Company Notes 2018.01.19

Sasbadi Q1 FY2018 Results

The higher revenue recorded by the Digital & Network Marketing Division ws due to our network marketing/direct sales business continuing to gain momentum. The higher revenue recorded by the Print Publishing Division was due to better performance arising from more timely publishing and introduction of new titles to the market coupled with higher revenue from new textbook contracts with the MoE.

edotco Malaysia eyes higher market share

edotco, a 62.4%-owned subsidiary of Axiata Group Bhd, owns about 4,000 telecommunication towers and manages another 5,000 towers for its customers in Malaysia through its wholly-owned unit edotco Malaysia Sdn Bhd.

According to a 2016 industry report by TowerXchange, edotco Malaysia had the third-largest tower count in the country, at 3,600 as at end-2014, after YTL Communications Sdn Bhd’s 5,000 towers and Maxis Bhd’s 3,800 towers. DiGi.Com Bhd, which ranked fourth in the report at the time, had 3,400 towers, followed by the combined portfolio of 3,200 towers owned by 14 state-backed tower companies (towercos).

Suresh said the Malaysian telecom tower industry has been growing consistently at a pace of between 1,000 and 2,000 towers per year. “In the last few years, this pace of industry growth was probably okay. But given the increasing investment in 4G by [mobile network] operators, perhaps it can accelerate a little bit over the next one or two years. Data growth is really driving the change, basically customers want more and more what we call ‘infill’ to boost capacity on top of existing coverage. These infills or towers as we call them could be a lamp pole, a camouflaged structure or maybe a signboard. In Kuala Lumpur we can only [affix new small cell antennas] on lamp posts or street furniture now, and no longer build a tower,” he added.


BCM eyes earnings growth

Cypress supplies medical devices to 220 pharmacy retail outlets, 48 medical equipment dealers and two wholesale medical equipment dealers, with notable names like Caring Pharmacy, Multicare Health Pharmacy, and RedCap Pharmacy.

The acquisition of Cypress also comes with a profit guarantee of RM600,000 for the first year.

Being in the distribution space, BCM Alliance is subjected to risks of short-term contracts. For example, distribution agreements and service contracts generally have short tenures, averaging at one to two years. However, BCM Alliance banks on its track record, having been a long term distribution partner to several brands, with some partnerships established for 14 to 15 years, like Hitachi Medical.

Additionally, under the Medical Device Act 2012 (Act 737), clients who purchase medical devices from distributors are mandated to seek after sales services from the same distributor. Hence, BCM Alliance is further protected from competition by third party service providers and is ensured of renewed service contracts. “This act is enforced beginning January 2018, and also applies to the trade of certified and registered medical devices. This weeds out the sale of substandard and uncertified medical devices, particularly in the pharmacy market,” says Liaw.


Battersea Power Station stake sold as part of $2.2 billion deal

Surveys identified “significantly worse” asbestos risk in the power station building and the cost of removing it was “substantially higher than originally envisaged”, the developer said in a separate letter to the borough council last year. The complexity of restoring the chimneys and additional foundation works also increased costs, it said.

Construction work on the building is due for completion in 2020 and about a quarter of the space will be leased to Apple. Most of the 250 apartments included in the property have already been sold.

Stronger ringgit a boon to healthcare sector

The strengthening ringgit is also a boon. “For the past few quarters, the operating costs for healthcare providers have shot up due to the higher US dollar against the ringgit, which has left healthcare operators with higher cost for medical consumables. Therefore, with the improving ringgit, we opine this will help stabilise an otherwise increasing cost of operations for healthcare providers,” said MIDF Research.

Should this government-backed national health insurance system become a reality in Malaysia, private healthcare operators in the country are poised for a major step-up in revenues and profits, according to AmInvestment Bank Research’s Ng. “Under a national health insurance system, theoretically, citizens can choose between seeking treatments in a public or private hospital. While a patient seeking treatment in a private hospital will still incur a higher cost versus a public hospital, the general price differential between the two hospitals should narrow,” he said.

“The local private healthcare sector has an added catalyst, that is, medical tourism backed by its highly competitive medical charges and hospitalisation costs [versus those in developed countries], a generally English-speaking population as well as various incentives provided by the government,” it added.

Company Notes 2018.01.12

AirAsia Group may relist M’sian ops to unlock value

“There is nothing to prevent us from listing some shareholdings in AirAsia Bhd [in the future]. What we are creating now is a vehicle (AAG) where some people may want [exposure to] the Malaysian risk or some people may want [exposure to] the group’s risk.”

“That (listing Malaysia AirAsia) is a potential plan. Ideally, we really want to convert all the interest [in all subsidiaries and associates] into one economic unit. So, let’s assume 51% of foreign associate shares could be swapped for AirAsia Group shares and that requires a lot of work such as legal [requirements], but now we have a vehicle to start working towards that.”

“This is also to enable our investors to understand the group better going forward. We hope to consolidate all of Asean’s businesses very soon, [with] Thailand being the next, hopefully, and then we will also give investors individual profit and loss statements, so that they can look at them. This is the first step of combining AirAsia into one economic unit [towards] our dream of creating a single public holding company, and aligning all shareholders.”

Note that Thai AirAsia Co Ltd is 55%-owned by Stock Exchange of Thailand-listed Asia Aviation PCL (AAV). AirAsia Bhd has an effective interest of 45% in Thai AirAsia and 49% in Indonesia AirAsia (IAA). Plans are in the works to list 39.9%-owned AirAsia Philippines Inc this year.


CIMB cuts stake in asset management firms

The group announced yesterday that it had entered into sale and purchase agreements to divest a 20% stake in CIMB-Principal Asset Management Bhd (CPAM) to Principal International (Asia) Ltd (PIA) and a 10% stake in CIMB-Principal Islamic Asset Management Sdn Bhd (CPIAM) to Principal Financial Services Inc (PFI).

“CIMB is expected to recognise a gain on disposal of about RM950mil and a Common Equity Tier 1 (CET1) ratio improvement of about 18 basis points upon completion of the proposed divestment,” it said in a filing with Bursa Malaysia. The group’s CET1 ratio stood at 120% as of Sept 30, 2017.


Ta Ann to buy 30.39% stake in SPB for RM170mil

“The proposed acquisition is consistent with the company’s plan to further expand its oil palm plantation business and gain larger market access in Sarawak,” Ta Ann said.

Ta Ann said its planted area would likely be enlarged by about 23%, given the group’s 30.39% stake in SPB.


Malaysia airports hit record 96.54 million in 2017, driven by international traffic

For the entire year of 2017, passenger traffic at the 39 airports in Malaysia improved 8.5% to a record 96.54 million from 88.98 million in 2016. International passenger movements grew 14.1% to 49.4 million passengers over 2016, while domestic traffic rose 3.2% y-o-y to 47.14 million. MAHB said this is the second highest increase in absolute passenger numbers achieved in the last 20 years.

On prospects, MAHB said Malaysia passenger traffic in 2018 is expected to grow at 6.3%, with international and domestic passenger traffic growing at 8.3% and 4.2% respectively.

“The growing travelling local population, combined with [the] increase in the per capita income, will further support air travel growth,” it said, adding that passenger growth prospects for SGIA in 2018 is expected to remain moderate.


SCGM sales strong on demand for ‘lifestyle’ packaging

Having invested RM153 million in the two new factories, Lee said he is confident the group’s output would steadily increase, allowing SCGM to cater to export markets, which the group wants to place more focus on. The group’s revenue is currently contributed by a 70:30 ratio from the domestic and export markets respectively. Moving forward, as it taps into new markets, the group intends to shift the ratio to 60:40, said Lee.

“This sort of demand for pre-cooked or frozen food is still very new in Malaysia. It’s not something that people are familiar with. If you look at Family Mart today, many of its customers are Caucasians, foreigners or tourists rather than locals. They are already accustomed to the novelty of microwaveable food or ready-to-eat food sold at stores such as this. “We believe, moving forward, the demanding lifestyle and commitment of the middle-aged population will gear towards this trend rather than cooking at home. If you look at Hong Kong, it has a 70% takeaway rate. Singapore is about at a 30%-40% rate,” said Lee.


KUB still seeking buyer for A&W Malaysia

KUB is currently in an extended franchise agreement with A Great American Brand until June 2019. Under the agreement, KUB is obliged to open 25 new A&W restaurants in three years, which will bring the total number of A&W restaurants in Malaysia to 52 by the end of 2019. Although KUB is committed to honouring the contract, Abdul Rahim said it is on a capital rationalisation phase as it embarks on a strategic plan to refocus its business activities on three core sectors, namely energy, information and communications technology (ICT), and agro.

“We don’t want to end up like in Thailand where we lost the franchise licence [to operate A&W restaurants there]. It’s better to sell it when we still have the rights so that the buyer can consider that in their [offer] price,” he said.


Mydin puts Sam’s Groceria stores up for sale

Ameer estimated the grocery business to be worth RM50 million. The planned sale comes on the heels of the disposal of its loss-making MyMydin convenience store business in April last year. It also discontinued the Kedai Rakyat 1Malaysia (KR1M) stores in October 2017. “We decided to sell Sam’s Groceria after realising that the stores’ patrons are mainly local Chinese and expatriates. (However,) we do not sell liquor, wine, beer or pork at our stores and thus, we have been unable to meet our customers’ needs,” he told The Edge Financial Daily.

Ameer said currently, Mydin Holdings has 62 stores under its portfolio excluding Sam’s Groceria. According to Mydin Holdings’ website, Sam’s Groceria is positioned as a premier urban grocer and 60% of its products are fully imported brands. It opened its first flagship store in Gurney Paragon Mall in 2013.

A check with the Companies Commission of Malaysia revealed that Sam’s Groceria Sdn Bhd is also loss-making. It posted a net loss of RM27.49 million on revenue of RM63.16 million in FY16. Accumulated losses stood at RM42.05 million as at March 31, 2016. Sam’s Groceria also has RM101.8 million in total liabilities, of which RM84.54 million are current.

Company Notes 2018.01.05

Malaysia mobile giant weighs $500 million tower IPO

Edotco raised $700 million in a private placement last year from investors including Axiata’s top shareholder, sovereign fund Khazanah Nasional Bhd., and government-backed Innovation Network Corp. of Japan, according to an April statement. Malaysia’s second-biggest pension fund, Kumpulan Wang Persaraan (Diperbadankan), also invested in Edotco through the deal, which reduced Axiata’s stake to 62.4 percent.

Edotco was started in 2012. It owns more than 26,000 towers spread across Malaysia, Sri Lanka, Bangladesh, Cambodia, Pakistan and Myanmar.


SCGM on track for expansion

“We take customer rapport very seriously; this is how we have managed to not just survive but thrive in a competitive world. In light of this, we do not simply increase prices merely to improve margins; rather, any price increases are carefully evaluated and justified by price hikes in costs beyond our control, such as resin costs.”

“We intend to increase our product range in the coming years. At present, we have only started producing biodegradeable lunchboxes, and aim to add on more items like bowls, plates and other common F&B-related items from next year.”

“The population is also increasingly mobile and need more convenient packaging. For example, in the past, thermoform lunchboxes were the only portable semi-rigid packaging. Today, thermoform is used for bento, soups, egg trays and a host of other items, replacing paper-based or glass packaging because of hygiene, cost and sustainability.”

Growing discord in Malaysia’s paddy industry

In its earlier incarnation in 1971 as Malaysia’s state-run rice board, Bernas was tasked with maintaining adequate rice supplies, keeping prices fair and stable for farmers and consumers, and improving the industry. It continued to shoulder these obligations after it was privatised in 1996 and became a for-profit company. Two decades later, however, farmers are up in arms over Bernas’ alleged failure to protect and promote the local industry, by favouring cheaper imported rice to bump up its own profits.

