Thursday 5 January 2012

Khazanah, Temasek in talks with bank to finance Singapore projects

PUTRAJAYA (Jan 5): Khazanah Nasional Bhd (Khazanah) and Temasek Holdings (Pte) Ltd (Temasek) are currently in the midst of discussions with banks to provide financing for M+S Pte Ltd development projects in Singapore.

M+S, a company owned 60:40 by Khazanah and Temasek respectively, is set to develop land parcels in Marina South and Ophir-Rochor with an estimated gross development value of RM27 billion (S$11 billion).

The developments in these areas are expected to be completed over the next six years, with CONSTRUCTION [] expected to commence in 2013, according to a joint statement released by Khazanah and Temasek after the bilateral meeting between Prime Minister Datuk Seri Najib Tun Razak and his Singapore counterpart Lee Hsien Loong here on Thursday.

It added that M+S has appointed architects and consultants for the Marina South and Ophir-Rochor developments and submitted the designs for provisional planning approvals in the last quarter of last year.

Meanwhile, Pulau Indah Ventures Sdn Bhd (Pulau Indah), a 50:50 joint venture between Khazanah and Temasek, will develop the “Urban Wellness” project on a 2.02 ha site in Medini North.

It will also develop the 85.5 ha “Resort Wellness” project in Medini Central.

The gross development value of the projects, which include the development of a wellness centre, serviced residences, a corporate training centre, commercial, retail and residential and wellness-related offerings, is estimated at approximately RM3.0 billion.

For the Urban Wellness project, Pulau Indah has appointed CapitalLand as project manager via the exchange of the Project Management Agreement.

The project is expected to commence in 2013 and completed over the next four years.

For the Resort Wellness project, Pulau Indah and an indirect wholly-owned subsidiary of Eastern and Oriental Berhad (E&O), had exchanged the Shareholders’ Agreement in relation to Nuri Merdu Sdn Bhd, the 50:50 joint venture vehicle for the Resort Wellness project.

E&O will also carry out the project management and marketing for the Resort Wellness site.

The architect, master planner and key consultants havwe been selected for the project, with the initial phase expected to commence in 2013 and the whole project to be completed in five years.

Earlier, Najib and Lee were briefed on the concept for both the Urban Wellness and Resort Wellness developments. - Bernama



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Can-One says unaware of unusual market activity

KUALA LUMPUR (Jan 5): CAN-ONE BHD [], whose share price surged on Thursday, told Bursa Malaysia Securities it was unaware of the reasons for the unusual market activity (UMA).

Can-One surged 31 sen to close at RM1.37 with 6.95 million shares done.

In its reply to Bursa Securities’ query, it said there was no corporate development relating to the group’s business and affairs that had not been previously announced that may account for the UMA.

“We are not aware of any rumour or report concerning the business and affairs of Can-One group that may account for the UMA,” it said.



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Lion Corp gets Bursa nod to list 950m new shares

KUALA LUMPUR (Jan 5): LION CORPORATION BHD [] has received Bursa Malaysia Securities Bhd’s approval to list up to 950 million new shares to settle the overdue amount owed by its 79% subsidiary Megasteel Sdn Bhd.

The company said on Thursday Bursa Securities had also approved the proposed share consolidation.

However, the approvals were subject to conditions, wherein Lion Corp must fully comply with the relevant provisions under the Main Market Listing Requirements of Bursa Securities.

To recap, the 950 million new shares was to settle the RM950 million due by Megasteel to the unsecured trade creditors with an overdue amount of RM500,000 and above as at April 30, 2011.

This settlement would involve the issuance of one new share at par value of RM1 Lion Corp share and deferred cash payment of 20 sen for every RM1 of the overdue amount.

Lion Corp had said the proposed capital reCONSTRUCTION [] involved the proposed reduction of the par value of the existing LionCorp shares of RM1 each to 20 sen each by cancelling 80 sen.

This would be followed by the proposed consolidation of every five Lion Corp shares of 20 sen each into one share of RM1 each after the capital reduction was completed.



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Kian Joo MD See Teow Chian retires

KUALA LUMPUR (Jan 5): KIAN JOO CAN FACTORY BHD []’s managing director Datuk See Teow Chuan has retired with effect from Thursday.

The company said that See, 71, ceased to be the managing director after his contract of service expired on Thursday.

However, he would remain on the board of directors as a non-independent and non-executive director.

See has a 45-year track record in the can and also carton manufacturing business. He also sits on the boards of several private limited companies.

He has a direct stake of 14.523 million Kian Joo shares.



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Maxbiz: RM510m LOI based on RM5,100 per connection to 100,000 homes, office

KUALA LUMPUR (Jan 5): MAXBIZ CORPORATION BHD [] says the contract value of the letter of intent (LOI) of RM510 million from Fibre-N Sdn Bhd was based on the infrastructure works of RM5,100 per connection.

Maxbiz said on Thursday the LOI was for the fibre-to-the-home and fibre-to-the-office (FTTX) infrastructure works for 100,000 connections to high- rise residential and office buildings in Klang Valley, Penang and Johor Bahru.

“By way of comparison, TELEKOM MALAYSIA BHD []’s cost for the High Speed Broad Band (HSBB) project of a similar nature was stated as RM11.3 billion for 1.3 million connections, spanning over 10 years,” it said.

In its reply to a query from Bursa Malaysia Securities that Fibre-N had undertaken to deploy one million homes specifically in multi-tenanted buildings (high rise condominium and office buildings) over three to five years.

Fibre-N is a fibre optic cabling turnkey contractor for both in-building cabling works and roadside cable laying works. It is a wholly owned subsidiary of Open Fibre Sdn Bhd and the directors are Ranjeet Singh Sidhu and Hasniza Hashim.

Maxbiz said the overall cost of the project based on Fibre-N’s current rate of RM5,100 per connection was RM510 million.

However, this included both out-plant works and in-plant works and also related scope of works such as project management, site survey works, testing & commissioning.



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SapuraCrest unit inks contracts worth RM712.78 million

KUALA LUMPUR (Jan 5): SAPURACREST PETROLEUM BHD [] has secured two contracts worth combined US$227 million (RM712.78 million) to build two units pipelay cum heavylift offshore CONSTRUCTION [] vessels.

It said on Thursday that its unit TL Offshore Sdn Bhd had finalised the contracts with Cosco (Nantong) Shipyard Co. Ltd.

SapuraCrest said both parties had agreed that the contract be effective from Sept 10, 2011.

It said one of the Vessels was scheduled to be delivered in the fourth quarter of 2013, whilst the other vessel to be delivered in the first quarter of 2014.



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KLCI snaps losing streak, closes 0.68% higher

KUALA LUMPUR (Jan 5): The FBM KLCI snapped its losing streak on the third trading day of 2012 and closed in the positive territory for the first time in the New Year, lifted by gains at banking and select blue chip stocks.

The FBM KLCI gained 10.21 points to close at 1,514.43.

Gainers beat losers by 467 to 325, while 324 counters traded unchanged. Volume was 1.67 billion shares valued at RM1.46 billion.

However, whether the index would be able to sustain its gains on Friday remains uncertain as most Asian markets closed in the negative territory while European indices fell in early trade on Thursday.

At the regional markets, Hong Kong’s Hang Seng Index added 0.46% to 18,813.41, Taiwan’s Taiex gained 0.68% to 7,130.86 and Singapore’s Straits Times Index edged up 0.07% to 2,713.02.

Meanwhile, the Shanghai Composite Index fell 0.97% to 2,148.45, Japan’s Nikkei lost 0.83% to 8,488.71 while South Korea’s Kospi shed 0.13% to 1,863.74.

Concern about the appetite for euro zone sovereign debt pushed European stocks lower and hit the single currency on Thursday, with the first French bond auction of 2012 set to test how much progress policymakers have made in easing tensions, according to Reuters.

The price France has to pay to sell 7 to 8 billion euros of longer-term bonds will measure how much relief markets have taken from the EU leaders' December plan for resolving the crisis and the near half-trillion euros pumped into the region's banks by the European Central Bank, it said.

On Bursa Malaysia, KLK jumped RM1.76 to RM25.26, Dutch Lady gained RM1 to RM24, Can-One 31 sen to RM1.37, Nestle 30 sen to RM56.30, Timwell 28 sen to RM1.08, BHIC and Boxpak 26 sen to RM4.11 and RM2.52, Carlsberg and MISC 23 sen each to RM8.71 and RM5.96, while BLD PLANTATION []s was up 22 sen to RM7.60.

Among banking stocks, CIMB rose six sen to RM7.16, RHB Capital five sen to RM7.33, Affin seven sen to RM3.09, HLFG four sen to RM11.56, while Maybank and Public Bank gained two sen each to RM8.29 and RM13.16.

