Saturday, December 3, 2011

M&As must drive Proton's exports, says chairman

PETALING JAYA (Dec 3):'' Any form of merger or acquisition involving the national automaker, PROTON HOLDINGS BHD [], should steer its glory
internationally, says chairman Datuk Seri Mohd Nadzmi Mohd Salleh.

He neither confirmed or denied any takeover rumour but said as a national automotive company any move to bring in new shareholders or privatise the entity should only be for the future success of Proton.

"As to who will be the shareholders, it is not up to me or the management to decide but it is up to the government. Proton can never remain the
national car manufacturer forever given the present situation.

"Proton is now in the midst of transforming its business module where we are looking to push exports. Proton cannot be what it is locally, it has to
transform itself to become a global player internationally," he told Bernama'' on the sidelines of the Proton's Family Day celebration here on Saturday.

Mohd Nadzmi said it was for this reason that the company's management and board were pushing ahead for Proton to be bigger than what it is today.

"Push for more export activities is the key because for a car industry, volume is very critical. In Malaysia, the domestic market is very small and very

"The current management team has a very huge task in making sure the national car project is not only focusing on the domestic market but we want to be a big global player.

"I think whatever we have to do now...even if we have to bring in new shareholders or the company needs to be privatised, it should not lose sight of that objective,"'' Mohd Nadzmi said when commenting on Proton's sharp price increase of 15.4 per cent or 51 sen to RM3.61 on Friday, making it the day's third biggest gainer.

Analysts highlighted that the hike was a clear indication that talks of an impending takeover or sale of a stake in Proton, was imminent.

Conglomerates DRB-HICOM, Naza Group and SIME DARBY BHD [] were among the big companies involved in the automotive company's merger and acquisition exercise, with a stake sale to DRB-HICOM expected to be the closest.

Asked on potential suitors, Mohd Nadzmi said: "The interest has always been there. Many parties have expressed their interest and I think the government is very cautious in this kind of things as they would balance and analyse all possible factors before making a decision.

Mohd Nadzmi also said Proton was positive it cannot perform in the global arena as good as it did domestically without undergoing a shift in business
modules. - Bernama

ASEAN stock exchanges eye cross-border trading in 2012

HANOI (Dec 3): Stock exchanges in Singapore, Malaysia and Thailand delayed a plan to set up electronic trading links to attract investment and raise liquidity, saying it would be done in 2012.

The plan, set to be finalised this year, will be joined by exchanges in the Philippines, Indonesia and Vietnam at a later date.

The proposal to launch cross-border trading was initially set to be in place in 2010, but has already been delayed for reasons such as the development of a new platform.

Singapore Exchange and Bursa Malaysia will link up in June 2012, followed by Thailand in August, a joint statement said after the heads of the seven stocks exchanges met in Hanoi on Friday.

The Philippines will come in at a later date while Indonesia and two markets in Vietnam will announce their participation pending approval from their regulatory bodies, according to the statement issued late on Friday.

The meeting also agreed to launch the ASEAN Trading Link in June 2012, it added.

The 10-country Association of South East Asian Nations (ASEAN) wants to establish an economic community modelled on the European Union by 2015 and the market venture will support one of its aims, allowing capital to move more freely between states.

The ASEAN Trading Link is aimed to electronically interconnect the participating markets and facilitate cross-border order trading seamlessly.

The seven exchanges of Southeast Asian have a combined capitalisation of about $2.4 trillion and were the darlings of emerging market investors in 2010. - Reuters

#Stocks to watch:* Glomac, Mah Sing, Tan Chong, Fibon

KUALA LUMPUR (Dec 3): The FBM KLCI may trend higher and again test the psychologically important 1,500 level in the week ahead, starting Monday, Dec 5 on more'' global liquidity and economic optimism.

On Friday, Dec 2, the FBM KLCI closed in positive territory as some key regional markets reversed their earlier losses, but gains at the local market remained muted as investor sentiment stayed cautious.

Week-on-week, the KLCI was up 57.45 points to end at 1,489 with the market capitalisation up RM39.59 billion to RM1,269.59 billion.

Affin Investment Bank head of retail research Dr Nazri Khan said the sentiment could be propped by the coordinated move by central banks including China and Brazil to ease monetary policies.

Another positive factor is the rising expectation of an aggressive cut in the ECB interest rate and stronger EU deal to resolve the debt crisis.

'However, despite the gains spotted worldwide, we recommended caution since the liquidity move is yet to address the core problems that Europe faces which is to provide a long-term sustainable funding solution to the troubled European banking community,' he said.

Dr Nazri expected the broad market to trend higher slowly as they digest more clarity on the EU plan to deal the problems (possibly disclosed in the upcoming Dec 9, EU summit).

'These may includes details on how to enforce budget balancing for troubled countries, how to implement tough austerity measures especially for Portugal, Italy, Ireland, Greece and Spain, how to leverage the rescue funds and how to strengthen the ECB to backstop future crisis,' he pointed out.

Among the stocks which could see trading interest are GLOMAC BHD [], MAH SING GROUP BHD [], TAN CHONG MOTOR HOLDINGS BHD [] and Fibon'' Bhd.

Glomac's net profit for the second quarter ended Oct 31, 2011 rose 50pct to RM23.78 million from RM15.88 million a year ago, underpinned by on-going projects particularly Glomac Damansara, Glomac Cyberjaya, Saujana Rawang and Bandar Saujana Utama.

Its revenue for the quarter however declined 4.3pct to RM134.83 million from RM140.89 million, due to completion of two projects namely Glomac Tower and Glomac Galleria.

Mah Sing's proposed joint development of 4.08 acres of prime land along Jalan Tun Razak-Jalan Pahang faced a setback after the conditions were not met.

However, Mah Sing said it would explore options to move ahead on this. The project is a niche development ' M Sentral -- with an estimated gross development value of RM900 million and it is part of the RM9-billion 58 acre riverside urban regeneration project.

The Edge weekly reports that Tan Chong Motor Holdings Bhd, which invested nearly US$45 million in Nissan Vietnam Co Ltd since acquiring a controlling stake in the company last year, is optimistic that it will reach break-even earlier than anticipated.

Meanwhile, Fibon ' a chemical compounds producer -- is poised to enter a new phase of growth with the upcoming launch of its new switchboard Fibon LogiCube.

Anther company which could see trading interest are sports shoe sole manufacturer Xingquan International Sports Holdings Ltd.'' Its chief executive officer Wu Qingquan is confident that it can maintain its double digit growth in revenue for the financial year ending June 2012, said.'' The compound annual growth rate from 2006 to 2011 was 39%.

Last Friday, MMC CORPORATION BHD []'s Tanjung Bin Energy Sdn Bhd has sealed a power purchase agreement with TENAGA NASIONAL BHD [] to supply electricity over 25 years. However, the price of electricity which Tanjung Bin would sell to Tenaga was not disclosed in the statement to Bursa Malaysia.


Proton group MD sees higher sales next yr

PETALING JAYA (Dec 3): PROTON HOLDINGS BHD [] is confident of achieving better sales volume next year as the car maker has put several initiatives in place to boost sales, says group managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir.

He said it has been Proton's tradition lately to introduce a new car variant or model annually, and next year, would be no exception.

"We are preparing to launch a new car in 2012 and one of the important activities for Proton next year would be to push hard on exports.

"Domestically, the sales volume is growing, year-on-year, but, for next year, it would be dependent upon prevailing market conditions then," he told
Bernama at Proton's annual Family Day here on Saturday.

Syed Zainal said next year was expected to be a challenging year economically, but for the automotive industry, the introduction of new varient
models would help improve Proton's overall performance.

For the first six months, Proton Holdings' car sales increased to'' 74,519 units versus 65,918 units sold in the same period in 2010.

Syed Zainal said like any other segment of the economy, the automotive market was and would remain very competitive.

"Thus, we have to double our efforts and this family day is one way to gather our workforce, raise their spirits, morale and encourage them to steer
Proton to greater heights and success," he said. - Bernama

U.S. judge rejects Apple bid to halt Galaxy sales

(Dec 2): A U.S. judge rejected Apple's attempt to halt U.S. sales of some Galaxy smartphones and tablets made by Samsung Electronics, according to a ruling on Friday.

U.S. District Judge Lucy Koh in San Jose, California, denied Apple's request for a preliminary injunction in a fierce patent lawsuit between the two companies. - Reuters

US STOCKS-Wall St caps stellar week on drop in jobless rate

NEW YORK (Dec 2): U.S. stocks ended flat on Friday but capped the best week for Wall Street bulls in almost three years after data showed the U.S. unemployment rate dropped to a 2-1/2 year low.

The market gave back a 1 percent gain earlier in the session as traders booked profits after the S&P 500 failed to break through technical resistance near its 200-day moving average.

The retreat also came on caution before key events in Europe next week, including a European Union summit aimed at solving the two-year old euro zone debt crisis.

While traders were heartened by the drop in the unemployment rate, they were aware of Europe's ability to disappoint investors, especially after a more than 7 percent gain in the S&P 500 this week.

"We've been led down the aisle so many times we're afraid the groom's not going to show up again," said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.

"There's an increasing expectation that when leaders meet next week they will have the framework of a resolution that will allow greater fiscal unity and some beginnings of a resolution to the European debt crisis."

Recent U.S. economic data has heartened investors. U.S. companies stepped up hiring and the jobless rate dropped to 8.6 percent from 9 percent, further evidence the recovery was gaining momentum.

The unemployment rate drop was "the single most surprising number in employment data this year," Colas said.

The lowest estimate on a Reuters poll of 67 economists was 8.9 percent.

The S&P 500 came within striking distance of its 200-day moving average, a breach of which could signal more gains, and briefly turned positive for the year.

Financial shares were the biggest gainers on the day with the S&P financial index up 1.4 percent. JPMorgan Chase gained 6.1 percent to $32.33.

The Dow Jones industrial average dipped 0.61 point, or 0.01 percent, to 12,019.42. The S&P 500 shed 0.30 point, or 0.02 percent, to 1,244.28. The Nasdaq Composite edged up 0.73 points, or 0.03 percent, to 2,626.93.

For the week, the Dow rose 7 percent, the S&P 500 added 7.4 percent and the Nasdaq rose 7.6 percent. It was their largest weekly percentage advance since mid-March 2009.

