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Shareholders positive after Lotte’s bumpy start

KUALA LUMPUR: Lotte Chemical Titan Holdings Bhd shareholders remain buoyant on the prospects of the petrochemical firm after a series of unfortunate events – share price slump, stop-work order and fire at its plant – in the first six months of listing marred the fanfare of being one of the largest listings the stock exchange has seen in the last five years.

Shareholders met by SunBiz at the group’s AGM today said they are more relieved now after all the distractions, as the business operations are back on the right track.

They acknowledged that while the share price movement is something beyond the group’s control, its rebound to above RM6 is seen as a good sign for the group which hit a low of RM4.14 just a month into its listing at RM6.50.

“I managed a handsome paper gain after I bought into the stock when it fell to below RM5 last year,” a minority shareholder said.

At today’s market close, the stock gained 2 sen or 0.3% to RM6.23, just 4.2% shy from its initial public offering (IPO) price which was slashed from the RM8 set initially, due to weak market sentiment.

Its share price dipped to a low of RM4.14 last August after announcing a 72% plunge in second-quarter net earnings ended June 30, 2017 on the back of high inventory cost carried forward from turnaround activities as well as higher production cost due to water supply interruption.

Giving truth to the adage of trouble coming in threes, in September, Lotte’s Pasir Gudang factory caught fire due to contact between residual vapour from the quench water drain pit and the steam line, causing an estimated loss of less than RM50,000.

The same plant was also issued a stop-work order by the Department of Environment in October after being identified as the source of a stench, which reached Singapore’s shores.

Looking ahead, Lotte’s executive vice-president of corporate planning Philip Kong believes the group will continue to see a reasonable profit margin given strong demand for petrochemical products with limited market supply capacity.

This is despite the rising oil prices, which could put pressure on petrochemical players. As at 7pm today, Brent crude oil stood at US$74.95 a barrel.

“Our business is a margin game. As long as there is strong demand with limited supply, the margin will be maintained. If oil prices go up, the polymer prices will pick up as well,” he told reporters after the group’s first AGM since its listing.

Lotte produces olefins and polyolefins, which are raw materials for plastic product manufacturing.

For the financial year ended Dec 31, 2017, its net profit declined 19.1% from RM1.32 billion to RM1.06 billion, due to lower sales volume resulting from two routine statutory turnaround exercise at the Malaysian site and water disruption in Johor.

For 2018, its utilisation rate is expected to increase to 90% from 75% currently in the absence of plant shut down and water disruption.

Speaking on the integrated petrochemical facility in Indonesia, Kong said Lotte will make a final decision on its planned integrated petrochemical facility in Indonesia within the year or early next year. The estimated cost of the project is between US$3 billion (RM11.7 billion) and US$4 billion (RM15.6 billion) and is scheduled to be completed by 2023.

He added that Malaysia and Indonesia, which make up 70% of the overall business, remain the two important markets for Lotte on the back of huge population and a slight premium against the international prices.


Nestle records marginal increase in Q1 earnings

PETALING JAYA: Nestle (Malaysia) Bhd recorded a marginal increase in its net profit for the first quarter ended March 31, 2018 to RM231.22 million from RM230.69 million a year ago.

In a filing with Bursa Malaysia, Nestle said its operating profit was higher by RM4 million at RM303 million while pre-tax profit rose RM4 million to RM295 million.

“A satisfactory bottom line performance considering the first quarter of 2017 was already on a high base. The impact of slightly higher commodity prices as well as from increased marketing investments for the Chinese New Year sales was compensated by a strong revenue growth,” it said.

Revenue for the quarter rose 4.2% to RM1.43 billion from RM1.37 billion a year ago driven by higher domestic sales and export sales, which grew 4.4% and 3.4% respectively.

“Relevant product innovations with the right marketing and promotional support helped the group to achieve high sales during Chinese New Year,” it said.

The group said it will continue with its “Fuel the Growth” strategy, which strives for efficiency increases all over the supply chain, reinvesting realised improvements and intensifying its trade and consumer promotions.

The group's share price was down 50 sen to RM147.50 with some 167,800 shares changing hands.


