Business Business en MIDF expects better stock market performance in 2018
After being the worst performing stock market in Southeast Asia this year with merely a 6.7% return year to date, MIDF Amanah Investment Bank Bhd Research Head of strategy & quantitative analytics Syed Muhammed Kifni Syed Kamaruddin sees a better outlook for the equity market next year given that there has been a recovery in corporate earnings and share price movements since the second half of 2016 and the momentum continued throughout 2017.

Speaking at a media briefing on the 2018 market economic outlook here today, he noted that the underperformance of the Malaysian equity market compared with its regional counterparts in the second half of this year was due to selling pressure arising from the “pre-election” effect.

However, drawing reference to the market performance trend during 13th GE, he believes the situation will reverse with a “relief rally” once the ballot results are out, as share prices and corporate earnings are expected to see an upturn.

“Right after (the 13th) election, we outperformed. We gained back all our pre-election discount. The Monday after GE13, the market shot up 130 points,” he said.

The local equity market, which saw strong momentum last week, is projected to end the year at around 1,740 points before reaching a new high of 1,900 points in 2018, with the banking stocks to be the growth driver.

The FBM KLCI closed 1.43 points or 0.08% lower at 1,751.64 today.

Despite registering positive foreign fund flows, MIDF Amanah chief economist Dr Kamaruddin Mohd Nor cautioned on the challenges to heed in terms of possible interest rate increases by Bank Negara Malaysia next year as well as developments in the home country of investors.

Based on MIDF’s baseline assumptions and barring any surprising upside in terms of economic growth and inflationary pressure, Bank Negara is projected to increase the Overnight Policy Rate (OPR) by 25 basis points to 3.25% in 2018.

As for economic growth, he expects the gross domestic product growth to moderate to 5.5% in 2018 from the forecast 5.8% growth this year due to the high base effect.

Meanwhile, the ringgit is seen climbing to RM3.95 against the US dollar by the end of 2018, buoyed by the interest rate tightening by global central banks, especially the US Federal Reserve, stable commodity prices, continued robust economic growth, the OPR hike and the fiscal deficit reduction.

For this year, the local unit is expected to settle at RM4.05 to the dollar. As at 5pm today, it was up 0.02% at 4.0855.]]>
Business Mon, 18 Dec 2017 06:32:12 +0000 V Ragananthini 512918 at
GLCs crowding out private investment, says ADB economist
In his recent policy paper titled “Government-Linked Companies: Impacts on the Malaysian Economy”, he said private firms tend to invest less in industries where GLCs are dominant, as the latter are seen to have preferential access to government contracts and benefit from regulations.

Based on his study, Menon said he found that when GLCs are dominant in an industry, investment by private firms in the sector is significantly negatively impacted.

Conversely, when GLCs do not dominate an industry, the impact on private investment is not significant.

“This suggests a negative relationship between the share of GLCs in an industry and the rate of investment by private firms,” he said.

Using either the industry share of operating revenue or income as a proxy for market share, Menon said he found that GLCs are most dominant in utilities (93%) and transport and warehousing (80%).

Nevertheless, he said GLCs tend to play a dominant role in all sectors except for some food-related, mineral, and services industries.

Meanwhile, Jayant said despite the Economic Transformation Programme undertaken by the government previously to reduce its role in the country’s business, GLCs’ shares in the FTSE Bursa Malaysia Kuala Lumpur Composite Index of the stock market increased from 43.7% to 47.1% between 2011 and 2015.

Although the programme was declared a success when it was concluded in 2015, he said the net result left the authority playing an even greater role in business.

Jayant said this is given that the divestment programme was associated with an even more aggressive programme of diversification, where government entered new sectors as it appeared to be reducing its influence in existing ones.

Therefore, he recommends that the government implement a transparent, time-bound and committed programme of divestment, seeing it as the only real solution.

“Commitment to divestment is admittedly complicated and requires a separate study focusing on much broader issues. But at a minimum, it would seem to require confronting vested interests and addressing the underlying political economy motivations that continue to provide a lifeline for GLCs and allowing them to flourish,” Jayant said.]]>
Business Mon, 18 Dec 2017 14:14:22 +0000 513103 at
Kenanga launches Malaysia's first AI-leveraged investment fund
The fund leverages on the breakthroughs in AI to identify profit opportunities from short-term predictive relationships in pricing and volume data. It then constructs portfolios with a focus on capital preservation based on forecasts of instruments’ movements.

It said in a statement that the fund aims to deliver absolute returns in any market condition by diversifying into global index futures with a long/short strategy.

