Wednesday, May 8th, 2019


Turkey’s economic rebound will be ‘gradual’, says EBRD

LONDON, May 8 — Turkey’s troubled economy will contract one per cent this year before a “gradual” rebound, the European Bank for Reconstruction and Development forecast today. “Turkey’s recovery from an expected 1.0 per cent economic…

Axiata’s Ncell granted stay order

PETALING JAYA: The Supreme Court of Nepal has allowed the temporary stay order granted on April 25 to be continued for the tax issues surrounding Axiata Group Bhd’s indirect 80% owned subsidiary Ncell Private Ltd.

During this period, Nepal’s Large Taxpayer Office (LTPO) is refrained from taking any steps against Ncell in relation to the 39.06 billion rupee (RM1.44 billion) capital gains tax it slapped on Ncell.

In addition, a full bench of the Supreme Court will be convened to hear and decide on the Ncell application, according to Axiata in its stock exchange filing.

“Axiata will make further announcements upon material developments arising from the Ncell application,“ the group added.

Last month, Ncell appealed to the Supreme Court against the LTPO’s demand for the capital gains tax.

Trading houses caught in crossfire of Russian oil contamination

MOSCOW, May 8 — Trading houses Vitol, Glencore and Trafigura are caught in the crossfire between Russian oil producers and Western buyers as the latter refuse to take contaminated crude that traders bought from companies in Russia. At least 10…

Inta Bina bags RM178m serviced apartment job

PETALING JAYA: Inta Bina Group Bhd’s wholly owned subsidiary Inta Bina Sdn Bhd (IBSB) has accepted a RM178.2 million contract from Southville City Sdn Bhd for the appointment of IBSB as the contractor for the main building works for a proposed serviced apartment project in Sepang.

The first phase of the project includes Block A (37-storey; 329 units of serviced apartment and 148 units of affordable serviced apartment), part multi-storey car park block, support facilities and nine-storey landscape deck as well as security guard house.

The second phase includes Block (488 units of 38-storey serviced apartment), three units of commercial space, part multi-storey car park block, support facilities and nine-storey landscape deck.

The completion period will be 30 months from date of commencement for the first phase and 31 months for the second phase.

“Barring any unforeseen circumstances, the contract is expected to contribute positively towards the future earnings of Inta Bina for the duration of the contract and will not have any effect on the share capital and substantial shareholders’ shareholdings of Inta Bina,“ the group said.

IBSB intends to fund the contract via internally generated funds and/or external borrowings.

Gadang plans private placement to raise RM62m

PETALING JAYA: Gadang Holdings Bhd proposes a private placement exercise to raise up to RM62.12 million for its ongoing and future construction project.

The group told Bursa Malaysia that the private placement will entail the issuance of up to 82.83 million new shares, representing 10% of its existing issued shares.

It intends to place out the placement shares to independent third party investors to be identified later.

Based on an indicative issue price of 75 sen per share, the private placement is expected to raise up to RM62.12 million, which will be utilised for construction projects expenditure, repayment of bank borrowings and expenses relating to the proposed private placement.

“The board had considered various methods of fundraising and is of the opinion that the proposed private placement is the most appropriate avenue of fund raising for the group to raise additional funds expeditiously without incurring financing costs associated with bank borrowings,” it said.

Among the construction projects identified by Gadang are its contract awarded by MMC Gamuda KVMRT Sdn Bhd (RM952.1 million), Cyberview Sdn Bhd (RM475 million) and TRX City Sdn Bhd (RM327.9 million).

The group’s outstanding bank borrowings amounted to RM334.8 million as at Feb 28 and it intends to utilise RM13.5 million of the proceeds to repay its bank borrowings.

“The annual interest savings to Gadang Group is approximately RM710,000 based on the interest rate of 5.25% per annum.”

Maybank first bank to lower lending, fixed deposit rates

PETALING JAYA: Effective tomorrow, Maybank will revise its base rate (BR) and base lending rate (BLR) downwards in line with Bank Negara Malaysia’s Overnight Policy Rate (OPR) reduction.

In a statement released today, the bank said its BR will be lowered by 20 basis points from 3.25% to 3.05% while its BLR will be revised from 6.9% to 6.7%.

Similarly, the Islamic BR and base financing rate will be reduced by 20 basis points from 3.25% to 3.05% and from 6.9% to 6.7% respectively.

In addition, Maybank’s fixed deposit rates will also be adjusted downwards by 20 basis points.

Group president and CEO Datuk Abdul Farid Alias said the bank had been offering the lowest BR and BLR among commercial banks in the country for some time now at 3.25% and 6.9% respectively.

“Our revision in rates will continue to benefit our borrowers who have loans pegged to the BR/BLR as their applicable interest rates will be adjusted downwards accordingly from May 9.”

