F&N 2Q net profit down 18.9% to RM107.01m, declares 20 sen interim dividend

KUALA LUMPUR (May 7): Fraser & Neave Holdings Bhd (F&N) net profit fell 18.93% to RM107.01 million in its second quarter ended Mar 31,2012 from RM131.99 million a year earlier as a result of the cessation of its Coca-Cola business and flood disruptions in Thailand.

Revenue decreased 27.61% to RM730.43 million from RM1.00 billion a year ago. Meanwhile, earnings per share were 29.70 sen compared to 36.80 sen last year.

F&N declared an interim single tier dividend of 20 sen per share for the financial year ending Sept 30, 2012 amounting to RM73 million to be paid on August 1.

F&N chief executive officer Datuk Ng Jui Sia in a statement Monday said while the lower revenue was already expected due to the cessation of the Coca-Cola business, the natural calamity in Thailand caused extensive damage to production facilities, leading to production and sales losses.

He added that excluding the Coca-Cola revenue contribution of RM269 million, F&N's 17% drop in revenue was attributed to the loss in revenue in Thailand, lower sales in its dairies segment and the absence of property sales.

Although revenue had generally fallen, F&N reported an 8% increase in its soft drinks revenue on the back of an 11% rise in volume, boosted by post Chinese New Year sales of 100PLUS, a 6% growth in its Seasons range and a 29% jump in Red Bull sales.

"While we navigate through one of the most challenging periods of our long-standing history of success, our fundamentals are strong and paradoxically, the natural calamity in Thailand has in fact propelled us ahead of the competition," Ng said.

The Thai flooding had effectively placed F&N's entire Thai business in a reset mode, fortunately giving the group the advantage to jumpstart full operations ahead of the market, he added.

For the first six months ended Mar 31, revenue fell 27.94% to RM1.47 billion from RM2.04 billion a year ago while profit decreased 37.76% to RM148.8 million from RM239.07 million.



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MSM 1Q net profit up 7.05% to RM66.39m

KUALA LUMPUR (May 7): MSM Malaysia Holdings Bhd profits rose 7.05% in its first quarter ended Mar 31, 2012 to RM66.39 million from RM62.02 million a year ago, due to higher sales volume and average selling prices.

It said on Monday that its revenue for the quarter increased 5.68% to RM531.76 million from RM503.17 million a year earlier.

"The profit before tax for current quarter ended Mar 31 is 2% lower in other words RM88.0 million as compared to RM90.0 million for the same quarter last year due to lower gross profit margin recorded during the quarter as a result of higher cost of sales caused mainly by increase in raw sugar price," it added.

Earnings per share were 9.44 sen compared to 10.76 sen a year earlier.



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eBworx 1Q net profit up 24.9% to RM3.16m

KUALA LUMPUR (May 7): EBWORX BHD [] net profit for the first quarter ended March 31, 2012 rose 24.9% to RM3.16 million from RM2.53 million a year earlier, due to improved profit margin and decrease in operating expenses during the quarter under review.

The company said on Monday that its revenue for the quarter rose 36% to RM14.99 million from RM11.02 million in 2011.

Earnings per share was 1.57 sen compared to 1.20 sen a year earlier, while net assets per share was 36.19 sen.

On its prospects, eBworx said that with the current order book, it anticipated the improved performance achieved in the financial year ended 31 December 2011, to continue for the financial year ending 31 December 2012.



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Leader Universal disposes 15.4% stake in Sarawak Cable to HNG Capital

KUALA LUMPUR (May 7): Wire and cable producer, Leader Universal Holding Bhd disposes of its entire 15.4% stake in Sarawak Cable Bhd to HNG Capital Sdn Bhd (HNGC) as part of the latter's takeover of the group.

In a statement on Bursa Malaysia on Monday, the group said it and HNGC had mutually agreed to the disposal of its stake in Sarawak Cable and had completed it on Monday in accordance with the terms and conditions of the sales of business agreement (SBA) between the two companies.

Earlier today, theedgemalaysia.com reported that some 20.74 million shares or a 15.4% stake in Sarawak Cable had been traded off-market on Monday morning.

The tranche worth RM35.3 million was done in an off market cross trade at RM1.71 per share, which was a 10.5% discount to its current market price of RM1.91.

