Market Update - 14 Sep 2007

Technorati Tags : stock update, stock pick

Malaysia

The stock market closed higher Friday, tracking the rally on Wall Street overnight on growing hopes the Federal Reserve will cut its fed funds rate next week and with investors picking up bargains among select index-linked companies.

The Kuala Lumpur Composite Index (KLCI) closed up 5.48 points or 0.4 percent at 1,289.50, off an intraday high of 1,294.68. For the week, the KLCI was down 15.4 points or 1.2 percent. The FTSE Bursa Malaysia 30-large cap index rose 33.40 points or 0.4 percent to 8,183.57 and the second board index was up 0.3 point or 0.3 percent at 104.70.

Gainers outpaced losers 498 to 290, with 288 stocks unchanged and 255 counters untraded. Trading volume was 833.481 million shares valued at 1.195 billion ringgit.

Index heavyweights closed mixed, with state-run Telekom Malaysia adding 10 sen or 1.1 percent to 9.55 ringgit, national power company Tenaga down 10 sen or 1 percent at 9.65 ringgit and Malaysia's largest bank Maybank down 10 sen or 0.9 percent at 11.40 ringgit.

Bumiputra-Commerce Holdings, the owner of Malaysia's second largest commercial bank, CIMB Bank, closed up 10 sen or 0.9 percent to 10.80 ringgit. The company said Thursday that it is interested in acquiring a stake in ACL Bank PCL of Thailand.

Stock exchange operator Bursa Malaysia led the advance among index-linked stocks, rising 55 sen or 5.6 percent to 10.30 ringgit. Timber company Ta Ann jumped 20 sen or 2.6 percent to 7.95 ringgit and DiGi.com, Malaysia's smallest mobile phone company, added 20 sen or 1.1 percent to 19.30 ringgit.

Construction giant Gamuda advanced 20 sen or 2.6 percent to 7.85 ringgit and oil and gas services provider Muhibbah gained 30 sen or 3.6 percent to 8.70 ringgit.

Budget carrier AirAsia was up 3 sen or 1.6 percent at 1.90 ringgit. The company said Thursday it will pay 26.7 million ringgit for a 20 percent stake in low-cost long-haul air services operator Fly Asian Xpress Sdn Bhd (FAX).

Interior fit-out company LCL Corp rose 12 sen or 2.6 percent to 4.72 ringgit. The company expects revenue from its 51-percent-owned Kazakhstan unit, LCL-SC Interior Creations LLP, to reach 50 million US dollars next year.

Astro All Asia Networks Plc declined 4 sen or 1.2 percent to 3.42 ringgit after Malaysia's largest pay-TV operator recorded a net loss of 54.2 million ringgit in the second quarter to July, due to a write-off of assets

and balances arising from its investment in Indonesia's PT Direct Vision.

CB Industrial Product Holding was up 2 sen or 0.4 percent at 4.60 ringgit after it said Thursday it has secured a contract worth about 29.97 million ringgit from Indonesia's PT TH Gambut Plantations.

In off market deals, Lembaga Tabung Haji continued to raise its stake in loss-making Silver Bird Group Bhd, acquiring another 4.82 million shares on Sept 11. A filing with Bursa Malaysia showed that after the recent acquisition, the pilgrimage fund board held 44.61 million shares or 20.79%. The new shares could be linked to the conversion of 6.56 million irredeemable convertible unsecured loan stocks 2004/2009 into 4.82 million shares of 50 sen each. These new shares were listed on Sept 11. Silver Bird had on Sept 6 received the Securities Commission's approval to issue up to 32.08 million shares or 10% of its enlarged issued and paid-up share capital. The issue price was fixed at 50 sen or, 19.25% above the five (5) day weighted average market price of 41.93 sen.

