Newz Bits 301211

Reports

§         Newz Bits [download report]

Malaysian news

§         RHB Capital: Said to be near RM1.9bn deal for OSK unit

§         Kulim: DPMM offers to facilitate sale of Kulim’s QSR stake

§         Cahya Mata Sarawak: Cleans air on cement shortage

§         CCM: Streamlines operations

§         Century: Plans distribution centers in PTP

§         Box-Pak: Denies privatization report

§         Media: Astro unit in JV to provide pay-TV channels across Asia

§         Power: New generation of IPPs to draw familiar names

§         Plantation: Malaysia expects plantation exports bonanza

§         Construction: MRT Corp inks deals with Jalan Inai residents

Global news

§         US: Jobless claims drop to 3-year low in past month

§         US: Business activity in expands faster than forecast

§         US: Foreign central banks' U.S. debt holdings fall

§         Europe: Loan growth slowed in November amid crisis

§         Europe: German inflation slowed in December as debt crisis damped growth

§         Europe: Italy auctions EUR7bn of bonds as ECB buoys investor demand

§         Japan: Ruling party reaches agreement on doubling sales tax

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Morning Commentary 301211

Good morning,

1) Cypark: Cypark Resources Bhd has secured a RM14.71m job to upgrade a landfill site in Negeri Sembilan's Kok Foh enclave. Co said the project involves the closure of a portion of the landfill and the upgrading of another portion into a sanitary cell, and is expected to complete by Dec 2012; +ve, the contract will further strengthen Cypark's position as one of the country's leading specialist in solid waste management & integrated environmental solutions. Job is expected to boost earnings for FY12, in addition to other contracts previously awarded by the National Solid Waste Management Dept for the closure & remediation of 16 landfills.

2) RHB/OSK: RHB Capital may be paying as much as RM1.9b in shares for OSK Holdings Bhd's investment bank, according to sources with knowledge on the matter. Talks between the 2 parties were now centered on a price range of RM1.8b to RM1.9b. The 2 banks were expected to reach an agreement & seek approval from BNM by mid-January. RHB might issue new shares worth as much as 10% of it's existing equity to pay for the OSK unit ; Neutral for now. Buying OSK Investment Bank would allow RHB to overtake CIMB Investment bank as the biggest stockbroker in Malaysia, based on data from Bursa.

3) Construction: MRT Corp (unit initiated by the govt under it's ETP initiative) has sealed the Points of Agreement (POA) with owners of 21 plots of land in the Jalan Inai area affected by the MRT project. The agreements are expected to resolve all outstanding issues faced by land owners with the MRT project, which connects Kajang & Sungai Buloh. The POA addresses issues such as land acquisition, access to the land for tunneling works, compensation & the judicial review which some land owners have brought against the govt. It will form the basis for the mutual agreements, expected to be signed between MRT Corp & the land owners at the end of next month; +ve, the event marked a positive step towards resolving similar land issues at Jalan Sultan, Jalan Bukit Bintang & other affected areas.

4) Mkt: window-dressing to dominate activities today.

Market Roundup 291211

FBM30 1506.69, +2.58 points (+0.17%), Volume 1,588.8mil, Value 1,163mil       

1) KLCI continued its recent upward trend on thin volumes despite weaker markets in the US and Europe overnight. Tech (+1.7%) stocks led the gainers with UNISEM+6.7%, MPI+3.7%, NOTION+5.8%, ENG+4.6% while select lower liners hogged the limelight with gains on active trade: SANICHI+16.7%, MULPHA+2.7%, KNM+5.8%. Market breadth was healthy with gainers doubling losers 492:254. Futures closed 1510 (4 points premium).

2) Heavyweights: AXIATA+1.2% RM5.05, CIMB+0.8% RM7.16, PBBANK+0.5% RM13.18, PETGAS+0.7% RM15.20, RHBCAP+2.4% RM7.30, PPB+0.7% RM17.12, BAT+0.8% RM49.60, KLK+0.4% RM22.68, YTL-2% RM1.48, MAYBANK-0.2% RM8.32.