In October 2011, Leader Universal's top officials, via HNG Capital made a takeover offer for the group for RM480.10 million or RM1.10 per share.

It said the purchase consideration would be RM410.94 million in cash and RM69316 million as an amount remaining due and owing HNGC as a debt due to Leader.



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S&P revises outlook on Axiata to positive from stable

KUALA LUMPUR (May 7): Standard & Poor's Ratings Services has revised its outlook on Axiata Group Bhd to positive from stable.

In a statement Monday, S&P said that that at the same time, it affirmed its 'BBB' long-term corporate credit rating on the company.

“We raised our ASEAN scale rating on Axiata to 'axA+' from 'axA' to reflect the revised outlook.

“In addition, we affirmed our 'BBB-' issue rating on the senior unsecured notes that Axiata unconditionally and irrevocably guarantees. Axiata SPV 1 (Labuan) Ltd. issued these notes,” it said.

S&P credit analyst Mehul Sukkawala the outlook was revised to positive because S&P expects Axiata to maintain its improved financial risk profile.

"We anticipate that Axiata's free operating cash flows will remain positive over the next 18-24 months and that the company will maintain its strong financial ratios. We also revised Axiata's financial risk profile to "modest" from "intermediate" based on the company's strong financial performance,” he said.

Sukkawala said strong and stable cash flows at most of Axiata's key operations had resulted in strong financial ratios.

He said that for the past two years, the company's adjusted-debt-to-EBITDA ratio has been 1 time and its ratio of funds from operations (FFO) to adjusted debt has been more than 75%.

“We have adjusted all cash over RM2.5 billion, which we believe is required for operations, against debt,” he said.

Sukkawala said S&P expects Axiata to maintain its strong financial ratios because we expect its revenue growth at 4%-7% over the next two years.

“However, the company's EBITDA margin is likely to be lower at about 42% because of investments in the data business.

“Axiata's revenue growth was 5% and adjusted EBITDA margin was 45% in 2011,” he said.

Sukkawala said Axiata was expected to maintain its current level of capital expenditure over the next two years, and use positive free operating cash flow to pay dividends.

“However, its financial ratios could be lower than our expectations if a material acquisition or shareholder distribution results in significant negative discretionary cash flow,” he said.

“Our assessment of Axiata's business risk profile remains satisfactory,” he said.

The company's favorable market position in all its key markets contributed to its good operating performance in 2011.

Nevertheless, Axiata remains exposed to the political, macroeconomic, and regulatory risks in emerging markets. The company is also susceptible to the high capital investment and significant competitive pressures associated with such markets.

We assess Axiata's stand-alone credit profile as 'bbb'. In accordance with our criteria for government-related entities, our view of a "moderate" likelihood of extraordinary government support in the event of financial distress is based on our assessment of the company's "strong" link with the Malaysian government and its "limited" role in Malaysia's economy.

Sukkawala said S&P could raise the rating in the next 12 months if Axiata continued to follow conservative financial policies.

“Such policies would mean that the company will maintain an adjusted-debt-to-EBITDA ratio of less than 1.5 times and that it will not generate significant negative discretionary cash flow.

“We could also raise the rating if we raise the local currency sovereign rating on Malaysia,” he said.

He said S&P could revise the outlook to stable if Axiata's cash flow generation significantly deteriorates resulting in an adjusted-debt-to-EBITDA ratio of more than 2.0x.

“Cash flows could deteriorate if: (1) Axiata's operating performance weakens; (2) the company makes material debt-funded capital expenditure or investments that are not in line with our expectations; or (3) the management undertakes significant shareholder distribution that exceeds our expectations,” said Sukkawala.



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Pavilion REIT posts net profit RM47.8m in 1Q

KUALA LUMPUR (May 7): KUALA LUMPUR: Pavilion Real Estate Investment Trust Bhd (Pavilion REIT) recorded profit of RM47.8 million in its first quarter ended Mar 31 on the back of RM85.3 million revenue.

Earnings per unit was 1.59 sen, while net assets per unit was 95.51 sen.

Reviewing its performance, Pavilion REIT said on Monday that distributable income for the period under review amounted to RM50.6 million or 1.68 sen per unit, consisting of realised income of RM47.8 million and non-cash adjustments of depreciation, amortisation of borrowings transaction cost of RM0.3 million and surplus cash arising from 50% of manager’s management fee payable in units of RM2.3 million.