Decliners were led by RCI that lost 35 sen to RM1.45, BAT 14 sen to RM49.66, IGB 10 sen to RM2.48, Genting Plantations and IJM Corp eight sen each to RM8.60 and RM5.46, Malayan Flour Mills and WCT seven sen each to RM7.16 and RM2.18, while Mahajaya and AFG fell six sen each to 62 sen and RM3.89.

The actives included XDL, JCY, Proton, Versatile and Astral Supreme.



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Market Commentary

The FBM KLCI index gained 10.21 points or 0.68% on Thursday. The Finance Index increased 0.40% to 13391.52 points, the Properties Index up 0.16% to 992.41 points and the Plantation Index rose 2.30% to 8483.71 points. The market traded within a range of 10.28 points between an intra-day high of 1514.82 and a low of 1504.54 during the session.

Actively traded stocks include MAS-CD, WIJAYA-WA, XDL, JCY-CD, PROTON-CL, PROTON-CG, JCY, MAS-CE, VERSATL and ASUPREM. Trading volume increased to 1668.82 mil shares worth RM1462.48 mil as compared to Wednesday’s 1658.84 mil shares worth RM1527.52 mil.

Leading Movers were KLK (+176 sen to RM25.26), PETCHEM (+18 sen to RM6.38), DIGI (+9 sen to RM3.88), CIMB (+6 sen to RM7.16) and IOICORP (+3 sen to RM5.36). Lagging Movers were BAT (-14 sen to RM49.66) and MMCCORP (-1 sen to RM2.69). Market breadth was positive with 467 gainers as compared to 325 losers. -- JF Apex Securities Bhd



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AmFirst REIT may buy shopping malls to grow asset base

PETALING JAYA: AmFirst Real Estate Investment Trust (AmFirst REIT), one of two Malaysian REIT to propose a rights issue late last year, is looking to grow its asset base by 20% over the next 15 months and may do this by acquiring Malaysian shopping malls assets managed by its Singapore-listed parent.

Lim Yoon Peng, chief executive officer of Am ARA REIT Managers Sdn Bhd (Am ARA), said while AmFirst REIT does not have legal priority over ARA Asset Management Ltd’s (ARA
Asset) properties here, AmFirst REIT is well-positioned to take advantage of any opportunities.

“Hypermarkets like Tesco, Giant and Jusco are considered commercial properties. There is no first right of refusal but I am first in the queue,” Lim told The Edge Financial Daily in a recent interview, adding that a deal could happen when ARA Asset decides to make an asset disposal in line with its exit strategy.

Singapore-listed ARA Asset, which owns 30% of AmFirst’s REIT manager Am ARA, is an affiliate of tycoon Li Ka-shing’s Cheung Kong Group. Malaysia’s AmInvestment Group Bhd owns 70% of Am ARA.

The malls mentioned could come from ARA Asset’s ARA Asia-Dragon Fund (ADF). “The fund usually keeps the properties for a period of between three and five years before
disposing them of for a profit. ADF will offer to sell these properties to third-party buyers or AmFirst (REIT),” Lim said. “I foresee that ADF may dispose of some properties within two to three years.”

Reportedly in talks to acquire up to 10 malls throughout Malaysia, ARA Asset’s portfolio here includes the 1 Mont’Kiara Mall and AEON Bandaraya Melaka shopping centre in Malacca. ARA Asset also owns the Klang Parade, Seremban Parade and Ipoh Parade malls.

The acquisitions were undertaken via the ADF, a private real estate scheme investing across Singapore, Hong Kong, China and Malaysia. According to ARA Asset’s latest annual report, the ADF has a committed capital of US$1.13 billion (RM3.55 billion).

Recent news reports, quoting unnamed sources, indicated that the ADF is acquiring the Citta Strip Mall in Ara Damansara for about RM245 million from Germany-based real estate fund SEB Asset Management and property developer Puncakdana Group.

“I believe the ADF is buying Citta to incubate the asset before disposing of the property within the next three to five years,” Lim said when asked on the news reports.

AmFirst REIT’s plans to acquire more properties coincides with the REIT’s plans to venture outside its comfort zone in the Klang Valley, Lim said.

Already, AmFirst REIT is eyeing commercial properties such as Grade A office buildings in Penang and Malacca, as it seeks to grow its real estate asset base by 20% before the end of its FY ending March 31, 2013.

“Both states are coming up and the economy is doing well. Valuations and asset purchases are driven by market rent,” Lim said.

The office buildings would form a crucial element in the manufacturing enclaves in both states, which have benefited from foreign direct investments, he added.

Lim also said AmFirst REIT’s potential acquisitions will still be centred on commercial properties and the group had no intention to venture into industrial assets.

AmFirst REIT’s asset base stood at RM1.16 billion as at Nov 30, 2011, according to data from its presentation slides.

Its portfolio of properties includes Bangunan AmBank Group, AmBank Group Leadership Centre, Menara AmFirst, Menara AmBank, Kelana Brem Towers and The Summit Subang USJ. In Nov 2011, AmFirst REIT completed the acquisition of two commercial towers, namely Prima 9 and Prima 10 in Cyberjaya.

These eight properties, with a collective net lettable area of 2.33 million sq ft, have occupancy rates of between 66% and 100%, according to AmFirst REIT.

The acquisition of the Prima 9 and Prima 10 was first announced in June prior to the announcement of AmFirst REIT’s renounceable rights issue in August.

AmFirst REIT had proposed to undertake the rights issue on the basis of three new rights units for every five existing units in the company.

The property trust had also planned to expand its approved fund size from 429 million units to 686.4 million units.

Based on an indicative 85 sen per rights unit, the proposed rights issue, to be finalised by March 2012, is expected to raise RM218.79 million. Of that, RM214.74 million will go towards the repayment of the company’s debt.

Following the completion of the Cyberjaya acquisition in November 2011, AmFirst REIT’s gearing ratio rose to 46.5%, just a shade below the 50% debt-to-total asset ceiling allowed by regulators.

Upon repayment of borrowings from the proceeds of the cash call, AmFirst REIT’s gearing will decline to some 28%, the company said, thus providing the property trust room to gear up to pursue other real estate acquisitions. Its gearing ratio will also decline with a larger asset base.

In a statement dated Nov 30, announcing the completion of its first investment in Cyberjaya, Lim said its proposed rights issue “will be a catalyst to drive AmFirst REIT’s asset acquisition strategy”.

While unit holders of REITs in Singapore had reacted negatively to rights issues, Lim seemed confident AmFirst REIT unit holders would not take the exercise badly.

“I don’t think AmFirst (REIT) unitholders will react negatively to the [proposed rights] exercise. This is because after we acquired Prima 9 and Prima 10 in Cyberjaya, our gearing rose to nearly 47%.

If we don’t do fresh capital raising, we cannot grow AmFirst (REIT) further,” Lim said, pointing out that the cash call would strengthen the REIT’s balance sheet, allowing further room for growth. “If there is negative market perception on AmFirst REIT’s growth prospects, our unit price could be affected.”

Whatever the case, there is a need for AmFirst REIT to improve earnings. For the 1H ended Sept 30, net profit fell 8% to RM18.95 million from RM20.59 million a year earlier as revenue declined 2% to RM46.18 million.



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2012 CEO Outlook series: Public-private sector ties to boost RHBCap

TEFD: What are your expectations for 2012, for your bank and the industry?
Kam: Economic growth is expected to weaken with the eurozone’s sovereign debt crisis still lingering and the risk of it worsening remains high on the back of a slow US economic growth.

Due to the protracted slow growth, export growth is expected to slow down in 2012.

However, we expect the Malaysian economy to continue to be supportive of business growth and the outlook for the banking sector to remain positive, supported by the
underlying strengths of the domestic economy and the progressive rollout of the Economic Transformation Programme (ETP) projects.

In addition, Bank Negara Malaysia (BNM) is expected to keep the overnight policy rate and statutory reserve requirement to be supportive of growth. However, if global economic conditions are to deteriorate rapidly, Malaysia will be impacted negatively and we expect BNM to proactively act and begin cutting interest rate sooner rather than later to support growth.

Domestically, the progressive rollout of the ETP shall provide more opportunities in the capital markets.

We will capitalise on our relationship with the public and private sectors for corporate and investment banking businesses. The proposed merger with OSK Investment Bank Bhd will complete our clientele coverage from small to large corporates and enhance our distribution reach to Asean and Hong Kong.

On the international front, high on the agenda will be completing the acquisition of Bank Mestika and participating in the growing Indonesian market, as well as driving our existing businesses in Singapore and Thailand.

What impact, if any, do you expect from the euro crisis?
In a bid to preserve liquidity and capital, European banks appear to have opted to be more conservative with their balance sheets. Consequently, within the region, this will provide opportunities for the domestic banks to step in and fill up the gaps when it comes to supporting transactions with our balance sheet. On a broader view, should the euro crisis continue to deteriorate, the impact on the real economy globally will not be spared and economic growth will be impacted.

