Johan drops on RM14m Q3 loss

Johan Holdings Bhd, a ceramic-tile maker, dropped in Kuala Lumpur trading after reporting third- quarter net loss of RM13.9 million, compared with RM1.8 million profit a year earlier.

The stock lost 4 per cent to 24 sen at 9.05 am local time. -- Bloomberg



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KLCI falls on eurozone uncertainties

KUALA LUMPUR (Dec 8): The FBM KLCI opened lower on Thursday in line with most key regional markets, following the weaker overnight close at European bourses and wobbly Wall Street.

At 9.10am, the FBM KLCI fell 10.12 points to 1,472.87, weighed by losses at blue chip stocks.

Losers led gainers by 117 to 73, while 132 counters traded unchanged. Volume was 113.17 million shares valued at RM38.47 million.

Among the early decliners were PPB, IJM Corp, Uzma, Sime Darby, Axiata, IOI Corp, Top Glove, Gamuda and Petronas Dagangan.



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Automotive-based Sanichi plunges into energy sector

KUALA LUMPUR: Sanichi Technology Bhd, a mould maker for the automotive sector, has made its first venture into the energy sector by securing a two-year contract to supply three million tonnes of coal a year to China.

Johor-based Sanichi also formed a joint venture agreement with coal trader FiRC Trade (Malaysia) Sdn Bhd to sell steam coal in China.

Sanichi managing director Datuk Dr Jacky Pang said this venture will be the company's new business division and will bring it to a higher level in the future.

"Prospects are good because there is an overdemand situation for coal globally," he told reporters here at the company's KL office yesterday.

The steam coal will be supplied by Indonesia's coal miner CV Permata Al Zahra, which had signed an order supply commitment with Sanichi.

Sanichi has committed to undertake business development activities to market and distribute the coal supplied by Permata together with FiRC.

Sanichi and FiRC have agreed to a 50:50 profit-sharing ratio from the trading business.

"We will start supplying coal in January next year and it will impact positively to the company's future earnings and growth," said Pang.

However, he said the company is not in a position to make a clear assessment of the potential impact on Sanichi's earnings per share, net assets per share and gearing for the financial year ending June 30 2012.

Pang said China uses 2.5 billion tonnes of steam coal a year, of which 35 per cent Indonesia supplies followed by countries like South Africa, Australia and Mongolia.

Sanichi, which is listed on the ACE market, will fund the activities through internally-generated funds.

Pang said it will approach Tenaga Nasional to buy its coal and may also own mine in Indonesia.



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Pavilion REIT seeks expansion

PAVILION Real Estate Investment Trust (Pavilion REIT), the largest retail REIT in Malaysia, is eyeing more local assets to spur growth.


Pavilion REIT Management Sdn Bhd chief executive officer Philip Ho said the trust is seeking opportunities to expand its assets in Penang, Johor and the Klang Valley.

Ho said Pavillion REIT will evaluate any financially viable investment opportunity that comes around.

"As a retail real estate investment trust, our duty is to acquire malls and build up the portfolio," he told reporters after its listing ceremony here.

Ho said the company's trustees had signed three rights of first refusal (ROFR) to acquire Farenheit88, the Pavilion Mall's extension, and a mall in USJ Subang Jaya.

With an appraised value of RM3.54 billion, Pavilion REIT is currently made up of two assets - Pavilion Mall and Pavilion Tower.

The mall, which contributes 96.4 per cent to the appraised value, has 1.3 million sq ft of net lettable area.

It boasts of about 450 retail tenants, making it the largest premium retail fashion mall in Malaysia.

Pavilion REIT yesterday fetched a 13.3 per cent premium over its offer price on its debut on Bursa Malaysia.

It opened at RM1.03, 13 sen higher than its institutional price of 90 sen, with 15.7 million unit shares traded.

Ho said the listing provides the company with direct access to capital markets, thereby strengthening its financial capacity to seize new opportunities in the country.

"We are committed to enhance unitholders' return and value, both through the organic growth of our existing portfolio as well as visible growth via acquisitions," he added.



