Berjaya Sports Toto’s Q4 net profit doubles, 4.5 sen dividend proposed

PETALING JAYA: Berjaya Sports Toto Bhd’s (BToto) net profit for the fourth quarter ended April 30, 2019 doubled to RM70.18 million from RM35.18 million a year ago, attributed to higher profits attained by Sports Toto Malaysia Sdn Bhd.

The group registered a 7.7% increase in revenue to RM1.51 billion compared with RM1.40 billion in the previous year’s corresponding quarter, contributed by HR Owen Plc and Sports Toto.

The board has declared a fourth interim dividend of 4.5 sen per share for the quarter under review amounting to RM60.6 million, bringing the total dividend distribution to 16 sen or RM215.5 million for the financial period ending June 30, 2019.

For the 12-month period, BToto’s net profit grew 20.4% to RM276.42 million from RM229.66 million a year ago, while revenue increased 1.1% to RM5.72 billion from RM5.66 billion.

Looking ahead, the group anticipates that the performance of the number forecast operation business of Sports Toto will be satisfactory and is confident that the group will continue to maintain its market share in the number forecast operation business for the remaining two months of the financial period ending June 30, 2019.

BToto has changed its financial year-end from April 30 to June 30 so as to coincide with the new financial year-end of its holding company, Berjaya Land Bhd.

Thus, the next set of financial statements with the new financial year-end will be prepared for the period from May 1, 2018 to June 30, 2019 covering a period of 14 months. Thereafter, the financial year-end will end on June 30 for each subsequent year.

Can-One’s creamer unit sale leaves earnings void for packaging biz to fill

PETALING JAYA: Can-One Bhd’s disposal of its creamer unit F&B Nutrition Sdn Bhd is positive in the near term but will leave behind a huge void for the packaging business to fill, said MIDF Research.

“While the deal arrives at a time that allows for Can-One to pare down its debt and to reduce borrowing cost as a result of the privatisation of Kian Joo Can Factory Bhd (KJCF), it will take time to reap synergies from the enlarged packaging business,” it said in its report.

MIDF Research said the creamer segment has been Can-One’s earnings growth driver based on recent years and after the disposal, the enlarged packaging business will have to fill up the earnings void left by the more lucrative creamer business.

“Going forward, business risk will also be much more concentrated on the packaging business. That said, the merged entity with KJCF will also be much more asset rich and it remains to be seen how the management will be able to potentially unlock the value of its assets,” it added.

The research house expects on-year normalised earnings per share enhancement of 8-44% for Can-One from the disposal, based on a pro forma basis. The enhancement is mainly attributed to the savings in borrowing cost.

To recap, Can-One recently signed a sale and purchase agreement with Southern Capital Group Private Ltd to dispose of the entire stake F&B Nutrition for RM800 million to RM1 billion.

F&B Nutrition is an original equipment manufacturer of evaporated creamer and sweetened creamer mainly for the Southeast Asian and African markets.

The consideration is based on 10.5 times F&B Nutrition FY19 earnings before interest, tax, depreciation and amortisation (ebitda) less the FY18 net debt of RM107.4 million and net capital return of RM26 million.

“We think that the valuation of 10.5 times ebitda is considered fair as F&B Nutrition is largely an OEM but not a brand owner,” said MIDF Research.

Can-One’s gearing level is estimated to fall to between 0.55 times and 0.79 times, from 1.94 times after the disposal of the creamer unit. It is expected to make a one-off net gain of RM610.8 million to RM810.8 million from the sale.

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GDB eyes 12 projects worth RM2.9 billion

PETALING JAYA: Construction services firm GDB Holdings Bhd is tendering for 12 projects worth a total of RM2.9 billion in the Klang Valley.

The 12 projects include residential, mixed development, hotel, factory and sales gallery.

Managing director Cheah Ham Cheia said there has been gradual improvement in tender activity for the construction of various buildings this year, reflecting the recovering sentiment in the sector.

“On top of that, we also believe that our consistent track-record in delivering projects ahead of schedule as exemplified with our recent completions places us in a favourable position to secure new contracts. To that end, we are continuously pursuing new contracts in a bid to bolster our order book of RM619.1 million as at end-March 2019,” he said today.

Cheah said the company is buoyant of its prospects for the financial year ending FY19 on the back of its strong track record for works completion ahead of schedule.

