Thursday, May 23rd, 2019

 

Wall Street sinks further as trade woes persist

NEW YORK, May 23 — Wall Street plunged at the open of trading today as investors shuddered at worldwide political, economic and trade turmoil. About 15 minutes into the session, the benchmark Dow Jones Industrial Average and tech-heavy Nasdaq each…


IMF warns US-China trade war will ‘jeopardise’ 2019 global growth

WASHINGTON, May 23 — The IMF warned today that the escalating US-China trade war will “jeopardise” 2019 global growth, undermining confidence and raising prices for consumers. “Consumers in the US and China are unequivocally the losers from…


Boustead Heavy in the red in Q1

KUALA LUMPUR: Boustead Heavy Industries Corp Bhd (BHIC) saw a net loss of RM4.3 million in the first quarter ended March 31, 2019 (Q1’19) from a net profit of RM4.5 million a year ago mainly due to lower defence-related and commercial-based maintenance, repair and overhaul activities, negative contribution from the associates and lower negative contribution from the energy segment.

The group’s revenue fell 8.6% to RM36.3 million for the period under review compared with RM39.72 million reported in the same corresponding quarter last year.

BHIC chairman Tan Sri Ahmad Ramli Mohd Nor said while it expected the tough business conditions it faced in 2018 to spill over into the early part of 2019, BHIC remains cautiously optimistic that it can weather the challenges and turn the corner this year particularly given its improved performance in Q1’19.

Moving forward, he added that BHIC is on course to expand its customer base and pursue opportunities with other government agencies.


Boustead Heavy in the red in Q1

KUALA LUMPUR: Boustead Heavy Industries Corp Bhd (BHIC) saw a net loss of RM4.3 million in the first quarter ended March 31, 2019 (Q1’19) from a net profit of RM4.5 million a year ago mainly due to lower defence-related and commercial-based maintenance, repair and overhaul activities, negative contribution from the associates and lower negative contribution from the energy segment.

The group’s revenue fell 8.6% to RM36.3 million for the period under review compared with RM39.72 million reported in the same corresponding quarter last year.

BHIC chairman Tan Sri Ahmad Ramli Mohd Nor said while it expected the tough business conditions it faced in 2018 to spill over into the early part of 2019, BHIC remains cautiously optimistic that it can weather the challenges and turn the corner this year particularly given its improved performance in Q1’19.

Moving forward, he added that BHIC is on course to expand its customer base and pursue opportunities with other government agencies.


Ringgit continues downtrend, approaches 4.20 to the US dollar

PETALING JAYA: The ringgit extended its downward trend for the third trading day, falling 0.18% to 4.1935 against the US dollar today, the lowest in more than five months as the tariff dispute between the United States and China escalates into a full-fledged trade war following the US ban of Huawei.

Market analysts have expected the ringgit to depreciate to RM4.20 against the US dollar this week on shortened trading due to the Wesak Day and Nuzul Al-Quran public holidays. The currency was also expected to move in tandem with other Asian units this week as global risk sentiment remains delicate over the direction of the US-China trade war.

FXTM global head of currency strategy and market research Jameel Ahmad said most Asian stocks were in the red today, as regional currencies turned in a mixed performance against the greenback, showcasing its sensitivity to the US-China trade dispute outlook.

Concurrently, the dollar hit its highest level in a month against a basket of six major currencies as economic and political uncertainties swept through Europe and Asia.

Jameel said the political risks that are weighing on the European Union and the UK are translating into support for the dollar.

“As long as the US economy doesn’t show meaningful signs of a sharper economic slowdown and the trade tension concerns continue to linger in the atmosphere, this should help support the ‘resilient dollar’ narrative,” he said.

He added that markets appear to have priced in the recent deterioration in US-China relations, but remain on edge awaiting the next catalyst that could swing risk sentiment either way.

“Overall, the likelier base case for investors is that the US-China tensions will persist, which is a far cry from the prospects of a formalised US-China trade deal that anchored market expectations up until April,” said Jameel.

Tensions between the US and China heightened after US President Donald Trump banned Chinese tech giant Huawei from the US. A number of companies around the world followed suit to cut back their business with Huawei, including Google, Japan’s Panasonic and Britain’s largest mobile service provider EE.

On Bursa Malaysia, the FBM KLCI lost 1.87 points to 1,601.87 points today. Among other Asian bourses, Tokyo’s Nikkei 225 was down 0.6%, Hong Kong’s Hang Seng Index fell 1.6%, Shanghai’s Composite Index skidded 1.4% and Seoul’s Kospi slipped 0.3%.


Ringgit continues downtrend, approaches 4.20 to the US dollar

PETALING JAYA: The ringgit extended its downward trend for the third trading day, falling 0.18% to 4.1935 against the US dollar today, the lowest in more than five months as the tariff dispute between the United States and China escalates into a full-fledged trade war following the US ban of Huawei.

Market analysts have expected the ringgit to depreciate to RM4.20 against the US dollar this week on shortened trading due to the Wesak Day and Nuzul Al-Quran public holidays. The currency was also expected to move in tandem with other Asian units this week as global risk sentiment remains delicate over the direction of the US-China trade war.

