Construction stocks, GCorp, LCL, AirAsia

Written by Joyce Goh
Tuesday, 15 September 2009 07:34

KUALA LUMPUR: Regional markets should be on a firmer note on Tuesday, Sept 15 as sentiment is shored up by Wall Street's overnight gains following more merger activity.

Meanwhile, AmResearch again raised its fair value for FBM KLCI to 1,350 based on 2010’s price-to-earnings of 16.5 times, or one standard deviation above the mean of 14.5 times. It sees the rally has still more legs to continue.

On Wall Street, stocks rose as reports of more merger activity added to a string of recent deals, suggesting investors still see value in the market after its run-up of more than 50% since March, according to Reuters.

The Dow Jones industrial average rose 0.22% at 9,626.80. The Standard & Poor's 500 Index was up 0.63%at 1,049.34. The Nasdaq Composite Index advanced 0.52% at 2,091.78.

Stocks to watch include CONSTRUCTION [] companies, GCorp, LCL and AirAsia.

Syarikat Prasarana Negara Bhd's announcement that it is budgeting between RM6 and RM7 billion to extend the light rail transit (LRT) lines in operation should stir interest in construction companies.

Scomi Group and the YTL Group are reported to be eyeing part of the mechanical and electrical works. As for the civil works, they include UEM BUILDERS BHD [], IJM Corp Bhd, MALAYSIAN RESOURCES CORP [] Bhd, YTL and Loh & Loh Construction Bhd.

Meanwhile, AmResearch said based operating track record, IJM Corp Bhd and GAMUDA BHD [] are frontrunners for the LRT jobs.

GENERAL CORPORATION BHD [] saw its Singaporean subsidiary Low Keng Huat (Singapore) Ltd raking in the numbers recently. The 52%-owned subsidiary saw its net profit for the 2Q ended July 31, 2009, jumping 247% to S$20.4 million.

The better data was mainly due to increases to higher construction profit, higher development profit from joint venture companies and higher investment profit offset by lower profit from hotels.

Interior fit-out services provider LCL Corp could see shareholding changes ahead as it finalises discussion for a strategic partnership with a listed Malaysian construction company to help fund its Abu Dhabi projects.

Group managing director Datuk Low Chin Meng did not rule out the possibility of its partner taking up a stake in LCL. "All these are possible. We won't deny it. Put it this way, it will go in stages," he said.

AirAsia shares are suspended in the morning session for its announcement on the bookbuilding exercise. It saw several blocks of shares traded off-market on Monday.

BAT has come under some selling after AmResearch said the tobacco industry was unlikely to get a reprieve from a hike in excise duty this year when the Budget 2010 proposals are tabled in Parliament on Oct 23