Company Notes 2018.02.16

CSC Steel Q4 FY2017 Results

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


Hexza Q2 FY2018 Results

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

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


Weida Q3 FY2018 Results

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

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

Elsoft to ship more test equipment in first half-year

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


Wegmans aims to boost exports after doubling capacity

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

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

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

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


Ninja Van to use funds raised to boost Malaysian ops

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

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

Singapore may start taxing Amazon and Lazada

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

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


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

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

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


‘Home ownership is not for everyone’

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

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

Curated Insights 2018.01.07

The $100 billion venture capital bomb

Son must deploy $20 billion, or a fifth of the fund, every year for the next five years to meet investors’ terms and their expectations in a market that many already consider overvalued.

Son explained to Hauser that there was a big new wave of computing coming — the sixth, in Hauser’s estimation, following on from the mainframe, the minicomputer, the workstation, the PC, and mobile. This next wave would automate processes in industrial manufacturing and on consumer devices. Son said Arm could uniquely capitalize on this new order as the leading processor manufacturer behind the Internet of things.

“This is the company,” Son said in a televised interview. “No one can live on the earth without chips — it’s in cars, refrigerators, everywhere. So if chips are the things everyone needs, and one company has a 99 percent market share, there must be a barrier. They’re not monetizing well enough. But if I own it, we can monetize it much better. I think the company is going to be more valuable than Google.”

Aside from its 95 percent domination of smartphones, Arm has 34 percent of the global processors market. There are currently 110 billion Arm processors in the world. The company has forecast a total of one trillion by 2035. As the applications get more advanced — be that a car, a washing machine, or a drone — they demand smarter processors, which are more expensive to produce in-house. “We price our fee at a tenth of the cost of what it would cost to develop it yourself,” Thornton notes. “So when you’re staring down the barrel of $100 billion and ten years to develop that processor yourself, we can say it will cost $10 billion from us and you can have it instantly. This is why we have expanded so rapidly over 20 years. One by one, design team by design team, we will become the processor of choice in those markets.”

“Arm Holdings has an insight into the future. When Arm makes a contract with a new business venture, providing the Internet of things for automobiles or farming, Arm will know what is in the pipeline for the Internet of things two years ahead.” SoftBank, in turn, gets a head start on funding companies for a market that doesn’t yet exist.

Analysts say SoftBank, which declined to comment for this article, is at work on vertical integration: Foxconn builds devices, Arm supplies the chips, and SoftBank-owned Sprint and OneWeb, an Internet satellite company, operate the networks on which the devices run. Vision Fund portfolio companies will reap the benefits of these partnerships. SoftBank sits in the middle, introducing high-growth prospects from the fund to one another and to the infrastructure on which their success rides.

Units of time are the new currency

Buffett’s not wrong, but technology has changed the nature of competition. While businesses were once considered only as valuable as the dividends they paid out, the “impenetrable” moats that let companies spit off excess cash are dwindling. A moat today is simply a temporary buffer that helps a company get ahead of the next innovation cycle. When you compound time, you’re creating and recreating value faster than the current innovation cycle.

This is the formula for compounding time into a utility and beyond: 1) Reduce friction for your customers and yourself. Use the time you save to build your utility. 2) Compound time by investing in the ecosystem and getting other companies to integrate with your product. Other companies will integrate with you to save themselves time, building on top of your platform and giving you time to invest in the next great business. 3) Buy other people’s time to defend your utility and stay relevant. Smartly acquiring new products helps you maintain your utility.

Jeff Bezos: “All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions.” While this created more work in the short-term, it broke Amazon down into hundreds of micro-services that communicated via APIs. By making all services accessible via API, Amazon drastically reduced the time it took to deploy new features and functionality.

Google’s machine-learning algorithms are reportedly five to seven years ahead of the competition. By keeping TensorFlow to itself, Google would have maintained its lead time — similar to how moats are created by stockpiling assets. But by taking the opposite approach and giving TensorFlow away for free, Google created a utility.

Building a traditional moat will be antithetical to building a great business. The only way to survive is to extract the core of your business and spread it out to compound returns on time. First, you have to save time for your customers and even yourself. Then, you have to invest it forward by co-operating with other products in your ecosystem. Finally, you have to acquire new innovation to maintain your lead.


Why has Waymo taken so long to commercialize autonomous taxis?

To estimate the rate at which passengers will tolerate autonomous taxi errors, we analyzed the manually driven car statistics to set the hurdle. On average human driven cars break down roughly once every 50,000 miles and crash once every 240,000 miles,2 thus offering perspective on acceptable tolerance rates for autonomous vehicle SIFs and UFs.

Supporting this hypothesis, its cars seem to have had difficulty making left turns. One possible explanation is that it has chosen not to vertically-integrate, outsourcing vehicle production to partners like Fiat Chrysler and then taking engineering shortcuts by integrating its sensor suite into a product manufactured away from its controls. In contrast, Tesla’s and Cruise Automation’s (GM) manufacturing operations are vertically-integrated, which could become an important source of competitive advantage.

We are skeptical of that negative conclusion for a number of reasons. Today, Waymo probably is trying to maximize its failure rate to identify faults and root them out. Some stretches of road are trickier and some intersections more difficult to navigate than others.

Getting my fix of Starbucks

SBUX has been successful engendering loyalty from its customers as well- Starbucks Rewards has 13.3mm members in the US and an incredible 36% of all dollars tendered in the stores is transacted through the loyalty program (US Company operated stores).

In the US- the average new SBUX location generates revenue of $1.5mm (average unit volume or AUV) and generates a year 1 store profit margin of 34% or $510k. Based on an average store investment of $700k in the US, this results in an ROI of ~75%. Compare this to a McDonalds with an ROI of ~30%, an average fast casual operator at ~40% or even Chipotle (at its peak before the food illness issues) at ~70%. This means that the average SBUX store earns back its investment a third of the way into its second year – very compelling unit economics. The math likely changes with higher investments in Reserve stores and premium Roasteries in the coming years but if these seek to elevate the overall SBUX experience and thus drive pricing power through the entire system, it’s the right move for the long term.

Starbucks is a well-positioned company led by a smart management team playing “the long game”. While store growth in more mature markets and continuing competition in premium coffee may be a drag to future growth, Starbucks benefits from a moat in the form of a strong brand and a loyal, repeat customer that can be extended into more markets and into more than just coffee. And I believe that this moat is sustainable under the right leadership team that understands that Starbucks delivers an experience that extends far beyond just selling coffee. The sustainability of the moat is predicated on continued investment to elevate the store experience and thus drive pricing power. Management has demonstrated a willingness and enthusiasm to invest and has ample runway to do so while also rewarding shareholders with share repurchases.

How big tech is going after your health care

Now, as consumers, medical centers and insurers increasingly embrace health-tracking apps, tech companies want a bigger share of the more than $3 trillion spent annually on health care in the United States, too. The Apple Heart Study reflects that intensified effort.

Each tech company is taking its own approach, betting that its core business strengths could ultimately improve people’s health — or at least make health care more efficient. Apple, for example, has focused on its consumer products, Microsoft on online storage and analytics services, and Alphabet, Google’s parent company, on data.

Last year, Facebook made it more appealing for pharmaceutical companies to advertise their medicines on the platform by introducing a rolling scroll feature where drug makers can list their drug’s side effects in an ad. Such risk disclosures are required by federal drug marketing rules.


