AffinHwang Capital downgrades Unisem to Sell, target price RM1.54

KUALA LUMPUR (Dec 16): AffinHwang Capital Research has downgraded Unisem (M) Bhd to “Sell” (from Reduce) at RM1.83 with an unchanged target price of RM1.54 and said Unisem's stock price has continued to gain positive traction on accumulation by a major shareholder.

In a note Tuesday, the research house said this could be attributed to: 1) its strong 3Q14 results and the possibility of strong earnings delivery in the subsequent quarters; 2) its exposure to the robust RF business; and 3) the potential for a strong DPS in 4Q14.

“However, trading at 17.3x 2015 EPS, and a premium to peers, we believe that good news is already in the price. On a risk adjusted basis, Unisem is the most expensive semiconductor stock under our coverage.
“With good news priced in and limited re-rating catalyst from this point, we turn anti-consensus on the stock, downgrading Unisem to Sell with an unchanged target price of RM1.54,” it said.

Stocks to watch Kencana, Pantech, Spritzer, KNM, Silver Bird

KUALA LUMPUR (May 1): The FBM KLCI could be range bound when trading resumes on Wednesday after May Day holiday on May 1, given the absence of fresh catalysts.

The FBM KLCI fell some 25.72 points in April, as investor sentiment took a beating given rising external and domestic uncertainties.

Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said he expects the FBM KLCI to trend lower in response to rising solvency risk and borrowing cost in Europe (Spain & Italy) and rising local political uncertainties.

“Despite positive comments from the USA Fed on possible monetary stimulus, a weaker than expected read on April Euro zone sentiment and rising European bond yield seemed to bring struggling European growth and debt concerns back into focus.

Most markets in Asia and Europe were closed on Tuesday to mark the May Day holidays and the Monday close at Wall Street was less then encouraging as The S&P 500 posted its first monthly decline since November on Monday, as stocks slipped in one of the lightest trading days of the year on signs the U.S. economy may be slowing and as a recession in Spain highlighted risks in the euro zone.

The Dow Jones industrial average dropped 14.68 points, or 0.11 percent, to 13,213.63. The Standard & Poor's 500 Index fell 5.45 points, or 0.39 percent, to 1,397.91. The Nasdaq Composite Index lost 22.84 points, or 0.74 percent, to 3,046.36.

Among the stocks that could be in focus on Bursa Malaysia are KENCANA PETROLEUM BHD [], PANTECH GROUP HOLDINGS BHD [], SPRITZER BHD [], KNM GROUP BHD [] and SILVER BIRD GROUP BHD [].

Kencana Petroleum Bhd’s wholly owned subsidiary, Kencana HL Sdn. Bhd. ("Kencana HL") in consortium with Shinryo (M) Sdn Bhd has secured an engineering, procurement, CONSTRUCTION [] and commissioning (“EPCC”) from PETRONAS GAS BHD [].

Kencana said on Monday that the contract was for the EPCC of two cogeneration plants, having combined capacity of 50MW of electrical power and steam capacity of 120 ton per hour.

The company said the portion of the contract value for Kencana HL was estimated at RM35 million.

Pantech Group Holdings Bhd Net profit for the fourth quarter ended Feb 29, 2012 surged 90% to RM10.68 million from RM5.11 million a year earlier, due mainly to an increase in revenue.

The company said on Monday that its revenue for the quarter jumped 76.2% to RM128.45 million from RM72.9 million in 2011 due to improved sales demand from oil and gas sector with the on-going new projects.

Earnings per share rose to 2.37 sen from 1.14 sen, whiel net assets per share was 75 sen.

Pantech proposed a final single tier dividend of 1.3 sen per share 20 sen each amounting to RM5.84 million for the financial year ended Feb 29, 2012, subject to shareholders' approval.

Spritzer Bhd net profit for the third quarter ended Feb 29, 2012 jumped 69.4% to RM3.66 million from RM2.16 million a year earlier, due mainly to higher sales of more profitable carbonated and flavoured drinks and natural mineral water products.

The company said on Monday that its revenue for the quarter rose 33% to RM45.22 million from RM34.09 million in 2011 on higher sales volume.

KNM Group Bhd (KNM) has proposed to undertake a fund raising exercise involving a Rights Issuance of RM200 million.

In a filing to Bursa Malaysia Securities Bhd on Monday, KNM said the definitive terms for the Rights Issue would be determined by the Board of the Company subject to the advice of the Company’s Corporate Advisors to be appointed in due course.

Silver Bird Group Bhd’s proposed group restructuring scheme is expected to be finalised by the middle of May 2012 said Silver Bird Group’s chairman of audit committee, Richard Azlan Abas after the company’s AGM on Monday.

“The group restructuring plan will include, but not limited to, capital reduction, share consolidation, rights issue and debt restructuring. However, it is still in its preliminary stage and very fluid. We hope to finalise the proposed plan once we get an agreement from the major stakeholders by the middle of May.” he added.

When asked about the amount of rights issue which the company intends to raise for its restructuring plan, Richard said it would amount to RM60 million.



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Stocks to watch WZ Steel, Pensonic, Bumi Armada, Chin Teck

KUALA LUMPUR (APRIL 28): The FBM KLCI is expected to trend lower next week in response to rising solvency risk and borrowing cost in Europe (Spain & Italy) and rising local political uncertainties.

On the local scene, the outcome of the Bersiih 3.0 rally, and how the ruling Barisan Nasonal government handles the issue will also play heavily on investor sentiment.

U.S. stocks advanced on Friday and posted their best weekly gains in a month as stronger-than-expected earnings from Amazon.com and Expedia Inc reinforced confidence in corporate performance, according to Reuters.

Wall Street managed a fourth day of gains as the strong earnings season outweighed a surprisingly weak reading on first-quarter economic growth, it said.

Next week's release of a slew of economic data on the U.S. labor market and the beginning of the latter half of corporate earnings will be keenly watched to see if they are enough to allow stocks to break above the recent trading range, it said.

Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said he expects the FBM KLCI to trend lower in response to rising solvency risk and borrowing cost in Europe (Spain & Italy) and rising local political uncertainties.

“Despite positive comments from the USA Fed on possible monetary stimulus, a weaker than expected read on April Euro zone sentiment and rising European bond yield seemed to bring struggling European growth and debt concerns back into focus.

“Following Standard & Poor's downgrade of Spain's long-term sovereign credit rating by two notches (from A to BBB+ with a negative outlook), we expect more selling to weigh on European equities and increase the risk-off appetite for German Bunds and USA Treasuries,” he said.

Among the stocks that could be in focus are WZ Steel Bhd, PENSONIC HOLDINGS BHD [], Bumi Armada Bh and CHIN TECK PLANTATION []S BHD [].

