Wednesday, May 15th, 2019


Outgunned by bigger rivals, Honestbee’s food delivery service exit in Singapore will have ‘minimal impact’

SINGAPORE, May 15 — Homegrown startup Honestbee’s termination of its food delivery service here will have minimal impact on its restaurant partners, some eateries have told TODAY. The company announced today that it will halt its food delivery…

Mnuchin says China trade talks likely to continue in Beijing

WASHINGTON, May 15 — US Treasury Secretary Steven Mnuchin said today he will likely travel to Beijing soon to continue negotiations with Chinese counterparts as the world’s two biggest economies try to salvage talks aimed at ending their…

Wall Street pares losses after Trump decides to delay auto tariffs

NEW YORK, May 15 — US stocks pared losses today after US President Donald Trump decided to delay tariffs on auto imports by up to six months. Sentiment was earlier hurt by a clutch of weak economic data from the United States and China that…

Ford to build more Lincolns for Chinese market locally, says CFO

NEW YORK, May 15 — Ford Motor Co plans to start production of new luxury Lincoln models in China for that market as they are launched, starting with the new Corsair later this year, to benefit from lower costs and avoid the risk of tariffs, a top…

European Commission prepares raft of banking reforms after Brexit

LONDON, May 15 — The European Commission is working on its largest regulatory push on banking since the financial crash that could curb Britain’s access to the bloc, according to an internal draft document seen by Reuters. In the 12-page…

Regulator: Banks in Britain face fines over arbitrary fraud compensation

LONDON, May 15 — Banks in Britain could face fines if they make selective and arbitrary decisions about compensating customers who have fallen victim to fraud, the Financial Conduct Authority’s head of enforcement said today. A code of conduct…

US manufacturing falls in April, total Q1 output plunges from 2018

WASHINGTON, May 15 — US manufacturing declined sharply in April, and the economy’s total industrial output for the first three months of the year were far worse than originally reported, the Federal Reserve said today. Amid a bitter trade war…

i-Stone signs underwriting deal with M&A Securities for IPO

PETALING JAYA: i-Stone Group Bhd inked an underwriting agreement with M&A Securities Sdn Bhd to pave the way for its listing on the ACE Market of Bursa Malaysia.

According to the underwriting agreement, M&A Securities will underwrite 73.29 million new shares comprising 61.07 million new shares made available for the public and 12.22 million new shares for eligible directors and employees of the group.

i-Stone is involved in the manufacturing automation business segment. It has received approval from Bursa Malaysia for its initial public offering (IPO) exercise, which will see the issuance of 244.3 million shares, representing 20% of its enlarged issued and paid-up share capital.

The IPO proceeds will be used for process and product development; payment of bank borrowings; construction of a new design and development centre at its existing operations centre in Taman Teknologi, Johor; purchase of new machineries and software to enhance its manufacturing capabilities; purchase of new robotic arms; and working capital.

“i-Stone Group has grown by leaps and bounds in the past 12 years since our inception. We have expanded our in-house capabilities for our manufacturing automation activities, which has led to the establishment of our business model that enables us to control the quality and production lead time as well as provides flexibility to design and manufacture our specialised automation machines,” said managing director Rebecca Tee Sook Sing.

MARC affirms Malaysia’s sovereign rating at ‘AAA’

KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) has affirmed Malaysia’s sovereign rating of ‘AAA’ with a stable outlook, but cautioned that its fiscal and debt management performance remains “rating constraints”.

In a statement released today, the rating agency said the triple-A rating reflects the resilience of the Malaysian economy, its effective monetary policy, as well as healthy external position.

However, the rating strengths are tempered by persistent fiscal deficits, high government debt and rising contingent liability, as well as high household debt.

“The stable outlook is based on the expectation that the new administration will continue implementing the governance and institutional reforms it promised in the run-up to the May 2018 election. We are, nevertheless, cautious about the risks posed by rising geopolitical and geo-economic uncertainties,” MARC said.

