Wednesday, September 27th, 2017

 

BFood expects Kenny Rogers Roasters chain in Malaysia to be profitable in FY18

KUALA LUMPUR: Berjaya Food Bhd (BFood) expects its wholly owned subsidiary Berjaya Roasters (M) Sdn Bhd (BRoasters), the master franchisee of Kenny Rogers Roasters’ (KRR) chain of restaurants in Malaysia, to be profitable in the financial year ending April 30, 2018 (FY18) with the execution of its turnaround plan.

BRoasters registered a loss before tax of RM4.2 million in FY17 compared with a profit before tax of RM2.5 million in FY16, mainly due to the impairment of fixed assets from the closure of non-performing restaurants, higher equipment maintenance and repair costs, and higher other operating costs.

BFood CEO Sydney Quays said BRoasters hit a bad patch over the last year, but stressed that it has big potential to move its numbers higher. BRoasters currently contributes some 15% to BFood’s revenue.

“What we’re working on currently… it gives us a good opportunity for the brand (KRR) to grow. We still have regular customers and we’re still strong in consumers’ mind. We can do better,” he told SunBiz in an interview recently.

Quays said their strategy includes introducing a new simplified menu, which kicked off earlier this week, with new pricing. Customers can now have lunch or dinner from RM13.90.

There are currently 82 KRR outlets in Malaysia. Moving forward, Quays said it plans to open five outlets in FY18 at a capital expenditure of RM700,000 to RM900,000 per outlet, with more vibrant design, which incorporates a walk-through service concept. It does not anticipate anymore outlet closures. In FY17, it closed five KRR outlets in the country.

Quays said the KRR team is committed to the company’s restructuring, banking on new pricing and menu, the way it serves customers, and its new star product, the OMG Unfried Fried Chicken, to transform the eating habits in KRR and cater to the different tastes of customers.

“The end goal is to create more interest in the brand and I’m positive that we will be able to achieve that.”

Quays expects BFood to achieve a better performance in FY18, driven mainly by Berjaya Starbucks Coffee Company Sdn Bhd (BStarbucks) and the turnaround in BRoasters as well as other rationalisation efforts.

“There are things that my team in Starbucks can learn from KRR and vice versa. Starbucks has always been known for its service standards and that’s something we hope to adopt in KRR. In the F&B business, it’s a lot to do with service and we definitely have to work on making service better in our companies within the group.”

BStarbucks remains the cash cow for BFood, contributing 77%-78% of the group’s revenue. There are 245 Starbucks outlets in Malaysia, and it has opened an average of 25-30 outlets a year for the last five years.

“BStarbucks’ growth strategy for FY18 will be focused on opening new stores, strengthening our current processes and getting more people to come to the brand. We also hope to penetrate more small towns than what we already have,” said Quays.

He said BStarbucks is pushing for more drive-through outlets, with untapped potential along highways, and smaller stores in MRT and LRT stations, which offer good prospects with the large number of commuters.
“The drive-through model is currently a big thing for BStarbucks. Out of 25 stores that we will open, 10 will be drive-throughs at least,” Quays said, adding that there are 34 drive-throughs now.

On its overseas food businesses, he said BFood is in talks to dispose of 51%-owned PT Boga Lestari Sentosa, the operator of KRR in Indonesia, and wholly owned subsidiary Jollibean Foods Pte Ltd that operates the Jollibean, Sushi Deli and Kopi Alley brands in Singapore.

“Our overseas businesses (KRR Indonesia and Jollibean) have been a challenge for us. We hope to be able to rationalise those businesses. We hope to be able to sell KRR Indonesia and that’s what we’re working towards. We’re close to doing that now and we hope for something to materialise soon.

“The goal is to be more lean. The company (as a small capitalisation company) has to be lean and nimble for us to move forward its strength. It needs to have profitable brands,” said Quays.


