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https://theedgemalaysia.com/node/45812

Oil: Minimal impact on China’s inflation

English

Oil prices have again stepped into the centre of the global economic scene. Global average crude oil prices have risen 25% so far in 2011 and are 43% above a year ago. China’s sensitivity to oil prices has grown in recent years, but authorities still have the means to absorb part of the impact. China’s economy is somewhat shielded from the rise in oil prices due to its strong ability to subsidise and control prices. Fuel prices have only been semi-liberalised to reflect global market prices. And if crude oil prices go above US$130/bbl (RM395.20/bbl) on a sustained basis, the government is likely to offer significant subsidies to both producers and consumers to ensure smooth operation of the economy and to contain inflation. The government is left with the unenviable task of distributing the burden of higher oil prices among refiners, consumers and its own treasury. In this report, we simulate the impact on China’s key economic indicators of a US$10/bbl rise in global average crude prices. We also look at how the dynamics might change at various price points. But the key is to provide a framework to think about in the impact of a particular oil price, with the understanding of how China sets its retail fuel prices. The direct impact on inflation is minimal, but secondary impact becomes meaningful. Transportation fuels represent only 0.7% of consumer price index (CPI), which would produce a tiny impact for a US$10/bbl change in oil prices. In reality, when transportation fuels become more expensive or reach any shortage, the cost of other products and services, such as agricultural goods and airplane tickets, would also rise. Other prices, such as fuel for heating and cooking, may also be under indirect pressure if coal and gas prices rise alongside crude oil. Fortunately, the bulk of China’s residential energy consumption is electricity, which is still under strict price control. If coal prices skyrocket, then more subsidies would be paid and shortages become a risk. Power prices may rise, but would still be fixed. In this report, we focus on the impact of refined petroleum products on the CPI, which we estimate to have a weighting about 2.5%.Oil presents much bigger pipeline inflation risks than its CPI weighting suggests. We look at how much oil the entire economy consumes to get a better idea of its impact. In 2010, China’s average oil demand was nine million barrels/day, according the US Energy Information Administration (EIA). This translates to 3.3 billon barrels for the year. At the average price of US$80/bbl and an average exchange rate of 6.77, 2010 consumption was nearly 1.8 trillion yuan (RM832.3 billion), or 4.5% of GDP. This highlights that China’s producers rely much more on oil than consumers do directly. Thus, a sustained increase in oil prices would create greater pipeline inflation risks even if fuel’s weight in CPI is small. The current account is likely to feel the most direct and immediate impact. China imported nearly 250 millon tonnes of petroleum and products in 2010, net of exports. We do not factor in potential yuan appreciation, which may speed up if crude prices really reach these levels. High crude prices are clearly a negative for China’s growth, though the impact is harder to quantify. Removing price terms, the real volume of the petroleum trade might not change that much given China’s inelastic demand. The fiscal impact would be visible, but is unlikely to crowd out other pro-growth fiscal outlays, especially with offsetting revenue increases. The ministry of finance’s budget deficit is 2% of GDP this year. As long as the negative fiscal impact is contained within 1% of GDP, the implicit 3% deficit cap would be achievable without cutting other spending. The key risk is that excessively high oil prices would stall global economic recovery, while additional domestic tightening may be done to contain inflation expectations. Higher prices would encourage greater efficiency, which is a stated goal of the government. China has become more energy efficient in terms of petroleum per unit of GDP. At the same time, China’s demand for energy is also very inelastic. Even in 2010, the first full year of implementing the current semi-market pricing mechanism, China’s petroleum demand grew by 8%, the fastest increase since 2004. So the pace of efficiency improvements actually slowed in 2010. China’s demand for fuel may become more elastic, as China targets to reduce energy intensity of GDP by 16% in the coming five years. To estimate oil prices’ impact, we need to first understand how China adjusts its domestic prices for refined products. Since 2009, the government began a mechanism to allow its domestic fuel prices to periodically and partially adjust to reflect global oil prices. China’s oil product pricing mechanism stipulates that crude prices are market determined, while prices of refined products are set by the government. When global crude oil prices change more than 4% on 22-day moving average basis, domestic gasoline prices may be adjusted. When global prices exceed US$130/bbl, the government is likely to limit price increases or keep prices capped and resume subsidies to refiners to shield them from losses and to facilitate supply. The magnitude of the adjustment would depend on a formula that provides room for refining costs, refining margin and a guaranteed minimum margin for distributors. We constructed the components of China’s retail gasoline price by breaking down the amount of estimated costs, taxes and margins based on US$100, US$130 and US$150/bbl crude price sustained over one full year. China actually applies hefty taxes on fuel. This includes an 1,350 yuan/tonne consumption tax for gasoline that is unlikely to change. There is also a 17% VAT for all stages of the supply chain, including double taxing the consumption tax. Together, they are about 28% of current retail price. The VAT would rise, as the retail price rises, thus cushioning the fiscal impact. Moreover, China imposes a windfall profit fee on crude produced domestically. The windfall tax is 40% of the portion over US$60/bbl (20%-35% for US$40-US$60/bbl segment). The windfall tax is already earmarked for consumer subsidies, so when crude is under US$130/bbl, only the additional VAT would be a fiscal positive. Beyond US$130/bbl, the windfall tax would be a contribution to the total subsidy, but the VAT would stop rising if retail prices become fixed. Fiscal action may kick in more strongly after global crude prices exceed US$130/bbl for an extended period. So the rise from the current US$100/bbl price fixing to US$130/bbl would be shared only among consumers and refiners. Because of the fixed cost assumptions, the change in retail price would be smaller than the change in crude. If refiner profit margins were to remain at 5%, the retail price would have risen by US$34/bbl. If the margin is squeezed to 0%, the rise would be US$26. In other words, from US$100/bbl to US$130/bbl, about 25% of the cost increase is likely to be borne by the refiners, with the rest passed on to the consumer. When prices get to US$150 on a sustained basis, net fiscal impact from subsidies is likely to be manageable. Assuming authorities do not impose a loss on refiners, we use zero profit margin for refiners. This implies about US$20 of increase in the retail price beyond the US$130/bbl scenario. If all of this increase was absorbed by subsidies, with no increase in the retail price, the Chinese government would have to provide about US$66 billion of subsidies, or 0.8% of our 2011 forecast GDP. Net of the additional windfall tax revenue and the cumulated VAT increases from US$80/bbl in 2010 up to US$130/bbl, the net impact would be just -0.4%. Despite small fiscal impact, implementing subsidies is very difficult. The last time China tried to control retail fuel prices through subsidies was in 2008. The subsidies were paid to the two main state-owned refiners, but were far from enough to offset the losses that refiners were incurring. Yet, the government required the two SOE refiners, with 80% of national refining capacity, to maintain sufficient supply. At the same time, the other 20% of domestic capacity cut production drastically to avoid losses. So the two big refiners increased imports of refined product after reaching maximum capacity. With this in mind, the subsidy strategy may need to change this time around. Authorities may be more inclined to pass on at least a portion of global price increases if inflation is not severe. Subsidies may return to ensure that refiners, especially smaller ones, maintain incentive to produce. Subsidising needy consumers (such as taxis, public transport, agriculture and other public facilities) may receive greater emphasis, though probably more complex. Some leakage is likely inevitable and the size and timing of the subsidies would depend on perceived risks of inflation. This article appeared in The Edge Financial Daily, March 10, 2011.

https://theedgemalaysia.com/node/65634

Remembering Marilyn

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CURATORS of a new exhibition celebrating screen siren Marilyn Monroe, Stefania Ricci and Sergio Risaliti have achieved the unexpected by presenting a fresh take on the woman who once said these wistful words: "I want to be an artist, not a pin-up. I don't want to be sold to the public like a celluloid aphrodisiac." One of Hollywood's most enduring icons has been immortalised yet again in a unique exhibition presented by Italian luxury maison Salvatore Ferragamo, whose handmade shoes were a personal favourite of Monroe's. Personally crafted by Salvatore himself, Monroe never met him as she purchased her shoes from the brand's store in New York, or would have Lee Strasberg's wife pick them up for her from Italy. Despite the distance, the brief was always clear — Salvatore designed them to accentuate the innate and intense physicality of the woman he likened to Aphrodite, the Greek goddess of beauty. Each pair featured an identical design of understated elegance: a pointed toe and a 4½-inch stiletto heel that emphasised the femininity of her famous sway. Interestingly, the shoes that Ferragamo made for Monroe are not the only items on display — the exhibition, simply entitled Marilyn, also includes everything from photographs, primary documents (like a handwritten order for Monroe's shoes from Ferragamo), film clips and costumes from her most iconic films borrowed from museums all over the world and from private collectors. Most interestingly, it also features modern and contemporary artwork and sculptures that cleverly associate this sex symbol extraordinaire with fine art. That said, this is no capricious pairing of seductive forms of the female figure — of which the art world has plenty — with Monroe's own sensuous photographs. It is a carefully curated exhibition that aims to provide a new and original interpretation of this great American actress' persona, seeking to rise above the inevitable murky areas of her life revealed by her tragic death at a young age. The exhibition, held at the Museo Salvatore Ferragamo in Florence, begins with how we best know Monroe — a symbol of beauty and desire. Alongside George Barris' well-known images of her wrapped in a sweater at the seashore is Sandro Botticelli's masterpiece of Venus rising from the sea with the ancient Medici Venus, the source of inspiration for Botticelli's depiction, nearby. Indeed, it is not without reason that writers and artists referred to Marilyn as a Venus or Aphrodite and that she kept a small bronze bust of the Venus de Milo in her home. We know also know that Monroe's beguiling beauty was often exploited for political gain — photographs and film clips show the actress in 1950s Korea, bravely shedding her coat in winter to lift the spirits of the young American soldiers and convey an image of a positive, triumphant America. It is from this viewpoint that the curators have also chosen to include the work of contemporary artist Paolo Canevari, displaying a bomb completely covered in woven luminous mirrors, very similar to the dress worn by the actress for the famous concert that was held for the American troops. Still keeping to the political theme, the following section is devoted to Marilyn's well-known delivery of Happy Birthday, Mister President to John Fitzgerald Kennedy. Documents and film clips from the era and a reproduction of the iconic dress she wore — and of course, the shoes — illustrate the event that launched her on her trajectory and marked the beginning of her ambiguous relationship with the political world of that time. Inspired by the way Monroe dedicated her life to love — or at least, her unending search for it — an entire room is devoted to great heroines who have pursued similar dreams. She is likened to Cleopatra and Dido through two 17th century works of art by Cesare Dandini and Andrea Scacchi, in which red is used to emphasise the heroine's dramatic power. Although it was never a favoured colour of hers, it is the colour of her most famous pair of shoes, covered in red Swarovski crystals, as well as the dominant hue in a celebrated photograph by Milton Greene. Completing this section are two masterpieces by Andy Warhol, whose images of Monroe and other personalities are themselves icons. Warhol's image of Monroe is juxtaposed with his portrait of the only woman who truly contrasted her fame and with whom she always had a connection — Jacqueline Onassis. The exhibition closes with an installation on Monroe's passing, focusing on its impact on her contemporaries and on future generations. This section gives in to the melancholy we all feel for young Norma Jean Baker and her constant craving for love and acceptance, and how that drove her to her death. As Giorgio Bassani's voice recites La Rabbia by Pierpaolo Pasolini, a 1960s-style television shows a short film made by Pasolini after Monroe's death. Also in this section are Bert Stern's stunningly beautiful images known famously as The Last Sitting — Monroe's final and possibly most intimate set of photographs, taken a few weeks before she died. Ferragamo's shoes for Monroe do not hold starring roles in this exhibition, yet they are an important narrative as the life of this talented actress unfolds. It anchors the exhibition in a unique way, and reminds us that despite all the hardship, failed marriages and broken dreams, Marilyn Monroe was really just a lovely girl at heart who had a penchant for high fashion and truly beautiful shoes. This story appeared in The Edge on July 9, 2012.

https://theedgemalaysia.com/node/59848

KLCI falls in early trade in line with regional markets on eurozone ratings downgrade

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KUALA LUMPUR (Jan 16): The FBM KLCI fell in early trade on Monday in line with regional markets that fell increasing worries that the mass sovereign debt rating cuts by Standard & Poor's would further aggravate euro zone funding difficulties and recapitalisation. At 9.20am, the FBM KLCI lost 4.90 points to 1,518.17. Losers led gainers by 144 to 110, while 162 counters traded unchanged. Volume was 180.6 million shares valued at RM60.89 million. Among the early decliners were F&N, Bursa, BHIC, Jaya Tiasa, Petronas Chemicals, Genting, CBIP, Sime Darby and MRCB. Meanwhile, Proton Holdings Bhd and DRB-Hicom Bhd in separate announcements on Monday said they had requested for a trading halt in their securities pending a material announcement. Proton said it had requested for a one-day trading halt on Jan 16 pending an announcement of a material corporate transaction to be made by its major shareholder Khazanah Nasional Bhd. Meanwhile DRB-Hicom, which said it would be “proposing a corporate exercise involving a very substantial transaction” also requested for a one-day trading halt on Monday.

https://theedgemalaysia.com/node/49127

Stakeholder Media Are the New Message

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OVER the past decade convergent trends gutted the mainstream news media (or MSM) in the OECD countries, and set the stage for an unexpected competitor. Concentration of ownership fed the rise of politically biased media networks, whose claims of fairness and balance merely convinced a majority of the public that no news media are fully credible. Simultaneously, downsizing sharply reduced the human capacity of the industry, leaving a content hole that was filled by PR. The public looked elsewhere: Broadband Internet and social media enabled news consumers to follow the influencers most aligned with their values and to view the content that resonates most with them.  Much of that content, and the power over opinion and response that goes with it, now belongs to “stakeholder media”. Stakeholder media comprise channels and formats controlled by communities of practice and interest – brand communities, user forums, activist websites, and many others. They may include Facebook pages or Twitter feeds, but they are hardly about being “liked.” These media exist in order to inform, defend and advance the objectives of particular groups, and to exert influence on organisations, in particular governments and firms. Our new papers in California Management Review and The Journal of Business Ethics demonstrate how they achieve those goals.Related The power of stakeholder media We show that media controlled by NGOs like Greenpeace, responsible shareholders, user forums, corporate employees and watchdog websites can cement coalitions that support, disrupt or even cripple management strategies, whether or not mainstream media are paying attention. The key to our work is system dynamics – a tool used to study how different forces combine in unexpected ways over time to impact the outcomes of management strategies. In one of our new papers, we followed the protests of ecologists over Arctic drilling, as they built de facto coalitions with workers at BP. The result can be compared to a gigantic trap, which tightened progressively on BP even before a series of catastrophic accidents shattered the firm’s reputation. In the nother, we compared three cases of corporate crises drawn from our work over the past decade, and found that they participate in a common system of stakeholder interaction. We modelled that system – a first step toward predicting how specific crises may develop, and how they might be better managed. There is an irony in our work, because we are conceptualising and mapping phenomena that were hiding in plain sight. The Internet began as a community of government-funded university researchers, and its growth was fuelled by the creation and expansion of stakeholder communities since 1992, when a user group for reporters, the “J-Forum”, appeared on Compuserve. Nor is the Internet the only channel for stakeholder communities to exercise influence through media. The explosive rise in the US of Christian broadcasting, the precursor of Fox News, began in the 1970s, in parallel with the development of direct mail as a conservative political marketing tool. The history of media is replete with actors who built their own channels to get their messages past the dominant powers of their time. The end of MSM hegemony Yet until midway through the past decade, the “hegemony” of large media groups over the public agenda was taken as a given by many scholars, organisational leaders and activists. They were right, to a certain extent. The research on agenda-setting showed that most people thought about what “the media” told them to think about, though they did not always think exactly what the media told them they ought to think. Research on social movements confirmed that activists focused on gaining traction through mainstream media coverage. Other media, it seemed, didn’t matter. The rare scholars who said they did were rarely followed, so far as the literature can tell us – at least, not until threads from stakeholder theory, social movement theory and agenda-setting theory began to coalesce into a new stream, of which we are part. At the end of the 1990s stakeholder theorists observed that stakeholders used their own media to influence management and other stakeholders. Around that time we observed that France’s extreme right movement, the National Front, had built its own media channels after the mainstream media (MSM) shut the movement out, and continued growing. In 2006-8, our INSEAD case study of a boycott that targeted Danone SA found that financial analyst newsletters battered the company’s market capitalisation in a moment of MSM indifference. If the MSM really determined what people pay attention to, such phenomena could not have occurred. Contemporary organisational leaders must never forget that their stakeholders, from employees to end users, have the means to make their voices heard, whether or not the mainstream media notice them. Stakeholder media are also business allies We found other cases, including happy ones. Reverend Musical Instruments, a small firm that we studied in the highly competitive, multi-billion dollar electric guitar market, would have vanished if its customers had not spontaneously used online forums to promote its products and counsel newcomers. Likewise, we saw that recent scholarship unpacked how the nascent wind power industry was supported for decades by homegrown media that the MSM disdained to notice. Most exciting, our recent case studies indicate that stakeholder media play a vital role in creating shared value, by linking values-based enterprises to their suppliers and their customers in virtuous circles. Our work also offers hope to the news industry – or at least, the part of the industry that sees its audience as active allies, instead of mere customers or competitors. Even now, news professionals sometimes express outright disdain for stakeholder media makers who cannot afford or do not accept professional ethics or production values. This is a grave mistake: The news industry wasted years deriding bloggers as amateurs, before it began hiring them in hopes of regaining lost audiences. We see stakeholder media as a “disruptive news technology”, resetting ethical and professional standards, and also as a crucial partner for news media. We are exploring how such collaboration might work in case studies and working papers on new business models, in collaboration with WAN-IFRA (the world association of newspapers) and the Aga Khan University.    The Stakeholder Media Project would not have been possible without Johnson & Johnson, who largely funded our most fundamental research. That was visionary, because our research does not fit easily into the marketing categories that dominate media studies at any business school. Our current research focuses on how an online forum inflicted $US 500 million in damages on a unit of a multinational firm. Our agenda here is to precisely map the network of information and influence that feeds to and from a central stakeholder media – taking us a step closer to the day when we can help organisational leaders avoid crises, rather than running after them. We welcome inquiries from organisations and individuals who want to work with us.   

https://theedgemalaysia.com/node/16523

Esso 1Q net profit drops 46.69% to RM82.56m

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KUALA LUMPUR (May 31): Esso Malaysia Bhd's net profit for the first quarter ended March 31, 2012 fell 46.69% to RM82.56 million from RM154.86 million, due to the higher costs of crude oil. In a statement on Thursday, Esso said that although its revenue rose 6.15% to RM2.76 billion from RM2.60 billion a year ago, margins declined as higher prices of crude oil and finished products impacted the costs of goods sold. Earnings per share were 30.60 sen, compared to 57.40 sen a year earlier. The group admits that global economic trends will continue to influence prices of crude oil and the industry's outlook, but ascertained that it would focus on optimising operations, product and services quality as well as cost control.

https://theedgemalaysia.com/node/21322

Puncak Niaga in JV for Indian water supply project

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Puncak Niaga said on Monday, Nov 2 the project was called by the Tamil Nadu Water Supply and Drainage Board. It involved package one of the Hogenakkal water supply and fluorosis mitigation project. It said Lanco, which is listed on the National Stock Exchange of India, is involved in construction, power, EPC (engineering, procurement and commissioning), infrastructure, property development and wind energy industries. Puncak will have a 60% stake and Lanco 40% in the JV company. Puncak would be in charge of overall planning and process design for the water treatment plant, sludge treatment plant, including chemical dosing and storage facilities.

https://theedgemalaysia.com/node/32199

Highlight: YTL Corp 1H profit rises 42% y-o-y to RM1.35b

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KUALA LUMPUR (Feb 20): YTL Corp Bhd reported a 42% rise in first-half profit from a year earlier, helped by the group's utilities and cement operations. In a statement today, YTL group managing director Tan Sri Dr Francis Yeoh Sock Ping said profit rose to RM1.35 billion in the first half ended December 31, 2013 (1HFY14) from RM950 million. Revenue however fell to RM10.12 billion from RM10.19 billion. “The group registered a strong performance for the first half of the 2014 financial year. Revenue remained satisfactory, topping the RM10 billion mark, whilst profit for the period soared just over 42% to RM1.35 billion, anchored by our utilities and cement operations. “Although our utilities division saw a decrease in revenue owing to lower fuel oil trading volumes, as well as lower units and prices of electricity sold, this was offset by better pricing as allowed by the industry’s economic regulator in our UK water and sewerage division, and lower losses recorded by our mobile broadband network division as the network continues to expand in terms of both coverage and subscriber base," Yeoh said. According to Yeoh, a fair value gain in the group's Singapore-listed Starhill Global REIT’s investment properties had also contributed to the YTL group’s performance. YTL's statement did not include YTL Corp's 2QFY14 financials. Meanwhile, Yeoh said YTL Corp's 50.51% subsidiary YTL Power International Bhd's 1HFY14 profit fell to RM490.8 million from RM503.8 million a year earlier. Revenue fell to RM7.75 billion from RM8.28 billion. "The board of directors of YTL Power declared a distribution of 1 treasury share for every 20 ordinary shares of RM0.50 each held in YTL Power, the book closure and distribution dates for which are 13 March 2014 and 27 March 2014, respectively," Yeoh said.

https://theedgemalaysia.com/node/66475

#Highlight* MCA polls: Gan Ping Sieu to go for president too

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Last Updated: 4:57pm, Nov 26, 2013 KUALA LUMPUR (Nov 26): MCA vice-president Gan Ping Sieu announced today that he is going for the president post in the coming Dec 21 party poll. With this, a three-cornered fight for party president is expected since deputy president Datuk Seri Liow Tiong Lai and former president Datuk Seri Ong Tee Keat had also declared their intention to vie for the seat. Gan, 47, seen as an articulate young leader in MCA, was elected as the party's central committee member in 2008 and as vice-president in the 2010 party re-election. "I hereby officially announce that I will contest in the coming MCA party election," he told a press conference at the MCA headquarters today. Feeling that it is time for him to offer his leadership to the party, Gan said he is also offering a roadmap to revamp the party. "When I communicate with the grassroots for the past few months, I can deeply felt that they want a new roadmap and new direction of the party. “This is to bring the 60-year-old MCA that had contributed to nation building out of its low point, to bring back dignity to the members of the party," said Gan who was elected Mengkibol state assemblyman in 2004. In the 2008 General Election (GE) he was defeated by DAP. Subsequently, he was appointed as a Senator and Deputy Youth and Sports Minister. However, in the 13th GE this year, he was dropped from the list of contenders. Gan said the old politics of MCA which is seen as a service oriented party, a firefighter when a certain issue comes up or a less influential component parties in Barisan Nasional (BN), must be changed to stay relevant. Also, he had proposed to form a BN reform committee so that the ruling coalition can be more inclusive in politics, taking into account the economy as it is the essence of a country’s foundation. “I will reveal my roadmap and manifesto in due time,” Gan said. He who has said previously that MCA needs a strong president, pointed out today he has been very vocal in many issues and never shy away from national, communal, racial and political issues. He will let the delegates to judge if he fits into their ideal of a strong president. Asked if he got the blessing from party president Datuk Seri Chua Soi Lek, Gan said: "Being my party president, he is fully aware of my move, and being my party president, it is not right for me to comment on behalf of him." Thus, he did not want to reveal his conversation with Chua out of respect for the party leader. He also said it is unfair to the central delegates and to Chua for him to say whether he is his proxy in the race or not. On Ong’s announcement a day ahead of him to join the race, Gan said any party leader who is a central delegate has the right to contest and it is up to the central delegates to make their choice. He said the party is big enough to accommodate anyone and any leaders who contest and lost can still contribute to the party. Gan, who has been working in the party for 20 years, admitted that he was relatively junior as compared to Liow and Ong, but he hoped he would not be handicapped by this. He also does not see the fact that he has yet to hold a full minister post as a weakness. "I am seen to be less factional in nature and maybe, less leakages. This could be my strength. And MCA cannot afford to be all bogged down by nothing but political personality and factional warfare endlessly." He cited the example of the current UK Labor Party president Edward Miliband, 40, who had defeated four of his contenders who are senior than him, including a senior cabinet secretary of state. Miliband's victory was in the context which the party was eager for change after it lost power in the 2009. Gan related that the grassroots are eager for change after the party’s disastrous defeat in the GE13. However, he did not say further if he has the advantage in light of this sentiment. For more stories, go to www.fz.com, the website for freedom of expression and fairness in articulation.

https://theedgemalaysia.com/node/53370

ECER launches entrepreneur development programme, RM10m fund

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KUALA LUMPUR: The East Coast Economic Region Development Council (ECER) has launched the Bumiputera Commercial and Industrial Community (BCIC) and a RM10 million SME Leveraging Fund as part of its ECER Entrepreneurship Development Programme (EEDP). The RM10 million fund will be used to top-up differences between interest rates imposed by commercial banks, and the interest rates intended for the EEDP. It is aimed at stepping up government and private partnership where the private sector plays a key role in providing loan funds for entrepreneurship development programmes. The implementation of the fund was formalised on Tuesday, Aug 16 after ECER inked agreements with Agrobank and SIRIM Bhd. Signing on behalf of ECER was its chief executive officer Datuk Jebasingam Issace John, while Agrobank was represented by its CEO Wan Mohd Fadzmin Wan Othman and SIRIM by its acting president and chief executive Dr Zainail Abidin Mohd Yusof. Wan Mohd Fadzmin said Agrobank would allocate RM27 million to RM30 million for the scheme. The agreement will see Agrobank assist all EEDP entrepreneurs shortlisted by ECERDC and SIRIM with regards to soft or micro loan applications at a special interest rate, via the top-up mechanism. Agrobank will provide SME loans of between RM50,000 and RM250,000 as well micro credit loans of up to RM50,000 to entrepreneurs with a maximum tenure of 60 months in ECER's key sectors. For any loans with an interest rate of above 4%, the fund will kick in. Minister in the Prime Minister’s Department in charge of the Economic Planning Unit Tan Sri Nor Mohamed Yakcop, who witnessed the signing of the agreement said entrepreneurs and SMEs faced many challenges, adding that emerging entrepreneurs sometimes only needed credit irrespective of costs during the initial start-up period. Meanwhile, Jebasingam said the partnership with Agrobank and SIRIM would at least 100 BCIC entrepreneurs and SMEs from ECER by the end of 2012.  

https://theedgemalaysia.com/node/65916

In Briefs

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SILK bags RM35m contracts KUALA LUMPUR: SILK Holdings Bhd’s subsidiary Jasa Merin (M) Sdn Bhd has clinched contracts worth RM35 million from ExxonMobil Exploration and Production Malaysia Inc for the provision of two anchor handling tug supply vessels. SILK told Bursa Malaysia yesterday the contracts commenced in mid July 2012 for 18 months, with an option exercisable by the charterer for a further 12 months’ extension. The contracts are expected to contribute positively to its earnings and assets for the financial years ending July 31, 2012 and 2013. AEON aborts land deal with DBKL KUALA LUMPUR: AEON Co (M) Bhd has terminated its plan to acquire a 2.53ha site together with a shopping centre to be erected thereon from Kuala Lumpur City Hall (DBKL) that was proposed in January 2009. In a filing with Bursa Malaysia, AEON said the deal worth RM107.23 million was cancelled due to the non-fulfilment of certain conditions. It said it will seek the refund of the security deposit of RM2.72 million. ATS ties up with Chinese firm KUALA LUMPUR: AT Systematization Bhd has teamed up with Maoming Jiacheng Industrial Co Ltd (JCheng) to explore the formation of a joint-venture company (JVCo) “to expand renewable energy production capacity”. It said the expansion could be in Malaysia due to the availability of raw materials and feed and the JVCo shall be the vehicle to own the new production facility proposed to be built there. JCheng is involved in new energy resources with an annual production of 600,000 tonnes. Top Gloves buys Melaka glove firm KUALA LUMPUR: Top Glove Corp Bhd has proposed to acquire Melaka-based rubber glove maker GMP Medicare Sdn Bhd from Matang Manufacturing Sdn Bhd for RM24.13 million. The world’s largest glove manufacturer said the proposed acquisition is in line with its plan to increase global market share. GMP is expected to contribute to the profitability of the group going forward. The proposed exercise is expected to complete within six months. Rexit raises stake in Reward-Link KUALA LUMPUR: Rexit Bhd has increased its stake in Reward-Link.com Sdn Bhd to 49%, having acquired another 29% from Kong Hein Hau, Reward-Link’s major shareholder, for RM1.59 million cash. “It is the Rexit management’s intention to increase its shareholdings in Reward-Link to a more meaningful level and ultimately to gain full control,” Rexit said in a filing with Bursa Malaysia. Reward-Link’s link with the Road Transport Department is crucial to Rexit’s e-Cover motor business. This article appeared in The Edge Financial Daily on July 18, 2012.

https://theedgemalaysia.com/node/83960

Malaysian, Indonesian CPO producers on a par from 2014

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KUALA LUMPUR: Malaysian palm oil producers exporting their products to the European Union (EU) will compete on a level playing field with their Indonesian counterparts when Malaysia loses its Generalised Scheme of Preferences (GSP) benefits beginning January 2014. The Indonesian palm oil sector will lose its EU GSP privileges for two years — from 2014 to 2016 — under a “graduation” mechanism imposed on Indonesia’s animal and vegetable oil sector since 2005. “Graduation means that a country with 17.5% [or more] of all imports into the EU under the GSP for a certain category of products are considered to be competitive, and no longer need GSP benefits. “Hence, for a period of two years, GSP privileges are suspended for that sector,” said Alessandro Paolicchi, first counsellor and head of the EU delegation’s trade and economic relations, during a recent interview with The Edge Financial Daily. Also present was EU ambassador to Malaysia, Luc Vandebon. Paolicchi noted that if Indonesia’s exports drop below the 17.5% threshold, then the country will be back under the GSP scheme because it is still technically under the EU’s list of GSP beneficiary countries. “Malaysia is out for good,” said Paolicchi. In October 2012, the EU excluded 12 countries including Malaysia from its GSP list as these countries have been classified by the World Bank as upper-middle income nations. Without the preferential treatment, Malaysian businesses will no longer benefit from the maximum 3.5% tax reduction on duties into the EU. In 2011, Malaysia’s total preferential exports to the EU under the GSP scheme came to €3.4 billion (RM13.5 billion). Under the EU GSP scheme, Malaysian exporters get duty reductions of up to 66% of tariff headings in the EU. Paolicchi said there are no trade restrictions against Malaysian palm oil or palm-oil based biofuels despite increasing non-governmental organisation (NGO) activism in European countries, as NGO activities remain beyond the EU government’s control. “We want to have the right to make sure that European taxpayers’ money goes to truly sustainable biofuels,” he said, adding that as long as Malaysian biofuels are sustainable, they would be eligible for incentives. “We have a regime in the EU where we give fiscal incentives and subsidies for the use of sustainably produced biofuels according to scientific criteria enshrined under EU law,” Paolicchi said, referring to EU’s Renewable Energy Directive (EU Red). Under the EU Red, the eligibility threshold for biofuels is set at 35% savings in greenhouse gas emissions compared with fossil fuels. This article first appeared in The Edge Financial Daily, on April 22, 2013.