WZ Steel Bhd is acquiring an industrial land in Indonesia’s West Java province for IDR 14.58 billion (RM5.02 million) to build a new factory in the neighbouring country.

In a statement Friday, WZ Steel said it is buying the leasehold tract within the Delta Silicon industrial area in the Lippo Cikarang enclave, from Indonesia-based property developer PT Lippo Cikarang Tbk.

Pensonic Holdings Bhd posted a third quarter net loss on higher as higher revenue failed to mitigate the impact of rising operating cost for the electrical and electronic appliances manufacturer.

Pensonic said net loss came to RM1.14 million in the quarter ended February 29, 2012 against RM896,000 a year earlier. Revenue grew 7% to RM85.08 million from RM79.65 million.

“The decrease was mainly due to lower margin recorded as a result of active promotional activities carried out and also the increases in administration, selling and distribution expenses in current quarter for future expansion,” it said.Bumi Armada Bhd in response to news reports that Ananda was paring down his stake said that enquiries with its major shareholders and directors, it clarified that Ombak Damai Sdn Bhd, Wijaya Sinar Sdn Bhd and Karisma Mesra Sdn Bhd had participated in a book-building exercise conducted by CIMB Investment Bank Bhd .

It said Ombak Damai had participated with 9 million, while Ombak Damai and Karisma Mesra with a joint 284 million shares respectively, accounting for a total of 293 million Bumi Armada shares.

The Edge Financial Daily on Friday reported that Tycoon Ananda Krishnan and his bumiputera partners will sell roughly 15% of offshore services provider Bumi Armada Bhd in private placements to local and foreign institutional investors in a deal that will raise close to RM2 billion.

Financial executives involved in the placement told The Edge Financial Daily that the sale of roughly 440 million shares in Bumi Armada would cut the joint holdings of Ananda and his bumiputera partners to 55% in the company.

Chin Teck net profit for the second quarter ended Feb 29 2012 fell 33.58% to RM9.19 million from RM13.83 million a year earlier due mainly to substantial decrease in profit contribution from its associates.

The company said on Friday that its revenue for the quarter fell 2.44% to RM28.22 million from RM28.93 million in 2011 due to lower average selling prices of FFB, crude palm oil and palm kernel.

For the six moths ended Feb 29, Chin Teck’s net profit fell to RM24.48 million from RM2998 million on the back of revenue of RM60.69 million.



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Stocks to watch Eversendai, Boustead, Tenaga, Genting Plantations

KUALA LUMPUR (April 14): Malaysian shares are anticipated to rise next week and analysts expect the FBM KLCI to extend its rally higher supported by positive sentiment on good Q1 earning result, further stimulus from global central banks, easing borrowing costs in Europe and stronger than expected China’s economic recovery.

Investor jitters at the regional markets over rising tensions in the Korean Peninsula dissipated with North Korea’s botched missile launch.

However, euro zone crisis is flaring up and debt auctions by safe-haven Germany and current bad boy Spain in the coming week will provide a gauge how far investor sentiment has changed since the shock and awe of recent ECB liquidity injections has worn thin, according to Reuters.

Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said the impressive rebound made by China stock market (China Shanghai composite posted best-in-two-months daily performance last week) would give more upside momentum to the emerging markets including Malaysia.

“As China is the world's biggest importer of commodities, we reckon stronger Chinese stocks and weaker USA dollar will lead to more commodity buying (FTSE China climbed 4%, CRB Index up 1% and Dollar Index down 2% respectively) which in turn will benefit Malaysian stocks.

Among the stocks that could be in focus on Bursa Malysia are Eversendai Corp Bhd, BOUSTEAD HOLDINGS BHD [], TENAGA NASIONAL BHD [] and Genting PLANTATION []s Bhd.

Eversendai Corp will undertake a 193 million riyal (RM158 million) structural steel job for the railway station at King Abdul-Aziz International Airport in Saudi Arabia.

The company said last Friday that it ha been appointed as subcontractor for the project by Saudi Binladin Group Architecture & Building CONSTRUCTION [] Division.

Bosutead has roped in Luxembourg-based Ikano Holding SA as a joint venture (JV) partner to acquire prime Kuala Lumpur land where both companies intend to develop and manage a shopping centre.

Boustead last Friday said the JV would it to increase its portfolio of retail investment PROPERTIES [] and leverage on its expertise to jointly develop and manage a shopping centre in the Kuala Lumpur city centre location," Boustead said.

Ikano owns and runs IKEA retail outlets across South East Asia under a franchise agreement with IKEA System BV.

Tenaga could extend its gains on Monday on the back of its net profit rising more than four fold from a year earlier, as a RM2.02 billion fuel-cost compensation from the government and Petroliam Nasional Bhd mitigated the impact of costlier fuel to the state-owned utility's profits.

The stock rose 10 sen to close at RM6.61 last Friday.

Genting Plantations will acquire a controlling 63.2% stake in a joint venture (JV) company for US$116 million (about RM355 million), a move which will give the acquirer access to some 74,000 ha of oil palm plantation in Kalimantan, Indonesia.

In a statement to Bursa Malaysia on Friday, Genting Plantations said it would jointly own the Singapore-based JV entity Global Agripalm Investment Holdings Pte Ltd with Global Agrindo Investment Co Ltd which will hold the remaining stake. Global Agrindo is part of Indonesia-based Sin Tek Huat Group.



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Stocks to watch Hartalega, Ingress Corp, EITA, and oil gas-related

KUALA LUMPUR (April 7): The FBM KLCI could experience some pullback in the week beginning April 9, as the rally over the past two weeks may not be sustainable given overriding external factors.

World stock markets look poised to fall early next week and safe-haven government debt prices could rally after U.S. employment figures fell short of expectations on Friday, according to Reuters.

U.S. stock futures fell more than 1% and Treasuries prices rallied after U.S. payrolls grew by 120,000 in March, far below the expected gain of 203,000 jobs, it said.

MIDF Research head of equity Syed Muhammed Kifni said that although the FBM KLCI recorded a fresh all-time high of 1,609.33 points last week, the joy was short-lived as the local market was not spared by the global market sell-off.

He said the pullback in global risk assets was triggered by the release of the minutes of recent US Fed meeting, which were interpreted by many as the central bank signaling its hesitation on launching a fresh round of monetary stimulus as the economy improves.

“Additionally, the poor Spanish government bond auction only added fuel to proverbial fire.

“We view the pullback as a clear manifestation that the recent market rally was underpinned mainly by liquidity, rather than valuations,” he said

Syed Muhammad said that nonetheless the streak of net foreign buying of Bursa-listed shares continued unbroken this past week.

Bursa data shows that foreign investors had been net buyers for 35 consecutive trading days until last Thursday, he said.

