Nazir: CIMB seeks value creating merger with RHB Cap

KUALA LUMPUR: CIMB Group is not looking at buying RHB Capital Bhd but the possibility of a value creating merger with the latter, said Group Chief Executive Datuk Seri Nazir Razak.

"We are not interested in ADCB (Abu Dhabi Commercial Bank)'s 25 per cent stake. We are in discussion with RHB as to whether such a merger can happen. CIMB is looking to negotiate a value creating merger. To the best of my knowledge, RHB is not for sale.

"Out of the process, there can be, as far as my knowledge three outcomes - to proceed with the CIMB merger; to proceed with a merger of a bank with yellow colour (MALAYAN BANKING BHD []); and the RHB stand alone.

"As far as I'm concerned, there is a one third chance of each of those possible outcome as we stand today because we are still at a relatively early stage," he said on Monday, June 20 (today after presenting RM200,000 to the Federation of Chinese Association Malaysia (Huazong) in support of their bid to raise funds for a new premise.

Last Friday, ADCB signed an agreement to sell its 25 per cent stake in RHB Capital to Aabar Investments, an Abu Dhabi investment fund, for RM10.80 per share.

Commenting on the transaction, Nazir said: I think the most relevant part of that transaction, is that, we now have the identity of the 25 per cent shareholder.

"So, the new shareholder comes into equation. We are now able to engage this new party because it has become a very material stakeholder. There's no point negotiating a deal unless you can get support of the shareholders.

"I urge you to take one step further in thinking about this transaction. So, the price is not relevant. What everyone is looking at is a value creating merger," he said.

Nazir said a proposal on the merger is expected to be submitted by end of next month. - Bernama

KPJ redeems RM250m debt notes

KUALA LUMPUR: KPJ HEALTHCARE BHD [] has fully redeemed and cancelled its RM250 million Commercial Papers/Medium-Term Notes Programme (2004/2011).

RAM Rating Services Bhd said on Monday, June 20 that it had received confirmation about KPJ's redemption and cancellation of the debt notes.

'As such, RAM Ratings no longer has any rating obligation on this debt facility, which had been rated AA3/P1,' it said.

Litrak climbs after KWAP emerges as substantial shareholder

KUALA LUMPUR: Shares of LINGKARAN TRANS KOTA HOLDINGS [] Bhd (Litrak) bucked the cautious market on Monday, June 20 after Kumpulan Wang Persaraan (KWAP) emerged as a substantial shareholder in the toll road operator.

At 3.33pm, Litrak was up nine sen to RM3.70 with 102,400 shares done.

The FBM KLCI fell 4.15 points to 1,559.28. Turnover was 604.8 million shares valued at RM859.11 million. There were 243 gainers, 462 losers and 290 stocks unchanged.

The Edge FinancialDaily reported that KWAP had emerged as a substantial shareholder on June 14.

A filing by Litrak said the shares were purchased in the open market by KWAP's fund manager.

KLK falls, denies breaching Indonesia's forest clearing ban

KUALA LUMPUR: Shares of KUALA LUMPUR KEPONG BHD [] (KLK) fell in thin trade on Monday, June 20 as the PLANTATION [] group denied an environmental group's allegations it had breached Indonesia's two-year forest clearing ban.

At 2.34pm, it was down 34 sen to RM22.04 with 195,900 shares done.

The FBM KLCI fell 2.27 points to 1,561.16. Turnover was 467.86 million shares valued at RM562.64 million. There were 260 gainers, 369 losers and 306 stocks unchanged.

Reuters reported that KLK had denied on Monday it had breached Indonesia's ban on the first day it was signed to law, calling the allegation by an environmental group "preposterous".

High Court dismisses Pioneer Haven's bid in Ho Hup suit

KUALA LUMPUR: The Kuala Lumpur High Court has dismissed Pioneer Haven Sdn Bhd's application for a stay of execution over the judgement on a 60-acre (24.3 ha) plot of land in Bukit Jalil, with costs in favour of Ho Hup CONSTRUCTION [] Bhd.

