Malaysia - Equity

Sime Darby Bhd led a sell-off in the stock market yesterday, starting a week which may see investors trim shares further amid continued uncertainties in global markets. While economic fundamentals at home remain strong, the concern that debt problems in Europe's weaker economies like Greece and Spain could spiral into another global credit crisis is keeping investors from picking up shares.

The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index closed lower for the seventh day, shedding 12.04 points to close at 1,273.69, despite upbeat regional markets. It was the index's lowest close in three months.It had opened 2.77 points lower at 1,282.96.

The FBM Emas Index fell 63.58 points to 8,562.09, the FBM70 Index declined 13.23 points to 8,409.80 and the FBM Ace Index dropped 41.41 points to 3,795.32.

The Finance Index, meanwhile, eased 78.03 points to 11,512.85, the Industrial Index declined 35.75 points to 2,576.88 and the Plantation Index dipped 73.12 points to 6,016.61.

Losers led gainers 415 to 252 while 285 counters were unchanged, 447 untraded and 55 others suspended.

Trading volume declined to 662.44 million shares valued at RM1.29 billion from the 886.44 million shares worth RM1.76 billion traded last Friday.

Among active counters, Talam Corp was flat at 14 sen, while Kumpulan Europlus rose 9 sen to 62.5 sen.

Sime Darby fell 27 sen to RM7.81, CIMB Group shed 4 sen to RM6.82 while Berjaya Corp increased 6 sen to RM1.56.

Of the heavyweights, Maybank lost 7 sen to RM7.25, Maxis shed 5 sen to RM5.17 and MISC slipped 4 sen to RM8.50.

Sime Darby, the world's biggest listed palm oil producer, sank to a 10-month low over concern that it may have to set aside more money for potential losses in its energy and utilities division.It fell 3.3 per cent to RM7.81, shedding almost four points off the index. Just two weeks ago, Sime Darby asked its chief executive (CEO) to leave as it looked set to book losses of almost RM1 billion for the second half of this year on cost overruns in that division. It made a net profit of RM1 billion in the first half. Current acting CEO Azhar Abdul Hamid indicated in a news report last weekend that there could be more provisioning as it probes further into that division.

RM

The ringgit ended almost flat against the US dollar yesterday as some buying interest for the local currency helped wipe out earlier losses, a dealer said.

At the close, the local unit was at 3.3180/3210 to the US dollar compared with Friday's close of 3.3180/3230.
The ringgit, he said, only started to move in the later part of the afternoon and traded between the 3.08 and 3.32 levels against the US dollar yesterday.

Compared with other major currencies, the ringgit was closed mixed.

It was softer against the Singapore dollar at 2.3564/3608 from 2.3534/3603 but firmer against the yen at 3.6842/6884 from 3.6858/6918.

CPO

Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed lower yesterday amid a lack of buying interest ahead of the export data due for release today, dealers said.

At the close, June 2010 and August 2010 contracts were down RM1 each at RM2,530 and RM2,490 per tonne respectively, July 2010 eased RM3 to RM2,508 while September 2010 was RM8 lower at RM2,472 per tonne.

News

The board of EON Capital Bhd (EON Cap) is expected to send out to shareholders its EGM notice and circular on the RM5.06bil takeover offer from Hong Leong Bank Bhd (HLB) this week It is understood that the banking group held a board meeting yesterday to discuss what would be written in the circular after it had decided to go ahead and table the proposed offer to shareholders despite facing resistance from its independent financial adviser (IFA), Credit Suisse Securities (M) Sdn Bhd, who has said the proposal was "not fair from a financial perspective." HLB values EON Cap at 1.42 times book.Come June, there will be some excitement in the banking industry when Bank Negara reveals some of the successful recipients for foreign commercial banking licences in line with the financial sector liberalisation plan.

Up to five new banking licences are expected to be issued in niche and up to two new takaful licences will also be announced. ING, Allianz, Manulife, Great Eastern and AmAssurance are some of the insurers believed to have submitted their applications. An industry observer felt Great Eastern might be one of the successful applicants for the takaful licence.
The medium-term note (MTN) holders of Transmile Group Bhd, a troubled air cargo carrier, will continue with their move to wind up the company. Sources said the five MTN holders, who are owed RM105mil, believe they have priority over the assets. They had on April 28 met to appoint receivers for the company. The company's other obligations included RM214mil in syndicated term loans and RM209mil in guaranteed convertible bonds. The five MTN holders are believed to be the Employees Provident Fund (EPF), Meridian Asset Management Sdn Bhd, OSK Group, Agrobank and AmBank Group. The EPF is believed to hold around half of the notes.

