MO R N I N G C O F F E E Thursday, April 12, 2012


Bursa Malaysia Trade Statistics
NA

U.S. and European market roundup
US stocks rebounded after an encouraging start to earnings seasons. Equities cut gains late in the session after the Federal Reserve said rising energy costs were a concern for economic growth. Sectors linked with economic growth led the way higher as their recent beaten-down prices made them attractive to bargain hunters. (Reuter)

European stocks posted modest gains on Wednesday, clawing back some of the steep losses seen in the previous  session, boosted by beaten-down miners and banking stocks. Also helping sentiment surrounding the secotr, HSBC upgraded its recommendation on European banks to 'overweight' from 'neutral'. (Reuter)

Macro News
The Asian Development Bank has projected the Malaysian economy to grow by 4% this year, with domestic demand as the anchor. Exports is ecpected to subdued in 2012 owing to torpid global trade and softer prices for export commodities. Private consumption will get support from government's 2012 budget to raise wages for the public sector and to make a 1-time cash payment to low and middle-income groups (53% of all households). Private investment will be subdued by weak global outlook. It expects the growth to quicken to 5% in 2013, lifted by an improved external demand. (Business Times)

Malaysia's industrial output, measured by the industrial production index (IPI), rose 7.5% in February from a year ago, as all three components of the gauge registered increases. The manufacturing and mining components grew 9.4% and 1.9% respectively, while the electricity portion was up 11.3% The IPI rose 9.1% MoM. The
manufacturing and mining components climbed 11% and 5.1% while electricity output was up 8.5%. (The Edge Daily)

Corporate News
Malayan Banking Bhd (Maybank) said it is keeping its options open in bidding for Al Amanah Islamic Investment Bank of the Philippines, the country's only Islam-oriented commercial bank, a Philippine's based newspaper reported. Al Amanah Islamic Bank is looking for a strategic partner through the sale of a 49% stake or the entire bank to a foreign entity with expertise in Islamic banks. Maybank already operates a commercial bank in the Philippines. Maybank Islamic Bhd, a member of the Maybank Group, is the largest Islamic commercial bank in the Asia-Pacific and 17th worldwide. It is also into Islamic insurance or takaful. The group aims to grow its Islamic business in markets like Indonesia and Singapore as part of its focus on the Asean region. (StarBiz)

Pharmaniaga Bhd is allocating some RM95m in capital expenditure this year. This will include spending for the company's expansion into the regional market, beginning with Indonesia. About TM30m is to be spent on setting up a manufacturing plant in Indonesia to meet the local demand for generic drugs. The rest of the capex will be used for the other regional expansion such as into Vietnam and Mynamar, upgrading its existing plants in Malaysia and improving its information system. (Business Times)

Several Indian companies are courting Scomi Group for a possible joint venture to set up a monorail related manufacturing plant in India, amid growing demand for the infrastructure service here. Group chief executive Shah Hakim Zain said a number of big names in India had approached Scomi for a possible tie-up. There was volume for such facility in India as the market size for monorail business in India was estimated at a whopping US$15b over five years, he said. However, he declined to reveal in which state Scomi planned to locate the plant. Listing its India unit on the Bombay Stock Exchange was another option for Scomi as it expanded its footprint in the region, said Shah. After successfully implementing India's first monorail project in Mumbai, the Scomi brand was well recognised and the company could capitalise on it, he said. To-date, besides the Mumbai project, Scomi Engineering has entered into a joint bidding agreement with Geodesic Techniques Pvt Ltd to build the proposed 59km monorail in Bangalore. It has also entered into a memorandum of understanding (MoU) with TATA Realty and Infrastructure Ltd, July last year, to pursue a modern mass transportation system project in Ludhiana. It also bid for monorail projects in Chennai and Delhi and, entered into a three year MoU with Engineering Projects (India) Ltd to execute projects for the construction of monorails and mass rapid transit system both in India and abroad. Back home, he said the Government's decision to revive the Putrajaya monorail project depended very much on the traffic growth in the administrative capital. (Starbiz)

BRD-Hicom Bhd has sent in a 5 man-strong post-acquisition team to evaluate and study the inner dealings in Proton Holdings Bhd, said an industry source. The team is there to understand how the Proton management operates. The culture of both the companies need to be integrated. In China, Proton is working on two deals, namely a potential tie-up with China's Hawtai Motor Group to invest in product development and vendor sourcing, and an on-going agreement with Jinhua-based Youngman Automobile Group. (Business Times)

Boustead Heavy Industries Corp Bhd's 51% owned subsidiary, Contraves Advanced Devices Sdn Bhd has secured an initial contract from Raytheon Company for the production and supply of components for the latter's Evolved Sea Sparrow Missile (ESSM). (Business Times)

MNRB Holdings Bhd is drafting a 5-year plan to drive the reinsurance group to the next level of profitability. The objective is to have a common vision, a better economies of scale and ultimately lead to better cost savings and better returns. (Business Times)


Source:Jupiter Securities Research 12 April 2012