Thursday, 12 April 2012

AmG Insurance to buy Kurnia Insurans for RM1.55 billion

KUALA LUMPUR (April 12): AMMB HOLDINGS BHD []'s 51%-subsidiary AmG Insurance Bhd (AmG) is acquiring the entire interest in Kurnia Insurans (Malaysia) Bhd (Kurnia) for RM1.55 billion.

In a statement on Thursday, AMMB said AmG had entered into a conditional sale and purchase agreement with KURNIA ASIA BHD [] (KAB), which wholly-owns Kurnia.

AMMB and AmG chairman Tan Sri Azman Hashim said the acquisition will position the group to deliver on AmG's strategic objective of being among the top three domestic general insurers.

"The combined businesses of AmG and Kurnia will emerge as the largest domestic general insurer and the market leader in motor insurance," he said.

AMMB said the purchase price of RM1.55 billion was arrived after taking into consideration a valuation by AmG of Kurnia's business, the net profits and net assets of Kurnia, and potential synergies.

"The cash purchase price for the proposed acquisition will be funded by AmG entirely with capital funds to be injected proportionally by its shareholders (51% by AMMB and 49% by Insurance Australia Group Ltd (IAG) [AMMB's strategic partner in AmG]," it said.

AMMB said that on a combined basis, AmG-Kurnia will emerged as the No 1 general insurer (about 13% market share) and motor insurer (about 22% market share) in Malaysia by gross written premium.

AMMB group managing director Ashok Ramamurthy said there are substantive cost synergies and supply chain operational efficiencies from the enlarged scale, which would benefit its customers and business partners.

"Additionally, the three million policyholders of Kurnia is a ready pool of customers for cross-selling opportunities of AmBank Group's other financial products and services, such as banking and fund management, through our extensive distribution footprint," he said.

AMMB said that post acquisition, both the AmAssurance and Kurnia brands would continue to be used, and most of the integration process is expected to occur over a period of two years after the acquisition, within which the value accretion from the proposed acquisition would be realised.

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Tenaga 2Q profit quadraples on fuel-cost compensation

KUALA LUMPUR (April 12): TENAGA NASIONAL BHD []'s (TNB) second quarter net profit rose more than four fold from a year earlier, as a RM2.02 billion fuel-cost compensation from the government and Petroliam Nasional Bhd mitigated the impact of costlier fuel to the state-owned utility's profits.

In a statement to the exchange on Tuesday, TNB said its bottom line was also helped by higher electricity sales and foreign exchange translation gains. It said net profit came in at RM2.82 billion in the second quarter ended February 29, 2012 against RM641.1 million a year earlier as revenue grew 17% to RM8.63 billion from RM7.37 billion.

Cumulative first-half net profit rose 76% to RM2.59 billion from RM1.47 billion a year earlier while revenue was up 15% to RM17.32 billion from RM15.1 billion, TNB said.

The firm said it plans to reward shareholders with a dividend per share of 5.09 sen during the quarter in review.

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Zhulian Corp 1Q net profit up 29.2% to RM28.39m

KUALA LUMPUR (April 12): Zhulian Corporation Bhd net profit for the first quarter ended Feb 29, 2012 rose 29.2% to RM28.39 million from RM21.98 million a year earlier, due mainly to the increase in revenue and share of profit of equity accounted investee.

It said on Thursday that its revenue for the quarter rose 30% to RM111.88 million from RM86.22 million in 2011, as overall, the export sales increased by 42%, due mainly to Thailand whilst the local sales increased by 18%, mainly contributed by high demand for the food & beverage and nutritional products.

Earnings per share was 6.17 sen while net assets per share was 85.29 sen.

On its outlook, the company said it expects satisfactory performance for the year 2012.

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Tenaga, blue chips lift KLCI

KUALA LUMPUR (April 12): The FBM KLCI closed higher on Thursday, lifted by gains at blue chips including Tenaga, Genting PLANTATION []s and Petronas Dagangan.

The FBM KLCI gained 4.10 points to close at 1,601.27.

Losers edged gainers by 366 to 360, while 321 counters traded unchanged. Volume was 1.11 billion shares valued at RM1.60 billion.

At the regional markets, most of the bourses reversed earlier losses as the Shanghai Composite Index rose more than 1.8%.

