JF APEX SECURITIES BERHAD (47680-X) KDN PP13226/04/2013 (032022) JF Apex Securities Berhad Newsletter Daily As Highlights 3 March 2014 Malaysia News & Highlights 1MDB awarded Project 3B Mudajaya tipped to be prime beneficiary from RM11bil power plant job Sime Darby sees challenging year Affin gets nod for talks I-Berhad's net profit surges to RM43.97m RM12m loss for Green Packet FGV eyes Asian Plantations Kulim returns to the black 7-Eleven may delay IPO GHL explores M&A in Indonesia, the Philippines and Thailand Cuscapi to double China revenue with acquisition Foreign News U.S. Stocks Erase Gains as Technology Shares Lead Losses European Stocks Advance for a Fourth Week on Dealmaking Asian Stocks Post First Monthly Advance Since October China Growth-Target Dilemma Looms as Policy Goals Demand Slowing Pound Strengthens Against Dollar as Economic Recovery Broadens Consumers Lead Canada Growth to Faster-Than-Expected 2.9% FBM KLCI Daily Chart Closing: 1835.66 Support: 1800 Resistance: 1850 Please read carefully the important disclosures at end of this publication
Market Thoughts U.S. stocks lost much of their gains on Friday, with the S&P 500 still managing a record close and equities posting a monthly gain. Rumors about possible Russian action in the Ukraine were cited as a potential factor in stocks pulling back late in the session. Meanwhile, European stocks closed flat boosted by early gains on Wall Street, where a final read on U.S. consumer sentiment in February came in just above expectations and existing-home sales held steady. On the local market, the FBM KLCI rose 4.00 points to 1835.66 points. Following the uncertainty in Ukraine, we expect the index to remain sideways. Stocks to watch are YTL Power, after 1MDB beat YTL Power to the power plant Project 3B deal; Mudajaya, as media reported that the Group is tipped to be the prime beneficiary of Project 3B; Affin Holdings, following it received nod from Bank Negara to commence negotiations for the proposed takeover of Indonesia s seventh largest bank; Sime Darby, Kulim, Brahim s Holdings, Benalec, Crest Builder, I-Berhad, Green Packet, Kulim, Mah Sing, and PPB Group following their quarterly results announcements. Malaysia News & Highlights 1MDB awarded Project 3B Government-backed 1Malaysia Development Bhd (1MDB) has won the highly-sought-after tender to build the 2,000 megawatt coal-fired power plant coded Project 3B. 1MDB s win was widely speculated over the last few weeks. It outbid early favourite YTL Power International Bhd for the RM11bil project. The Energy Commission (EC) selected the consortium of 1Malaysia Development Bhd-Mitsui Co Ltd (1MDB-Mitsui) to build, own and operate the power plant in Jimah, Negri Sembilan at a levelised tariff of 25.33 sen a kilowatt hour (kwh). (Source: The Star) Mudajaya tipped to be prime beneficiary from RM11bil power plant job Mudajaya Group Bhd, which has carved a niche for itself as builder of power plants in the country, is touted to be the prime beneficiary from the award of the 2,000 MW power plant to the joint venture of 1Malaysia Development Bhd-Mitsui Co Ltd. According to industry officials when the joint venture was preparing its technical and financial proposal for the tender, much of the input came from Mudajaya that has undertaken the civil works for most of the power plants in the country. Mudajaya is the civil contractor for the two ongoing coal-fired power plant projects. It was the company that the 1MDB-Mitsui joint venture were working with, said an industry official. (Source: The Star) Sime Darby sees challenging year Plantation conglomerate Sime Darby Bhd is looking at a 2% fall in fresh fruit bunch (FFB) production to around 10 million tonnes for the financial year ending June 30, 2014 (FY14), due to extreme weather conditions. In FY13, the company recorded 10.14 million tonnes in FFB production. Given the challenging outlook for FFB production with the possible return of El Nino in the second half of 2014, president and group chief executive Tan Sri Mohd Bakke Salleh expects crude palm oil (CPO) price to improve this year. (Source: The Star) Affin gets nod for talks Affin Holdings Bhd has received Bank Negara s approval to commence negotiations for the proposed takeover of Bank Panin Syariah. We wish to announce that Bank Negara had, vide its letter dated Feb 27, 2014, stated that it has no objection for Affin to commence negotiations with the shareholders of Bank Panin Syariah for the proposed acquisition, it told Bursa Malaysia. Affin added that it would need to seek the necessary approvals under the Financial Services Act 2013 in order to proceed with the proposed acquisition upon conclusion of the negotiation. Panin Syariah is a unit of PT Bank Pan Indonesia, which is the country s seventh largest bank. (Source: The Star)
