Tuesday, 25 October 2011

KL shares end mixed

KUALA LUMPUR: Bursa Malaysia closed mixed today with the benchmark index recouping its earlier losses as key heavyweight counters staged a late rebound in line with the mixed trading on regional marts, dealers said.

The benchmark FBM KLCI rose 7.78 points, or 0.54 per cent, to close at 1,457.80, after opening 3.44 points better at 1,453.46.

The benchmark index moved between 1,448.12 and 1,457.80.

A dealer said the market saw late bargain hunting which managed to reverse the earlier easy trend.

"However, the players are still cautious ahead of tomorrow's meeting by European policymakers to resolve the eurozone debt crisis," he said.

The Finance Index rose 46.649 points to 13,147.14, Plantation Index added 31.86 points to 7,386.56 and the Industrial Index gained 21.30 points to 2,685.02.

The FBM Emas Index advanced 43.5 points to 9,928.19, FBM70 Index was up 50.25 points to 10,658.68 and FBMT100 jumped 50.77 points to 9,751.06.

The FBM Ace, however, eased 43.21 points to 3,973.69.

Decliners led losers by 373 to 299 while 289 counters were unchanged, 500 untraded and 26 others were suspended.

Turnover declined to 950.64 million worth RM1.075 billion from 1.238 billion shares worth RM1.3 billion yesterday.

Volume on the Main Market fell to 697.91 million shares worth RM1.044 billion from 936.677 million shares worth RM1.28 billion Monday.

Turnover on the ACE market declined to 182.04 million units valued at RM24.943 million from 193.184 million units valued at RM24.509 million previously.

Warrants fell to 67.022 million shares worth RM5.11 million from 105.430 million shares worth RM7.119 million yesterday

Among actives, REDtone International earned 1.5 sen to 29.5 sen and AirAsia rose four sen to RM3.88.

The Media Shoppe and Systech, however, fell one sen each to 9.5 sen and 11 sen respectively.

Of the heavyweights, Maybank added two sen to RM8.27, CIMB increased seven sen to RM7.26, Sime Darby earned 21 sen to RM8.85 and Petronas Chemical added three sen to RM6.19.

Consumer products accounted for 29.18 million shares traded on the Main Market; industrial products 205.09 million; construction 32.62 million; trade and services 187.84 million; technology 22.43 million; infrastructure 18.22 million; finance 106.112 million; hotels 672,9000 properties 72.69 million; plantation 21.61 million; mining 65,000; REITs 1.33 million; and closed/fund 52,900 -- BERNAMA

The Ascott to run Somerset Puteri Harbour

KUALA LUMPUR:Nusajaya Consolidated Sdn Bhd (NCSB) has signed two agreements with The Ascott Ltd to provide technical advisory services as well as manage and operate 204 units of serviced residences, to be known as "Somerset Puteri Harbour", in Nusajaya, Johor.

The project will be developed by NCSB, a 50:50 joint venture between United Malayan Land Bhd (UMLand) and UEM Land Bhd (UEM Land), a wholly-owned unit of UEM Land Holdings Bhd.

In a joint statement today, UMLand and UEM Land said Ascott would provide technical advisory services to NCSB during the development of Somerset Puteri Harbour.

"As for the serviced residence management agreement, Ascott will manage and operate the serviced residences on behalf of NCSB upon its expected completion in 2013," it said.

The Somerset Puteri Harbour, a stylish waterfront serviced residence located in the enclave of Puteri Harbour, one of the catalyst developments within Nusajaya, Iskandar Malaysia, will be launched next month.

Somerset Puteri Harbour will be a four-storey serviced residence strategically located at the Puteri Harbour integrated waterfront and marina development in Nusajaya.

The serviced residence offers spacious apartments ranging from studio to three-bedroom units that come fully furnished with modern amenities. -- BERNAMA

Petra Energy approves private placemen

KUALA LUMPUR: Integrated oil and gas brown field services provider, Petra Energy Bhd (PEB), has approved a private placement of 19.50 million new ordinary PEB shares at 91 sen apiece.

In a statement today, PEB said the shares represented 9.09 per cent of its enlarged issued and paid-up capital.

Its executive director/chief executive officer, Kamarul Baharin Albakri, said the placement would boost PEB's efforts to strengthen its core competencies in project management capabilities, onshore fabrication services and fleet spread configuration.

"The placement will also allow the company to tap the robust market opportunities in enhanced oil recovery, top side major maintenance hook-up construction and commissioning and marginal oil fields.
"The timing is just right," he said.

He said the new growth opportunities were premised on the initiatives as planned under the government’s Economic Transformation Programme and Petronas' planned capital expenditure of about RM300 billion in rejuvenating existing oil
and gas fields, developing marginal fields and drilling of exploration wells.

"The initiatives would not only provide growth opportunities for the group in onshore and offshore services but also prepare the company for large contracts which are expected to be out for tenders in 2012 and beyond, given the vibrant industry landscape," he said.

He said PEB was also constantly exploring opportunities, including forging strategic alliances with other players.

"Through such partnerships, PEB would be in a better position to bid for bigger jobs," he said.

Kamarul said the company also planned to acquire vessels with a crane capacity of 400 tonnes.

In June this year, PEB leased space at Labuan Shipyard & Engineering Sdn Bhd to undertake minor and major fabrication works for oil and gas majors, he said.

"This is a step towards positioning the company to undertake future work volumes anticipated to come from offshore Sabah," he said. -- BERNAMA

KLIA Q3 passenger traffic up 10.4pc

KUALA LUMPUR: Passenger traffic at the Kuala Lumpur International Airport (KLIA) increased by 10.4 per cent to 9.54 million passengers in the third quarter of 2011 from 8.64 million passengers in the same period last year.

Of the total, 6.69 million were international passengers and 2.85 million were domestic passengers, Malaysia Airports Holdings Bhd (MAHB) said in a filing to Bursa Malaysia today.

It said that passenger movements at other airports under its management saw a 11.3 per cent increase to 6.6 million passengers in the third quarter this year from 5.93 million passengers previously.

MAHB said cargo movements at KLIA went down 0.6 per cent to 170.84 million kg from 171.94 million kg previously.

For the other airports, cargo movements decreased 8.9 per cent to 57.48 million kg from 63.11 million kg previously, it said.

The airport operator said KLIA's aircraft movements rose by 10.7 per cent to 68,040 in the third quarter of 2011 from 61,461 in the same quarter last year.

For the other airports, aircraft movements rose by 8.1 per cent to 91,152 compared with 84,307 previously, it added. - BERNAMA

TNB inks 21-year deal with FTJ Bio Power

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) today signed a Renewable Energy Power Purchase Agreement (REPPA) with FTJ Bio Power Sdn Bhd worth about RM18.4 million a year.

In a statement to Bursa Malaysia, TNB said FTJ Bio Power developed a small Renewable Energy (RE) power project under the Small Renewable Energy Power (SREP) Programme.

TNB said it has agreed to purchase the electricity from FTJ Bio Power Sdn Bhd for a period of 21 years.

The utility giant said the RE power plant developed by FTJ Bio Power, which utilises empty fruit bunches (EFB) as fuel, is located in Jengka, Pahang and will have an export capacity of 10.0 MegaWatt (MW) to TNB.

The total capacity under REPPA is currently 129.65 MW, it said.

The SREP Programme was launched by the government in May 2001 to promote the utilisation of renewable energy in power generation and to reduce emission of greenhouse gases.

According to TNB, the signing of the deal demonstrates TNB's continuous support for the success of the Government’s SREP Programme.

The deal will not have any effect on the issued and paid-up capital and will not have any material effect on earnings and net assets of TNB Group or on the shareholding of the substantial shareholders of TNB, the statement added. - BERNAMA

Supermax to expand its mart in China

KUALA LUMPUR: Supermax Corp Bhd, the world's second largest rubber glove maker, plans to further expand its market in China, says executive chairman, Datuk Seri Stanley Thai.

He said the company would further enhance its distribution in China in the next five years, starting 2012.

"Supermax will focus on identifying two or three strategic distribution locations, probably in the cluster area and density populated city," he said after briefing analysts, fund managers and investors on Supermax's third-quarter financial results here today.

Thai said the company would use the same business model with a bit of modification because China has a huge population.

He said the company planned to buy a piece of land in Chicago to build a bigger warehouse to further grow its US market, especially the hospital sector.

"The new warehouse should be ready in the third quarter next year and this is expected to increase sales," he said.

Thai said the flood situation in Thailand has not interrupted supply of raw materials as most of them came from south.

For the third quarter ended Sept 30, 2011 Supermax's pre-tax profit fell to RM34.088 million from RM41.448 million in the same quarter of last year.

Revenue, however, increased to RM271.419 million from RM235.104 million previously. -- BERNAMA

Late buying nudges KLCI up nearly 8pts

KUALA LUMPUR: Late fund buying of selected key stocks nudged the FBM KLCI to a strong close on Tuesday, Oct 25 after a lacklustre trading performance throughout the day.

The KLCI closed up 7.78 points or 0.54% to 1,457.80 after spending half the day in the red. Volume traded was 850.64 million shares valued at RM1.076 billion. The broader market sentiment improved, with 299 gainers versus 373 losers and 289 counters unchanged.

Shanghai's Composite Index closed up 1.66% at 2,409.67 led by financials and energy counters. Hong Kong's Hang Seng rose 1.05% to 18,968.20 and Singapore's Straits Index 0.33% to 2,769.94.

However, South Korea’s Kospi fell 0.51%to 1,888.65 and Japan's Nikkei 225 fell 0.92% to 8,762.31 as some Japanese market players were sceptical on whether European policymakers were doing enough to contain the debt crisis.

Reuters reported investors were cautious as fresh political uncertainties a day ahead of the eurozone leaders meeting to resolve the region’s two year old debt crisis.

At Bursa Malaysia, Malaysia Airports Holdings Bhd’s strong 3Q11 results saw the share price climb 33 sen to RM5.88.

Other index-linked stocks which closed higher were Sime Darby, up 21 sen to RM8.85, Tenaga Nasional 19 sen to RM5.78 and Malaysia Marine and Heavy Engineering 14 sen to RM6.08.

