Regional Notes 2018.05.25

Malaysia’s credit rating threatened by GST removal

“In 2017, GST revenue was RM44.3 billion or 3.3% of GDP. Unless the government introduces other offsetting measures at least over the next one to two years, the GST’s removal will have a net negative effect on government revenue, even accounting for some budgetary cushion from higher oil prices.”

“Beyond 2018, the reintroduction of the SST will create a revenue shortfall of 1.7% of GDP if the GST remains at zero. The ministry of finance said it will announce specific measures that will cushion the shortfall. According to the government, the rationale for eliminating the GST is that it will ultimately boost private consumption and economic growth, adding to the tax coffers through improvements in corporate and motor vehicle taxes, and excise and import duties. We do not include these effects in our assumptions because we do not expect a sizeable multiplier effect.”

“While it will uplift consumer sentiment in the short term, the actual consumer spending trend would depend on the impact of the GST removal on general prices. We foresee ‘price stickiness’ to be a major challenge for policymakers as businesses may, for example, be reluctant to reduce prices due to profiteering and a general belief that most businesses will not reduce prices.”

Malaysia’s 1 trillion Ringgit government debt explained

Federal government debt of 686.8 billion ringgit, or 50.8 percent of gross domestic product

Government guarantees of 199.1 billion ringgit, or 14.6 percent of GDP. The government is committed to paying the debt of entities which are unable to do so, including 42.2 billion ringgit for Danainfra Nasional Bhd, 26.6 billion ringgit for Prasarana Malaysia Bhd and 38 billion ringgit for 1MDB.

Lease payments for public-private projects of 201.4 billion ringgit, or 14.9 percent of GDP. The government is obligated to pay for rental, maintenance and other costs on a number of projects, such as construction of schools, hospitals and roads.

NTPM to spend RM50mil on expansion

“Our selling price has been adjusted by about 10% already, but still that is not sufficient. So, the profit has dropped. For this reason, we need to increase our market share to sell more. The growth of the tissue paper business in the domestic market is less than 3% a year, which is in line with global growth. In Vietnam and Indo-China, however, the growth is faster, which is why we are expanding the Vietnam operations.” Lee said the group was targeting to double the contribution from Vietnam by 2019 to RM80mil from RM40mil.

The tissue paper business generates about 65% of group revenue, while the personal care segment contributes 35%. Some 90% of the personal care business is generated from the local market. Despite the challenging and highly competitive local market conditions, the group succeeded in raising the revenue from the personal care segment by 9.4% to RM199.9mil in 2017.


Vitrox expects 2018 to be another growth year

“In the first three months of 2018, we have secured accumulated sales orders of about RM105mil, which will keep us busy for the next three months. The March book-to-bill ratio is 1:2, which means that for every 100 units of products we ship out, we receive 120 units of new orders in the same period. The current book-to-bill ratio is even higher.”

Company Notes 2017.11.17

United Plantations Q3 FY2017 Results

In the U.S., the soy bean harvest is in full swing and weather has been favorable, hence, the U.S. soy bean production is expected to be historically high due to the increased planted acreage in combination with good yields. In South America, the soy bean plantings are delayed in Argentina due to excessive moisture and in the northern part of Brazil due to dry conditions, however, at time of writing it’s still too early to ignore an expected South American bumper crop. The increase in soy bean production is therefore expected to have a negative impact on prices during 2018 as global vegetable oil stocks are expected to recover from current levels


Hovid Q1 FY2018 Results

Preceding quarter’s revenue was affected by lower sales and products being out-of-stock as they were depleted during the period when the manufacturing licences were revoked, and production not being able to run optimally due to insufficient workers during the initial months subsequent to the reissuance of the manufacturing licences. In comparison, production for all plants are operating at 24 hours a day during the current quarter to deliver the back-orders received during the period the licences were revoked.


Ranhill Holdings Q3 FY2017 Results

As for the International Environment sector, our strong partnership with SIIC has resulted in reducing the project loans’ interest with an average interest saving of approximately 1%. The joint venture is now poised to commence exploring new opportunities for industrial waste water concession contracts and other potential water related works in China and other South East Asia countries under the One Belt One Road initiative. 


