Stocks to watch Banks, telecommunications, Tenaga, MMC Corp

KUALA LUMPUR: The FBM KLCI could extend its gains on Wednesday, June 1 following the firmer close at key regional markets the previous day by an upbeat outlook from Japanese manufacturers.

European shares also rose yesterday on optimism over a possible Greece deal, with banks among the biggest gainers, according to Reuters.

On the local front, banking stocks are likely to pique investors’ interest after CIMB Group Holdings and MALAYAN BANKING BHD [] each received Bank Negara’s approval to start negotiations with RHB CAPITAL BHD [] for a possible merger of their businesses.

The approvals to start talks are valid for a period of three months from May 31, the two banks said, adding that further details on the possible merger would be announced in due course.

TENAGA NASIONAL BHD [], which received official approval to raise electricity tariff effective June 1, could see further buying interest.

The stock was the major gainers yesterday and actively traded, closing 59 sen higher at RM7.11 with 89 million shares done.

Maxis Bhd’s first quarter net profit dipped 2.35% to RM539 million from RM552 million a year earlier, due mainly to higher net finance costs due to additional borrowings.

Revenue for the quarter was RM2.13 billion compared to RM2.15 billion in 2010. Earnings per share was 7.20 sen while net assets per share was RM1.15.

Maxis declared a first interim single-tier tax exempt dividend of 8 sen per share in respect of the financial year ending Dec 31, 2011, to be paid on June 30, 2011.

Meanwhile, Axiata Group Bhd’s net profit for the first quarter ended March 31, 2011 fell 40.5% to RM548.36 million from RM921.47 million a year earlier, as the company recorded a one-off gain in 1Q 2010 from the disposal of shares in XL.

Revenue for the period grew 3.3% to RM3.94 billion from RM3.81 billion on the back of continuous improvement in key operating companies.

MMC CORPORATION BHD []’s net profit for the first quarter ended March 31, 2011 rose 29.5% to RM43.04 million from RM33.23 million a year earlier, due mainly to higher contributions from most of its divisions.

Revenue for the quarter increased to RM2.23 billion from RM2.06 billion in 2010. Earnings per share was 1.41 sen while net assets per share was RM2.19.

Ajinomoto (Malaysia) Bhd net profit for the fourth quarter ended March 31, 2011 rose to RM5.39 million from RM1.48 million a year earlier, due mainly to lower sales and marketing expenses.

Ajinomoto proposed dividend of 20 sen per share in respect of the FY ended Mrch 31, 2011 comprising a first and final gross dividend of nine sen; a nine sen tax-exempt dividend as well as special gross dividend of two sen per share.

For the financial year ended March 31, Ajinomoto’s net profit rose to RM25.73 million from RM23.94 million, on the back of revenue RM316.17 million.

Read more...

Maybank IB Views

COMMENTS ON NEWS
SP Setia RM5.96: Buy
Replicating Eco Park's success Shariah-compliant

3% EPS enhancement from new Cyberjaya land. We are positive on the latest Cyberjaya land purchase by SP Setia (SPSB) given its fair pricing. More importantly, the land, which will be developed into a RM3b GDV mixed development, will enhance our FY13 earning forecast by 3%. SP Setia remains as our top Buy in property. Our TP is unchanged for now at RM7.15 (10% premium to its RM6.50 RNAV).


Technicals
The FBM KLCI closes lower by 2.96 points at 1,499.28. Its resistance areas of 1,499 and 1,527 will cap market gains, whilst the weaker support areas are located at 1,485 and 1,497.

Trading idea for today is a Take Profit call on PROTON.

Other Local News
Celcom: Investing RM1b to upgrade network. Celcom Axiata Bhd will invest about RM1b this year in capex to upgrade its network to be long-term evolution (LTE) ready. 60% of the RM1b would be used to enhance its data network while 40% would be used to maintain its current network. (Source: The Star)

Sime Darby: No deal signed on Cameroon. Sime Darby Berhad clarified that it has not entered into any agreement to invest in oil palm plantation in Cameroon. However, Sime Darby does explore investment opportunities relating to its core businesses as part of the continuous expansion plan of the Group. (Source: Bursa Malaysia)

