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Tuesday, April 27, 2010

Tejari, Allianz, USD/MYR, KLCI

DJ MARKET TALK: KLCI Likely Stuck In Range; 1334-1344 Tipped
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0024 GMT [Dow Jones] KLCI likely to open flat, taking lead from U.S. stocks' flat finish overnight, says dealer with local brokerage; thinks index likely trapped in 1334-1344 range in absence of fresh catalysts. "Blue chips should continue to be well-supported due to the positive growth outlook on the domestic and global front, while lower liners remain in consolidation with slight downward bias," says TA Research; tips KLCI's immediate support at 1329, followed by 1320 (50% Fibonacci Retracement of the 12-day rally from 1292 low of March 22 to April 7's peak of 1347), while resistance remains at 1344 (the previous two week's high), then 1347, (April 7's pivot high). KLCI ended +0.2% at 1340.07 yesterday. Allianz Malaysia (1163.KU) may fall after insurer announced plans to raise MYR611 million through rights issue of convertible preference shares.


DJ MARKET TALK: USD/MYR Higher; 3.1700-3.1900 Range Tipped
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0032 GMT [Dow Jones] USD/MYR higher at 3.1810 vs 3.1725 late Monday, tracking USD/Asians, says dealer with local bank. "The ringgit is weakening more than the other Asian currencies because it was one of the best performers in the year-to-date, rising more than 6%," says dealer; adds, market participants also keeping on eye on developments in Greece for near-term direction. Tips pair to move in 3.1700-3.1900 range with upside bias.



DJ MARKET TALK: Allianz May Fall To MYR5.30 On Rights Issue Plan
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0014 GMT [Dow Jones] Allianz Malaysia (1163.KU) may fall to MYR5.30 (April low) after insurer announced plans to raise MYR611 million through rights issue of convertible preference shares; issurance ratio, pricing yet to be determined, rights issue aimed at raising funds to repay existing debt, to meet Bank Negara's capital requirements. Company says immediate earnings dilution would be minimal since convertible shares can be converted into ordinary shares only 12 months after issuance completed; pricing and ratio for share issuance to be determined later. "There will still be some impact on sentiment, though the fact that any dilution will only happen later should help prevent any steep drop in the share price," dealer says. Allianz ends +4.3% at MYR5.56 yesterday.



DJ MARKET TALK: Tejari May Rise To 35.5 Sen On Profit Hopes
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0003 GMT [Dow Jones] Tejari (0140.KU) may rise to 35.5 sen (January 2009 high) after signing to buy 51% stake in two computer products dealers for total of MYR9.3 million; company says acquisition of PC3 Technology Sdn Bhd, which sells Acer and Canon products, comes with profit guarantee of MYR2.4 million over 32-month period while acquisition of Essential Action Sdn Bhd, which sells Lenovo products, comes with MYR1.5 million guarantee over same period; dealers say acquisitions significant for Tejari, which posted loss of MYR2.4 million in FY09. "The company could return to profitability by as early as this fiscal year because of the contribution from the new companies," dealer says. Tejari ended +61% at 25 sen yesterday.

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Thursday, April 22, 2010

Axiata, Kossan, MAS, Nestle

DJ Nestle Malaysia Exec: 2Q Net Profit Very Likely Lower Than 1Q
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KUALA LUMPUR (Dow Jones)--Nestle (Malaysia) Bhd.'s (4707.KU) second-quarter net profit will "very likely" be lower than the first quarter due to higher advertising and promotion costs, Managing Director Peter Vogt said Thursday.

Some of this year's advertising and promotional expenses have been "bunched up" in the second quarter due to new product launches, while the costs in the first quarter were "unusually low," Vogt told a news conference. He didn't give a numerical guidance.

The food and beverage firm Wednesday reported that its net profit for first quarter ended March 31 grew 38% to MYR138.8 million from MYR100.4 million a year earlier.

Vogt said the results for the first half year will likely still be better than a year earlier due to higher sales. "We hope to improve both our top and bottom lines," Vogt said, adding that "we hope sales growth will be better than (the country's) GDP (forecast growth)." Malaysia's official forecast is for gross domestic product to grow between 4.5% and 5.5% this year.

Nestle Malaysia posted a net profit of MYR351.8 million in 2009 on revenue of MYR3.74 billion. The firm's gross profit margin was 11.8% in 2009 against 11.4% in 2008, while its net profit margin was 9.4% last year against 8.8% in 2008.

Finance director Marc Seiler said capital expenditure this year will likely be between MYR130 million and MYR140 million this year, to be used for expansion and renovations. Capex will be lower than last year's MYR257 million when the company made a major investment in new lines.

DJ MARKET TALK: OSK Keeps MAS At Sell; Target At MYR1.50
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0533 GMT [Dow Jones] STOCK CALL: OSK Research keeps Malaysian Airline System (3786.KU) at Sell, target at MYR1.50. Analyst Ng Sem Guan says "not excited" at possibility of commuter unit Firefly taking over MAS's ageing B737-400 planes when the parent's newer B737-800s arrive starting this year. Original plans were to retire the older planes, but company now says considering various options, including transferring them to Firefly. Ng says keeping them in group will raise maintenance costs, appears to contradict group policy in lowering costs by renewing fleet; also, Firefly may lose competitive advantage if forced to use KLIA rather than closer-to-city Subang Airport in Kuala Lumpur when it starts jet flights (vs only turbo-propeller planes now that is allowed at Subang). Stock down 0.9% at MYR2.25.


DJ Kossan Rubber Industries Shares Jump On Bonus Issue; May Rise More
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KUALA LUMPUR (Dow Jones)--Shares of Kossan Rubber Industries Bhd (7153.KU) rose as much as 4% to a two-week high Thursday after the world's third largest glovemaker by sales declared a 1-for-1 bonus issue, the most generous share distribution in the company's history.

The plan, announced in a stock exchange filing late Wednesday, makes Kossan Rubber the second Malaysian glovemaker to distribute free shares to shareholders in less than two months.

Supermax Corporation Bhd (7106.KU), the world's second biggest glovemaker, declared a 1-for-4 bonus issue in early March.

Kossan shares hit an intraday high of MYR8.19 before some profit-taking kicked in. At midday, Kossan shares were up 1.6% at MYR8.03, outpacing the benchmark Kuala Lumpur Composite Index which was 0.1% lower.

"Although the bonus issue would not have any impact on valuations, it may help improve the stock's liquidity and help buoy retail sentiment towards the stock," RHB Research analyst David Chong said in a report, reiterating an Outperform recommendation on the stock.

Kossan's bonus issue is also meant to be a reward for shareholders even as Malaysian glove manufacturers enjoy one of the best periods ever for their businesses.

Global glove demand has been expanding at an average rate of 8%-10% over the last decade, with the growth expected to continue in the coming years, underpinned by increasing healthcare spending, particularly in the wake of the U.S. healthcare reform.

Backed by retained earnings of more than three times its share capital, Kossan's latest bonus issue is the most generous payout ratio in the company's history, analysts said.

If the past performance of Kossan's shares after previous bonus issues are anything to do by, the stock may have further room to rise, said Affin Investment Bank.

Citing Kossan's previous 2-for-5 bonus issue in July 2005 as an example, Affin said the stock, which was trading at a price-to-earnings (PE) ratio of 7 times at the time of declaration, went on to establish a steady two-year uptrend in its traded PE ratio, peaking at 17 times in mid-2007.

"Despite the 45% year-to-date gain in Kossan's share price...valuations are still undemanding at 2010 PE of 10 times against a fairly robust 19% year-on-year earnings growth," Affin said, maintaining its Buy rating on the stock, with a target price of MYR10.12.

The bonus issues from Supermax and from Kossan has raised hopes that other glovemakers may follow suit.

Industry leader Top Glove Corporation Bhd (7113.KU), which has a combined share premium and retained profit of more than five times its paid-up capital, may be next, analysts and dealers said.



DJ MARKET TALK: Axiata May Pay Dividends From FY11 - RHB
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0231 GMT [Dow Jones] STOCK CALL: Axiata (6888.KU) may start paying dividends from FY11, one year earlier than planned, says RHB Research after meeting with company management; company officials could not be reached for comment. RHB says formal dividend policy likely to be set in few months time; early payment of maiden dividend in view of improving performance of most of its mobile phone services units, expected lower capex requirements. House says management indicated company unlikely to make any further acquisitions in Indonesia since unit XL Axiata already has network coverage of 80-90%. "We continue to like Axiata given its exposure to the recovery in emerging markets, where mobile penetration rates remain low," RHB says; keeps Outperform call with MYR4.05 target. Stock +0.3% at MYR3.74.

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Wednesday, April 21, 2010

Nestle, Kurnia, Kossan

DJ Kossan Rubber: Plans 1-For-1 Bonus Issue


KUALA LUMPUR (Dow Jones)--Kossan Rubber Industries Bhd. (7153.KU) said Wednesday that it plans a one-for-one bonus issue to reward shareholders and improve the liquidity of its shares.

The latex glove maker said in an exchange filing that it plans to issue up to 159.9 million bonus shares at a ratio of one bonus share for every existing share held.

The issue will be wholly capitalized from the company's retained earnings and share premium accounts.

"The board is of the view that the proposed bonus issue is the most appropriate avenue of enhancing the company's capital base," said Kossan Rubber, adding that it will increase its capital "to a level which would be more reflective of its current scale of operations and assets employed."

