Maybank Research retains Buy on Axiata, upgrades Maxis

KUALA LUMPUR: Maybank Investment Bank Research has retained its Buy call on Axiata and upgraded Maxis to a Buy as they would benefit from the implementation of the Goods and Services Tax (GST) when implement in April 2015.

“GST would allow wireless operators a chance to pass on the 6% service tax they currently absorb in the prepaid segment.

 “In reality, the benefits are likely less pronounced given elasticity and competition; we assume operators enjoy the equivalent of a 3% pass-through in service taxes for now,” it said.

Maybank Research said its sector picks are Axiata (maintain Buy, TP: RM7.80) and Maxis (upgrade to Buy, TP: RM7.40). 

"Consequently we raise net profit of Axiata/Digi/Maxis by 2.5%/4.1%/3.2% in 2015, and 3.1%/5.6%/4.3% in 2016 respectively.  

“For sensitivity purposes, every 1% pass-through in prepaid service tax raises net profit of Axiata/Digi/Maxis by 0.8%/1.4%/1.1% in 2015, and 1.0%/1.9%/1.4% in 2016 respectively,” it said. 
Maybank Research said the wireless operators have been absorbing the 6% service tax in the prepaid segment since 1998.

With GST, they can pass on the 6% service tax they currently absorb in the prepaid segment.  The theoretical impact of GST to operators is a direct flow-through of this previously-foregone revenue down to EBITDA. 

The research house explains that in reality, the benefits are likely less pronounced, given 1) the potential elasticity impact (prepaid is a price sensitive segment after all), and 2) possibility of increased competition, which effectively means part of the new-found revenue gets returned back to customers in the form of lower tariffs. 

Operators presently remain non-committal on their intentions with regards to GST treatment.
 “On the back of our earnings upgrades, we raise target prices of wireless operators under our coverage by 3%-7%. Consequently, we upgrade Maxis to BUY (from Hold). Our sector picks are Axiata and Maxis, on the back of their underperformance in 2014,” it added.

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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KLCI sustains momentum, closes at fresh all-time high

KUALA LUMPUR (APRIL 3): The FBM KLCI maintained its momentum and closed at a fresh all-time high above the psychologically-crucial 1,600-point level on Tuesday, in line with the generally positive sentiment at most global markets.

Asian shares on Tuesday sustained momentum from an overnight rally in global equities, with solid manufacturing data from the United States offsetting signs of mild recession in Europe, according to Reuters.

However, European shares and Brent crude oil prices dipped in early trade on Tuesday following recent sharp gains, as investors sought further signs of improvement in the global economy before chasing risky assets higher, it said.

The FBM KLCI closed 2.85 points to 1,606.63, lifted by gains at select blue chips including CIMB, Axiata, and BAT.

Gainers, however, trailed losers by 354 to 379, while 344 counters traded unchanged. Volume was 1.25 billion shares valued at RM1.36 billion.

At the regional markets, Hong Kong’s Hang Seng Index rose 1.31% to 20,790.98, the Shanghai Composite index added 0.47% to 2,262.79, South Korea’s Kospi gained 0.99% to 2,049.28, and Singapore’s Straits Times Index edged up 0.04% to 3,014.98 while Taiwan’s Taiex fell 1.3% to 7,760.85 and Japan’s Nikkei 225 lost 0.59% to 10,050.39.

On Bursa Malaysia, Dutch lady was the top gainer and rose 44 sen to RM35.94, Carlsberg added 34 sen to RM10.80, Jaya Tiasa 20 sen to RM8.72, HLFG 18 sen to RM12.50, BAT 16 sen to RM56.22, Sarawak PLANTATION []s 15 sen to RM3.24, MBM Resources 14 sen to RM4.77, APFT 12 sen to 79 sen, Voir 11.5 sen to 64.5 sen, Hightec 11 sen to 87 sen, Axiata nine sen to RM5.28 and CIMB two sen to RM7.81.

Metronic was the most actively traded counter with 134.23 million shares done. The stock fell 2.5 sen to 16 sen.

Other actives included Ingenuity Solutions, Ariantec, SuperComnet, Naim Indah Corp, Carotech, Utopia, Axiata and CIMB.

