CIMB Research maintains Neutral on AMMB

KUALA LUMPUR (April 13): CIMB Research has maintained its Neutral rating on AMMB HOLDINGS BHD [] at RM6.35 with a target price of RNM6.22 after AMMB’s 51%-owned AmG Insurances entered into a conditional sale and purchase agreement to acquire 100% of Kurnia Insurans from Kurnia Asia for RM1.55 billion cash.

The research house said that AMMB’s AmG Insurance will emerge as the largest general insurer in Malaysia following its acquisition of Kurnia Insurans, which was sealed by the execution of S&P agreement yesterday.

The research house sid in a note Frday tha the deal would provide cost synergies and cross-selling opportunities in longer term.

“But the earnings accretion for AMMB will initially be minimal at only about 1% for FY3/14.

“We retain our valuation basis of 10% discount to DDM value and Neutral rating given the below-industry loan growth,” it said.



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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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Kurnia Asia shares down on insurance unit disposal

KUALA LUMPUR (April 5) : KURNIA ASIA BHD [] (KAB) shares fell on Thursday morning following updates that the government has approved AMMB HOLDINGS BHD []’s plan to acquire KAB’s general insurance arm.

KAB shares, one of the most actively traded with some eight million shares done, fell 4.7% or three sen to 60.5 sen at 10.37am.

In separate statements to the exchange on Wednesday, AMMB and KAB said the minister of finance has approved the planned acquisition of KAB’s 100%-owned subsidiary Kurnia Insurans (M) Bhd by AmG Insurance Bhd, which is 51% owned by AMMB.

Both AMMB and KAB said details on the transaction will be disclosed when both AmG and KAB sign a definitive agreement.



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Alliance Research maintains Buy on AMMB, target price RM7.40

KUALA LUMPUR (April 5): Alliance Research has maintained its Buy recommendation on AMMB HOLDINGS BHD [] with a target price of RM7.40 after AMMB announced on April 4 that it received the Finance Ministry's approval, for the acquisition of a 100% equity interest in Kurnia Insurans.

“We are positive on this deal although pricing remains the key issue. We observe that banking M&A news flow has accelerated recently and has attracted investor interests on the stock.

“We believe that the potential for ANZ to increase its stake in AMMB is imminent. Maintain BUY with a target price of RM7.40,” it said.



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Stocks to Watch Xian Leng, ManagePay, AMMB

KUALA LUMPUR (April 4): The Malaysian stock market could see further profit taking on Thursday as investors weigh the impact of global economic updates against positive pre-election sentiment in Malaysia.

Crucial global highlights include US policymakers indication that they may not implement further quantitative easing to spur the world's largest economy. The updates had resulted in losses across Asian markets on Wednesday.

Malaysia's FBM KLCI erased earlier gains to finish 7.36 points or 0.46% lower at 1,599.27 points on Wednesday. In the US, the S&P 500 futures declined 10.5 points, while Dow Jones Industrial Average futures fell 100 points, a possible indication that US stocks may encounter another sell off.

Stocks to watch on Thursday include XIAN LENG HOLDINGS BHD [], APM AUTOMOTIVE HOLDINGS BHD [], ManagePay Systems Bhd, PHARMANIAGA BHD [], and AMMB HOLDINGS BHD [].

Trading of Xian Leng shares had been suspended since 12.16pm on Wednesday. In a statement to the exchange, the firm — which undertakes commercial breeding of ornamental fish — said it requested for the trading suspension pending the release of the findings of a special audit on the company's financials by PricewaterhouseCoopers.

HwangDBS Vickers Research Sdn Bhd has upgraded shares of APM, an automotive parts manufacturer, from "hold" to "buy", and raised its fair value for the stock from RM4.60 to RM5.60.

ManagePay was among the most-actively traded stock on Wednesday, when it rose as much as 27% or 5.5 sen to 26 sen, following updates on its strategic collaboration with Visa Worldwide Pte Ltd.

