Thursday, November 8th, 2018

 

Wall Street dips as weak earnings dampen surge from midterm elections

NEW YORK, Nov 8 — US stocks edged lower today, as a clutch of weak earnings reports punctured a rally from the previous session, which was spurred by the outcome for midterm elections. Wynn Resorts Ltd, Perrigo Co and D.R. Horton Inc were the…


Italy slams Brussels deficit warning

BRUSSELS, Nov 8 — Italy today flatly dismissed the EU’s more pessimistic outlook for the Italian economy as the IMF warned that Rome’s budget battle with Brussels could ensnare other European countries. The populist government in Rome is under…


Wall St set to open lower after election surge; Fed meet in focus

NEW YORK, Nov 8 — US stock indexes were set to dip today, following a rally in the previous session that was spurred by relief after the midterm elections, with investor focus shifting to the Federal Reserve’s interest rate decision. The S&P…


Bombardier to cut 5,000 jobs in restructuring

MONTREAL, Nov 8 — Canadian aerospace and transportation manufacturer Bombardier today announced 5,000 global job cuts over the next year to 18 months in a bid to “streamline” the struggling firm. The Montreal-based group also announced the…


Moody’s downgrades Petronas outlook to ‘negative’ from ‘stable’

PETALING JAYA: Moody's Investors Service has downgraded Petroliam Nasional Bhd's (Petronas) ratings outlook to “negative” from “stable” due to higher dividend payout to the government.

“The negative outlook on Petronas' ratings reflects our view that the financial profile of Petronas may deteriorate if the government continues to ask the company to keep dividend payments high, especially should oil prices decline,” Moody's senior vice-president Vikas Halan said in a statement today.

“Such a situation would no longer support a ratings level for the company that is currently two notches above that of the sovereign.

In such a scenario, Petronas' ratings could be constrained to no more than one notch above that of the sovereign,” he added.

Nonetheless, Moody's has affirmed the “A1” domestic issuer and foreign currency senior unsecured ratings of Petronas.

Petronas will pay dividends of RM26 billion in 2018 and RM54 billion (inclusive of a one-off special dividend of RM30 billion) in 2019 to help the goverment fully settle the outstanding tax refunds estimated at RM37 billion.

Moody's said although Petronas can support the dividend payments announced in Budget 2019 and still maintain a net cash position, a further increase in regular dividend payments cannot be ruled out especially if there is an increase in government funding needs.

“High shareholder returns will reduce the company's ability to absorb the volatility in crude oil prices and constrain its financial flexibility.”

Despite the high dividend payout, the rating agency expects Petronas will continue to invest in the growth of its production and reserves.

“Further, changes to the Malaysian government's policies for the oil & gas sector could affect Petronas' position as the sole owner of the  country's petroleum resources, and increase the royalties paid on its upstream oil & gas production.

“These changes could put pressure on the company's ratings, especially if Petronas is required to continue paying high dividends,” said Halan, who is also Moody's lead analyst for Petronas.

Petronas' gross financial leverage — as measured by total debt/ebitda (earnings before interest, taxes, depreciation and amortisation) — improved to 0.7 times for the 12 months ended June 30, 2018 from about 1.0 times for 2016. Moody's expects the company to maintain its gross financial leverage below 0.8-1.0 times over the next two to three years.

Based on Moody's adjusted numbers, the company's net cash position — which rose to RM97 billion as at June 30, 2018 compared with RM42.8 billion on Dec 31, 2016 — will likely stay at RM75 billion to RM80 billion over the next two to three years, based on Moody's current oil price assumption of US$50-$70 a barrel through 2019.


EU warns of eurozone slowdown, Italy deficit jump

BRUSSELS, Nov 8 — The EU today day said growth in the eurozone would slow in 2019 and beyond, citing global uncertainty and heightened trade tensions. The European Commission also warned that Italy’s deficit would balloon in 2019, due to a…


Country Heights shareholders approve cryptocurrency plan

SERI KEMBANGAN: Country Heights Holdings Bhd's (CHHB) shareholders have approved the company's plan for an initial coin offering (ICO) to issue its own cryptocurrency to be known as “Horse Currency” despite market concerns over its legitimacy.

Executive chairman and founder Tan Sri Lee Kim Yew (pix) said it will immediately set up a task force to oversee the acquisition and investment of the blockchain technology and the setting up of its infrastructure throughout all of CHHB's portfolio.

“We are going to immediately appoint technology partner and legal adviser. At the same time, we are setting up a task force. This task force is to ensure that the company will get the latest blockchain technology and make sure it is not only for cryptocurrency issue but at the same time, it can service all the businesses of the company such as car city, resort and hospitality, healthcare and property,” he told reporters after its EGM today.

