Monday, August 14th, 2017


China pressed iron ore traders to halt business even before UN sanctions

BEIJING, Aug 14 — China was pressuring its iron ore traders to stop buying the commodity from North Korea even before a United Nations Security Council vote this month to ban the trade as punishment for Pyongyang’s missile tests, two traders…

UEM Edgenta to sell stake in NZ unit for RM504m

PETALING JAYA: UEM Edgenta Bhd plans to dispose of its 61.2% equity stake in its New Zealand Stock Exchange listed subsidiary Opus International Consultants Limited (OIC) to WSP Global Inc, for NZ$161.1 million (RM504.2 million) cash to help pare down debts.

UEM Edgenta could receive another NZ$6.3 million should the board of OIC approve an up to NZ$0.07 per share cash dividend, bringing total proceeds to NZ$167.4 million.

The stock closed up seven sen at RM2.55 yesterday with 485,200 shares changing hands. It has a market capitalisation of RM2.12 billion.

The company said in a statement yesterday, the disposal will be made via its wholly owned subsidiary Opus International (NZ) Limited (ONZ). ONZ is a wholly owned subsidiary of Opus Group Bhd (OGB), which in turn is wholly-owned by UEM Edgenta.

WSP is a Canadian company listed on the Toronto Stock Exchange.

“It will also provide UEM Edgenta with the financial resources and enable management to focus on driving as well as supporting the organic growth and operational excellence initiatives in our core sectors spanning healthcare, infrastructure and real estate in key markets namely Malaysia, Singapore, Indonesia, Taiwan, India, other Southeast Asian countries and the Middle East region,” UEM Edgenta managing director and CEO Datuk Azmir Merican said.

The firm has entered into a lock-up agreement to sell its 61.2% shareholding via ONZ in OIC to WSP, subject to its shareholder approval at a general meeting expected to be convened in the fourth quarter of 2017.

The company’s major shareholder, UEM Group has provided an undertaking to vote in favour of the proposed disposal.

Under the proposed disposal, UEM Edgenta will retain OGB, an entity that focuses on project management and design consultancy operating in Malaysia and Indonesia, that has been drawing resources from OIC primarily in the asset management and consultancy businesses in the expressway sector.

OGB via its wholly owned subsidiary Opus International (M) Bhd (OIM) will continue to provide asset consultancy services in the two countries. This includes supporting UEM Group Bhd, the parent company of UEM Edgenta, in delivering the Pan Borneo Highway Project in Sabah.

The company said the proposed disposal of OIC is an opportunity for it to monetise its investment upfront at a healthy premium over the current market price.

It will also reduce its gross gearing from 0.8 times (post drawdown of sukuk of RM300 million in April 2017) to 0.4 times and provide the opportunity to sustain dividend payout to its shareholders in the future. Part of the proceeds will be used to repay loans taken for the acquisition of Asia Integrated Facility Solutions Pte Ltd, which was completed on Dec 15, 2016.

Despite the disposal, UEM Edgenta said it will still be able to draw on the experience and resources of OIC albeit as a third-party consultant and by extension, WSP’s engineering capabilities.

Payment speeds improve for agriculture, construction and manufacturing firms

KUALA LUMPUR: Companies in the agriculture, construction and manufacturing have a notably improved trend in terms of speed in making payments to creditors over the last few quarters, consistent with broadly positive business prospects for these three sectors, according to the RAMCI 2nd Industry Debts Turned Cash (RAMCI i-DTC) indicators measured from the last four quarters, Q3 2016 to Q2 2017.

The indicators were released by the Trade Bureau platform of RAM Credit Information Sdn Bhd (RAMCI), one of the leading credit reporting agencies.

RAMCI’s i-DTC measures the average number of days companies in various industries take to pay their creditors after the invoice date. A total of 12 industries’ indicators have been released yesterday, with the latest inclusion of the education industry.

Its indicators revealed that services-related industries such as the information & communication technology (ICT), financial services and real estate sectors experienced a decline in payment speeds over the same period.

For the real estate industry, which includes property companies and real estate firms, it is probably due to a slowdown in sales over the last two years that contributed to the stretch in their cash flow.

As for ICT and financial services industries covering generally larger corporations such as banking and financial institutions, telecommunication and IT companies, it could possibly be due to a lengthening of payment processes.

The hospitality and food and beverage, (F&B) and education industry (new addition) seem to be prompt paymasters with an average of 30 day for hospitality and F&B, and slightly over 30 days for education.

RAM Credit Information Sdn Bhd CEO Dawn Lai said for creditors who extend credit to companies in these few industries it is important to continue watching the i-DTC trend and work out an appropriate payment process with their debtors to ensure prompt payment.