“An example of this is the target fund’s (TCM Global Index Fund (Cayman) Ltd) performance in 2016, it was able to profit from the various opportunities in asset mispricing to deliver a return of 23.2% compared to the S&P 500 benchmark of 12.0%,” said Kenanga Investors executive director and CEO Ismitz Matthew De Alwis.

Kenanga Global Multi Asset Fund feeds into the TCM Global Index Fund, which is managed by Taaffeite Capital Management, LLC.

The TCM Global Index Fund is an absolute return fund measured against a benchmark of 15% per annum over two to three years which profits from the daily movement of global equity and fixed income indices. Its underlying assets are a long/short basket of 25 liquid global indices rebalanced once a day based on probabilistic forecasts of how indices will move over the next 24 hours.]]>
Business Mon, 18 Dec 2017 14:11:05 +0000 513100 at
Coastal Contracts starts arbitration against guarantors of aborted JSK Gas deal
At the time JSK Gas was the 99% owner of PT Benoa Gas Terminal, a LNG regasification service provider.

Coastal said it filed an arbitration petition against an individual and a company, a company and two individuals, for breach of the MoU signed between Coastal, the sellers and the company, and breach of two deeds of personal guarantee executed by the guarantors in favour of Coastal.

Following the MoU, Coastal lodged a refundable deposit in an amount of US$6 million with the sellers and/or the company on Aug 9, 2016. After the MoU was terminated on Oct 28, 2016 Coastal was entitled to a refund of the full deposit.

"The guarantors were to guarantee the refund by the sellers and/or the company of the deposit, and/or undertook to refund to Coastal the deposit. However to-date, the respondents have failed to fully refund Coastal the deposit and there is still an outstanding of US$3.85 million due and owing to Coastal, excluding interest and costs," Coastal said in a stock exchange filing.

Apart from the amounts claimed by Coastal, the arbitration proceedings are not expected to have any other potential financial impact on Coastal, its subsidiary(ies) and/or Coastal’s group of companies.

Coastal said it has engaged external legal counsel to represent and assist it in the arbitration proceedings and will announce any further developments on the arbitration proceedings at the appropriate time.

"As the rules applicable to the arbitration proceedings include provisions for the confidentiality of the arbitration proceedings, Coastal is unable to disclose any further information with regard to the arbitration proceedings at this stage."

Coastal closed 2.33% higher at RM1.32 with 40,400 shares traded.]]>
Business Mon, 18 Dec 2017 10:27:12 +0000 513075 at
Multi-Usage goes to court over 3 shareholders' notice to appoint new directors
On Dec 12, Multi-Usage received three separate notices from Ong Ban Huat, Lim Chai Loy and Chua Yong Chiang to nominate and appoint new directors at its upcoming AGM on Dec 29 in Sungai Pelek, Selangor, namely Chan Jee Peng, Chan Huan Ping, Khoo Ken Seong and Ong Kean Peng. Chua and Lim are also in the new line-up. Chua nominated Lim, while Lim nominated Chua to the board.

Multi-Usage current directors are Ang Kim Cheng @ Ang Teng Kok, Ang Hwei Chyn, Roslan Nasir, Kenneth Lim Keat Chye and Ho Pui Hold, while Tan Chew Hua was suspended in August after the company claimed he refused to cooperate in an internal investigation conducted by the company’s solicitor.

Multi-Usage is also requesting an order restraining the defendants from exercising any voting or other rights attached to the company shares.

The company said it is in the process of extracting the writ and statement of claim duly sealed by the court for the purpose of serving on the defendants.

“Any further material development of the above matter will be announced to Bursa Malaysia Securities Bhd in due course.”

Multi-Usage reported a net loss of RM1.09 million for the first quarter ended Sept 30, 2017 against a net profit of RM535,000 in the previous corresponding period. It is engaged in a total of 16 material litigation as at Aug 22, 2017.

The company is involved in property development, contracting works, manufacturing and trading of cement products.

Its shares fell one sen or 1.64% to close at 60 sen today on some 20,000 shares done.
Business Mon, 18 Dec 2017 12:19:43 +0000 513080 at
Ekovest to table IWCity proposal to shareholders, KPRJ agrees to sell
"It is the intention of Ekovest to acquire as many IWCity shares as possible via acquisitions from the open market and/or direct business transactions during the offer period at a consideration of not more than the offer price of RM1.50," Ekovest said in a stock exchange filing.

A proposed offer to acquire the 62% stake it does not own in IWCity is to be tabled to non-interested shareholders at an EGM, targeted to be held in mid February 2018 or earlier. The proposed offer is for either RM1.50 cash for an IWCity share, or one Ekovest share for one IWCity share.

