Thursday, January 4th, 2018

 

Dow breaks above 25,000 for first time

NEW YORK, Jan 4 — The Dow Jones Industrial Average sailed past the 25,000-mark for the first time today, while other major indexes rose to new highs after a strong private jobs report added to a bullish sentiment from indications of robust…


Scomi Energy Services shareholders reject proposed three-way merger

PETALING JAYA: A proposed merger between loss-making Scomi Group Bhd and its two units Scomi Energy Services Bhd (SESB) and Scomi Engineering Bhd (SEB) hit a stumbling block after shareholders of SESB voted against the exercise at a court-convened meeting today.

SESB said in a Bursa Malaysia filing that its non-interested scheme shareholders had not approved the proposed merger by way of poll voting.
The total number of shareholders that voted either in person or by proxy is 64, out of which those who voted in favour of the resolution is 35, representing 54.69% in number of holders of the disinterested scheme shareholders.

Nonetheless, 67.34% shareholders representing 292.51 million shares voted against the merger deal.

“As the three-tier threshold required under Paragraph 2(f) of Schedule 3 of the Rules on Take-overs, Mergers and Compulsory Acquisition has not been met, the proposed merger resolution is not carried,” SESB said.

However, Scomi managed to gain support from its shareholders today, with 99.27% voting in favour of its proposed merger with SESB and SEB.
Now, all eyes are on SEB’s court-convened meeting, which is scheduled for tomorrow.

The proposed merger involves the acquisition by Scomi and the transfer of all SEB and SESB shares not already owned by Scomi at an offer price of 30 sen for each SEB share and 12.6 sen for each SESB share.

Three new Scomi shares will be offered for every five SESB shares and 10 new Scomi shares for every seven SEB shares.

Scomi owns 65.65% of SESB and 72.33% of SEB. Both SESB and SEB will be privatised if the proposed merger goes through.

The merger deal was to be followed by Scomi divesting some non-core assets, especially in oilfield services, in order to pare down debts and develop the renewables and chemicals businesses.

SESB and SEB have been making losses for the past two years. For the six-month ended Sept 30, 2017, SESB saw a narrowed net loss of RM38.27 million against RM42.06 million in the previous corresponding period.

SEB’s net loss, however, widened from RM2.63 million to RM31.28 million. Scomi also registered a bigger net loss of RM42.17 million from RM33.37 million.

On Bursa Malaysia today, Scomi’s share price was up 9.1% to 18 sen, while SESB and SEB gained 8% and 2% to 13.5 sen and 25 sen respectively.


Balanced budget timeline needs to be extended by two or three years: Johari

KUALA LUMPUR: Second Finance Minister Datuk Seri Johari Abdul Ghani has reiterated that the country is unlikely to meet its balanced budget target by 2020 and will need another two to three years to reach zero fiscal deficit due to rising emolument and pension expense.

He said the government will work on both increasing revenue and cut costs. Johari said the government wants to bring everyone to be tax-compliant to create a level playing field for all.

“Otherwise genuine companies that pay taxes have to fight with shadow economy that doesn’t pay. The system of compliance is key,” Johari said at a conference today.

He added that cutting spending and costs are ongoing but the government will focus more on trying to increase productivity and bring innovation and e-government into play to reduce its headcount going forward.

“We want government staff to embark on multi-tasking. We use technology as much as we can, we try to be e-government. We grow our economy without growing our staff strength. That’s the strategy going forward,” said Johari.

He explained that the government prepared the fiscal deficit target at a time when the oil price was high, but today it needed to spend to stimulate the economy, and more time is needed to achieve the target.

“If you squeeze (fiscal deficit target) too fast, it will affect the spending and the economy going forward,” said Johari.


Qatar to allow 100% control for foreign investors in most economic sectors

DOHA: Qatar has approved legislation allowing 100% ownership for foreign investors in most sectors of the economy in a bid to boost non-energy revenues, the government said today.

The move comes at a time of political crisis in the Gulf, with Qatar under an economic and diplomatic boycott by neighbouring countries for the past seven months. It is also an attempt by Qatar, the third largest economy in the Gulf, to secure new revenues to finance a budget deficit due to the slump in oil prices since mid-2014.

Overseas investors will be able to fully own businesses in almost all economic sectors but they are not allowed to purchase real estate or own franchises, according to the ministry of economy and trade.

To invest in the banking and insurance sectors, foreigners need to secure a special permit from the government, the law states.

Currently, foreign investors can own up to 49% of companies listed on Qatar’s stock exchange in accordance with a law passed in 2014.