Will BNM’s recent tightening of consumer borrowing have an impact?
These guidelines are not new as banks are already practising prudent and responsible lending, taking into consideration the necessary risk-reward of the loan. Nevertheless, banks may see slower loan growth ahead as they move to tighten consumer lending practices from this year, and competition for quality customers is set to intensify.

While the loan growth potential will be slower, we do not foresee the impact to be significant given the existing excess liquidity condition, accommodative interest rate regime, strong capital adequacy ratios of banks and historically low impaired asset ratio.

What is your banking group’s plans and focus for this year?
The strong private and public sector relationship built up over the past 24 months shall position us well to tap those ETP-related opportunities, while our enhanced banking network and channel through Easy by RHB and POS will provide a strong reach to our retail and consumer customers. The recently launched RHB Bank@work which comes with a complete suite of products and services under our renewed electronic and online banking platform will further enhance our capability to serve our customers better. We will also focus our efforts on maintaining the momentum built in our Islamic banking business.

What is your wish list for 2012?
I wish for the global economy to rebound and the Malaysian and regional economies to continue with their growth path, and to complete our acquisition of Bank Mestika in Indonesia as well as the OSK M&A successfully.


The 2012 CEO Outlook series started on Dec 19, 2011 and will run every day into January. The Edge Financial Daily has so far interviewed Geoffrey Briscoe of BMW Malaysia, Tan Sri Teh Hong Piow of Public Bank Bhd, Jeffrey Chew of OCBC Bank (M) Bhd, Osman Morad of Standard Chartered Bank Malaysia Bhd, Yvonne Chia of Hong Leong Bank Bhd, Tan Sri Lee Oi Hian of Kuala Lumpur-Kepong Bhd, among many others. If you’ve missed them, please read our back issues on iPad for free.



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In Brief

Priceworth to carry out logging in Solomon Islands

KUALA LUMPUR: Priceworth International Bhd, via 100%-owned subsidiary Ligreen (SI) Ltd, has entered into an agreement to carry out logging activities in the Solomon Islands.

Ligreen was appointed by Success Co Ltd to carry out logging activities within 1,053ha on Kolombangara Island, Western Province, Solomon Islands.

The area is estimated to have a log volume of about 60,000 cubic metres per annum which can be processed into sawn timber, plywood and downstream wood products. The logs will be partly utilised for Priceworth’s internal consumption and for export purposes.

Ligreen and Success will jointly market the logs harvested from the area. Ligreen will receive 55% of the declared sales contract from Success.
The venture is not expected to have any material on its earnings per share for the financial year ending June 30, 2012 but is expected to enhance its future earnings, it added.

PTP container volume up 15% last year

KUALA LUMPUR: Malaysia’s largest container terminal Port of Tanjung Pelepas recorded a 15% rise in container volume to 7.5 million twenty-foot equivalent units (TEUs) of containers in 2011.

In a statement, Pelabuhan Tanjung Pelepas Sdn Bhd (PTP) said its growth in 2011 had outperformed global volume growth of 7%.

PTP said its increase in volume was driven by strong growth seen in its existing customers as well as volume from new customers.

The port also handled new shipping lines last year including South Korea’s Hanjin group and STX Pan Ocean, Japan’s Mitsui and K-Line and China Shipping.

PTP deputy CEO Azlan Shahrim said PTP had grown to 26 shipping lines and box operators from merely two shipping lines in the port’s early days.

PTP is a 70-30 joint venture between Malaysian utilities and infrastructure group MMC Corp Bhd and Danish shipping giant AP Moller-Maersk Group’s unit APM Terminals.



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BHIC attracts interest on privatisation talk

KUALA LUMPUR: Market talk concerning the possible privatisation of Boustead Heavy Industries Corp Bhd (BHIC) has resulted in an increase in the stock’s price over the past couple of weeks.

Yesterday BHIC closed at RM3.85, a 6.4% increase from its Tuesday close of RM3.62, with a total of 1.2 million shares done.

While the current price is still below the counter’s 52-week high of RM4.84, the stock price has seen a gradual upward trend from early December 2011, where the share price ranged between RM2.60 and RM2.90.

According to reports, while BHIC’s parent Boustead Holdings Bhd denied talk that it was planning to privatise the former, it then emerged that Lembaga Tabung Angkatan Tentera (LTAT) could be the vehicle to be used.

LTAT’s chief executive Tan Sri Lodin Wok Kamaruddin did not dismiss the possibility of the Armed Forces Pension fund taking BHIC private. However, he added that the matter would have to be collectively deliberated on by LTAT’s board of directors.

According to BHIC’s latest annual report, LTAT holds a direct 8.15% stake in the company, and an indirect stake of 65%, via Boustead.

According to Boustead’s latest annual report, LTAT holds a 59.28% stake in the company.

While there are still questions over the possible price that BHIC might be privatised at, the company’s net assets per share as at the end of Sept last year was RM1.71. At its current share price, its historical PE ratio is 46.78 times, while its estimated PE is 124.19 times. Its current price-to-book ratio is 2.26 times. However, AmResearch noted in a research report the attractiveness of BHIC given that it is the country’s sole military yard with massive order book prospects.

While it was a tough year for BHIC last year, the company recently got a boost to its prospects when it received a letter of award from the Ministry of Defence, as announced by the company in mid-December. The letter of award is for the contract to design, construct, equip, install, commission, integrate, test and trials, and deliver six combat ships.

The contract carries a ceiling of RM9 billion, with the first ship expected to be delivered in 2017, to be followed by the other ships at six-month intervals.

However, for its 3QFY11 ended Sept 30, BHIC slipped into the red, reporting a net loss of RM2.4 million compared to a net profit of RM26.9 million for the previous year’s corresponding period. Net profit for the first nine months of FY11 also showed a year-on-year decline of 84.5% to RM9 million.

According to the notes accompanying the announcement, the loss during 3Q was due to cost overruns in certain commercial shipbuilding projects.

AmResearch has a “buy” on BHIC but adjusted its earnings forecasts for FY11 on the back of cost overruns and late delivery charges for two accommodation crane barges and deadweight oil carriers.

The research house has a fair value of RM4.30 for the stock compared with RM4.15 by consensus.



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Nazir: CIMB ready for ‘challenging’ 2012

KUALA LUMPUR: The year 2012 would be a year when “revenues will be harder to earn”, and one that even larger banking groups would find thoroughly challenging, Datuk Seri Nazir Razak, group managing director of CIMB Group Holdings Bhd, told employees in his recent New Year address.

Even with its envied deal pipeline, dominance and reach, Nazir told employees that CIMB performed below par in 2011, a source said.

“CIMB did not outperform and shareholders lost a lot of value,” the source quoted Nazir as saying, adding that the message had a cautious undertone.

Net earnings growth, which Nazir expects to be around “mid-teens” in 2011, “relied heavily on cost containment and low provisioning”, the source added.

That CIMB probably only managed a 2% growth in net interest income, despite mid-teens growth in loan books, is another telling sign of margin compression and tougher times ahead.

In offering his views on why CIMB’s share price tumbled the way it did last year, Nazir even admitted the bank’s initial growth targets for 2011 were too aggressive. And the market didn’t question the guidance until CIMB under-delivered in several areas including on loans, deposits and net interest margins growth, the source said.

Nazir: 2011 wil be one of CIMB's worst years in terms of total shareholder returns.


While CIMB beat rivals on several fronts and would probably meet or perhaps exceed latest analysts’ earnings projections, Nazir said year 2011 will still be one of CIMB’s worst years in terms of total shareholder returns.

Mirroring an industry-wide concern over asset quality, capital ratios and hazy prospects, CIMB shares tumbled over 22% from as high as RM9.17 on Jan 5, 2011 to RM7-levels currently.

That wiped out easily RM15 billion in terms of market capitalisation.

Calling himself a “corporate strategy buff”, Nazir sounded more motivated than shaken by the imminent tough tides of 2012 though, the source said.

“That 2012 would be tough isn’t a surprise and Nazir thinks CIMB is well-prepared for the challenges ahead, at least better prepared and better organised than they were for 2011,” the source said. “He is not as certain about Thailand at this point but sees political changes in Myanmar opening up investment opportunities for CIMB.”

In his address, Nazir also reminded employees to be aware of the many changes that the business environment and advancement in technology bring, telling them to embrace technology and be that “21st century banker” in attitude, mind and practice.

Having prepared for tougher times, Nazir is “excited about 2012” and is “cautiously optimistic” about the year ahead, citing silver linings like CIMB’s investment banking deal pipeline which was already looking good. CIMB, he said, would have a great 2012 if it can capitalise on opportunities that would present themselves even amid uncertain times.



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Market volatility to remain in 1H12

What does 2012 hold for equity markets?
After a volatile 2011 that saw financial markets tumble and investor sentiment rattled by the debt crisis in the US and eurozone, geopolitical upheavals and natural disasters, how will the local stock market fare in the New Year? MIDF Research’s acting head of equity Syed Muhammed Kifni shares insights with The Edge Financial Daily’s Surin Murugiah.

