Stocks to watch: Perwaja, Kinsteel, Mah Sing and Transmile

Stocks to watch include steel manufacturers Perwaja and Kinsteel, Transmile and Mah Sing.

Kinsteel and Perwaja both reported net losses in their 2Q ended June 30, 2009. Kinsteel had a net loss of RM7.89 million compared to net profit RM103.32 million a year ago. Perwaja posted net loss of RM84.91 million in 2Q09 from net profit of RM147.4 million a year ago.
 
Losses were mainly due to sharp contraction in steel demand and prices which contributed to the sever margin squeeze. However, both companies are cautiously optimistic for the current financial year despite uncertainties in the economic climate, as implementation of government spending under the stimulus package commences.
 
Improvement in steel demand would depend on the effects of government stimulus package, continuous stabilisation of financial systems and return of consumers’ confidence.
 
Mah Sing Group achieved RM543 million sales in just seven and a half months this year, exceeding its full year target of RM453 million by 1.2 times. Strong sales indicated that the local property market was resilient, adding that low interest rates, a buoyant stock market and better consumer sentiments have combined to boost demand for PROPERTIES [ PROPERTIES  0.000  0.000 (0.000%) ].
 
It also said the property market was gaining momentum for a likely up cycle in the second half of 2010.
 
Malaysian Airline System's aircraft maintenance unit proposed to buy Transmile Group’s engineering unit. MAS said the projected 15% increase in additional capacity to its unit, Malaysian Aerospace Engineering Sdn Bhd (MAE) would contribute towards MAE’s growth plans and give it better economies of scale.

“The additional capacity will also serve MAE well as it actively pursues third party Maintenance, Repair and Overhaul (MRO) businesses with target revenue of RM500 million this year,” it said.
 
Carmaker Tan Chong’s net profit for 2Q09 fell 50% to RM34.59 million from RM68.14 million a year ago, in line with the tough operating environment for the automotive industry.
 
However, the company said orders for CKD (completely knocked-down) units had returned to normal since June to meet deliveries in October-November.
 
“Negative production variances in Q109 and Q209 are likely to reverse in Q409 once production has increased significantly to meet bookings. In the meantime, it would be challenging to meet deliveries in Q3 due to the higher bookings,” it said.