https://theedgemalaysia.com/node/8691

#Today's Diary* What to expect on Apr 13, 2010

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1. Deputy Minister of International Trade & Industry to officiate the Halcos 2010 International Conference at Matrade Exhibition & Convention Centre at 9am 2. Official launch of Senibong Cove by Datuk Haji Abdul Ghani Othman at Project Site, Permas Jaya, Johor at 9.30am 3. Datuk Seri Ong Tee Keat visits the Integrated Transport Terminal Gombak at Terminal Putera (LRT), Gombak at 9.30am 4. Ariantec Global Bhd signs MoU with Australian-based Exinda Networks at One World Hotel, PJ at 10.30am 5. The Centre for Public Policy Studies, SEDAR Institute and Wawasan Open University organise a forum on the 1st Stage of the New Economic Model at Seminar Room 1 & 2, Wawasan Open University, KL at 2pm 6. Baharani Beverages Sdn Bhd launches its latest product Golden Ocean Drinking Water at 52/2, Jln 27/70A, Desa Sri Hartamas, KL at 3pm 7. Official launch of the HTC Legend, HTC HD Mini, HTC Smart at The Opera, Oasis Boulevard, Sunway Pyramid Shopping Mall, PJ at 4pm

https://theedgemalaysia.com/node/11498

#Update* Petronas buys up Dow’s interest in Optimal for US$600m

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Set up in July 1998, the Optimal Group of Companies comprises three joint ventures involving Petronas and UCC.They are Optimal Olefins (Malaysia) Sdn Bhd (Petronas: 64.25%, UCC: 23.75%, Sasol: 12%), Optimal Glycols (Malaysia) Sdn Bhd (Petronas: 50%, UCC: 50%) and Optimal Chemicals (Malaysia) Sdn Bhd (Petronas: 50%, UCC: 50%). Headquartered in Kuala Lumpur, Optimal makes more than 70 products and serves key markets in the Asia-Pacific region from its petrochemical facility in Kerteh, Terengganu. According to their joint statement yesterday, Petronas would fund the acquisition through internal funds. The transaction, subject to customary conditions and approvals, is expected to close by the end of the third quarter of 2009. Dow and Petronas have agreed to enter into a commercial supply agreement allowing the two companies to continue serving the current customer base with products manufactured by Optimal. Dow will market Optimal’s basic and performance chemicals products to Dow’s existing customer base in Asia Pacific. “Optimal has been a great investment, thanks to the dedication and hard work of our joint venture employees and our partner Petronas,” said Andrew N Liveris, Dow chairman and chief executive officer. “With this transaction, we hand over the management of these businesses to Petronas, while at the same time remaining committed to our customers in the region. This divestiture and commercial arrangement demonstrate Dow’s ability to increase its financial flexibility and to continue to deleverage the balance sheet.” Petronas president and chief executive officer Tan Sri Mohd Hassan Marican said: “Our purchase of Dow’s equity in Optimal would enable us to strengthen our presence in olefins and reinforce the growth of the Malaysian petrochemical industry. “We have had an excellent working relationship with Dow over the years in Optimal, and we expect that will continue, with Dow now becoming one of Optimal’s largest customers.” According to the statement, Dow’s divestiture of Optimal follows other actions designed to increase its financial flexibility, improve its cash flow, and pay down its bridge loan. Dow has announced the US$1.7 billon sale of Morton Salt, a transaction expected to close in the second half of 2009, sold the company’s calcium chloride business to Occidental Petroleum for over US$210 million and a definitive agreement to sell interest in Total Raffinaderij Nederland N V for an enterprise value expected to be about US$725 million. Among its recent actions, Dow has issued US$6 billion of new long-term debt, US$2.25 billion of new equity and eliminated US$3 billion of perpetual preferred securities from the capital structure. In 2008, Dow had annual sales of US$57.5 billion and employed about 46,000 people worldwide. It has 150 manufacturing sites in 35 countries and produces about 3,300 products. On April 1, 2009, Dow acquired Rohm and Haas Company, a global specialty materials company with sales of US$10 billion in 2008, 98 manufacturing sites in 30 countries and about 15,000 employees worldwide.

https://theedgemalaysia.com/node/10368

Chor to appear before PAC on PKFZ saga

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Speaking to reporters after opening the "CFO Summit 2009" here today, he confirmed he was among several persons involved in the PKFZ project that had been summoned by the PAC to attend the ongoing probe. Chor added that PAC was merely doing its job in studying the PricewaterhouseCoopers (PwC) report on the PKFZ project that was made public in May. "I will definitely cooperate with them (PAC) and I am just waiting when they are going to fix the date," he said when asked to update on the controversial PKFZ project. Last Wednesday, PAC chairman Datuk Seri Azmi Khalid said it would summon key persons in the PKFZ project including transport ministers to appear before the committee in two weeks. Besides Chor, it is learned that former transport ministers Tun Dr Ling Liong Sik, Tan Sri Chan Kong Choy, current transport minister Datuk Seri Ong Tee Keat, Kuala Dimensi Sdn Bhd (KDSB) chairman and Bintulu MP Datuk Seri Tiong King Sing and Sementa assemblyman Datuk Abdul Rahman Palil have been summoned to appear before the PAC. The PwC report revealed details that the PKFZ project that was initially estimated at RM1.96 billion ended up costing PKA RM4.95 billion including interest cost due to deferred payments. The report states that the project outlay will cost RM7.45 billion inclusive of a soft loan provided by the Ministry of Finance (MoF), which PKA has to start paying from next year. It also said should PKA fail to meet its debt obligation to MoF, it is expected to be cash flow negative till 2041 and would incur further interest cost to push the total project outlay to RM12.45 billion.

https://theedgemalaysia.com/node/72526

Decent 3rd quarter earnings outlook

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KUALA LUMPUR: The third quarter (3Q) reporting season, with most companies announcing their results this month, is expected to see decent earnings for most sectors including plantations, despite a slide in crude palm oil (CPO) prices in the previous quarters. Analysts and research houses contacted by The Edge Financial Daily picked the rubber glove and construction sectors as two top performers in the 3Q reporting season. According to Syed Muhammed Kifni, head of MIDF Research, companies in the plantation sector, which saw CPO prices falling almost 6% to an average of RM2,903 per tonne in the 3Q against the same period last year, can expect earnings to pick up slowly for the rest of the year. “We expect earnings for plantation companies in 3Q to improve on a sequential basis due to higher fresh fruit bunch [FFB] and CPO output, attributable to the peak cycle season,” Syed Muhammed noted. “However, on a yearly basis, earnings are expected to be lower as a result of subdued CPO prices, coupled with weak aggregate production due to the tree stress effect,” he said.OSK Research had an “overweight” call on the plantation sector in a recent note, saying “We doubt CPO prices have much room to fall, given that it is already trading at close to parity with crude oil, which makes biodiesel viable.” This will limit further downside of CPO prices. “The industry is suffering from “indigestion” due to a surge in production in the peak season and restrictive export duty, resulting in ballooning inventory,” said the research house.According to Affin Investment Bank (Affin IB), high levels of inventory added to the anaemic demand, and weak economic sentiment make up a bearish trifecta that may further cap any upside to CPO prices. “With short-term bearish factors raising the downside risks to our 2012 to 2014 CPO price assumption of RM3,000 per tonne, as well as profit forecasts and valuations, we believe it is not the time to upgrade the sector to ‘neutral’ and ‘stock calls’,” it said. Some analysts have recommended buying into laggard stocks — Sime Darby Bhd and IOI Corp Bhd — along with companies showing good production growth prospects like Genting Plantations Bhd, IJM Plantations Bhd and TSH Resources Bhd. Affin IB, on the other hand, has “buy” calls on both Sime Darby and Sarawak Plantations Bhd, and “add” recommendations on Felda Global Ventures Holdings Bhd and Hap Seng Plantations Holdings Bhd. For the rubber gloves sector, MIDF’s Syed Muhammed expects rubber glove producers to improve their earnings on a sequential and yearly basis due to the more conducive operating environment. Affin IB said growth prospects are healthy with all four stocks under its coverage expected to post low to high teens earnings growth in 2013 while offering a net dividend yield of 2.6% to 3.4%. “This is decent for a sector with reasonably defensive growth potential,” said Affin IB in a report. The research house has an “overweight” call on the sector, saying growth will be backed by resilient demand for gloves, improving operational efficiencies due to automation and stable latex price expectations. Affin IB is positive on the recent mergers and acquisitions in the sector. “Assuming both Adventa [Bhd] and Latexx Partners [Bhd] are successfully privatised, this will leave the local bourse with only four listed rubber glove manufacturers,” it said. Affin IB expects Hartalega Holdings Bhd’s revenue and net profit growth for 3Q, which will be announced tomorrow, to be between 8% and 12% year-on-year (y-o-y). Both Top Glove Corp Bhd and Kossan Rubber Industries Bhd enjoy “add” ratings, with Supermax Corp Bhd a “buy”. “Valuations of Supermax and Kossan are highly attractive, trading at around 25% discount to prevailing average industry PER [price-earnings ratio] of 13 times,” said Affin IB.Market observers have generally been positive on the construction sector and continue to expect a good showing by construction companies. “We expect 3Q aggregate net profit of construction stocks under our coverage to continue rising, driven mainly by higher sales recognition as many of the ongoing projects have reached their mid to end stages of completion, and higher margins from lower building material prices, particularly steel,” said MIDF’s Syed Muhammed. According to Gan Eng Peng, head of equities at Hwang Investment Management Bhd , the sector should see no surprises ahead of the general election due to its inadvertent links to politics. “To avoid any unwarranted attention, the construction companies may opt to keep their income statements muted,” he said. But the uncertainty of the upcoming election still weighs on the sector. Should the outcome see Barisan Nasional emerge with a strong mandate, the sector will benefit from more contracts and greater earnings visibility, opined Nazri Khan of Affin IB. Gamuda Bhd is the top pick for both MIDF Research and RHB Research, with the former placing a “buy” call on the company. For the banking sector, statistics in September indicated that total loan growth fell to 11.9% y-o-y from 12.3% in August. “This softening loan growth was mainly due to weakening business loan growth of 12% from August 2012 (13.2% y-o-y),” said UOB Kay Hian Research in a note last Thursday. “However, business loan growth might stabilise with the pick-up in business loans applied which grew 16.7% y-o-y,” it added. “On an absolute number basis, net profit of banks in 3Q is likely to be higher than 2Q. We expect banks’ net profit in 3Q to remain decent and should fall largely within our expectations, on the back of a stable asset quality with an improved credit cost compared to the previous financial year,” commented MIDF’s Syed Muhammed. Nazri, picked Public Bank Bhd, CIMB Group Holdings Bhd and Malayan Banking Bhd (Maybank) to remain leaders in the sector. UOB Kay Hian said Public Bank is one of the best managed banks in Malaysia with a high return on earnings of 23.7%. “Its earnings are also the most resilient during an economic slowdown,” it added. The property sector should fare decently, with the mid-range housing market segment performing particularly well on the revenue of property launches, said Gan of Hwang Investment. “Due to the property boom post-global financial crisis in 2009, revenue growth should start to show in their income statements by now. As such, we believe the property sector will show decent 3Q12 earnings,” said Gan. MIDF’s Syed Muhammed said so far this year, developers with the right products, pricing and marketing strategies continued to achieve commendable sales growth despite the global economic uncertainties and tighter bank lending policies. Sunway Bhd, for example, has raised its sales target for financial year 2012 to RM1.3 billion from RM1 billion. “Likewise, S P Setia Bhd has recorded a very high take-up rate for their latest upmarket project in Cyberjaya,” he said. RHB Research’s Leong Kok Wen told The Edge Financial Daily it is maintaining its “neutral” rating for the sector, as its fundamentals are not strong enough to warrant a re-rating. According to Leong, the property sector would be afflicted by dampened market sentiment following the increase in real property gains tax announced in Budget 2013 although the rise is lower than initially expected, and investors would remain cautious on uncertainty of the upcoming election. For the oil and gas sector, MIDF Research expects 3Q earnings to fall within expectations. “We do not foresee any surprises as we believe that earnings growth of upstream services companies will continue to benefit from on-going contracts. In addition, 3Q saw an upward trend in oil prices which should sustain earnings of downstream players,”said Syed Muhammed. However, Gan of Hwang Investment had a word of caution. “Earnings from the oil and gas sector could disappoint as huge contract flows in Malaysia as well as the region have been weak,” he noted.   This article first appeared in The Edge Financial Daily, on Nov 5, 2012.

https://theedgemalaysia.com/node/10105

Ireka lags rally due to defensive qualities

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   IREKA Corp's (72 sen) share price has lagged its peers and the broader market in the recent rally. The stock started the year at 66 sen, and has risen only 9.1% to 72 sen for the first half of 2009, as compared with a 20% gain for the KLCI. From its March 2009 lows of 56 sen, the stock is up 29%, nowhere near the doubling of many construction and property stocks.   Ireka's lagging share price could be due to the fact that while it is a construction and property play, it is also relatively more defensive in nature. Its earnings are decent relative to size, but will lack the strong growth that other property players will usually see during an economic recovery. Nonetheless, its business model also ensures downside is limited during an economic downturn. This is because the group's ongoing property projects in Malaysia and Vietnam are all parked under its London-listed property fund, Aseana Properties Ltd (ASPL). ASPL is considered an investment and its earnings are not equity accounted, although Ireka's stake has recently increased from 19.6% to just over 20% after ASPL bought back 15% of its own shares. Any upside will be reflected in ASPL's share price or net asset value (NAV), rather than Ireka directly. Ireka's unique business model ensures a steady stream of sustainable earnings from management fees from ASPL, balanced with cyclical construction profits. The core construction arm's large order book will keep it busy for the next 2-3 years and margins should look better as building material costs, especially steel, have fallen. Through ASPL it also has access to a large war chest for future investments in Malaysia and Vietnam. This gives Ireka a far larger scale of operations than otherwise possible relative to size. Ireka's core construction arm has a large RM722 million order book, some 8.8 times its current market capitalisation of RM82 million. This is largely for projects undertaken by ASPL, which ensures negligible default or late payment risks, a common problem for the industry during a slowdown. An asset-light balance sheet insulates the company from the current downturn. As such, its balance sheet should remain reasonably healthy — and can sustain high dividends — with funding needed only for ongoing construction activities. We maintain our buy recommendation. At 72 sen, its shares are trading at price-to-earnings (P/E) valuations of around 5.7 times for FY March 2010-11 and well below their latest book value of RM2.06. We expect attractive dividend yields of 4.9% in FY10-11, based on a more conservative 28% payout ratio, as compared with the company's earlier stated 40% payout ratio.   Recent final results Ireka's recently released final results for FY March 2009 were within expectations. The company was solidly in the black in the fourth quarter (4QFY09) as the fall in building material and commodity prices benefited its construction arm. The company posted net profit of RM6 million for the full year, on the back of turnover of RM323.7 million. This was within our forecast of RM6.4 million and RM316 million, respectively. Its results would been better if not for a one-off loss of RM1.75 million for some IT investments. The effective tax rate was low at 13% due to allowances from previous losses. A comparison with the previous year is not relevant as FY08 included RM175.8 million in exceptional gains from the disposal of several property companies to ASPL. As such, the company posted a net profit of RM157.6 million in FY08. In 4QFY09, Ireka posted pre-tax profit of RM4.1 million, compared with a loss of RM6.6 million a year earlier. Net profit came in at RM4 million, compared with a net loss of RM5.7 million previously. The quarter's profits accounted for 67% of the full year total.   The construction arm has turned around well after several years of losses due to escalating building material costs. The construction arm posted revenues of RM286.5 million for FY09 — accounting for 88% of Ireka's total. Although this turnover was almost similar to FY08, the construction division reversed from a pre-tax loss of RM27.2 million to a pre-tax profit of RM7.5 million, with pre-tax margin of 2.6%. We expect margins to improve to 4.5% in FY10 as cost pressures ease.     As at March 2009, net debt stood at RM84.2 million, with gearing at a very manageable 36%. Positive earnings outlook There is growing consensus that we have already seen the worst for the global and domestic economy in 1Q09. However, the road to recovery is still patchy and a bottoming of the economy is only likely to happen in 4Q09. Even then, the property sector tends to lag the economy. This could see fewer new jobs available for property-based construction players — even if the economy as a whole starts to recover. Indeed, much of the recent upsurge in property sales has been from clearing existing stocks with attractive financing packages and discounts, rather than new launches. Despite the more subdued outlook ahead, Ireka's revenues are largely assured — and earnings should look quite positive for the next two years. Revenue over the next few years will be supported by a large unbilled order book totalling RM722 million. The steep fall in building material and commodity prices from 4Q08 has also removed major cost pressures that crimped margins earlier. The product mix of Ireka's order book will improve going forward and this will boost margins. The older projects were the ones most affected by higher costs due to lower original contract prices. These include I-Zen@Kiara 1 (completed in June 2008), Tiffani by i-Zen (which will complete in 3Q09) and One Mont'Kiara (which will complete in 2Q2010). As these older projects are being progressively completed, the order book is being replenished by newer and better-margin ones, priced when building material prices were much higher. Most notable is the RM539.8 million Seni Mont'Kiara contract secured in July 2008, which forms the bulk of the outstanding unbilled order book. The construction order book is likely to grow further given the pipeline of ASPL's new projects, which includes two office towers and a hotel within KL Sentral and two joint-venture projects in Ho Chi Minh City, Vietnam — Queen's Place and Hi-Tech Healthcare Park. The timing of these projects will depend on market conditions. Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.

https://theedgemalaysia.com/node/63076

S P Setia unit to raise RM505m debt notes

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KUALA LUMPUR (March 5): S P Setia Bhd has proposed to raise RM505 million to part finance the purchase of a piece of land in Rinching, Semenyih, Selangor. The property company said on Monday its unit Setia EcoHill Sdn Bhd had proposed to issue commercial papers and/or medium term notes of up to RM505.0 million in nominal value. “The notes will be issued in two tranches of MTN up to RM305 million and CP and/or MTN up to RM200 million. Tranche 1 (RM305 million) will be fully subscribed by Alliance Bank Malaysia Bhd. The primary subscriber for Tranche 2 (RM200 million) has yet to be determined,”it said.

https://theedgemalaysia.com/node/60045

TNB shows strong q-o-q improvement

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Tenaga Nasional Bhd(Jan 18, RM6.10) Maintain buy with target price RM7: Tenaga Nasional Bhd achieved 1QFY12 ended November 2011 unit sales growth of 3.7% year-on-year (y-o-y), supported by demand growth from both the industrial (+4.4%) and commercial (+3.9%) segments with improvement from steel and cement plants, and recovery in demand from petrochemical plants. Revenue in 1QFY12 came in much stronger at 12.5% after the 7% average tariff hike effective June 1, 2011. TNB’s 1QFY12 core net profit, after excluding foreign exchange loss of RM419.1 million, came in at RM194.4 million. The strong earnings turnaround from 4QFY11 ended August core net loss of RM119.3 million, was the result of an increase in gas supply to 1,050 million metric standard cubic feet per day (mmscfd), from just 900 mmscfd in 4QFY11 as TNB incurred additional costs from using more coal, oil and distillate in its generation mix. TNB has received RM1 billion in  compensation due to gas shortages, and Petronas will pay the remaining RM1 billion over the next few months. Apart from the RM2 billion claim, TNB will continue to ask for compensation as the current gas supply still falls below the agreed supply of 1,350 mmscfd. The approval of the gas compensation has demonstrated TNB’s ability to pass on increases in cost through the cost pass-through mechanism. We expect TNB’s earnings to recover strongly in FY12F following the RM2 billion gas compensation and increase in gas supply to 1,150 mmscfd for FY12. The gas shortage issue should also be resolved following the completion of the new regassification plant by Petronas Gas Bhd in July 2012. Maintain “buy” for strong earnings recovery and attractive valuation of FY13F price earnings ratio (PER) of 13 times and price-to-book value of one times.  Our target price of RM7 is pegged to 14 times CY13 PER, the average PER over the last two years. — HwangDBS Vickers Research, Jan 18 This article appeared in The Edge Financial Daily, January 19, 2012.

https://theedgemalaysia.com/node/87598

Rubber prices close lower

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KUALA LUMPUR (Oct 18): Malaysian rubber prices closed lower today, due to lack of demand for the commodity, dealers said. The bearish sentiment was also influenced by lower rubber futures prices on the Tokyo Commodity Exchange. "The market fundamental is weak and prices are heading downwards," said dealer. At noon, the Malaysian Rubber Board's official physical price for tyre-grade SMR 20 was 14.5 sen lower, at 742.50 sen a kg, and latex-in-bulk shed two-and-a-half sen, to 534.50 a kg. The unofficial closing price for tyre-grade SMR 20 dropped 8.50 sen to 740 sen a kg, and latex-in-bulk decreased one sen to 534.50 a kg.

https://theedgemalaysia.com/node/4279

Why fees matter

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The fees imposed with investment products are not always obvious and often not thought about. But they matter to your investment success. Of course, cheaper isn’t necessarily better. And if you are in it for the long term, the costs averaged out won’t seem so severe. But as an investor, you should always know what you are paying for. Here’s why.  What really matters are the returns after expensesThe performance tables and annual reports of unit trust and investment-linked funds don’t tell the whole story. They measure the performance of the fund manager rather than your returns. What matters to you is how much you have put in and how much you get at the end of the day. If you put in RM10,000 and 5% is deducted as fees, the fund would need to gain more than 5% to put you in the black. In bull markets, a 5% fee would seem small if you obtain a 25% gain. But as we go into uncertain times, some pundits argue that the age of oversized returns won’t return for a while. When markets are flat, fees are going to make a big difference to your returns.  Know what you should be getting for your money The fees you pay are for a service. The person providing the service should know his job. For active managers, the fee is paid to outperform a benchmark. Yet, I have seen charts of a so-called growth fund that hugged its benchmark index. Say, two managers invest in the same stocks in the same manner. The returns they are both able to squeeze out of their portfolio are the same. But if one manager charges 0.5% and the other charges 1.5%, guess which fund will give you a bigger return?The same goes with managers who hold a lot of cash without warrant — you can hold your own cash for free! As for the upfront sales charge, the bulk of it goes to the party who sold you the fund. So does a portion of the annual management fee that is charged to the fund. What are these sellers doing to earn that money?  Make proper comparisons and go in with your eyes openThose who choose to ‘invest’ in an investment-linked policy (ILP), need to minimise their fees as well. In the world of ILPs, premium allocation is what equates to sales charges. In regular premium policies, an example of premium allocation for Year one is 40%. This means that out of RM10,000 placed in the first year, only RM4,000 goes to buying units. The remaining 60% doesn’t go to paying your insurance charges — no, that comes out of your RM4,000 as well. Now, if you are aware of the charges, you would know that you shouldn’t be using these regular premium products if investing is your main objective. With such huge leakages, the “investment” would have to surmount a mountain to deliver a real positive gain. Special top-up facilities or single-premium investment-linked products take much less away, with typically 95% premium allocations. Capital protected funds, with their “return of capital” feature, may seem like bank deposits on steroids. But beyond the extra risk, you must compare the fees. Say, the fund manages to deliver 15% over three years. Sounds good? Over a year, that is an annualised gain of 4.8%. Common sales charges for these protected funds are 2% to 3%. To figure out whether the additional risk you took is worthwhile, you have to account for the fee. There are no fees for placing money in a fixed deposit account, there are no risks and there is no long lock-in period that may cost you a penalty if you were to withdraw your money earlier.   This article was first published in the March 2009 issue of Personal Money, a personal finance magazine published by The Edge Communications. Tan Su-Yin is editor of Personal Money.

https://theedgemalaysia.com/node/82833

Feature: Glove sector may revisit 2009 boom on bird flu scare

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KUALA LUMPUR (April  9): The rubber glove sector may enjoy the boom time of 2009-2010 again if the current bird flu scare in China develops into an uncontrollable global epidemic, according to analysts. The H1N1 bird flu virus that caused more than 12,000 deaths between March 2009 and August 2010 lifted the profits and share price of major glove producers. Share price of Top Glove Corporation Bhd, the world’s largest glove maker, nearly tripled to RM5 at end-2009 from RM1.74 a year earlier. Similarly, Supermax Corporation Bhd’s price jumped six fold to RM1.88 from 32 sen. While currently shares of glove companies have risen on news flow, analysts said the gains are due to speculative dynamics instead of fundamentals. The flu outbreak has yet to reach a critical stage. And if it is proven that human-to-human transmission had taken place, spread of the disease could be faster. "The industry may be rerated if the bird flu gets worse," RHB Research Institute Sdn Bhd analyst Lester Chin told theedgemalaysia.com over telephone. Glove manufacturers and the investment fraternity believe the outbreak of the H7N9 flu will lead to a short-term spike in demand for rubber gloves and profits for manufacturers. Supermax CEO/group managing director  Datuk Seri Stanley Thai said the firm is anticipating a "short-term exceptional rise in profits," due to higher demand for rubber gloves amid the bird flu outbreak in China. Thai said the company has received new enquiries and additional orders from existing customers in China over the last few days. This is, especially, for powdered natural rubber latex examination gloves as the major emerging economy has been a major importer of these products. Top Glove Corp Bhd managing director K.M. Lee said world rubber glove demand is expected to spike if the H7N9 bird flu in China develops into an epidemic along the proportions of the H1N1 outbreak in 2009 and 2010. Lee said Top Glove will continue with its glove capacity expansion to fullfill a potential rise of up to three fold in demand for the product in China should the current outbreak gets worse. Driven by news flow on the H7N9 flu, investors have been quick to accumulate shares of rubber glove companies to capitalise on the earnings growth outlook. That has helped spurred the price of glove stocks in recent days before profit taking pared gains. At 12.30 pm today, Top Glove Corp Bhd and Supermax Corp Bhd fell six sen each to RM5.91 and RM2.09 respectively while Hartalega Holdings Bhd fell three sen to RM5.18. Kossan Rubber Industries Bhd rose one sen to RM3.82. Yesterday (Monday, April 8), Top Glove jumped 24 sen or 4.2% to close at RM5.97, Supermax leapt 13 sen or 6.4% to RM2.15, Kossan added eight sen or 2.1% to RM3.81 while Hartalega  was up eight sen or 1.6% to RM5.21 Maybank Investment Bank Bhd analyst Lee Yen Ling said the research firm is maintaining its "overweight" call on the sector as the bird flu is still in its early stages. In a note today, Lee said the bird flu has not reached a critical level to have a major impact on glove demand. "We think the sharp run-up in share prices of rubber glove stocks on news of an outbreak of the H7N9 flu strain last week is purely speculative, as the virus has yet to have any material impact on demand. "Assuming the H7N9 virus develops into a full-blown pandemic, we believe all glove-makers will benefit from margin expansion," Lee said. Lee said should the situation worsen, Top Glove will be the obvious beneficiary as it is the only glove manufacturer with significant unused capacity. About 40% of its powdered natural rubber glove capacity is idle, Lee estimated. This means Top Glove will be able to respond to a sudden increase in glove demand, Lee said. "Our top pick is Top Glove as it has excess capacity and can readily respond to a potential upsurge in demand. We maintain our earnings forecasts, calls and TPs (target prices) on the rubber glove stocks. As market sentiment drives prices of rubber glove shares higher, not all investors are raising their bets on these stocks which they say may not generate as much return as other "higher-beta" or more-volatile entities. A fund manager said the spotlight now is on Johor-themed stocks such as UEM Land Holdings Bhd which may yield more upside compared to rubber glove shares amid pre-election sentiment in the country. "Valuations for glove shares are OK.. but these are moderate-beta stocks," he said over telephone. He expects glove producers’ profit margins to be maintained in the long term on higher demand for the product due to the bird flu outbreak. This comes amid still-low and stable natural rubber latex prices.

https://theedgemalaysia.com/node/66229

Shahrir suggests use of index as yardstick for salary hike

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Last Updated: 5:45pm, Dec 03, 2013 KUALA LUMPUR (Dec 3): Former Minister and Johor Bahru MP, Tan Sri Shahrir Samad today suggests the use of an index as a benchmark to justify any hike in state assemblymen or parliamentarians' salaries. "We are a small group of people. In Parliament, there are only 222 of us. In Selangor, 56. So, just because we feel like it, we cannot raise our own salaries, "There has to be an index as a benchmark. We can't say at a whim that just because the CEO of Maybank earns this much, I have to earn twice more," he said. He suggested that the index be based on the Gross Domestic Product (GDP) per capita as it gives an idea of how much the average person in the nation was earning. He said an Australian lawmaker's salary is three times the GDP per capita while a United Kingdom lawmaker's salary is 2.7 times the GDP per capita. He added that three times the GDP per capita was an acceptable level, adding that that national GDP per capita was roughly about RM33,000 last year. "Selangor's income per GDP should be slightly higher. So say it is RM40,000 annually, times that by three. Their salaries should than be RM10,000 per month," he said. According to the hike that was passed by the Selangor state assembly, The MB's wages were increased by 106% from the present RM14,175 to RM29,250. The salary for exco members has been given a 231% hike from RM6,109 to RM20,250. "MPs, Adun salaries are not tax deductible" He also said that any discussions on the assemblymen or parliamentarians salary must be transparent as their salaries were not tax deductible and they have their pensions too. "The discussion must be transparent so they people will know. MPs now earn RM6,805. This amount is tax exempted and we get our pension unlike the private sector. That's why our salaries are smaller, "You don't get pensions, you should not be kind to us," said Shahrir to the reporters. He admitted that even the Sarawak state assembly member's salary which increased three times in May this year, could be discussed on the same grounds. "Higher pay won't prevent corruption" Shahrir said like Parliament, which has its own House Committee to discuss such matters, state assemblies should also establish similar committee. This is to avoid a select group of people making the decision exclusively. He also rubbished arguments that a higher salaries would prevent corruption made by Menteri Besar Tan Sri Abdul Khalid Ibrahim to justify the hike. "Don't tell me that the poorer you are, the more corrupt you become. Corruption stems from greed, not poverty," he said. Pakatan Rakyat has announced its official stand today and would asked Khalid to review the salary hike. For more stories, go to www.fz.com, the website for freedom of expression and fairness in articulation.

https://theedgemalaysia.com/node/96123

#Mid-morning Market* KLCI pares loss, remains weak as blue chips weigh

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KUALA LUMPUR (Aug 19): The FBM KLCI pared some of its losses at mid-morning on Monday, but remained in negative territory in line with most regional markets, weighed by losses at blue chips. At 10.01am, the FBM KLCI fell 4.63 points to 1,783.61. The index had earlier opened more than 14 points lower. Losers edged gainers by 257 to 229, while 234 counters traded unchanged. Volume was 664.4 million shares valued at RM387.83 million. The top losers included BAT, KLK, Petronas Dagangan, PPB, Hong Leong Bank, HLFG, Genting Plantations, NCB, Sarawak Oil Palms and Petronas Gas. MAS was the most actively traded counter with 118.73 million shares done. The stock gained three sen to 36 sen. The other actives included TMS, Instaco, Flonic, Sumate, Astral Supreme, Daya Materials and Sona Petroleum. The gainers included P.I.E, Aeon Credit, Public Bank, Datasonic, United Plantations, Asia File, Hup Seng and My E.G. Hwang DBS Vickers Research in a note Monday said Wall Street weakened last Friday when its key bellwethers slipped between 0.1% and 0.3% at the closing bell. Essentially, sentiment was dragged by continued fears of an early reduction in US monetary stimulus and slow corporate earnings momentum, it said. “Still, we reckon there could be muted spillover effects on our Malaysian bourse ahead. On the chart, the benchmark FBM KLCI will probably find immediate support at the 1,785 level. “On the corporate front, the following stocks may attract added interest today: (a) Kian Joo Can Factory, as its major shareholder Can-One is reportedly eyeing to privatize the company according to a business weekly; (b) Daya Materials, after the same business weekly said it is close to securing oil & gas contracts in the North Sea for its chartered vessel; and (c) Silk Holdings, which has been awarded a contract by Sarawak Shell for the provision of one anchor handling tug supply vessel valued at RM82 million,” it said. Meanwhile, Asian markets face a tense few days waiting to see if minutes of the Federal Reserve's last policy meeting will provide some clarity on when it might start scaling back stimulus -- with far-reaching implications for borrowing costs across the globe, according to Reuters. Asian shares and currencies were expected to remain choppy, with Indian markets under particular pressure after the rupee cratered to record lows despite government efforts to stem the tide, it said.

