Six shortlisted for RM1.5bil school Internet contract

PETALING JAYA: Six companies are in the running for the RM1.5bil five-year contract to provide Internet access and a virtual learning module (VLM) platform for the 9,924 schools in the country under the 1Bestarinet project, sources said.

The six are said to be Celcom Axiata Bhd, Jaring Communications, Maxis Bhd, YTL Communications, Multimedia Synergy Corp and both Telekom Malaysia Bhd/Time dotCom Bhd, which submitted a joint bid.

The access job comes with an option to extend the contract period for another five plus five years, totalling 15 years, and this would include installation, maintenance and provision of a VLM.

Though the Government is looking at RM4.5bil as the absolute sum for the 15-year contract, those in the know claim the bids received thus far ranged from RM2bil to RM6bil. At RM4.5bil, it works out to RM1.5bil for every 5 years or RM300mil for each year.

A decision on the winner is expected sometime in the middle of next month, sources said, adding that the Government should insist on proof of concept before deployment to avoid issues and problems arising later. The plan is to roll out access to at least 7,000 schools by Jan 1, 2012.

The poser now is which company should win the 15-year contract.

“Even before 1Bestarinet came about, some of the parties vying for the contract have been lobbying for it. Whatever the decision, it should be based on merits and the focus should be on deliverables as we cannot afford a repeat of the Schoolnet episode. Choose those that can deliver, those that have the financial muscle, the capacity and capabilities and not those that compromise on quality for profits,” said a source.

“The last thing we want is our future generation being deprived of basic Internet access because of some companies which can't have enough profits from the project and the Government is committed because the contract would be binding for 15 years,'' added the source.

IBestarinet came about as a result of the Pemandu national key economic area lab series as there is a need to provide Internet access to all schools in the country since the earlier project to wire up schools, Schoolnet, did not meet the objectives set.

To recap, Schoolnet was born in 2004 to wire up schools using wireless or fibre technology but it had major constraints and did not live up to expectations in terms of speed and capacity, and also due to lack of specifications and integration.

Hence, in May this year, the Education Ministry called for a tender bid for the wiring up of all schools under the 1Bestarinet project and in the tender's posting it was clearly stipulated that the tender was open to all local companies with preference given to bumiputra tender bids registered with the Finance Ministry under some codes stipulated.

This tender bid which opened on May 5 saw over 80 companies collecting the tender documents. At its closing on May 31, it is said that only 19 companies submitted their bids. The six shortlisted are from the 19 that submitted bids.

Given its past experiences with Schoolnet, the ministry had spelt out certain conditions for 1Bestarinet. It wants the future network to be scalable to cater for growth and to evolve with technological evolution. It should have a VLM which will allow teachers and students, among others, to have a platform to write plans and share ideas. The Internet speed has to be constant and cannot be based on “best effort.'' For urban areas, the access speed is 2Mbps to 10Mbps, and for rural and remote schools 1Mbps to 4Mbps. All sorts of technologies can be used, be it fibre or wireless technologies including Vsat, wireless, WiFi, but the link to the school should be via fibre.

“The Education Ministry will also have an inbuilt checking mechanism to ensure that the vendor delivers as per specifications,'' said a source.

source: thestar

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Maybank IB Views

SECTOR UPDATE
Media: Neutral
May 2011 adex: Growth momentum slows

Slowing down. While May 2011 total gross adex was up 10% YoY, it was below expectations as it was only up 4% MoM when we expected it to be 10% to 15% higher MoM. This was likely due to weakening consumer sentiment dealt by inflation which will only be aggravated going forward by the recent 7% electricity tariff hike. Furthermore, total gross adex growth YoY will decelerate in 2H11 due to the high base effect of 2H10. Only Media Prima remains a Buy.

COMPANY UPDATE
Petronas Chemicals Group RM7.08: Buy
Retracement, but largely expected Shariah-compliant

Beset by headwinds. PCHEM's product margin in May 2011 was USD1,222/ton (+42.1% YoY, -1.7% MoM), we estimate. The year-to-date product margin of USD1,157/ton is 25.8% higher YoY. Product prices are retracing from a super run over the past three months. This is largely expected, and we are unperturbed as our 2011 earnings forecast is based on a realistic USD1,027/ton. Maintain BUY with an unchanged target price of RM8.15/share.

