press (M) Bhd. He previously served as CEO of television channel NTV7 and was TV3’s director of operations.

In the 1990s, Anthony worked in Sarawak Shell Bhd and Shell Gabon in West Africa.

Petra Energy yesterday gained 3.5 sen to 98 sen with 302,900 shares traded.


This article appeared in The Edge Financial Daily, January 12, 2012.



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TNB at lower range of book value

Tenaga Nasional Bhd (Jan 11, RM6.16)
Maintain buy with fair value RM6.57: We reiterate our “buy” call on Tenaga Nasional Bhd with an unchanged discounted cash flow-derived fair value of RM6.57 per share. This implies a CY12F price earnings ratio (PER) of 12 times and a price-to- book value (P/BV) of 1.2 times.

We maintain FY12F to FY14F earnings, which incorporate the one-off RM2 billion fuel relief provided for the natural gas shortage and assumption of normalised fuel costs.

Recall that in November last year, TNB received a letter from the government that laid out a fuel cost sharing mechanism to address the current increased cost borne by the group due to the gas shortage.

We expect further losses in the 1QFY12 results, which will be announced on Jan 17, due to high oil and distillate costs arising from the persistent natural gas shortage.

But the 1QFY12 loss would likely be lower than the RM454 million incurred in 4QFY11 given lower alternative fuel costs amid slightly improved natural gas supply during the flat quarter-on-quarter (q-o-q) seasonal electricity consumption.

Any recognition of the fuel relief in the coming results is unlikely as Petroliam Nasional Bhd is in the process of verifying the additional fuel costs borne by TNB from Jan 1, 2010 to Oct 31, 2011. For now, we do not have guidance on the fuel relief recognition.


Against a backdrop of the post-winter season and China’s lower purchasing, coal prices have fallen below US$100 (RM315) per tonne against our FY12F to FY14F assumption of US$110 per tonne.

We estimate that a US$10 per tonne reduction in FY12F to FY14F coal costs could raise TNB’s fair value by 24% to RM8.17 per share.

While electricity demand grew 7.2% in September/October 2011, we maintain FY12F electricity demand growth at 4% against our economist’s GDP growth forecast of 5% given the uncertain global economic outlook.

This is in line with management guidance.

We expect the upcoming national election to provide clarity to TNB’s key issues: (i) the timing of its tariff adjustment to compensate for higher fuel costs; and (ii) restoration of natural gas supply to the government’s assurance of 1,250 million metric standard cu ft per day (mmscfd) from just around 1,000 mmscfd currently.

The stock currently trades at a P/BV of 1.1 times, at the lower range of one times and 2.6 times over the past five years. Earnings-wise, TNB offers an attractive CY12F PER of 11 times compared with the stock’s three-year average band of 10 to 16 times. — AmResearch, Jan 11


This article appeared in The Edge Financial Daily, January 12, 2012.



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UMW not interested in Proton stake

KUALA LUMPUR: UMW Holdings Bhd has reiterated that it will not be making a bid for Khazanah Nasional Bhd’s 42.7% stake in Proton Holdings Bhd.

“I think we have already made it clear that UMW is not making any bids. We at UMW are committed to our partner Toyota in enhancing its business here in Malaysia and making Perodua (where UMW is a major stakeholder) self-reliant pre and post-NAP (National Automotive Policy),” said UMW’s group chairman Tan Sri Asmat Kamaludin in a Bernama report yesterday.

In the report, Asmat said as far as UMW was concerned, the Proton issue had not been discussed at board level. “And as far as I know we have no plans to make a bid. We have not even considered it,” he said.

UMW’s subsidiary UMW Toyota Motor Sdn Bhd yesterday unveiled the updated Toyota Avanza seven-seater MPV. With four more new or updated models to be released in 2012, UMW Toyota is confident of recapturing its domestic market share amid an increasingly competitive environment.

UMW Toyota, which is the sole distributor of Toyota and Lexus cars in Malaysia, plans to sell 8,800 units of the updated Avanza this year.

UMW Toyota’s deputy chairman, Takashi Hibi, said: “Back in 2005, the Avanza commanded 60% of the local market share of affordable MPVs and about 30,000 units were sold each year. Back then we had almost no competition, but there are many more competitors in the market now in this segment.”

(From left) Asmat, Toyota MotorCorp chief engineer Kaoru Hosokawa, Hibi and UMW Toyota Motor Sdn Bhd president Ismet Suki at the media launch of the all-new Toyota Avanza.

Since the Avanza was first launched in 2005, UMW Toyota has sold over 140,000 units of the MPV in Malaysia. It was the best-selling non-national car from 2005 to 2007.

“Last year, Avanza’s market share was somewhere between 15% and 20%. We expect this figure to improve this year. It will not be anywhere near the 2005 levels, but slightly over 20%,” added Hibi.

At the same time, Hibi is positive on his outlook for the automotive industry in Malaysia.

“Last year, about 599,000 cars were sold in Malaysia. This year we expect to see that number exceed the 600,000-mark. My biggest concern for 2012 (for the local automotive sector) is an increase in interest rates,” he said.

According to Hibi, 2012 is going to be an exciting year for UMW Toyota with four more new or updated models to be launched. Among them, the much-anticipated Prius C, which is a hybrid coupe, will be launched next month. UMW Toyota sold about 90,000 units in 2011.

