Bursa boards to be unified

KUALA LUMPUR: Prime Minister Datuk Seri Abdullah Ahmad Badawi yesterday announced a streamlining of Bursa Malaysia's main and second boards, as well as the structure of Mesdaq market.

He said the two boards would be combined into a unified board for more established companies with strong financial track records.

Abdullah, who is also Finance Minister, said the Mesdaq market would be revamped under the proposed streamlining process to allow smaller companies to access the equity market at an earlier stage of their lifecycle.

"The unified board will have uniform listing requirements and comprehensive disclosure based regulations with easy entry and fast removal access.

"For Mesdaq, the listing of emerging companies will be sponsor-driven whereby advisers will play a greater role in bringing listings to the market and maintain on-going supervision by reducing the number of boards and the number of listing requirements," he said in his keynote address at Invest Malaysia 2008.

Abdullah said the move would help catalyse the listing of more high quality companies in the local equities market.

The Government, he said, would be establishing a market-making framework for Bursa Malaysia.

"Market makers can include proprietary traders in commercial and investment banks as well as foreign traders to provide liquidity in the market," he said, adding that the initiative would help price discovery, promote innovation and enhance market liquidity.

"The government will offer incentives such as tax concessions and lower fees to attract financial institutions to act as market makers," he said.

Abdullah also said the government would allow the setting up of a third credit rating agency with foreign strategic partners holding up to 49% equity interest.

"We hope the domestic rating agencies will enhance their performance through better supervision and more competition," he added.

Currently Malaysia has two rating agencies: namely Rating Agency Malaysia Bhd and Malaysia Rating Corp Bhd.

Meanwhile, Abdullah also announced that the government would liberalise the bond market approval framework.



DATUK ZARINAH ANWAR

Chairman

Securities Commission (SC)



SC is still working on the rules and regulations to enable the revamp on Bursa Malaysia's Mesdaq, main and second board structure to be implemented and operational by year-end.

For (the new) Mesdaq, it will not only be for high-tech and high-growth companies, as we want more emerging companies to participate.



DATUK KRISHNAN TAN

Managing Director

IJM Corp Bhd



THE Government's poll losses will not slow down the spending on public works. Awards may peak but jobs may take two to three years to finish.

Many big construction companies already have substantial order books to provide two years of earnings. If there is a delay, it will be in order book enhancement and should not affect earnings in the immediate term.



DATUK LIM HONG THYE

Executive Director

Ann Joo Resources Bhd



THERE must be a good reason for the call to combine the main and second boards as well as revamp the Mesdaq market. Hopefully, this will lead to better efficiency, transparency and more quality stocks listed on Bursa Malaysia.



PUSHPA RAJADURAI

Executive Director

AmInvestment Bank



THE industry has been asking for disclosure-based regulation in line with other jurisdictions. We can now have a common playing field with other countries. It is a step forward.

The disclosures that corporations have to make with regards to initial public offerings (IPOs) must be comprehensive and ensure quality.

Intermediaries must ensure that is in line with Bursa Malaysia's focus on quality, complete disclosure and growth.

It is for companies with track record and need to tap the capital market.

These companies require good branding and investor relations before and after listing, as they will have to convince more investors to buy their shares.

The revamp of Mesdaq is timely and the opening up to sponsors is driven by the market and in line with what is happening in the Alternative Investment Market of the London Stock Exchange (AIM).

Mesdaq companies will have to ensure they have a growing business model and sound management. This is positive for those with a business that can compete with the technology and know-how.

For us, this will be a better year although for now, the overall market plunge has affected sentiment.

There were 40 IPOs done in 2006; 27 in 2007 and this is expected to go back up to 40 or 50 this year.

We are looking at the value chain - plantations, property, oil and gas and corridor developments.

Mergers and acquisitions will continue as people look at market capitalisation, privatisations and foreign interests.

There could be foreign buyouts of local companies.

URL: http://biz.thestar.com.my/news/story.asp?f...07&sec=business

KLCI down, dragged by Maybank

By JOSEPH CHIN

KUALA LUMPUR: The KLCI snapped its winning streak in the morning session on Thursday, dragged down by losses in Maybank, but weaker Bursa Malaysia also mirrored the losses on most Asian markets due to the weaker Wall Street.

