Into Second Gear

Yes, knowing the Malaysian market, it will go up by merely pushing up primarily the plantation stocks. The very sensitive financial stocks is next followed by the industrial. Then there are those middle-of-the-road sectors like infrastructure, construction and property which is popular as they are the beneficiaries of the Malaysian government in its development plans.

This morning, Bursa performed slightly better than yesterday's debilitating show. The CI went up on double digit gains of 11.31 points to 1295.06. That is less than 5 points to cross the psychological threshold of 1300 again this year. No problem. all you need to do is push up Maybank. Gainers overtook losers 520 to 200. Volume was 576 million shares worth RM877 million. Not too bad.

Gainers were Transmile, restored by the Kuok reputation to move up 44 sen. Landmarks, the subsidiary of Genting climbed 34 sen, PPB; another Kuok vehicle jumped 25 sen whole IOICorp climbed 20 sen. Losers saw the likes of Muhibbah letting go 15 sen and DFZ another 10 sen.

The portfolio faired okay. I have now included KHSB to trail after the KPS trajectory since it will be the main vehicle to collect UMNO election funds. KHSB also has its own story to tell- a possible de-listing and so there are premiums to collect. A water development contractor, it is also the largest Selangor state-owned listed property developer with plentiful of land. Should benefit from the 2008 Budget this Friday.

Here are the stock positions.

Resorts spurted upwards to gain 14 sen to RM4.08
Genting collected 15 sen to RM7.55
BJ Sports Toto collected 2 sen to RM4.86
KHSB added 3 sen on a turnover of 55,185 lots
JAKS tacked on 2.5 sen to 92.5 sen
RCE upped 2 sen to 83 sen
Metronic rose 0.5 sen to 17.5 sen
AMDB added 0.5 sen to 42.5 sen on a turnover of 38,726 lots
Welli was unchanged at RM 1.02

The gaming stocks may be up because of the likelihood of no increase in gaming tax in the 2008 budget.

Today is Wednesday. Market is good. We have just two days to have that little bullish push towards the 2008 Budget speech. Will it happen?

My guess is there has been fore-runners like Equine and Muhibbah but the mother ship is just behind. It may just ramped up the market this afternoon. So keep your fingers crossed especially for speculative stocks like KPS, KHSB, JAKS and property and construction stocks.

Heartsong

If Only We can Be This Cheery

We can't say we are with the way Bursa did not perform. It was like a wretched creature desperately looking for air. What a dump of a bourse. Could not hold its beer, as the saying goes and went down in the afternoon. Bloody weak stomach.

Listless trading to lower-that's all I can say. The gains got chipped off as the bell rung the fading trading seconds. CI was hardly steady at 1283.75 down a minuscule 0.39 points. Gainers were smashed up by losers 464 to 372. Volume was okay at 1.1 billion shares worth RM1.6 billion. Some breadth.

Gainers were SPSetia whick racked in 35 sen,Transmile which brought in 34 sen, FarEast which tacked on 30 sen and Commerce which added 20 sen. Losers were DFZ which lost 58 sen; Muhibbah which dropped 50 sen, Digi which descended 30 sen and Petgas that got burned out by 20 sen.

Portfolio-wise saw Welli gaining 5 sen to RM 1.02; Resorts World adding 4 sen to RM3.94 on a heavy volume of 102,685,000 shares.At their overnight levels were RCE at 81 sen and Genting at RM7.40. JAKS suffered from gravity pull, losing 3.5 sen on profit-taking to 90 sen on a turnover of 82,298,000 shares while Metronic lost 0.5 sen to 17 sen. AMDB which traded on a volume of 38,616,000 shares lost a sen to 42 sen while BJ Sports Toto dropped 6 sen to RM4.84.

Reading for tomorrow-bland and boring as well.

Heartsong

Bursar Blues

That's Maria Menounos, pretty as a picture.

Bursa however, isn't a pretty picture. Without big brother Dow which is holidaying on Labour Day in the US, it slinked away and imagined that no one could see its anemic sterility. But we do.

The CI was lullabied into losing 1.89 points; closing at 1282.25. Gainers lost to loser 303 to 390 and volume shrank to 603 million shares valued at RM 796 million.

