Morning Commentary 200112

Good morning,

1) AirAsia: A consumer watchdog in Australia, The Australian Competition & Consumer Commission (ACCC) has submitted documents to the Australian Federal Court, alleging that the budget airline did not disclose the full fares for it's flights out of Australia. It claimed that the fares displayed on AirAsia's online website disclose only part of the total. The company is currently seeking legal advice & will not comment further at this time, AirAsia said in a media statement. It added that the allegations relate to specific routes from Australia that pass through KL. Group has been operating in Australia since 2007 without any previous claims; -ve. This suit comes on the back of AirAsia announcing that it's long haul arm AirAsia-X will commence selling tickets for it's KL-Sydney route, with flights to Sydney set to commence in April. Meanwhile,on the domestic front, AirAsia & MAS has been given a month to provide the Malaysia Competition Commission (MyCC) with the relevent documents in relation to the Commission's probe on the share-swap agreement between AirAsia & MAS.

2) DBE Gurney: In a reply to Bursa's query on unusual market activity, DBE Gurney said the company has plans to undertake a private placement and the talks with a CI Holding shareholder was at a preliminary stage now. The purpose of the placement of new shares was to raise fresh working capital. Datuk Johari Ghani, who sold Permanis SB to Japan's Asahi Group Holdings for RM820m cash last year, is the single largest shareholder of CI Holdings. Johari, the MD of CI Holdings, holds a 30.5% stake in the company. According to him, CI Holdings is on the prowl for new business after divesting Permanis. This has sparked speculation that CI Holdings may be keen on poultry breeder DBE Gurney. A Chinese media reported yesterday, which quoted sources, that CI Holdings would pay RM40.4m (equivalent to 20s per share) to acquire a 30% equity stake in DBE Gurney; Neutral, DBE was the most actively traded stock yesterday on the Bursa, with price surging 23%.

3) KFC: Media reported that The Malay Chamber of Commerce (MCCM) has not given up it's quest to gain control of the KFC fast food business in Malaysia. After the rejection of it's offer to acquire Kulim Bhd's 54% shareholding in QSR Brands, the Chamber is now said to be eyeing Lembaga Tabung Haji's (LTH) 23% stake in KFC Holdings. MCCM president urged LTH to oppose the proposed sale of KFC's assets & liabilities. Alternatively, he said LTH should sell it's KFC shares to the Chamber at RM4.10 each. KFC ended trading at RM3.82 yesterday. LTH has refused to comment on matter at this time.

4) Mkt: maintain rangebound trade with firm undertone on relatively lower volume in view of the long CNY holidays weekend, accumulate CIMB, MAS, MHB.

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. 

Morning Commentary 221211

Good Morning,

1) DRBHCOM: Company had entered into an agreement to swap the Malay Reserve (MR) status of a plot of land in Langkawi with non-MR status of a piece of land in Kedah for RM76mil. Its MR land is located on Pulau Rebak Besar and spans 333 acres while the non-MR 350 acres land is an agricultural land which sits in the Northern Gateway Free Zone (NGFZ) at Bandar Kota Perdana, Kedah. The consideration pf RM76mil works out to RM5.23 psf to convert the MR to non-MR land.

2) QSR/KFC: The boards of QSR and KFC have accepted the joint takeover offer by Johor Corp and CVC Capital Partners Asia III Ltd and are not seeking any alternative bids for the sale of their assets and liabilities. This puts a rest to speculations on possible counter bids. However both companies noted that the takeover offers are subjected to "further negotiations and mutual agreement on terms and conditions to be incorporated into the definitive sale and purchase agreement". 

3) JTIASA: 1H Oct 2011 Tover +32% RM499.5m, Net+84.7% RM97.07m, EPS 36.36sen, 18% above cons (f) RM163.67mil.

Yoy revenue rose 32% while its net jumped 84.7% mainly due to 21% improvement in logs average selling price, 45% increase in FFB sales volume with 17% rise in average selling price and 80% growth in CPO sales volume with 23% improvement in average selling price. QoQ, the pre-tax reduced by 24% to RM57.3 million from RM75.3 million. The decline was mainly due to 11%, 7% and 10% decrease in the average selling prices of logs, plywood and FFB respectively. 

Going forward the oil palm segment remains bullish with higher FFB and CPO production volume while the performance for the timber segment will be challenging given the volatile operating environment and uncertain global economic environment. 

4) Mkt: relatively quiet, range trading with firm undertone as it approaches the Christmas holidays.