News

Datuk Lim Tong Yong, owner of a soap maker, has emerged as a substantial shareholder of Asia Poly Holdings Bhd, a maker of cast acrylic sheets. Lim, together with his son, Chang Ching, has bought about nine million shares, or 10 per cent of Asia Poly, a Mesdaq firm. This would make them the second biggest shareholder of Asia Poly. Teoh Cheng Chuan, the chief executive officer, controls Asia Poly with a 60 per cent stake as at July 31 2007. Lim is currently the single biggest shareholder of Pas Holdings Bhd, with 47.4 per cent. Lim and his son bought the stock on September 6. The price was not disclosed, Asia Poly said in a statement to Bursa Malaysia.

Datuk Seri Dr Ibrahim Saad, a former deputy chief minister of Penang, has teamed up with Welli Multi Corp Bhd's non-executive chairman to take over the company, people involved in the exercise said yesterday. Welli chairman Datuk Abdul Ghani Abdul Kadir, frustrated at the slow pace of restructuring Welli, is contemplating a management takeover of the second-board plantation company. Abdul Ghani, who owns shares in Hunza Consolidated Bhd and an executive director in fellow Penang-listed-entity Boon Koon Group Bhd, could not be reached for comment. An aide to the businessman told Business Times that Abdul Ghani has always been interested in Welli, and he is studying the best option to revive the fortunes of the company. It is understood that Ibrahim, Ghani and Datuk Jamaludin Abdul Rahim, a controlling shareholder of Perak-based CAJ Group, have accumulated sizeable number of shares of Welli in the open market.

QSR Brands Bhd, a fast-food chain operator, plans to raise an estimated RM102.3 million from a rights issue to fund working capital and cut debt. The company, a subsidiary of Kulim (Malaysia) Bhd, has proposed a renounceable rights issue of 40.91 million new shares and 40.91 million free detachable warrants. The exercise involves offering one rights share with one free detachable warrant for every six shares held on a date to be determined,. QSR runs the KFC restaurant chain as well as the Pizza Hut outlets nationwide. Based on an indicative price of RM2.50 a share, the rights issue would raise some RM102.28 million.

Malaysian construction firm WCT Engineering Bhd has won a 457 million ringgit contract to build two office towers in the Malaysian administrative capital of Putrajaya.

Melati Ehsan Holdings Bhd plans to develop a RM1 billion mini township, known as Bandar Sentul Utama, over five years. Project director Mohd Zainudin Badarudin said he was confident of good sales, helped by new incentives announced recently. "Land is scarce now in Sentul and we will carefully plan the township project to seize rising opportunities. There will be four phases," Zainudin said. The first phase, covering five hectares, consists of four blocks of condominiums with a total of 950 units. Each unit is priced from RM131,560 to RM180,000 for sizes ranging between 828 square ft and 1,029 square ft.

Sarawak based Swee Joo Bhd, through its subsidiary Johan Shipping Sdn Bhd, has recently received one of the two 7,000-tonne product tankers from China, thus making its foray into the crude palm oil transport within the region. Asia Star, built at a cost of US$12 million (RM41.76 million), was delivered in mid-August. Swee Joo group chairman Alexander Nanta Linggi said the tanker would be deployed along the Southeast Asia's routes covering Vietnam, south China, Sabah and Sarawak. Swee Joo owns and operates 31 vessels comprising 14 container, 10 general cargo and seven support vessels.

Henry Butcher Malaysia Sdn Bhd, a property consultant, and Malaysia Airlines (MAS) have teamed up to woo foreigners to buy properties in Penang. For starters, Henry Butcher's chief executive officer Dr Teoh Poh Huat said they will target 7,500 foreigners. "In the medium term, we intend to double the number within four to five years and in the long term, we are aiming to achieve a target of 25,000 foreigners in the state," Teoh said prior to the signing of a deed of collaboration between Henry Butcher and the national carrier recently.

