CIMB Research has technical sell on Nagamas at 70.5 sen

KUALA LUMPUR (Jan 16): CIMB Equities Research has a technical sell on Nagamas International at 70.5 sen at which it is trading at a price-to-book value of 2.1 times.

It said on Monday that Nagamas violated its wedge support few days ago. The bulls tried to make a comeback but it doubts prices can swing back above the 74 sen level any time soon.

“The deteriorating technical landscape suggests that selling pressure is picking up. MACD histogram bars are falling at a fast pace while RSI has also hooked downward.

“Sell on strength looks like a good option here, especially near the 72.5 sen to 74 sen resistances. Once the 200-day SMA (at 70 sen) is breached, expect prices to tumble towards 66.5 sen and 62.5 sen,” it said.



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CIMB Research has technical buy on IGB at RM2.63

KUALA LUMPUR (Jan 16): CIMB Equities Research has a technical buy on IGB Corporation at RM2.63 at which it is trading at a price-to-book value of 1.2 times.

It said on Monday that IGB broke out of its triangle pattern on Friday.

“Looking at the chart, we think the recent consolidation is probably at its tail-end. If the candles can continue to hold on above the resistance-turned-support channel (now at RM2.57), the bulls would likely lift prices towards RM2.77 and RM2.92 next,” it said.

CIMB Research said the technical landscape remains conducive. MACD is hovering in the positive territory while RSI is above the 50pts mark. Moreover, the candles are trading above all its key moving averages.

“Risk takers may start to take some position here but always place a stop at below RM2.50. A crack below RM2.45 would imply that the stock is heading towards its 30-day and 50-day SMAs at RM2.34 and RM2.19 respectively,” it said.



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RHB Research lifts MBM Resources FV to RM3.90 from RM2.70

KUALA LUMPUR (Jan 16): RHB Research Institute has lifted its fair value for MBM RESOURCES BHD [] to RM3.90 (from RM2.70).

It said on Monday that the new FV was derived from applying a 6.9 times (10% premium to its five-year median price-to-earnings ratio (PER) target PER to 2012 earnings from 5.0 times.

The research house said MBM had completed the takeover of Hirotako (97 sen a share and 5.0 sen a warrant in cash) on Jan 3, after securing 96% of the offer shares and intends to compulsorily acquire the remaining shares.

“The total acquisition price of RM412.5 million valued Hirotako at 11.3.0 times 2010 PER, 14.5 times estimated 2011 earnings and 2.1 times 2011 price-to-book.

“All in, we consider the acquisition to be relatively expensive, relative to the 2012 median sector PER of 8.5 times and 7.0 times target PER multiple ascribed to APM.

RHB Research said its 2011 earnings estimates were broadly unchanged. After consolidating Hirotako’s earnings, it raised the 2012 and 2013 estimates by 3.7% and 10.5% to RM135.3 million and RM155.8 million respectively.

“We view MBM’s relatively aggressive moves to expand its automotive component manufacturing presence positively and upgrade our call on the stock to Outperform (from underperform),” it said.



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RHB Research sees slight improvement for TNB in 1Q

KUALA LUMPUR (Jan 16): RHB Research sees slight improvement in TENAGA NASIONAL BHD []’s performance in the first quarter of FY2012.

It said on Monday that continued gas shortage will likely result in another loss for TNB in 1QFY12, but slightly lower than 4QFY11.

RHB Research said that gas supplied improved marginally, but was still below 1,000 mmscfd in 1Q.

“Even if fuel cost sharing mechanism is applied post Oct 2011 (assuming gas supply normalises only in FY13), our scenario analysis suggests a proforma fair value of only RM6.90. There is still upside to TNB, albeit limited.

“Due to share price rally, we downgrade our call to Market Perform. Maintain fair value of RM6.15,” it said.



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HDBSVR: KLCI could test support of 1,515 on eurozone downgrade

KUALA LUMPUR (Jan 16): Hwang DBS Vickers Research said the Euro Zone effects are expected to spread across Asia on Monday.

It expected the negative vibes from last Friday’s downgrade by Standard & Poor’s on the sovereign credit ratings for nine countries, including France, Italy and Spain, to weigh on the markets.

“The negative vibes will likely be felt on our local bourse too. From a technical perspective, the benchmark FBM KLCI could make its way to test the immediate support line of 1,515 ahead,” it said.

