Opportunity Behind The Dubai Financial Crisis

Dubai financial crisis has affected our stock market on 30 November 2009. Counter related to Dubai project were affected. What is advise of OSK on the said counters. Read the article below;

Good time to buy shares of contractors: OSK

THE recent share price retracement of Malaysian contractors should provide a good chance to accumulate, said OSK Research.

OSK, in its research note, said it expected a continuous positive news flow fuelled by more domestic contract awards with the Low-Cost Carrier Terminal project the first to take off with the earthworks package awards.

"We see the recent share price pullback as an excellent opportunity to accumulate and will retain the 'Overweight' stance on the construction sector," it said.

OSK said share prices of Malaysian contractors had declined in the past week on interest rate increase and currency devaluation in Vietnam as well as the Dubai's debt issue.

It said among the counters affected were Gamuda Bhd, which fell by 9.7 per cent, IJM Corp Bhd (3 per cent), WCT Bhd (6.3 per cent) and Mudajaya Group Bhd (8.6 per cent).

OSK said the rate increase and currency devaluation were likely to weaken sentiment in the Vietnamese property market in the short term.

"However, we believe long-term prospects in the Vietnamese property market will remain positive, underpinned by the nation''s robust gross domestic product," OSK said.

It said the Dubai issue would not impact Malaysian contractors much given the minimal exposure, with only IJM undertaking a RM126 million contract for the Fortune Executive office towers.

"Meanwhile, WCT-Arabtec joint venture is undergoing arbitration, which is expected to be completed by end-2010, with Meydan LLC in Dubai for the Meydan Racecource termination," it said.

OSK said LCL, however, was highly exposed as it has 85 per cent of its orderbook exposed to Dubai. -- Bernama

Hai-O Is Profit Taking, Good To Buy

Hai-O which involve in medicine business is expected to hit RM8.80 as their business is expanding to Indonesia. Profit taking aktivities happening today which propel Hai-O to lowest. Be contrarian for this stock is better to reap profit. By the way read the report from Theedgedaily.com as below:

KUALA LUMPUR: Shares of Hai-O Enterprise extended their losses in late afternoon trade on Friday, Nov 20, falling to a five-week low of RM6.93.

At 3.23pm, the shares were down 27 sen to RM6.93, the lowest since Oct 15.

On Thursday, the shares fell 46 sen, the biggest one-day loss in recent weeks, as investors started taking profit after the run-up in the share price.

Hai-O is a manufacturer and wholesaler of traditional herbal and pharmaceutical products.

In late October, a local research house increased the indicative fair value for Hai-O to RM8.80 from RM6.80, based on higher price-to-earnings ratio (PER) of nine times CY2010 earnings per share (versus eight times CY2010 earnings oer share previously).

This is a 38% discount to the research house's target PER for the consumer sector of 14.5 times due to its smaller market capitalisation as well as low liquidity.

The higher PER target, the research house said, was to reflect increased investor participation in mid-cap stocks,a lower risk premium and improved market sentiment.

Buy Share Now - Warren Buffet

You might know who is Warren Buffet. He is a greatest stock market investor in the world. He also one of the richest man in the world. What he said about current the stock market? Can we invest? Read the article below;

The world's richest men say go buy stocks, global economic panic is over

Buy attractive stocks, they say

NEW YORK: Capitalism is still alive and well, say the world's two richest men, despite lingering shocks from the longest, deepest recession since the Great Depression.

"The financial panic is behind us," said famed investor Warren Buffett, who recently made what he called an "all-in wager" on the U.S. economy by acquiring railroad Burlington Northern Santa Fe.

"The bottom has come in stocks. Don't pass on something that's attractive today."

Sitting facing each other in an auditorium filled with nearly 1,000 cheering people at Columbia University in New York, the CEO of Berkshire Hathaway Inc. and Microsoft founder Bill Gates fielded questions from Columbia Business School students on the recession, investing and what's the next Microsoft.

There were at first reassurances that the U.S. economy had not collapsed since the last time the two sat in front of a student audience, in Nebraska in 2005.

"We proved that we can make mistakes," said Gates.

