China's trade drops well below expectations in October

BEIJING -- China's trade figures disappointed analyst expectations by a wide margin in October, reinforcing views that the world's second-largest economy will likely have to do more to stimulate domestic demand given stubborn softness in overseas markets.

While Beijing has already repeatedly cut interest rates and softened the exchange rate to prop up the economy, latest trade numbers suggest that a greater risk of a hard landing remains.

October exports fell 6.9 percent from a year ago, dropping for a fourth month, while imports slipped 18.8 percent, leaving the country with a record high trade surplus of $61.64 billion, the General Administration of Customs said on Sunday.

http://www.cnbc.com/2015/11/07/chinas-trade-drops-well-below-expectations-in-october.html

SLP Resources' 3Q net profit triples, declares 1.5 sen special dividend

KUALA LUMPUR (Nov 6): SLP Resources Bhd ( Valuation: 1.10, Fundamental: 3.00) saw its net profit triple to RM9.39 million for the third quarter ended Sept 30, 2015 (3QFY15) from RM3.13 million a year ago, underpinned by higher sales volume, higher end product mix of its flexible plastic packaging products and foreign exchange (forex) gains.

Earnings per share came in at 3.8 sen compared to 1.27 sen a year ago.

The surge in net income was attributed to higher sales volume, higher end product mix of its flexible plastic packaging products for export markets and approximately RM4 million gains in forex, it told stock exchange in a filing today.

However, revenue for the quarter came in 3.4% lower at RM42.66 million from RM44.16 million a year ago due to lower volume for domestic sales of plastic packaging and other polymer products.

In view of the better results, SLP Resources declared a special single-tier interim dividend of 1.5 sen, payable on Jan 8, 2016.

For the nine months ended Sept 30, 2015 (9MFY15), SLP Resources posted a 147.7% growth in net profit of RM20.26 million or 8.19 sen per share from RM8.18 million or 3.31 sen per share last year.

Revenue for the period fell 5.56% to RM126.61 million from RM134.06 million in 9MFY14.

Going forward, SLP Resources said it will remain vigilant especially on the volatility of crude oil and currency, particularly the ringgit, which could have a direct impact on the operational costs and profitability of the group.

It is also confident that the group is in a good position to achieve greater operational efficiency and profit margins expansion following the installation of a new extrusion line last month, which boosts production capacity, and ongoing automation in manufacturing processes.

"Coupled with the encouraging response and demand for the group's MaxInflax range of products for food packaging and hygienic packaging, the board is optimistic [about] delivering satisfactory financial results for the remaining quarter of the financial year ending Dec 31, 2015," it said.

Shares in SLP Resources closed two sen or 1.09% at RM1.86, for a market capitalisation of RM460.04 million.

Eye on stock: Felda Global Ventures

FELDA Global Ventures Holdings Bhd (FGV) shares touched an all-time low of RM1.18 on Aug 26 amid extended selling pressure.

Thereafter, prices turned sideways briefly on consolidation before the bulls embarked on a recovery journey in the wake of fresh bargain hunting interest, which witnessed this stock hitting a high of RM2.04 during intra-day session, the best since May.

Based on the daily chart, FGV has been trending up nicely the past couple of months, with the rising 21-day simple moving average (SMA) line supporting the trend.

However, more significantly, prices had penetrated the uppermost 200-day SMA on Thursday, also the first time in 17 months and more importantly, the breakthrough was accompanied by a bigger trading turnover

Theoretically, they suggest a bullish reversal. Going forward, prices are expected to sustain the upward thrust amid follow-through interest and should there be a pullback due to an overbought condition, it is viewed as a temporary process to avoid overheating, meaning investors can consider accumulating more on weakness, if there is any.

Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were fast reaching the top, but they show no sign of weakness just yet. A short-term buy signal was triggered late last month.

Mirroring the upward momentum, the 14-day relative strength index firmed from a reading of 52 on Oct 28 to settle at the 85-point level yesterday. In addition, the daily moving average convergence/divergence histogram expanded steadily in tandem with the daily trigger line to keep the bullish note. It has flashed a buy on Tuesday.

Technically, chart development appears pretty promising. Combined with the positive landscape on the indicators, FGV shares are poised to advance in the short term. Initial resistance is envisaged at the RM2.20-RM2.25 area. A breach of the RM2.50-RM2.55 band hurdle may clear the path for the bulls to challenge the heavy upper barrier of RM2.97-RM3 range. The recent breakout point of RM1.88 will now act as the immediate support and concrete floor is pegged at the 21-day SMA of RM1.76.

The comments above do not represent a recommendation to buy or sell.

http://www.thestar.com.my/Business/Business-News/2015/11/07/Eye-on-stock-Felda-Global-Ventures/?style=biz

Pestech consistent performance quarter after quarter

THE future looks bright for power turnkey contractor Pestech International Bhd, which has proven to be a consistent performer, quarter after quarter.

In its report for the final quarter ended June 30, 2015, the group said it was fortunate to have booked in a “comfortable amount” of orders to sustain and maintain its growth in the future, despite the economic uncertainty in the region.

Its shares closed up 19 sen at RM6.80 yesterday with 1.57 million shares traded between RM6.71 and RM6.81.

Its order book stood at RM723mil at the end of the quarter, and is expected to take two years to execute.

In April, Pestech’s 60%-owned subsidiary Diamond Power Ltd signed an agreement with Cambodia’s Mines and Energy Ministry and state-owned Electricite Du Cambodge for the ownership of the 230kV Kampong Cham- Kratie Transmission System project.

In July, the homegrown integrated electric power technology group announced it was teaming up with the Shandong Electrical Engineering & Equipment Group (SDEE) to develop the power infrastructure market in Cambodia.

The company said, in a filing with Bursa Malaysia, that it had signed a memorandum of understanding with the group to assist Electricite du Cambodge in upgrading its national grid operations and maintenance.

They were also tasked with improving the national grid’s efficiency and reducing the transmission lost.

Pestech said it expected the project development to cost US$92.21mil (RM352.9mil).

Kenanga Investment Bank analyst Teh Kian Yeong said Pestech was a stock to watch because its contract flow was strong and the company had consistently proven itself with its strong performance every quarter.

They have an outperform call on Pestech.

“Their tender book value is over RM1bil and they are looking to secure about RM700mil in new contracts.

“This could almost double their current order book,” he says.

Teh adds that the bulk of the group’s earnings were from their projects in the Sarawak Corridor of Renewable Energy (SCORE) and in Cambodia.

The new Build-Operate-Transfer (BOT) concession business that they secured in Cambodia, he says, would be a recurring source of income for the next 25 years,

“Once the construction is complete by 2018, they will continue to see a recurring income from managing the asset itself.

“This will give them a sustainable income for the years ahead,” he said.

Teh says the group was also looking to enter the Philippines market next, and has a good chance of success of breaking into the market.

Pestech recently changed its financial year, from 31 December to 30 June, covering 18 months from January 1, 2014 to June 30, 2015, after which it will end June 30 each year.

According to RHB Research Institute Sdn Bhd (RHB Research) analyst Ng Sem Guan, they were positive on Pestech mostly due to its business model.

They have a buy call on the group.

The group, he says, is in the right business, at the right place, and at the right time.

“They are operating in the South-East Asian region, which is still developing, at a time when there is increasing demand for power.

“If you look at their business model, they have been building their expertise locally, building transmission lines and substations.

“They then took this know-how and moved into less developed countries in the region, and they are now a big player in Cambodia,” he says.

Ng says the company was also expanding its business horizons and was stepping into rail-related infrastructure, and rail electrification.

“In railway projects, there is a lot of potential even locally, with the LRT and MRT projects, for example,” he adds.

With a strong track record in Malaysia, and having strong foothold in the Cambodian market, he said, it would be easier to enter other markets in the region as well.

He says Pestech has good prospects and that they were bullish on the group, going forward.

