Wednesday, September 30, 2009

Buy select liquid big caps, trade small cap - OSK Research

KUALA LUMPUR: OSK Investment Research maintains its neutral call on the local stock market and has recommended a two-pronged strategy to invest, which is to buy selected liquid big caps and trade small cap sectors such as oil and gas, CONSTRUCTION [] and steel.

The research house said in its October strategy report released on Thursday, Oct 1 that while its September top picks did well, with 4 out of 5 stocks outperforming the index, namely MMC, Top Glove, Mudajaya and MRCB, it advocates taking a short term approach for October.

"Our top picks are now focused on the oil and gas and construction sectors," it said Oct 1.

OSK Research said that while September took it by surprise with a liquidity driven run up, profit taking took over in the end on fears of a cutback on stimulus measures worldwide.

"Nonetheless, our top picks generally outperformed the index and benefited from the volatility.

"For October, with the run-up to the Budget, we expect a strong flow of news, which should hopefully, offset the signs of risks in global markets," it said

Tuesday, September 29, 2009

Malaysia, Saudi Arabia in US$2.5b venture

MALAYSIA and Saudi Arabia today entered a new era of economic cooperation with the setting up of a US$2.5 billion joint-venture company that will spearhead the flow of foreign direct investments from the Middle East as well as make strategic investments in high-impact projects in Malaysia.

The joint-venture company is the result of a partnership between 1Malaysia Development Berhad (1MDB) and PetroSaudi International Limited (PSI).

This venture is the first undertaken by PSI in this region and underscores the confidence Saudi Arabia has in Malaysia and economic prospects here, the two companies said in a joint statement.

Details of the joint venture is expected to be announced today.
1MDB, wholly-owned by the Malaysian Government, was established recently to drive strategic initiatives for long-term sustainable economic development and promote inflow of Foreign Direct Investments (FDIs) into the country.

PSI, based in Al-Khobar, Saudi Arabia, is mandated to carry out investments that can strengthen relations between Saudi Arabia and key countries worldwide.

The JVC’s objective is to seek, explore and participate in business and economic opportunities which result in the enhancement and promotion of the future prosperity and long-term sustainable economic development of Malaysia.

It is expected to actively make investments in the renewable energy sector.

The JVC is also expected to be a vehicle for investments from the Middle East into the region, thereby giving Malaysia the edge in drawing investments from the cash- and resource-rich region.

PSI Chief Executive Officer Sheikh Tarek bin Essam bin Ahmad said: “Malaysia has long been a model of stability and development for developing countries.

"We believe the recent economic liberalisation policies announced by the Prime Minister will only make Malaysia a more attractive place for investors.

"We envisage Malaysia becoming an important partner for the Kingdom of Saudi Arabia."

Also lauding the setting up of the JVC was 1MDB Chief Executive Officer Shahrol Halmi.

He said: “The JVC is set to further increase FDIs from the Middle East, in particular Saudi Arabia. We will leverage on PSI’s strong international presence, their networks and expertise to promote Malaysia as the preferred investment destination.”

The JVC will initiate various projects in multiple sectors that are mutually beneficial and in line with 1MDB’s mission to drive long-term sustainable economic development in Malaysia. - Bernama

Maxis said to have hired co-bookrunners

SINGAPORE UBS, JPMorgan and Nomura have been hired as co-bookrunners for telecom firm Maxis Bhd’s planned initial public offering in Kuala Lumpur, sources with knowledge of the deal said today.

The three banks joined Goldman Sachs, CIMB and Credit Suisse, which were earlier appointed as joint bookrunners and global coordinators for the share offer that sources have said could raise over US$2 billion by mid-November.

Maxis plans to kickstart investor roadshows for the share sale by early next month and book building for institutional offering by November 9, sources have said.

Malaysia’s largest mobile network operator by market share said earlier this month it plans to offer 2.25 billion shares or 30 per cent of its existing share capital in the IPO.

Maxis was not immediately available to comment, while UBS, Nomura and JPMorgan declined to comment. -- Reuters

Hai-O Enterprise upgraded to 'buy'

OSK Research Sdn Bhd has upgraded Hai-O Enterprise Bhd, a Malaysian seller of Chinese wines, herbs and medicines, to “buy” from “neutral”.

The research outfit in a report today said it also raised the target price on Hai-O to RM6.92 from RM5.20.

The shares of Hai-O Enterprise advanced 4.9 per cent to RM5.97 in Kuala Lumpur trading at noon break.

Hwang-dbs 29/9/2009

TA Enterprise (RM1.39; Buy; Price Target: RM2.10; TAE
A balance of ‘yin’ and ‘yang’
• Opportunity to own 5th largest market cap property
stock with prime KLCC landbank
• Strong proxy to recovery in market volume
• Initiate with Buy with SOP derived PT of RM2.10

Gamuda 4Q net profit down 38.3% at RM43.29m

KUALA LUMPUR: GAMUDA BHD []'s net profit fell 38.3% to RM43.29 million in the fourth quarter ended July 31 compared with RM70.2 million a year ago due to sharply higher operating expenses.

Gamuda said on Tuesday, Sept 29 that revenue however rose 10.68% to RM942.24 million from RM851.3 million. Earnings per share were 2.16 sen compared with 3.50 sen.

For the financial year ended July 31, its net profit fell 40.4% to RM193.69 million from RM325.07 million primarily due to lower contributions from all divisions arising from the challenging economic environment. Revenue rose 13.4% to RM2.72 billion from RM2.4 billion.

On the 4Q results, Gamuda said its operating expenses rose to RM913.23 million compared with RM782.75 million a year ago. Income tax expenses were also lower at RM33.33 million compared with RM61.22 million.

On its CONSTRUCTION [] division, Gamuda said the electrified double tracking railway project was slightly behind schedule due to late handover of land by the authorities.

Under the terms of the contract signed by the project company and the Government of Malaysia, all land should be handed over to the project company early this year but, to-date, only 88% has been handed over.

"The progress is expected to pick up pace in the next financial year when the balance of the land is handed over," it said.

On the new Doha International Airport project in Qatar, it said the Sinohydro-Gamuda-WCT joint venture was recently awarded RM740 million as additional works and settlement in respect of all the outstanding counter-proposals in respect of the variation orders, contractors' claims and scope changes.

"To-date the total contract value has now increased from the original contract sum of RM1.75 billion to RM3.27 billion," it said.

On the Yenso Park and sewage treatment plant projects in Vietnam, it said the projects were progressing well on schedule.

As for the property division, Gamuda said the recent two quarters' results have improved compared to the first two quarters of the financial year.

"The property market is recovering well as product launches such as shop offices in Kota Kemuning and bungalows in Valencia were fully taken up. Stabilised by an improving economic outlook and affordable interest rate environment, the property sector is gaining momentum and is expected to perform better in the next financial year," it said.

RHB 29/9/2009

Glomac : Prefers niche commercial property projects Outperform

1QFY10 Results

- 1QFY04/10 normalised net profit was below our expectation due to slower-than-expected commencement of construction for Glomac Damansara and higher-than-expected tax rate. In 1Q10, Glomac hit RM61m property sales, or 15% of its target sales of RM400m. This excluded Glomac Cyberjaya, bulk of Glomac Damansara and Sri Bangi-phase 3 which were launched in Jul, Mar and Aug 09, respectively. As at Jul 09, the company had unbilled sales of RM333m or 0.9x of our FY10 property development revenue forecasts.

- Key highlights from the analyst briefing: 1) enbloc sales of 25-storey corporate tower in Glomac Damansara will likely be concluded in Oct 09; 2) prefers to focus on niche commercial property projects and looking to buy commercial land in Klang Valley; and 3) intends to maintain gross dividend of 7 sen or pay more.

- Off market trade of 18.2m treasury shares at RM1.098 yesterday, or 10% discount to the current price to institutional investors. This is positive as it could raise the company’s profile among institutional investors and further improve its gearing.

- We are lowering our FY10-12 earnings forecasts by 2.5-6.3% to factor in the change in progress billing for Glomac Damansara and higher tax rate assumption. Our indicative fair value has been raised to RM1.50, based on 0.8x P/NTA. Maintain Outperform.

Monday, September 28, 2009

Stocks to watch: Plantations, O&G, TSR Cap, Gloma

KUALA LUMPUR: Asian markets including Bursa Malaysia could trade on a more positive note on Tuesday, Sept 29 after the overnight rally on Wall Street, enabling US stocks to snap a three-day losing streak.

A spurt of corporate takeovers in the TECHNOLOGY [] and health-care sectors fuelled optimism about share values, according to Reuters. Mergers and acquisitions are typically viewed as bullish as it suggests companies are more optimistic about the business outlook.

The Dow Jones industrial average rose or 1.28% to end at 9,789.36. The Standard & Poor's 500 Index gained 1.78% to 1,062.98. The Nasdaq Composite Index shot up 1.9% to 2,130.74.

At Bursa Malaysia, PLANTATION []s, and oil and gas (O&G) companies could take their cue from weaker commodity prices as crude oil prices fall in anticipation of weaker demand amid high inventory.

Palm oil rates tend to move in tandem with crude oil prices as costlier hydrocarbon energy prompts demand for palm oil as feedstock for production of biodiesel, a cheaper alternative.

"(Crude) Oil may find some support at USD58," SJ Securities wrote in a note. Malaysian palm oil for November delivery fell RM86 to RM2,115 a tonne yesterday while crude oil for the same month was traded at some US$66 a barrel, down from about US$72 seen last week.

Yesterday, shares of plantation firms IOI Corp Bhd lost 11 sen to RM5.23 while SIME DARBY BHD [] fell six sen to RM8.52. O&G process equipment maker KNM GROUP BHD [], the most actively traded stock, shed 2.5 sen to 76 sen.

CONSTRUCTION [] stocks AHMAD ZAKI RESOURCES BHD [] (AZRB) and TSR CAPITAL BHD [] could see trading interest on fresh corporate developments.

AZRB confirmed a report in The Edge Financial Daily that it had bid for a RM50 million job for the Hulu Terengganu hydroelectric project.

