MBMR advances after RHB Research raises target price

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

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

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

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

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

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

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

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

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



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.

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

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

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

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

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

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

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

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

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



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 up more than 23 points week-on-week

KUALA LUMPUR (May 4): The FBM KLCI rose 23.24 points week-on-week, and was among the better performers compared with its regional peers on Friday.

The FBM KLCI rose 7.87 points to close at 1,691.04 on Friday, lifted by gains at blue chips including Petronas Dagangan, Tenaga, Genting and AirAsia.

Gainers outpaced losers by 456 to 274, while 352 counters traded unchanged. Volume was 1.33 billion shares valued at RM1.59 billion.

Asian shares were mixed for a second successive day on Friday as another batch of lacklustre U.S. data stoked concerns that the recovery in the world's biggest economy is faltering, according to Reuters.

At the regional markets, the Shanghai Composite Index added 0.49% to 2,452.01, Taiwan’s taiex added 0.54% to 7,700.95, Hong Kong’s Hang Seng Index fell 0.77% to 21,086.00, South Korea’s Kospi lost 0.30% to 1,989.15 and Singapore’s Straits Times Index

Japan’s Nikkei 225 was closed for a national holiday.

Meanwhile, European shares opened lower and industrial commodities like oil and copper were weak on Friday on concerns about the health of the world's biggest economy before a reading on the strength of the U.S. jobs market, said Reuters.

Weekend elections in France and Greece, which could complicate efforts to resolve the euro zone debt crisis, were also weighing on sentiment, leaving the euro steady against the dollar at around $1.3150 and debt markets little changed, it said.

On Bursa Malaysia, Nestle was the top gainer on Friday and rose 40 sen to RM55.90, Allianz, Aeon and Petronas Dagangan added 20 sen each to RM4.75, RM10 and RM19.50 respectively, Coastal Contracts 19 sen to RM2.13, SAM Engineering 18 sen to RM3.20, Tenaga and MBM Resources up 15 sen each to RM6.60 and RM5.24, while Maybulk and Genting rose 14 sen each to RM1.79 and RM10.64.

AirAsia was among the actively traded counters with 14.45 million shares done. The stock added four sen to RM3.64.

Other actives included Ariantec, Glomac, Maybulk, Astral Supreme, Metronic and Jotech.

Decliners on Friday included Knusford, Southern Acids, Cepco, Asia File, Ireka, Takaful, Hoover, Nakamichi, Aeon Credit and Lafarge Malayan Cement.



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.

Select blue chips lift KLCI marginally higher

KUALA LUMPUR (May 3): The FBM KLCI closed higher on Thursday, erasing its earlier losse, lifted by gains at select blue chips including AirAsia, Telekom, AMMB and CIMB.

The stock index added 0.78 of a point to 1,583.17.

Gainers trailed losers by 344 to 390, whiel 325 counters traded unchanged. Volume was 1.29 billion shares valued at RM1.21 billion.

Meanwhile, Asian shares slipped on Thursday and the euro languished near a two-week low after disappointing economic data from both sides of the Atlantic rekindled concerns about the strength of global growth, according to Reuters.

But European stock markets were seen opening stronger, fueled by hopes that a European Central Bank policy meeting later in the session will prepare the ground for further stimulus measures, it said.

At the regional markets, the Shanghai Composite Index edged up 0.07% to 2,440.08, Hong Kong’s Hang Seng index fell 0.28% to 21,249.53, Taiwan’s Taiex lost 0.23% to 7,659.53, South Korea’s Kospi shed 0.20% to 1,995.11 and Singapore’s Straits Times Index down to 3,000.94. Japan’s Nikkei 225 was closed for a national holiday.

On Bursa Malaysia, Knusford was the top gainer and rose 34 sen to RM2.28, Airasia added 27 sen to RM3.60, Panasonic up 22 sen to RM22.92, BAT 20 sen to RM55.24, Country View 19.5 sen to 84 sen, MPHB, Tradewinds PLANTATION []s and Tradewinds added 14 sen each to RM2.86, RM6 and RM9.99 respectively, MBM Resources was up 13 sen to RM5.09 and Permaju was up 12.5 sen to 55.5 sen.

Utopia was the most actively traded counter with 84.11 million shares done. The stock was unchanged at 8 sen.

Other actives included Ariantec, Naim Indah Corp, AirAsia, Metronic, Astral Supreme, Compugates and DayaMaterials.