3) DBT: BPURI 2.5mil @ RM0.84, MENANG 1.7mil @ RM0.20

4) Situationals: 

BOXPAK-9.7% RM2.23: Share price fell as low as RM2.21 (-10.5%) in the afternoon session, erasing early gains as the company denied a news report of a planned buyout by major shareholder Kian Joo Can Factory. The company says in an exchange filing it isn't aware of any formal discussions and hasn't appointed any investment bank for the purported buyout. Kian Joo also denied the news report in a separate filing. KIANJOO-1.42% RM2.09.

TCUBES-14.3% RM0.18: Shares fell in active trade after the company revealed that its accumulated losses for the FY ended March 31, 2011 was RM17.24mil and not RM7.3mil as stated in its Annual Report. Tricubes said there were typo errors on the accumulated losses as stated in pages 49, 61, and 98 of the 2011 Annual Report. The announcement followed an audit of its 2011 Annual Report which was submitted to Bursa on Sept 7.

5) KFC/QSR

The President of the Malay Chamber of Commerce (M) has come out to say that they would make a counter offer of RM6.90/share for the controlling stake in QSR. He further commented that the offer letter would be presented either later today or tomorrow. Recall that Massive Equity a SPV JV between Johor Corp (51%) and CVC Capital Partners Ltd (49%) had earlier tabled an offer for KFC (RM4) and QSR (RM6.80) which was duly accepted by the respective board of directors. The Malay Chambers of Commerce had earlier objected to this sale as it could result in both companies ending up in the hands of foreigners.

The offer by Massive Equity is still pending an EGM for minority approvals.

6) Market - Maintain short term bullish trend which could last into late Jan for the traditional CNY rally. 

Newz Bits 291211

Reports

§         Newz Bits [download report]

Malaysian news

§         EON Capital: Pays final dividend

§         PPB Group: Flour-milling arm gets first go-ahead for Wilmar China unit buy

§         Boustead Holdings: Announces RPT

§         Alam Maritim: Lands Shell job

§         Magna Prima: To develop projects with RM1.6bn GDV

§         TPC Plus: Gets takeover offer from Huat Lai

§         Zecon: Earnings likely to go up with revised toll rates next year

§         Retail: Sales likely to grow 6.5% this year

§         Steel: First coil rolls off Acerinox’s plant in Johor

§         Power: EC seeks players with lowest cost for 4,500MW capacity

§         Healthcare: 3 firms likely to get hospital support services concession renewal

§         Plantation: RM275m for rubber replanting and planting of new trees

Global news

§         US: Bernanke drive for openness may include more briefings

§         Europe: ECB balance sheet increases to record EUR2.73trn

§         Europe: Italy sells EUR9bn of bills as borrowing costs fall

§         Japan: Unemployment rate rises for first time in 3 months

§         Japan: Consumer prices fall for a second month in November

§         Japan: Industrial output slid 2.6% in November from month before

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Morning Commentary 291211

Good morning,

1) Alam: Alam has secured a RM29.8m job from Sarawak Shell to install offshore transport modules (the E8 & F13K Modules Offshore Transportation & Installation contract) for the oil major. In a Bursa statement, Alam said the 9 months contract commenced in Q4 of this year and is expected to complete by May 2012. The contract is not renewable, but is expected to contribute positively to earnings & NTA fro FY11 ending Dec and beyond; +ve, this brings jobs won this year to more than RM230m. The earnings recovery for Alam remains in tact, led by the turnaround in it's OIC services division & tightening conditions in the vessel charter industry.

2) PPB: PPB Group's flour milling arm FFM Bhd (80% owned) has received regulatory go-ahead for 1 of it's 3 proposed 20% stake acquisition in Wilmar International Ltd's Chinese flour milling units totalling RM80.14m - paving the way for greater collaboration between the 2 companies controlled by Robert Kuok. In a Bursa statement yesterday, PPB said FFM's 100% owned subsidiary Waikari SB has received the go-ahead from the Chongqing authorities to subscribe to 20% stake in Wilmar's Yihai (Chongqing) Foodstuff Co Ltd for US2.4m. Waikari is also paying US5.33m for a 20% stake in Yihai Kerry (Beijing) Oils, Grains & Foodstuff Ltd and US2.58m for 20% of Yihai Kerry (Shengyang) Oil, Grains & Foodstuff Co Ltd; +ve & expected. The proposals, which give FFM access to Wilmar's distribution network in China, are expected to contribute significantly to PPB's group future earnings, but would not materially impact earning for FY12/2011. The proposals are expected to be completed within 5 months.

