Thursday, May 24th, 2018


Oil slips further below US$80 on talk of easing output curbs

NEW YORK, May 24 ― Oil prices fell about 1 per cent today, with expectations building that Opec could wind down the output deal in place since the start of 2017, due to supply concerns out of Venezuela and Iran. Brent crude futures fell 61 cents,…

About US$1.2b in cryptocurrency stolen since 2017, says cybercrime group

NEW YORK, May 24 ― Criminals have stolen about US$1.2 billion (RM4.77 billion) in cryptocurrencies since the beginning of 2017, as bitcoin's popularity and the emergence of more than 1,500 digital tokens have put the spotlight on the unregulated…

Guan Eng: National liabilities total RM1.087 trillion, 80.3% of GDP

PUTRAJAYA: Finance Minister Lim Guan Eng today provided the breakdown of Malaysia's national liabilities of RM1.087 trillion, equivalent to a whopping 80.3% of gross domestic product (GDP) as at end-December, 2017.

This included off-balance sheet payments of RM201.4 billion comprising lease payments (including rental, maintenance and other charges) for a host of Public-Private Partnership projects such as construction of schools, hostels, roads, police stations and hospitals.

Lim said the official federal government debt was at RM686.8 billion, while government guarantees amounted to RM199.1 billion involving entities that failed to service their debts.

Among them are Danainfra Nasional Bhd (RM42.2 billion), Govco Holdings Bhd (RM8.8 billion), Prasarana Malaysia Bhd (RM26.6 billion), Malaysia Rail-link Sdn Bhd (RM14.5 billion), and an estimated RM38 billion for 1Malaysia Development Bhd (1MDB).

“Hence, the federal government debt and liabilities amounted to a total of RM1.087 trillion or 80.3% of the GDP as at Dec 31, 2017,” he explained.

However, excluding the off-balance sheet payments, the federal government debt would amount to RM885.9 billion.

“This represents the 65.4% of the GDP as highlighted by Prime Minister Tun Dr Mahathir Mohamad.”

Former prime minister Datuk Seri Najib Abdul Razak had said Malaysia's government debt was manageable at a level below its self-imposed ceiling of 55% of GDP.

Lim said the move to disclose the RM1 trillion liabilities is to establish the true baseline on the state of financial affairs, diagnose the problems and then prescribe the necessary remedies.

He added that the economic fundamentals remain strong with a stable financial sector. “The banking sector is well capitalised and there is sufficient liquidity in the market.”

Commenting on Najib's remarks that the RM1 trillion debt announcement jolted the financial markets, Lim opined that the stock market performance is subject to many factors, citing that the regional markets were also in the red. “Let's allow the market to adjust according to its own dynamics.”

UMW says no plans to raise offer for MBM Resources, allocates RM600m for 3 core segments

SHAH ALAM: UMW Holdings Bhd, which has no intention to raise its takeover offer price for MBM Resources Bhd, has budgeted RM600 million in capital expenditure (capex) for its three core segments after its full exit from the oil and gas business within the year.

Of that, RM200 million will be for the automotive and equipment segments each, RM100 million for manufacturing and engineering, and the remaining RM100 million for the aerospace expansion plan in Serendah, Selangor.

“On the Serendah land, we have a high value manufacturing plant there, so we try to expand in that area,” UMW president and group CEO Badrul Feisal Abdul Rahim told a press conference after its AGM here today.

He believes the “worst is over” for the group, but it will take some time before reaching what it had achieved prior to 2014. “It will take time but definitely it will be in the black.”

UMW's net profit jumped nearly four times to RM74.08 million for the first quarter ended March 31, 2018 against RM20.17 million in the previous corresponding period.

Badrul Feisal said the group's second new Toyota plant is expected to be completed by year-end and be operational early next year.

Automotive is the largest revenue contributor for UMW, but he cautioned that Toyota has been facing stiff competition, especially from Honda, despite new model launches this year.

Toyota car sales in Malaysia are estimated at 70,000 units this year, while Perodua is expected to sell 209,000 units.

