Transport Minister: No info on status of MAS-AirAsia share swap

KUALA LUMPUR (March 13): The Transport Ministry said it has no information on the latest on the AIRASIA BHD []-MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) share swap deal.

Speaking at the sidelines of the 6th World Cargo Symposium, Transport Minister Datuk Seri Kong Cho Ha said on Tuesday that he had yet to receive any decision or reports on the development of the matter.

Asked if the share swap deal was not final, Kong said: "That is a decision that has to be made by the related companies and Khazanah (Nasional Bhd). I can't comment anything now because I don't have any information.”

"What I know is the MoT has not received any information that the deal has been cancelled," he said.

On the recent cutting of routes with the latest by AirAsia X to Christchurch, Kong said it was a business decision of the airline.



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HDBSVR: Market may trade sideways with slight downward bias

KUALA LUMPUR (March 13): Hwang DBS Vickers Research said the FBM KLCI, after falling 0.9% or 14 points on Monday, could trade sideways today with a slight downward bias as investors continue to remain cautious on the current fragile global economic situation.

HDBSVR said that Italy has announced a contraction of 0.7% in its economy in 4Q11 while China has also posted its largest trade deficit for 22 years.

On Wall Street, major US equity indices ended Monday on a mixed note, trading between -0.2% to 0.3% as market volume declined 16% from March 9.

This follows a quiet market backdrop as investors await more news flow from the euro zone, with finance ministers gathering in Brussels to sign off a 130 billion euro second package for Greece.

As for stocks on Bursa Malaysia, stocks that could be of interest include: (a) YTL Power, with media reports stating that its subsidiary, YTL Communications, is in the process of implementing the RM1.5 billion 1Bestarinet project; (b) PFCE, after proposing to acquire PFC Engineering for RM300 million from DAT Group to expand further into the oil and gas industry; and (c) Kimlun Corp, which has won two contracts worth RM152 million for real estate deals in Johor Baru.



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RHB Research maintains Market Perform on YTL Power, unch FV RM2

KUALA LUMPUR (March 13): RHB Research Institute is maintaining its Market Perform call on YTL Power with an unchanged sum-of-parts derived fair value of RM2.00 for now pending official confirmation that it had secured the government’s 1Bestarinet project.

It said on Tuesday, quoting The Edge Financial Daily, that the project (worth RM1.5 billion over five years but could be worth RM4.5 billion if extended to 15 years), is in the process of being implemented by YTL Communications Sdn Bhd (YTL Comms), a 60% owned subsidiary of YTL Power.

“Although no official announcement has been made, we are surprised to learn that YTL Comms has already rolled out the service to a number of schools in the Klang Valley, having starting since December 2011,” it said.

RHB Research said to recap, YTL Comms had appeared as the winner of the project, according to a posting on the Ministry of Education website but this was taken down very quickly a few hours later.

The project involves providing Internet access and a virtual learning platform to 9,924 schools across the country.

“This development is a surprise, but nonetheless positive for YTL Power as the 1Bestarinet project allows YTL Power to monetise its relatively new and somewhat under-utilised WiMAX network, which has about 300,000 subscribers only,” it said.



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CIMB Research has technical sell on Carlsberg at RM10.50

KUALA LUMPUR (March 13): CIMB Equities Research has a technical sell on Carlsberg Brewery at RM10.50 at which it is trading at a FY13 price-to-earnings of 16.7 times and price-to-book value of 5.1 times.

It said on Tuesday that prices have been rising steadily since September. However, with the recent smaller candles, we see a slowdown in upward momentum.

“The bearish divergence on its MACD and RSI also calls for bulls to be extra cautious. The overbought RSI also supports the view that there is a good chance for the stock to retrace from here,” it said.

CIMB Research said it would be looking for a break below RM10.28 to confirm the reversal, which could send prices falling towards RM9.25 and RM8.43-8.55 next.

The research house said as long as the RM10.78 level is not breached. Otherwise, the rally could extend for a while longer before terminating.



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CIMB Research has technical sell on Maxis at RM5.94

KUALA LUMPUR (March 13): CIMB Equities Research has a technical sell on Maxis at RM5.94 at which it is trading at a FY13 price-to-earnings of 19.2 times and price-to-book value of 5.5 times.

It said on Tuesday there is a chance that the uptrend from mid-November is coming to a temporary end. The stock has pulled back from the February high to its uptrend channel support.

CIMB Research said a break below this channel support at RM5.86 on high volume would bring up the question of the end of the uptrend.

“Indicators are still showing weakness, which would allow the bears to continue to dominate. Traders should wait for a break below RM5.86 before selling.

“Otherwise, the stock could still push on to retest the February high. A break below RM5.84 would see prices fall towards RM5.56 and even RM5.15,” the research house said.