"If you had a good week, there's a very strong temptation to take everything off of your portfolio and wait for the next drop down," Colas said of the rally fade-out into the close.

U.S.-listed shares of Research in Motion Ltd dropped 9.7 percent to $16.77 after the BlackBerry maker said it will write down the value of its poorly received PlayBook tablet computer.

About 7 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the current daily average for the year of 7.96 billion.

Advancing stocks outnumbered declining ones by more than three to two on both the NYSE and Nasdaq. - Reuters

Wall St Week Ahead: Searching across the Atlantic for clues

NEW YORK (Dec 2): The euro zone will once again serve as the source of Wall Street's angst, as investors look to a summit of the region's political leaders for decisive solutions for the ballooning debt crisis.

Stocks posted their best week in more than two years this week, driven by central bank efforts to provide cheaper dollar loans to struggling European banks.

In addition, the new head of the European Central Bank said on Thursday the ECB stands ready to act more aggressively to fight Europe's debt crisis if political leaders agree to much tighter budget controls at the Dec. 9 summit.

But Wall Street investors can be forgiven for feeling like they've been in this position before. Markets seesawed throughout the fall, guided by prevailing sentiment out of Europe.

"Next week it will be all focused on the upcoming Friday summit. But don't forget this is the fifteenth summit we've had now during the euro zone crisis, and every one the market gets excited, gets excited and then boom - it gets disappointed," said Ken Polcari, managing director at ICAP Equities in New York.

Until now, the ECB has resisted prodding from markets and world leaders to step in as the lender of last resort. European credit market yields have soared in recent weeks on concerns that the euro zone could break up or one or more countries would default on their debt.

French President Nicolas Sarkozy said he and German Chancellor Angela Merkel would meet next Monday to outline joint proposals for the summit.

Investor optimism over apparent progress by euro zone leaders towards taming their debt problems helped propel the S&P 500 7.4 percent higher for the week, its best weekly performance since March 2009. The best performers in the last week were companies with more international sales, according to Bespoke Investment Group, an investment adviser in Harrison, New York.

While volatility remains high as markets remain susceptible to any negative headlines coming out of the euro zone, investors appear satisfied for the time being that the region's leaders will remain on track in tackling the crisis.


"We've seen some policy changes which suggest they are finally beginning to understand that they've got a problem," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

"They are finally recognizing that this is their Lehman moment, and they have got to do the same sort of things that we did back in the 2007 to 2009 period."

With markets swings closely tied to sentiment about the progress made in the euro zone, investors have been forced to weigh the region's fiscal stability with U.S. stocks that are seen as cheap by many analysts.

Recent corporate outlooks and analyst projections have been painting a less rosy picture, with estimates for fourth-quarter S&P earnings growth tumbling over the past two months as well as a near-record high ratio of negative corporate preannouncements to positive ones, according to Thomson Reuters Proprietary Research.

Even if European leaders continue on a path that investors have cheered, the difficulty in putting plans in place may throw cold water on investor optimism. Borrowing costs in major nations such as Italy and Spain remain at levels considered unsustainable in Europe's slow-growth economy.

"I don't know that the market just rallies straight through into the end of the year because whatever solution they come up with will be hard to implement," said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.

"It will be politically hard, it will be economically hard and you will be facing the very real threat of a recession -- a pretty deep recession in Europe in the first half of next year -- because of all the uncertainty that is being created right now."

The U.S. economic calendar for next week is light, with the ISM services report, weekly initial jobless claims and the trade balance among the highlights. - Reuters

Friday, December 2, 2011

GLOBAL MARKETS WEEKAHEAD-Too early for Christmas rally?

LONDON (Dec 2): Investors may be cheered by this week's liquidity move by the world's top central banks and interest rate cuts in key emerging economies, but more is needed to sustain the risk rally into the new year.

Wednesday's joint central bank move to ease tensions in European bank funding via swaps came as China eased monetary policy and Brazil cut interest rates and tax.

This is raising expectations that Group of 20 powers are finally taking coordinated action, lifting world stocks by 8.6 percent at one point in the past week.

The European Union summit on Dec 9 is now seen as a make-or-break for the 12-year-old single currency with policymakers under pressure to follow through with more measures. The focus is whether they will expand the role of the European Central Bank to become the lender of the last resort .

Until more clarity emerges, it would be difficult for investors to keep on buying risky assets.

"It smacks some sort of coordination. But it's only telling what they should've done. Support for the market came but it is still stressed and there's a question mark there," said Richard Cookson, global chief investment officer at Citi Private Bank.

"I take a gloomier view because you don't have any decent solution on the table. They're scrabbling around for solution. All the attention is centered on the ECB; whether it will blink."

Cookson recommends avoiding generally euro area assets and buying high-quality and non-financial U.S. investment corporate grade debt.

With so much uncertainty surrounding government bond markets, investors are also preferring to gain steady income from stocks of top-quality companies.

In the week ended Nov 30, equity income funds were the few sectors that took in fresh cash, according to Thomson Reuters' Lipper. This group pulled in $250 million in the latest week, extending an inflow streak that has had redemptions just nine times in the last two years.

"Global multi-nationals have low leverage and strong free cashflows and good dividend distributions. They are in a credit upgrade cycle," said Ashok Shah, chief investment officer at London & Capital.

"The credit downgrade cycle is in motion for OECD countries. This is the theme that will be played out in the next 5-10 years."


Many are still sceptical how sustainable the rally would be, but the benchmark MSCI equity index has risen at least 8.5 percent in the past week, its biggest weekly gain since November 2008.

What this highlights is that it can be very dangerous for investors to put too much tail risk hedging in place. It's such a policy-driven market that it can periodically lead to a very sharp rally in risky assets.

In October, stocks rallied more than 20 percent as European policymakers pledged fresh steps to aid European banks. The rally fizzled in November, but still hurt poorly positioned investors who got caught out by the positive policy response.

"You're left in an environment where heavy lifting had to be done by policymakers. It is a politicised market. Policy and policy shifts will continue to dominate market thinking," said Bill O'Neill, chief investment officer at Merrill Lynch Wealth Management.

"Correlation and volatility are very high and it is very difficult for asset allocators to diversify. Making tactical calls in this environment is a fearsome challenge."

That may be why some investors are starting to put risks back on. Reuters poll of 59 leading investment houses showed an increase in exposure to stocks in November, mainly as a result of demand for emerging market equities.

The difficulty of asset allocation is also emphasised by a shrinking universe of safe haven assets.

After a brief scare in German government bonds in November after a weak debt sale, investors will closely monitor another auction of German five-year note in the coming week.

Italy and Portugal are also scheduled to hold debt sale. - Reuters

MAHB chairman backs Bashir to stay on as MD

SEPANG (Dec 2): Malaysia Airports Holdings Berhad (MAHB) chairman Tan Sri Dr Aris Othman has extended his full support to a proposal to extend
the service of Tan Sri Bashir Ahmad as the company's managing director.

"I can say with confidence that the entire Board of Directors will extend their full support to him being retained as the managing director.

"In my opinion, the current situation is critical from the aspect of our'' standing and development. We should not make any changes whatsoever,
particularly for this position," he said.

Aris was speaking at the 6th joint signing ceremony with the Peninsular, Sabah/Labuan and Sarawak, Malaysia Airports Holdings Berhad Workers Unions, here on Friday.

Bashir's position as managing director came under question again following a media report that he would be replaced by Pos Malaysia Berhad Chief Executive Officer (CEO), Datuk Syed Faisal Albar Syed Albar, whose contract ends at the end of this month.

Bashir's contract with MAHB ends in June next year.

The proposal to extend Bashir's service was voiced by the President of the Peninsular, Malaysia Airports Holdings Berhad Workers Union, Hussin Shaharn at the same ceremony.

It was also proposed at the event that a memorandum be sent to the Prime Minister, Datuk Seri Najib Tun Razak, on the proposal.

Hussin also proposed that another memorandum be sent to the Prime Minister on the confusion at the Low Cost Carrier Terminal (LCCT) on Thursday in relation to the, "Say No To Airport Tax Increase", by Air Asia.

Air Asia is protesting MAHB's decision to raise the airport tax by between RM7 to RM14 at its five airports in the country, effective Thursday.

Meanwhile, the joint agreement signed today will see 2,705 non-executive workers of MAHB, receiving a new salary structure involving increases of 7-43 per cent.

There is also a salary adjustment of six per cent for 4,051 workers not involved in the restructuring. - Bernama

GHL Systems to pick accountants to probe Beijing irregularities next wk

KUALA LUMPUR: GHL SYSTEMS BHD [] is expected to formalise the appointment of certified public accountants by next week to launch an independent probe to assess the impact of irregularities on its Beijing operations.

The company said on Friday the independent panel would also look into measures to address and minimise the impact when the probe into GHL (Beijing) Co. Ltd was completed.

GHL Systems said the panel would also look into the possibility of taking any legal action or recovery and also a review of internal control procedures in the group to avert further irregularities.

It said GHL Beijing's posted after tax losses of RM1.29 million in 2008 and RM1.63 million in 2009 but it made net profit of RM109,410 in 2010.

To recap, GHL had announced to Bursa Malaysia on Nov 29 that after a recent review of its operations in Beijing, the board was made aware of certain irregular transactions between GHL Beijing and a third party company in which certain senior management personnel of GHL Beijing were interested in.

It had then said the transactions could potentially involve a conflict of interest involving certain senior management personnel of GHL Beijing.

Mah Sing: Conditions for joint devt of Jln Tun Razak project not met

KUALA LUMPUR (Dec 2): MAH SING GROUP BHD []'s proposed joint development of 4.08 acres of prime land along Jalan Jalan Tun Razak-Jalan Pahang faced a setback after the conditions were not met.

It said on Friday the conditions in the joint venture agreement to develop the land with Asie Sdn Bhd and Usaha Nusantara Sdn Bhd 'have not been fulfilled'.

'Notwithstanding the above, however, we are exploring options to move forward on this,' it said about the'' proposed joint development, which is part of the RM9-billion 58 acre riverside urban regeneration project.

To recap, on Aug 2, Mah Sing announced it would undertake a niche development ' M Sentral -- with an estimated gross development value of RM900 million.

M Sentral would comprise of smaller sized and more affordable serviced residences as there is strong demand due to lower entry prices, as well as some retail units.