The proposals are expected to be completed by the third quarter, it said.

Kossan had retained earnings of more than three times its paid-up capital as of end-2009.

Its share distribution follows a similar move by another Malaysian glove maker Supermax Corp. (7106.KU), which proposed a 1-for-4 bonus issue in early March.




DJ Nestle Malaysia 1Q Net Profit Rises 38% On Higher Export Sales
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KUALA LUMPUR (Dow Jones)--Nestle (Malaysia) Bhd. (4707.KU) said Wednesday its first quarter earnings rose 38% from a year earlier due to higher export sales and stronger demand while operational costs were lower due to timing differences.

The maker of dairy products said in an exchange filing that its net profit for the three months ended March 31 grew to MYR138.8 million from MYR100.4 million a year earlier.

Revenue rose to MYR1.02 billion from MYR983.9 million previously.

Nestle said the recovering local economy boosted consumer sentiment while exports, accounting for 23% of total sales, recorded double-digit growth.

However this was partially mitigated by higher commodity prices with the cost of skimmed milk powder and cocoa rising by more than 50% compared with a year earlier, it said.

Operational expenses were "exceptionally low" in the first three months, mainly due to the timing of major marketing campaigns that are scheduled in the following quarters, Nestle said.

It expects to "fully leverage" on the recovery in the economy to boost its sales this year, the company added.



DJ MARKET TALK: Kurnia Asia +2.8%; OSK Keeps At Buy
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0840 GMT [Dow Jones] STOCK CALL: Kurnia Asia (5097.KU) +2.8% at MYR0.555; dealer says stock supported by recent media reports that Bank Negara, insurance industry players working on revamped basic scheme for third party bodily injury, death on motor cover policies. Tips resistance at MYR0.58 (50-day moving average). OSK analyst Lim Mei Ching says Kurnia (with largest local motor insurance market share by net premium) could be main beneficiary if current scheme revised; "several possible scenarios have been drawn up, including a proposal that the overall liability be capped at MYR2 million and an increase in motor insurance premiums," says Lim. Keeps at Buy with MYR0.92 target. (


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Tuesday, April 20, 2010

Bursa, Sapura Crest


DJ MARKET TALK: Charts Tip SapuraCrest May Fall To MYR2.02-MIBB
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0524 GMT [Dow Jones] STOCK CALL: Maybank Investment rates SapuraCrest Petroleum (8575.KU) at Take Profit based on charts with retracement targets of MYR2.19, then MYR2.02. Technical analyst Lee Cheng Hooi says stock of oil, gas industry support firm peaked at its Wave 5 high of MYR2.58 in December 2009 with ample overbought, bearish divergent signals. "Its bearish signals (from the negative CCI, DMI, MACD, Stochastic and Oscillator) and daily closing prices below the 19- and 50 day simple moving average line, support our view of a potential downtrend in the mid-term," says Lee. Tips support at MYR2.25, then MYR2.15. Stock last +1.8% at MYR2.32, having breached immediate resistance at MYR2.28. Next resistance eyed at MYR2.58


DJ Bursa Malaysia 1Q Net MYR28.1 Million Vs MYR15.5 Million
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KUALA LUMPUR (Dow Jones)--Bursa Malaysia Bhd. (1818.KU) said Tuesday its first quarter earnings rose 81% from a year earlier due to higher equities trading activity.

The Malaysian stock and derivatives exchange operator's net profit for the three months ended March 31 rose to MYR28.1 million from MYR15.5 million.

First quarter revenue increased to MYR88.1 million from MYR64.2 million.

Bursa said equities trading revenue had doubled from a year earlier, but derivatives trading revenue fell 9% on year.

"We anticipate a better overall performance for the Group for the current financial year," the exchange said, adding that interest in the Malaysian derivatives market is expected to improve upon the migration of derivatives products and trading activity on to the CME Globex electronic trading platform in the 2nd half of 2010.


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Friday, April 16, 2010

Green Packet


=DJ INTERVIEW: Green Packet CEO: Profit May Take Time, Eyeing Foreign Partners
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By Benjamin Low

Of DOW JONES NEWSWIRES


KUALA LUMPUR (Dow Jones)--Malaysian high-speed broadband services provider Green Packet Bhd (0082.KU) expects positive earnings before interest, tax, depreciation and amortization this year, underpinned by growth in its network and device businesses, but high start-up costs would delay a turnaround in net profit for at least another year, its founder said.

Group Managing Director and Chief Executive Puan Chan Cheong also told Dow Jones Newswires in a recent interview that Green Packet is close to securing new foreign equity partners for its two core businesses--operating the company's WiMAX broadband networks and the supply of devices and software to other operators.

WiMAX, which stands for worldwide interoperability for microwave access, is a high-speed wireless broadband technology.

"This year will be a turning point for the company. This is the year when we will begin to see the fruits of the investments we have been putting in," said Puan, who started the company in California in 2000 before moving it to Malaysia in 2001.

Green Packet's investors include Santa Clara-based chip giant Intel Corp (INTC), the Saudi Economic and Development Company and U.S. investment management giant The Capital Group Companies. It is the largest WiMAX operator by subscribers in the Asia Pacific region and the third-largest device supplier by volume after Motorola Inc. and Samsung Electronics Co.

Green Packet has suffered losses for the last two consecutive years as a result of the heavy upfront investments and high operating and marketing expenses incurred for its Malaysian WiMAX network, which was launched in August 2008.

Since the launch, Packet One Networks (Malaysia) Sdn Bhd, Green Packet's wholly-owned WiMAX operating unit, has captured 140,000 subscribers at the end of 2009 and continues to add about 30,000 new subscribers every quarter.

"At that rate, we will hit the 280,000 subscribers milestone -- which is the number we need to be EBITDA break-even -- by the third quarter, if not the fourth quarter," Puan said.

He said average revenue per user--a key industry gauge to determine the long-term growth rate of telelcom operators--will likely be maintained at above MYR80 (US$25) in 2010 and in the coming years.

That means Green Packet's EBITDA for this year will likely turnaround from negative EBITDA of about MYR120 million in 2009, Puan said.

"For the full year, on a group-wide basis, we expect a small positive EBITDA. The WiMAX operator segment will still be slightly in the red for the full year period, but this will be offset by the devices and solutions segment, which is expected to achieve triple digit percentage growth this year," Puan said.

Green Packet expects to spend a total of MYR1 billion in capital expenditure to fully roll out Packet One's network. It has spent MYR450 million as of the end of 2009 and expects the expenditure to reach MYR700 million by the end of this year.



Strategic Investors



Green Packet's ongoing talks with potential foreign equity partners is not motivated by a need for funds as the company has already secured sufficient vendor financing from China's ZTE Corp. (000063.SZ) to meet its capital expenditure requirements, Puan said. ZTE supplies telecom equipment to carriers.

"We have been approached by various strategic investors. We are considering which are the ones that will be the best fit as we want investors not only to bring in money, but that can help us move up to the next level," Puan said, adding talks with some parties were at an advanced stage.

He said the group is looking to secure "one or two partners" this year to accelerate the expansion of both its WiMAX network and device and software businesses, and that their entry will involve the sale of equity, either in Green Packet and unit Packet One, or both.

Green Packet secured a WiMAX licence in Singapore in 2009 and may begin in 2011 to put a firmer plan in place for its operations there. It also has its sights on a potential venture in Indonesia next, Puan said.

In the WiMAX device segment, Green Packet has been almost exclusively doing business with customers in Asia-Pacific and the Middle East, but aims to break into the U.S. and European markets starting this year.

The entry of a new partner this year would be in keeping up with the trend of having a strategic investor emerging every two years.

Saudi Economic and Development Company bought a 10% stake in Green Packet in 2006. Two years later, Intel paid MYR50 million for convertible bonds that can be swapped for the equivalent of a 6% stake in Green Packet or a 9% stake in Packet One.

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Sime Darby, SP Setia, Tenaga, PUblic Bank,

DJ MARKET TALK:OSK Bullish On Sime Darby Mid-Term Based On Charts
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0416 GMT [Dow Jones] STOCK CALL: OSK Research keeps Sime Darby's (4197.KU) mid-term technical outlook at Bullish, but says stock stuck short-term between 100-day moving average, 200-day moving average lines. Is "expected to continue to consolidate within these two lines until either one of these moving average lines are violated." Chartist Shin Kao Jack says a breakout above 100-day MA at MYR8.75 will trigger Buy signal, will rise to test MYR9.00, then MYR9.19. Stock last down 0.5% at MYR8.68. Shin says on downside, immediate support seen at MYR8.50, then 200-day MA at MYR8.45; a break-down below line will trigger Sell signal.


DJ MARKET TALK: SP Setia Sales Expected To Be Robust -HwangDBS
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0338 GMT [Dow Jones] HwangDBS Vickers Research says property developer SP Setia (8664.KU) on track to reach its MYR2 billion sales target, after it achieved MYR935 million in sales in first 5 months of FY10. Adds, company may get a rush of buyers before a special financing package expires end-April; "We expect sales to remain robust driven by improving economic outlook and inflation hedging," HwangDBS says; adds, average selling prices for properties have been increasing steadily. Maintains Buy on stock, with unchanged target price of MYR4.80. SP Setia down 0.2% at MYR4.19.


