Tuesday, December 13, 2011

Stocks to watch 20111213: Proton, DRB-Hicom, BToto, GAB, Sersol

KUALA LUMPUR (Dec 13): The FBM KLCI could trade in a tight range on Tuesday, in line with the weaker sentiment at Wall Street and the European markets that fell on Monday as investors appeared less than convinced about the European leaders’ summit deal to pursue stricter budget rules and a stronger fiscal union.

Initial market enthusiasm over the plan on Friday faded due to legal uncertainty surrounding the pact and the absence of a sufficiently strong financial backstop for the euro zone single currency, according to Reuters.

Ratings agency Standard & Poor's put more pressure on investor sentiment after its chief economist said time was running out for the euro zone to resolve its debt problems and that it might need another financial shock to get it moving.

Fitch Ratings warned that the meeting of EU leaders last week did little to ease pressure on the region's sovereign debt crisis and the rating agency predicted a "significant economic downturn" across the region.

On Monday, Asian indices, including the FBM KLCI pared down their earlier gains.

Against this backdrop, crude palm oil (CPO) futures and crude oil prices also eased.

Palm futures fell to their lowest level in more than a month on Monday, tracking comparative oils lower as investors continued to fret about European debt, but expectations of a heavy rainy season helped cap losses, said Reuters.

CPO futures on the Bursa Malaysia Derivatives Exchange fell RM86 per tonne to RM2,998, the lowest since Nov 8.

On Bursa Malaysia, among the stocks that could be in focus are PROTON HOLDINGS BHD [], DRB-HICOM BHD [], BERJAYA SPORTS TOTO BHD [] (BToto), GUINNESS ANCHOR BHD [] (GAB), and SERSOL TECHNOLOGIES BHD [], as well as PLANTATION []-related stocks.

Proton shares and call warrants rallied on Monday on market talk that Khazanah Nasional would sell its stake to DRB-Hicom.

Tun Dr Mahathir Mohamad, Proton’s adviser, said Khazanah was selling its stake to DRB-Hicom. He was quoted saying on Sunday that Khazanah was selling its stake because it was not pumping more money into Proton, which needed funds for research and development work on new products such as hybrid cars.

BToto’s earnings jumped 62.3% to RM105.67 million in the second quarter ended Oct 31, 2011 from RM65.08 million a year ago when it was affected mainly due to the higher prize payout then.

It said on Monday it revenue rose 1.9% to RM862.37 million from RM845.79 million while its earnings per share were 7.90 sen compared with 4.87 sen. It declared an interim dividend of 8.0 sen per share.

GAB is rewarding it shareholders with a single tier special interim dividend of 60 sen per 50 sen share for the financial year ending June 30, 2012, to be paid on Jan 20 next year.

Meanwhile, Sersol’s shares, which halted trade from 3.56pm on Monday after the company announced it was unaware of the reasons for unusual market activity, will resume trade on Tuesday.

Sersol was earlier queried by Bursa Securities over the sharp rise in price and high volume in the shares recently.

The company in its reply to the regulator, said the directors and major shareholders were not aware of any factors which might have contributed to the unusual market activity.

The company had on Nov 30, announced the embezzlement detected in Zhuhai MS Coating Ltd, after taking into consideration minority interests, was only RM437,000.

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