Thursday, 19 January 2012

DBE Gurney confirms early talks with CI Holdings

KUALA LUMPUR (Jan 19): DBE Gurney Resources Bhd has confirmed that it is in talks with a shareholder of CI Holding Bhd which includes a private placement exercise.

The poultry-based company, in its reply to a Bursa Malaysia Securities query, said it had plans for a private placement to raise funds for its working capital requirement.

However, DBE said the talks with the CI Holdings shareholders was “at preliminary stage”.

“As such, the pricing for the proposed private placement exercise have not been finalised yet,” it said.



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1 Utopia posts losses in 4Q on higher taxes, cost of sales

KUALA LUMPUR (Jan 19): 1 Utopia Bhd, formerly TEJARI TECHNOLOGIES BHD [], posted net losses of RM412,000 in the fourth quarter ended Nov 30, 2011 (4Q11) from a net profit of RM218,000 a year ago due to higher taxation.

It said on Thursday it paid taxed amounting to RM942,000 in 4Q11 compared with only RM103,000 a year ago.

As for revenue, it increased by 33.6% to RM129.26 million from RM85.83 million. The increase was mainly due to the consolidation of revenue of its new subsidiary, PDA Expert Mobility Sdn Bhd and increased contribution from the two subsidiaries, PC3 TECHNOLOGY [] Sdn Bhd and Essential Action Sdn Bhd.

However, the higher revenue was offset also by the higher cost of sales at RM123.84 million in 4Q11 compared with RM79.73 million in 4Q10.

“The group generated a profit before taxation (PBT) of RM1.1 million for 4Q11 as compared to profit before taxation of RM700,00 in 4Q10. The profit was mainly due to the contribution from PDA Expert Mobility,” it said.

It recorded loss per share of 0.06 sen compared with earnings per share of 0.11 sen.

For the financial year ended Nov 30, 2011, its earnings plunged to RM45,000 compared with RM497,000 a year ago.

Its full year revenue, however, increased by 228% to RM456.13 million from RM138.93 million.



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HWGB proposes to place out 48.72m new shares to raise RM17.5m

KUALA LUMPUR (Jan 19): HO WAH GENTING BHD [] [] (HWGB) has proposed a private placement of up to 48.72 million new shares, or 10% of its paid-up, to third party investors to raise up to RM17.54 million.

HWGB said on Thursday the five-day weighted average market price of the HWGB shares up to Jan 18 was 40 sen.

“Based on an indicative issue price of 36 sen per placement, the company is expected to raise gross proceeds amounting up to RM17.54 million from the proposed private placement,” it said.

HWGB said the placement exercise would provide the group with more funds to finance its working capital requirements without incurring interest costs as compared to bank borrowings.

It expected the proceeds to reduce the borrowings of the HWGB group, thereby resulting in further interest savings.



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Gefung rights issue undersubscribed by 43.62%

KUALA LUMPUR (Jan 19): GEFUNG HOLDINGS BHD []’s issuance of 109.09 million rights shares with 21.82 million warrants was undersubscribed by 43.62%.

It said on Thursday that at the close of acceptance and payment for the rights shares at 15 sen each with warrants on Jan 12, the total acceptances and excess applications received was about 56.38% of the rights shares with warrants.

“Notwithstanding the above under-subscription, the minimum subscription level amounting to RM14.51 million had been achieved. Therefore, Datuk Lim Kim Huat will not be required to honour his undertaking to subscribe for additional rights shares up to the minimum subscription level,” it said.

Gefung said due to the under-subscription, the board allocated the rights shares with warrants to all applicants who applied for the excess rights shares with warrants. They are expected to be listed on Jan 27.

The corporate exercise involved the renounceable rights issue of up to 193.50 million new shares of 15 sen each together with 38.70 million free detachable warrants on the basis of five rights shares with one warrant for every four shares held as at Dec 27, 2011.



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Gefung rights issue undersubscribed by 43.62%

KUALA LUMPUR (Jan 19): GEFUNG HOLDINGS BHD []’s issuance of 109.09 million rights shares with 21.82 million warrants was undersubscribed by 43.62%.

It said on Thursday that at the close of acceptance and payment for the rights shares at 15 sen each with warrants on Jan 12, the total acceptances and excess applications received was about 56.38% of the rights shares with warrants.

“Notwithstanding the above under-subscription, the minimum subscription level amounting to RM14.51 million had been achieved. Therefore, Datuk Lim Kim Huat will not be required to honour his undertaking to subscribe for additional rights shares up to the minimum subscription level,” it said.

Gefung said due to the under-subscription, the board allocated the rights shares with warrants to all applicants who applied for the excess rights shares with warrants. They are expected to be listed on Jan 27.

The corporate exercise involved the renounceable rights issue of up to 193.50 million new shares of 15 sen each together with 38.70 million free detachable warrants on the basis of five rights shares with one warrant for every four shares held as at Dec 27, 2011.



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MyCC awaits response from MAS, AirAsia on swap deal

KUALA LUMPUR (Jan 19): Malaysia Competition Commission (MyCC), which has asked MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) and AIRASIA BHD [] to produce documents and collaboration agreement on the share swap deal, is still awaiting their response.

It has taken the initiative on its own accord to study if there was a breach of "anti-competitive behaviour" and abuse of dominant position in the deal following the brouhaha surrounding the share swap and collaboration agreement, signed between the two airlines, its chairman Tan Sri Siti Norma Yaakob said at the MyCC 2012 work plan media briefing on Thursday.

MyCC had written to both parties following concerns by many quarters that the deal could possibly weigh on air travellers with expensive airfares in the absence of competition.

"It's not an investigation and since it is the first case for the agency, we didn't provide a timeframe. However, we hope to receive a reply by end-January.

"We want to look into the deal and maybe there's nothing in it," she said.

MyCC is empowered to act if both parties do not respond.

Enforcement of the Competition Act 2010 since Jan 1 is to create healthy competition which will in turn stimulate productivity and innovation, thus creating wider choices of products for consumers with better quality and reasonable prices.

The Act prohibits two types of anti-competitive practices which are anti-competitive agreements between enterprises and abuse of dominant position.

On the agency's work plan, Siti Norma said the Competition Commission would be focusing on advocacy and capacity-building this year, with dedicated programmes targeting priority sectors and key stakeholders.

She said the programmes are being designed and ready to be executed throughout the year.

"Currently, MyCC prioritises its activities to ensure the Act was enforced in a responsive manner.

"We will focus on enforcing Section 4(2) of the Act under which practices such as price-fixing, market-sharing, limiting or controlling market access and bid-rigging arrangements will be of immediate focus and where compliance will not be compromised," she said.

MyCC will be issuing a set of guidelines governing the Competition Act 2010 and in line with that, the agency had issued draft guidelines on Market definition, Chapter 1 Prohibition and on Complaints Procedures in last quarter of 2011.

Siti Norma said the three guidelines are expected to be finalised and issued by end of the first quarter this year. - Bernama



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Zhulian 4Q net profit rises 18.5% to RM28.79m

KUALA LUMPUR (Jan 19): ZHULIAN CORPORATION BHD [] net profit for the fourth quarter ended Nov 30, 2011 rose 18.54% to RM28.79 million from RM24.29 million a year earlier, due mainly to an increase in share of profit of equity accounted investee as well as the strengthening of the US dollar against the ringgit .

It said on Thursday that revenue for the quarter rose 2.29% to RM86.84 million from RM84.89 million in 2010.

Earnings per share was 6.26 sen compared to 5.26 sen a year earlier, while net assets per share was 85.29 sen.

The company declared a fourth interim single tier dividend of 3 sen per ordinary share of 50 sen each.

For the financial year ended Nov 30, Zhulian’s net profit rose to RM95.32 million from RM87.07 million in 2010, on the back of an increase in revenue to RM357.54 million from RM322.61 million.

On its prospects, Zhulian said it expects the group’s performance for year 2012 to be satisfactory.



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Market Commentary

The FBM KLCI index lost 0.57 points or 0.04% on Thursday. The Finance Index fell 0.14% to 13413.69 points, the Properties Index up 0.03% to 1006.39 points and the Plantation Index rose 0.23% to 8505.71 points. The market traded within a range of 8.28 points between an intra-day high of 1522.32 and a low of 1514.04 during the session.

Actively traded stocks include DBE, TMS, TMS-WA, DBE-WA, JCY-CD, AXIATA, MBSB-CA, NEXTNAT, TM and BIMB-CC. Trading volume increased to 1936.36 mil shares worth RM1618.72 mil as compared to Wednesday’s 1490.47 mil shares worth RM1599.87 mil.

