Wednesday, January 4, 2012

#Stocks to watch:* JCY, Dialog, AirAsia, MAS

KUALA LUMPUR (Jan 5): Despite the second day of pullback on the local stock market , especially blue chips on Wednesday, the overall market sentiment continues to be firm due to the "January effect" while fresh corporate news could stir buying interest in selected stocks at least in the short-term.

However, RHB Research Institute was cautious as due to the overhanging concerns of the second half of 2011, it was'' fearful that this could be another year of 'more of the same'.

However, it did note the possibility of two market rallies in the near term, which were the 'January effect' and 'Chinese New Year rally'.

RHB Research said in a note on Wednesday that while the January effect has been evident every year for the last 10 years (and has led to a positive annual return in seven of the 10 years), the historical data for the pre-Lunar New Year rally is less conclusive (but the post-festival returns have actually been negative in seven of the last 10 years).

'Beyond January, we believe 2012 will be influenced by 2011 legacy issues. We thus continue to advocate a cautious stance, although we also recommend accumulating fundamentally-robust stocks on weakness for tactical plays with a longer-term view towards the recovery that will undoubtedly follow,' it said.

As for the stocks which could see trading interest on Thursday are hard-disk drive manufacturer JCY International Bhd, DIALOG GROUP BHD [], AIRASIA BHD [] and MALAYSIAN AIRLINE SYSTEM BHD [] (MAS).

JCY International Bhd, whose share price had surged in recent weeks, has stated that the group is likely to record a surge in earnings for the quarter ended Dec 31, 2011.

To cater for the increase in the component demands from the company's major customers, JCY allocated RM300 million over the next 24 months period to expand its facilities in Malaysia, Thailand and China.

Dialog could also see trading interest as its rights shares go ex on Thursday.

In December, Dialog fixed the rights shares at RM1.20 each and the exercise price of the warrants at RM2.40 each.

The issue price would be a discount of about 46% to the theoretical ex-rights price of RM2.23 per share, based on the five-day volume-weighted average market price (VWAMP) up to Dec 14 of RM2.43.


Meanwhile, the Securities Commission has approved the proposed warrants exchange between AirAsia and MAS under a tie-up between both airlines. The airlines said the SC has approved the warrants exchange under the Capital Markets and Services Act 2007 of Malaysia.

Priceworth International Bhd's unit has been appointed a contractor to carry out logging activities on Kolombangara Island, in the western province of Solomon Islands.

Priceworth said its unit, Ligreen (SI) Ltd had sealed a logging management and TECHNOLOGY [] agreement with Success Company Ltd to undertake the logging at a concession site measuring 1,053 ha.

KINSTEEL BHD [] had on Wednesday paid RM70 million to Perwaja Holdings Bhd which was the first payment for the subscription of the RCULS by Kinsteel. The balance of the RM210.0 million would be paid within 21 business days.

Following the first payment, Perwaja had provisionally allotted RM280.0 million nominal value of RCULS to Kinsteel.


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