“At the same time, we have endeavoured to ensure that depositors continue to receive an appropriate return for their deposits as fixed deposits rates have been adjusted less than the 25 basis points decrease in OPR,” he added.

Farid said the group will continue to manage its assets and liabilities effectively to ensure that interest rates are priced responsibly at all times for the benefit of its customers.

The last revision in Maybank’s BR was on Jan 29, 2018 when it was revised to 3.25% from 3%.

7-Eleven Malaysia: Parcel services next

KUALA LUMPUR: 7-Eleven Malaysia Holdings Bhd, which opened its 2,323rd store in Plaza Arkadia, Desa ParkCity today, is looking at introducing the Razer Parcel Plus services in 7-Eleven stores as the next available in-store services.

7-Eleven Malaysia CEO Colin Harvey said the Razer Parcel Plus services is currently in trial in about five of its stores, where customers can have their parcels delivered to their nearest 7-Eleven stores.

“Sooner or later when you order from Lazada or Amazon, you can click on the dropdown (menu) – 7-Eleven near to your house and you can collect it on the way home,” he told reporters after launching its 2,323rd store today.

“I see 7-Eleven as becoming a new and exciting product, a place to buy your meal and a place where you can pay all your bills… where you can later book a movie ticket. Some countries can do that. I don’t know if we can do that, we’ll explore. Can you book an airplane or train ticket, what is the next thing?” Harvey explained.

7-Eleven has increased its range of in-store services to customers with a wider selection of utility providers of its 24/7 bill payment service, major e-commerce offline payment option as well as being able to pay for PTPTN (National Higher Education Fund Corp) loan.

E-wallets such as Razer Pay and Alipay are also now accepted with more to come on board and fans of Google Play, Sony Playstation, Spotify, Netflix and more can also conveniently purchase prepaid cards at 7-Eleven stores.

Harvey said it is important for 7-Eleven Malaysia to continue to innovate on not only its product offering, but to also play a role in the daily lives of customers by offering a whole new level of convenience in Malaysia and continue to be the leader in the convenience sector.

So far, 7-Eleven Malaysia has opened 40 stores and refurbished 23 stores this year. Last year, it opened 83 stores (gross) and 63 stores (net), with Harvey emphasising that there is still opportunity to grow. A store typically cost about RM300,000.

“Whether we opened 200, 180 or 210 stores (a year) depends on the opportunities and our own capacity, but we certainly have the capacity to open 200 stores a year. That’s our broad-based target,” said Harvey, adding that it also aims to refurbish 200 stores this year (100 stores for major refurbishment and 100 stores for minor refurbishment).

7-Eleven Malaysia is the largest standalone convenience store chain nationwide and its latest store reflects its contemporary concept store format, which has been gradually rolled out over the past few years. The current generation of 7-Eleven stores encourages customers to see 7-Eleven as a “lifestyle store”.

Ministry revises anti-dumping duties on cold rolled steel coils

KUALA LUMPUR: The Ministry of International Trade and Industry (Miti) has revised anti-dumping duties imposed on imports of cold rolled coils of alloy and non-alloy steel originating or exported from China, South Korea and Vietnam.

The ministry in a statement today, said the revision was done after the government had conducted and completed the administrative review investigation on producers and importers in Malaysia, as well as producers or exporters from those countries.

The administrative review investigation was in accordance with the Countervailing and Anti-Dumping Duties Act 1993 and the Countervailing and Anti-Dumping Duties Regulations 1994.

“The Royal Malaysian Customs Department will enforce the collection of the revised anti-dumping duties effective May 8, 2019 to May 23, 2021,” it added.

Chinese steel producers Bengang Steel Plates Co Ltd’s anti-dumping duties now stood at 42.08%, while BX Steel POSCO Cold Rolled Sheet Co Ltd (35.89%), Jiangsu Shagang International Trade Co Ltd (42.08%) and other producers/exporters (42.08%).

For South Korean steel producers, it is nil for POSCO , Hyundai Steel Co (11.55%), and other producers (21.64%).

In the case of Vietnamese steel producers, it is POSCO Vietnam Co Ltd (2%), China Steel Sumikin Viet Nam Joint Stock Co (13.68%) and others (13.68%).

On Nov 9, 2018, the government initiated an investigation into anti-dumping duties imposed on imports of cold rolled coils of alloy and non-alloy steel originating from China, South Korea and Vietnam.

The investigation was based on a petition filed by CSC Steel Sdn Bhd on behalf of the domestic industry producing cold rolled coils of alloy and non-alloy steel.

The petitioner claimed that there was a substantial change in the dumping margin for the imports of subject merchandise by producers or exporters from China, South Korea and Vietnam, since the imposition of the anti-dumping duties on the imports of cold rolled coils of alloy and non-alloy steel on May 24, 2016.

