Tuesday, July 9th, 2019


IJM Corp’s RM1.12b LRT3 contract terminated

KUALA LUMPUR, July 9 — The light rail transit line 3 (LRT 3) contract worth RM1.12 billion earlier awarded to IJM Corporation Bhd has been terminated due to the project being remodelled. The company said wholly-owned subsidiary IJM Construction…

Pensonic to dispose of PJ land for RM19.5m

PETALING JAYA: Pensonic Holdings Bhd is disposing of its land in Jalan 223, Section 20, Petaling Jaya, together with office building, for RM19.5 million cash.

The one-off gain for the disposal is RM10.01 million.

Its wholly owned subsidiary Pensonic Sales & Service Sdn Bhd (PSS) today entered into a sale and purchase agreement with Chua Trading Company Sdn Bhd (CTC) for the exercise.

The land measures 4,046 sqm together with a four-storey office building with an annex three-storey building comprising a warehouse and an office.

Pensonic said the disposal price was arrived at on a “willing buyer and willing seller” basis through negotiation between the vendor and the purchaser and after considering prevailing market condition.

“Notwithstanding the indicative market value of the property of RM18.8 million as stated in the valuation carried out in 2018, the current soft property market and cautious sentiment in market arising from lacklustre economy has resulted in low demand for the property. The latest audited net book value of the property was RM8.06 million as at May 31, 2018. As such, the management and the board were of the view that the disposal price of RM19.5 million is fair and reasonable,“ it explained.

The proposed disposal is part of the group’s asset rationalisation exercise to unlock and realise the increase in the value of its landed assets, including the property, to improve the overall financial position of the entire group as some RM10 million will be utilised to repay borrowings from HSBC Bank Malaysia Bhd.

Following the disposal, PSS’ business operations will be consolidated and relocated to a smaller premise at a lower operational costs in the interim whilst awaiting the completion of construction of the warehouse cum office in Klang, Selangor.

Pensonic also noted that the deal is not expected to result in the company becoming a cash or PN17 company.

Govt sues Aeon Credit for unpaid taxes

PETALING JAYA: Aeon Credit Service (M) Bhd has received a writ of summons together with a statement of claim filed by the government in respect of taxes that are purportedly due for years of assessment 2010 till 2016.

In a filing with Bursa Malaysia, the company said that the matter has been fixed for case management at the High Court on July 23.

Upon consulting its tax solicitors, the company maintained its stance that there is a good basis in law to challenge the validity of the taxes and penalties demanded by the director general of Inland Revenue Board (IRB) as well as the civil proceedings commenced against the company.

“This is especially when at all material times, the company had sought professional advice from an independent and reputable firm of tax consultants on its tax treatment and that the notices of additional assessment for the years of assessment 2010 and 2011 are time barred,” it said.

To recap, the company was slapped with a RM96.82 million bill for additional income taxes with penalties, for the seven years of assessment by IRB in December 2017.

The taxes and penalties were in relation to the IRB varying the loan transaction collaterised by receivables undertaken by Aeon Credit with a local financial institution to that of a sale of receivables.

The IRB had also raised time barred assessments for years of assessment 2010 and 2011 but did not provide any reason for doing so. The penalties were for alleged submission of incorrect returns.

The company subsequently filed for an appeal but the High Court decided to not grant its application for a stay of the notices of the additional assessment. In May last year, the company said it would challenge the High Court’s decision.

The company’s share price rose 0.48% to close at RM16.78 today with 200,900 shares traded.

M’sia major cross-border capital recipient

KUALA LUMPUR: Malaysia saw an 18% year-on-year increase in cross-border capital for commercial property investments in the first quarter (Q1) of 2019, placing it in the top 10 countries in Asia Pacific, according to independent global property consultancy Knight Frank’s 2019 edition of its flagship report, Active Capital.

Knight Frank Malaysia executive director of capital markets James Buckley said overseas investors are carefully watching the progress of the new government who have made some encouraging progress in tackling corruption and cutting costs, particularly the renegotiation of Chinese-backed infrastructure projects.

“With high supply in the office and retail sectors, we are particularly focused on alternative real estate sectors such as car parking, educational and logistics investment properties where the fundamentals are stronger. We have also seen good demand from overseas groups for hospitality assets. We anticipate that there will be increasing repositioning opportunities for older office buildings where increasing vacancy may lead owners to consider alternative uses,” he said in a statement today.

Between Q1 2018 and Q1 2019, China remains the largest recipient of cross-border capital in Asia Pacific as its economic prowess continues to attract attention from foreign investors. This is followed by developed Asian economies such as Australia, South Korea, Japan and Singapore, as these matured economies are commonly viewed as safe havens for key investors such as REITs, private equity firms and hedge funds.

Knight Frank said the global residential sector had undergone some transformation in recent years, especially in developed countries, as occupiers across all-age groups began to adopt an asset light model, preferring to rent rather than owning their residence.

“This occurs as the modern society favors flexibility and experience of living over the possession of tangible assets. This has resulted in the proliferation of co-living spaces.”

Knight Frank Malaysia executive director of capital markets Allan Sim said in some developed Asian markets such as Hong Kong and Singapore, with the scarcity of land as well as high property prices, developers see the opportunity to fill the gap with co-living spaces targeting young professionals.

In Malaysia, as the co-working trend continues to gain traction, the idea of co-living which shares similarities with co-working is expected to take shape, especially in well-connected business districts.

“Challenges in the property market have also prompted developers to be more creative in generating expected revenue, resulting in the emergence of developments with co-living elements. For example, co-living spaces such as Co-Coon Co-Living KL by Tan & Tan Developments Bhd and the incoming Lyf Raja Chulan Kuala Lumpur by The Ascott Ltd are starting to make inroads into Malaysia.

