Tuesday, May 28th, 2019

 

US consumer confidence hits six-month high in May

WASHINGTON, May 28 — US consumers were in an increasingly rosy mood in May, driving an index of consumer confidence to a six-month high as the jobs market remained robust, survey results showed. The increase should support consumer spending in the…


Bursa Malaysia to close in conjunction with Hari Raya Aidilfitri

KUALA LUMPUR: Bursa Malaysia will only trade for half a day on Tuesday, June 4, and will be closed on the next two days in conjunction with the Hari Raya Aidilfitri holiday period.

Trading on Bursa Malaysia Securities would be opened only for the morning session on June 4, the exchange operator said.

“However, clearing and settlement services provided by Bursa Malaysia Securities Clearing and depository services provided by Bursa Malaysia Depository will continue as usual on June 4, and the office of Bursa Malaysia Securities will remain open until the end of business day,“ it said in a statement today.

Bursa Malaysia and its subsidiaries will be closed on June 5 and June 6.

Operations would resume on Friday, June 7, it said. — Bernama


US stocks rise, casting aside trade uncertainty

NEW YORK, May 28 — Wall Street today rose at the opening bell for a second day, casting aside uncertainties about US trade relations as investors returned from a holiday weekend. The upbeat mood came as President Donald Trump did little to resolve…


IHH Healthcare to reduce forex exposure in Turkey

KUALA LUMPUR: IHH Healthcare Bhd aims to reduce foreign exchange (forex) exposure to between US$300 million and US$350 million (RM1.257 billion and RM1.466 billion), from US$420 million currently in Turkey, where it has a 90% stake in Acibadem.

IHH group CFO Low Soon Teck said the group also plans to refinance between US$125 million and US$187.5 million of its debt denominated in euro and US dollar into Turkish lira.

“For this exercise, we have to do it in stages or we’ll place ourselves out of the market. At the moment, we aim to reduce it to US$350 million to US$300 million by the end of the year,” he told reporters at its AGM today.

Last year, the group held debt denominated in euro and US dollar equivalent to US$670 million in its Turkish market, where the free-falling lira saw a 30% decline against the US dollar. The group subsequently managed to reduce the forex risk to US$420 million earlier in April.

Besides reducing the forex risk, the healthcare group will be expanding its presence in China.

Outgoing managing director and CEO Dr Tan See Leng said it has established three greenfield projects in China, namely Gleneagles Chengdu Hospital, Gleneagles Shanghai Hospital and Gleneagles’ day surgery and ambulatory centre.

“The expansion follows the hub-and-spoke strategy unveiled four years ago, in which each of the hospitals would be supported by a number of its medical centres; and with the completion of the greenfield projects, three of the four hub and spokes clusters that were identified in our strategy will be completed,” he said.

Gleneagles Chengdu Hospital will have a capacity of 350 beds with capital expenditure (capex) of RM420 million. It is due to be completed in the second half of the year along with the day surgery and ambulatory centre in Shanghai.

The capex for IHH’s 450-bed capacity Gleneagles Shanghai Hospital, which is scheduled to be completed in the second half of 2020, is RM513.8 million.

On the South Asian front, IHH is awaiting the Indian Supreme Court’s judgment on its bid to acquire controlling stake in Fortis Healthcare Ltd, in which it currently has a 31.1% stake.

According to Tan, the court will reconvene on July 2 and with the general election out of the way, it expects to receive a judgment in the third quarter of this year.

He said the group’s outlook in Fortis has been “rosy” so far as it has managed to achieve all the 100 days objectives for the Indian healthcare provider.

Fortis returned to the black for its fourth quarter (January-March) of its 2019 financial year, recording a pre-tax profit of 135.6 crores against a loss of 932 crores in the corresponding period in the previous year. The hospital’s earnings before interest, tax, depreciation and amortisation jumped 120%.

On Monday, the group announced that Tan would be stepping down as its managing director and CEO when his contract expires on Dec 31, 2019. Columbia Asia Group CEO Dr Kelvin Loh will return to IHH to take over Tan’s role.

Loh, who joined Columbia Asia Group in 2017, had previously held senior management roles in IHH between 2008 and 2017, and had served as CEO of the group’s Singapore operations division.