At 12.30pm, the KLCI had fallen 5.28 points or 0.42% to 1,240.14, but off the early low of 1,230.33. The FBMEmas fell 41.49 points to 8,368.77 while the FBM Second Board eased 3.50 points to 5,804.71.

Turnover was 372.84 million shares valued at RM676.6mil. There were 240 gainers, 360 losers while 195 counters were traded unchanged.

On Wall Street, the markets closed weaker, dragged down by financial shares on concerns that bank profits would take much longer than expected to recover from the housing slump.

At the Asian markets, Shanghai's A Share Index skidded 3.79% or 143.60 points to 3,640.68, Japan's Nikkei 225 fell 119.56 points or 0.94% to 12,587.07 and Singapore's Straits Times Index lost 0.14% to 2,991.06 while South Korea's Kospi gave up 0.63% to 1,669.165. However, Hong Kong's Hang Seng Index advanced 0.41% to 22,710.35.

Light crude oil futures jumped to US$106.43 per barrel.

Crude palm oil lost RM50 to RM3,650 per tonne.

At Bursa Malaysia, sentiment was affected by selling pressure on Maybank. Maybank was the most active with 23.10 million shares done. It fell 65 sen to RM8.30, off the intra-day low of RM8. The fall in the shares shaved off 5.88 points from the 100-stock KLCI.

Maybank-CF call warrants fell 5.5 sen to 12.5 sen and Maybank-CG 1.5 sen to 5.5 sen.

Fitch Ratings said Maybank's proposed acquisition of PT Bank Internasional Indonesia for about 24.9 trillion rupiah or RM8.6bil would be beneficial in the longer term.

CIMB Equities Research said the price tag translated into 3.7 times to 4.0 times CY08-09 price/book value, which was above the two times to three times range for previous bank mergers and acquisitions in Indonesia.

However, CIMB Research believed the high valuation will be compensated by the strong growth prospects in Indonesia with it population of 224.9 million and an under-penetrated market.

"Although the valuation is on the high side, we are positive about the acquisition of BII as it will give Maybank a springboard into the high-growth Indonesian market," it said.

Other losers in the morning session were Tanjong and KL Kepong, down 50 sen each to RM16.40 and RM16.30 while United Plantations lost 30 sen to RM13. Kossan and Sarawak Oil Palms gave up 20 sen each to RM3.58 and RM5.60 respectively.

However, actively traded MRCB rose two sen to RM1.38. Penny stocks Kosmo, Liqua and Mobif rose in active trade, with Kosmo adding three sen to 18.5 sen while Liqua and Mobif gained 1.5 sen each to 22.5 sen and 24 sen respecitvely. Loss-making air cargo transporter Transmile added 25 sen to RM2.36.

Other gainers were Ranhill, up 22 sen to RM1.73 while Petra Perdana added 20 sen to RM8.65 while Gamuda's strong earnings saw its share price rising 18 sen to RM3.32.

URL: http://biz.thestar.com.my/news/story.asp?f...55&sec=business

New IPO: JF TECHNOLOGY BERHAD ("JF TECH")

---

Added on March 27, 2008, 7:48 pmMaybank falls 10.6% on concerns of RM8.6bil acquisition

By Joseph Chin

KUALA LUMPUR: Malayan Banking Bhd's share price fell as much as 10.6% or 95 sen in early trade on Thursday on some investors' concerns that it was paying a high price of RM8.6 bil for a 100% stake in PT Bank Internasional Indonesia Tbk.

It opened at RM8.40, down 55 sen. Within the first hour of trade, there were 14.81 million shares done at prices ranging from RM8 to RM8.45.

At 10am, it was trading at RM8.45, down 50 sen or 5.6%.

The KLCI fell points to 12.18 points to 1,233.24 as investors locked in gains, uninspired by the weak closing on Wall Street. US financial shares slid when concerns resurfaced that bank profits will take much longer than expected to recover from the housing slump. The Dow Jones industrial average closed down 109.74 points, or 0.88%, at 12,422.86.

