30 April 2012

Esso minorities not receptive to Petron's offer, only less than 10% of the balance shares held by minority shareholders had accepted the takeover offer

(ESSO opening stock price today (30.4.2012) was RM 3.57

ONE of the more interesting buyouts of public listed companies in recent times is the deal involving Philippines-based Petron Corp and Esso Malaysia Bhd (EMB).

A noteworthy development surfaced two weeks ago when independent adviser Kenanga Investment Bank Bhd advised minority shareholders to reject the offer by Petron, so that they may benefit from the positive prospects of EMB in the future.

In the same circular, the independent directors of EMB also concurred with Kenanga which said that the offer price of RM3.59 per share was not attractive following a few methods of financial evaluation, hence advising shareholders to reject the offer.

This raises a few questions: Will Petron's intention to privatise EMB fail if minority shareholders cling tightly to their shares, and will we see a sweeter deal for the minority shareholders?

To recap, Petron, a unit of conglomerate San Miguel Corporation, triggered a mandatory general offer to acquire the remaining 35% shares in EMB at RM3.59 each after the completion of ExxonMobil's disposal of its 65% stake to Petron. The company had also expressed its intention to privatise EMB post-acquisition.

In a deal valued at US$610mil, not only did Petron acquire a stake in EMB, it had also bought the unlisted downstream business of ExxonMobil which includes Exxon's industrial and wholesale and aviation fuels operations, the Port Dickson refinery, along with equity interest in 10 fuel distribution terminals and 560 branded retail fuel sites.

To date, less than 10% of the balance shares held by minority shareholders had accepted the takeover offer, hence Petron still has a long way to go to reach the threshold of 90% shares to compulsorily acquire the remaining shares.

Petron and persons acting in concert currently hold 69.66% of EMB including 3.09% stake valid acceptances from the minority shareholders as of April 25.

In Petron's circular to shareholders via Maybank Investment Bank Bhd, it said it did not intend to maintain the listing status of EMB, and has no plan take any steps to address any shortfall in the public shareholding spread of EMB.

This is an often used phrase by parties involved in any buyout offers of listed companies. However, few facts need to be made clear.

Industry sources familiar with buyout offers said that normally, if listed companies were faced with a shortfall in public shareholding spread, regulators were inclined to help the company regulate its shareholding instead of paving the way for the company to delist itself.

“If a listed issuer fails to maintain the required shareholding spread, it may request for an extension of time to rectify the situation.”

He said the enforcement action of suspension of trading in securities and de-listing due to non-compliance of the public shareholding spread was not automatic.

“To date, the regulators had not forcibly de-list any listed entities due to non-compliance with public shareholding spread,” he said.

Under the Listing Requirements, a listed issuer must ensure that at least 25% of its total listed shares are in the hands of public shareholders, while Bursa Malaysia may accept a percentage lower than 25% if it is satisfied that such lower percentage is sufficient for a liquid market in such shares. If the offeror does not intend to maintain the listing status of the listed issuer and the acceptances under the offer is more than 75% but less than 90% of the listed shares, the listed issuer may apply for the withdrawal of its listing from the exchange, provided that the listed issuer has obtain shareholders' approval via a shareholders' resolution.

On the flipside, should Petron sweeten the deal more to entice minority shareholders to give up their shares, given that the company's intention to undertake substantial capital investments to upgrade EMB's assets including the ailing Port Dickson refinery?

“While the fuel marketing business yields steady gross profits by virtue of price regulation in Malaysia, the refining business is highly volatile,” said an industry source.

He said the refinery was configured as a simple hydro-skimming plant, with feedstock being limited to light sweet crude which was expensive. “As a result, gross refining margins are weak, and given the general weakness in refinery economics, this is expected to continue.”

Some are of the opinion that RM3.59 was already a good offer since its share price was traded below RM3 prior to reports on possible corporate activity in early 2011, which represented a premium of about 20%.

Some, like Minority Shareholder Watchdog Group chief executive officer Rita Benoy Bushon, said the offer price for EMB was neither fair nor reasonable to minority shareholders, as its historical share price had been artificially depressed due to the illiquid status of the company's shares.

“The offer values EMB at a mere 6.3 times earnings, which is a significant (and unfair) discount to its other listed peers. For example, its much larger rival Petronas Dagangan Bhd trades at 21.5 times earnings, while the entire market trades at around 17 times earnings,” she said, adding that the acquisition would only go through if the minorities allowed it.

With Petron extending its offer from April 30 to May 14 to acquire all the remaining shares, the ball is still in the court of the minority shareholders.

Bear in mind that this investment, if held on, would not yield near-term dividend yields due to the company's capital expenditure, which might affect its ability to pay dividends.

For the longer term ahead, nobody knows how far Petron and its affiliated parent San Miguel would expand and improve on EMB.

For now, Petron's plans are tied to the decision of these scattered and highly fragmented minorities.

Source: www.thestar.com.my

Bursa to review cash settlement calculation method of Call Warrants, currently based on average closing price of the last 5 days - Bursa Official

The calculation of cash settlement for call warrants has come under the spotlight as some investors argue that the current method is unfair.

They argue that the calculation of cash settlement for call warrants should not be determined based on the average closing price of the last five days, but instead be based on the volume weighted average price of the last five days.

Currently under Bursa Malaysia's listing requirements, issuers of structured warrants are able to determine for themselves the calculation of cash settlement based on three options:

(i) The volume weighted average price; or

(ii) The average closing price; or

(iii) The closing price of the underlying share or exchange-traded fund on the market day immediately before the exercise or expiry date.

However, most issuers presently use the average closing price as the method to determine cash settlement. Some dealers feel that this may be unfair because if the closing price of the mother share gets depressed on the last five days, then the cash settlement figure drops. “This has happened in a few instances, so it raises the question of whether a more dynamic price determination ought to be considered,” said one dealer.

