Thursday, March 15th, 2018

 

Capital raising to dip to RM120b this year after record high in 2017

KUALA LUMPUR: The Securities Commission Malaysia (SC) expects total capital raising through primary and secondary markets to be around RM120 billion this year, lower than the record high of RM146.6 billion raised in 2017.

Last year’s figure represents a 48.8% jump from the RM98.5 billion capital raised in 2016.

In its annual report for 2017, the SC said domestic fundraising this year is expected to be driven mainly by capital raising in the corporate bond and sukuk market for infrastructure financing as well as refinancing of bonds and sukuk.

Fundraising through the corporate bond and sukuk market is expected to amount to about RM100 billion while equity fundraising is expected to be about RM20 billion, with RM8 billion to be raised via initial public offerings (IPOs) and RM12 billion via the secondary market.

SC chairman Tan Sri Ranjit Ajit Singh (pix) said 2017 was an exceptional year and the RM120 billion projected for 2018 is much higher than the long-term average of RM114 billion.

“People were anticipating rate hikes so they were positioning things differently. There are companies who deferred capital raising in 2015 and 2016, and moved to 2017. So there are multiple factors. You cannot use an outlier and use that as a new benchmark, it is not an appropriate comparison to make,” he told reporters at a briefing today.

Ranjit said there is a consistent level of capital raising that is occurring through Malaysia’s very well developed capital market, which shows that there is an avenue for businesses to raise a lot of funding.

“Malaysia is very fortunate to be able to develop a financial system that has a strong banking system and a strong capital market, not present in many markets. We have a very deep bond and sukuk market, which allows companies to access the bond and sukuk market to raise the sort of financing that you’ve seen,” he added.

Ranjit said both the equity and bond and sukuk markets still have a very favourable outlook and believes that the capital markets will remain vibrant this year while emerging markets will continue to outpace growth in developed markets.

“We believe the economic and market fundamentals for Malaysia are extremely strong, and given the improvements in corporate earnings, we think the positive sentiments overall will continue. We think 2018 will be a very good year,” he said.

Last year, the capital market grew 12.6% to RM3.2 trillion with total fundraising hitting a record high of RM146.6 billion, above the five-year average of RM114 billion.

Equity market capitalisation grew 14.4% to RM1.9 trillion while bond and sukuk outstanding grew 10.1% to RM1.3 trillion. Islamic capital market increased by 11.9% to RM1.9 trillion, representing close to 60% of the overall capital market.

Of the RM146.6 billion raised last year, RM124.9 billion was raised in the corporate and bond market, RM7.2 billion via 12 IPOs and RM14.5 billion in the secondary equity market.

The fund management industry posted 11.5% growth with assets under management of RM776.2 billion compared with RM696.3 billion in 2016, while the unit trust industry’s net asset value expanded 19.1% to some RM427 billion.

Meanwhile, the SC announced today that it will jointly establish a working group with Bank Negara Malaysia to accelerate digitisation of the stockbroking industry. Named Brokerage Industry Digitisation Group (BRIDGe), it aims to enhance operational efficiencies and service standards.
This year, the SC also aims to license the first digital investment manager and release findings from its ongoing blockchain pilot project.


SC: Existing laws sufficient to regulate initial coin offerings

KUALA LUMPUR: The Securities Commission of Malaysia (SC) believes existing securities laws are sufficient to regulate initial coin offerings (ICOs) but will do more if needed.

SC chairman Tan Sri Ranjit Ajit Singh said at a briefing today the SC will monitor how the landscape evolves and will do more if needed in relation to the regulation of ICOs.

Digital assets, including initial coin offerings (ICOs), have a place in the new frontiers of financial markets but investors must be careful and fully understand any fundraising scheme that they intend to participate in, he said.

“We have stated that we think that this is an area that investors have to be very careful about and we have issued several cautionary statements around this. The potential for investors to suffer losses through an ICO is very real and consistent with the position taken by many markets around the world.

“We have certainly provided cautionary position to the investors and to say be alert, be very careful and understand what you are doing. When you don’t understand, seek advice,” Ranjit cautioned.

He said potential ICOs must seek clarification with the SC as they could potentially be in breach of securities laws when trying to raise funds from the public. On this, Ranjit said, about 12 ICO issuers are engaging with the SC.

“If we find that others, through our own review of their white papers and what they are trying to do, are potentially in breach of the laws, we will take appropriate action,” he said.


Jaks Resources: Claims against Star Media will total more than RM50 million

PETALING JAYA: Jaks Resources Bhd’s total costs and disputed claim against Star Media Group Bhd would be much higher than the RM50 million bank guarantee called by Star Media, based on its preliminary estimate.