On Maybank, OSK Investment Research said in a note to clients that the acquisition price was not cheap as based on the acquisition price.

"We must admit that the acquisition price is not cheap as based on the acquisition price, BII is essentially priced at 4.45 times and 61.5 times FY07 BPS and EPS, respectively, or 4.26 times and 33.0 times FY08 BPS and EPS," it said.

However, it always believed that Maybank should expand its overseas presence in order to mitigate the saturated domestic market share.

"We believe the Indonesia banking sector offers more upside in the long-run as per the ratio of total outstanding loans-to-nominal GDP. However, due to the potential near-term profitability dilution, we have lowered our fair value to RM10.80 but maintain our BUY call," it said.

On Wednesday, Maybank announced it wanted to take over Sorak Holdings Ltd, which has a 55.7% stake in PT Bank International Indonesia Tbk (BII), from Fullerton Financial Holdings and Kookmin Bank for RM4.8bil cash. It will later make a general offer for all BII shares it does not own. Starbiz reported that to some people, Maybank's move to pay RM8.6bil, or 4.6 times book value, indicated how desperately the group wanted BII, Indonesia's sixth biggest bank.

The valuation is among the highest in the industry. The offer price is about 20% above Jakarta Stock Exchange-listed (JSE) BII's market price. The book value of 4.6 times is about double the average valuation among Indonesia's publicly traded banks.

The top four banks listed on JSE are currently trading at about 3.9 times. BII's net profit has been declining since 2004. For the year ended Dec 31, 2007, the bank's net profit fell to 404.7 billion rupiah (RM142mil) from 633.7 billion rupiah (RM222.3mil) in 2006.

URL: http://biz.thestar.com.my/news/story.asp?f...20&sec=business

This post has been edited by David83: Mar 27 2008, 07:48 PM

DJIA closed the day with:

12,302.46 -120.40 -0.97%

Maybank shares hit 5-year low

PETALING JAYA: Malayan Banking Bhd's (Maybank) successful bid for PT Bank Internasional Indonesia Tbk (BII) does not seem to have gone down well with the investing public as the stock fell to its lowest level in almost five years.

While analysts and fund managers concurred that the acquisition was the right move for cultivating long-term growth, some investors were more concerned about the short-term pain Maybank might have to bear.

Maybank shares was down 55 sen, or 6.1%, to RM8.40 - the lowest since July 2003. The counter dipped to an intra-day low of RM8, with 42 million shares changing hands.

BII shares, however, rocketed to seven-year high of 470 rupiah on the Jakarta Stock Exchange yesterday amid expectation that Maybank would soon make a tender offer of around 510 rupiah per share for the remaining 44.3% that it does not own in the Indonesian bank.

The strong selling came after a few foreign stockbrokers downgraded the banking blue chip to "sell" following Maybank's announcement of the RM8.6bil deal to buy BII at price-to-book value of 4.6 times.

Maybank intends to take over Sorak Holdings Ltd, which owns a 55.7% stake in BII from Fullerton Financial Holdings and Kookmin Bank for RM4.8bil cash. It will later make a general offer for all BII shares it does not own.

South Korea-based Kookmin Bank, however, has yet to decide on the sale of its 25% equity interest in Sorak to Maybank, according to Bloomberg.

Apart from the high price that Maybank was paying for BII, analysts were also concerned the acquisition might sap the group's financial resources to maintain its dividend payment.

A Maybank spokesman said: "The bank would keep to a minimum dividend policy of 60%, subject to Bank Negara approval, we intend to maintain dividends per share. Whatever that was paid in terms of quantum last year will be maintained.''

In terms of capital repayment, the spokesman said: "We have informed shareholders to give two years until the end of financial year 2008 if there are no acquisitions, then we can look into capital repayment. But now we have found good use for the money through a long-term acquisition in Indonesia."

Said Merrill Lynch analyst Loo Kar Weng: "This deal dashes the hope of Maybank returning excess capital to shareholders in the form of dividends. That was one of the key attractions of the stock.

"Furthermore, even its normal annual dividends may be affected as its earnings get diluted from the cost of the acquisition," he wrote in a research note.