FXTM global head of currency strategy and market research Jameel Ahmad said most Asian stocks were in the red today, as regional currencies turned in a mixed performance against the greenback, showcasing its sensitivity to the US-China trade dispute outlook.

Concurrently, the dollar hit its highest level in a month against a basket of six major currencies as economic and political uncertainties swept through Europe and Asia.

Jameel said the political risks that are weighing on the European Union and the UK are translating into support for the dollar.

“As long as the US economy doesn’t show meaningful signs of a sharper economic slowdown and the trade tension concerns continue to linger in the atmosphere, this should help support the ‘resilient dollar’ narrative,” he said.

He added that markets appear to have priced in the recent deterioration in US-China relations, but remain on edge awaiting the next catalyst that could swing risk sentiment either way.

“Overall, the likelier base case for investors is that the US-China tensions will persist, which is a far cry from the prospects of a formalised US-China trade deal that anchored market expectations up until April,” said Jameel.

Tensions between the US and China heightened after US President Donald Trump banned Chinese tech giant Huawei from the US. A number of companies around the world followed suit to cut back their business with Huawei, including Google, Japan’s Panasonic and Britain’s largest mobile service provider EE.

On Bursa Malaysia, the FBM KLCI lost 1.87 points to 1,601.87 points today. Among other Asian bourses, Tokyo’s Nikkei 225 was down 0.6%, Hong Kong’s Hang Seng Index fell 1.6%, Shanghai’s Composite Index skidded 1.4% and Seoul’s Kospi slipped 0.3%.


Heineken Malaysia posts RM52.8m net profit in first quarter

PETALING JAYA: Heineken Malaysia Bhd’s net profit for the first quarter ended March 31, 2019 (Q1’19) increased 8.3% to RM52.81 million from RM48.76 million a year ago, attributed to higher sales and efficient management of commercial spend.

Revenue for the quarter rose 21.1% to RM525.14 million from RM433.81 million, mainly driven by higher sales volume from effective execution of commercial campaigns during Chinese New Year 2019 and the increase in sales revenue prior to the price adjustment on April 1, 2019.

Heineken said the price adjustment was necessary due to higher cost of packaging and raw materials following increased global commodity prices. This was the first price increase since the Sales and Services Tax (SST) was introduced on Sept 1, 2018.

In view of the government’s decision to postpone the implementation of the sugar tax on beverages until July 1, 2019, pricing taken on the non-alcoholic Malta currently excludes this new tax.

“We have kept price increase to a minimum and we have not increased the prices of some of our products. We are mindful of the challenging market conditions and that the Consumers Sentiment Index fell further below the confidence threshold of 85.6 in Q1,“ said managing director Roland Bala.

Commenting on the outlook for the rest of the year, he said the company will leverage on the solid growth in Q1 to continue sharpening its focus on executing the right strategies to drive value creation for our stakeholders towards delivering a satisfactory performance for 2019, whilst being cautious of softening consumer sentiment and competition that is expected to intensify.


Unwanted: Some Asian shops shun Huawei phones for trade-ins

SINGAPORE/MANILA: Mobile phone retailers in some Asian countries are refusing to accept Huawei devices for trade-ins, as more consumers look to offload their device on worries Google suspending business with the Chinese firm will disrupt services.

Google has said it will comply with an order by US President Donald Trump to stop supplying Huawei, meaning current owners of Huawei phones face being cut off from updates of the Android operating system from late August. New phones will lose access to popular apps such as YouTube and Chrome.

Against this backdrop, some customers in Singapore and the Philippines have rushed to sell their Huawei phones, according to retailers and online marketplace data.

But there are few takers.

“If we buy something that is useless, how are we going to sell it?” said Dylan On, a salesman at Wanying Pte Ltd, a Singapore retail and repair shop.

“It’s not that Huawei is a bad product. It’s a very good product. It’s just that nobody wants to buy it now because of US policy,” he said, adding he was looking to sell existing Huawei stock online to overseas buyers in hopes they are less aware of current events.

When contacted by Reuters, a Huawei spokeswoman said the company “will continue to provide security updates and after-sales services to all existing Huawei and Honor smartphone and tablet products”.

The company said previously it is developing its own phone software and it can still use an “open source” version of Android that lacks access to Google apps. Huawei also went ahead with a new phone launch in Britain on Tuesday, even as the number of users trading in their devices rose in Asia.

Previously, about five people a day were looking to trade in their Huawei phones, but that has jumped to 20 in the last two days, said Zack, a salesman at Mobile Square in Singapore who declined to give his last name.

“Normally, you would see people wanting to trade their old phones as they want to replace them with new ones,“ he added. “Now you’re seeing people wanting to trade in the latest one.”

Carousell, Singapore’s most popular online marketplace, said the number of Huawei phone sales more than doubled the day the US order was announced.

Huawei smartphones had a 14% share of the Singapore market last year, according to research firm Canalys.

Mobile phone retailers in the Philippines are also staying away from Huawei products.

