CIMB Research upgrades tech sector to Trading Buy

KUALA LUMPUR (March 30): CIMB Equities Research is upgrading the tech sector from Underperform to Trading Buy as sentiment is turning positive, helped by a better book-to-bill ratio.

In its outlook report issued on Friday, it said the sector was not an outright Overweight as 1Q12 may be a weak quarter, similar to 4Q11.

“In light of our recent semicon sector upgrade, we now have three Trading Buys(JCY, MPI, and Unisem) and two Neutral calls (Jobstreet and Uchi). We raise our target prices for JCY, MPI and Unisem but lower our target price for Jobstreet and Uchi. Our top picks are Unisem and JCY,” said CIMB Research.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Blue chips cautious in early trade, eyes on Greece again

KUALA LUMPUR (Feb 21): Blue chips on Bursa Malaysia slipped in early trade on Tuesday as investors awaited the outcome of a 130 billion ero rescue for Greece.

Reuters reported that Euro zone finance ministers were expected to approve the rescue plan with strict conditions after months of uncertainty that has shaken the currency bloc, although work remained to be done to make the numbers add up.

At 9.30am, the FBM KLCI was down 1.16 points to 1,559.41. Turnover was 282.20 million shares valued at RM133.63 million. However, gainers led losers 174 to 161 while 238 stocks were unchanged.

Among the decliners were Esso, down 12 sen to RM3.64 after its earnings fell. CI Holdings lost seven sen to Rm1.26, Top Glove six sen to RM4.86, KLK also six sen to RM24.08 and Bursa Malaysia five sen to RM7.35.

Among the lower liners SPB lost 10 sen to RM3.61, Jobstreet five sen to RM2.16 and KKB four sen to RM1.71.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

KLCI extends loss at mid-morning as investors stay on sidelines

KUALA LUMPUR (Jan 31): The FBM KLCI extended its losses at mid-morning on Tuesday, albeit marginally as investors stayed on the sidelines ahead of the Federal Territories day holiday on Wednesday that would see the local stock market closed.

The FBM KLCI shed 1.31 points to 1,512.24 at mid-morning, weighed by select blue chips.

Gainers trailed losers by 206 to 214, while 263 counters traded unchanged. Volume was 336.38 million shares valued at RM209.43 million.

Meanwhile, Asian shares and the euro struggled on Tuesday as stumbling talks on Greek debt restructuring reignited concerns over funding in other highly indebted countries, with markets starting to worry that Portugal might need a second bailout, according to Reuters.

At the regional markets, Japan’s Nikkei rose 0.43% to 8,831.00, Hong Kong’s Hang Seng Index up 0.93% to 20,348.00, the Shanghai Composite Index gained 0.41% to 2,294.42, Taiwan’s Taiex rose 0.85% to 7,470.51, South Korea’s Kospi added 0.88% to 1,957.55 and Singapore’s Straits Times Index edged up 0.13% to 2,891.94.

BIMB Securities Research on Tuesday said that unresolved negotiation over Greece’s debt remains as the main obstacle for many equity markets.

There was some progress within the EU as most countries had signed a financial pact to strengthen the region’s financial standing, it said in a note.

It said investors were now more risks tolerant as many would still prefer to accumulate stocks on weaknesses, as reflected by the Dow Jones Industrial Average’s intra-day rebound erasing earlier losses to end the session 7 points lower.

The research house said as for European bourses, selling continued to hinder performances as most closed lower.

As expected, regional bourses succumbed to bouts of profit taking following a weak opening in Europe with no fresh catalysts in sight, it said.

“For Malaysia, the FBM KLCI broke its immediate resistance of 1,515 to end the day with a 7 points loss at 1,513.

“We expect the index to remain rather flat today from the lack of fresh leads,” it said.

Meanwhile, Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients Tuesday said the FBM KLCI’s resistance areas of 1,513 and 1,530 would cap market gains, whilst weaker support areas may be located at 1,493 and 1,510.

