Tuesday, November 14th, 2017


HSBC to pay €300m to avoid French tax fraud trial

PARIS, Nov 14 — HSBC Private Bank, a Swiss unit of banking giant HSBC, has agreed to pay €300 million (approx. RM1.48 billion) to avoid going to trial in France for enabling tax fraud, prosecutors said today. HSBC was accused last year of…

Maybank’s digital initiatives encouraging

PETALING JAYA: Analysts have lauded Malayan Banking Bhd’s (Maybank) digital initiatives, which they opined will contribute positively to its earnings.

“We believe that targeting millennials makes strategic sense given this age group’s prevalence in digital usage. We are pleasantly surprised by the group’s direction to create an in-house research and development (R&D) team and we believe that this will ensure its digital offerings are robust,” said MIDF Research, which is maintaining a “buy” call on Maybank with a target price of RM10.30 given the group’s positive outlook.

The research house said that the most obvious benefit from better digital offerings will be cost savings from areas such as lower personnel costs due to a lower headcount, as most processes are automated, lower cost-to-serve and less maintenance spending on vendors.

“Also, we understand that better productivity can be expected from personnel and more tailored customer focus. The digital initiatives are also expected to enhance revenue through more cross selling and bundling of products.”

With data analytics, MIDF Research said Maybank could tailor financial solutions for its customers. This includes on-boarding of SMEs, which are mainly online traders, and subsequently enhancing deposit-taking capabilities.

While it is optimistic on the potential of digital initiatives, MIDF Research said the cost and revenue associated from these initiatives are embedded into the group’s financial results. Therefore it is very difficult to truly measure the impact.

“Nevertheless, we have seen cost-to-income ratio on a downtrend recently for the group where it posted 47.9% in Q2’FY17 from 50.3% and 48.9% in Q1’FY17 and Q2’FY16 respectively, which might give an indication on the impact of the digital initiatives.”

MIDF Research said it understands the need for Maybank to maintain its dominant position in the digital offering due to the fact that the number of cashless transactions, whether through internet banking, mobile wallet or debit cards, are on the rise.

“We are not surprised by the management’s expectation of transaction value via mobile for the group to reach RM22 billion in 2017, or 95% year-on-year growth.”

Meanwhile, Hong Leong Investment Bank (HLIB) Research said it is positive on Maybank’s latest move, as decent return is expected from its digital effort, especially in garnering new potential business (new loan applications, current accounts and savings accounts) with a shorter turnaround time.

“The growth of digital banking forces banks to re-tailor their business model, including recurring investment in digital banking, to remain competitive and relevant. While investment value earmarked for digital initiatives is unknown, we believe Maybank is leveraging on its in-house digital R&D team, hence eliminating the exorbitant consultant fees.”

The research house said it continues to like Maybank for its well-balanced exposure in both retail and corporate segments.

“Maybank is the front runner beneficiary and the best proxy to ride on a continued expansion in the Malaysian economy.”

HLIB Research is maintaining a “buy” call on Maybank with a target price of RM10.70. The stock closed 18 sen, or 1.97%, higher at RM9.34 today, with some 16.87 million shares changing hands.

Global markets falter, focus on central banks

LONDON, Nov 14 — Asian and European equity markets faltered today after a tepid lead from Wall Street, as investors awaited key speeches from powerful central bank chiefs. London gained a slender 0.2 per cent on bright news from supermarket…

Lay Hong’s Q2 net profit up threefold

PETALING JAYA: Lay Hong Bhd’s net profit for the second quarter ended Sept 30, 2017 rose over threefold to RM12.17 million from RM3.54 million a year ago, mainly thanks to its integrated livestock farming segment.

The integrated livestock segment’s revenue increased 23.29% in the current financial quarter, due to the higher quantity of eggs and higher quantity and price of processed frozen products and pasteurized liquid eggs sold in the current quarter.

