Hong Leong Bank: Buy, target price RM9.50

The target price was derived with the assumptions of a 16 per cent sustainable return on equity, 4 per cent long-term growth, and 9.4 per cent cost of equity.

"Our view on Hong Leong Bank is independent of whether it successfully acquires EON Capital Bhd," HwangDBS wrote in a report yesterday after Hong Leong announced its results for the second quarter ended on December 31 2009.

The stockbroker believes that the growth potential could speed up at Bank of Chengdu in China, which is a 20 per cent associate of Hong Leong.

Hong Leong recently entered into a joint venture (49 per cent stake) with the Chinese bank to operate a licensed finance company in China.
"The venture could add to contribution from its Chinese operations. Its maiden venture in Vietnam has also commenced operations and is expected to contribute positively in two to three years," HwangDBS noted.

Genting Posts Pre-Tax Profit Of RM2.528 Billion

Genting Bhd Thursday announced that pre-tax profit for its financial year ended Dec 31, 2009, increased to RM2.528 billion from RM1.735 billion in the previous year.

Revenue, however, fell to RM8.894 billion from RM9.082 billion, mainly due to a decrease in revenue from the plantation division, the company said in a statement.

Total revenue from Genting Malaysia Bhd's Resorts World Genting was affected by the weaker luck factor in the premium players business although the overall business volume was higher, it said.

Although revenue from the UK casinos declined as a result of lower business volume and lower win percentage arising from poor luck factor and further exacerbated by the weakening of the pound against the ringgit, there was an improvement in profit, due largely to stringent cost control and significantly lower operating overheads, the company said.

Meanwhile, Genting Malaysia announced its pre-tax profit for the year ended Dec 31, 2009, increased to RM1.764 billion from RM1.127 billion in the previous year and revenue rose to RM4.992 billion from RM4.887 billion.

Palm oil rises on talk of India, China demand

CPO FUTURES

PALM oil gained yesterday on speculation that demand for the edible oil may remain strong in India and China, the world’s biggest users.

May-delivery palm oil futures advanced 0.2 per cent to RM2,635 a metric ton on the Malaysia Derivatives Exchange.

“Demand growth should remain strong given the projected gross domestic product growth of around 8-10 per cent for China and India,” CIMB Group Sdn Bhd said in a report yesterday.

Palm oil also gained as soybeans, crushed to make soybean oil, advanced for a second day.

May-delivery soybeans traded in Chicago advanced 0.2 per cent to US$9.71 a bushel at 6.49 pm in Singapore. May-delivery soybean oil was unchanged at 39.3 cents a pound at 6.46 pm.

In China, September-delivery palm oil rose 1.2 per cent to settle at 7,016 yuan (US$1,028) a ton on the Dalian Commodity Exchange, extending Monday’s 2.3 per cent jump. Soybeans rose 1.4 per cent to 3,874 yuan, after climbing 1.1 per cent on Monday.

Indonesia, the second-largest palm oil producer, may keep the export tax for March unchanged at 3 per cent, Sahat Sinaga, second deputy chairman of the nation’s palm oil board, said.

Palm oil, the cheapest cooking oil, is also used as an alternative fuel additive and tends to track crude oil prices. It surged 52 per cent last year as crude oil jumped 78 per cent.

Crude oil in New York for March delivery climbed to more than US$80 a barrel for a third day in Asian trading and was last at US$79.62 a barrel at 6.52 pm Singapore time.


RUBBER

MALAYSIAN rubber prices ended higher yesterday amid a quiet market despite weaker prices on the Tokyo Commodity Exchange.

The higher prices were due to concern over a tight supply condition, dealers said.

Many tappers have stopped tapping due to wintering, which is characterised by reduced yield owing to dry weather.

A dealer said the market was quiet due to lack of participants as more traders were still on the Lunar New year holiday mood.