Three out of four of its recently appointed directors of The Ayer Molek Rubber Co Bhd, turned up at its extraordinary general meeting (EGM) on Sept 14 to ensure it did not go on as proposed. Minority shareholders-appointed directors - chairman Datin Mariam Prudence Yusof, non-executive director Dr Jamal Bin Yusof @ Gordon Duclos and executive director Goh Joon Hai - were there to ensure that the current board, headed by executive chairman Adlin Shaharudin would not "spring a surprise" said Goh. The fourth appointee Syed Khalil Syed Ibrahim did not attend the EGM. Goh said the minority shareholders wanted to study the accounts of the company but the office had since been sealed.

Aa part of its strategy to penetrate the international markets, Emirates Investment & Development Co PSC (Emivest) has acquired a 15 per cent stake in Mesdaq-listed ETI Tech Corp Bhd. Emivest chairman Buti Saeed Ghandi said over the past 10 years, the firm has been acquiring shares and getting into partnership on a national and regional scale.

Property developer and resorts operator Karambunai Corp Bhd wants to develop a RM200 million tourism project in Sabah, which will include a theme park. Chief executive officer Datuk Robin HL Loh said the firm has

submitted a comprehensive proposal to Bank Pembangunan Malaysia Bhd. The bank manages the tourism infrastructure fund, which has been allocated RM200 million for tourism projects in Sabah and Sarawak.

A Middle East consortium plans to invest at least 5.0 billion ringgit (1.44 billion dollars) in Malaysia's energy, Islamic banking and property sectors, a report said Saturday. The consortium is led by Qatar General Insurance and Reinsurance company, Gulf Petroleum Ltd Qatar and other leading investment and banking groups from the Gulf region, the New Straits Times said. Qatar General Insurance chairman Sheikh Nasser Ali Saud Al-Thani said in a statement released by his legal firm that the group has begun talks on oil and gas projects with the relevant bodies in Malaysia and neighbouring countries.

Synergy Drive Bhd has announced the appointment of six new board members with immediate effect. The new board members are Tan Sri Dr Wan Mohd Zahid Mohd Noordin, Tan Sri Dr Ahmad Tajuddin Ali, Raja Datuk Arshad Raja Tun Uda, Datuk Seri Panglima Andrew Sheng Len Tao, Datuk Mohamed Sulaiman and Datuk Seri Ahmad Zubir Murshid. This is alongside current directors Tan Sri Md Nor Yusof, who is also the chairman of
Synergy Drive, Datuk Zainal Abidin Putih and Wan Razly Abdullah Wan Ali.

YNH Property Bhd plans to launch luxurious residential and commercial projects with an estimated gross development value (GDV) of RM2.1bil in Kuala Lumpur in late 2007 and early 2008. Group financial controller Y.M. Chan said the highlights were the RM300mil Duta Kiara 163 Suites and the RM600mil D'Kiara Place that would start construction in early 2008.

Analysts are generally positive on Bumiputera-Commerce Holdings Bhd (BCHB)'s plan to take a stake in Thailand's ACL Bank but aren't rushing to raise their target price for the stock yet. The 19.26 per cent stake in ACL Bank - for which BCHB's CIMB Investment Bank is bidding against China's Industrial and Commercial Bank of China (ICBC) - is expected to cost the group around RM200 million-RM220 million. ACL Bank, estimated to account for just 0.5 per cent of total loans and 0.4 per cent of total deposits in Thailand, is one of its smallest lenders with 12 branches nationwide.

Scomi Engineering Bhd is expected to ride the hive of activity and investments ploughed into the oil and gas (O&G) sector, but it is the monorail business that is the big and lucrative wild card to its future performance. "There is no let-up in demand for O&G. We are investing heavily in that business,'' Scomi Engineering president Hilmy Zaini Zainal said. "But we have also entered into a business that we will be focusing more on in the future. We believe monorail is the future, especially for the cities in this region.'' O&G is and has been for long the lifeblood of Scomi Engineering. The company's involvement in that sector is via its numerous machine shops sprinkled to the far corners of Asia that serve the big names in the energy sector. Hilmy explained that Scomi Engineering, which will probably migrate to the main board of Bursa Malaysia next year, currently got the bulk of its revenue from its machine shops.