Under the deal, Usaha Nusantara would grant Grand Pavillion the sole and absolute right to develop the land for an entitlement of RM106.60 million to be settled via 60% in cash (RM63.96million) and 40% stake in Grand Pavillion.

MMC's Tanjung Bin seals 25-yr power purchase deal with Tenaga

KUALA LUMPUR (Dec 2): MMC CORPORATION BHD []'s Tanjung Bin Energy Sdn Bhd has sealed a power purchase agreement (PPA) with TENAGA NASIONAL BHD [] to supply electricity over 25 years.

MMC said Tanjung Bin ' a unit of its 51% owned Malakoff Corporation ' had on Friday signed the PPA to supply power from its 1,000 MW coal-fired power plant in Tanjung Bin, Johor. The expected commercial operation date was March 1, 2016.

They also signed a coal supply and transportation agreement with TNB Fuel Services Sdn Bhd for the supply of coal to be used by Tanjung Bin Energy.

On Oct 14, Tanjung Bin Energy had received the Department of Environment's approval for the project's detailed environmental impact assessment.

"The PPA and coal supply and transportation agreement are expected to contribute positively to the earnings and net assets of the company from financial year ending 2016 onwards,' said MMC.

Glomac 2Q net profit rises 49.7% to RM23.78m

KUALA LUMPUR (Dec 2): GLOMAC BHD [] net profit for the second quarter ended Oct 31, 2011 rose 49.7% to RM23.78 million from RM15.88 million a year earlier, due mainly to on-going projects particularly Glomac Damansara, Glomac Cyberjaya, Saujana Rawang and Bandar Saujana Utama.

Its revenue for the quarter however declined 4.3% to RM134.83 million from RM140.89 million in 2010, due to completion of two projects namely Glomac Tower and Glomac Galleria.

Earnings per share for the quarter increased to 4.08 sen year-on-year from 2.72 sen, while net assets per share was RM1.06.

For the six months ended Oct 31, Glomac's net profit rose 32.4% to RM41.65 million from RM31.44 million in 2010, on the back of revenue RM262.66 million.

Reviewing its performance, Glomac group executive chairman Tan Sri F.D. Mansor said the company's Glomac Cyberjaya 2 and B.U.Centro @ Bandar Utama projects would further drive its sales growth and enhance its unbilled sales which currently stood at RM555 million.

He said this was a reflection of the strong market interest in Glomac's development projects, as well as its continuing success in building ourselves as a quality, reliable and innovative developer.

'Albeit that global economic uncertainty persists, we believe Glomac's prospects remain promising and that we would continue to sustain our earnings growth momentum.

'Excluding the RM1.4 billion worth of PROPERTIES [] we have and will launch in this current financial year, Glomac has a strong pipeline of strategic projects with a total gross development value (GDV) of RM2.6 billion for launch beyond this year.

He said the company's balance sheet had also continued to improve, having amassed RM385 million in cash.

Glomac Cyberjaya 2, which was officially launched in November 2011, comprises of 3 to 4 '' shop offices with a total GDV of RM130 million.

The initial phase of B.U.Centro @ Bandar Utama has an estimated GDV of RM370 million, comprising of shop offices which were soft launched in November 2011, and serviced apartments which is targeted for launch in early 2012.



Affin Bank MD Zulkiflee Abbas to drive group's strategic, devt agenda

KUALA LUMPUR (Dec 2): Affin Bank Bhd managing director and chief executive officer Datuk Zulkiflee Abbas Abdul Hamid will take the lead in driving the group's strategic and developmental agenda.

AFFIN HOLDINGS BHD [] said on Friday that Zulkiflee Abbas was given the mandate to push ahead with the agenda of the Affin Banking group, which comprises of Affin Bank Bhd, Affin Islamic Bank Bhd and Affin Investment Bank Bhd.

'Pursuant to this, Zulkiflee Abbas will oversee, among others, the overall performance of the Affin'' banking group and focus on optimising synergy among entities within Affin banking group,' it said.

PNB submits plan to SC over incentives, mgmt rights of S P Setia

KUALA LUMPUR (Dec 2): Permodalan Nasional Bhd, which served a takeover notice on S P Setia in late September, has submitted its proposal to the Securities Commission to work out the management and general conduct of the business of the property group.

S P Setia said in Friday it had received PNB's notice about the proposal to formalise the incentives and management rights relating to the management and general conduct of the business of S P Setia group of companies.

The notice had also stated that three parties -- PNB, S P Setia president and chief executive officer Tan Sri Liew Kee Sin, and S P Setia -- would work out the incentives and management rights. However, this arrangement would be subjected to the Securities Commission's approval.

To recap, PNB had on Sept 28 served a takeover notice on S P Setia after its shareholding reached 33.16% or 590.502 million shares.

PNB offered RM3.90 per share, which based on the last traded price of RM3.50, was a 40 sen premium. PNB also offered to acquire the remaining warrants at 91 sen per warrant. This was 45 sen or 97.8% above the last closing price of 46 sen before the offer was made.

S P Setia subsequently rejected the offer, stating it fundamentally undervalued the company and it then decided to seek a competing offer from other interested parties to make an offer to purchase the company's shares. However, it did not receive any competing offers for the stake in the company.

KLCI edges up as regional markets reverse losses

KUALA LUMPUR (Dec 2): The FBM KLCI closed in positive territory on Friday as some key regional markets reversed their earlier losses, but gains at the local market remained muted as investor sentiment stayed cautious.

World stocks extended gains on Friday and looked set for the biggest weekly rise since mid-2009 thanks to coordinated central bank action that cut the cost of money market funds, according to Reuters.

There were also widespread investor hopes that a key European summit next week could finally yield a concrete solution to the euro debt crisis, it said.

The FBM KLCI rose 3.76 points to close at 1,489.02, lifted by gains at select blue chips.

Gainers edged losers by 386 to 356, while 298 counters traded unchanged. Volume was 1.71 billion shares valued at RM1.36 billion.

At the regional markets, Japan's Nikkei 225 rose 0.54% to 8,643.75, Hong Kong's Hang Seng Index was up 0.20% to 19,040.39 and Singapore's Straits Times Index added 0.42% to 2,773.36.

Meanwhile, the Shanghai Composite Index fell 1.1% to 2,360.66. Taiwan's Taiex lost 0.53% to 7,140.68 and South Korea's Kospi shed 0.01% to 1,916.04.

On Bursa Malaysia, Petronas Dagangan and Petronas Gas added 68 sen each to RM17.30 and RM14; Proton was up 51 sen to RM3.61, Nestle and Dutch Lady 40 sen each to RM52.60 and RM24.80, Tradewinds PLANTATION []s 25 sen to RM4.17, Panasonic 22 sen to RM19.96, Parkson 19 sen to RM5.84 and TDM 18 sen to RM3.80.

Among the decliners, BAT fell RM1 to RM47.10, PPB down 20 sen to RM16.38, Amway 14 sen to RM8.96, Malaysia Smelting Corp 11 sen to RM4.01, while SHL, United Plantations, NSOP and Tradewinds fell 10 sen each to RM1.15, RM18.10, RM5.68 and RM9.90 respectively.

The actives included DPS Resources shares and warrants, Sanichi, SYF Resources and MUI Industries.


EM ASIA FX-Asian FX set for weekly gains on joint cbank action

SINGAPORE (Dec 2): Emerging Asian currencies are poised for their first weekly gain since late October buoyed by the joint central bank action and some short-covering , although caution ahead of the U.S. jobs data and dollar-buying by regional central banks kept them subdued on Friday.

Market players were also reluctant to take big bets ahead of a pivotal European summit next week that will try to determine a strategy for dealing with debt crisis.

A stronger-than-expected U.S. non-farm payroll may bring buyers back to riskier assets such as emerging Asian currencies. Forecasters expect November brought creation of 122,000 jobs in November and a steady jobless rate at 9.0 percent. Some dealers and analysts said positive figures have been reflected in the market to some degree.

"A rise of between 125,000 and 150,000 will not produce mush response from Asian currencies," said Jonathan Cavenagh, foreign exchange strategist for Westpac in Singapore.

A figure above 175,000 may boost the regional currencies, particularly the South Korean won, the Malaysian ringgit and the Singapore dollar, around 0.5 percent, he added.

So, stronger data will not guarantee a big jump in the regional units, given persistent worries about the crisis in Europe crisis, dealers and analysts said.

In the last week of October, emerging Asian currencies rose after the euro zone's leaders agreed on a plan to ease the continent's debt problems. But later, most emerging Asian currencies continued to suffer weekly losses.

Suresh Kumar Ramanathan, regional rates and foreign exchange strategist for CIMB Investment Bank in Kuala Lumpur, said he doesn't expect Asian currencies to rise further, as risk aversion remains high as do fears of possible sovereign defaults in Europe.

"Asia FX is now moving into a transition of weaker global growth, weaker domestic growth and easy monetary policy, all ingredients of weaker currencies," he said, adding there are no reasons to buy Asia ex-Japan FX in the current environment.

Investors are keeping an eye on the European Union (EU) summit next week to see if the continent's policymakers will make more progress.

French and German leaders are meeting next Monday to outline joint proposals to put to a Dec. 9 EU summit, seen as -- yet another -- make-or-break meeting for the 12-year-old currency bloc.

The European Central Bank hinted on Thursday it was ready to move more aggressively to tackle the crisis if politicians agree on much tighter budget controls in the euro zone, though it stopped short of detailing what exact measures it would take.

Still, there is no agreement among EU policymakers regarding how such controls could be implemented and many other problems, including securing resources to leverage the euro zone's bailout fund, linger unresolved.

This week, most emerging Asian currencies have risen as investors covered short positions after the world's top six central banks acted jointly to ease a liquidity crunch.

The won rose 2.9 percent against the dollar for the week, outperforming its Asian peers, according to Thomson Reuters data, as a central bank in central Asia bought the local currency for the country's bonds.

The ringgit, the second best performing among emerging Asian currencies, has gained 2.2 percent on the week. WON Dollar/won rose as investors covered short positions and on importers' demand for settlements.

Investors were also stayed wary of possible buying intervention by the foreign exchange authorities.

"It looks safer to hold long positions. If we see strong non-farm payroll, the pair may dip a bit. But it will head to the north again," said a foreign bank dealer in Seoul.