The average i-DTC trend across all industries has seen a slow climb up to 70 days in Q2 2017, from 66 days in Q1 2017. While the majority of companies still grant credit terms in the range of 30 days, the construction, retail and wholesale industries require longer credit terms of 60 days to 120 days.

“The RAMCI i-DTC data also indicated that the defaulted payments for total business corporations are on a slower pace of increase with an average 0.38% increase per month, representing a compounded growth rate of 4.56% over the 12-month period, as compared with previous 12-months compounded growth rate of 7.41%,” Lai said.

This indicates a positive sign that the Malaysian economy condition is stabilising, consistent with the upward revision of GDP growth and the broadly positive business sentiment with the latest release of RAM Business Confidence Index, a quarterly business survey jointly conducted by RAM Holdings and RAMCI on over 3,000 corporate and SMEs.

The RAMCI i-DTC indicators are based on more than 450,000 payment records on business corporations and SMEs measured between Q3 2016 and Q2 2017, and segregated by industry to allow a clearer picture of how fast companies in each industry pay their creditors.

More investments needed inE&E sector

KUALA LUMPUR: Malaysia needs to focus on increasing investments in the Electrical and Electronics (E&E) industry to transform into a high-income economy under the Industry 4.0 revolution.

SME Association Malaysia National deputy president Ong Chee Tat said small and medium enterprises (SMEs) in the country had a lot of catching up to do, to be on par with the bigger players, as well as be atop the latest trends in automation and technologies.

He said in terms of the Industry 4.0 revolution, local SMEs do not have the economies of scale compared with other countries and are thus unable to get a faster return on their investments.

“The big boys can spend first and earn later. But, the smaller players, can only spend what they earn. It is a matter of capital investment,” he told Bernama.

Ong said the association had put forth suggestions to the government on the funds needed to spur SMEs to advance into the Industry 4.0.

He said local SMEs need to change their mindset, from one of reliance on foreign labour to automating their businesses processes via the adoption of technologies such as robotics, the Internet of Things (IoT), cloud computing and artificial intelligence.

Citing the Original Equipment Manufacturers in Penang and other industrial zones as an example, Ong said the companies producing for big global factories were well into Industry 4.0.

He said game-changing innovations had caused a paradigm shift in the E&E industry, and SMEs, especially the smaller players, required financial assistance to be able to advance in Industry 4.0.

According to earlier reports, Khazanah Nasional Bhd subsidiary, Malaysian Technology Development Corporation, plans to approve RM170 million in loans to technology-based firms this year.

Globally, Industry 4.0 has spurred demands for energy efficient products, such as LED lamps and energy-efficient refrigerators, air-conditioners and other electrical gadgets, while stimulating interest among industry players in the E&E sector.

Palm falls from high as India import tax hits sentiment

KUALA LUMPUR: Palm oil futures fell in early trade yesterday and were set for their first fall in five sessions as sentiment took a hit after India on Friday said it would raise import taxes on crude and refined edible oils.

India, the world’s largest buyer of vegetable oils, doubled the import tax on crude palm oils to 15% and raised the import tax on refined palm oils to 25% to protect local oilseed farmers from cheaper imports from top suppliers Malaysia and Indonesia.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 0.2% at RM2,677 ) at the midday break. Traded volumes stood at 10,614 lots of 25 tonnes each at noon.

“The market may trade cautiously after the import duty hike in India,” said a futures trader, adding that Indian demand for palm oil could decline in the coming weeks. Cargo surveyor data showing Malaysia’s palm oil exports for the first half of August is scheduled for release today.

Another trader said that while India’s announcement partly weighed down palm, prices were also tracking weaker performing soyoil on the Chicago Board of Trade and China’s Dalian Commodity Exchange.

Palm oil prices are impacted by the movements in related edible oils including soy, as they compete for a share in the global vegetable oils market.

The October soybean oil contract on the Chicago Board of Trade was slightly down 0.1%, while the January soybean oil on the Dalian Commodity Exchange fell 0.2%. In other related oils, the January palm olein contract was up 0.5%. – Reuters

APFT aims to return to the black

PETALING JAYA: Flight education and training service provider APFT Bhd is targeting to return to the black in two years by completing its settlement of debts, embarking on a restructuring exercise and winning new businesses.

APFT has yet to improve its financial position and generate sufficient cash flow due to losses from its flight education and training division, as well as mechanical engineering works and services division for the oil and gas and petrochemical industries.

