Malaysia’s auto industry off on a positive start

KUCHING: Malaysia’s automotive industry is off on a positive start this year, led by strong numbers recorded by national carmakers. Analysts expect the industry to continue this strong momentum, underpinned by healthy demand and favourable foreign exchange (forex). According to the research arm of Affin Hwang Investment Bank Bhd (AffinHwang Capital), the automotive industry’s January […]

Holding costs, forex losses hit E&O’s Q3 earnings

PETALING JAYA: Eastern & Oriental Bhd (E&O) suffered a net loss of RM8.80 million in the third quarter ended Dec 31, 2018 compared with a net profit of RM21.98 million a year ago due to holding costs and unrealised foreign exchange (forex) losses.

In a filing with Bursa Malaysia, the group said its operating profit of RM50.18 million during the quarter was dampened by unrealised foreign exchange loss of RM11.74 million and holding costs of RM44.55 million payable for the option to purchase land which was not exercised.

Revenue for the quarter fell 22.58% to RM256.95 million from RM331.90 million a year ago due to lower revenue contribution from the property and hospitality segments.

Excluding the holding cost and unrealised forex losses, the group said its recurring pre-tax profit for the quarter would have been RM91.6 million, 10.39% higher than RM82.9 million recorded a year ago.

For the nine months ended Dec 31, 2018, net profit fell 61.60% to RM24.15 million from RM62.89 million a year ago while revenue fell 9.25% to RM636.34 million from RM701.22 million a year ago.

“As at Dec 31, 2018, we achieved a lower net gearing of 0.39 times compared with 0.58 times as at Dec 31, 2017 and our cash balance is RM98 million higher year-on-year at RM727.8 million while our total bank borrowings reduced by 13.66% to RM1.5 billion,” said E&O managing director Kok Tuck Cheong.

For the property development segment, the group recorded cumulative sales of about RM251 million during the quarter, representing a 6.45% growth year-on-year. The group also reduced its inventory level by 28.37% to RM232.4 million.

The group had recently proposed a private placement of new shares and also a rights issue of shares with warrants.

“While the group’s financial position is as strong as ever with net gearing of 0.39 times, the proposed equity raising will put the group on even stronger footing as we prepare for our next growth trajectory. As such, E&O’s fundamentals remain intact and we are committed and confident of our prospects going forward,” said Kok.

Axiata’s FY18 results dampened by dilution of India’s investment, write-off

KUALA LUMPUR, Feb 22 — Axiata Group Bhd swung to a net loss of RM5.03 billion in the 2018 financial year (FY18) from a net profit of RM909.48 million in the previous year due to dilution of its investment in India and asset write-off that ran into…

Axiata’s exit from Singaporean market ‘not surprising’

KUCHING: Axiata Group’s recent exit from Singapore’s telco market by accepting the offer to sell its 29.7 per cent-owned equity stake in SGX-listed M1 Tlecommunications asset came as no surprise to analysts. Researchers at AmInvestment Bank Bhd (AmInvestment Bank) said that Axiata Group’s exit was expected, thanks to the increasingly challenging and competitive market conditions […]

IOI Q2 earnings hit by lower plantation profit, forex translation loss

PETALING JAYA: IOI Corp Bhd saw its net profit tumble 67.2% in the second quarter ended Dec 31, 2018 (Q2 FY19) to RM195.5 million, from RM595.9 million in the previous corresponding quarter.

It was due to lower plantation profit and total net foreign currency translation loss on foreign currency denominated borrowings and deposits, the group told Bursa Malaysia today.

Its plantation segment profit for Q2 FY19 of RM117.3 million was 66% lower than the RM340.9 million for Q2 FY18, mainly due to lower crude palm oil (CPO) and palm kernel (PK) prices realised.

Average CPO price and PK price realised for Q2 FY19 was RM1,932/MT and RM1,444/MT, respectively versus RM2,644/MT and RM2,621/MT for Q2 FY18.

However, its resource-based manufacturing segment recorded a higher profit of RM139.3 million for Q2 FY19 from RM128.3 million underpinned by higher sales volume and margins from oleochemical and refining sub-segments as well as share of associate result from Bunge Loders Croklaan Group BV.

