Friday, August 14, 2009

KLSE NEWS 14.8.2009

AMMB Holdings Bhd (AMM MK, Buy, TP: RM4.76) has forecasted a net profit of between RM800m and RM900m in itsfinancial year ending March 31, 2010 (FY10) versus RM860m in FY09. This was despite posting a 27.3% rise in net profit toRM258.2m in its first quarter ended June 30, 2009 from RM202.9m a year earlier. The banking group expects net nonperformingloans to rise to nearly 4% at end FY10. Managing director Cheah Tek Kuang highlighted uncertainties over thestrength of the economic recovery, adding that there was also a lag effect to consider, hence “if you take a lag effect of about12 months from last October, the impact will be felt in our third or fourth quarter.” (Financial Daily)

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Sime Darby Bhd (SIME MK, Hold, TP: RM7.70) does not expect to immediately list its plantation business – the group’skey profit driver – as part of a detailed review of its operations, according to a source with direct knowledge of the plan.However, the source said that there was definitely a review of the automobile sector as the unit is facing stiff competitionregionally. (Starbiz)

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The owners of the upcoming two-phase Setia City Mall may consider selling it to a real estate investment trust (REIT) ifa good offer comes along. But for now, the retail entity on a 12.2ha (30.5 acre) site within the Setia Alam township willserve as a rental generation asset. The project, jointly developed by SP Setia Bhd (SPSB MK, Sell, TP: RM2.80) and LendLease Asian Retail Investment Fund 2, is expected to be completed within five years with a net lettable area of up to1.7m sq ftwith some 300 shops. “If somebody offers us a very good price, we will consult each other on whether we want to sell, or putinto a REIT. It’s a matter of pricing,” said SP Setia president Tan Sri Liew Kee Sin. (Financial Daily)

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Fajarbaru Builder Group Bhd has proposed a private placement of up to 10% of its paid up capital to placees to beidentified and at an issue price to be fixed later. Fajarbaru said the placement shares would be issued based on a discountof not more than 10% from the five-day weighted average market price immediately preceding the price-fixing date. It will usethe proceeds for working capital. In addition, the company said it would serve to increase the capitalisation of the company andto further strengthen the balance sheet of the group. (Financial Daily)

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Selangor Menteri Besar, Tan Sri Abdul Khalid Ibrahim said that the state expects to resolve its ongoing tussle with thestate's water asset concessionaires by the end of this month. He said that since Konsortium Abass Sdn Bhd and SyarikatPengular Air Sungai Selangor Sdn Bhd had accepted the state’s offer, it is now haggling over price with Syarikat Bekalan AirSelangor Sdn Bhd (Syabas), a 70% unit of Puncak Niaga (M) Sdn Bhd. He also said that once the price is resolved, the statewould not have any problems handling its other concessionaire Puncak Niaga (M) Sdn Bhd. (BT)

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Domestic unemployment rate may rise to 4.5% by year-end from 3.7% last year, according to International Trade andIndustry Deputy Minister Datuk Mukhriz Tun Mahatir. He said most factories that had laid off workers had begun to take backformer employees after demand picked up. As of July 7, Mukhriz said, statistics compiled showed a cumulative figure of 38,732workers retrenched due to the economic crisis. Of the total 29,712 were permanently terminated while 9,020 acceptedvoluntary separation offers. In addition, 40,662 workers had their pay reduced while 4,112 were temporarily laid off. (Starbiz