Meanwhile, the decliners included Genting, BLD Plantations, MAHB, PPB Bank, Shell, Pasdec,Eng Kah and Rexit.



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 snaps losing streak, but stays shy of 1,600-level at mid-day

KUALA LUMPUR (APRIL 6): The FBM KLCI snapped its two-day losing streak on Friday and rose at the mid-day break, while key regional markets were mostly closed for the Easter weekend holidays.

The FBM KLCI rose 6.29 points to 1,599.73 at the mid-day break.

Gainers led losers by 319 to 233, while 306 counters traded unchanged. Volume was 595.27 million shares valued at RM502.46 million.

The ringgit strengthened .07% t0 3.0625 versus the US dollar; crude palm oil futures for the third month delivery rsoe RM14 per tonne to RM3,546, crude oil was US$103.31 per a barrel (as of April 4 closing) whiel gold fell US$1.18 an ounce to US$1,630.05.

Asian shares struggled on Friday, with many markets closed for the Easter holiday, as investors stayed on the sidelines ahead of key U.S. jobs data, avoiding risk after rising yields in weaker euro zone countries refuelled concerns about the region's debt issues, according to Reuters.

Worries about Spain's rising bond yields were offset somewhat by fresh U.S. data on Thursday that provided more evidence of a recovering labour market, raising prospects of the non-farm payrolls report due later on Friday being solid, it said.

At the regional markets, Japan’s Nikkei 225 fell 1.05% to 9,665.28, Taiwan’s taiex added 0.60% to 7,685.52 and South Korea’s Kospi shed 0.25% to 2,023.75.

BIMB Securities Research in a note April 6 said that European stocks climbed in the final hour of trading on Thursday, after new on US initial jobless claims fell to their lowest levels in four years last week.

Meanwhile Spain’s 10-year bonds dropped for a third day, pushing the yield on the country’s benchmark debt seven basis points higher to 5.76%, it said.

The research house Wall Street ended largely unchanged in a lackluster session as investors hesitated to jump in amid ongoing worries over the euro zone and ahead of Friday's monthly jobs report.

Nonetheless, for the week, all three major averages recorded their worst decline this year, it said.

The Dow Jones Industrial Average slipped 0.11 percent, to close at 13,060.14, declining for a third-straight session while S&P 500 erased or 0.06 percent, to finish at 1,398.08, it said.

BIMB Research said that regionally, most major indices closed lower yesterday, due to weak Spanish bond sale which weaken investors’ confidence.

“In the local front, the FBM KLCI is well supported at 1,590 levels despite poor regional performance, losing 0.36% to close at 1,593.44. Net foreign participation remains positive yesterday at RM66.2m.

“Technical point of view, the near term outlook remains sluggish with immediate support to be seen at 1,590 followed by 1,580,” it said.

ON Bursa Malaysia, BAT the top gainer in the morning session and rose 68 sen to RM55.66, Dutch Lady added 50 sen to RM36, Tradewinds PLANTATION []s rose 31 sen to RM5.50, SMPC up 28 sen to RM2.25, Tradewinds 23 sen to RM10.02, Naim Holdings 14 sen to RM2.04, Mulpha 13 sen to 59 sen, Hing Yap 12 sen to RM1.68, MBM Resources 11 sen to RM4.91 and HLFG added 10 sen to RM12.48.

Naim Indah Corp was the most actively traded counter with 58.3 million shares done. The stock rose 2.5 sen to 51 sen.

Other actives included Metronic, Tiger Synergy, CSL, Green Ocean, Focus, TMS, Ariantec, Systech and DBE Gurney.

Decliners included Shell, F&N, Petrol One, KLK, HDBS, SapureCrest, Batu Kawan, Subur, Perduren and MGRC.



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.

RHB Research maintains Neutral on automotive sector

KUALA LUMPUR (April 5): RHB Research has maintained its Neutral call on automotive sector and said the auto industry made a shaky start to 2012 with total industry volume (TIV) in Jan declining 14.7% and 25.2% month-on-month and year-on-year respectively.

In a note Thursday, the research house said the softer sales were attributed to seasonal factors given the earlier than usual Lunar New Year holidays, the more stringent financing guidelines implemented by Bank Negara Malaysia (BNM) and the lingering effects of component supply disruption arising from the floods in Thailand.

“While the lower-end segment is likely to be the most exposed to the tighter financing environment, we expect the market (borrowers and lenders) to gradually adapt,” it said.

