KLCI closes higher, lifted by CIMB and select blue chips

KUALA LUMPUR (March 29): The FBM KLCI closed higher on Thursday, lifted by select blue chips including CIMB, Genting, Hong Leong Bank and BAT but the broader market was cautious.

The 30-stock index added 1.69 points to 1585.44. Gainers trailed losers by 260 to 462, while 353 counters traded unchanged. Volume was 1.50 billion shares valued at RM1.39 billion.

Asian shares fell for a second successive day on Thursday as concerns about growth prospects in the world's two largest economies, the United States and China, prompted investors to trim their risk exposure ahead of the end of the quarter, according to Reuters.

The Shanghai Composite Index fell 1.43% to 2,252.16, Hong Kong’s Hang Seng Index lost 1.32% to 20,609.39, Taiwan’s Taiex fell 2.06% to 7,872.66, South korea’s Kospi fell 0.85% to 2,014.41 while Singapore’s Straits Times index fell 0.28% to 3,007.44.

However, European stocks pared early losses and rose on Thursday, bouncing off a three-week low as rallying mining shares offset losses in the energy sector, where Total extended its slide, hit by worries over a gas leak in the North Sea, said Reuters.

On Bursa Malaysia, Warisan TC gained 20 sen to RM2.70, Aeon up 19 sen to RM9.40, BAT 18 sen to RM56.52, Hong Leong Bank 16 sen to RM12.38, Jaya Tiasa and Litrak added 15 sen each to RM8.38 and RM4.10. Toyo Ink rose 12 sen to RM1.58, WCT and Crescendo 11 sen each to RM2.50 and RM1.92, and Shell 10 sen to RM10.20.

Other gainers included CIMB that rose 10 sen to RM7.60, Genting four sen to RM11.14, Genting Malaysia two sen to RM3.89.

Decliners included Dutch lady, BLD PLANTATION []s, RHB Capital, GAB, Batu Kawan, SMPC, Bursa, United Plantations and Kossan.

The actives included Ariantec, Naim Indah Corp, Metronic, SuperComnet, Focus, Ingeuity Solutions, Key West and ManagePay.



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Stocks to watch: Gamuda, Syarikat Takaful, Bintai Kinden, WCT

KUALA LUMPUR (March 29) : While trading momentum in the Malaysian stock market has improved, analysts said cautious sentiment ahead of the country’s general election could prompt traders to safeguard their profits against the backdrop of challenging external macro dynamics.

Apart from less optimistic sentiment on economic growth prospects in the US and China, analysts also foresee the return of inflation as a key theme in financial markets, spurred by rising crude oil prices.

“We remain neutral on Malaysia. On the positive side, we currently do not expect its rates to increase, and we like the defensiveness of the market, with about one-third of its total market cap in defensive sectors, such as telecoms and utilities.

“National elections are likely to add to market volatility as well, although we expect the event to be market-neutral,” HSBC Global Research wrote in a note.

The FBM KLCI of 30 stocks erased earlier gains to finish 4.35 points lower at 1,583.75 points on Wednesday.

Stocks to watch on Thursday include GAMUDA BHD [], SYARIKAT TAKAFUL MALAYSIA BHD [], Bintai Kinden Corp Bhd and WCT BHD []. Other companies which could attract interest are NEXTNATION COMMUNICATION BHD [] and ENG TEKNOLOGI HOLDINGS BHD [].

Infrastructure-based Gamuda’s earnings rose 45.1% to RM136.47 million in the second quarter ended Jan 31, 2012 compared with RM94.02 million a year ago.

For the first half, earnings increased by 47.2% to RM268.79 million from RM182.55 million in the previous corresponding period.

Syarikat Takaful’s share price rose 5% or 15 sen to close at RM3.05 after CIMB Equities Research said the Islamic insurance firm should trade higher at RM4.60 in anticipation of its growth potential.

Bintai Kinden and joint venture partner Samsung C&T Corp have clinched S$166.24 million (about RM405 million ) worth of projects from Singapore’s Land Transport & Authority.