CIMB Investment Bank has a “neutral” call on UMW with a target price of RM7 per share while Maybank Investment Bank and Hong Leong Investment Bank have a “hold” call and target prices of RM6.10 and RM 7.60 respectively.

Hong Leong cited supply chain recovery from the Thailand and Japan disasters as well as the strong sales of Lexus, Toyota and Perodua as among the factors for the high target price. UMW owns a 38% stake in Perodua.

UMW closed higher yesterday at RM6.99, up 10 sen from RM6.89 with 288,800 shares traded.


This article appeared in The Edge Financial Daily, January 12, 2012.




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Muted response to Malay Chamber’s offer for QSR

KUALA LUMPUR: Despite offering 10 sen more per share, the Malay Chamber of Commerce Malaysia’s (MCCM) bid to acquire Kulim (M) Bhd’s 58.68% stake in QSR Brands Bhd faces a largely muted response from investors.

QSR closed five sen higher to RM6.50 yesterday with 927,200 shares traded. Kulim ended one sen lower to RM4.31 with 1.6 million shares transacted. KFC Holdings (M) Bhd (KFCH), a unit of QSR, gained two sen to RM3.82 with 1.4 million shares traded.

The FBM KLCI edged up 0.3 of a point to close at 1,522.29 yesterday.

Kulim on Tuesday announced that MCCM had offered to buy its 58.68% stake in QSR for RM6.90 a share, rivalling an earlier RM6.80 offer by Massive Equity Sdn Bhd, a joint vehicle between Kulim’s ultimate parent Johor Corp and private equity firm CVC Capital Partners.

Massive Equity was offering to buy all of the assets and liabilities of both QSR and KFCH, which worked out to cost more than RM5.3 billion excluding warrants. In comparison, MCCM’s offer is only for Kulim’s stake in QSR, although such acquisition will eventually trigger a general offer for QSR and hence KFCH.

The boards of QSR and KFCH had said they were not seeking an alternative bids for the sale of their assets and liabilities after both companies accepted a joint takeover offer by Massive Equity end of last year.

However, they noted that the takeover offer from Massive Equity was subjected to “further negotiations and mutual agreement on terms and conditions to be incorporated into the definitive sale and purchase agreement”.


This article appeared in The Edge Financial Daily, January 12, 2012.



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RHB, OSK submit applications to BNM for possible merger

KUALA LUMPUR: RHB Capital Bhd (RHBCap) and OSK Holdings Bhd have submitted their application for the possible merger of the businesses between RHB banking group and OSK Investment Bank.

In separate announcements to Bursa Malaysia here yesterday, both banks said they had submitted their applications to Bank Negara Malaysia (BNM) for the approval of the central bank and the Minister of Finance for the proposed merger.

To recap, at end-September, RHBCap announced that it wrote to BNM for approval to commence negotiations with OSK Investment Bank on a possible merger of businesses. The central bank gave its approval on Oct 13.

The pricing of the deal is not known. Nonetheless, The Edge weekly in October reported that RHBCap was likely to pay between 1.9 times and 2.2 times book value of OSK Investment and it would likely involve a share swap.


This article appeared in The Edge Financial Daily, January 12, 2012.



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Supermax PAT may hit RM110m for FY11

PETALING JAYA: Rubber glove maker Supermax Corp Bhd is expecting to achieve between RM100 million and RM110 million in profit after tax (PAT) and sales of up to RM1 billion for the financial year ended Dec 31, 2011 (FY11).

Its executive chairman cum group managing director Datuk Seri Stanley Thai said FY11 profits would be lower compared to the preceding year due to headwinds such as high natural rubber prices, and volatile forex rates.

Supermax posted RM158.96 million in PAT from RM977.28 million revenue in FY10.

For the first nine months of FY11, it registered net profits of RM77.87 million on the back of RM750.71 million in revenue.

Nevertheless, Thai said Supermax is expected to see its sales grow between 20% and 30% for FY12 due to the strengthening US dollar and softening natural rubber prices.

“FY11 was a challenging year for the industry due to these headwinds. However, natural rubber prices have fallen from its high and is expected to soften to between RM5.50 and RM6 in the first quarter of 2012. This will result in stronger profit margins for natural rubber glove players,” Thai said after the company EGM yesterday.

Natural rubber prices had fallen from an all-time high of RM10.50 per kg in mid-February last year to RM6.50 per kg in December.

Thai said that the profit margins for nitrile gloves would soften further to between 11% and 13% in the second half of 2012. “We expect profit margins for natural rubber gloves to increase to similar levels (as nitrile gloves),” said Thai. Supermax’s product mix is currently 60% natural rubber gloves and 40% nitrile gloves.

Apart from softening natural rubber prices, Thai said FY12 earnings prospects would also be supported by capacity expansion efforts and higher contribution from its distribution arm. Yesterday, Supermax incorporated a wholly owned subsidiary in UK to market and distribute gloves in the region.

“The subsidiary would be focused on marketing (Supermax’s products) to the dental market in UK. In addition, our German subsidiary had also contributed positively to the group since its incorporation in 2010. We see huge growth in the hospital market there,” said Thai, adding that its distribution arm contributes about 40% to the group’s profits.

Supermax is also replacing its old lines and building two new plants to increase its capacity from 17.5 billion gloves per annum currently to 22 billion by the 2H13, at a cost of RM122 million.

While foreign exchange rates are expected to remain volatile this year, Thai said there would be minimal risks as long as exporters lock in the exchange rates on their exports.