RHB Research said the key event in 2Q12 will be the announcement of the third iteration of the National Automotive Policy (NAP) that could potentially benefit domestic auto parts manufacturers.

“However both Thailand and Indonesia enjoy a strong head start as regional production hubs for numerous global OEMs.

“Still Neutral on the sector. DRB-HICOM and MBM are the top picks,” 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.

KLCI sustains momentum, closes at fresh all-time high

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

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

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

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

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

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

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

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

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

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



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.

Regional markets extend gains at mid-day

KUALA LUMPUR (March 9): The FBM KLCI remained in positive territory at the mid-day break on Friday as key regional markets extended their gains on improved sentiment on the back of a successful attempt by Greece to close the bond swap offer.

Greece' success in closing the bond swap offer enabled it to reduce its huge debt pile and avert a chaotic default that would pitch the euro zone into a fresh crisis, according to Reuters.

At the mid-day break, the KLCI added 1.55 points to 1,579.91, lifted by gains at select blue chips. Gainers led losers by 340 to 286 while, 312 counters traded unchanged. Volume was 714.59 million shares valued at RM546.47 million.

The ringgit strengthened 0.20% To 3.0044 versus the US dollar; crude palm oil futures for the third month delivery gained RM45 per tonne to RM3,337, crude oil rose 32 cents per barrel to US$106.90 while gold added US$5.18 an ounce to US$1,704.95.

At the regional markets, Japan’s Nikkei 225 rose 2.22% to 9,985.94, Hong Kong’s Hang Seng Index added 1.06% to 21,121.50, the Shanghai Composite Index rose 0.40% to 2,429.95, Taiwan's Taiex was up 0.34% to 8,011.59, South Korea’s Kospi rose 0.49% to 2,010.59 and Singapore’s Straits Times Index was up 0.44% to 2,983.41.

At Bursa Malaysia, gainers included BAT that rose 38 sen to RM52.40, Bonia 18 sen to RM2.48, Deleum 16 sen to RM2.20, KLK 14 sen to RM23.40, Tradewinds PLANTATION []s 13 sen to RM4.44, Press Metal and MBM Resources 11 sen each to RM2.09 and RM4.61, while Mercury and Johore Tin added nine sen each to 1.25 and RM1.23.

Naim Indah Corp was the most actively traded counter with 67.9 million shares done. The stock gained on sen to 64 sen.

Other actives included Sumatec, China Stationery, SILK Holdings, KeyWest, and Perisai .

Decliners included Petronas Dagangan and PPB which lost 12 sen each to RM18.24 and RM16.78, KAF, BLD Plantations and Far East down 10 sen each to RM1.80,RM9.35 and RM7.30 respectively. KLCC Property and Hong Leong Bank down eight sen each to RM3.34 and RM12.30.



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 takes a breather, Tenaga, Genting weigh

KUALA LUMPUR (March 6): Stocks on Bursa Malaysia took a breather on Tuesday as investors locked in recent gains, with profit taking seen in heavyweight Tenaga and Genting while key regional markets put on a lackluster performance after the weaker close on Wall Street.

At 10.04am, the FBM KLCI was down 2.79 points to 1,586.43. Turnover was 284.50 million shares valued at RM202.80 million. Losers led gainers 245 to 152 while 276 stocks were unchanged.

Reuters reported Asian shares and growth-linked currencies were under pressure on Tuesday as slowing economies in China and Europe and tension over Iran dampened sentiment, prompting investors to take profits from recent rallies that had been driven by ample liquidity.

CIMB Equities Research said that while the KLCI close to testing its all-time high of 1,597 in July 2011, it expected the index to face resistance.

“Only a successful close above the 1,600 psychological level could further lift prices towards a new heights at 1,620. Otherwise, we expect some consolidation to take place. On the downside, the 1,550 key support level is still a level to keep watch as it would eliminate all bullish potential if it is breached. There is also a minor support at 1,570,” it said.

Among the decliners were Tenaga and Genting, down six sen each to RM6.25 and RM10.70. Shell was the top loser, down 26 sen to RM10.12 but in very thin volume of 200 shares done.

PBB lost 26 sen to RM16.68, Oriental Holdings 13 sen to RM6.52, Can-One six sen to RM1.83, MBM Resources five sen to RM4.58 and Batu Kawan four sen to RM18.90.