"But the fundamentals of the system, a marketplace-driven system where we invest in education and a great infrastructure for the long-term, that's continued."

Even in the country's "darkest hour," he said, American businesses were still innovating.

"Last fall was really blindsiding," Buffett said later.

Still, "I did not worry about the overall survival of our economy."

The worst recession since the 1930s may be over, but the recovery isn't expected to be strong enough to stem job losses and get businesses hiring again.

Employers shed a net total of 190,000 jobs in October, a government survey showed Thursday.

It was the 22nd straight month of losses.

And the unemployment rate jumped last month to 10.2 percent, a 26-year high.

Buffett also commended the Bush administration's actions last September, saying "only the government could have saved things" after the collapse of Lehman Brothers triggered a freeze-up in credit markets and panic on Wall Street.

In the future, however, Buffett said "there should be more downside to the head of any institution that has to go to the federal government to be saved for reasons of the greater society. And so far, we have been better at carrots and sticks in rewarding CEOs at the top. But I think some more sticks are called for."

The two endeared themselves to the audience with tips.

Buffett exhorted students to "marry the right person" and said, "The worst investment you can have is cash."

Gates, meanwhile, said he sees big opportunities in environmentally friendly energy and medicine.

"Capitalism is great," he said.

Gates wore a suit and tie, flashing the inner red lining of his jacket as he walked to his chair. Buffett, who earned a master's degree from Columbia in 1951, wore a sweater with the Columbia insignia.

Students in the audience said they were glad the two were so confident about the economy.

"That probably weighs a lot to a lot of people to hear Buffett say we're out of the crisis," said Andrea Basche, an Earth Institute student at Columbia. – AP

http://biz.thestar.com.my/news/story.asp?file=/2009/11/13/business/20091113074426&sec=business

Banks, Property, Telcos, Construction

Written by Joseph Chin,

Saturday, 24 October 2009 07:49

KUALA LUMPUR: Investors' sentiment in equities next week, starting Oct 26, could be weighed down by the losses on Wall Street, which saw the Dow Jones Industrial Average finish below 10,000 for the second time this week.

The Dow Jones industrial average fell 109.13 points, or 1.08 percent, to 9,972.18, marking its second finish this week below the 10,000 mark. The Standard & Poor's 500 Index dropped 13.31 points, or 1.22 percent, to 1,079.60.

However, the positive outlook for the Malaysian economy next year and measures to further shore up the economy under the Budget 2010 proposals, would provide support for the market.

RAM Holdings said the smaller budget has strengthened its view that the planned 13.7% cut in operating expenses, or an equivalent of 3.2% of GDP, has improved the country's fiscal space.

"Although the government's projected GDP growth of 2% to 3% for next year is lower than market consensus and also RAM's forecast of 4.9%, we welcome the focus on reining in the country's fiscal deficit in 2010," it said.

AmResearch said from an equity-market perspective, Budget 2010 is again a non-event given the lack of multiplier effects on corporate earnings near term and muted consensus expectations on potential catalytic policy pronouncements.

Sin taxes on gaming, alcohol and tobacco were conspicuously absent, it said.

Stocks to watch next week include banks, credit card issuers including Aeon Credit, property companies, telcos, including broadband and WiMax players like Green Packet, and also telcos providing broadband services Telekom and DiG and infrastructure companies like IJM and Gamuda.

Maxis is scheduled to launch its prospectus on Wednesday and it is expected to raise nearly RM10.2 billion for the listing exercise of its Malaysian operations. However, pricing the shares above RM5.20 may not attract strong interest.

Tabung Haji had already stated it would only be interested if the offer price doesn’t exceed RM5.20 a share. The pilgrimage fund's chief investment officer Mohammed Noor Abdul Rahman said: “We cannot go beyond that price.”

Meanwhile, Datuk Seri Abdul Wahid Omar, who is president and CEO of MALAYAN BANKING BHD [] and chairman of the Association of Banks in Malaysia said there are two aspects in the Budget 2010 proposals that will affect the financial-services industry.

Firstly, the introduction of a RM50 a year service tax for credit and charge cards. Secondly, the reintroduction of a real property gains tax, albeit at a much lower rate of 5%.

