Friday, January 7, 2011

#Stocks to watch:* Maybank, water concessionaires, Priceworth, TM

KUALA LUMPUR: MALAYAN BANKING BHD [] (Maybank) will be in focus when it resumes trading on Friday, Jan 7 after it proposed to expand its regional footprint by acquiring Singapore-listed stockbroking firm Kim Eng Holdings Ltd. The total estimated purchase consideration for 100% of Kim Eng would be S$1.79 billion (RM4.26 billion).

Overnight, Wall Street Stocks slipped on Thursday, Jan 6 as soft retail sales and a sharp rise in the dollar left investors edgy a day before December's U.S. employment report, according to Reuters.

Given a rise of about 8 percent in the S&P 500 since the start of December, investors could be looking for an excuse to sell stocks if the jobs report falls short of forecasts that were raised after Wednesday's strong private-sector payroll report.

The Dow Jones industrial average was down 25.65 points, or 0.22 percent, at 11,697.24. The Standard & Poor's 500 Index was down 2.71 points, or 0.21 percent, at 1,273.85. The Nasdaq Composite Index was up 7.69 points, or 0.28 percent, at 2,709.89.

At Bursa Malaysia, stocks to watch include Selangor water concessionaires including Puncak Niaga and GAMUDA BHD [], Priceworth and TELEKOM MALAYSIA BHD [].

To recap, Maybank president and chief executive officer Datuk Seri Abdul

Wahid Omar states the bank has no plans for any rights issuance to fund its acquisition of Kim Eng Holdings Ltd.

He said Maybank has ample financial flexibity including sufficient capital base to absorb the transaction.

AmResearch said it believes the acquisition of Kim Eng will reduce the upside potential to Maybank's dividend payout.

'We are maintaining our HOLD rating on the stock. This is based on an unchanged fair value of RM9.60, based on our calendarised ROE estimate of 15.0%, and fair P/BV ratio is 2.08 times.

'At RM4.2 billion, this works out to a P/BV of 1.91 times based on Kim Eng's end-September 2010's shareholders' funds of S$937.6 million and 26.3 times annualised earnings based on Kim Eng's net profit of S$50.2 million for 9M10. The P/BV is within the range of investment bank/ stockbroking transactions in the past,' AmResearch said.

The Selangor water concessionaires including Puncak Niaga and Gamuda would see trading interest after the Selangor state government has made a fresh offer of more than RM9 billion to take over the four water concessionaires in the state.

Meanwhile, Priceworth said it is in final stage of negotiations to manage two timber concessions in Papua New Guinea and the Solomon Islands. The negotiations involve a combined land size of more than 100,000 hectares.

Telekom Malaysia expects the internal investigation into alleged payments received by its staff to be completed within one month.

TM said this timeframe was based on the board sub-committee (BSC) of the board audit committee's inaugural meeting on Jan 3.

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