Ho Hup said on Monday, June 20 that the court had made the ruling on Friday, June 17 after hearing arguments by lawyers for both Pioneer Haven (which is a unit of MALTON BHD []) and Ho Hup.

It said the High Court also set several conditions, pending the disposal of the appeal by Pioneer Haven to the Court of Appeal.

The High Court had agreed to the conditions proposed by Ho Hup, wherein it would not to sell nor dispose of the land. Ho Hup had also proposed it would not enter into any joint venture for the development of the land but may self-develop the land.

The court also said Pioneer Haven's private caveat on the land shall be removed (as already ordered on June 7), and Ho Hup group may redeem the charge in favour of CIMB and charge the land in favour of the new financier.

To recap, on June 7, the High Court had delivered its judgment and declared the joint development agreement dated March 16, 2010 (JDA) between Pioneer Haven and Ho Hup's 70%-owned Bukit Jalil Development Sdn Bhd to be null and void.

The court also found that the JDA was, in substance, a disposal of Bukit Jalil's 60-acres land at Bukit Jalil'' for which shareholders' approvals had not been obtained pursuant to Section 132C of the Companies Act 1965.

The High Court also ordered that the private caveat by Pioneer Haven be expunged and/or removed.

However, on June 10 Pioneer Haven sought for a stay of execution of the judgment.

Ho Hup had confirmed that the Ho Hup group was in the process of refinancing the existing loan facilities given to Ho Hup group by CIMB Bank Bhd and redeem the charge in favour of CIMB over the land for the purpose of charging the Land as security to the new financier;

Ho Hup had also said it would ill not sell or dispose of the land, or to enter into any joint venture with third parties for the development of the land; instead, Ho Hup group would develop the land on its own.

EON Cap shareholders to get RM5.16 dividend on Tuesday

KUALA LUMPUR: EON CAPITAL BHD [] said it will pay the special tax-exempt dividend of RM5.16 a share on Tuesday, June 21 to all shareholders on the register.

It said on Monday, June 20 the balance cash proceeds of RM1.79 billion from the disposal to HONG LEONG BANK BHD [] will be distributed back to shareholders via a non taxable capital repayment.

However, this is pending a High Court confirmation on July 18, EON Cap said.

The capital repayment was approved by shareholders at the EGM held on Sept 27, 2010 and was expected to be completed by year-end 2011.

Bursa derivatives' CPO futures open interest hits record high

KUALA LUMPUR: BURSA MALAYSIA BHD [] said the open interest for crude palm oil futures (FCPO) on Bursa Malaysia Derivatives hit an all-time high of 115,257 contracts on Monday, June 20.

It said the contracts surpassed the previous open interest record of 113,415 contracts on June 10.

'This is due to stronger interest in FCPO contracts by local and international traders; and increasing hedging activities in the FCPO market,' it said.

Banks, blue chips weigh FBM KLCI at noon

KUALA LUMPUR: The FBM KLCI slipped into negative territory at the mid-day break on Monday, June 20 as most of the key regional markets gave up their gains as investor sentiment remained tepid.

Trading at most markets remained muted on concerns that the debt crisis is spreading beyond Greece's borders were amplified by Moody's warning on Friday that it may downgrade Italy's credit ratings, according to Reuters.

For now, Asian equities enjoyed a rare moment of respite on scattered bargain hunting, but trade was cautious amid ongoing tensions in Greece and ahead of a heavy dose of regional data this week which could give further clues on the extent of the global economic slowdown as well as inflationary pressures, it said.

The FBM KLCI slipped 1.54 points to 1,561.89 at 12.30, weighed by losses at banking stocks and select blue chips.

Losers led gainers by 354 to 265, while 296 counters traded unchanged. Volume was 447.26 million shares valued at RM534.75 million.

