Company Notes 2017.10.13

LPI Capital Q3 FY2017 Results

“With its diversified distribution channels especially its strong agency network, Lonpac has continued to build its market share in the newly liberalised environment. Its gross premium income for the third quarter grew by 34.6% to RM416.6 million from RM309.6 million registered in the previous corresponding quarter. Lonpac’s profit before tax for the quarter under review similarly registered an impressive 20.3% jump to RM102.4 million from RM85.1 million previously. With its prudent underwriting policy and costs control measures, Lonpac managed to improve its combined ratio to a new record low of 63.9% for the third quarter of 2017, reduced from 65.0% reported in previous corresponding quarter. As a result, its underwriting profit registered a strong improvement by 19.9% to RM83.6 million from RM69.7 million previously, despite its claim incurred ratio having increased marginally to 40.3% from 38.9% previously.”

Lonpac has established a Digital Strategy Department to leverage on technology to distribute its products and to further enhance its services to our customers. We believe that investment in technology will enable us to further expand our business segment and strengthen our market position.


Zhulian Q3 FY2017 Results

We also look forward to improving the contribution from the MLM segments especially from our Thailand and Myanmar markets in order to drive growth momentum for overall Indochina market once we materialise our plan to enter Cambodia and Laos market. The Group will continue to adopt rationalisation in our business operations.


Atlan Holdings Q2 FY2018 Results

Duty free segment reported lower profit in current quarter and cumulative quarter as compared to the corresponding quarter and cumulative quarter in the previous year mainly due to lower revenue as lower demand from customers following the imposition of Goods and Services Tax at the border outlets and duty free zones with effect from 1 January 2017, coupled with higher management fee incurred. However, the decrease was partially offset by savings in transportation costs.


Top Glove Q4 FY2017 Results

The uptrend in sales revenue also came on the back of an increase in average selling prices (ASP) arising from a surge in raw material prices, as well as a strengthening of the USD over the course of FY2017. Additionally, more sales of nitrile gloves, which command a higher ASP, coupled with new capacity, also helped move sales revenue figures higher.

…the signing of a letter of intent to acquire the entire ordinary shares of Eastern Press Sdn Bhd, a printing and packaging material manufacturer for RM47.25mil. The proposed transaction is expected to provide the Group with synergistic benefits, enabling it to improve its supply chain coordination, thereby allowing for flexible planning and better delivery time in relation to the supply of packaging material for its glove products, as well as better cost and quality control.

Vitrox investing RM130mil to expand ops

According to Chu, the important growth segments are the automotive and telecommunication infrastructure industries.

“The report expects China to continue to be the world’s largest car market for the foreseeable future, and has upgraded its 2017 China forecast to 28 million units.”

“The total spending on endpoints and services will hit almost US$2 trillion in 2017.”

“We shipped out 106 units of advanced optical inspection and advanced x-ray inspection equipment for used in the electronic assembly industry. Only 1% of our shipment goes to the smart device segment. We are, therefore, not subjected to the volatility of sales in the smart device market. The second half of 2017 should see double-digit growth for all the four sectors over the same period last year and also the first half of this year.”


Choo Bee upbeat about steel price rally

“We have seen the price [of steel] really move up since July. It has hit [a five-year] high at the moment. At RM3,000 per tonne, it’s an extremely good price. It’s really a positive development for us. We’re seeing demand rising now. The construction industry is getting more active in the second half of the year. Since the third quarter, we have seen more orders coming in, and we expect the momentum to continue in the fourth quarter.”

Presently, its manufacturing segment makes up 40% of the group’s revenue, while its trading segment contributes the remaining 60%. The domestic market makes up the lion’s share or 95% of the group’s sales. Its only export market now is Singapore. Tan said Choo Bee intends to re-enter the US and the Middle East in the long run, but gave no timeline.

In the mean time, Choo Bee is looking to set up another new factory as part of its 10-year expansion plan. “Everything is still in planning stage … it will be in the Klang Valley. It will be near our existing warehouse in Kampar because we want to centralise everything. It makes more logistical sense,” Tan said. Choo Bee’s sole factory in Pengkalan, Perak, which produces about 110,000 tonnes per annum, is now running at about 75% capacity.


George Kent partners Siemens for HSR bid

Under the deal, George Kent and Siemens will form an engineering, procurement and construction (EPC) pre-consortium to prepare a joint offer on the EPC level to the special purpose company which shall bid for the development, financing, construction and technical operation and maintenance of the Kuala Lumpur-Singapore HSR.