Rural voters – 400,000 farmers, with nearly 300,000 of them planting paddy – form 11.2 per cent of the country’s registered voters and have traditionally supported the ruling Barisan Nasional (BN) coalition. Many live in the states of Kedah, Perlis and Perak.

Malaysia produces about 2 million tonnes of rice annually, which is not enough to meet its own estimated annual consumption of 3 million tonnes. In 2016, it spent US$377.4 million (S$515 million) on 822,000 tonnes of rice to meet the shortfall, making it the 14th-largest rice importer globally.

BCG: Unlocking Cities–The impact of ridesharing in Southeast Asia and beyond

Solutions going forward should balance between further capital investments to expand capacity and initiatives to increase the efficiency of existing assets. Ridesharing is one way to significantly increase the utilisation of existing infrastructure. Three characteristics of the ridesharing model contribute to its potential as a cost-efficient part of the overall response to the growing demand for transport in Asia: (1) Flexible supply base utilising existing private vehicles, (2) dynamic routing with smart supply-demand matching, and (3) demand pooling.

Radiation risk in home construction materials

“Materials traced to natural materials like brick, mosaic, wallpaper, plastic or wooden flooring, granite or cement blocks… even toilet bowls, contain radioactive materials… There is no way for us to run away from them. The levels of radiation vary depending on the origin of the materials. For example, mosaic from Kerala, India, may have higher radiation levels than those from the domestic market because the earth in Kerala has higher natural background radiation. Exposure to radiation can have long-term, short-term or acute effects… We must be careful with the long-term effects because it can slowly kill us even though we may not realise it.”

“Different rays affect us differently. For example, although alpha rays can be blocked using things like a piece of paper, it could cause a lot more damage on a surface, compared with beta, which has smaller particles. Since alpha’s particles are bigger, they will affect a wider area when it enters the human body, including through wounds, inhalation or contaminated food. For example, if you knead dough directly on top of a chipped granite table top, you will not notice particles containing NORM attaching to it. When you consume it, these radioactive materials will enter your body… some might exit through the excretion process, but the rest will continuously emit rays that will kill your cells.”

“It is important for homes to have good ventilation. Open the windows, turn on the fan, as this will help remove the gases,” he said, adding that radon would remain in a confined area for four days before it dissipated. As these gases are continually produced, good air circulation will help channel them out of confined areas.

Company Notes 2017.12.29

Binasat Communications Q1 FY2018 Results

The Group operates within the support services for the telecommunication network industry in Malaysia. The Group is expected to benefit from the future plans and strategies as disclosed in the Prospectus of the Company dated 13 December 2017. These include building a new teleport facility, enhancing our operations and maintenance service and fiber optic installation and commissioning capability and sourcing for business opportunities in ASEAN countries, particularly Vietnam, Myanmar and Laos.

PUC buys into leisure site photography firm

Under the deal, PUC will issue 64.6 million new shares — or slightly over 4.5% of its enlarged share capital — at 32.2 sen per share or RM20.8 million, while the balance of RM32 million will be paid on a staggered basis when Pictureworks meets its profit guarantee as outlined in the agreement, according to a filing with Bursa Malaysia.

Pictureworks provisions imagery capture and distribution platforms for major theme parks and other leisure and entertainment sites including the Shanghai Disney Resort in China, Hong Kong Disneyland Resort, Singapore’s Gardens by the Bay, Legoland Malaysia, and Kidzania Kuala Lumpur. It also holds the international licensing of imagery systems including Harry Potter: The Exhibition and Game of Thrones: The Touring Exhibition, among others. Currently, the Pictureworks group’s imagery system services are being offered in more than 30 sites.

The 33% stake in Pictureworks is valued at between RM57.05 million and RM73.3 million by FHMH Corporate Advisory Sdn Bhd, according to the announcement. Cheong has guaranteed that Pictureworks will achieve a PAT of RM14.8 million in FY18 and another RM20.5 million in FY19. Any shortfall will be compensated by Cheong, said PUC. “PUC expects that moving forward, its share of earnings from its 33% equity interest in Pictureworks may contribute 25% or more of the net profits of the PUC group and/or may result in a diversion of more than 25% of the net asset of the PUC Group,” it added.


2018 World Cup to bring cheer to breweries

“Note that due to the time difference between Malaysia and Russia, we can expect one match to kick off at 8pm Malaysian time, every day, during the event.”

Beer excise duty rose to RM175 per 100% volume per litre on March 1, 2016, from RM7.40 per litre previously, while the 15% ad valorem (according to value) tax was removed. “The new regulation on the legal purchasing age for alcoholic beverages, which raised the age from 18 to 21 effective Dec 1 2017, may encourage youngsters to switch to easily-available contrabands.”

“Beer and stout, which are typically of lower alcohol by volume, are taxed at a higher rate than wine and spirits, which contain higher alcohol levels.”


Broadnet’s moves raise concern with TM, TNB

“For starters, TNB wants to know for sure if the Government has a golden share in Broadnet and if they are compelled to collaborate with the company,” said the sources.

“In some ways, Broadnet would be a competitor to TM. So it is only natural for the company to seek clarification as TM itself is indirectly owned by the Government through Khazanah Nasional Bhd,” said a source.

Minister Salleh last week was quoted as saying that the Nationwide Fiberisation Plan would, among other things, leverage TNB’s extensive fibre trunk network. “We do not encourage monopolies or exclusive arrangements as this may slow down the deployment of broadband infrastructure,” Salleh was quoted as saying by Bernama. The NFP, he said, was in line with Prime Minister Datuk Seri Najib Tun Razak’s announcement in this year’s budget, which was to double broadband speeds at lower prices by 2019.


Only World Group sees a return to glory days

“[With] the new outlets, coupled with the reopening of [14] outlets [at Genting Highlands] and the stabilisation of the indoor theme park operations at The Top at Komtar Tower in Penang, we should return to our glory days.”

The group’s net profit for FY17 also took a huge hit from the temporary closure of 14 outlets at First World Hotel in Genting Highlands in February this year due to the ongoing redevelopment and transformation of Resorts World Genting. Its earnings for FY17 more than halved from RM12.57 million the previous year.

OWG is building an integrated attraction zone on 70,000 sq ft of land called Ripley’s Believe It or Not Adventure Land within Resorts World Genting, following the closure of its previous site as part of the relocation and renovation works under the Genting Integrated Tourism Plan (GITP).

“If we can reach our target of [holding] 52 weekend events or 108 events a year at The Top, it would see our food service operation equalising if not more than the other segment. This can possibly happen in less than five years because our order book for the banquet hall is filling up,” she said.The group is also reopening its F&B outlets at the Sky Avenue mall, as well as a new food court at Genting Premium Outlets.


Comfort carves its own niche, supplies premium specialty gloves

“Prospects for the rubber glove manufacturing sector remain strong, with increasing demand arising from switching trends towards nitrile glove. Nitrile glove now accounts for 61% of Malaysian rubber glove export. As overall demand for nitrile gloves increases, the market is seeing a rise in segmentation and differentiation, leading to higher demand for specialty gloves.”

Company Notes 2017.12.22

Berjaya Sports Toto Q2 FY2018 Results

H.R. Owen recorded a decrease in revenue of 8% as compared to the previous year corresponding quarter primarily due to drop in sales from the new and used cars sector during the current quarter as a result of softening demand in the United Kingdom car market as well as the product life cycle of the car models available for sale. It recorded a pre-tax loss of RM4.0 million as compared to pre-tax profit of RM5.1 million reported in the previous year corresponding quarter mainly due to the decrease in revenue and also lower profit margins earned from certain new car sales during the current quarter under review.


Top Glove Q1 FY2018 Results

The improved results followed strong demand growth stemming from developed and emerging markets, where glove demand is rapidly on the rise. Further contributing to demand was the disruption in vinyl glove supply following China’s strict enforcement against polluting industries which benefited both natural rubber and nitrile glove sales. Internally, new capacity coming onstream, as well as continuous improvement initiatives in terms of automation, better production lines and cost-saving were also instrumental in contributing to the strong performance.


Poh Huat Resources Q4 FY2017 Results

In line with the sustained demand for furniture in the US market, our operations continued to enjoy strong orders from customers from the US for both the office and home segment. In particular, shipment of our new ranges of panel based home products from our Malaysian operations to the US has rammed up over the last 12 months as our efficiency improves. In Vietnam, we also commenced shipment of several newer ranges of bedroom sets for which production runs is expected to smoothen over the next few months. Overall the Group expects this trend to continue for the remaining financial year.


Comfort Gloves Q3 FY2018 Results

Nitrile glove now accounts for 61% of Malaysian rubber glove export. As overall demand for nitrile gloves increases, the market is seeing increase segmentation and differentiation leading to an increase demand for specialty gloves. Through dedication to process rationalization and improving operational agility, the Group is confident in capturing greater market share and strengthening margins. The Group is confident that meeting customer expectations and continuous innovation will strengthen our position as the bespoke specialty glove manufacturer.

CAB Cakaran set to fly even higher after record year

Next year, Chuah said the group intends to increase broiler meat capacity to about 7.5 million birds per month, and up to 11 million birds a month for day-old chick. “We will not expand for the sake of expanding. For the broiler business, expansion is not an issue as long as we got the money and the land. But the key question is whether the demand is there,” he said.

Chuah said CAB has budgeted a sum of about RM50 million as capital expenditure for FY18, to upgrade the group’s facilities and machinery. “These upgrades are meant to cater for additional market demand. If we want to grow on a larger scale, we will have to look into the existing market, so we are also on the lookout to buy medium or smaller broiler businesses, especially those businesses that have no second generation successors,” he said.

“The construction will take about 12 months to complete and contribution will likely begin in 2019. We are targeting 4.5 million birds per month for the broiler and three million eggs per day for the layer in 2019. We currently hold 10% of the joint venture, and over the next five years, we have an option to increase our stake to 30% based on the inception price. In that way we don’t have to incur so much expenditure now.”


Kulim plant to boost Osram’s output to near market-leader’s level

“For more than one decade, Osram has been a strong number two in the market for opto semiconductors for lighting with a market share of more than 8%. With our new capacities in Kulim, the gap to the number one (Nichia Corp) will shrink further.”

“In our opto-semiconductor business, we have reached an operating margin of more than 28% before the opening of our new fabrication plant (in Kulim). Our target for the coming years is between 25% and 29%. Of course, the cost factor in Malaysia plays a role but our venture in Kulim is more about raising capacity for a still growing demand.”

“The market continues to be dominated by the replacement of traditional lighting with efficient LED lighting, while the LED share in the automotive segment is growing rapidly in interior lighting, and headlights. We also are developing exciting technologies for autonomous vehicles and using our LED chips; we are enabling new technologies for vehicle sensing, orientation and navigation. Our horticulture lamps are designed to grow leafy greens and herbs in a controlled environment, ensuring plants receive the best light to grow to their fullest potential with improved flavour.”


Techfast to source chemical products from China’s Tecore

Cape and Oriem will be Tecore’s Malaysian business partners to engage in the supply and sale of Tecore’s products, including clear epoxy molding compound and silicone phosphor film.

Techfast said Cape and Oriem will sell these products to its customers, which are multinational companies that engage in the LED business.

The group said Cape and Oriem’s services also include product evaluation testing, customer demand information collation and customer supply chain co-ordination on behalf of Tecore as its local business partners.

e-Conomy SEA spotlight 2017: Unprecedented growth for Southeast Asia’s $50B internet economy

There will be 330M monthly active internet users by year-end 2017, adding over 70M new users since 2015 at 13% CAGR. In Southeast Asia, mobile is the internet, as more than 90% of Southeast Asia’s internet users are on smartphones. It is hard to overestimate the absolute prominence of mobile as the access point and driver of Southeast Asia’s internet economy. Users in Southeast Asia are incredibly engaged, spending an average of 3.6 hours per day on mobile internet,1 more than in any other region in the world.

