On The Platter
STRATEGY-April
Outlook: The Post Election Winners
Although the market met expectations and rallied to an
all-time high closing in March, it may be dogged by some uncertainties and
potentially retrace in April. This, however, has not deterred investors from
scouring the market for Election-related BUYs. Rather than highlighting stocks
that might potentially rally for a short spurt before the election, we unveil
our Election BUY calls on stocks that should rally closer to and past the
polls. We believe that the advance in AirAsia, UEM Land, Genting, MMC, RHB Cap,
CIMB, Maybank, UMW and Sime Darby shares may have been capped by concerns that
they may falter if the election outcome is unfavourable for the incumbent. For
April though, given the uncertainty, we favour situational stocks with specific
catalysts during the month.
KENCANA (FV RM3.60 –
BUY) 1HFY12 Results Review: Consistent as Ever
TENAGA (FV RM7.68 –
BUY) Company Update: Longer Term Positive
MASTEEL (FV RM1.07–
NEUTRAL) Corporate News Flash: Rail Project Derailed?
Market Review
Closing higher.
The FBM KLCI rose 10.89 pts to 1596.33
on Friday. The Government has set up a task force that targets to reduce
non-revenue water from 36% of the total amount of water produced currently to 25% by 2020
while Bank Negara said
broad money expanded at a higher rate of 15.9% in February due to the
higher credit extended by banks to the private sector and foreign capital
inflows. Elsewhere, Extol MSC Bhd is bidding for RM100m worth of jobs from the
Government and private sector while UMW Holdings Bhd has
received a 2-year extension of
its jack-up drilling rig Naga 3 worth USD105m (RM322m) from Petronas Carigali
SB. The Malaysian Automotive Asssociation expects total vehicle sales in 1QCY12
to be either flat or lower than 158k in 1QCY11. Finally, the US markets closed
mixed while crude oil price finished
higher on Friday, with oil price edging up USD0.24 to USD103.02/barrel.
MEDIA HIGHLIGHTS
Mercuria to partner
CIMB in APH project
Switzerland-based Mercuria Energy Group Ltd is said to be
partnering CIMB Group Holdings to revive the beleaguered Asia Petroleum Hub
(APH) bunkering island project off Tanjung Bin in Johor. It is learnt that Mercuria
will establish a joint venture with a
well-connected local firm to invest in the APH project, which has stalled from
the past year. “What APH lacks is a firm partner that can drive the operations
and be the off-taker. Mercuria will fit the role,” said a source. (The Edge
Malaysia)
Cash for MRCB as levy
set to be imposed on EDL
Malaysian Resources Corp (MRCB) is to be compensated by
the Government following changes to the
terms under which it can collect toll on the Eastern Dispersal Link (EDL) in
Johor Bahru, said sources. “The amount is to be worked out, but it will
compensate MRCB for a loss in income due to changes to the terms of the concession,”
says a source. The EDL, which leads to the Customs, Immigration and Quarantine
(CIQ) complex onwards to the Causeway that connects Johor Bahru to Singapore,
is scheduled to be opened to traffic for a trial period of one month from 1
April. (The Edge Malaysia)White Knight for Silver Bird?
Financially-distressed Silver Bird Group may see a white knight emerging in the coming weeks
although no turnaround plans have been put forward to the board of directors of
the bread and confectionary maker. In a reply to a query, members of the
special committee that was formed to take charge of the daily operations of the
company said they were finalizing the forensics report results and development
of a restructuring plan. There has been speculation that Lembaga Tabung Haji
and Koperasi Permodalan Felda, or a combination of the two,could emerge as the
white knight. (StarBiz)
MAS in danger of
losing 5-star status from Skytrax
Malaysian Airlines (MAS) could be in danger of losing its
five-star Airline status from Skytrax, the world's largest airline review site.
Skytrax's website showed that MAS' ranking is "under review". Checks
shows that its status has been "under review" since October last
year, dismissing doubts that it could be a periodical review. Industry observers
believe that this could point to a possible downgrading of its ranking. (BT)
UMW to decide on
WSP's future soon
UMW Holdings said the decision on whether to take its 22.3%
associate WSP Holdings Ltd private could
be known by as early as this month. "Discussions are ongoing. We will have
a decision soon," said its president and group chief executive officer
Datuk Syed Hisham Syed Wazir recently. To recap, in December last year, private
equity H.D.S. Investments LLC (HDS) had proposed to acquire WSP at USD0.60
(RM1.80) per share,with the intention of taking it private. (BT)
A win-win deal for
Prasarana, Crest Builder
The redevelopment of the Dang Wangi light rail transit (LRT)
station site is expected to have a gross
development value (GDV) of RM1.04bn, with land owner
Syarikat Prasarana Negara (Prasarana) to get a 21.1% share amounting to some
RM220m, said a Crest Builder Holdings spokesman. Prasarana entered into a deal last
week with a joint venture between Crest Build and Detik Utuh SB (Crest
Builder-Detik Utuh JV), to turn the 1.1ha plot into a mixed commercial development
comprising a retail mall, upscale premium
serviced residential suites, hotels and offices sitting on top of the
Dang Wangi LRT station. (Financial Daily)
MJGL no longer an MMC
unit
MMC Corp said in a filing to Bursa Malaysia that Malakoff
Jordan Generation Ltd (known as ACWA Power Jordan Generation Ltd) (MJGL) has
ceased to be a subsidiary of Malakoff International Ltd (MIL), following the completion
of MIL's disposal of its entire equity interest in MJGL comprising two ordinary
shares of USD1.00 (RM3.06) each. The disposal does not have a material impact
on the earnings or net assets of MMC Corp for the financial year ending 31 Dec
2012. (Malaysian Reserve)
MBSB offers new home
financial scheme
Malaysia Building Society (MBSB)’s new home financial scheme
is targeted at first-home buyers. It is a package that offers 100% margin of
financing to houses with a ceiling price of RM500,000. The MBSB First Home Scheme,
officially launched last Friday, also offers an exemption of the normal 10%
down payment. Speaking at the launch, chief executive officer Datuk Ahmad Zaini
Othman said the new scheme is designed for young adults who want to own their
very first residential property. (Malaysian Reserve)
Extol bids RM100m
worth of local projects
Extol MSC is bidding for local public and private sector
projects contracts worth RM100m. Its president and deputy executive chairman
Mohd Badaruddin Masodi said the information and communications technology (ICT)
security market’s outlook is “very promising” this year. “The awareness on the
importance of the cyber security is increasing. We don’t need to do much
marketing about it. Everybody is aware of such security threats nowadays”.