On the recent re-emergence of the H1N1 bird flu in Hong Kong, Thai said there is little impact on Supermax at the moment.

“This (the impact or lack of it) is because the Chinese public hospitals use vinyl gloves rather than natural rubber gloves. Nonetheless, we expect demand for natural rubber gloves to increase once healthcare reforms take place in the country,” said Thai.

Natural rubber and nitrile gloves are considered safer and environmental-friendly compared to vinyl gloves.

Yesterday, Supermax’s shareholders approved a proposed one-for-one bonus issue of 340.08 million new shares and a proposed purchase by Supermax of up to 10% of its issued and paid-up share capital.

Thai said the bonus issue is intended to reward shareholders and improve the liquidity of Supermax shares.

Supermax was the top gainer on Bursa Malaysia yesterday, adding 39 sen to close at RM4.32 with 11.18 million shares done.


This article appeared in The Edge Financial Daily, January 12, 2012.



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SapuraCrest lands first contract in 2012

SapuraCrest Petroleum Bhd (Jan 11, RM4.60)
Maintain neutral with unchanged target price RM4.60: SapuraCrest Petroleum Bhd’s equally-owned joint venture company (with Subsea7), SapuraAcergy Sdn Bhd, has secured a contract worth US$100 million (RM315 million) for a subsea construction project off the Vietnamese coast.

The scope includes installation of 28km of 12-inch diameter pipeline, a 28km umbilical, pipeline end terminations (PLETs) and subsea isolation valve (SSIV) structures, spools and pre-commissioning. The job is expected to start mid-2012.

Recall, SapCrest secured a sizable RM4.2 billion contract from Petrobras to construct, charter and operate three units of pipe-laying support vessels (PLSV) in December last year, lifting its outstanding order book to an estimated RM11 billion.

Although the Vietnam contract is relatively small (equivalent to about 3% of its existing backlog), we are positive on the continuous new contract replenishment flow.

Assuming a net profit margin of 12% with the completion period assumption of one year, we expect this project to contribute RM18 million (about RM9 million each in FY13 and FY14) to SapCrest.


Given the earnings impact is minimal and we are fine-tuning our numbers pending the completion of the proposed merger with Kencana Petroleum Bhd, we make no change to our forecasts at the current juncture. We are maintaining our target price (TP) for SapCrest at RM4.60, at par with the offer price for its merger deal.

Our TP implies 21 times price-earnings ratio 2012, which is about plus one standard deviation above its historical average since 2007. The proposed merger with Kencana and the listing of Sapura Kencana is expected to be completed by the first quarter of 2012. — MIDF Research, Jan 11


This article appeared in The Edge Financial Daily, January 12, 2012.



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Consumer stocks among top losers

KUALA LUMPUR (Jan 12): Consumer stocks were among the major decliners on Thursday afternoon as investors took profit after the recent run-up and seemed to have switched partly into cyclical stocks with strong newsflow like Proton.

At 4.05pm, Carlsberg was down 29 sen to RM8.47 with 238,500 shares done, Guinness Anchor 24 sen to RM12.08, Dutch Lady 18 sen to RM26.02 and Nestle 12 sen lower at RM55.80.

The FBM KLCI rose 1.47 points to 1,523.76. Turnover was 1.21 billion shares valued at RM1.15 billion. There were 302 gainers, 438 losers and 317 stocks unchanged.



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Felda Ventures should only have one strategic global partner

LONDON (Jan 12): Felda Global Ventures Sdn Bhd (FGV) should ideally have only one strategic global partner, although talks are ongoing with several parties, sources said.

A source said the partner would bring in the know-how and capabilities in the downstream activities.

Currently, FGV, which is en route for listing on Bursa Malaysia, is reliant on upstream segment of the palm oil industry.

"So, the purpose of the strategic partner is to grow the business across the value chain from being too reliant on upstream to mid-stream and downstream," he told Bernama.

The source, who declined to be named, said one of the key criteria to have a strategic partner was that it must have the capability that would complement FGV.

He, however, declined to comment when asked if the global partner could be one that FGV is already working with in its overseas ventures.

On the company's website, big names such as Procter & Gamble, Behn Meyer & Co and Taiko Clay Chemicals are listed as its joint-venture partners.

"There is still room to further build FGV," he said.

He said the listing of the commercial arm of Felda Holdings Bhd would not only benefit the company and its stakeholders but also the Malaysian capital market.

"It is also branding for Malaysia," he said.

The source said said one should not be confused with big funds such as the Employees Provident Fund (EPF) and strategic global partner.

"Investment from funds like EPF will give strength to FGV's initial public offering. They take up the financial role, while the global partner is the one to help grow the business," he said.

Generally, investors would invest in a company for one to two years, but strategic partners were for the long term, he said.

"Market investors typically take one-two years' view in this kind of environment (due to current financial market uncertainties), previously it would have been one-three years," he said.

FGV is the commercial arm of Felda Holdings Bhd.

It holds a 49 per cent stake in Felda Holdings and Felda Investment Cooperative 51 per cent.

FGV owns about 80 active companies undertaking diverse activities such as mutli-crop PLANTATION []s, oils and fats, oleochemicals, logistics and services.

It has operations in US, Canada, China, Australia and the Middle East. - Bernama



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MBM Resources’s 78% owned OMI invests RM103m in alloy wheel plant

KUALA LUMPUR (Jan 12): MBM RESOURCES BHD []’s (MBMR) subsidiary Oriental Metal Industries (M) Sdn Bhd (OMI) is investing RM103 million in an alloy wheel manufacturing factory in Rawang, with the annual capacity to produce one million units.

