Curated Insights 2018.02.18

Amazon’s latest ambition: To be a major hospital supplier

The pilot is customized for the hospital system’s catalog of supplies, the official said, allowing employees to compare prices the system negotiates with its distributors against those in the Amazon Business marketplace. In response to questions about these efforts, Amazon said it is building technology to serve health-care customers, and seeking to sell hospitals on a “marketplace concept” that differs from typical hospital purchasing, which is conducted through contracts with distributors and manufacturers.

So far, some hospitals have been reluctant to buy supplies from Amazon Business, for reasons including lack of options and lack of control over purchases and shipping, which hospitals closely safeguard to ensure prompt arrival of goods.

Hospitals typically contract for assurances that products will be available and delivered securely, she said. “It’s a little different than being out of a size 6 dress. I can’t be out of a six French catheter,” said Ms. McCready, who oversees the hospital system’s $3 billion annual budget for supplies, contract services and pharmaceuticals. Ensuring continuity of product supply is also crucial, said Donna Drummond, Northwell’s senior vice president of consolidated business services. When doctors and nurses reach for a familiar product, they know its specifications. Jumping online to look for the best deal could disrupt that continuity, she said. Northwell is “not ready to move from our current model,” Ms. Drummond said, but added: “We are open to a competitive market.”

Fees and administration, marketing and shipping costs account for an estimated 20% to 30% of health-care supply costs, according to a November research report by Citigroup Global Markets Inc. “There’s a lot of people with fingers in the pie,” said Rob Austin, an associate director with Navigant Consulting Inc. and former hospital supply-chain executive. “There is a huge opportunity.”


Amazon threat has Maersk racing to stop clients becoming rivals

It’s not just a question of a smooth delivery, said Skou. Giant retailers like Amazon also want better information about shipments to manage supply chains as effectively as possible. Maersk is rolling out a new digitization strategy to modernize an industry in which bookings often still take place by phone. Last month, it formed a joint venture with IBM to develop the use of blockchain technology to manage and track cross-border trade.

“The ability of Maersk to understand the market and integrate with a big company like Amazon is very clever,” Benito said. “They realize that Amazon can be a disruptor, so it’s better to try and work together.”

How delivery apps like Seamless and Uber Eats may put your favorite restaurant out of business

In 2016, delivery transactions made up about seven per cent of total U.S. restaurant sales. In a research report published last June, analysts at Morgan Stanley predicted that that number could eventually reach forty per cent of all restaurant sales, and an even higher percentage in urban areas and among casual restaurants, where delivery is concentrated. Companies like GrubHub maintain that the revenue they bring restaurants is “incremental”—the cherry on top, so to speak, of whatever sales the place would have done on its own. They also argue that delivery orders are a form of marketing, exposing potential new customers who might convert to lucrative in-restaurant patrons. The problem is that as consumers use services like Uber Eats and Seamless for a greater share of their meals, delivery orders are beginning to replace some restaurants’ core business instead of complementing it. (In the Morgan Stanley survey, forty-three per cent of delivery patrons said that a meal they ordered in was replacing one they would have otherwise eaten at a restaurant.) And, as delivery orders replace profitable takeout or sit-down sales with less profitable ones—ostensibly giving restaurants business but effectively taking it away—the “incremental” argument no longer holds. “It’s total bullshit, and you can quote me on that,” Justin Rosenberg, the C.E.O. of the Philadelphia-based fast-casual chain Honeygrow, told me. “I’ve spoken to C.F.O.s of bigger fast-casuals, and they’ve said the same thing.”

It’s worth noting that, even while charging restaurants steep rates, most delivery platforms are not yet profitable, either. Their hope is that order volumes will one day become high enough—and couriers will deliver enough orders per hour—to push them into the black.


Airbnb reportedly built an internal hedge fund that makes $5 million per month

According to Bloomberg, Tosi “quietly built a hedge fund within the company’s finance department. He used a portion of capital from the balance sheet to buy stocks, currencies, and fixed-income securities, mimicking the treasury fund he ran at Blackstone. The side project represented 30 percent of the company’s cash flow last year and made about $5 million a month for Airbnb, the people said.”

New DNA nanorobots successfully target and kill off cancerous tumors

“Using tumor-bearing mouse models, we demonstrate that intravenously injected DNA nanorobots deliver thrombin specifically to tumor-associated blood vessels and induce intravascular thrombosis, resulting in tumor necrosis and inhibition of tumor growth,” the paper explains.