Meanwhile, Hong Kong shares rose on Thursday lifted by the rally in mainland markets on the back of reports of proposals to boost economic development in Shenzen as well as optimism of easier monetary policy following GDP data due later in the week, according to Reuters.

The euro neared a one-week high against the dollar and European bond markets steadied on Thursday as investors awaited an Italian debt sale that will show whether concerns over Spain are spreading to other debt-laden euro zone nations, it said.

At the regional markets, the Shanghai Composite Index rose 1.82% to 2,350.86, Hong Kong’s Hang Seng Index added 0.93% to 20,327.32,Japan’s Nikkei 225 gained 0.70% to 9.524.79, Taiwan’s Taiex edged up 0.08% to 7,662.92, whiel South Korea’s Kospi fell 0.39% to 1,986.63.

On Bursa Malaysia, Jaya Tiasa was the top gainer and rose 44 sen to RM8.99, SMPC up 34 sen to RM1.48, Tradewinds Plantations gained 19 sen to RM5.90, Cybertowers and Sarawak Oil Palms up 16 sen each to 75 sen and RM6.88, Genting Plantations and Brahims 15 sen each to RM9.67 and RM1.33, while Tenaga, Bat and United Plantations rose 14 sen each to RM6.51, RM54.84 and RM24.90 respectively.

Among the decliners, Warisan fell 30 sen to RM2.20, GAB down 22 sen to RM12.64, KLK 18 sen to RM24.32, BLD Plantations 16 sen to RM9.23, Panasonic, Manulife, Top Glove and LPI down 12 sen each to RM21.50, RM3.25, RM4.20 and RM13.80 respectively, RHB Capital fell 11 sen to RM7.36 and Shangri-La lost 10 sen to RM2.98.

The actives included JCY, Tiger Synergy, Asia Bio, Metronic, Ariantec and CSL.

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K-One Technology estimates Ipoh factory fire damage at more than RM13m

KUALA LUMPUR (April 12): K-ONE TECHNOLOGY [] BHD [] said the preliminary estimates from the fire damage at one of its secondary factories in the Silibin Industrial Area in Ipoh could be more than RM13 million, subject to verification.

However, the company said the loss impact was mitigated by insurance coverage.

The company said it had three factories located at different sites within the Silibin Industrial Area, and that the three factories consisted of a main factory and two secondary factories.

It said on Thursday that one of the two secondary factories was gutted by fire in the afternoon of April 10, 2012.

The company said the damage included raw materials, work-in-progress, finished goods, own brand products, components, parts, machines, equipment, tools and building, renovations, fittings, furniture and others.

"The Management has taken immediate action to recover finished goods lost in the fire incident by replacement production in the main factory.

"Hence, we expect to meet all customer deliveries and orders in the quickest time possible," it said.

The company said the root cause of the fire was currently being investigated by the company and relevant authorities.

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Axis REIT buys industrial building facility in Nilai for RM26.5m

KUALA LUMPUR (April 12): Axis Real Estate Investment Trust Bhd's manager Axix REIT Managers Bhd (ARMB) is acquiring an industrial building facility in Nilai for a total lump sum of RM26.5 million.

In statement on Thursday, ARMB said it had entered into a proposed acquisition of the building facility — Emerson Industrial Facility Nilai, which had a a gross built up of approximately 192,677 sq ft, located on two parcels of adjoining industrial land at the Nilai Industrial Area 1 — with LRS Property Sdn Bhd (LRS).

It said the the first parcel of industrial land (first land) was an industrial facility with a single storey detached factory, an annexed three storey office building, a double storey canteen/storage annexe with ancilliary buildings with a land area of 144,890.2 sq ft.

The second parcel of the industrial land (second land) has a single storey warehouse building with a three storey office, and ancillary buildings with a land area of 171,973.1 sq ft, it said.

It said both parcels of the land came with a 99 year leasehold title which would expire in September, 2095 and was presently tenanted by Emerson Process Management Manufacturing (M) Sdn Bhd ("Emerson"), and K-Plastics Industry Sdn Bhd.

"Emerson is a diversified global manufacturing and TECHNOLOGY [] company with annual sales of US$24 billion (RM73.68 billion).

"Recognised widely for their engineering capabilities and management excellence, Emerson has approximately 133,000 employees and 235 manufacturing locations worldwide," it said.

