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Friday, May 22, 2009

Bursa Chat - News Highlights (22.05.2009)

Public Bank Bhd (PBK MK, Buy, TP: RM9.50), plans to raise RM1bn from a sale of 7.5% bonds, according to a source working on the transaction. The sale of the Tier 1 perpetual notes, callable after 10 years, is managed by CIMB Investment Bank Bhd and RHB Investment Bank Bhd. (Financial Daily)
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Axiata Group Bhd (AXIATA MK, Buy, TP: RM3.12) expects to finalise plans for a rights issue for its Indonesian unit PT Excelmindo PRatama Tbk (Excel) next month. Group chief financial officer Datuk Yusof Annuar Yaacob said Excel might raise US$300m to US$600m in a rights offer this year. He also said that the unit needed the funds to repair certain parts of its
capital structure. (StarBiz)
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Malaysian Airlines (MAS MK, Sell, TP: RM2.44) forward bookings until year-end look “positive and strong” despite the turbulence in the aviation sector. According to the senior general manager of sales Datuk Bernard Francis, demand for flights did decline since November but the group is in transformation mode and therefore managed to quickly shift its strategy to focus on the retail market by undertaking aggressive promotional activities to stimulate demand. (StarBiz)
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Sime Darby Bhd (SIME MK, Buy, TP: RM6.40), and Ramunia Holdings Bhd have extended the signing of a sale and purchase agreement for the proposed acquisition of the latter’s business for RM232m, by 14 days, from May 21 to June 4. The offer consideration comprises of RM46.2m cash and RM185.8m worth of Sime Darby Engineering Sdn Bhd’s shares, which represent 20% of the enlarged paid up capital. (Financial Daily)
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Telekom Malaysia Bhd (T MK, Hold, TP: RM2.74), signed on Internet provider Wi-Net Technology Sdn Bhd as the firm’s first wholesale customer of its high-speed broadband (HSBB) transmission service in a deal initially worth RM250m over 5 years. Wi-Net currently has operations in the northern states of Penang and Kedah, and plans to expand nationwide, said group chief executive officer Lee Wai Tuck. Lee said Wi-Net will be investing RM1bn over the next 5 years, starting with Johor Bahru in 3QCY09 and Klang Valley in 2010. This translates into about 2,000 locations nationwide by 2010, and 4,500 locations by 2014. (Financial Daily)
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Genting Bhd (GENT MK, Buy, TP: RM5.30) has invested US$100m (RM355m) in bonds of rival MGM Mirage Inc, a USbased casino operator, to secure better returns for its cash. It subscribed for senior notes that are secured against the Bellagio Hotel and Casino and the Mirage Hotel and Casino, both located in Las Vegas. Genting Overseas Holdings Ltd, a wholly-owned unit of Genting, invested US$50m while Resorts World Ltd, a unit of Resorts World Bhd (RNB MK, Buy, TP:RM3.00), also subscribed for the same amount. Resorts World Bhd is a subsidiary of Genting. Half of the total US$100m are notes that pay annual interest of 10.375% and are due in May 2014. The rest carry a rate of 11.125% and they mature in November 2017. (BT)
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The Valiram Group has been appointed as the exclusive and sole luxury retail operator of Resorts World at Sentosa, Singapore. The luxury retail boutiques at Resorts World are scheduled to be opened in the first quarter of 2010. Valiram said the 30,000 sq ft of luxury retail space would include a line up of luxury brands ranging from jewellery, fine watch making to leading fashion houses. (Financial Daily)
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Tan Chong Motor Holdings Bhd (TCM) expects to double its annual sales volume from 25k units currently with the introduction of at least 1 new Nissan model a year in the next 3 years. TCM executive director, Datuk Dr Ang bon Beng told reports yesterday that the group expected the 3 new completely knocked-down (CKD) models to have combines sales of 2k units a month (24k units a year) once they are completely introduced.. (The Malaysian Reserve)
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Moody's Investors Service has placed the deposit and debt ratings of 28 banks in the region, including nine Malaysian banks, on review for possible downgrade. According to Moody’s vice president Christine Kuo, the ratings review will determine the extent to which government debt is used to support Malaysian banks, which has traditionally increased bank ratings due to this systemic support. However, she added as the financial crisis continues, Moody’s will reassess this systemic support to determine if its levels are more closely alight to the government’s local currency bond rating. The affected banks here are HSBC Bank Malaysia Bhd, Malayan Banking Bhd, Public Bank Bhd, CIMB Bank Bhd, CIMB Investment Bank Bhd, RHB Bank Bd, Hong Leong Bank Bhd, AmBank (M) Bhd and EON Bank Bhd. Moody’s said the banks’ ratings are unlikely to lead to more than a one notch in its ratings review. (Financial Daily)
