Stocks to watch: Axiata, Maxis, Wah Seong, LCL

KUALA LUMPUR: Stocks on Bursa Malaysia are expected to kick off the new month on a firmer note on Tuesday, Dec 1 after a choppy session as investors are encouraged by the latest development in the debt-laden Dubai and also a firmer close on Wall Street.

The volatile trading, which was evident among blue chips, especially those in the top 100 stocks could be due to some funds restructuring their portfolios. Companies with exposure to Dubai and Vietnam also saw some selling pressure but this could ease off.

On Wall Street, US stocks rose on Monday, Nov 30, helping the Dow post its fifth straight monthly gain, on hopes that possible fallout from Dubai's debt woes will be contained, according to Reuters.

Shortly before market close, Dubai's largest company said its planned restructuring of some units involved US$26 billion in debt, easing some concerns about the size of Dubai's financial problems.

The Dow Jones industrial average rose 34.92 points, or 0.34%, to end at 10,344.84. The Standard & Poor's 500 Index was up 4.14 points, or 0.38%, at 1,095.63. The Nasdaq Composite Index was up 6.16 points, or 0.29%, at 2,144.60.

The rout at Dubai came about after its government had announced last week that state-owned conglomerate Dubai World and its primary property subsidiary Nakheel wanted banks to delay debt repayment for six months. Dubai World had US$59 billion of liabilities as of August.

Stocks to watch include Axiata Group Bhd, Maxis Bhd, WAH SEONG CORPORATION BHD [] and LCL Corp Bhd

Axiata's net profit for the third quarter ended Sept 30, 2009 surged 118.9% to RM503.67 million from RM243.89 million a year ago, boosted by higher contributions from Celcom (Malaysia) Bhd and its overseas operations.

The company reported on Nov 30 that its revenue for the period, which rose 3.1% to RM3.38 billion from RM3.27 billion a year earlier, was due to higher contribution from Celcom and Axiata (Bangladesh) Ltd (AxB). Clcom and PT Excelcomindo Pratama Tbk (XL) continued to be the main contributors of the group for the quarter.

Maxis reported net profit RM615 million in the 3Q and a 2% increase in revenue on-quarter to RM2.15 billion. It declared an interim single-tier tax exempt dividend of six sen per share, payable on Jan 15, 2010. Its entitlement date is Dec 31, 2009.  Total mobile subscriptions rose to 11.7 million, contributing to the increase in revenue.

Wah Seong Corp's pipe coating business unit secured a US$162.86 million (RM551.15 million) contract from Chevron Australia Pty Ltd to provide pipeline coatings for the Gorgon project. The contract involves coating some 850 km of pipes, with completion expected in 2012.

The Gorgon project is a joint venture between the Australian subsidiaries of Chevron (Operator), ExxonMobil and Shell, to develop the Greater Gorgon gas fields, located between 130km and 200km off the north-west coast of Western Australia.

Interior fit-out company LCL Corp posted net loss of RM25.39 million in the 3Q, compared to net profit RM9.74 million a year ago due to continuous costs overrun for its Dubai projects.  Its revenue fell 61% to RM57.78 million from RM147.9 million in 2008;

LCL reported its trade receivables amounted to RM221 million while monies due for contract works from customers totalled RM154 million.

Since it was not tendering for new jobs in Dubai, LCL had incurred additional cost in right-sizing its operations, which were workers' compensation, logistics and premature termination of accommodation arrangement.

It said delayed payment from clients could also worsen the situation as it would need to bear additional operational and financing costs associated with project financing facilities procured for the projects.

YTL Corp could show some recovery after the 42 sen fall to RM7.05 on Monday in the absence of any negative news.

Written by Surin Murugiah