#Stocks to watch:* Tenaga, Envair, SILK, MFM

KUALA LUMPUR: TENAGA NASIONAL BHD [] could be in focus on Monday, Oct 31 after it announced fourth quarter net loss of RM453.90 million, the second consecutive quarter of losses, last Friday, and expected the current financial year to be very challenging.

At the operating level, the power company reported operating losses of RM248.80 million due to higher fuel costs of coal and utilisation of oil and distillates after the gas curtailment by Petroliam Nasional Bhd.

Though investors anticipated Tenaga to reported losses, their concerns were whether it could work out the gas supply issue and a definite compensation from Petronas.

However, the lack of assurance from Petronas could weigh on the share price, especially after Tenaga president and chief executive officer Datuk Seri Che Khalib Mohamad Noh said on Friday no decision had been reached as yet.

OSK Research said barring'' a write-back of compensation from Petronas due to its failure to supply sufficient gas to Tenaga, the power company should still post losses over the next two quarters.

'A continued gas shortage coupled with outages in coal plants during 4QFY11 should have necessitated Tenaga to continue to generate substantial power from expensive oil and distillates. In addition, the weakening ringgit would give rise to translation losses,' it said.

OSK Research cautioned that Tenaga might be hopeful for compensation from Petronas amounting to 33% to 67% of its additional fuel bill.

'Investors may also hold out hopes of Tenaga securing a fuel cost pass through after the anticipated General Elections, which may be held soon. In any case, we still believe it would be risky to invest in Tenaga beyond current levels given such speculation,' it added.

However, the broader market could extend their gains, underpinned by the recent strong performance on Wall Street where stocks closed out a fourth week of gains in quiet fashion on Friday, edging higher as the market took a breather after rallying 3% on Europe's deal to stem its debt crisis.

Reuters reported though investors still have questions about implementing the deal, they appeared satisfied by Europe's progress as stocks ended their longest weekly winning streak of the year.

The Dow Jones industrial average gained 22.56 points, or 0.18%, to 12,231.11. The Standard & Poor's 500 Index added 0.49 point, or 0.04%, to 1,285.08. The Nasdaq Composite Index shed 1.48 points, or 0.05 percent, to 2,737.15.

As for the FBM KLCI, it is up 114.3 points from Oct 3's 1,367.52 to end 1,481.82 last Friday. For last week, the KLCI was up 30.9 pts or 2.19%.

Affin Investment Bank head of retail research Dr Nazri Khan believes the'' KLCI is likely to trend higher next week on stronger global risk appetite following twin Europe-US catalysts last week.

The factors were the long awaited plan to resolve the European debt crisis and the stronger than expected US 3rd quarter economic growth (registering the fastest quarterly GDP in a year).

'Going forward next week, we expect investors to price in stronger US/European economy as well as the reduced banking crisis risk in both continents, pushing KLCI to a possible 1,524 level (which is the KLCI high made in 2008 before the subprime crisis),' said Nazri.

Other stocks to watch are Envair Holdings Bhd, SILK Holdings Bhd and MALAYAN FLOUR MILLS BHD [] (MFM). Also in focus could be TASEK CORPORATION BHD [] and Cycle & Carriage Bhd.

Envair has received a letter of intent from Zai Corporate Finance Ltd (ZAICF), an investment banking firm based in London, to subscribe for up to 30% of its new ordinary shares of 10 sen each at the market issue price.

The ACE Market listed company said the board would deliberate on this matter and announce its decision on the private placement.

SILK chairman Datuk Mohd Azlan Hashim has said he was confident the company would be able to return to profitability in a couple of years as traffic volume picks up for its tolled highway operations and an improvement in the marine support services.

"We expect with the continued increase in traffic flow in that area, these losses will eventually be wiped out and there will be a turnaround in profitability," he said.

Malayan Flour Mills could be getting ready for the next stage of growth, having announced a series of corporate exercises in May and signing an agreement in October that would see it step into the Indonesian market, according to The Edge weekly.

Tasek's earnings fell 32.9% to RM22.10 million in the third quarter ended Sept 30, 2011 (3QFY11) from RM32.90 million a year ago, due to lower sales. Its revenue fell 7.5% to RM132.99 million from RM143.78 million. Earnings per share were 17.82 sen compared with 20.63 sen.

Cycle & Carriage Bhd's earnings for third quarter ended Sept 30, 2011 fell 38.37% to RM5.93 million from RM9.62 million a year ago, due to lower margins and reduced non-recurring income. Revenue rose 20.6% to RM188.21 million from RM156.03 million. EPS were 5.89 sen compared to 9.55 sen the previous year.

Qantas says grounding all aircraft over labour dispute

SYDNEY: Australia's Qantas Airways said on Saturday, Oct 29 it was grounding all aircraft over a labour dispute, a move that would cost it A$20 million ($21.4 million) a day.

The airline said in a statement that from Monday evening it would lock out all employees over a protracted industrial dispute with the engineers association, pilots, catering and ground handling associations.

An extended grounding would benefit domestic rival Virgin Australia and others such as Singapore Airlines , British Airways and Chinese carriers on international routes.

"First, these three unions are sticking by impossible claims that are not just to do with pay, but also to do with unions trying to dictate how we run our business," Qantas Chief Executive Alan Joyce said in a statement.

"They are trashing our strategy and our brand. They are deliberately destabilising the company. Customers are now fleeing from us."

The unions have taken strike action since September over pay and opposing Qantas plans to cut soaring costs. The strike is the worst dispute the airline has faced since 2008, when industrial action by engineers cost it A$130 million ($133 million), according to local media.

Key high value domestic bookings on east coast routes are down by a quarter. November international bookings have fallen nearly 10 percent, Joyce said.

The airline said the financial impact to date has reached A$68 million and the action is costing Qantas approximately A$15 million per week in lost revenue.

It is looking at setting up two new airlines in Asia. It plans to cut 1,000 jobs and order $9 billion of new Airbus aircraft as part of a make over to salvage the loss making international business.

Approximately 70,000 passengers have been affected and more than 600 flights cancelled.

Aircraft currently in the air would complete the sectors they are operating. However, there will be no further Qantas domestic or international departures anywhere in the world, it said. - Reuters

Wall Street, finishing flat, posts 4 weeks of gains

NEW YORK: Stocks closed out a fourth week of gains in quiet fashion on Friday, Oct 28 edging higher as the market took a breather after rallying 3 percent on Europe's deal to stem its debt crisis.

Though investors still have questions about implementing the deal, they appeared satisfied by Europe's progress as stocks ended their longest weekly winning streak of the year.

The S&P 500 rose 3.7 percent for the week. The benchmark index had a seven-week rally that ended in January, but only two of the weeks were in 2011.

October also was on track to be the best month for stocks since 1974, supported by strong earnings. Merck & Co Inc (MRK.N) and Chevron Corp (CVX.N) both topped expectations with financial results on Friday.

"For it to not sell off is as much a positive sign as anything," said Andrew Slimmon, managing director at Global Investment Solutions of Morgan Stanley Smith Barney in Chicago.

"We have had a very good earnings season and the benefit of what happened in Europe is that it allows investors to focus on the good earnings season and move the European problem from the primary worry to off the headlines."

The Dow Jones industrial average .DJI gained 22.56 points, or 0.18 percent, to 12,231.11. The Standard & Poor's 500 Index .SPX.INX added 0.49 point, or 0.04 percent, to 1,285.08. The Nasdaq Composite Index .IXIC shed 1.48 points, or 0.05 percent, to 2,737.15.

Concerns that the euro zone debt crisis would spread and stifle domestic bank profits had been a huge overhang for equities, with the S&P down almost 20 percent -- defined as a bear market -- early this month.

As optimism grew about Europe's debt plan, bulls began to gain momentum and the S&P 500 is now up more than 13 percent this month, on pace for its biggest monthly gain since October 1974.

According to Thomson Reuters data, of the 315 companies in the S&P 500 that have reported quarterly results, 71 percent have posted earnings above analyst expectations.

The head of Europe's bailout fund played down hopes of a quick deal with China for that country to throw its support behind efforts to resolve the crisis but said he expects Beijing to continue to buy bonds issued by the rescue fund.

Hewlett-Packard Co (HPQ.N) gained 3.5 percent to $27.94 a day after it said it was ditching a plan to spin off its personal computers unit, a plan that was expected to have cost billions of dollars in expenses and lost business.

A pair of Dow components posted stronger-than-expected earnings. Merck rose 2.3 percent to $35.11 after its profit and sales beat analyst estimates, and Chevron's profit more than doubled. The stock advanced 0.6 percent to $109.64.

MF Global Holdings Ltd (MF.N) slumped 16.1 percent to $1.20. Some customers are moving money away from the futures brokerage, rivals, hedge fund officials and analysts said, though the extent of the outflows is unclear.

Economic data on Friday showed U.S. consumer sentiment improved in October for the second month in a row as consumers felt more upbeat about the economy's prospects.

Volume was about 7.71 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 8.03 billion.

Declining stocks outnumbered advancing ones on the NYSE by 1,505 to 1,475, while on the Nasdaq, decliners beat advancers 1,406 to 1,114. - Reuters

Stocks, euro pause as Europe doubts linger

NEW YORK: U.S. and European shares took a breather on Friday, Oct 28 after a strong rally on a long-awaited euro zone rescue deal, but a weak sale of Italian bonds showed investor confidence in the agreement was shaky.

The euro eased from a seven-week high against the dollar, while oil and gold prices declined on skepticism over whether the debt deal is enough to staunch the crisis.

Italy's 10-year borrowing costs topped 6 percent for the first time since the launch of the euro after a debt auction, underscoring the country's vulnerability at the center of the crisis.

It was the first euro zone bond auction after policymakers struck an agreement on Thursday to slash Greece's debt burden and strengthen the European Financial Stability Facility, the region's rescue fund.

Adding to concerns, the head of the EFSF played down hopes of a quick deal with China to throw its support behind efforts to resolve the crisis. But he said he expected Beijing to continue to buy bonds issued by the fund.

"I think we have a long way to go with this (European debt) mess. I still see huge risks," said Stanley J.G. Crouch, who oversees $2 billion as the chief investment officer of Aegis Capital in New York.

U.S. stocks ended mixed in quiet trading after rallying 3 percent the previous day, closing out a fourth week of gains.

The Dow Jones industrial average .DJI ended up 22.56 points, or 0.18 percent, at 12,231.11. The Standard & Poor's 500 Index .SPX added 0.49 point, or 0.04 percent, at 1,285.08. The Nasdaq Composite Index .IXIC slipped 1.48 points, or 0.05 percent, at 2,737.15.

The FTSEurofirst 300 .FTEU3 index of leading European shares ended 0.2 percent lower at 1,018.14.

