Stocks to watch: Maybank, MMHE, Tenaga, TSH

KUALA LUMPUR: Regional markets including Bursa Malaysia will continue to see downside pressure in the week ahead, starting Monday, Aug 22, tracking losses on European and US markets.

The FBM KLCI closed down 1.29% on Friday, or 19.32 points to 1,483.98, weighed by losses including at Genting and CIMB.

For the month, the KLCI is down 78 points while RM132.76 billion has been erased from the market capitalisation. A major concern is that another week of selldown could trigger margin calls on assets pledged with equities.

On Wall Street, stocks fell for the fourth week of losses amid mounting fears of another U.S. recession while Europe's financial system faces destabilisation, Reuters reported.

The Dow Jones industrial average fell 172.93 points, or 1.57%, to end at 10,817.65. The Standard & Poor's 500 Index dropped 17.12 points, or 1.50%, to 1,123.53. The Nasdaq Composite Index slid 38.59 points, or 1.62%, to close at 2,341.84.

For the week, the Dow ended down 4%, the S&P 500 dropped 4.7% and the Nasdaq lost 6.6%.

Stocks to watch on Monday include MALAYAN BANKING BHD [] (Maybank), Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE), TENAGA NASIONAL BHD [] and TSH RESOURCES BHD [].

Other counters which could see trading interest are PLUS Expressway Bhd, UMW HOLDINGS BHD [] and TAN CHONG MOTOR HOLDINGS BHD [].

Maybank will announce its fourth quarter results and expectations are that it could announce attractive dividends, as reflected that its share price was holding much steadier over the week compared with other heavyweights over the past week.

MMHE has secured two contracts worth RM952 million from MISC BHD [] for topsides fabrication, marine repair and conversion of two energy vessels.

Tenaga may continue to see more selling pressure after falling to a new 52-week low of RM5.55 on Friday. Hefty fuel costs which could reach an additional RM400 million a month would continue to weigh on the power giant while analysts had also downgraded the stock.

TSH posted a record pre-tax profit of RM51.63 million, which was 192% above the RM17.69 million a year ago in the second quarter, boosted by its PLANTATION []s business, especially from its Indonesian operations.

Its net profit increased by 217% to RM35.96 million from RM11.32 million a year ago. Its revenue rose 59% to RM329.95 million from RM207.47 million. Earnings per share were 8.77 sen compared with 2.77 a year ago.

PLUS, which is being taken private, reported second quarter earnings rose 28.7% to RM383.49 million from RM297.86 million a year ago, boosted by an increase in toll collection by RM41.10 million.

UMW earnings fell 38% to RM131.18 million from RM211.69 million a year ago, due mainly to lower contributions from its automotive and manufacturing & engineering segments. Revenue dipped 3.6% to RM3.16 billion from RM3.28 billion. Earnings per share were 11.26 sen while net asset per share was RM3.66.

The Edge weekly reported that production at Tan Chong Motor Holdings' assembly plant in Segambut is being ramped up to meet the rising volume of brands owned by its sister companies. Thus, the group has decided to defer its property development plan for the tract on which the assembly plant is located.

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PLUS dividend may come early

PETALING JAYA: PLUS Expressways Bhd is considering paying out dividends earlier than the norm and may announce this at its upcoming AGM, sources said.

According to the sources, the move is possibly aimed at pacifying investors who have had a relatively long wait for returns from the pending sale of the company's assets to the Employees Provident Fund (EPF) and Khazanah Nasional Bhd.

The amount paid for this year's dividends will be deducted from the final price that both EPF and Khazanah will pay PLUS for buying the latter's assets.

The RM23bil sale, which works out to RM4.60 per PLUS share, received shareholders' nod in February, about four months after it was announced.
A file photo shows a section of the North-South Expressway near Gopeng, Perak. PLUS generated cash from operating activities totalling RM2.24bil last year.

Proceeds from the sale would be paid to shareholders in early September, and PLUS, which operates the North-South Expressway, is likely to be de-listed by the end of the same month.

PLUS normally paid its interim dividends in the third quarter of every year and it was likely that this year's interim dividends would be paid out sooner as the company had the cash to do so, the sources said.

For the 12 months to Dec 31, 2010, the company generated cash from operating activities totalling RM2.24bil, with cash and cash equivalents balance stood at RM3.48bil.

PLUS has dividend yields of 4% to 6% and a 75% dividend payout ratio policy.

The deal to sell PLUS to EPF and Khazanah received overwhelming response from minority shareholders at an EGM in February.

PLUS' major shareholders, who are also the offerors in the deal UEM Group, its parent Khazanah, and EPF abstained from voting for the deal at the EGM.

EPF holds a 12.3% stake in PLUS while UEM Group, together with its parent Khazanah, has 55.4%.

The takeover of assets and liabilities of listed companies has been a particularly popular route used for privatisation proposals by major shareholders in the past six months.

Apart from PLUS, other companies which took this route include Sunway Holdings Bhd and Sunway City Bhd, Emivest Bhd, Leong Hup Holdings Bhd and Asia Pacific Land Bhd.

