Thursday, March 4, 2010

20100304 1829 FCPO EOD Daily Chart Study.

FCPO closed : 2674, changed : +39 points, volume : higher.
Bollinger band reading : upside biased.
MACD Histrogram : turned higher, buyer returned.
Support : 2670, 2650, 2620 level.
Resistant : 2700, 2730, 2750 level.
Comment :
FCPO opened lower on the second session followed by buyer action lifted price up breaking 2 levels of resistant with supporting volume. Daily chart outlook shifted from side way range bound into bullish biased market. Expect market to trade side way range bound upside biased in the near term. Having said that, market may have some correction before surging higher as today up wide range bar candle touched and closed near the upper Bollinger band level shows that market is a little overbought. 
When to buy : buy at support/weakness/break up with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20100304 1725 FKLI EOD Daily Chart Study.

FKLI closed : 1285, changed : +1.5 point, volume : slightly higher.
Bollinger band reading : bullish.
MACD Histrogram : getting lower slowly. buyer off loading.
Support : 1280, 1274, 1270 level.
Resistant : 1285, 1290, 1300 level.
Comment :
Despite a mostly negative developement Asia market, FKLI still managed to closed marginally higher with improving volume transacted. Daily chart wise, market correction continue to take place today within a bullish biased outlook market. Expect market to trade side way range bound with testing of support and resistant.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20100304 1448 FKLI Mid Day Hourly Chart Study.

FKLI closed : 1282.5, changed : -1 point, volume : moderate.
Bollinger band reading : downside biased.
MACD Histrogram : getting weaker, seller presents.
Support : 1278, 1270, 1265 level.
Resistant : 1285, 1290, 1300 level.
Comment :
FKLI opended and traded higher but didn't last long with seller coming in to pushed the market lower. Hourly chart reading suggest a further downside potential market likely to take place in the near term.

20100304 1445 FCPO Mid Day Hourly Chart.

FCPO closed : 2630, changed : -5 points, volume : low.
Bollinger band reading : side way range bound.
MACD Histrogram : getting weaker, buyer off loading.
Support : 2620, 2590, 2570 level.
Resistant : 2650, 2670, 2700 level.
Comment :
Another boring session on FCPO that traded range bound within a 20 points range market with low volume ahead of next week 3 days palm oil conference that start on Monday 8th Mar 2010. Hourly chart still suggesting a side way range bound market(just look at the 5 doji bar candles).

20100304 0949 Malaysia Corporate News.

The government has deferred announcing an increase in electricity tariffs pending a program to educate the public on the need to raise rates. However, a proposal for a review of the rates has been submitted to the Economic Planning Unit of the Prime Minister’s Department, Energy, Green Technology and Water Minister Datuk Peter Chin said. “We have also come up with a structure. We were going to announce a hike in electricity tariff but that has been deferred to get our public relations going first. There will be dissatisfaction among our population. They will not be happy. We have to explain to them why there will be a hike,” he added. (BT) Please refer to our note on Tenaga today for more comments.

Supermax announced a 1-for-4 bonus issue yesterday. Based on the company’s issued and paid-up share capital of 271.2m shares and assuming full exercise of all outstanding ESOS, a maximum of 71.4m new shares will be issued pursuant to the bonus Issue exercise. The proposal is due to be completed by 1H10. (BMSB) This news is not a surprise as the company indicated during its recent analyst briefing that it is looking at a bonus issue exercise to reward its shareholders. We view this announcement positively as it would boost liquidity further and enhance the stock’s affordability in terms of absolute cost.

