Axiata eyes non-mobile operations to boost revenue

KUALA LUMPUR (Jan 13): Axiata Group Bhd is allocating RM4.2 billion as capital expenditure for this year, as it looks into various ways to increase revenue, especially in the non-mobile operations.

"We are looking at areas that can increase revenue, especially content, entertainment, mobile commerce and mobile payment," said its president and group chief executive officer, Datuk Seri Jamaludin Ibrahim.

He said to achieve the objective; Axiata has planned for RM4.2 billion as capex for this year.

"It is more or less the same as last year, but the exact amount will be announced next month," he told a press conference after the launch of the Axiata Young Talent Programme on Friday.

On Axiata's key performance index (KPI) for this year, Jamaludin said it, together with revenue and the company's 2011 financial results, would be announced at the end of next month. The group revenue for 2010 was RM15.6 billion.

Axiata has a controlling interest in mobile operators in Malaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia, with significant strategic stakes in India and Singapore.

In addition, it has a stake in non-mobile telecommunication operations in Thailand.

The group's mobile subsidiaries and associates operate under the brand name Celcom in Malaysia, XL in Indonesia, Dialog in Sri Lanka, Robi in Bangladesh, Hello in Cambodia, Idea in India and M1 in Singapore.

On the Axiata Young Talent Programme, Jamaludin said the group is investing RM100 million over 10 years in it to foster education and talent development in Malaysia.

He said Axiata is working with its subsidiaries and associates to replicate the programme and aims to launch it in 2014, starting with Indonesia.

The Axiata Young Talent Programme is also part of the 1Malaysia Programme targeted at the youth in the hopes of nurturing and developing them to become the future leaders and captains of industry. - Bernama



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LTAT sells 10m Guan Chong shares

KUALA LUMPUR (Jan 13): Lembaga Tabung Angkatan Tentera (LTAT) disposed of 10.27 million shares of GUAN CHONG BHD [] on Dec 30, 2011.

A filing with Bursa Malaysia showed that after the disposal of the 3.23% stake, the superannuation fund had ceased to be a substantial shareholder as its stake was reduced to 5.90 million shares or 1.85%.

Guan Chong manufactures cocoa-derived food ingredients such as cocoa mass, cocoa butter, cocoa cake and cocoa powder.

The share price closed at RM2.06 on Dec 30, but since then, the share price has been trending upwards and closed at RM2.38 on Friday.



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Mitrajaya unit gets RM33.41m contracts

KUALA LUMPUR (Jan 13): MITRAJAYA HOLDINGS BHD []’s unit has secured two contracts worth a total RM33.41 million from Putrajaya Holdings Sdn Bhd for CONSTRUCTION [] jobs in Putrajaya.

The company said on Friday that Pembinaan Mitrajaya Sdn Bhd had been awarded contracts to build houses and shop offices in Precints 11 and 8 in Putrajaya.

It said the first contract was to build 63 units of two storey terrace houses at Zone 10E, Precinct 11, Putrajaya for a contract sum of RM20.53 million.

It said the other contract was for the construction of 25 units of two storey shop office, 4 units three storey shop office and associated works at Precinct 8, Putrajaya for RM12.88 million.

Mitrajaya said both the contracts were to be completed within a period of 22 months from the date for possession of site.

“Both the contracts expected to contribute positively to Mitrajaya's future earnings,” it said.



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PM: Polls after economic reforms show results

KUALA LUMPUR (Jan 13): Prime Minister Datuk Seri Najib Tun Razak hopes that the general election will be "soon" but adds that the government still has to show that its economic reforms are producing real results before he is ready to go to the ballot box.

In an interview published by the Wall Street Journal on Friday, Najib said essentially "it's a call you have to make on the basis of a feel-good factor, and that's when you press the button. But of course at the end of the day it's a rather intuitive decision.

"You can have all the polling numbers but you must have the sense that this is the right time. I hope it will be the right time soon enough, but we still have to deliver on our promises and it's important for people to have the feeling that the reforms we have promised will actually benefit them."

In the interview, Najib was reported to have acknowledged that the deteriorating global economic environment, especially the persistent debt crisis in Europe, could complicate his decision about when to call for an election.

The report said that a worsening economic outlook could encourage Najib to call an election sooner than planned.

"But so far we are still quite comfortable because our exposure to the EU in terms of total trade is only about 9.0 per cent, so we are less vulnerable," he said.

"But a euro-zone collapse or some other catastrophe there will affect the whole world."

The last general election was held on March 8, 2008 and the current term only ends in March 2013.

Najib also said that both the government and opposition camps would step up their race to claim the centre-ground of Malaysian politics in the coming months.

Referring to the acquittal verdict on opposition leader Datuk Seri Anwar Ibrahim, he said once it was released, "all of the tension surrounding the trial suddenly fell away and people suddenly realised there are more important things than just the Anwar issue."

"What is important now is that we move forward," he said, and cited measures like making elections more transparent ahead of the next polls. - Bernama



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Market Commentary

The FBM KLCI index lost 2.49 points or 0.16% on Friday. The Finance Index fell 0.05% to 13451.67 points, the Properties Index up 0.16% to 1004.38 points and the Plantation Index down 0.40% to 8505.98 points. The market traded within a range of 4.33 points between an intra-day high of 1526.27 and a low of 1521.94 during the session.

Actively traded stocks include COMPUGT, DRBHCOM-CF, DRBHCOM-CI, DRBHCOM-CG, UTOPIA, PROTON-CL, ASIABIO, DRBHCOM-CH, AT and TAKASO. Trading volume increased to 1766.31 mil shares worth RM1608.93 mil as compared to Thursday’s 1515.08 mil shares worth RM1579.76 mil.

Leading Movers were GENM (+3 sen to RM3.88), MMCCORP (+7 sen to RM2.80), MAYBANK (+1 sen to RM8.26), HLBANK (+6 sen to RM10.88) and PETCHEM (+1 sen to RM6.46). Lagging Movers were IOICORP (-6 sen to RM5.43), GENTING (-8 sen to RM10.88), CIMB (-3 sen to RM7.27), DIGI (-2 sen to RM3.90) and PBBANK (-2 sen to RM13.16). Market breadth was negative with 373 gainers as compared to 397 losers. -- JF Apex Securities Bhd



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KLCI snaps winning streak, but adds 8.94 points week-on-week

KUALA LUMPUR (Jan 13): The FBM KLCI snapped its four-day winning streak and fell on Friday as key regional markets ended the week on a mixed note.

European shares and the single currency rose on Friday after positive comments on the region's outlook from the European Central Bank and the success of Spain's bond auction, with attention focused on Italy's first debt sale of the year, according to Reuters.

The FBM KLCI closed 2.49 points lower at 1,523.07. Week-on-week, however, the index gained 8.94 points.

Losers edged gainers by 397 to 373, while 339 counters traded unchanged. Volume was 1.77 billion shares valued at RM1.61 billion.

Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said the FBM KLCI was likely to extend gains towards 1,550 level following a round of well-received debt auctions in Spain and Italy, expected monetary easing in China and huge liquidity on the domestic front.

“The fact that Italy and Spain sold a total of €22bn ($28bn) of sovereign debt at sharply reduced prices (with implied borrowing costs falling to lowest levels since March 2011) is a major surprise and suggest the European funding problem is gradually improving,” he said.

At the regional markets, Japan’s Nikkei 225 rose 1.36% to 8,500.02, Hong Kong’s Hang Seng Index added 0.57% to 19,204.42, South Korea’s Kospi gained 0.60% to 1,875.68 and Singapore’s Straits Times Index jumped 1.75% to 2,791.54.

Meanwhile, the Shanghai Composite Index fell 1.34% to 2,244.58 and Taiwan’s Taiex shed 0.07% to 7,181.54.

On Bursa Malaysia, Dutch Lady fell 32 sen to RM25.78, Far East down 30 sen to RM6.90, Proton 28 sen to RM5.18, Iretex 12 sen to RM1.05, Advanced Packaging 11 sen to RM1.19, while Aeon, CBIP, JT International and HLFG lost 10 sen each to RM7.35, RM4.75, RM7.08 and RM11.70 respectively.