At noon, the Malaysian Rubber Board's physical price for SMR 20 rose 4.5 sen to 1,046.5 sen per kg while latex in bulk edged up 5 sen to 734 sen per kg.

The unofficial sellers' closing price for tyre-grade SMR 20 decreased 1 sen to 1,045.5 sen per kg and latex in bulk added 0.5 sen to 734 sen per kg.


TIN

THE tin price on the Kuala Lumpur Tin Market (KLTM) rose by US$33 to close at US$16,933 per tonne yesterday amid expectations of strong demand from China, following the week-long Lunar New Year break and an improving economic outlook, dealers said.

The dealer said the KLTM also gained support in tandem with the overnight uptrend in the tin price on the London Metal Exchange (LME), which ended US$175 higher at US$17,175 per tonne.

"The tin markets received strong interest in anticipation of a better economic performance this year," added the dealer.

On the KLTM, overall turnover was flat at 50 tonnes.

Bids accounted for 50 tonnes compared with offers of 40 tonnes with European, Japanese and local traders continuing to dominate trade.

The price differential between the KLTM and the LME declined to a premium of US$95 per tonne from US$235 per tonne on Monday. - Agencies

Zeti: Malaysia clearly on track to economic recovery

MALAYSIA is on the path to economic recovery, Bank Negara Malaysia's (BNM) governor says, ahead of unveiling economic data for the fourth quarter of 2009 tomorrow.

"We are already clearly on the path to recovery. The indicators are that the economic performance is better than expected," Tan Sri Zeti Akhtar Aziz said.

Fourth-quarter data tomorrow will show if Malaysia managed to emerge from its first recession in a decade.

Zeti also reiterated that any adjustment in interest rates would be to achieve a "normalisation" and not a tightening of policy. "Monetary policy will continue to be supportive of the economic recovery process," she said.

Policymakers' next meeting is on March 4. BNM has kept the Overnight Policy Rate low at 2 per cent for seven straight meetings.

Economists expect Malaysia to return to positive growth in the final quarter, after three straight quarters of negative growth.

AmResearch's senior economist Manokaran Mottain recently upgraded his fourth-quarter economic growth to 3.5 per cent from 1.5 per cent.

"We are no longer in extraordinary circumstances. We have come out of that kind of environment," Zeti said after launching Thomson Reuters' new Islamic finance product in Kuala Lumpur yesterday.

The product, known as the Islamic Finance Gateway, is a global platform and directory comprising details and links to Islamic finance professionals, rating agencies, industry standards bodies, index providers and scholars, among other things.

It is available on its flagship Thomson Reuters 3000 Xtra desktop.

"The timely access to a broad range of key information on Islamic finance - including on the product terms, structures and Syariah rulings - will contribute to enhanced transparency in the Islamic financial markets," Zeti said of the product.

PPB may not be able to announce Q4 results on time

PLANTATION and property group PPB Group Bhd's (4065) fourth quarter results announcement will be delayed, as it waits for 18.4 per cent owned Singapore-based Wilmar International Ltd to announce its results.

On February 12, Wilmar told the Singapore Exchange it will announce its full-year results on March 1. No reason was given for the delay.

According to Bursa Malaysia Bhd's listing requirements, PPB is required to furnish its quarterly report for the fourth quarter ended December 31 2009 to the regulator by February 25.

The group however, told Bursa Malaysia yesterday, it will not be able to meet the timeline, due to Wilmar's material contribution to PPB's financial results.
PPB targets to release its fourth quarterly report to Bursa Malaysia on March 2, the day after Wilmar's announcement to the Singapore Exchange.

Should the group fail to announce its results by March 8, trading of its shares will be suspended.

IOI Corp Outlook Remains Encouraging

KUALA LUMPUR, Feb 11 (Bernama) -- IOI Corporation Bhd's outlook is expected to remain encouraging on the back of better crude palm oil prices, which averaged RM2,526 in the beginning of 2010, said Kenanga Research.

