Stocks to Watch Astro Malaysia, Public Bank, Mah Sing, INIX

Business & Markets 2012
Written by Surin Murugiah of  
Thursday, 18 October 2012 17:58

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KUALA LUMPUR (Oct 19): The FBM KLCI could end the week on a positive note in line with the re-emerging investor confidence at global markets, following encouraging data from China and the US during the week.

Also, the return of pay-TV giant Astro Malaysia Holdings Bhd to the Main Market of Bursa Malaysia Securities Bhd on Friday — coupled with PUBLIC BANK BHD []'s 3Q solid earnings — could give the much-needed impetus for the local market to sustain its gains and remain above the 1,660-point level.

Asian shares struck a seven-month high on Thursday as a slew of Chinese data pointed to stabilisation in the world's second largest economy, and positive US housing data helped ease worries about a sharper slowdown in global growth, according to Reuters.

Meanwhile, European shares edged toward a one-month high and Asian stocks surged on Thursday, as a slew of Chinese data boosted optimism over the health of the world economy, it said.

The gains were being held in check by concerns there could be disagreements at a two-day European leaders' meeting, which begins later, over plans for a banking union or measures to help struggling Spain and Greece, said Reuters.

Maybank Investment Bank Bhd (Maybank IB) head of retail research and chief chartist Lee Cheng Hooi said the FBM KLCI Index traded in a narrow price range of 16.75 points with low volumes of 0.98 billion to 1.30 billion done.

"The index closed at 1,665.42 on 18 Oct, up 4.75-points from the previous day as blue chip stocks like Axiata, Hong Leong Bank, Maxis and Petronas Chemicals, caused the index to rise in a bout of selective buying activities.

"With the rebound tone that emerged since the late-Sep low of 1,595.85, the key support levels are seen at the 1,620, 1,640 and 1,665-levels, whilst the resistance level of 1,668 may cap the initial market advance," he said.

Among the stocks that could be in focus on Friday are Astro; Public Bank; MAH SING GROUP BHD []; and INIX TECHNOLOGIES HOLDINGS BHD [] (INIX).

Astro Malaysia is making a comeback to Bursa Malaysia on Friday, with an initial public offer (IPO) price of RM3 per share.

The listing is valued at RM15.59 billion at its IPO price, nearly double the RM8.3 billion its predecessor ASTRO ALL ASIA NETWORKS PLC [] was worth using its privatisation price just over two years ago.

The retail portion of Astro Malaysia has been oversubscribed by 6.08 times, according to a statement by the Malaysia Issuing House (MIH).

A total of 57,259 applications asking for 735.93 million shares were received for the 103.9 million shares offered to the general public. The amount of shares offered to the Bumiputera retail investors saw an oversubscription rate of 3.09 times, while the non-Bumiputera portion was 9.07 times oversubscribed.

The retail portion represents only 2% of the number of shares sold at the IPO, which is set to raise RM4.6 billion for Astro Malaysia and its owners, having fixed the listing price at RM3 apiece for both retail and institutional investors.

Valuation on Astro Malaysia from five research houses obtained by showed a split in opinion.

Price targets ranges between ECM Libra Research's RM3.09 and TA Investment Research's RM3.53 apiece, which implied a wide 3% to 17.7% upside potential from its IPO price.

A few research houses, whose investment banking colleagues are involved in the IPO, are on a "blackout period" and cannot publicly speak on Astro Malaysia for at least 45 days.

Public Bank's net profit for the third quarter (3Q) ended Sept 30, 2012 rose to RM983.29 million versus RM931.95 million a year ago, as a result of the retrospective application of MFRS 139.

The banking group said on Thursday that revenue for the quarter rose to RM3.58 billion from RM3.27 billion a year earlier.

Earnings per share was 28.08 sen while net asset per share was RM4.83.

For the nine months ended Sept 30, Public Bank's net profit rose RM2.88 billion from RM2.77 billion.

In a statement Thursday, Public Bank chairman Tan Sri Dr Teh Hong Piow said that as a result of the retrospective application of MFRS 139, the comparative pre-tax profit and net profit for the corresponding first nine months of 2011 were restated upwards by RM219 million and RM164 million to RM3.67 billion and RM2.77 billion respectively.

"Hence, the group's pre-tax profit and net profit for the first nine months of 2012 were 3.6% and 3.8% higher than the restated corresponding period in 2011. "Excluding the effects of such restatement, the group's pre-tax profit and net profit for the same period increased by 10.2% and 10.4% respectively," he said.

Teh said the bank's strategies remained unchanged, and that Public Bank would continue to focus on its core retail banking and financing business as well as upholding strong corporate governance to support long term sustainable growth.

"The group will continue to leverage on its strong PB branding and its wide and efficient branch network; and our excellent customer service to deliver continuous revenue growth.

"For the fourth quarter of 2012, the group is expected to maintain its earnings momentum and record satisfactory performance," he said. Alliance Research said Public Bank's 9MFY12 net profit of RM2.87 billion (+3.8% y-o-y) came in within its expectation and market consensus.

"We have recently upgraded our recommendation on Public Bank to Neutral (from sell), in view of defensiveness of its operations and stock price, which are appealing during period of uncertainty. We have fairly valued the group at RM13.62 upon applying a 10% blanket discount to our Gordon Growth Model," it said.

Mah Sing has signed a 99-year lease agreement with Medini Land Sdn Bhd for two parcels of land in Iskandar Malaysia for RM74.7 million cash consideration.

According to the group's announcement on Bursa Malaysia on Thursday, its wholly-owned subsidiary Tropika Istimewa Development Sdn Bhd has signed the lease purchase agreement on Thursday.

The land has a gross floor area of 2.14 million sq ft located in prime area in Medini, Iskandar Malaysia with a potential gross development value (GDV) of RM1.1 billion.

Bursa Malaysia Securities Bhd has publicly reprimanded INIX for failing to establish an internal audit function since Jan 31, 2009 until Sept 17, 2012.

In a statement Thursday, Bursa Securities said the failure to establish an internal audit function was in contravention of Rule 15.27(1) of the Listing Requirements of Bursa Malaysia Securities Bhd for the Mesdaq Market (MMLR) / Bursa Malaysia Securities Bhd ACE Market Listing Requirements (ACE LR) where a listed corporation must establish an internal audit function which is independent of the activities it audits.

"Bursa Securities views the contravention seriously as the requirement for listed companies to establish an internal audit function is important to ensure an independent and regular review and/or appraisal of the effectiveness of the risk management, internal control and governance processes within the company.

"While Bursa Securities has not found any of INIX's directors to have caused or permitted the breach by the company, Bursa Securities wishes to highlight and remind INIX and its directors of their obligation in ensuring compliance of the listing requirements and to uphold appropriate standards of responsibility and accountability to its shareholders and the investing public," it said.