PLUS shares closed 1 sen lower yesterday at RM4.46. The company declined comment for this article.

source:thestar

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RHBInvest Research

Proton –Underperform (down from MP)

• Visit Note
• A long road ahead
• We downgrade our call to Underperform (from market perform) as we see business risks being heavily weighted on the downside with few positive catalysts within our investment horizon. Fair value to RM4.15 (from RM5.60).

Macro View

Inflation:

• Economic Highlights (published 23 Feb 2011)
• Rose to 2.4% in Jan, pointing to rising price pressure
• We expect inflation to grow at 3.0% (an upward revision from 2.8% previously) in 2011.
• As a whole, we expect the OPR to be raised by 50-75 basis points in 2H 2011 to bring it to a more neutral level of 3.25-3.50%.

Sector Call

Motor : Neutral

• Sector Update
• A decent start to 2011
• Staying Neutral on autos. We revise our 2011 and 2012 TIV forecast to +4.0% and +2.1% respectively, with the replacement cycle and sales growth already having peaked.

Corporate Highlights


MRCB: Trading Buy

• Ekovest-MRCB JV awarded LOI for River Of Life project
• Fair value is RM2.65. Maintain Trading Buy

PLUS: Underperform

• Deal is sealed – ceasing coverage
• We advise investors looking for stocks with a similar defensive quality like PLUS to consider telecom stocks, which offer high dividend yields supported by strong free cash flows.

AFG: Market Perform

• Briefing Note (published 23 Feb 2011)
• Staying conservative
• No change to forecasts. Fair value of RM3.60 and Market Perform call maintained.

Media Prima: Outperform

• 4QFY10 Results/Briefing Note
• FY10 core net profit jumped 132.4% yoy
• Fair value maintained at RM3.20. Reiterate Outperform.

Axiata: Market Perform

• 4QFY10 Results/Briefing Note
• Potential headwinds ahead
• Maintain Market Perform call and fair value of RM5.75

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Maybank IB Views

COMPANY UPDATE
PLUS Expressways RM4.39: Hold
Inks 3rd Indian toll Shariah-compliant

Not new. The Jetpur-Somnath concession, inked yesterday, is not a new development; PLUS and its partner won the tender in Sept 2010. We expect mid-teens project IRR being a brownfield project, but no immediate impact on earnings. PLUS remains a Hold with just a 4.8% upside to UEM-EPF's RM4.60 take-over offer price.


RESULTS PREVIEW
Petronas Chemicals RM6.30: Buy
The right chemistry

Maiden quarterly result looking good. PCG is expected to release its 3QFY11 results in the third week of February. 3Q is expected to be highly profitable, buoyed by high utilisation rates, and strong product margins. No change to our forecast for a sizeable 47% expansion in FY11 net profit. Maintain Buy, with an unchanged target price of RM6.70 based on FY12 PER of 13x, in line with global peers.


RESULTS REVIEW
Fraser & Neave Holdings RM14.98: Hold
Strong volume growth

Priced in. Volume growth was much stronger than expected and we raise our FY11-12 earnings estimates by 3-5% p.a. 1QFY11 net profit made up 33% of our and consensus full-year forecast. Much, however, is priced in, with the stock trading at a prospective PER of 16.9x FY12 earnings. The immediate challenge would be in supplementing revenue loss from the Coca-Cola franchise from FY12. Net cash stays strong at RM639m or RM1.80/share. Maintain Hold with a raised target price of RM15.00, based on a prospective FY12 PER of 15x plus net cash.


Hartalega Holdings RM5.63: Buy
Playing the nitrile theme Shariah-compliant

Results support our nitrile pick. 9MFY11 net profit of RM138m (+43% YoY) was 73% of our full-year forecast and 79% of street's. We expect Hartalega's positive earnings growth momentum (3QFY11 net profit: +5% QoQ) to sustain on nitrile demand growth while the latex-focused incumbents could still post lackluster numbers in the coming quarter(s). We believe the stock will re-rate on more evidence of the ongoing structural demand shift from latex to nitrile gloves globally, due to cheaper ASP. Maintain Buy and DCF-derived TP of RM6.80.


Technicals
The FBM KLCI closed higher by 3.78 points at 1,535.60 yesterday. Its resistance areas of 1,541 and 1,558 will cap market gains, whilst the obvious support areas are located at 1,515 and 1,535.

Trading ideas for today are two BUY calls on CHHB and MITRA.


Other Local News
TNB: To source coal from all over the world. Tenaga Nasional Bhd is aggressively sourcing coal from South Africa and Indonesia to overcome a shortage from its traditional supplier Australia, which has been partly swamped with floods. TNB president and CEO Datuk Seri Che Khalib Mohamad Noh said the current situation is not expected to recover in the next 2 to 3 months. Che Khalib said TNB's net profit is likely to be hurt for its financial year ending August 2011 if coal prices remain over USD100 (RM304) a tonne. Consequentially, its bottom line will dip 16% every time coal prices rise by USD10 (RM30.4) per tonne. (Source: Business Times)

Ireka: Wins RM28m contract. Ireka Corp Bhd's wholly-owned subsidiary, Ireka Engineering and Construction Vietnam Co Ltd, has won a RM27.6m contract from Hoa Lam-Shangri-La Healthcare LLC for the structural works package at a general hospital in Ho Chi Minh City. This will bring Ireka's current order book to about RM800m, of which about RM430m remains outstanding. (Source: Business Times)