DNA nanorobots are a somewhat new concept for drug delivery. They work by getting programmed DNA to fold into itself like origami and then deploying it like a tiny machine, ready for action.

Saving for old age: the global story (part II)

This country for old men and women would have had 222m people in it, assuming it was launched at the end of 2015. Assume all Chinese move there on their 60th birthday, and by 2025 you would expect the population of Oldland to be 300m.

It is well known that savings rates in China are already high. If greater portions of these savings are shifted into a funded pensions infrastructure which looks anything like that of the US, this would boost demand for the kinds of assets pension funds usually buy: stocks and bonds.

It may already be happening. The Willis Towers Watson report states that China has the fastest compound annual growth rate of pension assets over the past five years, at 18 per cent. The second highest, at 13 per cent, is South Korea. The third is Hong Kong, at 10 per cent (HK also has the fastest 10 year growth rate — there is no such figure for China).

Audio boom: how podcasters make a living

The defining year for podcasting was perhaps 2014, when NPR launched Serial, a true-crime series that became a global phenomenon and the fastest podcast to reach 5m downloads on iTunes. It triggered a wave of wannabes. That year, Apple installed the podcast app into its operating system — suddenly iPhones had podcasts on the home screen. Today there are more than 500,000 active shows on iTunes, including content in more than 100 languages.

In 2006, only 22 per cent of Americans had heard the term “podcasting”, according to Edison Research and Triton Digital. Last year it was 60 per cent. Thirty-one per cent of 25- to 54-year-olds said they had listened to a podcast in the past month compared with 16 per cent four years earlier. Networks such as Gimlet, or the crowdfunded Radiotopia, have helped to professionalise podcasts by attracting large audiences and advertising revenues.


An ‘iceberg’ of unseen crimes: Many cyber offenses go unreported

To many criminologists, academics and law enforcement leaders, crimes like car theft are anachronisms in a modern era in which the internet’s virtual superhighways have supplanted brick-and-mortar streets as the scenes for muggings, prostitution rings or commercial burglaries. They see dips in traditional violence and larceny as offset by a twin phenomenon: A surge in the evolving crimes of the digital era, and the fact that they are not fully captured in law enforcement’s reporting systems.

The wealth of Sapiens

True wealth is not money. It’s the option to buy what you truly need. If money can’t buy what you need, you’re on even footing with the poorest person out there. Wealth is a society where you can trust complete strangers with your child’s life. Wealth is having friends, colleagues and family who support you. Who take care of the things you can’t, without hesitation. Wealthy is when strangers rent you cars for 1-way trips at 3am over the internet.

Company Notes 2018.02.16

CSC Steel Q4 FY2017 Results

Driven by increasing prices of steel making raw materials such as iron ores and coking cokes, coupled with China’s continued efforts in shutting down its rudimentary and polluting steel mills, steel prices are expected to remain firm at least until the first half of 2018. However, steel market for the second half of 2018 becomes less predictable and very much dependent on the actions to be taken by Trump Administration on the outcomes of section 232 investigation. The Group expects business volume for the first quarter of 2018 to be impacted by Chinese New Year festivities and the rest of 2018 to remain challenging as the Malaysia steel markets continue to be liberalized and new steel mills come on stream within ASEAN countries taking advantage of the unimpeded access to markets within ASEAN under
the ASEAN Free Trade Agreement.


Hexza Q2 FY2018 Results

Our resins segment is expected to continue to operate in a challenging environment due to higher raw material prices that may affect our profit margin. Nevertheless, we will work on passing on incremental cost to customers to cushion the impact of higher raw material prices.

Our ethanol segment will feel the full year impact of the excise duty hike in October 2016, which has affected sales of our potable alcohol. We will continue to intensify our marketing efforts and work on increasing sales of higher margin products.


Weida Q3 FY2018 Results

The Group’s polyethylene culverts are increasingly being accepted by both the government sector in road construction projects, and the private sector especially oil palm plantations for drainage infrastructure.

The growing emphasis on environmental sustainability and green technology also bodes well for the Group. Over the years, the Group has significantly grown and enhanced its human and engineering capital, via active involvement and collaboration with a network of established international organisations. The Group has been successfully playing, and will continue to play, the role as a provider of environmental engineering solutions; such as in the field of water and wastewater treatment, septic sludge treatment and renewable energy.

Elsoft to ship more test equipment in first half-year

“Most of the orders come from the smart device segment, followed by the automotive and general lighting industries. They will go to customers in the Asia-Pacific. For the first half of 2017, about 60% of the orders were for the automotive segment. The shipment for the first half of 2017 was about RM30mil. However, the first quarters of 2016, 2017, and 2018 had proven to be unusual.”


