Wednesday, August 30th, 2017

 

Wall Street gains after strong data but N.Korea worries linger

NEW YORK, Aug 30 — Wall Street was higher in late morning trading today after data showed stronger-than-expected US economic growth, but gains were limited by concerns about escalating tensions between Washington and Pyongyang. Gross domestic…


StanChart Research: Malaysia’s GDP growth to moderate in second half

PETALING JAYA: Standard Chartered (StanChart) Research which had revised its full-year gross domestic product (GDP) growth forecast for Malaysia to 5.4% from 4.6% following a strong first-half economic performance, expects growth to moderate in the second half of the year.

The research house said the strong first-half GDP growth of 5.7% was driven by resilience in private consumption, increase in private investment and pick-up in exports.

It, however, expects private consumption to ease going forward.

“Domestic spending in the first half was likely boosted by one-off measures, including the minimum wage increase and voluntary employee pension contribution cuts. Higher BR1M (cash assistance to low-income households) may have also helped, but this was likely reduced by lower subsidies. Consumption may have been boosted by higher rural income due to the commodity price recovery.

“We think some base effects of the one-off measures may weigh on consumption growth in the second half. Furthermore, the slightly negative real wage growth may affect consumption (empirically, we found that real wage growth affects private consumption with a lag of about three quarters),” StanChart said.

StanChart was alarmed by the strong pace of growth which it said could increase the risk of a pick-up in core inflation. According to StanChart, if growth continues to surprise on the upside, expectations for an interest rate increase by the central bank may also build up.

“In the latest monetary policy statement in July, Bank Negara Malaysia (BNM) noted that underlying inflation (measured by core inflation) will be sustained by more robust domestic demand but is expected to remain contained.

“We think BNM is comfortable with the current accommodative monetary policy settings and maintain our view of no change in the policy rate for 2017, while keeping a watchful eye on core inflation even as headline inflation has eased since its peak in first quarter,” the research house said.

The export sector is set to be affected by unfavourable base effects such as the fading boost from high commodity prices and moderating external demand.
The softening growth in China, which is the primary source of demand for exports, may also impact export growth.

StanChart also displayed a cautious sentiment on the sustenance of the momentum of private investment which was driven by ongoing infrastructure projects and a pick-up in external demand as well as foreign direct investment.

However, loans disbursed have eased in the second quarter compared with the first, while construction projects have fallen steadily over the last few quarters.

Private investment were supported by ongoing infrastructure projects and a pick-up in external demand together with foreign direct investments, in the first half.

StanChart remains somewhat cautious on the sustainability of this strong momentum however, as loans disbursed eased in the second quarter from the first, as construction projects have fallen steadily over the last few quarters.


Mixed views on AirAsia corporate revamp, earnings performance

PETALING JAYA: Analysts are mixed on AirAsia Bhd’s (AAB) corporate exercise and earnings performance for the first half of the year ended June 30.

HLIB Research maintained a BUY call on AirAsia’s shares at a higher price target of RM4.10 (from RM3.82) on the back of expectations for seasonally stronger earnings in the second half of the year.

The research house also expects a stronger load factor in the second half due to strong demand and sustainable yields. Its fuel requirement is also expected to be hedged at US$60 per barrel.

On top of that, AirAsia is expected to gain from the corporate exercise and the disposal of its Asian Aviation Centre of Excellence Sdn Bhd for RM429.30 million.
PublicInvest Research maintained a NEUTRAL call on AirAsia at a price target of RM3.19.

“Upon completion, there will be no significant changes to the effective shareholdings in IAA by AirAsia, which is up to 48.4% (currently holding 49% of IAA). In addition, there will be a total one-off gain of about RM230.4 million in FY17, owing to reversal of IAA’s impairment in AAB of RM207.5 million, as well as forex gain of RM22.9 million, this however subject to approvals be given for the transaction. We view the listing as positive as it should provide financial flexibility to IAA to pursue growth,” PublicInvest said.

“We understand that IAA is participating in the Indonesia Tax Amnesty Programme, which IAA will no longer be liable for any tax liability prior to FY16, whilst the existing deferred tax asset in IAA’s book prior to FY16 will also no longer be deductible against future profits,” it added.

HLIB also said it expects no significant impact on the group’s earnings and shareholdings from the corporate exercise which is expected to be completed in the first quarter of FY2018, as it is pending the approval of regulators and shareholders.

Meanwhile as analysts agreed that the group’s core net profit came within expectations, they differed on the quantum of the core earnings.