We estimate that Southeast Asia’s internet economy will reach $50B in 2017. Growing at 27% CAGR, it has outpaced the 20% 10-year CAGR projected in Google-Temasek e-Conomy SEA and is on a solid trajectory to exceed $200 B by 2025. All sectors of the internet economy have experienced solid growth in 2017. Online travel reached $26.6B led by growth in airline and hotel online bookings. Online media touched $6.9B driven by online ads and gaming. E-commerce and ride hailing have been under the spotlight growing the fastest at over 40% CAGR, capturing consumers’ preferences with evolving business models, and attracting the majority of the investments in the region. As a result, they are the focus of Google-Temasek e-Conomy SEA Spotlight 2017.

GLCs are crowding out private investment — IDEAS

“An often-cited concern relates to the preferential treatment that they receive with respect to government procurement. They could also enjoy various other benefits, including direct subsidies, concessionary financing, state-backed guarantees, and exemptions from antitrust enforcement or bankruptcy rules. Hence, GLCs find it easier and more profitable to increase investment in sectors which they already have a significant presence — a level of involvement usually made possible by their special and preferred status to begin with.”

“The results revealed that when GLCs account for a dominant share (60% or more) of revenues in an industry, investment by private firms in that industry is significantly negatively impacted. Conversely, when GLCs do not dominate an industry, the impact on private investment is not significant.”

Company Notes 2017.12.15

VS Industry Q1 FY2018 Results

The lower-than-proportionate growth in profit before tax was largely owing to shift in product mix towards more box-build assembly. Furthermore, there were additional production lines commissioned during the
quarter under review, which resulted in higher operating costs (e.g. setup cost, operators’ salaries etc.) while production output of the new lines have yet to reach optimal level at the time.

Malaysia segment expects the box-build orders from key customers to sustain for the current financial year. On its operations in China, the Group expects improved performance going foward as it has since commenced mass production of new products for key customers in China and this contributes to higher plant utilisation rate.


Kein Hing International Q2 FY2018 Results

…due to the costs incurred for setting up of new production lines, recruitment and development of skilled and semi-skilled workforce at the new factory located in Hai Phong, Vietnam which is yet to achieve the optimal production and sales, higher depreciation charge resulting from new machines invested and the escalating labour costs as a consequence of constraints in labour supply encountered in Malaysia Operation and the wage inflation experienced in Vietnam Operation respectively.


Berjaya Food Q2 FY2018 Results

The results of the Group in the next quarter is expected to be adversely impacted by the one-off losses arising from the disposal of the KRR operations in Indonesia. Other than this one-off exceptional loss, the Group expects Starbucks to maintain its revenue growth momentum to continue contributing positively to the Group. In addition, the management hopes that the operational and menu rationalisation of KRR, being implemented recently, will yield better results for the brand moving forward.


LKL International Q2 FY2018 Resuults

The Group would continue developing the medical devices segment to grow into a significant contributor of group revenue and profitability. At the same time, the Group will be on the lookout to add more high-value medical products to its range to meet customer demand.


Jaycorp Q1 FY2018 Results

A major plant upgrade is due to take place in Jaycorp Green Energy Sdn Bhd (“JGE”) towards the end of 2017. Whilst this will result in the shut-down of operations for 2-3 months, the upgrade should significantly improve the operational efficiency of JGE in the long-term.


Bison Consolidated Q4 FY2017 Results

Operating expenses were higher in line with the bigger outlets network of 356 compared to last year of 294. Mynews had been more aggressive in driving its marketing campaigns and promotions and coupled with the enlarged staff force to support the Group’s expansion contributed to the increased operating expenses by RM17.67 million or 25.8% from last year of RM68.59 million to current year of RM86.21 million. Mynews had achieved its target of opening 70 outlets in the financial year 2017 and with the closing of 8 outlets, ended the year with 356 outlets. Its jointly controlled entity, WH Smith Malaysia Sdn Bhd had also added 3 new outlets during the year and it now has 12 outlets in the Malaysian airports.

The Board remains positive that Mynews is able to deliver profitable results with its on-going efforts to improve products and services offerings and aggressively expanding its foray into ready-to-eat food. Initiatives put in place such as the joint ventures with the Japanese partners to develop the food processing centre is progressing well. The Johor distribution centre is ready for operation pending the final approval by the relevant authorities.


Hiap Teck Venture Q1 FY2018 Results

The decline in steel demand in ASEAN-6 was mainly attributed by the slowing down in the consumption of two biggest steel consuming countries in the region namely Vietnam and Thailand. The decline in steel demand in Thailand and Vietnam are mainly due to destocking activities, slower economic growth and slow uptake in public investment projects.

The continuing efforts by Chinese Government and its plans to cut production capacity will help stabilise the world steel prices which will definitely benefit the local steel industry players.

OldTown gets takeover bid from global coffee maker

OldTown said its shareholders, holding a total stake of 51.45% in the group, have provided irrevocably undertakings to accept the cash offer. These shareholders are Old Town International Sdn Bhd (42.58%), OldTown’s management director Lee Siew Heng (1.34%) and Mawer Investment Management Ltd (7.52%).

“We are deeply honoured that JDE recognises the powerful brand and platform that we have tirelessly built over the past 18 years. We strongly believe JDE is the ideal partner as we continue to serve best-in-class products to our customers. We look forward to drawing on JDE’s deep global expertise and building a highly successful partnership with them. The OldTown team is focused on delivering premium, high-quality products to consumers and we see huge potential in the business. We are excited to work with the OldTown team to rapidly grow the business as part of the broader JDE platform.”


IRB slaps Aeon Credit with extra RM96.82m in tax bill

Aeon Credit said these taxes and penalties were in relation to the IRB varying the loan transaction collaterised by receivables undertaken by the company with a local financial institution to that of a sale of receivables, which the IRB did not specify which provision of the Income Tax Act 1967 in making this variation.

“This is especially so when at all material times, the company had sought professional advice from an independent and reputable audit and tax firm on its accounting and tax treatment and further, the assessments for the years of assessment of 2010 and 2011 are time barred,” it said.

S P Setia Bhd’s unit was slapped with a back tax bill of RM75.38 million last month, but the company said it has grounds to contest the notice. In October, the IRB slapped Cocoaland Holdings Bhd with RM5.89 million in additional taxes and penalties. In September, EcoFirst Consolidated Bhd said it was sued by the IRB over some RM35.47 million in additional taxes and penalties the latter is claiming for. In May, the IRB sought RM80.77 million in additional taxes and penalties from MK Land Holdings Bhd’s wholly-owned subsidiary Saujana Triangle Sdn Bhd, while Magnum Bhd and its wholly-owned subsidiary Magnum Holdings Sdn Bhd were served with notices of assessment for additional taxes and penalties totalling RM476.5 million.

In that same month, Country Heights Holdings Bhd announced that its executive chairman and major shareholder Tan Sri Lee Kim Yew had his fixed deposits of some RM126 million placed in a foreign-owned bank seized by the IRB in relation to RM22.5 million worth of tax liabilities incurred by Country Height’s wholly-owned unit Country Heights Sdn Bhd. The tax liabilities were accrued from the years of assessment of 1997 and 1998. In April this year, the IRB slapped Tenaga Nasional Bhd with an extra RM2.07 billion tax bill for the 2013-2014 tax years. In October 2016, the IRB also went after a subsidiary of Mega First Corp Bhd for RM22.8 million.


AirAsia worth more than meets the eye, group CEO says

AirAsia Bhd has been undermined by analysts as they have not taken into account the group’s growth potential from overseas joint ventures. Fernandes describes the “zero value” given to AirAsia’s Indonesia, Philippines and India businesses by analysts as “bizarre”.

“Our Indian operation could be a 200-plane operation by itself, because of the tourism potential in India and the middle class travelling out of India is massive. If you look at what we have done in China, where 18% of our revenue is coming from there, it shows you the potential. India is a function of how quick we want it to be profitable. It can be profitable now, but we are in a hurry to get to 20 aircraft which will then allow us to fly international [routes], and that is holding back the profitability.”


Loss of Starbucks Korea business ‘a temporary setback’

The loss of the Korean market in 1QFY18 was due to Starbucks Korea deciding to source its store sets — fixtures for the stores — from local manufacturers in order to stick to its timeline for store openings. Federal Furniture has been working on shortening its lead times and that it remains more cost-effective for Starbucks Korea to purchase store sets from Malaysia. As such, Choy foresees contribution from exports to Korea to bounce back within the next six years.

Starbucks Corp is Federal Furniture’s main customer in its manufacturing division — which makes modular caseworks, shop fixtures, and fitting and furniture for corporate customers — and typically accounts for about 90% of the division’s total sales.

The division currently serves Starbucks’ Asia-Pacific market, which comprises Japan, Korea, the Philippines, Malaysia, Brunei, Thailand, Singapore, Hong Kong, Cambodia, Vietnam, Australia and India, according to the group’s Annual Report 2017. The division is Starbucks’ first approved caseworks vendor outside the US, and has been the only approved caseworks vendor for its Asia-Pacific market for the past 17 years.

Choy shared that the supply of store sets to Starbucks India will be fully produced in that country by April 2018, as the 76% import duty imposed by Indian regulators has become too prohibitive to continue shipping materials from Malaysia. As such, the group is undertaking strategic outsourcing of its fixtures there while it finalises the setting-up of a legal entity in Bangalore to commence operations there. “Four out of 12 stores that have confirmed to be opened in our financial year 2018 (ending June 30, 2018) will use casework that has been manufactured there,” Choy said. The asset-light model Federal Furniture is deploying in India may be used for its planned entry as Starbucks’ fourth vendor in China.


U Mobile turns Ebitda-positive as it plans for IPO after GE14

“We are already Ebitda positive at this stage, and listing will come after election. Because if we go for listing, we got to look at the market, and the market at this stage is very uncertain. With that uncertainty, there is this overhang, so you don’t see a lot of activities in the market. Next year, the market is going to be as tough as this year, generally retail sentiment is still soft, despite what the GDP (gross domestic product) number says, the retail side is still very soft. From our case, hopefully after the election, whatever negative overhang will be lifted, and that should improve people’s sentiment. Hopefully, that will translate into higher spending.”

“Competition has always been intense, but [industry-wide] Ebitda margin is still largely the same. Next year’s capital expenditure (capex) will be at least RM1 billion. This year’s is already RM1 billion.”

Malaysia moving towards cashless society

Governor Tan Sri Muhammad Ibrahim said effective July 1, 2018 the instant transfer fee of 50 sen will be waived for up to RM5,000 per transaction by individuals and small medium enterprises (SMEs). However, the cheque fee would be increased from 50 sen to RM1.00, beginning Jan 2, 2021 to reflect the higher processing cost.

To encourage the use of the QR code payment, Bank Negara has issued an Interoperable Credit Transfer Framework (ICTF). “For the first time in our history, customers of banks and non-banks will soon be able to transfer funds across the network by just referring to the mobile phone number, identification number or QR code,” he said.

Company Notes 2017.12.08

SCGM Q2 FY2018 Results

The Group foresees the new Kulai factory targeted to be completed in the fourth quarter of current financial year ending 30 April 2018 will contribute positively to its future revenue and net profit following the expansion of its production capacity and installation of new production lines.

Cautious response to Top Glove buy

There is so much upside to the new deal in the making, considering the surgical gloves business offers higher margins due to its product quality, technology and the research and development involved in its production. It is also a market that has high barriers to entry that confront many glove players in a rapidly growing global healthcare industry.