IGB Corp Bhd is mulling over spinning off its assets into three separate real estate investment trusts (REITs) comprising its retail, hotel and commercial components, its top executive said. Group managing director Robert Tan Chung Meng said that should this plan take off, this could "potentially be the biggest REIT in Malaysia".
Currently, the planned REIT by the Sunway City Bhd at an estimated RM3 billion to RM4 billion is said to be the largest in Malaysia.

Sunway City may place out about a fifth of its planned IPO of a real estate investment trust (REIT) to cornerstone investors who have greater holding power for the shares, sources with direct knowledge of the deal said in Kuala Lumpur yesterday. Malaysia's sixth-biggest property company by market value is in talks with seven local funds in the hopes of getting some of them to become cornerstone investors in the IPO which is expected to raise around US$500 million (RM1.65 billion), the sources said. The Sunway REIT, with a fund size of 2.78 billion units, is set to become Malaysia's largest when it is listed in the third quarter of this year.

Three directors in The Star Publications (Malaysia) Bhd did not seek re-election at the firm's annual general meeting yesterday. They are executive director Ng Beng Lye, who was previously hand-picked by former MCA president Datuk Seri Ong Tee Keat, and non-executive directors Tan Sri Sak Cheng Lum and Raymond Tan Foong Luen. When contacted, Ng confirmed that he, Sak and Tan did not seek re-election but he refused to give any reason.

Mudajaya Group Bhd said its Indian investment has been offered term loan facilities amounting to 26.25 billion rupees (RM1.86 billion) to finance a coal based independent power plant (IPP) project in Chhattisgarh, India.
It told Bursa Malaysia yesterday that R.K.M Powergen Private Ltd, an associate company of Mudajaya Corp Bhd (which is a wholly- owned unit of Mudajaya Group) will receive the loans from several Indian financial institutions to finance the setting up of the remaining Unit-2, 3 & 4 of the 4 X 360 MW Coal Based IPP project.

Padiberas Nasional's (Bernas) unit Beras Corp Sdn Bhd (BCSB) entered a share sale agreement with Tan Kien Chong Sdn Bhd (TKCSB) to acquire the balance of 45% stake in Sabarice Sdn Bhd for RM4.73 million cash. Bernas had entered into an agreement last Friday to acquire the remaining 675,000 shares, or 45% stake, from TKCSB, a move which would make Sabarice its unit.

Online stockbroking and trading solutions provider N2N Connect Bhd is expecting its cross-border business to make up at least 30% of its revenue this year from 15% currently. Its managing director Andrew Tiang said N2N is working closely with local brokers as well as brokers from other countries to grow its cross-border business contribution from 15% at the moment.

Pipemaker Hiap Teck Venture Bhd has bought 55 per cent stake of Eastern Steel Sdn Bhd, which owns 240ha of land in Teluk Kalung, Kemaman in Terengganu, for RM110 million. The final amount of the purchase price of RM33 million has been fully settled.

MMC Corporation Bhd's unit has signed a memorandum of understanding with a unit of South Korea's STX Corporation to look into the proposed setting up of a plant to manufacture solar cells in Senai Hi-Tech Park.
MMC's unit Senai High Tech Park Sdn Bhd had signed the MoU with STX Corp's unit STX Energy Co. Ltd for the proposed plant, subject to a feasibility study.

Singapore's second largest utility firm, PowerSeraya Ltd, together with Malaysian parent YTL Power International Bhd, is seeking to expand its operations, which could include selling utilities, fuel trading and oil storage, in the region.Construction-to-power conglomerate YTL Corp Bhd bought PowerSeraya from Singapore state investor Temasek Holdings in December 2008 for S$3.8 billion (RM9 billion).
YTL Power's businesses include power generation in Malaysia and Indonesia, power transmission in Australia and provision of water and sewage services in the UK. PowerSeraya, which owns a 10,000 cu m seawater reverse osmosis desalination plant and a 3,100-megawatt (MW) power plant, is in the last stages of commissioning a new S$800 million (RM1.9 billion) 800 MW co-generation combined cycle plant. The unit, which will come on stream by the end of next month, will generate both electricity and steam.

Results

MBM Resources Bhd plans to spend RM100 million over the next three years to expand its distribution network.

