On The Platter
- SOP (FV RM7.09 – BUY) Company Update: 4Q Hitch Unlikely to Resurface After SOP’s share price retreated by as much as 4.3% following its poorer than expected 4QFY11 performance, we took a closer look at its results and sought management’s clarification. In 4QFY11, the company was hit by a lumpy refining capacity backlog in Sarawak which led to delays in CPO shipments and revenue recognition. This should, however, work to SOP’s advantage once its refinery comes on stream in 2Q. In 4Q, it also paid out higher performance-based employee compensation after a record year. As these issues should clear in 1QFY12, SOP remains our Top Malaysian Plantation Buy call.
- MAYBANK (FV RM9.60 – BUY) Company Update: Sweating Its Branches
- SHOUGANG CONCORD (FV HKD0.67 – TRADING BUY) Company Update: Upgraded despite Possible 2HFY11 Loss
- AXIATA (FV RM5.80 – BUY) Corporate News Flash: Sizing Up XL Axiata
- WCT (FV RM3.17– BUY) Corporate News Flash: To Pay RM450m for 2.5m Sq Ft Landbank
- XL AXIATA (FV IDR5400– NEUTRAL) Corporate News Flash: Etisalat Calls it Quits
Market Review
Still gaining grounds. After a seesaw session which saw the
FBM KLCI fall to a low of 1568.41 points, the benchmark index managed to
recover in the last hour to close with a 11.69 points gain at 1575.71 points.
Gainers beat losers by 444 to 334. Regional bourses were mostly higher. News
headlines: TA Global and Birkbeck Trust to jointly develop a hotel and
residence in Vancouver, Canada with initial contribution of CAD110m each, WCT
enters into conditional S&P to acquire Timor Barat Properties S/B which
owns 3 parcels of land in Taman Yarl, Kuala Lumpur for RM450m, Telekom Malaysia
signs High Speed Broadband agreement for delivery of HSBB services with Redtone
Marketing S/B. Positive momentum should continue today with the mild gains
chalked up by the Dow last night. The FBM KLCI faces resistance at 1580 points.
MEDIA HIGHLIGHTS
Sunway REIT to spend RM200m n the Putra Place Sunway REIT
Management SB will spend RM200m on the refurbishment of Sunway Putra Place
(formerly known as The Mall). CEO Datuk Jeffrey Ng said the refurbishment will
take 15 to 18 months with a projected return on investment of 12.5% to 15%.
“The estimated incremental income is expected to be RM25m to RM30m annually,”
he told a media briefing on the transformation plan for Sunway Putra Mall yesterday.
(Financial Daily)
WCT buys land in OUG
for RM450m
WCT will pay a cash consideration of RM450m to acquire the
entire equity interest in Timor Barat Properties SB, which has three parcels of
land totaling 23ha in the matured Overseas Union Garden (OUG) area of Kuala Lumpur.
The construction and property development firm said Iris Green SB, a
wholly-owned subsidiary, had entered into a conditional share sale agreement to
acquire Timor Barat from Eng Lian Enterprise SB, Shen & Sons SB and AMC SB.
(Financial Daily) Please see accompanying report TRC Synergy gets RM36m
Dayabumi facelift projectConstruction and property developer TRC Synergy’s
wholly–owned subsidiary, Trans Resources Corp SB, has received a construction
and alteration contract from Kompleks Dayabumi SB for a sum of RM36m. The
contract will involve construction, alteration and additional works to the
existing Kompleks Dayabumi and is expected to contribute positively to TRC’s
earnings in the future, the company said in an announcement to Bursa Malaysia yesterday.
(Malaysian Reserve) Please see yesterday’s report
DRB-Hicom gets nod
for Proton stake and may retain Lotus following takeover of Proton
DRB-HICOM yesterday received its shareholders’ nod to
acquire the 42.7% stake in Proton Holdings held by Khazanah Nasional which,
consequently, will trigger a mandatory general offer (MGO) for all the
remaining Proton stakes not owned by the group. The group expects the
acquisition to be completed within seven days, after which, Proton would become
a 50.01%-held, subsidiary. Also, the company may retain shareholding in British
sports and car manufacturer Group Lotus Plc. Malaysia’s leading automotive
player intends to continue capitalising on Lotus’ renowned automotive
powertrain and handling engineering development, said an industry source.
(Malaysian Reserve) Please see accompanying report
AirAsia Thai IPO
expected to raise RM500m
The listing of AirAsia Thai is expected to raise THB5bn
(RM500m) and will likely take place in Bangkok by early July this year, while
the prospectus will be out in May, said sources close to the deal. Tentatively,
the shares will be prices at THB5 (RM0.50) apiece. It is learnt that investment
bankers handling the deal are flying to Bangkok today to finalise details of
the initial Public Offering (IPO) exercise. The listing was supposed to take
place last year, but was delayed due to the flooding in Thailand in October.