Thursday, August 13, 2009

US MARKET & NEWS 13.8.2009

Stocks sustained gains Wednesday after the Federal Reserve held interest rates near historic lows and signalled the
economy has finally started to stabilize. Wall Street rallied leading up to the Fed announcement as signs of improvement in the
housing market pushed investors back into stocks following a two-day retreat. The market seesawed a bit after the
announcement, with the Dow, Nasdaq and S&P 500 pushing toward fresh 2009 highs, before trimming those gains by the
close. The Dow Jones industrial average gained 1.3% (+120.2 pts, close 9,361.6). The Nasdaq gained 1.5% (+28.9 pts, close
1,998.7) and the S&P 500 index gained 1.2% (+11.5 pts, close 1,005.8). U.S. light crude oil for September delivery rose 71
cents to settle at US$70.16 a barrel on the New York Mercantile Exchange. (CNNmoney)
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The Federal Reserve plans to slow the pace of its purchases of U.S. Treasuries as the recession eases, and signalled
that the US$300bn program will end in October. The program was previously scheduled to end in September. Policy makers
acknowledged signs that the worst recession since the 1930s may be ending, saying that data “suggests that economic activity
is levelling out.” Chairman Ben S. Bernanke’s US$1trn expansion of the Fed’s balance sheet, providing emergency funding for
banks and markets from commercial paper to asset-backed securities, has helped thaw financial markets, which the Fed said
have “improved further in recent weeks.” (Bloomberg)
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The U.S. trade deficit widened less than forecast in June, reflecting a second consecutive gain in exports spurred by a
pick-up in economies around the world. The gap increased 4% to US$27bn from US$26bn in May, which was the lowest level
in almost a decade, Commerce Department figures showed yesterday in Washington. Exports gained 2%, helped by stronger
demand for goods such as semiconductors and aircraft engines, while imports rose 2.3%, led by a higher cost for oil.
Increases in both exports and imports signal the worst global slump in the post-World War II era is coming to an end, helping
the U.S. pull out of the recession. Federal Reserve policy makers today committed to keeping rates low to secure an economic
recovery after wrapping up a two-day meeting. The trade gap was projected to widen to US$28.7bn, according to the median
of 70 forecasts in a Bloomberg News survey of economists. Deficit projections ranged from US$31bn to US$25.5bn.
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The U.S. budget deficit reached a record for the first 10 months of the fiscal year and broke a monthly high for July as the
recession curbed revenue and the government ramped up spending to rejuvenate the economy. The shortfall so far for the
fiscal year that ends Sept. 30 totalled US$1.27trn compared with a US$389bn year-to-date gap in 2008, the Treasury said
yesterday in Washington. The excess of spending over revenue for July climbed to US$180.7bn compared with a US$102.8bn
gap in July 2008 as the government spent more than in any month in U.S. history. Tax receipts are sliding and spending is
surging even as some economists say the recession may have ended. (Bloomberg)
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Home price declines in the U.S. accelerated in 2Q09, dropping by a record 15.6% y-o-y, as foreclosures weighed on values.
The median price of an existing single-family home dropped to US$174,100, the most in records dating to 1979, the National
Association of Realtors said yesterday. Total sales rose 3.8% to a seasonally adjusted annual rate of 4.76m from 1Q09 and fell
2.9% from 2Q08. Prices fell in 129 out of 155 metropolitan areas from a year ago and 39 states experienced sales increases
from 1Q09, the Chicago-based realtors group said. Home prices are falling even as a survey of economists indicates that the
U.S. economy is recovering from the worst recession since the 1930s. The economy will expand 2% or more in four straight
quarters through June, the first such streak in more than four years, according to the median of 53 forecasts in the monthly
Bloomberg News survey. (Bloomberg)
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Bank of England Governor Mervyn King said inflation may miss the central


DiGi Telecommunications Sdn Bhd, unit of Bhd (DIGI MK, Hold, TP: RM20.10), which currently has about 27% share of the youth cellular market, expects its new service – Digi Music Unlimited – to boost that market share to 33%. DiGi said that with 50% of the Malaysian population in the youth bracket, it is an important and growing market for the company. For RM5 a month, DiGi subscribers will be able to download unlimited songs to their mobile phones from half a million tracks. Those who sign up before November will enjoy free access for the first 30 days. (Starbiz)

