Wednesday, 29 February 2012

United Engineers - 2011: A bumper year

Target S$2.73

A special dividend (6.1% yield) was the key takeaway for FY11, supported by record earnings from 3Q11 and a catalyst for share price. Management is guiding for a 2012 that is focused on recurring income, cushioned by contributions from investment properties.

Source: CIMB Day Break 29 February 2012, Full PDF Report

STX Pan Ocean - Five quarterly losses in a row

Target S$4.15

STXPO released its financial results to SGX this morning, reporting a core net loss of US$16m in 4Q11, lower than our forecast of a US$49m loss. Nevertheless, with all three shipping arms – bulk, tanker and container – in the red, the outlook for 2012 remains tough.

Source: CIMB Day Break 29 February 2012, Full PDF Report

Noble Group - En-route to recovery

Target S$1.40

4Q11 was an inflexion point for Noble. The group returned to profitability following losses in 3Q11. We expect earnings momentum to gather pace from 1Q12 along with the economic recovery and improving operating landscape.

Source: CIMB Day Break 29 February 2012, Full PDF Report

Mewah International - Not over

Target S$0.37

4Q11 earnings surpassed our estimate only because of favourable tax credits. Underlying performance remained poor, while lingering economic uncertainties and intensifying competition from its Indonesian peers still mar its outlook.

Source: CIMB Day Break 29 February 2012, Full PDF Report

Ho Bee Investments - Can’t sell in Sentosa

Target S$1.16

While Hobee's 4Q11 result was in line with expectations, the focus again is on its unsold Sentosa inventory. Some completed units have been leased out but at an estimated implied yield of only 2%, based on latest prices. We believe its new launches could be delayed till 2013.

Source: CIMB Day Break 29 February 2012, Full PDF Report

Banks - Credit costs rise, dollar deposits flood in

As Singapore’s GDP slows to an expected 1-3% in 2012, 4Q11 is likely to mark the quarter when credit costs start to rise. It is not all bad though. There are other positive signs such as a concurrent margin trough and
improved US$ liquidity positions helping to offset.

Source: CIMB Day Break 29 February 2012, Full PDF Report

Wellcall Holdings - Only if you love dividends

Target RM1.28

Wellcall has been generous with its dividends, paying out most of its earnings. Management is looking at an expansion exercise but it  should not affect the dividend payout given its net cash, which backs 20% of its market cap.

Uchi Technologies - It’s all about the money

Target RM1.18

Uchi’s FY12 core net profit beat our forecast by 6% and consensus by 8% because of surprisingly strong demand. Earnings would have been better if not for the weaker US$ currency which suppressed margins.

Tomypak Holdings - An unstable package

Target RM1.34

Tomypak's 23% results shortfall in FY11 and 45% decline in 4Q11 earnings paled in comparison to its peer, Daibochi. This surprised us given its superior margins in the past few years. Fortunately, the share price downside risk is capped by its 6-7% net dividend yield.

Supermax Corp - Fits like a glove

Target RM2.43

2011 came to a fitting end as FY11 net profit came in at 97% of our forecast and 102% of consensus. But the final DPS of 1.75 sen was below our 3.9 sen forecast. Supermax's focus on distribution and own-brand gloves will buffer it from the next 1-3 years of glut.

RHB Capital Bhd - Dragged down by a margin squeeze

Target RM7.50

FY11 net profit met our expectations as it accounted for 97% of our forecast and consensus. However, net profit growth at only 5.7% was slow, impacted by a margin squeeze that offset the positive effects of swift loan growth.

Puncak Niaga Holdings - Watered-down expectations

Target RM1.45

Puncak’s FY11 core net profit trumped our and consensus forecasts of core net losses. Though above expectations, the results are a non-event given the distortions from IC12. The focus remains on Selangor water
asset takeover prospects, which are still not promising.

Petronas Chemical Group - Return of the growth machine

Target RM7.90

The gas supply shortfall and heavy maintenance schedule that eroded PChem's FY11 earnings should not feature much in FY12. This, together with cheap gas feedstock, will lead to strong earnings growth in FY12.

Media Chinese Int'l - Record quarter in HK but it’s not sustainable

Target RM1.21

MCIL’s 3QFY3/12 was seasonally strong as all major publishing titles showed ad revenue growth. But this may not be repeated as the HK print adex market is going into a lull after the peak CNY period.

Malaysian Bulk Carriers - A rocky boat ride

Target RM1.65

Maybulk's FY11 core net profit missed the boat by 20% because of additional cost items and lower earnings from its associate, POSH. The improvement in bulk earnings is unlikely to continue this year as the BDI has since plunged to a 26-year low.

Masterskill Education Group - Flunking the test

Target RM0.82

Masterskill’s FY11 results were a letdown because of unexpected losses in 4Q. The dwindling of student numbers is expected to persist in 2012, underpinning a likely deceleration in earnings and margins. Dividends
are still the draw but sustainability is in question.

