Hwang DBS Vickers Research: No reason for Perodua, Proton merger

KUALA LUMPUR: Hwang DBS Vickers Research said that two months after calling for a consolidation of the auto industry, Proton is now not interested in a merger.

The research house said on Monday, Sept 20 it was relieved that Proton is no longer pushing for a merger with Perodua, which it called an industry consolidation.

Its adviser Tun Dr Mahathir Mohamad was quoted saying on Friday, Sept 16 that financially, Proton is quite okay now. Instead, Proton would opt to form a "simple cooperation" with other companies once it completes its ongoing restructuring process.

'In our earlier comment (July 2010), we said that there is no reason for Perodua to merge with Proton because their platforms are different, which can result in an operational mess, and hence, operational synergies that Proton is arguing for may be hard to realise.

'Also, Proton is the one who has utilisation inefficiencies, not Perodua, making a merger of the two a one-sided deal in favour of Proton,' said the research house.

Hwang DBS Vickers Research said it agreed with Dr Mahathir that Proton is financially stable and it holds the view that it had turned the corner, with projected 3-year CAGR (CY10F-CY12F) of 40% on the back of good sales, better economies of scale and improving efficiencies.

'Hence, we retain our Buy call on Proton with a TP of RM6.60 (0.7x CY11F NTA). We also have Buy ratings on MBM Resources with a TP of RM4.80 (6x FY11F PE) and UMW with a TP of RM7.40 (sum-of-parts),' it said.

AmResearch maintains Overweight on oil and gas sector

KUALA LUMPUR: AmResearch is maintaining its Overweight call on the oil and gas (O&G) sector, underpinned by the re-acceleration in the country's O&G capex up-cycle and rising rates for offshore rigs.

In its research note issue on Monday, Sept 20, it said the rate for offshore rigs per day have increased for a second month in a row in three of four rig market segments tracked by ODS-Petrodata's monthly Offshore Rig Day Rate Index.

AmResearch said the deepwater fleet utilization fell to 95%, partially as a result of the ongoing moratorium in the US Gulf in the wake of the Deepwater Horizon disaster. The ODS-Petrodata Mid-Water Depth Semisubmersible Day Rate Index increased the most of the index group, rising to 725, its highest level over a year.

The ODS-Petrodata US Gulf of Mexico (250 to 300 feet) Jackup Day Rate Index increased 3ppts for the second consecutive month to 233, its highest level since May 2009.

'Given the re-acceleration in the country's oil & gas capex up-cycle coupled with the proposed listing of MISC's Malaysia Marine Heavy Engineering by end 2010, we maintain our OVERWEIGHT view on the sector with BUY calls on SapuraCrest, Alam Maritim Resources, Kencana Petroleum, Tanjung Offshore, Dialog Group and Petronas Gas.

'Our top pick continues to be SapuraCrest given its huge lock-in order book of almost RM10bil, which should sustain earnings for the next three years. We maintain our SELL call in KNM Group given its poor earnings deliverance,' it said.

Dataprep advances on RM35m SPNB contract

KUALA LUMPUR: DATAPREP HOLDINGS BHD [] shares advanced in early trade on Monday, Sept 20 after its subsidiary secured a RM34.99 million contract from Syarikat Prasarana Negara Bhd (SPNB) and a positive outlook that it would return to the black in the financial year ending March, 31, 2011.

At 9.05am, it was up three sen to 34.5 sen with 1.7 million shares done.

The FBM KLCI rose 4.41 points to 1,471.38. Turnover was 34.76 million shares valued at RM26 million. There were 126 gainers, 39 losers and 91 stocks unchanged.

Last Friday, Dataprep said its 55% subsidiary Solsis (M) Sdn Bhd received the letter of award contract from SPNB to implement a cashless bus ticketing system for Rapid KL Buses.

Bernama had also quoted Dataprep chief executive officer Cheam Tat Inn as saying he was optimistic the company, which posted pre-tax losses for two consecutive years, would return to the black in the financial year ending March, 31, 2011.