Gainers saw the likes of Transmile, back from the dead, adding 34 sen; BAT rising 25 sen; SPSetia taking in 25 sen and Ranhill striking up 20 sen. Losers were duty free pooper, DFZ losing another 58 sen; Muhibbah, giving back some 35 sen, UMW donating away 30 sen and Nanyang losing 30 sen as well.

The portfolio saw only Welli in action. It added 6 sen to RM1.03. Unchanged was RCE at 81 sen;Metronic at 17.5 sen and Genting at RM7.40 sen. AMDB fell a sen to 43 sen while JAKS lost 1.5 sen to 92 sen. BJ Sports Toto lost 4 sen to RM4.86 while Resorts gave up 2 sen to RM3.88.

I expect market to be sound asleep i n the afternoon session. There is just no respect for the 2008 Budget speech. No tabek hormat langsung............

Heartsong

The Return of Genting

OSK Investment Bank recommends Genting for your portfolio.

Why? Because at its current price of RM7.40, it is a steal.

Based on an estimated forward earnings of 41.7 sen per share and Thursday’s closing price (30 Aug 2007) of RM7.35, the stock is trading at a price-to-earnings (PE) of 17.6 times.

This PE is relatively undemanding when bench-marked against its global casino peer's PE average of 26 times to 28 times considering the group’s fast expanding global casino footprints and efforts to unlock the value of its non-core assets.

OSK expects the group's oil and gas (O&G) business grow exponentially by fiscal year ending Dec 31, 2010 (FY2010).

Following an analyst briefing by the group, OSK noted that there were promising on-going developments on Genting’s three Indonesian oil fields - Anambas, North West Natuna and West Salawati - that were currently in exploration stage.

Furthermore, 95% owned Genting Oil and Gas Ltd was anticipated to see cash flow generated from the Indonesian Muturi production sharing contract in late 2008.

When the unit sold its 45% stake in Muturi to BP Global Investments Ltd in 2001, it retained long-term rights to a deferred share of future pre-tax monthly income from the production-sharing contract.

OSK believes that the contribution from the O&G division could potentially rise by more than five folds by FY2009/2010. Genting Oil and Gas derives income from the Zhuanxi oil field in China and is currently contributing less than 2% of the group’s pre-tax profit.

Genting’s power division, on the other hand, was “deeply undervalued” given that it is the second largest earnings contributor, making up 22% of EBITDA.

Genting’s current share price only accounted the value of its gaming business; hence investors buying into Genting were getting its power assets virtually for free, adding that the power assets were estimated at RM1.22 per share.

Furthermore, given the steady cash-flow, the group is unlikely to dispose entirely its power assets.

“Instead a potential listing of its power assets may be a more viable option to unleash its hidden value,” OSK said.

Meanwhile, some might perceive Resorts World Bhd, the group’s leisure and hospitality unit, to see subdued domestic future earnings growth due to regional competition and a matured domestic “day-tripper” market segment.

However, Resorts’ first half-year double-digit growth in revenue and earnings proved that the management was successful in its strategies to drive both patronage growth and yield enhancement.

This included introducing higher level of non-casino entertainment activities such as concerts, casino renovations and cheaper hotel room packages, membership programme to drive VIP revenue and targeting higher yielding overseas customers like Middle Eastern tourists.

Resorts’ handsome cash flow, estimated at RM3.4bil by end of FY07, should come in handy when acquisition opportunities arise.

OSK noted that the management indicated that Resorts should not be confined solely to its domestic operations and Genting group would mobilise excess resources to help spearhead its global and regional casino growth aspirations.

The brokerage expects more opportunities to come as many casino and non-casino companies that took up excessive leverage during the ultra low interest rate environment four to six years ago to buy major casinos may now be under pressure to de-leverage given the higher rates.

This is especially so for casino property acquisitions by non-casino companies, which may be plagued with rising interest costs and highly leveragedunder managed casino properties.

Resorts with its cash rich balance sheet and the robust free cash flow generation is well positioned to capitalise on such opportunities.

A best scenario perspective for both Genting and Resorts. Believe half of it and you are in the money.

By the next 6 to 12 months, you will see Genting and Resorts back on their feet leading the Bursa.

