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Malaysia Market Watch 20th July 2012

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KUALA LUMPUR – The FBM KLCI is likely to trade sideways on Friday as investors could take profit ahead of the weekend following the recent rally that analysts said has left the local market overbought.

Meanwhile, US stock index futures rose on Thursday, indicating the market would extend to a third day a rally that has taken the S&P 500 to its highest level since May, according to Reuters.

However, global investors could remain cautious after the International Monetary Fund (IMF), in its online magazine IMF Survey, on Thursday said that the eurozone crisis had reached a critical stage, as financial markets in parts of the region face acute stress. The IMF also called for determined action towards establishing banking and fiscal unions in the euro area to bolster monetary union.

At Bursa Malaysia, among the stocks that could be in focus are British American Tobacco (M) Bhd (BAT), Tenaga Nasional Bhd (TNB) and Top Glove Corporation Bhd.
BAT’s net profit for the second quarter ended June 30, 2012 rose 19.93% to RM220.85 million from RM184.14 million a year earlier. Revenue for the quarter rose 2.8% to RM1.07 billion from RM1.04 billion. Earnings per share was 77.3 sen compared to 64.5 sen in 2011.

BAT declared a second interim dividend of 65 sen per share, tax exempt under the single-tier tax system amounting to RM185.59 million in respect of the financial year ending Dec 31, 2012, to be paid on Aug 24. For the six months ended June 30, BAT’s net profit rose 14.5% to RM415.36 million from RM362.69 million a year earlier, on the back of revenue RM2.11 billion.

TNB posted a net profit of RM619.10 million compared to a net loss of RM179.2 million for the third quarter ended May 31, 2012, due mainly to the alternate fuel cost differential compensation of RM2,823.8 million, which was recognised during the period.

Revenue for the quarter rose to RM9.19 billion compared to RM7.98 billion in 2011, due to an increase in sales of electricity in Peninsular Malaysia and the tariff increase of 7.1% on June 1, 2011. Earnings per share was 11.34 sen compared to loss per share of 3.29 sen a year earlier, while net assets per share was RM6.47.
On its prospects, TNB said it expected to record a better performance than last financial year mainly due to expected higher demand, implementation of fuel cost sharing mechanism and higher coal plant availability. “Given the foregoing scenario, the board of directors expects the group’s prospects for the year ending Aug 31, 2012 to improve compared to the last financial year,” it said on Thursday.

Top Glove plans to spend RM3 billion to set up another 30 factories in Malaysia in the next 15 years. Its chairman Tan Sri Lim Wee Chai said the initiative comes under the government’s Entry Point Project scheme. “We plan to set up two factories every year,” Lim said at the ground breaking ceremony for the company’s upcoming Top Glove Tower on Thursday.

Top Glove, the world’s largest glove manufacturer by capacity, has 23 existing factories with an annual capacity of some 38.5 billion pieces of gloves. -By Surin Murugiah of theedgemalaysia.com | The Edge Malaysia