Although the last financial year had 18 months, due to the change in the group’s financial year, and FY16 will have only 12 months, Ng said their earnings assumptions were even higher for the next year.

This, he says, was on the back of the group’s outstanding order book that in excess of RM700mil at the moment.

In September, Pestech won its first ever 500kW substation project from Tenaga Nasional Bhd with the contract value of RM134.4mil for the Yong Peng East substation

THIS is your best trading strategy: Dennis Gartman

Closely-followed investor Dennis Gartman has given CNBC his best trading strategies, with the chances of a December rate hike by the U.S. Federal Reserve looking more and more like a flip of the coin.

Gartman, editor and publisher of The Gartman Letter, has repeatedly turned cautious on stocks this year, with several sharp drops for U.S. benchmarks. Nonetheless, he reiterated his belief that we are "still in a bull market" for equities until the "trend lines are broken."

"Those who continue to try to sell it short find themselves scrambling almost all the time," he said Friday.

http://www.cnbc.com/2015/11/06/this-is-your-best-trading-strategy-dennis-gartman.html

Earlier this year when Hibiscus announced no oil found in their spud in Norway, the company was not suspended. 

However, Hibiscus was suspended for 3 days before the company announced the successful discovery of oil in Oman. This was because the company need to do the flow test and also conduct analysis on the quality of the oil. Hibiscus also need to seek the approval of the relevant authorities before they can announced the discovery to the public.

Wishing Hibiscus fans all the best.

China enters bull market; time to dip your toe?

With the Shanghai Composite back into a technical bull market Thursday, traders and analysts have been contemplating whether the time is right to gain exposure to Chinese stocks after a rollercoaster year.

China's key Shanghai Composite trimmed gains on Thursday afternoon to close up 1.9 percent. From its low on August 26 it has now rallied 20.34 percent, entering a technical bull market. The Shanghai bourse also hit an intra-day high of 3,585 points Thursday, its highest level since August 21.

"The bulls are back in the China shop," Brenda Kelly, the head analyst at London Capital Group, told CNBC via email on Thursday.

http://www.cnbc.com/2015/11/05/china-enters-bull-market-time-to-dip-your-toe.html

Bonia up 2.65% on favourable research report

KUALA LUMPUR (Nov 5): Shares of Bonia Corporation Bhd (Bonia) rose 2.65% at mid-morning today, after AllianceDBS Research said Bonia was in position to trade higher and that Bonia had on Nov 4, crossed over the 76 sen hurdle to an intraday high of 76.5 sen, before settling near the day’s low at 75.5 sen (up 1 sen or 1.34%).

At 10.54am, Bonia rose 2 sen to 77.5 sen, with 750,500 shares done.

In its evening edition yesterday (Nov 4), the research house said a crossover of the 76 sen hurdle again, would likely see Bonia trading upward with the next upside target pegged between 81 sen and 90 sen.

The research house said that risk taking traders could establish a buying position at 75 sen, on a small pullback.

It said once a buying position is established, a stop loss at 74 sen level must be placed for risk capital protection, and this 74 sen is to be followed by a trailing stop loss strategy.

“If you are prepared to take a trading loss risk of RM10 (excluding brokerage) for RM60 — RM150 potential profit, you may acquire 1,000 shares with a capital amount of RM750, assuming buying order is filled at 75 sen,” it said

Support Line 5/11/2015

REDTONE International hit a four-month high of 73 sen during intra-day session amid follow-through bargain hunting following the recent breakout. Apparently, the moving average convergence/divergence histogram continues to expand upward against the signal line, suggesting more scaling in the pipeline. A breach of the 75-sen barrier is likely to clear the way for the bulls to challenge the upper heavy resistance of 90-sen mark in the near term. Initial support is resting at the 70-sen line and an additional floor is pegged at the 100-day simple moving average of 67 sen.

THREE-A Resources shares reversed from an early three-month high of RM1.17 to finish a shade lower owing to an apparent profit-taking activity. In spite of the easier close, indicators still are positive. Based on the daily chart, prices are expected to face stiff challenges at the RM1.26 level, of which a clear penetration would give investors the confirmation that this stock is indeed on a new leg of uptrend, enroute to test the upper strong resistance of RM1.40. Initial support is seen at RM1.10 floor, followed closely by the RM1-RM1.03 band.

YONG Tai firmed towards the short-term descending line of 72 sen amid extended bargain hunting interest. Technically, all the short-term indicators, such as the stochastic, the 14-day relative strength index and the moving average convergence/divergence histogram are painting a pretty encouraging pictogram, implying a positive breakout may be on the cards. If successful, the medium-term target to look for would be the RM1.15 level, a heavy resistance level. Current support is seen at the 21-day simple moving average of 61.5 sen and strong floor is lying at the 58-sen mark.

http://www.thestar.com.my/Business/Business-News/2015/11/05/Support-Line/?style=biz

Kwasa Land appoints Ahmad Zaki as RM257 mil project's development partner
KUALA LUMPUR (Nov 4): Ahmad Zaki Resources Bhd (AZRB) has been appointed as the development partner of Kwasa Land Sdn Bhd, to undertake a proposed residential development with an estimated gross development value (GDV) of RM257 million.

In a filing with Bursa Malaysia today, the construction outfit said its wholly-owned subsidiary Ahmad Zaki Sdn Bhd has received a letter of award (LoA) from Kwasa Land, in relation to the appointment.

According to the filing, the proposed development will sit on a 3.91-acre land in the Kwasa Damansara Township, which entails the building of 188 high-rise residential units.

The project is expected to have an estimated GDV of RM257 million.

"The LoA shall be subject to the execution of a Development Rights Agreement with Kwasa Land within 60 days of the LoA," it added.

AZRB expects the award to contribute positively to its future earnings and net assets.

Shares in AZRB closed unchanged at 64 sen, for a market capitalisation of RM306.11 million. -- theedgemarkets.com

Insider Asia’s Stock Of The Day: Kawan Food

Kawan Food Bhd ( Valuation: 1.10, Fundamental: 3.00)

insiderasia-logo_theedgemarkets

Frozen food manufacturer Kawan (Fundamental: 3/3, Valuation: 1.1/3) is a beneficiary of the weaker ringgit and lower commodity prices, which should boost its margins.

The recent weakness in the ringgit is a boon for Malaysian exporters — enhancing their earnings and export competitiveness. Kawan in particular, exports well over half its products. In addition, food manufacturers like Kawan will also benefit from lower costs, as agriculture prices have fallen sharply following China’s slowdown fears.

To recap, Kawan is a leading manufacturer and exporter of frozen food in Malaysia. The company’s products, including paratha, chapatti, naan, spring roll pastry and baked breads, are sold under the brands of Kawan, KG Pastry, Veat and Passion Bake.

Exports, mainly to the US and denominated in USD, accounted for a significant 58.1% of total sales in 2014, up from 54.7% in 2013. This ratio increased further to 61.6% in 1H2015.

Kawan should also benefit from lower global commodity prices. For instance, prices of wheat — a key raw material — have fallen by 25% over the past 12-months.

For 1H2015, net profit increased by an outsized 33.9% y-y to RM12.8 million, driven by stronger consumer demand and foreign exchange gains. Sales, meanwhile, rose 8.7% to RM81.6 million, due mainly to higher export sales.

Future growth will be underpinned by its capacity expansion exercise — to be completed by end-2015 — which will see overall production capacity increase by a significant 250% to 35 million kg per year.

With strong annual operating cash flows of RM27.3 million and net cash of RM32.8 million, equivalent to 16.1 sen per share; funding of the RM98.7 million capex programme should not be an issue. The company also plans to borrow RM40 million to part finance its capex.

