Stocks to watch: Plantations, Boustead, Pharmaniaga, Dialog

Get a free trial on EXPERT STOCK SCREENER!


Written by Joseph Chin of theedgemalaysia.com
Wednesday, 06 July 2011 19:33

KUALA LUMPUR: With the FBM KLCI scaling fresh highs on Wednesday, July 6, powered by GENTING BHD [] and Petronas Chemicals, the resistance for the 30-stock index is the psychological 1,600.

The KLCI managed to chalk up gains of 9.49 points to close at fresh high of 1,591.34 in late buying by funds of Genting Bhd, Petronas Chemicals Bhd, Petronas Dagangan and Genting Malaysia.

But investors may have to watch out for some selling after the record high, which saw the index turning out to be the second best performer among regional markets after South Korea’s KOSPI.

The KLCI is up 4.77% year-to-date and is trading at a price-to-earnings of 16.97 times while the Kospi is up 5.86% and is trading at a PE of 14.42 times.

Bank Negara Malaysia, which is holding its monetary policy committee meeting, will announce whether it will maintain or raise the overnight policy rate. Economists expect a 25 basis point hike to 3.25% on Thursday.

HSBC Global Research said it was looking for another 25bps increase in Malaysia's policy rate, with the central bank then remaining on hold for the rest of the year.

“For one thing, we argue that Malaysia's external sector will be recovering healthily throughout the second half of 2011, aided by the normalisation of the supply chains in the region.

“Moreover, strength in exports of commodities such as palm oil has, and will continue, to have a helpful buffering role against any slowdown in the electronics sector,” it said.

Late Wednesday, China raised interest rates for the third time this year, making clear that taming inflation remains a top priority even as its vast economy gently eases.

The 25 bps increase in lending and deposit rates underscores China's quiet confidence that the world's second-biggest economy is resilient enough to take tighter monetary policy in its stride, and is not threatened by a hard landing that some investors fear, Reuters reports.

Meanwhile, crude palm oil (CPO) futures for third-month delivery slumped RM19 to RM3,020 a tonne, the lowest since October last year, on bearish outlook for palm oil.

The weaker CPO price will impact the outlook for PLANTATION []s and this could weigh on the KLCI, where the diversified Sime Darby, KL Kepong, IOI Corp and PPB Group are part of the index.

Other stocks to watch are BOUSTEAD HOLDINGS BHD [], PHARMANIAGA BHD [],DIALOG GROUP BHD [] and SOUTHERN ACIDS (M) BHD [].

Boustead shareholders are in a for a windfall as it seeks to pare down its stake in Pharmaniaga Bhd. Boustead has proposed a corporate exercise to reduce its current stake of 97.81% in Pharmaniaga which includes a dividend-in-specie, restricted offer for sale, divestment and bonus issue.

Dialog Group Bhd’s 51% own subsidiary Pengerang Terminals Sdn Bhd inked a shareholders agreement with the State Secretary, Johor (Inc) to invest in a special purpose vehicle (SPV) -- Pengerang Independent Terminals Sdn Bhd.

Pengerang Terminals will hold 90 in SPV and the balance 10% equity stake will be held by the State Secretary, Johor (Inc). The SPV will undertake the first phase portion of the design, and development of an independent deepwater petroleum terminal at Pengerang, Johor.

Southern Acids (M) Bhd has recommended a final dividend (tax exempt) of 6% per shares of RM1 each. The dividends to be paid out would amounting to RM8.21 million for the financial period ended March 31, 2011.

MNRB HOLDINGS BHD [] and ALLIANZ MALAYSIA BHD [] have ended their negotiations over MNRB’s proposed sale of its takaful business.

Both parties had mutually agreed to end the negotiations. The proposal involved MNRB’s disposal of its equity interest in its unit Takaful Ikhlas Sdn Bhd.