Stocks to watch: HL Bank, EON Cap, Kencana, MAS, MRCB

KUALA LUMPUR: Sentiment on Bursa Malaysia is expected to perk up on Tuesday, Dec 22 after the late sell-off of selected stocks including big caps which pushed the FBM KLCI down 11 points towards the close of trade.

External news especially from the firmer overnight close on Wall Street are expected to buoy the regional markets, including Bursa Malaysia.

On Wall Street, U.S. stocks rose on Monday, Dec 21 with the Nasdaq hitting a 15-month high after a healthcare reform bill advanced in the Senate and brokerages upgraded two Dow components on improving profit prospects, according to Reuters.

Retail stocks also gained as investors were optimistic about the rest of the holiday shopping season even after a heavy snowstorm hit the East Coast over the weekend, which may have deprived retailers of profits.

The Dow Jones industrial average shot up 85.25 points, or 0.83 percent, to end at 10,414.14. The Standard & Poor's 500 Index gained 11.58 points, or 1.05 percent, to 1,114.05. The Nasdaq Composite Index rose 25.97 points, or 1.17 percent, to end at 2,237.66.

At Bursa Malaysia, stocks to watch are EON CAPITAL BHD [], Hong Leong Bank and Hong Leong Financial Group, Kencana Petroleum, MALAYSIAN AIRLINE SYSTEM BHD [] and MALAYSIAN RESOURCES CORP []oration Bhd (MRCB)

All eyes are on EON Capital’s single largest shareholder, Primus Pacific Partners Ltd, following confirmation on Monday that two other substantial shareholders of the bank are in talks with HONG LEONG BANK BHD [] (HLBB) to dispose of their stakes.

R.H. Development Corporation Sdn Bhd, Kualapura (M) Sdn Bhd and Lintang Emas have received approval from Bank Negara to commence negotiations with Hong Leong Bank Bhd for the potential equity divestment of their combined 31.67% stake.

Hong Leong Bank and HONG LEONG FINANCIAL GROUP BHD [] should see a recovery in their share prices after the late sell-off on Monday, which was unwarranted.

HLFG fell 50 sen to RM7.30 and HLBank fell 43 sen to RM7.87. EON Capital closed 30 sen higher to RM6.88 with 2.38 million shares done.

Kencana Petroleum posted slightly lower net profit of RM30.82 million in the first quarter ended Oct 31, 2009 compared with RM33.06 million a year ago.

Revenue declined 12% mainly due to progress achieved for contracts in hand, which was in line with the project delivery schedule. Profit before tax fell 5% from RM43.9 million to RM41.8 million. Earnings per share were 3.41 sen compared with 3.67 sen.

But when compared with the fourth quarter ended July 31, 2009 profit before tax rose 7.5% to RM41.8 million from RM38.9 million.
Malaysian Airline System is believed to have plans to raise at least RM1 billion from a rights issue exercise for its expansion.

MRCB is looking forward to better years ahead, given the progress of its ongoing projects and its more robust financial position.
CEO Mohamed Razeek Hussain said the group’s financial position would be stable after the completion of its rights issue in mid-February 2010 that was expected to raise between RM508 million and RM541 million.