Market Updates - 12 Sep 2007

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Malaysia

The stock market closed easier yesterday, erasing earlier gains after last-minute profit-taking, especially in finance and property counters, sent the Kuala Lumpur Composite Index (KLCI) to close 0.39 point lower at 1,285.94

Throughout the trading session, the KLCI moved between 1,285.14 and 1,285.94. It opened 5.51 points higher at 1,291.84. The Second Board Index eased 0.45 point to 104.98. Of the FTSE-BM Index series, the FBMEmas fell 8.32 points to 8698.57 and the FBM30 was down 0.65 points at 8156.33.

Decliners outnumbered advancers by 509 to 303 while 266 counters were unchanged, 317 untraded and 29 others suspended.

Of the top gainers, Tanjong plc rose 60 sen to RM8.20, Kuala Lumpur Kepong gained 50 sen to RM11.90 and Lion Diversified went up 30 sen to RM11.90.

Among the top losers, HWL-C2 lost RM1.50 to RM35.50, MISC went down by 50 sen to RM9 and DFZ Capital eased 32 sen to RM2.98.

Among the heavyweights, Maybank lost 20 sen to RM11.40, Tenaga Nasional and Telekom Malaysia eased 15 sen each to RM9.75 and RM9.60 respectively, while Bumiputra-Commerce climbed 10 sen to RM10.70.

News

Volkswagen AG has not yet agreed to the possible purchase of a stake in Malaysian carmaker Proton, VW's chief executive told a German newspaper on Wednesday. Asked by the Frankfurter Allgemeine Zeitung newspaper if it was true that VW planned to take a 20 percent stake in Proton and possibly raise it to more than 50 percent later, VW's Martin Winterkorn said: "This has not yet been agreed, but it could go in that direction." VW was interested in Proton's dealership network, Winterkorn said in the interview, which was released in the paper's Internet edition ahead of publication on Thursday. Winterkorn also said there were no signals from large shareholder Porsche that it wanted to raise its stake in VW to more than 50 percent.

Leading independent power producer (IPP) Malakoff Corp Bhd plans to inject new assets into its portfolio to grow the company in a bid to sell shares in the next five to six years. It is understood that Malakoff is looking at acquisitions and contracts to build power and desalination plants in the Middle East and Southeast Asia, and is in direct negotiations with its foreign partners. Sources told Business Times that Malakoff expects to clinch some deals in two to three years and increase its earnings before planning to list.Malakoff, formerly known as Nucleus Avenue (M) Bhd, is a special purpose vehicle of MMC Corp Bhd, both controlled by Tan Sri Syed Mokhtar Al-Bukhary. It acquired the business of Malakoff Bhd in a RM9.3 billion deal to take it private. The firm was delisted from Bursa Malaysia on July 18.

Equine Capital Bhd is seeking to raise its 25 per cent stake in associate company, Abad Naluri Sdn Bhd, to develop the multi-billion ringgit Penang Global City Centre (PGCC) project in George Town. Executive chairman Datuk Patrick Lim yesterday said the move would facilitate financing options for the RM25 billion project, which may include finding new partners or raising funds from the capital market, including a bond sale.

Bursa reprimanded property developer Prime Utilities Bhd on Wednesday over a $34 million difference between its audited and unaudited financial results in fiscal 2006. The difference amounted to 117.9 million ringgit ($34 million), Bursa said, ordering Prime to get an external auditor to perform a limited review of its quarterly reports before making an announcement on its results.

Offshore marine services provider Petra Perdana Bhd has signed a memorandum of agreement with shipbuilder Nam Cheong Dockyard Sdn Bhd to buy four new offshore support vessels for about RM274mil. The vessels comprise two 300-men work barges and two 165-men workboats. Executive chairman and chief
executive officer Tengku Datuk Ibrahim Petra Tengku Indra Petra said the company had been focusing on developing its marine assets and resource capabilities to cater for the growing demand of the upstream oil and gas industry.

SAAG Consolidated (M) Bhd plans to enter deepwater oil and gas activities with its proposed acquisition of an effective 35% stake in Persada Nuri Sdn Bhd (PNSB). PNSB is in a three-year joint venture with Labuan Shipyard & Engineering Sdn Bhd to develop the Labuan shipyard to support deepwater activities in the area. In an announcement to Bursa Malaysia yesterday, SAAG said there was immense potential for the shipyard due to Labuan's location in the centre of Malaysia's deepwater activities.

Malaysian insurance software firm Rexit Bhd is not in talks to be taken private or be delisted, the firm said to the stock exchange on Wednesday. It was responding to a query from the Malaysian stock exchange over a newspaper report.

K&N Kenanga Investment Bank Bhd (KIBB) has formed a strategic alliance with South Korea's Goodmorning Shinhan Securities Co Ltd (GMSH) to pursue cross border business opportunities in the financial services industry. Holding company K&N Kenanga Holdings Bhd in a filing with Bursa Malaysia on Tuesday said the two parties signed a memorandum of understanding (MoU) that day. The MoU will be for three years and comes into effect from the date of signing.

Malaysia's top mobile phone firm Maxis Communications Bhd denied on Wednesday a Times of India newspaper report that it planned to exit its Indian Aircel unit -- its second denial in less than a month. The Indian newspaper had said speculation was mounting that Maxis was exiting India by selling its stake in Aircel Cellular, with India's Reliance Communications Ltd a possible buyer. Maxis holds 74 percent in Aircel Cellular Ltd, while the owners of south India-based Apollo Hospitals Enterprises control the rest.

