Wednesday, November 28th, 2018
KUALA LUMPUR, Nov 28 — Seeking an edge over other property developers in the country, Mah Sing Group Bhd has joined forces with e-commerce platform Lazada Malaysia to offer its products online. In a joint statement, the partners said the…
NEW YORK, Nov 28 — Wall Street stocks rose early today ahead of a speech by Federal Reserve Chair Jerome Powell that will be scrutinized for signals about future interest rate hikes. About 15 minutes into trading, the Dow Jones Industrial Average…
SINGAPORE: Murphy Oil Corporation is in talks to sell its Malaysian oil and gas assets after an unsolicited bid that could fetch between US$2 billion to US$3 billion (RM8.4 billion to RM12.6 billion), people familiar with the matter said, in the latest energy merger and acquisition deal in the Southeast Asian nation.
The independent US oil and gas exploration and production company has tapped banks for the potential sale of its majority interests in eight separate offshore production sharing contracts in Malaysia, said the people, who declined to be identified because the matter is confidential.
“Murphy wasn’t considering a sale but was approached by a party that put forward a very compelling bid. They are in negotiations,” said one of the people.
Murphy, which has been in Malaysia since 1999, could agree on a deal in a couple of weeks, the person said. Others familiar with the matter suggested Spanish oil major Repsol, whose presence in Malaysia is focused on its upstream business, or other global majors could be potential buyers for Murphy’s assets.
The possible transaction comes as M&A activity is heating up in Malaysia’s oil and gas sector, where international companies pursuing expansion plans are spotting opportunities.
Repsol and Murphy declined to comment on any potential transaction or talks. There was no response to a query sent by Reuters to Malaysian state-owned Petroliam Nasional Bhd (Petronas), which partners Murphy in Malaysia.
“This is a good, balanced portfolio and offers a smart way for someone looking to grow quickly in the region. Otherwise, it’ll take a decade to start from scratch,” said Alex Siow, upstream oil and gas analyst at energy research firm Wood Mackenzie.
“The buyer will be buying into an operatorship position with Murphy’s stake, therefore having the know-how and will to be an operator is important,” he said.
Murphy produced nearly 46,700 barrels of oil equivalent a day in the quarter ended Sept 30 in Malaysia, the company said in response to a query from Reuters.
PETALING JAYA: The legal proceedings between Genting Malaysia Bhd and Twenty-First Century Fox Inc and The Walt Disney Co are likely to affect visitor arrivals at Genting Highlands, according to Public Investment Bank Research (PublicInvest).
The research house noted that the legal tussle will take time to conclude and in the meantime, the opening of the theme park is likely to be further delayed.
In light of this, it has slashed visitor arrival growth rate forecast from 8-9% to 3% (based on 10-year historical average) for FY19-20F, which in turn also resulted in a cut in earnings forecasts by 9-16%.
“We have also ascribed a lower PE multiple for the Malaysian gaming operations in our SOTP valuation (from 14x to 9x), given the uncertainties surrounding its GITP (Genting Integrated Tourism Plan) project,” the research house said in a note.
The project could still remain in a limbo without a key attraction even in the event of Genting Malaysia winning the legal proceeding and receiving the US$1 billion (RM4.2 billion) compensation.
PublicInvest is of the view that seeking an alternative intellectual property licensing would be a challenge.
“We would like to highlight that there is also a potential impairment risk on GENM’s (Genting Malaysia) investment in promissory notes for the financing of the Mashpee Wampanoag Tribe’s development of an integrated resort in the US. Its total investment (including accrued interest) in the promissory notes as at June 30 amounted to US$426.3 million,” it added.
The US Department of Interior is reviewing the Tribe’s rights to the land which is subject to a legislation being introduced and passed in the US Congress.
Genting Malaysia said on Tuesday that it is suing Twenty-First Century Fox and The Walt Disney for more than US$1 billion for terminating their contract to develop a Fox-branded theme park at Resorts World Genting in Malaysia.