3) Healthcare: The 3 parties - Faber Mediserve SB, Pantai Medivest & Radicare (M) SB- which are vying for the hospital support service (HSS) concessions by the govt are likely to get their contract renewed within the next month, according to sources close to the matter. The govt has renewed the contract for a period of 6 months initially and had called for a tendering process by these 3 companies a month before their contract ended in Oct 2011. It is learnt that the 3 parties were the only companies which were called to submit their tenders for renewal because of their experience & expertise in providing HSS for hospitals in Malaysia; +ve if true for Faber, which has a 50% market share in terms of revenue. Faber's concession covers 81 govt hospitals in Perak, Kedah, Penang, Perlis, Sabah & Sarawak.

4) Mkt: expect to remain resilient despite the correction in overseas markets in view of window-dressing activities.

Market Roundup 281211

FBM30 1504.11, +3.20 points (+0.21%), Volume 1,273mil, Value 904mil       

1) KLCI recovered from morning's low of 1495.52pts (-5.39pts) to close at day's high bucking the regional market which fell on weaker US housing prices and concerns of slowing growth in China. Index closed at its highest level since Aug'11 led mainly by PETGAS+4.86% as Tech+3.1% sector outperformed with gains seen in JCY+8.8%, DATAPRP+8%, KEYASIC+11.5%. Broader market was positive with gainers leading losers 386:314. Futures closed 1504.5 (0.4points premium)  

2) Heavyweights: PETGAS+4.86% RM15.10, CIMB+0.71% RM7.10, IOICORP+0.57% RM5.29, RHB+1.13% RM7.13, MHB+0.89% RM5.70, PCHEM-0.65% RM6.15, TM-0.8% RM4.96, HLFG-1.02% RM11.68

3) DBT: TPC 26.9mil @ RM0.30 (33.6% PUC, crossing of London Biscuit block to Huat Lai Resources Bhd triggering a MGO), BONIA 25mil @ RM1.99 (12.4% PUC), UOADEV 14.5mil @ RM1.36, TENAGA 11mil @ 5.80  

4) Situationals: 

JCY+8.80% RM1.05: Share price continued to surged, closing at 13 months high of RM1.05 as buying interest remained for JCY which was not affected by the recent severe Thai flood while its main customers Western Digital and Seagate pushed for higher HDD prices of up to 50-100%. 

5) MAGNA

+0.6% RM0.815: MAGNA's property pipeline remains healthy as the company intends to launch an estimated GDV of more than RM1.6 billion next year. MAGNA plans to develop a commercial development project comprising two towers, residential units and a hotel in Jalan Ampang, as well as a mixed-development project in Jalan Gasing. The Jalan Ampang project will begin in 2012 while Jalan Gasing will start only in 2013. Its ongoing 25-storey single-tower residential apartment project in Melbourne, Australia known as Dynasty Living, also saw a 62% of a total of 320 units being sold. The Australian project will contribute RM48.3m in gross profits when completed in 2013.

+ve as it remains a niche player developing smaller plots of land for the medium to higher end market. The company could however experience problems in replenishing its land bank with scarcity of prime locations and rising prices.

6) Market - Remains on target to close the year above the psychological level of 1500pts assume we do not experience any further external shocks in the next few days. Trading ideas on underperforming counters in the past month include; MAS, Naim, MAHB, IJM.

Newz Bits 281211

Reports

§         Newz Bits [download report]

Malaysian news

§         Maybank: Opens 11^th Cambodia branch, mulls for the 12^th

§         Bumi Armada: Acquires vessel for RM68m

§         QSR – KFC: Johor Corp’s Massive Equity stake won’t be sold to outsiders

