Stocks to watch: O&G, Kencana, Dialog, Sealink, Supermax, DRB-Hicom

Saturday, May 14, 2011

KUALA LUMPUR: Stocks on Bursa Malaysia, especially oil and gas (O&G) counters and related industries are expected to continue see strong trading interest in the week ahead, starting on Monday, May 16.

The interest would be underpinned by Petroliam Nasional Bhd’s RM60 billion investments in the refinery and petrochemicals integrated development (RAPID) project in Pengerang, south Johor.

However, overall marketing trading could be slower due to the holiday-shortened week and the cautious overnight close on Wall Street.

US stocks ended a second week of losses on a down note Friday, May 13 reflecting growing worries that stocks are on the precipice of a pullback.

Concern about slowed growth worldwide, the coming end of a supportive Federal Reserve policy and the fear of a worsening euro-zone debt crisis are undermining the stock market's ability to maintain an upward direction.

The Dow Jones industrial average ended down 100.17 points, or 0.79 percent, at 12,595.75. The Standard & Poor's 500 Index finished down 10.88 points, or 0.81 percent, at 1,337.77. The Nasdaq Composite Index fell 34.57 points, or 1.21 percent, at 2,828.47.

For the week, the Dow was down 0.3 percent, the S&P 500 was off 0.2 percent and the Nasdaq was barely up at 0.03 percent.

Meanwhile, Petronas’ refinery and petrochemicals integrated development (RAPID) project will comprise a crude oil refinery with capacity of 300,000 barrels per day, a naptha cracker that will produce about three million tonnes of ethylene, propylene, C4 and C5 olefins annually, and a petrochemicals and polymer complex that will produce differentiated and highly specialised chemicals. The capacity of the project will be bigger than the current combined production in Kertih and Gebeng.

Stocks in focus would include DIALOG GROUP BHD [] which had received the Johor government’s approval to reclaim and use the site in Pengarang for the proposed RM5-billion independent deepwater petroleum terminal. It said the combined investment in the project is estimated at RM5 billion over a seven-year period.

KENCANA PETROLEUM BHD is buying Allied Marine & Equipment Sdn Bhd (AME) for RM400 million in its move to become a fully integrated offshore services player.

The company said the purchase of AME would be a share swap, where it would issue 149.25 million new Kencana shares at RM2.68 a share. The vendors of AME are Worldclass Inspiration Sdn Bhd and Allied Asset Holdings Sdn Bhd.

Kencana’s total order book increased to RM2.44 billion after it was recently awarded a RM250 million contract from Sarawak Shell Bhd

The Edge weekly reports that offshore vessel builder and charterer SEALINK INTERNATIONAL BHD is looking to raise at least RM30 million from a placement exercise as it plans to expand its chartering vessel fleet and increase shipbuilding activities.

Glove maker Supermax Corp Bhd’s earnings fell 52.6% to RM24.40 million in the first quarter ended March 31, 2011 from RM51.47 million a year ago as its margins were eroded by high latex prices and the weaker US dollar. Revenue rose 9.4% to RM241.37 million from RM220.65 million a year ago while earnings per share declined to 7.18 sen from 18.97 sen.

DRB-HICOM BHD is exploring a potential merger of its 70%-owned Bank Muamalat Malaysia Bhd and Bank Islam Malaysia Bhd but there are no plans to sell its Bank Muamalat stake.

The company submitted a letter of expression of interest to BIMB HOLDINGS BHD (BIMB) to explore a potential merger of the two banks and “has yet to commence any exploratory discussions with BIMB”.

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