Tuesday, May 7th, 2019

 

Strike set for rideshare drivers, casting shadow on Uber IPO

WASHINGTON, May 7 — Rideshare drivers in major US cities were set to strike tomorrow, casting a shadow over the keenly anticipated Wall Street debut of sector leader Uber. Organisers in some cities were calling for a 24-hour stoppage while the New…


Jet Airways pilots’ union asks India’s top court to direct lender to release funds

NEW DELHI, May 7 — Jet Airways’ pilots’ union has appealed to India’s top court to direct State Bank Of India (SBI) to release interim funding to try to revive the grounded airline, according to a court filing made today which was reviewed…


US stocks drop on trade tensions

NEW YORK, May 7 — Wall Street stocks dropped again early today as the latest flare-up in US-China trade tensions dampened hopes for a speedy resolution to the months-long fight. About 15 minutes into trading, the Dow Jones Industrial Average had…


Stock markets take cover as Trump trade fears linger

LONDON, May 7 — Equity investors ran for cover again today as it dawned on markets that US President Donald Trump’s trade war threat against China could be deadly serious. Indices had slumped yesterday, with Shanghai suffering its heaviest loss…


Vaping companies facing European opposition to higher nicotine level

DUBLIN, May 7 — A push by makers of electronic cigarettes to raise nicotine levels in the European Union towards their far higher American levels is running into opposition, a senior executive at US market leader Juul said today. But there is…


OPR cut to have minimal impact on banks but ringgit may weaken

PETALING JAYA: While the banking sector generally experiences net interest margin (NIM) pressure from an interest rate cut as deposits take longer to reprice than loans, the net impact is relatively modest over the medium to long term, according to Mac-quarie Research.

Research head Anand Pathmakanthan said, for example, as guided by CIMB Group Holdings Bhd, the full-year NIM impact is a 2-3 basis points (bps) decline.

“Banks with low current and savings accounts or casa (repricing fixed deposits will reduce funding costs) and higher share of fixed-rate lending will be least impacted, like AMMB Holdings Bhd; on the flip side, banks with high casa and high share of floating rate loans, with minimal ex-commercial banking operations to mitigate, would be most impacted, such as Alliance Bank Malaysia Bhd,” he said.

Today, most financial counters on Bursa Malaysia were in the red following Bank Negara Malaysia (BNM)’s decision to cut the Overnight Policy Rate (OPR) by 25 bps to 3%. The Financial Services Index fell 1.07% to 16,702.87 points.

Public Bank Bhd and AMMB lost 8 sen and 6 sen to RM22.48 and RM4.44, respectively. However, Malayan Banking Bhd and Hong Leong Bank Bhd gained 1 sen and 10 sen to RM8.99 and RM19.80.

Anand said the weaker bias to the ringgit is a boon for exporters, in terms of demand as well as margins. Its top picks in this space are Vitrox Corp Bhd (semiconductor) and Top Glove Corp Bhd (rubber gloves).

Macquarie Research, which was in the “on hold” camp, said a rate cut runs the risk of adding stress on the ringgit, which is already under pressure on concerns of bond market outflows, pertaining to the potential exclusion of Malaysian Government Securities from the World Government Bond Index.

“The OPR cut, which places Malaysia as a relative negative outlier vis-à-vis other emerging markets which have yet to ease, reinforces our view, that the ringgit will be the only Asian currency to depreciate against the US dollar over the rest of 2019 – our pre-cut US dollar-ringgit forecasts for Q1, Q2, Q3, Q4 are RM4.08, RM4.15, RM4.15, RM4.15, respectively.”

FXTM market analyst Han Tan said the ringgit showed little initial reaction to the interest rate cut, holding around the 4.148 handle against the US dollar, given that markets had largely priced in today’s monetary policy decision.

“External headwinds and ongoing con-cerns around the impending slowdown for the global economy are the primary reason behind why several central banks across the world are expected to change their monetary policy outlook this year.

The move taken by BNM to reduce interest rates should encourage a boost to domestic consumption, which would be positive for the Malaysian economy at a time where global conditions are providing headwinds to emerging markets,” he said.

“Should there be a deterioration in trade ties between the world’s two largest economies, that will significantly curtail risk appetite and may in turn weaken Asian and emerging market currencies. Such an event may also see US dollar/ringgit breaking above its 4.15 ceiling, with potential gains for the ringgit harder to come by given the expected resilience of the greenback,” he added.

With the OPR cut, MIDF Research expects improvement in investment and domestic consumption, particularly in the second half. It is maintaining the gross domestic product (GDP) growth estimate at 4.9% for 2019.

“As long as GDP growth is more than 4% and core consumer price index still positive, we opine no further change in monetary stance is required at this juncture. In addition, the Fed has confirmed their position to maintain its current funds rate till end of the year. Since there will be less pressure from both domestic and external fronts, we anticipate Bank Negara Malaysia will maintain the OPR at 3% in 2019.”


Powerwell to use bulk of IPO proceeds for capex

PETALING JAYA: Powerwell Holdings Bhd is looking to list on the ACE Market of Bursa Malaysia and plans to use the proceeds raised from its initial public offering (IPO) for capital expenditure (capex), certification expenditure and working capital.

In a draft prospectus exposure on the Securities Commission Malaysia website, Powerwell said its IPO involves 145.5 million ordinary shares comprising public issuance of 87.4 million new ordinary shares and offer for sale of 58.1 million existing ordinary shares.

The public issue of 87.4 million new shares comprises 23.8 million issue shares to the Malaysian public, 60.7 million issue shares by way of private placement to bumiputra investors and 2.9 million issue shares by way of private placement to institutional and selected investors.

