Monday, May 7th, 2018

 

Oil surges on Venezuela woes and Iran worries

LONDON, May 7 — Oil prices rose to their highest levels since late-2014 today, boosted by fresh troubles for Venezuelan oil company PDVSA and a looming decision on whether the United States will re-impose sanctions on Iran. Brent crude oil futures…


Latvian bank takes ECB to court for triggering collapse

RIGA, May 7 — Latvian bank ABLV said today it is taking the European Central Bank to court for triggering its demise after it faced allegations of money laundering. The development is the latest challenge to the European banks supervisor over its…


Local stocks slide on profit-taking ahead of GE14

PETALING JAYA: The local bourse continued to see profit-taking activity today ahead of the 14th general election (GE14) on Wednesday, with the benchmark index falling as much as 20.04 points or 1.09% to an intraday low of 1,821.79 points.

However, the FBM KLCI managed to pare losses to close 13.63 points or 0.74% lower at 1,828.20 on volume of 1.92 billion shares worth RM2.1 billion. Market breadth was negative with 750 losers against 187 gainers.

MIDF Research said in its weekly funds flow report that the FBM KLCI will probably stage a relief rally on Thursday after GE14 reflected by an influx of foreign inflows, assuming the federal ruling coalition retains power. To recap, foreign inflows mopped up RM1.43 billion worth of local equities during GE13.

Global investors turned net sellers for the first time in four weeks in the pentultimate week before GE14. The net amount withdrawn by foreign investors last week totalled RM438.4 million net, the second highest weekly outflow so far this year.

As a result, the year-to-date inflow stands at RM3.02 billion net, making Malaysia the only market with inflows so far in 2018 among the four Asean markets that MIDF Research tracks.

“It seems that foreign investors are shifting to the sidelines earlier than expected before the election. Tracing back to the penultimate week before GE13, foreign investors snapped up RM750.4 million net of local equities. Foreign attrition was only seen on the last trading day before GE13, which only amounted to RM91.7 million net,” said MIDF Research.

It said last Monday’s heavy of inflow of RM249.1 million net was offset by three straight days of outflows after the Labour Day break with Wednesday recording the highest daily outflow since early February 2018, totalling RM291.7 million net.

“We reckon that risk-on sentiment was hampered during this period due to GE14 fever; US-China trade talks and the Fed’s acknowledgement of inflation nearing its target without any hints to steer away from gradually tightening its policy.”

Foreign participation remained solid as the average daily trade value (ADTV) reached RM1.29 billion, the highest in seven weeks.

Local institutional funds took the opportunity to buy stocks, which resulted in the second highest weekly net buying so far in 2018 of RM605.4 million with the local institutional ADTV reaching RM2.32 billion, a fairly healthy level.


07/05/2018 21:54:27


Siemens' gas sites in week-long stoppage over falling demand

BERLIN, May 7 — German industrial conglomerate Siemens today said it would shut down its power and gas sites worldwide for a week as it grapples with an “unprecedented downswing” in the market for electricity generating equipment. The drastic…


GE14 outcome may determine Malaysia’s economic growth trajectory: Kenanga Research

PETALING JAYA: Kenanga Research said the 14th general election (GE14) may dictate the Malaysian economic growth trajectory on the back of rising support for the Opposition.

“Though our base case view is for the incumbent ruling coalition to win the general election with a simple majority and stay in power, there may still be the element of surprise given the growing support for the Opposition,” it said in a research note today.

Kenanga Research said the possibility of a change in government if Pakatan Harapan wins the election will create unprecedented major policy disruption.

“A promise to replace GST (Goods and Services Tax) with a ‘fairer’ sales and services tax and ‘people-friendly and entrepreneur-friendly’ tax as well as to review budget spending and allocation as well as key development projects could possibly bring about major uncertainties in the ability of the government to reduce its debt and budget deficit.”

Nonetheless, it does not discount the possibility that it will improve the health of the fiscal balance sheet provided there is a smooth transition to power along with improved governance and monitoring.

Kenanga Research said the political risk premium and policy risk will remain an impediment for achieving the potential growth for Malaysia, which will have an effect on consumption and investment growth.

Despite expected higher uncertainty from the second quarter onwards, the research house opined that the underlying fundamentals of the economy remain relatively intact.

“Though the house current economic growth projection appears to mimic the lower end of the latest official forecast (based on Bank Negara Malaysia’s forecast) of 5.5%-6.0%, we believe there could be some downside to our growth projection in 2018.

“This is premised on the outcome of GE14, the full impact of US Fed’s rate normalisation process, the impending trade war between the US and China, and geopolitical risks in the Middle East that may influence the oil price levels.”

Its base case projection for second quarter gross domestic product growth is 5.5% after taking into account the high net exports contribution.

On the currency front, Kenanga Research foresees a more volatile ringgit biased on weakness to a range between 3.85 and 4.10 to the US dollar in the next three to six months before ending the year at 3.90. As at 5pm today, the ringgit was weaker by 0.1% at 3.9445 against the greenback.


Tan Chong to build RM500m automotive hub in Bagan Datuk

PETALING JAYA: Tan Chong Motor Holdings Bhd will set up an automotive hub in Bagan Datuk, Perak, with an estimated long-term investment cost of RM500 million.

