Morning Commentary 130112

Good morning,

1) SapCrest: Sapura Crest Petroluem Holding's wholly owned units TL Offshore PLSV1 Ltd and TL Offshore PLSV2 have entered into contracts with IHC Ofshore and Marine BV for the construction and purchase of two 550-tonnes pipelay support vessels. The 1st & 2nd vessels would be completed & delivered within 30 months (May 2014) and 33 months (Aug 2014) respectively from Nov 2011. The company will finance the construction and purchase of the vessels via internal funds & borrowings. After delivery, the vessels will be slotted to carry out the services under the Petrobas contracts; +ve, but value of the contract was not disclosed.

2) AirAsia: The Thai unit of AirAsia said it would submit a filing for it's IPO to the Thai market regulator this month and planned a Bangkok listing in the 1st quarter. The company delayed it's submission due to flooding last year, it's CEO told Reuters; +ve and expected.

3) Proton: Khazanah has asked the interested bidders for it's 42.7% block in Proton to show proof of funds next week, sources familiar with the matter said. It is learnt that Khazanah has set aside the whole of next week to assess the funding mechanism of the various bidders. While the dates are not certain, it is understood that DRB Hicom will meet Khazanah in the middle of the week while Datuk Seri Mohd Nadzmi is likely to meet earlier in the week. It is not clear if Khazanah has set other appointments, apart from these 2. While the outcome is still not known, it is widely speculated that DRB Hicom is the front runner to bag the stake; Neutral on news.

4) BPuri: Bina Puri Holdings yesterday confirmed a financial daily report that it is in the process of finalizing a deal to upgrade & operate a highway in Pakistan. In a filing with Bursa, Co said it had received a LOI dated Nov 11, 2011 from the National Highway Authority in Islamabad, Pakistan. The LOI was for the conversion of the existing 4 lane Karachi-Hyderabad super highway into a 6 lane motorway, Motorway 9, on a build, operate & transfer basis; +ve & expected. Share price added 5%    on report yesterday.

5) Mkt: despite positive news from Spainish & Italian refunding exercise, range trading is expected to persist ahead of CNY break starting from next week.

Market Roundup 100112

FBM30 1521.99, +0.26 points (+0.02%), Volume 1,858mil, Value 1,872mil

1) KLCI ended mixed trading in a 5 points range as market was sluggish despite the positive region which rose on positive US data and speculations slowing China export data could encourage monetary easing policies. Malaysia's industrial production growth was also lower than estimates as manufacturing growth slows. Construction+1.2% outperformed in anticipation of jobs being awarded from the ETP program. Market breadth was positive with advancers outpacing decliners 416:330. Futures closed 1527 (5 points premium).

2) Heavyweights: DIGI+1.04% RM3.90, PETGAS+1.59% RM15.34, KLK+1.06% RM24.84, TM+1.03% RM4.91, PCHEM+0.47% RM6.36, GENTING-2.15% RM10.90, GENM-0.77% RM3.88, MHB-1.91% RM5.65

3) DBT: SCOMI 16.3mil @ RM0.15 (46% discount), BJCORP 12mil @ RM0.94 (10.5% discount),

4) Situationals:

TAKASO+2.08% RM0.245: TAKASO topped volume today with share price reaching a high of RM0.28 after news reported that company will be acquiring Kayumas Plantation PNG Ltd which has a timber license and concession in a bid to diversify its business. The company holds the rights to a net loggable area of 40,000ha of timber possibly worth up to RM500mil with length of extraction up to 9 years.

MBSB+4.12% RM2.02: Bank Negara has granted permission for MBSB to participate in its Central Credit Reference Information System (CCRIS) effective this month. This information is collected by the central bank's credit bureau from participating lending institutions to assit them in making informed decisions on credit applicants.

GAMUDA+3.52% RM3.53: Gamuda in response to news reports confirmed they have been invited by China Railway Construction corp to be its local partner in a group bidding for the Gemas-Johor Bahru railway project that is worth RM8bil.

5) SAPURACREST

Announced that SapuraAcergy Sdn Bhd has been awarded a contract for a subsea construction project, offshore Vietnam. SASB is a joint venture company equally owned by SapuraCrest Petroleum Berhad and Subsea 7 S.A. The scope of work requires the installation of 28km of 12" diameter pipeline, a 28km umbilical, Pipeline End Terminations and Subsea Isolation Valve , Structures, spools and pre-commissioning.

The value of the Contract awarded is approximately USD100 million, with the offshore work expected to be performed in mid 2012.

+ve the merger exercise with Kencana expected to be finalized by the 1Q this year will be the major re rating catalyst for both companies.

6) Market - Current bullish trend to continue with situationals and 2nd liners continuing to take center stage in the run up to CNY.

Morning Commentary 060112

Good morning,

1) SapCrest: announced that TL Offshore SB, a wholly owned subsidiary, has finalized, executed and formalized 2 separate contracts with Cosco (Nantong) Shipyard Co Ltd for the construction of 2 units pipelay cum heavylift offshore construction vessel at a combined contract value of US227m (RM712m). One of the vessels was scheduled to be delivered in Q4 2013 whilst the other to be delivered in Q1 2014; +ve, this contract win to add to healthy existing OB of RM10.6b. Catalyst for stock remains it's merger with Kencana Petroleum which will create one of the largest O&G service provider in south-east Asia with a 4-year CAGR of about 23%, backed by many long-term contracts. Also, the merged entity's potential mid 2012 inclusion in the FBMKLCI component stock.

2) BHIC: Boustead Heavy Industries Corp yesterday denied being part of any on-going privatization talks. In a statement to Bursa to clarify media reports following the rise of it's share price, BHIC said it had not received any indication or direction from it's shareholders with regards to any major acquisition of shares in the company which might include a privatization. BHIC also reiterated that it's major shareholder Boustead Holdings had on Dec 21, 2011 publicly announced it was not considering any proposal to privatize BHIC - May dampen speculative interest in stock which price has added almost 20% over the last 3 trading days.

3) Construction: Tenders for the beautification portion of the River of Life (RoL) programme, potentially worth up to RM1b, could be called in the second half of this year, upon completion of the project's master plan. KL Mayor said a total of RM4b has been earmarked by the federal govt for the RoL programme, a project identified under the ETP, that involves cleaning of 110km stretch of river basin and beautification along a 10.7km stretch within the city centre. Of the amount, RM3b will be for river cleaning (which is already underway) and the remaining RM1b is for beautification works. Mayor said the master plan for the beautification portion would be ready within 6 months ; +ve. Last December, Ekovest-MRCB JV SB, a 60:40 JV between Ekovest Bhd & MRCB, announced that it had been appointed the project delivery partner (PDP) of the RM2.2b river rehabilitation & beautification project, and stands to receive 1% of the project's estimated value, or about RM22m, as compensation for managing/coordinating the project for 3 years.

4) Mkt: situationals & plantation counters expected to be the main focus in a positive bias market.