He cited examples of Malaysia Building Society Bhd's (MBSB) call warrants which expired on April 18 and the DRB-Hicom-CH which expired on April 26.

“For the last five days where the price of the mother share was being used to determine the cash settlement, the price of MBSB's mother share was depressed at the close of four out of the five days,” said the dealer.

MBSB-CA expired at 5pm on April 18. Looking at the intraday charts of MBSB on April 11, 12, 13, 16, and 17, the share prices closed at the low of its day for April 11, 12, 16 and 17. The share prices started dropping towards 4.30pm.

For example on April 17, MBSB opened at RM2.19 and reached an intraday high of RM2.25. By 4.30pm, however, the share price had started dropping and it eventually closed (at 5pm) at RM2.17.

Basically, the higher the mother share, the higher the cash settlement for the warrant holder.

The exercise ratio was 3 MBSB-CA for every one MBSB mother share at an exercise price of RM1.48.

MBSB's closing price of RM2.18 was the average of the closing prices for the shares on each of the five market days immediately before the expiry date.

In the case of DRB-Hicom-CH, it expired on April 26. On the last five days of its closing before expiry, which were April 20, 23, 24, 25 and 26, its share price also dipped lower from the RM2.60-RM2.68 range it was trading in the last three weeks. For those five settlement days, the stock closed at an average price of RM2.45.

While it only closed at its intra-day low on April 23, it did close near to its day's low for the other four days.

A Bursa official said that Bursa's current rules were in line with those of other exchanges such as Singapore Stock Exchange (SGX) and the Hong Kong Stock Exchange (HKEX).

“However, in the discharge of our obligation to ensure a fair and orderly market, Bursa Malaysia has and will continue to review the effectiveness of its rules to ensure they meet their intended objectives,” said the Bursa official.

He added that SGX and HKEX allowed for options (ii) and (iii) .

Source: www.thestar.com.my

Technical Analysis: Analyst S.N. Lock says that Can-One's price trend is now poised to move towards its intermediate-term resistance zone (RM2.25-RM2.45)

(CANONE opening stock price today (30.4.2012) was RM 2.19)

Investor sentiment on Bursa Malaysia took a turn for the worse and share prices staged a follow-through technical pullback last week.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) stayed below the 1,580-point support level when it closed at 1,567.80 points on Friday. It hit an intra-week high of 1,592.45 last Monday before slipping to an intra-week low of 1,566.55 on Friday, giving a trading range of 25.90 points.

The benchmark index fell on four of the five trading days last week. It ended at 1,567.80 points on Friday, a weekly loss of 24.05 points, or 1.51 per cent.

Among other indices, the FTSE Bursa Malaysia Small Cap Index lost 224.14 points, or 1.79 per cent, to 12,314.11 while the FTSE Bursa Malaysia ACE Market Index fell 83.38 points, or 1.81 per cent, to 4,535.33.

Abroad, the New York Stock Exchange staged a follow-through rebound. The Dow Jones Industrial Average closed at 13,228.31, up 199.05 points, or 1.48 per cent.

In Hong Kong, the Hang Seng Index closed at 20,741.45 points on Friday, falling 269.19 points, or 1.28 per cent.

In Tokyo, the Nikkei 225 Index dropped 83.38 points, or 1.81 per cent, to 9,520.89 points.

On Bursa Malaysia, Can-One Bhd closed at RM2.19 last Friday, giving a week-on-week gain of 9 sen, or 4.29 per cent.

Can-One is principally an investment holding company and its subsidiaries are involved in the manufacture of metal lithographed cans, plastic jerry cans and the manufacture, packaging and distribution of dairy and non-dairy products.

The following are the readings of some of its technical indicators:

Moving Averages: Can-One's daily price trend had since stayed above all its 10-,20-, 30-, 50-, 100- and 200-day moving averages.

Momentum Index: Its short-term momentum index continued to stay above the support of its neutral reference line last week.

On Balance Volume (OBV): Its short-term OBV stayed above the support of its 10-day moving averages.

Relative Strength Index (RSI): Its 14-day RSI stayed above the 50 level. Its technical reading stood at the 69.07 per cent level at the market close last Friday.

Outlook

While, the FBM KLCI's 30 component stocks unfolded their expected consolidations, selected second liners remained the trading focus, one of them being Can-One.

Chartwise, Can-One's monthly price trend staged an overhead breakout of the neckline of its double-bottom pattern formation.

Its weekly price trend staged a decisive breach of the neckline (see Can-One's weekly price chart B1:B3) of its double-bottom pattern formation last week.

Can-One's daily price trend staged a successful re-test of the support of the neckline (see Can-One's daily price trend C1:C2) of its double-bottom pattern formation last week.

Its daily, weekly and monthly fast MACDs (Moving Average Convergence Divergence indicators) continued to stay above their respective slow MACDs at the market close last Friday.

Its 14-day Relative Strength Index (RSI) stood at the 69.07 per cent level last Friday. Its 14-week and 14-month RSIs were at the 74.50 and 82.17 levels respectively.

Following the technical rebound on its daily and weekly price charts (C1:C2 and B1:B2) on Friday, Can-One's price trend is now poised to move towards its intermediate-term resistance zone (RM2.25-RM2.45).

Source: www.btimes.com.my

_____________________________________________

Update on 5 May 2012 - 

Contrary to the technical analysis, CANONE stock price had moved downwards plunging to a low of RM 2.07 or -5.5% on 3 May and closed at RM 2.10 for the week.