Pharmaniaga managing director Datuk Farshila Emran said the firm plans to double revenue contribution from the private sector from 3% to some 6% in current financial year ending Dec 31, 2012.

AMMB said its 51%-owned general insurance subsidiary AmG Insurance Bhd has received the government's consent to acquire KURNIA ASIA BHD [] 100% stake in Kurnia Insurans (Malaysia) Bhd.



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AmG-Kurnia merger gets the nod

KUALA LUMPUR (April 4): The government has approved AMMB HOLDINGS BHD []'s plan to acquire the general insurance arm of KURNIA ASIA BHD [] (KAB).

In separate statements to the exchange on Wednesday, both companies said the minister of finance has approved the planned acquisition of KAB's 100%-owned subsidiary Kurnia Insurans (M) Bhd by AmG Insurance Bhd, which is 51% owned by AMMB.

Both AMMB and KAB said details on the transaction will be disclosed when both AmG and KAB sign a definitive agreement.



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KLCI ends 1Q on a high

KUALA LUMPUR (March 30): The FBM KLCI ended the first quarter of 2012 on a high note, in line with the global markets that mostly picked up gains at the end of the quarter.

The 30-stock index rose 10.89 points to closet at 1,596.33 on Friday, lifted by blue chips including banking and Petronas-linked stocks.

The closing was just a tad below its all-time high of 1,597.08 that the index rose to on July 11 last year.

Year-to-date, the index racked up 65.6 points from its December 30 close of 1,530.73. Gainers edged losers by 402 to 360, while 334 counters traded unchanged. Volume was 1.25 billion shares valued at RM2.08 billion.

World stocks rose with Europe up more than half a percent on Friday, picking up gains at the end of the quarter and with investors eyeing a boost to the euro zone's bailout resources that ministers are expected to sign off on later in the day, according to Reuters.

Despite the strong quarter, sentiment across asset classes has turned bearish since mid-March due to fears of a slowdown in growth centred on China, and the conviction that a huge injection of central bank money may only be a panacea for Europe's debt troubles, it said.

At the regional markets, the Shanghai Composite Index rose 0.47% to 2,272.79, Taiwan’s Taiex added 0.77% to 7,933.00 and Singapore’s straits Times Index gained

Meanwhile, Japan’s Nikkei 225 closed 0.31% lower at 10,083.56, Hong Kong’s Hang Seng Index fell 0.26% to 20,555.58 while South Korea’s Kospi shed 0.02% to 2,014.04.

Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said that despite pockets of weakness from China market (Shanghai Composite at 10-week low) and soft economic data from the US and Europe, he expects the FBM KLCI to continue market uptrend supported by local liquidity and strong first quarter performance.

“The local market has ample liquidity at the sidelines, accommodative Bank Negara, low interest rates and government commitment for economic project. Plain and simple.

“We also believe the local market will take further cues from a strong USA market,” he said.

He added that there was a fairly reasonable speculative element in the small cap stocks to create some excitement near term (Carotec, Mtronics, Keywest, Focus, Tiger to name a few).

“Though we agree that the local market is overbought and investors may pause after recent sharp gains, we are yet to see any evidence of distribution to suggest serious market wind down in the near term,” he said.

On Bursa Malaysia, KLK was the top gainer and added 46 sen to RM24.60, F&N up 28 sen to RM18.88, Takaful 27 sen to RM3.39, United PLANTATION []s 18 sen to RM24.98, Kossan, Bursa and DiGi added 12 sen each to RM3.35, RM7.38 and RM4.06 respectively.

Among banking stocks, Hong Leong bank gained 24 sen to RM12.62, AMMB 10 sen to RM6.31, CIMB nine sen to RM7.69 and Maybank seven sen to RM8.87.

Among Pertronas-linked stocks, Petronas Dagangan rose 26 sen to RM18.94, Petronas Gas 10 sen to RM16.84 and Petronas Chemicals six sen to RM6.74.

Carotech was the most actively traded counter with 99.63 million shares done.

