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 2017.09.08

SCGM registers RM5.6m net profit

“We have witnessed eight consecutive quarters of double-digit growth in domestic sales of thermo-form packaging, not only because of higher demand from retailers following the ban on polystyrene packaging, but also because of its relative low-cost and space-saving in storage.

“Our upcoming new plant in Klang Valley, which is on track to commence by the end of this month, will be well-positioned to capture the demand from Central and even Northern Peninsular Malaysia.”

The group has allocated RM20 million in capital expenditure for machinery. With five thermoform machines and two extruders, the Klang Valley factory would have a production capacity of 5 million kg per annum.

Axiata unit makes its biggest deal

Axiata Group Bhd’s subsidiary edotco Group Sdn Bhd is buying more than 13,000 telecommunications towers in Pakistan for US$940 million (about RM4 billion) to strengthen its position as one of the world’s independent tower companies.

With its existing portfolio of over 26,000 towers owned and operated across six countries, the deal will effectively place edotco as the eighth largest independent tower company in the world and second largest multi-country tower operator globally.

Fajarbaru wants a slice of action in current construction boom

“We will continue to tender for construction projects. But you see, jobs coming from the property development side will be passed on to our construction arm and [will] keep it busy for years to come.”

…“has a good chance” of getting its hands on the anticipated 37km light rail transit 3 project which connects Bandar Utama to Klang, and that it had tendered for five contracts under the RM9 billion project, including for the development of a depot, viaduct and stations.

“By possessing these machines, this also makes Fajarbaru one of the few private organisations to own such equipment, giving us a significant competitive advantage in the bidding of new construction and maintenance jobs for rail-related projects in the future.”

Fajarbaru’s unbilled order book currently stands at about RM400 million and it is expected to last the group for at least two more years, according to its finance director Charles Tan. Its tender book, which consists of railway, infrastructure and building projects, now stands at about RM4 billion.

…the timber segment will “continue to generate significant contributions to the group’s revenue, on the back of stable average prices of timber products”.

Money changing biz in Malaysia expected to hit RM80b this year, says association

“Many tourists are still coming into Malaysia judging by the flight arrivals, also there is a high turnover in the money changing business from Malaysians who work in Singapore and Brunei, who convert their [higher denomination] currencies here.”

Ramasamy said the wholesale currency business, which recorded transactions totalling RM10.6 billion in 2016, is also expected to grow by approximately 40%. However, he noted that remittances are expected to drop by about 7% this year. Total transaction value of remittances had dropped 1.9% to RM34.4 billion in 2016, compared to RM34.9 billion in 2015.

According to BNM’s Financial Stability and Payment Systems Report 2016, the total amount of Money Services Business (MSB) transactions in Malaysia, consisting of money changing, wholesale currency and remittance totalled RM118.5 billion in 2016, up 14.7% compared to RM103.3 billion in 2015.