TEFD: What is your outlook for the Malaysian stock market and economy for 2012?
Syed Muhammed: External events and developments emanating from Europe, the US and also China will continue to influence the sway and direction of the local market. We expect the worst of the current weakness to manifest only during the first half of 2012, hence market volatility is anticipated to remain above normal during the next six months.
As for its 2012 trough, MIDF Research is of the view that the KLCI is likely to be supported at the 1,350 points level or 12.2 times CY2012 earnings as the local economy is expected to remain resilient, albeit restrained.

The market should start to gain sustained ground in the second half of 2012 as the euro debt issue begins to show credible signs of healing, ie the bleeding stops and vital
organs revive.

We reiterate our base-case KLCI year-end 2012 target at 1,530 points. The KLCI year-end target for next year is based on 14 times CY2012 earnings which reflects our view that the market shall by then be well on the road to recovery.

Our base case GDP growth for Malaysia in 2012 is 4.8%, from an estimated 5% in 2011.

Here, we acknowledge that Malaysia will be the second most affected within Asean, after Singapore, due to its openness.

In drawing out our 2012 economic outlook for Malaysia, we went back to the top-down approach, given that the Malaysian economy is vulnerable to global events in view of its highly open economy in nature, with its openness at 2.2 times, the second most vulnerable economy to global events after Singapore in Asean.

Nonetheless even if there is a double-dip recession in Europe, the GDP growth in Malaysia is expected to remain resilient, albeit restrained.

Weaker external demand shall be somewhat offset by robust domestic demand supported by accommodative monetary policies.

While exports to the developed economies may suffer, continued growth in intra-regional trade should provide a needed buffer.
Although fiscal positions are not as strong as prior to the 2008 crisis, we believe that Malaysia still has the capacity to roll out fiscal stimulus should it become necessary.

But finally, the game changing wildcard act of 2012 is none other than how well would the China authorities be piloting its “jumbo” economy to a safe landing. At least for now, the general consensus is siding with them.

What is your target for the KLCI for 2012?
FBM KLCI 2012 trough at 1,350 points, and year-end target of 1,530 points.

How do you think the euro debt crisis will play out, and what impact will it have on Malaysia?
The European Central Bank (ECB) chief is very unambiguous and methodological on how the euro-debt crisis should play out, in essence —

(i) stop the bleeding, and
(ii) revive the vital organ. He asserted that the first line of defence for the eurozone economies are austerity packages, structural reforms, solid public finances, and robust economic governance (ie stop the bleeding).

Secondly, the European leaders should deliver on the European Financial Stability Facility (EFSF) recapitalisation fund to ailing banks (ie revive the vital organs) rather than looking to the ECB as lender of last resort.

Nevertheless given the slow delivery on the EFSF recapitalisation fund (as the EFSF is not “joint and several” thus the cold market reception towards its bonds has hampered fundraising efforts) coupled with the ECB being dogmatic in its refusal to act as lender of last resort, the Europeans inactions may end up afflicting the entire global economy.

The US Fed is said to be very concerned about the prospect that the European debt crisis morphing into a contagion that could spread to the US and the rest of the world.

Hence, despite its reported refusals, we believe the US Fed may ultimately be compelled to spearhead the formation of a global recapitalisation fund (bulk of which will be rechanneled to the EFSF recapitalisation fund) to avert a global financial meltdown.

The IMF is a potential vehicle to front this supranational initiative, and we expect this scenario to pan itself out within the next six months.

Nonetheless, as stated earlier, even if there is a double-dip recession in Europe (from the debt crisis and austerity packages that follow), the GDP growth in Malaysia is expected to remain resilient, albeit restrained.

The years 2010/11 were seen as years of M&A activities, and the government’s economic transformation programme. What do you see as the domestic theme for 2012?
More headline-grabbing listings and M&A activities (eg Felda Global and Proton), as well as “walking the talk” as far as the ETP is concerned.

If general elections are held in 2012, as is widely expected, how do you expect themarket to react, pre-and-post elections?

To reduce the role of the government and make the private sector the engine of growth, fiscal consolidation has been one of the key policy agendas outlined in the New Economic Model.
However, if the general election were to be held in 2012, that could mean fiscal consolidation may not be as aggressive in order to support the economy and, by extension, this may also benefit the market.
Having said that, the market will continue be subjected to the various external as well as internal macro dynamics despite the positive election catalysts.

As attested by its pre-election 2008 performance, the KLCI actually dropped by nearly 130 points from the election announcement date in February to the day before the election was held in March due to the then burgeoning worries over the US subprime issue.

What sectors do you like for 2012?
Oil and gas, healthcare and telecommunications

What sectors would you avoid in 2012?
Automotive, shipping and property.

What are your top stock picks and why?
Market volatility is expected to remain elevated well into 2012, coupled with continued macro uncertainty, and further combined with healthy but slowing earnings growth.

This scenario leads us to favour investments with higher quality, secular growth, and sustainable and growing dividend yield. Below is a list of five stocks that fit our investment criteria.

We reckon all the five stocks are in good stead to outperform the broader market due their inherent quality together with their good growth potential.

Furthermore, their strong financial standings leave little doubt on their ability to maintain dividend payments even during period of economic slowdown.

YTL Power International Bhd (Buy, TP: RM2.50): YTL Power is known for its defensive earnings coupled with its strong cash pile of RM8.2 billion.

Although YTL Power is conserving cash for its future overseas expansion and M&A opportunities, it still has set aside sufficient funds to at least sustain its dividend payments.

We reiterate our “buy” recommendation with target price of RM2.50 based on sum-of-parts (SOP) valuation. YTL Power is expected to provide potential upside of 40.9% with expected dividend yield of 5% in FY12.

Wah Seong Bhd (Buy, TP: RM2.80): Wah Seong’s valuation of 11.4 times PER12 is undemanding (industry average of 18 times) considering the strength of its outstanding order book (RM1.2 billion as at September 2011) and replenishment rate (RM400m per quarter).

Gorgon LNG, Australia Pacific LNG and Kebabangan Deepwater projects are expected to sustain FY12F profit.

Wah Seong will also benefit from the booming Australia LNG sector as well as rising domestic gas field development. We have a “buy” call on Wah Seong with a target price of RM2.66. Total upside is 35.2% (including dividend yield of 3.5%).

Sime Darby Bhd (Buy, TP: RM11): We continue to like Sime Darby because we are expecting higher contribution from its plantation division as more trees coming into maturity, strong demand for mining equipment from China, increase in sales for its motor division supported by upcoming new models and higher contribution from property division as more property projects being launched.

We reiterate our “buy” call on Sime Darby at unchanged target price of RM11, giving a total upside of 25.6% inclusive of 3.4% expected dividend yield in FY12.

Malaysia Airports Holdings Bhd (Buy, TP: RM7.30): We believe that the main catalyst for Malaysia Airports (MAHB) in FY12 will be the new airport charges which received the government’s approval recently. Despite the rate hike, MAHB’s PSC and aircraft landing and parking charges are still comparatively lower than most airports globally and regionally.

We expect that non-IC 12 revenue forecast in FY12 will increase by 1.1% due to the increase in airport charges. Also, we expect that the airport charges will increase FY12 earnings forecast by 4.5%.

Also, as suggested by its strong traffic, we expect MAHB will be able to weather the short-term headwinds facing the aviation industry.

The completion of KLIA-2, with the additional 45 million capacity, and its overseas projects will provide a platform for future growth.

Hence, our “buy” recommendation for MAHB stock with a target price of RM7.30. This gives a total upside of 20.3% inclusive of 2.4% expected dividend yield in FY12.

Axiata Bhd (Buy, TP: RM5.85): We continue to like Axiata due to its growth potential and stable Ebitda despite operating in very competitive markets. We still consider Axiata to be a telecommunication company in a growth stage given that two of its four operating companies are in markets with low penetration rate.

While the 3Q11 results were below expectations, partly due to higher expenses, we believe that some of the increases in expenses were short term in nature.
We opine that the cost of network modernisation as necessary to position itself for the next growth phase, which is data.

We also view positively at XL’s early preparation to move into data as we believe that it will be well positioned to take advantage of the rising demand in data there.
We maintain our “buy” recommendation for the stock and target price of RM5.85, giving a total upside of 17.6% inclusive of 2.9% expected dividend yield in FY12.

Your wish list for the year?
My wishes are that the market recovers swiftly later during the year, and second, the Mayans miscalculated so the market may continue its ascent well into 2013.




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Consumers upbeat but retail outlook less sanguine in 2012

Consumer sector
After expanding by an estimated 6.5% in 2011, the Retail Group Malaysia (RGM) on behalf of Malaysian Retailers Association (MRA) has projected retail sales growth to moderate to 6% this year, the slowest since the 8.4% jump in 2010.

These MRA-initiated retail sales growth projections seem consistent with BIMB Securities’ forecasts for private consumption growth of 6.4% in 2011 and 6% in 2012.