MMC, Gamuda: In shareholders deal. MMC Corp Bhd and Gamuda Bhd have entered into a shareholders' agreement to regulate their rights and liabilities as shareholders of a company that will act as the project delivery partner for the Klang Valley Mass Rapid Transit (MRT) project. The company that would undertake the MRT project would be equally owned by MMC and Gamuda. (Source: Bursa Malaysia)

Uzma: Secures RM200m Petronas contract. Uzma Bhd's subsidiary, Uzma Engineering Sdn Bhd, was awarded a long term service agreement from Petronas to provide a Low Pressure System (LPS) for its domestic upstream operations. The contract that is estimated to value at RM200m encompasses supply of uzmAPRESTM equipment, manpower and consultancy services. The tenure of the contract is from Feb 18 2011 till Feb 17 2014, with the option to extend the contract for another two years. (Source: Bursa Malaysia)

O&G: Petronas to invest RM250b in next 5 yrs. Petroliam Nasional Bhd plans to invest RM250b in the next five years in exploration and asset replacement to maintain the exploration levels. The capital expenditure would be internally funded. (Source: The Edge Financial Daily)

Aviation: IATA cuts airline industry 2011 earnings outlook. Global airline earnings will halve this year as rising costs, especially oil prices, offset increasing demand, according to industry body International Air Transport Association (IATA). IATA, whose 230 members include Malaysia Airlines and Singapore Airlines lowered its earnings forecast for 2011 to USD8.6b this year from USD9.1b forecasted in December. The new forecast represents a 46% decline in net profit from 2010 net profit of USD16b. (Source: The Star)

Read more...

Maybank IB Views

ACQUISITIONS / DISPOSAL
PLUS Expressways RM4.69: Hold
The loner in UEM-EPF Shariah-compliant

Nothing at offer close. MMC Corp did not throw in a new bid for PLUS as speculated. Jelas Ulung did not put in a RM50m cash deposit which means that it is out of the race. All eyes will now be back on UEM-EPF, which is the lone "bidder". The offer implies RM4.60 per PLUS share. PLUS is now officially a Hold; our call has been put under review since its share price started trending close to the UEM-EPF offer price. UEM-EPF's offer is fair, close to our RM4.70-DCF derived target price.


COMPANY UPDATE
Gamuda RM4.21: Buy
New water offer significantly undervalues Shariah-compliant

Another long drawn affair. The Selangor Government's latest offer for SPLASH values its equity value at RM297.5m, we estimate. Gamuda's short announcement yesterday only quoted the offer price on a per share basis, but not the total amount. If our calculation is right, the offer prices SPLASH at just 0.63x book. We think that the offer will be rejected by SPLASH's three shareholders, including Gamuda. Water consolidation in Selangor seems like another long drawn affair.


Sunrise RM3.12
Ceasing coverage Shariah-compliant

Stock to be delisted. The take-over offer by UEM Land at RM2.80 a piece has received 96.4% acceptances. UEM Land does not intend to maintain the listing status of Sunrise, which has been suspended since 31 Dec 2010. We are ceasing research coverage of Sunrise. Investors should no longer depend on our financial forecasts of Sunrise in making investment decisions, nor infer an adverse opinion as a result of our decision to cease coverage.


ECONOMICS
Industrial Production Index Nov '10
Stabilising after slowdown

Industrial production in Nov '10 picked up to +5.1% YoY (Oct '10: +3.1% YoY). However, on MoM basis, output fell across the board by 3.7%. YTD, the industrial production index (IPI) was up +7.8%. For Oct-Nov '10, it increased by +4.1% YoY (3Q10: +4.3% YoY; 2Q10: +10.8% YoY, 1Q10: +11.1% YoY). Using this to estimate real GDP, we came to a figure of around +5.0% YoY for 4Q10 (3Q10: +5.3% YoY; 2Q10: +8.9% YoY; 1Q10: +10.1% YoY). Our 2010 economic growth estimate of +7% reflects a 4% YoY expansion in the final three months.


Technicals
The FBM KLCI fell 8.69 points to 1,563.52 yesterday. Its resistance area of 1,563 and 1,576 will cap market gains, whilst its weaker support areas are located at 1,535 and 1,560.


