Tuesday, April 9th, 2019

 

Rail boost for construction, building materials stocks

PETALING JAYA: The recent headlines on the Kuala Lumpur-Singapore High Speed Rail (HSR) and the East Coast Rail Link (ECRL) projects are putting construction and building materials stocks on the radar of investors on Bursa Malaysia.

Some construction and building materials companies have seen their share prices rally since Monday after MyHSR Corp Sdn Bhd revealed its plans to appoint a technical advisory consultant to review the technical aspects of the HSR project’s cost-reduction options.

The HSR, which is currently on hold, could be revived as Prime Minister Tun Dr Mahathir Mohamad said today the government is looking at proposals aimed at reducing the cost of the project. It will be discussed further with Singapore before the end of the suspension period on May 31, 2020.

Notably, negotiations on the ECRL, which has been suspended due to its escalating price tag, are expected to be concluded by the end of this month, before Mahathir leaves for China for the Belt and Road Forum that starts on April 26.

Among the top gainers on Bursa Malaysia today were George Kent (Malaysia) Bhd, Ann Joo Resources Bhd-PA (preference shares) and Ann Joo Resources, which rose 11.67%, 18.18% and 4.54% to RM1.34, 65 sen and RM1.84, respectively.

Other construction and building materials counters that saw heavy buying included cement producer Lafarge Malaysia Bhd, Advancecon Holdings Bhd, IJM Corp Bhd, Ajiya Bhd and Tasek Corp Bhd which increased 2.41%, 5.62%, 1.3%, 1.83% and 0.55% to RM2.55, 47 sen, RM2.33, 55.5 sen and RM5.53, respectively.

“The KL Construction index has rebounded 33% from a low base year to date and from here the trend will be sustained when ECRL, HSR all come back to life,” Rakuten Trade Sdn Bhd vice-president of research Vincent Lau told SunBiz.

“We have been advocating the construction sector since February during our market outlook. Sentiment driven with the news of mega infrastructure projects headlines (are) driving the stock price now,” he added.

The proposed 350km HSR track between Bandar Malaysia in Kuala Lumpur and Jurong East in Singapore includes six stations in between – Putrajaya, Seremban, Air Keroh, Muar, Batu Pahat and Iskandar Putri. The journey from Kuala Lumpur to Singapore would be about 90 minutes with the travelling speed exceeding 300 kilometres per hour.

For the ECRL, Transport Minister Anthony Loke Siew Fook has confirmed that its alignment will be rerouted to benefit Negri Sembilan when it resumes after negotiations with the Chinese government at the end of this month. The new construction cost for the ECRL is expected to be much lower than the initial cost of RM81 billion.


China to ban bitcoin mining, traders say move not surprising

SHANGHAI/HONG KONG: China’s state planner wants to eliminate bitcoin mining in the country, according to a draft list of industrial activities the agency is seeking to stop in a sign of growing government pressure on the cryptocurrency sector.

China is the world’s largest market for computer hardware designed to mine bitcoin and other cryptocurrencies, even though such activities previously fell under a regulatory grey area.

The National Development and Reform Commission (NDRC) said on Monday it was seeking public opinions on a revised list of industries it wants to encourage, restrict or eliminate. The list was first published in 2011.

The draft for a revised list added cryptocurrency mining, including that of bitcoin, to more than 450 activities the NDRC said should be phased out as they did not adhere to relevant laws and regulations, were unsafe, wasted resources or polluted the environment.

It did not stipulate a target date or plan for how to eliminate bitcoin mining, meaning that such activities should be phased out immediately, the document said. The public has until May 7 to comment on the draft.

State-owned newspaper Securities Times said today the draft list “distinctly reflects the attitude of the country’s industrial policy” towards the cryptocurrency industry.

“The NDRC’s move is in line overall with China’s desire to control different layers of the rapidly growing crypto industry, and does not yet signal a major shift in policy,” said Jehan Chu, managing partner at blockchain investment firm Kenetic.

“I believe China simply wants to ‘reboot’ the crypto industry into one that they have oversight on, the same approach they took with the internet.”

Other bitcoin traders said they were not surprised by the government’s move.

“Bitcoin mining wastes a lot of electricity,” said one Chinese bitcoin trader who declined to be named due to the sensitivity of the situation.

Last week, the price of bitcoin soared nearly 20% in its best day since the height of the 2017 bubble, and breaking US$5,000 for the first time since the middle of November, although analysts and traders admitted they were puzzled by the surge.

Bitcoin, which accounts for around half of the cryptocurrency market, was down by around 1.4% today, while other major coins such as ethereum and Ripple’s XRP also fell by similar amounts.

Traders in London said it was unclear how much the Chinese move was weighing on the market.


MNC Wireless to raise at least RM11m from rights issue of preference shares

PETALING JAYA: MNC Wireless Bhd has proposed a renounceable rights issue of new irredeemable convertible preference shares (ICPS) together with free detachable warrants on the basis of 50 ICPS together with one free warrant for every 10 existing shares to raise a minimum of RM11 million.