MBM Resources said the investment would see its 78% owned OMI becoming the largest Tier-1 integrated wheel manufacturer in the country.

MBMR managing director Looi Kok Loon said the venture into alloy wheel manufacturing was a natural progression by OMI, which has been manufacturing steel wheels since 1985.

“There is a growing demand for high quality yet competitively priced alloy wheels by car manufacturers and assemblers in this country.

“We aim to offer to our current and potential customers, a very attractive locally-made alternative to imports, which are often exposed to vagaries such as currency fluctuations, product quality and delivery issues. Aside from the local market, we are targeting to export about 35% of our products,” he said.

The other shareholders of OMI are its technical partner, Central Motor Wheel Company Ltd of Japan (CMW) with a 19% stake while the remaining 3% is held by Toyota Tsusho Corporation.

MBM Resources said phase one of the project, which is next to OMI’s existing wheel module assembly plant, was scheduled to be completed by the fourth quarter of 2012.

When fully completed by the third quarter of 2015, the13,000 sq. metre plant will have the capacity to produce one million units of alloy wheels annually to cater to both domestic and export markets.

The alloy wheels will be manufactured to original equipment manufacturer (OEM) standards, which require the products to undergo a heat treatment process after casting for optimum strength and durability.

CMW’s president Yukio Azuma said that the new investment was part of the expansion of its 27-year old partnership with MBMR.

“The new plant will be setting benchmarks for our future manufacturing facilities. We will extend our fullest support, especially our technical expertise, to ensure that the alloy wheels produced are of the highest standards,” he said.



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Talks on BOC stake to concluded by Q1: Nazir

CIMB Group Chief Executive, Datuk Seri Nazir Razak, said the negotiations between the bank and San Miguel Corp on the proposed acquisition of a stake in Bank Of Commerce (BOC) in the Philippines are expected to be concluded in the first quarter of this year.

In October last year, CIMB Group has confirmed that it was in discussions with San Miguel over possible acquisition of a stake in BOC.

In announcing it, the group noted that the discussions were currently at an early stage and further announcements would be made in the event of any material developments.

San Miguel is the largest Philippine company by assets.

According to Bangko Sentral ng Pilipinas data, the BOC is the Philippines’ 16th largest lender with assets of 90.7 billion pesos (US$2.07 billion).

CIMB Group is Malaysia's second largest financial services provider and has presence in eight Asean nations. -- Bernama



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Nazir: Talks on Bank of Commerce stake to be concluded by 1Q

KUALA LUMPUR (Jan 12): CIMB Group chief executive, Datuk Seri Nazir Razak said the negotiations between the bank and San Miguel Corp on the proposed acquisition of a stake in Bank Of Commerce (BOC) in the Philippines are expected to be concluded in the first quarter of this year.

In October last year, CIMB Group has confirmed that it was in discussions with San Miguel over possible acquisition of a stake in BOC.

In announcing it, the group noted that the discussions were currently at an early stage and further announcements would be made in the event of any material developments.

San Miguel is the largest Philippine company by assets.

According to Bangko Sentral ng Pilipinas data, the BOC is the Philippines’ 16th largest lender with assets of 90.7 billion pesos (US$2.07 billion).

CIMB Group is Malaysia's second largest financial services provider and has presence in eight Asean nations. - Bernama



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KL shares wring gains at midday

Share prices on Bursa Malaysia ended the morning session steady with investors nibbling on lower-liners and penny stocks while awaiting fresh leads, dealers said.

At 12.30pm, the FBM KLCI stood at 0.03 of a point higher at 1,522.32 after opening 0.90 point lower at 1,521.19.

Analysts expect the benchmark FBM KLCI to probably move sideways within a narrow trading range today due to a dearth of fresh market leads.

With U.S markets' quiet last night, the local bourse could be in for yet another benign day of trading activity, with resistance seen between the 1,524 and 1,540 points level.

The Finance Index rose 23.181 points to 13,460.2 and the Industrial Index added 1.0 point to 2,799. The Plantation Index, however, shed 33.77 points to 8,504.2.

The FBM Emas Index added 2.92 points to 10,499.36, FBM 70 Index was 23.189 points higher at 11,785.51 while the FBM Ace declined 3.4 point to 4,295.34.

Decliners led advancers 365 to 275 while 313 counters were unchanged, 538 untraded and 19 others suspended. Turnover stood at 781.281 million shares worth RM680.040 million.

Among volume leaders, Pos-CE gained 5.5 sen to 13 sen, Proton-CH added 7.0 sen to 58 sen and Bursa-CU firmed 2.0 sen to 7.5 sen.

Among heavyweights, Maybank firmed 4.0 sen to RM8.26 while Sime Darby and CIMB were both flat at RM9.15 and RM7.29, respectively -- Bernama



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Maybank offers moratorium on payments for flood-affected customers

KUALA LUMPUR (Jan 12): MALAYAN BANKING BHD [] is offering a moratorium on monthly installment payment and waiver of certain charges based on a case-to-case basis till June 30 for customers affected by recent floods.

Under the disaster relief assistance programme, this would be for affected customers in Johor, Kelantan, Terengganu, Pahang, Sabah and Sarawak.

“These are extended to business banking, SMEs banking and consumer banking customers affected by the recent floods in Johor, Kelantan, Terengganu, Pahang, Sabah and Sarawak,” it said in a statement.

