Friday 9 March 2012

OSK188 Daily Research Report ( English Version) 9 March 2012


On The Platter
OIL & GAS (OVERWEIGHT) Sector Update: Oil Price on a Roller Coaster In recent weeks, the price of crude oil has shot up to above USD100/barrel, driven by the political tension in Iran. Going forward, we face the risk of oil price  revisiting its alltime high of USD147/barrel and potentially crashing after that. Should this happen, all vessel operators, shipbuilders, process equipment manufacturers and petrochemical operators will be negatively impacted in the longer term, while those that may be considered safer are the brownfield services providers, CTF operators as well as the fabricators and pipe coaters. Maintain Overweight, with Kencana Petroleum and Dialog Group being our top picks.

  • MBSB (FV RM2.70– BUY) Corporate News Flash: Government Scraps New Salary Scheme
  • ENG (FV RM1.52– SELL) Corporate News Flash: Revises Offer Price
  • PANTECH (FV RM0.595– TRADING BUY) Corporate News Flash: A Fitting Acquisition
  • REGIONAL PLANTATION (NEUTRAL) Sector Update: Best Year Ever


Market Review
Buying support.  The  FBM KLCI finished 3.53 pts higher at 1,578.36 supported by foreign institutional buying  on key heavyweights. However, decliners led advancers by 415 to 336, while 339 counters closed unchanged. Among the key market news today are: the Government scraps its previous salary scheme adjustments and reinstates its old scheme with a salary hike across the board, Proton may delay the launch of its newest model, Tan  Sri Ananda Khrishnan may put TGV Cinemas SB  up for sale, Perodua in RM225m lubricants oil deal with Petronas Dagangan, Pantech buys UK-based firm for RM45m and Pintaras Jaya gets RM34.4m contract. Overnight, US stocks extended their gains as  the deadline for private bondholders to exchange Greece-issued debt passed with adequate participation, thus  removing an obstacle to Greece’s second bailout. The DJIA closed up 70.61 pts or 0.6%, to 12,907.94, which could buoy sentiment on the local bourse today.

MEDIA HIGHLIGHTS
Pay rise for civil servants
Civil servants are to receive salary increases of between 7% and 13% under an improved Malaysian Remuneration System. This follows the scrapping of the controversial Public Service New Remuneration Scheme (SBPA), which had come under criticism from government employees. Datuk Seri Najib Tun Razak announced the improved Malaysian Remuneration System (SSM) to  the  applause  of more than 10,000 civil servants at the Putrajaya International Convention Centre. (StarBiz) Please see accompanying report

Perodua, Petronas in RM225m lubricant deal
Perodua and Petronas Daganga have signed a RM225m deal to supply the former with lubricant oil over the next five years. Perodua managing director Datuk Aminar Rashid Salleh said. He said the contract, dubbed “Perodua Genuine Oil”, would see the second national car maker using RM45m worth of  “Petronas SL/SM” grade oil at all its service outlets nationwide a year for five years with immediate effect. (Financial Daily)

MAHB to raise RM616m
Malaysia Airports Holdings Bhd (MAHB) is expected to raise RM616m from its private placement after fixing the issue price at RM5.60 a share. The airport operator had earlier proposed private placement of up to 110m new ordinary shares of RM1 each, representing 10% of the company's issued and paid-up share capital, primarily to part-finance the additional capital expenditure incurred for the enhancements to its KLIA2 and also to defray expenses relating to the proposed private placement. (StarBiz)

Top Glove eyes acquisition this year
Top Glove Corp Bhd, the world's largest rubber glove maker by volume, aims to buy at least one other glove producer this year as part of its strategy to gain market share and drive earnings, according to its chairman and founder. The company was in talks with a number of rubber glove makers, chairman Tan Sri Lim Wee-Chai told Reuters in an interview. Lim said Top Glove was well placed to make acquisitions on the back of its strong net cash position. The company held some RM300m net cash as of 29 Feb, 16.7% higher than August a year earlier. (Reuters)

