Regional Notes 2018.05.11

Govt support is crucial in the expansionary rubber glove industry, says MARGMA

Rubber glove manufacturers said today government support is crucial in an expansionary industry like rubber gloves where the world demand is now at 268 billion pieces and Malaysia produces 63% of it.

“We look forward to working closely with the new government in sustaining the rubber glove industry and maintaining global leadership as a premier producer and exporter of medical-grade rubber gloves. The export of rubber gloves is worth an estimated RM18.8 billion in 2018,” said Low.

Kossan to spend RM1.5b on new base

Kossan Rubber Industries Bhd’s sizeable acquisition of more than 800 acres (323.75ha) of land in Bidor, Perak may have “surprised” analysts, but its founder views it as a natural progression given the robust global demand for gloves. The project is expected to take six years to eight years to complete at an estimated cost of RM1.5 billion, Lim said in an interview with The Edge Financial Daily.

Kossan bought the 56-acre plot in Batang Berjuntai and 98-acre plot in Kuala Langat in 2013 and 2017 respectively, for an aggregate sum of RM130 million.

“We can’t finish that sizeable land [in Bidor]. Technically, for us, 300 acres would be good enough. So after we put up infrastructure for our own use, we will try to subdivide and sell some pieces of [extra] land to invite some of our suppliers to come and put up their factories,” said Lim. “To go for a bigger space is all in line with our future development. While we will still do what we are doing here at our existing plants, we will most likely go for segregation to achieve specialisation,” Lim said.


Datasonic sees net profit surpass RM100m in FY19

Abu Hanifah believes the potential to expand its smart ID and e-Passport project both in Malaysia and overseas is huge. “We have been receiving a lot of inquiries from neighbouring countries, particularly about our passport products,” said Abu Hanifah, adding that countries in Africa and the Middle East have also expressed interest in its products.

“We have built the next-generation e-Gate, which cuts the time [for passengers passing through the gate] by almost half to less than seven seconds. We have patented it for nine months locally and will patent it internationally. This technology is the first in the world.” The new e-Gate system will no longer use fingerprint scanning, but will feature facial recognition technology instead. It will have two cameras; one of which will first identify the passengers before entering the auto-gate while waiting in line, and the second camera will reidentify the passengers upon passing through the auto-gate.

“Under this e-driving licence, we have proposed to the ministry of transport a one-stop solution where users can apply for a digital driving licence through the web. Users can also renew their driving licence, road tax and also pay their summons [online],” Abu Hanifah said, adding that Datasonic hopes to kick-start this project after the 14th general election.

Company Notes 2017.10.27

British American Tobacco Q3 FY2017 Results

The Group registered market share decline from 54.5% in the second quarter of 2017 to 53.9% in the third quarter of 2017. Dunhill, the biggest Premium brand in legal market, registered 38.4% market share in the third quarter of 2017 (-0.6% versus previous quarter). The decline is mainly due to the prevailing high level of illegal cigarette incidence at 56.1% as of August 2017 (Source: Consumer Track by Kantar Research Agency) as well as the growth of a lower price segment within the legal market.

In relation to the cessation of the manufacturing operations announced on 17th March 2016, the Group has further recorded a one-off restructuring expenses of RM7.9 million as of year to date September of 2017 which consisted of on-going cost of the project, outplacement programs and one off expenses associated with the storage and transfer of unprocessed leaf and raw materials.

 

Maxis Q3 FY2017 Results

Demand for data continued to grow with 6.0 million 4G LTE users (3Q16: 4.1 million) and an average usage of 7.4GB per month (3Q16: 4.4GB). This was supported by the increase in smart-phone penetration which stood at 80.3% against 73.7% on a blended basis. The Group continued to lead the market with its expanded 4G LTE network at 89% population coverage, enabling customers to enjoy high speed and unmatched digital experience. In addition, the Group recorded an all-time high touch point net promoter score of +52 in the current quarter compared to +41 in Q3 2016.

 

Bursa Malaysia Q3 FY2017 Results

Bursa Malaysia-i , as the world’s first fully integrated end-to-end Shariah-compliant investing platform, will continue to intensify its efforts to promote Shariah investing in the market. Meanwhile, trading activities in Bursa Suq Al-Sila’ (“BSAS”) continues to record improvements. Bursa Malaysia will continue with its efforts to expand BSAS reach in new regions such as North Africa and Central Asia.

Bursa Malaysia recorded a significant milestone with the launch of the Leading Entrepreneur Accelerator Platform (“LEAP”) Market in July to assist small and medium enterprises (“SMEs”) to raise funds from the capital market for their business expansion. The LEAP Market went live on 3 October with the successful listing of Cloudaron Group Berhad.


