Stocks to watch: Mitrajaya, CIMB, Ajiya, Unico

KUALA LUMPUR: After two days of foreign selling on the local stock market, which saw the FBM KLCI declining a cumulative 21.6 points as of Tuesday, July 19, investors could generally stay on the sidelines on Wednesday.

As of Tuesday, there was a dearth of strong corporate news to excite investors and to underpin market sentiment.

Attempts to prop up the FBM KLCI failed on Tuesday, with the 30-stock index falling 6.94 points to 1,555.64 towards the close. The selling was not very heavy in terms of volume but what was evident was the stocks affected were those held by foreign funds like KLK, DiGi and CIMB.

Perhaps stocks to watch include MITRAJAYA HOLDINGS BHD [], CIMB Group Bhd, AJIYA BHD [], Unico Desa PLANTATION []s Bhd and SCOMI GROUP BHD [].

Mitrajaya secured a RM13.51 million contract to build a freshwater laboratory complex at Tasik Chini in Pekan, Pahang.

Its unit Pembinaan Mitrajaya Sdn Bhd accepted the letter of acceptance of contract from the East Coast Economic Region Development Council to build phase one of the laboratory.

CIMB Thai Bank Public Company Ltd posted net profit of 536.4 million baht (RM54 million) in the first half ended June 30, 2011.

Total operating income was 3.2 billion baht, underpinned by net interest income and fee and service income.

CIMB Thai Bank president and chief executive officer Subhak Siwaraksa said the group operating results for 1H showed a 24.9% decline in net profit to 536.4 million baht, from 714.0 million a year ago.

However, he explained in 2010, there was special revenue recognised including gains from disposal of Sathorn building in 1Q2010 and CIMB-Principal Asset Management in 2Q10.

“Should we exclude these items, profit should increase 160%,” he said.

The US State Department has lifted the sanctions which were imposed on Scomi Group Bhd group chief executive officer Shah Hakim Zain, with effect from July 18, Monday.

Ajiya’s net profit for the second quarter ended May 31, 2011 rose 13.68% to RM7.23 million from RM6.36 million a year earlier on the back of a higher turnover for the period.

Its revenue rose 15.5% to RM100.95 million from RM87.39 million in 2010, due mainly to better market sentiment. Earnings per share were 10.41 sen, while net assets per share were RM2.95.

For the six months ended May 31, however, Ajiya’s net profit fell to RM10.55 million from RM12.01 million despite posting revenue RM181.72 million compared to RM164.04 million a year earlier.

UNICO-DESA PLANTATIONS BHD [] has proposed to distribute shares in its unit ELK-Desa Resources to all shareholders on a one-for-10 basis under a corporate exercise which would involve in the listing of ELK-Desa.

Unico-Desa said on Tuesday, July 19 it had also proposed a restricted offer for sale of the remaining shares in ELK-Desa after the proposed distribution.

It also proposed to list ELK-Desa on the Main Market of Bursa Securities.

“The proposed distribution would involve a distribution of approximately 86.506 million ELK-Desa Resources shares representing approximately 86.51% equity interest in ELK-Desa Resources to Unico-Desa shareholders,” it said.

SALCON BHD [] has decided not to go ahead with its proposed water supply scheme in West Java, Indonesia.

Its unit Salcon Engineering Bhd decided not to proceed with the project after the detailed studies and discussions for the scheme for Kecamatan Cikarang Barat and Citibung in Kabupaten Bekasi.

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Maybank IB Views

ECONOMICS
External Trade, Apr 2011
A mixed bad of data

Exports growth in Apr '11 accelerated to +11.1% YoY (Mar '11: +4.1% YoY; Maybank IB: +14.8% YoY; Consensus: +11.3% YoY) while imports growth moderated to +9.4% YoY (Mar '11: +12.1% YoY; Maybank IB: +13.9% YoY; Consensus: +10.8% YoY) resulting in RM11b trade surplus. From the previous month, both exports and imports fell by 6.6% MoM and 7.4% MoM respectively.

