Business & Markets 2012
Written by Surin Murugiah of theedgemalaysia.com
Tuesday, 20 November 2012 19:05
KUALA LUMPUR (Nov 20): The FBM KLCI could find itself hard pressed to sustain its meagre gain on Wednesday on account of waning investor confidence on risks from the eurozone debt crisis.
Also, weaker earnings reported by conglomerate BOUSTEAD HOLDINGS BHD [] and Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) could weigh on the overall local market sentiment. But solid third quarter (3Q) earnings by CIMB Group Holdings Bhd could help cushion any fallout from negative external impact on the local market.
Most Asian markets reversed earlier gains on while European shares and the euro fell on Tuesday after a credit rating agency stripped France of its top-notch rating, reminding investors of the continuing risks from the eurozone debt crisis, according to Reuters.
But the falls were limited as the move was widely expected and comes a day after global equity markets saw their biggest gains since late July on optimism that US lawmakers would reach a deal to avert automatic tax hikes and spending cuts due to take effect in early 2013, it said.
Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan in a note Tuesday said that going forward, he expects the FBM KLCI to trend lower on concerns over uncertainty surrounding the US fiscal cliff, new conservative leadership change in China, escalating violence in the Middle East and European gross domestic product (GDP) data confirming recession status again.
There are signs that USA politicians may face stiff challenges to put the country’s public finances in order by January and may not have the resource to reach a budget compromise in a timely fashion, he said.
"On the local front, the local market's close below the strong 1,630 support level suggests a moderately negative setup for more weakness next week.
"We believe the logical downside objective will be 1,620 and 1,600 level while the next area of resistance is 1,630 and 1,650 level," he said.
Among the stocks that could be in focus on Wednesday are Boustead; MMHE; SYARIKAT TAKAFUL MALAYSIA BHD []; CIMB; and ALLIANCE FINANCIAL GROUP BHD [] (AFG).
Boustead's net profit for the third quarter ended Sept 30, 2012 fell 35.56% to RM77.9 million from RM120.9 million a year earlier, due mainly to reduction in PLANTATION [] earnings.
The company said on Tuesday that its revenue for the quarter increased to RM2.58 billion from RM2.19 billion in 2011.
Boustead declared a third interim dividend, single tier of 10 sen per share to be paid on Dec 28, in respect of the financial year ending Dec 31, 2012.
For the nine months ended Sept 30, Boustead's net profit declined to RM266.2 million RM418.3 million previously, despite registering a higher revenue of RM7.53 billion from RM6 billion.
On its prospects, Boustead said crude palm oil (CPO) prices for the fourth quarter were expected to be adversely affected by the higher Malaysian CPO inventories and the softening demand from China and other markets.
MMHE's third quarter net profits were only one-tenth of that booked last year, largely due to provisions made at its offshore business segment as well as the taking in of its share of losses from jointly controlled entities.
Net profit for the third quarter ended Sept 30, 2012, tumbled 89.9% to RM8.09 million from RM80.23 million in the same period last year despite a 81.78% jump in revenue to RM841.78 million from RM463.09 million over the same period.
According to notes accompanying its accounts, MMHE's offshore segment recorded an operating loss of RM1.81 million in 3Q2012 compared to an operating profit of RM75.90 million in 3Q2011 due to provisions made for "higher than expected expenses for an on-going conversion project".
"The group is carefully managing the project and is actively pursuing negotiation with clients through claim of change orders," MMHE said in in the notes.
Takaful's net profit for the third quarter (3Q) ended Sept 30 rose 187.2% to RM15.28 million, from RM5.32 million in the previous corresponding quarter, mainly due to higher sales from its Family Takaful business.
Revenue for the quarter rose 2.72% to RM416.2 million from RM405.18 million previously.
"For the quarter under review, Family Takaful recorded gross earned contributions of RM260.1 million against RM199.1 million for the same period last year and General Takaful generated gross earned contributions of RM111.7 million compared to RM100.9 million in the corresponding quarter of the preceding year," said the group in a Bursa filing on Tuesday.
CIMB reported a record net profit of RM3.263 billion for the nine months ended Sept 30, 2012, up 12.6% year-on-year.
For third quarter ended Sept 30, the group's net profit of RM1.143 billion was 3.0% higher than 2Q12, and 12.9% above its 3Q11 net profit of RM1.012 billion.
AFG net profit for the second quarter ended Sept 30 grew 14.3% to RM141.95 million from RM124.21 million in the previous corresponding quarter driven by an increase in net interest and higher non-interest income.
Revenue for the quarter rose 8.2% to RM338.97 million from RM313.17 million previously while earnings per share improved to 9.3 sen from 8.3 sen.
In a statement Tuesday, AFG said it registered a 13.6% year-on-year increase in net loans to RM26.1 billion, including Islamic financing. Lending to small business enterprises (SME) and corporate customers now represent 46% of its total loans portfolio with consumer banking making up the remaining balance of 54%.