The stock currently trades at a trailing 12-month P/E of 22.7 times and 2.9 times book. We expect earnings to grow by a three-year CAGR of 20%, which suggests its FY2017 P/E will compress to an attractive 15.1 times.

http://www.theedgemarkets.com/my/article/insider-asia%E2%80%99s-stock-day-kawan-food-0

Renewed buying interest emerges in MMSV, says AllianceDBS Research

KUALA LUMPUR (Nov 4): AllianceDBS Research said renewed buying interest had emerged in MMS Ventures Bhd (MMSV) ( Valuation: 2.10, Fundamental: 3.00) and that MMSV had on Nov 3 traded higher to 72.5 sen before settling near the day ’s high at 72 sen (up 3.5 sen or 5.10%).

In its evening edition yesterday, the research house said a crossover of the 73 sen hurdle would likely see MMSV trading upward with the next upside target pegged between 81 sen and 83 sen.

It said that risk taking traders could establish a buying position at 71.5 sen on a small pullback.

The research house said once a buying position is established, a stop loss at 70 sen level must be placed for risk capital protection, and this 70 sen is to be followed by a trailing stop loss strategy.

“If you are prepared to take a trading loss risk of RM15 (excluding brokerage) for RM95 – RM115 potential profit, you may acquire 1,000 shares with a capital amount of RM715 assuming buying order is filled at 71.5 sen,” it said.

Yongtai, VS & YSP Technical Analysis

http://fatta888.blogspot.my/

Weida @ RM1.79

WEIDA (7111) made a higher highs since 6/10 and it formed the 3rd higher high on 30/10 with huge spike up in traded volume, but unfortunately it was not able to break the resistance @ MYR1.78 and closed below that level @ MYR1.77 during the session ended.

If WEIDA is trading above MYR1.78 in the next trading days, foresee it should move further high to close up the gap down formed on 29/8/2015 @ MYR1.92.

http://fatta888.blogspot.my/

Luxchem: Earnings rose on forex gain

Results Update

For QE30/9/2015, Luxchem's net profit increased by 33% q-o-q or 118% y-o-y to RM13.0 million while revenue rose 5% q-o-q or 6% y-o-y to RM169 million. Improved bottom-line was due to higher profit before tax from the trading and manufacturing segment and higher realized forex gain due to the strengthening of USD.

Valuation

Luxchem (closed at RM1.58 last Friday) is now trading at a PER of 13.4 times (based on last 4 quarters' EPS of 11.76 sen). At this PER, Luxchem is deemed fairly attractive.

Technical Outlook

Luxchem is in an upward channel, with support at RM1.20 & resistance at RM1.70. It tested the upper line at RM1.65 last few weeks and poised to drift back down.

Conclusion

Luxchem could be a good stock for a long-term investment in view of its good financial performance. However, the good result could be rolled back if MYR strengthens in the near future. This plus the high valuation and overhead resistance should prompt some investors to take profit on this stock. I think that would be a good idea.

http://nexttrade.blogspot.my/

Prestariang unit bags RM20mil project from Higher Education Ministry

KUALA LUMPUR: Prestariang Bhd’s unit, Prestariang Systems Sdn Bhd, has secured a project worth RM20mil from the Higher Education Ministry (MOHE).

The project was for the supply of autodesk software services aligned with the industry based certification programme to public universities, polytechnics and community colleges under MOHE, over two years from Nov 2, 2015 until Nov 2, 2017, the company said in a filing with Bursa Malaysia.

“The services from Prestariang Systems to MOHE is a continuous initiative since 2006, in line with the ministry’s Higher Education Blueprint’s objectives and focuses.

“It is expected to contribute positively to the group,” it said. - Bernama

Semiconductor test equipment makers see strong start

GEORGE TOWN: Semiconductor test equipment manufacturers are projecting a strong start next year, despite worries that some major chipmakers are cutting back on capital spending.

Companies such as Pentamaster Corp Bhd, MMS Venture Bhd, and Elsoft Research Bhd are already seeing “higher-than-usual” orders from clients.

Pentamaster executive chaimran CB Chuah told StarBiz that the group had so far received orders for about RM15mil worth of semiconductor test equipment to be delivered in the first quarter of 2016 to be used in the smart device segment. “We can expect the first quarter for 2016 to improve by double digit percentage improvement over last year’s same period.

“All the orders for the first quarter 2016 should come in by the end of November, when we close the order book for the first quarter.

“The first quarter is usually a weaker period,” Chuah added.

For the final quarter of 2015, the group is shipping out over RM20mil worth of test equipment.

The 2015 fiscal year should see the group’s revenue improve by about 10% over last year’s result, according to Chuah.

Elsoft chief executive officer CE Tan said for the first and second quarters 2016, the group had orders in hand currently for about RM10mil worth of test equipment to be delivered to customers in the automotive and smart device industries.

“The first quarter of 2016 should be as strong as last year same period, when we registered RM10mil in sales.Orders for the first quarter 2016 are still coming in, as the first quarter order book closes Dec 31,” he said.

Tan said the second quarter of 2015 was slow for the group.

“Orders for the second half 2015 picked up and we ended up with over RM30mil worth of test equipment for delivery to customers in the smart devices, automotive, and general lighting industries.

“Since the performance of 2014 was the best in the group’s history, we can expect to improve only slightly over the 2014 results this year,” he added.

MMS managing director TK Sia said about RM9mil worth of orders for test equipment had been received for the first quarter of 2016.

“We are still getting orders in until Dec 31, when we close our order book for the first quarter of 2016.

“The orders were largely from the automotive industry, which is expected to generate about 45% of the group’s revenue for 2016, up from 30% projected for 2015.

“The orders for smart device test equipment should come in the second half of 2016,” he said.

Sona Petroleum buying 100% of Stag Oilfield for RM215m

KUALA LUMPUR: Sona Petroleum Bhd is buying the 100% stake in the Stag Oilfield, offshore Western Australia, for US$50mil (RM215.2mil), which will be its qualifying acquisition.

It said on Monday it was buying the production licence WA-15-L and pipeline licence WA-6-PL (Stag Oilfield) and the associated assets from Quadrant Northwest Pty Ltd and Santos Offshore Pty Ltd.

Sona said the Stag Oilfield is a producing oilfield in the Dampier sub-basin of the Carnarvon Basin, offshore Western Australia and in a water depth of 50 metres and 60km offshore.

Santos owns 66.67% of Stag Oilfield while the operator Quadrant owns the remaining stake.

Sona said the purchase consideration would be satisfied in cash and funded via Sona Petroleum’s internal funds raised from its initial public offering held under a trust account (net of taxes payable) amounting to RM525.6mil as at Oct 30, 2015.

Stock With Momentum: Eupe

Property developer Eupe (Fundamental: 1.25/3, Valuation: 1.4/3) triggered our momentum alert on active trade last Friday, closing unchanged at 85 sen.

Primarily involved in property development and construction, Eupe is a leading township developer in Sungai Petani, Kedah. The company also owns and manages the 18-hole Cinta Sayang Golf and Country Resort in Sungai Petani and built the town’s first high-end condominiums within the resort.

Eupe is venturing into the Klang Valley through joint venture with landowners. It is scheduled to launch the first tower of its Bangsar South development, ‘Novum’, this month, with the other two towers by mid-2016. The project has total gross development value (GDV) of RM550 million. Its next project — ‘The Weave’ in Cheras — with GDV of RM300 million, is expected to be launched in early-2016.

For 1HFYFeb2016, revenue fell 37.3% y-y to RM58.5 million, while net profit dropped 57% to RM1.8 million, due mainly to lower revenue from the property construction segment

http://www.theedgemarkets.com/my/article/stock-momentum-eupe

Stock With Momentum: Weida

WEIDA (Fundamental: 1.7/3 Valuation: 2.4/3), triggered our momentum algorithm for the first time last Friday. The stock closed 9 sen or 5.4% higher at RM1.77 on heavy volume, despite absence of significant developments.

Sarawak-based WEIDA is primarily involved in the manufacturing of polyethylene-based building materials, and construction of telecommunication towers and water & wastewater treatment plants. For FYMar2015, the manufacturing and construction segments accounted for 54.3% and 26.5% of revenue, respectively. It is also involved in property development, sewage treatment, waste management and quarry operations.