Cheam said his optimism was underpinned by the company's diversification into more segments in the IT business and secured many high-margin projects.

"Dataprep expects a revenue growth of between 35% and 45% in the current financial year," he said after the AGM.

Its pre-tax loss for FY ended March 31, 2010 rose to RM5.683 million from RM5.456 million in FY2009.'' For FY2008, it suffered a pre-tax loss of RM3.202 million.'' Revenue fell by 18 per cent to RM44.595 million for FY2010 from RM54.164 million in FY2009.

Cheam said Dataprep has seen in upward trend in revenue for the past three quarters, growing by 10% to 12% and based on the performance, it would return to the pre-crisis level or even higher.

FBM KLCI advances in early trade

KUALA LUMPUR: The FBM KLCI kicked off the week in positive territory and was up 4.38 points to 1,471.35 at 9.05am on Monday, Sept 20 lifted by gains, including at Tenaga, CIMB and PLUS.

Gainers led losers by 125 to 39, while 91 counters traded unchanged. Volume was 33.36 million shares valued at RM24.95 million.

Among the early gainers, QSR Brands rose 19 sen to RM5, Kulim was up 18 sen to RM8.40, DFZ Capital added 15 sen to RM3.80 and IJM gained 10 sen to RM5.10.

Meanwhile, Tenaga rose nine sen to RM9.10, CIMB up eight sen to RM8.35 and PLUS gained seven sen to RM4.30.

Nestle was the top loser in early trade, falling 12 sen to RM42.32. RHB Capital fell four sen to RM7, Boustead down three sen to RM4.66, while Hap Seng, Shell, Carlsberg and Affin lost two sen each to RM2.85, RM10.58, RM5.21 and RM3.16 respectively.

Tenaga, Sime advance in early trade

KUALA LUMPUR: Shares of Tenaga Nasional'' Bhd and SIME DARBY BHD [] advanced in early trade on Monday, Sept 20, on mild buying interest, enabling the FBM KLCI to recoup most of its losses from last Friday.

At 9.15am, the FBM KLCI was up 4.24 points to 1,471.21. Turnover was 78.10 million shares done valued at RM55 million. There were 160 gainers, 76 losers and 127 stocks unchanged.

Tenaga rose 10 sen to RM9.11 with 43,700 shares done while Sime Darby gained nine sen to RM8.24 with 142,000 units transacted.

Last Friday, late profit taking on TENAGA NASIONAL BHD [] and Sime Darby pushed the FBM KLCI down nearly six points to 1,466.97.

Tenaga fell 22 sen to RM8.22, dragging the KLCI down 2.32 points while Sime Darby shed 14 sen to RM8.15, weighing down the index by another 2.05 points.

Asian markets set for subdued, cautious start

WELLINGTON: Asian stocks will probably open cautiously higher on Monday, Sept 20 after U.S. stocks made modest gains despite data showing soft U.S. consumer sentiment and a re-emergence of concerns about euro-zone fiscal health.

Japanese markets, which closed at near six-week highs on Friday, are closed on Monday for a national holiday.

The main Wall Street indexes closed between 0.1 percent and 0.5 percent higher as the traditional trading volatility that comes with the expiration of futures and options contracts, the so-called quadruple witching, did not occur.

Oracle Corp the world's No. 3 software maker, jumped 8.3 percent and led the Nasdaq higher after it posted better-than-expected results and gave an outlook that topped Wall Street's forecasts.

The S&P 500 briefly pushed through key technical resistance around 1,130. A decisive move above that level on solid volume would be a bullish sign.

Risk sentiment was also kept in check by data that showed underlying U.S. inflation pressures were muted in August and consumer confidence was at a 13-month low, keeping fears of deflation alive and supporting safe-haven assets such as Treasuries.

Asian stocks listed on Wall Street fell 0.2 percent.

British shares fell 0.6 percent on soft financial and energy stocks, and European shares dipped 0.2 percent, on soft banks.

