Malaysian stocks weighed down by pre-election sentiment

KUALA LUMPUR (April 27) : Malaysian stocks traded in negative territory on Friday morning as domestic pre-election sentiment gains an upper hand in dictating the direction of the FBM KLCI.

The local market may take the cue from domestic concerns ahead of the coming general election as investors assess the impact of the much-anticipated Bersih 3.0 rally on Saturday. Analysts said while US equities registered a stronger close in overnight trade, Asian stock markets could trade in an opposite direction on Friday.

“This is because sentiment will likely be affected by the negative vibes arising from S&P’s downgrade of Spain’s sovereign credit rating yesterday.

“Reflecting investors’ adverse reaction, the DJIA June futures contract tumbled this morning to hover at a 91-point discount to the spot rate,” HwangDBS Vickers Research Sdn Bhd wrote in a note.

At 9.59am, the FBM KLCI fell 9.28 points to 1,570.41. Across the exchange, some 455 million shares worth RM195 million were traded, leading to 163 gainers versus 208 decliners.

Top gainers NCB HOLDINGS BHD [] was up 45 sen to RM4.35 while PARKSON HOLDINGS BHD [] gained seven sen to RM5.29.

Among decliners, BRITISH AMERICAN TOBACCO (M) [] Bhd lost 76 sen to RM54.74, while Bumi Armada Bhd fell 18 sen to RM4.04.

Among actively-traded stocks, Ariantec Global Bhd gained two sen to RM25.5 sen with some 222 million shares done.

Across Asia, Japan’s Nikkei 225 rose 0.15% to 9,575.82, Australia’s S&P/ASX 200 climbed 0.08% to 4,378.8, while South Korea’s Kospi was up 0.78% to 1,979.43.



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KLCI down in early trade, slips below 1,590-level

KUALA LUMPUR (April 10): Shares on Bursa Malaysia fell in early trade on Tuesday with most investors staying on the side-lines given the weaker regional sentiment and a holiday-shortened trading week in Malaysia.

The FBM KLCI fell 2.84 points to 1,588.44 at 9.03am, weighed by losses at select blue chips.

Losers edged gainers by 59 to 47, while 100 counters traded unchanged. Volume was 27.05 million shares valued at RM13.07 million.

Wednesday is a public holiday in Malaysia in conjunction with the installation ceremony of the Yang DiPertuan Agong.

Meanwhile, Global stocks and crude oil fell on Monday as investors reacted to the surprisingly sharp slowdown in U.S. jobs growth reported last week, which raised concerns about the strength of the world's largest economy, according to Reuters.

Stocks on Wall Street and crude oil futures prices slid about 1% on the first trading day after the U.S. Labor Department reported the March jobs data. U.S. equity markets were closed on Friday for the Good Friday holiday, it said.

Among the aly decliners on Bursa Malaysia were Genting PLANTATION []s, Petronas Gas, Lafarge Malayan Cement, HLFG, Hong Leong Bank, Astino, Petronas Dagangan, Public Bank and Parkson.



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KLCI slips at mid-day break in line with regional markets

KUALA LUMPUR (March 28): The FBM KLCI slipped at the mid-day break on Wednesday in line with the overall weaker sentiment at key regional markets, after US stocks retreated from near four-year peaks on Tuesday.

Asian shares drifted lower on Wednesday as investors waited for more clues on the state of the U.S. economy, after hopes for further stimulus from the U.S. Federal Reserve strengthened risk appetite and lifted prices the previous session, according to Reuters.

Te FBM KLCI shed 0.91 of a point to 1,587.19, weighed by losses at select blue chips including BAT, MISC and Tenaga.

Gainers trailed losers by 173 to 383, while 296 counters traded unchanged. Volume was 637.64 million shares valued at RM341.29 million.

The ringgit weakened 0.20% to 3.0635 versus the US dollar; crude palm oil futures for the third month delivery rose RM 9 per tonne to RM3,490, crude oil fell 57 cents per barrel to US$106.76, while gold lost 88 cents an ounce to US$1,679.00.

Among the decliners in the morning session, United PLANTATION []s fell 16 sen to RM24.72, BAT down 10 sen to RM54, Parkson and MISC down eight sen each to RM5.42 and RM5.21, WCT and Tenaga lost seven each to RM2.37 and RM6.42, while Box-pak, Batu Kawan and Ivory fell six sen each to RM2.18, RM18.62 and 65 sen respectively.

Shares of Supercomnet Technologies Bhd extended their losses in active trade for the second day on Wednesday after the proposed disposal of an 18.66% stake by several major shareholders fell through.

Supercomnet fell 13 sen to 23 sen with 85.09 million shares traded.

Other actives included Utopia, Metronic, Ariantec, Silver Bird, and Tiger Synergy.

Meanwhile, the gainers included Dutch Lady, Takaful, Bintulu Port, TDM, Widetech, Alliaaz, KLK< KFCH and Kulim.



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RHB Research sees consumer spending growth remaining resilient

KUALA LUMPUR (March 14): RHB Research Institute forecasts consumer spending growth would remain resilient at 5.8% for 2012, albeit at a slower pace as compared to 2011.

It said on Wednesday that in 2011, domestic consumer spending grew by 6.9% on-year, the fastest in three years and stronger than the 6.5% on-year growth in 2010.

“We believe the rate of growth of consumer spending would slow in 2012 (vs. 2011) as the high levels of household debt has prompted Bank Negara (BNM) to further tighten its grip on consumer lending by imposing more stringent measures on consumer credit and this could have an impact on consumer spending,” it said.

Nevertheless, despite the credit tightening, RHB Research believes consumer spending would still remain relatively resilient for FY12, underpinned by the high savings rate, rising consumerism and favourable labour market conditions.