§         NCB Holdings: Northport concessionaire has no knowledge of takeover

§         WCT: In mixed development project in Vietnam

§         Ingress: Gets TNB letter of intent

§         Aikbee Resources: Delisting on Friday

§         Property: Johor Corp mulls hotel sales

§         Power: Bids for new power plan begin

Global news

§         US: Obama picks bipartisan pair for Fed

§         US: Gain in consumer confidence exceeds forecasts

§         US: Home prices in 20 cities decrease more than forecast

§         Europe: ECB overnight deposits reach record after 3-year loans

§         China: Company profit growth slows in first 11 months of year

§         Japan: Japan sales-tax plan hits snag

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Morning Commentary 281211

Good morning,

1) Bumi Armada: announced yesterday that it's wholly owned subsidiary Bumi Armada Offshore Holdings SB has exercised an option to purchase a vessel named Rainbow River for a cash consideration of RM68m. It said the purchase of the vessel is pursuant to a MOA with Galaxy Naviera Maritime SA, Panama dated Sept 2011 and will be funded by internally generated funds; Largely expected. The acquisition is in line with Armada's fleet expansion plan & will be completed upon delivery of the vessel, expected in 1Q2012. The acquisition is not expected to have any material effect on earnings for FY11 and does not require any approval from shareholders or regulatory authorities.

2) Metrod: Metrod Holdings will gain RM74.5m after selling it's European units for a total of RM202.2m (49m Euros). Co has entered into a notarial deed agreement with GEP II Beteiligungs for the disposal of ASTA Holdings GmbH & ASTA Elektrograht GmbH, via it's Singapore subsidiary, ASTA Holdings, together with it's subsidiaries (collectively known as the ASTA Target group) comprises the international operations of the Metrod group in Europe, China & India. ASTA group is mainly involved in high quality flat-copper winding wire systems and manufacturing of specialty copper wires and strips. Metrod said the disposal is timely in view of the challenges faced in light of the current volatile & uncertain global economic conditions, increased market competition, threat of recession & deteriorating future outlook. The board was still assessing & evaluating plans for the use of the proceeds, and this might include acquisition of viable business or assets.

3) Power: The bidding process for the 4,500MW power generation to replace the capacity of the 1st generation PPAs and to cater to new demand beyond 2016 has started. The Energy Commission (EC) has issued a notice for prospective bidders for the development of a combined cycle gas turbine (CCGT) power plant in Peninsular Malaysia. The CCGT power plant was to sell it's capacity & energy to TNB under a new PPA. TBN had recently announced that the 1st generation PPAs, expiring between 2015 & 2016, would not be renegotiated and would be allowed to lapse. The 1st generation PPAs (involving YTL Power, Malakoff, Tanjung & Genting) collectively account for about 4,115MW of generation capacity. TNB CEO said these IPPs could still participate in the bidding process for new licences that would be held by way of open tender; Neutral.

4) Mkt: maintain existing sideways thin trade.

Market Roundup 271211

FBM30 1500.91, +4.76 points (+0.32%), Volume 993.8mil, Value RM743.8mil       

1) The KLCI managed to inch higher to close at the psychological level of 1,500 as it kicked off the last trading week on the back of an expected Santa rally driven by continued improving US economic data. Late closing action on some select heavyweights helped push the index to close day's high: UMW+5.8%, TM+4.2%, MHB+1.3%. Plantation (+1%) related stocks advanced despite palm oil futures dropped from one-month highs as investors lock-in gains: IOICORP+1.4%, KLK+1.6%, TWSPLNT+2.4%, RSAWIT+1.2%. Broader market however was mixed with gainers edging losers 378:341. Futures closed 1503.5 (3 points premium)  

2) Heavyweights: TM+4.2% RM5.00, IOICORP+1.4% RM5.26, UMW+5.8% RM6.98, DIGI+1.1% RM3.78, PETGAS+1.8% RM14.40, KLK+1.6% RM22.56, GENTING+0.6% RM10.94, AMMB+0.7% RM5.97, AIRASIA+0.8% RM3.73, CIMB-0.6% RM7.05  

3) DBT: MENANG 21mil @ RM0.20, TENAGA 14mil @ RM5.80, SUNWAY 7.1mil @ RM2.45 

4) Situationals: 

INGRESS+3.4% RM0.77: Stock reached its intra-day's high of RM0.79 (+6%) after the company said it secured a RM55 million power line project. Ingress said in an exchange filing a letter of intent for the project has been issued to an unincorporated joint venture between its two subsidiaries, Multi Discovery and Ramusa Engineering, for the project by Tenaga Nasional. The project is expected to start within 1Q of FY13, which comprise the establishment of PMU 132kV Kota Setar Applied Innovative Services Rehab and 132kV Lines Diversion at PMU Kota Setar and the proposed 275kV Bulk Supply to Bahru Stainless (Extension of 2 x 275kV Overhead Line Bays at PMU275/132/22 kV Cahaya Baru). This comes hot on the heels of a LOA from Proton worth RM84.8mil. 