“Due to the US markets’ mildly negative tone last night, we could be in for yet another range bound trading day before the City Day holiday tomorrow,” he said.

On Bursa Malaysia, BAT was the top loser at mid-morning and fell 28 sen to RM49.10; PPB fell 18 sen to RM16.72, Perstima 13 sen to RM3.77, MPI 12 she to RM3.56, Hong Leong Bank 10 sen to RM11.40, JobStreet, Tenaga and Petronas Dagangan down eight sen each to RM2.10, RM5.89 and RM17.62, while TSR Capital fell six sen to 87 sen.

Gainers included Glenealy, Malayan Flour Mills, Petronas Gas, Mudajaya, Coastal Contracts, Triplc, Plenitude, CBIP and Aeon, while the actives included DBE Gurney, DRB-Hicom, TMS, Maybulk, Mudajaya and Coastal warrants.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Weaker job market will affect JobStreet this year

JobStreet Corp Bhd (Jan 12, RM2.08)
Maintain hold with revised target price of RM2.40 from RM2.30: Hiring normally slows substantially towards the end of the year. We estimate 4Q11 will register 146,000 total job postings and RM28 million turnover (-2% year-on-year [y-o-y], -20% quarter-on-quarter [q-o-q]), compared with 3Q11 with 182,000 job postings and RM36 million turnover.

Net margin is also expected to soften to 30% (3QFY11: 32%) due to higher marketing costs and lower average selling price (ASP) due to competitive pricing. Separately, JobStreet had been consistently paying dividends in recent quarters, and we are expecting 2.65 sen dividend per share (DPS) in 4QFY11, in line with our 50% dividend payout assumption for FY11.

We remain conservative about the employment outlook in 2012, and expect JobStreet to register RM126 million revenue (-8% y-o-y) and RM43 million net profit (-9%) on the back of circa 589,000 job postings (versus 683,000 in FY11).

We do not expect the situation to be as bad as during the 2008/09 economic crisis, when FY09 sales fell to RM92 million (-10% y-o-y) with circa 396,000 job postings.

The drop in FY12 job postings and profit is mainly due to a higher base and profit margins in FY11 (as the economy rebounded and created higher employment opportunities). Nevertheless, FY12F revenue and job postings are still higher than FY09 and FY10.


We maintain our “hold” call for JobStreet with a revised discounted cash flow-based target price of RM2.40 (from RM2.30).

Downside risk will be supported by an expected 50% dividend payout. Seek’s 80% stake in JobsDB (JobsDB has 20% put option) and 22% stake in Jobstreet may pave the way for an M&A. Based on the last transacted pricing of 22.1 times enterprise value per earnings before interest, tax, depreciation and amortisation (EV/Ebitda) for JobsDB, Jobstreet is worth RM3.50 per share. — HwangDBS Vickers Research, Jan 12


This article appeared in The Edge Financial Daily, January 13, 2012.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Asian markets fall on Eurozone fears, KLCI snaps winning streak

KUALA LUMPUR (Dec 19): The FBM KLCI snapped its positive run on Monday, in line with the fall at key regional markets, on worries that credit ratings downgrades of some European countries could hamper any progress towards resolving the region’s debt crisis.

At mid-morning, the FBM KLCI fell 0.60 point to 1,465.62.

Losers edged gainers by 194 to 170, while 196 counters traded unchanged. Volume was 402.72 million shares valued at RM185.43 million.

Asian stocks fell on Monday on fears possible credit ratings downgrades of several European countries could derail progress towards resolving the euro zone's debt crisis, while the euro steadied after its worst weekly performance in three months, according to Reuters.

At the regional markets, Japan’s Nikkei 225 fell 0.83% to 8,332.07, Hong Kong’s Hang Seng Index lost 1.63% to 17,986.54, the Shanghai Composite Index was down 1.53% to 2,190.89, Taiwan’s Taiex fell 1.74% to 6,667.36, Singapore’s Straits Times Index was down 1.54% 2,618.31 and South Korea’s Kospi lost 2.42% to 1,795.35.