Furthermore, it believes that the impact of the tighter credit would mainly affect big ticket items such as property and vehicle sales and to a certain extent, electrical goods, as the banks now have more stringent criterion for approving housing loans and hire purchase loans.

“Underpinned by the resilient consumer spending outlook and despite the external headwinds, we remain positive on the topline growth outlook of the consumer sector (for all retail, F&B and sin stocks),” it said.

RHB Research reiterated its Overweight stance on the sector. Its top picks are QL Resources for the F&B segment and Parkson for the retail segment.



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CIMB Research has technical sell on Parkson Holdings at RM5.59

KUALA LUMPUR (March 6): CIMB Equities Research has a technical sell on Parkson Holdings at RM5.59 at which it is trading at a price-to-book value of 2.3 times.

It said on Tuesday that Parkson has been gyrating in a huge ascending wedge pattern for the past few weeks but recent setback dragged prices below the support trend line. Currently, the stock is hovering just a tad above its 200-day SMA.

“The biggest concern now is the potential fall below the 200-day SMA. If this happens, we expect selling to be steep. Next downleg is likely to drag prices back towards the RM5.22 and RM5.00 levels,” it said.

CIMB Research said indicators remain weak. MACD signal line has slipped into the negative territory while RSI is below the 50pts mark. Put a buy stop at RM5.70, just in case,” it said.



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Way of the dragon

In the Q&A below, HwangDBS Vickers Research explains the significance and expectations of the Year of the Dragon, which will reign from Jan 23, 2012 through Feb 9, 2013.

Q: Can you briefly explain the Chinese animal signs and basics of Chinese geomancy?
A: According to the Chinese almanac, the lunar calendar runs on a 60-year cycle, rotating among 12 animal signs of the zodiac and five elements that represent the basic components of everything in the universe — fire, earth, metal, water and wood, in this order — with their inter-relationships governed by the cycle of birth and destruction. This year, we are marking the Year of the Water Dragon, which takes over from the Metal Rabbit.

How do you know about celestial predictions when you are supposed to be a financial analyst? Who are your sources?
We do not pretend to know everything, certainly not the art of fortune telling. We trawl through cyberspace and borrow the crystal balls of experts who use a combination of astrology, horoscope and metaphysics principles. Based on consensus opinion, we then link their interpretations to our stock market knowledge, with a dose of logic of course.

Are the astrologers’ forecasts reliable?
Call them what you want — geomancers, soothsayers, astrologers, fortune tellers, feng shui practitioners — these self-styled masters earn a living by making predictions. Just like us, who advise clients by recommending what stocks to buy or sell (and hope we will be rewarded with commissions in return). Since forecasting is more art than science, based on different methods and subjective interpretations, there is no guarantee of accuracy. So, please do not hold us liable for their forward-looking opinions.



But were the predictions accurate last year?
To be honest, it was mixed. We wrote that the stock market rally would extend into 2011, but our local bourse could not sustain its momentum despite registering new highs. Yet, the advice to be more vigilant in the later stages due to possible cooling effects arising from the water element with the arrival of the Year of the Dragon seemed to offer a sense of truth.

In hindsight, investors who emulated the traits of the Rabbit would have benefited. Calls to use the long bunny ears to filter out market noises, avoid overconfidence, and show resilience, were timely. A word of caution — past track record is not a guarantee or reflection of future performance.

Why should we then read this report?
This report is for fun, if you will. The content is merely for amusement to take your mind off the shaky global economic outlook. It is not meant to be a substitute for our fundamental approach. So, be open-minded and stay positive. You can choose to believe or ignore these general forecasts, which are made without considering specific elements. Whatever the omens, remember, you are the master of your own destiny. So, let’s use our common sense to seek the truth.

Which elements will dominate in the Year of the Dragon?
We will see water sitting on top of earth. This represents a destructive cycle as earth is the destroyer of water according to the cycle of birth and destruction. Due to this conflicting relationship, there could be upheavals arising from a sense of imbalance. The combination of the water and earth elements may also result in murky waters, which could obscure the outlook. In addition, the Dragon is the only animal in the Chinese zodiac that is mythical, which implies events may unfold in an illusory manner. Yet, the later part of the year promises stability and recovery.

Will the world end on Dec 21?
As an investor, you should worry more about whether you will make money this year. Contrary to popular belief, the Mayan doomsday prophecy did not predict that the world would end on Dec 21, 2012. It merely said the date marks the end of a great cycle and the beginning of another in their calendar. It is also a leap year, which signifies that we will be able to jump over obstacles ahead. And just to be clear, we plan to be around this time next year to write on the Year of the Snake.

What happened in previous Dragon years?
An analysis of historical stock market performance was inconclusive. In Malaysia, the benchmark KLCI saw an obvious downtrend in 2000, but chalked up gains in 1988. If we go back to the last Year of the Water Dragon in 1952, the DJIA on Wall Street pulled back first (-7%) before rebounding subsequently to close the year up a minute 4%.

When will the bulls return? What does the Year of the Dragon hold for our stock market?
We wish we knew the exact timing. According to the soothsayers, the bulls may not make their presence felt this lunar year. This is because of the missing fire element, which represents the driving force behind the stock market. You may argue that the mythical creature could breathe out fire, but let’s not forget the dominance of the water element in the Year of the Dragon that can calm its fire. Also, because the spirit of the Dragon tends to make everything seem larger than life, the financial markets could see more volatility this year.

To prosper, be adaptable like the Dragon, which can live in water, on land and in the air. Being imaginative and self-driven are essential investment traits, too, as the divine beast is always able to see and chart new paths.


Which sectors will see good fortune?
Industries associated with the wood and earth elements. This is because according to the cycle of birth and destruction, wood conquers earth while earth conquers water (and earth and water are the two dominant elements in the Year of the Dragon). They include consumer products, food and beverage and media (wood element), and property, construction, petroleum related and mining (earth element). Meanwhile, industries that fall under the fire element (airlines, for example) and water element (shipping) are expected to face turbulent times.