Meanwhile, decliners included Genting Plantations, SMPC, PPB, Warisan, Cepco, Can-One, Petronas Dagangan, Takaful and United Plantations.



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Prepaid service tax in July?

KUALA LUMPUR (March 15): Rumour has it that the government may have finally decided to allow telecommunications companies (telcos) to pass on the six percent service tax to prepaid subscribers, HLIB Research says.

"It is understood that the Malaysian Communications and Multimedia Commission (MCMC) has issued a memo to all the industry players instructing the telcos to be technically prepared for the launch on July 1," said the research house today.

"Coupled with the broadband tax incentive implemented last year, this will further enhance telcos' earnings in the longer term," it said, maintaining a neutral rating on the telecommunications sector.

The research division of Hong Leong Investment Bank (HLIB) said it expected DiGi to benefit the most if this rumour was to materialise considering that it had the highest proportion (86.6 per cent) of prepaid users to total subscribers base, compared to Maxis (74 per cent) and Celcom (77.2 per cent).

Based on its estimation, DiGi, Maxis and Celcom would enjoy earnings uplift of six per cent, four per cent and two per cent respectively, provided competition and usage remain status quo. – Bernama



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Stocks to watch: Top Glove, Meda Inc, SunREIT, DRB-Hicom

KUALA LUMPUR (March 15): The sell down across China equities could dictate sentiment on the Malaysian bourse on Thursday following updates that the world’s second largest economy will maintain efforts to curb real estate speculation.

China’s premier Wen Jiabao said on Wednesday that measures to curb property speculation must be maintained to prevent a real estate bubble which will be detrimental to the country’s economy.

Wen’s comments had reversed earlier gains across China stock markets, resulting in major indices finishing in the red.

Hong Kong’s Hang Seng closed down 0.15% to 21,307.8 points, while the Shanghai Composite declined 2.63% to 2391.23. The Shenzen Composite fell 4.09% to close at 969.12.

At Bursa Malaysia, the FBM KLCI rose 11.69 points or 0.7% to close at 1575.71.

Apart from macro factors, analysts, have in fact, warned of bearish technical dynamics in local equities, prompting the anticipation of a sell down in local stocks.

“Given the bearish short-term technical momentum, stocks are likely to drift lower on limited trading participation, as most investors would look for cheaper levels before they are prepared to nibble,” TA Securities Holdings Bhd.

Stocks to watch on Thursday include Top Glove Corp Bhd, Meda Inc Bhd, Sunway Real Estate Investment (SunREIT), DRB-HICOM BHD [], TRC SYNERGY BHD [], TELEKOM MALAYSIA BHD [] (TM) and Axiata Group Bhd.

Top Glove is expected to announce its financial results for the second quarter ended Feb 29, 2012 (2QFY12) on Thursday.

According to analyst reports, Top Glove has guided that its 2QFY12 results will be weaker than the preceding quarter’s numbers. Top Glove shares rose five sen to close at RM4.80 on Wednesday.

Meda Inc Bhd plans to undertake an integrated township in Sungai Siput, Perak with the proposed purchase of 256.04 acres of land from RM13 million. The company said its unit Nandex Land Sdn Bhd has signed a sale and purchase agreement with Majuperak Energy Resources Sdn. Bhd to purchase the leasehold land.

Sunway REIT Management Sdn Bhd has earmarked RM200 million as capital expenditure to transform Sunway Putra Place.

Sunway REIT Management, which is the manager for Sunway Real Estate Investment (SunREIT) said the preliminary capital expenditure (capex) for the refurbishment of the mall is estimated at RM200 million.

“The refurbishment exercise is expected to take about 15-18 months with a projected return on investment (ROI) of 12.5% to 15.0%,” it said.

DRB-Hicom has obtained shareholders consent to acquire a controlling 42.74% stake in national car manufacturer Proton HoldingsBhd. DRB-Hicom fell two sen to RM2.64

CONSTRUCTION [] firm TRC Synergy has secured a RM36 million job to undertake alteration works at the Dayabumi Complex. TRC shares closed unchanged at 75 sen.

ECM Libra Research has upgraded TM’s fair value by 29% from RM3.70 to RM4.78 but maintained its hold recommendation for the stock.