Fitch Ratings had warned on Friday it may downgrade France and six other euro zone countries, saying a comprehensive solution to the region's debt crisis was "technically and politically beyond reach".

Fitch also revised the outlook on France's top-notch rating to negative, saying the downgrade was not imminent but could come in two years.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients on Monday said the local market remained mildly positive despite the volatile global markets last week.

Some local institutional blue chip buying on Thursday and Friday led the index up in fairly lack lustre trading, he said.

The weaker support areas for the FBM KLCI are in the 1,424 to 1,460-zone. The next resistance levels of 1,466 and 1,511 will see heavy liquidation activities, he said.

Lee said the tone of the global indices was still unstable and that Eurozone worries on how to tame their debt crisis persisted, with Fitch stating that a comprehensive deal was “beyond reach”.

“There could still be inherent price volatility in the next week before the global markets wind-down for the Christmas and New Year holidays in late December,” he said.

Among the decliners at mid-morning, Carlsberg fell 20 sen to RM8.46, JT International lost 18 sen to RM6.76, JobStreet was down 15 sen to RM2.35, LPI Capital and F&N down 10 sen each to RM13.30 and RM18.26, Hartalega lost nine sen to RM5.52, while CCM, Keck Seng and Batu Kawan lost eight sen each to RM1.57, RM4 and RM17.28 respectively.

Meanwhile, gainers included BAT, Nestle, Amway, Bosutead, BHIC, Far East, SOP, Pintaras and Gamuda.

The actives included Wijaya, Boustead, Versatile, JCY and Utopia.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

KLCI closes lower but narrows losses

KUALA LUMPUR (Dec 13): The FBM KLCI narrowed its losses on Tuesday, but investor sentiment across the region remained jittery as the Eurozone debt crisis and fear of credit downgrades in that region kept investors on the sidelines.

The FBM KLCI close 1.71 points lower at 1,465.39. The index had earlier fallen to its intra-morning low of 1,457.31.

Losers edged gainers by 386 to 344, while 315 counters traded unchanged. Volume was 1.83 billion shares valued at RM1.39 billion.

Meanwhile, European shares rose on Tuesday as investors bought up beaten-down stocks following sharp falls on Monday after a plan outlined at last week's EU summit for stricter budget rules failed to ease worries about the region's debt crisis, according to Reuters.

Gains, however, are likely to be short-lived on concern about credit downgrades after Moody's Investors Service said its ratings for all EU member states would be reviewed in the first quarter of 2012 as well as eight Spanish banks, it said.

Also, market activity is likely to be subdued ahead of the release of US retail sales for November due out later and the outcome of the Federal Reserve's FOMC meeting, though no change in U.S. interest rates is expected, it said.

At the regional markets, the Shanghai Composite Index fell 1.87% to 2,248.59, South Korea’s Kospi lost 1.88% to 1,864.06, Japan’s Nikkei was down 1.17% to 3,292.79, Taiwan’s Taiex lost 0.76% to 6,896.31, Hong Kong’s Hang Seng Index fell 0.69% to 18,447.17 and Singapore’s Straits Times Index.

On Bursa Malaysia, JobStreet was the top loser and fell 28 sen to RM2.50; PPB lost 24 sen to RM16.36, NSOP down 20 sen to RM5.36, Genting 19 sen to RM10.64, Guan Chong 15 sen to RM2.15, DKSH 14 sen to RM1.59, Sungei Bagan and Genting PLANTATION []s 13 sen each to RM2.82 and RM8.15, while MISC was down 12 sen to RM5.48.

Sanichi was the most actively traded counter with 170.3 million shares done. The stock added 5.5 sen to 23 sen.

Other actives included Utopia, Proton, warrants of MAS, BIMB, MBSB and Affin respectively.

