Malay Chamber of Commerce to buy Tebrau Teguh stake from KPRJ

KUALA LUMPUR (Feb 14): The Malay Chamber of Commerce Malaysia (MCCM) Johor has announced its plan to acquire a 33.15 per cent stake in TEBRAU TEGUH BHD [] from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ).

Its president Syed Ali Alattas said MCCM Johor, supported by MCCM, would be offering KPRJ 80 sen per share or about RM177 million.

"We will send the official letter by the end of the month," Syed Ali, who is also MCCM president, told reporters at a media conference here today.

He said MCCM Johor is also willing to buy KPRJ's 41.15 per cent stake in Tebrau Teguh.

According to reports, KPRJ plans to sell a 33.15 per cent stake in Tebrau Teguh to Iskandar Waterfront Holdings Sdn Bhd (IWH) for 76 sen a share, or RM168.7 million in total.

The move will result in IWH having to make a mandatory general offer for the rest of Tebrau Teguh’s shares at the same price.

KPRJ, which is the Johor state’s investment arm, currently owns a direct 41.15 per cent stake in Tebrau Teguh.

IWH is owned by KPRJ and Credence Resources Sdn Bhd. - Bernama



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Dialog Group 2Q earnings up 15.1% to RM41.45m with new biz, Asian ops

KUALA LUMPUR (Feb 14): DIALOG GROUP BHD []’s earnings rose 15.1% to 41.45 million in the second quarter ended Dec 31, 2011 from RM35.99 million a year ago, boosted by higher revenue from the consolidation of its new businesses and operations.

It said on Tuesday its revenue increased at a stronger pace of 33.5% to RM358.62 million from RM268.53 million. Its earnings per share were 2.10 sen compared with 1.84 sen.

“The consolidation of the revenue of the newly acquired fabrication and multi-disciplined engineering company, Fitzroy Engineering Group Ltd, based in New Zealand was the main contributor to this significant increase (in revenue),” it said.

Dialog added that contribution from Malaysia and Asian operations such as Brunei, Thailand, Oman and China, also increased significantly mainly due to higher revenue of specialist products and services recorded.

In the first half ended Dec 31, 2011, its earnings grew 24.4% to RM85.99 million from RM69.09 million while its revenue increased 34% to RM713.85 million from RM532.33 million.



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CIMB boost for KLCI, but broader market weaker

KUALA LUMPUR (Feb 14): Blue chips closed higher on Tuesday, extending their gains again for the second day on fund buying of selected index linked stocks, especially banking stocks like CIMB, but the broader market displayed some caution.

The FBM KLCI rose 3.23 points to 1,566.05. Turnover was 2.55 billion shares valued at RM2.25 billion. Declining stocks beat advanced 581 to 321 while 288 stocks were unchanged.

Rating agency Moody’s put a dampener on the markets, threatening to put the United Kingdom's triple-A rating in jeopardy for the first time and warned it may cut France as well, while downgrading six euro zone nations including Spain and Italy.

European shares fell as the ratings move by Moody's was a reminder to investors about the problems faced by the Europe to fight the debt crisis, with the agency saying it was concerned about whether governments could implement the reforms necessary to address it, Reuters reported.

Among regional markets, Japan’s Nikkei 225 rose 0.59% to 9,052.07, Hong Kong’s Hang Seng Index added 0.15% to 20,917.80 and Singapore’s Straits Times Index 0.3% higher at 2,985.37. However, Shanghai’s Composite Index lost 0.3% to 2,344.77, Taiwan’s taiex 0.36% lower at 7,884.08 and South Korea’s Kospi 0.15% lower at 2,002.64.

US light crude oil rose 0.04% to US$100.95 per barrel. The ringgit weakened against the US dollar to 3.0455.

Crude palm oil futures rose, with the third-month delivery up RM14 to RM3,181. This was the highest level in three week on market concerns that output in Malaysia would fall for the fourth consecutive month.

Among the banks, CIMB rose 15 sen to RM7.31, pushing the KLCI up 2.64 points. Public Bank added four sen to RM13.98, Maybank two sen to RM8.52 and Hong Leong Bank 14 sen to RM11.70.

Genting Malaysia added five sen to RM3.94 and GENTING BHD [] four sen to RM10.54 while Sime Darby three sen to RM9.64.

Hibiscus was the top gainer, up 31 sen to RM1.82 and the warrants five sen to RM1.02, BAT 28 sen to RM51.78, Aeon Credit 24 sen to RM7.58 and F&N 24 sen to RM17.60.

Naim Indah was the most active with 315.10 million shares done. It was eight sen lower at 48 sen, the third straight day of losses. However, investors should be aware of the price surge from only nine sen on Feb 2.

JCY lost nine sen to RM1.26 as it recent run-up seemed to have exhausted. CIMB Research said JCY’s rally from the 38.5 sen September low has been nothing but spectacular. “However, we think that this rally is over and looks poised for a deep correction,” it said.

Among the decliners were KLK, down 52 sen to RM25.46, dragging the index down by 0.87 of a point. AirAsia gave up eight sen to RM3.68, Tenaga and Telekom six sen each to RM6.13 and RM4.81 while YTL shed four sen to RM1.48.



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Market Commentary

The FBM KLCI index gained 3.23 points or 0.21 percent on Tuesday. The Finance Index increased 0.54 percent to 13902.7 points, the Properties Index dropped 0.58 percent to 1051.13 points and the Plantation Index down 0.49 percent to 8881.55 points. The market traded within a range of 5.29 points between an intra-day high of 1566.12 and a low of 1560.83 during the session.

Actively traded stocks include NICORP, COMPUGT, TMS, HIBISCS-WA, AGLOBAL, SAAG, JCY, PERISAI, TIME and COASTAL-CA. Trading volume decreased to 2546.67 mil shares worth RM2258.05 mil as compared to Monday’s 2661.46 mil shares worth RM2119.19 mil.

Leading Movers were CIMB ( 15 sen to RM7.31), GENM ( 5 sen to RM3.94), PBBANK ( 4 sen to RM13.98), MAXIS ( 6 sen to RM5.80) and SIME ( 3 sen to RM9.64). Lagging Movers were KLK (-52 sen to RM25.46), TENAGA (-6 sen to RM6.13), YTL (-4 sen to RM1.48), AIRASIA (-8 sen to RM3.68) and TM (-6 sen to RM4.81). Market breadth was negative with 321 gainers as compared to 581 losers. -- JF Apex Securities Bhd



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Sentoria's public offer of 20m new shares oversubscribed 5.4 times

KUALA LUMPUR (Feb 14): Sentoria Group Bhd’s offer of 20 million new shares to the public at an 85 sen each under its listing exercise was oversubscribed by 5.4 times.

The company, which is seeking a listing on the Main Market of Bursa Malaysia Securities Bhd, received 6,829 applications for 127.2 million shares with a total value of RM108.1 million.

Sentoria’s listing exercise entailed a public issue of 60 million new ordinary shares and an offer-for-sale of 40 million promoters’ shares.

Of the 60 million new shares under public issue, 20 million were allocated for public balloting and 10 million shares for eligible directors, employees and business associates of the group at 85 sen per share. The other 30 million shares were allocated for private placement at 87 sen per share.