Other actives included CIMB, Focus, Ariantec, Metronic, YTL, Naim Indah Corp and Key West.

Decliners included Genting, Dutch Lady, sunchirin, Multico, Kulang, Shangri-La, Kulim, Fiamma, Advanced Packaging and TDM.



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Market Commentary

The FBM KLCI index gained 3.53 points or 0.22% on Thursday. The Finance Index increased 0.19% to 14116.46 points, the Properties Index up 0.06% to 1051.2 points and the Plantation Index rose 0.15% to 8612.94 points. The market traded within a range of 4.24 points between an intra-day high of 1580.41 and a low of 1576.17 during the session.

Actively traded stocks include NICORP, HWGB, SUMATEC, CSL, SUMATEC-WA, RA, GOCEAN, HWGB-WB, AMEDIA and WINSUN. Trading volume increased to 1769.37 mil shares worth RM1763.28 mil as compared to Wednesday’s 1742.64 mil shares worth RM2030.26 mil.

Leading Movers were TENAGA (+7 sen to RM6.26), CIMB (+5 sen to RM7.36), SIME (+4 sen to RM9.84), GENTING (+6 sen to RM10.80) and AXIATA (+2 sen to RM5.14). Lagging Movers were DIGI (-2 sen to RM4.05), AMMB (-5 sen to RM6.17), PETDAG (-3 sen to RM18.36), PETCHEM (-1 sen to RM6.83) and HLFG (-10 sen to RM12.00). Market breadth was positive with 415 gainers as compared to 336 losers. -- JF Apex Securities Bhd



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KLCI closes slightly higher on late buying, broader market cautious

KUALA LUMPUR (March): Late buying of selected index-linked stocks pushed the FBM KLCI, which as in the red all Tuesday, back into positive territory, with GENTING BHD [] emerging as the bigger index mover.

The FBM KLCI closed 0.69 of a point higher to 1,589.91. Turnover was 1.29 billion shares valued at RM1.73 billion. The broader market reflected the cautious sentiment, with 519 decliners to 257 advancers while 315 stocks were unchanged.

Key regional markets posted losses between 0.63% and 2%. Hong Kong’s Hang Seng Index fared the worst, down 2.16% to 20,806.20, Singapore’s Straits Times Index fell 2% to 2,932.01, Shanghai Composite Index 1.41% to 2,410.45, Taiwan’s Taiex 0.83% to 7,937.97 while South Korea’s Kospi fell 0.78% to 2,000.36.

European shares extended losses in morning trade on Tuesday on fresh concerns about economic growth in Europe and uncertainties regarding a bond swap deal between Greece and its private creditors.

Britain's FTSE 100 extended its losing streak into a third session on Tuesday, as concern about the health of the global economy hit heavyweight oils and miners, pushing the index towards the bottom of its recent range and darkening the technical outlook, Reuters reported.

At Bursa Malaysia, Genting rose 16 sen to RM10.92, pushing the KLCI up by 1.4 points while Tenaga added eight sen to RM5.25 and Petronas Chemicals three sen to RM6.92.

There was some nibbling on banking stocks, with Maybank and Public Bank up two sen each to RM8.79 and RM13.78, Hong Leong Bank 10 sen to RM12.40 and AMMB three sen to RM6.30.

Dutch Lady rose the most, adding 40 sen to RM29.90 with 6,100 shares done. Genting PLANTATION []s rose 25 sen to RM9.49 and Petronas Dagangan 18 sen to RM18.46.

CI Holdings added 13 sen to RM1.48 after the company announced its capital repayment of 50 sen per ordinary share would go ex on March 16.

Winsun was the most active with 47.67 million shares done, down two sen to 16.5 sen.

CIMB declined six sen to RM7.42, dragging the KLCI down 1.06 points. Tenaga shed seven sen to RM6.24 while BAT lost 32 sen to RM52.52 and KLK 12 sen to RM23.28.