Star Publications announced a proposed joint development with Jaks Island Circle to develop a mixed residential and commercial on a 24,568 sq m land in Petaling Jaya. The land is owned by Star and previously housed the group's printing facilities among others. All cost, expenses and funding shall be borne by the Jaks Island Circle while Star exposure would be from its 30% share of the estimated RM370m GDV. The project is expected to complete in 60 months. (BMSB) This new is a surprise as it is a venture beyond Star's media business but would be long term positive for Star. Star's 30% share of the GDV works out to be RM111m in new revenue stream from 2012, and would add RM11-17m to pretax profits assuming a 10-15% pretax margin. Using our FY12 pretax profit as a gauge, this would enhance pretax profit by less than 5% as the earnings are likely to be recognised throughout the progress of project.

The Employees Provident Fund (EPF) has made an offer to buy the rest of Malaysian Resources Corp (MRCB) at RM1.50 each after it triggered the general offer (GO) rule.
  • The EPF triggered the GO after it bought shares not taken up by existing MRCB shareholders under a renounceable rights issue to raise up to RM566m. 
  • However, the GO will only happen if the pension fund gets more than half of MRCB.
  • EPF said it does not intend to delist MRCB.
  • The fund would also rectify MRCB's public shareholding spread if it plunges below the minimum 25% requirement as a result of the offer. If this happens, EPF stressed that it will still maintain a more than 50% interest in the construction and property firm. (BT)
Edaran Tan Chong Motor (ETCM) said all its models sold in Malaysia are not affected by the recall in the United States (US). It said Nissan Motor Co had officially confirmed the fuel-gauge component issue did not affect the Frontier models in Malaysia. It also said this is due to different components being used, compared to the models in the US, adding that the parts are supplied by different component manufacturers. On the recall issue of brake pedal pin and fuel gauge components on the Nissan Titan, Armada, Quest, Pathfinder and Xterra and Infiniti QX56, ETCM confirmed that these models are not sold in the country. "I would like reassure our customers that the recalls do not affect the Nissan vehicles sold by ETCM," said ED, Datuk Dr Ang Bon Beng. (Bernama)
This news came hot on the heels of Toyota’s massive recall exercise recently. Apart from the Nissan Frontier, the other Nissan models affected are currently not sold in Malaysia. While both UMW Toyota and ETCM have assured consumers that the vehicles sold in Malaysia are not affected by the recalls in the US, we think that the news on the recall exercises will still dent some consumers’ confidence in the Japanese makes, which have always been associated with quality. That said, we do not expect a significant impact on vehicle sales in the country.

