Thursday 19 February 2009.

DAILY MARKET REPORT.

Wednesday Markets Closing Prices.

KLCI 895.23 down 3.30.
DJIA 7,555.63 up 3.03 or 0.04%.
Crude Oil US$34.60.
May FCPO RM1,875.
Ringgit 3.6570.


LOCAL NEWS.

PM Abdullah Badawi launched RM4 billion halal hub in Tanjung Manis Sarawak with the investments coming from Taiwanese and local investors.

Toyochem Corp. Bhd, RM2.88, takeover offer revised upward to RM3.20 from RM2.00.

RM7 billion worth of rubber gloves exported last year (20% growth).

The price of premium grade petrol RON97 will be floated according to international oil prices in July 2009.

Analysis - The government should show some urgency in formulating an economy policy. Do it now. Don't wait until July so the 'rakyat' can have the full benefit of lower oil prices based on the outlook of oil prices and the world economy. Judging from the Automatic Pricing Mechanism, the price can be as low as RM1.00 by removing the excessive sales tax and a few other items, and based on the current world oil prices.

TNB Bhd, RM6.20, bought back US$165.3 million (RM605m) of debt that will mature in 2011. TNB also annouced plans to buy another US$135 (RM494) of bonds in the next six months.

Analysis - The amount is still too small to make a positive impact on the bottomline as TNB had more than RM23 billion outstanding with half of it either in US dollar or Yen, two of the strongest world currency at the moment. Instead, TNB should refinance all the outstanding US dollar and Yen loans into Ringgit loans. At the same time TNB should consolidate the power industry by taking over all the independent power producer to have a full control on the costs. TNB also had not passed on the RM3.61 gas subsidy to the customers, instead only giving them an average of 3.7% tariff reduction. A very, very glaring management weakness after all the time that they had all this years but still being awarded with a CEO of the Year 2008 award.

Stock Recommendation - SELL as the recent tariff review results in RM1.2 billion loss of revenue and only RM300 million of cost saving. Rising US dollar and Yen coupled with weak demand as a results of economic downturn will hurt TNB earnings going forward.


WORLD NEWS.

U.S unveils US$275 billion plan to stem mortgage foreclosure crisis which include US$75b to help borrowers meet interest payment and US$200b to Fannie and Freedie.

Fed revised estimate GDP contraction to between -0.5% and -1.5%, unemployment to between 8.1% to 8.8% and inflation to 2%.

Analysis - The forecast still look too optimistic considering the current state of the U.S. economy.


CORPORATE RESULTS.

TH Plantations Bhd RM 1.50. Unaudited 4Q FYE 31.12.2008.

4Q08 revenue down to RM41.9m Yr on Yr, net profit RM14.2m, net EPS 2.91 sen (after bonus), proposed dividend 7.5 sen and net assets per share RM1.64. FY 2008 revenue RM243.3m, net profit RM83.3m, net EPS 17.09 sen and dividend 14 sen.

Stock Recommendation - HOLD and TAKE PROFIT on rally based on forecast FYE 2009 EPS of 10 sen.

KLK Bhd RM9.95, Unaudited 1Q FY 30.9.2009.

Revenue up to RM1.88b, net profit down 77% to RM69.4m from RM303.3m due to write down and forex losses. Net EPS down to 6.18 sen from 27.34 sen. Net assets per share at RM5.15.

Stock Recommendation - SELL and TAKE PROFIT.


By:-
Kamel Bin Mohd Yusoh.
Kenanga Investment Bank Bhd.
013-6306544 or 03-21634549/50.