Saturday, June 25, 2011

Stocks to watch 20110625: Kencana, Muhibbah, Tambun Indah, Subur Tiasa

Written by Joseph Chin of
Saturday, 25 June 2011 09:58

KUALA LUMPUR: Worries about the Greek debt issue and the slide on Wall Street will weigh on investors’ sentiment in the week ahead, starting Monday, June 27, and maybe investors may give up the hope of window dressing as the first half draws to an end.

On Wall Street, Reuters reported the Dow industrials and the S&P 500 fell for their seventh week in the last eight. The benchmark S&P 500 is down 7% from its 2011 closing high at the end of April.

Investors are fearful Greece's government may fail to pass an austerity plan next week, which could force a default on its debt repayments. The government faces an electorate vehemently opposed to the austerity measures.

The Dow Jones industrial average dropped 115.42 points, or 0.96%, to 11,934.58 at the close. The Standard & Poor's 500 Index fell 15.05 points, or 1.17%, to 1,268.45. The Nasdaq Composite Index lost 33.86 points, or 1.26%, to 2,652.89.

For the week, the Dow fell 0.58% and the S&P 500 shed 0.24%, while the Nasdaq gained 1.39%.

At Bursa Malaysia, stocks to watch include KENCANA PETROLEUM BHD [], MUHIBBAH ENGINEERING (M) BHD [], Tambun Indah Land Bhd and SUBUR TIASA HOLDINGS BHD [].

Kencana’s earnings rose 81% to RM56.42 million in the third quarter ended April 30, 2011 from RM31.17 million a year ago underpinned by the progress achieved for the contracts. Revenue rose 34.7% to RM377.83 million from RM280.37 million. Earnings per share were 3.08 sen versus 1.92 sen a year ago.

When compared with a year ago, where revenue and pre-tax profit came in at RM280.37 million and RM36.5 million, this was an improvement of 35% and 91% respectively in the current quarter.

Muhibbah was awarded a RM338 million contract from Northport (Malaysia) Bhd to build a multipurpose wharf and the associated facilities. Hopefully, this could inject some positive news into the stock which was battered by its exposure to the Asian petroleum hub debacle.

Muhibbah said the wharf would be an extension to the existing wharf eight and upgrading of wharf 16. The contract is scheduled to start in July and completed in March 2014.

Some upbeat news from Tambun Indah Land Bhd. The Penang-based developer, with projects totaling gross development value (GDV) of RM1.6 billion, expects to record strong revenue growth in the financial year ending Dec 31, underpinned by the sustained property boom in Penang.

Growth would be driven by strong interest in its ongoing projects due to the rapid industrial expansion in Seberang Perai. It would also benefit from the spillover effect from the strong demand for residential PROPERTIES [] on Penang island.

Tambun Indah has several ongoing projects on mainland Penang with total GDV of RM1.6 billion, which is enough to last until 2016.

On a downbeat note, Subur Tiasa’s net profit in the third quarter ended April

30, 2011 fell 19.5% to RM8.40 million from RM10.44 million a year ago but it expects the outlook to be positive on firm demand overseas.

“The market outlook for timber and timber products in the coming quarter remain positive with the continued firm demand for timber in India and China,” it said.

The company’s financial performance was impacted by higher operational costs due to the increase in raw material, fuel and adhesive costs.

Revenue declined 11.8% to RM144.66m from RM164.12 million. Earnings per share were 4.62 sen compared with 5.55 sen.

Subur Tiasa said for the nine-month period, net profit was flat at RM23.838 million while revenue declined 4.8% to RM486.22 million from RM510.79 million.

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