Written by Joseph Chin
Saturday, 10 April 2010 21:05
KUALA LUMPUR: Key regional markets are expected to start the new week on April 12 on a firm note, as investors should be encouraged by the strong close on Wall Street after the Dow Jones Industrial Average rose above the key 11,000 briefly.
US stocks rose on Friday, April 9 with the Dow surpassing 11,000 for the first time in 18 months after Chevron's upbeat outlook and wholesale inventories data reinforced bets on an improving economy, according to Reuters.
The Dow Jones industrial average gained 70.28 points, or 0.64 percent, to 10,997.35. The Standard & Poor's 500 Index rose 7.93 points, or 0.67 percent, to 1,194.37. The Nasdaq Composite Index added 17.24 points, or 0.71 percent, to 2,454.05.
As for the week ahead, US heavyweights which are expected to release their earnings are Alcoa, Intel and Google, as well as from General Electric and JPMorgan Chase & Co.
At Bursa Malaysia, stocks to watch are SUNWAY HOLDINGS BHD [], Sunway City, Pelikan International Corp Bhd, PERISAI PETROLEUM TEKNOLOGI [] Bhd, Malaysia Airports Holdings Bhd (MAHB) and Atlan Corp Bhd.
MALAYSIAN RESOURCES CORP [] Bhd (MRCB) would continue to see trading interest. The offer period is drawing close with the first closing date at 5pm on April 13, which is 21 days after the positing date of the offer letter.
AmInvestment Bank Bhd, the independent adviser to the minority shareholders, recently advised minority shareholders to reject the Employees Provident Fund (EPF) offer of RM1.50 per share.
Sunway Holdings is teaming up Monty PROPERTIES [] Sdn Bhd to undertake joint residential property development in Puncak Jalil with an estimated gross development value (GDV) of RM120 million.
Sunway’s unit SunwayMas Sdn Bhd had signed a JV agreement with Monty Properties to undertake the project via a JV company Geneba Dua Sdn Bhd on the 4.4-acre site.
Pelikan, which had proposed to take over Frankfurt Stock Exchange-listed Herlitz AG, managed to secure only an additional 3.38% or 368,611 shares, when the offer closed on Tuesday, April 6. However, despite the poor response, it already owns 69.37% of Herlitz.
Pelikan had viewed the acquisition as crucial as it had expected to see cost savings of over RM100 million from its proposed acquisition of Herlitz AG enroute to achieving its target of €1billion (RM5.06 billion) in turnover in 2012.
Meanwhile, Perisai Petroleum Teknologi Bhd managing director Nagendran C. Nadarajah is disposing of his 19% stake in the company to Singapore-listed Ezra Holdings Ltd.
In Atlan Holdings, The Edge weekly reported that it has put in a proposal to carve out MAHB’s chain of Eraman duty-free retail shops and to place it under its subsidiary, DFZ CAPITAL BHD []. The proposal was put forward to Khazanah Nasional Bhd and MAHB.
The Edge weekly reported that MAHB was not keen on the proposal as Eraman was a key component to MAHB’s strategy to diversify its income from aeronautical-related activities.
Meanwhile, the stronger ringgit had brought into focus companies such as consumer companies including Nestle, UMW, PLANTATION [] companies and Tenaga Nasional.
However, companies which would not benefit include glove makers and also those in the electrical and electronics sector.
Meanwhile, MRCB has continued to see strong trading interest after the EPF offered to acquire the rest of MRCB shares at RM1.50 each. However, analysts have said that it was unlikely to get strong response as the share price had rallied, especially after the New Economic Model was announced.
MRCB is expected to play an important role in the development of the Rubber Research Institute Malaysia land in Sungei Buloh and other parts of Kuala Lumpur where the government is seeking private sector participation in property development.
AmInvestment Bank, in its independent advice, told minority shareholders to reject the RM1.50 offer, describing it as not fair and not reasonable to shareholders.
“We advise and recommend the holders to reject the offer,” it said.
AmInvestment Bank said the offer price represented a price-to-book ratio (PBR) of 1.73 times based on the audited net asset of MRCB as at FYE Dec 31, 2009.
“The PBR of the offer price is below the average PBR of comparable companies of 2.01 times and within the range of between 1.23 times to 2.95 times,” it said.
AmInvestment also said over the past one year, prior to the service of takeover notice, MRCB shares were trading at PBR of between 1.12 times and 2.43 times and had mostly traded above the offer price of 1.73 times.