Hengyuan allocates RM852m capex for FY19

KUALA LUMPUR: Regional major oil-refining company, Hengyuan Refining Company Bhd has allocated RM852 million or US$205.3 million in capital expenditure (capex) for the financial year ending Dec 31, 2019 (FY19).

Chairman Wang YouDe said the company is fully focused in equipping the refinery for the long-term through intensive capital investment programme without compromising its sturdy financial position.

“It is worth noting that despite having spent RM610 million or US$150 million in capex last year, we have successfully maintained our strong balance sheet and improved our gearing level to 0.57 times compared with 0.67 times a year ago,” he said in a statement in conjunction with the company’s 60th annual general meeting today.

Wang said with FY19 being a year of construction and consolidation, the company will continue its efforts on investing for the refinery’s long-term future by undertaking major infrastructure projects that enhance the refinery’s sustainability and reliability.

The capex for FY19 will be spent primarily on four ongoing major infra-structure projects, – Euro 4M Mogas (Euro 4M), Clean Air Regulation (CAR), Hydrogen Generation (H2GEN) and Euro 5 Gasoil (Euro5G).

Wang said the Euro 4M project is in the construction phase and is targeted for completion by January 2020, which is the date legislated by the government for the new Euro 4M specification.

The CAR project is also currently under construction and is on track for completion in the third quarter of 2019.

Wang said the company has started the design and construction phase for the H2GEN project, with the first production expected by September 2020.

For the Euro 5 Gasoil project, it has extensively reduced the scope with considerable capital savings, which will allow Hengyuan to manage the project in-house.

“We have also completed all necessary tie-ins for the commissioning and start-up of the E4M, E5G and H2Gen projects, so there will be no significant plant downtime required before commissioning,” Wang said.

To date, he said, the company has approved capital investments of more than US$415 million since 2016 on top of its annual asset integrity capital spend.

“Our proactive hedging strategy, coupled with our ongoing focus on operational excellence ensures the refinery will be fully capable of operating efficiently and will be commercially competitive, once our intensive capital investment programme has been completed,” he said on the company’s prospects.


First flagship fintech event opens for registration

KUALA LUMPUR: Malaysia’s first flagship fintech event MyFintech Week 2019 (MyFW2019) will take place from June 17-21, focusing on five key areas of financial inclusion, digital economy, insurtech, Islamic finance and cybersecurity.

These topics will be deliberated in more than 30 keynotes, panels and fireside chats during the event, which will be held at Sasana Kijang in Kuala Lumpur.

Organised by Bank Negara Malaysia, this event is held in conjunction with Malaysia Digital Economy Corp’s Malaysia Tech Week 2019. MyFW2019 will bring together more than 100 visionary and leading voices in the world of fintech under one roof.

With the theme “Shifting Tides: Future of Finance”, MyFW2019 aims to promote growth and diversity in the fintech ecosystem, spur digital transformation of financial institutions, drive responsible innovation in fintech and elevate public acceptance of fintech.

The registration fee for participants from financial institutions such as commercial banks, investment banks, Islamic banks, insurers and takaful operators is RM890. For participants from non-financial institutions the fee is RM590. Interested participants may register online at https://www.myfintechweek.my/.


Murphy Sarawak Oil gets arbitration notice from THHE

PETALING JAYA: TH Heavy Engineering Bhd’s (THHE) wholly owned subsidiary THHE Fabricators Sdn Bhd (THF) has served a notice of arbitration on Murphy Sarawak Oil Company Limited claiming RM112.74 million in additional costs for an engineering, procurement, construction and commissioning (EPCC) contract.

The EPCC contract is in relation to the Permas Production Platform-A Topside for Murphy’s Sarawak SK311 Development Project. THF said the notice of arbitration was served on Murphy on Monday.

THF completed its obligations under the EPCC contract and effected the handover of the Permas Topside, achieving the offshore mechanical completion date stipulated by Murphy, on Dec 8, 2014.

On Nov 6, 2014 and on June 3, 2015, THF submitted change order proposals to Murphy setting out in detail and justifying the total additional costs incurred by THF.

