Malaysia Market Watch 24th July 2012

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KUALA LUMPUR – The FBM KLCI could face challenging and volatile trading on Tuesday on the back of weakening sentiment at most global markets, due to the worsening outlook for not just the troubled eurozone but also the global economy as a whole.

European shares fell sharply on Monday as investors grew more concerned that Spain may need a full sovereign bailout after a second region indicated it would likely need government help, according to Reuters.

Eurozone banks fell 4.4% after Murcia looked set to follow Valencia in tapping a government programme to keep its finances afloat, while local media reported half a dozen regions were ready to do likewise, it said.

The euro hit its lowest level in over two years and shares fell on Monday after reports that Spain’s indebted regions need help fueled fears that the country will become the fourth eurozone member to ask for a major bailout, said Reuters.

Among the stocks that could be in focus on Tuesday are Public Bank Bhd, MTD ACPI Engineering Bhd and Inari Bhd.

Public Bank’s net profit for the six months ended June 30, 2012 rose 2.99% to RM1.89 billion from RM1.84 billion a year earlier, on the back of revenue RM6.84 billion compared to EM6.13 billion in 2011. Earnings per share was 54.07 sen compared to 52.51 sen. Net assets per share as at June 30 was EM4.49.

The banking group declared a fist interim dividend of 20 sen per share totaling RM700 million to be paid on Aug 15. For the three months ended June 30, Public Bank’s net profit dipped marginally to RM952.69 million from RM954.88 million.

Alliance Research in a note Monday said Public Bank’s 1HFY12 result came in within its expectation and market consensus. “We are maintaining our SELL recommendation with an unchanged target price of RM13.50, as 1HFY12 results do not alter our cautious view for the group. We foresee an increasingly challenging operating environment for the group to sustain its earnings momentum going forward and a potential downside risk to its dividend payout,” it said.

MTD ACPI subsidiary MTD Construction Sdn Bhd has secured a contract worth RM303.2 million to construct a fourth lane between Sungai Buloh and the Rawang interchange. In a filing on Monday, the company said its unit had accepted the contract from UEMB-MRCB JV Sdn Bhd (formerly known as Intria Urus Sdn Bhd) on July 18.

It said the contract would involve the building of a fourth lane between Sungai Buloh (KM457.0) and the Rawang interchange (KM443.9) package C. The company said package C comprised of all work from southbound and northbound inclusive of the drain and guardrails. MTD ACP said the contract was worth RM303.2 million, including provisional sum of RM13.6 million and prime cost sum of RM127 million for duration of 30 months.

Meanwhile, Inari, which will resume trading on Tuesday, has signed a Sales and Purchase Agreement (SPA) on Monday for the acquisition of a 100% equity interest in Amertron Inc (Global) Ltd (Amertron Global) for a purchase consideration of US$ 32 million (RM101.8 million). Established in 2006, Inari is a Penang-based company, located in the Free Industrial Zone and provides semiconductor packaging services in Radio Frequency (RF) mobile industry and includes back-end wafer processing and RF testing.

Inari’s finished products are System in Package (SiP) and Quad Flat No-Lead (QFN), which are crucial components used in the manufacturing of electronic products. Their products are mainly used in the wireless telecommunications, including mobile devices, cellular phones, smartphones, wireless communications as well as in the medical sector.

Inari on the other hand, ships their manufactured parts to main principals such as Avago Technologies, which will thereafter send them to customers worldwide. Currently, a total of 1.4 billion units were produced in the financial year 2011 and were shipped from Singapore to approximately 10 to 20 countries. – By Surin Murugiah of theedgemalaysia.com | The Edge Malaysia