For 1QFY2016, net profit surged 145.1% y-y to RM9.4 million on the back of a 48.7% revenue growth to RM102.9 million. This was mainly contributed by higher sales from construction and property segments. Net debt stood at RM17.5 million at end-June, compared to a net cash of RM94.6 million in FY2013.

http://www.theedgemarkets.com/my/article/stock-momentum-weida

Eye on stock: Gadang Holdings

GADANG Holdings Bhd had went through a round of relatively long correction phase recently (lasting 13 months) which saw its shares falling to a low of RM1.13 on Aug 25, the worst level since February, last year.

However, just when it appeared defenceless and in great danger of dipping further into the bearish area, a fresh bout of bargain-hunting interest emerged unexpectedly from the sidelines and that has helped lift prices higher. Since then, Gadang never looked back.

This stock gapped up in the morning and scaled to a five-month high of RM1.67 during intra-day session but what is more noteworthy is the positive breakout of the 15-month-old descending line recently, which indicates a bullish turnaround.

Going forward, Gadang is expected to firm on sustained bargain-hunting activity and should there be a pullback due to overbought reason, investors can consider accumulating more, provided the short-term 14-day simple moving average (SMA) line, now resting at the RM1.48 and rising, continues to support prices.

Initial resistance is envisaged at the RM1.70 mark, of which another breakthrough would pave the way for a re-test of the previous rally peak of RM2.04, set on July 24, last year.

Elsewhere, the daily slow-stochastic momentum index remained bullish despite fast reaching the overbought area. It had issued a buy at the 60% level in mid-week.

On the uptrend, the 14-day relative strength index climbed from the mid-range on Oct 20 to settle at the 81-point level yesterday.

Meanwhile, the daily moving average convergence/divergence histogram extended the upward momentum in tandem with the daily signal line to retain the bullish note. A buy call was issued on Sept 8.

Technically, indicators are painting a growing overbought condition, implying a correction may be around the corner, but we reckon there is still room for prices to advance on bullish extended-mode, as interest in Gadang still is strong.

To the downside. the trailing exit is pegged at the 21-day SMA of RM1.45. — By K.M. Lee

The comments above do not represent a recommendation to buy or sell.

http://www.thestar.com.my/Business/Business-News/2015/10/31/Eye-on-stock-Gadang-Holdings/?style=biz

MRCB on a roll

Its expansion drive has not gone unnoticed, but raises concerns on gearing

IF a list of stocks in vogue is to be made, Malaysian Resources Corp Bhd (MRCB) can count itself as one among them. The property and infrastructure construction company has recently come into focus for its expansion drive at a time when market sentiment is soft.

On Wednesday, it surprised the market with three job wins worth RM4.8bil – giving it long-term earnings visibility and moving it into the bigger league of business.

These comprise two contracts to upgrade facilities at the National Sports Complex (NSC) in Bukit Jalil for RM1.6bil and to develop a commercial project named Kwasa Utama in the Kwasa Damansara township for RM3.1bil.

It has also proposed a 70:30 joint venture (JV) with Cyberview Sdn Bhd to develop 53.4 acres of land in Cyberjaya, Selangor, in a project called Cyberjaya City Centre (CCC), with its 70% stake amounting to RM269.5mil.

MRCB has been on a roll of late. Earlier in September, it was awarded the RM9bil LRT3 construction project in a JV with George Kent Bhd that has a potential of about RM500mil in management fees alone. Expectations are that more new awards could be coming its way next year, say analysts.

There is no doubt that MRCB is a stock in transformation, following a new management team two years ago that saw Gapurna Sdn Bhd, a vehicle of entrepreneur Tan Sri Mohamad Salim Fateh Din, emerging as a shareholder in the once predominantly government-linked stock.

Gapurna has a 16.7% stake, while the other shareholder is the Employees Provident Fun (EPF) with 38.4%. Pilgrim fund Lembaga Tabung Haji is another major shareholder with a 10.1% interest.

The entry of Gapurna with its proactive approach has given the stock, which was plagued by legacy issues, a new lease of life.

Since then, the company has been on a restructuring mode to make it more property-centric. It divested its 30% stake in the Duta-Ulu Kelang Expressway for RM230mil, unlocked the value of its first investment property with the injection of Platinum Sentral into Quill Capita Trust Bhd for RM740mil, and bought choice land parcels in the Klang Valley such as MX1 in Kwasa Damansara and the German Embassy site for a total of RM1.08bil.

These developments have spurred a rebound in MRCB’s share price, which had been on a downtrend from the beginning of the year to hit a low of 80 sen on Aug 26. Since news on its win as the project delivery partner for the RM9bil LRT3 project, its shares have been steadily on the uptrend, gaining over 58.7% in a span of about 43 days. It touched RM1.27 at last look for a market capitalisation of RM2.25bil and trading at a price earnings of 7.32 times.

This price level is still a 24-sen discount to the consensus target price of RM1.51, according to Bloomberg information.

http://www.thestar.com.my/Business/Business-News/2015/10/31/MRCB-on-a-roll/?style=biz

China ended one child policy. That’s good impact towards commodities prices and stocks markets
Posted in Uncategorized on 29/10/2015 by J&J 35

Adding few hundreds millions young babies will create a new market demand for both China and the world. More demand in everything on earth. China stocks and commodities look to be positive in next 10 to 20 years.

Market Outlook as at October 29, 2015

FBMKLCI has once again dropped below the neckline of the head and shoulders top at 1680. On October 7, we had noted that the index managed to climb back above the neckline (for the chart, go here). That earlier recovery (above the neckline) meant that the prior interpretation of a market that had made a top was in doubt. However, with the index once again trading below the neckline, the interpretation that the market has made a top reassert itself.

If the two indices do not recover above their respective neckline in the next 1-2 day(s), the negative interpretation would return, i.e. the market has made a top and will likely to continue to drift lower in the weeks and months ahead. Thus, it is important that we watch the market closely and take the necessary corrective action to adjust for the latest market outlook

http://nexttrade.blogspot.my/

MRCB announces three major deals in one day

http://www.thestar.com.my/Business/Business-News/2015/10/29/Triple-win/?style=biz

Northport operator NCB swings back to profitability

KUALA LUMPUR: NCB Holdings Bhd, which MMC Corp Bhd is eyeing to take private, returned to the black in the third quarter ended Sept 30 with a net profit of RM10.89mil against a loss of RM2.3mil a year earlier.

Announcing its unaudited interim results to Bursa Malaysia, the port operator said this was achieved on the back of 9.5% higher revenue of RM218.4mil.

Its port operations’ revenue grew 17.6% year-on-year to RM164.9mil, with pre-tax profit tripling from RM8.1mil to RM25.7mil.

In contrast, the logistics operations saw a 9.8% drop in revenue to RM53.5mil and continued to make a pre-tax loss, albeit a lower loss of RM7.7mil against RM10.6mil a year earlier.

NCB said container business, being the main contributor of revenue for port operations, recorded an increase in containers handled of 733,213 20ft equivalent units (TEUs) from 644,272 TEUs.

The loss in Q3 of last year was due partly to a 79.5% year-on-year plunge in pre-tax profit from the port operations to RM8mil. Containers handled had decreased as NCB was upgrading its wharf facilities and operating expenditure rose 19.6%. It also did not help that logistics arm Kontena Nasional widened its pre-tax loss by 88.7% to RM10.6mil.

For the nine months to Sept 30, 2015, NCB’s net profit soared to RM29.5mil from RM5.3mil in the corresponding period last year.

Support Line - The Star 29/10/2015

COMFORT Gloves rebounded from a 7-month low of 67 sen on Sept 2 to a high of 82.5 sen on Oct 5 on renewed bargain hunting interest before turning sideways. The trend ahead is pretty straightforward. A crack of the 76-sen floor, followed by a breakdown from the 50-day simple moving average (SMA) of 74 sen is likely to drag prices back to recent lows of 67 sen on extended correction. On the opposite, a breach of the 82.5 sen barrier would propel the shares up to the 95-sen mark. The next upside objective would be to challenge the previous major rally peak of RM1.10.

