Wednesday, 31 July 2013

Tiong Nam Logistics buys back assets from SPV

Tiong Nam Logistics Holdings Bhd is repurchasing its assets disposed to a special purpose vehicle under a sale and lease back arrangement in 2006 for RM176.3m. Tiong Nam will take up borrowings of RM125m to fund the transaction. The company said the assets are instrumental in its total logistics business. (Financial Daily)

Source: CIMB Daybreak - 31 July 2013

I-Bhd expects revenue from leisure business to double

I-Bhd, the developer of the i-city township, expects revenue from its leisure business to double next year from RM32m last year. Information manager Tan Soke Cheng said the higher income would be boosted by an increase from online ticketing contributions as well as introduction of new attractions. (Starbiz)

Source: CIMB Daybreak - 31 July 2013

Zurich to grow general insurance to RM570m

Zurich Insurance Malaysia Bhd is looking to grow its gross written premium of general insurance to RM570m this year. As for life insurance, the insurer has budgeted an annual premium equivalent of RM150 million. Zurich chief executive officer Trevor Bull said its life insurance segment had a robust performance in the first half of this year, growing 44 per cent. (BT)

Source: CIMB Daybreak - 31 July 2013

Pesona's unit beg RM149.6m Johor Gov Contract

Pesona Metro Holdings Bhd's wholly owned subsidiary, Pesona Metro Sdn Bhd, has won a contract worth RM149.6m from the Intrasegi Sdn Bhd-Tegas Setuju Sdn Bhd joint venture. The contract is for the construction and completion of a government building complex in Johor Baru. The project, targeted for completion on 29 Jan 2016 and to be completed within 30 months from the date of possession of the site, will be funded internally. Pesona Metro Holdings Bhd's market capitalisation is RM143.8m. (Financial Daily)

Source: CIMB Daybreak - 31 July 2013

Supreme Global to assume Key West listing status

China government-linked company Supreme Global Group Ltd will assume Key West Global Telecommunications Bhd's listing status on the ACE market in a reverse take-over. Key West executive director Stephen Ng Min Lin said the reverse take-over will give Key West's fundamentals a fresh start as Supreme Global will then inject the assets and operations under its subsidiary Henan Xinghe Oil & Fat Co Ltd into Key West to be an edible oils business. Key West was initially a telecommunications company. The company dabbled in oil and gas last year but its deal fell through. (Starbiz)

Source: CIMB Daybreak - 31 July 2013

China Stationery pares down stake in Pelikan

China Stationery Ltd sold 3.57m shares of Pelikan International Corp Bhd in the open market, pairing down its stake in the company to 8.8% or 45.1m shares. Last Oct, China Stationary had bought 9.79% stake in Pelikan for RM50m via a share swap, that valued the mainland company at RM1.06 a share. China Stationary shares closed at 27.5 sen a share yesterday. (BT)

Source: CIMB Daybreak - 31 July 2013

Debutant Sona dominates trading

Sona Petroleum, the country's third publicly traded special purpose acquisition company (SPAC) dominated the stock market on its maiden trading day yesterday. Punting on Sona shares and its free warrants accounted for slightly more than 50% of the stock exchange's total volume. Sona has six cornerstone investors, namely Hong Leong Asset Management, Hong Kong-based hedge fund Segantii Capital, Davidson Kempner European Partners, CIMB-Principal Asset Management, Kenanga Investors and RHB Investment Management Sdn Bhd. (BT)

Source: CIMB Daybreak - 31 July 2013

Altel expects to invest RM1bn for 4G LTE

Altel Communications Sdn Bhd, a subsidiary of Puncak Semangat Sdn Bhd which is owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary, expects to invest over RM1bn over five years to deploy its 4G long-term evolution (LTE) network, which will be rolled out by the fourth quarter of this year, said its chairman Datuk Hilmi Mohd Noor. "For Altel, it would require an investment of more than RM1bn to deploy the kind of network we would like. However, with industry collaboration, smart partnerships and innovative approaches regarding the use of capex versus opex, we expect to make significant savings. In August, we will roll out the first of our commercial products to the market. After that, we will be introducing more products and services in the fourth quarter of 2013 and onwards into 2014 and beyond," he said. (sun)

Source: CIMB Daybreak - 31 July 2013

New Hoong Fatt inks 21-year renewable energy power purchase agreement with TNB

New Hoong Fatt Auto Supplies Sdn Bhd has signed a renewable energy power purchase agreement with Tenaga Nasional Bhd for 21 years at a feed in tariff rate of RM1.1812/kwh. (BMSB)

Source: CIMB Daybreak - 31 July 2013

Vincent Tan targets UK car dealer

Tan Sri Vincent Tan Chee Yioun looks poised to make a fresh bid for control of HR Owen plc, even as relationship with the board of directors of Britain¡¦s largest luxury car dealer gets frosty. The 81-year-old company is a dealer for Bentley, Rolls Royce, Ferrari and Lamborghini. Its after-sales services cover Aston Martin Bugatti, Maserati and Pagani franchises. The tycoon, using a subsidiary of his flagship Berjaya Group, had offered to acquire shares in the United Kingdom-listed company at 130 pence (RM6.42) a piece in the middle of this month.

Last month, Berjaya Philippines Inc, a unit controlled by Berjaya Lottery Management (HK) Ltd, which in turn is a direct subsidiary of Berjaya Sports Toto Bhd, emerged with a 29.8% stake in the London-based car dealer. By Jul 18, the cash offer was formerly rejected by the board of directors on the basis that the offer ¡§materially undervalues¡¨ the company, while in turn, Berjaya Philippines told the Philippine stock exchange that ¡§a formal recommendation from the board has not been sought¡¨. At 130 pence a share, the offer values HR Owen at ¢G32.5m. (BT)

Source: CIMB Daybreak - 31 July 2013

Media Prima signs licensing agreement with Paramount Pictures

Media Prima Bhd has signed a multi-year licensing agreement with Paramount Pictures Corp, which would make a variety of contemporary and classic hit films available on the group's free-to-air television networks in Malaysia in the coming months. (Bernama)

Source: CIMB Daybreak - 31 July 2013

Astro licensing TM on English Premier League

Astro Malaysia Holdings Bhd (Astro) and Telekom Malaysia Bhd (TM) are set to sign a collaboration agreement tomorrow which would see Astro sharing its broadcast rights for some of the English Premier League football matches with TM for the next three seasons. The signing ceremony will be witnessed by Communications and Multimedia minister Datuk Seri Ahmad Shabery Cheek. (Sun Biz)

Source: CIMB Daybreak - 31 July 2013

U&W gets Bursa approval for listing its oil and gas unit

UMW Oil & Gas Corp Bhd (UMW O&G) a wholly-owned subsidiary of UMW Holdings Bhd, has received a green light from Bursa Malaysia for its listing. UMW Holdings yesterday said the Bursa Malaysia approval followed the nod given by the Securities Commission earlier this month. No listing time frame was provided in the a statement issued by Maybank Investment Bank and CIMB Investment, on behalf of UMW Holdings yesterday. Market talk, however, has it that it would happen in 4Q13.
  • UMW O&G's initial public offering (IPO) involves 2.16bn shares of 50 sen each on the trading/services sector of the Main Market. The IPO is set to be among the country's largest this year. It was reported that UMW O&G will offer 843m of its shares at RM3 each, raising up to RM3bn for the company. (BT)

Source: CIMB Daybreak - 31 July 2013

Petronas delays RM60bn petrochemical project to 2018

Petronas will start up a refinery within its US$19bn petrochemicals complex in Malaysia at end-2017, signaling a delay in the country's largest ever infrastructure project. Previously local media had cited Petronas CEO Shamsul Azhar Abbas as saying the start date for phase one of the refinery and petrochemical integrated development (RAPID) project had been pushed back to early 2017. "The final investment decision (FID) date for RAPID project has been rescheduled to March 2014 from June 2013," Petronas said in a statement released to Reuters, citing external factors beyond its control. "As re result of the revised FID date, the RAPID refinery is scheduled to be ready for start-up in 4Q17 and the remaining plants within the complex are scheduled to be commissioned in 2018," it said. (Reuters)

Source: CIMB Daybreak - 31 July 2013

Palm oil group hails French pledge

The local palm oil industry welcomes the French government's assurance that it will not discriminate palm oil products from other vegetable oils. Malaysian Palm Oil Council chief executive officer Tan Sri Dr Yusof Basiron, however, said while the council welcomes the assurance by French Prime Minister Jean Marc Ayrault that palm oil will not be taxed discriminatorily in France, he must at the same time take action on the palm oil labelling issue. "The French prime minister is elusive, claiming commercial freedom of the companies to do so. Legally, in the absence of a clear law, it should be banned. There is no law to allow or disallow palm oil labelling in France. Such labelling should be banned until a justified request is approved," Yusof said. (BT)

Source: CIMB Daybreak - 31 July 2013

Maybank's BII 2013 1H PATAMI Surges 15% to Rp681bn YOY

PT Bank Internasional Indonesia Tbk (BII) announced a profit after tax and minority interest (PATAMI) of Rp681bn for the first six months of 2013, an increase of 15% from the same period a year earlier. The improved results were achieved on the back of growth in operating income and much lower provisions, mitigated by faster increase in operating expenses.