Among the gainers, BAT added RM1.50 to RM48.70, GAB and KLK up 70 sen each to RM12.98 and RM23.10, Dutch Lady 42 sen to RM26.40, HLFG 38 sen to RM11.70, Carlsberg 31 sen to RM8.46, Orient 29 sen to RM5.30, JT International 24 sen to RM6.92, F&N 22 sen to RM18.22 and Petronas Dagangan 20 sen to RM17.38.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

KLCI pares down losses at mid-day

KUALA LUMPUR (Dec 13): The FBM KLCI pared down some of its losses at the mid-day break on Tuesday on some mild bargain hunting, in line with most of the key regional markets that also somewhat steadied.

At 12.30pm, the FBM KLCI was down 0.26% or 3.86 points to 1,463.24, weighed by losses at banks and select blue chips. The index had earlier fallen to its intra-morning low of 1,457.31. Losers led gainers by 354 to 249, while 290 counters traded unchanged. Volume was 952.5 million shares valued at RM596.38 million.

The ringgit weakened 0.66% to 3.1797 versus the US dollar; crude palm oil futures for the third month delivery rose RM19 per tonne to RM3,018, crude oil added 13 cents per barrel to US$97.60 while gold fell US$10.88 an ounce to US$1,655.70.

At the regional markets, Japan’s Nikkei fell 1.02% to 8,565,45, Hong Kong’s Hang Seng Index lost 0.87% to 18,413.52, the Shanghai Composite Index was down 1.33% to 2,261.15, South Korea’s Kospi lost 1.34% to 1,874.36, Taiwan’s Taiex fell 0.73% to 6,898.36 and Singapore’s Straits Times Index shed 0.49% to 2,688.60.

On Bursa Malaysia, Tahps was the top loser this morning and fell 38 sen to RM4.10; JobStreet lost 28 sen to RM2.50, PPB down 24 sen to RM16.36, Genting 20 sen to RM10.62, Apollo, Sungei Bagan and Genting PLANTATION []s fell 13 sen each to RM2.86, RM2.82 and RM8.15 respectively, while MISC and Aeon Credit fell 12 sen each to RM5.48 and RM6.26.

Among the banking stocks, CIMB lost 10 sen to RM6.85, Public Bank, RHB Capital and Hong Leong Bank fell two sen each to RM12.66, RM6.88 and RM10.54 respectively, while AMMB shed one sen to RM5.85.

GAB was the top gainer and added 70 sen to RM12.98; Dutch Lady was up 68 sen to RM26.66, Nestle and KLK up 38 sen each to RM52.28 and RM22.78, Carlsberg 34 sen to RM8.49, JT International 26 sen to RM6.94, Tradewinds 23 sen to RM10.16, HLFG 22 sen to RM11.54, Proton 21 sen to RM4.44 and F&N was up 18 sen to RM18.18.

Meanwhile, the actives included Proton and DRB-Hicom warrants, MAS warrants, Sanichi and BIMB warrants.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Semiconductors weak with a challenging outlook

Semiconductor sector
Downgrade to underweight: We downgrade the semiconductor sector from “neutral” to “underweight” due to the de-rating catalysts of no imminent recovery in demand, more interest in defensive sectors and a more challenging outlook. We lower our target price for Unisem (M) Bhd but raise our target price for JobStreet.com. Our top pick is JCY International Bhd.

Despite the deteriorating external environment, the 3Q11 results season saw improvement as there were two outperformers and only two underperformers this time around. This contrasted with the 2Q11 results season when there were three underachievers and no outperformer.

Once again, semiconductor stocks provided the main source of disappointment, with faltering demand the culprit this time around. Utilisation rates did not materially improve in 3Q11 and semiconductor players had difficulty filling up capacity. Unisem plunged into a core loss in 3Q11 from a small profit in 2Q11 as it was affected by slowing demand and poor utilisation rates. Malaysian Pacific Industries Bhd was also buffeted by the challenging external environment. It fell into a loss from a small gain the quarter before.