“Our indicative US dollar cost of funding range from 2.5% to 3%, whereas ringgit borrowings cost is at 4.5% to 4.8%, a difference of around 1.5% – which translates to around RM19mil savings per annum,” he says. Therefore, a dollar loan will give us a perfect natural hedge, in the event of currency fluctuations. Ringgit borrowings, may result in mismatch due to the inflow of sales proceeds in dollars,” he elaborates.

“New expansions that has kicked off in the last few years will start generating cash and this will improve our cash flow in FY18. This will be more than sufficient to meet our organic expansion capex of around RM200mil to RM250mil.”


Kelington set to be lifted by gases

The contract, which involves on-site supply of nitrogen gas to a photovoltaic cell manufacturer in Malaysia, will provide a long-term revenue of about RM20mil over a period of ten years.

“We started our operations seventeen years ago to provide ultra high purity (UHP) gas delivery solutions to the electronics and semiconductor industry, which is still our mainstay business. Given our long-built experience and expertise in the field, it is relevant for us to penetrate the industrial gas segment in order to provide an end-to-end service. The venture into the industrial gas segment is a step in the right direction as it is synergistic with our existing core business. In fact, our clients consist of electronic manufacturers who utilise gases in their manufacturing processes.”

Kelington plans to invest up to RM60mil to build a carbon dioxide gas purification plant, which is anticipated to contribute revenue from FY19. “The new venture complements our existing project-based business model of providing engineering services which are usually completed within six to 12 months. In the coming years, demand for liquid carbon dioxide is expected to grow further on the back of rising demand in the food and beverages industry as well as the upcoming roll-out of large infrastructure and construction projects.”


More build-to-suit projects to come — Axis REIT

With limited “Grade A” assets in the market, allowing REITs to embark on build-to-suit projects will enable Axis REIT to create their own “Grade A” assets, said Leong, adding that the promoters of the REIT were previously “builders of industrial assets”. As REITs are only allowed to develop up to 15% of their portfolio, Leong said Axis REIT cannot proceed with redeveloping Phase 2 of the Axis PDI Centre as Phase 1 already takes up about 10% of their assets under management (AUM). Currently, the Phase 2 of Axis PDI Centre is still generating income as a storage yard for cars.

Over 12 years, the REIT’s portfolio has grown from five properties to 39 properties comprising 7.6 million sq ft and 132 tenants, with a total AUM of RM2.25 billion in size. “The yields for our property are pretty good. Overall our portfolio [yield] is almost 9% [per annum],” said Leong. The REIT is targeting to reach RM3 billion in AUM next year, and is looking at yield-accretive acquisitions. With the conclusion of a private placement two weeks ago that raised RM178.75 million, Leong said the exercise will enable Axis REIT to reduce their gearing to 29% from their current 36%. “[With] that, we will be able to allow more breathing space to provide a war chest for Axis REIT for growth next year,” said Leong.


Pensonic now at a crossroads, says CEO

“We have to allocate resources for future businesses to seek transformation in the next five to 10 years. Being in the home appliances segment, we missed out on the mobile phone and personal computer wave in the 1990s till 2000s. We want to make sure we don’t miss out on this digital age, particularly the IoT and wearables segment, which is why we have a consortium with some industry players to come up with a product or concept for the future.”

Pensonic has put together a team to focus on the e-commerce platform and is spending about RM500,000 for the infrastructure, Nelson said. Moving forward, its 700 retailers nationwide will also double up as pickup centres for customers, he said. On smart products, he said some 10 categories of appliances have been identified for value adding, where the group will incorporate the aspect of IoT into the products, which will take into account the evolving needs of customers.


Ajinomoto eyes 50% sales growth in two years

“Ajinomoto Thailand, Vietnam and Indonesia are already experienced in diversification, so Malaysia can leverage from their know-how when pursuing this,” Yamamoto said at a briefing on the group’s first half results yesterday.

This year’s performance, Yamamoto said, will be driven by strong sales from its consumer to business segment, supported by product diversification efforts and pricing strategy. But she cautioned that rising production cost could limit its near-term profit growth.

Saudi Arabia is a major export market for Ajinomoto, followed by the United-Arab Emirates and Oman, among other markets in the Middle-East.


GDex expects mid-teen growth in FY18 revenue, says MD

However, stiff competition and the group’s ambition to expand “aggressively” both domestically and regionally over the next few years are likely to add further pressure to the courier service provider’s margins, he said.

This will include allocating between RM30 million and RM50 million per annum for capital expenditure (capex) over the next two years to double its handling capacity, which currently stands at 120,000 parcels a day.

Outside Malaysia, the group only has a presence in Indonesia via its subscription to PT Satria Antaran Prima’s convertible bonds, which it has until 2021 to exercise. Although Teong foresees the local courier industry consolidating in the near future, he said GDex will focus on organic growth in Malaysia instead of considering further acquisitions.


Astro to invest RM100m in JV

“The JV will extend Astro’s online presence among the Malay-language audience, propel its combined monthly unique visitors to approximately 10 million, and is in line with its goal to build Nusantara and Islamic content verticals. In pursuit of our journey of reinvention, Astro is embracing change brought about by digital and mobile while staying true to our core as a consumer-first company. Regionally, we will forge complementary win-win partnerships, as well as identify strategic and opportunistic investments for our growth portfolio, as well as giving us a seat at the table to learn from value creators and disrupters of the future.”


Gamuda says construction supply chain ‘overstretched’

Local contractors may face cost pressures from a tightening supply chain in the years to come as mega infrastructure projects begin rolling out.

Though Gamuda has been touted as one of the biggest potential beneficiaries of the East Coast Rail Link (ECRL) project, Lin observed that “foreign funding usually comes with foreign participation”. “In an ironic sense, foreign participation can actually help ease the pressure on the [local] supply chain. But [these projects] will miss out on the benefits of localisation,” he said, adding that the government will have to weigh these factors in making any decision.


Acoustech exits audio business

“The disposal of the unprofitable audio segment will allow the group to focus on and utilise its resources solely for its core segment — property development. The divestment will eliminate any further erosion of the group’s profits that may result from the audio segment’s poor performance.”

“The proposed acquisition will allow the group to consolidate its supply channel and improve efficiency, resulting in longer-term cost savings and to ensure continuous supply of speaker units. By consolidating the supply chain, our group is expected to maintain better quality management and expand the future range of products that it can market to its customers. Currently, the board does not expect additional financial commitment to maintain FPT’s business. [However,] the management expects that further investments in FPT will help generate returns in the longer run through cost savings and faster turnaround for production requests. Therefore, Formosa Prosonic’s management expects FPT’s prospects to be favourable in the longer term based on the anticipated improvement in global demand for consumer electronic products.”

Move over tech. Here come Southeast Asia’s builders

With at least $323 billion in infrastructure spending in the pipeline in Southeast Asia and potentially more expected over the next few years, 2018 could well shape up as the year of builders’ stocks from Indonesia to the Philippines that have been the laggards in a broader market rally this year.

“Infrastructure has been under invested whether it’s clear water, clean air, energy, roads, ports, railways, education, health care — so there are tons of opportunities.”

Malaysia has allocated 210 billion ringgit ($51.6 billion) for projects in the 2018 budget of which 73 percent will go rail and public transport. About 55 billion ringgit allocated to East Coast Rail Link, 50 billion-60 billion ringgit given to Kuala Lumpur-Singapore High Speed Rail and 40 billion ringgit to phase 3 of the mass rapid transit system. Rail, affordable housing, roads and water infrastructure are major segments that will benefit from government’s spending next year, Sharizan Rosely, an analyst at CIMB wrote in a report dated Oct. 30. General election due by August 2018. Biggest construction companies: Gamuda Bhd., IJM Corp. Bhd., Sunway Construction Group Bhd., Malaysian Resources Corp. Bhd.


Klang Valley retail occupancy rate at 5-year low

“As of 3Q17 (third quarter of 2017), total retail stock in [the] Klang Valley stood at 61 million sq ft and estimated pipeline supply for those under construction is currently estimated at 16 million sq ft, comprising 23 projects. This implies an overall growth of 26% to current stock. In recent years, we have witnessed a mall closure in Petaling Jaya, and increasing occupancy stress, low footfall and retailers’ turnover, in some of the newer [and older] malls, matched by slower or worse, no rental growth and [an] increasing need to provide for tenants’ incentives.”

“Some of the newer malls have been struggling to establish market share that is getting more fragmentary and diminishing. “Construction of [the] mass rapid transit network has spurred a wave of transit-oriented developments, and more retail space supply can be expected along the train ride, resulting in overlapping catchments and intensified competition. It is and will continue to be very much impacted by the ongoing structural changes in the market, and not a normal supply-demand disequilibrium, that in the past could be resolved through the passage of time, rising affluence and population.”


Gas price hike to raise steel makers’ costs by RM200m a year

The average natural gas base tariff will be revised upwards by RM3.85 per MMBtu or 14.23% from RM26.46 per MMBtu to RM30.90 MMBtu for the non-power sector, including steel producers, in Peninsular Malaysia from Jan 1 to June 30, 2018. In addition to this, under the new gas cost pass-through (GCPT) mechanism, a surcharge of RM1.62 per MMBtu will apply to all tariff categories due to the higher liquefied natural gas price against the reference price in the base tariff during this period. This translates to an average effective tariff of RM32.52 per MMBtu across all categories, at an average increase of RM6.06 per MMBtu or 22.90%.


A lift for small developers

Smaller property developers will no longer need to just rely on bank financing to ease their cash flows. They can monetise upfront from the cash flows of their billings via a bond issue which potentially takes away businesses from banks.

“This will disrupt property financing in Malaysia, especially for bankers depending on businesses from small developers. Typically, developers need to wait for the three-year construction period before they are able to collect their portion of the development cash flows. For the smaller developers, liquidity is a huge issue.”


Ensure Chinese investments offer locals high-skilled jobs too

But to Wan Saiful, while MCKIP promises high-value investments and to grow the Malaysian economy, the immediate jobs created there have been mostly low-skilled construction jobs. Further, he thinks future jobs will likely be factory-based and that it is uncertain how locals can be transitioned into higher-level jobs once investors leave.

Likewise, he said tens of thousands of jobs have been created for locals in Africa via Chinese investments. “However, these have mostly been low-skilled,” he added. Citing a 2014 academic survey, he said among the 400 companies that invested in 40 African countries 80% to 97% were low-skilled roles which were occupied by locals.

Company Notes 2017.12.01

GHL Systems Q3 FY2017 Results

The Group has successfully deployed since 2015, its TPA merchant acquiring tie-ups with CIMB (physical merchants) and Global Payments (online and physical merchants) and in 2016, additional tie-ups with Alipay (Thailand) and RCBC group (Philippines). GHL group has commenced merchant acquiring for Alipay in Malaysia in 2Q17 and AFPI (Beep card) in Philippines for merchant acquiring in expected in 4Q17. The group remains optimistic of further developing TPA as a key growth engine for the group given the changes in the payment landscape as e-payments gain further traction as driven by not only regulatory directives but also positive changes in consumer preferences towards e-payments.


JHM Consolidated Q3 FY2017 Results

The declined in revenue was mainly due to worldwide components shortage and extended lead times in the supply chain.

The average inventory turnover days has reduced from 53 days to 39 days as a result of the continuing efforts of the Group in improving the inventory turnover efficiently.

Despite of facing the worldwide shortage of raw materials, particularly the passives, the Group’s outlook remains strong and bright with the growing acceptance of LED lamps in automotive market.


Dufu Technology Q3 FY2017 Results

We expect sales to continue to remain favorable towards end of 2017 as our major product is driven by the growth in high-capacity nearline HDDs as well as stabilization of client storage demand. The long-term future of HDDs are likely rests with high capacity HDDs, particularly in data centers serving cloud storage applications. The demand for high capacity storage drives, enhanced performance, and lower storage cost is set to rise. Global internet penetration, the rise in e-commerce in emerging markets, and the current trend for high-resolution media standards are the likely drivers for the continuing rise in global data storage demand.


