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Friday, June 17, 2011

Stocks to watch: Muhibbah, UEM Land, Merge Energy, Mitrajaya (Edge)

Market sentiment may perk up a bit on Friday, June 17 after US stocks rose in volatile trading on Thursday, thanks only to technical factors and options expirations. But raging uncertainty about Greece prevented investors from committing money to the market.

The Dow Jones industrial average gained 64.25 points, or 0.54 percent, to 11,961.52. The Standard & Poor's 500 Index added 2.22 points, or 0.18 percent, to 1,267.64. But the Nasdaq Composite Index dropped 7.76 points, or 0.29 percent, to 2,623.70. The S&P 500 has dropped 7 percent from its April 29 closing high.

At Bursa Malaysia, Muhibbah Engineering Bhd would continue to be actively traded after the sell-down on the stock following concerns that Asia Petroleum Hub (APH) -- which it undertook a project for -- faced receivership.

It saw RM152.11 million in market capitalisation wiped out on Thursday, as its shares fell 38 sen to close at RM1.52 – the lowest since mid-May. The market capitalisation was reduced from RM608.43 million to RM456.32 million.

However, there could be some mild bargain hunting as some analysts viewed the selling as overdone and the worst-case scenario for Muhibbah was a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11.

APH, the developer and operator of the APH oil terminal in Johor, faced the prospects of receivership, news reports said. Muhibbah was awarded the marine piling and jetty works worth RM820 million. Cost escalation in 2008 led to funding issues for APH and the stalling of payments due to Muhibbah.

CIMB Equities Research had said the unpaid amount accumulated to about RM300 million, which did not include RM187 million worth of outstanding works as at end-2010. It said the project was still deemed viable and the worst-case scenario for Muhibbah was a write-down of the RM300 million due from APH, which would push Muhibbah into losses for FY11.

“However, we believe that in a scenario where the receiver takes over management of APH, it may come up with a scheme to repay a large portion of the amount due to contractors, which would reduce the risk of a huge write-down,” it said.

Hence, receivership does not mean the company is being liquidated.

Other stocks which could see trading interest are UEM LAND HOLDINGS BHD [], MERGE ENERGY BHD [] and MITRAJAYA HOLDINGS BHD []

UEM Land Holdings Bhd has set an internal target for a 50% revenue growth in FY2011 and a 10% return on investment.

Its managing director and CEO Datuk Wan Abdullah Wan Ibrahim said with the acquisition of SUNRISE BHD [], UEM Land was hoping to build its portfolio and surpass its competitors' revenue in the near future.

Merge Energy Bhd has secured RM38.1 million contract to undertake water treatment and associated projects in Kuantan.

The contract was awarded by the East Coast Economic Region Development Council. It involves the balancing reservoir, access road, treated water mains and associated works for the Panching water treatment.

Mitrajaya has proposed to invest RM6 million cash for a 20% stake in Rawang Specialist Hospital Sdn Bhd (RSHSB).

RSHSB is a private limited company incorporated in Malaysia to principally operate and manage a specialist hospital and to provide healthcare solutions under the name of Optimax Specialist Hospital (Rawang).

On May 23, it awarded to Mitrajaya's unit, Pembinaan Mitrajaya Sdn Bhd, a RM46.41 million contract to build the eight-storey private hospital with 180 beds. The hospital is expected to commence operations in December 2013.

Bursa Malaysia Securities Bhd has rejected ECOFUTURE BHD. []��s application for more time to find a replacement sponsor after its then sponsor ECM Libra Investment Bank Bhd had tendered its resignation on March 10.

Ecofuture will be suspended from June 23 and ultimately, faces delisting by June 27.

Its share price tumbled four sen to 4.5 sen with 683,900 shares done on Thursday.

Perusahaan Otomobil Kedua Sdn Bhd (Perodua) unveiled - the new MyVi -- an upgraded version of the best seller on Thursday night, June 16 and prices range from RM43,900 to RM57,400.

The second national carmaker expects to sell about 8,500 units monthly. The price is from RM43,900 for the standard manual transmission and RM57,400 for the elegance automatic transmission on-the-road.

Perodua plans to export the new MyVi units to Indonesia this month, starting with 500 cars, under the Daihatsu Sirion badge.

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