Among the gainers, Malayan Flour Mills added 31 sen to RM7.86, Supermax 21 sen to RM4.55, Carlsberg and Nestle added 20 sen each to RM8.63 and RM56, Hartalega, MBM Resources and Parkson rose 17 sen each to RM6.57, RM3.47 and RM5.70 respectively, while Milux and Kian Joo added 15 sen to RM1.44 and RM2.16.

Compugates was the most actively traded counter with 101.3 million shares done. The stock added one sen to 7 sen.

Other actives included DRB-Hicom, Utopia and Proton.



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Frontken exec chairman sells all 5.8% stake to German shareholder

KUALA LUMPUR (Jan 13): FRONTKEN CORPORATION BHD [] executive chairman and managing director Wong Hua Choon has disposed of his entire stake in the company, comprising of 59.50 million shares or 5.8% stake.

Filings to Bursa Malaysia showed that Wong sold all the shares at 12 sen in two blocks to its German shareholder Jorg Helmut Hohnloser on Friday. Its net asset per share was 21 sen.

Hognloser’s shareholding increased to 28.8% or 290.99 million shares after he acquired the shares.

According to Frontken’s company website, Wong is the co-founder of and its subsidiaries. It said he has more than 20 years of experience in the business of surface TECHNOLOGY [], including setting up of research and development and engineering application in thermal coating processes.

Frontken provides surface metamorphosis engineering in Asean countries, which focuses on increasing the efficiency and extending the lifespan of machinery and equipment.

The group uses numerous thermal spray coating methods to improve the operations efficiency of various turnkey industries, including the oil and gas, petrochemical, power generation, semiconductor and electronics manufacturing sectors.

In the third quarter ended Sept 30, 2011, it posted net profit of RM65,000 compared with RM1.99 million a year ago. Its revenue was 36.9% higher at RM45.61 million compared with RM33.31 million a year ago.

For the nine-months ended Sept 30, 2011, it reported net profit of RM4.23 million, down 54.8% from RM9.37 million in the previous corresponding period. Revenue was 40% higher at RM146.39 million compared with RM104.56 million a year ago.

It had bank borrowings of RM47.76 million as at Sept 30, 2011 while it had trade receivables of RM67.86 million and cash and bank balances of RM21.40 million.



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Show proof of funding next week

KUALA LUMPUR: Khazanah Nasional Bhd has asked the interested bidders for its 42.7% block in Proton Holdings Bhd to show proof of funds next week, sources familiar with the matter tell The Edge Financial Daily.

It is learnt that the sovereign wealth fund has set aside appointment dates for the whole of next week to assess the funding mechanisms of the various bidders.

While the dates are not certain, it is understood that Tan Sri Syed Mokhtar Al-Bukhary’s DRB-Hicom Bhd will meet Khazanah in the middle of the week while Datuk Seri Mohd Nadzmi Mohd Salleh, the chairman of Proton who has submitted a bid for the national car maker, is likely to meet Khazanah earlier in the week.

Syed Mokhtar is said to have roped in Maybank Investment Bank Bhd to assist DRB-Hicom in the deal. While the outcome is not known yet, it is widely speculated that DRB-Hicom is the front runner to bag the stake in Proton.

Syed Mokhtar, who has almost a 56% stake in DRB-Hicom, is known to be close to former prime minister and Proton adviser Tun Dr Mahathir Mohamad.

Early this week, DRB-Hicom confirmed its interest in Proton, announcing to Bursa Malaysia that it “has always viewed Proton as an important automotive industry player and accordingly DRB-Hicom was on the lookout to explore any viable proposal(s) which will benefit and add value to the group’s business and expansion plans.

“In this regard, the company has submitted a bid for the acquisition of Proton’s shares held by Khazanah,” DRB-Hicom said in its announcement earlier this week.

Many say DRB-Hicom will rope in German auto giant Volkswagen AG, which DRB-Hicom has a collaboration agreement with and does contract assembly for at its assembly plant in Pekan.

DRB-Hicom closed yesterday at RM2.09, inching up one sen with 1.85 million shares traded.

Nadzmi is likely to meet Khazanah early next week to prove his financial might in his pursuit of Proton. Although it is not clear who Nadzmi’s merchant bankers are, some say CIMB Investment Bank Bhd may be roped in.

It is understood that Nadzmi and the other top brass of Proton met Prime Minister Datuk Seri Najib Razak when he visited the Proton plant in Shah Alam last Saturday as part of a meeting between the premier and industrialists in Selangor.

It is not clear if Khazanah has set other appointments, apart from the tentative meetings with DRB-Hicom and Nadzmi.

Tan Chong Motor Holdings Bhd was rumoured to have been invited to bid for Khazanah’s interest in Proton, but the company threw cold water on the speculation.

Other parties interested in placing a bid could be businessman Tan Sri AP Arumugam teaming up with Gerald Lopez of Genii Capital, but this remains unsubstantiated.

Yesterday, Proton surged 18 sen to close at RM5.46 with close to 16 million shares changing hands. According to sources, the offer price could be anywhere between RM5.50 and RM6, which means that the stock’s further rise could be capped.

At the upper band of RM6, the price tag for Khazanah’s block of 42.7% or 234.73 million shares in Proton works out to about RM1.4 billion, while a general offer for the entire company is close to RM3.3 billion.

For its six months ended Sept 30, Proton posted a net profit of RM20.11 million on the back of RM4.5 billion in revenue. In contrast to the corresponding period a year ago, Proton’s net profit tumbled 86.65% despite revenue being only marginally higher.

It is also known that Proton obtains grants from the government, which have helped it maintain profitability.

Much of the issues at Proton stem from its wholly owned Lotus Group International Ltd, which has been incurring higher expenses as a result of an ongoing revamp programme.

As at end-September, Proton had cash and bank balances amounting to RM1.31 billion. On the other side of the balance sheet Proton had long-term debt commitments of RM881.2 million and short-term borrowings amounting to RM77.89 million.

The cost to develop one new model can be as high as RM1 billion, which means Proton does not have much leeway to develop many models at one go.

Proton has also confirmed media reports that it was looking to hive off up to 50% of its Tanjung Malim plant to Detroit-based General Motors Corp. However, Proton cautioned that the talks are still at the preliminary stage. Reports had it that the price tag was as high as RM800 million for a 50% stake in the plant.


Other than the Tanjung Malim plant, the other main asset of Proton is its landbank where its Shah Alam plant is located. This land could have a development value in excess of RM1 billion, property players said.


This article appeared in The Edge Financial Daily, January 13, 2012.



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Sime to intervene in E&O minority’s suit against SC

KUALA LUMPUR: Sime Darby Bhd has received the green light to intervene in a legal challenge that an Eastern & Oriental Bhd (E&O) minority shareholder has filed against the Securities Commission (SC). Sime Darby has just acquired a 30% stake in E&O.

In a filing with Bursa Malaysia yesterday, Sime Darby said the court had allowed a bid by its unit, Sime Darby Nominees Sdn Bhd, to intervene in the judicial review application by E&O minority shareholder Michael Chow Keat Thye against the SC.

Sime Darby had to file the application seeking court permission to intervene in Chow’s application for judicial review because only the SC was named as a respondent in the matter.

Sime Darby had earlier said it was seeking to intervene in the judicial review proceedings on the basis that it should be afforded the opportunity to be heard during the proceedings, given that its legal and commercial interest will be directly affected by it.

To recap, Chow filed for judicial review against the SC in late December last year after the regulator decided not to compel Sime Darby to make a general offer for all remaining shares in E&O.

This came after Sime Darby’s contentious purchase of a 30% stake in E&O from its major shareholders — E&O managing director Terry Tham Ka Hon, GK Goh Holdings and Tan Sri Wan Azmi Wan Hamzah.

The deal sparked a debate as to whether Sime Darby could be deemed to be acting in concert with the three vendors, a claim which Sime Darby and the three E&O shareholders denied.

After investigating the matter, the SC ruled in October last year that the plantations-based conglomerate’s acquisition of the 30% equity interest in E&O did not trigger a mandatory offer obligation.

The SC also found no collusion between Sime Darby and Tham with regard to the deal, which saw Sime Darby pay RM766 million for the 30% block.

At RM766 million, the deal valued E&O at RM2.30 a piece or a 59% premium to E&O’s share price when the deal was announced on Sept 9 last year.