Wegmans aims to boost exports after doubling capacity

The completion of Wegmans’ new plant, slated for 4Q19, is projected to increase the group’s annual production capacity to 960,000 units of chairs and 380,000 units of tables for the dining room, living room and bedroom, according to the IPO prospectus.

Wegmans aims to start exporting its products to more European countries besides expanding its presence in existing markets following the increase in its capacity, said the group’s executive director Collin Law at the launch of the group’s prospectus yesterday.

“For FY16, approximately 98.42% of revenue and 9.53% of purchases were denominated in US dollars,” Wegmans said. The remaining sales and purchases were recorded in ringgit.

An 84.22% foreign composition of its workforce may also squeeze Wegmans’ margins going forward as it had to pay the new levy for foreign workers since Jan 1.


Ninja Van to use funds raised to boost Malaysian ops

“At present, we have 200 points which are all located in the Klang Valley,” said the group’s country head for Malaysia Adzim Halim. We plan to establish footholds in Johor Baru, Penang, Melaka, Negeri Sembilan and Kuantan. We’re looking to improve our sorting capacity by at least four times what it is now by investing in an automated parcel-sorting machine.”

A quick check on Ninja Logistics Sdn Bhd’s financial statements show that the company’s revenue for financial year 2016 (FY16) soared more than five times to RM6.77 million from RM913,589 in FY15. However, its loss after tax widened to RM6.09 million in FY16 versus RM1.07 million in FY15.

Singapore may start taxing Amazon and Lazada

BMI Research projects the region’s six biggest economies will boost e-commerce to $64.8 billion in 2021 from $37.7 billion last year, while Credit Suisse Group AG estimates that online shopping growth could outpace that of traditional retailers by six to 10 times over the next few years.

The Customs Department in Malaysia has been talking about plans around taxing foreign e-commerce players for months. While nothing is in hand yet, BMI Research’s Singh sees Malaysia following Singapore’s lead with a 6 percent levy on these online providers.


Chinese tourists are taking over the Earth, one selfie at a time

China already accounts for more than a fifth of the money spent by outbound tourists, twice as much as the next-biggest spender, the US, according to the United Nations World Tourism Organization. And the Chinese have barely started — only around 5% of them even have passports, and the government is issuing about 10 million new travel documents every year.

The shift is transforming the region, unleashing more than US$100 billion in infrastructure spending for bigger airports and jet fleets, new railways, hotels and theme parks. The effects of this boom include soaring property prices, stress on the environment and an avalanche of apps and innovations that reimagine the way we experience the world.


‘Home ownership is not for everyone’

“Home ownership is not for everyone. There’s not a single country in the world that has 100% home ownership. Usually, you have a home ownership penetration of about 75%, and the rest are rentals for various reasons. Some can afford to be homeowners but by choice want to be renters. Some cannot yet afford to be homeowners because they are at the start of their careers. We should, therefore, approach housing with a range of solutions rather than a specific one-size-fits-all policy that doesn’t help everyone equally.”

“If you start subsidising from the onset before fixing the way the housing system addresses factors such as access to financing, all you would be subsidising are the inefficiencies of the market. Fix the problem first. This would then enable governments to use the same amount of money typically used to subsidise housing to reach a much larger number of people.”

Curated Insights 2018.02.11

Why Expedia or Priceline might just be the next great hotel brand

“I think we [in online travel] have all innovated on the service layer, and most of the people in the room are working on the service layers, but the true innovation is going to be actually owning and operating the assets — the airplanes, the hotels, not so much the cars actually. But that aspect is hugely capital intensive, and it’s ripe for some new ideas, and someone will get there. I have a $100 billion, so it won’t be me. If you own and operate the hardware, you can do a lot more on the innovation side than from the service and software layer.”

“Online travel agencies are seeing their revenues go down and it costs them more to advertise on Google because the search criteria are going up. The search price is going up, and the online travel agencies had a tough third quarter. I think they see the writing on the wall. We’ve had overtures with online travel agencies reaching out to us and trying to find ways to partner more [with us].”

“They have to evolve because there are fundamental threats to their existence. They have to have a good relationship with hotels or they won’t have anything to sell.”

