Monday, December 17th, 2018

 

US stocks sink further into correction as Fed move looms

NEW YORK, Dec 17 — Wall Street’s woes continued today, with the major indices sinking further into correction as the horizon grew gloomier for investors. Markets already were cautious in advance of this week’s Federal Reserve meeting,…


IHH’s offer to acquire control of India’s Fortis on hold after court ruling

PETALING JAYA: IHH Healthcare Bhd’s plan to seek a controlling stake in India’s Fortis Healthcare Ltd has hit another bump, after the Supreme Court of India put a halt to the acquisition of an additional 26% stake in Fortis for RM1.97 billion.

IHH, via Northern TK Venture Pte Ltd (NTK), had in November completed the purchase of 31.1% of Fortis for RM2.35 billion.

In a filing with Bursa Malaysia today, IHH said the Supreme Court of India passed an order directing status quo with regard to the sale of the controlling stake in Fortis Healthcare to Malaysian IHH to be maintained.

“In light of the order, NTK and the persons acting in concert (PACs) will not be able to proceed with the Fortis open offer for the time being until further order(s)/clarification(s)/direction(s) are issued by the Supreme Court of India and/or the Securities and Exchange Board of India,” it said.

IHH said it is evaluating the order and is seeking legal advice on the matter, together with Parkway Pantai Ltd (PPL) and NTK, and will subsequently decide on the future course of action.

The open offer is for the acquisition of an additional 26% stake in Fortis by NTK, which is scheduled to be launched from today until Jan 1, 2019.

It also clarified that IHH, PPL and NTK were not a party to the proceedings before the Supreme Court of India, and that the order does not impact the subscription which was completed on Nov 13.

The Supreme Court of India’s directive came after Daiichi Sankyo Co filed a contempt petition in its dispute against former promoters of Fortis Healthcare, namely, Malvinder Singh and his brother Shivinder Singh.

According to news reports last week, Japanese firm Daiichi sought the court order to stop IHH from acquiring Fortis as the brothers had not fulfilled their commitment to a payment in relation to Daiichi’s acquisition of Ranbaxy Laboratories.

Daiichi is seeking an arbitration award amounting to US$385 million (RM1.6 billion) from the brothers, who had earlier pledged their shares in Fortis to satisfy the award.

On Bursa Malaysia today, IHH closed 5 sen or 0.9% lower at RM5.35 on volume of 1.11 million shares.


Trump calls on Fed not to raise rates on eve of policy meeting

WASHINGTON, Dec 17 — US President Donald Trump today called on the Federal Reserve not to raise interest rates, one day before a meeting at which policymakers are widely expected to do so. The Twitter outburst renewed the president’s rock…


Headline inflation to ease to 0.3% in November: RAM Ratings

PETALING JAYA: Malaysia’s headline inflation is expected to ease to 0.3% in November from 0.6% in October due to the dissipating low-base effects on retail fuel prices, according to RAM Ratings.

This is attributable to the 4.5% year-on-year fall in the price of the RON 95 petrol in the month under review compared with the increase of 1.1% seen in the preceding month.

As for the full year, inflation rate is expected to average at 1.0% as against the 3.7% seen in 2017 on account of low food inflation and deflationary pressure from the reinstatement of fuel subsidies.

Meanwhile, going into 2019, headline inflation is projected to accelerate to 2.7%, mainly driven by additional pressure from the switch to targeted fuel subsidies, along with the expected continued spillover effects from the reintroduction of the Sales and Service Tax and low-base effects during the three-month zero-Goods and Services Tax period.

In saying this, RAM Ratings head of research, Kristina Fong said the 2019 inflation projection will still depend on the implementation of the targeted fuel-subsidy mechanism in the second quarter of 2019 for which key details such as the exact date and the disbursement mechanism of its implementation are still scant.

Fong added that another key risk to the forecast is the volatility of global crude oil prices, as the pace of inflation in 2019 will largely depend on how effective the OPEC-led supply cuts will impact global crude oil prices.

