Company Notes 2017.12.15

VS Industry Q1 FY2018 Results

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

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


Kein Hing International Q2 FY2018 Results

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


Berjaya Food Q2 FY2018 Results

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


LKL International Q2 FY2018 Resuults

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


Jaycorp Q1 FY2018 Results

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


Bison Consolidated Q4 FY2017 Results

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

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


Hiap Teck Venture Q1 FY2018 Results

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

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

OldTown gets takeover bid from global coffee maker

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

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


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

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

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

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

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


AirAsia worth more than meets the eye, group CEO says

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

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


Loss of Starbucks Korea business ‘a temporary setback’

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

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

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

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


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

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

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

Malaysia moving towards cashless society

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

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

Company Notes 2017.11.24

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 2017.07.07

Tailwind to lift furniture makers’ earnings

The government’s ban on the export of rubberwood effective this month would help to lift a cap on local furniture makers’ earnings growth. This is simply because with more supply of rubberwood moving forward, manufacturers would be able to meet their orders faster.

Malaysia’s rubberwood exports were estimated to be worth up to RM300 million a year compared with the furniture exports of RM9.5 billion annually, hence the ban is important to ensure priority be given to the local furniture industry.


Thong Guan sees RM1b revenue in 2020

…expects additional revenue of RM100 million to RM120 million in 2018, due to rising demand for stretch film, which contributes 45% to the total revenue.

“We plan to add 12 lines over the next 20 years for the stretch film division on a 16-acre (6.47ha) land in the Sungai Petani Industrial Area. We have one 33-layer nano line now with another one scheduled in July, and we want to add two lines every two to three years. One line can generate RM100 million turnover…to increase its five-layer blown film lines by another three at its existing plant, and to add 16 more in the next 10 years, adding that each line can generate RM36 million in turnover or about 400 tonnes in output.”

“The PVC wrap lines will see altogether 20 lines by 2026, making us the largest PVC wrap manufacturer in Southeast Asia. By the end of this year, we will have eight lines. Our PVC wraps are popular in Indonesia and the Philippines.”

“We have a lot of areas we have not explored. We hope to be present in another 30 countries in five years. For instance, we want to break into the sub-Saharan region in Africa as we are only present in South Africa, Kenya and Nigeria. In the Americas, it is largely untapped. We have customers in the US, Canada and Mexico only.”

Apart from its stretch film division (45%), the group’s main revenue contributors are the garbage bags segment (25%), industrial films or bags (14%) and PVC food wrap (7%). The balance revenue comes from its compounding (calcium carbonate) and F&B units.


Malaysian firms need to act fast in KLIA space grab

“We have directed Malaysia Airports Holdings Bhd (MAHB) to give priority to local companies who need the space… but we want the locals to grab opportunities faster. Jack Ma alone took up so much space,” referring to the Digital Free Trade Zone (DFTZ), which will see Malaysian Digital Economy Corp and Alibaba Corp collaborating to develop some 110 acres in the old Low Cost Carrier Terminal (LCCT) here.


Malaysia’s exports grew 32.5% in May, trade surplus at RM5.49b

…stronger export growth for the month resulted in a trade surplus of RM5.49 billion, the 235th consecutive month of trade surplus recorded since November 1997.