ECM Libra has also revised upwards its earnings forecast for TM by between 1% and 24% for the FY12 to FY14 period.

TM plans to roll out the second phase of its high speed broad band (HSBB) services in smaller industrial areas and state capitals where it is economically viable. TM shares rose seven sen to RM5.13.

Axiata Group’s Indonesian unit PT XL Axiata Tbk is expected to register a 10% growth in its subscriber base to 51 million this year from 46.4 million in 2011. Axiata rose six sen to RM5.12.



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Market Commentary

The FBM KLCI index gained 11.69 points or 0.75% on Wednesday. The Finance Index increased 0.53% to 14082.29 points, the Properties Index up 0.18% to 1039.21 points and the Plantation Index rose 0.18% to 8611.44 points. The market traded within a range of 7.30 points between an intra-day high of 1575.71 and a low of 1568.41 during the session.

Actively traded stocks include NICORP, CSL, YTL, TIGER, HWGB, EURO, AXIATA, SIME, ASUPREM and SILVER. Trading volume increased to 1273.33 mil shares worth RM1844.76 mil as compared to Tuesday’s 1163.12 mil shares worth RM1471.04 mil.

Leading Movers were CIMB (+14 sen to RM7.40), TENAGA (+15 sen to RM6.47), AXIATA (+6 sen to RM5.12), PETGAS (+48 sen to RM16.98) and PETCHEM (+8 sen to RM6.78). Lagging Movers were DIGI (-5 sen to RM3.95), YTLPOWR (-2 sen to RM1.77), HLBANK (-4 sen to RM12.06) and MMHE (-1 sen to RM5.35). Market breadth was positive with 444 gainers as compared to 334 losers. -- JF Apex Securities Bhd



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KLCI closes sharply higher as regional markets end mixed

KUALA LUMPUR (March 14): the FBM KLCI rose sharply higher in late trade on Wednesday to stay firmly above the 1,570-point level, lifted by gains at select bue chips including Sime Darby, Axiata, Petronas Gas, PPB and BAT.

The 30-stock index closed 11.69 points higher at 1,575.71.

Meanwhile, Shanghai and Hong Kong shares reversed early gains to snap a four-session winning streak on Wednesday, dragged by China plays after Premier Wen Jiabao doused expectations for easing in the property sector at the close of China's annual parliamentary meeting, according to Reuters.

At the regional markets, the Shanghai Composite Index fell 2.63% to 2,391.23 and Hong kOng’s Hang Seng Index lost 0.15% to 21,307.89.

Meanwhile, Japan’s Nikkei 225 closed 1.53% higher at 10.050.52, South Korea’s Kospi added 0.99% to 2,045.08, and Taiwan’s Taiex gained 1.17% to 8,125.26 and Singapore’s Straits Times Index

CIMB Research in its Alpha Edge report on March 14 covering regional markets said last week’s resurgence of US and regional equity markets indicated that it was still not time for a major correction though markets should be close to one.

“Last night, the VIX (Chicago Board Options Exchange (CBOE) Volatility Index) fell to a four-year low, showing signs of complacency among investors. We remain bearish on prospects for this year,” it said.

The research house said that over the past week, the KLCI had been drifting downwards. It is now holding just above the support trendline at 1,568 points.

“A sharp breakdown of this support would convince us that the uptrend since last November has already ended.

“Until that happens, we cannot discount another short upleg towards the 1,580-1,600 levels,” it said.

On Bursa Malaysia, the top gainer was BAT that rose RM1.18 to RM53.98, Petronas Gas gained 48 sen to RM16.98, Far East up 35 sen to RM7.60, Aeon 29 een to RM9.40, PPB 28 wen to RM16.98, Aeon Credit up 25 sen to RM8.35, GAB 24 sen to RM13.48, Shell 22 sen to RM10.22 while Sarawak Oil Palm added 20 sen to RM6.23, while Axiata added six sen to RM5.12 and Sime Darby gaind two sen to RM9.71.

Naim Indah Corp was the most actively traded counter with 117.8 million shares done. The stock fell 2.5 sen to 66 sen.

