Stocks to watch: Glove makers, Xian Leng, Scomi, MAA

KUALA LUMPUR: Glove makers, which staged a rally on Tuesday, Oct 4 following upbeat reports that they would benefit from lower latex prices, could see some profit taking activities.

An unhappy Thailand, which is the world’s top rubber producer, warned that it wants to reduce output by 3.5% this year, especially after they have fallen about a third since hitting record in February, according to Reuters.

The news agency also reported Thailand would urge Indonesia and Malaysia to follow suit in a bid to prop up prices. Tokyo rubber futures plunged to a one-year low around 289 yen (US$3.8) a kg last month on growing fears about the global economy. Rubber futures traded at US$4.1 on Tuesday, off the peak of US$6.4 in February, the news agency said.

Among the stocks to watch are XIAN LENG HOLDINGS BHD [], SCOMI GROUP BHD [] and MAA HOLDINGS BHD [].

Xian Leng announced there were some possible financial irregularities relating to the capital expenditure of RM17.36 million stated in the financial statements.

It said the nature and extent of the possible irregularities could not be accurately determined at this juncture.

The company posted net loss of RM1.31 million on the back of RM3.52 million in revenue for the second quarter ended June 30, 2011. Its shares were untraded at 42 sen on Tuesday.

Malaysian Rating Corporation Bhd (MARC) has downgraded the issue rating of Scomi Group Bhd’s RM500 million medium term notes (MTN) programme to A+ from AA-.

The ratings agency also downgraded the issue rating of KMCOB Capital Bhd's RM630 million Murabahah medium term notes to A+ID(cg) from AA-ID(cg).

“The outlook on both ratings is negative. The downgrades affect RM200 million of outstanding MTNs issued by Scomi and RM480 million of outstanding Murabahah notes issued by KMCOB,” it said.

In a related development, Scomi Group said it plans to issue a new bond at KMCOB Capital Bhd following arising from the disposal of assets which had fully realised their value.

It said the bonds issuance, when completed, would significantly strengthen the balance sheet. The reduced debt and improved cash flow position would help fund new growth opportunities.

MAA could continue to see active trade Shares of MAA Holdings Bhd fell in active trade on Tuesday, Oct 4 after it was classified a Practice Note 17 company following the disposal of its insurance business.

MAA had announced on Sept 30 it was considered a PN17 company pursuant to Paragraph 2.1(g) of PN17 after it had completed the disposal of its insurance business to Zurich Insurance Company Lt for RM344 million.