The jobs include the supply and installation of electrical services apart from tunnel ventilation and environmental control systems

Singapore-based Oversea-Chinese Banking Corp Ltd has emerged as a substantial shareholder in CONSTRUCTION [] firm WCT Bhd after acquiring a 5.01% stake in the builder.

Nextnation plans to raise up to RM15.49 million under a private placement of 137.21 million new shares to finance the telecommunication software developer’s commercial land acquisition, and capital needs. Trading of Nextnation shares were suspended from 2.30pm to 5pm on Wednesday.

The board of Eng Teknologi has accepted the revised takeover offer of RM2 a share by the founders and major shareholders of the hard disk drive component manufacturer.

SYF RESOURCES BHD [] swung into the black with net profit of RM3.22 million in the second quarter ended Jan 31, 2012 compared with net losses of RM431,000 a year ago due to higher sales with lower raw material costs.

For the first half ended Jan 31, 2012, it posted net profit of RM42.46 million compared with net loss of RM1.01 million in the previous corresponding period.



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OCBC substantial shareholder in WCT

KUALA LUMPUR (March 28) : Singapore-based Oversea-Chinese Banking Corp Ltd (OCBC) has emerged as a substantial shareholder in Malaysian CONSTRUCTION [] firm WCT BHD [] after acquiring a 5.01% stake in the builder.

In a statement to Bursa Malaysia on Wednesday, WCT said OCBC had purchased the stake comprising 40.98 million shares in the open market on Monday. At WCT shares’ closing price of RM2.51 on that day, OCBC’s stake could be worth RM102.86 million

Meanwhile, WCT also indicated in a separate statement that Kumpulan Wang Persaraan (KWAP) had acquired a collective 2.14 million shares in the builder last Wednesday and Thursday. Following the purchase, KWAP owns 6.04% in WCT.

Shares of WCT settled at RM2.38 at lunch break on Wednesday.



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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 raises earnings forecast for WCT

KUALA LUMPUR (March 15) : RHB Research Institute Sdn Bhd has raised its earnings forecast for WCT BHD [] by 11% in the FY12 to FY14 period after factoring in earnings potential from the builder’s recently acquired land in the Taman Yarl enclave here.

In a note on Thursday, RHB said the higher earnings projection assumes WCT registers a RM100 million top line and RM20 million in earnings before interest and taxes from its planned real estate project at Taman Yarl during the period.

“We are positive on the latest development as WCT is acquiring the land at a reasonable price, while the relatively established location of the land means the development can take off in a major way over a relatively short period of time,” RHB said.

The research firm is keeping its Market Perform call for the stock with an unchanged fair value of RM2.33. WCT closed unchanged at RM2.61 on Wednesday.



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WCT acquires property developer for RM450 million

KUALA LUMPUR (March 14) : Builder WCT BHD [] is acquiring the entire stake in a privately-owned property development company for RM450 million, an all-cash deal which will give the buyer access to strategic tracts in the Klang Valley.

In a statement to the exchange on Wednesday, WCT said it has signed a conditional share sale agreement with Eng Lian Enterprise Sdn Bhd, Shen & Sons Sdn Bhd, and AMC Sdn Bhd to acquire Timor Barat PROPERTIES [] Sdn Bhd.

“The proposed acquisition is expected to contribute positively to the future earnings and thereby improve shareholders’ value over the medium to long-term,” WCT said.

Timor Barat owns three parcels of land with a combined area of 2.5 million sq ft along Jalan Awan China within the Taman Yarl enclave here, according to WCT. The acquirer said it will finance the purchase with its internally generated funds and bank loans.

WCT shares closed unchanged at RM2.61 on Wednesday.



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CIMB Research has technical buy on WCT at RM2.64

KUALA LUMPUR (Feb 29): CIMB Equities Research has a technical buy on WCT BHD [] at RM2.64 at which it is trading at a FY13 price-to-earnings of 9.8 times and price-to-book value of 1.5 times.

The research house said on Wednesday that WCT, which had broken out from its triangle pattern in February, the share price further pushed above its 200-day SMA before consolidating in a bullish flag pattern.

“Once this consolidation is over, we think the stock is poised for one more leg up,” it said.

CIMB Research said that the MACD signal line is losing pace but remains above the zero line. RSI is also trading above the 50pts mark.

