Thursday, April 11th, 2019


ASML falls victim to Chinese corporate espionage

AMSTERDAM, April 11 — Dutch ASML was the victim of Chinese corporate espionage a few years ago, but said the information stolen was not a blueprint for the lithography machines that have made it a world leader in semiconductor equipment. ASML said…

Ta Win ventures into cable manufacturing business

PETALING JAYA: Ta Win Holdings Bhd is teaming up with Justin Wong Chee Feng, Wong Ah Piaw and Latitude Technology Sdn Bhd to invest RM15 million in a new cable manufacturing business using electron beam irradiation technology.

In a filing with Bursa Malaysia, Ta Win said its wholly owned subsidiary Cyprium Capital Sdn Bhd has entered into a joint venture cum shareholders agreement (JVSA) with the three parties to jointly invest in, setup and operate the new business via a special purpose vehicle (SPV) to be incorporated later, namely Cyprium Wire Technology Sdn Bhd.

Ta Win said the proposed JVSA would enable it to enter into a new manufacturing line through a strategic partnership with the other parties, to use their expertise in the field of electron bean irradiation technology.

This is expected to enhance the profitable growth of Ta Win, with the parties contributing the necessary expertise and skills set to create synergies that will enhance Ta Win’s existing business.

Under the JVSA, the parties will produce and commercialise irradiation cross-linked wire and cable products to support local original equipment manufacturer companies in automotive and home appliances sectors.

The parties also intend to promote, expand and solidify the competitive position, presence and market share particularly in automobile sector of cable market in Asian countries, with an aim to earn high profit margin through implementation of the technology in wire and cable manufacturing.

Cyprium Capital will hold 80% in the SPV while Latitude Technology will hold 10%. The remaining 10% will be held equally by the two individuals.

The total investment is estimated at RM15 million, to be funded by debt and equity combination. The parties agree to make capital contribution up to RM3 million.

If the proposed JVSA requires additional funding that exceeds the initial fund arrangement, such funding will be contributed by the parties in the form of debt.

Ta Win will fund its participation in the SPV through internally generated funds. The proposed JVSA is expected to contribute positively to the future earnings of Ta Win.

Handal Resources sells 51% stake in Handal Simflexi for RM3.26m

PETALING JAYA: Handal Resources Bhd is disposing of its 51% stake in Handal Simflexi Sdn Bhd to Shanghai EB Pipeline Engineering Ltd (SHEB) for RM3.26 million.

In a filing with Bursa Malaysia, Handal said it has signed a share sale agreement (SSA) with SHEB, and a novation agreement with SHEB and Kemuncak Lanai Sdn Bhd for the proposed disposal.

SHEB currently holds the remaining 49% stake in Handal Simflexi. Upon completion of the disposal, Handal Simflexi will cease to be a subsidiary of Handal.

Handal said it originally acquired Handal Simflexi with the objective of diversifying into technology-based research and development (R&D) activities. On July 11, 2018, Handal Simflexi announced that it has received a letter of award for the joint development of a subsea technology solution.

“After taking into consideration the significant investments required for the joint development, Handal’s management is of the view that the project risk-reward profile is unsuitable for Handal,” it said.

“SHEB has indicated its commitment to proceed with the R&D project and this has provided an opportunity for Handal to divest its stake in Handal Simflexi and recover its investment,” it added.

In addition, the signing of the agreements will bring an end to the ongoing litigation between Kemuncak and Handal, as Kemuncak has agreed to withdraw its Kuala Lumpur High Court suit with no order as to costs.

Upon completion of the SSA, Kemuncak will have no further claim against Handal in relation to the initial SSA.

The disposal will result in a loss of RM4,000 to Handal after taking into consideration of the unaudited net book value of the investment in Handal Simflexi amounting to RM3.26 million as at Dec 31, 2018.

Handal will use the proceeds arising from the disposal for general working capital, which may be used for payment to suppliers and to defray project and administrative overheads.

NWP to raise up to RM3.15m via private placement

PETALING JAYA: NWP Holdings Bhd proposes to undertake a private placement exercise to raise up to RM3.15 million.

In a filing with the stock exchange, the group said under the maximum scenario, it will issue up to RM39.42 million shares, representing not more than 10% of its enlarged issued shares.

NWP, which is involved in the manufacturing and trading of a wide range of timber products, intends to place out the shares to independent third party investors.

Based on an indicative issue price of 8 sen per share, the group is expected to raise up to RM3.15 million, bulk of which will be used for performance bond payment to Borneo Resources.