Technicals
The FBM KLCI closed higher by 1.60 points at 1,560.79 yesterday. Its resistance areas of 1,562 and 1,576 will cap market gains, whilst the obvious support areas are located at 1,540 and 1,560. Due to the US markets’ rebound tone last night, we will see some initial low volume buying activities in the local bourse today.

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

Other Local News

MAHB: Secures Eurocopter as anchor tenant of Subang airport. Eurocopter Malaysia Sdn Bhd has signed the 30-year lease with an option for an additional 30years. Eurocopter is looking to build a maintenance, repair and overhaul (MRO) services facility on a 7,000 sq m plot of land in the MAHB helicopter centre in Subang. (Source: The Edge Daily)

MAS: Orders 10 more 737-800s. Malaysia Airlines (MAS) has exercised an option to buy 10 Boeing 737-800s valued at some USD800m (RM2.4b) at curret list prices. MAS still has purchase rights for an additional 10 737-800s remaining from its initial 2008 contract. (Source: The Sun)

Auto: Car sales impacted by amended Act. Stakeholders in the automotive sector say the recent amendments to the Hire-Purchase Act 1967 (HPA) will hurt the car retail trade. Some said the amended Act is confusing and overly protected consumers to the detriment of car retailers. (Source: The Star)

Mining: Vale turns focus to Malaysia. Vale SA has forgone plans to build a distribution centre in China and will focus on making Malaysia its main hub for Asian sales. Vale is investing USD1.37b (RM4.16b) to set up a maritime terminal in Malaysia with capacity to dock its Valemax vessels and handle up to 30m tonnes of iron ore a year starting in the first half of 2014. (Source: Business Times)

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Stocks to watch: BToto, Time Engineering, TimeCom, AirAsia

UALA LUMPUR: Berjaya Sports Toto will be in focus on Tuesday, June 21 following the announcement of its full year financial year results, which were lower than the previous year.

Other counters which could see trading interest are TIME ENGINEERING BHD, TIME DOTCOM BHD, AIRASIA BHD and Muhibbah Engineering Bhd.

BERJAYA SPORTS TOTO BHD’s net profit rose 28.8% to RM104.18 million in the fourth quarter ended April 30, 2011 from RM80.89 million a year ago, boosted by strong record sales.

Revenue rose 5% to RM901.30 million from RM858.29 million while earnings per share were 7.79 sen versus 6.05 sen. It declared tax exempt dividend of three sen per share compared with eight sen a year ago.

For the financial year ended April 30, 2011, the net profit declined by 9.2% to 348,098 from the previous financial year’s RM383.50 million. Revenue inched up 1.28% to RM3.433 billion from RM3.392 billion. The total dividends were 21 sen compared with 57.5 sen a year ago.

Time Engineering fixed the renounceable offer for sale of up 626.18 million shares of Time dotCom Bhd at 53 sen.

Time Engineering said the offer price of 53 sen was 33.75% below the five-day volume weighted average market price up to June 17. Based on Monday’s closing price of 79 sen, this was a discount of 26 sen or 29%.

AirAsia Bhd is teaming up with CAE International Holdings Ltd to set up an aviation academy to provide training services for pilots, cabin crew, engineers, ramp handlers, guest services and aviation management.

The JV company to run the academy will have a paid-up capital of RM165.56 million of which AirAsia’s 50% share, being its capital and investment outlay in the JV shall be satisfied through its assets contribution.

RAM Rating Services Bhd says MUHIBBAH ENGINEERING (M) BHD’s RM130 million Islamic bonds are not affected on the recent news about the receivership status of the owner of the Tanjung Bin petroleum hub project.

It said the group’s stand-alone credit profile was affected by its weaker-than-expected profit performance, balance sheet and debt coverage ratios, as well as its tight liquidity profile.