Malaysia Airlines to add wide-body aircraft in bid to regain premium status

PETALING JAYA: Malaysia Airlines Bhd (MAB), which is aiming to get back its five-star rating from Skytrax next year, is bolstering its premium airline ambitions by taking on more wide-body aircraft.

“We have gone too much the other way (narrow bodies), the fleet we have at the moment is very similar to what you would see in more of the low-cost carrier environment and we are going to try to relatively quickly rebalance that over the next few years,” its CEO Peter Bellew told reporters at a briefing today.

He said MAB’s fleet strategy is to address the mismatch between the type of aircraft and routes that will support its strategy going forward. He said the airline has too many narrow bodies at the moment and not enough wide bodies.

MAB’s fleet size is now at 69, comprising 48 narrow bodies and 21 wide bodies. The fleet size will reach 75 next year, comprising 48 narrow bodies and 27 wide bodies. By 2022, it will have 80 aircraft comprising 45 narrow bodies and 35 wide bodies.

The fleet strategy includes the delivery of six A350-900s that will replace six A380s, leasing of six A330-200 ex-Air Berlin aircraft and the memorandum of understanding with Boeing for eight Boeing 787-9 aircraft.

“We will continuously adjust and flex this as market improves and opportunity arises …right now we are at 70% narrow bodies and 30% wide bodies. We want to rebalance that over the next five years closer to 56% narrow and 44% wide.

“That is what a normal national carrier with a premium service does. If you are trying to get people to travel business class and you want to fly longer distances, you need to have wide-body aircraft,” Bellew said, adding that the rebalancing plan will result in 5-20% cost savings in terms of leasing cost.

Bellew said the six ex-Air Berlin aircraft will be leased from Aercap, in a deal that will cost less than the leasing cost of its existing wide bodies. Air Berlin, which is going into liquidation, has had a massive refurbishment exercise and this will enable MAB to rapidly improve its product next year.

The six aircraft will be delivered in February, June and October next year, with two each month. They can be used for flights to Mumbai, Delhi, Shanghai, Hong Kong and Bali.

Bellew said with wide-body aircraft, MAB will be able to offer lie-flat seats in business class compared with sloping seats in the narrow bodies. It will also provide them the flexibility of flying long-haul flights in the future if shareholders choose to return to destinations in the Americas or Europe.

“We’ve only ordered eight long-haul capable 787-9, which is just as happy and economical going to Tokyo or Beijing as it is going from here to San Francisco. Over the course of 10-12 years, the cost is not much different from the cost of the A330 but it gives flexibility and option, if we ever want to go back to those markets, we can do.”

Bellew said there will be significant shifts in the industry and the way people travel over the next three to four years, with transits via the Gulf states becoming less common with fewer options to do so.

He added that contractions could be seen in the Gulf carriers and there could be an opportunity to have direct connectivity to destinations in Europe and the US in the next five to six years.

Bellew said MAB is on track to be profitable by the second half of 2018 and should be “listable” by 2019, although the decision to list lies with the shareholders.

Bellew, whose contract lasts till 2019, said he will not be leaving MAB, contrary to talk of him returning to Ryanair, and succession is not an issue as there are five to six internal candidates who could take over when needed.


Tan Hua Choon exits ceramic products firm Goh Ban Huat for RM145.7m

PETALING JAYA: Ceramic products manufacturer Goh Ban Huat Bhd (GBH) today announced the entry of a new controlling shareholder after Paragon Adventure Sdn Bhd (PASB) took over Tan Sri Tan Hua Choon’s interest in the company for RM145.7 million.

The move has led to PASB having to undertake a mandatory takeover offer for the remaining shares it does not own in the company at RM1.40 a share and 40 sen per warrant. This marks the exit of once-controlling shareholder Tan, who joined the board in 2008.

In a filing with the stock exchange, GBH said the share offer price represents a 2.1% discount to its last traded price of RM1.43.

Following the acquisition, PASB will collectively hold 51% of the voting shares in GBH and 51% of the total outstanding warrants.

