Tuesday, October 10th, 2017


Trump allies said to fear Corker feud puts tax plan at risk

WASHINGTON, Oct 10 — Allies of President Donald Trump say they fear his feud with Republican Senator Bob Corker risks unravelling the White House tax overhaul effort and that another major legislative failure could hobble the administration for…

Maybank eyes 1% growth in card billings market share

KUALA LUMPUR: Malayan Banking Bhd (Maybank) is aiming for a 1% growth, equivalent to RM2 billion, in its billings market share to 30% for both its debit and credit cards in the next six months.

Maybank Head of Cards, Group Community Financial Services, B.Ravintharan said the target was achievable as people’s spending and travelling were expected to escalate towards the end of the year.

“I foresee our cards billings market share, which currently stands at 29% with a value close to RM50 billion, can improve by another 1% to 30% by the next six months. People are spending and travelling more around year-end.

“The industry’s billings market share is around RM180 billion, so an incremental of 1% is equivalent to about RM2 billion” he told Bernama after launching a co-brand partnership with FC Barcelona today.

Maybank is currently the leader in the cards business in Malaysia with over 11 million debit cards and two million credit cards in circulation.

The bank commands over 20.5% share of the credit and charge card market in the country.

Ravintharan said the bank saw a growth of over 20% for debit card and growth of slightly less than 10% for credit card last year.

He said the debit card segment was expected to continue its double-digit growth next year while growth for credit card could be between 10% and 12%.

“Our target is more on increasing the billings. We want to engage with the customers and we want the customers’ (cards) to be active.

“It’s not about the number of cards, but it’s more about getting the customers to use the card, responsibly, so there will be less cash transactions at point of sales,” he said.

With regards to the co-partnership with FC Barcelona, the bank today launched the Maybank FC Barcelona Visa Signature Credit Card and Visa Debit Platinum Card for the Malaysian market.

In his speech at the launch earlier, Ravintharan said the partnership with FC Barcelona represented another key step in the bank’s consumer banking strategy to ensure that it continued to build on its strong franchise in the region by offering distinct value propositions for different market segments.

“We expect to issue 15,000 new co-branded cards in the first year of launch and hope to be able to expand this partnership to our other regional markets, where there is a demand and strong following of the FC Barcelona team,” he said.

Ravintharan said Maybank is now considered the official bank for FC Barcelona in Malaysia and the bank would also be extending similar partnership to Singapore in January 2018, and tentatively to the Philippines and Cambodia next.

Meanwhile, FC Barcelona commercial director Xavier Asensi and its legend player Gaizka Mendieta, both of whom were present at the launching event, said through the new partnership, FC Barcelona would be able to continue to increase its popularity while getting closer to its fans.

Both Maybank and FC Barcelona shared an estimate that there are approximately four million FC Barcelona fans in Malaysia and 131 million fans in Asia.

Stocks in Focus (11-10-2017)

KUALA LUMPUR: Based on corporate announcements and news flow today, stocks in focus on Wednesday (October 11) may include: Malaysia Airports Holdings Bhd, Muhibbah Engineering…

Diamonds — the new gold for rich investors? (VIDEO)

LONDON, Oct 10 — Diamonds can at last be an investor’s best friend, the Singapore Diamond Investment Exchange (SDIX) said today, as it launched a new standardised form of the precious stones to rival gold ingots as a safe-haven alternative to…

FGV ends 2.3pc higher on news of CEO’s return

KUALA LUMPUR, Oct 10 — Felda Global Ventures Holdings Bhd (FGV) shares ended 2.33 per cent or four sen higher at RM1.76 at Bursa Malaysia’s closing today on news of its Chief Executive Officer (CEO), Datuk Zakaria Arshad will be resuming his…

Business confidence among M’sian firms improve

KUALA LUMPUR: Business sentiment among Malaysian companies has improved further for the third consecutive quarter in the fourth quarter of 2017 (Q4’17), reaching its new peak in six consecutive quarters.

According to Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study, overall BOI climbed from +3.40 percentage points in Q3’17 to +5.52 percentage points in Q4’17. On a year-on-year (y-o-y) basis, BOI rose from +3.83 percentage points in Q4’16 to +5.52 percentage points in Q4’17.

According to D&B Malaysia, five of six indicators – volume of sales, net profits, selling price, inventory level and employment level – have climbed upwards on a quarter-on-quarter (q-o-q) basis, except for new orders.