“We are no longer accepting Huawei phones. It will not be bought by our clients anymore,” Hamida Norhamida, a saleswoman of new and used phones in Manila’s Greenhills shopping centre told Reuters, adding that she felt relieved to have sold off her stock of Huawei P30 Pro ahead of Google’s Monday announcement.

Another phone salesperson at Greenhills said she would only buy Huawei phones at a 50% discount. “Selling it will be a gamble,“ said the saleswoman, who would give her name only as Thelma.

But some see this as an opportunity to get a quality phone on the cheap.

“My immediate reaction was worry that my current Huawei could be worthless,” Xin Yi, 24-year-old student from Singapore, told Reuters. “But Google said current Huawei users will not be affected … after that, I was relieved.”

She said she was now in the market for a new Huawei model at a marked-down price.

On Wednesday, Japanese telcos KDDI Corp and SoftBank Corp’s low-cost mobile brand Ymobile said they would delay the launch of Huawei P30 Lite smartphone which was due to go on sale tomorrow.


Mestron eyes RM25m from IPO for expansion

KUALA LUMPUR: Steel pole maker Mestron Holdings Bhd expects to raise RM25.28 million through its proposed listing on the ACE Market of Bursa Malaysia.

The company plans to use RM13 million (51.4%) raised from the initial public offering (IPO) to expand its main manufacturing facility and acquire more manufacturing machineries and equipment for future business growth.

It will further utilise RM5.18 million (20.5%) for working capital to purchase raw materials such as steel plates and pipes to support its expansion in capacity; RM4 million (15.8%) to repay bank borrowings while the remaining RM3.1 million (12.3%) to be used to defray listing expenses for the IPO.

Mestron managing director Por Teong Eng said the expansion of its main manufacturing facility will increase the company’s production capacity of steel poles by 5,700 metric tons (MT) to 11,400 MT per annum. It will also enhance Mestron’s manufacturing capability for specialty poles particularly, high mast poles and telecommunication monopoles.

“This is in line with our business strategies to expand the company’s revenue stream from its specialty pole business segment particularly high mast and telecommunication monopoles as the gross profit (GP) margin for specialty poles is relatively higher than the GP margin for standard street light poles,” he said in a statement.

Under the listing exercise, Mestron is issuing 158 million new shares at 16 sen per share of which 39.5 million new shares will be made available to the Malaysian public via balloting; 8.75 million new shares for its eligible directors and employees; 30.75 million new shares by way of private placement to selected investors while the remaining 79.0 million new shares are earmarked for private placement to identified bumiputra investors approved by the Ministry of International Trade and Industry.

As part of its listing exercise, the existing shareholders of the company will also make an offer for sale of 79 million shares by way of private placement to selected investors.

Based on the enlarged share capital of 790 million shares, Mestron is expected to have a market capitalisation of RM126.4 million and its listing is tentatively scheduled on June 18, 2019.


UMW expects aerospace unit to turn around in 2020

SHAH ALAM: UMW Holdings Bhd expects its nascent aerospace business under the manufacturing and engineering division to turn around next year as it ramps up production capacity.

The division is undertaken through UMW Aerospace, which had, in 2015, entered into an agreement with Rolls Royce Plc to manufacture and assemble fan cases for Rolls-Royce Trent 1000 and Trent 7000 aero engines used in Boeing and Airbus aircraft.

Speaking to the media after the group’s AGM yesterday, UMW group CEO and president Badrul Feisal Abdul Rahim did not reveal the exact figures of its fan cases production due to a confidentiality clause.

However, he said the unit delivered over 50 fan cases in 2018 and is expected to more than double that this year.

“We expect (aerospace business) to improve significantly due to the successful production ramp up.”

In 2018, the aerospace business’s losses narrowed significantly to RM29.4 million from RM60.4 million in 2017.

UMW also revealed it is in negotiations with a number of parties for the manufacturing of aerospace components as well as high-value manufacturing for other business sectors.

“To be sure, we are not leaving any stone unturned, we are looking to optimise our manufacturing capabilities. In the current fan case manufacturing it is all about precision engineering and the same skill set can be used for other industries, such as health, medical devices, manufacturing turbine for the energy industries and many more.”

Meanwhile, UMW has allocated capital expenditure (capex) of RM93 million for its aerospace business out of the RM118 million set aside for manufacturing and engineering division, along with RM1.6 million for the land development for High Value Manufacturing Park in Serendah, Selangor.

The group has also earmarked RM174 million for the automotive division to upgrade and automate the group’s Shah Alam plant and RM262 million has been allocated to its equipment division to be invested in the group’s equipment rental business.

Another RM52 million will be used for other capex, bringing the group’s total capex for the year to RM607 million.

For the automotive sector, UMW is maintaining its sales forecasts of 75,000 units for Toyota and 231,000 units for Perodua following Bank Negara Malaysia’s decision to cut the Overnight Policy Rate by 0.25%.

With regards to foreign exchange pressure, UMW said it has been utilising a hedging strategy to deal with the forex factor aside from the localisation efforts for it automotive division.

In January this year, the group began completely knocked down (CKD) production for Toyota Vios with 80% local input, followed by Toyota Yaris in April.

Badrul said the group is planning to have more CKD models going forward.