Sunday, October 8th, 2017


Java selling plantations unit to Fima Corp for RM5.2 million cash

PETALING JAYA: Java Bhd is disposing of its entire stake in Java Plantations Sdn Bhd to FCB Plantation Holdings Sdn Bhd, a wholly owned subsidiary of Fima Corporation Bhd, for RM5.2 million in cash.

In a filing with Bursa Malaysia, Java’s board of directors said it entered into a sale and purchase agreement with FCB Plantation last Friday in relation to the disposal of its 100% stake.

The proposed disposal will allow Java, which is involved in the oil palm business, to unlock and realise its investments and help repay its liabilities as well as regularise its financial condition.

The disposal could see Java netting RM4.12 million after deducting the net book value of Java Plantations of RM1.07 million as at Dec 31, 2016.

Java plans to deploy RM1.2 million from the proceeds for working capital, while RM3.5 million has been earmarked for the payment of trade and other payable comprising trade payable, statutory liabilities and other payables amounting to RM8.59 million. A sum of RM500,000 will be used to foot expenses related to the proposed disposal.

In a separate filing, Fima Corp said the acquisition will allow it to realise its strategy to expand its plantation business, particularly in Malaysia, and capitalise on the bright prospects of the palm oil industry, which in turn, would provide a broader earnings base for Fima Corp.

Fima Corp’s main growth driver has been its wholly owned subsidiary, Percetakan Keselamatan Nasional Sdn Bhd, which contributes substantially to its revenue and profitability via its security and confidential documents businesses.

Current environment calls for property lending rule: Miba

PETALING JAYA: The Malaysian Investment Banking Association (Miba) on Friday said it is not for the broad property sector (BPS) guideline on property lending to be scrapped, explaining that the current property environment calls for the continued practice of prudent measures introduced in the guideline on lending to BPS in 1997.

The statement comes after Bank Negara Malaysia (BNM) called on investment banks (IBs) to not take a short-term view in their desire to scrap the 20-year rule, on
Oct 4.

“Miba and its members are cognizant of the ramifications resulting from the over-concentration of credit exposures to the property sector and the need to maintain prudential measures to keep systemic risks in check,” it said.

“The guideline on lending to the BPS’, which was introduced in 1997 has encouraged prudential lending and ensured there is no property overhang. The current property environment calls for the continued practice of prudent measures and necessary safeguards to be put in place.”

Miba went to say that the guideline on lending to the BPS cannot be read in isolation as it complements other banking regulations within the financial system.

Miba said it plays a key role in supporting and contributing actively towards the development and growth of the investment banking industry and maintain close consultation and collaboration with BNM on all industry matters to ensure the stability and sustainability of the financial system.

Aeon: We’re not closing down Quill City Mall outlet

PETALING JAYA: Aeon Co (M) Bhd has refuted market talk of an impending closure of its outlet at Quill City Mall in Kuala Lumpur, which has underperformed its peers in the challenging market environment.

In an email reply to SunBiz, Aeon said it is in the midst of refurbishing and upgrading its existing malls and stores while expanding its customer experience throughout the country by setting up new malls, with the latest being the one in Bandar Dato’ Onn, Johor Baru.

“For the moment, we do not have any plans to close down any of our operations including Quill City. We believe in the importance of growing our brand irrespective of the uncertain economic situation as we are committed in offering continuous customer experience,” Aeon noted.

The retailing group highlighted that its revenue growth remains commendable, albeit the poor consumer sentiment due to the rising cost of living that has affected all sectors of the retailing business, thanks to customer loyalty and the group’s ability to deliver quality customer shopping experience.

“The group acknowledges that the retail market performance would be dependent on both the external and internal economic factors, including the ringgit performance which will affect consumer sentiment,” it said.

Currently Aeon operates 27 malls, 34 outlets and three MaxValu supermarkets throughout the country.

For the first half ended June 30, 2017, Aeon’s net profit was flat at RM47.96 million compared with RM47.78 million in the same period last year. This was on the back of a 1.4% rise in revenue from RM2.05 billion to RM2.08 billion.

Located on Jalan Sultan Ismail, Quill City Mall is owned by Quill Retail Malls Sdn Bhd. The mall opened its doors in October 2014, with a net lettable area of 800,000 sq ft.

Besides Aeon, which is an anchor tenant, Quill City Mall’s other main tenants include H&M and GSC cinemas. It has over 180 tenants, according to its website.

Checks with the Companies Commission of Malaysia show that Quill Retail Malls reported a widened net loss of RM35.25 million for the financial year ended Dec 12, 2016 against RM32.41 million a year ago.

According to a property consultant who declined to be named, the crowd at Quill City Mall is not as big as in other malls due to difficult accessibility to the complex.
“It is not just affecting Aeon, but also other tenants. It’s not so much on location, but inaccessibility. Not easy to access because it is at the ‘wrong’ side of Jalan Sultan Ismail,” he said.

Last June, Aeon announced that it was selling off its Aeon Mahkota Cheras Shopping Centre and the freehold land on which it sits for RM87.8 million, in a bid to focus on developing its future retail business.

In addition, the group aborted its land acquisitions in Sungai Petani (Kedah) and Senawang (Negri Sembilan) last year, and most recently in Batu Pahat (Johor). It also terminated a tenancy agreement for a yet-to-be-built mall in the face of the current challenging environment.

Aeon said in its 2016 annual report that the group’s strategy is to maintain a good balance between pursuing growth and stability under the challenging environment. The group has reorganised and consolidated its development portfolio, exercising restraint and reviewing development plans.

Property consulting firm VPC Alliance (Malaysia) Sdn Bhd managing director James Wong noted that the retail market is currently bogged down by oversupply, leading to stiff market competition.