Scicom MSC Q1 FY2018 Results

The BPO division has taken the following actions to mitigate the impact from clients’ change in strategy: a. Cost mitigation – The BPO division is mitigating its cost structure on two major fronts, namely controlling operations cost and enhancing utilization of the Group’s fixed asset base. For the current financial quarter under review as an indicator, direct contribution increased slightly to 30.5% as compared to 29.3% for the preceding financial year ended 30 June 2017; b. Extensive build up in sales pipeline Leveraging on Scicom’s track record and experience in multilingual contact centre management, Scicom’s business development team has been actively participating in new tenders with estimated contract value of approximately RM105 million. The management further expects to substantially successfully convert outstanding tenders from the above pipeline to commence operations and contribute to the Group’s bottom line by the fourth quarter of the current FY.


Apex Healthcare Q3 FY2017 Results

Steady revenue growth was achieved across all business units, with increased contributions from pharmaceutical sales to the Government sector and contract manufacturing services

During the quarter, the Group’s pharmaceutical manufacturing operations secured certification for compliance with European Union Good Manufacturing Practice, opening future growth opportunities.


Paramount Corporation Q3 FY2017 Results

…following the completion of the Sale and Leaseback agreement with Alpha REIT to dispose of the Sri KDU campus under its asset-light strategy which generated a gain on disposal of RM77.8 million. With the completion of the Sale and Leaseback agreement with Alpha REIT, as part of its asset-light strategy,
the Group would continue to explore opportunities to enter into similar ventures in future.

With the enlarged K-12 segment, comprising Sri KDU and REAL Education which offer premium and more affordably priced alternative private and international schools respectively, Paramount Education is now able to reach a wider segment of the K-12 market. Sri KDU’s mark of excellence in quality education continues to prevail in the market. Following the success of PISA in 2012, Sri KDU International School achieved the International School Quality Mark (ISQM) Gold Award this year, the first in Malaysia and third in Asia to procure this award.


Eastern & Oriental Q2 FY2018 Results

In the past months we are beginning to see more enquiries and bookings for our existing projects in STP1 namely Andaman and Tamarind. Besides selling down our inventory to improve our cash position and net gearing levels, we are heartened by the numerous unsolicited interest in our non-core assets which we have identified for disposal.


Lay Hong Q2 FY2018 Results

The entry of NH Foods Ltd into the Company as a substantial shareholder recently has marked a major step forward for the Company’s chicken product manufacturing business in the form of new product development and market penetration.

The Company is on track with its planned expansion to increase our production capacity. Our egg production now stands at approximately 2.3 million eggs per day to date and is expected to grow to our target. At the same time, our broiler capacity will increase to cater to new requirements in our food processing taking into consideration our JV with NH Foods Ltd.

The Company is constantly reviewing its strategies and will capitalize on the strength of NH Foods to take the Company to greater heights. A new joint venture company under the name of NHF Manufacturing (Malaysia) Sdn Bhd has been set-up and is now actively working on its plant set-up and product development. As at to-date, a total of 11 products have been launched and the response has been encouraging. The Company is continuously researching on viability of new products to be developed and introduced to our production line. It is expected that new products will be launched in future.

A piece of industrial land in Selangor Halal Hub, Pulau Indah has been identified for the plant to be set up and is currently working on the factory and machinery layout. This is expected to be the site for the JV with NH Foods. Works to acquire and build the said factory is progressing in a timely manner in accordance to our planned timeline.


Evergreen Fibreboard Q3 FY2017 Results

The increase in revenue was mainly contributed by commercial run of new Particle Board Plant in Segamat and higher average selling price as the Group emphasis more on high premium products as well as impact from weakening of Malaysian Ringgit against US Dollar.

The slight decrease in profit was mainly caused by higher log and glue cost, couple with higher repairing and upgrading cost incurred on the stoppage line in Thailand plant.


Ge-Shen Corporation Q3 FY2017 Results

The Group is still looking towards factory expansion across the subsidiaries to increase factory space and manufacturing assets in order to, amongst others achieve higher sales, improving cost structure and gain economies of scale. The construction and renovation of the new facilities in Vietnam is in progress despite some delays and expected to complete by beginning of 2018. Total capital expenditure is expected to increase due to higher building specifications and factory facilities investment and is expected to improve the cost structure and increase production capacities in the Vietnam subsidiary in the long
run.


Vitrox Corporation Q3 FY2017 Results

…contributed from the increase in revenue recorded for Automated Board Inspection (ABI) and Machine Vision System (MVS). The increase was mainly due to higher demand from widen customer base and positive acceptance of our products.