National mortgage corporation Cagamas Bhd may consider taking up stakes in foreign companies that are keen to replicate its successful mortgage model, its top executive said. Cagamas intends to provide consultancy services to foreign parties interested to copy its model as a route to future investments if the opportunity permits. Having received multiple invitations over the years, Cagamas has set up a consultancy unit within the firm to gauge the viability of such cross-border plans. Its president and chief executive officer Steven Choy said the "small" consultancy unit allows Cagamas to explore and evaluate overseas possibilities when it arises.

Gadang Holdings Bhd, which generates the bulk of its profits from civil engineering, construction and property development, is now banking on utilities to improve its profits. Managing director and chief executive officer Datuk Kok Onn said the company is targeting its utilities division to contribute 25 per cent of profit by 2011, from five per cent currently, following plans to acquire new water-supply concessions overseas. It is exploring opportunities in Indonesia, China, Vietnam as well as locally to grow the division. Gadang posted net profit of RM14.2 million on revenue of RM226 million last year, up 19.3 per cent and 21.8 per cent respectively.

Sales at Aeon Co (M) Bhd, Isetan of Japan Sdn Bhd and other retailers in Malaysia may increase eight per cent in 2008, helped by government measures to put more money in the hands of consumers. Retail sales may rise to RM69.4 billion from RM64.2 billion this year, said Tan Hai Hsin, managing director of the Kuala Lumpur-based Retail Group Malaysia. Retail Group provides forecasts and conducts quarterly retail sales surveys for the 100-member Malaysian Retailers Association.

US

The Dow added a few points Friday, rising at the end of a volatile session in which investors weighed downgrades of American Express and Intel and a weak retail sales report ahead of next week's Federal Reserve meeting.

The Dow Jones industrial average (up 27.72 to 3,452.60) rose 0.1 percent, according to early tallies. The broader S&P 500 (up 0.87 to 1,484.82) index ended the session little changed, as did the tech-heavy Nasdaq composite (up 1.40 to 2,602.46).

Stocks slipped in the early going after the retail sales report raised worries that the problems in housing and credit markets are spreading to the broader economy. But the selling pressure proved erratic as the session wore on, with investors turning their focus to Tuesday's Fed policy meeting.

Trading volume was light due to Rosh Hashanah, the Jewish New Year.

Retail sales rose just 0.3 percent in August, from an upwardly revised 0.5 percent in July. Economists surveyed by Briefing.com thought sales would rise 0.5 percent. Excluding autos, retail sales fell 0.4 percent in August after rising an upwardly revised 0.7 percent in July. Economists thought sales excluding autos would rise 0.2 percent in August, on average. The report seemed to speak to fears that ongoing problems in the credit and mortgage markets are spreading to consumer spending, which fuels roughly two-thirds of economic growth. A separate report showed a weaker-than-expected rise in industrial production.

However, the retail sales news was countered by other more positive items, including a report showing that consumer sentiment rebounded a little in September after a drop in August.

The University of Michigan's consumer sentiment index rose to 83.8 in September from 83.4 in August. Economists thought it would rise to 83.5.

In addition, Wall Streeters could be figuring that the weak retail sales report makes it more likely that the Federal Reserve will cut a key short-term interest rate by a half-percentage point when it meets next week.

Treasury prices rose, with the yield on the 10-year note at 4.46 percent little changed from late Thursday.

U.S. light crude oil for October delivery fell 99 cents to settle at $79.10 a barrel on the New York Mercantile Exchange after ending the previous session at a record closing high. However, the record price is still below inflation-adjusted highs hit in the early 1980s, which would be equal to at least $95 a barrel today. Oil prices have advanced about 30 percent in 2007.