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

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.
(Bloomberg)
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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

KLSE COMPANIES NEWS

DiGi Telecommunications Sdn Bhd, unit of DiGi.com 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)

YTL E & AIR ASIA

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)

US MARKET & NEWS 30.7.2009

Stocks trimmed losses by the close Wednesday, but remained in the red after a weak durable goods orders report added to worries about the economy and investors soured on Yahoo's partnership with Microsoft. In addition to the day's news, Wall Street was also vulnerable to a pullback in the wake of a big two-week rally that lifted the Dow and S&P 500 by more than 11%
and the Nasdaq by 12%. The Dow Jones industrial average lost 0.3% (-26.0 pts, close9,070.7).The Nasdaq lost 0.4 (-7.7 pts,close 1,967.8) and the S&P 500 index lost 0.5% (-4.5 pts, close 975.2). In currency trading, the dollar gained against the euro and the Japanese yen. U.S. light crude oil for September delivery fell US$3.88 to settle at US$63.35 a barrel on the New York Mercantile Exchange. (CNNmoney)

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Orders for U.S. durable goods, excluding automobiles and aircraft, unexpectedly rose in June, signalling manufacturing may expand in 2H09. Excluding transportation equipment, demand for goods meant to last several years climbed 1.1%, the most in four months, the Commerce Department said yesterday in Washington. Total orders fell 2.5%, the first decrease in three months. The durable-goods figures used to calculate economic growth indicate companies plan to boost investment in coming months, adding to evidence the worst recession in five decades is starting to ease. Economists expected a 0.6% drop in orders, according to the median of 73 forecasts in a Bloomberg News survey, after a previously reported 1.8% gain in May. Estimates ranged from a decline of 2% to a gain of 2%. (Bloomberg)
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The Federal Reserve said most of its 12 regional banks detected a slower pace of economic decline in June and July, further signs the worst U.S. downturn in at least five decades is closer to an end. “Economic activity continued to be weak” in June and July, the Fed said yesterday in its Beige Book business survey, published two weeks before officials meet to set monetary policy. San Francisco, the district with the biggest economy, and three others “pointed to signs of stabilization,” while Chicago and St. Louis showed a “moderating” pace of decline. The Beige Book provided few signs of outright growth. Retail demand was “sluggish” in most areas, with “mixed” auto sales. Non-financial services were “largely negative” with “a few bright spots,” and manufacturing was “subdued” yet “slightly more positive” than in the previous report, the Fed said. Lending in most regions “was stable or weakened further” in most loan categories, and banks tightened credit standards in seven districts, the report said. (Bloomberg)
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KLSE BUY & SELL AND NEWS 30.7.2009

Boustead Holdings Bhd (BOUS MK, Hold, TP: RM3.50) is looking to raise up to RM1.3bn through a rights issue anddivestment of its non-core assets. Boustead wants to use the proceeds to reduce its debt as well as for expansion purposes in key operations, namely shipyard, property and plantations. Shareholders have approved the two-for-five rights issue that could raise up to RM729.16m. Major shareholder, Lembaga Tabung Angkatan Tentera Malaysia with a 59.55% stake, has agreed to subscribe all of its portion of the rights shares. Boustead is looking to raise another RM500m to RM600m from the disposal of non core assets that include 17,000ha of plantation land in Indonesia and an 80% stake in BH Insurance (M) Bhd. (The Malaysian Reserve)

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CIMB Thai bank, 94% owned by Bumiputra Commerce Holdings Bhd (BCHB MK, Hold, TP: RM8.80), hopes its recent restructuring and an expected recovery in Thailand’s economy will help it return to net profit next year, earlier than expected. “A return to net profit this year, that’s hard to predict,” president Subhak Siwaraksa said. “Even though we are
already showing operating profits, the key variable is provisioning charges, which depend on economic conditions.” CIMB Thai had no plans to expand through mergers or acquisitions, he added. (Financial Daily)

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The possibility of a merger between AirAsia (AIRA MK, Buy, TP: RM1.90) and its sister company AirAsia X, if it were to materialise at all, is unlikely to happen anytime soon, Datuk Tony Fernandes and Azran Osman Rani were quoted saying despite the deal being favourable in their opinion. Besides, AirAsia would have to deal with strengthening its balance sheet first
before it could consider any merger exercise with AirAsia X, and it was in the midst of raising capital. (Financial Daily)