The ringgit strengthened 0.10% to 3.0413 versus the US dollar; crude palm oil futures for the third month delivery rose RM18 to RM3,216, crude oil fell 98 cents per barrel to US$92.03 while gold lost US$2.30 an ounce to US$1,537.15.

At the regional markets, the Shanghai Composite Index fell 0.88% to 2,619.62, Taiwans' Taiex lost 0.91% to 8,557.48, South Korea's Kospi was down 0.11% to 2,029.70 and Hong Kong's Hang Seng Index shed 0.06% to 21,682.57.

Meanwhile, Japan's Nikkei 225 added 0.33% to 9,382.43 and Singapore's Straits Times Index rose 0.64% to 3,024.55.

On Bursa Malaysia, KLK lost 30 sen to RM22.08, Nestle fell 20 sen to RM48, Cocoaland 11 sen to RM2.05, GAB 10 sen to RM10.22, Pos Malaysia, Astral Asia and Puncak Niaga fell eight sen each to RM3.30, RM1.20 and RM2.05, while KFCH lost seven sen to RM3.91.

Among banking stocks, Maybank fell 15 sen to RM8.85, RHB Capital lost 12 sen to RM9.63, CIMB down seven sen to RM8.48 and Hong Leong Bank shed two sen to RM13.34.

Ingenuity Solutions was the most actively traded counter with 31.5 million shares done. The stock was unchanged at 10.5 sen.

Other actives included Talam, DBE Gurney, Asia Media, Compugates, Axiata and Sime Darby.

Among the gainers, DiGi rose 42 sen to RM29, Malayan Flour Mills 36 sen to RM7.40, BAT 28 sen to RM45.96, PPB 20 sen to RM17.02, HLFG and MISC 12 sen each to RM12.76 and RM7.23, while Harrisons, F&N, Lysaght and Petronas Gas added 10 sen each to RM3.90, RM19.32, RM1.80 and RM13.04 respectively.

FBM KLCI flat at mid-morning

KUALA LUMPUR: The FBM KLCI was flat at mid-morning on Monday, June 20 in line with the limited gains at key regional markets after Euro zone finance ministers postponed a final decision on extending a further 12 billion euros ($17 billion) in emergency loans to Greece.

At 10am, the FBM KLCI was up 0.01 point to 1,563.44.

Gainers led losers by 195 to 163, while 227 counters traded unchanged. Volume was 167.66 million shares valued at RM123.19 million.

At the regional markets, Japan's Nikkei 225 was up 0.59% to 9,406.84, Hong Kongs' Hang Seng Index gained 0.88% to 21,886.90, Taiwan's Taiex added 0.49% to 8,678.59, South Korea's Kospi rose 0.30% to 2,038.07 and Singapore's Straits Times Index was up 0.63% to 3,024.19.

Meanwhile, the Shanghai Composite Index edged down 0.27% to 2,635.63.

The Euro zone ministers said in a statement that they expected to pay the money by mid-July. Greece has said it needs the loans by then to avoid defaulting on its debt, according to Reuters.

But keeping up the pressure on Athens, the ministers insisted that disbursement would depend on the Greek parliament first passing laws on fiscal reforms and selling off state assets, it said.

Maybank Investment Bank Bhd head of retail research Lee Cheng Hooi in a note to clients June 20 said the local market remained quite steady despite the Greek debt worries and uncertain mixed US economic news.

Local buying on some key blue chips cushioned the market's initial weakness, he said.

Lee said the obvious support areas for the FBM KLCI were located in the 1,536 to 1,563-zone, adding that the firm resistance zone of 1,564 and 1,57 would see very heavy liquidation activities.

'The local market had meandered in a very tight range since the beginning of 2011.

'We expect that the marker would be in further range-bound movements for the next few weeks, as market-moving local news flow appears to have dried up. Local buying by some funds will cause the index to inch up though,' he said.

