Thursday, September 27th, 2018

 

Saudi Arabia in short-term oil fix, fears extra US supply next year

DUBAI, Sept 27 — Saudi Arabia will quietly add extra oil to the market over the next couple of months to offset a drop in Iranian production but is worried it might need to limit output next year to balance global supply and demand as the United…


Germany’s embattled Thyssenkrupp plans to split company in two

FRANKFURT AM MAIN, Sept 27 — The board of German industrial conglomerate Thyssenkrupp hopes to split the historic group into two listed companies, executives said today, sending its shares soaring. “The executive board will suggest to the…


Zeti wants to be ‘equally ambitious’ at PNB

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) group chairman Tan Sri Dr Zeti Akhtar Aziz, who assumed her role on July 1, is looking at “organisational transformation” to lift the asset manager's capability and improve its performance.

In her first press conference since her appointment, Zeti said PNB is a very professional organisation with a very focused mandate but there is great potential to lift it to a higher level of organisational capability to perform better.

“At the central bank, during my term in office as governor, we did organisational transformation three times. We were very ambitious to be at the frontier of central banking and, so, I would like to be equally ambitious here to achieve this higher level of performance through greater organisational capability,” she told reporters today after launching two new funds under Amanah Saham Nasional Bhd that will be available to all types of investors.

Zeti said this will involve leveraging on greater use of technology within the organisation as well as on the business itself including its operations and distribution. Other areas that it will work on are diversification, risk management and liquidity management.

“PNB has been quite conservative holding a very high proportion of cash. It is good to be conservative, but it's also good, now having the instruments and mechanisms, to better manage the liquidity in the organisation that can contribute to generating greater value to the investments,” she added.

On its Strive 15 strategic plan for 2017-2022, Zeti said it is time to do a review as the domestic and international environment is rapidly changing, which presents new challenges, and decide on the changes that include increasing capability in risk management and building buffers in order to be resilient.

“These are the factors that we will take into account when we undertake this review. My own style is, I'm very open to listening to the high powered people we have, the highly experienced with institutional memory and the people outside in the community we live in and in the international community.

“Listen to everyone and have significant dialogues and engagement …after that, consolidate all these and make decisions. That's the approach that we will take,” she said.

On diversification, Zeti said it is important across asset classes and internationally, but it will be done gradually.

She said PNB will build up its internal expertise before venturing forward, and noted that there are great opportunities in the emerging financial markets.

Meanwhile, PNB will also be going through a period of consolidation after the rationalisation exercise carried out under Zeti's predecessor, Tan Sri Abdul Wahid Omar.

“Some of the consolidation and rationalisation or demergers are to give greater focus to the entities involved. They have greater clarity on what they are to deliver. But it will take time to deliver results. We want to manage it well so that it can unlock the value that it has and generate higher performance. Of course we don't exclude any market-driven merger or demerger exercise but not precipitated by PNB,” she said.

She said any merger or demerger carried out by PNB's strategic and core companies would be driven by the market process.

On government-linked investment companies reducing their shareholdings in public-listed companies, Zeti said PNB supports the idea, which is intended to give greater liquidity and facilitate trading but noted that action cannot be taken abruptly in order to avoid disrupting the financial market.


PNB to help laggard stocks of core companies soar

KUALA LUMPUR: Permodalan Nasional Bhd (PNB), which saw net income rise 2.6% to RM10.3 billion for the first eight months of the year, will focus on working with its core companies whose stock performance has been lagging, its president and group CEO, Datuk Abdul Rahman Ahmad, said today.

On Tuesday PNB agreed to take up its rights issue entitlement as well as mop up excess shares and warrants in Sapura Energy Bhd's RM4 billion fund raising exercise, which may result in PNB Group holding up to 40% of the company. PNB Group will also subscribe in full to the RCPS-i of RM1 billion.

“If you look at the KLCI, some of these stocks that we have, performance to date has been lagging. For instance, TM (Telekom Malaysia Bhd) has declined nearly 45% year to date,” he told reporters at a press conference.

He said some of the other companies such as telcos and construction companies have also been affected and while it understands the external challenges that these companies are facing, PNB's focus now will be to engage with them to transform their performance.

PNB defines core companies as companies in which it holds more than 10% stake or RM1 billion value such as TM and Sapura Energy Bhd while strategic companies are companies in which it has controlling stakes such as Malayan Banking Bhd and Sime Darby Bhd.

“Our focus last year was with our own strategic companies, so now we are moving towards our core companies and it started effectively with our support in the participation of Sapura Energy's transformation exercise, which we believe if it is executed well, will deliver very positive results in the future,” he added.

Meanwhile, the proposed stake acquisition in the Battersea Power Station project may be further delayed with the possibility of another extension.