https://theedgemalaysia.com/node/73548

OSK Holdings chairman appointed to RHBCap board

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KUALA LUMPUR (Nov 21): Datuk Nik Mohamed Din Nik Yusoff, non-executive chairman of OSK Holdings Bhd, has been appointed as non-executive director of RHB Capital Bhd. According to RHBCap’s filing to the stock exchange today, Nik Mohamed Din’s appointment was effective yesterday (Nov 20). A lawyer by training, Nik Mohamed Din also sits on the board of the Federation of Public Listed Companies Bhd, Jerasia Capital Bhd and OSK-UOB Investment Management Bhd, among others. OSK Holding’s investment banking arm is being merged with that of RHBCap’s following the sale of OSK Investment Bank Bhd to RHBCap earlier this year.

https://theedgemalaysia.com/node/21710

RHB upgrades Parkson to outperform

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“Parkson’s expansion plans are on track, with four or five new stores annually in China and two to three stores for Malaysia and Vietnam. War chest of around RM2 billion is sufficient for expansion and acquisitions,” said RHB. Same store sales (SSS) growth for China is estimated at 7% to 8%, while Malaysia and Vietnam are expected to see growth of 4% and 20%-22% respectively for the third quarter ending March 31, 2010 (3QFY10). In addition, Parkson Retail Group Ltd (PRG) has achieved double-digit SSS growth in China during the Oct 1-8 National Golden Week holiday. Indochina is the next target for the group’s expansion plans, with Parkson intending to gain a foothold in Cambodia by opening its first store measuring around 20,000 sq metre in Phonm Penh, located near the US Embassy. This new store is targeted to be completed by 1QCY11. “Given its net cash position of RM770 million as at June 2009 and operating cash flow of RM600 million to RM1.3 billion annually for the next three years, we believe that Parkson would not have any problem funding its capex and acquisitions,” said the research house. Parkson’s expansion plans through new stores would equate to capital expenditure of approximately RM160 million to RM180 million annually. “Our target price for PRG is increased to HK$11.65 (from HK$10.67). As such, our SOP-based (sum-of-parts) fair value for Parkson has been increased to RM6.07 from RM5.60 previously,” said RHB. Parkson closed at RM5.18 yesterday, up three sen. This article appeared in The Edge Financial Daily, November 6, 2009.

https://theedgemalaysia.com/node/61310

CIMB rises 2% on acquisition news

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KUALA LUMPUR (April 3 ) : Shares of CIMB Group Holdings Bhd rose as much as 2% on Tuesday morning on news that the financial services provider is acquiring Royal Bank of Scotland’s operations in Asia. At 10.40am, CIMB was traded four sen higher at RM7.83 after touching an intraday high of RM7.96. In a note, Credit Suisse said due to a lack of visibility on potential revenue upside for CIMB following the acquisition, Credit Suisse said investors “would at best be neutral on the deal”. However, Credit Suisse said the timing of the deal is good and that CIMB has a good acquisition track record so far.

https://theedgemalaysia.com/node/93863

Yu pares stake to thwart HLCap suspension

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KUALA LUMPUR: Trading in Hong Leong Capital Bhd (HLCap) shares may not be suspended on Aug 12 as its free float looks set to exceed 10% after its second largest shareholder sold some of his shares. Datuk Dr Yu Kuan Chon told The Edge Financial Daily he is willing to sell enough shares to lift HLCap’s free float above the required 10% threshold in order to sustain an active trading status. “[The stock suspension when free float is below 10%] is the regulator’s prerogative. We will comply with the rules,” Yu said when asked about  his recent sale of HLCap shares and the next course of action with regards to his investment in the financial group. Yu had an 8.65% stake in HLCap as at March 14. But on July 23, his holdings had fallen to 8.3% or just over 20.49 million shares, following several open market disposals, stock market filings showed at the time of writing. The 0.35% stake he has disposed of in recent weeks is only a shade behind the 0.37% shortfall in HLCap’s free float from the 10% threshold — to sustain its active trading status. To recap, HLCap’s free float stood at 9.63% on June 26, the reason Bursa Malaysia said that the stock would be suspended from Aug 12 due to the lack of free float — being 30 market days from the date of its announcement. In an earlier interview with The Edge weekly in May, Yu chairman of Sitiawan-based developer YNH Property Bhd, said he started accumulating HLCap shares three to four years ago as he believed the financial group was under researched and under appreciated by the investment community. Notwithstanding the lack of analysts’ coverage, he said HLCap is well-managed under the stewardship of Tan Sri Quek Leng Chan. In March this year, market watchers credited Yu for having helped kept HLCap listed and trading by paring his stake to 8.65% to raise the company’s free float to 10.02% at that time — just ahead of the 10% threshold to suspend trading. Yu’s name rocketed to prominence overnight in corporate Malaysia when news got out that his hand was strong enough to thwart Quek’s plans to privatise HLCap cheap. Whether or not Yu is successful in his bid to prevent HLCap from being suspended, for other minority shareholders, there is still the bigger question on what Quek’s next course of action will be. At the time of writing, HLCap had not come up with a plan to regularise its free float to the 25% level required of a public listed company, not to mention sustaining its free float at 10% to prevent a suspension. “The Company currently does not have any plan to address the non-compliance with the public shareholding spread requirement and requires time to assess the situation,” HLCap said on July 26. HLCap fell 7 sen to close at RM6.00 yesterday. This article first appeared in The Edge Financial Daily, on July 26, 2013.

https://theedgemalaysia.com/node/1350

February CPO stockpile to fall on floods

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KUALA LUMPUR: The February palm oil stockpile is likely to fall below January’s level of 1.83 million tonnes due to floods in various palm oil producing states. Plantation Industries and Commodites Minister Datuk Peter Chin said on March 5 the Malaysian Palm Oil Board was expected to release production figures for February on March 11. On the current price of RM1,800 for crude palm oil (CPO) , he said planters were already making money. At midday, CPO futures fell RM2 to RM1,869.

https://theedgemalaysia.com/node/92892

#fz says* AES just another political rent-seeking tool

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THE controversy-riddled Automated Enforcement System (AES) has got into the news again with the revelation in Parliament that the companies contracted to operate the traffic cameras have received RM13.5 million since enforcement began last September. Acting Transport Minister Datuk Seri Hishammuddin Hussein said the two companies – Beta Tegap Sdn Bhd and ATES Sdn Bhd – have been paid about 80% of the summonses collected as of mid-May. To put the amount into perspective, it is useful to note that the total collection of RM20 million represents just 10% of the summonses issued during this period. More pertinently, only 14 cameras are operational so far out of the 418 that will be installed throughout the country. The sums involved raise a host of issues that have not been clearly addressed since the system became a topic of public debate last year. To begin with, it remains a mystery why these companies need to be paid hundreds of millions of ringgit every year for the fully operational system when this revenue should go into the public account. The official line that the privatisation frees the government of the cost of installing and maintaining the system calls for the Transport Ministry to provide the cost-benefit analysis to prove that this argument can withstand scrutiny. Secondly, allegations that one of the companies is politically linked point to the need for an open investigation into possible conflict of interest situations in the award of the contract. This issue highlights the unresolved questions that surround the prevailing political culture, where the prospects of political patronage and rent-seeking appear to be inseparable from public office. The dangers of policy and regulatory capture by vested interests remain ever-present where government procurement is not done in accordance with universally accepted norms of transparency and accountability. In the current case, the absence of an independent assessment of the merits and demerits of the traffic camera system exposes the public to the risk that the purported benefits of the system may be nullified by an opaque regulatory environment. This can allow decisions to be taken to maximise returns for the operators instead of optimising outcomes for public safety. It is increasingly looking like the AES is just another rent-seeking tool to enrich selected private entities or individuals at the expense of the public.

https://theedgemalaysia.com/node/24265

Monitoring use of excess capital

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Investors subscribe for and invest in shares of a company because it offers distinct advantages, with potential for future business growth and ultimately profits. Shareholders can then sell their shares for capital gains or keep them while enjoying the dividends. Is it good corporate governance then if companies use excess cash, which could have been used to expand their businesses or be returned to shareholders, to invest in the stock market, thus deviating from their speciality? David Webb, a former investment banker-turned-shareholder activist based in Hong Kong, thinks this is a bad practice for various reasons. Firstly, he believes that investors like to pick the stock themselves and invest in a specific company because they believe the company enjoys some form of competitive advantage in its chosen core business. “Generally, listed companies have no competitive advantage investing in stocks. They should return surplus capital [any capital not needed for budgeted requirements] to shareholders rather than to use it for speculating in stocks, property, derivatives or other instruments,” he says via email. The only time an exception is made is when the company is an investment corporation, with a clear mandate to invest in the markets. “Shareholders of Berkshire Hathaway, for example, expect [Warren] Buffett to invest their money for them,” says Webb. If one scans the activities of companies on Bursa Malaysia, it may appear that some do harbour “Buffettian” aspirations. Take a look at Hock Lok Siew Corp Bhd (formerly Foremost Holdings Bhd), which announced in October that it had invested RM2.6 million buying up shares of Boustead Holdings Bhd and Sungei Bagan Rubber Co Bhd. The amount was equivalent to 15.7% of HLS Corp’s net assets as at Sept 30,2009. Interestingly, the company had also said in the same announcement that it would stop investing in quoted securities despite obtaining a mandate from shareholders.     Then there is Apollo Food Holdings Bhd, which has been trading stocks since 2000. It announced in October that it had disposed of RM9.44 million worth of shares between July and October, making a profit of RM2.7 million. It added further that as at Oct 28, the book and market values of shares held were RM2.3 million and RM2.88 million respectively. Other listed companies include CSC Steel Holdings Bhd, BHS Industries Bhd and Tex Cycle Technology (M) Bhd, which invested in funds managed by external fund managers or placed money with investment banks. The Minority Shareholders Watchdog Group (MSWG) holds a slightly more liberal view than Webb’s. CEO Rita Benoy Bushon says a company with surplus funds can invest in equities or marketable securities but the board of directors must justify its rationale for doing so. When a company holds 5% or more of another listed company’s shares, this must be disclosed according to the requirements in the Companies Act 1965. Under listing requirements, the company must also inform the investee company within seven days of becoming a substantial shareholder.  When purchasing marketable securities using surplus funds, the board of directors should also justify its action. MSWG defines marketable securities as investments in stocks, shares, certificates of deposits, bonds, or money market instruments, government securities, and listed securities that can be bought or sold on a stock exchange. “Good corporate governance is a matter of best practices which the board needs to observe whenever it deals with surplus funds,” says Bushon. Should minority shareholders feel better if a company’s excess funds were managed by professional fund managers investing in a conservative asset class like a money market or fixed-income fund as is the case with CSC Steel? MSWG points out that there is no rule governing the basis on which the board can engage a professional fund manager to invest on behalf of the company. However, minority shareholders can seek clarifications on the terms of engagement if they find the disclosure to be unsatisfactory or inadequate. In CSC’s case, it had disclosed in its 2008 annual report that it had RM47.6 million in a fixed-income fund, with no maturity period. “Unit trust funds are approved by the Securities Commission. A company investing in unit trust funds is not caught under the provisions of the Companies Act,” Bushon explains. For companies investing in unit trust funds, she recommends the 5% net asset rule, meaning that they should not invest more than 5% of their net assets in these funds. Webb, however, says it is no-go if the money market fund invests in risky commercial papers, or subordinated bank debt. If it invests in government bonds of the same currency as the group accounts, then that would be acceptable. “The key point is that listed companies should not take unnecessary risks with shareholders’ funds outside of their core business. Plain deposits with licensed banks, pending utilisation of funds in the core business, is the normal approach,” he explains. As for allocating shareholders’ funds to outside equity managers, Webb believes this is also unacceptable because that is not why investors put their money in the company. “If there is surplus capital, it should be distributed to shareholders, including the controlling shareholder, who can then do what he wants with his share,” he says. Webb adds that surplus capital weighs down a company’s balance sheet. “I call it corporate obesity. It reduces the rate of return on equity. Like people, fat companies cannot run fast. Their power-to-weight ratio is too low,” he explains. Bushon agrees that if a company has surplus funds beyond its current and future requirements — for capital expenditure, for example — the board ought to return the excess cash to shareholders. In cases where major shareholders agree to invest outside of the company’s core competency, the board must justify its action. “It is true that investors put their money in a company because of its core business. They feel the board would use the surplus funds wisely and operate the core business profitably and efficiently,” she says.  She also clarifies that the role of investment holding companies is not to trade in shares. Such companies own more than 50% of the stock in another company — listed or otherwise. They exist mainly to own shares in subsidiary companies, and together, they operate as a group. The provisions for investment companies are found under Sections 319 to 327 of the Companies Act.  Webb explains that when joint-stock companies were first established in the 1600s, they were for specific purposes as set out in the “objects” clause of the Memorandum of Association. However, this is no longer the case as the clauses now covered a wider field. But the principle behind it was sensible, namely that members or shareholders of a company are pooling their capital for a particular purpose, not just to give a blank cheque to directors to do as they wish with the money. In the present day, investors still expect directors to follow a coherent business strategy and not speculate beyond their stated strategy, he says. MSWG takes the view that minority shareholders need to be vigilant in monitoring where and how their investee companies use their surplus funds. “They must raise questions immediately whenever they feel uncomfortable with such investments,” Bushon adds. This article appeared in Corporate page of The Edge Malaysia, Issue 784,Dec 7 – 13, 2009.

https://theedgemalaysia.com/node/34164

On the burner: What's happening

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Entitlements going ex on: June 28Bina Darulaman Bhd - First and final dividend of 7 sen less 25% tax Cahya Mata Sarawak Bhd - First and final dividend of 5 sen less 25% tax Dufu Technology Corp Bhd - First and final tax-exempt dividend of 1 sen Genting Malaysia Bhd - Final dividend of 4.2 sen less 25% tax Manulife Holdings Bhd - First and final dividend of 17 sen less 25% tax TA Enterprise Bhd - First and final dividend of 2.5 sen TRC Synergy Bhd - First and final gross dividend of 4 sen less 25% tax YTL Cement Bhd - Third interim single-tier dividend of 3.75 sen June 30Daya Materials Bhd - Bonus Issue of 1:5 Salcon Bhd - First and final single-tier dividend of 1.5 sen July 1Tradewinds Plantation Bhd - First and final dividend of 6 sen less 25% tax July 2Berjaya Sports Toto Bhd - Second interim single-tier tax-exempt dividend of 8 sen Top Glove Corp Bhd - First interim single-tier dividend of 14 sen This article appeared in Corporate page of The Edge Malaysia, Issue 812, June 28-July 4, 2010

https://theedgemalaysia.com/node/91043

Listed firms more compliant now

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KUALA LUMPUR: Public-listed companies have become increasingly more compliant in submitting disclosures due to a change in corporate attitude, says Bursa Malaysia Bhd chief regulatory officer Selvarany Rasiah. Speaking at the Malaysian Institute of Chartered Secretaries and Administrators (MAICSA) annual conference yesterday, she said such greater compliance is a sign of a maturing corporate environment. "Today, there is greater emphasis on disclosures, risk management, transparency and accountability. This allows Bursa Malaysia to focus on more pressing issues which may have a material impact on the stock market." Selvarany added that company secretaries should have a bigger say in a company's day-to-day management and that they should not be cowed by pressure from superiors. "Secretaries have a duty to provide valuable feedback to the board of directors, so having the proper communication skills and technical competence are highly important." She said there is a rise in corporate whistleblowing, indicating greater commitment to expose wrongdoing. "We have also observed less variance between a company's unaudited and audited results, which shows that the companies are not trying to cook their books. "Bursa Malaysia has a commitment to provide a balanced framework which meets international regulatory standards." According to Selvarany, an internationally recognised regulatory framework coupled with compliance by public-listed companies is the key to attracting capital inflow from foreign investors. "We are constantly making sure that market regulations do not stifle growth," she said. In a keynote address on Monday, Companies Commission of Malaysia CEO Mohd Naim Daruwish voiced concerns over shareholder protection issues. "The emergence of many recent high profile corporate scandals have a great impact on the capital market, affecting local and foreign investors. "In the wake of such events, the Malaysian Code of Corporate Governance 2012 was introduced to ensure a higher quality of corporate financial reporting, greater transparency and accountability," he said. The MAICSA annual conference also covered topics such as ethical leadership, combating corruption as well as examing different corporate governance models globally. This article first appeared in The Edge Financial Daily, on July 04, 2013.

https://theedgemalaysia.com/node/68942

One year on, 30 still detained under ISA

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KUALA LUMPUR (Sept 13): Almost a year after the prime minister announced the repeal of the Internal Security Act (ISA) 1960, 30 detainees are still being held under the draconian law, where some have been subjected to abuse, a former ISA detainee has claimed. In light of this, Mohamad Fadzullah Abdul Razak questioned Prime Minister Datuk Seri Najib Abdul Razak’s commitment to human rights reforms when detainees were still being ill-treated. "Those held under the ISA are like political hostage as they will be released during Hari Raya or come election time... so what exactly does it mean when the government says ‘Janji Ditepati’," he said referring to this year's Merdeka celebration theme. As part of the government's political transformation programme, Najib last year announced a slew of reforms on the eve of Malaysia Day. The PM had said that laws considered restrictive to human rights, such as, the ISA, would be replaced with less rigid ones to allow for a freer society. Fadzullah, who was released on Aug 17, after a two-year long detention for allegedly having ties with international terrorists networks, pointed out that those detained under the Emergency Ordinance (EO) have been released but those detained under ISA are still held. He was speaking at a press conference at the Kuala Lumpur Selangor Chinese Assembly Hall on Thursday. Also present were activists from Gerakan Mansuhkan ISA (GMI) and Suara Rakyat Malaysia (Suaram) as well as lawyers of some of the detainees, who, they said, made numerous complaints about continued harassment, including solitary confinement and threats from officers. The lawyers also said that the mental and physical welfare of these detainees, which falls under the purview of the Camp authority, were not sufficiently provided for. Parliament voted to repeal the ISA 1960 in April this year, and passed the Security Offences (Special Measures) 2012 Bill in May to replace it. In tabling the repeal, Najib said that it would not affect those currently detained under the law. However, the Home Minister can look at individual cases and decide on early release. At the press conference, GMI president Syed Ibrahim Syed Noh claimed that recent news report by New Straits Times titled Making Millions From Behind Bars, showed that the ISA was not effective in tackling crimes related to human trafficking. He said that the article quoted an officer who said that most of the people arrested for human trafficking were detained under the ISA as evidence against them - accumulated from tapping into private phone conversations - could not be used in court. "Just yesterday, Bukit Aman CID chief Datuk Seri Mohd Bakri Zinin said that the Anti-Human Trafficking Law 2007 and other laws were sufficient to deal with human trafficking in the country. "Then the police should be working hard to gather evidence against them and not take the easy way out to detain them under the ISA," Syed Ibrahim added.

https://theedgemalaysia.com/node/37733

My Say: Need to hasten economic reform

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Malaysians are genuinely surprised at the plethora of economic reforms announced by the government over the last 18 months. Indeed, if the motive is to encourage Malaysians to put on their thinking caps and propose ideas to rejuvenate the economy, the government has scored top marks in rekindling the economic excitement that was last felt in the early 1990s. The country’s robust economy during the 1980s and 1990s was built on two factors — its natural endowment and hardworking population. From 1985 to 1995, Malaysia was ranked the eighth fastest-growing economy in the world with an average GDP growth of almost 8% per year. The population was expanding at 2.5% annually and its real growth per capita income was 5.7%, impressive figures even compared with the other Tiger economies of Asia. Today, few would argue that the country is at a crossroads and economic reforms are inevitable. Over the last 10 years, the country has re-adjusted itself from an electrical and electronics-based manufacturing into an oil-exporting economy. The revenue earned from the sale of the country’s petroleum and natural gas products appears to have saved the day in expanding the country’s GDP.  But there has been a downside — the prolonging of the fiscal account deficit that is dampening investor confidence; an overly subsidised economy; and over-dependence on the electrical and electronics sector to boost employment statistics. Adding to these concerns is the vulnerability of the global financial market that sometimes threatens to push the economy into a full-scale crisis. The economic structure must change, so say our policymakers, and Malaysia must brace itself for economic reforms that will ultimately propel it from a middle-income country to developed status in less than a decade. Unfortunately, the rules of engagement in today’s world have changed. The battle for economic supremacy is no longer fought on the premise of manufacturing products and natural endowments. It is based on factors such as the domination of the global financial markets, the concentration of power among the giant economies, the scarcity of resources, global networking and the role of governments to boost infrastructure development and expose bureaucratic inefficiency. These are factors that policymakers need to understand and tackle if genuine reforms are to be implemented. The global volatility over the last three years serves as a reminder that our financial environment has to remain dynamic to cushion any impact from unexpected calamities. Indeed, the strength of the global financial market cannot be underestimated because it will ultimately define the global economy of the future. Financial regulations across the globe appear to be converging into one regulatory framework and global capital flows will be more liquid, primarily designed to facilitate inflow and outflow into the international market. The resulting international landscape will be rapid globalisation and the emergence of global equity markets. The Malaysian financial market should expect a re-emergence of huge short-term investment flow, which has been blamed for the Asian financial crisis in the late 1990s. There is certainly a need for Malaysia’s financial regulators to anticipate such structural changes, particularly in trying to accommodate the increasing participation of massive foreign investments. The best strategy to improve the country’s financial environment is transparency. We have learnt that the more transparently organisations and institutions conduct their business, the more effectively they perform. In the years ahead, there will be fewer barriers to the flow of goods, services and capital as the global market becomes genuinely a free market. Protectionism can no longer be the tool to breed local infant industries, and market-oriented reforms need to be implemented to accommodate the demands of globalisation where market efficiency will be tested to its limits. Our economic reforms must include strategies to stimulate the growth of small and medium enterprises (SMEs) by encouraging innovation and technological advancement. One of the highest priorities is to strengthen the SMEs by providing every tool at the government’s disposal to ensure their vibrancy, enabling them to compete in the international arena.     Economic models and transformation plans can provide a road map to overcoming barriers but the implementation requires strong political will on the part of policymakers. Indeed, the pace of economic reform is crucial. The renewed economic vigour should generate enough momentum to provide policymakers with a clear mandate to initiate radical micro-economic reforms without delay. Slow economic reforms will lead to popular anguish and eventually a standstill as the fervour will gradually peter out.     Arguably, the global economic environment appears to be unusually favourable at present and the prospects for growth remain positive with the International Monetary Fund predicting an average world growth of 4.5% in 2010 and 4.25% in 2011. A stable global environment would be the most opportune time for policymakers to pursue economic reforms, failing which the country will not have the resources to respond to the next downturn or expand the economy during an upturn. This stage of reform should identify the issues that matter the most to the economy. There are three segments where reforms need to be identified: those that focus on government infrastructure and bureaucracy; those that that identify strategies to boost productivity in the manufacturing and services sector; and those that are needed to attract local and foreign investment. Now, more than ever, is the time to press ahead with these reforms. The uncertainty in the global economy is a constant reminder to be mindful of new challenges and new obstacles that we must overcome as a nation. The circumstances leading to an economic crisis are never the same so we cannot predict what could spark another crisis, which is why economic reforms should not be delayed any longer.     This article appeared in Forum page, The Edge Malaysia, Issue 822, Sep 6-12, 2010

https://theedgemalaysia.com/node/18210

Small-Cap Corner: Daibochi boosts margins and markets

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Daibochi is the leading flexible packaging company in Malaysia, with a market share of 30% to 35%, followed by Tomypak, with around 25%. It was founded in 1972 and listed on the Kuala Lumpur Stock Exchange in 1990. It operates from a 325,000 sq ft factory located on a 14-acre site in Melaka. Flexible packaging is used for many food products (snacks, biscuits, frozen food, cereals), beverages (coffee, tea, soft drinks, dairy), fast-moving consumer goods (shampoo, detergents, sanitary) and industrial products. Around 90% of its flexible packaging is used for food and beverage items (for example, the printed plastic wrapping your Maggie mee). Most flexible packaging is multi-layered with printing and barriers against water or oxygen. Around 65% of Daibochi’s customers are multinational corporations like Nestlé, Quaker Oats, Cadbury and Coca-Cola. The company exports 40% of its products, half of which goes to Asean countries (primarily the Philippines) and the other half to Australia. There are large flexible packaging players in Thailand and Indonesia, which makes it difficult for the company to export to these countries. Daibochi has been in the Australian market for five years. The going was tough at first because Daibochi had to compete with the larger domestic players. However, since its success in clinching multinational customers in Australia, like Nestlé and Pepsi Cola, the perception of the company Down Under has improved. It now finds it easier to secure new customers. Since volume growth in Malaysia has been slow, Daibochi’s export drive represents an important avenue to grow revenue. Materials like plastic, aluminium foil, ink and solvents account for around 60% to 70% of costs. Around half of the materials are sourced locally. Labour and electricity account for less than 10% of production costs each. The recent reduction in raw material costs has also helped improve margins for Daibochi. The company enjoyed better margins in 1Q2009 due to a reduction in raw material costs, higher margins from a better product mix and increased contribution from Australia. Revenue for 1H2009 grew 6.5% to RM113.9 million but as a result of the higher margins, pre-tax profit for 1H2009 grew 160% to RM13.1 million from only RM5 million in the previous corresponding period. Daibochi has two property development projects but their profits were marginal. The group aims to scale back its property development activities to focus on the flexible packaging business. It aims to promote new products like metalised film packaging, which has replaced the more expensive aluminium foil. This will result in cost savings for its customers and better margins for Daibochi. The company currently has the largest metalised film packaging capacity in Malaysia. Its manufacturing facility is currently operating at around 65% capacity, which means there is no need for expansion. However, the company will be spending money on making its own metalised, polyethylene and polypropylene films and expanding capacity for pouches and reels as these enjoy better margins. With a net debt of RM20 million and a net debt-to-equity ratio of around 16%, the company has the financial resources to expand or beef up its Australian operations, should the need arise. Daibochi could report a net profit of RM21.6 million (earnings per share of 28.4 sen) if it performs equally well in 2H2009. At a share price of RM1.38, this would value it at a FY2009 price-earnings ratio of only 4.9 times. Its competitor Tomypak would trade at a lower PER of 3.2 times if its 2H2009 profit matched that in 1H2009. However, Daibochi, with its larger size and potential growth in Australia, deserves a higher rating. Still, both the stocks are illiquid and their high margins, arising from low raw material prices, might be squeezed if raw material prices rose. Choong Khuat Hock is head of stock research and a partner at Kumpulan Sentiasa Cemerlang Sdn Bhd, a fund management company. KSC may own shares in some of the companies covered by the writer. This article appeared in Capital page of The Edge Malaysia, Issue 771, Sep 7-13, 2009

https://theedgemalaysia.com/node/95039

#US Stocks* Wall St finishes lower on uncertainty about Fed's move

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NEW YORK (Aug 7): U.S. stocks slid for a second consecutive day on Tuesday after comments from a pair of U.S. Federal Reserve officials left investors uncertain about the timing of a possible reduction in its bond-buying program. Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, told Market News International in an interview that the Fed could begin trimming the size of the stimulus program as soon as September, but might wait longer if the expected economic growth in the year's second half fails to materialize. Later in the session, Chicago Fed President Charles Evans echoed the sentiment when he said the central bank will probably decrease the program later this year and could do so as early as next month, depending on the economic data. Fed officials "are all hedging themselves, which is why the market continues to just be a little bit confused and why it is going to churn," said Ken Polcari, director of the NYSE floor division at O'Neil Securities in New York. "There is really no reason at the moment for the market to go higher because it is still too unclear." One catalyst for Monday's downturn in the Dow and the S&P 500 was provided by Richard Fisher, president of the Federal Reserve Bank of Dallas. He said he supported scaling back the central bank's stimulus next month unless economic data takes a turn for the worse. The S&P 500's decline on Tuesday was its biggest fall since June 24 as investors continued to take profits from the recent rally that drove the Dow Jones industrial average and the benchmark S&P to back-to-back record closing highs late last week. The Dow Jones industrial average fell 93.39 points or 0.60 percent, to end at 15,518.74. The S&P 500 declined 9.77 points or 0.57 percent, to 1,697.37. The Nasdaq Composite dropped 27.182 points or 0.74 percent, to 3,665.77. Earlier, the Dow fell as low as 15,473.40, while the S&P 500 touched a session low of 1,693.29, and the Nasdaq hit an intraday low of 3,654.672. The S&P 500 has risen for five of the past six weeks, gaining more than 7 percent over that period. Volume was light for the second straight day, with about 5.5 billion shares traded on the New York Stock Exchange, NYSE MKT and Nasdaq, below the daily average of 6.36 billion. The thin volume exaggerated the market's swings. Monday marked the lowest volume for a full-day session so far this year. With major U.S. economic data like the nonfarm payrolls report and earnings from bellwethers out of the way, volume is expected to be light throughout the week. Walt Disney Co posted a slightly higher quarterly profit that beat Wall Street's expectations, even though its movie studio earnings declined, in results released after the closing bell. Disney's stock fell 1 percent to $66.35 in extended-hours trading. The stock ended regular trading at $67.05, up 1.6 percent. During the regular session, the biggest drag on the Dow was International Business Machines Corp. The stock dropped 2.3 percent to $190.99 after Credit Suisse cut its rating to "underperform" from "neutral," saying growth would be a challenge for IBM in the future. Credit Suisse also cut its price target on the Dow component by $25 to $175. IBM topped the list of the Dow's 10 worst-performing stocks. Bank of America shares declined 1.1 percent to close at $14.64 after the U.S. Justice Department and the Securities and Exchange Commission filed civil lawsuits against the bank for what government lawyers said was a fraud on investors involving $850 million of residential mortgage-backed securities. The stock was among the Dow's 10 bottom performers. The S&P financial index lost 0.9 percent. Retailers' shares were among the day's biggest losers. American Eagle Outfitters shares tumbled 12 percent to $17.57 a day after the retailer said its second-quarter profit would be hurt by weak sales and margins. A number of analysts downgraded the stock. The S&P retail index slipped 0.4 percent. Of the 418 companies in the S&P 500 that had reported earnings for the second quarter through Tuesday morning, Thomson Reuters data showed that 67.5 percent have topped analysts' expectations, in line with the average beat over the past four quarters. On the revenue side, the data showed that 54 percent have reported revenue above estimates, more than in the past four quarters but below the historical average. Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 3 to 1, while on the Nasdaq, more than two stocks fell for every one that rose. - Reuters

https://theedgemalaysia.com/node/32243

Tussle at Petra Perdana heats up

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KUALA LUMPUR: The tussle for control of oil and gas outfit Petra Perdana Bhd (PPB) is heating up with the company rejecting the nomination of four individuals to the company’s board at its upcoming AGM on June 28. The nominations were made by parties aligned to Tengku Ibrahim Petra Tengku Indra Petra, who is at loggerheads with PPB’s board led by managing director Shamsul Saad and executive director Datuk Henry Kho Poh Eng. In a statement yesterday, PPB’s board said it had made the decision after seeking legal counsel and was advised that the nominations had not been made in accordance with the law. “The board had found that the nominations by the shareholders do not comply with the minimum requirements to nominate parties to the office of directors,” said Shamsul. The nominated individuals were John Pang Yun Nian, who is with the CIMB group, and nominated by Chow Lean Keat; Datuk Syed Norulzaman Syed Kamarulzaman who was nominated by Tengku Ibrahim’s wife Datin Che Nariza Hashim; Suhaimi Badrul Jamil who is Che Nariza’s brother-in-law and nominated by Ramilah Joannah Sulaiman; and Datuk Shaik Sulaiman S Mohamed Ismail, nominated by Nik Ismail Tengku Besar Indra Raja. When contacted by The Edge Financial Daily last night, Che Nariza said: “It’s now 10.30 (pm), I have yet to receive any letter (from PPB). I sent in the nomination on June 11. The AGM is on June 28.” According to PPB’s latest annual report, Tengku Ibrahim and Che Nariza collectively control about 12.9% equity interest in the company, while the rest are not among the top 30 shareholders as at April 30, 2010. In its media release, PPB said it would be addressing and circulating the nominations of the four individuals to the board prior to the company’s AGM. “We take nominations by shareholders to the board seriously, but we need to ensure that such nominations comply with the necessary rules and regulations,” Shamsul said in PBB’s media release. According to PPB’s announcement to Bursa Malaysia Securities, a letter informing the shareholders of their non-compliance to the nomination process was sent and copied to the Registrar of the Kuala Lumpur High Court, the Managing Judge of the Kuala Lumpur High Court and other relevant parties. The letter also stated that if the shareholders wished to file any ex-parte application against PPB, the company would require them to provide the notice of any mention or hearing date of such application and to serve on the company a copy of all cause papers as well as to bring the reply letter to the court’s attention. The latest nominations came the day after pilgrim fund Lembaga Tabung Haji’s (LTH) nomination on Monday of Hamdan Rasid, currently a director of TH Plantations Sdn Bhd, to PPB’s board. Insiders said LTH could be acting in concert with Tengku Ibrahim, and they were hoping to block the re-election of four directors at the AGM, namely Surya Hidayat Abd Malik, Shamsul, Raja Anuar Abu Hassan and Idris Zaidel. LTH is PPB’s fourth largest shareholder controlling 10.16%. Other substantial shareholders are state-controlled investment fund Permodalan Nasional Bhd (PNB), which has about 20.33%, and the Shamsul-Kho faction, which collectively have about 13.35%. In February this year, Tengku Ibrahim, Che Nariza, Suhaimi, and another director Wong Fook Heng were ousted from PPB’s board by the rival faction. Tengku Ibrahim was the executive chairman and CEO of PPB. Last week, Tengku Ibrahim, and parties linked to him, including Robert Lee Mee Jiong and Suhaimi, stepped down from the board of Petra Energy Bhd, a 29.6% unit of PPB, just before a scheduled EGM that was requisitioned by the Shamsul-Kho faction for their removal. Both factions have been looking to elicit the support of politically connected businessman Datuk Bustari Yusof, who has a 30% stake in PEB. Some quarters said the trio’s departure from PEB was a tactical move, while others said that the move indicated that Bustari did not favour them. The dispute between the two factions surfaced after PPB sold a large stake in PEB and three offshore support vessels to the latter late last year. The vessels were bought by PEB to service a RM1.1 billion Shell job in Sarawak. Meanwhile, trading volume on PPB had picked up slightly last week, breaching the 2.9 million unit mark on June 17, its highest since April 13, 2010. The stock has also gained momentum, strengthening some 37% since hitting its 52-week low of RM1.05 on May 25. PPB closed at RM1.44 yesterday, slipping three sen, while PEB ended trading at RM1.42, down two sen. This article appeared in The Edge Financial Daily, June 23, 2010.

