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Wednesday, September 14, 2011

Stocks to watch: Tenaga, glove makers, Ramunia, Wang-Zheng (Edge)

A lack of strong corporate newsflow could see lacklustre trading on Wednesday, Sept 14 while investors focus on external developments from the US and Europe.

Reuters reports Europe's sovereign debt and banking crisis is expected to push the region into recession over the next 12 months, and most investors do not expect higher U.S. interest rates until 2013, a survey showed.

The monthly survey taken by Bank of America Merrill Lynch from Sept. 1 to 8 showed 55% of European fund managers see Europe suffering two quarters of negative gross domestic product growth. That compares with only 14% in July.

Stocks on Bursa Malaysia were also not spared in the selldown in recent weeks. Malaysia took the brunt of the selling in August among the emerging markets, where it accounted for 31% of the total selling when its weighting was only 8%, according to a Credit Suisse Research report.

In August, the 30-stock FBM KLCI fell 110.74 points to end the month at 1,447.27 while RM94 billion was wiped out from the Bursa Malaysia market capitalisation, reducing it to RM1.241 trillion.

Meanwhile, stocks to watch on Wednesday include TENAGA NASIONAL BHD [], glove manufacturers, RAMUNIA HOLDINGS BHD [] and WANG-ZHENG BHD [].

Tenaga Nasional Bhd president and CEO Datuk Seri Che Khalib Mohamad Noh said the power company has to spend an additional estimated RM3 billion on power generation for this year, while having to raise financing for operations as the only solution to sustain itself.

He was quoted saying by Bernama that if no immediate solution was found to address the gas crisis, it would be the first time then, that the company was going to the market to raise money for operations. Previously, all fund raising was for capital expenditure, he said

Glove makers could continue to see some selling on concerns about the weak demand for the products. Analysts maintained a negative outlook for the sector as there were no strong catalysts to boost glove demand as well as profit margin, in the absence of a pandemic.

Ramunia’s net profit fell 86.9% to RM2.036 million in the third quarter ended July 31, 2011 versus RM15.59 million a year ago. Turnover was only RM183,000 compared with RM6.137 million a year ago. Earnings per share were 0.31 sen versus 2.40 sen.

Other income generated by the group had decreased by RM12.70million compared to preceding year corresponding quarter mainly due to the gain arising from the disposal of Teluk Ramunia fabrication yard.

Wang-Zheng is acquiring a 6.73-acre leasehold industrial land in Port Klang for RM18.5 million to be held as an investment property to be rented out.

Its unit New Top Win Corporation Sdn Bhd (NTW) had entered into a sale and purchase agreement with Klang Hock Polystyrene Industries Sdn Bhd to acquire the land.

SARAWAK OIL PALMS BHD [] is providing a corporate guarantee for RM59 million to Affin Bank Bhd for the banking facilities obtained by its subsidiary SOP Pelita Batu Lintang PLANTATION [] Sdn Bhd. The company had executed a corporate guarantee for a term loan of RM54 million and revolving credit facility RM5 million.

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