Written by Surin Murugiah
Monday, 25 October 2010 09:04
Bookmark and Share
KUALA LUMPUR: Asian stock markets, including Bursa Malaysia, will likely look at corporate earnings to be reported in the US in the final week of October for some guidance, as well as to restore investor confidence.
US stocks capped a third straight week of gains last Friday, Oct 22 as encouraging earnings helped the market sustain upward momentum, led by Baidu Inc, the latest tech company to beat estimates, according to Reuters.
TECHNOLOGY [] stocks have led gains in the recent rally, with the Nasdaq up more than 17% since the end of August compared with the S&P 500, which is up 12.7%. Last Friday, the Nasdaq closed just shy of its highest level since May.
Earnings will remain the centre of attention this week. In the last week of October, 177 S&P 500 companies are due to report their balance sheets, of which seven are Dow components. Among them are energy giants Exxon and Chevron and technology giant Microsoft.
The Dow Jones Industrial Average dropped 14.01 points, or 0.13% to 11,132.56 last Friday. The Standard & Poor's 500 Index gained 2.82 points, or 0.24% to 1,183.08 and the Nasdaq Composite Index gained 19.72 points, or 0.80% to 2,479.39.
On Bursa Malaysia, the stocks that could be in focus on Monday are TENAGA NASIONAL BHD [], ALAM MARITIM RESOURCES BHD [], KARAMBUNAI CORP BHD [], SUNWAY HOLDINGS BHD [], HUNZA PROPERTIES [] BHD [], Hunza Properties Bhd and MTD CAPITAL BHD [] as well as technology-related stocks.
Tenaga shares could see some selling pressure after Maybank Investment Bank Bhd Research maintained its sell call on the stock and said Tenaga's full-year net profit excluding forex items would be 10% to 20% below consensus.
Tenaga is due to release its results later this week.
The research house said the proposed subsidy rationalisation and feed-in tariffs bode poorly for reinstatement of the tariff formula, adding that it viewed Tenaga being pushed back in the queue again, leaving it exposed to coal price fluctuations.
"Our RM2.5 billion FY10 net profit ex-forex estimate suggests just RM322 million 4Q net profit, down 40% quarter-on-quarter and 14% year-on-year from the 3Q RM536 million and 4QFY09 RM376 million.
"Tenaga's 4Q tends to be the weakest quarter, as 'other costs' are backloaded into that quarter. 4Q 'other costs' has been as much as 40% of the total for the full year," it said in a note last Friday.
Alam Maritim entered into memorandum of understanding (MoU) with Yayasan Sabah Shipping Sdn Bhd, a unit of Yayasan Sabah Group with a view to form a joint venture (JV) company.
Alam Maritim said the JV would be involved in the provision of services including offshore installation CONSTRUCTION [], marine operations, and subsea works to the energy industry in Sabah.
Karambunai Corp clarified that it had not received any notification from the government nor has it signed any agreement with or have shareholding in special purpose vehicle (SPV) which was originated by its controlling shareholder together with a Beijing-based contractor to develop an integrated eco-nature resort in Karambunai.
Karambunai Corp's controlling shareholder is low-profile tycoon Tan Sri Dr Chen Lip Keong.
Sunway entered into an MoU with Shanghai Zhushengyuan Real Estate Co Ltd (SZRE) to explore the feasibility of a proposed mixed development project comprising commercial and residential units in "Wuguang New City" in Wuguangxincheng, Changsha, China.
The MoU is also to explore the feasibility of other projects in China.
Hunza's net profit for the first quarter ended Sept 30, 2010 surged 273% to RM34.69 million from RM12.69 million a year ago, on the back of a 13% increase in revenue to RM64.53 million.
Hunza attributed the higher revenue and profit mainly to improvement to FRS 140 Investment Properties, whereby it measures investment property under construction at fair value on a yearly basis.
On its prospects, the company said it was confident of a strong performance for the 2011 financial year.
Trading in MTD Capital's securities will resume Monday after it was halted last Friday following the Philippines Supreme Court decision that upheld the legality of the contracts entered into the Philippines government with private investors on the construction, maintenance and operation of the South Luzon Expressway (SLEx) project.
The Court also lifted the temporary restraining order (TRO) it issued last Aug 13 against the implementation of the 250% increase in toll rates at the SLEx based in the Supplemental Toll Operation Agreement (STOA) signed by the government and its joint venture partners in 2006.
Late last Friday, MTD Capital said it was still unable to obtain a copy of the official judgment from the Court, adding it would release further announcement upon receiving the aforementioned official judgment.