The company’s revenue rose 20% to RM204.56 million compared with RM170.98 million in the previous year’s corresponding quarter.

For the six-month period, its net profit rose over four times to RM16.59 million from RM3.96 million a year ago, thanks to its integrated livestock farming segment.

Revenue jumped 17% to RM387.59 million in the first six months compared with RM329.93 million in the previous year’s first six months.

Lay Hong said the entry of NH Foods Ltd into the company as a substantial shareholder recently has marked a major step forward for the company’s chicken product manufacturing business in the form of new product development and market penetration.

“The company is on track with its planned expansion to increase our production capacity. Our egg production now stands at 2.3 million eggs per day to date and is expected to grow to our target. At the same time, our broiler capacity will increase to cater to new requirements in our food processing, taking into consideration our joint venture (JV) with NH Foods Ltd,” it said.

The company is constantly reviewing its strategies and will capitalise on the strength of NH Foods to take the company to greater heights. A new JV company under the name of NHF Manufacturing (Malaysia) Sdn Bhd has been set up and is now actively working on its plant and product development. A total of 11 products have been launched and the response has been encouraging.

“A piece of industrial land in the Selangor Halal Hub, Pulau Indah has been identified for the plant to be set up and we are working on the factory and machinery layout. This is expected to be the site for the JV with NH Foods. Works to acquire and build the factory is progressing in a timely manner according to our planned timeline.”

Lay Hong closed unchanged at 99.5 sen today, with 1.74 million shares traded.

Ho Wah Genting eyes diversification into travel retail biz

PETALING JAYA: Ho Wah Genting Bhd (HWGB) proposes a slew of corporate exercises, namely diversifying into the travel retail business, share consolidation and private placement to raise up to RM20.18 million.

In a filing with Bursa Malaysia, it said that it will consolidate every four existing shares into one share, which could potentially reduce the volatility of the trading price with a reduction in the number of shares.

HWGB is involved in the manufacturing of moulded power supply cord sets, trading of wires and cables, tin mining and travel services.

It noted that the diversification into the travel retail business is pursuant to the shareholders’ agreement dated Sept 25, entered into with Dufry International AG for the operation of a duty and tax free shop in Genting Highlands resort.

Dufry and HWGB respectively own a 51% and 49% stake in the joint venture entity Dufry HWG Shopping Sdn Bhd.

HWGB said it believes that the business venture with Dufry is an attractive business proposition in the face of steady visitor traffic in Genting Highlands over the past two years.

It anticipates that with the new business venture, this business segment may potentially contribute more than 25% of the net profits and/or net assets.

Meanwhile, the proposed private placement entails the issuance of up to 77.62 million new consolidated shares, representing up to 30% of its issued shares. Proceeds raised will be used for working capital for its manufacturing and tin mining divisions.

HWGB’s share price was unchanged at 6.5 sen today, with some 6.31 million shares traded.

Paramount’s Q3 earnings leap over 7 times on disposal gain

PETALING JAYA: Paramount Corp Bhd’s earnings jumped more than seven fold to RM85.76 million for the third quarter (Q3) ended Sept 30, 2017 against RM11.16 million in the previous corresponding period, mainly underpinned by a gain of RM77.8 million recognised on the disposal of the Sri KDU campus. Revenue increased 41.8% from RM134.78 million to RM191.1 million, thanks to higher contribution from both the property and education divisions.

The property developer told Bursa Malaysia that it achieved sales of RM213 million for Q3, mainly from the encouraging take-up rate of new launches, namely Urbano in Glenmarie and Sekitar Business Park in Shah Alam.

Its nine-month sales of RM633 million also surpassed the 2016 full-year sales of RM402 million. Unbilled sales as at the end of Q3 stood at RM588 million compared with RM534 million in Q2.

Paramount expects its property division to benefit from the positive market sentiment by promoting and developing properties that are affordably priced and innovatively conceptualised.

