Monday, October 7th, 2019


US-China deputy-level trade talks get underway in tense atmosphere

WASHINGTON, Oct 7 — US and Chinese deputy trade negotiators launched a new round of talks today aimed at resolving the two nations’ 15-month trade war, with neither side showing any signs of giving ground. About 30 Chinese officials, led by Vice…

US-China trade talks to resume Thursday, says White House

WASHINGTON, Oct 7 — High-level US-China trade negotiations will resume this week in Washington, the White House announced today, a hopeful sign after a summer of deteriorating relations. Beijing’s top trade envoy Liu He will meet with US Trade…

UK completes Thomas Cook repatriation of passengers

LONDON, Oct 7 — Britain’s government today completed the country’s biggest peacetime repatriation that returned 140,000 UK-based Thomas Cook customers stranded abroad after the collapse of the holiday operator. The final flight arrived at…

US stocks fall as market eyes trade talks

NEW YORK, Oct 7 — Wall Street stocks dropped early today ahead of closely-watched US-China trade talks, while investors began to look ahead to the third-quarter corporate earnings season. Top officials from Beijing will be in Washington this week…

Hard to imagine PLUS in private hands, says Khazanah Nasional managing director

KUALA LUMPUR: Selling PLUS Malaysia Bhd to private entities would be a “huge moral hazard”, according to Khazanah Nasional Bhd’s managing director Datuk Shahril Ridza Ridzuan.

“We view PLUS as a strategic asset for the country. It’s an asset which, particularly, I think will be difficult to imagine in private hands, especially if a lot of the offers coming in are basically from private entities which just want to acquire the asset at a cheap price and still ask the government to guarantee them.

“I think that is a huge moral hazard in having private entities to hold such a strategic asset with the backing of government guarantees.

“We are not at liberty at this point in time to discuss what we put forward to the government, I think basically it is in line with the thought that it is a strategic asset and PLUS’ highways should really remain in ownership of the Malaysian people,” he said to the media on the sidelines of the Khazanah Megatrends Forum 2019 today.

During a TV interview over the weekend, Shahril said Khazanah had so far rejected all takeover offers it received from local and foreign private entities for the highway operator.

RRJ Capital, a Malaysian-led Hong Kong-based private equity firm, is reported to be one of the contenders for PLUS, having recently upped its takeover offer to RM3.5 billion.

Khazanah owns 51% of PLUS, while the Employees Provident Fund owns the remaining 49%, following a takeover exercise in 2011, in a transaction valued at RM32 billion.

However, at Parliament House today, Prime Minister Tun Dr Mahathir Mohamad appeared to contradict Shahril’s words, telling the media that the government will consider all acquisition offers for PLUS from private entities, provided the price is attractive.

“Yes, we can sell. Whatever offer is made on PLUS will be studied by the government to determine whether it is suitable to our needs,” he was quoted as saying.

Meanwhile, Shahril said the group hopes to achieve a profit of RM5 billion for the financial year ending Dec 31, 2019, following its first loss of RM8.65 billion in a decade last year.

“We are doing two things this year: divesting assets and improving our balance sheet. Hopefully we achieve our targets of reducing our debts and posting a profit of about RM5 billion this year,” he said.

Shahril also said the group’s debt target of RM35-40 billion was a medium-term plan for the group which would take place over the next three to five years.

“RM40 billion is what we consider a sustainable level of debt, and we are targeting an asset-to-debt cover about 3 to 3.5 times, as opposed to our current level of just over 2 times so it’s about providing a more sustainable balance sheet for Khazanah for the long term,” he said.

Shahril’s comments followed what Economic Affairs Minister Azmin Ali had said earlier in the day by which the sale of assets by Khazanah would be expected to reduce the group’s debt levels to between RM35 billion and RM40 billion.

Thus far, Khazanah’s debt level has been reduced from RM55 billion to RM47 billion.

“We must ensure that the assets sold generate money as well as new funds for us to reinvest into other assets and make more profits for Khazanah and also to eventually give dividends to the government,” said Azmin.

On the potential sale of Malaysia Airlines, Azmin said he was not able to comment on the potential bidders, but Khazanah would make the relevant announcement once the deal was completed.

EPF CEO: We’ll consider selling stake in PLUS if good offer comes in

KUALA LUMPUR: The Employees Provident Fund (EPF) will definitely consider divesting its stake in PLUS Malaysia Bhd if there is a good offer, says its chief executive officer, Tunku Alizakri Alias.

He said if there is any sensible takeover offer which benefits its members in terms of returns and dividends, the fund will definitely study and consider the offer.