I-Berhad's net profit surges to RM43.97m I-Berhad's net profit more than doubled to RM43.97 million in the year ended December 31 2013, from RM16.66 million previously. At the pre-tax level, the profit nearly tripled to RM52.98 million from RM18.24 million previously. This was mainly due to a higher profit recognition from ongoing projects in the group's property development division and fair value gains of about RM13 million from the revaluation of investment properties. (Source: Business Times) RM12m loss for Green Packet Green Packet Bhd reported a net loss of RM12.29mil for its fourth quarter ended Dec 31, 2013, compared with a net loss of RM11.98mil in the previous corresponding period, mainly due to a reduction in broadband services revenue. Revenue however grew to RM161.51mil from RM139.72mil a year earlier. The company told Bursa Malaysia yesterday that in the quarter, it recorded earnings before interests, taxes, depreciation and amortisation of RM18.27mil on revenue of RM161.51mil. It recorded loss after tax of RM26.64mil. (Source: The Star) FGV eyes Asian Plantations Felda Global Ventures Holdings Bhd (FGV) is hot on the trail of another round of landbank acquisitions this year. The cash-rich plantation conglomerate is believed to have set its sights on Asian Plantations Ltd (APL), a Singapore-based plantation company that is listed on the Alternative Investment Market (AIM) of the London Stock Exchange. Sources close to the deal tell StarBizWeek that discussion are still ongoing between the two parties. FGV is going to be busy with its international road show, which will kick-off next week. There is a possibility that the APL deal can be struck in the next few weeks, adds the sources. (Source: The Star) Kulim returns to the black Kulim (M) Bhd has turned around after chalking a net profit of RM3.39mil for the fourth quarter ended Dec 31, 2013, from a net loss of RM39.4mil a year ago. Meanwhile, revenue for the quarter under review fell 11% to RM661.73mil from RM714.03mil previously. In a filing with Bursa Malaysia, for the full financial year of 2013 (FY13) the company reported a 104% hike in net profit to RM431mil versus RM211mil it posted in FY12. However, revenue for the year also fell to RM2.85bil from RM3.03bil. (Source: The Star) 7-Eleven may delay IPO 7-Eleven Malaysia Holdings Bhd will postpone its initial public offering (IPO) from March until May at the earliest because the convenience store operator is updating its financial accounts, two people with knowledge of the matter said. The company, controlled by billionaire Tan Sri Vincent Tan, had planned to list in December but then delayed the move to March after the regulator raised queries, mainly about valuation. (Source: Business Times) GHL explores M&A in Indonesia, the Philippines and Thailand Following the acquisition of Australian-listed e-pay Asia Ltd (EPY), GHL Systems Bhd is exploring other merger and acquisition (M&A) opportunities in the region while rolling out its Internet merchant acquiring business. The company s focus would be on integrating EPY into the group and to ensure it was not over-stretched, its group chief executive officer Raj Lorenz said. We may be looking at one M&A in the region this year if the deal is right, he told StarBiz, adding that it was exploring opportunities with other parties that run similar businesses in Indonesia. (Source: The Star) Cuscapi to double China revenue with acquisition Cuscapi Bhd is in advanced talks to acquire a China-based technology solutions provider which, if successful, will see the group double its revenue contribution from the country to 50% of total revenue by end-2015, from 20% to 25% last year. (Source: The Edge)
Foreign News U.S. Stocks Erase Gains as Technology Shares Lead Losses U.S. stocks rose to a record, capping the best month since October, as improving consumer confidence and speculation that the Federal Reserve will support the economy offset concern over escalating conflict in Ukraine. The Standard & Poor s 500 Index climbed 0.3 percent to 1,859.45 at 4 p.m. in New York, capping a 1.3 percent gain for the week that left the gauge 4.3 percent higher in February. The Dow Jones Industrial Average gained 49.06 points, or 0.3 percent, to 16,321.71. About 7.7 billion shares changed hands on U.S. exchanges, 19 percent higher than the 30-day average. European Stocks Advance for a Fourth Week on Dealmaking European stocks rose for a fourth week as companies from Scania AB to Dixons Retail Plc rallied amid a resurgence in mergers-and-acquisitions activity. The