The Fox theme park is a key selling point of the Malaysian casino resort group’s multi-billion ringgit Genting Integrated Tourism Plan.
The Walt Disney Co is in the process of acquiring Twenty-First Century Fox.
Walt Disney and Twenty-First Century Fox had reportedly rejected claims in the lawsuit accusing them of abandoning a licensing contract tied to the planned construction of a Fox-branded theme park.
Disney and Fox said Genting Malaysia Bhd’s respective claims against them were “without merit.”
PETALING JAYA: UEM Sunrise Bhd’s net profit for the third quarter ended Sept 30, plunged 85.13% to RM21.17 million from RM142.9 million in the same quarter last year, due to lower revenue.
Revenue for the quarter under review declined by 50.83% to RM430.1 million from RM846.1 million registered in the same quarter in the preceding year.
“We are finally reaping the benefits of our maiden venture in Australia with the completion of Aurora Melbourne Central’s first separable portion valued at A$86.8 million (RM262.8 million). Totalling 21 floors starting from level 10, we have completed 127 residences and 10 office suites. On Sept 10, we delivered and received settlement for 120 residences and four office suites; a strong settlement rate of 92% against the total number of units completed, translating into an amount of RM195.6 million as seen in our latest results,” the group’s managing director Anwar Syahrin Abdul Ajib said in a statement.
“We hope to complete another 70 units valued at A$28.4 million before year-end. The remaining separable portions will be delivered in 2019.
Conservatory with total GDV of A$319 million, the first separable portion is expected to commence settlement in December while full settlement is anticipated to complete by 2019”, he added.
Anwar added that the group is on track towards hitting its sales target of RM1.2 billion considering as it has already achieved RM900.5 million in sales as at end of September.
“We are also pleased to point out that 30% came from inventories much of which is contributed by the company’s inventory monetisation efforts the latest being the 50 years of community building campaign, aptly called “C50”, which to date has generated sales plus bookings totalling RM262.3 million, while 23% were from new project launches – Kondominium Kiara Kasih and Serimbun. The remaining 47% was from our other ongoing projects” he said.
UEM Sunrise’s unbilled sales remain healthy at RM4.7 billion.
Asset divestment still remains as one of the group’s key strategies, after having recognised sales of three separate land parcels in Iskandar Puteri namely to Country View Bhd, RA Suria Sdn Bhd and Landasan Kejora Sdn Bhd.
Several parcels of non-strategic assets have also been earmarked for divestment amounting to RM349 million.
For the cumulative period of nine months, the group reported a 66.33% increase in net profit of RM260.25 million against RM156.5 million last year.
Revenue for the period under review, showed a decrease of 17.08% to RM1.3 billion from RM1.6 billion as most projects are at early stages of their development compared to the same period last year.
PETALING JAYA: Hong Leong Bank Bhd’s net profit for the first quarter ended Sept 30 rose 10.63% to RM706.92 million from RM638.97 million a year ago, driven by growth in non-interest income, prudent cost control and lower impairment allowances.
During the quarter, non-interest income surged 35.4% year-on-year to RM397 million to a higher non-interest income ratio of 31.8%, as a result of improved performance in treasury market activities and gain on divestment of joint venture.
Revenue for the quarter rose 5.97% to RM1.25 billion from RM1.18 billion a year ago driven mainly by robust non-interest income contribution and expansion in loan book.
Net interest income was lower at RM852 million due to rising funding cost from intensifying deposits competition over the past one year.
Consequently, net interest margin (NIM) for the quarter stood at 2%, 5bps lower than the precedent quarter.
Cost-to-income ratio improved during the quarter to 42%, while operating profit grew 7.8% year-on-year to RM724 million from RM671 million a year ago.
Gross loans, advances and financing grew 4% year-on-year to RM129.8 billion led by growth in mortgages and business segments, and overseas operations.
Overseas operations saw loan expansion of 3.8% year-on-year and 4.7% quarter-on-quarter, led by Cambodia and Vietnam.
