Asian markets rally after Fed minutes, Opec meeting in focus
HONG KONG, May 25 — Asian markets rose today as traders welcomed indications from the Federal Reserve that interest rates could rise next month, while oil prices rallied ahead of an expected extension to output cuts. Minutes from the Fed’s…
Dollar on defensive after Fed minutes, euro resumes rise
TOKYO, May 25 — The dollar was on the defensive today after the Federal Reserve dialed down on some of the more hawkish policy expectations in the market, while the euro edged back up toward a 6 ½ month high. Fed policymakers agreed they…
7-Eleven ‘excited’ to be first retailer to launch Alipay
PETALING JAYA: 7-Eleven Malaysia Holdings Bhd, which became the first retailer to accept Alipay, registered a pre-tax profit of RM10.9 million for the first quarter ended March 31, 2017 from RM22.29 million a year ago due to lower revenue and gross profit.
In a filing with Bursa Malaysia yesterday, the group said its pre-tax profit was also affected by the increase in selling and distribution cost due to new store expansion as well as the minimum wage increase which took effect on July 1, 2016.
Sales were impacted by operational issues faced by third party logistics provider in delivering products to stores. These issues have since been resolved.
Revenue for the quarter fell marginally to RM522.53 million from RM526.25 million a year ago due to the ongoing softness in the retail market. However gross profit margin expanded 0.2% points compared with a year ago.
“In the first quarter of 2017, we have continued to hold our dominant position in the market. We remain confident that continuous store expansion, refurbishment, promotional activity, improved merchandise mix and expanded in-store services will continue to deliver positive results despite the challenging headwinds,” said its CEO Gary Brown.
The group opened 37 new stores in the first quarter, resulting in a total store network of 2,154 stores as at end March 2017.
“We are excited to be the first retailer in Malaysia to launch Alipay. Last year there were approximately 2.1 million tourists from China and this is expected to grow to about 3.5 million in 2017, making 7-Eleven Malaysia a very attractive destination for those tourists to shop using their Alipay E-Wallet,” said Brown.
The group expects bill payment services to continue growing, with Tenaga Nasional Bhd to launch soon, and be well accepted by consumers.
Moving forward, the group expects trading conditions to remain challenging due to continued weak consumer confidence/spending and current macroeconomic conditions.
Sarawak Cable wins TNB deal worth RM81m
PETALING JAYA: Sarawak Cable Bhd’s wholly owned subsidiary Trenergy Infrastructure Sdn Bhd has received a letter of acceptance from Tenaga Nasional Bhd (TNB) for a RM81.37 million project.
The project is for the double-circuit 500kV overhead transmission line from Alor Gajah to Bahau South in Malacca.
The project is expected to contribute positively to the earnings and net assets of the Sarawak Cable group for the financial years ending Dec 31, 2017 to Dec 31, 2019.
Icon Offshore confident of riding out the storm
KUALA LUMPUR: Icon Offshore Bhd, fresh from the aborted merger with UMW Oil & Gas Corp Bhd and Orkim Sdn Bhd, stressed that it has a game plan that will enable it to ride out the storm and transform its future.
Icon managing director Amir Hamzah Azizan said it is even comfortable on the basis of operating on its own without a merger partner.
“We’re a material player here. Can we transform to do something different? I’m sure we can, but these are all opportunistic-driven. If they (merger and acquisition) come out, we will work harder. Our parent company (Ekuinas) is supportive. They will also help us to see how we can transform ourselves,” he told reporters after its AGM yesterday.
Strategic efforts such as restructuring the company’s financial commitments, revamping the business model, reducing operation cost and conserving cash flow are among strategies identified to ride out the downturn. The company has also embarked on a transformation process to develop a more robust business model for the future.
Amir said Icon is now poised to take advantage of the recovering market condition as it has taken necessary measures to bid and secure new contracts.
“In the meantime, we have a good lean cost structure that we’re able to drive utilisation through competitive bidding. The nature of contract and tenders that are being issued now does put us in a reasonably favourable position,” said chairman Raja Tan Sri Arshad Raja Tun Uda.