PublicInvest Research said the core net profit for the first half stood at RM775.70 million whereas HLIB Research said the earnings for the first six months were at RM667.60 million.

AAB shares fell one sen to RM3.32 with 26.7 million traded yesterday. It has a market capitalisation to RM11.1 billion.


Higher operating costs hit Boustead Holdings Q2 results

PETALING JAYA: Boustead Holdings Bhd’s net profit plunged 73.7% to RM59.3 million for the second quarter ended June 30, 2017 against RM225.8 million in the previous corresponding period, due to higher operating costs.

Revenue, however, rose 15.3% from RM2.07 billion to RM2.39 billion.
The group has proposed an interim dividend of three sen per share for the quarter under review.

Boustead’s six-month net profit plummeted 68.9% from RM204.3 million to RM63.5 million on the back of a 21.3% rise in revenue from RM3.93 billion to RM4.76 billion.

The group said in a filing with the stock exchange that for the half-year, the plantation division registered a lower pre-tax profit of RM85.9 million compared with RM151.2 million in the same period a year ago due to the absence of plantation land disposal gain.

The average selling price of crude palm oil for the first six months was RM2,969 per tonne, up by RM545 or 22% from RM2,424 in last year’s corresponding period.

The heavy industries division registered a pre-tax profit of RM45.9 million, marking an improvement from the deficit of RM99.6 million in the previous year’s corresponding period, thanks to improved contribution from Boustead Naval Shipyard.

The finance and investment division closed the half-year period with a higher pre-tax profit of RM40.5 million versus RM24.6 million in the same period last year.

The pharmaceutical division recorded a lower pre-tax profit of RM28.7 million versus RM37.9 million, while the property division recorded a deficit of RM15 million against a pre-tax profit of RM212.2 million in last year’s corresponding period.

Looking ahead, Boustead expects its six core business areas to benefit from the positive long-term prospects for the Malaysian economy, which is supported by strong economic fundamentals, a sound financial system, an accommodative monetary policy as well as the implementation of various government initiatives.

Boustead Holdings shares closed unchanged at RM2.70 yesterday, with 188,600 traded, giving it a market capitalisation of RM5.47 billion.


Fed’s Powell says new rules for bank directors don’t lower the bar

CHICAGO, Aug 30 — Federal Reserve Governor Jerome Powell today delivered a robust defense of new regulations for bank directors, saying they would streamline the role directors play in the day-to-day oversight of their institutions, but don’t…


IPIC says 1MDB has paid rest of money due by today

PETALING JAYA: State-owned strategic investment fund 1Malaysia Development Bhd (1MDB) has made the remaining payment due by the end of this month to International Petroleum Investment Co PJSC (IPIC) under a settlement agreement between IPIC and Minister of Finance (Incorporated) Malaysia (MoF Inc) and 1MDB.

“IPIC has now received the funds required to be paid by Aug 31, 2017 to complete the performance by MoF Inc and 1MDB of the payment obligations that were initially due to be performed by July 31, 2017 under the Settlement and the Consent Award and to pay default interest on the delayed payment,” IPIC told the London Stock Exchange today.

1MDB said in a separate statement that all funds were paid from proceeds of the ongoing ratiionalisation programme.

The statement follows an earlier announcement made on Aug 11, 2017, in which IPIC confirmed that it had received payment from 1MDB in order for the extension agreed with MoF Inc and 1MDB to be effective.

IPIC had agreed to grant MoF Inc and 1MDB an extension un til the end of August to meet their payment obligations, subject to their making a minimum payment of US$310 million (RM1.32 billion) by Aug 12. 1MDB had missed its original payment deadline of July 31, 2017 as well as a five-day extension.

1MDB had remitted the equivalent of US$350 million to IPIC by Aug 11, 2017 while the balance of the original July 31, 2017 payment obligation to IPIC was to be settled by Aug 31, 2017.


Affin net profit up 8% in Q2

PETALING JAYA: Affin Holdings Bhd’s second quarter ended June 30, 2017 net profit was up 8% on higher net income, in particular, a RM52 million jump in other operating income.

The group made a net profit of RM148.4 million for the quarter under review, compared with RM137.4 million for the same quarter in the year 2016.

This was despite impairment losses on loans and advances going up to RM35.9 million, from RM2.2 million for the same quarter in 2016.

This was on a 23% increase in revenue to RM588.3 million for the quarter under review, compared with RM476.7 million for the quarter ended June 30, 2016.

