09-05-2008: Profit taking

KUALA LUMPUR: Shares on the Bursa Malaysia snapped a three-day winning streak to close lower on (08-05-2008) Thursday. Sentiment was weak right from the word get go. We suspect the local bourse will remain within a narrow trading range given prevailing uncertainties.

The KL Composite Index traded in the red for almost the entire day. Clearly, investor confidence is still very fragile and most are cautious on where the market is next headed. As such, gains will likely be short-lived. Investors are more likely to lock in short term profits rather than hold on to their stocks, at least for the moment.

Sentiment was also affected by Wall Street's more than 200 points drop overnight after crude oil prices rose to yet another record high – and fanning inflationary pressures around the world. Crude oil futures on the New York Mercantile Exchange is now hovering just under US$124 per barrel. Many key Asian stock markets too finished the day with losses.

Selling pressure intensified in the afternoon session although the KLCI did manage to claw back some losses near the close. Some of the biggest losers were MPI, Panasonic Malaysia, Petronas Gas, KL Kepong, Public Bank, DiGi and IOI Properties.

The benchmark index finished nearly seven points lower at 1,280.4. Market breadth was, unsurprisingly, negative throughout the day. At the close, there were roughly seven losing counters for every five gaining ones.

Market volume contracted some from the previous two trading days. About 486 million shares changed hands Thursday. Telekom Malaysia was the most actively traded stock for the day.

Shares for JT International rose 30 sen to RM4.50 after the tobacco manufacturer announced a second interim dividend of 15 sen per share plus special tax-exempt dividend of 28 sen per share. The stock will trade ex-entitlement 22 May. Elsewhere, Southern Steel gained for the third straight day. The stock closed almost 5% higher at RM2.95.

KLCI MAY GO SIDEWAY FOR MONTH OF MAY 2008

Last year 2007 at month of April, KLCI is moving up and go sideway for May, Jun and July before big drop at early of August. At that time the vol is high and weighted moving avg 50 and 100 day is below the KLCI index point, this mean a lot of people is jump into market but for this year May the vol is vary small 5K vs 10K. I think for now a lot of fund is out from market already due to political issue.

08-05-2008: KLCI trades higher On 07-05-2008 WED

Sentiment on Bursa stayed on a positive footing yesterday. Shares traded broadly higher for much of the day.

The KL Composite Index opened in positive territory, gaining momentum throughout the morning session. Some profit-taking activities emerged in the later part of the day. The benchmark index came off its intra-day high but still closed 11 points higher at 1,287.2.

Market breadth was mostly positive although it did dip into the red in the late afternoon before recovering at the close. Gaining counters outnumbered losing ones by a ratio of roughly nine to seven.

There wasn't much change in terms of market volume from the previous trading day. About 640 million shares changed hands yesterday. Keladi Maju was the most heavily traded stock for the day. Other actively traded counters include Telekom Malaysia, IJM, Kosmo Technology Industrial, TM International and Kinsteel.

AEON was the biggest gainer. The stock added RM1.10 sen to finish at RM10.90. AEON, which owns and operates the Jusco retail outlets as well as several shopping malls in the country, announced plans for a 1-for-1 bonus issue. The entitlement date will be fixed at a later date.

Shares for Southern Steel gained for the second straight day after releasing strong 1Q08 financial results. The stock added another 21 sen to RM2.81. Other steel stocks like Ann Joo, Masteel and Kinsteel also traded higher on the back of improved outlook for the sector.

On the other hand, rising crude oil prices may yet pressure global economic growth going forward. Crude oil futures traded on the New York Mercantile Exchange touched fresh record high of US$122.73 (RM390.29) per barrel.

Concerns over production shortfalls in Russia and Mexico as well as the weaker US dollar helped bolstered oil prices. There appears no indication at the moment to suggest that oil prices will see a sustained retreat. Indeed, some analysts are predicting further gains in the coming months.

07-05-2008: Tenaga ripe for rebound, says OSK Research

OSK Research said there was still value in Tenaga Nasional Bhd (TNB) although its shares reached a five-year low as investors feared the company would not be granted a fuel pass-through mechanism in the face of record coal prices.

“Our analysis reveals that there is value particularly if coal prices ease below US$100 (RM318) per tonne and a pass-through mechanism is set one year from now.

“We believe margin erosion over the next six quarters will spur the government to award a pass-through mechanism and it is prudent to take position in TNB now with most bad news largely priced in,” said the research house.

OSK Research, which re-initiated its coverage on TNB with a buy, has pegged its shares with a discounted cash flow (DCF)-based fair value of RM9.05.

Based on our sensitivity analysis, a lack of a pass-through will mean our fair value is reduced to RM8.85.

“Every US$1 rise in coal prices will cut TNB’s core net profit by RM27 million if there is a pass-through and RM34 million if there isn’t. It will take an average of US$107 coal without a pass-through for us to downgrade TNB. With a pass-through, US$147 coal is the threshold. Recommend to buy now as bad news largely priced in,” it added.