Its managing director, Looi Kok Loon, said this year, RM20 million was allocated to expand its Perodua, Hino and Volkswagen (VW) dealerships. For financial year ended December 31 2009, MBM's revenue fell by 2.1 per cent to RM1.18 billion. Its pre-tax profit declined by 39 per cent to RM91.4 million. Meanwhile, MBM's pre-tax profit for the first quarter ended March 31 2010 rose to RM45.28 million from RM11.702 million in the same period last year. Revenue surged to RM363.835 million from RM246.055 million previously, it added. - Bernama

Star Publications (Malaysia) Bhd's earnings doubled to RM37.82 million in the first quarter ended March 31, 2010, from RM18.26 million a year ago, underpinned by strong growth in advertising expenditure. Pre-tax profit was RM53.5 million, which was double the RM25.45 million it posted a year ago. Revenue rose 27% to RM230.58 million from RM181.34 million while earnings per share were 5.12 sen versus 2.47 sen. However, when compared with the preceding quarter ended Dec 31, 2009, revenue declined by 26.7% to RM230.58 million from RM314.54 million. Pre-tax profit slipped 31.3% to RM53.5 million from RM77.86 million.

Newly-listed Masterskill Education Group Bhd yesterday reported a sharp increase in net profit to RM26.68 million for the quarter to March 2010 compared with a profit of RM18.68 million in the last corresponding period. Revenue for the quarter just ended was RM77.04 million, or 22.5 per cent higher than what it recorded previously. "Our net profit for this reporting quarter is mainly attributed to increase in our students. We had 17,003 active students as at end of March 2010, representing an increase of 21.7 per cent from the corresponding quarter in March 2009," Masterskill group chief executive Datuk Seri Edmund Santhara said in a statement yesterday. Ebitda for the reporting quarter increased by 30.3 per cent to RM35.8 million, with Ebitda margin of 46.5 per cent for first quarter result ending March 31. The Company continues to be in good cash position with less than 0.1 times gearing.

Semiconductor company AIC Corp Bhd has lined up several strategies to further boost business in 2010 after returning to profitability last year. The strategies include strengthening its core activities, namely in semiconductor, and precision tooling and automation. It is also looking to diversify its business by adding new high-valued semiconductor products, giving AIC the potential of having a better revenue mix.For its first quarter ended March 31 2010, AIC recorded a net profit of RM2.9 million from a loss of RM1.9 million previously. Revenue for the three-month period stood 77.8 per cent higher at RM41 million.

BANK Simpanan Nasional's profit-after-tax and zakat for 2009 rose to RM347 million from RM168 million in 2008 on strong growth in loans, advances and financing. Group revenue rose to RM1.21 billion from RM1.04 billion previously. Its total loans, advances and financing rose 27.2 per cent to RM5.91 billion from RM1.26 billion in 2008. BSN's total deposits edged up to RM16.99 billion from RM15.42 billion in 2008,

Total assets rose to RM18.74 billion from RM16.73 billion, fuelled by a 49.2 per cent rise in conventional loans and syariah-financing portfolios. BSN's net non-performing loans (NPLs) stood at 1.8 per cent as at the end of 2009, a marginal increase over 1.5 per cent in 2008.

Hong Leong Financial Group Bhd (HLFG) saw its third quarter net profit grow 7.5 per cent to RM141.92 million while revenue was up 3 per cent to RM542.37 million. However, profit before tax (PBT) was lower by 6.2 per cent to RM255 million for the period ended March 31 due to lower contributions from its commercial banking and insurance divisions. The commercial banking unit recorded a drop of 3.3 per cent in PBT of RM260 million as a result of higher other operating expenses and higher allowance for losses on loans, advances and financing. Meanwhile, the group's insurance division posted a pre-tax loss of RM1.6 million compared with a PBT of RM10 million a year ago, owing to the year-to-date adjustment for claims liabilities provided for under the risk-based capital framework. For the nine-months to March 31, the group saw its net profit increase 1.2 per cent to RM445.9 million as revenue fell 2 per cent to 1.66 billion. Its PBT dropped 7 per cent to
RM859.2 million due to lower contributions from its commercial banking unit. The commercial banking division saw its PBT fall 9 per cent to RM840.1 million for the nine-month period due to lower net interest income and non-interest income as well as higher other operating expenses.

Krisassets Holdings Bhd, the owner and operator of Mid Valley Megamall, is aggressively seeking foreign shopping complexes to be injected into the company. Group managing director Robert Tan Chung Meng said that the properties could either be in the US or in Europe. He added that KrisAssets has the muscle to raise between RM1 billion and RM2 billion to fund the purchases. KrisAsset, whose prized Mid Valley Megammall is valued at RM1.8 billion, has a cash balance of RM180 million as at December 31 2009. In 2009, it made a net profit of RM136.02 million on the back of RM227.88 million in revenue.

