China to scrap commercial banks’ loan-to-deposit ratio

BEIJING: China is to scrap the country’s longstanding loan-to-deposit ratio requirement, the latest in a series of measures to reform the country’s commercial banking sector and get more lending into a slowing economy.

China’s cabinet, the State Council, published its decision late on Wednesday, as part of a draft amendment to the country’s 20-year-old commercial banking law.

Chinese banks at present are prohibited from lending more than 75% of their deposits, limiting their ability to offer loans and engage in other commercial activity.

The move comes as the country’s economic growth continues to slow, and as the government hastens financial reforms that have included the liberalisation of interest rates and the implementation of a deposit insurance scheme.

“The loan-to-deposit ratio is the biggest administrative restriction over banks,” said Ma Kunpeng, a Shanghai-based banking analyst at Sinolink Securities Co, after the announcement.

The removal of the restriction will “strengthen ability of financial institutions to lend more to the agriculture sector and small businesses”, the State Council said in an online statement.

Analysts said shares in Chinese banks, including top lenders Industrial and Commercial Bank of China Ltd, China Construction Bank Corp, Agricultural Bank of China Ltd and Bank of China Ltd , would likely rise as a result.

As China steps up its financial reforms, its central bank has cut interest rates three times in the last seven months in a bid to lower borrowing costs, while giving banks more flexibility over how much they pay depositors, which has hit bank earnings as lenders face competitive pressure to pay more for deposits.

In May, China launched a long-awaited bank deposit insurance scheme, setting the stage for full liberalisation of deposit rates, which would allow banks to compete on the basis of deposit yields, seen as a key step in letting the market, not the state, set the price of capital and risk.

Last week, Bank of Communications, the country’s fifth-biggest lender, unveiled the country’s first ownership reform of state-owned banks, which aims to introduce private shareholding to help drive growth.

Even with the removal of the lending restriction, bank lending isn’t expected to increase substantially, said Li Qilin, an analyst at Minsheng Securities Co, as banks have become more risk-averse in a slowing economy.

Wednesday’s draft amendment will be submitted for approval to the Standing Committee of the National People’s Congress, China’s parliament, the cabinet said. It didn’t provide a timetable.

With credit demand weakening and banks struggling with the rising costs of deposits brought about by interest rate liberalisation, it was the “perfect time” to remove the loan-to-deposit requirement, said Ma of Sinolink Securities.

The State Council also said it would set up a 300 billion yuan (US$48bil/RM180.6bil) national insurance fund to invest in domestic and foreign funds that finance urban construction, regeneration and water projects as well as key projects in the “One Belt, One Road” initiative. - Reuters

http://www.thestar.com.my/Business/Business-News/2015/06/24/China-to-scrap-commercial-banks-loan-to-deposit-ratio/?style=biz

VS Industry’s net profit surges nearly six-fold

VS Industry Bhd’s net profit surged close to six-fold to RM26.5mil for the third quarter ended April 30, 2015 (3Q15), from RM3.8mil a year ago supported by higher revenue from its operations.

Its revenue for the quarter increased 11.7% to RM420.1mil compared to RM375.9mil a year ago due to Malaysian operations as well as China and Indonesia plants.

“The Malaysian operations was the group's largest 3Q15 revenue contributor with RM284.1mil in sales, increasing 36.6% year-on-year compared to RM208mil in 3Q14,” the company said on Tuesday.

VS Industry managing director Datuk Gan Sem Yam said its Malaysian operations secured higher sales orders and benefited from a favourable sales mix.

Meanwhile, the company noted that group’s China and Indonesia plants for the quarter registered RM116.7mil and RM18.7mil in sales respectively.

Gan said the group performance was commendable for the quarter due to its growth-centric key customers.

Going forward, he remains positive on the group’s prospects due to the strengthening US economy as consumer sentiments and jobs data improves.

“In line with this, we will continue to explore new business opportunities by increasing our customer base to sustain our growth momentum,” Gan added.

VS Industry declared a third interim single-tier dividend of 6sen per share in relations to the financial year ending July 31, 2015, which will paid to its shareholders on July 28, 2015.

Overall, the company declared a total of 12sen for the current financial year, whereby the cumulative dividend payout of RM26.1mil translating to 32.5% of its net profit for the third quarter.

VS Industry pointed out that it has a dividend policy of distributing at least 40% of the group's net profit to its shareholders.

http://www.thestar.com.my/Business/Business-News/2015/06/23/VS-Industrys-net-profit-surges-close-to-sixfold/?style=biz

Genetec Tech secures RM27.3mil orders

Genetec Technology Bhd has secured new orders from its clients worth RM27.3 million. 

In a filing to Bursa Malaysia on Tuesday, Genetec said the orders were for the electronics, semiconductor, hard disk drive and car sectors.

"The tenure of the contracts normally range from three to nine months depending on the size of order and scope of work, and they are expected to contribute positively to our earnings for the financial year ending March 31, 2016," it said.- Bernama

http://www.thestar.com.my/Business/Business-News/2015/06/23/Genetec-Tech-secures-RM27mil-orders/?style=biz

Fitch places Malaysia on "negative" outlook

Fitch Ratings has placed Malaysia's sovereign rating to A-, with a “negative” outlook in its latest Asia-Pacific Sovereign Overview 2Q15 report released today.

The rating agency said the ratings reflect pressure on the sovereign’s credit profile.

“An ongoing leveraging-up of the economy, particularly in the broader public sector and households, and weakening macro fundamentals due to a widening savings investment gap.

“But the rating is balanced by reasonably strong growth rates and an external solvency position that is still strong,” said Fitch.

It noted that high dependence on commodities remains an inherent structural weakness of the credit.

It explained that goods surplus declined in the first quarter of 2015 (1Q15) from the year-ago period, on lower oil and liquified natural gas prices.

Fitch also said the Goods and Services Tax (GST) was implemented on 1 April 2015, which could be supportive of fiscal finances, but on its own is unlikely to achieve the targeted deficit reduction without the government making further spending cuts.

“Real gross domestic product (GDP) in 1Q15 rose by 5.6% year-on-year, mainly driven by strong domestic demand, as households frontloaded their expenditure as a pre-GST move.

“Contingent and off-balance sheet liabilities of the government remain a weakness in the broader public sector’s finances.

“Explicit federal government guaranteed debt at the end of 2014 stood at 16% of GDP, up from 15.4% a year ago,” it said.

Fitch said the positive sensitivities were greater confidence in the authorities’ commitment to containing direct and indirect public indebtedness.

On the negative sensitivities, Fitch said these included the emergence of sustained “twin” fiscal and external deficits, where failure to consolidate the public finances leads to the emergence of a structural current account deficit.

“A shock to interest rates or employment that is enough to impair households’ debt servicing capacity or trigger a need for sovereign support to the banking system.

“Slippage relative to the government’s fiscal targets and lack of progress on budgetary reform,” it said.

Besides Malaysia, Fitch said sovereigns across the region were seeing pressures build on growth, external finances and public finances from a combination of weaker commodity prices, the drag from a run-up in private-sector leverage, and anticipation of higher US interest rates later this year.
Fitch Rating report news just out at 3.05pm. Maintain at A-.

http://klse.i3investor.com/blogs/kianweiaritcles/78862.jsp

Eco World ready to replicate S P Setia’s success story

Eco World Development Group Bhd ( Financial Dashboard)
June 22, RM1.57)
Rating under review with target price (TP) to be determined: We attended Eco World Development Bhd’s (ECW) analyst briefing recently and returned with a positive view on the company. The management shared their year-to-date May 2015 sales of RM1.2 billion, which has met 40% of its financial year 2015 (FY15) sales target of RM3 billion. The outlook for the group remains convincing despite the slowdown in the property market due to buyers’ “wait and see” stance as a result of the goods and services tax implementation and tighter lending environment by banks. ECW is now ready to fly high, replicating S P Setia ( Financial Dashboard)’s success story, especially with the completion of its restructuring and fundraising exercise.

ECW’s management is confident that it may be able to rake in RM3 billion in property sales in 2015.

In-line with that, we are confident in ECW given the management’s capability in delivering its key performance index, judging by the past records and successful management of S P Setia. ECW management team is currently led by former S P Setia directors and executives with rich experience in local and international property markets. Among the prominent names that shifted to ECW are Tan Sri Liew Kee Sia (former S P Setia CEO), Datuk Chang Kim Wah, Datuk Eddy Leong Kok Wah and Tan Sri Abdul Rashid. We believe the entire group will transfer their skills in S P Setia to ECW as we gathered not only top management migrated to ECW, but also several hundred staff have already joined ECW.

Furthermore, most of ECW’s projects are earmarked for township developments and will continue to use “eco” features that were introduced by ECW’s top management during their stint in S P Setia.