The 40 million promoters’ shares, allocated for Bumiputera investors approved by the Ministry of International Trade and Industry, were priced at 87 sen each.

Sentoria’s listing exercise raised RM51.6 million for the group, of which RM27.7 million would be for working capital; RM11.2 million for repayment of bank borrowings; RM9.0 million for purchase of property, plant and equipment; and the balance RM3.7 million to defray listing expenses.

Sentoria, which is scheduled to list on the Main Market of Bursa Malaysia on Feb 23, is the developer and operator of Bukit Gambang Resort City in Kuantan.

The integrated resort city covering 547 acres offer attractions including the Bukit Gambang Water Park and Active Academy, as well as facilities for meetings, incentives, conventions and exhibitions and 998 accommodation rooms for families and corporate groups.

For the 10-month period ended July 31, 2011, group revenue rose 53.4% to RM143.7 million from RM93.7 million in the previous corresponding period. Group net profit rose by 222.0% to RM38.1 million from RM11.9 million.



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‘We are in it for the long haul’

KUALA LUMPUR: Businessman Datuk Raymond Chan, who bought into two companies within four months, says he is a committed investor who intends to stay in the companies in which he has invested for the long term.

In an interview with The Edge Financial Daily yesterday, Chan shot down talk that the purchases were a speculative move.

“If I were to buy shares in the company, I definitely want to go into the company. I wouldn’t want to speculate. That is not our style,” said Chan, the substantial shareholder of Harvest Court Industries Bhd and Naim Indah Corp Bhd. Shares in both companies have marched to multi-year highs.

“We remain committed to grow the business, same as Naim Indah. We go in, we go in with a purpose. It is not like we want to inject assets in there, cash it out and dilute minority interests. It is not our objective. We want to create wealth for everyone, that’s our objective. We are here to stay for long term,” he said.

Chan grabbed the headlines when he first surfaced as a substantial shareholder in Harvest late last year after he bought a 13.83% stake. Little-known Harvest then became the star performer on Bursa Malaysia last year.

Since Chan’s entry, the value of his stake in Harvest has risen more than 16-fold. In fact, Harvest shares and warrants were just uplifted last week by Bursa Malaysia from a two-month period under designated status due to “excessive speculation”.

Similarly, Naim Indah, another hardly traded stock, has soared 10 times year-to-date on ballooning trading volume after Chan emerged as the largest shareholder with a 12.11% stake this year.

Chan: We go in, we go in with a purpose. It is not like we want to inject assets in there, cash it out and dilute minority interests. It is not our objective. We want to create wealth for everyone, that's our objective. We are here to stay for long term.

In just four trading days, Naim Indah’s share price rocketed from nine sen to 67 sen on Feb 9 before the company announced the proposed asset injection by Chan. The stock fell 16% yesterday to 56 sen.

To recap, last Thursday Chan’s 67.69%-owned Generasi Cipta Sdn Bhd (Gencip) entered into a heads of agreement for the proposed sale of its 60% stake in Sagajuta (Sabah) Sdn Bhd to Naim Indah for an indicative price of RM240 million, valuing the company at RM400 million.

Naim Indah said it also intends to acquire the remaining 40% in Sagajuta not owned by Gencip, which will be satisfied via issuance of shares and loan stocks.

Based on Sagajuta’s estimated net asset value of some RM174.7 million on Dec 31, 2012, Gencip and Naim Indah may have paid a hefty premium for the former.

Sagajuta made a mere RM14.64 million in net profit for FY10 ended Dec 31 on the back of RM128.78 million in revenue.

The RM400 million price tag for Sagajuta implies a historical price-earnings ratio of 27.3 times, which some analysts find high relative to the market average and property stocks.

But after including the estimated revaluation of 1Borneo Hypermall worth RM169.8 million, into Sagatjuta’s net tangible assets (NTA), the premium paid by Naim Indah is less.

Including the mall’s revaluation, Sagajuta’s NTA rises to RM344.5 million, placing its valuation at 1.16 times NTA.

However, an analyst pointed out that when compared with REITs, assets are typically injected at prices below book value. This is to allow capital appreciation upside for the REIT and better yields.

When asked about Naim Indah’s prospects, Chan said, “We have a strong [management] team and if you see, we are quite diversified [in terms of talent]. Everyone has a role to play.”

Mohd Nazifuddin Najib, the son of Prime Minister Datuk Seri Najib Razak, is the executive chairman of Sagajuta. He is also its third largest shareholder.

Chan said a reverse takeover (RTO) is the best way to grow a private limited company.

“Sagajuta as a private company has limitations to grow. Property is a very cyclical business. So, we really need to look for opportunities to make it big.

“So, I looked at Naim Indah. They have timber, a property development arm, and they have a shopping mall, which fits quite nicely with what we already have. The other thing is oil and gas; there is hype in this industry and the margin is healthy.

“For us to make it in a big way, we have to be a listed company, and from that we can build on our brand name. RTO was the fastest way for us. IPO (initial public offering) needs long track record,” he said.

Chan said one factor that stopped Sagajuta from going for a listing via the IPO route is that it does not have a sizeable landbank.

“This was one of the challenges. We have to acquire landbank; we need a vehicle that is big enough for us to raise funds and access the equity and debt markets,” he said.

To facilitate the RTO, a reduction in par value was proposed as well as a rights issue and private placement that would raise some RM100 million.

“One part [of the RTO] is to pare down the debts, and the other is to grow the business. There is nothing more to it than that. It is quite a simple exercise. We are rewarding shareholders by giving them two free warrants,” said Chan.

Chan also said it is too early to say whether the enlarged Naim Indah will have another round of fundraising for its future expansions after proposed rights issue.

“I have to re-look at our position. Give us about one or two months, then we’ll know [whether we need to raise funds from the equity market]. But exciting times are ahead, definitely, because there are more plans that we can work on now as a listed company,” he said.


This article appeared in The Edge Financial Daily, February 14, 2012.



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Time Engineering shares rally on stake sale

PETALING JAYA: Interest in Time Engineering Bhd shares soared yesterday as the debt-free ICT firm is said to have attracted three bidders to take up a controlling stake in it.

Time’s share price shot up to an intra-day high of 42 sen before it retreated to finish at 40.5 sen yesterday, up 15.7% or 5.5 sen from last Friday’s closing.

Some 89.02 million Time shares changed hands yesterday, the highest level since November 2010, making it the third most actively traded stock on Bursa Malaysia.

The Edge weekly reported that Khazanah Nasional Bhd has three bidders for its 45.03% stake in Time and the government investment arm is in the midst of evaluating the proposals from the bidders.

The weekly gathered that the bidders were likely to be ICT consultancy firm Zamcorp Bhd, IT solutions company MM Tech Corp, and an entity linked to tycoon Tan Sri Syed Mokhtar Albukhary.

“The three were recently asked to submit their proposed business plan for Time, including their offer price. The offers are generally at a slight premium to the stock’s current trading levels, though there are parties reluctant to pay more than the net asset value,” The Edge weekly said, quoting an unnamed source.



Some quarters speculated that there could be a general offer in the pipeline should the new shareholder take over the entire 45.03% equity stake currently held by Khazanah.

