Saturday, March 12, 2011

#Stocks to watch:* Berjaya Retail, Ta Ann, banks, insurers

KUALA LUMPUR: Stocks on Bursa Malaysia could stage a mild rebound on Monday, March 14 after the sell-off on Friday following the devastating earthquake in Japan, the country's strongest on record, as sentiment tracks'' the overnight recovery in the US markets.

On Wall Street, shares initially fell as investors reeled from images of mass destruction after the Japanese earthquake and tsunami left at least 1,000 dead, Reuters reported. But the market reversed losses and notched solid gains as investors shook off fears of the quake's impact on Japan, the world's third largest economy. Japan's major cities and manufacturing facilities were not affected by the quake.

The Dow Jones industrial average rose 59.79 points, or 0.50%, at 12,044.40. The Standard & Poor's 500 Index climbed 9.17 points, or 0.71%, at 1,304.28. The Nasdaq Composite Index added 14.59 points, or 0.54%, at 2,715.61.

Japan's central bank said it would cut short a two-day policy review scheduled for next week to one day on Monday and promised to do its utmost to ensure financial market stability.

As for key regional markets, which skidded Friday following the earthquake, investors would also await direction from the Japanese financial markets when they open on Monday.

On Bursa Malaysia, the FBM KLCI fell 1.40% or 21.29 points to 1,495.62 on Friday, weighed by losses including at banking stocks and key blue chips. Losers trounced gainers by 678 to 118, while 207 counters traded unchanged. Volume was 1.02 billion shares valued at RM1.85 billion.

Japan's Nikkei 225 fell 1.72% to 10,254.43, Hong Kong's Hang Seng Index lost 1.55% to 23,249.78, South Korea's Kospi fell 1.31% to 1,955.54, Singapore's Straits Times Index was down 1.04% to 3,043.49, Taiwan's Taiex lost 0.87% to 8,567.82 and the Shanghai Composite Index fell 0.79% to 2,933.80.

At Bursa Malaysia, stocks to watch include'' Berjaya Retail Bhd, TA ANN HOLDINGS BHD [], banks and insurers.

Pemier Merchandise Sdn Bhd (PMSB), which controls 58.71% of Berjaya Retail Bhd (B-Retail) has issued notice to take it private at 65 sen per share following the dismal performance of the shares since it was listed on Aug 16 last year. Tan Sri Vincent Tan Chee Yioun is the ultimate controlling shareholder of PMSB.

Tan is also the ultimate controlling shareholder of PMSB and owns 100% of PMSB via HQZ Credit Sdn Bhd. As at March 11, PMSB held 878.269 million B-Retail shares directly, which represented about 58.71% of the paid-up.

B-Retail said the shares and ICPS had not traded at or above the offer price of 65 sen since the listing of B-Retail on Bursa Malaysia Securities Bhd on Aug 16.

The five-day volume weighted average market price of B-Retail shares up to March 4, being the last trading day prior to the serving of the notice was 41.2 sen while for the ICPS, it was 33.5 sen.

At 41.2 sen, the offer for the shares at 65 sen each was a premium of 23.8 sen or 57.7%. The highest traded price since listing was 56.5 sen. As for the ICPS, the offer was a premium of 31.5 sen or 94%. Its highest traded price since listing was 51 sen.

Meanwhile, AmResearch said following the earthquake in Japan, it had have contacted timber players, who are also unsure of the extent of damage stemming from the latest earthquake and the aftershocks.

'Though reCONSTRUCTION []s are to be expected, the timber players do not expect a sudden and significant jump in timber exports towards the reconstruction process.

'Of the two timber companies under our coverage, Ta Ann exports 90% of its plywood production to Japan. Its timber products are shipped to trading houses in Osaka, which is located further south of Tokyo, in the central-southern region of Japan. We advise accumulate Ta Ann on weakness (UNDER REVIEW; FV: RM5.61/share) as the recent price pullback has caused an upside of more than 15% over our fair value for the stock,' it said.

Meanwhile banks and insurers are expected to be in focus after Bank Negara Malaysia raised the statutory reserve requirement (SRR) ratio from 1% to 2%, effective April 1, 2011, but it decided to maintain the overnight policy rate at 2.75%.

BNM also announced that from Jan 1, 2012, the third party insurance premium for private cars of 1,400cc will be adjusted between RM6 to RM34 per year, or a maximum of RM2.80 a month, over the next four years under a new framework. For commercial vehicles the impact of the premium adjustment on the passengers would be minimal at less than 10 sen per passenger.

This move to regulate the third party insurance premium would benefit general insurers like Kurnia and Allianz Malaysia.

OSK Research had initiated coverage of Allianz Malaysia with a BUY, at a target price of RM5.68, derived from a sum of parts valuation. It said riding on potentially strong growth in the life insurance industry and a re-rating of motor insurance, Allianz as the biggest general insurance player is poised to benefit from the encouraging industry outlook.

OSK Research said apart from being the No. 1 one player in Malaysia's general insurance industry with gross written premiums (GWP) totaling RM1.3 billion in FY10, Allianz's life insurance business is no less a consistent performer, chalking up RM1 billion in GWP on the back of a robust double digit growth of 18.5% in FY10.

On the hike in the statutory reserve requirement, AmResearch said based on its estimations, a 1% hike in the SRR rate would absorb RM6 billion to RM7 billion from the banking system. Excess liquidity in the financial system currently is estimated at around RM250 billion.

'In terms of the banking sector, we believe the impact of the SRR hike will be minimal, as liquidity and lending abilities in the banking system will remain unaffected,' it said.

No comments:

Post a Comment