Although ECW’s share price has been quite volatile of late due to hiccups in SPAC listing as well as weaker-than-expected property sales, we are positive on the company given its long-term prospect due to its aggressive expansion plan and business model, apart from its reputable management team. — M&A Securities, June 22

http://www.theedgemarkets.com/my/article/eco-world-ready-replicate-s-p-setia%E2%80%99s-success-story

PUC Founder, TNB sign 21-year FiT deal

PUC Founder (MSC) Bhd, via its subsidiary MaxGreen Energy Sdn Bhd, has signed a renewable energy power purchase agreement with Tenaga Nasional Bhd (TNB) ( Financial Dashboard) to provide electricity generated from its 1-megawatt-peak (MWp) solar photovoltaic (PV) plant in Sungai Petani, Kedah for 21 years.

Under the deal, TNB will purchase the electricity generated from the solar PV plant based on a Feed-in Tariff (FiT) rate of RM1.0355 per kilowatt-hour.

In a statement today, PUC Founder said construction of the solar PV plant will start soon and is planned for operation by fourth quarter of this year. It is expected to start contributing to PUC Founder's revenue in the first quarter of 2016.

“We are committed to expand the renewable energy business as this would bring us stable and recurring income," PUC Founder group managing director Cheong Chia Chieh said in the statement.

"The 1MWp solar PV plant is just the starting for us, and we want to further expand the business to 50MWp of solar PV capacity," he said, adding that the source of funds will be ranging from bank borrowings, fund raising exercise and/or internal funds.

"At the same time, we will also continue exploring other types of potential renewable energy businesses. And to manage all of these, we are providing adequate training to our employees so that we would be well prepared to handle the projects,” added Cheong.

PUC Founder (fundamental: 1.85; valuation: 1.1) shares closed down 5 sen or 3.7% at 13 sen today, bringing a market capitalisation of RM143.87 million.

http://www.theedgemarkets.com/my/article/puc-founder-tnb-sign-21-year-fit-deal

Renewed buying interest emerging in 3A, says AllianceDBS Research

AllianceDBS Research said renewed buying interest had emerged in Three-A Resources Bhd ( Financial Dashboard) (3A) and said 3A had on June 19 traded higher to settle at the day’s high of RM1.12 (up 6 sen or 5.66%).

In its evening edition last Friday, AllianceDBS Research said a crossover of the RM1.12 hurdle would likely see 3A trading upward with the next upside target pegged at / between RM1.22 and RM1.25.

The research house said risk taking traders can establish a buying position at RM1.10 on a small pullback.

“Once a buying position is established, a stop loss at RM1.07 level must be placed for risk capital protection, and this RM1.07 is to be followed by a trailing stop loss strategy.

“If you are prepared to take a trading loss risk of RM30 (excluding brokerage) for RM120 – RM150 potential profit, you may acquire 1,000 shares with a capital amount of RM1,100 assuming buying order is filled at RM1.10,” it said

http://www.theedgemarkets.com/my/article/renewed-buying-interest-emerging-3a-says-alliancedbs-research

BURSA : KL Shares To Stage An Oversold Rebound

Bursa Malaysia is expected to stage an oversold rebound next week driven by dovish Federal Reserve statement, positive global stocks performance and ringgit recovery. Affin Hwang Investment Bank Vice-President and Head of Retail Research Datuk Dr Nazri Khan said the local index were traded sideways last week but ended the week marginally higher.

The index is still being trapped in downtrend channel due to lack of fresh catalyst while key indicators are also showing lethargic signs despite being in their respective oversold region. “We continue to view that the FBMKLCI is oversold and therefore should see a mild rebound led by selected bashed down quality counters,” he told Bernama.

Last week trading session ended marginally higher, mainly led by bargain hunting gains in battered stocks such as Maybank, CIMB, Tenaga, Axiata and Airasia, he said. Foreigners finally ended its selling spree, a record year-to-date (YTD) outflow streak of 21-days and started to snap blue chips as they bought in a RM1.1 bilion worth of shares and bring the YTD Net outflows to RM7.4 billion he added.

However, he said the market is expected to remain highly volatile due to bond yield movement, concerns on China crackdown on margin lending, rising Greece debt default risk and untimely local government linked issues. He said three major local stories are expected to propel Bursa Malaysia moderately higher next week. They are -- Bank Negara’s reiteration on Malaysia’s have high monetary and financial stability to boost Ringgit and support sustainable economic growth; Ministry International Trade and Industry maintained that Malaysia will prosper
ASEAN economic integration model; and Petronas pledges on its commitment to mitigate the negative impacts on Bursa oil gas stocks which are under pressure from crunching business concession.

Weekly turnover increased to 7.72 billion units worth RM9.18 billion from 6.36 billion units worth RM7.29 billion previously. Main market volume improved to 4.91 billion units worth RM8.31 billion from 4.08 billion units worth RM6.62 billion last week.
-Bernama

IFCA's property e-commerce platform to boost revenue

Property business solutions provider, IFCA MSC Bhd expects the soon-to-be-launched e-commerce platform for property companies to be a major driver for revenue growth in the future.
Chief executive officer Ken Yong Keang Cheun said the platform, slated for launch in September, would enable property companies to receive bookings and sell properties online including through smartphones and mobile Internet.
"There is an addressable market size in Malaysia which has 2,000 property companies.

"Our competitors' major income is from advertising revenue but we're talking about subscription income against advertising revenue and other revenue from the e-commerce aspect," he told reporters after the company's annual general meeting on Friday.

Yong said IFCA MSC was also planning to expand the e-commerce platform to Indonesia after the conclusion of the RM32mil acquisition of PT IFCA Consulting Indonesia.

He said the acquisition was targeted to be concluded next month.

"With a mass population, e-commerce is going to do well. So, that is our business plan going into Indonesia," he said.

Apart from Indonesia, he said the company was also eyeing China's market as part the e-commerce service expansion.

Currently, the Malaysian operation contributes about 70% to revenue while the rest comes from overseas.

On outlook, he said the company remained extremely positive on its performance projection this year based on its strong fundamentals.

"Our market leadership is still there and we have quite a number of solutions offerings," he said, adding, the e-commerce service launch would further consolidate its business as companies would turn to the service during the economic slowdown for efficiency.

For the first quarter ended March 31, 2015, IFCA MSC's net profit rocketed to RM9.7mil from RM421,000 in the same period last year, following a strong billing quarter for software implementation.

Revenue for the quarter jumped 134% to RM32mil from RM13.7mil previously. - Bernama

http://www.thestar.com.my/Business/Business-News/2015/06/19/IFCAs-property-e-commerce-platform-to-boost-revenue/?style=biz

Eye on stock: Berjaya Sports Toto

A COUPLE of failed attempts to penetrate the previous major rally peak of RM4.95, set on June 21, 2007, sent Berjaya Sports Toto Bhd shares into a prolonged range-bound consolidation and subsequently an extended downward correction process, which saw prices swooned to a low of RM3.19 on May 29.

After violating the 61.8% Fibonacci retracement (FR) of RM3.20, this stock appeared frail and many people had expected it to tank deeper into the red. But a fresh bout of buying emerged unexpected to the rescue, thus lifting prices marginally higher off the ebb.

Berjaya Sports Toto was last traded at RM3.25, down one sen yesterday.

Based on the daily chart, it appears that this counter has corrected enough and now in the midst of constructing a base to heal.

Perhaps, investors can consider accumulating some, with prices flirting slightly above the 61.8% FR line and technically, viewed as an attractive entry level, if one is optimistic of the trend ahead.

Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were on the rise. It had triggered a short-term buy signal at the grossly oversold area a week ago.

Also on the rise, the 14-day relative strength index improved moderately from a reading of 41 on June 10 to settle at the 62 points level yesterday.

In addition. the daily moving average convergence/divergence histogram sustained the upward expansion against the daily signal line to keep the the buy call issued in mid-week.

Apparently, indicators are improving, implying Berjaya Sports Toto shares are likely to firm gradually in the immediate term.

Stiff resistance can be expected at the 200-day simple moving average of RM3.45, followed by the RM3.53 heavy barrier, of which a clear penetration would signal a bullish turnaround.

As for the downside, the recent lows of RM3.19 will now act as the tentative base for mending course, also acting as the trailing exit. - By K.M. Lee

http://www.thestar.com.my/Business/Business-News/2015/06/20/Eye-on-stock-Berjaya-Sports-Toto/?style=biz

Frontken: Will It Get Better in 2015?

Looking at Frontken's segmental revenue, there is no doubt that Oil & Gas and Semiconductor industries contributed massively in 2014.

Through 34.9%-owned associate company Ares Green Technology (Taiwan), Frontken is able to enjoy the robust growth in the semiconductor sector in Taiwan.

While contribution from Taiwan has increased 50% YoY in 2014, the main contributor is actually from Oil & Gas sector in Malaysia, in which its revenue increased from RM18mil to RM131mil YoY.

In September 2013, Frontken was awarded a contract by ATT Tanjung Bin Sdn Bhd as the main contractor for a hydrocarbon storage and distribution facility at Tanjung Bin.

The contract is worth RM110.6mil and the proposed date of completion of the project is 11 April 2015.

This means that after the Tanjung Bin project has been completed, its O&G annual revenue will likely to shrink significantly especially when there is a slow down in O&G sector now.

While Taiwan's Ares Green is enjoying superb growth in 2014, there is a disturbing slow down in Q1 of 2015 if compared to Q4 of 2014.