Where should investors put their money? And why?
In defensive stocks, of course. For prudence’s sake, that’s why. If the worst is yet to come, then it only makes sense to adopt a capital preservation investment strategy. To seek shelter in Malaysia, consider the following eight names. They are either in auspicious sectors or offer attractive dividend returns: Berjaya Sports Toto Bhd (“buy”, target price: RM4.70), Parkson Holdings Bhd (“buy”, TP: RM6.55), KLCC Property Holdings Bhd (“buy” TP: RM3.70), Axis REIT (“buy”, TP: RM2.75), Gamuda Bhd (“buy”, TP: RM4.80), Petronas Gas Bhd (“buy”, TP: RM16.90), Bumi Armada Bhd (“buy” TP” RM5) and Malayan Banking Bhd (“buy” TP: RM10.60).



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KLCI slips into negative territory at mid-day, lags Asian markets

KUALA LUMPUR (Jan 19): The FBM KLCI fell at the mid-day break on Thursday, lagging behind key Asian markets as some mild profit taking on the penultimate trading day before the extended weekend for the Chinese New Year holidays chipped off earlier gains.

The FBM KLCI slipped 1.60 points to 1,515.78 at 12.30pm.

Losers overtook gainers by 324 to 296, while 308 counters traded unchanged. Volume was 1.09 billion shares valued at RM675.52 million.

The ringgit strengthened 0.52% to 3.1027 versus the US dollar; crude palm oil futures for the third month delivery fell RM26 per tonne to RM3,154, crude oil added 86 cents a barrel to US$101.45 while gold gained US$3.50 an ounce to US$1,663.45.

At the regional markets, Japan’s Nikkei 225 added 1.1% to 8,645.04, Hong Kong’s Hang Seng Index gained 1.11% to 19,906.30, the Shanghai Composite Index rose 0.90% to 2,286.89, South Korea’s Kospi gained 1.14% to 1,914.03, Singapore’s Straits Times Index was up 0.54% to 2,810.52 and Taiwan’s Taiex edged up 0.17% to 7,233.69.

On Bursa Malaysia, the decliners at mid-day included Sunchirin that fell 20 sen to RM1.50, Batu Kawan down 18 sen to RM18.68, Triplc 17.5 sen to 42 sen, Genting down 16 sen to RM10.84, Southern Acids 14 sen to RM2.18, Warisan 11 sen to RM2.49, Tasek 10 sen to RM7.90, Bursa down nine sen to RM6.86 while Hong Leong Industries and Amway fell eight sen each to RM4 and RM9.40.

Among the gainers, Nestle was up 30 sen to RM56.30, Aturmaju 16 sen to 74 sen, Parkson 14 sen to RM5.74, BAT 12 sen to RM49.92, while Knusford, Petronas Gas, Ekovest and Sarawak Oil Palm added 10 sen each to RM1.70, RM15.38, RM2.60 and RM6.05 respectively.

D.B.E Gurney, which was the most actively traded counter this morning, was issued with an unusual market activity query by Bursa Malaysia Securities Bhd.

The stock was unchanged at 11 sen with 166.2 million shares done.

Other actives included TMS, JCY, MBSB, BIMB, Nextnation and Ingenuity Solutions.



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Parkson top gainer, strong growth opportunities seen

KUALA LUMPUR (Jan 19): PARKSON HOLDINGS BHD [] was the top gainer on Thursday morning as it was seen to be able to tap into the strong consumer growth opportunities in the region.

At 10.21am, the share price was up 18 sen to RM5.78 with 201,100 shares done.

The FBM KLCI rose 2.8 points to 1,520.18. Turnover was 570.49 million shares valued at RM272.30 million. There were 253 gainers, 194 losers and 270 stocks unchanged.

Affin Investment Bank Research said it continues to like Parkson for its attractive valuations. At the price level of RM5.60, it was trading at 13.7 times CY12 price-to-earnings, on par with its closest peer, Aeon (13.1 times) but slightly below sector average of 14.8 times.

Historically, however, Parkson had traded at a PE premium to Aeon, which it believed was justified given: 1) stronger three-year earnings CAGR of +17% (Aeon: +7%); 2) strong growth opportunities, particularly in Indonesia, Vietnam and Cambodia, and; 3) exposure to the regional consumer sector.

“We lifted our FY06/12-14 net earnings forecasts by +2-3% after raising our same store sales growth assumptions for Malaysia (from 6% to 8%) and Indonesia (from 5% to 8%). However, we lower our PE target for Parkson Retail Group (PRG) to 20 times (previously, 23 times) to take into account weaker market sentiment in China and Hong Kong – PRG is currently trading at 15.8 times CY12 PE.

“Consequently, our RNAV-derived target price is revised downwards to RM6.65 (previously, RM7.15). Notwithstanding that, we maintain our BUY rating,” it said.



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KLCI edges up at mid-morning, struggles to stay above 1,520

KUALA LUMPUR (Jan 19): The FBM KLCI edged up at mid-morning on Thursday but struggled to stay above the 1,520-level as pre-holiday mood kept investors on the sidelines.

The FBM KLCI rose 3.42 points to 1,520.80 at 10am.

Gainers led losers by 233 to 164, while 251 counters traded unchanged. Volume was 461.40 million shares valued at RM215.42 million.

Asian shares rose to a one-month high and the euro firmed on Thursday after news that the International Monetary Fund was seeking to boost its resources to tackle the euro zone debt crisis alleviated worries about Europe's funding difficulties, according to Reuters.

Smooth debt sales by Portugal and above-estimate earnings from Wall Street powerhouse Goldman Sachs Group Inc added to the positive mood just as investor risk-aversion has started to weaken after recent data suggested euro zone problems have not seriously derailed global economic activities, it said.