Western Digital, Nvidia on board with ‘RISC-V,’ so pay attention, says Benchmark

Any investor interested in learning how adoption of RISC-V stands to disrupt the CISC and RISC processor domains, including discrete processors and/or processor IP (cores and architectures) embedded within simple MCUs as well as advanced ASICs. Additionally, RISC-V stands to disrupt R&D development roadmaps for merchant and captive SoC companies. For example, if Western Digital truly intends to adopt RISC-V in storage products, Marvell will need to reconsider usage of Arm cores. This could lower the upfront licensing and royalty costs for Marvell; however, it may require a revamping of Marvell’s storage controller design flow. Processor IP companies such as Arm Holdings, Synopsys, Cadence Design, Imagination Tech and even CEVA, Inc. could see an impact.

China removes 1,400 baby formula products from shelves

The regulations, effective Jan. 1, require factories making formula to register those products with China’s Food and Drug Administration and pass safety inspections. Plants are limited to working with three brands, and those brands can make only three different products each. China’s FDA has approved 940 infant-formula products from 129 factories so far, the agency said. That compares with more than 2,300 formulations available to parents before Jan. 1.

That vaulted Nestle, Danone and Reckitt Benckiser Group Plc into the top spots in the $20 billion market, according to Euromonitor International.

Capturing those families will be crucial. With the relaxation of China’s one-child policy, Reckitt Benckiser anticipates about 20 million babies being born annually, which could trigger an annual growth rate of at least 7 percent in the infant-formula category during the next five years, said Patty O’Hayer, a spokeswoman. The company bought Mead Johnson for $16.6 billion last year, and its Enfa and Enfinitas brands were approved for sale. Asia generated half of the Enfa lineup’s $3.7 billion in sales for 2016.

The Paris-based company wants to deploy technology such as laser printing to make tampering more difficult and QR codes to ensure traceability of a product back to the factory — moves intended to assure Chinese parents concerned about food safety.

Cancer deaths fall to lowest rate in decades

While a number of breakthrough, high-cost drugs have improved the outlook for people with some deadly cancers, the biggest cause of the decrease in deaths is that Americans are smoking less. The report found decreased smoking rates, and improved detection and treatment, have led to sharp declines in the rate of lung, breast, prostate and colorectal cancer deaths.

How blockchain technology is redefining trust

‘Regulators will like that blockchain-based transactions can achieve greater transparency and traceability– an “immutable audit trail”,’ Masters says. In other words, it could help eliminate the kinds of fraud that come from cooking the books.

How do typical loans work? A bank assesses the credit score of an individual or business and decides whether to lend money. The blockchain could become the source to check the creditworthiness of any potential borrower, thereby facilitating more and more peer‑​to‑​peer financing.

Consider traditional accounting, a multi-billion industry largely dominated by the ‘big four’ audit firms, Deloitte, KPMG, Ernst & Young, and PwC. The digital distributed ledger could transparently report the financial transactions of an organization in real time, reducing the need for traditional accounting practices. And that is why most major players in the financial industry are busy investing significant resources into blockchain solutions. They have to embrace this new paradigm to ensure it works for, not against, them.

In the patent, Goldman describes SETLcoin as having the potential to guarantee ”nearly instantaneous execution and settlement“ for trades. It would mean all the capital the bank is required to keep in reserve, to hedge against the risk of transactions if they don’t settle, would be freed up.

The blockchain raises a key human question: How much should we pay to trust one another? In the past year, I’ve paid my bank interest and fees, some hidden, to verify accounts and balances so that I could make payments to strangers. I’ve spent thousands of dollars on lawyers to draw up contracts because I am not quite sure how another person will behave (and to sort out a few incidents where trust broke down). I’ve paid my insurance company to oversee the risk around my health, car, home, and even life. I’ve paid an accountant to reconcile an auditing issue. I’ve paid an estate agent tens of thousands of dollars essentially to stand between me, the prospective buyer, and the current owner to buy a house. It would seem we pay a lot for people to lord over our lives and double-check what’s happening. All these ‘trusted intermediaries’ are part of the world of institutional trust that is now being deeply questioned.

Today, it is circa 1993 for blockchain technologies. Even though most people barely know what the blockchain is, a decade or so from now it will be like the internet: We’ll wonder how society ever functioned without it. The internet transformed how we share information and connect; the blockchain will transform how we exchange value and whom we trust.


Bitcoin-is-Worse-is-Better

It’s not the decentralized aspect of Bitcoin, it’s how Bitcoin is decentralized: a cryptographer would have difficulty coming up with Bitcoin because the mechanism is so ugly and there are so many elegant features he wants in it. A cryptographer’s taste is for cryptosystems optimized for efficiency and theorems; it is not for systems optimized for virulence, for their sociological appeal. Centralized systems are natural solutions because they are easy, like the integers are easy; but like the integers are but a vanishingly small subset of the reals, so too are centralized systems a tiny subset of decentralized ones. It may be that Bitcoin’s greatest virtue is not its deflation, nor its microtransactions, but its viral distributed nature; it can wait for its opportunity. If you sit by the bank of the river long enough, you can watch the bodies of your enemies float by.

Gyms ditch machines to make space for free weights

In recent years the 420-location chain has scaled back cardio and weight machines to 50% of floor space from about 66%. The gym devotes the other half of floor space to free weights and functional training, which includes things like kettlebell swings and body-weight exercises with TRX suspension straps. It has also expanded its studio group-exercise classes.

“I prefer to do classes, because the teacher pushes me farther than I would push myself,” she says. “I get bored on cardio machines or on the weight machines.”

The shift away from machines is even more pronounced overseas. In 54 gyms of varying price levels in the U.K., members’ time spent on cardio machines dropped 7% between 2013 and this year, even as the total number of gym visits increased, according to an analysis from Edinburgh-based tracking firm GYMetrix.

The Remarkable Early Years of Warren Buffett (Part 1)

The risks of buying a home that’s too big

“The biggest house isn’t necessarily the best house or even the best investment. An older, smaller home with a shorter commute, bigger lot or greater remodel potential may appreciate more. In fact, many fancy new homes can lose value quickly if a developer builds newer homes nearby, while older areas may have more enduring land value.”

“You want enough space to live comfortably, but you don’t want to heat, clean and pay taxes on space you aren’t utilizing.”

Long-term returns. The money saved in buying a right-size home could pay dividends in the future—literally. A $20,000 savings each year over the life of a 30-year mortgage could result in a nearly $1.2 million nest egg if invested in a stock market portfolio earning 4% a year, Ms. Adam says. The annual savings, when compounded over time, is likely to exceed the appreciation in your home’s value over the term of the mortgage.

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).

Company Notes 2017.11.10

PIE Industrial Q3 FY2017 Results

One major customer of our EMS segment changed its receiving system in March 2017. As there was a major technical glitch discovered in their new system, the customer is unable to process their payments to the Group. Based on our Group’s policy on credit control, we are required to provide impairment for doubtful debts which are overdue over a certain period, therefore a provision of RM11.243 million is made during this quarter. Management estimates that these debts will be able to collect by the fourth quarter and maintaining such provision during this quarter is necessary in accordance with our Group’s policy.

The major source of revenue and earning of the Group comes from its manufacturing segment (98%). For EMS activities (77%), orders are expected to increase steadily from existing customers and potential customers through its fully built-up vertical integrated manufacturing facilities which have been in operation for the past 5 years.

Revenue derived from the manufacturing activity of raw wire & cable (18%) will continue to grow, with consistent profit margin for the rest of the financial year. The cost of its two main raw material i.e copper and PVC are expected to increase in the near future, enhancing its selling price and securing more orders from its customers.


Hartalega Q2 FY2018 Results

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. Hartalega NGC is on-schedule to meet this rising demand with progressive commissioning of Plant 4 and started the construction of Plant 5. The increasing contribution of NGC to Group sales revenues would help to consolidate margins and contribute further to Group earnings.


Tasek Q3 FY2017 Results

The Board expect the prospects for the rest of the financial year to remain challenging due to the weak prices of cement caused by the intense pricing competition and over capacity. Infrastructure roll-outs may be insufficient to make up for the present lull in demand for cement primarily caused by the soft property market.