Click here for all latest posts on Technical Analysis

Berjaya Land to acquire up to 20% in Posco Group's RM 9 billion project in South Korea, to seal deal by August or September 2012 - Director Tan u-Jiun

(BJLAND closing stock price today (30.4.2012) was 83.5 sen)

BERJAYA Land Bhd (BLand), a property and gaming company, is close to inking a partnership agreement with South Korean steelmaker Posco Group on the acquisition of up to 20 per cent in the former's US$3 billion (RM9 billion) project in South Korea.

BLand is developing Berjaya Jeju Resort through its subsidiary, Berjaya Jeju Resort Ltd (BJR), on a 73.2ha site in Yeraedong in Seogwipo City, southwest of Jeju island.

BJR director Tan u-Jiun told Business Times in an interview that it expects to seal the deal with Posco by August or September this year.

"Posco will take not more than 20 per cent stake in the development and they will help to develop it," Tan said.

Posco, which is listed in Seoul, Tokyo, London and New York, is involved in railway development, construction of buildings and infrastructure and steel manufacturing.

This will be the first partnership for Posco in Malaysia and the agreement with BLand is via its unit, Posco Engineering & Construction Co Ltd.

Tan, the younger son of Berjaya group founder Tan Sri Vincent Tan, said the first phase of the project comprising 212 units of luxury villas and market place is slated to be launched by the end of this year or early next year.

"We are awaiting the final approval for the Environmental Impact Assessment on our revised masterplan. We expect it to complete in May," Tan said.

The integrated project will have 1,403 condominium units, villas and bungalows, 935 hotel rooms, a one million sq ft retail mall that will be the largest in Jeju, a medical facility and a market place which will comprise super luxury shops and single-storey residences.

The landmark tower will be a 45-storey hotel, which will be the tallest building on the island. Complementing that is a 505-room casino hotel, which will be South Korea's largest casino complex, Tan said.

"We are launching the villas and market place first to attract higher paying customers to the development. Once the market is guaranteed and it creates an aspirational image, we will release the medium-tier properties," he said.

Tan said BJR hopes to start constructing the villas and market place by August this year.

According to him, BLand has invested close to US$150 million (RM450 million) on infrastructure works for the project, which was completed in December last year. The project will take five to six years to develop.

"We are targeting the Koreans and Europeans. We don't think the European market will be strong because of the eurozone debt crisis but we expect same sales there. We are also targeting China and Japan," Tan said.

Berjaya Jeju Resort recently won an award in the category of mixed- used development for South Korea at the Asia Pacific Property Awards 2012.

Source: www.btimes.com.my

Bersih 3.0 2012: Some of the Most Viewed Videos posted by PDRM (Royal Malaysian Police) and by people on the street



Here are some of the videos posted live by the Polis DiRaja Malaysia (Royal Malaysian Police)







Now, here are some of the videos posted by the people on the street.







If you have any comments, you may write to us below.

Cahya Mata Sarawak's JV to invest RM 1.53 bil in a manganese and ferro silicon alloy smelting plant in Bintulu, plant to complete in 2013

(CMSB closing stock price today (27.4.2012) was RM 2.54

OM Materials (Sarawak) Sdn Bhd (OM Sarawak) has sealed an agreement with Japan's Hanwa Co Ltd for the sales and marketing of products from its manganese and ferro silicon alloy smelting plant in Samalaju Industrial Park, Bintulu.

OM Sarawak is a 80:20 joint venture between OM Holdings Ltd of Australia (OMH) and Cahya Mata Sarawak Bhd (CMSB). The joint-venture company will be investing US$500mil (RM1.53bil) in the manganese and ferro silicon alloy smelting plant.

Construction of the plant will start in the next few months for completion in 2013.

In its latest March quarterly market update to the Australian Stock Exchange, OMH said the deal with Hanwa covered the sales and marketing of 80,000 tonnes of ferro silicon and 80,000 tonnes of silico manganese product a year.

Part of these volumes are expected to be incorporated into a formal off-take agreement to be inked in the second quarter of 2012 (Q2-2012).

The combined 160,000 tonnes represent more than 25% of the plant's anticipated total production capacity of 600,000 tonnes a year.

Last month, OMH raised about A$29.8mil from the issuance of convertible notes and ordinary shares to Hanwa.

Hanwa's core businesses include domestic and import-export of steel products, steel-making raw materials, construction and housing materials, non-ferrous metals and industrial machinery.

OMH also raised A$26.25mil through share placement to a strategic investor Boustead Singapore Ltd and a small number of institutional investors.

The total proceeds of some A$56mil will be used to finance the development of OM Sarawak's smelter plant project.

In the market update, OMH added that under a binding term sheet it signed with Japan's JFE Shoji Trade Corporation earlier this year, JFE would potentially take up a direct equity invest in OM Sarawak ferro silicon production combined with a product off-take agreement for up to 100,000 tonnes per annum.

OM Sarawak executive chairman Low Ngee Tong had said earlier that the Bintulu smelting plant was expected to undergo production testing from the second half of 2013, and the plant was expected to reach full operational stage by mid-2015.

OM Sarawak recently signed a 20-year power purchase agreement with Sarawak Energy Bhd for the supply of 500MW to its smelter.

On the latest progress of the smelter project, OMH said on-site earthworks on 202ha was 79% completed, with full completion expected by June.

It said a detailed environmental impact assessment (DEIA) report was submitted to the Department of Environment in February, and it expected approval to be obtained by Q2-2012.

“The majority of the civil and structural drawings of the proposed plant have been completed while the mechanical and electrical drawings are expected to be completed by Q2-2012,” it added.

On the project's financing, OMH said OM Sarawak had been working closely with its financial advisor Standard Chartered Bank to secure funding up to 70% of the project's capital requirements.

“A preliminary information package has been released to prospective lenders, and active engagement between these banks, OM Sarawak and its financial advisor continues.