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 bucks key regional markets

KUALA LUMPUR (March 5): The Malaysia stock market bucked the regional markets on Monday, underpinned by gains in selected banking stocks and heavyweights, while the broader market displayed an upbeat outlook as the FBM KLCI neared the all-time high of 1,594.

At 12.30pm, the KLCI was up 0.4% or 6.71 points to 1,590.49, but off a fresh intraday high of 1594.72. Turnover was 832 million shares worth RM818 million. Gainers beat losers 381 to 289 decliners while 316 counters were unchanged.

However, Asian stock indices declined at noon amid news that China had revised downwards its economic growth forecast to 7.5% in 2012. This compares to policymakers’ targeted growth of 8% between 2005 and 2011. China's economy rose 9.2% in 2011 from a year earlier following a 10.3% expansion in 2010.

Hong Kong’s Hang Seng Index fell 1.13% to 21,318.9, Taiwan’s Taiex lost 1.08% to 8026.96 while South Korea’s Kospi was down 0.9% to 2016.31 and Singapore’s Straits Times Index 0.16% at 2,988.72.

On the KLCI, analysts said it was trading at more expensive valuations compared to regional peers.

In a note on Monday, TA Securities Holdings Bhd head of research Kaladher Govindan said Indonesia and Thailand, offered better calendar year 2013 earnings growth prospects of 17.8 % and 14.9% respectively and are trading at a relatively cheap price-to-earnings ratios (PER) of 11.5 times and 10.7 times respectively.

This compares to Malaysia's FBM KLCI’s projected 12.2% growth at a PER of 13.2 times (based on Bloomberg consensus figures).

“While Malaysia being a low beta market had only advanced by 2.5% year-to-date, continued PER expansion in other regional markets on positive market undertone has the potential to rerate Malaysia as well.

“The impending announcement of various infrastructure and oil gas projects under the Economic Transformation Programme banner in the first half of this year could be strong drivers for the market apart from the listing of Felda Global Ventures that could draw fresh funds from abroad,” said Kaladher who does not discount the possibility of the KLCI testing the 1650 point level during the first half of the year.

Among the finance stocks, CIMB rose 16 sen to RM7.49 and Public Bank 10 sen to RM13.80. Heavyweight Sime Darby, which was upgraded, rose 10 sen to RM10.08.

As for PLANTATION []s, NSOP added 14 sen to RM6.10, TDM 10 sen to RM4.96, Batu Kawan four sen to RM18.98, TH Plantations three sen to RM2.83 but KUALA LUMPUR KEPONG BHD [] fell 12 sen to RM23.46.

Top gainer ORIENTAL HOLDINGS BHD [] added 21 sen to RM6.70 followed by Tasek Corp which rose 19 sen to RM9.

Notable decliners include PETRONAS DAGANGAN BHD [] which fell 22 sen to RM18.12 while Kulim and MBM Resources lost eight sen each to RM4.37 and RM4.57.

Most active was THE MEDIA SHOPPE BHD [] which added 1.5 sen to 10 sen with some 45 million shares done.



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.

Market mixed midday, concerns over high oil price

KUALA LUMPUR (Feb 27): Blue chips were higher at midday on Monday, buoyed by CIMB and Telekom but the broader market was mixed as investors’ sentiment was cautious about the impact of higher oil prices on the global economy.

The FBM KLCI rose 2.66 points to 1,561.43. Turnover was 851.34 million shares valued at RM730.13 million. There were 340 gainers, 330 losers and 310 stocks unchanged.

Brent crude eased slightly but stayed around 10-month highs above US$125 per barrel amid escalating tension over Iran's disputed nuclear programme, according to Reuters. Investors concerns were whether it could break through US$130.

US light crude oil fell 40 cents to US$109.37. Crude palm oil prices for third-month delivery rose RM20 to RM3,296 per tonne. The ringgit weakened against the US dollar to 3.0162.

Key regional markets which fell included Japan’s Nikkei 225, South Korea’s Kospi and Singapore’s Straits Times – three countries which are heavily dependent on imported crude oil.

At Bursa Malaysia, Dutch Lady rose RM1.70 to RM27.50 and Carlsberg 35 sen to RM9.80 while Guinness Anchor added 16 sen to RM9.10. Among PLANTATION []s, Batu Kawan added 24 sen to RM18.80 and Chin Tek 15 sen to RM9.10.

