Monday, May 27th, 2019


Inflation to tick up this year, remain muted in short term

PETALING JAYA: Economists are expecting an uptick in inflation this year, from 1% in 2018, owing to a low base effect in view of the three-month tax holiday in 2018 as well as a weaker ringgit against the US dollar.

“However, we believe underlying inflation could stay fairly muted in the near term underpinned by softening domestic sentiments, added with volatile global crude oil prices,” AmInvestment Bank said in a report.

It maintained its full-year inflation target at 1.0%, and believes that Bank Negara Malaysia will keep interest rates unchanged after instituting a cut early this month.

In April, headline inflation came in at 0.2% year-on-year (y-o-y), unchanged from March, but missed market expectations of 0.4%. However, inflationary pressure remained in the negative region when averaged for the first four months at -0.2%. Likewise, core inflation in April increased at almost the same pace as it did in March, at 0.5% y-o-y.

“Looking at the subsectors, price pressure in the economy was seen rather lacklustre almost across the board,” said AnInvestment Bank.

It said both cost of food and non-alcoholic beverages and utilities rose 1.1% and 2.0% y-o-y respectively in April, the same as in March. The drag in inflation was partly driven by a further decline in the clothing and footwear subsector at 3.2% y-o-y versus a decline of 3.0% y-o-y.

Though the decline in cost of transport was smaller – in April at 2.6% y-o-y from a 3.0% y-o-y drop in March – fuel pump prices of both RON95 and diesel were lower on an annual basis.

RON95 prices recorded a decline of 5.5% y-o-y in April (RM2.08/litre) from a drop of 5.4% y-o-y in March while diesel prices recorded zero per cent year-on-year growth (RM2.18/litre) compared with a 0.3% year-on-year growth in March.

However, RON97 prices accelerated 9.5% year-on-year in April (RM2.71/litre) from 1.9% y-o-y in March (RM2.51/litre).

PublicInvest Research said there is a fair chance that the Consumer Price Index (CPI) may rebound in the near term, driven by a combination of factors, including the increase in electricity tariff for businesses, which is expected to be passed on to consumers.

The higher minimum wage (+4.7%; RM1,100 a month) along with protracted weakness of the ringgit may also support the rebound in the CPI.

“However, we also think that the CPI may get more lift from global conditions especially the outcome of US-China trade negotiations. A favourable outcome may spark a rally not only in commodity but also other asset classes, a preamble of wealth creation and spending activities,” it said.

“On the flip side, however, a breakdown or prolonged negotiation may put a lid on the rise in inflation, conditions which we are facing at the moment,” it added.

WCT Holdings posts RM40.3m net profit for first quarter

PETALING JAYA: WCT Holdings Bhd’s net profit for the first quarter ended March 31, 2019 grew 8.8% to RM40.32 million from RM37.06 million a year ago, thanks to share of profit of joint ventures.

In a filing with Bursa Malaysia today, the group said it registered a share of profit of joint ventures amounting to RM1.88 million during the quarter, compared with a loss of profit of joint ventures amounting to RM2.94 million a year ago.

However its revenue for the quarter was 4.7% lower at RM514.65 million compared with RM539.79 million in the previous year’s corresponding quarter, mainly due to lower revenue recognition of certain engineering and construction projects which are nearing completion.

WCT group managing director Datuk Lee Tuck Fook said its performance for the current year to date has been in line with its expectations amid the prevailing challenging market conditions.

“Our engineering and construction division continues to be the group’s main contributor of revenue, accounting for 73% of the group’s consolidated revenue, supported by its strong outstanding order book comprising a mix of civil and infrastructure works and building construction jobs,” Lee said in a statement.

The group’s engineering and construction division recorded an operating profit of RM33 million (Q1 FY2018: RM59 million) on the back of revenue of RM378 million (Q1 FY2019: RM446 million).

The lower operating profit is mainly attributable to lower expected margins from the group’s ongoing construction projects and higher proportion of building construction projects with lower margins.

The lower revenue recognition is mainly due to some of the existing projects nearing completion and the newly secured jobs which are still in early stages of construction.

