Wednesday, April 24th, 2019

 

Ringgit will stabilise after recent sell-off, says FXTM analyst

KUALA LUMPUR: The ringgit is expected to trade within the 4.10-4.15 range against the US dollar in the second quarter as the sell-off pressure eases, barring any major catalyst, according to FXTM market analyst Han Tan (pix).

The ringgit weakened 0.06% to 4.1305 against the greenback today from 4.1280 on Tuesday.

The recent selling pressure in the ringgit was triggered by news of the Norwegian sovereign wealth fund cutting its exposure in the emerging markets, including Malaysia. This was aggravated by the speculation that Malaysian bonds would be dropped from the FTSE World Government Bond Index.

Tan said the market is currently focused more on external factors, letting external risk to dictate the performance of currencies and paying less attention to internal economic data.

According to the International Monetary Fund’s Purchasing Power Parity metrics, the ringgit is undervalued by 65% to the greenback.

Tan expects the Malaysian currency to remain supported by the country’s resilient economic fundamentals, whereby the projected gross domestic product growth of 4.3-4.8% this year is better than many other economies.

“Malaysia’s export mix is very well diversified and with this very diversified nature, is not just limited to export, it has multiple legs to stand on.”

To illustrate the influence of external factors, Tan pointed out that Malaysia has been able to buck the Asean trend in regard to exports, delivering a growth while the neighbouring countries are experiencing a contraction in the fourth quarter of 2018 up till February 2019.

“In other words, the currency markets are primarily focused outwards and paying less attention to what is happening onshore,” he said.

While oil prices have reached the US$70 (RM289) per barrel mark this month, the increase has yet to be reflected in the ringgit’s performance.

However, Tan said as Malaysia’s budget is based on the assumption of crude oil at US$70 a barrel, stronger prices will contribute to the ringgit’s strength.

“Barring any major catalyst, I expect oil prices to head towards US$80 per barrel within the first half,” he added.


Wall Street opens down after record-breaking session

LONDON, April 24 — Wall Street opened slightly down today after a record-breaking session the day before failed to spark a major global rally. Bullish earnings and economic data catapulted New York’s S&P 500 and tech-heavy Nasdaq indices to…


Ringgit will stabilise after recent sell-off, says FTXM analyst

KUALA LUMPUR: The ringgit is expected to trade within the 4.10-4.15 range against the US dollar in the second quarter as the sell-off pressure eases, barring any major catalyst, according to FXTM market analyst Han Tan (pix).

The ringgit weakened 0.06% to 4.1305 against the greenback today from 4.1280 on Tuesday.

The recent selling pressure in the ringgit was triggered by news of the Norwegian sovereign wealth fund cutting its exposure in the emerging markets, including Malaysia. This was aggravated by the speculation that Malaysian bonds would be dropped from the FTSE World Government Bond Index.

Tan said the market is currently focused more on external factors, letting external risk to dictate the performance of currencies and paying less attention to internal economic data.

According to the International Monetary Fund’s Purchasing Power Parity metrics, the ringgit is undervalued by 65% to the greenback.

Tan expects the Malaysian currency to remain supported by the country’s resilient economic fundamentals, whereby the projected gross domestic product growth of 4.3-4.8% this year is better than many other economies.

“Malaysia’s export mix is very well diversified and with this very diversified nature, is not just limited to export, it has multiple legs to stand on.”

To illustrate the influence of external factors, Tan pointed out that Malaysia has been able to buck the Asean trend in regard to exports, delivering a growth while the neighbouring countries are experiencing a contraction in the fourth quarter of 2018 up till February 2019.

“In other words, the currency markets are primarily focused outwards and paying less attention to what is happening onshore,” he said.

While oil prices have reached the US$70 (RM289) per barrel mark this month, the increase has yet to be reflected in the ringgit’s performance.

However, Tan said as Malaysia’s budget is based on the assumption of crude oil at US$70 a barrel, stronger prices will contribute to the ringgit’s strength.

“Barring any major catalyst, I expect oil prices to head towards US$80 per barrel within the first half,” he added.


Boeing reports lower profits amid 737 MAX crisis

NEW YORK, April 24 — Boeing today reported lower first-quarter profits as the global grounding of its 737 MAX plane following two crashes hit earnings. The results are the first since the company entered crisis mode with the March 10 crash of…


RHB to be ‘pragmatic’ in facing challenging investment banking scene overseas

KUALA LUMPUR: RHB Bank Bhd sees a challenging investment banking business scenario overseas, which is lacking in scale compared with the business in Malaysia, and it will adopt a “pragmatic” approach to address the challenges.

“That’s why we believe that, based on our FIT22 strategy, we focus on our niche and strength. Take for example in Singapore, we will do equities business, we will do investment banking business but we will not do debt market business because we don’t have the capability for distribution there and particularly in foreign currencies. And of course the bonds mainly in Singapore are not rated. But we will do the others,” said group managing director Datuk Khairussaleh Ramli (pix).

“In Thailand for example, we believe the equities business is very active, the retail broking there is among the most active in Asean, so that’s an area that we will focus on, including maybe some debt market as well,” he told reporters at its AGM today.