Leading Movers were IOICORP (+4 sen to RM5.39), TM (+7 sen to RM4.82), PETCHEM (+4 sen to RM6.68), MAXIS (+4 sen to RM5.63) and HLBANK (+10 sen to RM11.00). Lagging Movers were GENTING (-18 sen to RM10.82), MAYBANK (-8 sen to RM8.20), AXIATA (-3 sen to RM4.84), AIRASIA (-2 sen to RM3.63) and KLK (-4 sen to RM24.78). Market breadth was positive with 378 gainers as compared to 370 losers. -- JF Apex Securities Bhd



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KLCI extends losses, stays below 1,520-level

KUALA LUMPYR (Jan 19): The FBM KLCI extended its losses on Thursday and stayed below the 1,520-point level, lagging behind most Asian markets.

The index closed 0.57 of a point lower at 1,516.81.

Gainers edged losers by 378 to 370, while 325 counters traded unchanged. Volume was 1.94 billion shares valued at RM1.62 billion.

At the regional markets, the Shanghai Composite Index rose 1.31% to 2,296.08, Hong Kong’s Hang Seng Index added 1.3% to 19,942.95, Japan’s Nikkei 225 was up 1.04% to 8,639.68, South Korea’s Kospi up 1.19% to 1,914.97 and Singapore’s Straits Times Index edged up 0.57% to 2,811.20.

On Bursa Malaysia, Y&G fell 23 sen to 77 sen, Batu Kawan lost 20 sen to RM18.66, Triplc and Genting down 18 sen each to 41.5 sen and RM10.82, Nadayu 12 sen to RM1.06, Southern Acids and Kossan 11 sen each to RM2.21 and RM3.50, Asia File nine sen to RM3.65 while Amway and BIMB lost eight sen each to RM9.40 and RM2.16.

Among the gainers, MPI jumped 36 sen to RM3.15 after RHB Research upgraded the stock to Market Perform (from underperform) and raised its target price to RM2.79.

Other gainers include APM Automotive that added 20 sen to RM4.68, Glenealy 18 sen to RM6.55, Chin Teck 16 sen to RM8.76, TDM 15 sen to RM3.97, Coastal Contracts 12 sen to RM2.05, whiel Knusford, Hong Leong Bank and BRDB added 10 sen each to RM1.70, RM11 and RM2.23 respectively.

DBE Gurney was the most actively traded counter with 314.65 million shares done. The stock jumped 2.5 sen to 13.5 sen.

Other actives included TMS, JCY, Axiata, MBSV, Nextnation, Telekom and BIMB.



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DiGi 4Q net profit up 18.7% to RM394m, FY RM1.25 bn

KUALA LUMPUR (Jan 19): DIGI.COM BHD []’s earnings rose 18.7% to RM394.22 million in the fourth quarter ended Dec 31, 2011 compared with RM332.02 million a year ago, boosted by tax incentives.

“Net profit was high in 4Q11, rising by 34.9% to RM394 million (3Q: RM292 million) and this was mainly due to tax incentives related to mobile broadband network facilities,” it said in a statement on Thursday.

Its revenue increased 8.1% to RM1.545 billion from RM1.429 billion, with mobile data revenue exceeding 30% of the group revenue.

“Against general expectations of saturation, voice revenue grew for the third successive quarter. Mobile broadband/mobile internet revenue grew 6.2% on-quarter and now accounts for more than 30% of our service revenue. SMS and value-added services (VAS) also generated higher revenue this quarter,” it said.

DiGi said earnings per share were 5.07 sen compared with 42.70 sen. It announced a fourth interim tax exempt dividend of 6.5 sen per share for FY 2011.

The effective tax rates for the current quarter and financial year ended Dec 31, 2011 of 9.7% and 22.3% respectively were lower than the statutory tax rate of 25.0%, mainly due to the utilisation of broadband network-related tax incentives by one of the subsidiaries

For the financial year ended Dec 31, 2011, its earnings rose 6.5% to RM1.254 billion from RM1.178 billion. Revenue increased 10.3% to RM5.963 billion from RM5.406 billion. Earnings before interest, taxation, depreciation and amortisation (EBITDA) margin was 46.4%.

Revenue growth for the year was underpinned by an enlarged customer base of 9.9 million, higher voice and data usage, and increased take-up of bundled offerings of smartphones and devices.

DiGi chief executive officer Henrik Clausen said: “Our Internet for All proposition continues to spur mobile data usage driven by new data-light and tablet plans, an attractive device portfolio, and reenergized and expanded customer touch-points.

“We are pleased to be gaining good traction as the smarter choice for mobile internet, as seen from increased data penetration amongst our customers. We now have 5.2 million active mobile internet users.”

For FY11, DiGi stepped up its capex investment to RM610 million from the projected RM550 million to accelerate site roll-outs and increase capacity. DiGi’s operating cashflow increased to RM2.2 billion.



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Khazanah makes‘modest’ gain

KUALA LUMPUR: Khazanah Nasional Bhd will book a modest divestment gain from selling its 42.7% strategic stake in Proton Holdings Bhd for RM5.50 per share or a total cash consideration of RM1.29 billion.

Speaking to the media during Khazanah’s annual review, managing director Tan Sri Azman Mokhtar maintained that Khazanah’s entry cost into Proton in 2002 was lower than RM8 as reported.

Azman, however, declined to disclose Khazanah’s investment cost in Proton or the expected divestment gain from the transaction, only saying that the RM5.50 per share price tag was slightly higher than Khazanah’s holding cost.

Khazanah’s move to sell its 42.72% stake in the national carmaker to DRB-Hicom Bhd had drawn criticisms with some arguing that Khazanah could have negotiated a higher price for its asset.

This was partly because the RM5.50 per share was a nearly 44% discount to Proton’s net tangible assets (NTA) of RM9.81 per share.

Nevertheless, on a longer term horizon, the offer price from DRB-Hicom represented a 39.24% premium over Proton’s five-year average price of RM3.95.

Speculation that Khazanah’s stake in Proton was up for sale had pushed up Proton’s share price since mid-November, from RM2.70 on Nov 14 to a high of RM5.46 on Jan 12. Proton yesterday closed down one sen to RM5.40.

However, some analysts note that the discount to NTA was justified given Proton’s lacklustre prospects and its heavy capital expenditure.

Commenting on that, Azman pointed out that Proton’s share price had been “languishing” around the RM3-levels prior to the deal and the market “did not believe” in Proton’s RM9 NTA per share.

Azman also stressed that the RM5.50 per share offer was a “fair price” although he declined to comment if any bidders made a higher offer.

“Put it this way, the bids that we count are the bids with full financing. The financial aspect is not the only criterion,” Azman said.

According to him, there are “more than three reasonably serious bids” but he declined to disclose who the bidders are.

Azman stressed that Khazanah needed to find Proton a company that was already a significant local player with the ability to take the national carmaker to the next level of growth.

Azman also pointed out that Khazanah’s divestment of its stake in Proton, which was done through a restricted bid process, has to be contrasted from the disposal of its stake in Pos Malaysia Bhd.

The Proton deal comes less than a year after DRB-Hicom won the bid to acquire Khazanah’s 32.2% controlling stake in Pos Malaysia last April for RM623 million.

”For Pos Malaysia, it had to be a bit more of a blank canvass because we needed to get a broader set of proposals to see who has got a good idea on how to unlock the value of Pos Malaysia’s inherent assets,” he said.

Why DRB-Hicom?
Azman said Khazanah and the government had chosen DRB-Hicom given that the latter is a local player with quite a good track record, has existing alliances with several global auto manufacturers and the financial capabilities.

Once it takes over Proton, DRB-Hicom would need to inject cash and possibly new businesses to help turn around Proton, which has been battling lacklustre financial performance, shrinking sales volume and under-utilisation of its Tanjung Malim plant.

Azman noted that apart from having the funds to buy Khazanah’s strategic stake, the purchaser would also need the financial muscle to acquire the stake, fund a mandatory general offer and plough in investment for Proton’s growth.

“Just as we must be responsible sellers, they must be responsible buyers. The test of that is whether they will do it in a way that will promote the industry, for example, how much they will re-invest into the company and what they are going to do,” he added.

After winning the bid to acquire Khazanah’s stake, DRB-Hicom on Tuesday bought 39.93 million Proton shares, or a 7.27% stake, on the open market.

This brings DRB-Hicom’s total interest in Proton to 50.01% assuming its acquisition of Khazanah’s block goes through.

DRB-Hicom yesterday told a separate press conference that it was open to selling Proton’s unprofitable sports car subsidiary, Lotus Group International Ltd, which has been partly blamed for Proton’s woes.

Commenting on that, Azman said the decision rests with DRB-Hicom and that the moratorium imposed on significant asset disposal is merely on “some assets”.


This article appeared in The Edge Financial Daily, January 19, 2012.




