Saturday, June 18, 2011

#Stocks to watch:* Ramunia, Talam, Wah Seong, Top Glove

KUALA LUMPUR: Stocks may be range bound in the week ahead, starting Monday, June 20 despite the firmer close on Wall Street after France and Germany outlined an agreement to aid debt-burdened Greece.

However, most economists are overwhelmingly skeptical that Greece can ever repay its mountain of debt, which has reached 340 billion euros -- or 150% of the country's annual economic output. Hence, investors would not be rushing into riskier assets including equities.

The Dow and S&P 500 rose on Friday, June 17 after France and Germany outlined the aid for Greece but analysts said a recent bearish trend may not be over.

The Dow Jones industrial average rose 42.84 points, or 0.36%, to end at 12,004.36. The Standard & Poor's 500 Index gained 3.86 points, or 0.30%, to 1,271.50. But the Nasdaq Composite Index'' fell 7.22 points, or 0.28%, to 2,616.48.

Reuters reported that a slew of data showing the United States is on the verge of a slowdown has already done its damage to the market. After the heavy selling of the past several weeks, it seems investors are taking a wait-and-see approach -- for now.

Stocks to watch on Monday include RAMUNIA HOLDINGS BHD [], Talam Corp Bhd, Wah Seong Corp Bhd and Top Glove Corp Bhd.

Ramunia's net profit for the second quarter ended April 30, 2011 fell 58.7% to RM1.41from RM3.42 million a year ago, due mainly to a reduction in revenue due to the tail end of remaining projects billings and lower operating income.

Revenue fell to RM1.74 million from RM11.88 million in 2010. Earnings per share were 0.21 sen, while net assets per share were 25.3 sen.

For the six months ended April 30, Ramunia's net profit plunged 87.3% to RM2.51 million from RM19.83 million, while revenue fell 89% to RM3.09 million from RM27.74 million.

Talam posted net loss of RM25.97 million in the first quarter ended April 30, 2011 compared with net profit of RM1.56 million a year ago as it was impacted by the high administrative and finance costs totaling RM32.49 million.

Talam said administrative and other expenses totalled RM14.94 million while finance costs were RM17.55 million.

Its revenue was RM13.18 million compared with RM23.26 million a year ago due'' to lower gross profit and other operating income, as well as higher administrative and finance costs. Its loss per share was 0.72 sen versus earnings per share of 0.06 sen. Its net asset per share was 17 sen.

Wah Seong Corporation with a book order of RM1.2 billion plans to expand into water-related businesses and renewable energy after the demerger with Wasco Energy Ltd.

It plans to boost its biomass equipment and power generation business, as well as integrating into the fast growing agro-based sector and water industry. Another key growth area would be in deepwater pipe and gas pipe coating.

Top Glove's net profit for the third quarter ended May 31, 2011 fell 60.3% to RM25.60 million from RM64.48 million a year earlier due mainly to higher latex price and weakening US dollar.

Revenue eased 3.7% to RM535.36 million from RM555.85 million. Earnings per share were 4.14 sen. It declared a first single tier net interim dividend of 5 sen, payable on July 21, 2011.

For the nine months ended May 31, Top Glove's net profit fell 56.5% to RM87.06 million from RM200.22 million in the previous corresponding period, while revenue declined to RM1.51 billion from RM1.54 billion in 2010.

IMF cuts forecast for US, warns of crisis

SAO PAULO: The International Monetary Fund cut its forecast for U.S. economic growth on Friday, June 17 and warned Washington and debt-ridden European countries that they are "playing with fire" unless they take immediate steps to reduce their budget deficits.

The IMF, in its regular assessment of global economic prospects, said on Friday, June 17 that bigger threats to growth had emerged since its previous report in April, citing the euro zone debt crisis and signs of overheating in emerging market economies.

The global lender forecast that U.S. gross domestic product would grow an anemic 2.5 percent this year and 2.7 percent in 2012. In its forecast just two months ago, it had expected 2.8 percent and 2.9 percent growth, respectively.

The outlook elsewhere was mixed. The IMF said it was slightly more optimistic about the euro area's growth prospects this year, but a lack of political leadership in dealing with that crisis and the budget showdown in the United States could create major financial volatility in coming months.

"You cannot afford to have a world economy where these important decisions are postponed because you're really playing with fire," said Jose Vinals, director of the IMF's monetary and capital markets department.

"We have now entered very clearly into a new phase of the (global) crisis, which is, I would say, the political phase of the crisis," he said in an interview in Sao Paulo, where the forecast was published.

In the United States, the political problems include a fight over raising the debt ceiling. Fears that the world's biggest economy could default, even briefly, have rattled markets, with Fitch Ratings saying even a "technical" default would jeopardize the country's AAA rating.

Meanwhile, Greece has edged closer to default as euro zone officials disagree on a possible second aid package for the indebted country. With strikes and protests around the country, political turmoil has added to uncertainty, stoking fears that the government will not be able to tighten its belt enough to reduce crippling deficits.

"If you make a list of the countries in the world that have the biggest homework in restoring their public finances to a reasonable situation in terms of debt levels, you find four countries: Greece, Ireland, Japan and the United States," Vinals said.




Fears of contagion in the euro zone have driven global markets lower in recent sessions, with other vulnerable countries such as Ireland and Portugal feeling pressured.

The IMF raised its growth view for the euro area in 2011 to 2 percent from 1.6 percent. For 2012, the IMF saw growth at 1.7 percent, nearly stable from its previous 1.8 percent.

It raised its forecast for Germany, the powerhouse of the euro zone, to 3.2 percent from 2.5 percent, with growth moderating to 2 percent in 2012.

Forecasts for large emerging markets remained stable or slipped. While China's GDP view stayed at 9.6 percent this year, the IMF lowered its forecast for Brazil to 4.1 percent from 4.5 percent in April.


Those countries, along with Russia, India and South Africa, make up the fast-growing BRICS, a group of emerging economies whose brisk expansion has outstripped that of developed markets recently.

Robust growth has caused emerging economies to tighten monetary policy, with higher interest rates and reserve requirements, even as many developed nations keep policy ultra-loose to try to boost anemic growth.

The IMF warned that many emerging markets still need more tightening. In China, for example, the high inflation rate means negative real interest rates.

Some emerging markets have been reluctant to tighten too far, fearful of derailing growth or attracting speculative flows that could pressure currencies ever higher. - Reuters

Dow, S&P rise, but Greek woes keep bears on prowl

NEW YORK: The Dow and S&P 500 rose on Friday, June 17 after France and Germany outlined an agreement to aid debt-burdened Greece, but analysts said a recent bearish trend may not be over.

The Dow managed to close just above 12,000, but the S&P 500 barely squeaked out a gain for the week after six straight weeks of losses. The uncertainty surrounding a resolution of the debt crisis kept investors wary of committing more cash to equities.

Research In Motion Ltd's (RIMM.O) U.S.-listed shares sank 21.5 percent to $27.75 in its busiest day of trading in almost six years. The BlackBerry maker's sour results, released late Thursday, pushed the Nasdaq lower and dragged on other top TECHNOLOGY [] names such as Apple Inc (AAPL.O), down 1.5 percent at $320.26.

France and Germany said they would ask banks holding Greek debt to voluntarily shoulder some of the burden. Meanwhile, Greece's prime minister appointed a new finance minister to try to push through harsh economic reforms. For details, see [ID:nLDE75G1JP] [ID:nLDE75G0WW] [ID:nLDE75G0CY]

The debt crisis escalated this week as Moody's Investors Service said it may cut the credit ratings of French banks, citing exposure to Greek debt. Late Friday, Moody's said it was reviewing Italy's sovereign credit ratings for a possible downgrade.

"The question now in many people's minds is whether or not a credit event in Europe, the ripple effect, will be strong enough to put the U.S. economy in a recession. I honestly don't see that," said Natalie Trunow, chief investment officer of equities of Calvert Investment Management in Bethesda, Maryland, which manages about $14.8 billion.

But, she said, "people are finally starting to connect the dots between the sovereign debt crisis and the potential impact on some of the larger companies involved in those countries and some of the banks."

The S&P financial index .GSPF was up 0.9 percent for the day, but is down about 7 percent since the start of the year. The KBW Bank Index .BKX rose 1.1 percent on Friday.

The Dow Jones industrial average .DJI rose 42.84 points, or 0.36 percent, to end at 12,004.36. The Standard & Poor's 500 Index .SPX gained 3.86 points, or 0.30 percent, to 1,271.50. But the Nasdaq Composite Index .IXIC fell 7.22 points, or 0.28 percent, to 2,616.48.


Both the Dow and the S&P 500 finished the week with gains and broke a six-week string of losses: The Dow was up 0.4 percent for the week, while the S&P 500 was up just 0.04 percent.

But the Nasdaq lost 1 percent for the week.

For the year, the Nasdaq is down 1.4 percent.

In contrast, the Dow is up 3.7 percent for the year and the S&P 500 is up 1.1 percent.

Friday's volume was slightly better than average, as activity picked up amid options expiration.

But bearish signals for the market abound, including in equity-only put-call ratios, according to Larry McMillan, president of McMillan Analysis Corp. in Morristown, New Jersey.

Recent gains in the CBOE Volatility Index .VIX also show investors are skittish.

"All of the intermediate-term indicators are on 'sell' signals," he said.

The S&P 500 is roughly 7 percent below a three-year high hit in early May, and many strategists see a test of 1,250 on the index as likely.

Economic data was mixed, with the index of leading economic indicators rising more than forecast in May to a record high, but U.S. consumer sentiment for June was weaker than expected.

"Most of the more important reports (this week) indicated the world is not coming to an end, contrary to popular belief," said Charles Lieberman, chief investment officer of Advisers Capital Management, LLC in Hasbrouck Heights, New Jersey.

Shares of Marvell Technology Group Ltd (MRVL.O) slid 4.2 percent to $13.21, following Research In Motion's dismal report and sharply reduced forecast after Thursday's closing bell.

The day's volume was active, with about 8.29 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 7.58 billion.

Advancing stocks outnumbered declining ones on the NYSE by about 3 to 2. On the Nasdaq, advancers beat decliners by nearly 14 to 13. - Reuters

Oil drops, biggest weekly slide since May

NEW YORK: Oil prices fell on Friday, June 17 with U.S. crude slumping to a four-month low under $93 as a dimmer economic outlook and the European debt crisis drove crude to its biggest weekly loss since early May.

U.S. futures fell more than $3 a barrel as momentum sellers piled into the slide. U.S. crude's discount to Brent widened by more than $1 to $19.90 a barrel.

