Stocks to Watch Petronas-linked companies, AirAsia, SKP, I-Bhd

Business & Markets 2012
Written by Surin Murugiah of   
Saturday, 08 September 2012 13:47

KUALA LUMPUR (Sept 8): The FBM KLCI could extend its gains in cautious trade next week on some bargain hunting, but investors could exercise caution following national oil company Petroliam Nasional Bhd (Petronas) reporting a 30% fall in its second quarter earnings.

But positive external news may cushion the local market.

US stocks held steady at four-year highs on Friday, closing out their best week since June as a sharply disappointing jobs report only fueled expectations that the Federal Reserve would act to stimulate the economy next week, according to Reuters. The S&P closed higher but strength in both the Dow and Nasdaq was limited by blue-chips Intel and Kraft, both of which warned on their profit outlooks.

The August nonfarm payrolls report showed job growth of only 96,000, well under the 125,000 expected. That added to hopes the Federal Reserve will announce additional stimulus after its policy meeting ends Thursday, but investors could be in a holding pattern until then, said Reuters.

Affin Investment Bank vice president and head of retail research Dr Nazri Khan said that following the bullish performance of the global stocks and the sharp correction in the local stocks, he expects the local FBM KLCI to stage an oversold rebound with 1,630 as the immediate target.

Petronas-linked counters could come under scrutiny after weaker crude oil prices and reduced oil production have weighed down on Petronas's second quarter earnings. 

The national oil company posted net profit of RM15.22 billion for the second quarter ended June 30, 2012, down 30% from RM21.7 billion in the previous corresponding period. Revenue came in lower at RM70.7 billion against RM72.9 billion a year ago.

With the political crisis in Sudan and south Sudan, Petronas lost an estimated US$1 billion (RM3.11 billion) as the production of oil halted there.

AIRASIA BHD [] is putting the finishing touches to a deal to buy up to 100 Airbus passenger jets as it expands internationally, sources familiar with the matter said on Friday, according to Reuters.

The deal, potentially worth around US$9 billion, is designed to fuel the growth of what is fast becoming a cluster of related airlines under AirAsia's founder Tan Sri Tony Fernandes, who placed a record order for Airbus jets last year. If confirmed, the deal could will a setback to Canada's Bombardier which has tried to persuade Asia's largest budget carrier to choose its alternative new CSeries jet.

The Edge weekly in its latest edition reported that I-BHD [] was believed to be in talks with Thailand's largest retail developer as its partner to kick off the development of i-City Mall.

The mall, with an expected gross development cost of RM500 million, is located in i-City, I-Bhd's ICT-bases urban development on a 72-acre freehold site along the Federal Highway in Section 7, Shah Alam.

The Edge also reported that plastics parts manufacturer SKP RESOURCES BHD [] was positioning itself as a contract manufacturer to grow its revenue stream by securing more contracts from its existing customers.

The weekly reported that the Johor-based company, which has seen quarterly net profit grow an average of 58% in the past five quarters, recently secured a new contract to manufacture and supply a new product for an existing customer.

"This is our second contract where we will assemble the full product for our existing customer. The commercial production for the new product is expected to commence early next year and should provide recurring income for the next few years," The Edge quoted SKP's excutive director Ivan Gan as saying. However, he declined to reveal more information about the new contract due to trade sensitivity, said the paper.