CIMB added eight sen to RM7.14, pushing up the KLCI by 1.41 points, Telekom added seven sen to RM5.15, nudging the KLCI up 0.59 of a point while AMMB’s six sen gain to RM6.09 pushed the index up by 0.42 of a point. RHB Capital rose 22 sen to RM7.88.

Naim Indah Corp was the most active with 99.48 million shares done, It added 3.5 sen to 55 sen. China Stationery rose 10 sen to RM1.20.

MBM Resources was the top loser, down 20 sen to RM4.42 on profit taking and also concerns about earnings per share dilution from its proposed rights issue.

BAT, SOP and MAHB lost 10 sen each to RM52.46, RM6.15 and RM5.70 respectively. Latexx fell 12 sen to RM1.56 and the warrants 10 sen to RM1.18.



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.

MBM Resources down on rights issue plan, EPS dilution concerns

KUALA LUMPUR (Feb 27): Shares of MBM Resources were the top loser on Monday on investors’ concerns of earnings per share (EPS) dilution after it proposed a renounceable rights issue of 73.65 million.

At 12.30pm, it was down 20 sen to RM4.42 with 1.20 million shares done. It fell to an intra-morning low of RM4.37.

The FBM KLCI was up 2.66 points to 1,561.43. Turnover was 851.34 million shares valued at RM730.13 million. There were 340 gainers, 330 losers and 310 stocks unchanged.

However, the decline in the share price would also be due to profit taking since the share price had risen from RM3.69 on Jan 27. It reached an intra-day high of RM4.96 last Friday before closing at RM4.62.

Last Friday, MBM Resources had proposed a bonus issue of up to 73.65 million new shares on the basis of three bonus shares for every 10 existing shares held.

It also proposed the rights issue of up to 73.65 million new rights shares together with up to 73.65 million new free detachable warrants on the basis of three rights shares with three free warrants for every 10 existing shares.

OSK Research said MBM Resources’s FY11 earnings were within estimates.

“Given the group’s aggressive expansion, it has announced a rights issue with detachable warrants to fund its plans, as well as a bonus issue to reward shareholders and boost liquidity in its stock,” it said.

The research house said while the enlarged share base and potential 38% dilution to EPS were cause for concern, “we think there is potential price upside as MBM’s total consolidated earnings (including that from newly-acquired Hirotako), could surge by some 50% in FY12”.

“With the stock’s better liquidity and dominance in the auto industry, our SOP-based FV is RM5.34. Hence, we upgrade MBM from SELL to BUY,” said OSK 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.

HDBSVR sees marginal positive bias for equities

KUALA LUMPUR (Feb 27): Hwang DBS Vickers Research (HDBSVR) said in spite of a flattish Wall Street performance last Friday, the Malaysian stock market could show a marginal positive bias on Monday.

HDBSVR said the benchmark FBM KLCI may be eager to pull away further from the immediate support level of 1,555 ahead.

In terms of corporate developments, the focus will probably be on the slew of financial result announcements that were out last Friday evening.

On the positive side, Maxis rang up a pleasant surprise. But DRB-Hicom and Multi-Purpose Holdings posted below par earnings performances.

Meanwhile, investors could also be attracted by the following counters: (a) Litrak, after a business weekly reported that PLUS is eyeing to take over the highway assets of the toll concessionaire; and (b) MBM Resources, in response to a media report speculating that it is looking to expand into the auto assembly business.



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.

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.



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.

Sentoria fails to excite investors

KUALA LUMPUR (Feb 23): Shares of Sentoria Group Bhd, the first initial public offering (IPO) of the year, fell 9.7% at the closing bell, failing to excite investors as fears of an economic slowdown brought on by possible high oil prices and the ongoing European debt saga.

Sentoria's share price closed at 78.5 sen, down 8.5 sen from its reference price of 87 sen, with 34.2 million shares traded in.

Meanwhile, the FBM KLCI on Thursday ended 3.86 points lower, or 0.25%, to close at 1,556.66, dragged down by banks — such as CIMB Group Holdings (down 8 sen to RM7.16), Hong Leong Bank (down 18 sen to RM11.66), and RHB Cap (down 17 sen to RM7.61) — to bring the index down 2.07 points.

A total of 1.95 billion shares were traded in, valued at RM2.11 billion. Losers led gainers 689 to 217, while 264 counters traded unchanged.

Regionally, markets closed on a weak note, as fears of a possible economic slowdown brought on by high oil prices and the ongoing European debt saga continues.