Oil broke away from familiar correlations, diving in tandem with the dollar and despite gains for many commodities. Some oil analysts appeared more pessimistic about Greece than those in the foreign exchange market, where the dollar fell by nearly 1 percent on hopes for a debt deal.

U.S. crude futures for July settled at $93.01 a barrel, down $1.94, or 2.04 percent, its lowest since the February 18. It traded from $91.84 to $95.40 Friday. U.S. crude fell below the 200-day moving average for the first time since September, drawing additional selling.

Brent crude for August settled at $113.21 a barrel, dropping 81 cents, or 0.71 percent, the lowest settlement since May 24, when front-month Brent closed at $112.53. Trading volume was about 20 percent below the 30-day average.

For the week, front-month Brent fell 4.7 percent, the biggest weekly loss since the week to May 6. Brent is up 19 percent this year, while U.S. futures are up less than 2 percent as the European market rose to a record premium.

"The predominant problem here is that traders own too much oil. They bought too much in anticipation of market tightness and now they have to adjust their positions," said Tim Evans of Citi Futures Perspective.

The current July contract for U.S. crude is set to expire on Tuesday, June 21.

Prices slumped early in the European day, and made new lows in mid-afternoon as a downturn in stocks following Research In Motion's (RIMM.O) disappointing results weighed.

"The stock market and euro have come off a bit and that has added pressure on oil and some sell stops have been triggered. People just continue to be nervous about the economy," said Phillip Streible, senior market strategist at Lind-Waldock.


The euro gained on the day as the embattled Greek prime minister sacrificed his finance minister to force through an unpopular austerity plan, while Germany and France promised to go on funding Athens.

The euro pared those gains slightly in the afternoon when Moody's Investors Service said it may cut Italy's sovereign credit rating from AA2, citing challenges ahead for economic growth due to structural weaknesses and a likely rise in interest rates.

Oil's slump broke its inverse correlation with the dollar, which has eased to its weakest since mid-April at just 22 percent, based on the average of the past 25 days.

"U.S. crude has broken below the recent range of $95-$105 and looks like it will shortly tack another $5 to the downside," said Gene McGillian, analyst at Tradition Energy.

"The fear of the fallout from the Greek debt crisis continues to impact the oil markets. Indications of a possible resolution of the crisis have helped pare some of oil's losses but investors worry about the stalling pace of U.S. economic recovery."

The International Monetary Fund cut its estimate for U.S. gross domestic product. This also weighed on U.S. crude prices. The IMF now projects an anemic 2.5 percent growth this year and 2.7 percent in 2012.

Brent was also under pressure from news that this week's relative strength for the European benchmark was drawing physical crude from far afield, with news that traders were offering Russian Pacific Rim ESPO in the Mediterranean.

Data from the Commodity Futures Trading Commission that showed large hedge funds and other speculators raised their net long U.S. crude futures and options positions slightly in the week to June 14. - Reuters

Nestle says upward trend in raw materials to persist

MANILA: Nestle , the world's largest food group, expects the upward trend in raw material prices to persist, and its global operations provide a natural hedge against the strength of the Swiss franc, its chief executive said on Saturday, June 18.

Swiss-based Nestle, which has factories in 81 countries making products such as KitKat chocolates, milk products and pet food, is working to improve efficiencies and reduce costs as the prices of its inputs and packaging rise.

"It is clear that the upward trend, in our eyes, is going to be there to stay," chief executive Paul Bulcke told reporters said in Manila, where he was marking the 100th anniversary of Nestle's Philippine unit.

"Which is not a bad thing, if you put it in context of the fact that agricultural raw material prices went down for so many years to a level that agriculture was not an interesting activity, or there was no R&D investment, or there was no political impulse."

Nestle, which makes Nescafe, Maggi soups and Gerber baby food, has said it expects to meet its goal of 5-6 percent sales growth in 2011 and higher margins, although higher raw material costs and a strong Swiss franc would dampen first-half results.

It had projected rises in input costs to be at the top end of its guidance of 8-10 percent in 2011, with pricing expected to tick up during the year.

That guidance on input costs remained, even after some moderation in global commodity prices in recent months after a sharp surge earlier in 2011, Bulcke said.

"When we speak, we don't speak on the cost-on-the-day cost, we speak on the trend we see," he said, saying Nestle tried to read trends and set prices that could be stable amid market volatility.

"We never calculate our cost price on the peaks of every raw material," he said.

Nestle, whose shares have fallen 4 percent this year, expects emerging markets to account for 45 percent of turnover by 2020, from 35 percent, or 39 billion Swiss francs ($46 billion) now.

"I do see the growth of the emerging markets double, give and take, the growth of the developed markets," Bulcke said.



The Swiss franc has hit record highs against the dollar and the euro in June, and that will weigh on Nestle's consolidated results, when income from its foreign operations is converted to francs for reporting.

Bulcke said the franc did not affect the day-to-day operations of foreign units, which work in local currencies.

The company hedged its raw material needs to provide price certainty, but was not going to start hedging the Swiss franc purely for account consolidation," he said.

"No, because we have a natural hedge. What you can have is less Swiss francs, but they are Swiss francs so there's more dollar equivalent.

"We are growing very, very handsomely, and with less francs at the end of the day. And that is a little bit more the ego stuff -- you say 'all that effort, all that growth, where is it?' Well, it's in the Swiss franc." - Reuters

Friday, June 17, 2011

Talam 1Q net loss RM25.97m vs net profit RM1.56m yr ago

KUALA LUMPUR: Talam Corp Bhd posted net loss of RM25.97 million in the first quarter ended April 30, 2011 compared with net profit of RM1.56 million a year ago as it was impacted by the high administrative and finance costs totaling RM32.49 million.

It announced on Friday, June 17 that its revenue was RM13.18 million compared with RM23.26 million a year ago due'' to lower gross profit and other operating income, as well as higher administrative and finance costs.

Its loss per share was 0.72 sen versus earnings per share of 0.06 sen. Its net asset per share was 17 sen.

Talam said administrative and other expenses totalled RM14.94 million while finance costs were RM17.55 million.

When compared with the financial performance in the preceding quarter ended Jan 31, the revenue for the first quarter ended April 30 fell 77% from RM57.83 million. However, the loss before tax of RM26.31 million was lower than the RM70.92 million in the preceding quarter.

'The improved results for the current year quarter is mainly due to lower level of impairment losses allowed for development land of the group,' it said.

Kumpulan Europlus back in the black in 1Q

KUALA LUMPUR: KUMPULAN EUROPLUS BHD [] posted net profit RM998,000 for the first quarter ended April 30, 2011 compared to net loss RM3.39 million a year earlier, due mainly to disposal of shares (short term investments) and redemption of financial instruments by its associated company TALAM CORPORATION BHD [].

Revenue for the period fell 29.28% to RM6.25 million from RM8.84 million in 2010 due to lower billings by its manufacturing and CONSTRUCTION [] divisions and also due to the disposal of its 60.4%-owned subsidiary, Kekwa Indah Sdn Bhd in June 2010.

Earnings per share was 0.20 sen while net assets per share was 18.95 sen.

Reviewing its performance on Friday, June 17, Kumpulan Europlas said the long term viability of the West Coast Expressway project would further enhance its earnings.

It said negotiations on the detailed technical and financial terms of the concession agreement would be completed within six months from Jan 31, 2011 when its 64.2%-subsidiary West Coast Expressway Sdn Bhd received the approval in principal for the project.

On the Canal City project that was terminated on August 31 last year, the company said the Selangor state government had agreed to compensate Canal City Construction Sdn Bhd (CCC) by alienation of 1,877.87 acres of land to CCC's holding company, Radiant Pillar Sdn Bhd (RPSB).

It said RPSB, which is 50%-owned by the company, intends to launch property development projects when planning approval is obtained and market condition permits.


HeiTech Padu subscribes for 9% of Grand-Flo's new shares

KUALA LUMPUR: HEITECH PADU BHD [] has subscribed for a 9.01% stake in GRAND-FLO SOLUTION BHD [] or 14.36 million shares, increasing its shareholding to 13.02% as it seeks to venture into the enterprise data collection system.

HeiTech Padu said on Friday, June 17, it subscribed for the placement shares of par value of 10 sen each at an issue price of 43 sen for RM6.17 million cash, which would be financed from its own funds.

'The acquisition is part of HeiTech's plan to venture into value added business of research and development in enterprise data collection and collation system,' it said.

Grand-Flo specialises in the provision of these automated identification system solutions to businesses in all industries.

Court nod for HL Bank to take over EON Bank's entire business

KUALA LUMPUR: The High Court has granted a vesting order for EON Bank Bhd's entire business to be transferred to HONG LEONG BANK BHD [] with effect from July 1.

HL Bank said the court had granted the order on Friday, June 17 and following the vesting, EON Bank will become a dormant company.

Group managing director and chief executive Yvonne Chia said the granting of the vesting order is a key step towards merging both banks' operating businesses.

While the merger would be effective from July 1, she said it will continue to be business-as-usual for customers and business associates of both banks until further notice.

Chia said there would be uninterrupted service and seamless continuity of the banking operations at both banks.

'Like all bank mergers, the full integration process will take time before we can truly operate on a single platform. The merger is making solid progress at this stage, and we have forged very good camaraderie between the two banks in a very short time.

'These are exciting times for all of us and the new senior leadership team is focused, passionate and committed to the success of this merger. This is a growth merger for all stakeholders," she said.

Najib: Abu Dhabi to remain RHB Cap substantial shareholder

PUTRAJAYA: Abu Dhabi will remain a substantial shareholder in Malaysian lender RHB Capital and is supportive of a potential merger involving the bank, Prime Minister Datuk Seri Najib Razak said on Friday, June 17.

RHB, Malaysia's fifth-largest lender with a market value of about $7.2 billion, is presently a takeover target of Malaysia's two largest banking groups, CIMB Group and Malayan Banking (Maybank) .

Abu Dhabi Commercial Bank (ADCB) on Friday signed an agreement to sell its 25 percent stake in RHB Capital to Aabar Investments, an Abu Dhabi investment fund, for 10.80 ringgit per share.

The signing was witnessed by Abu Dhabi's Crown Prince Sheikh Mohammed Bin Zayed Al Nahyan, who is in Malaysia for an official visit.

"His Highness (the Abu Dhabi prince) informed me that Abu Dhabi will continue to hold a substantial stake in RHB Capital," Najib said in a statement after a meeting with Al Nahyan in the administrative capital.