PERSTIMA shares scaled to a high of RM5.10 during intra-day session, the best since July last year on continuous buying momentum. Technically, the daily moving average convergence/divergence sustained the upward thrust against the daily signal line to stay bullish, implying there may be more advances in store. Initial resistance is expected at the RM5.15 level. A major breakout of the next hurdle of RM5.30 would see the bulls becoming more aggressive. Immediate support is seen at the RM4.85-RM4.88 range and strong floor is pegged at the 14-day simple moving average of RM4.72.

SOLUTION Engineering re-test the historical peak of 42 sen in early session before paring gains to finish at 39 sen, up 1.5 sen. Based on the daily chart, the bulls must move to the uncharted territory quickly. Otherwise, prices may fall on correction after forming a “double-top” pattern, with initial support resting at the 21-day SMA of 35 sen. A slip below the lower 200-day SMA of 30.5 sen will have a negative outlook going forward.

The comments above do not represent a recommendation to buy or sell.

Affin Hwang: Upside bias for local stocks in Q4 on US quantitative easing bet

KUALA LUMPUR: Malaysia's stock market is expected to rise in the fourth quarter this year in anticipation of a further delay of the US rate hike due to continued weakness in the economic data, said Affin Hwang Asset Management Bhd managing director Teng Chee Wai.

Speaking at a market outlook briefing for Q4, he said the prolonged weak economic environment in the US has fuelled speculation that the Federal Reserve may be looking to introduce a new round of quantitative easing (QE).

"The weak data means a much prolonged cycle of QE and more drugs are put into the system to keep it alive," he noted.

While the revival of ValueCAP Sdn Bhd with an injection of RM20 billion could provide support to the market, he said external developments play a more significant role in influencing the fund flows

- See more at: http://m.thesundaily.my/news/1596047#sthash.40FmAyC5.dpuf

UMW-OG bags jack-up drilling rig contract from Petronas Carigali

KUALA LUMPUR: UMW Oil and Gas Corp Bhd’s (UMW-OG) unit, UMW Offshore Drilling Sdn Bhd, has been awarded a contract for the provision of a jack-up drilling rig from Petronas Carigali Sdn Bhd. 

In a filing with Bursa Malaysia, UMW-OG said it would assign its UMW Naga 7 for this contract. 

“The contract is for seven firm wells with extension option of one plus one  well and the contract will commence on Oct 15, 2015,” it said.

UMW Naga 7 is a premium independent-leg cantilever jack-up rig that has a drilling depth capability of 30,000 feet and a rated operating water depth of 375 feet.

UMW-OG is a Malaysian-based multinational provider of drilling and oilfield services for the upstream sector of the oil and gas industry. - Bernama

Insider Asia’s Stock Of The Day: ES Ceramicts Technology

ES Ceramicts Technology Bhd ( Valuation: 0.80, Fundamental: 2.55)

The rubber glove industry will be going through a major expansion exercise over the next five years. This comes as local glove giants aim to boost their annual production capacity, with the top four players — Top Glove, Hartalega, Kossan and Supermax — collectively announcing plans to spend over RM3 billion as part of their long term capacity expansion plans.

Top Glove will be adding annual capacity totaling 7.8 billion gloves over the next two years. Over the much longer term, Hartalega plans to add annual capacity of 28.4 billion gloves, Kossan 22.0 billion gloves and Supermax 10.8 billion gloves.

These major expansion exercises will drive demand for ceramic hand formers, which are used in the glove industry. ES Ceramics (Fundamental: 2.55/3, Valuation: 0.8/3) is one such company that focuses on producing hand formers for production of medical gloves, household gloves, surgical gloves and industrial gloves.

Earnings for FYMay2015 jumped more than two-fold to RM5.6 million, due to better sales mix of premium products and production efficiency.

Notably, it has made a comeback since recording losses in FY2011. The losses in FY2011 were due to one-off charges arising from goodwill impairments and inventories written-off, which came after it underwent an internal restructuring to improve operational efficiencies and focus on higher margin products.

Between FY2012–FY2015, revenue grew from RM19.9 million to RM25.0 million. Meanwhile, net earnings grew at a faster pace from RM1.1 million to RM5.6 million, as margins improved. Its EBITDA margins rose from 22.1% to 29.3%.

In the same period, the company generated sturdy free cash flows, ranging between RM4.6–7.7 million. This has allowed it to build-up a strong balance sheet, with gearing pared from 37.0% in FY2012, to net cash of RM13.8 million as end-May 2015.

The stock trades at trailing P/E of 15.1 times, which is attractive relative to its growth, while the listed glove companies are trading at 16.0-40.4 times earnings.

ManagePay climbs 3.57% following partnership with Fusionex

KUALA LUMPUR (Oct 27): Shares of ManagePay Systems Bhd ( Valuation: 0.00, Fundamental: 1.30) rose as high as 3.57% on the back of its partnership inked with Adv Fusionex Sdn Bhd (Fusionex) for the development of services related to big data analytics and e-payment.

At 10.26am, the stock gained as much as one sen to 29 sen before settling at 28.5 sen. A total of 4.88 million shares were traded.

Year-to-date, the stock has gained 27.27%, bucking the trend of the FBM KLCI which has declined 2.69%.

According to The Edge Research, the stock is currently trading at 3.83 times book with trailing 12-month P/E of 139.61 times.

Yesterday, ManagePay announced that it has signed a partnership agreement with Fusionex for the development of services related to big data analytics and e-payment.

ManagePay said Fusionex will provide ManagePay and its clients with data analytics, big data tools and platform support, while ManagePay will provide electronic money (e-money) and electronic wallet (e-wallet) services to clients of Fusionex.

The e-money and e-wallet services are slated to be rolled out at the end of the year.

Fusionex is a subsidiary of Fusionex International Plc which is listed on the London Stock Exchange.

The partnership will also explore the potential of a jointly developed payment gateway integrated with a big data analytics platform for ManagePay and Fusionex's clients, ManagePay said.

ManagePay group managing director and chief executive officer Chew Chee Seng had said the collaboration with Fusionex will provide deeper insights to organisations that require big data analytics for customer spending patterns or product mix trends according to market or region.

ManagePay had said the partnership is in line with its business strategy to develop a new scalable business earnings stream.

It also allows ManagePay to jump start into a broader ecosystem in cashless transactions, under the e-payment initiatives set out by Bank Negara Malaysia.

Budget 2016 boosts Sarawak shares led by KKB Engineering

PETALING JAYA: KKB Engineering Bhd leads the pack of Sarawak-based counters that reacted quite positively post-Budget 2016, adding 11 sen or 6.75% at RM1.74 at the end of trading yesterday.

The price gains seen in a majority of Sawarak-based counters, although not by double-digit was a stark contrast to the benchmark FBM KLCI that shed 4.14 points or 0.24% at 1,706.79, nearing to the resistance level of 1,700.

The state is a major beneficiary of several infrastructure and social incentives in the recently announced Budget 2016.

Following on the heels of KKB, Cahya Mata Sarawak Bhd gained 17 sen or 3.31% at RM5,30, Sarawak Plantation Bhd added 2 sen or 1.06% at RM1.90, Sarawak Oil Palms Bhd increased by 2 sen or 0.41% at RM4.88 and Shin Yang Shipping Corp Bhd climbed by a sen or 2.82% to 36.5 sen at the end of trading yesterday.

On the other hand, port operator Bintulu Port Holdings Bhd and Hock Seng Lee Bhd were traded unchanged.

Global stock markets rallied after China cut rates on Friday for the fifth time this year, just a day after the European Central Bank signalled that it was ready to increase the scale of its stimulus measures.