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DRB-Hicom keeps options open on Lotus

SHAH ALAM: Malaysian automobile assembler DRB-Hicom Bhd said yesterday it will keep its options open for selling Proton Holdings Bhd’s sports car unit Lotus, while ruling out an equity sale of Proton.

DRB-Hicom acquired a 42.74% equity stake in Proton on Tuesday.

Managing director Datuk Seri Mohd Khamil Jamil said the company will meet with the Lotus management as soon as possible and conduct due diligence before making a decision.

“I’m open to options, whether to move up or move forward on Lotus. We have to sit with the Lotus management and look at their plans before making any decisions.

“I’m not looking to sell at this moment until I see the company,” he said at a media briefing here yesterday.

Proton bought Lotus in 1996.

Khamil said, “If you look at my record, I do not sell companies; it’s never been in our plan to dispose of any equity.”

The plan right now is to take the company private, he added.

DRB-Hicom will steer Proton into the future by looking into foreign collaborations and branding, Khamil said.

“Branding is important to go global and there will be alliances, collaborations or joint-ventures with foreign partners to assist (us) and give us a platform to move into the global market.

“My agenda is not just Proton but also the national automobile industry, and we must brand Proton as a good car manufacturer besides being a national car,” he said.

He said DRB-Hicom was in exploratory talks with its foreign partners about a possible collaboration involving Proton, adding that DRB-Hicom was looking forward to meeting with Proton’s management to discuss growth plans, including the vendor supply chain, reviving the brand name and increasing exports.

Any possible tie-ups must be a win-win collaboration, he said, adding that DRB-Hicom intended to move forward as a car producer and a car manufacturer.

“I’m open. It could be General Motors, Volkswagen or Honda that are willing to work (with us) and give benefits to Proton and the industry,” he said.

On changes in Proton’s management, Khamil said he preferred it to be a blend of old and new.

“There maybe changes or may not be,” he said.


This article appeared in The Edge Financial Daily, January 19, 2012.



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HELP to invest RM20m for international school

KUALA LUMPUR: Education outfit HELP International Corp Bhd is investing RM20 million to set up an international school in Subang Jaya to offer primary and secondary education.

In a filing with Bursa Malaysia yesterday, HELP said it had received approval from the Education Ministry to set up the international school to be located within HELP University’s flagship green technology campus.

HELP said the school would be located on a 2.8ha site and will cater for more than 3,000 students.

The first phase is expected to open in September 2013 with an initial intake of 500 to 600 students.

“The demand for quality private education in Malaysia continues to grow strongly with the population growing in affluence. The establishment of the HELP International School is part of the group’s long-term plans to expand its educational presence in the country,” it said.

HELP said the curriculum would be based on the UK syllabus leading up to the Edexcel A-levels, and it will seek partnerships with renowned international schools in Australia, the UK and the US.

HELP plans to finance the establishment of the international school via internal funds and external borrowings.

For FY11 ended October, HELP posted a net profit of RM13.06 million on the back of RM108.06 million in revenue. Earnings per share (EPS) for the 12 month period was 9.2 sen.

For FY10 the company registered net profit of almost RM19.1 million from RM105.20 million in sales. EPS in FY10 stood at 13.4 sen.

As at end-October last year, HELP had cash and cash equivalents amounting to some RM60 million and no significant borrowings.

“With the investment in staff, facilities and the transitional period on student intakes, the directors expect the financial performance of the group to be satisfactory for FY12.

“The directors remain confident that the group is fundamentally strong and the initiatives taken during this capacity building phase will prepare us to position HELP as a global education provider of quality education. The group has a strong balance sheet and sufficient resources to expand its business,” HELP said.

HELP has been trending downwards in the past six months, falling from a high of RM2.54 to close at RM1.50 yesterday, inching up one sen.


This article appeared in The Edge Financial Daily, January 19, 2012.



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CI Holdings on the prowl for new businesses

KUALA LUMPUR: CI Holdings Bhd (CIH) is on the prowl for new businesses, following the completion of the sale of its entire equity interest in food and beverage arm Permanis Sdn Bhd to Japanese Asahi Group Holdings Ltd for RM820 million last year.

The Main Market-listed company is in talks with many parties for potential business ventures, but will not rush in or limit itself to specific sectors, said managing director Datuk Johari Abdul Ghani.

“We are looking at all possible businesses,” he told reporters after an EGM here yesterday.

“Basically, we don’t limit ourselves to any industry except that we are not interested in oil and gas, and property as I don’t have experience in these two sectors.”

One of the main criteria for possible business ventures is that CIH is more interested in companies it can have full control of so it can execute its
business plans smoothly, Johari said.

“But nothing is concrete yet. That is the reason why I decided to give back the 50 sen to shareholders because I don’t think we should keep that much cash in the company,” he said.
“And as when we identify a business, and we need more capital, we will talk to shareholders and try to get the capital from them if the business we intend to acquire requires sizeable capital,” he said.

Shareholders yesterday approved CIH’s proposed capital repayment of RM71 million on the basis of 50 sen for each share held via a reduction of the issued and paid-up share capital.

In total, the company is paying some RM724.2 million or RM5.10 via a special dividend and capital repayment following its disposal of Permanis to Asahi for RM820 million. As at Sept 30, 2011, CIH had RM11.35 million net cash.

The disposal of Permanis left the company with tap and sanitary ware businesses. Johari said CIH is also looking at potential business acquisitions that can expand the tap and sanitary ware businesses further.

CIH’s net profit for 1QFY12 ended Sept 30 fell 33% to RM7.34 million from RM11.67 million a year earlier.

The company’s revenue for the quarter in review was RM9.08 million, compared with RM10.98 million a year earlier. Earnings per share stood at 5.17 sen against 8.22 sen a year ago.

Decreases in revenue and profit were mainly due to the delayed completion of various projects, attributable to factors such as softening demand due to uncertainty in global economic conditions and Bank Negara Malaysia’s revision of property loan regulations to curb speculation.

“High and increasing cost also caused developers and distributors to exercise caution,” the company said in notes accompanying an announcement to Bursa Malaysia.


This article appeared in The Edge Financial Daily, January 19, 2012.

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Oldtown’s RM36.65m plan for new factory

KUALA LUMPUR (Jan 19): Oldtown Bhd is investing RM36.65 million in a new factory in Tasek Industrial Estate, Perak to expand its beverage manufacturing operations.

Oldtown said on Thursday, its unit White Cafe Sdn Bhd, would be able to increase the capacity by 500% with the new factory.

It said the tender for the new factory was awarded to Sg. Besi Contruction Sdn Bhd for RM36.65 million.

“The CONSTRUCTION [] period shall be for eight calendar months from the planned date of site possession on Feb 1, 2012. It is expected to be completed by third quarter of year 2012,” it said.

Oldtown said the financing of the projects would be from the IPO proceeds, bank borrowings and its own funds.



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REDtone narrows losses in 2Q

KUALA LUMPUR: REDtone International Bhd has managed to narrow its losses by 91%, with higher contributions from its data projects.

For its second quarter ended Nov 30 (2QFY12), the company posted a net loss of RM82,000 compared with a net loss of RM915,000 in the same quarter last year.

In a statement to Bursa Malaysia yesterday, REDtone said its revenue for 2Q increased by 67% to RM35.96 million from RM21.56 million a year ago, mainly due to higher revenue contributions from its data business.

The Edge weekly reported that REDtone had recently entered into a 4G/LTE network collaboration with two local telecommunication companies to rent out portions of its bandwidth, which could spark a turnaround once the collaboration kicks in.

Industry observers are expecting REDtone, which has been loss-making since 2008, to return to the black when its collaboration with these telcos takes off.

For the six months to Nov 30, REDtone posted a net loss of RM751,000 on revenue of RM60.66 million compared with a net loss of RM1.78 million on revenue of RM45.47 million in the previous corresponding period.

For the six months ended Nov 30, its data and broadband recorded a revenue of RM17.4 million compared with RM13.2 million for the 12 months ended May 31, 2011 (FY11).

REDtone added that by extrapolating the six months results, its increase in revenue from data is about 167%.

The companies that REDtone might be leasing parts of its 4G/LTE spectrum to are Maxis Bhd, U Mobile Sdn Bhd, DiGi.Com Bhd and Celcom Axiata Bhd.

REDtone did not name the party it had signed the deal with but said it was more than one telco. Sources say that DiGi and Celcom are possible partners of REDtone.

REDtone had said it would make an announcement on the matter once the Malaysian Communications and Multimedia Commision (MCMC) finalises the positioning of each spectrum block.

According to a source, REDtone’s rationale for entering into such an agreement is to raise capital to fund the eventual rollout of its own 4G/LTE network, which requires a large amount of capital expenditure.

Market talk of REDtone’s tie-up has caused its share price to gradually increase over the past three weeks.