Though monthly revenue in year 2015 has reduced significantly, fortunately they are still higher compared to previous year's corresponding periods.

However, if there is no "revenue spike" in Q4 of 2015, then Frontken's revenue from Taiwan in 2015 may not show significant growth.

Last year Frontken has acquired 45% stake in TTES Team & Specialist Sdn Bhd which has expertise in turbo machinery and rotating equipment engineering, technology, maintenance and technical support services.

TTES's customers are mainly in the O&G field. Its PAT in 2013 is merely RM1mil and is unlikely to contribute significantly to Frontken in the near future.

In conclusion, Frontken is a good company, but I think its FY15's financial result is unlikely to beat FY14 unless it secured another fat contract like the Tanjung Bin contract this year.

http://bursadummy.blogspot.com/

Tenaga: Buying 1MDB's stake in Project 3B

The Cabinet has just approved the move by Tenaga Nasional Berhad (TNB) to buy over 1Malaysia Development Berhad (1MDB)'s stake in the Project 3B coal power plant for an undisclosed sum. For more, go here.

From Chart 1, we can see the sharp plunge in Tenaga's share price. At the time of writing, the share price has stabilized at RM12.56.

The monthly chart below shows that Tenaga's long-term uptrend has halted in the past few weeks- probably due to reports that it has to come in to help out in Project 3B. Tenaga's share prices were moving in a large expanding triangle, with immediate support at RM12.00. If the share price falls below this mark, the downtrend should begin in earnest.

With the new cost pass through regime in place, Tenaga's share price weakness may be a temporary phenomenon due to the perceived bailout of 1MDB's Project 3B.

Until the details of the purchase of Project 3B are announced, we are not sure how it would benefit or impact Tenaga. For now, I believe that Tenaga could be a good BUY if it tests the RM12.00 mark.

http://nexttrade.blogspot.com/

SKP Resources in position to trade higher, says AllianceDBS Research

AllianceDBS Research said SKP Resources Bhd (SKP) was in a position to trade higher and that SKP had on June 17 crossed over the RM1.08 hurdle to reach a day’s high of RM1.13 before settling at RM1.11 (up 3 sen or 2.77%).

In a its evening edition yesterday, the research house said the crossover of the RM1.08 hurdle would likely see SKP trading upward with the next upside target pegged between RM1.23 and RM1.28.

AllianceDBS Research said that risk taking traders could establish a buying position at RM1.09 on a small pullback.

“Once a buying position is established, a stop loss at RM1.06 level must be placed for risk capital protection, and this RM1.06 is to be followed by a trailing stop loss strategy.

“If you are prepared to take a trading loss risk of RM30 (excluding brokerage) for RM140 – RM190 potential profit, you may acquire 1,000 shares with a capital amount of RM1,090 assuming buying order is filled at RM1.09,” it said

http://www.theedgemarkets.com/my/article/skp-resources-position-trade-higher-says-alliancedbs-research

EA Tech ready to test higher level, says AllianceDBS Research

AllianceDBS Research said EA Technique (M) Bhd (EA Tech) was read to test a higher level and said EA Tech had on June 17 traded higher to a high of RM1.06 before settling at RM1.05 (up half a sen or 5%).

In its evening edition yesterday, the research house said a crossover of the RM1.10 hurdle would likely see EA Tech trading upward with the next upside target pegged between RM1.25 and RM1.30.

AllianceDBS Research said risk taking traders could establish a buying position at RM1.03 on a small pullback.

“Once a buying position is established, a stop loss at RM1.00 level must be placed for risk capital protection, and this RM1.00 is to be followed by a trailing stop loss strategy.

“If you are prepared to take a trading loss risk of RM30 (excluding brokerage) for RM220 – RM270 potential profit, you may acquire 1,000 shares with a capital amount of RM1,030 assuming buying order is filled at RM1.03,” it said

http://www.theedgemarkets.com/my/article/ea-tech-ready-test-higher-level-says-alliancedbs-research

Signature has strong orders from developers

Maintain buy with a target price (TP) of RM3.65: Last week, we organised a visit to Signature International with five institutional clients.

Greeted by the group managing director Tan Kee Choong, and project director Mohd Anwar, they briefed us on what to expect during a plant tour and visit to Signature Lifestyle Gallery. Key takeaways from our recent meeting with management include: (i) The weak earnings trend in 2012 and 2013 is unlikely to repeat in the future, despite the current slow property market; (ii) Strong pipeline of orders from developers and (iii) Hint to pay regular interim dividend in the future, if cash flow is warranted.

The weak earnings trend in 2012 and 2013 is unlikely to repeat in the future, despite the current slow property market. Considering the two to three years lag effect in sales of kitchen systems when a property development cycle begins, the weak earnings trend in financial year 2012 and 2013 (FY12 and FY13), which saw earnings contract by 44% and 37% respectively, is a clear reflection of the sluggish property demand from 2008 to 2010.

However, management believes that this drastic drop in earnings is unlikely to happen in future years, despite the current weak property market in Malaysia. This is due to the favourable change in property mix in recent years in terms of housing supply.

According to the National Property Information Centre, housing supply in Malaysia has tilted toward the upmarket segment in recent years, with property transactions priced between RM500,000 and RM1 million per unit and above RM1 million per unit segments from 2007 to 2014 growing at a compound annual growth rate of 22%. This positive change in housing supply mix, coupled with the increase in incoming supply, would bode well for any company selling lifestyle products, including Signature.

Signature has an order book of RM153 million, which represents 62% of our estimated project revenue for FY16. However, the management is confident of reaping some of the new projects in Malaysia, which were put out on tender. According to management, there are approximately RM200 million kitchen projects to be dished out over the next three to six months.

Signature had turned into a net cash position as at March, with limited capital expenditure requirements in FY15 and FY16. As such, the company declared its first-ever interim dividend for the third quarter of FY15 (3QFY15), in conjunction with the release of 3QFY15 earnings.

According to management, the company will maintain this regular dividend payment in the future if cash flow is warranted. The company has a long investment list of properties, which will be disposed of eventually to reap disposal gains. We estimate that the book value for the sale of investment properties is RM22 million, which is equivalent to 18 sen/share.

No change to our FY15 to FY18 earnings projections. However, we raise our FY15 to FY18 dividend assumptions higher to 11 sen to 12 sen/share (from 9 sen to 11sen/share previously), based on the revised dividend payout ratio of 33% to 37%.

We maintain Signature’s TP at RM3.65/share based on unchanged 10x FY16 earnings per share. We reiterate our “buy” recommendation given the favourable change in the property trend, which bodes well for Signature’s future earnings. — TA Research, June 15.

http://www.theedgemarkets.com/my/article/signature-has-strong-orders-developers

Daily technical stocks highlight - YSPSAH

Author: kiasutrader | Publish date: Tue, 16 Jun 2015, 09:59 AM

YSPSAH (NR), a pharmaceutical player was one of the few counters that bucked the negative market breadth yesterday. It rebounded from its immediate support level of RM2.03 (S1) to close at RM2.11 after a one-month consolidation. Chart-wise, it has recently broken out from its “Pennant” chart pattern as the share price looks to rally towards the measurement objective target price of RM2.74. However, technical indicators are still depicting uncertain and mixed signals. MACD is heading south while both RSI and Stochastic indicators are moving sideways, showing that investors are still sitting on the fence. Therefore, we advocate investors who are interested, to seek stronger rebound signals before accumulating the stock.

http://klse.i3investor.com/blogs/kenangaresearch/78494.jsp

BURSA: FBM KLCI Expected To Rebound On June Window-Dressing
By Azizul Ahmad

The FTSE Bursa Malaysia KLCI (FBM KLCI) could stage a technical rebound next week or in the near term, driven by local funds ahead of the widely-anticipated June window dressing and oversold position.

The FBM KLCI could see an upside bias to retest the 1,746-1,769 level in anticipation of the mid-year window dressing, said Hong Leong Investment Bank Research (HLIB Research). “Having nose-dived seven per cent or 131 points in six weeks from a high of 1,867 on April 27 to 1,729 on June 9, we might see some technical rebound in the near term,” it said in a note.

On potential proxies, HLIB Research is recommending Telekom, IOI Corp, DiGi.com, MISC and CIMB due to their grossly oversold positions and high local institutional shareholdings.

Meanwhile, Kenanga Research said the FBM KLCI was expected to find a temporary bottom near the 1,710-1,732 level.“Thus, we believe it is a good time to nibble on selective stocks, especially those in resilient and export-oriented sectors, despite domestic and external uncertainties continuing to weigh down the market,” said the research house.

Affin Hwang Investment Bank vice-president and head of retail research, Datuk Dr Nazri Khan Adam Khan told Bernama that the current downtrend in the benchmark FBM KLCI presented a good buying opportunity for quality bluechips. “I recommend investors to buy construction and technology stocks as they are major benefactors of the recently announced Eleventh Malaysia Plan,” he said.

For the week just ended, the FBM KLCI managed to snap its losing streak as bargain hunting lifted the local market on Wednesday, in line with the recovery in key regional bourses.

