BCorp, Maxis, Mudajaya, O&G to be in focus

With the FBM KLCI extending its winning streak to end August on a stronger note and the index up 161 points for the month amid the flurry of corporate earnings, there could be some profit taking as trading kicks off today.

On Monday, the FBM KLCI closed at a 30-month high of 1,422.49, the highest since February 2008.

However, there are also expectations for the 30-stock index to touch 1,460 by year-end, underpinned by strong investor interest, positive earnings by corporations especially the bigger capitalised stocks, strengthening ringgit and ample liquidity.

In the short term, investors’ decisions would hinge on the external events including Wall Street’s performance and concerns about slower economic growth.

Stocks to watch include Berjaya Corp Bhd (BCorp), Maxis Bhd, Mudajaya Group Bhd and oil and gas-related counters. Other companies which could see some trading interest are Muhibbah Engineering Bhd, Oriental Holdings Bhd and KKB Engineering Bhd.

BCorp and Kim Eng Holdings Ltd called off their discussions where the latter was to be a strategic investor in Inter-Pacific Securities Sdn Bhd.

BCorp said “both parties have mutually agreed to discontinue discussions on the possible partnership” where Kim Eng would emerge as a “strategic investor in the stockbroking business of Inter-Pacific Securities”.

Maxis posted net profit of RM532 million in the second quarter (2Q) ended June 30, 2010 and it expects higher revenue growth momentum, underpinned by the encouraging demand for broadband and mobile Internet access.

Maxis’ operating profit was RM720 million while earnings per share were 7.1 sen. It declared an interim dividend of eight sen per share.

Oil and gas-related companies involved in the infrastructure could see some trading interest after Samsung Engineering Co, South Korea’s largest industrial plant builder clinched a US$770 million (RM2.43 billion) order to build a petrochemical plant in Sabah.

Under the deal with Petronas Carigali Sdn Bhd, Samsung Engineering will complete the plant by December 2013.

Meanwhile, Mudajaya provided a detailed outlook on how it would finance its operations in India following several queries from Bursa Malaysia Securities.

Mudajaya said it would use cash surplus of RM295 million and its own funds, which may include profits generated by 80%-owned MIPP International Ltd (MIPP) to inject an additional RM631 million in RKM Powergen Private Ltd (RKM).

The RM631 million was the balance of its total investment obligation in RKM of RM871 million.

RKM is a special purpose vehicle set up to undertake a 4x360MW coal-based independent power plant (IPP) in Chhattisgarh, India. The RM631 million would be injected over the next two years.

Muhibbah Engineering secured a RM124.4 million contract for the proposed Offshore Marine Centre at Tuas South Avenue 8 in Singapore. The contract was awarded by Jurong Town Corporation and the project is scheduled to commence in September 2010.

Oriental Holdings was cautious about the outlook and said the performances of the plantation subsidiaries may be impacted by the volatility of both crude palm oil (CPO) price and foreign exchange but the poor weather condition may affect the level of crop production.

It posted a 75% decline in its earnings at RM22.57 million for 2Q ended June 30 compared with RM91.23 million a year ago as it was impacted by a weaker plantation sector.

KKB Engineering’s subsidiary Harum Bidang Sdn Bhd has secured a RM114 million contract from CMS Infra Trading Sdn Bhd to supply steel pipes.

Harum Bidang was issued a letter of award by CMS Infra for the supply and delivery of various concrete line mild steel pipes and mechanical couplings.


This article appeared in The Edge Financial Daily, September 1, 2010.