The group told Bursa Malaysia today that the Tan Chong Automotive & Commercial Vehicle Hub is a strategic business plan that demonstrates its commitment towards Malaysia’s industrialisation and economic growth.

Tan Chong expects to start with an outlay of RM100 million, which will be channelled towards land acquisition and the construction of the first phase of a bus and truck plant.

Upon completion, the plant, which will cover 338 acres of freehold land, will cater to the production expansion needs of the local and exports markets.

Tan Chong said spin-offs from the investment will include creating new jobs, attracting new investments and spurring Bagan Datuk’s economic growth.“It is also expected to strategically tap into the growth regions of the North Corridor Economic Region.”

Tan Chong noted that buses produced by the group are currently exported to Singapore, Hong Kong and Myanmar. It continues to explore potential markets in the region including Thailand, Sri Lanka, Vietnam and Indonesia.

On Bursa Malaysia today, Tan Chong was unchanged at RM1.64 on volume of 98,000 shares.


SP Setia, Tradwinds to develop housing project for KL City Hall in return for RM1.19b land

PETALING JAYA: Retro Highland Sdn Bhd, in which SP Setia Bhd and Tradewinds Corp Bhd own a 50% stake each, has entered into a privatisation agreement with Kuala Lumpur City Hall (DBKL) for the construction of the Quality Sustainable People Housing (QSPH) project in Cheras.

In return, Retro Highland will be awarded 52.25 acres of leasehold land in Cheras valued at RM1.19 billion, to be used for a mixed project with an estimated gross development value (GDV) of RM11.03 billion and a development period of 11 years.

The agreed value of the exchange land of RM1.19 billion comprises the construction cost for Phase 1 and Phase 2 of up to RM344.79 million and RM835.12 million, respectively and cash consideration of RM14.99 million. If the construction cost of the QSPH development is lower than the estimated cost, a cash consideration for the difference will be paid to DBKL accordingly.

Retro Highland is a special purpose vehicle of SP Setia and Tradewinds Corp Bhd to undertake the privatisation project.

SP Setia said the QSPH project is a public-private strategic partnership undertaking, which is in line with the government’s intention to encourage the private sector to form partnerships with DBKL to undertake urban renewal initiatives under the KL Structure Plan 2020.

The QSPH project consists of 3,971 residential units, 112 shop/stall units, a market and other public facilities. It is expected to be completed by 2028.

Despite having recently acquired large tracts of landbank via the acquisition of I&P Group Sdn Bhd, SP Setia said it is an opportunity for it to increase and replenish its current landbank in key areas of Kuala Lumpur via the privatisation agreement.

SP Setia said the proposed development is expected to contribute positively to the group’s future earnings in the medium to longer term. It will, it added, benefit from the developments surrounding the exchange land with amenities, facilities and infrastructure that are already in the vicinity.

On Bursa Malaysia today, SP Setia closed down 1 sen or 0.33% at RM3.01 on volume of 523,400 shares.


Going-concern issue will be addressed, says Eden Inc

PETALING JAYA:Eden Inc Bhd’s external auditor Messrs Ernst & Young has issued a statement on material uncertainty related to going concern in respect of the company’s financial statements for the year ended Dec 31, 2017 after its current liabilities were found to have exceeded its current assets.

Eden, which reported a net loss of RM18.56 million, saw current liabilities exceed current assets by RM62.76 million and RM97.19 million at group and company level, respectively, as at end-December 2017. In addition, the group and the company reported operating cash outflows of RM10.99 million and RM78,213, respectively.

As at Dec 31, 2017, the group’s loans and borrowings and trade and other payables stood at RM92.73 million and RM53.87 million, respectively.

Eden, however, said with the expected full recommissioning of its power plants, recovery of amount due from Zil Enterprise Sdn Bhd, proposed issuance of redeemable convertible notes and planned disposals of land, it will be able to continually repay its outstanding borrowings/loans and creditors.

“This will reduce the current liabilities of the company. The group’s cash flow position and liquidity is expected to improve and the going concern issue of the group will be addressed,” it added.

Eden closed unchanged at 14 sen with 640,300 shares traded today.


Eden auditors say liabilities cloud going concern status

PETALING JAYA: Eden Inc Bhd’s external auditors Messrs Ernst & Young have expressed doubt over the material uncertainty in its financial year ended Dec 31, 2017 after its current liabilities were found to have exceeded its current assets.

Eden, which reported a net loss of RM18.56 million, saw its current liabilities exceed current assets by RM62.76 million and RM97.19 million at the group and company level, respectively end-December 2017.

In addition, the group and the company reported operating cash outflows of RM10.99 million and RM78,213, respectively.

As at Dec 31, 2017, the group’s loans and borrowings and trade and other payables stood at RM92.73 million and RM53.87 million, respectively.

Eden, however, said with the expected fully recommissioning of the power plants, recovery of amount due from Zil Enterprise Sdn Bhd (ZESB), proposed issuance of redeemable convertible notes and planned disposal of lands, it will be able to continually repay its outstanding borrowings/loans and creditors.

“This will reduce the current liabilities of the company. The group’s cash flow position and liquidity is expected to improve and the going concern issue of the group will be addressed,” it added.

Edenclosed unchanged at 14 sen today with 640,300 shares traded.