Thursday, December 20th, 2018


Malaysia attracts RM139b investments in January to September

KUALA LUMPUR: Malaysia attracted a total of RM139.3 billion worth of investments in the manufacturing, services and primary sectors in the first nine months of 2018, up 18 per cent from RM118.1 billion approved in the same period last year.

In a statement today, Malaysian Investment Development Authority (Mida) said the total investments approved in January-September 2018 were from 3,243 projects, which are expected to generate 93,379 job opportunities for the country.

“Approved foreign direct investments (FDI) increased by 109.7% to RM64.1 billion in January-September 2018 from RM30.5 billion in the same period last year, mainly driven by the manufacturing sector which recorded a strong increase of 249.4% in the period.

“Approved FDI in the primary sector rose by 99.3% which indicated that investor confidence in Malaysia remains high despite the challenging global economic environment. Domestic investments led with RM75.2 billion, contributing 54% to the total approved investments in all three sectors,” it said.

Mida said Malaysia continued to be a competitive location for manufacturing projects with a total of 468 projects worth RM59.1 billion approved in January-September 2018, compared with RM34.6 billion involving 463 projects in the corresponding period in 2017, representing an increase of 70.5% in capital investments.

“Foreign investments approved in the manufacturing sector recorded a total of RM48.8 billion for January-September 2018, a rise of 249.4% from RM13.9 billion in the same period last year.

“China accounted for RM15.6 billion or 32 per cent of total foreign investments, followed by Indonesia (18.4%), the Netherlands (17%), the US (6.3%), Korea (4.9%) and Japan (4.3%),” it added.

For the services sector, Mida said approved investments amounted to RM69.9 billion compared with RM74.2 billion recorded in the corresponding period in 2017, consisting of 2,721 projects, which are expected to create 50,896 job opportunities.

“Domestic investments made up the largest portion, recording RM60.4 billion or 86.4% of the total approved investments for the services sector during this period. The balance of RM9.5 billion were from foreign sources.

“The services sub-sectors that showed increase in approved investments were healthcare, education, global establishments, real estate, and supporting services,” it added. – Bernama

Aeon Credit posts better earnings in third quarter

PETALING JAYA: Aeon Credit Service (M) Bhd’s net profit for the third quarter ended Nov 30, increased 23.5% to RM87.14 million from RM70.55 million a year ago, attributed to lower impairment loss on financing receivables.

Revenue for the period increased 11.6% to RM348.5 million from RM312.35 million.

For the nine-month period, the group reported a 22.62% rise in net profit to RM267.01 million from RM217.75 million. Revenue was up by 8.7% to RM1.01 billion from RM925.95 million.

Aeon Credit told Bursa Malaysia that its gross financing receivables as at Nov 30 was RM8.31 billion, representing an increase of 15.41% from RM7.2 billion a year ago. Meanwhile, net financing receivables after impairment was RM7.74 billion compared with RM7.03 billion a year ago.

Its non-performing loan ratio stood at 2.05% as at Nov 30, 2018 versus 2.48% as at Nov 30, 2017.

Total transaction and financing volume in the current quarter and nine months ended Nov 30 increased by 49.5% to RM1.5 billion and by 26.4% to RM3.9 billion respectively.

M&A transactions to dip next year

PETALING JAYA: Malaysia is expected to see a dip in merger and acquisition (M&A) transactions next year, with 292 deals amounting to US$12.2 billion (RM50.9 billion) compared with the 311 deals amounting to US$13.2 billion transacted this year.

According to the fourth edition of the Global Transactions Forecast, issued by Wong & Partners, the Malaysian member firm of Baker McKenzie, the number of deals concluded in 2018 underlines a robust market moving into 2019 and beyond.

The report quoted Oxford Economics as saying that M&A in Malaysia accelerated sharply in 2018, with two megadeals in excess of US$1.5 billion and a further nine significant deals of between US$200 million and US$600 million.

The solid growth of gross domestic product (GDP) at around 4-4.5%, modest increases in interest rates, and a range of policy measures that promote deal-making, such as the recent cuts to small and medium enterprise corporation tax and the Industry 4.0 framework was seen as positive deal drivers for M&A activities.

The report noted that after a year of political sea-change, Malaysia’s deal climate will see some positive spillover effect from 2018 to 2019, buoyed by the robust markets, solid GDP growth, and a range of policy measures that promote deal-making.

“These numbers reflect the cautiously optimistic attitude of the market based on the new coalition government’s policy of balancing the need to firmly address the country’s fiscal deficit while ensuring market friendly initiatives that support growth,” said Munir Abdul Aziz, a partner from the Corporate, Commercial and Securities practice of Wong & Partners.

“We expect activity in 2019 to take the form of divestments of certain strategic assets by the sovereign wealth fund, continued private equity investments and exits including those driven by foreign private equity sponsors, take private transactions that exploit attractive pricing in the aftermath of the emerging market turmoil in equity markets in late 2018 and the subdued ringgit and likely upside from realignment in the Asian supply chain arising from trade tensions between the US and China,” he added.

Munir noted that there could be greater deal-making activity driven by the new government’s intent to create a more competitive market environment for hitherto sheltered industry sectors like energy, media and telecoms. A certain degree of re-organisation of large conglomerates including potential spin-offs or demergers are also expected.

