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CIMB IB Downgrades Maxis

Yes, Maxis has been downgraded by CIMB Investment Bank.

It is now is given  the tag of 'underperform' from 'neutral' as its first-half earnings came in below the brokerage’s estimates.

The share price estimate was reduced to RM4.80 from RM5.50, CIMB said in a report today.

Meanwhile, Maxis had its stock downgraded as well to “hold” from “buy” at ECM Libra Capital.
Its stock forecast was maintained at RM5.90.

So let us see how the market will react to this advice from CIMB since ECB Libra is ambivalent on the half year performance of Maxis.

Melissa M Chen Sells EIG Shares

This is the actual report as discussed in the earlier posting. It was taken from the STAR.

Esthetics International Group Bhd’s (EIG) substantial shareholder Melissa M. Chen has sold her stake and ceased to be a substantial shareholder in the company.

According to filings with Bursa Malaysia last Friday, Chen, who is EIG executive director business development and founder, sold 26.85 million shares, or 20.35% stake, in EIG via off-market transactions.

In the group’s latest annual report, Chen was listed as the second largest shareholder with a 20.35% stake after group managing director Lim Yee Soon with a 24.66% stake. Chen is Lim’s spouse.

At the time of writing, Lim’s office had not returned StarBiz queries while attempts to contact other EIG officials were unsuccessful.

EIG is involved in the wellness and beauty industry. The group manages and distributes skincare and wellness brands such as Averine, Bioxil, Clinelle, Dermalogica and EfiSlim.

Chen started Head to Toe Beauty Centre in 1984. She became interested in skincare brand Dermalogica in 1988 and four years later launched the first Leonard Drake centre in the country.

For the first quarter ended June 30, EIG reported a net loss of RM3.2mil against a net profit of RM1.02mil a year earlier. Revenue, however, rose slightly to RM39.9mil from RM37.8mil previously.

Concurrently, Providence Capital Sdn Bhd, in which EIG chairman Eddy Chieng Ing Huong has a stake, acquired 28.5 million EIG shares via off-market transactions.

With this acquisition, Providence Capital is currently EIG’s largest substantial shareholder with 42.2 million shares, or 31.97% equity.

Meanwhile, Kan Kok Chee, whose 10.04% stake as at June 30 made him the fourth largest shareholder in EIG, has disposed of his entire holding of 13.26 million shares.

Gambir Capital Sdn Bhd, in which independent non-executive director Felicia Lim Chang Ching has an interest, has acquired 11.6 million EIG shares, upping its stake to 18.04 million shares, or 13.67%, from 4.87% as at June 30. i suspect Gambir Capital could be linked to Lim.

EIG-Quo Vadis?

I thought it was not really a harrowing experience for the Board at the last AGM. I felt throughout the meeting that they could parried any the questions posed to them most convincingly.

Compared to the earlier AGM, this was the pits as their profit has frittered to less than RM700,000. The Chaiman who is incidentally the head honcho of Selangor Dredging was adept in his responses. I have mulled over the reasons for the diminution of the profit and they are plausible.

The one division they did not do well was in the Wellness sector. Their operations in Thailand  was a real loss situation given the civil unrest there that last for more than a few months.

Secondly, they were trying to promote their own brands rather then be a seller of licensed products.

What is interesting was there was a big share sale from a majority shareholder (Melissa) and another substantial seller. What piqued my interest is all the sales were mostly bought over by Chairman Chieng and another shareholder Jessica whom I believe is related to Melissa and Lim, the Deputy Chairman of EIG.

So what do you think he will do with EIG now that the top beautician R&D and developer has exited the scene?

The share is currently trading below 60 sen and interest is scant.

The Yea-Sayers- Are They Right or Guessing Again?

Yvonne Tan write this in the Malaysian Insider. Are you persuaded?


With most companies having reported their second-quarter results, traders and investors would do well to be conservative given the looming threat of a double-dip in the world’s largest economies, analysts said.