With a closing price of 32.5 sen yesterday, its shares have increased by 27.5% from 25.5 sen on Dec 28.

Based on its closing yesterday, REDtone had a market capitalisation of RM152.85 million.

Observers say that because REDtone is relatively small compared to other larger telco players, funding may prove to be an issue.

As at Nov 30, it had cash reserves of RM20.56 million and investments of RM3.53 million while its total borrowings amounted to RM2.91 million.

Since 2010, there has been a number of collaborations between telco players, starting with Maxis signing a deal with Telekom Malaysia Bhd (TM), followed by Packet One Networks (M) Sdn Bhd (P1) with TM, and DiGi with Celcom.

In 2011, Maxis signed a deal with U-Mobile to share its 3G infrastructure.

In December 2010, nine companies received a letter of award from the MCMC concerning their specific 4G spectrum blocks. The nine are Celcom, Maxis, DiGi, U-Mobile, REDtone, P1, Asiaspace Sdn Bhd, YTL Communications Sdn Bhd and Puncak Semangat Sdn Bhd.

On its prospects, REDtone said repositioning itself from voice into data and broadband has shown encouraging results.


This article appeared in The Edge Financial Daily, January 19, 2012.

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2012 CEO Outlook series: Manulife Malaysia to grow agency channel

Manulife Holdings Bhd CEO Michael Chan shares his views and outlook on the year ahead.

TEFD: What are your expectations for 2012 for your company and the insurance industry?
We would like to drive profitable growth in 2012 leveraging on our success in 2011. We have successfully moved to investment-linked insurance products which helped to contribute more than 50% of our new business sales. Therefore, continuing our shift to investment-linked products remains a key initiative for this year.

For the industry to grow, we would like to see a fair playing field for all insurance companies to maintain a healthy competition. The industry should also strive to build awareness of the types of insurance products that benefit the public and the importance of conducting financial planning courses at least once a year.

What is the impact, if any, do you expect from the euro crisis?
We see little impact the eurozone crisis will have on the insurance industry as it has proven to be resilient through different financial crises. Unlike many others, the insurance industry is largely unaffected by such situations due to the needs-based planning for customers.

Will Bank Negara Malaysia’s recent tightening of consumer borrowings have an impact?
We commend Bank Negara Malaysia on introducing the guidelines as this will help to reduce household debt. Overall, we foresee minimum impact on the insurance industry compared with the property sector, for example.

Generally, Malaysians are now more aware of the importance of having a life insurance plan and it has become an important part of financial planning for them. As such when needs are identified, the purchase decisions are generally not delayed.

Chan: We would like to see a fair playing field for all insurance companies to maintain a healthy competition.


What are the company’s plans and focus for 2012?
Our main priority is to strengthen our distribution capabilities. As a multi-distribution company we will continue growing our agency channel while increasing our focus on bancassurance and financial advisory business.

On the agency front, we will implement programmes to grow agency productivity and recruitment initiatives, and continue improving professionalism of our agency force to better serve customers.

We will also focus our bancassurance and financial advisory businesses by expanding the product portfolio to these channels.

To support our distribution channels, we will increase our regional support centres (RSCs) from the current eight. The next RSC in Kota Kinabalu, Sabah, will open in the middle of February this year.

What is your personal wish list for 2012?
I wish for Manulife Malaysia to continue to grow in insurance and wealth management businesses and to be a significant player in these areas. I also wish to ensure homegrown talent within the company to take on future leadership roles. I will be looking to identify and develop in-house talent to maximise their potential.


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 19, 2012.




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XiDeLang proposes private placement, bonus and rights issue

KUALA LUMPUR: China-based sports shoe and apparel maker XiDeLang Holdings Ltd is hoping to raise up to RM29.7 million via a proposed private placement, bonus issue and rights issue of warrants.

In a filing with Bursa Malaysia yesterday, XiDeLang said it is proposing a private placement of up to 43.99 million new shares to be placed with independent third party investors to be identified at a later date.

It is also proposing a one-for-two renounceable rights issue of up to 241.99 million warrants at an issue price of five sen, and a two-for-one bonus issue of up to 241.99 million new shares.

XiDeLang said the private placement and rights issue are expected to raise up to RM29.7 million, which would mainly be utilised to purchase machinery and equipment for its new design and production centre.

The company is currently building its new 128,000 sq m design and production centre to be completed in the first half of 2012.

The company said the proposed bonus issue would increase its share capital to better reflect its operations, which are currently expanding.

The exercises are expected to increase its issued and paid-up shares to 967.99 million from 439.99 million as at Jan 13, while its share capital would increase to US$96.79 million (RM302 million) from US$43.99 million. Its net assets per share would fall to 38 sen from 56 sen while gearing would improve to 0.05 times from 0.09 times.

XiDeLang did not state who the intended investors for the private placement are.

Recently, a vernacular paper reported that Navis Capital Partners, a Malaysia-based private equity firm, was looking to purchase Hong Peng International Holdings Ltd’s 54.55% stake in XiDeLang. However, XiDeLang denied it in a Bursa announcement but noted that it was looking at corporate proposals to enhance shareholders’ and company value.

XiDeLang rose to a three-month high of 41 sen on Jan 5 before it closed at 39 sen yesterday. Prior to that, XiDeLang was trading between 29.5 sen and 33.5 sen.


This article appeared in The Edge Financial Daily, January 19, 2012.



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China Stationery appoints M&A Securities for IPO exercise

KUALA LUMPUR: Integrated plastic stationery company China Stationery Ltd, which is en route for listing on Bursa Malaysia this year, has appointed M&A Securities Sdn Bhd its underwriter, adviser and placement agent.

Under the IPO exercise, China Stationery will issue 90 million new shares, of which 60 million will be made available to the public via balloting while the remaining 30 million shares are earmarked for private placement, it said in a statement yesterday.

As part of the exercise, China Stationery will offer for sale 133 million shares to selected investors via private placement. China Stationery is en route for listing on the Main Market by the first quarter of 2012.

Based in Fujian, the company designs and manufactures plastic stationery products such as files, compact disc holder files, business card holders, albums and customised adhesive tape labels.

For FY10 ended Dec 31, it recorded a net profit of RM189.07 million on revenue of RM669.88 million. As at May 2011, the group had net cash of RM543.21 million.

China Stationery has a dividend payout policy of not less than 20% from FY11 onwards. It also has a net margin of more than 30% over the last three years.


This article appeared in The Edge Financial Daily, January 19, 2012.



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DBE stirs on talk of new shareholders coming in

KUALA LUMPUR: Poultry breeder DBE Gurney Resources Bhd and its warrants were the most active on Bursa Malaysia yesterday, fuelled by market speculation that shareholders of CI Holdings Bhd (CIH) could buy into the company.

Close to 139 million shares or about 20% of DBE changed hands, with the stock gaining two sen to 11 sen, while more than 60 million warrants were traded, nudging the derivatives up 1.5 sen to 6.5 sen. The 30-day average volume for DBE was 4.4 million shares. Off market, more than 14 million DBE shares changed hands, a chunk at eight sen a piece. The warrants with a strike price of 10 sen expire in March 22, 2016.

CIH managing director Datuk Johari Abdul Ghani, who controls 30% of the company, could not be reached for comment. Another substantial shareholder, Datin Mariam Prudence Yusof, who has a 20.05% stake in CIH, was not able to comment as she was boarding a flight. Mariam is a non-independent non-executive director of CIH.

Market chatter aside, DBE’s net profit for the first three quarters of FY11 has steadily improved from a RM2.28 million loss in 1QFY11 to 2QFY11 net profit of RM1.29 million and RM2.19 million in 3Q.

The group’s 3QFY11 net profit of RM2.19 million marks a slight improvement of 1.9% from RM2.15 million in the corresponding period in 2010.

However, cumulative net profit for the nine-month period ended Sept 30 was down by 70% at RM1.20 million, compared with RM4.09 million in the same period the previous year.

Looking back, DBE posted positive earnings for the first three quarters of 2010 as well, which led to a RM4.09 million profit as at Sept 30, 2010. However, 4QFY10 losses of RM4.29 million swung the group back into the red for a FY10 net loss of RM202,000.

Of more concern is the group’s cash situation. Since October 2010 the group has been raising funds to offset accumulated losses, which included reducing the par value of each ordinary share of 50 sen to 10 sen, a rights issue of 400 million new ordinary shares, and a reduction of RM6.97 million in the share premium account. Most of the influx of cash went to cover losses.

In 1QFY11, RM61 million was raised through issuing shares but the net cash position at the end of the period was RM17.6 million. As at Sept 30, 2011, the cash and cash equivalents of the group had dwindled to a mere RM3.26 million.

