Wednesday, April 10th, 2019


Carlsberg pledges no more price hikes this year

KUALA LUMPUR: Carlsberg Brewery Malaysia Bhd does not plan to increase the price of its products for the rest of 2019, said outgoing managing director Lars Lehmann.

The group has hedged its needs for malt and barley, its two main components, as well as aluminium cans for the rest of 2019 to lock in the costs.

Chairman Datuk Toh Ah Wah said there will be “no major surprises” in prices, barring new regulatory changes.

Carlsberg has hiked price of certain products to distributors and retailers between 3% to 6% effective this month on rising costs.

“The price increase is preserving our margins. If we don’t do that, our margins will go down but we are able to keep our margins more or less unchanged,” Lehmann told a press conference after its AGM today.

The rising costs of raw materials were attributed to escalating production costs with malt prices increasing by 15% to 20% due to bad barley harvests in Europe and Australia; the increase in prices of glass bottles by 4% in 2019 versus 2018’s prices; as well as utilities costs that were up 6.6% in July 2018.

Meanwhile, Lehmann pointed out the existing regulatory developments, including the smoking ban will affect its on-trade consumption.

“The smoking ban is not helping the industry and it’s a new phenomenon this year impacting beer consumption in the outlets,” he said of its negative effect on beer sales.

However, he noted that stricter issuance for import licences on alcohol will benefit local brewers in the long run, while greater enforcement against counterfeit alcohol products has resulted in a 30% increase in excise duty on duty-paid production in January to February 2019.

On the sugar tax postponement until July 1, 2019, Lehmann said Carlsberg does not add sugar in its beers but noted that there is sugar in Jolly Shandy and Nutrimalt.

“We have to pay sugar tax from July 1. It’s not a huge amount. It’s around RM500,000 and we’re working to see if we can reduce the sugar in the recipe and still have the same good taste.”

There are also plans by Carlsberg to do more in the alcohol-free beverages space, in the areas of malt drinks.

“We believe that non-alcoholic beers have limited opportunity in Malaysia but there are other ways of creating exciting alcohol-free beverages,” Lehmann noted.

He added that Carlsberg remains focused on its investments in great innovations, excellent product quality and relevant consumer activations.

Macquarie wins ‘2018 Best Structured Warrant Issuer’ award

PETALING JAYA: Macquarie was named the “2018 Best Structured Warrant Issuer” at the Bursa Excellence Awards 2018 held on Tuesday.

The annual event recognises top performing brokers and market intermediaries for their contribution to the growth and vibrancy of Malaysia’s capital markets. Macquarie had also won an award presented in the structured warrants category in 2015.

“It is our honour to receive the ‘Best Structured Warrant Issuer’ award from Bursa Malaysia for the second time. We are focused on raising awareness of structured warrants through educating investors at free seminars and online resources,” said Macquarie Malaysia head of equity derivative products Johann Sze.

“Our team continues to provide educational seminars and workshops, while introducing informative and accessible videos on warrants. A highlight is the launch of an educational series covering topics such as the differences between structured warrants and other investment products, as well as interviewing traders about their warrants trading experience,” he said.

Since launching in October 2014, Macquarie has issued over 1,200 structured warrants in Malaysia.

In addition to issuing structured warrants over Malaysian listed companies, Macquarie also issues structured warrants over the S&P 500 Index (SP500), the Hang Seng Index (HSI), the iShares China A50 Index ETF (China A50) and the local benchmark FBM KLCI.

As the only issuer for warrants over the SP500 and HSI, Macquarie allows investors to trade foreign markets on the Malaysian stock market. Macquarie commands the leading market share to date, with more than 80% of the Malaysian warrant market turnover.

Ekovest, IWCity shares surge on fresh optimism over mega projects

PETALING JAYA: Tycoon Tan Sri Lim Kang Hoo-linked Ekovest Bhd and Iskandar Waterfront City Bhd (IWCity) emerged as the most active stocks on Bursa Malaysia today, driven by market optimism over the possible revival of mega projects.

IWCity’s parent company Iskandar Waterfront Holdings Sdn Bhd (IWH), together with China Railway Engineering Corp (M) Sdn Bhd (CREC) were the winners of the Bandar Malaysia project before their status as the master developer was scrapped in May 2017.

Ekovest’s share price has been on the rise since the end of March, gaining 27% from its closing price of 50 sen on March 29. Today, the stock soared as much as 19.3% to 65 sen before closing 16.51% higher at 63.5 sen.

