Stocks to watchSarawak counters, Proton, Press Metal, Masteel, KUB

KUALA LUMPUR: Investors’ sentiment in the week ahead, starting Monday, April 18 would partly hinge on the outcome of the Sarawak state elections due late Saturday, April 16.

Sarawak-based companies had run up ahead of the dissolution of the state assembly in late March before easing off.Since then, market sentiment had been generallyl cautious on political concerns about the Sarawak polls, which are the most hotly contested in recent years.

Meanwhile, Bernama reported that as at midday on Saturday, a total of 233,134 voters or 21.72% of the electorate in Sarawak have voted in the state polls, according the Election Commission. There were no untoward incidents.

At Bursa, over the past week, the 30-stock FBM KLCI had lost 22.06 points or 1.42% to end at 1,521.94 while RM14.83 billion had been erased from the market capitalisation, which mirrored the declines also in key regional markets. External concerns include the European debt crisis, sustained high oil prices and worries about the Japan's ability to recover from the earthquake which impacted its manufacturing sector.

Among the stocks which would be in focus include CAHYA MATA SARAWAK BHD (CMSB), NAIM HOLDINGS BHD, TA ANN HOLDINGS BHD, ZECON BHD [], ENCORP BHD and HOCK SENG LEE BHD (HSL).

Stocks with recent corporate developments are PROTON HOLDINGS BHD, PRESS METAL BHD, KUB MALAYSIA BHD and Malaysia Steel Works (KL) Bhd.

The Edge weekly reports that FUTUTECH BHD, which was a loss-making, former associate company of Eastern & Oriental Bhd, was poised to transform itself into a CONSTRUCTION [] firm. It had been awarded RM332.4 million worth of design, road and construction works by E&O Property Development Sdn Bhd.

Proton’s unit Lotus Cars Ltd secured £270m million (RM1.33 billion) in loans from six financial institutions over a six-year period to turn around the loss-making company.

Proton group managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir said he expected Lotus to break even by 2014.

Press Metal proposed a rights issue to raise between RM316.7 million and RM323.7 million to finance the Samalaju aluminium smelting project in Sarawak.

The rights issue involved RM323.73 million nominal value of redeemable convertible secured loan stocks (RCSLS) at 100% of its nominal value with up to 147.15 million warrants.

Johor Menteri Besar Datuk Abdul Ghani Othman has approved the proposed RM1.23 billion intra-city commuter train service in Iskandar Malaysia which would involve a100km rail network.

The project would be undertaken by Metropolitan Commuter Network Sdn Bhd - a joint venture between KUB Malaysia Bhd and Malaysia Steel Works (KL) Bhd.

SUCCESS TRANSFORMER CORP BHD has proposed to distribute 100 treasury shares for every 4,000 shares of 50 sen held for the financial year ending Dec 31, 2011. It also announced a tax exempt interim dividend of 2pct for FY ending 2011.

FAR EAST HOLDINGS BHD is recommending a final single tier dividend of 20 sen for the financial year ended Dec 31, 2010.

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Maybank IB Views

ECONOMICS
Economic Development & Outlook, 2Q11
Revolving and Evolving Risks

The risks, issues and challenges facing the global economy have not changed but have morphed into "4S" from "3S" to now include "(Black) Swans". This is on top of the "Sustainability" (US recovery), "Solvency" (Eurozone sovereign financial crisis) and "Stability" (Emerging Markets's "bubblenomy"). Given the fluid external environment, Malaysia needs to strike a balance between 1) sustaining growth, 2) maintaining macroeconomic and financial stability, and 3) dealing with inflation. The vital elements are 1) executing the Economic Transformation Programme (ETP), 2) gradual monetary policy normalization, fiscal consolidation and subsidy rationalisation, and 3) prudential measures within the financial system to address the asset bubble and household debt risks, thus ensuring the economy stays on track. Our key macroeconomic forecasts are largely unchanged, except for the upward revisions in inflation rate and crude oil price.

COMPANY UPDATE
IOI Corporation RM5.65: Hold
Raises stake in Singapore's South Beach Shariah-compliant

Maintain Hold. IOI Corporation has raised its interest in the Singapore South Beach development to 49.9% from 33.3% when it was initially proposed in Nov 2010. IOI has subscribed for a 49.9% equity interest in Scottsdale which will control 100% of the development. IOI will invest up to SGD816.8m (RM1.96b). Development details are not available, hence, we are unable to estimate the impact on IOI. Nonetheless, we draw comfort that the balance 50.1% holding in Scottsdale is held by Singapore's property pioneer, City Developments Ltd, who should be able to drive values for the South Beach development.