“As is typical for a financing of this nature to support the due diligence process of these prospective lenders, an independent technical engineer has been appointed to review all technical, commercial and operating aspects of the project.

“A full information package is targeted to be released to these banks in Q2-2012,” it added.

OMH said the group, via wholly-owned subsidiary OM Materials (S) Pte Ltd, consolidated and restructured its existing loans facilities with Standard Chartered Bank last month.

After the restructuring, the outstanding amount of term loans as of March 31 this year was nearly A$90.3mil.

The key aspects of the restructuring involved a reduction of about US$18mil (A$17.5mil) in principal repayable by the group in the next 12 months and a revised repayment schedule between April 2012 and April 2015.

“The revised repayment schedule will improve the group's debt maturity profile and provide increased financial flexibility to enable the group to executive its operating strategy and the early stage development of the Sarawak ferro alloy project.

“Debt servicing will continue to occur via operating cash flows and the divestment of non-core investments and other alternatives are currently under assessment,” said OMH.

Source: www.thestar.com.my

29 April 2012

Weekly Stock Picks Commentary Report (23-27 April 2012)


Malaysia Stock Picks
Week 17 (23-27 April) Stock Picks Commentary

Hi ! Welcome and thank you for being loyal reader of Malaysia Stock Picks site. Here are the stock picks commentary for Week 17 (23-27 April).

Stock Picks #1
Three A Resources Bhd (3A)

Week high : RM 1.35 (Up 12 sen - 14%)

On 23 April, AmReseach wrote that Three-A Resources Bhd's hydrolyzed vegetable protein plant in China will commence operations this month and is expected to account for 5% earnings in 2012 and 23% in 2013.

To recap, in late 2009, Wilmar International Ltd took up a 15.65% stake in Three-A. The plant is located near Wilmar's existing plant including Qinhuangdao Goldensea Foodstuff Industries Co Ltd, China’s largest soya protein producer.

Hence, it is widely expected that Wilmar will channel Three-A's products through its extensive sales and distribution network in China to food processors, particularly soya sauce producers.

Market took this news positively as the additional capacity and opportunity to leverage on Wilmar's established sales and distribution network in China are both beneficial to Three-A's financial performance from 2012 onwards.

3A stock rose 14% (12 sen) since 23 April to week’s highest RM 1.35 on 25 April and closed at RM 1.23 at the end of this week.

Click Here for all latest posts on Three-A



Stock Picks #2
DRB-Hicom Bhd (DRBHCOM)

Week high : RM 2.61 (Up 24 sen - 10%)

On 27 April, DRB-Hicom announced that it had received acceptances totaling 98.6% of the total issued and paid up share capital of Proton Holdings Bhd and will proceed to “compulsorily acquire” all outstanding shares.

Proton to be suspended from trading from 4 May 2012 onwards.

Market took this news as positive this will give DRB-Hicom total control over Proton to carry out their management strategies.

In addition, a market talk on possible sale of Lotus on 25 April (which was denied by DRB later on Friday) and the recent launch of Proton’s flagship car model Preve were expected to be beneficial to DRB-Hicom.

DRBHCOM stock rose 24 sen (10%) since 27 April to week’s highest RM 2.61 on the same day and closed at RM 2.54 at the end of this week.

Click here for all latest posts on DRB-Hicom



Stock Picks #3
Panasonic Manufacturing Bhd (PANAMY)

Week high : RM 23.50 (Up RM 1.54 - 7%)

On 23 April, MIDF Research initiated coverage on Panasonic and the analyst report highlighted Panasonic Malaysia strong cash position. It also reported that Panasonic has been consistently rewarding its shareholders with steady dividend payouts.

More impressively, the gross dividend payout ratio has exceeded 100% for the past few years, with the most recent payout ratio of 107% for FY11. Even though the company doesn’t have a fixed dividend policy, MIDF Research expects Panasonic Malaysia to continue churning out substantial dividend payouts to its shareholders.

Market took this news as positive as expectation of hefty dividend would be good for shareholders. The stock rose to a high of RM 23.50 already beating MIDF Research's target price of RM 21.62.

PANAMY rose 7% (RM 1.54) since 23 April to the week’s highest RM 23.50 on 26 April and closed at RM 22.50 at the end of this week.



Stock Picks #4
AEON Credit Bhd (AEONCR)

Week high : RM 10.26 (Up 61 sen – 6.3%)

On 23 April, AEON Credit reported that its net profit jumped 43% year-on-year and 10% quarter-on-quarter to RM27.7mil for 4th quarter ended Feb 20, 2012, mainly from credit card and personal financing.

asHwang DBS Vickers Research revised AEON Credit's target price to RM 9.20 on the same day pegging to 8 times PE ratio.

Market took this news as positive on improving market sentiments for the financing business. Furthermore, on 24 April, market talk rumoured that AEON Credit may be mulling for a 1-for-1 bonus issue.

OSK Research indicated that a bonus issue would be a positive move to retail investors as liquidity is one of the concerns of AEON Credit.

AEON Credit rose 61 sen (6.3%) since 24 April to the week’s highest RM 10.26 on 26 April and closed at RM 10.06 at the end of the week.


Stock Picks #5
TopGlove Corporation Bhd (TOPGLOV)

Week high: RM 4.72 (Up 29 sen – 6.5 %)

On 24 April, Maybank Research in its analyst report upgraded TopGlove Corp from "SELL" to "BUY" raising its target price to RM 5.40.

Maybank Research stated that TopGlove sales volume picked up in its latest quarter to almost back to its H1N1 peak as well as its key production cost (latex cost) has begun its seasonal downtrend.

Market took this news as positive as higher sales and lower production costs is expected to be beneficial to TopGlove's net profits in the coming months.

TOPGLOV stock rose 25 sen (5.6%) since 24 April to week’s highest RM 4.72 on 25 April and closed at RM 4.68 at the end of this week.