RAM Ratings said Muhibbah’s outstanding order book of RM2.9 billion as at May19 will sustain the group over the next two years.

It added Muhibbah also derives earnings diversity, from its involvement in the CONSTRUCTION , cranes and shipyard segments. It also enjoys recurring dividend income from its associate stakes in the concessionaire for road-maintenance work in Malaysia and an operator and concession holder for three international airports in Cambodia.

SAAG CONSOLIDATED (M) BHD fixed the issue price for the sixth tranche of the placement of 15 million new shares of 10 sen each under the proposed private placement at an issue price of 10 sen each.

The placement price of 10 sen is 40.85% above the five-day weighted average market price of SAAG shares up to and including June 17 of 7.1 sen per share.

Meanwhile, at Tradewinds PLANTATION Bhd’s AGM, the Minority Shareholders Watchdog Group (MSWG) wants to raise a question about the proposed acquisition of Mardec Bhd which was reduced from RM150 million to RM140 million taking into account Ernst & Young appraisal of the fair value of Mardec group using the hybrid methodology.

MSWG will also query the company about the five-year financial performance of Mardec, including latest results.

At Ho Hup Construction Co Bhd’s AGM, the MSWG will ask the board to explain the implication of the auditors’ continued disclaimer of opinion.

The MSWG also wants to know how confident is the board that the proposed PN17 regularisation plan would eliminate the accumulated losses and turn around the group.UALA LUMPUR: Berjaya Sports Toto will be in focus on Tuesday, June 21 following the announcement of its full year financial year results, which were lower than the previous year.

Other counters which could see trading interest are TIME ENGINEERING BHD, TIME DOTCOM BHD , AIRASIA BHD and Muhibbah Engineering Bhd.

BERJAYA SPORTS TOTO BHD []’s net profit rose 28.8% to RM104.18 million in the fourth quarter ended April 30, 2011 from RM80.89 million a year ago, boosted by strong record sales.

Revenue rose 5% to RM901.30 million from RM858.29 million while earnings per share were 7.79 sen versus 6.05 sen. It declared tax exempt dividend of three sen per share compared with eight sen a year ago.

For the financial year ended April 30, 2011, the net profit declined by 9.2% to 348,098 from the previous financial year’s RM383.50 million. Revenue inched up 1.28% to RM3.433 billion from RM3.392 billion. The total dividends were 21 sen compared with 57.5 sen a year ago.

Time Engineering fixed the renounceable offer for sale of up 626.18 million shares of Time dotCom Bhd at 53 sen.

Time Engineering said the offer price of 53 sen was 33.75% below the five-day volume weighted average market price up to June 17. Based on Monday’s closing price of 79 sen, this was a discount of 26 sen or 29%.

AirAsia Bhd is teaming up with CAE International Holdings Ltd to set up an aviation academy to provide training services for pilots, cabin crew, engineers, ramp handlers, guest services and aviation management.

The JV company to run the academy will have a paid-up capital of RM165.56 million of which AirAsia’s 50% share, being its capital and investment outlay in the JV shall be satisfied through its assets contribution.

RAM Rating Services Bhd says MUHIBBAH ENGINEERING (M) BHD ’s RM130 million Islamic bonds are not affected on the recent news about the receivership status of the owner of the Tanjung Bin petroleum hub project.

It said the group’s stand-alone credit profile was affected by its weaker-than-expected profit performance, balance sheet and debt coverage ratios, as well as its tight liquidity profile.

RAM Ratings said Muhibbah’s outstanding order book of RM2.9 billion as at May19 will sustain the group over the next two years.

It added Muhibbah also derives earnings diversity, from its involvement in the CONSTRUCTION, cranes and shipyard segments. It also enjoys recurring dividend income from its associate stakes in the concessionaire for road-maintenance work in Malaysia and an operator and concession holder for three international airports in Cambodia.

SAAG CONSOLIDATED (M) BHD fixed the issue price for the sixth tranche of the placement of 15 million new shares of 10 sen each under the proposed private placement at an issue price of 10 sen each.