According to MRA, these forecasts for retail sales, which exclude bulk or big-ticket items such as vehicles and houses, underline concerns over rising inflation, as measured by headline consumer price index (CPI), which was slow to ease in the 2H2011 after peaking at 3.5% year-on-year (y-o-y) in June 2011.

In its latest Malaysia Retail Industry report, the RGM blames the widely expected slump in external demand as a result of a European recession-led global slowdown which will negatively affect many Malaysian export-oriented manufacturing industries as the main culprit of the not-so-rosy retail outlook in 2012.

In view of the many downside risks to the global economic prospects, in particular the potential deepening of the eurozone sovereign debt crisis, the very anaemic US growth, China’s “soft landing” and waning recovery momentum in Japan post-Fukushima tragedy, Malaysian consumers may turn cautious in their spending intentions which could translate into lower real retail spending.

With the apparent downtrend in headline CPI, which we forecast to drop below the 3% y-o-y threshold by early this year after levelling off to 3.3% y-o-y in November 2011, concerns about the economic outlook — employment prospects, both job availability for job seekers and security for the already employed as well as sources of personal income, in particular regarding increments and bonuses — should soon overtake worries about runaway inflation.

Increasing concerns over economic health, job outlook and personal finances could dent confidence of consumers, who may choose to tighten their purse-strings, change their spending patterns by cutting back on spending on expensive luxury items or down-trading/bargain-hunting in favour of low-cost or competitively priced items or even postpone purchasing plans altogether.

Nonetheless, given the increase in Mier’s consumer sentiment index (CSI) in the 3Q2011 to 108.7 from 107.9 in the preceding quarter, it appears that recessionary mindset has yet to develop among Malaysian consumers. A list of disposable income enhancement measures announced in Budget 2012 should help put additional money into consumers’ pockets.

Still, the readiness to spend among Malaysian consumers may be timed mostly with huge discounts and marked-down prices during sales or promotional periods.

Although the consumer morale has remained relatively high, retail sales growth is estimated to have slowed to 7% y-o-y in 3Q2011 (versus 2Q2011: +9.1% y-o-y and 3Q2010: +9.8% y-o-y) and projected to trek down further to 5% y-o-y in the 4Q2011 notwithstanding spending related to school holidays, year-end festivities and back-to-school requirements. — BIMB Securities Research, Jan 4



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Dialog going full throttle

Dialog Group Bhd
(Jan 4, RM2.66)
Initiate coverage with a buy call at RM2.64 with target price of RM3.30: Dialog’s integrated technical services will underpin its future growth.

Its impressive track record — five-year historical earnings compound annual growth rate (CAGR) of 28% and three-year average return on equity of 27% — speaks volumes of its execution capability.

We are projecting three-year earnings CAGR of 17% over FY11-14 supported by higher capacity at the Tanjung Langsat terminal and a RM2.3 billion construction order book.



Dialog will almost triple combined capacity at its oil terminals in Kertih and Tanjung Langsat from one million cu m now to 2.8 million cu m within the next three years, with phase 1 of Pengerang and phase 3 of Tanjung Langsat coming on stream. We estimate over 70% of its earnings are now recurring. Strong partnerships with global oil traders such as Trafigura and Vopak could present more opportunities going forward.

Balai cluster fields are now in pre-development phase with first production likely by 2H14, and potentially contributing RM40 million profit in FY15. The risk service contract (RSC) is a major springboard for Dialog to move up the value chain as an exploration and production player, which complements its integrated technical services.

A second marginal field RSC may be on the cards after the RM479 million rights issue to boost its war chest for more upstream development.

We initiate coverage of Dialog with a sum-of-parts-derived target price of RM3.30 (post-rights: RM2.95, ex on Jan 5, 2012).

Its rights issue (RM1.20/share) with free warrants offers a good entry point. We are optimistic of Dialog’s prospects, as its growing tank terminal business will underpin long-term earnings visibility.

The massive Pengerang project in Johor over the next seven years is also a major transformation for Dialog. There should be little execution risk given Dialog’s proven track record and solid balance sheet. — HwangDBS Vickers Research, Jan 4



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Banking sector growth momentum still strong

Banking sector
Maintain overweight: Growth momentum of all three lending indicators recovered considerably in November with month-on-month (m-o-m) expansion in loan applications,
loan approvals and disbursements by 2.2%, 10.1% and 9.1% to RM64.8 billion (October: RM63.4 billion), RM35.9 billion (October: RM32.6 billion) and RM71 billion (October:
RM65 billion) respectively. Outstanding loans inched up by 1.1% m-o-m to RM988.3 billion, and year-to-date (YTD) annualised growth rose to 13% (October: 12.8%).

Property loans remained the key growth driver, accounting for 43.7% of the YTD credit expansion, followed by working capital loans at 18.4%. Although we believe that
property loans, which serve as the major loan growth driver last year, has peaked in 2011, we expect the increased business loans stemming from the roll out of Entry Point
Projects (EPP) under the government’s Economic Transformation Plan and the recovery in hire purchase loans to pick up the slack caused by the anticipated slowdown in property loans.

As such, we are still forecasting a double-digit domestic loan growth of 11% in 2012.

Both loan-deposit ratio (LDR) and financing-deposit ratio reduced marginally at 81.7% (October: 82.5%) and 87.7% in November (October: 88.5%) respectively.



Deposits were flattish, up 0.2% m-o-m (October: -0.4%). Annualised YTD growth improved from 10.4% in October to 11.5% in November.

Average base lending rate of the commercial banks remains constant m-o-m at 6.54%.

Average lending rate (ALR)-3 month fixed deposit (FD) spread improved to 2.07% (October: 2.03%). The improvement in ALR-3 month FD spread, which serves as a proxy for
the sector net interest margin (NIM), has reaffirmed our expectation that NIMs have reached its bottom last year and should stabilise or even improve in 2012.

Asset quality remains healthy as impaired loan ratio stayed at 1.9% while loan loss coverage maintained flattish m-o-m at 96.3%. Although impaired loans could trend higher should the economy deteriorate sharply, at present we do not foresee an alarming situation that justifies a surge in impaired loans for 2012.

The banking system remained well-capitalised, with the risk-weighted capital ratio (RWCR) and core capital ratio (CCR) at 14.8% and 12.7% respectively. This implies the domestic banking system is resilient to withstand unanticipated shocks to the financial system, if any.

The latest banking statistics have reaffirmed our conviction that the underlying fundamentals of the domestic banking sector remain solid, and we expect the near-term earnings prospect of the major domestic banks to stay robust going forward, despite the ongoing external uncertainties.

Maintain our “overweight” recommendation on the sector, where Hong Leong Bank Bhd serves as our top pick for the sector premised upon

(1) multi-year re-rating story from its transformation to be a banking giant;
(2) high synergistic benefits derived from the enlarged entity; and
(3) attractive valuation.

Key downside risks to our recommendation include

(1) unexpected termination in deal flows due to the volatility of the capital market; and (2) lower than expected loan growth;
(3) NIM compression due to competition and/or overnight policy rate cut; and
(4) deterioration in asset quality. — Alliance Research, Jan 3




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JCY: 1Q earnings to rise 19-fold

KUALA LUMPUR: After seeing its share price double over two months, hard disk drive component maker JCY International Bhd guided that net profit for the first quarter ended Dec 31, 2011 (1QFY12) would likely jump 19-fold year-on-year as sales benefited from a supply shortage caused by the floods in Thailand.

In a statement to Bursa Malaysia yesterday, JCY said net profit for 1QFY12 “is likely to increase” approximately 1,900% from the RM7.5 million booked in 1QFY11 or up 460% from the RM26.4 million booked in the immediate preceding quarter ended Sept 30, 2011.

That means JCY may report a net profit of about RM120 million to RM150 million for 1QFY12, back-of-the-envelope calculations showed. It has until end-February to release unaudited numbers.

“We wanted the public and minority shareholders to know and have access to factors surrounding JCY’s profitability,” JCY’s finance director James Wong told The Edge Financial Daily. “We and others in the industry saw an increase in average selling prices [ASP] of about 10% to 20% after the [Thai] floods.”

Wong: Some 80% of the money will be used to buy machinery.


Apart from the higher selling prices caused by component shortages following the October 2011 floods, JCY said the higher net profit for 1QFY12 that ended just a few days ago, also benefited from an effective product mix, efficient cost management and the US dollar’s appreciation versus the ringgit.

To cater to an expected increase in demand from its major customers, JCY’s board had approved a RM300 million capital expenditure to expand its facilities in Malaysia, Thailand and China over the next 24 months.

“Some 80% of the money will be used to buy machinery,” Wong said, adding that JCY would fund the capital expenditure through internal funds and borrowings.

“The RM300 million will be spent evenly over two years,” he said, adding that the money would help increase total capacity by about 30% to 40%.

