Monday, March 11th, 2019
WASHINGTON, March 11 — The US economy saw retail sales rebound slightly in January but December's sales were even worse than originally reported, according to government data released today. The bleak December figures were yet another sign of the…
WASHINGTON, March 11 — Electric carmaker Tesla is reversing course on its decision to move most of its sales online, saying it will keep many of its showrooms open — but will need to hike prices to do so. Tesla said in a statement late Sunday the…
KUALA LUMPUR: Malaysia’s decision on whether or not to ratify the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) must take into account how foreign investors will view the country’s position within Asean, says the Ministry of International Trade and Industry.
Deputy Minister Dr Ong Kian Ming (pix) said this is especially so considering the region’s top three trading powerhouses – Singapore, Vietnam and Thailand – have either ratified the agreement or expressed strong interest to join the CPTPP.
“Let’s say these three most open economies in Asean either ratify or are very interested to join CPTPP, while Malaysia is in a position where we are deliberating on the process.
“We need to take into account how foreign investors will view our position in the region in the long term,“ he told reporters after speaking at an exclusive dialogue on ‘Asean Integration Outlook 2019’ today.
Furthermore, he said there is also a growing discussion on the possibility of China joining the pact.
“Although I do not anticipate China to be part of the CPTPP in the next one or two years, we cannot discount that possibility especially considering the US-China trade tensions,“ he said.
He said the government is cautiously optimistic that talks on another mega trade pact – the Regional Comprehensive Economic Partnership (RCEP) – would reach a substantive conclusion this year.
He said one area of discussion that is yet to reach a conclusion among participating countries is the level of trade liberalisation.
“We are also waiting for the outcome of the general election in India to see what kind of position the new administration will take.
“However, I think that the push for greater trade is something that a country like India will have to consider very seriously regardless of which side will take power after the election,“ he said.
Commenting on the third national car, he said the project is being handled by Malaysian Industry-Government Group for High Technology (MIGHT), an agency under the Prime Minister’s Department.
The International Trade and Industry Ministry’s role would be to coordinate with MIGHT in terms of the National Automotive Policy (NAP) to see how the third national car fits into the larger automotive sector.
“The third national car will not be a flying car. I have not seen the prototype and I am not privy to know the details of the car, but it is unlikely that the flying car will be produced on a commercial basis.
“Whatever is developed will be a prototype, utilising some existing seed money and then if there are interested parties in the private sector to take on this project to expand it, it will be the prerogative of the private sector,“ he said.
Asked about Malaysia’s foreign direct investment performance for 2018, he said: “I am quite confident that it will be better than 2017 but the detailed figures will be announced by the minister on Thursday.”
The half-day event today was organised by CIMB Asean Research Institute.
PETALING JAYA: Protasco Bhd’s wholly owned subsidiary HCM Engineering Sdn Bhd has filed a legal suit at the Kuala Lumpur High Court against its mechanical and electrical works sub-contractor Kuasatek (M) Sdn Bhd for breach of contract.
HCM’s claim against Kuasatek is premised on breach of contract by Kuasatek pursuant to a letter of appointment for mechanical and electrical works packages dated March 15, 2016, a work package under a project previously awarded to HCM, which was the design and built contract for the proposed additional of a four-storey office building with basement car park to the existing facilities in Bukit Jalil for the Asian Football Confederation.
“The legal proceeding is to finally determine the liability of Kuasatek under the contract and for the refund of the adjudicated sum paid to Kuasatek pursuant to the adjudication decision dated July 4, 2018,“ Protasco said.
HCM’s claims against Kuasatek include a declaration that the contract dated May 13, 2016 between the plaintiff and the defendant is for the sum of RM9.5 million; the defendant has breached the contract dated May 13, 2016; the plaintiff is allowed to set off the sum of RM288,204.76 as the costs to rectify the defectives works and /or work done on behalf; the plaintiff is allowed to set off the sum of RM930,000 as liquidated ascertained damages; the plaintiff is allowed to withhold the sum of RM475,000 as the performance bond until the issuance of the Certificate of Making Good Defects by Asian Football Confederation.