  • Its transformation project to improve branch sale productivity has shown positive traction in generating deposits. Saving accounts recorded the highest growth of 27% from Rp16tr in Jun 12 to Rp20.3tr in Jun 2013; while current accounts grew by 12% to Rp15.1tr and time deposits increased by 18% to Rp55.7tr. 
  • Loans grew 16% during the first semester 2013, from Rp73.5 trillion as at Jun 12 to Rp85.1tr as at Jun 13. Business banking loans grew the fastest from Rp 23.5tr to Rp30.2tr or 29%. Retail loans increased 16% from Rp26.7tr to Rp31.1tr. Global Banking loans have returned to the growth track with 2% increase from Rp23.3tr to Rp23.9tr after the decrease in first quarter this year as a result of portfolio adjustment to proactively manage credit risk. (Company press statement)

Annualising the 1HFY13 numbers, BII's full-year net profit would account for 6.5% of our projected net profit for Maybank in FY13. This is in line with our expectation of 6-7% contribution from BII. In 1QFY13, BII contributed 6.3% to Maybank's PBT. We see challenging operating environment for BII in the next few quarters, due to the rise in inflation, rate hike and the keen competition for deposits. This could lead to slower loan growth and further compression in net interest margin. Should the 2H13 earnings come in weaker (compared to the 1H13), we think that BII will still be able to contribute 6-7% to Maybank's earnings. Any slippage from this would have minimal impact on Maybank's earnings in view of the small contributions from BII. The longer-term prospects should remain positive given the low penetration of the financial market in Indonesia and the untapped opportunities for banks to grow their fee income.

Source: CIMB Daybreak - 31 July 2013

CIMB Political News - 31 July 2013

Datuk Seri Azalina Othman Said fired the first salvo in the battle for the Wanita Umno chief's post by setting up a Facebook page. Azalina posted on Mon: "I'm running (for) Wanita Umno chief because I believe it is time for a new generation of women leaders to be in Wanita." Azalina announced last month that she was challenging Wanita Umno chief Datuk Shahrizat Abdul Jalil. Former Johor Wanita Umno chief Datuk Halimah Sadique may join the race. (NST)

Source: CIMB Daybreak - 31 July 2013

CIMB Malaysian Economic News - 31 July 2013

Fitch Ratings lowered its outlook on Malaysia to negative from stable amid weaker prospects for budgetary and fiscal reform following its May elections. “Malaysia’s public finances are its key rating weakness,” Fitch said in a statement yesterday, affirming the long-term foreign and local currency issuer default ratings (IDRs) at 'A-' and 'A', respectively.
  • The short-term foreign currency IDR has been affirmed at 'F2' and the Country Ceiling at 'A'.
  • It will be difficult to achieve the 3% deficit target in 2015 without additional steps, while rising state subsidies also pose risks, it said.
  • Credit fundamentals are weak by 'A' range standards. It projects the divergence from the 'A' median will widen out to 2015.
  • The negative outlook reflects the following risk factors that may, individually or collectively, result in a downgrade of the ratings, most likely by one notch: (1) Fiscal slippage relative to the government's targets and lack of progress on structural budgetary reform; further accumulation of contingent or other off-balance-sheet liabilities; (2) Further erosion of the current account surplus, particularly a "twin deficit" situation where failure to consolidate the budget is associated with the emergence of a sustained current account deficit; (3) A shock to interest rates or to employment sufficient to impair household debt servicing ability and put pressure on the banking system; and (4) Significantly slower GDP growth than Fitch's current projection of about 5% per year out to 2015. (Bloomberg, Fitch Ratings Agency)

Domestic Trade, Cooperatives and Consumerism Minister Datuk Hasan Malek has assured the Sabah government that the diesel shortage in the state has ended. Chief Minister Datuk Seri Musa Aman said: "The minister in charge has informed me that the supply of diesel in the state is back to normal, with the additional quote of 24.196m litres approved nationwide and 9m litres for Sabah." (Bernama) 

Malaysia-China bilateral trade has recorded a yoy double-digit growth of 15.7% to US$50.9bn (RM163.9bn) in the 1H13. China-Asean Business Council Executive Vice Secretary-General, Xu Ningning, said in the 1H13, Malaysia's exports to China increased 3.6% yoy to US$28.7bn (RM92.5bn). Imports from China were up 36.4% to US$22.2bn (RM71.4bn). (Bernama) 

The Federal Government will allocate RM430m to the State Consolidated Fund for 2015, said PM Datuk Seri Najib Tun Razak. Of the amount, RM130m will be to help the states facing deficits in their operating accounts.
  • A total of RM300m will be disbursed based on the states' economic growth level, infrastructure development and the people's well-being.
  • The total allocated by the Federal Government to the State Consolidated Fund for 2014 was RM287m, he said. (Bernama)

The Federal Government will bear 50% of the costs of supporting the Town and Country Planning departments in Peninsular Malaysia, Department of Urban and Regional Planning, Sabah and Sarawak's Planning and Resources. The amount, which will be given next year, will be based on the expenses to manage the departments this year, said PM Datuk Seri Najib Tun Razak.
  • The decision will entail financial implications to the Federal Government of between RM28m and RM32m for next year.
  • "With this funding, these departments are expected to play a more active and effective roles in the states and help achieve the Vision 2020 targets," he said. (Bernama)

The National Finance Council meeting yesterday approved the procedural guidelines on the management of the state road maintenance grants which will be used by all state governments. At the meeting, a committee was also established to ensure that the grants were distributed quickly without referring to the National Finance Council, said PM Datuk Seri Najib Tun Razak.
  • The committee, which will be chaired by Finance Ministry Secretary-Secretary, comprises the Auditor-General, Public Works Department Director-General, Accountant-General, Treasury solicitor and four representatives from the states.
  • The states' representatives will be picked every two years from among state financial officers/financial secretary, Sarawak/Sabah Finance Ministry permanent secretary.
  • They will represent the four zones. Zone 1: Perlis, Kedah, Penang and Perak; Zone 2: Kelantan, Terengganu and Pahang; Zone 3: Selangor, Negeri Sembilan, Melaka and Johor; and, Zone 4: Sabah and Sarawak.
  • The Finance Ministry's budget director will be the secretary of the committee, he said.
  • The meeting also agreed to the proposal in the Financial Procedure (Amendments) Act 2013 to implement accrual accounting for the Federal Government from 2015 and for the states in 2016, he added. (Bernama)

The government is committed to provide affordable and comfortable housing for the people, especially to low- and middle-income earners, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Tuesday. The provision of low-cost houses has been a priority in the five-year Malaysia Plans and the annual Budget.
  • "Therefore, the Budget 2014 Focus Group Meeting on Providing Greater Access to Home Ownership today is part of the inclusive process, as we have with us representatives from the private sector, industry organisations and government agencies," he said.
  • He said issues such as mismatch between supply and demand, low-cost houses are not strategically located, abandoned and delayed housing projects, slow implementation of the Industrial Building System (IBS) and no valuation requirements on new house launches also need to be addressed. (Bernama)

The Multimedia Development Corp (MDeC) aims to develop Malaysia's shared services and outsourcing (SSO) industry by concentrating on high value Knowledge Process Outsourcing (KPO) services. Vice-President of SSO division Michael Warren said this would be done by encouraging existing investments to take up KPO-type activities, attracting new investments in this service as well as developing niche areas such as financial services and the oil and gas industry.
  • He said currently the KPO segment contributes less than 10% of the total industry revenue of RM10.4bn last year.
  • "However, we see huge potential in this segment as it is projected to have a compounded annual growth rate of 24% from 2010 to 2014, reaching a market size of US$17bn globally," he said.
  • As of 30 Jun, MDeC managed to bring in 16 companies to invest in the country's SSO cluster, three of which are KPO-related companies.
  • In 2012, the SSO cluster contributed RM5.8bn to the nation's economy, up 32% from 2011 while creating 7,300 jobs or 57% more. (Bernama)

