Tuesday, July 3rd, 2018

 

TM revises KPIs, reduces capex in face of headwinds

KUALA LUMPUR: Telekom Malaysia Bhd (TM), which Tuesday announced a 40% cheaper fixed broadband plan for the B40 segment, has revised its headline key performance indicators (KPIs) for the year amid persistent headwinds.

Acting group CEO Datuk Bazlan Osman (pix) announced that revenue is expected to remain flat or shrink by 1% this year, compared with the 3.5-4% growth guided earlier, while capital expenditure (capex) has been reduced to 20-22% of revenue from the high 20s% guided earlier. Earnings before interest and tax has been maintained at RM1 billion.

The revision of capex will entail reprioritising its network spending and sweating of existing assets, while expanding its coverage efficiently.

Customer satisfaction measure has been reduced to 72 from 74 previously which, Bazlan noted, is still higher than the global average of 68 last year.

“We are currently facing numerous challenges to the business, namely, intensifying competition; increasing business and operating costs; cautious enterprise spending as well as increasing regulatory pressures,” he told reporters at a briefing Tuesday.

In announcing its revised KPIs for the year, TM also announced new broadband plans to deliver on the national broadband aspiration, including a new entry level unifi package at 30Mbps for the B40 segment which will cost less than RM100 a month, more than 40% lower than the existing 30Mbps package. Registration for prebooking starts on July 15.

For the M40 and T20 segments, unifi “turbo” plans offering more than double the current broadband speed will be launched. TM will gradually upgrade the speed for all its existing unifi customers at more than double the speed at no extra cost starting Aug 15 while new customers on existing unifi plans before Dec 31 will be upgraded in 2019.

There will also be a special package upgrade for pre-unifi (Streamyx) customers in unifi areas. For those not in unifi areas, TM will continue investing in its network to provide at least the entry level unifi package. More details will be announced next week.

Bazlan said the group has embarked on the fourth wave of its Performance Improvement Programme to address the challenges, including sustaining profitability and potential broadband price revision.

The programme, which stretches from 2018 till 2020, comprises four pillars – revenue uplift, sustained profitability, improved cash flow and increased productivity.

Bazlan said TM will increase the productivity of its 28,000 employees via in-sourcing instead of engaging third parties while headcount has been reduced via natural attrition and retirement, as well as reprioritising or redistribution of work.

TM is also looking to sweat its assets, for example, using excess broadband ports to bring in new customers without having to expand the coverage or increasing the number of ports. It has 1.4 million unifi ports available nationwide.

“In areas where other network service providers or network facility providers have the network, we don't have to build, we can be the access seeker,” Bazlan said, adding that it will also review contracts with suppliers and business partners to reduce cost, and pass on the cost savings to customers.

Group CFO Nor Fadhilah Mohd Ali said a portion of its capex is to support customer projects, which will also be reviewed but gave an assurance that the reduced capex will not compromise investment for growth.

She said TM will continue to assess its capital requirements and balance factors such as market conditions with capex and debt requirements.


IHH Healthcare makes new binding offer for India’s Fortis

PETALING JAYA: IHH Healthcare Bhd has launched a new offer for India's much-coveted Fortis Healthcare Ltd after a fresh bidding process was initiated last Friday.

“IHH has on July 3 issued a letter to the board of Fortis setting out a binding offer, which supersedes and replaces the enhanced revised proposal,” according to IHH's filing with the stock exchange.

This is IHH's only binding offer.

IHH is one of the invited bidders for the new round of bidding for Fortis and the results will be made known by 5pm on July 16.

The binding offer will be deemed to have been withdrawn if IHH does not receive any response from Fortis after the stated period.

Besides IHH, the consortium of Hero Enterprise Investment Office and Burman Family Office, Fosun International Ltd and Manipal Hospitals Enterprises are the bidders for Fortis.

IHH had planned to invest up to 40 billion rupees (RM2.36 billion) through a preferential allotment of equity shares at a price not exceeding 160 rupees per share in Fortis after its bid was turned down in April.

IHH said legal obligations and agreement between IHH and Fortis will be created only after the Fortis board approves the preferential allotment in terms of the share subscription agreement to be executed between the two parties.