Economy: Malaysia among top outsourcing destinations. According to the Press Trust of India (PTI), the top three slots in AT Kearney's 2011 Global Services Location Index (GSLI) are occupied by three Asian countries: India, China and Malaysia. The 3 countries have enjoyed the top 3 rankings since the inception of the GLSI in 2003, demonstrating "remarkable staying power, thanks to their deep talent pools and cost advantages". India remains the favourite back-office of the world thanks to its "first-mover advantage" and deep skill base, as per global management consulting firm AT Kearney's ranking of the best outsourcing destinations. (Source: Business Times)

Economy: Cuepacs appeals for minimum wage policy in civil service. Cuepacs is appealing to the government to implement a minimum wage policy in the civil service, which it believes is a crucial move to assist civil servants cope with the rising cost of living. Its president Datuk Omar Osman said the current salary of the workers in the support group was below the poverty line of RM720 a month. Those in Grade 1 to Grade 16 in the Support Group II are starting at RM647per month, which is below the poverty line. The basic salary should be at least RM850 or RM920 a month. (Source: Bernama)

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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)

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RHBInvest Research

Top Story

• The spike in volume and value of trades indicates that there is still ample liquidity in the market.
• Expect continued anticipation in terms of news flow for new projects, contracts, M&A. However, focus will shift more to actual award of contracts or projects, as well as to delivery and execution, potentially causing disappointment.
• The news flow for some sectors (in particular the oil & gas sector) appears to be going strong, and will continue to be the catalyst in the near term.
• In our view, the market will remain a trading market as we believe share prices cannot veer too far from fundamental valuations.

Sector Call


Plantation:

• 2010 production a disappointment, what of 2011?
  
• Should there be another disappointment in production in 2011, CPO prices could potentially remain at high levels of above RM3,500/tonne for the entire year.
• We maintain our CPO price assumptions at RM3,100/tonne for 2011 and RM2,900/tonne for 2012.
• No change to our Overweight rating on the sector

Oil & Gas:

Dialog:

• Fair value raised to RM2.82
• Outperform

Sapuracrest:

• Fair value maintained at RM3.86 Outperform

KNM:

• Fair value maintained at RM3.78 Outperform

Dayang:

• Fair value maintained at RM3.36 Outperform

Petronas Gas:

• Fair value maintained at RM13.51 Outperform

Kencana:

• Fair value raised slightly to RM2.89
• Market Perform (Down from OP)

Petra Perdana:

• Fair value raised to RM1.29 using P/NTA methodology
• Market Perform (Up from UP)

Wah Seong:

• Fair value maintained at RM2.02
• Market Perform

We are reiterating out Overweight call on the sector.


Corporate Highlights

PLUS: Underperform (down from TB)

• It all ends with a whimper.
• With the latest news, it is now very likely that UEM-EPF will stick to their existing RM4.60 offer. With no firm competing bids, UEM-EPF has no compelling reason to raise their offer.
• PLUS yesterday confirmed only UEM-EPF remitted the RM50m cash deposit.
• We downgrade PLUS from Trading Buy to Underperform with a fair value of RM4.60 (previously RM5.20) to reflect the offer price by UEM-EPF.

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RHBInvest Research

Prinsiptek:
Building blocks for earnings recovery put in place
Fair value is RM0.58


Corporate Highlights


MRCB:
To clinch RM8bn Klang River clean-up job?
Fair value is raised from RM2.48 to RM2.65.
Maintain Trading Buy.


PLUS:
Potential bidding war on the horizon
Maintain our Trading Buy call on PLUS with an unchanged fair value of RM5.20

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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)

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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.

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Maybank IB Views

Wah Seong: Disposal of shares in Drilbits and Driltools. Wah Seong disposed its 60% equity stakes in Drilbits International Private Limited (DrilBits) and Driltools International FZCO (Driltools) for USD2.7m (RM8.4m) and USD4.8m (RM14.9m) cash respectively. This Proposed Disposals of DrilBits and DrilTools are part of the WSC Group's strategy to streamline and rationalise its core businesses and to divest non-core business. DrilBits is principally involved in manufacturing and trading of oilfield tools and equipment while Driltools is in marketing and provision of oilfield and water well supplies and services related to the oil and gas industry. (Source: Bursa Malaysia)

CIMB: Completes restructuring of Thai unit’s NPL. CIMB Group Holdings Bhd. has completed the restructuring of non-performing loans (NPLs) under the 93.15%-owned subsidiary CIMB Thai Bank plc. The restructuring involved the transfer of CIMB Thai's 2.5m shares held in Sathorn Asset Management Co Ltd for RM23.5m to a wholly-owned subsidiary of CIMB Group, Mutiara Makmur Ventures Sdn. Bhd. as well as the transfer of NPL portfolio of RM297.9m from CIMB Thai to Sathorn for RM297.9m cash. (Source: Bursa Malaysia)

Hartalega: Allegations cost company millions. Hartalega Holdings Bhd, said allegations against the company had caused damages running into "millions of ringgit". The allegations that were related to environmental concerns over its operations in Bestari Jaya, Ijok had come despite its total compliance with all regulations. (Source: The Edge Financial Daily)

