Potential for further KL market rebound (BT)

For this week, investors should look for buying opportunities in oversold blue chips such as IOI Corp, Public Bank and Sime Darby, says a research head



While the weekly technical momentum indicators for the FBM KLCI sustained bearish signals, buy signals on short-term indicators such as the daily slow stochastics and 14-day RSI suggest good potential for a further technical rebound this week.

A weekly 'hammer' candlestick on the index's weekly chart, which is a bullish reversal pattern, together with the close above the 200-day moving average which was at 1,268 last Thursday, augurs well for the bulls this week.

A decisive push above the 200-day moving average will accelerate the gain towards the next significant resistance from the 100-day moving average at 1,304, while a successful breakout will target the 50-day moving average at 1,324 before more profit-taking and selling resistance emerge to cap the upside.



As for the downside, the 200-day moving average at 1,268 will provide support, with stronger support platforms available at 1,254, the 76.4 per cent Fibonacci Retracement (FR) of 1,224.4 trough to 1,349.9 peak, and then 1,228, the 61.8 per cent FR and 23.6 per cent FR of the 1,153 low of August 19, 2009 and 836 low of March 12 2009 to the 1,349 peak of May 4, which is reinforced by the February 9 pivot low of 1,224.



For this week, investors should look for buying opportunities in oversold blue chips such as IOI Corp, Public Bank and Sime Darby for technical rebound upside, as the 14-day RSI remains oversold. Also, lower liners such as rubber glove makers Adventa and Supermax, construction players MRCB, Tebrau and UEM Land, and oil and gas players Dialog, Kencana and SapuraCrest should rise further as buying momentum picks up.



The subject expressed above is based purely on technical analysis and opinions of the writer. It is not a solicitation to buy or sell.

Run Will You Still Can

Today is the last trading day of May and we may see some rebound due to Asia market rebound after Friday drop. For me this is the best time to exit from share market and keep your profit earn during last year bull run.

We may not know when the share market will drop more lower and also we sure will not been inform how bad Eurozone will be. Yesterday I read back some investment magazine issued last year start from Jan 2009 to Nov 2009 and I found out that most of the investor from bank were wrong about the market. They can said during 2009 FBM KLCI will only rebound by next year 2010 and after the share market start rebounds at mid of the year they said they had foreseen the rebound as early of the year 2009. So I think most of the comment we read from Newspaper are a tool to driven the retail investor to jump in or not into market.

Big fund is easy to sale down or buy up the share along with the news. So I think now better be conservative by keep money in gold not in share market, wait till year end from Nov to March to reinvest back into share market because most of the time this period blue chip share will bull run to close they account and fund manager getting they bonus so market need to bound up.

YUNKONG ... May10

It had stocked up on its raw materials, hot rolled coils, for the last two quarters (4Q2009-1Q2010) as it had expected prices to trend higher. Its stock was higher than normal in the last two quarters because it expected prices to remain in the upward trend.

Inventories as at March 31, 2010 were worth RM152.2 million versus RM135.7 million as at Dec 31, 2009 while it was RM91.1 million a year ago. As a result of the stocking up, the company’s stock turnover in the last two quarters increased to about four months from a normal two to two-and-a-half months.

YKGI’s stocking-up activities have seen its short-term borrowing increase from RM196.86 million as at Dec 31, 2009 to RM208.81 million as at March 31 2010. Its gearing of about 1.5 times as at March 31 2010 would naturally raise concerns on its ability to service and pare its debts. Its operational cash flow was at a deficit of RM4.1 million.

YKGI returned to the black in the three months just ended with a net profit of RM5.16 million versus a net loss of RM6.21 million a year ago while revenue rose 63% to RM117.4 million from RM72 million.

YKGI gets its raw material supplies from Megasteel Sdn Bhd as well as from Japan and Korea while it sells the finished products to local building materials players such as Ajiya Bhd. Megasteel, a sister company of Lion Industries Corporation Bhd, is the sole supplier of hot rolled coils in the country.

However, the company has started to destock or buy less raw materials in the current quarter (2Q2010) as it prefers to remain cautious. Although the management believes steel prices will go up further, they do not want to be caught as steel prices could also go south.

In the last two quarters (4Q2009-1Q20910), the average prices for hot rolled coils were between US$600 (RM1,992) and US$700 per tonne. However, it is now at about US$800 per tonne.

The cost of the benchmark hot rolled coil steel was about US$550 in January 2010 while it traded as low as US$380 a tonne in 2009. Too high a price may cause a sharp correction in steel prices if the market is unable to support such price levels.

Hence, YKGI expects to reap benefits from its inventory strategy as for the second half of this year (2010).

Freight Management Holdings

STRONG BUY
12-Month Target Price: MYR0.98

 Freight Management Holdings’ (FMH) 9MFY10 (Jun) results were within our expectations with net profit of MYR11.8 mln (+23.5% YoY). 3QFY10 (Jun) performance was particularly robust, with revenue up
33.7% YoY to MYR 66.5 mln, and net profit rose 32.4% YoY to MYR3.7 mln.

 Revenue from all key divisions improved, with sea freight in 3QFY10 jumping a hefty 62.0% YoY on the back of a rise in volume ferried (+55.7% YoY). Though gross profit margin for this division declined to
21.5% in 3QFY10 (from 26.3% in 3QFY09) due to an increase in vendor freight rates, the strong rise in freight volumes overcame weaker margins, translating to continued profit growth.

 Similarly, the launch of land freight services between Malaysia and Thailand has also helped FMH overcome the problem of erratic Thai/Malaysia rail services, where delays in transit time and shortage of locomotives often affected timely deliveries.

 Management remains upbeat, targeting double digit pretax growth for FY10, on the back of organic growth, continued productivity improvements and tight cost management. We are projecting a 15.5% pretax growth for FY10. Given its focus on Intra-Asia freight, impact from recent Eurozone weakness will be muted. FMH is also steadily increasing its ASEAN footprint, with five offices in Indonesia and one each in Thailand and Vietnam.

 Our 2010 projection remains unchanged. We maintain our Strong Buy recommendation and 12-month target price of MYR0.98. We value FMH by ascribing a target PER of 7.5x (unchanged) to our projected
FY10 earnings and include a projected net DPS of 3.3 sen. Our target PER is pegged to the valuation of a basket of logistic players.

 In our opinion, FMH’s business model has proven to be quite resilient. Freight rates have stabilized in the medium term, in our opinion, and FMH’s Full Container Load (FCL) business should benefit from the
economic recovery. The asset light business model has provided flexibility and management is continuously seeking suitable JV partners or potential acquisitions to further expand its intra-ASEAN
footprint.

 With its excellent track record and value added services, we believe that FMH will garner market share at the expense of smaller logistic players in the industry. Its balance sheet remains sound, and forward
capex requirements are also minimal

 Risks to our recommendation and target price include (i) a tougher than expected operating environment in the rail freight division, whichwill erode profits; (ii) an unexpected decline in freight rates which will
affect profitability; and (iii) a further unexpected downturn in import and export activities.