DJ MARKET TALK: HwangDBS Keeps Fully Valued On Petronas Dagangan
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0221 GMT [Dow Jones] STOCK CALL: HwangDBS Vickers Research keeps Petronas Dagangan (5681.KU) at Fully Valued, with unchanged target price of MYR8.10; petrol retailer on track to meet house FY10 earnings forecast of MYR778 million, with 9-month sales of 9.7 billion liters at 74% of full year forecast of 13.1 billion liters; unexciting earnings growth of 3.1% forecast for FY11, 2.4% for FY12. "Petronas Dagangan's valuation remains rich, trading at 1-year forward PE of 11.2x vs its 3-year historical forward PE average of 10.5x." But adds 4% net dividend yield to lend downside support to stock. Last unchanged at MYR9.10.


DJ MARKET TALK: Tenaga May Rise; CEO's Service Tenure Extended
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0004 GMT [Dow Jones] Tenaga Nasional (5347.KU) may rise after power utility says in exchange filing President, CEO Che Khalib Mohamad Noh's service tenure has been extended. Dealer tips share may rise to MYR8.50 (yesterday's intraday high) vs yesterday's close at MYR8.47 (+0.6%). Tenaga says Che Khalib's term will be extended for an additional year effective July 1 until June 30, 2011. Dealer says stock market will react positively to news; "Che Khalib is highly regarded as Tenaga's CEO so investors will be glad he'll be at the helm for another year," dealer says.

DJ MARKET TALK: OSK Keeps Public Bank At Buy; MYR13.0 Target
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0138 GMT [Dow Jones] OSK Research keeps Public Bank (1295.KU) at Buy, with unchanged target price of MYR13.00. 1Q FY10 net profit growth of 16.3% on-year within expectations, says analyst Keith Wee; adds, performance in coming quarters expected to be better as 1Q traditionally slower period, full impact of recent interest rate hike will be felt, stronger growth in loans to small businesses in line with economic recovery. 1Q annualised domestic loans growth surprisingly strong at 17.6%. "The strong growth achieved in the seasonally slower 1Q period indicates that there is upside bias for its full year growth," Wee says. Public Bank +0.3% at MYR12.08. (benjamin.low@dowjones.com)




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Wednesday, April 14, 2010

KLCI, RHBCap, Petra, MRCB, Survey

DJ MARKET TALK: KLCI +0.1 On Tech Stocks; Broad Market Mixed
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0439 GMT [Dow Jones] KLCI +0.1% at 1336.16, off earlier intraday high of 1341.52; technology stocks among biggest advancers, but other sectors mixed amid profit-taking on recent top performers. "The market started strongly following a positive cue from Intel's results, but the KLCI's failure to break out of it's week-long trading range spurred fresh selling pressure," dealer says; market's gains also capped by negative near-term technical signals, analysts say. Maybank Investment Research says if 1331 support is breached, "signs of a persistent steeper correction will emerge." Volume at 359 million shares, below recent midday average of 450 million-500 million. Among gainers, Unisem (5005.KU) +4.7% at MYR3.14, Green Packet (0082.KU) +4.5% at MYR1.15, JCY (5161.KU) +2.3% at MYR1.76; among decliners, Measat (3875.KU) down 4.8% at MYR3.36, Tan Chong (4405.KU) down 3.7% at MYR4.75

DJ MARKET TALK:AmResearch Keeps RHB Capital At Buy;MYR7.20 Target
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0358 GMT [Dow Jones] AmResearch keeps RHB Capital (1066.KU) at Buy, with unchanged target price of MYR7.20; says banking group maintaining loans growth momentum, confident of achieving 15% growth in FY10; notes upside potential from bancassurance tie-up, following exclusive agreement with TM Asia to sell life insurance products for 10 years; RHB Capital intends to maintain dividend policy of 30% of net earnings. "There is a good chance RHB Capital may turn into a strong dividend paying stock over the longer-term," house says; adds despite recent rise, stock still "deeply undervalued" at 1.5X book value vs sector average of 2.0X. Stock +0.8% at MYR6.00.

DJ MARKET TALK: Affin Ups Petra Perdana To Add, Target To MYR1.81
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0343 GMT [Dow Jones] STOCK CALL: Affin Research ups Petra Perdana (7108.KU) to Add from Reduce, target to MYR1.81 from MYR1.38 given expectations of earnings turnaround next year, primarily driven by higher vessel utilization and improvement in charter rates. "As all new vessels will be delivered before end 2010, bulk of the vessels' mobilisation costs and finance costs will be incurred this year," says analyst Loong Kok Wen; adds next year, house expects Petra to be able to secure charter contracts for most of its new vessels, thereby better match its heavy interest commitments (both on and off balance sheet financing; hence raises house FY11 earnings forecast for Petra by 24% to MYR39.8 million, FY12 by 19% to MYR49.1 million but trimmed FY10 forecast by 6% to MYR9.6 million as earnings will remain weak. Stock last down 0.6% at MYR1.65


DJ MARKET TALK: MRCB Flat; May Clinch Development Jobs - HwangDBS
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0257 GMT [Dow Jones] Malaysian Resources (1651.KU) unchanged at MYR1.59, unaffected by key shareholder Employees Provident Fund's decision to allow takeover offer of MYR1.50/share to lapse, after EPF received acceptance amounting to only 3.3% stake. Dealers say EPF, which owns 38.6% of MRCB, unlikely to raise offer price; note earnings outlook for MRCB remains bright as property sector recovers. HwangDBS Vickers Research maintains Buy call on MRCB, with MYR2.25 target price; tips MRCB to be prime beneficiary of federal government's plan to develop 3,400 acres of land in central Selangor state as EPF has been tasked to spearhead project. "Besides this land, we do not discount MRCB participating in other lucrative government land (projects)," says HwangDBS.

DJ Asia Investors Optimistic In 1st Quarter But Risk Appetite Low - Survey
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HONG KONG (Dow Jones)--Investors in Asia stayed fairly optimistic in the first quarter, but risk appetite remained low to moderate, according to the latest quarterly ING Investor Dashboard Survey.

ING's investor optimism index has remained around the same level over the past two quarters, coming in at 145 in the three months ended March 31 and 147 in the fourth quarter, double a low of 73 during the global economic crisis.

Investor sentiment in China and India continued to be the strongest in the region despite credit and monetary policy tightening in China and rising food inflation in India. Investors in Hong Kong and Singapore also stayed fairly optimistic. Currently, 73% of Hong Kong investors and 70% of Singapore investors expect a rise in local residential real estate prices in the second quarter.

Optimism in Southeast Asia was mixed, with investors in Malaysia and the Philippines being more optimistic while those in Indonesia and Thailand became more cautious because of political instability.

Despite the overall optimism, investors' appetite for risk remains "low to moderate," the survey found. Investors have been cautious of economic developments in the U.S. and China, and have been awaiting signs that the U.S. recovery will boost the job market before increasing investments.

Investors are also expecting inflation and higher interest, with 57% of survey participants--excluding those in Japan--expecting inflation to rise in the second quarter and 53% of Asia ex-Japan investors expecting domestic interest rates to rise during the quarter.

The ING Investor Dashboard survey tracks investor sentiment of "mass affluent" investors each quarter across 12 Asian markets. "Mass affluent" is defined as investors with disposable assets or investments of US$100,000 or more. The threshold for investors in the Philippines and Indonesia was lower at US$60,000. The survey is conducted by ING Groep (ING) with the Nielson Company.




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Monday, April 12, 2010

Batu Kawan, Sunway, Glove Makers, Pos, Tan Chong, WCT, Mulpha

DJ MARKET TALK: Charts Hint Batu Kawan May Rise To MYR11.50 - OSK
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0545 GMT [Dow Jones] STOCK CALL: OSK stays bullish on Batu Kawan's (1899.KU) immediate, mid-term outlooks based on charts. Technical analyst Shin Kao Jack says stock has so far risen on strong mid-term uptrend line extending from a low in late 2008; will likely continue to extend gains until trend line is taken out. "Should the uptrend line remain solid going forward, it will be a matter of time before Batu Kawan retests the MYR11.50 peak created in 2007," says Shin; immediate resistance eyed at MYR11.00. Stock last down 0.2% at MYR10.56. Immediate support eyed at MYR10.36, followed by MYR9.84.


DJ MARKET TALK: Affin Ups Sunway To Add Vs Reduce, Ups Target 38%
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0424 GMT [Dow Jones] STOCK CALL: Affin Research upgrades Sunway Holdings (4308.KU) to Add from Reduce, raises target 38% to MYR1.80 on positive outlook; "with improving prospects in Sunway's key construction and property divisions, management's ongoing focus on de-gearing as well as its highly attractive valuations, we have turned positive on the stock," says Affin analyst Shakira Hatta; ups FY10-FY12 net earnings forecast by 9%-12%. Notes Sunway has MYR16.1 billion worth of local and overseas target tenders in pipeline. "Local projects tendered for include the LCCT (low cost carrier terminal), estimated at MYR1.3 billion and for which Sunway has been identified as a frontrunner (along with IJM and UEM-Bina Puri)," she says; given historical contract win rate of 10%-15%, annual orderbook replenishment is estimated at MYR1.5-MYR2.0 billion, which slightly higher than previous house forecast of MYR1 billion a year. Stock last +3.2% at MYR1.61.(

DJ MARKET TALK: Malaysia Glove Makers Down As MYR Strengthens
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0323 GMT [Dow Jones] Malaysian glove makers mostly lower on concern stronger MYR may erode earnings as their products are mostly USD-denominated; shares of glove makers have been among the best performers year-to-date, with many hitting record highs amid optimistic demand outlook. "The ringgit is getting stronger by the day and this is creating some concern that the impact of higher demand may be somewhat offset by a drop in profit margins," dealer says. Top Glove (7113.KU) down 0.3% at MYR13.66, Kossan (7153.KU) down 1.0% at MYR7.91, Hartalega (5168.KU) down 3.1% at MYR7.93, Supermax (7106.KU) down 1.3% at MYR7.05. USD/MYR last bid at 3.1870 vs 3.1885 late Friday, around 3.4220 at end-2009.