"At this stage, we can confirm that we have bid for the project but at present no letter of award has been secured with respect to the works mentioned in the said article," AZRB said.

TSR Capital secured an RM80 million job to build Phase 3A of the Space Technology Facility within the National Space Centre in Banting, Selangor.

A 6.12% block of shares in property developer GLOMAC BHD [], believed to be treasury shares, were traded off-market on Sept 28 at RM1.098 apiece.

Glomac posted net profit of RM8.34 million for the first quarter ended July 31, 2009, up from the RM7.8 million a year ago. On a pre-tax level, it was up 57% at RM16.47 million versus RM10.5 million a year ago.

As for AmcorpGroup and AMDB, the latest development was that Tan Sri Azman Hashim's AmcorpGroup Bhd's offer for sale of 119.8 million shares in a restructured AMDB BHD [] met with a cold reception as only 7.19% of the total shares offered were accepted.

Honda U3-XHonda’s balance control technology

Both Honda and Toyota seem to be quite interested in producing Segway-like personal mobility devices for human usage. Toyota has the i-REAL, and this latest gadget from Honda is called the U3-X. It’s still a concept for now, a compact experimental device that fits between the rider’s legs, to provide free movement in all directions just as in human walking – forward, backward, side-to-side, and diagonally.

Honda U3-XHonda’s balance control technology – gained from the robotics research of Honda’s bi-pedal ASIMO robot – enables the rider to control the U3-X by leaning his or her upper body to shift body weight. The U3-X moves via a wheel that Honda calls the Honda Omni Traction Drive System, or HOT Drive System. The letter U stands for “unicycle” and “universal”.

It enables movement in all directions, including not only forward and backward, but also directly to the right and left and diagonally. Basically you sit on it like a stool, and lean around to move. The height of the device is designed to enable the user to be placed roughly the same eye level as other people. Top speed isn’t much, considering your upright position perhaps it’s for the better. You can travel at speeds of up to 6km/h. The U3-X itself weighs less than 10kg, can run for an hour with a full charge, and uses a lithium ion battery.

The U3-X will be one of Honda’s exhibits at the 41st Tokyo Motor Show 2009 that will happen towards the end of October 2009. You can probably expect the new Honda boss Takanobu Ito to ride out onto the stage on one of these to deliver his opening speech :D

Look after the jump for video and videos of this gadget.

RHB 28/9/2009

Corporate Highlights

YTL Power : Venturing into telecoms but dividends intact Market Perform

Visit Note

- We recently met management, who was upfront and confirmed that YTLP, via YTL Communications (YTL Com), will be the vehicle for the rollout of WiMAX.

- Management stated that the two main reasons why YTLP was selected were: 1) YTLP has the necessary project management skillset required for the implementation of large infrastructure projects; and 2) YTLP has the cash and balance sheet strength to provide solid backing for the project.

- YTL Com plans to roll out a nationwide mobile WiMAX network (about 60% population coverage) for its soft launch in 3Q2010. The cost of the rollout in the first year is estimated to be around RM500-700m and in total, YTL Com plans to invest around RM2.5bn over the next five years.

- Despite the investment required for WiMAX rollout, management reassured us that YTLP’s dividends would unlikely be affected.

- We have trimmed our FY11 and FY12 net profit forecasts by 3% p.a. after incorporating YTL Com’s estimated operating losses.

- In our view, management’s reassurance regarding dividends means that a key investment thesis for the stock is intact, i.e. attractive net dividend yields of 6.9% p.a.. We raised our SOP-derived fair value to RM2.10 (from RM2.00) following an update in valuation parameters and a roll-forward in valuations but our Market Perform is unchanged.

IJM Plantation : More positive CPO price view Underperform

Visit Note

- Five key takeaways: 1) view on CPO prices; 2) FFB production growth expectations; 3) cost of production projections; 4) improved progress for its Indonesian land planting; and 5) funding requirements and plans.

- IJMP believes that CPO prices should start moving upwards towards the end of CY09 to higher levels of around RM2,600/tonne, which is expected to hold at least for the first six months of 2010. As for CY09, IJMP expects average prices to be around RM2,200, close to our projections. IJMP is still targeting 3-5% yoy growth in FFB production for FY03/10, as it believes the peak production period to have only started in Sep-09 and expects production to remain on the high side until Jan 2010. As such, it expects 3QFY10 and 4QFY10 to record better crop production on a yoy basis. We prefer to remain conservative at this juncture, and maintain our FY10 FFB production projection at a 3.7% yoy decline, before recovering in FY11-12.

- We have tweaked our forecasts up slightly for FY11-12, by 0.7-2.4%, after taking into account the lower debt assumptions. Post-earnings revision, our fair value is relatively unchanged at RM2.30, based on unchanged target PE of 13.5x CY10 earnings on fully diluted (for rights and full exercise of warrants) share base. We maintain our Underperform call on IJMP, as we believe its valuations are stretched, trading at a 10-15% premium to other mid-sized plantation stocks.

Maxis may fetch market cap of RM42b

MAXIS Communications Bhd, which is planning to re-list its Malaysian operations under an initial public offering (IPO), may fetch a market capitalisation of RM42 billion, ECM Libra Investment Research said in a note today.

It said Maxis' IPO shares may trade in the range of around RM5 and RM6.20, assuming a PE multiple range of between 16x and 20x based on FY10 EPS estimate.

"However, we believe Maxis will likely trade at around RM5.60 based on a PE multiple of 18x, taking into account its mobile market leadership thus deserving premium valuation over DiGi (16x), but a discount to TM's fixed-line and broadband monopoly (20x)."

At a prospective RM5.60 per share, Maxis will generate minimum dividend yields of 4.2 per cent in FY10, it added.
Trade with buyers and suppliers from around the world on!

"Such yields are lower than our estimates for DiGi and TM, but perhaps investors may overlook this to have a stake in a blue-chip company that may fetch a market capitalisation of RM42 billion," ECM Libra said.

IJM's RM1b CP/MTN gets MARC rating

MALAYSIAN Rating Corporation Bhd (MARC) has assigned MARC-1/AA- ratings to IJM Corporation Bhd's proposed RM1 billion Commercial Papers/Medium Term Notes Programme.

Concurrently, MARC affirmed the MARC-1/AA- ratings on IJM's existing RM300 million Commercial Papers/Medium Term Notes Programme, the rating agency said in a statement today.

"The ratings reflect the Group's strong market positions in construction and property development and its diversified operations across industry segments and key markets, which help to balance the cyclicality that is inherent in many of its individual business segments.

"The ratings are moderated by the weaker near-term industry prospects for its construction and property divisions in addition to the increased business risk and additional leverage resulting from the expansion of its oil palm plantations operations in Indonesia," MARC said.
It said the substantial capital spending requirements of IJM’s 55 per cent-owned subsidiary, IJM Plantations Bhd (IJMP), through 2014 could limit IJMP’s dividend capacity, while the additional leverage taken on by IJM to fund the take-up of its entitlement under IJMP’s rights issue would exert pressure on IJM’s credit metrics at holding company level.

The stable rating outlook was supported by IJM’s strong liquidity position and good financial flexibility, and incorporated MARC’s expectations that IJM would continue to prudently manage its financial profile, it added.

The proceeds from the new programme will be used to finance IJM’s subscription of IJMP’s proposed renounceable rights issue with free warrants, subscription to its 50 per cent-owned Lebuhraya Kajang-Seremban Sdn Bhd's Redeemable Convertible Unsecured Loan Stocks and refinancing of existing borrowings.

"Assuming an initial drawdown of RM500 million from the new programme, this would raise its net debt-to-equity (DE) ratio to 0.65 times (FY2009: 0.59 times) against its covenanted net DE ratio of 1.25 times, and correspondingly IJM’s CFO interest coverage is expected to decline to 2.0 times (FY2009: 2.5 times)," said MARC.

It said IJMP had projected a total capital expenditure of RM602 million over the next five years until 2014 to develop approximately 33,687ha of land, including the construction of three palm oil mills in Indonesia.

No revenue was expected from this investment in the near term, although it was eventually projected to double IJMP’s estate size from its current cultivated area of 25,249ha in Malaysia, it said.

"In the longer term, IJMP’s expansion plans should positively impact revenue and consolidated operating margins, notwithstanding its exposure to cyclical palm oil prices," it said.

Since MARC’s last rating action on IJM in June, 2009, the Group has announced its succession plan for the Group’s CEO and Managing Director.

Saturday, September 26, 2009

Marc Faber ,Bloomberg Video Interview, September 25

“I wouldn’t be surprised if we’d seen the peak of the market for this year because the economic news isn’t going to improve very much. The correction in the market has been overdue for quite some time.”

Stocks to watch: GLCs, SelProp, Vastalux, NSTP

KUALA LUMPUR: Market sentiment this week is expected to stay lacklustre in the absence of fresh positive corporate news, expect for several companies, while the continued losses on Wall Street are unlikely to see investors taking fresh positions.

On Friday, US stocks fell for a third straight day as investors stayed cautious following disappointing housing and durable goods data and concerns about TECHNOLOGY [] spending.

Reuters reports the rally in US stocks, which stumbled in recent days on worries about the economic recovery and continued government stimulus, will be tested this week, by crucial data on growth and jobs.

Data due out are September non-farm payrolls, the final reading of second-quarter gross domestic product and several other big economic reports.

There is concern that the rally in stocks, with the Standard & Poor's 500 index up about 54% since early March, could be fizzling out.

Meanwhile, CIMB Equities Research is maintaining an overweight stance on Malaysia following potential share placements by government-linked investment companies including Khazanah Nasional.

The research house said such corporate exercises would be a win-win move for Malaysia as they would increase free float and liquidity for government-linked companies (GLCs). The GLCs include Malaysian Airline System, PLUS Expressways, UEM Land, Pharmaniaga while Khazanah has also substantial stakes in Proton, Axiata, Telekom and Time Engineering.

"Placements could also help renew foreign investor interest and drive a re-rating of the market. We remain bullish on Malaysia and maintain our end-2010 FBM KLCI target of 1,400," said CIMB Research.