HDBSVR said hoping to buck the bearish sentiment are Proton and DRB-Hicom, after two local dailies said an announcement to sell Khazanah Nasional’s 42.7% stake – most probably to DRB-Hicom – may be made as early as Monday. The speculated takeover price is between RM5.50 and RM6.00 per Proton share;

Also in focus would be Digistar Corp, following a financial weekly report which wrote that the company is poised to clinch a RM500 million contract for the digitalisation of RTM; and MNC Wireless, amid a news article saying that it is set to break into the wireless broadband market in Sweden.



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Plantations to lead local rally, says Affin Research’s Nazri

KUALA LUMPUR (Jan 15): The PLANTATION [] sector may lead the local market rally this week, starting Monday, despite the worries about the downgrade of several European countries especially France.

Affin Investment Bank head of retail research, Dr Nazri Khan said the market may shift focus back toward Q4 corporate earnings and economic data.

He added equity markets may face a barrage of critical data which includes China Q4 GDP, US industrial production and inflation report and Bank of Canada’s interest rate statement.

“Given that there is a lot of liquidity sitting at the sidelines, any stronger than expected recovery in the economic data may bring huge inflow of liquidity which in turn could become the tsunami the market has been waiting for,” he said.

Nazri pointed out the plantation sector (which have gained an impressive 4.8% gain over the last two weeks) to lead the local market rally.

He added there was a strong resurgence of interest in plantation stocks such as KLK, Kulim, Genting Plantation, Sarawak Oil Palms, Rimbunan Sawit and Gleanely Plantation.

“If the pick-up in liquidity and the stirrings by selected blue-chips and frontliners are maintained - especially in the plantation and CONSTRUCTION [] sector - are any indication, our view is that the local market may actually be inching towards an early 2012 recovery,” it said.

However, he said on the negative front however, the direction of oil can still be a wild card on the current positive sentiment.

He advised investors should keep a close eye on the price of crude oil as there are tensions between the west and Iran over the latter’s nuclear ambitions threaten to destabilise oil supplies.

Nazri said any serious embargo on Iranian exports by the USA may produce retaliations which can hike up the oil price.

“Technically speaking, we see positive MACD, Stochastics and RSI as well as healthy average trading volume (above 1.5 billion shares) as indicating upside momentum and more accumulation next week.

“Finally, we see positive local newsflow to sustain the local sentiment,” he said.

Nazri said the following headlines to excite the markets which may include rumours on RHB and MBSB merger, Genting Group getting a casino licence in Miami, CIMB expanding big into Laos, MMC proposed privatisation of KTMB, AirAsia X expanding into Australia after withdrawing flights in India and Europe, TM bidding for digital television broadcasting, UEM LAND HOLDINGS BHD [] mega launch of RM5.5 billion of property projects and Sapura Crest US$100 million construction award in offshore Vietnam.



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Decision on successful bidder for Khazanah's Proton stake this week

KUALA LUMPUR (Jan 15): As the decision on the new owner of Khazanah Nasional's 42.7 per cent stake in PROTON HOLDINGS BHD [] is expected to be known early this week, there is deep concern by industry players that the move will have an impact on the development of the national auto industry.

Among the major areas concern include the company's vendor programme which involves many vendors.

They opined that the new shareholder should continue to outsource the manufacturing of parts and components for Proton vehicles, which Proton has been doing since its inception, spawning a brisk auto parts industry in the country.

"If the new shareholder has manufacturing units involved in manufacturing parts and components, they should divest these units or should not be involved in this area for Proton vehicles. They are a lot of vendors involve in the manufacturing of components and parts for Proton vehicles," an industry source said.

Another source said Proton, being an Asian brand, needed someone who had deep knowledge of its business and not merely possess the financial capability.

"It's the national car project. Proton needs a personal touch. You have to understand well the nature of the business of Proton. It's an Asian brand," he said.

He also said that the new shareholder must have an expansion plan for the export market of Proton.

Industry sources said the new shareholder should have the capacity not only in turning around Proton's financial performance but taking the national car maker to greater heights.

Proton's net profit fell to RM20.1 million for its six months ended September 30 2011 from RM150.6 million in the previous corresponding period.

Net profit for second quarter was RM15.5 million compared with RM65.9 million in the second quarter of its previous financial year.