Other actives included CSL, YTL, Tiger Synergy, HWGB, Euro Holdings, Axiata, Sime Darby, Astral Supreme and Silber Bird.



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Axiata’s Indonesian unit sees subscriber base growing 10%

KUALA LUMPUR (March 14) : Axiata Group Bhd’s Indonesian unit PT XL Axiata Tbk is expected to register a 10% growth in its subscriber base to 51 million this year from 46.4 million in 2011, according to wire reports quoting XL Axiata’s president director Hasnul Suhaimi in Jakarta.

Hasnul was also quoted as saying on Wednesday that XL Axiata plans to spend as much as eight trillion rupiah (1 rupiah = RM0.033) as capital expenditure this year. He also said the company expects to secure a loan from Bank Mandiri to refinance 1.5 trillion worth of debt which is due next month, according to the report.

Shares of parent company Axiata Group rose three sen to RM5.09.



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CIMB Research keeps Axiata target price unchanged at RM5.48

KUALA LUMPUR (March 14): CIMB Equities Research raised its FY13-14 dividend assumptions for Axiata following our non-deal roadshow as capex post FY12 should fall faster than its expectations.

“This should push ROIC from about 11% this year to the high teens over the next three to five years. Axiata intends to up its stakes in Idea and M1, failing which it will sell out. The key risks are regulations in Bangladesh and India,” it said.

CIMB Research said Axiata remains a Buy and one of its regional top telco picks. It trimmed its EPS estimates on the higher dividends but no change to its DCF-based target price of RM5.48.



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KLCI drifts higher at mid-morning

KUALA LUMPUR (March 13): The FBM KLCI drifted slightly higher, lifted by select blue chips at mid-morning on Tuesday in line with the limited gains at key regional markets.

Meanwhile, at the regional markets most market players were on the sidelines awaiting the outcome of a Federal Open Market Committee meeting later in the day, according to Reuters.

The FBM KLCI added 2.47 points to 1,567.22 at 10.05am. Gainers led losers by 198 to 187, while 276 counters traded unchanged. Volume was 252.62 million shares valued at RM166.43 million.

At the regional markets, Japan’s Nikkei 225 rose 1.14% to 10,002.90, Hong KONG’s Hang Seng Index added 0.77% To 21,297.40, the Shanghai Composite Index edged up 0.05% to 2,436.08, Taiwan’s Taiex gained 0.82% to 7,992.51, South Korea’s Kospi was up 1.15% to 2,025.52 and Singapore’s Straits Times Index added 0.52% to 2,977.65.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients said the resistance areas of the KLCI at 1,564 and 1,583 would cap market gains, whilst the weaker support areas were at 1,540 and 1,559.

“Despite the US markets’ rebound last night, we could be in for a weaker day locally,” he said. The KLCI fell 14.25 points to close at 1,564.75 on Monday.

On Bursa Malaysia, BAT was the top gainer, up 40 sen to RM52.40, Ekovest added 15 sen to RM2.75, Sin Heng Chan gained 13.5 sen to 94 sen, LPI Capital 10 sen to RM13.66 and Tradewinds PLANTATION []s nine sen to RM4,64.

Petronas Chemicals and GAB up eight sen each to RM6.64 and RM13.38, Vintage 7.5 sen to 13 sen, Axiata six sen to RM5.10 while Hoover added five sen to 36 sen.

Naim Indah Corp was the most active with 52.94 million shares done. The stock fell half a sen to 72 sen.

Other actives included Winsun, Takason, Tiger Synergy, XDL, Sanichi and Sumatec.

Decliners included Theta warrants, Allianz warrants, UAC, MISC, Carlsberg, tradewinds, Johore Tin, BLD Plantations, AMMB and Hong Leong Bank.



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Market Commentary

The FBM KLCI index gained 0.64 points or 0.04% on Friday. The Finance Index fell 0.09% to 14104 points, the Properties Index dropped 0.49% to 1046.09 points and the Plantation Index rose 0.19% to 8629.54 points. The market traded within a range of 4.77 points between an intra-day high of 1582.00 and a low of 1577.23 during the session.