“The key point that we want to reinforce is that hotel commission rates are in the 10 to 15 percent range for the large chains and 15 to 25 percent for smaller brands that make up the bulk of Booking.com’s inventory. This compares to airline commission rates that are anywhere from zero to one or two percent in most developed markets. The rationale for the airline inventory is having a complete product to drive traffic, but the margins on those bookings themselves are much lower than for hotels. Booking.com has recently added airlines, but this is simply pushing traffic into its Kayak platform …”

“They were aggregating similar independent hotels with their own brands and it was a scale play. But they didn’t have access to every single hotel in a market. To compete with the online travel agencies who are spending several billion dollars a year in marketing is an expensive undertaking. Just because you have the capability of having content doesn’t mean you’ll be successful in bringing customers to your site, or doing it in a way that’s economically viable to run a business. I’m not surprised it didn’t work; AccorHotels at heart is a hotel brand company and hotel operator.”

What really matters most to consumers today, he said, isn’t the brand itself but the rankings and reviews associated with an individual hotel property. “The first thing a customer checks are the rankings and the commentary. That’s a much better quality assurance than a brand can provide. People choose to stay at an Airbnb based on social ratings and comments from users. They don’t need assurance that there’s a brand on it. That’s part of the dynamics and in essence, the brands are disappearing and what prevails is distribution. If I get the best distribution from an online travel agency, why would I sign up with another company?”

Tackling the internet’s central villain: The advertising business

And for all its power, the digital ad business has long been under-regulated and under-policed, both by the companies that run it and by the world’s governments. In the United States, the industry has been almost untouched by oversight, even though it forms the primary revenue stream of two of the planet’s most valuable companies, Google and Facebook.

The report chronicles just how efficient the online ad business has become at profiling, targeting, and persuading people. That’s good news for the companies that want to market to you — as the online ad machine gets better, marketing gets more efficient and effective, letting companies understand and influence consumer sentiment at a huge scale for little money.

But the same cheap and effective persuasion machine is also available to anyone with nefarious ends. The Internet Research Agency, the troll group at the center of Russian efforts to influence American politics, spent $46,000 on Facebook ads before the 2016 election. That’s not very much — Hillary Clinton’s and Donald J. Trump’s campaigns spent tens of millions online. And yet the Russian campaign seems to have had enormous reach; Facebook has said the I.R.A.’s messages — both its ads and its unpaid posts — were seen by nearly 150 million Americans.


Why JP Morgan, Daimler are testing quantum computers that aren’t useful yet

Chip experts say the phenomenon known as Moore’s Law that drove exponential gains in computing power for decades is now ending. Quantum computing could be a way to revive the rate of progress, at least in some areas. “If you can successfully apply it to problems it could give you an exponential increase in computing power that you can’t get” through traditional chip designs, says Bob Stolte, CTO for the equities division inside JPMorgan’s investment bank.

If and when they arrive, quantum computers won’t be good at everything. But physicists and computer scientists have proven, using theory, that even a relatively small quantum processor could do more than a phalanx of conventional supercomputers on some problems. Conventional computers work on data using bits that can be either 1 or 0. Quantum computers encode data into devices called qubits that can enter a “superposition” state in which they might be considered both 1 and 0 at the same time, allowing computational shortcuts.

The path to tackling other problems on the wish lists of Daimler and JPMorgan is less clear. Brecht says the automaker also hopes quantum computers could optimize routes for delivery vehicles, or the movement of parts through factories. Some problems in finance, such as adjusting portfolio risk, can boil down to similar math.


Why we didn’t invest in Ecolab

Integral to Ecolab’s moat in the Institutional segment is its direct sales force that provides customers with “high touch” relationships. Not only are these relationships hard to replicate, but no competitor is remotely close to matching Ecolab’s 26,000-plus salesforce. Ecolab estimates this figure is two-to-five times larger than any competitor’s.

Ecolab benefitted mightily over the last 10-20 years from inept competition. Its main competitor for North America institutional cleaning business is Diversey, which was most recently sold to Bain Capital in 2017 by Sealed Air. This was the fifth time Diversey had been sold in the previous 21 years. As a consequence of being passed around like a hot potato for two decades, Diversey’s strategy was inconsistent. Ecolab capitalized on many of Diversey’s mistakes.

We also had concerns about S.C. Johnson re-entering the institutional cleaning business, Bain Capital’s push into the European hygiene market, and potential impacts from food service automation.

We further concluded that the acquisitions of Nalco and Champion diluted Ecolab’s overall moat by diminishing the impact of the wide-moat Institutional operations. Indeed, we think the two deals were motivated by growth rather than by ROIC. If that’s the case, it would support our thesis that the Institutional business is a legacy moat with slower growth potential. Otherwise, we would have expected management to reinvest capital that was used in M&A back into the cleaning business.

