Tuesday, March 26th, 2019


US consumer confidence retreats in March

WASHINGTON, March 26 — US consumer confidence retreated sharply in March, confounding expectations that the rebound in the prior month would continue, according to a private survey released today. That decline, which included a more pessimistic…

European lawmakers urge end of golden visa schemes, name EU tax havens

BRUSSELS, March 26 — The European Parliament urged EU member states today to curb money-laundering in the bloc by ending programmes to sell visa and passports, a step the multi-billion-dollar industry said would cause economic damage. The…

Astro posts RM118.4m Q4 net profit, declares 1.5 sen dividend

PETALING JAYA: Astro Malaysia Holdings Bhd’s net profit for the fourth quarter ended Jan 31 decreased 35% to RM118.4 million from RM181.79 million a year ago mainly due to higher net finance costs.

In a filing with Bursa Malaysia, the group attributed the higher net finance costs to unfavourable unrealised forex movement arising from unhedged finance lease liabilities and vendor financing, and a decrease in earnings before interest, tax, depreciation and amortisation.

Revenue for the current quarter of RM1.3 billion was lower by 1.5% against corresponding quarter of RM1.39 billion, mainly due to a decrease in subscription revenue because of lower package take-up.

For the full year period, Astro’s net profit fell 40% to RM462.92 million from RM770.64 million a year ago resulting from higher sports content cost, one-off employee separation scheme costs and unrealised forex losses on finance lease liabilities.

Revenue for the year of RM5.48 billion was marginally lower against corresponding year of RM5.53 billion mainly due to a decrease in subscription and advertising revenue.

The decrease in subscription revenue was mainly due to lower package take-up and the decrease in advertising revenue was due to a slowing advertising market.

It declared a fourth interim dividend of 1.5 sen per share in respect of the financial year ending Jan 31 (FY19), while total dividend declared for FY19 is 9 sen.

Astro chairman Tun Zaki Azmi said in a competitive media landscape, Astro continues to be cash generative, cost disciplined and proactive in its capital management.

Astro CEO Henry Tan said given the challenging operating environment, Astro is reviewing its business so that it remains efficient and agile to serve its customers better.

“Our focus will remain on serving our 5.7 million Malaysian homes and 23 million individuals via our Pay TV and NJOI platforms with differentiated and compelling content. By leveraging on our customer base and our ability to reach and engage on television, radio and digital platforms, revenue adjacencies such as commerce, adex, content licensing and theatrical sales are showing promising growth trajectory,” he said.

Astro anticipates FY20 to be a challenging year and aims to strengthen its customer value proposition via initiatives such as broadband bundles, seamless viewing across all screens, better customer service and deeper engagement with fans.

Boost for Paris’s Champs Elysees as Galeries Lafayette opens ‘concept’ store

PARIS, March 26 — High-end French department store Galeries Lafayette will open a new outlet on Paris’s Champs Elysees this week, aiming to lure big-spending tourists and trendy Parisians back to the tree-lined avenue that was once a byword for…

US stocks rebound as growth fears ease

NEW YORK, March 26 — Wall Street stocks bounced back early today, with energy, technology and banking shares gaining after worries over global growth prompted a downturn in recent days. About 30 minutes into trading, the Dow Jones Industrial…

Margma calls on TNB, Gas Malaysia to revise natural gas tarif

PETALING JAYA: The Malaysian Rubber Glove Manufacturers Association (Margma) has called for a revision of the natural gas tariff following the sharp fall of liquefied natural gas (LNG) and coal prices in recent months.

The association urged Gas Malaysia Bhd and Tenaga Nasional Bhd (TNB) to review current cost factors and to revise the tariff to be in line with the international prices of LNG and coal, and has sought the Energy Commission’s assistance in moderating energy costs to make the local rubber glove industry more competitive.

“It is obviously natural that the cost of manufacturing ought to come down in tandem with the sharp drop in prices of these two important sources of energy. The reduction in energy costs will definitely be a booster to rubber glove manufacturers who are now saddled with a rather high natural gas cost and the higher tariff of electricity usage for businesses,” Margma president Denis Low Jau Foo (pix) said in a statement.

