Perodua, Petronas in RM225m lubricant deal

KUALA LUMPUR (March 8): Perodua and PETRONAS DAGANGAN BHD [] have signed a RM225 million deal to supply the former with lubricant oil over the next five years, Perodua managing director Datuk Aminar Rashid Salleh said.

He said the contract, dubbed "Perodua Genuine Oil", would see the second national car maker using RM45 million worth of "Petronas SL/SM" grade oil at all its service outlets nationwide a year for five years with immediate effect.

The deal emphasised Perodua's confidence in the quality and reliability of Petronas Dagangan's services, he said.

"Over the past 30 years, Petronas Dagangan has grown to become Malaysia's second largest lubricant company in a very competitive market.

"We aim to be the number one in Malaysia by 2015 through effective marketing initiatives, backed by our technological expertise and strong support from our strategic global partnerships," he said.

He said the collaboration was certainly a step forward to reinforce Petronas Dagangan's position as the "Brand of 1st Choice".

Both Perodua and Petronas Dagangan have a long-standing business partnership since 2003. -- Bernama



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Pintaras Jaya lands RM34m property project

KUALA LUMPUR (March 8): PINTARAS JAYA BHD [] has received a letter of award from Martego Sdn. Bhd for a proposed condominium project at Cangkat Perak in Kuala Lumpur.

“The works are to commence on March 12, 2012 with a completion period of 24 months. The contract is valued at RM34.38 million,” it said in a statement to Bursa Malaysia on Thursday.

The contract would involve earthworks, piling and sub-structure works and Pintaras Jaya expected it contribute to its future earnings.



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Sumatec inks joint investment agreement for Kazakh oil and gas field

KUALA LUMPUR (March 8): SUMATEC RESOURCES BHD [] had sealed a joint investment agreement to extract hydrocarbon in the Rakushechnoye oil and gas field (Shelly oil field) in Kazakhstan.

It said on Thursday the other parties which had signed the agreement were Markmore Energy (Labuan) Ltd and CaspiOilGas LLP (COG).

The scope of work for Sumatec would all the operations related to the production of hydrocarbon from the Shelly oil field for and on behalf of COG.

It was also tasked to complete all operations to develop the Shelly Oil Field within the period from the date of the agreement up to Aug 25, 2025.

Under the agreement, Sumatec would pay MELL a non-recoverable signature bonus of US$10 million by April 30, 2012 or any such time as may be mutually agreed by the parties.

Sumatec would also pay to MELL a non recoverable costs reimbursement of US$85 million.

It would also have to place with COG a refundable performance deposit of US$40 million for the due and satisfactory performance of the petroleum operations.

It would also have to pay oil royalty to COG at US$5 per barrel of the crude oil production and shall be offset against the performance deposit. The royalty for gas/natural Gas shall be mutually determined by the parties as soon as it becomes practicable.

As part of the agreement, MELL would provide Sumatec an advance for capital cost up to US$60 million to develop the Shelly oil field.

The distribution of profit between COG and Sumatec would be when the net production reaching a threshold of two million barrels within two years from the payment date.

Under the agreement, Sumatec would be entitled to 100% of the profit for the first and second year and by the third year, it would be on a 50:50 basis.

“The company will fund the payments required under the JIA and working capital for the development of the Shelly oil field from the proceeds of the fund raising exercise envisaged under the proposed regularisation plan,” it said.



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Encorp unit to issue RM1.58 bn Islamic bonds

KUALA LUMPUR (March 8) : Builder ENCORP BHD [] plans to issue up to RM1.58 billion worth of Islamic bonds to refinance the builder and property developer’s existing debt obligations.

In a statement to Bursa Malaysia on Thursday, Encorp said the exercise will be undertaken via indirect unit Encorp Systembilt Sdn Bhd (ESSB)

“The proposed ESSB Sukuk Murabahah issue will be issued in one lump sum and in tranches with tenures of up to 16 years from the issuance date. The profit rates for each tranche of the proposed ESSB sukuk Murabahah issue shall be determined prior to the issuance,” Encorp said.

Encorp said the Syariah-compliant instrument will not be listed on any stock exchange.

ESSB had in 2000, 2002 and 2004 issued a collective RM2.75 billion worth of Islamic bonds to part finance the development of 10,000 units of teachers’ quarters in the Malaysia. This follows a privatisation agreement between ESSB and the government in February 1998.



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KLCI lags key regional markets’ recovery

KUALA LUMPUR (March 8): Key regional markets racked up gains of up to more than 2% on Thursday, as investors’ sentiment was boosted by hopes that Greece could avert a default and positive news on the US economy.

However, the FBM KLCI lagged the regional markets and managed to close up only 3.53 points or 0.22% to 1,578.36, after falling 15.08 points – the worst loss for this year – on Wednesday. Turnover was 1.77 billion shares valued at RM1.76 billion. Advancing counters beat decliners 415 to 336 while 339 stocks were unchanged.

Reuters reported that in Europe, indications are major banks and pension funds are likely to take part in the Greek deal, easing concerns about a chaotic default. But some hedge funds and Greek pension funds are still holding out, injecting uncertainty before the deadline expires later in the day.

Greece aims to persuade 90% of creditors to take part in the bond swap. With two-thirds acceptance or more it may be able to trigger collective action clauses (CAC) to force bondholders to accept losses, an event that would have knock-on effects for banks but has largely been priced-in.

Among the key regional markets, the Nikkei 225 rose 2.01% to 9,768.96, Hang Seng Index 1.32% to 20,900.70, Shanghai Composite Index 1.06% to 2,420.28, Taiwan’s Taiex 1.03% to 7,984.56, South Korea’s Kospi 0.94% to 2,000.76 and Singapore’s Straits Times Index 1.96% to 2,970.38.