DJ MARKET TALK: Pos Malaysia Flat; Warns Analysts On Forecasts
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0258 GMT [Dow Jones] Pos Malaysia (4634.KU) unchanged at MYR3.14; stock reached nearly 3-year high on April 8, but since company on April 9 warned analysts their assumptions of the impact of the hike in postal tariffs starting July 1 may be overly bullish, stock confined to a narrow range. "Pos Malaysia has cautioned that street estimates on revenue had been optimistic as discounts on bulk mails were not taken into account," OSK Research analyst Ahmad Maghfur Usman says; adds, however, Pos clarified that 16% average pay rise for postal workers will begin only in July and won't be backdated to start of the year, but 2010 earnings will still be lower than analysts' expectations. Following briefing, OSK Research says FY10 earnings forecast raised by 15%, but FY11 and FY12 forecasts cut by 26% and 13% respectively.


DJ MARKET TALK: Tan Chong +9.7%; MYR Strength May Boost Earnings
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0212 GMT [Dow Jones] Tan Chong (4405.KU) +9.7% at MYR4.96 to extend recent uptrend; stock has gained 52% since early March, following strengthening of MYR, which currently at 23-month high; dealers say Tan Chong, which assembles, distributes Nissan vehicles, among major beneficiaries of a stronger MYR as higher local currency reduces import costs for components, boosting profit margins. "Investors are also positive on the long-term prospects of Tan Chong's venture into the Indo-China market, with Laos being the latest market where they have gained exclusive rights for Nissan," dealer says; stock tipped to test MYR5.00 psychological resistance near term. (benjamin.low@dowjones.com)


DJ MARKET TALK: WCT +1.1%; New Jobs May Exceed MYR2B -Maybank
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0224 GMT [Dow Jones] WCT (9679.KU) +1.1% at MYR2.80 on expectations builder likely to clinch more jobs in coming months; Maybank Investment Research says WCT likely to surpass its own target of getting MYR2 billion worth of new contracts in 2010. "The group's low cost base with an extensive fleet of heavy equipment allows it to compete aggressively in tenders," Maybank says; keeping Buy call, with unchanged target price of MYR3.40; dealers tip stock to test immediate resistance at MYR2.85 in coming sessions. "If the stock can breakthrough that level, we should see the stock heading for the MYR3.00 psychological resistance quite quickly," dealer says.


DJ MARKET TALK: Mulpha May Rise; Plans To List Unit In Hong Kong
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0029 GMT [Dow Jones] Mulpha (3905.KU), which has interest in properties, financial services, engineering and construction, may rise to test 6-month high of MYR0.52, says dealer with local brokerage; this, after company says in stock exchange filing late Friday, it plans to list engineering unit Manta Holdings on stock exchange of Hong Kong. Adds, planned listing will enable Manta to raise funds from the capital market to fund business activities, expansion plans; expects listing to be completed in 3Q. "Investors will likely view this as a positive news as the planned listing will also enable Mulpha to unlock the value of its investments in Manta," says dealer. Mulpha owns 88% of Manta. Stock closed flat at MYR0.49 last Friday

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Saturday, April 10, 2010

RHB, Tan Chong, Top Glove, Fund, USD/MYR, LPI

DJ MARKET TALK:RHB Capital +1.9%; M&A Talk Fuels Interest
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0739 GMT [Dow Jones] RHB Capital (1066.KU) +1.9% at MYR6.00 (vs flat finance sub-sector), dealer says, on M&A hopes after banking group's MD Tajuddin Atan says may consider such opportunities if they arise. "The bank will not close the door if the strategic fit comes into the picture," Tajudin says. "From a strategic perspective, it is possible" a deal could happen this year, he says, but doesn't provide details. Dealer says following Hong Leong Bank's (5819.KU) plans to acquire EON Capital's (5266.KU) assets, liabilities to create country's fourth largest lender by assets, "any talk of merger among banks will excite the market...even though there's nothing concrete." Resistance at MYR6.03 (intraday high).

DJ MARKET TALK:Tan Chong +12.2%, 3-Year EPS CAGR Likely +47%-CIMB
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0756 GMT [Dow Jones] Tan Chong Motor (4405.KU) +12.2% at fresh 12-year high of MYR4.50 on strong earnings outlook, says dealer with local brokerage; thinks stock may test psychological MYR5.00 in the next few weeks given expectation of stronger economic recovery. CIMB Research analyst Loke Wei Wern projects Tan Chong to post impressive EPS CAGR of 47% for FY10-12 after raising earnings forecasts; cites model mix expansion, and regional ambitions and Indochina strategy as reasons for earnings upgrade. Also predicts Malaysia's Nissan car distributor to post strong 1Q earnings, supported by stronger margins, higher sales volume. Didn't provide 1Q forecast figures. Keeps Outperform call on Tan Chong, raises target to MYR7.00 from MYR4.55.

DJ MARKET TALK: AmResearch Downgrades Top Glove To Hold From Buy
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0810 GMT [Dow Jones] AmResearch downgrades Top Glove (7113.KU) to Hold from Buy, cuts target to MYR12.50 from MYR15.70, based on lower P/E of 13X FY11F earnings on concerns over margin compression. Broker says demand growth for latex gloves has possibly peaked, "should decelerate going forward," with pricing power likely shifting from glove makers to customers; "there could be increased resistance from consumers in accepting higher average selling price going forward." Notes headwinds in higher latex costs, weaker USD vs MYR, both pose risk to margins; house cuts FY11F, FY12F earnings forecast by 8%-10%. "We believe the stock has run its course since 2009, and the lack of earnings upside surprise renders the stock fully valued," AmResearch says. Stock last +0.9% at MYR13.70.

DJ MARKET TALK: Emerging Market Stock Inflows Hit 6-Mo High -EPFR
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0843 GMT [Dow Jones] Investor interest in emerging markets is red hot with flows into emerging funds hitting six month high, according to fund flow tracker EPFR Global. Emerging market bond funds have been seeing inflows for 22 straight weeks now while emerging market funds took in US$3.27 billion in week ended April 7, bringing total YTD inflows to US$10.8 billion. Flows to Asia equity funds hit 17-week high. Asia ex-Japan stock funds were helped by renewed appetite for China, which has seen slacking interest thanks to increased tensions with the U.S. as well as uncertainty about the impact of tighter domestic monetary policy,

DJ MARKET TALK: USD/MYR Lower Late; 3.1650 Support Eyed
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0843 GMT [Dow Jones] USD/MYR lower late at 3.1885 vs late yesterday 3.2200; local dealer says pair continues to fall, on talk of possible CNY appreciation, in line with USD/Asians. "The pair broke another key support level at 3.1950 based on charts...and the trend is still downwards at the moment," says dealer; notes no central bank intervention seen. Says next support at 3.1650, then 3.1440; still, there's "likelihood of intervention" as pair trends toward April 23, 2008 low of 3.1310. "It's coming to a point where exporters could be hurt by an overly strong ringgit."

DJ MARKET TALK:OSK Raises LPI Capital Target To MYR15.9;Keeps Buy
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0846 GMT [Dow Jones] STOCK CALL: OSK Research keeps LPI Capital (8621.KU) at Buy, ups target to MYR15.90 from MYR15.50 after insurance underwriter's 1Q FY10 net profit +8% on-year, +6.9% above house estimate. Better numbers due to higher underwriting surplus (doubles vs year earlier), but investment income down 49.4% on-year due to lower dividend from Public Bank (1295.KU). Analyst Lim Mei Ching says gross premium will likely grow further in coming quarters as firm continues to expand agency force, bancassurance, branch network; "we are increasing our gross premium forecast by a marginal 4.7% on-year, which bumps up our net profit forecast by a marginal 3.2% for FY10," says Lim. Stock +0.1% at MYR13.82.


DJ MARKET TALK: Malaysia Shares End +0.1%;1330-1340 Range Eyed
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0910 GMT [Dow Jones] Malaysia shares end higher, benchmark KLCI +0.1% at 1333.98, but off intraday high of 1338.63, led by tech (+2.2%), property (+1.7%) plays; market rising in line with generally positive Asian bourses. Dealer with local bank-backed brokerage says index stays in tight 1332-1338 band, some early gains erased by profit taking late; "the market is in a consolidation phase and will likely continue to drift in the near term," says dealer, tips 1330-1340 range Monday in absence of fresh leads. Market breadth ends positive with 430 advancers vs 243 decliners; advancers are Tan Chong (4405.KU) +13% at MYR4.53 on strong earnings outlook, MISC (3816.KU) +3.9% at MYR8.49 on IPO plans for engineering unit, Unisem (5005.KU) +4.9% at MYR3.00, UEM Land (5148.KU) +5.6% at MYR1.50. Decliners are Petronas Dagangan (5681.KU) 0.8% at MYR9.03, AirAsia (5099.KU) down 2.2% at MYR1.32.


