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Malaysia Market Watch 25th July 2012

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KUALA LUMPUR – The much-anticipated listing of IHH Healthcare Bhd on the Main market of Bursa Malaysia on Wednesday could provide the impetus the local stock market requires amidst a gloomy external environment that has sapped global investor comfidence whilst keeping the FBM KLCI in negative territory for four trading days in a row.

European shares stayed weaker on Tuesday after steep declines in the previous day as eurozone concerns focused on Spain’s high borrowing costs, poor surveys and Moody’s move to cut Germany’s rating outlook offset positive Chinese manufacturing numbers, according to Reuters.

Late on Monday, Moody’s changed its outlook for Germany, the Netherlands and Luxembourg to “negative” from “stable”, citing increased chances that Greece could leave the euro zone, which “would set off a chain of financial sector shocks”, it said.

Among the stocks that could be in focus on Wednesday are IHH Healthcare; Axis Real Estate Investment Trust (Axis REIT); Southern Acids (M) Bhd; and Globetronics Technology Bhd.

IHH Holdings provides a full spectrum of healthcare services, from primary healthcare clinics to secondary and tertiary hospitals. It is one of the world’s largest healthcare providers with an estimated market capitalisation of RM22.6 billion. At the moment, IHH’s global healthcare network operates over 4,900 licensed beds encompassing 30 hospitals.

BIMB Securities Research in a note Tuesday said it valued IHH at RM3.30 based on 30 times PER over FY13 EPS of 11 sen. “With potential upside of more than 17%, we recommend IHH a Buy,” it said. The research house said that for FY12 and FY13, it  we expects IHH to register net earnings of RM763.3 million and RM883.7 million respectively representing growth of 478.1% and 15.8% respectively.

Axis REIT may raise up to RM270 million from its proposed placement of up to 90.76 million new units in the property trust. Stewart LaBrooy, CEO of Axis REIT Managers Bhd, the manager of Axis REIT, said the funds will be used to acquire more properties this year. “Our gearing will fall from about 36% to 24% post placement,” LaBrooy said at a media briefing on Tuesday in conjunction with the release of Axis REIT’s second quarter financial results.

Southern Acids has proposed a final gross dividend of 6.67 sen per ordinary share of RM1 each ax amounting to RM6.84 million.

Globetronics’s net profit for the second quarter ended June 30, 2012 rose 29.29% year-on-year to RM9.71 million from RM7.51 million, due mainly to higher volume loadings from most of the its customers in the quarter, better product mix and economy of scale. The company said on Tuesday that its revenue for the quarter was RM69.54 million compared to RM69.28 million.

Earnings per share was 3.62 sen compared to 2.83 sen a year earlier, while net assets per share was 96 sen. On its prospects, Globetronics said that moving forward, it would continue to focus on escalating up the value chain and riding on the R&D initiatives in new products’ design and development.

“The group will also continue to step up efforts in improving the efficiency and cost reduction measures in its operations to achieve the necessary competitive edge in the market. Premised on the above and barring any unforeseen circumstances, the group is optimistic of achieving better performance and growth in financial year 2012,” it said. -By Surin Murugiah of theedgemalaysia.com | The Edge Malaysia