KUALA LUMPUR (June 16): The FBM KLCI is likely to sustain its gains next week after ending last Friday 8.61 points higher week-on-week.
Late buying pushed the local index higher on Friday; in line with the gains at regional markets as fears of euro zone turmoil following Greek elections this weekend were offset by talk the world's major central banks stand ready to make a coordinated response to ease any market dislocation.
Global markets are expected eke out gains next week, but there would be some pressure depending on the outcome of the crucial Greek elections.
Affin Investment Bank Bhd vice president and head of retail research Dr Nazri Khan said that going forward, the FBM KLCI was likely to trend higher on positive lead from the USA market, impressive recovery from the Greece financial markets and news that major central banks are preparing coordinated financial stimulus.
“The fact that global equities including FBMKLCI have been holding well (within 1560-1580 tight range over the last two weeks) despite negative headlines (European banks downgrade, rising borrowing cost in Spain and Italy) suggest local market resilience and more upside momentum near term,” he said.
Among the stocks that could be in focus next week are Wah Seong Corporation Bhd, Tambun Indah Land Bhd, Petronas Gas Bhd and SapuraKencana Petroleum Bhd.
Wah Seong last week said it was positive on its financial year ending Dec 31, 2012 with its current order book of RM1.2 billion, comprising RM727 million from its oil and gas (O&G) segment, RM243 million from the renewable energy segment and RM182 million from the industrial trading and services segment.
Its managing director and group chief executive Chan Cheu Leong in a statement on Friday said the company was positive on its outlook due to the government’s strategy to intensify exploration activities in Malaysia to increase the oil and gas production as set out in the economic transformation programme (ETP).
Chan said the company would focus on gaining participation in the domestic O&G development.
“Our wholly-owned subsidiary, Wasco Energy Ltd and its group of companies (Wasco) would continue to seek business opportunities outside Malaysia,” he said.
Tambun Indah Land Bhd, which has cash balance in excess of RM90 million following its recent corporate exercise, said it was actively looking to replenish its land bank.
In a statement on Friday, the company said that following its recent two-to-five rights issue, it raised RM44.2 million on June 4, raising its cash balance to more than RM90 million.
The mainland Penang property developer said its acquisition plans involved buying about 716.5 acres of land mostly in Seberang Perai
Petronas Dagangan Bhd aims to expand into Indonesia and Myanmar as it widens its presence in Southeast Asia, its managing director told Reuters in an interview.
The largest liquefied petroleum gas (LPG) provider in Malaysia announced earlier this month it will buy six downstream companies belonging to Petronas in the Philippines, Vietnam, Thailand and Malaysia in a deal worth RM197.3 million.
CIMB Research rates the stock an Outperform at RM17.68 with and raised its target price to RM20.53 (from RM18.79):
“The regas fee could be announced in June, which will catalyse Petronas Gas Bhd (PetGas). It is now clear that PetGas will undertake all future regasification terminals (RGT) projects in Malaysia.
“We tweak core EPS after updating capex numbers. Yet, our DCF target (WACC: 8.0%) rises as we increase our terminal growth rate by 1% pt to 5% for better earnings visibility. PetGas remains our top utility pick,” the research house said in a note June 15.
Meanwhile, CIMB Research maintained SapuraKencana as an Outperform and its top pick for for oil & gas big caps with a target price of RM2.90.
“At our Asean conference on June 14, executive vice chairman Datuk Mokhzani Mahathir, CEO Datuk Seri Shahril Shamsuddin, senior VP of corporate strategy and planning Ms. Chow Mei Mei and head of capital management and investor relations Mr. Abdul Rahim Awang presented to a packed room of more than 80 fund managers and buy-side analysts.
The research house said that there were were no surprises from the presentation which shed light on fleet expansion and potential new contracts.
Management also shared news that the Berantai marginal field was set to produce first gas by August, it said.
“We are encouraged that the construction of seven new vessels, namely two drilling rigs, two derrick lay vessels and three pipelay/diving support vessel, is on track (see next page). The delivery of the new assets in CY14 will allow SapuraKencana to undertake larger and more complex jobs,” it said.