Market Commentary

The FBM KLCI index lost 3.90 points or 0.26% on Friday. The Finance Index fell 0.23% to 13152.76 points, the Properties Index up 0.68% to 951.46 points and the Plantation Index rose 0.43% to 7519.15 points. The market traded within a range of 9.58 points between an intra-day high of 1478.33 and a low of 1468.75 during the session.

Actively traded stocks include COMPUGT, JCY, TAKASO, IDMENSN, JCY-CD, MARCO-WA, IRCB-WA, TIGER, KBUNAI and RSAWIT. Trading volume decreased to 2068.34 mil shares worth RM1230.49 mil as compared to Thursday’s 2644.11 mil shares worth RM1462.10 mil.

Leading Movers were SIME (+3 sen to RM8.89), MAXIS (+4 sen to RM5.31), KLK (+8 sen to RM20.90) and PLUS (+1 sen to RM4.41). Lagging Movers were GENTING (-10 sen to RM10.58), CIMB (-4 sen to RM7.22), TENAGA (-4 sen to RM5.75), PPB (-22 sen to RM16.62) and DIGI (-22 sen to RM33.78). Market breadth was positive with 425 gainers as compared to 310 losers.-- JF Apex Securities Bhd

KLCI succumbs to profit taking, extends losses

KUALA LUMPUR: The FBM KLCI reversed its earlier gains and slipped into negative territory on Friday, Nov 11 as some mild profit taking on select blue chips weighed on the index.

The FBM KLCI fell 3.90 points to 1,468.75, weighed by losses at select blue chips.

Gainers led losers by 425 to 310, while 282 counters traded unchanged. Volume was 2.07 billion shares valued at RM1.23 billion.

At the regional markets, Hong Kong’s Hang Seng Index closed 0.91% higher at 19,137.17, South Korea’s Kospi jumped 2.77% to 1,863.45, Taiwan’s Taiex up 0.80% to 7,367.29, Japan’s Nikkei gained 0.16% to 8,514.47 and the Shanghai Composite Index edged up 0.06% to 2,481.08, while the Singapore Straits Times Index added 0.14% to 2,790.94.

On Bursa Malaysia, DiGi and PPB fell 22 sen each to RM33.78 and RM16.62, Ya Horng down 18 sen to 42 sen, Sunchirin 14 sen to RM1.38, Uzma 13 sen to RM1.68, Petronas Dagangan 12 sen to RM16.10, Tasek and Genting 10 sen each to RM8 and RM10.58, while Benalec fell eight sen to RM1.35.

Compugates was the most actively traded counter with 79.8 million shares traded. The stock gained half a sen to 8.5 sen.

Other actives included JCY International, Takaso, iDimension, Tiger, Karambunai and Rimbunan Sawit.

Meanwhile, gainers included United PLANTATION []s, BLD Plantations, CI Holdings, Harvest Court, Manulife, Dutch Lady, BAT, TSH Resources and GAB.

KL shares close lower

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 fell 0.3 per cent to 1,468.75, a second day of losses. The gauge declined for the second straight week, dropping 0.6 per cent.

C.I. Holdings Bhd, a beverage group, jumped 5.5 per cent to RM5.22, its highest close since June 6, 2000. The company is proposing to increase the size of its cash distribution to RM5.10 a share.

Century Logistics Holdings Bhd, a transport services provider, climbed 3 per cent to RM1.70, its highest close since Aug. 23. Earnings in the third quarter grew to RM8.99 million.

Equine Capital Bhd, a property developer, increased 6.7 per cent to 56 sen, the steepest gain since April 1. Profit in the second quarter almost doubled to RM12 million from RM6.3 million a year earlier.

iDimension Consolidated Bhd, a Malaysian software developer, rose 1.3 per cent in its debut on the Kuala Lumpur stock exchange today. The stock climbed to 38.5 sen from an initial public offering price of 38 sen.

MWE Holdings Bhd, a yard and fabric manufacturer, increased 1.6 per cent to RM1.25, its highest close this month. Third-quarter profit rose 3 per cent to RM12.5 million.