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CIMB Research has technical sell on Telekom at RM5.10

KUALA LUMPUR (March 13): CIMB Equities Research has a technical sell on Telekom Malaysia at RM5.10 at which it is trading at a FY13 price-to-earnings of 19.6 times and price-to-book value of 2.6 times.

It said on Tuesday the rally in Telekom could be at its tail end or even ended. Prices tested the key resistance trend line last week and prices reversed soon after.

“With its indicators showing slowing momentum, the chances of higher prices is lower at least in the short term. We expect a setback from here,” it said.

CIMB Research said the stock is a short term sell with a stop placed above RM5.25. Prices are expected to pullback towards the RM4.71-RM4.81 levels where support currently lies.

“The moving averages around RM4.93-RM4.98 may also offer some support. A break below RM4.71 would suggest that the longer term trend has also changed,” it said.



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CIMB Research maintains Hong Leong Bank target price at RM11

KUALA LUMPUR (March 13): CIMB Equities Research said Hong Leong Bank’s proposed sale of MIMB Investment Bank is not a surprise given the bank’s wish to focus purely on commercial and Islamic banking.

It said on Tuesday that since MIMB is expected to be sold at its book value, the deal will be neutral for the group.

“The sale of MIMB, which provides minimal earnings to Hong Leong Bank, does not alter our cautious stance on the banks’ prospects. It remains a Sell given its below-industry loan growth and above-sector P/E,” it said.

CIMB Research said it still tags a 10% discount to its DDM value and its target price remains at RM11.



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Stocks to watch: Kimlun, PFCE, SIG Gases, Gamuda

KUALA LUMPUR (March 13) : The Malaysian stock market which saw a downward correction on Monday, is likely to find support on Tuesday from a still-liquid market amid positive domestic news flow ahead of the country’s impending general election .

Analysts said the existing uptrend in the FBM KLCI was still intact as the domestic backdrop is still flush with liquidity and foreign funds are still pouring into the local market.

“The FBM KLCI still has more legs” TA Securities Holdings Bhd head of research Kaladher Govindan wrote in a note on Monday.

On Monday, news of China’s economic slowdown dragged Asian stock markets lower. These include updates that the world’s second largest economy’s exports growth coming in at 18.4% in February, way below street estimates of a 31.1% expansion, according to Bloomberg.

A slowdown in China does not bode well for Asian exporting countries where stock indices had reacted negatively to the updates.

Japan’s Nikkei 225 which fell 0.4% to 9,889.86 and Taiwan’s Taiex which was down 1.1% to 7927.55 and Singapore’s Straits Times Index retreated 0.03% to 2962.18. The FBM KLCI of 30 blue chip stocks fell 0.9% or 14.25 points to close at 1,564.75.

Stocks to watch on Tuesday include Kimlun Corp Bhd, PFCE Bhd, SIG Gases Bhd, GAMUDA BHD [], MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) and AIRASIA BHD [].

Kimlun Corporation Bhd has secured two contracts worth RM151.61 million for housing projects in Johor Bahru.

It had accepted a RM114.70 million contract from S P Setia Bhd’s unit Bukit Indah (Johor) Sdn Bhd for the CONSTRUCTION [] of service apartments and ancillary buildings.

It also secured a RM36.90 million contract from Keck Seng (Malaysia) Bhd to build 244 houses in Johor Bahru, Johor. The estimated date of completion is September 2013.

Ceramic products maker PFCE is acquiring the entire equity interest in its single largest shareholder PFC Engineering Sdn Bhd for RM300 million under an all share deal which will transform the acquirer into an oil and gas support services provider. PFC Engineering owns 40% of PFCE.

Shares of PFCE last closed at 70 sen on Friday, prior to the suspension of the stock’s trading on Monday. PCFE will resume trading on Tuesday.

SIG Gases Bhd is teaming up with a unit of Iwatani Corporation, Japan to set up a joint venture company to set up facilities in Samalaju Industrial Park, Bintulu, Sarawak.

The JV would pave the way for SIG Gases and Iwatani to be strategic business partners to set up the facilities in Samalaju to produce and supply of liquid products and compressed gases to customers in Sarawak.

RHB Research Institute Sdn Bhd had reduced its fair value for Gamuda shares by 2.8% from RM3.89 to RM3.78. The downward revision factors in potential earnings from the Klang Valley Mass Rapid Transit project into the research firm’s valuation for Gamuda’s construction business, RHB said. Gamuda shares, however, rose three sen to RM3.70.

The Edge weekly, quoting sources, reported that the share swap between the major shareholders of MAS and AirAsia could be unraveled following resistance from the Malaysian Airline System Employees’ Union. MAS shares declined two sen to RM1.36 on Monday while AirAsia fell four sen to RM3.59.



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