KLCI extends losses at mid-day

KUALA LUMPUR: The FBM KLCI extended its losses at the mid-day break on Monday, July 11 in line with the tepid sentiment at key regional markets.

Asian stocks dropped on Monday as a spate of weak economic data from China and the U.S. renewed concerns about the health of the global economy although sharp declines look unlikely before an emergency meeting to stem the spreading debt crisis, according to Reuters.

The FBM KLCI fell 0.58% or 9.24 points to 1,585.50, weighed by losses at blue chips, including BAT, Hong Leong Bank, DiGi and HLFG.

Losers beat gainers by 373 to 183, while 278 counters traded unchanged. Volume was 347.85 million shares valued at RM502.69 million.

The ringgit weakened 0.44% to 3.0055 versus the US dollar; crude palm oil futures for the third month delivery gained RM8 per tonne to RM3,086, crude oil shed 49 cents per barrel to US%95.71 while gold fell 15 cents an ounce to US%1,544.

At the regional markets, Japan's Nikkei 225 was down 0.76% to 10,061.09, Hong Kong's Hang Seng Index lost 0.88% to 22,525.47, Taiwan's Taiex fell 1.11% to 8,652.08, South Korea's Kospi down 0.95% to 2,159.67 and Singapore's Straits Times Index shed 0.72% to 3,128.68.

Meanwhile, the Shanghai Composite Index edged up 0.09% to 2,800.18.

On Bursa Malaysia, BAT was the top loser this morning and fell 52 sen to RM46.18; Dutch Ladu lost 26 sen to RM19.10, Hong Leong Bank and Petronas Gas down 18 sen each to RM13.56 and RM13.82, DiGi 16 sen to RM29.84, Tasek, Kotra, HLFG and Glenealy down 10 sen each to RM7.85, 48 sen, RM13.40 and RM5.75 respectively, Genting Malaysia nine sen to RM3.77 and Petronas Chemicals down four sen to RM7.07.

XDL was the most actively traded counter with 29/7 million shares done. The stock fell one sen to 39.5 sen.

Other actives included Key West, DVM, Petronas Chemicals and Genting Malaysia.

Among the gainers, Nestle rose 40 sen to RM47.70, Petronas Dagangan 25 sen to RM17.36, Asia File 22 sen to RM4.20, Muda 14.5 sen to RM1.05, BIMB 14 sen to RM2.44, KLK 12 sen to RM22.78, AFG 11 sen to RM3.57 and CI Holdings 10 sen to RM3.50.

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UOB Kay Hian FV for MRCB at RM3.02

KUALA LUMPUR:'' UOB Kay Hian Malaysia Research is maintaining a Buy on MALAYSIAN RESOURCES CORP [] Bhd (MRCB) at RM2.32 and has a fair value of RM3.02 as it expects MRCB to benefit from more redevelopment projects.

It said on Monday, July 11 MRCB's share price has crept up with volume last week, from RM2.21 to RM2.32.

'We continue to expect more positive newsflow in 2H11 for MRCB, particularly on the redevelopment of the Rubber Research Institute land in Sungai Buloh (GDV: RM10 billion), 'River of Life' project worth RM3 billion for phase 1 and also more sizeable land deals in Selangor, which will allow them to develop at least RM4 billion to RM5 billion of GDV in the future.

UOB Kay Hian Malaysia Research said if successful, the acquisition would lift its total GDV to a whopping RM12b. We maintain BUY with a RNAV-based share price of RM3.02.

Kencana, SapuraCrest merger to have RM10.87b market cap

KUALA LUMPUR: KENCANA PETROLEUM BHD [] and SAPURACREST PETROLEUM BHD [] could be looking at a merger in which shares of both companies would be absorbed by a newco and shareholders of the both the entities will get shares in the new company.

The merger would see'' the combined entity having a combined market capitalisation of more than RM10.87 billion, based on the pre-suspension prices.

Trading in the securities of Kencana and SapuraCrest had been halted from 9am to 5pm on Monday, July 11 pending a material announcement.

In separate announcements to Bursa Malaysia on July 11, the two companies said they had requested for a trading halt in their securities.

Both the companies said they had received letters from Maybank Investment Bank Bhd and CIMB Investment Bank Bhd on behalf of Integral Key Sdn Bhd (IKSB) informing it that IKSB was proposing a corporate exercise involving Kencana and SapuraCrest.