AMRB said Emerson Process Management Manufacturing (Malaysia) operated a world-class valve manufacturing plant in Nilai.

"This plant manufactures and assembles a wide variety of Fisher valve products, including globe valves, butterfly valves, angle valves, V-ball valves, and actuators for both the Malaysian and export markets.

"The plant is now Emerson's largest valve manufacturing facility in Asia by shipment volume," it said.

AMRB said Emerson's tenancy agreement for the First Land and part of the buildings built on the Second Land was for a term of three years expiring in stages on May 31, 2013 and June 30, 2013, with an option to renew for another period of three (3) years.

Emerson had on Feb 10, 2012 exercised the Option for Renewal, it said.

AMRB said the remainder of the space on the Second Land was rented to K-Plastics Industries Sdn Bhd for a term of two years expiring on 14 July 2012 with an option to renew for a period of one year.

K-Plastics are manufacturers of plastic and packaging products.

"The acquisition is accretive and will provide the Trust with a combined gross income of RM 2.65 million annually and this translates to a net yield before financing cost of 9%.," it said.

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IOI’s Bumitama debuts on Singapore exchange, up 36%

KUALA LUMPUR (April 12) : IOI Corp Bhd’s 30.4% associate Bumitama Agri Ltd rose as much as 36% on the PLANTATION [] firm’s debut on the Singapore bourse on Thursday.

Bumitama shares added 27 cents to an intraday high of S$1.02 before trading lower at 98 cents at noon for a market capitalisation S$1.72 billion (RM4.21 billion). At 30.4%, IOI’s stake in Bumitama is worth S$523 million.

For comparison IOI shares declined three sen to RM5.37 on the Malaysian bourse during lunch break for a market value of RM34.5 billion.

The Hongkong and Shanghai Banking Corp Ltd and DBS Bank Ltd are joint managers, bookrunners, and underwriters for Bumitama’s initial public offering.

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KLCI reverses earlier loss, breaches 1,600-level at mid-day break

KUALA LUMPUR (April 12): The FBM KLCI reversed its earlier losses and breached the 1,600-point level at the mid-day break on Thursday, as regional markets turned positive as well.

The FBM KLCI added 0.24% or 3.76 points to 1,600.93 at the mid-day break, lifted by gains at select blue chips.

Gainers trailed losers by 267 to 302, while 308 counters traded unchanged. Volume was 553.07 million shares valued at RM574.19 million.

Asian shares eked out small gains and the euro steadied on Thursday, reflecting investor caution over sovereign funding for troubled eurozone economies Spain and Italy, despite their declining yields that helped global equities rebound overnight, according to Reuters.

An encouraging start to the earnings season helped US stocks snap a five-day losing streak, spurring investors to scale back safe haven buying of gold and US and German government debt on Wednesday, but further selling of these perceived safe assets weakened in Asia on Thursday, its aid.

At the regional markets, the Shanghai Composite Inded added 0.40% to 2,318.16, Hong Kong's Hang Seng Index rose 0.36% to 20,212.83, Japan's Nikkei 225 gained 0.29% to 9,.485.52, Taiwan's Taiex edged up 0.04% to 7,659.70, Singapore's Straits Times Index rose 0.58% to 2,963.29 while South Korea's Kospi shed 0.90% to 1,976.83.

BIMB Securities Research in a note Thursday said that buoyed by Alcoa's better than expected earnings for the 1Q12 plus easing concerns over Europe, investors became less edgy thus the 89 points gain for the Dow Jones Industrial Average to surpass the 12,800 level.

The research house However said it still detected a hint of skepticism as Wall Street closed 40 points off its intra-day high.

As for Europe, successful sale of bonds by Germany, Italy and Spain had allayed fears of a deepening crisis, it said.

In response to indications of more bond purchases, yields for both Italy and Spain declined hence pushed European bourses all higher.

It was a rather mixed day for Asian markets as most are still coping with indications from both the US and Europe.

"Malaysia was closed for public holiday (on Wednesday) after another interesting day on Tuesday with the FBM KLCI adding almost 6 points to inch closer to 1,600 again.

"We reckon buying on the local bourse to persist supporting any weaknesses. Today, we may see the 1,600 mark to be breached again," it said.