On its prospects, it said the REIT manager was confident that 2012 would be an equally successful year for Pavilion REIT with its asset enhancement initiative and the office tower being fully tenanted by middle of this year.

“Barring any unforeseen circumstances, the Manager expects Pavilion REIT to meet the 2012 projected distribution per unit of 5.73 sen as disclosed in the prospectus,"

It reported a net property income of RM60.5 million while management fees and borrowing costs incurred were RM4.6 million and RM8.3 million respectively.

Pavilion RREIT was listed on Dec 7 last year.



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Bumi Armada unit gets RM198.9m contract

KUALA LUMPUR (May 7): Bumi Armada Bhd’s unit has secured a five-year contract worth US$65 million (RM198.9 million) to provide an accommodation workboat.

The company said on Monday that its subsidiary, Bumi Armada Navigation Sdn Bhd ("BAN") had been awarded the contract by Tecnologías Relacionadas con Energía y Servicios Especializados, S.A. de C.V. (TRESE).

“The Vessel will be providing accommodation and offshore support services in the Mexican territorial waters.

“TRESE is a Mexican Oil & Gas services company with interests in drilling, vessel chartering and accommodation services in Mexico,” said Bumi Armada.

The company said the Contract was for a period of five (5) years with an extension option of an additional five (5) years, and was expected to be effective from May 7, 2012.

Bumi Armada said the contract was expected to contribute positively to its earnings for the financial year ending Dec 31, 2012 and the financial periods thereafter for the duration of the contract.



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Bursa queries Permaju

KUALA LUMPUR (April 19): Bursa Malaysia Securities Bhd has issued an unusual market activity (UMA) query to PERMAJU INDUSTRIES BHD [] over the sharp rise in the price and high volume in the company’s shares recently.

Permaju was the among the most actively traded stocks in the morning session on Thursday on Bursa Malaysia with 3.16 million shares done.

The stock closed 20 sen higher at 73 sen with 16 million shares done.



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Asian markets mired in red as Europe stumbles

KUALA LUMPUR (May7): The FBM KLCI fell on Monday as Asian markets were mired in the red as European markets stumbled following election outcomes in France, Greece and Italy that raised concerns on whether euro zone economies will continue to pursue austerity measures.

Meanwhile, European equities slumped to 4-1/2 month lows on Monday after elections in France and Greece that reflected deep public discontent over austerity measures and cast doubt over the euro zone's ability to fix its debt crisis, according to Reuters.

Greece's benchmark stock index fell by more than 7 percent in early morning trading on Monday, after the country's main parties failed to win enough votes to form a ruling coalition following elections on Sunday, it said.

Royal Bank of Scotland strategists in a note Monday said the results of a number of elections across Europe that took place over the weekend were likely to keep the market squarely focused on politics this week, and on the results implications for the European policy response devised to address the debt crisis so far.

The FBM KLCI fell 6.71 points to 1,584.87 at 5pm, weighed by losses at select blue chips.

Market breadth was negative with 540 losers, 208 gainers and 305 counters trading unchanged. Volume was 963.02 million shares valued at RM1.19 billion.

At the regional markets, Japan’s Nikkei 225 lost 2.78% to 9,119.14, Hong Kong’s Hang Seng Index lost 2.61% to 20,536.65, Taiwan’s Taiex fell 2.11% to 7,538.08, South Korea’s Kospi was down 1.64% to 1,956.44 and Singapore’s Straits Times Index lost 2.08% to 2,928.34.

On Bursa Malaysia, Dutch Lady was the top loser and fell 34 sen to RM33.04, Tradewinds PLANTATION []s lost 23 sen to RM5.75, Tradewinds down 22 sen to RM9.82, SAM Engineering 19 sen to RM3.01, Hong Leong Bank, Genting Plantations and IJM Corp lost 16 sen each to RM12.20, RM9.44 and RM5.42 respectively, Allianz and Tahps down 15 sen each to RM4.60 and RM4.65, while Atlan fell 14 sen to RM4.26.

SAAG was the most actively traded counter with 48.97 million shares done. The stock gaindd half a sen to 7 sen.

Other actives included Ariantec, Time, Maybulk, Benalec, KFCH, Metronic, permaju, Naim Indah Corp and JCY.