“We thus see no reason to not to expect a continuation of the streak this week. Hence the underlying market sentiment should remain healthy so long as the liquidity flow into the market remains positive and we are confident that the FBM KLCI will regain the 1,600s level perhaps towards the later part of this week.

“Moreover, our external trade as well as industrial production figures due for release this week might potentially be key market movers. The consensus expectations are pointing towards all-around sequential improvements in the numbers,” he said.

Syed Muhammed said the immediate resistance and support levels for FBM KLCI were pegged at 1,610 points and 1,590 points respectively.

Meanwhile, Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said the FBM KLCI was now ripe for a pullback towards a lower sideways range of 1580-1600 level.

“We reckon the equity optimism will take a mild negative turn following a surprised absence of USA stimulus and Spanish revived fiscal concerns with the bond yields climbing to their highest level in five month (Spanish 10-Year bond rose to 5.8%).

“This has stoked concerns regarding the European debt crisis, boosted safe-haven appeal of the USA dollar and weighed on local risk-taking sentiment,” he said.

Among the stocks that could be in focus are HARTALEGA HOLDINGS BHD [], INGRESS CORPORATION BHD [], EITA Reources Bhd, and oil gas-related counters.

Hartalega is setting up a RM1.5 billion“next generation integrated glove manufacturing complex” (NGC) comprising 70 new high tech production lines.

The company said last Friday that its wholly owned subsidiary Hartalega NGC Sdn Bhd that was incorporated on March 29 is the designated corporate vehicle for the setting up of the NGC project, that is mainly involved in the production of rubber gloves to cater to fast rising global demand.

Ingress Corp Bhd will establish a switching station for TENAGA NASIONAL BHD [] (Tenaga) in a deal worth RM26.6 million. The 275-kilovolt station will be set up at Pantai Remis, Selangor.

In a filing to Bursa Malaysia Securities last Friday, Ingress said Tenaga had issued a letter of intent for the project to a joint venture between two subsidiaries of Ingress, namely, Multi Discovery Sdn Bhd and Ramusa Engineering Sdn Bhd.

Elevator manufacturer and distributor of electrical and electronics equipment EITA Resources Bhd, will be listed on Monday on the Main Board of Bursa Malaysia.

The group’s IPO entails a public issue of 23 million new ordinary shares and an offer for sale of 17 million ordinary shares, at an IPO price of RM0.76 per share.

Of the 23 million new shares, 6.5 million were allocated for public balloting and 3.5 million shares for eligible directors, employees and business associates of the Group.

Oil and gas stocks could attract some investor interest after RHB Research Institute Sdn Bhd on April 6 said it has an Overweight rating on the oil and gas sector and said it was positive on the sector following Petroliam Nasional Bhd’s (Petronas) statement on April 5 that the proposed Refinery and Petrochemical Integrated Development (RAPID) project, to be located in Pengerang, Johor, was progressing as scheduled.

The research house said on Friday that the statement was the closest indication yet that the RAPID would proceed as planned.



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KLCI closes higher but some pullback expected next week

KUALA LUMPUR (April 6): The FBM KLCI closed higher on Friday, while the few regional markets that were open for trade ended the day in negative territory, as investors stayed on the sidelines ahead of key U.S. jobs data.

China shares ended up 0.2 percent in thin volume on Friday, moving around a key psychological level as investors awaited a slew of economic data next week which could signal possible policy changes, according to Reuters.

The FBM KLCI closed 5.43 points higher at 1,598.87.

Gainers led losers by 457 to 248, while 324 counters traded unchanged. Volume was 1.28 billion shares valued at RM1.14 billion.

At the regional markets, the Shanghai Composite Index added 0.19% to 2,306.55, Taiwan’s Taiex gained 0.87% to 7,706.26, south Korea’s Kospi edged up 0.01% to 2,029.03 while Japan’s Nikkei 225 fell 0.81% to 9,688.45.

Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said the FBM KLCI was now ripe for a pullback towards a lower sideways range of 1580-1600 level.

“We reckon the equity optimism will take a mild negative turn following a surprised absence of USA stimulus and Spanish revived fiscal concerns with the bond yields climbing to their highest level in five month (Spanish 10-Year bond rose to 5.8%).

“This has stoked concerns regarding the European debt crisis, boosted safe-haven appeal of the USA dollar and weighed on local risk-taking sentiment,” he said.

DR Nazri said he also expects the bullish sentiment to take a pause after the Federal Reserve meeting minutes earlier this week indicated reduced prospects for more quantitative easing.

ON Bursa Malaysia, BAT was the top gainer and added 48 sen to RM55.46, Dutch Lady added 30 sen to RM35.80, Tradewinds PLANTATION []s and BLD Plantations rose 25 sen each to RM5.44 and RM9.40, Tradewinds up 18 sen to RM9.97, TDM 17 sen to RM4.95, SMPC and Naim Holdings 15 sen each to RM2.12 and RM2.05, Mulpha 14 sen to 60 sen and MAHB 13 sen to RM5.89.

Naim Indah Corp was the most actively traded counter with 149.52 million shares done. The stock rose 8.5 sen to 57 sen.

Other actives included Metronic, SuperComNet, Ariantec, CSL, Focus, Tiger Synergy, Green Ocean, Ingenuity Solutions and TMS.

Decliners included F&N, Batu Kawan, Shell, HUp Seng, Hong Leong Industries, Takaful, HDBS, Aeon and Tiong Nam Logistics.



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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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Stocks to watch Subur Tiasa, Amway, Poh Kong, Genetec , Perak Corp, Kein Hing

KUALA LUMPUR (March 24): The FBM KLCI is expected to trend higher in the weekbegining March 26, supported by local market defensiveness election hyped trading sentiment and bullish quartr-end window dressing.

World stocks rebounded on Friday, lifted by shares in energy and basic materials, as concerns about global growth were set aside by investors who saw further gains in this year's rally, according to Reuters.

Meanwhil, US stocks rose in light volume on Friday, boosted by rising energy and basic materials shares, and the S&P 500 continued to show resilience even as it posted its second negative week so far this year, it said.

Affin Investment Bank vice president and head of retail research Dr Nazri Khan said that despite the global weakness on negative manufacturing data from China, French and Germany, he expects the FBMKLCI to trend moderately higher next week, supported by local market defensiveness; election hyped trading sentiment and bullish quarter-end window dressing.

“We note that although most global indices trended lower late last week, the local benchmark closed higher and managed to stay resilient (KLCI up 0.6%, FTSE All World down 0.8% w-o-w) despite negative ideas of China economic contraction and rising recession concerns in the Europe.

“We believe such ideas are not new as market may have factored in eurozone recession and China slow down since late last year,” he said.

