Thursday, 31 January 2013

Aeon Credit targeting 50,000 new cardholders

Aeon Credit Service expects to sign up to 50,000 cardholders for its new Aeon-Watami Visa Classic credit card over the next few years. The card was launched in partnership with the Chasewood Group, which is the sole franchisee of Watami chain of restaurants in Malaysia. "We expect 40,000 to 50,000 people to sign up for the Aeon-Watami Visa Classic credit card within three to five years," said Aeon Credit executive director S. Krishnappan at the launch. (BT)

APM Automotive ties up with Taichi-S

APM Automotive is tying up with Taichi-S (Thailand) to make and sell car seats for original equipment manufacturers in Malaysia. Its unit, Auto Parts Holdings, would hold a 60% stake in the JV. Taichi-S is a unit of Japan's Taichi-S Co, a global automotive seat system designer and manufacturer. (Star Biz)

Naza Kia plans to grow its revenue 25% to RM1.5bn

Naza Kia Malaysia plans to grow its revenue 25% to RM1.5bn this year, helped by strong consumer sentiments as well as its new models. The company, which also hopes to boost sales by 22% to 15,000 units this year, is allocating a capex of RM60m to revitalise its sales network as well as to upgrade its plant. The company, which sold more than 12,000 units of Naza Kia vehicles last year, launched its all-new Rio. The company hopes that its new car will register a sales of 200 units a month. (BT)

Favelle Favco received RM76m in orders.

Favelle Favco has received orders of tower and offshore cranes amounting to RM76m. The contracts were received by its subsidiaries Favelle Favco Cranes Pte Ltd, Favelle Favco Cranes Pty Ltd and Favelle Favco Cranes (M) Sdn Bhd. The crane orders are to be delivered through to mid-2014 to clients within Asia. (BT)

UEM Land keen to attract more Chinese investors to Nusajaya.

UEM Land is keen on attracting more Chinese investors to Nusajaya following its success in getting a Chinese company to come in last December. Seven years since its inception, more and more investors from China were realising the good growth prospects offered by Iskandar Malaysia, said senior GM Mohd Nadzari Bachek. He said the company would look at ways to address the needs of Chinese investors, including those who had a penchant for large tracts of lands. (Star Biz)

MAS Aerospace Engineering to partner SR Technics

Talk has it that MAS Aerospace Engineering is partnering SR Technics to set up a component repair facility in Shah Alam. MAE had sent out a request for proposal for a similar facility to be set up in the country, given the growing demand for airline component repair works. However, MAE had yet to make a decision and was still evaluating the proposals. (Star Biz)

Fajar Baru secures RM289m contract to extend LRT line.

Fajarbaru Builder Group Bhd has secured a RM289.44m construction project to extend the Ampang light rail transit line. The construction period is scheduled for 27.5 months from the date for possession of the site. "The said contract is expected to contribute positively to the earnings and net assets of Fajarbaru Builder Group for the financial years ending June 30, 2012 to June 30, 2015," the company said. (Malaysian Reserve)

Flight cutbacks from India see fewer tourists coming to M'sia

Malaysia is losing a significant number of Indian tourists every year due to a lack of flight connectivity , especially in northern India. Tourism Malaysia director general Datuk Mirza Mohammad Taiyab said airlines from Malaysia, currently focusing more on routes to southern India, need to enhance its connectivity to other parts of the 1.2bn populated nation. "There was a cutback in flights when AirAsia pulled out flights in North India. That is affecting the tourist inflow," he said. (Malaysian Reserve)

Allianz Focuses On Retirement Planning

Allianz Life Insurance Malaysia said retirement planning will be among the company's main focus areas this year. Its CEO, Jens Reisch, said the insurance sector must be prepared with retirement schemes as people were living longer and Asia was ageing rapidly. "Currently, there is insufficient financial education and lack of awareness in this area," he said. (BT, Bernama)

