Plastic makers surge on CIMB Research upgrade

KUALA LUMPUR: Shares of plastic products manufacturers surged in early trade on Tuesday, Jan 26 after CIMB Equities Research said it is bullish long term on the plastic flexible packaging (PFP) sector and recommend an Overweight on the sector.

At 9.26am, the FBM KLCI was down 1.21 points to 1,295.58 despite the firmer close on Wall Street. Turnover was 118.18 million shares valued at RM79.54 million. There were 160 gainers, 88 losers and 144 stocks unchanged.

Hwang DBS Vickers Research, said it is market outlook, that it expects share prices on the Malaysian bourse to display a sense of stability on Tuesday after coming under pressures for the past two days.

The FBM KLCI – which plunged as low as 1,292.76 yesterday – will probably want to regain its footing ahead although the key market barometer may not be ready to surpass the psychological level of 1,300 yet.

Over on Wall Street, major U.S. equity indices – up between 0.2% and 0.5% at the closing bell last night – halted a three-day losing streak. This could provide an air of relief for investors across the region when trading resumes this morning.

“Meanwhile, sentiment on EON Capital shares could be influenced (in both ways) by news reports saying that its board of directors viewed the offer by Hong Leong Bank to acquire its assets and liabilities for RM4.9 billion cash (which works out to be RM7.10 per EON Capital share) as too low,” it said.

Plastic manufacturers Tomypak jumped 38 sen to RM2.66 and Daibochi 32 sen higher at RM3.18 while Bright Packaging gained 13.5 sen to 47.5 sen and Advanced Packing added 11 sen to RM1.01 after the sector was upgraded by CIMB Research.

CIMB Research said that after struggling for much of the past decade, the industry went through a major turnaround in 2009 and should continue to pack in the growth this year.

"We are starting coverage on the country’s two largest PFP producers, Daibochi and Tomypak with an Outperform recommendation for both stocks given the likelihood of further re-rating of the stocks,” it said.

Profit taking saw PPB slipping 26 sen to RM16.50 and KL Kepong shed four sen to RM16.60.Top Glove lost 10 sen to RM11.56 and Supermax shed four sen to RM5.58.