He said the investment banking businesses in Indonesia and Thailand have room to expand via organic growth while in Singapore, the group intends to synergise its investment banking and banking businesses in order to offer multiple services to clients.

In terms of its asset management business in Indonesia, Khairussaleh said the business is small and the main challenge there is distribution due to the country’s size.

“We have tied up with some banks but we also want to look at digital ways of distributing our products, because it is such a big country with many islands. If we can’t have physical presence, we need to look at digital capabilities,” he said.

“For our overseas business we take a pragmatic approach of focusing on our niche but in Malaysia, we pretty much are a universal investment bank, we pretty much do everything. Generally in Malaysia, the investment banking business is good,” he added.

RHB expects to take on several initial public offerings (IPOs) this year in the consumer product and trading services segments, including Leong Hup International Bhd and two sizeable IPOs of about RM750 million each in the second half of the year.

The group is one of the joint global coordinators for the IPO of poultry player Leong Hup, which is en route to list on the Main Market of Bursa Malaysia. The prospectus will be launched today.

Meanwhile, RHB aims to grant RM31 billion in new and additional financing for small and medium enterprises (SMEs) by 2021, which will benefit 18,000 SMEs. Last year, it approved RM7.2 billion worth of loans to over 4,000 SMEs in Malaysia.

The bank is currently ranked fourth in the SME segment with a market share of 9.06% as at January. Its market share was about 7% three to four years ago. It aims to connect to 15,000 new SMEs this year through its SME Ecosystem.

RHB aims to grow its mortgage business by 12% this year and 33% or RM17.5 billion over the next three years. Its mortgage market share stood at 9.64% as at February.

Khairussaleh said mortgage applications have reduced but its approval rate has been consistently high at 75%. He said there are no changes to its overall loans growth target of 5% for this year, driven by growth in the mortgage and SME segments.

In terms of provisions, he said it will be decided on a case-by-case basis and while some clients may be going through a difficult patch, there are no systemic issues at the moment.

“We believe that our oil and gas portfolio is under control. But again, potentially there could be case-by-case basis where customers may go through some difficulty. That’s where we should help. In fact, our oil and gas loan loss coverage is more than 100% so we are comfortable with our coverage for the current portfolio,” he said.

RHB’s exposure to the oil and gas sector is 2.8% of its total loan book, with 6% exposure to the property sector.


MISC expects to secure more projects this year

KUALA LUMPUR: MISC Bhd expects to secure more projects this year, given the company’s capability to take up to US$2-3 billion (RM8.3-12.4 billon) worth of new jobs, compared to the US$1 billion projects clinched in 2018, said president and CEO Yee Yang Chien.

He said as of the first quarter of 2019, the shipping company had bid for jobs worth US$6 billion versus the similar value of bids for the whole of last year.

“We had a success rate of 20% from the US$6 billion worth of projects that we bid for last year, and this was an improvement from the 14% (success rate) recorded in 2017.

“So we hope the number will improve in 2019,” he told reporters after MISC’s annual general meeting today.

Yee said the company was not short of opportunities but needed to be picky, as every single project involved a handsome investment.

Therefore, a stringent assessment to choose the right jobs was crucial to ensure the company could execute them and deliver the numbers, he said.

MISC, he noted, was currently working on three to four bids.

In February, it was reported that MISC and Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) were the frontrunners for two major contracts from Petronas Carigali’s Limbayong oil and gas field development off Sabah.

When asked for an update, Yee said: “The tender is still open and it will be closed at end of this month.”

A research house said it expected MISC to win the project for the floating production, storage and offloading vessel charter job, while its 66.5%-owned MMHE was likely to secure the engineering, procurement, construction, installation and commissioning contract.

Last year, MISC, which is 62.7% owned by Petronas, derived 35% of its revenue from Petronas-related projects.

On prospects, Yee said 2019 would be another challenging year for the tanker market.

“Growth in seaborne oil demand is expected to be impacted by the recently announced Organisation of the Petroleum Exporting Countries-led production cuts and geopolitical uncertainty,” he said.

On the liquefied natural gas (LNG) segment, he said the company expected to continue to benefit from the strengths seen in 2018, supported by demand in Asia, additional supply from new liquefaction projects and slower LNG fleet growth in 2019.

“While the LNG spot rates reached a multi-year peak in late 2018, the sustainability of such rates remains uncertain in 2019,” he said.

The offshore segment would see healthy activities in oil and gas exploration and production and the company would be adding two new assets in 2018, providing positive income growth, he added.


Airbnb lambasts call for cap on short-term rentals

PETALING JAYA: Airbnb has hit out against the Malaysian Association of Hotels’ call for a new cap on short-term rentals, equating it to capping Malaysian tourism.

Airbnb head of public policy for Southeast Asia Mich Goh (pix) said caps run contrary to the goal of growing Malaysian tourism as well as the Malaysia Productivity Corporation’s (MPC) work in reducing red tape and enhancing innovation.

“The most important and pressing issue for Malaysian tourism right now is growth. How is Malaysia going to grow and diversify tourism? How is Malaysia going to reach its ambitious tourism targets by 2020?