Non-semiconductor stocks were the star in 3Q11 as two of the three stocks beat expectations while Uchi Technologies Bhd met expectations. JCY surpassed expectations due to better gross margins from better operating efficiency and cost control. JobStreet’s results were also strong as volumes remained firm, offsetting margin erosion from investments in headcount and marketing. — CIMB Research, Dec 8


This article appeared in The Edge Financial Daily, December 9, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

KLCI gains, struggles to stay above 1,490 level

KUALA LUMPUR: The FBM KLCI pared down initial gains yesterday and slipped below the 1,490 point level, while regional markets chalked up strong gains as coordinated liquidity action by the major central banks boosted investor sentiment.

Analysts said the sentiment on the local market remains bullish for now, with the good run expected to sustain until the Lunar New Year in 2012.

Asian markets rose after the US Federal Reserve, the European Central Bank and the central banks of Canada, the United Kingdom, Japan and Switzerland said on Wednesday they would lower the cost of existing dollar swap lines by 50 basis points from Dec 5, and arrange bilateral swaps to provide liquidity for other currencies, Reuters reported.

The FBM KLCI closed 13.16 points higher at 1,485.26, lifted by gains at banking and select blue chips. The index had earlier risen to its intra-day high of 1,502.53.

On the regional markets, Hong Kong’s Hang Seng Index surged 5.63% to 19,002.26, Taiwan’s Taiex rose 3.98% to 7,178.69, South Korea’s Kospi gained 3.72% to 1,916.18, the Shanghai Composite Index added 2.29% to 2,386.86, and Japan’s Nikkei 225 was up 1.93% to 8,597.38 and Singapore’s Straits Times Index rose 2.2% to 2,761.88.

Dr Nazri Khan, Affin Investment Bank Bhd vice-president and head of retail research, said, overall, the market is bullish now.

“We see a good reliable bottom at 1,310, second bottom near 1,400, now all set for 1,530 by year-end, and 1,700 by Chinese New Year … we are going for a good run,” he said.

Nazri said the unprecedented move to lower the cost of existing dollar swap lines clearly demonstrates prevailing central banks and policymakers’ recognition of the need to undertake more aggressive monetary policy actions to avert a potential collapse of the global financial system — where money markets as well as credit markets have recently faced elevated levels of stress not seen since Lehman Brothers failure.

He said this is highly positive in not only greatly reducing banks’ liquidity risk, but importantly, acting as a major confidence booster to financial markets that central banks are prepared to take over the role of governments or politicians to address the problematic eurozone sovereign debt strain.

However, Nazri added that the move by global central banks coming into a consortium to provide a greater dosage of “morphine” to save the ailing patients will not resolve the underlying eurozone problem.

“The crux of the issue lies in the uncontrolled fiscal spending over the years that has resulted in overly indebted and leveraged governments who are facing insolvency risk (by extension of banks holding the weak sovereign bonds, their solvency is also in question).

“Clearly, a re-acceleration in global liquidity through the latest move and quantitative easing (UK and Japan) will stoke renewed inflationary pressure,” he said.

Among the banking stocks, Hong Leong Bank Bhd rose 32 sen to RM10.78, Public Bank Bhd added 20 sen to RM12.74, Hong Leong Financial Group Bhd up 18 sen to RM11.58, RHB Capital Bhd added 11 sen to RM7.42, Malayan Banking Bhd nine sen to RM8.39, CIMB Group Holdings Bhd eight sen to RM7.22 and AMMB Holdings Bhd up four sen to RM5.98.

Other gainers included British American Tobacco (M) Bhd, Nestle (M) Bhd, Dutch Lady Milk Industries Bhd and JobStreet Corp Bhd.

Among the losers, Genting Bhd fell 26 sen to RM10.70; Lafarge Malayan Cement Bhd lost 24 sen to RM6.70, MSM Malaysia Holdings Bhd down 19 sen to RM4.81, Axiata Group Bhd lost 17 sen to RM4.93, Fraser & Neave Holdings Bhd slipped 14 sen to RM18.02, IJM Corp Bhd, Tan Chong Motor Holdings Bhd and Malaysia Airports Holdings Bhd fell 11 sen each to RM5.80, RM4.24 and RM6.08 respectively, while Southern Steel Bhd shed 10 sen to RM1.98.