DBE’s net assets per share have also almost halved since 2010, falling from 21 sen per share to 11 sen per share as at end-September.

The poultry player’s poor performance comes against a backdrop of an industry that is turning around. From a macro perspective, the industry has an encouraging outlook given strong demand for its products, coupled with increasing prices and Malaysians being among the largest consumers of eggs in the world.

Furthermore, price controls have been relaxed to only five weeks of the year during festive periods, allowing producers to command better prices. The recent floods in Thailand have also disrupted supply and helped bolster prices. The group’s results for 4QFY11 ended Dec 31 will be an indicator of a recovery, or lack of it.


This article appeared in The Edge Financial Daily, January 19, 2012.




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Margin revival for rubber gloves on fast track

Rubber gloves
Upgrade to overweight from neutral: We have upgraded the rubber glove sector to “overweight” as we believe earnings recovery is in the early stages of a cycle and is bound to gain momentum on the back of sustained margin revival.

As it is, quarterly earnings before interest, tax, depreciation and amortisation (Ebitda) margins of glove manufacturers are still two to four percentage points below normalised levels, implying upside potential.

We reckon glove manufacturers are poised to reap higher margins from time-lag induced imperfect price adjustments from: (i) lower input costs due to easing latex price and; (ii) the strengthening US dollar against the ringgit. We expect higher margins to kick in over the next few quarters as cheaper latex costs are fully reflected in average selling prices.

Despite a sharp drop of over 40% in latex price from an all-time high of RM10.60 per kg (February 2011), we see further easing in latex prices as imminent due to a worse than anticipated rubber glut and weakening demand. This will extend support for a sustained improvement in margins for glovemakers.

We understand China’s stockpile of natural rubber (NR) has been on a progressive rise since August, leading to an estimated surplus of 365,600 tonnes as at end-December 2011. Even though global rubber supply for this year is forecast to rise by only half of 2011’s additional production of 610,000 tonnes, this will inevitably exert further downward pressure on latex prices.

Incidentally, the global automobile industry, as led by China with an estimated 23% market share, is expected to grow at a slower rate this year, in tandem with the country’s slower economic growth outlook.

As it is, China’s vehicle sales grew a mere 3% last year, against 32% in 2010. The world’s automobile industry consumes circa 70% of global NR output.

In our view, the structural shift from NR to nitrile gloves will continue alongside industry trends as consumers typically tend to migrate upwards along with rising disposable income.

However, the rate of switching should become less drastic now, given the softening latex price. Most encouragingly, prices of NR gloves are currently at a 7% to 10% discount to nitrile variants. NR gloves were sold at an estimated 12% to 13% premium to nitrile gloves in 2011.

The reversal in ASPs resulting in a favourable price differential should thus help NR gloves claw back some lost market share.

All in, we have raised our earnings forecasts by 35% to 48% for Top Glove Corp Bhd and 2% to 10% for Kossan Rubber Industries Bhd. We have imputed higher utilisation rates, latex price forecast of RM5.50 to RM6 per kg as well as our latest in-house foreign exchange rate at US$1:RM3.10 for both Top Glove and Kossan.

We have upgraded Top Glove to a “buy” with a higher fair value of RM6.15 per share (previously “sell”, fair value: RM3.10) based on a higher fair price-earnings ratio (PER) of 19 times revised FY13F earnings. Our valuation pegs the stock at 0.5 standard deviation above its five-year mean of 16 times, which we deem reasonable in lieu of the improving core fundamentals.

Top Glove is now our top “buy” for the sector as the group is a prime beneficiary of easing latex prices. With over 78% of total production (37 billion pieces per year) in NR gloves, the group is the “purest” and largest NR glove manufacturer. Based on past trends, the stock had seen an upward PER re-rating of eight to 12 times during previous periods of declining latex prices.

Accordingly, we upgrade Kossan to a “buy with a higher fair value of RM4.31 per share (previously “hold”, FV: RM3.38) based on a higher fair PER of 12.5 times revised FY12F earnings.

Our valuation is a tad above the stock’s 10-year mean of 11 times, but still at some 35% discount to Top Glove’s fair PER of 19 times.

We continue to like the group for its less susceptible earnings portfolio underpinned by its more balanced product mix. — AmResearch, Jan 17


This article appeared in The Edge Financial Daily, January 19, 2012.




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Automotive sector riding through a rough patch

Automotive sector
Maintain underweight: Total industry volume (TIV) for 2011 of 600,308 units (+0.4% year-on-year [y-o-y]) with sequentially softer December sales (-2% month-on-month [m-o-m]) met our and street expectations.

We expect auto sales growth to be uninspiring at 1% to 2% in 2012 as domestic automotive demand nears saturation.

Margin pressure is expected to set in on unfavourable exchange rates coupled with price discounting among players to regain market share post the Thai floods. In the absence of an immediate catalyst, the auto sector remains an “underweight”. Hold UMW Holdings Bhd and MBM Resources Bhd, “sell” Tan Chong Motor Holdings Bhd.

Auto sales contracted 2% m-o-m to 47,708 units in December, in line with consensus expectations. The non-national marques were the major losers in December as sales fell 13% m-o-m to 18,684 units, while national models fared better (+7% m-o-m to 29,024 units).

Honda’s sales were the hardest hit among the major marques; sales fell 66% m-o-m to a mere 635 units in December. Honda’s plants in Malacca and Thailand were badly affected by the flood situation in Thailand.


Toyota’s sales were also affected (-30% m-o-m to 5,614 units), followed by Proton (-4% m-o-m to 10,812 units). Conversely, Perodua and Nissan reported higher sales in December, up 14% and 1% on a monthly basis respectively.

We expect auto companies to report poor January to March 2012 sales figures, as they absorb the adverse effects of the disrupted supply chain.

With production everywhere still at sub-par levels, the majority of distributors will be reliant on fast-depleting inventories to support sales commitments.

Margins will be under pressure, crimped by the rise in completely-knocked-down (CKD) component costs on the stronger US dollar and yen against the ringgit.

The tightening in hire purchase (HP) financing will impact auto sales, as lenders become more cautious due to the recent uptick in non-performing HP loans.

Against this backdrop, we are keeping our 2012 TIV forecast of 1% to 2% growth unchanged. Overall, Perodua is set to retain its position as the best-selling marque, attributable to consumer preference for smaller autos (market share: 34.7% at end-October 2011).

Passenger vehicles in the compact car category (Myvi and Saga) will continue to dominate sales volumes. We see growth potential for hybrid and electric cars, which currently account for 1.2% of TIV, as exemptions from import and excise duties (effective until December 2013) make them more affordable. — Maybank IB Research, Jan 18


This article appeared in The Edge Financial Daily, January 19, 2012.




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TNB shows strong q-o-q improvement

Tenaga Nasional Bhd (Jan 18, RM6.10)
Maintain buy with target price RM7: Tenaga Nasional Bhd achieved 1QFY12 ended November 2011 unit sales growth of 3.7% year-on-year (y-o-y), supported by demand growth from both the industrial (+4.4%) and commercial (+3.9%) segments with improvement from steel and cement plants, and recovery in demand from petrochemical plants.

Revenue in 1QFY12 came in much stronger at 12.5% after the 7% average tariff hike effective June 1, 2011. TNB’s 1QFY12 core net profit, after excluding foreign exchange loss of RM419.1 million, came in at RM194.4 million.

The strong earnings turnaround from 4QFY11 ended August core net loss of RM119.3 million, was the result of an increase in gas supply to 1,050 million metric standard cubic feet per day (mmscfd), from just 900 mmscfd in 4QFY11 as TNB incurred additional costs from using more coal, oil and distillate in its generation mix.

TNB has received RM1 billion in compensation due to gas shortages, and Petronas will pay the remaining RM1 billion over the next few months. Apart from the RM2 billion claim, TNB will continue to ask for compensation as the current gas supply still falls below the agreed supply of 1,350 mmscfd. The approval of the gas compensation has demonstrated TNB’s ability to pass on increases in cost through the cost pass-through mechanism.

We expect TNB’s earnings to recover strongly in FY12F following the RM2 billion gas compensation and increase in gas supply to 1,150 mmscfd for FY12. The gas shortage issue should also be resolved following the completion of the new regassification plant by Petronas Gas Bhd in July 2012.

Maintain “buy” for strong earnings recovery and attractive valuation of FY13F price earnings ratio (PER) of 13 times and price-to-book value of one times. Our target price of RM7 is pegged to 14 times CY13 PER, the average PER over the last two years. — HwangDBS Vickers Research, Jan 18


This article appeared in The Edge Financial Daily, January 19, 2012.