With the replacement of the Goods and Services Tax by the Sales and Services Tax, Badrul Feisal said car prices will probably increase.

For the manufacturing and engineering segment, he revealed that the group plans to expand into medical device manufacturing.

UMW is unfazed by the review of mega projects in the country as a result of the change in the federal government, as 70% of its heavy equipment orders are derived from the overseas markets.

On the MBM bid, Badrul Feisal said UMW has not changed its mind on the offer price despite numerous rejections.

“We've extended the offer period. It's up to them to evaluate whether to sell or not. We still stick to the position (of not raising the offer price), until a time when it is suitable to address.”

MBM has stood firm on not accepting the deal due to the “unreasonable” pricing of RM501 million or RM2.56 per share, despite major shareholder Med-Bumikar Mara Sdn Bhd reportedly expressing interest in disposing of the stake.

Last month, UMW Holdings Bhd extended its takeover offer period for MBM by six months, from April 30 till Oct 31. The jewel in MBM is its 22.58% stake in Perusahaan Otomobil Kedua Sdn Bhd (Perodua).

An extension was also given to PNB Equity Resource Corporation Sdn Bhd, which owns 10% of Perodua. UMW has yet to receive a response.

FBM KLCI closes below 1,800 amid debt level concerns

PETALING JAYA: The FBM KLCI tumbled 1.58% or 28.59 points to 1,775.66 points today, after a mixed performance in the US market overnight, with the Malaysian bourse bogged down by negative sentiment over the countryt's high debt.

The index traded within a range of 41.72 points, with a day high of 1,809.90 and a day low of 1,768.18.

Trading volume shrank to 2.69 billion shares worth RM3.34 billion from Wednesday's 2.69 billion shares worth RM3.34 billion. Market breadth was negative with 235 gainers to 752 losers.

Actively traded stocks included Sapura Energy, My E.G. Services, Malayan Banking, Eduspec Holdings, Priceworth International, Hibiscus Petroleum, Malaysian Resources Corp and YTL Corp.

Top losers included British American Tobacco (M), Nestle (M), Ajinomoto (M), Public Bank and Allianz Malaysia.

One analyst told SunBiz: “1,800 is just another level”, when asked to comment on the breach of 1,800 points, which is seen as a psychological support level.

“Now that it is below 1,800, is it important? I don't think so. When it gets closer to 1,700, do you think 1,700 is also a psychological level? It is a psychological level, but whether it will have a significant impact … people are more concerned about the bigger picture,” said the analyst.

He said uncertainties brought on by national debt issues, review of the construction sector and toll concessions caused panic.

“You don't have solutions, investors take it negatively. Most likely they will stay on the sidelines, so they will sell.”

HLIB Research expects support to be anchored around 1,800 points, followed by 1,760. Should there be any rebound, the upside is envisaged around 1,830-1,840.

“We believe there could be some relief rebound on the FBM KLCI, tracking the slight gains on Wall Street. Nevertheless, upside could be limited as traders may still be focusing on the national debt issues and anticipate the next action plan by Pakatan Harapan to reduce the debt status.”

Moreover, 1MDB news flow and the expected review of construction mega projects and toll concessions may dampen sentiment, it added.

Wall Street opens flat as energy stocks, trade worries weigh

NEW YORK, May 24 ― US stocks opened flat today, weighed down by declines in energy stocks as oil prices fell and worries over protectionist trade policies. The Dow Jones Industrial Average fell 9.45 points, or 0.04 per cent, at the open to…

AirAsia’s Q1 net profit rises to RM1.09b

KUALA LUMPUR, May 24 ― AirAsia Bhd recorded a higher first quarter (Q1) net profit of RM1.09 billion for the period ended March 31, 2018, up from RM584.25 million recorded in the same period last year. Revenue increased to RM2.56 billion from…

7-Eleven first quarter earnings jump 11.6%

PETALING JAYA: 7-Eleven Malaysia Holdings Bhd saw a 11.6% jump in its net profit for the first quarter ended March 31 to RM8.9 million from RM8 million recorded in the same quarter a year ago, on the back of increased revenue as well as due to the improvement in gross margin and other operating income.