"This clearly signals Abu Dhabi's long-term commitment and confidence in the Malaysian banking sector and leadership...we are also delighted that Aabar is supportive of a potential local banking sector consolidation with RHB."

Analysts have said the sale to Aabar could complicate a merger bid between RHB and either CIMB or Maybank as it set the floor for the RHB takeover, pricing RHB at a minimum 2.25 times book value. RHB's book value was 4.79 ringgit per share as of March 31.

"The price may scare away Maybank and CIMB as the 2.25-2.3 times book is a bit expensive," HwangDBS Vickers Research senior analyst Lim Sue Lin said.

Maybank has said it will offer RHB a merger proposal by the end of June.

Aabar Investments Aabar is majority-owned by the Abu Dhabi government investment vehicle International Petroleum Investment Corp.

"The purchase of this stake in RHB adds a core asset to Aabar's financial services investments portfolio," Aabar's chairman, Khadem Al Qubaisi, said in a statement.

"We are impressed by the strong performance achieved by RHB and are excited by the opportunity to potentially participate in domestic consolidation and regional expansion."

RHB shares ended 0.9 percent lower at 9.75 ringgit on Friday. - Reuters

Ramunia 2Q net profit falls 58.7% to RM1.41m

KUALA LUMPUR: RAMUNIA HOLDINGS BHD [] net profit for the second quarter ended April 30, 2011 fell 58.7% to RM1.41from RM3.42 million a year earlier, due mainly to a reduction in revenue due to the tail end of remaining projects billings and lower operating income.

Revenue for the period fell to RM1.74 million from RM11.88 million in 2010. Earnings per share was 0.21 sen, while net assets per share was 25.3 sen.

For the six months ended April 30, Ramunia's net profit fell to RM2.51 million from RM19.83 million, while revenue dipped to RM3.09 million from RM27.74 million.

Commenting on its prospects, Ramunia said on Friday, June 17 that it continues to actively participate in bids for projects in the oil and gas and engineering businesses continues with focus on the fabrication of offshore oil and gas related structures.


FBM KLCI closes firmly above 1,560-level

KUALA LUMPUR: Late gains at banking stocks and select blue chips propped the FBM KLCI firmly above the 1,560-point level on Friday, June 17, while regional markets mostly stumbled on Greek woes.

At the regional markets, Hong Kong shares fell through two key chart support levels this week while Shanghai's key stock index slid to its lowest level in over eight months as growing bearishness on Chinese equities and Greece's worsening debt crisis drove investors out of riskier assets, according to Reuters.

The FBM KLCI rose 0.59% or 9.19 points to close at 1,563.43.

Gainers edged losers by 394 to 345, while 352 counters traded unchanged. Volume was 946.22 million valued at RM2.22 billion.

At the regional markets, Hong Kong's Hang Seng fell 1.17% to 21,695.26, the Shanghai Composite Index lost 0.81% to 2,642.82, Japan's Nikkei 225 was down 0.64% to 9,351.40, South Korea's Kospi fell 0.72% to 2,031.93, Singapore's Straits Times Index declined 0.49% to 3,005.28 and Taiwan's Taiex shed 0.21% to 8,636.10.

On Bursa Malaysia, Petronas Gas jumped 64 sen to RM12.94 as investors viewed the stock had more upside following the Melaka regasification plant and Kimanis power plant.

Aeon rose 62 sen to RM7.82, KLK and Hong Leong Bank were up 36 sen each to RM22.38 and RM13.36. HLFG and Maybank were up 26 sen each to RM12.64 and RM9 , Panasonic 24 sen to RM24.30, Aeon Credit 21 sen to RM5.62, QSR and MMHE added 16 sen each to RM5.95 and RM8.66, Axiata 10 sen to RM5.05 and CIMB eight sen to RM8.55.

Among the decliners, PPB fell 66 sen to RM16.82, F&N lost 48 sen to RM19.22, Batu Kawan 26 sen to RM17.04, BAT 22 sen to RM45.68, Milux 17 sen to RM1.10, United PLANTATION []s, Lafarge Malayan Cement and Malayan Flour Mills down 16 sen to RM19.84, RM7.42 and RM7.04 respectively, while MAHB lost 13 sen to RM6.37.

The actives included Axiata, Muhibbah, Asia Media, DBE Gurney, Maybank, CIMB and Petronas Chemicals.


China shares at 8-1/2-mth low, HK falls through chart supports

HONG KONG: Hong Kong shares fell through two key chart support levels this week while Shanghai's key stock index slid to its lowest level in over eight months as growing bearishness on Chinese equities and Greece's worsening debt crisis drove investors out of riskier assets.

Those betting on declines in Chinese shares have come out on top over the past month as markets have overlooked cheap valuations and a generally positive outlook for China's economy.

The Hang Seng index fell 1.2 percent on Friday, June 17 to 21,695 points, bringing its losses so far this month to over 8 percent and marking its worst two-week decline since last November.

In China, the Shanghai Composite fell 0.8 percent, bringing its losses for June to 3.7 percent.

"Quite a few short-term guys have been hurt trying to catch a falling knife, to be honest," said Tom Kaan, a director at Louis Capital Markets in Hong Kong.

"I still think real money is sitting on the sidelines because you don't want to be seen buying in such a market," he said.

"Greece is the big story but even if it's not Greece, its the U.S. debt ceiling. If not that, then China accounting worries."

Foreign investors have grown increasingly wary of Chinese stocks amid talk in the West of a Chinese internet bubble and questions about China Inc's corporate governance following controversies surrounding Sino-Forest and Harbin Electric .

China's dominant internet firm Tencent Holdings Ltd , which had been relatively outperforming the Hang Seng Index this year, fell 4.2 percent. Its shares are down 15 percent this month.

Fears of an abrupt slowdown in China's economy have added to the pessimism. However, while recent data have pointed to slight cooling in economic growth, echoing global trends, few market watchers expect a hard landing.

Bargain-hunting in certain Chinese banking shares, trading at forward valuations close to record lows, helped limit the losses earlier in the day but gains petered out into the close.

China CONSTRUCTION [] Bank closed up 0.5 percent while ICBC finished 0.4 percent.



China shares reversed early gains to sink to their lowest levels since last September in thin volume as short-term funding costs in the country hit the highest in six months, further restricting market players in an uncertain market.

While traders said the liquidity situation was easing, rumours of further policy tightening this weekend nudged the key seven-day repo rate to its highest level since late January.

"There a few factors at play today," said Wang Aochao, an analyst with UOB Kay Hian in Shanghai.

"Beyond concerns about monetary tightening, local funds could be beginning to be a little concerned how the protracted Greek debt situation could impact China's monetary policy."

The benchmark Shanghai Composite Index lost 2.3 percent on the week to end at 2,642.8 points, its lowest point this year to date.

But analysts said the market could be bottoming out soon since losses on Friday came in thin volume. A-share turnover in Shanghai on Friday marginally decreased from Thursday, hitting 74.1 billion yuan, the third-lowest in the last five months.

Material and resource plays were the biggest drags on the benchmark on profit-taking. Aluminium Corp of China Ltd

Both stocks have outperformed the broader market in June so far. Even after Friday's losses, they have gained 8.9 and 14.9 percent, respectively, this month.

Asia Media up 5.2% in active trade

KUALA LUMPUR: Asia Media Bhd, whose shares have been actively traded over the week, inched up in late afternoon trade on Friday, June 17.

At 4.41pm, it was up 1.5 sen or 5.2% to 30 sen with 14.85 million shares done.

The FBM KLCI rose 4.13 points to 1,558.37. However, the broader market was showing signs of some caution due to the weaker regional bourses. Losers beat gainers 384 to 309 while 336 counters were unchanged. Turnover was 681.05 million shares valued at RM1.36 billion.

The company had proposed to place out of 35% of the paid-up or 79.80 million new shares to identified Bumiputera investors.

MARC ups rating outlook on Sime Darby Islamic debt notes

KUALA LUMPUR: Malaysian Rating Corp Bhd has revised its outlook on SIME DARBY BHD []'s'' debt ratings to stable from negative as downside risks to the group's consolidated credit profile abate, particularly its energy and utilities (E&U) division's projects.

MARC said on Friday, June 17 the debt ratings were MARC-1ID /AAAID.'' The outlook revision affected the RM4.5 billion Islamic MTN programme (RM2.0 billion outstanding) and RM500 million Islamic commercial paper (ICP) programme (RM500 million outstanding) with combined limit of RM4.5 billion; and RM150 million underwritten Murabahah CP facility.

MARC said the E&U division's earnings before interest and tax (EBIT) of RM219.5 million for the nine months to March 31, 2011 marked a turnaround from the RM1.019 billion loss a year ago.

'The progress made on E&U division's problem projects since the rating agency's last rating action in October 2010 has alleviated MARC's major concerns about project execution risk and the potential for additional losses,' it said.

MARC said there was a RM98.5 million write-back of provisions for E&U division's Maersk Oil Qatar project in the third quarter of FY2011 following project close-out.

Its Qatar Petroleum project (where RM200 million in provisions were made in 3QFY2010) had moved into the close-out phase.

MARC added the Bakun dam project, in which Sime was the lead consortium member with a 35.7% interest, was scheduled for handover in end-2011.'' The India-based ONGC project was targeted for June 2012.

'Provisions of RM450 million made for the Bakun dam project and RM227 million for the ONGC project are expected to provide adequate buffer for actual cost overruns,' it said.

The ratings agency said it was positive about Sime's decision to exit from oilfield services. It divested Sime Darby Engineering Sdn Bhd's (SDE) oil and gas assets for a provisional cash consideration of RM695 million.

'MARC views the divestments as positive for Sime's consolidated credit profile in light of the operational challenges of its oilfield services business and huge prior year losses. The disposal of the oil and gas assets will allow Sime to focus on its core PLANTATION [], property, automotive and industrial businesses, and show improvement in its consolidated profitability.

MARC said it understood that Sime would still have to complete its outstanding contractual obligations notwithstanding the divestments.

For the nine months ended March 31, 2011, Sime's consolidated pre-tax profit doubled to RM3.4 billion (9MFY2010: RM1.7 billion) on consolidated revenue of RM29.7 billion (9MFY2010: RM23.7 billion).

MARC said the group recorded higher contributions from its plantation, industrial and motor divisions with increases of 18%, 30% and 90% respectively in EBIT. Its EBITDA interest coverage also strengthened to 17.4 times (9MFY2010: 14.3 times).