Investors were unsettled by a report in the Irish Independent newspaper which said Ireland was "perilously close" to calling in the International Monetary Fund and the European Union, which was denied by the Irish finance ministry.

Australian shares are also seen opening steady, with higher gold and base metal prices likely to support miners. Share index futures are down 22 points to 4,637, a 1.9 point discount to the underlying S&P/ASX 200 index. - Reuters

Facebook denies plans to build its own phone

LOS ANGELES: Social networking website Facebook said on Sunday, Sept 19 it is pushing deeper into the mobile phones sector, but denied an Internet report that it will build its own phone.

Privately held Facebook has more than 500 million users worldwide and the company already has applications on a number of mobile phones that tie into its social networking website.

But Jaime Schopflin, a spokesman for Facebook, said the privately held company "is not building a phone." Facebook's current projects include "deeper integrations with some manufacturers," he said.

"Our view is that almost all experiences would be better if they were social, so integrating deeply into existing platforms and operating systems is a good way to enable this," Schopflin said in a statement.

In a report on Sunday, the website TechCrunch.com said a source with knowledge of the project revealed that Facebook is secretly building software for a phone and working with a third party to build the hardware.

TechCrunch.com said Facebook wants to integrate deeply into the contacts list and core functions of a mobile phone, which it can only do if it controls the phone's operating system.

Facebook, for its part, cited Facebook Connect, a service to allow members to log onto third-party websites, for Apple Inc's iPhone, and contact syncing on its iPhone application as projects it has already undertaken.

In May, Facebook also launched a stripped-down version of its social networking website designed for mobile phones with limited bandwidth Internet connections.

"The bottom line is that whenever we work on a deep integration, people want to call it a 'Facebook Phone' because that's such an attractive soundbite, but building phones is just not what we do," Schopflin said.

Facebook's denial comes after Google Inc last year dismissed media reports about its plans to build a phone, and then later came out with the Nexus One.

At the time, the company said it was focusing on developing its Android mobile operating software, which works on a multitude of mobile phones developed by other companies such as Motorola Inc's hot-selling DROID device.

But Google eventually did release in January its own smartphone called the Nexus One, manufactured by Taiwan-based HTC Corp. Google sold the device itself through an online store, but in May announced it was closing that sales outlet and said the store had not lived up to expectations. - Reuters

HLG Research: Lower liners to play catch-up while blue chips consolidate

KUALA LUMPUR: ''HLG Research said technically, the growing overbought position and formation of a shooting star (last Wednesday, Sept 15) may entice jittery investors to book profit, thus leading the market to greater volatility in the immediate term.

In its outlook report issued on Monday, Sept 20, it said nevertheless, the bulls are still dominating the floor in the mid to long term and likely to flow to lower liners while any FBM KLCI retreat will likely be short-lived with investors buying on weakness.

On top of mildly positive external economic newsflow and strengthening Ringgit, positive domestic developments like the Economic Transformation Program Open Day on Sept 21, NEM2, Budget 2011 and speculation of Sarawak and general elections are likely to cushion significant correction.

For Bursa, immediate resistance targets are 1,472 (76.4% FR from top 1,525 and low of 1,300), 1,490 (Jan 8, 2008's intraday high) and all-time high of 1,524. Immediate support levels are 1,449 (10-d SMA). Stronger support levels are situated around 1,429 (20-d SMA) and 1,405 (30-d SMA).

For Wall Street, all eyes will focus on the FOMC meeting on Sept 21 as the turning point for stocks that have been searching to break out of the current range with conviction.

'If the Federal Reserve's view of the economy brightens by just a glimmer this week, it could push the Dow above the three-month high of 10,720, and probably to retest the 11,000 psychological level prior to the US mid- term election in November,' it said.

#Today's Diary* What to expect on Sept 20, 2010

Signing ceremony between MAA Takaful and LIMRA and graduation ceremony for the top Chief Consultants at Auditorium, Level P1, Menara MAA, Jln Dewan Bahasa, KL at 10am.