PLUS: Jelas Ulung not planning to seek extension for concession. Jelas Ulung Sdn Bhd is not planning on asking the Government for an extension of PLUS Expressways Bhd's tolled-highway concessions post-2038 in its proposal to take over the company. Jelas Ulung believed that its business model works well within the concession period until 2038, as it would have realized its investment by then. (Source: The Star)

Sime Darby: To build bioethanol demo plant in S'gor. Sime Darby Plantation Sdn Bhd will construct and operate a bioethanol demonstration plant in collaboration with Mitsui Engineering Shipbuilding Co Ltd. The plant that would be built at Bestari Jaya, Selangor, will be able to convert oil palm empty fruit bunches (EFB) into bioethanol. (Source: The Edge Financial Daily)

MSC: Secondary listing approved. Shareholders of Malaysia Smelting Corp Bhd (MSC) has approved the secondary listing of the company on the main board of the Singapore Exchange Securities Trading Ltd (SGX-ST). MSC plans to list on the Singapore stock exchange by end of January 2011. (Source: The Edge Financial Daily)

Construction: Benalec targets regional growth. Integrated marine construction firm Benalec Holdings Bhd, en route to list on the local bourse on Jan 17 next year, is gearing up for regional expansion while looking to increase its strength in Malaysia. Benalec will focus on larger-scale marine construction projects and plans to diversify the geographical locations of its projects to Penang. Benalec is eyeing the land-reclamation work for the 24-km long Penang Second Bridge project. (Source: The Edge Financial Daily).

O&G: Petronas gets invite from Bangladesh. Bangladesh has invited some of the world's leading state-owned gas giants to help explore its Chittagong hill tracts region. The companies invited encompass Petronas, Gazprom of Russia, CNOOC of China, PTTEP of Thailand and ONGC of India. (Source: Business Times)

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Maybank IB Views

ACQUISITIONS / DISPOSAL
PLUS Expressways RM4.60: Buy
Sense and sensibility Shariah-compliant

Shareholders to decide. PLUS' EGM tomorrow will proceed and shareholders will vote to either accept UEM-EPF's offer or adjourn the passing of resolutions which will give PLUS more time to evaluate Jelas Ulung's offer. As we have written yesterday, we are not comfortable with Jelas Ulung's offer - we are concerned on financial implications or recourse later. After a 5.5% share price gain yesterday, PLUS is trading at UEM-EPF's offer price and just a tinge away from our RM4.70 DCF-based target price. Our Buy call is now under review.


COMPANY UPDATE
KNM Group RM2.69: Buy
Doing a double; raising target price Shariah-compliant

Double joy on orders. We are bullish on the fabricators and have raised KNM's target price by 40% to RM4.35 as it has started to exhibit strong new job wins. The latest RM2.2b EPCC project win instantly doubles its backlog to RM4.6b and the growing momentum is set to sustain into 2011. We opine delivering consistent earnings and margin recovery will supersede market skeptics. Maintain Buy.


Lafarge Malayan Cement RM7.68: Buy
Bright prospects; upgrade to Buy Shariah-compliant

Liquidity and scarcity. Share price has outperformed its cement and steel peers by 3% and 11% YTD respectively and the stock now trades at 15.4x 2012 earnings, which we expect to be a peak demand year for cement in view of major infrastructure projects in Greater KL starting in 2011. Nonetheless, 2012 could mark the start of sustained demand for cement driven by the LRT, MRT, and government land development projects. On that scenario, 15.4x 2012 valuation is not too demanding.


Technicals
The FBM KLCI surged 9.30 points to 1,505.18 yesterday. Its resistance areas at 1,507 and 1,525 may cap market gains, whilst its obvious support areas are located at 1,493 and 1,505.
Trading idea for today is a SHORT TERM BUY call on TWSPLNT.


Other Local News
DRB-Hicom: In RM1b tie up with VW, keen to be VW's distributor in Malaysia. DRB-Hicom Bhd and Volkswagen AG (VW)'s has officially tied up in a collaboration worth RM1b. DRB-Hicom will assemble the Passat, Polo and Jetta models in Pekan. DRB-Hicom has expressed an interest to distribute VW's vehicles in Malaysia. (Source: The Star)

Conglo: Ex-CEO explains why Johor Corp wanted him out. Former Johor Corp CEO Tan Sri Muhammad Ali Hashim said that the reason for his removal is for to facilitate the sale of Johor Corp's assets, including the fast-food businesses. (Source: Business Times)

Amanah Saham Nasional Bhd: Declares 22% higher income payout. ASNB, the subsidiary of Permodalan Nasional Bhd (PNB) has declared an income distribution of 7.5 sen per unit and a bonus of 1.25 sen per unit for ASNB for the financial year ending Dec 31, 2010. The total payout is 22% higher than last year, at RM5.93b while bonus portion payment is RM603.34m. (Source: The Star)

MTD: In JV for jobs in S. Arabia. MTD Capital Bhd has formed a joint-venture (JV) company with ANC Holdings Pte Ltd to target engineering and infrastructure projects in Saudi Arabia. MTD would hold 51% in the JV while ANC would have the remaining 49%. (Source: The Star)

Agriculture: Government negotiating to raise price of Kenaf. The Ministry of Plantation Industries and Commodities is negotiating with a Pahang-based Japanese company to raise the price of kenaf to more than RM750/t to enable the jute-like plant to be commercially cultivated by former tobacco planters. (Source: Bernama)

