market share


Etiqa posts double-digit revenue growth in FY18 but profit falls

KUALA LUMPUR, April 25 — Etiqa Group Insurance and Takaful achieved a double-digit gross premium growth of 17 per cent to RM7.2 billion for the financial year (FY) ended December 31, 2018, although its profit before tax (PBT) was lower at RM825…

RHB to be ‘pragmatic’ in facing challenging investment banking scene overseas

KUALA LUMPUR: RHB Bank Bhd sees a challenging investment banking business scenario overseas, which is lacking in scale compared with the business in Malaysia, and it will adopt a “pragmatic” approach to address the challenges.

“That’s why we believe that, based on our FIT22 strategy, we focus on our niche and strength. Take for example in Singapore, we will do equities business, we will do investment banking business but we will not do debt market business because we don’t have the capability for distribution there and particularly in foreign currencies. And of course the bonds mainly in Singapore are not rated. But we will do the others,” said group managing director Datuk Khairussaleh Ramli (pix).

“In Thailand for example, we believe the equities business is very active, the retail broking there is among the most active in Asean, so that’s an area that we will focus on, including maybe some debt market as well,” he told reporters at its AGM today.

He said the investment banking businesses in Indonesia and Thailand have room to expand via organic growth while in Singapore, the group intends to synergise its investment banking and banking businesses in order to offer multiple services to clients.

In terms of its asset management business in Indonesia, Khairussaleh said the business is small and the main challenge there is distribution due to the country’s size.

“We have tied up with some banks but we also want to look at digital ways of distributing our products, because it is such a big country with many islands. If we can’t have physical presence, we need to look at digital capabilities,” he said.

“For our overseas business we take a pragmatic approach of focusing on our niche but in Malaysia, we pretty much are a universal investment bank, we pretty much do everything. Generally in Malaysia, the investment banking business is good,” he added.

RHB expects to take on several initial public offerings (IPOs) this year in the consumer product and trading services segments, including Leong Hup International Bhd and two sizeable IPOs of about RM750 million each in the second half of the year.

The group is one of the joint global coordinators for the IPO of poultry player Leong Hup, which is en route to list on the Main Market of Bursa Malaysia. The prospectus will be launched today.

Meanwhile, RHB aims to grant RM31 billion in new and additional financing for small and medium enterprises (SMEs) by 2021, which will benefit 18,000 SMEs. Last year, it approved RM7.2 billion worth of loans to over 4,000 SMEs in Malaysia.

The bank is currently ranked fourth in the SME segment with a market share of 9.06% as at January. Its market share was about 7% three to four years ago. It aims to connect to 15,000 new SMEs this year through its SME Ecosystem.

RHB aims to grow its mortgage business by 12% this year and 33% or RM17.5 billion over the next three years. Its mortgage market share stood at 9.64% as at February.

Khairussaleh said mortgage applications have reduced but its approval rate has been consistently high at 75%. He said there are no changes to its overall loans growth target of 5% for this year, driven by growth in the mortgage and SME segments.

In terms of provisions, he said it will be decided on a case-by-case basis and while some clients may be going through a difficult patch, there are no systemic issues at the moment.

“We believe that our oil and gas portfolio is under control. But again, potentially there could be case-by-case basis where customers may go through some difficulty. That’s where we should help. In fact, our oil and gas loan loss coverage is more than 100% so we are comfortable with our coverage for the current portfolio,” he said.

RHB’s exposure to the oil and gas sector is 2.8% of its total loan book, with 6% exposure to the property sector.

RHB Bank looking to disburse RM31b SME loans by 2021

KUALA LUMPUR: RHB Bank Bhd, which approved RM7.2 billion SME loans last year, aims to grant RM31 billion in new and additional loans for SMEs by 2021.

Speaking to reporters at its AGM today, group managing director Datuk Khairussaleh Ramli (pix) said the RM31 billion SME loans will benefit some 18,000 SMEs over the next three years.

“Our aim is to provide SMEs with services that are beyond the granting of credit facilities, but also to provide them with a holistic ecosystem that is able to offer targeted and innovative products and value added services that will allow them to focus on growing their businesses,“ he said.

He said the bank is ranked fourth in the SME segment with a market share of 9.06% as at January. Its market share stood at 7% about three to four years ago.