According to Margma, the Asian LNG pricing, using Japan Korea futures, was at its highest at US$11.81 per MMBtu in September last year. Currently, the price is only US$4.62 (about RM19) per MMBtu, representing a difference of around 60%.

The price of coal, meanwhile, has dropped by almost 25%, from US$118 a tonne in July 2018 to US$88.25 (about RM360) a tonne now.

Low said the Malaysian rubber glove industry is currently affected by rising costs due to higher wages, higher natural gas prices over the months, a not-so-conducive electricity tariff for businesses and the highly competitive global business environment.

“While most of our member-companies are seasoned players and very matured, it is still a challenge too much for them and, as such, it would be wise and clever for the Energy Commission to quickly step in to ensure that Malaysia continues to be the global leader in the supply of medical examination and surgical gloves to the world,” he added.

In terms of global consumption, Margma expects 300 billion pieces of rubber gloves this year, of which it hopes to garner 65%. Malaysia exports to over 190 countries across the globe.

Last year, Margma member-companies exported an estimated 168.8 billion pieces of rubber gloves to the world with a value of about RM17.74 billion. These companies aim to export RM19.88 billion worth of rubber gloves this year.

In addition to the costs and competitiveness of the Malaysian rubber glove industry, Margma hopes that the foreign workers issue will be resolved and will be engaging with Home Affairs Minister Tan Sri Muhyiddin Mohd Yassin and Human Resources Minister M. Kulasegaran to seek a winning solution.

Islamic financing to grow 10-11% this year: RAM Ratings

PETALING JAYA: Financing growth of the Islamic banking sector is expected to come in at around 10-11% this year, with Islamic financing still anchoring the growth of the overall Malaysian banking sector.

According to RAM Ratings’ annual publication Islamic Banking Insight, Islamic banking continued to expand at a much faster pace of 11% compared with conventional loans which grew 3.3% last year.

As at end-January 2019, Islamic financing comprised some 32% of the overall system’s loans.

The rating agency said Islamic financing may take longer to achieve Bank Negara Malaysia’s 40% target for it as a proportion of the overall system’s loans by 2020.

“While it may require more time to attain the targeted 40%, the Islamic banking industry has come a long way in terms of maturity and breadth,” said RAM’s co-head of financial institution ratings, Wong Yin Ching.

RAM has maintained a stable outlook on the Malaysian Islamic banking sector, in line with its view on the overall domestic banking system.

Its main expectations for the Islamic banking sector this year include Islamic financing growth to hover around the low teens, asset-quality indicators to remain resilient and funding profile to strengthen in the lead-up to the implementation of the net stable funding ratio (NSFR) requirement.

It also expects a stable outlook on profitability despite slight margin compression as well as strong capitalisation.

RAM said asset-quality indicators of Islamic banks have remained relatively benign, with a gross impaired financing (GIF) ratio of 1.2% as at the end of January this year and an annualised credit cost ratio of 27 bps in the first nine months of 2018.

“That said, we note an uptrend in the absolute GIF of Islamic banks, which increased 13% in 2018. On the other hand, the implementation of Malaysian Financial Reporting Standards 9 (MFRS 9) has bolstered loss-absorption buffers; the Islamic system’s GIF coverage ratio had improved to 103% as at end-January 2019,” it said.

Although the moderation in economic growth may affect borrowers’ repayment capabilities and thus lead to an uptick in impairments, RAM said the asset quality of the Islamic banking industry is unlikely to deteriorate significantly.

In 2018, the Islamic banking system’s deposits expanded at 12.4%, followings its commendable 14.2% growth in the preceding year. The bulk of the expansion stemmed from fixed deposits as banks are bracing for the implementation of the NSFR requirement.

“Despite the deferred adoption of the NSFR, margin pressure is unlikely to ease amid the ongoing keen competition for retail and SME deposits, as banks keep building up their funding bases.

“However, the overall outlook on profitability remains stable as banks keep a tight rein on operating expenses,” said RAM’s co-head of financial institution ratings, Sophia Lee.

As at end-January 2019, liquidity remained healthy with the industry’s liquidity coverage ratio standing at 143%. The Islamic banking system remains well capitalised, with respective common equity tier-1 and total capital ratios of 13.3% and 17.6% as at end-January 2019.