Aemulus Holdings Q4 FY2017 Results

Aemulus continues to create growth through innovation and leadership in the ATE markets for semiconductor devices. The launching of our new RF tester, Amoeba 7600-S combines our latest technology with scalability. We believe that the technology is going to be able to serve the smartphone and tablet market well especially in the Far East region. Based on the current business trend, demand for ATE from the smartphone and tablet segments as well as the enterprise storage segment is expected to continue into 2018. The group is expecting revenue growth to further accelerate in the fiscal year 2018, led by ATE sales growth in the Far East region with US region complementing it.


Pentamaster Corporation Q3 FY2017 Results

The higher revenue recorded was mainly due to increase in sales from automated equipment and smart control solution system segment which was partially offset by the decrease in sales from automated manufacturing solution segment.


IFCA MSC Q3 FY2017 Results

To further accelerate innovation and growth within the property sector, IFCA has initiated an accelerator program with a primary focus to create greater value and solutions for the property sector together with the start-up community. In this program which is specifically focused on prop-tech, IFCA will review potential prop-tech start-ups for opportunities for investment and partnership to bring new solutions and business models into the market.


Century Logistics Holdings Q3 FY2017 Results

Following the ongoing synergy process, the Group also intends to tap on the extensive network and infrastructure of its major shareholder, CJ Logistics Group. The Group is currently setting up the necessary infrastructure to roll-out its parcel delivery operation and expects to commence the operation by the first quarter of year 2018.


Kejuruteraan Asastera Q3 FY2017 Results

To (i) grow its market share in Malaysia by increasing tendering activities, focusing on affordable housing sector and geographical expansion; (ii) strengthen its capabilities by growing its mechanical engineering services segment; and (iii) diversifying its revenue stream by providing maintenance services including upgrading, expansion, refurbishment, retrofitting and renovation projects.

Hartalega to launch ‘game-changer’ gloves next year

“Bacteria coming into contact with the glove surface will be exposed to the anti-microbial activity which, in independent testing, has achieved up to a five-log (99.99%) kill within five minutes of contact. We have successfully conducted production trials and further clinical studies are planned to quantitate the benefits of using antimicrobial medical examination gloves in clinical settings.”


Spritzer eyes export markets, to place out stake to Singapore fund

“We think that growth domestically has become a bit saturated now. So, it is a good move to explore overseas markets. The partnership with Dymon Asia Private Equity will take us to new markets and expand the business even further. They can help us with the export markets and bring the brand to overseas markets especially in the countries that they are already in. To start from scratch will be an uphill challenge and this partnership is a good way to do it. Dape would like to give its industry experience and broad networks to support Spritzer.”

Spritzer will build a single-storey automated warehouse adjacent to its current bottling plant with a built up area of about 105,820 sq ft. “The new warehouse will have an automated storage and retrieval system. The existing warehouse is operated manually and almost fully utilised now. The current warehouse will not be able to cater to our needs should inventory levels rise,” said Chuah.


MAHB dismisses competition fears in Istanbul

Some analysts believe that MAHB’s wholly-owned Istanbul Sabiha Gokcen International Airport (ISG) has benefited from the current Ataturk Airport’s space constraints as the latter is surrounded by urban areas, constraining cost-effective expansion. As such, the upcoming new airport may draw passenger traffic from ISG once it begins operations.

“We believe that both the new airport and ISG have two different markets to serve, especially considering that ISG is ideally located on the Asian side of Istanbul,” MAHB told The Edge Financial Daily. “It is strategically positioned not only as the airport serving the Asian side of Istanbul, but also as a de facto city airport, serving the whole of Istanbul. “Aside from that, ISG’s resilience compared to Istanbul Ataturk Airport during the geopolitical tensions in 2016 proved that travellers had a strong preference for our airport,” the airport group added.

It may also help MAHB reduce its exposure to lingering risks in Turkey while returning to its original intention of being a partner of ISG instead of fully owning it.


Scicom to expand digital space presence

“If you talk to anybody who has a proposition, it’s going to be an online proposition. We have all the infrastructure [for that], from building the application to doing the mobile apps to the payment gateways. So there is a huge market there [as] the future will be all e-commerce and because we have this unique set of skills where we understand customer relationship management, customer fulfilment, technical support, payment gateways, mobile apps, [and] application development — this makes all the difference. We can’t just be a call centre anymore, it doesn’t pay.”

