Wall Street Indexes Close Down More Than 2%

May 4, 2010
Wall Street Indexes Close Down More Than 2%

By CHRISTINE HAUSER



The euro fell sharply on Tuesday and major indexes in Europe and the United States tumbled as the sovereign debt crisis in Europe and the risk of contagion continued to hang over the market.

At the close, the Dow Jones industrial average was 225.06 points, or 2.02 percent, lower at 10,926.77. The Standard & Poor’s 500-stock index fell 28.66 points, or 2.38 percent, to 1,173.60, while the Nasdaq dropped 74.49 points, or 2.98 percent, to 2,424.25.

The last time the Dow closed lower than that was on April 7, when it fell 72.47 points to 10,897.52

In London, the FTSE 100 declined 2.56 percent or 142.18 points, while the DAX in Frankfurt fell 160.06 points to 2.6 percent. In Paris, the CAC-40 dropped 139.17 points or 3.64 percent.

Although the 15 other countries in the euro zone and the International Monetary Fund had agreed to give Greece 110 billion euros ($144 billion) in aid over three years, traders said the austerity plan remained a hard sell. Hundreds of Greek demonstrators took to the streets on Tuesday to rail against tough new austerity measures aimed at helping the debt-ridden country stave off economic disaster.

One lingering question is whether the $144 billion is enough to settle Greece’s problems and keep them from spreading.

Investors were also watching Spain and Portugal, which have both had their debt downgraded in the last week. Greek government debt fell Tuesday, with the yield on the 10-year benchmark bond rising 36 basis points to 8.8 percent. In a sign of spreading nervousness, Portuguese and Spain bond yields also rose Tuesday.

“If there are real sovereign debt risks in Spain that is an issue for all multinational banks,” said Uri Landesman, president of Platinum Partners.

“What is going on in Europe is eventually going to result in defaults,” said Jeffrey Saut, the chief investment strategist for Raymond James. “They Band-Aided over the situation, and I think it is going to be very bad for the European banking complex.”

All of that has hurt the euro, which slipped 1.35 percent on Tuesday against dollar, trading at $1.3019. At one point, the euro slipped below $1.30.

“The impact of the potential contagion will continue to weigh on the euro in the near term,” Moody’s chief international economist, Ruth Stroppiana, said. “If the Greece situation does spread to Portugal, Spain and elsewhere in the euro zone then the euro would continue to fall. But the situation is still a very serious one.”

 Kevin Chau, a currency analyst with IDEAglobal, said the euro could go to $1.25 by the end of the summer, and that others have put it at $1.20.

“I think that it will continue to go down because the problems over in Europe and the structure of the euro is being questioned,” Mr. Chau said. “The European members’ will to make the euro work and this whole unity work, is being questioned because of what is going on with Greece.”

The European debt crisis dominated Wall Street. Traders paid little attention to the latest economic reports, which both topped expectations. The Commerce Department said that orders to factories rose 1.3 percent in March, and the National Association of Realtors said its index of sales agreements for previously occupied homes rose a stronger-than-expected 5.3 percent in March.

M. Jake Dollarhide, chief executive of Longbow Asset Management, said the economy was one part of a “three-pronged monster” stirring up concern; the others being the unresolved Greek debt issue and a fear of terrorism that stemmed from the discovery over the weekend of a car bomb in Times Square.

“The third prong is just the fact that we have not achieved economic resurgence up to a level that makes people feel comfortable,” Mr. Dollarhide said. “There are a lot of pressures, a lot of anxiety.”

In the past several market days, the declines in the market have been followed by recoveries. But investors were not seeing today’s lows as buying opportunities so far, he said.

Traders have also moved beyond the earnings season,which was highlighted by a string of stronger-than-expected results.

“Earnings season is pretty much in the rearview mirror,” Mr. Saut said, “so you haven’t got that to prop you up right now.”

Materials, industrials and information technology sectors were lower. FMC Corp. ended down less than 1 percent at $64.02. The Dow Chemical Co. closed $2.11 lower at $29.31.

