Thursday, May 3rd, 2018

 

Musk says don’t buy volatile Tesla stock; investors listen

SAN FRANCISCO, May 3 — Elon Musk told investors not to buy Tesla Inc shares if they can’t stomach volatility. They got the message. The comments — part of a bizarre, heated conference call after the close yesterday — precipitated another…


Youth unemployment hit record high in 2017: MIDF Research

PETALING JAYA: Youth unemployment was at its highest ever at 10.8% in 2017, of which graduate unemployment constituted about 40.5% or 204,000 of total unemployment due to skills mismatch amid a backdrop where demand for low-skill jobs continues to reign – which in turn may leave the government falling short of its 35% skilled workforce target by 2020, according to MIDF Research.

For every 100 jobs available, there are 76 jobs for elementary occupations and 10 jobs for plant and machinery operators and assemblers, which leaves 14 jobs for the high-skill and other low-skill occupations.

About 86.3% of job vacancies in 2017 were for low-skill jobs which was deemed less suitable for a fresh graduate while high-skill jobs such as professional, technicians and associate professionals, comprised 4.1% of the total job vacancies.

It noted that the high single- and double-digit unemployment rate among youth, defined as those between 15 and 24 years old, as being normal not only in Malaysia, but in Europe, the US and South Korea.

The high youth unemployment rate was mainly contributed by soaring graduate unemployment, despite the steady increase in tertiary-educated workers joining the workforce, which was also the fastest growing segment at 4.1%, followed by secondary at 3.2% and no formal education by 0.3%.

Employment share of professionals and technicians and associate professionals improved to 12.2% and 10.5% in 2017 expanding at 0.8% and 4.6% respectively.

“In terms of share, the rising stake of skilled-worker or tertiary-educated is in line with the Eleventh Malaysia Plan. Under the plan, the government estimated skilled-worker to total workforce ratio to touch 35% by 2020. Nevertheless, we view the ratio is not expected to reach the target at the current pace,” MIDF Research said.

“We forecast the skilled-worker ratio to register at 32% by 2020. Continuous improvement in production efficiency, resource allocations and better technology adoptions under the Industry 4.0 will facilitate and accelerate the productivity level in Malaysia in the long run,” it added.

The overall unemployment rate in the country remained low at 3.4% last year.

Malacca remains as the state with the lowest youth unemployment rate for the seventh consecutive year at 2.9% while Sabah recorded the highest at 13.5% in 2017.

Meanwhile, Selangor the largest employer, 23.2% of total national employment saw overall unemployment rate of 2.8% and youth unemployment rate of 9.4% last year.

The overall youth unemployment rate across all states registered poor performances compared with the previous year, 2016.

In 2018, the youth unemployment rate is expected to fall slightly to 9.9% and the overall unemployment rate to stand at 3.3%.

The job market outlook for commodity-based sectors is expected to improve in tandem with recovering commodity prices. This in line with anticipation of improvement in global trade, and higher demand for export products is expected to benefit industries such as electrical & electronics and mining.


Youth unemployment hit record high in 2017 due to skills mismatch: MIDF Research

KUALA LUMPUR: With affordability being a challenge, property industry stakeholders should look towards the rental market, said CBRE-WTW managing director Foo Gee Jen.

“Income and house price mismatch requires long-term correction in the market and in the economy as a whole. Renting takes up lower financial commitment and presents as an easier and immediate access to accommodation,” he said.

Some of the rental schemes that Foo suggested include build-to-rent, rent-to-own, co-living and retirement living.

Speaking at the Sales and Marketing Conference organised by Rehda Institute today, Foo said renting can address underutilisation of property as vacant units or aged properties could be transformed for rental use. Vacant commercial units and shop offices could also be converted into residential use.

“Renting is a sensible option in a soft market as rental yield becomes more attractive when capital gain is slow in a fatigue market,” Foo said.

As housing demand rapidly grows in tandem with urbanisation and population growth, putting up more houses for rent is a quicker response.

Based on population growth rate of 1.3% on population of 32 million as of 2017, the annual growth in population is estimated at 390,000.

Assuming an average household size of four, Malaysia would need 97,500 units of new houses per year. Last year, 94,198 units were completed.
Coupled with the mismatch in demand and supply caused by mismatches in price/income, location and product, Foo said, it is time to “do something out of the box” and turn towards renting.

“It could be time to move away from the Asian mindset on home ownership as the absence of home ownership does not imply welfare deprivation,” he said, adding that priority is to have shelter over one’s head, be it rented or owned.
However, he said the current laws in Malaysia are pro-tenant and should be reviewed to ensure further protection for landlords.

A comprehensive regulatory framework would protect both tenants and landlords to address challenges of property maintenance, tenants’ obligations, risks of rent default and other related concerns.

Foo said an example of a check-and-balance system or third party intermediary would be Australia’s Rental Bonds Office.

