Tuesday, November 7th, 2017


Dow hits record high at market open

NEW YORK, Nov 7 — The Dow hit a record high at the open today while the S&P and the Nasdaq were hovering near record levels, as earnings season winds down and investor expectations shift to a much-awaited cut in corporate taxes. The Dow Jones…

Opec: Cars to drive oil demand growth

KUALA LUMPUR, Nov 7 ― The outlook looks bright for oil-producing nations and carmakers, Opec said today, as the cartel expects a surge in car ownership in the developing world to far outweigh the adoption of electric vehicles over the coming two…

Foreign parties seen taking lead in MRT3

PETALING JAYA: Foreign parties are likely to take the lead in Mass Rapid Transit Line 3 (MRT3) as the financing proposal and technical experience requirements look to rule out Malaysian contractors for the project, which is estimated to cost RM35 billion to RM40 billion.

Contrary to the past where project delivery partners (PDP) are appointed for the MRT1 and MRT2 projects, MRT Corp has stated in its notice of tender released on Monday that it is calling for local construction and infrastructure development companies to participate in a tender to select a turnkey contractor to build and finance, on a turnkey basis.

The tenderers for MRT3 must present a financial proposal for at least 90% financing of the project cost, with a minimum financing period of 30 years and a moratorium on the first eight years. The financing can only be undertaken in ringgit, US dollar, Chinese yuan, Japanese yen or euro.

The successful bidder will be responsible for the engineering, procurement, construction, testing and commissioning of the 40km MRT3, featuring 32km of twin-bored tunnels and 8km of elevated viaducts. There will be a total of 26 stations – 19 underground and seven elevated. Joint ventures looking to tender must not have more than eight members.

Gamuda Bhd and MMC Corp Bhd are the PDPs for both MRT1 and MRT2.

Given that huge funding required for MRT3, AmBank Research believes the race has narrowed down to only Chinese and Japanese contractors, who have backing from their governments to provide soft loans for infrastructure in developing countries.

Nomura Research said in a note today that it is surprised by the timing of this tender, especially as the alignment has not been finalised yet, despite the government’s intention to bring forward the MRT3’s completion date to 2025.

Based on the preliminary assessment of the tender details, it opined that there are potentially negative implications for Malaysian construction stocks, as such a huge financing commitment likely rules out any Malaysian contractor being the lead contractor. It added that this is because of the relative balance sheet risks and the fact that none of the Malaysian contractors seem to fulfil all the technical experience criteria for the lead contractor.

Hence, it believes that a foreign contractor is likely to be the turnkey lead.

“We believe none of the Malaysian corporates are keen on the financing role, and will only choose to bid at the subcontractor level for portions of the MRT3.”

However, Nomura said this is negative for the local contractors, especially Gamuda which has historically been the biggest beneficiary due to its PDP role and healthy margins for tunnelling.

“Moreover for smaller contractors there will be very few viaduct packages to bid for due to the smaller elevated stretch – resulting in most Line 2 viaduct package winners missing out on Line 3 packages,” it said.

With Line 3 turning out to be a negative for the sector, Nomura reiterated its “buy” rating on Sunway Construction Group Bhd, which has already secured the biggest package from LRT3, and has a record RM6.6 billion order book.

Meanwhile, it is keeping a “neutral” call on Gamuda with a target price of RM5.20 as the MRT3 details seem not very promising for the company.

Despite that, Gamuda is confident that it is still likely to secure the tunnelling package for MRT3 even without the PDP model, according to AmBank, which has maintained a “buy” call on its stock with a fair value of RM5.95.

No negative impact from withholding tax exemption

KUALA LUMPUR: The government believes the exemption for withholding tax on overseas firms providing services in Malaysia will not have a negative impact on its revenue in the future, according to Deputy Minister of International Trade and Industry Datuk Chua Tee Yong.

“Basically, a lot of the businesses have given feedback to us that the issues they face have been resolved. And I think the government has already anticipated the revenue in terms of what is expected,” he told reporters after officiating the Malaysian Institute of Accountants’ (MIA) International Accountants Conference 2017 today.

Chua also believes that the Ministry of Finance (MoF) has factored in the economic and financial indicators such as the gross domestic product (GDP) growth outlook and the commodity prices before making the tax relief announcement.

“I believe the government has factored all these and had met with the industry players … where a lot of issues have been sorted out,” he said.

The MoF announced the exemption for withholding tax on overseas firms providing services in Malaysia last month, effectively rolling back the status to pre-January 2017.

Before the relief, companies using overseas expertise would have needed to set aside a 10% portion of the payment for services to be remitted to the Inland Revenue Board.

Meanwhile, during the conference opening ceremony, Chua said at least 1,500 small and medium enterprises (SMEs) are expected to participate in the newly-launched Digital Free Trade Zone (DFTZ) by end of next year.

Last week, Prime Minister Datuk Seri Najib Abdul Razak and Alibaba group founder Jack Ma launched the free trade zone with the participation of 1,972 export-ready SMEs.