An inventor of the VIX: ‘I don’t know why these products exist’

In my wildest imagination I don’t know why these products exist. Who do they benefit? No one, except if someone wants to gamble -– then, OK, just go gamble… And who exactly made money? The VXX from its inception in 2009 is down, what, 99%, even after this move… It’s kind of sad that these products exist in the first place, but it’s hard to stop it. If you stop this, something else will come up. Bitcoin will come up.


This physics breakthrough could help save the world

…the turbulence created when we pump air, water, oil, gas and other substances through countless miles of ducts and pipes. Thanks to its confounding effects, fully 10 percent of all the electrical energy produced on Earth gets wasted.

They investigated, for example, the effect of extra stirring from rotors placed inside a pipe, or by the injection of jets of fluid along the pipe walls. Intuition suggests that these would increase turbulence, and they do, but in both cases the flow downstream quickly returns to the smooth state. More important, the interventions can reduce the overall friction associated with turbulence by as much as 90 percent, something few researchers would have expected.


The magnetic field is shifting. The poles may flip. This could get bad.

The dangers: devastating streams of particles from the sun, galactic cosmic rays, and enhanced ultraviolet B rays from a radiation-damaged ozone layer, to name just a few of the invisible forces that could harm or kill living creatures.

Solar energetic particles can rip through the sensitive miniature electronics of the growing number of satellites circling the Earth, badly damaging them. The satellite timing systems that govern electric grids would be likely to fail. The grid’s transformers could be torched en masse. Because grids are so tightly coupled with each other, failure would race across the globe, causing a domino run of blackouts that could last for decades.

Company Notes 2018.02.09

Daibochi Plastic and Packaging Industry Q4 FY2017 Results

Daibochi is optimistic on achieving strong growth in the financial year ending 31 December 2018 as both Daibochi Malaysia and Daibochi Myanmar are expected to perform strongly. The Group is expecting several new export contracts to drive Daibochi Malaysia’s performance in 2018, comprising contracts to Indonesia as well as the Australia and New Zealand (ANZ) region.

In the first quarter of 2018 (1Q18), Daibochi Malaysia secured a new contract with a multinational customer (MNC) to supply flexible packaging to the ANZ region. The Group’s sales, technical and operations teams collaborated closely with the MNC particularly for its fast-moving consumer goods (FMCG) brand, and target to commence supply by the second quarter ending 30 June 2018. This marks the entry into a new product line for Daibochi Malaysia, thereby strengthening its value proposition to MNCs.

Daibochi Malaysia is also working towards commencement of flexible packaging supply to another two MNCs for their food and beverage and FMCG brands in Indonesia.

Meanwhile, Daibochi Myanmar is expected to deliver stellar growth in 2018, as it is actively pursuing new customers in Myanmar’s F&B and FMCG sectors. Additionally, Daibochi Myanmar aims to leverage its low-cost and geographical advantage to secure export contracts from costsensitive customers in various Southeast Asian countries.

Daibochi Myanmar will also tap into the Southeast Asia flexible packaging market. With our Myanmar operations securing the ISO 9001:2015 and Hazard Analysis and Critical Control Point food safety management system certifications since October 2017, together with the approval from the Myanmar Investment Commission in December 2017 to export out of the country, Daibochi Myanmar would now seek to enter qualification with MNCs to support their regional expansion programmes.


Bursa Malaysia Q4 FY2017 Results

The introduction of the stamp duty exemption for exchange-traded funds and structured warrants effective from 1 January 2018, is expected to enhance trading and vibrancy in the equity market. Bursa Malaysia will continue with its initiatives to enhance the breadth and depth of the ecosystem, amongst others, through the digitalisation of services, liberalisation of rules framework and greater diversification of the investor base to ensure that the Malaysian equity and derivatives markets are attractive and vibrant.

Datuk Seri Tajuddin added, “Our initiatives put in place over the years have built a strong foundation that has placed us on a firm footing to capitalise on new opportunities. In 2017 alone, the Exchange launched the Islamic Selling and Buying Negotiated Transaction and made a revision in the tick rule to provide market participants with greater price flexibility in performing regulated short selling. We will continue to work closely with our intermediaries to improve liquidity and increase trading activities. Similarly, we will expand our marketing efforts to build a strong IPO pipeline and look forward to rolling out our initiatives aimed at widening our products and services to create a conducive capital market
ecosystem for all market participants.”