SECTOR UPDATE
Construction: Overweight
Reasons to be patient

Maintain Overweight. The construction sector has yet to perform (KLCON: +0.2% YTD vs. KLCI: +2.7%) on slow award flows. Although frusfrating, we believe the critical issue is timing rather than project cancellations. The Klang Valley light rail transit (LRT) extension Package B is at the final stage of award which should provide some cheers soon. Also, last week's game changer in the signing of Bakun's electricity sale brings clarity in new infrastructure works in Sarawak. Our top pick is Gamuda, followed by WCT and Hock Seng Lee (HSL).

Technicals
The FBM KLCI closed higher by 1.81 points to close at 1,559.85 last Friday. Its resistance areas of 1,562 and 1,576 will cap market gains, whilst the support areas are located at 1,539 and 1,559. Due to the world markets’ poor tone last Friday; we will see some volatility in the local bourse today.

Daily trading idea is a SHORT-TERM BUY call on SOP.

Other Local News
MAS: Confident despite escalating fuel price. Malaysia Airlines (MAS) has recorded 18% higher international pre-loads this year compared with 2010. Overall, when combined with the domestic sector, its pre-load factor was up by 10% YoY. (Source: The Star)

SP Setia: Plans RM2.8b projects. SP Setia Bhd will redevelop the Sri Johor, Sri Pulau Pinang and Sri Melaka low-cost apartments and the Taman Ikan Emas low cost homes in Bandar Tun Razak, Cheras at a total development value of RM2.8b. (Source: The Star)

Nestle: Not ruling out expansion of coffee plant. Nestle (Malaysia) Bhd will not rule out the possibility of expanding its coffee manufacturing facility in Malaysia as it expects surging demand for coffee. (Source: Business Times)

Scomi: Bags RM2.6b Brazilian monorail deal with partners. Scomi Engineering Bhd and its consortium partners have clinched a RM2.6b contract to build a monorail line in Sao Paulo, Brazil. Its scope of work in the consortium involved the supply of rolling stock, the vehicle management system, design for switches, system integration, system assurance as well as testing and commissioning. (Source: Bursa Malaysia)

Mudajaya: Gets letter of intent for RM720m job. Mudajaya Group Bhd has received a letter of intent to undertake subcontract works worth RM720m for Manjung Power Plant. (Source: Bursa Malaysia)

Eversendai: RM270m from its IPO for CAPEX. The listing of Eversendai Corp Bhd on the Main Market of Bursa Malaysia on July 1 will raise RM270m for the company for capital expenditure. Its founder Datuk A.K. Nathan will realise a gain of RM130m for selling 30% of the company he pioneered 27 years ago. (Source: The Star)

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Stocks to watch Scomi, Mudajaya, Privasia, Inari, Century Software, banks

KUALA LUMPUR: Investors are likely to tread cautiously in the week beginning Monday, June 6 following the less-than-encouraging close at Wall Street last Friday on the back of grim employment data.

Asian markets too have yet to fully find solid footing after volatile trading last week, weighed by worries of a prolonged global economic slowdown as well as the motion of no confidence that was brought against the Japanese Prime Minister.

Although the Prime Minister Natao Kan survived the vote of no confidence, squabbling quickly resurfaced after his comments suggested he wanted to stay on until damaged reactors at the disabled Fukushima nuclear plant achieved a stable "cold shutdown", a process expected to take at least until January and probably longer, according to Reuters.

Wall Street capped off a fifth straight week of losses on Friday and Treasuries rose as much slower-than-expected US job growth stoked fear that the world's largest economy was in a protracted slowdown, according to Reuters.

The jobless rate rose to 9.1% in May as high energy prices and the effects of Japan's earthquake bogged down the economy, it said.

The Dow Jones Industrial Average shed 0.79% to 12,151.26, the S&P 500 Index fell 0.97% to 1,300.16 while the Nasdaq Composite Index lost 1.46% to 2,732.78.