Aeon in RM350m expansion drive
AEON Co (M) Bhd, which operates the Jusco department store and supermarket chain, has allocated RM350m for capital expenditure this year, particularly to increase its market penetration in the retail business. This includes the opening of two new shopping centres as well as refurbishment of existing stores. (BT)

Pantech buys UK-based company for RM45m
Pantech Group Holdings has entered into an agreement to acquire UK-based Nautic Steels (Holdings) Ltd and its wholly-owned Nautic Steel Ltd from  Robert Andrews, for a maximum of GBP9.5m (RM45m). Pantech, a manufacturer of steel pipes and fittings, will wholly own the two companies which have a mainstay in milling, machining and welding tube and pipe fittings for special metals for the marine oil industry. (StarBiz) Please see accompanying report.

ECONOMIC HIGHLIGHTS
Indonesia: Holds interest rate as inflation risk increases
Indonesia’s central bank held interest rates to support growth as a government plan to raise fuel prices and electricity tariffs revives inflation risk. Governor Darmin Nasution and his board kept the reference rate at 5.75%, Bank Indonesia said in a statement in Jakarta yesterday. A plan to raise prices of subsidized fuel threatens to reignite cost pressure in Indonesia and limits the scope for easing after an unexpected cut in the last meeting. (Bloomberg)

South Korea: Holds rate for ninth month as growth slows
The Bank of Korea held off altering borrowing costs for a ninth straight month as policy makers balance the risks from Europe’s debt crisis against rising oil costs that add to price pressures. Governor Kim Choong Soo and his board kept the benchmark seven-day repurchase rate unchanged at 3.25%, the central bank said in a statement in Seoul yesterday. Rising oil prices are one of the biggest concerns for South Korea, Vice Finance Minister Shin Je Yoon said yesterday.(Bloomberg)

Brazil: Accelerates interest rate cuts amid lacklustre growth
Brazil’s central bank surprised analysts by accelerating the pace of interest rate cuts, bringing borrowing costs below 10% for only the second time amid signs of lackluster growth in Latin America’s biggest economy.  In a split vote yesterday, policy makers led by bank President Alexandre Tombini cut the Selic rate by 75bps to 9.75%t. Two dissenting members voted to lower the rate by a half point for a fifth straight meeting. (Bloomberg)

Greece: Swap deadline passes as investors signal agreement
The Greek government’s deadline for the  biggest sovereign restructuring in history passed with a majority of investors signaling their readiness to participate in the debt swap.  The euro and stocks gained before the offer’s close at 10 p.m. in Athens yesterday as Greek Prime Minister Lucas Papademos told his Cabinet ministers that Greece had made “an appropriate framework with significant incentives” for bondholders. Finance Minister Evangelos Venizelos told Parliament that “a historic process will be completed last night,” and the results announced today. (Bloomberg)

US: Jobless claims rose 8,000 last week to 362,000
The number of Americans filing claims for jobless benefits rose to 362,000 last week, a level consistent with an improving labor market. Applications for unemployment  insurance payments increased by 8,000 in the week ended 3 March, Labor Department figures showed today. Economists forecast 352,000 claims, according to the median estimate in a Bloomberg News survey. The average over the past four weeks held close to a four-year low. The rate of firings indicates companies have grown more comfortable with headcounts and could take on additional employees when demand picks up. (Bloomberg)

US: Consumer confidence in rises to highest in four years
Household  confidence improved last week to a four-year high as more Americans said the economy was improving and decided it was a good time to shop. The Bloomberg Consumer Comfort Index was minus 36.7 in the period ended 4 March, the highest since April 2008, up from minus 38.8 in the prior period. The gauge on the state of the economy reached a one-year high, while the buying-climate measure climbed to a level last exceeded in December 2009.  For a fifth straight week, half of those surveyed also rated their personal finances as positive, bolstered by a resilient stock market, faster job growth and rising wages.(Bloomberg)

Source: OSK188

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