With coal prices above the US$110 per tonne level, TNB would face further cost pressures in FY09. For now, the research house is forecasting its FY09 profit to drop by 32% with coal prices at US$95 per tonne.

“Given continued margin erosion, we forecast that the government will grant a fuel pass-through mechanism to TNB by 4QFY09 or June 2009 although this may be in a form of a variable subsidy, boosting FY10 earnings,” said OSK Research.

Although it forecasted six quarters of poor profit, the research house was still maintaining a buy call as it believed most of the negative news has been priced in.

“We believe the investing community has forecasted US$120 per tonne coal with no APM (automated pricing mechanism) to value TNB. As such, further selling should be somewhat muted. Once the selling pressure stops, TNB should be ripe for a rebound and we believe now is as good a level as any,” added OSK Research.

Tenaga yesterday closed 10 sen higher at RM6.70 with about 11.48 million shares traded.

07-05-2008: Marginal gains as Maybank falls, steel stocks gain

KUALA LUMPUR: Trading within a narrow range, the KLCI edged marginally higher on 06-05-2008 Tuesday, helped largely by selective buying of blue chips such as Tenaga, as well as steel stocks.

This was perhaps quite commendable given the backdrop of an overnight decline on Wall Street, Maybank's losses after it acquired the stake in a Pakistani bank and crude oil prices hitting fresh record highs of over US$120 (RM381.60) per barrel.

The KLCI closed the day up 1.5 points at 1,276.1 points. Market breadth was negative for the better part of the day, but evened out at the close. Volume totaled 624 million shares.

Maybank's shares fell 30 sen to a near four-year low of RM7.70 on heavy volume of 18.2 million shares after it announced the purchase of a 15% stake in Pakistan's MCB Bank for RM2.2 billion. Some view the 5.1 times price-to-book price tag as a tad high, more so considering Pakistan's political risk.

Other actively traded stocks include MEMS, which was relisted after being suspended since March, Keladi, IOI Corp, Time, TM, MRCB and Sime Darby. Major gainers include AEON, Tenaga and BAT, as well as steel stocks such as Southern Steel and Ann Joo.

The steel sector enjoyed a re-rating after Southern Steel posted a 600% increase in net profit for the quarter ended 31 March 2008, affirming the steel sector's rosy prospects. Our favourite stock, Masteel, rose 9 sen to RM1.62.

The upcoming corporate earnings season – which will last until the end of May – should provide new domestic leads for certain companies and sectors, as it has done for the steel sector.

On the external front, things are starting to look wobbly again as crude oil prices crossed new record highs of over US$120 per barrel. Wall Street is also faced with the cancellation of several high-profile takeover deals, starting with Microsoft-Yahoo. There are now concerns over Bank of America's purchase of Countrywide Financial Corp may also be derailed.

07-05-2008 : KNM is on the way up

06-05-2008: Listless trading

KUALA LUMPUR: Shares on the Bursa Malaysia traded listlessly Monday in the absence of fresh leads. The KL Composite Index fluctuated within a narrow band. Although the benchmark index ended slightly higher, market breadth was in the red for much of the day.

Asian stock markets also traded mixed at the start of the week. The relevant bellwether indices in Hong Kong and Taiwan ended lower, while Singapore and South Korea moved higher.

The current ambivalent trading conditions may persist. A lot of uncertainties remain in the US and global economy. It will probably take a couple of months for a clearer picture to gradually unfold before investors can be sure of where the economy, and stock prices, are next headed.

Market volume on the local bourse stayed on the low side. Few investors are tempted to take up fresh positions given prevailing circumstances. Most are just sitting on the sidelines with a wait and see sentiment. Little over 493 million shares changed hands Monday. Time dotCom was the most actively traded stock.

The KLCI opened in positive territory. The emergence of mild profit taking activities was well absorbed. Although, the benchmark index slipped from the intra-day high, it managed to keep part of the gains to close three points higher at 1,274.6 points.

Malaysia Smelting Corp was the day's biggest gainer. The stock added 50 sen to RM9.00 but volume was thin. Other notable gainers include blue chips Public Bank, Tanjong plc, Dutch Lady Milk Industries, Cycle & Carriage Bintang, KL Kepong, DiGi and KFC.

There were however more losers than gainers for much of the day. At the close, losing counters outnumbered gaining ones by a ratio of about three to two. On the other hand, most of the top losers saw very thin volume. Among the more notable losers were Puncak Niaga, MK Land and SP Setia.

06-05-2008 - KLCI is believed to move sideway or downward for 2Q2008

Due to the DJIA markets are weaker, our KLCI is resilient and may going sideway in May & June. It is not falling a lot but for KLCI to go up is unlikely,the market is still strong and now just need to wait the vol to go lower and buy at that time. Normally during this two months, EPF, Amanah Sahan & some Malaysia big fund will buy some good counter to make the KLCI index look strong, when the vol is getting up it's time to sales.

05-05-2008 Public Bank Bhd - BUY with target price RM 13.00

Public Bank Bhd - BUY with target price RM 13.00