Malaysia - Equity

The stock market closed mostly lower after a rangebound trade yesterday.

Lack of buying interest dragged the FTSE Bursa Malaysia Kuala Lumpur Composite Index to its lowest in eight weeks due to weak overseas sentiment. Most investors were generally cautious and reluctant to take heavy positions due uncertainty over the Europe sovereign debt woes. Nevertheless, some bargain hunting activities managed to limit losses.

The FBM KLCI fell 4.07 points or 0.3 per cent to close at 1,304.16, after moving between 1,300.44 and 1,309.13. It had opened 3.37 points lower at 1,304.86.

The FBM Emas Index declined 33.45 points to 8,757.66, FBM70 Index lost 52.36 points to 8,561.31 and the FBM ACE Index dipped 6.63 points to 3,926.11. Meanwhile, the Finance Index slipped 11.67 points to 11,816.42.

The Industrial Index declined 8.71 points to 2,641.12 and the Plantation Index went down 11.62 points to 6,156.82.

Losers led gainers by 449 to 250 while 274 counters were unchanged, 405 untraded and 34 were suspended.

A total of 765.419 million shares worth RM1.415 billion changed hands compared with 781.520 million shares worth RM1.403 billion on Wednesday.

Topping the active list, Talam edged up half a sen to 14.5 sen.

Kencana Petroleum eased 4 sen to RM1.39 and IOI Corporation was up 1 sen to RM5.01.

Kumpulan Europlus advanced 6 sen to 53 sen and Unisem lost 4 sen to RM2.75.

Of the heavyweights, Genting and Petronas Gas fell 12 sen each to RM6.65 and RM9.76 respectively while Telekom Malaysia declined 10 sen to RM3.21 and Axiata Group slipped 4 sen to RM3.72.

The Goldman Sachs Group, Inc's purchase of shares in My E.G. Services Bhd (MyEG) has pushed the latter's foreign shareholding to almost 18 per cent. On Wednesday, Goldman Sachs, a global investment banking and securities company, emerged as a substantial shareholder in the powerful Internet portal after purchasing 30.3 million shares, effectively giving it a 5.04 per cent stake.Apart from Goldman Sachs, the other major foreign shareholder in MyEG is Utilico Emerging Markets Ltd, a UK-based investment fund, which increased its stake this year to 11.35 per cent.Another UK-based fund, London Asia Capital plc, owns 1.1 per cent of MyEG.

Foreign funds buying into MyEG comes at a time when the company itself is in the midst of a share buyback exercise, while Lembaga Tabung Haji, a major shareholder, has been reducing its stake over the past five months This year alone, Tabung Haji has sold some 19.5 million MyEG shares on the open market, while MyEG itself has bought some 371,900 of its own shares on the open market. MyEG is controlled by Asia Internet Holdings Sdn Bhd, which has a 34.8 per cent stake. Asia Internet in turn is controlled by Wong Thean Soon and Raja Munir Shah Mustapha, who are both directors in the company.

Kumpulan Europlus Bhd disposed of 110 million Talam Corp shares on May 17, reducing its shareholding to 24.11% . KEuro sold 90 million shares at 13 sen each and 20 million shares at 13.5 sen apiece on the same day. The disposals reduced its shareholding to 624.08 million shares and also reduced the share overhang of Talam shares. The filing did not state the buyers.

Allianz Malaysia Bhd, which will raise about RM611 million from the proposed rights issue of 192.33 million irredeemable convertible preference shares, has fixed the issue price at RM3.18. The proposed renounceable rights issue would be issued to shareholders on the basis of 125 new ICPS for every 100 shares held.

Astro Holdings Sdn Bhd's (AHSB) takeover offer of Astro All Asia Networks plc has become unconditional, having secured more than 90% of the latter's shares as of yesterday AHSB, which is buying the shares at RM4.30 each, is a special-purpose vehicle set up for the privatisation exercise Its main shareholders are Usaha Tegas Sdn Bhd and affiliates, Khazanah Nasional and several bumiputra foundations. Together, they own 72.9% of Astro.

RM

The ringgit ended easier against the US dollar yesterday in tandem with other major regional currencies as players stayed concerned with the European zone, dealers said.

