Khazanah in fresh buying of JKH

Monday, 23 September 2013 01:14 -     - {{hitsCtrl.values.hits}}

Largest foreign shareholder Khazanah was seen picking up JKH shares on Friday. The Daily FT learns via Broga Hill Investments Ltd., an arm of Malaysia’s sovereign fund Khazanah Nasional, it had bought around 400,000 JKH shares for Rs. 90 million. On Friday 1.37 million JKH shares traded for Rs. 296 million with the share price closing at Rs. 218, up by Rs. 6 from Wednesday’s closing. Last week 8.5 million JKH shares traded for Rs. 1.8 billion. It closed the week with a gain of Rs. 8.30. Intra-week highest was Rs. 209.50. Gain last week especially on Friday was following a rebound in investor sentiments from foreign investors after the US Federal Reserve on Wednesday decided to continue with its stimulus boosting a re-rating of emerging market stocks. As at June 2013, Broga Hill/Khazanah held a 9.9% stake or 84.68 million shares in JKH, up from a 8.7% stake or 74.6 million shares in March 2013. A mega Rs. 40 billion Rights cum Warrant Issue is coming at JKH. The Rights Issue is two for 13 held at Rs. 175 each. The Rights also entitles a subscriber for 1 warrant for 3 subscribed Rights at Rs. 185 in two years and at Rs. 195 in three years. The Extraordinary General Meeting for shareholder approval for the proposed issue will be held on 2 October. Rights trading commences on 15 October whilst renunciation is 24 October with the next day as the last date for acceptance and payment. A favourite of foreign investors, JKH last week saw 1.9 million shares (Rs. 413 million) of net foreign outflow. Foreign holding of JKH is at a record 55.8% (up from 53% in end December 2012) with several new funds investing in recent months. Thanks to fresh infusion last week, net foreign inflow at CSE moved back to the Rs. 19 billion level after dipping to Rs. 18.5 billion earlier in the week. Softlogic Stockbrokers said it expects some foreign portfolio investments to flow into the market in the short to medium term with the extension of the US Federal Reserve MBS tapering, which is likely to bring investors to emerging market seeking higher returns. “We advise investors to accumulate fundamental, high dividend yield counters which are liquid in nature,” the broking firm added. The Bourse last week closed positively with the ASPI recording a 1.12% rise (or 64.64 points) over the four-day week to close at 5814.10 points. The S&P SL20 Index meanwhile, gained 1.29% (or 40.86 points) to close the week at 3217.60 points. “We believe that the current price weakness in the Bourse provides a strong opportunity for medium to long-term investors both individual and institutional to pick up attractively priced growth stocks,” opined First Capital Equities. Although sentiment and liquidity could impact market volatility, it believed that Sri Lanka’s structural story is firmly intact (as indicated by the 2Q2013 GDP performance) with a firm multiplier effect on corporate EPS growth. “Consequently we advise investors to enter the market in an informed manner carefully selecting sectors and counters that will fully benefit from the domestic economic upswing,” First Capital said. “While we do agree that the market has not delivered in the short term, we believe that the Bourse has largely bottomed out at current levels presenting an attractive opportunity for long term investors such as the EPF to enter the market on a selective basis. Despite global liquidity constraints, long term foreign institutional investors appear to be utilising the current market conditions as an entry point to cherry pick blue-chip stocks notwithstanding their exposure to possibility of currency risk; net foreign portfolio flows are presently at Rs. 17.5 billion (US$ 131 m),” it added. First Capital Equities also said given the fact that most investors would now agree that the potential for short term trading opportunities are markedly limited, selecting medium to longer term investments would depend on a number of parameters, most importantly the strength of the top line and its sustainability. “While we do not rule out the importance of earnings as a strong indicator of growth, it is highly important to determine the source of profits, whether a result of top line growth or an increase in other income or a dramatic cut in costs that could have a negative impact on future productivity. Of perhaps even more significance is the sustainability of such earnings. In this respect, while we advise investors to seek quality, both in terms of the top line and the bottom line, we accentuate the need to select stocks that may not only pass the quality test in terms of fundamentals but are also sufficiently liquid,” First Capital Equities said.