Meanwhile, RHB has three initial public offerings (IPOs) in the pipeline this year, including poultry player Leong Hup International Bhd.

Khairussaleh revealed that it has two IPOs planned in the second half of the year, sized at about RM750 million each. The IPOs are within the consumer product and trading services segments.

Leong Hup will be launching its prospectus tomorrow. Bloomberg reported that the IPO’s maximum price has been set at RM1.10 per share.

Boeing seeks to exit crisis mode as it reports results

NEW YORK, April 23 — Under growing scrutiny from investors and regulators, embattled US aerospace giant Boeing will have a chance this week to reset the narrative as it aims to pivot from two deadly crashes that have grounded a top-selling plane….

Alliance Bank, Zurich M’sia seal bancassurance, bancatakaful partnership

KUALA LUMPUR: Alliance Bank Malaysia Bhd and its subsidiary Alliance Islamic Bank Bhd have entered into an exclusive 15-year partnership with Zurich General Insurance Bhd and Zurich General Takaful Bhd to establish general bancassurance and bancatakaful partnerships in Malaysia.

According to Alliance Bank group CEO Joel Kornreich, the partnership is expected to generate RM200 million over the 15-year period.

Meanwhile, Zurich General Insurance Malaysia CEO David Fike said Malaysia’s general insurance penetration stands at a low of 1.23% of GDP and the partnership with Alliance Bank would enable them to grab a large share of the insurance market, particularly the huge potential among small- and medium-sized enterprises (SMEs).

“The Malaysian market is largely made up of SMEs and a lot of them needs to have accessibility, and the partnership with Alliance Bank provides that accessibility,” he said to the media at the signing ceremony between the two financial institutions today.

Currently, Zurich is ranked seventh in Malaysia’s insurance and takaful market with a market share of over 5%.

Alliance and Zurich have identified fire insurance as the general insurance product to be offered by the partnership in May, with another six to 12 insurance and takaful product to be available to the public by the end of their first year.

Glove sector downgraded as challenges grow

PETALING JAYA: PublicInvest Research has downgraded the glove sector to “underweight” on the back of a more challenging operating landscape for the glove makers in near term.

This is due to additional capacity coming on stream and average selling pressure (ASP) pressure on latex gloves due to growing competition from Thailand.

Share prices of the glove makers under its coverage have seen price-to-earnings (PE) contraction with Top Glove Corp Bhd, Hartalega Holdings Bhd and Kossan Rubber Industries Bhd retracing by more than 18% year-to-date.

Despite the recent selloff, the research house said the sector is still trading at unattractive PE valuations and could potentially contract closer to historical average of 21-26 times.

It has also cut the sector’s FY19-20F earnings forecasts by 3-14% and downgraded its rating on Hartalega and Top Glove to “underperform” while Kossan is maintained at “neutral”.

PublicInvest Research said the global consumption of rubber gloves has always been growing at a steady rate of 8-10% annually.

“The previous vinyl gloves disruption in 2016/17 has led to glove makers expanding their capacity more aggressively in order to satisfy the sudden surge in demand for latex and nitrile gloves due to the impact of substitution effect.”

It noted that the capacity expansion planned during the vinyl disruption is expected to come in the market in the second half of 2019. This includes Thailand’s largest glove maker Sri Trang, which expects their production to increase to 23 billion pieces at the end of the year from the current capacity of 21.1 billion.

Overall, global supply for 2019 is expected to grow by 15% based on planned capacity, outpacing the demand growth of 8-10%.

Due to Thailand’s Sri Trang’s aggressive expansion plan and its product mix of 69% latex gloves and 31% nitrile gloves, PublicInvest Research expects it to have a stronger impact on Top Glove as latex gloves make up 49% of its product mix compared with the more nitrile-heavy glove players like Hartalega (95% nitrile, 5% latex) and Kossan (76% nitrile, 24% latex).

“We understand that Sri Trang has been cutting ASP in order to gain market share,” said the report.

In addition, Hartalega could be facing stronger ASP pressure due to its premium pricing and in the times of excess capacity, greater bargaining power is in the hands of buyers.

Hence, Hartalega may see margin compression in the coming quarters.