Summary: Listed on the Second Board of Bursa Malaysia Securities in Feb. 2005, Freight Management was
transferred to the Main Board in Dec. 2007. It is a logistic player providing sea, rail and air freight services, tug and barge services, as well as warehouse/distribution and custom brokerage services

Major Shareholders:
Chew Chong Keat 28%
Singapore Enterprises Pte Ltd 20%

By Standard & Poor's
Analyst: Kah Ling Chan

Allianz- a cheap insurer

Results Update

Allianz has just announced its results for QE31/3/2010. Its net profit dropped by 61.5% q-o-q but increased by 14.5% y-o-y to RM23.2 million while turnover increased by 19.4% q-o-q or 28.2% y-o-y to RM626 million. The drop in the net profit on a q-o-q basis was partly due to Allianz's practice of valuing its Life Funds' liabilities at its financial year end, with surplus taken into its book in the 4th quarter. As a result, Allianz booked in a surplus of RM12 million from its Life Funds in QE31/12/2009. In addition, its profit for QE31/3/2010 was also impact by a lower underwriting results from its general insurance subsidiary.


Table 1: Allianz's last 10 quarterly results


Chart 1: Allianz's 17 quarterly results

Valuation

Allianz (closed at RM4.82 yesterday) is now trading at a PER of 6.1 times (based on last 4 quarters' EPS of 79 sen). At this PER multiple, Allianz is deemed very attractive.

Technical Outlook

Allianz has been in an uptrend since October 2009. Its uptrend line accelerated from SS to S1-S1. In the past 4 weeks, Allianz dropped to its 40-week SMA line support at RM4.82. If this support is broken, it may test its immediate uptrend line at RM4.45-50.


Chart 2: Allianz's week chart as at May 26, 2010 (Source: Tradesignum)

Conclusion

Based on good financial performance & attractive valuation, Allianz could be a good stock for long-term investment. However, after a strong rally and the current uncertainty in the overall market, one should be more circumspect about buying into any stock in a substantial manner.

Mamee reported higher profit & higher sales

Results Update

Mamee has just announced its results for QE31/3/2010. Its net profit increased by 16.2% q-o-q or 13.6% y-o-y to RM12.0 million while turnover increased by 11.9% q-o-q or 26.0% y-o-y to RM115 million. The improved performance was attributable to higher sales, both domestically & overseas, and the return to profitability for its Chinese subsidiary.


Table 1: Mamee's last 8 quarterly results


Chart 1: Mamee's 16 quarterly results

Valuation

Mamee (closed at RM2.78 yesterday) is now trading at a PER of 9.3 times (based on the last 4 quarters' EPS of 30 sen. At this multiple, Mamee is considered quite attractive.

Technical Outlook

Mamee has been in an uptrend since November 2009. Its uptrend line accelerated twice, from SS to S1-S1 and then S2-S2. In the past 2 weeks of market selloff, Mamee broke below its accelerated uptrend line, S2-S2. It may consolidate further & may test the 20-week SMA line at RM2.76 or the next accelerated uptrend line, S1-S1 support at RM2.70.


Chart 2: Mamee's week chart (on Log scale) as at May 26, 2010 (Source: Tradesignum)

Conclusion

Based on good financial performance & attractive valuation, Mamee could be a good stock for long-term investment. However, after a strong rally- punctuated by a breakdown of its immediate accelerated uptrend line- and the current uncertainty in the overall market, one should be more circumspect about buying into Mamee in a substantial manner for now.

Keuro broke above its downtrend line!

Keuro has a train to catch. Despite the turmoil of the past 2 weeks, Keuro has been rising after breaking above its strong horizontal resistance at RM0.51-52. This morning, it has been testing its long-term downtrend line resistance at RM0.77-78. As at 11.55am, it traded at RM0.795, which means that it has just surpassed that downtrend line. The next resistance will be the horizontal line at RM0.85 & then the psychological resistance at RM1.00.

The only significant announcement made by Keuro is that it had disposed of 134,925,600 ordinary shares, representing 5.21% of the shares capital of Talam Corporation Berhad between 9 March 2010 and 12 May 2010.


Chart: Keuro's week chart as at May 26, 2010 (Source: Tradesignum)

Keuro had received a notification dated 24 May 2010 from Tan Sri Dato’ (Dr) Ir. Chan Ah Chye @ Chan Chong Yoon, its President/Chief Executive – Executive Director that he intends to deal in the securities of the Company (go here). Chan Ah Chye has direct & indirect interest in 143.6 million shares of Keuro. I think it is very likely that he is planning to sell into the current sharp rally.

While the upside breakout above the downtrend line should be viewed as a bullish development, this breakout came after a sharp rise of more than 50% over the past 4 days. Any trade based on this breakout could be a risky proposition. A failure to stay above the breakout level could lead to a sharp correction. Avoid Keuro despite the bullish breakout. If you have position in Keuro, sell if it failed to stay above RM0.78.

KOSSAN ... May10

S & P Results Review & Earnings Outlook

 Kossan’s 1Q10 results were within expectations as net profit of MYR30.4 mln accounted for 24% of our 2010 estimate.

 1Q10 sales volume rose 20% YoY while average selling price (ASP) was hiked up by 6% YoY. Coupled with improved demand for its technical rubber products (+36% YoY), these factors resulted in a 30% YoY rise in group revenue. However, due to the high price of latex, we see operating profit margin fall to 15.6% from 16.4% and in 1Q09
respectively.

 Kossan also achieved revenue growth of 15% QoQ, mainly due to higher ASP (+23% QoQ). 1Q10 sales volume is generally lower than the fourth quarter due lower average latex cost in 2H, which prompts customers to stock up inventory. Operating profit however, fell 19% QoQ, mainly due to an insurance compensation which boosted 4Q09
profits. Stripping this out 1Q10 operating profit was similar to 4Q09.

 Kossan is expecting 1.7 bln of new gloves capacity to come in by mid-2010 and another 1.7 bln in 3Q10. The additional new capacity would add to revenue growth in 2H10. We expect demand to continue to be strong and outstrip supply at least for the rest of the year.

 We maintain our 2010 and 2011 earnings estimates.

Recommendation & Investment Risks
 We maintain our Strong Buy recommendation with an unchanged 12-month target price of MYR9.00.

 We lower our target PER to 9x (from 11x) against our projected 2011 (rollover from 2010) EPS for Kossan and add our 12-month net DPS of 6.8 sen. The lower target multiple reflects the lower peer average.

 We like Kossan as we believe industry fundamentals remain sound. In addition, the further spread of H1N1 flu could trigger higher-thanexpected demand. Furthermore, Kossan’s new capacity will target the nitrile glove segment which carries higher margins. We believe these positive factors should support the out-performance of Kossan’s share price going forward.

 Risks to our recommendation and target price include potential delays in the commissioning of new production lines and a stronger-thanexpected appreciation of MYR as over 90% of its revenue (gloves and TRP) are derived from exports, while about 70% of its costs are in USD.