On other stocks:-

Ramunia Initial rumours on the RM 150 mil contract surfaced on news on 26 April but the stock has dropped since by 7.7% to 39 sen to end the week.

However, the stock has already rallied on 24 April (before the rumours was on news), surging an impressive 21% (7 sen) in one day to close at week’s highest 40sen.

Update: Ramunia has officially announced that it has received a letter of intent from Sarawak Shell Bhd on an estimated RM 150 mil contract on 27 April, Friday.


Seg International Navis Capital announced a general offer on 25 April that it offers RM 1.714 to acquire all SEG shares. It currently has 58% stake in the company.

On 26 April, Kenanga recommended SEG International shareholders to reject the offer.and the market reacted negatively. Kenanga Research has set a target price of RM 2.41 for Seg International. Market has reacted negatively which saw a 5% drop in stock price.

Opening stock price was RM 1.81 on 26 April and dropped 5% to RM 1.72 to close the week.

Sunway Behad – On 24 April, AmResearch commented in its report that Sunway property year to date sales was weaker largely due to the impact of the 70% loan-to-value ruling introduced in November last year.

This is not a surprise as Sunway’s pricing for its products has always been on the high side and 70% of its planned launches are priced at least RM1 million per unit. Amresearch recommends a fair value of RM 2.70.

Sunway stock dropped 7.3% to week lowest RM 2.30 on 26 April and closed at RM 2.39 for the week.


Tanjung Offshore – On 24 April, Tanjung Offshore announced its proposal to sell its marine business to Ekuinas for RM 220 million and intends to distribute approximately RM130mil out of the total proceeds arising from the proposed disposal to its shareholders

The stock rose to a high of 97 sen on 24 April.

However, on 25 April, AmReseach and OSK Research commented that Tanjung Offshore divestment of the group’s only profitable business raises question on its earning prospects going forward

Market was worried about its current valuation despite expecting the special dividend payout of 44 sen per share.

Tanjung Offshore dramatically dropped 27% since the commentary by the research houses  on 25 April and closed at 71 sen for the week.



Eastern and Oriental – On 23 April, Eastern & Oriental Bhd (E&O) announced that it is acquiring a freehold office cum retail building in central London known as the Princes House for £20.25mil (RM100.9mil).

However, on 25 April, The Wall Street Journal reported that the UK has slipped into recession after GDP shrank for 2 consecutive quarters. To recap, the U.K. last entered recession at the height of a global banking crisis in 2008, and emerged from it in the third quarter of 2009 after five successive quarters of economic contraction.

Market is cautious about this purchase especially at times when the UK economy is facing uncertainty.

E and O dropped 4.8% since 23 April to close the week at RM 1.38.

Panasonic Malaysia: Week 17 (23-27 April) Stock Picks Commentary

Stock Picks #3
Panasonic Manufacturing Bhd (PANAMY)

Week high : RM 23.50 (Up RM 1.54 - 7%)

On 23 April, MIDF Research initiated coverage on Panasonic and the analyst report highlighted Panasonic Malaysia strong cash position. It also reported that Panasonic has been consistently rewarding its shareholders with steady dividend payouts.

More impressively, the gross dividend payout ratio has exceeded 100% for the past few years, with the most recent payout ratio of 107% for FY11. Even though the company doesn’t have a fixed dividend policy, MIDF Research expects Panasonic Malaysia to continue churning out substantial dividend payouts to its shareholders.

Market took this news as positive as expectation of hefty dividend would be good for shareholders. The stock rose to a high of RM 23.50 already beating MIDF Research's target price of RM 21.62.

PANAMY rose 7% (RM 1.54) since 23 April to the week’s highest RM 23.50 on 26 April and closed at RM 22.50 at the end of this week.

Click Here for all latest posts on Panasonic Malaysia

TopGlove: Week 17 (23-27 April) Stock Picks Commentary


Stock Picks #5
TopGlove Corporation Bhd (TOPGLOV)

Week high: RM 4.72 (Up 29 sen – 6.5 %)

On 24 April, Maybank Research in its analyst report upgraded TopGlove Corp from "SELL" to "BUY" raising its target price to RM 5.40.

Maybank Research stated that TopGlove sales volume picked up in its latest quarter to almost back to its H1N1 peak as well as its key production cost (latex cost) has begun its seasonal downtrend.

Market took this news as positive as higher sales and lower production costs is expected to be beneficial to TopGlove's net profits in the coming months.

TOPGLOV stock rose 25 sen (5.6%) since 24 April to week’s highest RM 4.72 on 25 April and closed at RM 4.68 at the end of this week.

28 April 2012

AEON Credit: Week 17 (23-27 April) Stock Picks Commentary

Stock Picks #4
AEON Credit Bhd (AEONCR)

Week high : RM 10.26 (Up 61 sen – 6.3%)

On 23 April, AEON Credit reported that its net profit jumped 43% year-on-year and 10% quarter-on-quarter to RM27.7mil for 4th quarter ended Feb 20, 2012, mainly from credit card and personal financing.

asHwang DBS Vickers Research revised AEON Credit's target price to RM 9.20 on the same day pegging to 8 times PE ratio.

Market took this news as positive on improving market sentiments for the financing business. Furthermore, on 24 April, market talk rumoured that AEON Credit may be mulling for a 1-for-1 bonus issue.

OSK Research indicated that a bonus issue would be a positive move to retail investors as liquidity is one of the concerns of AEON Credit.

AEON Credit rose 61 sen (6.3%) since 24 April to the week’s highest RM 10.26 on 26 April and closed at RM 10.06 at the end of the week.