Tasek Q4 FY2017 Results

The Board expects the intense pricing competition to continue to the next quarter and affect the Group’s performance. Construction works on the Government’s infrastructural projects of the MRT2 (SSP Line) and the LRT3 (Bandar Utama – Klang Line) are expected to improve demand for cement for this year. However, the soft property market is expected to continue to weigh down the demand for cement.


Focus Lumber Q4 FY2017 Results

We foresee the price of logs hovering at this level based on the current market supply and demand as well as our cost in securing logs supply. Operating environment is very challenging if the Ringgit Malaysia remains strong throughout the next financial year. However, selling price in US dollar which is increasing recently has partially offset these negative impacts.


Hartalega Q3 FY2018 Results

Nitrile glove now accounts for 61% of Malaysian rubber glove export.

Hartalega aims to launch its anti-microbial gloves in Europe by second quarter of 2018 and is working on securing Federal Drug Administration (FDA) approval to enter the US market. We will price this new product competitively to encourage better take up.


Scicom Q2 FY2018 Results

Over the course of the year, whilst the BPO division did not lose any major clients, the revenue contribution for some of these key clients decreased. The primary driver was an adverse change in market conditions for these multi-national clients. As a result, there has been a corresponding drop in customer interactions which led to a subsequent decrease in billable headcount. However Scicom does not expect this situation to deteriorate further with our current clients and the management further expects to increase revenues on the successful conversion of a healthy pipeline built over the last 12 months.


Hup Seng Industries Q4 FY2017 Results

Stronger market demand for biscuits mainly contributed to the positive growth in sales. Export sales of biscuits grew by 6% mainly from China market. Domestic sales grew by 5% mainly from modern channel.

Escalating input cost eroded margin growth of the Group despite an improvement in turnover. Higher promotional expenses and other operating costs including fuel costs also depressed the profit performance.


Salutica Q2 FY2018 Results

The touch enabling functionality application to other various industry segments such as automotive and electronic appliances will be one of the segment which our Group will continue to focus in order to generate additional revenue stream, albeit at a slower pace. Meanwhile, the development of healthcare related products under in-house brand FOBO is still ongoing.


Tasco Q3 FY2018 Results

However, as our recent acquisition of Gold Cold Transport was fully financed via bank borrowings, our bottom line was significantly impacted by higher finance costs. In that respect, the Group would be evaluating the various ways and available options, in order to mitigate this situation in the medium term. Going forward, the downside risks for the Group would continue to be rising operational costs (in particular, relating to manpower and fuel costs), higher interest costs due to aforesaid reason, and keen competition for cargo in our traditional core businesses. We will continue to maintain our strategy to focus on servicing our customers with innovative logistics solutions and expand our logistics capacity when it is beneficial to our shareholders’ value.

JHM anticipates boost from new orders in 2H18

JHM designs and develops MECs that are used in subsegments of the electronic component industry, and electronic devices like digital cameras, mobile phones, personal digital assistants and automobile lightings. In both the automotive and aerospace segments, it manufactures, among others, MECs for the production of high brightness light-emitting diodes (LEDs).

“Although we have orders to fulfil in the automotive segment, we are being hampered by the material shortage, including for passive components like resistors and capacitors, which are being bought up by big players. So, we have money to buy, but we are not able to do so. In any case, we expect the situation to recover in the second half of this year,” Tan said.

“We are also aggressively working to penetrate the Japanese and European markets. In Japan, we have met with one of the biggest automotive light makers there, who is satisfied with our capability and set-up. We are now waiting for them to give us the request for [a] quote. In March, we will be allowed to bid for two projects. If our price is good for them, we will go for maximum production, meaning FY18 would end on a very good note,” he said.

“Mace has a good customer base, including multinational corporations. We intend to tap and expand our printed circuit board and assembly (PCBA) business. Since we are already in the PCBA business, Mace’s contribution will help stabilise our business, instead of the group having to depend only on the LED automotive segment,” he said.

The PCBA business is part of the automotive segment (which generates 80% of its revenue). Meanwhile, some 12% of its turnover comes from industrial products, under which JHM makes box builds for vending machines and fan controllers. The remainder of the group’s turnover comes from its telecommunications segment.


Fernandes: India to be a big market for AirAsia X

“Super proud of the turnaround happening at AirAsia X. We need to finish off cleaning up the balance sheet in the fourth quarter, but we are going to have a good year in 2018. We are now taking the very good value (Airbus) 330 to fill our capacity before moving to the next generation of aircraft, either the (Airbus) 330 neo or (Boeing) 787. I am very, very bullish on AirAsia X.”