Shangri-La Hotels Malaysia Q3 FY2017 Results

In particular, Shangri-La Hotel Kuala Lumpur is expected to achieve improved operating results for 2017 as it continues to reap the benefits of its newly renovated banqueting facilities and all-day dining restaurant. In addition, Hotel Jen Penang should continue to grow well, after the completion of its major renovation programme in June 2017. The hotel’s enhanced room product and facilities should support further increases in occupancy and room rates.


Petronas Dagangan Q3 FY2017 Results

In the current quarter ended 30 September 2017, the Group has disposed 100% equity interest in a subsidiary, PETRONAS Energy Philippines, Inc (“PEPI”) and 40% equity interest in an associated company, Duta Inc to P-H-O-E-N-I-X Petroleum Philippines, Inc., an external party of the Group for a fair value consideration of RM560.5 million resulting in a gain on disposal of RM424.6 million.

Malaysian CAB’s Indonesian venture to start

While the construction of the entire farm will take up to five years, it is hoped that by the second year of construction, the Indonesian operations will have the capacity to produce some four million broilers per month and three million eggs per day.

“According to an Orissa International report, global poultry consumption is predicted to grow by 27% to 28 million tonnes by 2023 – with 40% of that growth in Asia. In South-East Asia, the growth of incomes, population, urbanisation has translated into a growth of demand for animal products. The surge in demand for animal protein resulted in a significant increase of meat – mainly poultry and pork. Poultry is the largest livestock sector in Malaysia, Thailand, and Indonesia. Malaysia’s poultry meat per capita consumption is among the highest in the world, consumed 1.8 million chickens and 2.8 million chicken eggs daily.”

“Indonesian poultry production is estimated at €10bil (RM49bil) in 2015 with broiler meat accounting for three-quarters of the total. The poultry meat sector is projected to grow 70%-90% by 2020 if GDP increases by 6% per annum. The layer industry is also projected to grow at 50%-60% of the broiler sector.”


Not your typical manufacturer

Being a Tier-1 manufacturer, with research and development (R&D) and engineering capabilities that match that of a design house’s, Lim said Salutica co-develops products with brand owners instead of just manufacturing based on specifications given by clients.

However, maintaining that Tier-1 manufacture’s standard comes with a high cost, Lim admitted. Unlike many second- or third-tier manufacturers, Salutica is Responsible Business Alliance (RBA)-compliant, a code of conduct that Lim said the top 100 technology companies in the world — including many of its customers — subscribe to and impose on their Tier 1 suppliers.

“Fobo Ultra for commercial vehicles was more complicated than we initially thought. Negotiations with fleets and logistics firms took longer than expected because most fleet owners were sceptical about a product that was made in Malaysia. But [sales] have picked up slightly at home,” said Lim. All MRT (mass rapid transit) feeder buses in Malaysia under the Volvo brand, according to him, have been equipped with Fobo Ultra since the end of last year.


Kronologi to enlarge footprint through Quantum

“With this development, we could leverage on the collective experience of the enlarged team for best practices for vertical solutions and provide additional analytics, which include artificial intelligence. Currently, we’re collaborating with some other technology players to provide these additional solutions. We’re anticipating some form of AI solutions by next year but it’s an ongoing process for us.”

“Moving forward, once the acquisition is completed, Hong Kong will play an important role. Similarly, earnings growth should be quite evenly distributed among Singapore, India, Hong Kong and Southeast Asia (excluding Singapore).”


Hexza’s bottom-line to take a hit from RM28.5mil provision

This is not the first time Hexza has made an impairment loss of finance lease receivable due to the Tembusu Industries Pte Ltd’s payment default. In FY17, the Ipoh-based company made an impairment loss amounting to RM6.95mil, being the amount due but not paid by the lessee.

To recap, on Jan 30, 2015, Hexza inked an agreement with Tembusu to buy part of the equipment for a 8MW heavy fuel oil power generation system located in Myanmar from Tembusu for US$6mil (RM25.3mil), after which Tembusu would lease back the equipment from Hexza at a monthly rental of US$130.205 (RM549,937) for 10 years.


F&N poised for stronger FY18 after restructuring

“Now we want to build exports as our third pillar on top of our existing markets in Malaysia and Thailand,” said Lim. The company is looking to achieve stronger top and bottom lines — at levels seen in FY16 — next year, he added. “We have set a target for annual exports to hit RM500 million by FY20,” said Lim. The company is not looking to export excess capacity, he said, but will instead increase its output for the segment.

F&N is undergoing a three-year RM500 million capacity expansion plan which it initiated in FY17. It has completed four milestones with five more upgrades to go, which Lim said are on track to be completed separately in FY18 and FY19.

“We are also de-bottlenecking some facilities. These require much smaller capex (capital expenditure) at around RM5 million per project,” said Lim. “While the value is smaller, a simple upgrade can increase the annual output of our dairy product manufacturing plant in Pulau lndah by one million crates, for example,” he added.

F&N foresees the bulk of its exports to revolve around dairy products, said Lim, which provide higher margin — at between 10% and 12% — compared with other products such as packed beverages.

Over-regulation a hurdle for free zone operators

The PKFZ was initially modelled after Dubai’s Jebel Ali Free Zone, which is such a success that it contributed over 20% of Dubai’s gross domestic product. More than 30 other free zones have been set up in the United Arab Emirates, which were modelled after it.

The GST Act is deemed to have superseded the Free Zone Act 1990, taking away some advantages available under the Free Zone Act for free trade zones such as the PKFZ.

“So today, as far as free zones are concerned, the supply of goods is not an issue, but [the] supply of services is — as tax is applicable. They (customs) say it can be claimed back. But do you understand how business is done in the free [trade] zone? There are foreigners there. If you tell them that in order for them to claim back the tax, you have to employ an agent and other requirements, they will say ‘Why is it so difficult? In Singapore, there is no such issue’.”

Malaysia signals shift to tightening stance on growth view

Southeast Asian policy makers face rising pressure to start preparing for rate increases in the face of higher U.S. borrowing costs. Bank Negara Malaysia is forecast by economists as among the first to move. The economy is stronger with the government predicting growth of at least 5 percent until 2018 as it boosts infrastructure.

Inflation quickened to a five-month high of 4.3 percent in September, but is projected by the government to average between 3 percent and 4 percent this year. A general election due to be held by August 2018 is among reasons the central bank may hold off from raising borrowing costs just yet.


Focus on affordable housing may hurt private developers

“Over the past three years, government agencies’ participation filled the gaps nicely as private developers went through a gestation period to move towards the smaller-margin affordable housing segment. But moving forward, when supply keeps up with demand, government agencies and private developers will begin to compete on an unlevel playing field.”


Malaysia’s giving working moms a better maternity deal than U.S.

In a country where women are likely to drop out of the labor force when they have children, Najib is making a push to reverse that. He’s giving women a one-year tax exemption if they return to work after a break of two years or more, offering longer paid maternity leave for some and reducing working hours for others. In the U.S., there’s no national requirement for paid maternity leave.

Malaysia is losing out to low-cost and low-end manufacturing newcomers like Vietnam, but lacks the kind of skills and innovation that’s propelled Singapore and South Korea to more advanced status. Najib’s target is to make Malaysia a high-income country in the next three years, a feat that would require boosting per-capita income to $12,476 — which is the level the World Bank uses to define a high-income nation — from about $10,000 now.

Curated Insights 2017.10.22

Tesla’s new car smell

As I watched Tesla’s messy, hiccuping line, with workers dashing in to fix faulty parts in place, my mind travelled back to the Honda plant I had visited years ago in Marysville, Ohio. Clean, calm, everything moved smoothly. I was so shocked by the contrast that I imprudently voiced my concern. That didn’t go over well with my fellow Tesla owners. I was a killjoy, I was calling their choice into question.