It said it expected a slight drop of 0.9 per cent in revenue and a drop of 0.5 per cent in net profit for the company in the current financial year.

In a research note released Thursday, Kenanga Research also forecast a trimming of 2.1 per cent in revenue for the 2011 financial year and a decline of 3.5 per cent in net profit as a result of coverage changes.

IOI Corp's pre-tax profit for the second quarter ended Dec 31, 2009 rose to RM598.241 million from RM333.495 million in the same quarter of 2008.

IOI in an announcement to Bursa Malaysia had said the increase was due to higher profit contribution from the property and manufacturing segments and unrealised translation gain on US dollar-denominated borrowings.

Its revenue, however, declined to RM3.06 billion from RM3.727 billion previously.

Meanwhile, MIDF Equity Beat said CPO prices will remain firm this year and next year, with average prices to be at RM2,450 per metric tonne and RM2,650 per metric tonne respectively.

"We expect CPO prices to remain firm in the first quarter of 2010 but may be coming under pressure as the South American soybean harvest begin in the second quarter," it added.

Meanwhile, ECM Libra Investment Research said it expected softer yields and hence profits in the third quarter of this year due to the seasonal production down cycle.

It said this will be despite the stronger CPO prices so far.

"Malaysian Palm Oil Board statistics just for January have indicated that production declined some 11 per cent and this should be reflected in the group's (IOI) numbers," it said.

"We will continue to see stagnant growth into 2010 as the group has minimal major maturities coming on-stream," it said.

Export Of Palm Oil Products Reached RM49.6 Billion Last Year

BANGI, Feb 11 (Bernama) -- The income from the export of palm oil products last year reached RM49.6 billion following an increase in the production of the commodity.

The Deputy Minister of Plantation Industries and Commodities Datuk Hamzah Zainudin said the increase in production also contributed to the total export of palm oil products of 15.87 million tonnes.

"The strategic approach being implemented by the government in the area of research and development, has succeeded in yielding a new innovation which has had an impact on enhancing the prestige of the palm oil industry," he added.

He said this in his closing speech at a ceremony to present certificates to 47 participants of a Plantation Machine Operators Course (KOML) for the September 2009 session here Thursday.

His speech was read by the Director General of the Malaysian Palm Oil Board (MPOB), Datuk Dr Mohd Basri Wahid.

It was reported earlier that the export of palm oil products is expected to exceed RM100 billion in 2020 following initiatives to effectively enhance production.

In 2008, the export of palm oil products was worth RM65.2 billion.

Hamzah said the encouraging achievement of the country's oil palm industry is also attributed to the progress in research and quality control undertaken by the MPOB.

He said to date, MPOB's research has resulted in more than 440 technology encompassing the upstream sector and production of downstream products which have been accepted and endorsed by the industry.

He also stated that the area under palm oil cultivation has also increased by 4.5 per cent.

This he added, enabled the total area under oil palm cultivation, to reach 4.69 million hectares last year.

Commenting on the KOML, Hamzah said the involvement of local youths in the plantation sector would reduce the dependance on foreign labour which is estimated to reach 300,000.

"The dependence on foreign workers in the plantation sector does not benefit the country as there is an outflow of money overseas and also causes social problems," he explained.

Hamzah said the KOML is being implemented to produce local workers skilled in the operation of agricultural machinery to fullfil the needs of the oil palm industry and this is very important.

He also highlighted that the plantation sector and the cultivation of oil palm had moved to modern, efficient methods, including the use of agricultural machinery.

Maybank Expects OPR To Rise 50 To 70 Basis Points

Maybank expects the overnight policy rate (OPR) to increase between 50 and 70 basis points this year in line with signs of an improving economy, its president and chief executive officer, Datuk Seri Abdul Wahid Omar said.

He said the bank also expected gross domestic product (GDP) to grow 4.5 per cent this year and inflation to be at 2.3 per cent.