(StarBiz)
TM’s HSBB service in
economically viable areas soon
Telekom Malaysia (TM), which has been progressively rolling
out high speed broadband (HSBB), will introduce the service to
commercially-driven areas beyond 2012. TM group CEO Datuk Seri Zamzamzairani
Mohd Isa said its main priority now was to fulfill its obligation to provide
1.3m premises passed by year-end under its agreement with the Government.
(StarBiz)
ECONOMIC
HIGHLIGHTS
Euro: Italy keeps
sales at short end even as returns soar
Italy is shunning sales of longer- maturity bonds even as
they offer investors the best returns in the world. The longest-dated
securities Italy has issued since 1 Jan are due in 2022, sooner than the 2026
and 2040 bonds sold in the first quarter of last year. It has increased
offerings of debt maturing in less than two years to take advantage of demand
bolstered by three-year loans from the European Central Bank to help quell the
European sovereign-debt crisis. The yield difference between two-year notes and
30-year bonds widened last week to a more than 2.5-year high of 392 basis
points. (Bloomberg)
Euro: Dutch austerity
demands risk backfiring on Premier
Dutch Prime Minister Mark Rutte’s demand for budget cuts in
debt-laden southern Europe may backfire as the leader of one of the four remaining AAA euro countries struggles to
narrow a bigger-than-planned deficit. His coalition must find EUR9bn
(USD11.8bn) in budget cuts this year, equal to 1.5% of the nation’s gross
domestic product, to meet European rules and protect the top credit grade that
France and Austria lost in January. Rutte, who led demands that Greece deepen
spending cuts and overhaul its economy in exchange for a rescue, is squeezed by
mounting domestic dissent and a campaign by nationalist leader Geert Wilders to
exit the euro. (Bloomberg)
UK: Fitch puts UK
debt on negative outlook days away from budget
Fitch Ratings said Britain risks losing its top investment
grade because of its limited ability to deal with shocks, days before
Chancellor of the Exchequer George Osborne will present his annual budget.
Fitch changed the outlook on Britain to “negative” from “stable,” indicating a
“slightly greater” than 50% chance that the AAA rating will be reduced within
two years, the company said in a statement in London yesterday, citing the weak
economic recovery, high debt levels and threats from Europe’s debt crisis.
Osborne will meet coalition partners later this week to agree on a budget he
will present on 21 March. (Bloomberg)
UK: Unemployment rose
more than forecast in February
UK jobless claims rose more than economists forecast in
February and a broader measure of
unemployment remained at the highest rate in 16 years, underscoring the
weakness of the labor market even as the economy shows some signs of recovery.
Unemployment-benefit claims climbed by 7,200 from January to 1.612m, a 12th straight
monthly increase, the Office for National Statistics said today in London. The
median forecast of 28 economists in a Bloomberg News Survey was for a gain of
5,000. Unemployment measured by International Labour Organization methods held
at 8.4% in the three months through
January, the highest since 1995. (Bloomberg)
US: Bernanke says
‘frustratingly slow’ US growth impedes lending
Federal Reserve Chairman Ben S. Bernanke said the weak US
economy impedes efforts by banks to make profitable loans. “Despite some recent signs of improvement,
the recovery has been frustratingly slow, constraining opportunities for
profitable lending,” Bernanke said. The Federal Open Market Committee added yesterday
that economic conditions would still warrant holding the benchmark interest
rate near zero at least through late 2014. Community banks are “facing
difficult challenges,” Bernanke said. “Their close ties to local economies are,
on balance, a source of strength, but a drawback of those ties is that the
fortunes of communities and their banks tend to rise and fall together.”
(Bloomberg)
US: Growth in US to
strengthen as jobs lift consumers
The world’s largest economy will strengthen through 2012 as
employment gains give Americans the means to withstand rising fuel costs,
according to economists surveyed by Bloomberg News. Gross domestic product will
climb at a 2.5% annual rate in the final three months of the year, up from 2%
this quarter, according to the median forecast of 71 economists surveyed
from 9 to 13 March. For all of 2012, the
US may expand 2.2%, accelerating from 1.7% last year. More jobs, increasing
share prices, improving confidence and stability in housing will bolster the
expansion. At the same time, unemployment will be slow to retreat, averaging 7.3% in 2014, showing why Federal
Reserve policy makers yesterday said interest rates will remain low for at
least the next two years. (Bloomberg)
Source: OSK188
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