“IHH will make appropriate announcements to Bursa Securities in a timely manner in accordance with the Main Market Listing Requirements of Bursa Securities should there be any further material development on this matter.”
IHH advised its shareholders to exercise caution and seek appropriate independent advice when dealing in its shares.

On Bursa Malaysiatoday, IHH was unchanged at RM6 on volume of 3.54 million shares.


Wall Street higher as energy stocks gain

NEW YORK, July 3 — US stocks rose today, boosted by energy stocks as oil prices rose, but gains were capped by a drop in technology stocks, with Facebook sliding on renewed concerns over its data scandal. Facebook dropped 2 per cent after the…


Malaysian export growth to moderate to 5.5% in May: RAM Ratings

PETALING JAYA: RAM Ratings expects Malaysia's export growth to moderate to 5.5% in May 2018 after a strong increase of 14% in April.

The rating agency said in a statement today that this could be partially attributable to a high-base effect from May 2017, when export growth surged 32.4% – the highest level since March 2010.

RAM said the continued decline in imports of intermediate goods also suggests an expectation of a corresponding moderation in external demand growth going ahead.

Meanwhile, the import growth is projected to contract 2.5% in May in anticipation of the deceleration in exports.

“Furthermore, some risk aversion in the lead-up to the 14th General Election may also have caused some hold-back in investments, thereby contributing to the slower pace.”

For May, the trade surplus is estimated to come in lower at RM11.8 billion compared with RM13.1 billion in April.

RAM pointed out that the direct impact arising from the US's protectionist policies and tariffs on Malaysia's exports has been limited to date, as exports of affected goods to the US (blanket tariffs on solar panels, washing machines, and steel and aluminium) constituted only 0.8% of Malaysia's total exports in 2017.

However, it cautioned that the second-round effects from the escalating trade tensions between the US and China, which bears the brunt of most of the American tariffs, will pose a bigger concern to the Malaysian economy.

“This ripple effect will be more strongly felt through the global value chain (GVC) and also in global trade and economic growth.”

“Notably, the US tariffs announced have a more far-reaching impact beyond China and have significant spillover effects to the GVC given the intermediate nature of the goods taxed. China's set of retaliatory tariffs, on the other hand, seemingly target the US specifically,” said RAM head of research Kristina Fong.

Having said that, the research house noted that large trade gains could be derived as US substitutes its demand for imports away from China to other established technology markets, in addition to inward investment gains from American and Chinese firms seeking to bypass these trade tariffs by relocating their operations.

“However, the latter will take time to materialise as firms will require greater certainty in terms of how long and how significant this trade war will turn out to be.”

In the near term, RAM said, significant downside risks may arise from the widespread uncertainty and heftier production costs, primarily for the US, which could in turn affect the current positive global economic momentum through higher unemployment and lower investments.

“Moreover, greater-than-expected inflationary pressure may also spur faster-than-anticipated monetary tightening by the US Federal Reserve, which may further hurt investment and global restocking demand.

“For Malaysia as a small open economy, weak external demand is a clear downside risk to growth momentum; this will require very close monitoring,” the rating agency said.


Tabung Haji MD/CEO, deputy CEO and two directors leave after contracts expire

PETALING JAYA: Lembaga Tabung Haji (TH) announced today that its managing director and CEO Datuk Seri Johan Abdullah and deputy CEO Datuk Badlisyah Abdul Ghani have stepped down after the expiry of their two-year contracts on June 30.

Two directors, Tan Sri Badruddin Amiruldin and Tan Sri Mohamad Aziz, have also left the pilgrim fund after their contracts ended on June 30. They were appointed on Jan 1, 2005 and Jan 1, 2011, respectively.

Johan joined TH in January 2015 as deputy managing director and CEO. Prior to that, he was the managing director and CEO of BIMB Holdings Bhd, a subsidiary of TH.

Badlisyah was the CEO of CIMB's Islamic banking division before joining TH on July 1, 2016.

In May this year, TH saw the departure of its chairman, Datuk Seri Abdul Azeez Abdul Rahim.


Govt to lay down strong policy framework for oil palm industry

KAJANG: The government will lay down a strong policy framework to further develop the oil palm industry and provide assistance, as well as a supporting environment, to ensure sustainable development alongside the industry’s competitiveness.