On Bursa Malaysia, BAT was the top gainer in the morning session and rose 86 sen to RM55.56, SMPC 34 sen to RM1.48, Genting PLANTATION []s up 21 sen to RM9.73, Timwell up 14 sen to 95 sen, Tradewinds Plantations up 12 sen to RM5.83, CyberTowers up 11.5 sen to 70.5 sen, MSC up 11 sen to RM4.72, Kluang up 10 sen to RM2.90, while Tenaga and Advanced Packaging added nine sen each to RM6.46 and RM1.39 respectively.

The decliners included Dutch Lady, Manulife, GAB, Chin Teck, Toyo Ink, BLD Plantations, Top Glove, Pansonic and KLK, while the actives included Asia Bio, Tiger Synergy, Metronic, Asia Global, DGSB and Tambun.

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Tenaga up 1.3% in anticipation of record profit

KUALA LUMPUR (April 12) : TENAGA NASIONAL BHD [] (TNB) shares rose as much as 1.3% in morning trade as investors chased the stock in anticipation that the state-owned utility’s announcement of a record quarterly profit on Thursday.

The stock rose eight sen to an intraday high of RM6.45 as at 10.51am, placing it among top gainers across the Malaysian exchange.

Analysts said TNB may announce higher profits for the second quarter ended February 29, 2012, helped mainly by RM2 billion worth of cost-sharing payments from the government and Petroliam Nasional Bhd. In a note, Maybank Investment Bank said TNB could have registered a profit of RM2.16 billion (excluding foreign exchange (forex) translation), a record in the company’s history.

Excluding forex and cost-sharing payments, Maybank said TNB could have posted a core net profit of RM658 million in the second quarter, a 42% increase from a year earlier. This compares to a net loss of RM224.7 million in the preceding first quarter.

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FBM KLCI down on global economic concerns

KUALA LUMPUR (April 12) : Malaysian shares fell on Thursday morning as trading resumed following Wednesday’s public holiday. The FBM KLCI traded lower as investors reacted to global economic concerns which had dragged Asian markets down on Wednesday.

Crucial highlights include sovereign debt woes in Europe and growth prospect in the US and China, all of which, are major importing nations. In technical terms, analysts said selling in the FBM KLCI is still prevalent as the index failed to close higher than the 1,600 level after April 4.

“This comes on the back of a “negative divergence” in the daily relative strength index (RSI) where the daily RSI reading for the April price peak is below that of early March.

“Nonetheless, the index’s upward trend in the past six months is by no means over,” OSK Research Sdn Bhd technical analyst Mohammad Ashraf Abu Bakar wrote in a note.

At 10am, the FBM KLCI fell 0.24 point to 1,596.93. Across the exchange, some 217 million shares worth RM171 million were traded, leading to 171 gainers versus 189 decliners.

Top gainers SMPC Corp Bhd rose 27 sen to RM1.41 while Genting PLANTATION []s Bhd added 13 sen to RM9.65

Decliners NESTLE (M) BHD [] fell 26 sen to RM55.70 while BRITISH AMERICAN TOBACCO (M) [] Bhd was down 20 sen to RM54.50.

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KLCI slips in early trade, blue chips weigh

KUALA LUMPUR (April 12): The FBM KLCI slipped on resuming trade on Thursday after the public holiday on Wednesday, in line with the tepid investor sentiment at most global markets.

At 9.01am, the FBM KLCI shed 1.23 points to 1,595.94.

Gainers led losers by 57 to 50, while 98 counters traded unchanged. Volume was 21.71 million shares valued at RM22.65 million.

Asian shares eased on Thursday while the euro firmed, reflecting investor caution despite easing concerns about sovereign funding for troubled euro zone economies Spain and Italy that helped U.S. and European equities rebound overnight, according to Reuters.

Investors scaled back safe haven buying of gold and U.S. and German government debt, while an encouraging start to earnings season helped U.S. stocks snap a five-day losing streak, it said.

Among the early decliners were BAT, Petronas Gas, IOI Corp, Bumi Armada, Telekom,AirAsia, Genting, Xin Quan and QL Resources.

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CIMB Research maintains Neutral on Tan Chong, ups target price to RM4.75

KUALA LUMPUR (April 12): CIMB Research has maintained its Neutral Recommendation on Tan Chong Motor Holdings Bhd and said the key takeaways from its lunch meeting with Tan Chong’s management were 1) 1Q12 results could be weak, 2) assembly operations in Segambut could be halted as early as 2017, and 3) Tan Chong aims to triple vehicle sales during 2012-16.