However, on the education front, it will continue to face intense competition in a highly price-sensitive environment.

“Tertiary education institutions have gone into a price war in an attempt to hold their respective market positions and compete for new students.”

Paramount’s nine-month net profit more than doubled from RM44.76 million to RM108.72 million on the back of a 31.8% increase in revenue from RM393.41 million to RM518.59 million.

Its shares close 2 sen, or 1.1%, lower at RM1.73 today, with some 5,000 shares changing hands.

KWAP aims to boost performance

KUALA LUMPUR: Malaysia’s Retirement Fund Inc aims to lift the overseas portion of its investment portfolio to as much as 15% from 12%, as the US$30 billion (RM125 billion) pension fund looks to boost performance while domestic returns slow, its chief executive told Reuters.

Kumpulan Wang Persaraan (KWAP) will review its asset allocation strategy in the new year, Wan Kamaruzaman Wan Ahmad said at Reuters Global Investment 2018 Outlook Summit. Its international investments include US ride-hailing firm Uber Technologies Inc, he said.

With US$29.83 billion worth of assets under management, a three percentage point increase means a shift of US$900 million into foreign deals, a Reuters calculation showed.

The state-linked pension fund received board approval in 2013 to invest up to 19% of assets abroad.

But a 23% dive in the ringgit in 2015 saw the government urge funds to repatriate capital and limit foreign exposure.

As domestic investment increased, however, the main share price index continued a decline that began in 2014.

The index is up 6% in 2017 but is still one of the region’s worst performers. Returns on many domestic investments are therefore lower than global investments even though the ringgit is weaker than three years ago, Wan Kamaruzaman said.

“The target is to increase by 7% (to 19%) but we might look at 15%, which is more realistic,” the executive said, declining to elaborate on regions or sectors of focus.

KWAP put US$30 million into Uber last year as its first foreign, disruptive-technology investment, and was considering more technology-related deals.

Wan Kamaruzaman said the Uber investment was long-term, and that the fund was waiting for potential investment from Japanese conglomerate SoftBank Group Corp – which has said it is considering investing – to estimate any gains.

“Let’s see the valuations. If it does (invest), we will know whether our investment is in the money or not,” Wan Kamaruzan said.

KWAP is considering participating in a fund that Alibaba Group Holding Ltd aims to raise. The Chinese e-commerce firm plans to invest in regional small businesses in the Digital Free Trade Zone, which it launched with Malaysia’s government. Wan Kamaruzaman said talks were at an early stage.

He also reiterated an end to talks over buying a stake in AMMB Holdings Bhd (AmBank) from Australia and New Zealand Banking Group Ltd, which owns 24%.

“KWAP has always been a financial investor,” he said.

“We don’t want to acquire any controlling stakes in any company.

“If there’s a smaller (AmBank) stake to be sold, we might consider it, but the bank needs a driver.”

The fund is now in talks to buy stakes in the Malaysian units of Great Eastern Life Assurance Company Ltd and Prudential PLC, as the insurers seek local shareholders to satisfy central bank ownership regulations.

“We have received central bank approval to begin talks and we have started but it is very preliminary,” Wan Kamaruzaman said.

E&O’s Q2 earnings surge on higher operating profit

PETALING JAYA: Eastern & Oriental Bhd’s (E&O) net profit for the second quarter ended Sept 30, 2017 grew fivefold to RM19.68 million from RM3.83 million a year ago due to higher operating profit from the property segment on the back of higher revenue recognised.

In a filing with Bursa Malaysia today, the group said the higher operating profit was also due to steady progress in construction from ongoing projects. Operating profit for the quarter stood at RM46.29 million compared with RM8.15 million a year ago.

Revenue for the quarter more than doubled to RM195.88 million from RM79.28 million a year ago mainly due to higher revenue contribution from the property segment as a result of higher revenue recognition from ongoing projects and higher sales of completed properties.