https://theedgemalaysia.com/node/69615

SapuraKencana’s revenue leaps three-fold

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KUALA LUMPUR: SapuraKencana Petroleum Bhd’s revenue leaped almost three-fold to RM2.06 billion for the second quarter (2Q) ended July 31 from a year ago when revenue stood at RM699.4 million. The company attributed the sharp increase to the inclusion of Kencana Petroleum Bhd’s business results subsequent to the merger of SapuraCrest Petroleum Bhd and Kencana, and the higher revenue recorded by its offshore construction and subsea services (OCSS) segment. The oil and gas company posted a 125.6% rise in net profit to RM176.52 million for 2Q compared with RM78.23 million a year ago. However, its earnings per share was diluted to 3.53 sen from 6.13 sen previously. The OCSS segment revenue jumped 171.7% to RM1.2 billion from RM 441.5 million a year ago. “[The higher revenue] is mainly due to the higher scope of works for Pan Malaysia contracts, in line with client planned activities and contributions from several new contracts that were executed during the current quarter,” SapuraKencana said in a filing with Bursa Malaysia. Its drilling, geotech and maintenance services segment revenue swelled 194% to RM114.4 million from RM38.9 million a year ago while its fabrication, hook-up commissioning and offshore vessel support revenue ballooned to RM584.2 million compared with RM49.8 million before. Its energy and joint ventures segment saw revenue slip 6% to RM158.8 million from RM169 million a year ago on lower contribution from drilling business. For the half year ended July 31, the company’s revenue rose 119% to RM2.74 billion from RM1.25 billion in the previous year while net profit grew 44.8% to RM218.1 million from RM150.6 million previously. Going forward, SapuraKencana expects to achieve improved results for the financial year ending Jan 31, 2013. SapuraKencana ended unchanged at RM2.36 yesterday. In the last six months, the counter has hovered between RM1.94 and RM2.53.   This article is appeared in The Edge Financial Daily on 25 September, 2012.

https://theedgemalaysia.com/node/35633

OSK Research maintains Neutral on Telekom

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KUALA LUMPUR:  OSK Research maintains its NEUTRAL recommendation on Telekom Malaysia on lingering concerns over the erosion of its traditional voice business (45% of revenue) and its premium valuations against the KLCI/local peers. The research house said on Friday, Aug 20 that TM will announce its 2QFY10 results on Monday, to be followed by a conference call. “We expect EBITDA margin to come under pressure from (i) higher HSBB related opex; and (ii) increased marketing spending. TM slugged it out to defend its ADSL broadband business, drive take-up of its bundled voice packages and introduced the new HSBB (Unifi) service in 2Q10,” it said. OSK Research said TM will recognise the full quarter opex relating to its high speed broadband service (launched late March) in 2Q10. As a result, we expect its core EBITDA to slide q-o-q/y-o-y in 2Q10. The group posted flat EBITDA of RM731m in 1Q10 due to start-up costs for Unifi while revenue fell 7% q-o-q (+1% y-o-y) following the lumpy project sales recognition in 4Q09. “We expect 2Q10 revenue to show a slight recovery as the strong ADSL net-add momentum extended into 2Q10, albeit partially offset by the dilution in overall voice revenue as TM offered free local calls on its new bundled voice packages,” it said.

https://theedgemalaysia.com/node/26597

Garuda to pick underwriters in Feb for IPO

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SINGAPORE: Indonesian flag carrier PT Garuda Indonesia will pick underwriters within two weeks for a planned initial public offering of up to $400 million to be launched by the third quarter, its CEO said on Wednesday. Emirsyah Satar said Garuda's IPO would help fund its fleet expansion and was on target to be launched "either end of second quarter or early third quarter" of 2010. Indonesia's State Enterprises Minister Mustafa Abubakar had said last month the country expects to sell stakes in three state-owned firms, including Garuda, in public offerings this year, after stocks soared nearly 90% in 2009. Satar told Reuters on the sidelines of the Singapore Airshow that the Indonesian domestic market was expected to grow 9-10% this year and the airline was increasing capacity with 24 new planes — 23 Boeing 737-800s and one Airbus A330-200, largely to meet domestic demand. "Indonesia is a growing market, historically the growth of the domestic market is almost double digits and it will continue to grow," Satar said on board a brand new Boeing 737-800. "The number of passengers is a function of the economic growth of the country," he said, adding Garuda posted a 40% jump in net profit in 2009, thanks to strong domestic market and demand for flights to the resort island of Bali. Overseas tourist arrivals in Indonesia edged up 1.4% to 6.32 million in 2009, data showed on Monday, but the fallout of the global economic crisis meant they spent less in the Southeast Asian country. Analysts have said that Garuda's IPO would probably be well-received as the carrier is seen to gain from rising domestic demand. The government of Indonesia, Southeast Asia's biggest economy, estimates economic growth cooled to 4.3% in 2009 from 6.1% in 2008, but it is expected to pick up to 5.5% this year along with a global rebound. Garuda, the national airline, plans to add 116 aircraft, comprising 90 Boeing 737-800s, 20 A330s, and six Boeing 777s to its fleet by 2014, Satar said. As of end 2009, Garuda had 67 aircraft including three Boeing 747-400s and 10 Airbus A330s. The rest were from the Boeing 737 family, he said. — Reuters

https://theedgemalaysia.com/node/43401

InsiderAsia’s model portfolio - 413

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Stocks in the region traded broadly lower last week. The relevant bellwether indices in Singapore, Japan and Hong Kong were down by between 1.7% and 2.1%. Investor sentiment was buffeted by developments in China, which offset relatively upbeat data out of the US, including a bigger than expected drop in the latest data on initial jobless claims. Meanwhile, governments in the eurozone continue to grapple with a long-term solution to the debt crisis that is acceptable to all. China reported accelerated growth in 4Q10, above market expectations. GDP growth in the final quarter of last year rose to 9.8% year-on-year compared with 9.6% in 3Q10. This runs contrary to the government’s recent measures to temper growth and prevent the economy from overheating — and raises concerns that more stringent tightening measures would have to be implemented in the coming months. Earlier, the People’s Bank of China raised the reserve requirement ratio for banks for the first time this year, following a string of six similar hikes last year. Reserve requirements for banks now stand at over 19%. In addition to the increases in reserve requirement, the central bank had also raised the benchmark lending and deposit rates twice late last year. Whilst the country’s inflation rate for December was slightly off the record pace set in the previous month, down to 4.6% from 5.1%, it is set to rise again this month on the back of the renewed price increases of food and fuel. As such, this latest set of GDP numbers only serves to reinforce expectations that the government will take more drastic measures to control rising inflationary pressures — and bring growth down towards more sustainable levels. The Shanghai Composite Index was among the worst performing in the region last week, falling 2.7%. It will, however, be a fine balancing act for the Chinese government to control inflation and engineer a soft landing for its economy. A sharper than expected slowdown in the world’s second largest economy will affect the rest of the world, where countries have become increasingly reliant on its voracious demand for raw materials what with prevailing sluggish growth in most developed nations. On the positive note, the latest developments halted, at least temporarily, the upward momentum in commodity prices including crude oil — and offer some relief to emerging markets struggling under rising costs. Crude oil futures traded on the New York Mercantile Exchange retreated below the psychological level of US$90 (RM275.20) per barrel, after hitting a fresh 27-month high earlier in the month. Sentiment on Bursa Malaysia was fairly neutral during the first half of the week but fell sharply when trading resumed last Friday, playing catchup with the rest of the region. The local bourse was closed last Thursday for Thaipusam celebrations. Trading volume declined as investors reverted to a more cautious stance in view of the negative sentiment in the rest of the region. The bulk of trading activities remained focused on lower liner stocks. On-market daily trading volume on the local bourse dropped to roughly 1.78 billion shares on average, down from the daily average of about 2.45 billion shares traded in the previous week. Trading volume could continue to drop this week, ahead of the long break for the Lunar New Year celebrations early next month. Investors are also likely to be cautious amid greater uncertainties in the external environment. The FBM KLCI closed at 1,547.4 points last Friday, more than 22 points lower from the preceding week’s close. Last week’s losses pared the bellwether index’s gains for the year-to-date to 1.9%. Our model portfolio outperformed the benchmark index last week. Total market value for our basket of 18 stocks fell 1.29% to RM534,760. Twelve of the stocks in our portfolio ended the week in the red while three closed higher and three others traded unchanged. Some of the bigger losers last week were Pantech Group Holdings Bhd (down 9.9%), Tanjung Offshore Bhd (down 5.8%), Green Packet Bhd (down 7.3%) and Masterskill Education Group Bhd (down 5.5%). At the other end, shares in DiGi.Com Bhd and Quill Capita Trust were up 1.9% and 3.6%, respectively, for the week. Shares in Malaysia Steel Works (KL) Bhd (Masteel) too gained 3.7% for the week to close at RM1.41. Investor sentiment for the stock may have been buoyed by the company’s latest joint venture with KUB Malaysia Bhd to build and operate an intercity rail transit network in Iskandar Malaysia, with connection to the MRT line in Singapore, under a 25-year concession agreement. Masteel will own a 60% stake in the venture company, which will be the first private train operator in the country. The proposed project will link up to 25 commuter stations in major towns in the Iskandar Malaysia region using existing KTM Bhd rail infrastructure. Including our large cash reserves, our total portfolio value was down by 0.98% to RM705,636. For prudence’s sake, our model portfolio continues to hold quite a significant amount of cash totalling RM170,876 at the week end — for which no interest is imputed. The cash accounts for roughly 24% of the total portfolio value. Last week’s losses pared our model portfolio’s cumulative returns since inception to 341% on our initial capital of just RM160,000. Nevertheless, we continue to outperform the FBM KLCI, which was up by about 139.2% over the same period, by some distance. Our total profits are very substantial at RM545,636, of which RM360,634 has already been realised from previous shares sales. We kept our portfolio unchanged and will monitor the market for fresh leads. Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned. This article appeared in The Edge Financial Daily, January 24, 2011.

https://theedgemalaysia.com/node/48474

AmResearch maintains Buy on Hong Leong Bank, unch FV RM12.20

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KUALA LUMPUR: AmResearch maintains its Buy rating on Hong Leong Bank Bhd (HLBB), with an unchanged fair value of RM12.20/share. “This is based on unchanged P/BV of 2.3 and calendarised 2011 ROE of 15.7%,” it said on Tuesday, May 3. EON Capital (EON Cap) announced that its board had on April 28 confirmed to Hong Leong Bank Bhd’s (HLBB) to accept the offer by HLBB to buy the entire assets and liabilities of EON Cap for RM5.06bil or RM7.30/EON Cap share. However, EON Cap unexpectedly added in one major new condition before accepting the offer, which was that EON Bank, the wholly-owned subsidiary of EON Cap, will pay a net dividend of RM311.9mil, to EON Cap. An application for the proposed interim dividend will be submitted to Bank Negara Malaysia (BNM). HLBB has confirmed it has no objection to EON Bank declaring and paying net dividend amounting to RM311.9mil upon receipt by EON Bank the approval from BNM. HLBB said it will maintain the acquisition price of RM5.06bil with no deduction for payment of the proposed interim dividend. AmResearch said EON Cap has not yet announced it will pay up the dividend to its shareholders EON Cap’s announcement is vague in the sense that it did not mention what it intended to do with the net dividend of RM311.9mil. “We are not able to get further indications from EON Cap at this point. We expect EON Cap to pay the dividend eventually to shareholders, which will be RM0.45/share. “Despite this, we expect EON Cap to eventually pay the unexpected net dividend of RM311.9mil to EON Cap’s shareholders. This is on the basis that EON Cap will likely be delisted post the merger,” it said. AmResearch said in EON Cap’s circular to shareholders dated Sept 1, 2010, EON Cap’s board said that it did not intend to maintain the listing status of EON Cap and would make the necessary arrangements to request for the delisting of EON Cap. Also, in the circular to shareholders, EON Cap had said that it intended to pay a capital distribution amount of RM1.76bil or RM2.54/share, which represent the existing share capital and share premium reserve of EON Cap, as AmResearch said EON Cap cannot declare a special dividend from these capital accounts, but only via a capital repayment exercise in accordance with Sections 60 and 64 of the Companies Act 1965. On top of this, EON Cap had said that it intended to pay a special dividend of RM3.3bil or RM4.76/share, which comprise the retained earnings as at 31 December 2009 as well as realised capital gain from the proposed disposal of assets and liabilities to HLBB. “On this basis, we expect the RM311.9mil that EON Cap will receive to be declared as dividends to EON Cap’s shareholders. This works out to RM0.45/EON Cap share,” AmResearch said.

https://theedgemalaysia.com/node/27141

City & Country: Faber Group’s Armada Villa homes well received

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Real estate development is no longer just a business of building and selling a roof above one’s head. It has evolved over time to incorporate the value of aesthetics and thematic concepts as an expression of the desired lifestyles and well-being of the owners. On that note, one developer has carved a niche strategy and conceived a boutique enclave for a few high-net-worth individuals within the strategically located Taman Danau Desa, a part of the 358-acre Taman Desa in Old Klang Road, Kuala Lumpur. Faber Group Bhd’s first launch this year — the RM138 million Armada Villa residential project — is a testament to the company’s desire to take its property business a notch higher, capitalising on the trust between former customers and the company.“This (Armada Villa) is the new millionaire’s row of Taman Desa,” says Khalid Abdul Majid, head of Faber Development Holdings Sdn Bhd, a wholly-owned entity of Faber Group. The Armada Villa comprises 46 residential units — 40 semi-detached houses and six bungalows — and is a joint venture between Faber Group and Kuala Lumpur City Hall. City Hall is the owner of the tract on which the gated and guarded project sits, a 5.6-acre leasehold site within Taman Danau Desa and a 10-minute drive from the Kuala Lumpur city centre. Faber Group intends to convert one of the bungalow tracts into a clubhouse. The bungalows are priced from RM4.7 million to RM7.5 million, while the semidees go for RM2.6 million to RM3.4 million. The semidees come in three designs — the 3-storey Accra and Barbados, and 3½-storey Capri. These homes will have individual land areas of 3,040 to 5,500 sq ft to accommodate built-ups of 3,833 to 4,549 sq ft. The 3-storey bungalow units have land areas of 7,100 to 12,800 sq ft, with built-ups of 5,116 to 7,881 sq ft. These units come in five designs — Andaman, Bahamas, Catalonia, Danube and Florence. The Andaman and Danube come with private swimming pools. The standard semidees come with five rooms, while the bungalows have up to seven rooms. According to Khalid, the construction of Armada Villa, to be built using reinforced concrete, started last month and is expected to be completed within three years. Reinforced concrete refers to concrete with metal and mesh added into the building material to offer firmer support for a building. Khalid says these houses will have high ceilings, alarm systems,  solar water heaters as well as “green features”, such as rainwater-harvesting systems. Armada Villa is targeted at upgraders and investors, some of whom have purchased properties from Faber before, he adds. “We were confident when we launched that at least half would be taken up,” he says. The developer has sold 25, or 55%, of the units offered at the launch on April 3 and 4. In terms of value, the 25 units accounted for RM75 million or 54% of Armada Villa’s gross development value of RM138 million. Historical numbers have shown that property prices within the area have appreciated substantially. According to Khalid, prices for its Danau Villa 3-storey link semidees nearby have doubled over the last few years. The units, priced at RM700,000 each at the launch in 2005, are now worth between RM1.3 million and RM1.4 million. Other units, which were initially priced at about RM1 million each, are now valued at between RM1.7 million and RM1.8 million. Faber Group has had a presence in Taman Desa for more than three decades. According to its corporate profile, Faber Group’s initial real estate initiative in Taman Desa was in 1974, comprising link houses and semidee bungalows, which were completed in 1979. Its first commercial property project, known as Faber Plaza, was undertaken in 1977 and finalised in 1980. Taman Desa has since evolved into a notable real estate spot. The enclave, originally surrounded by jungle and rubber estates, is now considered a strategic area, with its proximity to Mid Vallley Megamall and other landmarks along Old Klang Road. Khalid says most of the tracts in Taman Desa have been used for property projects, and that the 5.6 acres for Armada Villa is the second last portion to be developed. The final portion, on which the developer intends to develop link villas, is a 2.7-acre site located between Danau Villa and Armada Villa. Khalid says the project is due for launch in August this year. The expansion of Faber Group’s real estate operations is worth noting. In an interview with The Edge Financial Daily in December last year, Faber Group managing director Adnan Mohammad said the company planned to launch some RM500 million worth of properties in the Klang Valley in 2010, including semidee and bungalow units under phase four and five of its Laman Rimbunan project in Kepong, as well as landed residential properties under its phase 1A (Fleet) project within Taman Desa. Adnan indicated that Faber hoped to secure more joint ventures with landowners, an expansion method more economical than land acquisition. The property developer, with undeveloped land across the Klang Valley and Sabah, is also eyeing opportunities in Johor Baru and Penang. Faber’s real estate business contributed 15%, or RM122.5 million, of its total revenue of RM805.28 million in FY2009. Its ongoing property projects include the Laman Rimbunan mixed project in Kepong, Kuala Lumpur, and Taman Hilltop Perdana in Kota Kinabalu, Sabah. Faber’s other businesses include a 15-year concession, ending in October 2011, to offer facilities management services to 79 government hospitals in Perlis, Kedah, Penang and Perak, as well as Sabah and Sarawak. Abroad, Faber’s track record in the UAE will serve as a springboard into the facilities management market in other Gulf Cooperation Council countries. This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 801, Apr 12-18, 2010  

https://theedgemalaysia.com/node/95730

Stocks with China exposure are intact

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KUALA LUMPUR: The fundamentals of companies with exposure in China are still intact, despite negative sentiment surrounding these  stocks due to slowing growth of the Chinese economy in the last 18 months. DBS Vickers Securities regional equity strategist Joanne Goh said in a note yesterday that there are opportunities in Asean stocks with exposure to China  although the top line growth would have come off. "Most companies would have exposure which is irrelevant when compared to the Chinese economy," she said, adding that the trickle down effects would be too light to be felt at company level. Regional banks may benefit from China opening up its capital account and increased yuan business. Goh also noted that outbound investments and tourism are not slowing on the back of China's slow growth. Although the slowdown in China has already affected Hong Kong property transactions, and slowing Chinese tourist arrivals have affected retail sales growth in Hong Kong, she said, "we note that the same may not be true for Asean countries." As for property investments, Goh said Asia has felt a strong Chinese presence in property investments, so it is possible China's slowdown could derail some potential investments. She said within the tourism sector, the growth of outbound tourist numbers from China is probably past its peak, but the absolute numbers remain sizeable. "About 95 million Chinese tourists are expected to travel out of the country this year, an increase of about 12 million from last year," Goh said. However, the slowdown has generally affected sectors such as retail mall operators, real estate investment trusts, department stores and restaurants due to slower consumption. To recap, China has slowed considerably in the past 18 months, from 9.5% in 2010/11 to 7.6% average since early 2012. There are fears of a hard landing, and sentiment has been affected by reports of the economy slowing. "We believe the slowdown has been priced in, as indicated in our market implied growth model," said the report. The market, it said, is now focusing on how the new leadership is going to execute reform plans to achieve a more balanced and thus  sustainable growth. "We expect news flow to focus on these changes to gain speed before the National People's Congress meeting in November," said Goh. DBS Vickers' report on Asia Equity Strategy also revealed that the Asian markets' sell-off in May and June was not entirely due to rising US bond yields. A weaker outlook for China had compounded the sell-off. Since then, correlation between Asia markets and China's A-Share market has been rising. The S&P 500 is up 2.5% since May 22, while Asia markets have fallen by an average of 6.4% and and China's A-Share market by 10.5%. The DBS Vickers report said investors are starting to pay attention to the recovery in the UK and Germany and what the world economy will need now would be for China to join the recovery story. "And indeed very recent economic data out of China has been decent, confirming belief that the worst may be over for China," Goh said in the report. This article first appeared in The Edge Financial Daily, on August 15, 2013.

https://theedgemalaysia.com/node/70765

BMAM urges changes to Strata Management Bill

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KUALA LUMPUR (Oct 8): The Building Management Association of Malaysia (BMAM) on Monday held a press conference to urge the Minister of Housing and Local Government to delete all references to Property Management /Property Manager and replace them with the terms "Building Management" or "Building Manager" in the Strata Management Bill before its enactment. "More than 2.5 million low and middle income earning Malaysians live in flats and apartments countrywide, and they are grappling with the ever increasing costs of living," said BMAM. "Any additional layer to building management in the form of a monopoly favouring licensed valuers will most certainly burden them financially, bearing in mind that many of them are registered voters. "Our proposed definition for 'Building Manager' is as follows: 'A Building Manager is any person who has been deemed competent to undertake the normal functions of building management and who has been accredited to, or admitted as a member of, or duly certified by an appropriate professional or registered body'," it concluded. The proposal comes after recent protests by the organisation alleging that property management will be monopolised by licensed valuers under the new Strata Management Bill. BMAM said that it was neither consulted not requested to provide inputs when workshops and meetngs were held to draft the bill. In September, it released a statement to clarify issues raised by the Malaysian Institute of Professional Property Managers (MIPPM) and the House Buyers Association (HBA). Amongst the issues BMAM raised were related to fiduciary duties and responsibilities of JMBs and MCs, professional indemnity insurance coverage, VAEA scale of fees and the monopolisation of licensed valuers on property management. The Strata Management Bill  was tabled for its first reading on Sept 24, with the second reading on Sept 26.

https://theedgemalaysia.com/node/15310

Lacklustre debuts for small IPOs

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KUALA LUMPUR: Multi-Purpose Holdings Bhd (MPHB) has proposed a demerger that will make it a dividend play with a sustainable payout policy of 80%. The exercise principally involves the separation of MPHB’s gaming and non-gaming businesses, which will later be listed on the Main Market of Bursa Malaysia through a special purpose vehicle (SPV Capital). The group’s announcement on the exercise confirms a report by The Edge Financial Daily published yesterday.   The new MPHB will be a pure gaming outfit with the jewel in its crown the wholly owned numbers forecast operator (NFO) Magnum Corp Bhd. SPV Capital will assume MPHB’s non-gaming businesses in financial services, property development, investment and hotels. The two listed entities will have common shareholders. In a briefing yesterday, MPHB managing director and major shareholder Datuk Surin Upat-koon said it is the group’s vision to become a dividend yielding stock comparable to its rival NFO Berjaya Sports Toto Bhd (BToto) and mobile player DiGi.Com Bhd. He said the main rationale for the exercise is to unlock value, as investors have under-appreciated MPHB’s lucrative gaming business due to a significant conglomerate discount. “The demerger and listing exercise are expected to be beneficial to our shareholders as this will unlock value within our group and allow the market to better recognise the distinct businesses within our group. All our shareholders, if they choose to stay, stand to benefit and be part of our growth,” he said. In a recent note, HwangDBS said at the moment MPHB offers a cheap exposure to the resilient NFO segment at a mere nine times FY12 earnings, against BToto’s 14 times. Its gaming division has delivered a strong three-year earnings compound annual growth rate of 21%. “The share price of MPHB has reached the level where there is little impetus to bring it to the next level. Analysts talk about [MPHB’s] value in excess of RM4, but in reality the share price is hovering at RM3 and below,” said MPHB director T Vijeyaratnam. The stock ended at RM2.93 yesterday, up two sen. The gaming division under Magnum accounted for 90% of MPHB’s revenue and has recorded a steady earnings before interest, tax, depreciation and amortisation of RM500 million to RM550 million over the past two to three years. The strong cash flow will back the group’s planned dividend policy. “Once it’s clear there are no other businesses in MPHB, except for Magnum, the cash flow from the gaming business would be easily identified. This gives better clarity to shareholders,” he said of the demerger. Surin, a Thai national who is also known by his Chinese name Lau Kim Khoon, added that MPHB had intended to make gaming its core activity after it bought back a 47% stake in Magnum from private equity fund CVC Capital last year. In addition, he said, MPHB has since disposed of a few of its assets, including Menara Multi Purpose, a hotel and its investments in Philippines Racing Club.Surin said MPHB will continue to divest some of its non-core assets, which include stockbroking firm AA Anthony Sdn Bhd. However, it will not dispose of its general insurance business under MPHB Insurans Bhd. In the demerger, MPHB will see an internal restructuring in which financial services and other non-gaming assets and investments will be transferred to SPV Capital. The transfer will be satisfied through the issuance of new ordinary shares in SPV Capital and/or cash to MPHB. As part of the exercise, MPHB will undertake an offer for sale (OFS) of all its shareholding in SPV Capital to the entitled MPHB shareholders, in proportion to their shareholdings, at an offer price to be determined later. Subsequently, MPHB will distribute all the net proceeds from the proposed OFS through a capital repayment exercise. The entitled shareholders of MPHB who do not wish to stay with SPV Capital may sell their entitlements under the proposed OFS in the open market. Nonetheless, they will still be entitled to the capital repayment from MPHB. Separately, prior to the proposed OFS, MPHB will also issue bonds to refinance the existing debt in the gaming business, which stands at RM975 million to date. Surin said it was too early to share details on the valuation of SPV Capital and the estimated proceeds from the OFS. He said  two of the largest shareholders of MPHB have committed to subscribe for their entire entitlement in SPV Capital. The two largest shareholders of MPHB are Surin himself, with a 33% stake (via Casi Management Sdn Bhd or CMSB), and Asia 4D Holdings Ltd (AHL), which holds 11.21% equity interest. MPHB personnel and minority shareholders hold the remaining 55.79% stake. Upon completion of the exercise by November, both MPHB and SPV Capital will be listed on the Main Market. The new MPHB will incorporate the Magnum brand name to better reflect its core gaming operation. This article appeared in The Edge Financial Daily, May 24, 2012.

https://theedgemalaysia.com/node/61368

CIMB Research maintains Neutral on banking sector

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KUALA LUMPUR (April 2):  CIMB Research has maintain its Neutral recommendation on the banking sector and said the slowdown in loan growth from 13.6% year-on-year in Dec 11 to 11.9% in Feb 12 was par for the course given the less favourable economic climate. The research house said it continues to project loan growth of 9-10% for 2012. “The gross impaired loan ratio has stayed at 2.7% since Nov 11, supporting our view of stable asset quality,” it said on Monday. “We also foresee less of a margin squeeze this year due to more disciplined pricing. We remain Neutral on the sector and continue to like Maybank for its attractive yield,” it said.