Meanwhile, the group’s property development division recorded a revenue of RM85 million (Q1FY2018: RM56 million), driven by a significant increase in the operating profit of this division from RM9 million to RM37 million mainly due to higher revenue and profit arising from the completed sale of an undeveloped land during the quarter under review.

The operating profit of the group’s property investment and management division surged to RM27 million (Q1 FY2018: RM16 million) on the back of higher revenue of RM52 million (Q1 FY2018: RM38 million).

The higher operating profit and revenue for the quarter was mainly contributed by the improved occupancy level of Paradigm Mall in Johor Baru and higher rental income from Bukit Tinggi Shopping Mall in Klang, Selangor.

Basic earnings per share for Q1 FY2019 was higher at 2.92 sen as compared with 2.62 sen recorded in the preceding year’s corresponding quarter.

“In 2019, subject to market conditions, our property development division plans to launch new property projects which would better cater to the consumer demand for more affordable residential units as well as continue our efforts to reduce our unsold properties and idle landbanks.

“Our property investment and management division aims to continue improving on the occupancy level and tenancy mix as well as enhancing our investment properties to stay relevant amidst the changing consumer behaviour and spending patterns. This division is expected to contribute positively to the group’s revenue and profit,” Lee said.

KNM units secure RM97.7m worth of contracts

PETALING JAYA: KNM Group Bhd has been awarded three contracts with a total estimated value of RM97.7 million via its subsidiaries.

The group told Bursa Malaysia that its wholly owned subsidiary KNM Process Systems Sdn Bhd (KNMPS) signed a purchase order from TPSK Consortium for the supply of shop assembled large columns for the Petrochemical Complex, Olefin plant in South Vietnam amounting to US$12.77 million (RM53.44 million) today.

Its indirect wholly owned subsidiary FBM Hudson Italiana S.p.A (FBM) had accepted a notice of award and authorisation for the supply of reactor effluent air condensers for Petronas’ Rapid project in Pengerang, Johor with a value of US$4.46 million (RM18.68 million) from Sinopec Engineering (Group) Co Ltd.

In addition, FBM was also awarded a technical goods and work purchase contract for the engineering, procurement, manufacturing, inspection, testing and delivery of oleflex reactors for the New European PDH Project at Borealis Production site in Kallo, Antwerp in Belgium with a value of €5.45 million (RM25.59 million) from Borealis Kallo N.V.

The group expects the awarded contracts to contribute positively to KNM’s earnings for the financial years ending Dec 31, 2019 and 2020.

Digi partners with ZTE for 5G rollout trials

PETALING JAYA: Digi Telecommunications Sdn Bhd has signed a memorandum of understanding (MoU) with ZTE (Malaysia) Corporation Sdn Bhd to further explore the potential of 5G technology in Malaysia.

Through the partnership, the two companies will collaborate to bring 5G technology to Malaysia by executing 5G live trials of end-to-end network functions and features, and pilot trials of 5G use cases for enhanced Mobile Broadband, Fixed Wireless Access, Ultra-Reliable Low-Latency Communication and Massive Machine Type Communications.

The two parties said that the trials will be conducted using low, mid and high 5G spectrum bands.

Digi CTO Kesavan Sivabalan said that the partnership illustrates the telecommunications company’s beliefs that collaborations and trials are key to explore use cases that are relevant to Malaysia, and a part of Digi’s next step to work towards implementing 5G technology in the country.

“We acknowledge that deploying 5G in Malaysia has to be a multi-party effort, and we look forward to more collaborations such as these to accelerate the adoption of the technology in Malaysia. These trials and demonstrations will give us more insights into what is needed in order to implement 5G according to the needs of the country,” he said.

“ZTE has been working with many mainstream operators globally for 5G innovation and developments, and is pleased to work with Digi to bring its best practices and suitable use cases to Malaysia,” said ZTE senior vice-president of global sales Xiao Ming.

ZTE Malaysia managing director Steven Ge said that as a global network provider and one of the pioneers in 5G, it looks forward to work closely along with local partners to make 5G a reality here in Malaysia.