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RHBInvest Research

Plantation:

• Raise forecasts by RM200/tonne for CY2011 and 2012 to RM3,100 and RM2,900 respectively, while maintaining our RM2,700 assumption for CY2010.
• Upgrade call on Genting Plant to Market Perform (from underperform)
• Upgrade our sector call to Overweight (from neutral).
• Sime Darby remains a Market Perform,

Corporate Highlights

PLUS:

• Received a takeover offer from Jelas Ulung Sdn Bhd (JU) at RM5.20/share, a 13% premium over UEM-EPF’s RM4.60/share offer.
• Revise fair value from RM4.60 to RM5.20 to match the latest offer.
• Upgrade from underperform to Trading Buy.

Hai-O:

• Fair value has been cut to RM1.35 (RM1.71 previously) based on unchanged 10x CY11 EPS.
• Maintain Underperform.

Jaya Tiasa:

• 2QFY04/11 net profit boosted by higher FFB and CPO prices Indicative fair value is revised to RM5.78 (from RM4.83).

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Maybank IB Views

ACQUISITIONS / DISPOSAL
PLUS Expressways RM4.36:Buy
RM5.20 offer, but what is the return? Shariah-compliant

Highly enticing but .... Jelas Ulung's RM26b offer is 13% higher than the RM23b offer by UEM-EPF. It promises not to seek any tax waiver, government compensation, nor toll increases. While extremely enticing for shareholders, we fail to see the investment return for Jelas Ulung as the offer price is 11% above our RM23.4b DCF value based on existing concession terms. Without that comfort, we are concerned on financial implications or recourse later. The government must reveal the revised concession terms sought by Jelas Ulung, before the offer proceeds.

Technicals
The FBM KLCI tumbled 4.00 points to 1,495.88 yesterday. The FBM 100 and FBM EMAS closed lower by 21.45 points and 24.48 points respectively.
Trading idea for today is a SHORT TERM BUY call on DIALOG.


Other Local News
TdC: To jointly offer IPTV services with Astro. TIME dotcom Bhd's (TdC) is collaborating with Astro, via its wholly owned subsidiary TT dotcom Sdn Bhd to offer Internet Protocol Television (IPTV) and broadband services in the Klang Valley and Penang. Under the collaboration, Astro's high-definition, video on demand and B.yond TV services will be bundled with TdC's broadband and telephony services. (Source: The Edge Financial Daily)

Supermax: ADR to broaden foreign interest in its share. Supermax Corporation Bhd has obtained approval from the US Securities and Exchange Commission for its Sponsored Level-1 American Depositary Receipt (ADR) programme which facilitates the trading of Supermax's shares by American investors. The Bank of New York Mellon would be the depository bank whilst Malayan Banking Berhad (Maybank) serves as the custodian of Supermax's shares in Malaysia. (Source: The Edge Financial Daily)

UEM Land, Sunrise: Takeover becomes unconditional, deadline extended. UEM Land's conditional take-over offer for Sunrise became unconditional after the acceptance has crossed the 50% threshold yesterday. The closing date and time for acceptance of the takeover has been extended to 5p.m. on Jan 7, 2011. (Source: The Edge Financial Daily)

MAS: Revamps fleet, adds capacity to India. Malaysia Airlines (MAS) plans to revamp its fleet and scale up operations to achieve 30 to 40% passenger growth in the Indian sector next year. MAS will switch from the B777, used at present, to the A380 aircraft to India by 2012. The carrier would also revamp its frequency to its regular destinations and allocate additional 40% capacity in India. (Source: Business Times)

RHB Capital: RHB Bank to hold Bank Mestika stake. Having consulted the relevant authorities, RHB Capital will now park its Bank Mestika stake under RHB Bank, from RHB Venture Capital previously. (Source: The Star)

MTDCap: Gets RM2.6b takeover offer. MTD Capital Bhd (MTDCap) has received a takeover offer from a consortium of four local firms in a deal that values the construction company at about RM2.6b. The four companies, namely Nikvest Sdn Bhd, Alloy Consolidated Sdn Bhd, Alloy Concrete Engineering Sdn Bhd and Alloy Capital Sdn Bhd which collectively own 131.48m shares or 53% stake in the company, offered RM9.50 a share to acquire the balance 116.0m shares or 47% stake they did not already own. The joint offerors do not intend to maintain its listing status. (Source: The Star)

Bina Puri: Wins job in Brunei. Bina Puri Holdings Bhd's unit Bina Puri (B) Sdn Bhd has entered into a sub-contract worth RM158.4m in Brunei with Chuon Tzu Construction Co Sdn Bhd. Bina Puri will undertake infrastructure works for a housing project which is expected to be completed in 36 months. (Source: The Star)

Iskandar Malaysia: Records RM64.4b in investments. The total value of investments recorded by Iskandar Malaysia from the start of the development corridor project in 2006 until September 2010 was RM64.4b, which exceeded the RM47b target set for this year. A total of RM37.26b or 58% from the total investments were by domestic investors while the balance of RM27.12b from overseas. Of the overall investment recorded, RM25.7b was in the service sector, RM12.8b in the tourism sector, RM19.6b in properties and RM6.28b in the government sector. (Source: Bernama)