Other matters to look into are reducing red tape and speeding up the planning process, extra density allowance, tax incentives, public-private partnership on land release as well as transparent and supportive planning.


Spotify has worst day as public company after growth disappoints

LOS ANGELES, May 3 — Spotify Technology SA suffered its worst stock decline since becoming a public company, slammed by investors who weren’t impressed with a 45 per cent jump in subscriptions last quarter. The shares tumbled as much as 11 per…


US trade deficit narrows in March on record exports

WASHINGTON, May 3 — The US trade deficit narrowed in March for the first time in seven months as exports reached the highest level on record, the Commerce Department reported today. The drop in the trade gap could point to higher growth in the…


Exxon pushes ahead with Rosneft LNG project despite sanctions, say sources

BEIJING, May 3 — Exxon Mobil is pushing ahead with efforts to develop its US$15 billion (RM59 billion) Far East Liquefied Natural Gas (LNG) project with Russia’s Rosneft despite being forced to exit some joint ventures due to Western sanctions….


MyHSR tight-lipped on project cost, PDP contract value

KUALA LUMPUR: MyHSR Corp Sdn Bhd remained tight-lipped on the estimated cost for the Kuala Lumpur-Singapore High Speed Rail (HSR) project as well as the contract value for the project delivery partner (PDP) model.

However, MyHSR Corp CEO Datuk Mohd Nur Ismal Mohamed Kamal said at a media briefing today that the PDP model has proven to be a success in the MRT 1, MRT 2 and LRT 3 projects.

“It is able to achieve results on time and within the budget,” he noted.

On Wednesday, a consortium of Gamuda Bhd and Malaysian Resources Corp Bhd,accepted a letter of appointment from MyHSR to act as the PDP for the northern section of the project, while the southern part was awarded to Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd-TH Properties Sdn Bhd consortium.

Mohd Nur Ismal said the project cost will not be revealed to avoid influencing tender bids.

“The cost estimate has never been disclosed by our side because this is an open tender project, so we do not want any cost estimate to influence the pricing of the bids,” he explained.

Second Finance Minister Datuk Seri Johari Abdul Ghani had in 2016 projected that the HSR project will cost RM50 billion to RM60 billion. Late last year, a Singapore-based think tank estimated the project to be worth up to RM77 billion.

More than 60 civil work packages will be dished out under the HSR project involving over 5,000 sub-contract packages, which are opened to local firms. More than 40% of the package value will be allocated for bumiputra companies.

In total, the HSR project is expected to create more than 70,000 jobs, of which 22,000 are professionals and skilled workers.

With PDPs coming on board, Mohd Nur Ismal said MyHSR has started planning on the advanced works and to come out with a detailed design for the project.

“Once regulatory requirements are met as well as the land acquisitions are settled, we’re ready to go. Some advance works will start end of this year.”

He said identified land for the project will be acquired in the second half of the year.

On the extension of the deadline for the Assets Co tender to December 28 this year, he said giving them more time will give MyHSR “more value-for-money proposals.”

China and Japan are perceived as the front runners to undertake the HSR project. The appointed Assets Co will be responsible for designing, building, financing and maintaining all rolling stock, as well as designing, building, financing, operating and maintaining all rail assets for the project.

The 350km HSR will cut the travel time between Kuala Lumpur and Singapore to 90 minutes and is slated to start running by Dec 31, 2026. There will be eight stations along the line including Bandar Malaysia, Sepang-Putrajaya, Seremban, Malacca, Muar, Batu Pahat and Iskandar Puteri in Malaysia, and Jurong East in Singapore.

Commenting on Pakatan Harapan chairman and former prime minister Tun Dr Mahathir Mohamad’s election campaign promise to review mega projects, including the HSR, Mohd Nur Ismal believes the benefits of the project for Malaysia will speak for themselves.

“The spillover benefits are so huge. It will be a wasted opportunity if we don’t proceed …,” he said, noting that Malaysia will have to compensate Singapore should the project fall through.


MyHSR tight-lipped on project cost, PDP value

KUALA LUMPUR: MyHSR Corp Sdn Bhd remained tight-lipped on the estimated cost for the Kuala Lumpur-Singapore High Speed Rail (HSR) project as well as the contract value for the project delivery partner (PDP) model.

However, MyHSR Corp CEO Datuk Mohd Nur Ismal Mohamed Kamal said at a media briefing today that the PDP model has proven to be a success in the MRT 1, MRT 2 and LRT 3 projects.

“It is able to achieve results on time and within the budget,” he noted.

On Wednesday, a consortium of Gamuda Bhd and Malaysian Resources Corp Bhd,accepted a letter of appointment from MyHSR to act as the PDP for the northern section of the project, while the southern part was awarded to Syarikat Pembenaan Yeoh Tiong Lay Sdn Bhd – TH Properties Sdn Bhd consortium.

Mohd Nur Ismal said the project cost will not be revealed to avoid influencing tender bids.