“We see the possible likelihood of a stronger rebound soon. If the candles can hold firm above its 200-day SMA, the next upswing will likely push prices towards RM2.78 and RM2.92 next. Be quick to cut loss if the RM2.58 level is violated,” it said.



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KLCI in the red in early trade, PetChem, Tenaga weigh

KUALA LUMPUR (Feb 28): Blue chips slipped in early trade on Tuesday, weighed down by losses in Petronas Chemicals (PetChem) and TENAGA NASIONAL BHD [].

At 9.31am, the FBM KLCI was down 0.08 of a point to 1,558.96. Turnover was 187.10 million shares valued at RM140 million. Losers led gainers 164 to 171 with 218 counters unchanged.

Reuters reported that regional markets consolidated on Tuesday as investors remained wary of the impact from high oil prices on growth and hoped the European Central Bank's upcoming second liquidity injection will support sentiment and revive risk appetite.

CIMB Equities Research said in its technical outlook for the market said while prices edged up on Monday, t the buying momentum could not be sustained.

“Market breath continued to be weak as it has been for the whole of last week. The 1,566 high still stands and so is our bearish outlook. The 1,550 key support levels is still a level to keep watch as it would eliminate all bullish potential if it is breached.

“The wedge support is now at 1,542 and a break below would be detrimental for the medium and long term outlook. The upside is likely capped around the next resistance at 1,570-1,575 even if the 1,566 is taken out. The scale is tipping towards the bears,” said CIMB Research.

Among the decliners were JT International, down 21 sen to RM6.95, F&N 16 sen to RM17.80, Oriental Holdings 14 sen to RM6.10 and WCT six sen to RM2.65. PetChem fell nine sen to RM6.81 and Tenaga six sen lower at RM6.19.



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WCT gains 1.5pc to RM2.69

WCT Bhd gained 1.5 per cent to RM2.69 in Kuala Lumpur trading at 9.52am, set for its steepest increase since Feb. 9.

The builder’s fourth-quarter profit rose 8.5 per cent from a year earlier to RM47.9 million, it said in a statement. -- Bloomberg



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WCT rises on RM331m Sabah job

WCT Bhd gained 1.1 per cent to RM2.68 as of 9:50 a.m. in Kuala Lumpur, set for its steepest increase since Feb. 9. The construction group won a RM331 million construction job in the eastern state of Sabah, it said in a statement. -- Bloomberg



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Stocks to watch: Sentoria, AirAsia, Hartalega, WCT, Kencana, TSH, MISC, KLK, Perisai

KUALA LUMPUR (Feb 23): Property developer Sentoria Group Bhd will be the stock to watch on Thursday, when it makes its debut on the Main Board of Bursa Malaysia.

The property developer is the first company to list in 2012.Its offer of 20 million new shares at an 85 sen each to the public was oversubscribed by 5.4 times.

RHB Research Institute had accorded a fair value of 92 sen based on a 30% discount to its sum-of-parts valuation.

Other stocks which could see trading interest following fresh corporate developments and financial results include AIRASIA BHD [], HARTALEGA HOLDINGS BHD [], WCT BHD [], KENCANA PETROLEUM BHD [], TSH RESOURCES BHD [], MISC BHD [], KUALA LUMPUR KEPONG BHD [] (KLK) and PERISAI PETROLEUM TEKNOLOGI [] Bhd and IJM CORPORATION BHD [].

AirAsia’searnings fell 56.3% to RM135.66 million in the fourth quarter ended Dec 31, 2011 when compared with RM311.08 million a year ago as it was impacted by aircraft fuel expenses, which rose to RM475.07 million from RM292.44 million on-year.

It recorded foreign exchange losses of RM137.38 million compared with forex gain of RM44.29 million a year ago.

For the financial year ended Dec 31, 2011, its net profit fell 46.8% to RM564.14 million from RM1.06 billion in FY10.

Nitrile latex glove maker Hartalega’s earnings rose 3% to RM50.70 million in the third quarter ended Dec 31, 2011 from RM49.20 million a year ago. For the nine months ended Dec 31, 2011, net profit increased 10% to RM151.60 million from RM137.76 million.