It is worth to note that Khazanah and national asset manager Permodalan Nasional Bhd (PNB) have plans to divest some of their non-core assets to bumiputera entrepreneurs through open tender as the government pushes for more equity ownership in the hands of bumiputera investors. Recently, Prime Minister Datuk Seri Najib Razak was quoted as saying that the best and most capable bumiputera firms will get to own the companies.

However, some quarters wonder about the intrinsic value of Time, which sold its crown jewel Time dotCom Bhd (TdC) for RM331.9 million to trim its borrowings.

Observers noted that Time’s main appeal is its cash pile which has increased quite substantially, derived from the proceeds of the TdC’s disposal. However, it has utilised 80% of the proceeds to pay off its debts, and is left with about RM68 million, of which the group said is available for investments as and when such opportunities arise, and also for its capital expenditure.

Time has a clean balance sheet now after it paid off its borrowing. As at Sept 30, 2011, Time had RM132.2 million in cash and its equivalents and RM24.4 million in receivables, deposits and pre-payments, and almost no debts. At book value per share of 20 sen, the stock is currently trading at 2.03 times, while its net tangible assets per share stood at 19 sen.


This article appeared in The Edge Financial Daily, February 14, 2012.



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IWH increases purchases from KPRJ

KUALA LUMPUR: Iskandar Waterfront Holdings Sdn Bhd (IWH) has increased its share purchases from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ), buying KPRJ’s stake in PLS Plantations Bhd, and confirming its purchase in Tebrau Teguh Sdn Bhd.

In two separate announcements to Bursa Malaysia yesterday, Tebrau confirmed IWH’s purchase of a 33.15% stake in the company while PLS said IWH acquired a 23.4% stake in PLS from KPRJ yesterday, bringing IWH’s purchases from KPRJ to a total of RM261.29 million.

KPRJ is a major shareholder of PLS. The company told Bursa yesterday that it received notification that KPRJ had entered into a share sale agreement with IWH, whereby the latter will acquire 76.5 million 20 sen shares in PLS for RM1.21 per share, representing a five sen premium to the five-day weighted average share price.

In its Jan 31 announcement, Tebrau said its major shareholder KPRJ had entered into a definitive agreement with IWH to sell its 33.15% Tebrau stake, which consisted of 222 million 50 sen shares, for 76 sen cash apiece. Before the sale was announced, KPRJ held 41.15% in Tebrau.

In addition, the announcement said the proposed acquisition will trigger a mandatory takeover offer by IWH and the parties acting in concert with it for all the remaining shares in Tebrau not owned by the former for 76 sen cash per share.

The news comes just a day after Prime Minister Datuk Seri Najib Razak announced a RM200 facilitation fund to kickstart the Iskandar Integrated Waterfront City Project in Danga Bay. The project will reportedly cover a total of 25km on the east and west of the Johor Causeway facing Singapore, with a reported gross development value of RM80 billion.

IWH is a special purpose vehicle established to develop the Iskandar project. IWH’s shareholders are KPRJ and Credence Resources Sdn Bhd, whose major shareholder is Ekovest Bhd executive chairman Datuk Lim Kang Hoo.

Tebrau has been in the news since it announced on Jan 31 that it had accepted IWH’s offer for the 33.15% stake. The developments have sent Tebrau’s stock price soaring. It closed up 2.5 sen or 2.8% to 91.5 sen yesterday, its highest close in 13 months.

PLS is an investment holdings company that is involved in plantation and construction activities. It finished at RM1.15 yesterday, unchanged since Feb 9. Its close on Feb 8 was RM1.19.


This article appeared in The Edge Financial Daily, February 14, 2012.



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Focusing on Harvest, Naim Indah

Fresh from gaining control of two listed companies in under four months, Datuk Raymond Chan Boon Siew talks to The Edge Financial Daily's Jose Barrock and Isabelle Francis about his plans for Naim Indah Corp Bhd and Harvest Court Industries Bhd, as well as rumours of his entry into another listed company.

TEFD: What are the future plans for Naim Indah apart from what Sagajuta already has in the pipeline?
Chan: We are scouting potential landbank, not so much greenfields, but those with (development) approvals. We have identified a few parcels and hopefully we can negotiate (and secure) a few.

Where is the land?
In the hotspot areas. The Klang Valley and Penang are our two focus areas. I can’t really tell at this moment.

What about plans for Naim Indah’s timber segment?
Are there plans to divest any of Naim Indah’s businesses?
We are leaving Naim Indah’s timber (segment) as it is. No plans to divest but only enhancing. What is there to divest? That is why Harvest Court Industries Bhd focuses on construction and Naim Indah on property. Even for Harvest Court, we are confident that it will return to the black by 2012.



Based on the proposal, you are valuing the company (Sagajuta) at RM400 million. Its NTA (net tangible asset) is over RM340 million.

It is not so much about managing the NTA, but it is about managing perception. What is the point of having a high NTA when you can’t grow the business.

For a lot of companies, their share prices do not reflect NTA. There are other factors involved: business prospects, what value that we can create...
Quality of assets is more important. We are quite prudent when we do things.

We have a strong (management) team and if you see, we are quite diversified (in terms of talent). Everyone has his role to play.

There are reports that you were interested in (buying) DBE Gurney Bhd as well?
No lah, it’s not true. No, no, no. There are people who ‘put’ my name there, make me look like a ‘syndicate’. In fact, I did buy a few shares in DBE Gurney but when I heard about the rumours, I disposed of everything.

Chan: Harvest Court focuses on construction and Naim Indah on property.

I don’t own a single share (in DBE Gurney) but people still use my name for whatever reason they have. But, I am definitely focusing on two companies right now: Harvest Court and Naim Indah.

When people said I was going into (DBE Gurney) a big way, I disposed of everything. You can do a search. I don’t own a single share now (in DBE Gurney). It was a very small stake, below 5%.

I’m disappointed when people start to blow it up. Why people disclose it (the shareholding)? They must have their own motives.

What went wrong in the proposed RTO exercise in Jerneh Asia Bhd?
I don’t want to revisit this because I don’t want to create an unnecessary issue for Jerneh and me. We could not agree on certain terms and we parted, that’s all.

Any more acquisitions moving forward?
I can’t say now. It is not easy to acquire a mall. A lot of people don’t understand. Running a mall is not like other business. You have got to run every aspect, from garbage to rental collection, you have to do everything. It is a very tough business.


This article appeared in The Edge Financial Daily, February 14, 2012.



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Hock Seng Lee awarded RM82m construction contract

KUALA LUMPUR: Hock Seng Lee Bhd (HSL) has been awarded a RM82.22 million road construction contract in Sarawak by the Public Works Department. The stock reached an eight-month high of RM1.72 following the award for the construction of the road linking Balingian to Jalan Persekutuan.

HSL signed the contract with PN Construction Sdn Bhd, a wholly-owned subsidiary of Nam Fatt Corp Bhd, with work for the subcontracted sum including earthworks, drainage and culverts, roads and bridges.

Construction is due to be completed in the first quarter of 2014. This new project complements an earlier contract the group was awarded for a 600MW coal-fired power plant in Balingian, which is expected to start construction this year.

In a report yesterday, Joshua Ng of RHB Research was positive on the latest development. Ng said that with an assumption of earnings before interest and tax (Ebit) margin of between 12% and 15%, the contract should fetch RM9.9 million to RM12.3 million over the construction period ending 1Q14.

