Petronas licence for all O&G upstream biz in Malaysia

KUALA LUMPUR: Petroliam Nasional Bhd has categorically stated that all companies wishing to start or continue any business or service related to Malaysia's oil and gas upstream operations and activities must apply for a licence from the national oil company.

Petronas said on Friday, Oct 28 that the policy, enforced under the regulations following the enactment of the Petroleum Development Act, 1974, has not changed, and 'applies to all local and foreign companies, service providers and suppliers'.

It was responding to recent media reports claiming that Petronas had decided 'to do away' with its licensing system for companies involved in Malaysia's upstream O&G industry.

Hirotako board not seeking alternative takeover offer

KUALA LUMPUR: HIROTAKO HOLDINGS BHD []'s board of directors does not intend to see an alternative party to make a takeover offer for the securities of the company.

It said on Friday, Oct 28 under the Malaysian Code on Take-Overs and Mergers, 1998, the board will appoint an independent adviser for purposes of the offer.

'The notice will be posted to the shareholders of Hirotako Holdings within seven days of its receipt,' it said.

On Thursday, MBM RESOURCES BHD [] offered 97 per share which was nine sen above the pre-suspension price of 88 sen and only 5.0 sen per warrant in its takeover offer.

OSK Research said at 97 sen, this was 14% above Hirotako's five-day market average closing prices of 85 sen a share and 5% above the warrant's exercise price of 92 sen a share.

At 12.30pm, Hirotako share price rose six sen to 94 sen with 23.54 million shares done while the warrants fell 8.5 sen to 15 sen with 66.51 million units done.

Can the KLCI test the 1,500?

KUALA LUMPUR: Key regional markets extended their gains in the morning session on Friday, Oct 28, as investors bet that equities could continue to rise after European leaders put together a one trillion euro rescue package.

The question on investors' minds is whether the run-up is sustainable and if so, can the FBM KLCI test the formidable 1,500 level in the short term.

At midday, the 30-stock index was up 11.64 points or 0.78% to 1,482.57. However, year-to-date, it is down 2.40%. Turnover was heavy with 1.22 billion shares done valued at RM1.127 billion. There were 456 gainers, 260 losers and 303 stocks unchanged.

Among the regional markets, Japan's Nikkei 225 rose 0.98% to 9,014.22, Hong Kong's Hang Seng Index added 1.89% to 20,061.44, Shanghai's Composite Index rose 1.10% to 2,462.38 and South Korea's Kospi 0.43% to 1,930.26. Singapore's Straits Times Index added 1.45% to 2,888.89.

Reuters reported the head of Europe's bailout fund as saying on Friday he does not expect to reach a conclusive deal with Chinese leaders during a visit to Beijing but expects the surplus-rich country will continue to buy bonds issued by the fund.

Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), also said the bailout deal with Greece was an exceptional case and he saw no need to repeat it for other nations.

Reuters said The EFSF, set up last year and so far used to bail out Portugal and Ireland, is a 440 billion euro fund based on guarantees from all euro zone member states, raising capital on international markets by selling bonds.

Investors want to know how the 440 billion euro EFSF rescue fund will be leverage to 1 trillion euros to put a safety net under bigger euro zone states, such as Spain and Italy and prevent them from being swept up by the crisis.

Meanwhile, the ringgit strengthened against the US dollar to 3.0750 while crude palm oil third-month futures fell RM6 to RM2,974 per tonne. US light crude oil fell 34 cents to US$93.62.

At Bursa, GENTING BHD []'s 36 sen jump to RM10.66 pushed the KLCI up 3.08 points while CIMB's 11 sen gain to RM7.39, gave the index a 1.89 point increase.

Among the consumer stocks, BAT was the top gainer, up 70 sen to RM46, Nestle 54 sen to RM50, Dutch Lady 40 sen to RM20.36, F&N 26 sen to RM16.66 and GAB 14 sen to RM10.70.

KLK rose 44 sen to RM21.04, MMHE 25 sen to RM6.37 while MAHB added 34 sen to RM6.22.

Hirotako warrants were the most active with 66.51 million units done. It fell 8.5 sen to 15 sen as investors reacted to the 5.0 sen offered by MBM Resources in the takeover offer. Hirotako shares added six sen to 94 sen.

The decliners were Tong Herr and Atlan, down 14 sen each to RM2 and RM3.02 while BLD PLANTATION []s gave up 10 sen to RM6.80 and CI Holdings shed 10 sen to RM4.90.

Trading of Capitamalls Malaysia Trust suspended Friday afternoon

KUALA LUMPUR: Trading in the units of Capitamalls Malaysia Trust (CMMT) will be voluntarily suspended from 2.30pm on Friday, Oct 28.

A Bursa Malaysia Securities circular said on Friday the suspension was at the request of the management company of CMMT 'pending an announcement'.

CMMT was unchanged at RM1.31 at midday.

Closing date for DXN takeover extended to Nov 14

KUALA LUMPUR: The closing date for the takeover offer for DXN HOLDINGS BHD [] shares has been extended from Monday, Oct 31 to Nov 14.

The joint offerors -- Deras Capital Sdn Bhd, DXN Group Sdn Bhd, Temasek Sejati Sdn Bhd, Lim Boon Yee and Lim Yew Lin ' issued the statement about the extension of the deadline via Hong Leong Investment Bank Bhd on Friday, Oct 28.

The offerors had made a voluntary conditional take-over offer to acquire all the remaining sharaes of 25 sen each for RM1.75 per share.