For the six months ended Sept 30, 2017, net profit grew almost sixfold to RM40.92 million from RM7.07 million a year ago while revenue rose 52.24% to RM369.32 million from RM242.59 million a year ago.

“Our positive results for the first half of financial year 2018 reflects an upward trend in our performance shown also by our first quarter results. We hope to sustain this performance by enhancing our sales initiatives as well as through prudent management of our financial position,” managing director Kok Tuck Cheong said in a statement today.

Commenting on upcoming projects, Kok said the group is at the planning and design stage for its project at the intersection of Jalan Conlay and Jalan Kia Peng, with a target set to launch by end of 2018.

Meanwhile, the Seri Tanjung Pinang Phase 2A project off the northeast coast of Penang is in progress with reclamation already achieving the targeted five metres chart datum (CD) level in certain areas. The application of titles for land reclaimed above two metres CD is in progress.

E&O’s share price fell 1.36% or 2 sen to close at RM1.45 today with a total of 503,100 shares traded, giving it a market capitalisation of RM1.91 billion.

Infocomm Foundation, Dutch firm ink big data business deal

AMSTERDAM: Malaysia Infocomm Foundation (MIF) and Xomnia B.V. of the Netherlands signed a framework cooperation agreement on Monday to set up a joint venture (JV) company in Malaysia specialising in the big data business.

Big data refers to data sets that are so large or complex data that traditional data processing application software is inadequate to deal with them.

The agreement was signed by MIF chairman Raja Mazhar Mohar Tun Raja Mohar, executive director Saad Mohib and Xomnia founding partners William van Lith and Ollie Dapper.

It was witnessed by Infocomm founder Datuk Mohd Radzi Abd Latif.

Raja Mazhar told Bernama that the JV company would be set up within a year to help realise the government’s goal of producing 20,000 data analysts and 2,000 data scientists by 2020.

“We want to be at the forefront to support the government’s policy under the Big Data Framework and the digital economy,” he said.

Raja Mazhar said by partnering Xomnia, a pioneer in datathon in the Netherlands, the new company also aims to make Malaysia an international hub for big data entrepreneurship.

It would also focus on developing young talent through a competitive environment in datathon.

Van Lith said his company was “very excited” with the partnership as it would provide a chance to achieve its big data and artificial solutions on a global scale.

“We are also very happy that we can now educate talent on a larger scale than ever before,” he said.

Citing examples of the big data business, he said Xomnia created and developed predictive models such as when a burglary would happen and predicting an energy crisis.

Another key business model is to predict how long an employee would work with a company.

Its major clients include the government, banking and insurance sectors, Dutch international airline, KLM, and the police.

Mohd Radzi said the venture aimed to expand its business to the Asian market.

MIF is focused on catalysing digital innovations, developing highly-skilled human capital for the digital industry and promoting digital area development strategies. – Bernama

Petra Energy’s unit bags MCM contract from Petronas Carigali

PETALING JAYA: Petra Energy Bhd’s wholly owned unit Petra Resources Sdn Bhd has secured a contract for the provision of maintenance, construction and modification (MCM) services for Petronas Carigali Sdn Bhd’s facilities at offshore Sabah.

The group told the stock exchange today, there is no firm contract value stated in the Letter of Award as the contract is on a “call-out” basis based on the work orders issued by Petronas Carigali.

Petra Energy said the work orders shall include any or all other work and services which is generally related to the scope of works in the contract at a fixed schedule of rates.

Under the contract, it said its unit will provide contract management, project execution, procurement and marine spread to undertake maintenance activities for Petronas Carigali under Package B (Offshore) Sabah.

It will be effective for a primary period of five years from Sept 20, 2017, and will expire on Sept 19, 2022.

“The award of this contract would contribute positively towards the company’s overall earnings for the period thus enhancing shareholder value,” it said in a statement.

Petra Energy closed lower 2% at 98 sen today with 74,600 shares done.