“Simply achieving Malaysia’s bold tourism goals is challenging enough without the added burden of unnecessary red tape. The fact is a cap on short-term rentals would be a cap on growth,” she said in a statement today.

She said restrictive caps would mean less choices for travellers, which in turn would lead to fewer travellers and tourism growth.

“They would also hurt the Malaysian families, small businesses and communities who depend on short-term rentals. While caps may be suitable for cities with legacy housing affordability issues, they are not suitable for Malaysia which needs to grow tourism and has an oversupply of homes,” she added.

The MPC is currently considering how best to regulate short-term rentals and has been in consultation with the wider industry on its draft regulatory framework.

As part of the consultation, the Malaysian Association of Hotels called for a new cap on short-term rentals namely a night cap, which limits the number of nights a Malaysian host could share their property in a year.

Airbnb noted that the number of visitor arrivals to Malaysia has dropped to 25.8 million in 2018 from 25.9 million in 2017.

Last week, Airbnb released new research showing the overwhelming majority of Malaysian voters’ support for short-term rentals.

Based on research from Expedition Strategies, 89% of Malaysians would support allowing people to rent their property through Airbnb and 78% would consider staying in short-term rentals while 50% believe there should be a national approach to regulating short-term rentals.


Boustead optimistic of returning to the black in current financial year

PETALING JAYA: Boustead Holdings Bhd expects to return to profitability in current financial year ending Dec 31 (FY19).

The group plunged into the red with a net loss of RM469.2 million in FY18 in light of the losses incurred by its heavy industries and plantation divisions, while other divisions registered moderate earnings as a result of trying economic conditions.

Executive director Datuk Seri Ghazali Mohd Ali said “the ingredients for success are there” and it is a matter of discussing and strategising it before year-end.

“Our assets are there, our plans are there, manpower is there. Those three ingredients alone will bring success and a fresh outlook for the new group managing director (MD) will help the organisation in achieving its targets,” he told a press conference after the group’s AGM today.

He declined to reveal the “plans”, citing pending discussions with the new MD Datuk Seri Amrin Awaluddin, who will begin his new role on May 6.

“We’ll be discussing with him (Amrin) and the board before we go ahead and implement. Rest assured that the management and the board is working at turning the company around from the results of this year,” said Ghazali.

He commended Amrin for his experience and track record, especially in property development, as well as his strong finance background, adding that the group has the framework ready for somebody to take over and lead the group forward.

He emphasised that Boustead is asset-rich and from the perspective of businesses, the group is in a strong position with clear prospects ahead.

“We firmly believe that as long as we remain persistent in strengthening the foundation of our businesses, and tapping opportunities for growth, we will see results in the medium to long term future. What got us here will not get us there. We have to reinvent ourselves in certain areas, we have to look at ourselves and work at our strengths,” said Ghazali.

Meanwhile, he said there will be one or two more asset disposals this year to pare down its borrowings. Its gearing ratio stands at 0.9 times, which is deemed comfortable for the group.

On the disposal of its Royale Chulan Bukit Bintang Hotel, he said the government (Economic Planning Unit) is doing the valuation for the hotel and the group expects to obtain the outcome in a month.

Earlier at the AGM, three resolutions were not passed by the shareholders, including the re-election of Datuk Wira Dr Megat Abdul Rahman Megat Ahmad as director, retention of chairman Gen Tan Sri Panglima Mohd Ghazali Che Mat (R) as independent director and the retention of Abdul Rahman as independent director.


Gadang posts RM13.3m net profit for Q3

PETALING JAYA: Gadang Holdings Bhd reported a net profit of RM13.3 million for the third quarter ended Feb 28, a 47.1% decline compared with RM25.14 million recorded for the corresponding quarter in 2018.

The construction firm attributed the reduction in earnings to recognition of some variation orders for completed construction projects in the previous year along with lower profit recorded for the Capital City project in the current year.

For the quarter under review, its revenue rose 34.5% to RM205.33 million compared with RM152.68 million in the corresponding quarter of the preceding year.

Its nine-month net profit increased 34.8% to RM46.87 million from RM71.85 million, while revenue grew 22% to RM502.99 million from RM412.29 million.

According to Gadang’s filing with Bursa Malaysia, its construction division outstanding order book currently stands at RM1.3 billion that will provide the company with a stable income visibility going forward.

However, the overall weakness in the property market has affected its sales and impacted the performance of its property division.

“The division has introduced more aggressive marketing efforts to promote sales of its existing on-going and completed projects. With unbilled sales of RM93.1 million and planned new launches, the property division is expected to deliver positive performance in this financial year.”

Looking ahead, Gadang foresees a challenging period for the group, taking into account the competitive market landscape and has initiated active tender participation for domestic infrastructure projects.

“Barring unforeseen circumstances, the group expects to remain profitable in the current financial year.”


Big brands dive into esports to court youth market, says Nielsen

NEW YORK, April 24 — From snack companies to carmakers, a wide range of brands is trying to reach one of the hottest demographic groups around: esports fans. Those brands are finding their footing with 39 per cent of brand exposure in esports’…