Financial News - 4th Nov 2010

Stocks to watch: Property stocks, Kulim, Pansar, CI Holdings

KUALA LUMPUR: Key Asian markets may be range bound on Thursday, Nov 4 after the US stocks closed marginally higher in volatile trade following the Federal Reserve's plan to buy US$600 billion (RM1.85 trillion) in Treasuries.

Most markets had already priced in the plan to buy the bonds, though earlier expectations were US$500 billion as the Fed took steps to boost the struggling economy.

Both the Dow and Nasdaq closed at levels not seen since 2008 while the S&P ended at a six-month high. The gains were preceded by an erratic session in which equities zigzagged up and down as the Fed announced a plan to buy $600 billion in Treasuries. The size of the plan was greater than had been anticipated but less than many hoped.

The Dow Jones Industrial Average was up 26.41 points, or 0.24%, at 11,215.13. The Standard & Poor's 500 Index was up 4.39 points, or 0.37%, at 1,197.96. The Nasdaq Composite Index was up 6.75 points, or 0.27%, at 2,540.27.

At Bursa Malaysia, property stocks may stage a mild pullback in a knee jerk reaction to Bank Negara Malaysia's (BNM) caution to lenders against irresponsible lending practices which would contribute to the build-up of excessive leverage among households.

BNM is imposing with immediate effect the maximum loan-to-value (LTV) ratio of 70% for the third house financing facility taken by a borrower as it seeks to curb "excessive investment and speculative activity in the residential property market".

The central bank said on Wednesday, the move was expected to moderate the excessive investment and speculative activity in the residential property market which has resulted in higher than average price increases in such locations.

Economists said there could be a pullback on property stocks following the imposition of the LTV ratio, which they said was necessary.

Kulim Bhd is undertaking a corporate exercise which involves the proposed share split of one 50 sen share into two 25 sen shares.

Kulim would also undertake a one-for-one bonus issue after the share split. Kulim also proposed to issue free warrants on a one-for-eight basis after the share split and bonus issue.

Its shares rose 22 sen to close at RM10.66 with 1.61 million units done on Wednesday.

Pansar Bhd will resume trading Thursday after Bursa Malaysia Securities uplifted the company from the PN10 classification. The company had completed its restructuring scheme.

Its additional 238 million new ordinary shares of 50 sen each at an issue price of 50 sen will be listed and quoted.

CI Holdings Bhd's earnings jumped 43% to RM11.77 million in the first quarter ended Sept 30, 2010 compared with RM8.22 million a year ago, boosted by higher revenue as its beverages division recorded strong growth.

The company said revenue rose 24% to RM153.38 million from RM123.78 million. Earnings per share were 8.29 sen versus 5.79 sen.

MAH SING GROUP BHD [] is undertaking two land acquisition deals valued at RM166.53 million as it moves to expand its landbank in the Klang Valley.

Mah Sing said the two pieces of land in Ampang and Cyberjaya had a combined gross development value (GDV) of approximately RM1.2 billion.

GUINNESS ANCHOR BHD []'s (GAB) net profit for its first quarter ended Sept 30, 2010 (1QFY11) jumped 44.6% to RM38.7 million from RM26.7 million a year earlier, on continued gains from the 2010 FIFA World Cup festivities in July and speculative buying prior to the Budget 2011.

GAB's pre-tax profit rose 44.31% to RM51.64 million from RM35.79 million a year earlier on the back of a 21.82% increase in revenue to RM366.63 million from RM300.97 million. Earnings per share (EPS) soared 44.91% to 12.81 sen from 8.84 sen a year earlier.

Meanwhile, GAB will hold its AGM at Sime Darby Convention Centre, KL at 11am Thursday.

Minority Shareholders Watchdog Group (MSWG) will raise questions on how much more continuous improvement will the board will be able to make in enhancing its earnings amid challenging economic environment and impact of economic growth on the malt liquor market.

Lingui Developments Bhd will hold its AGM at 10am. The MSWG raise questions on performance of plywood and veneer division in short to medium term.

MSWG expects the weak housing markets in Japan, US and possible anti-dumping duties by South Korea to have an impact as these markets account for 70% of group's total plywood exports in 2010.

MSWG to also ask if the board will commit to fix tenure for long-serving independent directors as three independent directors have served more than 20 years.
( Source: The Edge Malaysia written by Joseph Chin)