In his application for judicial review, Chow is reportedly seeking a court order to compel the SC to revoke its waiver of a general offer.

Chow is reportedly arguing that the premium which Sime Darby paid for the 30% block was clearly to gain control of the company.


This article appeared in The Edge Financial Daily, January 13, 2012.



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AirAsia X’s route cuts bode well for MAS

KUALA LUMPUR: The suspension of AirAsia X’s services to Paris Orly and London Gatwick, as well as its flights to Mumbai and New Delhi, bodes well for Malaysian Airline System Bhd (MAS), say analysts.

“Such reorganisation is positive for MAS for sure, which possibly explains why MAS’ share price has been on an uptrend,” OSK Research analyst Ahmad Maghfur Usman told The Edge Financial Daily yesterday.

But the long haul low-cost associate of AirAsia Bhd is not completely on the losing end. Ahmad said MAS has been reducing the lucrative Sydney route for AirAsia X, which would be good for the latter to realise better profitability.

“Overall, I don’t see much impact on AirAsia in terms of passenger feeds as typically the passengers from Europe would not fly a low-cost carrier for long haul flights. I’ve always been a firm believer that doing a low-cost carrier model for the long haul segment would be tough to pull off anyway,” he said.

Another analyst with a local bank-backed research firm concurred, saying that AirAsia X’s network reorganisation could have a positive impact on MAS, which has London as its most profitable and high-yield route.

AirAsia X's suspension of services to Paris and London is part of a network consolidation exercise to improve its operating cost efficiencies and focus on markets where it can build a leadership position.

Since Dec 30, 2011, MAS’ shares have increased 24% to close at RM1.62 yesterday. Air- Asia saw its shares close one sen or 0.27% lower at RM3.68 yesterday with 3.4 million shares changing hands.

The suspension of these flights comes as part of AirAsia X’s network consolidation exercise to improve its operating cost efficiencies and focus on markets where it can build a leadership position in 2012, said the company in a statement yesterday.

“The continued high jet fuel prices and the weakening demand for air travel from Europe, brought about by the current economic situation together with exorbitant government taxes, have placed cost pressures on operating long haul low-cost flights between Asia and Europe, compromising our ability to offer the low fares AirAsia X is known for,” AirAsia X CEO Azran Osman-Rani said in a statement.

Other rationales include the implementation of the European Union’s Emissions Trading System and the escalating Air Passenger Duty taxes in the UK, which are set to rise again in April, he added.



Apart from that, Azran said visa restrictions for travel between India and Malaysia, and the increase in airport and handling charges in India, resulted in a “structure not conducive to the low-cost model”.

But he said AirAsia X could reinstate the Mumbai and New Delhi services after these issues are resolved.

The airline’s four times weekly Kuala Lumpur to Paris service will be suspended on March 30 and the six times weekly London service will be suspended on March 31. The four times weekly Mumbai services will be suspended on Jan 31, and the daily service to New Delhi will be reduced to four times weekly in March and suspended from March 22.

Reuters, meanwhile, quoting Thai AirAsia CEO Tassapon Bijleveld, yesterday reported that the Thai unit of AirAsia would submit a filing for its initial public offering this month and plans a Bangkok listing in the first quarter.


This article appeared in The Edge Financial Daily, January 13, 2012.



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SapCrest buys 2 pipelay vessels

KUALA LUMPUR: SapuraCrest Petroleum Bhd’s wholly-owned units TL Offshore PLSV1 Ltd and TL Offshore PLSV2 Ltd have entered into contracts with IHC Offshore and Marine BV for the construction and purchase of two 550-tonne pipelay support vessels.

Without disclosing the price of the vessels, the oil and gas engineering firm said the first and second vessel would be completed and delivered to PLSV1 and PLSV2 within 30 months (May 30, 2014) and 33 months (Aug 29, 2014) respectively from Nov 30, 2011. The company will finance the construction and purchase of the vessels via internal funds and borrowings.

“With the deployment of these vessels, we will be able to enhance our market share by growing the revenue stream within our existing core business. After delivery, the vessels will be slotted to carry out the services under the Petrobras contracts,” SapuraCrest said in filing with Bursa Malaysia yesterday.


This article appeared in The Edge Financial Daily, January 13, 2012.



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2012 CEO Outlook series: Data to enhance DiGi’s growth

TEFD: What are your expectations for 2012, for your company and your industry?
Clausen: We expect that telecommunications will keep up the growth momentum in 2012, precipitated by increasing demand for the Internet. In 2012, we expect a significant part of our growth to come from data, and this trend will carry through for the next few years, with voice growth being flat.

What impact, if any, do you expect from the euro crisis?
I believe Malaysia will remain relatively resilient with marginal impact if any.

What are the main challenges for the company?
The main challenge I believe is to continue driving growth every day while we deliver on a very wide and ambitious transformation programme.

Our long-term outlook for the business is to become the mobile Internet service provider of choice for our customers, connecting customers from all segments, with any usage pattern and spending. The thrusts of our transformation programme — modernising our network, modernising our IT landscape, redefining our distribution and becoming best on people — together with a strong ability to deliver on day-to-day operations will enable us to achieve these goals.

What are the company’s plans and focus for 2012?
We began a three-year transformation journey last year to build an Internet business. In 2011 we established and identified key changes to strengthen the foundation of our business and preparedness to enable Internet for all. This year, we will be in full-scale implementation mode, driving a robust transformation programme across our network, processes, distribution and people.

Clausen: We hope for better clarity on spectrum use and access across all bands.

What is your personal wish list for 2012?
We hope for better clarity on spectrum use and access across all bands. Spectrum is the fundamental life blood for our business. To cater for the growing demand for the Internet, we need to have an adequate mix of spectrum to enable the fundamental voice service. Understanding plans for spectrum use allows us to have a solid overall game plan and allocate appropriate investments to get access to spectrum to drive growth for DiGi, the industry and country.

On a personal front, I wish for good health for my families — both at home and work.


The 2012 CEO Outlook series started on Dec 19, 2011 and will run every day through January. Among those TEFD has interviewed are Geoffrey Briscoe of BMW Malaysia, Tan Sri Teh Hong Piow of Public Bank Bhd, Jeffrey Chew of OCBC Bank (M) Bhd, Osman Morad of Standard Chartered Bank Malaysia Bhd, Yvonne Chia of Hong Leong Bank Bhd, Tan Sri Lee Oi Hian of Kuala Lumpur-Kepong Bhd, among many others. If you’ve missed any of these, please read our back issues on iPad for free.


This article appeared in The Edge Financial Daily, January 13, 2012.



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MBM unit invests RM103m in alloy wheel plant

KUALA LUMPUR: MBM Resources Bhd’s 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 said the investment would see its 78%-owned OMI become the largest Tier-1 integrated wheel manufacturer in the country.

MBM managing director Looi Kok Loon said the venture into alloy wheel manufacturing is a natural progression for 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 Corp.

MBM said phase one of the project, which is next to OMI’s existing wheel module assembly plant, is scheduled to be completed by 4Q12.

When fully completed by 3Q15, the13,000 sq m plant will have the capacity to produce one million units of alloy wheels annually to cater for 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 president Yukio Azuma said the new investment is part of the expansion of its 27-year old partnership with MBM.

“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.


This article appeared in The Edge Financial Daily, January 13, 2012.



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Bina Puri confirms Pakistan highway deal

KUALA LUMPUR: Bina Puri Holdings Bhd yesterday confirmed The Edge Financial Daily’s page one report that it is in the process of finalising a deal to upgrade and operate a highway in Pakistan.

In response to the report, Bina Puri, in a filing with Bursa Malaysia yesterday, said it had received a letter of intent dated Nov 11, 2011 from the National Highway Authority in Islamabad, Pakistan.

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

The M-9 highway links Hyderabad to Karachi, Pakistan’s largest city and seaport.

“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,” the company added.

Bina Puri shares gained 5% or 4.5 sen to 94.5 sen yesterday on the back of The Edge Financial Daily report. This was the counter’s steepest gain since mid-October.

Trading volume surged to 4.74 million shares, 15 times higher than Wednesday’s 315,300 shares.

