JIT News - Tenaga, Steel Players, Cocoa/F&N, H Seng, MTD Cap, KEuro ... 6/1/2011

Tenaga: The severe flooding in Australia has resulted in a dip in Tenaga share price on the back of rising coal prices following a supply disruption. In its financial year ended Aug 31 2010, TNB purchased about 17% of its coal from Australia , 71% from Indonesia and 11% from South America . For TNB, the costs of coal in FY2010 accounted for 48% of its fuel expenses based on full year average cost of US$88.20 per tonne.

Target Prices: Tenaga: 9.00 (AmResearch), 10.00 (HDBS), 10.50 (RHB), 9.76 (OSK), 8.54 (MIMB), 10.12 (BNP Paribas), 10.47 (Kenanga), 10.10 (ECM), 7.50 (MBB), 9.20 (JP Morgan), 9.98 (MIDF)

Lion Industries/Ann Joo/Kinsteel/Sino Hua-An: Possible tightening of supply of coal is yet to be reflected in the share prices of most local steel players. Several steel counters saw their share prices rising during the same period. Among the local steel players, Ann Joo would require cooking coal to fuel its blast furnace, for which commissioning is expected to be delayed until the end of this quarter. It is unsure whether Ann Joo has yet to stock up on cooking coal or has already done so but eventually everyone is going to be affected by rising costs.

Despite present high prices, millers have not been able to react immediately, let alone rising iron ore prices. Most steel players would require electricity to power their steel plants. Hence they would not be immune to TNB’s pending tariff review, which in turn would be affected to a certain extent by the increase in coal prices especially if the mines are shut for an extended period. Sino Hua An produces coking coal exclusively for the China market and does not expect the situation in Australia to have any significant impact on the company as it sells and buys locally.

It is estimate that half of the world’s coking coal for Asia’s steel mills from Australia . The floods have forced 75% of its coal mines to close.

Cocoaland/F&N: Cocoaland was given a contract to prepare, package and deliver F&N Beverage products with an option to extend the contract for another year. F&N is a major shareholder of Cocoaland with a 23.08% stake.

Target Prices: 2.18 (CIMB), 3.11 (TA), 3.70 (AMResearch)

Hap Seng: It is set to distribute 50% of its group net profit in the form of dividends, after its board approved the dividend policy. The group had approved the dividend policy of 50% of group profit after tax taking into account the level of cash, gearing, return on equity and retained earnings. The company also said it will make necessary announcements to Bursa if and when there is a definite corporate proposal in relation to the possible bonus issue and share split. Eight million shares crossed off-market via a direct deal on 03 Jan 2011 at a total value of RM48.32 million or RM6.04 a share. The new owner of the shares has not been announced to Bursa Malaysia yet.

MTD Capital: Its subsidiary MTD Manila Expressways Inc imposition of the 290% toll rate hike along the South Luzon Expressway in the Philippines faces a legal suit. MTD Manila Expressways had received a petition for the issuance of a temporary restraining order and/or status quo to restrain the implementation of the toll rate hike of 3.024 pesos or 22 sen per km initial toll rate hike. Its legal counsel had yet to receive any order or notice of action from the Supreme Court. A temporary restraining order could not undo the implementation of the toll rate hike which had already been implemented.

KEuro: KEURO priced the placement at RM1.22 per share.