Infrastructure: Plans for bridge between Malacca, Dumai. Malacca state government is seeking approval for the longest sea-crossing bridge connecting Malacca with Dumai in Sumatra from the federal government, while the Governor of Riau, Rusli Zainal, will attempt to secure Jakarta's approval. The proposed 127.9km highway costs USD12.8b (RM40.1b) and will be privately funded. Construction is expected to be completed in 10 years. The bridge will be built by Straits of Malacca Partners Sdn Bhd, with financial support guaranteed by China Exim Bank and other financial institutions. (Source: New Straits Times)

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PLUS, MTD, Bina Puri, Jaya Tiasa, Time Dotcom, BLand

KUALA LUMPUR: Regional markets are likely continue to experience cautious trading on Tuesday, Dec 21, following the ongoing concerns on the European debt crisis as well as simmering tensions on the Korean Peninsula.

On Monday, major Asian markets slumped after South Korea carried out military drills, but some of the losses were minimised after there were no retaliatory actions from North Korea.

However, the bearish momentum is expected to continue for some time, as most regional investors have already begun their year-end holidays.

On Bursa Malaysia, the lack of fresh catalysts coupled with bearish regional sentiment have kept investor sentiment somewhat muted in recent times.

Among the stocks to watch on Tuesday include PLUS EXPRESSWAYS BHD [], MTD CAPITAL BHD [], BINA PURI HOLDINGS BHD [], Jaya Tiasa Bhd, TIME DOTCOM BHD [], BERJAYA LAND BHD [] (BLand).

PLUS has received an offer from Jelas Ulung Sdn Bhd to acquire all of its business undertakings, including assets and liabilities for RM26 billion, or RM5.20 per share cash.

MTD Capital received a buyout offer from its major shareholders Nikvest Sdn Bhd, Alloy Consolidated Sdn Bhd, Alloy Concrete Engineering Sdn Bhd and Alloy Capital Sdn Bhd (joint offerors) to acquire the remaining shares they do not already hold (excluding 27.49 million treasury shares) at RM9.50 apiece.

The joint offerors hold 131.48 million shares of RM1 each in MTD, representing 53.13%.

The joint offers have also made a downstream, take-over offer for the existing and paid-up shares of RM1 each in MTD ACPI ENGINEERING BHD [] not already held by MTD for a cash offer price of 53 sen per share.

Trading MTD and MTD ACPI would resume at 9am on Tuesday, Dec 21. The two companies had requested for a trading halt from 9am on Dec 20 pending the announcement

Bina Puri's unit in Brunei landed a sub-contract worth RM158.36 million to undertake the project known as Skim Tanah Kurnia Rakyat Jati Kampung Lugu: Kerja-kerja Infrastruktur dan Perumahan in Brunei .

Bina Puri said on Monday that Bina Puri (B) Sdn Bhd had entered into a subcontract agreement with Chuon Tzu CONSTRUCTION [] Company Sdn Bhd on Dec 3 to undertake the project.

Jaya Tiasa net profit for the second quarter ended Oct 31, 2010 surged nine-fold to RM30.08 million from RM3.24 million a year ago on higher profit margin from log sales, increase in sales volume and average selling price of fresh fruit bunches as well as doubling of crude palm oil sales volume.

Its revenue for the quarter rose 7% to RM192.21 million from RM180.42 million. Earnings per share was 11.27 sen while net assets per share was RM4.31.

Time Dotcom's wholly-owned subsidiary TT dotCom Sdn Bhd has entered into principal terms of collaboration with MEASAT Broadcast Network Systems Sdn Bhd (Astro) for the provision of IPTV and Broadband services across the Klang Valley and Penang.

BLand net profit for the second quarter ended Oct 31, 2010 fell to RM5.71 million from RM15.16 million a year earlier despite posting revenue RM1.02 billion.

For the six months ended Oct 31, BLand's net profit was RM121.58 million on the back of revenue RM2 billion.

The lower net profit was attributed to the lower profit contribution from the gaming business operated by BERJAYA SPORTS TOTO BHD []'s principal subsidiary company Sports Toto (Malaysia) Sdn Bhd.

It said Sports Toto registered a lower pre-tax profit in the quarter under review due to the increase in Pool Betting Duty from 6% to 8% (effective June 1, 2010) coupled with higher prize payout.

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Maybank IB Views

SECTOR UPDATE
Plantations: Neutral
MPOB data: Tightening supply

Bullish for prices. Stock levels fell below trend as demand stayed strong while production began its seasonal decline. In our view, Malaysian production is likely to decline in 2010. While spot prices have surpassed our CPO ASP forecast of RM3,000/t for 2011, we believe prices could trend down as weather concerns dissipate post the passing of the year-end monsoon season.


RESULTS REVIEW
Sapura Crest Petroleum RM2.85: Buy
Eyes strategic assets; target price lifted Shariah-compliant

Target price raised to RM3.30. 3Q results yielded no surprises but we are turning even more positive on SapCrest. It has a strengthened balance sheet to expand its core businesses (i.e. IPF, marine services, drilling ops) through M&As. Maintain Buy with a higher RM3.30 target price (+8%) as we lift target PER multiple from 16x to 17x FY13 on new asset injection prospects.