Loans-to-deposits ratio stood at 81.7% while liquidity coverage ratio stood at 117%. Customer deposits increased 4% year-on-year to RM158.8 billion mainly from fixed deposits while CASA ratio stood at 25%.
Group managing director and CEO Domenic Fuda said business momentum has gained pace with gross loans and financing expanding 4% year-on-year despite persistent challenges in the operating environment.
“We maintained a very solid asset quality position with GIL ratio of 0.81%, whilst loan impairment coverage (LIC) ratio at 128% is one of the strongest in the industry post adoption of MFRS9,” he said in a statement.
The bank’s capital position remains strong even after the adoption of MFRS9, with CET 1, Tier 1 and total capital ratios at 12.4%, 13.1% and 16.1% respectively as at end-September.
Fuda said the Malaysian economy is expected to maintain a steady growth trajectory as domestic economic activities remain supportive of growth despite looming external risks arising from shift in monetary policies and ongoing trade and geopolitical tensions.
“While there could be short-term trade-offs between growth and fiscal restoration, increased governance and subsequent return of market confidence are expected to augur well with the longer term growth prospects of the Malaysian economy,” he said.
Fuda said the bank will continue to grow its domestic franchise and regional businesses by leveraging on its branch footprint and digital capabilities.
PETALING JAYA: Tenaga Nasional Bhd (TNB) may see its earnings for the financial year ending Dec 31 (FY18) affected by higher fuel cost, said MIDF Research.
“The higher fuel cost, although technically is temporary until TNB gets adjustments in 1H19 ICPT (Imbalance Cost Pass Through), will impact earnings for FY18 given the delay in recovery,” it said in its report.
TNB reported core earnings of RM1.2 billion for the third quarter ended Sept 30, excluding RM510 million one-offs, bringing its core earnings for the nine-months period to RM5 billion.
During the quarter, the coal cost recognised by TNB rose significantly by 13% quarter-on-quarter. The impact of higher coal price was further compounded by weak ringgit trends while piped gas price was higher in line with the gradual subsidy rollback.
“Additionally, fuel cost was impacted by higher gas in the generation mix which increased to 42% from 39% last quarter. This is due to outages at Kapar Energy and Tanjung Bin coal plants and is temporary. Coal mix is expected to normalise in 4Q18,” said MIDF Research.
It expects fuel cost in 4Q18 to ease slightly given a recovery in coal mix and gradually easing coal price in the spot markets.
The research house noted that TNB’s capital expenditure looks to have peaked with minimal new generation projects in the pipeline and most of the existing projects having progressed well as of 2Q18.
“Jimah East 95% completed, Sepang Solar completed and Southern Power Generation 59% completed. This suggests room for further growth in dividend payout,” it said.
It reaffirmed its “buy” call at unchanged target price of RM16.80 with key catalysts being decent dividend yields of 4.3% while valuations are cheap, peaking capex suggesting room for dividend upside and possible monetisation of backbone fibre asset via partners.
Meanwhile, CGS-CIMB has cut its FY18-20F EPS forecasts by 0.1-7% to factor in higher-than-expected associate losses and a higher effective tax rate.
“We expect the tax rate to continue to trend higher in FY18F due to a reduction in reinvestment allowance. Our target price is revised down to RM14.60 after the earnings adjustment, still based on a 10% discount to sector average FY19F P/E of 14 times to factor in risks from sector reforms,” it said.
CGS-CIMB maintained its “hold” rating on TNB despite the stock being one of the cheapest big-cap stocks in the market.
This is due to earnings risks, as the stable regulated earnings might not be able to offset the earnings downside from the expected step-up in tax rate due to a reduction in reinvestment allowance. It also noted the potential changes in regulations and policies for the utilities sector.
“Although dividend yield is decent at about 4%, we view the weaker earnings and unfavourable macro environment as not conducive to a stock re-rating,” it added.
TNB told analysts during a conference call that the 3Q18 effective tax rate was exceptionally high at 43% compared with 17% in 2Q18, due to lower reinvestment allowance claim. CGS-CIMB expects TNB’s effective tax rate in FY18-19F to remain close to 9M18’s tax rate level of 20%.