The Malaysia Co-operative Societies Commission and Bank Negara Malaysia (BNM) will set out the operational and assessment framework when considering an application by a co-operative society to undertake deposit taking from the public, other than its own members. Deputy Minister of Domestic Trade, Co-operatives and Consumerism Datuk Paduka Ahmad Bashah Md Hanipah said the framework could ensure that co-operative societies that undertake deposit taking activity are financially sound. The operational and assessment framework is covered in a memorandum of understanding (MoU) inked between the commission and BNM yesterday. (Bernama) 

A 2010 census found the population of the country to number 28.3m people, said Minister in the Prime Minister's Department Datuk Seri Wahid Omar. Of the total, 26m or 91% were Malaysian citizens while 2.3m or 8.2% were non-citizens. The census was carried out from 6 July 2010 to 22 Aug 2010. The next census will be in 2020, he said. (Bernama)

CIMB Global Economic News - 31 July 2013

The US S&P/Case-Shiller house price index rose 1.0% mom in May from a revised 1.7% in Apr, underperforming consensus of 1.3%. On a non-seasonally adjusted yoy basis, the index gained 12.2% from a revised 12.1% in Apr, again undershooting consensus of 12.3%. (Bloomberg) 

The US Conference Board consumer confidence index dipped to 80.3 in Jul from a revised 82.1 in Jun, underperforming consensus of 81.0. (Bloomberg) 

Eurozone's economic confidence index improved to 92.5, the highest since Apr last year, from 91.3 in Jun. Sentiment in the industrial sector rose to -10.6 from -11.2 in Jun, whilst the services confidence index rose to -7.8 from -9.6 a month ago. The consumer confidence indicator climbed to -17.4 from -18.8 last month. (RTT News) 

The People's Bank of China said it had injected Rmb17bn, or US$2.8bn, in the form of seven-day reverse repurchase agreements into the domestic banking system yesterday after a liquidity squeeze rocked financial markets in the world's second-largest economy last month. This was the first such move since Feb. (AFP) 

China's economy will continue to grow at a steady rate during the 2H13 despite "extremely complicated domestic and international conditions", the government said yesterday. Leaders of China will "coordinate the tasks of stabilising growth, restructuring the economy and promoting reforms", according to a statement from the Political Bureau of the Communist Party's Central Committee. "Macro policy should be stable, micro policy should be flexible and social policy should support the bottom line. All of them should be coordinated," it said. (Financial Daily) 

Japan's household spending fell 0.4% yoy in Jun (-1.6% in May). Economists were looking for a 1.4% gain. Industrial production fell 3.3% mom in Jun (+1.9% in May). Economists were expecting a reading of -1.5%. (Business Insider) 

Japan's vehicle output dropped 9.5% yoy in Jun (-6.2% in May). Driving the downturn, passenger car production fell 11.1%, and production of trucks edged down 0.7%. These declines were partially offset by an 11.8% gain in the manufacture of buses. (RTT News) 

South Korea's current account showed a surplus of US$7.24bn in Jun, down from a record high of US$8.64bn in May due to a slight dip in exports. Jun figure took the cumulative surplus for the 1H13 to US$29.7bn. (Bloomberg) 

South Korea's industrial production dropped 2.6% yoy in Jun (-1.3% in May), worse than market's expectations of a 1.1% contraction. Mom, it rose 0.4% (-0.1% in May). (Bloomberg) 

South Korea's cyclical component of composite leading index rises 0.5 pt in Jun (+0.3 pt in May). (Bloomberg)

The Reserve Bank of India (RBI) has maintained the status quo on key interest rates amid a weaker rupee but lowered the country's growth forecast for 2013/2014 to 5.5% from 5.7%. The repo rate stays at 7.25%, the reverse repo rate at 6.25%, and the cash reserve ratio at 4% of net demand and time liabilities of scheduled banks.
  • "India is currently caught in a classic 'impossible trinity' trilemma whereby we are having to forfeit some monetary policy discretion to address external sector concerns," it said.
  • They will be rolled back in a calibrated manner as stability is restored to the foreign exchange market, enabling monetary policy to revert to supporting growth with continuing vigil on inflation, it added. (Bernama)

The Philippine central bank sees inflation staying "well within" the target range this year and next, enabling it to keep interest rates unchanged through 2014, Governor Amando Tetangco said. "At this point in time, I don't see any signs that will lead us to modify or change the policy rate. That's based on our inflation forecast. But as I said, things are continuously evolving," he said. (Bloomberg) 

Australia's central bank governor Glenn Stevens said 2Q13 inflation suggests there's still room to lower interest rates if required and that he wouldn't be surprised if the currency dropped further. "The recent decline in the exchange rate seems to make sense from a macroeconomic perspective. It would not be a major surprise if a further decline occurred over time," he said. (Malaysian Reserve)

CIMB Daybreak - 31 July 2013

What’s on the Table...

  • Cuscapi - Time to REV up
  • Perisai Petroleum - Crossing the Rubicon(e)?
  • IGB REIT - Mid Valley delivers

News of the Day...

  • Fitch revises Malaysia's outlook to negative
  • Petronas delays RM60bn petrochemical project to 2018
  • U&W gets Bursa approval for listing its oil and gas unit
  • Palm oil group hails French pledge
  • Vincent Tan targets UK car dealer
  • Media Prima signs licensing agreement with Paramount Pictures
  • Debutant Sona dominates trading

Click here for the full PDF report 

Tuesday, 30 July 2013

KPJ Healthcare sees RM347.1m erased from market capitalisation

KPJ Healthcare saw RM347.1m erased from its market capitalisation after it was ordered to pay RM70.48m as damages in a legal suit. The private healthcare services provider, which was the biggest loser yesterday, saw its share price fall 53 sen to RM6.72, with about 12m shares changing hands. Its market capitalisation was reduced from RM4.741bn to RM4.394bn. Last Friday, KPJ announced that the High Court had allowed plaintiff Dr Mohd Adnan Sulaiman’s claim against the healthcare provider and awarded RM70.48mn as damages and costs of RM150,000. Adnan had sued the company for breaching the joint-venture agreement incorporating the shareholders’ agreement dated 30 May 1995. (Star)

Source: CIMB Daybreak - 30 July 2013

Nakamichi CEO ousted at EGM

Shareholders of timber-based company Nakamichi Corp Bhd have removed it CEO Lo Man Heng at an EGM. A source said the company's operations would be kept running as usual and that a new CEO would be announced in a month's time. (Starbiz)

Source: CIMB Daybreak - 30 July 2013

Newfield expects asset sale by year-end

Newfield Exploration Co expects to finalise sale of its oil and gas assets in Malaysia later this year. The group said there has been a strong interest for the assets from industry players. Its communications coordinator Keith Schmidt said the process of selling Newfield's international businesses is under way and progressing well, with interest from many parties. Newfield owns Malaysian assets through its two wholly-owned subsidiaries, Newfield Peninsula Malaysia Inc and Newfield Sarawak Malaysia Inc. According to the group, the Malaysian assets delivered some US$400m (RM12.9bn) of pre-tax profit in 2012. (BT)

Source: CIMB Daybreak - 30 July 2013

Kim Loong downsizes health supplements business

Kim Loong Resources Bhd's venture into the tocotrienols supplement business seems to be uncertain following the downscaling of its operations that it had invested in for close to 10 years. Executive chairman Gooi Seong Lim said the company has not been able to extract the tocotrienols effectively from the CPO it produced. To date, the company has invested over RM20m into the venture, and according to Gooi, this amount has already been written down over the past three to four years. (Starbiz)

Source: CIMB Daybreak - 30 July 2013

Kim Loong Resources to buy land in Sarawak

Kim Loong Resources Bhd is looking to acquire 12,410ha of land in Sarawak as the plantation group aims to expand its oil palm business in the state, said its executive chairman Gooi Seong Lim. Currently, the group has three palm oil mills and about 16,187ha of fully planted land in Sabah. It also has a RM190m cash pile that it can use for acquisitions. "We have decided to focus on our expansion plan in Sarawak where we can get sizeable land at reasonable cost. We'll probably go into some joint venture arrangement under the Native Customary Rights scheme and we'll also develop some state land which is inside the project area. That's our plan," he said. (BT)