Thai AirAsia, a unit of Malaysian budget airline AirAsia planned to sell shares on the Thai bourse in an initial public offering in the next three years. Proceeds from the IPO would be used to repay its 1.4 billion baht
($41 million) debt, chief executive Tassapon Bijleveld told reporters. He gave no detail how much money was to be raised. "We expect to do it in the next two and a half or three years. We will consider more details," he
said. Thai Air Asia is 49 percent owned by AirAsia, Asia's largest budget carrier. The rest is held by a Thai businessman and airline executives.

Plastic parts maker LCTH Corp Bhd is planning a capital repayment of 72 million ringgit ($20.50 million) following the sale and lease back of factory buildings and land, the firm said on Wednesday. Under the plan, it
will sell and then lease back the assets, located in south Johor state, to a real estate fund, raising 80 million ringgit. The firm will then return 72 million ringgit to shareholders through a bonus issue on the basis of
one new share for every five owned, with the remainder of the money used for working capital and expenses, it said.

Construction firm Ahmad Zaki Resources Bhd (AZRB) expects its oil and gas business to contribute positively to the company's earnings, following the acquisition of a 20.5 per cent stake in Eastern Pacific Industrial Corp
(Epic) Bhd. Its chairman Raja Datuk Seri Aman Ahmad said the company is looking at 10-15 per cent contribution from the sector to its revenues starting next year.

Ranhill Bhd has not ruled out the possibility that Ranhill Power Bhd could be relisted in the future, following plans to add value to the company after taking it private this year.Ranhill Power is expected to be de-listed from the official list of Bursa Malaysia Securities by October or November this year. Executive director Datuk Chandrasekar Suppiah said Ranhill plans to take Ranhill Power private to consolidate the company under the Ranhill group to maximise returns. He said going forward, the plan is to grow its power capacity from 380 megawatts (MW) currently to a minimum of 1,000MW in five years.

Media Prima Bhd has signed a pact with UDA Holdings Bhd to help raise the latter's branding efforts through television programmes. The two parties inked a memorandum of understanding (MoU) yesterday which will result in UDA's products - which include residential properties, hotels and shopping malls - being featured or promoted through programmes produced by Media Prima.

FACB Industries Inc Bhd has laid out a five-year business plan which will see it expanding aggressively across segments, ensuring a strong uptrend in its revenue and profits over the period and beyond. Chief operating officer Chua Tiam Wee said that for starters it would set up a plant to make fittings in Vietnam. The facility, costing RM25mil, would boost its production capacity and buoy earnings.

Toyota will launch an upgraded version of its Altis model next year in Malaysia as part of efforts to boost its market presence. This is in view of Proton consolidating its market hold through strategic alliances while rival car manufacturers were introducing newer models at a faster rate, said UMW Toyota Motor Sdn Bhd managing director Datuk David Chen.

Singapore real estate company Mapletree Investments Pte Ltd has plans to acquire some RM200 million worth of Malaysian assets. "We are looking at assets in Kuala Lumpur, Johor, Penang and key cities in Malaysia," Mapletree executive vice-president Phua Kok Kim told a media briefing in Kuala Lumpur yesterday. Its nominee company Mapletree MIF Malaysia Sdn Bhd yesterday signed a sales and purchase agreement with Classic Advantage Sdn Bhd, a subsidiary of plastic precision moulding manufacturer LCTH Corp Bhd, for the sale of land and six blocks of factories and an office block in Senai for RM80 million.

The Minority Shareholder Watchdog Group (MSWG) wants more transparency when it comes to revealing the remunerations of company directors and is demanding greater disclosure. Based on the findings of the Directors Remuneration Survey 2007, less than 10 per cent, or 48, of the 500 public-listed companies (PLCs) surveyed disclosed individual directors' remuneration. The survey also revealed that 0.4 per cent of the companies made some kind of disclosure in linking corporate performance to directors' remuneration; while 12 per cent, or 62 companies, do not have remuneration committees.

US

Stocks slipped Wednesday, after a volatile session in which investors mulled record oil prices and a falling U.S. dollar ahead of next week's Federal Reserve policy meeting.

The Dow Jones industrial average (down 16.74 to 13,291.65) lost a few points, while the broader S&P 500 (up 0.07 to 1,471.56) index ended little changed. The tech-fueled Nasdaq composite (down 5.40 to 2,592.07) lost 0.2 percent.

Stocks rallied Tuesday on bets that the Federal Reserve will cut a key short-term interest rate by as much as a half-percentage point when it meets next week. Such bets continued to soothe Wall Streeters Wednesday,
but any confidence in the Fed was countered by surging oil prices and a falling U.S. dollar.

Meanwhile, crude oil surged after the government's weekly report showed a surprise drop in crude oil inventories. U.S. light crude oil for October delivery rose $1.68 to settle at $79.91 a barrel on the New York Mercantile Exchange, briefly hitting an all-time trading high of $80.05 a barrel. However, the record price is still below inflation-adjusted highs hit in the early 1980s, which would be equivalent to at least $95 a barrel today. Oil prices have advanced about 30 percent in 2007.

Treasury prices fell, raising the yield on the 10-year note to 4.41 percent from 4.37 percent late Tuesday.

In currency trading, the dollar fell to a record low versus the euro and was little changed against the yen.