Wednesday, January 16th, 2019


Chinese premier vows measures to support the economy

BEIJING, Jan 16 — China will step in to support private businesses and cut taxes to boost the slowing economy, Premier Li Keqiang said today.  Growth in the world's second largest economy is flagging, dragged down by the trade dispute with…

Goldman Sachs profits top forecasts as legal costs rise

NEW YORK, Jan 16 — Goldman Sachs posted better-than-expected quarterly profits despite higher legal and regulatory expenses, the company reported today. The investment bank notched fourth-quarter profits of US$2.3 billion (RM9.45 billion), after…

Seacera to issue 149m shares to settle debt

PETALING JAYA: Seacera Group Bhd proposes to issue 149.09 million settlement shares at an issue price of 21 sen per share to settle its debt amounting to RM31.31 million.

Seacera told Bursa Malaysia that the group and its affected subsidiaries had entered into 28 separate conditional debt settlement agreements with certain of its creditors for the settlement exercise.

Seacera said the amount owed to its settlement creditors is RM31.38 million with some giving discount totalling RM70,000.

“The proposed capitalisation will improve the financial position of the group and place it on a stronger financial footing and working capital position,” it noted.

Seacera has also proposed a private placement of up to 30% of its existing issued share capital to raise gross proceeds of up to RM24.64 million, of which up to RM20 million will be used to reduce the bank borrowings and RM4.14 million to finance the group’s day-to-day operations for its working capital purposes.

The placement shares are proposed to be placed to independent third-party investors to be identified at a later date.

“The earnings per share of the group will be correspondingly diluted as a result of the increase in the number of Seacera shares in issue,“ Seacera said.

The stock declined 1 sen or 4% to close at 24 sen today.

World stocks hold nerve after May's Brexit defeat, pound steady

LONDON, Jan 16 —World equity markets today held their nerve after the heavy parliamentary defeat of British Prime Minister Theresa May's Brexit deal as investors saw potential for legislative deadlock forcing London to delay its departure from the…

Another challenging year for real estate

KUALA LUMPUR: The overall property market will still see growth this year, supported by the nation’s demographic growth but will continue to face challenges across all sectors.

“For landed residential properties, there will still be growth but the alarming part is you can see a lot of red flags in every location from Sabah and Sarawak to Peninsular Malaysia. High-rise is the one area of concern, especially in the Klang Valley where SoHo and SoVo units have very low occupancy,” said CBRE-WTW managing director Foo Gee Jen.

Speaking to reporters at the launch of CBRE-WTW Asia Pacific Real Estate Market Outlook 2019 report today, Foo said the high-end residential market will see a price correction this year while the success of the Home Ownership Campaign, which will be rolled out in March, will depend on how marketable the unsold homes are.

“There may be some take-up out of those units but we’ll wait and see if it (the campaign) translates to actual sales,” he added.

Over in Iskandar Malaysia, the vacancy rate of the high-rise residential market is expected to exceed 50% for the first time, said CBRE-WTW Johor Bahru director Tan Ka Leong.

He said prices and rental rates are expected to fall this year, making it a buyers’ and tenants’ market. A total of 10,500 units of new supply is expected to enter the market this year.

In the office sector, Tan observed a shift towards purpose built offices from conventional shop offices, with professional firms like Ernst & Young and KPMG moving out of their old premises to new offices in Medini.

He said the vacancy rate of offices in Iskandar Malaysia will increase to 35% this year from 26% while some 928,450 sq ft of new space is expected to be completed this year.

Meanwhile, Foo said the advancement of technology will be a challenge for the retail sector, with landlords already offering shorter term tenancies.

“Tenants are getting really restless and going into month-to-month tenancy. They will not sign long term tenancy anymore, as it will be a lot more flexible to move as they wish, depending on the market,” he said.

He said some tenants also opt for “turnover rental”, whereby they pay as they earn instead of a fixed rental. He said landlords have been offering such options to secure tenants but noted that the top five malls continue to perform well.

CBRE-WTW Kuala Lumpur director Ungku Mohd Iskandar said the Klang Valley retail market is less favourable this year, due to the impact of shorter term tenancies on sustainability of malls and the impact of e-commerce.

“Increasing popularity of online shopping could shift the role of retail space to display purpose, thereby shrinking space take-up. Established online retailers could also seek physical space for expansion,” he said.

Amid the challenging outlook, Foo said the industrial sector seems to be a bright spot, having dominated the top 20 property transactions recorded last year.

“Large tracts of land are opening up with accessibility of highways such as West Coast Expressway, where even before completion there has been announcement of about 300 acres of land in Kota Seri Langat,” he said.

Another bright spot is the tourism market in Sabah, with the Pan Borneo Highway being a catalyst. Foo said the tourism market will change and open up opportunities for more world-class resort hotels.

