Market Roundup 030112

 FBM30 1513.54, -17.19 points (-1.12%), Volume 1,604.5mil, Value 1,406.5mil

1) KLCI snapped its seven consecutive days of gains as blue chips saw profit taking following the year end closing action on Friday despite higher regionals after manufacturing expanded in India and China with more positive elements emerging for a US recovery. Financials-1.76% weighted on the market as index slide over the day to close near its low (LOW:-18.65pts). Market breadth remains positive with advancers outpacing losers 446:325. Futures closed 1524.5 (9 points premium).

2) Heavyweights: MAYBANK-2.8% RM8.34, CIMB-2.7% RM7.24, AXIATA-2.72% RM5.00, PBBANK-1.64% RM13.16, TM-3.23% RM4.80, DIGI-1.80% RM3.81, SIME-0.87% RM9.12, GENTING+2.18% RM11.24

3) DBT: XDL 9mil @ RM0.32 (2% PUC, 14.6% discount), ASUPREM 7.5mil @ RM0.205 (6.5% PUC), SYF 7mil @ 0.52 (2.6% PUC, 15.4% discount)

4) Situationals:

MAXBIZ+13% RM0.175: Share price jumped after midday as company announced that it's wholly owned subsidiary Dutamas SME Sdn. Bhd, received a letter of award from Harta Mesra Development Sdn. Bhd for the proposed infrastructure works for development of Phase 1A at Klebang, Ipoh with contract value of RM4.935mil. MAXBIZ also received LOI from Fibre-N Sdn Bhd in respect of a contract for the Fibre-to-the-Home and Fibre-to-the-Office for high rise residential and office buildings in Klang Valley, Penang and Johor Bahru valued at RM510mil.

5) Tan Chong

Announced that Tan Chong Motorcycles (Laos) Co., Ltd., a wholly-owned subsidiary of TCMH has entered into a Distributorship Agreement for 3 years effective 2 January 2012 with Vietnam Manufacturing and Export Processing Co., Ltd. in respect of the appointment by VMEP of TC Motorcycles Laos as the exclusive distributor, importer and after-sales service provider for SYM motorcycles (including spare parts for such motorcycles) in Laos. The project sales volume for the first 3 years is estimated at 12200 units.

+ve but minimal impact to bottom line.

6) Market - We remain bullish in the immediate term with the annual January effect likely play out again. During this period, 2nd liners/situationals generally outperform, hence trading favourites such as MRCB, TimeCom, DRBHcm, Malton, MMC, MPHB  should remain in the limelight.

Newz Bits 030112

Highlights of the day

§         Banking (Sector Update): Nov 2011 Statistics [download report]

Total loans grew slower at 12.8% y-o-y. The growth however was likely due to typical variation in the series. The cost of funds-average lending rate fell slightly but more importantly, the rate of fall has been decreasing. From macroeconomic perspective, the monetary policy has accommodative. The M2 grew 12.8% y-o-y while the OPR has created an environment of low real interest rate. We expect the OPR to remain changed during the next January 2012 MPC meeting.

Other reports

§         Newz Bits [download report]

Other Malaysian news

§         Maybank: Mayban Ventures to invest RM1bn in next 5 years

§         TM: RM3bn capex for TM

§         TM: Batam-Dumai-Melaka cable system takes off

§         MAS: Unveils new management structure

§         Kelington: Has RM170m orders in bag, confident of more

§         Automotive: Perodua sees TIV growing 3%

Global news

§         Europe: German-French summit set

§         Europe: Spain moves to contain budget deficit

§         Europe: Euro-zone manufacturing activity falls for fifth month

§         China: Contraction in manufacturing boosts easing case

§         India: Manufacturing shows resilience as Europe falters

§         Indonesia: Inflation slows

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Morning Commentary 030112

Good morning,


1) Adventa FY10/11 Rev+26% RM429.9m, Net-88% RM4.2m, EPS 2.75s


Sales in-line, core earnings RM13.4m, 25% below cons RM17.8m.


For Q4 yoy, Revenue +20%, from higher shipments & better prices. There was an exceptional loss of RM9.2m in the current quarter (loss due to fire at one of it's plant RM6.73m & a loan deposit written off RM2.5m) which resulted in the quarter registering it's 1st quarterly loss of RM3.66m. PBT was RM5.57m before the exceptional loss, +43% when compared to corresponding period last year. Qoq, Rev+12%, while Loss before tax stood at RM3.6m vs PBT of RM3m in preceding quarter. PBT would have been +55% if not for the exceptional loss of RM9.2m. Ahead, the erratic dynamism of commodities & currencies create a difficult environment for management of costs & sales prices. The global slowing economic environment, particularly the Eurozone market is a concern. The stretched credit terms for these countries may cause the group's trade funding to increase. However, lower latex cost, the emerging threat of bird flu & higher US dollar will provide support for glove makers going into 2012- HOLD.


2) Boustead: Boustead Holding's 51% subsidiary MHS Aviation Bhd (MHS) is buying 16 aircrafts for RM586.2m from DRIR Management SB & DRIR Rotor SB. DRIR Management & DRIR Rotor are wholly owned subsidiaries of DRIR Equities SB, which owns the balance of 49% in MHS. MHS provides air transport & technical services to O&G companies. In addition to owning it's own aircrafts, it also leases aircrafts from DRIR Management & DRIR Rotor. Boustead said the price was based on "willing buyer willing seller" basis after considering a valuation report from Lloyd Helicopter Asia Pte Ltd. MHS would pay RM530.7m cash in the deal. The remaining RM55.5m was deemed paid, as it was part settlement of debts owed by DRIR Management & Rotor to MHS. Boustead has also proposed to provide MHS a loan of up to RM460m, of which RM422.1m will be to partly finance the acquisition & remaining RM37.9m as working capital; Neutral. The acquisition is part of Boustead's strategy to make MHS an aviation service provider which has a wide range of aircrafts, that will support MHS's plan to actively source for new contracts.


3) TM: Telekom Malaysia Bhd plans to spend up to RM3b in capex this year as it continues to roll out high speed broadband (HSBB) access to more areas and expand it's internet access beyond homes & offices via WiFi hotspots, group CEO said in an interview. Previously, TM's focus has been on providing access via fixed lines to homes & offices. TM is looking to invest RM2.7b to RM3b in capex this year to provide access, build it's core network & support systems, he added. As at Q3 2011, TM had invested RM1.4b but CEO would not say what the final figure was for the full year capex for 2011. TM's capex is normally internally funded. Group now has 200,000 Unifi subscribers & about 17,000 hotspots in the country. The key places where users are most likely to be needing WiFi are in the shopping malls and universities, more so since all smart devices are WiFi enabled - Neutral.


4) Mkt: broad market especially mid & small caps to rally while big cap index stocks to pull back after their year-end window dressing.