5) WCT

Has been awarded an Investment Certificate by the People's Committee of Ho Chi Minh City to undertake a residential and commercial mixed development on a piece of land measuring approximately 46,577 meter square located at the development corridor of Nguyen Van Linh Expressway at the New Urban Development Area of Saigon South, approximately 10km from the Central Business District of Ho Chi Minh City. 

The Project is earmarked for the development of mid-high class residential apartments and commercial properties for the purposes of lease and/or sale. With a plot ratio of 6, the Project is planned for commercial shoplots and condominium units complete with a garden and full-fledged facilities for modern living. 

The duration of the Project is fifty (50) years from the date of receipt of the Investment Certificate.

Concurrent with the issuance and award of the Investment Certificate, the People's Committee of HCMC has also approved the establishment of a limited liability company namely, WCT-DPN Company Limited ("WCT-DPN"), a 70%-owned subsidiary of the Company.  The remaining 30% equity of WCT-DPN will be held by Southern Land Corporation ("SLC"), a joint stock company duly established and existing under the Laws of the Socialist Republic of Vietnam on 26 March 2001.

WCT-DPN's initial charter capital is USD25.15m. Its principal business activity is the development and management of the Project. 

Neutral as most Malaysian developers that have ventured into property development in Vietnam have yet to show any significant contribution to their bottom lines. The market's focus will remain on order book replenishment as the company significantly lags behind its original guidance of RM2bn new contracts.

6) Market - Investors will continue to seek guidance from the US market to lead global equities higher as hopes of a stronger than expected recovery in the US may counter the slowdown in Europe. 

Newz Bits 271211

Reports

§         Newz Bits [download report]

Malaysian news

§         Pelikan International: To dispose of 40% of Australian unit

§         Ingress: Wins RM85m Proton contract

§         SCAN Associates: Plans reverse takeover of Microsense

§         Khazanah: Buys Turkish group for RM5.32bn

§         Petronas: In petrochem plant talks with oil majors

§         Construction: Winning bid for KVMRT rolling stocks to be known in next 6 months

§         Plantation: Malaysians blaze trail in China’s oleo chem sector

§         Plantation: Doubts over Felda Global’s IPO deadline

§         Power: List of renewable energy quota

§         Technology: ICT sector expected to spend RM31.5bn next year

§         Transportation: Government allocates RM950m for new trains

Global news

§         US: Personal spending rises less than forecast

§         China, Japan: Yen-Yuan trade plan to cut dollar dependence

§         China: Shibor rising most since June

§         South Korea: Consumer confidence falls to a three-month low

§         Singapore: Production unexpectedly drops; inflation accelerates

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Morning Commentary 271211

Good morning,

1)Yinson: 9mths 10/11, Rev+12% RM549.9m, Net+77% RM20.7m, EPS 28.58s.Results 19% ahead of cons RM23.2m

For 9 mths yoy, higher Rev was due to the increase in volume of sales from trading +17% & marine transport business +50%. PBT+51%, mainly attributable to increase in contribution from marine transport business +520%, gain on disposal of a subsidiary arising from the write-back of accumulated losses recognized from the previous FY & gains from disposal of properties. Qoq, PBT+57%, mainly due to increase in revenue & higher gross profit margin from trading segment. Chairman & MD said that the marine transport division is growing well & is expected to continue it's growth momentum, given the favorable environment in the O&G industry regionally, particularly in Vietnam, Indonesia & Thailand. He added that Yinson's current OB is about RM1.25b & is currently bidding for contracts worth RM800m in the regional marine transport industry; +ve set of results. The coming 2 FYs are exciting ones for Yinson given that they have lined up their earnings catalysts from their O&G business (ie 3 new offshore support vessels to livered over the next 12 months & the FSO contract with Petrovietnam Technical Services Copr signed Sept 2011 that will commence in FY14). Trading at FY11 multiple of just about 5x & a 3-year CAGR of about 37%, BUY.