Actively traded stocks include NICORP, SUMATEC, LEESK, KEYWEST, SUMATEC-WA, CSL, SILKHLD, HWGB, WINSUN and TMS. Trading volume decreased to 1306.73 mil shares worth RM1367.01 mil as compared to Thursday’s 1769.37 mil shares worth RM1763.28 mil.

Leading Movers were TENAGA (+13 sen to RM6.39), MAYBANK (+2 sen to RM8.74), GENM (+3 sen to RM3.89), KLK (+14 sen to RM23.40) and TM (+2 sen to RM5.23). Lagging Movers were DIGI (-3 sen to RM4.02), AIRASIA (-3 sen to RM3.63), HLBANK (-10 sen to RM12.28), AXIATA (-1 sen to RM5.13) and PETGAS (-8 sen to RM16.70). Market breadth was negative with 369 gainers as compared to 388 losers. -- JF Apex Securities Bhd



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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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Market Commentary

The FBM KLCI index gained 5.44 points or 0.34% on Monday. The Finance Index increased 0.53% to 14204.47 points, the Properties Index dropped 0.05% to 1065.4 points and the Plantation Index down 0.19% to 8661.77 points. The market traded within a range of 8.59 points between an intra-day high of 1594.72 and a low of 1586.13 during the session.

Actively traded stocks include TMS , NICORP, GOCEAN, KHSB, CSL, DRBHCOM-CF, DRBHCOM, COASTAL-CA, DRBHCOM-CG and YTL. Trading volume decreased to 1448.66 mil shares worth RM1760.84 mil as compared to Friday’s 1630.35 mil shares worth RM1934.59 mil.

Leading Movers were CIMB (+15 sen to RM7.48), GENTING (+16 sen to RM10.76), TENAGA (+6 sen to RM6.31), PBBANK (+6 sen to RM13.76) and MMCCORP (+9 sen to RM2.84). Lagging Movers were YTL (-4 sen to RM1.74), KLK (-18 sen to RM23.40), GENM (-3 sen to RM3.87), AXIATA (-1 sen to RM5.16) and PETCHEM (-1 sen to RM6.89). Market breadth was negative with 391 gainers as compared to 414 losers. -- JF Apex Securities Bhd



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Market Commentary

The FBM KLCI index gained 12.92 points or 0.83% on Wednesday. The Finance Index increased 0.69% to 14017.35 points, the Properties Index up 1.22% to 1052.71 points and the Plantation Index rose 0.34% to 8651.77 points. The market traded within a range of 16.25 points between an intra-day high of 1573.75 and a low of 1557.50 during the session.

Actively traded stocks include YTL, CSL, IFCAMSC, KEYWEST, ECOFIRS, COMPUGT, MUIPROP, NICORP, DBE and TIGER. Trading volume increased to 1942.34 mil shares worth RM2693.55 mil as compared to Tuesday’s 1727.59 mil shares worth RM1588.57 mil.

Leading Movers were YTL (+17 sen to RM1.75), SIME (+12 sen to RM9.69), AXIATA (+7 sen to RM5.17), TENAGA (+8 sen to RM6.28) and GENM (+11 sen to RM3.91). Lagging Movers were PETCHEM (-10 sen to RM6.70) and BAT (-10 sen to RM52.20). Market breadth was positive with 535 gainers as compared to 297 losers. -- JF Apex Securities Bhd



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KLCI struggles, key regional markets advance

KUALA LUMPUR (Feb 28): Blue chips closed lower on Tuesday, weighed down by losses in Petronas Chemicals, Axiata and Tenaga, as the FBM KLCI struggled to breach the 1,560 level, in contrast with the firmer key regional markets.

The 30-stock KLCI closed down 2.31 points or 0.15% lower at 1,556.73 from a high of 1,562.42. Turnover was 1.73 billion shares valued at RM1.589 billion. Losers beat gainers 511 to 309, while 309 counters were traded unchanged.

The performance of the local stock market was a contrast to the positive sentiment at the key regional markets.

Shanghai's Composite Index rose 0.20% to 2,451.86, Hong Kong's Hang Seng 1.65% to 21,568.73, Japan's Nikkei 225 up 0.92% to 9,722.52, Singapore's Straits Index 0.73% to 2,968.27, South Korea's Kospi 0.63% to 2,003.69 and Taiwan’s Taiex 0.28% to 7,959.34.