Petronas Dagangan in joint venture to install EV charging stations

Through this tripartite partnership, Petronas Dagangan commits to install 100 ChargEV stations by 2018 and will explore strategic partnerships to increase the number of ChargEV stations gradually, in tandem with market demand. Petronas Dagangan will also look into installing solar PV panels at 100 selected stations. With this, the energy used to power the ChargEV stations will be fully renewable and completely carbon-free, making it truly green.


Rubber glove exports to hit all-time high

The Malaysian Rubber Glove Manufacturers Association (Margma), in a statement yesterday, said it had increased this year’s export sales target to RM16.2bil amid strong demand from overseas. The figure is almost RM3bil higher than what was achieved in 2016.

“As of the present situation, all glove manufacturers are oversold and selling beyond their capacity to produce by over three or four months behind due to demand and labour shortage issues,” Margma president Denis Low Jau Foo told StarBiz when contacted yesterday.

Despite the challenges, Low said rubber glove exports from Malaysia are expected to reach close to 150 billion pieces this year. It is estimated that exports from Malaysia accounted for two-thirds of global consumption.

“This is the more recent factor apart from the continued increase in hygiene awareness among the population worldwide. In China, the government has been actively closing vinyl glove factories which do not comply with environmental regulations. Due to this, there has been a vacuum over the past few months from the reduction of producers in China today. And I expect China’s actions to continue further in the near future. Over there, it is the vinyl gloves while over here, we have the nitrile and latex rubber gloves.”

Charting Naza’s direction

The focus of the second generation was to put a framework of corporate governance and professional managers in place at the key business divisions of the group. Nasarudin says his late father had about 100 active companies when he passed away and the group had no holding company. The problem they faced was the need to consolidate everything over the past seven years and put the right structure in place.

Apart from the auto business, which accounts for 60% of group revenue, the group’s other large business interest is in property development. That division, headed by Faliq, has seen sales rise from RM200mil to about RM1bil and is said to be valued at RM3.5bil – ripe for a listing on the stock exchange. It has 400 acres of land for mixed integrated development in the Klang Valley, but the weak sentiment in the domestic market has forced it to look abroad for opportunities. “We are sitting on very strategic land bank and with Platinum Park, we are the second-largest land owner at KLCC. At KL Metropolis, we are sitting on over 70 acres. When it comes to prime land, we are taking our time in realising that value,” says Faliq.


Malaysia Airlines mulls stake sale to another carrier

“It’s the trend these days; that’s what’s happening. Other airlines, they take a portion of somebody else, get really close [working] together … what it does is it generally lifts overall value, and you have other commercial operation opportunities, maybe you can have joint purchasing, maybe you cooperate on aircraft, you have the same product line, that’s the trend where the industry is going, and it makes a lot of sense. It allows for balanced growth. If you look around the world, a lot don’t have partners in Southeast Asia.”

Bellew acknowledged that Malaysia Airlines will remain loss-making in FY17 which is within expectations. “I think we are on track to be profitable in the second half of next year.”

Malaysia addressing inaccurate claims in EU draft palm oil report

The European Parliament had also endorsed the certified sustainable palm oil (CSPO) plan for Europe-bound vegetable oil exports to ensure that they are produced in an environmentally sustainable way.

Describing the draft report as the “wish list” of MEPs, Kalyana stressed that the EU Parliament has no rule-making authority. “It’s not a EU policy; it’s just recommendation from the parliament,” Mossenlechner told reporters.

The resolution calls for the EU to discontinue the usage of vegetable oils in biodiesel by 2020 on the grounds that they were allegedly produced in an unsustainable manner leading to deforestation.


Digital banking penetration to exceed 60% by 2018

This was well below the more than 90% penetration seen in South Korea, Australia, Singapore, Hong Kong and Taiwan, but above the rates of Indonesia, Thailand and the Philippines.

“Phase one of fintech disruption involved fintech start-ups disrupting the banking industry by offering their services directly to consumers, completely independent of banking industry players. However, now fintechs have realised how costly it is to acquire customers on their own, so there is a shift seen in these start-ups to providing business-to-business solutions, so they are looking for partnerships with bigger and more established banking players to offer customers a joint value proposition.”