This article appeared in The Edge Financial Daily, December 2, 2011.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

KLCI pares down gains, struggles to stay above 1,490-level

KUALA LUMPUR (Dec 1): The FBM KLCI pared down its gains on Thursday and slipped to below the 1,490-point level, while regional markets chalked up strong gains as coordinated liquidity action by the major central banks boosted investor sentiment.

The US Federal Reserve, the European Central Bank and the central banks of Canada, Britain, Japan and Switzerland said on Wednesday they would lower the cost of existing dollar swap lines by 50 basis points from Dec 5, and arrange bilateral swaps to provide liquidity for other currencies, according to Reuters.

The FBM KLCI closed 13.16 points higher at 1,485.26. The index had earlier risen to its intra-day high of 1,502.53.

At the regional markets, Hong Kong’s Hang Seng Index surged 5.63% to 19,002.26, Taiwan’s Taiex rose 3.98% to 7,178.69, South Kospi gained 3.72% to 1,916.18, the Shanghai Composite Index added 2.29% to 2,386.86, and Japan’s Nikkei 225 was up 1.93% to 8,597.38 and Singapore’s Straits Times Index rose 2.2% to 2,761.88.

On Bursa Malaysia, BAT was the top gainer and rose RM1.60 to RM48.10; PPB added 52 sen to RM16.58, Cepco rose 40 sen to RM1.91, JobStreet 39 sen to RM2.80, Hong Leong Bank 32 sen to RM10.78, Nestle, Dutch Lady and KLK 30 sen each to RM5.20, RM24.40 and RM21.80 respectively, Shangri-La 28 sen to RM2.38 and Litrak 24 sen to RM3.65.

Genting was the top loser and fell 26 sen to RM10.70; Lafarge Malayan Cement lost 24 sen to RM6.70, MSM 19 sen to RM4.81, Axiata 17 sen to RM4.93, F&N 14 sen to RM18.02, IJM Corp, Tan Chong and MAHB fell 11 sen each to RM5.80, RM4.24 and RM6.08 respectively, while Southern Steel lost 10 sen to RM1.98.

The actively traded counters included Wijaya warrants, Compugates, Utopia, Extol, Karambunai, Hubline and GPRO.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

Jobstreet surges 16% in thin trade, amid cautious outlook

KUALA LUMPUR (Dec 1): Shares of Jobstreet.com Bhd surged nearly 16.2% to RM2.80 in thin trade on Thursday, in line with the positive market, though analysts expected the fourth quarter to be lacklustre in terms of employment activities.

At 3.25pm, it was up 39 sen to RM2.80 with 1,000 shares done.

The FBM KLCI was up 16.63 points to 1,488.73, off the earlier high of 1,500. Turnover was 1.17 billion shares valued at RM1.25 billion. There were 517 gainers, 266 losers and 266 counters unchanged.

CIMB Equities Research, had in a mid-November report, said Jobstreet’s nine-month core profit was 84% of its full-year estimate but 79% of consensus numbers.

It raised its earnings per share (EPS), which lifted its target price though it continued to apply a calendar year 2013 price-to-earnings of 15.4 times, 40% higher than peers. It maintained a neutral outlook due to stretched valuations and a tougher 2012.

“We expect a seasonally weaker 4Q as employment activities slow down towards year-end. Pricing is still under pressure and volumes have started to decline. Despite the tight labour market, sentiment remains negative and slower economic growth is the consensus view for 2012,” it said in its report.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

KLCI breaches 1,500-point level

KUALA LUMPUR (Dec 1): The FBM KLCI breached the psychologically crucial 1,500-point level on Thursday, lifted by the strong regional sentiment.

At 11.10am, the FBM KLCI was up 29.23 points to 1,501.33.