“The strategy is to make e-government solutions a major contributor down the line, primarily as the margins are better, contract terms are longer and typically every year business increases as the population increases, so you would always have natural growth.”

“The trick is to get one new big business every year; that’s how you maintain your growth momentum. I wouldn’t necessarily agree there would be an impact; I think we have lots and lots of business in the pipeline; it’s just a matter of time to conversion.”


Mikro MSC to tap IoT to keep earnings growth momentum

“When we talk about new products, it is related to existing offerings. It’s more like an upgrade with new features, maybe with some elements of IoT. Rather than a stand-alone system, it will be an integrated system … everybody wants to have all these features but the pricing must be at a level that is right for businesses and our customers.”

Presently, the group commands about 50% of the local market share and has seen its business in Vietnam gain traction. Yim said Asean’s and Malaysia’s infrastructure growth stories are positive for Mikro MSC since its digital meters, relays and power factor regulators are used in high rises, as well as in mass rail transport systems being developed in the region.

In FY18, the group expects to complete its move to its new factory in Shah Alam — which it bought for RM11.7 million. The move is expected to cost it another RM5 million, including for the purchase of new equipment and machinery. “It gives us the opportunity to introduce new automation and other capacity that we could not do in the past as we have a larger space now,” Yim added.

Property market will be badly hit in 2018, says expert

Cheong pointed out that the RM12.26 billion is only from the primary market, which includes launches by developers. It does not include the secondary market, which is house owners seeking to sell their homes.

Cheong said this “generous payment mode” exists because developers are finding it hard to sell off their new properties. He said they are in danger of losing their bridging finance from banks if they fail to sell at least 40% of the total units. The bridging finance is used by developers to support their construction.

“This is where the danger starts. I predict if this continues, markets will crash within 24 to 30 months because consumers do not have the financial capacity to buy properties any more. Furthermore, developers who started building two years ago are expected to flood the market further with their units…So about RM16 billion of properties are waiting for buyers. But there is no demand. The reason is that people don’t have the money.”


Industrial property set to gain

The rapid growth of e-commerce, especially in Asia-Pacific, is creating new high-value assets that are now coming on stream. The industrial segment is a highly under-invested sector, as stock availability remained tight while rental rates had been on the rise over the past two years (over 30%).

The e-commerce boom will be a looming threat to retail malls, while the rapidly-growing office supply will continue to put rents under pressure. To tackle the challenges faced by the retail REITs, malls are shifting towards providing more lifestyle and food and beverage offerings, as opposed to just brick and mortar.


Will AIA, Great Eastern, Prudential list on Bursa?

There are 23 general insurers and 14 life insurers in Malaysia. Market share is more evenly distributed in the general insurance segment in terms of 2016 annualised gross earned premium, with local players comprising 52.1% and foreign players accounting for 47.9%. However, foreign names dominate the life insurance sector, with total market share of 81.7% in 2016 vs. the 18.3% of local insurers. AIA, Great Eastern and Prudential have a combined market share of 66.7% (in terms of gross earned premium).

Company Notes 2017.10.13

LPI Capital Q3 FY2017 Results

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

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


Zhulian Q3 FY2017 Results

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


Atlan Holdings Q2 FY2018 Results

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


Top Glove Q4 FY2017 Results

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

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

Vitrox investing RM130mil to expand ops

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

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

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

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


Choo Bee upbeat about steel price rally

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

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

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


George Kent partners Siemens for HSR bid

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


Petronas Dagangan in joint venture to install EV charging stations

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


Rubber glove exports to hit all-time high

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

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

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

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

Charting Naza’s direction

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

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


Malaysia Airlines mulls stake sale to another carrier

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

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

Malaysia addressing inaccurate claims in EU draft palm oil report

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

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

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


Digital banking penetration to exceed 60% by 2018

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

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


Here’s why Malaysians can’t afford a house

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

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

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


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

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

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


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

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

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


Malaysia should ease migration policy

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

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


Minimum wage to go up

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

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

Company Notes 2017.08.18

Media Prima Q2 FY2017 Results

The Group incurred an LAT of RM138.4 million for 2QFY17 mainly due to the impairment of investment in an associate of RM142.4 million.

…lower advertising and newspaper sales as the shift to digital media significantly affected the Group’s traditional media business. While the Group has ventured into new digital and consumer-based business initiatives to complement its traditional media segments, these initiatives are still undergoing a gestation period.

