Saturday, September 17, 2011

#Stocks to watch* Proton, Tenaga, Catcha, Cypark, tobacco players

KUALA LUMPUR: The FBM KLCI could stage a corrective rebound in the week beginning Monday, Sept 19, on the back of the announcements made by Prime Minister Datuk Seri Najib Razak as well as corporate news flow.

Najib on Sept 15 announced the proposed repeal of the Internal Security Act (ISA) and laws related to banishments, but gave little detail of the two proposed enactments to be in place after the ISA is repealed.

There is also heavy anticipation of a people-friendly Budget 2012 to be tabled on Oct 7, seen as the final one before the general elections which some analyst say could be called within the next six months.

There were also corporate announcements by PROTON HOLDINGS BHD [], TENAGA NASIONAL BHD [], Catcha Media Bhd and Cypark Resources that could put them in focus, while tobacco players may see some selling pressure on worries of a tax hike.

On the external front, US stocks rose for a fifth day in a row on Friday and the S&P 500 scored its best week since early July on signs euro zone leaders were acting together to limit any damage from its sovereign debt crisis.

Affin Investment Bank Bhd head of retail research Dr Nazri Khan said he expects the FBM KLCI to do corrective rebound next week before resuming its downtrend spotted since July this year.

We believe next week to be interesting as most regional indices''including FBMKCLI is close to test its year-to-date low (with FBMKLCI testing 1,423 level).

'A strong rebound from the support may suggest a reliable bottom in progress.

'The fact that FBM KLCI is currently down by 11% (since mid July 2011 week) on the past eleven losing weekly session may suggest an oversold rebound is imminent,' he said.

Proton and Japan's Mitsubishi Motors Corporation (MMC) are considering joint production of engines in Malaysia and production of MMC-brand vehicles at Proton's plants under their proposed strategic collaboration.

Confirming The Edge FinancialDaily report on Thursday, Sept 15 about the broad ranging strategic collaboration, they said in a joint statement they were in 'serious collaboration' to enhance their competitiveness in the global market place.

Tenaga plans to raise RM5 billion from a 20-year ringgit denominated Sukuk to be issued at the end of October, its president and chief executive officer Datuk Seri Che Khalib Mohd Noh was reported as saying to Bernama on Sept 15.

Che Khalib said the book building exercise was to be held in the third week of October and that the proceeds from the Sukuk would be used to finance the extension of the 1,000-MW Janamanjung coal-fired power plant in northern Perak.

Catcha Media is foraying into the luxury goods business after acquiring a Singapore-based company Haute Groupe Pte Ltd,''which also sells luxury goods online, for S$5 million or RM12.34 million.

Catcha Media said on Thursday, Sept 15 it was acquiring the entire equity from Loong Siew Fong and her spouse Low Choong Lang.

Haute Groupe's core activities are retail of bags, luggage and travel accessories and the wholesale of bags, luggage and travel accessories. It also operates the luxury flash sales website and luxury flash sales event business.

Cypark could see some trading interest after it secured a RM29.88 million contract from Putrajaya Holdings Bhd for infrastructure, landscape and road works in Putrajaya.

It said on Thursday, Sept 15 that it had accepted the letter of award for the project from Putrajaya Holdings on Sept 14.

Meanwhile, BRITISH AMERICAN TOBACCO (M) [] Bhd and JT INTERNATIONAL BHD [] may see continued selling pressure on concerns of a hike in the tobacco duty in the Budget 2012 proposals to be tabled on Oct 7.

OSK Research on Sept 15 said it expected a moderate hike in tobacco duty in the upcoming Budget but it believes that the breweries will be spared.

'We prefer BAT to JTI as the former is less exposed to value-for-money brands which are more price elastic and prone to substitution,' it said.

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