Nevertheless, Bina Puri’s stock price is still about 40.18% lower year-on-year, having experience an extended decline since recording RM1.58 on Jan 12, 2011.

Quoting sources, The Edge Financial Daily reported yesterday that Bina Puri will have a 28-year concession to operate the highway, of which three years will involve upgrading the highway to six lanes at a cost of RM600 million.

This will be Bina Puri’s second highway concession. The construction company has a 50% stake in the concessionaire for the Kuala Lumpur-Kuala Selangor Expressway (Latar).

No stranger to the Indian subcontinent, Bina Puri has completed three major highways in India — the Vijayawada-Eluru Expressway and Tada-Nellore Expressway in Andhra Pradesh, and Chittorgarh-Mangalawar Highway in Rajasthan.

In Pakistan, Bina Puri completed the construction of 174 villas in Lahore last September as part of the Defence Housing Authority’s Phase 6 of the Defence Raya Golf Resort.


This article appeared in The Edge Financial Daily, January 13, 2012.



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Is the market speculation about RHB Capital wrong?

RHB Capital Bhd (Jan 12, RM7.30)
Upgrade to trading buy from neutral with revised target price of RM8.70: RHB Capital Bhd (RHBCap) and OSK Holdings Bhd jointly announced that they have submitted applications for the proposed merger of businesses between OSK Investment Bank group and RHB Banking group.

No details were given on the pricing and mode of payment of the proposed merger. They are awaiting the approval of Bank Negara Malaysia (BNM) and the Minister of Finance (MoF).

Given that both parties have submitted applications to BNM and MoF, we believe the clouds surrounding the proposed merger are clearing.

Reviewing the past banking mergers, we observe that the proposed merger could be approved by BNM and the details announced at the earliest by March 2012.

We believe that market speculation about RHBCap undertaking a share swap to acquire OSK Holdings has served as a dampener on its share price, as it is expected to be priced at a lower price-to-book value (P/BV) than OSK Holdings. The rumoured share swap seems more favourable to the shareholders of OSK Holdings than RHBCap’s.

However, we believe there is a possibility the merger will be undertaken via a mixture of cash and a share swap and/or at investment banking unit level rather than the listed holding company level. As such, the market speculation may turn out to be untrue. Therefore, RHBCap could attract some buying interest should the actual merger terms turn out to be more favourable to its shareholders than market speculation allows.

As stated in our initiation report dated Dec 14, although we are positive on RHBCap’s fundamentals, we believe the uncertainties surrounding the merger with OSK Holdings will likely cap its share price performance in the near term.

Should the actual merger details prove to be more favourable to shareholders of RHBCap than the market speculation, it could serve as a near-term re-rating catalyst for the group.

With the proposed merger drawing closer, we have removed our 10% discount from our valuation and revise upwards our target price for RHBCap to RM8.70 using the Gordon Growth model (implied 1.5 times FY12 P/BV, 14% return on equity). The 10% discount was imposed previously to reflect the uncertainties surrounding the merger with OSK Holdings.

We have therefore upgraded our recommendation for RHBCap from “neutral” to “trading buy”. — Alliance Research, Jan 12


This article appeared in The Edge Financial Daily, January 13, 2012.



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Broader market still directionless

High dividend yielding stocks have, in general, outperformed the broader market in 2011, as increased volatility and uncertainties had investors gravitating towards lower risk investment options.

These stocks could outperform again this year if investors remain risk-averse. Conversely, they could lag if the outlook brightens, in which case higher beta stocks are expected to fare better. Much still depends on how global events pan out over the coming months. In the meantime, we are highlighting two more companies that are sitting on cash and could raise their dividend payout levels.

Panamy likely to keep dividends at RM1.45 per share at least
Panasonic Manufacturing Malaysia Bhd (Panamy) has quite a cash pile on its balance sheet — totalling RM446.5 million or RM7.35 per share as at end-September 2011.

The company raised gross dividends to RM1.45 per share for the financial year ended March 2011 (FY11) from RM1.20 per share for FY10. The higher dividends reflect its stronger earnings — net profit grew 27% year-on-year (y-o-y) to RM82.7 million in FY11.

We believe Panamy’s underlying earnings will continue to improve in FY12. Net profit in 1HFY12 declined 5.2% y-o-y to RM39.1 million due primarily to derivative loss amounting to RM4 million compared with a loss of just RM127,000 in the previous corresponding period. Excluding this, the company’s underlying earnings actually grew some 4.3% y-o-y despite a stronger ringgit that eroded export revenue.

With the ringgit reversing course in 4Q11, we expect the company to see better margins in 2HFY12, which will help offset the short-term negative impact on export sales as a result of last year’s flood crisis in Thailand.



On balance, we forecast Panamy’s underlying earnings growth at about 5% in FY12. Net profit is, however, estimated at a slightly lower RM80.7 million after including the RM4 million in derivative loss. Net profit should improve in FY13 without the extraordinary loss; we forecast to about RM87.3 million.

Thus, we expect the company will maintain, at least, its dividends at RM1.45 per share in FY12 before raising it to some RM1.50 per share in FY13. This is assuming a fairly conservative average payout of roughly 80% of earnings for the two years, which also means its cash pile will continue to build.

Based on our estimates, shareholders will earn fairly good net yields of 5.4% and 5.6% at the current share price of RM20. The stock posted decent gains in 2011, giving investors returns, including dividends, totalling some 14.2%.

Given that its shares are still trading at relatively modest price-earnings of roughly 14.2 times our annualised earnings forecast for 2012 — relative to other high-yielding consumer stocks — we believe there could be further upside.

Dutch Lady on track for fresh record high profits
Another stock that did very well in 2011 was Dutch Lady Milk Industries Bhd. Its share price gains plus dividends netted shareholders returns totalling nearly 38% last year.

The company is set to report strong earnings for 2011 that will eclipse the previous year’s record high of RM63.9 million. In the first nine months of the year alone, net profit totalled RM79.7 million, 50% higher than that recorded in the previous corresponding period.

This can be attributed to a confluence of factors, including higher topline sales on rising demand for its liquid and powder diary products (which were up some 9.7% y-o-y), favourable sales mix and higher selling prices.

Whilst higher dairy raw material prices and the weaker ringgit are expected to exert some downward pressure on margins in 4Q11 — and 2012 — we still expect earnings to expand. Net profit is estimated at RM97.3 million and RM99.7 million for 2011 and 2012 respectively.

The higher earnings and a strong balance sheet should translate into better dividends. Net dividends totalled 72.5 sen per share in 2010, or about 72.6% of profits for the year. Dutch Lady had already paid net interim dividends totalling 60 sen per share last year. We believe there will be a final dividend when its 4QFY11 results are released in the coming weeks.

Assuming a similar payout level as 2010, net dividends would total roughly RM1.10 per share for 2011 and rise to RM1.13 sen per share in 2012. That would earn shareholders decent net yields of 4.2% and 4.3% for 2011 and 2012 respectively at the current share price of RM26.20.

Dutch Lady’s cash position has been strengthening over the past few years. Net cash has improved from just RM0.9 million at end-2007 to RM145.8 million as at end-September 2011, or about RM2.28 per share. As such, we do not discount the possibility of higher dividend payout or special dividends in the near future. If so, we may see further upside gain for the stock. Its shares are now trading at about 16.8 times our estimated earnings for 2012, which although is higher than the broader market’s average valuations, remains far below the prevailing valuations for Nestle (M) Bhd. The latter is currently trading at over 27 times our earnings estimate for 2012.



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, January 13, 2012.


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Weaker job market will affect JobStreet this year

JobStreet Corp Bhd (Jan 12, RM2.08)
Maintain hold with revised target price of RM2.40 from RM2.30: Hiring normally slows substantially towards the end of the year. We estimate 4Q11 will register 146,000 total job postings and RM28 million turnover (-2% year-on-year [y-o-y], -20% quarter-on-quarter [q-o-q]), compared with 3Q11 with 182,000 job postings and RM36 million turnover.

Net margin is also expected to soften to 30% (3QFY11: 32%) due to higher marketing costs and lower average selling price (ASP) due to competitive pricing. Separately, JobStreet had been consistently paying dividends in recent quarters, and we are expecting 2.65 sen dividend per share (DPS) in 4QFY11, in line with our 50% dividend payout assumption for FY11.

