Thursday, October 13, 2011

#Stocks to watch:* RHB Cap, OSK, TAHPS, S P Setia, Tenaga

KUALA LUMPUR: The firmer overnight close on Wall Street is expected to give regional markets and Bursa Malaysia another boost on Thursday, Oct 13, providing some impetus for investors to pick up riskier assets like equities.

On Wall Street, U.S. stocks rose on Wednesday as Europe's progress toward bolstering its financial rescue fund brought more battle-weary investors back into the market.

Reuters reported the Dow Jones industrial average rose 102.55 points, or 0.90 percent, to end at 11,518.85. The Standard & Poor's 500 Index gained 11.71 points, or 0.98 percent, to 1,207.25. The Nasdaq Composite Index shot up 21.70 points, or 0.84 percent, to close at 2,604.73.

The S&P 500 traded above 1,200 for the first time in three weeks, taking the benchmark near the upper end of a range it has been stuck at since early August.

At Bursa Malaysia, among the stocks to watch as RHB Capital, OSK, TAHPS GROUP BHD [], S P Setia Bhd, Tenaga and local hard disk drive (HDD) component manufacturers.

RHB Capital emerged as the top gainer on Bursa Malaysia on Wednesday surging 11.6% as it remained on investors' radar following the surprising news announced almost two weeks ago that it was in merger talks with OSK Investment Bank Bhd (OSK IB).

TAHPS Group Bhd is buying Yee Seng PLANTATION []s Sdn Bhd, which owns more than 4,000 ha of agriculture land in Terengganu, for an indicative consideration of RM108 million.

TAHPS was acquiring Yee Seng, which owns 2,012 ha of plantation land in Kertih, and 2,023 ha of agricultural land in Pasir Raja district, together with other assets and liabilities.

S P Setia has yet to receive a competing offer from other interested parties to purchase the company's shares and warrants following the proposed takeover by Permodalan Nasional Bhd (PNB).

The property developer said on Wednesday, Oct 12 that 'as at todate, there has been no competing offer'.

The Edge FInancialDaily reports in the Thursday issue that with a growing number of mergers and acquisitions and bottomed out share prices, local hard disk drive (HDD) component manufacturers were just starting to garner some investor attention. Then came the floods in Thailand.

Concerns about TENAGA NASIONAL BHD []'s gas supply could weigh down its share price, despite assurances that the problem could be resolved soon.

What is of the utmost concern to investors is that why the problem of gas supply was not resolved earlier rather than delayed?

Other questions are why Petronas, its main supplier for the gas, only recently conducting overdue schedule maintenance, and also the impact of the weaker ringgit on Tenaga.

Tenaga may face more downside pressure in the absence of a clear-cut resolution of its high fuel costs and a weaker ringgit, which would see it sustaining forex losses, said UOB Kay Hian Malaysia Research on Wednesday.

The research house said that factoring in additional operating expenses for high fuel costs, Tenaga potentially needs to raise RM500 million to RM1.0 billion in working capital.

UOB Kay Hian Research also said Tenaga's weak performance in the third quarter ended May 31, 2011, where it posted net loss of RM440 million, could stretch until the first quarter ending-November 2011.

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