Wednesday, June 23, 2010

#Stocks to watch:* Shin Yang, BLand, Axiata, EON Cap

KUALA LUMPUR: Key regional markets are expected to see another day of cautious trade on Wednesday, June 23 after Wall Street fell overnight in yet another late-day selloff.

US stocks fell more than 1% as unexpectedly poor housing figures and the puncture of a key technical level sapped buying interest, according to Reuters.

Stocks marked time in a thinly traded session until the S&P 500 fell through its 200-day moving average, which had been a basis of support in the last few days.

The Dow Jones industrial average dropped 148.96 points, or 1.43 percent, to 10,293.45. The Standard & Poor's 500 Index fell 17.86 points, or 1.60 percent, to 1,095.34. The Nasdaq Composite Index lost 27.29 points, or 1.19 percent, to 2,261.80. The S&P 500 ended below 1111.33, the 200-day moving average.

At Bursa Malaysia, stocks to watch include Shin Yang Shipping Corporation, which will be listed on the Main Market, BERJAYA LAND BHD [], Axiata Group Bhd, Ingress Corporation and EON CAPITAL BHD [].

Miri-based Shin Yang Shipping's offer price is RM1.28. Of the RM176 million raised in its initial public offering, the proceeds will be used to part fund the building of seven new vessels, expand existing shipyard and build another shipyard in Tanjung Manis, Sibu.

The 24.0 million shares allocated for public subscription was oversubscribed by 1.35 times. There were 3,919 applications for 56.5 million shares.

Berjaya Land Bhd and South Korea's Jeju Free International City Development Center (JDC) had decided not to go ahead with the proposed US$200 million theme village after nearly two years.

BLand had allowed the conditional memorandum of agreement dated Aug 20, 2008 on the themed village project, to lapse and was no longer effective.

Instead, both parties decided to focus their efforts on the development of its current joint venture development project in Jeju with JDC. This project is a resort type residential and commercial complex development project at Yerae-dong, Seogwipo-si, Jeju Island undertaken by Berjaya Jeju Resort Ltd.

Axiata Group is firming up the details to issue sukuk bonds worth RM4.2 billon to refinance its current debts due to expire and hopes to announce details by end-July. The group aims to term out its loans by five to seven years.

The sukuk tenures will be five, seven and 10 years respectively. The group was in the midst of drawing up a new dividend policy, which it expects to announce at the end of this third quarter.

Ingress said in the first quarter ended April 30, net profit jumped to RM10.47 million from only RM587,000 a year ago. Revenue was RM180.41 million versus RM151.67 million.

The better performance was underpinned by the automotive division which recorded revenue of RM161.7 million and profit before tax of RM11.0 million'' compared with revenue of RM126.3 million and pre-tax profit of RM2.4 million a year ago.

When compared with the previous quarter, the group recorded a 10% increase in revenue with a profit before tax of RM15.3 million against the immediate preceeding quarter profit before tax of RM4.5 million.


However, investors should note the company has borrowings of RM310 million. It is also in the process of obtaining consent from other existing lenders and various authorities to refinance its sukuk.

Meanwhile, the board of directors of TRADEWINDS (M) BHD [] seemed unfazed by the high debt and corporate governance issues brought up by minority shareholders at the AGM on Tuesday.

Issues raised were the releasing of the RM10 million donation to Syed Mokhtar-linked Albukhary University before prior approval from shareholders.

Minority shareholders were said to be discontented with the lack of transparency at board level and lamented that the board was not serious about corporate governance. There were also concerns about Tradewinds' high debt and recoverability of its receivables.

Tradewinds' total debt as at end March 2010 stood at RM2.9 billion with gearing ratio of about 1.8 times. Of the total, some 53% or RM1.6 billion are short term borrowings. According to its annual report, for FY09 ended Dec 31, some RM1.6 billion of its borrowings will mature in less than a year.


In EON Cap, the company said it is unlikely the petition sought by its 20% stakeholder, Primus Pacific Partners Ltd, would have any material impact on the operations, business and financial position of the EON Cap and its subsidiaries.

EON Cap said it was only named as a nominal respondent in the petition filed by''Primus (Malaysia) Sdn Bhd on behalf of Primus Pacific.


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