Dividends had been the factor making Maybank shares appealing to investors when the earnings growth of the country's biggest bank was getting less exciting compared with its peers, such as Bumiputra-Commerce Holdings Bhd and Public Bank Bhd, which are enjoying contribution from investments abroad.

The concerns over the possibility of less generous dividend payment and expectation of no immediate contribution from its Indonesia operations gave no solid reason for investors to hold onto Maybank shares, a dealer said.

Investors could always buy the shares later when the acquisition in Indonesia started to yield fruit, he added.

Citi Investment Research analyst Stephan Hasjim in Indonesia said having Maybank as a new shareholder was good news for BII as it could add significant value and strengthen the bank's franchise.

However, he noted that it would take a few years for BII to achieve the industry average of 18% return on equity given the growing competition, the bank's high cost base and Indonesia's rising inflation.

At a press conference on Wednesday, Maybank acting chief executive officer Datuk Aminuddin Md Desa said BII would only start contributing to the group's profit in the third year after the acquisition.

He defended the high price was for a "scarcity premium" and the great potential of the sizeable consumer loan market.

"Some may balk at the hefty price target for BII but we see this investment as one that would enhance Maybank's earnings profile and provide sustainable growth over the long term," said AmResearch, which maintains its "buy" recommendation on the stock.

It said BII would provide Maybank with the platform to tap onto Indonesia's banking industry with "limited execution risks".

URL: http://biz.thestar.com.my/news/story.asp?f...00&sec=business

Mild fund buying lifts KLCI off early low

KUALA LUMPUR: The market opened lower in early trade on Friday, weighed down by the overnight losses on Wall Street, but some buying of blue chips including MISC, IJM and Maybank lifted the KLCI off its early lows.

At 10am, the KLCI was just down 0.24 point to 1,253.79, off the opening low of 1,247.10. Turnover was 197 million shares valued at RM272.60mil. There were 172 gainers, 188 losers and 138 counters unchanged.

Among Asian markets, Japan's Nikkei 225 fell 0.06% to 12,597.50, Singapore';s Straits Times Index lost 0.03% to 3,024.15 while Shanghai's A Share Index eased 0.13% to 3,574.21. However, Hong Kong's Hang Seng Index opened 0.41% higher at 22,756.42.

On Wall Street, the Dow Jones industrial average fell 120.40 points, or 0.97%, to end at 12,302.46.

In the United States, corporate profits fell 3.3% in the fourth quarter of 2007, according to government data. The Commerce Department said the economy grew at an annual rate of just 0.6% in the fourth quarter, unchanged from a previous estimate and down sharply from 4.9% in the third quarter.

At Bursa Malaysia, Maybank, which hit a five-year low of RM8.40 Thursday, rose 10 sen to RM8.50. MISC and the foreign shares rose 40 sen each to RM9.40 and RM9.50 respectively, while IJM added 15 sen to RM6. Public Bank gained 10 sen to RM10.80.

Ewein, which was listed Friday, jumped 24.5 sen to 94.5 sen. The Penang-based company makes tools, dies and parts for electrical and electronics equipment.

The warrants of Wah Seong, which were listed Friday, surged 30 sen to 30.5 sen but the shares eased three sen to RM2.06.

SP Setia was unchanged at RM3.68 off the early high of RM3.74. Analysts said the first quarter earnings for the period ended Jan 31, 2008 of RM49mil was broadly in line with their recently lowered profit numbers.

"Although it came in at 18% of our full-year forecast as well as consensus estimates, it was not a surprise as 1Q is typically the weakest quarter and the shortfall should be covered in the remaining quarters," said CIMB Equities Research.

Gula Perak rose 0.5 sen to 11.5 sen and it was the most active counter with 14.77 million shares done. Stocks on the move included Berjaya Corp, up seven sen to RM1.17 and Berjaya Corp-LC added six sen to 66.5 sen.

The major losers were IOI Prop, sliding 70 sen to RM11.10 but with only 1,000 shares done. BCHB and Shell fell 20 sen each to RM10.10 and RM10.90. Also down 20 sen was DiGi to RM24.20. Telekom gave up 10 sen tp RM10.70.