Affin Fund Mgnt aims to be among top 10 investment firms

Affin Fund Management (AFM), one of the smaller asset management firms in the country, plans to be among the top 10 firms within "the next year or so", its top official said. AFM moved up six spots to rank as the 13th largest player out of 40 by the end of last year with assets under management (AUM) of RM1.93bn, according to CEO Datuk Mohamad Ayob Abu Hassan.
  • "This means that we are only about three ranks away from the top 10 spots. Hopefully, we'll be able to achieve this target within the next year or so. By the end of this year, we hope to surpass our RM3bn target," he said. Surpassing the RM3bn mark is an "achievable" feat, he said, pointing out that the three new funds would add on up to RM1.5bn to the existing AUM of RM1.93bn. (BT)

CIMB Investment Bank tops MARC managers' league

CIMB Investment Bank clinched the top spot on the MARC 2012 Lead Managers' League Tables based on issue value and count. The investment bank was the lead manager for five MARC-rated sukuk/bond issues amounting to RM11.08bn. In 2012, MARC rated a total of 19 corporate debt issuances worth RM37.49bn, compared with 37 issuances worth RM26.55bn in 2011. (Bernama) 

MRT Corp awards 44 packages worth RM19.5m to Bumiputera contractors

A total of 44 work packages for the KVMRT project worth RM19.5m were awarded to Classes G1, G2 and G3 Bumiputera contractors. MRT Corp CEO Datuk Azhar Abdul Hamid said the contracts were part of the government's target of achieving 43% participation by Bumiputera contractors. MRT Corp has allocated 250 work packages worth RM200m for Bumiputera contractors. MRT Corp will hold a ballot every quarter to award contracts for MRT SBK line. Construction of the 51km MRT SBK line, now in full swing, is expected to be completed in 2016 and commence operations in January 2017. (BT)

Mudajaya is currently bidding for RM5bn projects.

Mudajaya is currently bidding for over RM5bn projects, largely in power and infrastructure sectors locally, group MD/CEO Anto Joseph said. "The bids are all in various stages. Being one of the larger contractors in Malaysia, we are in the position to secure some contracts," he said. Last October, Mudajaya - in a consortium comprising Alstom and Japan's Sumitomo - submitted its pre-qualification tender for the 1,300 MW gas-fired power plant fro Rapid in Johor. The EPCC contract could be worth US$1.95 billion (RM5.9bn). The group will also consider tendering for key packages of the West Coast Expressway project. (BT)

India may raise import duties on edible oils.

India may raise import duties on edible oils such as palm oil and soyoil again this year, with the government looking to protect domestic oilseed farmers as inflation slows, leading industry analyst Dorab Mistry said. India this month hiked import duties on crude imports to 2.5% from zero and lifted a six-year freeze on the taxable value of cargoes to curb cheap imports from top palm suppliers Indonesia and Malaysia. "I expect the next step to be announced in the budget at the end of February... The industry has requested import duty at 10% on unrefined oils and 17.5% on refined oils and I believe we shall get that level by end of March 2013 at the latest," he said. (sun)

CIMB Political News - 31 January 2013

Selangor will consider dissolving the state legislative assembly after Chinese New Year if the Putrajaya does not specify by then when it will hold the general election, Mentri Besar Tan Sri Abdul Khalid Ibrahim said. “If the federal government do not show any indications as to when they will dissolve Parliament, the state government plans to discuss with Pakatan Rakyat’s top leadership to dissolve the state assembly earlier - that is after Chap Goh Meh,” Abdul Khalid told reporters after chairing the state’s executive council meeting. 
  • Parliament will automatically dissolve on April 28 and elections must be held 60 days from then.Observers speculate that Prime Minister Datuk Seri Najib Razak is likely to hold elections by March after Putrajaya completes its 1 Malaysia People’s Aid (BR1M) handout, a programme Barisan Nasional leaders believe will help to boost the ruling coalition’s chances at the polls.
  • The Selangor mentri besar had previously said that the timing of the dissolution depends on when the prime minister plans to hold polls and that its plan of whether to hold a separate state election from parliamentary elections or simultaneously was a state government strategy. (themalaysianinsider) 