Gadang Holdings Q1 FY2018 Results

On-going projects i.e. RAPID package 301 and 402, KVMRT V206 and TRX are executed on a fast track basis to optimise on cost saving and design effectiveness. With the latest award of Cyberjaya Hospital in August 2017, the outstanding order book of the Division has increased to RM1.98 billion.


Public Bank Q3 FY2017 Results

The Group’s Common Equity Tier I capital ratio, Tier I capital ratio and total capital ratio stood at a healthy level of 11.7%, 12.4% and 15.4%. The Group’s liquidity position also remained stable and healthy with Loan to Fund ratio standing at 88.6% as at 30 September 2017.

Tan Sri Teh said, “The Public Bank Group has always focused on asset quality in the pursuit of business growth. Thus, the Group has been able to sustain its stable asset quality even in challenging times. As at the end of September 2017, the Group’s gross impaired loan ratio of 0.5% continued to remain the best in the domestic banking industry.”


Lotte Chemical Titan Q3 FY2017 Results

Overall market started off moderately in Q3 2017 after the Hari Raya holidays. Market demand rebounded by late July following the Chinese government’s announcement to ban importation of plastic scrap by end of 2017. The capacities taken offline caused by Hurricane Harvey in United States had temporarily affected supply from United States, especially to Latin America. The market was briefly lifted up as concern on the supply disruption from US lingered. Meanwhile, supply from other regions was reportedly diverted to Latin America to fill the void.

Group plant utilization was lower at average 77% compared to average 92% in corresponding quarter. This was mainly due to statutory routine turnaround (every 5-6 years) for Cracker 1 plant in Malaysia and Indonesia polyethylene plants load was reduced during the quarter due to poor polyethylene economics as a result of tight ethylene supply and high cost.


Texchem Resources Q3 FY2017

The revenue recorded for YTD Q3 2017 was RM192.2 million against RM164.3 million in YTD Q3 2016. The Restaurant division incurred pre-tax loss of RM1.6 million against pre-tax profit of RM4.3 million in YTD Q3 2016 mainly due to closure costs of RM5.2 million arising from cessation of business by a subsidiary and losses from new concept restaurants.


Suiwah Q1 FY2018 Results

The Manufacturing division experiences high prospect projects entering commercialization stage during the past few months. The Group foresees continuous growth in the flexible electronics sphere. The new expansion project at Batu Kawan has also taken off and the rate of construction work is progressing in accordance with the milestone target. The Group will continue its mission to create and add values to all customers, employees, and shareholders by delivering innovative, competitive and quality interconnect technology solutions.


WZ Satu Q4 FY2017 Results

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 outlook of this sector is promising with the Group benefiting from Government expenditure in infrastructure.

Full restoration of plant may take up to 1 year, says Notion VTec (filing to Bursa Malaysia)

It has affected more than 552 Computer Numeric Control (“CNC”) machines and Work-in-Progress (“WIP”) goods and the Quality Control “QC” building but not the rear building and the surface treatment plants are good and operational.

Notion has adequate insurance coverage – RM350 million for property damage, RM217 million for business interruption up to 18 months. The preliminary estimate of the loss is about RM150 to 200 million. Once we gain access to the site we shall be able to assess the extent of damage and provide a more accurate estimate of loss.

At this moment, the Company estimates the affected segments are the camera, Hard Disc Drive top clamps and automotive parts but the Company will re-commence production in Factory 3 using any spare capacity that Notion has as well as sourcing and renting suitable CNCs and if needed, rent additional floor space to meet current and new customers’ requirements. It is not easy to outsource to other machinist companies as it requires safety certification and approved vendor which will take time. Notion is committed to restoring the orders to the customers’ requirement.

The immediate effects of this outage in this affected Plant are about 50 to 60% of the Company sales revenue but with the fast recovery plan, Notion will have restored 75% of the outage progressively within 5 months and the balance within another 3 months. But of course, the full restoration of structure and Certificate of Fitness may take up to a year.

 

Comintel to give special cash dividend after sale of subsidiary (filing to Bursa Malaysia)

The buyer is Aurelius Holdings Sdn Bhd, a newly incorporated investment holding company, where Comintel executive director Loh Hock Chiang is also a shareholder of Aurelius. As at 29 August 2017, Loh holds direct interest of 0.07% in Comintel. Comintel’s CEO of Comintel’s manufacturing segment Lee Chong Yeow is also a shareholder of Aurelius.