2) Ingress: has received a LOA from Proton to supply parts worth RM84.8m for the carmaker's new models. In a Bursa filing, Ingress said the 5-year contract was for the supply of door sash, roof-drip moulding & belt-line moulding. The supply of door sash was expected to commence by the 2nd quarter of FY Jan 2014, while the supply of roof moulding was to commence by the beginning of FY14. Ingress said these 2 projects were expected to generate total revenue of RM73.2m; +ve.

3) E&O: A minority shareholder has filed a suit against the SC for not compelling Sime Darby Bhd to make a general offer to acquire all of E&O's shares soon after it bought a 30% stake in the company. Singapore's The Straits Times reported on Friday that a minority shareholder aim to overturn the waiver given to Sime Darby by the SC back in August this year. The affidavit states that the premium Sime paid for the E&O block of shares was clearly to obtain control of the company. It also claimed that Sime equity interest eclipses the combined shareholding of the next 30 biggest shareholders - Neutral for now. 

4) Mkt: quiet but steady trade as market is well supported by window-dressing activities as the year winds down its remaining trading days.

Market Roundup 231211

FBM30 1496.15, +4.69 points (+0.31%), Volume 942.5mil, Value 886.7mil       

1) The market traded in the positive territory in thin volume  ahead of the long weekend Christmas break and expected further +ve economic data from the US later today. Index closed marginally higher, just below the 1,500 psychological level with most of the heavyweights muted. Construction (+1.1%) led the gainers IJM+3%, MRCB+1%, AZRB+3% along with some select sits: LMCEMNT+4.6%, PETDAG+1.7%, KLK+1%. Market breadth was positive amid both volume and value fell below the 1bn mark, as gainers outpacing losers 413:292. Futures closed 1498 (2 points premium) 

2) Heavyweights: CIMB-1.3% RM7.09, DIGI+1.6% RM3.74, GENTING+1.1% RM10.88, IOICORP+1% RM5.19, TENAGA+0.9% RM5.84, BAT+2.8% RM49.20,TM+1.3% RM4.80, UMW+2.3% RM6.60, MAYBANK-1.2% RM8.35, PBBANK-0.6% RM13.18.  

3) DBT: MENANG 25mil @ RM0.20, A&M 10mil @ RM0.415, SUNWAY 7.5mil @ RM2.40 

4) Situationals: 

MRCB+1% RM2.09: Shares edged up after its unit MRCB Engineering Sdn Bhd has been awarded a RM13.93mil contract to upgrade the Sabah EPF building. The project involved renovating and upgrading the EPF building in Kota Kinabalu, Sabah of approximately 400,000 square feet. The project would be financed via internally generated funds and/or borrowings, and completed within 18 months from Jan 16, 2012. 

PERISAI+6.6% RM0.73: Share price rose in active trade after the company said it expects contribution from its mobile offshore production unit (MOPU), which it acquired through Garuda Energy (L) Ltd to be realised by FY12. Its MD said that the acquisition would be finalised by the end of this year and will start contributing to the group's bottom line from the first day of its operation as the group's asset.  

5) SUNWAY BERHAD

Announce that Sunway Geotechnics (M) Sdn Bhd, a wholly-owned subsidiary of Sunway Construction Sdn Bhd, which in turn is a wholly-owned subsidiary of Sunway Holdings Sdn Bhd and which in turn is a wholly-owned subsidiary of Sunway, had on 22 December 2011, accepted the letter of award for a contract worth RM27.57m from Hap Seng Land Development (JTR) Sdn Bhd for the proposed construction and completion of earthworks, pilings, basement (B2 & B1) and ground floor RC structures for 1 block of 43-storey service apartment at Lot 28, Seksyen 90, Jalan Tun Razak, Kuala Lumpur  

The Proposed Project is targeted to be fully completed on or by 12 December 2012 with a construction period of 12 months. It is expected to contribute positively to the earnings of Sunway Group for the financial year ending 31 December 2012 onwards.

6) Mkt - Bursa will be closed on 26th Dec and resume trading on the 27th. Merry Christmas!