Malaysia Airlines, JAL to pursue joint business agreement

PETALING JAYA: Malaysia Airlines Bhd (MAB) and Japan Airlines (JAL) have signed a memorandum of understanding to pursue a joint business agreement, to enhance in-flight service quality of both carriers for flights between Malaysia and Japan.

“MAB and JAL will also seek to cooperate in a wider scope, such as exchanging best practices, exploring collaboration in other operational areas such as cargo and developing jointly tourism in both Japanese and Malaysian markets,” said MAB in a press release today.

Currently, both parties have already filed an application with the Malaysian Aviation Commission (Mavcom) and Japan`s Ministry of Land, Infrastructure, Transport and Tourism, seeking exemptions/immunity from antitrust laws.

If approved, MAB and JAL will strive to deliver convenient travel options to customers with a comprehensive network throughout Malaysia and Japan.

Previously in 2012, the collaboration between MAB and JAL started by offering codeshare flight operations between Malaysia and Japan, after the former joined the oneworld airline alliance.

According to MAB group CEO Izham Ismail, the two airlines have always had a strong commercial link.

“This partnership will provide better efficiencies and a more comprehensive network for our customers whilst also playing a key role in further strengthening trade ties between Malaysia and Japan, increasing tourism and promoting Kuala Lumpur International Airport as an air hub,” he said.

He also said that the collaboration would be an important milestone for its long term business plans as it looks to explore more strategic opportunities as well as deepen more partnerships.

Meanwhile, JAL president Yuji Akasaka said that the partnership can potentially increase passenger traffic between the two countries and open up commercial opportunities.

“Subject to the relevant approvals, MAB and JAL intend to start the joint business in 2020 to coincide with the Tokyo Olympics,” he added.

Nova Pharma inks agreement for JV

PETALING JAYA: Nova Pharma Solutions Bhd has entered into a shareholders agreement with Acara Juara Sdn Bhd for a joint venture in providing a total engineering solutions business focusing on turnkey or engineering, procurement, construction and commissioning (EPCC) services for advanced technology facilities.

According to the group’s stock exchange filing, the joint venture will be executed via a special purpose vehicle (SPV) to be incorporated later under the proposed name of Nova HiTech Solutions Sdn Bhd.

Under the proposed joint venture, the SPV will be a private company with limited liability by share with Nova Pharma owning a controlling stake of 51% while Acara Juara will hold the remaining 49% stake.

Under the proposed agreement, Nova Pharma’s contribution towards the SPV shall be promoting it as a turnkey or EPCC outfit in Taiwan and Southeast Asia.

It will also provide or identify an office space for its operation to support the accounting, management and administration services of the joint venture and to provide engineering support as and when needed.

Meanwhile, Acara Juara will lead the execution of EPCC or turnkey projects secured by the SPV, spearhead the project management areas and promote the SPV as a turnkey or EPCC outfit to provide total engineering solutions services for advanced technology facilities setup for industries including healthcare, pharmaceutical and biotechnology.

In addition, the company shall also prepare and table the annual business plan and budget to the board of directors for approval.

Nova Pharma said that the joint venture would enable it to further expand its existing business through undertaking of turnkey or EPCC projects.

“The proposed joint venture is expected to generate new income stream for Nova Pharma with each party contributing relevant expertise and skill set to the SPV, which will enhance Nova Pharma’s capabilities in advanced technology facilities setup,” it said.

The group said that the proposed joint venture is expected to contribute positively to the future earnings of the group.

Offer for Yee Lee shares ‘not fair but reasonable’

PETALING JAYA: The unconditional voluntary takeover offer by Yee Lee Corp Bhd’s major shareholders to acquire the remaining shares they do not already own in the company for RM2.33 a share is deemed not fair but reasonable, said independent adviser Affin Hwang Capital.

Affin Hwang Capital said the offer is not fair as the offer price represents a discount of 31.87% to 40.71% to the estimated fair value of Yee Lee shares of between RM3.42 and RM3.93, although the offer price represents a premium to the historical market prices of Yee Lee shares over the past 12 months up to and including the last trading day (LTD).

However, it opined that the offer is reasonable as Yee Lee shares have been thinly traded over the past 12 months up to March 2019, with an average monthly trading volume (as a percentage of free float) of 0.89%.