At 5pm, the local currency eased to 3.2720/2750 against the greenback from a higher 3.2510/2560 on Wednesday.

A dealer said Germany's move to ban naked short-selling in some securities had increased uncertainties and influenced the forex market movement.

Another dealer said the curfew in Thailand, extended for three days following fresh anti-government violence, has also affected currency movements.

The ringgit was lower against other major currencies. It depreciated against the Singapore dollar to 2.3277/3321 from 2.3197/3237 on Wednesday and was weaker against the yen at 3.5850/5902 from 3.5491/5561 previously.

The ringgit slipped against the euro to 4.0579/0620 from 3.9584/9655 on Wednesday and against the British pound to 4.7045/7091 from 4.6398/6483 previously.

CPO

Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives ended higher with investors covering
short positions after Wednesday's losses, said a dealer.At close, June rose RM21 to RM2,493 per tonne, July added RM44 to RM2,495, August increased RM41 to RM2,476 and September rose RM40 to RM2,464. On the physical market, May South added RM20 to RM2,540 per tonne.

News

EON Capital Bhd said today, the board has resolved that the proposed disposal of its entire assets and liabilities to Hong Leong Bank Bhd is in the best interest of the company.
Sime Darby Bhd is facing the possibility of missing its key performance indicator target of RM2.5 billion net profit for financial year 2010 as it prepares to book in almost RM1 billion losses in its third quarter results.
The conglomerate will include losses from ventures in the Middle East as well as the Bakun hydroelectric dam project in the third quarter numbers it will report on May 27. A poll of 15 research houses came up with a net profit forecast averaging RM2.12 billion for the financial year, taking into consideration the losses. Sime reported net profit of RM2.28 billion in 2009 and RM3.51 billion in 2008. The net profit forecast for financial year 2010 ranged from as low as RM1.58 billion to as high as RM3.1 billion. Analysts said that many of the forecasts in the higher ranges were arrived at on the assumption of crude palm oil prices remaining high for the rest of the company's fiscal year.

Meanwhile, Tun Musa Hitam has no qualms stepping down as the chairman of Sime Darby Bhd if the board is proven to be accountable for the huge losses of RM964mil from delays and cost overruns in several projects involving the company's utilities and energy division The RM964mil provisioning is made up of losses of RM200mil from the Qatar Petroleum project, RM159mil from the Maersk Oil Qatar project, RM155mil from a project to construct vessels for use in the Maersk project and RM450mil from cost overruns in the Bakun project.The Minority Shareholder Watchdog Group (MSWG) has raised questions over Sime Darby Bhd's nearly RM1bil loss from cost overruns in the group's energy and utilities division.

CIMB Group Holdings Bhd reported a record first-quarter net profit, driven by its Indonesian unit and better income fee, and it is bullish on prospects for the rest of the year.

The country's second biggest banking group posted a net profit of RM838.1 million for the quarter to March 31 2010, up 37 per cent from the same quarter last year.Revenue rose 13 per cent to RM2.84 billion while profit before tax (PBT) jumped 35 per cent to RM1.13 billion. CIMB Niaga was the largest contributor to group PBT with 37 per cent versus 14 per cent in the same period last year. It made significant operational improvements and also made gains from the sale of bonds. The group's Malaysian consumer bank PBT grew 9.5 per cent year-on-year in line with the continued turnaround in CIMB Bank's operations. Recoveries of its bad bank were relatively flat. Its corporate and investment banking business did well due to better capital market activities. PBT for the unit doubled to RM236 million. However, PBT contribution from treasury and investments fell to 30 per cent from 57 per cent largely due to lower investment gains during the period.

Petra Perdana Bhd, which is involved in a series of legal disputes and a massive boardroom tussle, is expected to continue attracting attention ahead of its AGM to be convened next month The conclusion of Petra Perdana's EGM held in February did not spell an end to the countless issues surrounding the company. A tussle is still believed to be ongoing In the latest move, Petra Energy's wholly-owned subsidiary Petra Resources Sdn Bhd filed a writ of summons against seven persons it did not identify for breach of fiduciary duties and breach of trust.