It proposed a bonus issue of up to 371.65 million 50 sen shares on a one-for-one basis and free warrants issue of up to 74.331 million free warrants on the basis of one free warrant for every five existing shares held on the entitlement date.

WCT secured a RM331 million contract for a mixed commercial project with a medical centre in Kota Kinabalu.

Kencana secured a RM101 million contract from Murphy Sarawak Oil Co. Ltd for two offshore platforms in Sarawak.

TSH Resources Bhd posted record net profit of RM120.54 million in the financial year ended Dec 31, 2011, an increase of 43% from the RM84.28 million a year ago and its expects the Indonesian oil palm estates to boost future earnings.

As for the fourth quarter ended Dec 31, 2011, net profit fell 39.8% to RM26.15 million from RM43.45 million. TSH said the reduction was primarily due to a foreign exchange loss of RM10.962 million and a RM7.291 million reduction in contributions from jointly controlled entities

MISC suffered net loss of RM1.74 billion in the third quarter ended Dec 31, 2011 compared with net profit of RM1.38 billion a year ago due to recognition of one-off provisions totalling RM1.45 billion.

For the nine-month period, MISC recorded a net loss of RM1.481 billion due to the recognition of one-off provisions totalling RM1.452 billion following its recent decision to exit from the liner business.

Kuala Lumpur Kepong recorded a 12.1% increase in earnings to RM340.98 million in the first quarter ended Dec 31, 2011, boosted mainly by its PLANTATION []s business, when compared with RM304.18 million a year ago.

Perisai’s net profits soared 106.8% to RM21.28 million for the financial year ended Dec 31, 2011 from RM10.25 million a year ago, boosted by profit contributed by the Intan Group, which it acquired in August last year. For the year ended Dec 31, 2011, its revenue was up 9.6% to RM82.41 million from RM75.21 million a year ago.

For the fourth quarter ended Dec 31, 2011, Perisai’s earnings 62.3% to RM11.21 million from RM6.93 million.

IJM Corporation’s earnings rose 5.7% to RM135.23 million in the third quarter ended Dec 31, 2011 from RM127.96 million a year ago. Its revenue chalked up 30.1% increase to RM1.172 billion from RM901.34 million. Earnings per share were 9.81 sen compared with 9.47 sen.

IJM Corp said for the nine-month period, its net profit was 1.1% higher at RM325.04 million from RM328.83 million. Its revenue rose at a stronger pace of 23.6% to RM3.303 billion from RM2.672 billion.



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WCT gets RM331m contract for mixed devt project in KK

KUALA LUMPUR (Feb 22): WCT BHD [] has secured a RM331 million contract for a mixed commercial project with a medical centre in Kota Kinabalu.

It said on Wednesday its unit WCT CONSTRUCTION [] Sdn Bhd had accepted the contract from Riverson Corporation Sdn Bhd for the project.

WCT said the scope of works comprised of the construction and completion of a nine-storey hospital with 200 beds, a 10-storey complex with small office-home office, office suites and three levels of retail space and one level of basement car park.

“The works are expected to be completed in August 2014. The contract is expected to contribute positively to the group’s earnings and net assets for the financial years from 2012 to 2014,” it said.



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KL shares close higher

Shares of the following companies had unusual moves in Malaysia trading. Stock symbols are in parentheses and prices are as of the close in Kuala Lumpur.

The FTSE Bursa Malaysia KLCI Index rose 0.8 per cent to 1,565.32, its fifth day of gains and the highest close since July 21.

Cahya Mata Sarawak Bhd climbed 3.2 per cent to RM2.28, its highest close since July 27. The construction company’s power-purchase talks with Sarawak Energy Bhd are ongoing and expected to be completed in coming months, Cahya Mata said in an exchange filing.

Compugates Holdings Bhd, a supplier of cellular phones, calculators and digital cameras, fell 4 per cent to 12 sen, the most since Jan. 30. The company isn’t aware of the reasons for the 39 per cent surge in its share price yesterday, it said in a response to a query by the stock exchange.

Malaysian Resources Corp, a property and construction group, dropped 2.2 per cent to RM2.19, its steepest decline since Jan. 12. Fourth-quarter net income slid 37 per cent from a year earlier to RM26.1 million, according to an exchange filing.