On a Friday to Friday basis, the benchmark FBM KLCI shed 10.96 points to 1,734.37 from 1,745.33. Weekly turnover declined to 6.36 billion units worth RM7.29 billion from 9.07 billion units worth RM11.63 billion previously. Main market volume decreased to 4.08 billion units worth RM6.62 billion from 4.65 billion units worth RM8.17 billion last week.
- Bernama

Eye on stock: Eversendai Corp

EVERSENDAI Corp Bhd (Sendai) shares rallied from an all-time low of 48.5 sen on Jan 12 to a high of 83.5 sen on March 17 amid fresh bargain hunting interest.

In the wake of an apparent profit-taking activity, prices slipped into correction mode, trading sideways with a mild downward bias.

The consolidation process lasted almost three months before another fresh bout of buying emerged to help pushed Sendai higher, which saw the shares hitting an eight-month high of 86 sen during intra-day session.

Based on the daily chart, Sendai has penetrated the two-year-old bearish descending line of 76.5 sen in mid-week, as well as the recent highs of 83.5 sen during intra-day session yesterday.

The positive breakout suggests that the fate of this counter has changed for the better.

Another successful penetration of the pretty stiff resistance of 87.5 sen over the next few days would further raise our optimism about the trend ahead.

Greater resistance is resting at the RM1 mark, followed by the RM1.15 barrier but we reckon that Sendai may take this opportunity to fill the minor gap at the RM1.26-RM1.29 band.

Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were advancing. It had triggered a short-term buy at the mid-range on Wednesday. Also, the daily moving average convergence/divergence histogram continued to expand upward against the daily signal line to keep the bullish note. A buy call was issued on June 1.

The past week saw the 14-day relative strength index touching a high of 84 yesterday, up from the mid-range on Monday.

Technically, most of the indicators still are painting an encouraging pictogram, implying Sendai shares are likely to attract follow-through buying interest, thus leading prices higher,

Initial support is envisaged at the 80-sen mark, followed by the 76.5-sen floor.

The lower support of 70-sen mark will now act as the base for the next upward leg. – By K.M. Lee

http://www.thestar.com.my/Business/Business-News/2015/06/13/Eye-on-stock-Eversendai-Corp/?style=biz

Greek talks in crisis after IMF leaves table

The deadlock between Greece and its creditors over reforms went from bad to worse on Thursday as one of its lenders -- the International Monetary Fund (IMF) -- quit talks, throwing the negotiations into crisis.

Talks between Greece and the bodies overseeing its bailout program have hit multiple obstacles over the course of the last four months. However, the situation worsened yesterday when the IMF announced that its delegation had left negotiations in Brussels because of "major differences" with Athens over how to save the country from bankruptcy.

Jakob Christensen, senior economist at Exotix, told CNBC that the move sent a "clear message" to Greece that it needed to compromise – and fast.

http://www.cnbc.com/id/102754047

Why the selldown on IFCA MSC?

After a massive rally, the wake of an unusual strong bout of selling pressure sent IFCA MSC shares tumbling from an all-time peak of RM1.87 on May 20 to a four-month low of RM1.10 in mid-morning trade on Friday.

The recent weakness saw the shares of this software and IT systems counter violating the 23.6% Fibonacci retracement (FR) support floor of RM1.45 and the 38.2% FR of RM1.18 in the latest selloff.

Based on the daily chart, prices are in great danger of testing the important 200-day simple moving average, resting at the 99 sen level, or the 50% FR of 97.5 sen in the near-term.

A futile attempt to stabilise above these two lines will bring about more downward move and in this case, the 61.8% FR of 76 sen will be vulnerable.

The tumble in the share price in the absence of any fresh negative news.

At 10.32am, it was down nine sen to RM1.12. There were 14.88 million shares done at prices ranging from RM1.10 to RM1.20.

At RM1.10, this was the lowest since Feb 5 when it was trading at RM1.15.

The fall in the share price was earlier triggered by news that its chief financial officer (CFO) Philip Voo Lip Sang had resigned to “pursue other career opportunities” on Friday, May 22.

On May 25, its shares were sold down by some 15% triggering an unusual market activity query from Bursa Malaysia.

Only on that day did IFCA announce the appointment of its new CFO Chow Chee Keng. Chow had been the company’s chief accountant from early-2007 until the middle of 2009. He rejoined IFCA as CFO in 2013.

On a positive note, IFCA’s management had sought to engage fund managers in clearing the air that the resignation of its CFO was not because of any disagreement with management on the company’s financials, as speculated by the market.

http://www.thestar.com.my/Business/Business-News/2015/06/12/Why-the-selldown-on-IFCA-MSC/?style=biz

World Bank latest to urge Fed to hold rates until 2016

The World Bank has become the latest global organization to urge the U.S. Federal Reserve to delay raising interest rates until 2016, amid growing expectations that the central bank could hike as early as September.

The financial institution said on Wednesday that keeping rates at record lows would help avoid the kind of financial market volatility witnessed during the "taper tantrum" of summer 2013.

The World Bank's warning comes after the International Monetary Fund (IMF) said last week that the Fed should delay a rate hike until the first half of 2016.

The IMF said that until there are signs of a pickup in wages and inflation, the conditions were not right to raise rates, which could have major consequences for the rest of the world.

http://www.cnbc.com/id/102751019

1MDB’s assets at fair value as at FY14

The inquiry by the bipartisan Public Accounts Committee (PAC) to the auditors of 1 Malaysia Development Bhd (1MDB) has revealed that RM13.4bil of 1MDB’s assets had been independently verified as of its financial year ended March 31, 2014 (FY14).

“Deloitte told us that they have seen the bank statements pertaining to the RM13.4bil of assets in BSI Bank. They can verify the value of the assets in question as they did a test on whether the assets were at fair value at that point in time for FY14,” PAC chairman Datuk Nur Jazlan said at a press conference after the inquiry.

“As of 31 March, 2014 Deloitte said they had gotten independent valuation of these assets of RM13.4bil and the valuations tallied. Deloitte had not done any work for FY15 as they only did it up to March 31, 2014,” PAC member Tony Pua, who was also present, said.

“The question of whether some of the assets were in units or cash, which has been the subject of debate … has not been audited yet for this year,” Pua added.

The PAC also said the Finance Ministry had not yet requested an audit of 1MDB for the FY15.

Nur Jazlan added: “Deloitte told us that they have not been instructed to start auditing for FY15 yet. A government-linked company should practise prompt auditing of their accounts. At least two to three months after the closing of the accounts on March 31, for FY15”.

Deloitte also stood by their earlier declaration that there was “no going concern” of 1MDB’s accounts for FY14.

PAC said in a statement that it wanted to know the steps Deloitte had taken to verify 1MDB’s accounts as ‘true and fair’ when Deloitte gave an “unqualified” opinion on the IMDB’s statements.

The PAC also wanted to know what were Deloitte’s responsibilities when it audited 1MDB’s accounts after taking over from KPMG. “We wanted to know from Deloitte whether 1MDB relied on the government guarantee to go on as a ‘going concern’, to continue to operate as a ‘sovereign fund’, because this matter was not stated in the audit report,” Nur Jazlan said.

Nur Jazlan noted that it may have to call Deloitte in again to verify their testimony, after the PAC got more information following hearings with more witnesses.

Deloitte was repesented by its country managing partner Tan Theng Hooi, partners Ng Yee Hong, Cheong Thoong Farn and Mark Thomson and its senior manager Edwin Tan.

“We feel that this is a blessing in disguise for us as the session has revealed a lot of information for us to proceed with the next steps in the inquiry. We will call 1MDB president Arul Kanda Kandasamy and former president Datuk Shahrul Azral Ibrahim Halmi to face the PAC on the first week of August,” he said.

“We will allow them to celebrate Hari Raya first and after that there will be no more excuses for them, both of them will have to face the PAC,” Nur Jazlan added.

Nur Jazlan said that it was important for PAC to “build up the case” with the background information obtained from the auditors and the management of 1MDB before proceeding to decide on the next steps.

“For example, if Bank Negara’s report is of value to us we can call them at a later stage of this inquiry. We have to call in the four main witnesses first,” he said

http://www.thestar.com.my/Business/Business-News/2015/06/11/1MDBs-assets-at-fair-value-as-at-FY14/?style=biz

AllianceDBS Research 11/6/2015

Technical Buy - Sendai 0.785
TP 0.87 - 0.88
Cut-Loss - 0.76

Sovereign ratings remain

A spurious text message going around that two rating agencies have downgraded Malaysia’s sovereign ratings is untrue.

Both Fitch Ratings and Moody’s Investors Service said in e-mailed replies that they had not downgraded Malaysia’s sovereign ratings to BBB (or Baa in the case of Moody’s) in response to queries from StarBiz over the text message.

Fitch has an A- rating with a negative outlook for the country, while Moody’s in January had affirmed Malaysia’s A3 rating with a positive outlook. Standard and Poor’s Rating Services in February had affirmed an A- rating with a stable outlook.

A sovereign credit rating gives investors some insight into a country’s credit risk and usually involves political risk analysis. Basically, a higher rating allows Governments to raise debt in the capital markets with a lower risk premium.