https://theedgemalaysia.com/node/36254

Corporate: Xingquan courting strategic investor

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Xingquan International Sports Ltd, which has been actively seeking new partners for some time now, is finalising talks with at least one local party to take up a substantial stake in the company, sources say.  The first Chinese company to be listed on Bursa Malaysia in July last year, Xingquan is planning to raise its profile and expand into new markets via such a partnership, says a source. It is not known at this point who the potential investor is. Xingquan is the best performer among the Chinese shoemakers listed on Bursa Malaysia. Its share price closed at RM1.60 on Aug 5, gaining 32.23% year to date compared with 7% by the FBM KLCI. However, the stock is down 6.4% from its IPO price of RM1.71 on July 10, 2009. Net asset value per share stood at RM1.08 as at March 31, 2010, compared with 52 sen on March 31, 2009.  In an email reply to queries from The Edge, Xingquan executive chairman and CEO Wu Qingquan says the footwear and apparel maker is not ruling out the possibility of a new shareholder, but maintains that no deal is impending at the moment. “As part of our investor relation activities, we communicate frequently with existing shareholders and potential investors. However, currently there is no rights issue or placement exercise being considered. “We have a combination of various types of investors in our Top 25 shareholders list, which include government funds, private funds, foreign funds as well as high net worth individuals,” Wu says. Currently, the top 10 institutional funds with shareholdings in Xingquan include pilgrims fund Lembaga Tabung Haji (LTH), KWAP, the EPF and Prudential. Tai Zhen Xiang Holdings Ltd is the largest shareholder in the company with a 58.43% stake while LTH is the second largest with a 5.08% stake. Based on its 2009 annual report, the entire block of Tai Zhen Xiang’s shares is listed as pledged securities. Prior to the listing, Tai Zhen Xiang held an 83.47% stake in Xingquan. LTH, meanwhile, disposed of some 1.6 million shares on June 22. While Xingquan is smaller than its regional peers, most analysts agree that its shares are trading at a steep discount, with its prospective 2010 price-earnings ratio at 3.7 times compared with the industry average of 16.5 times.  Of the four Chinese companies, Xingquan raised the largest amount in its IPO exercise — RM164.58 million. By comparison, K-Star Sports Ltd, which joined its peers on Bursa Malaysia in June this year, raised only around RM32.9 million.   Does Xingquan have the right strategies to survive and capitalise on the industry consolidation that has begun in China amid rising labour costs that are starting to erode the profitability of manufacturers? “Investors are concerned about the ability of the smaller shoe companies to survive if the industry goes through a major consolidation exercise in the coming months. It is too early to tell which company will survive,” says Nigel Foo of CIMB Research. There are more than 150 players in the low to mid-end markets alone. “Industry consolidation has already started in the sportswear market. The impact will be felt first by the smaller shoe companies, which might not be able to survive if labour and raw material costs continue to rise. “But we are reasonably confident that Xingquan is moving in the right direction as it switches its focus from the competitive sportswear market to the less competitive outdoor market segment,” Foo adds. Addnice, Xingquan’s trademark sports apparel brand name, is one of China’s leading brands for outdoor sports shoes, apparel and accessories. Addnice is distributed at over 2,000 retail locations across China. Still, this pales in comparison with the top players in China, such as Hong Kong-listed Xtep International Holdings Ltd, which has 5,800 stores covering 31 provinces and provincial cities on the mainland. Wu acknowledges that the company is operating in a very competitive industry with low entry barriers, but points out that Xingquan has managed to carve a niche for itself in the outdoor footwear and apparel segment, where competition is less intense. “Many industries in China are competitive and so is the sportswear industry. We have been able to penetrate specifically the outdoor wear segment and have successfully positioned our brand and products as one of the leading outdoor wear brands in China with close to 2,000 points of sales,” he says. Despite the stiff competition, Xingquan has made its mark on the mid to high-end market in the outdoors segment, focusing on the second and third-tier cities in China. Competitors in this segment include overseas brands like Timberland, Columbia and North Face while local rival brands include the likes of Toread and Kolumb. Up to 3Q2010 ended March 31, Xingquan’s sales and net profit posted healthy growth. In the nine-month period, net profit rose 28.8% to RM84.18 million from RM65.36 million a year earlier while revenue jumped 48.5% to RM466.98 million from RM300.94 million. The Jinjiang, Fujian province-based shoemaker has said it intends to keep its promise of paying out as dividends between 10% and 20% of its current year earnings. This makes Xingquan the only Chinese company so far to publicly state its dividend policy. The company has paid its maiden dividend of 2.5 sen per share for 2QFY2010. But in a report on Chinese shoemakers dated July 26, CIMB cautions that apart from the business risk, investors are also exposed to China’s regulatory risk regarding dividend payments. In their prospectuses, it is stated that “the People’s Republic of China (PRC) law requires that dividend be paid only out of the net profit calculated according to PRC accounting principles, which differ in many aspects from generally accepted accounting principles in other jurisdictions”. Thus, there is the risk that the actual dividend might be less than what is expected due to differences in accounting reporting standards, says CIMB. This article appeared in Corporate page, The Edge Malaysia, Issue 818, Aug 9-15, 2010

https://theedgemalaysia.com/node/93745

Hot Stock: Kinsteel extends gains, more mining deals seen

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KUALA LUMPUR (July 25): Investors are still buoyant on loss-making Kinsteel Bhd’s prospects of making a comeback. There has been market talk that the steel maker will get more mining rights after obtaining one from the Sultan of Pahang. At 2:31pm, Kinsteel added 3.5 sen or 11.48% to 34 sen. Placed number four on the bourse's most-active list, a total of 27.696 million shares were traded. The surge in the stock began yesterday after it announced that it had signed a mining agreement with Sultan Ahmad Shah of Pahang for the exclusive right to carry out mining operations for all types of iron ore and other minerals in the district of Kuala Lipis. Kinsteel was traded higher by as much as five sen or 18.18% to 32.5 sen before closing at 30.5 sen. Analysts said there have been rumours that the steel producer could clinch more mining deals. They said this could be due to the company’s strong ties with the government. But Kinsteel's credit profile is also closely watched. Maybank Investment Bank which downgraded Kinsteel to a “hold” from "buy", and slashed its target price for the stock to 26 sen, from 58 sen, said "it remains to be seen" if Kinsteel will be able to fulfill its debt obligations. “We think its cash-strapped situation will cap upside (to the stock's price),” said Maybank analyst Lee Yen Ling in a note yesterday. While Lee said the research house is positive on Kinsteel’s mining deal in Pahang, it is unable to assess the incremental value to the firm as details on the award are scant. “Key risks include a potential equity-raising exercise, via placement of new shares or a rights issuance, in view of the capital expenditure required for the mining activity and the need to refinance its current borrowings,” said Lee. However, the analyst stated that there is “long-term value in mine”. “In addition to selling iron ore to third parties (potentially the export market), Kinsteel could also reap the benefit of this relatively cheaper local iron ore by consuming it internally versus importing, which would lead to a much better cost structure. "However, this will only materialise when its subsidiary Perwaja Holdings Bhd’s pelletising plant comes on-stream in the second quarter of next year,” Lee said.

https://theedgemalaysia.com/node/76754

Growth outlook lifts shares as Fed taper talk helps dollar

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LONDON: Signs of a solid US recovery boosted world equities yesterday although concern that this may encourage the US Federal Reserve to reduce its economic stimulus put pressure on emerging markets. Surprisingly strong US jobs data last Friday brought forward expectations for when the Fed could start tapering its stimulus, lifting Treasury bond yields and the dollar without curtailing demand for shares on Wall Street or in other major markets. US stock index futures signalled a steadier session as the Veterans Day holiday limits activity. “Tapering could well come earlier than March now, but people believe there is a little more upside as there were plus points in the [jobs] data,” Alastair Winter, chief economist at brokerage Daniel Stewart, said. Fed officials, including chairman Ben Bernanke, have sounded cautious about the prospect for early tapering since the jobs data though many investors are waiting for Bernanke’s nominated successor, Janet Yellen, to give her views before the US Senate on Thursday. “Janet Yellen is going up to the Senate and they are going to ask her about the taper. She is not going to say ‘I’m not telling you’,” Winter said. Meanwhile, the expectations for US growth helped lift European shares by 0.1% and off one-week lows during a subdued morning session. Earlier the recovery hopes had boosted Japan’s Nikkei by a hefty 1.3%, lifting it from one-month lows. MSCI’s global barometer of world shares added 0.2% though it was still down 1.7% from the near six-year highs touched at the end of October when it seemed the Fed might not taper until well into next year. But Asian shares reflected the concern in emerging markets that an earlier cutback in Fed stimulus and higher bond rates would attract capital back toward the US. Emerging Asian currencies also came under pressure on the capital outflow fears, pushing the Indian rupee down 1.3% to 63.281 per dollar and the Indonesian rupiah down 1% to 11,551 per dollar, a one-month low. The dollar retraced some of its gains against the world’s major currencies despite the talk of a more imminent tapering but was well supported just below the two-month high set last Friday after the data. The change in expectations has been reflected in the US Treasury market where yields on the 10-year benchmark jumped to 2.75% last Friday, from 2.6%. These now offer a pick-up over equivalent European and Japanese bonds. “The dollar has come off slightly, but the defining factor is the rise in US yields,” said Jeremy Stretch, head of currency strategy at CIBC World Markets. The euro was flat at US$1.3375, and not that far from a two-month trough of US$1.3295 plumbed last Thursday when the European Central Bank surprised the market by cutting its main rate to a record low 0.25%. The euro market is focused on GDP data later this week for the 17-nation bloc for hints about the region’s economic recovery prospects after recent positive numbers. In commodity markets, gold was taking a big hit from the tapering speculation, sliding to a three-and-a-half week low just under US$1,280 an ounce to add to last Friday’s 1.5% decline. Brent crude oil rose 50 US cents a barrel to around US$105.60 after Iran and six world powers failed to reach a deal on Tehran’s nuclear programme, and after Chinese data pointed to a rise in fuel demand in the world’s biggest energy consumer. — Reuters This article first appeared in The Edge Financial Daily, on November 12, 2013.

https://theedgemalaysia.com/node/51625

Gold futures open lower

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KUALA LUMPUR (Dec 20): Gold futures contract opened lower onBursa Malaysia Derivatives today on lack of buying interest, dealers said. At 9.20 am, December 2013 was 18 ticks lower at RM126.15 a gramme while January 2014 eased 21 ticks to RM126.30 a gramme. Turnover stood at 60 lots while open interest amounted to 1,453 contracts.  

https://theedgemalaysia.com/node/14767

Asia as global leader — not so fast

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AS the European economy teeters on the verge of a second recession and the US recovery wobbles, Asia is brimming with optimism. For Asian triumphalists attending a recent conference in Thailand — "Reading the Signposts of a Changing Landscape" — the signs are big, clear and point to a happy future. I'm less sure. The wording on many signposts is confused, with many pointing towards dead-ends or quicksand. In the rush of exuberant expectations that Asia's time has come, the continent could fall victim to what's behind many failures in the history of the world — simple hubris. The rise of Asia is not predetermined, just as the dominance of Western civilisation for the past few hundred years was not preordained. The rise of European imperialism and then American hegemony was not simply due to economic power backed by military might. It was underpinned by innovative, even revolutionary thinking, about the primacy of the rule of law; the separation of church and state; the commitment to an empirical, scientific worldview; and all the institutions that brought about the modern state built on liberal democracy and market capitalism. Much of the intellectual vigour propelling the West to supremacy is now spent. In its place is frustration that the old order is not working, with no vision as to what the new order should be. So could Asia rise to the occasion and, in the intellectual vacuum, offer new solutions to bankrupt thinking? Is the continent capable of the creative destruction of the taboos and restrictive mindsets that hobbled it during past centuries? Is Asia's economic growth matched by equally vigorous intellectual innovation? The regional landscape offers clues. India, for example, has managed, despite numerous challenges, to remain the world's largest practising democracy. But the continuing clash and contradictions between tradition and modernity render Indian political and social relations almost dysfunctional. And while Indian pride in its scientific, artistic and business achievements is justified, the continuing inability to lift millions of people out of abject poverty remains a sobering and hopefully not insurmountable challenge. China, the other great and ancient civilisation of Asia, is today to become the second most powerful economy in the world. Its government has, unlike India, lifted the teeming masses from abject poverty. Private capitalism thrives alongside the more dominant state capitalism. But the absence of a dynamic civil society — unlike in India — and its opaque political structure, as so glaringly revealed by the Bo Xilai scandal, is possibly unsustainable. India suffers from a lack of political consensus; China has too much of it. India has a surfeit of democracy and a deficit of economic equality; China has eradicated poverty, but suppressed democracy. Indian thought leaders realise that democracy has not reduced inequality or improved the lives of most Indians. Chinese intellectuals recognise that the current systemic problems of political governance, glossed over by rapid economic growth, are unsustainable and brittle. But neither knows how to move forward beyond recognition of the need for drastic reform. Intellectual innovation and political power are not integrated. Japan's social cohesion stands in stark contrast to China and India, but that same homogeneity and social conservatism has left it stranded in genteel decline, with no new thinking to break the country out of its stifling insularity. South Korea, Taiwan and Singapore are probably the best examples of societies that grew rapidly due to what political scientists call "developmental authoritarianism", and have successfully transited to liberal democracy. But their models of development are not easily transplanted to larger, more diverse societies. Southeast Asia has largely recovered from the debilitating financial crisis in the late 1990s, which nearly crippled its private sector and brought down its banks. But internal contradictions remain unresolved in Thailand, Malaysia and Indonesia and are, arguably, growing steadily. While one can't deny the real achievements of an ascendant Asian civilisation, it's difficult to accept the facile self-congratulations of the triumphalists who suggest that Asia's success in this century is inevitable. Even those who believe fervently that Asia's time has come cannot afford complacency. Asia requires diverse, innovative thought leadership if its economic rise will result in a sustainable, new paradigm for civilisational progress. In particular, Asia needs to inculcate a virtuous cycle whereby business, political and social leaders interact to create new norms of economic, social and political behaviour and values. One example is the dire need of a replacement for the highly individualistic, American form of capitalism, which at its best, enormously rewards risk-taking, but at its worst, creates monstrous inequalities based on speculative gambling of other people's money. Capitalism is not universally identical; it's shaped by history and culture, resulting in the Scandinavian variant or the German model. The American model may not be broken, but after recent financial debacles, Asia should not blindly adopt it. Asia needs to delve into its own history and culture for inspiration in creating an Asian variant of capitalism. One such source can be the webs of mutual obligation, which serve as a common, recurring socio-ethical tradition in Asia. This communitarian characteristic of Asian culture can, if thoughtfully enhanced, nurtured and developed, replace the highly individualistic, Darwinian ethos of American capitalism. Communitarian capitalism can be an Asian form of ethical wealth creation, where the interests of the community of stakeholders in an enterprise — owners, employees, customers and suppliers and the larger community — would be a higher consideration than return on capital. In other words, communitarian capitalism would be stakeholder-driven, not simply shareholder-driven. One of the contradictions of globalisation is the starkly worsening income inequalities across the world, particularly in Asia. There is no middle way, no waffling position where Asia's elite claim credit for generating growth but deny responsibility for its negative consequences. Such waffling, unfortunately, is what most Asian business leaders are doing today; hiding their heads under the sand, thinking that if they simply stick to what they're good at doing — creating and consuming wealth — they are part of the invisible hand of productive capitalism. But that's just not good enough because, as we've seen, unfettered capitalism is not an absolute good, and often businessmen deepen its imperfections.    History has shown how many institutions of a modern and progressive society, such as liberal democracy or universal suffrage, arose out of the demands of a rising business class — the bourgeoisie. Asia's rising middle class needs to play the same historic role as its counterparts in Europe several hundred years ago. Thought leadership need not be in grandiose or visionary ideas, but can be small, practical solutions to real problems. For example, as a tiny country, Singapore has no pretensions of being a global thought leader. It has simply and quietly created solutions to its own set of changing circumstances, setting a model for others. Singapore's approach to social security and public housing, launched many decades ago, has been universally hailed as revolutionary. In the field of sustainable resource management for cities, Singapore is probably one of the leading world examples. Across Asia, there are many more examples of innovative, inspiring thought leadership covering a spectrum of fields. But this is not enough. Asia needs fundamental paradigm shifts, particularly on political and business governance, if it's to reach the vision of its future. Future generations will either blame or thank the present elite for what they do, or more disappointingly, choose not to do. — YaleGlobal Ho Kwon Ping is chairman of Singapore Management University and executive chairman of Banyan Tree Holdings. This article appeared in The Edge Financial Daily on May 16, 2012.

https://theedgemalaysia.com/node/56043

Notion Vtec’s Thai subsidiary halts operations

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KUALA LUMPUR: Notion Vtec Bhd’s subsidiary in Thailand, Notion (Thailand) Co Ltd (Notion Thailand) has stopped operations due to the severe flooding as Ayutthaya. In a statement Tuesday, Oct 11, Notion said that Notion Thailand had stopped operations from Oct 10. The company said there was insurance coverage taken against damage caused by flood to property, plant and equipment. Notion said it was unable to ascertain the amount of damage and loss to property, plant and equipment due to current inaccessibility but was preparing for remedial works to commence once the waters receded. “At this moment we cannot ascertain when the factory can be operational again and will advise when things are more certain,” it said. Notion Thailand’s principal business is in the manufacture of certain camera components including machining, anodising treatment and also sub-assembly works. Notion added that one of its camera customers was also based in the vicinity and its factory had temporarily stopped operations. “As there is no known restart date due to severe flooding, we are unable to comment on the extent of loss due to stoppage of orders from this unexpected event,” it said. Notion also added that Notion Thailand had never experienced flood or any kind of natural disasters that affected the operations of its factory.  

https://theedgemalaysia.com/node/6469

Guan Eng: Democracy is dead

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"Democracy is dead in Perak and I am distressed and sad that the police could intrude into legislative assembly and use violence to remove an elected representative. "This violent interference and barbaric action has never happened before and the police have never interferred with the epitome of democracy," he said at a press conference. "This clearly reeks of dictatorship and shows that efforts to portray reformation and liberalisation by the new leadership has failed miserably. "If this is not rectified, it only goes to show that Barisan Nasional (BN) does not respect the clarion call made by the people of March 8 for the coalition to reform. "The people wanted change and BN had promised change, but clearly, that does not seem to be their intention," Lim added. He said what happened in Perak showed that BN would resort to any means to remain in power. "This signifies the death of democracy as the state legislative is deemed the highest legislature of land which symbolises the people's right to elect their own leaders. "If the police can violate the sanctity and use violence on these duly elected representatives, it shows democracy is dead and Perak is already a police state," he added. He said the BN government must "wake up" and realise that not only the Perakians but the entire nation was angry with the episode. "It shows that all that has been said and promised about reforms and liberalisation is just talk without substance. "Even wearing black has become a subversive act. "Malaysians are not only fighting against discrimination on their skin colour but now are also subjected to discrimination according to the colour of their clothes. "It is such a laughable matter, and Malaysia has become an international joke, but I am too sad to even laugh about it. "BN has lost all moral authority, legitimacy as well as ethical values," he said.

https://theedgemalaysia.com/node/34907

Special Focus Property: Mah Sing changing the face of southern Penang

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The buzz at the moment in Penang is about Mah Sing Group Bhd’s plans to develop a modern township in Batu Maung that will change the face of the southern area of the island.  Named Southbay, it is strategically located just two minutes away from the Second Penang Bridge which is due for completion in 2013. Penang International Airport is just 10 minutes away. Mah Sing Properties Sdn Bhd COO Teh Heng Chong believes the Southbay township could become the place of choice to live on the island, even more popular than George Town, due to its accessibility and innovative new concepts, which include the first gated and guarded residential area on Penang Island. “Southbay is the beginning of a new city. It may even become more prominent than George Town in time to come as George Town is an old town,” Teh says. The southern region of the island is often perceived as the less developed and more remote part of the island. But in fact, Southbay is located near many facilities such as shopping malls like Tesco and Giant hypermarket, healthcare facilities like the Pantai Mutiara Hospital, education institutions such as University Sains Malaysia, and hotels as well as recreational facilities. Teh describes Penang as a “unique market, an island city that has enormous growth potential”. As the company already has a foothold in the growth centres of the Klang Valley and Johor, Tan says Penang is a natural choice as Mah Sing’s next growth target. The company is seeking to build up its landbank there. “There has been a good response to our project in Penang ... If the response is good, why stop?” he quips. Penang has the third largest property market in Malaysia after the Klang Valley and Johor Baru. “Contributing to the robust demand for real estate on the island is the fact that it is second only to Selangor in its rate of urbanisation and level of monthly household income,” Teh explains. The completion of the second Penang Bridge will be a major boost to the 88.11-acre township that comprises three main components: Residence@Southbay, Legenda@Southbay and Southbay City. The freehold project has attracted many local buyers, especially upgraders, as well as foreigners — mostly Singaporeans who are attracted by the geographical and demographic similarities the two islands share. “There is also a growing number of direct flights between the two islands,” Teh says. Gated and guardedMah Sing is the first to introduce the gated and guarded concept of development on Penang Island. Both its landed residential areas — the Residence@Southbay and Legenda@Southbay are gated.  The projects also feature green street concepts, lush landscaping and community parks offering the owners a resort-like sanctuary in a secure environment. Teh says there has been a tremendous response. Of the 284 three-storey superlink homes in the 25.80-acre Residence@Southbay, 70% was taken up within two weeks of the launch in mid-2009. The project is scheduled for completion by the end of this year. “To date, the take-up rate is over 90%,” Teh says, adding that The Residence@Southbay is also the first residential development in Penang to incorporate a private clubhouse. “The Southbay township is a high quality residential enclave ... providing more security  ... and complemented by hotels, shopping complexes and SoHo offices,” he says. Another residential project, to be launched in the Southbay township this month, is the 27.81-acre gated and guarded Legenda@Southbay that consists of 3- and 4-storey bungalows with land areas from 7,500 sq ft and built-ups from 6,400 sq ft. Prices start from RM3.6 million. The gross development value is RM355 million. Teh says the 76 bungalow units to be built on elevated land are ideal for three-generation families and offer breathtaking views of southern Penang. Legenda@Southbay won the Asia Pacific Residential Property Awards this year for Best Architecture (Multiple Units) Malaysia Category. The three-unit-per-acre development is to begin construction in 2H2010 and is due for completion in three years. The low-density neighborhood will boast its own residents-only clubhouse. The bungalows come in five designs, each with a private lift, swimming pool, security system and spacious car porch for at least four cars. Besides the clubhouse with a gym and a community hall, there is also  a two-acre rejuvenating park with a jungle track. The main commercial centre in Southbay will be the 34.50-acre Southbay City comprising serviced residential suites, retail lots, Grade A offices, office suites as well as hotels and resorts. The entire Southbay City has seven phases. The first, Southbay Plaza, takes up about 4.19 acres. Southbay Plaza will have two towers connected by a retail podium. There will be 21 units of retail shops on levels 1 to 4 and the residential suites will occupy Level 9 upwards of both towers. There will be approximately 700 parking bays. The shops will have a net floor area of 74,475 sq ft with unit sizes ranging from 1,270 sq ft onwards. Indicative selling price starts from RM420 psf. The serviced residences range from 1,028 sq ft to 1,645 sq ft and are priced from RM400 psf. “The suites come in 1-bedroom, 1+1, 2-bedroom and 3-bedroom variants,” Teh says. Southbay Plaza is expected to be previewed in 3Q2010 and completion is due three years later.“We anticipate that Southbay City will come alive once the second bridge is completed. This is when new opportunities will be opened up and we will be ready for them,” he says. Mah Sing still has approximately 35 acres of undeveloped land in Penang, including Southbay City and a tract in north George Town. This article appeared in Special Focus Property, The Edge Malaysia, Issue 815, July 19-25, 2010 

https://theedgemalaysia.com/node/12497

First woman president for TeAM

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Technopreneurs Association of Malaysia (TeAM) is in its ninth year and going strong. More significantly, it is the first time TeAM has appointed a woman — Koh Lee Ching — as president of its council. TeAM, which has some 350 members, is headed by 10 council members.Nonetheless, Koh is not new to the association. She joined TeAM in 2002 and is the CEO of Calms Technologies Sdn Bhd, which specialises in multi-application smart card solutions with a focus on card issuance and management for large user-base organisations. Sharing her thoughts on the significance of her appointment, she says, “This shows that in business, especially in the technology space, gender is not that critical. What is more important is the actual business itself. I would like to highlight this to all the women out there; they can do it too.”With this in mind, Koh is calling out to more women technopreneurs to join the association to make a difference. In fact, TeAM is planning a new book on Malaysian women technopreneurs this year. Koh hopes to feature 21 women technopreneurs in the book following the successful launch of Go for Broke! last year, which contains the inspiring tales of 21 technopreneurs, who, incidentally, are all male. But her work does not stop there. One of the key activities to be undertaken by TeAM is its Go Global programme, which aims to build export-driven Malaysian technopreneurial companies. “Problems faced by technopreneurs include market access. Under Go Global, TeAM will provide a platform for 20 companies to penetrate overseas markets,” Koh explains. She says it is an “umbrella” project where the 20 companies will be parked under one big entity, which will then guide and assist them overseas. It is crucial to provide these companies with guidance and networking to ensure a high success rate. Go Global, Koh adds, will start with the US, the UK and the Middle East. TeAM hopes to partner Malaysian companies that already have a presence and relationships in these  countries to ease its entry and make the right connections. It plans to work with Cradle and MDeC on Go Global and partially fund it by tapping the Malaysian Industrial Development Authority’s RM50 million grant under the Services Sector Capacity Development Fund.Throughout the year, TeAM will organise clinics at which members can seek advice from experts in various fields on a one-to-one basis. It will also conduct seminars and training to assist technopreneurs in various aspects, such as educating them on the various grants available in the country. Apart from playing a role in assisting and shaping technopreneurs, TeAM is well regarded and respected as an organisation that presents a unified and rational platform to air concerns and suggestions to the government.   It has a track record of helping formulate national programmes that assist in enlivening the entrepreneurial scene in the country. Among TeAM’s direct and indirect efforts are the establishment of the Cradle Investment Programme, MDeC pre-seed fund, techno fund and inno fund under the Ministry of Science, Technology and Innovation (Mosti). “Cradle was born after two years of intense lobbying by TeAM. The turning point was in 2003 after a budget dialogue with the then prime minister Tun Dr Mahathir Mohamad. One month later, the Cradle fund was initiated,” Koh says.One of the things TeAM has done this year is to set up TeAM-Bio, with a full exco team and Datuk Iskandar Mizal Mahmood, CEO of BiotechCorp, as its patron. Besides holding dialogues with Mosti and BiotechCorp, TeAM-Bio offered input to Malaysian Industry-Government Group for High Technology for the formulation of the 10th Malaysia Plan. TeAM also contributed to the recent changes in the listing rules of Bursa Malaysia, particularly on initial public offerings on the ACE Market, which will replace the Mesdaq Market. “TeAM has built its reputation over the years but we have to say that the government has been very inclusive and open in engaging with industry players at a much higher level than it used to,” Koh says.She adds that so far, the response from technopreneurs to listing on ACE has been positive. However, TeAM believes venture capitalists (VCs) should be allowed to sponsor ACE listings as well. “We are proposing that VCs be allowed to become sponsors [of companies outside their portfolio to avoid conflicts of interest] as well because they understand technology companies better and will be able to value the potential and risks involved,” Koh says. At present, sponsors of companies seeking listing on ACE are mainly merchant bankers, where they are entrusted with the role of evaluating the companies on their suitability for listing, advising the companies on the guidelines and overseeing the due diligence process. Post-listing, the sponsors are required to guide the companies on ongoing compliance and advise them should trading of their shares be halted or suspended. In addition, sponsors are responsible for monitoring the conduct of the companies and have to notify the relevant authorities of any breaches. That said, while TeAM is doing its best to assist technopreneurs in the country, the key challenge is still access to funding. “Banks are reluctant to give out loans to technopreneurs. For example, we know of a biotech company that has firm contracts and is making profits but commercial banks won’t even grant it a RM2 million loan. Banks should take more risks; they should replicate Malaysia Debt Ventures Bhd as part of their corporate social responsibility programme,” Koh says. Over the years, TeAM has played a vital role in the development of technopreneurs as well as being a strong voice for them. However, the same group of people have been the drivers of the organisation. Koh says TeAM is eager for new faces for renewed energy and drive. This article appeared in [email protected], the technology section of The Edge Malaysia, Issue 760 June 22-28 2009

https://theedgemalaysia.com/node/2820

Barca counting on Ibrahimovic improvement

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MADRID: Lionel Messi's brilliance has helped Barcelona keep pace with La Liga leaders Real Madrid in recent weeks but the champions are still waiting for striker Zlatan Ibrahimovic to justify his expensive price tag. Messi netted a second hattrick in a week in Barca's 4-2 win at Real Zaragoza on Sunday, March 21, taking his tally to 11 goals in five matches, before generously allowed Ibrahimovic to take a late penalty that ended the Swede's month-long scoring drought. Ibrahimovic moved from Inter Milan at the end of last season in a swap deal that valued him at around €66 million but before Sunday had not scored in the league since mid-February and has 13 league goals to Messi's 25. "Ibra is a bit down but the penalty gave him a lift," defender Maxwell told reporters. "We are all standing by him and we know he is a great goalscorer," the Brazilian added. Barca, who are level on 68 points with Real but have an inferior goal difference, can go three points clear at the top with a win at home to Osasuna on Wednesday (1900 GMT).   Coach Pep Guardiola could be without central defenders Gerard Pique and Gabriel Milito for the clash at the Nou Camp after Pique damaged his knee in Zaragoza and Milito picked up a calf problem. Guardiola said he believed Ibrahimovic was getting back to something like the form he showed at the start of the campaign. "Today he took a step forward. He was involved a lot," he told a news conference on Sunday. "We will be relying on him a great deal during the remainder of the season." Real play at city rivals Getafe on Thursday (1900) and midfielder Rafael van der Vaart said they would probably need to win their remaining 11 matches, including the "Clasico" against Barca in three weeks, to take the domestic title. "The league is our only chance of silverware now and we want to win it whatever it takes," the Dutch international said in an interview in Monday's As sports daily. "We'll have to see how Barca respond but we are confident," he added. Valencia, 18 points behind the top two following their 2-0 win over Almeria, host Malaga on Wednesday (2100) and have a four-point lead over Real Mallorca, who occupy Spain's fourth Champions League qualification spot. Sevilla, in fifth two points behind the Balearic Islanders, need a win at home to basement side Xerez on Tuesday (2100) to ease the pressure on coach Manolo Jimenez after last week's Champions League exit and Saturday's 2-0 defeat at Espanyol. — Reuters