U.S. dollar/Singapore dollar edged up on short-covering on caution over possible intervention and on weaker stocks. There was market talk on Thursday that agent banks of Singapore central bank was seen to keep the pair above 1.2800, dealers said.

RINGGIT Dollar/ringgit fell on interbank speculators selling triggered by a higher euro, breaking support of 3.1380, the 38.2 percent Fibonacci retracement of its rise between late Oct and Nov. The pair may head to the 50 percent retracement level at 3.1195, although investors are keeping an eye on the U.S. jobs data later in the day.

BAHT Dollar/baht fell below a 55-day moving average, staying around the 61.8 percent Fibonacci retracement of its increases between late Oct and Nov. The pair edged down to 30.830, breaking through the average of 30.870 and near the retracement of 30.822. If it clears the retracement, it may possibly slide to 30.677, the 76.4 percent retracement. But investors were cautious over possible dollar-buying intervention by the central bank. Some dealers said the Bank of Thailand has stepped in the market from 30.800. A central bank official said the strength in the baht is not much and it is moving in line with regional currencies.

PHILIPPINE PESO Dollar/Philippine peso edged down, although it recovered most of its slide on short covering. Some interbank speculators are looking to sell the pair on hopes for strong U.S. job data. "With the string of bad news during the past couple of weeks, I think the market is very eager for any good news," said a European bank dealer in Manila. The dealer said the pair has room to slide to 43.00 and 42.50.- Reuters

RAM Ratings reaffirms RHB Islamic Bank's AA2/P1 ratings

KUALA LUMPUR (Dec 2): RAM Ratings has reaffirmed RHB Islamic Bank Bhd's respective long- and short-term financial institution ratings, at AA2 and P1; the long-term rating has a stable outlook.

It said on Friday the reaffirmed ratings mirror those of its parent and the core entity within the RHB CAPITAL BHD [] universal-banking group that is RHB Bank Bhd, which carries AA2/Stable/P1 ratings.

RHB Islamic recorded a robust gross financing growth of 92.2% for the past 18 months up to end-June 2011.

Due to the expanded but still largely unseasoned financing base, the bank's gross impaired-financing (GIF) ratio had eased to 5.3% as at the same date (end-December 2010: 7.0%), albeit still high relative to its rated peers.

RHB Islamic's weak asset quality mainly stems from its working-capital portfolio, which includes sizeable exposures to two troubled Middle-Eastern companies.

As at end-June 2011, the bank's portfolio of impaired financing for residential property - which had a high GIF ratio of 7.1% - represented its second-largest GIF exposure. The strong financing growth had also elevated its financing-to-deposits ratio to 99.7% as at end-June 2011 (end-December 2010: 87.6%).

Underpinned by stable net financing income, coupled with lower financing-loss provisions on the Middle-Eastern exposures, RHB Islamic's pre-tax profit improved slightly in FYE Dec 31, 2010.

The bank's tier-1 and overall risk-weighted capital-adequacy ratios were shored up to approximately a respective 11.6% and 12.9% (end-June 2011: 10.5% and 11.8%) via RM250 million capital injection by its parent on ''Nov 10, 2011.

Bursa Malaysia wins 4 awards in IR Global Rankings

KUALA LUMPUR (Dec 2): BURSA MALAYSIA BHD []'s exemplary best practice for corporate governance and online annual report structure saw it clinching four international awards in the 13th annual edition of the IR Global Rankings (IRGR).

It said on Friday the awards were 'Outstanding Corporate Governance in Asia Pacific', 'Best Ranked Corporate Governance by Industry (Financials)' and 'Best Online Annual Report in Asia Pacific' for 2011. Bursa Malaysia also won the bronze award for investor relations website in Asia Pacific.

Bursa Malaysia chief executive officer Datuk Tajuddin Atan described the international recognitions as an honour as the stock exchange operator was a proponent of sound corporate governance and investor relations practices.

'They are a testament of our steadfast commitment to embody the values of accountability, integrity, transparency and governance in our business operations.

'As we aspire further towards building an exchange of quality, these awards are a reminder of our contribution to the development of good corporate governance and investor relations practices in the country,' Tajuddin said.

To recap, the IRGR is the most comprehensive ranking system for investor relations website, online annual report, corporate governance practices and financial disclosure procedures.

The ranking is based on extensive technical proprietary research of publicly traded companies through a clear and transparent methodology. The ranking is supported by key global institutions such as Arnold & Porter; KPMG; MZ and Sodali.

More than 600 companies from over 30 countries participated in the 2011 edition of the IRGR.

Bursa Malaysia said participants were benchmarked against companies in the global and Asia Pacific region in four main categories comprising 'Best Ranked IR Website', 'Best Ranked Online Annual Report', 'Best Ranked Financial Disclosures Procedures' and 'Best Ranked Corporate Governance Practices'.

Last year, Bursa Malaysia won awards for 'Outstanding Corporate Governance in Asia Pacific' and 'Best Online Annual Report in Asia Pacific'.


Proton up amid cautious market on takeover rumours

KUALA LUMPUR (Dec 2): Shares of PROTON HOLDINGS BHD [] advanced amid a cautious market on Friday as speculation of its takeover lured traders, especially after Daihatsu Motor Co Ltd of Japan reiterated its rejection of a Proton-Perodua merger.

At 3.05pm, Proton was up 34 sen to RM3.44 with 7.63 million shares done.

The FBM KLCI was fluctuating in the positive and negative zones after the early spurt. The 30-stock index was just 0.01 of a point up at 1,485.27. Turnover was 960 million shares valued at RM700.96 million. There were 256 gainers, 372 losers and 287 stocks unchanged.

Meanwhile, The Edge Financial Daily reported on that Daihatsu, a key shareholder of Perodua, was standing firm against the idea of a merger between Perodua and Proton.

Daihatsu president Koichi Ina was quoted saying both companies have very different cultures and product lines and it's better to keep the individuality.

On Nov 29, UOB Kay Hian Research Malaysia upgrade Proton to a Hold from Sell previously raised its target price to RM3.05, after imputing a 15% discount (vs 30% previously) to RNAV.

'Should Proton be able to dispose the loss-making Lotus Group, every RM100 million raised from this potential disposal could add 20 sen/share to Proton's RNAV,' it said.

The research house said there was some truth to the constant speculation of Proton's impending takeover, after seeing Proton's somewhat bullish share price action (uptrend but with high volatility) over the past two weeks, recent consolidation in the auto industry (MBM Resources buying Hirotako), ongoing reforms by ailing GLCs (eg Malaysia International Shipping Corporation (MISC) has just announced its decision to cease its liner operations, once thought to be a 'sacred cow').

SYF Resources jumps, active trade despite recent query

KUALA LUMPUR (Dec 2): SYF RESOURCES BHD []'s shares and warrants jumped in active trade on Friday as speculators chased up the securities after the recent announcement that it was venturing into property development.

At 3.24pm, SYF was up 15.5 sen to 63.5 sen with 41.69 million shares done while SYF-WA surged 14.5 sen to 41.5 sen with 66.59 million units done.

The FBM KLCI was down 1.66 points to 1,483.60. Turnover was 1.07 billion shares valued at RM774.01 million. Declining stocks beat advancers 398 to 261 while 278 counters were unchanged.

On Nov 14, Bursa Malaysia Securities had queried the board by over the sharp rise in the volume and price.

In a response, SYF said it was buying 3.92 ha of freehold agriculture land in Semenyih, Selangor'' for RM5.06 million while the open market value was RM4.89 million using the comparison method of valuation.

'The property which has been zoned for industrial use, is located off the Jalan Sungai Lalang main road and adjoins the existing newly completed Semenyih Hi-Tech Industrial Park. As the surrounding area is already developed with several industrial PROPERTIES [], the property has good potential for conversion and development into an industrial park,' the SYF board said.

GLOBAL MARKETS-Stocks, euro post weekly gains on cbank fix, euro eyed

HONG KONG (Dec 2): Asian stocks are set for their first weekly rise in a month buoyed by coordinated central bank actions, while the euro held on to hefty gains before European policymakers make a fresh stab to tackle its crisis at a summit next week.

Most Asian markets succumbed to some profit-taking on Friday after Thursday's jump on caution ahead of monthly U.S. payrolls data due later in the day and an important European summit on Dec. 9.

European shares are set to open lower with financial spreadbetters predicting that Britain's FTSE 100 would open 0.6 percent up, Germany's DAX would gain 0.5 percent, and France's CAC-40 would rise 0.6 percent.

While the move by major central banks to together cut the cost of funds in money markets led to a relief rally in stocks and currencies this week, the undertone remains subdued as investors seek a more permanent resolution to Europe's crisis.

"We're in consolidation mode but its basically down to the non-farm payrolls today and then back to Europe next week," said Christian Keilland, head of trading at agency brokerage BTIG in Hong Kong.

"And the propensity of Europe to drop the ball on these is huge," he said. "Funds that are flat to down this year are probably going to scramble and try push things higher but its going to be difficult."

European Central Bank President Mario Draghi is urging progress towards a new euro-zone fiscal program and is willing to act more aggressively, while the leaders of France and Germany are working hard at a compromise.

Stock indices in Asia slipped after Thursday's bounce. Hong Kong, Shanghai and Korea trended lower while MSCI's broadest index of Asia Pacific shares outside Japan edged lower after jumping more than 4 percent on Thursday. For the week it is up more than 8 percent.


While the coordinated action by central banks pushed dollar LIBOR rates down for the first time in more than four months, traders said more steps need to be taken to thaw the spreading freeze in money markets.

Even as London interbank offered rates for three-month dollars fell to 0.52722 percent on Thursday from 0.52889 percent in risky assets, its first decline since July 22, some traders used the bounce as a selling opportunity.

The rising cost of dollar funds have sapped demand for Asian credits and hurt issuance going into the year end period.

Traders said borrowing via these new swap windows would be small due to a variety of factors such as the decline in external liabilities of euro area banks, the stigma associated with borrowing from the ECB and a lack of eligible collateral among banks, which may be addressed in next week's euro summit.

"It does feel a little better but we are seeing sellers into the strength," said a Singapore-based trader with an Asian bank. "No one is massively in a risk on mode at the moment."

In credit markets, spreads on the Asia ex-Japan iTraxx investment grade index held around 200 basis points compared to 206 bps in the previous session.