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Mah Sing Group Bhd’s purchase of 46.1ha freehold land in Cyberjaya for RM130.5m cash will spearhead its expansion into the southern growth corridor. According to Mah Sing’s MD, the land will be developed into a medium to high-end gated and guarded residential – Garden Residence – comprising super link homes, semi-detached homes and bungalows, with an estimated GDV of RM690m. The company said that they intended to fund the acquisition and development cost of the land through internally generated funds and/or bank borrowings. To be launched early next year, Garden Residence will take three years to complete. It is also expected to contribute to FY10 earnings. (Starbiz)
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Mah Sing Group Bhd subsidiary, Jastamax Sdn Bhd, has proposed an en bloc sale of an eight storey retail and office space with two basement levels of car park within its Southgate commercial centre for RM226m cash to Koperasi Permodalan Felda Bhd (KPF). Mah Sing said that it was extending its 5/95 marketing programme to KPF. Under the programme, 5% of the total price will be paid upon the execution of the SPA and the balance 95% will be released to Jastamax based upon the architect’s certification of each stage of completion. The right storey building is to be leased back for a period of 2 years to Jastamax from KPF. (Starbiz)
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Dunham-Bush Holding Bhd (DB), which was taken private in 2007, is expected to be relisted ithe next three years, which would see the air conditioner manufacturer raising between US$300m and US$400m (RM1.06bn and RM1.4bn). Its chief executive officer, Jeffrey Scott Albright, said the proposed stock exchange for the relisting would be decided later as it would also hinge on the potential investor base. Holding company Agromash Holdings BV wanted to relist the company in 2012 and the funds raised from the flotation would be used to expand its facilities and equipment. (Financial Daily)
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Bolton Bhd is considering issuing bond to raise up to RM300m to finance land acquisition and the development of existing projects. “We intend to raise a standby line or a bond issuance. We are seriously considering a bond issuance at this time, RM250m or RM300m with a staggered drawdown,” executive chairman Datuk Azman Yahya said. According to him, Boston has begun evaluating the options available for such an exercise, saying it is also “subject to rating, subject to pricing, subject to markets”. He emphasised that the company’s bond issuance would not be for refinancing or debt repayment purposes and said the company was scouting for landbank in the Klang Valley and possibly in Penang, where it has existing developments. (Financial Daily)

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MK Land Holdings Bhd is targeting some RM600m worth of property sales in the current year ending June 30, 2010 as the recovering economic landscape will boost the real estate market’s fortunes in the coming months. Executive chairman Tan Sri Mustapha Kamal Abu Bakar said the sales target was in anticipation of demand for the company’s offerings of its properties in Damansara Perdana. The properties are expected to have a combined worth of some RM3.5bn in over 240ha piece of land. “We are hoping, and in the near future, we are talking about RM1bn (worth of sales),” said Mustapha.
(Financial Daily)
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The US$7bn Transpeninsular Pipeline (TPP) project that was to take off nearly two years ago may yet become a reality
as a Chinese party is said to be keen to take a stake in the project, with a shareholding agreement expected to be signed
as early as tomorrow. Sources said that the TPP project might get an up to RM4bn boost from the Chinese party to jumpstart
the project. The TPP involves building a 312km pipeline linking Yan in Kedah to Bachok in Kelantan. The project also involves
a crude oil refinery plant in Yan and three storage tanks in Kelantan hence allowing oil shipments from the Middle East to
bypass the Straits of Malacca. (Starbiz)

Wednesday, August 5, 2009


YTL e- Solutions Bhd (YTLe), unit of YTL Corporation Bhd (YTL MK, Buy, TP: RM8.00), is investing RM2.5bn to build aWiMAX-enabled network that will have ample capacity to cater for 14m users. Its director Datuk Yeoh Seok Hong saidYTLe’s network roll-out was on track and the July 1 launch date for its service roll-out intact. “When we launch our servicesnext year, they will be available to 60% of populated areas. Our data speed will be three to four times faster than 3G speed,” headded. YTLe is working with US-based Clearwire, Cisco, Fibrerail and Samsung and is eyeing the untapped market that has nointernet access, which is about 80% of the population. (StarBiz)

AirAsia (AIRA MK, Buy, TP: RM1.90) has seen strong demand for its share issue worth US$172m (RM601m), which it willuse to reduce its debt, said CEO Tony Fernandes. Fernandes said the company’s new shares will be priced at a 5-10%discount to the market price of AirAsia shares at the time of issue. He noted that there was a lot of liquidity in the market andnow was a good time to reduce their gearing. (Malaysian Reserve)
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