Wednesday, December 13th, 2017


Ekuinas to acquire lighting firm Davex

PETALING JAYA: Ekuiti Nasional Berhad (Ekuinas), the government-linked private equity fund management company, is buying over homegrown lighting design, consultancy and manufacturer Davex (Malaysia) Sdn Bhd (Davex) for RM255 million.

Davex manufactures its own products under the brand name Davis Lighting and is primarily involved in the luminaire segment of the lighting market.

The Penang-based company founded in 1983, provides end-to-end lighting solutions to commercial, industrial and residential clients and has strong presence in Singapore and Australia, as well as the local market.

Davex’s dedicated in-house design teams and innovative technology integration capabilities have delivered products for large-scale projects such as the Petronas Twin Towers, Sunway Medical Centre, Singapore’s Changi Airport and Public Housing programme, and Australia’s John Curtin School of Medical Research and Big W department stores.

Ekuinas CEO Syed Yasir Arafat Syed Abd Kadir said, “Ekuinas will leverage Davex’s strengths towards achieving its value creation plan that we have put in place to expand its top line growth whilst increasing its presence in Malaysia and the region, as well as streamlining systems and process integration with the aim of improving brand equity.”

“We will work closely with Davex’s management team to establish and accelerate local and regional growth to replicate the company’s success in Singapore and Australia, and look to expand its facility in Penang. We are confident that as the company grows, there will also be increased employment opportunities for all Malaysians,” he added.

Ekuinas in its statement said Davex is well placed to capitalise on the increasing demand for energy efficient lighting solutions, adding that the Malaysian luminaire market is expected to grow to US$882 million (RM3.6 billion) by 2020.

Since its inception in 2009, Ekuinas has made 54 direct and outsourced investments, with a total committed capital of over RM3 billion. The Ekuinas Direct (Tranche I) Fund recorded a Gross Portfolio Return of RM466.4 million, at a gross annualised Internal Rate of Return (IRR) of 13.1% and a net annualised IRR of 9.4%. The second fund, Ekuinas Direct (Tranche II) Fund posted a Gross Portfolio Return of RM331.6 million at a gross annualised IRR of 18.1% and a net annualised IRR of 12.7%.

US Fed opens policy meeting, interest rate hike likely

WASHINGTON: The US central bank opened its final two-day policy meeting of the year on Tuesday and was likely to raise the benchmark interest rate despite the absence of inflation.

It would be the third rate hike this year, and possibly the final time Federal Reserve chief Janet Yellen presides over a policy move since President Donald Trump has opted to replace her in February.

Analysts say the booming labour market, which in recent months has pushed the unemployment rate down to 4.1%, the lowest in 17 years, will outweigh the Fed’s perplexity over why inflation has stayed stubbornly below the central bank’s 2% target.

And with Republicans in Congress working to finalise a unified final version of a massive tax overhaul that will slash corporate taxes, central bankers likely will be thinking about the measure’s potential to add fuel to the economy and finally ignite price increases, economists say.

“Labour markets and prospects of fiscal stimulus outweigh soft inflation” in the rate decision, Barclays said in a Fed outlook note.

With the rate-setting Federal Open Market Committee (FOMC) widely expected to increase the benchmark lending rate, analysts will focus on the wording of the Fed statement and the quarterly forecast for hints about how fast rates are likely to increase next year.

Most economists see three increases again in 2018, but will watch to see if more Fed officials forecast four rate hikes or make any mention of the tax cuts’ likely impact on economic growth.

Even so, “further upward adjustment will likely have to wait until either the tax cut passes or there is sufficient evidence to suggest that inflation is firming faster than anticipated,” Barclays said.

But Jim O’Sullivan of High Frequency Economics said “we expect officials will signal no let-up in tightening in response to a tight and still-tightening labour market.” He is projecting four rate increases next year.

Job gains, while slower than last year, are running at 174,000 a month on average, and companies around the country are reporting difficulty in finding workers to fill open positions.