Maybank deputy president and head of community financial services, Lim Hong Tat said this was the the fifth such moratorium the bank was offering customers since 2007 as it seeks to humanise financial services.

“The bank will process the request for relief assistance on a case-to-case basis,” he said.

The Maybank disaster relief assistance programme applies to both conventional and Islamic facilities.

Some of the key features include:

* Deferment of monthly installments based on a case-to-case basis for consumer loans including business banking and automobile financing for up to 6 months.

* Waiver of charges for affected customers seeking replacement of ATM cards, cheque books and passbooks which have been destroyed in the floods.

* Review of requests from credit card customers on case to case basis for waiver of late/finance charges and application to increase credit limit.



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KLCI pares down gains, Asian mkts turn negative

KUALA LUMPUR (Jan 12): The FBM KLCI hovered in positive territory at the mid-day break on Thursday as most key regional markets turned negative ahead of a Spanish debt sale that is seen as a key test of confidence.

Also, the European Central Bank and Bank of England are scheduled to announce their respective interest rates.

Regional investors have been more risk averse in recent days as lingering concerns over the eurozone debt crisis has sapped confidence among punters.

At the mid-day break, the FBM KLCI edged up a mere 0.03 of a point to 1,522.32.

Losers overtook gainers by 365 to 275, while 313 counters traded unchanged. Volume was 781.28 million shares valued at RM680.04 million.

The ringgit weakened 0.11% to 3.1423 versus the US dollar; crude palm oil futures for the third month delivery fell RM26 per tonne to RM3,202, crude oil gained 34 cents per barrel to US$101.21 while gold added US$1.05 an ounce to US$1,643.03.

At the regional markets, Japan’s Nikkei 225 fell 0.92% to 8,370.14, Hong Kong’s Hang Seng Index shed 0.12% to 19,128.80, the Shanghai Composite Index was down 0.15% to 2,272.63, and Taiwan’s Taiex lost 0.10% to 7,181.34.

Meanwhile, Singapore’s Straits Times Index was up 0.24% to 2,753.61 and South Korea’s Kospi gained 0.18% to 1,848.84.

Among the gainers on Bursa Malaysia, Proton rose 17 sen to RM5.45 with 9.98 million shares done. The national carmaker has been in the limelight in recent weeks on various reports of interested parties bidding for Khazanah Nasional Bhd’s controlling stake in the company.

Other gainers included Pos Malaysia that rose 14 sen to RM2.71, Bursa 13 sen to RM6.99, Southern Acids 12 sen to RM2.29, Esso and Can-One 11 sen each to RM3.67 and RM1.76, Kulim 10 sen to RM4.41, while Malayan Flour Mills and Hibiscus added nine sen each to RM7.49 and RM1.11.

GAB was the top loser this morning and fell 32 sen to RM12; Carlsberg lost 22 sen to RM8.54, Dutch Lady 20 sen to RM26, KLK 18 sen to RM24.50, New Hoong Fatt 14 sen to RM2.30, Nestle and Batu Kawan lost 12 sen each to RM55.80 and RM18.74, while BAT fell 10 sen to RM49.86.

The actives included Proton, Pos, Hibiscus, Bursa and OSK.



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CIMB plans to venture into Laos this year

CIMB Group Holdings Bhd plans to apply for a banking licence in Laos this year, says CEO Datuk Seri Nazir Razak today.



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Takaso ED emerges as substantial shareholder after buying 4.6% stake

KUALA LUMPUR (Jan 12): TAKASO RESOURCES BHD [] executive director Chin Boon Kim has emerged as a substantial shareholder after he acquired a 4.62% stake on Jan 11.

A filing with Bursa Malaysia showed he bought the 6.25 million shares at an average price of 26.3 sen from the open market.

After the recent acquisition, Chin’s stake increased to 5.44% or 7.35 million shares.

Takaso’s shares have been actively traded recently over a proposed timber concession. It is set to seal an agreement with Kayumas PLANTATION [] Ltd on Thursday which will enable Takaso to diversify and tap into Kayumas’ resources, including its concession and a timber licence.

Kayumas also has the logging rights for 40,000 ha of timber in Papua New Guinea.



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Bumi Armada dips, concerns of risky markets

KUALA LUMPUR (Jan 12): Bumi Armada shares dipped on Thursday as analysts were concerned about the longer term outlook for its business in a riskier market.

At 11.06am, it was down one sen to RM4.10. There were 383,000 shares done at prices ranging from RM4.09 to RM4.12.

UOB Kay Hian Malaysia research had initiated coverage on Bumi Armada with a Sell and sum-of-parts target price of RM3.16.

“Despite the promising macro outlook for floating production storage and offloading (FPSO) platforms within the region, Bumi Armada remains one of the most expensive stocks within the oil & gas services sector.

“Minimal exposure in Malaysia, limited lifespan on FPSOs, concentrated revenue stream on a singular asset, exposure to risky markets/counter parties and coupled with a short operating track record are inherent risks the market should not ignore,” it said.



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Bina Puri up on possible Pakistan highway concession

KUALA LUMPUR (Jan 12): BINA PURI HOLDINGS BHD [] shares were up in early trade on Thursday as investors turned positive on the stock on a report that the company was close to securing a possible 28-year highway concession in Pakistan.

At 10.30am, Bina Puri's shares were up seven sen to 97 sen with 2.69 million shares traded.