“Stars lining up, ringgit strengthening and oil going down as we predicted. There is just too much oil and with shale, fuel demand will continue to go down.”


Scicom to develop tourism management system for Cambodia

In a stock exchange filing today, the company said the project period is five years, with an option to extend for two more years. “The anticipated revenue from this contract is predicted on the number of air travellers to and from the Kingdom of Cambodia,” it said, but did not indicate the estimated value of the project. It expects the project to contribute positively to the earnings and net assets per share of the company going forward.

Curated Insights 2018.02.04

Ingvar Kamprad, Ikea’s Swedish billionaire founder, dies at 91

Kamprad was known for driving an old Volvo, recycling tea bags and taking home little packets of salt and pepper from restaurant visits. He was known as “Uncle Scrooge” and “The Miser” in the Swiss village of Epalinges, near Lausanne, where he moved in the 1970s before returning to Sweden a few years ago. He also avoided wearing suits and ties and traveled coach when flying.

Ikea’s corporate culture mirrors Kamprad’s celebration of frugality. Executives of the company travel on low-cost airlines and lodge in budget hotels. Its employees follow a basic pamphlet written by Kamprad in 1976, “The Testament of a Furniture Dealer,” which states that “wasting resources is a mortal sin,” and stipulates Ikea’s “duty to expand.”

The name Ikea is made up of the founder’s initials and the first letters of the Elmtaryd farm and Agunnaryd village where he was raised. His flat-pack furniture was invented by Ikea employee Gillis Lundgren in 1956 when he tried to fit a table into the back of a car. Realizing the table was too bulky, Lundgren removed the legs. Storing and selling Billy book shelves or entire kitchens in pieces has let Ikea cut storage space and fill its trucks with more goods. The concept of having customers pick up most of their own furniture in adjacent warehouses and transport it home for self-assembly also helped drive down costs.

How Amazon’s ad business could threaten Google and Facebook

But Amazon has a huge set of data that Facebook and Google can’t access—namely, its own. Already, more than half of all online searches for products start on Amazon, and of those a majority end there, according to various surveys. That figure has grown every year that pollsters have tracked it.

The Amazon Advertising Platform lets advertisers manage ad buys across multiple advertising exchanges, and it has quietly become as familiar to marketers as its equivalent from Google-owned DoubleClick.

Amazon also needs to expand the number of places it can sell advertisements, which is one reason the company bought videogame-streaming behemoth Twitch and is investing so heavily in its own streaming-video offerings.

How Apple built a chip powerhouse to threaten Qualcomm and Intel

…by designing its own chips, Apple cuts component costs, gets an early jump on future features because it controls research and development and keeps secrets away from frenemies such as Samsung…Those ultimately failed or stumbled because chip-making is the sport of kings: It’s brutally expensive and requires massive scale. Apple has wisely focused on designing its silicon (for its system on a chips, Apple uses reference designs from Arm Holdings Plc). Manufacturing is left to others, including Taiwan Semiconductor Manufacturing Co.

An investment pro who’s seen it all still sees upside for stocks

Over 40% of Standard & Poor’s 500 revenues now comes from abroad.

No other country is shrinking its equity base to the extent we are. We’re now in our ninth year of share buybacks equal to 3% of the market value of all S&P 500 stocks, based on Laszlo Birinyi’s work.

For 20 years, the average price/earnings ratio has been 19.3. If you go back 50 years, it’s 15.6 times. In periods where inflation grew 3% or less—which is 22 of the past 50 years—the P/E of the market was 19.7.

AlphaZero and the curse of human knowledge

Using self-play to recursively improve an agent’s ability to play a game isn’t new. Why hasn’t this method yielded a champion chess or Go engine until 2017? Historically, systems that improve via self-play have been very unstable. Previous attempts often ended up in cycles, forgetting and relearning strategies over and over rather than improving to superhuman levels. Or sometimes the agent would get stuck, failing to improve after achieving moderate success.

AlphaZero’s main contribution was solving these problems. After lots of experiments, DeepMind developed a series of new tricks and discovered a value function and tree search that reliably learned through self-play alone. They then leveraged their engineering talent and infrastructure resources to demonstrate that the system could work on the massive scale required to master complicated games such as chess and Go (the version that played Stockfish employed 5,000 custom machine learning chips).