Comintel said the proposed disposal will give the company the opportunity to unlock and realise the value of its investments in BCM Electronics. BCM, which is involved in electronics manufacturing services, provides turnkey manufacturing services. Comintel said “there is limited leverage to further increase the competitive edge of the electronics manufacturing services (EMS) and EMS-related industries.” If Comintel is unable to continue to maintain the competitiveness of the EMS business, there could be adverse impact of potentially losing its key customers to its competitor’s, the filing said.


Thriving Top Glove believes growth is sustainable

“We are very fortunate to operate in a growing industry. Not only demand for medical gloves is growing but even the food industry, such as in the restaurants and supermarkets, is using a lot of gloves, especially disposable gloves. Demand is growing, so growth is definitely sustainable. To grow by 10% a year in any industry is very good and we have been growing for the past 30 years.”

“Margins over the past 15 years is about the same, which is about 10% for net profit margins. I think these margins are reasonable. Profit margins, which are too high at 30%-40% in the manufacturing industry, won’t last. You will invite competition when your margins are too high. Margins which are too low will affect the industry as it cannot grow well. I think net profit margins at the 10% level is sustainable and will likely continue for the next 10 to 20 years.”

“On average, our revenue per worker per year is about RM250,000. This figure is better than an electronics factory, which is about RM200,000. Some 10 years ago, we were only at RM150,000. So we have improved a lot, much more than an electronics factory.”

Surgical gloves are thicker than the normal gloves due to requirements during surgery. It also requires more raw materials per piece to manufacture. Top Glove presently only produces 2% of surgical gloves compared to its total product mix by sales quantity. “It is certainly good to consider expansion in terms of acquisition for surgical gloves. We are No. 1 in terms of examination gloves and rubber gloves that is exported from Malaysia. When it comes to surgical gloves, we are at No. 4 or 5. It is also in our plans to tap into the growing market of surgical gloves.”


This little known Malaysian stock has surged 400%

“The margins are beautiful,” Yap, 61, said in an interview at the company’s headquarters on the outskirts of Kuala Lumpur, referring to the Manno tie-up. Clients in those sectors are willing to pay more for quality machined parts, such as shoulder screws used to secure protective casings for sensitive equipment, he said.

The company, which supplies its mold-cleaning rubber sheets to about 70 percent of Malaysia’s chipmakers, is expanding into markets like Taiwan and China after winning clients including Chinese chip-testing company Tianshui Huatian Technology Co. “There’s a reason why we control the market here, and Tianshui as a client is a testimony to our capabilities,” Yap said. The manufacturing process may seem simple, but “it’s difficult to replicate,” he said, adding that there’s plenty of room to expand in those countries: while they require about 180 tonnes of rubber-cleaning sheets per month, Techfast currently only supplies about 12 tonnes.

Still, for Yap, the share-price surge is just the start. He says he plans to return 40 percent of the company’s net income to shareholders starting this financial year, up from 26 percent in 2016. The “big leap” in profit will be in 2018, he said.


Favelle Favco’s next phase of growth

Although the decline in oil prices for the past three years has not deterred the company’s growth, Favelle’s orderbook replenishment is slowing down. This is because more than 60% of its business is in the offshore oil and gas (O&G) cranes. As such, diversification has been part of the company’s plan. Presently, it has an orderbook of RM536mil, halved from its orderbook in 2014 of RM1.02bil. Earnings wise, the company saw its net profit grew marginally to RM32.3mil in the first half ended June 30, 2017, from RM31.3mil a year ago.

Favelle says it has inked a heads of agreement to acquire 70% stake each in Exact Automation Sdn Bhd, Sedia Teguh Sdn Bhd, Exact Analytical Sdn Bhd and Exact Oil & Gas Sdn Bhd. These companies are primarily involved in the provision of engineering services, industrial automation solutions, and specialised equipment mainly for the O&G industry.

It is worth noting that Favelle has about 40 years experience in the crane business. With the O&G sector starting to gain traction as crude oil prices continue to stabilise, it is timely for Favelle to embark on its next phase of growth.


Higher capacity boost for Hartalega

The world’s largest nitrile glove maker, which has been enjoying an average year-on-year revenue growth of 28% for the last 13 years, has attributed the stronger growth to the expansion of its production capacity.

At an investment of RM2.2bil, the NGC will comprise six state-of-the-art manufacturing plants housing 72 of the most technologically advanced production lines in the industry. Upon completion, the NGC will see Hartalega’s total installed capacity increase substantially to 42 billion pieces per annum from the current 29 billion pieces. Over the next five years, Hartalega aims to have an average growth of 15% per annum in terms of manufacturing output via capacity expansion.