IOI’s revenue for the quarter dipped 6.4% to RM1.88 billion compared with RM2.01 billion in the same period a year ago.

It has proposed to declare an interim dividend of 3.5 sen per share for the quarter under review.

For the six-month period, the group’s net profit plunged 65% to RM339.3 million from RM955.9 million a year ago, while revenue was slightly down by 3.1% to RM3.76 billion, from RM3.88 billion previously.

On prospects for plantation segment, IOI expects its fresh fruit bunches production to decline in Q3 FY19 in line with seasonal trend.

However, with the increase in current CPO price, it foresees a slight improvement in Q3 FY19 financial performance from the plantation segment.

“Movements in the US dollar/ringgit and euro/ringgit exchange rates will continue to result in non-cash forex translation gain or loss on our US dollar and euro–denominated borrowings,” it added.

Yen weakens as BOJ flags easing risks, euro trims earlier gains

TOKYO, Feb 19 — The dollar inched up against the yen today after Japan’s central bank governor raised the possibility of further policy easing, while the euro’s latest bounce faded as the focus shifted back to economic challenges in the bloc….

Euro’s bounce fades as focus shifts back to economy, ECB policy

TOKYO, Feb 19 — The dollar was steady against its peers today, lacking strong direction as US markets were shut for a holiday the previous day, while the euro’s latest bounce faded as the focus drifted back to the economy and European Central…

Trump declares national emergency

Fundamental outlook PRESIDENT Donald Trump declared a national emergency in a bid to fund his promised US-Mexico border wall without congressional approval. On Friday, US officials from both Democrats and Republicans objected the bill and vowed to challenge as a violation of the US Constitution. Meanwhile, on the US–China trade talk, the Trump administration cited […]

Stronger Ringgit, commodity prices to shore up Bursa Malaysia next week

KUALA LUMPUR: Bursa Malaysia is expected to strengthen next week, driven by stronger ringgit and commodity prices, as well as rising forex reserves and higher national fourth quarter economic growth.

Phillip Capital Management senior vice-president (investment) Datuk Dr Nazri Khan Adam Khan said more upside is expected on the local stock market amid uncertainty over the outcome of the US-China trade negotiations.

“Despite global geopolitical concerns, the local market continues its near two-month upside movement above the 1,700-pt critical support mark,” he told Bernama.

He said another factor that would contribute to the market movement next week would be the release of economic data from Singapore, China, Japan and Taiwan.

Nazri Khan said the market would also be influenced by the outcome of the US-China trade talks.

“The talks between Chinese Vice-Premier Liu He and US trade representative Robert Lighthizer were the reason behind risk-averse attitude among investors,” he said.

Meanwhile, he said the gross domestic product (GDP) growth would also be one of the important catalysts as it improved above expectations, buoyed by a rebound in mining and quarrying, coupled with higher growth from the services and manufacturing sectors, albeit at a slower pace.

“Malaysia’s GDP grew 4.7% in the last quarter of 2018 compared with 4.4% in the previous quarter, slightly above our in-house and market expectations of 4.5 per cent and 4.6 per cent, respectively,” he said.

On the technical side, he said a further rise above 1,700 points in the FBM KLCI would indicate a bullish market sentiment.

“Having said that, we expect FBM KLCI to find its footing and enter into a short-term bullish movement,” he said.

For the week just ended, the local stock market was benign with investors mostly adopting a wait-and-see approach amid cautious sentiment over the US-China trade talks that began on Thursday.

On a Friday-to-Friday basis, the benchmark FBM KLCI settled 2.31 points higher at 1,688.83.

The FBM Emas Index was 24.75 points higher at 11,750.27, the FBMT 100 Index increased 11.36 points to 11,612.9 and the FBM Emas Shariah Index jumped 70.57 points to 11,663.6.

The FBM 70 eased 4.71 points to 14,028.19 while the FBM Ace Index rose 91.37 points to 4,646.59.