‘Rate cut not a growth catalyst for auto sector’

PETALING JAYA: Unlike the three-month tax holiday in 2018, AmResearch believes the Overnight Policy Rate (OPR) cut will not be a catalyst for growth in the automotive sector.

This is because of a little reduction in monthly repayment for vehicles despite the rate cut.

“Hence, the minimal interest savings are not likely to drive consumers to purchase vehicles,” the research house said in a note today.

According to the back-of-the-envelope calculations, the 25-basis-points cut will only result in RM13.12 reduction in monthly repayments for a RM70,000 vehicle with 10% downpayment.

“We believe that on the purchase of big-ticket items such as cars, the bigger challenge for consumers will be the upfront 10% down payment,” AmResearch opined.

However, MIDF Research believes that the rate cut could potentially improve consumer spending in the sector, citing that historically total industry volume (TIV) growth had an inverse relationship with OPR.

“An OPR hike historically had a dampening impact on TIV growth and vice versa if OPR is cut given improved consumer spending and basically, lower hire purchase rates.”

However, the research house cautioned that the potential upside from the lower rates could be offset by the forex factor.

“Despite potentially stronger consumer spending and potential upside to TIV forecast, auto players’ margins could be negatively impacted by a potentially weaker ringgit as a result of the OPR cut.”

Of the players under its coverage, Tan Chong Motor Holdings Bhd is the most sensitive to forex movement with every 1% change in US dollar/ringgit resulting in a 12% impact on its financial results this year.

“This is followed by UMW Holdings Bhd (3% change to earnings for every 1% change in US dollar/Japanese yen) and Bermaz Auto Bhd (1.4% change for every 1% change in Japanese yen/ringgit).”

MBM Resources Bhd is least sensitive to forex changes as its earnings comprise mainly Perodua which entails highly localised models.

AmResearch said the Malaysian automotive industry continues to face headwinds with lingering issues and is expected to remain challenging in a competitive business environment.

“We look forward to the anticipated revised National Automotive Policy 2019 (NAP 2019), expected to be announced in 2Q19 which will set the long-term direction of the automotive ecosystem, and will also include the direction of the third national car development.”

Currently AmResearch is maintaining its TIV projection of 603,000 units for 2019 (+0.8% y-o-y) as the sector is currently lagging with no major catalysts after receiving a boon from the tax holiday in 2018.

Alliance Bank, BIMB seen most affected by OPR cut

PETALING JAYA: Alliance Bank Bhd and BIMB Holdings Bhd are set to lose most in a falling interest rate climate, according to HLIB Research’s sensitivity analysis.

Affin Bank Bhd and AMMB Holdings Bhd are least affected by the Overnight Policy Rate (OPR) cut.

HLIB Research explained that the impact of an OPR cut on banks is largely dependent upon the composition of variable and fixed rate loans; proportion of current account, savings account (CASA) and other deposits; non-interest income ratio; as well as percentage exposure to overseas market.

“Biggest losers would be banks with high mix of variable loans and CASA, low non-interest income ratio and low percentage exposure to overseas market.”

Meanwhile, PublicInvest Research said Alliance Bank and RHB Bank Bhd would seem to be the worst hit by the rate cut given their higher proportion of variable rate loans (over total loans) of 89.9% and 85.7% respectively.

“Impact could be smallest for AmBank (74.3%), Maybank (71.6%) and Affin Bank (67.2%).”

On the liability front, the research house said Maybank, Public Bank Bhd and Alliance Bank’s lower levels of fixed-rate deposits allows it to re-price faster, standing it in better stead though Alliance Bank’s high level of variable-rate loans will cause its margins to compress more.

Meanwhile, HLIB Research highlighted that the previous rate cut only resulted in a marginal negative net interest margin (NIM) impact and there could be chance that NIM pressure could be mitigated by less intense deposit competition.

It noticed that high promotional fixed deposit rate campaigns have abated, indicating that banks are wary of the situation and started to price in lower interest rates.

PublicInvest Research expects the impact of the cuts to vary significantly to the banks under its coverage. It estimated that Alliance Bank to be the hardest hit with 5% knocked off its bottom line on a full-year basis.

“Maybank and CIMB Group are anticipated to see about 2.5% shaved off, with AmBank taking an estimated 2.0% hit. Industry-wide impact is anticipated at about 3%.“

It said despite relatively benign impacts to net profit, banking stocks may still take near-term hits as seen in previous rounds of cuts.

“We see this as opportunities to accumulate nonetheless, with longer-term effects likely to be shrugged off by gradual improvements in macro conditions. While we maintain our neutral view on the sector, it is with a positive bias given the sector’s lagging valuations to the broader market.”