Technicals
The FBM KLCI rose 6.30-points and closed at 1,507.28 last week. The obvious support areas for the FBM KLCI are located in the 1,474 to 1,507-zone. The key resistance areas of 1,510 and 1,531 may cap any rebound activity.

Trading idea for today is an Accumulate call on KFIMA.


Other Local News
GreenPacket: P1 plans to improve and upgrade its 4G WiMAX coverage to 45% of Malaysian households by year-end, with the goal of hitting 65% by 2012. P1 also planning to roll out an array of rich media services, including Voice-over-Internet Protocol and mobile video. (Source: The Star)

KrisAssets: Could buy The Gardens from IGB. KrisAssets Holdings Bhd's plan to issue RM300m in redeemable convertible bonds may be a precursor to acquire The Gardens from parent IGB Corp Bhd (IGB). The acquisition could be via cash and shares. (Source: The Edge Weekly)

Landmarks: May start Bintan development in 1Q11. Landmarks Bhd, a 30.3% associate of Genting Bhd, is expected to start its Bintan development called Treasure Bay Bintan (TBB) by the first quarter of 2011. The development has been planned since 2007. This will be Landmark's second resort development after the Andaman Resort in Langkawi. (Source: The Edge Financial Daily)

Port: Ancom's Siew submits proposal for Penang Port. Oriental Pearl Harbour (led by Datuk Siew Ka Wei of the Ancom group), in partnership with China Shipping (Group) Co Ltd (the parent of China Cosco and Cosco Corp), has submitted a competing bid for Penang port. This rivals an earlier proposition by businessman Tan Sri Syed Mokhtar Al-Bukhary. Oriental's proposition would involve an outright purchase for RM500m (with the government holding a golden share) and the absorption of future capex totaling RM2b to RM2.5b. (Source: The Edge Weekly)

UEM-EPF: Seeks tax waiver on PLUS takeover. The special purpose vehicle (SPV) controlled by UEM Group and the Employees Provident Fund (EPF) which has made an offer of RM4.60 per share for PLUS Expressways Bhd is seeking a tax waiver for PLUS's toll operations until the end of its tenure in 2030. UEM-EPF is also seeking an exemption or relief from all stamp duty, real property gains tax and other taxes and levy that may arise during the acquisition. However, the acquisition of PLUS will still proceed if UEM-EPF is unable to secure any exemptions. (Source: The Edge Weekly)

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Views & News, Maybank IB (2010-11-10)

SECTOR UPDATE
Plantations: Neutral
The final leg

Pricing in RM3,000/t. We believe plantation big caps could trend higher in the coming months, as: 1) the US Dollar is expected to stay weak throughout 1H 2011 and, 2) commodity and equity prices continue to rally due to increased liquidity. Plantation big caps could potentially price in a long-term CPO average of RM3,000/t, in our view. We raise our 2011-12 average CPO price forecast to RM3,000/t from RM2,600/t and upgrade Sime Darby to a Buy.


ACQUISITIONS / DISPOSAL
PLUS Expressways RM4.40: Accept offer
Shareholders to vote Shariah-compliant

Accept the offer. PLUS' board of directors have accepted UEM-EPF's offer at an unchanged RM23b offer price. We reiterate that it is fair offer price, at 2% below our RM4.70 DCF-based target price. In a revised offer letter yesterday, UEM-EPF allows PLUS to evaluate competing offers, if any. The next milestone is PLUS' shareholders go-ahead. Nonetheless, the timeline for deal completion, which could take up to a year, could be daunting. Amid a liquidity driven market, shareholders could derive better returns by selling the shares now, than to wait.


COMPANY UPDATE
IJM Corporation RM5.54: Buy
New job win Shariah-compliant

Target price under review. IJM's outstanding order book is sustained at RM3.6b with the new National Cancer Institute job win. We estimate a 1sen EPS contribution over three years into FY14. No change to our earnings forecasts. Share price has performed well exceeding our RM5.50 RNAV-based target price on expectations of rising news flow in construction and runaway CPO prices. Our target price is under review.


RESULTS REVIEW
Hartalega Holdings RM5.53: Hold
Testifying to nitrile gloves prospects Shariah-compliant

Results in line. 6MFY11 net profit of RM89m (+49% YoY) made up 51% of our and consensus full-year forecasts. 2QFY11 net profit (+14% QoQ) was impressive considering its latex-focused peers (Top Glove and Supermax) posted QoQ contractions of 17-30% in their respective Aug/Sept-ended quarter. However, we are maintaining our Hold rating (TP: RM5.40) as the sector lacks re-rating catalysts and Hartalega's share price has outperformed its peers by 25% since Jul '10.


Technicals
The FBM KLCI rose climbed 6.69 points to 1,526.53 yesterday. Due to the lower tone in the USA last night, we may see the FBM KLCI in a mixed mode today. Its resistance area at 1,526 may cap market gains, whilst its support areas are located at 1,507 and 1,525.

Trading idea for today is a SHORT TERM BUY call on OSK.


