Monday, February 18th, 2019


World stocks lifted to 2 1/2-month highs by trade optimism

LONDON, Feb 18 — Hopes for progress in Sino-US trade talks and expectations of policy stimulus from central banks lifted world stocks to 2 1/2- month highs today, though European gains were held back by concern over the outlook for auto makers….

AirAsia-MAHB spat could affect EPF’s investment income: Fund CEO

KUALA LUMPUR: The intensifying airport tax dispute between AirAsia Group Bhd and Malaysia Airports Holdings Bhd (MAHB) could affect the Employees Provident Fund’s (EPF) investment income if it causes a negative reaction in the stock market, EPF CEO Tunku Alizakri Alias (pix) warned.

EPF, a substantial shareholder of both AirAsia and MAHB, owns about 10% and 5% shareholdings in the two groups, respectively.

“Our dividend payments are always derived from our investment income, (which is) driven from the market performance. So if the spat has impacted the market, then of course it will have an impact (on us) in terms of income,” Alizakri said at a media briefing on the EPF’s 2018 financial performance today.

“We are not directly impacted (from the spat) but we are impacted by the market performance of the stock counters,” he said.

Meanwhile, Alizakri confirmed that EPF has written to both parties expressing its concern over the dispute, saying that it is acting “just like a typical concerned investor”.

He disclosed that AirAsia has responded to EPF’s letter, without ela-borating on the details of the airline’s reply. However, EPF has yet to receive a response from MAHB.

“One of the parties will be meeting with us very soon. We are very happy with that … to explain the situation. We are looking forward to meeting with them,” he added.

Alizakri stressed that the retirement savings fund is concerned about the spat being brought up to the public, saying that it is not only bad for the two organisations but also bad for Malaysia as a whole.

“Because when you think about it, these are (two of) the biggest counters (in the local stock market), and also the face of Malaysia. AirAsia is an airline, the company that brings in tourists and business people. And MAHB, which is KLIA (operator), the first point of contact for foreigners that come into Malaysia.

“So we are naturally concerned that this disagreement has been brought into the public,” he said, adding that the letters were just to voice EPF’s concern.

“We are not in the position to go and arbitrate between these two. We are acting just like a typical concerned investor and we are hoping that they will be able to resolve this soon,” Alizakri said.

Last December, MAHB sued both AirAsia and AirAsia X for a total of RM36.1 million for refusing to collect the additional RM23 passenger service charges per passenger at klia2.

While MAHB stayed firm on its stance that the same rates should apply to both klia2 and Kuala Lumpur International Airport (KLIA), AirAsia argued that klia2 is a low-cost terminal and the charges levied should commensurate with the level of services provided.

The spat between the two seems to be far from over after MAHB turned down AirAsia’s offer of mediation, an attempt to resolve the airport tax dispute.

Equities, foreign investments to remain main income drivers for EPF

KUALA LUMPUR: The Employees Provident Fund (EPF), which has recorded a gross investment income of RM50.88 billion in 2018, said that public equities and foreign investments will continue to be the main income driver for the retirement savings fund.

Equities contributed about 58% to its total income last year, while a further 40% was derived from overseas investments.

Speaking at a press briefing on the fund’s 2018 financial performance today, EPF CEO Tunku Alizakri Alias said that at this point of time, EPF still believes that equity is the type of asset class that is able to enhance the value of its members’ funds.

“Don’t think that just because the markets are bad, it is necessarily a bad thing. Don’t forget that uncertainty is both opportunity as well as a threat. Because we are a long-term fund, when the market is down, that is the time when we start hunting,” he added.

On its plan to increase the allocation of private equity (PE) investments from the current 2% to over 3% of its total strategic asset allocation over the next 10 years, he said it is still growing with the ones that it is comfortable with such as infrastructure and buildings – which are relatively safe.

Alizakri noted that it is not the time to be “too adventurous” in view of un-certainties it sees this year, including the longstanding US-China trade war, US interest rate increases and Brexit.

“Let’s stick to what we know. It is going to be challenging this year, so for PE, we most likely will still be steering the same course but our size is getting bigger so we will need to look at new PE partners to work with as well,” he said.

Alizakri also said the fund will be reviewing its strategic asset allocation this year, which is normally done on a three-year basis to evaluate its investment strategies.

Last Saturday, EPF declared a dividend rate of 6.15% for conventional savings with a payout amounting to RM43 billion; and 5.9% for syariah savings, with a payout amounting to RM4.32 billion.

In total, the payout for 2018 amounts to RM47.31 billion, a marginal decrease of 1.7% from 2017.

EPF has about RM222.61 billion worth of investments across 40 countries and 28 currencies, representing about 26.7% of its total portfolio. The fund is set to grow its current assets under management from RM833.76 billion to RM1 trillion in the next few years.

Petronas Gas Q4 profit weighed down by Kimanis Power

PETALING JAYA: Petronas Gas Bhd’s net profit fourth quarter ended Dec 31, 2018 fell 34.7% to RM317.90 million from RM486.70 million a year ago, largely attributed to share of losses from a joint venture company, Kimanis Power Sdn Bhd.

The losses were due to de-recognition of deferred tax assets amounting to RM124.3 million (being 60% share of the group) in relation to certain tax benefits which now have a seven-year utilisation limit under the new Finance Act 2018.

Its revenue grew 4.9% to RM1.39 billion compared with RM1.32 billion in the previous year’s corresponding quarter mainly contributed by the second liquiefied natural gas (LNG) regasification terminal in Pengerang, Johor which commenced commercial operations in November 2017, coupled with higher revenue from utilities and gas transportation segment.