Malaysia will miss its output target of 18.1m tonnes because of a shortage of foreign labour even as yields recover, a top industry official said. Industry regulator Malaysian Palm Oil Board (MPOB) chairman Sabri Ahmad said that Indonesian plantation workers make better pay at home as more palm oil estates start up there while employers in Malaysia have trouble hiring because of a stricter work-permit process.
  • Mr Sabri added that while concerns about hot weather caused by the El Nino weather phenomenon weigh on the industry, labour is the main issue now. 'The hot weather from El Nino is not the problem now because its effect can be seen 12-18 months later. 
  • The bigger issue is the labour shortage and if that is resolved, then 18.1 million tonnes is possible,' he added. According to immigration department statistics, the number of registered Indonesian plantation workers slumped 42% to 166,570 last year from 287,786 in 2008. (Reuters)
Axiata is considering paying a dividend from 2011 as improving business conditions have helped bolster its balance sheet, its CEO Jamaludin Ibrahim said. “We have not made any decision ... However given the strength of our balance sheet, especially our cash and debt position, we are in good position to consider it from 2011 onwards."
  • "We believe we could maintain the EBITDA margin, of course the pressure point would come from the competition and also our own investment in mobile broadband." 
  • Jamaludin said the Axiata will always review the possibility of increasing the free float of XL Axiata but declined to comment further on the timeline. "We have said back at the end of 2008 that we are open at possibility in increasing the float up (to) 15-20%. It is something that we are always looking at, and right now we also looking at it, perhaps more seriously." (Reuters)
Public Bank has no plans to raise capital this year in anticipation of the Basel 3 framework which, among other proposals, will require banks to beef up their tier-1 core capital ratio with predominantly common shares and retained earnings. COO Leong Kwok Nyem said there would not be any capital raising this year as the Basel 3 proposals were still at their initial stages of consultation. He said banks right now are only required to provide feedback to the Basel Committee on Banking Supervision. “There will be further consultation by the committee and it’s only by the end of this year that they’re going to come up with the next draft proposal,” Leong said following the company AGM. He said the Basel 3 framework was only scheduled for implementation by end-2012.
  • Public Bank’s core capital ratio stood at 9.9% as at 31 Dec 09 compared with 7.7% in the previous year, while the risk-weighted capital ratio stood at 14.2%, an improvement from the 13.1% in 2008. 
  • Leong said the ROE would also have to be reviewed should the Basel 3 framework require the bank to keep more equity capital. “We’ll have to review those ROE targets because as capital requirements are increased then the ROE will correspondingly be lower although we’ll still be looking at positive flows.” (StarBiz)
After taking over BH Insurance, the enlarged entity of AXA Affin General Insurance hopes to be among the top five insurers in the country by 2012. AXA Affin, a joint-venture company between Affin Holdings and France-based AXA SA, has signed an agreement to  buy over BH Insurance from Boustead Holdings and Felda Marketing Services. Boustead Holdings and Felda Marketing hold 80% and 20% stake in BH Insurance respectively.
  • Affin Holdings chairman Gen (R) Tan Sri Mohd Zahidi Zainuddin said the merger of the two insurance companies was to strengthen the business and it was also in line with the group’s decision to streamline its insurance operations. “Currently, the merged entity of AXA Affin and BH Insurance is in sixth place with a 6% market share. 
  • Meanwhile, Boustead Holdings – which will gain RM363m from the disposal of its stake in AXA Affin – will use the proceeds to further reduce its gearing to between 0.8% and 0.7% this year from just below 1% currently.
  • The corporate exercise, which is expected to be completed in the second quarter of this year, will see a new shareholding of AXA Affin where AXA will hold 42.4%, Affin Holdings 33.6%, Felda Marketing 16% and the rest will be held by minority shareholders. (StarBiz)
OCBC Bank Malaysia chalked up a 6% increase of RM998m in its operating profit for the FY12/09, against the RM942m registered previously. "Despite 2009 being a difficult year due to the global financial crisis, we are pleased to have turned in a strong performance, underscored by a well-balanced credit underwriting framework.
  • "We are particularly pleased with the broad-based growth in net interest income arising from higher loans growth across various industries," OCBC Director and CEO, Jeffrey Chew said. 
  • Net profit in 2009 experienced a 1% marginal decline to RM608m from RM617m in the previous year, due to higher net loan provisions. In 2008, OCBC's net profit benefited from larger one-off loan recoveries.(Bernama)
Maxis will build over 180 new sites this year to enhance its network coverage in Sabah and raise its subscriber’s base by 50%. The upgrading efforts will also include extending its 3G coverage in major towns such as Kota Kinabalu, Labuan and Sandakan. (BT)

SP Setia is projecting RM2bn sales this year, driven by the improved economy and ongoing product launches in addition to its financial package campaign offerings. The group has 10 ongoing projects and some 1,578 hectares. of landbank with a total gross development value of RM26bn, sustainable over the next 12 years. President and CEO Tan Sri Liew Kee Sin said continuous strong sales are projected in its key locations namely Klang Valley, Penang and Johor. (BT)

Malaysian Bulk Carriers (Maybulk) plans to acquire modern second-hand vessels in line with the improving global economic situation. Its chief executive officer, Kuok Khoon Kuan, said the company was eyeing the opportunities as the market was back to normal and would focus on acquiring modern second-hand vessels until the outlook improved further for the sector. "Since the resale value has declined by about 60 to 70%, the company will be able to buy them at a fraction of what they were previously sold for," he told a media briefing on the company's 2009 results here on Wednesday. Its executive chairman, Teo Joo Kim, said the company was also looking at investment opportunities in the coming months, though not aggressively. Meanwhile, Maybulk said although there were indications of increased spending in exploration and production activities, they had yet to be translated into higher rates due to current oversupply in the offshore segment. (Bernama)