The Election Commission (EC) conceded that it is impossible to clean fully the electoral roll, despite calls for a clean-up before the next elections. EC chairman Tan Sri Abdul Aziz Mohd Yusof claimed that no country could ever clean their electoral roll 100%, because of deaths, relocations and citizenships being revoked. “We have tried our best to clean our electoral roll within the law,” Tan Sri Abdul Aziz said, “If I clean my roll now, tomorrow somebody (might) die. It will be dirty again.”
  • The EC chairman was commenting on the possibility of opposition parties boycotting the 13th general election if the electoral roll is not cleaned up before Malaysians go to the polls. (themalaysianinsider)

The Selangor Pakatan Rakyat (PR) government will proceed to take over the state’s water concession within 14 days, Mentri Besar Tan Sri Abdul Khalid Ibrahim said. “We have written to the Energy, Green Technology and Water Minister Datuk Seri Peter Chin Kah Fui to notify him that we will take over the state’s water services from the concessionaires within 14 days,” Khalid told reporters after chairing the state’s executive council meeting.
  • “We are holding on to the word of Deputy Prime Minister Tan Sri Muhyiddin Yassin, who is the chairman of the Cabinet Committee on Water, in Sabak Bernam recently that the federal government will not stop the Selangor government from taking over the state’s water services,” added the PKR leader. Muhyiddin had reportedly stated as such four days ago when he reiterated that the Langat 2 water treatment plant project will commence despite Selangor’s opposition. (themalaysianinsider)

Malaysia's press freedom takes a hit as the country drops a shocking 23 places to 145th out of 179 countries in the Reporters Without Borders' Press Freedom Index 2013. The result of the yearly report is Malaysia's worst ever showing in the index by the global watchdog on media freedom. "Malaysia has fallen to its lowest-ever position because access to information is becoming more and more limited," the report stated. It compared Malaysia to Cambodia, which faced what the report terms "authoritarianism and censorship on increase". (The Sun Daily)

CIMB Malaysian Economic News - 31 January 2013

The Cabinet has agreed to reinstate a 1992 ruling putting the burden of levy on foreign workers instead of their employers. The decision is to be enforced with immediate effect on new foreign workers and those wishing to renew their work pass, employment pass, or temporary work visit pass.
  • The move is to reduce the hiring cost for employers, said Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah.
  • The levy paid is between RM34.16 and RM154.16 per month, he said. (The Star) 

A total of 44 work packages, worth RM19.5m, were awarded yesterday to Class G1, G2, G3 Bumiputera contractors for the Klang Valley Mass Rapid Transit (MRT) project. MRT Corp Sdn Bhd CEO Datuk Azhar Abdul Hamid said the contracts were part of the government's target of achieving 43% participation by Bumiputera contractors in the nation's largest infrastructure project.
  • This balloting was the second to be held involving 541 applicants.
  • The first balloting was held at the end of last year where nine contractors were awarded RM7.5m worth of contracts.
  • MRT Corp has allocated 250 work packages, worth RM200m, specially for Bumiputera contractors.  
  • "We expect most of the contracts to be awarded this year and the rest, latest, by the beginning of next year," he said. (Bernama) 

The retail sukuk issued to fund the construction of the Sungai Buloh-Kajang mass rapid transit (SBK Line) has been oversubscribed by 0.61 times, giving a small boost to the funding needs of the project. The oversubscription represents RM484.3m in value from a total of 1,424 applications for the RM300m retail sukuk offering, according to a statement from Malaysian Issuing House on behalf of DanaInfra yesterday.
  • Another RM1.3bn portion of this sukuk tranche is being issued to institutional over-the-counter trading for 10-year papers and the book building for that should be finalised by today.
  • This means that, in total, DanaInfra is raising RM1.5bn for the SBK Line year-to-date. (Starbiz) 

PM Datuk Seri Najib Tun Razak last night unveiled the next landmark in the federal capital when he launched the first Four Seasons Place in Southeast Asia. The RM2.5bn project was a significant development and one which would bring real benefits to the economy in the form of jobs and opportunities in construction and commerce.
  • He said the launch of the Four Seasons Place project was in line with last year's third quarter trend, which saw the services sector grow by 7% and construction sector by 18.3%.
  • It is expected to be completed in four years. (NST) 

