Business & Markets 2012
Written by Surin Murugiah of theedgemalaysia.com
Tuesday, 04 December 2012 19:22
KUALA LUMPUR (Dec 4): The FBM KLCI could trend lower on Wednesday, given the lack of fresh corporate leads at the local market as well as on concern over the state of the US and eurozone economy.
Analysts are less sanguine on the prospects for the local equity market given the several uncertainties that weigh on investor sentiment, in particular concerns over the 13th general election that must be called by June 2013.
European shares consolidated their recent rise on Tuesday after a surprise drop in US manufacturing added to worries about stalled budget negotiations, while the euro hovered at a six-week high on optimism over Greece's plan to buy back debt, according to Reuters.
Worries about a looming wave of US spending cuts and tax hikes intensified on Monday, after the White House dismissed a budget deal proposal from Republicans, saying it did not meet President Barack Obama's pledge to raise taxes on the rich, it said.
On the local front, CIMB Research has maintained its Neutral rating on the FBM KLCI but lowered its end-2013 FBM KLCI target from 1,730 points to 1,670 points based on an unchanged P/E target of 13.3 times.
In a strategy note Tuesday, the research house said that the November results season was another big letdown, making it the tenth straight results season that disappointed.
Not only did the revision ratio deteriorate to below 0.5 time, FY12/13 EPS also suffered considerable cuts, it said.
"We remain 'neutral' on Malaysia in view of the continuous earnings letdowns, with the 13th general elections constituting the other key overhang in 2013," said CIMB Research.
Meanwhile, Maybank Investment Bank Research, in its 3Q2012 results review and market strategy note on Tuesday, said it was maintaining its 2012 year end (YE) FBM KLCI target at 1,620 and introducing 2013 YE target of 1,710.
The research house said it expects the market to weaken further ahead of the 13GE.
Beyond the 13GE, it advocated accumulating the big cap, defensive and apolitical names.
"We upgrade the banking sector to 'overweight' as it also offers value, and downgrade telco and power to 'neutral'.
"Among our top stock picks, we have taken off KLCCP and Telekom and introduce RHB Cap and WCT. Public Bank, Hong Leong Bank, Genting Malaysia, SapuraKencana, Bumi Armada and Top Glove remains," it said.
Among the stocks that could be in focus on Wednesday are Sunway Bhd; TELEKOM MALAYSIA BHD []; and DSC Solutions Bhd.
Sunway Bhd, via its wholly-owned subsidiary Sun City Sdn Bhd (SunCity), will enter into a joint venture (JV) with Iskandar Investment Bhd's (IIB) wholly-owned Iskandar Assets Sdn Bhd (IASB) and Harmony Impulse Sdn Bhd (HISB) for a mixed development project on land worth RM412.73 million.
HISB, in a separate agreement, has agreed to purchase the land from IASB in two parcels: Pendas North Land, a 412.75 acre plot in Mukim of Pulai for RM221.28 million; and Western Pendas South Land, a 366.32 acre plot in Mukim of Tanjung Kupang for RM191.45 million.
"The attractive land price of RM12.16 per square foot is expected to generate an estimated gross development value (GDV) of RM12 billion over a period of 17 years," said Sunway in a filing with Bursa Malaysia on Tuesday.
Telekom Malaysia has formalised two collaboration agreements to provide telecommunications and ICT infrastructure for the aim of creating a connected Nusajaya.
The first agreement involves UEM Land Bhd (UEM Land) and Iskandar Investment Berhad (IIB) for the provision of communication and ICT infrastructure as well as telecommunications services, said TM in a statement Tuesday.
This will include the provision of "communication infrastructure and services for both residential and business property developments in Nusajaya, establishment of data centre, ICT/BPO service offerings as well as extending TM WiFi services to cover more sites in Nusajaya".
DSC Solutions could extend its losses on Wednesday. It fell in active trade to its all-time low at on Tuesday after the company said it was unable to release its fourth quarter financial report for the financial period ended Sept 30, 2012 by 30 November 2012 timeframe to Bursa Malaysia.
DSC Solutions fell 2.5 sen to 8.5 sen with 12.87 million shares done on Tuesday.