The placement price of 10 sen is 40.85% above the five-day weighted average market price of SAAG shares up to and including June 17 of 7.1 sen per share.

Meanwhile, at Tradewinds PLANTATION Bhd’s AGM, the Minority Shareholders Watchdog Group (MSWG) wants to raise a question about the proposed acquisition of Mardec Bhd which was reduced from RM150 million to RM140 million taking into account Ernst & Young appraisal of the fair value of Mardec group using the hybrid methodology.

MSWG will also query the company about the five-year financial performance of Mardec, including latest results.

At Ho Hup Construction Co Bhd’s AGM, the MSWG will ask the board to explain the implication of the auditors’ continued disclaimer of opinion.

The MSWG also wants to know how confident is the board that the proposed PN17 regularisation plan would eliminate the accumulated losses and turn around the group.

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Maybank IB Views

Banking: Overweight
Loan growth slows in February

Loan growth assumptions maintained. While there is some tapering off in loan growth in Feb, this may be attributed in large part to lumpy loans in Jan. The moderation in household loan demand, meanwhile, was as expected. We maintain our system loan growth forecast of 11.5% for 2011 (12.8% in 2010), with expectation that non-household loans will grow at a faster clip of 12.7% (12.3% in 2010) to supplant a moderation in household loan growth (10.5% in 2011 vs 13.2% in 2010). We maintain our Overweight on the banking sector with Buys on RHB Capital and CIMB.

COMMENTS ON NEWS
Sunway REIT RM1.06: Buy
Buys Putra Place at a discounted price

Maiden acquisition post-listing. SunREIT has confirmed the purchase of RM514m Putra Place (PP). Despite the discounted purchase price and potential enhancement opportunities offered by PP, we are neutral on the deal given our concerns on the office market and huge capex and considerable timeline required before PP contributes significantly. No change to our earnings forecasts and RM1.15 target price pending further details from the management.

COMPANY UPDATE
Petronas Chemicals Group RM7.24: Buy
Panic buying drives March higher Shariah-compliant

Supply disruption boost. PCHEM's product margin in Mac 2011 was USD1,204/ton (+40.4% YoY, +7.3% MoM), we estimate. The year-to-date product margin of USD1,106/ton is 28.5% higher YoY, and above our 2011 estimate of USD1,027/ton. The supply disruptions in Japan have triggered panic buying and pushed prices up. Maintain Buy; there is no change to our earnings forecasts and RM8.00 target price.

Lafarge Malayan Cement RM7.40: Buy
Here comes the ASP hike Shariah-compliant

Coal cost inflation proof. LMC will raise its gross cement ASP to RM318-320/mt (+6%) today to offset the coal cost increase and defend margins. Though there is no impact on our earnings forecasts, we think this would remove the overhang on share price, which has fallen 8% YTD on concerns over high coal costs. Currently trading at 14.8x 2012 PER, valuation is undemanding as Lafarge had traded up to 17x in the previous 2007 peak cycle. Maintain Buy; RM8.50 TP (17x 2012 PER).

RESULTS REVIEW
Glomac RM1.79: Buy
Beats consensus forecasts Shariah-compliant

Maintain Buy. Glomac's RM48m 9MFY11 net profit (+70% YoY) was within our expectation but beats consensus estimates by 10%. Glomac is on track to record "record" profits as 9MFY11 net profit has already exceeded FY10's RM41m. We see sales picking up significantly in 4QFY11 (9MFY11: RM206m), given strong bookings from its RM285m Glomac Damansara (GD) Residences. We maintain our forecasts and RM2.38 target price (20% discount to RM2.97 RNAV).

Technicals
The FBM KLCI rose by 13.50 points to 1,545.13 yesterday. Due to the DJIA’s marginally weaker tone last night, we will see the FBM KLCI in a benign mode today, with some pre-weekend profit-taking activities. Its resistance areas of 1,547 and 1,558 will cap market gains, whilst the obvious support areas are located at 1,528 and 1,545.

Trading idea for today is a Buy call on TASCO.

