SP Setia up on revised offer but road bumps ahead in property mkt

KUALA LUMPUR (Jan 25): Shares of S P Setia Bhd rose on Wednesday after the board received a revised offer, raising the price by five sen to RM3.95 per share.

At 3.06pm, S P Setia was up six sen to Rm3.94. There were 1.91 million shares done at prices ranging from RM3.93 to RM3.97.

Last Friday, Permodalan Nasional (PNB) and S P Setia’s group president and CEO Tan Sri Liew Kee Sin jointly agreed to raise the general offer (GO) price for SP Setia from RM3.90 a share and 91 sen a warrant to RM3.95 a share and 96 sen a warrant respectively.

UOB Kay Hian Malaysia Research said the upward revision of five sen “is minimal, but it implies a mild positive ending to the saga and that the relationship between PNB and S P Setia would still be positive”.

Liew and S P Setia would ink a management agreement where he would remain as group president and CEO of the company for three years following the close of the revised offer, in line with the market’s expectations.

"We understand Tan Sri Liew would not be selling his 8% stake but is eligible for a put option at RM3.95 spread over three years,” it said.

UOB Kay Hian Research said while “we do not doubt the strong capabilities of S P Setia’s management, but we are concerned that the property market would be rough going forward”.

The research house said S P Setia’s key products were skewed towards the mid-range to high-end segment.

The research house said it was maintaining a Sell and target price of RM2.99 (pegged at a 30% discount to RNAV), premising on the past-peak property and investment cycle and also due to lingering external concerns.

“Since September 2011, S P Setia’s rich valuations at 22 times forward PE and 2.2 times P/B are supported by the takeover by PNB at RM3.90. Hence, we expect share price to retrace to a 30% discount to RNAV (mid-cycle valuation) once the takeover is finalised. Our target price implies 16.7 times FY13F PE, on a par with its historical mean of 16 times,” it said.



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Genting Bhd’s exits Natuna O&G biz for US$39m cash

KUALA LUMPUR (Jan 25): GENTING BHD [] is exiting its Natuna oil and gas (O&G) business in Indonesia after its 95% subsidiary Swallow Creek Ltd sold all its interests to Australia’s AWE Ltd for US$39 million cash.

Genting said on Wednesday Swallow Creek was disposing of its 100% stake each in Genting Oil Natuna Pte Ltd (GONPL) and Sanyen Oil & Gas Pte Ltd (SOGPL) for US$39 million.

Under the deal, Swallow Creek would also assign loans and receivables owed to the company by GONPL and SOGPL of US$100 million to AWE – which is an Australian oil and gas exploration and production company.

GONPL and SOGPL are both Singapore incorporated companies principally involved in O&G exploration and development in the Natuna Sea, Indonesia.

GONPL and SOGPL own a 100% participating interest in the Northwest Natuna Production Sharing Contract and Anambas Production Sharing Contract in Indonesia respectively.

Genting said it expected the disposal to be completed in February 2012.



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Trading in Golden Frontier shares suspended

KUALA LUMPUR (Jan 25): Trading in the shares of GOLDEN FRONTIER BHD [] has been suspended from 2.30pm on Wednesday until 5pm on Friday, Jan 27.

A Bursa Malaysia circular said the suspension was for an announcement.

Its share price rose two sen to RM1.21 at midday. There were 61,000 shares done at prices ranging from RM1.19 to RM1.30.



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KLCI slips at mid-day break, blue chips weigh

KUALA LUMPUR (Jan 25): The FBM KLCI slipped into negative territory at the mid-day break on Wednesday, weighed by losses at key blue chips including CIMB, Genting and Petronas-linked stocks.

At 12.30pm, the FBM KLCI fell 2.37 points to 1,520.29.

Losers overtook gainers by 305 to 270, while 243 counters traded unchanged. Volume was 502.97 million shares valued at RM566.35 million.

The ringgit strengthened 0.23% to 3.0798 versus the US dollar; crude palm oil futures for the third month delivery rose RM12 per tonne to RM3,177, crude oil gained 21 cents per barrel to US$99.16 while gold rose US$1 an ounce to US$1,666.68.

At the regional markets, Japan’s Nikkei 225 rose 1.21% to 8,891. 89, Australia’s S&P/ASX 200 Index gained 0.88% to 4,261.40, Singapore’s Straits Times Index added 0.83% to 2,872.90 and South Korea’s Kospi was up 0.33% to 1,956.41.

The China, Hong Kong and Taiwan markets remained closed for the Chinese New Year holidays.

On Bursa Malaysia, Nestle fell 30 sen to RM55.70, Dutch Lady 20 sen to RM25.78, CIMB 12 sen to RM6.99, Golsta and KESM 10 sen each to 39 sen and RM2, Affin nine sen to RM3.13, Petronas Chemicals and Genting eight sen each to RM6.60 and RM10.90, Petronas Gas four sen to RM15.20 while Genting PLANTATION []s was down three sen RM9.25.