Selangor PROPERTIES [] Bhd posted net profit of RM33.3 million for 3Q ended July 31, up 182% from RM11.8 million a year ago, boosted by foreign exchange gains and higher profits from property development.

Revenue rose 36.5% to RM70.55 million from RM51.68 million. Earnings per share were 9.69 sen versus 3.44 sen.

In VASTALUX ENERGY BHD [], its executive vice chairman Mohamad Nor Abdul Rashid continued to reduce his stake in the company.

He sold 3.98 million shares in the open market at prices ranging from 41 sen to 46.8 sen from Sept 4 to 23. The recent disposals reduced his stake to 63.73 million shares.

As for NSTP and Utusan Malaysia, investors could be ready to lock in gains after several days of gain following an upgrade by Macquarie Research.

Macquarie Research upgraded NSTP to outperform and a target price of RM2.50, based on a 12 times price-to-earnings (PER) for 2010E. NSTP closed 13 sen higher at RM2.29 last Friday while Media Prima added four sen to RM1.54 and Utusan jumped 12.5 sen to RM1.04.

NSTP's three newspapers in its fold account for 35% of total circulation and 22% of total newspaper advertising spending (adex), it had said in the report.

Manohara, Wife of Kel* Prince, Leaked Nude Video

The video is said to be of an Indonesian socialite by the name of Manohara Odelia Pinot who marry a Malaysian prince then made the claims he held her as a sex slave and beat her. Supposedly the video is of the nude socialite with her prince husband behind the camera. Please be inform is for 18+ an above.. link from gutteruncensored link

Intel launches new Core i5 processor family, enhanced Core i7 and Xeon 3400 processors

Bank expects E&O to return to the black this year

Watch out for this bugger ....not bad not bad

The bottom line of Eastern & Oriental should return to the black in 2010 and jump 66 per cent in 2011 and 57 per cent in 2012, says CIMB Investment Bank

EASTERN & Oriental Bhd (E&O)(3417), a high-end property developer, could return to the black in the current financial year and stay profitable for the next three years, CIMB Investment Bank Bhd said in a report yesterday.

For the year to March 31 2009, E&O suffered a net loss of RM37.28 million compared with a net profit of RM128.85 million a year ago.

"The bottom line should return to the black in 2010 and jump 66 per cent in 2011 and 57 per cent in 2012. We believe robust earnings growth is sustainable even until 2013," wrote analyst Terence Wong in the report.

He noted that E&O has the highest upside to its target price if it manages to execute its ambitious launch schedule without too many hiccups.
The research house, which initiated coverage on the company yesterday, describes E&O as its top pick in the property sector with a trading buy target of RM2.18 a share.

This is a steep discount to E&O's revised net asset value of RM3.11 a share, which, according to CIMB's Wong, is the third steepest after UM Land Bhd and Hunza Properties Bhd and more than double the sector average.

Also, E&O has unbilled sales of RM310 million which should reap pre-tax profit margins of 25 per cent and this will be booked over the next two to three years, the CIMB report stated.

The group also has more than RM4 billion worth of properties that are ripe for launch over the next two to four years that should help in its turnaround prospect.

The bulk of the value comes from Seri Tanjung Pinang, a comprehensive mixed development township located 5km northwest of George Town and adjacent to Gurney Drive.

The project also involves reclamation of 397ha of land. So far this year, E&O has launched 33 link houses priced from RM1.1 million upwards, which were snapped up within hours.

Two intermediate units fronting the sea were sold for RM1.6 million, while two corner units, also fronting the sea, were sold for RM2.8 million, a record in Penang.

Its next launch will be the remaining 33 units of marina serviced apartments valued at more than RM30 million, while the biggest launch of the year will be condominiums with RM1.8 billion gross development value (GDV) in total.

Other sizeable launches include the Jalan Conlay condos with a GDV of RM800 million and the commercial building next to St. Mary Residences, situated in the heart of the Golden Triangle, with a GDV of RM500 million.

Selangor Properties 3Q net profit up 182% to RM33.3m

KUALA LUMPUR: Selangor PROPERTIES [] Bhd posted net profit of RM33.3 million for the third quarter ended July 31, up 182% from RM11.8 million a year ago, boosted by foreign exchange gains and higher profits from property development.

It said on Sept 25 revenue rose 36.5% to RM70.55 million from RM51.68 million. Earnings per share were 9.69 sen versus 3.44 sen.

Selangor Properties said pre-tax profit was RM41.94 million compared with RM13.1 million a year ago.

"The higher profit achieved for the current quarter was mainly due to foreign exchange gain of RM18 million as a result of the strengthening of the Australian Dollar and higher profit from property development," it said.

In the second quarter ended April 30 it posted a pre-tax loss of RM31 million due to the provision of impairment loss on its offshore investment in real estate funds.

However, for the nine-months, it was still in the red with net losses of RM3.54 million compared with RM85.65 million in earnings in the previous corresponding period. Revenue was RM166.58 million versus RM146.71 million.

On the outlook, Selangor Properties said the current global economic meltdown had resulted in provision for impairment loss on its offshore investment in real estate funds.

"Accordingly the group expects this current situation would affect the financial performance for the current financial year. However the group will remain cautious and will continue to strive to preserve the shareholders value," it said.
Nomura shares plunge on surprise US$5.6b share sale

OSK expects Maxis to be included in key market index

The listing could be timed to take place before an upcoming review of the FBM KLCI constituents scheduled for December 11, says OSK Research

MALAYSIAN Airline System Bhd (MAS), Petronas Dagangan Bhd or RHB Capital Bhd is likely to be removed from the stock market's key benchmark index to make way for the soon-to-be-listed Maxis Bhd, OSK Research said.

The local research house expects Maxis to be included in the FBM KLCI, which comprises 30 stocks at any one time.

It said the listing could be timed to take place before an upcoming review of the index constituents scheduled for December 11. The market largely expects a November listing for Maxis.

"As we believe Maxis may be included in the FBM KLCI to replace a less liquid and smaller capitalised component with a lower free-float, we believe that MAS, Petronas Dagangan and RHB Capital could potentially be replaced (in that order of possibility)," OSK's head of research Chris Eng said in a report yesterday.
The report studied how the FBM KLCI would be impacted should Maxis be included as an index component.

OSK had in the report assumed that Maxis may have a market capitalisation (cap) of RM41.2 billion and a free-float adjusted market cap of RM28.9 billion.

MAS was seen as the most likely candidate to be replaced on the index given that it has a smaller market cap, is relatively illiquid and has a low free-float, or proportion of shares available for trade on the stock market.
Trade with buyers and suppliers from around the world on!

Should MAS be replaced by Maxis, the latter would be the fifth largest component stock on the index, just ahead of Tenaga Nasional Bhd, which has a free-float adjusted market cap of RM26.6 billion.

Maxis' 5 per cent potential dividend yield would also make it the ninth highest dividend yielding stock on the FBM KLCI.

This may result in a repositioning of funds invested in dividend yielding stocks.

With the interest sparked by Maxis' upcoming initial public offering, the stock market could see some short-term fund inflow, Eng said.

He believes that the large-cap beneficiaries of this shot of excitement may include "liquid foreign darlings" such as CIMB Bhd, Genting Bhd and Axiata Bhd.

Friday, September 25, 2009

Rubber glove makers — time to fold them?

KUALA LUMPUR, Sept 25 — Shares of Malaysia's rubber glove makers have sky-rocketed since the outbreak of the H1N1 flu sent global demand for health-protection products soaring.

Higher average selling prices and lower latex costs provided an added boost, with Top Glove rising 103 per cent so far this year, Supermax up 219 per cent, Kossan Rubber up 49 per cent and Hartalega up 200 per cent.

As raw material costs start to rise and margins narrow with the weaker US dollar, is it time to sell stocks of glove makers with valuations reaching unreasonable levels, or should investors continue to accumulate the shares?

"We are positive on the sector," said Andrew Wong, who helps oversee assets worth US$5.01 billion (RM17.5 billion) as AmInvestment Bank's chief investment officer for equity asset allocation.

"If world demand is going to grow, whether it's because of the US healthcare reform or H1N1, and people are more health-conscious, then there is a very good fundamental call on that," he said. "We have Top Glove and Kossan. We're comfortable with their (fundamental) visibility and we're not selling (the shares)," said Wong, who declined to say how much stock in the two glove manufacturers the bank is holding.

Affin Research analyst Wong May Pearl has an "overweight" stance on the sector based on her assumption of double-digit earnings growth in 2010.

Malaysia is the largest exporter and producer of medical rubber gloves, supplying 65 per cent of the world's natural rubber and half of the world's nitrile gloves. Thailand and Indonesia account for most of the balance.

"The rubber glove industry is one of the best performing sectors year-to-date," said Affin's Wong.

"We believe current valuations are still undemanding. We expect glove players to register commendable double-digit earnings growth over the next few years at least, on the back of steady demand growth," she said.

Wong's top pick for the sector is Kossan, which she rates a "buy" with a target price of RM6.05.

According to Thomson Reuters data, 11 out of 14 analysts had "buy" and "strong buy" recommendations on Top Glove, the world's largest rubber glove manufacturer, while 10 out of 12 analysts had "buy" and "strong buy" ratings on sector laggard Kossan.

Some analysts say glove makers' valuations have shot through the roof and most stocks are starting to look expensive.

"If you look at Hartalega and Supermax, these stocks have gone up by 200 per cent, which is beyond fundamental valuations," said Mohd Fauzi Mohd Tahir, head of equities at AmIslamic Funds Management, part of Malaysia's fifth-ranked AmInvestment Bank group.

"It's tough to justify a buy on these stocks," he said.

According to Thomson Reuters data, Top Glove trades at 19 times its 2010 estimated earnings, Supermax trades at 11 times and Hartalega trades at 14 times.

The average PE for the food and household sector is 10.8 times earnings on Malaysia's benchmark index, which is up 39 percent this year.

RHB Research, a member of the country's fourth-ranked RHB Banking group, puts Hartalega's fair value at 9.5 times its 2010 estimated earnings, said analyst David Chong, who has an "underperform" call on Hartalega. — Reuters

Rubber glove makers — time to fold them?