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CIMB leads KLCI to higher close, 11 pts away from all-time high

KUALA LUMPUR (March 2): CIMB led the FBM KLCI to a higher close, just 11 points away from the all-time high of 1,594.74 in July 2011, as the firmer blue chips galvanised market sentiment.

At the close, the KLCI was up 10.33 points or 0.66% to 1,583.78. Turnover was 1.63 billion shares valued at RM1.93 billion. Advancing counters beat decliners 540 to 276 while 330 counters were unchanged.

Reuters reported European shares edged up to their highest level in more than a week on Friday, with the European Central Bank's ultra-cheap funding this week helping the euro zone debt market and further reducing risk within the battered banking sector.

Financials were among the top gainers, with the STOXX Europe 600 Banking index rising 0.6 percent and Commerzbank advancing 3%. The index, which was the worst performer in 2011 with a 32% drop, has gained about 19% so far this year.

Among the key regional markets, Japan’s Nikkei 225 rose 0.72% to 9,777.03, Hong Kong’s Hang Seng Index added 0.81% to 21,562.26, Shanghai’s Composite Index added 1.43% to 2,460.69 and Singapore’s Straits Times Index 0.49% higher at 2,993.49.

BAT was the top gainer, adding 40 sen to RM53.50. Its fourth interim dividend of 66 sen per share tax exempt will go ex on Tuesday.

CIMB rose 16 sen to RM7.33, pushing the index up 2.82 points after the banking group moved closer to expand its regional reach by acquiring certain assets of The Royal Bank of Scotland in Asia Pacific.

AMMB added nine sen to RM6.26 while Maybank and Public Bank rose two sen each to RM8.77 and RM13.70.

Petronas Chemical added 15 sen to RM6.90, Genting 14 sen to RM10.60 while DiGi and YTL advanced eight sen each to RM4.12 and RM1.78.

KHSB was the most active counter with 76 million shares done, adding 6.5 sen to 62.5 sen.

Silver Bird was unchanged at 20.5 sen as the price could have bottomed out after being sold down on Thursday where it lost nearly half its value.

China Stationery Ltd saw its share price slipping three sen to RM1.8 as investors took profit following its listing on Feb 24 at the offer price of 95 sen.

Among the decliners, PPB fell 34 sen to RM16.94, Dutch Lady 22 sen to RM29.50, Ta Ann 20 sen to RM5.71 and Hartalega 19 sen to RM8.13.



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Market Commentary

The FBM KLCI index gained 3.80 points or 0.24% on Thursday. The Finance Index increased 0.07% to 14026.81 points, the Properties Index up 0.36% to 1056.46 points and the Plantation Index rose 0.00% to 8652.12 points. The market traded within a range of 7.40 points between an intra-day high of 1576.23 and a low of 1568.83 during the session.

Actively traded stocks include NICORP, CSL, IFCAMSC, YTL, SIME, TIMECOM, SILVER, RA, DRBHCOM and WINSUN. Trading volume decreased to 1617.80 mil shares worth RM2024.63 mil as compared to Wednesday’s 1942.34 mil shares worth RM2693.55 mil.

Leading Movers were SIME (+24 sen to RM9.93), PETCHEM (+5 sen to RM6.75), BAT (+90 sen to RM53.10), DIGI (+2 sen to RM4.04) and AMMB (+4 sen to RM6.17). Lagging Movers were GENTING (-14 sen to RM10.46), YTL (-5 sen to RM1.70), TENAGA (-3 sen to RM6.25), YTLPOWR (-3 sen to RM1.83) and RHBCAP (-15 sen to RM7.80). Market breadth was negative with 309 gainers as compared to 506 losers. -- JF Apex Securities Bhd



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Market Commentary

The FBM KLCI index gained 0.27 points or 0.02% on Monday. The Finance Index increased 0.37% to 13913.15 points, the Properties Index dropped 0.18% to 1038.48 points and the Plantation Index down 0.22% to 8612.06 points. The market traded within a range of 7.58 points between an intra-day high of 1565.87 and a low of 1558.29 during the session.