Here’s why Malaysians can’t afford a house

Just 20 percent of new Malaysian housing launches in the first quarter were priced below 250,000 ringgit ($59,000), down from 33 percent between 2010 and 2014, according to the central bank’s “Housing Watch” website. The bulk of new homes cost between 250,000 ringgit and 500,000 ringgit. The median annual household income is estimated at around 63,000 ringgit.

Only about half of people living in Kuala Lumpur own a home, while nationwide the number was 72.5 percent at the last census in 2010. Demand is set to rise: the median age of Malaysia’s 31.7 million people is 28 years and the nation’s urban population is growing at an average 4 percent a year, among the fastest pace in East Asia, according to the World Bank.

“The focus should be on building houses which people can afford, not building expensive houses and then trying to push them, and then complaining that the banks are not giving loans,” he said. “The reason people are having problems getting loans is because the houses are not affordable. It’s beyond their repayment” ability, he said.


ABM ‘strongly refutes’ recent REHDA claim on difficulty to secure housing loans

The overall housing loan approval rates remains high at 73% of the applications in the second quarter of 2017. Furthermore, ABM said 72% of the housing loan borrowers are first-time house owners under the affordable home category.

ABM said its 27 member banks take an average of two to nine working days to process a housing loan application with complete documentation submitted by the applicant. “Therefore, the 60 to 90 days taken for loans approval as stated by Rehda is not reflective of the speedy approval process of housing loans by banks.”


Malaysians’ median monthly household income rises to RM5,228 in 2016

Seven states surpassed the national median monthly household income of RM5,228, namely, the Federal Territory (FT) Kuala Lumpur (RM9,073) FT Putrajaya (RM8,275), Selangor (RM7,225), FT Labuan (RM5,928), Johor (RM5,652), Melaka (RM5,588) and Penang (RM5,409).

On consumption expenditure, he said Malaysians spent an average RM4,033 a month, an increase of 6% from 2014. “Almost 70% was spent on four main groups, namely, housing, water, electricity, gas and other fuels (24%), food and non-alcoholic beverages (18%), transport (13.7%) and restaurants and hotels (13.4%). The scenario is in line with the composition of a developed country’s spending pattern.”


Malaysia should ease migration policy

“In receiving countries, foreign workers can fill labour shortages and promote sustained economic growth, if migration policies are aligned with their economic needs. Inappropriate policies and ineffective institutions mean that the region is missing opportunities to gain fully from migration. These restrictive policies are partly influenced by the perception that an influx of migrants would have negative impacts on receiving economies. However, there is evidence to the contrary.”

All said, Malaysia and Singapore have the lowest international labour mobility costs in Asean, which reflect their openess to globalisation, their efforts to develop migration system that meet labour market needs and their geogrphic centrality in the region.


Minimum wage to go up

This would be the second time in three years that minimum wage levels in the country have been revised. In July 2016, The minimum salary was raised to RM1,000 from RM900 in Peninsular Malaysia, and to RM920 from RM800 in Sabah, Sarawak and Labuan.

“We know that the minimum wages order must be reviewed at least once in two years. The review will look at the ability of the employer to pay the minimum wage which is a responsibility that is very challenging to ensure that the minimum wage policy meets all objectives”, Riot was quoted by Bernama as saying.

Company Notes 2017.08.25 (Part 3)

Kossan Rubber Industries Q2 FY2017 Results

With the completion of the commissioning of Plant 16 in end-July, the existing annual glove production capacity of the Group has since enlarged to 25 billion pieces, an increase of 3.0 billion pieces of nitrile gloves with the patented Low Derma technology. This plant is expected to contribute to the Group’s earnings gradually from the end of third quarter onward.

Keeping up with the expansion momentum and in need of new glove capacity to cater for increasing demand for the Low Derma technology nitrile gloves, the Group has since commenced the construction works for Plant 17 and 18. These 2 new plants which are equipped with high speed dipping technology and a high degree of automation are capable of producing up to 4.5 billion pieces (1.5 and 3.0 billion pieces respectively) of nitrile gloves per annum once completed in 2018.

The construction works of the integrated Research and Development cum Training Centre (“RDTC”) are progressing well and are expected to complete by end of the year. The RDTC once completed, will propel the Group to another level of achievement and breakthrough of the Group’s R&D efforts as the centre will focus on all areas of new innovations and quality improvements of our products. It will also involve research into engineering and robotic implementations to provide higher automation systems to new and existing facilities with the aim of lowering dependence on manpower.


