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.

Company Notes 2017.07.21

Pentamaster in a filing with Bursa Malaysia

The three units will be injected into PIL for a collective RM86.78 million, which will be satisfied via the issuance of 999 PIL shares to Pentamaster.

“The internal reorganisation will facilitate a more efficient group structure by way of promoting a better segregation of business responsibilities and operations for Pentamaster’s existing automated solution business and its other smart control solution system business. This will in turn enable the management of the automated solution business and smart control solution system business to efficiently allocate resources and focus on their respective businesses. In addition, the internal reorganisation will also facilitate PIL to act as the listing entity for the proposed listing.”


Icapital.biz in a filing with Bursa Malaysia

With another rate hike expected in the coming months and the Federal Reserve’s plan to unwind its US$4.5 trillion balance sheet, this is confirming what I wrote in the said commentary – “With the US economic recovery remaining intact, one can expect the normalisation of her monetary policy to proceed at a pace faster than in 2015 and 2016.” Again, we hope that investors are prepared for this in a calm manner

…in a reflection of the uncertain global economic conditions created by the US-led 2008 global financial crisis, the Bank of Italy recently advertised for 30 junior positions with an annual salary of €28,000 and it received 85,000 applications – nearly 3,000 candidates for each post. With Italy’s youth unemployment close to 40% and the overall level at 11.3%, steady jobs are in huge demand. The trouble in Italy is that, once an employee is hired, it is hard for a company to get rid of them no matter how incompetent they might be. How Italy and other European nations got into such a devastating mess deserves deep research by the government and policymakers.


Capitaland Malaysia Mall Trust in a filing with Bursa Malaysia

The decrease was mainly due to negative rental reversions from Sungei Wang Plaza as it continues to be temporarily affected by the ongoing Mass Rapid Transit works and the closure of BB Plaza. Lower gross revenue was recorded for The Mines mainly due to lower rental rates and occupancy whilst lower gross revenue in Tropicana City Property was mainly due to lower occupancy at the office tower. The decrease was mitigated by better performance from Gurney Plaza and East Coast Mall on the back of higher rental rates achieved.

As the competition in the market place heats up with the opening of new shopping malls – of which many are located in the Klang Valley – in the second half of this year (2H 2017), the Manager expects the operating environment to remain challenging. As CMMT’s malls are largely focused on day-to-day necessity shopping, they have proven resilient through economic cycles in the past and should continue to do so. The Manager also expects the recent commencement of the Sungai Buloh-Kajang Mass Rapid Transit line to benefit Sungei Wang Plaza in the long term.


Maxis in a filing with Bursa Malaysia

…added 41k new subscriptions, achieving the highest net additions following the revamp of the flagship MaxisONE plan. The Power of ONE campaign which enabled subscribers to own a wide range of devices for RM1 continued to attract high ARPU customers. As a result, the Group has grown its MOP subscription base to 1.9 million with monthly ARPU of RM120, which is higher than the blended ARPU of RM102.

Prepaid ARPU was stable at RM42 per month supported by continuous growth in mobile Internet revenue…Hotlink FAST base has now surpassed 1.8 million subscriptions with monthly ARPU of RM44.

Customer demand for data continues to grow strongly, supported by the rising consumption of social media, increasing availability of TV and video on mobile devices and better user experience on mobile network.

Blended smart-phone penetration stood at 79% against 70% in the same period last year. Blended data usage grew more than double in the last 12 months and is now at 5.0GB/month. The Group’s expanded 4G LTE network, with a nationwide population coverage of 89% on a comparable peer basis, continued to be an important differentiator for customers to enjoy high speed unmatched digital experience.


Westports in a filing with Bursa Malaysia

Due to the ongoing changes in the container shipping industry, we expect our container throughput to be lower when compared to the previous year by between seven percent and twelve percent.

The second phase of Container Terminal 8, consisting of a 300-metre wharf and supporting terminal operating equipment and facilities, have just been completed and are expected to be commissioned into service soon. The total terminal handling capacity would then be increased to 12.5 million TEUs.

Construction work continues at the first phase of Container Terminal 9, consisting of a 600-metre wharf, and is expected to be completed by December 2017.


Syarikat Takaful Malaysia in a filing with Bursa Malaysia

For the year 2017, Takaful Malaysia will continue to emphasize the four core areas of customer reach, operational agility, cost competitiveness and stakeholder confidence to increase its overall market shares and continuously improving shareholders’ value… promote its unique proposition of rewarding a 15% Cash Back to its General Takaful customers for no claims during coverage period.


British American Tobacco (Malaysia) in a filing with Bursa Malaysia

Illegal cigarettes incidence for the same period has increased by about 16% from 50.0% in the first half of 2016 to 57.9% in May 2017. This was driven by the price gap between legal and illegal cigarettes and current macroeconomic factors that are impacting consumer spending power…in line with volume decline and the cessation of contract manufacturing for exports as of 31st December 2016.


TAS Offshore in a filing with Bursa Malaysia

Indonesia is expected to export about 30 million metric tons of bauxite alone in 2017 as a consequence of the easing on export ban of unprocessed mineral ores by the Indonesian government. This may call for the demand for vessels required for such activities.


WZ Satu in a filing with Bursa Malaysia

For civil engineering and construction segment, the Group not only accumulated an order book to last for the next two to three years but also the Group is confident that its order book will grow beyond the run-off rate. The current order book of RM1.0 billion will ensure the Group is kept busy for the coming financial year and beyond.

