Celcom Axiata plans another RM1b capex for 3G infra

KUALA LUMPUR (Dec 9): Celcom Axiata Bhd, which invested RM1 billion in the 3G infrastructure this year, has set aside another RM1 billion next year.

Its chief financial officer Chari TVT said on Friday the network was long-term evolution (LTE) capable for upgrading. LTE is a standard for wireless communication of high-speed data for mobile phones and data terminals.

“Currently, 86% of mobile phones in Malaysia still depends on the 2G network. Over in Japan, they had just phased out the 2G network this year. Malaysia is roughly five years behind Japan, therefore we can expect to phase out 2G TECHNOLOGY [] in about five years,” said Chari.

When asked about plans by Broadcast Australia to ink a deal on Monday to be Celcom’s technical partner to bid for the RM2 billion digital terrestrial television broadcasting (DTTB) project, Chari said the details of the deal would be announced on Monday.

However, he said Celcom would ultimately be providing infrastructure for the DTTB network and rent it out for stable income in the future.

“We have 98% of the infrastructure in place for the DTTB network,” said Chari.

On Celcom Axiata’s financial performance for the third quarter ended Sept 30, 2011, Chari said it posted all-time record high profit and revenue.

Its profit after tax and minority interests for the third quarter rose 10% on-year to RM531million from RM509 million driven by revenue which grew by 6% to RM1.826 billion from RM1.768 billion.

Chari said he expected the group to achieve its key performance indicators and reach its targeted RM7.9 billion in revenue for the full year.

Moving forward, Celcom would continue to modernise its network, and accelerate its technology transformation by investing into network fiberisation, 4G LTE, and alternative access technologies while focusing on IT transformation.

Data makes up about 38% of Celcom’s revenue, but that figure is expected to reach 50% by 2015, he said.

He attributed the rapid growth of Celcom’s data business to the quickly expanding but highly competitive market.

“Smartphone penetration for our network has gone from 10% to 18% within a year,” said Chari who expected smartphone uptake to continue at a rapid pace as smart-phone prices continue to decline.



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Tony moving on to AirAsia regional chief?

PETALING JAYA: AirAsia Bhd may see a new country head soon, while Tan Sri Tony Fernandes will remain as the budget carrier’s regional chief, sources said.

It is worth noting that AirAsia already has CEOs for its respective operations in Thailand and Indonesia. It also has plans to list these entities, which have just started making profits.

The appointment of a new CEO here can be seen as an integral part of Fernandes’ aspirations to make AirAsia a truly Asean airline.

“Fernandes will stay regional, (there will be) just a new CEO in Malaysia,” said the source.

This development came amid AirAsia’s fast expansion in the Asian region as well as the changing landscape of the local aviation industry. Its latest regional move was the setting up of AirAsia Japan. Fernandes also hopes to triple AirAsia’s fleet from 100 to 300.

Named Forbes’ Asia businessman last year, Fernandes played a big role in enabling major changes in the country’s aviation industry this year. The AirAsia CEO was instrumental in forging closer ties between AirAsia and Malaysian Airline System Bhd (MAS) in a collaboration estimated to save both airlines some RM1 billion per annum as both focus on core competencies.

Under the deal, Fernandes and his deputy Datuk Kamarudin Meranun took up some 20% in MAS via a share swap deal with Khazanah Nasional Bhd in August. Khazanah in turn subscribed to some 10% in AirAsia. There is a two-year moratorium attached to these shareholdings.

sell substantially to non-Singaporean customers,” said a local property analyst.

Singapore has had one of the most exciting real estate markets in the region as investors from China, Indonesia and Malaysia snapped up private residential properties in the island state.

According to Singapore government data, foreign buyers accounted for 19% of all private residential property purchases in 2HFY11, a substantial increase from 7% in 1HFY09.

However, S P Setia president and CEO Tan Sri Liew Kee Sin seemed unfazed by the new measures to curb real estate speculation in Singapore.