https://theedgemalaysia.com/node/78179

Cover Story: The angst of running SapuraKencana

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THE board of SapuraKencana Petroleum Bhd, an oil and gas giant that is Malaysia's best-known name in the industry — other than Petronas — has a unique problem on its hands. It has to decide how to handle an investment by Kencana Capital Sdn Bhd, a private investment company controlled by its executive vice-chairman Datuk Mokhzani Mahathir, in Yinson Holdings Bhd in June this year. At the heart of the matter is whether there is a conflict of interest, because Mokhzani is a major shareholder of SapuraKencana and a key member of its management team. "It is a small matter … the investment to be made by Kencana Capital upon the completion of the Yinson deal, is less than RM100 million. But it underlines the intricacies of managing a dream merger in Malaysia's oil and gas industry, involving two powerful personalities," says a banker. Mokhzani, the son of former prime minister Tun Dr Mahathir Mohamad, is the second largest shareholder of SapuraKencana, while the largest shareholder is the Sapura group, which is headed by Tan Sri Shahril Shamsuddin. Shahril's father is Tan Sri Shamsuddin Abdul Kadir, who is a close friend of Tun Mahathir and one of the pioneers of the bumiputera charge into Corporate Malaysia. The merger of Shahril's and Mokhzani's companies — SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd — in May 2012, paved the way for the formation of SapuraKencana, now among the top five integrated oil and gas service providers in the world. With a market capitalisation of RM22 billion and an order book of RM26 billion, SapuraKencana has a finger in every segment of the upstream oil and gas business, and an abundance of assets that allows it to bid for and win international jobs, beating even big boys like US-based McDermott International, Inc. According to sources, its board, which is headed by Datuk Hamzah Bakar, decided in the final week of July — after getting the views of external consultants — that Mokhzani's investment was not a conflict of interest or competition to the company, in the present-day environment. However, it has not ruled out such situations in the future, and is expected to come up with guidelines for management. "If conflicts of interest do arise, Chinese walls will be put up to ensure transparency in the decision-making process," says a source. Although Yinson mainly acquires and leases out floating, production, storage and offloading (FPSO) assets to major oil companies, it could be a potential competitor, albeit a small one, to SapuraKencana in the future. "As a marginal oilfield contractor for Petronas, SapuraKencana will need to use FPSOs, which it may go into in the future, to increase its day-rate (charter) business revenue," says an industry official. "This is even more likely as SapuraKencana has started production in its first marginal oilfield, and is looking to land a second contract from Petronas. And there may be more in the future." SapuraKencana owns the largest fleet of tender rigs in the world — 22 drilling rigs, pipe installation vessels that cater for deepwater production work, and a host of other assets that have attracted even billionaire John Fredriksen, who owns Seadrill Ltd. He has joined its board as its third largest shareholder.Surprise investment Executives close to SapuraKencana say the top management, including Shahril, was not aware of Kencana Capital's foray into Yinson. "It caught them unawares," says an executive. Says the banker, "Because the investment was small, Kencana Capital pounced on it, without considering the implications and the perception it will create in the marketplace." But then again, the opportunity to invest in Yinson knocked on the door of Kencana Capital, which is, after all, a private investment arm controlled by Mokhzani with Lim Kheng Yeow aka KC, who is an independent executive director of SapuraKencana. "Moreover, Kencana Capital has been a minor shareholder of Yinson for some time now," says an executive familiar with Kencana Capital. Nevertheless, the development has forced the SapuraKencana board to work out a strategy on an announcement to defuse the situation, without affecting its integrity. The problem for the board was that if it let Mokhzani off the hook and a conflict of interest arose later, it would have to backpedal. "It was a matter of handling the issue without losing integrity. That is why the board is crafting some guidelines on how it will deal with such situations, going forward," says an executive close to the company. Rumours of strained relations The Yinson incident once again shone the spotlight on the supposedly tense relationship between Shahril and Mokhzani, in managing SapuraKencana. Executives close to both men strenuously deny that there is a strain, stating that the value in growing the company is bigger than their personalities. "They may have differing opinions on how to run the company, which employs some 11,000 people and has operations all over the world, but at the end of the day, the two of them and KC, make big decisions in less than an hour," an executive points out. The different responsibilities borne by Shahril and Mokhzani in managing the oil and gas giant, also put the two at opposite ends. "Shahril is effectively in charge of operations and strategy, while Mokhzani is in charge of risk management. By virtue of their roles, their opinions sometimes differ, which is normal for any company of this size," says the executive. It is worth noting that before the merger, Mokhzani had handled Kencana's fabrication business, but now it is under Shahril. "Still, this does not mean their relationship is strained. At the end of the day, their responsibility to the company is to see it grow and create value. Their investment and responsibilities in the company, override any other issue," remarks the executive. When the merged entity was listed in May 2012, it had a market cap of RM25.29 billion, far more than SapuraCrest and Kencana Petroleum's collective market cap of less than RM12 billion. Its quality of earnings is substantially better than the other oil and gas service providers. "Before the merger, 70% of the earnings of both companies came from project-related jobs, and were lumpy and volatile. Today, 50% of SapuraKencana's earnings are from day-rate charter of its assets, and hence less risky and more predictable," the executive explains. Mokhzani, who had ventured into the oil and gas industry as an engineer with Sarawak Shell in 1987, has a 13.27% stake in SapuraKencana, that is worth close to RM2.9 billion and dwarfs Kencana Capital's investment of less than RM100 million in Yinson. He listed Kencana Petroleum in 2006, marking his return to Corporate Malaysia. To recap, Mokhzani was previously the major shareholder of Tongkah Holdings and a few other listed companies, but sold his interests in 2001. He then established Kencana Capital with KC. Shahril is the president and group CEO of SapuraKencana. The oil and gas veteran's family is the largest shareholder of SapuraKencana, with a 16.71% stake that is worth RM3.7 billion. He is also the face of the company. It is worth noting that Shahril's father Shamsuddin had built the Sapura group during Tun Mahathir's reign as prime minister. In the early days, the group was involved mainly in telecommunications, but Shahril guided it into the oil and gas industry, elevating it to a whole new level. Shahril and Mokhzani, both 52, had grown up together. In fact, what drove the merger of their companies was their 35-year relationship. The idea for it came from Maybank Investment under Tengku Datuk Zafrul Aziz, and the two men liked it. But right from the start, there were doubts that they could work together for the long term, because they had a mind of their own. But the investment banker's pitch was that, as long as the merger created value, it would withstand any tension between the two. "At the end of the day, all differences will take a back seat, as long as the company continues to create value. The merger has generated enormous value for all the shareholders," says the banker. "There will be rumours about strained relations in any partnership, but as long as SapuraKencana keeps growing, everything else will be secondary." This story first appeared in The Edge weekly edition of Aug 26-Sept 1, 2013.

https://theedgemalaysia.com/node/27001

Analysts: Long road ahead for Pakatan Rakyat

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KUALA LUMPUR: The Federal Court's pronouncement of Datuk Seri Dr Zambry Abdul Kadir as the legitimate menteri besar of Perak may have brought some semblance of certainty to the state, said political analysts polled by The Edge Financial Daily, while Pakatan Rakyat (PR), on its part, has its work cut out for it to win the state in the next general election. "What PR can do is to play opposition, and catch Zambry's government out whenever there is cause to do so," said Dr Ooi Kee Beng of the Institute of Southeast Asian Studies. "PR can continue nationally to highlight the manner of its loss of Perak, but the effect of this will diminish as time goes by," he said. On what Zambry should do, especially to woo the Chinese voters who have yet to show signs that they have swung their support towards BN, Ooi said: "Zambry will not be prioritising the Chinese vote. A lot of effort will be needed, and for small gains on that front. What he will do is to secure the Malay and the Indian vote." Ooi said although ousted menteri besar Datuk Seri Mohammad Nizar Jamaluddin had challenged Zambry to call for fresh state polls, it would be more strategic for Nizar to direct his troops to dig in and plan for the long term. Political analyst Wong Chin Huat said there was a need to reflect on a democratisation roadmap that reviews federal-state, executive-legislative relations as well as the proper role of the palace in politics. "At the political level, Nizar and PR must position themselves as a shadow government," he said. "It must be able to offer a good alternative to Zambry and company. Nizar must be able to show leadership without power — he must lead in policy direction, forcing Zambry to follow." "Perak voters must be able to see the monetary differential in their well being of having a Zambry against a Nizar government," said Wong. While PR could continue to criticise the court's decision as harming the constitutional monarchy, he said, it must also show voters that it would accept reality and do its best as the opposition. On the perception that Setiawan assemblyman Datuk Ngeh Koo Ham and Pantai Remis assemblyman Nga Kor Ming hold sway over Nizar, Wong said that with a functioning shadow cabinet, Nizar would be able to play a key role in policy direction. This would help to dispel such a perception, he said. Another analyst, Khoo Kay Peng, said of the Federal Court decision: "There is a need to relook at the parliamentary democracy process." "The election of the leader of the House can only be decided in the House. It is weird to be decided by the constitutional monarch," he said, adding that there was a need for checks and balances. He said PR had much work carved out for the coalition. "There is too much infighting. What they do is not enough. They have to prove themselves. They have to position themselves as a viable alternative."

https://theedgemalaysia.com/node/37121

Is Jetson a buy or sell?

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KUALA LUMPUR: It has been a few months since the reported fallout between the Naza brothers and the management of Kumpulan Jetson Bhd. Since then, the stock has fallen from over RM1.50 to RM1.07 last Friday, and lost about a third of its value from November last year, when it hit over RM3. At this price, is Jetson, a stock not covered by analysts, a buy or sell? Market observers say it would depend on two scenarios. If the Naza brothers could sort out the differences with Jetson’s management led by group managing director Datuk Teh Kian An, who is said to be backed by other shareholders, and revive the previously cancelled joint ventures with Jetson, the latter’s stock price could rebound significantly. The Naza brothers, Sheikh Mohd Nasarudin Nasimuddin and Sheikh Mohd Faliq Nasimuddin, are currently Jetson’s chairman and executive director, and vice-chairman and executive director, respectively. Jetson’s current market value stands at about RM65 million, which is tiny compared to the potential profits it might generate from the two projects that it had earlier signed with Naza but cancelled. These refer to a 49:51 joint venture with the Naza Group to construct the proposed RM800 million Matrade Centre project off Jalan Duta and the development of the adjacent 62.5 acres land under a land-swap arrangement with the government, as well as the construction job relating to Naza’s multi-billion ringgit Platinum Park project near KLCC. But what if the Naza brothers decide to sell out from Jetson?The brothers, through Super Pavilion Sdn Bhd, bought a 33.2% stake (now diluted to 28.9% after placement of new shares) in Jetson for RM12.3 million or 70 sen per share in August 2009. If they were to exit, they wouldn’t sell out at below 70 sen, presumably. So the base price, in the event of a sale to a new investor or investors, would be 70 sen, if not around RM1 or some premium over which Jetson is currently traded, market observers say. The brothers are said to be still pondering their moves, though they are expected to decide “soon”, sources say. Jetson’s stock price has been hovering at the RM1 level pending further indication of the brothers’ decision. Without the Naza brothers, or any new major shareholder with a pipeline of big projects, investors might not be willing to value Jetson at a higher price. Though the company’s net tangible asset per share stood at RM1.72 per share, it lacks a strong operating performance. Jetson posted a net profit of RM283,000 for the six months ended June 30, 2010, on a turnover of RM104.98 million. During the period, its manufacturing division posted a revenue of RM55.62 million and an operating profit of RM5.38 million, while the construction and property division, and hostel management operation posted an operating loss of RM3.19 million and RM280,000, respectively. Nonetheless, the company has a clean balance sheet, with net borrowings of RM30.91 million that could be set off against RM41.34 million in net receivables. It is also cash flow positive. The Naza brothers had bought into Jetson not only for its construction experience but also its manufacturing division that produces rubber, plastics and polyurethane products that offer anti-vibration solutions mainly to the automotive sector. Jetson also manufactures, under licence from Dunlop, underseals and coating for automotive bodies. These are synergies that fit well with Naza Group’s core business in automotive and increasingly property development. Its clean balance sheet also made it a suitable listing vehicle for Naza. But should the deal fall through, resulting in the exit of the Naza brothers, Jetson would need to find a new investor that could bring it to a higher ground. This article appeared in The Edge Financial Daily, September 20, 2010.

https://theedgemalaysia.com/node/54162

Midday Market: KLCI gathers momentum, eyes fresh record close

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KUALA LUMPUR (Dec 17): The FBM KLCI gathered momentum at the midday break on Tuesday, and rose 0.51%, eyeing a fresh record close. At 12.30pm, the FBM KLCI gained 9.34 points to 1,847.22.The index had earlier climbed to a fresh intraday high of 1,847.47. Gainers led losers by 312 to 289, while 306 counters traded unchanged. Volume was 537.83 million shares valued at RM624.33 million. The top gainers in the morning session included BAT, Petronas Gas, Fima Corp, PPB, Allianz, Petronas Dagangan, CI Holdings, AFG and F&N. The actives included BIMB, XDL, Iris Corp, KNM, Sumatec, Daya Materials, TMS, MMSV and Sona Petroleum. The losers included Cahya Mata Sarawak, Shangri-La, Sarwak Oil Palms, Takaful, MAHB, Apollo, Shell, Jetson, Hong leong Capital and Pintaras. Affin IB vice president and head of retail research Dr Nazri Khan said that going forward, he expects Bursa to build on its past four weeks momentum (where FBMKLCI gains a total of 62 points or 3.8% since 14th November 2013) and extend its rally higher towards 1850 resistance level. Nazri said despite the weaker global equity market, the FBM KLCI was holding up well due to Bursa defensive appeal, resilient domestic liquidity and its lower vulnerability to foreign investor withdrawals. “We expect buying momentum to increase riding on three factors (1) Bursa safe haven status and defensive appeal amidst tapering volatility (as it did during the past global dips May-June 2013 & March-June 2012) (2) More rotation play towards small cap stocks (Chinese New Year/Christmas rally) as can be seen by the outperformance of FBMSmallCap and FBMFledgling Indices since February 2013 (3) Portfolio rebalancing with institutional funds positioning ahead of the year end towards Budget 2014 beneficiaries. “While we do not expect the FBM KLCI to experience a 'failed new high' or 'bull trap' on global weakness, we believe Bursa will benefit from the regional dips and resume its upside momentum despite being overbought over the last four straight weeks (Bursa gain a total of 62 points or 3.8% since 14th November 2013. On the domestic front, Malaysia shows a revitalisation of investment which may catalyse Bursa higher. “The near term trend remains firmly bullish, with resistance coming in at the 1,850 and 1860 levels while stronger shelf of support for any December dips stand at 1820 and 1,800 levels. Another cause for positive view is that Bursa volatility (as can be calculated from Average True Range) has broken to the upside suggesting aggressive short-term buy on price strength,” he said. Elsewhere, Asian shares pushed higher on Tuesday on the back of rising U.S. manufacturing output and a jump in euro zone business activity, ahead of a key U.S. Federal Reserve policy decision later this week, according to Reuters. Investors are on tenterhooks over when the Fed will start to reduce its $85 billion-a-month bond-buying programme, a major driver of global risk assets in recent years, it said.

https://theedgemalaysia.com/node/47004

HDBSVR ups Hong Leong Bank TP to RM11.80

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KUALA LUMPUR: Hwang DBS Vickers Research has raised Hong Leong Bank’s FY11-13F EPS by 3%-5% and upped the Target Price to RM11.80. It said on Friday, April 1 that on its own, Hong Leong Bank’s earnings are expected to grow at three-year CAGR (FY10-13) of 16%, supported by 12%-15% loan growth. “It could leverage on its low loan-to-deposit ratio (57% vs industry average of 82%) to further drive loan growth. Its robust asset quality (2.08% gross NPL ratio vs industry average of 3.59%) means lower risk of NPLs. “Non-interest income, largely from transactional banking and treasury business, could also support earnings given mounting competitive pressure on NIM,” it said. HDBSVR believed the bank’s strong credit cards franchise can overcome the challenge of tighter rules imposed by BNM recently. It added Hong Leong Bank’s regional strength continues to be driven by 20%-owned Bank of Chengdu, which it expects to grow 20% yoy over FY11-13 and contribute 12% to group pre-tax profit.  

https://theedgemalaysia.com/node/57434

Bank Negara maintains OPR at 3%

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KUALA LUMPUR (Nov 11): Bank Negara Malaysia’s Monetary Policy Committee (MPC) which met on Friday, Nov 11 has maintained the Overnight Policy Rate (OPR) at 3%. In a statement Nov 11, Bank Negara said that latest indicators suggested that the global growth momentum had moderated in recent months. It said economic activity in the advanced economies was being weighed down by heightened market volatility and lower confidence, amid rising policy uncertainties. Labour market conditions in several of these economies also continue to be weak, it said. “Going forward, these conditions may persist as critical policy issues remain unresolved and pose further downside risks to global growth. “In the Asian region, sustained domestic demand is projected to continue to support economic growth. Nevertheless, greater weakness in the external environment is expected to affect regional growth prospects,” it said. Bank Negara said the domestic economy improved in the third quarter, due primarily to stronger domestic demand. Export performance also improved, reflecting firm regional demand and the normalisation of trade flows from supply chain disruptions, it said. “Looking ahead, the weaker external environment could, however, impact the overall growth prospects. “Domestic demand will continue to be the anchor of growth, supported by private consumption and investment and reinforced by public sector spending and investment activity.  Employment conditions are also expected to remain stable,” said the central bank. Bank Negara said that domestic headline inflation was 3.4% in September on account of the slower increase in the transport category. Going forward, the central bank said inflation was expected to remain stable for the rest of the year and moderate in 2012. “Global energy prices are expected to experience some moderation while the impact of domestic demand factors on inflation is also expected to remain contained. “High food price inflation, largely due to supply disruptions, continues to remain a concern,” it said. Bank Negara said that in the MPC’s assessment, the global economic outlook is expected to be weaker and international financial market conditions will remain highly uncertain and volatile going forward. While the domestic economy is expected to expand, these external developments could affect the overall growth prospects of the Malaysian economy, it said. The MPC will continue to monitor these developments and assess the risks to the outlook for domestic growth and inflation, it said.    

https://theedgemalaysia.com/node/38065

Ringgit opens slightly higher against US dollar

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KUALA LUMPUR (Jan 7): The ringgit opened slightly higher against the US dollar, in early trading this morning, on mild buying interest for the local note, following weaker-than-expected US services sector growth. At 9.25 am, the ringgit was quoted at 3.2845/2875 per US dollar from Monday's 3.2860/2890. A dealer said the weaker-than-expected December 2013 data on the US services sector indicated that the US economy continued to expand, but at a modest pace. Meanwhile, the local note opened mostly lower against other major currencies except the Singapore dollar.     The local unit weakened against the yen to 3.1508/1540 from 3.1421/1465 posted on Monday, fell against the British pound to 5.3858/3917 from 5.3743/3805 previously and eased against the euro to 4.4745/4792 from 4.4667/4714 yesterday. It traded slightly higher against the Singapore dollar at 2.5893/5920 from 2.5895/5935 on Monday.

https://theedgemalaysia.com/node/71622

#Job Outlook* Slower hiring for Q4

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KUALA LUMPUR (Nov 19): Hiring is expected to slow down in the fourth quarter of 2013 as existing employees will stay put for their bonuses payable early next year, according to JobStreet.com’s Job Outlook Report. This is similar to the previous year’s study results, as 40% of respondents in the online job portal’s study said that job growth during the end of the quarter will slow down. “With the reinforcement of minimum wage in January 2014, we cannot afford to hire more employees,” said one hiring manager. A total of 28% of the respondents, mainly from the accounting, sales, marketing and construction industries, predict job growth to improve. Around 51% of respondents said they will improve salaries and “provide better work arrangements” in an effort to retain leaving employees. A majority of employers have also highlighted that finding talented employees with the right skill sets proves to be challenging as they face stiffer competition in hiring. “There will be no shortage of job opportunities for good talents in Malaysia. Good times or bad, good talents will always be sought after,” said one participant of the survey. Sales and marketing takes the top spot in the top ten specializations employers seek in the fourth quarter, according to the findings of the survey. This is followed by accounting and finance, engineering, computer and IT and manufacturing.

https://theedgemalaysia.com/node/47349

Malaysia's Dec 1-25 palm oil exports down 7.3 pct - ITS

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KUALA LUMPUR (Dec 26): Exports of Malaysian palm oil products from Dec. 1-25 fell 7.3 percent to 1,139,705 tonnes from 1,229,580 tonnes shipped during Nov. 1-25, cargo surveyor Intertek Testing Services said on Thursday. - Reuters

https://theedgemalaysia.com/node/42997

BIMB Securities Upgrades Kimlun to Buy, target price RM2.03

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KUALA LUMPUR (Jan 2): BIMB Securities Research has upgraded Kimlun Corporation Bhd to a Buy at RM1.83 with a target price of RM2.03 after Kimlun Corp received a letter of award from Country View Bhd for the building construction job worth about RM115.45 million on Dec 31. In a note Thursday, the research house said it was positively surprised with the contract win as it came in on a very last day of 2013. “As such, we reckon this project is part of our orderbook assumption for FY14. Hence, we made no changes to our earnings revision. “Nonetheless, we upgrade our recommendation to Buy following the recent selldown on the stock with an unchanged target price of RM2.03 based on PER of 11.1x,” it said.

https://theedgemalaysia.com/node/65258

Imperial eats

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TRY the Beijing Imperial Cuisine promotion going on till the end of the month at Toh Lee restaurant. Inspired by the majesty of China's bygone dynasties, chef Wang Gang cooks up dishes fit for a king, like steamed oxtail with Chinese spicy bean paste, sauteed wild rice and winter melon with egg white, and Gong Bao lobster with crab roe. Prices for à la carte dishes range from RM28++ to RM820++ each. Two set menus are also available, priced at RM148++ and RM188++. Reservations are required and can be made by calling (03) 2161 1111. Toh Lee is located at InterContinental Kuala Lumpur, 165 Jalan Ampang, KL. This story appeared in The Edge Financial Daily on July 4, 2012.

https://theedgemalaysia.com/node/40141

Integrax to exercise option to wholly own LMT

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KUALA LUMPUR: Port operator Integrax Bhd is looking to exercise an option which could entail Perak Corp Bhd (PCB) losing its 50% plus one share in Lumut Maritime Terminal Sdn Bhd (LMT) to Integrax. In an announcement to Bursa Malaysia yesterday, Integrax said “this option (requiring PCB to transfer its shares) is exercised pursuant to the company’s rights under the shareholders’ agreement”. Integrax is also seeking to solve the dispute with Taipan Merit Sdn Bhd, the wholly owned unit of Perak Corp that Integrax has signed the shareholder’s agreement with, via arbitration. Integrax has the remaining 50% minus one share in LMT. To recap PCB, via its unit Taipan Merit, had terminated a shareholder’s agreement with Integrax in end-October. PCB alleged that Harun Halim Rasip, who is the chairman and co-chief executive of Integrax, and one Captain Ng Ber Toon, had acted beyond their powers as representatives of Integrax, and acted without the approval of the board of LMT, assuming the powers of the chief executive officer. Integrax however had retorted saying that it did not accept the termination of the shareholder’s agreement and the allegations of breach. PCB’s actions are also linked to Amin Halim Rasip, whose tenure as chief executive officer of LMT was not extended after it ended in September. Amin is the executive director and co-chief executive of Integrax, and Harun’s brother. Amin is also stated as an official of PCB in its latest annual report, which has him as chief executive officer of LMT. PCB, upon termination of the shareholder’s agreement with Integrax, had re-appointed Amin as the chief executive of LMT. PCB did not attend an EGM yesterday called by Integrax possibly called to remove Amin as the CEO of LMT. Harun and Amin jointly control 33.03% of Integrax via privately held Halim Rasip Holdings Bhd. PCB meanwhile is 52.54% controlled by Perbadanan Kemajuan Negeri Perak. The Perak State has been looking to Integrax to support its efforts with Vale SA, a giant Brazilian iron ore company which is building a RM3 billion iron ore pellet distribution centre in Perak. Vale had approached Integrax to provide an interim port facility for a 10-year period while Vale builds its own jetty. While the Perak state officials saw this as a good deal, Harun and other directors of Integrax were not for the move, stating that the 10 year timeframe for the contract with Vale is too short. The cost of setting the terminal up was high, just below RM300 million, which would entail Integrax making RM30 million in profits a year to break even after the 10-year period. It is understood that Harun was looking for Vale to absorb a certain percentage of the costs for the developments at the new transshipment terminal, and was afraid of not getting any clients to fill the void once Vale left. However, PCB seem likely to put up a fight. PCB’s main revenue generator is its 50% plus one share in LMT. Integrax share price closed RM1.39, gaining four sen, while PCB closed at RM1.43 up three sen.

https://theedgemalaysia.com/node/51599

RHB Research expects Chin Well to pay dividend of 5.9 sen for 2014

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KUALA LUMPUR (Dec 20): RHB Research Institute expects Chin Well Holdings Bhd to distribute a dividend of 5.9 sen and 6.4 sen per share for 2014 and 2015 respectively, after the company set a dividend policy of minimum 40% payout, which will be effective by FY14. In a note Friday, the research house forecasts potential re-rating of share prices for Chin Well Holdings Bhd in the near term due to Europe’s extension of its anti-dumping duty and the implementation of GST in 2015. RHB Research said the anti-dumping duty of up to 87% imposed by the EU on imports of certain iron or steel fasteners from China was positive for the group, as its Europe-based customers switched over from China-based suppliers. “Sales to Europe now make up 56% of the group’s total topline from 26% in 2009,” said the research house. It added that the anti-dumping policy is to be renewed in January 2014, and is believed to be extended for another 5-year term. Moreover, the introduction of the GST in April 2015 is believed by the management to be potentially beneficial to the group as the 6% tax rate is lower than the current 10% sales tax passed on to its customers. “This will make Chin Well’s products more price-competitive, particularly against competing products from China,” said the research house. The research house derives a fair value (FV) of RM1.57 for the stock, which provides an upside of 18.9% to its current price of RM1.32. Chin Well is not rated by the research house.

https://theedgemalaysia.com/node/15906

MKH soars to 15-year high after selling non-halal unit

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KUALA LUMPUR: Shares in MKH Bhd climbed to their highest in 15 years in active trading as the company attracts fresh interests from institutional investors after having sold its non-halal livestock farming business last month. Formerly known as Metro Kajang Holdings Bhd, MKH closed three sen higher at RM1.89 yesterday, giving it a market capitalisation of RM500.1 million, the highest since October 1997. The counter has gained about 16.7% since it announced on Dec 29, 2011 the sale of its pig farm and pork retailing business to Thailand’s agricultural giant Charoen Pokphand Foods Pcl for RM64 million. The sale was completed on Jan 16. MKH’s non-halal livestock farming business comprised Makin Jernih Sdn Bhd (MJSB) and its subsidiaries — Chau Yang Farming Sdn Bhd, Tip Top Meat Sdn Bhd and AA Meat Shop Sdn Bhd. Fund managers said MKH’s disposal of its non-halal livestock farming business was beginning to attract institutional investors that seek syariah-compliant stocks as well as government-linked funds such as Employees Provident Fund, Lembaga Tabung Haji and Permodalan Nasional Bhd (PNB). “MKH can be exciting. It still has close to 242.8ha of landbank in Kajang/Semenyih that are carried at less than RM10 per square foot, and have mostly converted for development purposes. Its 16,000ha plantation operations in Indonesia also look promising,” said a fund manager. The Edge weekly reported last month that MKH’s main rationale for exiting its non-halal business, which it ventured into in 2006, was to focus on its core business in property development and oil palm plantation in Indonesia, which is set to become a major earnings contributor to the group in the next five years. MKH had also said it hoped to get on the radar of analysts and the syariah or government-linked funds after the disposal. For FY11 ended Sept 30, 2011, MKH posted a net profit of RM38.36 million on the back of RM342.35 million in revenue. While the group’s total net borrowings of RM315 million as at Sept 30 translated into a net gearing of 42.9% against shareholders’ funds of RM734.21 million, the ratio is set to reduce with the RM64 million proceeds from the disposal. MKH’s net assets per share was at RM2.77. This article appeared in The Edge Financial Daily, February 3, 2012.

https://theedgemalaysia.com/node/7958

Analysts: Bright prospects in O&G sector

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Against the backdrop, shares of oil and gas (O&G) firms have also come under the spotlight as stock market punters anticipate that these companies will benefit from more exploration and production (E&P) activities. Analysts’ observation indicated that prices of crude oil and equities were closely linked. The general trend suggested that stock prices would lead the upward movement of the commodity’s rates. However, equity rates tended to lag the decline in oil prices. Based on RHB Research’s technical analysis, crude oil prices were likely to increase to the next support range of between US$78 (RM271.44) and US$87 a barrel after piercing the US$60 a barrel support  level. “Nevertheless, based on current crude oil prices, most of the stocks under our coverage are trading at or below the current crude oil price level, with the exception of SapuraCrest Petroleum Bhd and Kencana Petroleum Bhd,” wrote RHB. Based on crude oil rates near US$70 a barrel now, the research firm said shares of O&G firms like Wah Seong Corp Bhd and KNM Group Bhd should, effectively, trade at around RM1.97 and RM1.87 respectively while Petra Perdana Bhd and Dialog Group Bhd should be transacted at some RM3.70 and RM1.26 respectively. SapuraCrest and Kencana , meanwhile, were deemed fairly valued at RM1.36 and RM1.50 respectively. “While we recognise the nearer-term risk that contracts would continue to be deferred or re-negotiated, we believe this is mostly discounted by the market. “We reiterate our view that the continued shortage of offshore E&P assets will underpin the longer-term growth in E&P activity. Hence, we reiterate our overweight stance on the sector,” said RHB. The research entity’s top picks for the sector include Wah Seong, Kencana and KNM. Meanwhile, OSK Research said as crude oil prices trade near US$70 a barrel, more shallow water and deep water O&G projecs were now feasible against the backdrop of cheaper raw materials such as steel. “We believe deepwater production cost has fallen to US$40 to US$50 a barrel following the drop in raw  material costs, especially steel. “This has made these projects even more attractive, especially, with oil price on the uptrend coupled with signs of recovery in the global economy, resulting in higher demand for oil and gas, wrote OSK which maintained its overweight recommendation on the sector. Among O&G companies, OSK’s top picks included Alam Maritim Resources Bhd and Petra Perdana which were given fair values of RM1.95 and RM3.50 respectively. OSK also liked Wah Seong and Kencana which are deemed fairly valued at RM2.58 and RM2.14 respectively. “We believe these four companies would be the main beneficiaries when new projects come back in a big way”, said OSK which issued buy calls for these companies. Last year, crude oil prices had surged to a historical high of US$147.27 a barrel in July before tumbling to  a low of US$32.40 a barrel in December. This article appeared in The Edge Financial Daily, June 5, 2009.

https://theedgemalaysia.com/node/87048

New contractors appointed to continue upgrading works at KKIA

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KUALA LUMPUR (Oct 10): New contractors have been appointed to complete the upgrading of the Kota Kinabalu International Airport (KKIA), according to Transport deputy minister Datuk Ab. Aziz Kaprawi. He said the mechanical and electrical contractor began working on Aug 12 while the civil and structural contractor, on Oct 1 this year. He said the project consisted of two packages that included upgrading of the terminal building which was completed in 2010. Another package involved upgrading of the airside such as expansion of the runway, taxi lane and replacement of the aeronautical ground lighting cables, as well as upgrading of the Communication Aids System and Navigation Aids System," he said in reply to a question by Senator Datuk Chin Su Phin. Chin had asked about the KKIA project delay and the government's measures toovercome it. Ab. Aziz further explained that the delay only involved the second package. To a supplementary question from Senator Datuk Lim Nget Yoon, he said the upgrading works did not hinder the daily activities and services at the airport.

