KLCI - 2008

Thursday January 1, 2009
Losers far outnumber gainers on Bursa
The local bourse left investors more battered and bruised than happy in 2008. Here are some of the stocks which rattled the nerves of many investors and one which overcame it all


MMC Corp Bhd

MMC Corp Bhd came under pressure in August after investors felt that its proposed acquisition of airport operator Senai Airport Terminal Services Sdn Bhd (SATS) for RM1.95bil and a general offer for water utility firm Aliran Ihsan Resources Bhd at 90 sen a share were too pricey.

The stock plunged 22%, or 61 sen, to RM2.12 following the announcement on Aug 4 – its biggest one-day tumble in almost a decade.

Analysts said then that both deals, which totalled RM2.2bil mostly in shares, would reduce its earnings per share and was not worth the price it was planning to pay.

Senai Airport is the only airport in Malaysia not operated by Malaysia Airports Holdings (MAHB). It was sold by MAHB to SATS in 2003 for RM80mil when its book value was only RM76.8mil.

MMC later revised the terms for its proposed acquisition of SATS and said that it would be financed via cash. The proposed acquisition price was also revised to RM1.7bil.

But once again, analysts viewed this as negative development as it involved the sale of MMC’s assets to fund the acquisition.

“MMC may end up swapping a profitable business with a currently loss-making airport operation on top of a huge undeveloped land, which will take years to mature,’’ an analyst said.


MMC-Gamuda Joint Venture Sdn Bhd, a joint venture between MMC Corp and Gamuda Bhd, also hit headlines after Gamuda said their RM12.5bil electrified double-tracking railway project linking Ipoh to Padang Besar would be delayed.

KNM Group Bhd

Far from its heydays as the darling of stock investors, KNM plummeted in October after foreign funds dumped its shares amid the global economic and financial volatility.

Market talk then also cast KNM, one of the country’s biggest oil and gas fabricators, in a bad light, with some saying that the company would write down its intangible assets totalling RM1.6bil, that it faced cancellation of outstanding orders and would suffer as a result of margin calls by its major shareholder.

KNM has lost about 80% in market capitalisation from its peak in May, when market cap was about RM8bil.

Based on analysts’ guidance, the company’s net profit for the year ending Dec 31, 2008 (FY08) has been lowered by 4.7% to RM400mil.

KNM has called off its 20 million euro (about RM91mil) acquisition of Belgium’s Ellimetal International NV.

Additionally, its plans to add 10,000 tonnes capacity to its Canada operations have been shelved due to the cancellation of oil sand projects by Suncor Energy Inc and Syncrude Canada Ltd.

KNM’s orderbook has dropped to RM4.3bil from RM4.7bil in August, according to RHB Research, after the removal of Ellimetal’s orders and the factoring in of a slowdown in orders from Canada and the Middle East.

Malayan Banking Bhd

The country’s biggest lender came under the spotlight this year for its decision to buy stakes in Indonesia’s PT Bank Internasional Indonesia (BII) and MCB Bank of Pakistan in deals deemed too expensive.

Maybank first proposed to acquire PT Bank Internasional Indonesia (BII) in March and a 20% stake in MCB Bank of Pakistan in May.

The BII and MCB purchases, at 4.3 times and 5.1 times book values respectively, had analysts sore not only over the valuations but also over the country risk factor, particularly in Pakistan.

Shareholders reacted positively when Bank Negara in July revoked its approval for the proposed acquisition of BII. But both deals have since been sealed.

These issues, coupled with the global financial turmoil, caused Maybank’s stock to be bashed from a high of RM10.20 in January to RM5.10 now, a plunge of 50%.

AirAsia Bhd

Shares in AirAsia Bhd sank to a record low of 79 sen on June 24 after worried foreign funds trimmed their stakes in it, largely due to concerns of skyrocketing crude oil prices which reached their peak on July 11.

It hit the headlines again sometime in October when news that Tune Air, which owns 30.8% of the budget airline, would take it private.

When news that the privatisation had hit a snag, its share price came under pressure once again.

Earlier in the year, AirAsia also came under scrutiny because of its fuel-hedging mechanisms which caused analysts to suggest possible losses of up to RM100mil for the company.

Analysts remain bearish on the aviation sector, citing the weak global economic outlook which could dampen demand for travel as a major concern.

IOI Corp Bhd

IOI Corp Bhd sent shivers down the spines of the investing fraternity in October when its shares took a big fall amid talk that a senior executive had resigned to take responsibility for foreign exchange losses incurred by the company.

Its share price plunged 18% to RM2.45 on Oct 24 but has since made quite a powerful run to close at RM3.56 as of yesterday, an indication that price falls can be an opportunity.

The plantation heavyweight had suffered severe hedging losses in the first quarter of financial year 2009, incurring realised foreign exchange losses of RM100.6mil and unrealised exchange losses of RM212.2 million – its largest loss to date.

Additionally, it was not spared the brunt of tumbling crude palm oil prices, which had seen a slide of 70% in the past seven months from its peak of RM4,486 a tonne.

In November, IOI Corp was heavily criticised over the RM73.3mil deposit that it forfeited when it called off its proposal to buy Menara Citibank in Kuala Lumpur.

Nevertheless, it remains the top plantation stock for some research houses, given that its business is well diversified, especially in downstream activities.

It is also one of the most efficient plantation players in the country due to its high fresh fruit bunches yields and low production costs.

TM International Bhd (TMI)

TMI emerged in April when Telekom Malaysia Bhd (TM) undertook one of the largest corporate deals of 2008 that saw the telecommunications giant separate its operations into two entities – with TM managing the fixed-line business and TMI, the mobile business.

On its listing on April 28, TMI shares made a lukewarm debut, opening strongly at RM8.10 a share from its reference price of RM7.85 but finishing 30 sen lower at RM7.55.

Then on Dec 5, TMI shares plunged 8.4%, or 28 sen, to RM3.04, the lowest since it was listed, triggered by foreign funds’ selling, and no thanks to a slew of stock downgrades and hedge fund redemptions.

It continues to be plagued by rising competition in the sector and its high-debt position.

Gamuda Bhd

Who can forget the day when Gamuda Bhd’s shares went all the way south to RM4.20, down 15.66% or 78 sen, after falling to as low as RM4.12 in afternoon trading?

The plunge on Feb 21, which wiped off 21.3% of its market value, was the company’s biggest fall in 10 years. It came after managing director Datuk Lin Yun Ling decided to cut his stake in the company to 1.7% from 5.2%.

Investors were not comfortable with Lin’s decision as he had helmed Gamuda for more than 20 years and they showed their discomfort with the stock continuing to lose ground in the following weeks.

The company is now plagued by project delays. The RM12.5bil double-tracking railway project, which it is building with MMC Corp Bhd, is likely to be delayed by another year due to land acquisition issues.

In Vietnam, its key commercial development project also faces some delays.

However, some brokerages still like the stock due to Gamuda’s ability to secure large-scale projects.

KFC Holdings Bhd

Shareholders of KFC must be heaving a huge sigh of relief amid all the turmoil in the equity market.

The best performer of the year with a year-to-date share price appreciation of about 15%, the cash-rich company plans to invest RM25mil next year to open at least 36 KFC outlets in South-East Asia, of which 30 will be in Malaysia.

The consumer sector in general remains one of the top picks of analysts who believe in its resilience.