Barefoot Investor: May 2011

KUALA LUMPUR: Shares of TENAGA NASIONAL BHD [] rose to a high of RM6.18 in morning trade on Wednesday, May 18 on expectations of a tariff hike.

At 11.17am, it was up 17 sen to RM6.15 with 3.00 million shares done.

The FBM KLCI rose 5.35 points to 1,541.62. Turnover was 366.04 million shares done valued at RM708.63 million. There were 271 gainers, 303 losers and 262 stocks unchanged.

OSK Research said for TNB, there could be a small hike in electricity tariff as it needed a 1% hike to cover the Renewable Energy feed-in tariff (FiT) scheme.

“The 1% tariff hike to cover the costs associated with the FiT scheme is expected to have a very minimal impact to electricity demand. FIT. So a 3-5% hike is not out of the question,” said OSK Research. (


MPHB a surprise RAPID winner

While oil and gas (O&G) companies are already identified as prime beneficiaries of the USD20bn (RM60.8bn) Refinery and Petrochemicals Integrated Development (RAPID) in Pengerang Johor, a surprise winner arising from the project is Multi-Purpose Holdings Bhd (MPHB). MPHB, which is undergoing a makeover to become a pure number forecast operator (NFO), has 4.641.3 acres of plantation in Pengerang with some portions fronting the sea. The land is said to be next to the site where the various RAPID projects are to be located. (Financial Daily)

Bland puts to reset concerns on RM711m bond redemption

The speculation on Berjaya Land Bhd (Bland) undertaking a massive restructuring to redeem a RM711m bond issue was put to rest on Monday when the company announced that it had deposited the required sum into a reserve account, fulfilling its obligation to bondholders. The amount was due on 15 August this year, which means Bland is ahead of schedule to redeem the five year debt paper issued in 2006.(Financial Daily)

Latexx shareholders denied exit opportunity, lose money

Shareholders of Latexx Partners Bhd must be wondering what went wrong with the takeover deal of the company.On Monday, Latexx shares plummeted by 10% after the company said the deal was aborted. Monday's closing price of RM2.40 is also a significant drop from the indicative offer price of RM3.10 that was stated on Jan 31 when the company received a conditional offer to buy out its assets. But in explaining why the deal was aborted, Latexx only said the parties could not agree on the terms of the deal. (StarBiz)

Billionaire Syed Mokhtar to list three of his MMC units worth RM13bn

MMC Corp Bhd, a company owned by billionaire Tan Sri Syed Mokhtar Al - Bukhary, will spin off three of its subsidiaries worth a total of RM13bn for a listing either this or next year. Group managing director Datuk Hasni Harun said the corporate exercise would likely see Gas Malaysia Sdn Bhd listed first followed by the re - listing of Malakoff Bhd and Johor Port Bhd.“ We are planning to unlock value via possible listing of our stable of companies, ” Hasni said reporters after its AGM yesterday. He said MMC was currently conducting financial and technical due diligence to get the go - ahead from the board of directors. (StarBiz)


WASHINGTON: Treasury Secretary Timothy Geithner says that China needs to make more progress on economic issues vital to America's interests, including speeding up the rise of its currency against the dollar.

Critics say an undervalued yuan is swelling China's trade surplus. Geithner said Tuesday that a stronger yuan also would help China restrain inflation.

Geithner is previewing administration goals ahead of annual talks next week between the two countries on economic and foreign policy issues. He called on Beijing to honor commitments that Chinese President Hu Jintao made in a January meeting with President Barack Obama in such areas as protecting American firms' intellectual property rights and technology.

The Treasury secretary says the administration also will press for reforms of China's financial system. - AP


WASHINGTON: Australia's foreign minister warned Tuesday of a new era of protectionism if global trade talks should fail.

Fears are growing among World Trade Organization members that the so-called Doha Round could now collapse with little to show for almost 10 years of haggling.

Foreign minister Kevin Rudd said that would signal that protectionism among small groups of nations was OK. He said bilateral trade agreements or pacts linking small groups of nations were no substitute for a global pact.

"I would appeal to all countries who are contemplating big decisions on the future of Doha to think through the consequences of the alternative," he said in a talk at the Brookings Institution think tank.

"It's not just not delivering a positive trade outcome. It's the signal contained in that, that the era of free trade is coming to an end."

Rudd said that governments should reflect on the economic history of the 1930s when global downturns were compounded by protectionism.

Rudd, a former prime minister, is visiting Washington and held talks Monday with Secretary of State Hillary Rodham Clinton.

The Doha Round was launched in Qatar's capital in late 2001 and was meant to add billions of dollars to the global economy by spurring cross-border trade.

WTO chief Pascal Lamy has warned the trade negotiations are at "serious risk" because developed and developing nations cannot agree on how to reduce duties on manufactured products such as chemicals and electronics. - AP


Kuala Lumpur: Companies that were red-flagged by auditors and those that reported stark difference in their audited net earnings, saw their stocks punished by investors yesterday.