Other Local News
Proton: In talks with to assemble vehicles in India. Proton Holdings Bhd could be in talks with Indian automobile manufacturer, Hindustan Motors to assemble its vehicles for the Indian market. Proton is in favour of using Hindustan Motors' Chennai plant, set up for assembling the Mitsubishi Lancer, to locally produce its Exora multi-purpose vehicle. (Source: The Star)

SapuraCrest: Gets RM750m loan. SapuraCrest Petroleum Bhd's wholly-owned subsidiary, Aurabayu Sdn Bhd was granted a syndicated Islamic financing facilities of up to RM750m comprising ringgit Malaysia and US dollar denominated tranches from Maybank Investment Bank Bhd. Maybank Investment acted as the mandated lead arranger and bookrunner. (Source: The Star)

Transmile: Sells four aircraft to FedEx for RM209m. Transmile Group Bhd has sold four MD-11F aircraft to Federal Express Corp (FedEx) for RM208.8m. The funds raised from the disposal would be used to partially settle the outstanding debt of the company, which amounted to RM528.9m as at Sept 30, 2010. (Source: The Star)

Integrax: Perak allows Vale of Brazil to build its jetty in Lumut. Vale International SA has been allowed by the Perak state government to construct its own jetty in Lumut to accommodate its proposed iron ore transshipment project. Vale was originally supposed to use Integrax Bhd's Lekir Bulk Terminal (LBT), but the facility upgrade has been on hold since 2009 due to the feud between two brothers who hold a combined 37% stake in Integrax through Halim Rasip Holdings. (Source: The Star)

Property: Tambun Indah IPO oversubscribed by 14.9x. Property developer Tambun Indah Land Bhd's initial public offering (IPO) of 11.1m shares was oversubscribed by 14.9 times where 10,751 applications for 175.7m shares with a total value of RM123m were received. (Source: The Edge Financial Daily)

Construction: Benalec oversubscribed by 4.9times. Benalec Holdings Bhd, which will be listed on the Main Market of Bursa Malaysia, has received an oversubscription rate of 4.92 times for the 36.5m shares made available for public subscription. (Source: The Edge Financial Daily)

Plantation: Planters appeal to abolish windfall profit levy. Malaysian oil palm planters will appeal collectively to Prime Minister Datuk Seri Najib Tun Razak to abolish the windfall profit levy on crude palm oil (CPO) after their requests were turned down by the Finance Ministry recently. The joint appeal is expected to be made by the Malaysian Palm Oil Association (MPOA), Malaysian Estate Owners' Association (MEOA), East Malaysia Planters' Association (EMPA) and Sarawak Oil Palm Plantation Owners' Association (SOPPOA). (Source: The Star)

Conglo: JCorp's directors may not attend EGMs. Johor Corp (JCorp) directors representing the Johor and Federal governments are unlikely to attend the EGM's of Johor Corp's three public listed companies (Kulim, Damansara Realty, KPJ Healthcare) this month to remove Tan Sri Muhammad Ali Hashim as their respective chairman. (Source: The Star)

Read more...

Maybank IB Views

ACQUISITIONS / DISPOSAL
PLUS Expressways RM4.61: Buy
MMC to bid for PLUS? Shariah-compliant

More details end of today. MMC Corporation is expected to throw in a bid for PLUS end of today, thus emerging as the third bidder. Today will be an interesting day for PLUS for any other offer for its businesses plus a RM50m cash deposit must be effected by the end of today. Our Buy call on PLUS, premised on RM4.70-DCF derived TP, has been put on review since PLUS' share price surged to the UEM-EPF offer price.


COMPANY UPDATE
Notion VTEC RM2.00: Buy
Secures new orders from Nikon; target price lifted Shariah-compliant

Target price raised to RM2.40 (+23%) following a 7-19% upgrade to FY11-12 EPS for Nikon's new sub-assembly of DSLR camera lens, and after raising our EV/EBITDA target. A further 7% rise in EPS and target price is possible should NVB secure the MSC tax break. NVB remains a Buy, offering an improving business condition and earnings prospect.


ECONOMICS
US Economy
"Jobless Recovery" no more...?