https://theedgemalaysia.com/node/28452

#Flash* Public Bank leads the charge

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KUALA LUMPUR: Public Bank led the charge in early trade on Monday, March 8, with other banking stocks also advancing on rising buying momentum, enabling the 30-stock FBM KLCI to convincingly break through the 1,300 level. At 9.50am, the FBM KLCI was up 20.4 points to 1,320.2. Turnover was 247.06 million shares valued at RM305.93 million. There were 386 gainers, 65 losers and 150 stocks unchanged. The surge in banking stocks was in line with the bullish sentiment as investors expect the market to chalk up more gains. Public Bank foreign rose 62 sen to RM11.90, Public Bank added 58 sen to RM11.90 while CIMB added 26 sen to RM13.98 and Maybank 21 sen to RM7.61. Keck Seng added 36 sen to RM4.58. The Edge Malaysia reported that the company's core businesses include oil palm plantations and property development, could pay out more dividends. It had cash of RM332.6 million as at end-2009 while it is debt-free. The world's largest glove maker, Top Glove added 26 sen to RM12.24.

https://theedgemalaysia.com/node/64549

Apartment residents free to use car park, rules court

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SHAH ALAM: Residents of SeaPark Apartments in Petaling Jaya can heave a sigh of relief for now as the High Court ruled in their favour yesterday in a dispute over the car park space near their homes. Justice Datuk Mohd Sofian Abdul Razak decided that the case was not suitable to be commenced by summary procedure, and proceeded to strike out the case, allowing the residents to once again use the space as a free car park. In law, a summary procedure is an application for the court to summarily enter judgment for one party against another party, without a full trial, based on the facts presented. Representing the residents, lawyer Wallace Wong said it was a just decision made by the court and it was good that it was in favour of the residents. “Our request to have our land intact is granted. Basically, the judge feels that this is a case that is not suitable to be commenced by summary procedure. “It was not suitable to use a procedure, calling the residents trespassers. It should be a case where proper issues need to be ventilated during the full trial and not by way of summary proceedings. “Accordingly, the judge allowed the tenants’ application to strike out the entire case,” he said. Residents of SeaPark Apartments have been battling the sale of their car park land to an individual since 2009. The residents said the developer of the apartments had sold the car park land to the individual in 2008. They also said that the present owner of the land where the parking bays are located wanted to charge the residents for parking. The residents, who were issued a legal notice by the land owner to vacate the space, said the move by the owner had caused them hardship. The disputed land, measuring 17,781 sq m, is located in the vicinity of the apartments. With the court’s decision yesterday, residents are relieved but remain cautious as an appeal can still be made on the decision or a new suit can be filed against them. But for now, things are back to normal for them and they will bring the matter up with the land office. For more stories, go to www.fz.com, the website for freedom of expression and fairness in articulation. This article first appeared in The Edge Financial Daily, on November 28, 2013.

https://theedgemalaysia.com/node/47939

FBM KLCI stages firm rebound

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KUALA LUMPUR: The FBM KLCI rebounded strongly and crossed the crucial 1,530-point level on Wednesday, April 19, lifted by gains at blue chip stocks. At the close, the benchmark index rose 0.62% or 9.49 points to 1,531.02. Gainers led losers by 473 to 288, while 333 counters traded unchanged. Volume improved to 1.27 billion shares valued at RM1.81 billion from 1.04 billion shares valued at RM1.39 billion on Tuesday. Among the major gainers, Genting added 40 sen to RM11.50, Digi that rose 42 sen to RM29.20, IOI Corp eight sen to RM5.41, Tenaga nine sen to RM6.11, Petronas Chemicals 12 sen to RM7.33, AMMB six sen to RM6.34, CIMB two sen to RM8.27, Genting Malaysia three sen to RM3.70, YTL Corp six sen to RM7.85 and RHB Capital 13 sen to RM8.54. Meanwhile, Dutch Lady added 36 sen to RM16.86, Coastal Contracts 35 sen to RM3.75, Guan Chong up 19 sen to RM2.64, Bursa 18 sen to RM8.11, and HPI 16 sen to RM3.72. Emas Kiara added 15.5 sen to 89 sen after it declared a special tax exempt interim dividend of 12 sen per 50 sen for the financial year ending Dec 31, 2011. Karambunai was the most actively traded counter with 81.34 million shares done. The stock shed 1.5 sen to 24 sen. Other actives included Smartag, Focus, Perisai, Alam Maritim, DBE Gurney and SAAG. Nestle was the top loser and fell 40 sen to RM48; Shell  lost 32 sen to RM10.88, F&N 28 sen to RM16.70, JobStreet 19 sen to RM2.61, Ibraco and KLCCP 13 sen each to RM1.12 and RM3.42, Carlsberg 12 sen to RM7.81 and United Malacca down 10 sen to RM6.84. At the regional markets, Japan’s Nikkei 225 rose 1.76% to 9,606.82, Hong Kong’s Hang Seng Index was up 1.60% to 23,896.10, South Korea’s Kospi jumped 2.23% to 2,169.91, Taiwan’s Taiex added 2.02%to 8,813.28, Singapore’s Straits Times Index added 1.29% to 3,165.80 and the Shanghai Composite Index was up 0.27% to 3,007.04.

https://theedgemalaysia.com/node/33358

Timber industry to recover at least 10%

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KUALA LUMPUR:  The country’s timber industry is set to recover by at least 10% this year stemming from a recovering global economy and opening of new markets, said Malaysian Timber Council (MTC) CEO Cheah Kam Huan. He said exports were hit hard by the financial crisis last year but the first quarter of this year had seen a 24.5% growth. “The building and construction sectors were hit especially bad. The biggest fall in (export) value was plywood which dropped 21.2% to RM4.99 billion from RM6.33 billion, and sawn timber which dropped 23.8% to RM2.34 billion from RM3.08 billion, due to less consumption in furniture manufacturing abroad,” Cheah told The Edge Financial Daily recently. He said 2009 saw timber exports declining by 14.5% to RM19.49 billion, which was the first industry contraction since 2006. Cheah said value-added finished products such as wooden furniture, mouldings and builder’s carpentry and joinery (BCJ) only suffered single-digit decline last year. “Last year, timber contributed 3.5% of the total RM553.3 billion export earnings,” Cheah said, adding that the timber industry was the fifth-largest export earner for Malaysia. “There are more construction activities happening globally and this is a good sign. Our stock levels are coming down and prices have improved. The Japanese market is showing signs of improvement,” said Cheah.   Emerging value-added products Cheah said the industry was committed to developing value-added downstream products to boost exports. “One of the latest products we are exploring is the glue-laminated (glulam) timber. MTC has formed an interest group to explore this new type of product since 2008,” he said. Glulam is a type of structural product composed of several layers of dimensioned timber glued together and is widely used in the building industry. “One company in Johor has bought a machine and has begun production for a local construction project,” he said. Cheah said MTC hoped to build a critical mass so that a glulam industry could be established in the next few years. Apart from timber, MTC is also exploring biomass products due to the abundant supply of the raw material. “We have a product called the Polypalm which is flooring made of oil palm wood. There is great potential for growth as it is estimated that 13.6 million logs are available annually based on a replanting cycle of 100,000 hectares per year. “If all the logs are converted into flooring, we would get 680,000 cubic metres of flooring every year,” he said, adding that strong demand for Polypalm was coming from the US. Overseas demand for oil palm wood furniture was also on the rise, said Cheah, due to its exotic grain and formaldehyde-free feature. “Currently, there are 10 local companies making palm wood furniture. It has only been introduced in the market for three years but it would be a force to be reckoned with once it becomes mainstream due to our abundant resource,” he said. Forest still abundant in MalaysiaOn sustainability, Cheah said Malaysia was still one of the countries in the world with a large percentage of natural forest. “Malaysia has 58.7% of land area under forest cover compared to other countries like Germany (32%), UK (11.8%) and US (11.8%). Our forests are actually very sustainable. “There is hardly any illegal logging since the government amended the Natural Forestry Act in 1993 which increased the minimum fine from RM10,000 to RM500,000 and imposes mandatory jail sentence,” he claimed. Malaysia exported RM19.49 billion worth of timber last year that included products such as logs, timber, plywood, veneer, moulding, medium density fireboard (MDF), BCJ and wooden furniture. Its major markets include the Far East with RM6.5 billion, the US RM2.9 billion and Europe RM2.88 billion. “Japan is one of our biggest importers of plywood while furniture is big in the US. India is slowly emerging as a potential market as the tariff has been significantly scaled down. We are seeing a lot of demand from the Middle East as well,” said Cheah. However, he said timber had always been locally funded and the industry needed to be given more attention by the government. “Timber needs to be looked at in a more favourable manner. Compared to the electronics industry where most profits are channelled back to the US or Japan, 100% of the profits made in timber exports come back,” he said. Cheah added that the timber industry was expected to contribute RM53 billion worth of exports by 2020 under the National Timber Industry Policy (NATIP). “This amounts to an annual growth rate of 6.4%. In order to reach the target, we need fresh investments especially in the downstream industry,” he said. A worldwide platform for timber productsMTC is organising the first MTC Global Woodmart trade exhibition at the Kuala Lumpur Convention Centre on Oct 19 and 20. “We are expecting 80 to 100 exhibitors at the trade centre with representatives from the US, France, UK, China and Malaysia. We are happy to say that 85% of the floor space has been taken up,” he said. “There would also be an innovative product section where we introduce innovative products such as palm plywood, palm fibreboard and kenaf board,” he said.   This article appeared in The Edge Financial Daily, July 12, 2010.

https://theedgemalaysia.com/node/65319

Hock Seng Lee climbs on new RM291m contract

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KUALA LUMPUR (July 5): Shares of Hock Seng Lee Berhad rose after company said the value of projects in hand for the company rose to a   record  RM2.07  billion after the company secured a contract worth RM291 million to design and build the Universiti Teknologi Mara (UiTM) campus in  Mukah, central Sarawak. At 3.05pm. HSL rose nine sen to RM1.67 with 967,400 shares traded. In a statement Thursday, HSL said the new contract would be undertaken for concessionaire KP Mukah Development Sdn Bhd. The scope of works for the project includes sand filling, piling, civil infrastructure works, the numerous specialist campus buildings and mechanical and electrical works, it said.

https://theedgemalaysia.com/node/79554

Rabbit fantasy still a lure

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WITH all that has happened in the literary circle over the past 12 months — from the sudden claim to fame of the 50 Shades franchise and bellyflop of the uninspiring Casual Vacancy, to the controversial Nobel Prize win by Chinese author Mo Yan — it was nice to sit back over the Christmas and New Year break and wrap my hands around something familiar and less cerebral.Over the break, I picked up this enchanting book about a group of “little” adventurers, who set out far from the comforts of the hearth on a dangerous quest. Braving predatory beasts, treacherous strangers and indeed, a full-out war from forces unknown, this stalwart band of warriors seek out a new home in an inhospitable land led only by a prophetic vision. It is a tale of high fantasy showcasing the values of perseverance, friendship and courage in the face of new and unknown dangers.If you guessed that this is the synopsis of the blockbuster movie The Hobbit that made its cinematic debut late last year and is still making its rounds, you’d be wrong. Although the key players of this book, Watership Down, bears some nominal similarity to the titular creature of the movie, that is where the resemblance ends. Written more than 40 years after JRR Tolkien’s aforementioned The Hobbit, the book by British author Richard Adams celebrated its 40th anniversary last year, and likely remains the seminal work of the heroic rabbit fantasy genre.Watership — which takes its name from a hill, otherwise known as a down — is set in the English county of Hampshire where a troupe of misfit rabbits make their home after a vision warns their resident prophet, named Fiver, of an impending cataclysm to their old warren. As with most fantasy epics, the characters are rounded out in well-used fantasy fashion, with each bringing its own special skills to bear as the situation warrants. One doesn’t often use the phrase “charming” in conjunction with fantasy epics, but there is little danger in making that association here, I think.There is Hazel, the inspiring and brave quick-thinking leader of the motley crew of bucks; the aforementioned Fiver — the runt of the litter with Nostradamus-like visions of disaster; the large and bellicose enforcer Bigwig; the clever engineering rabbit Blackberry; and so on. Each unique unto its own, but lest the reader assume that we’re dealing with anthropomorphic rabbits — sword-wielding, armour-clad rabbit-men — it should be made clear here that we’re dealing with actual rabbits that chew cud straight from their derrieres.Adams’ characters are honest to goodness wild rabbits replete with “rabbity” behaviour, including getting stunned by the headlights of a passing car, a propensity for meekness and all the natural skittishness expected of wild animals residing in the English countryside. The story hence becomes one of how these rabbits overcome their natural instincts or survival, which are, though useful, not very conducive to a heroic house move.The rabbits live in a highly structured caste system within their respective warrens, and being located on the bottom rungs of the totem pole, Hazel’s rabbits are cowed creatures expected to adhere to the norms and mores appropriate to their situation. Their flight from home, thus, is sudden and unbecoming to their nature, and proves to be the single largest challenge they need to overcome.In so doing, they confront a myriad of dangers — the numerous predators that rabbits are heir to; a group of seemingly innocuous rabbits that pose as a front for a rabbit farm; and the fascist and scheming General Woundwort, the Machiavellian leader rabbit of a spartan warren. Without giving the good bits away — and keeping in mind that this story was originally conceived as a number of bedtime tales for Adams’ daughters — the rabbits eventually arrive at their destination and establish a thriving colony.More so than The Hobbit, Watership Down has become rich fodder for reviews, interpreted by different quarters as a rendition of one of several themes found in the classical western literary canon. The theme of exile, survival and odyssey, for example, can be traced back to Homer’s Odyssey and Virgil’s Aeneid. It also borrows heavily from the Biblical tradition, specifically from Exodus that sees Moses leading the Jews out of captivity in Egypt into the Promised Land. Fortunately, it doesn’t take the rabbits 40 years to do so.The rabbits’ flight from disaster and the numerous false promises and obstacles along the way taps into the very essence of the heroic fantasy epic, which continues to be the bread and butter of the genre today. Where Watership stands out, in particular, is the way it manages to interweave these themes with a distinctly unheroic creature, the rabbit, and yet Adams does it expertly enough that the reader is never left isolated from the rabbits.He does, however, leave enough rabbit in them that they retain their Leporidae attributes, turning the story into a charming, if fantastical, children’s book. There are important lessons here, primarily for the book’s chief audience, but I suspect that the sensible adult reader should nonetheless be able to glean something from its pages as well. Watership, in its final analysis, is an enchanting tale that retains an air of innocence, which is slowly, but surely, disappearing from our literary pages.This story first appeared in The Edge weekly edition of Jan 14-20, 2013.

https://theedgemalaysia.com/node/35946

Agribusiness equities to grow in long term

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KUALA LUMPUR: Agribusiness is expected to continue on an upward trend in the long-term as growing global population and limited agricultural land lead to increase demand for commodities and consumer products, said Deutsche Asset Management (Australia) Ltd. Its director Bill Barbour said on Wednesday, Aug 25 that the global agribusiness - which encompasses everything from agricultural commodities to consumer products - will grow in the long-term, “even though we see some volatility in the short-term due to its cyclical nature”. “However, inevitable factors such as the diminishing agricultural land and global would drive increasing demand for food across the chain,” he said at a briefing on “How food scarcity makes compelling investment opportunities” organised by AmInvestment Bank Group.

https://theedgemalaysia.com/node/9755

Tanjong 1Q profit down 4.8% to RM191.4 million

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Revenue surged 20.91% to RM978.82 million from a year earlier, the company said in a statement to Bursa Malaysia yesterday. It also said profit before tax in 1QFY10 of RM269 million was higher than the RM148 million recorded last year, mainly due to the recognition in the preceding quarter, of RM141 million financing costs relating to loan facilities on two Egyptian plants, Port Said East Power SAE and Suez Gulf Power SAE. Earnings per share slipped to 47.47 sen from 49.84 sen and it proposed a dividend of 17.5 sen. “Net investment income has decreased mainly due to the recognition, in the corresponding quarter, of investment gains from the disposal of the group's interest in Arqiva amounting to RM62 million,” Tanjong said. Arqiva is a UK-based broadcast transmission and wireless site-leasing infrastructure company. Meanwhile, the company said revenue from its power generation business rose 21% to RM693 million, due to higher capacity and energy payments from its Malaysian power plants, leading to a 33% rise in the business' operating profit to RM265 million. It added gross sales proceeds from its numbers forecast operator (NFO) business increased marginally to RM530 million from RM520 million, as a result of two additional draws conducted in the current quarter. “There was a reduction in NFO prize payout ratio from 64% to 63%. The operating profit of the gaming segment remained at around RM62 million with an increase in totalisator expenses in the Racing Totalisator business,” it said. Its leisure segment, which saw improved attendances and spending at its Tropical Islands (TI) project in Germany, as well as contributions from TGV Cinemas Sdn Bhd, which became a wholly owned subsidiary on July 31, 2008, resulted in a RM39 million revenue increase to RM74 million, it added. Going forward, Tanjong said group revenues and earnings would continue to benefit from the investments made to expand its power-generating activity. It said, however, while its other businesses “should generally perform in line within expectations”, this would be subject to factors including the Malaysian government's efforts to restructure the power sector, which could impact its power generation unit, Powertek Sdn Bhd. Tanjong also said its gaming business could be impacted by the prevailing conditions affecting discretionary spending on its gaming products and services, as well as measures taken to reduce totalisator expenses in the racing totalisator business. Meanwhile, it said in relation to its investment in Tropical Islands, the venture had in April 2009 successfully entered into agreements with third parties who would independently finance the construction and development of vacation homes, and market the rental of these homes throughout Europe, to cover its growing market for short-term family vacations. It added the agreements were conditional upon the relevant parties procuring appropriate financing to complete the project. “The initial phase of development is targeted for finalisation by December 2011, and it is expected that this will bring about a gradual increase in visitor attendances and revenue. “However, if financing cannot be obtained, and/or if construction is significantly delayed, the group will need to re-assess the appropriateness of the carrying value of its investment in TI,” it said.

https://theedgemalaysia.com/node/46299

Timber stocks advance on hopes of demand rise from Japan

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KUALA LUMPUR: Timber-related stocks advanced yesterday on expectations of an increase in demand for reconstruction material in the aftermath of the devastating earthquake that hit Japan last week. MIDF Research said local timber companies would be the main beneficiary when Japans starts to rebuild earthquake-damaged areas as Malaysia is their largest source of plywood, accounting for 48% of Japan’s total plywood imports. The top gainer yesterday was Ta Ann Holdings Bhd, rising 50 sen to RM4.48. Meanwhile, Subur Tiasa Holdings Bhd added 38 sen to RM2.61, Jaya Tiasa Holdings Bhd was up 32 sen to RM5.42, Lingui Developments Bhd gained 18 sen to RM1.65, WTK Holdings Bhd was up eight sen to RM1.62, while Leweko Resources Bhd added 3.5 sen to 19.5 sen. AmResearch has earlier upgraded Tan Ann to a “buy” from “hold” previously with a raised fair value of RM6.30 (versus RM5.61 previously), pegging an upward revised FY2011F EPS of 42 sen to an unchanged fair price-earnings ratio of 15 times. Meanwhile, it is maintaining its “buy” call on Jaya Tiasa with a fair value RM6, adding that the company’s exposure to Japan represents less than 10% of its exports for both logs and plywood. This article appeared in The Edge Financial Daily, March 18, 2011.

https://theedgemalaysia.com/node/81987

#SEA Games* RM 2 million to send Malaysian contingent to the Myanmar SEA Games -- OCM

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KUALA LUMPUR (Oct 24): The cost of sending the Malaysian contingent to the Myanmar SEA Games in December is expected to cost RM2 million said the Olympic Council of Malaysia (OCM) honorary secretary Datuk Sieh Kok Chi. He said the cost of sending athletes under Category A was expected to be RM1.6 while the rest would be the expenditure for National Sports Associations to send their athletes under Category B. "The cost involves flight ticket, accommodation, food and uniform. So far the process to send the athletes under Category A and B is progressing smoothly. The football team will be the first to leave (Nov 28) as football competition starts early," he told Bernama, here, today. The cost of sending athletes under Category A will be absorbed by the OCM while the respective National Sports Associations will have to bear the cost of sending their athletes under Category B. Malaysia are expected to send 820 athletes and officials for the SEA Games that is scheduled from Dec 11 to 22, to compete in 31 sports that would be hosted at three main venues - Nay Pyi Taw, Yangoon, Mandalay. Kok Chi said despite the recent minor explosion at a leading hotel in Myanmar, the government has assured the safety of participants. "Malaysian contingent’s Chef-de-Mission (CDM) Datuk Wira Amiruddin Embi who attended the CDM meeting held in Myanmar recently was assured that safety was the government's top most priority," he said. He was also confident that Malaysia would be able to win between 35 to 40 gold medals in Myanmar.

https://theedgemalaysia.com/node/64767

Grexit unlikely, says EU ambassador

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PETALING JAYA (June 25): The eurozone is irreversible, said the ambassador and head of delegation of the European Union (EU) to Malaysia, Vincent Piket, during the ambassadorial brief organised by the Malaysian Institute of Management last Friday. Convinced that the eurozone will survive its present crisis, Piket said: “Instead of a collapse, you will see more EU [members], more policies and cooperation at the EU level voluntarily set up and agreed upon by member states. “I am 100% convinced that Europe will come stronger out of this. The EU members cannot go back to their former national currencies for economic, social and political reasons,” he said. Picket added that a Grexit is unlikely even though the country’s deficit reduction plan was not happening as fast as hoped. “The main EU members and the International Monetary Fund have to be more flexible on Greece, in terms of the time needed for the country to meet its targets.” Amidst the doom and gloom, Picket said the crisis had brought about some positive aspects to the troubled region. “The new proposals put forward for a European framework for bank recovery and EU banking supervisor are examples of a silver lining to the crisis. A crisis leading to innovations, improvement and strengthening of the EU members’ internal structures,” he said. On eurozone bonds, Picket said the common eurozone bonds will happen once the economic policies are in place. He added that the eurozone bonds is a logical step forward to create liquidity and low cost financing for its members. “It can be done with right conditions in place for EU members to pool debts and borrowings,” he added. There is no doubt that the sovereign debt crisis will cause ripples in Malaysia, a trade-dependent economy, said Piket. According to him, the Ministry of International Trade and Industry has recorded a 14% reduction in Malaysian exports to the EU for 1Q. However, Piket is optimistic of the trade prospects. He said the EU-Malaysia trade relationship is a resilient one. “Even though Malaysia experienced a dip in trade this year, I am sure we can come out of it next year. Trade will be able to rebound. During the 2008 economic crisis, bilateral trade dipped by 40% but the year after it had recouped the losses and achieved a new record growth in 2010,” he said. Piket attributed the resilient trade relationship to the Malaysian government’s efforts of maintaining an open policy towards world trade.   Adding that Malaysia is in a fairly enviable position with its current account at a surplus of US$30 billion (RM95.7 billion), or 10% of GDP, Picket said Malaysia can look at the eurozone crisis with a relative self-comfortness. Commenting on the negotiations of the free trade agreement (FTA) between the EU and Malaysia, Piket said they have yet to come to an agreement. “The agreement will bring about a 2% GDP growth for the EU while Malaysia will benefit from an 8% GDP growth by 2030. This FTA is entirely in line with the overall growth and income development objective of the Malaysian government,” he added. This article appeared in The Edge Financial Daily, June 25, 2012.

https://theedgemalaysia.com/node/6879

Yuan revaluation alone won't narrow US trade deficit

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THE US-China diplomacy deep freeze seemed to have thawed after US Treasury Secretary Timothy Geithner postponed a report, which was to have been released last Thursday, on whether to label China a currency manipulator. Then last week on the sidelines of the international nuclear summit, Chinese President Hu Jintao made it known China would not be pushed by external pressure and would instead base any decision on the yuan on its own economic needs. Nevertheless he indicated that China was committed to change. Despite this, Hu's remarks were seen as a snub to President Barack Obama who met his counterpart at the summit to discuss China's yuan policy. Geithner had also said last week that while the US would continue to push for open markets and fair trading rules, it was up to Beijing to progress towards a flexible currency-rate regime. He had also made a surprise visit to Beijing on April 8 to meet Wang Qishan, China's vice-premier in charge of economic affairs. Thank you Mr Geithner for choosing diplomacy over hubris after months of souring relations between the two nations blamed on unilateral moves by the US in selling arms to Taiwan and imposition of duties on Chinese goods. Even Obama receiving the Dalai Lama at the White House in February was seen as a subtle slap in the face. Political analysts say the change of tone from Washington should win the US some brownie points with China in order to get support for sanctions against Iran, and it is now a given that Beijing would allow the yuan to gradually appreciate in the months to come. Coincidentally, China recorded a trade deficit of US$7.2 billion (RM23.04 billion) in March — the first time since 2004 — taking the pressure off calls for the revaluation of the yuan. However, economists say this is temporary, caused by fewer working days because of the lunar new year. US exporters and members of the US Congress have been demanding for the renminbi — the yuan's official name — to be revalued in order to establish a fairer trade system. It has been viewed as a tool of unfair trade which took jobs away from the Americans while flooding the US market with cheap goods. Critics have argued that the yuan is undervalued by 40% but it is almost a certainty that China would not allow its currency to rise abruptly, risking economic growth, social and political stability. Experts say an increase of 5% may be expected over the next year but that is unlikely to do much to narrow the US' yawning trade deficit. It has been pointed out that when the yuan was revalued against the dollar in 2005, US trade deficit continued to rise. Even with a stronger yuan, will these lost jobs find their way back to America or will they move to other low-cost destinations like Latin America, for instance? Besides, there is more to the US' trade deficit than a cheap yuan. It is a well-known fact that Americans don't save. The personal savings rate has been declining since the 1990s when Americans saw other means of wealth creation through the stock market and properties; it only improved in the recent recession. Voracious consumerism encouraged debt and rising imports which led to its current account deficit. On the other hand, Chinese savings habit led to its huge foreign reserves which in turn funded America's spending, including the recent massive stimulus packages to rescue the economy. Yang Yao, the director of the China Centre for Economic Research at Peking University, wrote in the Financial Times last week that the US Treasury could have forced its hand in ending the yuan's peg to the US dollar by stopping the sale of its bonds to China, which for one-and-a-half years until December 2009 was the US' largest lender. If that happens, who would Washington turn to for cheap money? The fact is, the focus should not be on the yuan alone in dealing with the US' trade imbalances. However, US lawmakers, in an election year, have been loath to examine the problems in their own backyard.

https://theedgemalaysia.com/node/8215

Press Metal sells stake in K3

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PMB said yesterday the disposal would enable it to be more focused on its core business activities in the manufacturing and marketing of aluminium extrusion. K3 is involved in the trading of other metal products such as stainless steel and stainless pipes, according to PMB.

https://theedgemalaysia.com/node/79700

In the Chinese Press: Minimum wage talks end in discord

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KUALA LUMPUR (Feb 28): The minimum wage issue was spotlighted in the Chinese press today. Oriental Daily News, Sin Chew Daily and China Press all reported that the negotiations between the National Wage Consultation Council (NWCC) under Ministry of Human Resources and associations of commerce and industry ended in discord yesterday. According to the reports, the meeting, which took place 2pm yesterday, broke down after just 20 minutes. A member of the NWCC was even heard telling the delegates to leave. In its headline Oriental Daily News reported that the meeting initiated by NWCC turned to a war of words, whereupon delegates from various commerce associations decided to leave. A member of NWCC from Malaysian Trades Union Congress (MTUC) then shouted "get out" at them. It quoted a delegate as saying that the government has shut the door of negotiation, and "everyone is angry". Industries "forced" to accept Deputy President SMI of Association Malaysia Michael Kang Hua Keong told Oriental, the representatives of NCWW "forced" the delegates from the industries to accept the implementation of minimum wage, including all decisions made by the cabinet last week. According to Sin Chew's report, Kang said they were forced to accept three conditions set by the cabinet: The conditions are: 1. Companies which have implemented minimum wage cannot apply to postpone the implementation; 2. Companies with financial problem must apply for postponement separately; and 3. If the companies that have implemented minimum wage wish to deduct levy and transportation allowance, then they must apply separately. Kang was quoted as saying, "they allowed nothing to be discussed in the meeting. Their law adviser attended the meeting too, they said these (3 conditions) are cabinet's decisions, it's a law, must be accepted." "They said many companies have accepted, why not us?" Hope for PM to step in Kang said SMI of Association Malaysia and Ministry of Human Resources have given up negotiating with each other, all they hope is for the prime minister to step in and deal with the impasse. The minimum wage policy came into force from Jan 1. The amount is set at RM900 for Peninsula Malaysia, and RM800 in Sabah and Sarawak. The Malacca Chinese Chamber of Commerce and Industry and other 57 organisations held a peaceful gathering in Putrajaya on Jan 29 to urge the government to review the policy, especially for foreign workers. Education groups hail PR's promise Meanwhile Sin Chew Daily and Oriental Daily News reported that The United Chinese School Teachers Association (Jiao Zong) and United Chinese School Committees Association (Dong Zong) values Pakatan Rakyat's promise to recognise the Unified Examination Certificate (Combined Chinese Schools) highly. It urged other political parties to follow PR's step to include the demands of Chinese educators into their manifestos so that voters can make informed decisions. Besides recognition of UEC for the purpose of furthering academic admission to higher education institutions and as academic qualifications for jobs, PR's manifesto also allocates additional assistance to 1,854 Sekolah Janaan Rakyat according to the number of pupils, at RM300 per student each year. The Chinese education groups think that is a good start. Nevertheless they pointed out that PR's manifesto only covered part of the demands of the Chinese educators while there are plenty of issues faced by Chinese and other vernacular schools. According to Oriental News, the groups assert that our current education system does not meet the demands of the nation's development and a multi-cultural society. Therefore it urged PR to set up a royal commission of investigation to review and enhance our education system if it comes into power after the general election. Further, they elaborated, the Royal Commission should give its recommendations according to the spirit of two resolutions adopted in "1125" rally last year namely against the 2013-2025 Education Blueprint that continues to uphold a uniform education policy, and formulate a new Education Blueprint in order to set up a new education system that is acceptable to all.

https://theedgemalaysia.com/node/76853

Hot Stock: Datasonic rises after RHB Research starts coverage with positive outlook

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KUALA LUMPUR: Datasonic Group Bhd was among the top gainers at mid-morning on Tuesday, on the back of a positive outlook for the group on potential businesses and contracts. At 10.15am, Datasonic jumped 41 sen to RM6.88 with 231,200 shares traded. RHB Research has initiated coverage on Datasonic with a Buy rating and fair value of RM10.51, as it foresees the group to gain double profit due to potential contracts and business. “We are forecasting for Datasonic to more than double its net profit by FY13F to RM76.7 million. “Taking into account the potential replenishment of 10 million new MyKads come 2014, as well as likely margins enhancement post completion of its new MyKad assembly plant by end of FY13F, we foresee the group’s bottomline potentially breaching the RM100 million threshold come FY15F,” it said. Some of the key projects that the group was involved in are the rolling out of national identification (ID) cards in 2001 and the implementation of a payment multi-purposed card (PMPC) programme in 2003 to replace cards with magnetic stripes with chip-based ones. Looking forward, Datasonic’s management is hopeful of getting another extension on its contract to supply new MyKads come 2014. “Over the medium- to longer-term, Datasonic aims to capitalise on managing applications on new MyKads to help boost its recurring earnings base. “We gather from sources that the company had recently proposed to three public hospitals to incorporate their patients’ medical and health records into their respective MyKads,” said the research house.

