Stocks to watch: BToto, Affin, HLFG, Tenaga

Written by Joseph Chin

Saturday, 19 June 2010 09:31

KUALA LUMPUR: Key regional markets are expected to trade in a tight range on Monday, June 21 after the higher yet cautious close on Wall Street on Friday.

On Wall Street, stocks ground higher in another lightly traded session on Friday, ending a nervous week with gains despite signs of economic weakness at home and worries about public debt in Europe, according to Reuters.

Major indices rose for the second straight week even though housing and labor market data raised concern about the fragility of the recovery.

The Dow Jones industrial average gained 16.47 points, or 0.16%, to 10,450.64. The Standard & Poor's 500 Index rose 1.47 points, or 0.13%, to 1,117.51. The Nasdaq Composite Index added 2.64 points, or 0.11%, to 2,309.80.

At Bursa Malaysia, stocks to watch include BERJAYA SPORTS TOTO BHD [] (BToto), AFFIN HOLDINGS BHD [], HONG LEONG FINANCIAL GROUP BHD [] (HLFG) and TENAGA NASIONAL BHD [].

For the financial year, BToto net profit fell 8.4% to RM386.41 million from RM422.02 million. Revenue dipped 8.2% to RM3.39 billion from RM3.69 billion in the previous financial year mainly due to Sports Toto's results as well as higher group finance cost.

In Affin, Bank Negara explained that it rejected the former’s plan to take over the EON CAPITAL BHD [] as there were two issues which were not addressed.

It was reported the central bank stated there should not be any contravention of the existing regulations and to ensure the sustainability of the merged entity.

Meanwhile, HLFG is selling a 30% stake in Hong Leong Assurance Bhd (HLA) to Japanese insurer Mitsui Sumitomo Insurance Co Ltd (MSI) for RM940 million cash.

HLA is merging its entire general business to MSIG Insurance (Malaysia), the local unit of MSI. In return, HLA will get a 30% stake in the enlarged MSIG group, making it the second largest general insurer in terms of gross premium.

HLFG President and CEO Raymond Choong said he expected the enlarged entity would be more robust and resilient and poised to better compete and lead in the marketplace.

Tenaga could see some m ild profit taking after surging as much as 45 sen to RM8.80 on Friday. Tenaga chief executive officer Datuk Seri Che Khalib Mohamad Noh said the power giant would bid for a RM7 billion government project to upgrade power plants as the economic recovery boosts demand.

Phillip Capital Management Sdn Bhd had in report released earlier on Friday that it was upbeat about the prospects for Tenaga. It said the power giant, with a spare capacity of 46%, it will continue to benefit from the under-utilised capacity to ride the electricity demand growth over the next few years.

“There is little fear of gas subsidy removal as it will be reflected in tariff adjustment through a bi-annual review formula established in 2008.

“With low foreign shareholdings, the downside is limited, but when foreigners return, we see tremendous upside in the stock. The price has already taken into account most of the negative news. We recommend Buy on Tenaga as a laggard blue chip with considerable upside,” it said.

As for TANJUNG OFFSHORE BHD [], OSK Research had said while the emergence of Ekuiti Nasional Bhd (Ekuinas) as a strategic investor was positive, it remained its Sell call.

It said the Sell call would be maintained until it saw a notable strong earnings recovery. Its target price remains unchanged at RM0.78 based on a price-to-earnings ratio of 7.0 times FY11 earnings per share.

Ekuinas is a government-linked private equity fund manager and it acquired a 20% stake in Tanjung Offshore for RM73.45 million cash or RM1.30 per share.

Meanwhile, Malaysia Airline System Bhd will hold its AGM and EGM at the MAS Academy in Kelana Jaya, Petaling Jaya at 10am on Monday.

Also holding its AGM is PADIBERAS NASIONAL BHD [] at Sime Darby Convention Centre at 10am.