Nevertheless, observers noted that the text message was symptomatic of market concerns over the country’s many challenges, including the Government’s fiscal position and issues over 1Malaysia Development Bhd’s (1MDB) RM42bil debt.

Together with weak commodity prices, poor first-quarter earnings and a more uncertain outlook for economic growth, these issues have affected market sentiment and that has also impacted the ringgit, Asia’s worst-performing currency.

In January, the Government had revised the fiscal deficit target for this year to 3.2% of gross domestic product (GDP) from 3% after crude oil prices fell by more than half. The fiscal deficit to GDP stood at 3.5% last year.

Overall debt to GDP levels have also risen and hover near the 55% self-imposed limit, but could be as high as 70% if contingent liabilities of non-financial public enterprises were included.

Fortress Capital Asset Management (M) Sdn Bhd chief executive officer Thomas Yong, who was not aware of the text message, said investors were bound to be concerned, given that headlines “have not been fantastic”. Soft commodity prices and the foreign fund outflow have not been positive for the country either.

Yong said while foreign reserves had been steady in the past couple of years, indicating a net inflow, this could quickly change unlike foreign direct investment.

Fitch’s Asia-Pacific sovereign ratings head Andrew Colquhoun would make no further comment on the ratings. “We have said we expect to review the ratings again before the end of this month,” he said in an e-mail reply.

Finance Ministry officials were reported to have met with the rating agency’s analysts a week ago to convince them that Malaysia’s economy “is still sustainable and should be viewed positively”.

Colquhoun had said in March that Malaysia’s sovereign rating sat more naturally in the BBB-rated category based on the structural credit fundamentals. The March statement from Fitch also said that there was more than a 50% chance of a downgrade.

Fitch on Jan 20 had indicated that it was “more likely than not to downgrade the rating of the sovereign” in the coming months, following the Government’s revision of this year’s fiscal deficit target as well as the reduction of the GDP growth forecast to between 4.5% and 5.5% from 5% to 6%.

Moody’s senior analyst Christian de Guzman confirmed that the rating agency’s stance on Malaysia remained the same with no downgrade. “We will review the sovereign rating as and when developments warrant such a re-assessment,” he added.

De Guzman had expressed concern recently at a media briefing that the country’s fiscal consolidation may be derailed should the Government be forced to financially assist 1MDB.

He had said the concern was over how far the Government would go to honour 1MDB’s debts, as this would affect the ongoing fiscal consolidation. The magnitude of support was also important, as this could also affect the fiscal consolidation trend.

http://www.thestar.com.my/Business/Business-News/2015/06/11/Sovereign-ratings-remains/?style=biz

Omesti to pay stock dividend with Microlink shares

Omesti Bhd plans to distribute up to 5.978 million Microlink Solutions Bhd shares to its entitled shareholders as dividends on the basis of one share per 100 Omesti share held.

Based on Microlink’s last traded price of RM1.74 on Wednesday, the dividend payout is equivalent to RM10.64mil. Omesti’s share price fell 1 sen to 66 sen on Wednesday.

The IT services firm now holds a 79.02% stake, or 120.232 million shares, in Microlink through unit Omesti Holdings. The shares allocated for the dividend-in-specie represent a 4% stake.

Besides rewarding its shareholders, Omesti told Bursa Malaysia that the proposed distribution was undertaken to rectify the shortfall in the public shareholding spread of Microlink and it was expected to increase the shareholder base and public float of Microlink. Currently the public shareholding spread of Microlink is 20.84%.

Following the distribution, Omesti will hold 75.09% to 76.47% equity interest in Microlink.

The original cost of investment of its Microlink shares was about RM62.23mil.

The proposed distribution is subject to the approval of Omesti's shareholders at an EGM to be convened.

http://www.thestar.com.my/Business/Business-News/2015/06/10/Omesti-to-pay-stock-dividend-of-6-million-Microlink-shares/?style=biz

hehe bro John, hopefully all also huat.

Follow-through interest to lift Ge-Shen shares

Ge-Shen Corporation Bhd shares retraced back to the 50-day simple moving average (SMA) of 65 on June 1 during the recent mild correction process.

Prices then inched higher in the wake of renewed bargain-hunting and rode on the strength of a relief recovery in the principal market.

The bulls seized the opportunity to beat the most recent peak of 75 sen, achieving a high of 76.5 sen in the morning session - also the best level since May 2005 - but finished midday at 76 sen, up 3.5 sen.

Based on the daily chart, a positive breakout is in sight and it is backed by bigger trading volume.

Theoretically, the breakthrough looks convincing and it should pave the way for more climb in the immediate term.

The oscillator per cent K has crossed above the oscillator per cent D of the daily slow-stochastic momentum index at the 70% level to trigger a short-term buy.

The 14-day relative strength index improved moderately from a reading of 44 on June 1 to close midday at the 73-point level.

In addition, the daily moving average convergence/divergence histogram continued to strengthen, in tandem with the daily signal line to sustain the bullish note. It had issued a buy call last Friday.

Technically, the indicators are painting a pretty promising landscape. Combined with the encouraging price development, they suggest Ge-Shen shares will mostly sustain the upward thrust on follow-through interest.

Initial resistance is envisaged at the 85 sen mark, a successful penetration of which would lead to a re-test of the historical peak of RM1 set on Nov 23, 2004.

Solid support is pegged at the rising 50-day SMA of 67 sen. An additional floor is resting at the 65 sen level.

http://www.thestar.com.my/Business/Business-News/2015/06/10/Follow-through-interest-to-lift-Ge-Shen-shares/?style=biz

MSCI expects to include China A shares in global benchmarks

MSCI said on Tuesday it expects to include China A shares in its emerging markets index after several issues are resolved.
(Tweet This)

The firm said it may announce the decision outside of its annual review, which usually occurs in June.

The issues highlighted included quota allocation process, capital mobility restrictions and beneficial ownership of investments.

Investors told MSCI they need the ability to invest in China relative to the value of their assets under management, the release said. Daily liquidity is also critical for fund management, investors said.

An important factor for building confidence in Chinese markets is clarity on corporate ownership, MSCI said in the release.

Clem Miller, investment analyst at Wilmington Trust Advisors, said China may take until early 2016 to resolve the issues and that the first two are the most challenging. "China has been moving in the correct direction," he said. But "they would have to remove almost all its controls to achieve them."

http://www.cnbc.com/id/102745429

IFCAMSC : A Bird In Hand

The story for IFCAMSC has always been very compelling. It may explain why & how this stock managed to rally from a low of RM0.10 in January 2014 to a high of RM1.85 just last month.

IFCAMSC took a tumble in the past 3-4 weeks as investors were spooked by the sudden resignation of its new CFO- just 5 months into his new job. This unfortunate development may not be the main reason for the sell-down in the stock. Whenever a stock is priced richly - and to perfection, in the opinion of some - then any doubt could cause a sudden reprisal of a previously held opinion. Such is the reason why the over-reaction to the CFO's resignation.

Chartwise, I see weakness in this stock with bearish reading in the MACD & Slow Stochastic indicators. The share price is now struggling to hang onto the 21-week SMA line at RM1.30. If this support fails, its uptrend would be over. It could then transition to a sideways trend or even a downtrend.

Based on technical consideration, I think it may be a good idea to REDUCE one's position in this stock.

http://nexttrade.blogspot.com/

MERS: What you need to know

South Korea reported eight new cases of Middle East Respiratory Syndrome (MERS) and a seventh death on Tuesday. So, how worried should we be, not just about the country's already troubled economy but also the possibility MERS could spread across the Asia Pacific region? We examine the key facts.

What is MERS?

The Middle East Respiratory Syndrome Coronavirus (MERS-CoV) is the virus that causes the respiratory illness known as MERS, according to the Centers for Disease Control and Prevention (CDC). The virus is likely to have originated in animals, having been detected in camels in several countries. The first reports of humans having contracted the MERS-CoV virus emerged in 2012 in Saudi Arabia.

Presently, there is no known cure or vaccine to stop the virus.

Three to four out of every 10 people diagnosed with the illness have died, the CDC said. Common symptoms include fever, coughing, shortness of breath and gastrointestinal symptoms including diarrhea and nausea.

Exactly how contagious is it?

Like many other coronaviruses, MERS-CoV tends to spread from an infected person's respiratory secretions, like coughing. Close contact, such as living with an infected person, is also likely to spread infection.

People with diabetes, renal failure, and chronic lung disease are considered to be at high risk of severe disease from MERS-CoV infection, the World Health Organization said in recent a statement

http://www.cnbc.com/id/102739991

Market Outlook as at June 8, 2015

Market Outlook as at June 8, 2015

FBMKLCI is struggling to avoid entering into a long-term downtrend. It needs a miracle- a strong rebound- to escape what looks like a losing battle. The signs are all there:

1) FBMKLCI is now below the 30-month EMA line. In the past 3 instances when this had happened (A, B & C), the market entered into a bear market.

2) 20 & 30-month EMA lines have both flattened. This is the precursor to both these EMA lines turning south. Again, these are present in the 3 instances mentioned above.

