Market Thoughts

US stocks closed in positive territory Tuesday, with the Dow and S&P 500 both closing at record highs, boosted by gains in the health care sector. Similarly, European shares closed higher, led by the telecoms sector, which was boosted by new reports that Vodafone, the world's second largest mobile operator, could be bought by Verizon Communications.

On the local exchange, the FBM KLCI rallied 17.39 points to 1685 points following a surge in the afternoon session. Following the recent uptrend, the index could be testing its resistance of 1700 points and attempt a new historical high.

Stocks in the limelight are: a) Boustead Holdings following its major shareholder, LTAT has clinched the RM2.1b 1MDB deal for the redevelopment of Bandar Malaysia; b) Gamuda and a consortium made up of MMC, Salcon and Ahmad Zaki are among the three bidders that have been shortlisted for the RM1.2b Langat 2 project as highlighted by the media; c) Bina Puri as market speculates that it would win the Prasarana’s property project in Brickfields worth RM1.2b; d) Ho Wah Genting, it plans to place out 53.73m new shares for expansion of the group’s tin-mining business; and e) N2N, the group has been chosen for the Philippines Stock Exchange’s online trading project.

Malaysia News & Highlights

1MDB awards RM2.1bil contract to Armed Forces Fund Board unit

1Malaysia Development Bhd (1MDB) has awarded an RM2.1bil contract to a unit of the Malaysian Armed Forces Fund Board (Lembaga Tabung Angkatan Tentera or LTAT) to develop eight sites for the relocation of the former Royal Malaysian Air Force (RMAF) base in Sungai Besi. The relocation was to facilitate the construction of the 200.32ha mixed-use Bandar Malaysia, for which 1MDB is the master developer, the state-owned strategic investment firm said in a statement. Construction work on Bandar Malaysia can only commence after the new facilities are developed and relocation completed. (Source: The Star)

Petronas Gas to issue RM5b sukuk?

Petronas Gas Bhd is planning Malaysia's biggest sukuk offer this year and has invited pitches from banks to arrange as much as RM5 billion of Islamic debt, three people with knowledge of the matter say. The yield on Malaysia's three-year AAA-rated notes climbed three basis points this year to 3.56 per cent, the highest since June 29, a Bank Negara Malaysia index shows. Petronas Gas plans to use the funds from the sukuk for two regasification plants, part of the government's US$444 billion (RM1.4 trillion) spending programme that aims to propel Malaysia to developed-nation status by 2020. (Source: Business Times)

TH Heavy Engineering wins RM196mil contract from Murphy Sarawak

TH Heavy Engineering Bhd (THHE) has won a contract from Murphy Sarawak Oil Co Ltd worth approximately RM196mil to build the topsides for platforms offshore Bintulu. In a filing to Bursa Malaysia on Tuesday, the company said it received a letter of award for the engineering, procurement, construction and commissioning (EPCC) for Permas Production (PR-PA) topsides at Murphy Sarawak Oil's SK311 Permas development contract. The EPCC contract will be undertaken by THHE's subsidiary, THHE Fabricators Sdn Bhd. The platform is approximately 95km offshore Bintulu, Sarawak. (Source: The Star)

Brahim's wins 5 more contracts

Brahim's Holdings Bhd, the only licenced manufacturer of refined sugar in Sabah and Sarawak, has secured inflight catering contracts from five leading airlines that will boost its revenue and net profit this year. Its 70 per cent subsidiary, Brahim's Airline Catering Sdn Bhd (BAC), formerly called LSG Sky Chef-Brahim's Sdn Bhd, secured the contracts from Air France, Philipines Airlines, Nas Air, Xiamen Airline and Turkish Airlines. This brings the total number of foreign carriers being catered by Brahim's to 36. (Source: Business Times)

Prasarana plans to unveil RM1.1bil property development at LRT extension

Syarikat Prasarana Negara Bhd, the state-owned public transport owner and operator, will announce two more mixed property development deals estimated to be worth RM1.1bil located along its light rail transit (LRT) extension project in Awan Besar and Puchong by the middle of this year. Besides these two locations, there are 11 more parcels of land earmarked for property development along its future and existing LRT stations, envisaged to boost its non-fare segment revenue. The 11 locations are in Jelatek, Kelana Jaya, Putra Heights, Pandan Jaya, Pandan Indah, Cempaka, Titiwangsa, Glenmarie, Kinrara, Bandar Puteri and Sentul. (Source: The Star)