At Bursa Malaysia, penny stocks fell in active trade as traders decided to stay on the sidelines. Recent leaders Naim Indah Corp and HWGB fell in active trade while recent IPO China Stationery Ltd continued to lose ground.

Naim Indah fell 2.5 sen to 63 sen with 360 million shares done. clarified on Thursday there was no proposal from new major shareholder Datuk Raymond Chan Boon Siew to inject new development projects into the company.

CSL lost 10 sen to RM1 on continued selling as the allure of the second listing on Bursa Malaysia, which would have brought Chnia stocks back into focus, seemed to have faded. Its IPO price was 95 sen when it was listed on Feb 24 and it rose to a high of RM1.39 on Feb 28.

Mild buying of blue chips saw Tenaga adding seven sen to RM6.26, CIMB five sen to RM7.36 and Sime four sen to RM9.84. Their gains pushed the KLCI up by 2.34 points. Genting added six sen to RM10.80 and Genting Malaysia three sen to RM3.86.

PLANTATION []s rose on firmer crude palm oil prices, which rose RM34 to RM3,293, the highest since Feb 28. PPB added 16 sen to RM16.90, Sungai Bagan 12 sen to RM3, Far East and United Plantations 10 sen each to RM7.40 and RM24.50. However, Batu Kawan fell six sen to RM18.64.



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Market Commentary

The FBM KLCI index gained 3.53 points or 0.22% on Thursday. The Finance Index increased 0.19% to 14116.46 points, the Properties Index up 0.06% to 1051.2 points and the Plantation Index rose 0.15% to 8612.94 points. The market traded within a range of 4.24 points between an intra-day high of 1580.41 and a low of 1576.17 during the session.

Actively traded stocks include NICORP, HWGB, SUMATEC, CSL, SUMATEC-WA, RA, GOCEAN, HWGB-WB, AMEDIA and WINSUN. Trading volume increased to 1769.37 mil shares worth RM1763.28 mil as compared to Wednesday’s 1742.64 mil shares worth RM2030.26 mil.

Leading Movers were TENAGA (+7 sen to RM6.26), CIMB (+5 sen to RM7.36), SIME (+4 sen to RM9.84), GENTING (+6 sen to RM10.80) and AXIATA (+2 sen to RM5.14). Lagging Movers were DIGI (-2 sen to RM4.05), AMMB (-5 sen to RM6.17), PETDAG (-3 sen to RM18.36), PETCHEM (-1 sen to RM6.83) and HLFG (-10 sen to RM12.00). Market breadth was positive with 415 gainers as compared to 336 losers. -- JF Apex Securities Bhd



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Aeon Co. Malaysia plans RM350m capex this year

KUALA LUMPUR (March 8): AEON CO. (M) BHD [] has allocated RM350 as capital expenditure for this year which includes opening a department store in Sri Manjung in Perak by year-end.

The company is also undertaking a RM10 million rebranding exercise to change the name of its department stores from Jusco to Aeon.

To recap, in 1984, Aeon Japan Ltd of Japan was invited by the Malaysia government to modernise the retail industry in Malaysia. Since then, it had been operating the Jusco stores under its subsidiary company, Aeon Co. (M) Bhd.

But with the group moving towards globalisation, it is taking on the global brand name of Aeon for all its stores and shopping centres.



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Top Glove eyes acquisition this year

KUALA LUMPUR (March 8): Top Glove Corp Bhd, the world's largest rubber glove maker by volume, aims to buy at least one other glove producer this year as part of its strategy to gain market share and drive earnings, said its chairman and founder.

The Malaysian company is in talks with a number of rubber glove makers, chairman Lim Wee-Chai told Reuters in an interview.

"We are talking to companies mainly from Malaysia. When the pricing and everything is right, we can see something by the end of this year," he said at the company's headquarter in Klang just outside Kuala Lumpur.

Lim said Top Glove is well placed to make acquisitions on the back of its strong net cash position. The company held some 300 million Malaysian ringgit ($99.14 million) net cash as of Feb. 29, 2012, 16.7 percent higher than August a year earlier.

The global rubber glove industry, worth some $4.9 billion, has consolidated over the past decades, from 65 industry players controlling 45 percent of world market share in 2000 to 40 players commanding some 63 percent in 2012, according to the Malaysian Rubber Export Promotion Council.

Last year, private equity firm Navis Capital offered to buy Malaysian rubber glove maker LATEXX PARTNERS BHD [] for 852 million ringgit but the deal fell through due to disagreement on valuation.

YTY Group, the world's second-largest nitrile glove maker, followed up with a proposed 1.25 billion ringgit merger with Latexx but to no avail.

Top Glove is also working on deals to acquire rubber land in Malaysia, Indonesia and Cambodia as it tries to hedge against fluctuations in natural rubber prices, said Lim.

Profit margins for the industry declined in 2011 partly due to higher prices of latex, which makes up some 60 percent of rubber glove makers' production costs.

The latex price peaked at a record 11 ringgit per kg in early mid-February 2011. It plunged briefly in March last year after Japan's tsunami disaster, recovered, and then went on a gradual decline due to the dim global economic outlook.

The price is currently around seven to eight ringgit per kg now, where Lim expects it to stay this year.

"We foresee the global economic slowdown will ease commodity prices, but the Thai government's price support policy may boost prices in the short term," he said.

Top Glove plans to invest about 100 million ringgit this year to increase its production lines and factories, Lim said.

The company operates 20 manufacturing plants based in Malaysia, Thailand and China with a production capacity of 40.05 billion gloves annually. - Reuters



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