FBMKLCI
1782.51 +4.69pts (+0.26%)
Volume 1.229b Value RM1.844b
1) The KLCI opened 10pts higher in the morning behind
better jobless claims that boosted the US market overnight but the saw profit
taking chip away the index before the weekend to close at 1782pts (+4.6pts).
Asian indices were generally bullish today after several data showed that the
US economy grew faster than expected. NIKKEI +3.29% outperformed once again as
the yen held losses, most of the stocks in SHCOMP +0.04% rose amid growing
speculation of the government may relax curbs on the property segment, HSI
closed +0.46%; inline with the region. In the local market, O&G stocks saw
plenty of activity with PERISAI +4.73%, DIALOG -0.70%, DAYA -3.22%,
THHEAVY-0.58% leading in volume. Market breadth was skewed towards the positive
as gainers beat losers slightly at 400 : 315. Futures closed 1777 (5.5pts
discount).
2) Heavyweights : GENM +4.65% RM4.50, PETGAS +0.78%
RM20.64, BAT+1.31% RM63.00, HLBANK +1.29% RM14.10, YTL -1.20% RM1.66, KLK
+0.84% RM21.38, MAYBANK -0.76% RM10.32, MISC-1.49% RM5.29.
3) DBT : EDUSPEC
21.386mil @ RM0.10 (5.579% PUC @ 17.6% premium), MULPHAL 7.858mil @ RM1.00
(8.605% PUC @ 4% discount%), SERSOL 4mil @ RM0.43 (2.076% PUC)
4) Situational:-
KKB + 0.966% RM2.09 - KKB Engineering Berhad signed an
Acceptance of Order from JGC (Malaysia) Sdn. Bhd. for the shop fabrication of
steel structures for the proposed Petronas LNG Train 9 Project, Bintulu,
Sarawak, Malaysia. The completion date for the contract shall be on 15 November
2014 with a contract sum of approximately RM17.1 million.
5) MISC
In response to the news article this morning regarding
PETRONAS' direct procurement of newbuild LNG ships the company issued the
following statement.
"While we are disappointed with this latest
development and that we cannot speak on behalf of PETRONAS as to why this
decision was taken, we can perhaps, offer an objective perspective of the
decision.
PETRONAS's new LNG vessel requirements have a potential
capital expenditure of up to USD 1.8 billion.
As MISC prepares to weather another difficult year in the shipping
industry in 2014, the large capital expenditure requirements may pose a strain
to the Group's present balance sheet strength.
With the decision to procure the vessels directly,
PETRONAS will therefore, assume the responsibility of funding the new
vessels. This will help to preserve the
strength and stability of MISC's balance sheet while we continue to navigate
through a difficult freight rate environment. Nevertheless, it does not
preclude our participation in PETRONAS' future shipping projects as well as our
bidding for other future third party projects when circumstances are more
conducive. In any case, MISC will continue to be involved via the provision of
project management services during the construction of the vessels and
subsequently, the provision of ship management services for the day to day
operation of the vessels."
We feel the rationale to not unduly burden MISC's balance
sheet is unwarranted as it current debt/equity ratio is only 0.2x vs recent
high of 0.5x. Nonetheless we remain positive on the industry medium term
recovery and recommend accumulation on dips.
6) Market - Expect quieter market in the holiday shorten
week ahead with the KLCI likely to trade in a narrow range of btw 1775pts to
1792pts.
