Friday, February 11, 2011

#Stocks to watch:* Dayang Enterprise, Lion Corp, EPIC, Integrax

KUALA LUMPUR: Stocks on Bursa Malaysia may stage a mild rebound on Friday, Feb 11 as the heavy selling the previous day would be viewed as overdone as the firm economic fundamentals continue to underpin the economy. However, investors would also seek direction from the regional markets which skidded the previous day.

Analysts said foreign funds used the excuse of worries'' about an expected rise in the statutory reserve requirement to take profit in Malaysian banking stocks which had a strong run-up in recent months.

The FBM KLCI's year-to-date (YTD) gains were wiped out on Thursday, Feb 10 after it fell more than 2%, the biggest single day loss since November 2008, in tandem with most key regional markets.

European markets fell as disappointing corporate earnings weighed on global stock markets on Thursday, pushing major indexes lower, while shifting interest rate expectations lifted the dollar and put Britain's pound on edge.

On Wall Street, the S&P and Nasdaq eked out gains in the final minutes of trading on Thursday, Feb 10'' as Egyptian President Hosni Mubarak said he would delegate powers to the vice president, though he stopped short of resigning.

The Dow Jones industrial average was down 10.60 points, or 0.09 percent, at 12,229.29. The Standard & Poor's 500 Index was up 0.99 points, or 0.07 percent, at 1,321.87. The Nasdaq Composite Index was up 1.38 points, or 0.05 percent, at 2,790.45.

Stocks to watch include DAYANG ENTERPRISE HOLDINGS BHD [], Lion Corp Bhd, Eastern Pacific Industrial Corp Bhd (EPIC) and INTEGRAX BHD [].

Dayang secured a contract valued at RM802 million from Petronas Carigali Sdn Bhd to provide topside structural maintenance services.

Dayang said the contract shall be effective from Feb 2, 2011 until Feb 1, 2016 and estimated the total value of the contract to be about RM802 million over the duration.

'However, the contract is a 'call-up contract' made up of work orders, which will be awarded at the discretion of Petronas Carigali during the duration of the contract and the values of the work orders are based on the contract schedule of rates,' it said.

Lion Corp's unit Megasteel Sdn Bhd has proposed to issue preference shares with a total value of US$17 million to LION FOREST INDUSTRIES BHD [] (LFIB).

Lion Corp had entered into a conditional subscription agreement with Jadeford International Ltd ' a unit of LFIB --'' for the issuance of 17 million three-year redeemable cumulative preference shares (RCPS) of US$1 each for US$17 million cash.

'The proceeds from the proposed Issuance of RCPS amounting to USD17 million will be utilised for the repayment of Megasteel's existing US dollar and ringgit syndicated term loans,' it said.

EPIC reported earnings of RM14.87 million in the fourth quarter ended Dec 31, 2011, a 55.4% increase from the RM9.56 million a year ago underpinned by an increase in port operations and oil and gas activities.

Revenue rose 7.6% to RM53.31 million from RM49.54 million a year ago. Earnings per share were 8.77 sen compared with 5.65 sen a year ago.

For the financial year ended Dec 31, 2010, EPIC's earnings rose 25% to RM52.84 million from RM42.14 million while revenue climbed 28% to RM235.136 million from RM183.46 million. It has cash of RM98.58 million as at Dec 31, 2010 but its trade and other receivables were RM57.56 million.

Integrax'' is selling the entire 70.31% stake in its Indonesian subsidiary PT Indoexchange Tbk to Equatorex Sdn Bhd, a company controlled by Integrax's chairman and joint CEO Harun Halim Rasip.

Meanwhile, the High Court here has dismissed an application by Puncak Niaga (M) Sdn Bhd founder Tan Sri Rozali Ismail and two others to get a stay on making a RM35 million payment to a corporate advisor over breach of contract involving a water project.

Judicial Commssioner Rosilah Yop ruled as such after hearing submissions from counsel Datuk N.Vijay Kumar who acted for the plaintiff and counsel Tan Sri Datuk Cecil Abraham representing the defendant, in her chambers on Thursday, Feb 10.

On Dec 8, 2010, Rosilah had ordered Rozali and the two others to make the RM35 million payment to the plaintiff.

Malaysian Rating Corporation Bhd affirmed the rating of Perwaja Steel Sdn Bhd's RM400 million murabahah medium term notes at AID but the rating outlook was revised to negative from stable.

It said the outlook revision incorporates the recent deterioration in Perwaja's operating performance, and continuing pressure from lower volumes and rising input costs.

MARC said it was concerned about Perwaja's capacity to manage its liquidity position through its industry cyclical trough, given its high debt leverage and significant annual debt maturities.

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