MSCI's all-country world stock index .MIWD00000PUS was last up 0.5 percent at 319.22, after hitting its highest level in nearly three months and posting its best week since July, 2009.

Emerging market shares .MSCIEF rallied 1.9 percent.

While there are still questions over implementing the European deal, some analysts said investors investors appeared satisfied by Europe's progress.

"For (markets) to not sell off is as much a positive sign as anything," said Andrew Slimmon, managing director at Global Investment Solutions of Morgan Stanley Smith Barney in Chicago.

Investors' focus was shifting to a meeting of the Group of 20 nations next week in Cannes, France. They will watch for any coordinated efforts or pledges to help stabilize world financial markets, which have been battered this year by Europe's debt crisis and a slowing world economy.

EURO OFF HIGHS

The euro slipped 0.2 percent to $1.4161, retreating from a seven-week high of $1.4247 set on Thursday. The dollar steadied after falling 1.8 percent against a basket of currencies the previous day in its biggest daily drop in more than two years.

"We're seeing the market reposition itself," said Michael Woolfolk, managing director at BNY Mellon Global Markets in New York. "Going into the two (European) summits, speculators were long dollars. They have now exited those positions and players are fine tuning."

Analysts said much of this month's 5.8 percent rally in the euro against the dollar was driven by a squeeze of short positions, with speculators reluctant to build bets against the euro ahead of the G20 and a U.S. Federal Reserve meeting next week.

Any hints the Fed is considering another round of monetary easing to boost the U.S. economy or of a commitment from G20 players to support the euro zone bailout fund would likely push the euro higher.

The U.S. dollar index last traded up 0.2 percent at 75.053 .DXY. Against the yen, the dollar slipped 0.2 percent to 75.79, keeping alive the risk of intervention by Japanese authorities to curb the yen's rally.

Brent crude settled down $2.17 at $109.91. U.S. crude dropped 64 cents to settle at $93.32.

Spot gold retreated to around $1,741 an ounce from a one-month high of $1,751.99.

U.S. Treasuries prices rose as the highest yields in more than 2-1/2 months drew buyers. The benchmark 10-year U.S. Treasury note was up 18/32, its yield at 2.32 percent. - Reuters

Groupon mulls raising IPO price

NEW YORK/ SAN FRANCISCO: Groupon Inc is considering raising its IPO price range, as underwriters grow more confident about demand after completing the East Coast leg of a two-week roadshow to woo investors, Reuters reported on Friday, Oct 28.

One of the most closely watched initial public offerings of the year, Groupon had previously filed with regulators to sell 30 million shares at $16 to $18 apiece, scaling back its aspirations amid weak market conditions and uncertainties over its long-term business outlook.

The company is now considering raising the price range and could file an amended IPO prospectus early next week, said a source familiar with the situation. Groupon declined to comment and no other details were immediately available.

Chief Executive Andrew Mason hosted a luncheon on Friday at the St. Regis hotel in Manhattan -- the biggest event on the roadshow, seen as crucial in helping Groupon's bankers decide how to price the shares.

Fund managers who attended the meeting told Reuters they were pleasantly surprised by how charming and composed Mason was, since he has a reputation of being volatile after he blasted Groupon's critics in a leaked staff memo this summer.

Nonetheless, quite a few investors said they were still undecided about buying into the IPO, noting that Groupon faces huge competition in the daily deals business. The company has also had to change its accounting twice under regulatory pressure and has lost two chief operating officers in the past year.

Mason "was a lot more likable, less arrogant in person than I expected," said a money manager at a firm with more than $15 billion under management, who attended the Friday meeting.

"It's intriguing. It's such a massive opportunity if they're the winner, so the question is, 'Do they become the winner?'" he said, speaking on condition of anonymity.

Despite lingering concerns, investors expect the IPO to be over-subscribed, partly because bankers have limited the float to just 4.7 percent of shares.

One investor who attended the event said the investor's hedge fund firm planned to ask for shares in the offer, but added that it was very unlikely to get an allocation.

The risk is that Groupon may be flipped by some investors on the first day. Later on, early-stage investors might want to cash out through secondary issues, putting downward pressure on the stock.

"It will probably be like LinkedIn, a huge moonshot," said a hedge fund manager with $500 million under management, who attended Friday's presentation.

"There hasn't been an IPO in a long time and everyone will clamor for it," he said, but added that he does not view Groupon as a long-term investment.

Fidelity Investments, Capital Group and T Rowe Price already own Groupon stock from private investment rounds and are planning on buying more shares in the IPO, according to two underwriting sources.

The three asset managers all declined to comment so it was not certain if they would follow through. Institutional investors typically do not show their hand until a day or two before the final pricing and stock market debut.

AHEAD OF AMAZON

Groupon scaled back its IPO to raise up to $540 million, from a previous target of up to $750 million, amid Wall Street concerns that the Chicago-based company faced well-funded rivals such as Google Inc and Amazon.com Inc. They have billions of dollars to put in play, while Groupon expects to have about $723 million in cash and equivalents after the IPO.

A private equity investor who attended the presentation on Friday said he thinks Groupon is big enough that it is here to stay, but he was still not sure how much the company is worth.

"People are questioning Groupon's business model but I think that's misplaced," said the investor, whose firm has more than $10 billion under management. "I don't know if it's worth $11 billion or $5 billion or $20 billion -- that's where the debate comes in -- but it's a real business."

Groupon, which is approaching three years old, stressed to potential investors on Friday that its financials compared favorably to those of Amazon in its early days.

Mason said Groupon is currently generating about $190 in gross billings per customer per year on average, compared with Amazon's $130 when it was at a comparable stage of development, according to a person who attended the presentation. Amazon now generates about $290 in gross billings per customer per year, Mason was quoted as saying.

"Given the past mistakes management has made, they sounded credible," Scott Sweet of research firm IPO Boutique said.

The one-hour presentation took place at a room atop the St. Regis, a luxury hotel off Fifth Avenue that sports red carpet stairways leading up from the sidewalk and staff in fancy overcoats and top hats.

Security was tight and investors who were not pre-registered and who tried to walk in were turned away. Those investors who made it inside were offered chicken salad, bread, chocolate chip cookies, and tea or coffee.

There were half a dozen questions after the presentation, of which two focused on one slide that showed Groupon spending roughly $14 to acquire each customer and generating a return on that investment, according to one investor.

Another question focused on Groupon's efforts to reduce marketing spending and how that will effect subscriber growth.

Executives and bankers are scheduled to meet with investors in San Francisco, Denver and Chicago next week.

Underwriters on the Groupon IPO are being lead by Morgan Stanley, Goldman Sachs & Co and Credit Suisse. The shares are expected to begin trading on the Nasdaq on November 4 under the ticker symbol "GRPN." - Reuters

London investment bank keen on 30% stake in Envair

SHAH ALAM: Envair Holdings Bhd has received a letter of intent from Zai Corporate Finance Ltd (ZAICF), an investment banking firm based in London, to subscribe for up to 30% of its new ordinary shares of 10 sen each at the market issue price.

The ACE Market listed company said on Friday, Oct 28 the board would deliberate on this matter and announce its decision on the private placement.

Envair executive director Mohd Anuar Mohd Hanadzlah, the pricing would be based on the average market price of the group's shares traded on Bursa Malaysia over a certain period.

'They have indicated in the letter of intent that the valuation will be based on the current market price. Probably what we'll do is that we'll take the average market price over one or two weeks.

'However, the share price has rallied in recent weeks and reached 44 sen, so maybe there are not many who would be keen to buy the shares at 44 sen,' he said, indicating there would be certain amount of discount to be given for the private placement.

The water treatment system equipment manufacturer and distributor group's share price has risen after it announced that it has entered into a joint marketing agreement with Resscom Petroleum Sdn Bhd to undertake the business of distribution and trading of crude oil and liquefied natural gas.

Since Oct 6, share price had surged 232% from 11 sen per share to Friday's closing price of 37.5 sen.'' Year-to-date, its share price has risen by'' 461.5%, from 6.5 sen on Jan 3 and reached its closing high of 40 sen on Oct 20. It hit an intraday high of 43.5 sen on Oct 20.

Interest in the stock was also spurred on by its statement on Oct 13,announced it was venturing into the oil and gas sector.

In the second quarter ended June 30, 2011 the group recorded RM170,000 in revenue and losses of RM290,000.

Sudden interest in the stock has been buoyed by market talk that Envair had received letter of intent from potential buyer based in China to buy between 1.5 million and 2.0 million barrels of oil per month from the group.

In fact, the share rally was due to the entry of some individual investors based in China.

Envair's major shareholders include Teh Chee Teong (15.83%) and Kao Hsuan-Ying (12.16%) while the others are Ng King Kau (9.11%), Zhang Li (4.97%), Lim Ah Seng (4.59%) and Wong Peng Yew (4.45%).

KNM, Zecon, GAP yet to finalise terms for RM15b project

KUALA LUMPUR: KNM GROUP BHD [] and ZECON BHD [] have yet to finalise the agreement and financing for the RM15 billion petroleum refinery and polypropylene unit projects in Teluk Ramunia, Johor, with Gulf Asian Petroleum Sdn Bhd.

The two companies said on Friday, Oct 28 said the heads of agreements were signed on July 26, 2011 but they had 'yet to achieve financial close for the refinery/polypropylene project and the storage project'.

To recap, the first agreement was to undertake the engineering, procurement, CONSTRUCTION [] and commissioning (EPCC) contract of the 150,000/200,000 barrels per day (bpd) petroleum refinery and 400,000/525,000 million tonnes per annum (mtpa) polypropylene unit for Gulf Asian Petroleum.

The second was to undertake the EPCC contract for the petroleum product storage terminal'' comprising four terminals with a total storage capacity of 2.328 million cubic meters, complete with supporting infrastructure and auxiliaries including the jetty.

Gulf Asian Petroleum is owned 50% by Mubadala Capital Sdn Bhd and 50% by Abdul Aziz Hamad Al-Delaimi. It was established to build and operate an integrated petroleum complex comprising of the refinery and storage projects at Teluk Ramunia.

However, on Friday, KNM and Zecon said they would continue to pursue to finalise the EPCC contract, consortium agreement, shareholders agreement and financing for the projects.

Cycle & Carriage 3Q earnings down 38% on lower margins

KUALA LUMPUR: Cycle & Carriage Bhd's earnings for third quarter ended Sept 30, 2011 fell 38.37% to RM5.93 million from RM9.62 million a year ago, due to lower margins and reduced non-recurring income.

It said on Friday, Oct 28 that revenue rose 20.6% to RM188.21 million from RM156.03 million. Earnings per share were 5.89 sen compared to 9.55 sen the previous year.

Cycle & Carriage said the persistent intense competition in the premium vehicle segment in Malaysia put pressure on margins resulting in the lower margins.

