JAKS Should Follow Suit.........

Now that the mother-ship KPS has bounced up by 23 sen to RM2.09 on such a bad market day, what do you think will happen to JAKS, the lady-in-waiting?

Let us do a brief recap of JAKS. There was only three times that it touched or break the 90 sen level. On 24th April, it shot to an intra-day high of 91.5 sen. On 23rd April, it moved higher intra-day to 94.5 sen. Then on 26 July, with a poor market in tow, it turned in a solid performance to touch 90 sen again.

We all know JAKS in a favourite syndicate play counter. But we won't touch that, so says MC Hammer.

Let us revisit the strengths of JAKS.

• JAKS is the only pipe manufacturer in Malaysia that has the inbuilt capability to manufacture big diameter pipes. They have built 2 inch diameter pipe and technically, they do not have any problem tweaking the machine to produce 3 inch diameter pipes if there is demand for it. The Pahang-Selangor Water Transfer Project would require such big diameter pipes. One up for JAKS.

• JAKS's purchase of Empire Deluxe Sdn. Bhd would add to the range of products it can now offer. Through this company, JAKS will supply seamless steel pipe fittings to the oil and gas industry in USA and Canada.

• JAKS is also an experienced sub-contractor for water-works projects. The SPLASH reservoir in Selangor was constructed by JAKS and it supplied and laid all the pipes too. It has now put up similar proposals to be involved in managing water resources to the Melaka and Kedah water authorities. A response is awaited.

• All states have to do pipe replacement projects in the 9MP which allocated RM16 billion ringgit to this alone. JAKS is poised to get some of the parcels along with the other Malaysian pipe manufacturers.

• There is a legal suit between JAKS and the Selangor State government as a result of the privatisation of waterworks to Puncak Niaga. Here, JAKS wants its fair share of pipe supplies to the state's projects. This civil suit could be a bargaining block for JAKS to obtain piping contacts from Selangor if it drop the suit in deference to new project offers.

• JAKS is the cheapest pipe-play stock on the Bursa compared to Hiap Teck (RM2.21), YL!(RM3.20),Choo Bee (RM2.40) and Engtex(RM1.77)
  

Today, most counter were forced to retreat and JAKS is no exception. The Dow has done serious damage to Asian markets. It is still trading in the red today (Friday US time) and might extend its negative influence on Asian markets on Monday. We hope the damage will be minimal.

Looking at the trading pattern of JAKS today, buying up was glaringly visible. From the opening bell, it moved up in spite of going down to 81.5 sen at one point. Big blocks of shares above 1,000 lots were done mostly at the 83 sen-84.5 sen band. It is only in the remaining 45 minutes of the day that the price of JAKS went down to 82.5 sen on selective bargain hunting. Some 9.7 million shares changed hands and JAKS lost 4 sen.

The possible scenarios on Monday.

• The news of the pre-qualification of the Pahang-Selangor Water Transfer Project will hit the new-stand tomorrow and if Wall Street experienced tolerable losses tonight, all water contractor and pipe manufacturing counters will leap up as experienced by oil and gas counters on Wednesday and Thursday.

• The continual fear of the Dow will stifle trading and the effects of the pre- qualification will be ignored. Except for situational counters, others will continue to fall across the board but losses will be capped.

• The NCER launching could be heralded by the concerted action of Khazanah, EPF, the Pension Funds and their allies to push up the CI and set the market back on track. If that be so, JAKS should spring out of the box once again and leap beyond 90 sen.

Heartsong