APFT has been incurring losses for the past five years as a result of softening demand for the fixed wing pilot training market in Malaysia, mainly due to local major airlines cutting back on their training programme for new pilots, as well as the delay in refinery and petrochemicals integrated development projects due to the current lacklustre oil, gas and petrochemical industries.

Newly-appointed executive director Edwin Silvester Das said the next step is for the group to complete the capitalisation exercise and settlements to creditors.

“We’re trying to clean up the company and we’ve got the intention to take it to the next level, out of the situation we’re in right now. There has been a lot of accumulated losses. We’re trying to restructure,” he told reporters after its EGM yesterday. 

“APFT doesn’t have a big staff force to chop. We’re lean and mean. What we need to do is win new businesses.”

Edwin, who has experience in turning around companies, said APFT is still working on its expansion plans and sees potential in this business, as airlines expand, allowing it to also tap into the regional market.

“This is no sunset industry. As long as you’ve got aeroplanes, you need pilots. You have airlines buying planes so there is always a demand as companies progress.”

At this point, he said, APFT will still focus on its core business, but noted there is a possibility in any business to change going forward.

He added that APFT may also look into the leisure market for flight education.

“It’s a new possibility. There’s a lot of opportunity in this industry,” said Edwin.

Earlier at the EGM, shareholders approved its proposed settlement of debts owing to creditors and directors, as well as the proposed private placement to raise RM13.33 million, mainly to be utilised for the repayment to trade creditors.

The proposed creditors capitalisation entails the settlement of the amount owing to the creditors of RM11.32 million via the issuance of 226.3 million settlement shares.

The proposed directors capitalisation entails the settlement of the amount owing to directors of RM12 million and RM880,000 via the issuance of 240 million and 17.5 million settlement shares.

The company closed unchanged at 4 sen yesterday, having lost 33.33% of its share price in the last one year.

Singapore’s Ezion restructuring debts

SINGAPORE: Singapore-based oil services company Ezion Holdings Ltd said trading in its shares would be suspended temporarily as it is in talks with stakeholders such as bank lenders and creditors about its financing and capitalisation structure.

The company, which owns a fleet of liftboats, said it is reviewing its options to strengthen its financial position and preserve value for its stakeholders.

Singapore’s offshore and marine industry has been hit by low oil prices, weak charter rates and delays to projects, forcing many firms to restructure debt and cut costs.

Industry peers Swiber Holdings Ltd and Swissco Holdings Ltd have sought refuge in court, while Ezra Holdings Ltd filed for US bankruptcy protection.

Ezion has been considered to be among the stronger players in the industry, although analysts have drawn attention to its challenging business environment and high debt.

It is one of the largest operators in Southeast Asia for liftboats – self-propelling rigs that support offshore energy work such as platform maintenance.

“The operating environment remains tough and it may take some time before a significant recovery can be seen,” Low Pei Han, an analyst with OCBC Investment Research, said in a note.

The company’s shares last traded at S$0.188. Its market capitalisation has shrunk to about S$408 million (RM1.28 billion) from a 2014 peak of about S$3 billion.

Ezion had total debt of about US$1.4 billion as of end June.

Besides banks loans, the company has a series of bond issuance, of which the earliest matures in August next year.

“While the initial responses from our principal lenders appear positive, the details will need to be finalised,” Ezion said. “The outcome of the above discussions will very much determine if Ezion will survive the current crisis and emerge stronger than before.”

Ezion said charter rates for its rigs have been dropping significantly and that was expected to continue for the next 12 months. The collection of receivables was also slow and significant impairments may be needed if the situation worsens.

The company said its difficulties presented many challenges to its cash flow that “will threaten the fundamental viability of the group’s business if these challenges persist.”

Ezion also reported a loss of US$2.6 million for the second quarter compared with a profit of US$8.1 million a year earlier. – Reuters

Bursa Malaysia seeks feedback on review of Main, ACE Markets’ listing requirements

KUALA LUMPUR, Aug 14 — Bursa Malaysia Securities Bhd has issued a consultation paper on the review of the Main Market and ACE Market Listing Requirements (LR) in relation to corporate governance requirements. The amendments are being proposed…

FGV keen to offer logistic services in RM55b ECRL project

KUALA LUMPUR (Aug 14): Felda Global Ventures Holdings Bhd wants to offer its expertise in providing integrated logistics services with parties involved in the development…

Banks lead relief rally for European stocks, fundamentals back in focus

LONDON, Aug 14 — European shares rose today after geopolitical tension had sent them to their worst weekly losses of the year. The pan-European STOXX 600 rose 0.8 per cent while euro zone stocks and blue-chips jumped 1 per cent. Tension…