Business & Markets 2012
Written by Surin Murugiah of theedgemalaysia.com
Monday, 03 December 2012 19:11
KUALA LUMPUR (Dec 3): The FBM KLCI could struggle to regain lost footing on Tuesday as sentiment at the local market is expected to remain tepid in the near term, at least.
Even though regional markets were mostly higher on Monday and European stocks got off to a decent start in December, the local market appeared to ignore relatively improved sentiment at the global markets.
The euro hit a six-week high and shares rose on Monday as signs of quicker Chinese growth boosted investors' risk appetite although gains were capped by US budget worries, according to Reuters.
Asian shares and the euro rose on Monday as further signs of a stabilising Chinese economy boosted investor risk appetite, but gains were capped by worries that an impasse in US budget talks could tip the world's largest economy into recession, European shares will likely track, it said.
The recent wave of selling on Bursa Malaysia is largely sentiment driven, overshadowing stronger-than-expected 3Q12 GDP growth of 5.2% and new Economic Transformation Programme (ETP) project announcements, Affin Investment Bank Research said in its Malaysia strategy report today.
Notwithstanding the pullback of the KLCI from its recent peak of 1,679 (down 4.1%), Affin IB states that it does not think that the market will recover in the immediate term and maintained its "neutral" rating on the 2012 KLCI target of 1,600, and 2013 KLCI target at 1,720.
“[The recent wave of selling] is a manifestation of portfolio de-risking by locking in gains ahead of the 13th general election…Some had anticipated that parliament could be dissolved immediately after last week’s Umno general assembly,” Affin IB said.
Meanwhile, MIDF Research head of equity Syed Muhammed Kifni in a fund flow report on Monday reiterated the research house’s view that a better bet for the market lies in December.
He said that historically, the index had registered gains during the month in the last seven years, and in 10 out of the last 11 years.
He said that as the KLCI had always been well supported in December, strong local buying during this month could be expected.
“Despite a mid-week breach, the KLCI managed to regain ground to close the week a whisker above its 200-day moving average of 1,609 points.
“As we alluded to last week, this is the critical level for the market to hold. If this level can be maintained, our year-end target of 1,670 points should still be in the horizon,” he said.
Among the stocks that could be in focus on Tuesday are Bintai Kinden Corporation Bhd, GLOMAC BHD [], IHH Healthcare Bhd, and DSC Solutions Bhd
Bintai Kinden Corporation Bhd’s unit has secured a contract worth RM133.19 million to perform mechanical and electrical (M&E) works for a mixed development project in Kota Kinabalu, Sabah.
In a filing Monday, Bintai Kinden said its unit Kejuruteraan Bintai Kindenko Sdn Bhd has received the letter of award for the project from Pacific Sanctuary Holdings Sdn Bhd, appointing it as the main contractor for the M&E works.
It said the terms and conditions of the letter of award would form part of the formal contract to be executed between the parties in due course.
Glomac net profit for the second quarter ended Oct 31, 2012 rose to RM23.92 million from RM23.77 million a year earlier, due mainly to its projects in Glomac Damansara, Saujana Rawang, Bandar Saujana Utama, and Reflection Residences.
Revenue for the quarter dipped to RM124.4 million from RM134.83 million a year earlier.
Earnings per share was 3.5 sen compared with 4.08 sen, while net assets per share was RM1.06.
For the six months ended Oct 31, Glomac posted net profit RM44.92 million compared with RM41.65 million in 2011, on the back of revenue RM285.47 million versus RM262.66 million.
IHH Healthcare Bhd’s indirect subsidiary Acibadem Poliklinikleri AS has acquired the entire equity interest in Tolga Saglik Hitzmetleri AS for US$1.5 million (RM4.56 million).
The principal activity of Tolga Saglik is the provision of healthcare services.
Meanwhile, IHH Healthcare could extend its losses on Tuesday after analysts said that the hike in the stock’s price last week was unjustified because results were poor and the stock was expensive.
“At RM3.48, IHH is very expensive. For this to be sustainable, next year’s earnings have to be really fantastic which is not something we think they can achieve,” said an analyst with Public Investment Bank.
There is no reason to justify to jump in share price last Friday and it simply seems to be correcting itself today, said the analyst.
“IHH is now facing margin compressions due to its expansive expansions but the stock and the hospitals themselves are good."
Revenue for the quarter ended Sept 30 had ballooned more than 50% to RM1.5 billion mainly from contributions following IHH’s consolidation with Achibadem Holdings in January, said Affin IB Research in a note last week.
DSC Solutions Bhd said it was unable to release its fourth quarter financial report for the financial period ended Sept 30, 2012 by Nov 30 to Bursa Malaysia.
It said the delay was caused by the variations between the unaudited fourth quarter results ended Sept 30, 2012 prepared by the company and the auditor’s preliminary findings for the financial year ended Sept 30, 2012.
“In view of the above, DSC is expected to issue and submit its Outstanding Financial Statements latest by Dec 7, 2012,” it said.