Friday, September 15th, 2017


Late buying interests give Bursa Malaysia a lift

KUALA LUMPUR: Bursa Malaysia rebounded from its earlier losses to end at intra-day high today on late buying interests in selected heavyweights, among them, Genting Malaysia, Sime Darby and CIMB, dealers said.

At the close, the key FTSE Bursa Malaysia KLCI (FBM KLCI) jumped 4.96 points to end at 1,786.33 against Thursday's close of 1,781.37 after moving to a low of 1,776.87 earlier.

It opened 2.62 points better at 1,783.99.

Market breadth, however, was negative with losers leading gainers by 510 to 368 with 350 counters unchanged, 606 untraded and 38 others suspended.

Volume rose to 2.15 billion units worth RM2.69 billion from 1.90 billion units valued at RM1.81 billion on Thursday.

Genting Malaysia and IOI Corp were the top gainers among the heavyweight counters, rising 14 sen and 12 sen each to RM5.82 and RM4.66, respectively. The two counters contributed a collective 2.70 points to the benchmark index's gain.

A dealer said that there were renewed concern in the regional markets after North Korea launched its latest missile test, just days after the United Nations Security Council approved new sanctions against Pyongyang for its Sept 3 nuclear test.

However, he said, the markets were growing accustomed to North Korea's sabre-rattling due to reports that the country was preparing a missile launch, thus producing limited reaction.

Before the test took place, Asian markets were mostly higher, benefiting from positive US consumer inflation data, signalling possible increase in the interest rate by US Federal Reserve in December.

Japan's Nikkei 225 was up 0.5% to 19,909.50, Hong Kong's Hang Seng added 0.11% to 27,807.59, South Korea's Kospi earned 0.35% to 2,386.07 while the Singapore Straits Times Index decreased 0.12% to 3,217.15.

For other heavyweights, Maybank and TNB declined two sen each to RM9.70 and RM14.56, respectively, Public Bank slipped four sen to RM20.54 but CIMB jumped six sen to RM6.75 and IOI Corp surged 12 sen to RM4.66.

Among active counters, Sino Hua-An shed two sen to 23.5 sen, Trive Property and MLABS eased half-a-sen each to 12.5 sen and 10 sen, respectively, while Borneo Oil was flat at 10 sen.

The FBM Emas Index was 36.39 points higher at 12,723.68, FBMT 100 Index perked 39.37 points to 12,387.94 but the FBM Ace reduced 11.95 points to 6,692.60.

The FBM Emas Shariah Index climbed 33.16 points to 12,927.98 and the FBM 70 advanced 67.15 points to 15,246.88.

Sector-wise, the Plantation Index improved 47.85 points to 7,970.66, the Industrial Index went up 8.84 points to 3,242.55, and the Finance Index rose 4.09 points to 16,828.98.

The Main Market volume increased to 1.54 billion shares worth RM2.59 billion from 1.99 billion shares worth RM1.68 billion on Thursday.

Volume on the ACE Market widened to 454.97 million units valued at RM84.69 million from 164.47 million units valued at RM109.10 million yesterday.

Warrants fell to 140.86 million shares worth RM20.45 million from 123.22 million shares worth RM16.45 million previously.

Consumer products accounted for 81.48 million shares traded on the Main Market, industrial products (455.40 million), construction (73.08 million), trade and services (451.68 million), technology (210.76 million), infrastructure (10.06 million), SPAC (9.55 million), finance (73.39 million), hotels (1.91 million), properties (130.99 million), plantations (34.96 million), mining (231,500), REITs (10.35 million), and closed/fund (23,200).

The physical price of gold as of 5pm stood at RM173.06 per gramme, up 22 sen from RM172.84 at 5pm yesterday. — Bernama

DRB-Hicom, Geely to complete transaction “very soon”

PETALING JAYA: DRB-Hicom Bhd and Zhejiang Geely Holding Group are intensifying efforts to finalise the detailed business plan for Proton Group and are expected to complete the corporate transaction “very soon”.

DRB-Hicom said in a statement today that the detailed business plan is vital towards producing a solid roadmap for Proton Group for the years ahead, and is one of the key items to be concluded as part of the completion exercise.