“Unknown to analysts, investors and the hundreds of thousands of customers who signed up to buy it, as recently as early September major portions of the Model 3 were still being banged out by hand, away from the automated production line, according to people familiar with the matter.”

Moving from fewer than 100K cars a year to 500K and up isn’t “more of the same”, it can’t be achieved through clever, conventional-wisdom-defying improvisation. That sort of growth is a bold jump in scale that requires a smooth, well-oiled and well-understood manufacturing process.


Millennials are helping Jack Ma’s financing firm become a debt giant

Securitized products that bundle such obligations are meant to spread the risks among different investors. The tech companies can’t take deposits like banks, so the ABS, which are generally sold in private placements to institutional investors, give them a way to raise funds. The latest ABS from Ant Financial that’s backed by loans through its Jiebei service pays a 5.5 percent coupon for the senior tranche, according to data compiled by Bloomberg.

“In the short term, default risks for consumer loan ABS are very low because the underlying assets are composed of a number of loans in small sizes,” said Zuo Fei, an executive director and head of the ABS group in the investment banking division of China Merchants Securities Co. in Shenzhen. “These ABS products will be safe, unless systemic risks emerge in the economy and cause widespread defaults in consumer loans.”

Shell buys NewMotion charging network in first electric vehicle deal

Demand for electric vehicles is expected to rise significantly in coming decades and Morgan Stanley estimates that 1-3 million public charging points could be needed in Western Europe by 2030. Currently, there are fewer than 100,000. Shell expects around a quarter of the world’s car fleet to be electric by 2040.

Oil companies are growing increasingly aware of the potential threat to parts of their downstream business from the electrification of transport.


Solar wants to help fix a power-grid problem it helped create

Solar panels have proliferated in the Golden State, flooding the grid with power supplies in the middle of the day when the sun’s out — and then quickly vanishing after sunset. This has created a sharp curve in California’s net-power demand that’s shaped like a duck. And the so-called duck curve is getting steeper every year, sending wholesale electricity prices plunging into negative territory, forcing generators offline and making it increasingly difficult to maintain the reliability of California’s transmission lines.

…change the way solar farms are paid. If the state’s utilities compensate them for shutting generation when the grid doesn’t need it and providing power later when it does, he said, farms could use increasingly sophisticated inverters and software controls to adjust.


How Amazon’s $13.7B purchase of Whole Foods is a ‘blessing in disguise’ for Instacart

“When Amazon bought Whole Foods, what they did was they sent the signal to the entire grocery/retail landscape that Amazon was coming,” Mehta said. “Now, for every single grocery retailer at this point in time, whether they believed it or not before, now they needed an e-commerce strategy. They needed to have same day delivery. The reality was, for the last five years, that’s what we have done. We have brought hundreds of grocery retailers online, and so we had the track record of being able to do this successfully.”

Instacart has been growing faster than expected this year, and it has expanded to 149, up from only 30 at the beginning of the year. Mehta said the company can now reach 63 million households as potential customers, up from about 11 million a year ago.


This little-known startup just hit a valuation of $30 billion

Travel is becoming the latest competitive ground. With the recent fundraising, Meituan plans to spend hundreds of millions of dollars over the next three to five years to become a leading travel booking site. It’s also exploring opportunities to collaborate with Priceline as part of the investment. That may present a challenge to China’s biggest online travel site, Ctrip.com International Ltd., which is backed by Baidu. Ctrip shares fell 8.2 percent in U.S. trading.

China’s internet crackdown isn’t going anywhere

“Xi Jinping has definitely been a turning point in terms of the degree of censorship that is happening in China,” said Charlie Smith, who founded Greatfire.org, an organization that finds ways around government restrictions. “He is the first Chinese leader to truly understand the power of the internet and hence, we are seeing an unprecedented crackdown on dissenting information,” said Smith, who uses a pseudonym for fear of government reprisals

In June, Weibo Corp., the Chinese equivalent to Twitter, was one of three firms fined and banned by regulators from broadcasting certain types of content without a license. In an August earnings call, its chief financial officer said current rules made it legally impossible to acquire a license without becoming “wholly state-owned or state-controlled”.

The tightening presents unique challenges to foreign firms navigating the legal landscape. Services that rely on free-flowing information, such as Google and Facebook, would struggle to exist in such a regime, though they remain intent on finding a way in given the size of the potential market.


Who has the world’s No. 1 economy? Not the U.S.

Gross domestic product is supposed to measure the amount of real stuff — cars, phones, financial services, back massages, etc. — that a country produces. If the same phone costs $400 in the U.S. but only $200 in China, China’s GDP is getting undercounted by 50 percent when we measure at market exchange rates. In general, less developed countries have lower prices, which means their GDP gets systematically undercounted.

Economists try to correct for this with an adjustment called purchasing power parity (PPP), which controls for relative prices. It’s not perfect, since it has to account for things like product quality, which can be hard to measure. But it probably gives a more accurate picture of how much a country really produces. And here, China has already surpassed the U.S.

China’s modest per-person income simply means that the country has plenty of room to grow. Whereas developed countries can only get richer by inventing new things or making their economies more efficient, poor countries can cheaply copy foreign technology or imitate foreign organizational practices. That doesn’t always happen, of course — many poor countries find themselves trapped by dysfunctional institutions, lack of human capital or other barriers to development.

In other words, not only is China already the world’s largest economy, the gap between it and the U.S. can be expected to grow even wider. This continues to be borne out in the growth statistics — though China has slowed in recent years, its economy continues to expand at a rate of more than 6 percent, while the U.S. is at just over 2 percent. If that disparity persists, China’s economy will be double that of the U.S. in less than two decades.


China to build giant facial recognition database to identify any citizen within seconds

The system can be connected to surveillance camera networks and will use cloud facilities to connect with data storage and processing centres distributed across the country, according to people familiar with the project.

Commercial application using information sourced from the database will not be allowed under current regulations. [But] a policy can change due to the development of the economy and increasing demand from society.”

“To download the whole data set is as difficult as launching a missile with a nuclear warhead. It requires several high-ranking officials to insert and turn their keys at the same time,” the vendor said.

The 1.3 billion-person facial recognition system is being developed by Isvision, a security company based in Shanghai.

They found that the accuracy of the photo that most closely matched the face being searched for was below 60 per cent. With the top 20 matches the accuracy rate remained below 70 per cent, Fan and collaborators reported in a paper published in the domestic journal Electronic Science and Technology in May. “It cannot solve problems with real-life applications,” they added.

The researcher warned that the cost of the convenience facial recognition could bring to everyday life was “sacrificing security”.


Warning signs are mounting for Sweden’s once-hot housing market

SEB AB’s monthly housing-price indicator shows households are becoming less optimistic about the market. The gauge, which measures the difference between those who see rising housing prices and those who believe in a decline, has dropped to its lowest level since August 2016. While 66 percent of Swedes still expect prices to rise, and only 16 percent believe in a decline, the indicator has dropped for four consecutive months.

Regulators have been tightening regulations to cool debt growth. Swedes are now subject to a mortgage cap, limiting loans to 85 percent of a property’s value, and an amortization requirement, which forces borrowers pay off the part of their new loans that exceeds 50 percent of the property’s value. The regulator now wants to introduce an additional amortization requirement for the most indebted households, and has also floated the idea of a cap on loans in relation to incomes.

Developers are taking action to prepare for a slowdown. Wallenstam AB said this month it would convert 90 apartments in a development in the Stockholm neighborhood of Solberga to rentals rather than trying to sell them. The situation is “a bit uncertain,” with the market for ownership apartments having “cooled down,” Wallenstam said on Oct. 9.