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More asset acquisitions for Axis REIT in the pipeline

Axis REIT (Jan 18, RM2.73)
Maintain market perform with fair value RM2.72 from RM2.70: Axis REIT is currently looking at 11 potential assets totalling RM545 million that could be injected into the REIT over the next two years. The real estate investment trust plans to acquire half of these assets by end-2012. These assets include the two proposed acquisitions in Penang announced in 4QFY11.

The Bayan Lepas acquisition was completed yesterday, while the Seberang Prai acquisition is expected to be completed by month-end.

Axis REIT recorded an overall portfolio occupancy rate of 97.22% in 4QFY11, its highest ever (3QFY11: 96.83%; 4QFY10: 95.73%). This is expected to increase by 2QFY12 when Quattro West’s new tenant moves in, increasing the asset’s occupancy rate to 100% from 89.45%. Lease expiry for the next three years will be 16.98%, 19.13% and 22.41% of net leasable area (NLA), hence lease renewal risk will be higher in 2013 and 2014.

Axis REIT will be looking to spend at least RM20 million in capital expenditure for asset refurbishment in FY12. The major asset enhancement works will be on Wisma Bintang, where the scope of work includes the construction of a four-storey office block and the refurbishment of the fa├žade of Lots 13A and 13B. Work is expected to start in 3QFY12, with completion by 1QFY13. Other assets lined up for refurbishment are: (i) Subang Hi-Tech (40% completed); (ii) Infinite Centre (work to start in 1QFY12); and (iii) Axis Eureka (pending proposal).

Axis REIT’s current gearing level stands at 0.24 times (from 0.35 times), after we factor in the higher asset values and lower borrowings. The lower gearing will give Axis REIT plenty of debt headroom for the acquisition of new assets, although it will likely keep long-term gearing around its internal target of 0.35 times.

Axis REIT will try to maintain its weighted average cost of debt at about 4.5% (currently 4.66%). The management intends to do this by: (i) restructuring its short-term borrowings into medium- to long-term loans with lower spreads; and (ii) issuing long-term sukuk bonds as part of its debt funding model.

We raise slightly our target price for Axis REIT to RM2.72 (from RM2.70) based on a target yield of 6.45% on our revised FY12 dividends per unit (DPU). We maintain our “market perform” recommendation on Axis REIT. We like Axis REIT as it continues to deliver on its DPU, even with the placement of new units that could have potentially resulted in a DPU dilution. The MREITs continue to be the defensive picks for property exposure. — RHB Research Institute, Jan 18


This article appeared in The Edge Financial Daily, January 19, 2012.




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KL shares reverses earlier gain at mid-afternoon

Shares on Bursa Malaysia gave up early gains at mid-afternoon today amid lack of buying interest ahead of the extended Chinese New Year weekend, dealers said.

At 3pm, the FBM KLCI lost 1.89 points to 1,515.49 as investors reduced positions in selected heavyweights. It had opened 1.58 points lower at 1,515.80.

Market sentiment remained bearish with losers leading gainers 358 to 300 and 320 counters unchanged. Volume totalled 1.23 billion shares worth RM844.84 million.

The Finance Index dropped 25.84 points to 13,406.87 and the Industrial Index declined 2.83 points to 2,773.92. The Plantation Index increased 18.84 points to 8,504.87.

The FBM Mid 70 was up 18.71 points to 11,818.19 and the FBM Ace rose 9.81 points to 4,296.36. The FBM Emas slipped 6.11 points to 10,470.02.

Volume leader DBE Gurney was half sen higher at 11.5 sen, Media Shoppe advanced 12 sen to 21 sen and Media Shoppe-Warrants jumped 10.5 sen to 11 sen.

Among heavyweights, Maybank slid eight sen to RM8.20, Sime Darby was unchanged at RM9.10 while Petronas Chemicals gained four sen to RM6.68. -- Bernama



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MPI hits high of RM3.05 after upgrade on positive outlook for semicon

KUALA LUMPUR (Jan 19): Shares of MALAYSIAN PACIFIC INDUSTRIES [] Bhd (MPI) rose to a high of RM3.05 on Thursday on some nibbling, as sentiment was underpinned by a more positive outlook for the semiconductor sector.

At 3.14pm, MPI was up 23 sen to RM3.02.

The FBM KLCI fell 2.01 points to 1,515.37. Turnover was 1.30 billion shares valued at RM943.17 million. There were 310 gainers, 372 losers and 304 stocks unchanged.

RHB Research Institute has upgraded Unisem and MPI to market perform from underperform following the upbeat outlook from major players about the semiconductor industry.

It raised the fair value (FV) for Unisem to RM1.22, MPI’s FV to RM2.79 while Notion VTec’s FV was raised to RM1.69 (underperform outlook unchanged).

RHB Research said US based IC design company Linear TECHNOLOGY [] gave an upbeat outlook for the industry.

This would be the third positive guidance after Broadcom and ChipMOS, and indicates a more positive tone for the industry after a parade of negative guidance last month.

“We have already factored in a weak 1Q12 for local packaging players, as there is still lack of order visibility, but we believe the industry may be on track for some recovery in 2Q12, and stronger recovery in 2H12.

“We believe the demand weakness for chips has already been priced in. Thus, we are raising our benchmark forward target P/BV from 0.6 times to 0.8 times for the semiconductor players. We upgrade Unisem and MPI to Market Perform (from underperform),” said RHB Research.



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Media Shoppe faces query as shares jump

The Media Shoppe Bhd, a developer of Internet sites, doubled to 18 sen, headed for its highest close since Dec 11, 2007. This prompted the stock exchange regulator to issue a query on the stock’s unusual market activity, according to a company statement.



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'Felda Global business model must change'

Felda Global Ventures Sdn Bhd's (FGV) current business model, which is heavily dependent on crude palm oil (CPO) prices is not sustainable, its president and chief executive, Datuk Sabri Ahmad said.

"Relying heavily on one segment, exposes the company to violent fluctuations in commodity prices," he said, although, the current CPO price of above RM3,000 per tonne is giving good returns to plantation companies.

Hence, he added, FGV’s business model must change to steadily increase profit and not be overly exposed to fluctuating commodity prices.

"One way this can be done, is by expanding the downstream activities," he told Bernama.

Sabri, who has had extensive experience in the industry, notably as a previous chairman of the Malaysian Palm Oil Board said better premium margins are usually in the end consumer products.

"For that, we need a partner, to readily bring in the technology and strong marketing network," he said, adding, that is the very reason FGV is seeking a global partner who can fill the missing link.

FGV holds a 49 per cent stake in Felda Holdings, while Koperasi Permodalan Felda (KPF) has the remaining 51 per cent.

Three foreign banks, Morgan Stanley, JP Morgan and Deutsche Bank together with two local banks Maybank and CIMB, have been appointed to undertake the listing exercise.

He said the global partner is expected to come up with a number of capabilities such as a good global marketing network and enhanced technology.

Talk is rife that global trading giants such as Archer Daniels Midlands Co. (ADM) and Bunge Ltd (BG) are among those parties. Sources say FGV has screened a number of potential partners and has six to choose from.

However, Sabri was tight-lipped over this, noting that the board would make the final decision after due diligence.

The sources also said FGV is expected to pick the potential global partner by mid-February, in time to be listed on Bursa Malaysia before the middle of the year, with April being the earliest date.

Sabri reiterated that FGV never had any intention to be secretive about the listing but was merely being careful so as to not give out too much information which can disrupt the process.

"We need to follow the Securities Commission’s rules and regulations," he said, adding, FGV was putting out as much information as possible as long as it was line with the commission's procedures.

He said from the start of the listing plan, FGV was determined to constructively engage with all parties.

"We will continue to provide the settlers and other stakeholders with the necessary information. The ultimate goal of the listing is to benefit the settlers and KPF," he added.

FGV owns about 80 active companies undertaking diverse activities such as multi-crop plantations, oils & fats, oleochemicals, logistics and services. It has operations in the United States, Canada, China, Australia and the Middle East.

FGV’s independent director, Datuk Mohd Rafik Shah Mohamad believes that the listing and tie-up with a global partner, would help the company adapt to global operating standards.

"A listed company also comes under public scrutiny, which is good for FGV, as it will be pushed to perform better than at present. It will also enhance the company's corporate governance,," he said.

Providing a glimpse into future plans, Sabri, who has served as the chief executive officer of Golden Hope Plantation Bhd (GHPB), believes FGV has a lot of potential, especially the very concept that the company was built on and prospered.

"We can create nucleus estates, whereby the land is owned by settlers but FGV goes and manages them, buys the crops and processes it, similar to what is being done in Malaysia.

"We can also promote the concept to other developing countries," he said, adding, there are plans to promote it within Asean as well as the African region.

Sabri believes that such a concept will work well in Africa and help with poverty alleviation, similar to what has taken place in Malaysia with the Felda settlements.