Nazri said that the overall feel was that the global market had rallied a long way and was now overbought –he said the FTSE All-World index sits less than 2% below last week’s near eight-month peak, when it had surged almost 13% year to date – hence it needs a breather to neutralize its overboughtness as well as new positive catalysts to propel it higher.

He said cheap liquidity would be the biggest catalyst in the near term, including Ben Bernanke‘s Fed promises to keep interest rates low until 2014 and the ECB decision to lend over $1 trillion (at 1% rates for a three year duration) to under-capitalized European banks will be the primary cushion for the market against unexpected distribution.

“Despite rising inflation risk due to higher oil price, there are rumours that several central banks such as Bank Of England, Swiss National Bank and Bank of Canada and even Bank Of India to play catch up with Fed and ECB (in pumping liquidity) which we think will be supportive for the local market,” he said.

As for the local front, we expect the quarterly portfolio rebalancing as the most important bullish drivers with a combination of premium investors, high end retail and institutional making large bets ahead of the anticipated stronger second half (which include the upcoming mega IPO such as Felda and anticipated election in the second quarter).

The fact that the local benchmark index has already inched up 3% year-to-date and 18% since the September 2011 low is a testimony of the local market defensiveness (in terms of shallower correction, low beta due to slim MSCI weightage, low foreign shareholding and resilient domestic earning driver) especially during global volatility.

“Further, we see most regional bourses have successfully breached the pre-Lehman crisis’ high (Jakarta Composite Index, Philippines Composite Index and Thailand SET Index at three year high) which in turn can be supportive momentum for FBM KLCI.

“On the technical front, momentum studies continue to trend higher despite entering overbought levels, suggesting more positive bias. Uptrend so far remains intact with FBMKLCI still holding above the 20, 50 and 200 moving average near 1,580-1,565 support level. The next area of resistance are pegged at 1,590 and 1,600 while support should come at 1,580 and 1,565 levels,” he said.

Among the stocks that could be in focus are SUBUR TIASA HOLDINGS BHD [], AMWAY (M) HOLDINGS BHD [], POH KONG HOLDINGS BHD [], Genetec TECHNOLOGY [] Bhd, Perak Corp Bhd, KEIN HING INTERNATIONAL BHD [].

Subur Tiasa’s earnings rose 10.5% to RM6 million in the second quarter ended Jan 31, 2012 from RM5.43 million a year ago, boosted by the stronger manufacturing sector.

Kenanga Investment Bank Bhd has initiated coverage on Amway with an “outperform” call and target price of RM10.94.

Poh Kong said the jeweler has fully settled its outstanding debt under a RM200 million Islamic bond scheme. The stock was down 0.5 sen to 56 sen.

Genetec, a contract manufacturer of industrial equipment, has secured RM27.9 million worth of jobs, of which, orders from the hard disk drive sector account for 90% or RM25 million of the total amount.

Meanwhile, Perak Corp is collaborating with Sanderson Project Development (M) Sdn Bhd to develop and operate an animation theme park in Ipoh. The project includes hotel and high-rise residential portions. Shares of Perak Corp fell one sen to RM1.39 on Friday.

Finally, industrial component assembler Kein Hing reported a net loss of RM292,000 in the third quarter ended Jan 31, 2012 from a net profit of RM1.55 million a year earlier as revenue was down 8% to RM37.99 million. Kein Hing closed unchanged at 51 sen last Friday.



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Stocks to watch EP Manufacturing, Pharmaniaga, telcommunications, OSK Property

KUALA LUMPUR (March 17): Shares at the local stock market are expected to trend higher next week in line with the improved sentiment at global markets,

Global stocks advanced on Friday, with a benchmark U.S. equity index trading above an important level reached earlier this week, after news of subdued inflation bolstered investment sentiment and helped fuel a retreat in government debt markets, according to Reuters.

A report on U.S. consumer prices in February eased a hawkish view on interest rates, leading the dollar to fall and helping spur the sell-off in bonds. Improving U.S. economic data had recently sparked speculation the Federal Reserve would raise rates sooner than its time frame of late 2014, it said.

The Dow Jones industrial average was down 5.34 points, or 0.04 percent, at 13,247.42. The Standard & Poor's 500 Index was up 1.24 points, or 0.09 percent, at 1,403.84. The Nasdaq Composite Index was down 1.60 points, or 0.05 percent, at 3,054.77.

Affin Investment Bank vice president and head of retail research Dr Nazri Khan said the FBM KLCI was likely to trend higher on global equity upside momentum (FTSE All-World index at best level since August 2011), drop in oil price and strength in Wall Street (Dow Jones at best level since January 2008 following four year low weekly jobless claims, positive FOMC meeting comments and favorable bank stress test results).

Meanwhile, MIDF Research head of equity Syed Muhammed Kifni said foreign buying of Bursa-listed shares continued unrelenting this past week.

“Bursa data shows that foreign investors had been net buyers for 20 consecutive trading days until last Thursday, and we expect a continuation of the “risk-on” mood in the coming week,” he said.

Syed Muhammed said that in the US, a spate of housing numbers were scheduled to be announced next week and consensus expectations were pointing towards further improvements in the housing sector.

On the domestic front, the CPI number due for release in the middle of next week might also potentially be a key market mover, he said

He said the local inflation barometer was expected to further decline from the 2.7% year-on-year recorded in the earlier month.

“Hence barring ominous developments either internally or from the external front, we are sanguine on the ability of the KLCI to retest its all-time high of 1,597 points.

“Technically, we pegged the resistance and support levels for KLCI next week at 1,600 points and 1,560 points respectively,” he said.

Among the stocks that could be in focus on Bursa Malayssia are EP MANUFACTURING BHD [], PHARMANIAGA BHD [], telecommunications, OSK PROPERTY HOLDINGS BHD [].

EPMB is acquiring highway concession owner Maju Expressway Sdn Bhd for RM1.15 billion as part of its plan tp expand its highway concession business.

The move will see EPMB, an automotive parts manufacturer making a foray into the toll road business, and roping in new shareholders into the company.

The firm will acquire Maju Expressway from Bright Focus Sdn Bhd and Ulimas Sdn Bhd under a cash and stock deal. Bright Focus is a unit under the Maju Group of Companies.

Telcos could be infocus after the Malaysian Communications and Multimedia Commission (MCMC) said that it has not issued a memo to telecommunication industry players instructing them to be prepared for a proposed six per cent tax on prepaid phone subsribers.

The telecommunications regulator issued this clarification la Friday following a news report on a Hong Leong Investment Bank Research note on prospects for the local telecommunications industry.

Pharmananiaga plans to expand its market in the Middle East and Southeast Asia, particularly, Saudi Arabia, Indonesia, Myanmar and Vietnam.