Newz Bits 231211

Reports

§         Newz Bits [download report]

Malaysian news

§         Boustead Holdings: Doubles capex to RM1.4bn in 2012

§         Kulim: Gets shareholders nod for RM700m land buy

§         Berjaya Land: Given time extension by STC on land purchase deal

§         MAS: To suspend 4 more Sabah regional network routes

§         KFC-QSR: JCorp will not incur more debt by privatising both companies

§         Malaysian Resources Corp: Unit gets RM14m EPF job

§         Tan Chong: To start motor workshop in Myanmar

§         Proton: Sale will involve a general offer

§         Boustead Heavy Industries: LTAT does not dismiss prospect of privatising company

§         Perisai: To see earnings from Garuda Energy in FY12

§         Muhibbah Engineering: Australian JV gets RM1.05bn job in Queensland

§         Aikbee Resources: Offer gets 94.5% acceptance

§         Construction: Philippines offer RM22.9bn infrastructure projects

§         Power: B&V to deliver cleaner coal power by 2015

Global news

§         US: Economic growth revised lower for 3Q

§         US: Jobless claims fall

§         US: Michigan Consumer Sentiment Index rose more than forecast

§         US: Leading economic indicators rise more than forecast

§         US: Boehner says Republicans agree to payroll tax cut extension

§         Europe: Budget plan gets final approval in Italy parliament

§         UK: Growth accelerates to 0.5% as BOE says surge won’t last

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Morning Commentary 231211

Good Morning,

1) KULIM: Shareholders have given the go-ahead for the company to buy six parcels of oil palm plantation land in Johor for RM700mil cash from Johor Corp (JCORP). This sale is a major component of the JCORP's rationalization exercise. The 6 parcels of oil palm land have a total area of 13,687 hectares and 2 palm oil mills. This land buy in addition to the sale of QSR and KFC will see Kulim focus on its core plantation business.  

2) MAS: MAS has announced the suspension of four more routes, following up on the rationalization involving 8 routes that was announced last week. The routes that will be suspended include the twice-weekly Kota Kinabalu (KK)-Osaka, thrice-weekly KK-Perth, four-times weekly KK-Tokyo and four-times weekly KK-Seoul. These routes will be suspended starting from early next year and will be reviewed in 3 months from its suspension date. MAS will instead take advantage of its existing code-share operations with Korea Air to provide direct connectivity between Sabah and Korea. 

3) PROTON: Khazanah MD Tan Sri Azman Mokhtar said that any sale done will be on Khazanah's full 42.7% stake which means it will involve a general offer. They have been receiving offers for various forms of collaborations including acquiring its controlling stake in Proton but have not arrived at any decision to sell to any particular offeror. Among the serious bidders are DRBHCOM and Naza Group while Sime and US-based General Motors may also be interested. 

4) Mkt: improving US economic data & positive technicals continue to be supportive for higher markets ahead.

Market Roundup 221211

FBM30 1491.46, +6.48 points (+0.44%), Volume 1,204mil, Value 1,016mil 

      

1) KLCI flitted around overnight lvls the whole day before a surge in buying in select blues lifted index to close at day's high in last half hour of trading. Noticeable interest was seen in banks following several announcements by BNM,unveiling plans to develop a strong financial system with more flexible foreign shareholding in FIs, implementation of Basel III norms in phases from 2013 to 2019 and raise issuance of government bonds resulted in MAYBANK+1%, HLBANK+3%, AFG+2.1%, AFFIN+1.4% and select situationals: UEMLAND+3.9%, MMCCORP+1.6%, PPB+1.4. Market breadth was negative amid a relatively low volume with losers thrashing gainers 455:290. Futures closed 1495 (4 points premium).    