KUALA LUMPUR, Sept 25 — Shares of Malaysia's rubber glove makers have sky-rocketed since the outbreak of the H1N1 flu sent global demand for health-protection products soaring.

Higher average selling prices and lower latex costs provided an added boost, with Top Glove rising 103 per cent so far this year, Supermax up 219 per cent, Kossan Rubber up 49 per cent and Hartalega up 200 per cent.

As raw material costs start to rise and margins narrow with the weaker US dollar, is it time to sell stocks of glove makers with valuations reaching unreasonable levels, or should investors continue to accumulate the shares?

"We are positive on the sector," said Andrew Wong, who helps oversee assets worth US$5.01 billion (RM17.5 billion) as AmInvestment Bank's chief investment officer for equity asset allocation.

"If world demand is going to grow, whether it's because of the US healthcare reform or H1N1, and people are more health-conscious, then there is a very good fundamental call on that," he said. "We have Top Glove and Kossan. We're comfortable with their (fundamental) visibility and we're not selling (the shares)," said Wong, who declined to say how much stock in the two glove manufacturers the bank is holding.

Affin Research analyst Wong May Pearl has an "overweight" stance on the sector based on her assumption of double-digit earnings growth in 2010.

Malaysia is the largest exporter and producer of medical rubber gloves, supplying 65 per cent of the world's natural rubber and half of the world's nitrile gloves. Thailand and Indonesia account for most of the balance.

"The rubber glove industry is one of the best performing sectors year-to-date," said Affin's Wong.

"We believe current valuations are still undemanding. We expect glove players to register commendable double-digit earnings growth over the next few years at least, on the back of steady demand growth," she said.

Wong's top pick for the sector is Kossan, which she rates a "buy" with a target price of RM6.05.

According to Thomson Reuters data, 11 out of 14 analysts had "buy" and "strong buy" recommendations on Top Glove, the world's largest rubber glove manufacturer, while 10 out of 12 analysts had "buy" and "strong buy" ratings on sector laggard Kossan.

Some analysts say glove makers' valuations have shot through the roof and most stocks are starting to look expensive.

"If you look at Hartalega and Supermax, these stocks have gone up by 200 per cent, which is beyond fundamental valuations," said Mohd Fauzi Mohd Tahir, head of equities at AmIslamic Funds Management, part of Malaysia's fifth-ranked AmInvestment Bank group.

"It's tough to justify a buy on these stocks," he said.

According to Thomson Reuters data, Top Glove trades at 19 times its 2010 estimated earnings, Supermax trades at 11 times and Hartalega trades at 14 times.

The average PE for the food and household sector is 10.8 times earnings on Malaysia's benchmark index, which is up 39 percent this year.

RHB Research, a member of the country's fourth-ranked RHB Banking group, puts Hartalega's fair value at 9.5 times its 2010 estimated earnings, said analyst David Chong, who has an "underperform" call on Hartalega. — Reuters

Tuesday, September 22, 2009

Oil rises above US$70, traders seek demand recovery signs

PERTH, Sept 22 – Oil rose above US$70 (RM244) a barrel today in a technical rebound after its 3.2 per cent decline in the previous session, as traders watch for clues to the health of the global economy from a US Federal Reserve meeting and a summit of G20 nations this week.

Oil’s fall yesterday followed a re-emergence of demand growth uncertainty in the wake of bearish comments from Asia’s top oil refiner, Sinopec, that China’s diesel demand remained depressed, while the International Energy Agency said world power output was likely to drop this year for the first time since 1945.

US crude for October delivery rose 72 cents to US$70.43 a barrel by 0822 GMT. The contract settled down US$2.33 at US$69.71 a barrel yesterday.

London Brent crude gained 62 cents to US$69.31.

“Its more of a technical rebound. There’s no real news supporting oil’s gains and its still very much trading sideways,” said Clarence Chu, a Singapore-based trader with Hudson Capital Energy.

A more buoyant mood, helped by gains in the equities markets, may also have supported oil prices, analysts said.

Asian shares edged higher today, helped by gains in South Korean technology shares, while European stock futures were up 0.9 per cent and US equity futures were nearly 0.7 per cent higher.

Still, oil prices have largely been trading in the range of US$67 to US$73 in the third quarter and were unlikely to breakout without news of a substantial supply disruption or new evidence of a major recovery in energy demand, said John Vautrain, an analyst at Purvin & Gertz in Singapore.

Oil prices have doubled from their December lows of around US$32 a barrel and struck a 2009 high of US$75 a barrel in August, thanks to cross-asset ebullience following a stream of positive economic data.

But most analysts agree the fundamentals of supply and demand are still weak and most of the market optimism about a global recovery in energy demand has already been priced in.

China’s gasoline exports jumped to their highest since early 2007 and diesel sales remained unexpectedly strong last month, data showed today, fuelling concern that domestic demand in the world’s No. 2 consumer is failing to keep up with record refinery production.

Analysts said the market will now keep a close watch on comments from the US Federal Reserve meeting and the G20 summit for hints to the pace of the recovery.

The US Federal Reserve begins a two-day monetary policy meeting today and while it is likely to hold interest rates, markets will be watching for any comments indicating the Fed might wind back its super-accommodative policy stance in view of improving economic data. Such a move would boost the dollar, analysts said.

The Asian Development Bank on Tuesday raised its estimate of 2009 average growth in developing Asian economies to 3.9 per cent from its March forecast of 3.4 per cent, saying Asia had proved to be more resilient than expected to the global financial crisis. – Reuters

Stocks to watch: Proton, DRB-Hicom, MISC, Green Packet

KUALA LUMPUR: The trade-shortened week, which starts on Wednesday, Sept 23, could see interest in telco stocks including Axiata Group Bhd and DIGI.COM BHD [] after Maxis Corp Bhd's (MCB) announcement to relist the local operations.

After the listing exercise, MCB would still hold 70% or 5.25 billion shares of the paid-up. A very large chunk of the 30% stake offered for sale (comprising of 2.25 billion shares) will go to institutions (2.075 billion shares) and the remaining 174.79 million shares for the public and customers.

Apart from telcos, other stocks to watch on Wednesday are PROTON HOLDINGS BHD [] and DRB-HICOM BHD [], MALAYSIAN RESOURCES CORP [] Bhd (MRCB), MISC BHD [], GREEN PACKET BHD [] and EASTERN & ORIENTAL BHD [] (E&O).

DRB-Hicom's major shareholder Tan Sri Syed Mokhtar Al-Bukhary has submitted a bid to purchase a block of shares in Proton, but this will not trigger a mandatory general offer.

MRCB and the Employees Provident Fund have secured the approval from the federal government to acquire and develop certain strategically located pieces of land belonging to the federal government.

In MISC, the company plans for US$3.4 billion in capital expenditure in the next three years, primarily in the offshore, petroleum and heavy engineering segments with funding that could put additional pressure on MISC's financial risk profile, according to Standard & Poor's Ratings Services.

While the ratings agency had affirmed its 'A-' corporate credit rating on MISC but the outlook on the rating remains negative. This is the possibility of higher leverage as MISC takes delivery of new debt-funded vessels over the next few years.

In Green Packet, the issue of 197.61 million rights shares was oversubscribed by 126.78% when the total acceptances and excess applications were 448.15 million at the close of the acceptance date on Sept 17. The rights shares with free detachable warrants were issued on the basis of one rights shares with one warrant for every two shares held.

In MALAYSIA PACIFIC CORP BHD [] (MPCorp), the company has proposed renounceable two-call rights issue of up to 129.44 million shares of RM1 each together with up to 129.44 million free detachable warrants at an issue price of RM1 per rights share.
This is on the basis of three rights shares with three warrants for every four shares held.

The first call of 42 sen per rights share will be payable in full on application in cash and the second call of 58 sen is to be capitalised from the retained profits account.

In E&O, its managing director Datuk Tham Ka Hon has given an irrevocable letter of undertaking to subscribe for his full entitlement of the proposed 10-year irredeemable convertible secured loan stocks (ICSLS) 2009/2019 of 65 sen each and also 33% of Ample Echo Ltd's entitlement if renounced to him.

Tham has also proposed to further subscribe up to RM20 million of the ICSLS to ensure than about 45.46% of the ICSLS to be issued will be at the minimum subscription level of RM92.81 million.

Sunday, September 20, 2009

KL bourse set for a bull-run

Malaysian shares are likely to move higher next week with the current bullish outlook in global equity markets.

Technical analyst of MIMB Investment Bank, Nazri Khan said the market was ready for a bull-run with the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) immediate target at 1,250.

"Strong overall bullish performance in global markets will drive sentiment on the local bourse," Khan said.

Increasing signs of the global economic recession coming to an end will boost global markets, he said.
Even though the stock market will see a shorter trading period next week due to the Hari Raya holidays, the market's uptrend is expected to remain intact, Khan said.
Celebrate Aidilfitri with a FREE BlackBerry® CurveTM from Celcom Biz

"Baby bulls with legs will start to appear for the local bourse as overall strength in Asian stocks such as the Bombay Stock Exchange Index, Sensex will provide the catalyst," he added.

There may be corrections, but investors should start to accumulate stocks for a longer term position in view of further upside potential by the end of this year.

Asian stocks rose to a new high on Thursday with stock markets in Hong Kong and South Korea surging to new highs after the rally on US stocks following positive economic data in the US and renewed confidence of a recovery in the global economy.

On Bursa Malaysia, shares were mostly higher during the week with the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) hitting a 52-week high of 1,218 on Thursday.

The market ended the week on a high note, with FBM KLCI finishing at 1,221.20, the highest level seen since June 30, 2008.

On a Friday-to-Friday basis, the FBM KLCI ended 12.92 points higher at 1,221.20 while the FBM Emas Index surged 102.11 points to 8,224.88.

The FBM Top 100 Index advanced 102.57 points to 8,017.07, the FBM 70 gained 174.28 points to 8,156.62 and the FBM ACE Index increased 9.36 points to 4,089.1.

The Finance Index surged 167.36 points to 10,017.25, the Plantation Index rose 2.9 points to 5,957.28 and the Industrial Index increased 20.85 points to 2,660.52.