Sime's consolidated liquidity remains strong with cash and cash equivalents of RM4.1 billion (FY2010: RM4.4 billion) as of March 31, 2011 against short-term borrowings of RM3.2 billion (FY2010: RM3.3 billion).

MARC said the recent developments showed that Sime's credit metrics had been sufficiently restored and commensurate with its long-term rating of AAA.

Further factored into the stable outlook is Sime's strong commitment to preserve its current ratings.

Danajamin part guarantees Ranhill Powerton's RM710m debt notes

KUALA LUMPUR: Danajamin Nasional Bhd says it is only part guaranteeing Ranhill Powertron II Sdn Bhd's RM710 million 18-year Islamic medium term notes programme, specifically the longer end of the issuance.

Danajamin said on Friday, June 17 this was the first of its kind transaction for the financial guarantee insurer where it is only part guaranteeing a bond/sukuk programme,

Of the RM710 million programme, RM360 million (with maturities from one to 11 years) is issued on a standalone basis. The remaining RM350 million (with maturities from 12 to 18 years) is guaranteed by Danajamin. The standalone portion is rated AA while the Danajamin-guaranteed portion, is rated AAAIS(fg).

The RM690 million portion of the sukuk programme was issued on Friday.

Danajamin chief executive officer Ahmad Zulqarnain Onn said: 'The issuance is a result of Danajamin working with Ranhill Powertron II and their joint lead arrangers to come out with an optimal financial solution for the company'.

He said Danajamin was pleased to have helped Ranhill Powertron II tap the longer end of the sukuk market, which was less liquid.

'This ties in with Danajamin's objective to assist companies in accessing long term financing and to be a catalyst to stimulate the bond/sukuk market,' he said.

Danajamin has, to date, provided guarantees for RM2.0 billion bond programmes.

Ranhill Powertron II is an independent power producer and it owns and operates the 190MW Rugading combined cycle power plant in Kota Kinabalu.

It has a 21-year power purchase agreement with Sabah Electricity Sdn Bhd to supply electricity to meet Sabah's growing demand for power. The power plant was constructed in 2009 and it has been operating.

Petronas Gas at multi-year high of RM12.92

KUALA LUMPUR: Shares of PETRONAS GAS BHD [] (PetGas)surged to multi-year high of RM12.92 in late afternoon trade as investors viewed the stock had more upside following the Melaka regasification plant and Kimanis power plant.

At 3.41pm, it was up 62 sen to RM12.92 with 2.21 million shares done.

The FBM KLCI rose 5.92 points to 1,560.16. Turnover was 585.13 million shares valued at RM1.16 billion. The broader market was mixed with 315 gainers, 332 losers and 341 stocks unchanged.

Hwang DBS Vickers Research said PetGas was eyeing new opportunities in stable utility businesses given its strong balance sheet with RM2.3 billion net cash.

'Our discounted cashflow-derived target price is unchanged at RM13.50 a share,' it said.

The research house said PetGas' Melaka regasification plant could lift FY12-FY13F net profit by between 10% and 20% per annum and there was an 8% upside from the new Kimanis power plant.

'The power purchase agreement (PPA) for Kimanis will be finalised soon, while the regasification service agreement (RSA) may be signed by end 2011 to be able to commission the plant in July 2012,' it said.

N. American semicon equipment industry May book-to-bill at 0.97

KUALA LUMPUR: North America-based manufacturers of semiconductor equipment posted US$1.62 billion in orders in May and a book-to-bill ratio of 0.97, according to the Semiconductor Equipment Manufacturing Industry association (SEMI).

The US-based SEMI is the global industry association for companies that supply manufacturing TECHNOLOGY [] and materials to the world's chip makers.

A book-to-bill of 0.97 means that $97 worth of orders were received for every $100 of product billed for the month.

In a statement June 16 on its website, SEMI said the bookings figure was 1.1% more than the final April level of US$1.60 billion, and is 6.2% above the US$1.53 billion in orders posted in May 2010.

#Update2* Wah Seong Corp book order RM1.2b, unveils growth strategy

KUALA LUMPUR: WAH SEONG CORPORATION BHD [] (WSC), with a book order of RM1.2 billion most of which are from the pipeline and engineering services division, unveiled its strategy to expand into water-related businesses and renewable energy.

WSC managing director and group chief executive officer Chan Cheu Leong said on Friday, June 17 the group was looking at organic and acquisition-driven growth for all its divisions.

He said this would see WSC boosting its biomass equipment and power generation business, as well as integrating into the fast growing agro-based sector and water industry.

In a statement released after its annual general meeting in Penang, he said another key growth area would'' be in deepwater pipe and gas pipe coating, where Wasco Energy Ltd had the TECHNOLOGY [] and capability to coat pipes for deepwater oil and gas production.

'After toughing it out against a volatile business environment last financial year, WSC again surged into solid profitability in the first quarter this year and is planning major programmes for its divisions,' Chan said.

In the first quarter ended March 31, 2011, its net profit surged 155% to RM43.4 million from RM17.0 million a year ago while revenue increased 19.8% or RM81.3 million to RM490.9 million.

As for FY2010, WSC's net profit attributable to shareholders fell 53.9% to RM55.98 million from RM121.3 million in FY2009 due to the impact from the economic and financial turbulence of 2008/2009.

'Last year, our core activities centred on the commencement of our RM551 million, 850km Gorgon pipe coating project in Australia, of which about 48% is now completed. We expect to fully complete this by first quarter of 2012.

'This project takes up a fair amount of our Kuantan facility's capacity and plans are underway to maximise capacity as new market potential is currently being explored,' Chan added.

As for WSC's book order, he said of the RM1.2 billion, about 74% was from its pipeline and engineering services divisions.

On WSC's pipe manufacturing, Chan said the company was evaluating opportunities to broaden into water related industries and was eyeing waste water treatment and water concessions.

Increased urbanisation and environmental degradation has provided opportunities in water and structural pipes operations, he said.

Chan also provided an update on WSC's joint ventures with Nasdaq-listed Insituform Technology Inc to look into thermal insulation and related businesses.

'The first JV, Bayou Wasco Insulation Technologies, LLC, will see us setting up an insulation coating plant in the US, our first deepwater pipe-coating plant outside Malaysia.'' We are currently building the technical and sales organisation and target to commission by the beginning of 2012,' said Chan.

Bayou Wasco Insulation focuses on thermal insulation coating products to pipes or pipelines for projects in the US, Gulf of Mexico, Central America and the Caribbean Islands.

The second JV, WCU Corrosion Technologies Pte Ltd will promote high density polyethylene (HDPE) pipe lining system to the Asia Pacific market.

'Through this JV, we will also participate in onshore corrosion protection services, including engineering services, CONSTRUCTION [], installation, inspection, monitoring and maintenance and related product sales.'' We are targeting to secure our first project in Asia by mid 2012,' he added.

Chan also elaborated on the proposed demerger where the oil and gas business will be housed under Wasco Energy while WSC would transform into an industrial services player with renewable energy, trading and pipe manufacturing businesses as its core activities.

To recap, WSC started out in 1994 with its core activities in building material, trading and pipe manufacturing and it expanded into the oil and gas (O&G) industry. WSC's O&G unit, Wasco Energy, had evolved to become a major O&G player in this region.

The demerger, he said, would enable each entity to pursue a more focused and tailored business strategy to accelerate growth.

Chan said over the next five years, WSC would strengthen its industrial services where it would expand upstream and even own oil palm PLANTATION []s.

'We are confident that WSC will reinvent itself and become a major Asian industrial group after the demerger of its O&G unit.

'Renewal energy will be extensively developed, where the emphasis will be on strengthening our operations.'' Our expansion will likely see us going upstream, with a focus on the Afro Asia region palm oil sector.'' This could also see us becoming owner of oil palm plantations.

'This division is expected to propel the group's growth moving up the value chain to become a major player in the design and manufacture of mills and biomass and biofuel plants on turnkey basis,' he added.

As for WSC's trading business, Chan said it planned to tap into the vast opportunities in the Tenth Malaysia Plan and Economic Transformation Programme with the rolling out many infrastructure projects.

He said WSC's trading business would involve regional expansion to develop the company into Asean's major trading and logistics house.

Builders urge govt to further liberalise imports of construction materials

KUALA LUMPUR: The Master Builders Association Malaysia (MBAM) wants policymakers to further liberalise the import of all building materials and equipment to check unwarranted price hikes.

"The government must consider further liberalising importation of all building materials and equipment," said MBAM president Kwan Foh Kwai on Friday, June 17.

He said the government had to take steps to ensure increases in building material prices'' were reasonable.'' Increases in materials would lead to higher CONSTRUCTION [] costs, he added.

Kwan cautioned price increases could impact the projects and higher risk of failures, due to cost overruns and delays.

Top Glove 3Q net profit falls 60.3% to RM25.6m

KUALA LUMPUR: TOP GLOVE CORPORATION BHD [] net profit for the third quarter ended May 31, 2011 fell 60.3% to RM25.60 million from RM64.48 million a year earlier due mainly to higher latex price and weakening US dollar.

Revenue for the quarter dropped 3.7% to RM535.36 million from RM555.85 million in 2010. Earnings per share was 4.14 sen.

The glove maker declared a first single tier net interim dividend of 5 sen, payable on July 21, 2011.

For the nine months ended May 31, Top Glove's net profit fell to RM87.06 million from RM200.22 million a year earlier, while revenue was also lower at RM1.51 billion compared to RM1.54 billion in 2010.

In a statement Friday, June 17, Top Glove chairman Tan Sri Lim Wee Chai said the result for 3Q ended May 31, 2010 was an anomaly as the influenza A (H1N1) virus outbreak caused a surge in demand, and latex prices and the US dollar exchange rate were also more favourable then.

He said average latex price had increased by 39% year-on-year in 3Q ended May 31, 2011 while the US dollar had weakened against the ringgit 7.4%.

Lim said the company's average selling prices (ASPs) were regularly revised to reflect the increase in costs.

However, due to an oversupply situation in the glove industry, it was difficult for Top Glove to pass on the rise in costs to its customers in full, he said.

'Up until now in this fiscal year, we have only been able to pass on around 70% to 80 % of the increase. Furthermore, there is a time lag in the cost pass-through that we have to contend with.

'Latex price has declined about 14% in the past one month from its all-time high of RM10.99 on 11 April 2011 to around RM9.40 in recent weeks. As latex price stabilised, we expect customers who had adhered to minimum inventory holding before, to resume buying,' he said.

Lim said that although business conditions had been challenging, he was confident that the company's strong balance sheet and cash flow position would allow it to make the necessary investments and improvements to stay competitive and counter the headwinds.