Heartsong

Haze and Daze Trading Day

Afternoon profit-taking brought the CI down to 1284.14, effectively adding 10.21 points. General mood is buying for those who are anticipating the goodies coming from the Friday Budget speech. So the bargain hunters succeeded in bringing down some blue chips on the 100 company roll-call. Gainers thumped losers 585 to 277. Number of shares was a little short of a billion at 999 million shares worth 1.7 billion ringgits.

The gainers were Muhibbah with a mammoth gain of RM1.10 gain while Equine Capital stormed home with 67 sen. DNP added 40 sen and SPSetia got a similar amount. Losers were duty-free player DFZ, tobacco king BAT, cell-phone operator DIGI and property developer E&O. They lost between 16 to 54 sen.

Back to our shadow portfolio. Some good action by Resorts World adding 10 sen to RM3.90 while Genting tacked on 5 sen to RM7.40. AMDB added 2 sen to 43 sen on a volume of 80 million shares. RCE put on a sen to 81 sen. Metronic was quite hot today moving up half a sen to 17.5 sen. Welli remained unchanged at 97 sen but BJ Sports Toto tumbled 8 sen to RM4.90 after paying out 7.5 % dividend.

I believe the market is on the potentially on the starting block for a bull run and the smart alecs are collecting ahead of the September 7th Budget speech. Most of these buyers will be political parties and their financiers.

Last chance for them because elections is coming on April 2008.

Heartsong

Alas ! It's No Punter's Market This Day

So the plantation and the financial stocks locked hands and push up the index. There was a little support from property and construction stocks ahead of the Friday Budget speech which many are hoping for goodies for the property market perhaps in the reduction of stamp duties. Then there is the possibility of a tax rebate for REITS.

Other than that, today's market is no punter's market. Shares are rumbaing from side to side and if you are not careful you will be holding these hot potatoes and having to pay for them when T+3 is over. The water stocks have totally disappeared in terms of support though JAKS continue to be in a secondary volume leader position outside of the radar. KHSB is also losing its support and the momentum for KPS has dissipated.

CI started quite well, went down a wee bit and finished off at 1288.03 for a 14.10 points rise. So looks like there is a possibility that the big boys may attempt a 13 point push to get the CI to go beyond 1300 by Budget Speech Day. Volume was about average at 531 million shares valued at 829 million ringgits. Gainers, expectedly led losers 507 to 215.

The gainers were TENAGA upping 45 sen, Muhibbah topping up 40 sen, DNP pushing up 36 sen and KLK gaining 30 sen. The political Equine also saw action adding 33 sen. Losers were DFZ which erase 50 sen, Lion Div which reduced its share price by 30 sen while shockingly AHPlant lost 24 sen. Another surprise was property stock E&O which gave up 13 sen.

The portfolio saw action on Genting which up 10 sen, AMDB which gained 1.5 sen, JAKS adding a sen to 94.5 sen and Metronic springing to life adding 0.5 sen to 17.5 sen. Welli also added half a sen to 97.5 sen and so did RCE to 80.5 sen. BJ Sports Toto lost 2 sen to RM4.96 while Resorts added 6 sen to RM3.86. I believe the gaming twins, Resorts & Genting are about ready to take over the Bursa leadership in a matter of time.

This market will be in the doldrums in the afternoon. There is a possibility of a sell-down of those stocks that moved up last week. There is also the other possibility that syndicates may punt up AMDB and JAKS before the Budget speech.

Meanwhile, let us look at the painting of The Lady of Shallot and enjoy the state of serenity she is in.

Heartsong

Turning Point: 6th September 2007

This is Chap Ayam's prediction for 6th September 2007. Interestingly, it is also a day before PM's 2008 Budget Speech.

Based on Fibonacci Time Projection Method, Chap Ayam has calculated a trend-change date. According to him, it will not indicate whether it will be an up-trend of a down trend; only that a trend change is likely.

I would like to hazard a guess that it will be an up-trend because Wall Street's preoccupation with sub-primes and the yen carry trade is receding from the front-line of Wall Street's attention.

Expect most active counters and blue chips to move up convincingly from tomorrow onwards up to next week. After that, it will be the profit-taking phase.

Heartsong