Press conference on the inaugural Asia Pacific Congress & Exhibition on Indian Systems of Medicine which will be held Sept 24-26 at Malaysian Society of Complementary Medicine, No 163-2-10, 2nd Flr, Wisma Mah Sing, Jln Sungai Besi, KL at noon.

Kancil Awards 2010 press conference at Dillenia Room, Ground Flr, Sime Darby Convention Centre, KL at 2.30pm.

#Stocks to watch:* Water stocks, Dataprep, Proton, Naim

KUALA LUMPUR: Blue chips may start off the week on a cautious note on Monday, Sept 20 after the late profit taking last Friday which took investors by surprise but sentiment could be given a boost by the firmer close on Wall Street.

Late profit taking on TENAGA NASIONAL BHD [] and Sime Darby pushed the FBM KLCI down nearly six points to 1,466.97.

Year-to-date, the 30-stock KLCI is up 15.26%, making it the fourth best performer in Asia. Over the past week, the KLCI had risen 29.19 points, underpinned by the strengthening ringgit and it is above analysts' earlier forecast of 1,450.

On Wall Street, reassuring earnings and an upbeat outlook from Oracle nudged the Nasdaq up last Friday. Oracle Corp, the world's No. 3 software maker, jumped 8.3% to US$27.46, and led the Nasdaq higher after it posted better-than-expected results and gave an outlook that topped Wall Street's forecasts.

The Dow Jones industrial average gained 13.02 points, or 0.12%, to 10,607.85. The Standard & Poor's 500 Index added 0.93 points, or 0.08%, to 1,125.59. The Nasdaq Composite Index climbed 12.36 points, or 0.54%, to 2,315.61.

For the week, the Dow rose 1.4%, the S&P 500 gained 1.5% and the Nasdaq gained 3.3%.

At Bursa Malaysia, stocks to watch include water-related counters, DATAPREP HOLDINGS BHD [], NAIM HOLDINGS BHD [], PROTON HOLDINGS BHD [], MHC PLANTATION []S BHD [] and Handal Resources Bhd.

Malaysian Trustees Bhd is convening a meeting for the Selangor water industry players and bondholders on Sept 24 in a move to resolve the current impasse in the sector and concerns of operating environment uncertainties.

PUNCAK NIAGA HOLDINGS BHD [] (PNHB) said on Friday, Sept 17, it was informed by Malaysian Trustees the meeting was for all the Selangor water concessionaire holders, operators and bond issuers.

Also included in the meeting would be the term loan borrowers -- Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Holdings Bhd (PNHB), Konsortium ABASS Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH)

Dataprep' subsidiary has secured a RM34.99 million contract from Syarikat Prasarana Negara Bhd to implement a cashless bus ticketing system for Rapid KL Buses.'' Its 55% subsidiary Solsis (M) Sdn Bhd received the letter of award dated Sept 7.

Naim Holdings Bhd's plans to set up a joint venture to design and build a 50-storey tower known the Gaddafi Tower in Tripoli, Libya has come to a halt after the memorandum of understanding (MoU) lapsed.

Its unit NCSB Engineering Sdn Bhd and Al-Waatasemu Charity Foundation (WCF) had signed the MoU on July 16 this year.

Proton adviser Tun Dr Mahathir Mohamad said the national car maker is financially stable and sees no hurry in merging with other car manufactures.

"'Financially, Proton is still okay. We too are not very anxious to merge at this moment,' he said, when asked to comment on Proton's possible plan for merger after recent news report stated that DRB-Hicom was not actively looking to acquire a stake in Proton.

MHC Plantations Bhd has increased its stake in CEPATWAWASAN GROUP BHD [] to 37.01% after it acquired 4.2 million shares or 1.99% on Sept 15 for a total of RM4.59 million.

Meanwhile, Handal Resources Bhd saw 11 million shares done off-market on Friday at an average price of 65 sen each. Stock market data showed the shares were transacted below the market price of 80 sen. The 11 million shares represented a 12.22% stake.