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Malaysia’ inflation eased to a 1 year low in April as transport and communication costs fell amid a slowing economy, according to Bloomberg. The Consumer Price Index (CPI) in April rose 3% y-o-y, after a 3.5% gain in March, and a 0.2% decrease m-o-m, the Statistics of Department said yesterday. That compares with the median forecast for a 3.2% increase in a Bloomberg News survey of 20 economists. The key driver for April’s CPI upswing was food and non-alcoholic beverages which increased 7.5% y-o-y. Decreasing indexes were transport, clothing and footwear, and communication, which fell 2.1%, 0.7% and 0.6% respectively y-o-y. (Financial Daily)
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Stocks ended lower Wednesday, erasing earlier gains, as the Federal Reserve's dour economic outlook curbed optimism about the health of U.S. banks. Stocks surged in early trading after Bank of America's US$13.5bn stock sale raised bets that the financial sector is stabilizing. Energy stocks also rallied as oil prices rose to a 6-month high. But the market slumped in the final hour of trading after the Federal Reserve reduced its growth targets and raised unemployment expectations. The central bank also said it expects a recovery in sales and production to begin during 2H09. The Dow Jones industrial average lost 0.6% (-52.8 pts, close 8,422.0). The Standard & Poor's 500 index lost 0.5% (-4.7 pts, close 903.5) and the Nasdaq composite lost
0.4% (-6.7 pts, close 1,727.8). In currency trading, the dollar slipped versus major international currencies including the euro, the yen and the British pound. U.S. light crude oil for June delivery rose US$1.94 to settle at a six-month high at US$62.04 a barrel on the New York Mercantile Exchange. (CNNmoney)
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Some Federal Reserve officials judged last month that the central bank may need to boost its purchases of assets to secure a stronger economic recovery, while all policy makers agreed to hold off on such a move at the time. Central bank governors and regional bank presidents presented a new set of forecasts at the April meeting. Their central tendency ranges project the economy will shrink 1.3% to 2% this year and grow 2% to 3% in 2010. That compares with forecasts in January of a contraction this year of 0.5% to 1.3% and growth of 2.5% to 3.3% for 2010. Central bankers forecast the unemployment rate at 9.2% to 9.6% this year and 9% to 9.5% next year. That compares with forecast ranges of 8.5% to 8.8% for 2009 and 8% to 8.3% for 2010 in January. FOMC members also saw “some signs pointing toward economic stabilization,” and some officials detected prospects for “a trough” in the housing market’s downturn. (Bloomberg)
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The European Central Bank’s Governing Council discussed a package of asset purchases worth about 125bn euros (US$170bn) this month, more than twice the amount finally agreed upon, people briefed on the talks said. The package proposed at the May 7 council meeting included buying commercial paper and corporate bonds, said the people, who declined to be identified because the discussions were private. After the meeting, President Jean-Claude Trichet announced plans to acquire 60bn euros of covered bonds, low-risk securities backed by mortgages and public-sector loans. Germany’s Axel Weber opposed buying assets and argues the ECB should maintain its focus on getting banks to lend to each other again. Smaller countries pushed for the ECB to follow the Federal Reserve and the Bank of England in buying a broader range of assets to pump money into the economy and counter the possible risk of deflation. The ECB’s plan is worth 0.6% of euro region GDP. Asset-purchase programs by the Federal Reserve and the Bank of England amount to about 12% of U.S. GDP and 10% of U.K. GDP. (Bloomberg)
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Bank of England policy makers voted unanimously this month to extend their money-printing plan by 50bn pounds (US$78bn) after initially debating whether to increase the program by more to fight the recession. “For some members, a case could be made for a larger stimulus,” according to minutes of the bank’s May 7 decision published yesterday. “But as the precise amount that would ultimately be required was so uncertain, there was no pressing need for the larger extension at this meeting.” Governor Mervyn King said last week that the British economy may face a “slow and protracted recovery” from the nation’s worst recession in a generation. The nine-member panel has now committed to spending 125bn pounds of newlyprinted money on government bonds and corporate debt. Prime Minister Gordon Brown’s government has authorized the bank to spend a maximum of 150bn pounds, and policy makers said they would ask King to seek permission for an extension “should economic conditions require it.” (Bloomberg)
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Spain’s economy shrank more than initially estimated in 1Q09 as consumer spending extended its slump and unemployment soared toward 20%. Gross domestic product contracted 1.9% from the previous quarter, when it shrank 1%, the National Statistics Institute in Madrid said yesterday. From the previous year, the economy shrank 3%, the most since at least 1970. In an initial report on May 14, the institute estimated GDP fell 1.8% q-o-q and 2.9% y-o-y. Spain, whose construction boom made it a motor of job creation in Europe, now has 4m people out of work, accounting for almost 70% of the annual increase in euro-area unemployment over the last year. About a million new homes remain unsold and the European Commission expects Spain to continue to contract next year even after other economies in the region start to recover.