3) MACD has already cut below the MACD signal line. Again, these are present in the 3 instances mentioned above.

4) Slow Stochastic have gone below the 50 level. Again, these are present in the 3 instances mentioned above.

What would trigger a sharp drop in the market? There are a number of possible triggers, such as a sharp fall in Wall Street or Shanghai, a nasty market reaction to Greece's highly likely exit from the European Union, a blow-up in Ukraine and, of course, a fallout from 1MDB.

If the bear market were to set in, there is no telling how low the index may go. While we can see support at 1700, 1670 & 1600, I believe that the bottom could well surpass these levels. If we use the upward channel as a guide, it is possible for the index to go as low as 1200.

In view of the above, I believe we should be very careful in this market.

http://nexttrade.blogspot.com/

1MDB: US$975m loan fully repaid today

KUALA LUMPUR (June 8): Debt-laden 1Malaysia Development Bhd (1MDB) said today that it has repaid a US$975 million (RM3.6 billion) loan to a syndicate of international banks led by Deutsche Bank AG, which was reported to be due end-August.

“Today, we are pleased to confirm that the loan has been fully repaid. This RM3.6 billion repayment reflects 1MDB’s commitment to reducing its debt levels, in line with the rationalisation plan approved by cabinet,” 1MDB president and group executive director Arul Kanda Kandasamy said in a statement this evening.

http://www.theedgemarkets.com/my/article/1mdb-us975m-loan-fully-repaid-today

GLB
On behalf of the Board of Directors of GLBHD (“Board”), AmInvestment Bank Berhad (“AmInvestment Bank”), wishes to announce that the Company had on 8 June 2015 entered into a conditional sale and purchase agreement (“SPA”) with Pontian United Plantations Berhad (“PUPBPurchaser”), a wholly-owned subsidiary of Felda Global Ventures Holdings Berhad (“FGV”), to dispose of the entire equity interests in Yapidmas Plantation Sdn Bhd (“YPSB”), Sri Kehuma Sdn Bhd (“SKSB”), Ladang Kluang Sdn Bhd (“LKSB”) and Tanah Emas Oil Palm Processing Sdn Bhd (“TEOPP”), which are respectively wholly-owned subsidiaries of GLBHD, and a parcel of oil palm plantation land measuring approximately 836.10 hectares (“ha”) in Beluran, Sabah, currently held by GLBHD for a total cash consideration of RM655.0 million (“Disposal Consideration”) pursuant to the terms and conditions of the SPA.
http://www.bursamalaysia.com/market/listed-companies/company-announcements/4767561

Evergreen - Broke above it's long term downtrend line

Background

There was an article in the Star, where Yeoh Keat Seng recommended a BUY on Evergreen (here). According to him, the "MDF sector is turning around after suffering from over-capacity over the last five years, the consequence of massive capacity build-up following the Chinese government’s unprecedented 4 trillion yuan stimulus in 2008". 

The sector-wide recovery is also reflected in the financials of 2 Asian MDF giants, "Vanachai of Thailand and Dongwha Enterprise of Korea, who had both have turned profitable since 1Q14. Their share prices have skyrocketed by 5x to 6x from their December 2013 low, while their FY15 valuations have rerated sharply to ~16x PE and 9x – 12 EV/EBITDA."

"As for Evergreen, it managed to turn around in 3Q14 onwards after seven consecutive quarters of red ink. We estimate that the company is currently trading on FY15 PE of only 8x".

Based on Yeoh Keat Seng's numbers, Evergrn could potentially double in value if its valuation matches those of its peers, like Vanachai of Thailand and Dongwha Enterprise of Korea.

Technical Outlook

Today, Evergrn broke above the recent high of RM1.28 (see Chart 1). This, coupled with the breakout above the long-term downtrend line at RM1.25 (see Chart 2), may that Evergrn's uptrend is likely to continue. Its next resistance levels are RM1.60, RM1.80 & RM2.00.

Recent Financial Results

As mentioned earlier, Evergrn's bottom-line has returned to the black in 3Q14. In the past 3 quarters, we can see that net profit has risen steadily from RM10 million in 3Q14 to RM20 million in 1Q15. 

Conclusion

Based on satisfactory financial performance, attractive valuation & bullish technical outlook, Evergrn is a good stock for long-term investment.

http://nexttrade.blogspot.com/

Solution Engineering huge earnings jump

PUCHONG: Solution Engineering Holdings Bhd expects to register a huge jump in earnings to over RM6 million for the financial year ending Dec 31, 2015 based on an internal revenue projection of RM42 million.

According to its managing director Lim Yong Hew, the profit growth will be driven by increased sales, as it is confident it will bag RM30 million worth of contracts in the second half of the year.

"This would bring our total order book to RM50 million by then," he told SunBiz in a recent interview.

For the financial year ended December 31, 2014, Solution Engineering saw a five fold surge in net profit to RM3.66 million compared with RM740,000 a year before.

Solution Engineering is involved in engineering equipment, lubricants, automation and biotechnology segments.

Last year, the engineering equipment division, which provides technical training equipment to the education industry, contributed 80% to the group's top line.

Lim said the group is looking to form strategic partnerships with government agencies in a bid to grab more opportunities within the engineering equipment business.

Solution Engineering also has plans to increase contribution from overseas markets which currently make up 15% to 20% of the group's revenue.

Lim hopes to increase it to at least 50% in the next few years.

The company has a presence in Southeast Asia, Bangladesh, Pakistan, the Middle East and Africa, covering 35 countries. The Middle East and Africa are deemed as the most promising overseas markets.

Over the longer term, Lim said the group has plans to venture into North and South America.

"We've to cover the whole world, but we've to identify the right partners and agents," he noted.

Going forward, Lim said the group is committed to improving its research and development (R&D) capability to come out with new products as well as increasing production capacity and facility.

Last year the group registered a lower net profit margin of 10%, due to the employees' share option scheme (ESOS) cost.

"Quite a number of our projects have a gross margin of 40% to 50%, but after deducting the operating expenditure, tax and finance charges, then it comes out to be around 15% before incurring the ESOS cost," Lim said.

The group is also looking at potential acquisitions, but nothing has materialised as yet.

"We've been approached by foreign companies, but that was out of our affordability range. It's still at preliminary stage, but we've initiated the discussion," he said.

Lim is hoping that the group could embark on one or two acquisitions, in its quest to move to the main board.

"We hope to have one in electrical and electronic, one in mechatronic, so this would complement our existing product range. But we (won't pressure ourselves), the acquisitions must be synergistic to the current business," he added.

Lim said the company's new 35,000 sq ft workshop will be operational by 2016 as construction work on it will begin soon. Partial funding for the workshop has been secured, with land and construction cost to range between RM10 million and RM15 million.

"We'll relocate our operation here (Puchong) to the new workshop upon completion," he noted.

With the new plant, Lim said the group's production capacity will more than double with full utilisation rate.

On challenges, he pointed out that Malaysian products are not widely accepted due to some perception issues, hence it may take some time to change the market mindset. "We position ourselves as a mid-range player, not too high end," he added.

http://www.thesundaily.my/news/1451537

Sliding ringgit boosts investments in exporters

PETALING JAYA: The recent slide of the ringgit, which had fallen 4.6% against the US dollar over the past one month, is helping boost investors’ appetite for shares in exporters.

Investors are betting that these companies, mostly manufacturers, will benefit from increased sales. A weaker ringgit makes local produce more attractive to foreign buyers.

The ringgit on Friday declined to 3.719 against the US dollar – its weakest level since March 23. The latest bout of weakness for the local unit coincided with a sell-off on Bursa Malaysia by foreign fund managers.

Estimates showed as much as RM1bil had left the stock market since the start of May.

While blue chip stocks stumbled, the FTSE Bursa Malaysia KL Composite Index (FBM KLCI) had fallen 3.4% over the past one month, smaller stocks with huge export potential continued to outperformed the broader market.

On Friday, CIMB Research initiated a “buy” call on Kawan Food Bhd, a manufacturer of frozen food, which is expanding its production capacity to boost exports.

“Kawan Food is also a proxy to the economic recovery in the US, its largest export market,’’ analyst Nigel Foo said.

Shares in Kawan Food had surged 41% from a month ago to RM2.59 on Friday.

The company is now worth RM478mil, or 18 times based on CIMB’s projected earnings of RM26.3mil for the year ending Dec 31 (FY15).

Net profit at Kawan Food may rise to RM43.7mil in FY16, Foo said, as the company new RM100mil factory, which is five times bigger than its current facility, went into production.

“We forecast a strong 40% three-year compounded annual growth rate net profit for Kawan Food, backed by a strong topline growth from the new factory and lower effective tax rates,” he said in a report dated June 5.

Foo values the producer of frozen roti paratha, chapatti and spring roll pastry, at RM3.65 a share.

“Last but not the least, Kawan Food benefits from a weaker ringgit as it earns 60% of its revenue from export sales that are mostly denominated in US dollar,” he added.

