Petronas Chemicals Group Berhad (PCGB) is looking to raise as much as US$4 billion (RM12 billion) in its initial public offering (IPO) in Bursa Malaysia. This is exceeding the earlier estimates of over US$2 billion (RM6 billion) as it hopes to tap strong global investor demand for Asian stocks.

Last month, Petronas filed a draft prospectus for an IPO of its petrochemical business.

Petronas Chemical Group’s IPO is one of two offerings to be launched by government-run Petronas in response to Prime Minister Najib Razak’s call to reduce state ownership in the private sector and boost liquidity in the stock market when unveiling NEM early this year.

PCGB which owned by state oil giant Petroliam Nasional Bhd (Petronas), could become the largest share offering in the country, exceeding Maxis’ US$3.3 billion (RM10 billion) listing last year.

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While the fundamental outlook remains pretty much unchanged, we do note that the positive news flow surrounding the sector has been accelerating of late. We believe this will help further re-rate valuations of contractors upwards. Implementation of the mega projects under the ETP should serve to maintain the momentum of positive news flow. In short, we think there is potential for some irrational exuberance to set in. News flow aside, the 59.4% increase in domestic contact awards will serve to drive earnings growth over the next few years. With the KLCON now trading at its long term average of 15x, we see further room for rerating, potentially up to one standard deviation above mean (μ+1σ) level of 19.3x.

We are upgrading our sector call from Neutral back to OVERWEIGHT as we expect the positive news flow in the coming months to rerate valuations upwards. Our top picks are Mudajaya (BUY, TP: RM7.22) and Sunway (BUY, TP: RM2.52). Both our top picks are backed by strong earnings growth with a 3 year CAGRf of 33-37%. For the small caps, we like Ahmad Zaki (BUY, TP: RM1.27) which has witnessed very strong orderbook wins over the past 12 months. We also like Gamuda (TRADING BUY, TP: RM4.31) for the euphoric MRT play. In our view, investors should position themselves for the thematic Sarawak play fuelled by the upcoming state elections; pick Naim Holdings (BUY, TP: RM5.10).

Below are the target price for construction sector.

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structured investments

In the last posts, we look at main features and benefits of Structured Investments. The most notable feature of Structured Investments is that can give you potentially higher return than fixed deposits. However it comes with potentially higher risks too.

If you are unsure to choose whether to invest in Structured Investments or Fixed Deposits and would like to know the difference, this post is right for you. The table below illustrate the main difference between Structured Investments and Fixed Deposits.

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structured investments

When you invest, you aim is to maximize your returns over a period of time. Structure Investments are a form of investment that can give you potentially higher return than fixed deposits. However, it comes with potentially higher risks.

Structure Investments are investment product offered by financial institutions. These investments are linked to the various underlying assets such as interest rate, foreign exchange, equities, fixed income instruments or market indices.

Main Features of Structured Investments

Fixed term investments which may be held to maturity depending on the features of the products. If encashed or redeemed before maturity, your investments may lose part of the return or/and principal.

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In July 2010, The Banker Magazine publish Top 1000 World Banks ranking for 2010. The rankings are based on the definition of Tier 1 capital as set out by Basel’s Bank for International Settlements (BIS). The definition is stricter than total stockholders’ equity and covers only the core of the bank’s strength. The shareholders’ equity available to cover actual or potential losses. Goodwill is deducted from Tier 1.

The table below are the first 20 largest banks. Bank of America Corporation manage to gain the highest position with USD160,387.8 million. Where is Malaysian banks? In 2009 Maybank have the highest position among Malaysian banks at number 248.

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