Indonesia set for trillion-dollar economy in bittersweet triumph

Size isn’t everything. Even after eight rate cuts since the beginning of last year, the economy is struggling to fire up: loan growth remains muted, while the central bank expects low inflation to linger for some time. The picture is made more complex by a wide divergence in growth across the archipelago of more than 17,000 islands, with rates ranging from negative to more than 7 percent.

Jokowi is ramping up spending on roads, rail and seaports as he targets economic growth of 5.4 percent in 2018, the fastest rate in five years. But a massive infrastructure deficit — estimated by the World Bank at $1.5 trillion — is frustrating his efforts. The global lender says another $500 billion in infrastructure spending is needed over the next five years.

Indonesia’s tax revenue as a portion of GDP remains one of the lowest in the region with the OECD estimating it at around 12 percent two years ago. It has since fallen to 10.3 percent, which Finance Minister Sri Mulyani Indrawati in July described as “low and unacceptable.” She’s aiming to boost that ratio to 16 percent by 2019.


Like Bali? Indonesia wants to create 10 of them to draw Chinese tourists

Jokowi’s plan, according to Yahya, will see the contribution of tourism to the economy climb to 7.5 percent by 2019 from 4.5 percent last year. Tourism receipts are forecast to grow more than 60 percent to $20.7 billion over the same period, with the number of jobs seen rising to 13 million from 11.8 million.

Even with that kind of growth, Indonesia is far behind neighboring countries in developing tourism and targeting Chinese visitors. Thailand’s industry makes up about 18 percent of gross domestic product, with the country’s famed beaches and nightlife attracting 26 million foreign visitors so far this year, 28 percent of them coming from China. Indonesia also trails Singapore and Malaysia in number of tourists.

Funding Jokowi’s 10 New Balis plan will be a big challenge. Yahya estimates the industry needs $20 billion of investment over five years, of which about $10 billion will come from the government. Given its vast infrastructure needs in everything from ports to roads, and a budget deficit cap of 3 percent of GDP, authorities are seeking more private-sector funds.


Silicon Valley Vs. Wall Street: Can the new Long-Term Stock Exchange disrupt capitalism?

If the LTSE succeeds, it could offer a new incentive for privately held tech giants such as Airbnb Inc. and Uber Technologies Inc. to go public, at a time when many market veterans and regulators fear the process of going public has lost its luster. But skeptics wonder whether the LTSE is just another way for tech founders and elite Silicon Valley investors to maintain control at the expense of other shareholders.

For instance, executives’ bonuses couldn’t be tied to financial-performance targets over periods of less than one year. If the executives are paid in company stock, the shares couldn’t fully vest for at least five years. LTSE-listed firms would still publish quarterly results—an SEC requirement—but they would be barred from releasing quarterly earnings guidance, a practice that some critics say fosters short-term thinking. Meanwhile, tenure voting would be available to any shareholder of an LTSE-listed company. If an investor opted into the system, the voting power of his or her shares would grow over time, capped at 10 times the power of ordinary common stock after a decade. If the shares were sold, the voting power would be reset for the new owner.

Mr. Ries disputes the idea that the LTSE is good for founders and bad for everyone else. In his view, tenure voting is better than the solution favored by some Silicon Valley firms: severely limiting the voting power of ordinary shareholders through two or more share classes.

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 2017.09.22

Scientex Q4 FY2017 Results

…the startup cost for its biaxially oriented polypropylene (“BOPP”) and cast polypropylene (“CPP”) plants as well as lower product margins due to penetrative pricing.

The new stretch film manufacturing facility in Phoenix, Arizona in the United States is expected to have a commercial rollout by first quarter of calendar year 2018. It forms part of the pivotal and strategic move by the Group to be close to its customers and its sources of raw materials as well as access to other new customers in the region.

With the commissioning of its BOPP and CPP plants as well as the increased capacity of its Ipoh plants, the Group’s strategy is to focus on volume based converter market within Southeast Asia and Asia Pacific regions by developing sales networks with new distributors and wholesalers. The Group is confident that by optimising the production output, the operation costs will be better managed, hence improving its operational margins.


Adventa Q3 FY2017 Results

The revenue generation is still insignificant in comparison with the other businesses but the quantum of improvement in revenue (increased by 1,023%) is encouraging. The long period of regulatory approvals in the different countries weigh down revenue growth. The number of treatments is expected to increase sharply upon completion of the required approvals.


Haio Enterprise Q1 FY2018 Results

The overwhelming response from its newly launched fashion wear –Hijabs during the quarter had added on to the revenue. Wider usage of social media and marketing digital platform efficiently have facilitated the leaders to reach out to younger group of entrepreneurs. Hence, the new members recruitment which increased by more than 40% as compared to preceding year’s corresponding quarter had also contributed higher sales for the division.

The MLM division will continue to collaborate with a well known local designer to roll out more fashion wear and related products, and other trendy lifestyle range of products.

Elsoft sees slower earnings growth for 2017

The slowdown in demand was due to lower orders from smart devices as there is no new development in terms of technical specifications in the light emitting diode (LED) flash used in 2016 versus 2017.

“However, we are in a niche market; we design the equipment specifically made for our customers. We are a niche player. Our margin is higher, so we have to work harder in the second half.”

Elsoft is also developing a solution for depth sensing or 3D sensing, an infrared sensing and emitter for the smart devices and automotive segments. It also plans to add value to its automated test equipment (ATE) products by tying up with a mechanical design company.

“We are good at electronics and software but lagging in mechanical design. The ATE segment features two areas, the tester and the machine. Even though we are doing both now, I feel our machine is not good enough. If we can sell a product that is good in every part, then it’s excellent. We want to offer better solution for our customers. We want the ‘okay’ segment to be better.”


Warisan TC’s travel arm goes online

“The good thing is that we have been in the [tourism] business for the past 55 years, and we are not a small player in Malaysia when it comes to corporate travels. So we want to [leverage on] our existing customer base. Imagine a client with 3,000 employees — we want to approach their staff to use our services when it comes to leisure travel as well.”

“We are different from other players in the sense that our bundled products have more value as compared to buying them individually. So consumers can get more value when they buy everything together and they only have to deal with Mayflower Online for peace of mind on their whole trip — that is our goal. We are not looking to just be a [pure] marketplace where we have to rely on agents to come in and contribute the products. We offer our own products and we take ownership of them to take care of the customers. We’re not just a platform where we are not sure who the suppliers are or how their services are like.”


E&O to sell five more non-core assets

The five non-core assets, E&O managing director Kok Tuck Cheong said, are the Straits Quay Mall, properties in Gertak Sanggul, Kemensah Heights, The Peak, and the retail space of its 80%-tenanted St Mary project. According to E&O’s latest annual report, the aforementioned properties’ net book values totalled approximately RM546 million as at March 31, 2017.

“Keeping a mall is not necessarily our core business,” Kok said, giving confirmation of rumours of the group’s plan to dispose of its seven-year-old, loss-making Straits Quay Mall in Penang.


Columbia Asia: Our business model can keep healthcare costs lower

“When you build big hospitals, you end up incurring a lot of structural costs, maintenance costs, utility bills, manpower costs and so on. All that is a cost that has to be transferred somewhere. The question is where does it get transferred to? The patients’ bills,” said Tan, adding that patients’ claims from insurers would then inflate costs.

Tan said another way to control costs is in cutting down the average length of stay of a patient, which he believes Columbia Asia has achieved with better and more efficient care of patients, citing increased technological use as a main driver of this efficiency. “There’s a tendency [for hospitals] to have a key performance indicator that talks about filling up its occupancy rate. So, if you don’t have enough patients walking in, you tend to keep current patients longer, when, in actual fact, they should be at home with their families. From a hospital’s perspective, when you keep them longer, you incur extra costs.”