Vizione share price falls after profit guarantee news

PETALING JAYA: Vizione Holdings Bhd’s share price fell one a sen this morning after it announced that its newly acquired Wira Syukur (M) Sdn Bhd achieved 34.6% of a two-year profit guarantee, in the first financial year.

At noon, its share price was stood at 13 sen with 8.76 million shares traded.

Yesterday, Vizione told Bursa Malaysia that Wira Syukur achieved 34.6% of the guaranteed profit in the financial year ended Dec 31, 2017.

Last year, Vizione bought into Wira Syukur for RM280 million with a profit guarantee of RM82.59 million for two financial years, just ended Dec 31, 2017 and ending Dec 31, 2018.


Axis REIT shares fall slightly after land buy

PETALING JAYA: Axis Real Estate Investment Trust's (Axis REIT) share price fell slightly by 0.71% this morning, after announcing that it is buying two parcels of land in Shah Alam for RM87 million.

At 11.08am, the stock was down one sen to RM1.39 with some 22,100 shares changing hands.

Yesterday, the REIT told the stock exchange that the acquisition will raise its asset under management to RM2.64 billion.


Priceworth signs MoU with Foshan

PETALING JAYA: Priceworth International Bhd has signed a memorandum of understanding (MoU) to supply on a yearly basis 60,000 cubic metres of container flooring worth RMB192 million (RM120 million) to Chinese manufacturer Foshan Zhengsen Woodworking Co.

The company’s share price was down 1.5 sen or 7.5% to 18.5 sen with some 11.1 million shares changing hands. Its share value was fallen almost 23% in the last one year.

The deal which is expected to be finalised in six months, will see the construction of a RM10.5 million new container flooring production line that will be funded through a RMB4 million advance payment from Foshan Zhengsen and hire purchase financing of RM8 million.

Priceworth’s subsidiary Sinora Sdn Bhd signed the MoU on April 21 for the intended supply of container flooring to Foshan Zhengsen, a pioneer and manufacturer in the Chinese container flooring market based in Foshan City, Guangdong.

“This development represents an exciting opportunity for Priceworth, as we are looking at a five-year contract,” said executive director Richard Koo after signing the MoU in Singapore. “This new product opens up a huge market to Priceworth. With China’s One Belt One Road Initiative, we expect demand for container flooring to grow significantly.”

“At the agreed price and volume of 60,000 cubic meters a year, the contribution margin is about 20%. With a consistent supply of timber from our harvesting operations, the Priceworth group will be able to fully utilise and increase the production efficiency of its production assets once we finalise this contract,” Koo added.

Priceworth in the last two months has seen a jump in monthly log production with better harvests mainly from operations in Forest Management Unit 5 (FMU5), Sabah. In February, it saw the highest production volume since July 2012, up 57% from a year ago.

“For the last five months, our log production has stayed consistently above 14,000 cubic metres, and we expect our (log) production to further increase with improvement in our harvesting efficiency,” said Koo.

Priceworth has been operating in two compartments within FMU5, which it proposed to acquire in 2016, and was recently given approval to begin harvesting in another two compartments. Priceworth also has several other timber concession areas covering 27,900ha.

The group proposed to acquire FMU5 for RM260 million in October 2016, through subsidiary GSR Pte Ltd. It is also planning a Singapore Exchange-listing for GSR, which will also acquire sister company Sinora, which is Priceworth’s plywood manufacturing arm.


Priceworth in MoU to supply container flooring to China’s Foshan Zhengsen

PETALING JAYA: Priceworth International Bhd has signed a memorandum of understanding (MoU) to supply on a yearly basis 60,000 cubic metres of container flooring worth RMB192 million (RM120 million) to Chinese manufacturer Foshan Zhengsen Woodworking Co.

The company’s share price was down 1.5 sen or 7.5% to 18.5 sen with some 11.1 million shares changing hands. Its share value was fallen almost 23% in the last one year.

The deal which is expected to be finalised in six months, will see the construction of a RM10.5 million new container flooring production line that will be funded through a RMB4 million advance payment from Foshan Zhengsen and hire purchase financing of RM8 million.