Its chairman Tan Sri Lodin Wok Kamaruddin said the company was looking for growth opportunities in these countries including through mergers and acquisitions.

“We are exploring opportunities in Saudi Arabia as it is a growing market,” he sid last week.

OSK Property will raise some RM 24 million from a proposed rights issue which comes with free detachable warrants to finance its capital needs. Subscribers of the rights shares will also be entitled to bonus units from the company.



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Affin raises Eversendai TP to RM2.33

KUALA LUMPUR (March 16) : Affin Investment Bank Bhd has raised its target price for CONSTRUCTION [] firm Eversendai Corp Bhd from RM2.30 to RM2.33.

This follows an upward revision of between 1.2%, and 3.7%, in Affin’s net profit forecast for Eversendai in the FY12 to FY14 period, the research firm said in a note on Friday.

Affin believes Eversendai shares are under-valued. Despite steady margin and profits, Affin said the stock is still trading at a price-to-earnings ratio of 10.1 times 2012 earnings versus the sector ‘s average of 13.5 times.

Eversendai shares traded unchanged at RM1.67.



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Stocks to watch: HWGB, SKP, MSC, Gefung

KUALA LUMPUR (March 10): After a bumpy ride over the past week, which saw the FBM KLCI retracing the most in 2012, the market could receive a boost from firmer external developments, especially from the US markets.

Affin Investment Bank head of retail research, Dr Nazri Khan expected the KLCI to advance, underpinned by local projects newsflow, stronger US jobs data and rising optimism that Greece would avoid a disorderly default.

“Despite the last three days broad sell-off (Tuesday-Thursday), we generally view the distribution as a healthy correction to neutralise the overbought market condition (five months of KLCI uptrend with 12.5% gains since October 2011),” he said.

Nazri said based on his technical analysis, since the KLCI is holding above the 20, 50 and 200-day moving average is an indication the longer-term trend is still positive with KLCI aiming for 1,600 level as the ultimate near term target.

On Wall Street, for the week ahead, Reuters reported that US stocks may still sell off in the near term, but it's not likely to be a drastic decline.

Reuters said much of the optimism has come from signs of further improvement in the US economy. Friday's stronger-than-expected jobs report - the most widely watched U.S. economic indicator - gave the stock market more wind in its sails.

The S&P 500 ended the week with a gain of 0.1%, even though on Tuesday, it marked its weakest day so far in 2012 on concerns about a default by Greece on its country's debt.

Investors had also brushed aside Friday's news of a technical default by the country was mostly brushed aside by investors.

Reuters reported that while concerns about Greece aren't going away, the worst-case scenario has been averted, and the payroll report is another reason for investors to be confident.

As for Malaysia, among the stocks to watch on Monday are HO WAH GENTING BHD [] [] (HWGB), SKP RESOURCES BHD [], Malaysia Smelting Corp Bhd (MSC), GEFUNG HOLDINGS BHD [] and DIJAYA CORPORATION BHD [].

HWGB, whose shares had seen very active trade, said it is not in talks to sell its tin mining business for US$75 million (RM227 million) to Yunnan Tin Group.

HWGB said it was not negotiating with Yunnan Tin’s subsidiary Sino-Platinum Metals Co. Ltd to dispose of the business at this point in time.

A news report said Yunnan Tin had plans to buy HWGB’s tin mining business for US$75 million.

Meanwhile, The Edge weekly reported that the emergence of Dyson, the British innovative designer of electrical appliances, as a major new customer has launched a strong stream of earnings for SKP Resources.

MSC will rope in Optima Synergy Resources Ltd as a joint venture partner to undertake tin mining operations in Indonesia.

MSC signed a strategic alliance agreement with Optima Synergy, which is owned by Indonesian shareholders.

The deal will allow Optima Synergy to acquire up to 23% of MSC’s unit Bemban Corp Ltd for US$1.38 million, according to MSC. Bemban in turn has a 75% stake in PT Koba Tin which has secured a mining contract from the Indonesian government.

Gefung will not go ahead with the proposed joint venture for a mixed development project on 50.74 acres of land in east of Jakarta.

Gefung said the company and PT Greenworld Development “could not reach an agreement on the terms and conditions for the proposed project, the parties have mutually agreed to terminate the MoU with immediate effect”.

The Edge weekly reported that judging from the present share price movement, investors seem cautious about Dijaya’s proposal to acquire 73 PROPERTIES [] from major shareholder Tan Sri Danny Tan and family for an indicative consideration of RM948.7 million, mostly via the issuance of loan stocks.

BOUSTEAD HOLDINGS BHD [] sees its profit breaching the RM1 billion level within the next two years.

Deputy chairman/group managing director Tan Sri Lodin Wok Kamaruddin was quoted saying by Bernama that 2011 was a record year for the group.

“My personal target is that we’ll breach the RM1 billion profit level within the next two years. It could be this year or next year,” he said.

Lodin said Boustead would remain focused on PLANTATION []s, financial services, property, manufacturing and trading, pharmaceuticals and heavy industries.

In FY Dec 31, 2011, Boustead posted a pre-tax profit of RM831 million, up 14.43% from the RM726.2 million in FY10.



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Affin upgrades Sarawak Plantation Bhd to ADD, fair value raised to RM3.18

KUALA LUMPUR (March 9) : Affin Investment Bank Bhd has revised upwards its fair value for Sarawak PLANTATION [] Bhd shares from RM2.67 to RM3.18 and upgraded its recommendation for the stock from Reduce to Add. The stock closed at RM3 on Thursday.

In a note on Friday, Affin said the upward revision is in tandem with the research house’s move to raise its net profit forecast for Sarawak Plantation by between 19.1% and 26.2% for FY12 to FY14 period. Affin said the higher earnings forecast is based on the company’s higher fresh fruit bunch (FFB) growth assumptions and cost of production of between RM1,500 and RM1,600 a tonne and crude palm oil average selling prices of RM3,000 a tonne during the three year period.

“Based on latest management guidance, FFB production growth is now projected at 23% in FY12 and 14% in FY13 compared to our assumption of 12% and 8%, espectively,” Affin said.

The research house also said Sarawak Plantation’s forecast dividend payout offers an attractive net dividend yield of 5.4%.



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Stocks to watch: eBworx, UEM Land, CBIP, KLK

KUALA LUMPUR (March 3): With the FBM KLCI currently at overbought levels, investors ponder whether the FBM KLCI can reach the all-time high of 1,594.74 in July 2011.

On Friday, CIMB led the KLCI to a higher close, as the firmer blue chips galvanised market sentiment. The KLCI rose 10.33 points or 0.66% to 1,583.78.

A further upward trend could boost sentiment among smaller cap stocks, but this would also hinge on external factors from the eurozone and high oil prices which could stifle global growth.