Pharmaniaga says the manufacturing licence of its subsidiary Pharmaniaga Manufacturing was revoked by the Health Ministry effective March 1. This follows a routine audit conducted by the ministry’s pharmaceutical services division, Pharmaniaga said. The company was taking necessary steps to have the licence reissued, it added. (BT)

Steel prices are expected to move up further by 5-10%, said the Master Builders Association Malaysia (MBAM). Its deputy president, Kwan Foh Kwai, said the international steel prices had moved up last month by the same quantum. "We expect them to move up further albeit steadily. They will not be substantial but sustainable and manageable," he said. (Bernama)

Integrated facilities management (IFM) and property developer Faber Group is looking at growing its venture in Abu Dhabi and India to expand its revenue base. At the same time it is looking at several merger and acquisition proposals in facilities management to expand its business, its MD Adnan Mohammad said. Adnan said that talks with the local players in this business began last year and a deal is likely be sealed in the next 18 months. Meanwhile, the group's property division will see launches totalling RM495m in gross development value this year. (BT)

Malaysia Steel Works (Masteel) has fixed the first tranche of its placement comprising 4.9m shares of 50 sen each at an issue price of RM1.015 per share. (Financial Daily)

20100304 0938 Malaysian Economic News.

Malaysia will offer incentives to woo new and existing foreign investors under its coming 10th Malaysia Plan (10MP), a five-year economic plan. Foreign direct investment in the manufacturing sector halved to RM22.1bn in 2009 as a global recession halted expansion plans at multinational companies worldwide. We are in the midst of attracting investors to our country," Deputy International Trade and Industry Minister Datuk Mukhriz Mahathir said. He said that Malaysia wanted more companies with "innovative, creative, highincome and high-yielding operations" to invest here. (NST)

The prospect of Malaysian businesses increasing the salaries of employees this year, is positive. According to the International Business Report (IBR) by Grant Thornton, 63% of Malaysian companies planned to increase salaries, compared to the 44% recorded last year. The percentage of companies not prepared for any pay rise also saw a positive outlook, with 30% against the 36% in 2009. (Bernama)

The Home Ministry is expected to channel support in the form of grants, equipment and assistance for the Volunteer Patrol Scheme (VPS), to effectively combat crime in residential areas. Deputy Home Minister Jelaing Mersat said the initiative shows the seriousness and support of the government to set up VPS as an effort to combat crime in housing estates. (Bernama)

20100304 0936 Global Economic News.

US services sectors accelerated in February more than anticipated according to the Institute for Supply Management (ISM)’s index of non-manufacturing businesses. The index increased to 53 from 50.5 in January. Last month’s reading was the highest since October 2007 and exceeded all estimates. However the ISM services index has lagged behind the group’s manufacturing gauge, which registered a reading of 56.5 in February, the seventh consecutive month of expansion. (Bloomberg)

The Federal Reserve reported that its latest survey of economic conditions around the country -- the "beige book" report -- shows continued growth but little job creation. The beige book, based on what business and banking contacts told the 12 Federal Reserve Banks, says the economy "continued to expand" through February 22nd. And it says severe winter weather "held back activity" in several regions. Nine of the 12 Fed districts reported improved economic activity, but the Fed described growth as "modest." (Xinhua)

Atlanta Federal Reserve Bank President Dennis Lockhart described January US economic reports as "mixed" and stuck with his forecast for a modest recovery amid slowly repairing unemployment. "Upside surprises in inventories, capital spending, and consumption could tip the scales in favor of a stronger growth forecast," Lockhart added. (Xinhua)