Tycoon Tan Sri Lim Kang Hoo, who controls both Ekovest and IWC, made a proposal to merge the two companies after a proposed deal between IWC and parent company Iskandar Waterfront Holdings Sdn Bhd fell through.

The proposed offer is conditional upon, in the event of a voluntary general offer, Ekovest individually holding more than 50% of the voting shares of IWCity; and should it become a mandatory general offer, Ekovest and the persons acting in concert collectively holding more than 50% of the voting shares of IWCity.

The cash consideration for the exercise will be funded using a combination of bank borrowings and internally generated funds of Ekovest, which is yet to be finalised.

IWCity has interest in properties in Plentong Land, Danga Land and Sutera Land, which collectively have a market value of RM3.68 billion.

The total audited net book value of land held for property development and property development costs of the IWCity as at Dec 31, 2016 was RM1.01 billion.

Based on the offer price of RM1.50 per offer share, the implied total purchase consideration for Ekovest to acquire a 100% equity interest in IWCity is RM1.26 billion.

"From Ekovest management’s perspective, this means that Ekovest will only need to pay RM28.81 per square foot to have full access or control over the IWCity group’s 1,000-acre land bank, which is currently valued at RM84.49 per square foot."

In an outright land purchase, Ekovest may only be able to acquire 41 acres and 257 acres of the same land bank.

The offer price of RM1.50 represents a discount of more than 50% to the estimated revised net asset value of IWCity of RM3.03 per IWCity share.

The group said the enlarged land bank of more than 1,000 acres will strengthen its property development business. Ekovest can also expand its concept of river beautification and rehabilitation along the Gombak River to Johor Baru, considering the land bank of the IWCity group along the Tebrau River.

IWCity is expected to contribute positively to future earnings of the Ekovest group, backed by the land disposal to Greenland Tebrau and launch of new property development projects.

Ekovest's share price fell half a sen or 0.54% to close at 91.5 sen with 744,400 shares changing hands. IWCity's share price closed unchanged at RM1.32 with 1.5 million shares changing hands.]]>
Business Mon, 18 Dec 2017 13:22:45 +0000 513094 at
Melewar Industrial, Mycron Steel to decide rights shares prices later
TA Securities Bhd announced on behalf of the two companies through their respective stock exchange filings that the issue price of the rights shares will be determined and fixed by the board of directors at a later date.

The decision is expected before the announcement entitlement date, and after receiving the relevant approvals and taking into account the historical price movements of the stocks.

Earlier, the indicative prices for Melewar and Mycron's rights shares were set at 20 sen at 50 sen respectively.

The boards of directors of both companies are of the view that the proposed revisions will provide the board with flexibility of determining the issue price of the rights shares at an appropriate discount to the of theoretical ex-rights price of both Melewar and Mycron shares as well as the allocation of proceeds raised from the proposed rights issue.

Based on 20 sen per rights share, Melewar was expected to raise up to RM45.11 million, of which RM20.21 million will be used to subscribe Melewar's entitlement under Mycron's rights issue exercise. For Mycron, the maximum proceeds from the rights issue was supposed to be RM28.36 million.

Melewar is the majority shareholder of Mycron with a 71.26% equity interest.

Melewar's share price was unchanged at 25 sen with some 218,000 shares done, while Mycron shares gained 0.97% to close at 52 sen with some 250,900 shares changing hands.]]>
Business Mon, 18 Dec 2017 12:04:36 +0000 513093 at
TNB on track to be top 10 global utility by 2025
To meet the 2025 target, its efforts will be guided by its Strategic Plan (2017-2025), where one key pillar focuses on expansion in key growth markets in Southeast Asia, South Asia and the Middle East, as well as other markets, in which it sees opportunities to add value to TNB’s non-regulated revenue portfolio. This also includes a focus on renewable energy (RE).

The group will also embark on providing more digitised and automated services that will make its electricity systems ready for customers to generate their own electricity through solar photovoltaic and sell the surplus to the grid, enabling higher productivity, system performance with better experience.

Investments will also go into digital technologies towards improving customer experience and unlocking opportunities beyond the sale of electricity.

Azman said electricity demand has begun to show moderate growth as expected, with unit electricity demand growth expanding just 1% in the financial year ended Aug 31, 2017 (FY17). He said while TNB has achieved much thus far, it realised it cannot remain where it is.