"This plan will also be worked out with the global strategic partner," he said. -- BERNAMA



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Smartag to provide Smartrack tech for Brunei halal project

KUALA LUMPUR (Jan 19): Smartag Solutions Bhd will provide its Smartrack TECHNOLOGY [] for Brunei’s Halal traceability project, enabling consumers to trace halal products in the sultanate.

Smartag said on Thursday it had inked a memorandum of collaboration with John Harith Technology Sdn Bhd where the latter would use its Smartrack solutions for the project.

John Harith, is an ICT solutions provider which is focusing on developing a “Made in Brunei” radio frequency identification (RFID) security and tracking system.

John Harith was recently awarded a pilot project to develop a halal traceability and supply chain management system for the Ministry of Religious Affairs of Brunei.

“Under the project, John Harith will be developing the halal traceability software application on top of Smartrack, thus making Smartrack the engine for the project,” it said.



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Bursa Securities queries TMS after spike in price, volume

KUALA LUMPUR (Jan 19): Bursa Malaysia Securities Bhd has queried THE MEDIA SHOPPE BHD [] (TMS) over the sharp rise in price and high volume of the securities on Thursday.

It issued the unusual market activity after its shares jumped nine sen to 18 sen with 104.69 million shares done at midday. Its warrants rose 10.5 sen to 11 sen with 96.31 million units done.

TMS’s 312.63 million new shares of 10 sen each and 234.47 million warrants were granted listing and quotation on Thursday.

The shares were issued pursuant to the rights issue on the basis of two rights shares for every one share held with up to 238.93 million free detachable warrants on the basis of three warrants for every four rights shares subscribed at the issue price of 10 sen per rights share.



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KLCI slips into negative territory at mid-day, lags Asian markets

KUALA LUMPUR (Jan 19): The FBM KLCI fell at the mid-day break on Thursday, lagging behind key Asian markets as some mild profit taking on the penultimate trading day before the extended weekend for the Chinese New Year holidays chipped off earlier gains.

The FBM KLCI slipped 1.60 points to 1,515.78 at 12.30pm.

Losers overtook gainers by 324 to 296, while 308 counters traded unchanged. Volume was 1.09 billion shares valued at RM675.52 million.

The ringgit strengthened 0.52% to 3.1027 versus the US dollar; crude palm oil futures for the third month delivery fell RM26 per tonne to RM3,154, crude oil added 86 cents a barrel to US$101.45 while gold gained US$3.50 an ounce to US$1,663.45.

At the regional markets, Japan’s Nikkei 225 added 1.1% to 8,645.04, Hong Kong’s Hang Seng Index gained 1.11% to 19,906.30, the Shanghai Composite Index rose 0.90% to 2,286.89, South Korea’s Kospi gained 1.14% to 1,914.03, Singapore’s Straits Times Index was up 0.54% to 2,810.52 and Taiwan’s Taiex edged up 0.17% to 7,233.69.

On Bursa Malaysia, the decliners at mid-day included Sunchirin that fell 20 sen to RM1.50, Batu Kawan down 18 sen to RM18.68, Triplc 17.5 sen to 42 sen, Genting down 16 sen to RM10.84, Southern Acids 14 sen to RM2.18, Warisan 11 sen to RM2.49, Tasek 10 sen to RM7.90, Bursa down nine sen to RM6.86 while Hong Leong Industries and Amway fell eight sen each to RM4 and RM9.40.

Among the gainers, Nestle was up 30 sen to RM56.30, Aturmaju 16 sen to 74 sen, Parkson 14 sen to RM5.74, BAT 12 sen to RM49.92, while Knusford, Petronas Gas, Ekovest and Sarawak Oil Palm added 10 sen each to RM1.70, RM15.38, RM2.60 and RM6.05 respectively.

D.B.E Gurney, which was the most actively traded counter this morning, was issued with an unusual market activity query by Bursa Malaysia Securities Bhd.

The stock was unchanged at 11 sen with 166.2 million shares done.

Other actives included TMS, JCY, MBSB, BIMB, Nextnation and Ingenuity Solutions.



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HELP International edges up on RM20m expansion plan

KUALA LUMPUR (Jan 19): Shares of HELP International Bhd chalked up small gains on Thursday after it announced plans to set up a private primary and secondary international school in Subang but concerns about the growing competition from other players restrained strong buying interest.

At 11.31am, it was up 2.0 sen to RM1.52 with 83,200 shares done.

HELP announced late Wednesday it was expanding its education business which would see it investing RM20 million to set up the school with the capacity for more than 3,000 students. The first phase will open in September 2012 with an initial intake of 500 to 600 students.

OSK Research said it lauded the move as part of management’s strategy to diversify away from its traditional stronghold in the tertiary education segment and to penetrate into the fast-growing private education sector.

However, it maintained its Neutral call for now as it remained wary of the potential equity dilution to fund the project.

“We are also cautious on the heightening competition as its bigger peers continue to expand aggressively as well as a possible downside risk to earnings as management ramps up its headcount after obtaining university status.

“Retain our FV at RM1.63 based on an unchanged 9.0 times FY12 PER plus its net cash per share of 42 sen as of 4QFY11,” OSK Research said.



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Bursa queries DBE Gurney

Bursa Malaysia Securities Bhd issued an unusual market activity note to D.B.E. Gurney Resources Bhd today querying the company over its recent sharp price increase and turnover.

As at 9.56am, D.B.E Gurney was half-a-sen higher at 11.5 sen while its warrants were unchanged at 6.5 sen.

D.B.E Gurney, a Malaysia-based investment holding company, operates in the broiler, fryer and roaster chicken sector.

Meanwhile, OSK Research said D.B.E's share price gapped up at the opening yesterday after consolidating sideways for nearly two months.

"Follow-through buying was also impressive as the stock recorded the highest trading volume since hitting the 11 sen peak in November last year, making it yesterday's most actively traded stock," it said in a research note today.

OSK Reseach said based on the "Upside Gap" and the strong volume, the stock could be preparing to take a crack at the tough 11 sen resistance level.

"Hence, traders are advised to accumulate the shares ahead of its breakout.

"We are aiming for the 12.5 sen level, which is the next tough upside hurdle, as the upside target," it added. -- BERNAMA



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Bursa likely to post lower Q4 profit

MIDF Research says Bursa Malaysia Bhd's fourth quarter net profit for financial year 2011 is likely to be lower by seven per cent due to decline in daily average trading volume (DATV) for equities.

The net profit is likely to be around RM36 million which would translate into an earnings per share of 6.8 sen, it said in a research note today.

The four quarter results will be released on Feb 9.

It said the full financial year 2011 net profit would likely come in at RM151 million, an improvement of 33.3 per cent compared with the previous financial year.

Bursa Malaysia shares were down five sen at RM6.90 as at 10.45am.

MIDF Research is also keeping its FBM KLCI target of 1,530 points for this year. It said despite the index having surged to 1,530.73, at the end of the fourth quarter, from 1,387.13 in the third quarter, average market velocity for the fourth quarter was still low at 26.1 per cent.

The research house added that trading volume was higher but DAVT dropped in the fourth quarter of last year to RM1.3 billion versus RM1.7 billion in the previous quarter.

Foreign investors were net buyers of equities in the fourth quarter, accounting for RM3.06 billion of transactions recorded but were net sellers of equities totalling RM3.34 billion in the third quarter.

Meanwhile, HwangDBS Vickers Research remained defensive of Malaysian equities, expecting the benchmark FBM KLCI to slide to 1,400 points before staging a subsequent recovery towards its year-end target of 1,590 points.

It said the year of the dragon could shine on industries associated with the wood and earth elements, and favourable sectors include consumer, property, construction and petroleum-related. -- BERNAMA



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BIMB share price rally takes a breather

KUALA LUMPUR (Jan 19): Shares of BIMB HOLDINGS BHD [], which surged 22 sen on Wednesday, took a breather on Thursday as investors locked in their gains.

At 10.54am, BIMB was down five sen to RM2.19. There were 3.02 million shares done at prices ranging from RM2.17 to RM2.28.

Its call warrants shed one sen each, with BIMB-CC down to 16.5 sen (17.34 million units done) and BIMB-CB to 8.0 sen.

The FBM KLCI was up 1.01 points to 1,518.39. Turnover was 678.18 million shares valued at RM377.27 million. There were 275 gainers, 238 losers and 282 stocks unchanged.

A fund manager said BIMB should attract more trading interest as it was the only Syariah banking stock listed on Bursa Malaysia unlike the larger conventional banks.

Meanwhile, CIMB Equities Research said on Thursday, it had a technical buy on BIMB at RM2.24 at which it is trading at a price-to-book value of 1.3 times.

It said on Thursday that BIMB Holdings broke out of its consolidation triangle pattern on Wednesday.