We remain conservative about the employment outlook in 2012, and expect JobStreet to register RM126 million revenue (-8% y-o-y) and RM43 million net profit (-9%) on the back of circa 589,000 job postings (versus 683,000 in FY11).

We do not expect the situation to be as bad as during the 2008/09 economic crisis, when FY09 sales fell to RM92 million (-10% y-o-y) with circa 396,000 job postings.

The drop in FY12 job postings and profit is mainly due to a higher base and profit margins in FY11 (as the economy rebounded and created higher employment opportunities). Nevertheless, FY12F revenue and job postings are still higher than FY09 and FY10.


We maintain our “hold” call for JobStreet with a revised discounted cash flow-based target price of RM2.40 (from RM2.30).

Downside risk will be supported by an expected 50% dividend payout. Seek’s 80% stake in JobsDB (JobsDB has 20% put option) and 22% stake in Jobstreet may pave the way for an M&A. Based on the last transacted pricing of 22.1 times enterprise value per earnings before interest, tax, depreciation and amortisation (EV/Ebitda) for JobsDB, Jobstreet is worth RM3.50 per share. — HwangDBS Vickers Research, Jan 12


This article appeared in The Edge Financial Daily, January 13, 2012.



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UMW launches new Toyota Avanza

UMW Holdings Bhd (Jan 12, RM 7.00)
Maintain underperform with revised fair value of RM6.20 from RM5.80: UMW Toyota launched the Indonesian-assembled Toyota Avanza yesterday, replacing the long-in-the-tooth previous generation vehicle that dates back to 2004.

Sales of the Avanza averaged about 600 units per month in 2011, making up over 8% of To-yota sales.

The new Avanza comes in 1.3L and 1.5L variants as before and is priced between RM64,590 and RM79,590. We estimate this is about 4% to 14% higher than the outgoing model. UMW Toyota is targeting to sell 8,500 units of the new Avanza in 2012.

During the launch, UMW Toyota Motor president Ismet Suki revealed that the company recorded sales of 89,000 units in 2011, about 3.3% lower than our previous sales estimate.

Vehicle and component supplies from Thailand have been affected by the floods, although the supply situation is expected to normalise in 1Q12. The Malaysian Automotive Association (MAA) is expected to release 2011 total industry volume (TIV) data next week.

UMW is forecasting sales of 93,000 Toyota and Lexus vehicles in 2012, broadly in line with expectation, helped by the planned launch of four new models.

In February, UMW will introduce the new Prius C hybrid that was only recently unveiled at the 2011 Tokyo Motor Show.

The Prius C will be a lower priced alternative to the normal Prius. At RM103,990, it puts it at a similar price point to Honda’s Insight Hybrid (RM98,000).

The next generation Toyota Camry, to be assembled in Shah Alam, should also be introduced by mid-2012.

We have tweaked our sales volume estimates lower to 89,000 units for 2011 but raise it slightly to 93,000 for 2012 and 94,000 units in 2013. We also update our foreign exchange assumptions to reflect the continued strength of the US dollar and the yen.

All in, our net profit estimates for 2011 to 2013 are revised lower by 2.8%, 0.1% and 0.5% respectively.

Upside risks include: (i) stronger economy boosting car sales; (ii) favourable forex trends; and (iii) reduced competition.

We make no change to our “underperform” recommendation on valuation grounds. We lift our price earnings ratio (PER)-based, sum-of-parts derived fair value estimate to RM6.20 (from RM5.80) after ascribing higher target PERs of 10 times, 12 times and nine times to its auto, oil and gas (O&G) and other businesses respectively (from 9.5 times, 11 times and eight times).

The higher PER ascribed to its O&G businesses reflects improving prospects in 2012. The main worry for UMW is margin pressure given that the greenback and yen have appreciated 4.3% and 9.4% respectively against the ringgit in the past six months. However, hopes for a higher dividend payout could keep investor interest up. — RHB Research Institute, Jan 12


This article appeared in The Edge Financial Daily, January 13, 2012.



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Aeon ventures into Vietnam

HO CHI MINH CITY: Aeon Group Japan has invested US$100 million (RM314 million) to develop its first flagship retail outlet on a 3.5ha piece of land within Gamuda Land’s development, Celadon City in Ho Chi Minh City, Vietnam.

The investment includes the cost of the land, the construction and other costs related to marketing and design, said Yasuo Nishitohge, general director of Aeon Vietnam Co Ltd. The group is leveraging on Vietnam’s bullish economic growth amid a fairly low retail market in the country.

“We are looking at the growth of the Vietnamese economy and so far we are very confident with it,” Nishitohge told The Edge Financial Daily.

“The retail market in Vietnam is currently undeveloped and we believe that we can contribute to that particular market segment in the country. We are very determined to start with our new flagship store,” he said.

Aeon’s flagship retail outlet has a proposed gross floor area of 80,000 sq m and a net lettable area of 45,000 sq m. However, Nishitohge added that they will be expanding the floor area by 150% to 120,000 sq m as the current size is not sufficient to keep up with the catchment of one million people within a 15-minute radius. When operational, it expects some 100 million sales annually from both its Jusco store as well as other tenants.

The group’s decision to acquire land within Celadon City was primarily due to the development’s lush green space and the availability of the large parcel of land suitable for its mall business which they could not find anywhere else in Ho Chi Minh City.

An artist's impression of Celadon City by nightfall.

“Land of this size is very scarce within the city,” Nishitohge said. “Plus, the development has a very good environment that will be able to complement our outlet well.”

Celadon City is a mixed development comprising residential, commercial and academic components. Built on 82ha of leasehold land in the northern corridor of Ho Chi Minh City, the overall gross development value of Celadon City is RM6 billion which will be developed in six phases over nine years. The residential component has apartments ranging from 67 to 97 sq m and offers a range of two-bedrooms, three-bedrooms and 3+1 bedrooms. Selling prices for the units range from US$60,000 to US$130,000. Aeon is still currently in talks with international and local educational institutions for its education component.

Aeon’s flagship store in Vietnam will be operational by 2014. Aeon Group Japan also plans to expand in Vietnam with at least two new outlets opening each year from 2014 leading up to 2020.

Nishitohge said they will be announcing plans for the group’s second retail store in Vietnam after Chinese New Year.

He added that the group is looking 20 years ahead with this expansion plan.

“We have considered the purchasing power of Vietnam’s population and we are very confident with the economy,” said Nishitohge.

“Even though our outlet in Vietnam will be a small contribution to the group’s revenue, yet it holds a big meaning to the group itself,” he added. “We wish to further expand within Asean countries and our success in Vietnam will be important to our future.”


This article appeared on the Property page, The Edge Financial Daily, January 13, 2012.



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KL shares steadier at mid-afternoon

Share prices on Bursa Malaysia were steady amid rotational play during mid-afternoon trade today, dealers said.

At 3.30pm, the FBM KLCI stood 1.45 points lower at 1,524.11 after opening 2.3 points higher at 1,525.68.

The Finance Index rose 2.710 points to 13,461.45 but the Industrial Index lost 3.27 points to 2,806.52 and the Plantation Index dropped 31.66 points to 8,508.45.

The FBM Emas Index was up 3.619 points to 10,520.1, the FBM 70 Index was 60.17 points higher at 11,852.11 while the FBM Ace fell 26.49 points to 4,271.43.

Decliners led advancers 381 to 315 while 340 counters were unchanged, 456 untraded and 23 suspended. Turnover stood at 1.239 billion shares worth RM946.037 million.

Among volume leaders, Compugates Holdings gained five sen to 6.5 sen, Drbhcom-CF added 5.5 sen to 14.5 sen and Drbhcom-CI appreciated 2.5 sen to 4.5 sen.

As for the heavyweights, Maybank added three sen to RM8.28, Sime Darby declined one sen to RM9.15 and CIMB eased four sen to RM7.26. -- Bernama



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Can-One, Kian Joo climb on mkt talk of possible GO

KUALA LUMPUR (Jan 13): Shares of CAN-ONE BHD [] and KIAN JOO CAN FACTORY BHD [] (KJCF) climbed on Friday afternoon on market expectations that Can-One would likely launch a general offer for KJCH after securing the 32.9% block.

