Stocks to watch: Axiata, plantations, Favelle Favco, SILK

Written by Joseph Chin
Wednesday, 05 August 2009 00:02

KUALA LUMPUR: The 30-stock FBM KLCI closed at another year's high on Aug 4, mainly on fund buying of big capitalised stocks, but this could also be a time for smaller investors to lock in recent gains and await the release of the April-June financial results.

Sentiment would continue to be firm on Aug 5, with commodity prices on an upward trend, including crude palm oil and crude oil.

According to OSK Investment Research, with RM10 billion being raised for the Amanah Saham 1Malaysia, which goes on sale on Aug 5, there might be an influx of funds into the market to absorb any potential profit taking.

OSK Research also said despite its view that the FBM KLCI was significantly over-valued, the 30-stock index may continue to advance or sustain at the current level for a few more months although ultimately a retracement is inevitable.

The second-quarter (2Q) results season may also see more upgrades than downgrades.

Among the stocks to watch are Axiata Group, PLANTATION [ PLANTATION 0.000 0.000 (0.000%) ]s, Favelle Favco and SILK Holdings.

Axiata's PT Excelcomindo Pratama Tbk plans to undertake a rights issue to raise about US$300 million.

Axiata said the main factor for the capital raising was to reducing the gearing of XL's balance sheet in order to maintain financial flexibility and maintain a strong balance sheet and credit profile

Meanwhile, crane maker FAVELLE FAVCO BHD [ FAVCO 0.000 0.000 (0.000%) ], which had fallen below investors' radar screens for more than a year, could see some interest again.

Its units Favelle Favco Cranes (M) Sdn Bhd and Favelle Favco Cranes Pte Ltd bagged four contracts with a combined value of RM54 million.

Highway concessionaire SILK Holdings could be in focus also after the disposal of about 14 million SILK shares by Cerah Sama Sdn Bhd late last month.

PANTECH GROUP HOLDINGS BHD [ PANTECH 0.000 0.000 (0.000%) ]'s unit received the requisite approvals from the European Union Commission to export its steel products to the European Union (EU).

The country's first Special Economic Zone (SEZ) in Pekan, Pahang was launched on Aug 4 by the Prime Minister to generate investments of RM90 billion by 2020 and creating 220,000 new jobs.

This could see rising interest in CONSTRUCTION [ CONSTRUCTION 0.000 0.000 (0.000%) ] companies, especially those which are based in the east coast, in expectations they could be bidding for projects.

The SEZ, which is part of the East Coast Economic Region (ECER), is an integrated development zone with special incentives to attract investments and boost economic activities. The SEZ stretches from Kertih, Chukai, Kuantan Port City, Kuantan, Gambang to Pekan.