The telecom's industry regulator has come up with a draft spectrum plan in which it proposes to re-farm several blocks of frequency including those in the 850 Mhz, 900 Mhz and 2.5 Ghz bands Those in the know say that the 900 Mhz and 2.5 Ghz spectra may be allocated for 4G services sometime next year. But it is not clear what the plan is for the 850 Mhz.

Ranhill Bhd's unit Ranhill Power Sdn Bhd (RPower) has signed a conditional share sale agreement to sell its shares in Ranhill Powertron II Sdn Bhd to Sabah Energy Corp Sdn Bhd for RM73mil The deal involves two million ordinary shares of RM1 each and 47 million redeemable convertible non-cumulative preference shares of one sen each. "RPower and Ranhill group will realise a gain of about RM24.2mil for the financial year ending June 30," it told Bursa Malaysia. Offshore crane service and manufacturing provider Handal Resources Bhd is in advanced talks to buy a product line and intellectual property rights from a US-based company. The acquisition would allow Handal to expand its crane product range to include larger-sized cranes of up to 200 tonnes. Currently, the company manufactures smaller cranes, which weigh between 12 and 28 tonnes.

Government investment arm Khazanah Nasional Bhd said it will continue to sell its stake in non-core assets by the year-end but it will be done in an orderly manner.Khazanah has stakes in more than 50 companies, including Tenaga Nasional Bhd and Telekom Malaysia Bhd. In the last five years, it has made divestments totalling RM12.6 billion, locking in gains of RM3.6 billion over 20 deals.

Axiata Group Bhd's 20%-owned Idea Cellular Ltd has won the 3G spectrum in 11 circles in India, including eight circles where it has a strong presence, as the spectrum auction ended in the country When contacted, an Axiata spokesman said: "No comment, as Idea has yet to make an official announcement." Idea was reported to have forked out 57.7 billion rupees (RM4bil) for the cost of its spectrum. Among the circles Idea won are Maharashtra, Gujarat, Andhra, Kerala, Punjab, Haryana, Madhya Pradesh and Himachal Pradesh.

Century Logistics Holdings Bhd, a supply chain management and logistics provider, plans to set up a new head office and distribution hub in Bukit Raja, Klang, next year for RM75 million. The company is buying 12ha of industrial land from Jendela Hikmat Sdn Bhd, part of Boustead Group, for RM31.4 million. Century Logistics managing director Steven Teow Choo Hing said the hub will offer up to 750,000 sq ft of warehouse space.

Ariantec Global Bhd, an information technology (IT) firm specialising in managed security and network infrastructure, aims to return to profitability this year after registering a net loss of almost RM6 million in 2009.
It also plans to grow its revenue by 35 per cent to RM73 million from RM54 million last year, as it sells wider range of IT solutions to its customers and expands overseas.Earlier, the company signed a partnership agreement with South Korean public-listed firm Oullim Information Technology. Although Oullim established business relationship with Ariantec during the past few years, the partnership agreement represents a significant development for both parties.
Under the pact, Ariantec will gain access and sell Oullim's full suite of managed security solutions, while Oullim is able to expand its market reach in Southeast Asia. Prior to the agreement, Ariantec was only selling a portion of Oullim's solutions.

Low-cost carrier AirAsia Bhd will continue with plans for a dual listing in Thailand but will do so once the political environment there shows sign of recovery.sales in Thailand slowed down in the last two months due to the uncertainties in that country and expects to have a tough time with its operations there up to July.
AirAsia has yet to set a date for the listing.

TSH Resources Bhd is looking at expanding its plantation acreage in Indonesia, and is currently scouting around the central and East Kalimantan regions for large tracts of land that are reasonably priced.TSH would finance the expansion via internal funds. As at end-March this year, TSH had some RM68.38 million in cash and bank balances while its trade receivables stood at RM132.44 million.