Cost-wise, Icon is now 37% leaner since the implementation of its manpower rationalisation exercise in 2015. The company has also laid-up six vessels and implemented domestic safe manning. It also reduced overall operating expenditures for vessel operations and administrative expenses, despite stepping up vessel maintenance to increase vessel availability and reliability.
“Based on a fleet of 34, six laid-up vessels and deferred delivery post-2018, we have more than adequate capacity to compete in the spaces we’ve got. If opportunities arise and we’re commercially successful, the management will be keen to look at it,” said Amir.
Learning from the previous merger exercise, he said there are good opportunities that could come up and is looking forward to bundling its services to change the nature of the business and offerings.
“The concept of a stronger service provider is fundamentally important for Malaysia. Malaysia needs its oil and gas ecosystem to be strong, not just Petronas or the public listed companies but the service industry must be strong to support them in the future. We look to the mergers as a means to build a stronger (industry). Doesn’t make sense for Malaysia to be an oil and gas company but the only participant is in the extraction portion, it should also be the whole value chain,” said Amir.
He said activity levels are increasing and that oil and gas companies are bundling contracts into segments and markets, where bigger players have a better chance to compete if they are more diversified.
“We’re also encouraged that they’re limiting it to legitimate players within the Malaysian waters. No agents and brokers inside it that leaks yield from it. It creates a better environment for the whole ecosystem to operate against. Those are great signs for us.
“We are encouraged by the tender levels and we hope to be able to secure more (contracts) by the fact that we’ve been commercially competitive and we’re positioned well to win more,” said Amir.
As at March 31, 2017 Icon’s order book stood at RM510 million, which will spread over the next four years.
He said while Malaysia remains its core market, it will continue to work on its Brunei business to get more jobs there.
Hovid suffers Q3 loss on manufacturing licence revocation
PETALING JAYA: Hovid Bhd suffered a net loss of RM4.14 million in the third quarter ended March 31, 2017 compared with a net profit of RM1.48 million a year ago due to the revocation of its manufacturing licences during that period.
It resumed manufacturing activities for its Chemor plant in March and Ipoh plant on May 8 after the licences were reinstated.
Recall that its manufacturing licences for both its facilities in Chemor and Ipoh were revoked in January by the Health Ministry’s Pharmaceutical Services Division following an audit conducted by the National Pharmaceutical Regulatory Department.
Revenue for the quarter fell marginally to RM40.88 million from RM40.89 million a year ago.
For the nine months ended March 31, 2017, net profit plunged 58.65% to RM4.83 million from RM11.68 million a year ago due to lower revenue and the disruption in manufacturing activities caused by the revocation of licences.
Revenue for the period fell 2.56% to RM134.35 million from RM137.89 million a year ago, mainly due to lower local market tender sales. However, the loss in local sales was almost made up by the increase in export market sales.
Hovid said the outlook is expected to be satisfactory as it is expanding its tablet and capsule production facility and actively securing new overseas markets and registration of new products.
However, it cautioned that the fluctuation of the ringgit against the US dollar and the resulting unrealised foreign exchange gains/loss may cause some fluctuations to its ringgit-denominated financial results.
“The group will continue to enhance its competitive edge by continually placing emphasis in research and development and improving its production processes to achieve better efficiency,” it said.
MBSB earnings up threefold in first quarter
PETALING JAYA: Malaysia Building Society Bhd’s (MBSB) net profit for the first quarter ended March 31, 2017 rose almost threefold to RM101.32 million from RM34.84 million a year ago due to higher gross loans and lower cost of funds.
Revenue decreased by 0.2% to RM811.20 million as compared to the previous year corresponding period revenue of RM812.63 million mainly due to lower financing income from retail segment and lower income from investments in liquid assets.
President and CEO Datuk Seri Ahmad Zaini Othman said the group’s gross loans and financing grew 4.07% year-on-year to RM35.85 billion mainly contributed by higher corporate financing disbursements but partly set off by a slight contraction in the retail base.