At 3.46pm, Can-One was up 13 sen to RM1.91. There were 13.18 million shares done at prices ranging from RM1.77 to RM1.99.

KJCH rose 14 sen to RM2.15, the most in recent days. There were 3.61 million shares transacted at prices ranging from RM2.01 to RM2.15.

Last Thursday, Jan 5, Can-One won the legal tussle to acquire the 146.13 million KJCF shares held by Kian Joo Holdings Sdn Bhd after a Federal Court ruled in its favour.

The apex court had allowed Can-One’s appeal to proceed with the completion of the acquisition of the 32.9% stake for RM241.11 million.

Market talk was that Can-One could then launch a general offer for the remaining shares in KJCF.

To recap, on Nov 16, 2011 Can-One said the Securities Commission had approved a further extension of times until May 6, to complete the proposed acquisition.

As at Sept 30, 2011, KJCF’s net asset per share was RM2.02. It had cash of nearly RM60 million.



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MAS opts for latest cockpit technology

Malaysia Airlines (MAS) is embracing the Lufthansa Systems Electronic Flight Bag (EFB) application suite on its new A330 fleet aircraft to further enhance safety of flight operations and reduce costs.

In a statement today, MAS said the first of the A330-300 passenger aircraft would be fully operational with the EFB by July while the remaining A330 already in the fleet would be retrofitted progressively.

"The EFB, built for the cockpit environment of all sectors of aviation, can eliminate paper from the cockpit, improve crew situational awareness, improve cockpit efficiency, productivity and safety," it said.

It said it selected the Lufthansa Systems software suite, including applications such as e-document viewer, e-charts viewer, airport moving map, performance calculation, e-flight folder and e-form for the EFB system to guarantee consistent information availability throughout the entire flight.

NavAero AB, a Sweden-based company, meanwhile, provides the EFB hardware. MAS said the introduction of EFB on its new A330-300 aircraft marked the bold commitment it was taking towards pushing its efficiency to a new level.

Its executive vice president flight operations, Captain Izham Ismail, said by opting for the EFB, the airline would benefit not only from the weight reduction but improving efficiency in information management.

MAS has ordered 15 Airbus A330-300 and four Airbus A330 freighters to be delivered over the next three years, as part of its fleet renewal programme.

It has to date received five passenger and two freighter aircraft. The passenger aircraft are currently deployed for selected return flight operations from Kuala Lumpur to Melbourne, Brisbane, Adelaide, Bali and Shanghai. -- Bernama



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More upside for MPHB as it transforms into higher-yielding company

KUALA LUMPUR (Jan 13): Shares of MULTI-PURPOSE HOLDINGS BHD [] (MPHB) rose on Friday on analysts’ expectations that it could transform into a higher-yielding company.

At 3.10pm, it was up four sen to RM2.74. There were 923,900 shares done at prices ranging from RM2.70 to RM2.74.

UOB Kay Hian Malaysia Research said MPHB could re-rate in the second half of 2012 as investors start to price in significant divestment and monetisation of its non-gaming assets.

It said MPHB was trading at a steep discount to consensus RNAV of RM3.40 and at a prospective price-to-earnings multiple of 9.9 times on consensus’ forecast.

“Its discount to RNAV should narrow over time as it works towards monetising its non-core assets en route to becoming a purer gaming company, and as it reduces its net gearing that would allow it to raise dividend payout in the medium term,” it said.

UOB Kay Hian Malaysia Research said the expected developments include MPHB selling its Hotel Flamingo in Kuala Lumpur in the first quarter of 2012 and the securing of joint venture partners or buyers for its other hotels and other property assets.

It said there were expectations from the launch of its sizeable Rawang property development by 2H12, and by 1H12, the spinoff of its insurance arm and listing of U-Mobile (where it has invested RM180 million to date).

“Collectively, these exercises could release at least RM5 billion worth of market value,” it said.



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Tebrau Teguh advances on land sale deal

KUALA LUMPUR (Jan 13): Shares of TEBRAU TEGUH BHD [] rose to a high of 73 sen in moderate active trade on Friday as investors were positive to the sale of two parcels of land, which was 143.7% above the net book value.

At 2.47pm, it was up 2.5 sen to 72.5 sen. There were 8.09 million shares done at prices ranging from 70.5 sen to 73 sen.

Tebrau Teguh 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.



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Hiap Teck 354m new shares to list on Monday

KUALA LUMPUR (Jan 13): HIAP TECK VENTURE BHD []’s additional 354.14 million new shares under its rights issue will be listed on Monday, Jan 16.

A Bursa Malaysia circular said on Friday that the company’s 88.53 million warrants will also be listed on that day.

The new shares arose from the issuance of 354.14 million rights shares at an issue price of 50 sen per rights share with 88.53 million warrants on the basis of one rights share for every one share held and also one warrant for every four rights shares subscribed.



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KL shares easier at midday

At 12.30 pm today, there were 295 gainers, 329 losers and 320 counters traded unchanged on the Bursa Malaysia.

The FBM-KLCI was at 1,525.39 down 0.17 of a point, the FBMACE was at 4,281.83 down 16.09 points, and the FBMEmas was at 10,523.68 up 7.19 points.

Turnover was at 814.446 million shares valued at RM585.559 million. - Bernama



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Limited gains at Asian markets as Spanish, Italy bond sale euphoria fizzles out

KUALA LUMPUR: The FBM KLCI remained relatively muted at the mid-day break while gains at key regional markets appeared capped as the initial euphoria over the successful bond sales in Spain and Italy fizzled out.

The FBM KLCI shed 0.17 of a point to 1,525.39 at the mid-day break.

Gainers trailed losers by 295 to 329, while 320 counters traded unchanged. Volume was 814.47 million shares valued at RM585.57 million.

The ringgit strengthened 0.37% to 3.1305 versus the US dollar; crude palm oil futures for the third month delivery fell RM55 per tonne to RM3,154, crude oil rose 55 cents per barrel to US$99.65 while gold lost US$8.50 an ounce to US$1,641.75.

At the regional markets, Japan’s Nikkei was up 0.96% to 8,465.69, Singapore’s Straits Times Index added 0.76% to 2,764.45, South Korea’s Kospi gained 0.42% to 1,872.47 and Taiwan’s Taiex rose 0.22% to 7,202.13.

Meanwhile, the Shanghai Composite Index fell 1.77% to 2,234.81 and Hong Kong’s Hang Seng Index shed 0.03% to 19,089.40.

On Bursa Malaysia, United PLANTATION []s fell 40 sen to RM19.60, Iretex down 23 sen to 94 sen, F&N down 14 sen to RM18.86, BAT 12 sen to RM49.72, Advanced Packaging 11 sen to RM1.19, Dutch Lady and GAB down 10 sen each to RM26 and RM11.96, while Cview fell 8.5 sen to 59.5 sen.

Compugates was the most actively traded counter with 40 million shares done. The stock gained half a sen to 6.5 sen.

Other actives included Utopia, Proton, Takaso, Berjaya Corp and Nextnation.

Gainers included Malayan Flour Mills, Supermax, Hartalega, Pos Malaysia, Carlsberg, MBM Resources, Kian Joo, Tenaga and Can-One.



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Atlan drops on lower Q3 net income

Atlan Holdings Bhd, a maker of stamped-metal components and duty-free retailer, declined 1 per cent to RM2.93, on course for its lowest close since February 25, 2010.

Third-quarter net income dropped 10 per cent to RM8.3 million (US$2.7 million) from a year earlier, the company said in a stock exchange filing. - Bloomberg



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Buy Petronas Gas shares: HwangDBS

HwangDBS Vickers Research is maintaining its "buy" call on Petronas Gas Bhd with the target price raised to RM16.90 a share from RM15.50 earlier due to promising outlook in the oil and gas industry.

The research house, also optimistic over the company's strong earnings growth from this year's financial year onwards, said the promising outlook for the industry was supported by new pipelines and regas plants.

It said strong earnings growth would be led by contributions from the Melaka regas plant in FY2012 and the Sabah power plant in 2013, it said in a review of the company, whose shares eased four sen to RM15.40 on Bursa Malaysia at 11.30am today.

Petronas Gas would be the prime beneficiary with the planned new pipelines in Terengganu and new regas plants in Pengerang and Lumut, it said in a statement.