Shipping group MISC Bhd has sold its MT Bunga Siantan, a 15,999 dead-weight tonnage single-hull chemical tanker to PT Waruna Nusa Sentana for US$3.2 million (RM10.46 million). The sale is in line with its asset management strategy to phase out single hulled vessels and maintain a modern fleet of chemical tankers for its chemical business unit. The Kuala Lumpur Sessions Court has convicted Muhammad Khalid Ismail, a director of a fund management company, for misappropriating RM45 million of Koperasi Angkatan Tentera Malaysia Bhd's (KATMB) funds.
Khalid, 62, was a director of Oasis Asset Management Sdn Bhd at the time the offence was committed. He was convicted on eight different charges, the Securities Commission (SC) said in a statement. He was found guilty of hiding records required to be maintained by Oasis in relation to the investment made by KATMB. He was also found guilty of submitting a false statement to the SC and for failing to maintain a trust account for the investment from KATMB.

SIG Gases Bhd, a manufacturer, refiller and distributor of industrial gases in Malaysia, has received approval from the Securities Commission to list on the Main Market of Bursa Malaysia in the third quarter of this year.
The company has two production-cum-refilling facilities in Senai, Johor, and Nilai, Negeri Sembilan, as well as refilling plants in Kuantan, Pahang, Puchong, Selangor, Krubong, Malacca, and Bukit Minyak, Penang.
SIG has clients in a diverse range of industries, including ship-building, metal fabrication, iron and steel, chemical, and healthcare, among others. AmInvestment Bank Bhd is arranging its initial public offering.

The Asian Development Bank (ADB) has become the first supranational to list its medium-term notes (MTNs) issued under its RM3.8 billion MTN programme on the Malaysian market. The MTN programme was established on 2006 and has a tenure of 15 years. Under the programme, two tranches of MTNs were listed on Wednesday and valued at RM1 billion, specifically RM500 million each for a five- and 10-year term respectively.

Results

Shangri-La Hotels (Malaysia) Bhd's performance in the current financial year ending December 31 2010 is expected to match, if not surpass, its results for 2008. The expectation comes in line with better economic sentiments and two fully-furbished hotels. Shangri-La Hotel Kuala Lumpur and Golden Sands Resorts Penang underwent a RM112 million and RM40 million renovation respectively last year. In the year ended December 31 2008, Shangri-La posted a net profit of RM49.27 million on revenue of RM415.45 million. In comparison, the hotel owner-cum-operator only churned in a net profit of RM35.35 million on revenue of RM367.37 million last year as its revenue, especially from its main performer Shangri-La Hotel Kuala Lumpur took a hit from the global financial crisis. With the positive cash flow coming in, it expects to retire its borrowings by the end of 2012. The group's gearing increased to 23 per cent (RM168.97 million) as at December 31 2009 as a result of
financing to renovate the two hotels, from 21 per cent (RM154.32 million) in 2008. Its net gearing ratio is expected to reduce to between 13 per cent and 15 per cent by the end of this year and be completely settled by the end of 2012.

JCY International Bhd posted net profit of RM65.88 million in the second quarter ended March 31, 2010, up 38% from RM54.40 million a year ago as demand picked up following the recovery of the hard disk drive (HDD) industry. JCY, which manufactures mechnaical components for the HHD industry, said on Thursday, May 20 earnings per share were 3.22 sen versus 2.66 sen. It declared interime dividend of 3.91 sen. The revenue of RM549.7 million and profit before taxation of RM66.2 million for the quarter was a growth of 58.7% and 21.7% from a year agoFor the first half, net profit rose 83% to RM143.34 million from RM78.40 million in the previous corresponding period. Revenue rose 38% to RM1.07 billion from RM776.19 million.

Kian Joo Can Factory's (KJCF) net profit surged 83.3% to RM21.88 million in its first quarter ended March 31, 2010 (1QFY10) from RM11.94 million a year earlier, mainly due to the increase in revenue from the cans division, resulting from better production efficiency. Revenue rose 15.6% to RM216.74 million from RM187.48 million, while earnings per share rose to 4.93 sen from 2.69 sen. No interim dividend was declared.

Mulpha International Bhd posted a net profit of RM48.3 million in its first quarter ended March 31, 2010 (1Q10) versus a net loss of RM12.03 million a year earlier as the real estate and hospitality group booked more profit from its associates. Its bottom line was also helped by a RM29.85 million gain derived from the sale of a portion of its stake in associate Mudajaya Group Bhd. Revenue rose 3.8% to RM147.87 million from RM142.43 million, while earnings per share amounted to 3.74 sen. No interim dividend was declared.
On a quarterly basis, Mulpha's net profit fell 21.9% from RM61.83 million in the preceding fourth quarter while revenue was down 37.3% from RM235.87 million.