Golden Cross, another technical idea

I have posted yesterday that all of the major markets have crossed below their 200-day Simple Moving Average (SMA). It is generally accepted that when a stock or an index crossed below its 200-day SMA, that stock or index has entered into a bear market. Being a general rule, there are occasions when the stock or index actually rebounded & continued onto its prior trend. We have witnessed this in our FBM-KLCI in August 2007. Then, our market suffered a sharp selloff which begun in w/e 27/7/2007 and in a mere 4 weeks, FBM-KLCI lost about 18% to hit a low of 1141 (in w/e 17/8/2007). The current selloff started only last week & todate, FBM-KLCI has lost about 7%.


Chart: FBM-KLCI's week chart as at May 24, 2010 (Source: Tradesignum)

The other indicator that market strategists like to follow is the golden cross, which is normally defined as the crossover of the faster 50-day SMA & the slower 200-day SMA. If the 50-day SMA cut below the 200-day SMA, the market outlook is deemed bearish and vice versa. We can see an example of a bearish golden cross in our market in March 2008 and a bullish golden cross in May 2009 (see the chart above). Despite the recent sharp selloff, our FBM-KLCI has yet to record a bearish golden cross. If you looked at the table below, you will see that only two major markets have recorded a bearish golden cross- SSEC & HSI.


Table: Main market indices as at May 25, 2010 (Source: Stockcharts for all indices, except FBM-KLCI where I rely on Tradesignum)

No systems or indicators can be the final arbiter of the state of the market. One has to take into account many factors. The golden cross may give a more accurate reading than the crossing of the 200-day SMA but that level of certainty is purchased at a price of ceding more profits or taking on more losses if you have acted earlier. Similarly, a system or indicator that gives earlier reading may not be better because it would be more prone to whipsaws or false readings.

This article is intended to introduce the concept of the golden cross. I seldom looked for golden cross and the crossing of the 200-day SMA in order to call a potential market top or bottom because they are extremely slow systems. By the time you get the reading, the prices would have gone up or down substantially. In fact, some technicians go as far as using the golden cross as a contrarian indicator. I can see their logic but I would prefer not to do so. For a good reading on the generally accepted usage of the golden cross, check out this post.

Finally, I like to say that no technical indicator or system is foolproof. Technical analysis deals with probability. Even when the signals or readings are bearish, the outcome may 'surprise' to the upside. That's a fact of life that all market players have to accept.

AJI's net profit plunged

Results Update

AJI has just announced a disappointing set of results for QE31/3/2010. Its net profit dropped by 84% q-o-q or 18% y-o-y to RM1.5 million, while turnover increased by 18% y-o-y but slipped 1% q-o-q to RM71.9 million. The drop in net profit was attributable to higher input & energy cost & more competitive pressure, which resulted in higher expenditure incurred for sale promotion.


Table 1: AJI's last 8 quarterly results


Chart 1: AJI's 19 quarterly results

Valuation

The problem for AJI is in the forecasting of its future earning, which ranges from the low of 5.44 sen achieved last quarter to the high of 15.67 sen achieved in QE31/12/2009. If we assumed an average of 9.1 sen, then AJI, which closed at RM4.16 yesterday, would be trading at a PER of 11 times. Based on the sharp drop in commodities prices in the past few weeks, I believe that the average EPS of 9.1 sen is reasonable.

Technical Outlook

AJI should have a good psychological support at RM4.00. The next support is about RM3.40-50, based on horizontal line support at RM3.50 & uptrend line support at RM3.40.


Chart 2: AJI's week chart as at May 24, 2010 (Source: Tradesignum)

Conclusion

Based on poor financial results, AJI's share price would come under selling pressure for the next few weeks. If the share price were to drop to RM3.40-50 level, AJI would be an attractive stock for long-term investment, trading at PER of about 9.3 times.

Kencana ... May10

It had secured four contracts recently, the latest being a RM45 million contract from India’s Larsen & Toubro announced on Tuesday. This takes its order book to just a shade below RM2 billion.

Expecting more contracts to be announced in the coming months (May 2010 & Beyond). Kencana is aiming for RM1 billion worth of new fabrication contracts in 2010, of which 70% is expected to be domestic jobs.

Its wholly owned unit and main fabrication arm Kencana HL has been awarded a US$14 million (RM45 million) contract to construct jackets for offshore platforms to be located in India. The client is India’s Larsen & Toubro. This one-off contract is expected to run from 1Q to 3QFY7/11.

The management continues to deliver its promise of growing the order book. The recent contract is Kencana’s fourth since April 15 2010. The new contracts, worth a collective RM336 million, take Kencana’s outstanding order book to slightly below RM2 billion.

Capacity is not an issue as Kencana’s 169-acre yard in Lumut is running at 50% utilisation with extra space earmarked for new contracts.

New contracts (Malaysia, India and Australia) and new ventures (offshore support, drilling and pipeline installation) fuel our optimism on Kencana.

Favourable earnings prospects and its strategy of moving up the value chain with the new ventures.

Malaysian Pacific downgraded at OSK

Malaysian Pacific Industries Bhd (MPI), Malaysia's largest listed chipmaker, had its stock rating cut to 'sell' from 'neutral' at OSK Research Sdn Bhd, citing 'unattractive' valuations.

The share price estimate was reduced to RM4.28 from RM6.36, OSK said in a report today. - Bloomberg"

Mah Sing Q1 pre-tax profit surges

Property developer Mah Sing Group Bhd posted a 32.3 per cent higher first quarter pre-tax profit for the period ended March 31 to RM41.173 million from RM31.119 million in the same period in 2009.

Its revenue also rose 54 per cent to RM238.312 million from RM150.315 million previously.

The stock climbed 2.7 per cent to RM1.51 at 2.54 pm local time, set for its biggest daily gain since April 7.

Group managing director and chief executive officer Tan Sri Leong Hoy Kum said the first quarter sales were good due to strong response to all segments of its properties.

'The group's residential and commercial projects contributed to the good results. Main contributors to revenue are Southgate, Hijauan Residence, Kemuning Residence and Aman Perdana, all in the Klang Valley, Residence@Southbay in Penang and Sierra Perdana and Sri Pulai Perdana 2 in Johor Baharu,' he said in a statement today.

Besides property development, the group's plastic division also contributed positively to the quarter''s earnings, he added. -- Bernama"

Dow Claws Back Above 10,000; S&P Closes Up (ext)

NEW YORK (TheStreet) -- The Dow managed to recapture the 10,000 level in the last hour of trading after wiping away its steepest losses Tuesday, though stocks still finished near the flat line amid uncertainty about global growth.

After being down around 200 points during a good part of the session, the Dow Jones Industrial Average finished 23 points lower, or 0.2%, to 10,044. But the S&P 500 eked out a fractional gain to close at 1074. The Nasdaq dipped 3 points, or 0.1%, at 2211.

