Stocks to watch: Sarawak companies, UEM Land, MBF, SILK, IRCB

Written by Fong Min Hun & Joseph Chin
Tuesday, 12 January 2010 07:55

KUALA LUMPUR: The FBM KLCI is expected to be range bound on Tuesday, Jan 12, with external news from Wall Street providing some support.

The 1,300 level will continue to be a formidable resistance level to the 30-stock benchmark index. On Monday, the FBM KLCI futures rose 0.5 point to 1,297.50 while on the spot market, the FBM KLCI closed 1.53 points higher at 1,294.51.

In the US, industrial shares lifted the Dow and the S&P 500 on Monday, Jan 11 to new 15-month highs after China bolstered expectations the world economy would strengthen, but Nasdaq fell on profit-taking in tech stocks.

The Dow Jones industrial average gained 45.80 points, or 0.43 percent, to 10,663.99. The Standard & Poor's 500 Index rose 2.00 points, or 0.17 percent, to 1,146.98. The Nasdaq Composite Index fell 4.76 points, or 0.21 percent, to 2,312.41.

At Bursa Malaysia, crude palm oil futures closed RM41 lower at RM2,585, indicating the weaker start for the CPO futures trading. PLANTATION []s may also show some profit taking after the recent run-up in their share prices.

Commodity prices rose to fresh highs as the US dollar weakened against the backdrop of a recovering global economy which triggers the anticipation of rising inflation.

Glove makers were in focus on Monday, as interest was fuelled by Latexx's joint venture to make protein-free gloves. However, investors should be aware that INTEGRATED RUBBER CORPORATION [] Bhd (IRCB) had surged in the absence of any fresh news.

Other stocks to watch on Tuesday, Jan 12 include companies in Sarawak, UEM Land, MBF, SILK Holdings, Alliance Financial Group, KUlim and Tanjung Offshore.

Also in focus will be Takaso Resources and Perduren, which halted trading at 4.51pm on Monday and resumes trading Tuesday.

Both companies were queried by Bursa Malaysia Securities over the unusual market activity but replied they were unaware of the reasons for the price surge. Investors should brace for some volatile trade in these two counters unless there are fresh positive news.

Sarawak-based companies have come under the radar of investors following news that foreign direct investment (FDI) from China of up to US$11 billion (RM36.74 billion) will be flowing into the country's largest state.

MBf HOLDINGS BHD [] major shareholders have offered cash of 65 sen a share and 5 sen per warrant held by other shareholders of the company in a proposed selective capital reduction (SCR) exercise aimed at taking the company private.

SILK Holdings Bhd’s unit Jasa Merin Sdn Bhd (JMSB) has secured a contract worth RM12.4 million from Carigali Hess Operating Company Sdn Bhd (CHOC).

Under the deal, it will provide an anchor handling tug supply vessel (AHTSV) to support CHOC’s drilling programme. The vessel is to support CHOC in its drilling programme in the Malaysia–Thailand Joint Development Area.

UEM Land Bhd proposed a rights issue to raise RM970 million to repay a term loan and for working capital.

Of the proceeds, RM633 million will be used to repay a term loan owing by Bandar Nusajaya Development Sdn Bhd to UEM Group, RM266.2 million for property development expenditure, payment of trade payables and general working capital, and RM65.1 million as payment for the first instalment of acquision of land parcels in Cyberjaya from Setia Haruman Sdn Bhd.

UBG shares closed at RM2.45, nearing the offer price of RM2.50 by PetroSaudi International Ltd (PSI), which has proposed to buy 89.9% of the company through several proposals.

PSI is planning to acquire the UBG stakeholdings of CAHYA MATA SARAWAK BHD [] (CMS) and from Abu Dhabi-Kuwait-Malaysia Strategic Investment Corp, both of which have granted their conditional approvals to the deal, although they were subject to shareholder approval.

Although movement may be mooted on the part of UBG BHD [], its subsidiaries Loh & Loh Corp Bhd and PUTRAJAYA PERDANA BHD [] may see significant movement. They are both 80%-owned subsidiaries of UBG, and PSI will be required to make mandatory offers for outstanding shares in the company should its UBG purchase be approved.

Two legal suits filed against Kulim (Malaysia) Bhd pertaining to its acquisition of shares in QSR Brand Bhd last year have been dropped, with no order to costs by consent of the parties involved.

The plaintiffs had sought declarations to stop Indexia Assets Ltd, Naunton International Ltd and Yates Ventures Ltd from selling their 290.26 million QSR shares to Kulim on June 20, 2005.

TANJUNG OFFSHORE BHD [] has secured a contract to provide RM25 million worth of glycol dehydration packages to Petronas Carigali Sdn Bhd for the latter’s Kinabalu field.