United Malayan Land Bhd, a Malaysian property developer, gained 2.1 per cent to RM1.44, its biggest increase since Oct. 13. The company agreed to buy Tentu Teguh Sdn Bhd and land in Iskandar, Johor, for RM11 million. -- Bloomberg

Dijaya, Ivory to develop land in Penang

Dijaya Corp and Ivory Properties Group Bhd said they planned to jointly develop 102 acres of land in Malaysia’s northern Penang state.

The developers will build residential and commercial properties on the land which they estimate may generate sales worth RM10 billion, the companies said in separate exchange filings today in Kuala Lumpur. -- Bloomberg

UM Land grows Iskandar real estate cheaply

KUALA LUMPUR: United Malayan Land Bhd (UM Land) has proposed to acquire 332.68 acres (133ha) in Iskandar Malaysia, Johor, through the purchase of Tentu Teguh Sdn Bhd. This will expand its landbank there at the low price of just over RM4 per sq ft (psf).

The property development company announced to Bursa Malaysia yesterday that it had entered into a conditional share sale agreement to acquire Tentu Teguh for RM10.98 million cash. Upon completion, Tentu Teguh will become a wholly-owned subsidiary of UM Land.

If the proposal is approved, UM Land will subsequently receive 332.68 acres from Tentu Teguh’s February 2011 purchase from SAP Holdings Bhd.

The 332.68 acres comprise three parcels of freehold land in Felda Cahaya Baru in Johor Bahru. Tentu Teguh bought the land from SAP for RM45 million and has so far paid RM2.55 million.

UM Land will make the remaining payment of RM42.45 million for the land to SAP and Cahaya Baru Development Bhd and will absorb Tentu Teguh’s liabilities up to a maximum of RM9.3 million.

Based on the purchase price, the assumption of Tentu Teguh’s liabilities plus the remaining payments for the land, The Edge Financial Daily estimates the total effective cost to UM Land for the 332.68 acres will be RM62.73 million, or RM4.33 psf.

An analyst deems the price attractive given its strategic location within Iskandar Malaysia and its proximity to the major ports and petroleum hubs in the southern tip of the state.


“[The land] is within close proximity of UM Land’s flagship township Bandar Seri Alam and surrounding developments such as Taman Scientex, Bandar Bistari Perdana, Kota Masai and Lakehill Resort City,” said the company.

The company said fast expanding townships in the vicinity will provide a good base of potential buyers for its proposed developments on the land.

Pasir Gudang Port and the Tanjung Langsat industrial area are also close to the land. Tanjung Langsat is slated to be developed into a port for petrochemicals and non-edible chemicals and storage facilities. Ten multinationals have already committed to invest RM4 billion in the estate over the next few years.

Benalec Holdings Bhd announced yesterday that it had won approval from the Johor government to reclaim 1,760 acres on the coast of Pengerang and 3,485 acres on the Tanjung Piai coast in Johor, close to UM Land’s tract (please see separate story).

Benalec plans to develop the reclaimed land into a hub for petroleum and petrochemicals as well as maritime industrial parks.

Its ambitious plans, the large presence of oil and gas projects on the coast and the growing recognition of Iskandar Malaysia auger well for UM Land’s large landbank in the area.

A market observer notes that UM Land’s cost for the latest piece of land will likely be much lower than Benalec’s reclamation costs for the new project.

In a separate filing yesterday, UM Land announced that it had received approval of its earlier proposal to Bursa Malaysia in August to acquire a 8.89-acre parcel of land in Plentong, Johor, through its indirect wholly-owned subsidiary, PMS Services Sdn Bhd.

The purchase was made with a cash consideration of RM19.37 million, or RM50 psf, from TCB Realty Sdn Bhd.

UM Land said in its proposal filed with Bursa Malaysia in August that it “intends to build a commercial and retail complex to complement the existing amenities and facilities within the township”. The estimated gross development value of the project is RM90 million.

Despite a relatively small market capitalisation of RM426 million, UM Land has a large landbank of close to 2,000 acres located in Iskandar Malaysia and Selangor, as well as several niche projects in downtown Kuala Lumpur.

