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Malaysia stock market and companies daily report (March 15, 2013)

Contributed by Shares Investment

A Record Year For Malaysia’s RM2.5 Trillion Capital Market
The Malaysian capital market registered a record performance in 2012 with the overall size reaching RM2.5 trillion, a 16.4 percent increase from RM2.1 trillion in 2011. All market segments saw double-digit growth between the range of 14.1 percent to 22.6 percent. Last year was also a year of strong assessment outcomes. The Malaysian capital market regulatory framework emerged from this extensive assessment with a score of 92 percent, with ratings of “fully implemented’ for 34 out of 37 principles assessed. This achievement is the highest among countries that recently underwent the assessment. The large amount of funds raised through the issuance of corporate bonds and initial public offerings (IPOs) in 2012 sealed Malaysia’s ranking as the world’s biggest sukuk market, the fifth largest IPO destination globally and the fourth most active in Asia for corporate bond issuances. The corporate bond and sukuk market exceeded the RM1 trillion mark for the first time and positioned Malaysia as the third largest bond market in Asia.
Significance: According to chairman of the Securities Commission Malaysia (SC) Datuk Ranjit Ajit Singh, the Malaysian capital market has performed strongly in 2012 despite challenging global market conditions. The SC’s focus in 2012 was to ensure that our market remained resilient and that it continued to play its role in capital formation and the mobilisation of savings, he added.

Top Glove 2Q Earnings Plunge On Minimum Wage Policy
Top Glove’s earnings for the second quarter of FY13 fell six percent to RM50.32 million from a year ago as the higher labour costs have eroded the glove maker’s bottom line. In a filling to Bursa Malaysia, Top Glove said its revenue in the quarter under review climbed five percent to RM576.42 million. The firm attributed the higher income to the continuing uptrend in demand and better production capacity utilisation. Nonetheless, the implementation of the minimum wage policy on 1 January this year, coupled with more competitive pricing structure for its products have curbed its earnings. In order to mitigate the impact of labour cost pressures in the next quarters, the glove maker decided to automate its production lines to lower the dependency on unskilled labour and improve production efficiency. As for its rubber plantation venture in Indonesia, Top Glove believes it is on track and is expected to start the first phase of planting in the second half of 2013.
Significance: Moving forward, Top Glove plans to expand its annual output capacity by 19 percent to 47.9 billion of gloves as it expects the demand for rubber gloves will continue to see strong pick up from the global market. The firm also believes the current level of latex and nitrile raw material prices will enable a more favourable operating environment for sustainable growth in demand and earnings.

RHB Cap Rebounds As Concerns On MPC Loan Default Eases
Shares of RHB Capital rebounded following previous day’s heavy sell down which was seen as overdone. At late noon yesterday, there were 1.23 million shares done at prices ranging from RM8.14 to RM8.36. The stock closed 1.84 percent higher at RM8.30 with approximately 2.37 million shares traded. Alliance Research said RHB Cap’s steep selldown on yesterday aside from the overall weak market sentiment, was also due to worries of Malaysia Pacific Corporation’s (MPCorp) loan default amounting to about RM97.5 million. “The date of default is 7 March and would take effect on 31 March, subject to mutual new settlement arrangement. Nonetheless, we understand that the value of related collateral is more than sufficient to cover the outstanding loan balance of RM97.5 million,” said the research house.
Significance: According to Alliance Research, it did not expect the loan default by MPCorp to have any material impact to RHB Cap’s earnings. The research house maintained its Buy call on RHB Cap as it remained its top pick for exposure to the domestic banking sector.