Stocks to watch: Masteel, F&N, George Kent, Johan, RHB Cap

KUALA LUMPUR: Investors should brace for some profit taking on Wednesday, Oct 21 after blue chips rose to a fresh 17-month high the previous day, powered by institutional buying of PLANTATION []s and banks.

The local market could take the cue from Wall Street where US stocks retreated from 12-month highs on disappointing housing and inflation data prompted investors to book recent gains despite strong results from bellwethers including Apple and Caterpillar,

The Dow Jones industrial average dropped 50.71 points, or 0.50 percent, to end at 10,041.48. The Standard & Poor's 500 Index fell 6.85 points, or 0.62 percent, to 1,091.06. The Nasdaq Composite Index shed 12.85 points, or 0.59 percent, to close at 2,163.47.

At Bursa Malaysia, oil and gas counters should attract attention as light crude oil briefly topped the US$80 per barrel as the US dollar weakened against all major currencies.

The higher crude oil could spur more activities in brownfield and deepwater exploration.

At Bursa Malaysia, stocks to watch include Malaysia Steel Works (KL) Bhd (Masteel),
FRASER & NEAVE HOLDINGS BHD [] (F&N), GEORGE KENT (M) BHD [] and JOHAN HOLDINGS BHD [], RHB Captal Bhd, Hock Lok Siew Corporation Bhd (HLS Corp) and Sarawak Energy Bhd.

Masteel could see some positive trading activity after it sealed a deal with Stemcor Australia Pty Ltd to export steel worth millions of ringgit to the world's leading independent international steel trading organisation.

F&N will break ground for its RM350 million plant at the Pulau Indah Halal Hub this Friday, Oct 23.

This will bring investment in its dairies manufacturing operations in Malaysia and Thailand to RM600 million – in line with its aspirations to become an innovative world class regional food and beverage player.

In George Kent and Johan Holdings, low-key Tan Sri Khoo Kay Peng of the MUI Group has increased his shareholdings in both companies via Cherubim Investment (HK) Ltd.

Cherubim bought 973,000 George Kent shares from the open market from Oct 12 to 15, riasing the shareholding to 9.1% or 20.058 million shares.

Cherubim also bought 1.33 million shares of Johan Holdings from the open market from Oct 12 to 16, increasing it stake to 6.87% or 42.181 million shares.

RHB Captal could see more trading activity after the recent acquisition of the Indonesian bank. Minority shareholders expressed disappointment over the higher price tag despite the more optimistic outlook by research houses.

RHB Capital proposed to buy an 80% stake in Indonesia's PT Bank Mestika Dharma for RM1.16 billion cash.

The price tag is 3.5 times price-to-book ratio based on the bank’s audited net assets of RM415.4 million as at Dec 31, 2008

HLS Corp had acquired 488,600 BOUSTEAD HOLDINGS BHD [] shares at an average price of RM3.51 per share for a total of RM1.7 million in the open market, HLS said.

Sarawak Energy still has more upside, despite the strong gains yesterday, after the Sarawak Government offered RM2.65 a share to take it private.

Axis Real Estate Investment Trust (Axis REIT) posted a 3.7% increase in net profit to RM10.25 million for the third quarter (3Q) ended Sept 30, 2009 from RM9.86 million a year earlier.

Written by Joseph Chin