In currencies, the euro struggled to extend its chunky gains of this week, with traders focused on the closely watched U.S. non-farm payrolls report due later on Friday.

Due at 1330 GMT, the labour data is expected to show an increase of 122,000 jobs and a steady unemployment rate of 9.0 percent. A positive surprise is likely to underpin risk sentiment, while a weaker-than-expected outcome could prompt investors to take more profits on recent gains.

U.S. Treasury prices extended declines with ten-year yields trading around 2.09 percent, above a 1-1/2 month low of 1.89 percent hit last week.

Spot gold traded broadly flat around $1,740 per ounce while U.S. crude futures dipped slightly to around $100 a barrel

PLUS to be suspended Dec 8 for dividend distribution

KUALA LUMPUR (Dec 2): Trading in the securities of PLUS EXPRESSWAYS BHD [] will be suspended from Thursday, Dec 8 for the distribution of the cash proceeds.

A Bursa Malaysia circular on Friday said the suspension was from distribution following the disposal of the businesses, assets and liabilities via a special dividend and selective capital reduction and repayment.

Under the distribution, PLUS shareholders, other than the Employees Provident Fund Board, UEM Group Bhd and Khazanah Nasional Berhad, will be entitled to receive RM4.45 for each PLUS share held on the entitlement date.

Muted gains on KLCI as profit taking sends Asian markets lower

KUALA LUMPUR (Dec 2): Gains on the FBM KLCI were muted at the mid-day break on Friday, while most Asian markets fell as investors took profit ahead of the US employment data set to be released later in the day.

Although Asian stocks are poised for their first weekly rise in a month buoyed by coordinated central bank actions, the release of mixed economic data from the United States and China spooked some investors and profit taking started chipping off the gains at some of the regional markets.

The FBM KLCI was up 1.86 points at 1,487.12 at the mid-day break. Gainers trailed losers by 234 to 332, while 277 counters traded unchanged. Volume was 810.72 million shares valued at RM541.42 million.

The ringgit strengthened 0.31% to 3.1301 versus the US dollar; crude palm oil futures for the third month delivery fell RM10 per tonne to RM3,048, crude oil slipped 7 cents to US$100.13 while gold fell US$2.13 an ounce to US$1,742.70.

At the regional markets, Japan's Nikkei was up 0.27% to 8,620.25.

Elsewhere, the Shanghai Composite Index lost 1.44% to 2,352.52, Taiwan's Taiex fell 0.94% to 7,111.55, Singapore's Straits Times was down 0.65% to 2,743.84, Hong Kong's Hang Seng Index fell 0.49% to 18,909.07, and South Korea's Kospi lost 0.30% to 1,910.36.

On Bursa Malaysia, Nestle was the top gainer at the mid-day break and was up 60 sen to RM52.80; Dutch Lady gained 30 sen to RM24.70, Proton up 29 sen to RM3.39, Tradewinds PLANTATION []s 23 sen to RM4.15, Panasonic, HLFG and Harvest Court 20 sen each to RM19.94, RM11.78 and RM1.10 respectively, while Petronas Dagangan and Petronas Gas added 18 sen each to RM16.80 and RM13.50.

Among the decliners, Aeon Credit fell 20 sen to RM6.10, Shangri-La and Genting Plantations down 13 sen to RM2.25 and RM8, Inno 12 sen to RM1.23, SHL and BAT fell 10 sen each to RM1.15 and RM48, Timwell down nine sen to 76 sen, while PPB and TSH lost eight sen each to RM16.50 and RM1.91.

The actives'' included Wijaya warrants, DPS Resources, SYF Resources, Compugates and Tiger Synergy.

Xingquan confident of continuing double digit growth, says CEO

KUALA LUMPUR (Dec 2): Xingquan International Sports Holdings Ltd is confident that it can maintain its double digit growth in revenue for FY12 ending June 2012, said its chief executive officer Wu Qingquan.

Speaking after the company's third AGM on Friday, Wu said its compound annual growth rate from 2006 to 2011 was 39%.

'Based on the recently concluded spring and summer sales order, we got about a 10% increase in sales order from our distributors,' he said.

On its expansion plans, Wu said its immediate target was to add another 200 sales outlet in China from 2300 outlets currently, for its outdoor casual wear brand, GERTOP.

Wu said it will spend about RMB25 million in subsidies for the 200 sales outlets.

Wu added that Xingquan will its expand production capicity for outdoor shoes by 20% to 30 million pairs of shoes from 24 million pairs of shoes currently.

Moving forward, Wu expects its apparel division to be the main driver in revenue for the company.

In FY11, apparels contributed to 28% to Xingquan's revenue, while shoes (40%), and soles (19%).

Xingquan is involved in manufacturing of shoes and shoe soles, and the sale of shoes, shoe soles, apparels and accesorries. Its main products are outdoor sports shoes and apparels.

Xingquan became the first conmpany from China to be listed on Bursa on July 10, 2009.


TSH falls after 1-for-1 bonus, OSK Research FV RM2.21

KUALA LUMPUR (Dec 2): Shares of TSH RESOURCES BHD [] fell to a low of RM1.90 on Friday after its bonus shares, which were issued on a one-for-one basis, went ex.

At 12.08pm, it was down eight sen to RM1.91. There were 513,100 shares done at prices ranging from RM1.90 to RM2.01.

OSK Research said that following its calendar year 2012 crude palm oil (CPO) price assumption upgrade to RM3,000 per tonne, it was raising its FY12 earnings forecast for TSH by 10.4% and revising upwards its fair value to RM2.21.

'The company possesses one of the youngest tree age profiles among planters under our coverage, but its valuations are starting to appear a little rich following its recent strong price appreciation. Still a BUY at the moment with a potential 10.8% upside,' it said.


KLCI trims gains as Asian markets pause

KUALA LUMPUR (Dec 2): The FBM KLCI trimmed its gains at mid-morning on Friday, in line with the breather at the key regional markets, following the overnight dip at Wall Street ahead of the US employment data due out later in the day.

Asian stocks paused on Friday, a day after posting their biggest single-day rise in more than two months, as investors cashed in some gains and looked ahead to a key European summit next week for more progress on tackling the euro-zone debt crisis, according to Reuters.

The FBM KLCI was up 0.94 point to 1,486.20 at 10am.

Gainers trailed losers by 164 to 181, while 203 counters traded unchanged. Volume was 289.71 million shares valued at RM183.62 million.

At the regional markets, Japan's Nikkei 225 was up 0.50% to 8,640.52.

Elsewhere, the Shanghai Composite Index fell 1% to 2,362.97, Hong Kong's Hang Seng Index lost 0.32% to 18,941.52, Taiwan's Taiex was down 0.43% to 7,147.70, Singapore's Straits Times Index lost 0.47% to 2,749.00 and South Korea's Kospi shed 0.04% to 1,915.33.

RHB Research in its third quarter earnings review said that looking forward, global economic conditions were still unusually fluid, and that the US economy was still struggling and the euro debt crisis is approaching a critical stage.

The research house said in a note Dec 2 that a series of measures had been introduced to avert a liquidity crunch, but not the underlying problems of insolvency and uncompetitive economies.

Whether the ECB will bow to market pressures and be a lender of last resort remains to be seen, it said.

Meanwhile, Eurozone economy had started to contract and without a growth strategy, the risk is a deeper and protracted recession, it said.

'In our view, investors may still be too sanguine on the damaging impact from the euro debt crisis and a deeper recession in the Eurozone would leave few countries unscathed,' it said.

RHB Research said that as a result, the local equity market would still be held hostage to external developments and will likely remain volatile.

'Given a number of significant risks in the horizon, we continue to ascribe a lower PE valuation of 13 times for the local market, translating into a FBM KLCI target of 1,430 for end-2012, slightly higher than our previous target of 1,385 on account of an upward revision in earnings.

'Given the challenging external environment, we continue to advise caution and prefer resilient and defensive stocks to ride through the volatility,' it said.

On Bursa Malaysia, Nestle was the top gainer at mid-morning and was up 60 sen to RM52.80; Dutch Lady gained 30 sen to RM24.70, Tradewinds PLANTATION []s 27 sen to RM4.19, KLK 22 sen to RM22.02, Panasonic 20 sen to RM19.94, Proton 17 sen to RM3.27, Petronas Dagangan 16 sen to RM16.78, HLFG 10 sen to RM11.68 and F&N added eight sen to RM18.10.

Decliners included Hong Leong Bank, Maybank, Public Bank, Atlan, Bumi Armada, Ekovest and IOI Corporation.

Meanwhile, the actives included Compugates, Sycal, MUI Industries, Wijaya warrants, MBF Holdings warrants and DPS Resources.

CIMB Research maintains Hold on Tenaga, TP RM6.47

KUALA LUMPUR (Dec 2): CIMB Equities Research said that investors should be cautious about the compensation for TENAGA NASIONAL BHD [] for the gas shortage as it was only an ad hoc payment.

It said on Friday that compensation for the gas shortage was good news as Tenaga's financial position has deteriorated substantially.

'But being an ad hoc payment rather than the proper cost pass-through mechanism that Tenaga needs, it leaves Tenaga vulnerable to future gas supply shocks.

"We maintain HOLD and our target price of RM6.47, based on 1.1 times price-to-book value,' said CIMB Research.

Tenaga up on Petronas, government plan to share fuel cost burden

KUALA LUMPUR (Dec 2):'' TENAGA NASIONAL BHD [] shares rose in early trade on Friday after the utility company ''received a letter from the government on that provides a fuel cost sharing mechanism to address the utility's increased cost due to the gas shortage.

At 9.05am, Tenaga was up 12 sen to RM5.80 with 339,800 shares done.

Tenaga said on Dec 1 that the letter provided that Tenaga, Petronas and the government would each equally share the differential cost incurred by Tenaga due to dispatching on alternative fuels and also imports, from Jan 1, 2010 until Oct 31, 2011 amounting to approximately RM3.07 billion.

MIDF Research in a note Dec 2 said it viewed this development as positive for Tenaga with compensation of an estimated RM2.0 billion or 36.6 sen per share between the government and Petronas as well as all future costs related to any gas curtailment.

The research house said that with the fuel cost sharing mechanism in place, Tenaga was now eased from the burden of high fuel costs.

