Posted: 07 Sep 2012 04:47 PM PDT
WCT Bhd's shares had fallen slightly in tandem with the sharp two-day slump on the local bourse recently, but recovered to close 9 sen higher to RM2.63 yesterday.
On Thursday, the construction and property development group had proposed a bonus issue on the basis of three bonus shares for every 20 existing 50-sen shares, and one warrant D for every five shares held on the entitlement date. Many research analysts were positive about the corporate proposals, and maintained their "buy" calls on the stock.
HwangDBS Vickers Research points out that this is not an exercise to raise capital but more to increase trading liquidity and reward shareholders.
The research house says it does not expect any significant earnings dilution given the long tenure of the warrants but based on an extreme scenario of full conversion of the warrants, there may be a 20% dilution to financial year 2013 forecast earnings. "In terms of our sum-of-the-parts, assuming the exercise price is fixed at RM2.25/share, the dilution is around 8%."
Meanwhile, OSK Research deems the corporate proposals as a move that may boost trading sentiment on WCT's shares over the immediate term. It notes that WCT has a order book of RM3.7bil with more contracts likely to be awarded before year-end. "There are potential growth catalysts from the KLIA2 Integrated Complex, which is scheduled to commence operations by March next year."
HwangDBS Vickers's target price for WCT's stock is RM3.75 while OSK Research's fair value for it is RM3.36 or RM2.92 ex-bonus issue.
● The comments above do not represent a recommendation to buy or sell.
Posted: 07 Sep 2012 04:43 PM PDT
REVIEW: Over the week, the FBM KLCI saw strong selling pressure which resulted in a sharp 36-point slump over a two-day period, after Tuesday's market performance when the local bourse had an all-time high close of 1,654.11 points.
Yesterday, the local bourse staged a slight recovery to close at 1,624.55 points.
In explaining the sharp two-day decline on the FBM KLCI compared with other regional markets, Hwang Investment Management Bhd equities head Gan Eng Peng says there was strong selling pressure from foreign funds while local institutional fund activities were unusually quiet.
"Traditionally, our market tends to see a lot more government fund participation, which would have tempered the market decline for the week," Gan told StarBizWeek.
He points out that evidence of participation by local institutional funds should have been seen nearer to market closing in the latter part of the week, where buying activities tend to be the strongest, but this is not apparent this week.
Gan adds that the market was dragged down by a Standard and Poor's (S&P) report on Wednesday that said the ratings agency may lower Malaysia's sovereign credit rating if the Government cannot deliver reform measures to reduce fiscal deficits and increase the country's growth prospects.
"While the points are valid in the longer term, we think foreign funds are overreacting to the noise in the near term as
sovereign rating changes tend to have small impact on our market as a lot of the issues are already well known," says Gan.
Inter-Pacific Research head Pong Teng Siew said the local bourse has been on the verge of a pullback after hitting new highs, "as our technical indicators showed we are right in the midst of a confluence of toppish conditions in the market".
OUTLOOK: Next week, the local bourse is likely to be firmer as investors digest the S&P rating issue properly, coupled with the potential return of government fund activity, says Gan.
"For the longer term, we believe KLCI's performance will not veer too far from around 5% on both the upside and downside for the rest of the year since as it has been faring well year-to-date and it has gone up a fair bit," he adds.
The local bourse's limited downside is due to the support from the local institutional investors' funds, while its upside is capped by the fact that the top liners have mostly rallied and there is not much catalyst to propel it in a big way in the next three months.
"We see more opportunities for stock picking play in the second liners and mid and small-caps stocks as they are playing catch up with the blue chip stocks' performance," says Gan.
He also points out that Malaysia is seen as a defensive market, and any selling pressure will likely be limited and the downside will be around 5% between now to end of the year due to the buying support from local institutional investors.
"They have been raising their cash levels by selling their positions in the recent months. That gives them ample ammunition, which can readily be deployed to support the market when there is a selling pressure."
Meanwhile, concerning external environment factors, Pong points out that markets will be reacting to the decision of the German Constitutional Court on Sept 12, when it is due to rule on legal disputes about the planned 500-billion-euro European Stability Mechanism bailout fund.
"That will be the big hurdle for the eurozone next week," says Pong.
However, Gan says the eurozone crisis was beginning to have a benign effect on the local bourse, and even globally, as markets are an effective pricing mechanism.
"Old news are priced in and they move on to new catalysts. Only new risks and surprises can drive markets down and up."
Gan adds. He notes that external factors such as the eurozone crisis, economic softness in the United States and growth slowdown in China do affect the local bourse, although "their impact on us would not be as severe compared with our regional peers".