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Friday, April 9, 2010

KNM Group Target Price RM0.90

• RM1.42bn tax incentive
KNMG yesterday announced that they had received from the Ministry of Finance a total tax incentive of RM1.423bn to be granted and applied over four (4) years (with effect from the Year of Assessment 2009 onwards) in respect of the acquisition cost and other approved incidental costs which has been incurred by KNMPS (KNM Process Systems) for the BORSIG Acquisition. To recap, KNM had applied for this tax incentive back when the acquisition was being made but it has only just been approved. It involved a due diligence carried out by the Ministry to assess the business and the sum and term was also determined by the Ministry.

• Applies to only tax paid for Malaysia
The tax incentive applies to tax paid in Malaysia. Hence, in order to maximise the incentive, KNM ideally has to bring in more business to Malaysia/ domesticate their manufacturing operations. To note, currently some 60% of the tax typically paid is for foreign operations. • Effective tax rate to progressively decline

The impact of the RM1.42bn will not be felt immediately as the group will be in process of moving more operations into Malaysia. As such, effective tax rate will progressively decline to about 20% (from statutory rate level) to 5% achieved in 2012. We are adjusting down our numbers to reflect a 20% rate in 2010, 10% in FY11 and 5% in FY12.

• And of other things…
The reaction to this news will most certainly be positive for the stock and could possibly see KNM trading towards the 90 sen management buyout price. Having reported the loss last quarter, natural wariness causes us to have estimates for FY10 and FY11 below that of consensus and we also expect that upcoming 1QFY10 numbers will likely be poor. To note, current orderbook hovers around the RM2bn mark. April 16th will now be the next date to look to for the Group on whether this exercise is going to proceed. We have inkling that the authorities may want some involvement in this given the current move to change regulations to prevent such exercises.

• Maintain HOLD with 90 sen target


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KLCI, Bina Puri, Jaks, LonBisc, TPC

DJ MARKET TALK: KLCI May Rise; Banks May Lead; 1329-1340 Tipped
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0025 GMT [Dow Jones] KLCI may rise slightly, tracking gains in U.S. stocks overnight; benchmark index ended 0.9% lower at 1332.93 yesterday. "Following yesterday's drop, investors may do some bargain-hunting coming in today, given the positive long-term outlook for the market and the local economy. But with the weekend coming, the market will probably remain within a tight range," dealer says; immediate support pegged at 1329, with resistance at 1340. Interest may be centered on banking stocks, particularly investment banking leader CIMB (1023.KU), amid an increase in corporate finance activities after state oil company Petronas announced plans to list two units, which had combined revenue of MYR17 billion in FY09.


DJ MARKET TALK: Bina Puri May Rise; Thai Unit Gets THB63M Job

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0012 GMT [Dow Jones] Bina Puri Holdings (5982.KU) may rise to MYR1.18 (yesterday's intraday high) vs yesterday's close at MYR1.16 (down 0.9%), says dealer; this after company says its Thai unit gets THB62.8 million contract from Melewar Integrated Engineering for design, building of warehouse including foundation, RC & steel structure, architecture, M&E, associated external works for Sime Ice Co.'s cold room facility at Rayong, Thailand. Bina Puri says award will boost earnings; "with the award, the group's current order book stands at MYR1.80 billion," it adds. Dealer says although contract not large (only about MYR6.3 million), but hopes of stronger flow of building contracts had been boosting shares of late; "this award may start the ball rolling again."

DJ MARKET TALK: Jaks May Rise; To Build 2 Vietnam Power Plants
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0019 GMT [Dow Jones] Jaks Resources (4723.KU) may rise to MYR0.925 (yesterday's intraday high), then later psychological MYR1.00 vs yesterday's close at MYR0.905 (+0.6%), says trader; this after water-management construction firm says signed $2 billion deal with Vietnam authorities to build two 600-megawatt coal-fired power plants. Says projects to be developed under "build-operate-transfer" follows signing of 25-year power purchase agreement with Vietnam Electricity. Work on plants will begin in 4Q, with the first ready for commercial operation in 4Q 2014; second by 2Q 2015. Trader says agreement "significant" for Jaks for a number of reasons; "this is a major overseas project and it also provides the group with recurring rather than project-based income." (


DJ MARKET TALK: TPC Plus Likely Flat; LonBisc Offer Unattractive

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0030 GMT [Dow Jones] TPC Plus (7176.KU) likely flat vs yesterday's close at MYR0.295 (unchanged), says dealer, following buy out offer from major shareholder London Biscuit (7126.KU) for remaining shares in TPC. London Biscuit says in stock exchange filing it is making offer at MYR0.30/share for remaining 54.4 million shares (or 68%) of TPC it doesn't own, values entire offer at MYR16.3 million to be satisfied in cash. Adds, intends to keep the listing status of TPC after exercise. Dealer says premium of MYR0.005 over market "not attractive"; "TPC's share price has been hovering around 30 sen for about 2 months... this offer puts a price floor of sorts, but it will not excite investors."


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Thursday, April 8, 2010

London Biscuits, Lityan, Notion, Naim

DJ London Biscuits Offers To Buy Out TPC Plus At MYR0.30/Share
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KUALA LUMPUR (Dow Jones)--London Biscuits Bhd. (7126.KU) said Thursday it plans to buy out the remaining shareholders in TPC Plus Bhd. (7176.KU) for 30 sen per share in cash.

London Biscuits said in a stock exchange filing that it is making the offer for the remaining 54.4 million shares, or 68%, of TPC it currently doesn't own, thus valuing the entire offer at MYR16.3 million.

It intends to keep the listing status of TPC after the exercise, it said.

DJ MARKET TALK: Maybank Rates Lityan At Accumulate On Charts
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0829 GMT [Dow Jones] STOCK CALL: Maybank Investment says Lityan Holdings (9075.KU) may rise to upside targets at MYR2.16, then MYR2.53 based on charts. House rates stock at Accumulate after it spiked above 19-day moving average in January with grossly oversold signals. "With the buy indicators like CCI, DMI, MACD, Stochastic and Oscillator, we are positive that Lityan will trend firmly higher," says technical analyst Lee Cheng Hooi. Tips stock to test resistance at MYR1.97, then MYR2.17 en route to targets. Stock last +2.6% at MYR1.94. On downside, support seen at MYR1.89, then MYR1.59; stop loss at MYR1.57


DJ MARKET TALK: CIMB Keeps Notion Vtec At Outperform, Ups Target
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0805 GMT [Dow Jones] STOCK CALL: CIMB Research keeps Notion Vtec (0083.KU) at Outperform given company's sustained margins, strong order flows and demand. "While 1Q10 (results expected to be released end-April) tends to be a seasonally slower quarter especially for the consumption of electronics and also because the Japanese customers tend to keep lower inventory since many of them have financial years ending in March, we understand that revenue for this particular quarter has held up pretty well and that it should be fairly comparable to that of 4Q," says analyst Terence Wong; adds bottomline should also mirror that of 4Q. "The demand outlook has held relatively firm owing to component shortage and that the hard disk drive segment has been a strong performer," says Wong. Thus ups FY10-12 earnings forecasts by 2%-4%. This raises house target price to MYR4.46 from MYR4.32 based on unchanged FY11 P/E of 9.3X, a 20% discount to peers given its smaller market cap and size. Stock last +0.3% at MYR3.29.


DJ MARKET TALK: AmResearch Keeps Naim At Buy, MYR4.60 Target
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0738 GMT [Dow Jones] STOCK CALL: AmResearch keeps Naim Holdings (5073.KU) at Buy, target unchanged at MYR4.60 (based on 25% discount to estimated sum-of-parts MYR6.14/share). Analyst Mak Hoy Ken says expects share of associate earnings from 36%-owned oil & gas service provider Dayang (5141.KU) to rise to MYR17 million-MYR24 million in FY10F-12F vs MYR15 million in FY08 as new contracts flow in. (Dayang Wednesday says clinched MYR400 million 5-year maintenance job from Sarawak Shell.) Mak says Naim will also be beneficiary from further Sarawak projects as state accelerates spending (as in its SCORE development zone) ahead of local elections due by May 2011. Forecasts record core net profit of MYR86 million for FY10F, rising to MYR98 million-MYR128 million in FY11F-12F. Stock last down 1.2% at MYR3.40. Valuations are undemanding at FY10F-11F P/Es of 8X-9X, at lower end of historical P/E band of 7X-13X, Mak adds

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KLCI, Halex, Hong Leong, Sunway, CPO

DJ MARKET TALK: KLCI Down 0.9% Midday; 1329 Support Eyed
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0446 GMT [Dow Jones] KLCI down 0.9% at 1332.70 as broad-based profit-taking snaps market's 12-day winning streak; dealers say market taking cue from weaker U.S., regional markets. "After moving up without any stop for over 2 weeks, the market just ran out of steam. There were no positive catalysts externally and locally either," dealer says. Tips index to test 1329 support (April 2 low) in near-term. Volume at 493 million, in line with recent daily average; decliners beat gainers 3 to 1. Blue chips mostly lower, with CIMB (1023.KU) down 2.6% at MYR14.26, Tenaga (5347.KU) down 0.6% at MYR8.45, Maxis (6012.KU) down 0.8% at MYR5.28; Sunway City (6289.KU) bucked the trend, +2.2% at MYR3.78 on plans to set up biggest REIT in Malaysia.