UMW Holdings Bhd posted a net profit of RM132.9mil, more than 100% higher than the net profit of RM66mil recorded in the same period last year on improved margins A favourable model mix and higher sales volume achieved by its automotive segment mainly contributed to the significant profit increase. Revenue stood at RM3.03bil compared with RM2.35bil last year.

ASIA

The euro held its ground in Asian trade yesterday after plunging to a four-year low on heightened anxiety over eurozone debt, while fears over the crisis saw regional shares suffer heavy losses.

The euro bounced on rumours of a possible intervention from the Federal Reserve, European Central Bank and Bank of England and talk that Greece may be about to leave the eurozone.

The news boosted the euro to US$1.2408 in New York late trade but eased back in Asia yesterday to US$1.2327, although it is still off its four-year lows below US$1.22 seen on Wednesday.

On share markets, Sydney dived to its lowest since August 21 last year, tumbling 1.61 per cent, or 70.6 points, to at 4,316.5.

Australia will not compromise on the planned 40 per cent rate for its new mining tax, though it is in talks with miners on other aspects of the tax plan, Trade Minister Simon Crean said yesterday. "We are in discussion with the companies about the implementation and transition arrangements but we will not be compromising on the 40 per cent rate," Crean told reporters in Shanghai.

Singapore: The Straits Times Index fell 0.8 per cent to 2,753.51 at the close. Shares on the measure trade at 13.6 times estimated earnings, compared with about 17.5 times at the beginning of the year, according to Bloomberg data.

Shares of developers with business in China rose after the state-run China Securities Journal said the nation could wait to raise benchmark rates.

Hong Kong: Shares fell 0.17 per cent yesterday as dealers remained on edge over the eurozone's debt troubles.

The benchmark Hang Seng Index fell 33.15 points to 9,545.83.Turnover was HK$71.08 billion.

Shanghai closed down 1.23 per cent on concerns the government may introduce measures to tighten credit, dealers said.

Tokyo hit its lowest level since February 15, shedding 1.54 per cent, or 156.53 points, to 10,030.31.

Exporters, who see Europe as a key market, were hit by the weak euro, with the troubles outweighing data showing the Japanese economy surged an annualised 4.9 per cent in the first quarter.

Shanghai fell 0.64 per cent World markets have been sent reeling by the European debt crisis in recent weeks as fears abound that it could hurt the global recovery or even lead to another financial meltdown.

Bangkok was closed as the Thai capital was hit by violent clashes between anti-government protesters and security forces that have left dozens dead.

In other markets:

* Seoul tumbled 1.83 per cent, or 29.90 points, to 1,600.18. Dealers were hit by mounting tensions in the aftermath of the March 26 sinking of a South Korean warship, which has been blamed on North Korea.

* Taipei fell 1.78 per cent or 134.73 points, to end at 7,424.43. Taiwan Semiconductor Manufacturing Company fell 0.68 per cent to 58.90 Taiwan dollars and UMC lost 3.12 percent to 14.00. But PC maker Acer rose 1.6 per cent to 77.70.

* Manila closed 0.32 per cent, or 10.47 points, lower at 3,213.80. Energy Development Corp was unchanged at 4.95 pesos but Philippine Long Distance Telephone Co fell 0.2 per cent to 2,450 pesos.

* Wellington fell 0.34 per cent, or 10.46 points, to close at 3,111.42. Investors welcomed tax cuts and a better economic outlook in the government's budget. Telecom ended flat at NZ$2.05 and Goodman Property Trust added 2.1 per cent to 97 cents.

EUROPE

European shares slipped for a second session yesterday to a two-week closing low, with poor US macro-economic numbers and growing anxiety over possible tougher regulation in the eurozone unsettling investors.

The FTSEurofirst 300 index of top European shares finished down 2.2 per cent at 974.80 points, its lowest close since May 7, after falling to a low of 959.44 earlier in the session.