Naim Indah Corp, a property developer, surged 37 per cent to 67 sen, its highest close since October 2000. Its major shareholder Crest Energy Sdn Bhd sold a 22.8 per cent stake in the company to a group led by Raymond Chan, Naim Indah said in an exchange filing. The sharp rise in the price and volume prompted the stock exchange to advise investors today to “exercise caution” in trading the stock.

WCT Bhd, a construction group, jumped 7.8 per cent to RM2.78, its highest close since Aug. 17. The company won a RM300 million contract to build government buildings in Kuala Lumpur, WCT said in a statement. -- Bloomberg



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KLCI extends gains, Axiata, banks lift

KUALA LUMPUR (Feb 9): Fund buying of Axiata and banks pushed the FBM KLCI up more than five points in the morning session on Thursday amid some profit taking while the overall market was mixed.

At 12.30pm, the KLCI was up 5.04 points to 1,558.22. Turnover was 1.89 billion shares valued at RM1.29 billion. Losers led gainers 474 to 324 while 303 counters were unchanged.

Key regional markets were mixed on profit taking while uncertainty on the terms of a 130 billion euro (US$172 billion) rescue package for Greece held the buying in check. Euro area finance ministers are scheduled to meet Thursday.

US light crude oil rose 19 cents to US$98.90 per barrel. Crude palm oil price inched up RM2 to RM3,151 per tonne.

Market sentiment should be firmer in the afternoon session after the Statistics Department announced that December’s industrial production index (IPI) increased by 3.0% on-year, underpinned by the stronger manufacturing sector and electricity output.

The IPI increased 3.5% month-on-month in December 2011 while the IPI in November 2011 was revised to 2.4% year-on-year. As for the whole year of 2011, the IPI increased 1.4% from 2010.

The major index movers were Axiata, up 16 sen to RM4.94, pushing the KLCI up 3.20 points. CIMB added six sen to RM7.17, Maybank four sen to RM8.45, AMMB seven sen to RM6.03 and RHB Capital 12 sen to RM7.12.

Carlsberg was the top gainer, up 27 sen to RM9.58.

WCT added 13 sen to RM2.71 after it secured a RM300.52 million contract for the headquarters of the Ministry of International Trade and Industry from Putrajaya Management Sdn Bhd.

Naim Indah Corporation continued its rally to as 11-year high of 67.5 sen, up 18.5 sen with 257.9 million shares done as speculators hoped for a turnaround with the entry of new shareholders.

Among the six new shareholders include Datuk Raymond Chan Boon Siew. Chan, a major shareholder and executive director of HARVEST COURT INDUSTRIES BHD [], will hold the largest stake of 12.11% or 85 million shares. Chan is also the managing director of Sagajuta (Sabah) Sdn Bhd, a property developer.

Tenaga, which staged a surge on Wednesday, slipped eight sen to RM6.30 and dragged the KLCI by 1.02 points. IOI Corp fell four sen to RM5.43, Hong Leong Bank eight sen to RM11.52.

Far East fell 30 sen to RM7 in thin trade, Aeon 20 and United PLANTATION []s 20 sen each to RM7.80 and RM21.60 and Maybulk 18 sen to RM2.01.



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WCT gains on RM300m government job

WCT Bhd, a construction company, gained 2.3 per cent to RM2.64, bound for its highest close since Oct 28. The company won a RM300 million-contract to build government buildings in Kuala Lumpur, WCT said in a statement. -- Bloomberg



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Stocks to watch: Kimlun, WCT, JCY, MRCB, Naim Indah

KUALA LUMPUR (Feb 9): With the trading volume surging to fresh highs and the FBM KLCI at a six month high on Wednesday, investors should be ready to take some profit.

Key regional markets had also a strong run on Wednesday and whether the rally can be sustained on Thursday hinges on Greece as its leaders seem nearing a deal to secure a second bailout and avoid a messy default.

Trading volume on Bursa Malaysia surged to a record 4.39 billion units on Wednesday, driven by strong speculative trading in penny stocks while the FBM KLCI hit a six-month high of 1,553 as it played catch-up with regional peers.