Other Local News
CIMB: In quick U-turn on BLR. CIMB Bank and CIMB Islamic Bank Bhd will not raise their respective base lending rate and base financing rate. The two banks back tracked on their decisions in less than 24 hours after having announced a rise in lending rates on Wednesday. (Source: The Edge Financial Daily)

Maybank: Sets price of DRP shares. Malayan Banking Bhd (Maybank) has fixed the issue price of new shares under its dividend reinvestment plan (DRP) at RM7.70 each. (Source: Bursa Malaysia)

MAHB: Expects RM1b revenue from commercial services. Malaysia Airports Holdings Bhd expects one third of its expected revenue of RM3b to originate from commercial services by 2014. (Source: The Edge Financial Daily)

Time Dotcom: In IPTV deal with Measat. Time Dotcom Bhd’s wholly-owned subsidiary, TT Dotcom Sdn Bhd (TTdC), has entered into a collaboration agreement with Measat Broadcast Network Systems Sdn Bhd (MBNS) to provide Internet Protocol television (IPTV) and broadband services across the Klang Valley and Penang. (Source: Bursa Malaysia)

Perisai: Explains its proposed Garuda Energy deal. Perisai revealed that with the acquisition of Garuda Energy, it would assume a debt of RM120m of the latter. (Source: Bursa Malaysia)

HELP: Sees potential in Sri Lanka and Cambodia. HELP International Corp Bhd (HIC) is looking to expand into Sri Lanka, Cambodia, the Middle East and Africa to franchise its education programmes as well as offer professional niche courses for business continuity to rev up its revenue stream. (Source: The Star)

O&G: MOX-Linde upbeat on M'sian ops. MOX-Linde Gases Sdn Bhd, a local subsidiary of the Germany-based industrial gas company The Linde Group, is set to invest further in the country. The company planned to set up two production facilities in Iskandar Malaysia. (Source: The Star)

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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

COMPANY UPDATE
Axiata RM4.75: Buy
Secular growth trends to continue Shariah-compliant

Raising earnings and target price. We revisit our assumptions following Axiata's stellar 3Q10 results and tweak our earnings higher to reflect latest operating trends. We still like Axiata for its high-growth pan-Asian footprint, and believe Axiata would continue to benefit from a liquidity-induced market rally. Reiterate Buy with a higher RM5.45 TP.


KNM Group RM2.33: Buy
Sabah cross-over brings ample opportunity; target price raised Shariah-compliant

Target price lifted to RM3.10. We are positive over KNM's JV with Petrosab as East Malaysia fabrication opportunities are huge, riding on PETRONAS' rising domestic capex spend. The SOGT and Sipitang CTF projects are some of the JV's targeted projects. KNM remains a Buy with a raised 12-month target price of RM3.10 (+41%) as we foresee a sustained recovery outlook, locally and globally. Our new target PER is 10x (previously 9x) and we roll-over valuations to 2012 earnings.


ECONOMICS
US Economy
Stimulus begets stimulus...

FOMC meeting yesterday ended with the fed fund rate (FFR) retained at 0%-0.25% and more importantly, the Fed reiterating its commitment to the USD600b QE2, which has started with the purchases of USD114.1b US Treasuries since 12 Nov. In addition, there is a third fiscal stimulus package in the works in the form of USD858b tax incentives pending Congress approval. While these monetary and fiscal stimulus may be positive for the US and global economy in the short term, the risks are amplified over the long term.


Technicals
The FBM KLCI advanced 0.79 points to 1,510.58 yesterday. Its resistance areas at 1,512 and 1,531 may cap market gains, whilst its firm support areas are located at 1,495 and 1,510.
Trading idea for today is a SHORT TERM BUY call on TONGHER.