Normally that would be expected to drive wage gains and fuel price increases. But the Fed’s preferred measure of annual inflation has remained well below the 2% target, slipping to 1.6% in October.

The absence of inflation has baffled Fed officials and led to a split among those policymakers who want to go slowly and those who want to hike more quickly before price increases hit the economy.

Yellen will preside over one more FOMC meeting in January, and then Trump’s pick for central bank chief, Fed governor Jerome Powell, is due to take over in early February. – AFP

Malaysia resilient to external headwinds

SINGAPORE: Moody’s Investors Service said the government of Malaysia (A3 stable) demonstrates a relatively high debt burden.

In a report released today it said Malaysia will be able to maintain its strong growth trends on its highly diversified and competitive economic structure, that have proven to be resilient to external headwinds.

The economy’s long-term potential growth should stay robust at around 5%, which would be significantly stronger than most other A-rated sovereigns.

On the issue of whether household debt presents challenges to Malaysia’s macro-financial stability and growth, Moody’s said at 84.6% of GDP at the end of September 2017, Malaysia’s household debt levels, while stable, pose downside risks to growth.

“Nevertheless, such debt does not pose material threats to financial stability. Households have large liquid financial assets to buffer the impact of a potential shock to debt servicing capacity. Moreover, ongoing macroprudential measures will help contain potential further increases in debt,” it said.

It said Malaysia is also exposed to a potential sharp and lasting negative change in external financing conditions, given the country’s reliance on foreign financing.

“Nevertheless, its resilient economic growth, deep domestic capital markets, large international asset position and large export proceeds mitigate the sovereign’s vulnerability to sudden shocks,” said Moody’s.

Moody’s analysis is contained in its report titled “Government of Malaysia: FAQ on credit resilience to high leverage and external vulnerability risks”.

Moody’s report answers the five questions, including: Do you expect fiscal trends to improve? Do government guarantees present material contingent liability risks? Is Malaysia vulnerable to external conditions? Are strong growth trends likely to be sustained? Does household debt present challenges to macro-financial stability and growth?

On fiscal trends, Moody’s does not expect Malaysia’s fiscal trends to improve significantly. The agency explains that fiscal consolidation has slowed since 2014 and absent any meaningful revenue-raising measures, further material progress is unlikely.

The deficit will narrow from 2.8% of gross domestic product (GDP) in 2018, as and when strong nominal GDP growth boosts revenues. As a result, the debt burden will likely stabilise around the current levels (50.9% of GDP in June 2017), significantly higher than the A-rated peer median of 40.5% at year-end 2016. Debt affordability will remain constrained by a narrow revenue base.

With government guarantees, Moody’s said that such guarantees are unlikely to present material contingent liability risk, because they are issued through a stringent selection process and most companies that benefit from them are profitable and competently managed. At the end of 2016, the total debt of non-financial public sector corporations stood at 16.6% of GDP, two-thirds of which was guaranteed by the government.

Moody’s pointed out that Malaysia’s reserves are insufficient to meet maturing external long-term debt repayments and short-term debt. Nonetheless, a sizeable net asset position, large export proceeds, and deep domestic capital markets moderate external vulnerability.

Genting lifts Bursa Malaysia to end 8 pts higher

KUALA LUMPUR, Dec 13 — Bursa Malaysia ended higher today with the key index closing at its intraday high for the second consecutive day, driven by gains in blue chip stocks led by the Genting group, dealers said. Despite starting trading on an…

Ringgit closes marginally lower against US dollar (Updated)

KUALA LUMPUR: The ringgit closed marginally lower against the US dollar today on lack of demand despite firm crude oil prices, a dealer said.

At 6pm, the local unit was quoted at 4.0850/0880 against the US dollar from 4.0770/0800 on Tuesday.

Global benchmark Brent crude today rose 1.29% to US$64.16 (RM261.91) per barrel compared with US$65.31 () per barrel at close yesterday.