Kencana and SapuraCrest said full details of the corporate exercise would be announced in due course.

Kencana was last traded at RM2.80 while SapuraCrest closed at RM4.49 last Friday.

RAM Ratings keeps stable outlook on local telco market

KUALA LUMPUR: RAM Rating Services Bhd is maintaining a stable outlook on the domestic telco market in the near term and expects smartphones and other wireless devices like tablets, along with their data-intensive applications to drive growth.

'The business and financial risk profiles of the 4 major incumbents (TM, Maxis, Celcom and DiGi) are still dictated by their established presence (in terms of market reach and subscriber base) as well as sound financials,' it said on Monday, July 11.

RAM Ratings said due to the dynamic operating environment, telcos must stay on their toes, re-evaluating and reinventing their business strategies to propel forward and maintain their market positions.

It noted that facility sharing and outsourcing to save on capital and operating expenses are becoming more prevalent.

'Fixed-line and mobile players are encroaching on to each other's turfs by offering bundled services in a bid to stay competitive. Meanwhile, pressures on profit margins and decelerating top-line growth have compelled telcos to focus on operational efficiency,' it said.

In its outlook for the sector, RAM Ratings said smartphones and other wireless devices like tablets, along with their data-intensive applications such as video-related services, would be the catalyst for telcos' revenue growth in the foreseeable future.

However, while increased data usage is good news for them, it also presents challenges as operators try to arrest the decline in average revenue per user (ARPU) and explore new revenue sources while optimising their networks through more efficient bandwidth use.

RAM Ratings said while telcos are expected to keep ringing up hefty capital expenditure (capex) to upgrade their networks, including capacity, coverage and speed, it did not expect any substantial ramp-up in the immediate term.

'Despite their generally substantial capex requirements, telcos are still focusing on their capital-management policies to maintain healthy balance sheets and debt-coverage ratios, amid substantial payouts to their shareholders,' it said.

Asian markets fall on weak US, China data

KUALA LUMPUR: Asian markets started the week of July 11 on a weaker note, following the dip at Wall Street last Friday, as well as softer economic data from China over the weekend affected investor sentiment.

The ''spate of weak economic data from China and the US renewed concerns about the health of the global economy while the euro looked vulnerable before an emergency meeting to stem the spreading debt crisis, according to Reuters.

As markets began recovering from an extended period of volatility in the first half of 2011, a perfect storm in the shape of slowing growth in China, worrisome news from the euro zone and little progress to avert a looming US debt default sapped demand for risky assets, it said.

The FBM KLCI fell 5.75 points to 1,588.99 at 10am, weighed by losses at select blue chips.

Losers led gainers by 197 to 161, while 202 counters traded unchanged. Volume was 143.68 million shares valued at RM125.64 million.

At the regional markets, Japan's Nikkei 225 fell 0.48% to 10,089.56, Hong Kong's Hang Seng Index down 0.86% to 22,530.37, the Shanghai Composite Index lost 0.42% to 2,786.09, Taiwan's Taiex shed 0.74% to 8,684.44, South Korea's Kospi declined 0.88% to 2,161.21 and Singapore's Straits Times Index was down 0.75% to 3,127.64.

MIDF Research head Zulkifli Hamzah in note July said foreign investors remained net buyers last week, adding that foreigners had now been net buyers of Malaysian equity in 13 out of the last 16 weeks.

'We expect the market to remain steady this week, as foreign buying continues.

'Foreign investor sentiment towards the Malaysian market should be intact based on the reported success of the bookbuilding for the Bumi Armada IPO. Media report suggests that the institutional offering was oversubscribed by a whopping 25 times,' he said.

Among the decliners on Bursa Malaysia, Dutch Lady fell 24 sen to RM19.12, DiGi 22 sen to RM29.78, Petronas Gas 12 sen to RM13.88, Aeon 10 sen to RM7.20, Batu Kawan, Bina Puri, APM Automotive and BAT eight sen to RM17.20, RM1.20, RM4.91 and RM46.62 respectively, whiel CIMB and Bursa fell seven sen each to RM8.85 and RM7.71.

XDL was the most actively traded counter with 22.29 million shares done. The stock was unchanged at 40.5 sen.