At the regional markets, Japan’s Nikkei 225 added 1.25% to 8,657.27, Hong Kong’s Hang Seng Index gained 0.63% to 19,811.50, South Korea’s Kospi added 0.73% to 1,906.24, Singapore’s Straits Times Index was up 0.46% to 2,808.20, Taiwan’s Taiex was up 0.17% to 7,233.69 and the Shanghai Composite Index was up 0.16% to 2,269.99.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to client said that the FBM KLCI’s resistance areas of 1,518 and 1,532 may cap market gains, whilst obvious support areas may be located at 1,505 and 1,516.

“Despite the US markets’ positive tone last night, we could be in for yet another range bound day of trading activity ahead of the Chinese New Year holidays,” he said.

On Bursa Malaysia, the gainers at mid-morning were led by Parkson, Aturmaju and Hong Leong Bank that rose 16 sen each to RM5.76, 74 sen and RM11.06 respectively; UMW added 14 sen to RM6.99, Petronas Gas 12 sen to RM15.40, Ekovest and Knusford 10 sen each to RM2.60 and RM1.70, while Guan Chong and BAT gained eight sen each to RM2.44 and RM49.88.

D.B.E Gurney, which was the most actively traded counter at mid-morning, was issued with an unusual market activity query by Bursa Malaysia Securities Bhd.

The stock rose half a sen to 11.5 sen with 125 million shares done.

Other actives included TMS, MBSB, BIMB, JCY, XDL and DRB-Hicom.

Decliners included Southern Acids, Nestle, MAHB, Lafarge Malayan Cement, HLFG, MISC, BHIC and Maybulk.



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KLCI extends loss for second day, falls below 1,510-level

KUALA LUMPUR (Jan 16): The FBM KLCI extended its losses on Monday and fell below the 1,510-point level in line with the overall weaker investor sentiment at key regional markets following Standard & Poor’s cutting the sovereign credit rating of nine of the euro zone's 17 countries.

The FBM KLCI fell 14.01 points to 1,509.06.

Losers beat gainers by 542 to 207, while 289 counters traded unchanged. Volume was 1.44 billion shares valued at RM1.36 billion.

Meanwhile, European stocks pared early losses and turned flat in morning trade as gains in defensive shares offset a drop in banking stocks following a mass credit rating downgrade by S&P of euro zone countries, according to Reuters.

The US markets are closed on Monday to observe the Martin Luther King Jr Day holiday.

At the regional markets, the Shanghai Composite Index fell 1.71% to 2,206.19, Japan’s Nikkei 225 lost 1.43% to 8,378.36, Taiwan’s Taiex was down 1.09% to 7,103.62, Hong Kong’s Hang Seng Index fell 1% to 19,012.20, South Korea’s Kospi shed 0.87% to 1,859.27 and Singapore’s Straits Times Index lost 1.26% to 2,756.49.

Royal Bank of Scotland analysts said that overall, while the market impact of the downgrades was unlikely to be very significant in the short term, they serve as a stark reminder that the euro area sovereign crisis is here to stay.

In a note Jan 16, the analysts said that more importantly, these downgrades were likely to solidify expectations that neither the EFSF nor the ESM will be able to maintain their AAA rating.

“This in turn is likely to make any significant increase in the lending capacity of either institution more difficult.

“We continue to expect the crisis to deepen eventually leading to further widening in spreads across countries vis-à-vis Germany,” they said.

On Bursa Malaysia, BAT was the top loser and fell 46 sen to RM49.30; Genting lost 32 sen to RM10.56, Dutch Lady and GAB down 28 sen each to RM25.50 and RM11.70, F&N down 22 sen to RM18.68, Batu Kawan 20 sen to RM18.60, Petronas Dagangan and UMW 18 sen each to RM17.22 and RM6.81, while Parkson and Genting PLANTATION []s fell 17 sen each to RM5.53 and RM8.94.

Compugates was the most actively traded counter with 157.2 million shares done. The stock added one sen to 8 sen.

Other actives included UOA Development, Hovid, Asia Media, CIMB and RedTone.

Among the gainers, Maybulk rose 23 sen to RM2.11, Eupe and GUH 18 sen each to 63 sen and RM1.38, UOA Development 17 sen to RM1.58, Can-One 14 sen to RM2.02, Tasek and Far East up 10 sen each to RM8 and RM7, while SHL and Kian Joo added nine sen each to RM1.30 and RM2.25.



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KLCI falls further at mid-day break, sentiment stays weak

KUALA LUMPUR (Jan 16): The FBM KLCI fell below the 1,520-point level on Monday as key regional markets retreated, spooked by Standard & Poor’s cut of the sovereign debt rating of nine of the euro zone's 17 countries.

At the mid-day break, the FBM KLCI fell 11.15 points to 1,511.92, weighed by losses at select blue chips including Genting, Petronas Dagangan and Genting PLANTATION []s.

Market breadth was negative with losers beating gainers by 486 to 141, while 256 counters traded unchanged.

The ringgit weakened 0.51% to 3.1481 versus the US dollar; crude palm oil futures fell RM23 per tonne to RM3,125, crude oil gained 18 cents per barrel to US$98.88 while gold slipped US$1.60 an ounce to US$1,637.40.

Asian markets fell as worries that European financial troubles would hurt the global economy and sap appetite for commodities weighed on industrial metals such as copper, while a shift to perceived safe haven assets boosted Japanese government bonds, according to Reuters.

Japan’s Nikkei 225 fell 1.54% to 8,369.23, Hong Kong’s Hang Seng Index lost 0.95% to 19,021.80, South Korea’s Kospi was down 1.56% to 1,846.43, Singapore’s Straits Times Index lost 1.25% to 2,756.74, Taiwan’s Taiex fell 0.87% to 7,118.79 and the Shanghai Composite Index shed 0.56% to 2,231.98.