Abdul Wahid said this at a press conference here Tuesday after announcing Maybank's interim results for the half-year financial period ended Dec 31, 2009.

Last month, it was reported that Bank Negara Malaysia had decided to leave the OPR unchanged at a record low of two per cent for the seventh consecutive time amid uncertainty over the prospects of advanced economies.

In a statement issued after the first Monetary Policy Committee (MPC) meeting for this year on Jan 21, the central bank had said the growth in advanced economies would continue to depend on policy stimulus measures and the sustainability of private sector demand amid ongoing financial system resolution and reforms.

It had also said that the growth momentum in regional economies was expected to strengthen further this year, while domestic economic indicators had suggested a favourable economic expansion in the fourth quarter of 2009.

"Positive developments in manufacturing production, financing activity, external trade and labour market conditions reaffirms the assessment that the economic recovery is gaining strength," Bank Negara had said.

Maybank's H1 Pre-Tax Profit Up 38.8 Per Cent To RM2.55 Billion

Malayan Banking Bhd's (Maybank) pre-tax profit for the first half year ended Dec 31, 2009 rose 38.8 per cent to RM2.556 billion from RM1.842 billion in the previous corresponding period.

Its revenue increased by 35.5 per cent to RM6.408 billion from RM4.729 billion in the same period last year, while net profit rose by 43.5 per cent to RM1.875 billion from RM1.306 previously.

Maybank president and chief executive officer, Datuk Seri Abdul Wahid Omar, said the robust performance was achieved on the back of a significantly improved results across all business sectors.

He said this when announcing Maybank group's interim results for the half year ended Dec 31, 2009 here Tuesday.

Investors seen locking in profits ahead of festival

Malaysian investors are likely to remain cautious in the week running up to the Lunar New Year, after Asian equity markets fell late last week following overnight losses on Wall Street.

Analysts expect investors to continue locking in their profits this week, while volumes will ease due to the cautious sentiment.

Kenanga Investment Bank Bhd research head Yeonzon Yeow said that small/mid-cap stocks were likely to outperform the rest of the stock market, after the substantial sell-down in big-caps.

Analysts also expect global market volatility to continue as investors appear uncertain whether world growth can support the equities market, given the release of bearish economic data last week.

On the home front, stocks that will continue to draw interest this week include Scomi Marine Bhd and KNM Group Bhd. The two companies made major announcements last week.

Scomi Marine said late last Friday that it was selling its entire 29.07 per cent stake in the Singapore-listed CH Offshore Ltd for close to RM350 million.Giving away 8,888 Free Cards! Get your Tune-In Card now!


The disposal will result in net gain of RM63.6 million after accounting for estimated expenses of RM3.4 million.

The stock, which will resume trading today, last traded at 47.5 sen on Thursday.

Meanwhile, KNM gained 6.5 sen to 81.5 sen on Friday, after its founder and other investors said they planned to take the company private.

The Malaysian stock market benchmark was on an uptrend at the start of last week, but began a downward slide on Thursday as weakness on Wall Street weighed on sentiment.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) fell 17.13 points to end at 1,247.9 points on Friday, in line with weak Asian equity markets that took their cue from Wall Street, which fell after news of a rise in US unemployment benefits.

Markets were also affected by concern over the European sovereign debt problems.

However, a late rally on Wall Street last Friday saw US stocks ending slightly higher after a volatile week.

The Dow Jones Industrial Average erased its intra-day losses by ending 10.05 points higher at 10,012.23. The Standard & Poor's 500 Index was 0.29 per cent up at 1,066.19, while the Nasdaq Composite Index was 0.74 per cent higher at 2,141.12.

While the FBM KLCI may slide to 1,220 points, analysts expect the index to find its support level at 1,200 points.

FDI set for moderate recovery this year

INVESTMENTS in Malaysia's manufacturing sector halved last year, bitten by the global recession, but foreign direct investment (FDI) is expected to recover moderately this year.

