Market Thoughts

US stocks finished narrowly mixed in lackluster trading Friday, with the S&P 500 and the Nasdaq snapping their five-day winning streak, after a pair of weaker-than-expected economic reports discouraged buying. Meanwhile, European shares closed lower after U.S. growth figures missed expectations pointing to a potential slowdown in the world's biggest economy. On the local market, the FBM KLCI rose 4.95 points to 1711.29 points after failing to break the resistance of 1717 points. Following the bearish sentiment in global markets, the local market could post a negative performance today.

Stocks in trading interest are: Zecon as the group won a RM495m job to build a hospital in Kuching; Dayang and Petra Energy as the media reported that Dayang could bag as much as RM4b jobs while Petra Energy could secure RM2b contracts from the Pan Malaysia cluster of HUCC; and Crest Builder following the group signed a JV land development with Prasarana for a RM1b mixed development project in Dang Wangi LRT station.

Malaysia News & Highlights

Zecon gets RM495m hospital job

Zecon Bhd has been awarded a RM495 million contract by the Works Ministry with to build the 300-bed Petra Jaya Hospital in Kuching. Sarawak. The 42-month project is not expected to have any material impact on the earnings, net assets, share capital and substantial shareholders’ shareholdings of the company for the fiscal year ending June 2013.“However, it is expected to contribute positively to the company’s consolidated net assets and earnings in the subsequent financial years,” it told Bursa Malaysia last Friday. (Source: Business Times)

MBfH’s fate hangs in the balance

If Tan Sri Dr Ninian Lourdenadin could not get the remaining 0.42% to successfully privatize MBf Holdings, he has to rely on the wisdom of the regulators to see his dream through. Lourdenadin, through Tor Action Ltd, Nadin Holdings Sdn Bhd, Impact Action Sdn Bhd and Market Share Investments Ltd(joint offerors), managed to garner 568.8 million shares or 98.48% of MBfH as at April 16. This was 0.42% short of the 98.9% acceptance needed to take the company private. Last Friday was the last day of acceptance for the takeover offer, and at press time, it was still unknown whether Lourdenadin received the 0.42%. (Source: The Edge)

FGV mulls Papua New Guinea foray

FELDA Global Ventures Holdings Bhd (FGV), the world’s largest crude palm oil producer, may venture into Papua New Guinea to increase its plantation land. President and group chief executive officer Datuk Sabri Ahmad said Papua New Guinea’s government officials were impressed with FGV’s businesses and operations during their visit here recently.“They were impressed with the FGV model and have asked for our help to start oil palm plantations in Papua New Guinea. If all goes well, we will go there on a government-to-government level of cooperation.“We are conducting feasibility studies and technical due dilligence and if we decide to go there, we can easily start with an initial 10,000ha. The land is suitable for oil palm and can either be greenfields or brownfields,”Sabri told Business Times in an interview. (Source: Business Times)

Crest Builder inks deal with Prasarana

Crest Builder Holdings Bhd has signed a deal with Syarikat Prasarana Negara Bhd to undertake a mixed development project, with a gross development value of RM1.04 billion, at the Dang Wangi light rail transit (LRT) station. Its executive director Eric Yong said the development will feature a retail podium, small office and flexible office, office suites and luxury service apartments. “It The project is one of the first major projects that had been awarded by Prasarana’s ‘rail-plus-property’ projects programme involving about 50 mass rapid transit/LRT station sites,” he said in a statement. (Source: Business Times)

Lion Corp sells Lion Forest stake

Lion Corp Bhd has disposed of a 72.8% stake in Lion Forest Industries Bhd via subsidiaries.In separate filings with Bursa Malaysia, Amsteel Mills Sdn Bhd had disposed of a 53.39% stake, while Lion Industries Corp Bhd hived off 19.49%, which when combined represents 168.76 million shares out of its 231.6 million enlarged issued and paid-up share capital. (Source: The Star)

Salcon takes up balance 40% in S’pore firm

Salcon Bhd has acquired the remaining 40% stake in Singapore-based Salcon Darco Environmental Ptd Ltd form Darco Water Technologies Ltd for RM31.03mil. Upon completion of the acquisition, Salcon Darco Environmental will become Salcon’s wholly owned subsidiary. The group acquired the initial 60% stake in Salcon Darco Environmental last year for RM48mil. (Source: The Edge)