Meanwhile, crude palm oil futures for January rose RM61 or 2.1% to RM2,951 a tonne, the highest since Sept 26. IOI Corp rose seven sen to RM5.10,

KLK rose four sen to RM20.62 but KLK’s major shareholder Batu Kawan lost 18 sen to RM15.32.

The worst performer was TAHPS, down 40 sen to RM4.10, Fima Corp 18 sen to RM5.55, MFlour 15 sen to RM7.15 and Yahorng 12 sen to 50 sen.

Globetronics 3Q earnings down 10.6% to RM7.73m

KUALA LUMPUR: GLOBETRONICS TECHNOLOGY [] BHD []’s earnings fell 10.6% to RM7.73 million in the third quarter ended Sept 30, 2011 from RM8.65 million a year ago following a decline in revenue.

It said on Tuesday, Oct 25 that revenue declined 7.4% to RM70.72 million from RM76.38. Earnings per share were 2.91 sen compared with 3.27 sen. It declared an interim dividend of 5.0 sen a share.

“Moving forward, the group will continue to focus on escalating up the value chain and riding on the R&D initiatives in new products’ design and development. The group will also continue to step up efforts in improving the efficiency and cost reduction measures in its group’s operations to achieve the necessary competitive edge in the market,” it said.

For the nine-month period, the earnings slipped 3.2% to RM21.67 million from RM22.39 million in the previous corresponding period. The drop in net profit by 3% is mainly caused by the increase in electricity tariff rate and end of life for certain matured products.

Revenue was higher at RM207.08 million compared with RM205.70 million.

It had cash and cash equivalent of RM92.18 million as at Sept 30, 2011 compared with RM81.80 million a year ago.

However, when compared with the second quarter, revenue increased by 2.1% and net profit rose by 2.9% mainly due to improved volume loadings from some of the group’s key customers in the quarter.

Dutaland rejects IOI Corp bid to cancel RM830m land purchase

KUALA LUMPUR: IOI CORPORATION BHD []'s move to terminate its proposed acquisition of 11,977.91 ha (29,597.42 acres) of oil palm PLANTATION [] land from DUTALAND BHD [] for RM830 million has been rejected by the latter.

IOI Corp said on Tuesday, Oct 25 the cancellation was “due to non-compliance of certain terms and conditions”.

However, in a separate statement, Dutaland said it did not accept the reasons for termination of the sales and purchase agreement and directed the stakeholder, OSK Trustees Bhd not to remit the deposit of RM83 million, which was the 10% deposit paid.

To recap, on July 28, IOI Corp’s unit Sri Mayvin Plantation Sdn Bhd had signed a sale and purchase agreement with Dutaland’s unit Pertama Land & Development Sdn Bhd for the land.

The rationale then was that the proposed acquisition would increase IOI group’s plantation land-bank by 11,977.91 ha or 6.69% from its present 178,884 ha to 190,862 ha in Malaysia.

IOI Corp had then said the total planted area of the plantation land was about 10,449 ha of which about 85% of the estate is at its prime with oil palm trees ranging between three years to 15 years. The plantation land was also adjacent to the group’s Mayvin estates.

However on Tuesday, Sri Mayvin issued a notice to Pertama Land to terminate the agreement due to non-compliance of certain terms and conditions which had been communicated to Pertama Land.

“Under the provision of the SPA the rights and obligations of the parties shall lapse and be of no further effect from the date of termination notice,” it said.

However, Dutaland said on it was taking legal advice over the notice relating to the alleged non-compliance of certain obligations by Pertama Land.

“The company is taking legal advice and has duly notified Sri Mayvin today that the company does not accept Sri Mayvin’s reasons for termination of the SPA.

“Accordingly, the company has notified the Stakeholder, OSK Trustees Bhd not to remit to Sri Mayvin the deposit of RM83 million being the 10% deposit paid by Sri Mayvin under the SPA and any interest accrued thereon,” it said.

IOI Corp cancels RM830m land purchase from Dutaland

KUALA LUMPUR: IOI CORPORATION BHD [] has terminated its proposed acquisition of 11,977.91 ha (29,597.42 acres) of oil palm PLANTATION [] land from DUTALAND BHD [] for RM830 million.

IOI Corp said on Tuesday, Oct 25 the cancellation was “due to non-compliance of certain terms and conditions”.

To recap, on July 28, IOI Corp’s unit Sri Mayvin Plantation Sdn Bhd had signed a sale and purchase agreement with Dutaland’s unit Pertama Land & Development Sdn Bhd for the land.

The rationale then was that the proposed acquisition would increase IOI group’s plantation land-bank by 11,977.91 ha or 6.69% from its present 178,884 ha to 190,862 ha in Malaysia.

IOI Corp had then said the total planted area of the plantation land was about 10,449 ha of which about 85% of the estate is at its prime with oil palm trees ranging between three years to 15 years. The plantation land was also adjacent to the group’s Mayvin estates.

However on Tuesday, Sri Mayvin issued a notice to Pertama Land to terminate the agreement due to non-compliance of certain terms and conditions which had been communicated to Pertama Land.

“Under the provision of the SPA the rights and obligations of the parties shall lapse and be of no further effect from the date of termination notice,” it said.

Market Commentary

The FBM KLCI index gained 7.78 points or 0.54% on Tuesday. The Finance Index increased 0.36% to 13147.14 points, the Properties Index dropped 0.10% to 938.06 points and the Plantation Index rose 0.43% to 7386.56 points. The market traded within a range of 9.68 points between an intra-day high of 1457.80 and a low of 1448.12 during the session.

Actively traded stocks include HARVEST-WA, HARVEST , MBSB-WA, MBFHLDG-WA, REDTONE, AIRASIA, TMS, REDTONE-WA, SYSTECH and HUBLINE. Trading volume decreased to 950.64 mil shares worth RM1075.97 mil as compared to Monday’s 1238.47 mil shares worth RM1313.79 mil.

Leading Movers were SIME (+21 sen to RM8.85), TENAGA (+19 sen to RM5.78), CIMB (+7 sen to RM7.26), IOICORP (+7 sen to RM5.10) and MAYBANK (+2 sen to RM8.27). Lagging Movers were YTL (-2 sen to RM1.49), GENTING (-3 sen to RM9.99), PBBANK (-2 sen to RM12.48), AMMB (-3 sen to RM5.84) and AXIATA (-1 sen to RM4.84). Market breadth was negative with 299 gainers as compared to 373 losers. -- JF Apex Securities Bhd

Genting game to fly punters to Miami

KUALA LUMPUR: The Genting group is dead serious about the potential of its casino resort plan in sunny Miami, so much so that it is willing to buy 50% of seats to make direct flights happen from Asia to Miami.

If Miami can’t attract non-stop flights from Asia, Genting is “prepared to bankroll and subsidise some of the flights,” Colin Au, president of Genting Americas told The Miami Herald in an interview published on Oct 22.

“We will tell China Eastern or Air China that we will guarantee 50% of the seats,” said Au, who is reportedly on a mission to meet every one of Florida’s 180 legislators. And he is prepared to lobby “24/7 for 100 days” — being the run-up to the state’s upcoming legislative sitting which starts Jan 12, 2012.

It is Genting’s belief that Florida can create a US$4 billion (RM12.5 billion) to US$6 billion resort casino market supporting some 100,000 permanent jobs by appealing to international tourists and high rollers from other states in the US, like “New Yorkers with thousands” to throw on the table “not the little old lady in Hialeah with US$25”.

The plan, Au said, is to capture one third of the estimated 13 million (US) East Coast tourists who visit Las Vegas and some 80% to 90% of the Hispanic market on the East Coast. High stakes gamblers from the East Coast and Texas lured away from Las Vegas could help rake in some US$1 billion to US$2 billion revenue. And those flights Genting is prepared to fill up go to aid the expected US$1 billion to US$2 billion potential receipts that could come from Asian tourists, with contributions expected also from Latin America.

Citing preliminary results of an economic impact study done by consultants Genting hired, Au said annual casino tax revenue could be anything between US$400 million to US$600 million, assuming a 10% tax rate.

Those so-called “export model” numbers were drawn up based on Genting’s experience in Singapore, Au reportedly said, where the destination resort market had grown 41% over two years. More importantly, gaming tax revenue was US$6 billion, most from tourists with residents discouraged from gambling by a government-imposed S$100 (RM247) levy per day.

The bill to expand casino gaming in Florida was expected to be filed on Monday, a slight delay from the original Oct 17 target, The Miami Herald report read.

Au compared Florida’s decision to that made by Singapore’s minister mentor Lee Kuan Yew, who in 2005 determined the time had come to do away with the ban on casinos and allow the building of two casino resorts to stimulate the city state’s economy.

“The key thing for Florida is to decide what I call the Lee Kuan Yew moment,” Au reportedly said. “At the end of the day, we are a sin industry and the most important thing is to make the economic development benefits far outweigh anything else,” he said, adding that Miami should build on its strengths. “God, or nature, has given Miami the weather, location, stability and the crossroads of three continents.”

Au said Genting has begun reassuring local retailers and hotel owners that the group wants to work alongside them, and not against them, but concedes there will be resistance. Among lead opponents of expanding gaming in Florida are reportedly Walt Disney World and the Florida Chamber of Commerce, whose chairman is from Disney. Genting’s pitch also isn’t going down well with representative Steve Precourt, a Republican from theme-park rich Orlando and chairman of the House Finance and Tax Committee. Precourt reckons Genting’s attempt to lure convention business to Miami could be a zero-sum game as it saps neighbouring Orlando’s “bread-and-butter convention business” and “takes huge profits out of the community”.

If Au is worried there is a lot riding on him being able to swing legislative votes to Genting’s favour, he isn’t sweating. “Don’t feel sorry for us,”’ he told the Miami Herald. “We think this land [Genting bought] is going to appreciate. So if they take three years to do it, so be it.”

This article appeared in The Edge Financial Daily, October 25, 2011.

CIMB Niaga’s 9-month net profit jumps 33%

JAKARTA: The Indonesian arm of CIMB Group Holdings Bhd (CIMB), CIMB Niaga Tbk (CIMB Niaga), yesterday announced that for the nine-month period up to September 2011, the group recorded 2.38 trillion rupiah (RM843.93 million) of consolidated net profit, which is an increase of 0.59 trillion rupiah or 33% from 1.79 trillion rupiah for last year’s corresponding period.