These were a result of, among others, loss and expenses incurred due to major design changes and additional works that required massive reengineering works and significant increase in size, weight and complexity of the EPCC contract; prolongation of hookup and commissioning campaign work offshore caused by Murphy; and various field instructions issued by Murphy.

“Despite THF’s submission of the change order proposals to Murphy, no payments were forthcoming. Amicable attempts at resolving the disputes were also unsuccessful,“ the group said.


Kenanga obtains Bank Negara’s green light to acquire Libra Invest

PETALING JAYA: Kenanga Investment Bank Bhd (Kenanga IB) has received Bank Negara Malaysia’s approval for its asset management subsidiary Kenanga Investors Bhd (KIB) to acquire ECM Libra Financial Group Bhd’s fund management arm Libra Invest Bhd.

Kenanga IB said today that the approval is subject to KIB obtaining the necessary approval from the Securities Commission Malaysia.

Under the terms of the conditional share purchase agreement entered in March this year, KIB will acquire 100% equity stake in Libra Invest for a provisional purchase consideration of RM50.1 million.

The final purchase consideration will be based on the net asset value of Libra Invest on the last day of the month preceding completion date and a premium of RM35 million.

“We are very pleased with this milestone. This complementary strategic acquisition is expected to propel KIB’s asset under management over the RM10 billion mark, enhancing its position as one of Malaysia’s leading unit trust and asset management firms,” said Kenanga IB group managing director Datuk Chay Wai Leong.

“Both our organisations share an aligned commitment towards investment excellence and client service, which will serve as a strong foundation for a seamless integration. We aim for the exercise to conclude by third quarter of this year,” said KIB executive director and CEO Ismitz Matthew De Alwis.

“Through this, we will boost product line-up, diversify asset base and enhance overall investment capabilities, with the intent of driving better investment outcome for our fast growing and discerning client base,” he added.

Established in 1995, Libra Invest has a stronghold in the fixed income space, which will complement KIB’s equity product line up, representing a substantial expansion of its investment offerings and expertise.

KIB provides investment solutions ranging from collective investment schemes, portfolio management services, exchange traded funds, financial planning and alternative investments for retail, high net worth clients, corporate and institutional clients.


Transnasional’s auditors raise going concern uncertainty

PETALING JAYA: Konsortium Transnasional Bhd’s independent auditors Messrs, Al Jafree Salihin Kuzaimi PLT has expressed material uncertainty related to going concern in its independent auditors’ report dated April 3 for the group’s financial statements for the financial year ended Dec 31, 2018 (FY18).

Al Jafree said for FY18, Konsortium Transnasional’s current liabilities exceeded its current assets by RM63.07 million and RM14.1 million respectively. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the ability of the group and the company to continue as going concern.

“The ability of the group and the company to continue as going concern are dependent upon the group obtaining the support from the group’s penultimate holding company, obtaining support from the Land Public Transport Agency (APAD) to be disbursed to the private stage bus operators including the group, the ability of the group and the company to generate adequate positive cash flows and future profits from its ongoing reorganisation of its operations and obtaining the continuing support of creditors and lenders,” it said.

The auditor said the financial statements of the group and the company do not include any adjustments relating to the amount and classification of assets and liabilities that might be necesssary, should the going concern basis of preparation of the group’s and the company’s financial statements be inappropriate.

Konsortium Transnasional said the group has already started the process of addressing the net current liabilites by continuing to negotiate with the creditors for extension/converting debts into few years repayment period of the existing short term debts until completion of the group’s turnaround exercise.

It said that it has successfully negotiated lower monthly installment for the group’s hire purchase facility which is one of the group’s main monthly commitment; and out of the RM14.1 million net current liabilities of the company, RM12.41 million represent net amount of the amount due to related companies and the company’s penultimate holding company which are maintaining their commitments to continue their supports for the operations of the group and the company.

The group has two separate agreements with APAD to provide bus services under the MYBUS and ISBSF programs. The revenue and financial supports, respectively, from both programmes are significant and enable the group to continue servicing its current financial commitments.

Konsortium Transnasional had in 2018, ceased the operations of a few loss-making subsidiaries. The decision and action was made in line with the group’s rationalisation programme to focus the limited resources on feasible business operations.