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Japan’s economy shrank by a record last quarter as exports collapsed and consumers and businesses slashed spending, a decline that probably marked the low point in the country’s worst recession since World War II. Gross domestic product fell an annualized 15.2% in 1Q09, following a revised 4Q08 drop of 14.4%, the Cabinet Office said yesterday in Tokyo. The economy contracted 3.5% in the year ended March 31, the most since records began in 1955. GDP fell 4% on a nonannualized basis, more than double the U.S.’s 1.6% slide. It’s also worse than Europe’s record 2.5% contraction. Weaker domestic demand was the biggest contributor to the decline, shaving 2.6 percentage points off GDP, the most since 1974. (Bloomberg)
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Enthusiasm about an economic recovery in China may be “premature” as private investment lags behind government spending, the World Bank said. “Until we see a recovery in private investment, it’s hard to get too excited about the future,” David Dollar, country director for China, said at a forum yesterday. Private investment is “the main source of job creation,” Dollar said. “It’s very important for private investment to come back if China’s going to be able to continue to grow at a high rate that is sustainable.” Stimulus spending has “stabilized” the Chinese economy, he said, adding that it can’t be the source of long-term sustainable growth and more should be done to increase consumption. A 30.5% y-o-y gain in urban fixed-asset investment in the first four months, sparked by the stimulus plan, stoked investors’ optimism that a recovery is building. The central bank cautioned in a quarterly monetary policy report released May 6 that surging lending has been overly concentrated on government projects at the expense of small businesses. The recovery’s foundations aren’t solid, it said. (Bloomberg)
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The Organization for Economic Cooperation and Development will probably make few revisions to its economic forecasts next month as the world’s biggest industrialized countries weather a “very difficult patch,” OECD Secretary General Angel Gurria said. “I expect that 2009 will be a difficult year, and perhaps in 2010 we will have an end to the contraction and we maybe start to see a recovery,” Gurria said yesterday. The group forecast on March 31 that the economy of the 30 OECD members will shrink 4.3% in 2009, the most in more than 50 years. Gurria said he was “encouraged” by economic stimulus plans adopted by governments from Washington to Beijing to ease the global slump. While their impact varies from region to region, the conjunction of stimulus packages, interest rates near zero, liquidity injections and bank recapitalizations among OECD nations will eventually pay off, Gurria said. Gurria also warned about growing unemployment among the 30 OECD members. The organization on March 31 forecast the jobless rate will jump to 8.4% this year from 6% in 2008. (Bloomberg)
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Company Quarter Date
Maybank 3Q 21 May
TM 1Q 21 May
Sime Darby 3Q 25 May
Puncak Niaga 3Q 25 May
Sunway Holdings 3Q 26 May
IJM Corp 4Q 26 May
Larfarge Malayan Cement 1Q 27 May
KL Kepong 2Q 27 May
Sunway City 3Q 28 May
KNM 1Q 28 May
Plus 1Q 28 May
AirAsia 1Q 28 May

Reports Published
Company Title Target Price Rec Date
AirAsia (RM0.995) More interest hedge unwinding RM1.90 Buy 6 Apr
Banking Sector Weekly Review - Neutral 6 Apr
Oil & Gas Sector Weekly Review - Neutral 6 Apr
Plantations Sector Weekly Review - Overweight 6 Apr