'Equity markets thrive when there's certainty, and clearly we don't have that right now. There's a sense that once we have more clarity, we'll be able to see that we're going to get through this and that we'll be OK,' said Mike Schenk, senior economist at the Credit Union National Association. 'Now, I'm not saying that European debt issues won't drag on U.S. economic growth. I think it'll have an effect and it'll be a noticeable effect, but it won't be devastating.

'What you're seeing today is really being driven by Europe, but all the U.S. data we're getting is showing that consumers are in a much better place, and even the housing market is in a better place -- and that's what's pulls us out of downturns. I'm not saying the data is being ignored, but the emphasis is in other places,' Schenk said, adding, 'Once the market gets more clarity, I think the data we've been seeing will help the market stabilize.'

Several factors weighed on market sentiment Tuesday, including a warning from European Union Economy Commissioner Olli Rehn that major reforms are needed otherwise EU growth will not top 1.5% and the jobless rate will remain high over the next five years.

North Korea has threatened to use military action in retaliation against South Korea if it continues to trespass into its waters, and a North Korean spokesman said the Communist country is severing all relations with South Korea, Reuters reports. Earlier, Asian markets staggered under a Yonhap news agency story that referenced a local report indicating that North Korea is preparing for war. Tensions between North and South Korea have been running particularly high after the recent sinking of a South Korean warship.

Germany may extend its recently announced short-selling ban to all German companies' stocks, according to a report.

In Spain, four saving banks announced plans to merge amid concerns over solvency in the sector.

During a speech in London, St. Louis Federal Reserve Bank President James Bullard said Europe's sovereign debt problems, in all likelihood, will probably not lead to another worldwide recession that many are fearing, according to a report from The Associated Press.

Crude oil for July delivery settled at $68.75 a barrel after losing $1.46 during the session.

Elsewhere in commodity markets, the June gold contract gained $4 to settle at $1,198 an ounce.

KNM's 1Q net profit falls 60% KNM's 1Q net profit falls 60% (Edge)

KNM GROUP BHD []'s net profits for the first quarter (1Q) ended March 31, 2010 fell by 59% to RM40.33 million from RM98.45 million a year earlier as revenue declined nearly 30% to RM373.3 million on the back of lower utilisation of capacity.

Meanwhile, profit before tax fell to RM249,000 in 1QFY10 from RM124.9 million a year ago. It recorded basic earnings per share of 1.02 sen from 2.51 a year ago.

Compared to the preceding quarter, revenue is lower by 10.38% compared to 4QFY09's revenue of RM416.52 million. However, its profit before tax and minority interest at RM249,000 is better than the 4Q loss before taxation and minority interest of RM80.9 million.

A quick look at Coastal (25.5.2010)

A quick look at Coastal (25.5.2010)
http://spreadsheets.google.com/pub?key=taWOgEdJSr517zWzGn9LnQA&output=html

Health is Wealth

MBMR's results vroomed UP!

Results Update

Measat has just announced its results for QE31/3/2010. Its net profit increased by 78% q-o-q or 327% y-o-y to RM40 million while turnover increased by 12% q-o-q or 48% y-o-y to RM364 million. The improved performance was attributable to strong demand for passenger & commercial vehicles as well as the strengthening of the RM against the Japanese Yen, which lifted the operating margin. For the last 8 quarters' results & the highlights of the results for QE31/3/2010, see Taable 1 & 2 below.


Table 1: MBMR's last 8 quarterly results


Table 2: MBMR's financial highlights for QE31/3/2010 (Source: Link to the filling on Bursa Malaysia)


Chart 1: MBMR's 16 quarterly results

Valuation

MBMR (closed at RM2.70 yesterday) is now trading at a PER of 6.6 times (based on last 4 quarters' EPS of 41 sen). Price to Book is about 0.70 time. At these multiples, MBMR is deemed very attractive.

Technical Outlook

MBMR broke above its downtrend line at RM2.35 in October 2009. Thereafter, MBMR rose steadily- initially on a gradual uptrend line ('SS') and later accelerated (as per 'S1-S1'). The stock is now sliding back & it has just broken below S1-S1 at RM2.65. Its next support will be the horizontal line at RM2.50 and then the uptrend line, SS support at RM2.40.


Chart 2: MBMR's week chart as at May 17, 2010 (Source: Quickcharts)

Conclusion

Based on satisfactory financial performance and attractive valuation, MBMR could be a good stock for long-term investment. A good entry level could be at RM2.40-50.

Jobstreet ... May10

JobStreet Corporation Bhd in revising its dividend policy will distribute half of its annual net profit as dividends starting from the the current financial year ending Dec 31, 2010.

It would begin making quarterly dividends towards this annual target from the quarter ended March 31, 2010. JobStreet did not declare any dividends in FY2009.

For the first quarter just ended, JobStreet posted a 55.4% increase in net profit to RM8.69 million from RM5.59 million a year ago while revenue rose 27% to RM27.63 million from RM21.75 million.

The company attributed the better performance to higher sales of its core products due to improving economic conditions.

The core products JobStreet ESSENTIAL (online job posting service) and JobStreet IMPACT (career website management service) grew 53% and 84.9% year-on-year respectively. However, the increase was partially offset by a decrease in revenue from JobStreet RESOURCE (provision of contract staffing services) by 22.9%.

Moving forward, the company expected to benefit from the economic recovery in the region and the resumption of hiring activities by corporations to facilitate their future growth.

Its 20% stake in Taiwan-based 104 Corporation, which it acquired in April 2010 was expected to contribute positively to its consolidated earnings in 2010. With the elevation of 104 Corp to associate status, the fair value reserve attributed to its investment in 104 Corp amounting to RM29 million as at March 31, 2010 would be reversed and this would impact its other comprehensive income in the second quarter of 2010.

JF Apex Market Updates: 25 May 2010

Subject: Market Updates: 25 May 2010 - SIME Old Story

Malaysia - Equity

Sime Darby Bhd led a sell-off in the stock market yesterday, starting a week which may see investors trim shares further amid continued uncertainties in global markets. While economic fundamentals at home remain strong, the concern that debt problems in Europe's weaker economies like Greece and Spain could spiral into another global credit crisis is keeping investors from picking up shares.

The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index closed lower for the seventh day, shedding 12.04 points to close at 1,273.69, despite upbeat regional markets. It was the index's lowest close in three months.It had opened 2.77 points lower at 1,282.96.

The FBM Emas Index fell 63.58 points to 8,562.09, the FBM70 Index declined 13.23 points to 8,409.80 and the FBM Ace Index dropped 41.41 points to 3,795.32.

The Finance Index, meanwhile, eased 78.03 points to 11,512.85, the Industrial Index declined 35.75 points to 2,576.88 and the Plantation Index dipped 73.12 points to 6,016.61.

Losers led gainers 415 to 252 while 285 counters were unchanged, 447 untraded and 55 others suspended.

Trading volume declined to 662.44 million shares valued at RM1.29 billion from the 886.44 million shares worth RM1.76 billion traded last Friday.