Meanwhile, the gainers on Monday included Permaju, Country View, PMB Tech, Tasek, GAB, Lafarge Malayan Cement, MKH, KESM, Nestle and HLFG.



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Bose Corp to build manufacturing facility in M'sia

KUALA LUMPUR (May 7): Bose Corporation, a US-based company that specialises in audio equipment, is to build a manufacturing facility in Malaysia, marking its first big venture into the Asian region.

Vice president manufacturing and global supply chain Bryan Fontaine said the facility to be located in Batu Kawan, Penang, on 9.2 hectares of land, will cater to its Asia-Pacific (APAC) business.

"Scheduled for opening in mid-2013, the new facility will manufacture and distribute Bose products for the company's APAC business which includes Australia, China, India, Japan, the United Arab Emirates and the Asean countries," he added.

He was speaking to reporters at the announcement of the project at the Malaysian Investment Development Authority (Mida) office here on Monday.

Also present was Mida chairman Tan Sri Dr Sulaiman Mahbob.

Fontaine, who declined to disclose the total investment in Malaysia, said it would be multi-phased and multi-layered, and eventually see the plant expand to 600,000 square feet.

"We know that Malaysia is the right place for our investment as the country knows how to protect it.

"We also know that intellectual property (IP) protection for our products and confidence from our customers, will be safeguarded here in Malaysia," he said, when speaking on the rationale of choosing the country.

Bose Corporation has at present five manufacturing facilities in Framingham (Massachusetts), Columbia (South Carolina), San Luis R.C.(Mexico), Tijuana(Mexico) and Carrickmacross (Ireland).

When asked about a news report that Bose Corporation was closing one of its manufacturing facilities in the United States to move to Malaysia, Fontaine said: "We have not closed any operation in the US. We are reconsidering our footprint in the country but have not closed any operation."

Bose Corporation was founded in 1964 by Dr Amar G Bose, then professor of electrical engineering, at the Massachusetts Institute of TECHNOLOGY [] (MIT).

As an MIT graduate student in the 1950s, Bose decided to purchase a new stereo system.

He was disappointed to find that the speakers with impressive technical specifications failed to reproduce the realism of a "live" performance.

The quest for better sound was on.

The company, which has over 9,000 employees, recorded over US$2.5 billion (RM7.68 billion) in annual sales for 2011. — Bernama



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15% stake of Sarawak Cable done off-market

KUALA LUMPUR (May 7): Some 20.74 million shares or a 15.4% stake in Sarawak Cable Bhd were traded off-market on Monday morning.

The tranche worth RM35.3 million was done in an off market cross trade at RM1.71 per share, which is a 10.5% discount to its current market price of RM1.91.

As at 3pm, no Sarawak Cable shares had been traded on the open market today.

It is believed that the shares were disposed by Leaders Universal Holdings Bhd. According to the latest Bursa filing, Leader Universal holds a 15.4% stake in Sarawak Cable.



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Trading in securities of Microlink, Formis suspended pending announcement

KUALA LUMPUR (May 7): Trading the securities of Microlink Solutions Berhad and FORMIS RESOURCES BHD [] will be halted from 2.30pm on May 7 to 5pm on Tuesday, May 8 pending material announcement.

In separate filings to Bursa Malaysia, the companies said they had requested for trading halt in their securities.

Microlink said the request for the suspension was the pending release of an announcement relating to a corporate exercise on a very substantial acquisition.

Meanwhile, Formis said the trade halt was pending material announcement relating to a material corporate exercise.



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Global woes drag Asian equities lower

KUALA LUMPUR (May 7): The FBM KLCI remained in negative territory at the mid-day break on Monday, in line with the gloomy investor sentiment at key regional markets that saw the Japan and Hong Kong markets fall steeply by more than 2% each.

The FBM KLCI fell 7.76 points to 1,583.28 at 12.30pm, weighed by losses at select blue chips and index-linked PLANTATION [] counters.

Losers beat gainesr by 474 to 151, while 258 counters traded unchanged. Volume was 522.55 million shares valued at RM423.45 million.

The ringgit weakened 0.66% to 3,0613 versus the greenback, crude palm oil futures for the third month delivery fell RM30 per tonne to RM3,336, crude oil lost US$1.37 per barrel to US$97.12 while gold slumped US$4/27 an ounce to US$1,637.85.