WCT embarks on new chapter

Construction, engineering and property development company WCT Bhd is looking to grow its hospitality and retail property segments. WCT chairman Datuk Ahmad Sufian said the company plans to own and operate more shopping centres.Besides Première Hotel here, it also owns three shopping malls, namely Paradigm Mall, soon-to-be-opened gateway@klia2 and Bukit Tinggi Shopping Centre. “We need a new structure to accommodate our new growth divisions in the hospitality and shopping mall sectors. Our operational needs have changed over the years and we need more flexibility in order to keep growing. “We have transformed from ‘just’ a construction and engineering outfit, and our corporate structure needs to change, too, to support the business and its activities,” Ahmad said after the company’s shareholders meeting here yesterday. (Source: Business Times)

Maybank units see RM7b total gross premium, contribution

Etiqa Insurance and Takaful Bhd, the insurance and takaful arm of Maybank Group, expects its total combined gross premium and contribution for the financial year ending December 31 to exceed RM7 billion. This would be the highest on record for Etiqa. (Source: Business Times)

UEM set for 2nd growth phase

UEM Land Holdings Bhd, which has been busy with various projects since its incorporation in 2008, is now poised for the second phase of growth. The company, a member of the UEM Group, which is wholly-owned by Khazanah Nasional Bhd, is the master developer of the 9,600ha Nusajaya development in Johor. "We have reached our tipping point with one or two more catalysts to come as part of our effort to be relevant in the global market," said its managing director and chief executive officer Datuk Wan Abdullah Wan Ibrahim. "This trend will continue as we have some 3,200ha of land in Nusajaya to be developed, which will keep us busy in the next few years," he said after signing an alliance agreement with Telekom Malaysia Bhd (TM) here yesterday. (Source: Business Times)

Oneworld factor lifts MAS passenger load 3.5% in Q1

Malaysia Airlines' (MAS) entry into the oneworld alliance, among other factors, has lifted loads, although not drastically. The airline saw a 3.5% rise in passenger loads for the first three months of 2013 to 76.6% from the 73% recorded a year ago. It also saw a 16.5% rise in revenue passenger km (RPK) over the said quarter as opposed to the same period last year. RPK is the average amount an airline makes for flying a paying passenger over a distance of one km. (Source: The Star)

Iwatani-SIG plans second gas plant

Iwatani-SIG Industrial Gas Sdn Bhd is investing in a second industrial gas production and refilling plant at Samalaju Industrial Park, Bintulu. SIG Gases Bhd executive director Lau Cheng Ming said the joint-venture company had decided to go ahead with the second plant project to supply liquid gases to customers in Sarawak, Sabah and Brunei. Iwatani-SIG is a 60:40 joint-venture company between Japan-based Iwatani Industrial Gas Pte Ltd and Southern Industrial Gas Sdn Bhd, a wholly-owned subsidiary of SIG Gases. “Iwatani-SIG has invested about RM18mil in its first industrial gas plant, administrative building and related facilities. The plant will only supply compressed gas via pipelines to Tokuyama Corp's polycrystalline silicon plant (phase II) in Samalaju Industrial Park,” Lau told StarBiz.He said the plant would have a production capacity of 1,000 cu m an hour when it began operation in two months. (Source: The Star)

'Carlsberg beer prices to stay'

Carlsberg Brewery Malaysia Bhd will not increase its beer prices this year, says managing director Soren Ravn. It was earlier reported that the last time Carlsberg increased its product prices was in May last year - by an average of three per cent. Ravn said he also does not see the company adding more premium products this year. The premium beer segment was a key contributor to Carslberg's financial results last year, with significant sales growth from locally-produced Asahi Super Dry and Kronenbourg 1664."The Carlsberg brand continues to be the preferred brand that has gained share in key accounts and delivered performance on target," he said. Increasing market share in the premium segment, coupled with steady growth of its flagship Carlsberg Green Label and new outlets, have further strengthened the brewer's position in a highly competitive market. (Source: Business Times)

JCorp targets up to 15pc growth in 2013

State investment firm Johor Corp (JCorp) is targeting a 10 per cent to 15 per cent growth this year. JCorp president and chief executive Datuk Kamaruzzaman Abu Kassim believes its plantation, property development, healthcare and quickservice restaurant businesses can meet the overall target. He said the group has decided to carve a new growth plan in its palm oil and other non-core plantation businesses.“This is supported by the flourishing property market spurred by Iskandar Malaysia, as well as potential involvement in the niche oil and gas servicing industry with the development of the Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor,” he said after unveiling JCorp’s 2012 Annual Report last week. Kamaruzzaman said the group is working to be debt-free, adding that its assets are now worth RM8 billion. Jcorp’s companies include plantation-based Kulim (M) Bhd, KFC Holdings (M) Bhd, QSR Brand Bhd, healthcare provider KPJ Healthcare Bhd and property developers Johor Land Bhd and Damansara Assets Sdn Bhd. (Source: Business Times)