On the likelihood of diversification to rubber products, he said the company would not undertake such an exercise. “We don’t plan to diversify. This is because our profit margin is double than the industry average. Furthermore, we have the competitive advantage in terms of strength and there is good potential for future growth in the glove business.”


Caring to launch digital platform

“We want to streamline all our channels, from our [present] bricks and mortar stores and e-commerce store to a website and mobile app, for our customers’ convenience in enjoying a seamless shopping experience. Customers can order products and have them delivered to their doorstep, or if they want to save on courier charges, they can order online from home and pick up their products from our outlets three days after.”

As of Aug 31, 2017, the group operated a total of 110 pharmacies, Chong said, adding that it plans to open 10 to 12 new outlets a year.

“We are conducting surveys and studies on locations in the east coast of Peninsular Malaysia, Sabah and Sarawak to prepare for our expansion there. Last month, we opened [a branch] in Kuantan and in December, we will open a branch in Kota Baru. We have identified a site in Sabah where we plan to open [an outlet], hopefully in six months. [Our aim] is to be a complete national player,” said Chong.


Nationwide Express sees Airpak buy as growth catalyst

The acquisition of Airpak, Rosilawati said, fits in with the group’s strategy of expanding its business-to-consumer (B2C) or consumer-to-consumer segments, which currently account for just 5% of Nationwide’s revenue. The bulk of its revenue is derived from serving business-to-business (B2B) customers.

While Airpak’s courier business is seen as complementary to Nationwide’s existing operations, the acquisition of MTR is geared towards the group’s diversification, expansion, and long-term sustainability, she said.


MAHB on connectivity goal

“By having Alibaba here, the programme would help startup to establish e-commerce and transaction and payment. When you have access to global market, the growth rate of e-commerce would be in a single-digit but once the ecosystem is implemented, it will quickly jump into high double-digit.”

“Commercial airlines have the opportunity to carry e-commerce cargo, which in turn would boost airlines profitability and good for the airport. Thus, airlines would also look at other opportunities to either same or introduce new destinations.”

“The aviation industry is about inbound foreign direct investments. For example Boeing and Airbus will save 40 per cent of their new aircraft deliveries over the next 10 years in Asia. Aircraft manufacturers need to move a lot of those activities in Asia to serve their customers. They need to open up more MRO centres.”


ES Ceramics seeks new revenue streams

“We want to further diversify our portfolio to include complementary new products within the dipping industry. It does not help that key glove makers have been expanding so aggressively over the years. There is a price competition because some players are hungry. Why? Maybe they have increased capacity, but utilisation has not caught up.”

On its part, ES Ceramics has diversified from producing moulds for different glove types — examination, household, industrial and specialty — to include breathing bags and balloons as well. Wong did not reveal the latest products that ES Ceramics is looking to include in its list, noting that discussion is still at its infancy stage.

“We do not have the advantage of some manufacturers who can purchase turnkey machinery [to adopt automation]. Our machinery needs to be modified and tested. For that, we need engineers. But some engineers are from fields that are relevant to our operations, and some are inexperienced. We have been hiring and firing, that has caused our staff costs to increase slightly, but that will stabilise when the right team is established to speed up the adoption.”

“Right now, our factories are not applying automation at a significant level,” said Wong. The group is currently focusing on less critical parts of the manufacturing line to allow for more room for modifications. “The first objective is to make sure automation can work before it is being applied across the board. Only then can we look at improving quality,” he said, without giving a timeline for the adoption to be meaningful to ES Ceramics’ financial performance.


Perodua has no plan to introduce EVs in Malaysia yet

Daihatsu holds a 20% stake in Perodua and is also the latter’s technology and technical partner.

“I would rather we focus on our bread-and-butter internal combustion engine (ICE), which is energy efficient and can still be used in Malaysia. What we’re doing now is looking at how we can realise the full potential of this engine in terms of fuel consumption. Until such time we cannot improve on it anymore — that is, once it already reaches its full potential — then only we’ll consider EVs.” Zainal said it does not make sense for Perodua to venture into EVs now as the infrastructure that is needed to support such technology, such as charging stations, is not yet widely available in Malaysia.

He explained that the government’s policy on EVs is two pronged — to try to bring down the cost of EV production by allowing lithium-iron batteries to be produced in Malaysia, and to install more charging stations nationwide. He said there are currently 230 charging stations being installed and it is expected that by 2020, there will be 1,000 stations.