URL: http://biz.thestar.com.my/news/story.asp?f...33&sec=business

New IPO: HARTALEGA HOLDINGS BERHAD ("HHB")

DJIA closed the day with:

12,216.40 -86.06 -0.70%

Maybank doesn't need to raise funds

By KATHY FONG

PETALING JAYA: Malayan Banking Bhd (Maybank) does not need to raise money to finance the proposed RM8.6bil cash acquisition of Indonesia's PT Bank Internasional Indonesia Tbk (BII).

However, in the longer term, the group would explore various fund-raising options, including the issuance of new shares, to implement an active capital management policy post-acquisition, a Maybank spokesman said yesterday.

"We have cash and liquid assets of RM34bil. That's sufficient to pay for BII and Vietnam's Ann Binh Bank (RM430mil cash).

"There is a possibility that we may opt to raise equity funds to maintain our capital adequacy ratio but not for the acquisitions," the spokesman told StarBiz.

Maybank's top management had told an analysts' briefing on Thursday that the group was looking at several options to raise funds. They included equity, innovative and non-innovative tier-1 capital, and subordinated debt.

The remarks led analysts to believe that Maybank may want to raise equity funds and, as a result, bring in a new strategic shareholder to help finance the mega deal, which would allow the group to gain a foothold in Indonesia.

The Maybank spokesman, however, said there was no such intention.

Nonetheless, analysts say regardless of Maybank's reasons for raising money, it is undeniable it would have to find fresh funds as a result of the BII deal.

"The company hinted that the BII deal would be partly financed by equity,'' CIMB Equity Research said in a report issued after the briefing. "This will not be in the form of a rights issue but new shares issued to foreign strategic shareholders."

The stockbroker said Maybank had ample capacity to raise additional capital, including RM2.5bil in innovative tier-1 capital, RM7bil in non-innovative tier-1 capital and RM4bil in subordinated debts.

RHB Research expects Maybank to have the capacity to raise RM9.5bil in hybrid tier-1 capital.

To maintain a comfortable tier-1 capital of 8%, Citi Equity Investment said the "best option" would be to raise equity capital.

It estimated that Maybank would need to issue equity funds of RM3.6bil should the group opt to tap the equity market. "This could require an estimated 8% increase in issued capital," it added.

CIMB Equity Research said Maybank's goodwill would soar to RM6.45bil after the acquisition.

The purchase would reduce Maybank's core capital to 6.3% from 9.7% and the capital adequacy ratio (CAR) to 10.4% from 13.9% since goodwill would be deducted from the group's total capital in the calculation of CAR. "Hence, the group needs to issue new capital in the form of tier-1 hybrid capital or subordinated debt to raise the CAR to 11% to 12%," the research house said.

URL: http://biz.thestar.com.my/news/story.asp?f...50&sec=business

New IPO:

DAYANG ENTERPRISE HOLDINGS BERHAD ("DEHB")

Firmer start for KLCI in Q2

KUALA LUMPUR: The Malaysian market got off to a firmer start for the second quarter on Tuesday, on some buying of banking stocks but plantations including Sime Darby and IOI Corp fell, tracking the overnight losses in soyabeans.

At 10am, the KLCI was up 3.02 points to 1,250.54. Turnover was 104.16 million shares valued at RM150.8mil. There were 164 gainers, 126 losers and 154 counters unchanged.

Major Asian indices were higher in early trade. Japan's Nikkei 225 rose 172 points or 1.38% to 12,697.99; Singapore's Straits Times Index added 0.91% to 3,034.82. Hong Kong's Hang Seng Index opened 1.03% higher at 23,084.93. However, Shanghai's A Share Index points fell 1.39% to 3,592.49.

In the United States, Wall Street closed higher on stronger-than-expected Midwestern business activity which eased worries about the economy while a plan for regulatory overhaul raised hopes for calmer financial markets. The Dow Jones Industrial Average closed 46.49 points, or 0.38% higher, to end at 12,262.89.

At Bursa Malaysia, BCHB rose 35 sen to RM10.30, Public Bank added 20 sen to RM10.70 while AMMB gained 12 sen to RM3.56. Hap Seng Consolidated jumped 23 sen to RM2.66 on its strong set of earnings while KNM extended its gains, rising 15 sen to RM5.40.