“Near-term catalysts are lacking now with the results season over, and certainly there will be some spillover effects from the overseas markets. We advise sticking to defensive and blue-chip stocks,” a senior equity analyst with Hong Leong Research said.

Recent data from the world’s biggest economies have been less than cheerful, resulting in renewed worries on the growth momentum of these countries.

In the United States, a record plunge in home sales was recently reported. And in Japan, which has been overtaken by China as the world’s second biggest economy, export growth is showing no clear signs of picking up.  

Nevertheless, the local bourse has been fairly insulated, thanks to a positive earnings season together with a stronger ringgit – a key factor for foreign interest but with less strong catalysts now, any profits could very well be capped. “Add this to the uncertainties in global economies, which could spill over to markets and cause volatility, it pays to exercise caution,” the analyst said.

From a technical perspective, however, things appear to be still looking good for Bursa Malaysia, according to a senior technical analyst.

“The bulls had over the past couple of weeks demonstrated their power and determination to investors by outperforming their regional peers.

“With the daily and weekly moving-average convergence/divergence indicators continuing to expand positively against their respective signal line, they suggest more upside can be expected going forward,” the technical analyst said.

The FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) has chalked up gains of more than 3% in the past two weeks compared with Japan’s Nikkei 225 which lost 3.55%, Hong Kong’s Hang Seng which shed 2.7% and China’s Shanghai Composite Index which is down 0.87%.

On Monday, the local 30-stock gauge finished 11.44 points or 0.81% up at 1,422.49.

Meanwhile, of the sea of blue-chip and defensive stocks, the Hong Leong Research analyst likes the banking and telco sectors which reported a good set of results in the quarter just ended.

OSK Research also likes banks, which are seen to be the first proxies to a recovery in Malaysia’s economy. In a second-quarter results update on Aug 24, the research house said banks led the strong corporate results posted by big-cap companies during the three-month period.

Among the big caps, 26% exceeded expectations while only 16% underperformed, it said in its analysis.

Where Have All The Retailers Gone, Long Time Passing...

This article by Yow Hong Chieh of the Malaysian Insider should prove worthwhile reading.

KUALA LUMPUR, Sept 1 — Individual investors continue to shun the Malaysian stock market as public confidence remains shaky due to fears that the market’s recovery following the 2007 US sub-prime mortgage crisis may not be real.

Economists and analysts said that a slowdown in foreign investments, poor enforcement against unscrupulous activities and overseas competition for local funds also contributed to the lack of interest among ordinary Malaysians in investing in the local share market.

Kenanga Investment Bank economist Wan Suhaimie Wan Saidie said most investors were tired of the Malaysian stock market, which was not as competitive as other bourses in the region, and added that participation was also muted due to the lack of foreign direct investment (FDI).

“There is a correlation between retail participants and foreign investment flows,” he said, referencing the massive 81.1 per cent drop in foreign direct investment (FDI) Malaysia experienced last year.

“If foreign investment flows are not forthcoming individual investors are more likely to shun the local market.”
He said there was a possibility that investors might “go back to hibernation” until they saw signs of a firm recovery, but cautioned that the flow information both locally and abroad did not suggest that things were getting any better.

Until then, however, investors still had many other options to buy both locally and abroad or put their money into properties and commodities, he explained.

The Kuala Lumpur Composite Index’s 45 per cent gain last year lagged behind Southeast Asian neighbours even after the government announced stimulus plans totalling RM67 billion to help pull the region’s third-largest economy out of a recession.

The slump in trading by individuals coincided with an exodus by foreigners from Asean’s second-biggest stock market, leaving Bursa Malaysia more reliant on domestic institutional funds.

Overseas investors have sold a net RM1.36 billion of Malaysia’s equities this year, adding to RM8.57 billion withdrawn in 2009 and RM38.6 billion that flowed out in 2008, paring their share of local stocks down to 20.6 per cent at the end of April from 27.5 per cent in April 2007.

Wan Suhaimie was critical of the level of participation in the market by statutory funds such as Employees Provident Fund (EPF), which he said distorted the market as they focused only on index-linked stocks.