MIDF Research said it therefore had adjusted upwards its FY12f earnings by 10% to account for the fuel compensation.

'Based on our post FY12f earnings adjustment, we are revising our target price to RM6.70 (previously RM6.00) based on DCF valuation with WACC maintain at 8.8%.

'Hence, we upgrade our recommendation from Neutral to Buy,' it said.

RHB Research maintains underperform on Affin, FV RM2.05

KUALA LUMPUR (Dec 2): RHB Research Institute is maintaining its fair value of RM2.05 and Underperform call on AFFIN HOLDINGS BHD [].

It said on Friday that Affin's management guided for loan growth of 13% to 14% this year, in line with its annualised loan growth of 12.9%.

'For 2012, focus is on preserving asset quality and capital and as such, loan growth is expected to slow down further to 9%-10%,' it said.

RHB Research said that the net interest margins (NIM) remain under pressure due to competition on both lending and deposit gathering, but Affin's management thinks 3Q11 NIM could have reached bottom. Management hopes to hold NIMs stable ahead.

'While recoveries were strong in 3Q, this was helped by recoveries from some large corporate accounts. Going forward, such recovery levels are unlikely to be sustainable,' the research house said.

RHB Research maintains Outperform on Petronas Gas, FV RM14.50

KUALA LUMPUR (Dec 2): RHB Research is maintaining its Outperform on Petronas Gas with a fair value of RM14.50 following Petronas' consideration of a third LNG regasification plant in Lumut, Perak.

News reports on Friday said the third plant, if built, would address the shortage of gas supply to the power sector and industrial users in Peninsular Malaysia.

RHB Research said this proposal would be long-term positive for Petronas Gas as it ensures that the LNG business segment will continue to expand beyond the first LNG regasification plant in Melaka that is expected to come onstream July to August 2012.

Under the proposal, Petronas Gas is will manage the distribution via its pipelines. At present, Petronas Gas is not involved in the second plant in Sabah.

Affin Research maintains Reduce on Axiata, lowers TP to RM4.39

KUALA LUMPUR (Dec 2): Affin Investment Bank Research is maintaining its Reduce recommendation on Axiata and lowered the target price to RM4.39.

It said on Friday it had revised lower its sum-of-parts derived target price to RM4.39 because of the earnings downgrade (higher capex, lowered Celcom sub assumptions), and maintain our Reduce rating on the stock.

'In our view, stock lacks any re-rating catalyst and is pricey at 16 times FY12 EPS, considering that dividend yields are merely 2%.

'Moreover, our forecast implies a core net profit decline of 3.3% in FY11, but rising to +5.2% on-year in FY12, although not compelling enough to warrant this as a growth stock. At our target price, stock trades at a more compelling 14 times FY12 EPS,' Affin Research said.

Nikkei edges up, all eyes on key level

TOKYO (Dec 2): The Nikkei average edged up on Friday, with investors focused on whether the benchmark can hold above its 25-day moving average ahead of crucial U.S. employment data due later in the day.

The benchmark Nikkei rose 0.1 percent to 8,602.96, climbing above the 25-day moving average around 8,577. The broader Topix index gained 0.2 percent to 741.52. ' Reuters


Seoul shares slip after rally; tech issues ease

SEOUL (Dec 2): Seoul shares retreated on Friday after sharp gains in the previous session, with investors growing wary ahead of a U.S. job report.

Falls were led by TECHNOLOGY [] issues and refiners like Samsung Electronics and S-Oil, which lost 1.2 percent and 1.3 percent respectively.

The Korea Composite Stock Price Index (KOSPI) was down 0.08 percent at 1,914.67 points as of 0003 GMT. - Reuters

HDBSVR sees Tenaga giving KLCI a boost amid cautious mkt

KUALA LUMPUR (Dec 2): Hwang DBS Vickers Research expects power giant TENAGA NASIONAL BHD [] (TNB) to give the FBM KLCI a boost on Thursday amid a more cautious market after the weaker overnight close on Wall Street.

The research house said TNB would benefit from the fuel cost sharing mechanism with Petronas and the government, which would translate to substantial cost savings.

As for the broader market, HDBSVR said the KLCI after posting cumulative gains of 53.7 points or 3.8% over three straight days, the benchmark FBM KLCI could swing sideways with a marginal downward bias ahead.

'The immediate support and resistance levels are currently seen at 1,475 and 1,500, respectively,' it said.

As for Wall Street, the research house said the US market gave a mixed performance last night in the absence of more market-stimulating news.

Key U.S. equity indices ended between -0.2% and +0.2% following a three-day winning streak.

As for Bursa Malaysia, it said TPC Plus shares may see action after a local newspaper speculated Huat Lai Resources could announce by the end of next month a mandatory general offer for TPC Plus at not less than 30 sen per share.

CIMB Research has technical buy on 1 Utopia at 9 sen

KUALA LUMPUR (Dec 2): CIMB Equities Research has a technical buy on 1 Utopia at 9.0 sen at which it is trading at a price-to-book value of 0.7 times.

It said on Friday 1 Utopia is trying to penetrate the triangle resistance. If it succeeds, there is a good chance that prices may re-rate towards 11 sen and 14 sen.

'However, only risk takers should look at this stock due to its penny-nature. Expect great volatility,' it said.

CIMB Research said the MACD is poised for a positive crossover, suggesting that the bulls are slowly making a comeback. RSI too has hooked upward. These positive readings further reinforce our short term positive view on the stock.

'As long as prices stay above the 7.5 sen levels, we will continue to stick with the bull's camp. However, traders may want to put a stop at between 8.0 sen and 7.5 sen depending on one's risk appetite,' it said.

CIMB Research has technical buy on Alliance Financial Group at RM3.65

KUALA LUMPUR (Dec 2): CIMB Equities Research has a technical buy on ''Alliance Financial Group (AFG) at RM3.65 at which it is trading at a FY13 price-to-earnings of 10.7 times and price-to-book value of 1.6 times.

It said on Friday that AFG broke out of its consolidation triangle pattern on Thursday on rising volume.

'We anticipate the next up leg to lift prices towards the RM3.80 and RM4.00 resistances.

'Technical landscape is improving. MACD signal line has staged a positive crossover while RSI has also hooked upward,' it said.

CIMB Research said that aggressive traders may start to nibble now. However, always place a stop at below the resistance-turned-support channel (now at RM3.57).

US STOCKS-Wall St slips, eyes Friday's jobs report

NEW YORK (Dec 1): U.S. stocks treaded water on Thursday after the previous day's massive gains, but traders worried that recent strong data could set the market up for a selloff should Friday's jobs report fall short of hopes.

Both the Dow and the S&P 500 dipped and the Nasdaq ended with a slight gain following Wednesday's rally of more than 4 percent on an agreement from central banks to provide cheap dollar loans to struggling European banks.

Sentiment was underpinned by stronger-than-expected figures on U.S. factory activity, which came one day after private-sector payroll data also exceeded forecasts. Further gains could be sparked by a significant jump in November payrolls.

"At this point in time we are definitely building for a better payrolls number," said David Lutz, a trader at Stifel Nicolaus Capital Markets in Baltimore.

The U.S. economy is expected to have added 122,000 jobs in November. Some investors think even a number slightly better than that from the Labor Department won't be enough to justify more buying.

"I can't believe people are getting excited about 150,000 (new jobs) four years into this economic malaise," said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

Despite the importance of the payrolls figure, the market will still focus on the borrowing costs of euro-zone nations. Spanish and French government bond yields fell after well-bid auctions on Thursday, but relief may be brief with no solution for the euro zone's debt crisis in sight.

The financial sector, the strongest gainer on Wednesday, gave back some of its gains. The S&P's financial index slid 0.95 percent.

"Until there's a proper resolution among European policy makers, wild fluctuations in equity markets will continue forward," Morganlander said.

The Dow Jones industrial average fell 25.65 points, or 0.21 percent, to 12,020.03. The S&P 500 lost 2.37 points, or 0.19 percent, to 1,244.59. The Nasdaq Composite gained 5.86 points, or 0.22 percent, to 2,626.20.

All three indexes climbed more than 4 percent in Wednesday's broad rally on heavy volume, with the Dow industrials gaining almost 500 points.

In the latest better-than-expected data, the pace of growth in the U.S. manufacturing sector picked up in November to its strongest since June and new orders rose, according to the Institute for Supply Management.

However, new claims for unemployment insurance rose last week in a reminder that any healing in the country's battered labor market will be slow.

Barnes & Noble Inc plummeted 16.3 percent to $14.59 on more than twice its recent daily average volume after it reported a quarterly loss. The bookseller was hurt by the cost for keeping competitive with Inc.

On the upside, Yahoo Inc gained 3.3 percent to $16.23 after news that Blackstone Group LP and Bain Capital, along with Asian partners, were preparing a bid for the Internet company.

US Airways Group Inc jumped 4.7 percent to $4.94 after Barclays Capital upgraded its rating on the stock. An index of airline stocks rose 1.8 percent.

About 6.8 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the current daily average of 7.97 billion shares traded per day.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 3 to 2, and despite the overall gains on the Nasdaq just under 7 shares fell for every four that rose. ' Reuters


U.S. SEC chair says probing MF Global accounting

WASHINGTON (Dec 1): The U.S. Securities and Exchange Commission is probing the accounting treatment that helped mask MF Global's exposure to risky foreign sovereign debt, the head of the agency said on Thursday.

"We are investigating very carefully both the accounting treatment and the disclosure by the firm," SEC Chairman Mary Schapiro told a Senate Agriculture Committee hearing in what were her most extensive comments to date about the SEC's role in the MF Global probe.

"We're pursuing an active investigation with the potential for enforcement action at the end of the process," she also told the panel during her testimony.

In addition, she said the SEC, along with the Public Company Accounting Oversight Board which polices auditors, are both "looking very closely" at what role, if any, MF Global's auditor PricewaterhouseCoopers may have played.

Commodity Futures Trading Commission Chairman Gary Gensler and Schapiro were both on hand to testify on Thursday at the first major congressional hearing about MF Global since it filed for bankruptcy on Oct. 31.

MF Global collapsed after the firm was forced to reveal that it had made a $6.3 billion bet on European sovereign debt, spooking investors. An effort to sell the firm failed, partly because of the revelation that hundreds of millions of dollars in customer money was not where it should have been.