“The cost estimate has never been disclosed by our side because this is an open tender project, so we do not want any cost estimate to influence the pricing of the bids,” he explained.

Second Finance Minister Datuk Seri Johari Abdul Ghani had in 2016 projected that the HSR project will cost RM50 billion to RM60 billion. Late last year, a Singapore-based think tank estimated the project to be worth up to RM77 billion.

More than 60 civil work packages will be dished out under the HSR project involving over 5,000 sub-contract packages, which are opened to local firms. More than 40% of the package value will be allocated for bumiputra companies.

In total, the HSR project is expected to create more than 70,000 jobs, of which 22,000 are professionals and skilled workers.

With PDPs coming on board, Mohd Nur Ismal said MyHSR has started planning on the advanced works and to come out with a detailed design for the project.

“Once regulatory requirements are met as well as the land acquisitions are settled, we’re ready to go. Some advance works will start end of this year.”

He said identified land for the project will be acquired in the second half of the year.

On the extension of the deadline for the Assets Co tender to December 28 this year, he said giving them more time will give MyHSR “more value-for-money proposals.”

China and Japan are perceived as the front runners to undertake the HSR project. The appointed Assets Co will be responsible for designing, building, financing and maintaining all rolling stock, as well as designing, building, financing, operating and maintaining all rail assets for the project.

The 350km HSR will cut the travel time between Kuala Lumpur and Singapore to 90 minutes and is slated to start running by Dec 31, 2026. There will be eight stations along the line including Bandar Malaysia, Sepang-Putrajaya, Seremban, Malacca, Muar, Batu Pahat and Iskandar Puteri in Malaysia, and Jurong East in Singapore.

Commenting on Pakatan Harapan chairman and former prime minister Tun Dr Mahathir Mohamad’s election campaign promise to review mega projects, including the HSR, Mohd Nur Ismal believes the benefits of the project for Malaysia will speak for itself.

“The spillover benefits are so huge. It will be a wasted opportunity if we don’t proceed …,” he said, noting that Malaysia will have to compensate Singapore should the project fall through.


Banking still ‘overweight’ despite declining loan growth: AmInvestment

PETALING JAYA: AmInvestment Bank Research maintained an overweight call on the banking sector despite industry loan growth declining by 4.4% year-on-year, due to slower non-household loan growth.

Non-household loan growth decelerated to 4.4%y-o-y in March 2018, from 4.5%y-o-y in Feb, while growth in household loans remains stable.

On a year-to-date (YTD) basis, industry loan growth was an annualised 4.8% and remains on track to meet the research house projection for a 5% loan growth in 2018 on the back of a gross domestic product(GDP) growth of 5.5%.

Meanwhile, growth in household loan applications slipped further to 8.1% y-o-y.

“The industry’s impaired loans continued to rise for the 3rd consecutive month. It increased by 1.8%month-on-month or RM441 million in March 2018, due to upticks in impairment of loans for purchase of residential and non-residential property, construction and working capital loans,” the research house said.

This was due to the refining of bank’s methodologies for the implementation of MFRS 9 which resulted in an increase in provisions. Notwithstanding that, the industry’s total gross impaired loans (GIL) remained steady at 1.6% while the net impaired loan = ratio continued to inched up to 0.99% from 0.94% and 0.91% in Feb and Jan 2018 respectively,” it added.

AmInvestment Bank recommended a BUY call on RHB Bank Bhd (FV: RM6.30/share), Public Bank Bhd (FV: RM24.30/share), Alliance Bank Malaysia Bhd (FV: RM4.40/share) and BIMB Holdings Bhd (FV: RM4.80/share).


Fraser & Neave’s Q2 net profit declines 13.6%

PETALING JAYA: Fraser & Neave Holdings Bhd (F&N) reported a 13.6% decline in net profit to RM92.57 million for the second quarter ended March 31, 2018 compared with RM107.08 million in the previous corresponding year, due to higher input costs especially for dairy products, higher advertising and promotions expenditure and sales incentives for Chinese New Year festive promotions.

Revenue, however, rose 2.2% to RM1.01 billion from RM992.74 million.

It proposes an interim dividend of 27 sen per share for the quarter under review amounting to RM99 million, payable on June 7.

F&N’s first-half net profit fell 14.9% to RM199.4 million from RM234.36 million, while revenue was flat at RM2.08 billion.

Commenting on outlook for the rest of the year, F&N chairman Tengku Syed Badarudin Jamalullail said the business environments in both Malaysia and Thailand will continue to be challenging with prolonged weak consumer sentiments and intensifying competitive price pressure.

The group also expects raw and packaging material prices in subsequent quarters to remain volatile following the uptrend in packaging and milk-based commodity prices and oil prices.

“The group has hedged its core commodity requirements for the financial year along with the corresponding foreign currency exposure wherever possible.”

Despite the challenges, F&N said it will continue to remain vigilant and take decisive actions in managing the changes in external environment to ensure sustainable growth for our business.