“As emerging countries grow into being less industrialised, they require less electricity, they go for services and we’re cognisant of this fact. Therefore we need to find a different path of growth. That’s why we’re not only maintaining our dominance in providing electricity to the domestic market, we need to expand overseas,” Azman told a press conference after TNB’s AGM today.

He added that in TNB’s present investments overseas, it is not a passive investor but a strategic one learning the ropes of operations there.

“Apart from board seats, we have management seats. We’re developing our talent into a global talent powerhouse. We find that going into global operations is not that difficult for us because utility has a lot of things in common,” said Azman.

He said TNB has no plans for a rights issue to finance its overseas expansion. As at Aug 31, 2017, its deposits, bank and cash balances stood at RM5.06 billion.

He also said TNB has no intention to downsize for next year.

“The growth factor that we’re embarking on requires resources. We’re using our existing resources to fuel this growth. We don’t see at this point in time any downsizing,” said Azman.

He added that TNB is predominantly looking at investments opportunities, including RE projects in developing countries, but has left some room for investments in developed countries as well. He said it is looking for investments with a strategic fit and yet conservative to TNB, which will not exceed its 55% optimum level of gearing.

CFO Datuk Fazlur Rahman Zainuddin said for the next few years until 2025, conventional power is still going to make up the bigger portion in its earnings, but noted that TNB wants to achieve conventional and RE contribution to earnings of 70:30, from 90:10 now.

TNB has earmarked a recurring capital expenditure (capex) of RM10.5 billion next year for transmission, distribution and energy generation purposes. In FY17, its capex was RM12.1 billion.

Meanwhile, when asked if TNB is selling its stake in Sabah Electricity Sdn Bhd (SESB), Azman said it is discussing with the Ministry of Energy, Green Technology and Water (Kettha), with hopes that Kettha and the government will come to an agreement next year “to see what is the best option”. TNB is of the opinion that SESB should undergo a tariff review to make it more sustainable.

“In terms of the cost to generate electricity versus the tariff, there are some sustainable issues and structural matters to be studied in Sabah, which we’re currently going through. Sabah is looking at the overall electricity industry structure from tariff setting, fuel mix, subsidies to operations. A lot of things need to be addressed before we talk about ownership,” said Fazlur.]]>
Business Mon, 18 Dec 2017 06:25:32 +0000 Ee Ann Nee 512917 at
Iris Corp bags RM4.96m passport system maintenance job
The job comes after group's contract to supply e-passport chips to the Malaysian government was not renewed in May 2016. Felda Investment Corp holds a 19.4% stake in Iris.

The group told Bursa Malaysia that the contract is for the provision of maintenance services of equipment, software, and facial live capture image (application system) at all passport recipient and issuance offices of Immigration Department of Malaysia.

It is for a period of three years from Jan 1, 2018 to Dec 31, 2020 and is expected to contribute positively to Iris' earnings and net assets per share for the financial years ending March 31, 2018 onwards until the expiry of the contract.

Iris' share price rose 1 sen or 6.9% to close at 15.5 sen on some 17.41 million shares done.]]>
Business Mon, 18 Dec 2017 05:24:18 +0000 512909 at
Foreign inflows in line with Bursa’s movement
In fact, there has been four consecutive weeks of gradual foreign net inflow into Malaysia.

MIDF said based on preliminary data from Bursa Malaysia which excluded off market trades, foreign investors bought RM495.3 million net for the week ended Dec 15.

Besides that, MIDF said the FBM KLCI also took the market by surprise, leading other global benchmarks with a whopping 1.85% weekly gain.

It said the local benchmark closed above 1,750 points, a level not seen in more than a month.

MIDF added that the ringgit resumed its strengthening streak for the seventh week, appreciating 0.20% to finish at RM4.0795 against the greenback.

Meanwhile, the research house said the global equity markets ended the week mixed amidst a raft of central bank decisions by major economies.

“Despite a bout of uncertainty on the tax bill plans, all three major US benchmarks sealed fresh closing highs on Friday, each locking in weekly gains above 0.9% after Senator Marc Rubio expressed his support for the bill.

“The dollar index followed suit, advancing 0.47% the same day to settle at 93.932 points while marking its third straight week of gains,” it said.

MIDF noted that the Brent crude oil price dropped slightly by 0.27% for the week, to settle at US$63.23 per barrel, weighed down by US production which is reaching close to top producers such as Saudi Arabia and Russia.

“It is now the third uninterrupted week of foreign funds leaving Asia with the provisional aggregate data from the seven Asian exchanges suggesting that investors classified as “foreign” disposing -US$649 million net last week,” it added.]]>
Business Mon, 18 Dec 2017 12:44:19 +0000 513088 at