Kawan Food is joining a list of companies that analysts predict will benefit from the weaker ringgit. Clear winners from the currency slump includes glove makers and electronic equipment makers.

http://www.thestar.com.my/Business/Business-News/2015/06/08/Sales-boost-for-exporters/?style=biz

Robust US jobs growth

WASHINGTON: US job growth accelerated sharply in May and wages picked up, signs of strong momentum in the economy that bolster prospects for a Federal Reserve interest rate hike in September.

Non-farm payrolls increased 280,000 last month, the largest gain since December, the Labour Department said.

While the unemployment rate rose to 5.5% from a near seven-year low of 5.4% in April, that was because more people, including new college graduates, entered the labour force, indicating confidence in the jobs market.

“Today’s strong jobs report shows that the underlying trend in the economy is continuing to improve. This leaves the Fed on course to start hiking rates in September,” said Michelle Meyer, senior economist at Bank of America Merrill Lynch in New York.

The report joined May automobile sales and manufacturing data in suggesting economic activity was gaining traction after a slow start in the second quarter

http://www.thestar.com.my/Business/Business-News/2015/06/08/Robust-US-jobs-growth/?style=biz

EU chief rebukes Greece, demands swift debt plan

Germany (Reuters) - The European Union's exasperation with Greece burst into the open on Sunday when its chief executive rebuked leftist Prime Minister Alexis Tsipras and warned that time was running out to conclude a debt deal to avert a damaging Greek default.

In unusually sharp terms, European Commission President Jean-Claude Juncker accused Tsipras of distorting proposals by international creditors for a cash-for-reform agreement and of dragging his feet in putting forward alternative proposals.

He urged Athens to put its own ideas on the table swiftly to enable talks to resume on the sidelines of an EU-Latin America summit on Wednesday in Brussels.

In Athens, a government official said Greece wanted to continue to negotiate "at a political level" to find convergence with the lenders. However, the euro zone and the International Monetary Fund have made clear the numbers must first add up in technical negotiations before there can be a political deal.

http://mobile.reuters.com/article/topNews/idUSKBN0ON0MZ20150607?irpc=932RUEN,

BURSA: FBM KLCI To Continue Downtrend
KUALA LUMPUR -- The ringgit’s renewed weakness and untimely cautious local economic sentiments, coupled with the uncertain global economy, are expected to further weigh down the FTSE Bursa Malaysia KLCI (FBM KLCI) next week. Affin Hwang Investment Bank vice-president and head of retail research Datuk Dr Nazri Khan said the macro factors which are expected to affect the local index next week include the unsuccessful Greece negotiations and renewed bond volatility.

“The previous week saw the FBM KLCI continue its sixth losing weekly streak, driven down by TM and TNB due to news reports that there could be tariff cuts soon. The FBM KLCI failed to break above the 1,750 resistance level while several doji candlesticks appeared in the daily technical chart suggesting more downside ahead,” he told Bernama.

Due to the volatile market sentiment, Nazri said the local benchmark index is likely to continue its downtrend, testing the 1,700 support level over the next weekly session.

Meanwhile, on a Fridayto-Friday basis, the benchmark FBM KLCI shed 2.19 points to 1,745.33 from 1,747.52. Weekly turnover declined to 7.37 billion units worth RM8.94 billion from 9.07 billion units worth RM11.63 billion previously. Main market volume decreased to 4.65 billion units worth RM8.17 billion from 5.19 billion units worth RM10.53 billion last week.
- Bernama

Cramer: Stop crying over Greece

As pressure builds yet again over news of Greece, Jim Cramer wonders if investors are spending too much time worrying about Greece. Could the 11 million people in Greece really be able to bring down the entire continent of Europe, with a population of 742 million?

If you were to pay attention to the headlines in the news, then yes, Greece could really be that important. Some have even speculated that Greece is just as important to Europe as the fall of Lehman Brothers was to the United States. They have painted a picture that there is a tremendous amount of systematic risk if Greece defaults on its obligations.

http://www.cnbc.com/id/102730756

Eye On Stocks

RCE CAP

RCE Capital Bhd has been rising the past several months on renewed bargain hunting buying momentum following a round of correction process, which witnessed prices bouncing from the most recent lows of 28.5 sen in mid-December last year to achieve a nine-month high of 36 sen on Thursday.

Yesterday, the shares re-tested the previous day’s peak of 36 sen in early session before reversing slightly to close a shade lower, down half a sen to 35 sen.

Based on the daily chart, RCE Cap remains in correction mode apparently, but recent price development suggests that it is making a fresh attempt to mend and chances are fairly good it may succeed this time round, with investors’ interest building up.

A breach of the mid-term descending line of 37 sen, followed by a clear breakout of the relatively stiff barrier of 39 sen would give all of us the confirmation that this stock is on the way up, enroute to the 45.5-sen level or the upper 50-sen mark in the near term.

Elsewhere, the oscillator per cent K had slipped below the oscillator per cent D of the daily slow-stochastic momentum index yesterday, but the short-term sell signal could not be confirmed for now, simply because the two lines continued to flirt at the bullish territory.

In stark contrast, the 14-day relative strength index rose from a reading of 42 on May 26 to settle at the 77-point level yesterday.

Meanwhile, the daily moving average convergence/divergence histogram sustained the upward expansion against the daily signal line to keep the bullish note. It had issued a buy call on Tuesday.

Technically, most of the indicators are positive, implying RCE Cap shares are poised to strengthen, once the broad-market sentiment turns favourable.

Initial support is pegged at the 50-day simple moving average of 33 sen. An additional floor is resting at the 30-sen psychological level. 

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

http://www.thestar.com.my/Business/Business-News/2015/06/06/Eye-on-stocks-RCE-Capital/?style=biz

Stock To Watch
Kawan @ 2.60 - TP 3.65 by CIMB

Kawan Food climbs as CIMB Research upbeat on prospects

KUALA LUMPUR: Kawan Food’s share price rose to a high of RM2.58 on Friday after CIMB Equities Research initiated coverage of the frozen food producer with a target price of RM3.65.
At 3.55pm, it was up 12 sen to RM2.50. There were 1.75 million shares done at prices ranging from RM2.38 to RM2.58. The warrants rose 13 sen to RM1.51.

CIMB Research said Kawan is an exciting proxy for the F&B frozen foods market. The company, which invented the world’s first frozen roti paratha, is looking to launch more products once its new factory becomes fully operational in 2016.

Kawan is also a proxy to the economic recovery in the US, its largest export market.

“We initiate coverage on Kawan with an Add rating. Our target price is based on a 10% discount to our 2016 F&B sector P/E of 25 times; the discount reflects its small market cap.

“Potential catalysts include securing the tax incentives for its new factory capex, and start of commercial production at this plant. More aggressive investors may wish to consider its warrants (7216 WA, exercise price 93 sen, expiring July 2016),” it said.

http://www.thestar.com.my/Business/Business-News/2015/06/05/Kawan-Food-climbs-as-CIMB-Research-upbeat-on-prospects/?style=biz

Posted by rikki > May 30, 2015 11:23 AM | Report Abuse X

Eye on stock: Rubberex Corp

RUBBEREX Corp (M) Bhd shares rallied from a low of 56 sen on Dec 16 last year, the worst level in three years to a 15½-month high of 77.5 sen on April 13 before the bulls take a breather.

In the wake of an apparent profit-taking, prices retreated slightly back to the 68.5 sen on April 28 on correction, followed by a brief band trading on consolidation before bouncing off on renewed bargain hunting interest.

This stock bounced to a one-month high of 74.5 sen during intra-day session but finished up two sen at 73 sen, as a frail principal market trend somewhat undermined investors’ enthusiasm.

Based on the daily chart, Ruberex appeared to be making a fresh attempt to resume the scaling after the recent correction process.

A breach of the immediate hurdle of 76 sen, followed by a decisive breakout of the 77.5-sen barrier would give investors the confirmation.

If that happens, the next upside objective would be to challenge the pretty stiff resistance of 94 sen or to test the upper heavy barrier of RM1.05 in the near term.

Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily-slow-stochastic momentum index were firming. It had issued a short-term buy at the neutral area on Thursday.

Also looking good, the daily moving average convergence/divergence histogram resumed the upward expansion against the daily trigger line to keep the bullish note. It had call for a buy on May 21.

In addition, the 14-day relative strength index spiked to a high of 62, up from the 445-point level on Monday.

On the back of improving technical indicators, Ruberex shares are poised to advance in the short term.

To the downside, trailing stop-loss exit is pegged at the 68.5-sen floor.

http://www.thestar.com.my/Business/Business-News/2015/05/30/Eye-on-stock-Rubberex-Corp/?style=biz

IMF warns Fed should delay rate hike until 2016

The U.S. Federal Reserve should delay a rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation, the International Monetary Fund said in its annual assessment of the economy on Thursday.

The fund's report comes amid signs that some rate setters at the U.S. central bank are also pushing for rate hikes to be delayed until there are clearer signs of a sustained recovery. U.S. data has been mixed and the economy shrank 0.7 percent in the first quarter.

"Based on the mission’s macroeconomic forecast, and barring upside surprises to growth and inflation, this would put lift-off into the first half of 2016," the fund said.