Jet shares nosedive after flights grounded, lenders ‘hopeful’

MUMBAI, April 18 — Jet Airways shares plunged more than 32 per cent today, hours after the Indian carrier’s final flight landed following a decision to ground its entire fleet. The Mumbai-based carrier is on the edge of bankruptcy and has failed…

How 5G drove moves by Apple, Qualcomm and Intel

SAN FRANCISCO, April 18 ― Apple Inc and Qualcomm Inc on Tuesday settled an acrimonious two-year legal dispute. Shortly afterward, Intel Corp said it will exit the smartphone modem chip business. The entire drama played out as the mobile phone…

AirAsia shareholders approve US$768m deal with Castlelake

PETALING JAYA: AirAsia Group Bhd has obtained shareholders’ approval for the disposal of 25 aircraft to Castlelake LP for US$768 million (about RM3.2 billion), which will free up cash for the group’s digital business plans.

Almost 100% of its shareholders voted in favour of the deal, according to the carrier’s filing with the stock exchange.

AirAsia Group CEO Tan Sri Tony Fernandes declined to speak to the media at its EGM today.

However, he said in a tweet that the move will result in the group having more cash for its digital business, and enable it to be asset-light.

“Selling our aircraft monetises all our aircraft at high prices and avoids residual risk, and allows us to return cash to shareholders and invest in our new digital business,” he said on Twitter today.

“Between accountants and analysts, investors get a raw deal. MFRS 16 had no impact of cash. I value companies on cash generation. Even with that standard and if you use P&L (profit & loss) for analysis, the impact of the new standard MFRS 16… the impact is about RM35 million a year. Not very material,” he added.

The disposal will be done via the sale of the group’s entire equity interest in Merah Aviation Asset Holding Ltd, which is held by the group’s indirect wholly owned subsidiary Asia Aviation Capital Ltd (AACL), to AS Air Lease Holdings 5T DAC, an entity indirectly controlled by US-based investment firm Castlelake.

In addition to the sale of shares of Merah Aviation, Castlelake will also purchase from AACL a total of four new aircraft to be delivered this year, as announced by the group in December last year.

The 25 aircraft comprising A320-200ceo and A320neo under Merah Aviation, together with the four new aircraft to be delivered (A320-200ceo), will be leased back to AirAsia Bhd and/or its affiliates.

Fernandes said in a statement in December last year that the transaction is part of AirAsia’s ongoing transformation into “something more than an airline”.

“As we move towards becoming a travel technology company, the disposal of these aircraft will not only unlock significant value but also bring us closer to our goal of being a truly digital company.

“Years ago, many analysts criticised us for having high gearing and owning assets. Now many understand why we did that. In a few years, our digital strategy will be understood as well,” he said.

Meanwhile, AllianceDBS Research said AirAsia’s higher leasing expenses post disposal of assets will more than offset the factors contributing to its steady outlook this year, and has cut its FY19 and FY20 earnings projections by 15% and 19.4% respectively.

“We made adjustments to our earnings to account for leasing expenses which costs more than owning an aircraft. We have also adjusted our fleet expansion plans in line with management guidance for an additional 18 aircraft for FY19. This brings the group’s consolidated ASK (available seat kilometre) growth to 9.8%, 5.5% and 4.8% for FY19, FY20 and FY21 respectively,” it said in its report today.

It maintained its “hold” rating for the stock, with a lower target price of RM2.38 which includes a 13 sen special dividend from the Castlelake sale.

The research house said the group’s outlook remains steady as the market leader in the industry with 41.7% market share and expansion plans are underway with 18 new aircraft for FY19.

“ASK is expected to grow at 9.8% and RPK (revenue per kilometre) at 10.1% backed by load factors of 84.7%. Subdued fuel prices would help support earnings. Ancillary income would also grow as AirAsia ramps up REDCargo and,” it said, noting that ancillary business contributed 20% to group revenue in FY18.

For the longer term, it favours the stock for exposure in the e-commerce business which could potentially benefit from the upcoming growth.

Russia's Deripaska ready to give up control of van maker GAZ as sanctions bite

NIZHNY NOVGOROD, April 17 — Germany's Daimler and some others have stopped dealing with sanctions-hit van maker GAZ, controlled by Russian businessman Oleg Deripaska, he told reporters, adding he was ready to give up control of the company….