Written by Joseph Chin
Tuesday, 19 October 2010 07:56
KUALA LUMPUR: After a weak start on Monday, Oct 18, key Asian markets including Bursa Malaysia should be able to stage a recovery on Tuesday, underpinned by the firmer overnight close on Wall Street.
The fresh corporate news on the local scene and also some impetus from the Budget 2010/2011 proposals should shore up some confidence in investors.
However, the 1,500 level for the KLCI would continue to be a formidable challenge unless there are more foreign fund inflows and a strengthening of the ringgit.
With Public Bank posting a record quarterly pre-tax profit above RM1 billion in the third quarter, this should provide confidence to investors on the strength of the banking system despite slower economic growth of 5% to 6% next year, which was not unexpected on a year-on-year basis following a recovery in the first half of 2010.
On Wall Street, U.S. stocks advanced on Monday as stronger-than-expected profit from Citigroup helped financial shares shake off worries that the foreclosure mess could threaten the stability of the housing market, according to Reuters.
Apple Inc, which hit an all-time high during the regular session, disappointed investors after reporting gross margins and iPad shipments. Its shares skidded 5 percent in after-hours trading while stock index futures fell, suggesting a weak market opening on Tuesday.
Shares in IBM also fell after the closing bell, losing 3.5 percent to $137.84. The stock had reached a 52-week high during the regular session. International Business Machines Corp reported a higher-than-expected profit and raised its outlook for the full year, but the shares fell on sluggish sales of TECHNOLOGY [] services.
The Dow Jones industrial average rose 80.91 points, or 0.73%, at 11,143.69. The Standard & Poor's 500 Index gained 8.52 points, or 0.72%, at 1,184.71. The Nasdaq Composite Index added 11.89 points, or 0.48%, at 2,480.66.
At Bursa Malaysia, stocks in focus would be Public Bank, PLUS EXPRESSWAYS BHD [], AHMAD ZAKI RESOURCES BHD [] (AZRB), KONSORTIUM LOGISTIK BHD [] and STAMFORD COLLEGE BHD [].
Meanwhile, UEM Group Bhd and the Employees Provident Fund (EPF) maintained that their proposed acquisition of the entire assets and liabilities of PLUS Expressways Bhd, for RM23 billion or RM4.60 per share, benefits all stakeholders and that the offer is "fair".
UEM group managing director/chief executive officer Datuk Izzaddin Idris said the takeover offer of RM4.60 per PLUS share reflected a "fair price" for the shareholders of PLUS as it represented a premium of 14.7% and 21.7% respectively to the highway operator's three-month (RM4.01) and six-month (RM3.78) volume-weighted average price (VWAP).
However, PLUS share price fell as investors viewed limited upside for the offer of RM4.60 per share as the takeover process could be lengthy.
Sime Engineering Sdn Bhd has filed a suit against AZRB over alleged breaches in the Malaysia-China Hydro joint venture agreement dated June 12, 2002 relating to the Bakun dam.
AZRB was served with a writ summons and statement of claim dated Oct 12 by Sime Engineering claiming “RM15.24 million for alleged breaches by AZRB of the Malaysia-China Hydro JVA” relating to Bakun hydroelectric project package CW2 - main civil works.
In Konsortium Logistik, Ekuiti Nasional Bhd has extended an unconditional takeover by offering RM1.55 per share after it acquired 56.5% of the company on Monday, Oct 18.
On Oct 18, Ekuinas unit Bendahara 1 Sdn Bhd had acquired 57.97 million shares or 24.58% via open market transactions at RM1.55 pershares for RM89.86 million.
On the same day, it had also entered into a sale and purchase agreement with Dream Hectares Sdn Bhd, PBS Office Supplies Holding Sdn Bhd and Loo Hooi Keat and acquired 75.29 million shares or 31.92% for RM116.71 million.
Following the completion of the acquisitions, Ekuinas’ direct stake increased from zero to 56.5% and exceeded the 33% of the voting shares.
Meanwhile, KARAMBUNAI CORP BHD [], which was also activitely traded on Monday, should continue to see interest.
Karambunai told Bursa Malaysia that it was honoured that its property has been included in the Budget Speech of the Prime Minister as a result of its general manager of the Nexus Karambunai Hotel attending the Performance Management and Delivery Unit driven NKEA (New Key Economic Areas) Tourism lab together with other members of private and public sector, to assist in governmental efforts to identify high-growth tourism potential to propel the country towards achieving Vision 2020.
“At the moment, KCB has not signed any understating or agreement with any parties and does not have any corporate developments which merit public disclosure. However KCB is aware that is controlling shareholder, in his private capacity, has acted as a promoter to invite interested parties to invest in Karambunai,” it said.
Meanwhile, Bursa Malaysia Securities Bhd has rejected Stamford College’s proposed corporate exercise involving the cancellation of 50 sen of the par value of each RM1 share.
Bursa Securities had, in its rejection letter announced on July 26, said the rejection was premised on the concern that the plan did not comply with the Main Market Listing Requirements which specified the regularisation plan must be sufficiently comprehensive and capable of resolving all problems, financial or otherwise.
Bursa Securities had earlier stated the steel manufacturing business undertaken by Stamford College had only started operations in February 2010 and had yet to show it was able to generate profits and positive cashflows or be proven to be a viable business.
Another factor was that the company's steel manufacturing business was highly dependent on a single supplier and single customer, which was a related party, to sustain its business operations.
Bursa Securities had highlighted that the education business is highly competitive with a low barrier to entry.