Whilst this may reduce some speculative elements in the property market, it will also result in lower growth in housing/property loans for the banks, said Wahid.

But AmResearch said the sentiment-driven weakness in property equities presents a buying opportunity. To broaden tax revenue, the government has imposed a flat real property gains tax of 5% on residual gains, with certain exemptions.

"We do not think this measure will derail demand, as impact on property price discovery in a rising market would be negligible. Furthermore, recent share-price weakness in property equities suggest that real property gains tax (RPGT) has already been priced-in," it added.

Telcos including companies providing broadband services including Green Packet's unit, Packet One, should attract interest after the government proposed individual taxpayers be given tax relief on broadband subscription fee up to RM500 a year from 2010 to 2012.

Telekom Malaysia should attract interest also as the government speeds up implementation of high-speed broadband at total cost of RM11.3 billion, of which RM2.4 billion is from government and RM8.9 billion from Telekom Malaysia.

Infrastructure companies including IJM and Gamuda would attract interest as the government allocates RM9 billion for infrastructure.

Of the RM9 billion, the Budget 2010 proposals said RM4.7 billion will be for road, bridge, water and sewerage projects and RM900 million for railways.

Source : http://www.theedgemalaysia.com/business-news/152064-stocks-to-watch-banks-property-companies-telcos-construction.html

MAXIS, good to be subcribed !!!!!!

Maxis is expected to pay 85% of net profit as dividends

By RISEN JAYASEELAN and LEONG HUNG YEE

PETALING JAYA: Maxis Bhd will likely pay out 85% or more of its net profit as dividends once listed, a source close to the company toldStarBiz.

“Maxis has sufficient cashflow to do so and when it pays these higher dividends, you can expect a re-rating of the sector,” he said.

Maxis’ draft prospectus states that the company is targeting a payout ratio of 75% of its net profit.

But Maxis has a track record of paying much more. In 2007, it paid out RM2.71bil in dividends, more than 100% of its net profit.

For the first six months of this year, Maxis reported earnings before interest, tax, depreciation and amortisation (EBITDA) of RM2.14bil.

Annualising this figure, Maxis’ full year EBITDA could be close to RM4.3bil.

Even if Maxis spends the estimated RM1.4bil in capital expenditure and other items such as interest payment for the whole year – which is what analysts expect – it still has considerable headroom to pay out more than 75% of its net profit.

Maxis reported a net profit of RM1.14bil for the first half of its financial year.

That Maxis will seek to pay high dividends also makes sense for major shareholders, T. Ananda Krishnan and Saudi Telecom Co, who will use the cash to fund growth in capital-intensive markets like India and Indonesia.

These shareholders may also use the listing proceeds to pay off some of the huge debts taken up for expansion into those markets.

Maxis’ higher dividends could mean higher yields and that, in turn, could make its shares more palatable to investors who seek safe, dividend-yielding companies to put their money in.

Retail investors though will have to accept the fact that only a small proportion of the public issue will be devoted to them.

Sources said Maxis was not changing the structure of its initial public offering (IPO) from what it had laid out in its draft prospectus.

Maxis plans to offer about 175 million shares, or less than 10% of the shares on offer, to retail investors. The bulk of the share offering – 2.075 billion or 92.2% of the issue – will go to institutions.

That had led to calls for Maxis to offer more shares to the public.

It is understood that the Securities Commission (SC) is satisfied with the structure of the offer (based on the draft prospectus), considering that it had met with the minimum public spread requirements.

“The SC will not interfere in the structure of an offering. It deems that to be purely a commercial decision.

“Besides, the SC has now moved into a full disclosure-based system and to prescribe beyond what the regulations require would be taking a step back,” said an industry player familiar with the situation.

Meanwhile, Maxis is said to be starting its book-building exercise for its international tranche this Friday. The book building for local institutions is ongoing.

A fund manager said Maxis was in discussions with a number of potential “cornerstone investors”, including the Employees Provident Fund.

It had been reported that Malaysian funds would buy almost half of the more than RM10bil Maxis offering, which is the country’s largest ever IPO.

