STRATEGY: Maxis in KLCI - What’s Hot and What’s Not

While our Sep 23 report on Maxis’ upcoming IPO focused on the Telco sector and Maxis, in this report, we look at the potential impact on the FBM KLCI if indeed Maxis is listed before Dec 11, ’09, which is when a revision to the index’s constituents, if any, will be announced. As we believe Maxis may be included in the FBM KLCI to replace a less liquid and smaller cap component with a lower free float, we believe that Malaysian Airline System (MAS), Petronas Dagangan and RHB Capital could potentially bereplaced. If MAS were to be replaced by Maxis, the latter would be the 5th largest KLCI component stock, with a weightage of 7.3%. The KLCI’s adjusted market cap would then rise 7.4% to RM396.1bn. We believe Maxis will spur some short t erm interest inthe market, with non-T elco dividend plays such as Petronas Gas, Petronas Dagangan, PLUS and Tanjong potentially seeing an outflow of funds, other than Telco dividend plays such as Digi and TM. Market interest should be a boon to Liquid Foreign Darlings such as CIMB (BUY TP: RM13.00), Genting (TRADING BUY TP:RM7.90) and Axiata (BUY TP:RM3.68).

Stock in focus - GENTING SP

-- GENTING SINGAPORE


- BNP Paribas initiated on Friday itscoverage on casino

operator Genting Singapore with "Buy" recommendation and a target

price of S$1.35 ($0.953), citing the positive outlook with the

opening of its Singapore operation. [ID:nN24477575]

Asia News

According to industry players, the wealth of rich Asian individuals is set to grow at a compounded rate of 12.8 percent over 5 years till 2013. The fall of Lehman Brothers and the financial crisis sliced a quarter of the wealth of high net worth individuals. The prospects for Asia, however, still appear to be relatively bright. Private banks are expected to boost their expertise in order to capture the opportunities arising from a higher demand for wealth management services. It is estimated that Singapore would need 900 to 1,200 experienced private bankers over the next 5 years. Experts told a regional industry seminar in Singapore that pay structures for relationship managers will need to be overhauled, by reviewing bonuses and rewarding staff based on indicators like client satisfaction and investment performance, and less on fixed financial targets.

EPF is big brother who help maybank price up :)

9:45AM MAYBANK Employees Provident Fund Board (5,012,100 Shares Transacted)

Oilcorp down; company fails to meet interest payment due

PETALING JAYA: Oilcorp Bhd’s share price fell after the company failed to meet its interest payment of RM1.6mil due and payable last Thursday.
The stock was one of the most heavily traded on the stock exchange. At 2.45pm, the shares were down 5.5 sen, or 17%, to 26 sen.
The stock has resumed trading today after the shares were halted from trading last Friday. The interest payment is part of the facility agreement between EON Bank, Capone Bhd and Oilcorp under a primary collateralised loan obligation (CLO).
In a filing to Bursa Malaysia, the company said it did not have sufficient funds to settle the interest payment as the receipt of certain large receivables was delayed.
“The company has on Sept 15 written to Malaysian Trustees Bhd to seek indulgence of time of up to one month from the due date to remedy the matter,” Oilcorp said, adding that the lender and trustee had yet to declare Oilcorp to be in default under the facility agreement.
If such a notice were served to Oilcorp to declare the default, then the CLO is to be immediately due and payable together with the accrued interest, it said.
While such default would impact business, financial and operations of Oilcorp, it expects to resolve the issue within the indulgence period if granted, and is pursuing the payment of receivables.
The company is taking legal advice as to whether such a default constitutes an event of default under any other loan agreements.
“As the circumstances today, the directors are unable to form an opinion that the company will be able to meet its debts as they fall due and accordingly the company is not solvent,” Oilcorp said.

Macroeconomics

· In US, manufacturing activities was upheld, signaling solid 3Q; shipments, new orders and employment grow; prices growth slows. The index of US leading economic indicators rose for 5 consecutive months. The Conference Board’s gauge of the economic outlook for the next 3 to 6 months rose 0.6% in Aug. The gains in stock prices, consumer confidence and homebuilding results in buoying the leading index. On the other hand, US home prices rose 0.3% in Jul from the previous month, in a sign that the housing recovery is tenuous. The house price index fell 4.2% for the 12 months ended in Jul, the smallest decline this year.

· UK homesellers raised asking prices in Sep as confidence in the property market improved and the supply of homes dwindled. The average cost of a home increased 0.6% to £223,996 after falling 2.2% in Aug, indicating that confidence is up.

· Japan’s leading economic indicator was at 82.5% in Jul, compared with 80.9% the previous month, suggesting that the economy is recovering.

· At home, the foreign exchange reserves rose by US$0.22bn in 1H Sep to US$93.5bn as at 28 Aug. This suggests that the repatriation of export proceeds was more than sufficient to pay off import bills. The inflow of foreign portfolio funds might have contributed to the increase as well.