“[Inflation] is not [necessarily] about whether your panadol is 10 sen or 20 sen, it’s about how you manage your patients effectively and efficiently. And, we like to believe that we [show a good example in providing] effective and efficient healthcare,” said Tan.

Govt incentives needed to protect margins — Rehda

“Our margins are becoming smaller and smaller. I was talking about 17% to 18% last year. Now, a lot of developers are talking below 15% or 16% [gross profit margin]. Margins are being sqeezed.”

For example, steel prices in Malaysia and Thailand are similar, at about RM1,700 per tonne. But no thanks to the levy imposed by the government, Malaysian contractors are paying up to RM2,800 per tonne.


BNM hits out at rigid interpretation of economic indicators

Citing Moody’s External Vulnerability Indicator — a measure of short-term external debt by remaining maturity over reserves — which was used in the article, BNM said: “These short-term external debts are not a material risk.

“Most of it is accounted [for] by the banking sector, reflecting banks’ operations. Correspondingly, banks have placements abroad to mitigate currency and maturity mismatches,” the bank added.

BNM said short-term debt included inter-company loans which the bank said are subject to “flexible and concessionary terms”, as well as trade credits which “are usually backed by export earnings, which do not entail a claim on international reserves”.


GST collection could exceed RM42b target, says customs director-general

“For example, one of the requirements for GST is service providers need to have a place of supply, or a permanent establishment in Malaysia, and if their place of supply is elsewhere other than Malaysia, it becomes a bit difficult to tax, so we are looking into this. To tell you the truth nobody really knows how big the monster is out there, once we amend the law and look at the details we will know, it runs into several billions. We will be in consultation with industry players on this, and we hope to be able to [table] the amendment at the next parliamentary seating,” said Subromaniam.

Subromaniam shared that at present, there are 453,000 companies that have registered for GST. Out of this number, approximately 100,000 companies were small scale companies which had annual turnover of less than RM500,000, but had registered for GST voluntarily. These companies had registered so that they can claim input taxes, and also the bigger companies tend to not want to deal with [smaller companies] that have not registered for GST,” he said.

Curated Insights 2017.08.20

Apple has the best business model for generating cash

Apple’s $64B of operating cash flow was nearly as much as that of Alphabet ($36B), Facebook ($19B), and Amazon ($17B) combined. In essence, Amazon is doing as well financially as Facebook. Google is generating as much cash as Amazon and Facebook put together. Apple is generating nearly as much cash as Amazon, Facebook, and Google combined.

Apple’s $51B of TTM free cash flow is $3B more than the free cash flow produced by Alphabet, Facebook, and Amazon combined. In what may come as a surprise, Apple is bringing in 70% more free cash flow than Microsoft, who is still considered to possess one for the more lucrative business models in existence.

Apple is a design company focused on selling tools capable of fostering superior experiences. Scale is considered a byproduct of a properly functioning business model. Facebook and Google are service companies focused on offering free, data-capturing services to as many people as possible. The business models are dependent on achieving scale in order to access as much data as possible. Amazon is a retail platform company focused on getting you to buy more stuff over time. Scale in terms of purchase volume is needed in order for the cash flow/reinvestment cycle to continue.

Instead, we have non-hardware companies pontificate how hardware won’t matter in the future. In reality, the opposite will likely occur. Hardware will matter more going forward. The wearables industry represents a good example of this in practice. Meanwhile, the way smartphone and tablet components are mattering more now than ever to AR and AI is another hole in the “hardware won’t matter” thesis.


No one knows how much money WeChat is making, and investors are too bullish to care

…the success of Honor of Kings as an example of WeChat’s indirect influence on Tencent’s revenue growth. “When you go into the game, it becomes all about playing with your WeChat friends, and looking at their scores and achievements,” he says. Honor of Kings is currently ranked the top-grossing game in China’s iOS App Store (registration required), and four other Tencent titles fill out the top 10.

…pointing to WeChat’s low take on payments (Stripe and PayPal each charge about 3%) and its aggressive discounts, speculates it’s a loss leader. Tencent executives, meanwhile, have downplayed its role in making money for the company. “We consider payment at this point in time as to [sic] infrastructure service rather than a service that generates profit for us. And I think that status will maintain for quite some time.”

“Payments are the gateway to lending. And because you’re tracking the same consumer across so many platforms, you know the credit score of the consumer and you have very few non-performing loans.”


How Baidu will win China’s AI race—and, maybe, the world’s

But to train the algorithms that will deliver the intelligence to transform our cities, it needs data. To wit: The company with the most data wins.

Clearly, he saw more opportunity across the Pacific: In China, 731 million people—nearly twice the entire population of the United States—are online. Says Lu: “China has the structural advantage.”

We’re the first major company to clearly separate the perceptual and the cognitive layer. Perceptive capability and the cognitive are related, but they are quite different. Most of the [other] AI platforms bundle them together.

But one thing I learned is that in this race to AI, it’s actually more about having the right application scenarios and the right ecosystems.

It’s just like the phone ecosystem today. The phone ecosystem is the largest silicon software ecosystem. I believe the same thing will happen for the autonomous system. The car is going to build a larger ecosystem. And the same set of capabilities—hardware, sensors, chip sets, software—will be used to build industry robots, home robots. We want to have hundreds of companies and universities all at work on this, building a very large ecosystem. Then we can build robots, build drones, and build all those autonomous systems. So, to me, autonomy is a key.

…because China is highly, highly fragmented. There’s more than 250 car OEMs [original equipment manufacturers], unlike the United States, which is a heavily concentrated industry. None of the OEMs will have the full capabilities to build out deep R&Ds. With our code base that we released on July 5, [we will make it possible for] one person to assemble a vehicle in three days that can do autonomous driving in limited forms and start on R&Ds.

We’re competing against nobody. We enable each OEM, whether it’s Bosch, Continental, or Nvidia, to be able to do more.


Amazon has largest A.I. platform in the world, its machine learning guru boasts

Despite the lack of notoriety, “inside Amazon we’ve been doing machine learning for over twenty years,” he notes, and anyway, “We have more machine learning running on the platform than anywhere else” he claims, meaning AWS is doing more A.I. than Google or any other facility in the world.

“Today, machine learning is very technical,” he says, but overtime, and with Amazon’s help, it is going to be simpler and simpler to apply machine learning to any number of different applications, “and to do it with high accuracy.”

Wood noted another important development, the shift from just the “training” phase of A.I., where a computer deduces patterns, to the “inference” stage, where it responds to user requests based on what it’s learned.

…what he thinks of machines making machines, meaning, machine learning being able to design new algorithms for machine learning, a kind of self-reflexive moment in A.I. “Absolutely,” says Wood, “It’s already happening. There are customers on AWS who are training bots to to make algorithms.” One example is something called Bandits, where machines face off against one another, with one machine trying to deduce learning models while the other is trying to trick it with falsehoods.

Amazon expands program that pays Alexa developers for top-performing voice apps

It’s notable that the Alexa platform has managed to attract a sizable group of developers ahead of any formal compensation program, or support for traditional app monetization business models, like freemium apps, paid apps, and advertising. Despite this, Alexa’s app store has grown to over 15,000 skills in a relatively short period of time – after all, the Echo speaker – Amazon’s first Alexa device – wasn’t even available to the public until July 2015.

That said, direct payouts for skills is a program that can only be sustained for so long. Eventually, developers will demand more control over their businesses, rather relying on some inscrutable algorithm. In the meantime, Amazon will face competition from rivals, including Google Home and Apple’s forthcoming HomePod – both from companies who have a better understanding of how an app store ecosystem works.


Amazon in talks to offer event ticketing in U.S.