The higher consolidated net profit translated into an increase in its earnings per share (EPS) to 95.10 rupiah, which is 20.12 rupiah or 26.8% higher than 74.98 rupiah recorded for the same period last year. The higher net profit was largely driven by an increase in the total operating income of 1.15 trillion rupiah to 7.65 trillion rupiah, up from 6.5 trillion rupiah for the last corresponding period.

During the three quarters until September 2011, loans in all business segments namely corporate, commercial and retail grew by 30%, 28% and 18% respectively over the same period last year. The group stated that it will continue to improve its Islamic lending, micro-financing and rahn service.

“The management fully supports the development of the micro-financing and rahn business by adding new outlets to the Mikro Laju network — increased to 201 as at September 2011 from 72 as at September 2010. Another new product, rahn, has seen an impressive financing growth by 419% to 31.32 billion rupiah as at September 2011, compared with 6.03 billion rupiah for the same period last year,” according to president director of CIMB Niaga Arwin Rasyid.

More than 11% of total loans were disbursed outside of Java, reflecting CIMB Niaga’s diversified approach to loan distribution in Indonesia. CIMB Niaga continues to ensure the quality of its assets as reflected in its non performing loans (NPL) ratio (gross) of 2.63%, better than last year’s achievement of 2.73%.

In addition, the bank has also made some improvement in third-party deposits which reached 126.3 trillion rupiah, an increase of 18% from 106.6 trillion rupiah for the corresponding period. This maintains its position as the fifth largest bank in Indonesia in terms of third-party deposits. Meanwhile, CASA (current account savings account) increased by 13% year-on-year to 54.68 trillion rupiah.

As at September 2011, its asset size increased to 159.15 trillion rupiah, an increase of 30 trillion rupiah or 23% from the corresponding period in 2010 at 129.14 trillion rupiah, maintaining its position as Indonesia’s fifth largest bank by asset size.

“In order to cope with high levels of competition in the banking industry, CIMB Niaga will continue to maintain a sound balance in all aspects of the business — corporate, commercial, retail and Islamic banking. We will also continue to invest in our infrastructure, so that we will bring on quality banking solutions to all our customers and stakeholders across Indonesia,” Arwin added.

“This year we focus more on improving our CASA, high-margin businesses, alternate channels and efficiency. CIMB Niaga has re-launched the personal loans product in May and launched the two-wheeler financing through its subsidiary, CIMB Niaga Auto Finance, in July. Customers now can access this service through nine outlets located in various cities in Indonesia,” Arwin said.

The group’s channel network increased to 859 as at September 2011 from 711 a year ago and it had 23 branches of Islamic banking units as at September 2011.

This article appeared in The Edge Financial Daily, October 25, 2011.

Genting Malaysia buys IT firms from S’pore for RM50m

KUALA LUMPUR: Genting Malaysia Bhd is acquiring two IT support services entities from sister company Genting Singapore plc for RM50 million. The related party transaction will enable Genting Malaysia to reap cost savings.

In a statement to Bursa Malaysia, Genting Malaysia said it is buying the entire stakes in E-Genting Holdings Sdn Bhd and Ascend International Holdings Ltd for RM48 million and RM2 million respectively. It is acquiring the E-Genting stake from Genting Singapore subsidiaries Sedby Ltd and Geremi Ltd ,while the Ascend stake will be purchased solely from Sedby.

Genting Singapore acquired E-Genting in 2005 for RM87.4 million and Ascend for HK$2 in 2007.

“The services provided by the acquiree group (E-Genting and Ascend) are mainly to the Genting Malaysia group of companies, comprising IT, implementation, support and maintenance services as well as Malaysian WorldCard loyalty programme management services.

“As the largest customer and user of the acquiree group’s services, [Genting Malaysia] will enjoy cost savings as a result of the proposed acquisitions, especially in view of the fact that the acquiree group will also be providing services in relation to [Genting Malaysia’s] future projects,” Genting Malaysia said.

The company will finance the acquisitions with internal funds. The exercise is due for completion by the end of this month.

Genting Malaysia said it would invest the necessary resources in E-Genting and Ascend to ensure the IT entities are provided with trained personnel and adequate capital expenditure.

“The services provided by the acquiree group are expected to increase, in line with the Genting Group’s business expansion and new international projects.

This is expected to contribute positively to the future financial performance of the acquiree group,” Genting Malaysia said.

This article appeared in The Edge Financial Daily, October 25, 2011.

The Edge Billion Ringgit Club - Guinness Anchor Bhd

Listed since 1965, Guinness Anchor Bhd (GAB) operates the Sungai Way Brewery, which oversees the production, packaging, marketing and distribution of beer and stout in Malaysia. GAB brews, markets and distributes brands such as Tiger, Guinness Foreign Extra Stout, Guinness Draught, Heineken, Anchor Smooth, Anchor Strong, Kilkenny and Anglia. The company also produces the non-alcoholic Malta and distributes imported brands such as Strongbow, Paulander and Sol. Managing director Charles Ireland shares with The Edge Financial Daily his strategies and dreams for the company.

What are the company’s competitive strengths and advantages?
Ireland: GAB has achieved nine years of consecutive growth in revenue, market share and profit. This achievement is made possible through our continued investment and focus in Malaysia, especially in our people, our brands and in uplifting our performance.

GAB retains a highly-skilled and performance-oriented team with a staff attrition rate that is significantly below the Malaysian average. About 47% of our employees have been with us for over 10 years. Last year alone, we hired an additional 32 employees and promoted 98 employees within the company.

We are committed to growing our employees and in doing so, we ensure that they are given every opportunity to reach their full potential. We spent twice as much on training and development in FY10 compared to FY08. In FY10, the average hours of training per employee were 47.5 hours.

To prioritise key areas identified in growing and nurturing employees, we developed the HR 7 Pillars which focuses on improving, empowering, motivating and rewarding employees for great performance. The pillars help us to focus on being an employer of choice by creating a conducive work environment that encourages high productivity and creativity.

We have the world’s greatest portfolio of iconic, international premium brands. We have progressively increased our investments in building our brands, as a result, all our brands are growing:
• Tiger Beer is the No 1 Asian Beer
• Guinness is the world’s No 1 Stout
• Heineken is the world’s No 1 international premium beer

Ireland: Our vision is to be an icon in business.

Our success has been driven by our ability to deliver innovative brand experiences to build affinity and deliver enjoyment to our consumers. In April, we organised the much anticipated Tiger Asian Music Festival. Attended by 20,000 Asian music fans, the concert saw 25 biggest acts from seven Asian nations coming under one roof for a 10-hour performance. In 2010, we organised Arthur’s Day in Malaysia for the second time which was attended by more than 8,000 revellers.

We supported the annual Rainforest World Music Festival through Heineken. Besides that, we also had the privilege of bringing the UEFA Champions League Trophy to Malaysia which was greeted by more than 18,000 football enthusiasts.

We also activated other world-class marketing campaigns and consumer promotions such as Oktoberfest and our Chinese New Year campaign which successfully drove incremental sales for GAB brands.

GAB’s strong performance is a result of extensive application of systems such as total productive management programme which has equipped us with the tools to improve the performance of our people and processes. Such systems have complemented GAB’s work environment where people are consciously and continuously doing their best to deliver world-class standards, reaffirming our standing as a world-class brewery.

The sustained improvements to our performance have allowed us to achieve nine consecutive years of revenue, market share and profit growth. We are also able to deliver strong shareholders’ return with a compound average growth rate of 11.7% over the last nine years.

What have been the major achievements of the company in the past four years?
In FY10, we grew profit before tax by 7.2%. Our strong combination of dividends and gain in share price in FY10 reflects a 32% return for the year. All of our main brands grew — Tiger, Guinness, Heineken, Anchor and Kilkenny.

Our excellence in brewing quality is acknowledged by our global brand owners. Guinness has won the Guinness League of Excellence for four consecutive years since 2006, the benchmark for excellent Guinness production standards by third party operations in the world, outside of Dublin, Ireland. Tiger Beer has won the Tiger Quality Award as well as the Tiger In-Market Quality in 2008 and 2009. GAB is the first operating company in the history of the award to win for two consecutive years.

Our efforts to transform GAB into a world-class business have received recognition. GAB won the 2009 Diageo Asia Pacific Market of the Year Award. This award reflects GAB’s consistency and continuous improvements in business performance, brand building, organisational development and community enrichment.

GAB won the Asia Responsible Entrepreneurship Award (AREA) 2009 and 2010 in the “Investment in People” category for its policies and programmes that show our commitment to providing opportunities to people to grow and reach their potential.

We won the AREA 2009 award in the “Community Engagement” category for its CSR initiatives undertaken by the GAB Foundation that have enriched the community in which we operate and made a positive difference to many. GAB also won the Global Silver Award 2010 for “Workplace Best Practices” which recognises the value of our CSR programmes as well as our outstanding, innovative and world-class products implemented in 2008/2009.

What are the major challenges your company faced over the years and how did it overcome them? Is there anything else you would have done differently?
One of the biggest challenges for the beer industry is escalating production cost with the increase in malt and aluminium prices. As a result, we have no choice but to increase the price of our products to offset increasing input costs.We are constantly engaging in numerous productivity programmes to curtail costs while delivering value to our consumers. We are also determined to deliver the highest possible product quality as demonstrated by the awards we have won.

How is the company positioning itself within the industry? What are your strategies to grow or gain market share?
GAB is positioned as the clear market leader in the malt liquor market (MLM) with an iconic portfolio of premium international brands. We will expand domestically in terms of market share. We aspire to be the employer of choice with the aim of being the best in Malaysia and will deliver excellent returns to our shareholders.

We are committed to transforming GAB into a world-class business and organisation. As such, we will continue to invest in Malaysia through our focus on people, brands and performance.

We continue to invest in our people as we believe that they are our greatest asset and one of the key drivers of our success. Training and development will continue to be a priority for us.

GAB will leverage further on its strong trade and distribution network by continuing to invest and build synergistic partnerships with its trade partners. One of our key initiatives is the GAB Academy, a dedicated programme designed to equip our trade partners with the know-how and skills needed to consistently deliver the best possible food and beverage experience at their outlets.

