Saturday, July 17, 2010

#Stocks to watch:* Titan, Southern Steel, Lafarge, Fitters

KUALA LUMPUR: Key regional markets including Bursa Malaysia could see downside pressure in the week ahead, starting Monday, July 19 after the sharp fall on Wall Street on Friday.

The fall on Wall Street was triggered by dismal consumer sentiment data and anemic revenues from GE and two big banks'' -- Bank of America and Citigroup.

Bank of America and Citigroup shares fell as the banks' results highlighted the sluggishness of the U.S. economic recovery and costs of potential regulation, offsetting better-than-expected quarterly profits on lower credit losses.

The slide in the S&P 500 was a decisive break of an 8% rise over the last two weeks as investors lost hope that strong earnings could overcome doubts about the economic outlook.

The Dow Jones industrial average dropped 261.41 points, or 2.52%, to 10,097.90. The Standard & Poor's 500 Index slid 31.60 points, or 2.88%, to 1,064.88. The Nasdaq Composite Index lost 70.03 points, or 3.11%, to 2,179.05.

At Bursa Malaysia, stocks to watch are Titan Chemicals Corp Bhd, SOUTHERN STEEL BHD [], LAFARGE MALAYAN CEMENT BHD [] (LMC) and FITTERS DIVERSIFIED BHD [].

South Korea's Honam Petrochemical Corp has launched a takeover of Titan Chemicals Corp Bhd, to acquire remaining 72.32% stake or 1.249 billion shares for RM2.93b or RM2.35 a share.

Its major shareholders Union Harvard Investments S.R.L, CGDC Investments Corporation, Permodalan Nasional Bhd, and AmanahRaya Trustees Bhd had signed agreements to sell their collective stakes to Honam.

Southern Steel Bhd has received a notice of conditional take-over offer from Signaland Sdn Bhd to acquire all the shares, which it does not own, for RM2.05 cash per share.

It should be noted the shares jumped 13 sen to end at RM2.04 last Friday, ahead of the announcement. Its 52-week high was RM2.69 and its 52-week low was RM1.58.

'The board does not intend to seek an alternative person to make a take-over offer for the offer shares,' Southern Steel said.

Signaland had acquired 113.38 million shares or 27.03% at RM2.05 per share for RM232.43 million shares from NatSteel Holdings Pte Ltd.

Prior to the acquisition, the offeror and persons acting in concert, owned 181.25 million shares or 43.21% stake. After the acquisition, the offeror and persons acting in concert, saw their collective interest increase from 43.21% to 70.24%.

Should they hold more than 90% of the listed shares, it would seek to delist Southern Steel. However, if it receives more than 75% or less than 90% of the listed shares, it would explore various options to address the public shareholding spread.

In LMC, Lafarge SA had placed out an 11.2% stake or 95.15 million shares in LMC at RM6.24 a share. This was a 3.7% discount to Thursday, July 15's closing price of RM6.48 and a 4.0% discount to the five-day VWAP price of RM6.50).

In Fitters Diversified, its managing director Datuk Richard Wong Swee Yee attracted attention with his acquisitions of shares and warrants in the fire fighting equipment manufacturer.

His and family's equity interest in the company is just short of the 33% required to trigger a general offer. He owns 32.85% or 47.39 million shares as at May 27. More in The Edge weekly.

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