Stocks to watch: Tenaga, Public Bank, EON Cap, Baswell

KUALA LUMPUR: Key regional markets are expected to see another turbulent day on Thursday, Jan 21 as investors’ sentiment continues to stay cautious on concerns China's curbs on bank lending might jeopardise the global economic recovery.

At Bursa Malaysia, which managed to ignore the grim external factors to close firmly above the key 1,300 level on Wednesday, could see some profit taking before more fresh positive news emerge later to sustain buying interest.

On Wall Street, U.S. stocks fell on Wednesday and the Dow suffered its worst drop of 2010 due to fears that China's curbs on bank lending might jeopardize the global economic recovery, while IBM's outlook sparked caution about the TECHNOLOGY [] sector.

Quoting banking industry sources, Reuters reported Chinese authorities have ordered some major banks to curb their lending over the rest of this month after an early burst of credit.

The Dow Jones industrial average tumbled 122.28 points, or 1.14%, to end at 10,603.15. The Standard & Poor's 500 Index fell 12.19 points, or 1.06%, to finish at 1,138.04. The Nasdaq Composite Index dropped 29.15 points, or 1.26%, to close at 2,291.25.

At Bursa Malaysia, among the stocks to watch are Tenaga Nasional, Public Bank, EON Capital and Baswell. Also on the watch list are Ho Hup CONSTRUCTION [] Company, SapuraCrest Petroleum, KYM Holdings and Leader Universal.

Tenaga Nasional expects to maintain its improved earnings in its (1QFY10) for the rest of the financial year ending Aug 31, 2010.

While its president and chief executive officer Datuk Seri Che Khalib Mohamad Noh expects the power giant to do “definitely do better this year and we did last year”, he warned of higher coal costs because of the bitter cold front crossing the Northern hemisphere.

Regular discussions are on-going over Tenaga’s request for a tariff increase despite there is no latest updates, Che Khalib said.

Meanwhile, OSK Investment Research has downgraded its recommendation for Public Bank to NEUTRAL as its share price has run ahead of its target price of RM11.80.

“The stock has performed favourably over the past few weeks in anticipation of stronger than expected 4Q09 results.

“However, more restrained future dividend payouts coupled with concerns over the need for additional capital and hence more subdued ROE growth is likely to cap Public Bank’s share price performance over the immediate to medium term,” it said.

OSK Research said this could be further weighed down by the stock’s relatively rich valuations of 3.7 times FY10 price-to-book value (PBV). " As such, we have downgraded our recommendation to NEUTRAL as its share price has run ahead of our Target price of RM11.80,” it said.

Furniture maker Baswell announced it received a subcontract deal worth US$100 million from Hong Kong-based Metroplex Resources Ltd to manufacture and install the furniture and fittings of the Al Reem Island mixed development in Abu Dhabi.

EONCap has received Bank Negara Malaysia’s nod to start talks with HONG LEONG BANK BHD [] for the potential divestment of its assets and liabilities, including EON Bank Bhd.

SAPURACREST PETROLEUM BHD [] plans to tap into the fast-growing oil and gas (O&G) industry in India, having invested US$110 million (RM369.6 million) under two joint-ventures and building two derrick lay barges that are expected to start operations in the first quarter of 2010.

Ho Hup Construction’s former managing director Datuk Low Tuck Chee is seeking details on all the accusations that the existing board has hurled at him.

KYM, whose shares have surged since the sale of its land to Vale, has proposed a private placement of up to 8.11 million new shares of 50 sen each, or 10% of its paid-up capital, for 75 sen per share.

Leader Universal’s Cambodian Transmission Ltd, has signed a 25-year build-operate-transfer (B-O-T) power transmission agreement with Cambodia's Electricite Du Combodge to develop a 230 kilvolt power transmission system costing US$107 million, from Phnom Penh to Kampong Cham.

Jewellery-maker and direct seller Zhulian Corp Bhd shone in its 4Q results ended Nov 30, 2009, reporting a 29% surge in net profit on-year due to higher overseas demand for its products.

Gunung Capital proposed a 60% reduction in the par value of its shares through the cancelling of 60 sen in the par value of each of its RM1 share, along with a renounceable rights issue with free warrants to raise up to RM27.9 million in order to finance its acquisition of GPB.