Stocks to watch: Gamuda, Boustead, GDex, TDM

KUALA LUMPUR (Dec 17): Regional markets including Bursa Malaysia are expected to see cautious trade in the week ahead, starting Dec 19 with volume continuing to thin during the holiday season while investors’ sentiment is expected to be dampened by the eurozone debt crisis.

On Wall Street, a rally in stocks fizzled, leaving major indexes with modest gains on Friday, as Wall Street was torn between hope that U.S. economic data signals better times ahead and fear Europe's debt crisis will engulf world economies, Reuters reported.

The Dow Jones industrial average fell 2.42 points, or 0.02%, at 11,866.39. The Standard & Poor's 500 Index was up 3.91 points, or 0.32%, at 1,219.66. The Nasdaq Composite Index was up 14.32 points, or 0.56%, at 2,555.33.

Meanwhile, credit rating agency Fitch told euro zone countries it believed a comprehensive solution to their debt crisis was beyond reach, putting six euro zone economies including Italy on watch for potential downgrades in the near future,

At Bursa Malaysia, stocks to watch include GAMUDA BHD [], BOUSTEAD HOLDINGS BHD [], GD EXPRESS CARRIER BHD [] (GDex), TDM BHD [] and Top Glove Corp Bhd.

Gamuda is upbeat about the outlook for its prospects for the remaining financial year after its earnings climbed 49.5% to RM132.32 million in the first quarter ended Oct 31, 2011, from RM88.53 million a year ago due to higher contributions from all divisions.

The infrastructure-based company expected a stronger performance this year supported by its ongoing CONSTRUCTION [] projects, continued strong property sales and steady earnings from the water and expressway divisions.

Boustead’s subsidiary Boustead Naval Shipyard Sdn. Bhd has received the letter of award from the Ministry of Defence (Mindef) to supply six patrol vessels with a contract ceiling of RM9 billion.

The Edge weekly reported in its latest issue that GDex is bolstering its position to fight competition. The local express delivery provider is drawing up strategic plans on multiple fronts to deal with the increasing competition and gloomy economic outlook for 2012.

The Edge also reported that the rehabilitation of estates is paying off for TDM. It has been an exceptional year for the PLANTATION [] company as its net profit for the first nine months of FY2011 already exceeds that of any full year in the past.

Top Glove’s earnings fell 12.81% to RM31.43 million in the first quarter ended Nov 30, 2011 from the RM6.05 million a year ago impacted by higher raw material prices and the oversupply in the industry

However, the world’s largest glove maker performed better when compared with the preceding quarter in terms of revenue and earnings. It revenue rose 2.4% to RM554.84 million from RM541.84 million in the preceding quarter, while net profit increased 21.5% to RM32.46 million from RM26.82 million.

Commenting on the results, CIMB Equities Research said Top Glove’s 20.5% on -quarter rise in net profit, though strong, was expected.

“It came primarily from cost deflation as demand remained weak and industry overcapacity is still an issue. At 23.2% of our forecast and 20.2% of consensus, 1Q results were broadly in line as we expect stronger quarters ahead. We maintain our Underperform rating and target price, still based on 13.05 times price-to-earnings,” it said.

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Stocks to watch: Coastal Contracts , Sanichi, Dialog, JCY

KUALA LUMPUR (Dec 16): Regional markets including Bursa Malaysia could trade on a cautious note on Friday as investors’ risk appetite for equities would be restrained by worries about the global economy and Europe's debt crisis.

Reuters reported major Southeast Asian stock markets fell on Thursday, extending the decline for the third day, led by banks and commodities as a decline in Chinese factory output added to worries about the global economy and Europe's debt crisis.

Concern over the situation in the euro zone rose after Fitch Ratings downgraded five big European banks on Wednesday.

At Bursa Malaysia, stocks which could see trading interest include COASTAL CONTRACTS BHD [], SANICHI TECHNOLOGY [] BHD [], DIALOG GROUP BHD [] and hard-disk drive manufacturer JCY International Bhd.

Coastal Contracts’s year-to-date order wins rose to RM690 million after the company secured new contracts worth RM233 million for the sale of three offshore support vessels, two landing crafts and two barges.

“With this latest batch of contracts, the value of Coastal Group’s secured vessel sales orders currently stood at about RM610 million, with deliveries through 2012,” it said.

Sanichi, whose shares inched up in very active trade on Thursday, could see continued trading action. It received a letter of intent from China’s Guangxi Huayin to purchase 150,000 tonnes of steam coal per month, totaling 1.80 million tonnes for a one-year period.

Sanichi said Guangxi Huayin is one of the largest and most advanced aluminium producers in China and the shareholders include the Aluminium Corporation of China with a 33% stake.

Meanwhile Dialog Group Bhd, which is undertaking a cash call to raise funds for more investments in the upstream oil and gas opportunities, has fixed the rights shares at RM1.20 each and the exercise price of the warrants at RM2.40 each.

The issue price would be a discount of about 46% to the theoretical ex-rights price of RM2.23 per share, based on the five-day volume-weighted average market price (VWAMP)up to Dec 14 of RM2.43.

