Saturday, January 8, 2011

#Stocks to watch:* Hap Seng, Guan Chong, PLUS, MMC

KUALA LUMPUR: As the FBM KLCI posted 3.51% in gains for the first week of 2011 to close at a fresh high of 1,572.21 , investors' thoughts are whether the market can extend its gains for the week starting Monday, Jan 10.

Profit taking was well absorbed last Friday, with banks giving up some gains as interest shifted to other blue chips. External events would also help provide the direction for the local bourse.

For the week,the index was up 53.3 points or 3.51% from 1,518.91 on Dec 30 to 1,572.21''last Friday. Market capitalisation increased by RM49.87 billion during the period to RM1.324 trillion.

On Wall Street, US stocks fell on Friday after a court ruling in a key foreclosure case prompted investors to pull out of bank stocks, adding to weakness after a lacklustre jobs report.

Despite the weaker close, the broader Standard & Poor's 500 Index and Dow Jones industrial average recorded their sixth straight week of advances. The market has proved resilient despite expectations that stocks were due for a pullback.

The Dow slipped 22.55 points, or 0.19%, to 11,674.76. The S&P was off 2.35 points, or 0.18%, to 1,271.50. The Nasdaq Composite Index declined 6.72 points, or 0.25% to 2,703.17. For the week, the S&P 500 rose 1.1%, the Dow gained 0.8% and the Nasdaq climbed 1.9%.

Stocks to watch on Bursa Malaysia would be HAP SENG CONSOLIDATED BHD [], GUAN CHONG BHD [], PLUS EXPRESSWAYS BHD [] and MMC Corp Bhd.

Hap Seng plans to raise up to RM1.46 billion from a corporate exercise which includes RM808.21 million from a private placement and another RM654.54 million from a rights issue. The move would also build its war chest to undertake acquisitions.

It had proposed to place out up to 124.53 million new shares at an issue price of RM6.49 per placement share which would raise RM808.21 million.

It would also undertake a renounceable rights issue of up to 448.31 million new shares together with up to 448.31 million new free detachable warrants to raise RM654.54 million.

Meanwhile, Guan Chong plans to raise up to RM120 million from the expected exercise price of RM2 for the 60 million free warrants. It had fixed the exercise price for the warrants at RM2, which was 9.29% or 17 sen over the theoretical ex-price after the proposed bonus issue of RM1.83 per share, based on the five-day volume weighted average price of RM2.44.

Of the RM120 million, the proceeds would be used'' for the day-to-day working capital requirements of the group.

Monday is the deadline for interested bidders to deposit their RM50 million to take over PLUS Expressways. Reports state MMC Corp Bhd may be the third party to put in its bid on Monday.

The first joint offer by UEM Group Bhd and the Employees Provident Fund Board was RM4.60 per share or RM23 billion while the second offer is from Jelas Ulung Sdn Bhd which is offering RM26 billion ot RM5.20 per share.

Meanwhile,'' Johor Corporation (JCorp) has stated it has 70% of the required sum needed to repay its debts from plans about to be executed.

Its new president/chief executive officer, Kamaruzzaman Abu Kassim said last Friday that the group had RM3.6 billion debt in July 2012 and it was taking steps to reduce it to a more sustainable level of between RM1 billion and RM1.5 billion.

"To pay off the difference, which would amount to about RM2.6 billion, 70% of the required sum, or about RM1.8 billion, would be derived from plans which would be executed at a suitable time. The balance will be raised from sellable assets and land," he said.

Meanwhile, KFC Holdings (Malaysia) Bhd (KFCH) plans to invest RM25 million to open 25 new outlets nationwide this year.

Managing director Jamaludin Md Ali said out of the 15 of the KFC fast food restaurants will be drive-through outlets to provide more convenience to customers, he said. Currently, there were 520 KFC outlets including 40 drive-through outlets.

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