Click Here for all latest posts on AEON Credit

DRB-Hicom: Week 17 (23-27 April) Stock Picks Commentary

Stock Picks #2
DRB-Hicom Bhd (DRBHCOM)

Week high : RM 2.61 (Up 24 sen - 10%)

On 27 April, DRB-Hicom announced that it had received acceptances totaling 98.6% of the total issued and paid up share capital of Proton Holdings Bhd and will proceed to “compulsorily acquire” all outstanding shares.

Proton to be suspended from trading from 4 May 2012 onwards.

Market took this news as positive this will give DRB-Hicom total control over Proton to carry out their management strategies.

In addition, a market talk on possible sale of Lotus on 25 April (which was denied by DRB later on Friday) and the recent launch of Proton’s flagship car model Preve were expected to be beneficial to DRB-Hicom.

DRBHCOM stock rose 24 sen (10%) since 27 April to week’s highest RM 2.61 on the same day and closed at RM 2.54 at the end of this week.

Click here for all latest posts on DRB-Hicom


Three-A Resources Week 17 (23-27 April) Stock Picks Commentary

Stock Picks #1
Three A Resources Bhd (3A)

Week high : RM 1.35 (Up 12 sen - 14%)

On 23 April, AmReseach wrote that Three-A Resources Bhd's hydrolyzed vegetable protein plant in China will commence operations this month and is expected to account for 5% earnings in 2012 and 23% in 2013.

To recap, in late 2009, Wilmar International Ltd took up a 15.65% stake in Three-A. The plant is located near Wilmar's existing plant including Qinhuangdao Goldensea Foodstuff Industries Co Ltd, China’s largest soya protein producer.

Hence, it is widely expected that Wilmar will channel Three-A's products through its extensive sales and distribution network in China to food processors, particularly soya sauce producers.

Market took this news positively as the additional capacity and opportunity to leverage on Wilmar's established sales and distribution network in China are both beneficial to Three-A's financial performance from 2012 onwards.

3A stock rose 14% (12 sen) since 23 April to week’s highest RM 1.35 on 25 April and closed at RM 1.23 at the end of this week.

Click Here for all latest posts on Three-A

UMW Holdings to benefit from My Rapid Transit and light rail transit (LRT) line extension projects, in discussion with Japan's Komatsu Ltd to supply a broad range of heavy equipment to new markets overseas

(UMW closing stock price today (27.4.2012) was RM 7.83)

UMW Holdings Bhd is in discussion with Japan's Komatsu Ltd to supply a broad range of heavy equipment to new markets overseas, its chief said.

Currently, half of the revenue and profit for the group's heavy equipment division comes from overseas.

UMW wants to increase this, its president and chief executive officer Datuk Syed Hisham Syed Wazir said.

UMW holds the Komatsu franchise in Malaysia, Singapore, Papua New Guinea and Myanmar.

It offers equipment and parts for the construction, property development, infrastructure, mining, quarrying, logging and plantation sectors.

These include heavy equipment like excavators and fire engines, industrial equipment including forklifts and marine and power equipment for offshore businesses like oil rigs and vessels.

"The equipment business is doing very well under the Komatsu brand. Together with Komatsu, we will look for new markets overseas," Syed Hisham said in an interview with Business Times recently.

For fiscal 2011, UMW posted a pre-tax profit of RM1.38 billion on RM13.56 billion revenue. The heavy equipment division contributed RM63.2 million profit and RM2.08 billion revenue respectively.

Syed Hisham said UMW's operations in Myanmar, Vietnam and Papua New Guinea is expected to contribute higher returns in the next few years.

"Our heavy equipment business in these countries is set to benefit from increased activities in the jade and iron ore mining sectors there," he said.

Syed Hisham said UMW has budgeted RM50 million in capital expenditure this year to cater for growing demand for its range of heavy equipment.

At home, Syed Hisham expects the business for heavy equipment to grow by about eight per cent to 10 per cent this year buoyed by projects under the Economic Transformation Programme (ETP).

Syed Hisham said the ETP has stimulated many growth activities in construction, plantation and mining.

He said UMW's heavy equipment division is benefiting from projects such as the west coast expressway, the My Rapid Transit and light rail transit (LRT) line extension projects, as well as the Kuala Lumpur International Financial District development.

"Quarry and mining activities is also increasing with improved demand from iron ore mining, thus, the business for heavy equipment is set to improve. We also see the logging and plantation industries in Sarawak growing strong.

"Our Sabah branch has been experiencing good business because of increased construction projects. For Sabah, we are also offering new logging equipment, bigger excavators and dump trucks," Syed Hisham said.

For industrial equipment, he said UMW will continue to support the local small and medium enterprises, the logistics and plywood industries as well as the food and beverage sector.

"Our forklift rental business is one of the biggest in the industry with over 2,000 units available to clients, mostly from larger multi-national companies like Panaso-nic, Toyota and Perodua," he said.

Source: www.btimes.com.my

mTouche Chairman Resigns, Raja Hizad emerged as substantial shareholder with 28.83% stake

(MTOUCHE closing stock price yesterday (27.4.2012) was 54 sen) 

Eugene Goh, the chairman and chief executive officer of mTouche Technology Bhd, has resigned from his positions, the company said in filings to Bursa Malaysia.

The reason given for the resignation was that he wanted to “pursue other career developments”.

Goh was the founder and major contributor to mTouche's early success in the company. Goh currently has a direct interest of 20,000 mTouche shares and 73 of the warrants. On April 23, he had disposed of 59.56 million shares in a direct deal.

Meanwhile, executive director Tan Wee Meng also resigned from his position “to pursue other career developments”. He had disposed of 10 million shares or a 4.5% stake in the company on April 23. Raja Hizad bin Raja Kamarulzaman emerged as a substantial shareholder after purchasing 66.5 million shares or a 28.83% stake in mTouche via his substantial shareholding in Homegrown Media Sdn Bhd. This makes Homegrown Media the largest shareholder in mTouche currently. Raja Hizad has also been appointed as non independent and non executive chairman of the company.

