Written by Joseph Chin
Monday, 31 August 2009 14:29
KUALA LUMPUR: Stocks on Bursa Malaysia are expected to start off September on a cautious note, weighed down by the more than 5% plunge in China stocks on Aug 31, despite it was off its lows in late trade.
This is despite some improvements in Malaysia's corporate earnings and economy quarter-on-quarter. Other factors to watch are the trade data and if there is an improvement month-on-month in the exports to the US and China.
Stocks to watch include TRADEWINDS (M) BHD [] (TWM), Padibernas Nasional Bhd, Wah Seong Corp Bhd and oil and gas (O&G)counters following the volatile crude oil prices.
TWM is taking control of Bernas, including the stake held by Wang Tak, at RM2.08 per share. Bernas closed at RM1.92 last Friday.
However, TWM's gearing position would increase substantially as TWM intends to finance the purchase consideration by way of bank borrowings. Its gross borrowings will increase from RM1.23 billion to RM3.085 billion while the gross gearing will rise from 0.9 times to 2.25 times.
In Wah Seong, its 2Q net profit rose on annual and quarterly terms, boosted by the O&G services provider's pipe coating, and corrosion protection business. Wah Seong's net profit rose 33% to RM29.74 million from RM22.36 million from a year ago although revenue fell 8.3% to RM551.84 million from RM601.71 million.
AmResearch has reiterated its Buy call on Wah Seong with an unchanged fair value of RM2.65 per share, pegged to FY10F's price-to-earnings of 14 times.
"Its first half (1HFY09) results came in within expectations, accounting for 49% of our FY09F net profit of RM112 million and 48% of street estimate of RM116 million.
"The group's order book fell 23% quarter-on-quarter to RM1.05 billion on June 30 as the group did not secure significant contracts during the period. While the group's current order book accounts for a low 0.5 times FY09F oil & gas revenue, we understand that it is likely to secure major projects towards the end of the year," it said.
MEDIA PRIMA BHD [] returned to the black with net earnings of RM8.5 million in 2Q as the economy improved and as efforts to boost sales yielded results.
While the 2Q performance was better than the RM23.2 million net loss in 1Q. However, on-year, the profit was still 72.5% lower than a year ago as the global economic slowdown continued to hurt advertising spending.
O&G stocks also also attract attention following the volatile light crude oil price which headed towards US$72 following the tumble in China stocks. However, there are expectations for demand to strengthen over winter on the back of a global economic recovery.
Melewar Industrial Group posted net profit of RM20.52 million for its 4Q ended June 30 but sharply lower than the RM88.65 million a year ago. For the FY ended June 30, it posted net loss of RM157 million.
Guinness Anchor's 4Q net profit rose 40.5% to RM27.39 million from RM19.49 million a year earlier, helped by higher sales and writeback of provisions. Revenue grew 10.4% to RM276.27 million from RM250.31 million.
Full-year net profit rose 12.8% to RM141.99 million from RM125.86 million while increased 8.4% to RM1.29 billion from RM1.19 billion.