PPB Group Bhd posted net profit of RM1.12 billion in the first quarter ended March 31, 2010, as earnings were boosted by the completion of disposal of the group's sugar-related assets compared with RM271.83 million a year ago. The completion of disposal of the group's sugar-related assets in early January 2010 resulted in a gain of RM838 million recognised in the first quarter under review. Group revenue of RM504 million for the first quarter ended 31 March 2010 was marginally higher than the RM495 million in the same period last year. The increase was mainly due to higher revenue recorded by the film exhibition and distribution division, off-set by lower revenue from the environment engineering, waste management and utilities division as no new contracts were secured during the quarter.

ASIA
Investors took their lead yesterday from a Wall Street rally while keeping an eye on Europe's debt crisis, with shares closing broadly higher.

As well as Friday's Wall Street rally, trade was spurred by bargain-hunting after eurozone fears caused a broad sell-off in regional stocks in recent weeks.

Markets took their cue from Wall Street, where the Dow on Friday rose 1.25 percent on bargain-hunting and relief that President Barack Obama's finance bill had passed through the Senate.

Markets remain concerned despite a near trillion-dollar package to prevent the troubles of debt-ridden Greece spreading to the rest of Europe.

"It would take about three to six months before investors feel comfortable that enough has been done to address the problems in the (European Union)," said NRA Capital Chairman Kevin Scully.

SINGAPORE: STOCKS finished higher but lost some of its early gain in line with the rest of the region as investors cut risk amid fears the eurozone debt crisis would hit world growth.

The Straits Times Index closed 0.84 per cent, or 22.67 points, higher at 2,723.87.

Commodities and banks led gains, with Wilmar up 2.7 per cent and Oversea-Chinese Banking Corp 0.7 per cent.
HONG KONG: SHARES picked up 0.62 per cent yesterday following a Wall Street rally and hopes that China will put off any immediate plans to tighten credit.

The benchmark Hang Seng Index ended 121.93 points higher at 19,667.76.

Analysts see the index rising further this week after falling 3 per cent last week.

Short positions, which become profitable if prices decline, also contributed to gains, especially in some property shares.

TOKYO: Tokyo closed down 0.27 per cent, or 26.14 points, at 9,758.40, with exporters feeling pressure from a stronger yen as traders move into the safe-haven currency due to the crisis in Europe.

SYDNEY: Sydney gained 2.09 per cent, or 90 points, to close at 4,395.4.

SHANGHAI: Shanghai soared 3.48 per cent, or 89.90 points, to 2,673.42, boosted by hopes of a short-term halt in the Chinese government's efforts to rein in the property market, dealers said.

China will adjust its exchange rate policy at its own pace, President Hu Jintao said yesterday at the start of talks with the US on the Chinese currency and other sensitive trade issues. The annual strategic talks are seen as an opportunity for the two countries to end months of discord over issues such as the value of the yuan, or renminbi. Critics of China's currency policy say it keeps the yuan artificially low to make the country's exports cheaper and more attractive than those of rivals. "China will continue to steadily advance the reform of the formulation mechanism of the renminbi exchange rate under the principle of independent decision-making, controllability and gradual progress," Hu said.

SEOUL: Seoul closed up 0.30 per cent, or 4.75 points, at 1,604.93.

TAIPEI: Taipei rose 1.17 per cent, or 85.02 points, to close at 7,322.73.

JAKARTA: Jakarta fell 0.52 per cent, or 13.61 points, to end at 2,609.61.

BANGKOK: In Bangkok, shares tumbled 2.77 per cent, or 21.23 points, to close at 744.31 as dealers returned after the bourse was closed for two-and-a-half days due to clashes between anti-government protesters and security forces.

Thailand's economy grew at breakneck pace early this year but the deadly unrest that began in March will clip the full-year performance by 1.5 per centage points, officials said yesterday. Prime Minister Abhisit Vejjajiva said he would reach out to international investors to try to convince them the country's economic fundamentals remain strong despite two months of violent anti-government protests. The economy grew by a blistering 12 per cent in the first quarter but Abhisit said he expected a deep impact in the second quarter after anti-government protests were crushed last week, triggering arson and looting in Bangkok.

MANILA: Manila closed up 0.38 per cent, or 11.93 points, at 3,191.29.

MUMBAI: Mumbai rose 0.15 per cent, or 23.94 points, to close at 16,469.55.

The market was boosted by news that the warring billionaire Ambani brothers had called a truce in their feud.

EUROPE
European shares rose yesterday, with miners recouping losses from the previous week on a strong demand outlook for metals, but gains were limited by worries that the eurozone's debt crisis could hamper the bloc's growth.