The ultimate offerors are PASB’s shareholders, namely Datuk Seri Edwin Tan Pei Seng and Datuk Seri Godwin Tan Pei Poh, both holding 65% and 35% of the total shares in PASB respectively.

GBH said PASB intends to maintain the listing status of the group on the Main Market of Bursa Malaysia Securities.


Britain warns Boeing it might lose business over Bombardier row

BELFAST, Sept 27 —  Britain told US planemaker Boeing today that it could lose out on British defence contracts because of its dispute with Canadian rival Bombardier which has put 4,200 jobs at risk in Northern Ireland. The US Department of…


SC sues seven individuals over manipulation of APLI shares

PETALING JAYA: Securities Commission Malaysia (SC) has sued seven individuals at the Kuala Lumpur High Court for the manipulation of shares in APL Industries Bhd (APLI) and is seeking court orders for disgorgement and civil penalty of up to RM7 million and a capital market ban on the defendants.

The SC said in a statement that Ng Wai Hong, a dealer’s representative at Hwang-DBS Securities Bhd, and six others who were acquainted or connected to her, were alleged to have actively transacted large volumes of APLI shares between November 7 and 9, 2006, causing a surge in the volume and price of APLI, which was delisted in 2009.

According to the Statement of Claim, which was filed by the SC on Sept 21, 2017, Ng was responsible for planning and carrying out the alleged trading of APLI shares on behalf of the rest of the defendants, who had in turn allowed their accounts to be used for the said manipulative activity. The trades carried out by Ng in the accounts of the other six defendants represented 30.36% of the total volume of APLI shares traded on the market.

The other six defendants are Lo Ga Lung, Toh Pik Chai, Ling Pik Ngieh, Ng Soo Tian, Chan Kok and Chai Shou Wei.

The SC claims, the defendants’ actions had created a false or misleading appearance of active trading with respect to the market for APLI shares as well as having the effect of maintaining the price of them, which were in breach of section 84 and 85 of the Securities Industry Act 1983 respectively.

The disgorgement of all profits obtained by the defendants as a result of the manipulation, will be used to compensate affected investors.

The SC is claiming a civil penalty of RM1 million from each of the seven defendants and orders to bar the defendants from being a director of a public listed company and from trading on the stock exchange for a period of five years.


Seven sued over manipulation of APL Industries shares

PETALING JAYA: Securities Commission Malaysia (SC) has sued seven individuals at the Kuala Lumpur High Court for the manipulation of shares in APL Industries Bhd (APLI) and is seeking court orders for disgorgement and civil penalty of up to RM7 million and a capital market ban on the defendants.

The SC said in a statement that Ng Wai Hong, a dealer’s representative at Hwang-DBS Securities Bhd, and six others who were acquainted or connected to her, were alleged to have actively transacted large volumes of APLI shares between November 7 and 9, 2006, causing a surge in the volume and price of APLI, which was delisted in 2009.

According to the Statement of Claim, which was filed by the SC on Sept 21, 2017, Ng was responsible for planning and carrying out the alleged trading of APLI shares on behalf of the rest of the defendants, who had in turn allowed their accounts to be used for the said manipulative activity. The trades carried out by Ng in the accounts of the other six defendants represented 30.36% of the total volume of APLI shares traded on the market.

The other six defendants are Lo Ga Lung, Toh Pik Chai, Ling Pik Ngieh, Ng Soo Tian, Chan Kok and Chai Shou Wei.

The SC claims, the defendants’ actions had created a false or misleading appearance of active trading with respect to the market for APLI shares as well as having the effect of maintaining the price of them, which were in breach of section 84 and 85 of the Securities Industry Act 1983 respectively.

The disgorgement of all profits obtained by the defendants as a result of the manipulation, will be used to compensate affected investors.

The SC is claiming a civil penalty of RM1 million from each of the seven defendants and orders to bar the defendants from being a director of a public listed company and from trading on the stock exchange for a period of five years.