https://theedgemalaysia.com/node/7996

Thai consumer confidence falls again as crisis continues

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BANGKOK (Feb 6): Thailand's consumer confidence dropped for a 10th straight month in January, a survey showed on Thursday, as the prolonged political crisis is making Thais reluctant to spend, adding to the country's economic problems. The consumer confidence index calculated by the University of the Thai Chamber of Commerce (UTCC) slid to 71.5 in January, the lowest level since November 2011, from 73.4 in December. "People are very concerned about their future," UTCC economics professor Thanavath Phonvichai told a news conference. "The economy has not reached its bottom yet." A UTCC statement said consumers' consumption "is likely to fall further at least until late in the second quarter because the economy is slowing and there is no sign of recovery yet... confidence should pick up once the political situation eases but it's not clear when that will happen." For weeks, anti-government protests trying to oust caretaker Prime Minister Yingluck Shinawatra have been blocking some roads in Bangkok and forcing ministries to shut their doors. Thailand held a general election on Sunday but protests disrupted voting in one-fifth of constituencies, and it may be a long time before a new government can be formed. The consumer confidence index has steadily declined since April, initially because of slowing economic growth and in recent months due to political turmoil. - Reuters

https://theedgemalaysia.com/node/76462

Brent edges down towards $106 as U.S. crude stocks seen rising

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SINGAPORE (Nov 12): Brent crude futures dropped towards $106 per barrel on Tuesday on expectations of a large increase in U.S. oil inventories, while investors eyed possible economic reforms to be announced by Chinese leaders later in the day. While unsuccessful talks between Iran and world powers at the weekend pulled Brent away from a four-month low hit last week, a strengthening dollar and an expected build in U.S. crude stockpiles weighed on prices. Brent contract for December delivery was 17 cents lower at $106.23 per barrel at 0736 GMT. U.S. crude was down 25 cents at $94.89 per barrel. U.S. crude oil stockpiles were seen rising by 1.6 million barrels last week, according to a preliminary poll of Reuters analysts, but expectations of higher refinery runs headed into the heating season helped limit a steeper fall in prices. "Looking at the economic statistics in the United States, demand should be increasing," said Yusuke Seta, commodity sales manager at Newedge in Tokyo. "We should see a drawdown in stocks in the coming weeks, as refiners increase runs ahead of the peak winter season." The U.S. oil inventory data reports this week will be delayed by a day due to the Veterans Day holiday on Monday. Industry group, the American Petroleum Institute, will release its report on Wednesday and the U.S. Energy Information Administration will publish its data on Thursday. A strengthening U.S. dollar also weighed on oil prices, as it held to the upward trend seen at the end of last week on expectations the Federal Reserve might scale back its stimulus sooner than thought following a strong U.S. jobs report. Following unsuccessful talks over the weekend, investors will also be watching for the next round of talks between Iran and world powers due on Nov. 20. U.S. Secretary of State John Kerry said he hoped an agreement would be signed within months, while London and Tehran revived diplomatic ties. "At least for now, the idea that Iranian oil will return to global market is off the table," said Chee Tat Tan, investment analyst at Phillip Futures in Singapore. In a sign it is willing to grant concessions, Iran said on Monday it will grant U.N. inspectors "managed access" to a uranium mine and a heavy-water plant. But concern is growing among U.S. lawmakers and a pro-Israel group that Washington may be giving away too much in negotiations with Tehran. "We still see big challenges in reaching a deal. The United States is under political pressure, and Iran doesn't seem to be giving too much," Tan said. CHINA REFORM Investors are also awaiting the unveiling of China's economic blueprint for the next decade later on Tuesday as Beijing seeks to balance the need to overhaul the world's second-largest economy while it tries to preserve stability and to reinforce the Communist Party's power. Economic reforms are likely to dominate when the country's leaders announce a 10-year agenda at the end of a Communist Party meeting on Tuesday, but some analysts say the chances of any big surprises will be small. While not likely to have a direct impact on oil prices, the announcement will show how committed China's new leadership is to reform of the world's second largest oil consumer after formally taking power in March. Some support came from continued trouble getting oil flowing out of Kazakhstan's giant Kashagan oilfield. Oil is unlikely to come online until spring as the world's biggest crude discovery in half a century faces equipment challenges including leaky pipes, industry sources said. - Reuters

https://theedgemalaysia.com/node/63542

Market Open: KLCI edges up as Asian equities rally

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KUALA LUMPUR (Feb 12): The FBM KLCI edged up in early trade on Wednesday, in line with the rally at most regional markets on the back of an an optimistic economic outlook from Federal Reserve Chair Janet Yellen. At 9.05am, the FBM KLCI added 0.76 points to 1,824.93. Gainers led losers by 178 to 47, while 140 counters traded unchanged. Volume was 126.02 million shares valued at RM49.91 million. The top gainers included Petronas Dagangan, GAB, Pharmaniaga, BAT, KLK, Karex, MKH, MAHB and UMW Oil & Gas. Hong Leong IB Research in a market preview Wednesday said it remains optimistic of current ongoing relief rally to stay for a while towards upside targets near 1839 (38.2% FR), 1850 and 1855 (23.6% FR) before profit taking activities emerge. “On the flip side, a breach below the key supports of 1,796 (10-day moving average) and 1,784 (200-day moving average) will witness a resumption of sell-down to retest 1,750-1,770 territories,” it said. Elsewhere, Asian shares rallied for a fourth straight session on Wednesday as risk appetites were whetted by an optimistic economic outlook from Federal Reserve Chair Janet Yellen, which diminished the need for safe havens such as the yen and bonds, according to Reuters. Regional markets face a potential pitfall later Wednesday when China releases trade figures for January. Any weakness will stoke concerns about a slowdown and the risks would seem to be sizable given January last year was a very strong month for export growth, making for a tough comparison, it said.

https://theedgemalaysia.com/node/59864

Stocks to watch: Downgrades to weigh on market sentiment

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KUALA LUMPUR: Standard & Poor’s (S&P) decision to downgrade the long-term ratings on nine eurozone sovereigns will weigh on market sentiment this week. The negative turn of events in the eurozone could see key regional markets including Bursa Malaysia starting on a very cautious note with downside bias. S&P stripped France of its top AAA rating and downgraded half the nations in the eurozone, which Reuters reported might complicate European efforts to solve a two-year old debt crisis. Credit Suisse Economics Research presented two scenarios as any forecasts for Malaysia would hinge on the likely eurozone developments. Credit Suisse Research said the good news was that a break-up could be avoided or postponed beyond 2012. If this is right, it expects Malaysia’s GDP growth to continue to outperform the other small open economies in the region in the next one to two quarters. However, it said the bad news was that the risks of a eurozone break-up remained uncomfortably high, as in a crisis scenario, Malaysia’s real GDP could contract by over 1% in 2012. As for the impending general elections, Prime Minister Datuk Seri Najib Razak reportedly said the 13th general elections would not be held so soon as the government’s reform initiatives were not in full swing yet. Credit Suisse Research said the stock market would likely remain range-bound until there was clarity of the general elections and that stock picking was important to gain absolute terms. Meanwhile, stocks which could continue to attract trading interest are Can-One Bhd and Kian Joo Can Factory Bhd (KJCF). Expectations of a general offer by Can-One after it was given court approval to acquire the 32.9% block of KJCF had sent the stocks on a rally. Analysts said Can-One would be in a better position to increase the market share once it takes control of KJCF. However, they expected some profit taking after Can-One’s price surge. They said Can-One was cheap currently based on the future business growth and investors should pick up the stock if there was a price correction. As for KJCF, they said long-term investors should stay invested as the fundamentals remain robust. Proton Holdings Bhd could also see some downside bias after the strong run-up, fuelled by the takeover talks of Khazanah Nasional Bhd’s 42.7% block in Proton. However, the lack of indication when the deal will be done could prompt some profit taking, judging by the late profit taking last Friday. Meanwhile, Khazanah has asked interested bidders for its 42.7% block in Proton to show proof of funds this week. The Edge weekly reports the Genting group’s partnership with the state of New York — in a proposed US$4 billion (RM12.5 billion) development that would house the largest convention centre in the US — would give it an edge when it comes time to bid for a full-fledged casino licence. Snack and confectionery manufacturer Cocoaland’s earnings recovered last year, but whether the company can sustain its performance in the current financial year will depend on its ability to pass on the additional costs incurred in production to customers. Hiap Teck Venture Bhd’s additional 354.14 million new shares under its rights issue with 88.53 million warrants will be listed today. Mitrajaya Holdings Bhd’s unit has secured two contracts worth a total RM33.41 million from Putrajaya Holdings Sdn Bhd for construction jobs in Putrajaya. Frontken Corp Bhd has seen its German shareholder Jorg Helmut Hohnloser increasing his stake to 28.8% or 290.99 million shares after he acquired an additional 59.5 million shares or 5.8% stake. Frontken executive chairman and managing director Wong Hua Choon disposed of his 59.5 million shares or 5.8% at 12 sen in two blocks. Its net asset per share was 21 sen. This article appeared in The Edge Financial Daily, January 16, 2012.

https://theedgemalaysia.com/node/19199

#Stocks to watch:* Jetson, Techfast, KPJ, UM Land

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KUALA LUMPUR: Investors will have to brace for a gruelling session on Friday, Oct 2 after the Dow and S&P 500 suffered their worst one-day fall in three months as economic reports fuelled fears about the recovery's strength Key regional markets will likely take their cue from the overnight fall on Wall Street. The Dow Jones industrial average tumbled 2.09% to end at 9,509.28. The broader Standard & Poor's 500 Index slid 2.58% to 1,029.85. The Nasdaq Composite Index lost 3.06% to 2,057.48. The Institute for Supply Management's index of US factory activity declined in September from August's reading, and although the latest reading still indicated growth, it was sharply below economists' forecast in a Reuters poll. As for Bursa, the FBM KLCI's 1,200 psychological support level could be tested due to bearish external news. Stocks to watch for today are Kumpulan Jetson Bhd (KJB), Techfast Holdings Bhd, KPJ Healthcare Bhd, UM Land and Goh Ban Huat Bhd, In  Kumpulan Jetson Bhd (KJB), S M Nasarudin and S M Faliq, the sons of Naza group founder, the late Tan Sri Nasimuddin SM Amin, have failed in their conditional takeover bid for Jetson as minority shareholders rejected their RM1 per share offer price for the remaining shares in the company. Loss making Techfast Holdings Bhd saw former executive director of Rashid Hussain Bhd (RHB) and veteran banker, Chartchai Sae Pusavat, emerging as the single largest shareholder with a 24.4% stake. Listed on the ACE Market, Techfast other major shareholders are its chairman and managing director Yap Soon Sing with 11.22% and Lembaga Tabung Haji with 7.67%. For more, see today's edition of The Edge FinancialDaily. KPJ has proposed a 2:1 share split turning existing shares of RM1 each into two shares of 50 sen each. A subsequent one-for-four bonus issue of up to 105.53 million shares as well as an issue of up to 131.91 million free warrants on the basis of one warrant for every share held, will also be made. The exercise is expected to be completed by the first quarter of next year. UM Land has received shareholders’ approval of a 51:49 joint venture with Tradewinds Johor Sdn Bhd to undertake a RM718 million mixed development project in Pulai, Johor. UM Land said yesterday the proposed development was estimated to take five years from the completion of the proposed acquisition with a gross development value of RM718 million. As for Goh Ban Huat Bhd (GBH), the ceramic company announced several changes to its board following the takeover by businessman Tan Sri Robert Tan Hua Choon, who now constrols 82.5% stake. Plenitude Bhd has announced a first and final dividend of 14 sen per share less tax for the financial year ended June 30, 2009. The dividend is subject to shareholders’ approval at this year’s AGM with the tentative entitlement date of Nov 18, 2009. 

https://theedgemalaysia.com/node/76774

MPSB plans boutique homes in Bukit Dumbar

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MPSB Holdings may be a new kid on the block but the Penang-based niche developer is looking to launch three projects with an estimated total gross development value (GDV) of RM200 million on the island within the next 18 months. This follows the good response to its maiden project — Mansion One in Jalan Sultan Ahmad Shah (Northam Road) — 85% of which has been sold since it was first previewed in July 2011. Mansion One is the first hotel-cum- residential development in Penang. The 31-storey project has a GDV of RM300 million and is expected to be completed by 2Q2014. MPSB plans to hold a preview of its next project, a low-density residential development called D'Mansion in green-lung Bukit Dumbar, in mid-January. It has an estimated GDV of RM60 million. The boutique residential project, on a less than one acre freehold residential plot, is just two minutes from the Penang Bridge, MPSB Holdings director Terrence Lim tells City & Country. He adds that the 20-storey condominium will only have 50 units with sizes starting at 1,400 sq ft. It is within walking distance of the Jelutong market. Lim says the units will cost slightly below RM600 psf and will come with high-quality finishing. Construction is expected to commence in March 2013. There are also plans to launch two more projects — a townhouse in Teluk Kumbar and a mixed development near Bayan Baru. The developer acquired the 31-storey Northam Tower (the site of Mansion One) in 2008 via Magna Putih Sdn Bhd, which was incorporated as an investment holding company in 2002. MPSB Holdings was established earlier this year incorporating Magna Putih and Mansion Properties Sdn Bhd, the company set up to develop D'Mansion. Mansion One"Northam Tower was a non-performing office block with an occupancy rate of only 30% when it was acquired. The location itself is excellent but the product was wrong in its concept, tenant mix and colour of the building. We decided that the hotel residence concept — something we usually see in Hong Kong, Singapore and Kuala Lumpur — would be more suitable. In fact, we hit 75% bookings within six months of launching Mansion One. "We started refurbishing Mansion One once the acquisition was completed in 2010. Its commercial structure (substructure and superstructure) was retained as it is doubly strong compared to residential structures. We also retained it to avoid causing any possible damage to the heritage house across from our project. We have maintained it at 31 storeys, whereby the ground floor until Level 10 and Level 30 will be the hotel while Levels 11 to 28 will be residential suites," says Lim, a computer engineering graduate. There will be 200 hotel rooms, averaging 400 sq ft. Plans are for a four-star hotel, with an average room rate of RM250, slated to open by 3Q2014. The developer signed a general management term agreement with an international serviced residence operator last month to manage the building. The residential component offers a total of 306 suites with one to three bedrooms and built-ups of 580 sq ft to 1,300 sq ft. Lim says the average price of the units starts at RM650 psf or RM400,000. The units are unfurnished but there are options to upgrade. "You can't find anything below RM1 million in Jalan Sultan Ahmad Shah but our smallest units are selling for RM400,000. Small units are not that common in Penang yet. It's very expensive to buy a property in Penang but properties are still the best investments in terms of security and capital appreciation," Lim says. "The location of Mansion One is excellent and that's why it has been very well received. It's just a 15-minute walk to Gurney Drive and a two to three-minute drive to George Town or the iconic Komtar. We're close to Gurney Drive but not that close that you end up in a jam once you enter Gurney Drive. Our hotel and residence concept is one-of-a-kind in Penang. Our residents will be able to use all the facilities in the hotel as well as the laundry and housekeeping services (chargeable)," he adds. All the units offer uninterrupted views of the sea or the city. According to Lim, more than 70% of the buyers are Penangites. "The thing about Penang properties is they are what we can call, 'evergreen'. Yes, the hot spots are Kuala Lumpur, Johor and Penang but you don't see property prices dropping in Penang. They could stay stagnant for a year or 18 months but they never drop. One of the reasons is that most buyers are locals. Penang people are very savvy investors," says the Kuala Lumpur-born Lim, who has been living in Penang for the last seven years. Lim has been involved in property development since 2003. Prior to that, he was in the telecommunications industry for eight years. "I felt that I was travelling too much so when the opportunity came, I decided to join my friend's father's property development company. The opportunity to be a shareholder in Magna Putih came along a few years ago and I agreed to be a part of it. "Being in the property industry has been exciting. The business concept, whether it's computers or property, isn't that much different. For example, in computers, you have input, processing and output. For property development, input is when we have a piece of land we want to develop. Processing is where the design work and concept come in and the output is the house when it is completed. The processing part is very important as it differentiates one development from another, how you impress your buyers. It's your value add that makes your product different from the rest," he explains. Commenting on the property outlook for the coming year, he says: "I think we will see a correction in the property market but not a slowdown. Not a drop in prices but correction in the number of transactions and, even then, not a significant number. You won't see weakened demand for properties in Penang, but qualified buyers, according to bank qualifications, may be fewer." The biggest challenge faced now, he says, is getting loans approved. "Banks have become more stringent in approving loans. It used to take about 10 days but now the fastest is three weeks," he adds.   This story first appeared in The Edge weekly edition of Dec 31, 2012-Jan 4, 2013.

https://theedgemalaysia.com/node/19544

England need Beckham to boost 2018 World Cup bid, says Warner

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LONDON: England's bid to host the 2018 World Cup is falling off the pace and needs help from David Beckham, CONCACAF president and FIFA executive member Jack Warner said on Wednesday. England are among a dozen nations hoping to host or co-host the tournament but Warner said the country was failing to take full advantage of its attributes and that the likes of Spain and Russia were making a strong early impression. "England has the best infrastructure, the best league, the best history in the world and when I see all these things I ask why they are not doing better," Warner said at the Leaders in Football conference at Chelsea's Stamford Bridge on Wednesday. "They don't have a divine right to hold it but I feel they (the bid committee) don't exploit their attributes, they are not lording it over their opponents. "My colleagues are saying the people coming to them are lightweight. They need to be creative and innovative. I would take David Beckham for example and make him my ambassador. He has that stardust. "Some of they guys who have to vote do not know the people on the England bid committee — but they know Beckham, they know Michael Owen." South Africa host the next World Cup in 2010 with Brazil staging the 2014 event.   FIFA will decide the 2018 host in December 2010 but Warner said the last six months before that were irrelevant as the executive members would have made their minds up by then. "People say it's a marathon — give me a break, this is a 100m sprint, they need to get moving." Warner said. "I was in Rio last week and the name on people's lips (for 2018) was Spain and then Russia. "I'm not even sure what those countries are doing but I do know what England are not doing. "I have nothing to hide, I am giving advice to England — I'm not saying I'm voting for it — I'm saying if they don't get their act together they will lose." Warner was particularly impressed with a piece of "ambush marketing" delivered by the Australia and Qatar bids, who presented bags and bid documents to delegates at Wednesday's conference — with nothing in sight from England. "I love what Australia did this morning," he said. "But if I was running the England bid I would have been more aggressive, I wouldn't have allowed them and Qatar to have a bag here. "People are looking at these sort of things and asking questions." — Reuters

https://theedgemalaysia.com/node/12432

Sizzling Tiger takes command at Hazeltine

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Fresh from back-to-back wins on the PGA Tour in the last two weeks, the world number one delivered a superb display from tee to green on the monster Hazeltine National course. Woods, in pursuit of his 15th major victory but first this year, birdied three of his last eight holes to finish a stroke in front of playing partner and defending champion Padraig Harrington. Twice champion Vijay Singh of Fiji, 2001 winner David Toms and fellow American Hunter Mahan, Australians Robert Allenby and Mathew Goggin and big-hitting Spaniard Alvaro Quiros were all on 69. Britain's Lee Westwood, who finished one stroke out of a playoff for last month's British Open won by American Stewart Cink, was among a group of eight on 70. Although the 7,674-yard layout is the longest to stage a major, Woods and company took advantage of its generous fairways and softened greens in hot, humid conditions. "The way the course is set up you can be a bit aggressive," Woods told reporters after recording his lowest opening round at the PGA Championship since firing a 66 at Valhalla in 2000. "I played really well today and felt very comfortable with what I was doing. It's always nice to get off quick. In the first round you can play yourself out of a golf tournament but you certainly can't win the tournament on the first day. "I hit a bunch of good shots and this round could have been really low," he added after reaching 15 of 18 greens in regulation. "I missed a bunch of putts out there." Woods, champion in 1999, 2000, 2006 and 2007, totalled 29 putts including three from 20 feet or more. Allenby echoed the thoughts of many in the 156-strong field about the American's blemish-free performance. World's best"Obviously he's the best in the world so we expect him to win," the Australian said after recording five birdies and a double-bogey seven at the 15th after finding a plugged lie in a fairway bunker off the tee. "But you know what, it's three more days to go and a lot can happen. There are a lot of good golfers behind him." Irishman Harrington, who clinched last year's title by two shots at Oakland Hills, relished his high-profile grouping with Woods in front of huge galleries. "It puts you under a bit more pressure," the three-times major winner said after hitting five birdies and a lone bogey at the par-four first. "You have to go to a new level. It pushes you on and that's what I like." Harrington is bidding for his first victory on either the PGA or European tours this season after working hard on refining his downswing over the last eight months. Singh, champion at Sahalee in 1998 and Whistling Straits in 2004, was among the best of the afternoon starters and soared up the leaderboard with five birdies and two bogeys. "I drove it really well ... and the putting was good," the former world number one said after picking up two shots in his last three holes. Several big names, however, failed to take advantage. American Phil Mickelson, the 2005 champion at Baltusrol, opened with a 74, US Masters champion Angel Cabrera of Argentina carded a 76 and Australian Adam Scott slumped to an 82. — Reuters

https://theedgemalaysia.com/node/94654

BN keeps Manjoi and Pasir Panjang state seats

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BATU GAJAH (Aug 2): The Election Court here today struck out with costs the petitions to annul the 13th general election results for the Manjoi and Pasir Panjang state seats which were won by Barisan Nasional. Judge Abang Iskandar Abang Hashim rejected the petitions on grounds that the petitioners in both the petitions failed to comply with Regulation 9 of the Election Petition Rules 1954. He ordered the petitioner for Manjoi, Ahmad Mansor, a voter, to pay cost of RM40,000 to Manjoi Assemblyman Mohamad Ziad Mohamed Zainal Abidin, RM35,000 to the returning officer (RO) for Manjoi and RM30,000 to the Election Commission (EC), the respondents named in the petition. The petitioner for the Pasir Panjang state seat, Hamidun Ahmad, also a voter, was ordered to pay RM40,000 each to all three respondents, namely Pasir Panjang Assemblyman Rashidi Ibrahim, the returning officer and the EC. The BN assemblymen in both the petitions were represented by a panel of lawyers led by Datuk Firoz Hussein Ahmad Jamaluddin. Senior federal counsel Norinna Bahadun represented the other two respondents in the petition for Manjoi, while senior federal counsel Nadia Hanim Mohd Tajuddin represented the RO and the EC in the petition for Pasir Panjang. The petitioners were represented by a panel of lawyers led by Aminuddin Zulkifli. In the 13th general election, PAS candidate, Asmuni Awi, lost to Mohamad Ziad with a 132-vote majority, while Rashidi defeated PAS' Rohawati Abidin and Independent candidate S.Vijayan for the Pasir Panjang state seat with a 304-vote majority.

https://theedgemalaysia.com/node/54492

High net worth individuals in Asia on the rise

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KUALA LUMPUR: The number of high net worth individuals (HNWI) in Asia will balloon by 140% to 2.8 million by 2015 from 1.2 million now, according to CLSA Asia-Pacific Markets. In a report entitled ‘Fast Cars in Fast Lanes: Surge in high net worth individuals’ released on Sept 8, CLSA said that in the coming years, China would boast the largest wealth increase across the region, accounting for  60% of the rise in HNWI’s wealth over the next five years. However, Indonesia will have the fastest HNWI growth at 25%, higher than 22% in China, it said. The report, which analyses wealth distribution in China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan, and Thailand, defined HNWIs as those with investment-worthy assets of US$1 million or more, excluding their first homes. CLSA estimated that the ten countries had 1.2 million HNWIs, a figure that maked up a mere 0.06% of the adult population. In developed markets such as Singapore and Hong Kong, HNWIs are representative of 1.5% of their adult populations, it said. Countries such as Korea and Taiwan, in spite of having income level half that of the USA had eight times the ratio of HNWIs compared to China and 20 times when compared to India and Indonesia. CLSA said that the drivers for wealth explosion differed across nations and were explained by three main factors: increase in savings as a function of economic growth; return on assets from the yield and capital value appreciation. Key sectors to benefit from the wealthy boom include asset management, autos, consumer, healthcare, leisure and property, which have some US$600 billion of stocks, it said. Meanwhile, the rise of Asian exchange rates adds to spending power for internationally priced goods, it said. CLSA estimated that a 4% Asian-currency appreciation against the US dollar would account for 33% of the increase in HNWIs by 2015. The report also noted underlying risks such as the volatility of Asian economies to outside markets and a global downturn, slowdown in China’s growth, and an unexpected dollar rally which could hinder Asian wealth expansion.

https://theedgemalaysia.com/node/14895

'Ready to tackle the world'

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IDOTTV SDN BHD, the mobile technology specialist subsidiary of Sedania Group, has a grand dream. And to make its dream come true, it has ambitiously gathered a "World Innovative Team" (WIT) to compete on a regional or wider scale. "What we're trying to create is a local World Innovative Team comprising young, creative, talented innovators who are able to create cool and amazing products for the international market," says IDOTTV director of corporate and legal Zahani Yuhyi. "We are actually ready to tackle the world." The team will start 60-strong, but IDOTTV is looking to grow that number. "We are continuously looking for young talent," says Zahani. Already with members from Malaysia, Iran and Indonesia, IDOTTV will also recruit members from Thailand and the Philippines, taking advantage of their existing offices in those countries. The team will be contained in a "Google-like office, where they can let their creativity run wild". IDOTTV seeks innovators from various industries and locales to create a team as universal as the users of their mobile solutions. If it sounds a tad ambitious, then one should be reminded of Sedania Group's group CEO Datuk Azrin Mohd Noor, who has been quoted as boldly stating his goal of hitting RM1 billion in revenue at some point. He was a finalist in last year's Entrepreneur of the Year Awards held by Ernst & Young, where he competed in the Master Entrepreneur category. Azrin frequently talks about his love of future money, a metaphor for identifying the promising businesses of tomorrow and creating a strong business model around the trends identified that will lead to this future money. The formation of the WIT is to identify these trends and build businesses around them. Indeed, current solutions being improved and developed by the team include IDOTTV's prepaid and postpaid airtime transfer solutions, "Green Billing" smartphone billing solution and Green Banking system. Green Billing, already in use by Celcom for a year, is an electronic mobile phone billing solution for smartphones on all operating systems except Symbian. "Features include interfacing with the phonebook. That's one of the things that is first in the world. It's good for claims," says Zahani, explaining that companies can properly identify work-related communications and reimburse staff fairly. "We are relaunching this because we developed it for the prepaid market as well," adds COO El Hadj Azahari. Green Banking is a similar mobile solution for the banking vertical. "Green banking is the bank's giving statements to the customer. The customer can check and immediately pay," explains Zahani, "It gives the bank a singular line of communication with the consumer at all times." IDOTTV's solution is MYCC Cybersecurity certified to EAL1 level, reassuring when just two years ago, several banks' smartphone apps were found to have severe security flaws, including storing login details in plain text on the phone. "We have five levels of security," says El Hadj. "If you compare us with Internet banking, we are more secure. The Internet has a maximum of three levels — you have your user ID and password, and sometimes TAC (transaction authorisation code). We have added two more — SIM ID and device ID." Other features in the works include cheque-clearing notifications, remote queue ticketing and form filling — all centred around "making it easier for the customer". "In the second stage, we will cover non-smartphones, using USSD [Unstructured Supplementary Service Directory] or SMS," says El Hadj. USSD allows for transmission of information via a GSM network. In the end, IDOTTV's philosophy, and by extention that of the WIT, is expressed in the phrase Zahani repeats in many forms: "We are very consumer-centric. Anything we do is looked at from the customer's point of view." If the WIT lives up to the rhetoric of its senior managers, then Malaysian consumers could be looking at some interesting products in the future. Karamjit Singh is in the midst of launching a business tech portal, www.digitalnewsasia.com. This article appeared in The Edge weekly on May 14.

https://theedgemalaysia.com/node/96975

Highlight: FBM KLCI trading near pre-election levels

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KUALA LUMPUR: The FBM KLCI fell close to pre-election levels yesterday, almost wiping out gains made after the recent general election, partly due to the selldown of big cap stocks by foreign investors. The benchmark index fell to a low of 1,710.17 points during the day before closing at 1,720.37, down 1.4% or 24.48 points from the day before. On May 3, two days before the May 5 polls, the KLCI closed at 1,694.77. "The pullback of the KLCI is mainly due to some selling by foreign investors," Areca Capital Sdn Bhd CEO Danny Wong told The Edge Financial Daily. The recent selldown was confined to big cap stocks such as banks, oil and gas and tobacco players which had attracted foreign investors in the past, he said, noting that local institutions have been net buyers lately. This could be an opportunity to collect good fundamental stocks, Wong said, though the market may be volatile for a while. But he said there should be no cause for concern as foreign holdings in local shares are 23% to 24%, relatively lower than the historical high of about 28% before the Asian financial crisis of the late 1990s. Though some panic sellers may still be looking to reduce their holdings out of fear of further foreign selling in emerging markets, Wong foresees that a further selldown of Malaysian equities would be a short-term event driven by sentiment.   "I do not anticipate more to come as we are relatively not as bad as other emerging markets such as Indonesia, Thailand and India." Wong said GDP growth is still above 4% with the current account still in surplus, compared with Thailand which has entered a technical recession with two consecutive quarters of contraction. Another contributing factor to the selldown, Wong said, is the rising US dollar that has worried emerging markets as US assets become more attractive. Hwang Investment Management Bhd head of equities Gan Eng Peng said the Asean sell-off is in its second leg, noting that weak balance of payments is prompting a sell-off in most Asian currencies. "This prompted a fair amount of foreign fund withdrawals as their portfolios are measured in US dollars," he said. Weak Asian currencies have led to shrinkage in the value of portfolios even if stock prices stayed flat, Gan said, adding that Malaysia is no different. A large part of the Malaysian stock market's peaks and troughs has been driven by foreign liquidity, said RAM Holdings Bhd chief economist Dr Yeah Kim Leng. "A significant number took the position that the Barisan Nasional government would be returned to power and they were amply rewarded with the post-election bounce," he said. Yeah said the "herd response" will end when there is greater clarity in the timing and effects of the unwinding of the US Federal Reserve's balance sheet. Yesterday, the top losers on the KLCI included RHB Capital Bhd, which fell 5.19%; Tenaga Nasional Bhd, down 3.84%; Genting Malaysia Bhd (2.41%) and UMW Holdings Bhd (2.19%). Markets across the region were not spared the selldown as the Fed's tapering of its asset buying programme weighed on investor sentiment. The Philippines All Share index fell 5.49% to 3,756.67, Jakarta Composite Index dropped 1.11% and the Nikkei 225 closed a marginal 0.44% lower. South Korea's Kospi closed 0.98% lower and Australia's S&P/ASX 200 dropped 0.5%. Hong Kong's Hang Seng Index reversed early losses to close 0.4% higher, boosted by data showing China's manufacturing Purchasing Managers' Index rose to 50.1 in August, compared with 47.7 in July. A reading above 50 indicates expansion while a figure less than 50 signals contraction. This article first appeared in The Edge Financial Daily, on August 23, 2013.