Chinese vice-premier urges more support for economy as trade war bites

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China’s Vice Premier Liu calls for more measures to support economy

SHANGHAI: Chinese regulators should step up support for the economy and keep ample liquidity in the financial system, Vice Premier Liu He said on Thursday, suggesting Beijing would soon unveil more policies to bolster growth amid rising U.S. trade pressure.

Beijing has plenty of policy tools and is capable of dealing with various challenges, Liu said at a financial forum in Shanghai.

Despite a slew of support measures and policy easing since last year, China’s cooling economy is still struggling to get back on firm footing, and last month’s sudden escalation in U.S.-Sino tensions has raised fears of a full-blown trade war that could trigger a global recession.

Liu’s comments came a day after data showed China’s credit growth was weaker than expected in May, reinforcing market expectations that more monetary easing is needed. Factory activity contracted in May and imports fell the most in nearly three years, highlighting soft demand.

“At present, we do have some external pressures, but those external pressures will help us boost our self-reliance in innovation and accelerate the pace of high-speed development,” said Liu, who is also the lead negotiator in the U.S.-China trade talks.

The government will roll out more strong measures to promote reforms and opening up, added Liu.

People’s Bank of China chief Yi Gang said last week that there was “tremendous” room to make policy adjustments if the trade war worsens.

Earlier on Thursday, China Daily, citing economists, said China is expected to adjust money and credit supply in coming weeks, including cuts to interest rates or reserve ratio requirements, to counter “downside risks” if trade tensions escalate.

Further cuts in banks’ reserve requirement ratios (RRR) were already expected this year, especially after the trade conflict escalated last month. Both sides hiked tariffs on each other’s goods, and Washington is threatening more.

Last month, the PBOC stepped up efforts to increase loan growth and business activity, announcing a three-phase cut in regional banks’ reserve requirements to reduce financing costs for small and private companies.

It has now cut RRR times six since early 2018, and has also guided short-term interest rates lower.

Unlike previous downturns, however, the central bank has been reluctant to cut benchmark interest rates so far. Analysts believe it has held off on more aggressive measures due to concerns that such a move could risk adding a mountain of debt leftover from past stimulus sprees.

Sources told Reuters in February that the PBOC considered a benchmark rate cut a last resort. But some analysts now think one or more cuts are likely if the trade dispute spirals out of control and the U.S. Federal Reserve starts cutting its rates, giving the PBOC more room to manoeuvre.

Some analysts believe the chances of a trade deal are receding, with both sides showing signs of digging in. But U.S. President Donald Trump has said he plans to meet his Chinese counterpart Xi Jinping at a G20 summit later this month.


More forceful easing could also trigger capital outflows and add pressure on the Chinese yuan.

The yuan has fallen nearly 3 percent since the trade flare-up last month and is nearing the closely watched 7 per dollar mark, a level last seen during the global financial crisis a decade ago.

“China is capable and confident of maintaining stable operation of the foreign exchange market and keep the yuan basically stable at reasonable and balanced levels,” Pan Gongsheng, head of the State Administration of Foreign Exchange, said at the forum.

Citing experts, China Daily said financial institutions were facing tighter liquidity in June, and said authorities want to spur faster credit growth to meet economic growth targets.

Beijing has set a growth target of around 6% to 6.5% for this year, easing from 6.6% in 2018, which was the slowest rate of expansion the country has seen in nearly 30 years.

Analysts at Bank of America Merrill Lynch believe China’s GDP growth could fall to 5.8% this year and 5.6% in 2020 if the trade war intensifies, and expects Beijing to respond with four benchmark rate cuts, more RRR cuts, consumption subsidies and measures to stabilise employment.

On Monday, the government announced steps to give local governments more financing flexibility so they can increase infrastructure spending, a key part of the stimulus plan that has not revived investment as quickly as some China watchers had expected.

The escalating trade war has gone beyond tariffs as the two countries increase pressure on each other to cede ground.

Chinese state media has warned that Beijing could use rare earths for its next strike. The United States relies on China for supplies of the rare earths to make a host of high-tech products.

China is also the biggest holder of U.S. government debt, with about $1.12 trillion in U.S. Treasuries, stirring talk that Beijing could start dumping U.S. bonds.

China is a responsible investor in global financial markets, Pan said. – Reuters

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