Stocks to Watch: EON Bank, EON Capital, DiGi, Masterskill, construction, O&G

KUALA LUMPUR: The FBM KLCI is likely to kick-off May on a cautious note as historically the market drifts lower in this month.

With few fresh leads coming from the regional markets after the extended weekend, as well as a three-day break starting in Japan on Tuesday, investors will likely look for domestic news flow to decide on how best to allocate their funds.

Meanwhile, US stocks rose last Friday on strength from Caterpillar and other industrials, lifting the Dow and Nasdaq to their best monthly performance since December, according to Reuters.

The advance at Wall Street on Friday was also due to Federal Reserve chairman Ben Bernanke's pledge to keep cheap money flowing through the economy pushed the Nasdaq to a 10-year high, and gold and silver broke records.

MIDF Research head Zulkifli Hamzah said the FBM KLCI closed 0.7% lower in April, the first time in seven years that the market ended the month on a negative note.

He said it was not a reassuring development moving into May as the market tended to drift lower for the month, adding that in seven out of the last 10 years, the KLCI closed May lower.

Zulkifli said he expects a continuation of positive news flow particularly with regards to the ETP-related initiatives in May.

The oil and gas sector was likely to remain upbeat with expectations of more contract announcement on upstream E&P projects both in the deepwater and marginal field developments, he said.

"Stocks of major offshore oil and gas fabricators such as MMHE and Kencana may attract buying interests in view of the pending announcements," he said.

He also said the government had announced its intention to begin CONSTRUCTION of the MRT project in July this year, the exact date being July 8, 2011, adding that tender pre-qualifications for some sections of the project were expected to be undertaken as soon as the month of May.

"Hence we may see some excitements in big construction players such as Gamuda and IJM Corp in anticipation of the tender exercises," he said.

On Bursa Malaysia, stocks to watch include EON Bank Bhd and EON CAPITAL BHD, DIGI.COM BHD, Masterskill Education Group Bhd, construction, and, oil and gas counters.

EON Bank has proposed a dividend of RM311.94 million, translating into 44.9 sen per share, but to be paid to its parent EON Capital Bhd.

The proposed interim dividend was a surprise when EONCap announced on Friday, it had accepted HONG LEONG BANK BHD's offer of RM5.06 billion or RM7.30 per share.

DiGi posted net profit of RM331.39 million in the first quarter ended March 31, 2011, up 19% from RM278.25 million a year ago. Revenue rose 10.8% to RM1.43 billion from RM1.29 billion. It declared an interim dividend of 43 sen.

Masterskill won its suit against Sistem Televisyen Malaysia Bhd (STMB) over the visuals of its college on a TV3 news report about 60 colleges which had been deregistered.