We will continue to invest in bigger and better marketing campaigns for FY12. Additionally, we will also look into investing in innovation activities and portfolio development such as the introduction of our newly imported beer (Newcastle Brown Ale); new product variant (Anglia Orange & Anglia Grape) and new packaging format (Kilkenny and Strongbow in bottles).

Of the nine years of consecutive growth, the last four have been record-breaking with 2010 marking the best ever performance in our 46-year history. I am confident that our unwavering focus and unrelenting commitment on people, brands and performance will help us deliver another year of revenue, market share and profit growth.

What is your dream for your company? How would you like to see it in 10 years?
Our vision is to be an icon in business, respected the world over for delivering exceptional growth in people, brands and performance. I see our people growing with the company as we continue to develop and nurture them. I see continued growth in our brands year-on-year, offering bigger and better brand experiences to our consumers.

In terms of corporate social responsibility, I see GAB Foundation continuously enriching and empowering our communities. Finally, I see continuous growth in our performance and that we will continue to deliver superior shareholder returns in line with GAB’s strong financial performance.

This article appeared in The Edge Financial Daily, October 25, 2011.

IOI Corp sees better performance in FY12

PUTRAJAYA: IOI Corp Bhd expects its financial performance for the current FY12 ending June 30 to improve from a year earlier, buoyed by improved profitability in its resource-based manufacturing division.

Datuk Lee Yeow Chor, group executive director, said the current lower crude oil palm (CPO) prices compared with those of FY11 will translate into a higher profit margin for its resource-based manufacturing division, which refines palm oil and processes it into oleochemicals and speciality oils and fats.

“We felt the impact [of higher CPO prices] in the last financial year,” he told a press conference after the company AGM yesterday. With the current [softer] palm oil prices ... we think the impact will be less severe this financial year,” he said.

IOI’s resource-based manufacturing segment reported a 29% drop in operating profit to RM404.3 million in FY11 due mainly to lower sales and lower margins, especially in the oleochemicals and speciality fats sub-segments, according to notes accompanying its announcement to Bursa Malaysia.

The lower profitability led the division to contribute some 15% of IOI’s total operating profit for FY11 compared with 24% for FY10.

Nonetheless, its other divisions — plantation and property — continued to do well and registered 33% and 19% increases in operating profit for FY11.

In total, IOI reported a 7% increase in operating profit for FY11 to RM2.82 billion, with plantation business the biggest contributor (55%) followed by property (27%).

Nevertheless, IOI group executive chairman Tan Sri Lee Shin Cheng does not believe low CPO prices will be a long-term thing as tighter supply and growing demand will nudge prices up.

“We can see yield didn’t go up that drastically but the demand is still there,” said Shin Cheng, Yeow Chor’s father.

“Therefore, I don’t foresee CPO prices dropping any further. From now on, the price has to go up. It has come down from RM3,500 to RM2,800 a tonne now, and I think it is about time for it to jump above RM3,000 again,” he said.

A boost for CPO prices is strong demand from China, India and Pakistan.

“The import figures (for Malaysia’s palm oil) for the first 15 days of this month are higher than the same period last month, which is slightly more than 10%, and this shows demand for the commodity is still strong,” said Yeow Chor.

He added that the substantially lower CPO prices compared with soyoil also make the former a preferred choice.

However, Yeow Chor admitted that IOI is not spared the impact of Indonesia slashing the export tax of processed CPO from that country, which could clip the profits of refiners in competitor Malaysia.

The top palm oil producer in the world, Indonesia recently cut the tax rate for CPO exports in a bid to jump start its refineries.

Shin Cheng said IOI is still positive on the long-term prospects of its property projects in Singapore, even though the property market in the island republic has slowed down recently due to cooling measures imposed by its government.

“Property markets around the world are very uncertain for now, but still people prefer to buy in Singapore,” he said.

He added that IOI expects returns from its investment in the Singapore property market made some five years ago (of about RM5 billion) to start flowing into the group in the next two to three years.

On the local front, he said IOI plans to spend RM1.5 billion over the next few years to develop IOI Resort, which includes the construction of a shopping complex, golf course, two blocks of offices and an additional hotel.

“We hope to complete [the shopping complex] by end-2013,” he said. “And when it is completed, it is going to be one of the best in Southeast Asia. We are bringing in well-known architects from the US to design the complex.”

IOI closed three sen or 0.6% higher at RM5.03 yesterday with a total of 3.4 million shares changing hands, giving the group a market capitalisation of RM32.3 billion.

This article appeared in The Edge Financial Daily, October 25, 2011.

DiGi 3Q net profit almost flat on higher depreciation

KUALA LUMPUR: DiGi.Com Bhd posted a 1% growth in third quarter (3Q) net profit from a year earlier amid higher depreciation and amortisation, and operating expenses which offset the effects of higher sales and larger subscription base during the period.

In a statement to Bursa Malaysia, DiGi said its 3Q net profit came to RM292.45 million or 37.6 sen a share versus RM289.31 million or 37.2 sen a share a year earlier. Revenue increased 13% to RM1.52 billion from RM1.35 billion, driven by mobile data business.

“Mobile data revenue accounted for close to 30% of the group’s revenue base for the first nine months of the current financial year.

“In terms of outlook for the remaining quarter of 2011, the group maintains its target to achieve high single-digit revenue growth. It will also continue to leverage on the success of its on-going cost savings focus to drive further margin improvement,” DiGi said.

Cumulative nine-month net profit climbed 2% to RM860.16 million from RM845.98 million a year earlier while revenue was up 11% to RM4.42 billion from RM3.98 billion. Profit had grown slower than revenue due to accelerated depreciation amounting to RM275 million, amid on-going network modernisation effort and infrastructure sharing arrangement with Celcom. Nonetheless, 9M operating profit before working capital changes rose 15.2% to RM2.23 billion.

As at Sept 30, DiGi’s subscription base expanded to 9.6 million customers from 8.2 million as at end 2010. Average revenue per user (Arpu) however declined to RM50 from RM53 previously.

Clausen: Our network modernisation efforts remain a high priority.

The decline in Arpu was mainly due to lower spending by new customers, competitive price pressure, and lower domestic interconnect revenue in tandem with the reduction in mobile termination rate effective July 2010, according to DiGi.

DiGi had cash of RM987.15 million as at Sept 30 compared to debt obligations of RM726.68 million. This translates into net cash of RM260.47 million. The company plans to reward shareholders with a third interim tax exempt single-tier dividend of 37 sen a share for the quarter in review. This translates into dividends of RM1.10 a share so far this year.

Looking ahead, DiGi said it had earmarked a capex of some RM800 million for FY12 to spur its revenue growth and cost reduction plans.

While it anticipates that global economic volatility could impact the company’s outlook for the year-ahead, it believes that the telecommunications industry is more resilient than many other industries. This is by virtue of growth opportunities not only in the traditional segments but also in new mobile data business, DiGi said.

In a separate statement, DiGi chief executive officer Henrik Clausen said the company was streamlining its distribution set-up to improve its ability to anticipate and meet customer needs in a high data traffic environment.

“We have also continued to strengthen the foundation of our data network to support future increase in mobile Internet adoption and traffic. Our network modernisation efforts remain a high priority for the company and we aim to further improve our capability in the areas of coverage, capacity, quality and efficiency to support mobile data growth by putting in place a brand-new long-term evolution-ready network by the end of 2012,” he said.

This article appeared in The Edge Financial Daily, October 25, 2011.

S P Setia finalises terms of KL Eco City land privatisation

PETALING JAYA : Property developer S P Setia Bhd yesterday announced that its subsidiary KL Eco City Sdn Bhd (KLEC) has entered into a privatisation agreement with KL Datuk Bandar over the development plan of 24.88 acres (9.95ha) in Kampung Haji Abdullah Hukum, Kuala Lumpur into the RM6 billion KL Eco City mixed project.

Considering that the Datuk Bandar allows KLEC to develop the land, the company has agreed to pay the former RM105.9 million, being the market value of Plots A, C, D, and E of the DBKL land less the premium already paid by the developer for the alienation thereof to Datuk Bandar. The consideration shall be paid on a progressive and deferred basis over a maximum period of 36 months from the date of the agreement.

In addition, the developer agreed to pay Datuk Bandar RM191.9 million, being the minimum guaranteed profit of the proposed development, which shall be paid proportionately within one month from the date of issuance of the certificate of practical completion of each component of the proposed development.

The group stated that any additional profit representing the difference between 20% of the actual profit before tax and the minimum guaranteed profit shall be paid within one month from the date of the final audited account of each phase of the proposed development.

The 24.88-acre site is made up of about 4.38 acres belonging to S P Setia and 20.5 acres to Datuk Bandar. The land has been cleared and is currently vacant.

S P Setia has proposed to develop the land into an integrated commercial and residential development with a net saleable area of about 5.7 million sq ft. The proposed development has a gross development value of about RM6 billion and projected gross development cost of RM5 billion. The first phase was launched earlier this year.

“The privatisation agreement is the culmination of more than a decade’s work by S P Setia to secure this prime redevelopment site for which it has unveiled plans to develop a fully integrated and sustainable green commercial city. With the formalisation of the privatisation process, the developer is now able to translate the strong registered interest in phase 1 of the KLEC project, comprising boutique and strata offices, into actual sales for FY11 and FY12,” the group said.

“Phase 2 of the project comprising bite-sized residential units with unique lifestyle-driven propositions to appeal to young urbanites is targeted to be launched during the first half of 2012. Given the highly positive reception from this savvy target market group thus far, management is optimistic that the eventual launch will be a success,” it added.

This article appeared in The Edge Financial Daily, October 25, 2011.

Cahya Mata plant cost up on additional investment

PETALING JAYA: Cahya Mata Sarawak Bhd (CMSB) yesterday said the US$50 million (RM156.5 million) increase in its estimated cost to build the manganese and ferro silicon smelting plant in Samalaju, Sarawak, is due to additional investments in certain aspects and criteria of the plant.

When the group signed the memorandum of understanding with OM Materials (S) Pte Ltd in July, the cost of building the smelting plant was estimated at US$450 million.

However, last Thursday, the group said the cost had increased to US$500 million.

