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Friday, October 23, 2009

Bursa Chat - News Highlights 23.10.09

IJM Corp Bhd (IJM MK, Hold, TP: RM3.64) hopes to win more highway jobs in India under the recently announced new national highway programme for roads, said Datuk Krishnan Tan. “(Under the new programme), the packages are going to be substantially larger and we will be bidding for some of them”, he said. Indian road, transport and highways minister Kamal Nath this month set a target of 7,000km per year across all states, which translates into roughly 20km per day. Kamal Nath was quoted as saying that in the next 10 months, there will be about 11,000km of roads and contracts costing Rs1 lakh crore (US$20bn) to be awarded. (BT)
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Digi Telecommunications Sdn Bhd, unit of Digi.Com Bhd (DIGI MK, Hold, TP: RM20.10).has committed RM75m to roll out its Turbo 3G mobile and broadband service in Sabah over the next 3 years. Digi said that so far, coverage has been expanded to cover some 95% of the population in Kota Kinabalu. The company expects to progressively activate existing mobile subscribers on Turbo 3G, starting with Sabah and Penang yesterday, followed by Klang Valley at a later date.
(Malaysian Reserve)
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Telekom Malaysia Bhd (TM)(T MK, Buy, TP: RM 3.98) is on track to commercially launch its high-speed broadband (HSBB) retail service in the 4 initial areas of Taman Tun Dr Ismail, Bangsar, Subang Jaya and Shah Alam by the end 1Q10. TM said to date, physical work had been completed at four exchanges and in progress at 44 exchanges, out of 95 exchanges to be covered by the initial rollout. It said by the end of 2012, about 1.3m premises would have access to HSBB services, in accordance with the completion of the first phase of the project agreed by the government. TM group CEO Datuk Zamzamzairani said as at end of 2Q09, the government had reimbursed it a total of RM665m work completed. He said the retail service trials were scheduled to begin with 150 households involving TM employees residing in the 4 areas by mid-
November 2009. Following that, in January 2010, additional 300 selected households within the same area will be involved. (Financial Daily)
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Malaysian Airline System Bhd (MAS MK, Sell, TP: RM2.00) and Hainan Airlines Group (HNA) have signed a strategic cooperation framework in order to strengthen their business relationship. MAS managing director Tengku Datuk Azmil Zahruddin said the collaboration would lead to better resource sharing, multi-hub network as well as expediting their international development progress such as enabling MAS to reach those destinations that it doesn’t fly to (in China). He said the collaboration would also enable its cargo arm, Malaysia Airlines Cargo Sdn Bhd (MASkargo), to have access to HNA Group’s global network and increase its market share. MASkargo managing director Shahari Sulaiman said MASkargo and HNA would start discussions to explore each other’s networks. (Financial Daily)
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Malaysia Airports Holdings Bhd (MAHB) will give incentives in the form of cash to airlines that continue to bring in additional passenger traffic to Malaysia. The quantum of the monetary incentive is still unclear but MAHB managing director/CEO Tan Sri Bashir Ahmad is looking to announce details before the year is out. The suggestion to reward airlines in search of new growth by MAHB appears to be timely as it will not just make airports in Malaysia more competitive but also allows them to attract more airlines to operate in the country. It also helps airlines that are struggling due to the economic downturn. This monetary incentive proposal is being considered despite the fact that Malaysian airport charges are already the lowest in the region. The new cash incentive is meant for all airlines that operate from the country and from all the 39 airports in Malaysia but it is for new business only. All the existing incentives will also remain intact, such as the waiver for landing charges for new flights for 3 years. (Starbiz)
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Maxis Communications Bhd to double its wireless broadband user base by year-end, following the launch of its new broadband campaign, Something for Everyone. “Our sales have improved more than 100% year-to-date compared with last year. Next year, we expect to outperform this year’s performance,” senior general manager and head of broadband said. According to the draft prospectus lodged by Maxis Bhd, the company added about 31,000 mobile broadband subscribers in the first six months of 2009. Its broadband subscription totalled 171,200 or about 21% marker share, as at June 30. The new broadband packages ranged from as low as RM8 per day to RM48 per month. (StarBiz)
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evident from the “hot-selling” models- Persona, Saga and Exora. On the contest, Shukor said it had successful met its objective as car sales for June and July increased impressively to 14,065 units and 15,809 units respectively and this has placed Proton in the top spot for Malaysian car sales for the said months. (Financial Daily)
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Green Packet Bhd (GPB) is set to secure a worldwide Interoperability for Microwave Access (WiMAX) broadband licence in Singapore, making it the first Malaysian company to directly hold such a licence in the city-state. Under the sealed deal yesterday, the original WiMAX licence holder Singapore based Pacnet Internet Corporations (S) Pte. Ltd. will transfer its facilities-based operator’s (FBO) licence and wireless broadband access (WBA) spectrum right to GPB group. GPB’s wholly owned unit Packet One Sdn Bhd (P1) inked the transfer and agreement with Pacnet for the transfer of the FBO licence and WBA spectrum right to newly incorporated Packet One (S) Pte Ltd (P1 Singapore) for US$2.04m (RM6.94m) cash. GPB said the transfer would enable P1 Singapore to operate wireless broadband access telecommunications systems in the island-republic, as well as offer supplementary bandwidth to which existing telecommunications providers to minimise network congestion. P1 CEO Michael Lai said the WiMAX operator’s entry into Singapore to become a multi-market player would enable it to offer a robust alternative to complement mobile operators and compelling proposition for both its individual and corporate customers via roaming services. (Financial Daily)