Sector-wise, the Financial Services Index erased 9.55 points to 17,632.56 while the Plantation Index increased 35.83 points to 7,335.43 and the Industrial Products and Services Index inched up 1.16 points to 163.13.

Weekly turnover rose to 14.85 billion units worth RM9.78 billion against 4.94 billion units worth RM3.8 billion.

Main Market volume expanded to 11.05 billion shares valued at RM8.99 billion versus 3.77 billion shares valued at RM3.57 billion.

Warrants turnover increased to 2.27 billion units worth RM480.02 million from 690.66 million units worth RM149.03 million.

The ACE Market volume improved to 1.52 billion shares valued at RM305.71 million against 483.1 million shares valued at RM83.25 million.

The gold futures contract on Bursa Malaysia Derivatives is expected to trade higher next week following the release of weak US economic data, thus reducing chances for the Federal Reserve to hike rates this year.

A dealer said the weak US retail sales, which fell 1.2% in December 2018 compared with November 2018, would encourage the Federal Reserve to hold interest rates steady for a while.

“This prospect is seen as beneficial for gold prices, given that higher interest rates will lift the opportunity cost of holding non-interest bearing assets,” he added.

On a Friday-to-Friday basis, spot month February 2019, March 2019, April 2019 and June 2019 were four ticks higher at RM172.20, RM172.20, RM172.50 and RM172.60 a gramme, respectively.

Weekly turnover amounted to four lots worth RM68,820 compared with nil last week, while open interest was at 22 contracts from 23 contracts previously. — Bernama

Foreign fund outflows to persist but likely to lessen

PETALING JAYA: Foreign fund outflows are expected to persist but likely lesser, despite ringgit’s appreciation and ample foreign reserves, as external uncertainties continue to pose risk to domestic financial market and economic growth, according to Kenanga Research.

“On the trade war front, tensions persist, though we remain cautiously optimistic on the outcome of the US and China trade negotiations which would be due by March 1,” the research house said in a note yesterday.

Kenanga Research highlighted that China economic slowdown appears to be more concerning, fears over eurozone economic slump becoming increasingly evident with Italy falling into another recession while Germany’s economy is weakening as the global trade slowdown is affecting its exports.

Additionally, it said the US Federal Reserve is taking a less hawkish stance this year, with fewer or no rate hike expected.

“Against this backdrop, we do not discount a trend reversal to happen but due to uncertainties, we still expect outflow of hot money to persist but likely lesser,” it noted.

As at Jan 31, 2019, Bank Negara Malaysia (BNM) foreign international reserves increased by US$ 0.7 billion or 0.7% month-on-month (m-o-m) to US$102.1 billion, after it fell by US$0.6 billion in December last year.

In ringgit terms, the value of forex reserves increased by 0.7% m-o-m, adding RM2.8 billion to RM422.3 billion as at end January from RM419.5 billion in December.

In January, the ringgit was traded at an average of RM4.12 against the US dollar versus RM4.17 in the preceding month, appreciating as much as 1.3% m-o-m, marking its second month of appreciation primarily due to weakening of US dollar.

On the ringgit outlook, Kenanga Research expects its recent pick-up may have legs and test the 4.05 level against the US dollar in the near term.

“However, we still maintain our USDMYR year-end forecast of 4.10 on the back of weaker global economic growth and the natural tendency for global capital to flee to safe haven assets mainly US Treasuries,” it added.

The ringgit appreciated 0.26% to 4.0680 against the greenback as at 5pm yesterday.

Meanwhile, Kenanga Research maintains its view that BNM would hold the overnight policy rate (OPR) at 3.25% this year as domestic indicators are pointing towards growth moderation and inflation is expected to remain subdued on the back of weaker global oil prices and demand.

However, it anticipates that the central bank would gradually turn dovish and may not hesitate to cut interest rates if there are signs that external factors increasingly threaten domestic growth.

“The probability for that to happen is low for now as overall domestic fundamentals remain intact underpinned by low unemployment rate (Dec: 3.3%), decent current account surplus, a benign inflation, along with ample liquidity in the financial market. “