business growth

 
 

SDS to raise RM24m from IPO

KUALA LUMPUR: Homegrown bakery products manufacturer and distributor SDS Group Bhd expects to raise RM23.99 million under its proposed listing on the ACE Market of Bursa Malaysia Securities Bhd (Bursa Securities).

The company plans to use RM6.00 million (25.0%) raised from the initial public offering (IPO) to expand its business presence for both the wholesale and retail channels within the northern and central regions of Peninsular Malaysia respectively with the additional capacity from its new manufacturing plant in Seremban.

It will further utilise RM7.79 million (32.5%) for general working capital requirements; RM7.00 million (29.2%) to repay bank borrowings while the remaining RM3.20 million (13.3%) to be used to defray listing expenses for the IPO.

SDS Group managing director Tan Kim Seng said the company will increase the number of fleet of lorries for the northern region of Peninsular Malaysia and Seremban manufacturing plant to support the distribution of its wholesale bakery products.

The company also plans to set up eight new food and beverages (F&B) outlets within the established residential areas in the Klang Valley. Currently, SDS Group has 33 F&B outlets including five outlets under licensing agreement in Johor.

“Our business strategies to increase our fleet of lorries to expand to the central and northern regions of Peninsular Malaysia as well as increase the number of F&B outlets are expected to provide business growth in terms of revenue increase and earnings contribution,” he said in a statement.

Under the listing exercise, SDS Group is issuing 104.29 million new shares at 23 sen per share of which 20.29 million new shares will be made available to the public via balloting; 23.13 million new shares for its eligible directors, employees and business associates/persons while the remaining 60.87 million new shares are earmarked for private placement to selected investors.

The IPO is open for subscription from today to Sept 23, 2019. SDS Group’s listing on the ACE Market of Bursa Securities is tentatively scheduled on Oct 7, 2019.

M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.


Asians stocks struggle ahead of Powell’s speech; yuan at fresh 11-1/2 yr low

TOKYO: Asian shares struggled to make headway on Friday as uncertainty over how much further the U.S. Federal Reserve would cut interest rates added to investors’ worries over slowing global growth.

With a trade war between the United States and China dragging on, and political tumult in Hong Kong, Italy and Britain adding to the tense backdrop, investors were keenly awaiting Fed Chair Jerome Powell’s speech at a gathering of central bankers in Jackson Hole, Wyoming, later in the day (1400 GMT).

MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.1% higher and was up 0.8% for the week, on track to break a four-week losing streak.

Japan’s benchmark Nikkei added 0.3% and Australian stocks rose 0.3%.

The Shanghai Composite and the blue-chip CSI300 were up 0.5% and 0.7%, respectively, while Hong Kong’s Hang Seng gained 0.5%.

Business surveys on Thursday suggested further slowing in advanced economies in August, but service sector activity remained resilient, offsetting some of the drag from weak manufacturing.

“It’s going to be another wait-and-see day for traders ahead of Powell’s Jackson Hole speech. Investors are hoping for some soothing words from him,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

Wall Street stocks were mixed on Thursday, with the S&P 500 closing little changed, while the Dow was up 0.2% and the Nasdaq falling 0.4%.

In the U.S. bond market, the closely watched two-year, 10-year Treasury yield curve briefly moved back into inversion overnight, a shift that also occurred last week and sent financial markets into a tailspin amid worries of a sharp global downturn.

An inversion in the U.S. yield curve has presaged several past U.S. recessions, raising fears the decade-long expansion in the world’s biggest economy might be nearing its end.

While markets overwhelmingly expect the Fed to follow up its first rate cut in a decade with more stimulus at its meeting next month, some policymakers disagree.

Kansas City Fed President Esther George, who dissented against the decision to ease in July, and Philadelphia Fed President Patrick Harker, who said he “reluctantly” supported the cut, both said the U.S. economy does not need more stimulus at this point.

Dallas Fed President Robert Kaplan said the businesses had become much more cautious due to surprises on trade policy and he was “going to at least be open-minded about making some adjustment” if he sees continued weakness.

All of that has made Powell’s speech in Jackson Hole pivotal for markets as they look for any clues on future easing, after the Fed last month cut rates for the first time since the financial crisis.

Any indications of hawkishness in the Fed chief’s comments might hurt riskier assets, though the dollar stands to benefit.