On Bursa Malaysia, Dutch Lady and BAT fell 52 sen each to RM25.26 and RM49.24, Genting down 24 sen to RM10.64, Milux 21 sen to RM1.23, Petronas Dagangan 20 sen to RM17.20, F&N 18 sen to RM18.72, Degem 16 sne to 90 sen, Parkson 15 sen to RM5.55, Genting Plantations 13 sen to RM8.98 while Mentiga fell 12.5 sen to 67 sen.

Compugates was the most actively traded counter with 114.1 million shares done. The stock added one sen to 8 sen.

Other actives included Asia Media, Ingenuity Solutions, RedTone, Digistar, Can-One, YTL Land, Hubline and Hovid.

Gainers included Can-One, Supermax, Far East, Tasek, Kian Joo, Eng Kah and Aeon.



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KLCI snaps winning streak, but adds 8.94 points week-on-week

KUALA LUMPUR (Jan 13): The FBM KLCI snapped its four-day winning streak and fell on Friday as key regional markets ended the week on a mixed note.

European shares and the single currency rose on Friday after positive comments on the region's outlook from the European Central Bank and the success of Spain's bond auction, with attention focused on Italy's first debt sale of the year, according to Reuters.

The FBM KLCI closed 2.49 points lower at 1,523.07. Week-on-week, however, the index gained 8.94 points.

Losers edged gainers by 397 to 373, while 339 counters traded unchanged. Volume was 1.77 billion shares valued at RM1.61 billion.

Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said the FBM KLCI was likely to extend gains towards 1,550 level following a round of well-received debt auctions in Spain and Italy, expected monetary easing in China and huge liquidity on the domestic front.

“The fact that Italy and Spain sold a total of €22bn ($28bn) of sovereign debt at sharply reduced prices (with implied borrowing costs falling to lowest levels since March 2011) is a major surprise and suggest the European funding problem is gradually improving,” he said.

At the regional markets, Japan’s Nikkei 225 rose 1.36% to 8,500.02, Hong Kong’s Hang Seng Index added 0.57% to 19,204.42, South Korea’s Kospi gained 0.60% to 1,875.68 and Singapore’s Straits Times Index jumped 1.75% to 2,791.54.

Meanwhile, the Shanghai Composite Index fell 1.34% to 2,244.58 and Taiwan’s Taiex shed 0.07% to 7,181.54.

On Bursa Malaysia, Dutch Lady fell 32 sen to RM25.78, Far East down 30 sen to RM6.90, Proton 28 sen to RM5.18, Iretex 12 sen to RM1.05, Advanced Packaging 11 sen to RM1.19, while Aeon, CBIP, JT International and HLFG lost 10 sen each to RM7.35, RM4.75, RM7.08 and RM11.70 respectively.

Among the gainers, Malayan Flour Mills added 31 sen to RM7.86, Supermax 21 sen to RM4.55, Carlsberg and Nestle added 20 sen each to RM8.63 and RM56, Hartalega, MBM Resources and Parkson rose 17 sen each to RM6.57, RM3.47 and RM5.70 respectively, while Milux and Kian Joo added 15 sen to RM1.44 and RM2.16.

Compugates was the most actively traded counter with 101.3 million shares done. The stock added one sen to 7 sen.

Other actives included DRB-Hicom, Utopia and Proton.



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Parkson eyes Indo-China market

Parkson Holdings Bhd, a Kuala Lumpur-based department-store operator that makes most of its revenue in China, plans to enter new markets in Southeast Asia to tap the region’s growing affluence.

The retailer that has 102 outlets in China, Malaysia, Vietnam and Indonesia, sees Myanmar, Thailand and the Philippines as potential markets, said Alfred Cheng, managing director of the units listed in Hong Kong and Singapore. Parkson plans to open 24 more stores in Asia by the end of next year, followed by its first in Cambodia in the first half of 2013, Cheng said.

“I am always on the lookout,” he said in an interview in Kuala Lumpur yesterday. “The Indo-China region, as a whole, has about 160 million people. That’s where we want to be.”

Malaysia, Indonesia and Vietnam collectively contributed 30 percent to Parkson’s group revenue for the financial year ended June, with the rest coming from China, according to data compiled by Bloomberg. Non-China revenue may grow to mirror that generated in China in the future as the group expands, Cheng said, without specifying a time frame.

It currently operates 49 outlets in China, 37 in Malaysia, eight each in Vietnam and Indonesia.

Parkson’s China outlets will probably sustain same-store sales growth of as much as 13 percent next year, according to Cheng. Revenue from stores open more than a year in Vietnam will grow about 15 percent to 20 percent next year, and 8 percent to 10 percent in both Malaysia and Indonesia, he said.

Singapore Debut

Parkson was set up in Malaysia in 1987 as the retailing arm of the Lion Group, controlled by Cheng Heng Jem, better known as William Cheng. The holding company owns 51.5 percent of Hong Kong-listed Parkson Retail Group Ltd., which is based in Beijing, and 67.6 percent of Singapore-listed Parkson Retail Asia Ltd., which runs all stores outside China, according to stock exchange filings. Alfred Cheng is managing director of both.

Parkson Retail Asia debuted on the Singapore stock exchange on Nov. 3 after raising S$138.2 million (US$108 million) in an initial share sale. In June, the group ventured into the Indonesian market after acquiring PT Tozy Sentosa, which owns the country’s Centro department stores, for US$12.8 million.

“The idea of Parkson Retail Asia listing in Singapore is for it to have an independent profile so that it can undertake expansion within the countries we operate in, as well as to take on new countries when opportunity arises,” Cheng said. “Fifteen years or 20 years down the road, the rest of Asia could be equal size” to Parkson’s China business.