“The business plan will incorporate strategies for both companies to develop new vehicles together for the global market,” it said.

DRB-Hicom and Geely hold 50.1% and 49.9% stakes in Proton Group respectively. The Proton Group comprises three key entities namely Proton Holdings Bhd (PHB), Perusahaan Otomobil Nasional Sdn Bhd (PONSB) and Proton Edar Sdn Bhd.

PHB is the holding company while PONSB is a 100% subsidiary of PHB and is the main production, operations, manufacturing and marketing company. Proton Edar, a 100% subsidiary of PHB, is the main distribution outfit of the group.

For all three entities, DRB-Hicom has one additional seat at the board of directors level, matching the 50.1% that DRB-Hicom holds.

“Upon the completion of the transaction soon, an announcement shall be made in due course in relation to the composition of the board of directors of these companies. Each of the companies shall have board representations from both DRB-Hicom and Geely,” it said.

Apart from future appointments of the board members, DRB-Hicom’s group managing director Datuk Seri Syed Faisal Albar will continue with his key role as the overall chairman of PHB.

Syed Faisal’s role, among others, is to ensure that the tie-up will achieve its benefits and ultimately, provide a return on investment to the shareholders, namely DRB-Hicom and Geely.

Meanwhile, Datuk Ahmad Fuaad Kenali will relinquish his post as CEO of PHB effective Sept 30, 2017. Fuaad was appointed as CEO of PHB on April 1, 2016, after assuming the position of COO/senior group director of DRB-Hicom in 2013.

Upon completion of the corporate transaction, Geely will nominate a suitable candidate as the CEO of Proton Group’s PONSB.

“PONSB is the bulk of the operations of Proton Group, and thus it is critical that we have the right person for the job. An announcement shall be made in due course,” said Syed Faisal.

Meanwhile, Datuk Radzaif Mohamed will remain as a key officer at Proton Group and will continue in his role as deputy CEO at PONSB. Abdul Rashid Musa, who was named CEO of Proton Edar in February 2017, will also continue in his role.

“With Radzaif and Rashid remaining in their positions, this ensures continuity within the Proton Group. It will also ease the transition of the future CEO of PONSB and this can only be good for the venture,” added Syed Faisal.

LG loses European appeal against €541m fine

SEOUL, Sept 15 ― South Korean electronics giant LG Electronics has lost its final appeal against a giant price-fixing fine imposed by the European Union and will pay more than €540 million (RM2.7 billion), it said today. In 2012 the European…

Ahmad Maslan: Malaysian companies perfectly capable of being global investors

KUALA LUMPUR, Sept 15 ― Many people have the notion that Malaysian companies are not capable of investing abroad or being global investors, Deputy International Trade and Industry Minister Datuk Ahmad Maslan said. On the contrary, he said…

Matrade teams up with China Post, KCO Logistics to develop virtual platform for Malaysian brands

PETALING JAYA: The Malaysia External Trade Development Corporation (Matrade) has teamed up with China Post Group of Guangxi Zhuang Autonomous Region Branch and KCO Logistics & Distribution Services Sdn Bhd to develop a virtual Malaysia Pavilion for Malaysian brands on China Post’s e-commerce portal, is an e-commerce platform by China Post that connects the offline outlets with online and mobile services, supported by China Post’s extensive logistics network.

Under the memorandum of understanding (MOU) inked by the parties, China Post will provide the online and offline platforms while KCO Logistics – a Malaysian logistic company based in Guangxi – will be the logistic provider for China Post.

Matrade said the three-year collaboration will see the establishment of the virtual Malaysia Pavilion on with China Post’s commitment to import 2,000 single kind units (SKUs) of Malaysian products for one year valued at around RM300 million.

These products range from food products, health and wellness products to fast moving consumer goods. Apart from being showcased on the virtual pavilion, the products will also be made accessible to 600,000 of China Post’s offline stores around the cities in China.

Among the Malaysian brands to be featured through the collaboration are Julie’s, Regency Coffee and Furley, among others.

Matrade CEO Dr Mohd Shahreen Zainooren Madros said it will continue to explore various platforms, especially e-commerce platforms, to facilitate the entry of Malaysian products into China which has a market size of 1.35 billion people.