Source: CIMB Daybreak - 30 July 2013

Kulim: EPF disposes of 462400 shares

Kulim (Malaysia) Bhd yesterday told Bursa Malaysia that one of its shareholders, the Employees Provident Fund (EPF), had disposed of 0.46m ordinary shares in the open market on July 24. These shares represented the EPF’s indirect interest in Kulim Bhd. Following the disposal exercise, the financial giant’s remaining shareholdings in Kulim stands at 65.6m shares. (BT)

Source: CIMB Daybreak - 30 July 2013

Asas Dunia privatization offer at RM1.70/share

Asas Dunia Bhd executive chairman Datuk Tony Chan Leong Foon and several shareholders, who own 41.1% of the property developer, have made a voluntary takeover offer. Asas Dunia yesterday said Chan and parties acting in concert had offered to buy the remaining 112.3m shares or 58.8% stake, at RM1.70/share. (BT)

Source: CIMB Daybreak - 30 July 2013

Malindo Air to start KL-Dhaka route on Aug 28

Malindo Air is set to launch daily flights on the Kuala Lumpur-Dhaka route as part of its international expansion plans. The first international routes for the carrier will start on 28 August. The airline, which will use the Boeing 737-900ER (extended range) aircraft, will offer business and economy classes. CEO Chandran Rama Muthy said Malindo Air's immediate expansion plan included flights from KL to Bali, Jakarta, Medan and the island of Batam in Indonesia. (BT)

Source: CIMB Daybreak - 30 July 2013

AirAsia X to fly to Adelaide from Oct 30

AirAsia X Bhd, the long-haul arm of budget carrier AirAsia Group, will fly to Adelaide, its fifth Australian destination, from Kuala Lumpur beginning 30 October. Chief executive officer Azran Osman-Rani said the new route, which will be the only direct low-cost service between Malaysia and Adelaide, is a priority for AirAsia X as Australia is one of its core markets. 

"Our goal since launching our first Australian service in the Gold Coast in 2007 was to operate in the five major states, and we are proud to have accomplished this within six years," he said. AirAsia X currently flies to Gold Coast, Perth, Sydney and Melbourne. The airline will fly four times weekly from its hub in KL to Adelaide International Airport using the Airbus A330-300 aircraft. (BT)

Source: CIMB Daybreak - 30 July 2013

Mah Sing eyes govt partnership

Mah Sing Group Bhd is eyeing government land redevelopment projects in the Klang Valley, Johor and Sabah to improve its earnings, said group managing director Tan Sri Leong Hoy Kum. Leong said the company is banking on government land to expand its business because of scarcity of "good private landbank" in strategic areas. He said redevelopment of government land also offers the company good margins and will help to boost its earnings over the long term. "We aim to partner the government as a developer and develop the land in return for cash and kind," he said. (BT)

Source: CIMB Daybreak - 30 July 2013

Gartner: Malaysia's IT spending to hit RM62b

Malaysia's total information technology (IT) spending for 2013 is expected to reach RM61.9bn this year, up 6.4% over 2012, says IT research company Gartner Inc. Gartner said the forecast is made up of telecommunications services (RM33.9bn), devices (RM13.3bn), IT services (RM9.8bn), software (RM3.3bn), and data centre systems (RM1.7bn). "Worldwide IT spending is projected to total US$3.7trn (RM11.9trn) in 2013, a 2%t rise from 2012 spending of US$3.6trn," it said in a report. (BT)

Source: CIMB Daybreak - 30 July 2013

Tan Chong Motor wins exclusive right to distribute Nissan vehicles in Myanmar

Tan Chong Motor Holdings Bhd has won the sole and exclusive right to distribute Nissan vehicles in Myanmar. Tan Chong said its wholly-owned subsidiary ETCM (MM) Pte Ltd has entered into a distribution agreement with Japan¡¯s Nissan Motor Co Ltd to distribute Nissan brand completely-built-up vehicles in Myanmar. (BT)

Source: CIMB Daybreak - 30 July 2013

Khazanah buys into Turkish insurer for US$252m

Khazanah Nasional Bhd, through its insurance outfit Avicennia Capital Sdn Bhd, is buying a 90% stake in Turkish insurer Acibadem Sigorta for US$252m (RM811m). The stake is being bought from Mehmet Ali Aydinlar, his family and The Abraaj Group. Mehmet Ali will retain a 10% stake in Acibadem Sigorta. Acibadem Sigorta is a leading provider of health insurance services for corporate and individual clients in Turkey, and has the second largest market (BT)

Source: CIMB Daybreak - 30 July 2013

Bursa Securities: No suspension of Hong Leong Capital

Bursa Malaysia Securities says Hong Leong Capital Bhd will not be suspended on Aug 12 as it has met the public shareholding spread. It said on a circular of Monday the public shareholding spread has increased to 10.02%, which is above the 10% threshold level needed to retain its trading status. Substantial shareholder Datuk Dr Yu Kuan Chon has been disposing of his shares on the open market over the past weeks. At last look, he held a direct stake of 8.272%. (Starbiz)

Source: CIMB Daybreak - 30 July 2013

France Will Not Discriminate Palm Oil Products, Assures French PM

The French government will not discriminate against palm oil products vis-a-vis other vegetable oils, French Prime Minister Jean-Marc Ayrault said. In giving his assurance, Ayrault said although there were members of parliament in France to impose a special tax on palm oil, the government did not support these initiatives and they would not materialise. "The palm oil will not be treated differently from other vegetable oils and there will be no discrimination on palm oil," he said. (Bernama)

Source: CIMB Daybreak - 30 July 2013

Sime Darby raised its equity interest in Eastern & Oriental to 31.96%

Sime Darby Bhd has raised its equity interest in developer Eastern & Oriental Bhd to 31.96% following recent share purchases. Filings with Bursa Malaysia show that the group has bought an additional 15.4m shares or 1.39% equity interest in E&O since June 27. Sime Darby, whose landbank is located outside of city centres, had said its investment in E&O was for exposure to property projects in hot spots such as Kuala Lumpur city centre, Penang an Iskandar Malaysia. (Financial Daily)

Source: CIMB Daybreak - 30 July 2013

Prasarana: No cost overruns

The chief of Syarikat Prasarana Negara Bhd says the construction cost for both the Ampang and Kelana Jaya light rail transit (LRT) line extensions will stay within the RM8bn budget. Group managing director Datuk Shahril Mokhtar told BT that the cost will not exceed RM8bn although the project will be delayed by more than a year. Prasarana has always said it is spending some RM7bn on the extension of both the Kelana Jaya and Ampang LRT rail networks. 
  • He said the line extension was originally scheduled to be completed in 2014 but faced a setback due to issues relating to land acquisition in Puchong and other matters, which have been ongoing for more than 12 months. The disputed land is located within the approved alignment at Lebuhraya Damansara-Puchong (LDP) next to SRJK (T) Castlefield and squatter houses there. 
  • "The school board is refusing to allow us to pass through the edge of the school field and we have been negotiating for more than 12 months now. No solution has been reached," Shahril said. The other issues include the relocation of squatter houses at Station 9 in Puchong and concerns raised by residents in Subang and Shah Alam. However, he said both the matters have been resolved. (BT)

Source: CIMB Daybreak - 30 July 2013

Construction of the Ampang and Kelana Jaya LRT line extension project has hit a snag

The Ampang and Kelana Jaya light rail transit (LRT) line extension project has hit a snag and will only be completed earliest by the mid-2016. This means that the project, which was originally scheduled to be completed by end-2014, will be delayed by some 18 months. It raises the alarm that the construction cost for both the Ampang and Kelana Jaya LRT line extensions would surpass RM8bn, more than the original budget of RM7bn. BT understands that the delay is caused by the late award of contracts to some companies, including George Kent (M) Bhd, by the Minister of Finance Inc. 
  • George Kent won a RM960m contract for engineering, procurement, construction, testing and commissioning of system works for the Ampang LRT line. There was a 12-month delay in the awarding of the contract because of concerns raised by several parties on the company's capability and resources. (BT)

Source: CIMB Daybreak - 30 July 2013

KL-Singapore rail tender open to international bidders

Prime Minister Datuk Seri Najib Razak yesterday confirmed that the tender for the high-speed rail (HSR) link between Kuala Lumpur and Singapore will be opened to international bidders. He said the Malaysian and Singaporean governments are in the process of deciding on the modality, way forward and procedure for execution. "We expect this to be a very transparent, open bidding system in which companies from all over the world are free to participate," he said at a joint press conference with his French counterpart Jean-Marc Ayrault, here, yesterday. 
  • On the rail industry in Malaysia, Najib said Malaysia is embarking on extensive rail development, such as the multi-billion Klang Valley mass rapid transit project and the HSR project, which is targeted for completion by 2020. The rail link is expected to cost around RM40bn, including RM10bn to buy high-speed bullet trains.(BT)

Source: CIMB Daybreak - 30 July 2013

Two master developers in Iskandar racing to go public next year?