Affin said as at June 30, 2017, Total Capital ratio, Common Equity Tier-1 Capital ratio and Tier 1 Capital ratio of all banking entities within AFFIN remained at healthy levels, well above minimum regulatory requirements. Total Capital Ratio for AFFIN Bank Bhd and AFFIN Hwang Investment Bank Bhd stood at 18.1% and 36.6% respectively.

The group said in a filing with Bursa Malaysia, the bank’s strategic objectives will be focusing on strengthening its fee-based income from digital banking, unit trust and credit card to mitigate the impact of margin compression on net interest income.

The bank is targeting a loan growth of 8-10% for 2017 and its Islamic division is expected to grow by 15%, supported by the implementation of “Priority Islamic” approach and AFFINITY Transformation Program initiatives.

Priority is also placed on increasing deposits to further strengthen the bank’s liquidity and funding profile.

The group made a 6% jump in net profit to RM268.6 million for the six month period ended June 30, 2017, compared with RM253 million for the same period in 2016.

Revenue for the period was also higher at RM1.1 billion for the six month period ended June 30, 2017, compared with RM903.6 million for the same period in 2016.

The group’s share price was up two sen to close at RM2.55 today. It has a market capitalisation of RM4.95 billion.


Scomi posts wider net loss in first quarter

PETALING JAYA: Scomi Group Bhd reported a widened net loss of RM16.18 million for the first quarter ended June 30, 2017 against RM12.21 million in the previous corresponding period, due to losses across its three major segments namely oilfield services, transport solutions and marine services.

Revenue was down by 10% from RM237.56 million to RM213.81 million.

It told Bursa Malaysia the group remains cautious on its performance for the current financial year.

Scomi Group said oilfield activities are likely to be sluggish until the end of the year, but it continues to explore opportunities that require minimal investment and to leverage on the existing resources and competitive advantage.

“For Ophir production, the well drilling campaign is expected to be completed by August/September 2017. First oil is expected by fourth quarter of calendar year 2017.”

For the marine services division, Scomi said the stable coal price has continued to drive activity at the coal unit and is expected to contribute positively to the bottom line of the segment.

“However, we expect the offshore vessels unit to continue impacting the profitability of marine services as we explore all possibilities to charter out the vessels in a challenging market.”

For the transport solutions division, Scomi Group continues to intensify efforts to expand businesses in its current markets of Brazil and India and to pursue new businesses in various strategic markets such as China, Turkey and Asean for the rail segment.

“For Mumbai monorail project in India, work continues on phase two with expected commencement of operations of phase two before end-2017.”

Meanwhile, Scomi Group’s 65.65%-owned Scomi Energy Services Bhd swung to the red registering a net loss of RM17.15 million for the first quarter ended June 30, 2017 against a net profit of RM18 million in the previous corresponding period.

Revenue declined 17.6% from RM204.59 million to RM168.49 million.

For Scomi Engineering Bhd, a 72.33% subsidiary of Scomi Group, it registered a net loss of RM14 million for the first quarter ended June 30, 2017 versus a net profit of RM344,000 in the same quarter last year.

Revenue came in at RM45.32 million, 37.5% higher than the RM32.97 million it made in the previous corresponding period.


Multi-Usage suspends director indefinitely

PETALING JAYA: Multi-Usage Holdings Bhd today said it has decided to indefinitely suspend director Tan Chew Hua after he refused to cooperate in an internal investigation conducted by the company’s solicitor.

The purpose of the internal investigation was to seek clarification from Tan on matters highlighted in the Special Audit Report dated Feb 25, 2016 and auditors’ qualified opinion in the audited financial statement for the financial year ended June 30, 2016.

The company however told Bursa Malaysia its solicitor was unable to conclude the internal investigation on Tan as he refused to cooperate and attend any interview.

The board of directors was advised by the solicitor that it is at liberty to continue the suspension until the suspension is set aside by a court order, or is prohibited by a court order.

Multi-Usage is engaged in a total of 16 material litigation as at Aug 22, 2017.

The group said in its filing with Bursa Malaysia, it will continue to focus on and develop its major business segment which is property development in Machang Bubok, Bukit Mertajam and actively pursuing opportunities to increase its landbank.

For the manufacturing segment, the group will continue to pursue enhancement in productivity of high margin products as well as implementing cost efficiencies.


Hummels faces warning over daredevil jump video

BERLIN, Aug 30 — Mats Hummels will be ticked off by Germany’s management after posting a video of him jumping from a balcony into a swimming pool — days before key World Cup qualifiers. Germany have won all six qualifiers so far and could…