Pensonic eyes IoT market

“We have not committed ourselves to a time frame for the IoT project. But we can safely say that we are committed to the project, which is now part of five-year business strategy. The Malaysia IoT Consortium (MyIoTC) is looking into creating an IoT ecosystem so that it could better tap into the IoT business opportunities worldwide, leveraging on the members’ respective strengths and area of specialisation.”

On the local front, Weng Khak said the company has been granted nationwide MYTV set-top box (decoder) distributorship in anticipation of Malaysian television broadcasting going digital in 2018. “The decoders would be a required item to receive television signals for continued access to Free-to-Air TV channels. The management is of the view that this distributorship would contribute to the group’s revenue in the short to medium term.”


Top Glove’s Lim buys 10.24% of Tropicana

The transaction price was not disclosed in the filing with the stock exchange. Based on yesterday’s closing of 93 sen, Lim’s 10.24% stake will cost him RM139.6 million.

“Over the years, Tropicana has proven itself by delivering high-quality and iconic projects to its customers. With my business experience, and regional as well as international contacts, I hope to contribute positively in moving Tropicana up the value chain.”


TMC to expand bed capacity to 1,100 in five years

“We are hoping to achieve this target if, and only if, we manage to complete the expansion of our capacity at Tropicana Medical Centre, as well as get the health ministry’s go-ahead to kick-start the Iskandariah Hospital in Johor. Most importantly for us is to expand our current facilities first, as we bank on the growing local population and increasing demand for medical services. Gradually, I am hoping the facility in Kota Damansara will reach to 600 beds by 2020.”

The construction of the additional facilities on a six-acre (2.43ha) land in Kota Damansara, serving a neighbouring population expected to increase soon to 200,000, will take three years to complete and cost around RM300 million. The centre’s overall weekly utilisation rate is 60%.

“We are also planning to open a fertility centre in East Malaysia. Hopefully, this will garner more interests from the locals and tourists. We recently celebrated the delivery of the 1,000th baby born via the in-vitro method. Obviously, this business is doing well.”


TNB’s net profit could fall by RM1b p.a. if 2% tariff mark-up removed, says CIMB Research

Under the IBR framework RP1 (2014-2017), TNB’s return on its transmission and distribution (T&D) assets is 7.5%, said CIMB Investment Bank Bhd in a note to clients today. However, its actual average tariff is about 2% higher than the base tariff set by the IBR due to higher electricity consumption by the commercial sector.

“As such, when the regulator revises the IBR parameters for RP2 starting in 2018, the allowable return may be lowered and we see potential earnings risk as it may no longer enjoy the additional 2% tariff,” said its analyst Ngo Siew Teng.

“Assuming TNB is only allowed to earn a 6.5% return (its weighted average cost of capital based on CIMB estimates) on its T&D assets and the 2% mark-up in tariff is entirely removed, we estimate that TNB’s net profit could be lowered by as much as RM1 billion per annum. This, plus the risk of a higher effective tax rate, may lead to a RM2 billion reduction in TNB’s annual net profit,” she added.


Plywood prices on uptrend

“Delay of shipments is about three to four months now, and port inventories are down in Japan while the demand continues to be strong. Plywood mills operate with very little log inventories. Also quality logs are hard to come by now,” revealed International Tropical Timber Organisation (ITTO) report in its latest issue. Reduced supply volume and higher export prices will continue.

“Floor base plywood demand has been shifting to domestic softwood plywood. Demand for softwood plywood is brisk mainly by large precutting plants. August softwood plywood production was high at 254,700 cu m, 10.8% more than August last year. It is a fact that domestic plywood is now more than imported plywood in Japan but imported plywood is absolutely a necessary product for Japan. But in the coming years, the (Japanese) market would not accept any product without traceability of forest certificate.”

“In Indonesia, 40% of total harvest is now planted timber and in Sarawak, share of planted timber in total harvest will be more than 50% in five years.”

Tax laws must not be complicated

Seah noted that the government had in recent times amended the laws after losing out in court disputes with taxpayers. The CTIM, she added, supports amendments that are made for tax laws to stay relevant to current trends and to maintain their original intent. “However, amendments [made] after the loss of a tax case are often drafted with a very wide scope to cover any imaginable circumstances and they [the amendments] sometimes unintentionally affect other taxpayers and put them in a difficult position,” said Seah.

Seah said policymakers should have guidelines and implementation plans ready to be rolled out immediately after amendments are proposed. Similarly, for all the rulings, Seah opined that the effective date should not be on a retrospective basis.

To avoid hiccups in implementation, communication between different government agencies and policymakers is essential to enable harmonisation of laws whenever there are changes or implementation of new rulings.

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.