…the U.S. ticketing market as ripe for attack. Consumers dislike ticket fees, and venue owners, sports leagues and teams want more distributors for their tickets as they seek to boost sales. Access to tickets could be another means to lure members to the Amazon Prime shopping club. For music acts and sports teams, selling tickets through Amazon could help sell their merchandise.

Amazon has had conversations to partner with Ticketmaster as a potential way to get into ticketing in the United States, but those conversations have stalled over who would control customer data, according to sources with knowledge of the conversations.

Ticketing would likely make money for Amazon, which has a patchy record of profitability. Ticketmaster generated $1.6 billion in revenue from initial sales of tickets to events in 2016, according to estimates by research firm BTIG. That figure does not include revenue from the reselling of tickets, which BTIG estimates at $250 million.


Amazon looks to new food technology for home delivery

If the cutting-edge food technology comes to fruition, and Amazon implements it on a large scale, it would be a major step forward for the company as it looks to grab hold of more grocery customers shifting toward quick and easy meal options at home.

The pioneering food-prep tech, known as microwave assisted thermal sterilization, or MATS… The method involves placing sealed packages of food in pressurized water and heating them with microwaves for several minutes, according to 915 Labs.

“They obviously see that this is a potential disruptor and an ability to get to a private brand uniqueness that they’re looking for. They will test these products with their consumers, and get a sense of where they would go.”

“They have to leapfrog to MATS because they don’t have the refrigerated supply chain like we have in the U.S.”

Facebook buys computer vision startup focused on adding objects to video

…could be useful as Facebook pursues additional video filter creation technology, both for its live streaming efforts, and for platforms like Instagram Stories.

…being able to add objects to live video and remove them or cover them over on the fly is also something that can be put to interesting use in the emerging field of augmented reality.

The world’s shipping companies are going super-sized

A massive consolidation is underway in the $500 billion global industry and the survivors now enjoy big economies of scale and increased demand, one year after excess capacity caused the sector’s worst-ever crisis — the bankruptcy of South Korea’s Hanjin Shipping Co.

These super-sized shipping companies wield much more pricing power over manufacturers and retailers like Wal-Mart Stores Inc. and Target Corp. The five biggest container lines control about 60 percent of the global market, according to data provider Alphaliner. Shipping rates are climbing, and an index tracking cargo rates on major routes from Asia is about 22 percent higher than it was a year earlier.

“Since the demise of Hanjin Shipping, flight to quality has become more noticeable in the container shipping business,” said Um Kyung-a, an analyst at Shinyoung Securities Co. in Seoul. “That’s why the market is becoming more and more dominated by top players with big ships and those that don’t have could become more and more obsolete.”


The awesome but mostly unknown story of Carlsberg beer in China (Part 1, Part 2)

It was a daring strategy. Inland China was the one region that was not yet dominated by the large SOE brewers. It was still open territory. But you also need to have a picture in your mind of Western China circa 2003. It was the poorest part of China. It was a massive and undeveloped territory. There was little infrastructure and even less money.

A review of Sunny’s Carlsberg presentation in 2006 is fascinating. Western China had exceptionally low per-capita beer consumption. In Eastern China in 2005, it ranged from 30-80 liters per person, but in Tibet and Ningxia it was only 10-15 liters. And in Yunnan and Xinjiang it was closer to 3 liters. That could of course mean big growth one day. More likely, it meant small money in difficult geographies for the foreseeable future.

Across the board, it was a strategy of regional dominance. They were building a competitive advantage based on local economies of scale in marketing, distribution and production. And they were racing to become a giant in the West.


Deep learning could discover new plant species hidden in centuries of herbarium data

…but the valuable info in these slowly vanishing temples to the plant kingdom needs to be modernized in order to be of use to an increasingly digital-first scientific community.

They trained a plant-identification algorithm on a quarter million images of plant samples, and set it to work IDing new sheets. It matched the species picked by human experts exactly 4 out of 5 times, and 90 percent of the time the correct species was in the algorithm’s next few guesses.

“People feel this kind of technology could be something that will decrease the value of botanical expertise,” study co-author Pierre Bonnet told Nature. “But this approach is only possible because it is based on the human expertise. It will never remove the human expertise.”

CRISPR’d pigs offer hope for the human organ transplant shortage

The findings represent an important breakthrough in the potential for xenotransplantation, or the use of animal organs in humans. Currently there are more than 117,000 men, women and children on the donor waiting list in the U.S., 22 of whom die each day from lack of a matching donor. The ability to use a pig heart, lungs or other body parts could shore up the shortage and save numerous lives.

This is the first time researchers have been able to demonstrate they were able to inactivate PERV and open the way for xenotransplantation without cross-species contamination.

CRISPR holds enormous potential to wipe out diseases in both humans and animals, upend our food system and has many other applications we likely don’t see yet. Just last week, U.S. scientists were able to demonstrate they could successfully CRISPR out a faulty heart gene mutation in human embryos. However, there is still a lot to take into account before applying the technology to fully formed human beings.


The death of the internal combustion engine

And then there is oil. Roughly two-thirds of oil consumption in America is on the roads, and a fair amount of the rest uses up the by-products of refining crude oil to make petrol and diesel. The oil industry is divided about when to expect peak demand…

Meanwhile, a scramble for lithium is under way. The price of lithium carbonate has risen from $4,000 a tonne in 2011 to more than $14,000. Demand for cobalt and rare-earth elements for electric motors is also soaring. Lithium is used not just to power cars: utilities want giant batteries to store energy when demand is slack and release it as it peaks. Will all this make lithium-rich Chile the new Saudi Arabia? Not exactly, because electric cars do not consume it; old lithium-ion batteries from cars can be reused in power grids, and then recycled.

Housing for the long run?

Housing beat stocks mostly because the returns were less than half as volatile. Thanks to the magic of compounding, this created a performance gap of more than 2 percentage points each year, on average, since 1950, with an even bigger gap if you start the clock in 1870.

Housing has beaten stocks since 1950 because rental income has been better than dividend income, not because house prices have grown more than stock prices.

It’s possible to imagine a world where most housing is owned by large diversified investment trusts that anyone can invest in, but until then, “housing for the long run” is not a practical investment strategy.


Sustainability of hedge-fund reinsurers questioned

Such reinsurers generally engage in “low-margin and low-volatility (property/casualty) reinsurance business,” and try to generate returns for investors through hedge fund investment or other strategies.

The fund reinsurers’ strategy is a half success, as they outperform traditional reinsurers’ investment record. This is still not enough to offset underwriting losses, says S&P, leaving the fund reinsurers trailing their more established brethren in total return.

“We continue to believe that HFRs need to focus as much on the additional risks of their overall strategies as they do on the higher investment returns,” S&P said, adding that “HFRs will continue to evolve, learn from their earlier brethren’s mistakes, and nibble at the edges of the reinsurance market as they carve out a niche for themselves.


ASEAN at 50

Southeast Asia is one of the world’s most diverse regions. Its 640 million people include 240 million Muslims, 120 million Christians, 150 million Buddhists, and millions of Hindus, Taoists, Confucianists, and Communists. Its most populous country, Indonesia, is home to 261 million people, while Brunei has just 450,000. Singapore’s per capita income of $52,960 per annum is 22.5 times that of Laos ($2,353). This diversity puts Southeast Asia at a distinct disadvantage in terms of fostering regional cooperation. When ASEAN was founded in 1967, most experts expected it to die within a few years.

But ASEAN defied expectations, becoming the world’s second most successful regional organization, after the European Union. Some 1,000 ASEAN meetings are held each year to deepen cooperation in areas such as education, health, and diplomacy. ASEAN has signed free-trade agreements (FTAs) with China, Japan, India, South Korea, Australia, and New Zealand, and established an ASEAN economic community. Today, ASEAN comprises the world’s seventh-largest economy, on track to become the fourth largest by 2050.