The greenback slipped on Thursday, but moved within narrow ranges. In early Asian trading, the dollar was up 0.1% against a basket of major currencies to 98.293.

The euro also was little changed against U.S. currency at $1.1073. A survey showing a surprise uptick in euro zone business growth for August was offset somewhat by trade war fears knocking future expectations to their weakest in over six years.

The pound jumped to a three-week high of $1.2273 overnight after traders interpreted comments from German Chancellor Angela Merkel to mean that a solution to the Irish border problem could be found before Britain leaves the European Union on Oct. 31.

Merkel on Wednesday challenged Britain to come up with alternatives to the Irish border backstop within 30 days, but French President Emmanuel Macron cautioned there would be no renegotiation of the Brexit deal. Sterling last quoted at $1.2234, 0.1% weaker on the day.

China’s yuan extended losses, threatening to stoke trade tensions between Washington and Beijing.

Spot yuan slid to as low as 7.0992 per dollar, its weakest since March 2008, although the central bank set the midpoint rate at 7.0572, its weakest level in 11-1/2 years, but was much stronger than traders had expected.

Washington labelled China a currency manipulator early this month after a sharp slide in the yuan.

Concern about China’s economy is growing because U.S. tariffs on roughly $150 billion of Chinese goods will take affect from Sept. 1.

Oil prices weakened overnight, with both Brent crude and U.S. West Texas Intermediate down 0.6% each, on worries about the global economy.

Brent crude was last up 0.3% at $60.11 per barrel and WTI crude added 0.2% to $55.46.

Gold prices dipped on Thursday but held near the pivotal level of $1,500 per ounce, underpinned by demand for the precious metal amid uncertainties around monetary policy, trade and geopolitical tensions. Spot gold was last down 0.2% at $1,494.99 an ounce. – Reuters


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Public Bank posts lower Q2 earnings on higher expenses

PETALING JAYA: Public Bank Bhd’s net profit for the second quarter ended June 30, 2019 fell 4.5% to RM1.33 billion from RM1.40 billion a year ago mainly due to higher interest and operating expenses.

Its revenue, however increased 3% to RM5.60 billion from RM5.44 billion previously.

The bank has declared a first interim dividend of 33 sen per share, translating into a total dividend payout of RM1.28 billion.

For the six-month period, its net profit was 2.1% lower at RM2.74 billion as compared with RM2.80 billion in the previous corresponding period due the negative effect of Overnight Policy Rate (OPR) reduction of 0.25% in May 2019 versus an OPR hike in January 2018 of the previous year corresponding period.

Its revenue however jumped 3.5% to RM11.17 billion from RM10.79 billion a year ago.

Public Bank founder and chairman emeritus Tan Sri Dr Teh Hong Piow said arising from the reduction of the OPR in May 2019, domestic banks were faced with a decline in net interest margins which affected the profit for the half year ended June 30, 2019.

“However, excluding the negative effect of the OPR reduction, Public Bank was able to sustain stable profitability underpinned by its healthy loans and deposits growth, stable asset quality and prudent cost management,” he said in a statement.

During the period, Public Bank’s total loans grew by an annualised rate of 4.0% to RM323.7 billion, mainly attributed to the healthy growth in its core financing business in residential and commercial properties. Its gross impaired loans ratio stood at 0.5% as at end-June, 2019, well below the banking industry’s gross impaired loan ratio of 1.6%.

On funding side, the group’s deposits saw an annualised growth rate of 5.9% to RM349.1 billion.

In the first half of 2019, the group achieved 8.1% growth in non-interest income, mainly arising from higher investment income and higher banking fee income.

“The group’s unit trust management business through its wholly-owned subsidiary, Public Mutual, continued to be the largest contributor, making up 35% of the group’s total non-interest income.”

Public Bank’s cost-to-income ratio came in at 34.2%, as compared with the banking industry’s 44.6%.

“The group’s effective management of cost efficiency has helped to cushion the impact of interest margin pressure. The group’s long term track record of prudent cost management will also continue to be its competitive advantage when rising cost pressure is expected to persist,” said Teh.

As at the end of June 2019, the group’s common equity Tier 1 capital ratio, Tier 1 capital ratio and total capital ratio were at 13.2%, 13.6% and 16.0% respectively.