“The group will continue to focus on cost optimisation and stringent cash flow management and maintaining safety and quality services to remain competitive,“ it said.


AMMB net profit jumps 81.4% in fourth quarter

PETALING JAYA: AMMB Holdings Bhd’s net profit for the fourth quarter ended March 31 jumped 81.4% to RM459.67 million from RM253.41 million a year ago driven by higher lending volume, lower expenses from non-repeat of severance cost and increase in recoveries.

Its revenue grew 5.5% to RM2.33 billion compared with RM2.11 billion in the previous year’s corresponding quarter.

For the financial year ended March 31 (FY19), AMMB’s net profit increased 33% to RM1.51 billion from RM1.13 billion a year ago mainly thanks to its share in results of associates and joint ventures and net recovery of RM303.8 million while revenue grew 6.3% to RM9.12 billion from RM8.58 billion.

AmBank Group CEO Datuk Sulaiman Mohd Tahir (pix) said it achieved commendable results for the financial year 2019, which demonstrates that its transformation strategy is bearing fruit and generating value for the group, as it continue to execute its priorities despite heightened competition and headwinds.

Net interest income (NII) grew 3.9% year-on-year (y-o-y) underpinned by good balance sheet growth, as both its loans and deposits growth outpaced the industry’s growth. Total underlying income was broadly stable y-o-y due to weaker investment banking and trading income.

Continuous cost discipline and business efficiency measures were a key driver in FY19 in improving overall profitability. It reduced expenses by 12% y-o-y and achieved a positive JAWS of 11%, with its cost-to-income (CTI) ratio improving to 54.3%.

Excluding certain one-off costs in the previous year, underlying expenses were also down by 4% after absorbing salary inflation and investments. Consequently, its profit before provision recorded a double digit growth of 15.0% y-o-y.

“We completed the sale of retail non-performing loans and resolved a few large corporate non-performing loans during the financial year, further supporting our earnings,“ Sulaiman said.

Return on equity (ROE) improved to 8.8% from 7% in FY18. It declared a final dividend of 15 sen per share, bringing total dividend for the year to 20 sen.

“Overall, we improved our operating leverage and strengthened our fundamentals in our strategic execution this year. Today, we are on a much stronger footing than before, and this is reflected by the two credit rating upgrades received by the group during the year,” he added.

Net interest margin contracted 11bps to 1.89% due to higher liquidity surplus and lending rate pressures in retail banking.

Non-interest income (NoII) fell by 10.2% y-o-y to RM1.34 billion, impacted by tougher market conditions, which resulted in lower contributions from investment banking, trading and investment income. This was partially cushioned by higher fee income from business banking coupled with better outcome from the life insurance business.

Sulaiman said the ongoing BET300 efficiency programme has resulted in a 12% y-o-y drop in expenses to RM2.13 billion while CTI improved to 54.3% from 60.8% a year ago, below the CTI target of 55% set for FY19.

The group recorded a net recovery of RM303.8 million in FY19 compared to an impairment charge of RM15.7 million last year, aided by several large corporate recoveries and the sale of retail non-performing loans.

Gross impaired loans ratio improved 11bps to 1.59% and loan loss cover rose to 114%. Gross loans and financing base expanded 5.7% y-o-y to RM101.8 billion.

On the retail front, mortgage loans increased 11.8% y-o-y to RM34.1 billion and card receivables grew 12.3% y-o-y to RM2.2 billion. Loans to small and medium enterprises (SME) grew 21.2% y-o-y to RM20.2 billion and now represents 19.9% of its total loans base.

AMMB’s customer deposits grew 11.6% y-o-y to RM106.9 billion while current accounts and savings accounts (CASA) grew 22.1% y-o-y to RM24.9 billion, with CASA mix at 23.3% from 21.3% a year ago. FHC CET1 ratio stood at 11.9% and total capital ratio at 15.4%.

On FY20 prospects, Sulaiman said that competition will remain fierce while regional and international headwinds will have an impact on local market dynamics.

“We are confident that our growth strategy in terms of improving profitability and strengthening our balance sheet is on track. Furthermore, our drive to reduce costs will carry through into the new financial year,” he said.