Among active counters, Talam Corp was flat at 14 sen, while Kumpulan Europlus rose 9 sen to 62.5 sen.

Sime Darby fell 27 sen to RM7.81, CIMB Group shed 4 sen to RM6.82 while Berjaya Corp increased 6 sen to RM1.56.

Of the heavyweights, Maybank lost 7 sen to RM7.25, Maxis shed 5 sen to RM5.17 and MISC slipped 4 sen to RM8.50.

Sime Darby, the world's biggest listed palm oil producer, sank to a 10-month low over concern that it may have to set aside more money for potential losses in its energy and utilities division.It fell 3.3 per cent to RM7.81, shedding almost four points off the index. Just two weeks ago, Sime Darby asked its chief executive (CEO) to leave as it looked set to book losses of almost RM1 billion for the second half of this year on cost overruns in that division. It made a net profit of RM1 billion in the first half. Current acting CEO Azhar Abdul Hamid indicated in a news report last weekend that there could be more provisioning as it probes further into that division.

RM

The ringgit ended almost flat against the US dollar yesterday as some buying interest for the local currency helped wipe out earlier losses, a dealer said.

At the close, the local unit was at 3.3180/3210 to the US dollar compared with Friday's close of 3.3180/3230.
The ringgit, he said, only started to move in the later part of the afternoon and traded between the 3.08 and 3.32 levels against the US dollar yesterday.

Compared with other major currencies, the ringgit was closed mixed.

It was softer against the Singapore dollar at 2.3564/3608 from 2.3534/3603 but firmer against the yen at 3.6842/6884 from 3.6858/6918.

CPO

Crude palm oil (CPO) futures prices on Bursa Malaysia Derivatives closed lower yesterday amid a lack of buying interest ahead of the export data due for release today, dealers said.

At the close, June 2010 and August 2010 contracts were down RM1 each at RM2,530 and RM2,490 per tonne respectively, July 2010 eased RM3 to RM2,508 while September 2010 was RM8 lower at RM2,472 per tonne.

News

The board of EON Capital Bhd (EON Cap) is expected to send out to shareholders its EGM notice and circular on the RM5.06bil takeover offer from Hong Leong Bank Bhd (HLB) this week It is understood that the banking group held a board meeting yesterday to discuss what would be written in the circular after it had decided to go ahead and table the proposed offer to shareholders despite facing resistance from its independent financial adviser (IFA), Credit Suisse Securities (M) Sdn Bhd, who has said the proposal was "not fair from a financial perspective." HLB values EON Cap at 1.42 times book.Come June, there will be some excitement in the banking industry when Bank Negara reveals some of the successful recipients for foreign commercial banking licences in line with the financial sector liberalisation plan.

Up to five new banking licences are expected to be issued in niche and up to two new takaful licences will also be announced. ING, Allianz, Manulife, Great Eastern and AmAssurance are some of the insurers believed to have submitted their applications. An industry observer felt Great Eastern might be one of the successful applicants for the takaful licence.
The medium-term note (MTN) holders of Transmile Group Bhd, a troubled air cargo carrier, will continue with their move to wind up the company. Sources said the five MTN holders, who are owed RM105mil, believe they have priority over the assets. They had on April 28 met to appoint receivers for the company. The company's other obligations included RM214mil in syndicated term loans and RM209mil in guaranteed convertible bonds. The five MTN holders are believed to be the Employees Provident Fund (EPF), Meridian Asset Management Sdn Bhd, OSK Group, Agrobank and AmBank Group. The EPF is believed to hold around half of the notes.

IGB Corp Bhd is mulling over spinning off its assets into three separate real estate investment trusts (REITs) comprising its retail, hotel and commercial components, its top executive said. Group managing director Robert Tan Chung Meng said that should this plan take off, this could "potentially be the biggest REIT in Malaysia".
Currently, the planned REIT by the Sunway City Bhd at an estimated RM3 billion to RM4 billion is said to be the largest in Malaysia.

Sunway City may place out about a fifth of its planned IPO of a real estate investment trust (REIT) to cornerstone investors who have greater holding power for the shares, sources with direct knowledge of the deal said in Kuala Lumpur yesterday. Malaysia's sixth-biggest property company by market value is in talks with seven local funds in the hopes of getting some of them to become cornerstone investors in the IPO which is expected to raise around US$500 million (RM1.65 billion), the sources said. The Sunway REIT, with a fund size of 2.78 billion units, is set to become Malaysia's largest when it is listed in the third quarter of this year.

Three directors in The Star Publications (Malaysia) Bhd did not seek re-election at the firm's annual general meeting yesterday. They are executive director Ng Beng Lye, who was previously hand-picked by former MCA president Datuk Seri Ong Tee Keat, and non-executive directors Tan Sri Sak Cheng Lum and Raymond Tan Foong Luen. When contacted, Ng confirmed that he, Sak and Tan did not seek re-election but he refused to give any reason.

Mudajaya Group Bhd said its Indian investment has been offered term loan facilities amounting to 26.25 billion rupees (RM1.86 billion) to finance a coal based independent power plant (IPP) project in Chhattisgarh, India.
It told Bursa Malaysia yesterday that R.K.M Powergen Private Ltd, an associate company of Mudajaya Corp Bhd (which is a wholly- owned unit of Mudajaya Group) will receive the loans from several Indian financial institutions to finance the setting up of the remaining Unit-2, 3 & 4 of the 4 X 360 MW Coal Based IPP project.

Padiberas Nasional's (Bernas) unit Beras Corp Sdn Bhd (BCSB) entered a share sale agreement with Tan Kien Chong Sdn Bhd (TKCSB) to acquire the balance of 45% stake in Sabarice Sdn Bhd for RM4.73 million cash. Bernas had entered into an agreement last Friday to acquire the remaining 675,000 shares, or 45% stake, from TKCSB, a move which would make Sabarice its unit.

Online stockbroking and trading solutions provider N2N Connect Bhd is expecting its cross-border business to make up at least 30% of its revenue this year from 15% currently. Its managing director Andrew Tiang said N2N is working closely with local brokers as well as brokers from other countries to grow its cross-border business contribution from 15% at the moment.

Pipemaker Hiap Teck Venture Bhd has bought 55 per cent stake of Eastern Steel Sdn Bhd, which owns 240ha of land in Teluk Kalung, Kemaman in Terengganu, for RM110 million. The final amount of the purchase price of RM33 million has been fully settled.

MMC Corporation Bhd's unit has signed a memorandum of understanding with a unit of South Korea's STX Corporation to look into the proposed setting up of a plant to manufacture solar cells in Senai Hi-Tech Park.
MMC's unit Senai High Tech Park Sdn Bhd had signed the MoU with STX Corp's unit STX Energy Co. Ltd for the proposed plant, subject to a feasibility study.