The remaining of the proceeds will be utilised for staff cost and administrative expenses.

The group said it had considered various methods of fund raising and is of the view that the proposed private placement is the most appropriate avenue of fund raising.

In a separate filing, NWP said its wholly owned subsidiary NWP Industries Sdn Bhd has been appointed by Borneo Resources as the sole and exclusive party to carry out the activities to clear, fell, extract, remove, sell and deliver all timber, trees and logs products on the 605.9-hectare forest area in Kg. Mindohuan in Ranau, Sabah.

It will provide stable supply of raw material to the group, which has been affected by the shortage of raw materials, and is expected to improve the group’s performance and profitability.

Norway fund pullout seen having little impact on Malaysian bond market

PETALING JAYA: AmInvestment Bank (AmResearch) sees limited impact from the Norwegian sovereign wealth fund’s pullout from emerging market bonds as the exposure level is low and the outflow pace is expected to be gradual.

The Norwegian sovereign wealth fund’s exposure to Malaysian government bonds is US$1.96 billion (RM8 billion), representing 5.3% of total foreign holdings in Malaysian Government Securities (MGS) of RM150.7 billion as at end-March 2019.

AmResearch said in the event the fund decides to withdraw all the RM8 billion from the MGS holdings, it is expected to add about 0.6% upward pressure on the ringgit against the greenback.

“At the same time, the 10-year MGS yields used as the benchmark should rise by 7 basis points under this extreme scenario,” it said in a research note today.

AmResearch believes the outflow of the RM8 billion will more likely be gradual.

“Besides, with a fairly low exposure of around 5.3% with respect to total foreign holdings in our MGS, added with strong liquidity in our bond market, we do not expect any major impact on the yields.”

Norway’s sovereign wealth fund will streamline its US$300 billion (RM1.23 trillion) fixed-income portfolio by cutting emerging market bonds from the benchmark index it tracks. Currently worth US$1.05 trillion (RM4.31 trillion), Norway’s Government Pension Fund Global has invested around 30% into fixed income with the balance 70% invested in equities.

In terms of size, Malaysia is the third largest country with exposure to the fund after South Korea and Thailand.

AmResearch highlighted that Malaysia’s bond yields are well supported by healthy macro fundamentals such as steady growth, healthy reserves, current account surplus, low inflation and real money flows.

“We project the 10-year MGS yield at 3.75%-3.80% as our ‘prudent’ levels with room to reach 3.70% if a 25-basis-point Overnight Policy Rate is instituted. In the event there is no rate cut, we expect the 10-year yield to move back to our original levels of 3.90%–4.00%.”

Meanwhile, it expects total gross issuance of MGS/Government Investment Issues (GII) in the primary market for 2019 to hover between RM120 billion and RM125 billion with Q2 2019 gross issuance amounting to RM40 billion.

It foresees a healthy appetite for ringgit corporate bond and sukuk market that saw a total issuance of RM10 billion in 2018.

“In Q1 2019, the total issuance stood at RM25 billion and we project volume to remain healthy with a total issuance of RM80–RM85 billion by the end of the year.”

AmResearch pointed out that the challenges for Malaysia’s bond market in 2019 come mainly from external noises that remain high in the cards.

“Uncertainties surrounding US trade noises with the EU, Japan and India while negotiations with China are still ongoing, Brexit, the US economy outlook, elections (eurozone, India, Indonesia, Thailand and the Philippines) and outlook of the Chinese economy remain high on the table.”

During this period, it expects the level of volatility to swing between 2% and 4%, much depending on the severity of the adverse noises and how long these last. On the domestic side, the focus will be on growth and policy certainties.

Eco World International acquires remaining 20% stake in Yarra One developer for RM13.25m

PETALING JAYA: Eco World International Bhd is acquiring the remaining 20% stake in Eco World-Salcon Y1 Pty Ltd (EW-Salcon), the developer of the Yarra One project in Australia, for A$4.52 million (about RM13.25 million) cash.

In a filing with Bursa Malaysia, the group said its wholly owned subsidiary Fortune Quest Group Ltd entered into a conditional share sale and purchase agreement (share SPA) with Salcon Bhd’s wholly owned subsidiary Salcon Development Sdn Bhd for the acquisition.

EW-Salcon is the registered proprietor of the freehold lands measuring 2,128 square metres located at South Yarra, Victoria in Australia, on which it is developing a residential-led mixed used development named Yarra One.