DJ MARKET TALK: AmResearch Ups Hong Leong Bank Target To MYR9.70
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0359 GMT [Dow Jones] STOCK CALL: AmResearch raises Hong Leong Bank (5819.KU) target to MYR9.70 from MYR8.90 pegged to fair P/BV of 2X, based on revised ROE of 16.1% FY10F for the enlarged group, assuming the takeover of EON Capital (5266.KU) goes through. Notes, apart from existing all-cash offer of MYR7.30/EON Capital share, HLBB may also alternatively offer 85% cash (or MYR6.20 cash) and MYR1.10 in the form of new 0.12 HLBB shares valued at current market price of MYR8.90/share as requested by EON Capital's board. "The takeover would still be value enhancing and positive for HLBB as it reduces the burden of a larger rights issue later, which at the same time, serves as a goodwill gesture to selected major shareholders of EON Cap," says AmResearch. Keeps at Buy. Stock last down 0.6% at MYR8.83.

DJ MARKET TALK: HwangDBS Ups Sunway City To Buy; MYR4.70 Target
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0322 GMT [Dow Jones] STOCK CALL: HwangDBS Vickers Research raises Sunway City (6289.KU) to Buy from Hold, with higher target price of MYR4.70 vs MYR3.10 previously; this after Sunway City unveiled plans to inject 8 properties into REIT. House estimates REIT assets at MYR3.5 billion, with average 7% yield; says sale of assets to REIT may generate proceeds of MYR560 million, which could be redeployed for landbank acquisitions, new property investments. "We do not discount the possibility of special dividends to reward shareholders." Sunway City last +2.7% at MYR3.80.


DJ MARKET TALK: Charts Tip Halex As Short-Term Buy - Maybank
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0239 GMT [Dow Jones] STOCK CALL: Maybank Research rates agriculture chemical product maker Halex (5151.KU) as Short-Term Buy based on charts. "Halex is in a fledgling uptrend, confirmed by the positive crossovers on its technical indicators and potential Golden Cross on the 19- and 50-day moving averages," says chartist Lee Cheng Hooi; thinks Halex has great potential to reach resistance and target levels of MYR0.76, MYR0.83 and MYR0.91, after hitting recent all-time low of MYR0.625 with firm bullish divergence signals. Tips support at MYR0.63 with stop-loss at MYR0.61. Stock last down 2.2% at MYR0.655.


DJ Malaysia End-March Palm Oil Stocks Likely Down 5%-6% -Trade
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KUALA LUMPUR (Dow Jones)--Malaysia's palm oil inventories in March may have declined 5%-6% to around 1.68 million-1.70 million metric tons despite strong growth in production, as export demand for palm oil also improved, trade participants and plantation company executives said Thursday.

Crude palm oil futures have fallen 3.2% since March 1 under the weight of rising production. Plantation company executives said March crude palm oil output rose 7%-16% from the previous month.

However, end-March inventory numbers will likely decline because production may not be high enough to meet consumption, a senior trading executive based in Kuala Lumpur said.

The Malaysian Palm Oil Board is due to report output, exports and palm stocks data on Monday. CPO production was estimated at 1.16 million tons in February, while palm oil inventories at end-February were at 1.78 million tons, the MPOB said.

Export estimates by two cargo surveyors showed rising exports for March. Intertek Agri Services said shipments rose 12.1% to 1.35 million tons, while SGS (Malaysia) Bhd. said exports were up 7.7%, also at 1.35 million tons.

Analysts said March output rose significant on month because February was a shorter month and harvesting activities had spilt over to March, but growth reported by company executives came in a wide range from 7%-16%.

"Output at our palm estates has shown a single-digit increase (in March)," Lee Oi Hian, chief executive at Malaysia-based listed plantation company Kuala Lumpur Kepong Bhd. (2445.KU) said.

CPO production is likely to improve further in April, but the rise won't be "too much, as yields would be affected by the El Nino-induced dry spell in the second half of 2009," a Malaysia-based planter said. A prolonged dry spell lasting two successive months normally affects future yields.

Some trading executives put palm oil imports from Indonesia between 70,000 and 80,000 tons. Shipments from the world's largest palm oil-producing nation have likely risen due to a rush to ship out the oil to avoid a higher export tax effective in April.

An official at Indonesia's Ministry of Trade said last month that it would raise the palm oil export tax to 4.5% this month from 3%.

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KLCI, Dayang, Sunway


DJ MARKET TALK: KLCI May Fall After 12-Day Rise; 1339-1354 Tipped

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0021 GMT [Dow Jones] KLCI may fall, with weaker performance by U.S. stocks overnight, likely on profit-taking. "After having closed in positive territory for 12 consecutive sessions, it's hard to see the market going up any further without first taking a breather, especially given the lack of new bullish developments at the moment," dealer says; tips blue chips like Tenaga (5347.KU), which rose strongly in recent days, to succumb to profit-taking. KLCI ended +0.1% at 1345.09 yesterday. TA Research pegs immediate support at 1339, with resistance at 1354; notes that "market conditions are becoming increasingly overbought."

DJ MARKET TALK: Dayang May Rise To MYR2.18 On MYR400M Job
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0002 GMT [Dow Jones] Dayang Enterprise (5141.KU) may rise to test MYR2.18 (recent high) after clinching MYR400 million, 5-year contract from Sarawak Shell Bhd; contract, which includes option for additional 1 year, is for provision of topside maintenance services; oil & gas support services provider says job expected to contribute positively to earnings for 2010-2015 period. "Dayang has been doing work for Sarawak Shell, so, this latest job award comes as no surprise. Nevertheless, it's a sizeable contract and should have a positive impact on Dayang's shares," dealer says. Analysts say latest contract boosts Dayang's orderbook by some 80% as company previously had about MYR500 million worth of jobs on hand. Dayang ends +0.5% at MYR2.10 yesterday. (

DJ MARKET TALK: Sunway City May Rise; Plans To Set Up REIT
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0045 GMT [Dow Jones] Sunway City (4308.KU) may rise to test Tuesday's high of MYR3.74 after unveiling plans to set-up REIT for eight of its properties; company says it will sell three hotels, two shopping malls, two office towers and one hypermarket, to the REIT at a price to be determined later; Sunway City will receive cash or units in the REIT, or both. "Certainly, this is a good move by Sunway to unlock the value of its properties. But until the pricing details of the deal are released, the shares may have limited upside," dealer says. Sunway City ended 0.3% lower at MYR3.70 yesterday.
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Wednesday, April 7, 2010

Petronas, Uchi, Sunrise, Gopeng

DJ MARKET TALK: Maybank Upgrades Petronas Gas To Hold From Sell
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0755 GMT [Dow Jones] STOCK CALL: Maybank Investment upgrades Petronas Gas (6033.KU) to Hold from Sell, raises target to MYR10.40 from MYR8.80 following better terms in new, 4th Gas Processing and Transmission Agreement with parent Petronas (for period April 1, 2010 to March 31, 2014). Analyst Andrew Lee says latest GPTA improves firm's business model, enhances earnings (FY11-12 EPS may rise by between 29% and 34%), addresses key operating risks like gas price fluctuations, also eliminates concern over gas supply (allows PetGas to choose 3rd party gas supply). Lee says this could likely be "a prelude to using imported gas in Peninsula Malaysia... we understand that the external gas will come from Petronas' Santos field, Australia." Dividend yields remain decent at 5%, making PetGas a good defensive bet, Lee adds. Stock +0.1% at MYR9.90.

DJ MARKET TALK: TA Research Keeps Uchi As Buy, MYR1.60 Target
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0715 GMT [Dow Jones] STOCK CALL: TA Research keeps Uchi Technologies (7100.KU) at Buy with unchanged MYR1.60 target based on 14X FY10 EPS. "We continue to like Uchi, premised on its strength in the niche products market," says TA Research. Uchi is only supplier of electronic control systems (for coffee maker) in Asia, and possibly sole supplier in world (excluding customer's own in-house models). "This will serve as a meaningful catalyst to drive earnings momentum going forward as customers would have no choice but to place orders with Uchi once demand rebounds as there is no alternative supplier in the market," says TA; adds, company also does not face any difficulty in passing on any cost increases to customers. Keeps net profit forecast of MYR42.6 million for FY10, MYR50.1 million for FY11. Stock flat at MYR1.38.

DJ MARKET TALK: Charts Tip Sunrise As Accumulate -Maybank
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0626 GMT [Dow Jones] STOCK CALL: Maybank Research says Accumulate property firm Sunrise (6165.KU) based on charts. "Sunrise spiked up above its 19-day moving average in January 2010 with grossly oversold signals," says chartist Lee Cheng Hooi; adds, with buy indicators like CCI, DMI, MACD, Stochastic and Oscillator, house positive that Sunrise will trend firmly higher, with potential to test potential upside target areas of MYR2.50, then MYR2.95. Stock last down 0.4% at MYR2.30, having breached immediate support at MYR2.31. Tips next support at MYR2.03 with stop-loss at MYR2.01.