The pace of US job cuts continued to slow last month, according to payroll report released by ADP. Automatic Data Processing (ADP), a payroll-processing firm, said private-sector employers cut 20,000 jobs in February (-60k in Jan), the fewest since February 2008 when employment first began to decline. This matched market estimates.
  • It was the 11th straight month that job losses narrowed from the previous month. The service sector reported job growth for a third consecutive month after a 21-month decline, with an increase of 17,000 jobs in February, and the manufacturing sector moved into positive territory for the first time since January 2008 by adding a modest 3,000 jobs. (CNN Money)

The US Senate voted late Tuesday night to extend the deadline for unemployment benefits. Several hours later, President Obama signed the measure. More than 200,000 people were set to stop receiving checks this week after lawmakers let the Feb. 28 deadline to apply for extended federal benefits lapse. Senators had been trying to pass a 30-day, short-term extension for the past week. (CNN Money)

US companies are poised to increase investment in new equipment this year as profits recover, while keeping a tight rein on hiring, according to a quarterly survey of chief financial officers. Capital spending will rise 9% in 2010, the most in seven years, according to the average estimate of officers surveyed by Duke University/CFO Magazine. Earnings will rise as much as 14% and payrolls will climb 0.2% over the next 12 months, the report showed. (Bloomberg)

The Asian Development Bank (ADB) plans to revise upward its 2010 economic growth forecast for developing Asia to around 7.0% (vs. 6.6% forecast in Dec 09). citing the ability of some nations to quickly employ massive stimulus measures, ADB’s president Haruhiko Kuroda said. “The rapid use of monetary and fiscal stimulus measures in developing Asia has led the signs of a “V-shaped recovery”. This year and next year it will grow rapidly. However, the challenge will be to sustain that pace of recovery, and rolling back stimulus measures at the same time remains a difficult balancing act,” he added. (Financial Daily)

Greece’s government passed measures to cut spending by an additional €2.4bn and raise an extra €2.4bn in revenue, Deputy Citizen Protection Minister Spyros Vougias said. The Cabinet also decided to cut civil servants’ bonus-salary payments by 30.0%, to freeze pensions and to raise the main value-added tax to 21.0% from 19.0%. (Bloomberg)

The European Commission said it is working on “instruments” to aid financially distressed governments in the euro area that it will keep secret for now to avoid inciting speculators to prey on Greece. “We have to have solidarity in the European Union. The concrete instruments, we will present them in due time. I should not feed this kind of speculation at this moment,” President Jose Barroso said. (Bloomberg)

Europe’s Purchasing Managers’ Index for service and manufacturing industries remained at 53.7 in February, marking the seventh month of expansion as companies stepped up output to meet reviving global demand. That’s in line with an initial estimate published on 19 Feb. (Bloomberg)

European retail sales declined 0.3% mom in January (+0.5% in Dec 09) as companies across the region continued to trim jobs and reduce costs to help shore up earnings. That’s in line with economists’ median forecast. From the year-earlier month, sales declined 1.3% in January (0.5% in Dec 09). (Bloomberg)

Australia’s economy grew 0.9% qoq in 4Q09 (0.3% in 3Q09), marking the fastest pace in almost two years, and underscoring the central bank’s decision to boost borrowing costs for the fourth time in five meetings. The gain in GDP matched market forecasts. From a year earlier, gross domestic product (GDP) expanded 2.7% in 4Q09 (0.9% in 3Q09). (Bloomberg)

South Korea’s factory output was better than economists expected in January, as a rise in production of semiconductors and mobile phones offset a decline in consumer and corporate spending. Industrial production remained unchanged from Dec 09, when it gained a revised 2.4% mom. Economists forecast for a 0.6% mom drop. From a year earlier, output increased 36.9% in January (34.3% in Dec 09). (Bloomberg)

The Indonesian parliament voted to seek a police investigation against Vice President Boediono and Finance Minister Sri Mulyani Indrawati over their roles in the 2008 bailout of PT Bank Century. (Bloomberg)