Stocks to watch are Kimlun Corporation Bhd, WCT BHD [], JCY International Bhd, MALAYSIAN RESOURCES CORPORATION BHD (MRCB) and NAIM INDAH CORPORATION BHD [].

Kimlun’s unit SPC Industries Sdn Bhd has secured a RM223.18-million contract from Mass Rapid Transit Corporation Sdn. Bhd to supply segmental box girders for the Sungai Buloh to Kajang stretch of the Klang Valley MRT.

WCT secured a RM300.52 million contract for the headquarters of the Ministry of International Trade and Industry from Putrajaya Management Sdn Bhd.

Hard-disk drive manufacturer JCY International Bhd’s earnings surged to a record RM162.45 million in the first quarter ended Dec 31, 2011 from only RM7.51 million a year ago. Its revenue rose 27.3% to RM559.03 million from RM438.90 million a year ago.

MRCB’s net profit fell 37% to RM26.11 million in the fourth quarter ended Dec 31, 2011 (4Q 2011) from RM41.50 million a year ago. It recorded a slightly lower profit before taxation amounting to RM42.5 million for 4Q 2011 compared to RM49.3 million in 4Q 2010.

Its revenue rose 8.6% to RM470.38 million from RM433.12 million. Its earnings per share were 1.88 sen compared with 3.01 sen. It proposed dividend of 2.0 sen a share compared with 1.50 sen a year ago.

For the financial year ended Dec 31, 2011, its net profit rose 15.1% to RM77.46 million from RM67.27 million. Its revenue increased by 13.6% to RM1.213 billion from RM1.067 billion.

Naim Indah Corporation Bhd’s major shareholder Crest Energy Sdn. Bhd had disposed of all its 22.80% stake comprising of 160.06 million shares in the company. The counter hit limit-up and was the second most active on expectations of a turnaround for the company with the entry of new shareholders.

The shares were chased up on expectations of another bout of buying by speculators. However, it remains to be seen if the upward trend and high volume can be sustained.

Bursa Malaysia Securities issued an unusual market activity (UMA) query to COMPUGATES HOLDINGS BHD [] on Wednesday. The query was due to the sharp rise in price and high volume in the company’s shares. Compugates rose 3.5 sen to 12.5 sen with 451.47 million shares done.



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WCT lands RM300.5m MITI headquarters project

KUALA LUMPUR (Feb 8): WCT BHD [] has secured a RM300.52 million contract for the headquarters of the Ministry of International Trade and Industry from Putrajaya Management Sdn Bhd.

It said on Wednesday the projects involved the proposed design, CONSTRUCTION [] and completion of the headquarters and also external works at Jalan Khidmat Usaha, Kuala Lumpur.

“The scope of works under the contract includes the design and building of the government office building with GBI Gold rating consisting of a 31-storey office tower, a two-storey car-park and a three-storey podium and external works. The works are expected to be completed in February 2015,” it said.

WCT said it expected the contract to contribute positively to the group’s earnings and net assets for the financial years from 2012 to 2015.



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WCT confident of Vietnam ventures

KUALA LUMPUR: Despite the lingering economic uncertainty in Vietnam, construction firm WCT Bhd is confident of the long-term prospects of its property venture in the third most populated Southeast Asian nation.

The company sees Vietnam as part of its long-term growth plan and will continue to seek business opportunities in that country, said its CEO of China and Vietnam operations Datuk Teo Tong Kooi.

“We are fully aware of the challenges ... at the moment but we are in Vietnam for the long term as proven by our presence in the Middle East since 2002,” he told The Edge Financial Daily.

“Although we have been informed that the high borrowing costs and inflation rates [in Vietnam] have more or less stabilised over the past few months, we are still taking a very cautious approach to our investments in Vietnam,” Teo said.

WCT, via its wholly owned subsidiary WCT (S) Pte Ltd, was awarded an investment certificate (IC) by the Vietnamese government on Dec 24 last year to undertake a residential and commercial mixed development on a 4.7ha tract in Binh Hung Commune, Ho Chi Minh City.

Teo: We are still taking a very caution approach to our investments in Vietnam.