Priceworth’s subsidiary Sinora Sdn Bhd signed the MoU on April 21 for the intended supply of container flooring to Foshan Zhengsen, a pioneer and manufacturer in the Chinese container flooring market based in Foshan City, Guangdong.

“This development represents an exciting opportunity for Priceworth, as we are looking at a five-year contract,” said executive director Richard Koo after signing the MoU in Singapore. “This new product opens up a huge market to Priceworth. With China’s One Belt One Road Initiative, we expect demand for container flooring to grow significantly.”

“At the agreed price and volume of 60,000 cubic meters a year, the contribution margin is about 20%. With a consistent supply of timber from our harvesting operations, the Priceworth group will be able to fully utilise and increase the production efficiency of its production assets once we finalise this contract,” Koo added.

Priceworth in the last two months has seen a jump in monthly log production with better harvests mainly from operations in Forest Management Unit 5 (FMU5), Sabah. In February, it saw the highest production volume since July 2012, up 57% from a year ago.

“For the last five months, our log production has stayed consistently above 14,000 cubic metres, and we expect our (log) production to further increase with improvement in our harvesting efficiency,” said Koo.

Priceworth has been operating in two compartments within FMU5, which it proposed to acquire in 2016, and was recently given approval to begin harvesting in another two compartments. Priceworth also has several other timber concession areas covering 27,900ha.

The group proposed to acquire FMU5 for RM260 million in October 2016, through subsidiary GSR Pte Ltd. It is also planning a Singapore Exchange-listing for GSR, which will also acquire sister company Sinora, which is Priceworth’s plywood manufacturing arm.


Ideal United Bintang receives takeover offer

PETALING JAYA: Property developer Ideal United Bintang International Bhd has received an unconditional mandatory takeover offer from its chairman Tan Sri Ooi Kee Liang for 54 sen per share and 1 sen per warrant.

Ooi, together with his spouse Puan Sri Phor Li Wei and ICT Innotech Sdn Bhd are the joint offerors.

This offer came after ICT Innotech, in which Ooi and Phor holds a 50% stake each, acquired a 26.9% stake in Ideal United Bintang from Bumimaju Gaya Sdn Bhd and Lakaran Asia Sdn Bhd for 54 sen per share, bringing its shareholding to 54.06%, triggering a mandatory general offer (MGO).

The offer price represents an 11.48% discount to its five-day volume weighted average price of 61 sen per share. It will remain open for acceptances until 5pm on the 21st day of the posting date.

The offeror intends to maintain the listing status of Ideal United Bintang.

Ideal United Bintang said the board will hold a meeting to deliberate the offer and make an announcement in due course.

Its share price fell 2.5 sen or 4% to close at 59.5 sen today on some 4,000 shares done, while its warrants were unchanged at 11 sen.


PUC to set up joint research lab with Chinese institute

PETALING JAYA: ACE Market-listed company, PUC Bhd through its wholly-owned subsidiary PUC (Malaysia) Sdn Bhd has entered a three-year joint agreement with Chinese industrial research institute ShenZhen Institutes of Advanced Technology (Siat) of the Chinese Academy of Sciences (CAS) , which will see it invest RM6 million to set up the Presto Intelligence Technology Laboratory.

PUC’s share price was down 2.5 sen today to 23.5 sen with some 41.3 million shares changing hands.

The two will work together in the development of several new cutting-edge technologies such as the development of artificial intelligence (AI) technology, including Electronic Know Your Customer (E-KYC), facial recognition platforms, outdoor media demographics analyser as well as photo editing tools and many more, which would enhance PUC’s electronic payment and media services.

This innovative technology can further be applied for commercial purposes on top of enhancing PUC’s e-payment and media services which will contribute positively to the group.

Group managing director and CEO Cheong Chia Chou said “This collaboration reflects the group’s continuous journey to enhance our technological capabilities and pave the way for new breakthroughs in the world of technology. We believe this will benefit the group greatly as we focus on driving our new media, e-commerce, and financial technology-related businesses.”