The CFTC is the primary regulator in charge of the search for the missing money, which so far has only been money from futures accounts. The Department of Justice, other regulators and the trustee overseeing the bankruptcy proceeding are also on the hunt for the missing money.

In the months leading up to MF Global's collapse, the first regulator to flag problems was the Financial Industry Regulatory Authority, which self-polices securities brokers. In June, FINRA raised concerns that the firm had a substantial position in European sovereign debt and was not appropriately holding capital against it.

FINRA also questioned whether it was appropriate for MF Global to use Generally Accepted Accounting Principles to park the exposure off balance sheet.

MF Global was financing its European sovereign debt bets through "repo-to-maturity" transactions, which allowed it to move the exposure off its balance sheet, even though the firm still faced enormous risk in the case of a default.

FINRA and the SEC ultimately forced MF Global to increase its capital. The firm later disclosed the capital infusion in September.

Schapiro said regulators are exploring whether any new regulations are in order in the wake of MF Global's collapse, including possible accounting changes.

She noted that the Financial Accounting Standards Board, which sets U.S. accounting standards, recently decided that repo-to maturity is the only kind of repo transaction that qualifies for off-balance sheet treatment. But in light of MF Global's demise, regulators are now rethinking that approach.

"We are talking to FASB about whether that is a policy that ought to be changed," she said. "They did improve the disclosure around it, but there is a question I think about whether repos-to-maturity should be included on the balance sheet."

At least one senator seemed to think that was a good idea.

"That is a loophole so big you could drive a Mack Truck through it," said Democratic Senator Kent Conrad. "If that's not closed down, we really got to ask ourselves what we're doing."

Schapiro said MF Global did disclose its net exposure to sovereign debt in a regulatory filing. The company also disclosed its gross exposure, though "not as clearly," she said. She told the lawmakers the SEC is looking at whether there was sufficient disclosure surrounding the repos, as well as "the hedges that were expiring" and the "window-dressing."

"All of those issues are under investigation," she said.

As for potential regulatory fixes, she said the SEC already proposed a rule earlier this year that would require brokerages that hold custody of customer money to undergo additional PCAOB audits. That rule, when finalized, will help "give us another set of eyes on the financial responsibility compliance of the firms," she said.

She also was hopeful the SEC will soon approve a rule proposal by FINRA that would require additional financial reporting so the brokerage regulator can beef up its monitoring. - Reuters

GLOBAL MARKETS-Stocks mostly decline after big gain; euro up

NEW YORK (Dec 1): Stocks on Thursday pulled back from a sharp rally the previous day, when markets reacted to a liquidity move by the world's major central banks, while the euro edged higher for a fourth day.

The move by the banks to offer cheap dollar loans for struggling European banks helped to soothe investor worries about a global financial crisis. For more see .

Their action also pushed the cost of interbank lending lower for the first time since July 22.

London interbank offered rates for three-month dollars fell to 0.52722 percent from 0.52889 percent. The last time the LIBOR rate fell, it was at 0.2521 percent.

Friday brings the U.S. monthly jobs report, the most widely watched U.S. economic indicator. After a series of stronger-than-expected economic reports, a less-than-stellar jobs report could disappoint some investors.

A report on Thursday showed the pace of growth in the U.S. manufacturing sector picked up in November to its strongest level since June.

"At this point in time we are definitely building for a better payrolls number," said David Lutz, a trader at Stifel Nicolaus Capital Markets in Baltimore.

The U.S. economy is expected to have added 122,000 jobs in November.

On Wall Street, the Dow Jones industrial average ended down 25.65 points, or 0.21 percent, at 12,020.03. The Standard & Poor's 500 Index was down 2.38 points, or 0.19 percent, at 1,244.58. The Nasdaq Composite Index gained 5.86 points, or 0.22 percent, at 2,626.20.

The MSCI world equity index was up 0.4 percent, well off the day's high, while European equities ended lower after a choppy trading session.

On Wednesday, the Dow registered its best day in point and percentage gains since March 2009.

According to a Reuters poll, U.S. stocks are expected to end next year with modest gains, but the range of predictions varies widely due to the uncertainty surrounding the euro zone debt crisis.

The S&P 500 is expected to rise about 7.5 percent from Wednesday's close to 1,340 by the end of next year, according to a median forecast from over 40 respondents polled over the last week.


The euro rose against the dollar, bolstered by generally successful Spanish and French debt auctions. The euro reached a high of $1.3521, according to Reuters data.

Overseas, Spain sold 3.75 billion euros of debt in three maturities at the top of the targeted range, although its cost of borrowing was the highest in 14 years and at levels seen as unsustainable for public finances. France also found demand for its sale of 4.35 billion euros of debt in several maturities.

Still, investors were said to be consolidating their positions ahead of the jobs report.

Headlines from Europe have caused much volatility in markets in recent months, with the region's debt crisis fueling worries the problems could escalate into a global financial crisis.

Although investors cheered Wednesday's joint central bank action, they are worried that the debt crisis remains unresolved, with little time for politicians to find a solution.


Some gauges of money market strain stayed near end-2008 levels. A substantive solution to the debt crisis is needed before a return to more normal lending, analysts said.

The European Central Bank signaled on Thursday it stood ready to act more aggressively to fight Europe's debt crisis if leaders in the 17-nation euro zone agree next week on tighter budget controls. Euro zone leaders meet on Dec. 9.

U.S. government debt prices fell. Benchmark 10-year Treasury notes traded 9/32 lower in price to yield 2.11 percent, up from 2.08 percent late Wednesday and from 1.89 percent just over a week ago. Yields reached just above 2.14 percent to the highest in a month.

In the oil market, Brent crude oil futures fell more than 1 percent.

Goldman Sachs warned of a possible sharp drop in demand on increasing signs of economic slowdown in Europe. Brent crude fell $1.49 to $109.03 a barrel. In London, crude for January delivery settled at $108.99 a barrel, down $1.53.

Gold fell in light trade, snapping a three-day rally, as the bullion market took a breather after the previous session's sharp gains.

Gold prices were nearly flat after earlier rising to their highest in two weeks as the central banks' move gave investors confidence to cut their holdings of cash.

Gold fell 0.2 percent to $1,742.49 an ounce, having earlier touched a two-week high of $1,754.- Reuters

GLOBAL ECONOMY-Global factories stall, IMF to cut GDP forecasts

WASHINGTON/LONDON ( Dec 1): Manufacturing activity contracted in the euro zone and much of Asia in November, pointing to a global slowdown even as growth in the United States appears to be shifting into higher gear.

Thursday's weak manufacturing surveys from the two regions underscored the ripple effects from Europe's debt crisis, which has caused turmoil in financial markets.

The United Nations sharply downgraded its forecast for global growth next year, and the International Monetary Fund said it would cut its projections next month.

"If you were to ask me it (global economic outlook) will be revised downwards, undoubtedly," IMF Managing Director Christine Lagarde told reporters in Brasilia. "The global economic outlook will be lower, and in certain parts much lower than what we had initially envisaged."

The Global Manufacturing PMI, produced by JPMorgan with research and supply management organizations, fell to 49.6 in November from October's 49.9 -- evidence of an overall contraction in world factory activity.

In the euro zone, factory activity shrank at its fastest pace in two years, reinforcing the view that the debt-strapped region was already in recession. British manufacturing also contracted at the fastest pace in two years, raising the risk that the UK economy may suffer the same fate.


But the United States is charting a different path. U.S. manufacturing regained momentum last month, boosted by strong growth in new orders and exports.

That added to a raft of data, including retail sales and industrial production, indicating an acceleration in economic activity in the fourth quarter.

"The key risks remain external. The euro zone is tipping into recession, and China is slowing, bad news for export prospects," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. "But if the euro zone financial crisis can be contained, there's enough momentum on the domestic side to keep the U.S. moving forward."

The UN slashed its forecast for global growth next year to 2.6 percent from a 3.6 percent prediction made just six months ago. It said it expected the world economy to "muddle through" in 2012, propelled by higher growth in developing economies, but that "risks for a double-dip recession have heightened."

China's official purchasing managers' index showed factory activity shrank in November for the first time in nearly three years, while a similar Indian PMI showed factory growth nearly stalled.

Both China and Brazil eased monetary policy on Wednesday. That came amid coordinated action from the world's biggest central banks to try to prevent another credit crunch by lowering the cost of dollar swap lines.

"The big picture here is this is an unwinding of a 20-year debt bubble," said Peter Dixon, global financial economist at Commerzbank. "It's going to be painful, and it's going to be nasty. What policymakers are aiming for is a smoothing of the path."


But policymakers appear to be getting more worried.

Zhu Guangyao, China's advance coordinator to the Group of 20 talks and a vice finance minister, said heavily indebted countries had limited scope to act, which will make it harder to sustain global growth as the European debt saga drags on.

"The current crisis, to some extent, is more serious and challenging than the international financial crisis following the fall of Lehman Brothers," Zhu said. "It's keenly important for countries around the world to work together in the spirit of 'co-operating in the same boat'," he added.

After the Lehman bankruptcy, G20 countries committed trillions of dollars to boosting growth and backstopping banks, and central banks cut interest rates to record lows.

But rates are still near zero in the United States, Japan and Britain, and public finances have deteriorated around the world, leaving less space to counter a European downdraft.

Fast-growing emerging markets such as China, Brazil and India led the recovery in 2009, and they are still growing far more rapidly than most developed economies. But they are not immune to weak demand from Europe or the United States.

The weaker-than-expected China PMI reading came one day after Beijing lowered banks' reserve requirements by 50 basis points to try to ease credit strains.

Just a few months ago, inflation was the primary concern for most of Asia's economies. But Europe is the top export destination for many countries including China, so when its crisis intensified, Asia's growth prospects dimmed.

South Korea's factory activity shrank for a fourth consecutive month in November, and in Indonesia, year-on-year export growth slowed sharply in October.

India bucked the trend, reporting a pick-up in export orders, although its overall PMI dipped in November on weak domestic demand. ' Reuters


Thursday, December 1, 2011

Accept Kuok Brothers takeover offer, Jerneh Asia shareholders told

KUALA LUMPUR (Dec 1): JERNEH ASIA BHD []'s shareholders have been advised to accept the takeover offer by the group's major shareholder, Kuok Brothers Sdn Bhd, for a quicker way out of the cash-rich company that has been without a core business for a year.