The exercise involves the issuance of up to 3.77 billion ICPS together with up to 75.38 million free warrants B.

The gross proceeds to be raised from the exercise are intended to be utilised for the upgrading of the group’s bulk short messaging service (SMS) messaging platform, upgrading of the group’s premium mobile content platform, development of an online property management platform, acquisition and/or investments in other complementary businesses and/or assets.

MNC Wireless opined that the proposed rights issue of ICPS with warrants is the most suitable means of fund raising for the company as it will not have an immediate dilution effect on the group’s earnings per share (EPS) as the ICPS are expected to be converted over the conversion period as opposed to a fund raising exercise via rights issue of ordinary shares which will have an immediate upfront impact on the group’s EPS.

It also enables the company to raise the requisite funds without incurring additional interest expense from bank borrowings, thereby minimising any potential cash outflow in respect of interest servicing costs.

The exercise of the warrants B in the future will allow the company to obtain additional funds without incurring additional interest expenses from borrowings. Should the company increase its borrowings in the future, the exercise of warrants B will increase shareholders’ funds and lower the company’s gearing, thereby providing the company with flexibility in terms of the options available to meet its funding requirements.


Analysts: Fortis has highest impairment risk for IHH

PETALING JAYA: Analysts remain cautious about IHH Healthcare Bhd’s recent acquisition of India’s Fortis Healthcare Ltd as it has the highest risk of impairment moving forward.

This comes after a qualified opinion by IHH’s auditors pertaining to its FY18 audited accounts. The rationale behind the opinion is that there are ongoing investigations by various parties on Fortis, as such the auditors were unable to ascertain the extent of funds’ diversions, if any, in excess of the amount that had been provisioned for prior to the acquisition.

“Given the many external variables affecting Fortis, we are of the opinion that out of all of IHH’s core assets, Fortis has the highest risk of impairment moving forward,” said HLIB Research after attending a conference call by IHH.

Post clarification from management, it has uplifted the “under review” call on IHH and the stock remains a “hold”.

AmInvestment Bank Research is negative on the issue as there is a risk of impairments which would impact IHH’s financial statements. The provisional goodwill accounted for Fortis in FY18 is RM1.5 billion.

IHH management reiterated that concerns raised in the qualified opinion were known prior to the acquisition, while Fortis will undergo the procedural impairment test annually as per the groups other assets.

IHH had acquired a 31.1% stake in Fortis in November 2018 and the group will be making an open offer to buy an additional 26% stake in Fortis upon the lifting of status quo order by India’s Supreme Court.

AmInvestment Bank Research remains concerned over IHH due to the high currency risk associated with its operations in Turkey, coupled with start-up losses at its green field hospital projects.

However, its long-term growth prospects are strong underpinned by growing demand for private healthcare backed by rising affluence and the aging populations.

“IHH also appeals to investors for its presence in key regional markets such as Singapore, India and China,” said the research house, which maintains its “hold” recommendation on IHH with an unchanged fair value of RM5.30 per share.

HLIB Research also noted that the acquisition of Fortis is positive for IHH in the long run.

“However we qualify that the speed to completion and gestation period for this acquisition remains opaque amidst the backdrop multiple court cases and other external variables at play.”

IHH’s share price has been on a downward spiral since Monday with a fall of 3.6%. Today, the stock declined 2 sen or 0.4% to RM5.56 on 4.61 million shares done.


EU’s Juncker demands fair trade from China ahead of summit

BRUSSELS, April 9 — European companies should have the same rights in China as Chinese firms in Europe, European Commission head Jean Claude Juncker said today as an unusually tense EU-China summit kicked off in Brussels. The EU-China summit every…


Saudi Aramco bond sale attracting record demand, says bank source

PARIS, April 9 — The bond sale by energy giant Saudi Aramco has attracted record demand of US$85 billion (RM348.3 billion) from investors, one hour before bidding closed, a banking source told AFP. Saudi Arabia’s Energy Minister Khalid al-Falih…


Lenders take control at UK department store Debenhams

LONDON, April 9 — British department store chain Debenhams has been taken over by lenders after falling into administration, it said today, amid tough times in the retail sector. High street stalwart Debenhams, whose history dates back to…


Proton extends partnership with Petronas Lubricants

KUALA LUMPUR, April 9 — Perusahaan Otomobil Nasional Sdn Bhd (Proton) has extended its partnership with Petronas Lubricants Marketing Malaysia Sdn Bhd (PLMM) for 10 years to develop, supply and deliver lubricant products and…


LBS’ new Dengkil township, [email protected], launched today

KUALA LUMPUR, April 9 — A new 633 acre self-sustainable township was launched today in Dengkil by award-winning property developers LBS Bina Group Berhad (LBS). The new development, named [email protected], has already sold out its first and second…


Commodity currencies propelled by crude oil price rally

LONDON, April 9 — The Australian and Canadian dollars rose today, aided by a surge in oil prices to five-month highs that lifted most commodity-linked currencies. Oil prices have rallied on expectations that global supplies would tighten due to…