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Friday, February 18, 2011

Stocks to watch: Favelle Favco, Daibochi, SBC, MBM Resources (Edge)

KUALA LUMPUR: Blue chips on Bursa Malaysia may trade range-bound on Friday, Feb 18 ahead of the fourth quarter GDP data announcement after market close but most importantly, investors are keen to know the outlook for the economy and the inflationary trends.

On Thursday, Prime Minister Datuk Seri Najib Tun Razak said conservatively, GDP grew more than 6% in 2010.

On Wall Street, US investors piled on a dizzying two-year advance in stocks on Thursday, using a brief slip on negative economic news as an opportunity to buy into market leaders.

Reuters reported the TECHNOLOGY [] sector showed strength, with Nvidia Corp up 9.8% to US$25.68 a day after posting a bullish revenue forecast on accelerating sales of its processors. An index of semiconductors' shares gained 1.4% and is now up 21.3% since early December, around the time when the most recent leg of the run-up started.

The Dow Jones industrial average gained 29.97 points, or 0.24%, to 12,318.14. The Standard & Poor's 500 Index rose 4.11 points, or 0.31%, to 1,340.43. The Nasdaq Composite Index added 6.02 points, or 0.21%, to 2,831.58.

Stocks to watch on Bursa Malaysia include FAVELLE FAVCO BHD [], Daibochi Plastic and Packaging Industry Bhd, SBC Corp Bhd, Wah Seong Corp Bhd and MBM RESOURCES BHD [].

Favelle Favco secured RM123.20 million in contracts to supply eight cranes which would be delivered to eight buyers from early this year to 2012.

The crane builder said it expected the contracts to contribute positively to the earnings and net assets for the financial year ending Dec 31, 2011 and beyond.

Daibochi saw its earnings fall 31% to RM4.15 million from the RM6.05 million a year ago due to the sharp increases in polyester prices in 2010 for the packaging segment.

Revenue rose 38.2% to RM75.46 million from RM54.58 million, while earnings per share were 5.5 sen compared with 8.04 sen.

Daibochi declared a fourth interim dividend of 3.50 sen, tax exempt, to be paid on March 30.

SBC Corp Bhd posted net profit of RM6.81 million in the third quarter ended Dec 31, 2010 when compared with RM2.02 million a year following higher revenue from its CONSTRUCTION [] projects.

Revenue climbed 95% to RM54.80 million from RM28.03 million while earnings per share were 8.26 sen versus 2.45 sen a year ago.

For the nine-month period, its revenue rose 16.6% to RM89.03 million from RM76.34 million in the previous corresponding period. Its earnings increased by 66% to RM10.47 million from RM6.31 million.

MBM Resources' net profit for the fourth quarter (4Q) ended Dec 31, 2010 rose 36.2% to RM28.2 million from RM20.7 million a year ago, driven by the overall strong total industry (TIV) volume in the automotive sector.

Revenue for the quarter rose to RM389.88 million from RM292.46 million in 2009. Earnings per share was 11.64 sen, while net assets per share was RM4.19. It declared a special second tax-exempt interim dividend of five sen per share totaling RM12.13 million, and a special tax-exempt dividend of three sen per share totaling RM7.28 million.

For the financial year ended Dec 31, MBM's net profit surged to RM141.24 million from RM66.53 million a year earlier, on the back of revenue RM1.55 billion.

Wah Seong’s earnings fell 28.9% to RM24.76 million in the fourth quarter ended Dec 31, 2010 from RM34.84 million a year ago due to the lower number of projects and unfavourable effect of foreign exchange fluctuations.

Revenue fell 12.7% to RM397.23 million from RM455.07 million while earnings per share were 3.2 sen compared with 4.5 sen. It proposed dividend of 2.5 sen per share.

For the financial year ended Dec 31, 2010, the net profit fell 53.8% to RM55.98 million from RM121.32 million in FY09. Revenue fell 21.9% to RM1.523 billion from RM1.950 billion.

In The Edge FInancialDaily, ZELAN BHD [] has raised eyebrows with the negative revenue of RM39.2 million that it recorded for its third quarter ended Dec 31, 2010.

It also reports UOB Kay Hian has downgraded its recommendation on PROTON HOLDINGS BHD [] from a "hold" to "sell" on expectation of a loss for its third quarter ended Dec 31, 2010 due to weaker domestic sales and further investments in Lotus which could dilute its earnings in the short term.

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