“Barring unforeseen circumstances, the company expects to increase its global market share of HDD mechanical component industry over the next 24 months,” its statement read.

Both shares and call warrants in JCY emerged among yesterday’s most actively traded with a volume of 31.16 million shares and 50.59 million units respectively.

Its stock traded between RM1.10 and RM1.20 before closing at RM1.18 yesterday, up three sen or 2.6%, its highest since August last year.

That’s just shy of a RM1.30 price target that OSK Research set for JCY when upgrading the stock from “sell” to “trading buy” on Dec 22, 2011, Bloomberg data showed.
Its call warrants, JCY-CD, closing one sen higher to 58 sen, had an intra-day high of 60.5 sen and low of 54.5 sen yesterday.

Since October, shares in JCY, from a level of around 40 sen, have been on an upward trend on optimism that JCY could benefit from the floods as prices of HDD and components are expected to increase from the disrupted supply chain.

As JCY supplies mainly to HDD giants, Seagate Technology plc and Western Digital Corp, industry observers had said it was set to profit from an increase in ASP.

The global HDD sector was badly affected by the floods in Thailand because a huge portion of the supply chain is situated in the country’s worst hit areas. Although Seagate was mostly unaffected, Western Digital, which has some 60% of its HDD produced in Thailand, announced a halt to its production in Thailand.



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Bursa Securities queries Can-One over price surge

KUALA LUMPUR (Jan 5): Bursa Malaysia Securities Bhd has queried CAN-ONE BHD [] over the sharp increase in the price of the shares recently.

At 4.41pm, Can-One was up 31 sen to RM1.37 with 6.95 million shares done.



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MAS extends gains on fresh newsflow, turnaround hopes

KUALA LUMPUR (Jan 5): Shares of Malaysian Airline System (MAS) rose in active trade on Thursday on fresh corporate newsflow and expectations of a turnaround in its fortunes following a top management revamp.

At 4.09pm, MAS was up 17 sen to RM1.58 with 17.82 million shares done. Its call warrants MAS-CD added 4.5 sen to 16 sen while MAS-CE gained five sen to 18.5 sen.

The FBM KLCI rose 7.75 points to 1,511.97. Turnover was 1.39 billion shares valued at RM1.10 billion. There were 384 gainers, 358 loser and 326 counters unchanged.

The latest newsflow was the the Securities Commission’s approval for the proposed warrants exchange exercise between MAS and AIRASIA BHD []. However, the approval is subject to the company complying with the relevant requirements pertaining to the implementation of the proposal as stipulated under the SC’s equity guidelines.

Meanwhile, a news report said MAS’ short-haul premium airline is set to be launched by the first half of this year. This airline would be using six B737-800 aircraft, previously used by Firefly.

Last Friday, MAS unveiled a management structure with new business units, group chief executive officer Ahmad Jauhari taking on the role as CEO of long-haul, the departure of several top officials and the entry of two aviation experts.



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Menang Corp sees 4.49% stake crossed at 22c each

KUALA LUMPUR (Jan 5): Property-based Menang Corporation Bhd saw 12 million shares crossed in several off-market deals on Thursday afternoon.

Stock market data showed the shares, representing a 4.49% stake, were crossed at an average price of 22 sen.

At 3.39pm, Menang was up one sen to 23 sen.

On Dec 27, Menang group deputy chairman Datin Mariam Eusoff increased her shareholding in the company with the recent acquisition of 20 million shares, or a 7.48% stake.

She bought the shares from the open market at 20 sen each on Dec 27. The recent acquisition saw her shareholding increase to 26.18% or 69.949 million shares.



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Navis Capital may take over Xidelang

Xidelang Holdings Bhd, a Chinese footwear maker, said Navis Capital Partners Ltd may be interested in taking a controlling stake in the Kuala Lumpur-listed company.

Navis indicated its intention during an informal discussion with HongPeng International Holdings Ltd, Xidelang’s biggest shareholder, an exchange filing today said. HongPeng holds 54.6 per cent of the manufacturer’s shares, according to data compiled by Bloomberg. -- Bloomberg



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Navis Cap keen to buy Hong Peng’s stake in Xidelang

KUALA LUMPUR (Jan 5): XiDeLang Holdings Ltd (XDL) says Navis Capital has approached the former’s major shareholder Hong Peng International Holdings Ltd to acquire its stake.

It said on Thursday that “Navis Capital had indicated their intention to acquire the entire shareholdings of Hong Peng in XDL during an informal discussion”.

Trading in the shares of XDL was voluntarily suspended from 2.30pm to 3.30pm following the announcement.

According to filings to Bursa Malaysia, the British Virgin Islands’ registered Hong Peng owns 240 million XDL shares or 60% as at Nov 11, 2009.

XDL share price was up one sen to 37.5 sen before trading was suspended.



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Proton advances on chairman bid, but strategic partner crucial

KUALA LUMPUR (Jan 5): Securities of PROTON HOLDINGS BHD [] rose on Thursday, spurred by the latest corporate development where its chairman Datuk Mohd Nadzmi Mohd Salleh confirmed he had put in a bid for Khazanah Nasional's 42.7% stake.

However, CIMB Research said a strategic partnership with a global original equipment manufacturer (OEM) involving TECHNOLOGY [] transfer was needed for Proton's exports aspirations and its long-term sustainability as an auto manufacturer.

At 2.31pm, Proton was up 13 sen to RM15.01 while its call warrants also advanced in heavy trade. Proton-CL rose seven sen to 22 sen, Proton-CG five sen to 49.5 sen and Proton-CH 4.5 sen to 45 sen.

The FBM KLCI rose 2.88 points to 1,507.10. Turnover was 771.48 million shares done valued at RM599.23 million. There were 308 gainers, 311 losers and 339 counters unchanged.

A news report quoted Nadzmi as saying that privatisation was the way to go for Proton, which would enable him to restructure the whole group to turn it around.

"I know the business well, and Proton is close to my heart. There is a potential in Proton and that is why I dare to make a bid and the offer runs into billions," he was quoted saying in the report.

Nadzmi had also said if "done right", Proton's profit could easily be doubled or tripled without incurring any additional investment cost.

"It is all about how you juggle your assets. This could be done by increasing the utilisation rate of Proton's assets, cost reduction and also increasing Proton's exports. These steps could easily add a further RM500 million to RM600 million to Proton's bottom line," he was quoted saying.

CIMB Research said news of a potential management buyout is not entirely a surprise as Proton's management has, in the past, indicated such intention to do so.

“Datuk Nadzmi's belief in the privatisation for Proton and his indication that his bid runs into billions should be good news for minority shareholders banking on Proton's general offer,” it said.

The research house said his comment on an offer for the NTA price of Proton being too high reaffirmed its belief that a balance has to be struck as Khazanah would unlikely to settle for a price much lower than Proton's NTA but an entry price that is too high would give the acquirer less ammunition in its overhaul of the company.

“While we concur that one way to revive Proton's profitability would be to increase its plants' utilisation rate needed for the business to achieve economies of scale, we think a strategic partnership with a global OEM involving technology transfer is needed for Proton's exports aspirations and its long-term sustainability as an auto manufacturer,” it said.



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Eversendai bids for jobs worth RM12b

Eversendai Corporation Bhd is bidding for RM12 billion worth of infrastructure development projects worldwide, says executive chairman cum group managing director Datuk A.K. Nathan.

He said the projects would consist of iconic infrastructure development, power plants, engineering jobs and other segments related to Eversendai's core businesses.

"The projects will be situated mainly in the Middle East, South East Asia and Commonwealth of Independent States (CIS) region," he told reporters after the signing of a memorandum of understanding between Eversendai and Sunway Business Applications here today.

He said the bidding process was on-going and Eversendai was optimistic of securing at least 20 per cent of the projects aimed given the track record of the company.

"Our success rate is usually 20 per cent and this time around we think it will be a similar figure. If it's more, I would be happy," he said.

Nathan said the company's orderbook currently stood at RM1.5 billion and he anticipated a minimum growth of 10 per cent this year.

"Every year, we have seen 10 per cent growth. Ninety-five per cent of our earnings accrue from Eversendai's overseas operations while the Malaysian operations contributed the remaining five per cent.

"However, this year onwards we will be very busy in Malaysia. We have just completed the Manjung power plant and have kickstarted the KLIA 2 project and a project in Sabah. We expect many more to come as we have bid for many more projects here (in Malaysia).

"The projects are part of the RM12 billion projects we have already bid for. But, nothing is finalised until the contract is awarded," he said.

Nathan said in future, the Malaysian operations were poised to contribute at least 10 per cent of the company's earnings compared with the current contribution of five per cent. He added that Malaysia and India would become Eversendai's fastest growing markets in coming years.

"In India, we have five ongoing projects which comprises of two high-rise buildings and three power projects.

"One of the projects is the RM350 million Worli Tower, which comprises a 50-storey and 80-storey buildings," he said.