Reuters reported that the European Central Bank's upcoming cash boost for banks supported the euro and shares but some investors are worried the benefits of the cheap money will be short lived.

At Bursa Malaysia, Petronas Chemicals fell 10 sen to RM6.80, dragging the KLCI down 1.01 points and Axiata shed five sen to RM5.10, pushing the KLCI down by one point. Losses in TNB, where the power giant’s share price fell five sen to RM6.30, shaved 0.64 of a point of the index.

Tenaga president and CEO Datuk Seri Che Khalib Mohamad Noh said he expected the power giant to perform better in the second quarter ended Feb 29, 2012 as it would receive RM2 billion in compensation from Petroliam Nasional Bhd and the government under a fuel cost-sharing mechanism.

Losers included JTI, down 25 sen to RM6.91 as investors were disappointed over the absence of a dividend payout. Sarawak Oil Palm fell 17 sen to RM6.

China Stationery Limited continued its strong performance post-IPO to be one of the most active and among top gainers after closing up 16 sen to RM1.39, with 84.98 million shares traded in.

Dutch Lady rose RM1.48 to RM28.98, Atlan 32 sen to RM3.47, Hong Leong Industries up 21 sen to RM4.20 while Hong Leong Bank and Carlsberg added 20 sen to RM11.90 and RM9.90 respectively.



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Market Commentary

The FBM KLCI index lost 2.31 points or 0.15% on Tuesday. The Finance Index increased 0.06% to 13920.97 points, the Properties Index up 0.15% to 1040.06 points and the Plantation Index rose 0.12% to 8622.6 points. The market traded within a range of 9.80 points between an intra-day high of 1562.42 and a low of 1552.62 during the session.

Actively traded stocks include IFCAMSC, CSL, IFCAMSC-WA, NICORP, TMS, SNTORIA, COMPUGT, WINSUN, GOCEAN and ZELAN. Trading volume increased to 1727.59 mil shares worth RM1588.57 mil as compared to Monday’s 1642.24 mil shares worth RM1633.98 mil.

Leading Movers were GENTING (+10 sen to RM10.54), YTL (+4 sen to RM1.58), HLBANK (+20 sen to RM11.90), PETGAS (+4 sen to RM16.56) and HLFG (+6 sen to RM11.82). Lagging Movers were PETCHEM (-10 sen to RM6.80), AXIATA (-5 sen to RM5.10), TENAGA (-5 sen to RM6.20), MAXIS (-9 sen to RM5.89) and YTLPOWR (-3 sen to RM1.85). Market breadth was negative with 309 gainers as compared to 511 losers. -- JF Apex Securities Bhd



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Celcom Axiata posts net profit of RM2.1b in FY11

KUALA LUMPUR (Feb 28): Telecommunications provider, Celcom Axiata Bhd, has registered a net profit of RM2.1 billion for the financial year ended Dec 31, 2011.

The figure is 11 per cent higher when compared to the RM1.89 billion recorded in 2010.

Revenue rose six per cent to RM7.23 billion from the RM6.85 billion posted in 2010, driven mainly by higher subscribers on the back of an attractive product offering of bundled packages.

Its Chief Executive Officer Datuk Seri Shazalli Ramly said the current revenue growth was the strongest since the last fourth quarter in 2009.

"Celcom closed the year with 12 million subscribers, adding 542,000 more in the last quarter, promising greater opportunities for the company this year in respect of achieving consistent and strong traction in both revenue and profitability.

"We have evidently proven ourselves in meeting consumer demands at any cost while maintaining our top position," he told a media briefing here.0

Celcom is expected to continue to prioritise non-voice services, emphasising data access and innovative content offerings, while at the same time resuscitating voice usage.

Shazalli said Celcom has allocated RM1 billion for capital expenditure this year, to be largely spent on information TECHNOLOGY [] development.

"We will continue to deliver a comprehensive suite of access mediums, including mobile and high speed broadband, with the aim of having more WiFi hotspots in the country," he added. - Bernama



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Axiata set to garner interest after high dividend payout

PETALING JAYA: Axiata Group Bhd's surprisingly high dividend payout for the financial year ended Dec 31, 2011 (FY11) will be a catalyst for its stock, analysts said.