KUALA LUMPUR: The government will announce two key frameworks in the first quarter of 2019 regarding cryptocurrency and property crowdfunding regulations to be meted out by the Securities Commission Malaysia (SC).
Finance Minister Lim Guan Eng said the Ministry of Finance (MoF) will be the coordinating body for the SC and Bank Negara Malaysia for the cryptocurrency framework.
“The regulations for digital assets, or cryptocurrency exchanges, and initial coin offerings will come into force by the first quarter of 2019 as part of the SC’s effort to facilitate alternative fundraising avenues and new investment asset classes.
“While some parties might still be sceptical of this space, there can be no doubt that we need appropriate regulations to be put into place and enforced to safeguard the interest of investors,” he told reporters after delivering a keynote address at the Synergistic Collaborations by SC Fintech Conference 2018 today.
Lim said any interested parties, including the proposed Harapan Coin cryptocurrency, must work within the framework jointly set up by Bank Negara and the SC.
“The Finance Ministry will lead the committee, comprising Bank Negara, SC, and MoF. So, for those who are interested, please liaise with this coordinating body headed by MoF and ensure that you are in full compliance.
“While we want to encourage, we also want compliance with the law to ensure that investors know what they are getting into,” he added.
Lim said the property crowdfunding platform framework will act as an alternative source of financing for first-time home buyers, and will be the first of its kind in the world.
“The platform is a framework and another choice given by private investment companies to borrowers apart from traditional (funding) sources such as banks and financial institutions. The implementation of this new framework is still being discussed by the SC,” he said.
SC chairman Datuk Syed Zaid Albar said the regulation is in the midst of amending the guidelines relating to these frameworks to ensure they will be able to accommodate the new digital requirements.
“For property crowfunding, we have completed our first draft and we will be engaging with the industry to get everybody’s view (on the draft). We will not be able to release anything now and we will move forward from there (after the consultation),” he added.
PETALING JAYA: T7 Global Bhd’s net profit for the third quarter ended Sept 30 plunged 75.23% to RM737,000 from RM2.98 million a year ago due to higher operating expenses and taxes paid during the three months.
In a filing with Bursa Malaysia, the group reported higher operating expenses of RM5.40 million compared with RM627,000 a year ago. It also incurred income tax expenses of RM935,000 during the quarter.
Revenue for the quarter rose 38.55% to RM52.74 million from RM38.07 million a year ago, driven by contributions from its engineering packages unit and marine sector.
During the quarter, the engineering packages unit registered a revenue surge of 347.71% to RM79.20 million from RM17.69 million a year ago, mainly driven by engineered packages and offshore equipment packages. The products and services division’s revenue expanded marginally by 2.74% to about RM86.37 million from RM84.07 million a year ago.
For the nine months ended Sept 30, net profit more than doubled to RM4.29 million from RM1.72 million a year ago while revenue rose 62.71% to RM165.57 million from RM101.76 million a year ago due to contributions from several long-term contracts from its engineered packages unit and marine sector.
Chairman Datuk Seri Dr Nik Norzrul Thani Nik Hassan Thani said the group sees improvement in oil prices and Petronas’ performance, and expects growth in capital expenditure by Petronas for the upcoming year, despite challenges in the oil and gas industry.
“T7 Global will continue to focus on projects in the O&G sector and look into new ventures to grow the business.
“The recent announcement made in Budget 2019 that aerospace industry has been identified as one of the sub-sectors in focus in the second half of the 11th Malaysia Plan 2016-2020 bodes well with the group’s diversification into the aerospace business,” he said.
Nik Norzrul said the group will look into leveraging the new business opportunity, and will build, operate and set up a metal treatment plant in Malaysia to pursue high value manufacturing businesses in metal treatment.
“Our new metal treatment plant, scheduled to start operations by mid-2019, is expected to contribute to the group’s revenue,” he added.