“We are still in the process of finalising the transaction. At the moment we are nearly completing our due diligence exercise so we hope this is something that we can agree to some form of finalisation. But it is still subject to a final review of terms and negotiation of terms. We will probably have better clarity in the fourth quarter,” said Abdul Rahman.

Recall that PNB, together with the Employees Provident Fund, had proposed to acquire the commercial assets in Battersea Phase 2 Holding Co Ltd worth over RM8 billion. The acquisition was proposed early this year.

For the first eight months of 2018, PNB's net income rose 2.6% to RM10.3 billion from RM10 billion a year ago while total assets under management grew 7.3% to RM288.1 billion from RM268.6 billion in the same period last year.

As at August 2018, PNB had 13.6 million accounts with 231.5 billion units in circulation. Cumulative income distribution stood at RM176.4 billion as at September, including RM4.3 billion distributed year to date.

The asset manager yesterday launched two new forward pricing variable price funds, namely, Amanah Saham Nasional (ASN) Equity 5 and ASN Sara 2, as part of its efforts to expand its variable unit trust products.


Harrisons buys Famous Amos Singapore

PETALING JAYA: Harrisons Holdings (Malaysia) Bhd’s indirect subsidiary Famous Food Co Pte Ltd (FFC) is buying the entire stake in Famous Amos Chocolate Chip Cookie Singapore Pte Ltd (Amos) for S$5.7 million (RM17.1 million).

Amos is principally engaged in the business of retailing cookies under the Famous Amos brand name in Singapore, while FFC is an investment holdings company.

The group told the stock exchange today that FFC has entered into a sale and purchase agreement with Amos’ directors for the proposed transaction.

The group noted that Harrisons Peninsular Sdn Bhd (HPSB), a wholly owned subsidiary of the group and the immediate holding company of FFC will contribute its 68% share of the purchase price amounts to S$3.9 million, which will be funded through bank borrowings.

Harrisons said this acquisition will further enable the group to capitalise on its overseas expansion platform to further expand its distribution and wholesaling business.

“Harrisons plans to expand to other regional territories with this established brand together with the Komonoya brand,” it noted.

Harrisons recently acquired 100% of Watts Harrisons Sdn Bhd which retails and wholesale the uniform price products under the Komonoya brand in Malaysia, Singapore and Brunei.


Mohd Nageeb to take over as Felcra chairman on Oct 1

PETALING JAYA: Harrisons Holdings (Malaysia) Bhd’s indirect subsidiary Famous Food Co Pte Ltd (FFC) is buying the entire stake in Famous Amos Chocolate Chip Cookie Singapore Pte Ltd (Amos) for S$5.7 million (RM17.1 million).

Amos is principally engaged in the business of retailing cookies under the Famous Amos brand name in Singapore, while FFC is an investment holdings company.

The group told the stock exchange today that FFC has entered into a sale and purchase agreement with Amos’ directors for the proposed transaction.

The group noted that Harrisons Peninsular Sdn Bhd (HPSB), a wholly owned subsidiary of the group and the immediate holding company of FFC will contribute its 68% share of the purchase price amounts to S$3.9 million, which will be funded through bank borrowings.

Harrisons said this acquisition will further enable the group to capitalise on its overseas expansion platform to further expand its distribution and wholesaling business.

“Harrisons plans to expand to other regional territories with this established brand together with the Komonoya brand,” it noted.

Harrisons recently acquired 100% of Watts Harrisons Sdn Bhd which retails and wholesale the uniform price products under the Komonoya brand in Malaysia, Singapore and Brunei.


Apple, Amazon set to boost Wall St higher at the open

NEW YORK, Sept 27 — Wall Street pointed to a slightly higher opening today, helped by a bump in high-flying stocks such as Apple and Amazon, and the Federal Reserve’s confidence in the strength of the economy as it raised rates for the third…


Takeover offer for M1: Will Axiata answer the call?

PETALING JAYA: The takeover bid for Singapore’s M1 Ltd could see more twists as Axiata Group Bhd may reject the offer and launch one of its own to gain a bigger stake in its associate.

Today, Keppel Corp Ltd and Singapore Press Holdings (SPH) Ltd told the Singapore stock exchange that they launched a preconditional offer for M1 at S$2.06 (RM6.24) per share, which represents a 26% premium against its last traded price of S$1.63.

The offer price values Axiata’s stake in M1 at about RM1.7 billion.

However, Reuters quoted sources as saying that Axiata views the offer as “opportunistic” and “inadequate” and instead is in talks with private equity firms and other companies to initiate a competing bid.

Considering the current highly competitive cellular market that requires sustained capex rollouts, AmInvestment Bank Research opined that Axiata Group Bhd will probably accept the offer. Especially since the 28.7% stake in M1 is not considered a strategic asset for Axiata.