Analysts expect investors to remain interested in HSL, even as interest wanes on the sector leading up to the general election. According to the RHB report, the share prices of construction stocks are expected to be muted for at least the next six months, or longer, as the market prices in a higher risk premium ahead of the general election that must be held by March 2013.

Analysts in general are bullish on HSL based on potential projects under the Sarawak Corridor of Renewable Energy (Score).

RHB, which has an “outperform” call on the company, highlighted the group’s outstanding construction order book of RM1.1 billion coupled with its strong balance sheet with a net cash of RM142.1 million or 24.4 sen per share as an added downside protection to its share price.

Analysts covering the stock have priced RM600 million in job wins this year against RM570 million in 2011 in their earnings forecasts, but with contributions to only start in 2013.

The group’s 2011 job wins totalled RM313 million, well below the management’s target and 2010’s RM532 million in contracts, said Wong Chew Hann of Maybank IB in her report last week.

The slow momentum in securing projects was due to a lack of contracts awarded by the state government. State contracts were down by 39% year-on-year (y-o-y), she added. This was not confined to Sarawak as new construction jobs reported for the whole country were down 11% y-o-y to only RM77.3 billion in 2011.

However, both AmResearch and Maybank IB have “buy” calls on the company, with fair values of RM2.30 and RM2.10 respectively. They expect construction awards in Sarawak to pick up this year in a bid to support the state’s industrialisation plans under the Score.

“We believe there will be a flurry of job announcements in the weeks and months ahead relating to the Score development and in particular, the fast-developing Samalaju Industrial Park,” AmResearch said in its report last Friday.

HSL recorded an 11.3% increase in profit to RM22.56 million from RM20.28 million in the quarter ended Sept 30, 2011 compared with a year ago. Revenue was also up by 11.9% to RM150.42 million from RM134.35 million.


This article appeared in The Edge Financial Daily, February 14, 2012.



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Spotlight on China stocks

Consumer sector
Maintain overweight: The Edge Financial Daily reported on Monday that the recent listing of Chinese companies in Hong Kong at higher price-earnings ratios (PER) may spark a re-rating of China-based stocks listed on Bursa Malaysia. Valuations of these stocks are still cheap.

Right from their IPOs, China-based companies listed on Bursa are trading at huge discounts to their book values (BV) and are at very low PER.

Their weak share price performance is mainly due to investor scepticism of Chinese stocks listed in overseas bourses in view of numerous accounting issues dogging such companies listed in the US and Singapore.

The Chinese companies listed on Bursa are currently trading at extremely cheap PER of about two times.

China Stationery Ltd (CSL), slated to list on Bursa at a PER of around six times, is a China-based integrated plastic stationery company.

Compared with other Chinese companies listed here, CSL’s valuation will be at the higher end of the spectrum.



As such, a re-rating could be in store for the other listed China-based companies if CSL’s IPO is well received, which will bring public attention back to these stocks. Chinese shoe sole manufacturer Multi Sports (“buy”, fair value (FV): RM0.78), which is under our coverage, has been performing steadily and delivering within our estimates.

We are still “overweight” on the consumer sector given its resilient earnings, low beta and decent dividend yields. QL Resources Bhd (“buy”, FV: RM3.62) and Padini Holdings Bhd (“buy”, FV: RM1.42) are our top picks in the consumer space for their solid track records and decent dividend yields. — OSK Research, Feb 13


This article appeared in The Edge Financial Daily, February 14, 2012.



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Sector upgrade on easing headwinds and YTD underperformance

Banking sector
Upgrade to neutral from underweight: We have turned more positive on the banking sector and consequently upgrade our sector recommendation to “neutral” from “underweight”.

The two key factors that underpin the change in our sector view are: (i) easing macro headwinds; and (ii) the sector has underperformed the broader market and regional peers year-to-date (YTD).

While we think the eurozone is unlikely to avoid a recession in 2012, it appears to have pulled back from the brink of a meltdown in late-2011. The recovery in the US economy appears to be gaining momentum after a string of positive economic data in early 2012.

These suggest that the risk of a double-dip global recession is receding and outlook is becoming less gloomy. This has improved the odds for an upgrade to our real GDP growth forecast and the Malaysian economy could turn out to be stronger than our 2012 forecast of +3.6%.

YTD, the sector has underperformed the broader market and regional peers. Consequently, while Malaysian banks still trade at a premium to regional peers, the premium has narrowed. In addition, we think the slower sector earnings growth ahead has largely been priced in as our earnings forecasts are generally in line with consensus. Thus, we do not expect the sector to underperform the market too significantly and we see share price weaknesses as buying opportunities. When the economic upcycle begins, it is the banks that tend to take the lead in lifting the market to higher levels.



We make no change to our earnings forecasts. With the risk of a global recession receding, we have reverted to an earnings-based valuation methodology to derive our fair value estimates for the banks.

In addition, we have raised our target 2012 PER multiples to reflect lower risk premiums with the benchmark 2012 PER for the banks being 14 times, in other words in line with the target PER for the KLCI. Overall, we have raised our fair value estimates for the banks by between 6.5% and 30.5%.

We upgrade Malayan Banking Bhd to “outperform” from “underperform” while CIMB Group Holdings Bhd and AMMB Holdings Bhd are rated “market perform” (both “underperform” previously).

We make no changes in recommendation for the other stocks. Overall, we raise our sector call to “neutral” from “underweight”. — RHB Research Institute, Feb 13


This article appeared in The Edge Financial Daily, February 14, 2012.



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Gamuda JV formalises role in Klang Valley MRT project

Gamuda Bhd (Feb 13, RM3.85)
Maintain buy with revised fair value RM4.57 from RM4.46: Gamuda announced on Bursa Malaysia last Friday that its jointly controlled entity, MMC Gamuda KVMRT (PDP) Sdn Bhd, has signed an agreement with MRT Corp to formalise its status as the project delivery partner (PDP) for the Klang Valley My Rapid Transit (KV MRT) project. Under the agreement, the PDP will receive a 6% fee on the aggregate contract value for all of the project’s works packages.

The agreement states the PDP is fully responsible and held accountable for due performance by all the contractors awarded works packages. In the event any of the contractors fail or default in their performance, the PDP has the obligation to step in and deliver the remaining works on its own.

Should the PDP complete the project within the agreed target cost, it will be paid a fee of 6% of the aggregate of all the awarded works contracts (excluding the value of the underground works package if the PDP wins the Swiss Challenge).

If the project exceeds the agreed target cost, the PDP shall be liable for the cost overrun via a reduction of the fee entitled based on an undisclosed formula.

The target completion date for the entire Sungai Buloh-Kajang (SBK) line is set for July 31, 2017. Should the PDP fail to complete the project by the agreed completion date, it is liable to pay to MRT Corp an agreed liquidated damage of RM500,000 per day.

Save for the underground works, the PDP is not allowed to participate in any of the tenders for the KV MRT works. If the MMC-Gamuda JV is awarded the underground works package, the management and supervision of that portion will be undertaken by MRT Corp itself.

Given the JV’s tender pricing advantage, the government’s preference for local contractors as well as its previous experience with the SMART Tunnel and Kaohsiung MRT, we continue to rate as high MMC-Gamuda JV’s chances of clinching the tunnelling works worth as much as RM8 billion for the SBK line, which we expect to be made known by April 2012.