It is understood that the latest indicative share price range for Maxis’ IPO starts from RM4.80, which is at the low end of analysts’ expectations and which could make its yields look more attractive.

Maxis is promoting itself as a pure dividend play which is poised for growth in the Malaysian market through data services.

“It has the most of the high-end cellular customers in Malaysia who are the target market for 3G type services,” an analyst said.

http://biz.thestar.com.my/news/story.asp?file=/2009/10/22/business/4952603&sec=business

NSTP vs Sarawak Energy

There are two companies will be privatised soon. Those companies are NSTP and Sarawak. Announcement of privatisation for both companies has been made on 16 and 19 October respectively. The price of both counters has reacted differently after the announcement.

As for NSTP, the price was down, open lower and closed at RM2.09 compared to RM2.46 before announcement. It has lost at RM0.35.

Conversely, Sarawak price has reacted differently where it was open higher at RM2.60 compared to RM2.14 before announcement and gain at RM0.56.

In most previous cases, privatisation made the price gain, and Sarawak case included, but in NSTP case privatisation has made the price loss. Why?

The answer is valuation of the price after upon announcement. NSTP has been valued at RM2.00 compare to RM2.46 market price., where as Sarawak had been valued at RM2.65 compared to RM2.14 market price.

As for current NSTP’s minority shareholders they will be paid in form of share swap. They will get one Media Prime share for every one NSTP share together free warrant of Media Prima at ratio 1 for 5.

The question is, what price of Media Prima after NSTP’s privatisation? Can shareholders sell it at RM2.00 (as swapped by Media Prima) where as the current market is only RM1.80. Can Media Prima’s price increase to RM2.00 after NSTP’s privatisation?

Different situation will be faced by Sarawak current shareholders. If they accept the privatisation offer, they will get RM2.65 per share and they will be paid in cash. The offer is certain.

There is another different scenario here. NSTP’s NTA is RM4.06 where as Sarawak’s NTA is RM1.88.

Looks like NSTP’s current shareholders offered lower than NTA compared to Sarawak current shareholders. Minority Shareholders Watchdog (MWSB) should object this matter.

Or, should current shareholders of NSTP sell the shares?

From my point of view, they should sell as long as gain by taking in account the Media Prima (NSTP swapped share) price which is uncertain.

- Sabri Jalil

Proton, Do Not Overlook

Buy national car maker proton when the price moving downward close to RM4.00. Good prospect for Proton based on followings factors.

• Proton will have new strategic partner. No matter either it is local or foreign partner it will benefit Proton in term of market expansion and technology. By the way, Mahendra from India and Volkswagen have shown interest to be partner of Proton.

• Proton will be the assembler for other brand of car to make their factory in Tanjung Malim fully utilised, thus it will be new source of income for Proton.

• Proton is cyclical stock. Since Dow Jones has reached above 10,000 points and has potential to go up further, stock like Proton will follow.

CIMB more positive on reported potential tie-up between Proton and Volkswagen and targeted the price at RM6.05

Jim Rogers : Oil Price Will Be $200?

Prior to this Jim Rogers commented on gold price movement, as stated in previous article. Below article in turn containing his view on future oil price movement. If his view is true, I think it is good for Oil & Gas stock. Please read the article below;

One of the greatest hedge fund managers in history, Jim Rogers, insists that oil will move above $200 at some point during the bull market. He also sees the coming bubble in Treasuries bursting soon. Rogers commented that “the U.S. government bond market will be the next bubble to burst due to unsustainable borrowing,” during an interview with Reuters TV.

Rogers’ argument is no different from that of most other commodities bulls. A rapid recovery in the global economy will hit oil supplies with unprecedented demand. Oil fields around the world are aging and their production is falling. Underwater fields are hard to drill and some many be unreachable based on current technology.

Rogers may be worth listening to because he has been right so often in the past. He c0-founded the Quantum Fund with George Soros almost forty years ago and has done remarkably well, making himself a billionaire, though intelligent investments in global commodities.

Rogers is already making his bet on $200 oil. It was at $147 just a little more than two years ago. If it can get there once it can certainly get there again.

http://www.thedailycrux.com/content/3073/Jim_Rogers/eml

If You Invest In Gold

If you view the movement chart of price gold in this blog, it shows the uptrend and record new highest.