Asian markets fell after elections in France and Greece raised concerns on whether euro zone economies will continue to pursue austerity measures and as U.S. jobs data came in weaker than expected, according to Reuters.

At the regional markets, Japan’s Nikkei 225 slumped 2.72% to 9,125.48, Hong Kong’s Hang Seng Index lost 2.43% to 20,573.10, the Shanghai Composite Index down 0.26% to 2,445.68, Taiwan’s Taiex fell 2.23% to 7,529.40, South Korea’s Kospi lost 1.77% to 1,953.91 and Singapore’s Straits Times Index fell 1.80% to 2,936.85.

On Bursa Malaysia, Dutch lady fell 30 sen to RM33.08, Tradewinds 19 sen to RM9.85, Carlsberg 18 sen to RM10.82, Hong Leong Bank and Asia Ply 16 sen each to RM12.20 and 14 sen, Allianz 15 sen to RM4.60, while IJM Corp and Petronas Dagangan fell 12 sen each to RM5.46 and RM19.38.

Among the plantations, Tradewinds Plantations fell 18 sen to RM5.80, KLK 16 sen to RM23.60, PPB eight sen to RM16.68, Batu Kawan four sen to RM18.80, Genting Plantations and IOI Corp two sen each to RM9.58 and RM5.25, while Sime Darby, IJM Plantations and Kulim fell one sen each to RM9.78, RM3.25 and RM4.23 respectively.

Time Engineering was the most actively traded counter with 399.51 million shares done. The stock rose four sen to 37 sen.

Other actives included SAAG, Ariantec, KFCH, Maybulk, Benalec, Metronic, JCY and Rubberex.

Gainers included Country View, Lafarge Malayan Cement, Glenealy, GAB< Permaju, NCB, Tan Chong, Tasek, Mentiga and MAHB.



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KLCI falls at mid-morning, blue chips weigh

KUALA LUMPUR (May 7): The FBM KLCI fell at mid-morning on Monday, in line with some of it key regional peers, on concerns about the impact of weekend elections in France and Greece on the euro zone debt crisis and weaker-than-expected U.S. jobs data.

The FBM KLCI fell 7.30 points to 1,583.74 at 10am, weighed by losses at blue chips.

Loers led gainers by 270 to 108, while 212 counters traded unchanged. Volume was 21.52 millionshares valued at RM117.40 million.

Risk assets fell broadly on Monday after elections in Greece and France fuelled questions about whether struggling euro zone economies will continue to pursue austerity measures which are seen by markets as crucial to resolving the bloc's debt crisis, according to Reuters.

BIMB Securities Research said heightened volatility ahead for global equity markets was over expectation from analysts and economists alike are beginning to scupper sentiments.

It said in a note on Monday that despite the net adds in the US job data, the figure was broadly lower than forecasted thus the sell down on Wall Street with the Dow Jones Industrial Average losing 168 points to close at just above the 13,000 mark.

In Europe, equities all ended lower as there were mixed reaction to the new administration in France following Hollande’s victory in the French election, it said.

“With this new “establishment”, investors are concern if Europe’s bailout process would be derailed. Meanwhile, Asian bourses ended mostly lower on weaker opening in Europe.

“Locally, the FBM KLCI continues to astound us with another 7.87 point addition to 1,591 on some late buying on blue chips. Nonetheless, we remain unconvinced of the market’s undertone and advise investors to sell into strength,” it said.

Among the losers at mid-morning were PPB, KLK, Petronas Chemicals, Rapid, Genting, F&N, Tenaga, Orient, Tradewinds PLANTATION []s, Parkson and MPHB.

The actives at mid-morning included Time Engineering, KFCH, Maybulk, ariantec, Ruberex, Benalec, Kulim, AirAsia and HWGB.

Gainers included Ekovest, Country View, Aeon Credit, NCB, Permaju, MKH, Tasek, Tradewinds and HLFG.



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MBMR advances after RHB Research raises target price

KUALA LUMPUR(May 7): MBM RESOURCES BHD [] shares advanced on Monday after RHB Research has maintained its Outperform rating on the stock and raised its fair value to RM6.40 (from RM5.05) after MBMR fixed the issue price of its 3 for 10 rights issue at RM1.42 and the exercise of the accompanying free warrants at RM3.20.