On Wall Street, the S&P and Nasdaq notched their eighth week of gains out of the last nine, but momentum ran out on Friday as stocks ended the day lower in a thinly traded session.

Energy shares were the big losers in the broad decline, falling alongside crude oil prices, though other cyclical groups, including industrials and financials, also lost altitude.

Reuters said the Dow Jones industrial average dipped 2.73 points, or 0.02 percent, to 12,977.57 at the close. The Standard & Poor's 500 Index slipped 4.46 points, or 0.32 percent, to 1,369.63. The Nasdaq Composite Index shed 12.78 points, or 0.43 percent, to close at 2,976.19.

For the week, the Dow inched down 0.05 percent, while the S&P 500 rose 0.3 percent and the Nasdaq added 0.4 percent. On Tuesday, the Dow closed above 13,000 for the first time since May 2008, though it has subsequently struggled to maintain that level.

Affin Investment Bank head of retail research Dr Nazri Khan said on the technical front, the short term momentum might be overbought, but it was normal to expect the KLCI to stay at overbought level for an extended period of time.

“With the KLCI at seven months high, we see the bulls having the upper hand now with all oscillators pointing up accompanied by good trading volume (KLCI has rallied a respectable 62 points and 4% year-to-date with 1.6 billion shares average daily volume suggesting strong buyers underneath).

“The next FBMKLCI target should ultimately come in at July 2011 all-time-high of 1597 level. Short term supports meanwhile are seen at last week high and low near 1565 and 1550 level respectively,” he said in a note.

Meanwhile stocks to watch on Monday include EBWORX BHD [], UEM Land Bhd, CB INDUSTRIAL PRODUCT HOLDING [] Bhd (CBIP), KUALA LUMPUR KEPONG BHD [], ENVAIR HOLDING BHD [] and CyPARK RESOURCES BHD [].

Hitachi Ltd had on Friday launched a conditional voluntary general offer for eBworx Bhd with an indicative purchase price of 90 sen a share. Its pre-suspension price was 78.5 sen.

eBworx said Hitachi had proposed to acquire the shares by making a conditional voluntary general offer to all holders of the shares with a minimum level of acceptances of no less than 85% of the nominal value of the shares excluding the treasury shares held by the company.

UEM Land has targeted a 40% increase in net profit under its key performance indicators for 2012. It was reported the property developer was also targeting a 50% increase in revenue.

UEM Land managing director and CEO Datuk Wan Abdullah Wan Ibrahim was quoted as saying the optimism was underpinned by the various launches this year with a combined gross development value of RM4.5 billion.

He was also quoted saying that for 2012, UEM Land was targeting to achieve RM3 billion in property sales with new residential and commercial property launches.

Meanwhile, The Edge weekly said palm oil mills builder and equipment manufacturer CB Industrial Product Holding is quietly transforming itself into a medium-size palm oil player with the expansion of its Indonesian PLANTATION [] venture.

CBIP would also attract interest as its one-for-one bonus issue goes ex on Monday.

KL Kepong plans to build three refineries in Indonesia to tap higher margins after Jakarta lowered its processed edible oil export taxes, Reuters reported.

With 56% of the its total 248,498 ha land bank in Indonesia, KLK’s plantations director Roy Lim was quoted saying there was little choice but to build the refineries there.

Envair plans to undertake a private placement of up to 35.56 million new shares or 30% of its paid-up to raise RM9.78 million or 27.5 sen per share. It last traded price was 29.5 sen.

The shares would be placed out to its major shareholder Deepak Jaikishan, the directors Mohd Anuar Mohd Hanadzlah and Mohd Shukri Abdullah and independent third parties.

Cypark Resources Bhd has proposed a private placement of up to 15.52 million shares or 10% of the paid-up share capital, to raise up to RM27.48 million.

The indicative issue price was RM1.77 per placement share, which would be a discount of about 10% to the five-day volume weighted average market price of the shares up to and including the last practical date of RM1.9585.

Poultry-based DBE Gurney Bhd has proposed to place out 67.33 million shares or 10% of the current paid-up share capital to raise funds for working capital.

It said the proposed private placement will enable the group to raise fund for working capital requirements, improve the group’s cash flow position and also to provide continued support to the group’s existing business and future business expansion.

DBE Gurney said assuming the placement shares were issued at an indicative issue price of 10 sen per placement share based on the par value of the shares, the proposed private placement is expected to raise gross proceeds of up to RM6.73 million.



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Stocks to watch: TM, Maxis, DRB-Hicom, SOP, MPHB

KUALA LUMPUR (Feb 25): Oil and gas and PLANTATION []s stocks could remain in focus following the high oil prices, providing some support for the local stock market and there could be some dividend-driven investors’ interest in stocks like Telekom Malaysia and Maxis Bhd.

The FBM KLCI, which had trailed its regional peers, saw analysts divided on the outlook for the week ahead.

A senior analyst with a bank-backed research house said the Malaysian stock market was expected to trade sideways with downside bias in the week ahead as the local performance pales in comparison with the regional markets.

He did not see any big surprises in the current October-December quarterly corporate results.

Among the companies to announce their results are PROTON HOLDINGS BHD [], MALAYSIAN AIRLINE SYSTEM BHD [] and SIME DARBY BHD [].

However, the head of retail research at Affin Investment Bank Dr Nazri Khan was a tad more upbeat for the local market.

“Going forward next week, we believe FBMKLCI is likely to have an upside bias on local market relative strength (holding up well despite the volatile February results season),” he said.

He cited external factors such as strong Germany resilience following the painful Greece’s bail-out deal, strong US equities, improved commodities price (crude palm oil, soybean, wheat, corn, gold start to track equities) and rising risk appetite in the global forex market (strong gains in emerging market currency including ringgit).

On Wall Street, the S&P 500 had on Friday closed at the highest level since before the collapse of Lehman Brothers in 2008, continuing a pattern of steady gains on signs of US economic recovery.

However, the continued high oil prices had also cast a pall of gloom over the flagging Euro zone economies with a recession seemed imminent for some weaker economies.

At Bursa Malaysia, Telekom Malaysia and Maxis Bhd would be among the top two stocks to watch on Monday after they announced dividends payouts last Friday while other stocks to watch include DRB-HICOM BHD [], SARAWAK OIL PALMS BHD [] and MULTI-PURPOSE HOLDINGS BHD [] (MPHB).

In a pleasant surprise, TM proposed a capital repayment to its shareholders of about RM1.073 billion or 30 sen per share and a final single tier dividend of 9.8 sen per share.

In terms of earnings, TM’s 49% increase to RM598.30 million in the fourth quarter ended Dec 31, 2011 was largely due to the recognition of deferred tax income on unutilised tax incentives in the current year quarter.