Sawarak Cable Bhd shed 4 sen or 2.61% at RM1.49, Sarawak Consolidated Industries Bhd was down by 0.5 sen or 0.67% at 7.45 sen and Naim Holdings Bhd slid by 2 sen or 0.91% at RM2.18.

Budget 2016 that was announced last Friday saw RM42mil allocated for the construction of Mukah Airport in Sarawak.

Additionally, the Sarawak Pan-Borneo highway spanning 1,090km linking Sarawak and Sabah is expected to be completed in 2021 with a total cost of RM16.1bil. The PanBorneo Highway will be toll free.

Also, the national minimum wage will be increased from RM900 to RM1,000 per month for Peninsular Malaysia and from RM800 to RM920 per month for Sabah, Sarawak and Labuan, effective from July 1, next year.

“We deem this to be negative for planters, as a higher minimum wage will raise the planters’ costs of production unless it is offset by productivity gains.

“This is because labour costs form as much as 30% to 50% of the estates total costs and some estates workers are paid the minimum wage.

“The 11% to 15% rise in minimum wage could raise costs of production for estates by 3% to5%, leading to a potential cut in earnings of pure planters by as much as 10% for a full-year impact,” said CIMB Research.

Support Line 27/10/2015

OLDTOWN recovered moderately from the three-year lows of RM1.26 on Sept 1 in a generally range-bound trading. Technically, this stock remains in correction mode, but it has the potential to come out of the doldrums, with the moving average convergence/divergence sustaining the upward expansion against the signal line after triggering a buy signal on Sept 11. The immediate resistance is seen at the RM1.51 barrier, followed by the RM1.60 mark. A clear penetration of the upper hurdle of RM1.83 would see the bulls becoming more aggressive. Initial support is pegged at the RM1.30-RM1.31 band.

MISC shares rebounded back to within striking distance of the previous rally high of RM9.39 on April 24, as investors seek bargain buys following the recent correction. Apparently the stochastic and the 14-day relative strength index are ticking up while the moving average convergence/divergence histogram retains the buy signal, suggesting a positive breakout may be on the cards. If successful, the near-term objective would be to re-visit the historical peak of RM10.04, established on Dec 7, 2007. Support is anticipated at the RM8.96 and RM8.85, which is the 14-day and 21-day simple moving average lines respectively.

TAS Offshore mended to a six-month high of 76.5 sen during intra-day session on renewed buying momentum. Based on the daily chart, a positive breakout of the uppermost 200-day simple moving average was sighted last Friday and theoretically, it would open the windows for more scaling until extreme overbought condition kicks in. Current resistance is expected at the 80 sen-82 sen range, followed by the RM1-RM1.05 band while support is lying at the 63 sen level.

Stocks in spotlight after unveiling of Budget 2016

PETALING JAYA: Although there are several big projects under Budget 2016, analysts say investors trying to maximise profits should bank on companies with the best track record.

According to analysts, newly-listed Sunway Construction Bhd is a frontrunner to secure a contract to expand the Bus Rapid Transit (BRT) project. It had completed the first dedicated elevated bus-lane system in Bandar Sunway here.

The Government had announced two new BRT projects which would cost RM2.5bil.

The RM1.5bil BRT project between Kuala Lumpur and Klang would be implemented next year, while RM1bil would be allocated for the BRT project in Kota Kinabalu.

Construction and infrastructure development formed the thrust in the Government’s budget to boost domestic growth amid slacking external demand.

CIMB Research noted that the total number of projects in Budget 2016 amounted to RM85bil, with the BRT line in Kota Kinabalu and the RM900mil traffic dispersal scheme in Jalan Tun Razak, Kuala Lumpur among the surprises.

With new awards expected to be given out for the ongoing Klang Valley Mass Rapid Transit and the expansion of the Light Rapid Transit, IJM Corp Bhd and Gamuda Bhd are the key beneficiaries.

But while the construction sector continued to hog the limelight, smaller companies in the technology sector are also in the running to secure lucrative projects.

A plan by the Government to launch online visa application by the middle of next year had provided opportunities for major technology solution providers.

Datasonic Group Holdings Bhd, a supplier of visa and pass system to the Immigration Department, is said to be a strong contender for the project.

Other companies that might benefit included MyEG Services Bhd, a concessionaire for the Malaysian E-Government MSC flagship application project and Scicom (MSC) Bhd, which is the sole agent of processing student visa for the Education Ministry.

The e-visa system will initially cover tourists arriving from seven countries – China, India, Myanmar, Nepal, Sri lanka, the United States and Canada.

The move is part of the Government’s strategy to attract 30.5 million tourists, expected to contribute RM103bil to the economy, next year.

Some company are also direct beneficiaries from the Government move to nurture targeted industries.

For example, aerospace companies in the maintenance, repair and overhaul (MRO) business are now eligible to apply for a suspension of the goods and services tax on imported parts.

This could benefit Destini Bhd, a defence contractor that recently saw the Government taking up a 24.75% stake in the company in September. Destini provides MRO services to the military.

Meanwhile, Alliance Research described Budget 2016 as “market neutral” and would be reviewing its end-2015 KLCI target of 1,520 for an upgrade on investors looking to a delay in the US rate hike and concerns over domestic political uncertainties.

“With the KLCI rebounding strongly over the past month, it is currently trading at its historical mean price-to-earnings valuation of 15.2 times. But earnings risk still lingers while noises from domestic politics will likely return in the months ahead. As such, we continue to advise caution going forward, selling into strengths and looking for opportunities in dips,” Alliance Research said.

It said export-oriented technology players and construction companies remained its core “buy” ideas given more visible earnings growth trajectory. Among its top picks in these sectors were Gamuda, Globetronics Technology Bhd and Muhibbah Engineering Bhd.

“With the Government’s announcement that government-linked companies and government-linked investment companies are encouraged to invest domestically, we believe beaten down big cap stocks deserve a re-look. As such, we include Public Bank Bhd, Hong Leong Bank Bhd and Tenaga Nasional Bhd into our top buy ideas,” it added.

AllianceDBS Research - Technical Buy 

3A @ RM1.05
TP 1.13 - 1.15 
Cut Loss 0.99

U are most welcome bro Tj & Coldrisks ;)

Shipbuilding, Repair Industry To Generate RM6.35 Bln In GNI

KUALA LUMPUR -- The Shipbuilding and Ship Repair (SBSR) industry in Malaysia is expected to generate RM6.35 billion in Gross National Income (GNI) and provide 55,000 employment opportunities by 2020. In 2013, the industry generated a turnover of about RM8.35 billion and provided about 32,500 jobs. Minister in the Prime Minister’s Department Datuk Mah Siew Keong said the industry is gaining traction as a new growth area and the government is fully committed to positioning Malaysia as a key global maritime player by 2020.
- Bernama

TAS: The recovery begins...

Results Update

For QE31/8/2015, TAS's net profit jumped by 285% q-o-q or 60% y-o-y to RM8.7 million on the back of relatively unchanged reve nue of RM76 million. The sharp jump in bottom-line was attributed to gain from foreign exchange due to the strengthening of the USD & SGD against the MYR

Valuation

TAS (closed at RM0.51 yesterday) is now trading at a current PE of 6 times (based on annualized EPS of 9 sen). We do not know how much of the earning of QE31/8/2015 will recur as it includes a substantial forex gain. Assuming the recurring earnings accounted for 2 sen EPS out of 5 sen reported EPS, then its recurring annualized EPS would be 8 sen. At this "adjusted" EPS, TAS's PER would be 6.4 times. Thus, TAS is deemed fairly attractive.

Technical Outlook

TAS had a sharp drop from a high of RM1.50 in July 2014 to a low of RM0.40 in August this year. It was at this time that it cracked below the long-term uptrend line, SS at RM0.40. Since then, the share price has recovered above its strong resistance of RM0.50. To rise further, TAS needs to break above the intermediate downtrend line, RR at RM0.52-0.54.