The announcement and agreement terms are within our expectations. Although the total value of the SBK line will only be known after all the 90 work packages are awarded by 2H12, we estimate Gamuda’s share of profit at approximately RM360 million from the management fee on the SBK line alone, assuming a total contract value of RM12 billion for the elevated portion.

Taking a conservative stance to account for potential delays in construction as well as a possible variation order exceeding the 15% buffer due to unforeseen fluctuations in prices of building materials, we are incorporating half of the agreed 6% management fee (which translates into RM180 million for Gamuda’s share of profit), spread evenly from mid-2012 to end-2016.

We bump up our FY13 earnings by 5.5% and FY14 by 4.7%, leaving our FY12 estimates unchanged, as we assume that contribution will only come in by mid-2012.

Maintain “buy”, at a revised fair value of RM4.57 (from RM4.46 previously), based on our sum-of-parts valuation as we see more positive news in the run-up to the official award of other packages on the KV MRT SBK line. — OSK Research, Feb 13


This article appeared in The Edge Financial Daily, February 14, 2012.



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Perisai Petroleum: No spills and plenty of thrills

Perisai Petroleum Teknologi Bhd (Feb 13, 86.5 sen)
Maintain outperform with target price RM1.45: We continue to value Perisai at our 2013 target market price-earnings ratio (PER) of 12.6 times. A potentially strong 4Q11 performance, fleet expansion and a prospective marginal field venture support our “outperform” call. We have not factored in any contribution from marginal fields.

We do not expect Perisai to disappoint when it releases its 4QFY11 results on Feb 22. The company is likely to post a net profit of RM10 to RM12 million or growth of around 55% year-on-year (y-o-y) and 20% quarter-on-quarter (q-o-q).

The strong 4QFY11 is due to the first full-quarter contribution from Intan Offshore Sdn Bhd, which owns eight vessels. Perisai completed the RM45 million acquisition of a 51% stake in Intan in August 2011.

The 4QFY11 performance will also reflect the contribution from pipelay barge Enterprise 3.

Net profit for 4QFY11 is expected to give Perisai a record finish in FY11 with a core net profit of RM35 million. FY11’s 209% core earnings per share (EPS) jump will mark Perisai’s first earnings expansion since FY07.



We remain bullish on Perisai’s prospects. Garuda Energy (L) Inc’s mobile offshore production unit (MOPU) has been contributing to Perisai’s bottom line since Jan 4 when the acquisition was finalised.

The MOPU, which is servicing Petronas’ 2+1+1 contract at the Bekok C field, comes with an annual profit guarantee of RM50 million for the primary term.

The Intan and Garuda purchases underpin our expectations of new net profit highs in FY12/FY13 and a three-year EPS compound annual growth rate of 96%.

We advise investors to accumulate the stock aggressively. It offers the most share price upside in our oil and gas portfolio.

Despite this, FY12/FY13 PERs are under eight times, making Perisai the cheapest stock in the portfolio. Potential marginal field contracts, which may require MOPUs, add to the attraction. — CIMB IB Research, Feb 13


This article appeared in The Edge Financial Daily, February 14, 2012.



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Sentoria IPO oversubscribed by 5.4 times

Sentoria Group Bhd's public tranche under its Initial Public Offering (IPO) on the Main Market of Bursa Malaysia Securities Bhd has been oversubscribed by 5.4 times.

The company said it had received a total of 6,829 applications for 127.2 million shares with a total value of RM108.1 million, for the public tranche of 20.0 million shares under the Group's IPO.

"The oversubscription for our IPO indicates the investing community's confidence in our business strength and abilities to grow further in the theme park and resorts sector.

"We believe that the upcoming listing on the Main Market would enhance our balance sheet, which will give us ample opportunities to expand operations, including enriching the visitor experience at Bukit Gambang Resort City (BGRC).

"We are optimistic that our future projects will elevate the Group to greater heights," Head of Public and Investor Relations of Sentoria Group, Nasiruddin Nasrun said in a statement, today.

Sentoria, scheduled to be listed on Feb 23, will be the first IPO of 2012.

The company is also the developer of BGRC located in Kuantan, Pahang. It is, the first and largest water park resort city in the east coast of Malaysia. -- Bernama



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Inovisi acquires 10% stake in Nextnation

Nextnation Communication Bhd's Indonesian outsourcing customer, PT Inovisi Infracom Tbk, has acquired a 10 per cent stake in the company.

In a statement today, Nextnation said the private placement by Inovisi would allow it to secure a portion of the capital expenditure fund of US$5 million it required to take on the project it recently secured from the Indonesian conglomerate.

Nextnation group chief executive officer, Larry Tey, said the stake showed a strong vote of confidence from Inovisi in the company.

"There is a possibility of Inovisi increasing its stake to 30 per cent in the future," he said.

Tey said Nextnation recently won an outsourcing project to provide mobile platform infrastructure hosting and maintenance services to Inovisi.

"This project will provide Nextnation with a minimum guaranteed revenue of approximately RM67.5 million over three years.

"The company expects to generate a 31 per cent profit margin, or approximately RM21 million, over the same period," he said. Nextnation is listed on Ace Market on Bursa Malaysia.

Inovisi is an infrastructure investment holding company listed on the Indonesia Stock Exchange. -- Bernama



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KL shares lower at mid-afternoon

Share prices on Bursa Malaysia continued to remain subdued during mid-afternoon trading today, although the benchmark index remained in positive territory, lifted by finance-related stocks, dealers said.

At 3.42pm, the FTSE Bursa Malaysia Kuala Lumpur (FBM KLCI) was 2.41 points firmer at 1,565.23.

The Finance Index rose 57.689 points to 13,885.26, the Industrial Index added 2.67 points to 2,909.47 and the Plantation Index shed 45.391 points to 8,879.85.

The FBM Emas Index eased 1.08 points to 10,877.45 and the FBM 70 Index was 46.399 points lower at 12,378.49 while the FBM Ace declined 58.57 points to 4,687.3.

Decliners led advancers 585 to 268 while 287 counters were unchanged with turnover at 1.84 billion shares worth RM1.441 billion.

Among volume leaders, Aeon Credit added 26 sen to RM7.60, British American Tobacco gained 18 sen to RM51.68 and Warisan TC Holdings improved 15 sen to RM2.70.

Among heavyweights, Maybank went up one sen to RM8.51, Sime Darby gained three sen to RM9.64, Petronas Chemicals perked two sen to RM6.97 and CIMB rose 13 sen to RM7.29. -- Bernama



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Petra Energy buying Labuan yard site for RM16m

KUALA LUMPUR (Feb 14): PETRA ENERGY BHD []’s unit Petra Resources Sdn Bhd has proposed to buy two parcels of land in Labuan, which is it currently renting, for RM16 million.

The company said on Tuesday the two parcels of leasehold land measured 2.294 ha were currently used for its fabrication and CONSTRUCTION [] activities.

Petra Energy said Petra Resources had signed a sale and purchase agreement with Jong Nyat Lian and Lee Wing Yim to acquire the land

It expected the proposed acquisition to contribute positively to the future earnings and net assets as the expansion of its operations was expected to generate an increase in revenue.



