Market Roundup 310112

FBM30 1521.29, +7.74 points (+0.51%), Vol 1,782mil, Value 2,181mil       

1) Positive comments by Greek prime minister that significant progress has been made in talks with private-sector creditors gave investors fresh hope that a solution was in sight to settle the crisis, driving the regional bourses to recover earlier losses, including KLCI. Index dipped below the 1510 level in morning session, before month-end closing action marked the index to close at day's high. Domestically, investors are waiting for the outcome from BNM's meeting later today with mkt expecting no change in the OPR rate holding it steady at 3%. Market breadth was healthy with gainers edging losers 415:394. 

2) Heavyweights: GENTING+2% RM11.12, GENM+4.1% RM4.04, PETGAS+3.2% RM15.68, MAXIS+2.7% RM5.71, SIME+0.6% RM9.14, YTL+2% RM1.50, TENAGA+0.5% RM6.00, DIGI+0.5% RM3.96, AXIATA+1.7% RM4.67, HLBANK+1.2% RM11.36.

3) DBT: BJTOTO 5mil @ RM4.27, PROTON 3mil @ RM5.40  

4) Situationals: 

TENAGA+0.5% RM6.00: Shares were down most of the session before closing +ve during auction after news reports said the problem of compensation for the burning of distillates following the severe gas shortage has not been resolved yet. This was despite the three major stakeholders - TNB, Petroliam Nasional Bhd and the govt - having agreed to share the RM3bn incurred between Jan 2010 and October 2011. On another note, CEO Datuk Seri Che Khalib Mohd Noh will be calling it quits when his contract expires in June this year after heading TNB for seven years. The board has accepted Che Khalib's request and has begun finding a replacement. 

AXIATA-1.7% RM4.67: Shares fell to the lowest since Oct 4, on concerns about the regulatory approvals for its outdoor structures and regional risks. On Monday, Axiata said it received another two-year extension from the SC to get the local authorities' approval for its outdoor structures. The SC gave it until Jan 29, 2014 to get the approvals for the outdoor structures, which were part of the conditions for its listing on Bursa.

5) PPB Group: With regards the proposed acquisition by Waikari SB, a wholly owned subsidiary of FFM Bhd (which in turn is a 80% subsidiary of PPB) of 20% interest in Yihai Kerry (Anyang) Foodstuff Industries Co Ltd, PPB announced that Waikari had on Jan 30 2012 received notification that the relevant PRC regulatory authorities have issued the Certificate of Approval for Establishment of Enterprises with Foreign Investment in the PRC, and the Business Licence, on Jan 9 & Jan 12 2012 respectively; +ve and expected. Together with further proposed interest in other selected subsidiaries of Wilmar in the PRC, will enhance PPB's distribution network of it's produce there.

6) Mkt - buying momentum to continue to be concentrated in small-mid cap names. Any resolution from Greece is a welcomed relief for the mkt to trend higher. 

Morning Commentary 040112

Good morning,

1) Bonia: Bonia is taking a bigger step abroad by acquiring a 49% stake in German based leather goods maker Braun Buffel in a deal worth Euro 3.2m (RM13.1m). Co announced that it's 70% owned subsidiary Jeco Pte Ltd has signed a SPA with Christiane Brunk for the purchase of a 49% equity stake in Braun Verwaltungs GmbH & Braun GmbH & Co KG for Euro 980,000 cash. Jeco also entered into a loan receivable sale agreement with several parties to restructure the total debts of Euro 3.15m owed by Braun KG, which will be settled through a lump sum of Euro 2.2m. Jeco also entered into a trademark purchase & transfer agreement for the purpose of acquiring the Braun Buffel trademark for Euro 20,000 cash.The entire deal will be funded through internally generated funds; +ve, the group believes the long established brand of Braun Buffel will be able to further grow it's market share & recognition in the Asia-Pacific region and the rest of the world. Acquisition should widen it's earning base.

2) PPB: PPB's flour milling arm FFM Bhd has received regulatory approval from Chinese authorities to have a 20% stake in another Chinese flour milling unit controlled by Wilmar International Ltd. In a Bursa statement yesterday, FFM's wholly owned unit Waikari SB said it received notice of approval for the establishment of Yihai Kerry (Quanzhou) Grain & Foodstuff Industries Co Ltd, which it is taking a 20% stake in. It already has approval for it's investment in Yihai (Chongqing) Foodstuff Co Ltd; +ve. Acquisition represents an opportunity for FFM to tap on the distribution network of the Wilmar group in China. The acquiree companies operate substantially in the same core business as FFM & is expected to contribute significantly to group's revenue moving forward. PPB is also seeking regulatory go-ahead for investments totaling RM173m in debts & equity for Wilmar's flour milling units in Beijing, Dongguan, Zhoukou & Shenyang.

3) Maybank: said it has been granted further extension of time by Indonesian authorities to lower it's stake in PT Bank Internasional Indonesia Tbk (BII). In a Bursa statement, Maybank said it had on Dec 2011 received a letter from Bapepam granting it a further 6 months to June 1 to fulfil & complete the selldown exercise. Maybank acquired BII in 2008 for RM7.9b and holds a 97.5% stake. It was asked by the Indonesian regulators to sell down it's stake to achieve a minimum float of 20% - Neutral.

4) Mkt: maintain existing view of situationals & lower liners to outperform in a positive January market.

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.