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MAS regional premium airline to start ops mid-2012

Malaysia Airlines (MAS) will start its yet-to-be-named regional premium airline by mid-2012, focusing on routes in Asean, South Asia and Greater China.

In the long term, it will fly to all of the domestic and regional routes serviced by MAS today.

The airline will be a single aircraft-type one, operating only the Boeing 737-800.

“We intend to create a separate management structure to focus on the unique customer needs of regional premium travellers.

“The new airline will set new standards for product and service quality, cost efficiency and operational excellence. It will set a template for the airline’s success,” Ahmad Jauhari said.

Meanwhile, Firefly is also expected to continue with its turboprop operations.



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MAS right sizing to fly back into the black

Malaysia Airlines expects another year of losses in 2012, before the “right sizing” of its network, staff and non-core businesses helps it get back into the black in 2013.


MAS group chief executive officer Ahmad Jauhari Yahya yesterday said the airline expects to start generating positive operating cash flow next year, but is still likely to post a net loss of RM165 million.

The airline reported a loss of RM1.2 billion for the first three quarters of 2011 and does not expect to make a profit for the full year.

“We firmly believe all is not lost,” Ahmad Jauhari said in his first meeting with the media since his appointment more than three months ago.

Also present was group deputy chief execuB4tive officer Mohammed Rashdan Yusof.

Ahmad Jauhari said the airline would explore all options in handling the issue of its 20,000 staff strength, adding that a separation scheme would be a last resort.

“First, we will have to spin off our businesses as separate entities, then we’ll see about relocating staff so that we operate at optimum level,” he said.

MAS also has an engineering division, a pilot training and safety academy, ground handling division and a cargo arm.

According to the recovery plan, MAS is looking to generate between RM1.2 billion and RM1.5 billion in cash through a combination of a smaller network, improved revenue management and sales and marketing efforts, re-negotiation of contracts and spinning off of its subsidiaries.

Ahmad Jauhari does not rule out the possibility of disposing of its other businesses such as cargo and engineering entirely if the price is right.

However, he maintained that the idea of bringing in strategic partners is to allow it to grow to its full potential and help reduce its own costs.

The national carrier plans to shrink its network by 12 per cent in 2012 by suspending routes to South Africa, Argentina and Dubai, among others.

According to MAS, 40 per cent of its long-haul routes are losing money.

MAS will operate only 88 aircraft in 2012, with plans to end operating leases for 36 aircraft.

Despite cuts, there are plans to increase frequencies to destinations such as Manila, Jakarta and Narita in Japan.

Ahmad Jauhari said MAS was in talks with not only Australian carrier Qantas Airways but also other carriers on potential partnerships.

He did not elaborate.

On the Comprehensive Collaboration Framework (CCF) with AirAsia and AirAsia X announced in August this year, he said MAS had begun discussions with them on joint procurement and consolidation of key activities that could bring a savings of RM100 million.

"I am not saying that it would have been impossible to have this collaboration with AirAsia and AirAsia X if we didn't have the CCF, but it certainly makes it easier," Ahmad Jauhari said.

He also said there were opportunities for further collaboration.



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Stocks to watch MAS, Toyo Ink, Sanichi, BHIC

KUALA LUMPUR (Dec 8): Gains at the FBM KLCI on Thursday could be capped by cautious sentiment ahead of a crucial European Union leaders’ summit later this week, as pressure mounts on policymakers there to thrash out a definitive plan to salvage the region from a deeper debt crisis.

European shares turned briefly negative on Wednesday after downbeat comments from a German politician about the chances for a comprehensive deal at a leaders' summit this week, aimed at resolving the region's debt crisis, according to Reuters.

Regional markets, including at Bursa Malaysia, had closed higher on Wednesday after the Financial Times reported that European leaders would discuss boosting the firepower of the euro zone bailout fund.

On Bursa Malaysia, among the stocks that could be in focus today are MALAYSIAN AIRLINE SYSTEM BHD [], TOYO INK GROUP BHD [], SANICHI TECHNOLOGY BHD [] and BOUSTEAD HEAVY INDUSTRIES CORPORATION BHD.