Financials were going to remain a concern, Mr. Landesman said, given the prospect of financial regulation and the accusations of trading fraud against Goldman Sachs. Shares of Goldman Sachs and most other major banks were lower Tuesday. Goldman Sachs closed 5 cents down at $149.45 and Citigroup Inc was lower by 15 cents at $4.26.

Information technology stocks were among the most actively traded. Intel ended 70 cents down at $22.56 and Microsoft was down 73 cents at $30.13.

“Technology has had such a big run-up with Apple, and Nasdaq is under a lot of pressure today,” Mr. Dollarhide said. Shares of Apple closed at $258.68, down 2.8 percent, while Dell Inc. was down 4.4 percent at $15.66 and Google ended 4.57 percent lower at $506.37.

And energy shares slipped. Britain’s main index was dragged down by BP and concerns about the costs that the oil company will face from the spill in the Gulf of Mexico. BP shares closed down 2.95 percent in London.

“The worst thing is when you can’t really size a risk or a problem,” Mr. Landesman said.

On Wall Street, Exxon Mobil declined $1.37 to $66.47 and Chevron dropped about $2.07 to $80.76.

Mr. Saut said that he believed Wall Street was predisposed to the declines.

“We are set up for a correction,” he said. “We are into a buying stampede.”

http://www.nytimes.com/2010/05/05/business/05markets.html?src=me&ref=business

From Buffett, Thought-Out Support for Goldman

By ANDREW ROSS SORKIN
Published: May 3, 2010

Why is Warren Buffett sticking his neck out so far in defense of Goldman Sachs?

That was the question so manyBerkshire Hathaway shareholders, some in disbelief, kept asking here over the weekend, after Mr. Buffett offered his full-throated support of Goldman and its chief executive, Lloyd C. Blankfein, as they fight a civil fraud suit brought by regulators.

Yet by the end of Berkshire’s annual meeting, at least some of the 40,000 shareholders in attendance who had been skeptical of Goldman had come to the same conclusion: Mr. Buffett may actually be right.

“I don’t have a problem with the Abacus transaction at all, and I think I understand it better than most,” Mr. Buffett declared with nonchalance late Sunday afternoon, referring to the mortgage derivatives deal at the center of the lawsuit. He had just finished playing Ping-Pong with Ariel Hsing, a top-ranked 14-year-old junior table tennis player. (He lost 2 to 1.)

His comments echoed the strong view he had offered just the day before: “For the life of me, I don’t see whether it makes any difference whether it was John Paulson on the other side of the deal, or whether it was Goldman Sachs on the other side of the deal, or whether it was Berkshire Hathaway on the other side of the deal,” Mr. Buffett said.

Have we all been thinking about this the wrong way?

Mr. Buffett’s view — conventional, perhaps, on Wall Street but contrarian on that mythical place called Main Street that Mr. Buffett usually occupies — is worth considering for at least one reason: No one else of prominence has spoken out so publicly in support of Goldman. In his trademark way, he made a plain-spoken case that makes sense.

Cynics might regard Mr. Buffett’s statements as predictably self-serving. After all, his company owns about $5 billion in preferred stock in Goldman. What’s more, ever since he made a big investment in Goldman during the thick of the financial crisis, his priceless reputation has been hitched to the firm.

But remember that he has been a consistent and unapologetic critic of Wall Street, especially in the wake of the financial crisis. And besides, his stake in Goldman is more a loan than an investment, so he’ll no doubt be paid no matter what happens with the Abacus suit.

But on the facts of the Securities and Exchange Commission’s civil fraud case against Goldman, Mr. Buffett — he was questioned on this topic over the weekend by shareholders and a panel of three journalists, including me — was resolute. (He did not directly address reports that the Justice Department was conducting a criminal inquiry into Goldman’s mortgage deals, but his positive view of the firm is obvious.)

To him, investors should make their investment decisions based on the quality of the securities, not on who helped put them together or who else was betting for or against them. He suggested those factors were irrelevant.