Hostile takeover of highways unlikely: Research house

PETALING JAYA: The government is unlikely to exercise the expropriation clause in the concession agreements which would lead to a hostile takeover of the four highways under Gamuda Bhd, said TA Research.

In its report today, the research house said that the proposed takeover of the four highways by the government will be on a willing buyer-willing seller basis.

If Gamuda and the government could reach an agreement on the proposed acquisition of highways by the government, the research house believes that the disposal of highways by Gamuda would still be conditional on obtaining approvals from shareholders of Lingkaran Trans Kota Holdings Bhd (Litrak) and Gamuda, if the proposed disposal is carried out in a single exercise.

This is given that shareholders’ approval is required for transactions that exceed a percentage ratio threshold of 25%. For Litrak, it requires at least 75% approval of those who are present and vote in a general meeting as it is a major disposal.

“In the event the offer is perceived to be detrimental to the shareholders of Gamuda and Litrak, the shareholders can vote against and turn down the proposed offer in general meetings,“ said TA.

This is given that Lebuhraya Shah Alam (Kesas), Lebuhraya Damansara Puchong (LDP) and Sistem Penyuraian Trafik KL Barat (Sprint) generate healthy cash flow; the concessions of Kesas, LDP and Sprint are relatively near to concession expiry dates, which generally require lower acquisition considerations and have lower outstanding debts, compared with other urban highways that have longer remaining concession periods.

In addition, the government’s cost of funds is generally lower than corporates’ funding costs; and the operation costs and financing costs of these highways are likely to be sufficiently covered by the proposed congestion charge, with a possibility of generating a surplus to the government, on TA’s assumption that the congestion charge is imposed on a permanent basis.

It maintained a sell call on Gamuda with an unchanged target price of RM2.80 as it thinks the current share price has fully reflected its value.

“We reiterate our ‘buy’ recommendation on Litrak with an unchanged target price of RM5.11. At the current share price, investors could potentially benefit from the proposed acquisition of LDP and Sprint by the government, while having the downside risk capped.”

However it maintained its “underweight” call on the construction sector as it thinks the valuation has run ahead of its fundamental. In addition, the property market, in which most of the contractors have direct or indirect exposure, remains challenging.

“With the recent weakness in share price performance, we take this opportunity to upgrade our calls on Gadang Holdings Bhd (from hold to buy) and Eversendai Corp Bhd (from sell to hold).”

Advancecon, Kumpulan Semesta to explore solar energy opportunities

KUALA LUMPUR: Earthworks and civil engineering services specialist Advancecon Holdings Bhd recently signed a memorandum of understanding (MoU) with Kumpulan Semesta Sdn Bhd (KSSB) to explore opportunities in the solar energy industry in Malaysia, particularly the Large Scale Solar Project 3 initiated by the Energy Commission.

Subject to Advancecon being successful in its bid for the project, Advancecon will appoint KSSB as the project’s consultant, whereby KSSB’s primary role is to identify and secure a suitable land to serve as the location of the project.

The MoU also involves KSSB working closely with Advancecon to provide all necessary expertise and assistance towards the implementation of the project and will include, but not limited to, local management support and development support. This also includes coordinating with various landowners, government officials and the local community.

Advancecon group CEO Datuk Phum Ang Kia said this new collaboration with KSSB is meant to explore opportunities in the solar energy industry as Malaysia embraces renewable energy.

“We believe that Advancecon’s current expertise as a specialist in infrastructure works would be a plus point in our bid for the proposed solar project. Moreover, this marks a new step for Advancecon to develop a source of recurring income to complement our core business in earthworks and civil engineering,“ Phum said in a statement.

As part of Advancecon’s CSR initiatives, it remains committed in implementing a climate change strategy to address increasing environment concerns on renewable energy and to positively impact communities for a sustainable future.

Weak single-family homebuilding weighs on US housing starts

WASHINGTON, March 26 — US homebuilding fell more than expected in February as construction of single-family homes dropped to more than a 1-1/2-year low, but the outlook for the housing market is improving amid declining mortgage rates. Housing…