As for the warrants, it said the exercise price was 8% above the theoretical ex-rights price of RM2.23 per share, based on the five-day VWAMP up to Dec 14 of RM2.43.

JCY could see continued trading interest as it was not impacted by the severe floods in Thailand unlike other hard-disk drive manufacturers which had major operations in Thailand.

CIMB Equities Research said believed a full restoration to pre-flood production was at least six to nine months away, but suppliers with strong balance sheets to invest could benefit from greater allocations in the near term.

“Improvements in average selling prices (ASP) for drive makers should also be positive for the industry,” it said. It advised investors to be selective as it believed volume would remain hindered by component shortages.

“Buy JCY as we expect strong near-term earnings on higher ASPs and allocations,” it said.

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Stocks to watch: S P Setia, Kencana, Boustead, Benalec

KUALA LUMPUR (Dec 9): The FBM KLCI could trade in a tight range on Friday, as the focus turns on the economic data from China over the next two days as well as the crucial summit of European policymakers.

Global markets, however, could edge upwards as the European Central Bank cut interest rates by a quarter of a point on Thursday to counter the twin threats of recession and deflation in the euro zone.

The ECB is also expected to unveil fresh measures to help banks hurt by the bloc's debt crisis, according to Reuters.

At Bursa Malaysia, the market could be given a boost from the slew of fresh corporate announcements.

Among the stocks are S P Setia Bhd, KENCANA PETROLEUM BHD [], BOUSTEAD HOLDINGS BHD [], Benalec Holdings, Bumi Armada Bhd and MELEWAR INDUSTRIAL GROUP BHD [].

S P Setia Bhd set a set a new full-year sales record in FY 2011 of RM3.29 billion, or a 42% increase from the previous record of RM2.31 billion set in FY 2010. The company has also set a target to achieve total new sales of RM4 billion in FY 2012.

For the financial year ended Oct 31, S P Setia’s net profit rose 30.2% to RM327.97 million from RM251.81 million, on the back of an increase in revenue to RM2.23 billion from RM1.75 billion in 2010.

However, the offer price cap set by Permodalan Nasional Bhd (PNB) in its takeover bid could restrain any upside. PNB offered RM3.90 per share and 91 sen per warrant.

Kencana’s unit, Kencana HL Sdn Bhd, secured a RM1 billion contract from Bechtel International Inc to fabricate and assemble a liquefied natural gas (LNG) processing plant in Australia.

The contract includes fabrication to loading of process equipment modules for Wheatstone Project LNG plant at Ashburton North, Western Australia.

Boustead subsidiary, Boustead Naval Shipyard Sdn Bhd secured a RM62 million job from the government to supply spare parts, maintenance, integrated logistic support and training for the 17th patrol vessel squadron of the Malaysian navy.

Benalec inked a MoU with Singapore-based Rotary Engineering Ltd to jointly develop an independent deepwater storage terminal for oil products in Tanjung Piai, Johor. The MoU would enable it to become a strategic business partner with Rotary in the equity ownership and development of the terminal in Tanjung Piai.

Bumi Armada's subsidiary Armada TGT Ltd has inked a US$341.1 million (RM 1.08 billion) loan with seven financial institutions to fund the conversion and installation of the FPSO Armada TGT 1 to be used in the Te Giac Tran Field, offshore Vietnam.

Its chief financial officer Shaharul Rezza Hassan said the facility was for seven years and represented about 80% of its capex value.

Meanwhile, Melewar’s unit Melewar Integrated Engineering Sdn Bhd (MIE) has inked an MoU with KAZMY Steel Company wherein MIE would be the contractor to design and build the MycroSmelt plant in Almaty, Kazakhstan.

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Stocks to watch: Glomac, Mah Sing, Tan Chong, Fibon

KUALA LUMPUR (Dec 3): The FBM KLCI may trend higher and again test the psychologically important 1,500 level in the week ahead, starting Monday, Dec 5 on more global liquidity and economic optimism.

On Friday, Dec 2, the FBM KLCI closed in positive territory as some key regional markets reversed their earlier losses, but gains at the local market remained muted as investor sentiment stayed cautious.

Week-on-week, the KLCI was up 57.45 points to end at 1,489 with the market capitalisation up RM39.59 billion to RM1,269.59 billion.

Affin Investment Bank head of retail research Dr Nazri Khan said the sentiment could be propped by the coordinated move by central banks including China and Brazil to ease monetary policies.

Another positive factor is the rising expectation of an aggressive cut in the ECB interest rate and stronger EU deal to resolve the debt crisis.

“However, despite the gains spotted worldwide, we recommended caution since the liquidity move is yet to address the core problems that Europe faces which is to provide a long-term sustainable funding solution to the troubled European banking community,” he said.

Dr Nazri expected the broad market to trend higher slowly as they digest more clarity on the EU plan to deal the problems (possibly disclosed in the upcoming Dec 9, EU summit).

“These may includes details on how to enforce budget balancing for troubled countries, how to implement tough austerity measures especially for Portugal, Italy, Ireland, Greece and Spain, how to leverage the rescue funds and how to strengthen the ECB to backstop future crisis,” he pointed out.

