Thursday, July 15, 2010

#Stocks to watch:* Tenaga, Jetson, O&G, UMW, SEGi

KUALA LUMPUR: Key regional markets could take a breather on Thursday, July 15 after Wall Street closed mixed overnight following suggestions from the Federal Reserve suggested additional measures may be needed to combat a weakening economy.

The Dow Jones industrial average edged up 3.70 points, or 0.04%, to end at 10,366.72. The Standard & Poor's 500 Index dipped just 0.17 of a point, or 0.02%, to 1,095.17. The Nasdaq Composite Index added 7.81 points, or 0.35%, to close at 2,249.84.

Earlier, the broader S&P 500 touched an intraday high at 1,099.08 and the Nasdaq was up as much as 0.8 percent at a session high of 2,260.33.

At Bursa Malaysia, stocks to watch include Tenaga Nasional'' Bhd, KUMPULAN JETSON BHD [], oil and gas (O&G), UMW and SEGi. The FBM KLCI is up 5.37% year-to-date and on Wednesday, it was at a two-month high.

Tenaga's third quarter net profit was higher at RM1.1 billion versus RM1.02 billion a year ago. Revenue was higher at RM7.72 billion from'' RM7 billion. It reported earnings per share of 25.51 sen versus 23.6 sen.

For the nine-months, earnings came in at RM2.81 billion against the RM753.6 million in the previous corresponding period.

Tenaga's forex translation gain was RM569.1 million in 3Q as the ringgit strengthened against the yen and the US dollar. Of the power giant's'' borrowings totaling RM21.57 billion, about RM5.1 billion was in yen and RM4.78 billion in US dollars.

Jetson shares could fall, extending its losses for the second day, amid fears of a boardroom tussle, as the company temporarily halted trading of its shares to announce the surprise retraction of a director's earlier resignation.

O&G stocks and supporting industries could see strong interest as a staggering RM27 billion pipeline of potential contracts in the sector will continue to keep the ball rolling for a sector that contributes 41% to the government's revenue in 2009.

CIMB Research said bulk of the contracts were domestic and in line with the government's and Petronas' strategy of putting more resources in Malaysia and developing domestic reserves.

Major contracts up for grabs were the RM11 billion development of deepwater fields, US$2.1 billion rejuvenation of seven fields including Tapis, RM2 billion Sabah Oil & Gas Terminal (SOGT) and RM1.5 billion offshore maintenance contract.

In UMW, its joint venture''UMW Toyota Motor Sdn Bhd, which distributes Toyota vehicles, targets to locally assemble Camry models by mid-2012 as part of its RM170 million assembly plant upgrading programme.

UMW Toyota was conducting technical studies on its assembly plant capacity and was in talks with local suppliers to see how local content could be used in its production.

The new Camry assembly line was part of UMW Toyota's total investment of RM370 million to improve its production line and build a new centralised stockyard.

Meanwhile, a filing from SEG INTERNATIONAL BHD [] showed Rexter Capital Sdn Bhd disposing of 1.25 million units on July 13, reducing its interest to 25.4% or 63.35 million shares. The shares had rallied in recent weeks, spurred by the corporate exercise.

MALAYSIAN AIRLINE SYSTEM BHD [] is sealing an agreement to purchase from Pratt & Whitney its PW1470 Advantage 70TM engines for its 17 new Airbus A330 aircraft.

CIMB Research was upbeat about MAS as it expected a global aviation recovery will help MAS turn a small core net profit in FY11 and more significant profits in FY12 with new aircraft deliveries.

In WWE, the Securities Commission rejected its proposed restructuring scheme as it did not comply with profit requirements.


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