Gainers led losers by 518 to 150, while 233 counters traded unchanged. Volume was 665.48 million shares valued at RM748.47 million.

Among the major gainers were BAT, PPB, Nestle, JobStreet, HLFG, MISC, Hong Leong Bank, Dutch Lady and KLK.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

OSK Research discontinues coverage of Jobstreet

KUALA LUMPUR (Nov 16): OSK Research has discontinued coverage of Jobstreet due to the lack of share price catalysts and its in-house resource reallocation, including a review of the current market dynamics.

It said on Wednesday that Jobstreet’s 9MFY11 core earnings stood at RM36.2 million, coming in within its and consensus estimates at 74.3% and 76.4% of the full-year forecasts respectively.

“3QFY11 net profit came in at RM11.6 million, up 19.8% y-o-y on improved employers sentiment but was down 13.4% q-o-q on seasonal weakness,” it said.

OSK Research said a third interim DPS of 1.8 sen was declared, bringing the YTD payout to 4.8 sen.

“Given the lack of share price catalysts and our in-house resource reallocation, including a review of the current market dynamics, we are discontinuing coverage on the stock. Our call is now changed to NON-RATED, while our previous Fair Value was RM2.10,” it said.



Get your T+10 interest FREE margin trading account NOW. Attractive brokerage for online trading. Contact Mr Ho at +603-5192 0808 or hoxian@sjsec.com.my for more details.

JobStreet looks for silver lining

KUALA LUMPUR: In an economic slowdown the last thing one thinks of is changing jobs or increasing headcount. And that could be a worry for online recruitment firm JobStreet Corp Bhd.

As prospects of a global economic slowdown in 2012 loom large, JobStreet is facing concerns that its earnings could be impacted from weaker business sentiment and a soft job market.

In recent months, concerns over lower recruitment advertisements have pushed JobStreet’s share price down by some 20% to a six-month low of RM2.30 on Oct 7, from the previous levels of RM2.80 to RM2.90. The stock has since rebounded slightly to end last week at RM2.50.

JobStreet chief financial officer Greg Poarch acknowledges that the global sentiment has turned more negative since August.

Though there is an increasing likelihood of a worldwide economic slowdown next year, Poarch pointed out that many economists are still predicting reasonable economic growth for Malaysia in 2012.

Indeed, even as some economists doubt the government’s GDP growth projection of 5% to 6% for 2012, there is consensus that Malaysia could still record GDP growth of under 5%.

In an email interview with The Edge Financial Daily, Poarch said JobStreet is still confident that it will continue to do “relatively well” in 2012 as companies continue to compete for talent.

“Ultimately, Malaysia’s biggest problem is that the job market lacks talent. We believe it is still a priority issue for many companies rather than short-term dips in the global economy.

“Companies are still struggling to hire people and we believe many companies will start to look at down periods as a good opportunity to hire quality talent before the competition does,” Poarch said in the interview.

Poarch acknowledges that the global sentiment has turned more negative since August.

JobStreet’s online advertising site, JobStreet.com, has over 1.9 million registered jobseekers in Malaysia alone.

Malaysia is JobStreet’s main geographical segment, contributing over 60% of the group’s earnings and turnover. It also has presence in Singapore, the Philippines, Indonesia and is in the process of developing a presence in Thailand, India and Japan.

Earlier, JobStreet said demand for recruitment advertising services remained solid in 2H11, though it did not rule out a possible slowdown due to global economic uncertainty.

“JobStreet will focus on sustaining and increasing long-term shareholder value although profitability may be negatively impacted in the short term,” the group cautioned in the notes to its latest financial results.

JobStreet’s performance for FY11 ending Dec 31 will still depend on sustained economic growth, a competitive environment and the group’s ability to grow sales and investment performance, the group said.