In addition, the defendant shall pay the sum of RM12,889.25 to the plaintiff; refund the sum of RM2.97 million to the plaintiff being the excess payment paid by the plaintiff to the defendant for work done; refund the sum of RM106,571.60 to the plaintiff forthwith being the sum paid by the plaintiff to the defendant for legal costs, adjudication costs and expenses; general damages to be assessed by the Court; interest at the rate of 5% per annum on the amount above from the date of judgment until date of full payment; and costs.
Protasco said the legal proceeding it has initiated has no significant immediate adverse impact on its current financial position.
HCM had previously appealed to the High Court after its originating summons to set aside the adjudication decision dated July 4, 2018 obtained by Kuasatek was dismissed with costs.
PETALING JAYA: The higher capital expenditure (capex) spending target of RM50 billion by Petroliam Nasional Bhd (Petronas) may spur local upstream activities, according to HLIB Research.
Reading through Petronas’ FY18 report card, HLIB said commendable profit was delivered with the balance sheet staying firm and healthy.
“We are pleasantly surprised by the capex spending target to land at RM50 billion this year. This would probably translate into higher activities in the upstream space,“ it said.
Petronas’ FY18 earnings before interest, tax, depreciation and amortisation surged by 27% to RM116.5 billion on widened margin (+6.2 ppts) to 46.4% thanks to consistent cost optimisation amid a better crude environment.
However, the research house opined that it may be tough for Petronas to continue to expand its margins, especially when services rates are on gradual recovery mode.
It said the aggressive international expansion would probably benefit the services players which already have a strong international presence (Sapura Energy and Yinson Holdings) or companies that are eager to seek overseas growth (Malaysia Marine & Heavy Engineering Holdings or MMHE, and Dayang Enterprise Holdings).
HLIB reiterated its neutral view on the sector while keeping its average oil price forecast unchanged at US$68 (RM277) per barrel in 2019. Its preferred pick is Sapura Energy.
With the upstream segment having been deprived of capex over the recent years from Petronas, Kenanga Research believes Petronas’ higher capex stance moving forward may be for underdevelopment green fields (such as Kelidang, Limbayong) and recent discoveries (for instance, a massive find in South Sumatra).
“We see potential beneficiaries of higher Petronas capex spend to include fabricators (Sapura Energy, MMHE) as well as floating production storage and offloading players bidding for local contracts (MISC, Yinson). However, we feel that cost optimisation would be a key concern, as we expect to see competitively low margins for upcoming job awards,“ Kenanga said.
It maintained its neutral call on the sector. With balance sheet resilience and earnings visibility still key selection criterion for the research house, it favours more stable names such as Dialog Group, Serba Dinamik Holdings and Yinson, although it also sees a post-restructuring Sapura Energy as a potential prime beneficiary of increased upstream activities locally and globally.
“Overall, we believe Brent prices ranging between US$60 and US$70 a barrel to be ‘sensible’, with oil majors comfortable producing at these levels. In fact, we expect to see increased final investment decisions globally in the coming one to two years, spurred by massive new fields in the Middle East and Africa. From here, we look towards Opec’s (Organization of the Petroleum Exporting Countries) next meeting in April for indications of continued output cut commitments.”
PETALING JAYA: Berjaya Sports Toto Bhd’s (BToto) 88.26% owned subsidiary Berjaya Philippines Inc. (BPI) has acquired 1.59 million shares or a 0.14% stake in 7-Eleven Malaysia Holdings Bhd for RM2.23 million cash (Philippine Peso 28.52 million).
In a filing with Bursa Malaysia, BToto said BPI, which is listed on the Philippine Stock Exchange, now holds a total of 23 million shares representing 2.04% equity interest in 7-Eleven Malaysia.
According to BToto, the acquisitions were made in the open market between Dec 20, 2018 and March 8, 2019 at prevailing market prices. The average price per share is RM1.40 per share.