The new law was approved at the Cabinet’s weekly meeting on Wednesday. It is not yet clear when the draft law will come into force. – AFP


ADP: US private sector hiring surged in December

WASHINGTON, Jan 4 — Hiring by private US firms surged in December far more than expected, with nearly all of the gain concentrated in the services sector, payroll firm ADP reported today.  The service sector has long been a bulwark of the…


Malaysia’s economy to grow 5.3% this year: HLIB Research

PETALING JAYA: Hong Leong Investment Bank (HLIB) Research, which expects resilient growth for Malaysia in 2018, has forecast a gross domestic product (GDP) growth of 5.3% this year, from an estimated 5.8% last year.

In its strategy report yesterday, the research house said the key support for growth is expected to be domestic demand at 6.6% for 2018 from an estimated 6.5% in 2017, driven by increased public spending amid steady private spending.

On the overnight policy rate (OPR), HLIB Research said it expects a one-off normalising rate hike of 25 basis points (bps) which could potentially take place as early as this month.

“We have an appreciation bias on the ringgit and expect a range of 4.00-4.20 against the US dollar with mean of 4.10 for 2018,” it noted.

The research house said it also expects the ringgit to appreciate by 4.9% in 2018 on an average basis which would be positive for auto, aviation, power and media but negative for tech and wood manufacturers.

Furthermore, it said it anticipates the robust flow of construction jobs to continue into 2018, driven by mega projects such as the East Coast Rail Link, Pan Borneo Sabah, MRT3 and High Speed Rail.

Meanwhile, HLIB Research said it projects 7.3% FBMKLCI earnings growth for 2018 from an estimated 8.6% in 2017 driven by banks, plantations, gaming and healthcare sectors.

“Our 2018 FBMKLCI target of 1,880 is premised on a 16.5 times price-earnings multiple, translating to 0.5 SD above mean. We believe this is palatable as we expect higher investor risk appetite once the 14th general election (14GE) is done and dusted.

“Foreign shareholding of 23.1% (November) is now at historical mean and we believe this would gain further traction post 14GE,” it added.

Although the FBMKLCI rose 9.4% in 2017, HLIB Research said it was the worst performer amongst Asean peers, noting that even after adjusting for ringgit gains (+10.9% y-o-y), the FBMKLCI’s returns still ranked second lowest at 21.3%.

Its stock picks include Tenaga Nasional Bhd, RHB Bank Bhd, Malaysia Airports Holdings Bhd, Genting Bhd, Gamuda Bhd, Sunway Bhd, DRB-Hicom Bhd, Mitrajaya Holdings Bhd, Lay Hong Bhd and Taliworks Bhd.


5.3% GDP growth forecast for this year

PETALING JAYA: Hong Leong Investment Bank (HLIB) Research, which expects resilient growth for Malaysia in 2018, has forecast a gross domestic product (GDP) growth of 5.3% this year, from an estimated 5.8% last year.

In its strategy report yesterday, the research house said the key support for growth is expected to be domestic demand at 6.6% for 2018 from an estimated 6.5% in 2017, driven by increased public spending amid steady private spending.

On the overnight policy rate (OPR), HLIB Research said it expects a one-off normalising rate hike of 25 basis points (bps) which could potentially take place as early as this month.

“We have an appreciation bias on the ringgit and expect a range of 4.00-4.20 against the US dollar with mean of 4.10 for 2018,” it noted.

The research house said it also expects the ringgit to appreciate by 4.9% in 2018 on an average basis which would be positive for auto, aviation, power and media but negative for tech and wood manufacturers.

Furthermore, it said it anticipates the robust flow of construction jobs to continue into 2018, driven by mega projects such as the East Coast Rail Link, Pan Borneo Sabah, MRT3 and High Speed Rail.

Meanwhile, HLIB Research said it projects 7.3% FBMKLCI earnings growth for 2018 from an estimated 8.6% in 2017 driven by banks, plantations, gaming and healthcare sectors.

“Our 2018 FBMKLCI target of 1,880 is premised on a 16.5 times price-earnings multiple, translating to 0.5 SD above mean. We believe this is palatable as we expect higher investor risk appetite once the 14th general election (14GE) is done and dusted.

“Foreign shareholding of 23.1% (November) is now at historical mean and we believe this would gain further traction post 14GE,” it added.

Although the FBMKLCI rose 9.4% in 2017, HLIB Research said it was the worst performer amongst Asean peers, noting that even after adjusting for ringgit gains (+10.9% y-o-y), the FBMKLCI’s returns still ranked second lowest at 21.3%.

Its stock picks include Tenaga Nasional Bhd, RHB Bank Bhd, Malaysia Airports Holdings Bhd, Genting Bhd, Gamuda Bhd, Sunway Bhd, DRB-Hicom Bhd, Mitrajaya Holdings Bhd, Lay Hong Bhd and Taliworks Bhd.


AmProp to invest more in Spain joint venture

PETALING JAYA: Amcorp Properties Bhd (AmProp), which has partnered with Grosvenor Europe Investments Ltd (GEIL) and Grosvenor Fund Management Spain, SLU (manager) to invest in real estate in Spain, said the capital commitment from each joint venture party will be increased by an additional RM72.45 million (€15 million).

Previously, AmProp said the group will be committing up to €35 million (RM153.65 million) for a 50% stake in a JV company. GEIL was also to contribute an equal amount and hold the remaining 50% stake.

In a filing with Bursa Malaysia today, AmProp said the manager had drawn a significant portion of the existing capital commitment of €70 million from the JV parties, supported by strong pipelines and resurgence in the economy and Madrid real estate market.

“Premised on the above and taking into consideration that the JV still has a balance acquisition period of up to July 12, 2018, the JV parties have agreed to the additional capital commitment with a view of acquiring additional new projects within the investment criteria set out in the JV agreement,” it added.

Therefore, AmProp said a variation letter agreement was entered between its subsidiary Amcorp Horizon Sdn Bhd (AHSB) with the other JV parties, to vary the terms of the earlier JV deal.

Pursuant to the amendment, AHSB and GEIL each contributed a capital commitment of €50 million to the JV company, bringing the total capital commitment to €100 million.

AmProp said the additional capital commitment will be funded through a combination of internally generated funds, proceeds from the proposed rights issue and/or bank borrowings.

AmProp closed unchanged at 75 sen today with 54,000 shares done.


PRG enlists HK’s Mingfa Group as one of partners to manage unit Premier JPC

PETALING JAYA: Hong Kong-incorporated Mingfa Group (Global) Investments Holdings Ltd is now a collaborative partner with PRG Holdings Bhd, Premier JPC Sdn Bhd (Premier JPC) and Jiangsu Provincial Construction (M) Sdn Bhd to manage Premier JPC’s venture into highway, bridge, port and housing development projects.

PRG said in a Bursa Malaysia filing that it entered into a collaborative agreement (CA) on Jan 4, 2018 with the parties mentioned to formalise their commitments and to regulate their rights and obligations as shareholders in respect of the management of Premier JPC.

Jiangsu Provincial holds a 34% stake in Premier JPC whereas PRG and Mingfa each hold 33%. Premier JPC is a wholly owned subsidiary of PRG.

On Oct 26, 2017, PRG, Premier JPC and Jiangsu Provincial entered into a CA for the same purpose. The agreement has since been terminated on mutual consent and been superseded with the present one.

Under the CA, the three parties will have joint duties and obligations to obtain contracts in Malaysia, including affordable housing projects under the Fincance Ministry, to provide technical knowhow for contracts secured by Premier JPC and to perform, complete, and comply with all the terms and conditions of the contract works obtained by Premier JPC.

“The parties hereby agree that whatsoever funding required by Premier JPC shall be based on shareholding ratio. If Premier JPC requires additional funding from any shareholder, the interest payable for such additional funding shall be calculated based on 6% interest per annum,” a clause of the CA reads.


PRG gets additional partner to manage unit Premier JPC

PETALING JAYA: Hong Kong- incorporated Mingfa Group (Global) Investments Holdings Ltd is now a collaborative partner with PRG Holdings Bhd, Premier JPC Sdn Bhd (Premier JPC) and Jiangsu Provincial Construction (M) Sdn Bhd to manage Premier JPC’s venture into highway, bridge, port and housing development projects.

PRG said in a Bursa Malaysia filing that it entered into a collaborative agreement (CA) on Jan 4, 2018 with the parties mentioned to formalise their commitments and to regulate their rights and obligations as shareholders in respect of the management of Premier JPC.

Jiangsu Provincial holds a 34% stake in Premier JPC whereas PRG and Mingfa each hold 33%. Premier JPC is a wholly owned subsidiary of PRG.

On Oct 26, 2017, PRG, Premier JPC and Jiangsu Provincial entered into a CA for the same purpose. The agreement has since been terminated on mutual consent and been superseded with the present one.

Under the CA, the three parties will have joint duties and obligations to obtain contracts in Malaysia, including affordable housing projects under the Fincance Ministry, to provide technical knowhow for contracts secured by Premier JPC and to perform, complete, and comply with all the terms and conditions of the contract works obtained by Premier JPC.

“The parties hereby agree that whatsoever funding required by Premier JPC shall be based on shareholding ratio. If Premier JPC requires additional funding from any shareholder, the interest payable for such additional funding shall be calculated based on 6% interest per annum,” a clause of the CA reads.