Monday, September 3rd, 2018

 

Lotte Chemical, AirAsia, FGV, Marine & General, HeveaBoard, Uzma, Vertice, Vizione, DBE Gurney and Supermax

KUALA LUMPUR (Sept 3): Based on corporate announcements and news flow today, companies that may be in focus tomorrow (Sept 4) may include the following: Lotte Chemical Titan Holding Bhd, AirAsia Group Bhd, FGV Holdings Bhd, Marine & General Bhd, HeveaBoard Bhd, Uzma Bhd, Vertice Bhd, Vizione Holdings Bhd, DBE Gurney Resources Bhd.and Supermax Corp Bhd. Lotte Chemical Titan Holding Bhd said today its polypropylene production plant (PP3) had successfully commenced commercial operations on Saturday (Sept 1). It said the PP3 plant will produce polypropylene for the domestic and export market.Read More


Samsung said in talks to sell Commerzbank’s City of London HQ

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LONDON (Sept 3): Samsung Life Insurance Co is in talks to sell Commerzbank AG’s City of London headquarters to Singapore-based Wing Tai Holdings Ltd, two people with knowledge of the matter said. Samsung Life is seeking about £425 million (US$548 million) for the 30 Gresham Street building. The terms of the deal haven’t yet been finalized and there’s no guarantee that the transaction will be a completed, the people said, asking not to be identified because the information is private. Investec Plc is the other major tenant in the roughlyRead More


ECB: EU must challenge PayPal, Apple in payment services

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FRANKFURT, Sept 3 — European Union countries must foster payment services that work across the continent to boost its financial sector and reduce dependence on third countries like the United States, a top European Central Bank official said…


KLCI slips as Asian markets retreat ahead of Sept 5

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KUALA LUMPUR: Asian markets pulled back on Monday ahead of the Sept 5 deadline for public commentary on the US trade tariffs, following which the taxes are expected to go ahead as planned. Among the key markets, the Shanghai Composite Index slid 0.2% while China’s blue chip CSI 300 lost 0.4%. Hong Kong’s Hang Seng fell 0.6% while Japan’s Nikkei dropped 0.7% and South Korea’s Kospi gave up 0.7%. The FBM KLCI also succumbed to the negative sentiment, shedding 6.08 points to 1,813.58. Trading volume was 2.65 billion shares valuedRead More


Ringgit hits 10-month low to dollar amid emerging market currencies sell-off

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PETALING JAYA: The ringgit weakened as much as 0.54% to 4.1313 against the US dollar today following contagion effects from the sell-off in emerging market currencies and the escalating global trade tensions.

The local unit closed at 4.1283 to the dollar at 5pm today, down 0.47%, the lowest level since November 2017.

RHB Research economist Peck Boon Soon told SunBiz the recent depreciation in the ringgit was largely due to a stronger US dollar and the contagion effects from the slump in the Turkish lira and the Argentine peso. Meanwhile, the Indonesian rupiah plummeted to its weakest level since the 1997-98 Asian financial crisis.

“Although regional currencies Indonesian rupiah and Philippine peso saw selling pressure, they were not as bad as the Turkish lira and the Argentine peso.”

FXTM research analyst Lukman Otunuga opined that the ringgit may experience further losses in the near term with US-China trade tensions promoting risk aversion and the US dollar buoyed by rate hike speculation.

“Technical traders will continue to closely observe how the US$/RM behaves above the 4.12 level. A stabilising US dollar could push prices towards 4.1380.”

He said it is difficult to predict the worst-case scenario for the ringgit, especially when considering how the current weakness is based heavily on external forces.

“Risk aversion from escalating US-China trade tensions, US rate hike expectations and an appreciating US dollar may offer nothing but pain to emerging market currencies including the ringgit. If domestic economic growth continues to disappoint, this may intensify the downside pressure on the ringgit with 4.1600 acting as a level of interest.”

Nonetheless, Peck believes the ringgit should stabilise, with catalysts being high crude oil prices and current account surplus.