Conclusion

Based on imporved financial performance, relatively attractive valuation & mildly positive technical outlook, TAS is considered a good stock for a recovery play.

http://nexttrade.blogspot.my/

Eye on stock; SMRT Holdings

A MASSIVE rally pushed SMRT Holdings Bhd to a new all-time high of 94.5 sen on Aug 15 last year.

Thereafter, prices retraced to the near 200-day simple moving average (SMA) of 53.5 sen in a short correction process owing to apparent profit-taking, followed by a spike in the wake of fresh buying interest.

However, a futile attempt to beat the historical peak triggered another bout of liquidation pressure and this time round, selling was more persistent and as a result, the shares dropped all the way to a near three-year low of 17 sen on Aug 25.

SMRT re-tested this ebb once again a week later on Sept 3 to form a short-term “double bottom” pattern before bouncing off on renewed buying momentum, which saw prices mended to a high of 37 sen during intra-day session yesterday.

Based on the daily chart, the worst of SMRT appeared to be over, with prices breaking out of the one-year-old bearish descending line late last month.

Adding to our optimism that SMRT may be in the infancy stage of recovery, the rising 14-day SMA and the 21-day SMA continued to support the share prices. Perhaps, investors can consider taking up a position, if one is confident of the trend ahead.Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochstic momentum index were rising. It had issued a short-term buy at the neutral area a week earlier.

The past week witnessed the 14-day relative strength index retracing back to a reading of 63 on Tuesday before ticking up to finish at the 81-point level yesterday.

Meanwhile, the daily moving average convergence/divergence histogram resumed the upward expansion against the daily trigger line to keep the bullish note. A buy signal was issued on Sept 4.

Apparently, indicators are positive, implying SMRT shares are likely to firm on follow-through interest.

A breach of the 200-day SMA of 41 sen is poised to send prices up to challenge the heavy resistance of 46 sen, of which a clear penetration may see the bulls turning more aggressive. Strong support is pegged at 30 sen-31 sen band.

http://www.thestar.com.my/Business/Business-News/2015/10/24/Eye-on-stock-SMRT-Holdings/?style=biz

Gadang wins RM375mil contract from Petronas

KUALA LUMPUR: Gadang Holdings Bhd has clinched a RM375.13mil contract from Petroliam Nasional Bhd’s (Petronas) subsidiary PRPC Utilities and Facilities Sdn Bhd.

The property and construction player told Bursa Malaysia that the letter of award given to its unit Gadang Engineering (M) Sdn Bhd was to undertake a project known as “Utilities, interconnecting, offsite (U10) facilities: Procurement, construction and commissioning of civil & infrastructure works at interconnecting sleepers amd utilities area 2 (Package 14-0301)” at Pengerang, Johor.

The contract, to span 31 months, is expected to contribute positively to the Gadang group’s earnings for the financial year ending May 31, 2016 onwards.

None of the directors or major shareholders of Gadang or persons connected with them has any interest, whether direct or indirect in the contract.

In June last year Gadang had won a contract (Package 18C) from Petronas Refinery and Petrochemical Corp Sdn Bhd with an estimated value of RM350mil. The contract was to be completed in September this year.

Gadang shares shed 2 sen to close at RM1.46 on Friday.

Malaysia's fiscal consolidation trend will remain intact this year, says Moody’s

KUALA LUMPUR (Oct 23): Malaysia's fiscal consolidation trend will remain intact this year due to the implementation of the Goods and Services Tax and the reduction of energy subsidies, according to Moodys’ Investors Service.

In a pre-budget commentary on Malaysia, Moody’s said the key question regarding the positive outlook on Moody's A3 rating is whether Malaysia's government can muster the political will to sustain the trend of fiscal consolidation that it initiated in 2010.

The rating agency said the administration faces a balancing act between its stated commitment to work towards a balanced budget and providing support to an economy that is facing major headwinds to growth.

“The government has successfully charted these waters before.

“In the wake of losing its popular mandate in the 2013 elections, fiscal reform actually accelerated, with the government announcing its decision to implement the goods and services tax during the 2014 budget announcement in October 2013.

“It also effectively removed fuel subsidies when global oil prices fell last year.

Moody’s however said given expected pressures on revenues next year due to low oil prices, it is unclear whether the government will cut spending to a sufficient degree to maintain that trend.

http://www.theedgemarkets.com/my/article/malaysias-fiscal-consolidation-trend-will-remain-intact-year-says-moody%E2%80%99s

Draghi warns on China, hints at further QE to come in December

ECB President Mario Draghi signaled on Thursday that the central bank is prepared to undertake another large stimulus package to tackle the lackluster growth seen in the euro zone.

"It was not a wait-and-see, but it was a work-and-assess. We are ready to act if needed, we are open to a whole menu of monetary policy instruments," Draghi said at the ECB's governing council meeting

http://www.cnbc.com/2015/10/22/european-central-bank-keeps-rates-at-record-lows.html

BNM international reserves climb as at Oct 15

KUALA LUMPUR: Bank Negara Malaysia’s (BNM) international reserves rose to RM418bil or US$94.1bil as at Oct 15 from two weeks ago.

The central bank said on Thursday the reserves position was sufficient to finance 8.8 months of retained imports and was 1.2 times the short-term external debt.

The reserves were higher than those at Sept 30 when they were at RM415.1bil (US$93.3bil).

BNM had then explained the decline in reserves level in US dollar terms as at Sept 30 from the prior two weeks was mainly due to the quarterly adjustment for foreign exchange revaluation changes.

The reserves position was sufficient to finance 8.6 months of retained imports and was 1.2 times the short-term external debt.

If compared with Sept 15, BNM’s international reserves had increased by RM57.9bil in ringgit terms from RM360.1bil but lower in US dollar terms by US$1.2bil to US$95.3bil. The reserves position then was sufficient to finance 7.3 months of retained imports and was 1.1 times the short-term external debt.

WELLCAL has been generous with dividend pay-outs exceeding 90% of annual profit after tax for the past five years, a much higher payment from its 50% minimum dividend pay-out policy. Up to now for the three quarters of FY15E, a total payout of 6.9 sen or 80.7% of 9M15 has been declared. Nonetheless, in view of the underlying expansion plan, we would not be surprised to see the dividend payouts being reduced slightly, say 80%, for the next few years. We understand that the Group may require a total of RM55.0m in capex. While we have factored in lower dividend payouts, we further consider a financing of up to RM21.0m by FY16 into our earnings model. As such, our FY15E and FY16E NDPS are estimated at 8.0 sen and 11.0 sen, representing yields of 3.4% and 4.7%.

· Not Rated, however, we believe WELLCAL should be valued within a range of RM2.30-RM2.90 (or RM2.60 on average), implying a FY16E-FY17E PER of 17.0- 18.0x, based on our FY16E-FY17E EPS of 13.6-16.0 sen. Although these valuations at a premium amongst its small cap peers, it is still not demanding, in our view, given WELLCAL’s: (i) high growth potential (15.1% CAGR from FY14 to FY17E), (ii) sustainable profit margins (20.2% average net margin for FY16E and FY17E against 19.3% between FY13 to FY15E), (iii) strong ROE of >30% in FY16E/FY17E, and (iv) decent dividend yield.

Source: Kenanga Research - 22 Oct 2015

Wellcall Holdings Berhad - Piped-in Growth

· One of its kind. Based in Ipoh, Wellcall Holdings (WELLCAL) is the only listed company which specialises in the manufacturing and distribution of industrial rubber hoses. The company manufactures mandrel hoses as well as extrusion hoses customised for a wide variety of applications, such as automotive, abrasion and welding, and to service oil and gas industries. Recently, the company announced the completion of a new production plant to include spiral hose to cater to customers with less heavy-duty requirements.

· Growing and still expanding. The company is now commissioning two production plants and a new production plant is in the pipeline. In addition to the newly invested spiral hose production line, the new plant will also house seven new mandrel hose production lines to increase the monthly capacity of mandrel hoses from 185,000 linear metres per shift (LMS) to 279,000 LMS (i.e. +50%). Furthermore, two rubber compounding machines will be installed in this facility to allow WELLCAL to perform rubber compounding in-house, a function which is currently outsourced. While there is no guidance on the amount of cost saving, we believe this strategic move will enable WELLCAL to enjoy better margins and to have better control over the quality of their production materials.