'Besides, Top Glove has been rebalancing its product mix by producing more nitrile gloves to avoid over reliance on natural rubber gloves.

'However since nitrile is also dependent on crude oil, which is depleting and competing with other types of usage, our new production lines have been built to be inter-switchable between producing natural rubber gloves and nitrile gloves,' he said.

Lim said Top Glove's new factory in Klang, the F21, had 16 lines dedicated to produce nitrile gloves and was already up and running.

Two additional new factories, F22 and F23, which are slated to be completed by October 2011 and March 2012 respectively, will also be installed with nitrile glove production lines, he said, adding that the expansion would increase Top Glove's capacity from 35.25 billion pieces per annum to 41.55 billion pieces.

Lim said the company has also been investing more heavily in R&D in order to continue innovating new products, to further enhance its product quality and to improve productivity and cost efficiency.

'Top Glove believed the glove industry still remains resilient, for gloves are a necessity especially in the medical and healthcare industry.

'The increased awareness of healthcare and hygiene in developing countries also helps sustain the demand for rubber gloves,' he said.

Banks, blue chips boost FBM KLCI; Muhibbah stages mild recovery

KUALA LUMPUR: The FBM KLCI remained above the 1,560 level at the mid-day break on Friday, June 17, boosted by bank stocks and select blue chips and it was among the top performers in the region.

At 12.30pm, the KLCI was up 5.85 points to 1,560.09. Gainers edged losers by 297 to 263, while 333 counters traded unchanged. Volume was 397.29 million shares valued at RM714.06 million.

The ringgit weakened 0.26% to 3.0525 versus the US dollar; crude palm oil futures for the third month delivery was flat at RM3,193, crude oil fell 23 cents to US$94.72, while gold lost US$2.90 an ounce to US$1,526.90.

Regional markets were mixed as markets are still largely unconvinced that Greece can dodge a default without political stability in Athens, keeping equity and commodity prices in a near-term downtrend, according to Reuters.

Japan's Nikkei 225 fell 0.53% to 9,361.53, Hong Kong's Hang Seng Index lost 0.35% to 21,876.32, South Korea's Kospi was down 0.86% to 2,029.04, Singapore's Straits Times Index declined 0.16% to 3,015.37 and Taiwan's Taiex edged down 0.05% to 8,649.73.

Meanwhile, the Shanghai Composite Index rose 0.37% to 2,674.03.

On Bursa Malaysia, Petronas Gas added 62 sen to RM12.92, KLK 28 sen to RM22.30, BAT 24 sen to RM46.14, Panasonic and DiGi 16 sen each to RM24.22 and RM28.84, MMHE 11 sen to RM8.61 and Favelle Favco gained 10 sen to RM1.71.

Among banking stocks, Hong Leong Bank was up 26 sen to RM13.26, HLFG 18 sen to RM12.56, CIMB eight sen to RM8.55, RHB Capital and Public Bank up four sen each to RM9.88 and RM13.18, while Maybank and AMMB added three sen each to RM8.77 and RM6.43.

Muhibbah was the most active with 19.55 million shares done. The stock gained 11 sen to RM1.63 after it said there were reasonable grounds to hold that the receivables from Asia Petroleum Hub were recoverable in due course.

Other actives included Axiata, DBE Gurney, Digistar, KBB, Tricubes, Compugates and Focus.

Decliners included Batu Kawan. down 42 sen to RM16.88, F&N and Nestle fell 20 sen each to RM19.50 and RM48, Genting and Malayan Flour Mills 14 sen each to RM10.28 and RM7.06, Boustead 11 sen to RM6.04, Sunway City and MSC fell eight sen each to RM5.05 and RM4.39.

APH says in talks with investor to finance hub project - Muhibbah

KUALA LUMPUR: Asia Petroleum Hub (APH) has identified an investor and was in negotiations with the investor to fully finance the completion of the APH hub project, including making due payments to contractors.

In a filing Friday, June 17, MUHIBBAH ENGINEERING (M) BHD [] said according to APH, it had identified an investor.

Muhibbah is one of the contractors for a petroleum hub and bunkering facility at the reclaimed island of Tanjung Bin, and its receivables for certified work done and related costs amount to RM 370.8 million as at Dec 31, 2010.

Muhibbah's share price tumbled yesterday after the Singapore Business Times reported on June 15 that CIMB (the financier of APH project) had appointed receivers and managers for APH.

However, the shares recovered this morning and were last traded eight sen higher at RM1.60 with 9.27 million shares done before trading was halted for one hour from 10.39am.

'As this is a oil and gas project with a secured business and the said investor due to finalise its financing transaction with APH, there are reasonable grounds to hold that the receivables are recoverable in due course,' Muhibbah said.

#Update* Muhibbah extends gains on resuming trade

KUALA LUMPUR: MUHIBBAH ENGINEERING (M) BHD [] shares extended their gains upon resuming trade at 11.39am on Friday, June 17 following a one hour trading halt.

Muhibbah rose 11 sen to RM1.63 at 11.45 am with 15.46 million shares done after it said there were reasonable grounds to hold that the receivables from Asia Petroleum Hub were recoverable in due course.

In a filing Friday, June 17, Muhibbah said that according to APH, it had identified an investor and was in negotiations with the investor to fully finance the completion of the APH hub project, including making due payments to contractors.

Muhibbah is one of the contractors for a petroleum hub and bunkering facility at the reclaimed island of Tanjung Bin, and its receivables for certified work done and related costs amount to RM 370.8 million as at Dec 31, 2010.

Muhibbah's share price tumbled yesterday after the Singapore Business Times reported on June 15 that CIMB (the financier of APH project) had appointed receivers and managers for APH.

'As this is a oil and gas project with a secured business and the said investor due to finalise its financing transaction with APH, there are reasonable grounds to hold that the receivables are recoverable in due course,' Muhibbah said.

FBM KLCI breaches 1,560-level at mid-morning

KUALA LUMPUR: The FBM KLCI breached the 1,560-point level at mid-morning, in line with the modest initial gains at most key regional markets that were boosted by the overnight advance at Wall Street.

However, trading sentiment at the regional markets was soured by the uncertainty in the Greece debt situation and activities remained subdued.

At 10am, the FBM KLCI was up 8.37 points to 1,562.61, lifted by gains including at

Gainers led losers by 222 to 134, while 207 counters traded unchanged. Volume was 151.36 million shares valued at RM202.54 million.

At the regional markets, Japan's Nikkei 225 edged down 0.01% to 9,410.68, Hong Kong's Hang Seng Index was down 0.22% to 21,904.79, the Shanghai Composite Index shed 0.03% to 2,663.44, Taiwan's Taiex down 0.02% to 8,653.13, South Korea's Kospi fell 0.25% to 2,041.52 and Singapore's Straits Times lost 0.35% to 3,009.44.

Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi in a note to clients June 17 said due to the US markets' mixed tone last night, there would be some initial low volume buying activities in the local bourse today.

'The market could possibly rise, with some pre-weekend profit taking activities later in the day.

'As a result, we expect the FBM KLCI to remain volatile today. Investors should trade the market with a short-term time frame,' he said.

Meanwhile, BIMB Securities Research in a note June 17 said while Wall Street rebounded overnight, undertone of the market remains cautious and weak.

'We believe there to be more downward bias in the DJI given the heightening uncertainties both in the US and Eurozone.

'Locally, we expect to remain thin in the absence of any positive catalysts. As a result, the FBMKLCI is seen to move within a tight range with the 1,550 level as a rather firm support,' it said.

Among the gainers, Digi rose 42 sen to RM29.10, Petronas Gas 38 sen to RM12.68, Hong Leong Bank 30 sen to RM13.30, KLK 26 sen to 22.28, BAT and HLFG 18 sen each to RM46.08 and RM12.56, CIMB 10 sen to RM8.57, while Aeon Credit and RHB Capital added eight sen each to RM5.13 and RM9.92.

DBE Gurney was the most actively traded counter with 9.48 million shares done. The stock was unchanged at 8 sen.

Other actives included Compugates, Tricubes, Muhibbah, Kurnia Asia, Axiata and Asia Media.

Decliners at mid-morning included Batu Kawan, Shell, Malayan Flour Mills, Petrol One, Kim Hin, Genting PLANTATION []s, Top Glove and Puncak Niaga.

CIMB Research has technical Buy on YTL Power at RM2.18

KUALA LUMPUR: CIIMB Equities Research has a technical Buy call on YTL Power International at RM2.18, where it is trading at FY12P/E of 13.6 times and price-to-book of 2.1 times.

It said on Friday, June 17 YTL Power is still gyrating in a bullish wedge pattern but the bulls were slowly gaining strength.

'However, to avoid bulls trap, traders should wait for a push above the resistance trend line before going long,' it said.

CIMB Research said the MACD is poised for a positive crossover while RSI has also bounced off its lows. Once the RM2.22 level is taken out, the following resistance levels are RM2.33 and RM2.45.

'Although risk takers may start to nibble now, we would rather wait for a break above RM2.22 before taking any position. Be quick to trim loss if the RM2.12 level is violated,' it said.

Muhibbah active, up in early trade

KUALA LUMPUR: Shares of Muhibbah Engineering Bhd were actively traded and rose on Friday, June 17 after having been sold down a day earlier following concerns that Asia Petroleum Hub (APH) -- which it undertook a project for -- faced receivership.

At 9.15am, Muhibbah was up one sen to RM1.53 with 3.02 million shares done. Its subsidiary Favelle Favco gained three sen to RM1.64.

Muhibbah suffered the steepest single day fall yesterday since Jan 14, 1998 in a knee-jerk reaction to the possibility that APH was facing receivership. The stock fell 20% or 38 sen to RM1.52 with 45.7 million shares done.

Some analysts viewed the selling yesterday as overdone and the worst-case scenario for Muhibbah was a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11.

APH, the developer and operator of the APH oil terminal in Johor, faced the prospects of receivership, news reports said. Muhibbah was awarded the marine piling and jetty works worth RM820 million. Cost escalation in 2008 led to funding issues for APH and the stalling of payments due to Muhibbah.

CIMB Equities Research had said the unpaid amount accumulated to about RM300 million, which did not include RM187 million worth of outstanding works as at end-2010. It said the project was still deemed viable and the worst-case scenario for Muhibbah was a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11.

'However, we believe that in a scenario where the receiver takes over management of APH, it may come up with a scheme to repay a large portion of the amount due to contractors, which would reduce the risk of a huge write-down,' it said.