IWCity’s share price has also seen strong buying momentum over the past few weeks, rising 46.38% from its closing price of 32 sen on March 28. The stock rose to an intra-day high of RM1.10 and closed 18.13% higher at RM1.01 today.

Ekovest was the most active stock on the bourse with 196.90 million shares traded, followed by Ekovest-WB which saw 184.32 million shares changing hands. IWCity was the third most heavily traded stock with 151.03 million shares traded.

This comes after a rally in construction and building materials stocks on hopes of the revival of the Kuala Lumpur-Singapore High Speed Rail (HSR) and the East Coast Rail Link (ECRL) projects.

MyHSR Corp Sdn Bhd has disclosed plans to appoint a consultant to review the technical aspects of the HSR project’s cost-reduction options.

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

Meanwhile, negotiations on the ECRL are expected to be concluded before Mahathir leaves to attend the Belt and Road Forum that starts on April 26 in China.

Latest developments on these two projects have in turn driven optimism in the market on the possible revival of Bandar Malaysia.

Bandar Malaysia is a mixed development with an estimated gross development value of RM160 billion. The transit-oriented development was planned as a transport hub connecting the HSR, MRT, KTM Komuter and Express Rail Link networks.

In May 2017, TRX City Sdn Bhd, an indirect wholly owned subsidiary of the Finance Ministry, announced that the sale of its 60% interest in Bandar Malaysia Sdn Bhd had lapsed after IWH CREC Sdn Bhd’s failure to meet the payment obligations outlined in the conditions precedent under the share sale agreement, despite repeated extensions being granted.

IWH CREC was a 60:40 joint venture between IWH and CREC.

After the Pakatan Harapan government came into the power, Ministry of Finance special officer Tony Pua has said there was no interest in the government’s call for tender proposals for the Bandar Malaysia project.

Southern Thailand wants to improve trade cooperation with Malaysia

KOTA BARU, April 10 — Southern Thailand wants the cooperation between its traders and their Malaysian counterparts to be strengthened in order to generate better economic growth for both sides. Thailand Consul-General to Kota Bharu, Mongkol…

LKL, OCB to explore medical devices biz

PETALING JAYA: LKL International Bhd and OCB Bhd will jointly promote, market, distribute and sell selected medical products in Malaysia.

LKL International’s wholly owned subsidiary Medik Gen Sdn Bhd and OCB’s wholly owned indirect subsidiary Agrow Corp Sdn Bhd have signed a shareholders’ agreement to form and incorporate a joint venture (JV) company for the business.

Medik Gen and Agrow will invest RM250,000 for a 50% stake each in the proposed JV company, LKL Agrow Healthtech Sdn Bhd (LKL Agrow Healthtech). The investments will be funded via internally generated funds.

Both parties will also have equal representation on the board of directors with each party nominating two directors while the chairman will be appointed by rotation between the directors appointed by the parties, for a term of up to two years.

The JV would distribute a range of imported medical products, namely the Breathair® mattress from Toyobo Japan, nursing call systems from Alexys Australia, cleanroom solutions for hospitals from Dagard France, digital solutions and monitoring systems for hospitals from Melten Taiwan, and air purifier systems from Aerus USA.

Under the shareholders’ agreement, Medik Gen is responsible for the marketing, promoting and distribution of products in the medical and healthcare sector while Agrow would focus on senior living and commercial markets.

Potential revival of HSR seen as catalyst for YTL

PETALING JAYA: A potential revival of the Kuala Lumpur-Singapore High Speed Rail (HSR) project is a catalyst for YTL Corp Bhd’s construction division, according to MIDF Research.

It said construction currently accounts for 3% of YTL’s pretax earnings, while its construction earnings has seen progressive improvement in recent quarters given progress in the Gemas-Johor Baru double tracking project.

It was reported that Malaysia was exploring proposals to reduce cost of the HSR project, which could mean a potential revival of the project.

YTL was previously appointed as one of two project delivery partners (PDP) for the now deferred HSR project. YTL submitted a bid for the role via a 70:30 joint venture with TH Properties Sdn Bhd (YTL-THP).

The other consortium appointed for the PDP role previously was Malaysian Resources Corp Bhd-Gamuda Bhd (50:50). YTL-THP was selected for the Southern portion of the alignment (Johor portion) and MRCB-Gamuda for the Northern portion (KL to state border of Malacca-Johor).

Moreover, previously reported contenders for the now deferred HSR project were Gamuda, IJM and Naza’s respective consortiums.

