20 November 2008 Newz Bits

November 25, 2008 at 8:21 am Leave a comment

TALKING POINT

TM International bids for third national mobile licence in Iran TMI together with Fanavari Moudj Khavar (“Fanamoj”) and Sarmayegozarie Atiyeh Saba (“Atiyeh”) have entered into a consortium agreement to bid for the third public mobile network licence in Iran. While the move to expand into low penetration markets is positive, we are wary that TMI’s gearing levels have risen quite high with a debt/equity ratio of 1.5x. Should TMI win this bid, it may have to gear up even more for this venture, which may cause earnings to be hit in the near term due to higher financing costs. Our BUY call is re-iterated, and target price maintained at RM5.95 pending the results of the bids.

HIGHLIGHTS

On Malaysia
• YTL Corporation on the hunt for assets with its RM12bn war
chest
• Government expects 4% unemployment rate in 2008 and 2009
On The Global Front
• U.S. consumer prices fall by a record amount in October
• European Commission working on a €130bn package to bolster
the region’s economy
REPORTS
• TM International – Bids for third national mobile license in Iran
(Buy; RM4.00; TP: RM5.95)
• Boustead Holdings – 3QFY08 Results (Buy; RM3.10; TP:
RM4.00)

AirAsia Bhd’s (AIRA MK, Buy, TP: RM1.90) major shareholders are nearing completion of a deal to finance the
privatisation of the company. Sources said the airline’s major shareholder, Tune Air Sdn Bhd, was likely to announce a general offer next week. The indicative offer price is said to be RM1.30 to RM1.35 a share. It will cost Tune Air RM2.14bn to RM2.22bn to buy the remaining stakes in the airline that it does not have. Tune Air now has 30.72% stake in AirAsia. (StarBiz)
* * * * *
AirAsia Bhd has secured financing totalling US$336m (RM1.21bn) for the purchase of up to 8 Airbus 320-200 aircraft, in the first Islamic French-Malaysian lease agreement. AirAsia deputy group CEO Datuk Kamarudin Meranun said it had secured the financing at a pricing that was “comparable” to its previous aircraft financing deals before the global financial crisis. (Financial Daily)
* * * * *
AirAsia Bhd is poised for a record fourth-quarter revenue, driven by a blistering pace of bookings for its flights. “I think bookings are at a record pace … it’s such a record pace that our computer systems crashed on the first day,” AirAsia chief executive officer Datuk Seri Tony Fernandes told Business Times in Kuala Lumpur yesterday. AirAsia will make provision for losses from the collapse of Lehman Brothers investment bank. “We had a trade (on fuel) with them (Lehman Brothers) and some money outstanding, I don’t think we are going to get it back, but we would have paid for it anyway,” he said. That, together with hedging losses, which even Fernandes admits will be heavy, will be quite a sum. However, he declined to reveal any figures. “We’ll take the loss now to be clean in 2009. Over the next two to three months we will recover it,” he said. (BT)
* * * * *
Sime Darby (SIME MK, Buy, TP: RM7.30) said yesterday that it is making a major foray into the downstream palm oil business in China in a proposed joint-venture company with Dongguan Sinograin Oils & Grains Company Ltd (DOSG). Sime Darby said it was expected to take a majority stake in the venture with the Chinese GLC. Sum of investment however was not stated. (Financial Daily)
* * * * *
YTL Corporation (YTL MK, Buy, TP: RM8.00) said it has a war chest of RM12bn and is hunting for acquisitions as asset values decline. YTL could also borrow six or seven times more than its cash for larger deals, said Tan Sri Francis Yeoh. The builder is particularly looking at deals in Singapore, where rents are falling, and the UK and Australia, where domestic currencies have weakened. (Financial Daily)
* * * * *
The government is considering other options to obtain electricity, apart from extending the contracts of the first generation independent power producers (IPPs), which will expire between 2015 and 2017, said Energy, Water and Communications Minister Datuk Shaziman Abu Mansor. Among the options being considered are for the government to buy over the plants from IPPs whose contracts are expiring and put for tender the plant’s operations and maintenance. Another option is for the IPPs to sell capacity not required by Tenaga Nasional Bhd (TNB MK, Buy, TP: RM10.20) directly to consumers or commercial users. The last option would involve Tenaga Nasional buying over the plants from IPPs but this is considered unfavourable as the government would appear to be backtracking on the privatisation of the power sector. (StarBiz)
* * * * *
The government expects a 4% unemployment rate for this year and next despite the gloomy economic outlook, and the level of retrenchment is not expected to be as bad as the 1997/1998 financial crisis, Second Finance Minister Tan Sri Nor Mohamed Yakcop said. . (Financial Daily)
* * * * *
The government is still negotiating with Japan Bank for International Cooperation (JBIC) on the soft loan that it should have received for the Pahang-Selangor Interstate Raw Water Transfer Project, said the deputy of the Energy, Water and Communications department. The response was in reply to a supplementary question by opposition in Dewan Rakyat and the minister said that should the plan fail the government had backup plans. (Financial Daily)
* * * * *
The tender for the Pahang-Selangor Raw Water Irrigation Project will be opened next month, said Deputy Energy, Water and Communications Minister Datuk Joseph Salang Gandum. Replying to a question on the sale of water from Pahang to Selangor and on the Kelau Dam, he said construction work on the Kelau Dam was scheduled to be completed in 2013. (The Star)
* * * * *
