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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Bursa Securities queries LFE Corp

KUALA LUMPUR (Dec 7): Bursa Malaysia Securities Bhd has issued an unusual market activity query over the trading of LFE CORPORATION BHD []'s shares on Wednesday.

The regulator said on Wednesday the query was due to the sharp rise in price and high trading volume in LFE Corp’s shares.

LFE Corp rose 9.5 sen to 22.5 sen with 67.2 million shares traded.



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Sanichi to venture into mineral mining, supply biz

KUALA LUMPUR (Dec 7): SANICHI TECHNOLOGY BHD [], a precision-mould maker, is venturing into the minerals mining and supply business via a collaboration with FIRC Trade (Malaysia) Sdn Bhd.

Sanichi said on Wednesday that FIRC was 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.

It said FIRC was also involved in the trading and supply of various iron ore and coal products.

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.

It said the operations would commence by Jan 2, 2012 and will continue to be in force for a minimum period of five years.

Sanichi said it would finance the business activities of the alliance via internally generated funds.

It said the business was expected to contribute positively to its future earnings.

Meanwhile, Sanichi said it had also secured at least three million metric tonnes of coal supply a year from Indonesia's CV Permata Zahra.

In a separate filing on Wednesday, Sanichi said that under a collaboration agreement, it would market and distribute the coal supplied by Permata.

The contract is for a period of two years beginning Dec 6, it said.



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Market Commentary

The FBM KLCI index gained 2.07 points or 0.14% on Wednesday. The Finance Index increased 0.38% to 13233.15 points, the Properties Index up 0.64% to 957.73 points and the Plantation Index rose 0.44% to 7882.82 points. The market traded within a range of 9.31 points between an intra-day high of 1482.99 and a low of 1473.68 during the session.

Actively traded stocks include PAVREIT, WIJAYA-WA, SANICHI, LFECORP, RA, UTOPIA-WA, PROTON-CG, COMPUGT, MACRO-WA and UTOPIA. Trading volume decreased to 2088.21 mil shares worth RM1770.42 mil as compared to Tuesday’s 2261.26 mil shares worth RM1304.55 mil.

Leading Movers were AXIATA (+14 sen to RM5.09), CIMB (+11 sen to RM7.20), MAYBANK (+10 sen to RM8.30), GAM (+15 sen to RM3.40) and KLK (+48 sen to RM22.16). Lagging Movers were TENAGA (-19 sen to RM5.46), IOICORP (-6 sen to RM5.12), PETCHEM (-8 sen to RM6.08), DIGI (-4 sen to RM3.62) and PBBANK (-6 sen to RM12.66). Market breadth was positive with 445 gainers as compared to 304 losers. -- JF Apex Securities Bhd



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KLCI reverses earlier losses to close higher

KUALA LUMPUR (Dec 7): The FBM KLCI reversed its earlier losses and closed higher on Wednesday, in line with the improving but still cautious sentiment at key regional markets.

The FBM KLCI rose 2.07 points to close at 1,482.99.

Gainers led losers by 445 to 304 while 306 counters traded unchanged. Volume was 2.09 billion shares valued at RM1.77 billion.

Growing optimism that euro zone leaders are on track to produce a confidence-boosting package of measures to solve the debt crisis at their weekend summit lifted risk appetite on Wednesday, with the euro and global equity markets posting gains, according to Reuters.

At the regional markets, Japan’s Nikkei 225 rose 1.71% to 8,722.17, Hong Kong’s Hang Seng Index up 1.58% to 19,240.58, Taiwan’s Taiex added 1.10% to 7,033.00, South Korea’s Kospi rose 0.87% to 1,919.42, the Shanghai Composite gained 0.29% to 2,332.73 and Singapore’s Straits Times Index rose 1.21% to 2,782.55.

On Bursa Malaysia, KLK was the top gainer and added 48 sen to RM22.16; Nestle rose 40 sen to RM53.60, JT International and KrisAssets were up 30 sen each to RM6.80 and RM5.38, Allianz 21 sen to RM4.88, Aeon 20 sen to RM7.40, Boxpak 18 sen to RM1.69 while Chin Teck, Dutch Lady and BHIC rose 16 sen each to RM8.56, RM22.26 and RM2.86 respectively.

Pavilion REIT, which made its debut on the Main Market of Bursa Malaysia, was the most actively traded counter with 197.3 million units done. The counter added 12 sen to RM1.02.

Other actives included Sanichi, LFE Corp, Utopia’s securities and Proton.

Among the decliners, Proton fell 27 sen to RM4.04, MAHB 24 sen to RM5.80, Tenaga 19 sen to RM5.46, UMW and RHB Capital 13 sen each to RM6.54 and RM7.13, Tradewinds PLANTATION []s 11 sen to RM4.40 while Tasek and LPI Capital fell 10 sen each to RM7.70 and RM13.



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MAS to cut unprofitable routes

Malaysian Airline System Bhd, the loss-making national carrier, said it will cut unviable routes, spin-off ancillary businesses and form a new regional unit in a bid to return to profit in 2013.

The new airline, which will start operations in the second half of next year, will initially have 45 Boeing Co. 737-800 planes and fly to cities in Southeast Asia and Greater China, Chief Executive Officer Ahmad Jauhari Yayha, told reporters outside of Kuala Lumpur today. Routes being dropped include Johannesburg, Cape Town and Buenos Aires, he said.