Lee Swee Kiat Q2 FY2017 Results

The expansion and modernization project for our latex division is near completion. The new line would potentially increase our capacity by 30% and increase the varieties of latex pillows in productions.

Key Raw Material – Centrifuged latex price which had risen by more than 80% in Quarter 1 for the current financial year, has softened recently. The lower latex price would be beneficial to the Group’s margin in the coming months.

The Group is negotiating to acquire the plant & machineries of a small bedding company. The Group would also absorb the key managers as well as a group of skilled production workers from that company.


Perak Transit Q2 FY2017 Results

The outlook of integrated public transportation terminal operations segment is expected to the favorable driven by the Group’s plans for expansion in other parts of Perak, whereby the construction of the Terminal Kampar has commenced and it is on schedule. It is expected to be completed by the 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.


Thong Guan Industries Q2 FY2017 Results

The group is scheduled to commission its second nano layer stretch film line and its 8th PVC food wrap line during the current quarter.


GFM Services Q2 FY2017 Results

The Pangkalan Ikan Central Sdn Bhd LKIM deep sea fishing port facilities management contract located at Tanjong Bako, Kuching Sarawak commence operations on 22 July 2017. This project will contribute positively to the Group earnings this year.


Sime Darby Q4 FY2017 Results

Accordingly, the results of the Plantation and Property businesses have been classified as Discontinuing Operations and, upon completion of the Proposal, both Sime Darby Plantation Berhad and Sime Darby Property Berhad would be deconsolidated from the Sime Darby Berhad Group. Going forward, the Group’s businesses would be Industrial, Motors, Logistics and Others.


Luster Industries Q2 FY2017 Results

With the successful rationalization of the manufacturing business and successfully position itself to be an Original Equipment Manufacturer (OEM), manufacturing segment has shown positive growth in profitability.

Pan Cambodian Lottery Corporation Limited (PCL), a 60% owned subsidiary of LIB has successfully grow the business in gaming & leisure segment by increasing the network of agents. The Group is also looking at strategy to increase the number of the digit game products. As for the plan to establish a gaming entertainment center, PCL is looking at the option of leasing the land and building and is currently in the process of discussion with several gaming operators.


DRB-HICOM Q1 FY2018

In line with DRB-HICOM’s effort to turnaround PROTON, the Group had on 23 June 2017 entered into a strategic collaboration with Zhejiang Geely Holding Group Co., Ltd. (“ZGH”) vide a share subscription agreement for ZGH to acquire 49.9% equity interest in PROTON Holdings Berhad (“PROTON”) and for PROTON to divest its indirect 100% entire stake in Lotus Advance Technologies Sdn. Bhd. to ZGH and Etika Automotive Sdn. Bhd. The entry of ZGH as the Strategic Partner is expected to improve PROTON’s competitiveness through infusion of competitive products and technology, advanced manufacturing systems, quality and brand confidence which will allow PROTON to improve its sales domestically and globally especially in South East Asia and the right hand drive markets. In addition, PROTON will also be able to leverage on ZGH Group’s advanced technology, global resources through its extensive business network as well as global best practices. An Extraordinary General Meeting will be convened on 30 August 2017 to seek the shareholders’ approval on the above mentioned transactions.


OpenSys Q2 FY2017 Results

For the remainder of this year, we will continue to roll out even more Cash Recycling Machine from the robust orders we have received in the second quarter of this year.


Muda Holdings Q2 FY2017

The Board believes that the upward price trend of industrial paper will support the domestic selling price for the rest of the year. However, tight supply of waste paper in the domestic market which will translate into higher production cost, coupled with higher depreciation charge and interest cost from the new corrugating production line, will assert negative pressure on the profitability of the Manufacturing Division.


Mega First Q2 FY2017 Results

Being a coal fired thermal plant, the tightening environmental protection policies in China also have the effect of pushing up steam production cost. Heavy investments are necessary to add or modify existing plant and machinery to comply with the new emission standards. Earnings contribution from China is therefore expected to remain weak.


Transocean Holdings Q2 FY2017 Results

Logistics division derived revenues and profits mainly from multinational electronic factories shipments for “loose cargo” or consol cargo trucking services for the routes Pg/Sin/Pg and Pg/Thai/Pg. Continuous pull out of multinational factories from Malaysia particularly the electronic companies from Penang has reduced the cargo volumes and revenues. Furthermore, with the improved infrastructure of Air and Sea Ports in Malaysia, fewer importers and exporters are using Singapore Air and Sea Ports nowadays.