However, the group said it managed to increase sales of Mercedes-Benz cars by 16%, assisted by the inclusion of sales by Lowe Motors Sdn Bhd. Lowe Motors was acquired in May 2011.

The group's head office costs were lower than the year before and earnings from the group's after-sales activities have also improved.

For the nine months ended Sept 30, 2011, profit fell 8.93% to RM20.29 million from RM22.28 million a year ago. Revenue increased 11.92% to RM519.00 million from RM463.70 million.

Cycle & Carriage chairman Brian Keswick said: "While the impact of the deteriorating global economy on Malaysia is still unclear, the intense competition in the local automotive market is expected to continue putting pressure on sales and margins."

#Update* Tenaga 4Q operating loss at RM248.80m, sees challenging FY12

KUALA LUMPUR: TENAGA NASIONAL BHD [] posted operating losses of RM248.80 million in the fourth quarter ended Aug 31, 2011 due to higher fuel costs of coal and utilisation of oil and distillates and expects the current financial year to be 'very challenging'.

The power giant said on Friday, Oct 28, the severe gas curtailment in 4QFY11 led to higher usage of the alternative fuels while coal price rose to US$117.30 per tonne from US$97.20 a year ago.

Tenaga said the decision to use alternative fuel was crucial to meet the demand during the gas curtailment period as it was severely impacted by the high costs. This saw Tenaga posting net loss of RM453.90 million, which was also impacted by foreign exchange translation loss of RM344.60 million in the quarter.

The dismal results were in contrast from a year ago when it posted operating profit of RM917.20 million in the fourth quarter ended Aug 31, 2010.

Its net loss in 4QFY11 was also in contrast with 4QFY10's net profit of RM555.20 million through there was forex translation loss of RM35.50 million.

However, revenue was 13% higher at RM9.12 billion compared with RM8.07 billion a year ago. Loss per share was 8.33 sen compared with earnings per share of 10.22 sen.

Tenaga said for the 4QFY11, it recorded electricity sales of RM8.41 billion compared with RM7.68 billion a year ago.

It had borrowings totaling RM19.054 billion at as Aug 31, 2011, of which RM5.457 billion was in yen, RM2.909 billion in US dollar and RM25.80 million in other currency while RM10.66 billion was in ringgit.

Its cash and cash equivalents shrank to RM3.258 billion as at Aug 31, 2011 from RM8.015 billion a year ago.

For the financial year ended Aug 31, 2011, its net profit plunged 84.3% to RM499.50 million from RM3.20 billion in FY10. Revenue was 6.2% higher at RM32.20 billion compared with RM30.32 billion.

Ex-Transmile independent directors fined, jailed

KUALA LUMPUR: Two former independent directors of TRANSMILE GROUP BHD [], Jimmy Chin Kim Feung and Shukri Sheikh Abdul Tawab were jailed one year and fined RM300,000 in default six months imprisonment for authorising a misleading statement to Bursa Malaysia.

The Securities Commission said on Friday, Oct 28 the Kuala Lumpur Sessions Court found them guilty under section 122B(b)(bb) of the Securities Industry Act 1983.

Their offence was authorising the furnishing of a misleading statement to the stock exchange in Transmile's quarterly report on unaudited consolidated results for the financial year ended Dec 31, 2006.

'The misleading statement was with respect to the unaudited revenue figures which were reported to the stock exchange for both the fourth quarter of 2006 as well as the cumulative period for 2006,' said the SC.

According to the SC, Chin and Shukri, were at the material time, in February 2007, members of Transmile's audit committee and board of directors.

They were charged in 2007 and claimed trial. The trial started in 2010 and the prosecution called 11 witnesses to prove the charge against both accused. Both accused gave sworn evidence in their defence.

Sessions Court Judge, Justice Datuk Jagjit Singh Bant Singh, in passing the sentence of one year imprisonment and a fine of RM300,000, had said the public interest factor must be given paramount consideration.

He said the audit committee is a vital organ of the company and particularly important in the corporate governance.

Jagjit Singh said the audit committee had specific duties, functions and responsibilities and that the investing public relied on them very much.

However, evidence showed a blatant disregard of the seriousness of the concerns on the contra transactions when the audit committee was told by Deloitte that the contra transactions were very unusual and lacked commercial justification.

Jagjit Singh said these were sufficient warning bells and as audit committee members they should have raised these issues to the board but instead failed to do so.

The trial of two other former directors of Transmile -- Gan Boon Aun and Khiudin Mohammed -- who were executive directors at that time, are pending in the Kuala Lumpur Sessions Court.

The SC said the charges against Gan and Khiudin were also because of the misleading statements made in the same quarterly statement which was submitted by Transmile to Bursa Malaysia in February 2007.

Both accused had, on March 22, 2011, been called to enter their defence after the close of the prosecution case.

KLCI closes at more than 2-months high

KUALA LUMPUR: The FBM KLCI closed at a more than two-months high on Friday, Oct 28, led by fund buying of index-linked stocks, as investors were upbeat on the euro zone leaders deal on Greece's debt issue

The KLCI closed up 10.89 points or 0.74% to 1,481.82, the highest since Aug 23, though it was off its day's best. Volume traded was at 1.88 billion shares valued at RM2.295 billion. Gainers led losers 470 to 338 while 319 counters traded unchanged.

The upbeat mood was evident in key regional markets. Hong Kong's Hang Seng was up 1.68% to 20,019.24, Shanghai's Composite Index 1.55% to 2,473.41, Japan's Nikkei 225 1.39% to 9,050.47, Singapore's Straits Index 2.04% to 2,905.72 and South Korea's Kospi 0.39% to 1,929.48.

At Bursa Malaysia, key stocks which pushed the KLCI were Nestle, British American Tabacco, MALAYSIA AIRPORT HOLDINGS BHD [], KLK and F&N.

Nestle rose 94 sen to RM50.40, BAT 92 sen to RM46.22, MAHB 44 sen to RM21.00 and F&N 38 sen to RM16.78.

CIMB gained 18 sen to RM7.46, pushing the index up 3.10 points, Genting gained 30 sen to RM10.60 adding 2.67 points to the index, while Maybank gained six sen to RM8.35 and PetChem 10 sen to RM6.41 to add 2.03 points to the index.

Zelan gets letter of intent from Mudaya for RM300m civil works

KUALA LUMPUR: ZELAN BHD [] has received a letter of intent from Mudajaya Corporation Bhd to undertake civil works valued at RM300 million for a power plant expansion in Johor..

It said on Friday, Oct 28 Mudajaya confirmed its intention to subcontract part of the civil works for the CONSTRUCTION [] of the 1,000 MW Tanjung Bin coal fired power plant in Johor.

However, this was subject to the consortium, comprising of Alstom, Mudajaya and Eversendai Corp Bhd, being appointed the main engineering, procurement and construction contractor (EPCC) by Malakoff Corporation Bhd for the power plant expansion.

Zelan also said the letter of intent was also subject to the subcontract price being competitive and acceptable to Mudajaya, it added. The letter of intent will be valid for nine months or until the consortium receives the letter of award and notice to proceed, whichever is earlier.

SILK Holdings to be profitable in 'couple of years'

KUALA LUMPUR: SILK Holdings Bhd is confident the company will be able to return to profitability in a couple of years as traffic volume picks up for its tolled highway operations and an improvement in the marine support services.

Chairman Datuk Mohd Azlan Hashim said on Friday, Oct 28 that "we expect with the continued increase in traffic flow in that area, these losses will eventually be wiped out and there will be a turnaround in profitability".

The highway division's loss of RM26 million for the financial year ended July 31, 2010 was reduced to RM19 million in FY11, he told reporters after the AGM.

He said the decline in losses, coupled with a continued increase in traffic flow in the Kajang area, SILK Holdings would be able to make a profit in the next couple of years.

"We've been experiencing traffic flow rates of 17% per annum for two years running now. There is tremendous growth potential and as development happens in that area, traffic is generated," he said. Currently, the area is low density, he added.

On their marine support services division, he said group was expanding its fleet and renewing with more modern vessels. Currently, they own 14 vessels and expect to acquire a few more vessels in the next few months.

Azlan said that the oil and gas sector in Malaysia is an exciting area to be in as it was one of the national key economic areas to be developed under the Economic Transformation Programme.

"We are positioning ourselves to serve that need. At the moment, a quarter of the group's revenues are contributed by the highway side and the remaining is by the marine support services arm," said Azlan.

"Having said that, the highway business takes time to build up as the concession is for 36 years and we are only in the early part now," he added.

"In the highway business, there is heavy capital outlay and a long gestation period," he said. "You have to be patient. The initial years will show losses but once you hit your critical mass in terms of traffic, then you will be out of the woods."

For the financial year ended July 31, 2011,SILK recorded net loss of RM11.24 million compared with net loss of RM10.03 million in FY10.

Tasek 3Q earnings dn 32.9% to RM22.10m

KUALA LUMPUR: TASEK CORPORATION BHD []'s earnings fell 32.9% to RM22.10 million in the third quarter ended Sept 30, 2011 (3QFY11) from RM32.90 million a year ago, due to lower sales.

It said on Friday, Oct 28, revenue fell 7.5% to RM132.99 million from RM143.78 million. Earnings per share were 17.82 sen compared with 20.63 sen.

Tasek Corporation said the lower earnings were attributed to the lower volume in domestic cement sales following the Hari Raya holidays during the quarter. Competitive pricing in the market coupled with higher production costs also contributed to the lower results, it added.

However, the group said 3Q11 results had benefited from higher interest income it received during the reporting quarter.

Moving forward, the group is confident that demand and pricing for cement and ready-mixed concrete will remain positive for the next quarter.

For the first nine months ended Sept 30, 2011, profit fell 8.5% to RM69.72 million from RM76.18 million a year ago. Revenue fell 3.4% to RM398.95 million from RM413.08 million.

#Flash* Tenaga 4Q net loss RM453.90m

KUALA LUMPUR: TENAGA NASIONAL BHD [] extended its losses for the second consecutive quarter, posting net loss of RM453.90 million in the fourth quarter ended Aug 31, 2011 versus net profit of RM555.20 million a year ago.

It said on Friday, Oct 28 that revenue was higher at RM9.12 billion compared with RM8.07 billion a year ago. Loss per share was 8.33 sen compared with earnings per share of 10.22 sen.

For the financial year ended Aug 31, 2011, it net profit plunged to RM499.50 million from RM3.20 billion in FY10. Revenue was RM32.20 billion compared with RM30.32 billion.

Timber, timber products exports to hit RM21b this yr

KUALA LUMPUR: Malaysia's timber and timber-derived products exports are expected to be around RM20 billion to RM21 billion this year, almost equalling last year's exports totalling RM20.5 billion.

Deputy Minister of PLANTATION [] Industries and Commodities Datuk Hamzah Zainudin said the projection was in tandem with the sluggish global economic
climate influencing demand and exports.