Among the stocks which could see trading interest are GLOMAC BHD [], MAH SING GROUP BHD [], TAN CHONG MOTOR HOLDINGS BHD [] and Fibon Bhd.

Glomac's net profit for the second quarter ended Oct 31, 2011 rose 50pct to RM23.78 million from RM15.88 million a year ago, underpinned by on-going projects particularly Glomac Damansara, Glomac Cyberjaya, Saujana Rawang and Bandar Saujana Utama.

Its revenue for the quarter however declined 4.3pct to RM134.83 million from RM140.89 million, due to completion of two projects namely Glomac Tower and Glomac Galleria.

Mah Sing's proposed joint development of 4.08 acres of prime land along Jalan Tun Razak-Jalan Pahang faced a setback after the conditions were not met.

However, Mah Sing said it would explore options to move ahead on this. The project is a niche development – M Sentral -- with an estimated gross development value of RM900 million and it is part of the RM9-billion 58 acre riverside urban regeneration project.

The Edge weekly reports that Tan Chong Motor Holdings Bhd, which invested nearly US$45 million in Nissan Vietnam Co Ltd since acquiring a controlling stake in the company last year, is optimistic that it will reach break-even earlier than anticipated.

Meanwhile, Fibon – a chemical compounds producer -- is poised to enter a new phase of growth with the upcoming launch of its new switchboard Fibon LogiCube.

Anther company which could see trading interest are sports shoe sole manufacturer Xingquan International Sports Holdings Ltd. Its chief executive officer Wu Qingquan is confident that it can maintain its double digit growth in revenue for the financial year ending June 2012, said. The compound annual growth rate from 2006 to 2011 was 39%.

Last Friday, MMC CORPORATION BHD []'s Tanjung Bin Energy Sdn Bhd has sealed a power purchase agreement with TENAGA NASIONAL BHD [] to supply electricity over 25 years. However, the price of electricity which Tanjung Bin would sell to Tenaga was not disclosed in the statement to Bursa Malaysia.

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Stocks to watch: Maxis, Axiata, E&O, Tanjung, PJI

KUALA LUMPUR (Dec 1): After the flurry of corporate results for the quarter ended Sept 30, 2011, stocks which could see trading interest on Thursday include Maxis Bhd, Axiata Group Bhd and Eastern & Oriental Bhd (E&O).

Other companies which could also come under focus following fresh contracts are PJI HOLDINGS BHD [], TANJUNG OFFSHORE BHD [] and MALAYSIAN RESOURCES CORP []oration Bhd (MRCB).

Maxis’ earnings fell 10.6% to RM537 million in the third quarter ended Sept 30 from RM610 million a year ago on higher administrative expenses and network operation costs. Revenue was 1.3% higher at RM2.244 billion from RM2.216 billion a year ago, while earnings per share were 7.2 sen compared with 8.0 sen. It declared a third interim single-tier tax exempt dividend of 8.0 sen per share.

Meanwhile, Axiata’s earnings fell 7.7% to RM589.62 million in the third quarter ended Sept 30, 2011 from RM639.12 million a year ago on foreign exchange translation losses and higher costs. Net foreign exchange losses surged to RM43.91 million compared with gains on financing activities of RM71.96 million a year ago.

E&O saw its earnings surge 172% to RM13.83 million from RM5.08 million a year ago. Its revenue increased by 25.5% to RM82.60 million from RM65.81 million while earnings per share were 1.27 sen compared with 0.48 sen.

Tanjung Offshore’s subsidiary, Tanjung Maintenance Services Sdn Bhd has secured a RM43 million contract from Petronas Carigali Sdn Bhd. The contract was to provide maintenance services for mechanical rotating equipment at all offshore platforms operated by Petronas Carigali in the Sarawak operations region .

PJI Holdings Bhd’s unit has secured two contracts worth RM59.64 million at the KLIA2 involving the low voltage system for several locations at the KLIA2.

Its unit P.J. Indah Sdn Bhd had accepted the letter of award from BINA PURI HOLDINGS BHD [] to formalise the sub-contract valued at RM25.16 million.

P.J. Indah had also accepted a RM34.64 million contract from UEM CONSTRUCTION [] Sdn Bhd for the design, supply and maintenance of the low voltage system, uninterruptible power supply and lightning protection system at KLIA2.

MRCB has secured a RM40.3 million contract to carry out coastal protection works at the Sungai Perai river mouth. MRCB said it had received the letter of award from the Department of Irrigation and Drainage for the third phase of the project.

FABER GROUP BHD [] posted net losses of RM26.87 million in the third quarter ended Sept 30, 2011 compared with net profit of RM29.01 million a year ago. The losses were mainly due to the recognition of costs amounting to RM44.5 million for works completed for the projects in the United Arab Emirates (UAE) where the corresponding revenue was not recognised as it could not be measured reliably.

KUB MALAYSIA BHD [] posted net loss of RM12.86 million in the third quarter ended Sept 30, a vast contrast from the net profit of RM2.49 million a year ago. KUB had undertaken impairment assessments on its assets of underperforming subsidiaries and decided to provide impairment losses of RM14.70 million.

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