Traditional long haul chartered load sector required a large fleet of trucks operating with low margins.

The group had switched to car parts sector to improve revenues moving consol cargo from Thai/Mal/Sin. Steps also had been taken to convince existing customers to accept the “monthly price adjustments format” based on the average of weekly fuel price adjustment announced by the government to pass on the extra cost to the customers. The effect of the price adjustments will only materialize during the 3rd quarter.


Scicom MSC Q4 FY2017 Results

During the financial year, the Company recognized a tax incentive representing 70% tax exemption on its statutory income from outsourcing services. The Company’s achievement of the conditions and KPIs have been presented to the administrator, however, the assessment by the administrator has not been completed as at 30 June 2017. The Directors have assessed that the Company is able to meet the requirements for the tax incentive after taking into consideration that the Company has substantially met the stipulated conditions and KPIs, and their historical experience where confirmations from the administrator were obtained to recognize the tax incentive when conditions and KPIs were substantially met.

Therefore, the Directors are of the view that there is a reasonable basis for the Company to recognize the tax incentive during the financial year ended 30 June 2017.

Where the final outcome of the assessment of income tax exemption by the administrator is different from the Company’s assessment, this will result in higher income tax expense on the statutory income from outsourcing services recognized during the financial year.


Padini Holdings Q4 FY2017 Results

…the positive growth from the existing stores with 8% same stores sales growth… the opening of fourteen new stores during the current 12-month quarter.

There is an increase of RM22 million on inventories losses, inventory written-off and inventory written-down as compared to last financial year. This is an initiative of the management to embark on a more stringent implementation of the inventory policy with the use of stricter write off/ write down estimates. Excluded the effect of the additional inventories losses, the gross profit margin stood at 40.8%.


N2N Connect Q2 FY2017 Results

The acquisition of AFE, which was completed on 31 March 2017, enhanced our coverage in Malaysia, Singapore, Indonesia, Philippines and the United States. With the addition of Hong Kong, Macau, and Vietnam resulting in N2N being one of the largest Asian base platform provider. The acquisition of AFE will positively contribute to the Group’s performance in the future. We are assessing a few more potential targets for acquisition to establish a Pan Asia presence and the network of inter broking activities powered by our latest platform.

The Philippines business is expanding beyond the provision of the platform to the Philippine Stock Exchange(“PSE”) as leading brokers are now coming directly to N2N to obtain a more advanced version of the trading system to complement the services currently obtained from N2N via PSE. New agreements are in the pipeline and more demonstration to prospects, including the Back Office Settlement system, which had gone live in April 2017.


Choo Bee Metal Industries Q2 FY2017 Results

Of late, flat strip products have begun to pick up in price prior to earlier moderation, mainly due to speculative buying activities in China’s futures market. The pick-up in prices will augur well for tubular products and manufacturers where they are expected to raise their selling prices for finished products in tandem with the rise in iron ore prices. However, global demand ex-China remains soft and as such, sustainability of this price increase remains uncertain.


Tomypak Holdings Q2 FY2017 Results

With the completion of the new plant and the successful commissioning of the first more advance and efficient new printing and lamination machines, the Group is in the midst of working with major existing customers and potential customers to qualify this new plant to service these customers. Upon the successful certification of this new production process, the Group expects the overall performance to improve.

Another three sets of advance and efficient machines are schedule to be delivered in the last quarter of 2017, which will be commissioned and ready for production towards the end of the first quarter of 2018. The Group expects these machines to further improve the overall productivity and efficiency.


Hexza Q4 FY2017 Results

Due to lower sales volume and taking into consideration the Excise Duties (Amendment) Order 2016, whereby the excise duty of potable alcohol will be levied on the finished products and paid by the bottlers, our ethanol division’s revenue, which previously included excise duty for potable alcohol, was 66.1% lower.

The impact of the steep hike in excise duty for potable alcohol is still being felt as manufacturers of locally bottled alcohol products continued to adjust to the new market dynamics. In view of the challenges in the potable alcohol market, our strategy is to intensify our marketing efforts and deepen customer relationship. Our potable alcohol sales may be affected by new regulation introduced by the government but we expect our ethanol division to remain profitable during the financial year ending 30th June 2018.