Technicals
The FBM KLCI rose 2.11-points and closed at 1,557.49 last Friday. The obvious support areas for the FBM KLCI are located in the 1,500 to 1,556-zone. The firm resistance zone of 1,558 and 1,576 will see heavy liquidation activities.

Trading idea for today is a Buy call on BENALEC.

Other Local News
MAHB: Passenger traffic to cross 60m mark. Airports Holdings Bhd (MAHB) is confident that total passenger traffic volume across the country’s airports will breach the 60-million mark this year. In 2010, all 39 airports nationwide handled a total of 57.8m passengers. (Source: Malaysian Reserve)

Notion: Eyed by private equity firm again? Market talk of possible corporate exercises has resurfaced at Notion Vtec Bhd, including the potential entry of a major US-based private equity firm and Nikon Corp considering upping its stake in the company. (Source: The Edge Malaysia)

Mamee: Shareholders propose to privatise company. Major shareholders of Mamee-Double Decker (M) Bhd have proposed to privatise the company by undergoing a capital reduction and repayment exercise under Section 64 of the Companies Act, 1965. Under the plan, major shareholders of Mamee who control the company would repay RM179.8m or RM4.39 a share to minority shareholders. (Source: Bursa Malaysia)

O&G: Shell shortlists five potential bidders for sale of LPG business. Royal Dutch Shell plc (Shell) has shortlisted five potential bidders for its downstream liquefied petroleum gas (LPG) business in Peninsular Malaysia. The shortlisted companies are Boustead Petroluem Marketing Sdn Bhd, KUB Malaysia Bhd, KKB Engineering Bhd, Lembaga Tabung Haji and Integrated Petroluem Services Sdn Bhd. (Source: The Edge Weekly)

Property: Projects galore in Penang. Some RM2.94b worth of residential and commercial properties from six developers, based in Kuala Lumpur and Penang, will be launched on the island this year. The south and south-west of the island will see some 1,275 units of residential and commercial properties launched with an estimated gross sales value (GSV) of RM1.45b, while the north-east district will see the development of about 1,166 units of properties valued at RM1.49b. (Source: The Star)

Transportation: Score railway link still pending study. The Sarawak government is still waiting for the completion of a feasibility study on a railway link beginning form the Samalajau Industrial Park in Bintulu to Tanjung Manis. (Source: The Edge Financial Daily)

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Stocks to watch: Tenaga, Puncak, F&N, Masteel

KUALA LUMPUR: Stocks on Bursa Malaysia may see some downside pressure on Friday, Jan 21 after China key stocks index fell 2.9% on Thursday on concerns of more monetary tightening.

At Bursa, the FBM KLCI fell on Wednesday, weighed down by losses in CIMB but the losses were relatively limited across the broader market, despite the firmer regional markets.

Companies with fresh corporate news including TENAGA NASIONAL BHD [], Fraser & Neave Holdings Bhd, Malaysia Steel Works (KL) Bhd (Masteel) and KUB MALAYSIA BHD (KUB) and PUNCAK NIAGA HOLDINGS BHD could see trading interest.

TNB’s board of directors expects the group's prospects to be very challenging for the current financial year due to the rising coal prices in the absence of a tariff review.

It reported earnings of RM712.9 million in the first quarter ended Nov 30, 2010, just a marginal 1% increase from the RM706.3 million a year ago as it was impacted by higher coal prices. The power giant said on Wednesday, Jan 19 there was an increase in forex translation loss of RM104.8 million as compared to RM45.4 million a year ago due to the strengthening of the yen and US dollar against the ringgit.

Puncak Niaga could see some selling pressure after the company and its joint venture partner have failed in their tenders for the two water supply and drainage projects in India. Puncak said that its partner P&C CONSTRUCTION s (P) Ltd had dissolved the joint venture agreements following the unsuccessful bids.

Fraser & Neave will allocate up to RM500 million as it seeks to take on a more regional and full fledged group from its current form as a tightly controlled food and beverage firm into a more regional and full fledged group.

It has also received the approval to market its isotonic drink 100PLUS and carbonated soft drinks in Thailand and Brunei, a move which will enhance its beverages business in Thailand especially.

Masteel and KUB have proposed to build and operate a 100km inter-city rail transit system in Iskandar Malaysia, which will connect to the MRT line from Singapore. The companies said the project could cost over RM1 billion, and consists of up to 25 commuter stations in major towns in the Iskandar Malaysia region in the initial stage.

Other stocks in the news would be OSK HOLDINGS BHD after its investment bank, which is seeking opportunities to expand into Thailand, has received the go-ahead from the potential securities company for a due diligence to be carried out.

In UMW HOLDINGS BHD, the automotive and oil and gas player is allocating about RM800 million for expansion, of which RM500 million would to be expand its local operations including the automotive business.

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