It said the company was a main player in the current volatile oil and gas market and might be rerated with imminent news of project awards. -- Bernama



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Tebrau Teguh rises after land sale

Tebrau Teguh Bhd, a Malaysian property company, rose the most in almost two months in Kuala Lumpur trading after saying it sold land for RM16.7 million above its current book value.

Its shares gained 4.3 percent to 73 sen at 9:36 a.m. local time, set for its biggest increase since Nov. 14. -- Bloomberg



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KLCI slips at mid-morning in lacklustre trade

KUALA LUMPUR (Jan 13): The FBM KLCI slipped into negative territory at mid-morning on Friday amidst lacklustre trade, while key regional markets eked out modest gains following the successful bond sales in Spain and Italy on Thursday.

On Bursa Malaysia, the FBM KLCI shed 0.19 of a point to 1,525.37 at 10am, weighed by losses at select blue chips.

Gainers led losers by 230 to 164, while 223 counters traded unchanged. Volume was 365.74 million shares valued at RM180.37 million.

Asian shares rose to a one-month high and the euro clung near its strongest in a week on Friday as strong demand for Spanish and Italian debt sales tempered risk aversion ahead of another auction from Rome later in the day, according to Reuters.

Interbank lending rates fell in a sign that worries about a credit crunch may be easing, while Asian credit markets firmed, with primary market activity picking up, it said.

At the regional markets, Japan’s Nikkei 225 rose 1.39% to 8,502.16, Hong Kong’s Hang Seng Index added 0.43% to 19,178.10, South Korea’s Kospi gained 0.68% to 1,877.18, Singapore’s Straits Times Index up 0.54% to 2,758.60 and Taiwan’s Taiex was up 0.52% to 7,224.18.

Meanwhile, the Shanghai Composite Index shed 0.19% to 2,270.60.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients Jan 13 said that due to the US markets’ quite tone last night, the local market could be in yet for another benign day of trading activity.

“From the recent 1,310.53low to the 1,493.28 high, the index held the 38.2% retracement level of 1,424.19. The market’s next swing high is probably located at 1,530.73 (Dec 30).

“If the index can surpass this level, we are poised to head to higher levels soon. Else, the index could remain quiet for now,” he said.

Among the decliners on Bursa Malaysia, F&N fell 20 sen to RM18.80, Dutch Lady 10 sen to RM26, Genting PLANTATION []s six sen to RM9.04, Sunchirin and BLD Plantations five sen each to RM1.50 and RM8, while Apollo, HSL, IOI Corp and Genting fell four sen each to RM2.91, RM1.41, RM5.45 and RM10.92 respectively.

Utopia was the most actively traded counter with 20.33 million shares done. The stock gained half a sen to 7 sen.

Other gainers included Compugates, Proton, Berjaya Corp, Palette and Lion Corp.

Gainers included Malayan Flour Mills, Supermax, Hartalega, Petronas Dagangan, Carlsberg, MBM Resources, CI Holdings, Kretam and Kian Joo.



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KL shares wring gains in early trade

Share prices on Bursa Malaysia were traded slightly higher in early trading today, as investors took the cue from the better performance of the Wall Street overnight, dealers said.

At 9.13am, the FTSE Bursa Malaysia KLCI (FBM KLCI) edged up 0.28 of a point to 1,525.84.

However, losses in some banking and financial stocks saw the Finance Index easing 0.9 of a point to 13,457.84.

The Plantation Index also lost 6.12 points to 8,533.99 but the Industrial Index rose 3.09 points to 2,812.88.

The FBM Emas Index gained 7.02 points to 10,523.50, the FBM 70 Index added 17.62 points to 11,809.56, the FBM100 Index earned 4.71 points to 10,328.68 and the FBM Ace advanced 10.37 points to 4,308.29.

Gainers led decliners by 138 to 64 while 157 counters were unchanged.

It was thin trading with 1,189,194 lots worth RM68.595 million.

Actives, Palette edged up half a sen to 7.5 sen, Compugt gained one sen to seven sen and Proton-CL was up two sen to 29 sen.

Among heavyweights, CIMB added four sen to RM7.26, Maybank was up one sen to RM8.26, while Petronas Chemicals was unchanged at RM6.45. -- Bernama



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Maybank IB Research cuts KNM target price to 88 sen

KUALA LUMPUR (Jan 13): Maybank Investment Bank Research has reduced the target price of KNM GROUP BHD [] to 88 sen following a 10%-19% downgrade in FY12-13F earnings forecasts on lower revenue recognition.

It said on Friday that while margin pressure has abated on improving order flows, it is cautious of KNM's cost management abilities and so retain a conservative stance on its estimates.

“KNM needs to deliver a consistent set of quarterly results to warrant a re-rating. Sell maintained,” it said.



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Faber shares retreat on concerns over legal suits

KUALA LUMPUR (Jan 13): FABER GROUP BHD [] shares retreated on Friday on concerns over the increasing legal disputes the company is facing involving its projects in the Middle East.

On Thursday, the company said that its subsidiary Faber Ltd Liability Company was facing a suit from sub-contractor, Sweet Home Technical Works Ltd Liability Company, for services provided for housing projects in Abu Dhabi.

At 9.25am, Faber slipped three sen to RM1.79 with 49,000 shares done.

Faber on Thursday said the statement of claim dated Jan 10 was for AED13.12 million (RM11.21 million), which Faber LLC is disputing.

Meanwhile, RHB Research Institute downgraded Faber to underperform from market perform but maintained its sum-of- parts (SOP) fair value of RM1.53.

It said on Friday that following two earlier lawsuits, the company now faces a third claim by Sweet HomeTechnical Works for earlier contract works in UAE amounting to approximately RM11.2 million.

“Still too early to determine the impact of the recent lawsuits but we are increasingly concerned that Faber could face more lawsuits, going forward,” it said.

“SOP fair value estimate of RM1.53 kept unchanged. However, recent run-up in Faber’s share price on growing expectations of the government concession renewal means that it is no longer in line with our expected market return. Downgrade to Underperform from market perform,” it said.



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Takaso rises on PNG timber concession

Takaso Resources Bhd, a Malaysian consumer-products company, rose to the highest level in more than four months in Kuala Lumpur trading after saying it will buy a timber-license concession holder in Papua New Guinea.

The stock gained 4 percent to 26 sen at 9:20 a.m. local time, set for the highest close since Sept. 5. -- Bloomberg



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Faber downgraded, stock declines

Faber Group Bhd, a hospital support-services provider and property developer, fell the most in a week in Kuala Lumpur trading after the stock was downgraded to “underperform” at RHB Capital Bhd.

Its shares fell 2.2 percent to 1.78 ringgit at 9:17 a.m. local time, set for their biggest decrease since Jan. 6.



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MIDF Research upgrades construction sector to Positive

KUALA LUMPUR (Jan 13): MIDF Research has upgraded the CONSTRUCTION [] sector to Positive from Neutral.

In a note Jan 13, the research house said this was after taking into account heightened expectation of stronger orderbook replenishment in 2012.

“Execution risk will be mitigated by stronger needs to pump-prime the economy to counter the effect of the European debt crisis.

“We are upgrading Gamuda (TP: RM4.40) and MRCB (TP: RM2.40) to Buy given their stronger prospect of securing the ETP projects, namely KV MRT, Gemas-JB Railway EDTP and River of Life jobs,” it said.



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Tatt Giap gains on plan to buy Buminox

Tatt Giap Group Bhd, a Malaysian manufacturer of stainless-steel products, rose to its highest level in a week in Kuala Lumpur trading after saying it plans to buy 60 percent of iron-ore miner Buminox Sdn Bhd for RM3.6 million.

The stock gained 2.4 percent to 43 sen at 9:07 a.m. local time, set for its highest close since Jan. 6. -- Bloomberg



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Tenaga gets RM1b govt compensation: CIMB

Tenaga Nasional Bhd, Malaysia’s biggest power producer, received an advanced payment of RM1 billion from the government on behalf of state-owned Petroliam Nasional Bhd as compensation for additional costs arising from a shortage of gas supply, CIMB Group Holdings Bhd said in a report today.

