Thursday, April 19th, 2018


Opec, non-Opec panel finds oil glut virtually eliminated (VIDEO)

JEDDAH, April 19 — A global oil glut has been virtually eliminated, according to a joint Opec and non-Opec technical panel, two sources familiar with the matter said, thanks in part to an Opec-led supply cut deal in place since January 2017….

Indonesia keeps rates on hold for seventh month, rules out hike

JAKARTA, April 19 — Indonesia’s central bank kept its key interest rate unchanged today, tying the decision to a need to maintain stability as the economy faces external pressures including higher oil prices and a potential trade war. Bank…

Apple, P&G and chip stocks lead Wall St lower

NEW YORK, April 19 — Wall Street slid this morning, weighed down by a broad-based slump in technology stocks from Apple to chipmakers as well as a tumble in consumer staples such as Procter & Gamble. A warning from Taiwan Semiconductor (TSMC),…

Oil climbs on Saudi price ambitions and US stocks draw

LONDON, April 19 — Oil prices kept rising to their highest since late 2014 as US crude inventories declined, moving closer to five-year averages, and after sources told Reuters that top exporter Saudi Arabia aims to push prices even higher….

Nestle, Unilever forego price increases to move product

ZURICH, April 19 — First-quarter sales growth at Nestle and Unilever was driven almost entirely by shifting more goods, in a stark illustration of how hard it is for consumer products makers to raise prices in a competitive retail environment….

Malaysia has what it takes to attract MNC investments: GE Malaysia CEO

KUALA LUMPUR: Malaysia has all the key ingredients to attract multinational companies (MNCs) to invest here but more could be done in terms of providing skilled labour, said General Electric (GE) Malaysia CEO Datuk Mark Rozario (pix).

“Talent, particularly new graduates, that’s probably one area that could improve but that’s not unique to Malaysia. If you think about university education, what’s lacking are things like critical thinking. The kind of skills that are required by industries are normally never fulfilled by just doing a university course.

“But the government is doing a lot in that area as well, they’ve got things like TVET (Technical and Vocational Education and Training), vocational training, internships; so continue doing that. The other thing that probably needs to be done is for the country to move away from the reliance of cheap labour, which the government is also doing,” he told SunBiz in an interview.

Rozario was one of the speakers at the recent 2018 APCAC Business Summit, which was hosted by the American Malaysian Chamber of Commerce. Themed “Charting a Bold Future: US Businesses in the Asian Century”, the event shed light on US investments in Malaysia and the region.

For GE, which has been here since 1975, the environment in Malaysia is very conducive and all its key businesses, namely, aviation, power, oil and gas and healthcare, are present here today.

“We have invested in things like iCentre (monitoring and diagnostics centre) that we described just now, which is the only one in Asia Pacific for GE; one for the oil and gas industry and the other for power. The one for oil and gas is a global centre and is one of three centres, with the other two in Florence, Italy, and Houston, US. The centres operate in eight-hour shifts,” said Rozario.

He said the reason iCentre is sited in Malaysia is because of the infrastructure that is available here, such as broadband with good coverage and skilled labour, while cost of talent is competitive compared with the rest of the region.

“When you talk about Industry 4.0, one of the first jobs that would go are those semi-skilled jobs. Here in GE, we don’t have any requirement for unskilled labour. All our employees here have to be quite highly skilled.”

According to him, GE’s aircraft engine workshop in Subang employs 300 staff, all of whom are Malaysians. He said the facility, which is a global business servicing more than 40 airlines, used to have expatriate staff but with the transfer of technology and skills over the years, it now has 100% Malaysian staff.

The facility overhauls jet engines and is the only facility outside the US with the capability for GE’s latest LEAP jet engines, which is for the Airbus A320neo and the Boeing 737 MAX.

“Again, why is it sited here? Because we have the infrastructure, the logistics ability for the engines to be sent here by cargo. The engines are taken off the aircraft and flown over to the workshop. We have the logistics, we have the availability of talent. I think the environment here is very conducive for multinationals to have their operations here,” he added.

GE’s main businesses in Malaysia are aviation, power, oil and gas, and healthcare.