CMSB clarified to Bursa Malaysia that the additional investments include investment in conveyor belt for US$35 million, additional engineering, procurement, construction management and indirect costs for US$9.2 million, last-mile electricity connection for US$3.8 million and insurance for US$2 million.

According to the breakdown information, the conveyor belt system, insurance and last-mile electricity connection are additional costs not included in the initial estimation.

The management did not provide the reason for the additional conveyor belt system.

On the supply of raw materials for the smelting plant, CMSB said it is currently negotiating with other parties, believed to be OM Holdings Ltd, the parent company of OM Materials, on terms of the raw material supply agreement including the duration.

CMSB said that barring any unforeseen circumstances, it expects the agreement to be concluded by the first quarter of next year.

The group added that negotiations with off-takers of its end products will be concluded by the second quarter.

The project is undertaken through a joint-venture company called OM Sarawak Sdn Bhd, which is 20%-owned by Samalaju Industries Sdn Bhd, a wholly-owned subsidiary of CMSB, together with OM Materials (S) Pte Ltd, a wholly-owned subsidiary of OM Holdings.

This article appeared in The Edge Financial Daily, October 25, 2011.

Supermax 3Q net profit down 19%

KUALA LUMPUR: Supermax Corp Bhd’s 3QFY11 net profit fell 19% from a year earlier despite its sales picking up, as the rubber glove manufacturer contended with costlier raw materials and a stronger ringgit.

In a statement to the exchange yesterday, Supermax said its net profit for 3QFY11 came to RM30.9 million or 9.09 sen a share compared with RM38.14 million or 11.24 sen a share in 3QFY10.

Revenue for the period in review rose 15% to RM271.42 million from RM235.1 million a year ago, as the company produced and sold more gloves.

Supermax said its top line benefited from higher glove output from new and existing production lines.

“Having weathered the sharp volatility in latex prices and foreign exchange rate fluctuations over the past one to 1½ years, the Supermax group has turned the corner and returned to the path of profitability growth after recording a second consecutive quarter of core profit growth.

“While the industry had remained largely resilient, many industry players had seen their margins being squeezed as latex prices soared and the US dollar/ringgit exchange rate fell almost continuously during this period,” Supermax said in the notes accompanying its financial results.

Supermax plans to reward shareholders with a three sen a share tax-exempt dividend for the quarter. The first interim payout translates into a 6% yield against the stock’s par value of 50 sen. Cumulative nine-month net profit, meanwhile, declined 43% to RM77.88 million from RM135.47 million a year earlier although revenue was up 9% to RM750.71 million from RM690.58 million for the nine months of 2010.

Against the current operating environment, Supermax said it expects a full-year net profit of between RM100 million and RM120 million, based on the company’s targeted 15% to 20% net profit growth for FY11 ending Dec 31.

During 3Q, average natural rubber prices rose 23% to RM8.63 a kg from a year earlier, while prices of synthetic rubber or nitrile climbed 42% to RM6.43, according to Supermax. The ringgit strengthened from 3.16 against the US dollar to 3.02 during the same period, the company said.

“Supermax group has been actively adjusting selling prices to mitigate the impact of highly volatile raw material prices as well as unfavourable foreign exchange rates.

“While we are increasing production of nitrile gloves, we have been maintaining our manufacturing margins at 11% to 15% to be in line with global prices, especially gloves from China. This is in line with our objective to be globally competitive,” Supermax said.

Capacity expansion is on the cards. Supermax said it plans to grow its surgical glove capacity tenfold, with the new lines expected to be ready by year-end. The additional capacity will enable Supermax to capitalise on the lucrative surgical glove market.

According to the company, the expansion will be undertaken in one of its rebuilt plants and is expected to contribute US$10.1 million (RM31.6 million) in additional profit to the group next year. Supermax also indicated plans to increase its natural rubber and nitrile glove output. This involves two new factories in Klang over the next two years, apart from improvements to existing lines.

Supermax closed at RM3.22 yesterday, slipping three sen. Its latest reported net assets per share was RM2.21.

This article appeared in The Edge Financial Daily, October 25, 2011.

Nextnation to capitalise on mobile Internet traffic

KUALA LUMPUR: ACE Market-listed Nextnation Communication Bhd, a mobile application service provider, is seeking ways to capitalise on mobile Internet traffic, said CEO and managing director Tey Por Yee.

Nextnation’s clients telecommunication operators such as Celcom, DiGi and Maxis have requested Nextnation to develop solutions and services to capitalise on the heavy Internet traffic and bandwidth usage, which are mainly going to social networking sites such as Facebook, he said after the company AGM yesterday.

“How do we convert ourselves from a conventional texting or mobile payment services provider to be able to cater for the mobile Internet? That is the challenge,” Tey said.

He said Nextnation’s services are mostly through text messaging, but its clients now want services that are tuned or specialised for the mobile Internet, such as media streaming.

Although telcos are already charging users for mobile Internet usage, they still see an opportunity in their traffic, he said.

Nextnation has not come up with any conclusive solutions yet, but Tey said mobile advertising or merchandising are some of its ideas.

Telcos provide voice and data services, but value-added services and solutions are provided by companies such as Nextnation.

Nextnation Network Sdn Bhd, wholly-owned subsidiary of Nextnation, is a leading end-to-end mobile multimedia application services provider (ASP) that offers one-stop mobile and wireless solutions to telecommunication companies, corporate and consumer markets

On the company’s growth, Tey said most of the its future revenue would be derived from overseas businesses. Tey said about 40% of overseas revenue is from Indonesia and the rest from Thailand. Nextnation’s overseas revenue accounted for 63% of the total for its FY11 ended April 30.

It posted a net profit RM1.06 million for FY11 versus RM4.57 million previously, while revenue increased to RM72.31 million against RM66.09 million a year earlier.

The difference in net profit was mainly due to a gain of RM4.5 million from the disposal of subsidiary companies that was recorded in FY10, the annual report stated.

Tey said compared with Indonesia and Thailand, there is a limit to growth in Malaysia given its population size.

The company’s market share in the niche segment (customised services) is 30% in Malaysia, 20% in Indonesia and about 15% in Thailand, according to Tey.

He said Nextnation also provides original equipment manufacturing (OEM) services — where it provides the technology and takes back the royalties — in countries such as India, China and the UK.

On Nextnation’s profitability, Tey said the company’s revenue is increasing but profits are declining.

“I think going forward, in terms of the margins, it is going to be a very competitive environment,” said Nextnation corporate finance vice-president Adrian Ooi Kock Aun.

Ooi attributed the decline in profits to stiffer competition and the increasing sophistication of its services, which have increased costs.

He said Nextnation may diversify into related and non-related sectors. One possibility in a non-related sector is property, such as smart building design, Ooi said.

The company targets to transfer to the Main Market when it meets the requirements, he said.

This article appeared in The Edge Financial Daily, October 25, 2011.

YES 4G network to reach Sabah, Sarawak in a year

KUALA LUMPUR: Mobile network operator YTL Communications Sdn Bhd (YTL Comms), a 60%-owned subsidiary of YTL Power International Bhd, said expansion plans are on track and Sabahans and Sarawakians can expect the company’s YES 4G network to hit their shores within the next 12 months.

“We [YTL Comms] are in the process of securing licences from the government to launch YES 4G in east Malaysia and expect the process to take about 12 months,” YTLComm chief marketing officer Chee Pok Jin said during a media event yesterday.

Chee pointed out the fact that mobile broadband is virtually non-existent in Sabah and Sarawak and this presents a huge opportunity for the company.

Since the launch of YES 4G mobile broadband and telecommunications service in November 2010, YTL Comms has managed to attract over 300,000 subscribers.

YTL Comms CEO Wing K Lee did not disclose target subscription numbers for next year but said subscriptions are on track with the company’s plans.

Wing said mobile phone penetration in Malaysia is almost at 100% but Internet penetration lags behind at 60% penetration. He hopes that YES 4G will be able to bridge the digital divide and to take advantage of the disparity. In the 11-month span since the start of commercial operations, YTL Comms has deployed an additional 800 base stations over its original 1,200.

Wing says YTL Comms has enough funds to proceed with next year's expansion.

YTL Comms’ 4G coverage currently is at 65% of the population with its 2,000 base stations which it intends to increase by 500 by year-end.

Wing intends to double that figure to over 4,000 base stations by end-2012 which will allow 85% of Malaysia’s population access to the 4G network.

When asked about the cost of next year’s expansion Wing replied: “We cannot discuss the figures. We are a private company, so we do not have to submit to short-term pressures. Nonetheless, it is within our funding to go ahead with the expansion.”

YTL Comms has expanded from its initial 600 stores to almost 2,000 nationwide with retail outlets opening in places like East Coast Mall in Kuantan.

To date, the telecommunications company has recorded seven million minutes of talk time, two million SMSes sent and 825 terabytes of data downloaded. Wing was also happy to announce customers’ satisfaction of 86%.

Earlier this month, YTL Comms won the Global 2011 InfoVision Awards for its innovative Yes 4G service dubbed, “Malaysia’s fastest mobile Internet with voice.”

This article appeared in The Edge Financial Daily, October 25, 2011.

Engtex snags cheap land in Puncak Alam

KUALA LUMPUR: While big-cap property developers are forking out big bucks to purchase parcels of land on the fringes of the Klang Valley, a small company, Engtex Group Bhd, has also managed to wrestle a good deal for land in Puncak Alam, Kuala Selangor.

Engtex’s 70% unit Tiara Best Sdn Bhd acquired two parcels of agriculture land in a public auction on Oct 17, measuring 182 acres (73.65ha), in Puncak Alam for RM31 million or RM3.90 per sq ft (psf).

The pricing is considered attractive although the land is currently zoned for agricultural use. Note that S P Setia Bhd recently coughed up RM13 psf for 673 acres of industrial land in Semenyih, while Mah Sing Group Bhd purchased 12.9 acres of industrial land at RM37.80 psf in Bukit Jelutong.

Engtex’s property earnings are growing fast, compared to its wholesale and manufacturing business, with its mainstay in cement-lined pipes, valves, fittings, manhole covers and pillar hydrants. The latest acquisition marks the company’s aspirations to strengthen its footing as a property developer.