Its two main townships in Iskandar are Seri Alam and Taman Seri Austin, while its Bangi project is Bandar Seri Putra.

While UEM Land Holdings Bhd is synonymous with Iskandar Malaysia, UM Land is also one of the largest landowners there, with a landbank of around 1,790 acres following the latest purchase.

The company’s major shareholders include CapitaLand Ltd.

UM Land’s shares were untraded yesterday, and last closed at RM1.41. The stock is trading at less than half its net assets per share of RM2.95 as at June 30, after adjusting for a one-for-four bonus issue in August.


This article appeared in The Edge Financial Daily, November 11, 2011.

Dijaya and Ivory to undertake property JV?

PETALING JAYA: Dijaya Corp Bhd and Ivory Properties Group Bhd have asked for a one-day suspension in trading of their shares today pending a material announcement. There is market speculation that the two developers could tie up to undertake a major property project on Penang island, where Ivory Properties is one of the most prominent developers.

These expectations were foreshadowed when the two companies established a shell joint-venture company on Oct 14, called Tropicana Ivory Sdn Bhd, which is 51% owned by Ivory Properties and 49% by Dijaya.

Market observers say a joint venture with Ivory Properties will enable Dijaya to gain a strong foothold in Penang. It is also set to launch freehold townships in Cheras and Balakong or Kajang this year, with a combined GDV of over RM500 million.The landbank of about 66 acres in Kajang and 28 acres in Cheras were acquired at RM16 to RM17 psf in 2007 and 2008 as agricultural land and have been converted for residential use.

In an interview with The Edge weekly in June, founder and CEO Tan Sri Danny Tan said he wanted to grow Dijaya into a RM2 billion to RM3 billion company in terms of market capitalisation, from RM500 million then. Despite the market turmoil since then, its market capitalisation has increased to RM635 million as at yesterday.

Ivory Properties, listed in the middle of last year, has completed a number of quality Penang projects, including The View Twin Towers in Batu Uban; Tanjung Park and Seri Taman Tanjung in Tanjung Tokong; Plaza Ivory and Palace Hill in Bukit Gambir and Penang Times Square.


This article appeared in The Edge Financial Daily, November 11, 2011.

Benalec wins 2,123ha land reclamation job

KUALA LUMPUR: Benalec Holdings Bhd yesterday announced that it has received approvals for reclamation works totalling 5,245 acres (2,122.6ha) in Pengerang and Tanjung Piai, Johor.

The company said the Economic Planning Unit of Johor (UPENJ) had awarded two of its subsidiaries, Spektrum Budi Sdn Bhd and Spektrum Kukuh Sdn Bhd, approval letters for reclamation works on 1,760 acres in Pengerang and 3,485 acres in Tanjung Piai respectively.

“The projects will be undertaken to facilitate the development of petroleum and petrochemical hubs and maritime industrial parks,” Benalec told Bursa Malaysia.

No details were given as the value of the project, or how much of the reclaimed land will accrue to Benalec.

Benalec has a market capitalisation of RM1.04 billion.

Benalec said formal agreements with the Johor government will be subject to a detailed analysis of the projects, a feasibility study and detailed environmental impact assessment report. The approvals received will be valid for six months, it said.

It added that the projects are expected to contribute positively to the company’s earnings and net assets from its FY13 onwards.

Benalec’s partner in the two companies is the crown prince of Johor, Tunku Ismail Idris Tunku Ibrahim.

Tunku Ismail and Daing A Malek Daing A Rahaman are directors of Spektrum Kukuh and Spektrum Budi, and they hold the remaining stakes of 21% and 9% respectively in the two companies awarded the contracts, according to an earlier announcement by Benalec.

Benalec had last week acquired a 70% stake in each of the two companies for a nominal sum of RM7,000 each.

The announcement by Benalec confirms speculation, including a report in The Edge Financial Daily yesterday. The project will be the single biggest reclamation job for the company, and the first major one outside its traditional base of Melaka, where it has reclaimed over 2,000 acres, mostly for mixed development use.

