Sunday, January 30, 2011

Bursa Malaysia: Stocks to watch: Century Software, EON Cap, GAB, DiGi

KUALA LUMPUR: Stocks on Bursa Malaysia could see volatility with downside bias in the trade-shortened week, starting on Jan 31, as investors react to the overnight decline on Wall Street following the political'' instability in Egypt.

With Bursa Malaysia closing for three days, due to the Federal Territory Day on Feb 1 and Chinese New Year holidays from Feb 3 to 4, investors would be reluctant to take fresh buying positions especially due to the already weak sentiment.

Investors' hope for the rebound last Friday fizzled out on selling pressure of stocks with high foreign shareholdings and also banks. Worries about Bank Negara raising the statutory reserve requirement would weigh down interest.

On Wall Street, US socks suffered their biggest one-day loss in nearly six months on Friday, Jan 28 as anti-government'' rioting in Egypt prompted investors to flee to less risky assets to ride out the turmoil.

Increased instability in the Middle East drove up the CBOE'' Volatility Index, the stock market's fear gauge, as investors scrambled for protective positions.

The Dow Jones industrial average ended down 166.13 points, or 1.39%, at 11,823.70. The Standard & Poor's 500 Index was down 23.20 points, or 1.79%, at 1,276.34. The Nasdaq Composite Index fell 68.39 points, or 2.48%, at 2,686.89. For the week, the Dow fell 0.4%, the S&P lost 0.5% and the Nasdaq dipped 0.1%.

For the week ahead, US stocks may struggle to return to firmer footing if anti-government riots in Egypt destabilise the Middle East, keeping investors on edge.

At Bursa, stocks to watch are Century Software Holdings Bhd, EON CAPITAL BHD [], GUINNESS ANCHOR BHD [], DIGI.COM BHD [] and MTD CAPITAL BHD []. Also in focus will be PLANTATION []s and banks, which have borne the brunt of the foreign selling.

Century Software issued 23 million new shares of 10 sen each at an offer price of 93 sen each. Kenanga Research has a target price of RM1.43.

Kenanga Investment Bank Research said following a recent meeting with Century Software, it is convinced that the group is set for greater growth.

'We have upgraded our FY10, FY11 and FY12 earnings estimates to RM10.9 million, RM19.1 million and RM25.3 million, respectively. We value Century Software at 12.9 times PER to its FY11 EPS of 11.1 sen, hence we pegged our 12-month target price at RM1.43,' it said.

Meanwhile, the Kuala Lumpur High Court is set to announce its decision on suit by Primus (Malaysia) Sdn Bhd against EON Capital Bhd over the Sept 27, 2010 EGM. Primus is opposed to the HONG LEONG BANK BHD [] takeover of EON Cap.

Primus had filed an originating summons with the High Court as it sought relief from the court over several issues against the company. Primus had sought a declaration that the motion to adjourn the Sept 27 EGM was a valid motion.

To recap, on Oct 4, 2010, Primus had filed an originating summons with the High Court as it sought relief from the court over several issues against the company.

Primus had sought a declaration that the motion to adjourn the Sept 27 EGM was a valid motion. It also sought to declare the EGM chairman's decision not to put the motion for an adjournment of the EGM to a vote was unlawful. Other relief included a declaration the motion to remove the chairman as valid.

Primus had sought a declaration that the chairman's refusal to put the motion for his removal as the chairman of the EGM was unlawful; while all the proposed resolutions passed at the EGM were null and void.

On the bright side, posted earnings of RM332.02 million in the fourth quarter ended Dec 31, 2010 compared with RM246.5 million a year ago.

The earnings growth was underpinned by increased usage from an enlarged subscription base, inclusion of handset bundles plus rising revenue contributions from data services.

Guinness Anchor's earnings rose 47% to RM64.63 million in the second quarter ended Dec 31, 2011 from RM43.83 million a year ago as it sold more of its Tiger beer. Revenue rose 11% to RM421.41 million from RM378.13 million. Earnings per share were 21.40 sen compared with 14.51 sen. It declared a dividend of 10 sen a share.

Investors will await details how MTD Capital Bhd's two top officials will finance their RM3.25 billion cash offer to acquire the entire business and undertaking of MTD Prime Sdn Bhd and Metramac Corp Sdn Bhd including all their assets and liabilities.

Its group executive chairman Nik Hussain Abdul Rahman and the president/chief executive officer Azmil Khalili Khalid has made the offer on Friday, Jan 28 to acquire business of MTD Prime and Metramac. Details will be announced on Monday.

MTD Capital owns 100% of MTD Prime and Metramac. MTD Prime is the tolling concessionaire for the Kuala Lumpur - Karak Highway and its extension, the East Coast Expressway Phase 1.

Source: The Edge, 29 Jan 2011

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