Singapore's second largest utility firm, PowerSeraya Ltd, together with Malaysian parent YTL Power International Bhd, is seeking to expand its operations, which could include selling utilities, fuel trading and oil storage, in the region.Construction-to-power conglomerate YTL Corp Bhd bought PowerSeraya from Singapore state investor Temasek Holdings in December 2008 for S$3.8 billion (RM9 billion).
YTL Power's businesses include power generation in Malaysia and Indonesia, power transmission in Australia and provision of water and sewage services in the UK. PowerSeraya, which owns a 10,000 cu m seawater reverse osmosis desalination plant and a 3,100-megawatt (MW) power plant, is in the last stages of commissioning a new S$800 million (RM1.9 billion) 800 MW co-generation combined cycle plant. The unit, which will come on stream by the end of next month, will generate both electricity and steam.

Results

MBM Resources Bhd plans to spend RM100 million over the next three years to expand its distribution network.

Its managing director, Looi Kok Loon, said this year, RM20 million was allocated to expand its Perodua, Hino and Volkswagen (VW) dealerships. For financial year ended December 31 2009, MBM's revenue fell by 2.1 per cent to RM1.18 billion. Its pre-tax profit declined by 39 per cent to RM91.4 million. Meanwhile, MBM's pre-tax profit for the first quarter ended March 31 2010 rose to RM45.28 million from RM11.702 million in the same period last year. Revenue surged to RM363.835 million from RM246.055 million previously, it added. - Bernama

Star Publications (Malaysia) Bhd's earnings doubled to RM37.82 million in the first quarter ended March 31, 2010, from RM18.26 million a year ago, underpinned by strong growth in advertising expenditure. Pre-tax profit was RM53.5 million, which was double the RM25.45 million it posted a year ago. Revenue rose 27% to RM230.58 million from RM181.34 million while earnings per share were 5.12 sen versus 2.47 sen. However, when compared with the preceding quarter ended Dec 31, 2009, revenue declined by 26.7% to RM230.58 million from RM314.54 million. Pre-tax profit slipped 31.3% to RM53.5 million from RM77.86 million.

Newly-listed Masterskill Education Group Bhd yesterday reported a sharp increase in net profit to RM26.68 million for the quarter to March 2010 compared with a profit of RM18.68 million in the last corresponding period. Revenue for the quarter just ended was RM77.04 million, or 22.5 per cent higher than what it recorded previously. "Our net profit for this reporting quarter is mainly attributed to increase in our students. We had 17,003 active students as at end of March 2010, representing an increase of 21.7 per cent from the corresponding quarter in March 2009," Masterskill group chief executive Datuk Seri Edmund Santhara said in a statement yesterday. Ebitda for the reporting quarter increased by 30.3 per cent to RM35.8 million, with Ebitda margin of 46.5 per cent for first quarter result ending March 31. The Company continues to be in good cash position with less than 0.1 times gearing.

Semiconductor company AIC Corp Bhd has lined up several strategies to further boost business in 2010 after returning to profitability last year. The strategies include strengthening its core activities, namely in semiconductor, and precision tooling and automation. It is also looking to diversify its business by adding new high-valued semiconductor products, giving AIC the potential of having a better revenue mix.For its first quarter ended March 31 2010, AIC recorded a net profit of RM2.9 million from a loss of RM1.9 million previously. Revenue for the three-month period stood 77.8 per cent higher at RM41 million.

BANK Simpanan Nasional's profit-after-tax and zakat for 2009 rose to RM347 million from RM168 million in 2008 on strong growth in loans, advances and financing. Group revenue rose to RM1.21 billion from RM1.04 billion previously. Its total loans, advances and financing rose 27.2 per cent to RM5.91 billion from RM1.26 billion in 2008. BSN's total deposits edged up to RM16.99 billion from RM15.42 billion in 2008,

Total assets rose to RM18.74 billion from RM16.73 billion, fuelled by a 49.2 per cent rise in conventional loans and syariah-financing portfolios. BSN's net non-performing loans (NPLs) stood at 1.8 per cent as at the end of 2009, a marginal increase over 1.5 per cent in 2008.

Hong Leong Financial Group Bhd (HLFG) saw its third quarter net profit grow 7.5 per cent to RM141.92 million while revenue was up 3 per cent to RM542.37 million. However, profit before tax (PBT) was lower by 6.2 per cent to RM255 million for the period ended March 31 due to lower contributions from its commercial banking and insurance divisions. The commercial banking unit recorded a drop of 3.3 per cent in PBT of RM260 million as a result of higher other operating expenses and higher allowance for losses on loans, advances and financing. Meanwhile, the group's insurance division posted a pre-tax loss of RM1.6 million compared with a PBT of RM10 million a year ago, owing to the year-to-date adjustment for claims liabilities provided for under the risk-based capital framework. For the nine-months to March 31, the group saw its net profit increase 1.2 per cent to RM445.9 million as revenue fell 2 per cent to 1.66 billion. Its PBT dropped 7 per cent to
RM859.2 million due to lower contributions from its commercial banking unit. The commercial banking division saw its PBT fall 9 per cent to RM840.1 million for the nine-month period due to lower net interest income and non-interest income as well as higher other operating expenses.

Krisassets Holdings Bhd, the owner and operator of Mid Valley Megamall, is aggressively seeking foreign shopping complexes to be injected into the company. Group managing director Robert Tan Chung Meng said that the properties could either be in the US or in Europe. He added that KrisAssets has the muscle to raise between RM1 billion and RM2 billion to fund the purchases. KrisAsset, whose prized Mid Valley Megammall is valued at RM1.8 billion, has a cash balance of RM180 million as at December 31 2009. In 2009, it made a net profit of RM136.02 million on the back of RM227.88 million in revenue.

PPB Group Bhd posted net profit of RM1.12 billion in the first quarter ended March 31, 2010, as earnings were boosted by the completion of disposal of the group's sugar-related assets compared with RM271.83 million a year ago. The completion of disposal of the group's sugar-related assets in early January 2010 resulted in a gain of RM838 million recognised in the first quarter under review. Group revenue of RM504 million for the first quarter ended 31 March 2010 was marginally higher than the RM495 million in the same period last year. The increase was mainly due to higher revenue recorded by the film exhibition and distribution division, off-set by lower revenue from the environment engineering, waste management and utilities division as no new contracts were secured during the quarter.

ASIA
Investors took their lead yesterday from a Wall Street rally while keeping an eye on Europe's debt crisis, with shares closing broadly higher.

As well as Friday's Wall Street rally, trade was spurred by bargain-hunting after eurozone fears caused a broad sell-off in regional stocks in recent weeks.

Markets took their cue from Wall Street, where the Dow on Friday rose 1.25 percent on bargain-hunting and relief that President Barack Obama's finance bill had passed through the Senate.

Markets remain concerned despite a near trillion-dollar package to prevent the troubles of debt-ridden Greece spreading to the rest of Europe.

"It would take about three to six months before investors feel comfortable that enough has been done to address the problems in the (European Union)," said NRA Capital Chairman Kevin Scully.

SINGAPORE: STOCKS finished higher but lost some of its early gain in line with the rest of the region as investors cut risk amid fears the eurozone debt crisis would hit world growth.

