Stocks To Watch Infrastructure, banks, plantations, Sime, UEM, Genetec, Green Packet, Mulpha Land

Business & Markets 2013
Written by Ho Wah Foon of   
Tuesday, 10 September 2013 19:25

KUALA LUMPUR (Sept 10): Based on news flow and corporate announcements today, the stocks that may excite the market tomorrow include Infrastructure stocks, banks, PLANTATION []s, Sime, UEM, Genetec, Green Packet and Mulpha Land.

Infrastructure stocks may be stirred by news that the government plans to spend RM160 billion more for rail-related projects by 2020.

Prime Minister Datuk Seri Najib Tun Razak, who announced this today, said since 1990 the government had invested over RM50 billion, reported Bernama.

"Now, more than ever, we are seeing a massive expansion of the rail network in Asia, including in Malaysia. In a sense, it is a resurgence of rail, as rail not only helped build many nations in their fledgling years, but also there is renewed interest in rail," Najib said when opening a rail conference.

Malaysia’s banks are solid as they are not involved in risky financial instruments such as derivatives by US banks, said investment guru Dr Marc Faber.

Malaysia's financial condition, Faber said, is one of the strongest in the world today due to the prudent management of its financial system.

Faber, the publisher of the widely-read Gloom, Boom & Doom report, said despite Fitch Ratings' recent negative outlook on Malaysia, the country is relatively well-managed compared to other emerging countries.

Faber expressed more interest in Malaysian equities, rather than US market.

"Malaysian equities are not exciting. However, they are relatively stable, supported by a well-balanced economy coupled with no major downward risks," he said.

Plantation companies may come under scrutiny after official data show that Malaysia's crude palm oil output rose 3.61% month on month to 1.74 million tonnes in August this year, inventory increased 0.11% to 1.67 million tonnes while palm oil exports climbed 7.37% to 1.52 million tonnes.

Meanwhile, the exports of Malaysian palm oil products for Sept. 1-10 rose 10.8% to 462,671 tonnes, from 417,414 tonnes during Aug. 1-10, said cargo surveyor Intertek Testing Services on Tuesday.

The official August data on palm oil released at noon today suggest that the monthly production of the vegetable oil will increase in the coming months and inventory will build up accordingly, said JF Apex Research.

“We expect higher inventory to keep a lid on the upside of CPO price in the coming months and hence we maintain our neutral stance on the sector.”

SIME DARBY BHD [] said its joint venture company Sime Darby Sunrise Development Sdn Bhd has unveiled a RM1.6 billion integrated development, named Radia, at the heart of Bukit Jelutong in Shah Alam.

In a statement, Sime Darby said Radia was jointly launched today by group CEO of Sime Darby Bhd, Datuk Abd Wahab Maskan and managing director/CEO of UEM SUNRISE BHD [], Datuk Wan Abdullah Wan Ibrahim.

The integrated development was the result of a landmark 50:50 joint venture between Sime Darby Property and Sunrise Bhd (a wholly owned subsidiary of UEM Sunrise).

“This development will collaborate to leverage on each other’s expertise to bring further strategic value to our business owners, customers and investors,” said Abd Wahab.

Wan Abdullah said Radia will fulfill the immediate and long term needs of the Bukit Jelutong community and the wider catchment area of Greater Kuala Lumpur.

Genetec TECHNOLOGY [] Bhd, an engineering and design specialist, has entered into a foreclosure agreement for the disposal of certain assets and operations of its indirect subsidiary US-based IP Systems, Inc (IPS) for RM720,000 in cash.

IPS is a 60%-owned indirect subsidiary which is directly held by Genetec Global Technologies, Inc (GGT), a wholly-owned subsidiary of Genetec as well as Springs Fabrication, Inc (SFT).

“The proposed disposal is in the best interest of Genetec Group in view that the proceeds raised are intended to be utilised to repay loans of IPS,” the company said, adding the proposed disposal is expected to be completed by fourth quarter of 2013.

GREEN PACKET BHD [] clarified that it has not received any offer to purchase its shareholdings in P1, when responding to an news article that said the company “is close to sealing a deal” to hive off its 55% owned 4G unit, Packet One Networks (M) Sdn Bhd (P1).

However, Green Packet said: “Nonetheless, as part of the efforts to maximize shareholder returns, the company will continuously pursue possibilities of collaborations and partnerships to complement the company's business strategy.”

MULPHA LAND BHD [] (MLB) plans to reduce its bank borrowings by RM4 million through the disposal of land in Klang for a cash consideration of RM8.63 million.

Mulpha Land said it has entered into a sale and purchase agreement with Amazing Acres Sdn Bhd, for the disposal of two pieces of vacant freehold land measuring 5.1664 ha located in Kapar, Klang.

"Part of the proceeds from the proposed disposal will be utilised towards the repayment of MLB Group’s bank borrowings, which will result in a reduction of MLB’s gearing level and in turn reduce the borrowing costs which will translate into interest savings for MLB Group," it said in a filing on Bursa today.

It noted that the deal is also expected to increase the net assets per share of the group, and reduce its gearing for the financial year ending December 3, 2013.

Based on the sale consideration, MLB is expected to make a gain before tax of RM3.97 million.