Perak Transit Q3 FY2017 Results

The outlook of integrated public transportation terminal operations segment is expected to the favourable driven by the Group’s plans for expansion in other part of Perak, whereby the construction of the Terminal Kampar has commenced and it is on schedule. It is expected to be completed by 4th quarter of 2018. In addition to Terminal Kampar, the Group’s plans include similar integrated public transportation terminal in Bidor and Tronoh. As of this juncture, the Group is unable to determine the construction cost for the terminals to be built as the construction project is still at its preliminary stage and the approvals for construction have yet to be obtained from the relevant authorities. In this regards to the status of the Bidor and Tronoh lands, the acquisition of the lands are pending completion subject
to the fulfilment of the condition precedent as announced on 19 January 2017 (Bidor), 18 September 2017 (Bidor), 28 March 2017 (Tronoh) and 27 November 2017 (Tronoh) respectively.

The Group’s bus operations segments outlook is also positive driven by Stage Bus Service Transformation programme as the operation runs all the 19 approved routes since September 2016 with 45 express buses fully delivered in March 2017.


Pos Malaysia Q2 FY2018 Results

The Group’s prospects remain positive as our business continues to be largely driven by the strong e-Commerce growth in Malaysia and we are optimistic that the establishment of the Digital Free Trade Zone (DFTZ) will drive cross-border e-Commerce volume, especially for Malaysian small and medium enterprises (SMEs). This is expected to be positive for the prospects of our e-Commerce related businesses, namely our courier, eFulfilment, air cargo logistics and international mail business.

On the digital front, we are looking to introduce digital services that are relevant to our customers as digitalisation and demographic changes have encouraged us to be more innovative in providing services that suit the changing lifestyle needs of the Malaysian public, especially the younger generation. Accordingly, we expect to launch our Digital Mailbox product in early 2018 that will provide a range of digital services catering to mobile lifestyles. We are confident that our Digital Mailbox will, over time, become a key digital product offering.


EG Industries Q1 FY2018 Results

The Group is in the midst of construction of the IPC hub and expects to begin its IPC operations in December 2017. With the commencement of IPC operations, the Group is expected to obtain more competitive raw material prices through larger scale of procurement activities to maintain its competitiveness in global Electronic Manufacturing Services (“EMS”) market.


CAB Cakaran Q4 FY2017 Results

The integrated poultry farming and processing division’s performance in the next quarter may be moderately affected by the lower average selling price of broilers but will be mitigated by the lower cost of feeds. The recent strengthening of the Malaysian Ringgit and the world wide over supply of corn and soya, has contributed to the lower cost of feeds.

The value added food products manufacturing and trading division’s performance will be impacted by the continuous losses at Farm’s Best Food Industries Sdn. Bhd.. Management expects the performance of this division to show improvement after the measure undertaken to improve operational efficiency as well as the upgrading of facilities are completed over the next few months.


Ta Ann Q3 FY2017 Results

Performance for the palm oil sector is expected to remain as the main profit contributor in the coming quarter. For timber sector, the underperformance is due to the low logs production in compliance with the certification exercise as well as the restricting logs export quota of 20% that took effect in July 2017.

Given to the low plywood inventory in Japan coupled with the infrastructure construction works for the coming Olympics which has accepted the Company plywood products for the said construction works, we expect the timber market to rebound.


OCK Group Q3 FY2017 Results

The Group aims to grow its recurring revenue business via build-own-and-lease and acquiring existing tower sites operators in ASEAN. For our tower leasing business expansion, the Group is leveraging on its established presence in ASEAN and its vast experiences in building telecommunication infrastructures and site maintenance of telecommunication infrastructure. The build-own-and-lease business model is based on building, owning and leasing back the tower sites to telecommunication operators over a long-term period.


Notion Vtec Q4 FY2017 Results

The auto braking plungers business is expected to have a double-digit growth in FY2018 especially in electric and hybrid cars. The production for the lifestyle consumer electronics segment will take to production as soon as possible as it is a high volume product. We have also made inroads to a major MNC production equipment maker in the semi-conductor space which has good prospects. The Group continues to invest in new technologies and diversifying its customer and industry bases.

Finally, due to the need to conserve cash in the light of the fire incident the Board has decided to defer any dividend payment for this and next quarter until things are back to normal.


IQ Group Q2 FY2018 Results

The Group’s first half year performance has been below expectations. Sales slowed during this period and performance was further impacted by some delays in the conclusion of new product sales. IQ is however blessed with considerable opportunity from both new and established business relations with on-going product development and related planned launches in the pipeline. The current volume of product development requirements is good from a new business perspective, but challenging from a resource and timing standpoint. We see that the current conditions will remain throughout the remainder of this financial year, but going forward thereafter we anticipate positive performance as the various new products are rolled out into the market. Improvements to IQ’s R&D structure are already implemented to accelerate results and to better position our speed to opportunity going forward.

Paper mill operations to boost BHS Industries’ earnings

As it stands BHS earlier this month signed a memorandum of understanding with China Nuclear Industry Huaxing Construction Co Ltd to jointly develop the second and third phases of the project. Phase 2 involves a factory with the capacity to produce 100,000 tonnes of box liner paper as well as 120,000 tonnes of corrugated paper. Meanwhile, Phase 3 will involve another factory with a capacity to produce 65,000 tonnes of tissue paper. Interestingly, Lim added that, “We are targeting to give the award on the final negotiation to the Chinese party for the main building of the factory (Phase 1 for 10,000 tonnes wood-free pulp and paper plant).”

Note that BHS has secured a five-year contract from the Malaysian government to publish past examination papers. It also disposed of a plot of land (from the 410-acre GTP project) for RM5.3 million to a third party to develop. The group is still looking for potential partners to jointly develop the project’s fourth and fifth phases. Phase 4 will involve the construction and development of a feed mill with production capacity of 30,000 tonnes of agro-feed using the microbial fermentation technology, as well as a fertiliser plant with a production capacity of 50,000 tonnes of fertiliser using the by-products produced from the biogas plant.

Phase 5 has been earmarked for light industries involving the construction and development of packaging and printing factories. Additionally, BHS is also looking to expand the GTP model to other states. The group signed a memorandum of understanding with Sarawak Land Consolidation and Rehabilitation Authority subsidiary Bau Palm Oil Mill Sdn Bhd (Bapom) on Nov 10 to jointly develop, implement and finance a waste management project to convert the palm oil biomass, which is supplied by Bapom into commercially viable products. On top of that, BHS is actively looking to develop a third GTP in Johor in the near future; a first step before spinning off the concept to other states as well. “We are targeting Johor as there are many palm oil mills over there,” explained Lim, adding that in the next four years the group could be looking at Indonesia for expansion as well.”

Printing and publishing remain the core business of the group, accounting for about 80% of its revenue in FY17. The remaining 20% came from park development and management activities. “[Revenue] contribution is mainly from our book printing and publishing [business] now, but you will soon see it overtaken by GTP Phase 1,” said Lim. He expects the revenue contributions to invert, with 80% of the revenue coming from GTP Pekan and 20% from the existing printing and publishing business.


Top Glove wants to buy Aspion for RM1.3bil to boost profits

Aspion is currently the second-largest producer of surgical gloves in the world, with an annual production of 1.4 billion pieces or an 18% market share. Lim said production at Aspion is projected to increase by another 1.6 billion pieces by 2019 due to the ongoing capacity expansion at its Kulim plant in Kedah. Top Glove has a 12% global market share in this segment, producing 665 million pieces a year. The surgical glove segment, prior to the acquisition, contributed about 5% of Top Glove’s revenue.

Aspion’s Kulim plant houses the company’s most recent technology and research and development centre. It also has manufacturing facilities in Kluang, Johor and Kota Bahru, Kelantan, catering mainly for examination gloves. Aspion owns cutting-edge technology, namely, its Finessis surgical glove which is known to be the only technology capable of reducing the number of viruses (such as HIV) transferred in cases of percutaneous injury.


EG Industries allocates RM30mil for plant expansion

Group chief executive officer and executive director Alex Kang said the expansion, to be funded through bank borrowings and internally generated funds, was to cater to the strong enquiries from customers for box-build contracts, reiterating the company’s stronger proposition in this segment.

“Not only has our box-build segment improved, but also our printed circuit board assembly (PCBA) segment as it remains the main revenue generator for EG Industries.”


Kim Teck Cheong Consolidated to realise its investments in FY19

In March, KTC acquired a 60% equity interest in Grandtop Marketing Sdn Bhd for B$600,000, which is principally engaged in the business of distribution of CPG in Brunei. He said the group plans to further invest in its infrastructure in FY18 — albeit with a smaller allocation — to take advantage of opportunities as they arise. He added that KTC is currently in talks with five to six notable third-party CPG brands in Sabah and Sarawak, which may come on stream in FY18.


Freight Management sees 10% growth in FY18 profit

“There is no such thing as saturation in the market as there are no more avenues to grow. There will always be customers who are looking for improvements in service. We just have to take advantage of our strength to gain market share.”

The sea freight segment will remain the group’s core business. “We have always been very strong in our sea freight segment, so it’s only natural that we try to keep building and growing this particular segment.”

On the group’s e-commerce segment under 65%-owned FM Hubwire Sdn Bhd, Chew said although there is an opportunity to grow, the loss-making business remains a challenge as it is a relatively new area for the group. “We started this about a year ago, but honestly the business has not really gained traction. We are exploring ways to boost the business. Although it may take a while, if we don’t get involved now it will be too late later. It is a challenge now, but we have the resources [to sustain it],” he said. The group, he added, hopes to see some traction in the business by end-FY18, and to turn a profit by FY19.

Company Notes 2017.11.24

APM Automotive Q3 FY2017 Results

APM believes that innovation is one of the keys to success and has not allowed the current challenging economic climate to be a deterrent in its pursuit of the same. In this respect, APM has invested in and established a fully functional research and development centre that houses more than 80 engineers. This centre is equipped with some of the latest cutting edge technologies and a central testing laboratory. APM’s engineers have been carefully selected and are capable of handling a range of tasks, including product design and development as well as manufacturing process and technology improvement.

Having the credentials that include over 30 years of manufacturing experience have enabled APM to remain competitive over the years but APM is aware that it cannot rest on its laurels and rely on past successes to drive it forward. APM aims to further improve on its competitiveness and market share through the gradual introduction of automation into its manufacturing processes, the continued adoption of forward transactions based on actual commitments rather than leveraging on derivatives and speculative hedging to curb losses associated with currency fluctuation and the increased focus on the export market for its products.


GD Express Carrier Q1 FY2018 Results

The decline in performance for the current quarter under review was mainly due to higher operating expenses incurred for expansion of network and infrastructure to cater for the higher demand of express delivery by e-commerce business.


Star Media Group Q3 FY2017 Results

On 12 July 2017, the Company announced the completion on the disposal of Cityneon Holdings Limited by Laviani Pte Ltd, a wholly-owned subsidiary company. Accordingly, Cityneon Holdings Limited and its subsidiaries have ceased to be the indirect subsidiary companies of the Company.

With the sale of the two radio stations (Capital FM and Red FM) which were loss making in the last financial year, Radio segment is expected to contribute positively to the Group.

Star is actively searching for new investment opportunities especially in the digital sector to further complement and enhance its existing assets. The fast evolving media landscape into all things digital and the ever changing consumer preferences make it a priority for Star to maintain its engagement with its audiences via the latest technologies.