(Malaysian Reserve)
ECONOMIC
HIGHLIGHTS
Indonesia: Delays
fuel price increase
Indonesia’s parliament has given the government conditional
authority to raise fuel prices, after President Susilo Bambang Yudhoyono’s
Democrat Party dropped its push for an increase in 1 Apr. Lawmakers voted 356
to 82 in favor of a proposal by the Democrats to allow an increase if the
Indonesia Crude Price, or ICP, exceeds the budget assumption of USD105 a barrel
by 15% over a six-month period, Speaker of the House Marzuki Alie said. Two
opposition parties walked out on the proceedings. The deliberations took place
as about 12,000 demonstrators clashed with police in front of the parliament
building 30 March, and a police-estimated 81,000 rallied across the country in
the biggest public protests since the government raised fuel prices in 2008.
Soaring food and fuel costs in the world’s fourth-most- populous nation
contributed to riots that led to the ousting in 1998 of the dictator Suharto,
then Asia’s longest-reigning ruler. (Bloomberg)
China: Manufacturing
gain masks exporters’ woes
A stronger reading for a Chinese manufacturing gauge failed
to end predictions for policy loosening as analysts described the gain as
seasonal and a separate survey showed exporters struggling. A Purchasing
Managers’ Index rose to a one-year high of 53.1 in March, China’s logistics
federation and the National Bureau of Statistics said. The gauge has a pattern
of rising each March. Premier Wen Jiabao has pledged to “fine-tune” economic policies
as needed as weakness in export demand and a cooling housing market restrain an
economy that probably grew at the slowest pace in almost three years in the
first quarter. (Bloomberg)
South Korea: Exports
fall 1.4% on weakness in global demand
South Korea’s exports were less than analysts forecast in
March, sliding 1.4% y-o-y on weakness in global demand. Imports fell 1.2%,
leaving a trade surplus of USD2.3bn, the Ministry of Knowledge Economy said. Signs
that Europe’s debt crisis is easing may improve the outlook for shipments from
South Korea, where the economy grew at the slowest pace in two years in the
fourth quarter. The Asian nation’s central bank refrained from altering
borrowing costs for a ninth month in March as officials balanced price pressures from oil costs against risks
posed by stresses in the euro region. (Bloomberg)
EU: Italian bonds
drop for third week as boost from ECB loans Wanes
Italian bonds fell for a third week as the nation missed its
target at a debt auction and the boost to demand for the securities from
European Central Bank liquidity measures waned. Italy auctioned EUR8bn
(USD10.6bn) of bonds and floating-rate securities on 29 March, missing its
EUR8.25bn maximum target for the sale. Spain’s bonds rose for the first time in
four weeks before it sells debt on 4 April. The ECB has lent more than EUR1trn
to European financial institutions through its longer-term refinancing
operations. (Bloomberg)
US: Consumers boost
spending as US confidence rises
Americans increased their spending by the most in seven
months as an improving labor market boosted confidence, adding to evidence the
world’s largest economy is gaining strength. Purchases climbed 0.8% in February,
Commerce Department figures showed. The
University of Michigan’s final index of consumer sentiment rose to 76.2,
the highest since February 2011, from 75.3 last month. Employment gains are
helping sustain the consumer spending that accounts for 70% of the economy,
lifting sales at companies such as Nike Inc. Another report today showed
business activity held near a 10-month high, indicating that the US economy is weathering
rising fuel costs. (Bloomberg)
World: World Bank
board said to plan decision on President 1st April
The World Bank plans to pick its new president on 16 Apr
after interviewing the three candidates for the post the previous week,
according to three officials at the lender’s board. Nigerian Finance Minister
Ngozi Okonjo-Iweala is scheduled to meet the 25-person board 9 Apr, according
to the officials, who spoke on condition of anonymity because the dates haven’t
been made public. Former Colombian finance minister Jose Antonio Ocampo is to
be interviewed on 10 Apr, followed by the US candidate, Dartmouth College
President Jim Yong Kim on 11 Apr, the officials said. The new president will
succeed Robert Zoellick, whose term ends 30 June. The US is the bank’s largest
shareholder, and an American has always held the top job. The bank had
previously said it would make a decision by 20 Apr. (Bloomberg)
Source: OSK188
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