In a filing with Bursa Malaysia last Monday, Engtex said it is planning to convert the 182-acre tract of agricultural land in Puncak Alam into industrial land, and develop it into an integrated industrial park with a gross development value (GDV) of RM166 million.

“Based on preliminary plans and subject to the approval of relevant authorities, Tiara Best plans to offer for sale industrial lots of various sizes within the industrial park,” it said.

Subject to approvals, Engtex expects to commence development in 2Q12 and develop the land over two years. The land is currently planted with ageing oil palm trees with no erected buildings.

Engtex could not be contacted to provide further details.

In May, Engtex entered into an agreement with Liputan Canggih Sdn Bhd to acquire the two parcels of land in Puncak Alam for RM44.4 million or RM5.60 psf. However, the agreement was terminated on Oct 16, one day ahead of the public auction, as Liputan Canggih had failed to obtain the state’s consent to transfer the land within the application period.

The termination of the original agreement turned out to be beneficial for Engtex as it ended up acquiring the land at auction at a 30% discount to the original price of RM44.4 million.

A property analyst with a local bank noted that the cost price for the Puncak Alam land was attractive as industrial land costs anywhere between RM10 and RM30 psf depending on the location.

However, the analyst noted that Engtex will need to convert the land into industrial land, which usually costs between 10% and 15% of the market value. Assuming the cost value of RM31 million, Engtex would need to fork out another RM4.65 million to convert the land, which comes up to an additional 59 sen per sq ft, increasing its land cost to about RM4.49 psf.

A property consultant added that the market price of industrial land in the area is RM30 psf. “It wound appear that Engtex has struck a good deal, even though we need to factor in the conversion price as well as roads and infrastructure that need to be constructed to access the area ... Engtex could probably see a net cost of RM20 psf, but it is still a good price in the market,” he said.

Engtex diversified into property development in 2008 and launched its maiden Taman Tiaraputeri project, which consists of 76 units of semi-detached houses with a GDV of RM60 million. Engtex had bought the 17 parcels of land in Selayang for RM14.18 million or RM122 psf, but the properties were sold from RM300 psf. The project has been completed and vacant possession was handed to the owners early this year.

Engtex also launched Tiara Residence garden pool villas and an integrated mixed development called Emerald Avenue in Selayang with a combined GDV of RM300 million.

For FY10 ended Dec 31, Engtex’s property division contributed RM8.73 million in operating profit while its wholesale and distribution division contributed RM25.51 million and manufacturing RM13.35 million. Group net profit amounted to RM33.86 million in FY10.

Coming into 1HFY11, Engtex’s property division made a loss of RM639,000 for 1HFY11, on revenue of RM3.9 million due to completion of certain development projects and before the launch of new ones. Nonetheless, the latest acquisition of land should act as the catalyst for the resurgence in the property division’s contribution.

This article appeared in The Edge Financial Daily, October 25, 2011.

Maybank, India’s Axis Bank tie up for remittance services

KUALA LUMPUR: Malayan Banking Bhd (Maybank) expects a 15% growth in remittances for its Maybank Money Express service following its tie-up with Axis Bank of India to introduce remittance services to beneficiary accounts in India.

Maybank said yesterday this service offers competitive service charge to its customers and it also reduces the time taken from Malaysia to India compared with the conventional remittance method (Swift) which takes about two days to reach the beneficiary.

Maybank deputy president and head, community financial services, Lim Hong Tat, said the tie-up with Axis Bank “speaks volume” about the potential from the large number of remitters to India from Malaysia and vice-versa.

“We expect this new service to strengthen Maybank’s foreign remittance segment for which we currently have a 36% overall outward remittance value among the banks and we are targeting for it to grow 15% by June 2012,” he said.

The new remittance service is an extension of the existing facilities offered by Maybank Money Express.

The service offers straight-through remittances to intended beneficiaries holding accounts with Axis Bank or any of the 78,000 National Electronic Funds Transfer-enabled (NEFT) branches of over 100 other banks in India.

For individual customers, there is a limit of RM10,000 per customer per day for remittance via Maybank. Maybank Money Express currently serves nine countries, including Indonesia, Vietnam, Pakistan, Nepal, the Philippines, Cambodia, Brunei, Singapore and India.

India is the largest recipient country in the world, with inward remittances of more than US$55 billion (RM172 billion) from 2009 to 2010.

This article appeared in The Edge Financial Daily, October 25, 2011.

Genting Malaysia’s US gambit

Genting Malaysia (Oct 24, RM3.75)
Maintain hold with revised target price of RM3.95 from RM3.79: Having thus far spent/committed US$1 billion (RM3.13 billion) — equivalent to 9% of 2010 shareholder reserves — to operate the New York Aqueduct racino (NYA) and to acquire prime properties in Miami, Genting Malaysia is now ready to commit to a US$3 billion casino in Miami should it receive a casino concession there. Like New York, South Florida has one of the highest unemployment rates in the US at 10.6%, which supports the establishment of casinos.

NYA’s success in boosting New York’s coffers and creating badly needed jobs will boost its long-term chances of securing more gaming concessions in the US. We understand that NYA received 30,000 applicants for its 1,300 job vacancies.

While our upward revised NYA enhancement to Genting Malaysia’s fair value still remains modest (up to 25 sen per share or 6% of our sum-of-parts (SOP) value), Genting Malaysia’s entry into the US gaming scene creates an interesting “option value” over the long term.

Specifically, it could be a key beneficiary should New York City legalise casinos, and its first-mover advantage provides a decent chance to secure a casino operator licence should Miami legalise casinos outside the Seminole tribe reservations. Nevertheless, the route to legalisation is arduous and likely to be a long process, and competition for such licences is stiff.

Modest upside from NYA, which is expected to account for 4% and 6% of the company’s FY12F net profit and SOP value. We have revised up the expected discounted cash flow (DCF) of NYA from US$126.6 million to US$520.3 million after raising the number of machines and wins per day per machine, and raising the establishment costs of NYA.

The first phase of the NYA is the Times Square casino, which will open for business this Friday with 2,485 video lottery terminals (VLT) and electronic table games (ETG) in operation. By end-December NYA will open the 5th Avenue Casino and the Crockfords Casino with 2,515 VLTs and ETGs.

Overall, NYA will have 5,000 machines comprising 4,525 VLTs and 475 ETGs. NYA is estimated to contribute 14% to Genting Malaysia’s FY12F earnings before interest, tax, depreciation and amortisation (Ebitda), garnering a revenue of US$662.5 million (32% of FY12F revenue) based on our estimated blended average win per machine per day of US$363.

Our assumption is conservative against Genting Malaysia’s expectations (US$800 million gaming revenue) and present experience at Yonkers (average win per day per machine of US$340 for its 5,300 VLTs).

Although there should be new market creation and NYA’s location is thought to be superior to Yonkers in a richer neighbourhood and next to a mass rapid transit station, we reckon that the overall competition will stiffen and industry VLT win per day will ease.

NYA could be a significant beneficiary should New York state eventually legalise casinos, taking into account that New York gamers annually contribute US$5 billion to the casinos in surrounding states.

However, this will prove to be an onerous process which could take a minimum of three years as there have to be two consecutive legislative sessions to pass the bill, following which the measure must be approved in a statewide referendum.

Miami’s appeals court has cleared the way for legislators to expand gaming in South Florida without a referendum. If approved, South Florida will see three resort casinos in Miami-Dade and Broward counties.

However, these three resort casinos will have to be evaluated based on a scoring scale that gives preference to proposals that create the most jobs and complete work the earliest. Genting Malaysia stands a good chance of being one of the three resort casinos as its proposal creates over 5,000 jobs, and it can roll out its casino at the Omni Center within six months of the casino licence approval. — UOB Kay Hian Research, Oct 24

This article appeared in The Edge Financial Daily, October 25, 2011.

Petronas licensing changes to affect smaller players

Oil and gas sector
Maintain overweight: Most local oil and gas (O&G) players are strong enough to hold their ground should a change in Petroliam Nasional Bhd’s (Petronas) licensing system result in more foreign competition. But marginal companies could see their piece of the pie getting smaller and the race for contracts get even tougher.

Pending further details, the sector remains an “overweight”. Also intact are all our stock recommendations, earnings forecasts and target prices. Our top picks are Petronas Dagangan Bhd for the big caps and Perisai Petroleum Teknologi for the small caps.

We are surprised by the possibility of the national oil company doing away with its current practice of awarding licences only to local O&G companies in certain job categories, as reported by The Edge at the weekend. This will make it harder for smaller companies to compete, but our industry checks indicate that the proposal is still very much preliminary.

These are key points from The Edge’s article: Petronas’ decision to end the restriction on licences in certain job categories to local players means that existing Petronas-licensed O&G firms, such as equipment fabricators and vessel operators, will have to fight for contracts with foreign rivals as well as unlicensed local players.

The move is aimed at further liberalising the domestic O&G sector to attract more foreign investment and promote Malaysia as an O&G hub. However, it will not take place across the board. It is believed that it does not apply to the vendor development programme.

By reforming the licensing system, foreign companies can bid directly for Petronas jobs and be the main contractors.

We think any revamp in Petronas’ licensing system is likely to only negatively impact the industry segments where Malaysian companies are still lagging behind their overseas counterparts, i.e. tubular services and reservoir studies. Therefore, it could be business as usual for most segments, especially those where local players have a competitive advantage and specialised assets — drilling rigs and pipelay barges.

Stay invested as we have positive expectations for the sector given an active execution of the Economic Transformation Programme (ETP) initiatives, most notably the marginal field projects and Pengerang tank terminal. Commanding 52% of RM170 billion committed investments so far, the sector is the single largest beneficiary of the ETP. — CIMB IB Research, Oct 24

This article appeared in The Edge Financial Daily, October 25, 2011.

Axis REIT marching to the beat of its own drum

Axis REIT (Oct 24, RM2.52)
Maintain buy with lowered target price of RM2.75 from RM2.90: Visible near-term growth with Axis REIT’s recent proposed acquisition of a logistics warehouse in Seberang Prai, which will boost revenue by RM6.9 million in FY12F (assuming completion in FY11).

The REIT has another five acquisitions valued at RM225.5 million that are being assessed (expected completion 2012) with estimated yields of 8% (based on Axis’ yield hurdle), tenures of more than five years and triple net leases ensuring relatively low property expenses.