DJ MARKET TALK: Charts Tip Gopeng May Rise To MYR1.22-Maybank
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0826 GMT [Dow Jones] STOCK CALL: Maybank Investment rates Gopeng (2135.KU) at Accumulate based on charts with upside targets at MYR1.07, then MYR1.22. Technical analyst Lee Cheng Hooi says stock of plantation firm broke above 19-day moving average in January with grossly oversold signals. "With the buy indicators like CCI, DMI, MACD, Stochastic and Oscillator, we are positive that Gopeng will trend firmly higher, with the potential to test our resistance areas of MYR0.99 and MYR1.09 as it is poised to break its upward Pennant formation," says Lee. Stock last down 0.5% at MYR0.95, having breached immediate support at MYR0.955. Next support at MYR0.82; stop loss at MYR0.80.


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POS, Kencana, AEON, Petrnonas Gas,

DJ MARKET TALK: OSK Research Starts Pos Malaysia At Buy
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0321 GMT [Dow Jones] OSK Research starts Pos Malaysia (4634.KU) at Buy, with target price of MYR3.52; government approval for hike in postal tariffs from July came earlier than expected, says analyst Ahmad Maghfur Usman. Thinks revision in tariffs, first in 18 years, may result in 11% decline in mail volume in FY10; but, tariff increase will more than compensate for lower mail volume, planned 20% pay rise for postal workers. "We see yields on mail items ultimately jumping 80%, thus boosting total revenue and bottom-line by 38.5% and 174% respectively in 2011," Ahmad Maghfur says. Adds, with improved earnings, Pos Malaysia's gross dividend expected to double to 20 sen by FY11, for a gross yield of 7%. Pos Malaysia +12.2% at MYR3.21.

DJ MARKET TALK:HwangDBS Ups Petronas Gas To Hold; MYR10.60 Target
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0121 GMT [Dow Jones] STOCK CALL: HwangDBS Vickers Research raises Petronas Gas (6033.KU) to Hold from Fully Valued, with higher target price of MYR10.60 vs MYR8.00 previously; upgrade comes after company held briefing to explain recent revision in processing, transportation pricing terms with parent Petronas; cost savings derived from internal gas consumption to reach MYR400-MYR500 million, higher than earlier estimates, says house; adds new structure enables Petronas Gas to take on gas supply from other sources in the future as production from Terengganu fields declines. "We believe new supply might come from the Santos-Petronas LNG project in Australia, which is expected to come on stream in 2013." Stock trading at 17.2X 2011 PE vs 18.1X for regional peers. Untraded so far today, ends down 0.1% at MYR9.89 yesterday. (benjamin.low@dowjones.com)


DJ MARKET TALK: OSK Research Starts AEON Credit Malaysia At Buy
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0144 GMT [Dow Jones] STOCK CALL: OSK Research starts AEON Credit Malaysia (5139.KU) at Buy, with target price of MYR4.95. Notes AEON Credit, which provides payment plans for purchases of consumer durables, achieved revenue and earnings CAGR of 27% and 57% respectively in past 2 years, while keeping non-performing loans at under 2%; company also had profit margin of 23% and 35%, with high net interest margin of above 19% in past 2 years; analyst Lim Mei Ching says earnings momentum on track with fundamentals still solid. "Overall, the group is poised for organic growth on the back of a bigger clientele, improved consumer spending and rising demand for micro-credit financing," says Lim. AEON Credit untraded so far; ended +0.3% yesterday at MYR3.93.


DJ MARKET TALK: Pos Malaysia +11.9% On Postal Rate Hike
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0302 GMT [Dow Jones] Pos Malaysia (4634.KU) +11.9% at MYR3.20 after Malaysian government announces first increase in domestic postal rates in 18 years, to be effective July 1. AmResearch estimates Pos' EPS to be boosted by 168% in FY10, 60% in FY11, while EBITDA margins improving to 23% from 15% currently. "However this is still significantly lower than Singapore Post's EBITDA margin of 36%," says AmResearch. Adds, impending sale of Khazanah's 32.2% stake in Pos would now be more certain with the new tariff rates. Keeps Buy call, raises target to MYR3.80 from MYR2.30 previously; stock hit fresh 3-year high of MYR3.22 earlier. .


DJ MARKET TALK: OSK Research Starts Pos Malaysia At Buy

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0321 GMT [Dow Jones] OSK Research starts Pos Malaysia (4634.KU) at Buy, with target price of MYR3.52; government approval for hike in postal tariffs from July came earlier than expected, says analyst Ahmad Maghfur Usman. Thinks revision in tariffs, first in 18 years, may result in 11% decline in mail volume in FY10; but, tariff increase will more than compensate for lower mail volume, planned 20% pay rise for postal workers. "We see yields on mail items ultimately jumping 80%, thus boosting total revenue and bottom-line by 38.5% and 174% respectively in 2011," Ahmad Maghfur says. Adds, with improved earnings, Pos Malaysia's gross dividend expected to double to 20 sen by FY11, for a gross yield of 7%. Pos Malaysia +12.2% at MYR3.21.



DJ MARKET TALK: Maybank Research Rates Kencana As Accumulate
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0328 GMT [Dow Jones] STOCK CALL: Maybank Research rates oil and gas services provider Kencana Petroleum (5122.KU) as Accumulate based on charts. "Kencana recently made a Wave 4 low in February 2010 and is now on its Wave 5 uptrend," says chartist Lee Cheng Hooi; adds stock price went above its 19- and 50-day moving average, confirmed by positive crossovers on its firm technical indicators. Thinks stock has great potential to reach its stipulated resistance levels of MYR1.72, MYR1.81 and target areas of MYR1.83, MYR2.11. Tips support at MYR1.67, then areas MYR1.46 with stop-loss at MYR1.44. Stock last down 0.6% at MYR1.66

Summary

*DJ Petronas Gas Raised To Buy From Hold By AmResearch
*DJ Pos Malaysia Target Lifted To MYR3.80 From MYR2.30- AmResearch
*DJ Proton Target Upgraded To MYR6.30 From MYR5.50 By AmResearch
*DJ Telekom Target Raised To MYR3.90 From MYR3.25 By AmResearch
*DJ Telekom Malaysia Upgraded To Buy From Hold By AmResearch
*DJ Unisem Target Lifted To MYR3.30 From MYR2.68 By Affin Research


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KLCI, USD/MYR, DRB-Hicom, Iris

DJ MARKET TALK: KLCI May Fall, Snapping 11-Day Winning Streak
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0043 GMT [Dow Jones] KLCI may fall amid absence of fresh leads, bringing an end to a winning streak that lasted 11 days, longest in 16 years. KLCI ended +0.2% at 1344.37 yesterday. "We need some bullish developments to sustain the market's run-up, but newsflow has been rather thin this week. Investors may decide to take some profit at this point," dealer says; pegs immediate support at 1338, with resistance at 1350. Oil and gas-related stocks may continue to be in focus amid strong crude oil prices. "Bullish breakouts on oil and gas stocks such as Dialog (7277.KU) and Scomi Group (7158.KU) should accelerate further gains," TA Research says.

DJ MARKET TALK: USD/MYR Lower; Strong Support At 3.1950 - Dealer

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0035 GMT [Dow Jones] USD/MYR lower at 3.2040 vs 3.2100 late yesterday, extending recent downtrend to hit lowest level since May 2008 amid positive outlook for local economy, expectations of rising interest rates, improved risk appetite. But dealers say pair appears poised for rebound; "the pair has been moving downwards almost without stopping and is starting to look overdone. We expect strong support at the 3.1950 level, which should be a bottom for now," one says. Pegs resistance at 3.2200.

DJ MARKET TALK: DRB-Hicom May Rise To MYR1.25 On Potenza Pact
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0024 GMT [Dow Jones] DRB-Hicom (1619.KU) may rise to MYR1.25 (yesterday's high) after signing MOU with UK-based sports car maker Potenza for possible collaboration; DRB-Hicom says both parties will carry out feasilibility study on granting DRB-Hicom exclusive rights to manufacture, distribute Potenza cars for Asia-Pacific markets; collaboration may also include DRB-Hicom being made a development partner on new car models. "This will be a boost to DRB's reputation, but the immediate impact on DRB's bottomline will be rather limited as sports cars are a rather niche market. The market is still waiting for news on Volkswagen," dealer says, referring to recent market speculation Volkswagen, which plans to set up assembly operations in Malaysia to serve regional market, may select DRB-Hicom as a partner. Stock ends 3.2% lower at MYR1.20 yesterday


DJ MARKET TALK: Iris May Rise; Unit Awarded MYR115M LRT Contract
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0009 GMT [Dow Jones] Iris Corp. (0010.KU) may rise to test MYR0.18 (January 18 high), then MYR0.225 (1-year high) vs yesterday's close at MYR0.15 (down 3.2%) says dealer; this after company says unit Iris Information Technology Systems awarded MYR115.2 million contract by state-owned Syarikat Prasarana Negara to design, make, install automatic fare collection system for Prasarana's light rail transit (LRT) Kelana Jaya, Ampang lines in central Klang Valley. Adds, letter of award appoints Indra-Iris AFC Consortium as contractor for project, works to be completed within 15 months. Dealer says contract to raise Iris' top line, while generous margins will likely "significantly boost" its bottom line for 2010, 2011; "this one single contract is equivalent to a third of the company's entire 2009 revenue," dealer says. Iris posted 4Q net profit of MYR3.1 million on revenue of MYR132.5 million.