“A drag however, comes from weak Power Seraya performance given the continued overcapacity situation in Singapore power generation. Hyflux’s woes could be a blessing in disguise as it could mean the elimination of excess capacity should there be a dismantling gas supply agreements to Hyflux’s plants as part of its restructuring, if any. Other than Singapore power, there continues to be concerns surrounding the 1Bestari project, expected to expire mid-2019, which will be re-tendered out,“ MIDF cautioned.

However, the research house said YTL is backed by a solid track record given involvement in the construction and operation of the RM2.4 billion Express Rail Link project which was also one of the cheapest that has been rolled out nearly two decades ago at just RM42 million/km.

YTL’s order book is estimated at RM8 billion comprising mainly the Gemas-Johor Baru double tracking project which was not impacted by the Pakatan Harapan government’s review of infrastructure projects in the past eight months.

The construction of YTL Power’s Tanjung Jati coal power plant in Indonesia was supposed to add an estimated RM4 billion, but progress on the financial close of this project has been delayed, presumably given the upcoming Indonesian elections.

MIDF maintained its “neutral” call on YTL for the meantime at an unchanged target price of RM1.15 a share. Key catalysts for a review of its call include progress in Tg Jati power plant project, improvement in Seraya earnings, and potential revival of the HSR project.

G3 Global, SenseTime Group to invest US$1b in AI park

KUALA LUMPUR, April 10 — G3 Global Bhd and China’s SenseTime Group Ltd are looking to set up Malaysia’s first artificial intelligence (AI) park, in collaboration with China Harbour Engineering Company Ltd (CHEC), with a total investment of…

MHB unit, Hiap Seng bag project from Petronas

KUALA LUMPUR, April 10 — Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) and its joint-venture partner, Hiap Seng Engineering Limited, have secured a master service agreement for integrated turnaround main mechanical and maintenance…

Futures tick higher as focus turns to central banks

NEW YORK, April 10 — US stock index futures rose slightly today after a bout of selling on trade and growth concerns, as investors awaited minutes from the Federal Reserve’s latest meeting and the start of the corporate earnings season. The…

IMF: Global economy cooling more than expected, stimulus could be needed

WASHINGTON: The global economy is slowing more than expected and a sharp downturn could require world leaders to coordinate stimulus measures, the International Monetary Fund (IMF) said as it cut its forecast for world economic growth this year.

The global lender’s semi-annual World Economic Report pointed to the US-China trade war and a potentially disorderly British exit from the European Union as key risks and warned that chances of further cuts to the outlook were high.

Some major economies, including China and Germany, might need to take short-term actions, the IMF said.

“This is a delicate moment for the global economy,” IMF chief economist Gita Gopinath said in a news conference on Tuesday to discuss the report.

Governments may need to open their pocketbooks at the same time “across economies” if the slowdown becomes more serious, Gopinath said, adding that loose monetary policy might also be needed.

The comments provided an eerie warning to the global officials gathering in Washington this week for the spring meetings of the IMF and World Bank. The world engaged in coordinated fiscal stimulus to counter the 2008 financial crisis.

In its third downgrade since October, the IMF said the global economy will likely grow 3.3% this year, the slowest expansion since 2016. The forecast cut 0.2 percentage point from the IMF’s outlook in January.

The projected growth rate for next year was unchanged at 3.6%.

More than two-thirds of the expected slowdown in 2019 stems from troubles in rich nations, including members of the EU.

“In this context, avoiding policy missteps that could harm economic activity should be the main priority,” the IMF said in its report.

One potential misstep lies in Britain’s indecision over how to leave the EU. Despite looming deadlines, London has not decided how it will try to shield its economy during the exit process.

The IMF’s new forecast assumes an orderly “Brexit,” but the Fund said a chaotic process could shave more than 0.2 percentage point from global growth in 2019. It said the Bank of England should be “cautious” on its interest rate policy, an apparent tip to wait before increasing borrowing costs.

The EU’s economic growth is already slowing substantially, though the IMF said it still expects the slowdown in Europe and some emerging market economies will give way to a reacceleration in growth during the second half of 2019.

The US economy, while seen outperforming other rich nations’ economies, also got a downgrade on signs that a fiscal stimulus fueled by tax cuts was producing less activity than previously expected.

The IMF said it supported the US Federal Reserve’s decision to pause its rate-hiking cycle, which the global lender said would support the US and world economies this year by easing financial conditions. The IMF raised its forecast for US growth in 2020 by a tenth of a percentage point to 1.9%.

The global lender said it was slightly boosting its outlook for Chinese growth this year – to 6.3% – in part because an expected escalation in the US-China trade war had not materialised.

Still, America’s ongoing tensions with China and other major trading partners continue to cloud the global economy.