Revenue for the quarter under review rose by 2.5% to RM535.7 million from the RM522.5 million registered in the preceding year’s corresponding quarter.

The growth in revenue continued to be driven by the growth in new stores, higher customer counts and better consumer promotion activity.

“We are pleased with our net profit growth of 11.6%. This improvement has been driven by an increase in revenue, gross margin improvement and higher other operating income. We will continue to leverage our supply chain operations and sharpen our offerings to our customers, with a key focus of Fresh Food and Instore services in order to reaffirm 7-Eleven Malaysia as our customer’s first choice convenience store operator. We are also hopeful that 7-Eleven Malaysia, with the largest convenience store network in Malaysia would be in a favourable position to benefit from higher consumer purchasing power due to the upcoming 0% GST with effect from June 1, 2018,” Acting CEO Ho Meng said in a news release.

The board of directors is of the view that the trading conditions for the next quarter are expected to improve with the anticipated heightened consumer sentiment.

“We expect to see further improvements in the next quarter by pursuing our core strategy pillars of operations excellence, cost management and commercial innovation,” it said.

Petron bottom line down in first quarter

PETALING JAYA: Petron Malaysia Refining & Marketing Bhd’s net profit for the first quarter ended March 31 fell 33.55% to RM72.12 million from RM108.54 million a year ago.

In a filing with Bursa Malaysia today, the group said its pre-tax profit was lower at RM96 million compared with RM119 million reported a year ago, while net income for the quarter fell to RM72 million from RM109 million a year ago.

Revenue for the quarter rose 6.66% to RM2.73 billion from RM2.56 billion a year ago due to growth in sales volume and higher oil prices.

Total sales volume reached 8.7 million barrels, reflecting a 4% increase from 8.3 million barrels last year, driven by the growth in domestic volumes.

Dated Brent averaged US$67 per barrel during the quarter compared with US$54 per barrel in the same period last year, and about 10% higher or US$10 per barrel from the US$61 average in the fourth quarter of 2017.

Cost of crude significantly increased resulting in lower refining margins. Gross margin for the quarter settled at RM114.7 million, which was 37% lower from a year ago. The drop in margins was partly cushioned by lower financing charges during the quarter.

Moving forward, the group expects more uncertainty in oil prices with the US pulling out of the Iran nuclear deal but will continue to maintain a robust risk management system to mitigate exposures to such uncertainty.

“The company’s sustained financial performance proved that the company’s plans and programmes have been effective. With the positive outlook on Malaysian economy with stable growth and domestic demand, the company will continue to enhance promotions of innovative products, strengthen partnerships and explore new opportunities,” it said.

Petron’s share price fell 4.09% or 35 sen to close at RM8.21 today with a total of 394,200 shares traded.

Aeon’s net profit 6.6% higher in Q1

PETALING JAYA: Aeon Co (M) Bhd’s net profit for the first quarter ended March 31 rose 6.63% to RM27.94 million from RM26.20 million a year ago.

Revenue for the period grew to RM1.11 billion from RM1.07 billion on the back of higher revenue from its retail and property management service businesses.

“The domestic economy is expected to grow at 5.5% in year 2018 driven by domestic demand, both consumers and producers. The company remains optimistic about the country’s retail market and barring unforeseen circumstances, the company expects its performance for the financial year 2018 to improve,” its board of directors said.

As for its retail business, Aeon said it will continue to employ appropriate marketing and pricing strategies, merchandise assortment reformation, maintaining quality customer service and operational efficiency efforts, for the benefit of its core businesses.

For the property management services, it is expecting occupancy rate and rental rates to remain stable and sustainable.

“The company will continue to leverage on its competitive strengths to draw customer traffic to its malls so as to continue to maintain its position as a shopping destination,” said its board.

The stock gained 2.22% to close at RM2.30 with 1.3 million shares done.