Turnover rose to 3.551 billion shares worth RM5.65 billion from 3.313 billion shares worth RM5.717 billion last week.

Volume on the Main Market rose to 3.175 billion shares worth RM5.568 billion from 2.815 billion shares worth RM5.579 billion last week.

The ACE market volume decreased to 218.489 million shares worth at RM45.694 million from 267.363 million shares valued at RM64.459 million last week.

Call warrants volume decreased to 135.118 million units worth RM31.927 million from 204.205 million units worth RM61.759 million last week.-- Bernama

Friday, September 18, 2009

BATTLE OF THE ROYALS: RM50 million demand

Wah.Malaysia full of interesting story...Now the the Royal Bowl between NS and Johor Royal Family

THE RAJA MUDA OF JOHOR (PIC): Allegedly involved in the assault incident
TUNKU Dara Naquiah Tuanku Ja’afar, the eldest daughter of the late Yang di-Pertuan Besar Negri Sembilan, Tuanku Ja’afar Tuanku Abdul Rahman, denied rumours that the family had demanded a RM100 million monetary settlement from the family of the Raja Muda of Johor, Tunku Ismail Idris Abdul Majid Abu Bakar Iskandar Tunku Ibrahim over the latter's alleged “vicious assault” and abduction of her son in a hotel on Oct 25th last year as “my son's life is priceless”.

However, she said the law firm representing the family had sent a “lawyer to lawyer” letter of demand, dated Dec 10, 2008, seeking compensation to the tune of RM50 million but that letter was never responded to.

Tunku Dara Naquiah said she had contacted the Attorney General (A-G) Tan Sri Abdul Gani Patail and he had suggested that the matter be settled out of court, but she had told him, “my son’s life is priceless.”

She said the A-G assured the family of a fair investigation but there has been no news from the police so far.

The A-G has denied that nothing is being done by the police and the A-G's chambers (see accompanying

She said the reason the family waited 11 months before holding a press conference was because of her father's death and her son’s wedding and also because the family had been waiting for action to be taken by the police.

Tunku Dara Naquiah claimed she was assured by the police the documents had been handed over to the
Attorney-General’s chambers.

“I actually want justice to be done and that's why I am here.” When asked if there had been any contact between the two royal families since the incident, Tunku Dara Naquiah claimed Tunku Ismail’s parents had contacted her on the day of the incident to apologise “in not so many ways”, over what their son had done to Tunku Nadzimuddin.

It was emphasised that there had been no communication between Tunku Ismail and Tunku Nadzimuddin
prior to the incident and that the younger Tunku Ismail was not even personally known to Tunku Nadzimuddin.

Tunku Nadzimuddin said the day of the incident was the first time he had gone out in over a year as he had
been undergoing treatment for Hodgkins Lymphoma, from which he has since recovered.

“I also want to express my disappointment with the Royal Malaysian Police force...over what I can only conclude to be their serious lack of affirmative action in the investigations into this incident.

“Police had assured their probe would be carried out without fear or favour. I was further assured that no one was above the law and the assailants would be produced in court to face charges. However, I am today bewildered and shocked to learn otherwise,” he said.

Malay Mail had first highlighted the incident in late October last year in which we reported the Negeri Sembilan prince was allegedly assaulted in the lift at the lobby of a five-star hotel in Kuala Lumpur up to the 25th floor, when he was held in a room there by a member of the Johor royal family and his bodyguards.

The incident followed an earlier dispute at a trendy club in the Asian Heritage Row.

Selamat Hari Raya to all my friend and all my visitor

I here want to wish all my friend and visitor .Selamat Hari Raya Aidilfitri..
Enjoy the holiday with family and friend... Be carefully when you all balik kampung or go for holiday....Salam Aidilfitri from my Raytech.....have a nce weekend ya.... I will be not around next week.....until friday......Please enjoy the RAYA song below

Maxis Bhd to offer 2.25b IPO shares

Maxis Communications Bhd, the country's dominant mobile operator, plans to list its Malaysian business, Maxis Bhd (Maxis Malaysia), in the year's most anticipated initial public offering (IPO).

The listing is set to be the country's biggest since 1995, estimated at US$2 billion (RM7 billion), according to Reuters.

Maxis Malaysia will not be issuing new shares, but will offer 2.25 billion shares, representing 30 per cent of its existing share capital.

Some 92 per cent, or 207.5 billion shares, will be offered to institutional investors, and the rest to retail investors.

In a prospectus exposure on the Securities Commission's website yesterday, Maxis Malaysia said the listing will give the company the financial flexibility to pursue growth opportunities and enhance its profile, among other things.
"The exercise could help its main shareholders (Maxis) to fund the group's Indian investments," an analyst from a local research house said.
Celebrate Aidilfitri with a FREE BlackBerry® CurveTM from Celcom Biz

Upon completion of the IPO, Maxis' stake in Maxis Malaysia will be reduced to 70 per cent.

Tycoon T. Ananda Krishnan currently controls 75 per cent of Maxis, while Saudi Telecom Co owns the balance.

Maxis Malaysia, which registered RM1.14 billion net profit in the first half of this year, plans to return 75 per cent of its 2010 net profit as dividend.

"Until the IPO price is out, I can't tell whether the IPO is attractive or not. Without the IPO price, we can't calculate the yield based on dividend policy alone," another analyst said when contacted.

The offer price will be determined after a bookbuilding exercise. CIMB, Credit Suisse and Goldman Sachs are joint bookrunners for the IPO.

Maxis Malaysia, according to the draft prospectus, saw net profit rise 21.23 per cent to RM2.4 billion last year. In the first half of this year, its net profit declined 9.4 per cent.

Revenue rose 9.8 per cent to RM8.45 billion last year. In the first half of 2009, it was up 4.3 per cent to RM4.24 billion.

In the six months to June 2009, it had 11.42 million subscribers comprising 8.52 million prepaid, 2.73 million post-paid and 171,200 wireless broadband users.

The IPO is expected to help boost the local stock market as it would add to the number of large companies and help in efforts to woo more foreign shareholders.

Analysts and investors have been closely monitoring Maxis developments after Prime Minister Datuk Seri Najib Razak, in a media briefing during a working visit to Saudi Arabia some two months back, suggested that it be relisted to help attract investors to Bursa Malaysia.

Maxis was valued at some RM40 billion before it was taken private in 2007 by Ananda.

Short film on dementia

Thursday, September 17, 2009

KNM unit takes 50pc stake in Verwater

KNM GROUP Bhd announced today that its wholly owned subsidiary KNM International Sdn Bhd has completed its subscription for 100 ordinary shares of RM1.00 each, representing 50 per cent equity stake in a joint venture company known as Verwater Industrial Services (Malaysia) Sdn Bhd (VISM) for RM100.

VSIM was incorporated on August 11, 1992, as a private limited company under the Companies Act 1965, the group said in a statement.

It is presently dormant although its main activities are in the business of relocating and jacking of tanks, catalyst change-out and chemical cleaning works. - Bernama

Hicom-Chevrolet break up..

The staff of Hicom-Chevrolet Sdn Bhd have been informed that September 30 will be their last day of work as General Motors Corp (GM) finally severs its ties with DRB-HICOM Bhd to distribute Chevrolet vehicles here.

People close to the matter said some Hicom-Chevrolet staff will be deployed to DRB-HICOM's automotive complex in Pekan. Others will have to find a new job.

"Those affected will be given a salary compensation of one or two months," one source said.

It was earlier reported that DRB-HICOM lost the Chevrolet distribution job after GM decided not to renew the distribution pact that had lapsed on August 30.

DRB-HICOM denied the report but speculation was rife that GM was talking to five parties that included the Naza Group and Sime Darby Bhd for a new joint venture or partnership.
DRB-HICOM holds a 49 per cent stake in Hicom-Chevrolet, while the balance 51 per cent is owned by GM through wholly-owned General Motors Asia Pacific Holding Co LLC.

Sources said DRB-HICOM did make a final pitch yesterday to salvage the distribution pact, but its fate had already been decided earlier.

They said that in the interim, the warranty and services of Chevrolet vehicles here will be taken care of by Cergazam Sdn Bhd until GM decides on the new full-time distribution partner.

Cergazam is the super dealer for Chevrolet, owning four out of seven outlets selling the American vehicles nationwide.

Sources said DRB-HICOM could not convince GM that it will be able to continue to help develop the Chevrolet business in the country.

"It appears that Cergazam has shown more effort. The Chevrolet retail is controlled by Cergazam and DRB-HICOM doesn't and can't control Cergazam.

"Unless DRB-HICOM can set up its own retail system that is bigger than Cergazam's, then it is very unlikely both parties can co-exist in any new set-up," another source said.

Prospects of Renault being Proton's partner

French carmaker Renault SA, instead of Germany's Volkswagen AG, could end up being the technical partner of Proton Holdings Bhd, a research house has suggested.

AmResearch Sdn Bhd said its meeting with Renault Malaysia and related parties last month appeared to indicate the French carmaker's keeness to expand its presence in Malaysia and the Asean region.

"But it prefers a local partner to share its investment risk,"AmResearch said.

The research house did not rule out the possibility of Proton having further talks with Volkswagen, but felt that any such negotiations would be too lopsided against Proton.

"We think talks will involve smaller European carmakers with minimal manufacturing, market, and research and development (R&D) exposure in Asia, leading us to believe Renault is a likely suitor," it said in a recent report.
In April, Proton managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said the national carmaker was in very preliminary technical collaboration talks with Renault, an affiliate of Nissan Motor Co.

Industry observers had said then that the talks were focused on the supply of a diesel engine and probably joint development of the Perdana replacement.

Renault, France's second largest carmaker, does not have its own assembly plant in the region and has very little exposure to the Asian market, AmResearch noted.

Passenger models are fully imported from France and the sales volume here is small, it said.

Renault, however, has a local partner in Tan Chong Motor Holdings Bhd.

Tan Chong, which assembles, markets and sells Nissan cars here, also holds the local Renault franchise through wholly-owned TC Euro Cars Sdn Bhd.