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AirAsia X is proceeding with its expansion plans, including the launching of two new routes, to Chengdu, China and a city in the Middle East this year. The company plans to increase flight capacity this year to current routes by 50% to the Gol Coast in Australia, by 40% to Taipei, Taiwan and by 20% to Hangzhou, China. Also this year, either Melbourne or Perth
Australia may see a boost in capacity from one flight daily to having 2 flights on four days weekly. He said the new flight to the Middle East would start before Hari Raya Haji. (Financial Daily)

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Alliance Financial Group Bhd (AFGB) is likely to pay lower dividend for the current financial year in anticipation of a weaker performance due to the challenging economic setting, said chairman Datuk Oh Chong Peng. He said that the group had passed on every sen that it received from Alliance Banking Group to shareholders and that it paid 6.5 sen per share last year, but expected it to be lower this year as profits are likely to be lower. AFGB is the parent company of Alliance Bank Malaysia Bhd as well as Alliance Investment Bank Bhd, Alliance Investment Management Bhd and Alliance Islamic Bank Bhd.
(StarBiz)

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Alliance Financial Group Bhd’s banking arm, Alliance Bank Malaysia Bhd (ABMB) will be relooking at its product offerings and focusing on selling less risky products in view of the uncertain times. ABMB group CEO Datuk Bridget Lai said there was a need to focus on less risky products that gave the bank the revenues it was looking for in the financial year ending March 31, 2010. On the bank’s loans growth in FY10, Lai said that ABMB remained cautiously optimistic about its prospects and would continue to grow its loans portfolio at a slower rate, most likely in the lower teens, in terms of percentage growth. (Financial Daily)

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Lion Diversified Holdings Bhd said its wholly-owned unit Well Morning Ltd has entered into a conditional sale and purchase agreement with Lion Asiapac Management consultancy (Shanghai) Co Ltd (LAPS). The agreement is for the disposal of the right to invest in the remaining 30% registered capital of Changshu Lion Enterprise Co Ltd to LAPS for a nominal cash consideration of 1 renmimbi (51 sen). LAPS is a subsidiary of Lion Asiapac Ltd (LAP) while Changshu Lion is a
property development company in Changshu city, Jiangsu Province in China. (StarBiz)

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Carlsberg Brewery Malaysia Bhd (CBMB) expects Carlsberg Singapore Pte Ltd (CSPL) to contribute about 30% to its net profit in the financial year ending Dec 31, 2010 pursuant to its proposal to acquire the latter. CBMB also expects to resume its dividend payout at previous levels after surprising the market with its lower dividend early this year. CBMB managing director Soren Holm Jensen said preliminary estimates showed CBMB’s net profit for2010 to increase to RM113m from RM76m in 2008, on the assumption that the proposal to acquire CSPL was approved by minor shareholders. (Financial Daily)

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KPJ healthcare Bhd’s unit Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB) is buying the Bandar Baru Klang Medical Centre Building from Greenbelt View Sdn Bhd RM38m cash. KPJ said the proposed acquisition was in line with its objective to increase its network of hospitals to locations where private healthcare was in demand. The proposed acquisition, which was
expected to be completed by year-end would be financed via internally generated funds. (Financial Daily)
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Mudajaya Corp Bhd has been awarded a RM75.38m contract to build a hospital in Pahang. The project was awarded by Takdzim PMG Sdn Bhd on July 27. The project is expected to be completed by Jan 31, 2012. (Financial Daily)

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Bank Negara Malaysia kept the overnight policy rate unchanged at 2% at the Monetary Policy Committee meeting yesterday, saying there were signs the global and local economies were stabilising. “Conditions in the domestic economy have also showed signs of stabilising in the 2Q, with several indicators such as the industrial production index and retrenchment recording a slower pace of decline,” it said in a statement. (Financial Daily)