Its loan loss coverage stood at 116.0%, well above the banking industry’s 91.1%. Including additional regulatory reserves set aside of RM1.9 billion, it would be higher at 226.5%.

Overseas operations contributed 10.5% to the group’s pre-tax profit, mainly contributed by Public Financial Holdings Limited Group in Hong Kong and Cambodia Public Bank Plc.

Going forward, Teh said Public Bank will remain on a cautious stance in growing its business and closely monitor the changes in the operating environment and undertake appropriate measure to fine-tune its operational strategies for continued business growth.

“In addition, as the group continues to sustain its fundamental strength, it will proactively seek to develop new initiatives, such as banking digitalisation as well as innovative and distinctive financial products for long term business growth.”


European shares flat ahead of ECB meet, earnings a mixed bag

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Euro zone business growth stumbles in July, outlook gloomy

LONDON: Euro zone business growth was weaker than expected in July, hampered by a deepening contraction in manufacturing, and forward-looking indicators in surveys published on Wednesday suggest conditions will get worse next month.

That will make disappointing reading for policymakers at the European Central Bank, who are expected to signal on Thursday a bias towards cutting its already-negative deposit rate this year to try to boost growth and inflation.

Doing little to dispel those expectations, IHS Markit’s Flash Composite Purchasing Managers’ Index (PMI), considered a good guide to economic health, dropped to 51.5 this month from a final June reading of 52.2, missing the median expectation in a Reuters poll for 52.1 and closer to the 50 mark separating growth from contraction.

“It’s a pretty gloomy picture,” said Chris Williamson, chief business economist at IHS Markit.

“People are saying they expect the year ahead to be harder given rising geopolitical concerns, Brexit becoming an increasing worry and rising trade tensions.”

Williamson said the PMI suggested economic growth of 0.2% – or possibly as low as 0.1% – this quarter, weaker than the 0.3% predicted in a Reuters poll.

A PMI for the bloc’s dominant service industry fell to 53.3 from June’s 53.6, matching the median Reuters poll forecast.

Manufacturing activity contracted for a sixth month and at its sharpest rate since late 2012. The factory PMI fell to 46.4 from 47.6, below all forecasts in a Reuters poll which had predicted no change from June’s reading.

An index measuring output, which feeds into the composite PMI, sank to 47.0 from 48.5 – its lowest reading since April 2013.

“The divergence between the two sectors is unusually wide. The question remains – how long can services continue to grow while manufacturing is in this deepening downturn,” Williamson said.

Demand for manufactured goods fell at the second fastest rate in over six years and factories again turned to completing old orders to stay active. The backlogs of work index fell to a seven-year low of 43.3 from 45.5.

Services firms also suffered from weak demand and they cut back on hiring. The employment index fell to 53.5 from 54.2.

As forward-looking indicators were painting a downbeat picture, businesses across the euro zone grew less optimistic. The future output index fell to 58.5 from 59.2, its lowest since October 2014.


DNeX wins RM11.8m Petronas contract

PETALING JAYA: Dagang Nexchange Bhd’s (DNeX) wholly owned subsidiary OGPC Sdn Bhd has been awarded a RM11.8 million contract from Petronas Dagangan Bhd.

According to its Bursa filing, the contract is for the supply, installation, testing, commissioning and maintenance automatic tank gauging (ATG) and accessories for 200 Petronas stations nationwide.

Works on the project also include the supply, installation, testing, commissioning and maintenance of the Wetstock Management System (WMS) connected to ATG and its accessories, as well as relevant hardware, software on cloud-based platform and cybersecurity systems.

According to DNeX, the ATG and its accompanying hardware and software system provides automatic measurement of fuel storage tanks thus enabling more accurate and improved, real time reading.

“The project augurs well with efforts to boost book order, and further expand on business growth of OGPC including contracting work in downstream sector,” said DNeX executive deputy chairman Datuk Samsul Husin (pix).

He said OGPC, which is a supplier, service provider and contractor for oil and gas, petrochemical, power, palm oil and general industries, has contributed a new stream of revenue for DNeX since the group acquired the company in 2016.

“We are continuously growing this business to get more jobs, which OGPC has been delivering this year,” he added.

The two-year contract, which commenced on July 12, 2019, comes with an option to extend for another two years.


UK banks say business investment slowing further ahead of Brexit

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