According to Gan, the outcome of the country's anticipated general election will not have much impact the local bourse much, as the election risk is a known and well-absorbed risk.
"Even the upcoming Budget 2013 announcement will have a muted effect, as the local bourse has already rallied."
However, Gan says a sustained deterioration in Malaysia's budget deficit without concrete measures to address it can result in a gradual outflow of foreign funds from the country's bond market, which may create a vicious cycle of the ringgit weakening and affect the local bourse's performance.
"This is the key new risk we are monitoring," he says.
Posted: 07 Sep 2012 04:42 PM PDT
THE Public Relations Consultants Association of Malaysia (PRCA) is on a membership drive to strengthen the industry and to address the talent crunch issue.
"We want to see exponential growth in members, for sure. We would like to see even students becoming our members," acting president Joycelyn Lee tells StarBizWeek.
PRCA, formed in 1999, has 88 individual members and about 20 corporate members, made up of international and local agencies.
At present, it does not have any student members and its corporate members are all PR agencies.
It wants to diversify its membership base, attracting students and companies which are "not strictly" PR firms.
"We definitely have to open it up because there are students who want to know what PR is all about," she says, adding that PRCA is looking at reaching out to more institutions of higher learning to give students "a practitioner's perspective" before they enter working life.
The PRCA executive committee members have worked closely with IACT College in Petaling Jaya. She says the association is now talking with "one or two" other private institutions of higher learning to have programmes where students get the benefits of learning about the PR industry from practitioners.
She says that if universities want to talk to PRCA about things like syllabus, it is "more than happy to do so."
She also notes that students can send their internship applications to PR agencies via the PRCA website (prcamalaysia.org).
Lee says while PRCA hopes to attract more talent into the industry, it wants to see people who are passionate about communications, not people who just took mass communications in universities because they thought it was easy.
"And we also don't want people to think that the industry is limited just to mass comm graduates. As long as you have the facility for language and are passionate about the idea of communicating, the creative and PR industries should be something to look at," she says.
PRCA wants to attract more corporate members which are not strictly PR agencies, but Lee says it has never had any application from them.
The association wants to offer the in-house PR practitioners an opportunity to engage with external ones.
Currently, the percentage of members who are in-house PR practitioners is "not very high", she says. "It goes back to us not raising our profile enough, but we would like to see more members from in-house and corporates."
PRCA plans to roll out several programmes, including one-day workshops for new practitioners (practising under one year).
"Some of them are not from communications background. And while others have studied communications, real life is different from theory," she says, adding that their teachers will be veteran practitioners.
The first of these twice-a-year workshops will be in early December.
PRCA has also just reintroduced its members' night this week after a lapse of more than seven years.
The members' night allows members to exchange views and insights.
"I hope this (the members' night on Wednesday) will be the first of a number of members' nights," she says.
"Profile-wise, we have been relatively low. Now it's time for us to step up our profile. We hope agencies will come and talk to us about their challenges, and two, if we raise our profile, we will get more talent who are interested in joining the PR industry."
Lee hopes that raising PRCA's profile would lead to more people at the AGM early next year who want to do something for the industry.
"We are mostly consultants with a day job, so we hope to have more volunteers among the industry practitioners to pass on learnings."
PRCA, which organises an annual PR awards night (Malaysia Public Relations Awards), also plans to hold half-day pre-submission workshops so agencies can learn how best to highlight their submissions.
This year it had its first Malaysian PR Summit in March where regional heads of agencies such as Hill & Knowlton and Burson-Marsteller. It attracted more participants than expected, she says.
"We hope to do this once every two years," she says.
She says PRCA likes to see more cooperation and collaboration.
"These things that we're rolling out will hopefully help us add more punch to the industry in terms of growth," she says.
On whether it is possible to partner the Institute of Public Relations Malaysia (IPRM), Lee says if IPRM wanted to collaborate with PRCA, the latter would be "happy" to come to the table to discuss it.
To the question of whether the PR practitioners should be accredited to ensure that they have a certain level of skills, she replies: "I think the industry should be self-regulating. In Malaysia, in some ways PR is still very much a growth industry. Eventually some level of accreditation by an association should be looked at, but at this point, who will set the ground rules?
"We do not want to set up barriers to entry. If someone is accredited, is he practically licensed to practise? And who gives the accreditation? It is an area that the PRCA is willing to discuss further; we are very open to discussing any idea that will strengthen the PR industry. What we are not willing to do is to have barriers to entry amid the talent crunch. While we want to have good talent, we don't want to set up such barriers."
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