Other Local News
KFC Holdings: MD not aware of any plans to privatise KFCH. KFC Holdings Bhd's (KFCH) top official has brushed off talks that the firm is a takeover target by a substantial shareholder, as the stock surged to a fresh high yesterday. The counter had risen 130% over the past six months while shares in QSR surged 80% and Kulim rose 76% over the same period. (Source: The Star)

Autos: Consolidation of auto sector could be done soon. The Malaysian Automotive Institute (MAI) is understood to have submitted its proposals and recommendations pertaining to the consolidation of the automotive sector to the government for a final decision of the merger between the players. The proposed consolidation is expected to entail a merger between two national automakers, Proton Holdings Bhd and Perusahaan Otomobil Sdn Bhd (Perodua). (Source: The Edge Financial Daily)

Banking: RM150mil banking talent boost. The Institute of Bankers Malaysia plans to use the RM150mil staff training fund for various capacity development initiatives in the financial services sector over the next five years. They included collaborations with local and foreign universities to churn out more learning programmes to help reduce the shortage of talent in the banking and financial services sector. (Source: The Star)

Plantation: RSPO unveils "Sustainable Palm Oil" Trademark. The Roundtable on Sustainable Palm Oil (RSPO) Tuesday unveiled a trademark that will enable consumers to identify consumer products containing sustainable palm ingredients. (Source: Bernama)

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RHBInvest Research Highlights 18th October 2010

Top Story

Budget:

• Setting the pace towards transformation.
• Consequently, our end-2011 FBM KLCI target remains unchanged at 1,640

Corporate Highlights

PLUS:

• To be taken private.
• We revised our fair value from RM4.76 to RM4.60.
• We downgrade PLUS from outperform to underperform.

Technical Highlights

Daily Trading Strategy:

• Key support level is near the 10-day SMA
• FBM KLCI continued to retreat on intensifying profit-taking activities upon the announcement of the 2011 Budget by the PM.
• The benchmark could revisit the key supportive level near the 10-day SMA of 1,483 soon.
• However, we remain optimistic and expect the bargain-buying support to return near the 10-day SMA.

Daily Technical Watch: Axiata Group

• Forming a support near the SMAs prior to any technical recovery.
• Immediate Support at RM4.40
• Immediate Resistance at RM4.66

Weekly Trading Idea: CMS

• Forming base at >RM2.68 before technical rebound.
• Strategy: Buy on weakness near RM2.68 for a technical rebound soon.
• Immediate Resistance at RM2.82
• Immediate Support at RM2.68
• Exit: Cut loss if it falls below the 40-day SMA near RM2.59.

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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

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Stocks to watch: GLCs, SelProp, Vastalux, NSTP, UEMLand - Edgedaily

KUALA LUMPUR: Market sentiment this week is expected to stay lacklustre in the absence of fresh positive corporate news, expect for several companies, while the continued losses on Wall Street are unlikely to see investors taking fresh positions.

On Friday, US stocks fell for a third straight day as investors stayed cautious following disappointing housing and durable goods data and concerns about TECHNOLOGY spending.

Reuters reports the rally in US stocks, which stumbled in recent days on worries about the economic recovery and continued government stimulus, will be tested this week, by crucial data on growth and jobs.

Data due out are September non-farm payrolls, the final reading of second-quarter gross domestic product and several other big economic reports.


There is concern that the rally in stocks, with the Standard & Poor's 500 index up about 54% since early March, could be fizzling out.

Meanwhile, CIMB Equities Research is maintaining an overweight stance on Malaysia following potential share placements by government-linked investment companies including Khazanah Nasional.

The research house said such corporate exercises would be a win-win move for Malaysia as they would increase free float and liquidity for government-linked companies (GLCs). The GLCs include Malaysian Airline System, PLUS Expressways, UEM Land, Pharmaniaga while Khazanah has also substantial stakes in Proton, Axiata, Telekom and Time Engineering.

UEM Land Weekly Chart

Plus Expressway Weekly Chart

"Placements could also help renew foreign investor interest and drive a re-rating of the market. We remain bullish on Malaysia and maintain our end-2010 FBM KLCI target of 1,400," said CIMB Research.

Selangor PROPERTIES [] Bhd posted net profit of RM33.3 million for 3Q ended July 31, up 182% from RM11.8 million a year ago, boosted by foreign exchange gains and higher profits from property development.

Revenue rose 36.5% to RM70.55 million from RM51.68 million. Earnings per share were 9.69 sen versus 3.44 sen.

In VASTALUX ENERGY BHD [], its executive vice chairman Mohamad Nor Abdul Rashid continued to reduce his stake in the company.

Vastalux Weekly Chart

He sold 3.98 million shares in the open market at prices ranging from 41 sen to 46.8 sen from Sept 4 to 23. The recent disposals reduced his stake to 63.73 million shares.

As for NSTP and Utusan Malaysia, investors could be ready to lock in gains after several days of gain following an upgrade by Macquarie Research.

UEMland Weekly Chart

Macquarie Research upgraded NSTP to outperform and a target price of RM2.50, based on a 12 times price-to-earnings (PER) for 2010E. NSTP closed 13 sen higher at RM2.29 last Friday while Media Prima added four sen to RM1.54 and Utusan jumped 12.5 sen to RM1.04.

NSTP's three newspapers in its fold account for 35% of total circulation and 22% of total newspaper advertising spending (adex), it had said in the report.

Source: Edgedaily

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