The company undertook its first reclamation job in Langkawi, Kedah in 2000, followed by one in Port Klang in 2003, but has since focused mostly on Melaka.

Benalec shares will resume trading today after a one-day suspension yesterday.

The counter closed five sen higher at a three-month high of RM1.41 with 15.29 million shares traded on Wednesday, prior to the suspension.

According to Bloomberg data, the stock has three “buy” calls and one “sell” with an average target price of RM2.08.

Benalec had announced at end-October that it had secured a contract worth RM36.6 million to reclaim 60 acres in Pulau Koney, Alor Gajah, Melaka.

The company’s core activities are in marine construction, vessel chartering and marine transport.

For its FY11 ended June 30, it registered a net profit of RM96.08 million and revenue of RM214.49 million.

Marine construction accounted for the bulk of its FY11 revenue, followed by vessel chartering and ship maintenance and shipbuilding.

Revenue for its 4QFY11 rose 29% to RM14.8 million from a year ago mainly due to an increase in marine construction income.

The company previously said it was in the process of bidding for land reclamation works with a combined estimated value of RM8 billion.

It had an unbilled order book of RM590 million, according to a recent AmResearch report, before the latest developments.


This article appeared in The Edge Financial Daily, November 11, 2011.

SC cautions investors on speculative penny stocks

KUALA LUMPUR: Securities Commission (SC) chairman Tan Sri Zarinah Anwar has warned investors to be cautious over the rising number of penny stocks whose prices have skyrocketed of late without material corporate developments.

“I would like to remind investors that they have to exercise caution and make informed investment decisions. Everybody has a role to play in terms of ensuring fair and orderly trading in the market,” Zarinah commented when asked about the growing speculative interest in penny stocks.

She noted that the SC and Bursa Malaysia have surveillance systems in place and monitor all price movements for all counters listed on the exchange.

“Action will be taken depending on the outcome of our surveillance,” she told reporters on the sidelines of the 5th International Islamic Capital Market Forum yesterday.

Recently, penny stocks, particularly on the ACE Market, have seen heavy trading volume and sharp spikes in share prices. Despite poor financial results, these stocks have garnered strong speculative interest.

Among the counters, notably, is Harvest Court Industries Bhd. In barely four weeks, the stock has jumped 16 times from 8.5 sen to RM1.40 yesterday.

The company saw the emergence of a new shareholder, Datuk Raymond Chan, who bought part of his 13.83% stake from the company’s managing director Ng Swee Kiat. Ng later proposed to Affin Bank Bhd to acquire the bank’s 18.3% equity interest for 25 sen per share.

Other penny stocks that have joined the euphoria include Karambunai Corp Bhd, Envair Holdings Bhd, Focus Dynamics Technologies Bhd, Sanichi Technologies Bhd and GPRO Technologies Bhd.

Bursa has queried some of these counters on unusual market activity (UMA). Most of them have replied by saying the board is not aware of any material corporate developments in the companies. Those queries, however, do not seem to have stopped some of those counters from climbing further.

Asked about the share swap deal between state investment arm Khazanah Nasional Bhd and Tune Air Sdn Bhd of shares in Malaysian Airline System Bhd (MAS) and AirAsia Bhd, Zarinah said the SC is reviewing all the trading data. “We will make a decision upon our review and determination of our findings.”

There is no time frame for the investigation, she added.

Deputy Finance Minister Datuk Dr Awang Adek told the Dewan Rakyat last week that the SC and Bursa have launched an investigation into the swap deal involving MAS and AirAsia shares. He said the probe would also look into the possibility of insider trading and will take time because it involves many accounts and a huge value.

He said if the probe finds evidence of insider trading, the Malaysian Anti-Corruption Commission may also be invited to investigate.

Under the swap deal announced in August, Tune Air and Khazanah, major shareholders of AirAsia and MAS respectively, agreed to swap their shares in the two airlines. After the swap, Tune Air now owns 20.5% equity interest in MAS, while Khazanah holds a 10% stake in the low-cost carrier.


This article appeared in The Edge Financial Daily, November 11, 2011.