Two master developers with large tracts of land in Johor are racing to go public next year. Medini Iskandar Malaysia Sdn Bhd, which is majority owned by Iskandar Investment Bhd (IIB), is planning to raise RM2.58bn through a listing in the first half of next year. Earlier this year there were reports of Iskandar Waterfront Holdings Bhd (IWH), the master developer of waterfront land 25km along the coast of the Straits of Johor, seeking a listing by end of this year. However, an executive close to the state government said IWH's listing is on track for the early part of next year. (Financial Daily, Reuters)

Source: CIMB Daybreak - 30 July 2013

Maybulk’s associate POSH Semco seeking listing in Singapore

Offshore marine services provider POSH Semco, controlled by Malaysia's richest man Robert Kuok, is seeking to list shares in Singapore in a deal worth S$300m to S$500m, sources said. The deal is expected to be launched in September or October, two people with direct knowledge of the deal told Reuters. POSH Semco's market capitalisation is expected to reach nearly US$1bn after its shares are listed. POSH Semco owns and operates a fleet of more than 100 vessels, providing support for offshore oil and gas activities. One source said the figures were preliminary as the deal has yet to be launched and that POSH Semco has not determined how existing and new shares will be sold in the IPO. (BT)

Malaysian Bulk Carriers (Maybulk) owns a 21.23% stake in POSH Semco after purchasing the stake from Pacific Carriers (a Kuok-backed company) for US$221m in 2008. Under its purchase agreement to buy the stake in POSH Semco, Maybulk has the option to sell it back to Pacific Carriers for US$276.25m (25% premium to the purchase price) if POSH is not listed by end-2013. Based on POSH Semco's speculated market capitalisation of nearby US$1bn, Maybulk's stake is valued at almost US$212.3m, lower than the value the company can reap from the put option.

Source: CIMB Daybreak - 30 July 2013

CIMB Political News - 30 July 2013

The disclosure by an architect directly involved in the Scorpene submarine purchase agreement showed the allegations by Suaram, a human rights organisation, over the purchase was a political ploy, said Home Minister Datuk Seri Dr Ahmad Zahid Hamidi. 

  • He said the ministry could not take action against Suaram which created the issue as it was registered as a company. "But I think if someone makes a police report against the allegations by Suaram, the police can take action as it has tarnished the image of our country and our leaders," he said. (Malaysian Insider)

DPM Tan Sri Muhyiddin Yassin has expressed concern over racial polarisation in the country. He said the trend now was as if the people were getting more hypersensitive. Citing education issues as an example, Muhyiddin, who is also education minister, said there was a convention organised by Chinese educationist, Dong Zong, recently. "They made a resolution to object to whatever outcomes of the National Education Blueprint which were meant to improve the education sector." 
  • Another example Muhyiddin highlighted was the demand by non-Muslims wanting to use the word "Allah". He said Malays must be ready to face the challenges. "Muslisms in the country must be united. If we are not united, we will face problems in the future. (NST)

Source: CIMB Daybreak - 30 July 2013

CIMB Malaysian Economic News - 30 July 2013

A bill on Access to Biological Resources and Benefit Sharing to protect the biodiversity of the country is expected to be tabled in Parliament next year. Natural Resources and Environment Minister Datuk Seri G. Palanivel said the final draft was amended to incorporate views from state governments, ministries, agencies and various interested parties. "The draft will be submitted to the Attorney-General's Chambers in Sep, and later to the Cabinet," he said. (Bernama) 

The production of rice, meat and vegetables has yet to reach 100% with rice production at 1.74m tonnes or 75.3% of the country's needs. Deputy Minister of Agriculture and Agro-Based Industry Datuk Tajuddin Abdul Rahman said the four new padi growing areas planned by the government in Pekan, Rompin, Batang Lupar and Kota Belud involve 23,900 hectares. The four areas are expected to produce 147,443 tonnes of rice and increase production to 81%, he said. Meanwhile, the production of beef was at only 30% of the country's needs. Although fish production exceeds the country's needs at 134.2%, the price keep fluctuating as some of the fish are exported to other countries. (Bernama)

The government is targeting to increase the number of doctor of philosophy (PhD) holders to 6,000 by 2023, in line with an effort to produce specialists various fields to promote the country's industrialisation policy, the Dewan Negara was told yesterday. Minister in the Prime Minister's Department Datuk Seri Abdul Wahid Omar said the target was a mechanism to create groups of highly knowledgeable human resources. (Bernama) 

The Health Ministry has received approval to build 11 hospitals this year. Its deputy minister Datuk Seri Dr Hilmi Yahaya said these hospitals included the Parit Buntar Hospital in Perak, Shah Alam Hospital (Selangor), Tampin Hospital (replacement) and Rembau Hospital in Negeri Sembilan, and Bera Hospital and Rompin Hospital (Pahang). The others are the Kuala Krai Hospital and Bachok Hospital (Kelantan) and Lawas Hospital, Petra Jaya Hospital and Sri Aman Hospital (Sarawak). Out of 140 hospitals throughout the country, 14 including Kuala Lumpur Hospital are categorised at state hospitals, 26 each as major and minor specialist hospitals, 66 as non-specialist hospitals and eight as special medical institutions. (Bernama)

PM Datuk Seri Najib Tun Razak said the government will look into the budgetary consideration for the contract for the MiG-29N replacement programme. He said: "We are looking at our defence requirement in the future but it is not so much in terms of our future needs, but it is a question whether we can afford and it is also the question of budgetary consideration. "We also have to grapple with a fiscal deficit reduction inMalaysia because we need to strengthen our micro and fiscal level," he added. (Bernama) 

Malaysia and France are looking forward to venture into new areas of cooperation, particularly in renewable energy, transportation and biotech. PM Datuk Seri Najib Tun Razak said the cooperation was discussed with his French counterpart, Jean-Marc Ayrault in their meeting yesterday. Apart from that, Malaysia and France were also keen to deepen and strengthen current economic relations, particularly in trade and investment, defence and education. There are two significant investments: 1) an investment worth US$135m to produce carbon discs for aircraft brakes for the entire Asian market in Sendayan, Negri Sembilan and 2) the biotech investment in Terengganu between Arkema of France and CJ CheilJedang (CJ) of South Korea. (Bernama, The Star)

No government development projects under the Tenth Malaysia Plan (10MP) were reported to be abandoned, said Minister in the Prime Minister's Department Datuk Seri Dr Shahidan Kassim. However, he said there were 238 projects with a total value of RM4.48bn which were delayed from the original date of completion. He said that 61 of the projects that were categorised as being delayed were described as ailing projects up to 23 July, with a total value of RM1.3bn. Among the reasons for the delay are weaknesses in the internal management of the contractors concerned, problems in securing building material supply, and manpower problems, he said. (Bernama)

The government initiated its first of many initiatives to promote human capital development for the rail industry yesterday with the signing of a memorandum of understanding (MoU). The MoU between the Malaysia Industry-Government Group for High Technology (MIGHT) and Thales, a renowned Original Equipment Manufacturer (OEM), was witnessed by PM Datuk Seri Najib Tun Razak and his French counterpart Jean-Marc Ayrault. (Bernama) 

The chief of Syarikat Prasarana Negara Bhd says the construction cost for both the Ampang and Kelana Jaya light rail transit (LRT) line extensions will stay within the RM8bn budget. Group MD Datuk Shahril Mokhtar told Business Times that the cost will not exceed RM8bn although the project will be delayed by more than a year. (BT)

CIMB Global Economic News - 30 July 2013

The US pending home sales index fell 0.4% mom in Jun from a revised +5.8% in May. This was better than consensus of -1.4%. (Bloomberg) 

China's leading index slowed to 99.55 pts in Jun from a revised 99.72 pts in May. (Bloomberg) 

China's State Council recently approved the interest rate reform plan drafted by the People's Bank of China (PBOC), Caijing magazine reports in its latest issue, citing an unidentified person who participated in discussions of the plan. China may stop setting benchmark rate for 5-year deposits as the next step of interest rate reform. 
  • PBOC plans to set up 3 benchmark lending rates separately for loans under 1 year, 1 year to 5 years and over 5 years. 
  • Currently China has 5 benchmark rates for loans under 6 months, 6 month to 1 year, 1 year to 3 year, 3 year to 5 year and over 5 years. 
  • PBOC also plans to set up a benchmark interest rate control mechanism for the whole credit market. 
  • Banks will be required to report their lending rates for "best clients" and National Interbank Funding Center will announce a benchmark rate by calculating the average. 
  • PBOC will allow some qualified banks to sell negotiable certificates of deposit in the interbank market first, and then it may permit banks to sell such products, known as CD, to corporates and individuals. (Bloomberg)

