Market Roundup | 29 Oct 2012

FBM30   1672.56      +0.67 pts ( +0.04%)         Vol  1.27b           Value RM1.39b

 

1) The KLSE opened strongly, registering a new high of 1679.37 pts, before succumbing to selling pressure, drifting south through the sessions into the red before late buying closed it marginally higher at 1672 pts. There was little catalyst from abroad as the US market braced for the impact of Hurricane Sandy and HK slid on a new real estate tax. Market volume was dominated by penny stock except for ASTRO, which slid a further 2.8% . Market breath was negative, with losers edging gainers 376:331 . Futures closed 1674.5 ( 1.94 pts prem) .

 

2) Heavyweights: DRB +2.2% RM2.53, HLBANK +2.2% RM14.72, PBBANK +2.1% RM15.74, GAMUDA +2% RM3.57, ASTRO -2.8% RM2.78, MISC -1.9% RM4.20, GENM -1.7% RM3.48.

 

3) DBT: SEG 5m @ RM2.07, WINSUN 5m @ RM0.12 ( 14% prem), INTEGRAX 3m @ RM1.40

 

4) Situationals :

 Armada +2.4%: reported that Co's first FPSO to India, the US360m Armada Sterling, is ready for delivery. The market for FPSO in India is huge, as it steps up it's exploration in deepwater, shallow and marginal offshore fields to feed strong local demand, said Armada's CEO En Hassan Basma. This FPSO was chartered by India's state owned Oil and Natural Gas Corp ( ONGC) & Armada is also in the running for a second FPSO project at ONGC's cluster seven field. Cluster Seven will be announced this quarter.

 

5) DRB HICOM

PROTON a wholly owned subsidiary of the Company entered into a Collaboration Agreement with HONDA Motor Co., Ltd, a company incorporated in Japan and is one of the leading global manufacturer and distributor of motor vehicles under the brand name "HONDA".

Under the Agreement, PROTON and HONDA MOTOR will explore collaboration opportunities in the areas of technology enhancement, new product line up, platform and facilities' sharing.

 

This Agreement signifies the potential of a long-term strategic collaboration with HONDA MOTOR. Having a strong and renowned global automotive player like HONDA MOTOR as the foreign strategic partner to PROTON will provide PROTON and the DRB-HICOM Group with the opportunity to grow as an Original Equipment Manufacturer ("OEM"), as the opportunities are endless. This collaboration will provide positive impact to PROTON and the DRB-HICOM Group in the long run.

 

 +ve as this collaboration is expected to capitalize on Proton's under utilized Tanjong Malim Plant. We suspect that it could be primarily for hybrid and electric car models.

 

6) Market - Underlying strength in the KLCI remains despite weaker US and European markets recently. We still see trading opportunities in Waseong, GentMsia, Coastal.

News Bits | 29 Oct 2012

Reports

§  Newz Bits [download report]

 

Malaysian news

§  Bumi Armada:  New FPSO ready

§  AirAsia: To reap RM180m from Tune Ins IPO

§  AirAsia: EPF net seller of shares

§  DRB-Hicom: Expected to partner Mitsubishi

§  DRB-Hicom: Proton set to tie up strategic partnership with Japanese firm

§  TH Plantations: To buy land in Sarawak for RM255m

§  Cypark: Plans to expand supply to the national grid

§  Brahim’s Holdings: To complete acquisition of LSG Asia stake

§  Brahim’s Holdings: Hopes to wipe out losses 

§  Insurance: ING buy sets benchmark for CIMB-Aviva deal

§  Economy: Sabah has potential to become Malaysia’s economic powerhouse

 

Global news

§  US: Growth exceeds forecasts on consumer spending

§  US: Goods orders point to business spending slump

§  US: Jobless claims show limited labor market progress

§  US: Michigan consumer sentiment index increased to 82.6 in October

§  Europe: Troika proposes new debt restructuring for Greece, Spiegel says

§  China: Slowing Revenue Gains Seen Limiting Spending to Aid Growth

§  South Korea: Growth slows as global cooling caps exports

§  Singapore: Output declines

 

 

Visit ECM Libra at https://www.ecmlibra.com/ecmlsmy

Our on-line trading portal at www.ecmmoney.com

News Bits | 25 Oct 2012

Highlights of the day

§  Dijaya Corp (Stock Idea): Earnings to take off next year (BUY, TP: RM1.57) [download report]

Dijaya’s share price has been sold down amidst various concerns, just as earnings are about to take off after an aggressive property acquisition drive.  If, as we believe, the Malaysian property sector resumes its run in 2013 after consolidating this year, Dijaya shares could be re-rated to our target price of RM1.57 in 12 months’ time for a 51% capital gain.