Digital Media – The proposed acquisition of RAHSB will enable access to resources and competencies to drive growth in digital business by acquiring expertise in digital content curation and digital content marketing. The acquisition of RAHSB increases content monetisation opportunities for the key market segments by leveraging on the Group’s audience base, big data initiative and traditional media platforms to strengthen the newly acquired business further.


Eversafe Rubber Q2 FY2017 Results

The Group plans to increase its export sales and geographical footprint to various overseas markets. The new markets the Group intends to expand to will primarily be outside the ASEAN region, with a focus on the South American region. The Group is in the midst of finalising the details of a joint venture agreement with its business partner to establish a tyre retreading plant in South America and also to market and distribute the retreaded tyres.


AHB Holdings Q1 FY2018 Results

AHB has increased its R&D resources and plans to continue to introduce new dynamic furniture programs and new products to improve financial performance. AHB is also diversifying its market base, including improving the local market share of the office furniture market.


Batu Kawan Q3 FY2017 Results

Profitability of the Group’s oleochemical business will be lower in view of stocks write-down, challenging and difficult market environment. As for the Chemicals division, profit from the chlor-alkali business is projected to be higher due to better prices while the restructured sulphuric acid business should contribute a modest profit.


Kuala Lumpur Kepong Q3 FY2017 Results

Financial performance of the oleochemical business was significantly impacted by the high volatility of the price of its raw material, crude palm kernel oil (CPKO), during the current quarter which had created mismatch in the selling price of oleo products against its raw materials purchase price. Customers additionally, are exercising higher prudent buying strategy in light of market conditions. This had resulted in the write-down of RM60.3 million in stocks with most of the oleo products had lower or negative contributions.


Hup Seng Industries Q2 FY2017 Results

…the development of new market such as China over the past has also started to bear fruits contributing to the pleasant growth.

Domestic sales registered a drop of 2% mainly due to some problem in East Malaysia market. However, this decline was more than offset by a 20% growth in export sales propelled by higher demand from existing distributors due to concerted effort of promotion activities as well as contribution from a new distributor in China whom the Group nurtured since 2016.


Ornapaper Q2 FY2017 Results

The key factors affect the group’s performance include mainly raw material costs (such as kraft liner, test liner, medium paper and etc), operationg cost, demand for the packaging products and the ability to cope with the change. The recent upward trend of raw material costs has resulted in increase of production cost.

The sales volume and average selling price for corrugated cartons and boards has increased by 4.97% and 8.76% respectively compared to the preceding quarter.


Pharmaniaga Q2 FY2017 Results

Although earnings were impacted by the temporary closure of production lines, this will subsequently enable the Group to move forward with the commercialisation of new products as some of the products were approved ahead of schedule. This is certainly testament to the Group’s strong research and development initiatives.


LTKM Q1 FY2018 Results

The decrease in earnings was due mainly to the drop in egg prices and increase in cost of major raw materials namely corns and soybean.


Taliworks Q2 FY2017 Results

The high trade receivables particularly the amount owning by SPLASH continues to be a major concern as it has long been outstanding due to the uncertainties in the Selangor water restructuring exercise.


Paramount Q2 FY2017 Results

Education institutions have gone into a price war in an attempt to hold their respective market positions and compete for new students.

With the enlarged K-12 segment, comprising Sri KDU and the R.E.A.L Education Group, offering premium and more affordably priced alternative private and international schools respectively, Paramount Education is now able to reach a wider segment of the K-12 market. Sri KDU’s excellence in quality education continues to be reinforced. Following the success of PISA in 2012, Sri KDU International School achieved the International School Quality Mark (ISQM) Gold Award this year, the first in Malaysia and third in Asia to procure this award.


Press Metal Aluminium Q2 FY2017 Results

Aluminium price continues to increase as more and more production cuts are being announced in China according to the government supply reform policy. As a result, the China smelting production is expected to slow down and the world’s supply and demand will tilt towards a deficit situation which will support long term aluminium price performance.

Our smelting operations will continue to run at full capacity for the remaining of the year with demand continues to be well supported.


IFCA MSC Q2 FY2017 Results

As the trend of businesses moving online to the cloud starts to pick up momentum, the Group has started to invest in the next generation of solutions for the property industry with a strong focus on prop-tech. This initiative is expected to leverage the depth of experience of the Group in the property sector over the last 30 years, and combine it in a partnership with a leading cloud technology provider.