Online hiring hits high note in February with 11% rise: Monster

PETALING JAYA: Online recruitment hit a high note in February 2018, growing 11% from the previous year, with job roles related to information technology, telecom/internet service provider; business process outsourcing and information technology enabled services taking the lead with 52% year-on-year (y-o-y) growth, according to Monster Employment Index.

The job recruitment agency noted that the industry grew from 20% to 52% on a month-on-month (m-o-m) basis.

Other top hires including logistics, courier, freight, transport, shipping and marine sectors exhibited 45% y-o-y growth, while the oil and gas industry trailed with a 41% y-o-y growth.

Another segment which saw an uptrend is hospitality and travel job roles, for the second consecutive month, with 26% y-o-y growth.

However, the banking, financial services and insurance industry exhibited the steepest decline with a y-o-y contraction of 4% while marketing & communications was the only job-role to match the corresponding period year-ago growth.

“The Malaysian economy remained resilient in the fourth quarter of 2017, posting a 5.9% year-on-year growth driven predominantly by private sector demand.

“The strong outlook in the last quarter correlates with the steady growth in Malaysia’s job market and marks continued business confidence especially in the tech, logistics and oil & gas sector,” said Asia Pacific and Middle East CEO Abhijeet Mukherjee.

PUC investing in e-commerce platform

PETALING JAYA: PUC Bhd is taking a stake of up to 24% and management control in e-commerce platform 11street Malaysia owner Celcom Planet Sdn Bhd (CPSB), for up to RM90 million.

The deal values CPSB at between RM333 million and RM375 million.

PUC entered into a term sheet with Axiata Group Bhd’s unit Axiata Digital Services Sdn Bhd and SK Planet Global Holdings Pte Ltd, which is a wholly owned subsidiary of SK Planet Co Ltd, as owners of Celcom Planet.

PUC said in a stock exchange filing that it will be investing up to RM90 million in five tranches in CPSB after which its shareholding in the company will increase to 24%. The investment slated to be concluded by end of August 2018 will be funded via internally generated funds, bank borrowings, equity and/or debt fund raising.

The investment for the fifth tranche which amounts to RM50 million will be subject to the approval of the shareholders of PUC and regulatory authority, while the RM40 million under the first four tranches is not subjected to approvals.

“In the event PUC does not succeed in obtaining the approval of shareholders of PUC for the investment of up to RM90 million, PUC will not proceed with the injection of the fifth tranche amount,” its board of directors said. This would leave it with a 12% interest in 11street.

Upon the execution of a definitive agreement and three years thereafter, PUC will have the right to nominate and appoint the CEO and CMO of 11Street Malaysia.

Additionally, under the synergistic collaboration PUC will offer competitive terms to 11Street in terms of marketing especially in digital marketing; payment gateway with PUC’s flagship digital services platform (Presto) being nominated and implemented as the company’s preferred payment platform on all of its e-commerce services and technology needs in terms of e-commerce infrastructure and platform.

PUC’s board of directors said the investment will allow the group to increase potential revenue streams in advertising and media, and financial services segments.

From 2015 to 2017, 11Street reported a more than 300% growth in gross merchandising value (GMV), 160% growth to over 13 million product listings, and 200% increase to 40,000 sellers registered on its platform.

As of Dec 31, 2017, 11Street Malaysia recorded a GMV of RM427 million for financial ended Dec 31 2017, and total monthly unique visitors of 13.5 million for the month of December 2017.

Apart from advertising and media and financial services segments, PUC is involved in biometrics and renewable energy.

PUC’s shares fell 1.85% to 26.5 sen with 49.01 million shares done.

AmBank Research expects gradual pickup in inflation

PETALING JAYA: AmBank Research expects inflation to rise gradually going forward, driven by firmer commodities prices and tighter labour market conditions, which should result in firmer wages and better disposable spending by households.

Nevertheless, the research house said that better investment in capacity expansion and labour productivity should contain the upside inflationary pressure.

“We project inflation would be around 2-2.5%, which falls within the Bank Negara Malaysia (BNM) range of 2-3%. We continue to believe that strong growth conditions will allow BNM to normalise monetary policy further,” it said in a note today.

“Hence, we maintain our 30% chance of BNM raising the OPR (overnight policy rate) by 25 basis points in September, taking the year-end policy rate to 3.5%,” it added.

