Pre-Chinese New Year Rally

Just for fun, I computed 15 years of KLCI movement around CNY period (40 days before and after CNY) since so many people have been talking about pre-CNY rally. How true is it? Enjoy the graph below!

Surprisingly, my findings showed that on average KLCI performance rose 5% during the 40 days before CNY and spiked up to 8% after CNY (Base count from 40 days before CNY). Though this rally is not fundamentally driven, perspective of the investors anticipating a pre-CNY rally does make an impact on the market movement. Though there were some years where KLCI performed badly during CNY, this year is different, backed by improving market sentiment, economic recovery etc etc. In the meantime, let's just ride on the rising tide yah!!

Happy trading!!

PS: Mudajaya and Supermax flight was just exhilarating. Both breached more than RM5.00 (Though Mudajaya fell back to RM4.90 level currently). Anyway, will wait for RM6.00 to sell.

RM1.85b tag for EONCap (RM6.58) stake

Singaporean Rin Kei Mei and Tan Sri Tiong Hiew King, who collectively hold a 32.57 per cent of EONCap, are willing to sell to Hong Leong Bank, says a BNP analystTwo major shareholders of EON Capital Bhd (EONCap) (5266) are willing to sell their shares to Hong Leong Bank Bhd (HLB) at RM8.20 a share, according to an analyst from BNP Paribas.

That price would be a premium of almost 25 per cent over EONCap's last closing price of RM6.58 on Thursday, giving the group a total value of RM5.68 billion. Singaporean Rin Kei Mei and Tan Sri Tiong Hiew King hold a collective 32.57 per cent of EONCap and the two are willing to sell, BNP analyst Ng Wee Siang said in a note reported by Reuters.

At RM8.20 apiece, HLB would pay about RM1.85 billion for that block. HLB could then push for EONCap to sell its assets, to kickstart a merger between the two banking groups. An asset sale would only require the approval of shareholders with a simple majority of 50 per cent plus one share, Ng said. Ng thinks that other big shareholders like the Employees Provident Fund and Khazanah Nasional Bhd, who hold another 20.7 per cent collectively, are likely to support the deal as their entry investment cost was below RM6 a share.

BNP has raised its target price for EONCap to RM8.30 as it thinks that the takeover of the group would be done at that price. On Thursday, HLB, currently the sixth biggest in terms of assets, received Bank Negara Malaysia's approval to start talks with "certain shareholders" of EONCap, which is ranked seventh.

"(The talks are) for a potential acquisition of the assets and liabilities, including equity interests in EONCap," HLB said in a statement to Bursa Malaysia yesterday. A combination of HLB and EONCap would create a group with total assets of RM121.41 billion. This means that HLB would be able to leapfrog RHB Capital Bhd, currently fourth biggest with assets of RM110.5 billion.

Source: www.btimes.com.my

Faber (RM1.49) mulls venturing into healthcare

KUALA LUMPUR: FABER GROUP BHD is toying with the idea of venturing into the healthcare business by owning hospitals in the future to broaden its income streams, said its managing director Adnan Mohammad.

Certainly, Faber is not content with just being the concessionaire for the sanitation and laundry services to the local public hospitals. The group intends to diversify into new businesses as well as to grow its overseas revenues in the Gulf region and India, according to Adnan.

“We are looking at it (building and owning hospitals). We would like to see a lot of non-organic growth and we are not discounting M&As (mergers and acquisitions) to expand the facility management business,” Adnan told The Edge Financial Daily in an interview.

Facilities management business, including laundry and maintenance services, accounts for 84% of its revenue. Faber, which is also a property developer, holds a 15-year concession ending October 2011 to offer services to 79 government hospitals in Perlis, Kedah, Penang and Perak, and East Malaysia.

According to analysts, Faber had in October submitted its application for a renewal of the concession, and its status would only be known in October next year. Besides the government concession, Faber also has operations in the United Arab Emirates (UAE) and India. Currently, only 5% of the group’s revenue is derived from overseas.

For the nine-month period ended Sept 30, Faber recorded a lower pre-tax profit of RM74.6 million against RM81.7 million in the previous corresponding period. Revenue was also lower at RM509.2 million compared with RM518.2 million previously.

Abroad, Adnan said Faber’s track record in the UAE would serve as a springboard for it to tap into the other Gulf Cooperation Council (GCC) countries. Last month, Faber announced that it had secured an infrastructure facilities management contract from the Department of Municipal Affairs of the Western Region Municipality (WRM) in Abu Dhabi. The job with an estimated annual contract price of AED154 million (RM141.8 million) may be extended at WRM’s discretion.

A few months earlier, WRM had awarded Faber two jobs of equal value with a combined worth of RM65.6 million where the Malaysian company would offer civil, mechanical and electrical maintenance services for low-cost houses in Abu Dhabi.More jobs are on the cards for Faber in the UAE. According to Adnan, the firm is bidding for a three-year hospital facilities management job in Abu Dhabi.“It’s quite sizable,” he said without elaborating. In India, Faber has a presence in New Delhi, Hyderabad and Chennai. It is also hoping to secure more airports contracts for electrical and sewerage maintenance services.

On its property development business, Faber’s real estate operations in Malaysia are also expanding. Adnan said Faber planned to launch some RM500 million worth of PROPERTIES [] in the Klang Valley next year. These include semi-detached and bungalow units under phase four and five of its Laman Rimbunan project in Kepong, besides landed residential entities under its phase 1A (Fleet) project within the Taman Desa enclave.

The property developer, with about 37 acres of undeveloped land across the Klang Valley and Sabah, is also eyeing opportunities in Johor Bahru, and Penang. “We are not discounting the major cities, such as Penang and Johor Baru,” Adnan said, adding that the company’s focus would still be in the Klang Valley. Faber hopes to secure more joint ventures with landowners, an expansion method deemed more economical compared to land acquisitions by the developer.

Shares of Faber had gained 109% so far this year, outperforming the 45% rise on the FBM KLCI. OSK Research Sdn Bhd analyst Norfauzi Nasron foresees, better financials for Faber from FY09’s fourth quarter onwards as the company continues expanding its facilities management business abroad.

The analyst said the expected renewal of Faber’s 15-year concession with government hospitals would allow the company to propose new prices for its facilities management services, as current rates have not been reviewed despite operating expenses having risen over the last 12 years.

“We reiterate our view that it is highly unlikely for the (15-year) concession (in Malaysia) not to be renewed given the substantial investments poured into it since the concession started, and the fact that Faber has the expertise and track record in the provision of such services,” Norfauzi wrote in a note to clients last Friday.

OSK is maintaining its earnings forecast for Faber, and fair value of RM2.15 for the company’s shares. The research house also retained its buy call on the stock. Based on Faber shares’ closing price of RM1.40 last Friday, the stock was trading at a price-to-earnings ratio (PER) of 8.71 times and price-to-book ratio of 1.6 times. The industry’s average PER stands at 14.31 times.

Source: The Edge