The Edge Financial Daily reported on Thursday that the Bina Puri was close to securing a 28-year privatisation concession for a highway in Pakistan costing some RM600 million.

It was understood that the group had already received a letter of intent from the National Highway Authority of Pakistan but were still negotiating finer points to the contract.

For more on Bina Puri, read today’s edition of The Edge Financial Daily.



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CB Industrial jumps on declaring dividend

CB Industrial Product Holding Bhd, a Malaysian farm equipment maker, jumped to its highest level in almost four years in Kuala Lumpur trading after declaring an interim dividend of 10 sen per share.

The stock gained 1.3 per cent to RM4.81 at 9.49 am local time, set for its highest close since March 3, 2008. - Bloomberg



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KLCI struggles to extend gains as external concerns persist

KUALA LUMPUR (Jan 12): The FBM KLCI struggled to stay in positive territory at mid-morning on Thursday as key regional markets traded mixed following the softer overnight close at Wall Street.

Asian shares were subdued and the euro hovered near a 16-month low on Thursday as worries about euro zone sovereign funding kept investors risk-averse ahead of a Spanish debt sale that is seen as a key test of confidence, according to Reuters.

The FBM KLCI edged up 0.17 of a point at mid-morning.

Gainers led losers by 221 to 197, while 238 counters traded unchanged. Volume was 333.23 million shares valued at RM251.65 million.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note Thursday said the FBM KLCI’s resistance areas of 1,524 and 1,535 may cap market gains, whilst obvious support areas may be located at 1,500 and 1,522.

“Due to the US markets’ quiet tone last night; we could be in for yet another benign day of trading activity,” he said.

At the regional markets, Japan’s Nikkei 225 slipped 0.71% to 8,388.11, Hong Kong’s Hang Seng Index shed 0.14% to 19,124.80, South Korea’s Kospi lost 0.28% to 1,840.38 and Singapore’s Straits Times Index was down 0.16% to 2,742.66.

Meanwhile, the Shanghai Composite Index added 0.07% to 2,277.65 and Taiwan’s Taiex rose 0.08% to 7,194.15.

On Bursa Malaysia, Pos Malaysia was the top gainer at mid-morning and added 14 sen to RM2.71; Kulim added 10 sen to RM4.41, Can-One, Proton and CBIP rose nine sen each to RM1.74, RM5.37 and RM4.84, Jetson and Genting eight sen each to RM1.32 and RM10.84, Ann Joo seven sen to RM1.87 and Sarawak PLANTATION []s six sen to RM2.60.

Among the decliners, Ta Ann fell 40 sen to RM5.20, KLK down 12 sen to RM24.58, Tan Chong nine sen to RM4.20, Shell and Top Glove down seven sen each to RM9.43 and RM5.18, NCB, Ewein and Kossan down six sen each to RM3.86, 79 sen and RM3.51 respectively, while NSOP fell five sen to RM5.55.

The actives included Pos, Proton, OSK, RedTone, Hibiscus and Envair.



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Tan Chong falls on Proton stake denial

Tan Chong Motor Holdings Bhd, a Malaysian car assembler and distributor, fell the most in almost a month in Kuala Lumpur trading after saying it has no plans to buy a controlling stake in Proton Holdings Bhd.

The stock lost 2.1 percent to RM4.20 at 9:30 a.m. local time, set for the steepest decline since Dec. 16.

Proton gained 2.5 percent to RM5.41. -- Bloomberg



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Supermax gains on setting up UK unit

Supermax Corp, a Malaysian glove maker, rose to the highest level in almost 10 months in Kuala Lumpur trading after saying it set up a marketing and distributing unit in the U.K. under its global expansion plan.

The stock gained 2.1 percent to RM4.41 at 9:17 a.m. local time, set for the highest close since March 22. -- Bloomberg



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Supermax extends gains on positive outlook

KUALA LUMPUR (Jan 12): SUPERMAX CORPORATION BHD [] shares extended their gains in early trade on Thursday on the company’s positive outlook for the glove makers’ sector.

At 9.15am, Supermax added five sen to RM4.37 with 1.15 million shares traded.

The company’s executive chairman Datuk Seri Stanley Thai said on Wednesday said the company expects to record between RM100 million and RM110 million in profit after tax for the financial year ended Dec 31, 2011.

Thai said he also expected RM1 billion in sales in FY11.

For the nine-months ended Sept 30, FY11, Supermax reported RM77.86 million earnings on the turnover of RM750.70 million.



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Bina Puri rises on Pakistan project news

Bina Puri Holdings Bhd, a Malaysian builder, gained the most in more than three months after the Edge Financial Daily reported that the company was close to securing a highway project in Pakistan.

The stock advanced 5.6 percent to 95 sen at 9:04 a.m. local time in Kuala Lumpur trading, set for the steepest increase since Oct. 7. -- Bloomberg



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CIMB Research has technical buy on Sealink at 45 sen

KUALA LUMPUR (Jan 12): CIMB Equities Research has a technical buy on Sealink International at 45 sen at which it is trading at a price-to-book value of 0.5 times.

It said on Thursday that Sealink looks set to break out of its long term downtrend channel.

“If the candles can swing above 46.5 sen and sustain above this level, we believe the bulls are ready to make a comeback. Prices would then charge towards 49 sen and 53.5 sen next,” it said.

CIMB Research said that the MACD histogram bars have returned to the black while RSI has also hooked upward.