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The domestic advertising expenditure (adex) this year is expected to be lower than the RM6.2bn posted in 2008 but the advertising industry is expected to perform better in 2010, said Malaysian Advertisers Association president Peter Anthony Das. He said total adex was expected to drop this year due to a lack of major events and the economic slowdown. “I hope the
total ad spending this year would be better than the RM5.4bn in 2007 as companies are pushing for sales by year-end and on improving market sentiment,” he said. (Financial Daily)
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The Plantation Industries and Commodities Minister plans to propose the sale of biodiesel with less palm oil content to reduce government spending for the initiative, known as the B5 mandate. Under the mandate, the government has set a January 2010 deadline to sell B5 biodiesel, a mixture of 5% palm oil and 95% diesel. Minister Tan Sri Bernard Dompok said a more realistic alternative would be to revise downwards the blend ratio. "I' ll be proposing to the Cabinet to bring down the B5 mandate to B3 or B2. The B5 mandate, if it were to be fully implemented, would cost around RM240m to RM250m. This is a problem because ordinary diesel is already being subsidised by the government," he said. Malaysia had planned for the B5 mandate to be rolled out in stages, starting from February this year with government vehicles, followed by the industrial and transport sectors. (BT)
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Stocks rally Thursday, blue chips led a bigger stock market rally, as better-than-expected results from four components pushed the Dow industrials above 10,000 again and reassured investors about the ongoing corporate reporting period. Investors took in stride announcements from the Federal Reserve and the Obama administration' s pay czar regarding curbing executive pay. The Dow Jones industrial average gained 1.3% (+131 pts, close 10,081.31), according to early tallies, closing at 10,081.31. The S&P 500 index rose 1% (+11 pts, close 1,092.91). The Nasdaq composite gained 0.7% (+14 pts, close 2,165.29). U.S. light crude oil for December delivery fell 18 cents to US$81.19 a barrel on the New York Mercantile Exchange, edging off a one-year high. (CNN Money)
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U.S. leading economic indicators rose in September for a sixth straight month, showing the economy is likely to expand into early 2010. The Conference Board’s gauge of the economic outlook for the next three to six months climbed a greater-than-forecast 1%, contributing to the biggest six-month gain in 26 years. More than US$2trn in government stimulus programs worldwide have revived growth from the U.S. to China, signalling the worst global recession in the post-World War II era has come to an end. The leading index over the past six months was up 11.8% at an annual rate, the biggest gain since 1983. Eight of the 10 indicators in today’s report contributed to the gain, led by the difference between short- and long-term borrowing costs, an increase in consumer expectations, lower jobless claims and higher equity prices. (Bloomberg)
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U.S. initial jobless claims rose more than forecast, a reminder that the labor market will be slow to recover. Initial jobless applications rose by 11,000 to 531,000 in the week ended Oct. 17, from a revised 520,000 the prior week that were the fewest in nine months, the Labor Department said in Washington. The number of people collecting benefits fell, while those receiving extended benefits increased. The four-week moving average of initial claims, a less volatile measure, fell to 532,250 last week from 533,000. Continuing claims decreased by 98,000 in the week ended Oct. 10 to 5.92m, in part reflecting those that have used all their benefits without finding another job. The number of people collecting extended payments climbed to 3.86m in the week ended Oct. 3 from 3.83m a week earlier, report showed. (Bloomberg)
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The European Central Bank (ECB) advised the European Union (EU) to coordinate internationally on rules to regulate hedge funds, saying the current proposals could put Europe at a disadvantage. “The ECB urges the Commission of the European Communities to continue the dialogue with its international partners, in particular the United States, to ensure a globally coherent regulatory and supervisory framework,” the Frankfurt-based ECB said in a legal opinion published on its Web site. The EU’s proposals would require hedge-fund managers and private-equity firms overseeing at least 500m euros (US$737.8m) to report to regulators. The directive is one of several measures the EU has proposed in the wake of the worst financial crisis since World War II. (Bloomberg)
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U.K. retail sales unexpectedly stagnated in September for a second month as Britons spent less on food and clothing, a sign the country is struggling to escape the recession. Sales were unchanged from August, the first time sales haven’t risen for two months in almost a year, the Office for National Statistics said in London. The median forecast was for a 0.5% gain, according to a Bloomberg News survey of 30 economists. Sales climbed 2.4% from a year earlier. Rising unemployment and the credit squeeze are discouraging Britons from shopping. Today’s report may signal that weakness in the economy is persisting as the Bank of England considers whether to increase its 175bn-pound (US$291bn) bond- purchase program. Food sales slipped 0.1% and textile, clothing and shoe sales fell 0.5% in the month, the statistics office said. Sales at non-specialized stores rose 0.5% and household goods stores showed an increase of 0.3%. (Bloomberg)
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Chinese officials may be preparing to reduce monetary stimulus that propelled growth to 8.9% in the third quarter and led the world out of recession. The economic expansion the government reported yesterday exceeded the 7.9% gain in the previous three months and pushed stocks lower around the world on concern the central bank may tighten monetary policy. On the eve of the release, the cabinet signaled that inflation concern will play a greater role in setting policy. (Bloomberg)
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Sunday, October 18, 2009

