Thursday, February 17, 2011

#Stocks to watch:* Dialog, IOI Corp, Amway, Green Packet

KUALA LUMPUR:Stocks on Bursa Malaysia may edge up on Thursday, Feb 17, hopefully encouraged by overnight gains on Wall Street where the market overcame concerns about tensions between Israel and Iran, and indexes slowly climbed back to close near the session's high.

According to Reuters, the S&P 500 rose on Wednesday to twice its value from just two years ago, a bounce whose vigor has not been seen since the Great Depression. Stocks were boosted by Dell earnings and deal announcements fueling hope for more gains, but light volume makes the recent move more tenuous.

The Dow Jones industrial average gained 61.53 points, or 0.50 percent, to 12,288.17. The Standard & Poor's 500 Index rose 8.31 points, or 0.63 percent, to 1,336.32. The Nasdaq Composite Index added 21.21 points, or 0.76 percent, to 2,825.56.

At Bursa Malaysia, stocks which could see trading interest after the recent corporate results include DIALOG GROUP BHD [], IOI Corp Bhd, Amway (Malaysia) Holdings Bhd'' and GREEN PACKET BHD [].

Dialog's earnings rose 25.7% to RM35.99 million in the second quarter ended Dec 31, 2010 from RM28.63 million a year ago, due mainly to higher contribution from its engineering and CONSTRUCTION [] and plant maintenance activities in Malaysia and Singapore.

Revenue slipped 2.5% to RM268.53 million from RM275.57 million in 2009. Earnings per share were 1.84 sen while net assets per share were 26.3 sen.

For the six months, earnings rose 24.3% to RM69.09 million from RM55.56 million. Revenue declined 8.9% to RM532.33 million from RM584.42 million.

Reviewing its performance for the quarter, Dialog said its specialist products and services for international operation also performed better in the current financial quarter.

Meanwhile, IOI Corp's net profit rose 12.8% to RM520.24 million in the second quarter ended Dec 31, 2010 from RM461.21 million a year ago, due mainly to higher profit contribution from the PLANTATION [] and property segment.

Revenue was RM3.97 billion compared to RM3.06 billion in 2009, while earnings per share was 8.15 sen. Net assets per share was RM1.73. IOI Corp declared an interim single tier tax-exempt dividend of 80% or 8.0 sen per ordinary share of 10 sen each in respect of the financial year ending June 30, 2011.

In the 2Q ended Dec 31, 2010, total fair value losses on derivative contracts recognised were about RM73 million.

For the six months ended Dec 31, IOI Corp net profit rose to RM1.02 billion from RM939.59 million, on the back of revenue RM7.49 billion. IOI Corp's plantation segment reported a 14% increase in operating profit to RM363.7 million for 2QFY2011 as compared to RM319.9 million a year ago.

CIMB Equities Research said IOI Corp's 1H earnings at 40% of its full-year forecast and 42% of consensus projections, the core net profit was broadly in line as it expected better 2H earnings.

'We retain our FY11-13 core EPS forecasts and our target price of RM5.71, based on an unchanged forward P/E of 16 times.

'The stock remains an UNDERPERFORM in view of its rich valuations and declining FFB yields. On top of that, we believe that CPO price is close to its peak. This is a potential de-rating catalyst, along with weaker production,' it said.

CIMB Research said for exposure to the Malaysian plantation sector, it preferred Sime Darby.

Meanwhile, Amway's net profit rose 12.5% to RM18.32 million in the fourth quarter ended Dec 31, 2010 from RM16.28 million a year ago, year mainly due to the increase in sales revenue.

Revenue rose to RM184.1 million from RM171.89 million mainly due to an increase in the distributors' productivity after implementing the sales and marketing programme, effort index adjustment and the distributor price increase implemented in first half of the year.

Earnings per share were 11.14 sen while net asset per share was RM1.28. It declared a fourth interim single tier dividend of 9.0 sen net per share.

For the financial year ended Dec 31, 2010, it posted net profit RM78.32 million on the back of revenue RM719.41 million.

Green Packet Bhd posted net loss of RM77.68 million in the fourth quarter ended Dec 31, 2010, which was lower compared with the RM100.71 million a year ago.

Revenue rose 58% to RM116.25 million from RM73.54 million, loss per share was 11.8 sen compared with 15.3 sen. However, the loss from continuing operations were RM100.11 million compared with RM103.82 million a year ago.

For FY10, it managed to reduce its net loss to RM134.97 million from RM182.64 million in FY09, while revenue increased 80.8% to RM393.97 million from RM217.81 million. Loss from continuing operations increased to RM209.67 million from RM187.41 million in FY09.

Green Packet's total group accumulated losses increased to RM274.67 million as at Dec 31, 2010 from RM196.53 million as at Sept 30, 2010.

Penang property developer Tambun Indah Land Bhd intends to strengthen its footprint in Penang Island with a mixed development project of RM180 million in gross development value (GDV).

Tambun Indah had proposed to acquire three companies for RM11.6 million, which would increase the group's GDV by RM245 million to RM1.4 billion to last till 2016.

'The group expects contributions of RM38.7 million in pre-tax profits over development period from FY2011 to FY2014,' it said.

Airports operator Malaysia Airports Holding Bhd's net profit fell 29% to RM100.04 million for the fourth quarter ended Dec 31, 2010 from RM140.97 million a year ago.

MAHB said the decline was mainly due to the adoption of FRS 139 resulting in the higher share of losses in an associate company.

However, the concession payable by the associate company was recognised at fair value and subsequently at amortised cost. Gains and losses arising from the changes in the fair value were recognised in the income statement.

Its 4Q revenue rose to RM494.37 million from RM476.84 million a year ago, while earnings per share were 9.15 sen. Net assets per share was RM2.99.

PETRONAS DAGANGAN BHD [] net profit for the third quarter ended Dec 31, 2010 rose 26.1% to RM236.16 million from RM187.25 million a year earlier, driven by higher product average selling prices and sales volume.

The company said on Wednesday, Feb 16 that the higher net profit was also due to lower operating costs.

Revenue for the quarter rose to RM5.93 billion from RM5.34 billion. Earnings per share were 23.8 sen, while net assets per share was RM4.60.

Loss-making ZELAN BHD [] recorded negative revenue from its continuing operations in Indonesia totaling RM39.2 million in the third quarter ended Dec 31, 2010 and warned of more losses in the current fourth quarter.

Explaining the negative revenue, Zelan said this was due to a reversal made on the revenue recognised earlier as a result of additional foreseeable losses for the Indonesian project.

It said net losses for the 3Q were RM41.29 million compared with RM60.38 million. Loss per share was 7.33 sen versus 10.72 sen.

Zelan said there was minimal revenue recognised from other existing projects during the 3Q and warned it was expected to continue to make losses in the final quarter as its revenue was expected to come only from its existing secured order book.

'The group recorded a loss after tax from continuing operations of RM40.5 million as compared to RM64.4 million losses in the preceding year's quarter,' it said.

It cautioned there was a possibility that liquidated ascertained damages of a maximum of about RM125 million may be imposed and the performance bond issued by the group to the owner of the project of RM132 million may be drawn down.

'It may also result in delays in the collection of the outstanding progress billings previously certified by the owner of the project of approximately RM181 million, potentially pending ascertainment of costs to completion by the independent consultants,' it said.

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