Chua said MIA could play an important role by providing value-added services, financial management and relevant business supports to the SMEs to help them improve in terms of products quality, growth and expansion decisions.

The two-day conference, organised by MIA, the developer and regulator of the Malaysian accountancy profession, attracted 3,000 delegates from commerce and industry, public sector, public practice and the academia.

Gas Malaysia in joint venture with Sime Darby Offshore Engineering

PETALING JAYA: Gas Malaysia Bhd is teaming up with Sime Darby Offshore Engineering Sdn Bhd (SDOE) to provide electricity, steam, chilled water, hot water, hot air and/or any other utilities via combined heat and power (CHP) system to industries in Malaysia.

The move will see Gas Malaysia diversify from gas distribution to energy business.

In a filing with Bursa Malaysia today, Gas Malaysia said Gas Malaysia Venture 1 Sdn Bhd (GMV1), a wholly-owned subsidiary of Gas Malaysia Ventures Sdn Bhd, which in turn is a wholly-owned subsidiary of Gas Malaysia, had entered into a joint-venture agreement (JVA) with SDOE today.

Under the JVA, GMV1 and SDOE will incorporate a joint-venture (JV) company to pursue and engage in the business; carry out the design, construction, installation, commissioning and operation of CHP at each customer’s premises; and engage in any activity in relation to the objectives and purposes as per terms of the JVA.

“The JV is in line with Gas Malaysia’s overall strategy of maintaining its key position to be an innovative value added energy solution provider,” it said.

GMV1 will hold a 70% stake and SDOE the remaining 30% in the JV company which will have a paid-up capital of RM5 million. The JV company will have at least four directors, of which three will be nominated by GMV1 and one nominated by SDOE.

The commencement of the incorporation of the JV company is conditional upon the negotiation and execution of an energy supply agreement with a potential customer of Gas Malaysia as well as the negotiation and execution of an engineering, procurement, construction and commissioning contract with contractor, within 12 months from the signing of the JVA.

GMV1 will fund its investment in the JV company through a combination of internally generated funds and borrowings. The JVA is conditional upon approval being obtained from regulatory authorities.

Gas Malaysia’s share price fell 0.36% or 1 sen to close at RM2.76 today with a total of 198,600 shares traded, giving it a market capitalisation of RM3.54 billion.

BFood CEO, BStarbucks bag prestigious awards

SINGAPORE: Leadership and sustainability go hand in hand for Berjaya Food Bhd (BFood) and subsidiary Berjaya Starbucks Coffee Company Sdn Bhd (BStarbucks), as both entities were recognised for their leadership and sustainability practices at the Asia Corporate Excellence & Sustainability Awards (ACES) early last month.

BFood CEO Sydney Quays emerged as the year’s only Eminent Leaders in Asia category winner under the leadership domain; while BStarbucks is one of two winners in the Top Companies to Work for in Asia category under the sustainability domain.

“Leadership and sustainability go hand in hand. It’s a big requirement for a lot of companies to practise both effectively and I don’t think any one is lesser than the other. I’m confident this will spur us to work harder. There is no way you can become a leader without having people to lead,” Quays told SunBiz.

The Eminent Leaders in Asia award is presented to exemplary individuals leading mega businesses for a decade or more with the right attitude towards the business and the determination and grit to achieve success. These select few are led by their inner drive, embracing the concept of sustainability and new innovation to continuously grow the multimillion dollar business in terms of revenue, brand reach and resources maximisation. 

Quays bagged the award for his role in developing coffee giant Starbucks in the Malaysian market. He is a pioneer of BStarbucks and was instrumental in the 1998 establishment of the brand in Malaysia. Under his leadership, Starbucks Malaysia won the 2016 Asia Responsible Entrepreneurship Awards, Social Empowerment Category for Starbucks Connecting Communities project; Employer of Choice, Malaysia HR Awards 2015; Best Companies to Work for in Asia 2015, HR Asia; Best of the Best Award, Malaysia’s Best Employer 2015, Aon Hewitt.

“Being a global brand does not make leadership any easier. It makes it a lot harder because there is a lot more responsibility to keep up with in the global environment,” said Quays.

BStarbucks has about 260 Starbucks outlets in Malaysia and is opening an average of 30-40 outlets a year. Quays said there is constant growth and innovation in Starbucks.

“The growth is focused around our customers. Many times we get customers requesting us to open Starbucks outlet closeby as to them and we know that we’re an acceptable brand. Now the strategy is to expose the brand outside Kuala Lumpur, in small towns like Batu Pahat, Segamat and Taiping.”

Quays has now moved beyond Starbucks and is tasked with overseeing all food and beverage entities under BFood, including Kenny Rogers Roasters and Jollibean.

“Empowerment is a big part of our business and it comes in many forms. The most important is trusting your people. You’ve got to hire the right people, train them well, motivate and give them the recognition that they reserve.”

“This year marks our 19th year in Malaysia and Starbucks has been a big part of the Malaysian culture. We do a lot of sustainable community givebacks,” said Quays. A total of 193 nominees and 41 winners from the region were present at the ACES.