Jaks said in a Bursa Malaysia filing that its 51%-owned subsidiary JAKS Island Circle Sdn Bhd’s (JIC) solicitors are in the midst of preparing the necessary documentation on the arbitration.

“The company will make further announcement accordingly if there is any material update on this.”

Jaks noted that JIC reserves the right to claim, via arbitration, the additional costs incurred for the variation orders instructed by Star Media and potential costs or damages incurred/will be incurred during this process.

Early this month, JIC served a notice of arbitration on Star Media to resolve all disputes between the two parties by way of arbitration, including issues arising from the claim by Star Media on interest and the call on the RM50 million bank guarantee.

Star Media in response said it did not view the letter from Jaks as a notice of arbitration, calling it premature and failing to state or particularise Jaks’ alleged dispute intended to be referred to arbitration. It also denied a request by Jaks to waive the procedural step of panel resolution pursuant to Clause 19.1 of the sale and purchase agreement.

The issue revolves around a RM50 million bank guarantee which Star Media is claiming for JIC’s failure to deliver vacant possession of Tower A of the Pacific Star project by the stipulated deadline. JIC however is contesting this, stating that delays had been partly caused by Star Media’s variation orders.

JIC has filed an injunction with the Kuala Lumpur High Court to restrain Star Media from receiving the RM50 million. The hearing is set for March 20.

Jaks maintains the view that it has strong and sufficient grounds to support the injunction applications and the call on the bank guarantee by Star Media is baseless.

Jaks’ share price fell 10 sen or 6.3% to close at RM1.48 today, while Star Media was down 1 sen or 0.8% to RM1.28.


Petronas unit Malaysia LNG signs supply contract with Tokyo Gas

PETALING JAYA: Petroliam Nasional Bhd (Petronas) through its subsidiary, Malaysia LNG Sdn Bhd (MLNG) has signed a Heads of Agreement (HOA) with Tokyo Gas Co Ltd to supply liquefied natural gas (LNG) for up to 13 years.

Under the terms of the agreement, MLNG will supply 0.5 million tonnes per annum to Tokyo Gas from April 2018 for six years, with the possibility of a volume increase of up to 0.9 million tonnes per annum for the remaining period.

Petronas Vice President of LNG Marketing & Trading, Ahmad Adly Alias said Petronas remains steadfastly committed to delivering reliable supply of LNG through its integrated operations that allow for both long-term and short-term solutions for its customers. MLNG has had a 35 year business relationship with Tokyo Gas.

“The HOA is a testament to Petronas’ strength and reliability in providing flexible solutions to accommodate the different needs of buyers,” he added.

MLNG operates the Petronas LNG Complex in Bintulu, Sarawak, one of the world’s largest LNG complexes operating on a single site. The nine-train facility has a combined annual production capacity of about 30 million tonnes.


Pensonic secures distributorship rights to UK brands Morphy Richards and Belling

KUALA LUMPUR: Pensonic Holdings Bhd, which expects flat growth in financial year 2018, foresees its newly secured exclusive distributorship rights for renowned UK home appliances brands Morphy Richards and Belling for the Malaysian and Singaporean markets to contribute RM10 million in sales to the group for the next financial year ending May 31, 2019.

Pensonic, a homegrown company, has 10 service centres and more than 900 dealers in Malaysia, which positions it as the natural choice to distribute the brands in Malaysia and Singapore.

Pensonic group managing director Vincent Chew said the addition of these two brands will complement its existing brands and contribute to the group’s growth and resilience in the future.

Morphy Richards and Belling are both brands under the Glen Dimplex Group, the world leader in electrical heating business holding significant market positions in the domestic appliance industry worldwide.

Chew said the initial agreement for the distributorship is for 44 months, but it wants to secure a bigger regional coverage area.

“We continue to explore the possibility of getting the Southeast Asia region (distributorship),” Chew told reporters after an agreement signing ceremony between Pensonic and Glen Dimplex here today.

He explained that the group’s performance over the last two years has not been stable and FY18 is expected to close on flat growth driven by its existing brands.

Pensonic has been focusing on the mass market, which saw weak consumer spending.

With Pensonic as its core brand, the group also distributes products of Lebensstil Kollektion, Cornell from USA, Indesit and Ganggia from Italy, and Princess from Holland.

“Pensonic has been a multi-brand platform, so with Morphy Richards and Belling, we’re capturing the niche, premium market, which will help our bottom line as the revenue for the mass market is slowing down,” said Chew, adding that for premium products, the currency exchange effects are manageable, in terms of margin.

