Thursday, January 3rd, 2019


Star Media sets up special committee, new CEO identified

PETALING JAYA: Star Media Group Bhd has identified the candidate for the position of CEO and will make an announcement in due course. At the same time, a special committee will be set up to look after the operations in the interim.

To recap, on Nov 30, 2018, Star Media CEO and group managing director Datuk Seri Wong Chun Wai announced that he will be stepping down on Jan 1, 2019.

The group said in a bourse filing today that a replacement for Wong has been identified.

A temporary special committee comprising three non-executive directors will be set up to oversee the operations of the company until the new group CEO assumes office. The three non-executive directors are Datuk Fu Ah Kiow, Datuk Dr Mohd Aminuddin Mohd Rouse and Chan Seng Fatt.

“The board wishes to emphasise that whilst the abovementioned directors undertake their role as oversight on the operations, they will as non-executive directors endeavour to act objectively at all times in the best interests of the company and shareholders,” said Star Media.

Export growth breezes in for Daikin Malaysia

SUNGAI BULOH: Air conditioning company Daikin Malaysia Sdn Bhd, which has allocated a capital expenditure (capex) of RM434 million for the next financial year ending March 31, 2020 (FY20), will ramp up its efforts on driving export growth, in line with its aim for export to contribute 70% of its total sales by FY20, from 65% now.

COO Ooi Cheng Suan (pix) said products from its flagship factory here, mainly air conditioners for residential (household) use, as well as light commercial and commercial, are exported to 70 countries in the world.

“We are driving export because the Malaysian market is not big and it is limited. To expand, we must go beyond, go out (of Malaysia). Being made in Malaysia, it (our products) is well accepted. In these two years, our ringgit has weakened and this has given us certain advantage when exporting. We become more competitive,” he told SunBiz in an interview recently.

He said traditionally, the company had been exporting to Europe, with the more prominent countries being Italy, Greece, France, UK, as well as the Middle East. This year, in addition to Central Europe, it has expanded its export to the US and Latin America.

“We want to achieve at least 70% export for this factory here (remaining 30% for local market). As per our plan and budget, we’re on track to move towards 70%,” said Ooi.

He explained that the US-China trade war has given the company an opportunity of exporting into the US due to the imposition of tariffs on products from China, which impacted Daikin China’s export into US.

“Malaysia’s platform is similar to China’s platform, so we can transfer that demand from US (supplied originally by China) to Malaysia. We’re in a good position (to secure that opportunity) because we’re competitive and we’re able to respond fast to changes so there’s a high chance that the demand of US (for Daikin) will shift to Malaysia (from China),” explained Ooi.

In Malaysia, Daikin, the world’s industry leader in air conditioning, prides itself as the number one air conditioner maker in terms of sales turnover and the number of air conditioners sold in the market. Annually, its Sungai Buloh factory produces 1.4 million sets (comprises indoor evaporator and outdoor condenser). Currently the residential segment makes up over 60% of its sales, while the remaining 40% comes from the light commercial, commercial and industrial segments.

Ooi, who is also deputy regional general manager for Asia emerging districts, claims that the Japanese brand Daikin is also the top air conditioner maker in almost all of the markets in Southeast Asia (SEA), based on its survey.

“Some players claim they’re number one at serving only a niche market. Daikin has the full range of air conditioners, from as small as 0.5 horsepower to a few thousand horsepower. We cover the full spectrum of the market,” said Ooi.

The company is expecting to close FY19 with a double-digit growth based on its current sales momentum.

“For the Malaysian market, the situation (sales) is slow, but the upcoming Chinese New Year will spur some buying from consumers. From past experience, when it comes to February and March, the weather turns hot and this will spur impulse buying.

“Air conditioner has become a necessity. The price of air conditioner in Malaysia is not too far reaching that it becomes a luxury item. It has been relatively low, affordable for the public,” said Ooi, adding that globally, demand for air conditioner from developing countries like India and Africa is growing fast.

He stressed on two important pillars for growing the local market, including the introduction of R32 refrigerant products (low global warming potential), as well as educating the market to move to energy-efficient products, such as the Inverter series.

Daikin Malaysia will invest RM100 million annually as capex for facility and machine upgrading.

Its two new factories in Shah Alam and Banting will focus on manufacturing applied products, comprising chillers and air handling units, for large, high rise buildings, shopping centres and industrial use. The Shah Alam factory, which was set up at RM140 million, will start its full-fledged production by 2019 and is expected to have a turnover of RM100 million per year in the beginning.

“This is the only applied factory in SEA Oceania and this will be the factory that will support the whole SEA Oceania. With our plan to expand our applied business in SEA Oceania, we’ve set up our applied regional hub in Malaysia and Singapore to expand the sales in SEA.”

Meanwhile, it will also invest RM125 million to set up a factory in Shah Alam to make electronic devices (air conditioner controllers), which will come into production by 2020. Ooi said this factory will supply to Daikin’s affiliates, of which there are 73 factories in the world.

“Currently we’re already exporting to Daikin factories in Turkey, Vietnam, Czech Republic and the US. We can’t cater to the whole demand of Daikin. These factories that we’re catering for are less than 20% of the demand of Daikin group. A good percentage is still supplied by others,” said Ooi.