Pharmaniaga in MoU to buy Indonesian firm for RM86.2mil

Pharmaniaga Bhd has entered into a memorandum of understanding (MoU) with Glenn Rahyu Adli Ariff to buy 100% of PT Errita Pharma, a privately held manufacturer of generic pharmaceutical products based in Bandung, Indonesia, for US$28mil (RM86.2mil). The company said in a statement to the stock exchange yesterday that it planned to acquire 40,000 shares in PT Errita Pharma from two vendors, Sutjipto Tjengudororo and Hendrijanto Surjosuseno. Under the agreement, Pharmaniaga, a 54.7%-owned unit of conglomerate Boustead Holdings Bhd, would buy 30,000 shares, or 75%, and Ariff 10,000 shares. Pharmaniaga's stake is worth US$21mil (RM64.7mil). (Source: The Star)

REDtone, TM sign ethernet deal

REDtone International Bhd, which eyes RM80mil in data revenue this year, has teamed up with Telekom Malaysia Bhd (TM) in a wholesale ethernet deal. In a joint statement yesterday, the companies said the agreement would provide REDtone instant access to all TM’s Metro-E infrastructure nationwide. “The collaboration is set to widen REDtone’s coverage for its data and broadband services and strengthen its grasp in the corporate and small medium industries/small medium enterprises segment where its data solutions are targeted at,” it said. (Source: The Star)

MSC updates Bursa on Indonesian unit contract

Malaysia Smelting Corp Bhd (MSC) reiterates that its mining and smelting investment in Indonesia will be adversely affected if it fails to get a contract extension there. The Indonesian government is still evaluating the contract extension of MSC's 75 per cent-owned PT Koba Tin. Although the contract expired on March 31 this year, PT Koba is still allowed to undertake production operations up to a maximum of three months from Monday, pending the evaluation. (Source: Business Times)

Ho Wah Genting plans to issue up to 53.727 million new shares

Ho Wah Genting Bhd (HWGB) plans to issue up to 53.727 million new shares in a private placement to independent third-party investors, to finance further tin mining exploration works and repay its bank borrowings. Based on an indicative issue price of 21 sen per share, the company said in its filing with Bursa Malaysia that it expected to raise gross proceeds of RM11.28mil. “The issue price shall not be at a discount of more than 10% from the five-day weighted average market price (WAMP) of HWGB shares immediately preceding the price-fixing date,” it said in a statement. (Source: The Star)

Foreign News

U.S. Stocks Advance Amid Factory Orders, Cyprus Deal

U.S. stocks rose, sending the Standard & Poor’s 500 Index to a record close, as concern over Europe’s debt crisis eased and factory orders topped forecasts. The S&P 500 rose 0.5 percent to 1,570.25 at 4 p.m. in New York. The Dow Jones Industrial Average climbed 89.16 points, or 0.6 percent, to 14,662.01, also reaching a record high. About 5.9 billion shares changed hands on U.S. exchanges, 6.6 percent below the three-month average.

European Stocks Climb to Two-Week High; Vodafone Gains

European stocks advanced the most in four weeks as trading resumed after a four-day weekend and a report showed U.S. factory orders increased in February. The Stoxx Europe 600 Index climbed 1.3 percent to 297.52 at the close of trading. The gauge added 5.8 percent in the first quarter as U.S. lawmakers agreed on a compromise budget and optimism grew that central banks around the world will continue stimulus measures to support an economic recovery.

Emerging Stocks Drop on China Earnings as Brazil Tumbles

Emerging stocks fell a second day as disappointing Chinese earnings and tensions on the Korean peninsula overshadowed gains in eastern European equities. Brazilian shares slumped the most in six weeks. The MSCI Emerging Markets Index lost 0.2 percent to 1,029.10 in New York. More than 55 percent of companies on the index that reported annual earnings this year trailed analysts’ estimates, data compiled by Bloomberg show. North Korea will restart all facilities at the Yongbyon nuclear site, according to the official Korean Central News Agency.

Euro Trades Near Five-Week Low Against Yen Before ECB Meeting

The euro was near a five-week low against the yen amid speculation the European Central Bank will use its meeting tomorrow to signal future economic stimulus. The yen snapped a decline as the Bank of Japan starts a two-day gathering at which it’s expected to increase monthly bond purchases to combat deflation. The Australian dollar remained higher following a three-day advance after global stocks gained, boosting demand for higher-yielding currencies.

(Source: Bloomberg)