Mah Sing Group - Ending FY11 on a high note

Target RM2.51

Our faith in Mah Sing is buttressed by its record FY11 earnings, which were just 1% shy of our forecast and 5% above market. 2011’s record new sales, revenues and profits should continue in 2012 as the group is aiming to sell RM2.5bn worth of properties during the year.

JT International - Coughing up more for capex

Target RM7.40

One negative surprise from JTI's analyst briefing was its higher capex of RM30m for this year, going largely to packaging machines. Though its market share is still heading south, this is balanced by the possibility of a capital management initiative.

Genting Malaysia - No major surprises in the cards

Target RM4.10

At 100% of our forecast and 104% of consensus numbers, Genting Malaysia's FY11 core net profit met expectations, anchored by the UK casinos and resilient domestic operations. In 2012, it can look forward to an additional earnings stream from RWNY.

Ann Joo Resources - Prospects are heating up

Target RM2.39

At 98% of our forecast and 100% of consensus estimates, FY11 core net profit was in line. While the steel outlook is cautious, domestic prospects are improving. EPS is likely to get a boost from a RM200m p.a. Petronas contract and a 7% p.a. output lift from the MRT in 2H12.

UEM Land Holdings - Pushing the envelope in 2012

Target RM2.56

UEM Land’s final results were way ahead of expectations. The RM2.2bn new sales notched up in FY11 were also impressive. The group has set the bar high for 2012 with headline KPIs of 50% revenue growth, 40% profit growth and 10% ROE.

Genting Bhd - Thrown off course by MI and tax

Target RM11.90

Thrown off-track by higher minority interests and taxes, Genting Bhd undershot expectations, with FY11 core net profit being only 88% of our forecast and 93% of consensus. Save for the O&G division, earnings growth was commendable across the board.

CIMB Daybreak February 29, 2012

What’s on the Table…
  • Genting Bhd - Thrown off course by MI and tax
  • UEM Land Holdings - Pushing the envelope in 2012
  • Ann Joo Resources - Prospects are heating up
  • Genting Malaysia - No major surprises in the cards
  • JT International - Coughing up more for capex
  • Mah Sing Group - Ending FY11 on a high note
  • Masterskill Education Group - Flunking the test
  • Malaysian Bulk Carriers - A rocky boat ride
  • Media Chinese Int'l - Record quarter in HK but it’s not sustainable
  • Petronas Chemical Group - Return of the growth machine
  • Puncak Niaga Holdings - Watered-down expectations
  • RHB Capital Bhd - Dragged down by a margin squeeze
  • Supermax Corp - Fits like a glove
  • Tomypak Holdings - An unstable package
  • Uchi Technologies - It’s all about the money
  • Wellcall Holdings - Only if you love dividends

News of the Day...­
  • Malaysia's declining oil production has hit economic growth.
  • Genting has joined CIMB as part investors in a Sri Lanka IB.
  • First-generation IPPs must reduce capacity payment.
  • MAHB may raise its stake in Sabiha Gokcen airport.
  • Perodua production to be impacted if new lending rules remain.
  • AirAsia X to axe Christchurch from route network.

Click here for the full PDF

ECM GLOBAL NEWS 29 February 2012

US: Home prices in 20 cities decline 4%, more than forecast
Home prices in 20 US cities dropped more than forecast in December to the lowest level since the housing crisis began in mid-2006, indicating foreclosures are hampering the industry's recovery. The S&P/Case-Shiller index of property values in 20 cities fell 4% from a year earlier, after decreasing 3.9% in November. The median forecast of 31 economists surveyed by Bloomberg News called for a 3.7% decline. (Bloomberg)

US: Durable goods orders slump 4%, most in three years
Orders for durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment. Bookings for goods meant to last at least three years slumped 4%, more than forecast, after a revised 3.2% gain the prior month. Economists projected a 1% decline, according to the median forecast in a Bloomberg News survey. (Bloomberg)

Europe: Euro-area economic confidence rises more than forecast
Economic confidence in the euro area improved more than forecast in February, adding to signs the economy is stabilizing after a fourth-quarter contraction. An index of executive and consumer sentiment in the 17-nation euro area rose for a second month, increasing to 94.4 from 93.4 in January. Economists had forecast a gain to 94, the median of 31 estimates in a Bloomberg News survey showed. (Bloomberg)

Europe: Ireland to hold referendum on Europe's fiscal treaty
Ireland will hold a referendum to ratify the European fiscal compact, Prime Minister Enda Kenny said. Kenny, speaking in the Dublin parliament, said that the government decided to hold a vote after receiving legal advice from the state's attorney general. In contrast to two previous Irish referendums on European policies, a veto wouldn't sink the treaty, which requires support from just 12 of the 17 euro countries to take effect. (Bloomberg)