It is also allocating RM135 million to set up a centralised logistics centre, which is expected to start operations by early 2020-2021.

In addition, some RM74 million has been budgeted for research & development in FY20.

372,000 German drivers join legal action against Volkswagen

FRANKFURT, Jan 3 — Some 372,000 German owners of Volkswagen cars fitted with motors that cheated emissions tests have joined a collective legal action against the auto giant, official figures showed today. Hundreds of thousands of people signed up…

Survey: Brexit doubts drag down UK business confidence

LONDON, Jan 3 — British firms are facing labour shortages, stagnating growth and price pressures heightened by Brexit, according to the largest private sector survey of business sentiment published today. The percentage of firms reporting an…

Apple warning delivers fresh blow for markets, global growth

LONDON, Jan 3 — Stock markets retreated once more today as China’s slowing economy forced Apple to slash its revenue forecast, wiping as much as US$55 billion (RM227.9 billion) from its value and dragging down share prices in the wider…

Nexgram to incur RM12m loss from sale of office tower

PETALING JAYA: Nexgram Holdings Bhd’s unit Coconut Three Sdn Bhd, formerly known as Nexgram Land Sdn Bhd, has proposed to dispose of its 11-storey stratified office building called Nexgram Tower in Bangsar South, Kuala Lumpur,for RM67 million, which will result in an estimated loss on disposal of RM12.4 million.

The group told the stock exchange that its unit had on Dec 31, 2018 entered into a sale and purchase agreement with IMS Development Sdn Bhd for the disposal.

Nexgram noted that the property’s current book value is RM79.4 million and the original cost of investment of the property on April 8, 2013 was RM64 million.

It decided to dispose of the property, which is currently held for rental purposes, after taking into consideration the challenges of the upkeep of the premises.

The proceeds arising from the proposed disposal will be utilised to settle its banking facilities and for working capital purposes.

Ecobuilt bags RM202.5m construction job

PETALING JAYA: Ecobuilt Holdings Bhd, formerly known as M-Mode Bhd, has bagged a contract worth RM202.47 million to undertake construction works for the proposed development in Kampung Muhibbah, Kuala Lumpur.

The group told the stock exchange today that its wholly owned subsidiary E&J Builders Sdn Bhd had accepted the letter of acceptance from Vistarena Development Sdn Bhd to appoint the company as the main contractor.

The proposed development of two apartment blocks will comprise 1,320 home units, eight-storey podium car park, one unit TNB substation, one unit of refuse chamber and common facilities.

The 30-month project is expected to be completed by July 3, 2021.

Ecobuilt expects the project to contribute positively to its earnings and net assets for the financial year ending May 31, 2019.

Sterling sent lower after Asian ‘flash crash’ rocks FX markets

LONDON, Jan 3 — Sterling fell across the board today after worries about the health of the global economy and particularly China sparked an investor exodus out of currencies considered riskier. The pound, already struggling to make headway amid…

November export growth expected to slow to 3%

PETALING JAYA: RAM Ratings expects Malaysia’s export growth to decelerate to 3% in November 2018, as front-loading activities that had temporarily propped up exports by 17.7% in October subside.

The rush to front-load orders in October was driven by greater concerns over the planned increase in US tariffs – from 10% to 25% – on US$200 billion (RM827 billion) of Chinese imports, the ratings agency said in a note today.

RAM is of the view that the export stimuli will remain limited over the next few months – a scenario further supported by a contraction in China’s manufacturing export orders in the last several months.

In line with the weaker external demand, RAM expects that import growth would ease to 1.8% in November.

Overall, the trade surplus is projected to come in at RM11.1 billion in November.

To date, Malaysia has yet to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) that came into force on Dec 30 with seven members.

That said, RAM’s head of research Kristina Fong opined that Malaysia’s absence is unlikely to have significant implications for its trade performance in the near term, given that it already has free trade agreements (FTA) with five of the seven signatories.

“The two remaining countries, Canada and Mexico, constitute a small share of overall exports at just 0.4% and 1%, respectively, thus limiting potential adverse trade diversion away from Malaysia,” she explained.

Furthermore, she said this trade diversion risk is also mitigated by the fact that the tariff reductions on major goods imported from Malaysia that also overlap with key imports from other CPTPP members, is mostly less than one percentage point.

While the direct impact of Malaysia’s absence from the deal could be muted in the short run, RAM said it could potentially cause the country to lose out over the long term as regional members in the multilateral FTA could be favoured as foreign direct investment destinations.

“Standardised rules of origin and lower regulatory barriers brought about by the CPTPP could entice firms to more readily build up supply chains between member countries. This dynamic could in turn foster the development of new industries and global value chains and build new capacities within this alliance,” it added.

RAM expects Malaysia’s November export growth to decelerate

KUALA LUMPUR, Jan 3 — RAM Ratings expects Malaysia’s November export growth to decelerate to 3.0 per cent, as front-loading activities which had temporarily boosted exports by 17.7 per cent in October subsided. The rush to front-load orders in…