Further enhancements to existing assets should bolster revenue growth via increased net lettable area (Menara Axis: 6,700 sq ft; Crystal Plaza: 15,000 sq ft) and higher revaluation gains (refurbishment of Infinite Centre, Wisma Bintang and Kayangan Depot).

Axis REIT will likely fund asset acquisitions via the announced 75.2 million-unit placement (which could raise about RM170 million) and income redistribution exercise (to commence with 3Q11 distributions).

At 38.2% gearing (based on total asset value) as at Sept 30, we believe it may issue RM300 million of long-term sukuk bonds to refinance short-term revolving credit (RM340.1 million as at Sept 30; RM198 million due in 2011) to lengthen loan expiry profiles and lock in lower interest rates.

We have raised our FY12F/FY13F earnings by 18.3%/25.7% on higher assumed asset acquisitions. We maintain our “buy” call, but reduce target price by 15 sen to RM2.75 from RM2.90 as we roll over our valuation base to FY12F and update our discounted cash flow assumptions (7.2% weighted average cost of capital, 0.45 Beta, 2.5% terminal growth). — Hwang DBS Vickers Research, Oct 24

This article appeared in The Edge Financial Daily, October 25, 2011.

Tanjung Offshore wins Carigali contracts for 3 OSVs

Tanjung Offshore (Oct 24, 85 sen)
Maintain sell with revised fair value of 53 sen from 70 sen: Last Friday, Tanjung Offshore Bhd announced that its 100%-owned subsidiary, Tanjung Offshore Services Sdn Bhd, had been awarded a contract by Petronas Carigali Sdn Bhd for the provision of three offshore support vessels (OSVs) for a total charter contract of up to two primary years, valued at about RM27 million.

However, as we expect its vessel earnings to be affected by negative contributions from its other divisions, we are downgrading FY11/FY12 earnings by 24% to 52% and maintaining our “sell” call.

We see the continuing dishing out of contracts by Carigali as positive for the company as its contracts already make up about 38% of the company’s 16 contracts for its 16-vessel fleet. Hence, we believe this division will continue to lead Tanjong Offshore’s overall earnings. This is because we had assumed some order book replenishment for it vessels. Hence, we are keeping our vessel earnings contribution unchanged for now.

Although the vessel division is still the pillar of its business, its contribution is expected to be eroded by the company’s other divisions, especially its process equipment division, Citech, which was supposed to have broken even by now. But we gather that it is still in the red due to sluggish business activities amid the slowdown in the global economy, coupled with some potential provisions that need to be made to reflect the true value of the division.

Hence, we are downgrading our FY11/FY12 earnings by 24% to 52% to reflect the group’s potential loss in earnings.

Our fair value for the stock has also been downgraded to 53 sen (previously 70 sen), based on the existing price earnings ratio (PER) of 12 times FY12 earnings per share (EPS), following our FY12 earnings downgrade. — OSK Research, Oct 24

This article appeared in The Edge Financial Daily, October 25, 2011.

MAHB 3Q earnings up 74% to RM108m

KUALA LUMPUR: Malaysia Airports Holdings Bhd (MAHB) earnings rose 74.1% to RM108.18 million in the third quarter ended Sept 30, 2011 from RM62.11 million a year ago, boosted by higher contributions to airport operations and higher passenger movements.

In a statement on Tuesday, Oct 25, MAHB said revenue rose 4.6% to RM652.83 million from RM623.78 million a year ago. Earnings per share improved to 9.83 sen for 3Q11 from 5.65 sen a year ago.

"The improved revenue was mainly attributed to the effects of adopting IC 12 which resulted in recognition of CONSTRUCTION [] revenue in relation to the construction of KLIA2 and expansion of Penang International Airport in the current quarter and financial period-to-date of RM169.1 million and RM506.2 million respectively as compared to the amount recognised in the same period previous year of RM177.5 million and RM328.9 million respectively," it said.

Once construction revenue was stripped out, the improvement in revenue for the current quarter under review was due to a 7.4% growth in airport operations, driven by an increase in non-aeronautical revenue of 15.6%, mostly derived from the group's retail business.

However, MAHB said its airport operations revenue was impacted by airline incentives accrued in the financial period to date. It said RM90.0 million wouldl be given out in the current financial year compared to RM27.7 million a year ago.

"The airline incentives were granted to eligible airlines under the Airlines Recovery Program (ARP) announced on Nov 18, ember 2009 and effective for three years ending Dec 31, 2011," it added.

Passenger movements for the quarter was 10.8% higher compared to a year ago, in which the international and domestic passenger movements increased by 9.8% and 11.6% respectively.

Year-to-date, the group's profits rose 42.7% to RM278.23 million from RM194.87 million. Revenue rose 16.4% on-year from RM1.65 billion to RM1.92 billion.

MAHB said was it optimistic that overall passenger traffic at its airports would remain positive in 2011. "The expected future GDP growth as well as increases in tourism and consumer spending in these markets will provide positive support to the group's operational and growth objectives," it added.

However, MAHB pointed out that the International Air Transport Association (IATA) has recently estimated a 5.9% world passenger traffic growth for 2011, an upward revision from an earlier forecast of 4.4% in June.

However, MAHB said the temporary improvement in passenger demand was unexpected and may not be expected to continue beyond the short term due to the growing likelihood of a protracted period of slow growth in the developed economies.

IATA had also forecast cargo growth at 1.4 % from the earlier 5.5 %. On this, MAHB said the significant reduction in cargo growth revision reflected a slowing worldwide economy.

“Nevertheless, to date the overall impact of these factors to MAHB have been relatively low and at this juncture MAHB is optimistic that the overall passenger traffic performance at the airports operated by the group will remain positive in 2011,” it said.

Axis REIT buys DHL’s warehouse in Penang for RM48.5m

KUALA LUMPUR: Axis REIT Managers Bhd is buying a logistic warehouse in Bayan Lepas, Penang from DHL PROPERTIES [] (Malaysia) Sdn Bhd for RM48.5 million.

Axis REIT said on Tuesday, Oct 25 that it would leaseback the property to DHL for a total lump sum cash consideration of RM48.5 million.

It said its trustee OSK Trustees Bhd, has signed the agreement for the acquisition and leaseback of the three-storey office block and warehouse complex measuring 3.08 ha with a tenure of 60 years expiring on Jan 22, 2062.

“The property has a gross built-up of approximately 231,940 sq ft and will be leased back to DHL Properties for five and five year lease term,” it said.

Axis REIT Managers said the corporate exercise was to provide unit holders with stable distribution and to achieve growth in net asset value (NAV) per unit of the fund. This would be through acquiring properties which meet the manager’s investment criteria.

“The proposed acquisition and leaseback of the property is consistent with the investment objective and strategy of Axis-REIT and it will be accretive to Axis-REIT’s distributable income.

“The proposed acquisition and leaseback of the property will at the same time diversify and enlarge Axis-REIT’s portfolio of properties and is expected to benefit the fund in the long term from economies of scale,” it said.

AirAsia X now flies to Gatwick Airport

LONDON: AirAsia X has shifted base from London Stansted International Airport to Gatwick Airport with its inaugural flight departing at 5.25pm (GMT) yesterday.

AirAsia X Head of Commercial Darren Wright said that the move will help spur growth for the Kuala Lumpur-London route.

"We want to continue providing guests with value for money fares and promotions to encourage passenger numbers travelling from both London and Kuala Lumpur," he said during a launch event here yesterday.

The budget airline announced its decision to switch airports in July to provide guests with more connectivity options.

Travellers arriving at London via Gatwick Airport can benefit from connections to a variety of cities in the United Kingdom (UK) and other European destinations.

Air Asia X first flew to London in March 2009.

The airline will see three weekly flights for November and will increase its frequency up to six flights weekly from December 2011 to March 2012.

Gatwick Airport is the busiest single-runway airport in the world and the second busiest in the UK. It is about 45km from London. -- Bernama

Dutch panel rejects Malaysian timber body’s appeal

KUALA LUMPUR: The Netherland’s appeals panel has rejected the Malaysian Timber Certification Council’s (MTCC) appeal against a 2010 decision by Dutch timber procurement body TPAC.

According to the Timber Industry magazine, the panel found that the Malaysian Timber Certification Scheme (MTCS) had not met the Netherland’s procurement criteria for wood.

Timber Industry, a UK magazine for the timber trade, said on Monday, Oct 24 the independent panel SMK, had rejected the MTCC’s appeal against TPAC’s decision.

Timber Industry said TPAC’s rejection was based on the MTCS’s limited recognition of the rights of indigenous peoples and lack of adequate protection against the conversion of certified natural forest to other uses, included PLANTATION []s.

The magazine also said MTCC had not provided substantive arguments in their case, hence the appeal was dismissed.

To recap, the MTCC is an independent organisation established to develop and operate the MTCS to provide independent assessments of forest management practices in Malaysia as well as to meet the demand for certified timber products.

Timber certification is a market-linked tool to promote and encourage sustainable forest management as well as to provide an assurance to buyers that the timber products they buy come from sustainably managed forests.

Timber Industry quoted the MTCC as saying it regretted the decision as it undermined the efforts by developing tropical forest countries like Malaysia to implement timber certification.

The Netherlands is the largest market for Malaysian timber in the European Union and accounts for 49% of the MTCS’s exports of certified timber products.

MAHB posts higher Q3 profit of RM108.2m

Malaysia Airports Holdings Bhd said third-quarter profit rose to RM108.2 million from RM62.1 million a year earlier.

Revenue climbed to RM652.8 million from RM623.8 million, the company said in a statement to the Kuala Lumpur stock exchange today. -- Bloomberg

KL shares lower at mid-day

Share prices ended the morning session slightly lower today with the FTSE Bursa Malaysia KLCI (FBM KLCI) falling 0.87 of a point to 1,449.15, dealers said.

They also said the market remained cautious over the ability of European policy makers in dealing with Europe's debt saga.

"A final decision on the issue was deferred until a second summit scheduled for tomorrow and this put a cap on markets," a dealer said.

The benchmark index moved between a low of 1,448.12 and a high of 1,455.65 this morning after opening 3.44 points higher at 1,453.46.