Property Sector Weekly Review - Neutral 6 Apr
Construction Sector Weekly Review - Neutral 6 Apr
Telco Sector Weekly Review - Neutral 6 Apr
Hong Leong Bank (RM5.30) Disposal of Takaful Business RM5.80 Hold 9 Apr
Wah Seong (RM1.45) Business as usual RM1.55 Hold 10 Apr
Tenaga (RM6.50) 2QFY09 results preview RM7.00 Hold 13 Apr
Plantations March MPOB Data - Overweight 13 Apr
Banking Sector Weekly Review - Neutral 13 Apr
Construction Sector Weekly Review - Neutral 13 Apr
Property Sector Weekly Review - Neutral 13 Apr
Oil & Gas Sector Weekly Review - Neutral 13 Apr
Telco Sector Weekly Review - Neutral 13 Apr
Public Bank (RM8.45) 1QFY09 Results RM9.50 Buy 15 Apr
Tenaga (RM6.50) 2QFY09 Results RM7.00 Hold 15 Apr
TSH Resources (RM1.64) Buys 7.96% unlisted plantation company RM1.80 Buy 15 Apr
Plantations Sector Weekly Review - Overweight 20 Apr
Banking Sector Weekly Review - Neutral 20 Apr
Construction Sector Weekly Review - Neutral 20 Apr
Oil & Gas Sector Weekly Review - Neutral 20 Apr
Property Sector Weekly Review - Neutral 20 Apr
Telco Sector Weekly Review - Neutral 20 Apr
Bumiputra Commerce (RM8.00) Completes Bank of Yingkou purchase RM7.70 Hold 21 Apr
SunCity (RM1.99) Still some shine to it RM2.96 Buy 22 Apr
British American Tobacco (RM45.00) 1QFY09 Results RM47.00 Hold 23 Apr
Plantations Sector Weekly Review - Overweight 27 Apr
Banking Sector Weekly Review - Neutral 27 Apr
Construction Sector Weekly Review - Neutral 27 Apr
Oil & Gas Sector Weekly Review - Neutral 27 Apr
Property Sector Weekly Review - Neutral 27 Apr
Telco Sector Weekly Review - Neutral 27 Apr
Banking Financial sector liberalization - Neutral 28 Apr
Market Strategy Khazanah's Malaysian investments: Time to
- - 28 Apr
Banking April 2009: March numbers holding steady Neutral 30 Apr
Property Strong uptick in property loan approval Neutral 30 Apr
DiGi.Com (RM22.30) 1QFY09 Results RM22.60 Hold 4 May
Plantations Sector Monthly Review - Overweight 4 May
Telco Sector Monthly Review - Neutral 4 May
Construction Sector Monthly Review - Neutral 4 May
Oil & Gas Sector Monthly Review - Neutral 4 May
Property Sector Monthly Review - Neutral 4 May
Sime Darby (RM6.70) More than doubling yard space RM6.40 Hold 5 May
IJM Corp (RM5.30) Water tunnel job flowed in RM5.10 Hold 5 May
Hong Leong Bank (RM5.70) 3QFY09 Results RM5.80 Hold 7 May
Sunrise (RM1.46) 3QFY09 Results RM2.17 Buy 8 May
Plantations Sector Weekly Review - Overweight 11 May
Banking Sector Weekly Review - Neutral 11 May
Construction Sector Weekly Review - Neutral 11 May
Oil & Gas Sector Weekly Review - Neutral 11 May
Property Sector Weekly Review - Neutral 11 May
Telco Sector Weekly Review - Neutral 11 May
Building Materials Sector Weekly Review - Neutral 11 May
Bumiputra Commerce (RM8.85) 1QFY09 Results RM8.80 Hold 15 May
Heavy Industries (RM3.26) New JV signed with DNCS Under review Hold 15 May
AMMB Holding (RM3.18) 4QFY09 Results RM4.00 Buy 18 May
IOI Corp (RM4.44) 3QFY09 Result RM4.00 Sell 18 May
Media Prima (RM1.34) 1QFY09 Results RM1.25 Hold 18 May
Boustead Heavy Ind (RM3.30) 1QFY09 Results RM3.30 Hold 18 May
Banking Sector Weekly Review - Neutral 18 May
Building Materials Sector Weekly Review - Neutral 18 May
Oil & Gas Sector Weekly Review - Neutral 18 May
Property Sector Weekly Review - Neutral 18 May
Telco Sector Weekly Review - Neutral 18 May
Plantation Sector Weekly Review - Overweight 18 May
Construction Sector Weekly Review - Neutral 18 May
Boustead Holdings (RM3.54) 1QFY09 Results RM3.60 Hold 19 May
YNH (RM1.47) 1QFY09 Results RM2.02 Buy 20 May
Axiata (RM2.32) 1QFY09 Results RM3.12 Buy 20 May

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