Liew said S P Setia’s Singapore projects are mainly targeted at Singaporeans wanting to upgrade their dwellings. He expects to sell about 70% of the group’s real estate units there to Singaporeans.

Additionally, Liew does not expect its non-Singaporean customers to be frightened off by the additional stamp duty charges. “The remaining 30% would be foreigners who want to buy anyway, regardless of the stamp duty and additional 10% charge,” a confident Liew said after announcing the group’s latest financial results.

Liew also pointed out that S P Setia’s maiden project in Melbourne had seen fast take up from Malaysians despite the strong Australian dollar against the ringgit.

S P Setia made its maiden foray to Singapore in April after acquiring a freehold development along Woodsville Close for redevelopment. It plans to redevelop the 0.68-acre land into a multi-storey residential apartment building with an estimated gross development value (GDV) of S$130 million (RM316.3 million). The project is expected to be launched in the coming months.

Just last week, S P Setia announced that its subsidiary had won a tender for a 4.62-acre parcel at Singapore’s Chestnut Avenue for S$180 million. The eco-themed development comprises residential apartments with an estimated GDV of S$465 million. The project is scheduled for launched in 4Q12.

Selangor Dredging Bhd (SDB), another Malaysian property developer with ongoing projects in the island republic, believes that Singapore remains a viable investment destination despite the new measures.

SDB communications and corporate affairs manager Yeoh Guan Jin said although the impact of the new measures will likely be felt quickly, the market will adapt to the new regime.

“Speculation will likely be curbed for now. But in the longer term, demand for property will return to normal. We are confident that the market will ride this out. A more stable and less speculative property sector would be a positive development,” Yeoh told The Edge Financial Daily in an email response.

Yeoh added that SDB has no plans of delaying the launch of its fifth Singapore project in Pasir Panjang, which is currently scheduled for 2H12. In Singapore, SDB has completed and sold out its low-density apartment called Jia on Wilkie Road.

The other three projects that are close to selling out are its mixed development Okio Residences, Gilstead Two apartments and 41-units of luxury apartments called Hijauan on Cavenagh.

Among the Malaysian players, IOI Corp and Khazanah (via listed property arm UEM Land) may be more affected as they have a large landbank there with yet-to-be launched projects. The latter recently gained control of two plots of land in the Marina area in exchange for the surrender of the KTM railway land.

Analysts say that a positive spin-off effect of Singapore’s move could be a diversion of property investors to Malaysia, particularly Iskandar Malaysia in Johor and even Penang.

“The changes in Singapore may affect its attractiveness. It was previously seen as having quite a liberal environment for real estate ownership by foreigners. Foreigners do not like changes that affect their investments. The Malaysian government has been relatively liberal when it comes to property ownership by non-citizens,” said one property analyst.

Foreigners in Malaysia are allowed to buy properties priced at above RM500,000 and own landed homes, the analyst pointed out. He also claimed that the Malaysia My Second Home programme was “the cheapest long-term residency programme” in the world.


This article appeared in The Edge Financial Daily, December 9, 2011.



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AirAsia, Bumi Armada and UEM Land to replace Gamuda, MISC and PLUS in KLCI

KUALA LUMPUR: AirAsia Bhd and Bumi Armada Bhd will replace Gamuda Bhd and MISC Bhd in the FTSE Bursa Malaysia KLCI, following the semi-annual review approved by the FTSE Bursa Malaysia Index Advisory Committee yesterday.

Bursa Malaysia Bhd and FTSE Group in a joint statement yesterday added that PLUS Expressways Bhd will be removed from the KLCI due to its suspension and delisting, and be replaced by UEM Land Holdings Bhd, the highest ranking stock in the KLCI reserve list at the close of business on Dec 8. This change will take effect at the start of business on Dec 13.