AmResearch said Proton's appeal lay in its advanced, underutilised manufacturing plant as well as comprehensive distribution and after-sales network. Its Middle East exposure and strategic importance to the government further enhance its appeal.

"In the case of a partnership, a structure similar to previous VW talks, i.e. stakes at manufacturing and R&D level, could be adopted rather than outright stake sale at Proton holding level," AmResearch said

Wednesday, September 16, 2009


HI Guys, I have sold 6 lot of my KFIMA with 23% gain Kam SIA SIFU... i now have 0 KFIMA share on hand... I am now searching my next target to buy......Thank you vey much for the Raya Gift..........Selamat Hari to you guys

Tuesday, September 15, 2009

Co-founder raises indirect stake in Kump Jetson

Co-founder Tee Keng Kok's son bought 0.84 per cent of the company from the open market last week at between RM1.40 and RM1.43 a share

KUMPULAN Jetson Bhd's (9083) co-founder Tee Keng Kok has upped his indirect stake in the company, barely a month after selling the bulk of his shares in the firm to a group led by two top Naza Group executives.

Fillings to the stock exchange show the purchase was registered under Tee's son Tee Joe Jer.

Joe Jer bought 400,000 shares, or 0.84 per cent of the company, from the open market last week at between RM1.40 and RM1.43 a share.

Tee, who has more than 37 years of business experience in the trading, printing and rubber industries, is an executive director at Jetson, a position he has held in the company since July 1977.
Jetson filed in on Friday to Bursa Malaysia that Tee now indirectly owns 0.96 per cent of the company.

The company has a paid-up capital 53.07 million shares, while its estimated free float in the market is about 36 million shares.

Last month, Tee sold 5.88 million Jetson shares in a series of off-market deals to companies linked to SM Nasarudin SM Nasimuddin, group chief executive officer of the Naza Group, and SM Faliq SM Nasimuddin, group managing director of Naza TTDI Sdn Bhd and their partners.

The Naza brothers and their partners Woon Sung Liang and Soh Kim Hock, bought 33.15 per cent of Jetson in a deal valued at RM12.3 million.

They made an offer to buy all remaining Jetson securities for RM41.66 million, but subsequently increased the package to RM54.19 million.

The offer values the Jetson mother share at RM1 a piece, the loan stock at 93 sen a piece and the warrant at 1 sen a piece.

Since the fresh offer was made, the share price of Jetson have substantially run up to close the trading day at RM1.62 yesterday, the highest the stock has closed since January 7 2004.

The closing price is also small a premium over Jetson's net tangible asset of RM1.54 a share as at June 30 this year.

Jetson surges to new high on takeover plan

PETALING JAYA: Shares in construction company Kumpulan Jetson Bhd, together with its loan stocks and warrants, shot to new highs in heavy trading yesterday.

The stock surged 31 sen, or 19%, to RM1.93 while Jetson-LA gained 26 sen to RM1.76 and Jetson-WA rose 17 sen to 94 sen.

Jetson is involved in building and civil construction, property development, hostel management and manufacturing.

The company is a takeover target for Superior Pavillion Sdn Bhd (SPSB) and Odyssey Wealth Sdn Bhd (OWSB), which are led by brothers S.M. Nasarudin S.M. Nasimuddin and S.M. Faliq S.M. Nasimuddin.

A dealer with a brokerage said the buying interest seemed “irrational”, given that the present prices were way above the offer price for the shares and outstanding loan stock of RM1 per share and 93 sen per irredeemable convertible unsecured loan stocks 2002/2012 (Iculs).

“Maybe investors are betting that the offeror would revise the prices again,” he said.

SPSB, the largest shareholder of the company with a 33.15% stake, and OWSB had raised the offers earlier this month from 70 sen per share and 65 sen per Icul previously. The offer price for the warrants remains at 0.01 sen each.

Shareholders have until Oct 1 to decide on the offers. The board has appointed Kenanga Investment Bank as independent adviser for the deal.

A head of research said the present price levels were not reflective of Jetson’s fundamentals but investors were buying in anticipation of the future plans that the new shareholders would inject into the company after the exercise.

Yesterday’s closing share price represented a 25% premium over Jetson’s net tangible asset of RM1.54 per share as at end June.

Jetson turned in a profitable second quarter ended June 30 with a net profit of RM1.2mil compared with a net loss of RM726,000 in the first quarter due to improved margins and cost-cutting efforts.

Revenue rose marginally by 7% to RM26.9mil in the second quarter from RM25.1mil in the preceding three months.

Last week, executive director and co-founder Tee Keng Kok’s indirect shareholding in the company increased by 0.94% to 1.15% after his son, Joe Jer, bought 400,000 shares.

Jetson’s property projects include the development of semi-detached, bungalows and terrace houses in Kamunting, Perak, and the 78-acre site in Bukit Cherakah, Selangor, for medium-cost double-storey homes.

Its subsidiary, PJS Development Sdn Bhd, holds a 25-year concession to manage Universiti Putra Malaysia’s student housing.

Meanwhile, its manufacturing division makes, among others, customised rubber-moulded parts for the automotive, motorcycle, electronic and electrical sectors which are also exported to countries like the United States, Germany, Britain, Spain, India, China and Japan.

8 Malaysian SMEs in Forbes 'Best Under A Billion' list

Wah.. KFIMA also in...not bad..not bad..lucky i got boot some...haha.. happy investing

EIGHT Malaysian companies are among the 200 small and medium-sized (SME) companies in the Asia Pacific that got into Forbes Asia's fifth annual "Best Under A Billion" list for 2009.

The companies are Coastal Contracts Bhd (marine transportation), Efficient E-Solutions Bhd (information technology outsourcing), ETI Tech (batteries), Hai-O Enterprise Bhd (cosmetics), Kumpulan Fima Bhd (food processing), NTPM (paper products), Success Transformer (electrical manufacturing) and YNH Property Bhd (palm oil).

According to Forbes Asia yesterday, the winners were culled from over 25,000 publicly listed companies with under US$1 billion (RM3.49 billion) in sales.

Four Malaysian companies - Coastal Contracts, Kumpulan Fima, NTPM and YNH Property - each recorded US$101 million (RM352.49 million) in sales.
Of the others, Hai-O Enterprise registered US$122 million (RM425.78 million) in sales, Success Transformer US$53 million (RM184.97 million), ETI Tech US$24 million (83.76 million), and Efficient E-Solutions US$17 million (RM59.33 million).

Forbes Asia said a third of last year's companies returned to this year's list, with all having either increased sales and profits over the past 12 months or were forecast to do so in the coming quarters.

It said that 78 companies from Hong Kong and China, or nearly 40 per cent, dominated the list, followed by Japan with 24 companies, South Korea (23), India (20) and Australia (18).

Apparel, media, technology and healthcare companies led the way on the list, it added.

Commenting on the list for the September 21 issue of Forbes Asia, writer Jack Gage said there were many survival stories in these 200 top companies whose lessons other entrepreneurs could learn from.

Gage said unprecedented dislocations in the global economy disrupted supply chains over the past 12 months, froze lines of credit, depleted consumer coffers and sent business spending into hibernation.

"The 64 companies returning from last year are a testament to fearless management and 136 new entrants have seized opportunities arising from the economic uncertainty," he said.

The 200 winning companies will be honoured at the Forbes Asia's "Best Under A Billion" award ceremony in Singapore on November 11. - Bernama

Oil & Gas OSK

I like O&G stock.. it stand about 30% of my portfolio. my top pick is SEALINK ... About 47 of my portfolio is under construction my top pick is SP-Setia and you see what i see?

The Star’s online report yesterday said Chevron has announced that the Gorgon gas project
has been approved and will be developed off northwest Australia. Chevron will partner with
ExxonMobil and Royal Dutch Shell to develop the gas field. The report also said the project
has appeared to be more certain after PetroChina agreed to buy 2.25m tonnes of LNG p.a.
from the gas field.
Project background. We understand from our sources that the entire project is worth about
AUS$50bn, with estimated resources of about 40 trillion cubic feet of LNG, which is enough to
power a city of 1m people for the next 800 years. Chevron will be the main operator of the
project with a 50% stake, followed by ExxonMobil and Shell, with each holding 25%
respectively. These oil majors will build a plant which will include 3 production trains, a gas
plant and an established international shipping facility. We understood earlier that the Federal
Government has approved the project on the Barrow Island nature reserve, off west Australia,
but approval will be subject to conditions on managing and protecting local fauna, especially
the endangered flatback turtle.
Approval is good news for Malaysian companies too. We believe the main beneficiaries
will include Wah Seong and KNM, which have put in their bids for jobs in the Gorgon project.
We understand that Wah Seong stands a very good chance of winning at least part of the
pipe coating jobs since it is one of the two main bidders for the project, other than Bredero
Shaw. As for KNM, we understand from the company’s management that it too is bidding for
higher-end process equipment jobs. The group has significant presence in Australia through
its subsidiary, KPL. Maintain Buy on Wah Seong (TP: RM2.78) based on a PER of 12x FY10
EPS) and KNM (TP: RM1.01), based on PER of 10x FY10 EPS).