Do you invest in gold? If yes is this the right time to sell or to wait for the price to go up further?

Jim Roger, the greatest commodity investor has good advise for you. Read below article;

Thursday October 8, 2009

Jim Rogers wary of buying gold at new high

But he sees further gains in the long term

SINGAPORE: Renowned investor Jim Rogers, one of the biggest bulls on this decade’s commodities rally, is not so bullish on gold a day after the precious metal set a record high, although he does see further gains in the long term.

“Gold has hit a new high and I don’t like to buy something at record prices unless there are extremely strong fundamental reasons. I am not jumping on board,” said Rogers, whose bearish views on the dollar and bullish views on commodities and China have been widely broadcast for years.

Global renowned commodity investor Jim Rogers. Also, author of "Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market”. He says ... I am not jumping on board".

“I can’t say what will happen to gold tomorrow or next month. But if you ask me whether gold will go up in the long term, maybe in the next decade, I would say yes,” he toldReuters by telephone in Singapore, where he now lives as an independent investor.

Spot gold prices surged to a record above US$1,040 an ounce on Tuesday, topping the previous March 2008 peak as investors moved to preserve the value of their dollar-denominated assets against the weakening currency and the risk of inflation.

Rogers has long been down on the dollar, which he has called ‘terribly flawed’. Dollar weakness has been one of the main drivers of the recovery of commodity prices this year, and also cited as one of the factors explaining the strength of gold.

He is also renowned as a long-time commodities bull, repeatedly predicting higher prices for raw materials and also author of a book titledHot Commodities.

Rogers rose to fame after co-founding the now-closed Quantum Fund with George Soros nearly four decades ago. The fund returned 4,200% over the 1970s and famously bet against the pound in the 1990s. — Reuters

Latest business news from AP-Wire

http://biz.thestar.com.my/news/story.asp?file=/2009/10/8/business/4862377&sec=business

Affin Raises KNM Target To MYR0.88

Affin Research ups KNM Group target to MYR0.88 from MYR0.83 (based on 11X FY10 EPS), after revising up FY10-FY11 earnings forecasts by 4%-6%.

Keeps Add call, says "it is encouraging to see that KNM has successfully replenished its orderbook in 3Q09 (now stands at MYR3.2 billion)." Broker thinks reaching MYR4 billion mark is crucial to sustain earnings momentum, to help stock's re-rating process. "We expect the MYR4 billion mark is likely to be achieved in early 2010."

Air Asia Recommended BUY

CIMB Ups AirAsia Target To MYR1.90 From MYR1.80

CIMB Research raises AirAsia (5099.KU) target to MYR1.90 from MYR1.80, keeps Outperform call, following strong response to airline's private placement of 380 million shares. "Demand for the recently concluded 380 million share placement was especially strong from foreign institutions, allowing AirAsia to price it at MYR1.33 apiece, higher than the MYR1.05 we had imputed in our earnings model," says CIMB; thus tweaks earnings slightly (plus or minus 1%) and raises target price "as we roll a year forward." House says 9X P/E target is at higher end of its 4X-10X forward P/E multiple over past year. Cites potential re-rating catalysts to include robust revenue and earnings despite the downturn. Adds, successful private placement also removed overhang of an anticipated equity issue. Stock last down 0.7% at MYR1.39. (ECH)

Buy CIMB, Axiata, TNB stocks: Credit Suisse

INVESTORS should buy banking group CIMB Group Holdings Bhd, mobile-phone operator Axiata Group Bhd and power utility Tenaga Nasional Bhd as they’ll outperform the “lackluster” Malaysian stock market, Credit Suisse Group said.

“Malaysia has become under-researched due to its liquidity, low beta nature and unexciting valuations,” Stephen Hagger, an analyst at Credit Suisse, said in a report today. Beta is an indicator of volatility. “This offers an opportunity in stock picking” and “the best opportunity is to look for value in under-researched stocks.”