One million affordable homes in 10 years a tall order, but achievable

KUALA LUMPUR: The government’s promise of providing one million affordable homes over 10 years is a tall order but an achievable target, said CBRE-WTW managing director Foo Gee Jen (pix).

He said the target, which works out to about 100,000 units per year, is a much more realistic target compared with the previous government’s promise of delivering one million affordable homes within five years, of which only 100,000 units were delivered.

Despite the more “palatable” target, Foo said that the government must first fix the fundamental issues and get the National Housing Policy right.

“We should not drive this entirely to the private sector. What will happen if all these things are driven to the private sector? There would be even heavier cross subsidy to the M40 group. The government should not just be looking at winning the vote by making the B40 happy. If there is too much cross subsidy, the M40 group will suffer,” he told reporters at the launch of CBRE-WTW Asia Pacific Real Estate Market Outlook 2019 report today.

He said the government’s target can be achieved if all state governments work together with the federal government, and put their resources to good use for example, state-owned land, but stressed that the land must be in the right location with proper infrastructure in order to avoid developing failed affordable housing projects such as the one in Bukit Beruntung, Hulu Selangor.

On the National Housing Policy 2.0, Foo said the policy “would just be a piece of paper” if the nation’s legislation in terms of the development processes, are not in place.

He said basic issues such as local and structure plans, land matters, differing regulations on bumiputra discount, development charges and others need to be addressed in order to achieve successful implementation of the policy.

“With regard to land, it is still a state matter. All land is still under the jurisdiction of the state, so there is conflict between what the federal government can do and what the state governments can overrule.

“These are the fundamental issues that need to be looked into before we can really have an ideal situation where the National Housing Policy would be able to realise the dreams and hopes of the rakyat,” he added.

Meanwhile, Foo lauded the government’s move in gazetting the Kuala Lumpur Structure Plan 2020 as it would pave the way for more systematic planning and provides more certainty to property industry stakeholders.

“There will be no more haphazard developments for example, roads ‘choking’ due to high density. Governance will be the key point moving forward,” he said.

Fortis completes deal for RHT Health assets

PETALING JAYA: India’s Fortis Healthcare Ltd, in which IHH Healthcare Bhd owns a 31.1% stake, has completed the acquisition of RHT Health Trust’s assets for INR46.66 billion (about RM2.69 billion).

In a filing with Bursa Malaysia, IHH Healthcare Bhd said Fortis has completed the acquisition of the equity and other securities of several entities from Fortis Global Healthcare Infrastructure Pte Ltd.

The acquisition, which includes foreign exchange movement and slippages, is pursuant to the master purchase agreement dated Feb 12, 2018 and other subsequent definitive agreements.

The entities will become direct/indirect wholly owned subsidiaries of Fortis and thus become indirect subsidiaries of IHH. The financials of the entities will be consolidated under IHH.

The entities are International Hospital Ltd, Fortis Health Management Ltd, Escorts Heart and Super Specialty Hospital Ltd, Hospitalia Eastern Private Ltd and Fortis Hospotel Ltd.

Recall that IHH, via Northern TK Venture Pte Ltd, had in November 2018 completed the purchase of 31.1% of Fortis for RM2.35 billion.

However, its plan to acquire an additional 26% stake in Fortis for RM1.97 billion has been put on hold following the Supreme Court of India’s ruling.

Kawan Food: Earnings to remain under pressure

PETALING JAYA: Frozen food manufacturer Kawan Food Bhd expects its earnings to remain “depressed” this year, hurt by the start-up cost and depreciation charges for its new factory in Pulau Indah, according to its managing director Timothy Tan.

“We’ve moved in (to the new factory) in July last year and shut down two factories in Shah Alam in December. We’re still trying to increase our output and the utilisation rate is not at an optimum (level) yet,” Tan told reporters today after announcing its partnership with Australia Securities Exchange-listed biotechnology research firm Holista CollTech Ltd.

“The cost of the new factory is RM200 million, and with depreciation of about RM20 million annually, our profit after tax will go down, but our earnings before interest, taxes, depreciation, and amortisation might remain the same,” he added.

Nevertheless, Tan said the group has kept its margins fairly healthy, noting its frozen paratha segment’s gross profit margins are hovering at around 40% currently.

For the nine-month period ended Sept 30, 2018, Kawan Food’s net profit was down 26% to RM17.2 million, from RM23.25 million in the previous corresponding period, mainly due to unfavourable US dollar/ringgit exchange rate, higher advertisement and promotion expenses and start up cost of the new plant incurred during the period.

To mitigate margin pressures, Tan said the group will bring in more innovation to its products and believes that its new collaboration with Holista to produce a range of low-glycemic index (GI) flatbreads for local and international markets will help to increase the consumption of its products.