"The main recipient countries that receive our timber exports like the United States, Japan and several european nations are grappling with economic
crisis, thus demand from them are uncertain at the moment.

"Earlier, we projected our timber export value to increase by six to seven per cent this year, but if we can maintain last year's export worth, I think
it's good enough (given the current sluggish economic climate)," he told reporters after opening a national seminar on timber industry in the Industrial
Building System (IBS) here on Friday, Oct 28.

Hamzah said political uncertainties in several Middle East countries are also expected to influence timber exports value as several countries from that
region imported timber and timber-derived products from Malaysia.

He said although prices of other CONSTRUCTION [] materials like cement and steel are uncertain in the market, that situation did not influence demand for
timber so much as timber imports depended on requirements and affordability of a country.

On domestic market, Hamzah said the local timber consumption was about RM7 billion a year, with the housing sector being the biggest contributor to the figure.

To encourage higher use of local timber and boost its export value, he said the Malaysian Timber Industry Board (MTIB) has embarked on a replanting
programme to plant 25,000 timber trees of various species every year.

"Over the next five years, we expect to plant about 125,000 timber trees. This move will ensure that we can meet market demand," he added.
The seminar, jointly hosted by MTIB and Universiti Putra Malaysia, is to impart knowledge and provide exposure to industry players on opportunities to
explore in the IBS particularly using timber as a construction material. - Bernama

Harvest Court appoints Chan, Nazifuddin to the board

KUALA LUMPUR: HARVEST COURT INDUSTRIES BHD [] has appointed two officials of Sagajuta group of companies, Datuk Raymond Chan Boon Siew and Mohd Nazifuffin Najib to the board with effect from Friday, Oct 28.

The timber manufacturing company said on Friday that Chan, 39, was appointed as a non-independent, non-executive director of the company and Nazifuffin, 28, as an independent and non-executive director.

Chan owns 23.808 million shares or 13.85% in Harvest Court which he had acquired in several off-market trades at 20 sen each on Oct 18.

He is also the managing director of the Sagajuta group of company ' a post he held since 1995.'' Chan was appointed managing director of 1Green Enviro Sdn Bhd in 2011.

Meanwhile, Nazifuffin is the chairman of 1Green Enviro Sdn Bhd, Magna Healthcare Sdn Bhd, Cahaya Pedoman Sdn Bhd, Tribus Sdn Bhd and Sagajuta (Sabah) Sdn Bhd.

He also a director of Kingtime International Limited and Dynac Sdn Bhd.

Raja Teh Maimunah appointed Hong Leong Islamic Bank CEO

KUALA LUMPUR: Veteran banker Raja Teh Maimunah Raja Abdul Aziz has been appointed managing director/chief executive officer of Hong Leong Islamic Bank (HLISB), a unit of HONG LEONG BANK BHD [], with effect from Friday, Oct 28.

Raja Teh Maimunah, with over 18 years of experience in the financial industry focusing on investment banking and Islamic finance, was the global head of Islamic markets at Bursa Malaysia prior to her appointment in HLISB.

Hong Leong Bank group managing director Yvonne Chia said: 'We have much to look forward to as a strong and united Hong Leong Islamic Bank with the new leadership.

'I am confident with Raja Teh's leadership, HLISB will continue to innovate to be a preeminent player in the Islamic financial services industry.'

Raja Teh Maimunah was also the chief corporate officer and head of international Business at Kuwait Finance House Malaysia and CEO of Bank AlKhair Malaysia (previously Unicorn Investment Bank).

She also served in CIMB Investment Bank covering the debt and equity origination and equity sales and was responsible for the establishment of the investment banking division in RHB Investment bank in 2004.

She is also the adviser on Islamic banking and finance to the World Islamic Economic Forum Foundation and holds an LLB (Hons) from the University of East London.

Thai c.bank cuts GDP f'cast as floods hit industry

BANGKOK: Thailand's central bank slashed its 2011 economic growth forecast to 2.6 percent from 4.1 percent on Friday, Oct 28 because of flooding and said it was ready to call a special meeting on interest rates, raising speculation about a rate cut.

It faces a dilemma over rates because it expects inflation to remain high next year, forecasting price rises of 3.5 percent versus 3.8 percent this year, with core inflation at 2.5 prevent after an expected 2.4 percent this year.

In the most recent Reuters poll, economists expected the policy rate to still be at the current 3.50 percent at the end of next year but the chances of a cut to help industry are rising.

"Temporary rate reductions at the next meeting or in some interim special policy meeting cannot be ruled out, but that is not our base case forecast for now," said Ramya Suryanarayanan, an economist at DBS Bank in Singapore.

ReCONSTRUCTION [] after the floods and other programmes promised by the government ahead its election in July will help push up economic growth in 2012 to 4.1 percent, the Bank of Thailand said, but it could also add to inflationary pressure.

With the flooding far from over and the final cost uncertain, the central bank said it might review its growth forecasts again at its next policy meeting on Nov. 30.

"The main factor affecting GDP is the floods, which have vastly damaged the agricultural and industrial sectors," Assistant Governor Paiboon Kittisrikangwan said.

"The impact will be mostly felt this year. But next year after the reconstruction, domestic demand and government measures should lend support," he told a news conference.

Thailand is a manufacturing hub for international companies in the car and electronics sectors. Its worst flooding in half a century has closed seven huge industrial estates this month, disrupting international supply chains.

The capital, Bangkok, which accounts for 41 percent of GDP, is faced with extensive flooding this weekend.

The flooding plus global economic uncertainty prompted the central bank to leave its policy rate steady at 3.50 percent last week, pausing after over a year of tightening that has brought the rate up from a record low of 1.25 percent.

The central bank aims to keep core inflation -- which excludes energy and fresh food prices -- in a range of 0.5-3.0 percent. Core inflation was pushing up against the top of that range at 2.92 percent in September.

CONTRACTION

Even before the flooding, Southeast Asia's second-largest economy was having a tough time, contracting 0.2 percent in the second quarter from the first under the impact of the Japanese disaster. .

"In terms of the flood impact on factory output and business sectors, it seems like capacity utilisation for October will be very low," said Rahul Bajoria, an economist at Barclays Capital in Singapore.

"A drop in industrial production to the tune of 15-20 percent month-on-month cannot be ruled out.

Finance Minister Thirachai Phuvanatnaranubala told Reuters last week the economy would probably grow by little more than 2 percent this year . It grew 7.8 percent in 2010.

The BOT's forecast of 2.6 percent for this year compares with the 3.8 percent in a quarterly Reuters poll . The poll was conducted this month before the disaster worsened but the forecast was already the lowest in Southeast Asia. .

Indonesia, Southeast Asia's biggest economy and with ambitions to rival it as a manufacturing hub, is expected to grow 6.5 percent this year and Singapore 5.1 percent.

To help with the flooding, the cabinet approved a 325 billion baht ($10.6 billion) package on Tuesday to help firms, small vendors and individuals with soft loans to be arranged or partly guaranteed by the government. .

It earlier approved an increase in the budget deficit to 400 billion baht for the fiscal year from Oct. 1 from 350 billion.

Because of the floods and a slowdown in overseas markets, the central bank cut its forecast for export growth this year to 20.1 percent from 22.4 percent and to just 7.9 percent for 2012 from 10.4 percent. Exports rose 28.5 percent in 2010.

Petronas licence for all O&G upstream biz in Malaysia

KUALA LUMPUR: Petroliam Nasional Bhd has categorically stated that all companies wishing to start or continue any business or service related to Malaysia's oil and gas upstream operations and activities must apply for a licence from the national oil company.

Petronas said on Friday, Oct 28 that the policy, enforced under the regulations following the enactment of the Petroleum Development Act, 1974, has not changed, and 'applies to all local and foreign companies, service providers and suppliers'.

It was responding to recent media reports claiming that Petronas had decided 'to do away' with its licensing system for companies involved in Malaysia's upstream O&G industry.

Hirotako board not seeking alternative takeover offer

KUALA LUMPUR: HIROTAKO HOLDINGS BHD []'s board of directors does not intend to see an alternative party to make a takeover offer for the securities of the company.

It said on Friday, Oct 28 under the Malaysian Code on Take-Overs and Mergers, 1998, the board will appoint an independent adviser for purposes of the offer.

'The notice will be posted to the shareholders of Hirotako Holdings within seven days of its receipt,' it said.

On Thursday, MBM RESOURCES BHD [] offered 97 per share which was nine sen above the pre-suspension price of 88 sen and only 5.0 sen per warrant in its takeover offer.

OSK Research said at 97 sen, this was 14% above Hirotako's five-day market average closing prices of 85 sen a share and 5% above the warrant's exercise price of 92 sen a share.

At 12.30pm, Hirotako share price rose six sen to 94 sen with 23.54 million shares done while the warrants fell 8.5 sen to 15 sen with 66.51 million units done.

Can the KLCI test the 1,500?

KUALA LUMPUR: Key regional markets extended their gains in the morning session on Friday, Oct 28, as investors bet that equities could continue to rise after European leaders put together a one trillion euro rescue package.

The question on investors' minds is whether the run-up is sustainable and if so, can the FBM KLCI test the formidable 1,500 level in the short term.

At midday, the 30-stock index was up 11.64 points or 0.78% to 1,482.57. However, year-to-date, it is down 2.40%. Turnover was heavy with 1.22 billion shares done valued at RM1.127 billion. There were 456 gainers, 260 losers and 303 stocks unchanged.

Among the regional markets, Japan's Nikkei 225 rose 0.98% to 9,014.22, Hong Kong's Hang Seng Index added 1.89% to 20,061.44, Shanghai's Composite Index rose 1.10% to 2,462.38 and South Korea's Kospi 0.43% to 1,930.26. Singapore's Straits Times Index added 1.45% to 2,888.89.

Reuters reported the head of Europe's bailout fund as saying on Friday he does not expect to reach a conclusive deal with Chinese leaders during a visit to Beijing but expects the surplus-rich country will continue to buy bonds issued by the fund.

Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), also said the bailout deal with Greece was an exceptional case and he saw no need to repeat it for other nations.

Reuters said The EFSF, set up last year and so far used to bail out Portugal and Ireland, is a 440 billion euro fund based on guarantees from all euro zone member states, raising capital on international markets by selling bonds.

Investors want to know how the 440 billion euro EFSF rescue fund will be leverage to 1 trillion euros to put a safety net under bigger euro zone states, such as Spain and Italy and prevent them from being swept up by the crisis.

Meanwhile, the ringgit strengthened against the US dollar to 3.0750 while crude palm oil third-month futures fell RM6 to RM2,974 per tonne. US light crude oil fell 34 cents to US$93.62.