The FTSE Bursa Malaysia KLCI Index has risen 38 per cent this year, trailing Southeast Asian benchmark indexes even as Prime Minister Najib Razak announced on June 30 stimulus plans valued at RM67 billion (US$19 billion) and unveiled efforts to liberalize the economy.

Najib, who took office on April 3, reduced limits on foreign investment, property purchases and initial share sales, peeling back decades of benefits to ethnic Malays as the nation sought to attract investors and restore economic growth.

While Najib has “laid the foundations” for the long-term development of the capital markets, the “momentum of positive change” has slowed, Hagger said, without giving details.

Malaysia’s stock market is trading at 23 times reported earnings compared with 15 times in the Philippines and 21 times in Singapore, according to data compiled by Bloomberg.

‘THE Stock to Own’

CIMB remains “THE stock to own in Malaysia” because the bank is “on a roll as it dominates the share of capital raisings both domestically and increasingly, regionally,” Hagger said.

CIMB will also benefit from a recovery in consumer banking and its presence in the Indonesian banking industry, he said.

Shares of Malaysia’s second-biggest bank have surged 85 per cent this year. CIMB is the index’s third-best performer this year. The stock jumped 3 per cent to RM10.84 as of 10:12 a.m. local time, set for the highest level since Jan. 18, 2008.

Axiata, Southeast Asia’s second-biggest mobile-phone operator, “stacks up well against peers” while state- controlled power utility Tenaga will benefit from a rebound in electricity sales, the report said. - Bloomberg

http://www.btimes.com.my/Current_News/BTIMES/articles/20090911110733/Article/index_html

Citi Group Under Valued?

Every investor in world know Citi Group, world financial giant. The price plunged in October 2008 and bailed out by US government. Only in few months later the price rebounced after a news reported the company recorded profit. Is the price still undervalued? Please read the article below;

(Reuters) - Hedge fund manager John Paulson, who bet against financial companies after foreseeing the credit crisis, has been buying Citigroup Inc shares over the past few weeks, the New York Post reported, citing sources.

Paulson bought around a 2 percent stake in Citigroup, a source told the paper. An investor with a 5 percent or higher stake in a company would have to make a disclosure with the U.S. Securities and Exchange Commission.

Sources told the paper Paulson believes Citigroup's assets are undervalued. A spokesman for Paulson declined to comment to the paper on the hedge-fund manager's investment activities.

Paulson's investment moves are monitored by investors after he predicted the implosion of mortgage markets in 2007 and the collapse of banks and other financial companies in 2008.

A spokesman for the hedge-fund manager was not available to comment.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Dan Lalor)

Sources : http://www.reuters.com/article/wtUSInvestingNews/idUSTRE57Q1C820090827

TNB Comes Back?

TNB is comeback !!!!...It has recorded a profit as much as RM1.02 billion for third quarter of this financial year compare to RM298.80 million for previous financial year. It is a triple profit.

Profits were boosted by a forex gain of RM603.2 million compared to losses of RM180.8 million a year ago. The previous loss, in turn, was also caused by forex.

Previous target was RM8.40 already met on 20/7/2009. Demand of power just start to pick up as certain industries showing the positive hints.

Looks like my point of view on TNB in previous article came true.

Still can buy?

I am not too eager to recommend this time but RHB and CIMB has set the target at RM10.30.

http://www.btimes.com.my/Current_News/BTIMES/articles/20090722180954/Article/index_html

- Sabri Jalil

Hold For Astro

Based on today’s newspaper report (21 Jul., 09), the CEO of Astro has denied the report earlier. He has attributed that the report was “purely speculative”. Therefore investor should hold the decision to buy and wait what is their decision.

- Sabri Jalil

Astro, Another Windfall After TM

The trading of Astro stock was halted in morning session on 20 July 2009 to pave the way of making announcement. Announcement was made regarding the plan of spin off their subsidiaries in India and Indonesia which not showing good performance. By spinning of both subsidiaries, Astro will no longer take the burden thus improve the company’s efficiency.

As a result of restructuring, Astro will make a capital return as much as RM1.00 per share to their shareholders. Therefore, it is a windfall for shareholders.

OSK Research recommended buy for Astro where the target price is RM4.20.