He said the low-GI roti canai product will be launched in Malaysia by April this year, while sales to US consumers are expected to commence in June.

Tan said the parties expect to sell 200 containers or four million kilogram of low-GI roti canai product to the local and international markets within three years, with about 50% of the overseas’ sales coming from the US market.

He said the group is also planning to export the same product to Brunei, Singapore and UAE this year.

Currently, he said the group exports to 40 countries including US, Canada, UK, France, Australia and UAE. Its export business contributes about 60% of its revenue, and the remaining 40% from its local business.

Meanwhile, Holista managing director and CEO Datuk Dr Rajen Manicka said the low-GI versions of this popular staple food will help to address the growing problem of obesity and diabetes in Malaysia and abroad.

Rajen said the company will use its proprietary mix of ingredients, trademarked as GI Lite, to develop the flatbreads.

The GI indicates the rate at which foods containing carbohydrates raise human blood sugar levels, with a lower score indicating healthier food.

Supreme Consolidated posts 24% premium

PETALING JAYA: Sarawak-based Supreme Consolidated Resources Bhd recorded a 24% premium for its debut on the Leap Market of Bursa Malaysia today.

The stock, which debuted at 60 sen at the opening bell, gained as much as 15 sen or 30% to 65 sen before closing 12 sen or 24% higher at 62 sen on 380,100 shares done.

Supreme Consolidated’s listing exercise entailed the public issue of 13.14 million new shares at 50 sen per share to raise RM6.57 million, of which bulk of the proceeds amounting to RM3.5 million for the construction of warehousing facilities.

In addition, some RM1.97 million has been earmarked for working capital while RM1.1 million will be deployed to defray listing expenses.

Supreme Consolidated is involved in importing, trading and distribution of frozen, chilled, dairy and dry food products in East Malaysia since 1983.

“The share price performance reflected support and confidence of our high net worth investors in our company’s performance and business model” said its non-independent executive vice-chairman Datuk Richard Wee.

‘Delayed approval of perks affecting new car launches’

PETALING JAYA: The Malaysian Automotive Association (MAA), which has projected a flat 0.21% growth in the total industry volume (TIV) for 2019, has lamented the delayed incentives approval from the government for new car models pricing that has affected its members’ plans to launch new models.

MAA president Datuk Aishah Ahmad (pix) said its members have to apply to the International Trade and Industry Ministry (Miti) for the Industrial Linkage Programme (ILP) scheme approval and the delay can take some five to seven months.

“The delay is also because the Finance Ministry (MoF) does not want to make decisions. Everything is channeled back to the Automotive Business Development Council (ABDC). Even after the committee has decided, it goes back and the papers are not coming up. We have voiced this out where it is difficult because we cannot get prices and therefore we cannot launch our models,” she told a press conference today after announcing the market review for 2018 and outlook for 2019.

ABDC consists of the Customs Department, Miti, MoF, Malaysia Automotive Robotics & IoT Institute and Malaysia Investment Development Authority.

Aishah added that the matter is made worse when the National Audit Department checks on those who have obtained ILP and until the audit is completed, no govern-ment official wants to make any decision.

“Government officials are now holding back. They don’t want to make the decision on their own, it has to be a committee’s decision. It’s not helping the industry,” said Aishah, describing that due to the change of government, officials now choose to play safe rather than make a decision even though the matter is under their purview and jurisdiction.

Until today, she said many members still do not have the prices for car models showcased during the Kuala Lumpur International Motor Show last year that were supposed to be launched.

“We have highlighted to MoF and written to the minister, waiting for a response. We’re also seeking a meeting with Miti to address the issue,” she said, adding that it is expecting some feedback by the end of this month.

MAA has also asked the government to continue with the 2014 National Automotive Policy (NAP) energy-efficient vehicles (EEV) incentives in the revised NAP, which will be unveiled this year.

“The incentives help us to ensure that the price is competitive, where customers are able to afford the cars we sell.”

MAA foresees 2019 to be another challenging year, estimating a flat 0.21% growth in the TIV for the year at 600,000 units, from 598,714 units in 2018. The forecast factors in the economy, lower public investment, weak ringgit, moderation in consumers’ spending, delayed approval from the authorities, vehicles purchased forward during the tax holiday, stringent lending guidelines, among others.

After two years of consecutive contraction, the local automotive market had rebounded in 2018. TIV of new motor vehicles registered in 2018 rose 3.8% to 598,714 units, from 576,625 units in 2017, boosted mainly by the tax holiday.

Aishah said catalysts to push TIV growth in 2019 includes quicker incentive approval from the government and if the government continues to provide EEV incentives in the NAP.