Actively traded stocks include NICORP, CSL, FOCUS-WB, HARVEST-WA, ENVAIR, ASIAEP, IFCAMSC, HARVEST, PDZ and GOCEAN. Trading volume decreased to 1642.24 mil shares worth RM1633.98 mil as compared to Friday’s 1695.08 mil shares worth RM1941.07 mil.

Leading Movers were CIMB (+8 sen to RM7.14), YTL (+4 sen to RM1.54), TM (+7 sen to RM5.15), AMMB (+8 sen to RM6.11) and RHBCAP (+20 sen to RM7.86). Lagging Movers were GENM (-6 sen to RM3.81), IOICORP (-3 sen to RM5.40), PBBANK (-4 sen to RM13.62), SIME (-3 sen to RM9.57) and MAYBANK (-2 sen to RM8.75). Market breadth was negative with 327 gainers as compared to 455 losers. -- JF Apex Securities Bhd



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Market Commentary

The FBM KLCI index gained 2.11 points or 0.14% on Friday. The Finance Index fell 0.04% to 13861.51 points, the Properties Index up 0.30% to 1040.31 points and the Plantation Index rose 0.31% to 8630.99 points. The market traded within a range of 6.02 points between an intra-day high of 1559.64 and a low of 1553.62 during the session.

Actively traded stocks include CSL, NICORP, HIBISCS-WA, IFCAMSC, TMS, AXIATA, HARVEST-WA, TIGER, ENVAIR and YTL. Trading volume decreased to 1695.08 mil shares worth RM1941.07 mil as compared to Thursday’s 1951.41 mil shares worth RM2109.15 mil.

Leading Movers were IOICORP (+10 sen to RM5.43), MAYBANK (+7 sen to RM8.77), AXIATA (+6 sen to RM5.15), YTL (+8 sen to RM1.50) and TENAGA (+6 sen to RM6.25). Lagging Movers were GENTING (-26 sen to RM10.46), CIMB (-10 sen to RM7.06), SIME (-3 sen to RM9.60), AMMB (-4 sen to RM6.03) and PBBANK (-2 sen to RM13.66). Market breadth was positive with 425 gainers as compared to 373 losers. -- JF Apex Securities Bhd



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KLCI range bound, Genting weighs

KUALA LUMPUR (Feb 24): The broader market was cautious in the morning session on Friday, with investors taking profit on recent gains ahead of the weekend despite the positive key regional markets.

With the eurozone not yet out of the debt crisis, another issue was the high oil prices which would put the brake on the flagging economies. US light crude oil was up 58 cents to US$108.41 while Brent crude rose 45 cents to US$124.07

At 12.30pm, the FBM KLCI was down 1.99 points to 1,554.67. Turnover was 745.19 million shares valued at RM717.18 million. There were 289 gainers, 383 losers and 326 counters unchanged.

Among the regional markets, Japan’s Nikkei 225 rose 0.23% to 9,617.50, Shanghai’s Composite Index added 0.32% to 2,417.15, Taiwan’s Taiex 0.09% to 7,944,28, South Korea’s Kospi 0.35% to 2,014.83 and Singapore’s STI 0.08% to 2,970.65. However, Hong Kong’s Hang Seng Index fell 0.10% to 21,359.90.

At Bursa Malaysia, GENTING BHD [] was the biggest drag on the KLCI, falling 26 sen to RM10.46 and pushing the KLCI down 2.27 points.

CIMB fell 10 sen to RM7.06, pushing the index down 1.76 points. AMMB fell seven sen to RM6, Sime three sen to RM9.600 and YTL Power two sen to RM1.88.

MSC was the top loser, down 42 sen to RM4.16 while recent gainers Oriental fell 27 sen to Rm6.07 and Nestle 14 sen to RM55.66.

Tenaga rose five sen to RM6.24, PPB 20 sen to RM17.14, Maybank and Axiata two sen each to RM8.72 and RM5.11.