“The improving technical landscape bodes well with our bullish stance on the stock. Risk takers may start to nibble now while other should join the bandwagon

when prices swing above the 46.5 sen level. Be quick to cut loss if the 44 sen level is breached,” it said.



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RHB Capital, OSK advance on submitting applications for merger

KUALA LUMPUR (Jan 12): Shares of RHB CAPITAL BHD [] and OSK HOLDINGS BHD [] advanced in early trade n Thursday after they jointly announced that they had submitted their applications for the proposed merger of businesses between OSK investment banking group and RHB banking group to Bank Negara Malaysia and the Minister of Finance.

At 9.05am, RHB Capital added four sen to RM7.31 with 23,700 shares traded while OSK gained two sen to RM1.86 with 1.68 million shares done.

Alliance Research vice president for equity research Cheah King Yoong upgraded his recommendation on RHB Capital from Neutral to Trading Buy, and upped the target price for the stock.

“With the impending proposed merger exercise drawing closer, we have removed our 10% discount from our valuation and raised our target price to RM8.70.

“Should the actual merger details to be announced prove to be more favourable to RHBC’s shareholders, than what has been speculated by the market, it could serve as a near term re-rating catalyst for RHB Capital,” he said in a note Thursday.



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CIMB Research has technical sell on Seacera at 72.5 sen

KUALA LUMPUR (Jan 12): CIMB Equities Research has a technical sell on Seacera Group at 72.5 sen at which it is trading at a price-to-book value of 1.0 times.

It said on Thursday that Seacera Group violated its wedge support on Wednesday, which also confirmed its evening star reversal pattern.

“We think that there is a high possibility that prices may dwindle towards 69.5 sen and 66 sen next. The 200-day SMA (at 63.5 sen) is the following support level,” it said.

CIMB Research said the indicators are showing signs of exhaustion. MACD signal line has begun to flatten out while RSI has also hooked downward.

“Aggressive traders may want to unload some position here. However, always put a buy stop at 75 sen in case we underestimate the strength of this rally,” it said.



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CIMB Research has technical buy on Dayang at RM1.90

KUALA LUMPUR (Jan 12): CIMB Equities Research has a technical buy on Dayang Enterprise Holdings at RM1.90 at which it is trading at a price-to-book value of 2.1 times.

It said on Thursday that Dayang broke out of its consolidation triangle pattern on high volume on Wednesday. It added the prices also shot past its 200-day SMA along the way.

“We think the stock is ripe for a stronger rebound and the candles should surpass the RM1.95 high very soon. The following resistance levels are RM2.02 and RM2.10,” it said.

CIMB Research said the technical landscape is improving. MACD signal line has staged a positive crossover while RSI has also hooked upward.

“Any pullback towards its 200-day SMA (at RM1.85) is an opportunity to accumulate. However, always place a stop at below the RM1.80 level,” it said.



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Maybank IB Research maintains Neutral on glove makers

KUALA LUMPUR (Jan 12): Maybank Investment Bank Research is maintaining its Neutral outlook on the Malaysian glove makers industry.

It said on Thursday that though 2012 is a recovery year for the latex-focused players “but we believe overcapacity in latex powdered segment will limit the earnings recovery”.

Maybank Research pointed out that on the other hand, nitrile-focused players will see margin compression due to industry-wide expansion into nitrile segment, it said.

“Nonetheless, our top pick is Hartalega (TP RM6.80) due to the dichotomy between its high profitability and undeservingly low forward PER of only 9.0 times. We also have a Buy call on Kossan (TP: RM3.50) and Sell on Top Glove (TP: RM3.40),” said Maybank Research.



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RHB Research maintains outperform on Sime Darby, but lower TP of RM10.40

KUALA LUMPUR (Jan 12): RHB Research Institute has lowered its sum-of-parts target price for SIME DARBY BHD [] to RM10.40 from RM10.65, post earnings revision.

It said on Thursday that it is maintaining its Outperform call on the stock. Although earnings growth for Sime may not be too exciting, it believes that PE valuations for the stock of 13 times to 13.5 times are at an unjustified discount to peers at 15 times to 17 times.

“In addition, with a dividend policy to pay out at least 50% of net earnings, we believe Sime’s net yields of 3%-4% p.a. provide a relatively decent and stable return for investors,” it said.

RHB Research said its key takeaways from a briefing by Sime Darby were whether the conservative CPO production growth targets were likely to be surpassed.

While Sime Darby’s downstream division is bleeding but once Indonesian refinery is operational, things should improve, said the research house. However, it noted that the new planting in Liberia is behind schedule.

Other positive takeaways were the heavy equipment division in the form of Bucyrus acquisition; the resilient sales in the motor division while its property marketing strategy was appealing to the right target market in the property sector.

“We have revised our forecasts by -2.9% to +1.3% for FY12-14. We are maintaining our Malaysian CPO price assumptions at RM3,150/t for FY06/12 and RM2,900/tonne for FY13,” it said.



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Kossan set to bounce, says ECM Libra Research

KUALA LUMPUR (Jan 12): ECM Libra Research is recommending KOSSAN RUBBER INDUSTRIES BHD [] a Buy and said commercial operations of the company’s new production lines are expected to commence at end-2Q12.

It said the new capacity would increase output by 2 billion gloves to 14 billion, adding that Kossan has managed to secure buyers for more than 85% of the new capacity.

In a note Thursday, ECM Libra said the current utilisation rate as at end Dec 2011 was 90%.