Lee said the 20-member task force will continue to engage with regulators such as Bursa Malaysia, the Securities Commission (SC), Bank Negara Malaysia (BNM) as well as the Malaysia Blockchain Association.

This will enable CHHB to be the first public listed company to implement its cryptocurrency after SC issues its guidelines for cryptocurrency and digital assets in the first quarter of 2019.

On engagement with SC, he said the group has been in talks with the regulator but was not asked by SC to make any submissions.

Lee said the task force will also be responsible for the risk management of the currency and upon successful issuance, it will communicate the currency's potential usage and benefit to the public and ensure its public subscription.

In addition, the task force will look at setting up a cryptocurrency wallet. Lee said it will either collaborate with e-wallet players or if necessary, set up its own e-wallet service in the future.

“We are also trying to engage investment bankers who are keen on the cryptocurrency … besides the technical partner and legal advisor, we think it may also be necessary to engage an investment banker,” he said.

CHHB is setting up a Blockchain Innovation Lab at its headquarters.

The group plans to issue one billion units of Horse Currency backed by RM2 billion worth of assets held by the holding company with an initial 300 million open to the public for circulation. Lee said it hopes to rope in an investment banker or foreign investors to underwrite the initial issuance.

Although the RM2 billion assets are not reflected in its balance sheet, Lee gave an assurance that the holding company has RM2 billion worth of assets after revaluation. The list of assets, comprising properties, will be revealed in the whitepaper along with other details of the ICO.

“We need to invest in talent, software, wallet. All these investment in the hardware, software, implementation of the technology itself, right now at the first stage we are putting in RM5 million budget to take us to the next stage,” said Lee.

“Even after we do this to implement blockchain technology, we still need to get shareholders' second round of approval. We are doing this the patient and prudent way to eliminate risk,” he added.

Lee said using blockchain technology and cryptocurrency to raise funds will be an inevitable trend, which will open up a new horizon for capital markets and make the Malaysian capital market more interesting.


Provisional anti-dumping duties on galvanised iron from China, Vietnam

PETALING JAYA: The government is imposing provisional anti-dumping duties ranging from -3.33% to 16.13% on imports of galvanised iron from China and Vietnam.

They will be effective for not more than 120 days from Nov 8, 2018, according to the International Trade and Industry Ministry.

The move follows the completion of the preliminary determination with regard to the anti-dumping investigation concerning imports of flat rolled products of iron alloy or non-alloy steel, plated or coated with zinc, using hot dip process originating in or imported from China and Vietnam.

The investigation was initiated in accordance with the Countervailing and Anti-Dumping Duties Act 1993 and Countervailing and Anti-Dumping Duties Regulations 1994 on July 25, 2018 based on a petition filed by FIW Steel Sdn Bhd on behalf of the domestic industry producing galvanised iron.

The petitioner alleged that imports of galvanised iron from China and Vietnam are being dumped into Malaysia at a price much lower than their domestic selling price, causing material injury to the domestic industry in Malaysia.


F&N Q4 profit jumps fourfold

PETALING JAYA: Fraser & Neave Holdings Bhd’s (F&N) net profit for the fourth quarter ended Sept 30 quadrupled to RM81.2 million from RM19.6 million a year ago attributed to higher contribution from both F&B Malaysia and F&B Thailand.

Its revenue for the quarter also increased by 2.1% to RM996.6 million from RM976.3 million in the previous corresponding quarter.

F&N’s full-year net profit grew 19.1% to RM385.1 million against RM323.4 million a year earlier, while revenue grew marginally by 0.2% to RM4.11 billion from RM4.1 billion previously.

On prospects, the group said it expects the overall domestic market for both Malaysia and Thailand to remain challenging with continuing competitive price pressures and intensifying competition as well as volatility in foreign currency movements and commodity prices.

It has partially hedged its core commodity requirements for the next financial year along with the corresponding foreign currency exposure wherever possible.

In Malaysia, F&N said its management will assess and closely monitor the impact of the imposition of excise duty at 40 sen per litre on ready-to-drink beverages that contain sugar exceeding five grams per 100 millilitres, starting April 1, 2019 as announced in Budget 2019, including taking appropriate actions as necessary.

Meanwhile, it said F&B Thailand is expected to commence paying corporate taxes next year after the utilisation of the carried forward losses from non-promoted businesses.

The group’s share price dropped 18 sen or 0.5% to RM34.78 today with some 164,200 shares changing hands.


KPMG to phase out non-audit work for British bookkeeping clients

LONDON, Nov 8 — KPMG will phase out advisory work for its British accounting clients, marking a first for the “Big Four” firms trying to head off a possible break-up. The Competition and Markets Authority (CMA) is under pressure to consider…