07/11/2017 20:52:42

GHL buys stake in Vietnam mobile payment facilitator

PETALING JAYA: GHL Systems Bhd has announced its entry into Vietnam by acquiring a 31.16% stake in MPOS Global Limited for US$3.32 million (RM14.04 million).

MPOS Global and Vietnam MPOS Technology provide the first and only non-bank mobile payment acceptance terminals and financial solutions for individuals and businesses through a 0%-interest installment scheme linked with 12 major banks across Vietnam.

GHL said the move is part of its ongoing transaction payment acquisition strategy in the region. Its executive vice-chairman Simon Loh said it believes Vietnam is ripe for an explosion in e-payment adoption and the strengths of both companies will see it becoming a major player in the e-payment landscape in Vietnam and Asean.

Founded in 2013, Vietnam MPOS owns important innovations in card-present and card-not-present payment acceptance and self-operating end-to-end payment facilitator business. Vietnam MPOS operates 7,000 active mobile payment terminals for 3,000 merchants with an average monthly transaction payment volume (TPV) growth rate of 30% in 2017.

With a population of 93 million, Vietnam is an attractive electronic payment cards market with an estimated 121 million cards issued by 40 financial institutions, but is served by only 300,000 electronic data capture (EDC) terminals. This represents only two EDC terminals per 1,000 inhabitants, compared with 10 EDC terminals per 1,000 inhabitants in Malaysia.

Both GHL and Vietnam MPOS’s strategy is to cement a strong Vietnamese presence in mobile and internet payments, including next generation payment solutions such as QR-code and NFC (near field communication).

For FY16, MPOS Vietnam recorded an audited loss after tax of VND3.06 billion (RM570,000). The historical losses of MPOS Vietnam are not material compared with the audited profit after tax of the GHL Group for the FY16 of RM18.2 million.

“Nonetheless, the management of GHL believes that there are positive synergies to be established through the proposed acquisitions, which are expected to contribute positively to the earnings and earnings per share of the GHL Group moving forward,” GHL said in a stock exchange filing.

The proposed acquisitions are subject to regulatory approvals of Vietnamese authorities and are expected to be completed within the fourth quarter of 2017. GHL closed 4.52% higher at RM1.62 today with 1.13 million shares traded.

Nestle announces 70 sen dividend despite Q3 slump

PETALING JAYA: Nestle (Malaysia) Bhd saw its net profit slump by 25.5% to RM119.75 million in the third quarter ended Sept 30, compared with RM160.71 million registered a year ago, due to an anticipated increase in prices of raw materias such as sugar, milk powder, coffee beans and the devalued ringgit.

Revenue, however, rose 4.77% to RM1.32 billion in the period under review from the RM1.26 billion registered last year, on the back of growth achieved in domestic and exports sales, which grew by 4.2% and 6.8% respectively.

The group announced an interim dividend of 70 sen for the financial year ended Dec 31, 2017.

It said in a bourse filing that effective marketing and trade activities on selected product categories, helped deliver the growth in domestic sales whereas exports benefitted from the good growth registered by its affiliated companies especially those in Asean.

In addition to that, diligent cost management helped in cushioning the effect of the depreciated ringgit.

“This proactive cost management and a different phasing of the marketing investments make us confident of achieving a satisfactory profit situation for the full year 2017,” the board of directors said.

“Based on our cautiously optimistic outlook for the Malaysian economy, we will continue with our ‘Fuel the Growth’ strategy: Striving for efficiency increases all over the supply chain and reinvesting the realised improvements into the sustainable growth of the company by innovating/renovating our portfolio and intensifying our Trade-and Consumer promotions. We are confident that this approach will finally lead us also to a solid profit level,” it added.

For the nine month period net profit fell 10.16% to RM512.51 million from RM570.19 million, which the group said is reflective of its different marketing profit phases, as well as the impact of currency fluctuation.

Nestle’s shares fell 0.2% to RM88 with some 582,800 shares traded.

BNM announces RM500m Disaster Relief Facility for SMEs

PETALING JAYA: Bank Negara Malaysia (BNM) today said a RM500 million Disaster Relief Facility would be made available from today for small and medium enterprises at a concessionary rate, to help alleviate the financial burden and assist in the resumption of operations for businesses affected by the recent floods in the northern states of Peninsular Malaysia.

Under this facility, affected businesses can obtain financing at a concessionary rate from any commercial bank, Islamic bank and development financial institutions regulated by BNM.

BNM will provide a 60% guarantee on the financing obtained through Credit Guarantee Corporation Malaysia Berhad.

The salient features of the facility are available to Malaysian SMEs affected in the districts identified by Agensi Pengurusan Bencana Negara as flood disaster areas.

The maximum amount of financing is RM500,000 per group of companies; financing is for the purpose of repairs/purchases of assets to replace those damaged by floods and working capital; effective financing rate chargeable is up to 2.25% per annum; and the tenure of the financing is up to five years, with a grace period of six months on financing repayments.

The facility is open for application until May 31, 2018. Financial institutions have also committed to give top priority to all requests for assistance from customers who have been affected by the flood.