Resorts Frenzy Buying is Over!

Observing this morning rush hour traffic (9.00-9.20 am), it looks the play is now on Genting. It went up 20 sen to RM8.55 and Genting-CD which was left behind yesterday took centre stage today to up a sen to 0.04 sen. Those who pun the counter at 2.5 sen and possibly at 0.3 sen can exit with joy.

Resorts shot up to RM4.60 but slided down equally fast to RM4.54 for an 8 sen gain. Will it hold at this level? Hard to tell. I surmised the Treasury buy is peaking. They could be bargaining the price down for another push up perhaps this afternoon. Buying is dynamic, with its peaks and troughs. I expect it to settle down at RM4.60 for a 14 sen gain, at best.

KPS has gone up to RM.189 for a 6 sen gain on good volume. Highest done was RM1.91. Elsewhere, Welli is still looking at corals or Neptune, down another 3 sen to RM1.27. JAKS is half a sen better at 83 sen.

We are now in the witching hour. What is on the other side?

Heartsong

Market Seems to be Developing Breadth

The last two days trading pattern shows early promise of a greater breadth for the market. Or is it just an illusion occasioned by the Resorts buy-back exercise. We cannot tell for sure since fund managers have jumped into the fray as well.

Cap Ayam predicts today's market. I append with some paraphrasing:

Malaysia shares tipped to trade in the 1371-1388 range tomorrow after failing to breach the all-time high 1391.57. KLCI ends down 0.83 points at 1381.53 in heavy volume on profit taking from intra-day high 1389.20 despite healthy buying interest in blue chips and index-linked stocks. Market breadth is positive with gainers leading decliners 494 to 427. The surge in China stocks, despite the imposition of higher interest rates, helped to lift regional markets with positive spill over effect onto our market. The ringgit's strength was an added catalyst for foreign funds," says dealer. USD/MYR was trading late at 3.4050 vs 3.4140 Friday.

So it is range trading that we can expect. If it is so, then we can say today will be more a bargain hunters' market and fund managers would not be in active participation. So let us watch the market as it unfolds. Meanwhile you can look at Kate Beckinsale in the above photo.

Heartsong

THE TALIWORKS-CIMB-STANDARD CHARTERED-EPF CONNEXION

TALIWORKS Corp Bhd (Taliworks) has gone into toll road operations by buying a controlling stake of 55 per cent stake in Cerah Sama Sdn Bhd (CSSB) the operator of the Cheras-Kajang highway. CSSB owns and operates the Cheras-Kajang highway through Grand Saga Sdn Bhd, which holds the concession right up to 2027. It will pay out RM55.5 million for this stake.

Taliworks, a water and waste-related specialist has formed a strategic partnership with South East Asian Strategic Assets Fund (SEASAF) - which will separately buy 35 per cent of CSSB for RM35.3 million - to pursue investments in toll road concessions, both in Malaysia as well as in the Southeast Asian region. SEASAF is a fund that is jointly sponsored by the CIMB Group and Standard Bank plc, and co-sponsored by the Employees Provident Fund.

Taliworks and SEASAF will collectively own 90 per cent in CSSB, which will be their vehicle for toll road investments.

Taliworks has been on the look-out for viable infrastructure projects to generate recurring income, while continuing to grow the water-related businesses. This new venture will elevate Taliworks into a next phase of growth and will position the company to be a full-fledged and formidable infrastructure player in the region.

Taliworks would sell RM225 million of convertible bonds to raise funds for its expansion. Goldman Sachs will take up RM180 million of the bonds, while the rest will be placed out to other investors.

The proceeds from the bonds will be utilised by Taliworks to look into potential investments abroad in water and waste-related infrastructure projects particularly in China and Middle East. The company envisaged overseas businesses will account for half of the group's revenue over the next three to five years from the less than five per cent currently.

Besides paying RM55.5 million for the CSSB stake, Taliworks has also committed up to RM52.2 million to help the former reduce its bank borrowings. The proposals are expected to be completed in the final quarter of 2007.

CSSB made a net profit of RM54 million for the 11 months ended May 31 2006.