“At this juncture, PLUS is an asset that is very positive, it gives really strong returns and it is a well-run organisation.

“In terms of services, it operates over 1,200 kilometres of highways and it gives really good service. So from the EPF’s perspective, we are very happy with the returns from PLUS and it is also a strong asset,” Alizakri told reporters on the sidelines of the Khazanah Megatrends Forum 2019 here today.

On Prime Minister Tun Dr Mahathir Mohamad’s comment that the government will study offers to take over PLUS, he said that the comment could have been made on behalf of Khazanah Nasional Bhd, the government wealth sovereign fund that is another shareholder of the toll concessionaire.

Earlier today, the prime minister said that the government will study offers to take over PLUS, including bids from abroad. He was commenting on the offer by Hong Kong and Singapore-based equity firm RRJ Capital to take over PLUS, reportedly for RM3 billion.

“Any bidding by firms (to take over PLUS) will be studied by the government. We will entertain the offer if it suits our needs,” he said.

Asked on dividends for the shareholders, Alizakri said that the fund cannot give the direction although he acknowledged the challenging economic performance moving forward both globally and domestically.

“All the data points to a challenging environment, (therefore) on our side we will ensure our assets are managed well, but we will make sure if we have to buy we will buy the best long-term asset, and if we must sell we will also make sure we get the best deal for any divestment,” he explained.

Alizakri said the fund is always on the lookout to buy and sell assets to give dividends to the shareholders.

“The question is, do we have a governance process that is sustainable? (We have to ensure) due diligence is properly done, so our members can rest assured that any divestment that we do is to benefit our members,” he added.

It was reported that EPF secured dividends of RM1.56 billion from 10 companies that paid the most dividends in its portfolio in the first half of 2019. The sum received was 5.4% higher than the RM1.49 billion a year ago. – Bernama

September palm stocks set to snap six months of falls

KUALA LUMPUR: Malaysian palm oil stockpiles in September likely rose for the first time in seven months, as production grew and export demand eased for the edible oil, a Reuters survey showed.

Inventories in the world’s second-largest palm oil producer are forecast to rise 11.9% from August to 2.52 million tonnes in September, their highest in five months, according to a median estimate of eight planters, traders and analysts polled by Reuters.

Higher stocks could put further pressure on benchmark palm oil prices, which hit a more than one-month low at the end of September.

Prices have been trading in a tight range since then, and were last 0.6% higher at RM2,161 at the midday break on Monday.

Stockpiles were largely expected to rise as exports slumped for the first time in three months.

Exports likely shrank by 19.4% to 1.4 million tonnes from a three-year high in the previous month, as demand from markets such as India eased.

“We saw lower exports to India as they purchased more refined oil from Indonesia instead due to the recent change in duty structure,“ said a manager at a Malaysian plantation firm, who declined to be named as he was not authorised to speak to the media.

“Though September exports are lower month-on-month, they are still considered good as August exports were the highest in three years.”

India, the world’s biggest edible oils importer, in September raised the tax on refined palm oil from Malaysia to 50% from 45% for six months to curb imports and boost local refining.

Industry players had forecast that Indian demand for Malaysian refined palm oil would drop sharply following the tax hike, limiting further exports from the Southeast Asian country and leading to higher inventories.

Malaysian palm oil output likely rose in line with seasonal trend, contributing to the gain in inventories and marking a third straight month of gains in production.

The poll pegged September production at 1.91 million tonnes, up 4.6% from the previous month and the highest in nearly a year. “Fresh fruit bunch yields remain strong and growth is mainly coming from East Malaysia estates,“ Ivy Ng, regional head of plantations research at CIMB Investment Bank, said in a note.

Malaysia’s eastern states of Sabah and Sarawak are the country’s top two producing regions of palm oil. – Reuters

SDS posts 11% premium on ACE debut

PETALING JAYA: SDS Group Bhd shares recorded a 2.5 sen or 10.9% premium to 25.5 sen against its offer price of 26 sen for its listing on the ACE Market of Bursa Malaysia today.

The stock hit an intraday high of 27 sen, but pared down gains to 25.5 sen at market close with 108.7 million shares changing hands.

SDS Group is a homegrown bakery product manufacturer and distributor with Top Baker and Daily’s brand in its portfolio along with 33 food & beverage (F&B) outlets in Johor.

Its listing exercised raised RM23.99 million, of which RM6 million (25%) will be utilised to expand its business presence for both the wholesale and retail channels within the northern and central regions of Peninsular Malaysia with the additional capacity from its new manufacturing plant in Seremban.