At Bursa, GENTING BHD []'s 36 sen jump to RM10.66 pushed the KLCI up 3.08 points while CIMB's 11 sen gain to RM7.39, gave the index a 1.89 point increase.

Among the consumer stocks, BAT was the top gainer, up 70 sen to RM46, Nestle 54 sen to RM50, Dutch Lady 40 sen to RM20.36, F&N 26 sen to RM16.66 and GAB 14 sen to RM10.70.

KLK rose 44 sen to RM21.04, MMHE 25 sen to RM6.37 while MAHB added 34 sen to RM6.22.

Hirotako warrants were the most active with 66.51 million units done. It fell 8.5 sen to 15 sen as investors reacted to the 5.0 sen offered by MBM Resources in the takeover offer. Hirotako shares added six sen to 94 sen.

The decliners were Tong Herr and Atlan, down 14 sen each to RM2 and RM3.02 while BLD PLANTATION []s gave up 10 sen to RM6.80 and CI Holdings shed 10 sen to RM4.90.

Trading of Capitamalls Malaysia Trust suspended Friday afternoon

KUALA LUMPUR: Trading in the units of Capitamalls Malaysia Trust (CMMT) will be voluntarily suspended from 2.30pm on Friday, Oct 28.

A Bursa Malaysia Securities circular said on Friday the suspension was at the request of the management company of CMMT 'pending an announcement'.

CMMT was unchanged at RM1.31 at midday.

Closing date for DXN takeover extended to Nov 14

KUALA LUMPUR: The closing date for the takeover offer for DXN HOLDINGS BHD [] shares has been extended from Monday, Oct 31 to Nov 14.

The joint offerors -- Deras Capital Sdn Bhd, DXN Group Sdn Bhd, Temasek Sejati Sdn Bhd, Lim Boon Yee and Lim Yew Lin ' issued the statement about the extension of the deadline via Hong Leong Investment Bank Bhd on Friday, Oct 28.

The offerors had made a voluntary conditional take-over offer to acquire all the remaining sharaes of 25 sen each for RM1.75 per share.

CIMB Research has technical sell on Axiata

KUALA LUMPUR: CIMB Equities Research has a technical sell on Axiata Group at RM4.86 at which it is trading at a FY12 price-to-earnings of 14.3 times and price-to-book value of 2.2 times.

It said on Friday, Oct 28 that the rebound from its RM4.43 low reached the 61.8% FR of the July-August correction, suggesting that this upleg is probably coming to a temporary halt.

'Looking at the chart, prices also face strong resistance at the 200-day SMA. Indicators are showing signs of exhaustion. MACD histogram bars are losing pace while RSI has also flattened out,' it said.

CIMB Research said if prices fail to push above the RM5.01 level soon, expect selling pressure to intensify. This should drag prices back towards RM4.61 and RM4.43 next. Always put a buy stop at RM5.05, just in case.

HDBSVR maintains buy on MAHB, ups TP to RM8.10

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) is maintaining a Buy on Malaysia Airports Holdings Bhd (MAHB) and raised the sum-of-parts based target price to RM8.10 from RM7.60 after an earnings upgrade.

It said on Friday, Oct 28 that at the current share price, this implies 38% upside.

'We continue to like MAHB for its long-term earnings potential from its cash-rich airport concession, land development, as well as overseas investments,' it said.

MAHB had received approval from the Ministry of Transport to raise the international passenger service charge (PSC) and aircraft landing and parking charges.

Effective Nov 15, International PSC for KLIA will increase from RM51 to RM65, while rates for LCCT KLIA and Terminal 2 Kota Kinabalu will increase from RM25 to RM32. And it will increase aircraft landing and parking charges by 9% and 18% per annum, respectively, on Jan 2012, Jan 2013 and Jan 2014. This is positive as we expect minimal incremental costs for MAHB.

'After imputing the resulting changes to airport rates and lower growth rates for passenger and aircraft movements, we nudged up FY11F-FY13F earnings by 1%-8%.

'Besides that, MAHB also signed an agreement with Tenaga Nasional (TNB) for the latter to supply cooling energy to KLIA2 for 20-years. Apart from securing operational requirement for KLIA2, MAHB will also receive royalties from the structured agreement,' it said.

OSK Research downgrades Tenaga to Neutral, sees losses ahead

KUALA LUMPUR: OSK Research has downgraded Tenaga Nasional to a Neutral and it still sees the company reporting losses for 4QFY11 and 1QFY12.

It said on Friday, Oct 28 it is maintaining its profit forecasts pending the announcement of compensation or a fuel cost pass through. It is maintaining its fair value of RM6.24.

'Even with a potential write-back and the announcement of a new district cooling plant at KLIA2, we are unlikely to raise our FV substantially in the absence of a fuel cost pass through mechanism. As such, we maintain our DCF based FV for now, and downgrade the counter to a NEUTRAL given the limited upside after the recent price rally,' it said.

Tenaga will release its fourth quarter results on Friday evening.

'We maintain our estimates pending this evening's results release although we note that without compensation from Petronas, a disappointment is still likely. Given the limited upside to our RM6.24 DCF derived fair value, we downgrade our call on Tenaga Nasional to Neutral. A clear fuel cost pass through would have to be in place before we upgrade our FV substantially,' it said.

Hirotako shares up on MBM Resources takeover

KUALA LUMPUR: HIROTAKO HOLDINGS BHD []'s shares rose on Friday, Oct 28 after MBM RESOURCES BHD [] (MBM) launched a takeover to expand its automotive manufacturing division, at a cost of RM412.5 million.

At 9.14am, Hirotako share price was up 6.5 sen to 94.5 sen with 7.27 million shares done. However, the warrants fell six sen to 17.5 sen with 26.49 million units transacted.

The FBM KLCI rallies 12.54 points to 1,483.47. Turnover was 298.17 million shares valued at RM186.47 million. There were 417 gainers to 31 losers.

MBM offered 97 per share which was nine sen above the pre-suspension price of 88 sen and only 5.0 sen per warrant.

OSK Research said at 97 sen, this was 14% above Hirotako's five-day market average closing prices of 85 sen a share and 5% above the warrant's exercise price of 92 sen a share.

OSK Research said the acquisition price tag is not cheap, valuing Hirotako at 11 times FY11 price-to-earnings, which is at the high end of its historical trading band (slightly above +2 SD for PE and P/BV).

MAHB shares climb on imposition of charges at airports

KUALA LUMPUR: Shares of Malaysia Airports Holdings Bhd (MAHB)climbed in early trade on Friday, Oct 28 after it received the government approval to raise international passenger service charge (PSC) and aircraft landing and parking charges.

At 9.27am, MAHB share price was up 17 sen to RM6.05.

The FBM KLCI was up 11.46 points to 1,482.39. Turnover was 427.22 million shares valued at RM279.17 million.

Hwang DBS Vickers Research (HDBSVR) is maintaining a Buy on MAHB and raised the sum-of-parts based target price to RM8.10 from RM7.60 after an earnings upgrade.

'We continue to like MAHB for its long-term earnings potential from its cash-rich airport concession, land development, as well as overseas investments,' it said.

MAHB had received approval from the Ministry of Transport to raise the international passenger service charge (PSC) and aircraft landing and parking charges.

Effective Nov 15, International PSC for KLIA will increase from RM51 to RM65, while rates for LCCT KLIA and Terminal 2 Kota Kinabalu will increase from RM25 to RM32.

MAHB will increase aircraft landing and parking charges by 9% and 18% per annum, respectively, on Jan 2012, Jan 2013 and Jan 2014.

'This is positive as we expect minimal incremental costs for MAHB,' it said.

Wall Street soars 3 percent as Europe deal draws buyers

NEW YORK: Stocks surged 3 percent on Thursday, Oct 27 as an agreement by European leaders to help contain the region's two-year debt crisis lifted a cloud hovering over markets.

Optimism that a deal would be struck to prevent widespread financial distress fueled the market's rebound in October. The S&P 500 is up more than 13 percent this month, on pace for its biggest monthly gain since October 1974.

But some traders said implementing the agreement will present major challenges, observing that the devil is in the details.

After more than eight hours of talks, European heads of state, the International Monetary Fund and bankers sealed a deal that also foresees a recapitalization of hard-hit European lenders and a leveraging of the bloc's rescue fund to give it firepower of $1.4 trillion.

The agreement includes provisions for write-downs on Greek bonds, though decisions on how to recapitalize hard-hit European banks and boost the EU's rescue fund have not been finalized.

"People had limited expectations for the leadership to do something decisive, and if the market is correct, this is a game changer that will prove bullish for the market down the road," said Robert Schaeffer, a money manager at Becker Capital Management in Portland, Oregon.

The Dow Jones industrial average was up 339.51 points, or 2.86 percent, at 12,208.55. The Standard & Poor's 500 Index was up 42.59 points, or 3.43 percent, at 1,284.59. The Nasdaq Composite Index was up 87.96 points, or 3.32 percent, at 2,738.63.

The day's gains lifted the S&P 500 above its 200-day moving average for the first time since the beginning of August, a sign of an improving trend for stocks after five straight months of losses.

It was the strongest day for volume since October 4, and the rise above the 200-day moving average may pull more long-term buyers into the market in coming days. About 11.95 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well over last year's daily average of 8.47 billion.

"We are rallying today because the active players, mostly hedge fund managers and tactical investors, have been very neutral to even short until now. The market is up a lot, but they are rushing into getting long because they are capitulating," said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.

Financials were the best performers, with JPMorgan Chase & Co up 8.3 percent to $37.02 and Citigroup Inc jumping 9.7 percent to $34.17. The KBW Bank index shot up 6 percent while the S&P financial index soared 6.2 percent.

Analysts see the European developments removing risk to the U.S. economy and tamping down fears of the crisis spilling over into the global financial system. The CBOE Volatility index shed 14 percent.

All 10 S&P sectors rose by more than 1 percent. Materials and energy shares were among the top gainers as the resolution in Europe allayed fears about how weak growth might impact demand. Crude oil rose 4.3 percent.

In a positive sign for the U.S. economy, the government's estimate of third-quarter growth expanded at the fastest pace in a year.

Between the deal in Europe and the GDP data, "there's clearly a scenario where strength in equities can continue into 2012, and in that case stocks look cheap," said David Smith, chief investment officer at Rockland Trust Investment Management Group in Rockland, Mass.

After regular trading, insurer MetLife Inc reported third-quarter earnings that topped analysts' forecasts, sending its shares 2.6 percent higher to $36.60. Baidu Inc climbed 8.2 percent after the bell on the Nasdaq after its results.

Exxon Mobil Corp rose 1 percent to $81.88 after the Dow component said profit rose 41 percent in the third quarter, helped by higher crude oil prices and refining margins.

Dow Chemical Co's quarterly profit narrowly missed expectations. Still, the stock rose 8.2 percent to $29.10, along with the broader market.