The project comprises 250 residential units, 17 office and retail units and 183 car park spaces across 27 storeys and four basement levels, with an estimated gross development value of A$253.2 million (about RM742.4 million).

The project has a net book value of A$57.78 million based on EW-Salcon accounts for the financial period ended Jan 31, 2019. Construction commenced in the second quarter of 2018 with completion expected in the second half of 2020.

“In light of Salcon’s intention to dispose of its 20% equity interest in EW-Salcon, we decided to undertake the proposed acquisition as we believe in the prospects of the Yarra One project. The proposed acquisition will enable us to recognise 100% of the profits to be derived from the Yarra One project upon completion and handover of units,” said Eco World International.

Since the launch in June 2017, EW-Salcon has secured A$132.6 million (about RM388.9 million) sales up to the end of February 2019, representing a 60% of the total units launched.

The purchase consideration will be funded via bank borrowings, other debt instruments and/or internally generated funds.

In a separate filing, Salcon said the proposed disposal would allow the group to strengthen its financial position arising from the disposal consideration and the capital, which was earmarked for the Yarra One project, would be used for future investments and/or working capital purposes.

“Hence, Salcon will be able to re-mobilise its financial resources to pursue potential investment opportunities,” it said. The group is expected to realise a net gain of about RM931,560 upon completion of the deal, which is expected by the second quarter of 2019.

Ringgit slides further against us dollar

KUALA LUMPUR: The ringgit slid further against the US dollar today, with currency traders still in a risk-off mood after the release of slower industrial production index (IPI) data for February 2019, along with the recent lower global growth forecast by the International Monetary Fund (IMF).

At 6pm, the ringgit lost 0.17% to end at 4.1120/1160 against the US dollar from 4.1050/1100 at Wednesday’s close.

SPI Asset Management head of trading and market strategy Stephen Innes said the February IPI data accounted for the weaker ringgit, as it could trigger more equity outflows from crucial mining and energy sector stocks.

Malaysia’s IPI grew 1.7% year-on-year in February, registering the slowest growth since June 2018, as manufacturing and electricity sector indexes expanded at a softer pace while mining posted a larger decline.

Innes said the data miss — the index grew slower than the expected 2.2% — supported the view that Bank Negara Malaysia (BNM) would adopt a dovish bias, as the fall in the IPI index could have negative consequences on Malaysia’s gross domestic product (GDP), which was always a key metric the BNM followed.

“When combined with a possible overtly dovish shift from the BNM, the IPI data is sending negative signals to the currency traders,“ he told Bernama via email today.

Meanwhile, Bank Islam Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the weaker ringgit was in tandem with regional currencies, as the downside risk narratives had become louder, judging from the IMF’s latest global growth forecast revision.

“The European Central Bank and the US Federal Reserve have also become wary on the balance of risks, which are tilted on the downside based on the recent communique.

“Therefore, it’s a risk-off mode now, and we believe the forex markets have become increasingly risk averse, resulting in higher demand for the safe-haven currencies,“ he said.

This week, the IMF trimmed its global GDP growth forecast for 2019 to 3.3% from the previous forecast of 3.5% made in January this year.

Overall, the ringgit traded lower against a basket of major currencies.

It slipped further against the British pound to 5.3826/3883 from 5.3673/3755 and declined against the Japanese yen to 3.7008/7048 from 3.6939/6987 yesterday.

The local note depreciated against the euro to 4.6367/6428 against Wednesday’s close of 4.6292/6361 and vis-a-vis the Singapore dollar, it retreated to 3.0383/0417 from 3.0347/0393 yesterday. — Bernama

SMEs should tap RM517m soft loans from MIDF, MTDC

KUALA LUMPUR, April 11 — Small and medium enterprises (SMEs) should capitalise on the RM517 million funding made available by Malaysian Industrial Development Finance Bhd’s (MIDF) and  Malaysian Technology Development Corporation (MTDC)…

UK business cautiously welcomes Brexit extension

LONDON, April 11 — British business today gave a cautious welcome to yet another Brexit extension — but also urged an end to the “chaos” that has plagued the nation’s withdrawal from the European Union. European leaders have agreed with…

Bursa Malaysia falls to 52-week low

KUALA LUMPUR, April 11 — Bursa Malaysia fell to a 52-week low today with 25 of the benchmark index’s heavyweight stocks in the red and Tenaga being the main drag. At 5pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) dropped 15.23 points to 1,624.23…