Construction reseach by OSK.. 15/9/2009

At a press conference yesterday, SPNB announced the details on the LRT extension,
whereby the Kelana and Ampang lines will be extended by 17km and 17.7km
respectively. Prequalification tenders are expected to be called next month and actual
award maybe in early 2010, with the construction period estimated at 3 years. We see 4
main potential beneficiaries of the LRT extension job - UEM Builders, Gamuda, IJM and
MRCB - by virtue of their experience in such jobs. We take this recent development as
a prelude to a tide of positive news for the sector. Our rating on the sector has been
upgraded from Neutral to OVERWEIGHT.
Press conference held. At yesterday’s press conference, Syarikat Prasarana Negara Bhd
(SPNB) provided the details on the much anticipated Light Rail Transit (LRT) extension. While
the investing community was (sadly) not invited for the conference, we managed to zoom in
on the conference’s key takeaways from our contacts.
Details on the Kelana line. The Kelana Jaya line would be extended from the existing
Kelana Jaya station into Subang Jaya and USJ before ending in Putra Heights. A total of 13
stations will be located along the 17km long Kelana extension. There will also be an
interchange at the existing KTM line located behind Carrefour in Subang Jaya.
Details on the Ampang line. The extension of the Ampang line will begin from the existing
Sri Petaling station, passing through Kinrara, Puchong and also ending in Putra Heights. The
slightly longer 17.7-km Ampang extension will also have a total of 13 stations. Both the
Kelana and Ampang extension lines will connect at an interchange in Putra Heights. The map
and alignment of both lines are shown in the Appendix.
Status of the job. SPNB said conditional approval for the project was obtained on Aug 25,
’09 and most contractors have submitted their “Expression of Interest” for the job. Starting
today, the proposed alignment will be on public display for 3 months to enable the public to
provide feedback on the proposals and highlight any issues that may impact on residents.
What’s next? We understand that prequalification tenders are expected to be called next
month. From our channel checks, most contractors said they expect the final tenders to be
called by year-end and the actual award by late 1Q10/ early 2Q10. This timeline jives in with
SPNB as it expects construction to begin in early 2010. Barring any unforeseen
circumstances, SPNB should receive the final letter of approval after the 3-month period for
public feedback ends. Construction is expected to take 3 years.
Ridership to double. Currently, the average daily passenger ridership is 180,000 for the
Kelana line and 170,000 for the Ampang line. Upon full completion of both extensions,
passenger ridership is expected to double. We believe this is possible as the extended lines
mainly penetrate the populated mature townships such as Subang Jaya, USJ and Puchong.
See important disclosures at the end of this report
OSK Research
OSK Research | See important disclosures at the end of this report 2
See important disclosures at the end of this publication
Project to cost RM7bn. The total cost of the extensions is a whopping RM7bn. We gather that this
includes RM2bn in land acquisition cost. An issue that remains unresolved is the number of packages to
be awarded. We gather from one contractor that the job is likely to be awarded in 4 packages - 2 each
for the Kelana and Ampang extensions. Subtracting land acquisition cost, each package would be
valued at RM1.25bn, comprising civil and M&E works.
Project financing. To finance the RM7bn job, SPNB has raised RM2bn in bonds, which we think will be
used for land acquisition. During the 3-year construction period, we believe another RM2bn worth of
bonds will be raised, mainly for progress payments to contractors. SPNB has said that it currently has
RM2bn in internal funds. We postulate that funding should not be an issue as (i) SPNB is wholly-owned
by the government, which provides security to borrowers, and (ii) the anticipated doubling of passenger
ridership should help service the debt.
Potential beneficiaries. We see 4 potential beneficiaries of the LRT extension: UEM Builders (Not
Listed), Gamuda (SELL, TP: RM2.94), IJM (NEUTRAL, TP: RM6.21) and MRCB (TRADING BUY, TP:
RM1.69). We reckon that Gamuda has the necessary expertise to undertake the job given its experience
with the Kaohsiung Mass Rapid Transit (MRT) in Taiwan. IJM and Road Builders (acquired by IJM in
2007) were one of the main subcontractors for the existing LRT line. On the other hand, MRCB was
involved in the existing LRT portion at KL Sentral. Lastly, UEM Builders was the main contractor for the
existing line. Another potential beneficiary is Mudajaya (BUY, TP: RM4.80) which previously constructed
some of the existing LRT stations. It also built the ERL link at KLIA.
Upgrade to OVERWEIGHT. We take this latest development as a prelude to more positive news for the
sector. Expectations of the awarding of more projects should keep contractors in the limelight, in our
view. As such, we are upgrading our sector rating from Neutral to OVERWEIGHT. For those concerned
over the lofty valuations, we suggest a switch to smaller cap contractors. Our top sector picks are
Mudajaya and WCT (BUY, TP: RM3.12). We also like Naim Holdings (BUY, TP: RM3.46) for Sarawak
related plays.

Monday, September 14, 2009

Syed Mokhtar, Kisai eyeing Proton stake

Khazanah stake may be acquired via DRB-HICOM

PETALING JAYA: Low-profile tycoon Tan Sri Syed Mokhtar Al-Bukhary may be eyeing Khazanah Nasional Bhd’s stake in Proton Holdings Bhd.

News of his interest surfaced after a blogger mentioned his name and that of Datuk Kisai Rahmat, a former Proton executive director in charge of the national carmaker’s engineering and manufacturing division, as those interested in Khazanah’s 42.74% stake.

According to a source, this stake could be acquired via DRB-HICOM Bhd, a company in which Syed Mokhtar holds a 56% stake. “Unofficially yes, he’s interested in acquiring the Khazanah stake,” the source told StarBiz yesterday.

It, however, declined to say whether talks were already ongoing with Khazanah.

This would not be the first time that DRB-HICOM is used as a vehicle to acquire Khazanah’s stake as the company was in preliminary talks to acquire the stake in late 2006.

DRB-HICOM is no stranger to Proton as the company used to own a 27% stake until it was sold off to Petroliam Nasional Bhd in 2000.

Efforts to contact Kisai, who is vice-chairman of Yasmin Holdings Sdn Bhd, were unsuccessful.

It is understood that Kisai could partner the Naza group to acquire the stake. The Naza group is primarily involved in automobile distribution and manufacturing as well as property development. The group’s late founder, Tan Sri SM Nasimuddin SM Amin, was also keen on a stake in Proton.

Alor Star-based Yasmin Holdings is involved in providing rust-proofing services to Proton. The company is also involved in the provision of oil and gas services as well as information technology services.

Besides DRB-HICOM, an automobile manufacturer and distributor, Syed Mokhtar is involved in a slew of business ventures, including ports, power generation, plantations and property development.

He has controlling stakes in two other listed companies – MMC Corp Bhd and Tradewinds Corp Bhd.

Besides a stake sale to local business entities, analysts were also speculating that Proton could be close to a stake sale to Renault SA, although no details were forthcoming on the deal. They maintained that Proton needed to form a strategic partnership with a foreign carmaker for the company to have a viable long-term future.

Express Rail Link gets Indian, Saudi invitations

Express Rail Link Sdn Bhd (ERLSB), a rail operator controlled by YTL Corp Bhd, has received offers from India and Saudi Arabia to participate in some major railway projects in the two countries.

Chief executive officer Noormah Mohd Noor said a Delhi-based consultancy firm wants ERLSB to offer its expertise in packaging the financing for a few railway projects in India.

India will be investing more than US$20 billion (RM70 billion) for railway development over the next few years.

Noormah said a group in Saudi Arabia has offered to tie up with ERLSB for operation and maintenance contracts.

The group is involved in railway developments and has bid for projects in Medina.
Noormah declined to name the companies.

"We will study the feasibility of the contracts to see if it would be viable for us to cary out the works. There are a lot of railway developments in Saudi Arabia," she told Business Times in an interview.

It was reported this month that the Saudi Railways Organisation is inviting bids for the second main construction job on its US$7 billion (RM24.4 billion) high-speed railway between Mecca and Medina.

It has asked six prequalified international consortiums to prepare bids for the US$1.4 billion operations, signaling and maintenance deal.

The Al-Rajhi Alliance, led by Saudi Arabia's Mada and Al Rajhi groups, won the first main construction contract in March this year.

"We are capable of handling operation and maintenance contracts. Our unit ERL Maintenance Support Sdn Bhd (Emas) is doing something similar in Thailand. We want to be sure it is the right time to enter India and the Middle East," Noormah added.

Emas has contracts from the State Railway of Thailand. for operation and maintenance, plus to train drivers for Bangkok's express railway line,

Noormah said Emas has been invited to submit proposals for similar contracts in India and Dubai and is in preliminary talks with the project owners.

"While we are exploring to go overseas, our focus is still on Malaysia. There is a lot more we could do to build our business, such as offering our expertise for railway development locally," she added.

ERLSB holds a 30-year concession to operate the KLIA Express and KLIA Transit rail services from KL Sentral in Brickfields, Kuala Lumpur, to the KL International Airport (KLIA) in Sepang.

It has 12 electric high-speed train sets to operate the routes.

Weak Dollar also means strong Commodities and equities , this crisis was avoided by postponing it

Surprise if stake in Sime Darby not sold, says CIMB

Morgan Stanley ups oil price forecast to US$105 in 2012

SINGAPORE: Morgan Stanley has raised its forecast of US crude oil price to US$105 a barrel in 2012 from US$95 due to tightening spare capacity, the U.S. bank said in a research note seen on Monday, Sept 14.

Reuters reported that Morgan Stanley expected global spare production capacity to stay ample through end-2010, before declining in 2011 and reaching 2007/08-like tightness by 2012.

"Assuming that demand returns to growth, we see global spare capacity back to 2007/08 levels by 2012, and getting even tighter thereafter," Morgan Stanley said.

"We believe that prices will need to move higher to ration demand as the world struggles to find enough supply," it said, adding that the research was based on the bank's proprietary database of more than 460 fields expected to come online through 2015.

International benchmark U.S. crude peaked above US$147 in July 2008 on strong demand from emerging economies such as China.

But the global economic recession has curtailed energy demand and slashed oil prices, which have traded around US$68 to US$71 a barrel over the last week.

Morgan Stanley assumes oil demand to fall by 2 million barrels per day (bpd) this year, rebound by 1 million bpd in 2010 and then grow by just 1% thereafter, it said.

Post 2012, global liquids production shows the potential to increase to what the bank believes will be a maximum achievable level of roughly 92 million bpd, it said.

Even if this record level is achievable, global demand growth at 1 percent annually would still leave the market tight, it added.

There was considerable downside to much of the post-2013 production schedule, the report said, citing political wrangling over Project Kuwait, oil laws in Brazil, militant attacks in Nigeria and an array of issues with Iraq, Iran and Venezuela that will put global spare capacity at risk. - Reuters

Prasarana budgets RM6b to RM7b to extend LRT lines

KUALA LUMPUR: Syarikat Prasarana Negara Bhd, the sole asset holder for the entire Klang Valley and Penang public transport system, is budgeting between RM6 to RM7 billion to extend the existing light rail transit (LRT) lines in operation.