FBM KLCI : Slowly But Surely

The FBM KLCI closed at its highest level for the year before the long weekend. Although the market has been stuck in a tight range over the last eight trading days, its trend is still generally up. We had expected the key index to run faster after the previous peak of 1196.46 pts was violated, but most importantly, that the uptrend remains fully intact. Even if the market were to continue to inch up slowly, it is likely that the uptrend will continue to extend further from the current level.

The FBM KLCI’s near-term technical outlook remains firmly bullish. As the daily RSI closed at the 73.2 pt-level last Friday, there is no doubt that there is room left for further upside extension.

From the current level, an immediate resistance lies at the 1,242 pt-level, followed by the 1,296 pt-level. To the downside, there is initial support at the 1,212 pt-level and the next support is found at the 1,196.5-1,200 pt area.

MKLAND (RM0.415@18/09/09)

MK Land’s months of sideways consolidation brought the stock to the 100-day MAV line last week. The 100-day MAV line, which is now situated at the RM0.39 level, has not been tested after the sharp run-up from the RM0.15 level. Last Friday’s volatile price action indicated that some traders may have noticed the significance of the 100-day MAV line. Traders can consider accumulating the shares at above the 100-day MAV line. We are eyeing the RM0.46 level as the upside target but an immediate resistance is seen at the RM0.43 level. Our cut-loss point is pegged at below the 100-day MAV line, below which RM0.38 and RM0.35 are the next support levels. The immediate technical outlook of MK Land is Neutral at the moment but could well shift to bullish after a few rounds of rallies from the 100-day MAV line.

MCB Sale of 30% Maxis Stake May Raise RM9bn

Maxis Communications Bhd (MCB) is offering for sale 30%, or 2.25bn shares of Maxis Bhd’s (Maxis) issued and paid-up capital, of which 2.33% is for retail investors and 27.67% for institutional investors, as part of the celco’s initial public offering (IPO). Maxis is the country’s dominant cellular player, which as at mid-June had 11.4m mobile subscribers and controls 40% share of the Malaysian cellular market. The offer for sale is expected to raise US$2.5bn, or about RM9bn, which will be the biggest IPO in corporate Malaysia since 1995. The offer price was not revealed in the draft prospectus that was posted on the Securities Commission website on Thursday. Maxis will not issue new shares for the IPO and thus will not get any proceeds. The proceeds will go to the shareholders that are making the offer for sale. (StarBiz)

Malaysia : International Reserves of BNM Amounted to US$93.5bn as at Sept 15, 09

The international reserves of BNM amounted to RM329.9bn (US$93.5bn) as at Sept 15, ‘09. Compared to two weeks ago, it amounted to RM329.1bn (US$93.3bn). The reserves position is sufficient to finance 9.4 months of retained imports and is 3.8 times the short-term external debt. (BNM)

OILCORP ??? 3697

Anyone monitoring OILCORP?? abt time to rebound?

ICAP.Biz -Closed-end Fund in KLCI

ICAP.Biz is a closed end fund, which is managed by Teo Boon Teong. This fund actually successfully outperform KLCI benchmark.


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Investment Book : A Bull in China, Jim Roger

Please email us for a copy of "A Bull in China" book from Jim Roger.


Thanks.

China Automobile Industry News

A Goldman Sachs private-equity fund is investing about $250 million in Geely's Hong Kong-listed arm to fund the auto maker's growth ambitious.


Geely Automobile Holdings Ltd. is expected to announce the investment by Goldman Sachs Capital Partners on Monday, a Geely executive said.
 
The Goldman Sachs fund is investing in convertible bonds and warrants that will give its funds a minority stake in the Chinese automaker, according to the person familiar with the matter. The size of the stake was unclear. The listed arm has a market capitalization of about $1.68 billion, according to FactSet Research Systems Inc., a research firm.




Geely said Wednesday that it planned to issue convertible bonds and warrants without naming Goldman Sachs Capital Partners as the buyer.



The Hong Hong-listed Geely arm plans to use the money to fund its working capital as it expands. That could free up capital for its parent to bid for Ford Motor Co.'s Volvo unit.


People familiar with the matter have said Ford was likely to pick Geely Holding soon to take over Volvo -- a sign of its global ambitions. Geely Auto confirmed earlier this month that its parent was bidding for Volvo with an unnamed state-owned investment company.




International investors have in recent months backed major Chinese auto makers, betting they may become global champions. The auto makers are looking to survive a possible wave of consolidation in China's domestic market by snatching up smaller players at home and buying into distressed brands overseas in order to expand sales both domestically and outside the country.



A unit of Warren Buffett's Berkshire Hathaway Inc. agreed last year to pay about $230 million for a 9.9% stake in electric carmaker BYD Co. Earlier this year, Chery Automobile Co. secured backing from yuan-denominated private equity funds managed by CDH Investments and Bohai Industrial Investment Fund Management Co.



Hangzhou-based Geely has made substantial improvement in the engineering and quality of its vehicles since 2006 under Frank Zhao, the company's product development director, who joined Geely from the U.S. auto maker now known as Chrysler Group LLC via a separate Chinese auto maker.