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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