“I don’t care if John Paulson is shorting these bonds. I’m going to have no worries that he has superior knowledge,” he said, adding: “It’s our job to assess the credit.” The assets are the assets. The math either works or it doesn’t.

In its suit, the S.E.C. has accused Goldman of not disclosing that the Abacus instrument was devised in part by a short-seller, John Paulson, who stood to gain by betting against it.

IKB, one of the buyers, and ACA, which acted as the selection agent and insured the transaction, said they didn’t know Mr. Paulson was on the other side of the deal and had influenced which mortgages were chosen. Together, IKB and ACA lost nearly $1 billion in the deal.

Mr. Buffett, who has always approached investing as a dispassionate exercise based on his reading of the numbers, said IKB and ACA had all the relevant facts that any investor would need. They were able to see all the mortgages, which were referenced in full, and yet they made what turned out to be a very bad bet.

“It’s a little hard for me to get terribly sympathetic,” he said. When he makes his investments for Berkshire, he said, “we are in the business of making our own decisions. They do not owe us a divulgence of their position.”

On Sunday, Mr. Buffett said that the case against Goldman seemed to be based only on hindsight.

“It’s very strange to say, at the end of the transaction, that if the other guy is smarter than you, that you have been defrauded,” he said. “It seems to me that that’s what they are saying.”

Indeed, many securities lawyers have said from the start that the case against Goldman might be hard for the S.E.C. to win, for many of the reasons spelled out by Mr. Buffett in his defense of Goldman.

One Berkshire shareholder who has been a regular in Omaha is Bill Ackman, an outspoken hedge fund manager who has made a career of railing against bad corporate practices. He spent years, for example, trying to get people to pay attention to the failures of the rating agencies before the crisis became full-blown.

In recent days, he has gone even further than Mr. Buffett in his defense of Goldman, suggesting it would have been unethical for the firm to disclose Mr. Paulson’s position in the Abacus deal. He says that Goldman, as the market maker, had a duty to protect the identity of both sides of the transaction.

He agrees with Mr. Buffett that as an investor, he would not have considered it necessary to know that Mr. Paulson had helped select the securities.

If that is really the case, it makes you question all of the outrage being directed at Goldman over this transaction. “The country wants to hang somebody,” one Berkshire board member told me.

With so many easy targets of the financial crisis — Fannie Mae, Freddie Mac, A.I.G., Bear Stearns, Lehman Brothers — it does seem odd that the government, and the public, has chosen to vilify one of only a couple of firms that made fewer mistakes than the rest.

Still, the chorus of Goldman opponents has become so loud that, predictably, some people have called for Mr. Blankfein’s head.

On that subject, Charles Munger, Mr. Buffett’s vocal sidekick and vice chairman, put it bluntly: “There are plenty of C.E.O.’s I’d like to see gone in America. Lloyd Blankfein isn’t one of them.”


http://www.nytimes.com/2010/05/04/business/04sorkin.html?src=me&ref=business

The euro also tumbled to a one-year low

The euro also tumbled to a one-year low as concerns about the sovereign debt crisis in Europe dominated the markets.




May 3, 2010
In Greek Debt Crisis, a Window to the German Psyche
By KATRIN BENNHOLD

PARIS — A few weeks after Lehman Brothers went bankrupt and the world plunged into a financial crisis, Chancellor Angela Merkel of Germany offered some common-sense advice to reckless bankers, indebted consumers and profligate governments.

“One should simply have asked a Swabian housewife,” Mrs. Merkel said during an address to fellow Christian Democrats in December 2008 in the southwest German region of Swabia, hub of the Protestant work ethic. “She would have told us her worldly wisdom: in the long run, you can’t live beyond your means.”

Now, as Europe struggles to avoid its own Lehman experience — saving Greece and thus the euro — the episode says much about the Germans.

Led by France, European neighbors have been pressing for months for Germany, which has the Continent’s biggest economy, to throw its financial weight behind a bailout package and a new system of economic governance for the euro zone. In the process, a reluctant Berlin has been called irresponsible, selfish and even un-European.