Newly appointed Primary Industries Minister Teresa Kok said the oil palm industry continued to face challenges, especially in the form of anti-palm oil campaigns, despite its impressive contribution to the country’s development.

“Consumers around the world need to know that criticism on the health aspects of palm oil is unfair and not substantiated with scientific facts,” she said in her opening speech at the 24th Malaysian Palm Oil Board (MPOB) Transfer of Technology Seminar and Exhibition today.

Kok’s speech was read by Deputy Minister of Primary Industries, Shamsul Iskandar Md Akin.

She pointed out that the world needed to know that Malaysia had always advocated sustainable development and management of the oil palm industry and conservation of forests and biodiversity.

“The anti-palm oil campaign strategy has now changed and the detractors of palm oil claim that it is harmful to the environment. We need to provide scientific facts and data to counter these negative allegations and reports regarding the oil palm industry, especially in terms of deforestation and land use change,” she added.

Kok noted that Malaysia’s oil palm industry was highly regulated and it was in the government’s interest to ensure the environment, rainforest and wildlife were protected and conserved.

Malaysia’s initiative to implement the Malaysian Sustainable Palm Oil (MSPO) and make the certification compliance mandatory by Dec 31, 2019, would raise the bar for the local palm oil industry not only in sustainability but also in quality standard, she said.

“I am, therefore, confident that through the concerted promotion of the MSPO, Malaysian palm oil will find a niche in the international oils and fats market. In this regard, I am pleased to announce that the MSPO certification scheme has been adopted as a tool for the Tokyo 2020 Olympics and Paralympic Games Sustainable Sourcing Code for Palm Oil.

“It will be the dawn of a new era in the branding of Malaysian palm oil as it stands tall against all odds and adversities,” she added.

Kok pointed out that the Malaysian oil palm industry must keep itself relevant for many years to come.

New technologies must therefore be incorporated into the entire value chain to make the industry more efficient and productive, generating growth and value addition.

Between 1995 and 2017, the MPOB made available 648 technologies and 174 services applicable to the oil palm industry.

To date, 198 MPOB technologies have been commercialised – a 30% of commercialisation rate compared with the national average of 3% to 5%. – Bernama


Timely for Sapura Energy to boost capital: Analysts

KUALA LUMPUR: Sapura Energy Bhd (SEB) may have posted a net loss of RM147 million for the first quarter ended April 30, 2018 (Q1FY19), however a number of research houses remain undiminished in their outlook for the company and stress that its immediate priority will be to raise capital for future growth in the medium to longer term.

Analysts were in agreement that SEB’s priority in FY19 would be to de-gear or lower its borrowings, which at a debt-to-equity ratio of 1.6 times was relatively high among its global peers.

SEB is involved in offshore development, drilling and pipe-laying services as well as engineering, procurement, construction, installation and commissioning services. The group also owns upstream assets with 243mmboe (millions of barrels of oil equivalent) of reserves and resources, of which 94% is natural gas.

In rating a “buy” for SEB, Maybank Investment Bank said a well-executed capital raising exercise would cut its net gearing level to a healthier level, to, say, 0.6 times in terms of debt-to-equity ratio.

“To be successful, these initiatives require high commitment from major shareholders and should be structured to be win-win,” it said.

With RM16.5 billion in borrowings and RM1.4 billion in cash as at end Q1 FY19, Credit Suisse said deleveraging or debt reduction would remain a key priority as it was important that the company remained well capitalised to capture the improving prospects in the industry.

UOB Kay Hian said although it was difficult to gauge if investors would perceive the capital raising needs positively, “we view that the timing of this new information is a strong signal that SEB is close to securing more mega contracts that will require capital support.”

As for the Q1FY19 results, Credit Suisse said SEB’s performance was dragged down by its drilling division but it did not think that the market would be displeased with the results as “FY19 is expected to be a ‘transition year’ after all.”

Maintaining its rating of “outperform” for SEB when looking at the big picture, Credit Suisse said that its thesis for the company remained intact where the key catalysts would be from more order wins, improved tender market and listing of the exploration and production (E&P) division.

As for UOB Kay Hian, it maintained a “buy” for SEB based on its outstanding international track record and that contract wins were beginning to translate into a better outlook for activities and asset utilisation. – Bernama


Velesto bags US$31m deal

PETALING JAYA: Velesto Energy Bhd’s indirectly owned subsidiary Velesto Drilling Sdn Bhd has bagged a US$31.08million (RM125.87 million) contract for the provision of one jack-up drilling rig and associated services from Roc Oil (Sarawak) Sdn Bhd.