“Not only that, Siat has numerous labs and resources that are crucial and valuable to our research efforts, and the transfer of knowledge and technology that is expected to take place during this duration will further elevate our expertise, putting us on par with various industry players with proven technologies. This collaboration will also strengthen the group’s objective as a catalyst to the emergence of a digital ecosystem in Malaysia, thus positioning Malaysia as a technology leader in this region,” he added.

Siat aims to enhance the innovative capacity of the equipment manufacturing and service industries in the Guangdong-Hong Kong region, promote the development of emerging industries possessing their own proprietary intellectual property, and become a world-class industrial research institute. Siat has fostered long-term partnerships with tech giants Huawei and Tencent as well as AI leader SenseTime, amongst others.


Caely Holdings to expand undergarment biz for an eventual listing

PETALING JAYA: Caely Holdings Bhd plans to expand its undergarments business through potential collaboration with China-based lingerie companies and leveraging on the presence of its substantial shareholder Ni Hsin Resources Bhd in Italy, with the ultimate goal of listing the division on one of the stock exchanges.

Executive chairperson Datin Fong Nyok Yoon said the listing will help Caely unlock value and get higher valuations which will reward its shareholders. Recently, the Hong Kong Stock Exchange saw a number of IPOs of undergarments companies based in China.

Ni Hsin, a company in the manufacture, sale, and distribution of premium stainless-steel cookware products, convex mirrors and clad metal owns a 13.62% in Caely.

“In order to create an enhanced and sustainable earnings and business prospects for Caely, we are currently in talks with several China-based lingerie companies for potential collaboration. This will open the door for Caely to penetrate into the vast Chinese market. The company foresees robust growth potential for the ladies’ undergarment industry. This is largely underpinned by the increasing number of fashion-centric women and their higher purchasing power in the region. Besides targeting the growing affluent Chinese market, we also plan to leverage on Ni Hsin's existing presence in Italy, Europe, which is widely recognised as the fashion country of the world to market the lingerie products by Caely, bringing it to the next international level. We are also looking to acquire companies that have synergies with the businesses of Caely,” Fong said in a statement today.

Established in 1986, the principal businesses of Caely are undergarments manufacturing, property development and construction with a total annual revenue of more than RM100 million catering to both local and export markets, under its own brand as well as other OEM brands.

On the positive synergies with Ni Hsin, Fong explained the company is exploring collaborative initiatives to market its PENTOLI products via Caely’s direct selling license, various marketing channels and joint training efforts.

With regard to its property development and construction segment, Fong said the focus would remain on building affordable houses with more projects in the pipeline.

Caely's share price was unchanged at RM1.13 with some 1.9 million shares changing hands as at 2.19pm.


Sinotop shares flat on RM164m proposal for construction firm

PETALING JAYA: Sinotop Holdings Bhd share price opened flat despite a potential RM164 million bid to buy a 60% interest in construction company Asianmax Corp Sdn Bhd on Friday.

In the last one year the company has lost 43% of its share value. It closed unchanged in morning trade at 43 sen.

On Friday, Sinotop announced that its proposal for Asianmax was to strengthen its existing project management and infrastructure construction-related businesses.

The company told Bursa Malaysia it may consider a rights issue to fund the deal which would include the use of internally generated funds and/or bank borrowings.

The group which is involved in the production of customised woven loom-state fabrics from cotton, synthetic and mixed yarn, said it had entered into a term sheet with Datuk Justin Soo for the proposed acquisition, which would exclude one of Asianmax’s subsidiary, Johnson Fluid Engineering Sdn Bhd, as it is not involved in the business of construction. The term sheet is subject to a definitive share sale agreement between Sinotop and Soo.

Soo will provide a profit guarantee of an aggregate amount of not less than RM50 million for the financial year ending 2019, 2020 and 2021 collectively.

Subject to a definitive agreement, the purchase consideration will be satisfied either through wholly in cash, wholly by the issuance of new redeemable convertible preference shares (RCPS) in Sinotop based on terms to be mutually agreed upon by the company and the vendors at an issue price of 42 sen per RCPS or a combination of both.