Aeon Credit service’s Q3 net profit increases to RM87m

KUALA LUMPUR, Dec 20 — Aeon Credit Service (M) Bhd’s net profit for the third quarter ended Nov 30, 2018, increased to RM87.13 million from RM70.55 million chalked up in the same period last year. Revenue rose to RM348.49 million from…

Berjaya Land Q2 net loss narrows to RM1.77m

KUALA LUMPUR, Dec 20 — Berjaya Land Bhd’s net loss for the second quarter (Q2) ended October 31, 2018 narrowed to RM1.77 million versus the RM99.92 million net loss in the same period a year earlier. Revenue for the quarter eased to RM1.51…

HSBC Insurance to dispose of 49pc of its takaful business

KUALA LUMPUR, Dec 20 — HSBC Insurance (Asia Pacific) Holdings Ltd, an indirect wholly-owned subsidiary of HSBC Holdings Plc (HSBC), will be disposing of 49 per cent of its shares in HSBC Amanah Takaful (Malaysia) Bhd to FWD Life Insurance Company…

AmBank Research cuts manufacturing to neutral

PETALING JAYA: AmInvestment Bank (AmBank Research), which has downgraded the manufacturing sector to “neutral” for the next 12 months, prefers household product manufacturers over can makers.

It noted that household product manufacturers such as VS Industry and ATA IMS Bhd would benefit from the rising trend in trading up in the floor-care market, particularly due to their ties with a key customer in the segment which has a robust growth prospect and continuous innovation.

This key customer is also planning a slate of new product launches over the next few years, which is anticipated to keep box-build orders growth sturdy.

Meanwhile, the research house is negative on can makers as they are affected by rising cost pressures as average prices of raw materials such as aluminium, tin plate and paper roll which escalated by 12%, 5% and 8% in the first three quarters of this year against the same period last year.

This has been eating into the margins of local can makers including Kian Joo Can Factory. Apart from higher raw material costs, the group is also facing intensified competition in its corrugated carton space and looming competition for its tin and aluminum can industries due to upcoming capacities from other regional players.

AmBank Research expects Kian Joo to be impacted by higher labour costs in 2019 with the minimum wage policy in Malaysia and Vietnam as both its manufacturing businesses and contract packing services are labour-intensive.

“For chemicals manufacturing companies such as Luxchem Corp and Samchem Holding, the end-applications of their outputs are very diverse (general products) and their diversified, large customer base should mitigate supplier switching concerns and excessive reliance on client’s performance,” it added.

Nonetheless, the research house said the sector’s rating might be upgraded to “overweight” if the ringgit appreciates against the US dollar.

CGS-CIMB sees strong vehicle sales in December, raises 2018 TIV growth forecast

PETALING JAYA: CGS-CIMB expects vehicle sales to be stronger in December and has raised its 2018 total industry volume (TIV) growth forecast from 2.5% to 4% on the back of stronger-than-expected TIV year-to-date.

“We expect stronger sales in December in view of year-end promotions and multiple new models that were recently launched. For example, Proton launched its first SUV, the X70 on Dec 12 and we learned that it has started delivery to showrooms. Proton has so far received encouraging bookings of over 12,000 units since the end of November,” it said in its sector note today.

On Wednesday, the Malaysian Automotive Association (MAA) announced that TIV grew 2.1% month-on-month to 48,282 units in November due to higher passenger vehicles (PV) sold. Perodua and Mazda recorded 8% and 14% month-on-month growth respectively.

For the 11 months ended November, TIV rose 5.5% year-on-year to 550,526 units due to stronger PV and commercial vehicles (CV) demand on the back of the tax holiday period. PV and CV recorded healthy 5% and 8% year-on-year sales growth respectively during the period.

For 2019, it expects resilient sales in PV on the back of new model launches in the passenger car and SUV segments from Perodua, Proton, Honda and Toyota but overall, TIV delivery is expected to be flat next year.

“We project a 10% sector net profit growth in 2019, driven by positive earnings growth from all companies, led by Sime Darby. However, we see downside risk to earnings from the depreciation in ringgit versus US dollar and Japanese yen, as this will increase the distributors’ costs of imported complete knocked-down kits and complete built units,” it said.

Bermaz Auto Bhd (BAuto) is CGS-CIMB’s top pick, in view of the company’s undemanding valuation, attractive yield and proxy to export sales growth. It has an “add” rating on the stock with a target price of RM2.65.

“We expect BAuto to deliver robust sales volume in FY19-20, driven by the popular Mazda CX-5 and upcoming new model launches of Mazda 3 and CX-8,” it added.

HSBC sells 49% of HSBC Amanah Takaful

PETALING JAYA: HSBC Holdings plc’s indirect wholly owned subsidiary HSBC Insurance (Asia Pacific) Holdings Ltd is selling a 49% stake in HSBC Amanah Takaful (Malaysia) Bhd to FWD Life Insurance Company (Bermuda) Ltd.

The transaction has obtained approval from the Minister of Finance, via Bank Negara Malaysia, and is expected to be completed during the first half of 2019.

“We have decided to exit the takaful manufacturing business and focus on our banking operations in Malaysia. This transaction relates only to a change in ownership for the takaful joint venture. For the HSBC Group, the transaction does not have any impact on our current businesses in Malaysia, comprising HSBC Bank Malaysia Bhd and HSBC Amanah Malaysia Bhd. Malaysia remains a key insurance distribution market for us and we will continue to support the insurance needs of our customers through our insurance partners,” said HSBC Bank Malaysia Bhd CEO Stuart Milne.

Airbus shares plunge 6pc after Le Monde reports US probe

PARIS, Dec 20 — Shares in European aircraft maker Airbus tumbled more than 6 per cent after the French daily Le Monde reported that it could face fines of several billion dollars under a US corruption probe. The newspaper said that the US…