There were several other changes to the boardroom. Datuk Ahmad Bahrin Idrus was appointed as independent and non executive director while Ng Joo How resigned as independent and non executive director.

Yeap Teik Pung was appointed as independent and non-executive director while Datuk Kong Hien Nigh was appointed as executive director

Source: www.thestar.com.my

KPMG appointment towards selling Lotus was put on hold after DRB-Hicom completed the acquisition of Proton, says Group Managing Director Datuk Seri Mohd Khamil Jamil

(DRBHCOM closing stock price today (27.4.2012) was RM 2.54)

DRB-Hicom Bhd has reiterated that it is not selling loss-making British sports car subsidiary, Lotus, following news reports that audit firm KPMG has been appointed to evaluate the company with a view to sell.

Group Managing Director Datuk Seri Mohd Khamil Jamil said KPMG's appointment was made before DRB-Hicom acquired the national car manufacturer in January this year.

This means it was not DRB-Hicom, but another party which appointed KPMG, to evaluate Lotus for a subsequent sale.

"We put on hold any further effort by KPMG towards selling Lotus when we completed the acquisition of Proton," he told Bernama in response to media reports on KPMG's appointment and the sale of Lotus.

Khamil Jamil said there were many decisions made before DRB-Hicom acquired Proton and the appointment of KPMG was one of them.

Asked if the practice of undertaking an operational review was common in any acquisition, especially with DRB-Hicom expected to spend approximately RM3.02 billion to acquire Proton, he said: "The operations audit on Lotus is still ongoing in accordance with our governance process.

"And I reiterate that we have not decided on selling Lotus."

DRB-Hicom acquired a 42.7 per cent stake in Proton from Khazanah Nasional Bhd and now owns 98.6 per cent of it.

Source: www.bernama.com

27 April 2012

216.35 million Bumi Armada shares were transacted in several off-market deals at an average price of RM3.95, representing 7.38% stake

(ARMADA closing stock price today (27.4.2012) was RM 4.06)  

Bumi Armada Bhd's 216.35 million shares were transacted in several off-market deals on Friday at an average price of RM3.95.

The shares represented a 7.38% stake in the company, which has a paid-up of 2.928 billion shares.

At 4.05pm, Bumi Armada shares fell 18 sen to RM4.04 while the call warrants Bumi Armada-CA fell 15 sen to 26 sen and Bumi Armada-CD lost 10.5 sen to 26 sen.

The FBM KLCI fell 10.87 points to 1,568.82. Turnover was 1.05 billion shares valued at RM966.47mil. There were 237 gainers, 454 losers and 300 stocks unchanged.

A news report said Ananda Krishnan and his bumiputera partners would sell roughly 15% of Bumi Armada shares in private placements to local and foreign institutional investors in a deal that will raise close to RM2bil.

The report, quoting sources, said the sale of roughly 440 million shares would reduce the joint holdings of Ananda and his partners to 55%. The shares will be placed at a 3%-6% discount. The share price closed at RM4.22 on Thursday.

Source: www.thestar.com.my

"Rumours" about Ramunia awarded a RM150 million contract proved TRUE, received Letter of Intent from Sarawak Shell Bhd

(RAMUNIA closing stock price today (27.4.2012) was 39 sen)

Ramunia Holdings Bhd's unit has received a letter of intent (LOI) from Sarawak Shell Bhd for two contracts valued at RM150mil.

It said on Friday that Ramunia Fabricators Sdn Bhd had received the LOI for the fabrication of two substructures and also two topsides on April 23.

"The total contract price is estimated to be in the region of RM150mil depending on the final scope of works awarded," it said.

Ramunia said the LOI would hinge on Ramunia Fabricators fulfilling the conditions imposed by Sarawak Shell.

To recap the initial post on rumours dated 26 April 2012, here is the link http://malaysiastockpicks.blogspot.com/2012/04/ramunia-to-be-awarded-rm150-million.html

Source: www.thestar.com.my

RHB and OSK merger update - Minister of Finance's approval for the proposed merger has been obtained!

(OSK closing stock price today (27.4.2012) was RM 1.56)
(RHBCAP closing stock price yesterday (30.4.2012) was RM 7.25)

RHB Capital Bhd and OSK Holdings Bhd have received the Minister of Finance's (MoF) approval for the proposed merger of the businesses of the RHB Banking group and OSK Investment Bank group.

They announced to Bursa Malaysia on Friday they had received notification from Bank Negara Malaysia (BNM) about the MoF's approval, confirming The Star report.

They said the terms and conditions of the proposed merger would be announced subject to the execution of the conditional share purchase agreement for the proposed merger.

The Star reported the merger deal is believed to have received BNM's nod and was awaiting approval at the Finance Ministry level.

It also reported that while most analysts had expected this nod, some industry players expressed surprise the issues said to have held up the approval process could be resolved so fast.

The news report said among the issues apparently were those related to pricing; talk that CIMB was still interested in RHB, hence the rationale for RHB buying OSK; and that most department heads proposed for the investment bank were purportedly from OSK.

Source: www.thestar.com.my

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Proton will be suspended from trading from 4 May 2012 onwards, DRB-Hicom proceed to compulsorily acquire all remaining shares

(DRBHCOM opening stock price today (27.4.2012) was RM 2.37)

DRB-Hicom which had received acceptances totalling 98.6% of the total issued and paid up share capital of Proton Holdings Bhd will proceed to “compulsorily acquire” any outstanding shares of the latter of which had not yet sent in their acceptances.