The price was trading lower after suspension. It was closed at RM3.44 compare to RM3.62 before suspension. Since it was discounted at RM0.20, from my point of view it is good to buy. Investors will gain from the windfall as well as price appreciation.

- Sabri Jalil

The Return Of MK, Impact On MK

In corporate world MK is refer to Mustapha Kamal Abu Bakar, his title is Tan Sri, so let’s call him Tan Sri MK. In stock market MK is refer to MK Land Berhad, subsidiary of Emkay Group where Tan Sri MK was a founder. Emkay Group is the well known properties developer in Malaysia. It’s subsidiary MK Land Berhad was listed on Bursa Malaysia.

In year 2000, MK Land’s share was RM4.00 but nine years later, 28 October 2008, it was only RM0.10, 40 times lower than highest price. Nevertheless it was moving slowly from RM0.10 to only RM0.16 from October 2008 till April 2009.

What made MK Land worst?.

Economic downturn has contributed to the bad performance but suppose not that bad as world economic crash in October 2008 did not badly affect our banking system, thus, the impact on properties was not as worse as year 1997.

The very low price of MK Land was mainly due to the company’s bad performance. It has made huge loss amounting RM55.70 million for financial year 2008 which ended on June. At the time when MK Land makes loss, Tan Sri MK has no longer a CEO but only as an ordinary chairman. The loss recorded by MK Land has forced Tan Sri MK return with an executive power.

As soon as Tan Sri MK returns as captain of MK Land, he has changed the strategy of business. He focus on strategic land development especially in Klang Valley and selling non strategic lands. By selling non strategic lands, it will increase cash for paying the outstanding loan, thus it will reduce gearing ratio of MK Land.

On 28 May 2009, Business Times has reported that, MK Land has posted net profit of RM13.2 million for nine months to March 2009, compared with loss of RM18 million in the same period last year in tandem with the increase in sales which jumped 180 per cent to RM185 million.

One of the project that contributed to the huge sales is The Domain Cyberjaya, where Koperasi Pelaburan Hartanah Berhad (KOPRAHA), growing investment cooperative, was one of the biggest buyer of the strategic property.

Since the income increase, MK Land aims to reduce its debt of RM500 million as at December 2008 to RM400 million by June and RM300 million by early 2010.

The township project namely Damansara Perdana is expected to drive the profit of MK Land, thus increase its earning per share.

Can we buy MK Land’s share?

From the latest financial report, NTA of MK Land is RM0.81 and as of 15 July 2009, the price of MK Land closed at RM0.41. It shows that MK Land is undervalue stock and with the existence of “orang lama” and his strategy, I believe that the market price will improve toward its NTA.

The conclusion is, “the return of MK will give an impact to MK”.

Do not overlook this stock.

- Sabri Jalil

Believe In Monopoly

Monopoly stock is a Warren Buffet’s favourite, greatest investor in this planet.

What is the monopoly stock in Malaysia? It is Tenaga Nasional Berhad or TNB. I have expressed my opinion on TNB via article in this blog on April 14. I have stated some reasons why should investors buy stock like TNB during the economic crisis.

I don’t to want to comment further but looks like the business time report today has proven my view was not wrong. Compare the price since April and today. Target RM8.40

- Sabri Jalil

RM8 Billions Water Project, Who Will Benefit?

From June to September 2009, there will be a numbers of water transfer project which cost RM8 billion.

Three major jobs which form part of the inter-state water project, estimated at RM2.5 billion, will be tendered out from this month.

The construction of the Klau Dam, dual pipelines from the dam to the intake point and a pump station in Semantan to transfer the water along a 45km tunnel which cuts through the Titiwangsa mountain range, will be awarded in the next three months.

There are three more contracts to be tendered out soon… the tender bidding will be from June to September.

What company will benefit from the project?

IJM will build the consortium with Shimizu, Nishimatsu and UEM builders to handle the Pahang – Selangor Interstate Raw Water Transfer. It is including tunnelling work.

Loh & Loh Corp Bhd may be awarded sub-contractor jobs for Klau Dam project in Semantan.

JAKS will bag some of the piping jobs. News reports say JAKS has already been shortlisted with three other players for the piping works.