The KLCI reserve list, comprising the five highest ranking non-constituents of the index by market capitalisation, were UEM Land Holdings, IJM Corp Bhd, S P Setia Bhd, Malaysia Airport Holdings Bhd and Fraser & Neave Holdings Bhd.

Companies in the reserve list will replace constituents that become ineligible as a result of corporate actions before the next review.

Changes were also made to the FTSE Bursa Malaysia Mid 70 Index (FBM 70) and FTSE Bursa Malaysia Hijrah Syariah Index (FBM Hijrah).

All constituent changes take effect at the start of business on Dec 19 and the next review will take place on June 7, 2012.

This review saw the FTSE Bursa Malaysia Index Series experience a higher turnover than in previous reviews. This was due to the implementation of a new and enhanced liquidity rule.

The new rule is based on the median of the daily turnover of a stock (expressed as a percentage of its shares in issue and adjusted for its free float weighting) over the course of a month. The old rule was based on the total turnover for a month (expressed as a percentage of shares in issue and adjusted for free float weighting).

The new rule is in line with the FTSE Global Equity Index Series which further aligns it to global standards while continuing to provide an accurate representation of the true investability of companies in the FTSE Bursa Malaysia Index Series.


This article appeared in The Edge Financial Daily, December 9, 2011.



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DRB-Hicom not eyeing Proton

KUALA LUMPUR: DRB-Hicom Bhd has denied a newspaper report that it is looking to secure a substantial stake in Proton Holdings Bhd, and would divest part of the stake to Volkswagen AG.

“In this regard, we wish to inform Bursa Malaysia that the company is not aware of the source and the basis of the article,” it said in a filing with Bursa yesterday.


This article appeared in The Edge Financial Daily, December 9, 2011.



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KLCI closes on weaker note as eurozone debt woes persist

KUALA LUMPUR (Dec 9): The FBM KLCI ended the week on a weaker note in line with global markets, as investors worried over the uphill battle European leaders faced in agreeing to a more permanent solution to solve the eurozone debt crisis started liquidating their stocks.

The FBM KLCI fell 12.79 points to 1,460.13, weighed by losses including at KLK, Genting, PPB, AMMB and Gamuda.

Losers beat gainers by 515 to 213, while 278 counters traded unchanged. Volume was 1.3 billion shares valued at RM1.06 billion.

EU leaders agreed stricter budget rules for the euro zone at a summit seen as crucial to the future of the single currency in Brussels, but failed to secure changes to the EU treaty among all 27 member states, meaning a deal will instead have to involve just euro zone states and any others that want to join, according to Reuters.

After 10 hours of talks there was little concrete progress among the leaders, apart from their commitment to work towards a new "fiscal compact", it said.

At the regional markets, Hong Kong’s Hang Seng Index lost 2.73% to 18,586.23, South Korea’s Kospi fell 1.97% to 1,874.75, Japan’s Nikkei 225 was down 1.48% to 8,536.46, Taiwan’s Taiex lost 1.28% to 6,893.30, the Shanghai Composite Index shed 0.62% to 2,315.27 and Singapore’s Straits Times Index lost 1.24% to 2,694.60.

On Bursa Malaysia, KLK fell 72 sen to RM22.28, Genting down 26 sen to RM10.62, Cepco 23 sen to RM1.66, Knusford lost 22 sen to RM1.64, PPB fell 20 sen to RM16.30, Parkson and AMMB lost 16 sen each to RM5.50 and RM5.74, Gamuda and MISC down 15 sen each to RM3.13 and RM5.80, while AirAsia lost 12 sen to RM3.67.

Among the gainers, Nestle added 28 sen to RM54.38, GAB 18 sen to RM12, Hartalega 17 sen to RM5.72, Harvest Court 15 sen to RM1.24, Dutch Lady 14 sen to RM24.92, Magni 13 sen to RM1.23, Bintulu Port and SOP 10 sen each to RM6.95 and RM5.40, while Perduren added 8.5 sen to 93.5 sen.