WTK and BJCorp Charts

Two charts to study,

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Wednesday, October 7, 2009

Axiata (HOLD TP RM2.75)

Price war escalates in India

· One big disruptive price plan in India Reliance Communications (RCOM IN, non-rated), the second largest mobile operator in India, unleashed a disruptive price plan on Monday which allows both prepaid and postpaid subscribers to make calls at only INR0.50/min (US 1 cent/min) nationwide, believed to be among, if not the cheapest tariff in India. On average, subscribers pay US 2 cents/min for local calls, while national long-distance calls are priced at about US 3 cents/min.

Intense competition over the years has driven down tariffs and pushed mobile operators to constantly innovate and throw in extra features to reduce churn and protect market share. Barely four years ago, BSNL introduced a plan which only charged INR1.00/min.

The disruptive plan by Reliance will likely result in Axiata’s associate, Idea Cellular (IDEA IN, non-rated) facing significant pressure on margins and downside risks to revenue and subscriber growth, with the extent dependent on how Idea will respond. Lowering tariffs may help reduce churn and stimulate usage but may not fully offset the effects from a steep drop in tariffs. Idea is expected to respond quickly to avoid churn and maintain its growth trajectory, as the next several weeks coincide with Deepavali in mid-October and the wedding season in November and December. This is crucial to ensure it does not lose out as mobile usage and new subscriber additions will likely surge during this period. However, being only the fifth largest among 11 players, Idea may not have the clout to go head-to-head with Reliance in a price war. Reliance has a subscriber base of 84.8m as at August while having a far superior EBITDA margin of 39.1% in 2QCY09. In comparison, Idea has 50.1m subscribers and EBITDA margins of only 28.9%. The market leader, Bharti Airtel (BHARTI IN, non-rated) leads with 110.9m subscribers and BITDA
margins of 40.6%.

Earnings forecast trimmed
In view of intensifying competition, we have reduced our EBITDA margins, ARPU and revenue growth assumptions for Idea. Consequently, our FY09-11 EPS estimates for Axiata are lowered by 2%-4%. Maintain HOLD, TP reduced to RM2.75 We maintain our HOLD call on Axiata, while lowering our target price from RM2.85 to RM2.75 based on SOP valuation. Risks to our recommendation include (1) irrational price competition, and (2) a long and drawn-out price war in India.

