Business & Markets 2012
Written by Surin Murugiah of theedgemalaysia.com
Monday, 19 November 2012 19:49
KUALA LUMPUR (Nov 19): The FBM KLCI could edge higher on Tuesday, in line with the uptrend at most global markets on Monday, while some strong earnings results announced late Monday on Bursa Malaysia could also give a boost to local investor sentiment.
Share markets worldwide rebounded from last week's sharp selloff on Monday, with investors encouraged by signs of progress in talks to resolve the fiscal crunch in the United States, according to Reuters.
US lawmakers said on Sunday that a compromise was possible in talks to avert the US$600 billion "fiscal cliff", which threatens to send the economy back into recession, it said.
MIDF Research head Zulkifli Hamzah in his fund flow report on Monday said that at 1,629 points, the FBM KLCI was currently only 24 points away from the long-term support, as represented by the 200-day moving average (200 DMA) of 1,605. Zulkifli said that he believed the FBM KLCI could make a revival this week on account of local support and weaker foreign selldown.
"The rebound on Wall Street last Friday and Malaysia's relatively strong 3Q12 GDP growth numbers are likely to prop up sentiments.
"We note that in May, the FBM KLCI had also made a dash towards the 200 DMA support, but reversed swiftly. Timing-wise, the market is good for a rebound," he said.
Zulkifli said that he expects buying support of index-linked counters in the weeks leading to the close of 2012.
"Confidence in Malaysia remained strong as evidenced in the risk-free Malaysian government bond market. The yield on 3-year MGS dropped to below the OPR on Friday reflecting foreign buying.
"One of the reasons for the continued faith in Malaysian markets is the relatively reported strong GDP growth in 3Q12," he said.
Among the stocks that could be in focus on Tuesday are IOI CORPORATION BHD []; China Stationery Ltd; BOLTON BHD []; MAH SING GROUP BHD []; and ESTHETICS INTERNATIONAL GROUP [] Bhd.
IOI registered a net profit of RM604.3 million for the first quarter (1Q) ended Sep 30, 2012, a jump of 134.1% year-on-year, mainly on currency gains and contributions from non-PLANTATION []s segments.
The group had registered a RM258.1 million net profit in the corresponding quarter in previous year. But revenue for the quarter fell 17.1% to RM3.4 billion, from RM4.1 billion a year ago.
China Stationery said on Monday its net profit for the quarter to end-Sept 2012 rose 98% year-on-year to RMB147.38 million (RM72.60 million) from RMB74.42 million, due to higher sales.
Revenue for the third quarter (3Q) increased by 14% to RMB505.80 million from RMB445.58 million recorded a year ago. For the nine-month period to end-Sept 2012, China Stationery recorded a 26% increase in net profit to RMB397.24 million from RMB315.62 million recorded in the previous corresponding period.
This was on the back of a 19% rise in revenue to RMB1.52 billion from RMB1.27 billion recorded a year ago.
Property developer Bolton's net profit for the second quarter ended Sept 30, 2012 rose 48.4% to RM12.43 million despite lower revenue and operating profit for the period as it saw greater contribution from associates and jointly-controlled entities.
Earnings attributed to equity holders for the three months ended Sept 30, 2012 was higher year-on-year as associate contributions jumped to RM3.11 million from RM671,000. The company also recorded a RM394,000 profit from ‘other investing activities' compared to a RM5.94 million loss in the previous year's corresponding quarter.
Mah Sing posted a net profit of RM55.23 million for the third quarter of 2012, up 27.8% from RM43.22 in similar quarter last year.
Revenue, however, was flat at RM420.84 million in the quarter under review compared to RM420.69 million recorded in the third quarter of 2011.
The group, in its filing with Bursa Malaysia, said for the nine months to end-September 2012 its total revenue rose 16% year-on-year to RM1.33 billion and net profit rose 37% to RM175.22 million.
On its prospects, the company said with RM2.2 billion sales secured as at mid-November 2012, it is well on track to achieve its 2012 full year sales target of RM2.5 billion.
The company said it is well-positioned to record sales target of at least RM3 billion in 2013.
RHB Research Institute retained a neutral stance on Mah Sing, but raised its fair value by 3.2% to RM2.58.
"We maintain our market perform rating on Mah Sing, as sentiment on property stocks is likely to stay cautious ahead of the general election," RHB said in the Nov 19 note, adding that its price target was at a 15% discount to its revised RNAV (revised net asset value) estimate of RM3.04 per share," the research house said in a note Monday.
Meanwhile, Inter-Pacific Securities Sdn Bhd in its independent advice circular (IAC) sent to the minority shareholders of Esthetics International has advised them to reject the offer by its majority shareholder Providence Capital Sdn Bhd to buy out the remaining shares and warrants it had not yet owned in the group.
The brokerage firm stated that the 50 sen per ordinary share and 12 sen per warrant cash offer was not fair and not reasonable based on its discounted-cash flow (DCF) valuation of EIG's shares of 69 sen per share and 15 sen per warrant which better reflects its full time value.