Compugates was the most actively traded counter with 66.9 million shares done. The stock was unchanged at 7 sen.

Other actives included SYF Resources, Versatile, DPS Resources, Utopia, Pavilion REIT and Emico.



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Liew: PNB-S P Setia management agreement win-win situation

KUALA LUMPUR: Amid a takeover offer from its largest shareholder Permodalan Nasional Bhd (PNB), S P Setia president and CEO Tan Sri Liew Kee Sin has assured shareholders that the proposed management agreement between PNB and the property developer will bode well for all stakeholders.

“It is an agreement that will be a win-win for everybody; for S P Setia, for myself, everybody will be happy with this management agreement,” Liew told a press conference yesterday after announcing the group’s latest financial results.

While remaining tightlipped on specifics, Liew pre-empted questions from reporters by stressing that the ball is now in the Securities Commission’s (SC) court after the parties had ironed out the agreement over the last six weeks since PNB launched the takeover bid of S P Setia in late September.

After deliberations, the SC could reject, accept or amend portions of the management agreement.

Last Friday, PNB submitted a proposal to the SC to formalise incentives and management rights relating to the business of S P Setia.

Liew confirmed The Edge weekly’s report on Nov 29 that the management agreement would include an incentive package provided that S P Setia achieve specific milestones.

“The agreement is quite comprehensive. All the answers are inside the agreement. But take it from me, if this agreement can be implemented it is good for everybody.

Liew: Everybody will be happy.

“This is the first time an institutional fund is having a controlling stake in a company and yet allow entrepreneurs like ourselves to continue running it and to create value. I think it’s a good thing.”

On the key question of how long he will remain at S P Setia’s helm, Liew quipped, “Wait until this agreement is out. But there are lots of good people in Malaysia. We are not the only ones who can do the job.”

Liew announced yesterday that S P Setia is targeting RM4 billion in sales in 2012 despite concerns of a weaker economic environment and the central bank’s recent prudent lending guidelines for housing mortgages.

“Look at our portfolio. We are a development supermarket [with products ranging] from low-cost units to RM10 million villas. We think whichever way the market swings, we are able to cater to that segment of the market,” Liew said.

S P Setia said it had achieved a fourth consecutive year of record sales after posting full-year sales of RM3.29 billion for FY11, a 42% increase from the previous high of RM2.31 billion for FY10.

The property developer said its net profit for 4QFY11 ended Oct 31, grew 9.73% to RM82.46 million from RM75.15 million a year ago.

Pre-tax profit rose 7.57% to RM109.04 million from RM101.37 million while revenue climbed 13.5% to RM633.36 million from RM557.99 million a year ago.

For the 12-month period, S P Setia’s net profit rose 30.24% to RM327.97 million from RM251.81 million, while revenue grew 27.87% to RM2.23 billion from RM1.74 billion a year ago.

Liew said S P Setia is still keen to acquire assets in London and could re-evaluate proposals to acquire the Battersea Power Station in south London when the project is open for tender.

S P Setia recently lost its bid to acquire the asset after lenders to the Battersea Power Station development rejected the former’s preliminary offer to take over the debts amounting to £300 million (RM1.48 billion).

“We are definitely interested but subject to the terms in the tender. London is a very interesting market,” Liew said.


This article appeared in The Edge Financial Daily, December 9, 2011.



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Benalec, S’pore firm to develop oil terminal

KUALA LUMPUR: Benalec Holdings Bhd has found a Singapore buyer for a plot of reclaimable land forming part of its ambitious reclamation project in southern Johor. The 100ha plot will be turned into an oil storage terminal in which Benalec will also own a small stake, partnering with foreign oil and gas firms.

Benalec, a marine construction specialist, yesterday announced that it has entered into a memorandum of understanding (MoU) with Rotary Engineering Ltd to collaborate in developing an independent oil storage terminal spanning 100ha in Tanjung Piai, located on the southwestern tip of Johor.