Prasarana group managing director Datuk Idrose Mohamed however, the amount could vary once the public display of the alignment ends in three months. The public display will start from Sept 15, Tuesday at various locations, and during this period the public is invited to give constructive feedback.

Prasarana, a unit of the Ministry of Finance, already raised RM2 billion worth of Islamic bonds, which was more than three times oversubscribed, with an order book of RM6 billion.

“Once we gain the final approval from the Ministry of Transport, then we will be about to call out for tenders for the CONSTRUCTION [] portion,” Idrose said on Sept 14.

He added Prasarana would call for a pre-qualification for contractors for the civil works.

The Kelana Jaya (formerly Putra) extension line will start from Kelana Jaya and run 17 km through 13 stations spanning Subang Jaya to Putra Heights.

The Ampang (formerly STAR) extension line will start from Sri Petaling station, and run 17.7 km through 13 stations passing through Kinrara, Puchong and end at Putra Heights.

He added that Prasarana hoped to complete the extensions by 2012.

Sunday, September 13, 2009

Upcoming National Automotive Policy (NAP)

The Edge weekly reported that the upcoming National Automotive Policy (NAP) policy will introduce incentives for car manufacturers to develop "home-grown models" in an attempt to attract more value-added investments, especially in product development, from foreign car manufacturers. Industry sources say the government is trying to shift its automotive policy whereby the emphasis will no longer be on keeping a strict division between national carmakers Proton and Perodua, and non-national players such as the Naza Group, UMWToyota,
Honda Malaysia and others.

Maintain OVERWEIGHT on sector. We continue to retain our OVERWEIGHT recommendation for the auto sector, backed by the stronger than expected vehicle sales, as well as the potential of further liberalisation of the sector, which may bring in more foreign partnerships. Our calls across our coverage are BUYs (Proton: TP RM5.10, MBM: TP RM2.87, TCHONG: TP RM2.35, NHFATT: TP RM2.22) while UMW and EPMB are retained as SELL, with target prices of RM4.71 and RM0.32 respectively.

Guide to investing in call warrants

A key feature of Bursa Malaysia’s online game for young investors - Bursa Pursuit is providing education on adopting informed investment strategies. This third of a four-part series focuses on a key investment tool to participate in the growth of an active stock.

IN our previous articles, we talked about how companies initiated corporate actions like “share splits” and “bonus issues” that help transform a listed company’s share structure and potentially affect the returns to shareholders.

Now, let’s talk about a specific instrument that is not created or initiated by the listed company, but rather by an investment bank. Called a call warrant (or “option” outside Malaysia), this tool gives investors the right to own stocks in a company at a fraction of the share’s cost for a fixed period of time.

A call warrant is a derivative-based product that has a fixed tenure (maturity) and, if not exercised, is worthless after its expiry date. Therefore, it is essential to select a call warrant that has sufficient time before it expires to match investment targets.

While a call warrant is traded like a stock, it is not based on the company’s performance but the attractiveness of the company’s stock that is being traded on the stock market. It derives its value from the value of an underlying security stock.

A holder of a call warrant does not have any voting, shareholding or dividend rights. The investor therefore has no say in the management of the company, even though he is affected by any decisions made by the company that impacts the share price of the warrants.

As call warrants are somewhat volatile investment vehicle, it pays to understand some of the terms used.

# “Mother share”: The share on which the call warrant is based. It is also known as the underlying security.

·Expiry date or ex-date: This is a very important date to know, because if you do not redeem your call warrant before or on the expiry date, it ceases to exist.

·Exercise or strike price: It’s the stated price per share for which the mother share may be purchased or sold by the call warrant holder upon exercise of the call warrant contract.

# Settlement types: This means the type of settlement to warrant holders upon maturity i.e. physical-settled or cash-settled.

# Settlement price: This means a reference price determined by the market in which a Call Warrant is converted into cash value.

The call warrant is classified by its exercise style:

·American warrant: This call warrant can be exercised anytime before or on the stated expiry date

·European warrant: Exercise of this call warrant can be carried out only on the day of expiration.

Before investing in call warrants, there are three things you should know and watch out for:

1. Volatility of the mother share because a highly dynamic stock can make the call warrant even more volatile due to the leverage.

2. Determine the leverage based on the formula given below. This determines how much you get paid at the end and the amount you gain or lose when the price goes up or down.

3. Determine the settlement amount based on the formula given below. This determines how much you get paid upon expiry or exercise of a cash-settled call warrant

Cash Settlement formula:

(Settlement Price - Exercise price) / Entitlement Ratio} x Number of CW exercised - Exercise Expenses

4. Expiry Date: The date the call warrant closes and ceases to exist. This means that when the expiry date is due, the value of the call warrant follows the payout formula described in cash settlement formula. However, if the settlement price is less than the exercise price, the cash settlement amount is zero.

Let’s say company XYZ shares are currently priced at RM10 per share. To purchase 1,000 shares which is equivalent to 10 lots, an investor would need RM10,000. However, if the investor opted to buy a call warrant (representing one share) that was going for 50 sen per call warrant, the investor could enjoy the right to own 20,000 shares with the same RM10,000, and be highly rewarded if there is a rise in price!

Because the prices of call warrants are low, the leverage they offer is high so there is a potential for large capital gains, but also losses. While it is common for a share price and a call warrant price to move in parallel, the percentage gain (or loss) will be varied because of the formula used to determine the final payout.

To illustrate this, let’s say that share XYZ gains RM1 per share from RM10 to close at RM11. The percentage gain would be 9%.

However, with a RM1 gain in the call warrant, from 50 sen to RM1.50, the percentage gain would be 66%.

As mentioned above, the leverage call warrants offer can be high. But when the gains are big, the losses can be big too!

If the price drops by RM1, the percentage loss for the share price would be 10%, while the loss on the call warrant could drive the value close to zero. The large drop could bring the settlement price lower than the exercise price, resulting in a zero payout.

Yes, call warrants can offer a smart addition to an investor’s portfolio, but due to their risky nature, call investors need to be attentive to market movements and informed before making their investment decisions.

Happy investing!

Saturday, September 12, 2009

Marc Faber of the Gloom Boom and Doom report recently on Bloomberg and Goldseek Radio

Investor Marc Faber said government spending and low interest rates will keep the U.S. deficit “very high” and will spur inflation.

Interest rates will be kept “artificially low” and remain “near zero for a long time” in the U.S., Faber, the publisher of the Gloom, Boom & Doom report, said today in a presentation broadcast on the Internet. “The deficit will stay very high and that will create some kind of more inflation down the road.”

The Federal Reserve is likely to continue to “print money” in an effort to boost the U.S. economy, and that, combined with low interest rates, will spur weakness in the dollar, Faber said. U.S. President Barack Obama has pumped up the nation’s marketable debt to an unprecedented $6.94 trillion as he borrows to spur the world’s largest economy.

“Money printing will be unprecedented because the deficit will need to be financed,” Faber said. “The weaker the economy, the more the stock market will go up because the money that is being printed will go into” speculative assets.

Faber, who recommended buying U.S. stocks in October, before the biggest rally in more than 70 years, said investors should buy equities instead of bonds or holding cash.

Stocks to watch: Sime Darby, Petra Perdana, Astro, Genting

KUALA LUMPUR: Stocks on Bursa Malaysia are expected to extend their gains for the week starting Sept 14 on the latest data showing strength in the economic recovery following the latest industrial production index.

The gains could be limited to the big capitalised stocks and blue chips on institutional buying, mirroring the Sept 11 close when the 30-stock FBM KLCI closed at a fresh 14-month high.

However, investors could be more optimistic as the global economy makes a recovery, one year after the collapse of the Lehman Brothers Holdings and the resultant global financial crisis.

Despite the weaker close on Wall Street on Friday, after five days of gains, sentiment is still firm. October crude oil futures fell nearly 4% to settle at US$69.29 a barrel due to a higher-than-expected rise in refined fuel inventory, according to Reuters.

At Bursa Malaysia, several government-linked companies could see interest including Sime Darby and Malaysia Airports Holdings Bhd (MAHB) following the fresh news. Pos Malaysia saw 25 million shares done off-market at an average price of RM2.30 apiece in the morning session. Other stocks are Petra Perdana, Mulpha International, Astro and Genting.

Sime Darby could attract attention as investors hope for the entry of a Chinese sovereign fund.

On Friday, Prime Minister Datuk Seri Najib Razak declined comment on reports that the government was offering a stake of up to 10% in PLANTATION [] conglomerate SIME DARBY BHD [] to China, stating that he did not wish to "pre-empt" any decision.

Najib said he did not want to pre-empt any decision and that an announcement would be made once a decision was reached.

PETRA PERDANA BHD [] has disposed of 10.5 million shares in PETRA ENERGY BHD [] at RM1.53 apiece for RM16.06 million. The proceeds from the divestment of the stake would be used to reduce borrowings.

However, the Petra Perdana group will sustain a loss on disposal of about RM500,000 arising from the disposal of the sale shares.

Mulpha International made a one-off group gain of RM16.81 million for the year ending Dec 31, 2009. after its units disposed of their entire combined stake in Pacific Orchid Investments Ltd.

Pacific Orchid's group core businesses are paint manufacturing and trading in petrochemicals.

Astro and Genting, which extended their losses on Friday, could continue to see some pressure after the latest batch of corporate news which disappointed investors.

Nokia puts Booklet 3G netbook up for pre-order... in Italy

So, we've got some good news and bad news. The good news is that Nokia's already offering up its Booklet 3G netbook for pre-order over in Italy, which is becoming an all-too-familiar scene for Nokia wares. The bad news is that the posted price is, um, absurd. During a keynote at Nokia World 09, listeners were told that the Windows 7-powered machine would ring up at "just" €570, yet Nokia's own Italian e-store has it listed for €699. That's just over a grand in Greenbacks, though we get the feeling it'll be selling for substantially less once the feel-good emotions fade and cold, hard economics take their toll.

Update: As pointed out in the comments, the announced €570 price was likely pre-tax and pre-carrier subsidy as is typical for Nokia's European announcements. The €699 price is thus VAT inclusive.