It highlighted that Malaysia’s resilient economy, underpinned by a diversified economic structure, significant natural resources and human capital endowments, is an important rating support.

“Macroeconomic fundamentals remain sound, thanks to continued proactive and practical economic management. Malaysia is also globally competitive. In the World Economic Forum’s Global Competitiveness Report 2018, for example, it was the only non-high-income economy to make it into the top 25.”

MARC said another rating support is Malaysia’s effective monetary policy, as evidenced by strong monetary policy transmission to bank lending rates due to favourable shocks to the monetary base.

“Given that domestic economic and financial considerations are guiding policy decisions, the monetary policy framework has continued to deliver broad output and price stability. Over the 2011-2018 period, for example, growth and inflation volatility came in lower than the median of its rating peers in MARC’s sovereign rating universe.”

Malaysia’s external position remains healthy given persistent current account surpluses, a manageable level of external debt and adequate international reserves. As at April 30, Bank Negara Malaysia’s international reserves stood at US$103.4 billion, equivalent to 1.0 time total short-term external debt.

“These attributes, together with a credi-ble monetary policy, flexible exchange rates and a well-developed financial system, continue to help limit vulnerability to external developments,” MARC said.

Nonetheless, under the new administration, the fiscal deficit for 2018 has been reset upwards to 3.7% of gross domestic product (GDP) compared with 2.8% in Budget 2018.

The rating agency said as the government’s Medium-Term Fiscal Framework assumes a crude oil price range of US$60-US$70 (RM258-RM292) per barrel over the 2019-2021 period, a slide to below US$60 per barrel would be credit negative.

Given this and elevated geopolitical and geo-economic concerns, it has become a more challenging fiscal balancing act, MARC said.

The government’s debt risk profile remains fluid given the reliance on off-budget initiatives that include guarantees and public-private partnerships (PPP). As of end-2018, total federal government direct debt stood at 51.8% of GDP, slightly up from the previous year. Government-guaranteed debt also rose, rising to 18.6% of GDP by the end of 2018.

Another rating constraint is Malaysia’s high household debt. Despite its moderation to 83.0% of GDP in 2018, risks remain because it comprises a significant 57.3% of banking system loans.

While aggregate household financial assets and liquid financial assets may be 2.1 times and 1.4 times of debt, MARC said, not all households can pay down debt if an economic disruption adversely affects the labour market.

“In any case, the growth pace of financial assets could fall below that of debt given a more difficult economic environment,” it added.

Lower taxation lifts KLK’s Q2 bottom line

PETALING JAYA: Kuala Lumpur Kepong Bhd’s (KLK) net profit for the second quarter (Q2) ended March 31, 2019 jumped 34.7% to RM142.96 million from RM106.15 million a year ago, thanks to lower taxation and surplus of RM25.6 million arising from the government’s acquisition of plantation land.

However, its revenue fell 15.9% to RM3.94 billion compared with RM4.69 billion in the previous year’s corresponding quarter as plantation profit was substantially lower by 55.8%.

The group has proposed to declare an interim dividend of 15 sen per share for the quarter under review.

For the six-month period, KLK’s net profit grew 15.3% to RM393.87 million from RM341.51 million a year ago, mainly thanks to surplus from government’s acquisition of plantation land of RM48.1 million and foreign currency exchange gain of RM35 million from translation of inter-company loans denominated in foreign currencies.

Its revenue declined 18.6% to RM8.03 billion from RM9.86 billion.

KLK told Bursa Malaysia that in Q2, its CPO and palm kernel prices slipped 17.9% and 37.3% year-on-year to RM1,969 and RM1,301 per tonne due to high stocks level.

For oleochemical business, the profits for the first half was lower as compared to the same period last year. Going forward, margins are volatile but reasonable profit is expected in view of capacity utilisation.

“Overall, the group’s operational profits are expected to be lower for financial year 2019,“ KLK said.