The Straits Times Index closed 0.84 per cent, or 22.67 points, higher at 2,723.87.

Commodities and banks led gains, with Wilmar up 2.7 per cent and Oversea-Chinese Banking Corp 0.7 per cent.
HONG KONG: SHARES picked up 0.62 per cent yesterday following a Wall Street rally and hopes that China will put off any immediate plans to tighten credit.

The benchmark Hang Seng Index ended 121.93 points higher at 19,667.76.

Analysts see the index rising further this week after falling 3 per cent last week.

Short positions, which become profitable if prices decline, also contributed to gains, especially in some property shares.

TOKYO: Tokyo closed down 0.27 per cent, or 26.14 points, at 9,758.40, with exporters feeling pressure from a stronger yen as traders move into the safe-haven currency due to the crisis in Europe.

SYDNEY: Sydney gained 2.09 per cent, or 90 points, to close at 4,395.4.

SHANGHAI: Shanghai soared 3.48 per cent, or 89.90 points, to 2,673.42, boosted by hopes of a short-term halt in the Chinese government's efforts to rein in the property market, dealers said.

China will adjust its exchange rate policy at its own pace, President Hu Jintao said yesterday at the start of talks with the US on the Chinese currency and other sensitive trade issues. The annual strategic talks are seen as an opportunity for the two countries to end months of discord over issues such as the value of the yuan, or renminbi. Critics of China's currency policy say it keeps the yuan artificially low to make the country's exports cheaper and more attractive than those of rivals. "China will continue to steadily advance the reform of the formulation mechanism of the renminbi exchange rate under the principle of independent decision-making, controllability and gradual progress," Hu said.

SEOUL: Seoul closed up 0.30 per cent, or 4.75 points, at 1,604.93.

TAIPEI: Taipei rose 1.17 per cent, or 85.02 points, to close at 7,322.73.

JAKARTA: Jakarta fell 0.52 per cent, or 13.61 points, to end at 2,609.61.

BANGKOK: In Bangkok, shares tumbled 2.77 per cent, or 21.23 points, to close at 744.31 as dealers returned after the bourse was closed for two-and-a-half days due to clashes between anti-government protesters and security forces.

Thailand's economy grew at breakneck pace early this year but the deadly unrest that began in March will clip the full-year performance by 1.5 per centage points, officials said yesterday. Prime Minister Abhisit Vejjajiva said he would reach out to international investors to try to convince them the country's economic fundamentals remain strong despite two months of violent anti-government protests. The economy grew by a blistering 12 per cent in the first quarter but Abhisit said he expected a deep impact in the second quarter after anti-government protests were crushed last week, triggering arson and looting in Bangkok.

MANILA: Manila closed up 0.38 per cent, or 11.93 points, at 3,191.29.

MUMBAI: Mumbai rose 0.15 per cent, or 23.94 points, to close at 16,469.55.

The market was boosted by news that the warring billionaire Ambani brothers had called a truce in their feud.

EUROPE
European shares rose yesterday, with miners recouping losses from the previous week on a strong demand outlook for metals, but gains were limited by worries that the eurozone's debt crisis could hamper the bloc's growth.

Miners Anglo American, Kazakhmys, BHP Billiton and Rio Tinto added 0.7 to 2 per cent, on a bright outlook for the demand for metals following comments by an official that China should be particularly cautious in introducing new tightening measures.

The pan-European FTSEurofirst 300 index of top shares closed up 0.3 per cent at 973.21 points, snapping three straight sessions of losses which caused an 8 per cent drop in the index.

London's benchmark FTSE 100 index of leading shares edged up 0.13 per cent to 5,069.61 points. In Paris, the CAC 40 was virtually unchanged at 3,430.93 points and in Frankfurt the DAX lost 0.40 per cent to 5,805.68 points.

Britain's new coalition government unveiled details yesterday of some STG6.2 billion (STG1 = RM4.80) in cuts to "wasteful" spending, to begin slashing a record deficit in line with a key campaign pledge. The cuts - immediately slammed by labour unions, but seen by analysts as sending an essential signal to nervous markets - include a freeze on civil service recruitment and reductions in numerous programmes. Former Labour premier Gordon Brown warned ahead of May 6 elections that making immediate budget cuts will jeopardise Britain's fragile recovery from the global downturn. But new finance minister George Osborne, whose Conservative party struck a deal with the third-placed Liberal Democrats to form Britain's first coalition government since World War II, insisted the cuts were essential.

US
Stocks tumbled Monday, with the Dow ending at a three-month low as worries about the global economic outlook overshadowed a bigger-than-expected rise in existing home sales.

The Dow Jones industrial average lost 126 points, or 1.2%, closing at its lowest point since Feb. 2. The S&P 500 index declined 14 points, or 1.3%. The Nasdaq composite lost 15 points, or 0.7%.

Stocks had fallen in the early going, turned mixed through the afternoon and then turned lower near the close.

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 1.31 billion shares. On the Nasdaq, decliners topped advancers by eight to five on volume of 2.08 billion shares.

The housing market report marked a positive start to a busy week for economic news. Investors are looking for evidence that the U.S. economy is holding up despite the turmoil abroad. More housing reports are due later in the week.

Readings are also due on durable goods orders, personal income and spending, and consumer sentiment.

Nonetheless, the positive report was countered by continued worries about the European debt crisis. The euro slumped, erasing last week's gains, following reports that Spain's central bank took over a long-established regional savings bank.

Stocks ended higher Friday at the end of another rough week, in which worries about the European debt crisis and the flailing euro sent global markets lower. For the week, the Dow and S&P 500 both lost around 4% and the Nasdaq fell around 5%.

Since hitting rally highs in late April, the Dow has lost 10.2%, the S&P 500 has slipped 11.8% and the Nasdaq has dropped 12.5% through Monday's close. The declines of more than 10% off the highs means all three major gauges have met the technical definition of a correction. The selling has also raised worries about whether stocks are heading into a bear market, technically a decline of 20% to 30% off the highs.

Housing: April existing home sales rose 7.6% to a seasonally adjusted 5.77 million annual unit rate from a 5.36 million unit rate in March, the National Association of Realtors reported shortly after the start of trading. Economists surveyed by Briefing.com expected a smaller rise to 5.65 million units. The rise was due largely to the expiration of the homebuyer tax credit at the end of April.

Corporate news: AIG will not face criminal charges, with the Justice Department opting not to pursue the case due to insufficient evidence.

In deal news, IBM is reportedly buying AT&T's business software unit Sterling Commerce for $1.6 billion in cash.

Financial stocks slipped, including Dow components Bank of America and JPMorgan Chase. Other big losers included PNC Financial Services, Wells Fargo, Goldman Sachs and Morgan Stanley.

The KBW Bank index lost 3.3%.

Euro/dollar: The euro lost 0.3% versus the dollar after seesawing over the last week since falling to a four-year low of $1.2234 earlier in the month.

