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Monday, February 28, 2011

Stocks to watch: TM, CIMB, MAS, Proton, AZRB, Faber (Edge)

After four straight days of losses on Bursa Malaysia last week where markets were roiled by the unrest in oil producer in Libya which saw investors taking money off the table, sentiment is expected to remain cautious in the week ahead, starting Feb 28.

There could be some mild buying interest in companies which announced a strong set of earnings but investors are not expected to rush into the market just yet.

On Wall Street, US stocks rose on Friday, bouncing back from a three-day sell-off as oil prices stabilised, but unease over the Libyan rebellion could be enough to keep buying in check.

The S&P 500 lost 1.7% for the week, breaking a three-week streak of gains. Friday's bounce followed a late recovery Thursday that showed buyers were ready to support shares after a bout of selling.

The Dow Jones industrial average gained 61.95 points, or 0.51%, to end at 12,130.45. The Standard & Poor's 500 Index advanced 13.78 points, or 1.06%, to finish at 1,319.88. The Nasdaq Composite Index rose 43.15 points, or 1.58%, to close at 2,781.05.

As for the outlook for the local stock market, Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi expected FBM KLCI to remain volatile in the short term and very bearish in the medium term.

“We suggest that clients liquidate on rallies and remain more in cash, as there are very few price defensive counters.

“Due to the global market malaise recently, we will see the FBM KLCI in a much weaker posture today. We expect the market to remain weak as the foreign hedge fund money exits Malaysia,” he said, adding that the downturn could be a protracted one.

Stocks to watch during the week ahead after their financial results are TELEKOM MALAYSIA BHD [], CIMB Group Holdings Bhd, MALAYSIAN AIRLINE SYSTEM BHD [] (MAS), UEM Land Bhd, AHMAD ZAKI RESOURCES BHD [] (AZRB) and FABER GROUP BHD [].

TM proposed a capital distribution of about RM1.037 billion or 29 sen for each share held. TM said the proposed capital distribution will be funded through its existing cash balances, which stands at RM3.488 billion as at Dec 31, 2010.

TM also announced its earnings rose 135%to RM400.63 million in the fourth quarter ended Dec 31, 2010 from RM170.25 million a year ago.

Revenue was marginally higher by2.1% at RM2.32 billion from RM2.27 billion. Earnings per share were 11.2 sen compared with 4.8 sen. It proposed a final dividend of 13.1 sen per share.

For FY10, TM’s earnings surged 87.6% to RM1.20 billion from RM643.02 million. Its revenue rose 2.1% to RM8.79 billion from RM8.61 billion.

CIMB Group posted a record net profit of RM3.52 billion in the financial year ended Dec 31, 2010. For the fourth quarter, earnings were RM877.62 million, boosted by its Indonesian operations.

The 4Q net profit was 9.3% higher from the RM802.89 million a year ago. Revenue rose 16% to RM3.168 billion from RM2.731 billion. Earnings per share were 11.83 sen compared with 11.37 sen.

MAS posted net profit of RM225.92 million in the fourth quarter ended Dec 31, 2010, down 64.7% from RM640.12 million a year ago, on lower derivative gains and higher finance costs.

Its managing director and chief executive officer Tengku Datuk Seri Azmil Zahruddin was quoted saying MAs had operationally, done well in the quarter where traffic volumes rose 10% and yields were up 5%.

However, it was also weighed down by higher cost of fuel despite that it carried more passengers. Its fuel bill was 13% higher at RM1.2 billion in 4Q compared witrh RM1.06 billion due to higher fuel prices and consumption.

Its revenue rose 8.2% to RM3.67 billion from RM3.39 billion a year ago. Earnings per share were 6.76 sen compared with 31.17 sen.

Proton swung into the red with net loss of RM60.1 million in the third quarter ended Dec 31, 2010 compared to net profit of RM79.68 million a year ago, due mainly to higher branding costs as well as the restructuring expenses incurred by Lotus Group International Ltd.

Revenue for the quarter fell by 8.96% to RM1.83 billion from RM2.01 billion last year. Loss per share was 10.90 sen compared to earnings per share 14.50 sen previously. Net assets per share was RM9.73.

For the nine months ended Dec 31, 2010 Proton’s net profit fell 58.1% to RM90.5 million from RM216.29 million, although revenue rose to RM6.36 billion from RM5.97 billion.

Proton said as part of the transformation plans to turn around LGIL, it had started investing in rationalisation of dealers network, and branding activities to deliver the five-year business plans.

Proton also said that during 3Q, it had experienced lower domestic sales volume, as well as increased promotional and marketing spending by a principal subsidiary.

UEM Land Bhd recorded a 37.3% increase in its earnings to RM135.36 million in the fourth quarter ended Dec 31, 2010, boosted by higher revenue and higher margin achieved for one-off transactions from strategic land sales.

AZRB posted net loss of RM83.06 million in the fourth quarter ended Dec 31, 2010 compared with net profit of RM5.13 million a year ago following the termination of the Alfaisal University Campus project in Riyadh, Saudi Arabia.

Revenue shrank to RM52.62 million compared with RM105.56 million a year ago. Loss per share was 30.03 sen compared with earnings per share of 1.86 sen.

For the financial year ended Dec 31, 2010 its net loss was RM61.28 million compared with net profit of RM20.76 million in FY09. Its revenue was RM431.34 million compared with RM459.40 million.

Faber Group saw its net profit shrink to RM2.91 million in the fourth quarter ended Dec 31, 2010 from RM42.57 million a year ago. Revenue declined to RM203.95 million from RM303.93 million. Earnings per share were 0.8 sen only compared with 11.73 sen. It proposed dividend of eight sen per share compared with six sen.

For the financial year ended Dec 31, 2010 net profit was RM78.78 million compared with RM82.68 million in FY09.

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