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Tuesday, April 6, 2010

Kinsteel, Tenaga, KLCI, UMW


DJ MARKET TALK: Maybank Raises Kinsteel To Buy; Ups Target 19.4%
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0228 GMT [Dow Jones] STOCK CALL: Maybank upgrades Kinsteel (5060.KU) to Buy from Hold, raises target price to MYR1.23 from MYR1.03 after raising FY10 EPS forecast by 13% and on higher target P/E of 8X 2011 earnings vs previous 6X. Says has turned positive following margin expansion in 1H FY10, with April-May billets sold forward at $550/ton vs inventory procured at $110/ton; analyst Lee Yen Ling says with sufficient iron ore inventory to last 3 months, company yet to commit to 2Q FY10 iron ore contracts, seeking more favorable pricing from domestic reserves. "We think the shares offer a better risk-reward ratio now, given higher steel prices, positive global steel fundamentals, and low foreign shareholding (less than 10%)," Lee says. Kinsteel +1.9% at MYR1.05



DJ MARKET TALK: Tenaga +3.8% On Better Power Demand Outlook
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0407 GMT [Dow Jones] Tenaga Nasional (5347.KU) +3.8% at MYR8.41, may test psychological MYR8.50 later, on better power demand outlook, says dealer with local brokerage. "The improved economic conditions have led to higher demand for power and that will translate to higher earnings," says dealer. AmResearch's analyst Alex Goh, who has Buy call, MYR10.00 target, says Tenaga's valuations are "highly attractive" at 2010 forecast P/E of 11X vs 5-year average of 14X. Cites rising power demand (+5% in FY10 vs +4% earlier), strengthening MYR, which reduces fuel, interest costs, improving economies of scale on declining power reserve margin and revival of foreign interest (shareholding which has fallen to 8.6% from 28.4% in May 2007) as catalysts that will fuel share prices.


DJ MARKET TALK: KLCI +0.2% Midday; Oil & Gas Stocks Lead
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0448 GMT [Dow Jones] KLCI +0.2% at 1344.56 midday, led by oil & gas-related stocks, select index heavyweights; "The external environment has been positive and domestically, newsflow has been generally favorable as well. There is room for further upside, at least, in the near-term," dealer says. Benchmark index tipped to rise to 1354 resistance in near-term, with support at 1338. OSK Research technical analyst Shin Kao Jack says market "far from being overbought". "The trend is obviously up and we are maintaining our bullish bias view," he adds. Among gainers, Tenaga (5347.KU) +3.5% at MYR8.38 on bullish power demand outlook, Petra Perdana (7108.KU) +10% at MYR1.76 after CIMB Research raised target price to MYR2.00; oil industry support services stocks among most active, with Kencana (5122.KU) +2.5% at MYR1.76, Dialog (7277.KU) +2.7% at MYR1.15. Among decliners, CIMB (1023.KU) down 0.4% at MYR14.68.



DJ MARKET TALK: Affin Keeps UMW As Add, Ups Target To MYR7.00
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0531 GMT [Dow Jones] STOCK CALL: Affin Research keeps UMW Holdings (4588.KU) as Add, ups target to MYR7.00 from MYR6.40 earlier; this, after according a higher P/E multiple for UMW's oil and assets (from 10X to 15X P/E). Analyst Chong Lee Len says key re-rating catalysts for stock include product pipeline visibility for 51%-owned UMW Toyota Motor Sdn Bhd, potential listing of oil and gas unit and active capital management. The "initial overhanging fear, at least on our part, of sharp decline in domestic Toyota car sales given the massive global Toyota car recalls have been proven unfounded," says Chong; adds UMW is house's top pick in automotive sector as earnings may surprise on upside given aggressive oil and gas expansion, bright prospects and management prowess. Stock +0.2% at MYR6.34.
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KLCI, Maybank, Salcon

DJ MARKET TALK: KLCI May Extend Winning Streak To 11 Sessions
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0030 GMT [Dow Jones] KLCI may extend its winning streak to 11 sessions; blue chips expected to lead gains after U.S. shares climbed to 18-month highs overnight. Stronger MYR amid improved risk appetite, bullish technical signals also expected to boost investor confidence, dealers say; last time benchmark index gained for 11 days straight was in August 1994. TA Research says KLCI's close above 1340 yesterday signals "a bullish breakout which should boost upside momentum toward 1354 before more significant profit-taking emerge." Support tipped at yesterday's low of 1339. KLCI ended +0.4% at 1341.75

DJ MARKET TALK: HwangDBS Raises Maybank To Buy; MYR9.00 Target
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0139 GMT [Dow Jones] STOCK CALL: HwangDBS Vickers Research upgrades Maybank (1155.KU) to Buy from Hold, raises target price to MYR9.00 from MYR7.30; Maybank well positioned to benefit from interest rate hikes as it has one of lowest cost deposits ratio among banks, says analyst Sue Lin Lim. With solid domestic franchise, especially for hire-purchase and mortgages, alongside improved prospects in Indonesia, where no further provisions expected for BII (BNII.JK), Maybank's loans growth expected at 12-15% over FY10-12, above industry average of 8-9%; revises up FY10-12 earnings forecast by 1-8%. "Maybank remains an attractive laggard big cap," Lim says; Notes shares trading at 1.9X 2010 book value vs 2.2X for rival CIMB (1023.KU).


DJ MARKET TALK: OSK Research Starts Salcon At Buy, MYR0.81 Target
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0124 GMT [Dow Jones] STOCK CALL: OSK Research starts Salcon (8567.KU) at Buy, with target price of 81 sen; water engineering and construction company's orderbook stood at MYR1.2 billion as at end-2009, of which MYR576 million still outstanding. "With its current tender book at MYR1.5 billion, Salcon is poised to secure jobs worth MYR300-MYR450 million this year, based on its historical success rate of 20%-30%," says analyst Vincent Lim; adds, construction and engineering division revenue to increase 35.5% in FY10. Tips orderbook to be enlarged further in FY11 as company increases presence overseas in Thailand, Vietnam, India, Sri Lanka. In wastewater business, Salcon, now has eight concessions, mainly in China; expected to secure more China concessions in next 2-3 years, Lim says. Salcon down 0.7% at 71.5 sen.



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Monday, April 5, 2010

CPO, O&G, Waseong, Glove Makers

DJ MARKET TALK: BMD CPO Futures Up Midday; Further Upside Unlikely
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[Dow Jones] BMD CPO futures higher, rising as much as 1.1% to intraday high of MYR2,588/ton. Gains in CPO likely limited as strengthening ringgit makes it more expensive and affects refiners' margins, Malaysia-based exporter says. CPO futures likely rangebound in afternoon session, moving in MYR2,550-MYR2,590/ton range, analyst from Kuala Lumpur-based brokerage says. Benchmark BMD June CPO futures trading MYR11 higher midday at MYR2,570/ton, off intraday high of MYR2,588/ton.


DJ MARKET TALK: Affin Keeps M'sia Oil & Gas Sector Overweight
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0420 GMT [Dow Jones] STOCK CALL:Affin Research keeps Malaysia's oil and gas sector as Overweight; analyst Loong Kok Wen says rising crude oil price will be catalyst for more contract flows. "Current valuations for oil and gas stocks are still undemanding, compared to the past valuations when the oil price was at equivalent levels," says Loong; adds sector is a market laggard. "The upcoming IPOs of two Petronas' subsidiaries signal that Petronas is confident on the outlook of the sector, he says; notes, new listing, which house believes could be at a premium, is likely to be a kicker for sector valuations. Tips Dialog (7277.KU) last down 0.9% at MYR1.12 and Kencana (5122.KU) +0.6% at MYR1.60 as house top picks for the sector.


DJ MARKET TALK: Maybank Keeps Wah Seong At Buy; MYR2.80 Target
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0258 GMT [Dow Jones] STOCK CALL: Maybank Investment Bank maintains Buy on Wah Seong (5142.KU), with unchanged target price of MYR2.80; notes stock has strong potential for re-rating should company succeed in bid for Socotherm's (SCT.MI) regional manufacturing assets; results of bid likely to be known by mid 2010. A successful bid would turn Wah Seong into 2nd largest pipe-coating operator in the world, provide company access to new markets such as North America, South America, Europe, analyst Andrew Lee says; adds as Socotherm under administration, assets likely to be sold at distressed prices, below book valuation. "Acquisition of Socotherm's assets could allow (Wah Seong) to grow its earnings base in the long-term"; says successful acquisition of Socotherm assets could boost FY11 earnings forecast by 17.5%. Wah Seong last +1.9% at MYR2.74.



DJ MARKET TALK: Glove Makers Higher On New Flu Cases
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0215 GMT [Dow Jones] Glove makers higher, with some stocks like Kossan (7153.KU) hitting fresh record highs, as renewed concerns of H1N1 flu outbreak add to already rosy demand outlook; this after government reported sharp increase in H1N1 infections in Malaysia over past week, though insufficient evidence to warrant declaration of outbreak. "Recent developments like the U.S. healthcare reform bill have been favorable for glove makers. It's still way too early to be concerned, but in the event there were to be a second wave of H1N1 globally, it will certainly be positive for the glove sector," dealer says. Latexx (7064.KU) last +1.5% at MYR4.06, Kossan +1.2% at MYR8.30, Supermax (7106.KU) +1.5% at MYR7.31

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