MO R N I N G C O F F E E Monday, April 2, 2012

U.S. and European market roundup
US stocks rose, extending the biggest 1Q advance since 1998 for the S&P's 500 Index, as stronger than forecast growth in consumer sentiment and spending bolstered optimism in the country. US consumer sentiment rebounded to its highe 3st level in more than a year in March as optimism about jobs and income overcame higher prices at the gasoline pump, according to the Thomson Reuters/University of Michigan Surveys of Consumers. Following a stellar 1Q, US stock investors will focus on the March non-farm payrolls report this week. The attention will then turn to earnings season starting in the second week of April. (Bloomberg)

European stocks and the euro gained on expectations the region's finance ministers will agree to increase rescue funds at a 2-day meeting last Friday. The region's governments are preparing for a 1-year increase in the ceiling on rescue aid for indebted nations to 940b-euro ($1.25trillion). German retail sales fell 1.1% as rising energy prices sapped household purchasing power. (Bloomberg)

Macro News
Banking system remained well-capitalised in February with risk-weighted capital ratio (RWCR) and core capital ratio (CCR) at 14.8% and 13% respectively. BNM said net impaired loads remained stable and represented 1.9% of net loans. Loan loss coverage remained higher at 97.5%. International reserves were RM427b as at March 15, 2012, sufficient to finance 9.7 months of retained imports and were 4.1 times the short term external debt of the country. Net financing in February rose to RM1.354 trillion from RM1.344 trillion in January. The net financing comprised of banking system loans outstanding and private debt securities outstanding but excluede non resident and Cagamas. Outstanding banking system loans to businesses increase at a steady pace mainly supported by lending to the construction, manufacturign and real estate sectors. (The Edge Daily)

Corporate News
Financially-distressed Silver Bird Group Bhd may see a white knight emerging in the coming weeks although no turnaround plans have been put forward to the board of directors of the bread and confectionary maker. The members of the special committee that was formed to take charge of the daily operations of the company said they were finalising the forensic report results and the development of a restructuring plan. Meanwhile, parties whose names have been linked to the turnaround plans have denied that they were involved in any deal. An investment banker noted that any white knight coming in would have to resolve the company's debt woes. Moreover, the banker said Koperasi Permodalan Felda (KPF) might not be the party favoured by others to take over since the condensed milk joint venture with Silver Bird was one of the businesses that have come under scrutiny. (StarBiz)

UMW Holdings Bhd said the decision on whether to take its 22.3% owned associated WSP Holdings Ltd private could be known by as early as this month. Group CEO Datuk Syed Hisham Syed Wazir said WSP had formed a special committee to deliberate the offer from private equity H.D.S. Investment LLC to acquire WSP at USD0.60 (RM1.80) per share. China-based WSP is a manufacturer of oil country tubular goods (OCTG). Its products consist of seamless casing, tubing and drill pipes that are use for oil and natural gas exploration, drilling and
extraction, and other types of pipes and connectors. WSP is being affected by anti dumping and countervailing duties imposed by the US on OCTG products from China. (Business Times)

Kontena Nasional Bhd set a revenue target growth of 15% to 18% for financial year ending Dec 31, 2012, mainly from organic growth and new businesses. Last year Kontena managed to record a net profit of RM234mil. They expect the haulages and subsidiaries' business to maintain their contributions of around RM80mil to 90mil each to revenue this year. Its chief executive officer, Hood Osman quoted. (StarBiz)

Ho Hup Construction Company still faces hurdles to get its Bukit Jalil project off ground even though rulling by the High Court has ordered the company to buy out the other shareholders that own the rights of the land. Among the concerns raised was; financing ability to buy out Zen Courts Sdn Bhd, off its 30% share of Bukit Jalil Sdn Bhd (BJD), which own the right to develop 60-acres of land in Bukit Jalil. Ho Hup has appeal to the Federal Court, after the Court of Appeal upheld Malton Berhad's case of being a joint developer of the land. (StarBiz)

Petronas has extended its O&G support services contract with UMW Holdings Bhd by another 2 years in a deal valued at about USD105m (RM321.8m). UMW will continue to offer its jack-up drilling rig to Petronas Carigali Sdn Bhd until March 21, 2014. (Bernama)

Malaysia Reinsurance Bhd is currently accessing losses arising from the recent floods in Thailand but the
reinsurer does not expect it to have a negative impact on earnings. MNRB Holdings Bhd's president and CEO Mohd Din Merican said the numers are still managerable but MNRB expects its net profit to be lower than last year as an impact from the Thailand flood loss. (Business Times)

A group of disgruntled shareholder at Asia EP Resources Bhd who are seeking to replace the company's director with their own appointees at an EGM scheduled for Friday, has pledged to inject property and construction assets and turn around the loss-making IT firm. They are confident of delivering a profit in the current financial year ending Feb 28, 2013 (FY13) if other shareholders support the move. Ng is managing director of AgroFresh International Bhd and is one of the candidates proposed by the shareholders, led by Tian Ee Intertrade Sdn Bhd. Together, the group own 11% of asiaEP. (Sunbiz)

 Source:Jupiter Securities Research 02 April 2012