UEM Land gains on 50% revenue growth target

KUALA LUMPUR: UEM LAND HOLDINGS BHD [] shares advanced in early trade on Friday, June 17 after the company said it has set an internal target for a 50% revenue growth in FY2011 and a 10% return on investment.

At 9.25am, UEM Land was up three sen to RM2.80 with 298,300 shares traded.

Its managing director and CEO Datuk Wan Abdullah Wan Ibrahim yesterday said with the acquisition of SUNRISE BHD [], UEM Land was hoping to build its portfolio and surpass its competitors' revenue in the near future.


RHB Capital gains on stake sale to Aabar

KUALA LUMPUR: RHB CAPITAL BHD [] shares rose on Friday, June 17 on reports that Abu Dhabi Commercial Bank (ADCB) has received''the green light from Bank Negara to sell its 25% stake in RHB Capital Berhad (RHB) to sister company Aabar investment PJSC.

RHB Capital was up seven sen to RM9.91 at 9.30am with 157,300 shares traded.

MIDF Research has maintained its Neutral recommendation on the stock but raised its target price to RM10.40 (from RM9.90 previously) based on a EPS forecast for FY11 of 75.8 sen pegged''to 13.7 times PER.

'PER of 13.7 times''is''the high side of 3 years PE band. Our target price also implies FY11 P/BV of 2.11 times,' it said in a note June 17.

Nikkei edges higher, trade seen subdued

TOKYO: The Nikkei average edged higher on Friday, recouping some of the losses posted the previous day as a rebound in U.S. stocks reassured the market, but trade may be subdued before the weekend.

The Nikkei added 0.3 percent to 9,435.88, while the broader Topix index gained 0.2 percent to 813.71. ' Reuters

CIMB Research maintains Underperform on MAS

KUALA LUMPUR: CIMB Equities Research maintained its Underperform call on MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) and maintained a target price of RM1.52.

It said on Friday, June 17 that MAS had, in a briefing on Thursday, reiterated on the benefits of its oneworld alliance membership.

The network would enable MAS tap into a global network of connectivity, a seamless travel experience, frequent flier benefits and airport lounge access.

'We agree that joining oneworld is the right move and a MAS-Qantas partnership through the alliance could form an effective counterweight to the recently announced SIA-Virgin Australia tie-up.

'But we continue to rate MAS an UNDERPERFORM as the 2Q loss is expected to be much larger than the 1Q loss and the benefits of the alliance will only start flowing through in 2013. We maintain our EPS forecasts and target price of RM1.52, which is based on 2x P/BV,' it said.

CIMB Research has Sell on TRC Synergy

KUALA LUMPUR: CIMB Equities Research has a Technical Sell on TRC Synergy at RM1.78 at which it is trading at price-to-book of 1.1 times.

It said on Friday, June 17 TRC violated the bearish wedge pattern on Thursday.

'We see this as a prelude to more downside ahead. If the 30-day and 50-day SMAs also give way, there is a good chance that prices may fill the RM1.70-1.62 gap soon. The following support levels are RM1.51 and RM1.43,' it said.

CIMB Research said the bearish divergence on its MACD suggests that follow through momentum has faded. RSI has also hooked downward.

'As the bears gain traction, we believe the best strategy here is to unload on strength. Near term gains are likely to be capped at RM1.81-1.87. Put a buy stop at RM1.90, just in case,' it said.

CIMB Research has Buy on Kurnia Asia

KUALA LUMPUR: CIMB Equities Research has a technical Buy call on Kurnia Asia at 43.5 sen at which it is trading at price-to-book of 1.7 times.

It said on Friday, June 17 that Kurnia Asia broke out of its consolidation triangle pattern on Thursday. The upswing also took out its key moving averages along the way.

'Looking at the chart, we think prices could still make one more upleg, likely towards 46 sen and possibly even 48.5 sen. Technical landscape is improving. MACD histogram bars have returned to the black while RSI is also rising,' it said.

CIMB Research said traders may start to nibble now. However, always put a stop at below 40 sen to avoid bull traps. If this level is breached, the next support levels are 37.5 sen and 34 sen.

Oracle seeks billions in lawsuit against Google

SAN FRANCISCO: Oracle Corp is seeking damages "in the billions of dollars" from Google Inc in a patent lawsuit over the smartphone market, according to a court filing.

The disclosure on Thursday, June 16 was the first time either side publicly mentioned the cumulative scale of Oracle's damages claims.

Oracle sued Google last year, claiming the Web search company's Android mobile operating TECHNOLOGY [] infringes Oracle's Java patents. Oracle bought the Java programing language through its acquisition of Sun Microsystems in January 2010.

Some see the lawsuit as a sign of a growing business rivalry between the two companies.

The case is also part of a wider web of litigation among phone makers and software firms over who owns the patents used in smartphones and tablets, as rivals aggressively rush into a market in which Apple jump-started with iPhone and iPad.

Barring any settlements, a trial between Oracle and Google is expected to begin by November.

Google has called an Oracle damages report "unreliable and results-oriented," and asked a U.S. judge in San Francisco to ignore it, court documents show. In disputing Oracle's methodology, Google also asked the court to keep private some damages information Google disclosed in a court filing.

Oracle then accused Google of trying to conceal the fact Oracle's damages claims in the case are in the billions, according to a document filed on Thursday. Oracle said it did not object to having the information about its damages become public.

Due to Oracle's stance, U.S. District Judge William Alsup ordered Google on Thursday to make public the damages information by Friday.

A Google representative declined to comment.

The case in U.S. District Court, Northern District of California, is Oracle America, Inc v. Google Inc, 10-3561. - Reuters

Dow, S&P rise in volatile session; Nasdaq slips

NEW YORK: Stocks rose in volatile trading on Thursday, June 16 thanks only to technical factors and options expirations. But raging uncertainty about Greece prevented investors from committing money to the market.

The impending expiration of stock-index futures, single-stock futures, equity options and stock-index options for June -- known as quadruple witching -- created exceptional volatility, pushing the S&P 500 to swing more than 1 percent from its session low to its intraday high.

Greece kept a pall over investor sentiment, even though experts say U.S. banks' exposure to Greek debt may be smaller than many market participants fear.

Still, the market needs resolution of the situation soon, as the lack of a deal to resolve the Greek debt crisis stifles investor confidence and curbs the market's advance.

"The big headline is Greece, and it's going to continue to be Greece until there is some clarity or conviction that comes out of there," said Jonathan Corpina, head of NYSE floor operations for Meridian Equity Partners in New York.

Losses were contained, however, as investors looked for value after the recent sell-off. The Dow finished the volatile day with a modest gain and the Nasdaq retraced some ground after falling slightly more than 1 percent in late afternoon trading.

The S&P materials sector .GSPM lost 0.9 percent, reflecting a slide in copper prices amid concerns that the U.S. economy may be slowing. For details, see [ID:nN16194354]. Freeport-McMoRan Copper & Gold Inc (FCX.N) shed 1.4 percent to $47.85.

The Dow Jones industrial average .DJI gained 64.25 points, or 0.54 percent, to 11,961.52. The Standard & Poor's 500 Index .SPX added 2.22 points, or 0.18 percent, to 1,267.64. But the Nasdaq Composite Index .IXIC dropped 7.76 points, or 0.29 percent, to 2,623.70.

The S&P 500 has dropped 7 percent from its April 29 closing high.

The benchmark S&P 500 Index appeared to bounce back from a technical support test at 1,257.88, its 200-day moving average, recovering from an intraday low of 1,258.07.

Quadruple witching is a term used by pros to describe the

quarterly expiration and settlement of four types of June equity futures and options contracts -- an event that can add volume and volatility as investors adjust their derivatives positions.

The two-day event begins when June stock-index futures and certain options on the cash indexes such as the S&P 500 and the Nasdaq 100 .NDX stop trading at Thursday's close. These contracts then settle on Friday's morning opening.

"We've got expiration -- end of the month, end of the quarter -- we've got a couple of things coming down in the pipe right here. Shuffle that with Greece, U.S. economic data, oil, we've got a little bit of a perfect storm going on," Corpina said.

"We are going to continue to see volatility, we are going to continue to see volume. When you see that volume, volume adds that conviction to the market. But as we start to see higher volume, it's really going to get the snowball effect."


Dow component American Express Co (AXP.N) rose 2.4 percent to $48.42, helping to bolster the blue-chip average.

Among the day's upbeat company news, shares of Kroger Co (KR.N), the biggest U.S. supermarket operator, jumped 4.5 percent to $23.99 after it posted a higher-than-expected quarterly profit that was helped by cost controls and a rise in sales. Kroger also boosted its full-year profit forecast.

After the closing bell, U.S.-listed shares of Research in Motion (RIMM.O)(RIM.TO) plunged as much as 15 percent after the Canadian company reported its quarterly profit dropped and revenue missed its lowered forecast, forcing the BlackBerry maker to slash its outlook.

The day's data painted a mixed picture of the economy.

Factory activity in the U.S. Mid-Atlantic region unexpectedly shrank in June, another sign of weakness in the manufacturing sector, according to the June reading of the Philadelphia Federal Reserve Bank's business activity index.

Another report on Thursday showed the number of Americans signing up for jobless benefits fell last week, while housing starts and building permits rose in May.

Volume was modestly active with about 7.78 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, slightly above the daily average of 7.58 billion.

Declining stocks outnumbered advancing ones on the NYSE by 1,660 to 1,355. In contrast, on the Nasdaq, the opposite trend prevailed, with advancers beating decliners 1,332 to 1,254.

BlackBerry maker slashes forecast, shares tumble

TORONTO: Research In Motion's quarterly profit dropped and revenue missed its own limp forecast, forcing the BlackBerry maker to slash its outlook and sending its shares down 15 percent on Thursday, June 16.

Facing intense pressure from Apple and Google in the smartphone market, RIM also warned that its latest models would not hit U.S. stores until well into the valuable back-to-school shopping season. The delay will likely add to the disappointment felt by investors after RIM's botched launch of its PlayBook tablet computer this spring.

"The company is going into the abyss of a transition, and even if they get a new model, it's a new model on the old platform," said BGC Partners analyst Colin Gillis, one of many who has criticized RIM's product development pipeline.

RIM has promised smartphones next year running on its new QNX platform, now featured in the PlayBook, but only after it releases a series of devices with an upgraded version of the current operating system. But even those upgrades to its Bold business workhorse, new Torch and Storm models won't go on sale until late August, RIM said on Thursday.

That delay pushed RIM to forecast shipments of between 11 million and 12.5 million smartphones in the current quarter, sharply lower than the more than 14 million eyed by analysts.