MIDF Research head Zulkifli Hamzah said the FBM KLCI ended May in the positive territory, adding that this was a good sign for the market in June.

“MIDF Research anticipates another gainful month for equity although historically June tends to be quieter, both from volume and price action perspective.

“From corporate angle, there is not much to expect from the market this week. We are still in school holiday and that tends to be associated with less local participation,” he said.

Among the stocks to watch on Monday are SCOMI ENGINEERING BHD, MUDAJAYA GROUP BHD, Privasia TECHNOLOGY Bhd. Inrai Bhd, Centuru Software Holdings Bhd and banking counters.

Scomi Engineering and its consortium partners have been awarded the RM2.6 billion Line 17 monorail project in Sao Paulo, Brazil.

The monorail project awarded to the consortium which consists of Scomi, Andrade Gutierrez S.A. (AG Group), CR Almeida S.A. Engenharia de Obras and Montagens e Projetos Especiais SA (MPE) will cover the design works, manufacture, supply and implementation of the monorail system for the 18-km monorail Line 17, or the Gold Metro of São Paulo.

Scomi said the project was expected start in July this year and be completed in 42 months.

Mudajaya’s unit Mudajaya Corporation Bhd been given a letter of intent to design and build a component of the Manjung power plant for a sub-contract valued at RM720 million.

Mudaya said Mudajaya Corp was the given the letter on June 2 by CMC Machipex Sdn Bhd to build the balance of plant component of Manjung No. 4 Power Plant Project.

ACE Market-listed Privasia is on the lookout for potential targets for acquisition as part of its expansion plan.

Its chief executive officer Puvanesan Subenthiran said the company was targeting companies that were able to offer synergistic benefits in helping Privasia fulfil its vision of becoming a total ICT outsourcing services provider in the region.

ACE Market-bound Inari plans to invest RM25 million over two years to acquire new machines, upgrade existing equipment and build a new facility to increase its production capacity.

Century Software’s unit Century Software (M) Sdn Bhd has been awarded a RM22.53 million contract by the Ministry of Finance to implement an online budget system.

Meanwhile, CIMB Research last Friday maintained its Overweight rating on the Malaysian banking sector and said that overall, it still sees a favourable operating environment that will allow banks to achieve its projected net profit growth of 15.5% for 2011.

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RHBInvest Research

Top Story

2011 Market Outlook & Strategy:

• Gravitate towards fundamentals as capital flow normalises.
• Short-term volatility, there is still room for the market to trend higher in 2011 given sustained economic and earnings growth.
• Our end-2011 FBM KLCI target has been revised up slightly to 1,700, from 1,640 previously
• Construction and property would be the sectors to focus in the immediate term
• Positive on the banking, oil & gas, plantation, timber, gaming and telecommunications sectors.

Sector Call

• Banks: Banking on another good year.
• CIMB is our top pick for large cap stocks while Affin is our pick for the small-mid sized banks.
• Overweight stance maintained.

Corporate Highlights


AirAsia:

• To set up a low-cost carrier in the Philippines
• Fair value is RM2.10. Maintain Underperform.

Technical Highlights


Daily Trading Strategy:

• Negative sentiment expected to continue…
• Index to drift lower towards the Nov low of 1,474 and the critical level of 1,450 in the near term.
• Breaching of 1,450 will trigger a stronger selling pressure on the FBM KLCI going forward.
• Immediate resistances are now seen at the 1,500 psychological level and the 10-day and 40-day SMAs.

Daily Technical Watch: Scomi

• Failure to sustain at above RM0.36 and 10-day SMA will reinvite sellers…
• Immediate Support = RM0.36
• Immediate Resistance = RM0.435

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Maybank IB Views

SECTOR UPDATE
Automotive: Overweight
Can a forced marriage be a force?