“The trading liquidity of Yee Lee shares is comparatively lower than KLCPI’s average monthly trading volume (as a percentage of free float) for the past 12 months up to March 2019 of 4.21%,“ it said in its independent advice circular. Accordingly, it recommend that the holders accept the offer.

In addition, one of the joint offerors Langit Makmur Sdn Bhd has been actively acquiring Yee Lee shares from the open market during the period between the LTD and the latest practicable date (LPD), whereby its shareholding in Yee Lee has increased from nil as at the LTD to 2.56% as at the LPD.

As a result, the joint offerors’ shareholding in Yee Lee has correspondingly increased from 58.41% as at the LTD to 60.96% as at the LPD.

“Hence, in any case, whether the joint offerors receive valid acceptances upon the completion of the offer or Langit Makmur continues to acquire Yee Lee shares, the liquidity of Yee Lee shares is expected to tighten further (due to lower public shareholding spread) and consequentially, holders may find it difficult to dispose of the offer shares in the open market.”

In this regard, the offer presents an opportunity for holders to realise their investment in the Yee Lee shares on a wholesale basis in cash and at premium to its historical market prices.

“Save for the offer, the board has not received any competing offer for the offer shares or any other offer to acquire the assets and liabilities of Yee Lee,“ said Affin Hwang Capital.

It noted that the offer is the only available offer for the holders’ consideration and the joint offerors do not intend to maintain the listing status of Yee Lee on the Main Market of Bursa Securities.

To recap, Yee Lee received the voluntary takeover offer from Yee Lee Organization Bhd, executive chairman Datuk Lim A Heng @ Lim Kok Cheong, Datin Chua Shok Tim @ Chua Siok Hoon, Lee Ee Young and Langit Makmur Sdn Bhd last month.

Lim is also chairman of Spritzer Bhd. As at the LPD, the joint offerors hold a 60.96% stake in Yee Lee Corp.

“The non-interested directors concur with our opinion that the offer is not fair but reasonable. Accordingly, the non-interested directors recommend that the holders accept the offer,“ it added.

Old partner Nissan left sidelined by Renault-Fiat merger

TOKYO, May 27 — Nissan, a long-time Renault partner, has been left sidelined by a potential tie-up between the French firm and Fiat-Chrysler, just as the beleaguered Japanese firm battles to recover from the arrest of former boss Carlos Ghosn….

Nasdaq withdraws offer to acquire Oslo stock exchange

OSLO, May 27 — US stock market operator Nasdaq said today it was withdrawing its offer of nearly €700 million (RM3.3 billion) to acquire the Oslo Stock Exchange, clearing the way for its European competitor Euronext. After months of battling for…

AmInvest named Malaysia’s best pension fund manager

PETALING JAYA: AmInvestment Bank’s fund management arm, AmInvest was named Malaysia’s Best Pension Fund Manager by Asia Asset Management, an Asian asset management publication based in Hong Kong.

The selection was made after a three-year and five assessment period of AmInvest’s management performance for its domestic pension mandates and Private Retirement Scheme (PRS) fund, the size of these mandates and returns against relevant benchmarks, as well as investor education initiatives undertaken.

“Our ability to understand and anticipate the ever-changing market environment has given us the foresight to develop retirement solutions as well as a robust investment process to deliver consistent positive returns over the long term,” said its CEO Goh Wee Peng.

She shared that over the past five years, AmInvest’s pension mandates and PRS funds’ assets under management recorded a 26% growth or around RM2.75 billion.

Currently, the fund management firm has 10 PRS funds comprising various asset classes and geographical exposure as well as shariah and conventional offering.

At the Asia Asset Management’s “Best of the Best Awards” 2019, AmInvest bagged the top three spots for the best performing PRS funds over a one-year performance period as at April 19.

“We are honoured to receive this acknowledgement as it is truly a testament of our team’s unwavering commitment to performance excellence, and the affirmation and trust of our clients and investors in our capabilities to manage their pension and retirement investments,” said AmBank Group’s group CEO Datuk Sulaiman Mohd Tahir.