Daibochi Plastic and Packaging Industry Q3 FY2017 Results

The Group has marked good progress in its Myanmar plant. Daibochi Myanmar achieved, in a short period, the ISO 9001:2015 and Hazard Analysis and Critical Control Point food safety management system (HACCP FSMS) certifications in October 2017. With these certifications, Daibochi Myanmar is now equipped and ready to supply flexible packaging to global food and beverage (F&B) and fast moving consumer goods (FMCG) brands.

At the same time, Daibochi Myanmar is extending its existing business footprint by pursuing new contracts from the FMCG sector in Myanmar. The positive feedback from the sales team after three months of visiting customers in Myanmar, coupled with Daibochi Myanmar’s technical capabilities and product quality, makes the Group confident of entering the qualification process for various companies and new product lines of existing customers in the fourth quarter of 2017.


Boon Koon Group Q2 FY2018 Results

The Group expects the automotive market to remain challenging due to stiffening competition for the rebuilt commercial vehicles as a result of the influx of more China commercial vehicles. However, the company will continue looking for option available to undertake new dealership for commercial vehicle and to progressively expand the number of distributors and marketing arms around Malaysia, particularly in Johor and Kuala Lumpur. The demand for the rebuilt and brand new commercial vehicles is continuously growing in these states in view of various ongoing and new mega infrastructure construction projects which are currently being implemented.


Supermax Q1 FY2018 Results

The Group is making good progress in developing its contact lens business. Not only has it successfully set up its production operations over the last few years, but it is also seeing its intensive efforts to procure the necessary certifications and approvals to produce and bring its products to market bear fruit.

The certifications and approvals obtained to date include the US FDA 510K, the CE Mark and the Brazilian Anvisa license for the overseas markets; and the Medical Device Authority license for the Malaysian market. It is currently pursuing the approvals required to gain access to the Japanese market, the 2nd largest contact lens market after the USA. The Group will continue launching its products in the various overseas markets after obtaining the necessary approvals.


Heineken Malaysia Q3 FY2017 Results

Group revenue in the quarter also received a boost in the cider category following the successful launch of HEINEKEN Malaysia’s new mainstream cider brand Apple Fox in August 2017 and the commencement of sale of locally brewed Strongbow Apple Ciders.


FoundPac Group Q1 FY2018 Results

Demand for our stiffeners and accessories for stiffeners are expected to remain steady. For medium to long term, we will put more effort and concentrate on the products of test socket, hand lids and accessories for test sockets to gain more market segment.


Rhone Ma Holdings Q3 FY2017 Results

The Group’s future plans and strategies will focus on the expansion of our manufacturing activities by constructing and operating a new GMP-compliant plant in Nilai, Negeri Sembilan Darul Khusus which will increase our production capacity by approximately four (4) times of the existing maximum production capacity. As at to-date, we have obtained the planning approval and are awaiting approval for the commencement of earthworks from the relevant authority. The construction of the plant is estimated to be completed by the fourth quarter of 2018.

We have commenced work on our new warehouse situated in Kapar, Selangor Darul Ehsan in July 2017. The new warehouse, which will be used as our main distribution centre to cater to our increasing storage needs for both animal health products and food ingredients, is estimated to be completed by the third quarter of 2018.


Techfast Holdings Q3 FY2017 Results

Preparations for the military and aerospace project are still underway as the machines are still being commissioned. The broaching machine and materials for this project from the USA are expected to arrive in December 2017.

Cape is currently working with one of the biggest semi-conductor companies in China, which is assessing the standard and the quality of our products. Sales to Taiwan had seen some volume increase in this current quarter. The management team expects that the standard and quality of our products would be accepted in a matter of time, as already evidenced by some increase in sales volume to Taiwan thus far

Oriem is working on a high end LED and epoxy projects with two reputable international original equipment manufacturers (“OEM”) in Penang. Oriem is already an approved vendor which meets the standards and requirements of their supply chain. The evaluation of our company’s new products is still in progress.


Serba Dinamik Holdings Q3 FY2017 Results

Recent announcement for the establishment of a chlor-alkali plant in Tanzania would mark as our first step into Africa and the Company expect to further grow the business in the region. It also re-affirms our plan to grow our asset ownership business model which would lead to further enhance our EPCC & O&M capabilities.


Tune Protect Group Q3 FY2017 Results

The innovative initiatives put in place are gaining traction in favour of the global Travel reinsurance business, notably in product bundling with our key airline partner. In its early stages of implementation, dynamic pricing and other targeted marketing initiatives also aim to elevate sales and overall customer experience. Continued collaboration with our airline partners and new personalized travel products in the pipeline, including Family, Migrant and Annual travel plans, is expected to further strengthen our recovery.


Focus Lumber Q3 FY2017 Results

The logs supply issue has been temporarily resolved since early August but the costing of our products had increased significantly due to the higher logs price paid in order to secure logs supply. Although the selling price of plywood has been an increasing trend recently, we expect that it will not help much on our profit margin recovery due to the current cost structure of our inventory as well as the higher logs price. Other than local suppliers, we are also looking to purchase veneer sheets from overseas when there is a shortage in logs supply in future.


Dagangan NeXchange Q3 FY2017 Results

The Group’s Information Technology business continues to firm up its e-services by broadening its product range in business-to-business segment to complement the Group’s position in delivering business-to-government services. The new recurring income from operation and maintenance of the VEP&RC System, eWork Permits, and the 1Trade, a Web-based one-stop portal for total cargo and trade management and related services have further open up a new revenue stream to the Group.


Telekom Malaysia Q3 FY2017 Results

Our main broadband service offering continues to grow with unifi reaching 2.70 million households nationwide to date, and our mobile offering achieving 8.0% mobile penetration.

In supporting the Government’s initiative, we successfully completed Sistem Kabel Rakyat 1Malaysia (SKR1M). SKR1M is the result of a successful Public-Private Partnership (PPP) collaboration between TM and the Government through Malaysian Communications and Multimedia Commission (MCMC) which has achieved the project completion as scheduled and is now commercially launched. The new submarine cable system spans over 3,800 km lands at six (6) landings in Kuantan, Mersing, Kuching, Bintulu, Miri and Kota Kinabalu.


N2N Connect Q3 FY2017 Results

Following the successful acquisition of AFE, the enhanced coverage in Malaysia, Singapore, Indonesia, Philippines, the United States, Hong Kong, Macau, and Vietnam has positioned N2N to become one of the largest Asian-based platform providers. As Merger and Acquisition is one of the key expansion strategies, N2N is continuously seeking several other suitable acquisitions that are synergistic to its business.

These prospects include information service terminal, trading platform, data center hosting, network infrastructure and the acceptance of our latest back office settlement system by several brokers in Malaysia, Thailand and Philippines.


Petron Malaysia Refining & Marketing Q3 FY2017 Results

With all sectors posting positive growth, total sales volume reached 9.0 million barrels, a 15% improvement from 7.8 million barrels last year.

Dated Brent averaged US$52 per barrel during the quarter compared to US$46 per barrel in the same period in 2016. Brent crude reached US$56/bbl in September this year, up by almost US$10/bbl or 20% from the June level compared to the range-bound movement during the same period in 2016. As oil prices rose, the price differentials between finished products and crude also widened which further improved the Company’s margin.

The Company continues to pursue its network upgrade and expansion program amidst the more challenging market and business environment.


Lii Hen Industries Q3 FY2017 Results

The cost increases in raw materials, labour and subcontractors charges continue to affect the Group’s gross profit margin by 2% compared to the immediate preceding quarter.

The fire outbreak occurred on 27 October 2017 at one of the finishing plants have the operational impact on the bedroom sets, however the effect was mitigated by working extra shift/hours at main premises. The production was resumed on 14 November 2017.


Salutica Q1 FY2018 Results

Leveraging on the Group’s experience and expertise in Bluetooth technology and R&D capabilities, we had begun developing Bluetooth-enabled personal healthcare related products under our in-house brand FOBO. Currently, we are at the proof of concept stage base on engineering prototypes.

The Group is continuing with the manufacturing of a USB-powered device that adds touchscreen functionality to a non-touch laptop screen. The touch enabling functionality may be incorporated into applications for various industry segments, such as automotive and electronic appliances, subject to expected gestation period for product certification or homologation.

FOBO Tag, the World’s 1st patented Bluetooth 5 tracker was launched on 31 August 2017 on a crowd funding platform. The Group will start shipping FOBO Tag product in early December 2017.


Chin Well Holdings Q1 FY2018 Results

In order to cushion the stress from the safeguard duty which imposed by the Malaysian government towards the end of the financial year ended 30 June 2017 on the wire rod imported from China, the Group had sourced its raw material from other alternative countries such as the Middle East and Vietnam which are duty exempted and without compromising the quality of our products. Application to the authorities for the exemption of the duty is in the progress with the hope to obtain the approval in the next few months.

The Group expects its DIY segment will continue to contribute positively to the Group’s performance through the increase of its distribution network in the European and US markets. While for the Wire division, with the expansion in the production of new product lines such as welded fencing, gabion and poultry mesh, it is expected to further enhance the division’s result in this financial year with its high value added margin.


Heveaboard Q3 FY2017 Results

The decrease in revenue for the reporting quarter was due to the planned annual preventive maintenance at the particleboard sector and also the shortage of foreign workers at the RTA sector which had resulted in higher operational costs as optimum production capacity could not be achieved.


PPB Group Q3 FY2017 Results

Although the flour markets in Malaysia, Indonesia and Vietnam remain competitive, Grains and agribusiness segment is expected to perform satisfactorily. Performance of the Consumer products segment is expected to remain stable. The business of Film exhibition and distribution segment will continue to be driven by the newly-opened cinemas in Malaysia and Vietnam; and the movie title releases for the rest of the year. Environmental engineering and utility segment will continue to focus on timely completion of its on-going projects and participate in tendering for prospective projects. The launching of the mixed development project in Taman Megah, Petaling Jaya in November 2017 is expected to contribute positively in the coming financial year.


Kossan Rubber Industries Q3 FY2017 Results

The demand for gloves remains robust, with the Group’s production plants running at full capacity. The Group’s latest Plant 16 located along Jalan Meru, was initially expected to be completed in July 2017. However, there was a slight delay due to machine installation and water supply issues. Two of the eight production lines were completed in October which are now under production-trial, with the rest six lines going to be completed by Dec. We expect contributions from this plant for this year to be minimal, with full contributions to start from Jan 2018 onwards. Plant 16 which has an installed capacity of 3 billion pieces per annum, will focus on the Group’s patented Low Derma Technology gloves. This latest state-of-the-art plant incorporates many of the latest technologies, including highspeed dipping technology with a high-degree of automation to reduce the dependence on manpower. Construction works for Plant 17 and 18, also along Jalan Meru have commenced and expected to be completed by 2018. These 2 new plants would be capable of producing up to 4.5 billion pieces (1.5 and 3.0 billion pieces respectively) of nitrile
gloves per annum once completed.

Research & development remains one of the cornerstones of Kossan’s success. The construction of the Group’s integrated Research and Development cum Training Centre (“RDTC”) is completed in the 4th quarter of 2017. The RDTC will house the Group’s world class research, lab and testing facilities for new innovations and quality improvements. It will also serve as the nerve centre for research into engineering and robotic implementations as well as automation systems for existing and new manufacturing plants.


Thong Guan Industries Q3 FY2017 Results

For the third quarter ended 30 September 2017, the Group has continued its double digit growth trend in its sales. The group commissioned its second nano layer stretch film line and its 8th PVC food wrap line during the current quarter. With the additional capacity coming on stream in the final quarter of 2017, the Group is optimistic to continue its upward trend in sales volume and profitability.


Karex Q1 FY2018 Results

Result from operating activities was lower due to pressure on tender prices and rising production costs coupled with higher distribution and administrative expenses. Distribution and administrative expenses pertaining to efforts to build Own Brands through advertisement, hiring of human capital and expansion of our distribution network continued to impact profitability.