RIM shipped 13.2 million BlackBerrys in the three months to May 28, missing its own estimate.

It shipped 500,000 PlayBook tablets in the six weeks after its April launch, exceeding the average analyst forecast of 366,000. Even so, the number represents a small fraction of Apple's iPad sales.

RIM, once a byword for corporate mobile communications, has lost allure as Apple's iPhone and later Google's Android operating system changed the rules of the game.


Up against that competition, analysts had thought it was only a matter of time before RIM abandoned a $7.50 a share earnings outlook for the year to late March 2012. On Thursday, it did just that, recalibrating expectations to between $5.25 and $6 a share.

In a tacit acknowledgment that it needs to do more to play catch-up, the company said it plans to cut jobs and focus its resources on accelerating its product pipeline. The company did not disclose the number of job cuts, but indicated that it intends to begin this reorganization immediately.

"RIM is in this situation because its phones aren't competitive and they're not competitive because they've fallen behind on development and product cycle," said Charter Equity analyst Edward Snyder. "Now they need to accelerate the models to market, but at the same time they are cutting staff."

To help boost its sagging share price, RIM intends to buy back up to 5 percent of its outstanding shares and said the board did not expect that the spending would have a negative impact its growth plan. Its full year forecast for earnings per share did not calculate any impact of the share buyback.


RIM expects earnings in the current quarter of between 75 cents and $1.05, sharply lower than the already pessimistic average view of $1.40. It sees revenue of between $4.2 billion and $4.8 billion.

The Waterloo, Ontario-based company's net profit dropped to $695 million, or $1.33 a share, on revenue of $4.9 billion. Analysts had expected profit of $1.32 a share on revenue of $5.1 billion.

A year ago RIM earned $1.38 a share on revenue of $4.24 billion.

The company said its gross margins, among the highest in the smartphone industry, will likely slip around 5 percentage points to some 39 percent in the current quarter.

Shares of RIM -- which reported its results after the close -- fell to nearly a five-year low during the regular session after the company said a senior executive had taken medical leave.

RIM shares fell more than 15 percent further to $29.84 in trade after the closing bell in the United States.

Thursday, June 16, 2011

Perodua unveils new MyVi unit, priced RM43,900 to RM57,400

KUALA LUMPUR: Perusahaan Otomobil Kedua Sdn Bhd (Perodua) unveiled - the new MyVi -- an upgraded version of the best seller on Thursday night, June 16 and prices range from RM43,900 to RM57,400.

The new model comes in three variants -- standard, premium and elegance ' and will be on display at all 178 Perodua sales and selected service outlets nationwide.

Perodua managing director Datuk Aminar Rashid Salleh said the new MyVi is more than mere aesthetic improvement to the design of the successful MyVi model which was launched in May 2005.

He said it was an improved variant in terms of both looks and functionality and it has received about 10,000 orders since booking opened on June 4.

The second national carmaker expects to sell about 8,500 units monthly. The price is from RM43,900 for the standard manual transmission and RM57,400 for the elegance automatic transmission on-the-road.

The new models come in with a new colour ; mystical purple which is available for all variants. Other colors include ebony black, medallion gray, glittering silver, pearl white and ivory white.

Aminar Rashid also said Perodua plans to export the new MyVi units to Indonesia this month, starting with 500 cars, under the Daihatsu Sirion badge

"This will be the real test of our seriousness in expanding our export market. For the first batch, we will export some 500 units to Indonesia," he said.

FBM KLCI pares down losses as regional markets tumble

KUALA LUMPUR: The FBM KLCI clawed back late in the afternoon session to limit its losses on Thursday, June 16, as gains at select blue chips cushioned the effects of the tumble at regional and European markets.

Key Asian markets fell while European stocks mostly opened lower as worries mounted that Greece's debt troubles were deepening, sparking contagion fears.

On Bursa Malaysia, the FBM KLCI shed 0.13% or 1.95 points to 1,554.24. The index had earlier fallen to its intraday low of 1,549.65.

Losers thumped gainers by 558 to 21, while 289 counters traded unchanged. Volume was 814.91 million shares valued at RM1.65 billion.

At the regional markets, Japan's Nikkei 225 fell 1.70% to 9,411.28, Hong Kong's Hang Seng Index lost 1.75% to 21,953.11, the Shanghai Composite Index fell 1.52% to 2,664.28, Taiwan's Taiex slumped 2% to 8,654.43, South Korea's Kospi lost 1.91% to 2,046.63 and Singapore's Straits Times Index was down 1.14% to 3,020.13.

On Bursa Malaysia, Muhibbah was the top loser and fell 38 sen to RM1.52, its biggest single day fall in since Jan 1998.

Malayan Flour Mills fell 30 sen to RM7.20, Dutch Lady 24 sen to RM18.14, Tahps and Petronas Gas lost 20 sen each to RM4.50 and RM12.30, Favelle Favco lost 19 sen to RM1.61, Sunway City and Tradewinds 18 sen each to RM5.13 and RM10.50, Fima Corp 17 sen to RM6.15 and Esso 15 sen to RM5.25.

Among the gainers, CIMB rose four sen to RM8.47, AMMB three sen to RM6.40, Axiata and Hong Leong Bank two sen each to RM4.95 and RM13, Batu Kawan 54 sen to RM17.30, F&N 26 sen to RM19.70, HPI 25 sen to RM4.18, Milux and Mintye 17 sen each to RM1.27 and RM1.47, while Shell, Vitrox and Lafarge Malayan Cement gained 10 sen each to RM10.70, RM2.18 and RM7.58 respectively.

The actives included Muhibbah, Compugates, Axiata, Focus, SAAG, Careplus, Tricubes, Petronas Chemicals and Tenaga.

Merge Energy gets RM38.1m Kuantan water contract

KUALA LUMPUR: MERGE ENERGY BHD [] has secured RM38.1 million contract to undertake water treatment and associated projects in Kuantan.

It said on Thursday, June 16 the contract was awarded by the East Coast Economic Region Development Council.

The contract involves the balancing reservoir, access road, treated water mains and associated works for the Panching water treatment.

'The''project will contribute positively to the earnings of Merge for the financial year ending Jan 31,2012 and 2013,' it said.

Ecofuture's appeal for more time to find sponsor rejected

KUALA LUMPUR: Bursa Malaysia Securities Bhd has rejected ECOFUTURE BHD. []''s application for more time to find a replacement sponsor after its then sponsor ECM Libra Investment Bank Bhd had tendered its resignation on March 10.

The company said on Thursday, June 16 its application for an extension''of time to appoint a sponsor'' made on June 6 was rejected.

'The board of directors of Ecofuture wishes to inform that Bursa Securities had via its letter dated June 15 rejected the application,' it said.

Ecofuture will be suspended from June 23 and ultimately, faces delisting by June 27.

Its share price tumbled four sen to 4.5 sen with 683,900 shares done on Thursday.

EPF investment income up nearly 20% to RM6.53b in 1Q

KUALA LUMPUR: The Employees Provident Fund's (EPF) investment income rose 19.7% on-year to RM6.53 billion in January-March quarter of 2011, boosted by its investments in equities.

Bernama quoted the EPF statement on Thursday, June 17 the improved performance was mainly due tp the stronger performance of the equities market, underpinned by stronger corporate earnings and resilient economic fundamentals.

The EPF reported that in the first quarter, investment in equities contributed RM3.23 billion or 49.4% EPF's total investment income. This was a 20.24% increase from RM2.69 billion a year ago.

EPF Chief Executive Officer Tan Sri Azlan Zainol said: "Equity prices were further boosted by strong performance across all key sectors, primarily benefiting from higher global commodity prices, while CONSTRUCTION []-related stocks strengthened with the announcement of several major projects under the government's Economic Transformation Programme.

"The favourable trade volume had also facilitated the EPF to capitalise on profit taking."

Loans and bonds accounted for the second largest contributor to the EPF's investment income, with a return of RM1.77 billion in the first quarter. This represented an increase of 32.66 per cent from RM1.34 billion in the same period 2010.

Malaysian government securities, meanwhile, generated an income of RM1.35 billion, up RM71.54 million.

Returns from money market instruments also recorded double-digit growth, increasing 14.61% to RM153.09 million from RM133.58 million in the first quarter of 2010.

Investment income from PROPERTIES [] grew by 29.76% to RM28.12 million from RM21.67 million during the same quarter last year.

As at March 31, 2011, the EPF's total investment fund stood at RM450.26 billion.

Of the total, equities were allocated 35.55%, loans and bonds 32.32%, Malaysian government securities 27.79%, money market instruments 3.9% and properties 0.41%.

"With the global economy expected to experience uneven economic recovery and more moderate growth for the remainder of the year, the EPF will continue to consolidate its investment efforts to ensure that members' retirement savings are optimised.

"To this end, we will continue to be cautious and vigilant in our

investments by maintaining a prudent and low-risk investment approach," Azlan said. - Bernama

ANALYSIS-Oil traders may hold more stockpiles than Japan needs

KUALA LUMPUR/SINGAPORE: Oil traders and companies holding stocks of crude and fuel oil ready to cash in on a surge in demand from Japan's power plants may have bought more than needed, Reuters reported on Thursday, June 16.

Japan's oil demand for power consumption has shown little of the expected rise. If traders decide to give up the wait and sell elsewhere, prices of the stockpiled sweet crude grades from Indonesia, Vietnam and Sudan and fuel oil could slide in the weeks ahead.

Traders bought crude and fuel oil after the massive March 11 earthquake and tsunami, on the expectation Japan would burn more oil at power plants as it looked to plug the gap in electricity supply due to shutdowns at nuclear reactors hit by the disaster.

"The system in Japan is already geared to take care of the situation without too much additional burden," Fereidun Fesharaki, chairman of FACTS Global Energy said.

"I don't see a big rush to buy new volumes."

Until May, demand had been tepid and there was little sign of the need for an extra 200,000 barrels per day the IEA estimated.

In May, Japan's main 10 utilities doubled the amount of crude it burned from the same month last year while fuel oil consumption jumped by 50 percent.

News that Japan may shut all its 54 nuclear reactors by April as public concern prevents restarts from maintenance could also force the country to increase oil imports for power plants.

The possibility, however, that Japan demand estimates have been overdone are already weighing on prices. Vietnamese Su Tu Den , a grade that is used for direct-burning in Japan, was sold at $3-$5 a barrel above the Minas formula for July loading, down from a record premium of $7.15 a barrel paid for a July-December deal done in April-May.