Other actives included Key West, DVM, Tanco, and Talam.

Gainers included Nestle that added 40 sen to RM47.70, Panasonic 28 sen to RM24.40, KLK and Petronas Dagangan 14 sen to RM22.80 and RM17.24, BIMB eight sen to RM2.38, TSH seven sen to RM3.25 and MNRB six sen to RM2.95.

Meanwhile, trading in the securities of Kencana Petroleum and SapuraCrest Petroleum were suspended from 9am till 5pm today on possible merger talks. The companies in separate announcements said the trading halt was pending a material announcement.

CIMB Research has technical Buy on YTL e-Solutions at 95.5 sen

KUALA LUMPUR: CIMB Equities Research has a technical Buy call on YTL e-Solutions at 95.5 sen at which it is trading at a FY12'' price-to-book value of 7.3 times.

It said on Monday, July 11 the pullback from the high of RM1.78 appears to be at its tail end after forming a bearish wedge like pattern. The slope of the downtrend has flatten so much that could possibly suggest that prices are about ready for a good rebound rally.

CIMB Research said the MACD and RSI show multiple bullish divergence signals, which could mean that stale bulls are selling. There is a good chance that a trend reversal move is about to take place or already has.

'We think that the stock is a buy now with a tight stop placed below the recent swing low of'' 93.5 sen. One can also place their stop below 90.5 sen.

'In the near term, we expect prices to take out its moving averages at 99 sen (30-day SMA) and RM1.01 (50-day SMA) to rally towards its RM1.15 levels (its 200-day SMA) next in the coming weeks,' it said.

CIMB Research has technical Buy on SP Setia at RM4.14

KUALA LUMPUR: CIMB Equities Research has a technical Buy call on SP Setia at RM4.14, at which it is trading at a price-to-earnings for FY12 of 21.8 times and price-to-book value of 2.3 times.

It said on Monday, July 11 SP Setia appears to be still consolidating in a triangle pattern and it is possible to deduce that the triangle it at its tail end of this consolidation.

'From here, we expect prices to kick on higher from here. Technical landscape is improving with its MACD back in positive territory but the momentum is lacking at the moment. RSI on the other hand, stayed above the 40-pts mark, which could be viewed as bullish,' it said.

CIMB Research said traders should buy on any weakness with a stop placed below RM4.01. A breakout above RM4.24 would increase the odds that the next leg is underway. Anything above RM4.45 would confirm that new highs of around RM4.88-RM5 are taking place.

Ramunia edges up in early trade

KUALA LUMPUR: RAMUNIA HOLDINGS BHD [] shares rose in early trade on Monday, July as investors viewed its acquisition of a floating, storage and offloading (FSO) vessel for US$82.5 million (RM248.37 million) cash in a positive manner.

At 9.10am, Ramunia edged up one sen to 43 sen with 557,600 shares traded.

The acquisition would be financed by bank borrowings of'' RM201.3 million and the remainder via internally generated funds

Kencana requests for trading halt

KUALA LUMPUR: KENCANA PETROLEUM BHD [] has requested for a trading halt in its securities from 9am to 5pm on Monday, July 11 pending a material announcement.

In a filing to Bursa Malaysia Securities on July 11, Kencana said it had received a letter from Maybank Investment Bank Bhd and CIMB Investment Bank Bhd on behalf of Integral Key Sdn Bhd (IKSB) informing it that IKSB was proposing a corporate exercise involving Kencana.

It said full details of the corporate exercise would be announced in due course.

#Update* Trading in Kencana, SapuraCrest securities halted

KUALA LUMPUR: Trading in the securities of KENCANA PETROLEUM BHD [] and SAPURACREST PETROLEUM BHD [] have been halted from 9am to 5pm on Monday, July 11 pending a material announcement.

In separate announcements to Bursa Malaysia Securities on July 11, the two companies said they had requested for a trading halt in their securities.

Both the companies said they had received letters from Maybank Investment Bank Bhd and CIMB Investment Bank Bhd on behalf of Integral Key Sdn Bhd (IKSB) informing it that IKSB was proposing a corporate exercise involving Kencana and SapuraCrest.

Kencana and SapuraCrest said full details of the corporate exercise would be announced in due course.

Kencana was last traded at RM2.80 while SapuraCrest closed at RM4.49 last Friday.

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