Stocks To Watch KLCI index stocks, MAHB, KNM, REDtone, MAS, Sumatec, Ancom, Nylex, Silver Ridge

Business & Markets 2014
Written by Ho Wah Foon of   
Monday, 27 January 2014 20:13

KUALA LUMPUR (Jan 27): The local stock market, led by blue chips and index stocks, may continue to come under selling pressure if the ringgit continues to slide tomorrow.

Concerns over the tapering of US stimulus measures and weakness in China’s economy could continue to cloud the market.

The FBM KLCI fell 23.69 points or 1.3%, in line with global markets today. The outflow of foreign funds, which has resulted in the continuous fall of the ringgit, continued unabated last week.

The ringgit has depreciated to its weakest level in three and a half years against the US dollar amid sales by foreign funds from emerging markets.

Foreign funds sold a net RM1.259 billion of Malaysian stocks in the open market last week, according to MIDF Research. This was the highest since the week ended Nov 15 last year.

Malaysia Airports Holdings Bhd (MAHB)’s share price fell after the company announced its weak final quarter results. At market close today, the airport operator fell 16 sen or 1.8% to end at RM8.68.

The company said today its final quarter net profit fell 38% to RM48.51 million from the previous year's corresponding quarter due to lower construction income, higher staff cost and more losses from its Turkish unit. Revenue dropped to RM1.12 billion from RM1.33 billion.

The airport operator also told reporters today that it will undertake a private placement of its shares in two months to reduce Khazanah Nasional Bhd’s stake to 36%.

Looking ahead, MAHB said it is targeting passenger growth of 9.7% in 2014, in anticipation of higher passenger movements when klia2 starts operations on May 2 this year.

However, klia2 is expected to incur higher operating expenditure. Hence, MAHB only sees performance improving from 2015 onwards.

KNM Group Bhd has proposed to undertake a par value reduction via the cancellation of RM0.50 of the par value of every existing share of RM1.00 each in the company.

The issued and paid-up share capital of KNM is RM1,490,013,252 comprising 1,490,013,252 ordinary shares of RM1.00 each, including 23,271,275 treasury shares credited as fully paid-up and 488,920,659 outstanding warrants 2012/2017 as of today.

“The proposed par value reduction will give rise to a credit of RM745,006,626 which will be credited to the share premium reserve account of the company and may be utilised in such manner as the board deems fit,” said the company in a filing with Bursa Malaysia.

On the rationale for the exercise, KNM noted that as at Jan 24, the closing price of KNM Share was RM0.565, which was at a discount of 43.5% to the existing par value of RM1.00 each in KNM share.

“The current market price of KNM shares is therefore not conducive for KNM to embark on any fund-raising exercise and/or corporate exercises involving issuance of new shares.”

REDtone International Bhd announced that its net profit for the second quarter ended November 30, 2013, rose 52% year-on-year to RM6.04 million.

Revenue for the second quarter stood at RM30.45 million, up 14% from RM26.68 million in the preceding year’s corresponding quarter.

Net profit for the cumulative six months to Nov 2013 rose to RM9.7 million, from RM6.0 million a year ago. Revenue for its six months also rose to RM66.56 million from RM57.35 million previously.

Malaysia Airlines Bhd (MAS) will suspend flights to Los Angeles effective April 30 following a route rationalisation exercise to stem losses, Bernama reported.

"While MAS has a long history in Los Angeles, this route is no longer economically viable.

"The factors contributing to this negative situation today include overcapacity and competition resulting in lower yields, high cost of operating the B777 aircraft and pressure from continued increases in fuel costs.

"These are adding further pressure to MAS' group expenses, which we are continuously evaluating," Group CEO Ahmad Jauhari Yahya said in a statement.

Sumatec Resources Bhd has undertaken initial extraction of crude oil reserves at its Rakushechnoye oil and gas field in Kazakhstan since Jan 25.

In a statement to Bursa Malaysia today, Sumatec said oil output is estimated at 150 barrels per day at the field known as the Shelly oil field.

"Oil production at the second well will follow in about two week's time as planned. Sumatec will provide further details as soon it is available," Sumatec said.

Ancom Berhad’s posted a net profit of RM4.5 million for its second financial quarter ended 30th November 2013, from a net loss of RM8.69 million a year ago.

Revenue for the quarter rose to RM528.07 million from RM514.81 million in a similar quarter a year ago.

Cumulative profits for the six months to Nov 2013 rose to RM6.18 million from a net loss of RM12.67 million a year ago. Cumulative revenue for the period was RM1.01 billion, from RM1.03 billion a year ago.

Nylex (Malaysia) Bhd’s net profit jumped 68% year-on-year (y-o-y) to RM3.62 million from RM2.15 million for its second quarter ended 30 November 2013.

Revenue for the quarter improved marginally to RM446.60 million, from RM444.00 million in the prevous year's corresponding quarter.

Net profit for the six months to November 2013 rose to RM5.96 million from RM4.34 million the previous year, while revenue for the period fell slightly to RM863.55 million from RM885.71 million.

Looking ahead, the group said it expects a difficult trading environment.

Melati Ehsan Holdings Bhd's net profit jumped 202% to RM4.98 million in the first quarter ended November 30, 2013 from RM1.65 million a year earlier. Profit growth came on higher revenue from its construction, trading and real estate development units.

Melati Ehsan said revenue rose to RM66.49 million from RM40.21 million.

The company has proposed a first and final single-tier dividend of 2.5 sen a share for financial year ended August 31, 2013.

Silver Ridge Holdings Bhd announced that its wholly-owned unit  Silver Ridge Sdn. Bhd has been awarded by Telekom Malaysia Berhad a service contract worth RM10.53 million.

The contract is for the provision of the consolidated comprehensive maintenance and support services of “Huawei Multi Service Access Node Equipment”.

The contact is for five years commencing 1 January 2014 until 31 December 2018, and is expected to contribute positively to the earnings of the company during the period.