At 9.36am, MBMR rose four sen to RM5.28 with 28,500 shares traded.

RHB Research in a note Monday said the total proceeds of RM340.3m will fund a RM250m capex programme (excluding Hirotako) over the next five years.

“We believe management is currently working hard on potential vehicle assembly opportunities with positive news flow likely in the coming months. There could be potential opportunities with various China commercial vehicle manufacturers.

“Within the MBM Group, potential assembly opportunities exist for Hino trucks. MBM owns a 42% stake in Hino Malaysia.

RHB Research said that among the Japanese marques there could be potential opportunities with Mazda and Mitsubishi who do not yet have major local assembly operations.

It sai Hirotako would drive MBM’s earnings in 2012, adding that demand for airbags would be rising going forward, driven by the Government’s push for all new cars sold locally to be fitted with dual airbags, in addition to rising consumer awareness of vehicle safety issues.

“We lift our 2012-14 earnings estimates by 7.1%, 3.6% and 3.6% respectively after revisiting our Hirotako assumptions and factoring in OMI’s new alloy wheel business.

“We reiterate our Outperform call and lift our fair value estimate to RM6.40 (from RM5.05) after ascribing a 10x PER (close to sector average) to 2012 earnings (from 8.5x),” it said.



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Time active, up on report Khazanah planning to divest stake

KUALA LUMPUR (May 7): TIME ENGINEERING BHD [] (TEB) shares rose and were actively traded on Monday after the Edge, citing sources, reported that it was likely to be among the companies that Khazanah Nasional Bhd will divest.

At 9.25am, TEB rose 3.5 sen to 356.5 sen with 132.63 million shares done.

The Edge Weekly reported that companies linked to Tan Sri Syed Mokhtar are the front runners for the company.

Syed Mokhtar has several companies in the multimedia and communications segment with government contracts. Among them are Puncak Semangat Sdn Bhd that has been awarded a 4G license.

TEB is in a net cash position and has several companies with long term clients. Among them include Dagang Net Sdn Bhd.



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CIMB Research maintains Trading Buy on Mudajaya, target price RM3.45

KUALA LUMPUR (May 7): CIMB Research has maintained its Trading buy Rating on MUDAJAYA GROUP BHD [] at RM2.80 with a target price of RM3.45 and said that Mudajaya’s order book top-up prospects were anchored by highway and power plant jobs.

“The prospect of a new recurring income stream other than its Indian IPP adds spice. Our target price is still pegged to 40% RNAV discount.

“Newsflow is likely to be better in 2H12, which should renew interest in the stock. Mudajaya remains a Trading Buy and not an Outperform because of the political risks for the CONSTRUCTION [] sector. The key catalyst is project awards,” CIMB Research said on Monday.



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KLCI falls in early trade in line with regional retreat

KUALA LUMPUR (May 7): The FBM KLCI fell in early trade on Monday, in line with some of it key regional peers, as overnight election results in Europe stoked worries of lingering euro zone debt crisis issues.

Risk assets fell broadly on Monday after elections in Greece and France fuelled questions about whether struggling euro zone economies will continue to pursue austerity measures which are seen by markets as crucial to resolving the bloc's debt crisis, according to Reuters.

Meanwhile, Japan’s Nikkei 225 and South Korea’s Kospi also opened broadly lower.

The FBM KLCI lost 7.37 points to 1,583.67 t 9.05am, dragged by losses at key blue chips.

Market breadth was weaker with losers outpacing gainers by 109 to 50, while 122 counters traded unchanged. Volume was 36.75 million shares valued at RM17.17 million.

Among the early losers were KLK, Petronas Chemicals, Sime Darby, Bursa, Tenaga, Tradewinds PLANTATION []s, Genting, Top Glove, BIMB and Orient.



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RHB Research maintains Outperform on MBM Resources, ups fair value to RRM6.40

KUALA LUMPUR(May 7): RHB Research has maintained its Outperform rating on MBM RESOURCES BHD [] and raised its fair value to RM6.40 (from RM5.05) after MBMR fixed the issue price of its 3 for 10 rights issue at RM1.42 and the exercise of the accompanying free warrants at RM3.20.

RHB Reseacrch in a note Monday said the total proceeds of RM340.3m will fund a RM250m capex programme (excluding Hirotako) over the next five years.