Bach Ho crude for July was sold at around $6 a barrel above the Minas formula, down from a near $10 a barrel premium for May-loading cargo.


"In the beginning when Fukushima came, there was a big jump in sweet crude prices," Fesharaki said.

"I think they may have jumped a bit too fast. I just don't see the system requiring too much oil."

Estimates of Japan's demand for direct-burning utility fuels, which has so far been lackluster in the aftermath of the March 11 earthquake, are wide, ranging from 150,000 to 250,000 barrels per day (bpd), analysts and industry executives said.



Companies and suppliers are still assessing the amount of idle generation capacity fired by fuel oil and crude the nation has following the devastating earthquake and tsunami.

Utilities in the world's third largest oil user are expected to burn 200,000-250,000 bpd of oil in 2011, up 30,000-80,000 bpd from last year, estimates from consultancies PFC Energy and ESAI showed.

"This is quite a large increase, considering that extreme temperatures boosted last year's summer oil burning to already high levels," said Mark Freier, senior analyst, markets and country strategies at PFC Energy.

Since the quake, local refiners have been stocking up residual products, which normally would be sold as high-value blendstock, in anticipation of increased summer demand for electricity and the possibility of insufficient power-generation fuels, traders said.

There is floating storage offshore Malaysia and Japanese traders also have tanks in Singapore, southern and eastern China. At least two Aframaxes are each storing 600,000 barrels of sweet crude, likely Nile Blend, while a light sweet Kutubu cargo is also in storage, traders said.

"Before the crisis, nobody floated much crude. People were more bullish thinking the Japanese would buy more crude for burning and started storing," a trader said.

Crude storers are incurring demurrage costs of around $22,000 a day while a backwardated Brent market may lead to losses as they risk selling at lower prices in the future than the prompt month, traders said.


Japan's commercial crude inventories soared to a 31-month high while crude throughput fell to a record low in the week to June 4 as demand fell on economic slowdown after the quake.

Fuel oil imports tripled to 476,200 kilolitres (99,840 bpd) in April, data from the Petroleum Association of Japan showed.

In contrast, consumption has fallen and an average of about 400,000 kl of fuel oil was used for burning in power plants in March and April, down from an average of 645,000 kl for January and February and from last year's monthly average of 485,000 kl, according to data from the Federation of Electric Power Companies of Japan.

At the same time, Japanese refiners have increased the yield of the product to over 13 percent by burning heavier crudes, increasing local availability of the fuel, PFC's Freier said.

All these signs point to swelling inventories, sparking concerns that even with higher summer demand the volumes may still prove to be more than required.

A swing factor in the supply-demand jigsaw is Japan's disciplined population and its reaction to the government's austerity measures to limit electricity usage.

Among steps to curb power use during the hot summer months, when air-conditioning causes demand to spike, car and car parts makers will switch days off to weekdays instead of weekends, running factories on Saturdays and Sundays when power demand is lower.

Austerity measures could impact demand, traders said, although it is difficult to forecast how much.



"I wouldn't be surprised if actual demand even turns out a little lower," than expectations, PFC's Freier said.

To cope with the shortage, Japan has targeted a cut in electricity use by 15 percent in quake-hit regions of Kanto and Tohoku in the north-east for more than two months from July 1.

The best-case scenario for refiners and traders would be that the summer demand is sufficient to soak up all the stocks at a steady pace, but without the need for any desperate buying that may result in a surge in prices, traders said.

"The bottom line is -- fuel oil will never be able to replace the entire capacity that is lost, there is not enough incremental production of 0.3 percent fuel oil available and some of the oil-fired thermal generators are still down," another trader said.

"But the expectation is that summer demand will pick up to a point where it is more than enough to soak up all the LSWR in storage." - Reuters

RSPO: Suspension of IOI Corp's certification still under deliberation

KUALA LUMPUR: The suspension of IOI Corp Bhd's certification process by the Roundtable on Sustainable Palm Oil (RSPO) due to a dispute with natives over a plot of land in Sarawak is still being deliberated.

'We are still going though the formal process of the grievance panel, we are analyzing the information we have collected,' RSPO secretary general Darrel Webber said on Thursday, June 16.

To recap, in early April, IOI Corp said there was a dispute with natives over PLANTATION [] land in Sarawak which was occupied by its 70% owned IOI Pelita Plantation Sdn Bhd.

'The RSPO is looked upon as a credible organisation and we have done it before, we have censured some companies people considered too big to fail but we do so in the spirit of making that things are changed on the ground,' said Webber.

RSPO was established to promote the growth and use of sustainable oil palm products through global standards and a stringent certification process.

RAM Ratings assigns AA3 ratings to Kencana's proposed RM1.5b sukuk

KUALA LUMPUR: RAM Rating Services Bhd assigned preliminary AA3 ratings to KENCANA PETROLEUM BHD []'s two tranches of proposed Islamic debt notes, totaling RM1.50 billion

The ratings agency said on Thursday, June 16 the ratings were for the RM350 million Sukuk Mudharabah (with detachable warrants) (2011/2016) and proposed RM700 million Sukuk Mudharabah programme (2011/2026). Both long-term ratings have a stable outlook.

'The preliminary AA3 ratings are supported by Kencana's strong position in the domestic engineering and fabrication segment,' it said.

RAM Ratings said Kencana had about 20% of the local market in this segment, and has a good track record on prompt delivery within budget.

Kencana's recurring income is from its drilling and marine support services, marginal oilfield operations and sub-sea inspection and maintenance services, which account for 40% of the group's operating profit before depreciation, interest and tax over the medium term.

Kencana and its local peers also benefit from the favourable policies of the government and Petroliam Nasional Bhd that are designed to promote and develop domestic O&G players.

However, RAM Ratings expected Kencana's financial profile to weaken, albeit still sturdy, as its debt level escalates to around RM1.2 billion to fund the capital expenditure and development costs for its new marginal oilfield operations.

This was based on the assumption that it draws down about RM550 million of sukuk as planned and upon the consolidation of AME's debts).

The group's gearing level is expected to peak at around 0.7 times (end-July 2010: 0.32 times), with a corresponding net gearing ratio of around 0.2'0.3 times.


Milux rises, despites recent losses

KUALA LUMPUR: Milux Corp Bhd share price bucked the weaker market sentiment on Thursday, June 16 to advance to RM1.27 in thin trade on Thursday, June 16.

At 3.42pm, it was up 15 sen to RM1.27 with 1,000 shares done.

The FBM KLCI fell 5.71 points to1,550.48. Turnover was 592.08 million units valued at RM1.02 billion. Losers beat gainers 568 to 139 while 268 stocks were unchanged.

The rise in the share price was in the absence of fresh positive news. In the second half ended Feb 28, it posted net loss of MM1.35m in the second quarter ended Feb 28, 2011 while the first half net losses were RM1.53 million.

In a recent statement to Bursa Malaysia, accompanying the results, the company said its management has taken measures to reorganise the operations of the local and overseas subsidiaries which are incurring losses presently to return to profitability.

'The management anticipates that these subsidiaries will show meaningful recovery in future,' it said.

#Flash* UEM Land targets 50% revenue growth in FY2011

KUALA LUMPUR: ''UEM LAND HOLDINGS BHD [] has set an internal target for a 50% revenue growth in FY2011 and a 10% return on investment, said its managing director and CEO Datuk Wan Abdullah Wan Ibrahim.

He said with the acquisition of SUNRISE BHD [], UEM Land was hoping to build its portfolio and surpass its competitors' revenue in the near future.

"With the acquisition of Sunrise, we are the biggest property player in terms of market capitalisation. But we do not have the earnings to prove it yet.

'Nonetheless, we hope to surpass our competitors in the near future," he said after the group's AGM on Thursday, June 16.

"We believe these targets are achievable with Sunrise in the picture," he said.

FBM KLCI pares losses, Muhibbah in focus

KUALA LUMPUR: The FBM KLCI pared down some of its losses at the mid-day break on Thursday, June 16 as most key regional markets fell to their lowest in nearly three months on fears of a deeper global economic slowdown.

Muhibbah Engineering came under selling pressure on the negative surprise about the impact from news report about Asia Petroleum Hub (APH) -- ''which it undertook, a project for -- faced receivership.

Rising tensions in the euro zone and data showing the US economy is facing a troubling mix of weaker growth and higher prices triggered heavy selling on Wall Street, added to pressure on Asian equity markets and other riskier assets, Reuters report

Investors were also awaiting further US data later Thursday including housing starts, jobless claims and the Federal Reserve Bank of Philadelphia business outlook survey for better assessment of the state of the US economy.

At 12.30pm, the FBM KLCI shed 0.22% or 3.50 points to 1,552.69. The index had earlier fallen to its intra morning low of 1,549.65. Market breadth was negative with losers beating gainers by 461 to 149, while 258 counters traded unchanged. Volume was 392.93 million shares valued at RM635.18 million.

The ringgit weakened 0.45% to 3.0461 versus the US dollar; crude palm futures for the third month delivery shed RM24 per tonne to RM3,246, crude oil rose 67 cents per barrel to US$95.48 and gold fell US$4.78 an ounce to US$1,526.10.

Nikkei 225 -1.22% 9,457.08 Hang Seng Index
-1.45% 22,020.08 Shanghai Composite Index -0.97% 2,679.13 Taiwan's Taiex -1.63% 8,687.50 Kospi -1.67% 2,051.69 Straits Times Index -0.87% 3,028.24 ''


On Bursa Malaysia, Muhibbah Engineering came under selling pressure on the negative surprise about the impact from news report about Asia Petroleum Hub (APH) -- ''which it undertook, a project for -- faced receivership.

Muhibbah fell 35 sen to RM1.55 with 25.8 million shares done while Favelle Favco lost 20 sen to RM1.60 with 885,100 shares traded.

BLD PLANTATION []s fell 26 sen to RM6.82, Malayan Flour Mills 25 sen to RM7.25, Hong Leong Bank 22 sen to RM12.76, Panasonic, Petronas Gas and Tradewinds fell 16 sen each to RM24, RM12.34 and RM10.52 respectively, Petronas Chemicals down 15 sen to RM7.03 and JT International fell 14 sen to RM7.12.

Among the gainers, HPI added 24 sen to RM4.17, Milux 15 sen to RM1.27, Tien Wah 13 sen to RM1.79, BDB 12 sen to RM1.26, Tahps and MISC 10 sen each to RM4.80 and RM7.30, while Cycle & Carriage added eight sen to RM4.58.

The actives included SAAG, Tricubes, Compugates, Focus, Axiata and Careplus.