Following the listing, the group is expected to open eight F&B outlets in the Klang Valley over the next two years.

“We expect to open three food & beverage outlets by October 2020, while the remaining five outlets by October 2021,” said SDS managing director Tan Kim Seng in a press release.

With regards to its expansion plan into Penang and Kedah, he said that it will set up two new depots in Bukit Mertajam, Penang and Sungai Petani, Kedah and purchase 18 new delivery vehicles.

“To grow our wholesale business in order for us to extend the reach of our bakery products, we need to widen our distribution network and increase our logistics coverage,” said Tan.

He said that the logistics capacity expansion in Penang and Kedah will will enable the group to cover the northern region.

Currently, it has 19 depots across Peninsular Malaysia and 250 one-tonne delivery vehicle to distribute its products to 10,000 customers which include convenience stores and supermarkets.

Proceeds from the IPO will also be used for general working capital requirements (RM7.79 million) and repayment of bank borrowings (RM7 million).

Foreign outflow hit 8-week high of RM771m last week

PETALING JAYA: Foreign funds exit from Bursa Malaysia intensified for the third week as they sold RM770.8 million net of local equities, the highest outflow in eight weeks.

It was also more than a four fold increase from the RM150.9 million outflow reported for the preceding week.

According to MIDF Research, the local bourse ended the third quarter on a weak note as foreign investors sold RM72.3 million net of local equities on Monday.

“Jitters came from news on President Trump’s talk of delisting Chinese firms from the US markets in the preceding week,” said the research house in a report.

With that, September saw a total foreign net outflow of RM559 million, the second lowest monthly foreign net outflow so far in 2019.

On Tuesday, Bursa started Q4 on the right foot with a slight gain of 0.4%, snapping two days of losses.

However, the FBM KLCI was still the smallest gainer amongst regional peers due to the foreign net outflow of RM74.2 million.

Foreign net selling accelerated further to RM168.0 million on Wednesday, while the sentiment on Thursday was affected by the US factory gauge hitting the weakest point since the end of the last recession and news of the US is set to slap US$7.5 billion (RM31.4 billion) worth of tariffs on European imports.

“As such, offshore investors dumped RM266.5 million net on Thursday, the highest daily foreign net outflow in more than a month.”

MIDF said Friday saw foreign investors dispose of RM189.7 million of local equities, extending the foreign net selling spree to the sixth day as Malaysia’s import in September reached the lowest level since 2009.

Subsequently, the local bourse followed suit to close at 1,557.7 points on the same day, a level not seen in four years.

On a year-to-date basis, international funds have taken out RM8.6 billion worth of local equities from Bursa, making up 74.0% of last year’s foreign outflow of RM11.69 million.

CaspiOil terminates joint investment pact with Sumatec

PETALING JAYA: Sumatec Oil And Gas LLP (SOG), a wholly owned subsidiary of Sumatec Resources Bhd has received a notice from CaspiOilGas LLP (COG) terminating its joint investment agreement and novation agreement effective Oct 17.

In the termination notice, COG highlighted the constraints faced under Sumatec’s current financial and legal predicaments which impacted SOG’s ability to comply with its obligations to carry out appropriate investment/work programmes and to provide necessary funding for the petroleum operation under the joint investment agreement.

According to Sumatec’s filing with Bursa Malaysia, SOG will still have to confirm if it could still operate under the joint investment agreement, provide assurance whether Sumatec would be able to regularise its financial position and set aside the winding up petition, as well as to offer a credible plan on how to ensure the financing of petroleum operations at the Rakushechnoye field can continue smoothly in light of Sumatec’s existing PN17 status.

“The board, after deliberation on the termination notice has resolved to seek the indulgence of CaspiOil from terminating the joint investment agreement and novation agreement as the board is in the midst of finalising a plan to regularise its PN17 status and remedy the winding-up petitions,” it said in the filing.

To recap, on March 8, 2012, Sumatec entered into a joint investment agreement with Markmore Energy (Labuan) Ltd and CaspiOil for the development and extraction of hydrocarbon in the Rakushechnoye oil and gas field.

SOG was meant to carry out all operations related to the production of petroleum production, for and on behalf of CaspiOil, to study, appraise, develop, and produce the relevant petroleum reservoirs of the oil field.

On Sept 26, 2017, Sumatec entered into a novation agreement with SOG, Markmore Energy and CaspiOil where SOG would accept and assume all of Sumatec’s rights, title, benefits, interests, obligations and liabilities under the joint investment agreement.