As at 30 June 2017, the Group has unbilled orders in hand amounting to RM28.22 million, an increase of RM 4.44 million from the previous quarter, showing an upward trend in the order book.


HSS Engineers Q2 FY2017 Results

The decline was compensated by newly secured projects in 2017 including East Coast Rail Line (“ECRL”) scheme design and Kuala Lumpur-Singapore High Speed Rail.

The Group has put in place a series of future plans as follows:- (a) Geographical expansion into ASEAN, Middle East and India regions; (b) Continuous enhancement on its three (3) existing core services (i.e. engineering services, project management and Building Information Modeling (“BIM”) services) and proposed venture into a fourth (4th) core service i.e. facility management; and (c) Venturing into the provision of support services to the water and power generation sectors which are expected to continue receiving strong government support given their strategic importance to the country.


Dialog Group Q4 FY2017 Results

As a leading integrated technical services provider to the upstream, midstream and downstream sectors in the oil, gas and petrochemical industry, DIALOG remains confident that its business model is well structured and can withstand the current oil price volatility and currency movements. The Group’s financial track record has proven that DIALOG’s business is well risk-managed and sustainable.


S P Setia Q2 FY2017 Results (Press Release)

Sapphire By The Gardens, comprising a residential tower with 345 units of apartments and GDV of AUD376 million in Melbourne’s Central Business District (“CBD”) witnessed a strong take-up rate of 70% during the launch weekend on 17 June.

Moving forward into the second half of 2017, the Group will focus more on the local market with emphasis given to the launches of mid-range landed properties in the Klang Valley…The strategy is to launch more of the landed properties in the Group’s flagship townships where the underlying demand for such properties by owner occupiers are still strong.


Three-A Resources Q2 FY2017 Results

The Group has positioned itself strategically to leverage on the expansion of production facilities especially the completed Maltodextrin product Plant no. 3 and also the acquisition of lands located in the vicinity of the existing production facilities.


Shangri-La Hotels Malaysia Q2 FY2017 Results

Shangri-La Hotel Kuala Lumpur is expected to deliver revenue and profit growth for the full year 2017, supported by stronger food and beverage business over the second half, with the continuing benefit of its recently fully upgraded banqueting facilities and all-day dining restaurant. Hotel Jen Penang successfully completed its major renovation, with the hotel’s full inventory of renovated rooms back in operation at the end of June 2017. This will allow the hotel to drive improvements in occupancy and room rates during the reminder of 2017.


Aemulus Q3 FY2017 Results

Sales growth in the Far East region has been encouraging. The double digit revenue growth target set by the Group for this region remain unchanged.

Orders for products continue to stream in from our customers in the enterprise storage segment.

The combined revenue from the enterprise storage, smartphone and tablet segments constitute close to 90% of the Group revenue


Century Logistics Q2 FY2017 Results

The Group will leverage its extensive customer base and internal strength which the Group has put in place that focuses on providing value added logistics solutions while maintaining cost efficiencies. Following the ongoing synergy process, the Group also intends to tap into the extensive network and infrastructure of its major shareholder, CJ Logistics Group. The Group is currently setting up the necessary infrastructure to roll-out its parcel delivery operation and expects to commence the operation soon.


Vitrox Q2 FY2017 Results

…the increase in revenue recorded for Machine Vision System (MVS) and Automated Board Inspection (ABI). Revenue from MVS and ABI have recorded an increase of 45% and 31% respectively against the corresponding period of preceding year. The increase was mainly due to higher demand from widen customer base and positive acceptance of our products.


Carlsberg Brewery Malaysia Q2 FY2017 Results (Press Release)

… higher sales volume and a one off trade discount adjustment in Singapore. This improvement was achieved despite trade loading last year in Malaysia during June 2016 prior to the price increase in July 2016.

“Our premium brands Somersby cider and Kronenbourg Blanc are growing double-digit, improving our brand mix and overall revenue. In Malaysia, our draught stout Connor’s is also growing double-digit as well and reaching new consumers with the ‘Connor’s Challenge’ campaign. In Singapore, our Asahi Super Dry sales are also very encouraging.”


Allianz Malaysia Q2 FY2017 Results

The increase in gross earned premiums of the life insurance operation was mainly contributed by growth in premiums from agency and bancassurance channels.