The group has approved a fourth interim dividend of 22 sen per share amounting to RM435.3 million in respect of the financial year ended Dec 31, 2018.

For the full-year period, Petronas Gas’ net profit grew 0.98% to RM1.81 billion from RM1.79 billion a year ago, while revenue of RM5.5 billion was the highest in history, an increase of 12.3% compared to RM4.90 billion last year.

The Energy Commission has approved the tariffs for the gas transportation and regasification services for 2019. While the tariffs are expected to affect the group’s transportation and regasification business segment revenues in 2019, both segments are anticipated to continue contributing positively to its earnings.

The group’s gas processing segment is expected to deliver improved earnings pursuant to the higher fixed remuneration charge under the second term of the 20-year Gas Processing Agreement effective from 2019 until 2023.

Property, farming drive KLK’s Q1 earnings

PETALING JAYA: Kuala Lumpur Kepong Bhd’s (KLK) net profit for the first quarter ended Dec 31, 2018 rose 6.61% to RM250.92 million from RM235.36 million a year ago driven by property development and investment holding segments.

In a filing with Bursa Malaysia, KLK said its property development segment achieved a much higher profit of RM11.1 million during the quarter compared with RM1.7 million a year ago supported by the increase in revenue to RM39.8 million compared with RM17.9 million a year ago.

Under the investment holding/others segment, the farming business recorded a higher profit of RM56.5 million compared with RM31.9 million a year ago due to higher crop production as a result of better yields and larger cropped area.

However, the plantation segment’s profit fell sharply by 58% to RM127.5 million from RM303.6 million a year ago despite the 7.9% improvement in fresh fruit bunches (FFB) production to 1,105,465 MT, due to the drop in crude palm oil (CPO) and palm kernel (PK) selling prices realised.

The manufacturing segment also recorded lower profit of RM98 million, reflecting a 28.8% drop from RM137.7 million a year ago while revenue fell 12.4% to RM2.20 billion from RM2.52 billion a year ago as a result of lower selling prices.

“Decline in profits from China and Europe operations had more than offset the improvement in profits from Malaysia operations,” KLK said.

The oleochemical division’s profit was lower at RM94.5 million compared with RM137.1 million a year ago but profit from the other manufacturing units had increased to RM3.5 million compared with RM641,000 a year ago.

KLK said the group’s profit had accounted for foreign currency exchange gain of RM38 million which arose from the translation of inter-company loans denominated in foreign currencies and a surplus of RM22.5 million arising from government acquisition of plantation land.

Revenue for the quarter fell 21.06% to RM4.09 billion from RM5.18 billion a year ago.

Moving forward, the group expects a reasonably satisfactory profit for the financial year ending Sept 30, 2019 (FY19).

“Prevailing CPO prices had since recovered from the low levels in the preceding quarter. Should such recovery be sustained, we are optimistic that the prospects for plantation profit for FY19 will be satisfactory,” it said.

It expects the oleochemical division to sustain its performance through increase in capacity utilisation and improvement in margins.

KLK’s share price fell 0.24% to close at RM24.74 today with 317,700 shares traded.

Porsche warns of Brexit price hike on UK cars

FRANKFURT, Feb 18 — Porsche customers in the UK should brace for a price hike of up to 10 per cent in case of a hard Brexit, the luxury German carmaker warned today. The company said it had taken the "precautionary step" of informing customers…

EU vows 'swift' riposte to threatened US auto tariffs

BRUSSELS, Feb 18 — The EU promised a quick and effective response if the United States imposes import duties on European autos, a spokesman for the European Commission said today. Brussels issued the threat after the US Commerce Department filed a…

BLand ventures into Iceland real estate in RM57.5m deal

PETALING JAYA: Berjaya Land Bhd (BLand) is planning to venture into Iceland’s property market through the acquisition of Iceland real estate firm Geirsgata 11 EHF (GE11) in a US$13.99 million (RM57.54 million) deal.

In a filing with Bursa Malaysia, BLand said the proposed acquisition will provide an opportunity for the group to venture into property development and investment in Iceland and in particular, branded hotels and residences.

To facilitate the proposed acquisition, BLand has incorporated a 100%-owned subsidiary namely Berjaya Reykjavik Investment Ltd (BRIL) in Iceland for a cash subscription of €1.00 (about RM4.69).

Following the incorporation, BRIL has entered into an agreement with Fiskitangi EHF and Utgerdarfelag Reykjavikur HF (URHF) to undertake the proposed acquisition of GE11 for US$1.4 million (RM5.75 million) cash.

As part of the deal, BRIL will also repay the outstanding loan of US$12.59 million (about RM51.79 million) obtained by GE11 from URHF to purchase a piece of leasehold land in Iceland.

GE11 was incorporated in Reykjavik, Iceland in 1998 and its principal activities are provision of real estate, lending activities and related operations. It owns leasehold real estate at Geirsgata 11, of 101 Reykjavik, currently being leased from Faxaflóahafnir sf.

BLand expects to fund the cash payments for the proposals from internally generated funds and/or borrowings of the group. The proposals are expected to be completed in the first half of 2019.

European stocks mostly drop after rally

LONDON, Feb 18 — Europe's major stock markets mostly slid today, as investors set aside a bright performance in Asia and paused following last week's bumper gains, dealers said. "European stocks have had a stuttering start to the week, with strong…

Swiss bank UBS faces French court ruling on fraud charges

PARIS, Feb 18 — A Paris court will rule Wednesday on whether Swiss banking giant UBS illegally tried to convince French clients to hide billions of euros in Switzerland, charges which prompted prosecutors to seek a record €3.7 billion (RM17.09…