China: Shanghai raises minimum wage 13% as China seeks to boost demand
China's financial hub of Shanghai joined Beijing and Shenzhen in boosting the minimum wage this year as policy makers seek to spur consumer spending and a shrinking labor surplus pushes up salaries. The nation's most affluent city will increase the wage by 13% to CNY1,450 (US$230) a month starting in April. It's the 19th adjustment since the city's minimum wage rule was established in 1993. (Bloomberg)

Japan: Retail sales exceed forecasts as economy set to grow
Japan's retail sales exceeded economists' forecasts in January, signaling a recovery in consumer spending will help the world's third-largest economy return to growth this quarter. Sales rose 1.9% from a year earlier, after a 2.5% increase in December. The median forecast of 15 economists surveyed by Bloomberg News was for a 0.1% decline. From a month earlier, sales gained 4.1%. (Bloomberg)

South Korea: Industrial output falls 2% from year earlier
South Korea's industrial production fell 2% in January from a year earlier. The median estimate of 16 economists surveyed by Bloomberg News was for a 4.6% decline. Production rose 3.3% from December, compared with a 0.5% drop estimated by economists. (Bloomberg)

Oil & Gas: Upswing likely for industry output in 5 years, Idris Jala

The O&G output is likely to see an upswing within the next 5 years and continue to contribute significantly to GDP. Minister in the Prime Minister’s Department, Datuk Seri Idris Jala said last year, the sector declined by 5.7% and the lower oil output had affected economic growth. Idris said O&G is still Malaysia’s single largest sector and “if we had no decline, the GDP growth last year could have been more than 6% to 6.5%.” The decline was mainly due to the maintenance works in Peninsular Malaysia and the drop in production of the Murphy Oil’s Kikeh field, which was due to sand in the oil and would take about 2 years to solve. (Financial Daily)

Power: Indonesia, Malaysia to begin power trade in 2014

Indonesia's state power company, PT Perusahaan Listrik Negara (PLN), plans to begin large-scale electricity trading with Malaysia in 2014 after the construction of a transmission network connecting West Kalimantan and Sarawak. PLN president-director Nur Pamudji said between 50 and 100 MW of electricity could be traded via the planned 275 KW transmission line. The discussion on constucting the necessary facilities are underway, Nur Pamudji was quoted as saying in The Jakarta Post. (Financial Daily)

Power: EC wants IPP to reduce capacity payments

The first generation IPPs "must agree to reduce capacity payment for the current concession" in order to extend the existing power purchase agreements (PPA) by 10 years, said Energy Commission (EC) chairman Tan Sri Dr Ahmad Tajuddin Ali. "They must agree to renegotiate the terms of their PPA for a reduction on capacity payment until the end of their concession periods. This is the pre-condition for them to participate in the possible extension," Tajuddin said. However he declined to reveal the quantum for the reduction. (Financial Daily)

Automotive: Perodua wants banks to be "considerate" in new guidelines

Perodua has urged local banks to give consideration to the automotive industry by implementing any new guidelines in stages so as to allow a soft landing for both players and consumers. Perodua MD, Datuk Aminar Rashid said the financial institutions should take into consideration the government's desire to see growth in the industry by increasing competitiveness and creating a better business environment for all. The Malaysia Motor Association reported a 25% drop in sales of new motor vehicles, citing the tightening of hire purchase loan approvals as one of the reasons for decline. (Financial Daily)

PJI: Secures two contracts worth RM32m

PJI Holdings Bhd announced that it has secured two contracts worth RM32m. In a filing to Bursa, PJI said its unit, Kejuruteraan Trolka Sdn Bhd, had accepted a letter of award from Ocean Electrical Co Sdn Bhd for a RM22.1m project. The contract is for the erection and completion of the proposed Kompleks Markas 2 Division and proposed earthworks and external works for a planned residential development in Penang, which expected to be completed before 23 Mar 2013. Another job secured was RM9.9m contract from Bina Puri Sdn Bhd for execution of electrical services and to be completed by 30 Nov 2013. (Financial Daily)

TSM Global: Gets buyout offer from two directors

TSM Global Bhd received a buyout offer from West River Capital Sdn Bhd, a vehicle owned by TSM MD Datuk Lim Kheng Yew and ED Lim Tze Thean. In a filing with Bursa, TSM’s board said it had received a letter from West River setting out its proposal to acquire all of TSM’s business and undertakings, including all assets and liabilities, for RM159.2m. The offer price works out to RM1.25 per share, excluding the 1,000 treasury shares held by the group. West River is proposing to settle the purchase consideration in cash to all entitled shareholders and a deferred amount owing to identified parties. (Financial Daily)

Emkay Group: Development of Cyberjaya enters phase 3

Emkay Group of companies will develop the 3rd phase of Cyberjaya for the next 5 years with a GDV of RM3.8bn. Emkay group chairman Tan Sri Mustapha Kamal Abu Bakar said it plans to  embark on an additional 3.1m sq ft of office space, 3,250 units of various types of residential units, 856 commercial units and a light industrial area for automotive support services starting this year. He believes that Emkay's investment in Cyberjaya will increase by three fold with the 3rd phase of the development. (Business Times)