The new shareholders intend to list CSSB after it has build up a sizeable portfolio of investments. The may list CSSB in about 7 years time or even earlier. They have not decided on which stock exchange to list it.

Heartsong

A Chop-Suey Finish

Well it was one choppy trading day, I can tell you. Some effects possibly from the sharp downturn on Wall Street last Friday. The Chinese markets, however, rallied in spite of the Chinese government's measures at monetary tightening.

CI closed at 1381.53 points, down hardly a point (0.83). Some talk about foreigners selling blue chips particularly Tenaga to offset holding riskier assets. According to Phillip Capital Management, these short term fluctuations are a regular feature of the marketplace. No undue concern. Start to worry, though, if the US$ stage a rebound and investors take their money out of equities. Right now, ringgit is firming against the US$, so no immediate worry.

Sime Darby, Golden Hope and Guthrie rose on the potential of the new combined entity to save RM500 million in costs. Elsewhere Resorts World continue its share buy-back operation setting a record breaking run to touch RM4.52 before settling down at RM4.46 for a 24 sen gain. Genting also sprang into action, gaining 25 sen after breaking a 6 day retreat.

Market talk is that Resorts is buying shares because Genting's stake in Resorts will dip below 50 on the impending conversion of a convertible bond. According to Citigroup Inc, "Resorts will continue to buy back its shares and possibly cancel them to help bring Genting's stake above 50% again." Plausible and possible.

Let us see how high Resorts shares will go as the Treasury operations continue, assuming it still has a long way to go.

Now let us look at how the market perform up close. Good share volume today. 1.65 billion shares changed hands. Value worth 2.67 billion. Gainers stood at 507 while losers were at 434. Leading the gainers were UMW, LPF, Shell and Sime Darby. The losers comprises IOIProp, DIGI, Tanjong and Tenaga.

The portfolio:

Resorts came off best to end at RM4.46 adding 24 sen on the largest volume of 648 million shares done on Bursa today.

Genting added 25 sen on a rebound. It ended at RM8.35 on a volume of 154,615 million shares.

KPS finally got over the RM1.80 resistance level and finished 9 sen better at RM1.83 on a volume of 86 million shares.

BJ Sports Toto found new buying interest to add 10 sen to RM5.10 on a volume of 11.2 million shares.

AMDB closed unchanged at 0. 395 sen.

Welli continued free-falling to RM1.30 for a loss of 6 sen on a volume of 10 million shares.

RCE lost 2 sen to RM1.03 on a volume of 55 million shares.

Metronics lost half a sen to 22.5 sen on a volume of 18.3 million shares

JAKS lost a sen to 82.5 sen on a volume of 48.2 million shares.

Taliworks lost 3 sen to RM2.13 on a volume of 14.7 million shares.

My thoughts for tomorrow.

• Marginal rise for Resorts and Genting if Treasury buy-in becomes less aggresive.

• The beginning of the water-play if there is follow through on KPS buying-ins.

• Possible Welli (WMC) play if the collectors have collected enough.

Heartsong

A Good Follow-Through Finish

So, what do you know?

Market went into positive territory as Quasimodo rang the bell.

CI finished up 2.8 points to 1385.10 and gainers outdid losers 428 to 417. Volume of shares was 8.1 million while value of stocks done was 1.1 billion ringgits.

So let us see how the portfolio ended up.

Resorts did splendidly with a gain of 22 sen to RM4.44 on a volume of 34 million shares. Genting was so much better today as it moved up healthily to RM8.35, adding 25 sen. Another 35 sen and it will be back to RM8.70, its price before it was shot down. KPS sprang wings and took flight and is now sitting on the price level of RM1.80. Hope it stays there this time while we wait for the water-play to begin... JAKS was 0.5 sen better at 84sen. Looks like it is ready to leap to 90 sen soon. Metronic and AMDB are at its overnight level while Welli is now scuba diving at RM1.33; losing 3 sen in the process. Taliworks is not performing well after the last corporate news of the SILK Highway takeover. It slumped 9 sen to RM2.07.

So let us watch the afternoon session and see whether magic is in the air.

