Tuesday, January 8th, 2019
KAJANG: SYF Resources Bhd, which expects to continue incurring losses for the current financial year ending July 31, 2019 (FY19), is downsizing its furniture segment and may consider exiting the furniture business within two years.
Executive director Keith Ng Wei Ping (pix) said the group will now focus on rationalisation and downsizing of the furniture segment as global demand is decreasing, coupled with rising labour costs and high overhead costs.
“We will continue to downsize the furniture segment more aggressively and ultimately we may close the whole furniture business, if necessary. SYF eventually will be a focused property counter,” Ng told reporters after the group’s AGM today.
For the furniture segment, SYF has a combined factory area of 40 acres in Semenyih. Having sold 10 acres, the group continues to sell its assets and intends to use the proceeds to pare down borrowings for interest savings and to build up liquid resources to take advantage of any future opportunities that may arise.
The group has been engaged in its core activities of rubberwood furniture manufacturing and materials processing for over 20 years. In 2012, the group ventured into property development to expand and diversify its business activities. The property division had undertaken several projects involving industrial factories, residential houses and condominiums in Semenyih, Kajang and Cheras.
Most of these projects are completed or nearing completion with the group adopting a cautious stance before embarking on any new projects or land acquisitions in view of prevailing conditions in the property market. As conditions remain depressed and with no imminent signs of an upturn, the group has refrained from acquiring landbank or new projects.
“We’re still looking for suitable landbank. We try to finish what we have in our hands,” said Ng, adding that SYF has about 80-100 unsold units from its property projects in Sungai Long, valued at RM30-RM40 million and is looking to sell these units.
“The board has expectations to incur losses in FY19. We don’t see any new revenues coming in from furniture, which we don’t plan to grow, and the property (market) is bad but we try to mitigate it to be a minor loss. We try our best to break even.”
Despite this, Ng said SYF is fundamentally strong with its net assets “still there”, and having liquid assets.
“Property is cyclical. Once the project kicks in, the revenue and profit will come fast. Just like the past few years, we have two to three projects and the profit was good. Now we’re making losses but on the other hand the board is being prudent. We try not to be too aggressive in a way that eventually we end up with too many unsold units and burden the group as a whole,” he explained.
SYF plunged into the red in FY18 with a net loss of RM14.24 million, according to its annual report. It posted a revenue of RM255.75 million, 44% lower from the preceding financial year.
PETALING JAYA: Boustead Plantations Bhd is taking legal action against SP Setia Bhd’s Setia Fontaines Sdn Bhd for breach of a sale and purchase agreement (SPA) involving a land deal in Penang.
In a filing with Bursa Malaysia, Boustead Plantations said it had filed a writ of summons and statement of claim on Setia Fontaines on Dec 28, 2018, which was served on the defendant on Jan 3.
Boustead Plantations is claiming for relief against the defendant on account of the breach of the SPA dated Dec 22, 2016. The claims are related to a refund under the Goods and Services Tax Act, 2014 owing to Boustead Plantations.
The claims include a declaration that goods and services tax is chargeable in the sum of RM37.2 million on the sale of lands by Boustead Plantations to Setia Fontaines and damages amounting to RM37.2 million to be paid by Setia Fontaines.
Boustead Plantations is also claiming interest at the rate of 8% per annum (or a rate deemed fit by the court) computed from Oct 31, 2017 until full settlement by Setia Fontaines as well as costs and further or other relief deemed fit by the court.
Setia Fontaines has 14 days from the date of receipt of the writ of summons to enter its appearance in the suit. The matter has been fixed for case management on Jan 28, 2019.
“In consultation with Boustead Plantations’ solicitors, the board is of the view that Boustead Plantations has a good cause in this suit and are therefore positive of the outcome of this litigation,” the company said.
To recap, SP Setia acquired five parcels of land measuring a total of 677.8ha in Seberang Perai Utara in Penang from Boustead Plantations for RM620.12 million cash, following a successful bid by the property developer under a tender exercise.
PETALING JAYA: The Malaysian Rating Corp Bhd (MARC) expects the amount of net foreign outflows to moderate in 2019, capped by the gradually increasing clarity in the Malaysian government’s macro policies going forward, a slowdown in the pace of interest rate hikes in the US and the increased stability of the ringgit.
“Going forward, uncertainties surrounding US-China trade, prospects of the US dollar, Brexit and the US government political gridlock as well as Malaysia’s moderating growth performance will likely affect foreign investors’ demand for local bonds,“ MARC said in a report today.
It said net foreign outflows from the local bond market surged in the first 11 months of 2018 to RM19.6 billion (Jan–Nov 2017: RM11.6 billion), thus bringing down total foreign holdings to RM187.1 billion (Jan–Nov 2017: RM204.0 billion).
Overall, foreign ownership of local bonds fell to 13.3% of the total outstanding (Jan–Nov 2017: 15.9%). This was mostly attributed to the lower foreign holdings in Malaysian Government Securities (MGS), which fell RM12.7 billion to RM147.6 billion (Jan–Nov 2017: RM160.3 billion) in the same period. By end-November, foreign ownership of MGS papers had declined to 38.8% (Jan–Nov 2017: 44.3%) of total MGS outstanding.
Foreign outflows from local govvies in the first 11 months of 2018 were also driven by slower Malaysian gross domestic product (GDP) growth in 2Q 2018 and 3Q 2018; rebound in US dollar; faltering crude oil prices; rising UST yields; and four US rate hikes that occurred in 2018.
Meanwhile, MARC envisaged yields for MGS and corporate bonds to increase slightly in 2019 when compared with 2018.
“However, we are of the view that the upside in yields will be capped by a low inflation rate; the expectation of a possible cut in the overnight policy rate amid weaker economic prospects; and limited upside of UST yields as the rate hike pace slows. Against this backdrop, we expect yields for the 10-year MGS to range between 3.9% and 4.4% in 2019.”
MARC expects total gross issuance of MGS/Government Investment Issues (GII) in the primary market to range between RM115 billion and RM125 billion in 2019, premised on the government’s projected budget deficit of RM52.1 billion, as well as higher volume of matured MGS/GII papers.
In 2018, total gross issuance of MGS/GII papers was up by 0.8% to RM114.8 billion (2017: RM113.9 billion).
Going into 2019, MARC also foresee gross issuance of corporate bonds to normalise to between RM80 billion and RM90 billion, premised on lower growth of public investment, a more moderate real GDP growth of 4.6% and slower pace of global investment.
“We also expect a material decline in gross issuance of unrated government-guaranteed and infrastructure-related corporate bonds following the government’s reprioritisation efforts.”
In 2018, total corporate bond issuance in the primary market fell to RM103.9 billion, down by 15.4% from the previous year (2017: RM122.9 billion), mainly attributed to a significant drop in the unrated segment.
KUALA LUMPUR: Bursa Malaysia Securities Bhd has expanded its trading features to enable investors to execute a greater variety of trading strategies and navigate more efficiently through the equity market environment.
“The introduction of these new and revised trade execution options is expected to empower investors towards enhancements in their trading strategies and help promote a more profitable and sustainable trading in the equities market,” said Bursa Malaysia CEO Datuk Seri Tajuddin Atan in a statement.
Going forward, Tajuddin said that the exchange will continue to provide investors with greater choice and more efficient means to implement their trading ideas which will also allow them to better manage risk and capture new opportunities in the market.
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