7-Eleven Malaysia is the owner and operator of 7-Eleven stores in Malaysia, a convenience store chain with more than 2,200 stores nationwide.
PETALING JAYA: KNM Group Bhd’s wholly owned subsidiary KNM Process Systems Sdn Bhd has issued and submitted a request for arbitration against Lukoil Uzbekistan Operating Company LLC with the Institute of the Stockholm Chamber of Commerce (SCC) in Sweden, seeking for claims and damages in excess of US$96 million (RM393 million).
The request concerns a dispute arising from a contract for the supply of technical documentation and equipment for development of gas-condensate fields Adamtash, Gumbulak and Djarkuduk-Yangi Kilzilcha in Uzbekistan entered into between the claimant KNM Process Systems and the respondent Lukoil on Dec 3, 2010.
Under the contract, the SCC rules shall apply to this arbitration and the seat of arbitration shall be at Stockholm, Sweden.
KNM Process Systems was engaged by Lukoil as contractor for the supply of technical documentation and equipment for development of gas-condensate fields Adamtash, Gumbulak and Djarkuduk-Yangi Kilzilcha.
The original contract price was US$212.11 million and after subsequent addenda for change orders, the final contract price was US$272.03 million.
In commencing arbitration, KNM Process Systems is seeking for claims and damages in excess of US$96 million in relation to unpaid invoices for work done, costs arising from breach of the contract, costs arising from design changes, additional works performed, prolongation of contract and financial losses.
“This arbitration is part of the claimant’s on-going recovery actions to protect and preserve the claimant’s rights and monetary claims under the contract pursuant to all of the claimant’s efforts to resolve the matter in an amicable way with the respondent,“ KNM said.
It said the arbitration is not expected to have any material operational and financial impact on the group’s earnings for the financial year ending Dec 31, 2019 and Dec 31, 2020.
PETALING JAYA: TFP Solutions Bhd is disposing of its loss-making wholly owned subsidiary Tech3 Solutions Sdn Bhd for RM7.90 million cash.
However, the proposed disposal is expected to result in a pro forma gain of RM1.63 million to the group.
In a filing with Bursa Malaysia, TFP said it has entered into a conditional share sale agreement with Cloud Dynamix Sdn Bhd for the proposed disposal.
Tech3 is principally involved in providing enterprise system solutions. Its revenue has been decreasing over the years from RM60.06 million in financial year ended Dec 31, 2016 (FY16) to RM58.84 million in FY17 and RM33.57 million in FY18, due to lower sales of servers as organisations move towards cloud technology instead of setting up their own ICT infrastructure.
It also suffered net losses of RM1.67 million, RM89,000 and RM625,000 in FY16, FY17 and FY18 respectively due to low gross profit coupled with high operating expenses.
“A substantial amount of funds is required to be invested in research and development in cloud technology for Tech3 to catch up with the existing industry players, it would also have to adopt a vastly different business model from the sale, installation and maintenance of servers to a business model that provides cloud technology services to organisations, which may not provide immediate returns to the group.
“As such, the management of the company is of the view that this is an opportune time to dispose Tech3 and to realise a gain on the disposal as compared to further investing substantial amount of funds to turnaround Tech3’s business,” said TFP.
TFP has identified the business management solutions (BMS) segment as the main revenue driver of the group. It noted that revenue from BMS has been on an increasing trend.
It also intends to venture into new businesses that will create synergy with the existing BMS business, including potential collaboration with its partners to provide financial technology to existing customers.
Of the RM7.9 million proceeds to be raised from the proposed disposal, RM3.64 million will be used as working capital for BMS business, RM4.07 million as funding for new business plans and RM200,000 for estimated expenses of the proposed disposal.
KUALA LUMPUR, March 11 — The International Monetary Fund (IMF) expects Malaysia’s economic growth to stabilise in 2019 and over the medium term. “Domestic demand will remain the main driver of growth, with private consumption and investment…