CIMB Research has technical sell on Axiata

KUALA LUMPUR: CIMB Equities Research has a technical sell on Axiata Group at RM4.86 at which it is trading at a FY12 price-to-earnings of 14.3 times and price-to-book value of 2.2 times.

It said on Friday, Oct 28 that the rebound from its RM4.43 low reached the 61.8% FR of the July-August correction, suggesting that this upleg is probably coming to a temporary halt.

'Looking at the chart, prices also face strong resistance at the 200-day SMA. Indicators are showing signs of exhaustion. MACD histogram bars are losing pace while RSI has also flattened out,' it said.

CIMB Research said if prices fail to push above the RM5.01 level soon, expect selling pressure to intensify. This should drag prices back towards RM4.61 and RM4.43 next. Always put a buy stop at RM5.05, just in case.

HDBSVR maintains buy on MAHB, ups TP to RM8.10

KUALA LUMPUR: Hwang DBS Vickers Research (HDBSVR) is maintaining a Buy on Malaysia Airports Holdings Bhd (MAHB) and raised the sum-of-parts based target price to RM8.10 from RM7.60 after an earnings upgrade.

It said on Friday, Oct 28 that at the current share price, this implies 38% upside.

'We continue to like MAHB for its long-term earnings potential from its cash-rich airport concession, land development, as well as overseas investments,' it said.

MAHB had received approval from the Ministry of Transport to raise the international passenger service charge (PSC) and aircraft landing and parking charges.

Effective Nov 15, International PSC for KLIA will increase from RM51 to RM65, while rates for LCCT KLIA and Terminal 2 Kota Kinabalu will increase from RM25 to RM32. And it will increase aircraft landing and parking charges by 9% and 18% per annum, respectively, on Jan 2012, Jan 2013 and Jan 2014. This is positive as we expect minimal incremental costs for MAHB.

'After imputing the resulting changes to airport rates and lower growth rates for passenger and aircraft movements, we nudged up FY11F-FY13F earnings by 1%-8%.

'Besides that, MAHB also signed an agreement with Tenaga Nasional (TNB) for the latter to supply cooling energy to KLIA2 for 20-years. Apart from securing operational requirement for KLIA2, MAHB will also receive royalties from the structured agreement,' it said.

OSK Research downgrades Tenaga to Neutral, sees losses ahead

KUALA LUMPUR: OSK Research has downgraded Tenaga Nasional to a Neutral and it still sees the company reporting losses for 4QFY11 and 1QFY12.

It said on Friday, Oct 28 it is maintaining its profit forecasts pending the announcement of compensation or a fuel cost pass through. It is maintaining its fair value of RM6.24.

'Even with a potential write-back and the announcement of a new district cooling plant at KLIA2, we are unlikely to raise our FV substantially in the absence of a fuel cost pass through mechanism. As such, we maintain our DCF based FV for now, and downgrade the counter to a NEUTRAL given the limited upside after the recent price rally,' it said.

Tenaga will release its fourth quarter results on Friday evening.

'We maintain our estimates pending this evening's results release although we note that without compensation from Petronas, a disappointment is still likely. Given the limited upside to our RM6.24 DCF derived fair value, we downgrade our call on Tenaga Nasional to Neutral. A clear fuel cost pass through would have to be in place before we upgrade our FV substantially,' it said.

Hirotako shares up on MBM Resources takeover

KUALA LUMPUR: HIROTAKO HOLDINGS BHD []'s shares rose on Friday, Oct 28 after MBM RESOURCES BHD [] (MBM) launched a takeover to expand its automotive manufacturing division, at a cost of RM412.5 million.

At 9.14am, Hirotako share price was up 6.5 sen to 94.5 sen with 7.27 million shares done. However, the warrants fell six sen to 17.5 sen with 26.49 million units transacted.

The FBM KLCI rallies 12.54 points to 1,483.47. Turnover was 298.17 million shares valued at RM186.47 million. There were 417 gainers to 31 losers.

MBM offered 97 per share which was nine sen above the pre-suspension price of 88 sen and only 5.0 sen per warrant.

OSK Research said at 97 sen, this was 14% above Hirotako's five-day market average closing prices of 85 sen a share and 5% above the warrant's exercise price of 92 sen a share.

OSK Research said the acquisition price tag is not cheap, valuing Hirotako at 11 times FY11 price-to-earnings, which is at the high end of its historical trading band (slightly above +2 SD for PE and P/BV).

MAHB shares climb on imposition of charges at airports

KUALA LUMPUR: Shares of Malaysia Airports Holdings Bhd (MAHB)climbed in early trade on Friday, Oct 28 after it received the government approval to raise international passenger service charge (PSC) and aircraft landing and parking charges.

At 9.27am, MAHB share price was up 17 sen to RM6.05.

The FBM KLCI was up 11.46 points to 1,482.39. Turnover was 427.22 million shares valued at RM279.17 million.

Hwang DBS Vickers Research (HDBSVR) is maintaining a Buy on MAHB and raised the sum-of-parts based target price to RM8.10 from RM7.60 after an earnings upgrade.

'We continue to like MAHB for its long-term earnings potential from its cash-rich airport concession, land development, as well as overseas investments,' it said.

MAHB had received approval from the Ministry of Transport to raise the international passenger service charge (PSC) and aircraft landing and parking charges.

Effective Nov 15, International PSC for KLIA will increase from RM51 to RM65, while rates for LCCT KLIA and Terminal 2 Kota Kinabalu will increase from RM25 to RM32.

MAHB will increase aircraft landing and parking charges by 9% and 18% per annum, respectively, on Jan 2012, Jan 2013 and Jan 2014.

'This is positive as we expect minimal incremental costs for MAHB,' it said.