Distribution expenses had increased due to higher freight costs for shipments to Africa and Asia as well as the marketing cost for the launch of the MyOne range of condoms in US via an ecommerce platform.


Chemical Company of Malaysia Q3 FY2017 Results

The growth in profit before tax is primarily due to higher sales and margin as a result of higher average selling prices of its chlor-alkali products, higher volume sold during the period under review and positive impact on operational efficiency initiatives.


Malaysia Airports Holdings Q3 FY2017 Results

MAHB’s network of airports (including Istanbul SGIA) recorded 95.3 million passengers in YTD September 2017, representing a growth of 8.7% over YTD September 2016. International traffic improved by 13.3% while domestic passengers traffic increased by 4.9%. Correspondingly, aircraft movements improved by 3.1% with international and domestic aircraft movements increasing by 6.8% and 1.0% respectively


Eng Kah Q3 FY2017 Results

Going forward, the Group will further strengthen its presence in overseas markets and joint venture business. Atika Beauty Manufacturing Sdn. Bhd. (“Atika”) has completed its factory renovation and relevant machinery has been installed. The manufacturing operations if Atika has commenced in the third quarter of 2017. The Group’s research and development team has also developed a new range of unique and impressive souvenir products that are able to capture the beautiful scenery and memorable moments of customers’ choice with 3D printing effect on the glass bottle.


BCM Alliance Q3 FY2017 Results

The Group has successfully obtained an appointment from KLS Martin SE Asia Sdn Bhd as the non-exclusive distributor on 10 February 2017 to distribute OT lights and accessories, pendants and modular OR. This create the new brand for medical devices during the financial period ended 30 June 2017 and the new appointment is valid until 5th December 2021 which had been approved by MDA.


Chin Hin Group Q3 FY2017 Results

Lately, we have set up another new subsidiary, Metex Modular Sdn Bhd to venture broadly into Industrialised Modular Building System (IMBS). Application of IMBS in the commercial and industrial construction is not only fast and environmental friendly, this method of construction is scoring the highest IBS points, achieving higher assessment rating over the other IBS method. With appropriate design and construction practice, modular building can ever be a prefabricated prefinished volumetric construction solution system (PPVC System) for big scaled residential and commercial estate within 6 to 12 months period. Chin Hin will capitalise on its internal resources i.e. ready-mixed concrete, wall panel, wire mesh and C-Purlin to maximise its return on the modular business and target to be recognised as one of the most reliable IMBS manufacturer in the market.

Maybank initiates rent-to-own scheme

“The scheme will provide the transparency that customers need and certainty of their monthly rental commitments throughout the chosen tenure. It will also give them the opportunity to earn capital appreciation on their property via the cash-out option,” he added, noting that that “best of all, there is the option to buy the property at a later stage but at a predetermined price.”

To be eligible for the scheme, Maybank said applicants must have a household income of at least RM5,000 per month and committed to a minimum rental tenure of five years. Customers will be subjected to a flat rental payment for the first five years, and they will also be able to purchase the property at a locked-in rate, continue rental tenure with 2% annual rental step-up or terminate the agreement with no further obligations.

“In Malaysia, only 24% of households rent. The society has to correct this social stigma that renting is not the last resort, it is simply a choice.”


Chin Well plans regional expansion

“We have enquiries from customers for more of our new fasteners that are made in Vietnam. We will add more production lines in Vietnam to cater to the rising demand. We aim to have at least a DIY customer in each European country by 2019. We are targeting for the DIY segment to generate about 25% of the group’s revenue in 2019, compared to 15% now.”

“There is now a shortage of graphite, an essential ingredient used for stabilising the temperature in the furnace used for producing steel-based products. This is on top of the problem in China, where the government is closing down all the cottage industries using archaic technology to produce steel in a nationwide effort to curb pollution. We are well stocked on cold-rolled coils which were obtained on competitive prices due to the large amount we order. We have adjusted the pricing of our fasteners accordingly to the hike in raw material prices.”


Jaycorp expects great potential in Sabah’s construction sector

“We are looking at the potential of acquiring additional furniture factories with good management already in place. Our policy for investment is that the partner we look for must be well-known in the industry and the management must know its job. Come the right one, we will say yes.”

Currently, all of Jaycorp’s furniture products are catered for exports, transacted in US dollars. The Chinese market accounts for 40% of the group’s furniture division’s top line, followed by the US at just below 30%, with the remaining made up of several countries including Australia and European nations.

Jaycorp’s factories are running at an average utilisation rate of 80%. The group has three plants for its core business — furniture production, two for wood processing, one for carton box packaging, and one for renewable energy. The rubberwood furniture maker has no stress from cost or shortage of raw materials such as rubberwood — as it has an option to source supply from its subsidiary operating in Medan, Indonesia, which does pressure treatment and kiln-drying of rubberwood.


Tencent mulls e-payment launch in Malaysia next year

Tencent has made a “breakthrough” in gaining an e-payment license in Malaysia for local transactions, and plans a launch early next year, senior vice president S.Y. Lau said in an interview. “Malaysia is actually quite large in the sense that we have 20 million WeChat users, huge potential, and the market is quite warm towards internet products from China,” Lau said.


Top palm oil growers go on defensive against EU curb threat

Indonesia and Malaysia are the world’s top palm oil producers, accounting for 85 percent of supply. The European Parliament’s non-binding resolution urged the bloc’s executive arm to step up efforts to prevent deforestation as a result of palm oil production. The expansion of plantations in the two countries has seen farmers accused of illegally using slash-and-burn methods to clear land, destroying rainforests and habitats for animals, and causing a severe haze that can blanket parts of Asia. Indonesia has said it is ready to retaliate against further attempts to curb palm oil exports.

The European Union is Malaysia’s biggest export destination, accounting for about 13 percent of shipments of palm oil and palm-based products last year, according to the Malaysian Palm Oil Board. About 90 percent of Malaysia’s biodiesel exports also go to Europe, Mah said.


Malaysian palm oil prices seen dropping further on India import duty

India lifted the import tax on crude palm oil to 30 percent from 15 percent, and increased import tax duty on refined palm oil imports to 40 percent from 25 percent. Indian oilseed crushers had been struggling to compete with cheaper imports from Indonesia, Malaysia, Brazil and Argentina, reducing demand for local rapeseed and soybeans which have been trading below government-set prices in the physical market and angering farmers.

Property imbalance growing wider

Bank Negara says the bulk or 83% of the total unsold units were in the above RM250,000 price category. The central bank revealed that 61% of total unsold units were high-rise properties, out of which 89% were priced above RM250,000. Johor has the largest share of unsold residential units (27% of total unsold properties in Malaysia), followed by Selangor (21%), Kuala Lumpur (14%) and Penang (8%). Over the period 2016 to the first quarter of 2017, only 21% of new launches were for houses priced below RM250,000. This is insufficient to match the income affordability profile of about 35% of households in Malaysia. Secondly, the mismatch was exacerbated by the slower increase in median household incomes (compounded annual growth rate (CAGR) 2012 to 2016: 9.6%) relative to median house prices (15.6%).

Since the first quarter of 2015, the office vacancy rate in the Klang Valley has increased steadily from 20.9% to 23.6% in the first quarter of 2017. This is higher than the national average of 18.1%, and more than three times the regional average of 6.6%. The office vacancy rate is projected to reach an all-time high of 32% by 2021, far surpassing levels recorded during the Asian Financial Crisis. In other words, if current supply-demand dynamics persist, one-in-three offices in Klang Valley could be vacant in 2021.

In 2016, Penang had the highest retail space per capita in the country (10.5 sq ft per person), followed by Klang Valley (8.2 sq ft) and Johor (5.1 sq ft). In higher-income regional cities such as Hong Kong and Singapore, prime retail space per capita is only 3.6 sq ft and 1.5 sq ft respectively. The incoming supply of 140 new shopping complexes by 2021 across the Klang Valley, Penang and Johor is expected to worsen the oversupply going forward. While Penang currently has the highest prime retail space per capita, it will be overtaken by Johor by 2018. The large incoming supply of 15.8 million sq ft of retail space in Johor will be 1.5 times the existing supply.


Developers are responsible for the market overhang, says PEPS

In a statement today, the association blames the developers’ indiscriminate building of properties, a lack of market studies and financial feasibility studies being carried out prior to building and no coordination on planning among local authorities and indiscriminate approvals for the market overhang. Other causes include the delay in gazetting of local plans that leads to uncontrolled development and higher cost as well as artificial demand created by members of the public for fear of losing out on choice properties.

“The property industry has linkages to more than 120 industries and collectively account for 10% of gross domestic product. Therefore, any severe property market imbalances and overbuilding will affect the stability of the financial system,” said PEPS, adding that it concurs with Bank Negara Malaysia’s view that “severe property market imbalances can pose risk to macro economics and financial stability”.


Digital economy to contribute 5% to 10% more to GST revenue — Deloitte

“I anticipate that Malaysia will come on board in the next one year or two years. With the digital economy, companies can basically be based everywhere and anywhere, and the customs can move everywhere. We want to tax where the consumption occurs, where the customers are, because that’s where they’re receiving the service.”

“What I and many investors hope to see is a comprehensive tax incentive framework to attract the foreign investors and local SMEs (small and medium enterprises) to come in and make use of the platform to sell their products abroad. Especially for the SMEs, the government needs to offer some incentives in the form of funding made available for them to develop their e-commerce platform infrastructure so they can play a meaningful role in this space and be competitive.”


Online publishers sign MoU to form Malaysian Premium Publishers Marketplace

The current trend of programmatic digital advertising used by marketers is designed to automate how and where ads are placed online, promising wide reach and return on investments. However, this is done at the risk of advertisers losing control of where their ads are placed. In some cases, this has lead to the placement of ads in undesirable, irrelevant or even fake websites. MPPM therefore gathers some of Malaysia’s top media companies to effectively deal with the common digital advertising challenges such as ad fraud and brand misplacement and to provide an extensive solution to further expand brands’ reach to the local market. MPPM member publishers will also be able to improve their revenue, while offering advertisers quality inventory at a reasonable price.

Household savings growth ‘not promising’

Household savings accounted for a meagre 0.9% or RM6 billion of the overall household income, which stood at RM638.8 billion in 2014.

Pioneered by the World Bank since the early 1960s, the SAM is a comprehensive economic snapshot attempting to model the income distribution flow for households, and spending pattern for institutions.

Company Notes 2017.11.17

United Plantations Q3 FY2017 Results

In the U.S., the soy bean harvest is in full swing and weather has been favorable, hence, the U.S. soy bean production is expected to be historically high due to the increased planted acreage in combination with good yields. In South America, the soy bean plantings are delayed in Argentina due to excessive moisture and in the northern part of Brazil due to dry conditions, however, at time of writing it’s still too early to ignore an expected South American bumper crop. The increase in soy bean production is therefore expected to have a negative impact on prices during 2018 as global vegetable oil stocks are expected to recover from current levels


Hovid Q1 FY2018 Results

Preceding quarter’s revenue was affected by lower sales and products being out-of-stock as they were depleted during the period when the manufacturing licences were revoked, and production not being able to run optimally due to insufficient workers during the initial months subsequent to the reissuance of the manufacturing licences. In comparison, production for all plants are operating at 24 hours a day during the current quarter to deliver the back-orders received during the period the licences were revoked.


Ranhill Holdings Q3 FY2017 Results

As for the International Environment sector, our strong partnership with SIIC has resulted in reducing the project loans’ interest with an average interest saving of approximately 1%. The joint venture is now poised to commence exploring new opportunities for industrial waste water concession contracts and other potential water related works in China and other South East Asia countries under the One Belt One Road initiative. 