Miners Anglo American, Kazakhmys, BHP Billiton and Rio Tinto added 0.7 to 2 per cent, on a bright outlook for the demand for metals following comments by an official that China should be particularly cautious in introducing new tightening measures.

The pan-European FTSEurofirst 300 index of top shares closed up 0.3 per cent at 973.21 points, snapping three straight sessions of losses which caused an 8 per cent drop in the index.

London's benchmark FTSE 100 index of leading shares edged up 0.13 per cent to 5,069.61 points. In Paris, the CAC 40 was virtually unchanged at 3,430.93 points and in Frankfurt the DAX lost 0.40 per cent to 5,805.68 points.

Britain's new coalition government unveiled details yesterday of some STG6.2 billion (STG1 = RM4.80) in cuts to "wasteful" spending, to begin slashing a record deficit in line with a key campaign pledge. The cuts - immediately slammed by labour unions, but seen by analysts as sending an essential signal to nervous markets - include a freeze on civil service recruitment and reductions in numerous programmes. Former Labour premier Gordon Brown warned ahead of May 6 elections that making immediate budget cuts will jeopardise Britain's fragile recovery from the global downturn. But new finance minister George Osborne, whose Conservative party struck a deal with the third-placed Liberal Democrats to form Britain's first coalition government since World War II, insisted the cuts were essential.

US
Stocks tumbled Monday, with the Dow ending at a three-month low as worries about the global economic outlook overshadowed a bigger-than-expected rise in existing home sales.

The Dow Jones industrial average lost 126 points, or 1.2%, closing at its lowest point since Feb. 2. The S&P 500 index declined 14 points, or 1.3%. The Nasdaq composite lost 15 points, or 0.7%.

Stocks had fallen in the early going, turned mixed through the afternoon and then turned lower near the close.

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 1.31 billion shares. On the Nasdaq, decliners topped advancers by eight to five on volume of 2.08 billion shares.

The housing market report marked a positive start to a busy week for economic news. Investors are looking for evidence that the U.S. economy is holding up despite the turmoil abroad. More housing reports are due later in the week.

Readings are also due on durable goods orders, personal income and spending, and consumer sentiment.

Nonetheless, the positive report was countered by continued worries about the European debt crisis. The euro slumped, erasing last week's gains, following reports that Spain's central bank took over a long-established regional savings bank.

Stocks ended higher Friday at the end of another rough week, in which worries about the European debt crisis and the flailing euro sent global markets lower. For the week, the Dow and S&P 500 both lost around 4% and the Nasdaq fell around 5%.

Since hitting rally highs in late April, the Dow has lost 10.2%, the S&P 500 has slipped 11.8% and the Nasdaq has dropped 12.5% through Monday's close. The declines of more than 10% off the highs means all three major gauges have met the technical definition of a correction. The selling has also raised worries about whether stocks are heading into a bear market, technically a decline of 20% to 30% off the highs.

Housing: April existing home sales rose 7.6% to a seasonally adjusted 5.77 million annual unit rate from a 5.36 million unit rate in March, the National Association of Realtors reported shortly after the start of trading. Economists surveyed by Briefing.com expected a smaller rise to 5.65 million units. The rise was due largely to the expiration of the homebuyer tax credit at the end of April.

Corporate news: AIG will not face criminal charges, with the Justice Department opting not to pursue the case due to insufficient evidence.

In deal news, IBM is reportedly buying AT&T's business software unit Sterling Commerce for $1.6 billion in cash.

Financial stocks slipped, including Dow components Bank of America and JPMorgan Chase. Other big losers included PNC Financial Services, Wells Fargo, Goldman Sachs and Morgan Stanley.

The KBW Bank index lost 3.3%.

Euro/dollar: The euro lost 0.3% versus the dollar after seesawing over the last week since falling to a four-year low of $1.2234 earlier in the month.

The dollar was little changed against the yen.

World markets: Markets in Europe cut earlier losses to end mixed. Britain's FTSE 100 rose 0.1%, Germany's DAX lost 0.4% and France's CAC 40 was little changed.

Asian markets were mixed. Japan's Nikkei fell 0.3%, while Hong Kong's Hang Seng gained 0.6%. China's Shanghai Composite rallied 3.5%.

Commodities: U.S. light crude oil for July delivery rose 17 cents to settle at $70.21 a barrel on the New York Mercantile Exchange.

COMEX gold for July delivery rose $17.90 to settle at $1,194.70 an ounce. Bonds: Treasury prices slipped, lifting the yield on the 10-year note to 3.22% from 3.20% where it stood late Friday.