Maxis declared a fourth interim single-tier tax exempt dividend of 8.0 sen per share and also proposed a final single-tier tax exempt dividend of 8.0 sen per share for FY11. Its earnings increased 47.5% to RM900 million in the fourth quarter ended Dec 31, 2011 from RM610 million a year ago.

For FY11, it recorded 10% growth in net profit of RM2.527 billion versus RM2.295 billion in FY10. However, its revenue dipped to RM8.800 billion versus RM8.869 billion in FY10.

DRB-Hicom saw its earnings falling 27.6% for the third quarter ended Dec 31, 2011, to RM79.57 million from RM110.10 million as its automotive division was impacted by the severe floods in Thailand. Its revenue rose 5.6% to RM1.69 billion from RM1.60 billion a year ago.

Sarawak Oil Palms Bhd recorded a 60.35% increase in earnings to RM242.95 million in the financial year ended Dec 31, 2011 from RM151.51 million last year, boosted by higher sales and production of crude palm oil (CPO) and palm kernel. It said FY11 revenue increased by 60.7% to RM1.17 billion from RM728.16 million a year ago.

MPHB’s earnings more than doubled jumped to RM260.14 million in the fourth quarter ended Dec 31, 2011 (4Q2011) from RM85.21 million a year ago, boosted by an exceptional gain derived from the sale of PROPERTIES [] within the group. However, its revenue increased by 2.1% to RM913.91 million from RM894.45 million.



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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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KL stocks higher at midday

Improved investor risk appetite pushed Bursa Malaysia to extend gains at midday today, led by Tasek Corporation, Batu Kawan and Petronas Gas, dealers said.

Reversing losses incurred earlier this week, the FTSE Bursa Malaysia KLCI (FBM KLCI) at 12.30 pm rose 7.04 points to 1,557.53, after opening 5.14 points lower at 1,484.81.

Affin Investment Bank head of retail research Dr Nazri Khan said the performance of the local bourse was now steadier on the back of an improved market sentiment globally.

Robust economic data from the United States and renewed hope that Greece would secure a long-awaited bailout next week, lifted the performance of global equities markets.

"The uptrend today was in line with our expectation that the market will rebound after the correction that took place this week.

"We anticipated the correction phase. The risk appetite is now stable amid an improved regional sentiment," he told Bernama.

The Finance Index added 61.71 points to 13,833.65, the Plantation Index increased 35.819 points to 8,830.39 and the Industrial Index climbed 21.54 points to 2,912.79.

The FBM Emas Index went up 48.29 points to 10,828.64, the FBM Mid 70 Index edged up 46.20 points to 12,330.29 and the FBM Ace added 28.66 points to 4,684. Gainers outstripped losers 426 to 232 with 349 counters unchanged. A total of 1.213 billion shares worth RM880.561 million were traded.

Among active stocks, Tasek Corporation added 49 sen to RM8.49, Batu Kawan gained 34 sen to RM19.86 and Petronas Gas advanced 22 sen to RM16.58.

For the heavyweights, Maybank rose four sen to RM8.54, Sime Darby increased nine sen to RM9.63, Petronas Chemicals was unchanged at RM6.88 and CIMB went up two sen to RM7.27. -- Bernama



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

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

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

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

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

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



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Stocks to watch: KLCI to trend higher, 4Q earnings in focus

KUALA LUMPUR: Trading on Bursa Malaysia will resume today after the Prophet Muhammad and Thaipusam public holidays, and analysts are mixed on the prospects for the FBM KLCI going forward.

Investor sentiment for the local market this month would no doubt be influenced by the 4Q11 corporate earnings, which would be announced over the next fortnight.

MIDF Research’s Syed Muhammed Kifni in his 4Q11 earnings preview report said that early gauges supported the likelihood of slower growth in the final quarter of last year.

He said Public Bank Bhd, which released its 4Q11 results recently, recorded a stark reduction in on-year quarterly earnings growth of 3.6%.

“Moreover, other index heavyweights such as Sime Darby Bhd and IOI Corp Bhd are expected to report lower core earnings in 4Q11 as average CPO prices declined by 8.4% year-on-year to RM3,018 per tonne during the corresponding period.

“It is noteworthy that both the banking and plantation sectors represent more than half of FBM KLCI total weightage,” he said.

Nevertheless, Syed Muhammed said both MIDF Research’s and consensus FBM KLCI earnings growth for 2011 remained well within positive territory, supported by its good earnings growth performance in the first half of 2011.

“Furthermore, we expect KLCI earnings growth for 2012 to remain positive albeit only in single digit.

“While the current liquidity-driven rally may boost the market to up to 1,600 in the near term, at this juncture, we retain our year-end 2012 KLCI base case target at 1,530 points,” he said.

Meanwhile, Affin Investment Bank Bhd vice-president and head of retail research Dr Nazri Khan said that despite the holiday shortened session, the FBM KLCI would trend higher this week on continuous fund inflow, the stronger ringgit, good progress made in the eurozone, continuous US economic recovery and stronger global manufacturing data.

Given the solid January gains for the local equities (FBM100, FBM Fledgling, FBM SmallCap and FBM Ace gaining 1%, 5%, 8% and 10% respectively with smaller-caps outperforming larger-caps stocks), the FBM KLCI was likely to get more momentum and follow through into February, he said.

Nazri said punters would also likely continue churning penny stocks last week (with 90% of the top 40 active volume below RM1 including DBE, Focus, Tebrau, Nicorp and Compugates) even after the Chinese New Year celebration.

“We also expect growing hype on the upcoming flotation of Felda and Integrated Healthcare Holding IPO in 2Q12 (with estimated market cap of RM20 billion and RM8 billion respectively) to raise interest in the local plantation and healthcare stocks.

“Overall, we expect the market to continue rising with the 1,560-level as the near-term target,” he said.

Among the stocks that could be in focus this week are Genting Bhd, JCY International Bhd, AirAsia Bhd, Fraser & Neave Holdings Bhd and Naim Indah Corp Bhd.

Genting shares could come under some pressure after a bill that would have ushered in the largest gambling expansion in Florida history was withdrawn by its legislative sponsor last Friday.

The bill, which proponents said could lead to 100,000 new jobs for the state, faced a probable defeat at its first stop — the House Business and Consumer Affairs Subcommittee, according to Reuters.

Rules in the Florida House of Representatives prohibit the chamber from taking further action on a bill that has failed to pass at least one committee; so the measure is dead for 2012, it said.

Genting announced in May last year it was buying a 14 acre (5.7 ha) waterfront property in downtown Miami for US$236 million (RM710.4 million) and would build a mega-resort on the site, which currently houses the Miami Herald newspaper.