China Stationery, which was listed on Friday, rose 13 sen to RM1.08 and it was the most active with 103.23 million shares done.

Harvest rose 15.5 sen to 97 sen and the warrants 14.5 sen to 74 sen.



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Market Commentary

The FBM KLCI index gained 3.21 points or 0.21% on Tuesday. The Finance Index increased 0.26% to 13952.02 points, the Properties Index up 0.31% to 1048.83 points and the Plantation Index down 0.85% to 8745.43 points. The market traded within a range of 6.73 points between an intra-day high of 1564.86 and a low of 1558.13 during the session.

Actively traded stocks include IFCAMSC, GOCEAN, NICORP, COMPUGT, FOCUS-WB, FOCUS, TMS, KHSB, JCY and TEBRAU. Trading volume increased to 1894.51 mil shares worth RM1747.28 mil as compared to Monday’s 1864.17 mil shares worth RM1610.89 mil.

Leading Movers were MAYBANK (+9 sen to RM8.70), MAXIS (+17 sen to RM5.98), AXIATA (+4 sen to RM5.04), TM (+7 sen to RM4.93) and TENAGA (+3 sen to RM6.07). Lagging Movers were KLK (-14 sen to RM24.00), YTL (-4 sen to RM1.47), AMMB (-7 sen to RM6.07), BAT (-90 sen to RM53.00) and MMCCORP (-5 sen to RM2.81). Market breadth was negative with 370 gainers as compared to 442 losers. -- JF Apex Securities Bhd



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AMMB’s Indonesian subsidiary gets investment manager licence

KUALA LUMPUR (Feb 17): AMMB HOLDINGS BHD []’s subsidiary PT AMCI Manajemen Investasi Indonesia (AmInvestasi) has received an investment manager licence to operate the Indonesia.

AMMB said on Friday the Badan Pengawas Pasar Modal dan Lembaga Keuangan (Indonesia Capital Market and Financial Institutions Supervisory Agency) had issued the licence to AmInvestasi on Feb 14.

AmInvestasi is a 99.99% owned subsidiary of PT AmCapital Indonesia, which in turn is 99% owned by AMMB.

AmInvestasi would be able to undertake investment management activities which include portfolio fund management services and also issue and manage mutual fund products.

PT AmCapital Indonesia is involved in stockbroking and underwriting business in Indonesia.



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Market closes steadier, but down for the week

KUALA LUMPUR (Feb 17): Blue chips on Bursa Malaysia closed firmer on Friday, tracking the regional markets which posted gains of up to 1.6% as investors were somewhat upbeat that Greece had taken enough measures to ensure it would secure a second bailout.

The FBM KLCI closed up 6.66 points to 1,557.17, boosted by gains in Tenaga, Maybank and Genting. Turnover was 2.27 billion shares valued at RM1.94 billion. There were 511 gainers, 304 losers and 346 stocks unchanged.

All the key Asian markets posted gains. Japan’s Nikkei 225 rose 1.58% to 9,384.17, Hong Kong’s Hang Seng Index 1.01% to 21,491.62. Taiwan Taiex 0.32% to 7,894.36 and South Korea’s Kospi 1.30% to 2,023.47 while Singapore’s Straits Times Index edged up 0.79% to 3,000.59. The Shanghai Composite Index was a marginal 0.01% higher at 2,357.18 while the other China indices closed in the red.

Reuters reported optimism grew on Friday that Greece has finally done enough to secure a second bailout despite worsening relations with Germany, but doubts remained over lenders' demands for tighter supervision of how Athens will implement the deal.

Greek officials say they have done everything asked of them for euro zone finance ministers to sign off on the 130 billion euro (US$170 billion) rescue package on Monday -- a month before Athens needs the money to make 14.5 billion euros of debt repayments due on March 20 or go bankrupt.

At Bursa Malaysia, investors were happy to see the market closing higher after the pullback on Thursday. However, for the week, the KLCI lost 4.51 points down from 1,561.66 on Feb 10.

