Doldrum Trading Day

After a night of fun, you get up with a hang-over. Today is that hang-over day. The Composite Index is hardly up, adding 4.5 points to 1,376.79.

Let us look at the tracked stocks. I have decided not to track POS Malaysia because of the Transmile imbroglio which wis such an albatross around the neck of this stock reducing its upside even with the capital pay-back of RM1.50. My guess is POS will definitely dump its 15% stake in Transmile the first chance it gets to protect its investment value before more worms should come out of Transmile. It closed at RM4.2o.

BJ Toto went up to RM5.05 today for an 13 sen gain. Volume was huge at 7.6 million shares. KPS continued its ascent to RM1.65 for a 2 sen gain. It did touch an intra-day high of RM1.70. Meanwhile RCE lost 0.5 sen to 99.5 sen.Resorts was good,adding 12 sen to RM3.44. Genting was flat at RM7.95 and JAKS was a sen lower at 78.5. Good price to stabilise at since it has been moving non-stop from the 60 sen level. A likely ''shadow'' KPS in the making? Yes, and much, much more as it moves overseas as an oil and gas player. Metronic was flat at 38.5 sen but with good volume.

A so so day at the stocks. Hopefully tomorrow will see the market lifting itself from its stupor and lethargy .

Heartsong

JAKS and the Water Transfer Project

With the impending tender of the Langat 2 project in the second half of 2007, besides KPS which will benefit in terms of engineering design and project implementation, the other company could well be JAKS Resources.

The tunnel will be undertaken by Japanese engineering firms and contractors since a soft loan from Japan will be used to finance this project. However, the project will require three meter diameter sized pipes to siphon water into the tunnel in the Main Range on the Pahang side and after exiting the tunnel, the water needs to be transported by pipes to the Langat 2 Scheme in Selangor. Right now, there is no company in Malaysia which is producing such pipes due to the lack of demand.

However, if there is a project that requires such pipes, JAKS is poised to supply them. All it need to do is to modify its production machinery and voila! you get the pipes. JAKS has in fact supplied steel pipes up to 2 meters before to SPLASH. JAKS's steel pipes are coated on the outside with cement, fiber-glass tissue and bitumen on the outside to prevent rust.

JAKS is not only a supplier of pipes. It is also a sub-contractor for water work projects. SPLASH's reservoir was actually constructed by JAKS and they laid all the pipes there as well. As such JAKS intends to bid for sub-contractor works under the Langat 2 project. It is also involved in a water project proposal in Kedah and Malacca.

On top of that, it is venturing into the oil and gas sector with its buying over of a company, Empire Deluxe Sdn. Bhd. that will be supplying seamless steel pipe fittings to markets in Canada and the U.S.

JAKS's share prices moved up vigorously all morning and settled down finally to close at 79.5 sen up 4 sen from last Friday's close of 75.5 sen. The intra-day high was 83 sen. The lowest price this year was 47.5 sen on 22 March 2007 and the highest;94.5 sen on 23 April 2007.

As a company, JAKS made RM 2.632 million in 2006 but as a group, the losses amounted to RM5.98 million.

I believe JAKS is a good company to buy on a longer term because of the water and oil play. I will recommend a buy at any price below 70 sen when the market pulls back.

Heartsong

Metronic's Delayed Transfer to the Main Board

By the looks of it, the transfer of Metronic-Global (MGB) to the main board will be delayed further as it may not be completed by the end of July which was originally the target period. The Securities Commission (SC) has approved all the modifications and variations sought.

• The transfer can now be implemented any time before 13 August 2007

• Listing and quotation for 12,250,000 new ordinary shares has been approved.

The SC's approval will be subject to the condition that HWANG DBS Investment Bank and MGB submit to the SC an undertaking to complete the placement of the remaining 7,500,000 MGB Shares by 17 August 2007, as proposed.

So, until all these new measures are undertaken, there will very unlikely be any vigorous market action on this counter until after July 2007.

Heartsong

Great Day at the Bursa

Well, what do you know? Today is about one of the best market days in months. It had direction and it had strength all day. Index touched a good high of 1,372.28 for a 11.6 points gain. Gainers led losers. IOICorp put on 40 sen;Ranhill 37 sen and SP Setia; 35 sen. Losers were BAT, KNM and LCL.

Tracked stocks faired generally well today. KPS performed splendidly putting on 12 sen to RM1.63 after touching an intra-day high of RM1.65. RCE finished off best at RM1.00 ad BJ Toto added 14 sen to RM4.92. Resorts World came out of its cocoon to notched up 8 sen to RM3.32. Metronic added 1/2 sen. POS, however, lost 4 sen.