“We believe management is currently working hard on potential vehicle assembly opportunities with positive news flow likely in the coming months. There could be potential opportunities with various China commercial vehicle manufacturers.

“Within the MBM Group, potential assembly opportunities exist for Hino trucks. MBM owns a 42% stake in Hino Malaysia.

RHB Research said that among the Japanese marques there could be potential opportunities with Mazda and Mitsubishi who do not yet have major local assembly operations.

It sai Hirotako would drive MBM’s earnings in 2012, adding that demand for airbags would be rising going forward, driven by the Government’s push for all new cars sold locally to be fitted with dual airbags, in addition to rising consumer awareness of vehicle safety issues.

“We lift our 2012-14 earnings estimates by 7.1%, 3.6% and 3.6% respectively after revisiting our Hirotako assumptions and factoring in OMI’s new alloy wheel business.

“We reiterate our Outperform call and lift our fair value estimate to RM6.40 (from RM5.05) after ascribing a 10x PER (close to sector average) to 2012 earnings (from 8.5x),” it said.



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Stocks to watch MAA Group, Petra Energy, Crest Builder, Malaysian Airline, Air Asia, DKLS

KUALA LUMPUR (May 5): The FBM KLCI could take trend higher next week, as the first quarter earnings reporting season kicks off, and as analysts expect better sequential earnings for companies.

Global stocks swooned and crude oil tumbled on Friday after a weak U.S. jobs report and data that suggested a deeper recession across the euro zone than previously thought dented sentiment, according to Reuters.

Major U.S. and European stock indexes fell more than 1 percent, U.S. crude oil slumped about 4 percent and government debt prices jumped after the Labor Department said American employers reduced hiring more than expected in April, it said.

MIDF Research head of equity Syed Muhammed Kifni said with the earnings reporting season for the first quarter 2012 beginning this week, he expects to see an overall sequential improvement in the bottom line figures.

“Both ours and consensus KLCI earnings growth for this year are estimated at around mid-teens, supported by decent organic earnings growth performance as well as absence of lumpy abnormal losses,” he said.

Syed Muhammmed said that despite recent difficulty of the KLCI to sustain itself above the 1,600 points levels, in our opinion, the recent liquidity-driven rally has not yet ended as the local market undercurrent remains positive.

Furthermore, notwithstanding the feeble dynamics in Europe, risk-on mood is still prevalent on Wall Street as attested by its benchmark index which is stealthily approaching the pre-2008 highs, he said.

“This continuing appetite for risk assets may help the markets in this region to also regain their upward momentum. Hence we believe the KLCI will again attempt to knock against the psychological 1,600 points ceiling in the coming days.

“We reiterate both our year-high as well as year-end 2012 KLCI base case targets of 1,670 points and 1,600 points respectively,” he said.

Among the stocks that could be in focus next week are MAA Group Bhd, PETRA ENERGY BHD [], CREST BUILDER HOLDINGS BHD [], MALAYSIAN AIRLINE SYSTEM BHD [], Air Asia Bhd and DKLS INDUSTRIES BHD [].

MAA Group Bhd is selling its wholly-owned security equipment and services unit for RM7 million, a move which will help the financial services entity focus on its core business.

Petra Energy Bhd declared a final tax-exempt dividend (single-tier) of half a per share for the financial year ended Dec 31, 2011 to be paid on July 13 this year.

The founding family of Crest Builder Holdings Bhd raked in proceeds of RM4.1 million from the sale of five million shares or 4% in the CONSTRUCTION [] firm.

Updates to the exchange show that Yong Tiok Chin who is the daughter of founder and managing director Yong Soon Chow had disposed of the shares at 82 sen each on Thursday.

Shares of Malaysian Airline System Bhd and Air Asia Bhd could continue to be in focus next week after the reversal of their share-swap agreement and the resignation of Tan Sri Tony Fernandes and Datuk Kamarudin Meranun from MAS' board.

DKLS Industries Bhd has inked a heads of agreement with the Selangor State Development Corporation (PKNS) to collaborate in the redevelopment of a 15.9-acre area in Petaling Jaya into a mixed development comprising commercial, retail and residential units.

The company said on Friday that the gross development value of the Proposed Redevelopment was estimated at the range of RM1.5 billion.



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