South Korea's Kospi was down 1.03% to 2,007.80, Taiwan's Taiex fell 0.80% to 7,937.30, Hong Kong's Hang Seng Index was lower by 0.78% to 21,380.99, and Singapore's Straits Index dropped 0.92% to 2,968.34.

However, Japan's Nikkei 225 (up 0.44% to 9,595.57) and Shanghai's Composite Index (up 0.25% to 2,409.55) bucked the trend.

On Bursa Malaysia, top gainers included United PLANTATION []s (up 76 sen to RM24.18), ORIENTAL HOLDINGS BHD [] (up 56 sen to RM6.34) and MBM RESOURCES BHD [] (up 41 sen to RM4.89).

Top losers included British American Tobacco (down 64 sen to RM52.12) and Batu Kawan Holdings (down 30 sen to RM18.50).

Most actively traded was Naim Indah Corporation, which was down 3.5 sen to close at 42 sen, with 68 million shares traded in.



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 stages mild rebound, boost from Greek debt accord

KUALA LUMPUR (Feb 21): Blue chips staged a mild rebound in the afternoon session on Tuesday in line with most key Asian markets as sentiment was bolstered by the Greek bailout deal.

At 3pm, the FBM KLCI was up 1.85 points to 1,562.421. Turnover was 1.06 billion shares valued at RM865.49 million. There were 292 gainers, 414 losers and 353 stocks unchanged.

Panasonic Malaysia was the top gainer, adding 68 sen to RM21.19 while Maxis gained 19 sen to RM6.

Among the PLANTATION []s, United Plantations added 62 sen to RM23.38, BLD Plantations 21 sen to RM10.04 and Sarawak Plantations 14 sen to RM3.06.

F&N added 22 sen to RM17.80 on mild buying interest after its share price was recently impacted by the decline in earnings.

Nilai Resources added 14 sen to RM1.55 after the major shareholders proposed a selective capital repayment (SCR) of RM1.50 a share.

YTL Cement and MBM Resources added 13 sen each to RM4.73 and RM4.43.



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.

Credit crunch and weakening ringgit negative for automobile sector

Automotive sector
Maintain negative: December’s total industry volume (TIV) dropped by 12.9% year-on-year (y-o-y) and 2% month-on-month (m-o-m) to 47,708 units. The lower sales in December were attributed to the floods in Thailand and seasonal factors. The Malaysian Automotive Association (MAA) guided that January 2012 vehicle sales should improve slightly given ongoing promotional campaigns and the rush to deliver new vehicles ahead of the Chinese New Year holidays.

In 2011, Perodua continued to maintain the top spot with a market share of 30% against Proton’s 26.4%. In the non-national vehicle segment, Toyota remained resilient with a 14.8% market share. However, the back-to-back disasters narrowed the market share gap between Honda and Nissan. The top three Japanese marques ended FY11 with only 25.6% market share of TIV down from 28.3% in FY10.

We anticipate vehicle sales to benefit from a pent-up demand after last year’s two major disasters. However, there are several potential dampeners for the auto industry: (i) The uncertain global economic outlook could dent consumer confidence and they would turn cautious on spending on big-ticket items such as cars.

(ii) A more stringent auto financing loan approval process and credit control. Bank Negara Malaysia imposed a new ruling on credit standards late last year. Banks are now required to assess loan applications based on the net income instead of the gross income of the borrower. About 70% of hire purchase loan applications have been rejected since the new ruling came into place. This would likely affect consumers within the low to middle income bracket, while mid-range Japanese and South Korean makes could be the hardest hit. Second-hand vehicle prices are expected to fall as the car sellers will offer discounts given the stricter credit financing conditions.



(iii) The weakening of the ringgit against the yen and US dollar could add cost pressure in terms of rising raw material prices and potentially higher completely-knocked down (CKD) costs. Among local stocks, the biggest exposure to the greenback over the yen is Tan Chong Motor Holdings Bhd with as much as 70% of its imports in US dollars. UMW Toyota Motor Sdn Bhd’s imports are mostly priced in dollars and its 38% associate Perusahaan Otomobil Kedua Sdn Bhd (Perodua) imports in yen. MBM Resources Bhd has no direct exposure to yen except via its 20% associate Perodua. Proton Holdings Bhd has about 7% exposure to the greenback via imported CKD content in its Inspira model.