Silver Bird planning new line of bread products and S'pore expansion

Despite its financial troubles, Silver Bird Group Bhd should break even operationally in about six months, said chairman Datuk Dr Gan Khuan Poh. “Our first priority is to break even so we can cover our costs, which would allow us to be a going concern,” he told the press after the company's AGM last Friday, its second since financial irregularities worth millions of ringgit were discovered in its books last year. Gan added that Malaysia's No. 2 bread and confectionary maker by market share was in the midst of creating a new line of bread products to be unveiled soon, and is even looking at expanding in Singapore, a market he said was not well managed previously.(Source: The Star)

Foreign News

U.S. Stocks Gain for Week on Earnings, Stimulus Optimism

U.S. stocks rose for the week, with the Standard & Poor’s 500 Index rebounding from the biggest drop since November, as companies beat earnings estimates amid speculation central bank stimulus will continue. The S&P 500 fell on the final day as data showed the U.S. economy grew less than forecast in the first quarter The S&P 500 rose 1.7 percent to 1,582.24 over the five days, after tumbling 2.1 percent in the previous week. The Dow Jones Industrial Average increased 165.04 points, or 1.1 percent, to 14,712.55. The S&P 500 is up 0.8 percent in April, poised for a sixth straight monthly gain, the longest stretch since September 2009.

Growth in U.S. Trails Forecasts as Defense Spending Falls

The U.S. economy grew less than forecast in the first quarter as a drop in defense outlays undercut the biggest increase in consumer spending in two years. Gross domestic product rose at a 2.5 percent annualized rate following a 0.4 percent fourth-quarter advance, according to data from the Commerce Department issued today in Washington. The median estimate of 86 economists surveyed by Bloomberg called for a 3 percent gain.

European Stocks Post Biggest Weekly Gain in Five Months

European stocks posted the biggest weekly gain in five months as investors speculated the region’s central bank will cut rates and as companies from BASF SE to Standard Life Plc reported better-than-expected results. The benchmark Stoxx Europe 600 Index rose 3.7 percent to 295.89 this week, its biggest weekly advance since November. The measure has rallied 5.8 percent so far this year as U.S. lawmakers agreed on a compromise budget and optimism grew that the world’s biggest economy is recovering.

European Leaders’ Softening on Austerity May Accelerate

Europe may accelerate a shift away from its austerity-first agenda this week as the new Italian government changes course and a German-Spanish investment pact underscores a renewed focus on combating record unemployment. Yesterday’s swearing in of Italian Prime Minister Enrico Letta ends a political deadlock nine weeks after voters rejected the country’s budget-cutting course. German Finance Minister Wolfgang Schaeuble, a champion of austerity, will travel to Spain today to unveil a plan aimed at spurring investment in Spanish companies. Later this week, the European Central Bank may also cut interest rates at a meeting.

Ebbing Inflation Means More Easy Money in Name of Stable Prices

Slowing inflation is giving central bankers scope to provide the world economy with more liquidity and lower interest rates for longer, all in the name of price stability. European Central Bank President Mario Draghi may cut his benchmark rate to a record low as soon as this week as ebbing price pressures let him deliver more stimulus to the euro area’s recession-riddled economy. Federal Reserve Chairman Ben S. Bernanke at a policy meeting that starts tomorrow might have more room to press on with asset purchases as the argument against that strategy is undercut by waning inflation risks. Their counterparts from New Zealand to Canada also have more reason to keep policy loose.

China Industrial Profit Growth Slows as Economic Recovery Wanes

Growth in Chinese industrial companies’ profits slowed in March, adding to evidence the nation’s economic recovery is losing steam. Net income increased 5.3 percent from a year earlier to 464.9 billion yuan ($75 billion), down from a 17.2 percent pace in the first two months, the National Bureau of Statistics said on its website on April 27. Profit in the first quarter rose 12.1 percent to 1.17 trillion yuan, it said.

(Source: Bloomberg)