The Cabinet approved the Education Blueprint 2013-2025 yesterday, said DPM Tan Sri Muhyiddin Yassin. The Education Blueprint would now be presented to the Conference of Rulers for its consent for implementation next year, he added. (NST)

PM Datuk Seri Najib Tun Razak said there are already signs that the Economic Transformation Programme (ETP) is yielding strong results while the country remains an attractive investment destination. Investors flocked to the local stock exchange, tempted by a succession of public offerings last year, he said.
  • The transformation programme involved businesses and investors from the very beginning, helping to identify areas of economy to be prioritised and the reforms needed to improve competitiveness.
  • He said the policy package, accompanied by government and political transformation programmes, will open up Malaysia politically and economically. (Bernama) 

CIMB Global Economic News - 31 January 2013

US GDP contracted 0.1% qoq in 4Q12 (+3.1% in 3Q12), worse than consensus of +1.0%. (Bloomberg)

US Federal Reserve maintained its lax monetary policy with the purchase of securities at the rate of US$85bn a month, whilst keeping its pledge to hold its target interest rate near zero for as long as unemployment remains above 6.5% and inflation remains no more than 2.5%. (Bloomberg)

The US MBA mortgage applications index fell 2.0% wow in the 25 Jan week (+3.0% in the earlier week), whilst the refinance index lost 10.0% wow (+8.0% in the earlier week). (Bloomberg)

The US ADP employment report showed that an estimated 192,000 jobs were added onto private payrolls in Jan versus the revised 185,000 for Dec. This came in above consensus of 172,000. (Bloomberg)

Eurozone banks expect to tighten their lending rules in the coming months even as their own access to funding has improved, the European Central Bank (ECB) said on Wednesday. In its latest quarterly Bank Lending Survey, which quizzed a sample of 131 banks in the euro area, the ECB said a net 15% of respondents had said they expected to tighten the criteria that businesses must meet to take out loans in the first quarter of the year. A net 13% of banks had already tightened their credit standards in the fourth quarter, the survey showed. (Starbiz)

South Korea's current account surplus rose to a record US$43.2bn in 2012 on growing overseas construction orders and exports that remained relatively solid despite a global slowdown. This smashes the previous record of US$32.7bn set in 2009. (AFP)

South Korea’s industrial production rose a seasonally adjusted 1.0% mom in Dec (a revised 2.6% in Nov), the fourth consecutive monthly rise. (AFP)

Thailand's finance minister, Kittirat Na Ranong said he wanted to see more stability in the baht, which has risen strongly this year, and would be talking to the central bank about possible measures, but he ruled out capital controls. He said that Prime Minister Yingluck Shinawatra had instructed him to speak to the Bank of Thailand and its monetary policy committee as well as outside economists to examine the issue. (Starbiz)

Indonesia' trade minister estimated the country's 2012 trade deficit probably the first in the country's history at US$2bn. The country has faced a difficult global market for the vast array of natural resources on which it depends heavily. At the same time, imports have been pushed up by growing fuel consumption and purchases of machinery as the country tries to industrialise. (Starbiz)

Indonesia will guard its foreign-debt costs for the first time against exchange-rate fluctuations as the rupiah extends a six-quarter slide versus the dollar. The Finance Ministry will start hedging interest payments on foreign-currency liabilities against exchange-rate volatility this year to prevent the budget deficit from widening beyond estimates, Bambang Brodjonegoro, head of fiscal policy said. The government is studying which instruments to use for the purpose, he said, adding current rules allow such transactions to be undertaken only in 2013. (Bloomberg)

The Indonesian central bank has asked some of its departments to look into reports of manipulation in Singapore's offshore currency market but has not decided whether to join in any efforts with its Singaporean counterpart on the matter, a source close to the issue said yesterday. Internal reviews by banks in Singapore have found evidence that traders colluded to manipulate rates in the offshore foreign exchange market, including for Indonesia's rupiah, it was reported on Monday. (BT)

Felda Global Ventures - FGV trades in Tradewinds (M)

Target RM2.60 (Long Term: Neutral)

We are, overall, neutral on FGV's decision to accept the RM9.30/share cash offer for its 20% stake in Tradewinds (M) as the strong return on this investment is offset by earnings dilution of around 3% following the sale.