Malaysian Air, which will likely make a loss of RM165 million ringgit (US$53 million) next year, has begun discussions to cooperate with AirAsia Bhd to cut costs after the two airlines’ biggest investors undertook a share swap in August. Subang, Selangor-based Malaysian has struggled to turn rising sales into profits because of higher fuel costs and competition from AirAsia.

“Consolidated operations will deliver better service at lower costs,” said Ahmad Jauhari, who took over as CEO in September. Potential areas for cooperation with AirAsia include fuel purchasing, maintenance, training and ground-handling, he said.

The airline’s engineering, pilot training, cargo and ground services operations could all be spun to raise proceeds of as much as RM337 million, he said. Malaysian Air aims to make an annual profit of RM900 million in 2016, Ahmad Jauhari said. The company lost RM1.2 billion in the first nine months of this year.

The carrier, which will join the Oneworld alliance by September 2012, intends to add 23 new planes next year as its phases out older fuel-hungry planes, Ahmad Jauhari said. AirAsia Chief Executive Officer Tony Fernandes and partners own 20.5 per cent of Malaysian following the share-swap. They gave 10 per cent of AirAsia to Malaysian’s state-controlled parent Khazanah Nasional Bhd in return. Fernandes and his deputy Kamarudin Meranun also now sit on Malaysian Air’s board. -- Bloomberg



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GuocoLand buys Cheras land for RM108m

KUALA LUMPUR: GuocoLand (M) Bhd is buying nine land parcels measuring 18.9ha in Cheras for RM107.87 million or RM53 per square foot (psf) to be satisfied via cash.

In a filing with Bursa Malaysia yesterday, the property developer said its wholly-owned subsidiary Ace Acres Sdn Bhd (AASB) had entered into a conditional sale and purchase agreement (SPA) with Bonds Corp Sdn Bhd (BCSB) to purchase the nine freehold land parcels.

The proposed development of the said land will comprise a mixture of bungalows, semi-detached houses, superlink houses, condominiums and shophouses, it said.

However, it did not provide any further information on the project as the development proposal is currently at the initial planning stage.

GuocoLand said the land is currently occupied by squatters. The developer added that the purchase would be funded entirely by borrowings and its gearing is expected to increase to 1.34 times from 1.13 times as at June 30.

In addition to the SPA, AASB and BCSB also signed an agreement where AASB would get the first priority within the next 12 months to acquire an adjacent 2ha plot from BCSB for RM53 psf.

The 18.9ha site is located 10km south of the city centre, and is sandwiched between Alam Damai and Bandar Damai Perdana townships.

The proposed acquisition is subject to approval by the Prime Minister Department’s Economic Planning Unit.

GuocoLand closed unchanged at 83.5 sen with 121,800 shares traded.


This article appeared in The Edge Financial Daily, December 7, 2011.



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Wijaya to start logging in Indonesia in 2Q12

KUALA LUMPUR: Wijaya Baru Global Bhd, in which politician Datuk Seri Tiong King Sing owns a 32.02% stake, will begin logging operation in Indonesia in 2Q12, after having received the go-ahead from shareholders at the EGM yesterday to acquire Wealth Gate Pte Ltd and Suffolk Pte Ltd for a total of US$80 million (RM251 million).

Suffolk and Wealth Gate, incorporated in Singapore, have 80,000ha of land in Irianjaya, Indonesia that have been approved for oil palm plantation and related activities. The land valued at US$1,000 per ha is covered with virgin forests and Wijaya will extract the timber first before the area is converted into oil palm plantations.

Wijaya chairman Datuk Abdul Azim Mohd Zabidi said there are no plans to undertake oil palm plantation in Indonesia at the moment,though it remains an option.

He added that after logging is completed and the land cleared, only then will the company weigh options to either venture into plantation or sell the land or lease it to others to plant oil palm trees.

“It is (venturing into oil palm plantation) on the radar and the option is there. But Wijaya has always been a timber company. We had a timber concession in Sarawak and that licence expired in July 2010. We want to stay focused on our core business and that is why we explored this deal,” said Azim.

“This business (timber) has been contributing well to profits year in, year out for the last 20 years,” added Azim.

The concession for oil palm cultivation for the total 80,000ha will last for 35 years and may be renewed for another 25.

Azim acknowledged that there has been a global slowdown due to issues in the eurozone and the US, but said, “What goes down must come up. When the global market recovers, we expect to see demand for construction activity increase, hence more demand for timber.”

“Furthermore, it is unlike those days where you had a lot of timber concession areas. In fact, Indonesia has imposed a (two-year) moratorium (from April 2010) as part of an international treaty with Norway. Fortunately, this (the two plots of land) was approved prior to that,” said Wijaya Group CEO and executive director Datuk Faizal Abdullah.

Wijaya will pay for 20% of the US$80 million purchase consideration via internal funds with the remaining 80% in borrowings sourced from Export-Import Bank of Malaysia Bhd (Exim). The company could not raise funds through a rights issue or shares placement as its current stock price is trading below its par value of RM1.00.

The acquisition should be completed by year-end after Wijaya secures the necessary funding, said Azim, and the company will start clearing the land.

Since both plots of land are virgin forests, Wijaya will have to build up the entire infrastructure for timber extraction which Azim said will cost around RM40 million, including the cost of setting up a sawmill.

Timber logging could begin as early as 2Q12 once the infrastructure is in place, said Azim, who said Wijaya has all the appropriate permits, including undertaking an environmental impact assessment.

Wijaya’s share price rose sharply yesterday to close at 80.5 sen, up 4.5 sen or 5.9% in reaction to the company getting shareholders’ approval for the Indonesian deal.


This article appeared in The Edge Financial Daily, December 7, 2011.



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