DRB-Hicom will within two months from yesterday proceed to complete the acquisition in accordance with Section 222 of the Capital Markets & Services Act 2007. The offer to buy the shares not yet owned by DRB will remain open for acceptances until 5pm on May 9.

Proton's shares and warrants will henceforth be suspended from trading with effect from May 4, 2012.

Source: www.thestar.com.my

Mah Sing CALLS OFF memorandum of understanding with Thai partner Central Pattana, letter of intent with China Wujin District People's Governement LAPSED

(MAHSING opening stock price today (27.4.2012) was RM 1.96 )

Mah Sing Group Bhd and its potential Thailand-based joint cooperation partner Central Pattana had decided not to pursue a memorandum of understanding (MoU) to study the potential investment of developing and managing a shopping mall Icon City through a joint venture and/or partnership.

In another statement, Mah Sing had also said that the letter of intent which it entered into with China's Wujin District People's Government, Changzhou City had lapsed due to certain obligations which had not been fulfilled.

The company would proceed to conduct a voluntary liquidatino of Mah Sing Property Consulting (Changzhou) Pte Ltd in an effort to reduce operational costs and to channel the funds for other business opportunities. Mah Sing Chanzhou has a total net asset size of RM97.31mil, it said in the statement.

Source: www.thestar.com.my

Felda IPO Update: Draft prospectus indicated a total 2.19 billion shares to be offered, 72.96 million issue shares to be made available to the Malaysian public

FELDA Global Ventures Holdings Bhd (FGVH), enroute to a Main Market listing on Bursa Malaysia by end of next month or early June, is offering up to 2.19 billion shares in its initial public offering (IPO) for institutional and retail investors.

According to its draft prospectus posted on the Securities Commission website late yesterday, the 2.19 billion shares comprise 1.92 billion shares, or 52.5 per cent, from its enlarged issued and paid-up capital, which will be offered to the institutional investors. Another 283.61 million shares, or 7.5 per cent, will be offered to retail investors.

The institutional offering involves a total of 1.21 billion offer shares and 286.85 million issue shares allocated for Malaysian and foreign institutional investors, while 419.54 million issue shares are set aside for Bumiputera institutional and selected investors approved by International Trade and Industry Ministry, at the institutional price.

The retail offering involves 200.65 million issue shares to be offered to eligible employees, Felda settlers and those who have contributed to the success of FGVH and its subsidiaries, while 72.96 million issue shares will be made available to the Malaysian public.

After its listing exercise, FGVH will have an enlarged share capital of up to 3.65 billion.

The offer price for the IPO has yet to be determined. FGVH, in its prospectus, said the retail price of its share will be established after the institutional price is determined through bookbuilding exercise.

FGVH said it will not receive proceeds from the offer for sale, but the selling shareholders are entitled to the proceeds.

Gross proceeds from the issue are expected to be utilised, among others, for the acquisition of oil and fats, manufacturing and logistics businesses; construction or acquisition of mills and refineries; loan repayment for overseas operation; capital expenditure and working capital.

FGVH’s listing will be the biggest IPO so far this year. Upon listing, the company will be among the local bourse’s top 20 companies.

FGVH is the commercial arm of Federal Land Development Authority (Felda).

It is a global agricultural and agri-commodities company with operations across 10 countries. The group is involved in three main business segments, namely plantations business, downstream business and sugar business.

It currently operates 343,521ha of oil palm plantation estates in Malaysia. Its 49 per cent-owned associate, Felda Holdings Bhd, is the world’s largest producer of crude palm oil, while its subsidiary, MSM Holdings Bhd, is the country’s leading refined sugar producer.

According to global business research and consulting firm Frost & Sullivan, FGVH is the world’s third largest oil palm planter.

Source: www.btimes.com.my

Proposed merger between OSK and RHB yet to receive go-ahead from Bank Negara - OSK CEO U Chen Hock

(OSK opening stock price today (27.4.2012) was RM 1.52)
(RHBCAP opening stock price today (27.4.2012) was RM 7.25

The proposed merger between OSK Investment Bank and RHB Capital Bhd (RHBCap) may take up to six months to be finalised once it receives the go-ahead from Bank Negara, OSK chief executive officer U Chen Hock said.

"We need four to six months to finalise everything," he told reporters during the handover of OSK investment education room to Tunku Abdul Rahman College (TAR College) here yesterday.

He said this when asked whether the deal could be concluded by the third quarter of this year.

RHBCap group managing director Kellee Kam was reported to have said that it hopes to conclude its takeover of OSK in the third quarter after the bank's shareholders meeting earlier this month.

Both companies had applied for the central bank's approval for their merger on January 11.

U said RHBCap and OSK are still waiting for the Bank Negara's response, adding that he will only give an update on the proposed merger upon receiving the approval.

"Recently, during the annual general meeting, we have made our comment on where we are now. Nothing has changed... there is no further progress. We are still waiting for Bank Negara to give us the greenlight. At this stage, that's all we can say," he said.

He also declined to comment on reports that the proposed merger, due to be sealed soon, will be paid via share swaps.

Yesterday, OSK handed over the investment education room to Tunku Abdul Rahman College (TAR College) as part of the prize awarded to the college for emerging top in the campus category of last year's OSK Investment Challenge (OSKIC).

The challenge is an online trading competition designed to educate and inspire students on the workings of the capital market by providing an avenue for them to experience it first hand, as virtual investors, within a simulated stock market.

TAR College beat more than 300 campuses nationwide to emerge champion with the highest combined portfolio calculated based on the total scores of the top 100 participating students from each campus.

U said OSK feels the OSKIC has met its objective, judging from the increasing number of participants since it was launched in 2010.

OSKIC could be held every year in the future, he said, adding that OSK aims to build a new generation of potential investors and create awareness on stock market trading as a viable form of value investing.

Source: www.btimes.com.my