However, plantation stocks fell after soyabeans fell the maximum allowed by the Chicago Board of Trade after the US government said farmer would boost planting by 18%. Soyabeans for May delivery fell the 70 US cents maximum or 5.5% to US$11.97 (RM38.18) a bushel.

Sime Darby fell 20 sen to RM9.15, dragging the KLCI by 2.22 points, while IOI Cap also lost 20 sen to RM6.90, which pulled the KLCI down by 2.27 points. KL Kepong and Asiatic fell 20 sen each to RM16 and RM8.20 respectively.

URL: http://biz.thestar.com.my/news/story.asp?f...23&sec=business

Media Prima declares 9 sen per share special dividend

By Joseph Chin

KUALA LUMPUR: Media Prima Bhd declared a special dividend of nine sen per share totalling RM56.40mil arising from the net proceeds from the sale of a piece of leasehold land with a six-storey building.

It told Bursa Malaysia Tuesday its wholly-owned subsidiary Sistem Televisyen Malaysia Bhd had completed the disposal of the property to Zetro Services Sdn Bhd for RM60mil.

"Following the completion of the proposed disposal and in line with the company's on-going initiative to enhance shareholder value, the board of directors of Media Prima has decided to distribute the net proceeds of the disposal less cost amounting to RM56.4mil arising as a special dividend to the shareholders," it said.

The ex-date for the special dividend is Arpil 15 and the entitlement date is April 17.

URL: http://biz.thestar.com.my/news/story.asp?f...35&sec=business

Asian markets rally, KLCI gives up some gains

By JOSEPH CHIN

KUALA LUMPUR: Asian markets powered ahead in the morning session on Wednesday, with Hong Kong and Japan's key indices recording more than 4% gains, lifted by the strong overnight performance on Wall Street but the KLCI gave up some gains.

At 12.30pm, the KLCI was just up 2.55 points or only 0.2% to 1,252.96, off the early low of 1,264.75. The FBM Emas added 20.53 points to 8,465.69 while the FBM Second Board edged up 0.35 of a point to 5,860.

Hong Kong's Hang Seng Index jumped 1,017.29 points or 4.4% to 24,154.75; Japan's Nikkei 225 surged 4.02% to 13,165.15 while Singapore's Straits Times Index added 2.62% to 3,126.51. Shanghai's A Share Index rose 3.79% to 3,625.24.

The surge in the Asian equities was driven by investors' hopes that the credit crunch could finally be over. The strong demand for Lehman Brothers Holdings Inc's share offering quelled fears it was headed toward a fate similar to Bear Stearns. It raised US$4bil (RM12.76bil) of capital in an offering of convertible preferred shares.

Light crude oil was trading at US$101.37 (about RM324) per barrel.

Crude palm oil futures recovered from Tuesday's fall to advance RM113 to RM3,292 for the third-month contract.

At Bursa, Maybank fell five sen to RM8.40; Tenaga and Telekom were unchanged at RM7.50 and RM10.70 respectively.

Banking stocks like Public Bank and EON Capital were among the major gainers. Public Bank and its foreign shares rose 20 sen each to RM10.90 and RM11.30 while EON Capital and Hong Leong Finance rose 12 sen each to RM4.94 and RM4.68 respectively.

BAT rose 25 sen to RM42.75; Tanjong and KNM aded 20 sen each to RM16.70 and RM5.70. Transmile added 18 sen to RM2.28 despite the absence of fresh strong corporate news.

Al-Aqar KPJ REITS saw 15 million units or 3.6% stake done at RM14.55mil or 97 sen each. Its share price rose one sen to 98 sen.

EB Capital lost 19 sen to end the morning session at 16 sen, but off the initial low of 9.5 sen ahead of the suspension of trading in the securities.

Quill Capital skidded 28 sen to 18.9% to RM1.20 while DiGi fell 20 sen to RM24.20. Down 10 sen each were Sime Darby and BToto to RM9.05 and RM5.10 respectively. Kulim and its warrants WB fell RM7.35 and RM5 respectively.

URL: http://biz.thestar.com.my/news/story.asp?f...26&sec=business