CPO prices rose yesterday on speculation that China would boost purchases before CNY as well as India’s decision to impose duty on purchases of crude soy bean oil. To note, China bought 3.78m mt of CPO in the months to October, which was 0.6% lower that what was purchased last year but a boost is expected towards year end. As for India, a 20% import duty was imposed and the expectation is that buyers will opt for more palm oil instead. (Financial Daily)
* * * * *
Stocks fell hard on Wednesday, with the Dow closing below 8,000 for the first time since March 2003, the Dow Jones industrial average shed 427 points to close 5% lower at 7997.28. Stocks languished for most of the day, with the selloff accelerating near the close of trade. Wednesday’s dramatic retreat erases gains made in the previous session. Investors are grappling with a possible bankruptcy in the automotive industry, something analysts say could have dire implications for the broader economy, as a second day of congressional hearings on the matter ended without resolution. At the same time, weak readings on the nation’s housing market and a sharp decline in consumer prices reflected the challenges facing the economy
and drove down shares of financial services firms. (CNN Money)
* * * * *
US consumer prices fell by a record amount in October, another worrisome sign about the contracting economy, the government reported Wednesday. The Consumer Price Index, a key inflation reading, fell 1% last month, according to the Labor Department. That was much weaker than September’s flat reading and exceeded the 0.8% decline a consensus of economists surveyed by Briefing.com had forecast. Prices fell by the greatest amount since the Department of Labor began publishing seasonally adjusted changes in February 1947. Economists are worried about deflation. Falling prices may be a welcome sign for consumers in grocery store aisles and filling up at the pump, but deflation is generally a bad sign for the economy. (CNN Money)
* * * * *
The Federal Reserve on Wednesday sharply lowered its projections for economic activity this year and next, and signaled that additional interest rate reductions may be needed. Facing the likelihood of “significant weakness” in the economy, some Fed officials suggested “additional policy easing could well be appropriate at future meetings,” according to documents from the Fed’s most recent closed-door deliberations on interest rate policy at the end of October. Under its new economic forecast, the Fed now believes gross domestic product could be flat or grow by just 0.3% this year. GDP could actually shrink by 0.2% or expand by 1.1% next year. Both sets of projections are lower than the Fed’s forecasts delivered to Congress in July. Even while hinting that another rate reduction could be forthcoming, Fed officials worried that the effectiveness of previous rate cuts “may have been diminished by the financial dislocations, suggesting that further policy action might have limited efficacy in promoting a recovery in economic growth. (CNN Money)
* * * * *
Housing starts and permits, key measurements of home construction, hit record lows in October, the Commerce Department reported Wednesday. Housing starts reached an annual rate of 791,000 last month, the lowest level since the department began tracking starts in 1959. The rate tumbled 4.5% from the revised reading of 828,000 in September. Building permits fell 12% to an annual rate of 708,000 in October, breaking the previous low of 709,000 in March 1975. (CNN Money)
* * * * *
Bank of England policy makers considered an even bigger reduction in the benchmark interest rate than the 1.5% cut announced on Nov. 6 as their forecasts pointed to a deepening recession. The possible need for a cut to less than 2.5 percent was discussed at the Monetary Policy Committee’s meeting, according to minutes published. Policy makers limited the reduction to 1.5 percentage points because they wanted to wait for details of government tax plans and see the effects of the state rescue of financial institutions. They also said that a bigger cut may surprise financial markets and damage the credibility of their inflation target. Some policy makers said that limiting the reduction gave. (Bloomberg)
* * * * *
The European Commission is working with the 27 EU states on a 130bn-euro package to bolster the region’s
economy amid recession, according to German government officials. The plan is due to be approved by the commission on Nov. 26, and faces a vote by European leaders at a Dec. 10 summit. A spokeswoman for German Economy Minister Michael Glos, confirmed a Spiegel magazine report that said EU states will be expected to give 1% of gross domestic product to help finance the stimulus package. (Bloomberg)
* * * * *
Growth in the Asia-Pacific region may expand in 2009 at less than half the pace of the previous two years as the global financial crisis causes the U.S. economy to contract, the Pacific Economic Cooperation Council said. Growth in the 16 economies tracked by the council may slow to 1.2% next year from 3.6% in 2008 and 3.5% in 2007, it said in a statement today. The estimate includes the performance of the U.S., Chile, Peru and Japan. East Asia’s growth is forecast to slip to 3.4% from 3.9% this year, the independent non-government group said. China’s growth will be supported by stronger domestic demand and government spending, the group said. (Bloomberg)
* * * * *

Entry filed under: Business, Finance, Stock Market. Tags: , , , , , , , , , , , .

CLSA: It has been bad, now looking ugly Boustead Holdings : 3QFY08 : Fears priced in

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Trackback this post  |  Subscribe to the comments via RSS Feed



%d bloggers like this: