Thursday, March 1st, 2018


Wall Street down, steel tariff fears hit industrial stocks

NEW YORK, March 1 ― Wall Street’s main indexes fell today as industrial stocks, including heavyweights Boeing and Caterpillar, took a beating on fears that potential tariffs on steel imports could hit profits. US President Donald Trump…

IMF chief sees growth, overheating, debt risks from US tax cuts

NEW YORK, March 1 ― International Monetary Fund Managing Director Christine Lagarde said she saw positive and negative effects from a “complicated” US tax overhaul, including a near-term growth bump that risks overheating the US economy and…

February manufacturing PMI dips on fewer new orders

PETALING JAYA: The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) saw a slight drop to 49.9 in February from 50.5 in January, due to a reduction in new orders.

IHS Markit, which compiles the survey, said it indicates a broad stagnation in operating conditions across Malaysia’s goods producing sector, with respondents indicating weak underlying demand conditions, albeit the rate of decline was marginal.

However, production at Malaysian manufacturers rose for the seventh consecutive month in February, in line with improved economic conditions, which prompted manufacturing companies raising their staffing levels for the fourth month in succession.

Meanwhile, new export orders declined in February, thereby ending a three-month sequence of growth as some panelists mentioned a fall in demand for Malaysian goods from key export markets, especially Europe and the US.

On the price front, input cost inflation was sharp and in line with the series trend, but firms were unable to fully pass on higher cost burdens to price-sensitive customers.

IHS Markit economist Aashna Dodhia opined that February data painted a mixed picture as manufacturing conditions stagnated across Malaysia.

“Output growth was accompanied with greater payroll numbers across the sector, but demand for Malaysian-produced goods at both home and from international markets fell slightly.

“On the price front, higher input costs placed further pressure on firms’ margins as they were restricted in their ability to fully pass on higher cost burdens to price-sensitive clients.”

Looking ahead, manufacturers remain optimistic towards the 12-month outlook for output and the key factor behind the positive sentiment is an expected improvement in underlying demand.

“That said, the level of business confidence slightly fell from January and was weaker than the average recorded over five-and-a-half years of data collection.”

Berjaya Sports Toto’s Philippine unit to appeal against tribunal’s ruling

PETALING JAYA: Philippine Gaming Management Corporation (PGMC), a unit of Berjaya Sports Toto Bhd’s 88.26%-owned subsidiary Berjaya Philippines Inc, will be appealing against the ruling of the Arbitral Tribunal of the Philippines on its exclusive right to supply an online lottery system for Luzon.

Berjaya Sports Toto said in a Bursa Malaysia filing today the tribunal had found that Philippine Gaming Management Corporation does not have an exclusive contractual right to supply an online lottery system for Luzon because the 1995 Equipment Lease Agreement and the 2004 Amendments to the Equipment Lease Agreement do not grant such exclusivity in their terms.

The final award received on Feb 23 was for the case heard in the International Chamber of Commerce court against the Philippine Charity Sweepstakes Office (PCSO).

“PGMC will appeal all aspects of the award and argue that more than 10 years of exclusivity as acknowledged by PCSO should prevail in determining the existence of an exclusive relationship and the award, and that the compensation structure which accords PGMC with a share of all lottery revenue from Luzon does not permit any third party supplier of lottery equipment to reduce or share in the revenue arising from Luzon that is contractually provided for PGMC.

“PGMC is confident that it will prevail on appeal,” it said.

According to the ruling, the tribunal had also ordered PGMC to pay all of PCSO’s reasonable costs and expenses in the arbitration, amounting to 543.59 million pesos (RM41 million) as well as to reimburse the advance cost amounting to US$200,000 (RM780,000).

On March 12, 2014, PGMC had filed a request for arbitration at the Secretariat of the ICC court stating its exclusive rights under the 1995 Equipment Lease Agreement and the amendment made to the agreement dated Dec 29, 2004, to supply the online system to Luzon, among others.

Jaks told to deliver Tower A by June

PETALING JAYA: Jaks Resources Bhd (JRB) has been served with a letter of demand by Star Media Group Bhd to complete and deliver Tower A by end of June 2018.

Jaks has seven days to respond to the letter.

“The company has instructed its solicitors to study the matter and advise on the appropriate actions,” JRB said in a stock exchange filing.

JRB had received a notice of demand from Star Media dated Feb 28 under the Corporate Guarantee dated Oct 17, 2013, requiring JRB to complete or cause to be completed JRB’s sub-subsidiary Jaks Island Circle Sdn Bhd’s (JIC) obligations under the sale and purchase agreement dated Aug 19, 2011, including but not limited to completing and delivering Star’s entitlement by end of June 2018.

Last month, the solicitors of JIC filed an injunction with the High Court in Kuala Lumpur to restrain Star Media from receiving the proceeds of a bank guarantee of RM50 million provided for a development project in Section 13, Petaling Jaya.

Star Media claimed that JIC failed to deliver vacant possession of Tower A by the stipulated deadline enabling it to demand the RM50 million bank guarantees pledged as security.

It said the deadline for the delivery of vacant possession of Tower A had expired on Feb 15 following the latest extension agreed between Star Media and Jaks.

Jaks shares closed 0.59% lower to RM1.68 today with 5.14 million shares done, while Star Media stood unchanged at RM1.30 with 1.02 million shares done.

Pasukhas to acquire 60% of Indonesian coal trader

PETALING JAYA: Pasukhas Group Bhd’s wholly owned subsidiary Pasukhas Products Sdn Bhd is acquiring 60% equity interest in Indonesia-based coal trader PT Berkah Bumi Leluhur for 3.3 billion rupiah or RM1 million.

The group announced in a Bursa Malaysia filing, it entered into a conditional sale and purchase of shares agreement with Akhmad Syaifullah, Kutut Jalu Prasojo, Joko Purnomo, Agus Triono and Masrani for the acquisition.

Prior to a restructuring exercise, PT Berkah Bumi Leluhur was known as PT Berkah Bumi Luhur.

On Nov 22, 2017, Pasukhas announced that it signed a preliminary share sale and purchase agreement with the vendors, for the acquisition in PT Berkah Bumi Luhur.

“The acquisition of PT Berkah Bumi Leluhur will create opportunities for us to expand our coal trading business, which is synergistic with our concessionaire business. We are also optimistic that this acquisition will contribute towards creating sustainable earnings for the company,” the group’s executive director and CEO Wan Thean Hoe said in a statement.

Following the completion of the purchase, the proposed shareholding composition will comprise 60% of issued shares owned by Pasukhas while the remaining 40% will be owned by the vendors and/or their affiliates.

The acquisition will not have a material impact on the group’s earnings for the financial year ending Dec 31, 2018.

Pasukhas’ share price fell 3.33% to 14.5 sen with some 128,400 shares done. In the last one year the group’s share price has gained 10%.

GDEX to buy two MBE firms

PETALING JAYA: GD Express Carrier Bhd (GDEX) proposes to buy the entire stake in MBE Business Corporation Sdn Bhd and MBE Business Holding Sdn Bhd for RM5.5 million.

The group said its wholly owned subsidiary GD Express Sdn Bhd had entered into a conditional share sale agreement for the acquisition, which will be financed by its internally generated funds.

MBE has more than 92 outlets operating in Malaysia. Its outlets are mainly operating in business districts and shopping malls which give great accessibility to business, retail and e-commerce (B2C) customers. MBE is principally engaged in mailbox services, packaging, shipping, photocopying, and printing services.

GDEX believes this proposed acquisition will bode well for the group’s expansion plan to venture into the retail delivery network.

AirAsia plans special dividend payout from sale of aircraft leasing arm

PETALING JAYA: AirAsia Bhd (AAB), which is selling its aircraft leasing operations Asia Aviation Capital Ltd, for US$1.18 billion (RM4.64 billion) to BBAM Ltd Partnership’s managed entities, is planning to use the bulk of the cash proceeds to pay out a special dividend to shareholders and settle bank borrowings to improve its financial leverage.

Under the terms of the agreements, FLY Leasing Ltd (FLY), Incline B Aviation Limited Partnership, Nomura Babcock and Brown will acquire a portfolio of 84 aircraft and 14 engines of which 79 aircraft and 14 engines will then be leased back to AirAsia and its affiliates.

FLY and Incline have also entered into agreements to acquire 48 aircraft to be delivered to AAB and an option to acquire a further 50 aircraft to be delivered.

As part of the disposal consideration, AAB will take up a 10.2% stake in FLY for US$50 million and commit another US$50 million into Incline Parallel Funds, which will invest alongside the Incline Aviation Master Fund in global aviation investments.

AAB told Bursa Malaysia in its filing that 74% of the RM3.5 billion gross proceeds will be used to pay out dividends, while 22% will be to repay bank borrowings, which will save the airline RM22 million in interest costs annually.

The deal will see AAB recognise a gain on sale of RM967.1 million.

Besides improving its financial leverage, AAB said, the deal with allow AAB Group to establish long-term partnerships with BBAM, the world’s third-largest and longest-standing manager of commercial aircraft which services over 200 airline customers worldwide.

Its investments in Incline Funds gives AAB exposure to the largest aircraft leasing institutional fund managed by BBAM, while its investment in FLY enables it to continue to participate in the future growth of a leading global aircraft lessor with a diversified lessee portfolio.

“Today’s sale is much in line with our stated strategy of disposing non-core assets and businesses, an undertaking which we have successfully executed over the last six months – starting with our training centre, ground handling unit and now our leasing unit – and unveiling the true value of AirAsia,” AirAsia Group CEO Tan Sri Tony Fernandes said in a statement today.

“When we bought these planes, our gearing was high and some people could not see why we wanted to own these assets. This deal shows it was the right strategy as we have something of value to dispose in return for cash and an equity relationship in two great companies, while removing residual risks,” he added.

The deal values Asia Aviation at an enterprise value of US$2.85 billion.

PNB credits special bonus for Amanah Saham Bumiputera

PETALING JAYA: Permodalan Nasional Bhd will credit a special bonus of 1.00 sen per unit for the first 10,000 units held by unit holders of Amanah Saham Bumiputera (ASB) today, in conjunction with PNB’s 40th Anniversary on March 17, 2018.

The income distribution of 7.00 sen per unit and bonus of 0.25 sen per unit for ASB for the financial year ending December 31, 2017 were credited into unit holders’ accounts on January 1, 2018.

Group chairman Tan Sri Abdul Wahid Omar said in a statement, “This Special Anniversary Bonus is a token of PNB’s appreciation to our loyal unit holders for their support through the years. PNB’s unit trust company, Amanah Saham Nasional Berhad (ASNB), today is the largest in Malaysia with some 228 billion units in circulation, of which 67.3% are units under ASB. We are grateful for unit holders’ support and we are pleased to reward them with this Special Anniversary Bonus paid out of PNB’s own proprietary funds.”

The bonus amounts to a distribution of RM255.12 million, which together with the income distribution and bonus previously distributed of RM10.48 billion, will benefit 9.3 million unit holders subscribing over 145 billion units of ASB. With this, more than 7.5 million unit holders with up to 10,000 units will receive an effective return of 8.25 sen per unit whilst an additional 1.7 million unit holders will receive at least 7.25 sen per unit.

The computation of the special bonus distribution is subject to the average minimum monthly balance over 12 months of the financial year ending December 31, 2017, up to 10,000 units only.

Unit holders will be able to check and update their accounts through ASNB’s new portal or at any ASNB branches or agents nationwide from today.