Bank of Japan Governor Haruhiko Kuroda indicated little concern that a planned sales-tax rise would derail an economic rebound, saying that the BOJ considers "downturn in overseas economies to be the largest risk factor to the outlook for economic activity and prices." (Bloomberg) 

Japan's retail sales rose 1.6% yoy in Jun from May's 0.8% gain. The result was slightly below average expectations for a 1.9% increase. (WSJ) 

The Reserve Bank of India said steadying the rupee to help preserve economic stability has become the priority for monetary policy and that more steps are needed to curb the nation's current-account deficit. (Bloomberg) 

The IMF approved a further €1.7bn in funds for Greece's bailout program after completing the fourth review of the cash-strapped eurozone state. (Reuters) 

Thailand's economy in second quarter probably slowed from the first quarter on weak exports and cooling local demand, Ekniti Nitithanprapas, deputy director-general of the Fiscal Policy Office said. The ministry maintains its 2013 GDP growth forecast at 4-5% for now while seeing it tilted toward 4%. The ministry may revise down forecast in Sep, he said. (Bloomberg)

Bangko Sentral ng Pilipinas Governor Amando Tetangco said that peso at between 42-44 to dollar at this point in time is probably a good range. He added that pass-through impact of exchange rate to inflation minimal, citing low consumer-price gains, credible monetary policy, greater flexibility in exchange rate and increased global competition. (Bloomberg)

CIMB Daybreak - 30 July 2013

What’s on the Table...

  • Genting Malaysia - A new RM3bn chapter for RWG
  • Construction - Firing up the MRT theme

News of the Day...

  • Maybulk’s associate POSH Semco seeking listing in Singapore
  • Two master developers in Iskandar racing to go public next year?
  • Construction of the Ampang and Kelana Jaya LRT line extension project has hit a snag
  • Sime Darby raised its equity interest in Eastern & Oriental to 31.96%
  • Tan Chong Motor wins exclusive right to distribute Nissan vehicles in Myanmar
  • Asas Dunia privatization offer at RM1.70/share
  • China's leading index slowed to 99.55 pts in Jun from a revised 99.72 pts in May
  • US pending home sales index fell 0.4% mom in Jun from a revised +5.8% in May

Click here for the full PDF report 

Monday, 29 July 2013

TAS Offshore outsources more vessels to China shipyards

TAS Offshore is increasingly outsourcing its vessel construction to contract shipyards in China to take advantage of their competitive pricing. MD Datuk Lau Nai Hoh said the number of vessels currently contracted out to two established shipyards in Guangzhou stood at 12, the highest ever. ¡§These are all anchor-handling supply (AHS) vessels for the oil & gas industry.

  • We will continue to outsource the construction of vessels in view of the competitive pricing and quality work done by the contract shipyards in China," he said. TAS turned to Chinese shipyards about five years ago as its own shipyard in Sibu could not cope with the big orders. (Star)

Source: CIMB Daybreak - 29 July 2013

Leisure Farm bungalow lots in Iskandar Malaysia sold out

Due to overwhelming response, 10 pre-selected bungalow lots in Leisure Farm Resort, Iskandar Malaysia was sold out with over 30 bids received. Successful bidders secured the units around 10% to 15% above the reserve price, with about half of the total sale of RM50m to Malaysians and the balance to overseas buyers. Leisure Farm Corporation Sdn Bhd, a wholly-owned subsidiary of Mulpha International Bhd, said in a statement that there was a surge in demand in the first six months of the year, with land prices increasing by 40%-70% depending on the precinct and topography of the lots.

  • The reserve price of the lots ranged from RM2.0m to RM6.9m, or RM115-RM150per sf. Oct will see the launch of a further 57 units of canal-front bungalows and eco-themed semi-Ds, Bayou Creek, Precinct 7B in the same area. (Starbiz)
Source: CIMB Daybreak - 29 July 2013

Genting to have RM400m Fox theme park

Genting Malaysia Bhd said it will invest over RM400m to build the world's first Twentieth Century Fox theme park to replace the 35-year-old Resorts World Genting theme park in Genting Highlands, Pahang, as part of a larger refurbishment project that will see the gaming group spending some RM3bn. Its chairman and chief executive Tan Sri Lim Kok Thay said the RM400m capital investment will be internally generated, but the figure is expected to increase and the group will approach the capital markets for further and cheaper funding at a later stage.

  • Under a larger refurbishment plan, the integrated resort also sees the construction of an additional 1,300 hotel rooms adjoining the existing First World Hotel, which is already underway. 
  • The additional rooms are to cater to the increasing number of visitors, which is expected to double from the current 20.5m per year, and is targeted to be completed around the same time as the opening of the new theme park in 2015. (sun)

Source: CIMB Daybreak - 29 July 2013

Takaful eyes 20% revenue growth in 2013

Syarikat Takaful Malaysia expects its revenue growth to equal the industry growth of 20% cent this year. Group MD Datuk Mohamed Hassan Kamil said the company recorded a total revenue of RM1.2bn last year. The increase in revenue for this year will be attributed to the performance in the second half, which is expected to be better than the first half, he said. "The second half (of 2013) is expected to be better because in the first half, there were uncertainties economically and politically," he said. (BT)

Source: CIMB Daybreak - 29 July 2013

EPF will invest 500m euros in industrial/office property in Germany and France

The Employees Provident Fund (EPF) will invest 500m euros (RM2.13bn) in industrial property in Germany and office space in France, according to sources familiar with the deals, signalling growing appetite for high-yielding property assets, as Europe's main economies show signs of recovery. EPF, the world's sixth-largest pension pool with about US$160bn (RM513bn) in assets, has been expanding its foreign portfolio, as it seeks to maintain high dividends for Malaysian savers in the face of limited opportunities in the small South-East Asian nation.

  • The EPF would expand an existing partnership with Australia's Goodman Group Pty Ltd to start a 250m euro (RM1.07bn) fund to buy seven industrial properties in the German cities of Berlin, Munich and Frankfurt, the sources said. 
  • The pension fund would spend another 250m euros to buy prime office space in Paris and capitalise on high rental yields there, said one of the sources, who asked not to be identified because he was not authorised to speak to the media. (Starbiz)

Source: CIMB Daybreak - 29 July 2013

Something brewing in Flonic?

THE potential emergence of a couple of high-profile shareholders in loss-making Flonic Hi-Tech Bhd is bound to pique investor interest in the weeks to come. So far, the manufacturer of critical and precision cleaning systems for various industries has announced that Tan Siew Ching who is the granddaughter of the late Tan Sri Tan Yuet Foh - founder of Tan Chong Motors Holdings Bhd - has increased her stake in the company to a substantial 6.72%. Market talk has it now that a well known oil and gas industry player could potentially surface as a major shareholder in the company too.

  • Why all these changes is not very clear at the moment but they do suggest that something is cooking in this firm, which is currently loss-making. While speculation is still swirling as to who that oil and gas personality is, sources say it is former Perisai Petroleum Bhd major shareholder Nagendran Nadarajah. According to one source, he had been accumulating shares in the firm over the past few days and could potentially hold a substantial stake in it. 
  • In 2010, Nagendran disposed of his 19% stake in Perisai to HCM Logistic Ltd, a subsidiary of Singapore-listed Ezra Holdings Ltd.(Starbiz)

Source: CIMB Daybreak - 29 July 2013

KTMB to seal RM380 deal with French group

Thales Group is expected to ink a RM380m deal with national railway company Keretapi Tanah Melayu (KTM) to supply railway signalling simulator and equipment. Sources said under the deal, the French group will also provide facilities and training syllabus to KTM’s Malaysian Railway Academy (MyRA) via its education arm Thales University. A memorandum of understanding (MOU) between the two parties is expected to be signed today. (BT)

Source: CIMB Daybreak - 29 July 2013

AgroFresh may go public to raise RM200m

AgroFresh Holdings Bhd is mulling over a RM200m listing for business expansion, said sources with first-hand knowledge of the matter. The company will announce the details in November," a source told BT. If things went well, AgroFresh would be the first fruit trader and producer to be listed on Bursa Malaysia. AgroFresh has yet to appoint investment bankers or submit a draft prospectus to the Securities Commission.