Analysts said the positive economic data from Bank Negara Malaysia on the economic growth in the fourth quarter of 2011 helped boost sentiment. The cautious outlook for 2012, as forecast by BNM, was expected.

Crude palm oil futures for third-month delivery rose RM54 to RM3,243 per tonne. The ringgit gained 0.0162 to 3.0430 to the US dollar.

Tenaga rose 11 sen to RM6.11, pushing the KLCI up 1.41 points. Maybank added six sen to RM8.56 and GENTING BHD [] 12 sen to RM10.64, nudging the index up by 1.06 points and 1.05 points.

HLFG rose 20 sen to RM11.74, Hong Leong Bank 12 sen to RM11.74, Public Bank six sen to RM13.70, AMMB four sen to RM6.14 and CIMB three sen to RM7.28.

Tasek was the top gainer, up 47 sen to RM8.47 after announcing its dividend payout. Petronas Dagangan rose 20 sen to RM18.02 and Petronas Gas 14 sen to RM16.50.

PDZ was the most active with 178.9 million shares done, adding two sen to 10.5 sen, GPA rose 1.5 sen tp 10.5 sen.

Perisai rose six sen to 98.5 sen. There were 50 million shares crossed in several off-market deals at an average price of 88 sen.

Among the decliners were DiGi, down eight sen to RM4.02, Maxis twos en tp RM5.75 and MMHE three sen to RM5.41.



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AMMB’s 3Q results within expectations

PETALING JAYA: AMMB Holdings Bhd (AMMB) posted a net profit of RM357.18 million for 3QFY12 ended Dec 31, 2011, up 9.8% over the previous corresponding quarter. The group’s revenue was higher at RM1.96 billion during the quarter, compared with RM1.82 billion previously.

This is the group’s 19th consecutive quarter of profit growth. However, analysts who track the banking group said the latest quarterly earnings numbers are pretty much in line with market consensus.

“There is no surprise to the market,” said Alliance Research analyst Cheah King Yoong, adding that AMMB’s results continued to be supported by strong growth in non-interest income, stabilised net interest margin (NIM) and improving loan quality that resulted in lower loan loss charged.

For the nine-month period ended Dec 31, AMMB recorded an increase of 13.8% on net profit to RM1.17 billion above the same period last year.

AMMB said the double-digit growth of the group’s 9MFY12 earnings was driven by growth across most divisions, with the retail banking division leading the contributions.

The division recorded RM433.6 million in profit after tax (PAT), an increase of 3.6% from the same period last year, driven by lower impairments of non-performing loans.

Cheah Tek Kuang: We will continue with our disciplined execution of strategic priorities.

Most other divisions also recorded double-digit growth rates in net profit. The markets division’s — which involves Treasury business and trading of bonds — net profit jumped by 51.3% year-on-year (y-o-y) to RM235.1 million, while the corporate and institutional banking division recorded 35.5% growth in net profit to RM186.7 million.

Net profit for business banking increased by 17.8% to RM158.9 million, with higher income growth of 20.5% from diversified growth in asset base and strong fee income, according to the group’s statement. The investment banking division recorded a net profit of RM116.2 million, an increase of 29% over the year.

The general insurance division recorded RM64 million in PAT, a 38.7% increase over the year, driven by better underwriting profits and lower claims, the group stated. General insurance fund assets increased by 10.2% while the claim ratio continues to improve, it said.

However, PAT for the life insurance division dropped by 18.2% y-o-y to RM42.2 million, pending stabilisation of business model refinements focusing on bancassurance business growth initiatives, better performing agencies and infrastructure improvements, the group said.

“Net interest margin improved quarter on quarter while the non-retail segment drove loans growth. We continue to strategically grow our Casa (current account savings account), alongside diversifying our overall funding profile which includes stable funds such as senior notes, medium-term notes and sukuk funding programmes,” said Cheah Tek Kuang, group managing director of AMMB in the statement.