MAS aims to fly back into the black by 2013 on the back of an aggressive capacity cut, which is possibly the largest in the airline’s history.

The airline said it would reduce 12% of its capacity and cut unprofitable routes over the next one year, a move that it said would save it some RM300 million, which accounts for over 20% of the RM1.18 billion to RM1.51 billion in cost savings and additional income it aims to achieve under its turnaround plan unveiled yesterday.

MAS also confirmed the launch of a new regional premium airline, which will serve mainly Asian routes, by the middle of next year.

However, the airline will remain in the red this year after posting a RM1.25 billion loss for the first nine months.

Toyo Ink has been given the nod to commence research and development of the proposed US$2.5 billion Song Hau 2 Thermo Power Plant in Vietnam.

The company said on Wednesday that it had a letter from Vietnam's Ministry of Industry and Trade for it to start research and development of the plant with a capacity of 2 X 1000 MW at Song Hau Power Center, Hau Giang Province.

Sanichi, a precision-mould maker, is venturing into the minerals mining and supply business via a collaboration with FIRC Trade (Malaysia) Sdn Bhd. The latter is principally involved in the mining industry as contract owners and joint venture partners with several producing iron ore and coal mines in Malaysia and Indonesia.

Sanichi said under that the collaboration, FIRC would provide technical expertise and engineering support to Sanichi, while the group will co-brand with FIRC for the purposes of marketing and business development.

BHIC’s subsidiary BHIC AeroServices (BHICAS) Sdn Bhd was awarded the certification by Directorate General Technical Airworthiness of the Malaysian Armed Forces, which the Malaysian technical airworthiness authority.

The AMO certification is for the maintainance, repair & overhaul (MRO) of Eurocopter AS555SN Fennec helicopters, it said.

BHICAS is a joint venture between BHIC Defence Technologies Sdn Bhd, a wholly-owned subsidiary of Boustead Penang Shipyard Sdn Bhd, Prestige Pillar Sdn Bhd and Eurocopter Malaysia Sdn Bhd, a wholly-owned subsidiary of Eurocopter.



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BHIC subsidiary certified to overhaul rotary winged aircraft

KUALA LUMPUR (Dec 7): BOUSTEAD HEAVY INDUSTRIES CORPORATION BHD’s subsidiary has been awarded the Approved Maintainance Organisation (AMO) certification from the Malaysian Armed Forces.

The company said on Wedn that BHIC AeroServices (BHICAS) Sdn Bhd was awarded the certification by Directorate General Technical Airworthiness of the Malaysian Armed Forces, which the Malaysian technical airworthiness authority.

The AMO certification is for the maintainance, repair & overhaul (MRO) of Eurocopter AS555SN Fennec helicopters, it said.

BHICAS is a joint venture between BHIC Defence Technologies Sdn Bhd, a wholly-owned subsidiary of Boustead Penang Shipyard Sdn Bhd, Prestige Pillar Sdn Bhd and Eurocopter Malaysia Sdn Bhd, a wholly-owned subsidiary of Eurocopter.

Its core business to provide MRO services for rotary wing aircrafts.

BHIC said the certification was a major milestone for BHICAS in becoming the leading MRO centre for rotary wing aircrafts in the country and to strengthen the group’s involvement in the Malaysian aviation sector.

It said BHICAS had set up a temporary facility in Terminal 3, Subang Skypark while a permanent MRO centre was being developed in the new Subang Helicopter Centre.

Meanwhile, in a separate filing, BHIC said that BHIC Defence Technologies had agreed to form a joint venture (JV) company with Eurocopter Malaysia in Malaysia.

It said the JV would undertake the development of pilot training services using a simulator for EC225/725 EC family of helicopters for military and civil customers, and would cover the Asian region.

Eurocopter Malaysia is a helicopter manufacturer which is a wholly owned subsidiary of the EADS Group, involved in training helicopter pilots for military and civil markets.



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