According to the announcement to Bursa Malaysia, it will be a 70:30 joint venture (JV) project between WCT and the Vietnamese government’s Southern Land Corp. The project has a plot ratio of six and is earmarked for commercial shoplots and condominium units complete with a garden and full-fledged facilities.

“The estimated gross development value (GDV) is RM700 million,” Teo said. “We have started land clearing and land filling. Due to the current economic outlook and rather weak property sentiment in Vietnam, the JV partners have agreed to defer the official launch to a later date to be decided.”

This marks WCT’s second property venture in Vietnam. The company, via a 67:33 JV called BSC-WCT Co Ltd with another local partner Minh Thien Construction and Trading Co Ltd, in 2008 obtained the IC to undertake a commercial and retail development named Platinum Plaza. However, the RM1 billion project has yet to contribute to WCT’s revenue.

“We do not expect any financial contribution from this project for this financial year [ending Dec 31, 2012],” Teo said.

“We can only officially launch the Platinum Plaza project once the local authorities have resolved the land settlement and terms which our JV partner has proposed to amend, which are still pending approval. Hence, there will be further delay in the official launch of this project,” he said.

Teo said there is no urgency to expedite the projects until WCT sees further improvement in the local economy. “The demographics of Vietnam will eventually create an appealing business environment,” he said.

While WCT fell short of meeting its RM2 billion construction job wins target last year with just RM187 million jobs secured, its property division has been doing relatively well despite the current global economic uncertainty.

According to a research report from Maybank Investment Bank, WCT’s property development sales for the nine-month period ended Sept 30, 2011 (9MFY11) was RM398 million, which was just RM2 million away from its RM400 million internal target for 2011.



The strong demand came from both its property projects in Klang, Selangor, and Sabah. The company recently launched the RM700 million 1-Medini residential project in Iskandar Malaysia, Johor, and is slated to open the Paradigm shopping mall this year.

Analysts are still upbeat on WCT despite a lack of new large-scale projects in the pipeline. According to Bloomberg data, 15 out of the 20 analysts who cover the company had a “buy” recommendation.

The consensus target price on the stock is RM2.91, according to Bloomberg data. This is 26.5% or 61 sen higher than last Friday’s closing price of RM2.30, which gave the company a market capitalisation of some RM1.9 billion.

According to Maybank IB Research, WCT is currently tendering for some RM4 billion jobs, of which about 75% is for infrastructure projects in Oman and the balance is domestic jobs. The company currently has an order book with a value of near RM3 billion, which would keep the company busy until 2013, it added.

For 9MFY11, WCT posted a 15.3% increase in net profit to RM114.5 million from RM99.3 million the same period a year earlier, mainly due to higher contribution from its civil engineering and construction division.

Revenue dropped 17% to RM1.05 billion in 9MFY11 from RM1.27 billion a year ago. Earnings per share rose to 14.29 sen from 12.61 sen previously.

The property development and property investment and management divisions made up some 40.6% or RM79.7 million of its total operating profit of RM196.2 million (excluding elimination of intra-group profit) in 9MFY11, up from a contribution of 37.5% the same period a year ago. The balance was contributed by its civil engineering and construction businesses.



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KLCI rises at mid-morning, lower liners in focus at Bursa

KUALA LUMPUR (Jan 26): Lower liners were in focus at Bursa Malaysia Securities Bhd at mid-morning on Thursday as the FBM KLCI edged up, lifted by select blue chips.

At 10am, the FBM KLCI added 0.92 of a point to 1,520.68.

Gainers led losers by 230 to 141, while 221 counters traded unchanged. Volume was 368.82 million shares valued at RM208.71 million.

At the regional markets, Hong Kong’s Hang Seng Index rose 1.02% to 20,314.70, South Korea’s Kospi gained 0.20% to 1,956.12, Singapore’s Straits Times Index edged up 0.20% to 2,897.28 and Japan’s Nikkei 225 shed 0.03% to 8,881.30.

The China and Taiwan stock markets are closed for the Chinese New Year holidays.

BIMB Securities Research in a note Thursday said the lack of new developments in Europe coupled with the highly anticipated low rate regime as pledged by the Feds, acted as catalysts for Wall Street pushing the Dow Jones Industrial Average up 81 points to close at a high of 12,757.