But if France wants Germany to be more European, Germany wants Europe to be more Swabian. To bring Europe to a compromise required a deal between Mrs. Merkel and a Frenchman, Dominique Strauss-Kahn of the International Monetary Fund, who met in Berlin last week to pull Greece and the euro zone back from the brink.

The Greek episode has heated up the long culture clash between the European Union’s traditional drivers: federal Germany with its Prussian attachment to rules and an instinctive frugality rooted in past economic traumas, and republican France with its tradition of state intervention and a more Mediterranean attitude toward public debt.

Paris and Berlin have had many disagreements in the postwar world, but few are as deep-rooted as those on economic governance, said John C. Kornblum, a former United States ambassador to Germany.

“This comes from the gut, it’s emotional,” said Mr. Kornblum, who as assistant secretary of state for Europe in the 1990s watched successive French and German leaders spar over how to govern the future single currency.

If there is no political structure in place to safeguard the euro — a weakness exposed in the current debt crisis — Mr. Kornblum said it was because Germany and France could never agree on one. “There are profound philosophical differences between the two sides,” he said.

These differences are in many ways personified by Mrs. Merkel, daughter of a Lutheran pastor, and two flamboyant Frenchmen: President Nicolas Sarkozy, a conservative, and Mr. Strauss-Kahn, a Socialist.

Mr. Sarkozy and Mr. Strauss-Kahn are rivals and may even run against each other in the 2012 presidential election. But they share a belief in state intervention that unites most of the French political elite.

Mr. Sarkozy, a Gaullist whose millionaire friends and taste for expensive brands have not gone unnoticed across the Rhine, first roused German suspicions as finance minister in 2004 when he prevented a takeover by Siemens of Alstom, the French maker of trains.

As president, he allowed the budget deficit to rise above the 3 percent euro zone limit even before the economic crisis erupted, and he repeatedly criticized the European Central Bank’s interest rate policy.

Mr. Strauss-Kahn, a native of Alsace who speaks German, has been called “Mr. Euro” in France and is credited with steering his country into the euro zone as finance minister in 1997. In Germany, he is also remembered for serving under President Jacques Chirac, a staunch advocate of a political counterweight to the European Central Bank.

So when the two men independently revived calls for an “economic government” of the 16 countries that share the euro, resistance in Germany was instinctive.

In a country where many lost their savings twice in the 20th century — once to hyperinflation in 1923 and again to currency reform after World War II — central bank independence and budgetary discipline have become part of the German narrative.

Fear of inflation and broad-based aversion to debt also help to explain a striking divergence in the perception of Germany’s wealth at home and abroad. At 3.3 percent of gross domestic product, Germany’s budget deficit is low by crisis standards and frequently cited as a justification to appeal to Berlin for solidarity with poorer countries.

In contrast, the French budget deficit has widened to 7.5 percent of G.D.P. But Germans, who have absorbed East Germany and face a declining population, do not feel rich.

“Germans fear going bankrupt themselves,” said Mr. Kornblum, now a consultant in Berlin.

Jean-Pierre Jouyet, a former minister of European affairs who now leads the French stock market regulator, said: “The fundamental difference between France and Germany is that, for the French, budgetary, financial and currency stability is a means to an end. For the Germans it is an end in itself.”

Mrs. Merkel, a physicist raised in communist East Germany, has a hard-working, parsimonious lifestyle and an analytical, somewhat bland personality that in many ways reflect the national value system, said Gerd Langguth, author of a 2005 biography of her.

While Mr. Sarkozy resides in the majestic Élysée Palace and has an army of staff members, Mrs. Merkel still lives in the central Berlin apartment she occupied before her election in 2005 and has been seen doing her own shopping.

There are limits to national stereotyping. Mrs. Merkel’s more outgoing predecessor, Gerhard Schröder, made common cause with the French in breaking the euro zone’s budgetary limit.