On a separate note, PublicInvest Research said it expects the consumer price index (CPI) to remain benign for the rest of the year due to smaller effect of global cost factors.

It said it is of the view that the series of US interest rate adjustments will keep a lid on commodities like oil, adding that a favourable base effect would also help CPI following 2017’s elevated average of 3.7%.

In addition, it said the strength of the ringgit will also help as this will clamp the cost of imported goods.

The firm forecasts CPI to average at 2.2% this year with core CPI to remain tepid at 1.9%.

“Based on the mandate of BNM which is to ensure price stability while being supportive of growth, we don’t see strong evidence for the policy rate to be intervened again post the adjustment in January given the projected gross domestic product growth rate of 5.3% in 2018 and 2019.”

“Additionally, inflation rate projection of 2.2% and 2.7% in 2018 and 2019 is within the long-term average of 2.6% (2006-2017), hardly a strong reason to suggest risks of financial imbalances or demand-driven inflation,” it added.

Furthermore, it said should there be any pressure on global cost factors, notably oil prices, due to extreme conditions like geopolitical risks or supply disruption, it believes that the condition will be transitory in nature and hence, does not warrant any adjustment.

Maxis earnings up 4.2% to RM523m in first quarter

PETALING JAYA: Maxis Bhd saw its net profit rise 4.18% to RM523 million in the first quarter ended March 31, from RM502 million in the previous corresponding quarter.

Revenue for the quarter declined 5.8% to RM2.2 billion, compared with RM2.4 billion in the same period last year.

“We delivered a steady quarter with solid earnings before interest, tax, depreciation and amortisation (ebitda) and high ebitda margin in a highly competitive market,” its CEO Robert Nason said in a statement.

Year-on-year (y-o-y), Maxis’ normalised profit after tax (PAT) was stable at RM510 million on the back of solid ebitda. Its normalised ebitda continued to be stable at RM1 billion.

Meanwhile, ebitda margin (on service revenue) was high at 51.5% against 49.3% last year, reflecting positive results from cost optimisation initiatives.

The group’s service revenue was marginally lower at RM2 billion from RM2.1 billion a year ago due to intense competition, particularly in the prepaid market.

Postpaid revenue grew 5.2% y-o-y to RM985 million from RM936 million last year, registering the highest shared line acquisition and increased average revenue per account (Arpa) through mobile and fixed offerings.

“This was supported by high monthly postpaid Arpu of RM92 and our flagship MaxisONE Plan (MOP) which continued to attract high-value subscribers. MOP registered 283,000 new additions y-o-y, bringing the total base to two million customers,” it noted.

Maxis’ prepaid revenue softened to RM849 million from RM1 billion last year due to lower subscription base, driven by aggressive price competition, continued SIM consolidation and migration to postpaid.

Nevertheless, the group said it continued to sustain high Mobile Internet (MI) penetration of 73%, which supported its high prepaid Arpu of RM41 per month.

Maxis has declared an interim dividend of five sen a share for the financial year ending Dec 31, to be paid on June 28.

In a note today, AmInvestment Bank Bhd said it is maintaining its “hold” call for the group with an unchanged discounted cash flow derived fair value of RM5.76 per share.

It said this was based on a weighted average cost of capital discount rate of 7% and a terminal growth rate assumption of 2%.

“The stock’s FY18 enterprise value/ebitda of 11 times is almost at parity to its three-year average, while dividend yields are decent at 3%,” it noted.

Pending an analyst briefing, AmInvestment said its forecasts are maintained as Maxis’ Q1’18 normalised net profit of RM510 million came in generally within the firm and consensus expectations.

“Unlike Digi.Com which recently registered a 10% increase in Q1’18 net profit from the adoption of MFRS 15 on device subsidy and sales commissions, Maxis’ results appear to be adversely impacted, with Q1’17 normalised net profit slightly adjusted down by 1% while revenue rose 10%,” it said.

Post-MFRS 15 adoption, it said management is now guiding for FY18 service revenue to decrease by a mid-single digit decline versus an earlier low single digit and for ebitda to decline by a high single digit versus mid-single digit.

This includes expectations for higher spectrum fees from the 2,100MHz and 700MHz bands, it added.