 

§  Economics (Leading Economic Indicator): August 2012: The worst may be over [download report]

Malaysian leading indicator for August grew marginally slower at 2.0% y-o-y after growing 2.3% in July. At the same time, the August coincident indicator jumped back up by 1.6% y-o-y after barely increasing in July. The lagging indicator also grew faster in the same month compared to the previous one. While the leading indicator suggests that the economy may grow only slowly in the future, both the coincident and the lagging indicators hint that the worst may be over.

 

Other reports

§  Newz Bits [download report]

 

Other Malaysian news

§  Bumi Armada:  Gets jobs worth RM147m

§  Sunway REIT: Targets RM7bn asset size in 5 years

§  TH Plantations: Plans Sarawak acquisitions

§  Lion Industries: To buy firm for RM24m

§  Naim Holdings:  Named for MRT package S2

§  Daiman: Unit invests in Chinese housing fund

§  Amcorp Prop: Expects RM27m from land sale

§  Automotive:  No excise duty cuts on cars

§  Property: PHB upbeat on City Hall nod for Bangsar project

§  Telecommunications: 4 telcos shortlisted

§  Timber: RM1.04bn for forest plantation scheme

 

Global news

§  US: Fed calls growth ‘moderate’ while maintaining bond purchases

§  US: Home sales rising to two-year high spur growth

§  US: Markit - October factory activity edges up, growth still weak

§  Europe: Greece, Troika reached final labor agreement

§  Europe: Euro-area recession deepens as manufacturing shrinks

§  Thailand: Exports unexpectedly climbed for first time in four months

 

 

Visit ECM Libra at https://www.ecmlibra.com/ecmlsmy

Our on-line trading portal at www.ecmmoney.com

Market Roundup | 24 Oct 2012

FBM30 1667.99     +3.09points (+0.19%) Volume 1,132mil   Value 1,465.5mil      

1) KLCI continue to forge ahead as investors sentiment was buoyed by news report that China HSBC PMI rose to a 3 months high of 49.1 in October. However gains eased from its high of 1670pts following announcement that Germany's manufacturing contracted more than estimated. Properties+2.61% was the key movers led by UEMLAND+11%, SUNWAY+8%, Tebrau+8% and IGB+3% while Astro recovered to closed at day's high 2.89. Market breadth turned positive with advancers outpacing decliners 411:271. Futures closed 1672pts (1 point discount).

 

2) Heavyweights: GENTING+1.71% RM8.94, UEMLAND+11.4% RM2.15, CIMB+0.66% RM7.64, PBBANK+0.27% RM15.02, HLBANK+1.27% RM14.38, TM+0.66% RM6.10, MAYBANK-0.55% RM9.00, AXIATA-0.3% RM6.63

 

3) DBT: NICE 22.3mil @ RM0.10 (19% PUC, 16.7% discount), MERGE 2.7mil @ RM0.35 (4% PUC)

 

4) Situationals:

UEMLAND+11.4% RM2.15: UEMLAND has entered into a 40:60 JV agreement with Singaporean business space solutions provider Ascendas Land International Pte Ltd to develop an integrated eco-friendly tech park in Nusajaya, Johor at a projected investment value of S$1.5bil (RM3.7bil). The 210ha freehold integrated tech park would be located in Gerbang Nusajaya within the Nusajaya regional city in Iskandar Malaysia. The proposed development is expected to take place in three phases over nine years with the launch of Phase 1 targeted in the last quarter of next year

 

5) BUMI ARMADA

Announced today that its subsidiaries have secured 5 contracts in Gaban, 2 in Republic of Congo, 2 in Saudi Arabia worth approximately RM147m with an optional extension value of RM102m.  The vessels involved include Armada Firman 2, an accommodation workboat, Armada Tuah,84,85, AHT towing support vessels, Armada Hibiscus, an accommodation work barge.

 

+ve with further contract wins from Petronas Carigali expected for their OSVs and also the long awaited FPSO from ONGC. BUY

 

6) Market - Underlying strength of the market reflected by its resilience today despite the sharp falls in the US/Europe overnight. We continue to advocate portfolio building on laggards in anticipation of a strong 4Q/early 1Q.

Market Roundup | 22 Oct 2012

 FBM30 1661.95   -4.40points (-0.26%)       Volume 1,276mil            Value 1,463mil      

1) KLCI fell following weaker DOW on Friday as weaker corporate earnings and a sharp drop in Japan's export dented investors risk appetite. Index however failed to recover inline with regionals which rose on optimism China's government will introduce measures to boost equities before a leadership transition next month. Market breadth was negative with decliners leading gainers 407:259. Futures closed 1664pts (2 points premium).