WellCall: Keen to grow oil and gas operations

WellCall Holdings Bhd is keen to grow its O&G sector to cater to the growing demand and get better margins. WellCall ED Alex Chew said the O&G profit margin is between 20% and 40%. "The O&G sector is a lucrative industry. Product pricing is easier as it has to meet high standard of requirement," Chew said. O&G rubber hose business currently accounts for about 30% of WellCall's revenue a year. (Business Times)

LPI Capital: Eyes 10% premium rise

LPI Capital Bhd is targeting a 10% increase in gross premium to RM1bn this year, to be driven by property insurance for infrastructure projects under the Economic Transformation Programme (ETP). To boost its property segment, LPI Capital CEO Tee Choon Yeow said the group's wholly owned subsidiary, Lonpac Insurance Bhd, would try to insure all the large infrastructure projects provided insurance rates and returns were attractive. (StarBiz)

Oriental Holdings: No plans for privatisation

Oriental Holdings Bhd has denied news report speculating the company was embarking on a possible privatisation exercise. Oriental added that it had no intention to go for privatisation or undergo a leadership change at the moment. (Business Times)

RHB Capital: To wrap up OSK, Bank Mestika acquisitions

Chairman Datuk Mohamed Khadar Merican said that "we are focused on concluding our proposed acquisitions of PT Bank Mestika in Indonesia and OSK Investment Bank, which when completed, will provide us access to all the key Southeast Asian markets and move us closer to realising our regionalisation aspirations." The bank said on 24 Feb it had agreed to extend the deadline to complete the acquisition of an 80% stake in Bank Mestika from 29 Feb to 30 June. (The Sun)

TNB: To perform better in 2Q with RM2bn compensation

Tenaga Nasional Bhd (TNB) expects to perform better in 2QFY12 ending 29 Feb as it will receive RM2bn in compensation from Petronas and the government as part of fuel cost sharing mechanism. TNB CEO Datuk Seri Che Khalib Mohamad Noh said gas supply has improved compared a year earlier. “They have been giving us 1,100mmscfd. However, we still need to burn distillates from time to time,” he said. The RM2bn compensation announced was part of the fuel cost sharing mechanism to bear RM3.1bn cost to burn distillates as an alternative fuel from 1 Jan 2010 to 31 Oct 2011. (Financial Daily)

Axiata: Extends collaboration with Huawei, Celcom to check drop

Axiata Group Bhd (AXIATA MK, Hold, TP: RM5.19) is extending its 5-year strategic global framework arrangement with global ICT solutions provider Huawei to establish a streamlined procurement platform. The framework agreement will create a common platform for Axiata group of companies to purchase network telecommunications infrastructure products, including provision of related works and services, from Huawei. (The Sun)

Separately, Celcom Axiata Bhd, a unit of Axiata Group Bhd will continue efforts to arrest the drop in voice revenues, which is suffering an industry-wide decline due to the increasingly higher takeup of data services consumed through smartphones and tablets. "We are not so worried about voice (cannibalisation). There will be substitution for sure, but most of our subscribers have kept their voice and still buy data, some have 2 or even 3 devices," CEO Datuk Seri Shazali Ramly said. (StarBiz)

Genting: Enters banking sector

Genting Bhd has joined CIMB Group Holdings Bhd and 2 individuals as shareholders of an investment banking advisory outfit in Sri Lanka. Through wholly owned Vista Knowledge Pte Ltd, Genting will have a 20% in CIMB Pte Ltd, which is 45% owned by CIMB Group via CIMB Securities International Pte Ltd. In an announcement to Bursa, CIMB Group said it had entered into a deed of accession to the JV and shareholders agreement to facilitate Vista Knowledge's entry into the JV, which had been formed last August. (StarBiz)

Genting Malaysia: FY11 results

Genting Malaysia saw its profits slip 4% y-o-y to RM349.28m in 4QFY11 despite revenue surging 50% y-o-y to RM2.33bn. FY11 net profit rose 12% y-o-y to RM1.42bn as revenue jumped 60% y-oy to RM8.5bn. (StarBiz)

Comments: Genting Malaysia's FY11 EPS of 25.2 sen was in line with consensus estimate of 25.6 sen. Underlying FY11 EBITDA growth was 15% y-o-y. The bulk of Genting Malaysia's earnings still come from its Malaysia gaming operations, which contributed 90% of EBITDA. Growth of Malaysia gaming EBITDA, however, was only 6% and it was a sharp improvement in the UK casino and maiden contribution from US that pushed group EBITDA growth up to 15%. Considering that FY11 results were within market expectations, consensus EPS forecast for FY12 of 29.1 sen is unlikely to be adjusted significantly. At Genting Malaysia's current price of RM3.80, this places it on an FY12 PER of 13.1x with EPS growth of 15%. (Hon Sze)