However, the same cannot be said for major European bourses as most ended up in the red as Greece remained locked in a negotiation stalemate on its debt restructuring, it said.

Meanwhile, performance from regional markets were rather mixed yesterday possibly from the holiday mood that most were still enjoying with Hong Kong and Taiwan remaining closed for Chinese New Year celebrations, it said.

The research house said that on the domestic front, the FBM KLCI saw some profit taking on blue chips as reflected by the 3 point decline to a tad below the 1,520 mark.

“Nonetheless, retailers came out in droves as trading on penny stocks came alive on the 1st trading day in the Year of the Dragon.

“We expect the benchmark index to move within a tight range of between the 1,515 and 1,525 levels and envisage focus to be on the lower liners again,” it said.

On Bursa Malaysia this morning, Boxpak added 18 sen to RM2.35. Theta 11.5 sen to 64.5 sen, YTL Cement, DRB-Hicom and WCT gained 11 sen each to RM4.47, RM2.41 and RM2.45, Carlsberg, Jaya Tiasa, Hartalega and Nestle added 10 sen each to RM8.78, RM7.13, RM6.70 and RM56.20 respectively, while GCE added nine sen to 75 sen.

DBE Gurney was the most actively traded counter with 27.5 million shares done. The stock added half a sen to 13 sen.

Other actives included Wijaya, DRB-Hicom, Unisem, Denko, KHSB, JCY and Iris Corp.

Decliners included Malayan Flour Mills, Hibiscus, DKSH, Can-One, Bursa Malaysia, Perduren, Chin Well, Kian Joo and MSM.



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WCT’s FY11 new contract wins fall short of target

WCT Bhd
(Jan 9, RM2.23)
Maintain market perform at RM2.23 with revised fair value of RM1.97 (from RM2.08): WCT was unable to meet its new construction order book guidance of RM2 billion for FY11 ended December. It only managed to secure RM187 million. The key culprits were its unsuccessful bids for Yas Mall in Abu Dhabi, Four Seasons Hotel in Bahrain, Madinah Airport in Saudi Arabia, airport extension in Brunei and “Package B” of the LRT line extension project.

WCT has yet to issue guidance on its FY12 new construction order book. However, it is certainly putting a lot of faith in its RM4 billion outstanding tender book at present, with the key contracts being two highway packages in Oman as well as building jobs in Malaysia. Over the short to medium term, WCT is also eyeing infrastructure and building jobs from Vale SA, Putrajaya, Iskandar Malaysia, Permodalan Nasional Bhd, the Kuala Lumpur International Financial District (KLIFD), Langat 2 water treatment plant, Gemas-Johor Baru double tracking, West Coast Expressway and Penang traffic alleviation. On a less positive note, WCT is staring at the prospect of not being involved at all in the RM20 billion Sungai Buloh-Kajang (SBK) line of the Klang Valley MRT project. In our earnings forecasts, we assume WCT will secure RM1.5 billion worth of new jobs per annum in FY12/FY13.

We are cutting FY12/FY13 net profit forecasts by 7% to 12%, having reflected an actual new construction order book secured of only RM187 million in FY11 (vis-à-vis our previous assumption of RM1.5 billion), partially mitigated by an upward revision in property profit.

Risks to our view include: (i) new contracts secured in FY12/FY13 coming in below our target of RM1.5 billion per year; and (ii) escalation in input costs.

We have turned less enthusiastic on construction stocks as we believe their share price performance is likely to be muted over the next three to six months as: (i) investor confidence and comfort level that the Klang Valley MRT project will start work soon are being chipped away by further delays in the rollout of certain long overdue large-scale projects; (ii) even if the Klang Valley MRT project starts work as scheduled, initial progress is likely to be painfully slow due to bureaucratic hurdles, which means realistically that earnings impact from the Klang Valley MRT may be a few quarters, or even a year or two away; and (iii) there is generally a lack of credible new large-scale projects in the pipeline. Indicative fair value for WCT is reduced by 5% from RM2.08 to RM1.97. — RHB Research, Jan 9


This article appeared in The Edge Financial Daily, January 10, 2012.




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