This is because the economies of its foreign investors are set to improve. The International Monetary Fund, for instance, has raised its global economic growth forecast to 3.9 per cent for this year from 3.1 per cent.

The government approved manufacturing investments worth RM32.6 billion last year, down from RM62.8 billion in 2008.

Out of the 766 projects approved by the Malaysian Industrial Development Authority (Mida), foreign investments made up 67.8 per cent, or RM22.1 billion.

"Foreign investments in projects with investments of RM1 billion and above accounted for 37.3 per cent of the total (investments approved), indicating FDI inflows into the country were mainly for quality investments," International Trade and Industry Minister Datuk Seri Mustapa Mohamed said at the investment agency's annual media conference in Putrajaya yesterday.

FDI was mainly in industries manufacturing chemicals and chemical products, non-metallic mineral products, and electronics and electrical products.

In 2008, before the global economic crisis, the country attracted RM46.1 billion of investments

"(The year) 2009 has been tough for all of us. But we also see a better balance between foreign and domestic investments," Mustapa said.

Domestic investments amounted to RM10.5 billion, or a third of the total approved. They were mainly in industries making basic metal products, chemicals and chemical products, are among countries with RHD markets.

BYD's gas-powered cars, F0 and F3, are China's top sellers.

The Chinese manufacturer of batteries and cars aims to become the market leader in new energy vehicles (EV).

Its EV model, F3DM, operates as a plug-in hybrid vehicle, while the soon-to-be-launched e6 will be the first pure-electric vehicle.

The e6 will be launched in China in the first quarter, and in the US by year-end.

Berjaya Group holds 51 per cent of Changan Berjaya Auto Sdn Bhd, a joint venture with China's ChangAn Auto Co Ltd, to distribute Changan Era cars here.

The group also owns distribution rights for brands such as Mazda, Skoda and Mercedes-Benz.

Berjaya Group also plans to assemble Mazda 3 cars in Malaysia soon.

Lee, others in RM3.6b bid for KNM business

KNM Group Bhd (7164) says its founder and other investors have offered to buy all of its business, valuing the process equipment maker at RM3.6 billion.

The group has received a proposal from BlueFire Capital Group Ltd, which is controlled by Lee Swee Eng, to buy all of its business and undertakings for 90 sen per share.

Lee is the group managing director and major shareholder, with 23.4 per cent of KNM as at May 18 last year.

The offer is 20 per cent more than KNM's share price of 75 sen at yesterday's close.

KNM told Bursa Malaysia that BlueFire was working with GS Capital Partners VI Fund LP and Mettiz Capital Ltd and the international adviser was Goldman Sachs (Singapore) Pte Ltd.
GS Capital is a US$20.3 billion (RM69 billion) global investment fund set up by Goldman in 2007.

KNM's board has granted BlueFire a limited exclusivity period up to March 22 to complete due diligence.

KNM said it will engage its legal and financial advisers to assist the company and its board to evaluate and negotiate the definitive terms of any transaction. KNM's current order book stands at RM2.2 billion. It is bidding for contracts valued at RM14 billion.

KNM Group stock jumps on buyout bid

KNM Group Bhd, a Malaysian oil and gas services provider, rose the most in almost seven months after a Goldman Sachs Group Inc. private equity fund joined the founder of KNM in a takeover bid that values the Malaysian oil and gas services provider at about $1 billion.

The stock surged 10 per cent to 82.5 sen at 9:05 a.m. local time in Kuala Lumpur, set for the steepest gain since July 15.

Founder and Managing Director Lee Swee Eng offers to buy out company at 0.90 ringgit per share, valuing the process equipment maker at RM3.6 billion.

Lee now owns 23.64 per cent of KNM.

“We believe the valuation is fair and a premium relative to the sectors FY10F PE of 8.8 times, as it reflects control premium of the M&A in Malaysia,” said HwangDBS Research in a note on Friday. - Bloomberg, Reuters