Dec 2010 labour market data was mixed amid lower than expected rise in non-farm payrolls (Dec 2010: +103,000; Nov 2010: +39,000; consensus: +150,000) and bigger than expected decline in unemployment rate( Dec 2010: 9.4%; Nov 2010: 9.8%; consensus: 9.7%) . However, there are plenty of structural issues in the job market (e.g. high labour underutilisation rate and long-term unemployment) that resulted in Fed's cautious outlook with the central bank expecting jobless rate to fall only to 8% two years from now and the labour market to normalise only in four to five years. Therefore, jobless recovery remains a risk to the US economy and a challenge to policymakers.


Technicals
The FBM KLCI gained 53.30-points and closed at 1,572.21 last week as some very firm new year broad-based buying activities caused the market’s superb surge.The firm support areas for the FBM KLCI are located in the 1,531 to 1,572-zone. The key resistance level of 1,576 may offer some token selling only. We anticipate further bullishness for this week.

Our weekly trading Idea is a technical Strong Buy call on KENCANA.


Other Local News
MRCB-Ecovest: Poised to bag river clean-up job. A joint venture between Ekovest Bhd and Malaysian Resources Corp Bhd (MRCB) is on the verge of receiving a letter of award from the government for a portion of the Klang Valley river beautification project that is worth RM8b. The Klang River clean-up project is part of a RM15b rehabilitation and development plan for the river, under the ETP. Another company eyeing the project is YTL Corp Bhd’s Wessex Water Ltd, which bided for the project with I-Bhd. (Source: The Edge Financial Weekly)

MRCB, IJM Land: Reconsider merger plans. Malaysian Resources Corp Bhd (MRCB) and IJM land Bhd could be taking another look at the merger plan. Meanwhile, IJM Land does not rule out the possibility of working with MRCB in a joint venture capacity rather than a merger of the two companies. (Source: The Edge Financial Weekly)

Boustead: In talks to buy army base land for RM8b project. Boustead Holdings Bhd is in talks with the government to buy the 98ha Batu Cantonment army base at Jalan Ipoh, Kuala Lumpur for a mixed commercial and residential properties project worth more than RM8b. The Batu Cantonment army base, which has been there for over 40 years, will be relocated. (Source: Business Times)

Hap Seng: Raise funds via rights issue, placement. Hap Seng Consolidated Bhd is proposing a private placement of up to 124.5m new shares (representing 20% of existing share capital), followed by a two-for-one bonus issue, and a renounceable rights issue on the basis of one rights share and one warrant for five shares (post bonus). The funds raised would be utilised for capital expenditure requirements, corporate purposes and additional working capital purposes. (Source: Bursa Malaysia)

Conglo: JCorp may sell land, property to pare down debts. Johor Corp (JCorp) is considering selling various assets including land, properties and plantation assets to partly repay its current RM3.6b debt which is due for repayment in July next year. The state investment arm plans to bring down the debt level of RM3.6b to a “sustainable level” of between RM1b and RM1.5b. (Source: The Star)

Infrastructure: MRT line from Sg Buloh to Kajang to be finalised between April and May. The locations of the 35 stations of the first mass rapid transit (MRT) line from Sg Buloh to Kajang are expected to be finalised between April and May. The line, with about 9.5km underground will run through Sg Buloh, Kota Damansara, Kuala Lumpur, Cheras to Kajang. (Source: Bernama)

Aviation: Inaugural Riau Air Flight to Melaka. The inaugural Boeing 737-500 Riau Air flight from Riau to Melaka International Airport (LTAM) in Batu Berendam is expected to give the airport a boost. Riau Air would begin its thrice-weekly Pekan Baru-Melaka flights next week. Meanwhile, Riau Air is also eyeing air connections between Pekan Baru and Johor Bahru via Senai airport. (Source: Bernama)

Read more...

Stocks to watch: Hap Seng, Guan Chong, PLUS, MMC

KUALA LUMPUR: As the FBM KLCI posted 3.51% in gains for the first week of 2011 to close at a fresh high of 1,572.21 , investors’ thoughts are whether the market can extend its gains for the week starting Monday, Jan 10.

Profit taking was well absorbed last Friday, with banks giving up some gains as interest shifted to other blue chips. External events would also help provide the direction for the local bourse.

For the week,the index was up 53.3 points or 3.51% from 1,518.91 on Dec 30 to 1,572.21 last Friday. Market capitalisation increased by RM49.87 billion during the period to RM1.324 trillion.

On Wall Street, US stocks fell on Friday after a court ruling in a key foreclosure case prompted investors to pull out of bank stocks, adding to weakness after a lacklustre jobs report.