Other Local News
KLK: Subscribes to RM209.8m rights issue entitlement. Kuala Lumpur Kepong Bhd (KLK) and its unit will subscribe to their rights issue entitlement in London-listed Yule Catto & Co Plc amounting to GBP42.4m, or RM209.8. The subscription will be financed with cash reserves and bank borrowings.KLK and its unit hold 27.4m shares, or 18.8%, in the specialty chemical manufacturer. The funds raised from the rights issue is for Yule Catto's acquisition of PolymerLatex Group, an European emulsion polymer products manufacturer with assets in Europe and Asia worth GBP376m (RM1.85b). (Source: The Star)

MAS: Firefly airline plans four new hubs. Firefly plans to set up at least four new hubs for its jet operations within the next two years. This excludes KL International Airport (KLIA) where it would begin its jet services from Jan 15 next year. The four new hubs will be established at Kota Kinabalu (KK), Kuching, Senai and Penang. (Source: The Star)

DiGi, Time dotCom: Ties up in RM139m deal. Digi.Com Bhd has entered into a 10-year wavelength purchase agreement and a maintenance and support deal collectively worth RM139m with Time dotCom Bhd (TdC) as a follow-up to the bandwidth service agreement signed between the two companies in April 2008. TdC would fiberise, maintain and support parts of Digi's backhaul links between its aggregation wireless towers and mobile switching centres. (Source: The Star)

Maxis, TM: Ink 10-year deal. Telekom Malaysia Bhd (TM) and Maxis Broadband Sdn Bhd have signed a 10-year agreement for TM to provide high speed access connectivity, via its high speed broadband access (HSBB Access) service, to Maxis. The deal would enable Maxis to offer bundled services, including Internet Protocol (IP)-based offerings, to 700,000 homes at present and 1.3m households by the end of 2012. (Source: The Star)

Starhill REIT: YTL disposes properties to Starhill REIT. YTL Corp Bhd, via its units, will dispose nine of its hospitality-related properties to Starhill Real Estate Investment Trust (Starhill REIT) for RM1b. The properties disposed are Cameron Highlands Resort, Hilton Niseko, Vistana Penang, Vistana Kuala Lumpur, Vistana Kuantan, The Residences at The Ritz-Carlton, Kuala lumpur, The Ritz Carlton Hotel, Kuala Lumpur, Pangkor Laut Resort and Tanjong Jara Resort. Starhill would lease the properties to the respective vendors/leases for 15 years, with an option to renew for a further term of 15 years. The lease payments for the properties are fixed and include a 5% step-up rate every five years. (Source: Bernama)

YTL: Powers into Jordan. YTL Power International Bhd would invest USD5b to acquire 30% stake in Eesti Energia's Jordanian oil shale projects. The oil plant with output of 38,000 barrels per day will be jointly developed by the partnership between Eesti Energia (60%), YTL Power (30%) and Near East Investment (5%). (Source: The Star)

Autos: BMW unveils another locally assembled model. BMW Malaysia Sdn Bhd has added the contemporary sport-centric BMW X1 to its stable of locally assembled cars. The model would be assembled in Kulim, along with BMW 3 Series and BMW 5 Series that are currently assembled there. (Source: The Star)

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RHB Invest Research

Top Story

Time dotcom:

• Biting Off More Than It Can Chew.
• TdC is trading at a relatively expensive. Not Rated.

Corporate Highlights


Kencana Petroleum:

• Proposed Fund Raising.
• Fair value is RM2.60. Maintain Outperform.

SP Setia:

• Needs a match-making.
• Fair value unchanged at RM5.94. Maintain Outperform.

Technical Highlights

Daily Trading Strategy:

• Failed To Acquire A Critical Confirmation Signal.
• Friday’s closing proved our concerns valid, as the FBM KLCI failed to earn a confirmation candle on Friday to secure further upside potential on the chart.
• In fact, with a “dark cloud cover” candle on the board, plus the flabby technical readings overall, investors may continue to unload, fearing further deterioration on the technical layout.
• The immediate support levels near the 10-day and 40-day SMAs of 1,494 and 1,498 should hold the index’s downside to avoid further profit-taking pressure.
• Otherwise, the index would head towards the recent low of 1,474 and the critical level of 1,450.