London's benchmark FTSE 100 index of leading shares shed 1.65 per cent to 5,073,13 points. In Paris, the CAC 40 lost 2.25 per cent to 3,432.52 points and in Frankfurt the DAX dropped 2.02 per cent to 5,867.88 points.

US

Stocks got pummeled Thursday, with the Dow, Nasdaq and S&P 500 losing enough to fall into "correction territory" - marked by a drop of more than 10% off the rally highs.

Worries about how the European debt crisis and slump in the euro will impact the global recovery fueled the selling, extending the month-long declines.

The Dow Jones industrial average fell 376 points, seeing its biggest one-day point loss since February 10, 2009. Thursday's point loss was equivalent to 3.6%, the biggest one-day percentage loss since March 5 of 2009. The loss was bigger than that in the so-called "flash crash" earlier this month in which the Dow lost nearly 1000 points during the session, but ended up closing down just shy of 348 points or 3.2%.

The Nasdaq fell 94 points, seeing its biggest one-day point loss since December 1, 2008. The point loss Thursday was equivalent to 4.1%, its biggest one-day percentage loss since Feb. 17, 2009.

The S&P 500 declined 43 points, its biggest one-day point loss since January 20, 2009. It was equivalent to a percentage loss of 3.9, the S&P's worst since April 20, 2009. Thursday's point and percentage drops for the Nasdaq and S&P were bigger than those made on the day of the flash crash.

The CBOE Volatility index, the VIX Wall Street's fear gauge, spiked 30% to a 14-month high of 45.48.

Stocks slumped in the morning, trimmed losses in the afternoon as the euro turned positive and then resumed the selling, ending just above the lows of the day. The afternoon selloff intensified after the Wall Street reform bill cleared a key hurdle in the Senate. The bill is expected to pass the Senate. Investors also kept an eye on the escalating conflict between North Korea and South Korea.

Euro: The euro was little changed versus the dollar after falling in the morning and gaining through the late afternoon. The euro has seesawed over the last few days after plunging to a four-year low of $1.2234 on Monday. The dollar fell 0.2% versus the yen, erasing bigger morning losses.

Economy: Reports on jobless claims and leading economic indicators (LEI) disappointed, while the Philadelphia Fed index, a regional reading on manufacturing, topped forecasts.

The number of Americans filing new claims for unemployment rose last week to 471,000 from 446,000 the prior week. Economists surveyed by Briefing.com expected claims to fall to 439,000.

Continuing claims, the number of Americans who have been receiving benefits for a week or more, fell to 4,625,000 from 4,665,000 in the previous week. Economists thought claims would fall to 4,600,000.

After the start of trading, the Conference Board released its index of leading economic indicators. LEI fell 0.1% in April after rising 1.3% in March. The index was expected to have risen 0.2%.

The Philadelphia Fed index rose to 21.4 in May from 20.2 in April, topping predictions for a rise to 20.7.

After the mini-crash: New rules continue to be proposed in the wake of the May 6 stock market selloff, in which erroneous trading in hundreds of issues created a panic that dragged down the broad market. Since then, most of the trades have been cancelled, but regulators remain unclear as to what exactly caused the selloff.

Out-of-control computer trading may have caused the slump, Securities and Exchange Commission chairwoman Mary Schapiro told a Senate panel Thursday.

On Tuesday, the SEC proposed new rules that would impose circuit breakers, or a temporary pause, on individual stocks that experience extreme swings. There are already circuit breakers in place for the broad markets, but this would impact individual stocks.

World markets: Markets in Europe slumped, as the euro continued its slide versus the dollar. The British FTSE 100 fell 1.7%, the German DAX lost 2% and the French CAC 40 fell 2.3%.

Asian markets tumbled. The Japanese Nikkei fell 1.5%, while the Hong Kong Hang Seng fell 0.2%.

Commodities: U.S. light crude oil for June delivery fell $1.86 to settle at $68.01 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $4.50 to settle at $1,188.60 an ounce. Bonds: Treasury prices rallied , lowering the yield on the 10-year note to 3.24% from 3.36% late Wednesday.