Parkson Retail Asia has risen 5.3 percent since its debut, compared with a 2.4 percent decline in the benchmark FTSE Straits Times Index in the same period. The stock rose 1.3 percent to S$1.19 at 11:10 a.m. in Singapore trading today.

Store Expansion

Parkson Holdings, the Malaysian parent, had RM3.2 billion (US$1 billion) in cash in September, according to data compiled by Bloomberg. Its position is “strong enough” for acquisitions and opening stores in new markets as opportunities arise, Cheng said. Parkson Retail Group signed an agreement last month to expand a loan, completed last year, by 60 percent to US$400 million, giving it additional working capital to expand in China.

The group plans to open four new stores in China this month, said Cheng. The retailer opened its first store in Beijing in 1994 and now derives 70 percent of sales from the world’s most populous nation for the financial year ended June, according to data compiled by Bloomberg.

“We are cautiously aggressive with our plans,” he said. “We are operating in countries where the underlying domestic consumption is still growing very quickly.”

Dividend Policy

Parkson posted a 19 percent increase in net income to RM90.3 million for the three months through Sept. 30, driven by higher sales and improved operating efficiency. Revenue grew 21 percent to RM792 million.

“Our same-store sales growth is still growing at a very strong double-digit rate, so with that improvement, our bottom line continues to expand in double digits,” he said. “Despite the global uncertainty in the economic environment, the countries we are operating in are still in developing mode.”

Both Parkson Retail Group and Parkson Retail Asia have a policy of paying as much as 50 percent of net income as dividends to shareholders, Cheng added. -- Bloomberg



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Parkson plans 24 more outlets in 2012

Parkson Retail Asia Ltd, the Singapore-listed unit of Parkson Holdings Bhd, plans to open 10 new stories in Southeast Asia next year, Managing Director Alfred Cheng said in an interview in Kuala Lumpur today.

Parkson Retail Group Ltd, the group’s Hong Kong-listed unit, will open as many as 14 more outlets in China, including four this month, he said. -- Bloomberg



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KLCI closes higher but gains limited on cautious sentiment

KUALA LUMPUR (Dec 5): The FBM KLCI rose marginally higher on Monday as Asian markets closed mixed, with sentiment lifted by Italy's unveiling of austerity steps, and expectations Ireland will do the same in a new budget to be announced later in the day.

World stocks and demand for German government bonds rose on Monday as confidence grew European leaders would make big strides in solving the euro zone's debt crisis at a crucial summit this week, according to Reuters.

The FBM KLCI gained 0.93 point to close at 1,489.95.

Gainers led losers by 407 to 337, while 303 counters traded unchanged. Volume was 2.33 billion shares valued at RM1.33 billion.

At the regional markets, Hong Kong’s Hang Seng Index gained 0.73% to 19,179.69, Japan’s Nikkei 225 added 0.60% to 8,695.98 and South Korea’s Kospi rose 0.36% to 1,922.90.

Meanwhile, the Shanghai Composite Index fell 1.16% to 2,333.23, Taiwan’s Taiex lost 0.60% to 7,098.08 and Singapore’s Straits Times Index shed 0.26% to 2,766.23.

On Bursa Malaysia, shares of automotive players PROTON HOLDINGS BHD [] and DRB-HICOM BHD [] rose after the Edge weekly reported that state investment arm Khazanah Nasional Bhd was likely to ask for proposals from interested parties for its stake in the carmaker.

Citing industry sources, the Edge said Khazanah had made overtures and put out feelers to the market, seeking proposals from existing car players on a business plan with regard to Proton.

Khazanah is the largest shareholder in the national car company with a 42.74% stake.

Proton was up 89 sen to RM4.50 while DRB-Hicom added 20 sen to RM2.20.

Other gainers included BAT that rose RM1 to RM48.10, Nestle 60 sen to RM53.20, CBIP 28 sen to RM4.63, United PLANTATION []s and Toyo Ink 26 sen each to RM18.36 and RM1.86, Tradewinds Plantations 25 sen to RM4.42 and Batu Kawan 22 sen to RM17.10.

Among the losers, IJM Corp fell 21 sen to RM5.57, Manulife 19 sen to RM2.90, HELP and Parkson 16 sen each to RM1.62 and RM5.68, Sime 14 sen to RM8.98, Petronas Dagangan 10 sen to RM17.20, Bursa and MAHB nine sen each to RM6.60 and RM6.06, while RHB Capital lost eight sen to RM7.35.

The actives included Proton, Sanichi, DRB-Hicom, Compugates and DPS Resources.


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KLCI slips at mid-day as Asian markets tread cautiously

KUALA LUMPUR (Dec 5): The FBM KLCI slipped at the mid-day break on Monday, in line with the cautious sentiment at most key regional markets that are awaiting for the outcome of a crucial European leaders’ summit later in the week.

The FBM KLCI slipped 0.16 point to 1,488.86 at the mid-day break, weighed by losses at select blue chips.

Gainers led losers by 298 to 290, while 287 counters traded unchanged. Volume was 1.3 billion shares valued at RM634.95 million.

The ringgit weakened 0.40% to 3.1391 versus the US dollar; crude palm oil futures for the third month delivery rose RM41 per tonne to RM3,101, crude oil rose 51 cents to US$101.47 per barrel while gold edged up two cents an ounce to US$1,746.77.

Asian markets were mixed after the HSBC Purchasing Managers' Index for China's services sector fell to 52.5 from 54.1 in November, its slowest rate of growth in three months.

At the regional markers, Japan’s Nikkei 225 and Hong Kong’s Hang Seng Index each rose 39% to 8,677.61 and 19,114.78 respectively, and South Korea’s Kospi edged up 0.02% to 1,916.46.

Meanwhile, the Shanghai Composite Index fell 0.63% to 2,345.78, Taiwan’s Taiex lost 0.39% to 7,112.67 and Singapore’s Straits Times Index shed 0.33% to 2,764.25.