WZS Misi Setia Sdn Bhd’s (“MISI”) investment in the Automated Pipe Spooling fabrication plant has kicked-off well and has led to successfully securing contracts in The Refinery and Petrochemical Integrated Development (“RAPID”) project. Since the previous reporting, MISI has secured additional works on top of existing contracts for RAPID projects. The above investment has come on stream and has been successfully translated into meaningful results as reflected and registered in the current quarter oil and gas segment result.


Saudee Group in a filing with Bursa Malaysia

…new products going to markets both locally and abroad. The Group has started collaboration with a few strategic partners to produce new halal food product to cater to the local and exports market. The product, manufactured under a patented technology, has a significant untapped market both locally and overseas.


Cycle & Carriage Bintang in a filing with Bursa Malaysia

The Mercedes-Benz trading operations recorded a loss primarily due to increased competitive intensity resulting in lower
unit sales, reduced margins and to a lesser extent higher operating expenses.

…with the model mix moving away from S-Class to the lower margin GLC-Class and E-Class. Margins suffered further due to strong competition in the premium car market.

Furniture exports keep growing

“The ban on rubberwood export would ensure sustainable supply to the furniture industry to achieve Natip’s RM16 billion target.”

“If we are allowed to employ five foreign workers for one local employee (5:1), we can expand faster but the home ministry wants to stick to the 3:1 ratio.”

“Malaysia wants to have a balanced policy by keeping the upstream players including the rubberwood sawn timber mills happy instead of helping the downstream value-added furniture industry. But Malaysia can export a quota of 100,000 cubic metres of rubberwood which would generate a total revenue of RM200 million to RM300 million. However, we hope the government would consider reducing the quota to 40,000 cubic metres.”

“Some manufacturers are thinking of Vietnam where there is sufficient labour and raw materials like acacia wood for use in our furniture. If the environment is not good, with unfriendly policies that impede growth, we might think of moving out of Malaysia.”


Mobile healthcare app to revive Palette’s earnings

The demand for mobile healthcare in Malaysia is not as good as in China at the moment, but we are targeting the locations that have higher tourism numbers such as Penang, Melaka, and Kuala Lumpur. We expect the whole mobile healthcare business segment to contribute about RM3 million to RM5 million in revenue…”

…it plans to diversify into traditional Chinese medicine (TCM) to expand its earnings base by acquiring a 51% stake in TCM, food and herbal supplements trader Genopharma Sdn Bhd (GSB) for RM1.53 million.


Prestariang sees strong growth from SKIN

“It is a government-led initiative, as the current system needs to be refreshed and rebranded because some of the technologies used are old and things have changed. It is considered as zero risk for the government through the build, operate, maintain and transfer method under the public-private partnership.”

Payment to Prestariang will commence upon full commissioning of SKIN, with an average annual payment of RM294.7 million for 12 years (from the fourth to the 15th year) during the maintenance and technical operations period.


Foreign insurers are said to plan US$2 bil of Malaysia deals

A sale of a 30% stake in Great Eastern Life Assurance (Malaysia) Bhd could raise about RM5 billion (US$1.2 billion), while the disposal of a similar stake in Prudential Malaysia Assurance Bhd would fetch at least RM3 billion.

Foreign insurers have until end of June 2018 to reduce their holdings in local firms to 70% at most. The country’s central bank has been weighing tougher enforcement of a cap on foreign ownership as it seeks to boost local participation in the industry.


Bank Negara: Housing loan criteria review won’t resolve affordable housing issue

“Housing affordability has not improved significantly where average national house prices remained at 4.4 times of median income (affordable range is 3.0 and below), with lower affordability recorded for some major states and urban cities. Housing developers, working together with authorities and relevant stakeholders, should therefore intensify efforts to reduce costs and accelerate supply.”


RAM: Malaysian ports throughput growth to “remain at low single digit”

“Malaysia’s throughput remained resilient in 2016, with container throughput recording a 10-year CAGR [compound annual growth rate] of 6% while that of cargo throughput came in at 5%. At the same time, Malaysia handled more than 25% of the containers passing through the Asean-5 nations, in other words Malaysia, Singapore, Thailand, Indonesia and the Philippines and accounted for 3% of world container traffic.”

“On that note, regional port expansion is under way in Singapore, Malaysia, Indonesia, Thailand and the Philippines, adding at least 100 million TEUs (20-foot equivalent units) of new container-handling capacity over the next 20 years, with most of this planned along the Straits of Malacca. Although the new capacity will provide opportunities in terms of scale, there is a possibility of running into a supply glut and an ultra-competitive situation if trade growth does not keep pace.”


Don’t get ‘punch-drunk’ over Belt and Road, Munir urges Malaysia

“We must not be overwhelmed by the sheer size of the Belt and Road and think that good things are going to happen automatically. We must look at which part of it will work for Malaysia, and inevitably for Asean.”

…China’s investments in Malaysia’s planned port and railway projects over the next two decades could be as much as RM400 billion or 32% of the country’s expected gross domestic product (GDP) in 2017.

Data from Malaysia Investment Development Authority (Mida) showed that China is currently the largest foreign investor in the country. In 2016, Mida approved a total of 33 China-led projects valued at RM4.8 billion, almost double 2015’s tally of 17 projects worth RM1.9 billion.


Nazir urges govt to scrutinise benefits of Chinese-led deals

“What are the lessons that we have learnt across the 60 countries that have experiences in negotiating with the public and private China. This year is the 20th anniversary of the Asian financial crisis. What caused it? It is the infrastructure debt. Isn’t there a risk? This (Obor) is going to create huge infrastructure debts in the 60 countries. Nobody will not dare not to repay China. Therefore, the risk will eventually end up in sovereign balance sheet and then we have a problem. If this happens in many countries, then we have an Asian problem. That is one caution that we need to bring to the table.”