And no German could have defended the legacy of the Bundesbank more vigorously than the president of the European Central Bank, Jean-Claude Trichet, referred to by some in Paris as “that Frenchman in Frankfurt.”

But understanding the radically different contexts in which German and French positions are honed is crucial as Europe’s two foremost powers grapple with the crisis, said Jean Pisani-Ferry, director of Bruegel, a research institute based in Brussels.

“Ultimately this is about whether Germany is ready to lead,” he said. “And leading means compromising, rather than only insisting on red lines.”

http://www.nytimes.com/2010/05/04/business/global/04iht-euro.html?src=me&ref=business

Wall Street Indexes Close Down More Than 2%

Latexx more than doubles net profit to RM21m in 1Q

3.5.2010

KUALA LUMPUR: LATEXX PARTNERS BHD [] more than doubled its net profit to RM20.72 million for the first quarter ended March 31, 2010 (1QFY10) from RM9.14 million a year earlier on the back of capacity expansion, aggressive marketing strategy and overall cost savings.

Revenue surged 79.4% to RM126.17 million from RM70.32 million, while earnings per share rose to 10.52 sen from 4.7 sen. It declared a tax exempt interim dividend of 2.5 sen per share.

In notes accompanying the results on Monday, May 3, Latexx said at pre-tax level, its profit was 37.2% higher at RM23.25 million compared with RM16.95 million recorded in the preceding quarter.

It said despite the increase in raw material prices and the weakening US dollar, the increase in the group’s profit was due principally to increased sales volume and improved overall efficiency achieved giving rise to lower overheads, operational and supervision costs.

Latexx is confident that growth in FY10 will be sustained along with the world’s growing appetite for medical gloves in the health sector.

“The strategy of increasing capacity and switching to a better mix of products coupled with more aggressive marketing efforts by penetrating into new markets will contribute to sustainable profitability,” it said.

The company said an additional plant next to existing facilities had been completed and the commissioning of the remaining production lines was in progress. It expects to boost production capacity to nine billion pieces of gloves per year by 2011.

Latexx said following its joint-venture agreement (JVA) with Netherlands-based Budev BV, its unit Total Glove Company Sdn Bhd had entered into a licensing agreement with Budev for the exclusive right to use their TECHNOLOGY [] for the treatment of latex examination and surgical gloves to lower protein and allergen to non-detectable levels to prevent allergic reactions.

The JVA and licensing agreement would enable Latexx to embark on a new phase of technology and enhance its product range, and would also allow the group to reinforce its competitive edge in the global market through innovative production methods to produce high quality gloves for its customers, it said.

http://www.theedgemalaysia.com/business-news/165213-latexx-more-than-doubles-net-profit-to-rm21m-in-1q.html

Comment:  Will Latexx be able to achieve MR 100 million net profit for this financial year????

LPI Capital at record high after Kenanga initiates coverage with buy call

KUALA LUMPUR: LPI CAPITAL BHD [] surged Monday, May 3 after Kenanga Research initiated coverage on the stock with a buy recommendation at RM15.04 and target price RM16.80.

http://www.theedgemalaysia.com/business-news/165189-lpi-capital-at-record-high-after-kenanga-initiates-coverage-with-buy-call.html

A quick look at Hing Yiap (4.5.2010)

PROFILE BRIEF
The principal activities of the Company are those of property and investment holding, textile knitting and the manufacture of garments. The principal activities of the subsidiaries are Retailing and Distribution of the ANTIONI, B.U.M. EQUIPMENT, BONTTON, DIESEL and VANITY FAIR brand of ready-made sports and casual wear and related accessories; Operator of speciality stores known as BUMCITY; and Wholesaling of ready-made garments and fabrics.

Hing Yiap Group Berhad Company

Business Description:
Hing Yiap Group Berhad Formerly known as Hing Yiap Knitting Industries Berhad. The Group's principal activities are wholesaling, retailing and distributing ready-made sports and casual wear, women intimate apparel and related accessories. Other activities include textile knitting and manufacturing garments. It also operates as a property and an investment holding company. Operations are carried out in Malaysia.