The dollar was little changed against the yen.

World markets: Markets in Europe cut earlier losses to end mixed. Britain's FTSE 100 rose 0.1%, Germany's DAX lost 0.4% and France's CAC 40 was little changed.

Asian markets were mixed. Japan's Nikkei fell 0.3%, while Hong Kong's Hang Seng gained 0.6%. China's Shanghai Composite rallied 3.5%.

Commodities: U.S. light crude oil for July delivery rose 17 cents to settle at $70.21 a barrel on the New York Mercantile Exchange.

COMEX gold for July delivery rose $17.90 to settle at $1,194.70 an ounce. Bonds: Treasury prices slipped, lifting the yield on the 10-year note to 3.22% from 3.20% where it stood late Friday.

Stock to Watch - Mon, 24 May 2010

* Genting (RM6.60, SELL) – Sell into strength.
* SLP Resources (RM0.70, SELL) – The trend may have reversed.
* Gamuda (RM2.76, SELL) – More risk to the downside?
______________________________________________________________________

1. Genting (RM6.60, SELL)

____________________________________________________________________

2. SLP Resources (RM0.70, SELL)

_____________________________________________________________________

3. Gamuda (RM2.76, SELL)

AEON ... May10

AEON Co. Bhd’s (AEON) profit before tax of RM59.4 million for the 1QFY10 was 57.26% better than 1QFY09. This was achieved as a result of a series of operational and business measures that AEON had embarked in the past 18 months to boost its operational efficiency. We noticed that AEON’s profit margins improved from merely below 5% to above 7% in the past two quarters, hence we expect this trend to continue thus we upgraded our earnings target price to RM6.60 from RM5.90 previously.

Highlights
o Revenue 1QFY10 increased marginally by 4.7% Y-O-Y (within our expectation) – For the period ended March 2010 (1QFY10), AEON reported a 4.7% increased in revenue,
y-o-y, a mild yet balanced improvement in both the retail and property management segments, in tandem with the economic growth during the period. In addition, q-o-q
revenue declined by 26.0% was also within our expectation. Our study shows that since 2006 AEON’s 1Q revenue had the tendency to decline from previous quarter mainly due to consumer spending patterns. Contributions of revenues from
new store openings in the past 18 months have in fact reduced the rate of decline in 1QFY10 to the least since FY2006.

o Profit Before Tax surged by 57.3% Y-O-Y (within our expectation) - PBT surged 57.3% y-o-y was due to substantial improvement in margins from around 5.0% to above 6.0% in the retailing segment, whilst the property management services continue to contribute stable recurring earnings at steady growth of around 4% per annum to
AEON. For q-o-q, AEON’s PBT declined of 23.7% was within our expectation. The rate of decline was actually the lowest in the past four financial years.

o Better Outlook as consumer spendings are expected to pick up further. We anticipate that AEON’s revenue would experience a great surge as consumer spendings are expected to swell as domestic economy recovers. A full swing contributions from stores that opened in the previous year as well as in the first half of this year are expected to boost AEON’s revenue for FY10 and beyond.

o BUY with new target price RM6.60 – We have upgraded our forecast of FY10 AEON’s earnings per share to 55.0 sen from 42.4sen previously. By pegging our estimated industry PER of 12x for AEON, we derive our target price at RM6.60. BUY target price to RM6.60 which offers a 32% upside potential from current price. Key downside risks
include: i)substantial margin deterioration in the next three quarters and ii) sudden deterioration in domestic economy.

Market Outlook as at May 24, 2010

Our FBM-KLCI opened with a sharp drop to hit an intra-day low of 1264 at 9.50 am. That was surprising given the positive close for US & European markets. Looking at Chart 1, we can see that DJIA had a fairly successful 'Test of the Low' which failed to make a new low & closed with a gain of 125 points. While FTSE did make a new low, it closed with an bullish hammer as well as a bullish divergence in the RSI. See Chart 2.


Chart 1: DJIA's daily chart as at May 21, 2010 (Source: Stockcharts.com)


Chart 2: FTSE's daily chart as at May 21, 2010 (Source: Stockcharts.com)

This morning, SSEC broke above its medium-term downtrend line ('RR') at 2600. It may test the horizontal resistance at 2900 or the 50-day SMA line at 2947. See Chart 3.


Chart 3: SSEC's daily chart as at May 21, 2010 (Source: Stockcharts.com)

HSI has also rebounded off its strong horizontal support of 19400. If it can surpass the psychological 20000 level, it may test the horizontal resistance at 21000. See Chart 4.


Chart 4: HSI's daily chart as at May 21, 2010 (Source: Stockcharts.com)

Based on the above technical outlook, I believe the global equity markets could be in for a decent rebound over the few days. The big question is whether the worst is over or has it just begun.

Padini ...May10

It plans to spend about RM7.55 million on existing and new stores by year-end.

This year our major projects include a flagship Vincci store in Fahrenheit 88 Kuala Lumpur where customers will be able to get bags, shoes and accessories in-store, and a new 15,880-sq ft Brands Outlet store in Sunway Pyramid. The company was also undertaking renovations in its Bandar Utama 2 and Pavilion Padini Concept Store (PCS) outlets. At present, the company has 20 PCS outlets and is also eyeing East Malaysia and regional markets for expansion opportunities.

Sales from PCS outlets contributed about 40% of total group turnover in 2009.

The next level would to bring the company regional and to have more market recognition in Asean countries including Thailand, the Philippines and Brunei, with 23 outlets in Saudi Arabia and nine in the United Arab Emirates (UAE).

The export market contributed about 10% of total revenue, which was RM128.4 million in the second quarter ended Feb 25, 2010.

Most of Padini's expansion plans were funded by internally generated funds.

MPHB reported an encouraging results

Results Update

MPHB has just announced its results for QE31/3/2010. Its net profit increased by 51.5% y-o-y to RM68.2 million on the back of a 19.4%-increase in turnover to RM993 million. Compared to the immediate preceding quarter (QE31/12/2009), its net profit dropped by 40.3% while turnover increased by 13.4%. The q-o-q decline in net profit is attributable to gains on disposal of quoted securities of RM45 million previously as compared to a gain of RM3 million in QE31/3/2010.


Table 1: MPHB's last 8 quarterly results


Chart 1: MPHB's 16 quarterly results

Valuation

MPHB (closed at RM1.98 last Friday) is now trading at a PER of 8 times (based on annualized EPS of 6.3 sen recorded for QE31/3/2010). At that multiple, MPHB is deemed very attractive. Assuming a PER of 12 times, MPHB's fair value is about RM3.02.

Technical Outlook

MPHB has broken below its uptrend line at RM2.00 last Friday. A quick recovery is crucial, failing which the stock could drift lower.


Chart 2: MPHB's weekly chart as at May 17, 2010 (Source: Tradesignum)

Conclusion

Based on strong financial performance & attractive valuation, MPHB could be a good stock for long-term investment. However, its short-term outlook is clouded by the breakdown of its uptrend line at RM2.00.