OANDA Head of Trading Asia-Pacific Stephen Innes said the ringgit did not benefit from rising oil prices as local traders factored the risk premium as a short-term factor.

“Expect the ringgit to trade with a neutral bias today, given that international investors are gearing down for the holiday season.

“However, with energy prices holding up well and given the lack of positioning in the ringgit, it may be less vulnerable to any Federal Open Market Committee surprises than regional peers,” he told Bernama.

The ringgit mixed against a basket of currencies.

The local note appreciated against the euro to 4.7991/8038 from 4.8035/8083 previously.

However, it dropped against the yen to 3.6017/6053 from 3.5933/5963, weakened against the Singapore dollar to 3.0190/0219 from 3.0171/0207, and traded lower against the pound at 5.4518/4579 from 5.4391/4456 previously. — Bernama

Dolphin International’s Indonesian unit sues PT Arka Jaya Mandiri

PETALING JAYA: Dolphin International Bhd‘s subsidiary Dolphin Indonesia has filed a writ of summons in the High Court of Indonesia against PT Arka Jaya Mandiri in relation to a delay in completion of civil works.

Dolphin International’s board of directors said in a Bursa Malaysia that it has served a letter of demand to PT Arka via its solicitors, in relation to the additional expenses incurred mainly due to the delay in completion of civil work awarded to the defendant on January 3, 2013, for which there has been no response from PT Arka.

The group is seeking Rp12,542,812,878 (RM3.58 million) in claims from PT Arka. The claims was calculated on a formula of 6% to the total expenses incurred to complete the unfinished and rectification works, as well as the additional expenses incurred due to the delayed in completion of civil work.

Dolphin said PT Arka's actions resulted in it being compelled to take over and complete the project, which it claims brought damage to its reputation and resulted in the loss of future business due to the failure on PT Arka’s part to fulfill its contractual obligations.

“There is no material impact to the Dolphin International arising from this suit except the estimated legal fee cost of Rp.650,000,000-00),” the board said on the impact of the suit.

Dolphin's shares gained 6.67% to close at 16 sen with some 1.51 million shares done.

Lufthansa said to offer Condor, TUI slots to gain Air Berlin

FRANKFURT, Dec 13 — Deutsche Lufthansa AG is ready to transfer landing rights from Air Berlin Plc to leisure giants Thomas Cook Group Plc and TUI AG in an effort to fend off antitrust concerns about its bid for most of the insolvent carrier,…

Genting lifts Bursa Malaysia to end 8 points higher

KUALA LUMPUR: Bursa Malaysia ended higher today with the key index closing at its intraday high for the second consecutive day, driven by gains in blue chip stocks led by the Genting group, dealers said.

Despite starting trading on an easier note, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) ended at 1,737.66, up 8.09 points or 0.47%, from yesterday's close of 1,729.57.

The index opened 0.73 of-a-point lower at 1,728.84 and hit an intraday low of 1,725.95 on mild profit-taking before clawing back to end at its intraday high.

On the broader market, gainers outpaced losers 563 to 353, with 366 counters unchanged, 585 counters untraded and 40 others suspended.

Total volume rose to 2.51 billion shares worth RM2.58 billion from Tuesday's 2.15 billion shares worth RM2.33 billion.

Genting group contributed 5.072 points to the rise in the FBM KLCI. Genting Bhd rose 37 sen to RM9.08 while Genting Malaysia bagged 24 sen to RM5.64.

Among other heavyweights, top weighted Maybank was flat at RM9.25, Tenaga lost six sen to RM15.42, Public Bank gained 16 sen to RM20.36, while Petronas Chemicals advanced two sen to RM7.44.

Among actives, NETX was flat at 4.5 sen, PUC perked half-a-sen to 26 sen, Trive added one sen to 5.5 sen, while Hibiscus edged up 1.5 sen to 83 sen.

Hengyuan Refining led the list of top gainers, putting on 56 sen to RM12.46, while the top loser was United Plantations which fell 40 sen to RM28.00.