Wright Quality Rating: LBC1 Rating Explanations






A quick look at Hing Yiap (4.5.2010)
http://spreadsheets.google.com/pub?key=tsNT3xhHVKW3w4UCexYEeHw&output=html

Comment:
Will need to examine its past performances in depth.  During the recent global financial crisis, its earnings went down to almost nil in Q3 and Q4 of last financial year.  However, the earnings for the latest 2 quarters had been good.

Since this stock is outside my area of competence, will avoid being entangled with it.  However, will keep track of it.  There are other stocks with better quality and durable competitive advantage to invest in.

A quick look at KNM (4.5.2010)

A quick look at KNM (4.5.2010)
http://spreadsheets.google.com/pub?key=tcCGJ_jnIm-UI-eucHCcPlA&output=html

KNM Group expects to perform better this year

4.5.2010


PROCESS equipment manufacturer KNM Group Bhd (7164)expects to perform better this year on lower tax rates and higher exploration and production activities.

"We recently spoke to the management of KNM following the breakdown of its proposed takeover offer. We believe that investors have overlooked the business aspect in the last few months after the takeover news first broke off back in February 2010," wrote HWANGDBS Vickers Research Sdn Bhd (HDBSVR) analyst Lee Wee Keat in a note to clients yesterday.

KNM's substantial shareholder and group managing director Lee Swee Eng had recently aborted his proposed offer via Bluefire Capital Group to buy KNM's entire business at RM0.90 per share.

Last year was a bad year for KNM as oil majors held back spending in view of low and volatile oil prices.

"We understand that KNM managed to secure only RM1.5 billion worth of jobs last year, and capacity utilisation was only 65 per cent compared with 80 per cent in 2008.

"(Profit) margins for the jobs secured were also slimmer as intense competition over the modest number of jobs available led competitors to cut prices," he said.

Lee expects margins for the next few quarters to remain sluggish as the company completes jobs secured last year. He estimated that the average completion ranges from 15 to 18 months per project.

"We gather that margins have improved since, but have yet to recover to previous levels."

Lee also said concerns over KNM's orderbook replenishment persists.

"KNM has a RM2.4 billion orderbook, with RM400 million of new contracts secured thus far. This is slow, but we foresee a rise in exploration and production activities in the second half of this year to trigger contract flows."

The group currently has a RM11 billion tender book comprising jobs mostly in the Middle East and Europe.

However, Lee has cut his new wins assumption for KNM to RM1.7 billion from RM1.8 billion previously for the financial year ended December 31 2010 (FY10), based on current tender book and historical hit rate of 15 per cent.

KNM's FY09 audited net profit stood at RM260.6 million after adjusting for the tax incentive, which was granted by the Finance Ministry on April 7 2010 to its subsidiary KNM Process Systems Sdn Bhd for the acquisition of Borsig.

Totalling RM1.4 billion, the tax incentive will apply for a period of four years from 2009.

"We expect a lower tax rate going forward as local operations will be spared from paying taxes. Also, there was no impairment charge for Borsig. Borsig contributed about 45 per cent of total FY09 earnings," said Lee.

The research firms has upgraded KNM to "hold" from "fully valued", but lowered its target price to RM0.60 from RM0.65.

"We expect some overhang in the share price given the EPF's recent heavy selling, but at the current price level, we believe that most of the negatives have been priced in. KNM has also started to buy back its shares.

"We believe KNM's strong RM571.7 million cash balance should support more buyback on share price weakness," said Lee.

Read more: KNM Group expects to perform better this year 
http://www.btimes.com.my/Current_News/BTIMES/articles/03knm/Article/index_html#ixzz0mvpKFNdB

A quick look at Integrax (4.5.2010)

Integrax Berhad Company

Business Description:
Integrax Berhad. The Group's principal activities are owning and operating 2 port facilities, Lumut Maritime Terminal (port facility for dry and liquid bulk, break bulk and containers) and Lekir Bulk Terminal (port facility for dry and liquid bulk) comprising Lumut Port. Other activities include providing tuggage services, and extracting and smelting mineral ore. Operations are carried out in Malaysia.

