Written by Joseph Chin of theedgemalaysia.com
Saturday, 15 January 2011 21:51
KUALA LUMPUR: Regional markets could start off the new week on Monday, Jan 17 on a firmer note after Wall Street closed higher on Friday, as investors’ sentiment was underpinned by a bank-led rally.
Reuters said strength in financial stocks helped offset economic reports that showed soft December retail sales and consumer sentiment dented by rising gasoline prices. The market's resilience will be tested next week when a number of banks report results.
The Dow Jones industrial average added 55.48 points, or 0.47%, to 11,787.38. The Standard & Poor's 500 rose 9.48 points, or 0.74%, to 1,293.24. The Nasdaq Composite gained 20.01 points, or 0.73%, to 2,755.30.
US financial markets will be closed on Monday for Martin Luther King Jr. Day.
At Bursa, stocks to watch on Monday include Benalec Holdings Bhd, Syarikat Kayu Wang Bhd (SKW), Prinsiptek Corp Bhd and AIRASIA BHD [].
Benalec, an integrated marine engineering specialist, will be listed on Bursa Malaysia. Its offer price is RM1 per share while AmResearch has a Buy call and a sum of parts-derived fair value of RM1.90.
The research house said Benalec enjoys an 18% share of the Malaysian marine CONSTRUCTION [] market dominated by only five major active players.
Hence, Benalec should trade at a scarcity premium – the closest peer HOCK SENG LEE BHD [] trades at FY11F-12F PEs of 8 times-10 times versus Benalec’s 6 times-8 times (at IPO price of RM1), it said.
“Benalec’s highly scalable business model could also serve as a springboard to secure more value-accretive deals, including specialised industrial hubs,” said AmResearch.
SKW has secured a RM129.24 million subcontract for an affordable housing scheme in Alor Setar, Kedah. It said on Friday, Jan 14 that it has accepted a letter of award from B.S. Civil Engineering Sdn Bhd for the subcontract.
Prinsiptek, whose shares had risen recently following positive newsflow, saw a foreign fund, which had been a substantial shareholder for several years, reducing its stake.
UBS AG for the Artradis Barracuda Fund disposed of 5.5 million shares on Jan 10, reducing its stake to 9.53 million shares or 7.52%.
Another filiing showed UBS AG for AB2 Fund ceased to be a substantial shareholder when it disposed of 3.5 million shares on Jan 10.
RHB Research Institute had on Jan 10 issued a positive outlook for the company. It said the the company, having laid low over the last two to three years against a backdrop of a slowdown in the local construction and property sectors, Prinsiptek’s earnings are back on the growth path again.
It said the earnmings growth would be underpinned by (1) an expected improved job flow in the construction sector; and (2) its five new property launches. as it believed the construction sector prospects would be bright in 2011, underpinned by rising demand for contracting services on the back of a better job flow and tightening supply for contracting services.
“We have arrived at an indicative fair value of 58 sen for Prinsiptek,” it said. RHB Research valued Prinsiptek’s construction business at 10 times one-year forward earnings, in line with our one-year forward benchmark target price earnings ratio of 10 to 16 times for the construction sector; and its property business by discounting back project cash flows at the 10% property benchmark discount rate.
Last month, Prinsiptek announced it plans to undertake an estimated RM100 million mixed development on a newly acquired leasehold land in Section 7, Shah Alam, Selangor.
Prinsiptek said the project involving serviced apartments and shoplots, is expected to generate a profit of approximately RM25 million, based on a development cost of some RM90 million.
In AirAsia, the foreign shareholding increased to 51.55% of its paid-up share capital of 2.77 billion shares as at Dec 30, 2010. The low-cost carrier said on Friday, Jan 14 that this was an increase of 3.48% from the 48.07% as at June 30.
DIGI.COM BHD [] has moved closer to its proposal to provide mobile broadband services after it submitted its detailed business plan to the Malaysian Communications and Multimedia Commission (MCMC) on Friday, Jan 14.
Its unit DiGi Telecommunications Sdn Bhd had submitted the plan to the MCMC as part of its application for a spectrum in the 2600MHz band, which is essentially for 4G.
"This is pursuant to MCMC’s offer to award 20MHz of this spectrum via apparatus assignment subject to DiGi submitting a suitable business plan," it said.
DiGi said on the 2600MHz spectrum would enable it to provide enhanced mobile broadband services to its customers.
"By utilising long term evolution TECHNOLOGY [], customers/end users will be able to benefit from improved user experience from both higher data speeds and improved service quality," it said.