2) Heavyweights: MAYBANK-0.55% RM9.04, DIGI-0.73% RM5.44, CIMB-0.53% RM7.58, TENAGA-0.58% RM6.92, TM-0.99% RM5.99, PCHEM-0.76% RM6.51, PPB+4.29% RM13.14, PBBANK+0.4% RM14.94

3) DBT: IGBREIT 327.6mil @ RM1.25 (9.6% PUC, 8.7% discount), DGSB 15.5mil @ RM0.045 (1.1% PUC, 18% discount), BENALEC 5.5mil @ RM1.43 (2.7% discount)

4) Situationals:

EIG+15% RM0.495: Esthetics International Group (EIG) said it had received an unconditional mandatory takeover offer from Providence to acquire the remaining shares and warrants in the company not owned by the acquirer. Providence which already owns about 60% of EIG and 85% of the warrants, is offering 50sen per EIG share and 12sen per warrant.

BAT-0.22% RM63.86, JTI-1.28% RM2.32: all cigarette packs has been raised by 20sen effective today after cigarette manufacturers were notified by Royal Malaysian Customs on Thursday of a mandated uplift in the ex-factory pricing.

5) CSL/ Pelikan

CSL  entered into two (2) conditional sale and purchase agreements with the following vendors,Mahir Agresif (M) Sdn Bhd and PBS Office Supplies Holding Sdn Bhd; and Persada Bina Sdn Bhd to acquire acquiring a total amount of 50,000,000 ordinary shares of RM1.00 each in Pelikan, representing 9.79% of the equity interest in Pelikan for a total purchase consideration of RM50m equivalent to RM1.00/Pelikan Share, which is to be satisfied by the issuance of up to 47,169,812 new ordinary shares each in CSL at an issue price of RM1.06/ CSL shares.

CSL has opted for the issuance of up to 47,169,812 new CSL Shares as payment for the Purchase Consideration and additional 3,000,000 new CSL Shares as payment for the professional fees rather than other available financing alternatives.

The Proposed Acquisition represents a strategic move on the part of CSL and its subsidiary companies as it will immediately provide a pathway for both the CSL Group and the Pelikan Group to work together to grow the business in the sales, distribution and procurement of Pelikan's stationery products in the markets, and to fully leverage on the CSL Group's strong market network and access, namely China.The Proposed Acquisition will also enhance the value and recognition of CSL as a global stationery player.

It is also envisaged that the Proposed Acquisition will enhance the strategic collaboration between the two (2) groups and will provide and create synergy and value-added enhancement to the parties in terms of sharing of resources, market insights and networking, which will lead to the added benefit of cost effectiveness in the operation of the respective groups.

Comments : It remains to be seen how both companies plan to integrate as Pelikan historically have priced themselves more in the premium market while its acquirer CSL is more targeted at the mass market.

6) Market - With the global economy now showing some stability, we remain bullish for a strong performance in the equity market for 4Q and early 1Q 2013. We continue to advocate accumulation to laggard quality names, ie MISC, Waseong, Genting Msia, Bumi Armada.

Morning Commentary 170112

Good Morning,

1)ARMADA: Bumi Armada's subsidiary, Bumi Armada Navigation Sdn Bhd, had signed a contract with Petróleo Brasileiro S.A. (Petrobras) for the provision of one anchor handling towing support (AHTS) vessel valued at RM155mil. The AHTS vessel will be supporting research activities as well as hydrocarbon and mining activities developed by Petrobras in the Brazilian continental shelf. The Contract is for a period of four years with an extension option of another four years. The Contract is expected to be effective by the first quarter of 2012, when Petrobras is anticipated to formally accept delivery of the vessel, +ve.

2)IOICORP: IOICORP is said to have won the bidding for a prime piece of land in Singapore near the Clementi MRT station to build high-rise public housing with development valued at RM1.7-1.9bil. According to Singapore's Housing and Development Board InfoWEB, IOICORP's wholly owned subsidiary MultiWealth (S) Pte Ltd's bid of S$408mil (RM988.39mil) or S$554 per sq ft was the highest for the project in Jalan Lempeng with the second highest bid coming in at S$360.97mil. Based on an average selling price of S$1,000-1100 per sq ft, IOICORP should enjoy pretax margins of 10-18% assuming construction cost of S$350 per sq ft plus its land cost of S$554 per sq ft.

3)KIMLUN: KIMLUN's wholly-owned subsidiary, Kimlun Sdn Bhd (KLSB) had accepted the letter of award from Ikatan Flora Sdn Bhd, a sub-subsidiary of IJM Land Berhad for the construction of 2 blocks of service apartment and ancillary buildings in Mukim Plentong, Johor Bahru. The contract sum for the Project is RM82.1mil and is expected to be completed by May 2014, +ve.

4)KULIM: Kulim has rejected the offer from Dewan Perniagaan Melayu Malaysia (DPMM) which made an offer to acquire all the shares of QSR Brands Bhd (QSR) held by Kulim at RM6.90 per share. Kulim noted that its holding company, Johor Corporation, said that it would not support any proposal to dispose off the QSR Shares, expected.

5)Mkt: consolidation within a narrow trading range ahead of long CNY weekend.

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.