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Thursday, August 18, 2011

Stocks to watch: Esso, Mah Sing, MSM, PetGas (Edge)

Investors are likely to be cautious on Thursday, Aug 18 following the weaker-than-expected second quarter economic data which showed GDP grew at a slower pace of 4%.

Bank Negara Malaysia said the slower 2Q growth versus 4.9% in 1Q was due to the slowdown in the manufacturing sector due to a weaker external environment. Another driver of the economy, the CONSTRUCTION [] sector grew only 0.6% (1Q11: 3.8%) as infrastructure projects were delayed.

Stocks which would see trading interest include ESSO MALAYSIA BHD [], MAH SING GROUP BHD [], PETRONAS GAS BHD [], MSM Holdings Bhd and Sarawak Cable Bhd.

San Miguel Corporation offered RM3.50 per share for a controlling 65% stake in Esso Malaysia Bhd from its parent ExxonMobil International Holdings Inc. This was RM1.45 below the last traded price of RM4.95 and this could be a rude shock of speculators who chased up the stock on Wednesay.

The acquisition price of RM3.50 was about 1.06 times Esso Malaysia’s book value of RM3.28.

San Miguel’s acquisition of the 65% or 175.50 million shares would cost the Philippines’ brewery giant RM614.25 million (US$206.02 million).

On a more positive note, Mah Sing posted a strong set of earnings, with net profit up 47.9% to RM43.13 million in the second quarter ended June 30 from RM29.16 million a year ago, with unbilled locked in sales and remaining gross development value of more than RM14.5 billion.

Rrevenue rose 43.9% to RM416.12 million from RM289.05 million while earnings per share (EPS) were 5.19 sen compared with 3.51 sen. Its cash pile increased to RM781.02 million from RM292.52 million a year ago.

MSM Holdings Bhd’s net profit rose 64.4% to RM76.41 million in the second quarter ended June 30, from RM46.47 million a year ago, boosted by fair value gain in derivatives by RM30.3 million.

The sugar refiner and distributor said revenue declined 4.2% to RM562.86 million from RM587.51 million due to a decline in sales volume for domestic sales despite higher average price in the second quarter.

At the pre-tax level, it was 43% higher at RM97.92 million compared to RM68.50 million a year ago. Earnings per share were 10.87 sen compared with 6.61 sen.

Petronas Gas Bhd posted net profit RM386.74 million on the back of revenue RM916.55 million for the three months ended June 30, 2011, due to higher gas processing revenue and utilities sales, and lower tax expense.

Earnings per share were 19.54 sen while net assets per share was RM4.47.

Sarawak Cable Bhd is looking into the proposed development of transmission lines in Sarawak.

The company said on Wednesday, Aug 17 it had signed an MoU with Sinohydro Corporation (M) Sdn Bhd and KEC International Ltd to prepare and submit the proposals.

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