On March 30, Prime Minister Datuk Seri Najib Razak revealed that the state-controlled EPF accounted for 50 per cent of daily trading volume in the equity and bond markets. Additionally, more than half of the RM417.1 billion market value in the benchmark stock index is owned by government-linked funds, according to calculations by Bloomberg.

“It doesn’t really reflect the real overall performance of the stock market. Most of the information and research is skewed towards big cap stocks,” he said, adding that it was possible that investors might miss out on smaller companies that have better growth potential because of this.

A Hwang-DBS remisier who wanted to be identified only as Kok explained that, during good times, retail investors make up 60 to 70 per cent of trading value in a normal market.

However, according to a Bloomberg report, trading by individuals have fallen to as low as 20 percent of trading value from more than half before the start of the 1997 Asian financial crisis, when the KLCI slumped by a record 52 per cent.

Kok said the battering individual investors took in 1997 and the recent sub-prime crisis led many to put their money in safer alternatives like unit trusts or sukuks (Islamic bonds), adding that many were also still holding onto stocks that had yet to recover.

“With the market in such a lacklustre mode, you can’t make money punting,” he said. “The market is just drifting. The main market movers are just blue chip index counters... Most retail investors are still on the sidelines nursing their wounds.”

“Any spare money they’ll probably keep in interest-bearing accounts or, if they have more money, they’ll probably just park it with a fund manager.”

Most individual savings started shifting to mutual funds and unit trusts since Malaysia’s economy went into a recession in 1998 but have not returned to stock trading even as the economy expanded at an annual average of five percent over the past decade and the benchmark index more than doubled, Bursa Malaysia CEO Yusli Mohamed Yusoff said in June.

In order to boost retail investors’ share of trading to closer to one-third and tap into Southeast Asia’s second-highest savings rate, Bursa is currently working with brokerages and banks to encourage investors to open up accounts and pursue online trading.

However, Kok said he felt that investors were still wary of trading on the market because they were not convinced that Malaysia’s economic recovery was real.

“When you talk about six or seven per cent (GDP) growth, I suppose you and I don’t see it,” he said.

A broker with a local investment bank who declined to be named was similarly sceptical of the strength of the market’s recovery, pointing out that the KLCI, which is used as a bellwether for the Malaysian stock market, focused only on selected blue chip stocks.

“It is very obvious that the index, targeting only 30 counters, is not a true reflection of the overall market. A lot of the companies are actually really going down,” she said.

“Because the downtrend from ‘07, until today, in terms of all those general stocks that people buy and sell, a lot of them are still very much at the bottom.”

She added that retail investors have also been “very quiet” partly because they had lost confidence in market regulators, citing the recent case of furniture make Kenmark Industrial Co Bhd.

Kenmark’s troubles began in late May when its Taiwanese managing director James Hwang disappeared mysteriously — leading to a plunge in share price and plant closures in Port Klang and Vietnam — only to resurface nearly a week later, claiming his absence was due to illness.

During Hwang’s absence, Datuk Ishak Ismail entered the market and amassed shares amounting to a 32.36 per cent stake in the company over 10 days at prices of between 5.8 sen and 6.0 sen, claiming he had done so to help out his friend Hwang and offer re-employment to the company’s workers.

However, Ishak later sold his direct and indirect stake in Kenmark between June 9 and June 11 at between 14 sen and 16 sen after failing to convince Hwang to return to the company.

The Securities Commission finally stepped in on June 16 when it obtained a High Court order to stop Ishak from using or dealing with the RM10.16 million proceeds from the sale of shares in Kenmark as part of a move to probe possible insider trading.

Kenmark’s share price plummeted from a high of RM0.85 to just RM0.07.

“Stocks can drop from a dollar to penny stocks... These sorts of events happen in the Malaysian market, yet the authorities are not taking action,” the remisier said.

“A company doesn’t just fold up within a month. I can understand how those investors feel.”