  • "The company has been approached by some public-listed entities to discuss the possibility of a backdoor listing," the source said. The company, which is pondering between an initial public offering and backdoor listing, needs more capital to expand its business. Last Friday, AgroFresh signed a RM4bn 10-year contract with Dashang Group, one of the largest retailers in China, to supply Cavendish bananas and assorted tropical fruits to the latter. 
  • "Dashang has given AgroFresh a two-year period to fully comply with the fruit supply agreement. If AgroFresh chooses a conventional listing (IPO), it may not be able to ramp up production in the stated time frame," the source said. From appointing professionals to eventually listing on the stock exchange, the IPO exercise could take months to complete. 
  • AgroFresh has to supply 220,000 tonnes of Cavendish bananas carrying the "Cavana" brand to Dashang annually. AgroFresh has also secured two smaller fruit supply contracts from retailers in China. It also supplies Cavendish bananas to Europe and the Middle East. The company, which started as a banana fruit trading company in 2009, is now expanding into upstream and downstream activities. It plans to increase its total plantation size to 9,500ha with two more plantations in Thailand and Indonesia coming on stream. It has 500ha of banana farms in the Philippines. (BT)

Source: CIMB Daybreak - 29 July 2013

Tenders for RM25b MRT project early next year?

Mass Rapid Transit Corp Sdn Bhd (MRT Corp) expects to call for tenders for Line 2 of the Klang Valley My Rapid Transit (KVMRT) project, estimated to be worth over RM25bn, by as early as next year, sources said. The second line is slated to be a circle line and may ply between Sungai Buloh and Putrajaya, a distance shorter than the 51km-long Line 1 from Sungai Buloh to Kajang.

  • “Although Line 2 is shorter than Line 1, it may cost more because of land acquisition. The Land Public Transport Commission (Spad) is carrying out a study on Line 2 and Line 3 to finalise the alignment. “It has not been decided whether Line 2 and Line 3 will be implemented simultaneously or one after the other,” a source with first hand knowledge on the matter told BT. 
  • Line 1 is mostly elevated except for an underground portion of 9.5km running through the city centre from Semantan at Jalan Duta to Maluri in Cheras. MRT Corp CEO atuk Azhar Abdul Hamid said no date for procurement initiatives has been fixed for Line 2 and Line 3. “The government has approved Line 2 and Line 3 and Spad is in the process of seeking approval,” he said. Meanwhile, sources said companies prequalified for Line 1 can bid for Line 2 and Line 3. 
  • “As long as they have been prequalified they can bid for Line 2 and Line 3. New companies can also submit their tenders but they must meet the government’s criteria,” one of them said.Winners for Line 1 were Sunway Bhd, Gadang Holdings Bhd, Mudajaya Corp Bhd, IJM Corp Bhd, Ahmad Zaki Resources Bhd, Naim Engineering Sdn Bhd, UEM Construction Sdn Bhd and Apex Communication Sdn Bhd. The project delivery partner for Line 1 is MMC-Gamuda Joint Venture Sdn Bhd. The JV had won the RM8.2bn tunnelling job.(BT)

Source: CIMB Daybreak - 29 July 2013

MAS hires part-time cabin crew

Malaysia Airlines (MAS) is hiring part-time cabin crew, paying RM8 per hour to make up for the shortage of staff as the international carrier embarks on an expansion drive. It aims to add on to its current strength of 3,800 flight attendants. The airline needs more cabin crew after adding new routes and frequencies in recent months. It has reinstated flights axed two years ago. MAS will commence flights to Dubai next month and Darwin in Australia by November. It will also begin flights to new destinations like Kochi in September and add frequencies to existing routes like Auckland. (Financial Daily)

Source: CIMB Daybreak - 29 July 2013

No need for lock-up period - Sona Petroleum

Sona Petroleum Bhd, a special purpose acquisition company (SPAC), believes it is not imperative to impose a lock-up period on the company's cornerstone investors. This is because the structured nature of a SPAC ensures the confidence of long-term investments, managing director Datuk Seri Hadian Hashim said. Hadian was responding to issues raised regarding a moratorium, or a lack of it, imposed on Sona Petroleum's six cornerstone investors.
  • Some 275m shares under the initial public offering have been offered to six cornerstone investors, namely Hong Leong Asset Management Bhd, Hong Kong-based hedge fund Segantii Capital, Davidson Kempner European Partners, CIMB-Principal Asset Management Bhd, Kenanga Investors Bhd and RHB Investment Management Sdn Bhd. The cornerstone investors did not obtain their shares at a discount. 
  • Sona Petroleum was the first SPAC listing to allocate shares for investors approved by the Ministry of International Trade and Industry, as well as foreign and domestic cornerstone investors, underscoring the rising appeal of these investment vehicles. SPACs are companies which have no operations or income-generating business at the point of IPO but undertake a listing for the purposes of acquiring operating companies or assets, known as "qualifying assets" (QAs). (BT)

Source: CIMB Daybreak - 29 July 2013

China firm to launch maiden Malaysia project with GDV of RM10bil

China's seventh largest property developer Country Garden (Holdings) Ltd expects to launch its maiden project in Danga Bay on Aug 11, just eight months after purchasing the land. Country Garden Danga Bay, with a GDV of RM10bn, is the company's first self project outside China. It is understood there would be more than 9,000 condo units. A further 6.07ha are earmarked for commercial development like shopping mall and commercial boulevard. (Stabiz)

Source: CIMB Daybreak - 29 July 2013

LBS Bina aims to double profit

Although LBS Bina Group has strongly hinted at a higher-than-industry-average dividend rate, its board continued to waver between rewarding shareholders with a more handsome payout and growing its Malaysian business with incoming funds. But what is more exciting is its lofty ambition to double last year's net profit of RM37.2m to RM74m in three years. (Starbiz)

Source: CIMB Daybreak - 29 July 2013

Ranhill Energy and Resources IPO is off

Ranhill Energy and Resources, which has withdrawn its plans for an IPO, said it will refund all monies received to all applicants or investors by 7 Aug to the respective applicants' address maintained with Bursa Depository. However, the company said it has every intention to revisit an IPO and to achieve a market listing "at the earliest practicable date".
  • Meanwhile, Ranhill said its Australian affiliate Perunding Ranhill Worley Sdn Bhd (PRW) had on 25 Jul received a letter from Petronas stating that the suspension of PRW's licence for upstream activities had been lifted effective from the date of the letter. However, the suspension on downstream activities as set out in the letter from Petronas dated 17 Jul remains intact. (Sun)

Source: CIMB Daybreak - 29 July 2013

Privatisation of OSK Property Holdings may be in the works?

A privatisation of OSK Property Holdings may be in the works after filings with Bursa Malaysia showed the company's substantial shareholder and family via their privately-held vehicle, Land Management Sdn Bhd, had raised their stake to 45.7% from 41.59% in less than a week. Tan Sri Ong Leong Huat and his family members had been accumulating shares at RM1.33 each from Jul 23 to 25 on the open market. (Starbiz)

Source: CIMB Daybreak - 29 July 2013

Sime Darby may be looking at acquiring plantation land in Papua New Guinea?

Sime Darby Bhd may be looking at acquiring plantation land in Papua New Guinea, sources say. When contacted by The Edge, a Sime Darby spokeperson said that is is "constantly exploring opportunities for growth. However, while we are keen to expand, we do not have anything material to announce currently," said the spokeperson.
  • Sime Darby currently has 878,797ha of landbank in Malaysia, Indonesia and Liberia. Just under a year ago at the group FY12 result briefing, Sime Darby had said that it aims to increase its plantation landbank to 1m hectares by 2015. (The Edge)

This news does not come as a surprise to us. Sime has indicated previously that it is keen to expand its plantation landbank.

Source: CIMB Daybreak - 29 July 2013

CIMB Political News - 29 July 2013

Umno will be holding its general assembly in Dec after the conclusion of its party elections in Oct, party president Datuk Seri Najib Razak announced. Najib said the general assembly would be held for six days starting from Dec 2, while the party election for supreme council members would be held simultaneously with the divisional delegates' meetings nationwide on Oct 5. 