Meanwhile, BIMB Securities Research said that Wall Street saw some buying on Friday and consequently pushed the Dow Jones Industrial Average to just above the 12,000 level again.

'We expect this to be short-lived as uncertainties are still very much prevalent in both the US and Europe.

'Back home, we believe the FBMKLCI though is still in its consolidation phase, is expected to see some buying support on selected blue chips as many funds have started to rollover their valuations to 2012. Immediate resistance is seen at 1,565 with the next threshold at 1,580,' it said in a note June 20.

Among the gainers on Bursa Malaysia, Genting rose 12 sen to RM10.98 after the gaming group announced it was pushing ahead with its US$3 billion Resorts World Miami mixed development.

Genting's announced of the hiring of Miami-based Arquitectonica to create the master plan for its project just after three weeks of its successful US$236 million (RM717 million) bid for a 13.9-acre (5.6ha) waterfront land in northern downtown Miami, though a casino licence is not yet within reach.

Other gainers included DiGi that added 52 sen to RM29.10, BAT 30 sen to RM45.98, Malayan Flour Mills 20 sen to RM7.24, PPB 16 sen to RM16.98, Petronas Gas 14 sen to RM13.08, MISC and Harrisons 12 sen each to RM7.23 and RM3.92, IJM Corp 10 sen to RM6.36 while Lafarge Malayan Cement was up eight sen to RM7.50.

Banking stocks were among the early decliners, with RHB Capital and Maybank down 10 sen each to RM9.65 and RM8.90, Hong Leong Bank eight sen to RM13.28 and CIMB down six sen to RM8.49.

Other decliners included KLK that fell 18 sen to RM22.20, Pos Malaysia down eight sen to RM3.30, while S P Setia, Parkson, JT International and KFCH lost six sen each to RM4.13, RM5.99, RM7.03 and RM3.92 respectively.

Actives included Ingenuity Solutions, Talam, DBE Gurney, Asia Media and Tricubes.

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Moody's maintains stable outlook for S-REITs while growth continues

KUALA LUMPUR: ''Moody's Investors Service has maintained its stable outlook on Singapore Real Estate Investment Trusts (S-REIT) over the next 12-18 months.

However, new supply, rising interest rates, and growth initiatives could challenge the sector, it said.

In a statement Monday, June 20, Moody's analyst Alvn Tan said the rating agency's rated S-REITs were well-positioned within their respective rating categories, as reflected in the stable outlooks for most of the rated S-REITs.

Moody's maintained its outlook on the S-REITs in its entitled "Stable S-REIT Sector Amid Strong Economy and Healthy Balance Sheets."

According to the report, Moody's sees continued growth in Singapore's economy over the next 12-18 months that would lead to increased rental rates and high occupancies.

Nonetheless, a slowing of Singapore GDP growth, coupled with the large supply of new PROPERTIES [] coming on stream, should reduce the rate of rental growth, it said.

The environment for refinancing is currently benign as ample liquidity in the market and strong backing from sponsors for most S-REITs will alleviate refinancing risk, it said.

Moody's said that while S-REITs continued to use their well-capitalised balance sheets to fund their acquisitive growth strategies in 2011, they were unlikely to over-extend their gearing and should maintain their leverage within targeted limits of 40-45%.

Any rise in interest rates will raise financing costs for S-REITs and make acquisitions more expensive, it said.

"We expect S-REITs to manage such risks by (1) staggering debt maturities, (2) using proper hedging, and (3) relying on an appropriate mix of debt and equity to fund purchases," said Tan.

External weaknesses, such as a crisis brought on by a sovereign debt default or inflationary pressure on Asia, could prompt Singapore to tighten its monetary policy further, thus reducing the scope for domestic demand to absorb new properties, he said.

A fall in occupancy or rental rates due to excess supply in the market or an adverse change in market conditions could trigger a change in the sector outlook to negative, he said.