Dun & Bradstreet (Malaysia) Sdn Bhd CEO Audrey Chia said it expects the outlook for Malaysian businesses to sign off on a relatively good note for 2017. This is largely attributed to positive growth within the construction sector as well as an increase in electronics, food and beverage manufacturing activities over the recent months.

On the domestic front, the government has a development plan in place that focuses on boosting the country’s labour productivity, skills upgrading of employees and infrastructure, which bodes well for businesses here and making Malaysia competitive in high value-added sectors.

“As an open economy, however, Malaysia is highly vulnerable to any increase in protectionism, which is a non-negligible possibility in the current anti-globalisation environment. With the acceleration in inflation rates, a slowdown in consumer spending and dampening of household sentiments will also be expected. Hence, we remain cautiously optimistic in our outlook for the rest of the year,” said Chia.

Petronas bars THHE unit from major jobs

PETALING JAYA: TH Heavy Engineering Bhd (THHE) today announced that its unit THHE Fabricators Sdn Bhd (TFSB) was informed in July this year, that Petroliam Nasional Bhd (Petronas) has disallowed it from bidding for main contractor, major fabricator and engineering procurement, construction and commissioning (EPCC) jobs due to non-performance in the Kinabalu Non-Associated Gas (NAG) project.

The financially troubled group, which has another seven months to come up with a regularisation plan, however made the announcement four months later.

The action follows an outright ban by Petronas Carigali Sdn Bhd in 2016, from participating in their tenders for a period of two years, for non-performance in the same project.

TFSB is the procurement, construction and commissioning (PCC) contractor for KNPG-B Topside PH II, NAG development project, which was awarded in Jan 28, 2014.

THHE said TFSB had received a letter on July 9, 2017 from Petronas in relation to its vendor performance report, which highlighted TFSB’s non-performance for its scope of work for the project.

Due to the non-performance, Petronas has excluded TFSB from several scopes namely main contractor; major fabrication works; PCC works; EPCC works; engineering, procurement, construction, installation and commission (EPCIC) works; and procurement, construction, installation and commissioning (PCIC) works.

Following the exclusion, Petronas and its subsidiaries and Petroleum Arrangement Contractors (PACs) will not award any new contract to TFSB for the above scopes, and not allowed to participate in any tender related to the above scopes.

“The letter also states that the upliftment of the exclusion will be subject to TFSB satisfactorily meeting Petronas’ requirements, which were not mentioned in the letter,” said THHE.

The group said it will seek clarification from Petronas on the matter, explaining that the contract for the Kinabalu NAG project was novated to a third party on Oct 24, 2016 with Petronas Carigali’s consent.

It claimed that the third party had assumed all of TFSB’s rights, interests and responsibilities under the contract, and the contract’s performance now rests with the third party.

“The novation also released and discharged TFSB from all liabilities under the contract in accordance with the terms and conditions of the novation agreement. In addition, the company will take appropriate measures to mitigate the matter including appealing to Petronas,” said THHE.

Due to the recent cut in capital expenditure by oil majors, TFSB anticipates substantially lower number of capital projects in the upstream oil and gas sector in the near future.

It said the letter will not have any material impact on the company and TFSB is not expecting to participate in Petronas upstream tenders in the present year. However, it is still able to bid for other scopes under Petronas licence.

TFSB’s exclusion is not expected to have material impact on THHE’s financial results. In addition, any impact is further mitigated by TFSB’s diversification into onshore fabrication, fabrication of specialised equipment, offshore fabrication opportunities regionally as well as shipbuilding and ship repairs.

THHE’s share price rose 28.57% to close at 9 sen today with a total of 12.16 million shares traded. Its market capitalisation stood at RM100.90 million.

AWC terminates RM130m TBS service contract with government

PETALING JAYA: Building management services provider AWC Bhd and the government of Malaysia have agreed to terminate a five-year contract worth RM130 million to manage the facilities of Terminal Bersepadu Selatan (TBS) in Bandar Tasik Selatan, Kuala Lumpur, on mutual grounds.

AWC’s board of directors said in a Bursa Malaysia filing, Ambang Wira Sdn Bhd (AWSB) and the government had on Oct 10, entered into a Mutual Termination Agreement (MTA) to terminate the original contract dated June 9.

In a filing dated Aug 26, the company said the commencement date for the maintenance of TBS had been deferred pending the resolution of certain operational and technical matters between the government and the existing contractor for TBS.

“The MTA is conditional that any payments made by the government to date shall be deemed as the full and final settlement of payment for the value of all work or services carried out or partially performed for the original contract by AWSB up to date. Todate, AWSB has not received any payments from the Malaysian government for the original contract, and has incurred minimal expense in relation thereto,” the board said.