Daily Technical Watch: RCE Capital

• A fresh bearish push on the share price.
• Immediate Support at RM0.49
• Immediate Resistance at RM0.61
  

Weekly Trading Idea: OSK Holdings

• Reattracting Bargain-hunting Activities at RM1.70.
• Strategy: Buy on weakness nearer to RM1.70.
• Immediate Resistance at RM1.90
• Immediate Support at RM1.70
• Exit:Cut loss if the stock loses the recent low of RM1.65.

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Stocks to watch: Sime Darby, Media Prima, MPI, BDRB

KUALA LUMPUR: SIME DARBY BHD will be among the stocks to be in focus on Thursday, Nov 18 after announcing board changes, plans to divest its non-core business and its plan to return to profitability.

Other stocks to watch are MEDIA PRIMA BHD, MALAYSIAN PACIFIC INDUSTRIES and BANDAR RAYA DEVELOPMENTS BHD following their recent corporate results on Tuesday. TIME DOTCOM BHD, whose shares fell sharply on Tuesday after announcing its corporate revamp but included a share capital reduction and share capital consolidation, could see extended selling pressure.

Sentiment would also be cautious despite the late gains on Tuesday, but the broader market displayed rising profit taking. With the settlement date on Thursday after the heavy trading volume last week, punters would have to pay up.

At the regional markets, Shanghai and Hong Kong stocks fell to multi-week lows on Wednesday, Nov 17, on worries about how Beijing will tackle inflation including a rate rise as early as this week. After the market closed, the China cabinet said it will take forceful measures to stabilise prices and it will increase supplies of grain, oil and sugar from the country's reserves.

While Malaysia, Singapore and Jakarta were closed, other Southeast Asian stock markets ended weaker on Wednesday, continuing a losing trend on foreign outflows, worries over euro zone debt, fears of a rise in Chinese interest rates and talk over capital controls. Foreign selling hit Thailand and the Philippines as foreign institutions cashed in profits, although local retail investors were on the buying side.

At Bursa Malaysia, Sime Darby would see trading interest after the conglomerate said it was pursuing legal action in matters pertaining to losses suffered at the group’s energy & utilities division (E&U Division). Other surprises at Tuesday’s AGM were six members of the board who did not seek reelection while one resigned. However, its acting president and group chief executive Datuk Mohd Bakke Salleh said its first quarter results were in the black. The earnings are to be announced on Nov 25.

EMAS KIARA INDUSTRIES BHD, whose share price rallied after proposing to dispose of its geosynthetic manufacturing business for RM100 million, did see some concerns raised by Malaysian Rating Corp (MARC).

MARC said the MARCWatch on Emas Kiara’s RM80 million debt notes reflected the possibility that the transaction may not proceed as expected and the uncertainties that it would generate with respect to the operating profile and earnings generation ability of Emas Kiara following the disposal of its core operating business

Media Prima posted earnings of RM71.87 million for the third quarter ended Sept 30, 2010 compared with net profit of RM17.26 million a year ago. Its revenue was RM416.75 million compared with RM206.35 million a year ago. It declared a dividend of four sen a share.

For the nine-months period, net revenue exceed the RM1 billion mark for the first time and profit after tax and minority interest from continuing operations grew from RM39 million in 3Q FY2009 to RM154 million for the same period in 2010, with strong contributions from all media platforms. Its EBITDA margin, which grew from 20% to 24% due to the increase in revenue and effective cost control measures.

“Excluding the negative goodwill arising from the acquisition of The New Straits Times Berhad (NSTP), and other exceptional items, net revenue grew by 23.3% while PATAMI from continuing operations recorded an increase from RM28.6 million for the third quarter of 2009 to RM63.1 million for the same period in 2010,” it said.

MPI’s 1Q earnings rose to RM25.83 million from RM17.77 million a year ago while revenue rose to RM370.45 million from RM312.32 million. It declared an interim dividend of 10 sen a share. The chip makers said the better performance were due to higher sales in the quarter but this was partially offset by the appreciation of the ringgit against the US dollar.

BDRB swung into the red in the thid quarter with net loss of RM745,000 compared with net profit of RM40.92 million a year ago due to the inclusion of loss in a jointly controlled entity and higher expenses.