Genting: FY11 results

Genting Bhd recorded a net profit of RM772.91m for 4QFY11 ended 31 Dec, up 66% y-o-y. Its group revenue rose nearly 24% y-o-y to RM5.06bn. This was due in part to a reversal of a RM308.6m previously recognized impairment loss which relates to the UK casino licenses. For FY11, Genting saw its profit improve by 30% to RM2.9bn, driven by revenue that improved 29% y-o-y to RM19.6bn. (Financial Daily)

Comments: If we exclude a reversal of impairment loss on its UK casinos which added 4% to Genting's PBT, its FY11 EPS of 77.5 sen was in line with consensus estimate of 74.6 sen. Underlying FY11 EBITDA growth (adjusted for exceptional items) was 14% y-o-y. The bulk of Genting's earnings come from Singapore and Malaysia gaming as can be seen from its EBITDA composition: Singapore gaming (50%), Malaysia gaming (33%), Power (8%), Plantations (8%). The 14% EBITDA growth was driven by Singapore gaming (+19%), Plantations (+37%) and Power (+16%). Malaysia gaming EBITDA grew 7%. Considering that FY11 results were within market expectations, consensus EPS forecast for FY12 of 81.4 sen is unlikely to be adjusted significantly. At Genting's current price of RM10.54, this places it on an FY12 PER of 12.9x with EPS growth of 9%. (Hon Sze)

UEM Land Holdings (4QFY11 Results): Beats consensus

Maintain HOLD, TP: RM2.25

UEM Land (UEML) delivered FY11 results which were above consensus estimates. FY11 revenue and net profit came in at RM1.7bn (+263% y-o-y) and RM301.7m (+55% y-o-y), respectively. This was mainly on contribution from the Group’s property developments in Mont’Kiara, as well as Southern Industrial and Logistics Clusters (SiLC) and East Ledang, in Nusajaya. There were no dividends recommended for the year. The Group also announced its headline KPIs for 2012 which includes (i) revenue growth of 50%, (ii) net profit growth of 40%, and (iii) ROE of 10%. Maintain our earnings forecasts and HOLD call with RNAV-based target price of RM2.25.

ECM Newz Bits 29 February 2012

Highlights of the day
§         UEM Land Holdings (4QFY11 Results): Beats consensus (Maintain HOLD, TP: RM2.25) 

Other Malaysian news
§         Genting: FY11 results
§         Genting Malaysia: FY11 results
§         Genting: Enters banking sector
§         Axiata: Extends collaboration with Huawei, Celcom to check drop
§         TNB: To perform better in 2Q with RM2bn compensation
§         RHB Capital: To wrap up OSK, Bank Mestika acquisitions
§         Oriental Holdings: No plans for privatisation
§         LPI Capital: Eyes 10% premium rise
§         WellCall: Keen to grow oil and gas operations
§         Emkay Group:  Development of Cyberjaya enters phase 3
§         TSM Global: Gets buyout offer from two directors
§         PJI: Secures two contracts worth RM32m
§         Automotive: Perodua wants banks to be ‘considerate’ in new guidelines
§         Power: EC wants IPP to reduce capacity payments
§         Power: Indonesia, Malaysia to begin power trade in 2014
§         Oil & Gas: Upswing likely for industry output in 5 years, Idris Jala

Global news
§         US: Home prices in 20 cities decline 4%, more than forecast
§         US: Durable goods orders slump 4%, most in three years
§         Europe: Euro-area economic confidence rises more than forecast
§         Europe: Ireland to hold referendum on Europe’s fiscal treaty
§         China: Shanghai raises minimum wage 13% as China seeks to boost demand
§         Japan: Retail sales exceed forecasts as economy set to grow
§         South Korea: Industrial output falls 2% from year earlier

Click here for the full PDF report.

Tuesday, 28 February 2012

CIMB Trader PM February 28, 2012

CIMB squawk box
  • Petronas Chemical Group (PCHEM MK, RM6.79)
  • Hong Leong Bank (HLBK MK, RM11.84)
  • Genting Plantations (GENP MK, RM9.23)
  • JT International (RJR MK, RM6.96)
  • Carlsberg Brewery (CAB MK, RM9.79)
Big picture
Asian markets: Asian markets were mixed this morning on the back of better than expected
housing data in the US. As of writing, the MSCI Asia Pacific Index lost 0.1% to 127.99. The
Japanese Nikkei 225 saw profit taking this morning. It was trading at 9,536.11, down 1.02%.
Korea’s KOSPI rebounded a tad after its sharp fall yesterday, edged 0.21% higher to 1,995.33.
Hong Kong’s Hang Seng Index rebounded 0.54% to 21,333.02. ASEAN markets were marginally
higher with Singapore’s FSSTI being 0.10% higher to 2,949.63 while across the border, Malaysia’s
FBMKLCI was flat at 1,559.49.

Click here for the full PDF report.