DBE Gurney was the most actively traded counter with 46.72 million shares done. The stock was unchanged at 12.5 sen.

Other actives included JCY, Compugates, MBSB, Maybulk, CIMB, Unisem and DRB-Hicom.

Among the gainers, BAT was up 46 sen to RM49.96, MPI 35 sen to RM3.63, Malayan Flour Mills 24 sen to RM8.04, Hong Leong Bank and BHIC 20 sen each to RM11.30 and RM3.77, Tradewinds Plantations and Fima Corp 17 sen each to RM4.43 and RM6.21, KLK 16 sen to RM25.64 while NSOP and Batu Kawan added 14 sen each to RM5.84 and RM18.84.



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Semicon, HDD-related counters advance on positive outlook for sector

KUALA LUMPUR (Jan 25): Shares of semiconductor and hard disk drive-related counters advanced on Wednesday as investors appeared confident of a more positive outlook for the semiconductor sector.

At 12 noon, MALAYSIAN PACIFIC INDUSTRIES [] jumped 31 sen to RM3.59, UNISEM (M) BHD [] gained nine sen to RM1.44, JCY International added five sen to RM1.19 while Eng Teknologi rose three sen to RM1.73.

RHB Research Institute last week upgraded Unisem and MPI to market perform from underperform following the upbeat outlook from major players about the semiconductor industry.

It raised the fair value (FV) for Unisem to RM1.22, MPI’s FV to RM2.79 while Notion VTec’s FV was raised to RM1.69 (underperform outlook unchanged).

RHB Research said US based IC design company Linear TECHNOLOGY [] gave an upbeat outlook for the industry.

This would be the third positive guidance after Broadcom and ChipMOS, and indicates a more positive tone for the industry after a parade of negative guidance last month.

“We have already factored in a weak 1Q12 for local packaging players, as there is still lack of order visibility, but we believe the industry may be on track for some recovery in 2Q12, and stronger recovery in 2H12.

“We believe the demand weakness for chips has already been priced in. Thus, we are raising our benchmark forward target P/BV from 0.6 times to 0.8 times for the semiconductor players. We upgrade Unisem and MPI to Market Perform (from underperform),” said RHB Research.



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Scomi advances after Brazil monorail contract finalised

KUALA LUMPUR (Jan 25): SCOMI ENGINEERING BHD [] shares rose on Wednesday after its consortium partners officially sealed the contract with Brazil’s Amazonas state for the RM2.56 billion monorail system.

At 11.10am, Scomi Engineering was up two sen to 62 sen with 439,000 shares done while SCOMI GROUP BHD [] added half a sen to 28.5 sen with 884,500 shares traded.

The Manaus monorail system will include 20 km of monorail line from Largo da Matriz to Jorge Teixeira, nine stations and 10 train sets of six cars each.

The total award is valued at Brazilian Real 1.46 billion (RM2.56 billion) of which Scomi Engineering’s share is Real 339.9 million (RM597.2 million).

The project is expected to be completed in 40 months from the date of the signing of the contract.



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Public Bank shares up after Maybank IB raises target price

KUALA LUMPUR (Jan 25): PUBLIC BANK BHD [] shares advanced on Wednesday after Maybank Investment Bank Bhd Research maintained its Buy call and raised its target price for the stock to RM14.60 from RM13.50 previously.

At 9.31am, Public Bank added eight sen to RM13.38 with 126,300.

The research house said Public Bank would kick off the reporting season for the banks with the release of its 4Q11 results by month end.

“Our full-year net profit estimate stands at RM3.37 billion, just slightly behind (- 1.8%) consensus’ RM3.43 billion.

“This implies a 4Q net profit of RM761 million, down 10% year-on-year, -15% quarter-on-quarter, premised largely on NIM compression and lower q-o-q non-interest income,” it said.

The research house however said the bank had thus far succeeded in surprising on the upside despite repeatedly cautioning of a 10-15 basis points compression in NIM in 2011.

“We would not be too surprised if management pulls it off again, which could result in earnings surprising on the upside

“We maintain our Buy call for exposure to Public Bank’s impeccable fundamentals while a net yield of 4% provides support to share price,” it said.



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DBE Gurney continues active streak, up in early trade

KUALA LUMPUR (Jan 25): DBE Gurney Resources Bhd continued to be actively traded on Wednesday after the company last week had confirmed that it was in talks with a shareholder of CI Holding Bhd which includes a private placement exercise.

At 9.15am, DBE Gurney was the most actively traded counter with 11.3 million shares done. It rose half a sen to 13 sen.

Meanwhile, its warrants traded unchanged at 7 sen with 2.51 million units done.

The poultry-based company, in its reply to a Bursa Malaysia Securities query on Thursday, said it had plans for a private placement to raise funds for its working capital requirement.

However, DBE said the talks with the CI Holdings shareholders was “at preliminary stage”.

“As such, the pricing for the proposed private placement exercise have not been finalised yet,” it said.



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