The sources also feel that there is lack of transparency in the decision making process on the new shareholder of Khazanah's stake.

"If Khazanah wants to change partners for Proton, there will be a new leadership for the national carmaker. It should be transparent on the parties that it is negotiating with," he said.

Among the parties that have submitted proposals for the 42.7 per cent stake include DRB-HICOM BHD [] and chairman of Proton Holdings Datuk Seri Mohd Nadzmi Salleh.

It is believed that Mohd Nadzmi's bid is not the cheapest compared to others.

Mohd Nadzmi's plans include transforming Proton into a global player, starting with the upcoming model codenamed "P3-21A" which will transform Proton's DNA.

Mohd Nadzmi would also re-look the export markets for Proton, naming China, Iran, India and the Asean countries as potential markets for the national car maker.

He had said that there would be more tie-ups with Mitsubishi Motors Corp which is keen to share its electric vehicle mechanism with Proton.

He also planned to privatise Proton in order to restructure its whole organisation.

Mohd. Nadzmi was appointed Chairman of Proton on Jan 1, 2009 and is also the chairman of boards of various subsidiaries within the PROTON Group of Companies.

He was the managing director of Perusahaan Otomobil Nasional Bhd from 1993 until 1996.

He was also the Manager in the Marketing Services Department of Edaran Otomobil Nasional Bhd in 1984 and later assumed the positions of Executive Director and Chief Executive Officer of the company.

DRB-Hicom, however, has not revealed its plans for Proton. - Bernama



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Stocks to watch: Hiap Teck, Mitrajaya, Frontken, Can-One, Kian Joo

KUALA LUMPUR (Jan 14): Key regional markets including Bursa Malaysia are likely to start off the new week on Jan 16 on a cautious note as the eurozone crisis drags on.

The latest move by Standard & Poor's to downgrade the long-term ratings on nine eurozone sovereigns will weigh on market sentiment.

S&P stripped France of its top AAA rating and downgraded of half the nations in the euro zone, which Reuters reported might complicate European efforts to solve a two-year old debt crisis.

“In our view, the policy initiatives taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone,” said S&P.

On Wall Street, stocks dropped on Friday, snapping a four-day winning streak on the downgrade.

The Dow Jones industrial average fell 48.96 points, or 0.39%, to 12,422.06 at the close. The Standard & Poor's 500 Index lost 6.41 points, or 0.49%, to 1,289.09. The Nasdaq Composite Index fell 14.03 points, or 0.51%, to 2,710.67.

For the week, the DJIA rose 0.5%, while the S&P 500 advanced 0.9%, and the Nasdaq gained 1.4%.

Reuters reported that investors will look to earnings next week for insight on how the euro zone's debt woes may affect profits.

At Bursa Malaysia, stocks which could see trading interest are HIAP TECK VENTURE BHD [], MITRAJAYA HOLDINGS BHD [], FRONTKEN CORPORATION BHD [], CAN-ONE BHD [] and KIAN JOO CAN FACTORY BHD [].

Meanwhile, The Edge weekly reports in its latest edition that the Genting group's partnership with the state of New York - in a proposed US$4 billion development that would house the largest convention centre in the US - would give it an edge when it comes time to bid for a full-fledged casino licence.

Snack and confectionery manufacturer Cocoaland’s earnings recovered last year, whether the company can sustain its performance in the current financial year will depend on its ability to pass on the additional costs incurred in production to customers.

Hiap Teck Venture’s additional 354.14 million new shares under its rights issue with the 88.53 million warrants will be listed on Monday.

Mitrajaya’s unit has secured two contracts worth a total RM33.41 million from Putrajaya Holdings Sdn Bhd for CONSTRUCTION [] jobs in Putrajaya. Pembinaan Mitrajaya Sdn Bhd was awarded contracts to build houses and shop offices in Precints 11 and 8 in Putrajaya.

Frontken executive chairman and managing director Wong Hua Choon has disposed of his whole stake of 59.50 million shares or 5.8% stake.

Wong sold all the shares at 12 sen in two blocks to its German shareholder Jorg Helmut Hohnloser on Friday. Its net asset per share was 21 sen. Hognloser’s shareholding increased to 28.8% or 290.99 million shares after he acquired the shares.

Can-One and Kian Joo would continue to see trading interest on market expectations that Can-One would likely launch a general offer for KJCH after securing the 32.9% block.



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