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MAS unions-PM meet up cancelled

KUALA LUMPUR: Malaysia Airlines Employee's Union (Maseu) was scheduled to meet Prime Minister Datuk Seri Najib Razak but called off the press conference scheduled for 2.30pm today.

As at 11.30am the press conference was still on track to happen.

Calls to Maseu's president, Alias Aziz went unanswered.



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AMMB Holdings pre-tax profit surges to RM1.6b

AMMB Holdings Bhd's pre-tax profit for the nine months ended Dec 31, 2011 surged to RM1.598 billion on steady growth seen in non-interest income and lower provisions as compared with RM1.439 billion it posted for the same period last year. Revenue jumped to RM6.047 billion from RM5.302 billion previously.

"This is our 19th consecutive quarter of profit growth, reflecting AmBank Group’s achievements towards delivering its Medium-Term Aspiration," its group managing director, Cheah Tek Kuang, said in a statement today.

Cheah said the group continued to focus on growing sustainable non-interest income, CASA (current account, saving account) and loans targeting profitable and viable segments, as well as enhancing its customer service levels.

The group's return on equity continued to improve and stood at 14.6 per cent, while earnings per share rose by 14.3 per cent to 39.1 sen.

Sustainable non-interest income as well as fee income contributed to 36 per cent of the group's total income, up from 22 per cent last year. However, net interest margin was lower at 2.74 per cent.

In a filing to Bursa Malaysia, the group said going forward, it was cautious in its outlook given the uncertain global economic backdrop.

"We remain focused on loans growth targeting profitable and viable segments, accelerating deposits growth especially low-cost deposits and expanding non-interest income," it said.

It said the launch of the new joint venture AmFamily Takaful Bhd would position the group to participate in the fast-growing takaful segment and strengthen the insurance and wealth management businesses. As at Dec 31,2011, the group’s total assets stood at RM107.2 billion.

Meanwhile, the group’s banking subsidiaries' aggregated risk-weighted capital ratio stood at 14.7 per cent as at Dec 31, 2011, compared with 14.4 per cent as at March 31, 2011. -- Bernama



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AMMB 3Q net profit up 9.8% to RM357.2m from RM325.3m yr ago

KUALA LUMPUR (Feb 14): AMMB HOLDINGS BHD [] posted net profit of RM357.18m for the third quarter ended Dec 31, 2011, up 9.8% from the RM325.31 million a year ago underpinned by profit growth across most divisions.

It said on Tuesday that its revenue increased 7.2% to RM1.955 billion from RM1.824 billion. Earnings per share were 11.95 sen compared with 10.83 sen.

“The group's pre-tax profit for the financial period ended Dec 31, 2011 improved to RM1.598 billion as compared to RM1.439 billion reported for the corresponding period last financial year,” it said.

For the nine-months ended Dec 31, 2011, its earnings increased by 13.8% to RM1.168 billion from RM1.026 billion in the previous corresponding period. Its revenue registered a 14% increase to RM6.047 billion from RM5.302 billion.



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'Construction jobs worth RM90b seen in 2012'

Malaysia's construction industry is expected to record RM90 billion worth of projects this year driven by government and private projects, said the Construction Industry Development Board (CIDB).

Chief executive Datuk Seri Ir Judin Abdul Karim said private financing initiatives and public-private partnerships are expected to contribute the highest value of projects at RM32 billion, followed by government projects (RM24 billion), residential projects (RM13 billion) and other private investments (RM19 billion).

"The trend this year is expected to be in line with the trend for the previous four years where construction investment by the private sector averages about 65 per cent," he said at the International Construction Week 2012 programme here today. - Bernama



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OSK keeps 'buy' call on Prestariang

Prestariang Bhd's (Prestariang) profit after tax for the fourth quarter of the financial year ended Dec 31, 2011 is expected to be within OSK Research Sdn Bhd's estimate of between RM10-RM11 million.

OSK Research in a research note here today said the results are likely to be driven by its information and communications technology training and certification division which usually experiences a peak in the second half of the year.

It said moving into 2012, the Prestariang management is aiming for an internal profit after tax of RM40 million for the new year and the research firm believes the target is achievable.

"We believe that the target, which implies a 19 per cent growth year-on-year is achievable, leveraging on the broader implementation of its in-house developed solutions, which typically yield better margins," it added.

OSK Research said the company is also working towards smoothening out its future earnings by focusing more on non-time sensitive contracts during the off-peak quarters to mitigate the seasonality impact.

The research house expects a more normalised and predictable earnings cycle going forward.

Meanwhile, it has maintained a "buy" call with a higher fair value of RM1.38 on the company as it feels increasingly upbeat on the prospects, riding on the growing adoption of its self-developed solutions. -- Bernama



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KL stocks wring gains at midday

Bursa Malaysia shares extended its downtrend midday dragged by losses mainly in plantation-related counters led by Kuala Lumpur Kepong, dealers said.

However, the FTSE Bursa Malaysia (FBM KLCI) recovered from its earlier losses and gained 0.18 of a point to end the morning session at 1,563 points.

Market sentiment continued to be influenced by developments in the euro zone while at home, the fourth quarter gross domestic product data was expected to be released this week.

The Finance Index perked 18.16 points to 13,845.73, the Plantation Index fell 34.92 points to 8,890.32 and the Industrial Index added 4.47 points to 2,910.94.

The FBM Emas Index gave up 11.49 points to 10,867.04, the FBM Ace Index fell 45.06 points to 4,700.81 and the FBM Mid 70 Index declined 45.5 points to 12,379.39.

Losers outnumbered gainers 530 to 229 with 307 counters unchanged, 414 untraded and 16 others suspended.

Turnover stood 1.367 billion shares worth RM969.69 million. For actives, British American Tobacco rose 28 sen to RM51.78, Far East Holdings advanced 20 sen to RM7.40 and Petronas Gas gained 16 sen to RM16.76.

Among heavyweights, Maybank was unchanged at RM8.50, Sime Darby inched up two sen to RM9.63, Petronas Chemicals rose three sen to RM6.98 and CIMB added eight sen to RM7.24. -- Bernama



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KLCI closes slightly higher at noon

KUALA LUMPUR (Feb 14): At 12.30pm on Tuesday, there were 229 gainers, 530 losers and 307 counters traded unchanged on the Bursa Malaysia.

The FBM-KLCI was at 1,563.00 up 0.18 of a point, the FBMACE was at 4,700.81 down 45.06 points, and the FBMEMAS [] was at 10,867.04 down 11.49 points.

Turnover was at 1.367 billion shares valued at RM969.969 million. — Bernama



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KL stocks easier at midmorning

At 10.30 am today, there were 175 gainers, 413 losers and 309 counters traded unchanged on the Bursa Malaysia.

The FBM-KLCI was at 1,562.10 down 0.72 of a point, the FBMACE was at 4,696.54 down 49.33 points, and the FBMEmas was at 10,860.67 down 17.86 points.

Turnover was at 858.871 million shares valued at RM461.439 million -- Bernama



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Three ex-Transmile directors fail in bid for judicial review

KUALA LUMPUR (Feb 14): The High Court has ruled in favour of the enforcement actions taken by Bursa Malaysia Securities against three former directors of TRANSMILE GROUP BHD [].