We continue to maintain our 2012 TIV forecast of 611,140 units, lower than MAA’s 615,000 as we expect more severe repercussions for TIV from tighter credit conditions.

We reiterate our “negative” recommendation for the automotive sector. Under our coverage, we have only a “buy” on MBM Resources (target price: RM3.60 — under review) backed by its current low valuation among its peers. We maintain “neutral” on Tan Chong (TP: RM4.50), UMW (TP: RM6.90) and Proton (TP: RM5.50). — MIDF Research, Jan 31


This article appeared in The Edge Financial Daily, February 2, 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.

Tighter financing spreads to luxury cars

Automotive sector
Maintain underweight: The Edge Financial Daily reported last Friday that car buyers may soon find it more difficult to secure loans as banks move to clamp down on auto financing.

While the financing structure is fluid at this juncture and has yet to be finalised, it was reported that luxury car buyers (high-end models like two-door sports cars and brands like Bentley, Ferrari and Maserati) may be required to take out as much as 50% up front payment. Additionally, buyers may be limited to a maximum of two car loans in their names at any one time.

The banks are proposing to stop lending to people who want to take a third car loan. Buyers taking a first car loan will still be able to secure 90% financing, while for a second loan a down payment of 30% to 35% may be required. This move was reportedly spearheaded by the private sector and financial institutions.

If the above tightening of auto loan spread is limited to only high-end luxury models, we don’t expect a change in our projected 600,000 unit sales forecast for 2012 (flat year-on-year).



New Porsche cars sold in 2011 were 126 units (out of 600,000 vehicles sold in 2011). Note that reconditioned car sales are not captured in our sales forecast. However, if the tightening of auto loans is also spread to mass models, the impact is clearly negative on 2012 auto sales forecast. At this juncture, we maintain our projections until further clarity from financial institutions.

In the past one decade, auto sales have grown by 12% annually and this is largely due to: (i) positive economic growth; and (ii) high levels of affordability. Thus, if financial institutions change the tenure of car loans (Malaysia has one of the longest tenures, with options to take a car loan for up to nine years) or impose a higher down payment, the sector will be challenging in 2012.

We maintain our “underweight” call on the sector to reflect flattish sales growth prospects and concerns over margin compression over the next six to nine months (on the back of higher raw material cost and advertising and promotions given the onset of competition, especially in 2H12). The sector trades at 12.1 times CY12 earnings and 0.75 times price over earnings-to-growth ratio — fairly reflective of a mature ex-growth sector with low trading liquidity.

Top pick: MBM Resources Bhd (Buy, current target price [TP] RM3.65 — under review) for good representation in both the mass (Perodua) and high-end market (VW, Volvo, Mitsubishi) as well as good cost discipline.

We also believe MBM is a prime candidate to undertake a privatisation exercise given its attractive valuations (price-earnings ratio of 6.7 times, 0.8 times book value, net cash of RM132 million and return on equity of 11.2%). The completion of the Hirotako takeover will raise FY12 earnings per share by 10% and bump up our TP for MBM from RM3.65 to RM3.80. — Affin IB Research, Jan 27


This article appeared in The Edge Financial Daily, January 30, 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.

KLCI stays cautious in line with the retreat at key regional markets

KUALA LUMPUR (Jan 30): Trading on the FBM KLCI remained cautious at mid-morning on Monday, in line with the subdued sentiment at key regional markets ahead of key economic data from the US as well as developments in Europe in relation to the Greece debt issues.

At mid-morning, the 30-stock index edged up 0.56 of a point to 1,521.46.

Gainers led losers by 279 to 199, while 263 counters traded unchanged. Volume was 582.43 million shares valued at RM239.19 million.

Asian shares inched lower and the euro eased from its highest in more than six weeks on Monday, as markets cautiously tuned in to a likely debt swap deal for Greece that is crucial to avoiding a messy default and eyed another European summit meeting, according to Reuters.

World stocks fell on Friday on a slower-than-expected annualised 2.8 percent growth in the U.S. economy in the last quarter of 2011, the fastest quarterly rate in 1-1/2 years, while U.S. stocks were also weighed down by disappointing corporate results, it said.

At the regional markets, Japan’s Nikkei 225 fell 0.64% to 8,784.31, Hong Kong’s Hang Seng Index was down 0.55% to 29,388.50, the Shanghai Composite Index lost 0.91% to 2,297.96, Taiwan’s Taiex rose 2.86% to 7,440.49, South Korea’s Kospi fell 0.68% to 1,951.45 while Singapore’s Straits Time Index lost 0.91% to 2,889.79.