The higher expense ratio is due mainly to investment in digital assets and provision for impairment on insurance receivables.

The second phase of motor and fire detariff commenced in July 2017 where insurers have the flexibility to deviate pricing for the motor and fire portfolios within certain regulatory allowances. The pricing for both lines of business is expected to move towards a risk-based pricing approach. Competition is expected to intensify for the general insurance business.

The general insurance subsidiary has taken key initiatives to remain competitive in this environment including building a technical pricing model, active portfolio, and claims management as well as disciplined expense management.

The life insurance subsidiary will focus on strengthening its distribution channels through the professionalization and increased the productivity of its agency force. It will generate growth from its investment-linked business with rider attachments which cater for customers’ protection needs.


JcbNext Q2 FY2017 Results

Pending the acquisition of new businesses and/or investments, the Group’s future prospects will depend on the performance of its associated companies in Taiwan and Malaysia, quoted investment in Hong Kong, foreign exchange rates, and operating activities in Malaysia and Japan. The Group will derive income primarily from the provision of consultancy services, dividend income from its quoted investments and rental of office space.


Tasco Q1 FY2018 Results

Contribution from export cargoes of printed circuit boards, E&E, capacitors, semiconductors as well as aerospace customers boosted the higher revenue of AFF business. For Ocean Freight Forwarding (“OFF”) division, strong shipments contribution by a solar panel customer, especially export shipments to New York & Savannah of USA, coupled with increased export to Japan of an aerospace customer significantly uplifted OFF revenue performance. New customers of furniture manufacturers of OCM business also contributed higher revenue to OFF division…Trucking division posted a revenue increase of RM3.0 million (15.2 per cent), largely as a result of an increase in a new secured E&E account in the central region as well as increased distribution of an FMCG customer and inbound cross border business from Thailand.

On 12 July 2017, we completed our acquisition of Gold Cold Transport Sdn. Bhd. (“GCT”), thus marking our official foray into cold supply chain logistics business. Hence, the results of GCT will be consolidated into our accounts with effect from our second fiscal quarter this year. Our acquisition of MILS Cold Chain Sdn. Bhd., on the other hand, is still pending approval from the relevant authorities.


Pos Malaysia Q1 FY2018 Results

…the recent upbeat economic sentiments, globally and domestically, are supportive of the growth of e-Commerce, the key driver of the Pos Malaysia’s revenue growth. Furthermore, the Government’s continued progress in rolling-out the Digital Free Trade Zone incentives is also positive for the continued growth of e-Commerce and its ecosystem in Malaysia.

…traditional mail business to remain challenging due to the structural decline in mail volume driven by the continued shift into digital and mobile communications platforms.


Notion VTec Q3 FY2017 Results

The accounting profit is affected by losses mainly arising from Notion Thailand and Notion International, Johor due to insufficient orders covering the higher overheads but there are new orders from new customers in the coming quarters.

The camera continues to be on a decline…


Hong Leong Industries Q4 FY2017 Results

Malaysian Newsprint Industries Sdn Bhd (“MNI”), an associated company had commenced creditors’ voluntary winding-up proceedings. Arising thereto, the Group had made a one-off full impairment provision of RM172 million which is the Group’s carried amount of investment in MNI as at 30 June 2017. Going forward the Group is no longer required to equity account for the future results of MNI. In the event of any residual value from the liquidation process, the Group will recognize any recoveries in future periods.


ELK-Desa Resources Q1 FY2018 Results

The Group will continue to strategically operate in the underserved niche market and focus on growing the small value second hand car financing segment. The business strategy will also be constantly reviewed to ensure the Group continues to stay relevant in the industry and at the same time keeping the credit risk exposure within the tolerance level.

…the furniture business will continue to be affected by the sluggish consumers’ sentiments and the current soft economic environment. However, the Group will continue to grow the furniture business and focus on ensuring the operational efficiencies in the various divisions (i.e. retail, wholesale, export, and manufacturing).


Tune Protect Group Q2 FY2017 Results

“Gross Written Premiums is up by 11.3% which was driven by our motor, offshore oil, and engineering, as well as Middle East travel businesses.”