Gamuda Bhd (and Loh & Loh) should be beneficiaries for the water treatment plant in Selangor where Gamuda will be the main civil contractor for the 1,950-million-litre a day Sungai Selangor Phase 3 water treatment plant (WTP) project — the largest WTP in Malaysia — with Loh & Loh having being involved in civil works for all three previous water supply schemes in Selangor

Watch out the price movement of above mentioned counters i.e IJM, Gamuda, Loh & Loh and JAKS.

- Sabri Jalil

Bright prospects in O&G sector

RISING prices of crude oil have been hogging the limelight as a weaker US dollar spurs investors’ demand for commodity as a hedge against inflation.

Against the backdrop, shares of oil and gas (O&G) firms have also come under the spotlight as stock market punters anticipate that these companies will benefit from more exploration and production (E&P) activities.

Analysts’ observation indicated that prices of crude oil and equities were closely linked. The general trend suggested that stock prices would lead the upward movement of the commodity’s rates. However, equity rates tended to lag the decline in oil prices.

Based on RHB Research’s technical analysis, crude oil prices were likely to increase to the next support range of between US$78 (RM271.44) and US$87 a barrel after piercing the US$60 a barrel support level.

“Nevertheless, based on current crude oil prices, most of the stocks under our coverage are trading at or below the currentcrude oil price level, with the exception of SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd,” wrote RHB.

Based on crude oil rates near US$70 a barrel now, the research firm said shares of O&G firms like Wah Seong Corp Bhd and KNM Group Bhd should, effectively, trade at around RM1.97 and RM1.87 respectively while Petra Perdana Bhd and Dialog Group Bhd should be transacted at some RM3.70 and RM1.26 respectively.

SapuraCrest and Kencana , meanwhile, were deemed fairly valued at RM1.36 and RM1.50 respectively.

“While we recognise the nearer-term risk that contracts would continue to be deferred or re-negotiated, we believe this is mostly discounted by the market.

“We reiterate our view that the continued shortage of offshore E&P assets will underpin the longer-term growth in E&P activity. Hence, we reiterate our overweight stance on the sector,” said RHB. The research entity’s top picks for the sector include Wah Seong, Kencana and KNM.

Meanwhile, OSK Research said as crude oil prices trade near US$70 a barrel, more shallow water and deep water O&G projecs were now feasible against the backdrop of cheaper raw materials such as steel.

“We believe deepwater production cost has fallen to US$40 to US$50 a barrel following the drop in raw material costs, especially steel.

“This has made these projects even more attractive, especially, with oil price on the uptrend coupled with signs of recovery in the global economy, resulting in higher demand for oil and gas, wrote OSK which maintained its overweight recommendation on the sector.

Among O&G companies, OSK’s top picks included Alam Maritim Resources Bhd and Petra Perdana which were given fair values of RM1.95 and RM3.50 respectively. OSK also liked Wah Seong and Kencana which are deemed fairly valued at RM2.58 and RM2.14 respectively.

“We believe these four companies would be the main beneficiaries when new projects come back in a big way”, said OSK which issued buy calls for these companies.

Last year, crude oil prices had surged to a historical high of US$147.27 a barrel in July before tumbling to a low of US$32.40 a barrel in December.

This article appeared in The Edge Financial Daily, June 5, 2009.

Quoted from Theedgedaily.com

Rubber Glove Sector, Promising Investment

Why should we invest in rubber glove sector;

1.       Rubber glove products are inelastic demand - recession proof industry.

2.       Any increase in production cost can be passed to customer, earnings will not be affected

3.       Strong world demand as its usage is mandatory in medical sector.

4.       Companies in rubber glove sector never failed to pay dividend to shareholders

5.       Rubber gloves stock considered as income, defensive and growth stock

·         Income stock – stock which always manage to pay good dividend

·         Defensive stock – stock which not badly affected by economic circle especially when the economic crash.

·         Growth stock – EPS growing in tandem with the company and economic performance, thus, the price will go up.

AmResearch recommend to buy Kossan and Top Glove which their target price are RM4.90 and RM6.70 respectively.

 

- Sabri Jalil