For Otunuga, the primary catalyst for the Malaysian currency remains global trade developments as market sentiment is highly sensitive to the US-China trade tensions with any sign of escalation promoting risk aversion, ultimately punishing emerging market currencies.

Meanwhile, on the local equity market outlook, AmResearch remains positive on the FBM KLCI with its earnings expected to grow 3.6% and 6.8% in 2018 and 2019, underpinned by gross domestic product growth of 4.8%-5.0% and 4.2-4.5%, respectively.

The research house is maintaining its end-2018 FBM KLCI target of 1,900 points, implying a price-to-earnings ratio of 18.3 times, which is consistent with the medium-term target of 18.5 times.

The FBM KLCI lost 6.08 points or 0.33% to close at 1,813.58 today.

AmResearch believes investors' sentiment towards emerging markets, including Malaysia, will improve when the market feels that the US rate hike cycle and the US dollar upcycle are about to taper off.

In addition, it said market sentiment will turn better when the risk-and-reward profile and the valuation-to-growth matrix of emerging markets become attractive again after the recent sell-off; and if commodity prices stay firm, which could strengthen the finances of commodity-exporting emerging markets.

However, the research house is mindful of various headwinds that could cap the upside of the FBM KLCI, including the hawkish US Fed; investors' cautiousness towards emerging markets; the structurally rich valuations of the Malaysian equity market against its regional and global peers; and external risks such as international trade tensions and the potential of a new European Union existential crisis.


FGV embarks on turnaround plan as it ‘cleans house’

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KUALA LUMPUR: FGV Holdings Bhd, which is still not done cleaning house, announced today that it will embark on a turnaround plan to be overseen by two independent directors and a transformation officer in an effort to bring the embattled agri-commodities giant back on its feet and improve its finances.

In a press conference, FGV chairman Datuk Wira Azhar Abdul Hamid said several members of the board and management, past and present, are being investigated as part of its probe into transaction and investment decisions and business practices.

FGV president and CEO Datuk Zakaria Arshad was absent from the press conference, which saw the presence of three independent directors. Azhar said Zakaria was in Turkey to attend a board meeting.

Declining to elaborate on the investigations into individuals in the group, Azhar said they are waiting for FGV's lawyers to finalise their opinion and advise them on the next step, which could be civil action. This involves lawyers from the UK and its investments abroad.

The three independent directors at the press conference with Azhar were Datuk Mohd Anwar Yahaya, Datuk Dr Salmiah Ahmad and Dr Mohammed Nazeeb P. Alithambi. They were appointed to the FGV board in the last quarter of 2017.

Salmiah and Mohammed Nazeeb, together with Azhar, are part of a special board committee set up to enhance the performance of FGV's plantation division and other initiatives. The Transformation Office will be headed by Syed Mahdhar Syed Hussain, who was previously MRT Corp standards and compliance director.

On Aug 28, the board announced that it had in January 2018 officially appointed forensic investigators to look into six transactions and/or investment decisions, of which four have been completed. The four investigations include the acquisition of Asia Plantations Ltd, investment in FGV Cambridge Nanosystems Ltd and the acquisition of the Troika condominiums. Investigations are to be completed by year-end.

Additionally, the board undertook internal investigations into open credit lines, poor purchasing trading practices and poor palm oil sales that resulted in bad debts of about RM100 million; direct awards of procurement contracts in breach of best practices; and the critical shortage of workers between May 2016 and April 2018 that resulted in financial losses of more than RM170 million over the period.

“A lot of the issues investigated have been provided for, so financially it is not an issue. Let's say I give you an example … some of the debts that have been written off, they are going to go straight to the bottom line,” Azhar said when asked how the group will turn around amid the probes.

“The reason why we have been performing poorly over a period is because we have been providing for all these episodes. If we can reverse them the financial numbers will be better.”

