PETALING JAYA: The cancellation of the joint venture (JV) to form a low cost carrier in Vietnam will not negatively affect AirAsia Group Bhd’s expansion plan, said MIDF Research.
“While the cancellation of the JV may appear to negatively impact AirAsia’s expansion plan, we do not think that this is the case. In early April 2019, AirAsia introduced Can Tho to its network of routes with a weekly frequency of four flights. In fact, this is the first ever international flight to Can Tho, indicating AirAsia’s lead as an international airline for that destination,” it said in its report today.
It noted that Can Tho is AirAsia’s sixth destination in Vietnam while new services between Bangkok and Can Tho are set to commence in May 2019.
With 8.5 million visitors visiting the Mekong Delta in 2018, it opined that this destination has the potential to attract more visitors which will positively flow to AirAsia’s load factor thus, it is not imperative for AirAsia to set up a JV carrier in Vietnam.
Today, AirAsia told Bursa Malaysia that its wholly owned subsidiary AirAsia Investment Ltd, together with Gumin Company Ltd and Hai Au Aviation Joint Stock Company had amicably agreed to terminate and release each other from all obligations under the transaction agreements in relation to the proposed JV in Vietnam.
PETALING JAYA: CIMB Thai Bank PCL recorded a consolidated net profit of 325 million baht (RM42.2 million) for the first quarter (Q1) ended March 31, an increase of 92.4% compared with the same period a year ago.
This was mainly attributed to a 3.4% growth in operating income and a 17.4% drop in provisions, partially offset by a 8.2% increase in operating expenses.
CIMB Thai acting president and CEO Omar Siddiq said operating income rose 3.4% to 3.5 billion baht from an increase of 4.3% in net interest income, mainly from loan expansion and higher interest income on investments.
Other operating income rose 3.4% from an increase in gains on sale of non-performing loans (NPLs) and higher gains on trading and foreign exchange transactions.
Its net interest margin over earning assets stood at 3.31% in Q1 2019 against 3.98% in Q1 2018, resulting from higher cost of funds.
As at March 31, total gross loans stood at 230.9 billion baht, an increase of 1.4% from Dec 31, 2018.
Deposits stood at 235 billion baht, a slight increase of 0.3% from 234.3 billion baht as at end of December 2018. The modified loan-to-deposit ratio rose to 98.3% compared to 97.2% as at Dec 31, 2018.
“The gross NPL stood at 10 billion baht, with a stable gross NPL ratio of 4.3%, unchanged from Dec 31, 2018. CIMB Thai continues to exercise high credit risk underwriting standards and risk management policies. The bank also focuses on improving productivity and monitoring collection,” it said in a statement.
CIMB Thai’s loan loss coverage ratio increased to 109.5% as at March 31 from 107% at the end of December 2018. As at March 31, total provisions stood at 11 billion baht, translating to a 5.4 billion baht excess over the Bank of Thailand’s reserve requirements.
Total consolidated capital funds as at March 31 stood at 48.1 billion baht. The BIS ratio stood at 18.9%, of which 13.8% comprised Tier-1-capital.
PETALING JAYA: British American Tobacco Bhd (BAT) is currently awaiting approval for its tobacco heating product (THP) and its flagship product Glo from the tobacco control sector and department director-general of health under the Health Ministry.
“We have submitted our application to the relevant authorities in December last year, the price of our THP will be subject to the regulatory bodies,” said BAT managing director Erik Stoek at a media briefing today.
He expects some consumers to adopt the risk reduced tobacco product as the vapour produced product has less harmful chemical compared with conventional cigarettes.
““The industry estimates that the global THP market to grow to £5 billion (RM27.1 billion) in the next four to five years,” he said.
In Malaysia, BAT’s competitor Phillip Morris Malaysia Bhd was the first big tobacco firm to introduce such product.
In addition, BAT is also conducting a pilot project to produce unprocessed tobacco product in East Malaysia.
“At the moment, we are two weeks in with our project, Dunhill HTL cigarillos in East Malaysia, which retails for RM9 for a pack of twenty.”
Stoek said affordability is one of the key factors in combating illicit cigarettes in Malaysia. A research by Nielsen ICS estimates that the volume share of illicit cigarette stands at 60%.
He estimates that the profit of illicit cigarette to be RM1.2 billion compared with RM700 million recorded by the legal trade. The prevalence of illicit cigarette was one of the decision for the company to close its Virgina Park factory in Petaling Jaya in 2016.
Currently, BAT is in its first year of full import business model, with 98% of their products manufactured in Indonesia. It has managed to reduce the lead times by ten days for finished goods and prepaid excise duties, from 26 days to 16 days and 21 days to 11 days, respectively.
However, the company retains a factory in Johor with an annual production capacity of 100 million sticks.
“The factory is in operation since December last year and it is a means to retain our manufacturing license. Should the situation with illicit cigarettes improve, we might expand our manufacturing capacity in Malaysia,” said Stoek.
“We welcome the government’s commitment in tackling this problem, especially with the increase of penalty related to illicit cigarette. The fine of RM100,000 and six months jail term show that the government is serious in their enforcement,” he added.
Last year, the authorities raided 325 outlets involving a total of 100 million cigarettes.
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PETALING JAYA: Astro Malaysia Holdings Bhd as signed an agreement with Measat Communication Systems Sdn Bhd (MCSSB) for the utilisation of transponder capacity on the MEASAT-3d (M3d) satellite for US$360 million (about RM1.49 billion) cash.
In a filing with Bursa Malaysia, the group said it has also signed an agreement with Measat International (South Asia) Ltd (MISAL) for the early termination of an earlier agreement for the utilisation of transponder capacity on the MEASAT-3b (M3b) satellite. MCSSB and MISAL are wholly owned subsidiaries of Measat Global Bhd.
These are deemed as related party transactions as Tan Sri Ananda Krishnan is major shareholder of Astro and Measat Global.
Under the first agreement, MCSSB will supply Astro’s wholly owned subsidiary Measat Broadcast Network Systems Sdn Bhd (MBNS) with 12 transponders on the M3d satellite for 15 years.
The US$360 million was calculated based on a utilisation fee of US$2 million per year per transponder for 15 years. After taking into account fixed and variable discounts of US$9 million each, the fees amount to US$342 million. MBNS will fund the fees from internally generated funds and/or borrowings.
Meanwhile, the second agreement is for the early termination of an agreement dated April 12, 2018 entered into between MBNS and Measat International (South Asia) Ltd (MISAL) for the utilisation of transponder capacity on the M3b satellite.
At present, MBNS is leasing 42 transponders on Measat satellites for its required transponder capacity to provide direct-to-home (DTH) and Internet access services to its subscribers.
“However, the lease for 12 transponders on the M3 satellite and six transponders on the M3a satellites will expire on Feb 22, 2022 and July 20, 2024 respectively. After the expiry, MBNS will only have the use of transponders on one operational satellite that is, the M3b satellite,” said Astro.
The new agreement will allow MBNS to use the transponder capacity on the M3d satellite, which is expected to be launched in 2022.
“In addition, with the improvement in video compression technology, it is expected that the 12 transponders on the M3d satellite will be able to replace the 18 existing transponders on the M3 and M3a satellites,” it added.
Astro said that the proposed early termination will allow MBNS to terminate the lease of the six transponders on the M3b satellite which it no longer requires.
To recap, the M3b 2018 agreement involves the lease of six transponders on the M3b satellite for a period of 12 years up to June 11, 2030, for a total fee of US$22.5 million. Following the early termination, the US$8 million fee which was scheduled for payment on July 1 will be deferred until the termination date where the amount will be deducted from the refund sum.
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