Nonetheless, gains in plantation stocks like Sime Darby, Kuala Lumpur Kepong (KLK) and Batu Kawan, helped pare market losses, as industry players expect the crude palm oil price to rise above RM3,000 per tonne in the next three months due to a drop in production amid increasing overseas demand.

Sime Darby rose five sen to RM8.69, KLK added two sen to RM20.60 while Batu Kawan earned six sen to RM15.56.

The Finance Index rose 20.96 points to 13,121.45, the Industrial Index fell 2.66 points to 2,661.06 and the Plantation Index declined 8.01 points to 7,346.69.

The FBM Emas shed 7.92 points to 9,876.77, the FBMT100 decreased 2.67 points to 9,697.62 and the FBM Ace Index fell 43.19 points to 3,973.71 but the FBM 70 Index increased 9.87 points to 10,618.30.

Decliners led advancers by 383 to 193 while 230 counters were unchanged, 655 untraded and 26 others suspended. Trading was moderate with a total volume of 424.87 million shares worth RM388.2 million.

Of the active counters, The Media Shoppe lost half-a-sen to 10 sen, MAA and Cybertowers rose half-a-sen each to 47.5 sen and 11 sen respectively, and AirAsia earned four sen to RM3.88.

Among heavyweights, Maybank advanced three sen to RM8.28, CIMB was flat at RM7.19 and Petronas Chemicals declined two sen to RM6.14. -- Bernama

AirAsia flies 13.5pc more passengers in Q3

AirAsia Bhd carried 13.5 per cent more passengers in the third quarter compared with a year earlier, according to an emailed statement today.

The low-cost airline’s passenger traffic climbed 8.8 per cent in September, the company said. Load factor slid to 78 per cent from 80 percent a year earlier, it said. -- Bloomberg

Ascott to manage UEM Land JV’s Somerset Puteri Harbour

KUALA LUMPUR: The Ascott Ltd will manage and operate 204 units of service residences, to be known as Somerset Puteri Harbour, in Nusajaya, Iskandar Malaysia under an agreement with Nusajaya Consolidated Sdn Bhd.

Nusajaya Consolidated, a 50:50 joint venture between UEM Land Bhd and UNITED MALAYAN LAND BHD [], had on Tuesday, Oct 25 signed two agreements with Ascott.

UEM Land said under the technical advisory agreement, Ascott will provide technical advisory services to Nusajaya Consolidated during the development of Somerset Puteri Harbour.

Under the serviced residence management agreement, Ascott will manage and operate the serviced residences on behalf of Nusajaya Consolidated when completed in 2013.

Somerset Puteri Harbour will be a four-storey serviced residence at the Puteri Harbour integrated waterfront and marina development in Nusajaya.

The serviced residence offers spacious apartments ranging from studios to three-bedroom units that come fully furnished with modern amenities. With facilities such as a gymnasium, swimming pool, restaurant and residents’ lounge available in the property, Somerset Puteri Harbour provides the ideal home away from home for residents to live, work and play.

UEM Land as the master developer of Nusajaya has set a target for the regional city to come alive by 2012.

To achieve this, it has adopted a strategy to partner several property developers to transform Nusajaya into a world class sustainable city that offers holistic and integrated lifestyle, with immense potential growth for investors.

Lacklustre morning for market, EU summit in focus

KUALA LUMPUR: The market put up a lacklustre performance in the morning session on Tuesday, Oct 25 as investors decided to stay on the sidelines ahead of the EU finance ministers’ summit on Wednesday.

At 12.30pm, the FBM KLCI had dipped 0.87 of a point to 1,449.15. Turnover was 424.87 million shares valued at RM388.20 million. Losers beat gainers 383 to 193 while 230 stocks were unchanged.

With the holidays on Wednesday, investors were not keen to put money into the riskier equities. The unimpressive market sentiment was also reflected in the key regional markets.

Japan’s Nikkei fell 0.44% to 8,805.22, South Korea’s Kospi dipped 0.18% to 1,894.95 and Singapore’s Straits Times Index eased 0.09% to 2,758.58. However, Hong Kong’s Hang Seng Index rose 0.54% to 18,873.10.

Among the commodities, crude palm oil third-month futures rose RM38 to RM2,928 while US light crude oil added 46 cents to US$91.73. The ringgit was firmer against the US dollar at 3.1278.

At Bursa, Genting fell five sen to RM9.97 and Genting Malaysia four sen to RM3.71 while MISC shed seven sen to RM6.71.

Among the PLANTATION [] stocks, United Plantations fell 12 sen to RM17.20 while IOI Corp shed one sen to RM5.02 but KLK rose two sen to RM20.60 and Sime five sen to RM8.69.

Public Bank and AMMB shed two sen each to RM12.48 and RM5.85 but Maybank advanced five sen to RM8.30 and RHB Cap 10 sen higher to RM7.37.

Britech was the top loser, down 13.5 sen to 11 sen while AIC and Bina Goodyear shed eight sen each to RM1.20 and 65 sen.

Among the gainers were consumer stocks, Dutch Lady up 26 sen to RM19.60, Nestle 16 sen to RM49.36, F&N 10 sen to RM16.20. DiGi added 10 sen to RM31.68 and MMHE four sen to RM5.98.

Asian shares rise, euro steadies on Europe hopes

TOKYO: Asian shares rose and the euro steadied on Tuesday, Oct 25, keeping gains from the previous day as investors grew more confident about European leaders coming to a broad agreement to contain the region's debt crisis.

European policymakers neared a deal over the weekend on bank recapitalization, and France and Germany appeared close to agreement on how to use the European Financial Stability Facility (EFSF) to stave off contagion in the bond market.

But final decisions were deferred until a second summit scheduled for Wednesday, putting a cap on markets.

Deep divisions over the extent of losses that private holders of Greek bonds would have to incur remain a huge risk, putting downward pressure on the markets.

Investors are also concerned that the size of the bail-out fund, the EFSF, may not be sufficient to stem the debt woes from spreading wider.

"A lot has already been priced in, so profit-taking flows will likely set initially and put downward pressure on the market after Wednesday, before the market consolidates," said Frances Cheung, senior strategist for Asia ex-Japan at Credit Agricole CIB in Hong Kong.

Sentiment was boosted after the world's largest heavy equipment maker Caterpillar Inc reported a 44 percent jump in profits, suggesting the underlying health of the global economy may not be as dire as is widely believed.

Its stock gained 5.5 percent on the New York Stock Exchange and further upbeat forecast from General Electric Co and United Technologies Corp helped spark an overall rally in the market Monday.

The markets, particularly commodities, were also encouraged by comments from William Dudley, president of the New York Federal Reserve Bank, that another round of quantitative easing, or QE3, is one possible option the U.S. central bank has to boost the slow recovery.

"With some direction emerging from Europe on its debt crisis, there is a feeling the worst can be avoided, spurring an unwinding of an excessive risk aversion, which may continue in the very near-term," said Tetsuro Ii, president of Commons Asset Management in Tokyo.

"Money is flowing into commodities, and speculation about QE3 is definitely helping the mood."

But over the medium-term, markets will be firmly capped by the European debt crisis.

"What will be agreed on Wednesday will be just the start," Ii said. "It will address the macro issues, but micro issues, problems facing individual countries must be tackled next, so we can't be optimistic."

MSCI's broadest index of Asia Pacific shares outside Japan rose 0.3 percent, with the metals and energy sectors leading the gains as commodities rebounded.

Japan's Nikkei stock average reversed earlier gains and slipped almost half a percent on Tuesday as the yen stayed near a record high versus the dollar.

Shanghai copper rose on Tuesday, climbing for a third straight session.

Gold prices held steady and resilient physical demand from Asia also lent support, while Oil kept its gains after U.S. crude jumped more than 4 percent to its highest level in more than two months on Monday.

While some encouraging signs emerged to reflect improving sentiment and some willingness to take risks, caution and scepticism about a long-term solution to the euro zone crisis may keep recovery short-lived.

"Asian markets are on a long-term rising trend based on fundamentals but the markets may turn their focus on worries over the U.S. and European economy, which will affect exports from Asia," Cheung said.

"Even if (Europe's) measures are delivered, there is still concern that the EFSF is not enough to contain euro zone det problems from spreading out."

HSBC's flash purchasing managers' index (PMI) on Monday showed China's vast manufacturing sector expanded moderately in October, reflecting the resilience of robust domestic demand and soothing fears of an abrupt slowdown in the world's second-largest economy.

China's PMI data and Caterpillar's results pushed the Standard & Poor's 500 Index up near a key technical level on Monday, with the index testing a 61.8 percent retracement of the 2011 decline.

On Monday, global stocks hit a seven-week high and commodities rallied on hopes Europe was moving closer to resolving the debt crisis.

The euro edged lower on Tuesday but still held near a six-week high Of $1.39570 hit the previous day, supported by market expectations for broad crisis-tackling measures from a summit due on Wednesday.

"Funds want a bit more of a rise in markets to take profits before they close their books for the year, so that may help support the market in the near-term," Ii said. "At the same time, there are also needs to cash out to cover losses."

Gains on Wall Street weighed on safe-haven U.S. Treasuries. Benchmark 10-year Treasury notes fell 4/32 in price for a yield of 2.23 percent on Monday.

But lingering worries about the extent of progress made over the euro zone sovereign debt problems pushed the spread between the yield on the 10-year Italian BTP benchmark bond and the equivalent German Bund wider on Monday to 388 basis points.

The spreads on the iTraxx Asia ex-Japan investment grade index , a gauge for whether investor risk appetite is returning, narrowed by a couple of basis points early on Tuesday.

Hong Kong-based Sun Hung Kai PROPERTIES [], Asia's largest developer by market value, issued 5-year $500 million bonds on Monday at 245 basis points above U.S. Treasuries, in line with final guidance.

Data on Monday showed huge outflow of funds from emerging markets were reversing.

EPFR Global-tracked Bond Funds recorded net inflows of $2.51 billion in the week ending October 19. In mid-October, investors returned into high yield bond funds, with the combined U.S., Europe and Global high yield funds absorbing over $3 billion during the same week.

EPFR Global also reported on Monday that an increased risk appetite helped Emerging Market bond funds snap a short, sharp outflow streak. - Reuters
Related Posts Plugin for WordPress, Blogger...