“Looking at the chart, we think the stock is ripe for a stronger rebound. If we are right, the next upleg is going to lift prices towards RM2.34 and RM2.43,” it said.

CIMB Research said the technical landscape was improving.

Its technical analysis showed that the MACD histogram bars have returned to the black while RSI has also hooked upward. The 30-day SMA has also cut above its longer term 50-day SMA, which is another positive sign.

“Traders should wait for a slight pullback before jumping onto this buying bandwagon. Always put a stop at below RM2.08-RM2.03 to limit downside risk,” it said.



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KL shares remain in positive territory

Shares on Bursa Malaysia remained in the positive territory mid-morning on improved investor sentiment, dealers said.

At 10.45am, the underlying FBM KCLI was 1.24 points better at 1,518.62 after opening 1.58 points lower at 1,515.80.

Investor sentiment recovered following a strong overnight close on Wall Street and expectations that the US economic growth prospects remained intact, a dealer said.

Market breadth was positive with gainers leading losers 269 to 220. Volume amounted to 657.27 million valued at RM359.01 million.

The Finance Index declined 5.72 points to 13,426.99, the Industrial Index slipped 2.77 points to 2,773.98 and the Plantation Index gained 12.48 points to 8,498.51. The FBM Emas increased 13.96 points to 10,490.09, the FBM Mid 70 advanced 33.87 points to 11,833.35 and the FBM Ace added 2.33 points to 4,288.88.

Among active stocks, DBE Gurney and its warrants rose half-a-sen each to 11.5 and seven sen, respectively while Media Shoppe was 3.5 sen higher at 12.5 sen.

For heavyweights, Maybank slipped four sen to RM8.24, Sime Darby shed one sen to RM9.09 while Petronas Chemicals perked four sen to RM6.68. -- BERNAMA



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Parkson top gainer, strong growth opportunities seen

KUALA LUMPUR (Jan 19): PARKSON HOLDINGS BHD [] was the top gainer on Thursday morning as it was seen to be able to tap into the strong consumer growth opportunities in the region.

At 10.21am, the share price was up 18 sen to RM5.78 with 201,100 shares done.

The FBM KLCI rose 2.8 points to 1,520.18. Turnover was 570.49 million shares valued at RM272.30 million. There were 253 gainers, 194 losers and 270 stocks unchanged.

Affin Investment Bank Research said it continues to like Parkson for its attractive valuations. At the price level of RM5.60, it was trading at 13.7 times CY12 price-to-earnings, on par with its closest peer, Aeon (13.1 times) but slightly below sector average of 14.8 times.

Historically, however, Parkson had traded at a PE premium to Aeon, which it believed was justified given: 1) stronger three-year earnings CAGR of +17% (Aeon: +7%); 2) strong growth opportunities, particularly in Indonesia, Vietnam and Cambodia, and; 3) exposure to the regional consumer sector.

“We lifted our FY06/12-14 net earnings forecasts by +2-3% after raising our same store sales growth assumptions for Malaysia (from 6% to 8%) and Indonesia (from 5% to 8%). However, we lower our PE target for Parkson Retail Group (PRG) to 20 times (previously, 23 times) to take into account weaker market sentiment in China and Hong Kong – PRG is currently trading at 15.8 times CY12 PE.

“Consequently, our RNAV-derived target price is revised downwards to RM6.65 (previously, RM7.15). Notwithstanding that, we maintain our BUY rating,” it said.



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KLCI edges up at mid-morning, struggles to stay above 1,520

KUALA LUMPUR (Jan 19): The FBM KLCI edged up at mid-morning on Thursday but struggled to stay above the 1,520-level as pre-holiday mood kept investors on the sidelines.

The FBM KLCI rose 3.42 points to 1,520.80 at 10am.

Gainers led losers by 233 to 164, while 251 counters traded unchanged. Volume was 461.40 million shares valued at RM215.42 million.

Asian shares rose to a one-month high and the euro firmed on Thursday after news that the International Monetary Fund was seeking to boost its resources to tackle the euro zone debt crisis alleviated worries about Europe's funding difficulties, according to Reuters.

Smooth debt sales by Portugal and above-estimate earnings from Wall Street powerhouse Goldman Sachs Group Inc added to the positive mood just as investor risk-aversion has started to weaken after recent data suggested euro zone problems have not seriously derailed global economic activities, it said.

At the regional markets, Japan’s Nikkei 225 added 1.25% to 8,657.27, Hong Kong’s Hang Seng Index gained 0.63% to 19,811.50, South Korea’s Kospi added 0.73% to 1,906.24, Singapore’s Straits Times Index was up 0.46% to 2,808.20, Taiwan’s Taiex was up 0.17% to 7,233.69 and the Shanghai Composite Index was up 0.16% to 2,269.99.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to client said that the FBM KLCI’s resistance areas of 1,518 and 1,532 may cap market gains, whilst obvious support areas may be located at 1,505 and 1,516.

“Despite the US markets’ positive tone last night, we could be in for yet another range bound day of trading activity ahead of the Chinese New Year holidays,” he said.

On Bursa Malaysia, the gainers at mid-morning were led by Parkson, Aturmaju and Hong Leong Bank that rose 16 sen each to RM5.76, 74 sen and RM11.06 respectively; UMW added 14 sen to RM6.99, Petronas Gas 12 sen to RM15.40, Ekovest and Knusford 10 sen each to RM2.60 and RM1.70, while Guan Chong and BAT gained eight sen each to RM2.44 and RM49.88.

D.B.E Gurney, which was the most actively traded counter at mid-morning, was issued with an unusual market activity query by Bursa Malaysia Securities Bhd.

The stock rose half a sen to 11.5 sen with 125 million shares done.

Other actives included TMS, MBSB, BIMB, JCY, XDL and DRB-Hicom.

Decliners included Southern Acids, Nestle, MAHB, Lafarge Malayan Cement, HLFG, MISC, BHIC and Maybulk.



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Quill Capita Trust advances to RM1.13

Quill Capita Trust rose 1.8 per cent to RM1.13, set for its highest close since Feb 8. The property trust’s 2011 net income grew 5.4 per cent to RM34.3 million from a year earlier, according to a stock exchange filing. -- Bloomberg



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Ajiya adds 2.4% on 9% profit growth

Ajiya Bhd, a supplier of building materials, added 2.4 per cent to RM1.70, set for its steepest increase since Oct. 28.

Fourth-quarter net income grew 8.8 per cent to RM4.53 million ($1.5 million) from a year earlier, the company said in a stock exchange filing. -- Bloomberg



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Bursa Malaysia queries D.B.E. Gurney over unusual market activity

KUALA LUMPUR (Jan 19): Bursa Malaysia Securities has queried DBE Gurney Resources Bhd over the sharp increase in the price and high volume of the company’s securities recently.

The regulator had on Thursday issued the unusual market activity query to D.B.E Gurney before the mid-morning period.

As at 9.50am, the share price was up half a sen with 123.9 million shares done while the warrants were unchanged at 6.5 sen with 41 million units transacted.



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Pantech edges up on better 3Q earnings

KUALA LUMPUR (Jan 10): Shares of steel pipes and fittings manufacturer PANTECH GROUP HOLDINGS BHD [] rose on Thursday after the company posted net profit of RM10.34 million in the third quarter ended Nov 30, 2011, an increase of 69.5% from RM6.09 million a year ago.

At 9.35am, Pantech was up 1.5 sen to 53.5 sen with 1.37 million.

Its revenue increased 49.3% to RM112.65 million from RM75.43 million. Earnings per share were 2.29 sen compared with 1.36 sen. It declared a special interim single tier dividend of 1.2 sen per 20 sen share.

CIMB Equities Research has a technical buy on Pantech Group Holdings at 52 sen at which it is trading at a price-to-book value of 0.7 times.

It said on Thursday that Pantech Group broke out of its medium term downtrend channel recently.

“It seems that prices are likely to charge towards its 200-day SMA soon. If this moving average is taken out, we expect follow through momentum to pick up strongly. The next upswing is going to lift prices towards 54.5 sen and 58.5 sen,” it said.

CIMB Research said the positive technical readings reinforced its bullish stance on the stock.

The research house said the MACD histogram bars have returned to the black while RSI has also hooked upward.

“Traders with lower risk appetite should wait for prices to swing past its 200-day SMA before going long. Be quick to cut loss if 49.5 sen is breached,” it said.



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Poly Glass gains most in more than month

Poly Glass Fibre (M) Bhd, a Malaysian manufacturer of fiber-glass wool, gained the most in more than a month in Kuala Lumpur trading after third-quarter net income almost tripled to RM3.4 million.

The stock climbed 4.8 per cent to 33 sen at 9:20 a.m. local time, set for its steepest increase since Dec 8. -- Bloomberg



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