A good counter to watch from now on is JAKS Resources, the pipe manufacturer which may feature well with the Pahang Water Transfer Project since they produced pipes of almost the right size for the project. It went up to 85.5 sen on an intra-day high before finishing off at 79.5 sen. I hope to track JAKS and blog it soon.

A good trading day for many.

Heartsong

Hopefully this is a Good Day

Market ended the morning session with a 9.3 points gain to push the index to 1,369.93 points. Gainers outpaced losers. Market leaders were Ranhill, Tanjong and DIGI and losers included BAT, KNM and RCI.

Of the tracked stocks, there was much interest in RCE which went up 6.5 sen to RM1.03 on a trading volume of 12.25 million shares and KPS which garnered 5 sen to RM1.56 on a trading volume of 8 million shares.. Genting was off 5 sen but Metronic added a sen to 39 sen and BJ Toto; 2 sen to RM4.80.

Heartsong

KPS-No Pretender, Solid Global Utilities Player

KPS's AGM yesterday was a real eye opener.

Rumours have somehow become potential news and there's more in the offing.

There is no further doubt. KPS is the Selangor State government's vehicle to take on the Langat 2 water scheme project. It has been involved in this project since 1999 and to date had spent some RM5 million on preliminary and feasibility studies on it. Chairman Karim Munisar explained that KPS is a GLC with the expertise and financial clout to undertake this project and it is putting all efforts to get the project. Langat 2 which will cost RM2.5 billion to develop, is a treatment and storage facility for raw water that will be transferred from Pahang. The tender will open in the second half of 2007.

KPS controls Konsortium Abass, a teated water supplier as well as holds a 30% stake in SPLASH, the holder for the Sg. Selangor Phase 1 and 3 concession. Moreover, KPS aslo has a 20% stake in Taliworks, a sub-contractor to water concessionaires including that of Langkawi.

Prospect-wise, KPS is looking seriously to be involved abroad through its strategic alliance partners. It's first foray is the likely RM150 million independent power producing project and a RM600 million toll road in Sumatra. This will be followed by a water project in China. To top it up, KPS is actively talking to some states on mining projects.

For the year ended December 31,2006, KPS posted a pre-tax profit of RM28.3 million compared to a pre-tax loss of RM123 million in 2005. A dividend of 4% minus 27% tax will be paid to shareholders.

So it looks like the phoenix is certainly rising up in KPS. Let us see this state-level GLC operate benchmarked against Khazanah as well as global standards and performance criteria.

Viva KPS!

Heartsong

RCE-The Direct Indirect Beneficiary

I liked the two articles featured in the Bizweek Section of THE STAR today. One is by Jose Barrock and the other by K.M. Lee.

Good angle-as the civil servant start spending real money in August, RCE will definitely be guffawing all the way to its parent bank for the next few years. True, it may face competition in places where you will find Court Mammoth stores. However, if Courts allow financing from RCE, it will certainly be a boon for both.

RCE's mainstay at the moment is playing chettiar (money lender) to government servants, the majority of whom are Malays. Together with bank credit, credit cards and the regular tontin funds, Malay civil servants may see their new salary hike as a magic gateway to new mobile phones, LCD televisions, notebooks and the whole smorgasboard of house-hold white goods. Itchy fingers can do wonders! Personal loans will help as well.

According to research house, Aseambanker, RCE's loans have dramatically grown in the last few years since 2002. As of March 2007, total loans forked out was RM500 million compared to the paltry amount of RM70 million in 2002. Furthermore, Aseambanker is of the opinion that since the regulated personal loan and consumption credit market amounts to something like RM25 billion, the opportunity for RCE to grow its market share and loans book are stupendous. The driving factor of the pay-hike will no doubt underpin RCE's revenue and profit profile in the ensuing years.

The Technical Analysis provided by K.K. Lee is worthwhile looking at. The past months had seen RCE climbing steeply on good momentum buying. RCE shares have gone into unknown territory touching RM1.01 on an intra day high before closing at 96.5 sen on Friday. The major outbreak for RCE was 52 sen in February. According the Lee, he believes there are more investors getting on board with longer term holders prevailing over punters and speculators. For now, better profits on the longer haul is much preferred to short-term gains. This is his take.

Technically, a short term buy signal triggered the Thursday's buying and all signs point to a bullish price stance. He expects the price to move to RM1.20 in the short term with the next upside projection to RM1.40-RM1.50 band. For downside, initial support will be 95 sen and the next support level would be 90 sen.

Since RCE closed only 2.5 sen up on Friday, expect RCE to go up next week possibly to touch RM1.00 and beyond (just like what Toy Story's Buzz's battle cry). And that is... if global markets perform as usual without glitches.

To end, let's give three cheers to the happy and extravagant government servants for they make stockholders of RCE happy too.

Heartsong