“Based on our estimates, every US$5 move in the average price of Brent crude will alter headline inflation by approximately 0.3 percentage points in 2019, barring any second-round effects on prices,” she said in a statement.

“We expect Bank Negara Malaysia to maintain the OPR(Overnight Policy Rate) at 3.25% in 2019, given the need to balance between capital outflow pressures and growth support. Although headline inflation is envisaged to accelerate next year, the pace of increase will still be rather nondescript as a trigger point, relative to the downside risks to growth from ongoing fiscal consolidation, volatile capital markets, US-China trade tensions and Brexit uncertainties,” she added


Air Selangor, Splash extend deadline for SPA

PETALING JAYA: Pengurusan Air Selangor Sdn Bhd (Air Selangor) and Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash) have mutually agreed to extend the cut off period for the fulfilment of the condition precedent to the share purchase agreement (SPA) for the Splash acquisition deal to Feb 28, 2019.

Gamuda Bhd and Kumpulan Perangsang Selangor Bhd said in separate filings with the stock exchange that Air Selangor and Splash have decided to extend to the aforesaid date from the initial deadline of Dec 27.

To recap, Air Selangor inked SPAs with the duo in Sept, to acquire Gamuda’s 40% stake and Kumpulan Perangsang Selangor’s 30% equity interest in Splash, in a bid to consolidate the Selangor water industry.

The remaining 30% stake is held by The Sweet Water Alliance Sdn Bhd, which is controlled by businessman Tan Sri Wan Azmi Wan Hamzah.

The total purchase price of RM2.55 billion to be paid by Air Selangor for the 100% stake of Splash will be distributed via upfront sum of RM1.9 billion, followed by nine annual instalments for the remaining RM650 million.

Once completed, Gamuda and KPS stand to receive total gross proceeds of RM1.02 billion and RM765 million for their shareholdings in Splash.

Gamuda fell 2.63% to close at RM2.22 with 2.82 million shares done. Kumpulan Perangsang Selangor on the other hand declined 1.58% to close at RM1.25 with 222,600 shares done.


Takeover offer for Unisem not fair, not reasonable

PETALING JAYA: The takeover offer of RM3.30 per share for Unisem (M) Bhd by its joint offerors is not fair and not reasonable, and shareholders have been advised to reject the offer.

In its independent advice circular, independent adviser Public Investment Bank Bhd (PIVB) said that the offer price is not fair as it is below the range of the ascribed equity value of RM4.31 to RM5.38 per Unisem share.

It said that the offer price represents a discount of RM1.01 to RM2.08 or 23.43% to 38.66% to the ascribed equity value per Unisem share. This is despite the offer price representing a premium in the historical share price analysis.

Based on the historical share price analysis, the offer price represents a premium ranging from 11.11% to 40.43% over the last traded price of Unisem shares as at Sept 7 being the last full trading day prior to the date of the pre-conditional offer announcement (announcement LTD) and the five-day, one-month, three-month, six-month and 12-month volume weighted average market price of the Unisem shares up to the announcement LTD.

In its analysis of the reasonableness of the offer, PIVB noted that the offeror intends to maintain the listing status of Unisem thus the Unisem shares will remain traded on Bursa Securities.

“Holders will still be able to participate in the trading of the Unisem shares after the closing date,” it said.

It said that the holders may consider realising their investment in Unisem in the open market in the event that the market price of Unisem shares is higher than the offer price, as the joint offerors intend to maintain the listing status of Unisem.

To recap, China-based Tianshui Huatian Technology Co Ltd and Tianshui Huatian Electronics Group Co Ltd signed a collaboration agreement in September 2018 with the single largest shareholder of Unisem collectively, chairman John Chia and director Alexander Chia, as part of a plan for the Chinese parties to acquire up to 75.72% stake in Unisem for RM3.30 a share.

The deal values Unisem at almost RM2.4 billion. John, Alexander and companies affiliated to them collectively own a 24.28% stake in Unisem.