A merger on the cards? Proton is eager. Perodua is not. While Newco could create size and realise value, the merger offers minimal operational synergies. An equity swap is unlikely unless Perodua is finely compensated and its partners agree to it. A loose collaboration without equity swap makes more sense. Local automakers need to look beyond the domestic market to remain relevant and competitive. Based on our analyses, MBM offers higher upside to a potential merger. We remain Buyers of Proton and MBM; Hold on UMW.

COMPANY UPDATE
KNM Group RM1.93: Buy
Momentum picking up Shariah-compliant

Fundamentals recovering. Management's tone at an analyst briefing post 3Q10 results suggests a sustained recovery outlook. A confluence of factors, i.e. steady oil price, higher capex spending in the sector translating into rising order and tender books, and margins recovery should stimulate growth over the next few years. Buy, with a RM2.20 target price based on 9x 2011 EPS, Current valuations reflect KNM's near bottom cycle valuations (below its historical mean).


Technicals
The FBM KLCI edged higher by 0.76 points at 1,501.74 on Monday. Its resistance areas at 1,505 and 1,525 may cap market gains, whilst its obvious support areas are located at 1,488 and 1,501.

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


Other Local News
Air Asia: To form Philippines unit. Air Asia plans to form a Philippines unit with Antonio Cojuanco, a former chairman of Philippine Long Distance Telephone Co by 1Q11. The domestic and overseas routes would be available in 2011. (Source: The Star)

Scomi Eng: Accepts RM494m price for monorail fleet expansion. Scomi Engineering via its subsidiary, Scomi Rail Bhd (SRB), has accepted the contract price of RM494m for the monorail fleet expansion project. SRB had received a letter from Syarikat Prasarana Negara Bhd (SPNB) on Dec 3 notifying SRB of the intent to award SRB the contract at the quoted price. (Source: The Star)

UEM Land: To buy land in Bangi for RM268m. UEM Land Holdings Bhd will acquire two parcels of freehold agricultural land in Bangi for RM268.5m from Inch Kenneth Kajang Rubber Public Ltd Co. UEM intends to develop a township with a gross development value of RM2.84b spanning 10 years. (Source: The Star)

NFO: Some 4 Digit prize payment reduction approved. Multi-Purpose Holdings Bhd’s unit, Magnum and another listed NFO operator received approval from the Finance Ministry to revise the special prizes of their 4 Digit Big Game from RM200 per RM1 bet to RM180 per RM1 bet. Both companies said the special prizes for the 4 Digit Big permutations would be revised proportionately. (Source: The Star)

Chemicals: Petronas, BASF mull RM4b joint venture. Petronas and Germany's BASF are considering a RM4b joint venture to produce specialty chemicals in Malaysia. The final scope of investments will be determined following the outcome of a joint feasibility study, which is targeted to be completed in 2011. (Source: The Star)

Banking: India's Religare seeks presence in Malaysia. Religare Enterprises Ltd, an Indian financial services group controlled by the Singh brothers, Malvinder and Shivinder, is planning to buy a mid-sized investment bank in Malaysia and Indonesia. Besides India, Religare has presence in Singapore and Hong Kong. (Source: Business Times)

Healthcare: Pantai plans RM500m expansion of hospital network. The Pantai Group plans to expand its network of hospitals in Iskandar Malaysia at an estimated cost of RM500m.The development of the project, which will bear the name Gleneagles Medini Hospital, will be done in phases and is slated to be one of the premium hospitals under Parkway Health. (Source: The Star)

Property: RM500m Azea latest project in Danga Bay. Imperial Marine Pte Ltd, Danga Bay Sdn Bhd and Pembinaan Sahabatjaya Sdn Bhd have formed a 30:37:33 joint venture to develop a RM500m high-end mixed development known as Azea Properties. The commercial project will be undertaken on a 1.7ha site in Danga Bay, one of the key flagship zones within Iskandar Malaysia. (Source: Business Times)

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Scomi Engineering rallies 17.7% on RM494m SPNB contract

Scomi Engineering Weekly Chart

KUALA LUMPUR: SCOMI ENGINEERING BHD’s share price surged 17.7% in late afternoon trade on Monday, Dec 6 after its subsidiary accepted the contract price of RM494 million from Syarikat Prasarana Negara Bhd (SPNB) for the monorail fleet expansion project. At 3.30pm, Scomi Engineering was up 17 sen to RM1.13 sen.

