The Star Online: Business
The Star Online: Business |
- Alliance Research maintains "Overweight" on glove sector
- KLCI opens 3.17 points lower
- Asian shares track Wall St lower as Fed meeting looms
| Alliance Research maintains "Overweight" on glove sector Posted: 16 Jun 2013 07:02 PM PDT KUALA LUMPUR: Alliance Research is maintaining its "Overweight" call on the glove sector, with Hartalega and Kossan being its top picks. Alliance reiterated its "Buy" rating on Hartalega with a target price of RM6.80 as well as "Buy" on Kossan with a target price of RM4.85. "We like Hartalega as a medium to long term investment (one to three years), as we are convinced that it will emerge as the industry's game-changer in two years' time, once its NGC plants kick start in August 2014," it said. Alliance added over the short term of 12 months, it continued to favour Kossan although its share price has already outperformed over the past six months. "We believe that Kossan is still trading at an attractive valuation, less than 10 times price P/E for financial year 2014, as it moves up its value chain and improve its profitability," it said. Alliance added it retained its "Neutral" call on Top Glove with a target price of RM5.90 and Supermax at RM2.04 as it believes the strong nitrile migration wave could put both companies in a less favourable position such as margin compression, as both companies have less than 40% nitrile glove capacity currently. "To recap, we upgraded the glove sector from "Neutral" to "overweight" on Dec 3, 2012, as we foresee the latex cost to stabilise between RM5.50 petr kg to RM6.50 per kg due to weak global demand, strong US dollar against the ringgit in the run up to the 13th General Election and improving supply and demand dynamics. "Since then, the sector appreciated by 17.4%, outperforming the FBM KLCI by 7.8 percentage points. Among our top picks, Kossan and Hartalega outperformed both Top Glove and Supermax, generating a handsome profit of 31.9% and 33.1% respectively since Dec 3, 2012," it said. Moving forward, Alliance said it anticipates global glove demand to stabilise with 10% to 15% growth on-year in the second half of 2013 after a strong 15% on-year growth in the first half due to global influenza trend which had peaked in the first quarter. "Based on the latest indicators from World Health Organization, the global influenza trend, particularly in the high-glove-consumption countries such as US and EU, has already eased in 2QCY13. While we do not rule out the possibility of virus mutation that could result in viruses such as H7N9 turning into a global pandemic going forward, we opt to be conservative by assuming structural demand growth, which is skewing towards nitrile glove segment," it said. |
| Posted: 16 Jun 2013 06:22 PM PDT KUALA LUMPUR: The FBM KLCI inched lower on Monday from its 19.3 point gain on Friday, spurred by the weaker Asian equities and losses from Genting-related stocks and Tenaga. At 9.07am, the KLCI was down 3.17 points to 1,759. Turnover was 62.11 million valued at RM23.087mil. There were 87 gainers, 76 losers and 123 unchanged. HwangDBS Vickers Research said Wall Street ended in the red last Friday. Leading US equity indices were down between 0.6% and 0.7% at the closing bell amid renewed concerns of a premature withdrawal of monetary stimulus by the Federal Reserve. "The negative vibes may spill over to Asian equities today. Back home, the key FBM KLCI could surrender parts of its 19.3-point gain chalked up last Friday. However, from a technical perspective, we reckon the benchmark index will likely find intermediate support at the 1,750 level," it said. Reuters reported Asian shares inched lower and the dollar remained defensive on Monday as investors settled in to wait for the US Federal Reserve meeting outcome later in the week - and some long-awaited clarity on its intentions for monetary stimulus. It said Wall Street fell on Friday for its third negative week in four as investors took profits, and the dollar posted its worst week in almost four years against the yen as data showed the US economic recovery still lacked strength to warrant an imminent change in the Fed's current accommodative policy. At Bursa Malaysia, blue chips were among the losers, with Genting Plantations down 21 sen to RM9.19, Genting Bhd eight sen to RM10.42, Tenaga nine sen to RM8.20, MISC five sen to RM5.03 and HL Cap five sen to RM6.95. Among gainers, Sunway rose four sen to RM3.65, UMW four sen to RM14.58, United Plantations 10 sen to RM 28.80 and Armada three sen to RM3.79. |
| Asian shares track Wall St lower as Fed meeting looms Posted: 16 Jun 2013 05:58 PM PDT TOKYO: Asian shares inched lower and the dollar remained defensive on Monday as investors settled in to wait for the US Federal Reserve meeting outcome later in the week - and some long-awaited clarity on its intentions for monetary stimulus. Wall Street fell on Friday for its third negative week in four as investors took profits, and the dollar posted its worst week in almost four years against the yen as data showed the US economic recovery still lacked strength to warrant an imminent change in the Fed's current accommodative policy. Still, investors were likely to remain wary ahead of the Fed policy meeting over Tuesday and Wednesday, where the central bank may conceivably taper its massive bond-buying program as long as the economy is showing some improvement. "We expect the (Fed) chairman to reiterate that conditional on the outlook and sustainability of the recovery, the committee could reduce the pace of purchases in the coming months," Barclays Capital said in a research note. "That said, we expect he will balance this by saying monetary policy will remain accommodative and (stimulus) will be withdrawn only at a measured pace, signaling that the Fed is in no hurry to shrink the balance sheet or raise rates," Barclays added. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.2% after advancing 1.6% on Friday for its best daily gain since January 2, but ending the week down 1.3% after tumbling to its lowest since September on Thursday. South Korean shares opened little changed, hovering near a recent seven-month low. Australian shares opened up 0.9% after rebounding 2%t for their biggest one-day gain in 18 months on Friday. "Everyone will be keen on what the Fed says," said Kim Hyoung-ryoul, a market analyst at Kyobo Securities in Seoul. "There is no doubt that the market is cheap at current levels below 1,900 points...but appetite to buy is not very strong for now." Tokyo's benchmark Nikkei stock average opened down 0.8% after closing up 1.9% on Friday. The latest sell-off in the Nikkei, sparked after the Bank of Japan took no action to quell highly volatile domestic bond market last week, erased the gains made since the central bank's big-bang stimulus unveiled on April 4, which had helped propel the index up to a 5-1/2-year high last month. The dollar was up 0.3% at 94.32, sticking near a 10-week low of 93.75 yen hit on Thursday, leaving it down about 9% from last month's 4-1/2-year peak of 103.74 yen. The dollar ended last week down 3.4% for its biggest weekly loss since July 2009. The dollar index measured against a basket of six major currencies, was down 0.1%, hovering just above a four-month low of 80.50 hit on Thursday. The euro was at 125.96 yen, also near an eight-week low of 125.345 yen touched on Thursday. Against the dollar, it was steady at $1.3352. Data on Friday showed May industrial output was unchanged, below a 0.2% forecast rise, while Thomson Reuters and University of Michigan index of U.S. consumer sentiment unexpectedly fell from a near six-year high in early June. The US economy may not be picking up much steam but it was also not facing deflationary pressure, with the producer price index up 0.5% last month, above a 0.1% gain forecast. US crude futures were down 0.2% at $97.68 a barrel. |
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