As part of enhancing its plantation segment, FGV will be aggressively replanting 15,000ha as some of the estates from Felda under a 99-year land lease agreement (LLA) came with mature palm. FGV pays a fixed amount of RM250 million, and 15% of annual profits from LLA-related land to Felda.

FGV swung into the red in the second quarter ended June 30, registering a net loss of RM23.23 million versus a net profit of RM37.26 million in the previous corresponding quarter, dragged down by lower crude palm oil prices and productivity, higher production cost as well as higher share of losses from joint ventures and associate companies.

Its revenue went down 18.4% to RM3.44 billion from RM4.21 billion.


Vertice joint-venture company wins RM815m contract in related party deal

PETALING JAYA: Vertice Bhd's 50:50 joint venture (JV) company with Vizione Holdings Bhd, Buildmarque Construction Sdn Bhd was awarded an RM815 million contract by Consortium Zenith Construction Sdn Bhd to undertake construction works for Package 2 of the Penang Mega Infrastructure Project.

The award is for the construction of a 5.7km by-pass from Bandar Baru Ayer Itam to Lebuhraya Tun Dr Lim Chong Eu, to be completed within 36 months.

The parties of the JVA are in the midst of arranging for the subscription of shares in Buildmarque (currently wholly owned by Vertice). Each party will eventually hold 50% equity interest.

Consortium Zenith, in which Vertice has a 13.2% investment ownership, had in 2012 participated in an open tender by the Penang state government and were among the 60 bidders for the mega project. Consortium Zenith was awarded the project which comprises three highways and an undersea tunnel.

Vertice is a related party by virtue of the shareholding of its major shareholders, Vista Lestari Development Sdn Bhd and Datuk Zarul Ahmad Mohd Zulkifli in Zenith Construction Sdn Bhd, the holding company of Consortium Zenith.

Vizione said it enlarges its order book and is expected to provide a steady stream of revenue for the group over the next three financial years.


Moody’s loses final appeal over Hong Kong regulator’s action against it

HONG KONG: Ratings agency Moody's has failed in its final attempt to overturn action taken against it by Hong Kong's securities regulator for a 2011 report alleging corporate governance failings at a number of Chinese companies.

Hong Kong's Court of Final Appeal today dismissed an appeal by Moody's Investors Service Hong Kong Ltd in relation to the Securities and Futures Commission's (SFC) disciplinary action concerning a “special comment” report Moody's published in 2011, the SFC said in a statement.

The case has been watched closely by the financial industry and corporate governance activists as it could redefine the limits on what can be written in reports on public companies and potentially curtail the activities of Hong Kong research firms.

Credit rating agencies have been directly regulated by the SFC since June 2011.

In July 2011 Moody's published a report that raised concerns about corporate governance at 49 Chinese companies listed in Hong Kong.

Following an inquiry into the report, the SFC fined and reprimanded Moody's in November 2014, but Moody's appealed against the action to the Hong Kong Securities and Futures Appeals Tribunal, which did not uphold all aspects of the SFC's claims against Moody's, and slashed the fine.

Moody's later appealed to the Hong Kong Court of Appeal and then the Hong Kong Court of Final Appeal.

The SFC's statement today said that the Court of Final Appeal would issue its reasons later.

“Moody's is disappointed that the Court of Final Appeal has dismissed its appeal regarding the scope of the SFC's jurisdiction but we recognise its importance for market clarity,” Moody's said in a statement. – Reuters


Brexit progress fears drive drop in sterling against euro

LONDON, Sept 3 — The British pound was set today for its biggest daily drop against the euro in more than three months as concerns grew about the progress of Brexit negotiations. Sentiment was also further sapped by UK manufacturing data that…


SME bank appoints Aria Putera Ismail as CEO

KUALA LUMPUR, Sept 3 — Aria Putera Ismail has been appointed Chief Executive Officer of Small Medium Enterprise Development Bank Malaysia Bhd (SME Bank) effective today. Aria, who was Maybank Shariah Indonesia (MSI) President Director and Chief…