There were 172 million shares valued at RM1 to RM1.13. Scomi Engineering said it had received the letter from SPNB dated Dec 3 notifying it of “SPNB’s intent to award to Scomi Rail the contract to perform the project for a contract price of RM494 million, subject to Scomi Rail accepting the said contract price”. It said Scomi Rail had accepted the contract price and according to the SPNB Notice, a formal letter of award would follow.

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Scomi Group in the red with RM166m net losses

KUALA LUMPUR: SCOMI GROUP BHD reported net losses of RM166.48 million in the third quarter ended Sept 30, in contrast to the net profit of RM22.97 million a year ago.

The company said on Friday, Nov 26 the losses were due to lower revenue from its core business while there was a potential impairment and costs amounting to RM52.6 million and provision of RM109.7 million.

Turnover was RM367.6 million compared with RM448.5 million a year ago, with the major contributors from the oilfield services division and the transport solutions division. Loss per share was 11.99 sen compared with earnings per share of 2.27 sen.

“The oilfield services division generated revenue of RM269.5 million for the current quarter, representing a decrease of RM31.4 million or 10% over RM300.9 million recorded in the corresponding quarter in 2009,” it said.

Scomi said the decrease was mainly due to lower sales in UK, Middle East and India, whilst Russia and Asia countries performed fairly well. It added the weakening of US dollar against most currencies has also substantially impacted the revenue reported for the period.

Revenue from the transport solutions division was RM77.2 million, down RM45.1 million or 37% from RM122.3 million a year ago. The decline in revenue was due to the disposal of machine shop in the preceding quarter.

Scomi said the energy logistics division was impacted by the cabotage law in the regional markets which delayed the deployment of new vessels into these markets.

The company explained this caused it to reduce its equity interest in its coal logistics and offshore businesses in Indonesia.

“This transaction resulted in the need to remeasure the disposal group to its fair value in the current quarter with a provision being made amounting to RM109.7 million. However, the division will receive approximately RM550 million in cash upon completion of the transaction,” it said.

After the provision and other provisions for potential impairment and costs totaling RM52.6 million, net loss for the current quarter was RM166.5 million compared to net profit of RM23.0 million a year ago.

“Excluding these adjustments, net loss for the quarter would have been RM4.2 million,” it said.

source: theedgemalaysia

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Scomi RSI-14 weeks < 30

Scomi Weekly Chart

Currently Scomi is under downtrend mode and if you see the weekly chart the value already oversold. I am just putting the trending for you to see at the moment.

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Scomi Consortium Shortlisted for Project

From The Star Publication;

"PENANG: The consortium comprising Scomi Engineering Bhd and Larsen & Toubro Ltd is one of the three shortlisted for the RM5bil monorail project in Mumbai, India.

The two others are Bombardier-Transportation India and Reliance Energy-Hitachi.

In a letter dated March 17, the Scomi-Larsen consortium was informed that it would receive a request for a proposal document soon.

Sources said the consortium would submit a proposal complete with financial and technical details to the Mumbai Metropolitan Region Development Authority by mid-May.

The Scomi-Larsen consortium was among seven international consortia that submitted pre-qualification bids, which closed on Jan 25, for the Mumbai project.

The others were Reliance Engineering-Siemens, Kalpataru Power Transmission Ltd-JMC-Intimin, Gammon India-Metrail Swiss and Videocon-Aerospace.

The 70km monorail project, stretching over four corridors in the city and suburbs, would be implemented on a build, operate and transfer basis for at least 30 years.

The estimated cost of building one kilometre of monorail track is RM85mil.

The monorail system, which is designed to accommodate some 10,000 passengers per hour during peak traffic, is expected to complement the existing railways in easing traffic congestion in the city, which is home to about 15 million people."

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