Nathan said the company was also in the midst of constructing a steel fabrication plant in Trichy, India, which would boost the company's steel output by 24,000 tonnes per annum.

"This will add to our total capacity of some 144,000 tonnes, annually," he said.

The factory, slated to be operational between six and eight months, will add to the list of four steel fabrication plants currently operating each in Rawang, Sharjah, Qatar and Dubai. - Bernama



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KL shares wring gains at midday

Share prices on Bursa Malaysia were steady at midday today, aided by gains in finance and plantation counters.

At 12.30pm, the FBM KLCI stood 2.74 points higher at 1,506.96. It had opened 2.83 points better at 1,507.05.

Dealers said sentiment was still influenced by renewed concerns about the ability of European countries to refinance their huge public debt.

The Finance Index rose 71.021 points to 13,408.74 and the Plantation Index gained 15.881 points to 8,308.69 but the Industrial Index lost 0.22 of a point to 2,738.31.

The FBM Emas Index added 12.16 points to 10,369.5, The FBM ACE Index fell 15.5 points to 4,084.42 and the FBM 70 Index eased 9.33 points to 11,580.68.

Turnover stood at 754.214 million shares worth RM579.564 million.

Gainers led losers 307 to 300 while 332 counters were unchanged, 550 untraded and 23 others suspended.

Among active stocks, JCY International-CD and JCY International gained seven sen each to 65 sen and RM1.25 respectively, Wijaya Baru-WA added 2.5 sen to 39 sen and Versatile Creative was up six sen to 48.5 sen.

For the heavyweights, Maybank improved six sen to RM8.33, Sime Darby lost seven sen to RM9, CIMB edged up four sen to RM7.14 and Petronas Chemicals inched up three sen to RM6.23. -- Bernama



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Eversendai bids for RM12b projects worldwide

KUALA LUMPUR, Jan 5 (Bernama) -- Eversendai Corporation Bhd is bidding for RM12 billion worth of infrastructure development projects worldwide, says executive chairman cum group managing director Datuk A.K. Nathan.

He said the projects would consist of iconic infrastructure development,power plants, engineering jobs and other segments related to Eversendai's core businesses.

"The projects will be situated mainly in the Middle East, South East Asia and Commonwealth of Independent States (CIS) region," he told reporters after the signing of a memorandum of understanding between Eversendai and Sunway Business Applications here on Thursday.

He said the bidding process was on-going and Eversendai was optimistic of securing at least 20 per cent of the projects aimed given the track record of the company.

"Our success rate is usually 20 per cent and this time around we think it will be a similar figure. If it's more, I would be happy," he said.

Nathan said the company's orderbook currently stood at RM1.5 billion and he anticipated a minimum growth of 10 per cent this year.

"Every year, we have seen 10 per cent growth. Ninety-five per cent of our earnings accrue from Eversendai's overseas operations while the Malaysian operations contributed the remaining five per cent.

"However, this year onwards we will be very busy in Malaysia. We have just completed the Manjung power plant and have kickstarted the KLIA 2 project and a project in Sabah. We expect many more to come as we have bid for many more projects here (in Malaysia).

"The projects are part of the RM12 billion projects we have already bid for. But, nothing is finalised until the contract is awarded," he said.

Nathan said in future, the Malaysian operations were poised to contribute at least 10 per cent of the company's earnings compared with the current contribution of five per cent.

He added that Malaysia and India would become Eversendai's fastest growing markets in coming years.

"In India, we have five ongoing projects which comprises of two high-rise buildings and three power projects. "One of the projects is the RM350 million Worli Tower, which comprises a 50-storey and 80-storey buildings," he said.

Nathan said the company was also in the midst of constructing a steel fabrication plant in Trichy, India, which would boost the company's steel output by 24,000 tonnes per annum.

"This will add to our total capacity of some 144,000 tonnes, annually," he said.

The factory, slated to be operational between six and eight months, will add to the list of four steel fabrication plants currently operating each in Rawang, Sharjah, Qatar and Dubai. - Bernama



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Genting unit plans US$4b New York job

Genting Malaysia Bhd plans to invest at least US$4 billion to develop a convention and exhibition centre with hotel rooms and expand its casino in New York City, according to a statement to the Kuala Lumpur stock exchange. - Bloomberg



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Flash: Genting Malaysia considering US$4 bln complex in Queens, NY

KUALA LUMPUR (Jan 5): Genting Malaysia Bhd’s unit is considering developing an integrated mixed-use complex, costing US$4 billion, on real property located adjacent to the Aqueduct Racetrack, Queens, New York.

It said on Thursday its indirect unit Genting New York LLC (Genting NY) had signed a non-binding letter of intent dated Jan 3, 2012 with the New York State Urban Development Corporation for the project.

“The proposed project is anticipated to cost at least US$4 billion, which will include an integrated 3.8 million square feet of convention and exhibition centre with up to 3,000 hotel rooms and an expansion of Resorts World Casino New York City,” it said in a statement to Bursa Malaysia.

Genting NY said it will work closely with New York State Urban Development Corporation, which undertaking the business as Empire State Development Corporation, and the relevant parties, to negotiate the terms.

The plan is to enter a binding memorandum of understanding on or before Nov 30, 2012.



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KLCI remains in positive territory at mid-day, but gains seen capped

KUALA LUMPUR (Jan 5): The FBM KLCI stayed above the psychologically-crucial 1,500 level at the mid-day break on Thursday, but pared down its gains as investor sentiment remains fragile.

At 12.30pm, the FBM KLCI was up 2.59 points to 1,506.81. Gainers edged losers by 306 to 300, while 334 counters traded unchanged. Volume was 754.24 million shares valued at RM579.57 million.

The ringgit weakened 0.11% to 3.1392 versus the US dollar; crude palm oil futures for the third month delivery fell RM2 per tonne to RM3,213, crude oil shed 23 cents per barrel to US$102.99 while gold gained US$4.97 to US$1,616.57.

Asian stocks steadied and reversed some earlier losses, but overall sentiment was cautious given concerns about the ability of euro zone countries to refinance their huge public debt that dampened investor risk appetite.

Meanwhile, China's services sector entered a seventh straight year of expansion in December, a survey of purchasing managers showed on Thursday, but a slowdown in the world's second-biggest economy saw overall levels of activity mired at three-month lows, according to Reuters.

The HSBC China services purchasing managers index (PMI) stood at 52.5 in December, unchanged from November, signalling a steady if sluggish expansion in the sector that is increasingly a barometer for domestic economic conditions, it said.

At the regional markets, Hong Kong’s Hang Seng Index was up 0.44% to 18,810.38, Singapore’s Straits Times Index added 0.58% to 2,726.76, South Korea’s Kospi gained 0.39% to 1,873.49, Taiwan’s Taiex was up 0.37% to 7,109.30 and the Shanghai Composite Index edged up 0.32% to 2,176.37.

Meanwhile, Japan’s Nikkei 225 fell 0.65% to 8,504.44.

On Bursa Malaysia, Dutch Lady gained 60 sen to RM24.60; Timwell was up 28 sen to RM1.08, Can-One 24 sen to RM1.30, Sarawak PLANTATION []s and BHIC 22 sen each to RM2.59 and RM4.07, SOP 15 sen to RM6, while Perduren, Tahps, HLFG and Proton added 12 sen each to 85 sen, RM4.40, RM11.64 and RM5 respectively.

Decliners included Far East, YHS, Malayan Flour Mills, UMS, IJM Corp, Sime Darby, Genting and IGB, while the actives included JCY, Versatile, Proton, HWGB and Astral Supreme.



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Frost & Sullivan sees auto industry volume just up 1.2% to 612,000 in 2012

KUALA LUMPUR : Research firm Frost & Sullivan expects the Malaysian automotive total industry volume (TIV) to reach 612,000 units in 2012. This is a yearly growth of 1.2% from the expected figure of 605,000 units in 2011.

Frost & Sullivan head of automotive and transportation practice Kavan Mukhtyar said its 2012 forecast comes amid an uncertain global economic outlook, limited new mass market model launches and concerns of lower loan approval rates for buyers.

"Banks will be more cautious," he said at a media conference on Thursday.

He said Malaysian TIV could still see annual growth of some 5% for the next 10 years. This compares to a 15 to 20% growth rate seen in the past.



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KL shares advance at midmorning

At 10.30 am today, there were 269 gainers, 224 losers and 274 counters traded unchanged on the Bursa Malaysia.

The FBM-KLCI was at 1,509.79 up 5.57 points, the FBMACE was at
4,095.84 down 4.08 points, and the FBMEmas was at 10,386.30 up 28.95 points.

Turnover was at 459.350 million shares valued at RM339.632 million.
-- Bernama



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KLCI steadies at mid-morning, Asian markets mixed

KUALA LUMPUR (Jan 5): The FBM KLCI steadied at mid-morning on Thursday and was up 7.3 points to 1,511.25 at 10.01am, lifted by gains at select blue chips, while regional markets traded mixed.