Ringgit rated ‘overweight’ by Standard Chartered

KUALA LUMPUR: Standard Chartered Bank has placed an “overweight” foreign exchange (FX) weightings on the ringgit, saying the currency is among the most undervalued emerging market currencies.

In its Global Research 4Q 2017 report, the bank also said the overall positioning for the currency among foreign investors remained extremely light.

“More importantly, the ringgit sentiment onshore has improved with better US dollar supply dynamics.

“We have short- and medium-term ‘overweight’ FX weightings on the ringgit,” it said.

Standard Chartered said the ringgit’s onshore FX turnover was well off its late 2015 lows.

At the same time, onshore foreign-currency deposits had turned a corner, it said, adding the ringgit had also benefited from Malaysia’s strong linkage to the global supply chain, amid robust global export volumes.

The Malaysian currency had suffered in 2016, having depreciated by 4.53% to end the year at 4.4845/4875 against the US dollar, compared with the 4.2900/2970 registered end-2015.

The currency retreated over fears of a global recession, falling crude oil prices, anticipation of normalisation of interest rates in the United States and concerns over China’s economy.

In first quarter 2017, the ringgit had stabilised and appreciated by 1.3% amid the broad weakening of the greenback on the back of uncertainties on the direction and implication of policies in the US.

The momentum continued in the second quarter, which saw the ringgit rising by 3.1% between April and June, making it the best performing currency in the Asian region during the quarter.

The local unit was well supported by the continued weakness in the greenback, coupled with further liberalisation of the bond market and FX hedging requirements as announced by Bank Negara Malaysia’s Financial Markets Committee. – Bernama


Ringgit rated ‘overweight’ by Stanchart

KUALA LUMPUR: Standard Chartered Bank has placed an “overweight” foreign exchange (FX) weightings on the ringgit, saying the currency is among the most undervalued emerging market currencies.

In its Global Research 4Q 2017 report, the bank also said the overall positioning for the currency among foreign investors remained extremely light.

“More importantly, the ringgit sentiment onshore has improved with better US dollar supply dynamics.

“We have short- and medium-term ‘overweight’ FX weightings on the ringgit,” it said.

Standard Chartered said the ringgit’s onshore FX turnover was well off its late 2015 lows.

At the same time, onshore foreign-currency deposits had turned a corner, it said, adding the ringgit had also benefited from Malaysia’s strong linkage to the global supply chain, amid robust global export volumes.

The Malaysian currency had suffered in 2016, having depreciated by 4.53% to end the year at 4.4845/4875 against the US dollar, compared with the 4.2900/2970 registered end-2015.

The currency retreated over fears of a global recession, falling crude oil prices, anticipation of normalisation of interest rates in the United States and concerns over China’s economy.

In first quarter 2017, the ringgit had stabilised and appreciated by 1.3% amid the broad weakening of the greenback on the back of uncertainties on the direction and implication of policies in the US.

The momentum continued in the second quarter, which saw the ringgit rising by 3.1% between April and June, making it the best performing currency in the Asian region during the quarter.

The local unit was well supported by the continued weakness in the greenback, coupled with further liberalisation of the bond market and FX hedging requirements as announced by Bank Negara Malaysia’s Financial Markets Committee. – Bernama


Research firm maintains call on oil & gas sector

PETALING JAYA: PublicInvest Research has maintained its “overweight” recommendation on the oil and gas (O&G) sector, premised on the stabilisation of prices at higher levels, thereby encouraging a return in activity.

“Oil prices are expected to stabilise, with our estimates premised on the average year to date oil price at US$52.40 per barrel for Brent and its futures for 2H17 at US$49 per bbl to balance the year at our estimated US$50 per bbl price for Brent in 2017,” its analyst Mabel Tan said in a note today.

For 2018, PublicInvest estimated the Brent oil price levels to average at US$55 per bbl.

