Stocks to Watch Banks, AirAsia, Benalec, Dialog

Business & Markets 2012
Written by Surin Murugiah of   
Monday, 17 September 2012 13:05

KUALA LUMPUR (Sept 17): The FBM KLCI could trend higher upon resuming trade on Tuesday after the long weekend and extend its gains for a third day running, in line with the improving sentiments at most global markets following hopes that fresh stimulus from the world's top central banks will support flagging growth.

Asian stocks held steady on Monday and gold, oil and copper hovered near multi-month highs, after markets rallied late last week on hopes that fresh stimulus measures from the developed world's big central banks will support flagging growth, according to Reuters.

The dollar languished near its lowest in seven months, as the aggressive new securities-buying programme announced by the Federal Reserve on Thursday tempted investors back into riskier assets such as equities and commodities, it said.

Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said he expects the FBM KLCI to stage further rebound with 1,650 as the immediate target.

“We note that the Fed decision to keep monetary policy accommodative until mid-2015 and to buy an additional US$40 billion in mortgage debt every month will keep borrowing costs low to stimulate USA and global growth higher,” he said.

Among the stocks that could be in focus on Bursa Malaysia are banking stocks; AIRASIA BHD []; Benalec Holdings Bhd; and DIALOG GROUP BHD [].

Banking stocks were among the major gainers last Friday, and hope of fresh stimulus from global banks will no doubt keep local banking stocks in focus.

TA Securities head of research Kaladher Govindan last Friday said major banks like HONG LEONG BANK BHD [] (HLB) and MALAYAN BANKING BHD [] (Maybank) were undervalued, and hence, the upside.

Last Friday, Maybank was at a new high up 13 sen or 1.4% at RM9.40, while CIMB Group Bhd and HLB added on 11 sen (or 1.45%) at RM7.69 and 20 sen (or 1.5%) to RM13.46 respectively.

AirAsia Bhd hinted it might change its mind on the acquisition of PT Metro Batavia in Indonesia for US$80 million cash.

If this happens, it is reversing its recent decision to capture up to 15% of the Indonesian passenger market. It is unsure if this latest development has to do with the setting up of a new budget airline, Malindo Airways, earlier this week.

AirAsia chief executive officer Aireen Omar told in response to a question on Friday: "Due diligence is still on-going. We haven't come to a conclusion yet. We are not re-thinking, but putting it under review."

The Edge weekly in its latest edition reported that Benalec is negotiating with several foreign “tank farm operators” to sell the first reclaimed parcel of 250 acres.

Citing financial executives familiar with the negotiations, The Edge said that the company was confident of closing a deal within the next few months and expects to commence reclamation works at Tanjung Piai, Johor, as early as the second half of 2013.

Dialog could be in vogue on the back of the Balai marginal field development, further developments for Pengerang project as well as the potential announcement of a very significant enhanced oil recovery project with Halliburton.

AmResearch Sdn Bhd in a note last Friday wrote that Dialog may also be on the verge of being awarded a very significant enhanced oil recovery (EOR) project in the Balingian province.

“Dialog has the competitive edge in this yet-to-be-announced project, which lies in the vicinity of the group’s Balai cluster project.

“This stems from Dialog being able to leverage on the pipeline infrastructure being installed by the RSC contractors,” said the research house.

Furthermore, the government’s efforts to develop Pengerang as a regional storage hub continue with a RM4.08 billion LNG terminal project that will be undertaken by a consortium that includes Dialog could augur well for the company.