Written by Joseph Chin
Saturday, 23 January 2010 20:48
KUALA LUMPUR: Regional markets will continue to see volatile trade on Monday, Jan 25 with more downside pressure after US stocks fell for the third day, the worst in 10 months, on Friday.
Investors worried White House's plan to curb bank risk-taking would cut profits, and tech shares slumped after Google Inc's disappointing results.
Reuters said uncertainty about the Senate's confirmation of Ben Bernanke for another term as the Federal Reserve's chairman also rattled investors in a week when political squabbles helped erase stocks' gains for 2010, according to Reuters.
The Dow Jones industrial average fell dropped 2.09% to 10,172.98, the Standard & Poor's 500 Index skidded or 2.21% to 1,091.76. The Nasdaq Composite Index fell 2.67% to 2,205.29.
At Bursa Malaysia, the FBM KLCI which fell below the psychological important 1,300 level may extend its losses this week starting on Jan 25, with banks, PLANTATION []s and latex glove makers the major decliners and investors lock in gains.
Again investors should see the selling of fundamentally strong stocks as buying opportunity to pick up these counters. The improvements in the economic outlook and corporate earnings should again spur buying interest.
Stocks to watch include Axiata Group Bhd, KENCANA PETROLEUM BHD [], DRB-HICOM BHD [], Yeo Hiap Seng (Malaysia) Bhd, Ho Hup CONSTRUCTION [] Co. Bhd, Rubberex Corp (M) Bhd and SAPURACREST PETROLEUM BHD [].
CIMB Equities Research is maintaining its Outperform recommendation on Axiata with an unchanged sum-of-parts based target price of RM3.86, of which 4% comes from Idea.
“We still rate Axiata as our top pick among the regional telcos given the strong growth at Celcom and Excelcomindo. Both continue to gain market share in their respective countries and the strengthening rupiah also favours Axiata.
“The likely re-rating catalysts include positive earnings surprises, especially at Celcom and XL, and market share gains at its key units. Our EPS forecasts are 15-36% above consensus. The key risks are the upcoming 3G spectrum auction and price war in India,” it said.
As for Kencana, CIMB Research is maintaining an Outperform and raised the target price to RM2. New ventures including pipeline installation and drilling) and new contracts (Malaysia and India) further fuels the research house’s optimism on Kencana.
Bahrain’s Al Baraka is in preliminary discussions to buy a stake in Bank Muamalat and it could be up to 49%. DRB-Hicom Bhd owns 70% of Bank Muamalat while Khazanah Nasional owns the remaining 30%.
Yeo Hiap Seng said the revenue from contributed by "Red Bull" products for the financial period Oct 1, 2008 to Sept 30, 2009 was RM99.6 million, accounting for 18.2% of the group revenue.
The operating profit was RM870,000, or 14.7% of the group's operating profit during that financial period, it said in its comments on the financial impact on the cessation of the contract to distribute the products.
Ho Hup, which has earlier targeted to submit its revised regularisation scheme on Feb 4, has sought a three-month extension to May 4 to address its Practice Note 17 status.
It revised the capital reduction to 60 sen of the par value, instead of the 95 sen earlier while it wants to leverage on the company’s current core land bank of 60 acres within Bukit Jalil.
Rubberex’s net profit for FY ended Dec 31, 2009 nearly doubled to RM16.56 million from RM8.63 million a year ago. Revenue was RM325.44 million compared with RM274.51 million.
SapuraCrest Petroleum's JV has secured a US$75 million contract to transport and install four platform jackets in the Mumbai High North Field, offshore Mumbai. SapuraCrest’s share will be 60% of the contract based on its shareholding in the JV.
CBS Tech’s bonus issue of one-for-two shares and Hunza PROPERTIES [] rights issue with warrants will go ex on Jan 25.