OSK Investment Bank (OSK IB) Bhd, which is the independent adviser to the Kuok Brothers' offer, said on Thursday the takeover offer was preferable compared with the "uncertainty and lengthy" procedure of receiving proceeds via the route of asset disposals, capital repayment and winding up.

In arriving at its recommendation, OSK IB said it considered that Jerneh Asia was classified under PN16 and PN17 status given that it was without a core business, having disposed off its insurance business.

Last December, Jerneh Asia sold its 80% equity interest in Jerneh Insurance Bhd to ACE INA International Holdings Ltd last December for RM523.2 million cash and had distributed the proceeds in the form of dividends and capital repayments.

To recap, Kuok Brothers had on Oct 31 launched a conditional takeover offer of RM1.45 cash per share for all remaining Jerneh Asia shares it does not own and for all new Jerneh Asia shares which may be issued arising from the exercise of the outstanding warrants.

Kuok Brothers, which holds a direct 37.71% stake in Jerneh Asia, was also looking to acquire the remaining 2.96 million warrants for 45 sen apiece. Kuok Brothers and persons acting in concert (PACs) hold a combined 41.81% equity interest in Jerneh Asia, comprising 102.02 million shares.

Based on a simple calculation, Kuok Brothers ' the vehicle of tycoon Robert Kuok Hock Nien ' will have to fork out about RM207.19 million for the deal.

Jerneh Asia shares yesterday closed unchanged at RM1.43.

London Biscuits 10.25m placement shares fixed at RM1 each

KUALA LUMPUR (Dec 1): LONDON BISCUITS BHD []'s private placement of 10.25 million new shares of RM1 each has been fixed at RM1 per share.

It said on Thursday the RM1 issue price was about 22% above the five-days volume weighted average market price up to and including Nov 30 of 82 sen per share.

The placement shares represented 10% of its paid-up share capital.

S&P cuts ratings on Australia banks, others, after criteria change

(Dec 1): Standard & Poor's Ratings Services cut the ratings on five Australian banks on Thursday as a result of major changes in the criteria it uses to assess risk.

Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, National Australia Bank Ltd and Westpac Banking Corp were each cut one notch to AA minus, the fourth highest credit rating on S&P's scale.

Macquarie Group Ltd was cut by two levels to BBB, the ninth highest grade.

Standard Chartered Plc's rating was increased one level to A plus, the fifth highest rating.

The rating on Singapore bank DBS Bank Ltd was left unchanged at AA minus following the revision. Overseas-Chinese Banking Corp Ltd and United Overseas Bank were each raised by one level to AA minus.

In Japan, Nomura Holdings Inc was left unchanged at BBB plus and Sumitomo Trust & Banking Co Ltd was also left unchanged, at A plus. Resona Bank Ltd was left unchanged at A.

The Bank of East Asia Ltd was raised one level to A.

Earlier this week, S&P reduced the credit rating on 15 big banks, mostly in Europe and the United States, as part of its sweeping overhaul of its ratings criteria.

The announcement by S&P comes at a time when markets for bank debt are on edge because of the European debt crisis. It could increase already-soaring funding costs for some banks.

But S&P began warning financial markets more than a year ago that it was revising its ratings.

The overhaul is part of a broad, multi-year drive by the agency to improve its products and repair its reputation. S&P badly tarnished its image by wrongly putting triple-A ratings on securities backed by subprime mortgages. The agency is owned by the McGraw-Hill Companies Inc.

S&P officials expect the new system to allow the agency to more quickly change ratings when it sees new threats to bank funding or sees governments become less willing to bail out creditors.

The criteria are also intended to make better comparisons of banks around the world by applying consistent measurements of bank capital, S&P officials said.

Favelle Favco mulls crane manufacturing in China

KUALA LUMPUR (Dec 1): FAVELLE FAVCO BHD [] is mulling plans to manufacture cranes in China following its acquisition of a 60% stake in a Shanghai Favco Engineering Machinery Manufacturing Co Ltd for 10.8 million renminbi or RM5.33 million.

It said on Thursday it had subscribed for 10.80 million shares of 1.0 renminbi each in Shanghai Favco.

To recap, Shanghai Favco was incorporated in China on Dec 18, 2009'' with an authorised share capital of 21 million renminbi.'' It is presently dormant and plans are for it to manufacture cranes.

DRB-Hicom issues RM500m debt notes for working capital, projects

KUALA LUMPUR (Dec 1): DRB-HICOM BHD [] has issued RM500 million in nominal value of Sukuk in two tranches which would be used for working capital, projects and capital expenditure.

It said on Thursday'' the sukuk had been accorded a final rating of AA-IS by Malaysian Rating Corporation Bhd with a stable outlook.

The first tranche of the Sukuk, amounting to RM250 million in nominal value shall have a tenure of five years maturing on Nov 30, 2016.

The second tranche of the Sukuk, amounting to RM250.0 million in nominal value shall have a tenure of seven years, maturing on Nov 30, 2018.

Petronas 2Q net profit up 54% to RM18.35b from RM11.88b yr ago

KUALA LUMPUR (Dec 1): Petroliam Nasional Bhd posted net profit of RM18.35 billion for the second quarter ended Sept 30, 2011, up 54.4% from the RM11.88 billion a year ago underpinned by improved margins.

It said on Thursday its revenue was RM71.83 billion, up 26% from the RM56.99 billion a year ago on the back of higher realized prices of crude oil and condensates and other energy commodities particulary petroleum products and liquefied natural gas (LNG).

Its operating profit was RM27.11 billion, an increase of 47% from RM18.44 billion a year ago.

For the first half, its net profit increased by 50.8% to RM40 billion from RM26.51 billion in the previous corresponding period. Its revenue rose 25.3% to RM144.80 billion from RM115.54 billion on the back of higher realized prices of petroleum products, crude oil and condensates, LNG and petroleum products.

Petronas said its total assets increased from RM439 billion as at March 31, 2011 to RM472 billion following the profit generated during the quarter, net of dividend distributed to shareholders.

'Total debt to total asset ratio remains at 0.11 times,' it said.

During the period ended Sept 30, 2011, it paid a third interim dividend of RM6 billion for the financial year ended March 21, 2011. It also paid a tax exempt final dividend of RM22 billion between June and November 2011.

It also declared and paid a first tax interim dividends of RM2 billion for the financial period ending Dec 31, 2011.

According to notes to its accounts, in the second quarter ended Sept 30, its revenue of RM91.348 billion comprised of exploration and production (RM28.84 billion), gas and power (RM19.50 billion), downstream (RM39.32 billion) and corporate and others RM4.68 billion.

Petronas also said second quarter total production was 2,033 thousand barrels of oil equivalents (boe) per day compared to 2,116 thousand boe per day a year afo.

'Crude oil and condensates production decreased by 7.0% mainly caused by higher realised prices for crude oil and condensates, offset by the impact of the strengthening of the ringgit,' it said.


Tenaga, Petronas and government to share fuel cost increase

KUALA LUMPUR (Dec 1): TENAGA NASIONAL BHD [] (Tenaga) has received a letter from the government that provides a fuel cost sharing mechanism to address the utility's increased cost due to the gas shortage.

In a filing to Bursa Malaysia Securities on Thursday, Tenaga said that the letter provided that Tenaga, Petronas and the government would each equally share the differential cost incurred by Tenaga due to dispatching on alternative fuels and also imports, from Jan 1, 2010 until Oct 31, 2011 amounting to approximately RM3.07 billion.

'Presently, Tenaga is facing a higher operational cost due to the extra cost of generation arising from running the power plants on expensive alternate fuels and power import from Singapore and Thailand.

'In view of the urgency of the matter and the critical financial situation facing Tenaga, Tenaga will be liaising as soon as possible with the relevant parties to implement this mechanism,' it said.

Petronas' RM300 bln capex for 5 yrs intact, says CEO

KUALA LUMPUR (Dec 1): Petroliam Nasional Bhd's growth agenda remains intact to meet rising long term demand for oil and gas, says its president and CEO Datuk Shamsul Azhar Abbas.

He said on Thursday the RM300 billion as capital expenditure (capex) over five years was intact.

'A robust balance sheets, prudent cost and risk controls, efficient cash management and focus of our growth agenda remain key in driving superior performance,' he said.

On the global and industry outlook, Shamsul said the global economic recovery remained volatile with potential downside risks.

Among the risks were a worsening Eurozone debt crisi with the US remaining weak; weakening Asian manufacturing activity in China, South Korea and Taiwan; and continued disruption from Japan's triple disasters.

On prudent energy management reforms, Shamsul'' said subsidised gas prices which leads to an over-reliance on gas as fuel was not sustainable.

'Growing reliance on cheap gas discourages end-users from pursuing energy efficiency,' he said, warning that the bulk of tomorrow's gas requirements would be derived from imports at market prices.

'The days of abundant subsidised gas are effectively over,' he said.

Developers urged to do research before opening more malls

KUALA LUMPUR (Dec 1): The Malaysian Retailer-Chains Association (MRCA) has urged developers to do extensive research before opening additional
shopping malls, saying there is an oversupply.

Retailers have had difficulty in differentiating product offerings and in finding staff, said association secretary-general Valerie Choo.

She said it would be hard for retailers to continuously change product offerings due to too many shopping malls with the same positioning, and the lack of talented staff.

Certain recently-opened malls have an occupancy rate of below 50 per cent, which would be bad for retailers, she said.

Ten more shopping malls are set to open in the Klang Valley alone next year, which is too high for the population, she added.

"Before setting up a mall, developers need to do in-depth studies whether it is appropriate in terms of consumer needs and demographics," she said at a press conference on 'Malaysia's Most Outstanding Retailer-Chains: 50 Success Stories' book here on Thursday.

The book will be officially launched at a banquet on Dec 12 at Sunway Resort Hotel and Spa Ballroom.

MRCA council member and the event organising chairman, Datuk Liaw Choon Liang, said the book honours the contributions of outstanding MRCA members in the development of the retail-chain business in Malaysia and abroad.

He said the association aims to inspire and drive the Malaysian retail business towards greater success, adding the book would serve as a guide to the
who's who of the retail and services industry.

Copies will be placed in government agencies and corporate companies locally and globally, while limited copies will be sold at the banquet for charity, he
added. - Bernama