In a note Thursday, CIMB Research said it was raising its target price for Tan Chong to RM4.75 from RM4.49.

“We retain our earnings estimates but raise our SOP-based target price for a higher target P/E of 9.4x (prev. 9.1x), still pegged to a 30% discount to our KLCI target P/E which has been raised to 13x from 12.6x. Maintain Neutral.

“We like DRB-Hicom for exposure to the auto sector,” it said.

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RHB Research upgrades utilities sector to Overweight

KUAL A LUMPUR (April 12): RHB Research Institute Sdn Bhd has upgraded the Utilities sector to Overweight from Neutral and said it was turning more positive on Tenaga Naional Bhd given better visibility of its earnings outlook with the improved gas supply.

In a note April 12, the research house said that while imported LNG pricing remained an issue, it believed that the implementation of a dual pricing system wass more likely and therefore have an earnings neutral impact to Tenaga.

“As for YTL Power, the stock lacks catalysts while dividends are no longer attractive. However, sentiment may improve if the 1Bestarinet project helps to monetise its WiMAX network.

“Given our recent upgrade on TNB, we upgrade the sector to Overweight, from neutral,” said RHB Research.

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Stocks to Watch S P Setia, Xian Leng, SMPC, MBSB, Yinson

KUALA LUMPUR (April 11): The FBMKLCI could experience some minor pullback amidst cautious trading on Thursday, in line with its regional peers’ performance on Wednesday.

Asian shares fell for a third straight day on Wednesday as investors continued to cut back their risk exposure given uncertainty over global growth prospects and resurfacing worries about debt restructuring in struggling euro zone economies, according to Reuters.

European shares hit a 10-week low on the first trading day after the four-day Easter holiday on Tuesday, and Wall Street's benchmark Standard & Poor's 500 Index followed through with a 1.71% slide, its worst day in four months.

The sell-off was triggered by last Friday's data, which showed a sharp slowdown in US jobs creation last month, along with Tuesday's data, which suggested softening Chinese demand even when Beijing returned to an export-led trade surplus in March, said Reuters.

The mood at the local market may also be impacted by the less that encouraging outlook for Malaysia by the Asian Development Bank (ADB) in its Asian Development Outlook 2012: Confronting Rising Inequality in Asia report.

The ADB said that given Malaysia’s close integration with the world economy — exports and imports of goods and services are equivalent to over 100% of gross domestic product (GDP) — weakness in the global outlook clouds the country’s prospects in 2012.

“Growth is seen moderating to about 4.0% in 2012, then quickening to 5.0% in 2013 as the external environment improves,” ADB said in the report released on Wednesday.

Among the stocks that could be in focus on Thursday are S P Setia Bhd, XIAN LENG HOLDINGS BHD [], SMPC Corp Bhd, MALAYSIA BUILDING SOCIETY BHD [] (MBS), and YINSON HOLDINGS BHD [].

The Securities Commission has approved a proposed RM505 million bond scheme by Setia Ecohill Sdn Bhd, a wholly-owned subsidiary of property developer S P Setia Bhd.

The board of Xian Leng Holdings Bhd will improve the company’s corporate governance, following a special audit which revealed financial irregularities in the commercial breeder of ornamental fish. In a statement to the exchange on Tuesday, Xian Leng said its directors will consider and implement preemptive and corrective measures including the appointments of key personnel to oversee its business. These include a legal advisor and monitoring accountant, apart from an officer in charge of the daily operations of the firm.

SMPC Corp shares rose as much as 7% on Tuesday morning as investors chased the stock before it goes ex-rights on Thursday (April 12). The final day of lodgement is on April 16. The steel manufacturer climbed 17 sen to reach an intraday high of RM2.53, before trading lower at RM2.50 at 11.56am.

Financial services entity MBS — which is paying a final dividend of 7% less 25% tax for financial year ending Dec 31, 2011 — will go ex-dividend on Thursday as well.

Kenanga Investment Bank Bhd has initiated coverage on logistics firm Yinson Holdings Bhd, with an "outperform" call and fair value of RM2.29.

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