The research house said valuations were undemanding with Kossan trading at 9.7x FY12 EPS (vs Top Glove’s 24x and Supermax’s 11x FY12).

“The valuation gap should narrow as: (i) Kossan moves up the value chain by offering higher margin surgical and clean room gloves; and (ii) Kossan’s product mix contains less natural rubber glove which is sensitive to movements in latex price.

“Recommend BUY with RM4.02 target price based on 11x FY12 EPS, in line with its historical average,” it said.



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HDBSVR sees KLCI trading in narrow range, key hurdle at 1,530

KUALA LUMPUR (Jan 12): Hwang DBS Vickers Research said the FBM KLCI will probably move sideways inside a narrow trading range ahead due to a dearth of fresh market leads on Thursday.

It said that on the chart, the resistance threshold of 1,530 remains a key hurdle for the bellwether to clear.

On Wall Street, key U.S. equity indices ended between -0.1% and +0.3% as buying interest (especially in banking and TECHNOLOGY [] stocks) offset the lingering Euro Zone sovereign debt concerns.

In terms of local corporate developments, HDBSVR said there could be interest in: (a) OSK Holdings and RHB Capital, after both companies said they have submitted an application to Bank Negara Malaysia to seek approvals in relation to a possible merger of their businesses; and (b) Bina Puri Holdings, in response to a media report saying that it is close to securing the privatisation concession for a highway in Pakistan.



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Stocks to watch: Takaso, CIMB, Tan Chong, Supermax, Hibiscus

KUALA LUMPUR (Jan 12): Stocks on Bursa Malaysia could see some downside bias on Thursday following the weaker macroeconomic issues from its weaker exports outlook and also the troubled eurozone.

RHB Research Institute said on Wednesday it expected Malaysia’s export growth to slow down sharply in 2012 as the global economy will likely experience a protracted slow growth and downside risks remain.

“Indeed, the latest economic data releases suggest that the Eurozone economy might have fallen into a contraction and the US economic growth, though improving, is likely to remain in a low gear,” it said.

Malaysia recorded RM56.86 billion in exports in November 2011, up 8% on-year but when compared to the previous month of October, it fell 10.2%.

Imports for the month were RM47.38 billion, up 8.4% on-year but declined 5.3% on-month.

In its analysis of the November trade data, RHB Research said the 8% on-year export growth in November was the lowest in four months, after holding up at +15.8% in October and off a 15-month high of +16.6% in September.

“This was below the median estimate of an easing to +12.9%, on the back of sliding exports of commodity products as well as a weaker growth in the exports of non-electronic & electrical (E&E) manufactured goods during the month. A smaller contraction in the exports of E&E products, however, helped to mitigate this,” it said.

On the external front, the head of sovereign ratings for Fitch, David Riley warned that the European Central Bank should ramp up its buying of troubled euro zone debt to support Italy and prevent a "cataclysmic" collapse of the euro, , said on Wednesday.

Riley said the collapse of the euro would be disastrous for the global economy, and while it is not Fitch's baseline scenario, it could happen if Italy did not find a way of its debt problems.

"The end of the euro would be cataclysmic. The euro is a reserve currency," Riley said. "What would that do in terms of financial and political stability?"

At Bursa Malaysia, among the stocks to watch are TAKASO RESOURCES BHD [], CIMB Group Holdings Bhd, TAN CHONG MOTOR HOLDINGS BHD [], SUPERMAX CORPORATION BHD [] and Hibiscus Petroleum Bhd.

Takaso, whose shares have been actively traded recently over a proposed timber concession, is set to seal an agreement with Kayumas PLANTATION [] Ltd on Thursday.

The agreement will enable Takaso to diversify and tap into Kayumas’ resources, including its concession and a timber licence. Kayumas also has the logging rights for 40,000 ha of timber in Papua New Guinea.

Philippine conglomerate San Miguel Corp is finalising a deal to sell 60% of its banking arm, Bank of Commerce, to the CIMB Group,.

Reuters said a share-transfer agreement was now being reviewed by the groups involved, the source, who was not authorised to speak to the media about the matter and thus did not want to be identified, told Reuters.

CIMB had said in October it was in early talks to acquire a stake in Bank of Commerce from San Miguel group.

Reuters said Bank of Commerce, with total assets of $2 billion, has capital stock of 16.96 billion pesos (US$385.5 million) as of June 2011, latest bank filings with the central bank show. Based on this data, a sale of a 60% stake in the bank could be worth US$231.3 million.

Tan Chong Motor Holdings had categorically stated it does not plan to acquire a stake in PROTON HOLDINGS BHD [].

It said that it “has neither received any formal invitation nor has any plan to bid for the stake in the national carmaker, Proton”.

Meanwhile, there could be some intermittent profit taking on glove makers after the strong run on Wednesday, if market sentiment weakens.

Supermax expects to record between RM100 million and RM110 million in profit after tax for the financial year ended Dec 31, 2011.

Its executive chairman Datuk Seri Stanley Thai said he also expected RM1 billion in sales in FY11.

For the nine-months ended Sept 30, FY11, Supermax reported RM77.86 million earnings on the turnover of RM750.70 million.

Hibiscus has come under some selling pressure on the back of rising trading volume after the run-up earlier this month. Its shares fell 16 sen to RM1.02 with 31.51 million units done while the warrants fell 2.5 sen to 61 sen with 27.69 million warrants done.



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