According to Keith Wee of OSK Investment Research, although the group’s annualised loan growth at 5.6% y-o-y is slightly below the research firm’s target of 8% growth y-o-y, AMMB’s focus is on profitability rather than volume growth.

This strategy has paid off, reflected by improvement in the quarterly NIM to 2.85% in 3QFY12 compared with 2.71% in 2QFY12, he added.

For FY12, the group will remain cautious in the short term. “We will continue with our disciplined execution of strategic priorities but remain cautious of short-term downside risks,” said AMMB’s Cheah.

AMMB’s share price traded one sen higher to RM6.12 yesterday with just over three million shares traded. Year-to-date, the stock has increased by 5.5% from RM5.80 on Jan 3. For the 52-week period since Feb 14, 2011, it has dropped by 2.4% from RM6.27.


This article appeared in The Edge Financial Daily, February 15, 2012.



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AMMB shares edge down at noon

KUALA LUMPUR (Feb 15): AMMB HOLDINGS BHD [] shares edged down at noon on Wednesday after CIMB Research said the banking group’s 9MFY3/12 results revealed a weak underlying trend for the lending business as year-on-year loan growth was only 6.2% in Dec 2011 and NIM shrank y-o-y.

At 11.57am, AMMB shed one sen to RM6.11 with 768,300 shares traded.

AMMB 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.

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.

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.

CIMB Research in a note Feb 15 said it deemed the results slightly disappointing as 9M net profit was 72% of its full-year forecast and 77% of consensus.

The research house said its FY12 net profit and target price (10% discount to DDM value) are trimmed as it lowered loan growth by 1 percentage point and lending yield by 5 basis points.

“We retain our Neutral call as the challenging lending environment will dilute the impact of the revamp,” it said.

“Despite the benefits of its continuing revamp and strong treasury income growth, we do not advise investors to accumulate the stock for a host of reasons – below-industry loan growth, y-o-y drop in margin and increased competition for the investment banking business. We prefer Maybank,” it said.



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Stocks to watch: AMMB, Dialog, RCE, Tebrau Teguh

KUALA LUMPUR (Feb 15): With the broader market showing signs of weakness, whether the market can perk up again hinges on fresh corporate developments and earnings which are going into full swing next week.

Also over the past two trading days, late fund support has helped the FBM KLCI close higher but volume has been declining in the broader market, with recent leaders among penny stocks and lower liners fading.

On the economic front, Bank Negara Malaysia is scheduled to release its fourth quarter GDP data after market. Most importantly, investors would want to hear is Bank Negara Malaysia’s assessment of the economy and its outlook.

As for stocks, among those which could see trading interest are AMMB HOLDINGS BHD [], DIALOG GROUP BHD [], RCE CAPITAL BHD [] and TEBRAU TEGUH BHD []. Naim Indah could also see trading interest with downside bias as more traders take profit.

AMMB 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. 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.

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.

Dialog’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.

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.

Meanwhile, Dialog’s 396.87 million rights shares issued under its rights issue with warrants will be listed and quoted on Wednesday.

Bernama reports RCE Capital Bhd's pre-tax profit fell 10.4% to RM105.237 million for the nine-month period ended Dec 31, 2011 from RM117.44 million a year ago. The decrease was due to the loan financing segment, which posted a lower pre-tax profit by RM8.6 million arising from lower interest income generated from its loans and receivables.

For the third quarter, RCE Capital posted a lower pre-tax profit of RM30.645 million compared with RM42.401 million a year ago. Its revenue declined to RM61.11 million from RM77.179 million.

Meanwhile, the Malay Chamber of Commerce Malaysia (MCCM) Johor has announced its plan to acquire a 33.15% stake in Tebrau Teguh from Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ).

Its president Syed Ali Alattas was quoted saying by Bernama that 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, said on Tuesday. He added MCCM Johor was also willing to buy KPRJ's 41.15% stake in Tebrau Teguh.

KPRJ plans to sell a 33.15% 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% stake in Tebrau Teguh. IWH is owned by KPRJ and Credence Resources Sdn Bhd.



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