US& GLOBAL MARKET 29.7.2009

Stocks ended mixed Tuesday as investors weighed a weaker-than-expected consumer confidence report and a better-thanexpectedhousing report in the aftermath of a big rally. Stocks have gained for the last two weeks, as investors have breatheda sigh of relief that second-quarter results have been mostly better than expected. The Dow and S&P 500 have added around11.5% and the Nasdaq has gained 12%. But after such a big run in a short period of time, stocks have become vulnerable. TheDow Jones industrial average lost 0.1% (-11.8 pts, close 9,096.7). The Nasdaq gained 0.4% (+7.6 pts, close 1,975.5) and theS&P 500 index lost 0.3% (-2.6 pts, close 979.6). In currency trading, the dollar fell against the euro and fell against theJapanese yen. U.S. light crude oil for September delivery fell US$1.15 to settle at US$67.23 a barrel on the New YorkMercantile Exchange. (CNNmoney)

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A gauge of U.S. house prices posted its first monthly gain in three years, but consumer confidence this month fellmore than forecast. The S&P/Case-Shiller home-price index rose 0.5% m-o-m in May, the first gain since July 2006 andbiggest since May of that year, the group said yesterday in New York. The S&P/Case-Shiller home-price index was down17.1% y-o-y, less than projected and the smallest y-o-y drop in nine months. Economists forecast the index would drop 17.9%y-o-y, according to the median of 32 projections in a Bloomberg News survey. The Conference Board’s confidence indexdropped to 46.6, a second consecutive decline, following a reading of 49.3 in June, the New York-based research group said.The figure reached a record low of 25.3 in February. (Bloomberg)

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U.K. house prices rose for the first time in 17 months in June, led by gains in London, the Land Registry said yesterday.The average price of a home in England and Wales increased 0.1% m-o-m, the first gain since January 2008, to 153,046pounds (US$253,000), the government agency said in a report on its Web site. Values in the capital rose 2%. The report addsto evidence that the market for residential property is stabilizing while the economy is mired in the worst recession in ageneration. A survey published this week by London-based property researcher Hometrack Ltd. showed prices held their valuefor a third month in July. Half of the 10 regions tracked by the Land Registry showed an increase from the previous month.Yesterday’s national reading is down 14% y-o-y. (Bloomberg)

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Japanese manufacturers probably increased production for a fourth month in June, capping the largest quarterly outputexpansion in more than 50 years. Production climbed 2.5% from May, according to the median forecast of economistssurveyed before a Trade Ministry report tomorrow. That would be an 8.3% quarterly gain, the biggest increase since the end ofthe Korean War in 1953. Leaner inventories and US$2.2trn in emergency spending by governments worldwide have stabilizedglobal demand, giving a lift to Japanese exports. Automakers including Mitsubishi Motors Corp., benefiting from subsidies onfuel-efficient cars, are raising production and reinstating overtime. Japan’s output will still be a quarter below last year’s,economists said. (Bloomberg)

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China’s rate of inflation may rebound in 2H09, the People’s Bank of China said yesterday, adding that it plans to keeppolicies stable to ensure an economic recovery. China’s economy is at a “critical” stage, the central bank said in a report on itsWeb site. It said the acceleration in growth in 2Q09 from 1Q09 had exceeded expectations. Premier Wen Jiabao and the rulingCommunist Party’s Politburo last week pledged to maintain a “moderately loose” monetary policy, countering speculation thatrecord new loans and surging asset prices will trigger a tightening. Consumer prices fell 1.7% y-o-y in June, the fifth monthlydecline and the biggest drop since 1999. (Bloomberg)

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India’s central bank may start reversing its interest-rate cuts in early 2010 as food and energy prices fan inflation, after itkept borrowing costs unchanged yesterday to bolster economic growth. “On the way forward, the Reserve Bank will have toreverse the expansionary measures to subdue inflationary pressures while preserving the growth momentum,” GovernorDuvvuri Subbarao said. Inflation may “creep up” to about 5% by March next year compared with an April estimate of 4%, hesaid. India is vulnerable to inflation as it relies on imported oil and demand for food from its 1.2bn people exceeds supply.Besides being buffeted by higher global commodity costs, inflation in India is also fuelled by congested roads and ports andpower shortages that add to the cost of doing business. (Bloomberg)