Bursa Malaysia said on Tuesday the court had Feb 9 dismissed the application for a judicial review of the enforcement actions taken against Gan Boon Aun, Khiudin Mohd @ Bidin and Shukri Sheikh Abdul Tawab.

To recap, on Sept 6, 2010, Bursa Malaysia publicly reprimanded and imposed a total fine of RM781,500 each on Gan and Khiudin and RM162,600 on Shukri for breaching paragraph 16.11(b) of Bursa Malaysia’s Listing Requirements.

The former directors were found to have permitted, knowingly or where they had reasonable means of obtaining such knowledge, Transmile to breach:-

* paragraphs 9.22(1) and 9.23 of the LR pertaining to the delay in the submission of Transmile’s annual audited accounts and annual report for the financial year ended Dec 31, 2006, and quarterly report for the financial period ended March 31, 2007; and

* paragraph 9.16(1)(a) of the LR pertaining to the restatement of Transmile’s audited results for the financial year ended Dec 31, 2005, and the deviation in Transmile’s unaudited and audited results for the financial year ended Dec 31, 2006.



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Court in favour of Bursa's action on Transmile

Bursa Malaysia Bhd, the country’s stock exchange operator, said the High Court of Kuala Lumpur ruled in favor of its enforcement actions against three former directors of Transmile Group Bhd.

The court dismissed the applications for a judicial review of the incident, Bursa said in an e-mailed statement in Kuala Lumpur today. - Bloomberg



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Felda Global ventures market cap to hit RM21b on listing

KUALA LUMPUR (Feb 13): Felda Global Ventures Holdings Bhd's (FGVH) market capitalisation is expected to touch RM21 billion upon its listing on Bursa Malaysia Main Board, slated to be on May 10, said Deputy Minister in the Prime Minister's Department Datuk Ahmad Maslan.

The current market capitalisation of Felda's commercial arm is at RM3 billion.

"That will make Felda Global Ventures as one of the blue-chip companies in the global PLANTATION [] industry," he said during a briefing to some 1,300 Felda personnel on the listing process, here on Monday.

He said investors of Felda Global Ventures will get pre-and post-listing dividends.

He, however, declined to reveal further details, saying it will be announced by Prime Minister Datuk Seri Najib Tun Razak.

"The whole negotiation process before the initial public offering (IPO) is 90 per cent complete. Therefore, once it is completed, the Prime Minister will make the announcement."

Ahmad Maslan also said Koperasi Permodalan Felda (KPF) would be the single largest shareholder of Felda Global Ventures with a 37 per cent stake.

Among the other shareholders will be settlers, state governments and Bumiputera investors, institutional investors and foreign investors.

"We have finalised the shareholders. Companies like Permodalan Nasional Bhd, Employees Provident Fund and Amanah Saham Nasional Bhd will have their stake in the company after listing," he said.

Ahmad Maslan said a new investment holding company, Felda Asset Holdings Company had been established to control and manage KPF's 37 per cent stake in Felda Global Ventures.

This is to prevent KPF from selling Felda Global Ventures' stake to unwanted parties in the future, he said.

"Felda Asset Holdings Company will have representatives from the Prime Minister's Department, Ministry of Finance, Felda, Felda Global Ventures and KPF. These representatives will be appointed by Datuk Seri Najib Tun Razak."

Ahmad Maslan also said Felda Global Ventures had narrowed down its choice of global partners to two companies both of which are very big and successful.

Felda is still negotiating with the two entities and announcements will be made once the negotiations are completed, he said, adding that the global partner will diversify the group's network and open up more markets for them. - Bernama



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Market lacklustre as investors cautious of Greece's reforms commitment

KUALA LUMPUR (Feb 14): Blue chips reversed into the red after the first hour of trading on Tuesday following the lack of follow-through buying support, in line with the cautious regional markets.

Reuters reported that the initial relief over Greece's approval of harsh austerity measures in exchange for crucial aid gave way to doubts about Athens' ability to pursue the reforms, with social unrest intensifying.

At 10.02am, the FBM KLCI was down 1.06 points to 1,561.76. Turnover was 620.93 million shares valued at RM300.42 million. Losers beat gainers 331 to 170 while 289 stocks were unchanged.

CIMB Equities Research in its technical outlook that it was beginning to see more weakness creeping into the KLCI index.

“The past two candles have been small with Friday’s candle forming a bearish harami pattern. The strong volume run-up the past week could potentially be a buying climax with prices stalling at the 1,560-1,565 resistance level. A close below the 1,550 levels would likely confirm the reversal and send the index back towards 1,524 and 1,500 next.

“Anything above 1,565 should be viewed as a bonus to lock in profits at a higher level. A break below 1,500 would mean that 1,565 is most likely going to be a very significant top that is unlikely to be challenged for at least a couple of years,” said CIMB Research’s technical outlook for the market.

KLK was the top loser, down 38 sen to RM25.60, BAT 20 sen to RM51.30, HL Bank 10 sen to RM11.46, Tenaga seven sen to RM6.12 and PetDag six sen to RM18.72.

Naim Indah Corp fell seven sen to 49 sen with 34.89 million shares done.

JCY fell five sen to RM1.30. CIMB Research said the rally in JCY’s share could be over and looks poised for a deep correction.

“We believe that it is time to get out and lock in gains. Even if there is upside left, it is likely limited to RM1.50-1.60 levels. The key level to watch out for is RM1.31, where a break below would likely signal that prices are headed back to RM1.08 and RM1.03 next, where the latter is its 50-day SMA. Sell now,” it said in its technical outlook.

Among the gainers were Petronas Gas, up 18 sen to RM16.78, Ta Ann 12 sen to RM5.89, MNRB 11 sen to RM2.80 while PetChem gained six sen to RM7.01.



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Hektar REIT rises on Q4 income surge

Hektar Real Estate Investment Trust rose 1.5 percent to RM1.37 in Kuala Lumpur trading at 9.38am, bound for its highest close since Dec. 7.

Its net income in the fourth quarter grew fivefold from a year earlier to RM57.7 million, according to a filing to the stock exchange. -- Bloomberg



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PLS Plantations up on Iskandar stake buy

PLS Plantations Bhd advanced 4.4 percent to RM1.20 in Kuala Lumpur trading at 9.38am, set for its highest close since Dec. 5.

Iskandar Waterfront Holdings Sdn Bhd agreed to buy 23.4 percent of PLS from Kumpulan Prasarana Rakyat Johor Sdn Bhd at RM1.21 per share, according to a filing to the stock exchange. -- Bloomberg



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MBSB slips after unaware of privatisation plan

KUALA LUMPUR (Feb 14): Shares of MALAYSIA BUILDING SOCIETY BHD [] (MBSB) slipped in early trade after it said that it was not aware of any plans for its privatisation.

At 9.55am, it was down three sen to RM2.33.

“MBSB wishes to inform Bursa Malaysia Securities Bhd that the company is not aware of the intention to privatise MBSB and/or unlock the value in MBSB's PROPERTIES [] by the holding company,” it said in a statement to Bursa Malaysia on Monday.



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Premier Nalfin falls, not takeover target

Premier Nalfin Bhd, a manufacturer of edible oils formerly known as Premium Nutrients Bhd, fell 1.2 percent to 42 sen in Kuala Lumpur trading at 9.38am.