A dealer said Bursa Malaysia could still potentially trade higher on improved risk appetite on both the US and domestic equity markets.

“The bullish Wall Street factor, coupled with positive domestic sentiment, such as improving trade data, year-end window dressing and the possibility of a pre-election and Chinese New Year rallies, may prompt new buying interest in the local equity market,” he added.

On the scoreboard, the FBM Emas Index rose 44.39 points to 12,469.84, the FBMT100 Index gained 43.83 points to 12,136.79, while the FBM Emas Syariah Index dipped 10.55 points to 12,843.04.

The FBM 70 bagged 10.43 points to 15,265.81, while the FBM Ace surged 109.98 points to 6,464.13.

On a sectoral basis, the Finance Index jumped 85.85 points to 16,268.85, the Industrial Index went up 5.72 points to 3,147.49 and the Plantation Index trimmed 12.14 points to 7,831.43.

Main Market volume swelled to 1.48 billion units worth RM2.41 billion from 1.34 billion units worth RM2.19 billion recorded on Tuesday.

Volume on the ACE Market rose to 833.93 million shares valued at RM136.13 million from 659.26 million shares valued at RM124.21 million.

Warrants volume improved to 173.58 million units worth RM23.78 million from 138.67 million units worth RM18.16 million recorded on Tuesday.

Consumer products accounted for 54.33 million shares traded on the Main Market, industrial products (282.98 million), construction (57.86 million), trade and services (638.18 million), technology (259.42 million), infrastructure (6.94 million), SPAC (3.69 million), finance (54.00 million), hotels (835,900), properties (93.21 million), plantations (28.92 million), mining (26,000), REITs (6.04 million), and closed/fund (0).

The physical price of gold as at 5pm stood at RM157.86 per gramme, up 23 sen from RM157.63 at 5pm yesterday. — Bernama

BFood posts higher Q2 profit, recommends dividend

PETALING JAYA: Berjaya Food Berhad (BFood) registered a higher pre-tax profit of RM9.51 million for the second quarter ended Oct 31, 2017, mainly due to better profits from Starbucks’ operation in Malaysia and lower losses incurred by the Kenny Rogers Roasters (KRR) operation in Indonesia from further closure of non-performing outlets.

The group made a pre-tax profit of RM7.56 million in the corresponding quarter in 2016.

This was achieved on higher revenue of RM160.78 million for the quarter compared with RM149.11 million in the corresponding quarter in 2016, mainly due to additional Starbucks cafes operating in the current quarter.

The board has recommended a second interim dividend of 1.0 sen single-tier dividend per share (second quarter ended Oct 31, 2016 : 1.0 sen single-tier dividend per share) in respect of the financial year ending April 30, 2018 to be payable on Jan 26, 2018. The entitlement date has been fixed on Jan 12, 2018. The total dividend declared for the six month financial period ended Oct 31, 2017 amounted to 2.0 sen single-tier dividend per share (for the six month ended Oct 31, 2016: 1.50 sen single-tier dividend per share).

The group said its results in the next quarter is expected to be adversely impacted by the one-off losses arising from the disposal of the KRR operations in Indonesia.

“Other than this one-off exceptional loss, the group expects Starbucks to maintain its revenue growth momentum to continue contributing positively to the group. In addition, the management hopes that the operational and menu rationalisation of KRR, being implemented recently, will yield better results for the brand moving forward”, it said.

The group made a pre-tax profit of RM18.27 million for the six month period ended Oct 31, 2017, compared with RM15.01 million for the same period in 2016. Revenue for the period was up to RM315.17 million, compared with RM290.48 million for the six month period in 2016.

Airbus faces possible leadership change amid CEO exit report

BERLIN, Dec 13 — Airbus SE faces the prospect of having to find a new leader after Chief Executive Officer Tom Enders reportedly decided not to stand for a third term, sparking a leadership contest just as the planemaker grapples with a bribery…