Even if you knew the cards…

One of the (many) reasons I stopped heeding the macro forecasts of others and quit trying to come up with my own is that even if you knew what the future data would be, you’d still not be able to predict how people would react to it. You could certainly try, but markets are set up to confound us, not confirm our hypotheses.

Company Notes 2018.02.02

Lotte Chemical Titan Q4 FY2017 Results

The delivery of Polyolefin products in China and Malaysia is expected to be slightly reduced by the Lunar New Year festive holidays. However, the demand from other SEA countries is expected to remain stable. Olefins and Derivative is expected to be better in view of upcoming regional crackers turnaround from March 2018 and active restocking by China supported by higher derivative margins for Styrene Monomer and Ethylene Glycol.

Can a $1.2 Billion casino lure Asian tourists to the Catskills?

Empire Resorts is not technically part of the Genting group, a conglomerate that operates cruise ships, manufactures paper and runs palm oil plantations in addition to its hotel and casino businesses. Instead, a private investment company controlled by Lim owns more than 90 percent of Empire shares. Last year, Empire reached an agreement to use Genting’s Resorts World brand and participate in its Genting Rewards Alliance loyalty program in exchange for a single-digit percentage of net revenue, according to an Empire filing with the Securities and Exchange Commission.


Kim Teck Cheong is here to stay, says Lau

“I’m very positive [about our growth] as we are now in [the] consolidating stage and even though the profitability may not recover as fast as what I would want it to, at least I know I have a plan and direction for the company. I’m not running away, I’m still around, I’m still the same person and I’m still working on it and I think shareholders should ride with me,” said Lau. Our customers have demonstrated they are supportive of us [with the contracts offered].”

As of end-FY17, the group had 7,355 sale and distribution points covering over 84 districts, of which it distributes more than 200 third-party brands for 37 brand owners. The distribution of third-party brands contributes about 90% to the group’s revenue, while the remaining 10% is contributed by its own line of frozen, dry and bakery products under its Orie, Bamble and Creamos brands. The group’s revenue is contributed mostly from its Sabah operations at 68%, followed by Sarawak at 23%, Brunei 5% and Labuan 3%.


Better earnings visibility, prospects for Cypark

Listed on the Main Market of Bursa Malaysia in 2010, from a pure construction player, Cypark has today transformed itself into an integrated environmental engineering and technology provider, which Daud deemed it as “resilient to any other economic cycle”. Daud highlighted that the company had undergone a business transformation shortly after its listing. Cypark had diversified into environmental engineering and solutions, renewable energy — WTE and solar, as well as green technology.

“We have to stay competitive and be innovative with our products as even big companies such as Petronas, MRCB, and Malakoff want to enter this industry,” said Daud, adding that Cypark will be replicating the floating solar plant model, and it aims to bring down the cost of making it by 10%. Due to the scarce availability of land, Daud opined that Cypark wants to offer something that is very sustainable. “As a tropical country, we are blessed with a lot of reservoirs and they have no economic use,” said Daud. Hence, Cypark had offered to lease the space from the reservoirs, from the local authorities, and dams to place its floating solar plant.


PeterLabs aims to execute tech-based portfolio this year

“Fatfish Ventures is a technology venture group and it invested in PeterLabs to enhance our value through its network and resources. Fatfish Ventures is the master of adding value. Fatfish Ventures knows how it can identify the technology trend, the major consumer behaviour trend and invest in the major trend which could help the company.”


TMC Life Sciences on acquisition trail

TMC needs to grow in size in order to achieve greater economies of scale, and that an acquisition of a complementary business would better enable such a goal.

Quek said that the group is planning to finance between 30% and 40% of the RM1.2 billion Thomson Iskandar Medical Hub in Vantage Bay, Johor. The hospital, which will be equipped with an initial 500 beds, is expected to be completed in 2020.

With the expansion of its Tropicana Medical Centre in Kota Damansara from 200 beds to 600 beds, TMC hopes to see an increase in patients, especially as connectivity is improved to the hospital via the Kota Damansara mass rapid transit station and the completion of the Damansara-Shah Alam Elevated Expressway.

Malaysia’s capital will adopt ‘smart city’ platform from Alibaba

City Brain was first adopted by the government of Hangzhou, Alibaba’s home city, in 2016 to help run operations more efficiently. That’s quite a nebulous scope of work, but essentially the service pulls in all kinds of data — including video feeds, social media and traffic information — which is then processed to provide information that helps to manage daily activities. That could be responding to a traffic accident, or providing the data to redesign parts of the city to reduce vehicle congestion.