“The demand for co-living spaces, which is intertwined with co-working, is poised to grow in the midterm given rapid urbanisation coupled with the shift in lifestyle habits especially among the millennial generation,” Sim added.

IJM terminated as contractor for LRT3 package on project remodelling

PETALING JAYA: IJM Corp Bhd has been terminated as the works contractor for the underground package of the Light Rail Transit Line 3 (LRT3) from Bandar Utama to Johan Setia.

In a filing with Bursa Malaysia, the group said that its wholly owned subsidiary IJM Construction Sdn Bhd received a notice of termination on Monday from MRCB George Kent Sdn Bhd.

“The termination was due to the project being remodelled from a project delivery partnership (PDP) model to a fixed price contract model pursuant to the direction of the government,” it said.

Under the new contractual framework, MRCB George Kent’s employment was terminated. The company was the project’s PDP under the PDP agreement with Prasarana Malaysia Bhd.

Following the termination and pursuant to the conditions of contract, MRCB George Kent has issued the notice to IJM Construction.

To recap, IJM announced the letter of acceptance for the project on March 13, 2018, at a contract sum of RM1.1 billion.

Preliminary works had commenced before the project was suspended in June 2018. IJM Construction is currently consulting its advisers and will seek appropriate legal redress under the contract.

Apart from the potential earnings from the project, the termination is not expected to have any significant effect on the group’s financial position.

IJM’s share price rose 1.25% to close at RM2.43 today with 2.52 million shares traded.

Business sentiment slightly better in Q3

KUALA LUMPUR: Business sentiment among Malaysian companies rebounded slightly in the third quarter (Q3) after falling in Q2 this year, according to Dun & Bradstreet (D&B) Malaysia’s Business Optimism Index (BOI) study.

The BOI inched upwards from +5.61 percentage points (pp) in Q2 2019 to +7.22 percentage points in Q3 2019. However, it moderated from +13.17pp in the third quarter of last year.

The six business indicators under the quarterly BOI study include volume of sales, net profits, selling price, inventory level, employees and new orders. This is the 26th D&B BOI study being released in Malaysia.

On a year-on-year (yoy) basis, only two of six indicators increased for Q3 2019. Selling price jumped from +1.0pp in Q2 2019 to +9.17pp in Q3 2019; while new orders climbed from +19.50pp to +25.83pp.

Volume of sales moderated downwards slightly from +18.0pp in Q2 2019 to +2.50pp in Q3 2019; net profits dived into the contractionary zone from +15.50pp to -5.0pp; inventory levels fell from +18.0pp to +5.0pp; employment levels dropped from +7.0pp to +5.83pp.

For Q3 2019, both manufacturing and services sectors are most upbeat about the outlook while the construction and transportation sectors are least optimistic.

The services sector has emerged as one of the most optimistic sectors with five indicators in the positive zone. However, majority of the indicators have moderated downwards.

The outlook within the manufacturing sector has improved, with five indicators in the positive zone for Q3 2019.

The agriculture sector is moderately optimistic with four indicators in the expansionary zone.

Meanwhile, the construction and transportation sectors are least optimistic.

Dun & Bradstreet (Malaysia) Sdn Bhd CEO Audrey Chia said the overall outlook has improved for Q3 2019 due largely to improvements seen within the agricultural and wholesale trade sectors as well as the relatively sound financial position of Malaysian companies.

“However, downside risks remain amid a slowdown in China as well as the escalation of trade-war tensions. This could also mean that exports would remain volatile. Furthermore, the key electronics sector will face increasing competition from lower-cost factories in Vietnam and higher-value-added production in China over the medium term,” she said in a statement.

In line with lower public spending and weaker export and investment growth, it expects economic growth should moderate to 4% in 2019.

Orange CEO Richard secures his position after acquittal

PARIS, July 9 — A French court today cleared Orange Chief Executive Stephane Richard of any wrongdoing in a fraud trial, cementing his position at the helm of the country’s biggest telecom operator. The case dates back to a €400 million…

Asdion proposes RM30.76m share capital reduction

PETALING JAYA: Asdion Bhd has proposed a share capital reduction of RM30.76 million to reduce and eliminate the accumulated losses of the company.

As at March 31, 2019, its accumulated losses stood at RM31.05 million at the group level.

It said the surplus after such elimination, if any, will be utilised to set off any future losses or for other purpose as the board deems fit.

“The proposed share capital reduction will enable the company to rationalise its statement of financial position by reducing/eliminating its accumulated losses, which may enhance the company’s creditability with bankers, customers, suppliers and investors,“ Asdion said.

The board expects the proposed share capital reduction to be completed by the fourth quarter of 2019.

No more OPR cuts until year-end, predict economists

KUALA LUMPUR, July 9 — Bank Negara Malaysia’s (BNM) decision to keep the Overnight Policy Rate unchanged at 3.0 per cent is not a surprise move as it has been widely anticipated and the rate will remain at that level until year-end, experts say….

Focus Point plans 1-for-3 bonus issue

PETALING JAYA: Focus Point Holdings Bhd proposes a bonus issue of up to 55 million shares on the basis of one bonus share for every three existing shares held.

The group told Bursa Malaysia that the exercise will provide shareholders with greater participation in the equity of the company in terms of number of shares held and maintaining percentage equity interests.

The proposal is also expected to enhance the marketability and trading liquidity of the group on Bursa by increasing the number of shares.

The bonus issue is expected to be completed by the fourth quarter of the year.