Market Roundup 080212

FBM30 1553.18, +14.41 points (+0.94%), Volume 4,388mil, Value 3,296mil

1) KLCI rallied and held above 1550pts mark as investors remained optimistic Greece debt will be resolved while regional markets led by HSI+1.5% and SHCOMP+2% were buoyed by China Central Bank's decision to support first home buyers. Trading volume surged to 4.3bil with heavy volume seen in penny stocks led by NICORP+172%, COMPUGT+39%, SAAG+20%. Index closed near its high of 1554.06 (+15.29pts) following buying support of TENAGA+6.5% at close while GENTING-5%, GENM-5% waere sold down after the bill to allow mega casinos in Miami was withdrawn by its legislative sponsor. Market breadth was positive with advancers thumping decliners 593:322. Futures closed 1548.5 (4.5pts discount).

2) Heavyweights: TENAGA+6.5% RM6.38, SIME+2.33% RM9.68, PBBANK+1.45% RM13.96, CIMB+1.57% RM7.11, MAYBANK+0.96% RM8.41, PCHEM+2.06% RM6.93, PPB+3.02% RM17.72, GENTING-4.55% RM10.50, GENM-5% RM3.81

3) DBT: NICORP 170.1mil @ RM0.08 (24.23% PUC, 83% discount), SUNREIT 46mil @ RM1.29 (1.7% PUC), PREMIER 10mil @ 0.48 (3% PUC, 6.6% premium)

4) Situationals:

KIMLUN+5% RM1.67: Mass Rapid Transit Corporation Sdn Bhd has appointed SPC Industries Sdn Bhd, a wholly-owned subsidiary of the Company, a RM223.18mil contract as the designated supplier for the supply of segmental box girders to certain packages of the Klang Valley MRT for the Sungai Buloh to Kajang stretch. The contract is expected to spread over a period of 40 months.

NICORP+172% RM0.49: Share price hit limit up RM0.49 with 270mil shares traded. Buying interest heightened in NICORP after Crest Energy Sdn Bhd which owns 22.8% stake comprising 160mil shares was said to be in discussion to dispose off its shares. Today 170mil shares traded off market at 8sen per share.

5) JCY: Q1 12/12  Rev +27%RM559m  Net +2060% RM162.5m   EPS    7.94s   Div 2c Results 180% above ann  cons RM230m.

For Q1 yoy, the higher Rev was due mainly to higher average selling prices (ASP) as a result of shortage in HDD mechanical components after the Oct 2011 Thailand floods & appreciating USD exchange rates. Net improved by more than 20x, mainly due to the aforesaid increase in ASP/appreciating USD, coupled with effective product mix and continuing effective cost management. For the Malaysian segment, Rev+29.9%, Net+285% while the Thailand segment recorded Rev+35% but recorded a net loss of RM0.7m this year, due to unfavourable exchange rate of the Thai baht & higher labour cost. Qoq, Rev+27%, PBT+535%, due to reasons mentioned earlier. Ahead, the Thai floods have significantly changed the landscape of the HDD industry supply chain. Increase in ASP should continue to benefit JCY in the next 12 months. JCY's Thailand factories were not affected by the Thai floods and together with the soon-to-be-ready China factories (Suzhou & Foshan), Co expects to increase output in the near future.

Comments: Strong set of results, surpassing even the company's guidance to Bursa in early Jan of between between RM121-143m net profit for Q1 is +ve but expected as stk has outperformed, gaining 32% ytd.

6) Mkt - continued buying momentum to carry KLCI higher with rotational interest in mid-small cap stks. Stks at buy lvls: TMCLife, MRCB, Timecom, Waseong.

Morning Commentary 050112

Good morning,

1) JCY: JCY International Bhd has guided that net profit for the 1st quarter ended Dec 2011 (1QFY12) would likely jump 19 folds yoy from the RM7.5m booked in 1QFY11 or up 460% from the RM26.4m booked in the immediate preceding quarter, as sales benefited from a supply shortage caused by the floods in Thailand. This means JCY may report a net profit of about RM140m (accounting for about 83% of FY12 cons RM168m). Group’s finance director said Co wanted the public & minority shareholders to know and have access to factors surrounding JCY’s profitability. JCY & others in the industry saw an increase in ASP of about 10-20% after the Thai floods, and also benefited from an effective product mix, efficient cost management and the USD’s appreciation versus the ringgit. He added that to cater to the increased demand from it’s major customers, JCY’s board had approved a RM300m capex to expand it’s facilities in Malaysia, Thailand & China over the next 24 months. Since Oct, shares in JCY, from a level of around 40s, has been on the uptrend on optimism that it could benefit from the Thai floods.

2) Proton: Proton Holdings chairman Datuk Mohd Nadzmi has confirmed that he has put in a bid for Khazanah’s 42% stake in Proton, making him the only person to publicly indicate his interest. However he declined to reveal the offer that he had put in for Proton due to the sensitivity of the deal, but he deemed an offer for the NTA price of Proton to be too high as Proton will not be an easy project. He said the management approached him a few months ago after rumors of a few parties being interested in Proton surfaced, and asked him to make a bid because of his experience in setting up Proton & leading the group in the past. It is a management buy-out (MBO) in a sense; Neutral. Meantime, DRB-Hicom & Naza are believed to have offered RM6 per share for Proton while Detroit-based General Motors Corp (GM) is eyeing a stake in Proton’s state-of-the-art plant.

3) BHIC: Share price rose for the 2nd straight day, driven by renewed speculation that it’s largest shareholder LTAT will take the company private soon. Rumour is that BHIC will be taken private at above RM5 per share, said market players. According to reports, while BHIC’s parent Boustead Holdings denied talks that it was planning to privatize the former, it then emerged that LTAT could be the vehicle to be used. LTAT holds a direst 8.15% in the company and an indirect stake of 65% via Boustead. While one may be puzzled as to why LTAT may choose to privatize BHIC at a premium, analyst said that the temptation could be driven by the jobs it is expected to secure over the medium to long term, especially after it was awarded a RM9b Defence Ministry contract to design, build & deliver 6 second generation patrol vessels.

4) Mkt: KLCI index to consolidate with rotational play on situationals & laggard lower liners.

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.