Of 262 companies in the S&P 500 that have reported quarterly earnings, 72 percent topped Wall Street expectations, according to Thomson Reuters data.

About 87 percent of stocks on the New York Stock Exchange closed higher while 81 percent of Nasdaq issues ended in positive territory. - Reuters

Oil rallies more than 4 percent on EU rescue deal

NEW YORK: Crude oil futures rallied more than 4 percent on Thursday, Oct 27 primed by a deal on Greek debt that many analysts said bodes well for resolving the euro zone crisis.

Markets got a boost after euro zone leaders struck an agreement with private lenders for the latter to accept a 50 percent loss on their Greek government bonds.

The deal pulled up the euro against the dollar to a seven-week high and sparked a rally on Wall Street, while copper surged 6 percent. .N

Additional support came from data showing the U.S. economy grew in the third quarter at its fastest pace in a year, bringing relief to investors who weeks ago feared the world's largest oil consumer would lapse into another recession.

"Given the positive nature of today's GDP report, as well as settling of some European debt concerns, the path has been paved for bullish moves in coming sessions for commodity and equity prices," said Jason Schenker, president of Prestige Economics LLC in Austin, Texas.

U.S. December crude futures gained $3.76 or 4.2 percent to settle at $93.96 a barrel, the highest close since August 1, after falling 3 percent on Wednesday following a bearish U.S. oil inventory report.

In London, ICE Brent for December delivery settled at $112.08, rising $3.17, or 2.91 percent. It hit a session high of $112.79, the loftiest since October 17, and pierced the 200-day average at $112.25.

Brent's premium to U.S. crude fell back to $18.12 at the close, from $18.71 on Wednesday. It dropped to $16 in heavy spread trading earlier in the week, well off a record over $28 hit on October 14.

For much of the day, the U.S. energy complex was paced by gasoline futures, which rose more than 4 percent on short-covering ahead of the front-month November RBOB contract's expiration on Monday, traders said.

Near the close, the contract trimmed gains on a bout of profit-taking, ending up 9.04 cents, or 3.4 percent, at $2.7420 a gallon.

"There's a risk-on mood in the market, despite yesterday's rather bearish (U.S.) inventory report," said Carsten Fritsch, analyst at Commerzbank.

MOOD-CHANGING DEAL

Crude fell on Wednesday, with U.S. oil sliding 3 percent, because of a larger-than-expected rise of 4.7 million barrels in U.S. inventories and caution over Europe's ability to agree on a plan to address its two-year-old debt crisis.

Early on Thursday, the market mood changed markedly after news that euro zone leaders had struck a deal in which private banks and insurers would accept a greater loss on their Greek sovereign bonds. The deal would lower Greece's debt burden and includes recapitalizing European banks and increasing the region's rescue fund.

However, a Reuters poll of economists found that the deal may not be enough to make Greece's debt burden sustainable.

The U.S. economy expanded at a 2.5 percent annual rate in the third quarter, the U.S. Commerce Department said, as consumers and businesses stepped up spending, creating a momentum that could carry into the final three months of the year.

The day's oil rally also benefited from expectations that China, the world's second-largest oil consumer, may loosen a tight liquidity policy in the fourth quarter as growth slows, while hopes are running high that inflation has peaked. - Reuters

TAS Offshore 1Q earnings at RM1.27m

KUALA LUMPUR: TAS Offshore Bhd's earnings rose 17.2% to RM1.27 million in the first quarter ended Aug 31, 2011 from RM1.09 million a year ago.

It said on Thursday, Oct 27, that revenue fell 22% to RM17.67 million from RM22.66 million a year ago. Earnings per share were 0.72 sen compared with 0.60 sen.

TAS Offshore said with crude oil prices hovering between US$80 to US$100 per barrel, it was still economically viable for the oil majors to carry out oil exploration and production activities in the deep seas where most of the world oil reserves were located.

"We maintain our outlook of more building contracts will surface for the offshore support vessels," it said. "The demand for tugboats from Indonesia caused by the growth in mining activities has been encouraging," it added.

In the 1Q ended Aug 31, 2011, the group had repurchased 3.7 million shares each from the open market for RM1.39 million. The repurchase was from its own funds.

MHC Plantations 3Q earnings down 32.4% to RM8.5m

''KUALA LUMPUR: MHC PLANTATION []S BHD []'s earnings fell 32.4% to RM8.53 million in the third quarter ended Sept 30, 2011 from RM12.62 million a year ago, dragged by the recognition of negative goodwill of RM6.23 million.

It said on Thursday, Oct 27, the negative goodwill arose from an acquisition of additional shares in an associate a year ago. However, revenue rose 10% to RM8.59 million from RM7.82 million. Earnings per share were 6.05 sen compared with 8.97 sen.

MHC said the higher revenue was due to the higher prices of fresh fruit bunches (FFB). It noted that due to the cyclical nature of the business, third quarter was normally the peak production season.

Profitability in 3Q11 was slightly lower compared to 2Q11 due to a decrease in FFB prices by 11% despite a higher yield of 12%, it added.

For the first nine months ended Sept 30, 2011, net profit increased 33.07% to RM25.09 million from RM18.85 million a year ago. Revenue rose 36.78% to RM26.29 million from RM19.22 million.

Govt extends Faber hospital support services for 6 months

KUALA LUMPUR: The federal government has extended FABER GROUP BHD []'s hospital support services concession for an interim period of six months, starting Friday, Oct 28.

It said on Thursday it unit Faber Medi-Servce Sdn Bhd had received a letter from the Public Private Partnership Unit of the Prime Minister's Department about the extension of the contract.

Faber said the extension was subject to the prevailing terms and conditions of the concession or until the signing of a new concession agreement for the privatisation of services with the Health Ministry, whichever is the earlier.

'The six months interim extension is not to be considered as binding on the Government of Malaysia,' it said.

Faber said more announcements would be made concerning the privatisation of the services when the negotiations with the government have concluded.

KLCI closes at near 2-month high of 1,470

KUALA LUMPUR: The deal struck by euro zone leaders on Greece's debt burden energized regional markets on Thursday, Oct 27, as fund buying pushed the FBM KLCI towards a near two-month high.

The KLCI closed up 13.13 points or 0.90% to 1,470.93 ' the best performance since Sept 2 -- after a strong start in the morning. Trading volume was heavier with 1.88 billion shares changing hands at RM2.313 billion.

The broader market was firm, with gainers leading losers 689 to 165 and 195 counters unchanged.

Commodities also rallied, with US light crude oil surging US$2.18 to US$92.38. Crude palm oil futures for third-month delivery rose RM29 to RM2,980 per tonne. The ringgit was firmer at 3.1092 to the US dollar.

The upbeat mood was also seen in key regional markets. Hong Kong's Hang Seng rallied 3.26% to 19,688.70,'' Singapore's Straits Index advanced 2.89% to 2,849.90, Japan's Nikkei 225 2.04% to 8,926.54, South Korea's Kospi 1.46% to 1,922.04 and Shanghai's Composite Index 0.34% at 2,435.61.

Reuters reported the euro and stocks rallied after European leaders struck a deal to provide debt relief for Greece, but analysts warned the plan would fail to halt the euro zone's two-year-old debt crisis unless crucial details were resolved soon.

Governments announced an agreement under which private banks and insurers would accept 50 percent losses on their Greek debt holdings in the latest bid to reduce Athens' massive debt load to sustainable levels. The deal also foresees a recapitalisation of hard-hit European banks and a leveraging of the bloc's rescue fund, the European Financial Stability Facility (EFSF), to give it firepower of 1.0 trillion euros (US$1.4 trillion).

At Bursa Malaysia, the star performers which pushed the KLCI were Genting, IOI Corp, Public Bank, Gamuda and Petronas Chemicals (PetChem).

Genting rose 31 sen to RM10.30, giving the 30-stock index a 2.65 point push while Public Bank gains 14 sen to RM12.62 and Gamuda 20 sen to RM3.37, adding a combined 2.8 points.

IOI Corp rose 16 sen to RM5.26, adding 2.38 points to the index, after it cancelled the RM830 million land purchase deal with Dutaland. Dutaland fell seven sen to 54 sen and the warrants three sen to 10 sen.

Tenaga rose five sen to RM5.83, HLBank 22 sen to RM10.58, Gamuda 20 sen to RM3.37 and PetChem 12 sen to RM6.31.

Supermax added 30 sen to RM3.56. CIMB Investment Bank Bhd said that the less volatile natural rubber latex prices will lead to earnings re-rating for Supermax as a result of better margins and higher demand. The stable costs would enable the group to pass on a higher portion of its costs on to customers, regaining lost profits when raw material costs increased.

Among actively traded counters were Hibiscus, up two sen to 69.5 sen while Hibiscus-WA rose three sen to 32 sen. The securities resumed trading on Thursday after announcing the deal to acquire a 35% stake in Lime Petroleum Ltd for US$55 million.

MBM Resources launches takeover of Hirotako

KUALA LUMPUR: Auto parts manufacturer MBM RESOURCES BHD [] has made a takeover offer for HIROTAKO HOLDINGS BHD [], which makes car safety restraint equipment, offering 97 per share, which is nine sen above the pre-suspension price of 88 sen.

Hirotako said on Thursday, Oct 27 it had received a notice of conditional take-over offer from AmInvestment Bank Bhd on behalf of MBM Resources.

MBM Resources was offering 97 per share for all the voting shares of 25 sen each in Hirotako and 5.0 sen per warrant.

'The board of directors of Hirotako will hold a meeting tomorrow to deliberate on the offer,' it said.

MBM Resources said it had obtained an irrevocable undertaking from Hiro-Dapat Holdings Sdn Bhd -- the largest shareholder with 39.948 million shares or 22.85% -- to accept the offer.

Hiro-Dapat is controlled by Hirotako group managing director Datuk Kuan Peng Ching @ Kuan Peng Soon.

According to the latest financial results, Hirotako had in in its second quarter ended June 30, 2011, posted net profit of RM12.67 million on the back of RM75.17 million in revenue. Its net asset per share was RM1.15 and it had RM77.54 million cash and cash equivalents.

Its receivables totalled RM61.08 million as at June 30, 2011 up from RM39.41 million as at Dec 31, 2010.

MBM Resources said it did not intend to maintain Hirotako's listing status.

Tenaga to build RM388m plant for MAHB at KLIA2

KUALA LUMPUR: TENAGA NASIONAL BHD [] will build a 132kV sub-station and a district cooling plant for RM388 million at the Kuala Lumpur International Airport's new low cost carrier terminal (KLIA2) for Malaysia Airports Holdings Bhd (MAHB).

The companies said on Thursday, Oct 27 the klia2 generation plant project would be under a build-operate-transfer model for a concession period of up to 20 years.