Shares of hard-disk drive (HDD) maker JCY extended their gains last Friday ahead of the release of the company’s earnings for the 1Q ended Dec 31, 2011 this week.

JCY in early January stated the group was likely to record a surge in earnings for the quarter ended Dec 31, 2011.

AirAsia’s joint venture with All Nippon Airways Co Ltd has obtained an air operators certificate (AOC) from the Japanese Civil Aviation Bureau.

“The AOC shall enable AirAsia Japan to operate aircraft in its fleet for commercial flights to international and domestic destinations,” AirAsia said last Friday.

F&N’s 1Q earnings fell 61% to RM41.74 million from RM107.08 million a year ago, due to the absence of contribution from the Coca-Cola business.

It said last Friday the earnings were also impacted by the different timing in the accounting of operating losses in Thailand due to the severe floods last year and the recovery under its business interruption insurance policy.

F&N said other factors were higher raw material costs, particularly for skimmed milk powder and sugar, and lower sales in Dairies Malaysia.

Meanwhile, Naim Indah Corp’s major shareholder Crest Energy Sdn Bhd is said to be in discussions with various parties to dispose of its shares. Naim Indah, however, said last Friday that no details of the proposed disposal, including the price, had been finalised.


This article appeared in The Edge Financial Daily, February 8, 2012.



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Beyond hospital healthcare services

Healthcare and pharmaceutical sector
Maintain overweight: Recently, we hosted a healthcare corporate luncheon and invited representatives from the Association of Private Hospitals of Malaysia, KPJ Healthcare Bhd, the Malaysia Healthcare Travel Council, and Pemandu’s healthcare unit to present their views on the healthcare industry in Malaysia.

The key commonality is the potential prospects of healthcare in Malaysia as the “the hidden jewel”, in view of the inherent demand growth (both domestic and regional) and Malaysia’s strong cost competitiveness.

With the government’s target of becoming a developed nation by 2020, there has been an apparent change in lifestyle. We believe a rise in a society’s level of wealth will result in: (i) a natural increase in the diseases of the affluent; (ii) a rise in general healthcare awareness; (iii) a longer life expectancy; and (iv) an increase in the use of healthcare insurance. In turn, there will be an overall increase in demand for private healthcare services. This is positive for KPJ given its large hospital network across Peninsular Malaysia and Sabah and Sarawak.

We believe a key growth driver for the healthcare industry will be the healthcare travel segment. Given Malaysia’s geographical location, we see the strong potential in this growing industry underpinned by: (i) relatively lower healthcare costs; (ii) excellent healthcare services (no long queues, specialised doctors, world class facilities); and (iii) many ideal holiday destinations. We think there is further upside within this segment taking into account of: (i) a growing Asian market — population and wealth; (ii) the advantage of Malaysia being a Muslim majority country; (iii) government support; (iv) relatively stable political environment; and (v) relatively fewer natural disasters. In addition, there are other healthcare-related segments (education and care for the aged) that could be potential growth drivers for the industry.

We maintain our “overweight” call on the sector and we believe KPJ is the best proxy to the Malaysian healthcare industry, being the only major listed healthcare service provider (that offers reasonable market size and trading liquidity).

Year-to-date, KPJ’s share price has appreciated by 4.9% and outperformed the KLCI by 4.5%, validating our conviction in its defensive growth characteristics.

Despite the good share price performance, we believe KPJ is still undervalued (price-earnings ratio [PER] of 17 times, 15% discount to regional peers).

We maintain our “buy” rating on KPJ with an upgraded target price of RM5.85 pegged to a higher PER target of 20 times on CY12 earnings per share (previously RM5.27 based on 18 times CY12 earnings per share).

We believe the increased PER target is fair given the company’s: (i) defensive growth; (ii) new growth drivers from its new ventures (nursing school, aged care facilities and Indonesia); and (iii) scarcity premium listing of Integrated Healthcare Holdings Sdn Bhd (IHH) which will lead to further price discovery. — Affin IB Research, Feb 3


This article appeared in The Edge Financial Daily, February 8, 2012.



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Utilities: Revealing the bidders for new plant-ups

Utilities sector
Maintain neutral: The Energy Commission has unveiled a list of 47 prospective bidders, comprising local and foreign firms, for the development of new combined-cycle power plants in the country. This follows the commission’s recent issuance of “notice for expression of interest” for a total plant-up of 4,500MW of new generation capacity in Peninsular Malaysia.

Among the local parties bidding for the combined-cycle power projects are Tenaga Nasional Bhd (TNB), Tanjong Energy Holdings Sdn Bhd, YTL Power International Bhd (YTLP), Petroliam Nasional Bhd (Petronas), Sime Darby Energy Sdn Bhd, Malakoff Corp Bhd and Ranhill Power Sdn Bhd. The foreign parties include Samsung C&T Corp, Marubeni Corp, Siemens Project Ventures, Mitsubishi Corp, Mitsui & Co, Daewoo International Corp and Korea Electric Power Corp. In line with the government’s policy, foreign participation in a consortium is capped at 49%.

The next stage is for a pre-qualification of interested parties — with the pre-q document to be issued by early February this year. We are positive on the level of transparency attempted by the regulator to provide a level playing field and award contracts to the least-cost unit generator. From a recent meeting with the regulator, we understand that the first phase of plant-up (from a total of 4,500MW of generation capacity) will include two times 700MW gas-fired power plants slated for commercial operation by 2016/17. Importantly, the two times 700MW power plant to be awarded by the Energy Commission will be located at a brownfield site already identified by the regulators. We believe the potential sites are Prai in Penang, Pasir Gudang in Johor and Klang, Selangor. All these sites are currently owned by TNB with existing gas-fired power plants in operation (YTLP currently operates in Pasir Gudang). We also understand that while TNB is an interested bidder in the 4,500MW plant-up exercise, in the event it does not emerge as the least-cost producer, a land lease agreement will be extended to the winner of the new power plant.



All in, we see opportunities for the likes of YTLP, TNB, Tanjong plc (unlisted) and Malakoff (51%-owned by MMC Corp Bhd) to increase their existing generation capacity. Due to the nature of the competitive bidding currently undertaken by the Energy Commission, project internal rates of return will likely be at a level similar to overseas projects (low teens) and therefore, the incremental impact on net asset values will be far less than past projects, albeit being positive.

Maintain “neutral” on the sector. The sector as a whole trades at 16.1 times CY12 earnings — above market valuations. This, we believe, fairly reflects the sector’s liquidity and large market capitalisation representation. For yield exposure, we like YTLP. TNB (“reduce”, target price: RM6.12) may see choppy days ahead (until after the general election) in the absence of outright fuel volume and price commitment from the regulator. — Affin IB Research, Jan 30


This article appeared in The Edge Financial Daily, January 31, 2012.



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