Oct 28th - Stocks to watch DRB-Hicom, Konsortium, HSL, breweries, tobacco, property, infrastructure

by **Cals** Sat 26 Oct 2013, 20:44

Stocks to watch DRB-Hicom, Konsortium, HSL, breweries, tobacco, property, infrastructure

Business & Markets 2013

Written by Surin Murugiah of theedgemalaysia.com

Saturday, 26 October 2013 12:07

KUALA LUMPUR (Oct 26): The FBM KLCI could trend higher cautiously nest week as the market is expected to react modestly to the proposals in Budget 2014 tabled last Friday.
MIDF Research in a note Friday said that overall, it expects modest market reaction to Budget 2014.
“In our opinion, while revolutionary, the budget provides no material surprises that may spur further trading interest in the equity market.
“Having said that, we expect the market undertone to continue buoyant as the liquidity situation is expected to remain accommodative at least in the near term,” it said.
Meanwhile, Affin IB vice president and head of retail research Dr Nazri Khan said that going forward, he expects the local market to trend higher and possibly hit a new-record-high (beyond 1826.22 level) on a fiscally prudent Budget 2014, rising foreign inflows and significantly improved global sentiment (USA market regains all-time-high while MSCI All World & FTSE All World at fresh five year record high).
He said the local equity markets were slightly overextended (FBMKLCI gains 63 points or 3.5% in four straight weeks) but rising funds inflow (based on improved average daily trades to 1.6 billion shares worth RM1.8 billion), will offset and extend local gains in the near term.
Nazri said he expects bullish reversal action helped by a round of quick positioning immediately after Budget 2014 and bullish-year-end seasonalities.
“Seasonally speaking, October-November has always been set for fund houses (that were underweight equities) to buy into market dips so as to avoid underperforming market benchmarks ahead of year-end.
“Immediate resistance for the index stays at the 6 May all-time high of 1,826 followed by 1,850 level while support stays at 10-day moving average near 1800 level followed 20-day and 50-day moving average near 1780 and 1760 levels respectively,” he said.
Among the stocks that could be in focus are DRB-Hicom Bhd, Konsortium Logistik Bhd, Hock Seng Lee Bhd (HSL), brewery and tobacco stocks, and property players, as well as oil and gas related counters
DRB-Hicom Bhd’s via its wholly-owned subsidiary KL Airport Services Bhd (KLAS) today proposed to buy a 61.61% equity interest in Konsortium Logistik Bhd (KLB) for RM241 million in cash.
KLAS is a wholly-owned subsidiary of HICOM Holdings Bhd, which in turn is a wholly-owned subsidiary of DRB-Hicom.
Hock Seng Lee Bhd (HSL) has secured an RM86.7 million project to build a raw water pumping station for the Tanjung Manis water supply project in Sarawak.
In a statement to the exchange, HSL said it has received the project's letter of acceptance from the Sibu Water Board.
Brewery and tobacco players have some reason to cheer as they were spared any tax hike, leaving matters as status quo.
Property developers may face some challenges with the hike in Real Property Gains Tax (RPGT).
Furthermore, the increase in the floor price of foreign property purchase will affect property developers with predominantly high-end products at certain foreigner “hotspots”.
Infrastructure players could stir investor interest given the government’s plans for several transportation-linked projects as well as national oil firm Petroliam Nasional Bhd’s long term integrated oil and gas production development projects.