Stocks to watch: Green Packet, Ranhill, plantations, Sime Darby

KUALA LUMPUR: Investors are expected to stay cautious on Friday, Dec 4 in the absence of fresh corporate news to spur buying interest and also ahead of the weekend.

On Wall Street, stocks closed weaker after the vast US services sector unexpectedly shrank in November.

The weaker close was led by a slide in financials, as Bank of America Corp's massive equity offering spurred concerns that other banks could sell new shares and dilute existing shareholders' equity, according to a Reuters report.

The Dow Jones industrial average fell 86.53 points, or 0.83%, to end at 10,366.15. The Standard & Poor's 500 Index  slipped 9.32 points, or 0.84%, to close at 1,099.92. The Nasdaq Composite Index fell 11.89 points, or 0.54%, to finish at 2,173.14.

At Bursa Malaysia, the 30-stock FBM KLCI is expected to show some weaknesses, as indicated by the KLCI futures. The December futures fell 5.5 points to 1,267.50 despite the spot market saw the FBM KLCI close slightly higher on late buying. The market is also consolidating and unable to break past the 1,270 convincingly.

Stocks to watch include Green Packet, RedTone, Ranhill, PLANTATION []s and Sime Darby.

GREEN PACKET BHD [] garnered three separate contracts with companies from Georgia, Armenia and Ukraine to provide its modems. It did not reveal the value of the contracts.

Meanwhile, REDTONE INTERNATIONAL BHD [] said it would increase the number of locations of its free Wi-Fi hotspots.

Ranhill president and CEO, Tan Sri Hamdan Mohamad has said its second 190MW combined cycle gas turbine power plant in Sabah is expected to be completed by end-2010.

Meanwhile, Standard & Poor's Ratings Services revised the outlook on Ranhill to stable from negative and affirmed the 'B' long-term corporate credit rating on the company.

It also affirmed the 'B-' issue rating on the US$220 million five-year senior unsecured notes due in October 2011.

"We revised the outlook and affirmed the ratings to reflect the improvement in Ranhill's financial risk profile due to lower debt following the transfer of its water assets to the Malaysian government," said Standard & Poor's credit analyst Andrew Wong.

S&P also said Ranhill was moving away from risky ventures by exiting oil exploration projects and focusing on the stable utilities businesses. This alleviated the downward pressure on the rating.

However, it did caution Ranhill's near-term liquidity is weak. The company had unrestricted cash of  RM355 million as at June 30, 2009 was not enough to cover the RM506 million of debt facilities that are due for repayment over the next 12 months. However, most of these maturities are performance guarantees, which will naturally end as projects get completed.

Top plantation analyst, Dorab Mistry, who heads vegetable oils trading at Godrej International said Malaysian palm oil stocks would peak at 2.1 million tonnes in December before declining next year. Yields would be affected by the El Nino.

Separately, Affin Research upgraded the domestic plantations sector to overweight on the back of trading opportunities in the next six months.

Sime Darby said its 75%-owned Sime Darby Water Resources (Perak) Sdn Bhd had executed a groundwater resource development agreement with the Perak government.