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STOCKS NEWS MALAYSIA-Kenanga downgrades technology sector to 'neutral'

Wednesday, 3 Oct 2012 | 10:36 PM ET

Kenanga Research cut its rating on the technology sector to 'neutral' from 'overweight' after companies under the research house's coverage posted earnings below market expectations.

"All the players are now wary about the outlook for the second half of 2012 due to global economic uncertainties and the slowdown in consumer demand for electronic devices," Kenanga said in a research note on Thursday.

Kenanga expects a possible strengthening of the ringgit against the greenback over the next two months will impact technology companies' earnings visibility.

"Our top-down analysis points to a negative outlook for the sector in the fourth quarter of 2012. Post the second quarter of 2012 results, we had revised down most of our earnings for the tech companies and downgraded their target prices (TP) as well," it said.

Kenanga has 'outperform' calls on Malaysian Pacific Industries Bhd with a target price of 3.10 ringgit per share) and Notion VTec Bhd with a target price of 1.50 ringgit per share.

It had 'market perform' calls on Unisem (M) Bhd (TP: 1.32 ringgit per share), SAM Engineering & Equipment (M) Bhd (TP: 2.80 ringgit per share), JCY International Bhd (TP: 85 sen a share) and Kelington Group Bhd (TP: 53 sen a share).

1018 (0218 GMT)

(Reporting by Yantoultra Ngui in Kuala Lumpur; yantoultra.ngui@thomsonreuters.com; Editing by Prateek Chatterjee)

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10:19 STOCKS NEWS MALAYSIA - Kenanga downgrades Malaysia's rubber glove makers

Kenanga Research downgraded its call on Malaysia's rubber glove makers to 'neutral' from 'overweight' as a stronger ringgit is expected to dent exports.

"There is a high probability the ringgit could continue to strengthen against the dollar, threatening the glove players' earnings growth going forward," Kenanga said in a research note on Thursday.

Additionally, recent earnings from the sector were below expectations and the benefit Malaysian glove makers have enjoyed from low latex prices could be muted in the coming quarters, it said.

Kenanga cut the target price on Top Glove Corp. Bhd

to 5.36 ringgit per share from 5.80, Supermax Corp. to 2.20 ringgit from 2.50 and Kossan Rubber Industries to 3.38 ringgit from 3.64.

At 0947 (0147 GMT), Top Glove was down 0.77 percent at 5.14 ringgit per share, while Kossan was untraded at 3.04 ringgit per share and Supermax was down 0.5 percent at 2 ringgit.

The KLSE composite index was up 0.16 percent at 1652.36.

(Reporting by Siva Sithraputhran; siva.sithraputhran@thomsonreuters.com; Editing by Prateek Chatterjee)

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10:03 STOCK NEWS MALAYSIA - RHB cuts consumer sector to 'neutral'

RHB Research has downgraded the consumer sector to 'neutral' from 'overweight', as current premium valuations are deemed hard to sustain.

"We believe the consumer stocks are traded at premium price-to-earning (PE) valuations due to strong buying interest in defensive and dividend-yielding stocks, amid economic uncertainty and relatively low returns elsewhere," RHB said on Thursday. Its coverage on the consumer sector comprises 10 stocks, with QL Resources Bhd and Super Group

named top picks.

The consumer sector has outperformed the FBM KLCI index

by 14 percent since the beginning of the year, although this will be increasingly difficult to maintain as yields compress, said RHB.

RHB said the performance has not been across the board, with Parkson Holdings Bhd declining 14 percent, while AEON Co(M) Bhd gaining 70 percent since January.

0949 am (0149GMT)

(Reporting By Al-Zaquan Amer Hamzah; alzaquan.amerhamzah@thomsonreuters.com) Editing by Prateek Chatterjee

Keywords: MARKETS MALAYSIA STOCKSNEWS/TECHNOLOGY