Keppel and SPH own 19.3% and 13.5% stake in M1, respectively.

Keppel said with majority control, the group and SPH, who are long-term shareholders of M1, would be better able to support M1’s management to implement strategic and operational changes to strengthen its performance and position as a connectivity platform.

“To deal with the fast-changing landscape and increasing competition in the Singapore telecommunication sector, M1 will need to undertake extensive business transformation requiring long-term shareholder and management commitment.”

In a statement issued after the offer was made, Axiata seemed to emphasise on getting the accurate future value of M1 (inclusive of an acceptable control premium),consistent with market standards as well as reviewing all options available in relation to its shares in M1.

“Hence, the above shall be the primary bases for Axiata to review the offer together with other considerations, including but not limited to, comparable premium on precedent transactions within the Asean market, M1’s historical trading trend whereby the price has been depressed for more than a year vis-a-vis its true value potential, long-term growth potential, and future competitive outlook.”

Axiata’s share price closed 2 sen or 0.4% lower at RM4.73 today on 2.98 million shares done.

AmInvestment Bank Research is neutral on the development as the sale proceed of RM1.7 billion will improve Axiata’s gearing levels, with FY19 net debt-to-ebitda (earnings before interest, taxes, depreciation and amortisation) decreasing from 1.6 times to 1.4 times.

Given that M1’s FY19 consensus price-to-earnings ratio is 14 times, which is much lower than Axiata’s 33 times, the research house expects a slight FY19 earnings per share reduction of 2% for Axiata from the equity sale, as the loss in earnings contributions will be greater than interest savings.

It is maintaining a “buy” call on Axiata with an unchanged fair value of RM6.05.


Business optimism dips amid economic headwinds: RAM index

PETALING JAYA: Ratings Agency Malaysia (RAM) has released the results of its latest RAM Business Confidence Index readings for fourth quarter 2018- first quarter 2019, which indicate that firms remain optimistic going into 2019.

Although still in positive sentiment territory, the corporate index declined 1.1 points from the 3Q-4Q 2018 survey, it said in a statement.

RAM said the corporate index reached 55.7 while the small and medium enterprise (SME) index came in at 53.5, in which the latter showed improvement but still lagged behind its corporate counterpart.

“This signals the slight moderation in firms’ sentiment on their business performance and demand prospects in the next six months,” it added.

Released quarterly, the index is based on data from a survey of close to 3,500 SMEs and corporates across five main industry segments respectively.

Additionally, RAM said the latest survey results also show that firms with more exposure to the ongoing trade spat between the US and China are now less optimistic.

RAM noted that the export-oriented corporate index has been declining since 2017, in which the trend is consistent with the slower export growth observed to date, following the rebound last year.

“Given the forward-looking nature of the survey responses, we do not expect export growth to pick up in the near term, although growth should remain sturdy given the still-positive reading of 57.6.

“The external downside risk pressures have also weakened the sentiment of the manufacturing corporates and SMEs,” RAM said.

Apart from the external outlook, RAM said that manufacturers are also undergoing a transitional period on account of the reinstatement of the sales and services tax (SST).

“This affects their expectations on future demand and profitability; the corporate turnover and profitability sub-indices dipped a respective 9.9 points and 10.3 points to 50.8 and 49.5 while those for SMEs fell 1.7 points and 2.3 points to 52.0 and 51.6,” it added.

“This tax impact is not only confined to the manufacturing sector as the margins of the wholesale sector, which serves as a bridge between manufacturers and retailers, may also be compressed by the potential pass-through of additional SST expenses by manufacturers,” it added.

On a brighter note, RAM said that transport and storage firms’ sentiment on business performance remained strong, with the overall sentiment reading for transport and storage corporates rising 1.9 points to 62.1 – the only corporate sector to post an increase.

Its SME counterpart also improved 1.8 points to 55.1, as sentiment on turnover and profitability became positive.

RAM said the more upbeat outlook on this sector is mainly attributable to logistics, shipping and oil tanker services (particularly oil and gas support services), which are enjoying healthier business prospects amid strong oil prices.

Moving forward, it said short-term economic uncertainties remain, most notably from the repercussions of the ongoing US-China trade war on the manufacturing sector, and the ensuing second-round effect on the domestic sectors.

Therefore, it said more guidance on future economic policies that will shape the overall business environment will be crucial to business confidence among firms, and will help drive sustainable economic activities.


Pos Malaysia appoints Ahmad Suhaimi as new director

KUALA LUMPUR, Sept 27 — Pos Malaysia Bhd has appointed Ahmad Suhaimi Endut as its new Independent and Non-Executive Director, effective today. In a filing with Bursa Malaysia today, Pos Malaysia said Ahmad Suhaimi, who…