Revenue shrunk 52% to RM127.59 million from RM267.47 million as both property and manufacturing divisions reported lower revenues.

BDRB said the property division sold more PROPERTIES with the well-received previews of its new projects: 6 CapSquare in Kuala Lumpur and Straits View Residences in Johor. However, there was little progress income contribution as both these projects were at early stages of CONSTRUCTION [], whilst there were few remaining units of the completed One Menerung project available for sale.

Third-quarter revenue from the manufacturing division under MIECO CHIPBOARD BHD [] (MIECO) was RM42.0 million, 11% lower against RM47.1 million a year ago mainly due to lower export sales of particleboard. The decline in export sales was mitigated by higher domestic demand and more sales of value added products. MIECO recorded pre-tax profit of RM1.6 million in third-quarter 2010, an increase of 45% when compared to RM1.1 million a year ago, which was partly attributable to unrealised foreign exchange gains.

source: theedgemalaysia

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Maybank Invest Daily Update

Technicals

• The FBM KLCI rose marginally by 1.75 points to 1,501.56 yesterday. Its resistance area at 1,503 and 1,531 will cap market gains, whilst its weaker support areas are located at 1,486 and 1,500.

Other Local News
TdC: In RM339m deal to transform into regional player. Time dotcom Bhd (TdC) is undertaking a RM339m acquisition exercise of three companies in the telecommunication services and infrastructure industry. TdC would partly own Unity Cable system, a 9,620km Japan-to-US submarine cable through the acquisition of Global Transit Ltd Labuan (GTL). This will be complemented with acquisition of Global Transit Communications Sdn Bhd (GTC) that enables TdC to enter the international submarine cable business and tap into GTC's regional wholesale customer base. On the other hand, acquiring AIMS Group is targeted to penetrate the fast-growing hosting and co-location businesses. AIMS is one of the leading network neutral data centres in Southeast Asia hosting more than 188 telcos and service providers. (Source: The Edge Financial Daily)

CIMB: CIMB Niaga to raise RM527m. PT Bank CIMB Niaga expects to raise 1.5t rupiah (about RM527m) via a rights issue of 1.4b shares at 1,065 rupiah (37.4 sen) per share next month. (Source: The Star)

MAS: Expects KK hub to contribute up to RM100m profit. Malaysian Airline System Bhd (MAS) expects its operations from Kota Kinabalu, Sabah to contribute between RM60m to RM100m annually to group net profit. MAS intends to increase flight frequencies on existing routes and also introduce new routes from Kota Kinabalu. (Source: The Edge Financial Daily)

Media Prima, YTL Comms: Hybrid TV gets content boost. YTL Communications Sdn Bhd (YTL Comms) will host RTM and Media Prima group channels on its hybrid television slated for launch in November 2011. The hybrid TV would cost RM1b to RM2b to roll out. (Source: The Star)

Kencana: Unit gets RM275m Sarawak Shell contracts. Kencana Petroleum Bhd's whole owned subsidiary, Kencana HL Sdn Bhd (KHL), has secured contracts worth RM275m from Sarawak Shell Bhd (SSB) for the fabrication of compression modules and tie-in modifications. These one-off construction contracts are expected to be completed by the first quarter of 2012. (Source: The Edge Financial Daily)

IPO: China firm Sozo Global to list on Bursa. Another China based company, Sozo Global Ltd, is expected to make a debut on the Main Market of Bursa Malaysia. Agro Treasures which is an outsourced fund initiated by Khazanah Nasional Bhd is the company's anchor investor, holding 10.4% equity stake in the food maker from northeast China's Shandong province. Sozo entered into an underwriting agreement with AmInvestment Bank Bhd and JF Apex Securities Bhd in conjunction for its IPO offer. (Source: The Edge Financial Daily)

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Timecom fall 14cents in the early trade this morning

Timecom share fall sharply in the early trade this morning

Timecom fall 14cents in the early trade this morning after it proposed a corporate exercise but investors were unhappy with the share capital reduction and share consolidation.

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