Corporate business’ strategic (business) expansions in the sector had increased its asset composition between retail and corporate to 80:20 compared to 84:16 year-on-year, steadily progressing towards the group’s target of 70:30.
Return on equity stood at 5.98% while return on assets grew to 0.92%. Asset quality has improved with net impaired financing/loans ratio strengthening to 2.76%.
MBSB continued to preserve a cost-efficient entity with an industry leading cost to income ratio of 19.72%, an improvement from 22.15% year-on-year and considerably better than the industry’s average of 49.5%.
“We shall continue to strengthen our market position in financing government contracts and projects especially in the affordable housing segment as well as the SME, which has shown continued resilience,” said Zaini.
Commenting on the proposed merger with Asian Finance Bank, he said MBSB is at the final stage of negotiations with shareholders and hope to finalise it within the timeline set by Bank Negara Malaysia.
AirAsia plans separate firm for event ticketing business
PETALING JAYA: AirAsia Bhd plans to create a separate entity for its event ticketing business, known as Redtix, by acquiring a dormant sheel company and renaming it RedTix Sdn Bhd (formerly known as Rokki Media Sdn Bhd) from Rokki Media Holdings Sdn Bhd.
In a filing with Bursa Malaysia yesterday, AirAsia said floating the event ticketing business as a separate entity would enable it to have an independent and focused management to drive RedTix’s operations.
Its current directors are Sami Joseph El Hadery and How Kim Lian (nominee of AirAsia).
RedTix is a department within AirAsia, focusing on events and entertainment ticket sales. According to its website (AirAsiaRedTix.com), RedTix partners with premier event organisers and promoters in Asia and globally.
The platform allows customers to discuss, review and book tickets to an international line-up of concerts, sporting events, musicals, theatre performances and others. It also provides the latest music and entertainment news, tour dates and event calendars, among others.
Lotus has been running at a loss since acquisition in 1996
PETALING JAYA: Proton Holdings Bhd is divesting its interest in Lotus Group International Ltd after failing to turn it around since acquiring control in 1996.
It is not due to want of trying, however, as numerous media reports point to efforts to inject more funds to drive the company back to profitability.
In 2011, Lotus secured £270 million (RM1.33 billion) in loans from six financial institutions over a six-year period to do just that, without much positive results.
Proton acquired a 80% stake in Lotus, valued at £51 million, in October 1996 following the bankruptcy of the former owner, businessman Romano Artioli. The controlling interest was bought from ACBN Holdings SA of Luxembourg, a company controlled by Artioli, who also owned Bugatti at that time.
Proton’s stake in Lotus was increased to 100% in 2003.
The deal now, however, comes at a time when CEO Jean-Marc Gales said it is on track to make a profit and with costs at its lowest in eight years.
Formerly head of brands at PSA/Peugeot-Citroen, Gales was recruited in 2014 to turn around Lotus. He cut 300 jobs and reduced manufacturing costs.
Gales reportedly told an online portal earlier in the year that Lotus was on the mend despite recording a £50 million loss for the financial year ended March 31, 2016.
It was reported that revenue for the year fell 17% to £79 million after safety regulation changes forced Lotus to suspend sales of its Evora high-end sports car in the US, the world’s biggest sports car market. Unit sales over the financial year fell to 1,607 from 2,015 the year before.
Lotus Cars is one of the most famous sports car makers in the world. It currently manufactures four model lines – Elise, Evora, Exige and 3-Eleven.
Lotus Cars owns Lotus Engineering, a successful automotive engineering consultancy firm with offices in China, Malaysia and the US that advises third-party companies, mostly active in the automotive industry, on subjects such as lightweight architectures and driving dynamics.
Lotus has been involved in the development of suspension and handling elements of all Proton cars launched since 1996.
Auto industry to recover slowly this year, BMI Research says
KUALA LUMPUR, May 25 — The Malaysian auto industry is expected to recover gradually in 2017 on the back of an improved economy and strong infrastructural spending, BMI Research said in a statement today. The Fitch Group unit said it expected…