Tricubes nine-month net loss widen to RM2.95m

Tricubes Bhd, the enabler of the 1Malaysia email account, saw its nine-month net loss widen to RM2.95m as at Dec 31, 2011 from RM0.26m in 2010. Tricubes said the 1Malaysia email project and the appointment by Royal Malaysian Police as the collection agent of traffic summonses via automated teller machines and enquiry about summonses via SMS are expected to have a positive impact on the results in 2012 and subsequent years. (Bernama)

Kimlun has been awarded a RM72m contract

Kimlun has been awarded a RM72m contract for the construction of an extension building and alteration of existing building of a shopping mall in Johor Baru. The construction work is expected to be completed by end November 2012. (Malaysian Reserve)

Petronas has resigned from Indonesia’s East Natuna gas project

Petronas has resigned from a consortium exploring Indonesia’s East Natuna gas project, Asia’s biggest untapped gas reserve, Indonesia’s state oil and gas company Pertamina said yesterday. “We received confirmation from our upstream director Muhammad Husen that Petronas has backed down as our partner in East Natuna,” Pertamina spokeswoman Wianda Pusponegoro said yesterday. In Dec-2010, Pertamina signed agreements with Exxon Mobil, Total and Petronas as partners to develop the Natuna gas field. (Reuters)

IGB Corp Bhd is said to be milling REIT

IGB Corp Bhd is said to be milling a hotel real estate investment trust (REIT) to unlock the value of its hospitality assets in the country and overseas. IGB owns a stable of business class as well as upmarket hotel assets and has been streamlining the assets parked under its hospitality division. According to its website, it has 16 hotel assets under its hospitality division. (StarBiz)

Carlsberg to brew Kronenbourg in Malaysia

Carlsberg Brewery is planning to brew another one of its premium beers in Malaysia this year in order to capture more market share. "Within the next three to six months, we will start production of Kronenbourg [1664] and [Kronenbourg] Blanc here. So we get one more brand in our premium portfolio produced here," managing director Soren Ravn said. The company's target is for its premium beer brands to have a 20% market share in the premium beer segment in 2012, up from 16% in 2011, he said. (Financial Daily)

Carlsberg faced with costlier raw materials

Carlsberg Brewery Malaysia, faced with costlier raw materials like malt and aluminium packaging, is mulling price hikes in its beer range as early as the next quarter. "The rising input cost of products particularly malt - the key ingredient in brewing beer - is 20% higher this year. Last year, the cost of aluminium cans had also increased 27% from 2010 while electricity and natural gas tariffs also went up in mid-2011," said Carlsberg managing director Soren Ravn. (BT)

Muhibbah Engineering filed a suit against APH and ZAQ

Muhibbah Engineering, one of the contractors for the RM1.4bn APH project has filed a suit against APH Sdn Bhd, and the managing contractor, ZAQ Sdn Bhd, for overdue claims amounting to RM381m. (BMSB, Financial Daily)

Tan Chong expects its Vietnam unit to gain momentum

Tan Chong expects its Vietnam unit to gain momentum with the commencement of its manufacturing plant in Danang by the middle of this year. The RM51.15m Danang plant manufactures, assembles and sells buses, trucks and passenger vehicles and provides after-sales service. The plant is targeted to produce 1,200 units of trucks annually and will gradually increase its production volume to 12,000 units a year for the next five years. (Malaysian Reserve)

MAHB January passenger volume grew

Malaysia Airports Holdings (MAHB) said yesterday that the January passenger volume at its airports grew 11% compared to January last year. International passenger movement increased by 8% while domestic passenger movement was up 13.9%. Apart from economic and political fundamentals, growth was also partly driven by Chinese New Year festive season. A number of foreign airlines, including Lion Air, increased their frequencies at the airports. (Bernama)

SPV for FGV listing entirely owned by Felda settlers

The special purpose vehicle (SPV), that is being created to push through the listing of Felda Global Venture Holdings Bhd (FGV), will take the form of an investment holding company (IHC) that will be entirely owned by Felda settlers. Settlers will be offered units in the IHC, similar to Amanah Saham Nasional unit trust. However, the advisor working on the structure have yet to finalise how IHC would pay for the FGV shares. (StarBiz)

IOI Corp will build a refinery in Indonesia

IOI Corp will build a refinery in Indonesia once it generates enough feedstock from its plantations in Borneo island in the next three years, a top official said yesterday. Foreign firms have been scrambling to set up processors in the world's top producer of the tropical oil to tap higher margins after Jakarta last year slashed export taxes of the refined grade to half of that of the crude variety.
  • IOI Corp's group executive director Lee Yeow Chor, said the firm's two Indonesian units will plant 25,000ha annually over the next three years - an ambitious target given it has planted 2,200ha in the financial year ended June 2011. "We are building up our planted Indonesian hectarage and in about three years time, we will have sufficient volume for a refinery," Lee said in an interview ahead of the Bursa Malaysia Palm Oil Conference next week. (BT)