“More importantly, we are excited to announce that we’ve secured a new airline partner. Our partnership with Cambodia Angkor Air marks the 4th airline partnership with Tune Protect and is slated to commence in 3Q2017. This is definitely a silver lining for Tune Protect, as we ride out the storm. Securing another airline partner in the region is a huge milestone for us as it brings us closer to our vision of becoming a leading travel insurer in ASEAN.”

…due to increase in net claims mainly from Motor class of general insurance business, offset by a minor improvement in share of profits from overseas ventures.

“To alleviate the higher costs of motor claims that continue to impact our Malaysian general insurance business, we have redirected car repairs to non-franchise panel workshops to minimise the cost. We are also revising the way we evaluate franchise vehicles that have higher loss exposure and reviewing Beyond Economic Repair level to curb total loss exposure.”

With the intensified competition on the back of the liberalization of Motor and Fire businesses, our strategies for the coming months will concentrate on providing further online accessibility and product differentiation via risk-adjusted pricing.


Kawan Food Q2 FY2017 Results

The construction of the new plant at Pulau Indah is progressing accordingly to the revised schedule. The new factory is expected to be commissioned in the second half of the year. The research and development activities are continuing for new products which are planned to be manufactured at the new factory.

Thong Guan eyes to list unit on HK’s GEM

Ang is increasingly frustrated with the low market valuation of Thong Guan, saying it is an unjustified discount to its local rivals, which he hopes would eventually be corrected with a spin-off of its F&B arm and leaving the parent focused on the plastic packaging business.

“Last year, the F&B division contributed about RM4.5 million in profit and we expect this to grow to RM5 million this year. The PVC food wrap business recorded a profit of RM6 million in 2016. If we combine the two, we have a RM10 million profit company.”

“China has the largest market for organic noodles in the world. And the people there are growing more affluent, preferring to buy imported food products because they know regulations for imported food are very stringent. And there is a big market for baby noodles in China. So far, there is no organic noodle for babies in China and we would be among the first to go with that concept. I believe it would work. People want to start [letting] their kids [like and eat healthy food] when they are young.”

“Under China’s food regulations, products for children more than seven months old are categorised as infant food where certain vitamins and minerals are necessary. Our baby noodle products did not meet those requirements. So, we are changing the packaging of these baby noodle products in order for them to enter China.”

“We are actively looking for potential acquisition targets in the nanotechnology stretch film and max-stretch film business in Malaysia, Vietnam and other countries in Southeast Asia, [but the] market is good now. When the market is bad, then it is a good time to move in. We are also looking at companies that can provide complementary strengths like producers of plastic raw materials. We have been in talks, but we are not in a hurry [to complete any M&A transaction]. We can sit on top of the mountain and watch, and still grow our existing business.”


Sasbadi to ‘unleash’ non-academic segment’s potential

“Most of the products we sell target students. However, students have many needs, for example they want to read fiction too. We also want to target books for adults such as for self-improvement and other hobbies. There are [basically] many other segments we can look into.”

“We have mature technology that can be exported. So we are identifying partners who have good content and good branding in the local market, with good reach in terms of distribution, but lack the technological advantage. That’s where we can come in and collaborate. I believe this kind of collaboration will enable us to get access to good markets abroad.”


Gamuda’s IBS parts-making capacity to double by end-2018

Gamuda Bhd will see its annual manufacturing capacity of industrialised building system (IBS) components more than double to 8,000 units, with the completion of its second facility in Banting by end-2018.

“With the second factory coming online [by the] end of next year, we will be able to produce a total of 8,000 of 1,000-sq ft units per year. The current facility manufactures solid walls which are heavy and unsuitable for taller buildings. The new facility will be able to produce double walls, which are lighter and more suitable for taller buildings.”

“But when IBS is made mandatory, demand will rise and factories will ramp up their capacity. I am confident that there will be more IBS manufacturers coming up when demand picks up.”

Malaysia’s medical inflation at double-digit pace

Malaysia’s healthcare inflation stood at 11.5% in 2016 and is projected to rise to 12.7% this year, the survey shows. The pace is much faster than the average of 10.7% in Asia last year, and the rate is projected to ease to 10.2% this year. In fact, Malaysia is the third-highest among the 11 Asian countries surveyed, after India’s 14% and Indonesia’s 13.1%.

Among the reasons for the growing inflationary pressure on medical costs, the top three are utilisation medical services as more people are falling sick, the growing ageing population, and the costly advancement of medical technology.

“As medical care becomes more and more expensive, premiums [for medical insurance] will likewise increase.”