Heartsong

KPS-MORPHING INTO THE SULTAN OF WATER

According to Rachael Kam of THE STAR, a German-based chemical company has bought a stake in local water treatment company, Chemindus Sdn Bhd.

Sud-Chemie AG, a listed company in Germany, has not only acquired a 55% stake in Chemindus but it has also bought the company’s technology for the manufacture of specialties coagulants which are used in water treatment plants. Hydrovest Sdn Bhd, a subsidiary of Kumpulan Perangsang Selangor Bhd owns 25% of Chemindus Sdn Bhd while founder and Managing Director Tan Swee Hua now holds the balance of 20%.

Established in 1992, Chemindus produces aluminium-based coagulants and supplies the water treatment chemicals to the local market and those abroad. The company’s laboratory is equipped with high-tech analytical equipment. Chemindus’s vision is to be the leader in water treatment technology. Its chemicals are versatile and good to remove water impurities. It is setting its eyes currently on the rapidly growing market for potable water and industrial effluents treatment in South-East Asia.

For Sud-Chemie AG, buying into Chemindus has given it access to a promising market for water treatment chemicals in Malaysia, and this represents a part of the ongoing expansion of its water treatment business in South-East Asia.

Tan, foresees good prospects for Chemindus because Sud-Chemie would bring in innovative technology and operational techniques as well as provide high-tech water treatment solutions. The enlarged entity, resources and various technologies from Germany would allow the company to expand to areas that it is not involved in currently. Chemindus aims to grow at a fast pace to become South-East Asia's biggest water treatment supplier in three to five years.

Water treatment and wastewater management will remain the core business of Chemindus. Its polyaluminium chloride-based coagulants have captured a market share of over 50% locally. Following the increase in water consumption, the demand for new water treatment chemicals is also rising.

Chemindus is poised to grab a bigger market share. Tan said the market for treated potable water supply in the region would continue to grow, because in certain countries, treated water supply is still limited. Secondly, the demand for premium quality treated water supply will continue to grow.

Tan informed that the company intends to build another plant by year-end and Selangor would be ideal if the State Economic Development Corp has available land bank for the plant. Other sites under consideration are in Penang, Perak or Johor.

A graduate of the University of Malaya, Tan started the business together with his former lecturer, Professor Dr Chan Chee Yan, who is Chemindus technical advisor. From a rented factory lot in 1992, the company now owns eight lots with a total built-up area of 40,000 sq ft. The plant has recently doubled its monthly production to 4,000 tonnes. Its products are exported to Indonesia, Thailand, Japan and South Africa. Currently, exports contribute a substantial amount to the company's revenue.

“With the new partner and expanded capacity, we will export to more countries and will set up operations in strategic countries in the region within the next few years,” he said.

Another feather in the cap of KPS. Looks like KPS is really targetting sultan status in the country’s water resource industry and perhaps beyond….

Syabas!

Heartsong

Good Day for Gamblers

Market shrugged off any overseas influence to trade marginally lower at the opening bell. It closed down 0.37 points to 1381.99. Volume was low as we move into the midst of the witching hour. Some 6 million shares changed hands. Value was 827 million ringgits. Losers beat gainers at 426 to 352. About half a million shares traded were Resorts World and Resorts-CB.

Gainers included BSDProp, UMW, Tongher and DIGI while losers were IOIProp, Lion Diversified, SunCity and Tanjong. Mostly property stocks.

Except for Resorts and Genting, most portfolio stocks receded into negative territory. Welli took top spot by bungee jumping another 6 sen to RM1.30. JAKS slided 2 sen to 83 sen while RCE lost 3 sen to RM1.03. Staying at their overnight levels were KPS, BJ Sports Toto, AMDB and Metronics. Taliworks lost 5 sen to RM2.11.

Meanwhile, Resorts World added 22 sen to RM4.44 while Genting added 25 sen after falling the last 5 trading days on suspected price suppression.

The market appears to be resilient at this unearthly hour. If it can pace itself through the next hour, it should solidify a base for an afternoon run to put the CI in positive territory.

Heartsong