Scicom MSC Q1 FY2018 Results

The BPO division has taken the following actions to mitigate the impact from clients’ change in strategy: a. Cost mitigation – The BPO division is mitigating its cost structure on two major fronts, namely controlling operations cost and enhancing utilization of the Group’s fixed asset base. For the current financial quarter under review as an indicator, direct contribution increased slightly to 30.5% as compared to 29.3% for the preceding financial year ended 30 June 2017; b. Extensive build up in sales pipeline Leveraging on Scicom’s track record and experience in multilingual contact centre management, Scicom’s business development team has been actively participating in new tenders with estimated contract value of approximately RM105 million. The management further expects to substantially successfully convert outstanding tenders from the above pipeline to commence operations and contribute to the Group’s bottom line by the fourth quarter of the current FY.


Apex Healthcare Q3 FY2017 Results

Steady revenue growth was achieved across all business units, with increased contributions from pharmaceutical sales to the Government sector and contract manufacturing services

During the quarter, the Group’s pharmaceutical manufacturing operations secured certification for compliance with European Union Good Manufacturing Practice, opening future growth opportunities.


Paramount Corporation Q3 FY2017 Results

…following the completion of the Sale and Leaseback agreement with Alpha REIT to dispose of the Sri KDU campus under its asset-light strategy which generated a gain on disposal of RM77.8 million. With the completion of the Sale and Leaseback agreement with Alpha REIT, as part of its asset-light strategy,
the Group would continue to explore opportunities to enter into similar ventures in future.

With the enlarged K-12 segment, comprising Sri KDU and REAL Education which offer premium and more affordably priced alternative private and international schools respectively, Paramount Education is now able to reach a wider segment of the K-12 market. Sri KDU’s mark of excellence in quality education continues to prevail in the market. Following the success of PISA in 2012, Sri KDU International School achieved the International School Quality Mark (ISQM) Gold Award this year, the first in Malaysia and third in Asia to procure this award.


Eastern & Oriental Q2 FY2018 Results

In the past months we are beginning to see more enquiries and bookings for our existing projects in STP1 namely Andaman and Tamarind. Besides selling down our inventory to improve our cash position and net gearing levels, we are heartened by the numerous unsolicited interest in our non-core assets which we have identified for disposal.


Lay Hong Q2 FY2018 Results

The entry of NH Foods Ltd into the Company as a substantial shareholder recently has marked a major step forward for the Company’s chicken product manufacturing business in the form of new product development and market penetration.

The Company is on track with its planned expansion to increase our production capacity. Our egg production now stands at approximately 2.3 million eggs per day to date and is expected to grow to our target. At the same time, our broiler capacity will increase to cater to new requirements in our food processing taking into consideration our JV with NH Foods Ltd.

The Company is constantly reviewing its strategies and will capitalize on the strength of NH Foods to take the Company to greater heights. A new joint venture company under the name of NHF Manufacturing (Malaysia) Sdn Bhd has been set-up and is now actively working on its plant set-up and product development. As at to-date, a total of 11 products have been launched and the response has been encouraging. The Company is continuously researching on viability of new products to be developed and introduced to our production line. It is expected that new products will be launched in future.

A piece of industrial land in Selangor Halal Hub, Pulau Indah has been identified for the plant to be set up and is currently working on the factory and machinery layout. This is expected to be the site for the JV with NH Foods. Works to acquire and build the said factory is progressing in a timely manner in accordance to our planned timeline.


Evergreen Fibreboard Q3 FY2017 Results

The increase in revenue was mainly contributed by commercial run of new Particle Board Plant in Segamat and higher average selling price as the Group emphasis more on high premium products as well as impact from weakening of Malaysian Ringgit against US Dollar.

The slight decrease in profit was mainly caused by higher log and glue cost, couple with higher repairing and upgrading cost incurred on the stoppage line in Thailand plant.


Ge-Shen Corporation Q3 FY2017 Results

The Group is still looking towards factory expansion across the subsidiaries to increase factory space and manufacturing assets in order to, amongst others achieve higher sales, improving cost structure and gain economies of scale. The construction and renovation of the new facilities in Vietnam is in progress despite some delays and expected to complete by beginning of 2018. Total capital expenditure is expected to increase due to higher building specifications and factory facilities investment and is expected to improve the cost structure and increase production capacities in the Vietnam subsidiary in the long
run.


Vitrox Corporation Q3 FY2017 Results

…contributed from the increase in revenue recorded for Automated Board Inspection (ABI) and Machine Vision System (MVS). The increase was mainly due to higher demand from widen customer base and positive acceptance of our products.


Aemulus Holdings Q4 FY2017 Results

Aemulus continues to create growth through innovation and leadership in the ATE markets for semiconductor devices. The launching of our new RF tester, Amoeba 7600-S combines our latest technology with scalability. We believe that the technology is going to be able to serve the smartphone and tablet market well especially in the Far East region. Based on the current business trend, demand for ATE from the smartphone and tablet segments as well as the enterprise storage segment is expected to continue into 2018. The group is expecting revenue growth to further accelerate in the fiscal year 2018, led by ATE sales growth in the Far East region with US region complementing it.


Pentamaster Corporation Q3 FY2017 Results

The higher revenue recorded was mainly due to increase in sales from automated equipment and smart control solution system segment which was partially offset by the decrease in sales from automated manufacturing solution segment.


IFCA MSC Q3 FY2017 Results

To further accelerate innovation and growth within the property sector, IFCA has initiated an accelerator program with a primary focus to create greater value and solutions for the property sector together with the start-up community. In this program which is specifically focused on prop-tech, IFCA will review potential prop-tech start-ups for opportunities for investment and partnership to bring new solutions and business models into the market.


Century Logistics Holdings Q3 FY2017 Results

Following the ongoing synergy process, the Group also intends to tap on the extensive network and infrastructure of its major shareholder, CJ Logistics Group. The Group is currently setting up the necessary infrastructure to roll-out its parcel delivery operation and expects to commence the operation by the first quarter of year 2018.


Kejuruteraan Asastera Q3 FY2017 Results

To (i) grow its market share in Malaysia by increasing tendering activities, focusing on affordable housing sector and geographical expansion; (ii) strengthen its capabilities by growing its mechanical engineering services segment; and (iii) diversifying its revenue stream by providing maintenance services including upgrading, expansion, refurbishment, retrofitting and renovation projects.

Hartalega to launch ‘game-changer’ gloves next year

“Bacteria coming into contact with the glove surface will be exposed to the anti-microbial activity which, in independent testing, has achieved up to a five-log (99.99%) kill within five minutes of contact. We have successfully conducted production trials and further clinical studies are planned to quantitate the benefits of using antimicrobial medical examination gloves in clinical settings.”


Spritzer eyes export markets, to place out stake to Singapore fund

“We think that growth domestically has become a bit saturated now. So, it is a good move to explore overseas markets. The partnership with Dymon Asia Private Equity will take us to new markets and expand the business even further. They can help us with the export markets and bring the brand to overseas markets especially in the countries that they are already in. To start from scratch will be an uphill challenge and this partnership is a good way to do it. Dape would like to give its industry experience and broad networks to support Spritzer.”

Spritzer will build a single-storey automated warehouse adjacent to its current bottling plant with a built up area of about 105,820 sq ft. “The new warehouse will have an automated storage and retrieval system. The existing warehouse is operated manually and almost fully utilised now. The current warehouse will not be able to cater to our needs should inventory levels rise,” said Chuah.


MAHB dismisses competition fears in Istanbul

Some analysts believe that MAHB’s wholly-owned Istanbul Sabiha Gokcen International Airport (ISG) has benefited from the current Ataturk Airport’s space constraints as the latter is surrounded by urban areas, constraining cost-effective expansion. As such, the upcoming new airport may draw passenger traffic from ISG once it begins operations.

“We believe that both the new airport and ISG have two different markets to serve, especially considering that ISG is ideally located on the Asian side of Istanbul,” MAHB told The Edge Financial Daily. “It is strategically positioned not only as the airport serving the Asian side of Istanbul, but also as a de facto city airport, serving the whole of Istanbul. “Aside from that, ISG’s resilience compared to Istanbul Ataturk Airport during the geopolitical tensions in 2016 proved that travellers had a strong preference for our airport,” the airport group added.

It may also help MAHB reduce its exposure to lingering risks in Turkey while returning to its original intention of being a partner of ISG instead of fully owning it.


Scicom to expand digital space presence

“If you talk to anybody who has a proposition, it’s going to be an online proposition. We have all the infrastructure [for that], from building the application to doing the mobile apps to the payment gateways. So there is a huge market there [as] the future will be all e-commerce and because we have this unique set of skills where we understand customer relationship management, customer fulfilment, technical support, payment gateways, mobile apps, [and] application development — this makes all the difference. We can’t just be a call centre anymore, it doesn’t pay.”

“The strategy is to make e-government solutions a major contributor down the line, primarily as the margins are better, contract terms are longer and typically every year business increases as the population increases, so you would always have natural growth.”

“The trick is to get one new big business every year; that’s how you maintain your growth momentum. I wouldn’t necessarily agree there would be an impact; I think we have lots and lots of business in the pipeline; it’s just a matter of time to conversion.”


Mikro MSC to tap IoT to keep earnings growth momentum

“When we talk about new products, it is related to existing offerings. It’s more like an upgrade with new features, maybe with some elements of IoT. Rather than a stand-alone system, it will be an integrated system … everybody wants to have all these features but the pricing must be at a level that is right for businesses and our customers.”

Presently, the group commands about 50% of the local market share and has seen its business in Vietnam gain traction. Yim said Asean’s and Malaysia’s infrastructure growth stories are positive for Mikro MSC since its digital meters, relays and power factor regulators are used in high rises, as well as in mass rail transport systems being developed in the region.

In FY18, the group expects to complete its move to its new factory in Shah Alam — which it bought for RM11.7 million. The move is expected to cost it another RM5 million, including for the purchase of new equipment and machinery. “It gives us the opportunity to introduce new automation and other capacity that we could not do in the past as we have a larger space now,” Yim added.

Property market will be badly hit in 2018, says expert

Cheong pointed out that the RM12.26 billion is only from the primary market, which includes launches by developers. It does not include the secondary market, which is house owners seeking to sell their homes.

Cheong said this “generous payment mode” exists because developers are finding it hard to sell off their new properties. He said they are in danger of losing their bridging finance from banks if they fail to sell at least 40% of the total units. The bridging finance is used by developers to support their construction.

“This is where the danger starts. I predict if this continues, markets will crash within 24 to 30 months because consumers do not have the financial capacity to buy properties any more. Furthermore, developers who started building two years ago are expected to flood the market further with their units…So about RM16 billion of properties are waiting for buyers. But there is no demand. The reason is that people don’t have the money.”


Industrial property set to gain

The rapid growth of e-commerce, especially in Asia-Pacific, is creating new high-value assets that are now coming on stream. The industrial segment is a highly under-invested sector, as stock availability remained tight while rental rates had been on the rise over the past two years (over 30%).

The e-commerce boom will be a looming threat to retail malls, while the rapidly-growing office supply will continue to put rents under pressure. To tackle the challenges faced by the retail REITs, malls are shifting towards providing more lifestyle and food and beverage offerings, as opposed to just brick and mortar.


Will AIA, Great Eastern, Prudential list on Bursa?

There are 23 general insurers and 14 life insurers in Malaysia. Market share is more evenly distributed in the general insurance segment in terms of 2016 annualised gross earned premium, with local players comprising 52.1% and foreign players accounting for 47.9%. However, foreign names dominate the life insurance sector, with total market share of 81.7% in 2016 vs. the 18.3% of local insurers. AIA, Great Eastern and Prudential have a combined market share of 66.7% (in terms of gross earned premium).