Wright Quality Rating: LAD0 Rating Explanations






A quick look at Integrax (4.5.2010)
http://spreadsheets.google.com/pub?key=t8WcTpUdhaSg_cm5MvKQYLQ&output=html

30/04/2010  
PROPOSED FINAL DIVIDEND
The Board of Directors of Integrax is pleased to recommend a final dividend of 3% less Malaysian income tax for the financial year ended 31 December 2009, subject to the approval of the Company's shareholders at the forthcoming Twenty-Fourth Annual General Meeting to be convened.

A quick look at Genting Berhad (3.5.2010)

Genting Berhad Company

Business Description:
Genting Berhad. The Group's principal activities are operating hotel, gaming and entertainment, tours and travel related services. Other activities include generation and supply of electric power, oil palm plantations, palm oil milling, construction, property development and management, oil and gas exploration, sale of crude oil and investment holding. Operations of the Group are carried out in Malaysia, Asia Pacific, Europe and other countries.

Wright Quality Rating: ACD0 Rating Explanations






A quick look at Genting Berhad (3.5.2010)
http://spreadsheets.google.com/pub?key=tn_N2jnN3rN857OjJ3soAyA&output=html

Warren Buffett's Investment Secret

Asked whether he has an investment secret, he says simply: "Pragmatism."

Warren Buffett's wonderful world of investing

A quick look at Daibochi (3.5.2010)

Daibochi Plastic and Packaging Industry Berhad

Business Description:
Daibochi Plastic and Packaging Industry Berhad. The Group's principal activity is manufacturing and printing flexible packaging materials. Other activity includes developing land into residential and commercial buildings. The Group principally operates in Malaysia.

Wright Quality Rating: LBC1 Rating Explanations






A quick look at Daibochi (3.5.2010)
http://spreadsheets.google.com/pub?key=tiRMwQJfZ-5eKyfTy1bPXWw&output=html

Comment:
Not a great stock.
A gruesome stock.

A quick look at Latexx (3.5.2010)

A quick look at Latexx (3.5.2010)
http://spreadsheets.google.com/pub?key=tECNeQDUY1U6NYZKZZlixQQ&output=html

Kenanga Research initiates coverage on LPI Capital with buy call

Kenanga Research initiates coverage on LPI Capital with buy call

Written by Kenanga Research
Monday, 03 May 2010 08:56


KUALA LUMPUR: Kenanga Research has initiated coverage on LPI CAPITAL BHD [] with a buy recommendation at RM15.04 and target price RM16.80, and said it favours LPI the most among general insurers in Malaysia due to its well-diversified business portfolio enabling the company to minimise its operating risks and generates the highest return on equity (RoE) to reward shareholders.

The research house said the auto insurance segment is expected to turn around in 2010-11 with the proposed increase in premium rates and the change of motor tariff structure, which is a re-rating catalyst.

"We have not factored in the potential tariff hike in this report, however, we estimate every 5% increase in net premium, could increase LPI's earning by 9%," it said.

The research house said LPI has multiple distribution channels including its own agency network and tapping into Public Bank's 250 branch networks.

"We believe its faster-than industry's organic gross premium growth rate of 15%-16% is achievable," it said.

Kenanga Research said historically, LPI's premium has grown at a CAGR of 15% for the last 10 years.

"We estimate LPI now trades at 12.7 times FY11 PER, offers 6.2% net dividend yield and we forecast RoE of 17.2%; which is better than most of the banking stocks.

"We believe its business model of growing revenues at the calculated risk should sustain its earning growth of 12%-14% over next two years and efficient capital structure do offer a solid dividend yield story to investors," it said.

The research house said LPI deserved a valuation premium given stronger growth, higher margin, low investment risk, better market position; whilst the downside is well cushioned by its 6.2% net dividend yield.


Related:

A quick look at LPI