Tenaga may get another RM1 billion from the government within this financial year ending August, Terence Wong, an analyst at CIMB, wrote in the report, without saying where he got the information. -- Bloomberg



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MRCB advances in early trade after MIDF Research upgrade

KUALA LUMPUR (Jan 13): MALAYSIAN RESOURCES CORP []oration Bhd shares advanced in early trade on Friday after MIDF Research upgraded the stock to a Buy from Neutral with a higher target price of RM2.41 from RM1.94 previously.

At 9.15am, MRCB gained two sen to RM2.05 with 34,000 shares done.

The research house said in a note Jan 13 that the upgrade was largely due to the adjustment of its sum-of-parts valuation after assigning a higher forward PE multiples of 14x (in line with its FY12 KLCI target PER) for MRCB’s CONSTRUCTION [] segment.

“MRCB is one of our top picks in construction sector given its higher possibility of winning ETP project (i.e. RM1 billion beautification works of River of Life), as well as the continuous improvement of its property segment’s financial performance,” said MIDF Research.



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Bina Puri extends gains on confirming talks for Pakistan highway deal

KUALA LUMPUR (Jan 13): BINA PURI HOLDINGS BHD [] shares extended their gains in early trade on Friday after the company said it was negotiating the financial and legal aspects of a privatisation concession agreement with the National Highway Authority in Islamabad, Pakistan.

At 9.05am, Bina Puri rose 2.5 sen to 97 sen with 102,000 shares traded.

In confirming The Edge Financial Daily report on Thursday entitled “Bina Puri to bag Pakistan highway deal”, the company said 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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CIMB Research has technical buy on XOX at 28.5 sen

KUALA LUMPUR (Jan 13): CIMB Equities Research has a technical buy on XOX at 28.5 sen.

It said on Friday XOX appears to have formed a cup and handle pattern. The recent close above its moving averages, confirmed that the trend has now changed for the better.

CIMB Research said the MACD is now back above its zero line while its RSI is also above the 60-pts resistance mark.

“Accumulate the stock on weakness with a stop placed below the recent swing low of 23 sen. Prices should at least continue on further to test 32 sen to 34 sen next. A breakout above 34 sen is a booster for the bulls as it could send prices towards 38 sen next,” it said.



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CIMB Research has technical sell on MBSB at RM2.01

KUALA LUMPUR (Jan 13): CIMB Equities Research has a technical sell on Malaysian Building Society (MBSB) at RM2.01 at which it is trading at a price-to-book value of 2.3 times.

It said on Friday that the stock appears to at the end of its bearish wedge pattern and a reversal is likely to take place soon.

“A bearish divergence is forming on its MACD while its RSI is now overbought. Both signals caution for the bulls,” it said.

CIMB Research said nevertheless, it still needs confirmation that a reversal is indeed taking place.

“A break below RM1.97 would increase the odds while closing below RM1.90 would confirm it. However, anything above RM2.10 would indicate that our view is incorrect and the bullish run is likely to continue,” it said.



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CIMB Research has technical buy on Digistar at 45.5c

KUALA LUMPUR (Jan 13): CIMB Equities Research has a technical buy on Digistar Corporation at 45.5 sen at which it is trading at a price-to-book value of 1.8 times.

It said on Friday that Digistar is still consolidating in a huge triangle pattern but it thinks the stock is ripe for a breakout soon.

“If we are right, prices should take out the 50 sen level soon. Once this level is taken out, we think prices could move to new highs above the 53.5 sen high set in June 2011,” it said.

CIMB Research said the technical landscape remains compelling. MACD signal line is hovering just above its zero line while its RSI has hooked upwards from the neutral levels.

“As long as prices stay above the 42 sen levels, we will continue to stick with the bull’s camp. Keep a stop below 42 sen just in case,” it said.



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RHB Research estimates CSC Steel to record net loss of RM10m to RM15m

KUALA LUMPUR (Jan 13): RHB Research Institute estimates CSC Steel is likely to record a net loss of RM10 million to RM15 million in the upcoming 4Q11 results due to narrowing margins as well as a write-down in inventory value.

It said on Friday that CSC Steel has a huge cash reserve of RM213.5 million, or about 56 sen a share (as at Sept 30, 2011).

At RM1.41, it would only cost the controlling shareholder about RM295 million to buy out all minority shareholders, and this amount could be substantially funded with CSC Steel’s cash reserve.

“We are cutting FY10-12 net profit forecasts by 2%-39% largely to reflect the potential write-down in inventory value in FY11 as well as narrowing spread between HRC and CRC.

“We are also rationalising our valuation method to book value. Fair value raised to RM1.66 (from 90 sen) based on 0.8 times book value, at a premium to its historical average of 0.7 times. Upgrade to Trading Buy (from underperform),” it said.



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RHB Research downgrades Faber to underperform, FV unch RM1.52

KUALA LUMPUR (Jan 13): RHB Research Institute has downgraded FABER GROUP BHD [] to underperform from market perform but maintains its sum-of-parts (SOP) fair value of RM1.53.

It said on Friday that following two earlier lawsuits, the company now faces a third claim by Sweet Home Technical Works for earlier contract works in UAE amounting to approximately RM11.2 million.

“Still too early to determine the impact of the recent lawsuits but we are increasingly concerned that Faber could face more lawsuits, going forward,” it said.

“SOP fair value estimate of RM1.53 kept unchanged. However, recent run-up in Faber’s share price on growing expectations of the government concession renewal means that it is no longer in line with our expected market return. Downgrade to Underperform from market perform,” it said.



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HDBSVR: KLCI faces immediate resistance at 1,530

KUALA LUMPUR (Jan 13): Hwang DBS Vickers Research expects to see mixed action on Bursa Malaysia on Friday.

“The key FBM KLCI is expected to oscillate sideways with a marginal upward bias ahead, possibly climbing towards the immediate resistance barrier of 1,530,” it said.

The research house said on the other hand, rotational speculative buying activity on the lower liners could persist to hold up market momentum.

Over on Wall Street, major U.S. equity indices were up slightly by between 0.2% and 0.5% on Thursday night.

Essentially, sentiment got a lift from lower borrowing costs at sovereign bond auctions in Europe, which more than offset disappointing U.S. economic data.

HDBSVR said of probable interest to investors in Malaysia are stocks such as: (a) Proton, as it moves a step closer to a potential sale of its controlling block of shares after a local financial daily reported that major shareholder Khazanah Nasional has asked potential bidders to furnish funding details next week; and (b) AirAsia, after its associate AirAsia X has cut routes to Paris, London, Mumbai and New Delhi.



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Stocks to watch: Faber Group, Bumi Armada, TAS, Tebrau Teguh

KUALA LUMPUR (Jan 13): Stocks which could see trading interest on Friday include FABER GROUP BHD [], Bumi Armada Bhd, TAS Offshore Bhd and TEBRAU TEGUH BHD [].

The latest suit which Faber’s subsidiary Faber Ltd Liability Company is facing is from a sub-contractor, Sweet Home Technical Works Ltd Liability Company, for services provided for housing projects in Abu Dhabi.

Faber said the statement of claim dated Jan 10 was for AED13.12 million (RM11.21 million), which Faber LLC is disputing.

Meanwhile, UOB Kay Hian Malaysia research had initiated coverage on Bumi Armada with a sell and sum-of-parts target price of RM3.16 due to weaker outlook.

“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,” said UOB Kay Hian Research.

On an upbeat note, TAS Offshore’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 []. Its revenue was 27.7% higher at RM31.57 million compared with RM24.72 million a year ago.

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.

Interestingly, Tebrau Teguh could stand to report a gain of RM16.67 million from the sale of two parcels of commercial land in Plentong, Johor.

It is selling the parcels of land for a total of RM28.27 million, which RM16.67 million or 143.7% above the net book value of RM11.60 million as at Dec 31, 2010. The company said 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.

BINA PURI HOLDINGS BHD [] is negotiating the financial and legal aspects of a privatisation concession agreement with the National Highway Authority in Islamabad, Pakistan. Bina Puri said had received the letter of intent dated Nov 11, 2011 from the highway authority.

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.

CIMB Group says its discussions with San Miguel Corp to possibly acquire a stake in Bank of Commerce in the Philippines, was still on-going. It expected to conclude the negotiations by the first quarter of 2012.



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