Yet ASEAN’s long-term progress is undeniable. Its combined GDP has grown from $95 billion in 1970 to $2.5 trillion in 2014. And it is the only reliable platform for geopolitical engagement in the Asia-Pacific region, unique in its ability to convene meetings attended by all of the world’s great powers, from the United States and the European Union to China and Russia.

Curated Insights 2017.08.13

Misunderstanding Apple Services

Services revenue for the last four quarters reached $27.8B, figuratively placing Apple’s Services 98th on the Fortune 100 List. If Apple Services were a standalone company, its $27.8B in revenue would just squeak past Facebook’s $27.6B.

…It’s the consideration of Apple Services as a self-standing business. Remove “Apple” from “Apple Services”…would this stand-alone “Services” company enjoy the same success were it to service Android phones or Windows PCs?

With Services, Apple enjoys the benefits of a virtuous circle: Hardware sales create Services revenue opportunities; Services makes hardware more attractive and “stickier”. Like Apple Stores, Services are part of the ecosystem. Such is the satisfying simplicity and robustness of Apple’s business model.

Electric vehicle realities

Peer reviewed research suggests the cost of the battery pack is about 50% greater than the cost of the battery cells, however, we note the same article suggests that ratio will remain the same as battery prices drop. This is unlikely as there is no reason to believe the largely mechanical battery pack will decline proportionately any more than the cost of an engine or transmission will decline. Most likely, the battery pack assembly, excluding the cells, will decline only slightly.

For example, about 2 million new passenger cars are registered in France every year. If only half of those were EVs, subsidies would total $7.2B. Money for roads, infrastructure maintenance, policing, and so on have to come from somewhere, and if ICEV sales decline substantially, European governments’ huge gasoline tax revenues would also deteriorate; in such an environment, it is reasonable to assume that EV subsidies would eventually disappear and be replaced by taxes.


Why 5G will transform much more than telecommunications

The transition from 4G to 5G will allow wireless technology to surpass three technical thresholds: 1) wireless internet speeds will surpass cable broadband and potentially also fiber optic cable; 2) the “internet of things” will have mass industrial applications for the first time; and 3) communication lag will fall to one millisecond—faster than the speed at which humans perceive touch response as instantaneous—giving rise to new, “tactile internet” applications such as remote surgery.

As a result of these barriers being broken, the 5G transition will likely have a larger and broader economic impact than shifts between previous wireless generations.

The end of typing: The next billion mobile users will rely on video and voice

…many of America’s most popular apps aren’t in India’s top 100… Mr. Singh’s phone uses Google’s Android operating system, which nearly monopolizes India’s smartphone market… Apple Inc., in contrast, has a 3% smartphone market share in India, in part because its least expensive iPhone costs over $300; in India, more than 90% of smartphones cost less than that.

In the year through June, use of YouTube in India has more than doubled, while Gmail use fell 15%…Facebook says it has just over 200 million active users in India, the largest number outside the U.S…

UC Browser, from Alibaba Group Holding Ltd.’s UCWeb, is optimized to use less data for low-speed connections like those India’s poor use. UC Browser, with a less-than-1% market share in the U.S. and Europe, controls more than 40% of India’s mobile browser market…

Google has also benefited from the dominance of its Android operating system.

Paytm, the biggest mobile money app in India, now has more than 200 million users in India, vastly more the number of credit-card holders in India.

Some poor users say they are willing to pay for data even if it means forgoing consumption of things like cigarettes to afford prepaid cards. Sales of shampoo and some snacks foods have slipped for certain consumers as they put more rupees aside for their phones, say consumer-goods companies such as Nestlé SA.

The evolution of machine learning

Traditional machine learning models — not deep neural networks — are powering most AI applications. Engineers still use traditional software engineering tools for machine learning engineering, and they don’t work: The pipelines that take data to model to result end up built out of scattered, incompatible pieces.

Facebook’s FBLearner Flow and Uber’s Michelangelo are internal machine learning platforms that do just that. They allow engineers to construct training and validation data sets with an intuitive user interface, decreasing time spent on this stage from days to hours. Then, engineers can train models with (more or less) the click of a button. Finally, they can monitor and directly update production models with ease.

Services like Azure Machine Learning and Amazon Machine Learning are publicly available alternatives that provide similar end-to-end platform functionality but only integrate with other Amazon or Microsoft services for the data storage and deployment components of the pipeline.

The market really is different this time

Over the past month, small investors have pulled $17 billion out of U.S. stock mutual funds and exchange-traded funds and added $29 billion to bond funds. That’s the latest leg of a long-term trend: Since the internet-stock bubble burst in 2000, investors have withdrawn half a trillion dollars from U.S. stock mutual funds.

The math is simple: If you had a target of 50% in stocks and they go up 10%, you are suddenly off-target, with more than half your money there. Your financial adviser or target-date fund will automatically sell stock and buy bonds to get you back to 50%.

These automatic adjustments don’t mean stocks can’t crash or soar from here. But such sharp moves are at least somewhat less likely, and less likely to last, in a homeostatic market. So don’t believe anyone who tells you Dow 22000 is driven by euphoric “dumb money.” This is a market in which millions of small investors have been selling, not buying.


When (if ever) has it paid to wait for a stock market correction? Reviewing 115 years of US stock market history

From a given “expensive” starting point, there was a 56% probability that the market had a 10% correction within 3 years, waiting for which would result in about a 10% return benefit versus having invested right away.

In the 44% of cases where the correction doesn’t happen, there’s an average opportunity cost of about 30% – much higher than the average benefit.

Putting these together, the mean expected cost of waiting for a correction was about 8% versus investing right away.

Now shifting focus from the historical record to looking forward, it’s true that the lower one’s expectation of the stock market return, the lower the expected cost of waiting for a correction. If you believe the stock market has a negative expected return to a particular horizon, then waiting for a correction to invest makes sense. However, at least as far as the historical record for the US stock market goes, higher market valuations are consistent with lower prospective long-term returns, but not negative expected returns.

Americans are dying younger, saving corporations billions

In 2015, the American death rate—the age-adjusted share of Americans dying—rose slightly for the first time since 1999. And over the last two years, at least 12 large companies, from Verizon to General Motors, have said recent slips in mortality improvement have led them to reduce their estimates for how much they could owe retirees by upward of a combined $9.7 billion, according to a Bloomberg analysis of company filings. “Revised assumptions indicating a shortened longevity,” for instance, led Lockheed Martin to adjust its estimated retirement obligations downward by a total of about $1.6 billion for 2015 and 2016, it said in its most recent annual report.

The fact that people are dying slightly younger won’t cure corporate America’s pension woes—but the fact that companies are taking it into account shows just how serious the shift in America’s mortality trends is.

Changes to life expectancy in the U.K. could cut 310 billion pounds from British private-sector pension obligations, or 15 percent of the total liability, PwC estimated in May, although other actuaries have called that figure “relatively extreme.”

The question actuaries can’t yet answer is whether the slowdown is a short-term blip or a more permanent shift. If mortality improved by 1 percent a year for most of the past 70 years, might the U.S. revert to that soon? Or, Keener asks, “is this really a new reality that we’re living in?”


Baby boomers who refuse to sell are dominating the housing market

Like much of his generation, Yanoviak is desperate to get a piece of an increasingly scarce commodity: prime American real estate. Millennials are finding themselves out in the cold because building has slowed, and longer-living baby boomers are staying put, setting up a simmering conflict between the two biggest generations in U.S. history.

People 55 and older own 53 percent of U.S. owner-occupied houses, the biggest share since the government started collecting data in 1900, according to real estate website Trulia. That’s up from 43 percent a decade ago. Those ages 18 to 34 possess just 11 percent. When they were that age, baby boomers had homes at almost twice that level.