Among the decliners on Bursa Malaysia this morning, IJM Corp fell 17 sen to RM5.61, Sime Darby 13 sen to RM8.99, Asas 12 sen to 98 sen, Parkson 11 sen to RM5.73, Petronas Dagangan 10 sen to RM17.20, AIC nine sen to RM1.11 while HELP and OCB lost eight sen each to RM1.70 and 47 sen.

Proton was the top gainer and surged 98 sen to RM4.59 with 14.45 million shares done.

The national carmakers shares were actively traded on Monday after the Edge weekly reported that state investment arm Khazanah Nasional Bhd was likely to ask for proposals from interested parties for its stake in the carmaker.

Citing industry sources, the Edge said Khazanah had made overtures and put out feelers to the market, seeking proposals from existing car players on a business plan with regard to Proton.

Khazanah is the largest shareholder in the national car company with a 42.74% stake.

Other gainers included BAT that rose 72 sen to RM47.82, Nestle 60 sen to RM53.20, United PLANTATION []s and Toyo Ink 30 sen each to RM18.40 and RM1.90, Tradewinds Plantations 26 sen to RM4.43 while KLK added 20 sen to RM22.

The actively traded counters this morning included Proton’s securities, Compugates, DPS Resources and Sanichi.



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KLCI edges up as regional markets reverse losses

KUALA LUMPUR (Dec 2): The FBM KLCI closed in positive territory on Friday as some key regional markets reversed their earlier losses, but gains at the local market remained muted as investor sentiment stayed cautious.

World stocks extended gains on Friday and looked set for the biggest weekly rise since mid-2009 thanks to coordinated central bank action that cut the cost of money market funds, according to Reuters.

There were also widespread investor hopes that a key European summit next week could finally yield a concrete solution to the euro debt crisis, it said.

The FBM KLCI rose 3.76 points to close at 1,489.02, lifted by gains at select blue chips.

Gainers edged losers by 386 to 356, while 298 counters traded unchanged. Volume was 1.71 billion shares valued at RM1.36 billion.

At the regional markets, Japan’s Nikkei 225 rose 0.54% to 8,643.75, Hong Kong’s Hang Seng Index was up 0.20% to 19,040.39 and Singapore’s Straits Times Index added 0.42% to 2,773.36.

Meanwhile, the Shanghai Composite Index fell 1.1% to 2,360.66. Taiwan’s Taiex lost 0.53% to 7,140.68 and South Korea’s Kospi shed 0.01% to 1,916.04.

On Bursa Malaysia, Petronas Dagangan and Petronas Gas added 68 sen each to RM17.30 and RM14; Proton was up 51 sen to RM3.61, Nestle and Dutch Lady 40 sen each to RM52.60 and RM24.80, Tradewinds PLANTATION []s 25 sen to RM4.17, Panasonic 22 sen to RM19.96, Parkson 19 sen to RM5.84 and TDM 18 sen to RM3.80.

Among the decliners, BAT fell RM1 to RM47.10, PPB down 20 sen to RM16.38, Amway 14 sen to RM8.96, Malaysia Smelting Corp 11 sen to RM4.01, while SHL, United Plantations, NSOP and Tradewinds fell 10 sen each to RM1.15, RM18.10, RM5.68 and RM9.90 respectively.

The actives included DPS Resources shares and warrants, Sanichi, SYF Resources and MUI Industries.



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MIDF Research upgrades Parkson to Buy, raises TP to RM6.42

KUALA LUMPUR (Nov 24): MIDF Research has upgraded PARKSON HOLDINGS BHD [] (PHB) to Buy from Neutral with a higher target price of RM6.42 (from RM4.82).

The research house said on Thursday that it was adjusting its sum-of-parts valuation to include the recent listing of Parkson Asia (PA) as well as stake dilution in PA to 67.6%.

“We also ascribed a higher PER12 for its China operation of 18.7x (previous 13.4x) and PRA (Malaysia, Indonesia and Vietnam) operations of 13.7x based on its peers average multiple (refer table D and E).

“We like PHB given its exposure to regional retail sector as well as its on track network expansion plan,” it said.



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KLCI opens lower, blue chips weigh

KUALA LUMPUR (Nov 21): The FBM KLCI fell in early trade on Monday, weighed by losses at select blue chips, in line with the weaker sentiment at key regional markets.

Asian shares fell on Monday as uncertainty remained over how euro zone leaders would respond to mounting funding difficulties for European banks, while a crushing election win for Spain's centre-right opposition raised hopes for reforms, according to Reuters.

At 9.05am, the FBM KLCI fell 3.90 points to 1,450.50.

Loser edged gainers by 82 to 80, while 111 counters traded unchanged. Volume was 58.68 million shares valued at RM20.39 million.

Among the early decliners were Nestle, KLK, Petronas Chemicals, Genting, IOI Corp, Sime Darby, Public Bank, Parkson and TMC Life.



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Parkson Retail Asia bullish on growth

Alfred Cheng, managing director of Parkson Retail Asia, was all smiles during the listing ceremony of his company at the Singapore Exchange on Nov 3. Shares of the department store operator got off to a good start that morning, commencing trade on the Mainboard at S$1.04 (RM2.52) each, 10.6% above their IPO price against a 1.1% drop in the Straits Times Index.

That makes Parkson Retail Asia one of the few companies in the world to have braved a listing on the local bourse this year. Others — such as gym operator Fitness First and celebrity soccer club Manchester United — have either delayed or cancelled their plans to go public in the light of the financial uncertainty plaguing the global economy. Meanwhile, others that have listed, including port operator Hutchison Port Holdings Trust, continue to trade below their IPO valuations.

Cheng is confident, however, that Parkson has what it takes to ride the volatility and grow. “We are in the retail business, which is one of the industries that is less susceptible to financial volatility,” he tells The Edge Singapore in an exclusive interview.