The gross proceeds raised from the public issue will be used for capex (47%), certification expenditure (17.69%), working capital (16.55%) and to defray estimated listing expenses (18.76%).

The capex includes purchase of machinery and equipment, and enhancement of ERP systems and hardware while working capital includes purchase of materials and components, and marketing activities.

Powerwell is involved in the design, manufacturing and trading of electricity distribution products which comprise LV (low voltage refers to voltage less than 1kV) switchboards, MV (medium voltage refers to voltage equal or greater than 1kV and less than 50kV) switchgears and related products.

Its principal markets are Malaysia, Vietnam, Bangladesh, Indonesia, Philippines, Cambodia, Singapore, Pakistan, Myanmar, Dubai, Japan and Qatar. It has factories and offices in Malaysia and Vietnam, and a representative office in Indonesia.

As at March 28, its order book stood at RM63.86 million, which will be billed progressively up to the next 24 months.

For the financial years ended Dec 31, 2016 (FY16), 2017 (FY17) and 2018 (FY18), Powerwell achieved revenues of RM92.5 million, RM106.4 million and RM105.4 million respectively. It registered net profits of RM8.4 million, RM13.9 million and RM12.1 million for the three financial years respectively.


CE Technology to raise RM12m from LEAP listing

PETALING JAYA: Cleanroom gloves exporter CE Technology Bhd expects to raise RM12.48 million from its LEAP Market listing on Bursa Malaysia to fund its expansion plans on the back of growing global demand of cleanroom gloves.

The company manufactures and sells nitrile and latex cleanroom gloves that are targeted for niche markets such as the high-end electronics and life sciences industries which require additional chemical and microbiological hazard protection. Cleanroom gloves are mainly used to control contamination and prevent electrostatic discharge.

Based on the audited financial statements for the financial year ended July 31, 2018, more than 95% of its products are exported overseas to Asean, Europe, the US, China and Japan.

CE Technology plans to allocate approximately 69% or RM8.5 million of the listing proceeds to expand its processing capacity and enhance research and development capabilities.

“We are setting up new cleanroom post-processing facilities which will more than double our monthly processing capacity from 20 million pieces to approximately 43 million pieces of gloves a month,” said its managing director and CEO Teoh Swee Sun.

The company also plans to leverage its R&D capabilities to develop and customise new cleanroom gloves, such as the extra-long and good ESD control cleanroom gloves used in both the high-end electronics industries as well as the life sciences industries.

CE Technology has obtained approval from Bursa Malaysia for the listing exercise, which entails a placement of 52 million shares representing 15.02% of the company’s enlarged share capital to selected sophisticated investors at an indicative price of 24 sen per share.


Lafarge to resume cement supply for East Coast Rail Link

PETALING JAYA: Lafarge Malaysia Bhd can now resume cement supplies for all eight packages of the proposed East Coast Rail Link (ECRL) project worth RM270 million.

Lafarge said following the instruction received by China Communications Construction (ECRL) Sdn Bhd from Malaysia Rail Link Sdn Bhd on April 15, the suspension of the company’s supplies will now be ceased with immediate effect and it is instructed to resume supplies for the remaining term under the contract until Dec 31.

The ECRL project was one of the major projects that underwent a review by the Pakatan Harapan government upon assuming power last year.

Last month, Malaysia Rail Link and China Communications Construction Company Ltd signed a supplementary agreement to pave the way for the resumption of the suspended project.

Lafarge’s wholly owned subsidiary Lafarge Cement Sdn Bhd and China Communications Construction had in March 2018 entered into an agreement for the supply of cement for all eight packages of work for the proposed ECRL project for RM270 million.


Hartalega Q4 profit dragged down by strong ringgit

PETALING JAYA: Nitrile glove manufacturer Hartalega Holdings Bhd recorded a 21.7% decline in net profit for the fourth quarter ended March 31 from RM116.65 million a year ago, due to the inability to pass the rapid rising cost arising from the strengthening of the ringgit within a short period of time.

Despite the drop in earnings, the group recorded RM683.89 million in revenue, 10.9% higher than the RM616.84 million recorded in the corresponding quarter of the previous year, attributed to the growth in sales volume.

Apart from that higher labour cost, electricity and lower gain from foreign exchange also affected the results for the quarter.

As for the overall financial year, Hartalega’s net profit rose 3.9% to RM456.2 million from RM438.92 million in the previous year, while revenue soared 17.6% to RM2.83 billion from RM2.41 billion.

The group told Bursa Malaysia that the growth in sales revenue was contributed by improvement in sales volume of 10.1% in tandem with growing demand for nitrile gloves and continuous expansion in improving production capacity.

Currently, Hartalega will continue with its NGC capacity expansion plan and the increasing contribution of NGC to sales revenue will contribute further to the group’s earnings.

The group is also working on securing Federal Drug Administration (FDA) approval for US market where there is greater awareness among US healthcare professionals on the dangers of healthcare-associated infections.

“Furthermore, due to ongoing commissioning of new capacity within the industry, capacity growth is currently ahead of demand growth.”

Hartalega believes the new capacity will gradually be taken up in the coming quarters as industry players regulate expansion and market demand for rubber gloves continues to grow globally.

Its has also embarked on various cost optimisation and automation initiatives to mitigate potential margin pressure.

“Moving forward, Hartalega remains optimistic of the longer term prospects underpinned by growing demand for rubber gloves, ongoing NGC expansion and potential growth of antimicrobial gloves market share.”