Tenaga's unit Airport Cooling Energy Supply Sdn Bhd ' the concessionaire for the project -- had signed the concession agreement with MAHB for the sub-station and plant to supply chilled water and electricity and associated works at KLIA2.

The total project cost is about RM388 million and funded through external borrowings by the concessionaire (80% of the total project cost) and the balance shareholders equity.

They said the klia2 generation plant shall supply energy cooling to klia2 core facilities comprising the terminal building measuring 250,000 sq meters of covered area and for the klia2 private facilities at the integrated complex, with other possible customers within the vicinity.

Under the terms of the agreements, Tenaga shall have a 77% stake and MAHB 23% in Airport Cooling Energy Supply.

Within 60 days from the date of the concession agreement, the Airport Cooling Energy Supply would allot shares to MAHB and Tenaga at a subscription price of RM21.9 million and RM77.3 million respectively.

Sony buys Ericsson out of mobile phone venture

LONDON: Sony Corp is to take over its mobile phone joint venture with Ericsson for 1.05 billion euros ($1.5 billion), as it seeks to exploit its music and video to help it catch smartphone leaders such as Apple Inc, Reuters reported on Thursday, Oct 27 .

The deal to buy out its Swedish partner will enable Sony to better integrate smartphones and other devices with its array of content, from its music label whose stars include Beyonce and Britney Spears, its movie studio whose current hits include Spider Man and Anonymous and its Playstation video games such as Legends of Norrah.

"Its the beginning of something which I think is quite magical," Sony Chairman Sir Howard Stringer told a news conference in London. "We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment".

Until now Sony's tablets, games and other consumer electronics devices have been kept separate from the phones sold and created by Sony Ericsson.

"Sony is looking to do the same as Apple and meet users' demands through linking various devices with similar interfaces and operating systems," said analyst Nobuo Kurahashi of Mizuho Investors' Securities in Tokyo.

"Smartphones look to become more important products for Sony ... and they will probably become the main device people use to connect to the Internet."

Smartphone sales have been surging since Apple launched its first iPhone in 2007 and despite a slowdown in the overall consumer electronics market, strong demand is set to continue.

"More and more people are watching content on smartphones. TV is not going to go away, but they watch it on smartphones and they watch it on tablets," Stringer said.

STRUGGLES AHEAD

The deal will give Sony ownership of certain handset patents held by Ericsson and will enable it to cut costs in the Sony Ericsson business, with Stringer pointing to savings in operations, R&D and marketing.

The takeover of Sony Ericsson by the Japanese group had long been talked of and a source with knowledge of the matter told Reuters this month a deal was in the offing.

"Sony now has all the components to compete with Samsung and Apple. The big question now is ... can it execute?," said Pete Cunningham of consultancy Canalys, adding Japanese company takeovers in Europe and the United States had often struggled.

"Based on history I am sceptical, but I would not say it cannot be done," he added.

Founded in 2001, Sony Ericsson employs some 7,500 and last year took around 2 percent of the global cellphone market with sales of 6.3 billion euros. Initially it thrived with an array of camera and music phones but it lost out in the smartphone race.

"Sony had to make this deal as it had run out of options, but integration challenges could prove to be a major hurdle," said Ben Wood, head of research at consultancy CCS Insight.

"As a major consumer electronics player, lack of mobile assets had become a liability for Sony, particularly when compared with Samsung, whose telecommunication business creates nearly half of its profits," he said.

Ericsson said the deal provides Sony with a broad intellectual property cross-licensing agreement covering all the Japanese company's products and services, as well as ownership of five essential patent families relating to wireless handset TECHNOLOGY [].

Shares in Ericsson, which as a result of the deal increases its focus on the wireless network business in which it is the world's largest manufacturer, were up 5 percent at 70 crowns by 1153 GMT. The STOXX Europe 600 technology index was up 3.4 percent.

Ericsson Chief Executive Hans Vestberg told Reuters the company would use the cash payment to strengthen its balance sheet and had no plans to pay it out to shareholders. - Reuters

Bursa Securities rejects Samudra's bid for more time

KUALA LUMPUR: Bursa Malaysia Securities Bhd has rejected KEJURUTERAAN SAMUDRA TIMUR BHD []'s application for more time to submit its audited statements for the financial year ended June 30, 2011.

The company said Bursa had informed it of the rejection in a letter on dated Thursday, Oct 27.

Samudra had on Oct 19 announced it had submitted an application to Bursa Securities for an extension of time to announce/submit the audited financial statements.

It posted net loss of RM14.80 million on back of RM68.08 million in revenue for FY end June 30, 2011. It was also in the red, recording losses of RM13.71 million on the back of revenue of RM60.04 million in FY10.

AirAsia rises to RM4, highest since early August

KUALA LUMPUR: Shares of AIRASIA BHD [] rose to RM4 on Thursday, Oct 27, its highest since early August, in line with the fresh optimism in regional equities markets.

At 4.09pm, it was up five sen to RM3.93. There were 22.03 million shares done at prices ranging from RM3.90 to RM4.

Following the run-up in the share price, UOB Kay Hian Malaysia Research downgraded the low-cost carrier to HOLD from BUY.

The research house said the share price had run up by 33% since its upgrade on Oct 5 and exceeded its target price of RM3.70 (unchanged).

'Our target price is based on 7.5 times EV/EBITDA and adjusted for the value of its Thai and Indonesian associates. Recommended entry price is RM3.22,' it said.

Shell's 3Q profits soar on higher oil price

LONDON: Royal Dutch Shell Plc reported a doubling in profits on Thursday, Oct 27 thanks to higher oil prices, robust demand for gas and stronger refining margins, and said it would continue to sell off non-core assets.

Europe's largest oil company by market value said it's current cost of supply (CCS) net income was $7.2 billion, a 100 percent rise on the same period last year when non-cash accounting charges weighed on the result.

The underlying result was broadly in line with analysts forecasts.

The Hague-based group said its enormous investments in big new projects were paying off saying that while production fell 2 percent to 3.01 million barrels of oil equivalent (boepd), excluding the sale of fields, the underlying trend was upward.

Chief Executive Peter Voser also said in a statement that although Shell had already met its target of $5 billion of disposals this year, sales of "non-core" assets would continue.

Brent crude jumped 48 percent in the quarter compared to the same period last year, to average $113/barrel in the quarter.

The Japan earthquake earlier this year and subsequent shut down of nuclear plants has boosted demand for natural gas, especially liquefied natural gas, in which Shell is a market leader.

The company said LNG sales rose 12 percent, echoing buoyant LNG results reported by smaller rival BG Group on Tuesday.

Excluding one-offs, the result rose 42 percent to $7.0 billion, compared to an average forecast of $6.61 billion from a Reuters poll of nine analysts.

Exxon Mobil, the world's largest publicly-traded oil company third-quarter net income is expected to jump 40 percent on last year to $10.26 billion, according to I/B/E/S estimates.

CCS earnings strip out unrealised gains or losses related to changes in the value of inventories, and as such are comparable with net income under U.S. accounting rules. - Reuters

SC approves PDS plans to raise RM15.9b in 3Q

KUALA LUMPUR: The Securities Commission Malaysia (SC) approved all 15 applications for ringgit-denominated private debt securities (PDS) in the third quarter of 2011.

It said on Thursday, Oct 27 the PDS proposals were to raise a total of RM15.9 billion. These schemes were part of the 23 applications for corporate proposals in 3Q, comprising of eight equity proposals and 15 PDS proposals.

'Out of the eight applications for equity proposals considered, three were approved (consisting of two IPOs and one share offering) while five were rejected owing to non-compliance with the SC's Equity Guidelines (consisting of three IPOs, one restructuring proposal and one proposed transfer from the ACE Market to the Main Market),' it said.

The SC said the two IPOs approved during in 3Q would have a combined potential market capitalisation of RM190.10 million and would raise RM59.03 million.

''

CIH may pay RM4 per share as dividend from Permanis sale

KUALA LUMPUR: C.I. HOLDINGS BHD [] (CIH) expects to conclude the disposal of its beverage subsidiary Permanis Sdn Bhd (Permanis) to Japan's Asahi Group Holdings Ltd (Asahi) within one or two weeks and expects to pay a minimum of RM4 per share in the form of special dividend to its shareholders.

Group managing director Datuk Johari Abdul Ghani said on Thursday, Oct 27 CIH was looking to acquire a company with potential but weak management.

"At this moment, I think we will distribute a minimum of RM4 to shareholders back so that will leave about RM200 million over.

'So with that money we will try (to acquire a new business), but if we cannot find anything concrete in the future, we may distribute back to shareholders in the form of capital repayment or special dividend," he told reporters after the AGM.

On July 21, CIH signed an agreement with Asahi for the disposal of Permanis for an acquisition price of RM820 million in cash, representing 70 million shares. - Bernama

Moody's lowers AP O&G refining industry outlook to stable from positive

KUALA LUMPUR: Moody's Investors Service has changed the outlook for the oil & gas refining and marketing (R&M) industry in Asia Pacific to stable from positive as the sector has reached a peak.

In its report on Thursday, Oct 27, the international ratings agency said the stable outlook was in line with the global industry.

Moody's vice president and senior analyst Simon Wong said Moody's changed the R&M outlook to stable from positive in August due to 'only limited prospects for improvement from current levels, while risks to the downside have risen'.

He said an expected increase in refining capacity worldwide would exasperate oversupply as soon as 2012, unless sufficient demand or the rationalisation of capacity materialise. The downside factors would be a combination of a global slowdown in economic growth, and resulting in lower demand for refining products.

"Generally, in terms of challenges, except for one-off events, refining margins have limited upside potential as the structural overhang in refining capacity will persist. Nevertheless, continued demand from China and India, which is expected to exceed the global growth trend, will benefit regional refineries serving intra-Asia markets," said Wong.

Wong was speaking on the release of a Moody's special comment on the outlook for the R&M industry in Asia Pacific. The report was written by Wong and a Moody's associate analyst Nino Siu.

The report looks at issues such as key sector trends, the outlook for margins, and capex plans, as well as the implications for rated issuers. Moody's rates eight R&M companies in Asia Pacific with ratings ranging from Baa1 to Baa3.

Within the rated portfolio, seven of the issuers have stable outlooks and one has a positive outlook.

Wong said overall, the issuers' financial metrics have developed some headroom, benefiting from improved margins and utilization during 2011, but ongoing capex will hold back ratings.

"The improved metrics of the past 12 months should provide some buffer from an expected deterioration in the supply-demand balance for refined products in 2012. Some companies can also defer downstream projects, if necessary, as happened during the global financial crisis," he said.

The Moody's report expects overcapacity to constrain Asian refining margins over the next 12-18 months, but they will not drop to the extent shown during the global financial crisis.