The land is part of Benalec’s entitlement to reclaim some 1,400ha in Tanjung Piai and 712ha in Pengerang. The Johor government has given “approvals in principle” to two units of Benalec for the reclamation projects.

Singapore-listed Rotary is a provider of engineering, procurement, construction (EPC) services specialising in the oil and gas industry. Rotary’s MoU with Benalec has lent more credence to the latter’s reclamation project in Johor, which surprised many in the industry.

“Benalec with its marine construction expertise will reclaim the land while Rotary will build the oil storage tanks,” said a source.

He explained that once the oil storage terminal is developed, a joint venture will be formed between Rotary, another oil and gas firm and Benalec to own and operate the terminal.

“Benalec will make profit from selling the reclaimed land to the JV, it will also take up a small stake in the JV which will provide it with recurring income,” he added.

Benalec stated that the terminal will be a tank facility for storing, blending and distributing crude oil and petroleum products with deepwater port facilities capable of handling very large crude carriers.

The terminal will have an initial storage capacity of one million cu m with subsequent phases to increase capacity to three million cu m, it said.

It is worth noting that the terminal, when it is developed, will be similar to Dialog Group Bhd’s facility in Pengerang, at the southeastern tip of Johor. So this could mark the start of a rivalry between the two companies, said an observer.

Dialog has begun the first phase of its 202ha independent deepwater terminal project in Pengerang. It has completed 5% of the first phase, which is scheduled for completion in early 2014.

Dialog’s terminal involves tankage facilities for handling, storing, blending and distribution of crude oil and petroleum products, together with marine facilities capable of handling large crude carriers with a water depth of up to 26m.


This article appeared in The Edge Financial Daily, December 9, 2011.



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MIG to build steel plant in Kazakhstan

KUALA LUMPUR: Melewar Industrial Group Bhd (MIG) yesterday signed a memorandum of understanding (MoU) with Kazmy Steel Company of Kazakhstan in which MIG is to be the turnkey design-and-build contractor for a mycrosmelt steel plant in Almaty.

Undertaking the job in Kazakhstan will be MIG’s 70% unit Melewar Integrated Engineering Sdn Bhd (MIE), which will act as the project manager to provide the necessary expertise, experience and resources to design and build the plant.

The proposed investment in the plant is estimated at RM178 million via a joint venture by MIE and Kazmy. Of the RM178 million, 30% will come directly from shareholders and 70% via bank borrowings from Kazakh financial institutions.

“Kazakhstan is big as it is the ninth largest country in the world. It is a major producer of steel especially in the northern region near Astana,” MIG chairman Tunku Ya’acob Tunku Abdullah said.

Almaty is the largest city in Kazakhstan, located almost 2,000km south of Astana, the capital of the former Soviet republic, where the country’s steel production facility is located.

The plant is likely to have an annual capacity of 100,000 tonnes per annum and provides cheaper long products, including integrated re-bars, said Tunku Ya’acob.

While the cost of transporting steel through Astana to Almaty is high, MIG’s mycrosteel technology has helped to maintain the costs.

Construction work on the plant is slated to start in the second quarter of 2012, with the targeted completion date in 2013.

For 1Q ended Sept 30, 2011, MIG incurred a net loss of RM15.65 million on RM218.46 million revenue. For the corresponding period a year ago, the company suffered a net loss of RM7.46 million from RM157.93 million in sales.

Tunku Ya’acob added that the group intends to exit the power generation business in Thailand by selling its plant there to concentrate on the steel production business.

MIG’s power generation arm contributed RM75.82 million in revenue for the quarter and it accounted for RM13.32 million of MIG’s RM16.48 million loss before tax.

MIG ended trading yesterday at 49.5 sen, slipping half a sen.


This article appeared in The Edge Financial Daily, December 9, 2011.



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