The company formerly known as UMW Oil & Gas Corp Bhd told the stock exchange that it received a letter of award on June 5, for the contract which entails the provision of the Jack-Up Drilling Rig and associated services for Roc Oil’s D35 Phase 2 Infill Drilling Programme.

The tentative commencement date of the contract for 11 firm wells is expected to commence in August 2018.

Velesto will assign the Naga 4 for this contract, which is a premium independent-leg cantilever jack-up drilling rig that has a drilling depth capability of 30,000 feet and has a rated operating water depth of 400 feet.

The contract is expected to contribute positively to the earnings and net assets of the group during the contract period for the financial period ending Dec 31.


Higher salary growth, job numbers in ICT sector last year

PETALING JAYA: The ICT employment market in Malaysia in 2017 showed improvement in salary growth and higher number of jobs compared to 2016. The overall average monthly salary of ICT Professionals grew to RM8,908 in 2017, a 5% growth from RM8,484 in 2016. This was a better growth compared to 4.6% in 2016.

The number of advertised jobs of ICT Professionals also jumped by 35% to 15,197 in 2017 compared with 11, 227 in 2016. Senior Executive level attracted the most number of jobs at 7,118 among the five job categories. These were among the many findings in the 11th edition of Pikom ICT Job Market Outlook in Malaysia 2018 launched today.

The 92-page report, a collaboration with Jobstreet.com, is Pikom’s most comprehensive job market publication since 2007 and attracted 17 industry players as valued partners. They are MDEC, DELL EMC, HDC, EK Tech, MYKRIS, Censof, Commerce.Asia, GLOCOMP, Fire Eye, Dimension Data, Hitachi Sunway, Fusionex, Persol Kelly, Microsoft, Epson, Day Three, and CIS Solucis.

The publication is aimed at helping decision makers in organisations, to understand and plan their ICT talent requirements and acquisitions. Packed with more than 70 charts and tables, the report covers mainly the Economic and ICT Industry Outlook in Malaysia; Salary and Hiring Trends in Malaysia in five job categories and 22 Industry Groups as well as Regional Benchmarking Analysis in 20 countries and 82 cities (including four in Malaysia).

For the first time, Pikom has included in this report, Salary and Hiring Trends in six countries in Southeast and East Asia region taken from Jobstreet.com sister regional companies in Singapore, Hong Kong, the Philippines, Thailand, Indonesia and Vietnam.

This section shows that Malaysia’s overall average monthly of RM8,908 (US$2,244) is the third highest behind Singapore (US$3,354) and Hong Kong (US$3,049). Thailand was fourth at US$1,272, the Philippines at US$834, Vietnam at US$746 and Indonesia at 7th place at US$585.

The association has also included the salary trends of ICT professionals in the cybersecurity market to highlight the critical need for qualified and skilled professionals to tackle the growing cyber threats that are crippling organisations worldwide.

The salary trends of the entry level professionals are also a cause for concern as the salary gap between this category and the other four categories especially the senior manager category, continued to widen.

The overall top five paying industries in 2017 was Financial Services/ Securities/ Insurance, Call Centre/IT-Enabled Services/BPO, Computer/Information Technology (Hardware), Banking and Telecommunication.

Computer/Information Technology (Software) was the overall top hiring industry for ICT professionals in 2017, offering 5,686 jobs. This was followed by Consulting (Business/Technical) industry offering 2,346, Manufacturing/Production at 1,147 jobs, Telecommunication industry at 1,068 and Banking at 906 jobs.

The overall average monthly salary of ICT professionals in Malaysia is expected to move up further in 2018 to RM9,389, a 5.4% growth, which is still much lower than the 7% Average Annual Growth from 2009 to 2017. – Bernama


Qatar to buy New York’s Plaza Hotel for US$600m, source says

LONDON, July 3 — The tiny but ultra-rich Gulf state of Qatar has agreed to buy one of New York’s most iconic buildings, the Plaza Hotel, for around US$600 million (RM2.4 billion), adding a development that was once owned by US President Donald…