BIMB Securities Research in a note Monday said that a slew of developments both in the US and Europe could chart the direction of global equity markets this week.

Impending economic data plus more corporate results from the US and the European Summit may well see investors stay sidelined, it said.

As such, there were some profits taking activities ahead of this week’s events with the Dow Jones Industrial Average losing 74 points last Friday, it said.

The research house said that as for Europe, most major indices ended up in the negative territory after an across the board technical rebound on Thursday.

Regionally, most major bourses continued with their uptrend buoyed possibly by prospects of more monetary easing within the region, it said.

Nonetheless, latest move by China to maintain its SRR would disappoint some market observers and trigger some profit taking today, it said.

“Domestically, the FBM KLCI maintained its range trading activities without any headway from the lack of fresh catalysts and may test the immediate support of 1,515 today.

“Nonetheless, the stronger ringgit at RM3.04 per US$1 may be a precursor of foreign funds trickling in,” it said.

On Bursa Malaysia, privatisation targets Glenealy and Lingui were among the top gainers. Glenealy jumped 65 sen to RM7.20 while Lingui added 17 sen to RM1.53.

Other gainers included GFB that added 26 sen to RM1.47, Hartalega up 25 sen to RM7.15, Malayan Flour Mills 16 sen to RM4.13, Tradewinds PLANTATION []s 14 sen to RM4.82, Pos Malaysia 13 sen to RM2.88, Sunchirin 12 sen to RM1.77 while MBM Resources and Boustead REIT added nine sen each to RM3.78 and RM1.80.

The actives included DBE Gurney, DRB-Hicom, Hubline, Privasia, Utopia while the decliners included Nestle, Maybulk, JobStreet, KLK< Boxpak, Chin Teck, Unisem and Genting.



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.

Automotive sector riding through a rough patch

Automotive sector
Maintain underweight: Total industry volume (TIV) for 2011 of 600,308 units (+0.4% year-on-year [y-o-y]) with sequentially softer December sales (-2% month-on-month [m-o-m]) met our and street expectations.

We expect auto sales growth to be uninspiring at 1% to 2% in 2012 as domestic automotive demand nears saturation.

Margin pressure is expected to set in on unfavourable exchange rates coupled with price discounting among players to regain market share post the Thai floods. In the absence of an immediate catalyst, the auto sector remains an “underweight”. Hold UMW Holdings Bhd and MBM Resources Bhd, “sell” Tan Chong Motor Holdings Bhd.

Auto sales contracted 2% m-o-m to 47,708 units in December, in line with consensus expectations. The non-national marques were the major losers in December as sales fell 13% m-o-m to 18,684 units, while national models fared better (+7% m-o-m to 29,024 units).

Honda’s sales were the hardest hit among the major marques; sales fell 66% m-o-m to a mere 635 units in December. Honda’s plants in Malacca and Thailand were badly affected by the flood situation in Thailand.


Toyota’s sales were also affected (-30% m-o-m to 5,614 units), followed by Proton (-4% m-o-m to 10,812 units). Conversely, Perodua and Nissan reported higher sales in December, up 14% and 1% on a monthly basis respectively.

We expect auto companies to report poor January to March 2012 sales figures, as they absorb the adverse effects of the disrupted supply chain.

With production everywhere still at sub-par levels, the majority of distributors will be reliant on fast-depleting inventories to support sales commitments.

Margins will be under pressure, crimped by the rise in completely-knocked-down (CKD) component costs on the stronger US dollar and yen against the ringgit.

The tightening in hire purchase (HP) financing will impact auto sales, as lenders become more cautious due to the recent uptick in non-performing HP loans.

Against this backdrop, we are keeping our 2012 TIV forecast of 1% to 2% growth unchanged. Overall, Perodua is set to retain its position as the best-selling marque, attributable to consumer preference for smaller autos (market share: 34.7% at end-October 2011).

Passenger vehicles in the compact car category (Myvi and Saga) will continue to dominate sales volumes. We see growth potential for hybrid and electric cars, which currently account for 1.2% of TIV, as exemptions from import and excise duties (effective until December 2013) make them more affordable. — Maybank IB Research, Jan 18


This article appeared in The Edge Financial Daily, January 19, 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.