  • The party's Wanita, Youth and Puteri movements will hold their internal polls on Sep 28. This will be the first time that Umno will be holding its party elections according to amended provisions in the party constitution, which will allow 150,000 grassroots members to elect the top leadership. (NST) 

The disclosure by the architect of the Scorpene submarine deal Jasbir Singh Chahl that Mongolian model Altantuya Shaarribu was never part of the team should put an end to the lies spread by the opposition, said Communication and Multimedia minister Datuk Seri Ahmad Shabery Cheek. He said the disclosure proved that the opposition's allegations that PM Datuk Seri Najib Razak had links with Altantuya's murder and the submarine deal were baseless. (NST)

Source: CIMB Daybreak - 29 July 2013

CIMB Malaysian Economic News - 29 July 2013

The International Trade and Industry Ministry (Miti) is committed to helping Kedah develop its industrial sector and to luring more investors to the state. Its minister Datuk Seri Mustapa Mohamed said, as such, the ministry viewed seriously arising issues such as the water supply problem at the Kulim High-Technology Park (KHTP). The federal government will look into the request from the state government for RM50m to improve the water supply, he said. (Bernama) 

All agriculture agencies in Johor have been ordered to submit proposals on the best possible way of turning the state into the country's main food producer. Johor Agriculture and Agro-based Industry Committee chairman Ismail Mohamed said he would call for a meeting with officers of the agencies concerned today to determine the direction of the state's agriculture industry. 
  • "We will determine the level of the state's production in 10 key areas which has to be achieved in a certain period to ascertain Johor becomes the country's main food producer," he said. (Bernama)

The government is open to negative feedback and comments on the ongoing Trans-Pacific Partnership Agreement negotiations, which are expected to conclude by year-end. International Trade and Industry Minister Datuk Seri Mustapa Mohamed said his ministry will hold an open day on the TPP on 1 Aug at Matrade, Jalan Duta.
  • The first part is a briefing on what is happening in Kota Kinabalu at the 18th round of the TPP negotiations. 
  • The second part features a forum with comments and views from panelists and questions from the floor, while the last part is a workshop for six to seven smaller groups on areas like drugs, Bumiputera issue, small and medium enterprises, intellectual property rights and the labour environment. 
  • On the economic growth outlook, he said that the government still believes the country can achieve the target of 5% growth for this year. (Bernama) 

The recent shortage of diesel in Sabah is temporary and due to disruptions in the supply of subsidised diesel to several petrol stations, said state Community Development and Consumer Affairs Minister Datuk Jainab Ahmad Ayid. To overcome the shortage, the Domestic Trade, Cooperatives and Consumerism Ministry has and will take the necessary steps including raising the subsidised diesel quota if there is a need and justification, she said.
  • She said the high price differential between subsidised and unsubsidised diesel has contributed to the shortage, with commercial concerns buying subsidised diesel and smuggling it through coastal areas. 
  • The rise in number of vehicles using diesel and the difficulty of transporting the fuel to other areas due to geographical features are also contributing factors, she said, adding the shortage will be resolved before the start of the upcoming festive season. (Bernama) 

A government move to distribute 20m litres of diesel nationwide after an apparent shortage has been met with approval although some wonder if the amount is enough. Petrol Dealers Association of Malaysia vice-president Datuk Abu Samah Bachik said this amount could disappear very quickly due to the Hari Raya holidays.
  • Domestic Trade, Cooperatives and Consumerism Minister Datuk Hasan Malek said the move to allocate 20m litres until the end of July came after a Friday meeting with oil companies. 
  • From this, 5m litres would go to Sabah. 
  • However, he said that the quota could not be raised too much due to smuggling and fuel manipulation concerns. (The Star) 

Malaysian Investment Development Authority (Mida) is currently in talks with potential investors in alternative energy, oil and gas and advanced electronics. Its CEO, Datuk Noharuddin Nordin, said apart from that, some of these foreign companies are also interested in setting up their operational headquarters or regional service centres in Malaysia.
  • He said the investments in the pipeline under negotiation are encouraging.
  • As of May this year, the investment promotion agency is actively negotiating potential investments worth RM42.1bn to be realised within this year. 
  • During the 1Q13, the country recorded RM49.3bn of approved investments, an increase of 44% as compared with RM34.3bn in 1Q12, a substantial proof that Malaysia is still a location of choice for investments in the region. (Bernama) 

Perbadanan Nasional Bhd (PNS), an agency under the Domestic Trade, Cooperatives and Consumerism Ministry, will identify small businesses to enable them to be more competitive and systematic under its business transformation scheme. "We also hope to develop them into franchise businesses," the relevant minister, Datuk Hasan Malek, said.
  • PNS has identified five potential franchisors for the programme, while urging locksmiths, cobblers, plumbers, electricians and the like to contact PNS to join the scheme, he said. 
  • Of the government's RM8m micro franchise fund for businesses under RM50,000, PNS has disbursed RM5.7m for 213 franchisees, mainly in the retail, services, food and beverage, and education sectors, he added. (Bernama) 

The Employees Provident Fund (EPF) will invest £500m (RM2.1bn) in industrial properties in Germany and office space in France, according to sources familiar with the deals, signalling growing appetite for high-yielding property assets as Europe's main economies show signs of recovery. The fund will expand an existing partnership with Australia's Goodman Group Pty Ltd to start a £รก250m fund to buy seven industrial properties in Berlin, Munich and Frankfurt in Germany, the sources said.
  • It will spend another £250m to buy prime office space in Paris and capitalise on high rental yields there. 
  • New York City properties are also being actively targeted, one of the sources said. 
  • The deal will mark the EPF's first foray into the eurozone. (BT) 

Standard & Poor's Rating Services (S&P) on 26 July affirmed sovereign credit ratings on Malaysia with a stable outlook, which reflects the country's strong external liquidity position, open and competitive middle-income economy, and considerable monetary flexibility. These strengths are weighed against sticky fiscal deficits and an increasing government debt burden.
  • The rating agency affirmed its "A-" long-term and "A-2" short-term foreign currency sovereign credit rating on Malaysia and also affirmed its "A" long-term and "A-1" short-term local currency sovereign credit rating on the country. 
  • S&P's also affirmed its Asean regional scale rating on Malaysia at "axAAA/axA-1+". (BT) 

Prices of chicken had spiked recently due to a weaker ringgit, higher minimum wages and rising cost of feed but not due to any shortages, said Federation of Livestock Farmers of Malaysia (FLFAM) secretary-general Jeffrey Ng. Broiler producers were faced with the double whammy of higher cost of feed which is imported, which makes up 60% of the cost of production and the depreciation of the ringgit.
  • He said the situation has been compounded by the imposition of the minimum wage of RM900 per month by the government this year. „h FLFAM members were paying their farm hands an average of RM600 per month and the new wage is a rise of 50% exclusive of allowances, added Ng. (Malaysian Insider) 

The Urban Wellbeing, Housing and Local Government Ministry is setting up a "rakyat exchange" website which will match the skills of people to the demands for those talents. "People in urban areas are facing increasingly high costs of living and one way to alleviate this is for them to have more money in their pockets," said its minister Datuk Abdul Rahman Dahlan. He said that the website is expected to be up and running next year and that there will also be a smartphone app so that the site is more accessible. (The Star)

In an effort to make houses more affordable to city folk, the government will have a day-long brainstorming session next month with all stakeholders. They would include housing developers, house owners' associations, those in the cement and building material industries, academics, architects and bankers. Some 70 to 80 stakeholders are expected to attend it, said Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan said. (The Star) 

Some 3m coconuts will be imported to meet the expected surge in demand during the Hari Raya period. Agriculture and Agro-based Industry Minister Datuk Seri Ismail Sabri Yaakob said the coconuts were imported from Indonesia and would arrive in stages to ensure freshness. Coconut is among 20 items that have been placed under the price control scheme for Hari Raya. Its ceiling price is RM1.50 each while the maximum price for coconut milk has been set at RM6/kg. (The Star) 

In about 30 years from now, Malaysia will have 38.6m people and it is expected to be a growing older populace. Many in the year 2040 would be aged 36 and above, according to the National Statistics Department's (NSD) Population Projections 2010-2040 document.
  • The NSD said Malaysians would also be making fewer babies while the annual growth rate would decline from 1.8% in 2010 to 0.6% in 2040. „h The population aged 65 and over is projected to increase more than three-fold of the 2010 population. „h This will lead Malaysia to become an aging population in 2021, it said. „h It said the number of children in the country (0 to 14 years) would hover around the 7.8m mark, while the potential workforce (15 to 64 years) would shoot up from 19.3m in 2010 to about 26.6m in 2040. „h Senior citizens (65 years and above) were expected to be 11.4% of the population, or 4.4m people, 3m more than in 2010. (The Star)

Source: CIMB Daybreak - 29 July 2013