“This MOU will pave the way for products by Malaysian small and medium enterprises (SMEs) to be marketed on China Post’s vast online and offline networks. Matrade is grateful for the strong support from China Post and KCO Logistics in realising this initiative,” he said in a statement today.

He added that Matrade, through its offices in China, will specifically assist to promote Malaysian enterprises on the platforms and identify quality Malaysian brands and products as well as to facilitate organising business matching sessions and sourcing programmes for the Malaysian companies.

CMS acquires 80% stake in Betong Premix Sdn Bhd.

PETALING JAYA: Cahya Mata Sarawak Bhd's (CMS) 51% owned subsidiary CMS Resources Sdn Bhd(CMSR), has acquired an 80% equity interest in Betong Premix Sdn Bhd for RM1.83 million, in a bid to increase its premix operations and production capacity.

CMS's board of directors announced in a Bursa Malaysia filing, that CMSR had acquired 500,000 ordinary shares and 100,000 ordinary shares in Betong from Umang Nangku Jabu and Gelayan Anak Mambang respectively for the aforementioned amount.

Following the acquisition, Betong will become a 80% owned subsidiary of CMSR, while the remaining 20% equity interest will be held by Umang Nangku Jabu.

“The acquisition will not have any material effect on the earnings per share, net assets per share, share capital, gearing and substantial shareholders' shareholdings of CMSB for the financial year ending 31 December 2017,” the board said.

CMS's shares gained 1.46% to close at RM4.16 on Friday with some 252,700 shares changing hands, bringing its market capitalisation to RM4.36 billion.

Kimlun unit bags RM214.7m contract

PETALING JAYA: Engineering and construction firm Kimlun Corp Bhd has bagged a contract worth RM214.7 million from Hillcrest Gardens Sdn Bhd for the construction of two blocks of condominiums and ancillary buildings at Mukim Petaling, Selangor.

Kimlun told the stock exchange last Friday, the contract was awarded to its wholly-owned subsidiary Kimlun Sdn Bhd.

The group said the construction work is expected to be completed by June 2020.

Kimlun said it expects the project to contribute positively to the group's earnings and net assets for the financial years during the contract period.

Kimlun closed unchanged at RM2.16 last Friday with a total of 4,700 shares traded. Its market capitalisation stood at RM690.4 million.

S&P affirms ‘BBB-’ rating with stable outlook, for IOI debt

PETALING JAYA: S&P Global Ratings affirmed its 'BBB-' long term credit rating on IOI Corp Bhd, with a stable outlook, and also the company's guaranteed senior unsecured debt.

“We affirmed the ratings because we believe that more volatile earnings will temper the benefits of the debt reduction following IOI's proposed asset disposal,” it said in a statement last Friday.

The palm oil plantation and oleochemicals supplier entered into an agreement to sell a 70% stake in oleochemicals producer Loders Croklaan to Bermuda-based Bunge Ltd for RM3.94 billion, last Tuesday.

“In our view, the disposal will impair IOI's earnings quality. We estimate that the company's resource-based manufacturing revenues will shrink by about 40% (about RM6 billion) and earnings before interest, tax, depreciation and amortisation (Ebitda) by about 20% (about RM400 million) following the sale.

“In addition, IOI's operating profits will likely be more volatile from higher exposure to fluctuations in crude palm oil (CPO) prices. We understand that IOI intends to be a partner to Bunge post the transaction. Barring any unforeseen circumstances, we do not expect IOI's feedstock sales to Loders to be affected, given the supply contract between them to be executed,” said S&P.

The rating agency expects IOI to remain vertically integrated and estimates that the company's operating profit contribution from the downstream division would shrink to about 25% from around 30% before the transaction.

It expects IOI's Ebitda margin post-transaction to rise to about 22% from about 14% currently due to the plantation business' higher margin (above 50% earnings before interest and tax margin on a stand-alone basis).

“Additionally, we believe the company will embark on bolt-on acquisitions both in the upstream and downstream segments that will bolster earnings. That could help IOI regain some of its lost size and scale over time,” it added.