Moody's also said a lot of new capacity will emerge specifically in 2012, and peak in 2014 and 2015, while a material rise in conversion capacity will similarly increase capacity output of gasoline, diesel, and other distillates.

Potential volatility in crude prices, as occurred during the global slowdown of 2008-2009, could disrupt management of working capital and liquidity.

However, Asian R&M companies generally have strong access to domestic banking and debt capital markets, largely mitigating liquidity risks.

Markets up on EU plan to contain euro zone crisis

KUALA LUMPUR: Asian markets rallied on Thursday, Oct 27 after euro zone leaders struck a deal to contain the euro crisis, with the key indices up between 1% and 1.7%.

At 12.30pm, the FBM KLCI was up 14.86 points or 1.02% to 1,472.66. Turnover was 984.32 million shares valued at RM1.07 billion. There were 489 gainers, 149 losers and 234 stocks unchanged.

Japan's Nikkei 225 rose 1.7% to 8,896.92, Hong Kong's Hang Seng Index added 1.74% to 19,399.03, South Korea's Kospi 1.31% to 1,919.16 and Singapore's Straits Times Index advanced 1.7% to 2,817.10.

Reuters reported euro zone leaders struck a deal with private banks and insurers to accept a 50% haircut on their Greek government bonds under a plan to lower Greece's debt burden and try to contain the two-year-old euro zone crisis.

Under the deal, the private sector agreed to voluntarily accept a nominal 50% cut in its bond investments to reduce Greece's debt burden by 100 billion euros, cutting its debts to 120% of GDP by 2020, from 160% now.

Crude palm oil third-month futures rose RM39 to RM2,990 per tonne while Brent jumped US$1, or 0.9%, to US$109.91 a barrel and U.S. oil added US$1.56, or 1.7%, to US$91.76 a barrel.

At Bursa Malaysia, IOI Corp rose 18 sen to RM5.28 after it cancelled its RM830 million land purchase deal with Dutaland.

Dutaland fell 6.5 sen to 54.5 sen with 30.34 million shares done while Dutaland-WA lost three sen to 10 sen with 22.74 units done.

Hibiscus-WA rose 1.5 sen to 30.6 sen while the shares added 1.5 sen to 69 sen after its decision to buy a'' stake in Lime Petroleum Ltd for a total of US$55 million.

MBM Resources rose two sen to RM3.09 on a possibility it might buy a stake in Hirotako.

Among the major gainers in the morning session was Supermax, after analysts upgraded its outlook. It rose 36 sen to RM3.62. BLD PLANTATION []s was the top gainer, up 57 sen to RM6.90.

Among index-linked stocks. BAT added 40 sen to RM45.30, RHB Cap 35 sen to RM7.70, HLFG 30 sen to RM11.78, Getting 27 sen to RM10.26 while MISC rose 19 sen to RM6.99, Tenaga and HL Bank 18 sen each to RM5.96 and RM10.54.

Among the decliners were Ewein, down 22 sen to 86 sen, JFTech 17 sen to 13 sen, Ibraco and Lafarge 13 sen each to RM1.20 and RM6.99.

Toyota to cut N.America output on Thai floods

TOKYO: Toyota Motor Corp said on Thursday, Oct 27 it would cut production in North America for one day due to the interruption of parts supplies from Thailand, marking the first impact of the floods on car production outside Asia.

Thailand's worst floods in 50 years have affected hundreds of manufacturers and cut off the supply of about 100 components for Toyota, the country's top automaker. Toyota has three factories with a combined production capacity of 650,000 vehicles a year in the Southeast Asian export base.

The disaster also began affecting output outside the country this week. Toyota reduced work in Japan due to the shortage of electronic, plastic and forging parts, and cut back work in Indonesia, Vietnam and the Philippines.

Honda Motor Co has also postponed the launch in Japan of a special edition of its Life minivehicle that had been scheduled for Oct. 13. Its 240,000-cars-a-year factory in an industrial park in Thailand's Ayutthaya area is still under water.

With many suppliers directly hit by the deadly floods, automakers are scrambling to procure replacement parts and assess the extent of disruption to the supply chain.

Japanese automakers dominate the Southeast Asian car market, where they have recently announced a slew of new investments to meet booming demand.

Before the cancellation of work in North America, Tokai Tokyo Research analyst Mamoru Katoh had estimated a 5,000-vehicle daily output reduction for Toyota globally based on its announced plans. Assuming a 300,000 yen ($4,000) profit on each vehicle, that would amount to a 1.5 billion yen ($19.7 million) reduction in profit every day, he wrote in a report.

In North America, Toyota said it would suspend vehicle production on Oct. 29 in Indiana and Kentucky, two plants in Ontario, Canada, and an engine plant in West Virginia to conserve parts.

Toyota had scheduled Saturday production to catch up on output after it was forced to cut back due to supply chain disruptions in the wake of Japan's March earthquake and tsunami.

Japan's Chunichi newspaper on Thursday cited an unnamed Toyota executive as saying a complete normalisation of parts supply and production in Thailand could take until December or later. Toyota said the situation remained unclear.

About 1,800 Japanese manufacturers operate in Thailand, including Canon Inc , Pioneer and Sony Corp .

Honda, Japan's No.3 automaker, said its car, motorcycle and power product factories will remain closed at least until Oct. 31, in line with the Thai government's calling of a special five-day holiday to let people escape.

Toyota and Nissan Motor Co said they expect to provide an update for next week on Friday at the latest, after announcing a suspension through Oct. 28.

With many car components exported from Thailand, the disruption is poised to spread to more countries for Nissan and Honda as well as parts inventories run out.

In September, before the floods began shutting car factories, Toyota built about 70,700 vehicles in Thailand, Nissan about 20,000 and Honda about 22,000.

At midday, Toyota's shares were up 1.8 percent, Nissan's were up 3.3 percent and Honda's were up 1.5 percent, outperforming a 0.5 percent rise in the benchmark Nikkei average. - Reuters

Asia shares, euro rally on EU summit

TOKYO: Riskier assets across the board from equities to oil and the euro rallied on Thursday, Oct 27 after European leaders agreed to boost the region's rescue fund and struck a deal on a 50 percent writedown for private bondholders on their Greek debt.

Spreads tightened in Asian credit markets while U.S. Treasuries extended losses in Asia, but gold extended gains to their highest in more than a month on confirmation that progress in resolving European sovereign debt crisis will remain slow.

Lack of details on how to deliver the broad rescue scheme meant there was still a long way before markets get any convincing answers to relieve their concerns over the contagion of the Greek debt crisis to other euro zone countries and the damage to the broader economy.

MSCI's broadest index of Asia Pacific shares outside Japan was up nearly 2 percent to its highest level since Sept. 12, rising more than 18 percent from its lows hit on Oct. 4.

The Nikkei rose 0.5 percent, as the yen's rise to a record high against the dollar of around 75.70 yen on Wednesday fuelled worries about the impact to corporate earnings.

"The blueprint is out, but it's coming in dribs and drabs and not as clear as we thought it will be," said Jonathan Barratt, managing director at Commodity Broking Services, adding that it also did not fully address the issues.

"But it's still a step forward and each step keeps optimism intact. But the task ahead is too large to put a deadline on, and if there is a lag, the market will lose its optimism. If there are no concrete measures, it will draw down market prices."

French President Nicolas Sarkozy said on Thursday after a summit of euro zone heads of state and government that the region's rescue fund will be leveraged four or five times, giving it firepower equivalent to about 1 trillion euros ($1.4 trillion).

He said the leaders had agreed with bankers that private sector investors would accept the loss of half the value of their Greek bond holdings, and to refinance Greece's remaining debt at preferential rates.

Two approaches to strenthen the bailout-fund, the European Financial Stability Facility, were identified: one aiming at getting credit enhancement to sovereign bonds issued by member states and another aiming to set up one or several special purpose vehicles to finance its operations.

European policymakers also agreed to force banks to raise their capital buffers to 9 percent in core Tier 1 capital, a measure of banks' financial health, by June next year, to protect against losses from any Greek debt restructuring and to contain the region's financial crisis.

In another sign of progress to ease concerns about Greece's debt issues from spreading, euro zone leaders will welcome Italy's plans to increase the pension age to 67 but will want detailed plans on how it can be achieved.

The euro surged to its highest in seven weeks to just below $1.40 .

NEXT FOCUS - FUNDAMENTALS

With the summit meeting providing some direction for key issues, the market will shift its focus to details for implementing these measures while more closely watching the impact of the euro zone debt crisis on the economy.

"The markets will remain in a cycle of expectations and disappointments over the euro zone debt issues for some more time to come, as Europe's sovereign debt issue will take a long time to resolve and there are many more hurdles that need to be cleared," said Kazuto Uchida, an executive officer and general manager of the global markets division at the Bank of Tokyo-Mitsubishi UFJ.

The markets had priced in an extremely pessimistic scenario, so the outcome prompted covering of these positions.

"The markets are now shifting their focus to how the debt crisis has affected the economy," Uchida said. "Whether the market can consolidate in a range or enter a downtrend will depend on how they see risks from fundamentals."

Commodities rose, with oil gaining more than $1 while gold extended its gains to its highest in over a month on Thursday, after rising 1.5 percent the previous session when it notched its longest stretch of gains in over two months.

Gold has been underpinned by safe-haven allure amid uncertainty over the euro zone crisis as well as strong physical demand when prices fall.

BET ON RISK RALLY

Technicals suggest the markets were providing good trading opportunities for both bulls and bears, encouraging investors to buy on dips when a risk rally eases.

The euro, having consolidated in a range of $1.3650-$1.3950 since mid-October, was technically set to break out the range.

In Asian credit markets, weakening strains helped sharply narrow the spreads on the iTraxx Asia ex-Japan investment grade index , a gauge for whether investor risk appetite is returning, by 12 basis points on Thursday.

"We could see this rally go further based on the technicals, as real money accounts are underweight and dealers are lightly positioned, but longer term it could be capped by issuance," said a Singapore-based credit trader with an Asian bank referring to the supply pressure built up after inactivity in the primary markets in over a month.

Investors' appetite eased for protection in the options market against losses, with the CBOE Volatility index VIX -- a 30-day risk forecast of volatility in the S&P 500 -- falling 29.86 on Wednesday from 32.22 the day before.

Since Oct. 4, when the Standard & Poor's 500 Index slumped to intraday levels last seen in September 2010, the benchmark index has surged nearly 15 percent, mostly on hopes for a solution to the debt crisis.

While it has failed to clear a key technical level of a 61.8 percent retracement of the 2011 decline around 1,258, the index has found a solid support around 1,221, suggesting a level investors could buy on dips.

With the rally in riskier assets, safe-haven U.S. Treasuries fell further in Asia, with yields on the benchmark 10-year notes inching up to 2.22 percent from 2.21 percent late in New York on Wednesday. - Reuters