The selldown in some of the companies was systematic, as investors were wary of their long-term prospects.

Since Friday, some 16 companies either had their books qualified by external auditors, or had revealed significant variance in their audited net earnings.

From the 16, eight companies saw their share prices fall, while two closed unchanged. Shares in the other six companies were untraded yesterday.

Sumatec Resources Bhd saw its share price fall by as much as 48 per cent to close the trading day 13 sen a share.

The Sumatec warrant, which also one of the top 10 actively traded securities fell by more than 50 per cent to 7 sen.

Sumatec's auditors SJ Grant Thornton was not convinced of the company's ability to secure new contracts.

The auditor highlighted that Sumatec did not impair goodwill on its subsidiary's consolidation and deferred tax assets of RM33.48 million and RM13.15 million respec-tively.

It also added that the company's trade receivables of RM5.91 million have been long outstanding and not impaired.

"I think, in most cases, the auditors are just making sure that provisions are being made on uncollectable debts. The rule of thumb today is to make provision for debts that can't be collected in six months," said Jupiter Securities head of research Pong Teng Siew.

Other notable stocks that fell include DBE Gurney Resources Bhd and Alam Maritim Resources Bhd.

DBE's shares fell by more than 5 per cent after it reported an audited net loss of RM3.71 million, more than 17 times of its unaudited net loss of RM202,000.

Meanwhile, Alam Maritim's shares fell by 4 per cent after it announced an audited net loss of RM12.9 million for the financial year ended December 2010, as compared to its unaudited net profit of RM2.2 million.

According to analysts, these variance between unaudited and audited numbers will, to a certain extent, change investors' long-term view of the companies.

"As you can see in today's selldown in some of the stocks, investors do take into account all these. Variations like these will make investors cautious of a company's sustainability and the credibility of its unaudited accounts," OSK Research head of research Chris Eng added.

While most analysts feel that most of these "incidents" are mainly driven by companies' misinterpretation of the new accounting standards, some feel that it could be a sign of more bad news to come.

"I think we can't discount the fact that it may be a prelude to bigger adjustments later," said Pong.(business times)


KUALA LUMPUR: Blue chips on Bursa Malaysia extended their losses for the fourth day, sending the FBM KLCI below the 1,530 level again on Wednesday, May 4 as investors decided to keep out of the riskier equities, in line with key regional markets.

Investors were also cautious ahead of the Bank Negara Malaysia meeting on Thursday. Economists don’t expect the central bank to raise the overnight policy rate, which has been maintained at 2.75% since last July. However, they expect the statutory reserve requirement to be raised by another 100 basis points to 3%.

The cautious sentiment was also reflected in the key regional markets. Reuters reports China's stocks fell to a two-month low on Wednesday as investors dumped commodity-related sectors for a sixth straight session, but Hong Kong stocks closed above key chart support, suggesting the market's decline will not accelerate in coming days.

At Bursa Malaysia, the KLCI fell 3.04 points or 0.2% to 1,528.43. Turnover was 1.2 billion shares valued at RM1.51 billion. The broader market signaled the weakening sentiment, with 653 losers to 163 gainers.

Meanwhile, the Shanghai Composite Index fell 2.26% to 2,866.02 while the Hang Seng Index shed 1.35% to 23,315.24 while Singapore’s STI lost 1.26% to 3,113.76.

Crude palm oil third month futures fell RM7 to RM3.250 while light crude oil shed 10 cents to US$110.95. The ringgit was weaker against the US dollar at 2.9755 versus the previous close of 2.9700.

At Bursa, GENTING BHD []’s fall of 12 sen to RM11.30 dragged the KLCI down by 1.05 points while Maybank’s decline of six sen to RM8.66 pushed the index down by another 1.04 points.

HL Bank fell 12 sen to RM10.30, Petronas Dagangan 14 sen to RM15.16, Maybank six sen to RM8.66, Axiata and Petronas Chemicals four sen each to RM4.89 and RM7.18.

TAHPS was the top loser, down 27 sen to RM4.60 while Nestle gave ip 20 sen to RM48.20, Tradewinds 19 sen to RM7.92, Coastal Contracts 16 sen to RM3.36 and Puncak 14 sen to RM2.

Ramunia-WA was the most active with 72.5 million units done, down six sen to 41 sen while the shares gave up eight sen to 56 sen. Fitters lost nine sen to 98 sen

Low-profile counter, The Store was the top gainer, up 50 sen to RM3 with3,000 shares done. MAA was in play again, jumping 22 sen to RM1.32.

Among mid-cap stocks, Genting PLANTATION []s rose 14 sen to RM8.14 and Tan Chong 11 sen to RM4.65.(


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