TNB pursue further investment opportunities in the energy sector in Pakistan

Tenaga Nasional Bhd (TNB) is keen to pursue further investment opportunities in the energy sector in Pakistan. However, CEO Datuk Seri Che Khalib Mohd Noh wants the Pakistani authorities to relook the terms of its current power purchase agreement (PPA) in Sindh. "We're trying to overcome some small challenges (in the PPA), which we will overcome soon, and turn to a new chapter," he said at a media briefing after the Malaysia-Pakistan Business Council meeting here yesterday. TNB, through TNB Liberty Power Ltd, operates a 235MW combined-cycle natural gas power plant. It invested US$300m (RM906m) in the 21-year Liberty Power Plant project, launched in 2002. (BT)

MARC revised DRB-HICOM's sukuk rating on IMTN to Negative

Malaysia Rating Corporation (MARC) has revised DRB-HICOM's sukuk rating on its RM1.8b Islamic Medium Term Notes (IMTN) programme from stable to negative. The outlook recognises the potential weakening of DRB-Hicom's near-to-intermediate term financial profile, caused by its debt-funded acquisition of Proton Holdings. The rating agency said, "a key rating issue for DRB-Hicom in the context of the Proton acquisition is the more challenging debt maturity profile that would result from the acquisition-related interim-financing decisions and the execution risk associated with plans to deleverage post-acquisition." (Starbiz)

CIMB Political News February 28, 2012

Datuk Seri Najib Razak today pledged to give more freedom to the Malaysian Anti-Corruption Commission (MACC) in the appointment of its officers if Barisan Nasional (BN) wins two-thirds control of Parliament in the next general election.
  • “I agree with the view of the MACC advisory panel, that an anti-corruption service commission be formed. This commission will be given the power to appoint and terminate MACC officers,” the prime minister said.
  • “But this needs amendments to the Federal Constitution; insyaAllah (God willing), if Barisan Nasional is given a two-thirds mandate in the 13th general election, constitutional amendments will be made and this commission will be formed.
  • He said there was also a proposal to elevate the status of the MACC chief commissioner to a standing equal to the Attorney-General or Auditor-General. The prime minister later announced that 150 positions would be created within the MACC every year to increase its manpower to 5,000 people. (Malaysian Insider)

The Malaysian Anti-Corruption Commission’s (MACC) chief commissioner will have full access to information on assets owned by all members of the federal administration, the prime minister said today.
Datuk Seri Najib Razak said all current ministers and deputy ministers had personally declared their assets to him via statutory declarations (SD).
  •  “I agreed with the recommendation made by the advisory panel of the MACC that the chief commissioner be granted full access to documents on assets of any member of the administration,” he said.
  • “I would like to explain that the Barisan Nasional government has practised the process of declaring assets earlier than anyone else. “Every member of the administration is required to declare his/her as well as [the] family’s assets to the prime minister,” added Najib. (Malaysian Insider) 

The government will introduce an initiative, as part of its transformation programme, to control political funding and check misappropriation of funds. PM Datuk Seri Najib Razak said this initiative, based on a recommendation by the MACC's Corruption Prevention Advisory Board, would stress that monies donated to political parties, be it at the national or state levels, be deposited in the party's official account. This would prevent party members from soliciting and misusing funds under their party banner, he said. (NST)

Umno Youth chief Khairy Jamaluddin will be appointed as the new chairman of the Perbadanan Usahawan Nasional Bhd (PUNB), an entity entrusted to develop Bumiputera entrepreneurs in strategic and high potential businesses. Although it is not immediately known when the Rembau Member of arliament will begin his tenure at PUNB, a source told BT it is expected to be soon. Khairy is expected to take over from Tan Sri Mohd Abu Bakar Mohd Noor who has held the position since 1998. PUNB provides a range of loans for prospective Bumiputera businessmen under various schemes such as Pemborong Prosper, Prosper Runcit and Prosper Siswazah and also networking platforms for its borrowers. (BT)

CIMB Malaysian Economic News February 28, 2012

Bank Negara Malaysia will keep interest rates “accommodative” as the outlook for the global economy remains uncertain, Governor Tan Sri Dr Zeti Akhtar Aziz said. “Given the external environment is a difficult environment, we will keep the interest rates at an accommodative stance and it is just an issue of degree of accommodation,” Zeti said yesterday.
  • “Right now, our interest rate level, we say, is accommodative. Certainly at 3%, it wasn’t an inhibiting factor for increasing loan growth,” she said.
  • “We can say with a high degree of confidence that domestic demand is on a solid and steady growth path. But in the external environment, we are seeing of course our export performance being affected by the slowing in demand in the US and in Europe and other parts of the world. We are not going to be immune to these kinds of developments,” she added. (BT)