“What they have announced is better than we had expected, and will likely stir investors' interest,” an analyst with MIDF Research wrote in his report.

Axiata, a telecommunication services provider with regional presence, on Wednesday said the management had proposed a dividend payout of 19 sen per share for FY11, representing a 60% payout ratio, and doubled that of last year's 30%.

In addition, Axiata's management had raised its dividend guidance for FY12 to 65%, which analysts said would boost investor sentiment towards the stock.

“Despite a more challenging outlook, Axiata maintains that it has sufficient cashflow generation power to improve its dividend,” Maybank Kim Eng said in its report.

In general, Axiata's performance for FY11, when benchmarked against market consensus, was not surprisingly great hence, the dividend surprise was a welcome.

Raking in a net profit of RM2.34bil on revenue of RM16.4bil, which represented an increase of 32.5% year-on-year and 5.3% year-on-year, respectively, analysts said they were within expectations.

Benchmarked against its own targets, Axiata had even missed its headline key performance indicators (KPI) targets for FY11; it merely achieved around 5% growth in revenue and hit only a growth of 1% in earnings before interest, tax, depreciation and amortisation (EBITDA) compared with its KPI target of a 10% growth for both categories.

Following the failure to meet its FY11 headline KPI, the company had set lower headline KPI targets for FY12, that is, a 5.3% increase in revenue and 1.8% growth in EBITDA.

“The company is faced with increasing competition from other players and there is increasing pressure on its margin,” an analyst said. “Nevertheless, we think its FY12 headline KPI targets are achievable.”

Most analysts concurred.

MIDF analysts, in their reports, indicated that Axiata's FY12 headline KPI targets were conservative; hence it would not be too difficult for the company to achieve them.

Axiata closed at RM5.15 yesterday, representing a gain of six sen from the previous day.



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China Stationery in focus, KLCI closes higher

KUALA LUMPUR (Feb 24): China Stationery Ltd (CSL) was in focus on Friday when it made its debut on Bursa Malaysia on Friday, closing 15.8% higher amid some profit-taking activities in the broader market.

CSL closed up 15 sen to RM1.10 and it was the most active stock with 154 million shares traded.

The stationery manufacturer's initial public offering, priced at 95 sen per share, raised RM85.50 million from its public issue of 90 million new shares.

As for the FBM KLCI, it closed up 2.11 points or 0.14% at 1,558.77, led Axiata (up 6.0 sen to RM5.15), YTL Corp (up 7.0 sen to RM1.49) and IOI Corp (up 6.0 sen to RM5.39). Their gains pushed the index up 3.16 points.

Turnover was 1.70 billion shares valued at RM1.94 billion. Gainers led losers 425 to 373 while 343 counters traded unchanged.

Regional markets closed higher, with the Shanghai Composite Index up 1.25% to 2,439.63, Hong Kong's Hang Seng Index up 0.12% to 21,406.86, Japan's Nikkei 225 0.54% to 9,647.38, South Korea's Kospi rose 0.60% to 2,019.89, Singapore's Straits Index up 0.33% to 2,978.08 and Taiwan's Taiex, up 0.28% to 7,959.34.

Commenting on the performance of Bursa Malaysia, Dr Nazri Khan, vice president of retail research at Affin Investment Bank Research said:

"We see the last three profit taking days (Wednesday to Friday) as a healthy correction to neutralise its overbought momentum.

"We also note that the strong ringgit performance (1.1% weekly gain and 4.5% year to date gain) as positive signs of more inflow for the local equities.”

At Bursa Malaysia, top gainers included British American Tobacco up 44 sen to RM52.56, Panasonic Malaysia up 42 sen to RM21.00 and Dutch Lady up 28 sen to RM25.80.

Losers were led by PLANTATION [] stocks such as BLD Plantation down 39 sen to RM9.51 and United Plantation down 34 sen to RM23.84. Oriental Holdings fell 27 sen to RM6.07, MBM Resources also 27 sen lower at RM4.62 and Genting 26 sen to RM10.46.



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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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