Stoxx Europe 600 Index rose 0.6 percent to 338.02 this week as it completed the longest stretch of weekly gains since November. The benchmark declined as much as 1 percent on Feb. 27 as tension escalated in the Ukrainian region of Crimea following the removal of the country s president. European equities jumped 4.8 percent in February, their biggest monthly rally since July. Asian Stocks Post First Monthly Advance Since October Asian stocks posted a third week of gains, completing the first monthly advance since October, as company profit forecasts and takeover speculation overshadowed concern that the Chinese economy will slow. The MSCI Asia Pacific Index gained 0.3 percent this week to 137.84. Chinese shares were dragged lower ahead of the National People s Congress meetings and a report today that may show a gauge of manufacturing declined to a 17-month low. China Growth-Target Dilemma Looms as Policy Goals Demand Slowing China s Communist Party leadership faces a dilemma over where to set a growth goal for 2014 as President Xi Jinping wrestles with sustaining expansion while limiting debt risks, environmental damage and social unrest. The target, set at 7.5 percent last year, will be announced at this week s meeting of the National People s Congress in Beijing. In a Bloomberg News survey, 63 percent of economists predict the same number this year, while 33 percent see either a 7 percent goal or a switch to a range, such as 7 percent to 7.5 percent. Pound Strengthens Against Dollar as Economic Recovery Broadens The pound advanced against the dollar as data showed a surge in business investment helped the British economy grow for a fourth straight quarter, boosting the allure of the U.K. currency. Sterling rose versus the euro this week as Bank of England policy makers expressed little concern that the strength of the currency would harm the economy. Officials also said any increases in interest rates from a record low will be gradual and limited. Central bank Chief Economist Spencer Dale told Bloomberg there will probably be a healthy split among voting members on when to raise rates. U.K. government bonds advanced for a second week. Consumers Lead Canada Growth to Faster-Than-Expected 2.9% Canada s economic growth unexpectedly accelerated in the fourth quarter as consumers kept spending and companies added to inventories. Gross domestic product grew at a 2.9 percent annualized pace from October through December compared with 2.7 percent in the prior three months, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg predicted growth would slow to 2.6 percent. (Source: Bloomberg)
Futures Kuala Lumpur Composite Index Futures Crude Palm Oil *As at 8.00am 3 March 2014 Technical Review: FBM KLCI Index Closing: 1835.66 Support: (S1) 1800 / (S2) 1770 Resistance: (R1) 1834 / (R2) 1882 Comments: The FBM KLCI gained 4.00 points to 1835.66 points. Technical indicators are mixed with the RSI hovering in the neutral zone while the MACD crossed above its signal line. Following the record high in late Dec, the index pulled back after hitting its upper channel and resistance of 1882 points. The selldown since January was halted by the 200-day moving average which serves as its base for rebound. Currently, the bullish momentum slowed as down after being capped by the resistance of 1834 points. We expect consolidation at the moment with the uptrend still intact.
FKLI Spot Month Contract FKLI Closing: 1833 Support: (S1) 1750 / (S2) 1685 Resistance: (R1) 1835 / (R2) 1880 Comments: The spot-month FKLI futures shed 1.00 point to 1833 points. The contract represents 2.66 points discount to the cash market compared to 2.34 points premium in the previous trading day. Technical indicators are flat with the RSI hovering below the overbought zone while the MACD is cutting above its signal line. Following the major selldown in January, the contract rebounded off the 200-day moving average but was capped by the resistance of 1835 points. We expect sideways movement at the moment before resuming its uptrend. 3 rd Month Crude Palm Oil Contract CPO Closing: RM2800 Support: (S1) 2690 / (S2) 2550 Resistance: (R1) 2820 / (R2) 2840 Comments: The 3rd month CPO futures contract rose RM21 to RM2801 to stage a rebound. Technical indicators are positive with the MACD cutting above its signal line while the RSI is hovering in the oversold zone. The rally since July 2013 lifted the contract to a 1-year high. After a correction last month, the contract bounced off the RM2490 level supported by the 100-day moving average. Following the recent surge, we expect the contract to retest its resistance of RM2820.
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