“Retail trade is about domestic consumption and we are operating in developing countries where per capita income is rising with the middle and upper-middle classes. This gives us the foundation to do very good business.”

With 158.2 million shares offered to institutional investors and the public at 94 cents apiece, Parkson Retail Asia has raised proceeds amounting to S$148.7 million, about half of which Cheng intends to use to expand his business in Southeast Asia, where domestic consumption is on the rise.

The company had initially planned an IPO of 147 million shares, but exercised the option to issue an additional 22 million shares because of the high demand. Over the next three years, Parkson plans to open eight to 10 stores a year in Malaysia, Vietnam and Indonesia, where domestic consumption as well as tourist demand is on the rise.

According to market consultancy Euromonitor, retail sales by value in the department store sector are projected to grow 4.5%, 9.1% and 10.7% for Malaysia, Vietnam and Indonesia respectively between now and 2015.

Parkson plans to open eight to 10 stores a year in Malaysia, Vietnam
and Indonesia over the next three years.

Cheng: We were the first to introduce a brand with a personality in China.

Established 24 years ago in Malaysia, Parkson is now the nation’s second largest department store operator, with a chain of 36 stores in 24 cities and a market share of about 20%. It also operates stores in Vietnam, where it controls about 36% of the department store sector.

Earlier this year, it entered the Indonesian market through the acquisition of Centro Retail, a local chain of department stores focused on the middle class. Cheng expects to see “dramatic growth” in Indonesia over the next few years, and plans have already been drawn up for more Parkson stores across a dozen cities in the country.

Indonesian expansion
With a current market share of just 2.5% in Indonesia, however, Parkson Retail Asia could face a tough time establishing a foothold in the middle- to upper-middle-class consumer market there.

Indeed, it faces head-on competition with other department store operators such as Sogo, Debenhams and Metro as well as local players such as Matahari and Ramayana and other specialty stores or standalone outlets offering the same products. That could see Parkson Retail Asia struggle to gain headway in the world’s fourth most populous nation.

Cheng isn’t worried, though. To take on his rivals, he intends to have the company focus on fashion and cosmetics for a young, contemporary market, particularly in Jakarta and Bali.

Meanwhile, he plans to pursue a dual-brand strategy in Indonesia, which will see it leveraging on the widely known Centro brand to capture the “underserved” middle-class market and expand its network to at least 12 or 13 cities in Indonesia.

Cheng will also open new Parkson department stores to meet the demands of the Indonesian upper class in first-tier cities such as Jakarta, Medan and Surabaya.

Cheng believes that Parkson’s size and reputation will enable it to attract a wider base of international brands into its fold.

“We have a large network of stores across our markets that will give us an advantage with Indonesian customers and international retailers as well because they know that, by placing their brands with us, they get to be more visible,” he says.

“Also, the Indonesians already know our brand, since they tend to travel a lot in Malaysia and they have been asking for our brand for a while now. So, that will shorten our brand-building process in Indonesia.”

Lessons from China
To successfully enter the Indonesian market, Parkson can also use the experience gained from its operations in China, which is controlled under a separate company listed in Hong Kong — Parkson Retail Group — of which Cheng is also managing director.

Parkson is the first department store operator to set up successfully in China, where it is now the largest player in the sector. It set up its first store in 1994 in Beijing and now operates 50 outlets in 23 provinces across the country.

How did Cheng manage to build this Malaysian brand into the most successful department store operator in China? “One of our advantages was being there early,” he says.

To be sure, when Cheng brought Parkson to China, the department store sector in the country comprised a handful of fragmented operators.

“We were the first to introduce a brand with a personality and, over the years, we have developed standards of consistency and ser­vice that set us apart from our rivals.”

Parkson also hires mainly local talent, which allows it to better understand the needs of each market and tailor the merchandise according to customer demands.

Indeed, even differences in the weather in each city in China plays a part in influencing the size and colour of the apparel customers look for. Parkson currently hires some 13,000 staff across China, of whom just 40 are expatriates.

“At the end of the day, it’s the merchandise that draws the consumer and we have the platform and experience to offer our customers what they need,” says Cheng.

“Understanding your customers better than your competitors is the key to success in this sector. Coming out on top in the Chinese market gives us the confidence to operate in other countries.”

That experience will certainly help Singapore-listed Parkson Retail Asia, which will hold all of its department stores outside China. Indeed, Parkson is also exploring opportunities for growth in other Southeast Asia markets and will become the first department store operator to enter Cambodia when it opens its first outlet in Phnom Penh in 2013.

In total, Parkson runs about 50 outlets across Southeast Asia, with profits hitting S$36 million for FY ended June 30, up about 60% year-on-year (y-o-y) on the back of S$367 million in revenues, up 10% y-o-y.

“We have branded ourselves as a fashionable, family department store targeting the middle to upper-middle classes in the markets that we are in,” Cheng says.

“In each country, we have tailored our merchandise to appeal to the local consumer, even though certain more high-profile stores such as the Parkson outlets in [Suria] KLCC and Pavilion Kuala Lumpur see a higher volume of tourists.”

Parkson Retail Asia closed its first day of trading at S$1.13, with 35.5 million shares changing hands. At these levels, the stock has a market capitalisation of S$765 million, or 19 times earnings.

After the listing, parent company Parkson Holdings Bhd — which is controlled by Parkson Retail Asia chairman Cheng Heng Jem — will hold a 70.5% stake in the company.

“Listing in Singapore at this time is the right thing to do because we have just entered Indonesia and announced a new store in Cambodia,” Cheng says.

“Based on our growth profile and ability to execute, we are bullish on the longer term and believe our equity value will be worth a lot more when the market recovers.” — The Edge Singapore


This article appeared in The Edge Financial Daily, November 10, 2011.