The companies are Jayvest Holdings Sdn Bhd and SCQ Industries Sdn Bhd. The RM3.30 per share offer would be satisfied in cash.


Scomi’s Mumbai monorail contract axed

PETALING JAYA: Scomi Group Bhd’s contract for a monorail system in the Mumbai metropolitan region has been terminated by the Mumbai Metropolitan Region Development Authority (MMRDA).

In a filing with Bursa Malaysia, Scomi said the MMRDA issued a notice of termination of contract via a letter dated Dec 14, 2018 to the consortium of Larsen & Toubro Ltd and Scomi Engineering Bhd.

“The company is in discussions with its consortium partner with a view to fully enforce the consortium’s rights under the contract in respect of the notice of termination, including taking all necessary legal proceedings by acting on the advice of its solicitors,” it said.

The notice of termination takes effect 15 clear days from the date thereof. Scomi said the financial impact of the termination for the financial year ending March 31, 2019 is dependent on the outcome of the legal proceedings.

The RM1.85 billion contract for the design, development, construction, operation and maintenance of the monorail system in Mumbai was awarded by MMRDA to the consortium on Nov 7, 2008.

Scomi’s share price closed unchanged at 4.5 sen today with 550,200 shares traded.


Air Selangor, Splash extends deadline for SPA

PETALING JAYA: Pengurusan Air Selangor Sdn Bhd (Air Selangor) and Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash) have mutually agreed to extend the cut off period for the fulfilment of the condition precedent to the share purchase agreement (SPA) for the Splash acquisition deal to Feb 28, 2019.

Gamuda Bhd and Kumpulan Perangsang Selangor Bhd said in separate filings with the stock exchange that Air Selangor and Splash have decided to extend to the aforesaid date from the initial deadline of Dec 27.

To recap, Air Selangor inked SPAs with the duo in Sept, to acquire Gamuda’s 40% stake and Kumpulan Perangsang Selangor’s 30% equity interest in Splash, in a bid to consolidate the Selangor water industry.

The remaining 30% stake is held by The Sweet Water Alliance Sdn Bhd, which is controlled by businessman Tan Sri Wan Azmi Wan Hamzah.

The total purchase price of RM2.55 billion to be paid by Air Selangor for the 100% stake of Splash will be distributed via upfront sum of RM1.9 billion, followed by nine annual instalments for the remaining RM650 million.

Once completed, Gamuda and KPS stand to receive total gross proceeds of RM1.02 billion and RM765 million for their shareholdings in Splash.

Gamuda fell 2.63% to close at RM2.22 with 2.82 million shares done. Kumpulan Perangsang Selangor on the other hand declined 1.58% to close at RM1.25 with 222,600 shares done.


India holds off raising import tariffs on some US goods until Jan 31

NEW DELHI, Dec 17 — India has held off until end-January 2019 raising tariffs on select goods from the United States, deferring for the fourth time retaliatory action against higher import tariffs imposed by the US on steel and aluminium, the…


Kayin increases offer price for Selangor Properties to RM6 a share

PETALING JAYA: Selangor Properties Bhd’s (SPB) largest shareholder, Kayin Holding Sdn Bhd which is vying to take the company private, has revised its offer price for SPB by 5.3% higher to RM6 from RM5.70 per share.

SPB said it has deliberated on the revised offer price and has resolved to table the proposed selective capital reduction and repayment exercise to its shareholders for consideration.

Kayin is the vehicle of the Wen family who holds a 68.25% stake in SPB.

The revised offer price represents a premium of 47.85% against its five-day volume weighted average price of RM4.05 up to Oct 24.

Consequential to the revised offer price, SPB’s issued share capital will be reduced by RM655.02 million.

Following the revised offer price, SPB’s share price rose 19 sen or 3.6% to close at RM5.52 with 849,400 shares done.

Kayin had said by going private, it will provide SPB with greater flexibility in managing and developing its businesses and undertake corporate exercises without lengthy shareholder and regulatory approvals.