2) Heavyweights: MAYBANK+1% RM8.45, GENTING+1.3% RM10.76, TENAGA+1.2% RM5.79, CIMB+0.7% RM7.00, HLBANK+3% RM10.86, PBBANK+0.5% RM13.26, PPB+1.4% RM17.10, UEMLAND+3.9% RM2.39, AIRASIA+1.1% RM3.70, YTL-2% RM1.51 

3) DBT: ECOFIRS 20.3mil @ RM0.10, BJLAND 15.6mil @ RM0.95, UNICO5mil @ RM1.20 

4) Situationals: 

ENVAIR-17.2% RM0.265: Share price was under selling pressure in active trade after Carpet Raya Sdn Bhd director Deepak Jaikishan ceased to be a substantial shareholder in the loss-making company after emerging as s/h just early this month. A filing with Bursa Malaysia on Dec 21 showed that Deepak had disposed 6mil Envair shares in the open market on Dec 14.

CYPARK+2.3% RM1.36: Company expects to generate annual revenue of up to RM17mil from the sales of renewable energy (RE) upon full commencement of the RE park. Cypark said it had obtained Feed-in Tariffs (FiT) approval from Sustainable Energy Development Authority to supply 8MW and and 2MW of RE from solar PV and landfill biogas sources, respectively. With the approval, Cypark would be able to sign RE PPA with TENAGA for Fit concession periods of 21 and 16 years respectively for electricity generated from solar PV and landfill biogas.

5) Muhibah's 50:50 JV with Monadelphous Group Limited has been awarded a major contract valued at approximately AUD330 million (RM1.05bn)for the construction of an approach jetty and ship berth associated with the Wiggins Island Coal Export Terminal Pty Ltd's (WICET) Project at Gladstone in Queensland, Australia. The contract includes the construction of offshore plant and infrastructure including a 1.8km approach jetty and transfer tower platform, wharf, wharf conveyor including the drive and take up tower, berthing and mooring dolphins, ship access platforms, jetty conveyor and transfer tower. The work, which is part of stage one of the project, is scheduled to start immediately and be completed by first quarter of 2014. Stage one has a contracted annual coal export capacity of 27 million tonnes with fully developed terminal having an annual capacity of more than 80 million tonnes.

Comment: +ve as co expands marine related infra works into advanced countries such as Australia and adds to current infra orderbk of RM2.3bn. Trades at PER 7.5x-trading buy as stk has not recovered from 30% drop frm recent peak following APF receivership resolution and increase in OB recently. 

6) Mkt - Expectations of improved US consumer confidence numbers tonight and higher personal spending growth tomorrow will spur confidence in mkts ahead of long Xmas break.

Newz Bits 221211

Highlights of the day

§         Economics (Consumer Price Index): November 2011 Statistics: Stable and possibly moderating [download report]

November inflation was stable and showed signs of moderation. It grew at a slower pace of 3.3% y-o-y, compared to 3.4% y-o-y last month. Core inflation suggested moderation as well; it registered growth of 2.1% y-o-y, compared to the recent maximum of 2.5% y-o-y registered back in June 2011. This may relieve pressure to hike the OPR in January 2012.

§         Economics (Leading Economic Indicator): October 2011 Statistics: The near future looks okay still [download report]

The leading indicator suggests that the economy will still be growing in the near future. The leading index grew 2.4% y-o-y in October. The coincident index meanwhile indicated that economic activities in the month also registered growth (1.3% y-o-y) to concur with the relatively favorable figures produced by the October Industrial Production Index.

Other reports

§         Newz Bits [download report]

Other Malaysian news

§         DRB-Hicom: Swaps land status in RM76m deal

§         Boustead Holdings: No plan to privatise unit

§         KFC-QSR: Accept MESB's takeover offer

§         LBS Bina: Upbeat on RM800m sales target

§         Cypark Resources: Sees RM17m revenue from renewable energy

§         Fajarbaru: Unit bags government deal

§         Banking: Malaysia flexible on new licences in financial sector

§         Banking: Blueprint to develop a strong financial ecosystem

§         Construction: Posco/Daewoo tipped to win Ampang LRT project

§         Oil & Gas: Petronas sells diesel and jet fuel to Bangladesh

§         Media: Vasseti to launch IPTV service in February

§         Economy: Government maintains 2011 & 2012 GDP forecasts

Global news

§         US: Sales of existing homes rise from deep slump

§         Europe: Banks devour ECB emergency funds amid frozen markets

§         UK: Greek debt talks hit trouble as hedge fund walks out

§         Japan: BOJ seen holding fire, may offer somber view of economy

§         Japan: Exports slide a second month as Europe takes toll

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