Fed chair Janet Yellen has insisted the economy remains on track and that a rate rise this year is on the cards, although others including Fed governor Lael Brainard, viewed as a centrist on the rate-setting committee, have raised concerns over growth.

The fund forecast that the Fed's favored measure of inflation, the personal consumption expenditures (PCE) reading, would hit the central bank's 2 percent target only in mid-2017.

"A later lift-off could imply a faster pace of rate increases following lift-off and may create a modest overshooting of inflation above the Fed’s medium-term goal (perhaps up toward 2.5 percent)," the Fund said.

"However, deferring rate increases would provide valuable insurance against the risk of disinflation, policy reversal, and ending back at
zero policy rates."

http://www.reuters.com/article/2015/06/04/us-usa-imf-idUSKBN0OK1L220150604

KAWAN high volume persisted buying sparks ideas
Posted in Uncategorized on 03/06/2015 by J&J 35

Last few days we found Kawan has exceptional trading volumes that not seen in years. Together with major share holders disposed some stocks early in May. Sparking ideas of right issue, bonus issue, General offer or even a strong fund buy into the counter.

However, we still hold its Kawan mother share as we believe the price of the share worth more than RM 2.50 excluding the new plant contribution in 2016. Beyond that may worth RM 3.00 and above. However, we disposed some warrants at RM 1.40. We will continue to dispose warrant but hold on to its mother share.

Our target of Kawan remained with RM 2.50 before year end and RM 3.00 beyond.

Support Line

Connect

SHARES of Connectcounty Holdings scaled to a high of 26 sen during intra-day session, the best since November 2011. For now, indicators are looking pretty promising, suggesting more upside in the pipeline. A breach of the 27.5-sen barrier would propel prices up to the 33.5 sen-37.5 sen band while important support is resting on the 23-sen line.


Hup Seng

HUP Seng Industries rose to a nine-month high of RM1.14. The immediate upside objective would be to challenge the historical peak of RM1.23, set on April 18 last year, of which a positive breakout would send the bulls into unknown territory. On the other hand, a futile attempt to tear down the stiff barrier would see price retreating on correction, with RM1.02 acting as an initial support.

Scanwolf

SCANWOLF Corp eased marginally on extended consolidation. Based on the daily chart, a successful penetration of the 87-sen barrier would signal the end of the correction process, en route to re-test the all-time peak of RM1.05. On the downside, a crack of the 62-sen floor will have a negative impact on this stock going forward.

http://www.thestar.com.my/Business/Business-News/2015/06/04/Support-Line/?style=biz

Stock To Watch

Cocoaland @ 2.04

Cocoaland gets takeover offer from First Pacific

Snacks and candy company Cocoaland Holdings Bhd has received an indicative non-binding proposal from First Pacific Company Ltd to acquire the business of Cocoaland including all of its assets and liabilities for RM463.32mil or RM2.70 per share.

This is the second takeover offer Cocoaland is receiving in less than two weeks.

Last week, Cocoaland’s board rejected a takeover offer from private equity firm Navis Asia VII Management Co Ltd for RM377.52mil or RM2.20 per share.

The confectionery maker said then that its board had deliberated on the proposed acquisition made on May 22, and unanimously rejected the offer.

Cocoaland was last traded at RM2.04 on Monday. The stock is up 51 sen or 33.33% on a year to date basis. It will resume trading at 9am today.

For this latest offer, Cocoaland directors Liew Fook Meng, Lau Kee Von, Liew Yoon Kee and Lau Pak Lam are deemed interested parties in the proposal.

First Pacific intends to undertake the proposal through a special purpose vehicle.

Fook Meng, who is an executive director and substantial shareholder of Cocoaland, along with certain shareholders of Leverage Success Sdn Bhd, (a substantial shareholder of Cocoaland, and referred to as the Liew Group) will acquire a stake in the proposed acquiror to be agreed upon by First Pacific and the Liew Group.

First Pacific is a Hong-Kong based investment management and holding company, having its principal business interests in telecommunications, consumer food products, infrastructure and natural resources. It is listed on the Hong Kong Stock Exchange.

Cocoaland told Bursa the proposal is conditional upon a few key things, chiefly the completion of a due diligence exercise to the satisfaction of First Pacific, on the commercial, financial, legal, tax and other affairs of Cocoaland and its subsidiaries for a period of four weeks.

Secondly, the negotiation and execution of a sale and purchase agreement for the proposal on terms and conditions are to be satisfactory to all parties.

The last condition is that Cocoaland has not paid, made or declared any dividend or distribution from the date of the proposal until the completion of the proposal.

Cocoaland told Bursa that it had agreed for a six week period of exclusivity from the date of the proposal or for an extended period agreed upon by all parties. During this period, Cocoaland will deal exclusively with First Pacific in respect of any disposal of the business and undertaking, including all the assets and liabilities, of Cocoaland or any takeover offer for Cocoaland shares.

“Cocoaland further agrees that neither it nor the management of Cocoaland will initiate or enter into any transaction, negotiation or discussion with any other party regarding such proposed disposal or takeover or respond to any approach made by any party with a view to any of the foregoing,” it said.

http://www.thestar.com.my/Business/Business-News/2015/06/03/Cocoaland-gets-takeover-offer-from-First-Pacific/?style=biz

Sumatec’s substantial shareholder surfaces in Metronic

James Chan Yoke Peng, a close associate to tycoon Tan Sri Halim Saad, emerged as a substantial shareholder in Metronic Global Bhd, with a 5.01% equity stake.

A filing with Bursa Malaysia yesterday shows that a company named Tekad Mulia Sdn Bhd had acquired 35 million shares in Metronic (fundamental: 1.25; valuation: 0.3) at 10 sen per share through off market on May 26.

According to Companies Commission Malaysia, Tekad Mulia Sdn Bhd is owned by Chan, who is also a director in the private limited outfit.

Meanwhile, Chan is the incumbent non-independent non-executive director of Sumatec Resources Bhd (Financial Dashboard), an oil and gas company in which Halim owns a 24.5% stake.

Through Tekad Mulia, Chan had been paring down his shareholding in Sumatec (fundamental: 2.0; valuation: 0.9) from 7.9% to 2.08% in March alone, resulting in him ceasing to be the substantial shareholder in the group.

Metronic was trading at 9.5 sen per share as at 4:31pm today, up one sen or 11.76%, with 4.39 million shares changing hands, giving it a market capitalisation of RM59.36 million. Sumatec share price, on the other hand, gains 0.5 sen or 2.5% to 20.5 sen per share, with 26.06 million shares traded, valuing it at RM696.54 million.

http://www.theedgemarkets.com/my/article/sumatec%E2%80%99s-substantial-shareholder-surfaces-metronic

thank you abang duit....same goes to you....:)

Ewein incorporates subsidiary in anticipation of next Tanjong Pinang project

Ewein Bhd which is looking to bag the next parcel of land that Consortium Zenith BUCG Sdn Bhd (CZBUCG) will be offering at Bandar Tanjong Pinang, Penang for development — is incorporating a new 60%-owned subsidiary called Ewein Zenith II Sdn Bhd in anticipation of the proposed project.

The remaining 40% stake in Ewein Zenith II will be held by CZBUCG.

In a filing with Bursa Malaysia, Ewein (fundamental: 1.55; valuation: 1.4) said the board of directors of its wholly-owned subsidiary, Ewein Land Sdn Bhd, approved today to incorporate Ewein Zenith II.

"An application has been made to the Companies Commission of Malaysia today, for the said incorporation," it added.

The proposed directors of Ewein Zenith II will be Ewein managing director Datuk Ewe Swee Kheng, CZBUCG chairman Datuk Zarul Ahmad Mohd Zulkifli and Ewein director Chan Gooi Yew.

Ewein said the intended principal activities of Ewein Zenith II will be property development, construction and property investment.

According to a source close to the matter, the incorporation of Ewein Zenith II is in anticipation of Ewein bagging the next parcel of land, measuring 4.29 acres (1.73ha) at Bandar Tanjong Pinang.

“Their (Ewein) chances are getting more visible. That is why they are setting up a new subsidiary, with the purpose of managing the proposed project,” the source told theedgemarkets.com today.

In an April interview with The Edge Financial Daily, Ewe had indicated that the next property project at Bandar Tanjong Pinang was likely to be another high-rise residential development. It is understood that the second project will have a gross development value (GDV) of RM1 billion.

If successful, it would be Ewein's second project in Penang. On March 31, 2015, Ewein, through Ewein Zenith Sdn Bhd — a 60:40 JV between Ewein and CZBUCG — received planning permission from the Penang Island City Council to develop luxury serviced apartments on a 3.67-acre piece of freehold land in Bandar Tanjong Pinang.

Dubbed “City of Dreams”, the project features two blocks of 38-storey towers, housing a total of 572 units with built-ups ranging from 1,100 sq ft to 2,350 sq ft.

Ewein's shares fell 4.5 sen or 4.62% to close at 93 sen per share today, with over 2.49 million shares done, giving it a market capitalisation of RM205.66 million.
http://www.theedgemarkets.com/my/article/ewein-incorporates-subsidiary-anticipation-next-tanjong-pinang-project