The MTA will negatively impact AWC’s financial performance over the intended duration of the original contract.

However, the impact is expected to be minimal as AWSB has secured other new contracts over the last three months.

AWC’s shares dipped 0.97% to close at RM1.02 with some 111,600 shares traded. Year-to-date the stock has made gains of 7.9%.

Analysts positive on Zakaria’s return to FGV

PETALING JAYA: Analysts reacted positively to the return of Datuk Zakaria Arshad as Felda Global Ventures Holding Bhd’s (FGV) group president and CEO, effective Oct 16, for easing uncertainty regarding the group’s direction in the long term.

MIDF Research analyst Alan Lim said FGV chairman Datuk Wira Azhar Abdul Hamid’s assurances that his priorities are to improve operational and financial performance of FGV’s core business and ensure sustainable growth going forward, have also helped.

MIDF Research maintains its “neutral” stance on FGV, with an unchanged target price of RM1.59.

“Our target price is based on 1.0x price to book value.

Despite the positive news, we believe that long term re-rating catalyst for FGV is the sustainable core earnings,” said Lim, who has maintained his earnings estimates for the group for FY17 and FY18.

On a separate note, Kenanga Research analyst Voon Yee Ping said while the decision may have no immediate earnings impact on the group, the research house believes that the return of the CEO should reduce long-term uncertainty concerning the company’s direction.

As such, Voon said it expects the market to react positively to the news.

“With the hiatus of both the CEO and CFO of FGV, management decisions were made in the interim by a management committee.

“Although such an arrangement would be sufficient for maintaining day-to-day operations, we believe the longer-term company direction requires further guidance, which may not be possible under a temporary committee,” she noted.

While the return of Zakaria reduces an element of uncertainty, Kenanga Research said it remained neutral over the overall group outlook on labour woes which are expected to continue in the mid-term, leading to crop losses.

Moreover, she said sugar earnings may remain weak in Q3 2017, due to existing higher cost stocks. There is a possibility of improvement however, towards Q4 2017.

Therefore, Voon said the research house maintains the group’s FY17-18 core net profit at RM49 million and RM64 million respectively, given minimal earnings impact on the decision. Kenanga Research reiterated its market perform on FGV, with higher target price of RM1.85.

“We up our valuation to 1.15x from 1.10x, implying mean valuation (from -0.5SD) as we believe the resolution of management suspensions should improve investor confidence while reducing long-term uncertainty over the company direction.”

“However, we remain neutral over the company’s outlook, with better production prospect offset by labour scarcity, while the effect of lower raw sugar prices may not be felt immediately given high existing stocks.”

FGV on Monday announced the re-entry of Zakaria, after Ministry of Finance Inc took into consideration the ongoing FGV transformation programme and his commitment and assurance to resolve the long outstanding debt of Safitex Trading LLC with FGV’s subsidiary Delima Oil Products Sdn Bhd.

FGV’s share price hit a high of RM1.77, before closing four sen higher at RM1.76 today, with some 9.5 million shares done.

SGX proposes rules changes on securities trading, market practices

PETALING JAYA: The Singapore Exchange (SGX) is seeking public feedback on a raft of proposed changes to SGX’s rules on securities trading and market practices.

It said in a statement that the objectives of the proposed changes include adopting a more principles-based, rather than prescriptive approach and ensuring rules remain relevant as market practices evolve.

For instance, trading members will have full flexibility to set the amount of security deposit required of a remisier after conducting a credit assessment.

“They can also negotiate the terms of their agreement with their remisiers. This eases the entry of new remisiers to the industry.”

SGX said it will no longer mandate senior management pre-approval for staff securities trading, so long measures are in place to guard against the misuse of confidential information.

“Trading representatives (TRs) engaging in their own business activities – apart from trading in securities – also no longer require SGX’s oversight; members will be responsible for ensuring that such activities do not conflict with the TR’s trading activities and compromise customers’ interest.”

SGX said requirements governing customer account opening will become less prescriptive and members are to ensure that any account opening is duly authorised.

“Management oversight of a securities broking firm is vested upon persons who are registered as approved executive directors with SGX.”

While registering of the CEO is currently practised by all members, many also register their executive directors with SGX.

“We propose to require only CEO registration as this person is ultimately responsible for the day-to-day management of the entire member firm and its activities.”

The public consultation is open till Nov 7, 2017.