Malaysian Pacific Industries - Muted quarter ahead

Target RM2.60 (Long Term: Neutral)

During MPI's 2QFY6/13 analyst briefing, management guided for a flat qoq performance in 3Q13 as overall weakness in the sector continues to plague order visibility. This is a negative surprise as it had earlier guided for a stronger rebound in 2H13. It expects a rebound in 4QFY13 to propel MPI back into profits in FY13. Maintain Neutral rating given its low valuations (0.7x FY13 P/BV) and lack of re-rating catalysts. We cut our FY13-15 earnings forecasts by 40-65% as we adjust for lower capex, revenue growth and EBITDA margin assumptions. This reduces our target price, which is based on an unchanged 0.8x FY13 P/BV, 2 s.d. below its 5-year historical average.

IGB REIT - 1st fruits from this Gardens

Target RM1.50 (Long Term: Out Perform)

IGB REIT's post-listing FY12 net profit of RM53m, when annualised, made up 104.6% and 101.8% of our and consensus forecasts, which was slightly above expectations due to higher-than-expected rental rates achieved compared to our forecast. We keep our Outperform rating and DDM-based target price. Re-rating catalysts are likely to come from higher-than-expected rental reversions for 53% of The Gardens Mall's NLA next year, along with potential tenant re-mixing at Mid Valley Megamall, triggered by the potential exit of Carrefour (AEON BIG).

Water Treatment & Services - No ripples for a play on water

Long Term: Neutral

2013, an election year, will be a more challenging period for the progress of water assets restructuring in Selangor. Takeover moves on water assets will be muted, while the construction of the Langat 2 water treatment plant (WTP) provides little excitement at this time. We retain our Neutral call on the water sector as politics, the sector’s major risk, could intensify in the run-up to the polls. Ideally, we would prefer a play on Puncak Niaga given its attractive valuations, but we advocate investors to stay on the sidelines as there is unlikely to be progress on the takeover anytime soon. 

CIMB Daybreak - 31 January 2013

What’s on the Table...
  • Water Treatment & Services - No ripples for a play on water
  • IGB REIT - 1st fruits from this Gardens
  • Malaysian Pacific Industries - Muted quarter ahead
  • Felda Global Ventures - FGV trades in Tradewinds (M)
News of the Day...
  • Selangor considers dissolving legislative assembly after Chinese New Year.
  • India may raise import duties on edible oils.
  • Mudajaya is currently bidding for RM5bn projects.
  • UEM Land keen to attract more Chinese investors to Nusajaya.
  • Favelle Favco received RM76m in orders.
  • Fajar Baru secures RM289m contract to extend LRT line.
  • MAS Aerospace Engineering to partner SR Technics.
  • APM Automotive ties up with Taichi-S.

Click here for the full PDF report

Wednesday, 30 January 2013

An audacious growers scheme

Golden Agro Plantation Bhd CEO Datuk Allan Lim Kim Huat has introduced a growers scheme (GAGS), offering retail investors direct exposure to the palm oil sector amidst controversy over another similar investment scheme that was terminated after its was launched five years ago by Tan Sri Lee Kim Yew. GAGS covers 12,587 acres of oil palm in Mukah Sarawak and involves selling to investors quarter acre plots at a price of RM8,000 per plot with a maturity of 20 years. GAGS promises a return of 35% for the first five years or a guaranteed return of 7% per annum and then subsequently 100% of the net profit of the plantation until the maturity of the scheme. (Financial Daily)

Construction jobs for Harrods Hotel in KL awarded in H2 this year

The construction contracts for the Harrods Hotel here are expected to be awarded in the 3Q-4Q13. Estimated cost for hotel and the integrated development is expected to be RM2bn. In July-2012, StarBiz reported Malaysia could be home to the world's first Harrods Hotel under a collaboration between Qatar Holding LLC and Jerantas Sdn Bhd. The project, located on a 5.48-acre land between Jalan Raja Chulan and Jalan Conlay, would be one of the world's first three Harrods Hotel chain to be built. The other two on the drawing board would be in London and Italy. (Starbiz)