Thursday, January 12, 2012

Stocks to watch 20120112: Takaso, CIMB, Tan Chong, Supermax, Hibiscus

KUALA LUMPUR (Jan 12): Stocks on Bursa Malaysia could see some downside bias on Thursday following the weaker macroeconomic issues from its weaker exports outlook and also the troubled eurozone.

RHB Research Institute said on Wednesday it expected Malaysia’s export growth to slow down sharply in 2012 as the global economy will likely experience a protracted slow growth and downside risks remain.

“Indeed, the latest economic data releases suggest that the Eurozone economy might have fallen into a contraction and the US economic growth, though improving, is likely to remain in a low gear,” it said.

Malaysia recorded RM56.86 billion in exports in November 2011, up 8% on-year but when compared to the previous month of October, it fell 10.2%.

Imports for the month were RM47.38 billion, up 8.4% on-year but declined 5.3% on-month.

In its analysis of the November trade data, RHB Research said the 8% on-year export growth in November was the lowest in four months, after holding up at +15.8% in October and off a 15-month high of +16.6% in September.

“This was below the median estimate of an easing to +12.9%, on the back of sliding exports of commodity products as well as a weaker growth in the exports of non-electronic & electrical (E&E) manufactured goods during the month. A smaller contraction in the exports of E&E products, however, helped to mitigate this,” it said.

On the external front, the head of sovereign ratings for Fitch, David Riley warned that the European Central Bank should ramp up its buying of troubled euro zone debt to support Italy and prevent a "cataclysmic" collapse of the euro, , said on Wednesday.

Riley said the collapse of the euro would be disastrous for the global economy, and while it is not Fitch's baseline scenario, it could happen if Italy did not find a way of its debt problems.

"The end of the euro would be cataclysmic. The euro is a reserve currency," Riley said. "What would that do in terms of financial and political stability?"

At Bursa Malaysia, among the stocks to watch are TAKASO RESOURCES BHD [], CIMB Group Holdings Bhd, TAN CHONG MOTOR HOLDINGS BHD [], SUPERMAX CORPORATION BHD [] and Hibiscus Petroleum Bhd.

Takaso, whose shares have been actively traded recently over a proposed timber concession, is set to seal an agreement with Kayumas PLANTATION [] Ltd on Thursday.

The agreement will enable Takaso to diversify and tap into Kayumas’ resources, including its concession and a timber licence. Kayumas also has the logging rights for 40,000 ha of timber in Papua New Guinea.

Philippine conglomerate San Miguel Corp is finalising a deal to sell 60% of its banking arm, Bank of Commerce, to the CIMB Group,.

Reuters said a share-transfer agreement was now being reviewed by the groups involved, the source, who was not authorised to speak to the media about the matter and thus did not want to be identified, told Reuters.

CIMB had said in October it was in early talks to acquire a stake in Bank of Commerce from San Miguel group.

Reuters said Bank of Commerce, with total assets of $2 billion, has capital stock of 16.96 billion pesos (US$385.5 million) as of June 2011, latest bank filings with the central bank show. Based on this data, a sale of a 60% stake in the bank could be worth US$231.3 million.

Tan Chong Motor Holdings had categorically stated it does not plan to acquire a stake in PROTON HOLDINGS BHD [].

It said that it “has neither received any formal invitation nor has any plan to bid for the stake in the national carmaker, Proton”.

Meanwhile, there could be some intermittent profit taking on glove makers after the strong run on Wednesday, if market sentiment weakens.

Supermax expects to record between RM100 million and RM110 million in profit after tax for the financial year ended Dec 31, 2011.

Its executive chairman Datuk Seri Stanley Thai said he also expected RM1 billion in sales in FY11.

For the nine-months ended Sept 30, FY11, Supermax reported RM77.86 million earnings on the turnover of RM750.70 million.

Hibiscus has come under some selling pressure on the back of rising trading volume after the run-up earlier this month. Its shares fell 16 sen to RM1.02 with 31.51 million units done while the warrants fell 2.5 sen to 61 sen with 27.69 million warrants done.


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