For future growth, he said, Pensonic is developing its own digital customer relationship management whereby customers will be able to log on to the system for services and complaints.

The company is also developing a smart range of appliances and hopes to launch five items that are wifi-enabled by year-end.


Koh Brothers Eco Engineering in consortium to build Singapore’s first smart hospital campus

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SINGAPORE (Mar 15): Koh Brothers Eco Engineering, in a 20% joint venture with Ssangyong Engineering & Construction and Daewoo Engineering & Construction, has won a contract to develop the Woodlands Health Campus (WHC). The Woodlands Health Campus is Singapore’s first smart hospital campus that spans 7.66 hectares. It comprises an acute hospital, a community hospital, specialist outpatient clinics and nursing home, marking the first time all facilities are conceptualised and built simultaneously. The facility is expected to have 1,800 beds and will complete progressively from 2022. The campus will alsoRead More


PMB Investment eyes O&G in 2018

corporatenews10 feb2017

KUALA LUMPUR (March 15): Oil and gas (O&G) and construction are the sectorial themes for PMB Investment Bhd’s equity investment strategy this year, amid improving prospects underscored by Petroliam Nasional Bhd’s (Petronas) significantly higher earnings last year. The technology sector had been the focus of PMB’s investments last year, its chief executive officer Najmi Mohamed said. At a media conference today, he said the Islamic fund management firm intends to increase its exposure to O&G given Petronas’ encouraging financial performance for the year to end December when it doubled itsRead More


Son of Australia PM Turnbull says he exposed bank’s alleged misconduct over Malaysia’s 1MDB

corporatenews10 feb2017

SYDNEY (March 15): The Singapore-based son of Australian Prime Minister Malcolm Turnbull has claimed that he exposed alleged misconduct by Goldman Sachs in its dealings with 1Malaysia Development Berhad (1MDB), adding a further twist to the scandal involving the Malaysian sovereign wealth fund. Mr Alex Turnbull, who is based in Singapore and manages a hedge fund, said he was sidelined and then resigned while working for the global investment bank Goldman Sachs in Singapore, after raising concerns about a deal that raised around US$6 billion in loans for 1MDB. TheRead More


Cathay Pacific flags recovery in airfares, shares surge

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SINGAPORE (March 15): Cathay Pacific Airways expects airfares will recover further this year after four years of declines, a senior executive said, offering a positive outlook for the Hong Kong airline that sent its shares 7.6% higher on Thursday. The carrier posted on Wednesday a smaller-than-expected annual loss of HK$1.26 billion (US$160 million) due to a rebound in the cargo market, a slower pace of decline in ticket prices and lower fuel hedging losses. At an analyst briefing after the results, Cathay Pacific said passenger yields, a proxy for airfares,Read More


Top Glove’s Q2 profit up 31.3% as sales volume registers strongest growth ever

PETALING JAYA: Top Glove Corp Bhd reported a 31.3% growth in net profit to RM109.01 million for the second quarter (Q2) ended Feb 28, 2018 versus RM83.05 million in the previous corresponding period, as sales volume surged by an all-time high of 21%.

Revenue was up 12.6% from RM851.54 million to RM958.44 million.

The group said in a statement the significant growth in sales volume was mainly attributed to an increase in demand for natural rubber gloves, underscoring the importance of having a balanced product mix, comprising both natural rubber and nitrile gloves, which is aligned with market demand.

It also noted that raw material prices were lower compared with Q2 FY17, with average natural rubber latex and nitrile latex prices decreasing 26.1% to RM4.40/kg and 1.9% to US$1.06 respectively.

Top Glove’s first-half net profit soared 37.1% from RM156.37 million to RM214.46 million on the back of a 15.8% rise in revenue from RM1.64 billion to RM1.9 billion.

The group said it will continue to pursue strategic expansion via the organic and non-organic routes.

Top Glove is in the process of building two new manufacturing facilities namely, Factory 31 (operational by June this year) and Factory 32 (operational by early 2019).

Upon completion, they will boost the group’s total number of production lines by 78 lines and production capacity by 7.8 billion gloves a year.

The group expects glove demand to continue growing steadily on the back of increasing healthcare standards and awareness globally.

Meanwhile, Top Glove said preparations for its condom manufacturing facility have commenced and it is expected to be operational by June 2018.

On Bursa Malaysia today, Top Glove gained 3 sen or 0.3% to RM9.85 on 3.08 million shares traded.