The company clarified news reports to say that it isn’t a target of a reverse takeover, according to a stock exchange filing. -- Bloomberg



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Maxbiz delisting deferred after appeal submitted

KUALA LUMPUR (Feb 14): Bursa Malaysia Securities has deferred the delisting of MAXBIZ CORPORATION BHD [] after the company submitted an appeal to the regulator on Feb 10.

Maxbiz said on Monday the appeal was against the regulator’s application to reject the company’s application for an extension of time to submit its regularisation plan.

“As such, the removal of the securities of the company from the Official List of Bursa Securities on Feb 16, 2012 shall be deferred pending the decision on the appeal,” it said.



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Naim Indah falls for third day as traders take profit

KUALA LUMPUR (Feb 14): Shares of NAIM INDAH CORPORATION BHD [], which was chased up last week, extended its decline for the third day on Tuesday as traders and investors were quick to take profit.

At 9.20am, it was down 5.5 sen to 50.5 sen with 17.97 million shares done. It had surged from only 9.0 sen on Feb 2.

The FBM KLCI rose 2.6 points to 1,565.42. Turnover was 255.65 million shares valued at RM114.39 million. Advancing stocks beat decliners 193 to 126 while 216 counters were unchanged.

On Monday, Naim Indah fell 11 sen to 56 sen with 196.26 million units done.

It had proposed to acquire 60% in Sagajuta (Sabah) Sdn Bhd for an indicative price of RM240 million from Generasi Cipta Sdn Bhd.

Businessman Datuk Raymond Chan, who bought into two companies – Naim Indah and HARVEST COURT INDUSTRIES BHD [] -- within four months, told The Edge Financial Daily he is a committed investor who intends to stay in the companies in which he had invested.



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Affin Research maintains sell on KNM Group at RM1.04, TP 84 sen

KUALA LUMPUR (Feb 14):Affin Investment Bank Research is maintaining its sell call on KNM GROUP BHD [] at RM1.04 and lowered the target price to 84 sen.

The research house said on Tuesday it was not optimistic about KNM’s proposed GBP450 million (approximately RM2.2 billion) Peterborough Energy Park (PEP) project in the UK.

On Feb 8, KNM, the contractor turned owner for the PEP signed a conditional sale and purchase agreement with the PEP project site owner to purchase the project land (approximately 55 acres) for GBP25 million (RM120 million).

“In view of the ongoing global economic uncertainties, cautious market sentiment (especially in Europe), KNM’s weak earnings track record and its lack of track record in renewable project ownership, we are not optimistic on the PEP project and we believe securing the project funding will be challenging.

“Besides, the previous project owner had failed to achieve financial close after negotiating with bankers for over a year,” said Affin Research.



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CIMB Research has technical sell on Genting Malaysia at RM3.89

KUALA LUMPUR (Feb 14): CIMB Equities Research has a technical sell on Genting Malaysia at RM3.89 at which it is trading at a FY13 price-to-earnings of 13.4 times and price-to-book value of 1.9 times.

It said on Tuesday that Genting Malaysia tested the resistance trend line for the fourth time in the past year and the half.

“The market thinks that this line is important and so are we. The sharp fall since the final test has been sharper than the rest, which is likely an early indication that price could reverse further,” it said.

CIMB Research said the MACD and RSI sports bearish divergence signals, which suggests that the bulls are getting tired. The recent gap at RM3.94-RM4.01 could potentially be a good level to lock in gains.

“Failure to fill up this gap would be detrimental to the stock.

“The key support at RM3.78 is likely to give way soon. A break below would see prices fall towards RM3.17 next,” it said.



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CIMB Research has technical sell on Genting Bhd at RM10.50

KUALA LUMPUR (Feb 14): CIMB Equities Research has a technical sell on GENTING BHD [] at RM10.50 at which it is trading at a FY13 price-to-earnings of 11.2 times and price-to-book value of 2.3 times.

It said on Tuesday that Genting’s rally from September low found stiff resistance at RM11.20-RM11.30 levels, the downtrend resistance line from the January 2011 high.

However, it said prices have since retraced and have been falling on strong rising volume.

“The black candles may not fully form the three black crows’ pattern but it is still bearish. The indicators continued to fall to new 5-month lows, suggesting weakness ahead.

“Any rebound towards the 50-day SMA at RM10.80 levels is an opportunity to take profits. We will maintain our bearish stance unless prices can take out the RM11.26 levels. A break below Friday’s low RM10.22 would send prices reeling towards RM9.75 and even RM8.34 in the months to come,” CIMB Research said.



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CIMB Research has technical sell on JCY at RM1.35

KUALA LUMPUR (Feb 14): CIMB Equities Research has a technical sell on JCY International at RM1.35 at which it is trading at a FY13 price-to-earnings of 3.6 times and price-to-book value of 3.1 times.

It said on Tuesday that JCY’s rally from the 38.5 sen September low has been nothing but spectacular.

“However, we think that this rally is over and looks poised for a deep correction,” it said.

CIMB Research said the upward momentum is weakening via bearish divergence signals on both its MACD and RSI. The overbought RSI is also a warning sign for bulls.

“We believe that it is time to get out and lock in gains. Even if there is upside left, it is likely limited to RM1.50-1.60 levels. The key level to watch out for is RM1.31, where a break below would likely signal that prices are headed back to RM1.08 and RM1.03 next, where the latter is its 50-day SMA. Sell now,” it said.



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RHB Research keeps Maybank FV at RM9.47, Outperform

KUALA LUMPUR (Feb 14): RHB Research Institute is maintaining its fair value of RM9.47 and Outperform call on MALAYAN BANKING BHD [].

It said on Tuesday Maybank will be announcing its results (for the six months financial period to December 2011) during the week beginning Feb 20.

“Our net profit forecast of RM2.56 billion (+19.1% on-year) for the six-month period implies that 2Q net profit would be down marginally on-quarter (-0.7% on-quarter) but up by around 13.5% on-year.

“We expect lower net profit on-quarter mainly due to higher loan impairment allowances (+200% on-quarter) on expectations of lower recoveries and additional provisioning to beef up coverage levels. That said, we do note that our annualised credit cost assumption for the 6-month period stands at 30bps, slightly more conservative than the 20-25bps mentioned by management previously,” it said.

RHB Research said it expects Maybank to declare a final gross DPS of 27.5 sen (2QFY06/11: 32 sen, gross), based on a net payout ratio of about 60%.

However, Maybank’s recent payout track record with script dividends has been in excess of 70%. If repeated again, this would translate to a final gross DPS of at least 32 sen.

“Fair value of RM9.47 and Outperform call maintained. Note that we upgraded our call on the stock in yesterday’s Banking Sector Update,” it said.



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Bursa Malaysia website target of distributed denial of service attack

KUALA LUMPUR (Feb 14): BURSA MALAYSIA BHD []’s website was the target of a distributed denial of service (DDOS) attack.

It said in a statement early Tuesday that this resulted in users experiencing intermittent access to its website on Monday evening.

"Contingency measures were activated to provide continued access to the website. As a result of the contingency measures, access by international users may still be temporarily affected. Users in Malaysia are not expected to experience any disruption,” it said.

However, Bursa Malaysia’s other systems were not affected during the incident and trading in its securities, derivatives and Islamic markets continue to operate normally.



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