For 2QFY11 ended June 30, JobStreet’s net profit rose 20.14% to RM13.35 million from RM11.11 million a year ago driven by higher sales from higher recruitment activities.
Pre-tax profit grew 12.51% to RM17.7 million from RM15.73 million a year ago on the back of 21.8% revenue growth to RM36.22 million from RM29.74 million a year ago.

During the quarter, JobStreet’s operating expenses increased by 26.4% due to higher staff costs and marketing expenses, the group said in the notes to its financial results.

Earnings per share was 4.2 sen and net assets per share was 59 sen as at June 30.

Quarter-on-quarter, JobStreet’s net profit climbed 18.26% to RM13.35 million from RM11.29 million while revenue grew 7.73% to RM36.22 million from RM33.62 million in the preceding quarter.

For the six-month period, JobStreet’s net profit grew 24.64% to RM24.64 million from RM19.8 million while revenue increased 21.76% to RM69.85 million from RM57.36 million a year ago.

Analysts said JobStreet is on track to meet net profit forecasts of between RM47 million and RM48 million in FY11, with JobStreet’s 1HFY11 profit of RM24.6 million constituting roughly half of the full year forecast.

However, analysts are less upbeat on JobStreet’s earnings prospects in FY12 and FY13, with two research houses calling “hold” on its stock and one with a “sell” call.

In a recent note, HwangDBS Vickers Research cautioned that JobStreet’s earnings in the next two years could face downside risks, and had slashed JobStreet’s forecast earnings for FY12 and FY13 by 20% to 21%.

The lower earnings projection for FY12 was based on the assumption that job advertisements could fall 14% y-o-y instead of an earlier projection of 15% growth while earnings before interest, tax and amortisation (Ebita) margin could be squeezed to 41% from 43%, HwangDBS Vickers Research said.

“Historically, JobStreet’s revenue correlated strongly with GDP with each 1% growth in GDP raising revenue by 3% to 5%.

“The current monthly average of 23,000 job advertisements for 3QFY11 may not be sustainable in 2012,” the research house said in a report dated Oct 4.

Nevertheless, JobStreet’s share price could be supported by its high net cash backing and prospective 3% net dividend yield for FY12, HwangDBS Vickers Research said.

As at June 30, 2011, the company had net cash and equivalents of RM83.06 million, which translates into 25.5 sen per share. That accounted for 43% of its net assets per share of 59 sen.

HwangDBS Vickers also pointed out that Malaysia, JobStreet’s core market, currently appears less vulnerable to external turbulence as it is supported by the government’s Economic Transformation Programme (ETP), which aims to create 3.3 million new jobs by 2020.

Still, macro-economic challenges exist, and JobStreet is also facing higher competition and lower pricing for job postings from its main regional competitor, Hong Kong-based JobsDB Inc, which operates online recruitment websites in Southeast Asia, Australia and China.

JobStreet’s single largest shareholder is Australia-based recruitment website SEEK Ltd, which held a 22.3% stake as at May 9, 2011.

SEEK’s 69%-owned subsidiary, SEEKAsia Ltd, however, also holds an 80% stake in JobsDB.

In July, SEEKAsia increased its shareholding in JobsDB to 80% from the 60% block it acquired in December last year.

Poarch said JobStreet will continue to compete with JobsDB by leveraging its competitive advantage in Southeast Asia, ensuring quality customer service and keeping costs low.

Earlier this month, HwangDBS Vickers Research downgraded JobStreet to a “hold” while revising downwards its 12-month target price to RM2.30 from RM3.60 due to moderate growth prospects.

OSK Research, meanwhile, reiterated its “sell” call on JobStreet’s stock at a revised fair value of RM2.10 based on a forward price-earnings ratio of 13 times for FY12.

According to OSK Research, JobStreet is currently trading at a FY12 PER of 18 times, which the research house said is unjustified given the gloomy global economic outlook which is likely to dampen hiring sentiment.

Poarch shrugged off the valuations attached to JobStreet’s stock, saying, “We will just focus on building a strong, sustainable business and let the market decide the valuation”.


This article appeared in The Edge Financial Daily, October 24, 2011.