· Easing production costs in an export-oriented business. On top of the inhouse rubber compounding capability, WELLCAL is set to enjoy better gross profit margin with the declining cost of latex for its rubber hoses. Latex prices have declined from an average of 474.1 sen/kg in FY14 to 412.0 sen/kg in FY15 (as indicated by the Malaysian Rubber Board). Additionally, WELLCAL is poised to benefit from the recent drop in the crude oil prices as well, as petrochemical is used as an additive in processing rubber compound. Moreover, only a small portion of WELLCAL’s cost of production is in USD-denominated. As such, being an export-oriented business with approximately 90% of revenue generated from export transactions in USD, we expect positive effects to WELLCAL’s income statement from the strengthening of the USD. Nonetheless, as the company has a clientele base from across most regions in the world, with larger customers from North America, other Asian countries, the Middle East and Europe, WELLCAL may need to pass on some benefits from the strong USD back to their clients especially those in Asian countries as these economies also saw their currencies depreciating against USD.

· Strong historical performance with no signs of slowing down. In the past five years, the company has recorded a revenue CAGR, PBT CAGR and average PBT margin of 13.1%, 21.7% and 20.9%, respectively. With 9M15 cumulative revenue, PBT and net profit of RM119.8m, RM37.1m and RM28.4, respectively, it is set to overtake FY14 full-year results of RM146.4m revenue, RM38.7m PBT and RM29.5m net profit. We project FY15 revenue to fall close to RM175.1m (+19.6% YoY) with net profit of RM33.6m (+13.9% YoY). We further project that FY16 revenue of RM223.4 (+27.6% YoY), PBT at RM60.1m (+36.4% YoY) and net profit at RM45.1m (+36.4% YoY). We based our high growth projections to: (i) WELLCAL tapping into spiral hose line market, (ii) increased production capacity from the new production plant, (iii) cost savings from performing in-house rubber compounding, (iv) cheaper raw material costs, and (v) strengthening of USD.

cont/

Brahim’s mulls SATS’ offer to buy inflight catering unit stake

KUALA LUMPUR (Oct 22): Brahim's Holdings Bhd ( Financial Dashboard) received an offer from Singapore-based SATS Ltd ( Valuation: 1.70, Fundamental: 2.50) to buy a 49% stake in Brahim's Airline Catering Holdings Sdn Bhd (BACH) for RM218 million.

In a statement to Bursa Malaysia today, Brahim's said the conditional binding offer involved the acquisition of 490,000 shares in BACH.

"The board will appoint the relevant advisers in due course and deliberate on the terms of the said offer and decide on the next course of action.

"Further announcements will be made once the board has made a decision on the conditional binding offer," Brahim's said.

SATS plans to pay the RM218 million to Brahim's in two portions. Brahim's said the first RM110 million portion would be paid upon completion of the transaction.

The remaining RM108 million is conditional upon certain financial targets being met, according to Brahim's.

Brahim's website indicates that BACH owns 70% in Brahim's Airline Catering Sdn Bhd (BAC), which offers catering services to 28 global airlines. These include Malaysia Airlines Bhd ( Valuation: 1.40, Fundamental: 0.80), AirAsia ( Valuation: 1.20, Fundamental: 0.20) and Cathay Pacific.

Malaysia Airlines owns the balance 30% stake in BAC.

SAT's website shows that the company extends its catering expertise to various sectors including the aviation, logistics and hotel industries.

At Bursa Malaysia, Brahim's shares rose as much as 28.5 sen or 42% to 96.5 sen. The stock cut gains at 94.5 sen at 11.41am for a market capitalisation of RM228.03 million.

Brahim's was the second-largest gainer across the exchange.

Support Line

GUNUNG Capital shares were generally range-bound, attempting to build a base for recovery after finding shelter at the two-year low of 38 sen on Aug 10. Technically, prices may firm in the short term, with the daily moving average convergence/divergence (MACD) histogram returning to positive. A breach of the 200-day simple moving average of 46 sen, followed by a clear penetration of the short-term descending line of 49 sen would signal a new leg of uptrend, en route to the 60-sen mark or the 66-sen barrier. Initial support is maintained at the 38-sen floor.

HONG Leong Industries Bhd reversed from an intra-day high of RM6.10, the best level since February 2000, to settle lower owing to profit-taking activity. Despite the easier close, the MACD indicator retains the buy call, implying investors can consider accumulating more on weakness. The initial target would be to test the immediate resistance of RM6.30 while the current support is lying at the RM5.79 level.

TOP Glove Corp set new records for the fourth straight day amid extended buying interest. Technically, shares are set to advance deeper into uncharted territory on the back of the bullish reading on the MACD histogram. However, trading volumes must expand accordingly to sustain the trend ahead. Otherwise, the bulls may pause for air, with the stochastic momentum index and the 14-day relative strength index painting a growing overbought picture. Initial support is envisaged at the RM9-RM9.12 band

Next ‘VW scandal’? Dyson accuses German vacuums of test cheating

It seems Volkswagen might not be the only German brand accused of cheating on its tests.

U.K. vacuum brand, Dyson has begun legal action against German rivals Bosch and Siemens, claiming they have misled customers on the testing of their products.

http://www.cnbc.com/2015/10/21/next-volkswagen-scandal-dyson-accuses-german-vacuum-cleaners-of-test-cheating.html

Tomei to make Hello Kitty jewellery and accessories

KUALA LUMPUR: Tomei Consolidated Bhd has signed an agreement that allows it to make and market gold jewellery and accessories based on the Hello Kitty, My Melody and Little Twin Stars characters.

In a filing with Bursa Malaysia, the jewellery manufacturer and retailer said its unit Tomei Gold and Jewellery Holdings (M) Sdn Bhd had entered into a merchandise sub-license agreement with Sanrio Wave Hong Kong Co Ltd for a non-exclusive right for the manufacture/importation as well as for the distribution and offering for sale of the products throughout Malaysia.

Sanrio Wave is a body corporate in Hong Kong that creates and distributes the original Sanrio contents/entertainment business throughout Asia.

Tomei said the agreement would be effective until Nov 30, 2017.

“The agreement is expected to contribute positively to Tomei’s profitability for the financial year ending Dec 31, 2015 barring any unforeseen circumstances as it will contribute additional income stream to the company from the sale of the said products,” it said.

According to Tomei’s annual report, the group launches more than 4,000 new designs every year. Tomei has more than 70 retail outlets in the country and also wholesales its products to other jewellery stores.

Tomei had previously sold Hello Kitty pendants and rings.

TMC Life's quarterly profit jumps to RM2.89m

KUALA LUMPUR (Oct 21): TMC Life Sciences Bhd ( Valuation: 1.10, Fundamental: 1.45) saw its net profit for the three month period ended Aug 31, 2015 jump more than 290% to RM2.89 million or 0.24 sen per share, from RM728,000 or 0.09 sen per share a year earlier.

The better earnings was driven by higher revenue recorded and interest income earned.

Revenue for the quarter came in 29.8% higher at RM30.07 million, from RM23.17 million, contributed by higher patient load arising from additional consultants recruited.  

No dividend was declared for the current quarter under review.  

Going forward, TMC Life said the growth prospects for the healthcare sector in Malaysia remains positive, fuelled by changing demographics, a more affluent society, and more health-conscious lifestyles.

Nonetheless, the group continues to expand the breadth and diversity of their services to generate more revenue growth.

"With the 2 new wards, comprising 51 beds, completed on Sept 9, 2015, our hospital in Kota Damansara now [h]as a capacity of 200 beds," it added.  

Shares in TMC Life closed unchanged at 56 sen today, for a market capitalisation of RM979.06 million.