“Because of the serious competition, the retail margins are now lower. But at the same time, the landlords want to maintain or increase the rental upon renewal.”

He also highlighted that high cost of living has eroded purchasing power. “The annual wage increments and bonuses are not keeping pace with the cost of living. So the purchasing power and the propensity to spend are less, thus affecting the retail market.”

Given the sluggishness in the retail market, Wong said, rumours have mounted over the exit of foreign retail players from Malaysia.

“Also, a lot of big retail players prefer to rent rather than buy land and invest in the construction of the retail malls.”

Meanwhile, CBRE-WTW managing director Foo Gee Jen did not rule out the possibility of more retail closures going forward given the stiff competition and the market might take one to two years to recover if the cost of living remains at a high level.

“If the situation gets worse, the businesses might fail to survive even if given free rental as they still have other overhead expenses.”

Watta to cease ops of auto battery units

PETALING JAYA: Watta Holdings Bhd has decided to cease operations of loss-making wholly owned subsidiaries Watta Battery Industries Sdn Bhd and Syarikat Perniagaan Leko Sdn Bhd as part of its reorganisation plan.

Watta’s board of directors said the rationale is to reduce operating costs and overheads of the group.

The business of manufacturing and distribution of automotive batteries has been very competitive with the influx of foreign brands, which in turn has reduced its margins to a point of not being able to cover operational costs and overheads.

A total of 29 employees will be laid off in stages and the contracts of its six contract staff will not be renewed.

“The proposed cessation will affect the financial performance of the group for the current financial year ending Dec 31, 2017, as a result of the one-off redundancy cost and impairment loss on assets to be incurred. The impact to consolidated earnings will be a cost of RM1.95 million, and in terms of earnings per share and net assets per share, a reduction of RM0.05 per share respectively,” the board said.

The revenue contribution by trading and distribution of automotive batteries amounted to 30.17% of the group’s revenue for the nine months ended June 30, 2017.

Watta will continue its existing business of servicing and trading telecommunication products, which made up 69.83% of the group’s revenue for the nine-month period.

Meda responds to class-action suit by Arc @ Cyberjaya unit owners

PETALING JAYA: Meda Inc Bhd on Friday told Bursa Malaysia it denies promising a fixed rental income of up to 25 years to 137 apartment owners who have initiated a class-action lawsuit against its wholly owned subsidiary, Maju Puncak Bumi Sdn Bhd (MPSB).

MPSB is the developer of Arc @ Cyberjaya, a serviced apartment project.

Meda said according to an option agreement between owners and MPSB to exercise their option for a guaranteed rate of return (GRR), there is a fixed term of three or four years (depending on the unit), and the option to renew the agreement for up to 20 years was on MPSB.

“In fact, we have terminated the GRR scheme pursuant to the option agreement for majority of the units,” it said.

The class-action suit is claiming breach of contract in relation to the option agreement.

The owners are claiming for RM3.97 million being the outstanding rentals up till May 2017; 8% interest on the outstanding rentals; agreed liquidated damages as stated in the agreement, general damages, and/or aggravated damages, as well as exemplary damages; 5% interest from the judgement till the full payment date; cost; vacant possession of the unit; and any relief deemed fit by the court.

“We have already captured all the outstanding rentals amounting to RM 3.97 million, therefore, there is no financial impact in our books. Any further updates in respect of any material development of this case will be made from time to time,” Meda said.

FGV terminates MoU with Mara

PETALING JAYA: Felda Global Ventures Holdings Bhd (FGV) and Majlis Amanah Rakyat (Mara) have decided to scrap the memorandum of understanding (MoU) signed between the two parties on May 12, 2016, to collaborate in logistic services, specifically in the aviation sector, within Mara group.

In 2014, the federal government awarded Mara the job to develop Sultan Abdul Aziz Shah Airport in Subang as Original Equipment Manufacturer (OEM) for Southeast Asia. The project is now called Asia Aerospace City.

FGV announced in a Bursa Malaysia filing on Friday, the two decided to terminate the MoU signed between Felda Transport Services Sdn Bhd and Mara Liner Sdn Bhd without disclosing the reason behind the termination. The termination is not expected to impact the earnings of both parties.

In May, FGV's board had stated that it had approved a further one year extension to the MoU and was awaiting the decision of its counterpart on the extension.

FGV's shares remained at RM1.71 with some 2.77million shares changing hands.

Ryanair executive quits crisis-hit carrier

LONDON, Oct 7 — The chief operations officer of Ryanair is stepping down, the Irish airline has announced, following a crisis caused by the cancellation of thousands of flights. “Michael Hickey… has decided to resign effective from the end…

Malaysia bond market weekly updates (8 Oct 2017)

The TR BPAM All Bond Index posted gains of 0.061 per cent, almost reversing all the losses made in the previous week, to end the week at 154.900 points from 154.805 points last week. The gain was underpinned by the flattening of the MGS yield curve as the short-to-medium term region edged higher by one […]

Crude Palm Oil Weekly Updates – 7 Oct 2017

Malaysian palm oil futures reversed two consecutive weeks of decline and traded higher on Friday ahead of the release of official MPOB data for September, tracking stronger performance from soyoil on the Chicago Board of Trade (CBOT). The benchmark crude palm oil futures (FCPO) contracted upwards 1.3 per cent to RM2,732 on Friday, which is […]

Decision time in P&G boardroom brawl

NEW YORK, Oct 8 — A costly months-long battle over the direction of one of America’s biggest companies culminates on Tuesday with a shareholder vote at Procter & Gamble headquarters in Cincinnati. The fight pits the maker of Gillette razors…