Despite the weaker close, the broader Standard & Poor's 500 Index and Dow Jones industrial average recorded their sixth straight week of advances. The market has proved resilient despite expectations that stocks were due for a pullback.

The Dow slipped 22.55 points, or 0.19%, to 11,674.76. The S&P was off 2.35 points, or 0.18%, to 1,271.50. The Nasdaq Composite Index declined 6.72 points, or 0.25% to 2,703.17. For the week, the S&P 500 rose 1.1%, the Dow gained 0.8% and the Nasdaq climbed 1.9%.



Stocks to watch on Bursa Malaysia would be HAP SENG CONSOLIDATED BHD, GUAN CHONG BHD, PLUS EXPRESSWAYS BHD and MMC Corp Bhd.

Hap Seng plans to raise up to RM1.46 billion from a corporate exercise which includes RM808.21 million from a private placement and another RM654.54 million from a rights issue. The move would also build its war chest to undertake acquisitions.

It had proposed to place out up to 124.53 million new shares at an issue price of RM6.49 per placement share which would raise RM808.21 million.

It would also undertake a renounceable rights issue of up to 448.31 million new shares together with up to 448.31 million new free detachable warrants to raise RM654.54 million.


Meanwhile, Guan Chong plans to raise up to RM120 million from the expected exercise price of RM2 for the 60 million free warrants. It had fixed the exercise price for the warrants at RM2, which was 9.29% or 17 sen over the theoretical ex-price after the proposed bonus issue of RM1.83 per share, based on the five-day volume weighted average price of RM2.44.

Of the RM120 million, the proceeds would be used for the day-to-day working capital requirements of the group.



Monday is the deadline for interested bidders to deposit their RM50 million to take over PLUS Expressways. Reports state MMC Corp Bhd may be the third party to put in its bid on Monday.

The first joint offer by UEM Group Bhd and the Employees Provident Fund Board was RM4.60 per share or RM23 billion while the second offer is from Jelas Ulung Sdn Bhd which is offering RM26 billion ot RM5.20 per share.

Meanwhile, Johor Corporation (JCorp) has stated it has 70% of the required sum needed to repay its debts from plans about to be executed.

Its new president/chief executive officer, Kamaruzzaman Abu Kassim said last Friday that the group had RM3.6 billion debt in July 2012 and it was taking steps to reduce it to a more sustainable level of between RM1 billion and RM1.5 billion.

"To pay off the difference, which would amount to about RM2.6 billion, 70% of the required sum, or about RM1.8 billion, would be derived from plans which would be executed at a suitable time. The balance will be raised from sellable assets and land," he said.



Meanwhile, KFC Holdings (Malaysia) Bhd (KFCH) plans to invest RM25 million to open 25 new outlets nationwide this year.

Managing director Jamaludin Md Ali said out of the 15 of the KFC fast food restaurants will be drive-through outlets to provide more convenience to customers, he said. Currently, there were 520 KFC outlets including 40 drive-through outlets.

Read more...

Stock to Watch - GW Plactic, PLUS, Gamuda, MMC and O&G sector

GW Plastics is one of the largest manufacturers of flexible plastic packaging in Malaysia, its public tranche was oversubscribed by 3.7 times. Its offer price was 76 sen and RHB Research accorded it a fair value of 90 sen.

PLUS resumes trading on Monday after it received an offer from UEM Group Bhd and the Employees Provident Fund (EPF) as joint offerors to acquire all its business and undertakings , including assets and liabilities for RM23 billion or RM4.60 per share cash.

PLUS daily chart Oct 2010

UEM and EPF said in a joint statement on Friday, Oct 15 they would set up a co-investment vehicle to make the offer to PLUS. The co-investment vehicle will be 51% owned by UEM Group, with the remaining 49% owned by EPF.

Gamuda daily chart Oct 2010

MMC Corp and Gamuda will be in focus after the firm commitment by the government to go ahead with the Mass Rapid Transit in Greater KL which will be implemented beginning 2011. This project will entail an estimated private investment of RM40 billion.

MMC daily chart Oct 2010

Oil and gas counters will see trading interest as the government stays focused on the sector. The government will allocate RM146 million to support the sector.

Source: theedgemalaysia

Read more...