Tan said the research house believes the industry is more focused on robust activity at stable oil prices, rather than very high oil prices at this juncture, which may not be sustainable.

The overnight Brent crude prices hit its highest levels since July 2015, closing at US$58.44 per bbl on concerns over potential supply issues as Turkey threatened to turn off a pipeline through northern Iraq and also the build-up on previous worries of US refineries having been hit by the hurricane season.

She said this has put Brent crude prices within sight of the US$60 per bbl mark and thus reinforcing the research house “overweight” view on the sector.

Furthermore, Tan said oil prices continued to firm up this week, holding onto gains, despite no decision on the extension of curbing oil production beyond the current deal which expires in March 2018.

From the meeting in Vienna last Friday, she said the Organisation of Petroleum Exporting Countries (Opec) and other oil producers may extend cuts in the next formal Opec meeting in November, but would most likely wait until January.

Opec together with Russia and several other producers have cut 1.8 million barrels per day since the start of 2017, which has seen to lift oil prices some 15% during the past three months.

Meanwhile, the Energy Information Administration (EIA) report projected total world energy consumption will rise 28% between 2015 and 2040, with most growth coming from developing countries.

The agency also reported another significant drawdown on gasoline stocks, partly due to the lingering refinery outages in Texas from the hurricane season, but also because demand is proving to be robust.

“There is one million barrels per day of refining capacity still offline in Texas, with a handful of large facilities operating below capacity. Supply of US gasoline is currently well within the five-year range, and globally, Organisation for Economic Cooperation and Development refined product supplies are similarly closing in.

“This means crude drawdowns can also be expected as refineries around the world need to pick up the pace,” she said.


Research firm keeps ‘overweight’ call on O&G

PETALING JAYA: PublicInvest Research has maintained its “overweight” recommendation on the oil and gas (O&G) sector, premised on the stabilisation of prices at higher levels, thereby encouraging a return in activity.

“Oil prices are expected to stabilise, with our estimates premised on the average year to date oil price at US$52.40 per barrel for Brent and its futures for 2H17 at US$49 per bbl to balance the year at our estimated US$50 per bbl price for Brent in 2017,” its analyst Mabel Tan said in a note today.

For 2018, PublicInvest estimated the Brent oil price levels to average at US$55 per bbl.

Tan said the research house believes the industry is more focused on robust activity at stable oil prices, rather than very high oil prices at this juncture, which may not be sustainable.

The overnight Brent crude prices hit its highest levels since July 2015, closing at US$58.44 per bbl on concerns over potential supply issues as Turkey threatened to turn off a pipeline through northern Iraq and also the build-up on previous worries of US refineries having been hit by the hurricane season.

She said this has put Brent crude prices within sight of the US$60 per bbl mark and thus reinforcing the research house “overweight” view on the sector.

Furthermore, Tan said oil prices continued to firm up this week, holding onto gains, despite no decision on the extension of curbing oil production beyond the current deal which expires in March 2018.

From the meeting in Vienna last Friday, she said the Organisation of Petroleum Exporting Countries (Opec) and other oil producers may extend cuts in the next formal Opec meeting in November, but would most likely wait until January.

Opec together with Russia and several other producers have cut 1.8 million barrels per day since the start of 2017, which has seen to lift oil prices some 15% during the past three months.

Meanwhile, the Energy Information Administration (EIA) report projected total world energy consumption will rise 28% between 2015 and 2040, with most growth coming from developing countries.

The agency also reported another significant drawdown on gasoline stocks, partly due to the lingering refinery outages in Texas from the hurricane season, but also because demand is proving to be robust.

“There is one million barrels per day of refining capacity still offline in Texas, with a handful of large facilities operating below capacity. Supply of US gasoline is currently well within the five-year range, and globally, Organisation for Economic Cooperation and Development refined product supplies are similarly closing in.

“This means crude drawdowns can also be expected as refineries around the world need to pick up the pace,” she said.