Source : ECM Libra

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Tuesday, October 6, 2009

Glomac (BUY TP RM1.37)


Expanding Sg Buloh township land

News
Glomac announced yesterday the acquisition of 43 acres of leasehold land, which is located within its existing Bandar Saujana Utama township in Sungai Buloh, Selangor, for RM9m cash or RM4.80 psf. Development rights on the said land was previously acquired in 2004 under a joint
venture arrangement where Glomac is required to pay a guaranteed land price of RM7.31m and a share of 30% development profit to the landowner, Pertubuhan Peladang Kawasan Kuala Selangor. The joint venture agreement will be terminated upon completion of the outright acquisition. (Bursa Malaysia)

Comments
Development on the said land has already commenced in March 2009. Known as Bukit Saujana, the project is divided into 5 phases with an estimated gross development value of RM98m. Todate, a total of 85 units of double storey terrace houses has been launched with more than 80% sales achieved. The outright acquisition of the said land instead of joint venture does not change our earnings estimates. The only effect the transaction has is perhaps the acceleration of payment of purchase consideration under outright acquisition instead of 8 semi-annual instalment payments from the date of approval of layout plan under the terms of the joint venture. Funding for the outright acquisition is not a problem due to improving financial position of the company following the sale of RM72m worth of investment properties as well as RM20m raised from the recent sale of treasury shares. Going forward, we expect the company to be on an expansion trail. Currently, the company is negotiating for the acquisition of 2 commercial land in the Klang Valley. We reiterate our BUY call on Glomac for its undemanding valuation. Earnings prospect is expected to improve going forward, underpinned by unbilled sales of RM333m. Further upside will come from the successful en bloc sale of office towers in its on-going Glomac Damansara project and acquisition of new landbank. Our target price remains unchanged at RM1.37 which is based on 10x P/E on FY10 earnings.

Source : ECM Libra

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Friday, October 2, 2009

Mid-Autumn Festival

Cmate wishes all Happy Mid Autumn 09 Pictures, Images and PhotosIf you like the post, please subscribe to Bursa Chat. We will send you the latest post by Email
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Short term upset - The Trader

Last night, the Dow Jones dropped 203 points amidst negative economic data. New initial job claims came in at 551k, disappointing economists estimates of 535k. In addition, the US Institute for Supply Management said its index of manufacturing activity in September slipped to 52.6 from 52.9 in August, disappointing expectations of a positive m-o-m improvement. Violation of short term dynamic support The Dow Jones violated a very important short term dynamic support last night which is the 30-day short term MAV line. We have always thought that the 30 day MAV line is a very crucial dynamic support of the Dow. An obvious break of the
support line will most certainly trigger more bearish sessions to come.

Strategy : Short term bearish
With the 30-day MAV line violated, we opine that there will be more bearish sell-downs in the days to come. Thus, we are forced by the bears to alter our short termviews to negative, though our mid term and long term positive views remain unchanged. As of now, we are technically short term negative on the closely correlated (>90% correlation) FBM-KLCI while maintaining our mid term and long term positive view. We expect the FBM-KLCI to face a correction ahead to below the 1,200 level. We are now advising caution for traders.

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Thursday, October 1, 2009

FBM KLCI: NO WORRIES (YET)

The FBM KLCI continued to retrace by another 6.13 pts yesterday. The market has lost some 30 pts since hitting a high of 1231.49 pts. Nevertheless, the retracement is not worrying us just yet as we know that the 50-day MAV line is giving a clear signal that the market is still on an uptrend. Note that India’s key benchmark index cracked a new high yesterday while Jakarta’s benchmark index is approaching the recent-high. Once again, there was no panic selling across the board.

Although the FBM KLCI could have gone up at a faster pace after violating the 1196.46 pt-peak, the recent retracement does not bother us. Our view towards the near-term market will remain firmly bullish as long as the 50-day MAV line is not violated.

From the current level, an immediate support lies at the 1,196.5-1,200 pt-area and a very strong support is seen at the 50-day MAV line, which is now situated at the 1,178 pt-level. To the upside, an immediate resistance lies at the 1231.50 pt-level followed by the 1242 pt-level.



This is an update on AMMB’s latest technical landscape. The stock’s uptrend remains the same as it was a few months ago. Its share price is continuing with its steady ascent at above the 50-day MAV line and is expected to do so as long as the 50-day MAV line continues to provide support to the stock. Both the immediate and mid-term technical outlook of AMMB will remain firmly bullish as long as the stock maintains a posture at above the 50-day MAV line, which is now situated at the RM4.10 level. At below the RM4.10 level, look for the RM4.00 level and the RM3.90 level for the next support. Unless the stock is hit by negative news or the FBM KLCI’s technical outlook turns negative, we think AMMB should be able to maintain a comfortable posture at above the 50-day MAV line. From the current level, an immediate resistance lies at the RM4.42 level, followed by the RM4.65 level.

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