The government will introduce another initiative under the government transformation programme (GTP) to curb political financing as a proactive measure to enhance transparency and public confidence in political organisations in the country, said PM Datuk Seri Najib Tun Razak. The initiative would emphasise that any contribution made to any political party whether at the central or state level must be channeled through the official party account, he said.
  • Every contribution made must be issued with a receipt and deposited into the party account. Through a proper receipt account, this contribution could be audited at the end of each financial year, he said.
  • 'Political Financing' is one of the suggestions made by the Anti-Corruption Committee and Anti-Corruption Advisory Board of the Malaysian Anti-Corruption Commission (MACC).
  • Meanwhile, the government planned to display the draft of every bill on the website of the ministry concerned to ensure that every bill in the country was transparent and took into consideration the views of every one before it was enforced, he added. (Bernama)

PM Datuk Seri Najib Razak agreed to have 150 posts created annually until there were 5,000 officers working for the Malaysian Anti-Corruption Commission (MACC), in view of the shortage of manpower following its expanded responsibilities. As of Jul 2011, MACC had 1,805 officers, a number that PM described as worrying.
  • He agreed with the MACC’s Corruption Prevention Advisory Board that an anti-corruption workforce commission, similar to the ones found in the police force and education department, be set up to appoint and sack officers.
  • With such a body, MACC could vet, select, interview and give marching orders, he said. Now, the Public Service Commission decides on such matters. (NST)

On the move to require members of the administration to declare their assets, PM Datuk Seri Najib Tun Razak said the government welcomed the suggestion by the MACC Advisory Board and agreed that the MACC Chief Commissioner be given full access to asset declaration documents by any member of the administration.
  • Every member of the administration is required to declare their assets as well as those of their closest family members to the Prime Minister. Any addition or disposal of their asset must also be declared.
  • In addition, all the asset declarations are made in the form of statutory declaration, he said. (Bernama)

The country's oil and gas sector will need over 40,000 skilled workers by 2015, Human Resources Minister Datuk Dr S. Subramaniam said. Other sectors in need of more skilled manpower are the electronic and hospitality industries, he said, adding that the hospitality industry particularly lacked people with good command of English. (Bernama)

The Domestic Trade, Cooperatives and Consumerism Ministry's price standardisation project is poised to reach 1,022 areas nationwide this year, its secretary-general Datuk Saripuddin Kasim said. Of the total, 624 will be the extension of existing areas while 398 will be new areas. "With the expansions of the project's area of coverage, more people in the rural areas will get to enjoy subsidised goods at the same price as those in urban areas," he said.
  • Sarawak has the highest number of areas covered under the project, at 485, followed by Sabah, at 460, owing to the size of both states. In peninsula, the states covered under the project are Kedah, Kelantan, Perak, Pahang and Terengganu.
  • He added that the government allocated RM200m each year to bear the cost of transporting subsidised these items to the interior. (Bernama)

Business licence compliance costs in Malaysia will be reduced by more than half by Jun 2012 following a joint review by the government and private sector. Chief Secretary to the Government Tan Sri Mohd Sidek Hassan, who is co-chairman of the Special Task Force to Facilitate Business (Pemudah), said 395 of 761 business licences will be eliminated or simplified.
  • This whole initiative will result in an estimated reduction of RM729m in business licence compliance cost when this exercise is completed in Jun 2012, he said.
  • The proposed liberalisation of 17 sub-sectors under the services sector would be undertaken in stages in 2012. A priority list of these sectors for equity liberalisation has been drawn up. (BT)
The government is to implement the build-and-sell concept by 2015 to stem the abandoning of housing projects, according to the 2012 annual report of the Special Task Force to Facilitate Business (Pemudah), which was issued yesterday. The concept would be implemented through the financing of houses based on Syariah to buyers. The government also imposed tighter laws through an amendment to the Housing Development Act (Control and Licensing) 1966 (Act 118), it said. (Bernama)

The influx of illegal foreign workers is expected to continue as barely 18.95% here were legalized during the 6P amnesty programme which was supposed to have ended on Feb 15. Because of the poor turnout, the Home Ministry has decided to extend the deadline to Apr 10 as the authorities managed to legalise only 379,000 immigrants, including 94,856 who chose to return home. (NST)

Malaysia’s sovereign credit rating can move up if the country undertakes structural reforms to rebalance her economy so that private investments play a larger role as a source of growth, says Moody’s credit rating agency. Moody’s said greater private investment would support favourable long-term growth prospects; and an improved fiscal framework which improves the government’s debt dynamics, would also be credit positive. (Malaysia Reserve)

BNM Governor Tan Sri Zeti Akhtar Aziz said yesterday the timing is not right to internationalise the ringgit, given the volatility resulting from the European sovereign debt crisis. Zeti said the ringgit will only be internationalized when external conditions stabilize and suitable domestic pre-conditions are in place. She added that the central bank wants to first ensure that the local foreign exchange market is more developed with an increase in volume of activity as well as having a bigger range of products and services. “Until then, we don’t want a situation that when we internationalise our currency and the foreign exchange market migrates to other countries. This will increase our vulnerability.” (Edge Financial Daily)

Source: CIMB Daybreak February 28, 2012