Gainers led losers by 236 to 164, while 228 counters traded unchanged. Volume wa332.32 million shares valued at RM231.13 million.

Meanwhile, Asian shares and the euro eased on Thursday as concerns about the ability of euro zone countries to refinance their huge public debt dampened investor risk appetite ahead of a French bond auction later in the day, according to Reuters.

The euro zone's sovereign funding plans and US economic data, including U.S. jobs figures due on Friday, are the primary focus for market participants to gauge whether investors would take or avert risk, it said.

At the regional markets, Hong Kong’s Hang Seng Index edged up 0.08% to 18,742.43, Taiwan’s Taiex added 0.14% to 7,093.05 and South Korea’s Kospi rose 0.39% to 1,873.41.

Meanwhile, Japan’s Nikkei 225 fell 0.61% to 8,508.25, the Shanghai Composite Index dipped 0.07% to 2,167.91 and Singapore’s Straits Times Index shed 0.02% to 2,710.48.

BIMB Securities Research in a note Jan 5 said attention on Eurozone crisis was back to haunt investors again after a few days of reprieve, adding that the situation was made worse from a weak capital raising exercise of €7.5bn by Italy’s Unicredit.

As a result, jittery sentiments resurfaced and wiped out all gains made the previous day by European bourses as most ended in the red, it said.

Wall Street fared better with a 21 point gain buoyed by improved sales figures from the automakers, said the research house.

It said Asian bourses were apparently affected by the weak European performances with most charted into negative territory.

“Locally, the FBM KLCI fell for the second consecutive days possibly suffering from indigestion amid an overbought position.

“Expect the psychological 1,500 level to be tested today and it is crucial that this support level is maintained,” it said.

On Bursa Malaysia, Nestle was the top gainer at mid-morning and added 40 sen to RM56.40; Timwell gained 28 sen to RM1.08, United PLANTATION []s and Dutch Lady rose 20 sen each to RM19.40 and RM24.20, BHIC 17 sen to RM4.02, HLFG 14 sen to RM11.66, while F&N, Hong Leong Bank and UMW rose 10 sen each to RM18.22, RM10.84 and RM7.09 respectively.

Decliners included Far East, KrisAssets, IJM Corp, Dialog, IIGB, Toyo Ink and Hibiscus, while the actives included JCY, Proton, Astral Supreme and HWGB.



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Priceworth gains on getting logging rights

Priceworth International Bhd, a Malaysian timber company, rose the most in more than two months in Kuala Lumpur trading after it was appointed a logging contractor in Solomon Islands.

The stock advanced 11 percent to 45 sen at 9:10 a.m. local time, set for the steepest increase since Oct. 31. -- Bloomberg



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KL shares mixed in cautious trade

Share prices on Bursa Malaysia were mixed in cautious trading amid developments over the euro zone debt crisis.

At 9.21am, the FTSE Bursa Malaysia KLCI (FBM KLCI) was 0.59 of a point lower at 1,504.81, after opening 2.83 points better at 1,507.05.

The Finance Index rose 25.88 points to 13,363.6, the Plantation Index gained 3.61 points to 8,296.42 and the Industrial Index added 2.06 points to 2,740.59.

The FBM Emas Index perked 3.05 points to 10,360.39 but the FBM Mid 70 Index shed 3.029 points to 11,586.98 and the FBM Ace Index eased 5.39 points to 4,094.53.

Gainers led losers 148 to 117 while 166 counters were unchanged.

Turnover stood at 160.878 million lots worth RM88.577 million.

HwangDBS Vickers Research said if the benchmark index dipped beneath the psychological mark of 1,500 points, then the market barometer could pull back further ahead.

Among the actives, JCY International-CD and JCY International, each added four sen to 62 sen and RM1.22, respectively, Ho Wah Genting-WB eased half-a-sen to 33 sen while Proton-CL perked 6.5 sen to 21.5 sen.

Among the heavyweights, Maybank gained three sen to RM8.30, Sime Darby and Petronas Chemicals was both flat at RM9.07 and RM6.20, respectively, while CIMB added two sen to RM7.12. -- Bernama



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MAS' Newark exit is Emirates' gain: Experts

NEW YORK: Many aviation experts and travel agents on the east coast of the United States say that Malaysia Airline's (MAS) loss has become Emirates' gain.

The oblique reference is to the discontinuation since nearly four years of MAS' regular direct flight service between Newark airport in New Jersey, a busy aviation point on the east coast, and KL International Airport.

"We were shocked when MAS first announced that it was discontinuing its Newark operations. There may have, understandably, been economic reasons behind the move but then there are other non-profitable routes that are still operated by the airline.

"After all, the east coast of the United States is the world's most important and indeed prestigious route for airlines, many of which still fly despite low yields.

" Also, the discontinuation of the service was not a good strategic move because if you withdraw once, it is not going to be easy getting back your foothold should you decide someday to come back," said one New York-based travel agent who sold MAS tickets but now sends most of his Malaysia-bound passengers on other airlines, particularly Emirates.

Since MAS pulled out of Newark, other airlines have had a field day in tapping the lucrative Southeast Asian market.

Singapore Airline, which has built up a wide network of connections from New York's JFK and New Jersey's Newark airport to a number of destinations in Southeast Asia, via Singapore, virtually held a monopoly for destinations in the region.

However, Emirates is making an aggressive pitch for Southeast Asia, particularly to Malaysia.

It has become the first airline to operate a scheduled A380 service to Malaysia.

Travel agents in New York point out, not without missing the symbolism, that the airline's flagship flight to Malaysia, operating as EK346, was piloted by a Malaysian national, Capt Kwong Yung Ling, who landed at the Kuala Lumpur international airport last Sunday with a traditional welcome of a water canon salute.

Most Malaysian travellers say they prefer a stopover at Dubai airport because of its incredible shopping opportunities there before taking a connecting flight to KLIA.

Dubai was also a stopover for Newark-bound flights operated by MAS which, later, decided to discontinue that sector and switched to Stockholm en-route to Newark.

Richard Jewsbury, Emirates' senior vice president (commercial operations – Far East and Australasia) said that the airline had been "eagerly awaiting" the start of the Airbus A380 service to Malaysia, "a country that we have been operating flights to since 1996".

"I am sure that this historic milestone in both Malaysian aviation history and in the Emirates' story will further strengthen ties between Malaysia and the United Arab Emirates, in addition to promoting trade and tourism opportunities between the two nations," he recently commented on the launch of the A380 service to Malaysia.

The KLIA has, meanwhile, become the 18th airport being served by the airline's A380 double-decker aircraft. -- Bernama



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JCY active, up on positive profit guidance

KUALA LUMPUR (Jan 5): JCY International Bhd shares were actively traded on Thursday after the company said it was likely to record a surge in earnings for the quarter ended Dec 31, 2011.

At 9.30am, JCY gained four sen to RM1.22 with 12.6 million shares done.

JCY said on Wednesday said that to cater for the increase in the component demands from the company’s major customers, it had allocated RM300 million over the next 24 months period to expand its facilities in Malaysia, Thailand and China.

CIMB Research in a note Thursday said JCY’s profit guidance for the December quarter was even better than our already-above-consensus estimate.

The research house JCY’s positive earnings momentum would continue for at least the next 2-3 quarters and should catalyse a rerating of the stock.

“The favourable impact of a higher ASP, better product mix and stronger US$ prompts us to revise our above-industry forecasts again for FY12-14.

“This raises our target price to RM1.54, still based on 6x CY13 P/E. Maintain Trading Buy,” it said.



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CIMB Research has technical buy on SBC at 90.5 sen

KUALA LUMPUR (Jan 5): CIMB Equities Research has a technical buy on SBC Corporation at 90.5 sen at which it is trading at a price-to-book value of 1.9 times.

It said on Thursday that SBC was trying to push above its triangle resistance. If it succeeds, there is a good chance that prices may re-rate towards 95 sen and 99.5 sen in the medium term.

“MACD signal line is slowly picking up, suggesting that buyers are slowly making a comeback. RSI too is above the 50pts mark.

“Traders should only get in when prices swing above its key moving averages at 90.5 sen to 91 sen. Be quick to cut loss if 85 sen is breached,” it said.



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CIMB Research has technical buy on TSH at RM2

KUALA LUMPUR (Jan 5): CIMB Equities Research has a technical buy on TSH Resources at RM2 at which it is trading at a price-to-book value of 2.0 times.

It said on Thursday that TSH tried to push above its triangle pattern the previous day.

“Looking at the chart, we think that the uptrend channel from its September’s low could still last a while longer. Once the RM2.04 level is taken out, the following resistance targets are RM2.15 and RM2.30,” it said.

CIMB Research said the MACD signal line is poised for a positive crossover while RSI is above the 50pts mark. The improving technical landscape bodes well for the stock.

“Aggressive traders may start to nibble now. However, always place a stop at between RM1.91-RM1.85, depending on one risk’s appetite,” it said.



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