S&P expects the transaction to help improve IOI's financial position to some extent, as the company intends to use half of the cash proceeds to reduce debt. The management and the shareholders envisage operating at a lower financial leverage after the transaction closes.

IOI's pro forma leverage is estimated to reduce to around 2.4 times with the ratio of funds from operations (FFO) to debt improving to around 27%. The transaction is to close in the second half of 2018, although it could be earlier subject to regulatory and other customary approvals.

“The stable outlook reflects our view of potentially more volatile earnings amid a significantly reduced debt load for IOI. We expect that the company will be able to maintain its FFO-to-debt ratio at around 25% over the next 12 to 24 months,” said S&P.

It said that the ratings could be lowered if IOI's financial strength deteriorates, such that the FFO-to-debt ratio approaches 20% for a prolonged period. This would most likely occur if the company aggressively pursues capital outlays (via large acquisitions or shareholder payments) or due to a lasting period of low CPO prices.

On the other hand, it could consider an upgrade if IOI's financial strength improves permanently, with the FFO-to-debt ratio remaining above 35%, and management remains committed to maintaining conservative financial policies. The improvement in financial ratios could occur if IOI controls capital outflows and reduces debt.

Most Asian currencies up, ringgit set for fifth weekly gain

SINGAPORE, Sept 15 — Most emerging Asian currencies strengthened today as the US dollar lost ground against a basket of major currencies after North Korea fired another missile over Japan into the Pacific Ocean. The latest missile launch…

EPF records RM11.51b investment income in Q2

PETALING JAYA: The Employees Provident Fund’s (EPF) investment income for the second quarter (Q2) ended June 30, 2017 has increased 36.36% to RM11.51 billion from RM8.44 billion a year ago.

Its CEO Datuk Shahril Ridza Ridzuan said in a statement today that the market conditions have improved from a year ago and all asset classes in its portfolio recorded healthy year-on-year growth, with equities continuing as the main profit driver during the quarter.

The fund said it recorded lower net impairment of RM1.34 billion during the quarter, an improvement of RM2.28 billion or 62.98% from RM3.63 billion previously, in line with the better performance of the equities market.

From the RM11.51 billion investment income recorded, fixed income instruments contributed 37.29%, equities contributed 53.72%, while real estate and infrastructure and money market instruments contributed 6.23% and 2.64% respectively.

“While we recorded significant improvements in year-on-year performance in both the preceding and current quarters, there is a slowdown in momentum which saw corporate profits normalising in Q2 2017. We, therefore, expect a moderation in income growth for upcoming quarters,” Shahril added.

Equities, which made up 41.96% of EPF’s total investment assets as at Q2 2017, contributed RM6.18 billion of income, 61.45% higher than RM3.83 billion recorded in the previous corresponding quarter.

The fund said it also benefited from diversification into other asset classes that provide stable streams of income, including fixed income instruments and real estate and infrastructure investments through its subsidiaries.

EPF said a total of RM820.71 million out of the total investment income of RM11.51 billion was generated for Simpanan Shariah, while RM10.69 billion was generated for Simpanan Konvensional.

In equities, Shahril said the banking sector has been outperforming since the beginning of the year, noting the bulk of its impairments during the quarter came from the telecommunications and oil and gas sectors.

“If this continues, we expect that Simpanan Konvensional will benefit from the former and outperform in the short term,” he said.

As at Dec 31, 2016, the value of EPF's investment assets reached RM759.78 billion, a 3.92% or RM28.67 billion increase from RM731.11 billion previously.

Out of the total investment assets, RM362.50 billion or 47.71% were in Shariah-compliant investments and the balance were invested in non-Shariah assets.

As at June 30, 2017, the fund’s overseas investments, which accounted for 29% of its total investment asset, contributed 32.5% to the total investment income during the period.

Commenting on the outlook for the second half of the year, Shahril said with the ringgit showing signs of improved stability, global investments would remain one of EPF’s significant revenue drivers going forward.

“Domestically, while gross domestic product growth continues to improve, the EPF will be vigilant of other external factors which may create uncertainty, including the possibility of global rate hikes, and rising geopolitical tensions.”