KUALA LUMPUR: The 6% tariff hike for natural gas for the non-power sector will have a minimal impact on utilities as the prospect of higher prices have largely been priced in, say analysts.
AllianceDBS Research said in a note yesterday that utility players were now effectively insulated from fuel cost volatility thanks to the implementation of the Imbalance Cost Pass-Through (ICPT) mechanism.
“Therefore, this offers strong earnings visibility for Gas Malaysia Bhd and Tenaga Nasional Bhd (TNB) as income growth will be mainly driven by sales volume and operational efficiency.
“We also take comfort that the gradual increase in piped gas price has quashed concerns about the government’s commitment to address the gas subsidy rationalisation issue given the large discount for local piped gas prices against international prices,” it said.
Gas Malaysia announced on June 29 that the Government has revised the natural gas tariff for the non-power sector to RM27.05 per million British thermal units (mmBTU) from RM25.53 effective July 15.
Meanwhile, TNB announced that the Government is maintaining its ICPT rebate at 1.52 sen per kWh effective July 1 up until Dec 31.
The total rebate amounting to RM758.03mil, which will be passed back to consumers, arose from lower liquefied natural gas (LNG) and coal prices as well as from higher utilisation of coal as a fuel source.
The Government is also increasing the price for piped gas to RM19.20/mmBTU from RM18.20/mmBTU previously effective July 1, which is in line with its subsidy rationalisation efforts, TNB said in a June 29 filing with the exchange.
In a note yesterday, MIDF Research reiterated its “buy” call on TNB with a target price of RM16.80 on the back of cheaper fuel costs and higher usage demand which was partly due to the heatwave earlier this year.
“Additionally, there is a dividend catalyst on the back of free cash flow (FCF) yield of 7% over the next two years, a relatively under-geared balance sheet and its upcoming captial optimisation exercise,” it said.
As for Gas Malaysia, MIDF said that its average gas distribution margin currently stood at around RM1.58/mmBTU, providing more earnings clarity for the utility going forward.
With the expected periodic semi-annual rise in gas tariffs for the non-power segment under the incentive-based regulation (IBR) framework, the firm’s profit spread should be properly regulated.
Following the tariff revision, the research house is maintaining its “buy” call on Gas Malaysia with a target price of RM2.92.
PETALING JAYA: Gamuda Bhd’s earnings in financial year 2017 ending July 31 (FY17) are expected to improve, driven by the Klang Valley Mass Rapid Transit Line 2 (MRT 2) project, analysts said.
According to analysts, Gamuda’s construction order book currently stands at RM8.2bil, of which the MRT 2 project is worth RM7.7bil.
“We believe earnings will bottom in FY16 and rebound in FY17 as the RM30bil MRT 2 project starts to contribute earnings,” Affin Hwang Capital said in a note yesterday.
It added that the MRT 2 project had improved Gamuda’s earnings visibility over the six-year construction period.
Maybank Investment Bank Research (Maybank IB) expects the MRT 2 tunneling works to start soon because Gamuda has already secured the construction site.
“Earnings would recover in FY17 on a stronger construction orderbook. Upcoming infrastructure job awards would boost orderbook further,” the research house said in a report.
It said Gamuda was bidding for infrastructure projects including the Pan Borneo Sarawak Highway, the Klang Valley LRT 3 and Gemas-Johor Baru electrified double-track rail.
Gamuda posted a 10.3% decline in net profit to RM474.04mil for the first nine months of FY16, on the back of a 15.15% drop in revenue to RM1.51bil.
The lower net profit for the period was because of the tapering of underground and elevated works of the Klang Valley MRT 1 project as well as the softer property market in Malaysia.
For MRT 1, Gamuda played the role of project delivery partner through MMC Gamuda KVMRT Sdn Bhd. The company said the overall cumulative progress at the end of May 2016 was an 86% completion rate.
Gamuda said that Phase 1 is expected to be completed in December 2016, with full completion by July 2017.
On Gamuda’s property-development segment, for the first nine months of FY16, the company achieved new property sales of RM575mil, which according to Maybank IB, was 43% of management’s initial property sales target of RM1.33bil for FY16.
Nonetheless, Maybank IB expects the shortfall in sales from the company’s property projects in Malaysia to be offset by its projects in Vietnam and Singapore.
“Surprisingly, management has increased its FY16 and FY17 property sales targets to RM1.42bil and RM1.8bil, respectively,” it said.
Kenanga Research said Gamuda’s construction orderbook of RM8.2bil and unbilled sales of RM1bil would provide earnings visibility in the next three years.
On Gamuda’s 40%-owned Syarikat Pengeluar Air Sungai Selangor Sdn Bhd, CIMB said that the divestment of the asset would be a positive catalyst for Gamuda, especially with the Selangor state government targeting to resolve the valuation issue by end-2016.
“We continue to favour Gamuda over other big caps for its earnings turnaround angle and MRT exposure. The downside risk for Gamuda is the delay in job rollouts,” it said.
SINGAPORE: The United Kingdom’s vote to exit the European Union (EU) or Brexit has no immediate direct ratings impact on Asia-Pacific (APac) sovereigns or banks, says Fitch Ratings.
In a statement yesterday, Fitch Ratings said the spike in political uncertainty in the UK – and resulting effects on investor risk appetite – could pose the greatest challenges for Asia in the short term.
If protracted uncertainty has a sustained effect on investor and consumer confidence, the resulting tightened liquidity conditions and pressure on emerging markets capital markets could weigh on growth in the region, it said.
“This is especially the case for more trade-integrated economies such as Singapore, Taiwan, Hong Kong and South Korea. But it remains far from clear that such a sustained market reaction will develop,” it said.
Fitch said some of the negative “risk-off” market moves that occurred in the immediate aftermath of the Brexit vote had already been partly unwound this week.
Furthermore, it noted that Asian market reaction had been far more muted than in Europe.
The potential for developed market central banks to act, namely the Federal Reserve slowing the pace of its rate increases, could also play a key role in calming markets, it said.
Fitch noted that the direct impact from UK trade on Asian economies was also likely to be limited.
The UK is the world’s fifth-largest economy, and Fitch expects a slowdown in short-term gross domestic product (GDP) growth as a result of the referendum.
But exports to the UK equate to less than 1% of GDP and account for less than 3.5 per cent of total exports for every Asian country, it said.
Over the long term, Fitch said it was also possible that a UK outside the EU might be able to make quicker progress on trade liberalisation with Asian countries than as a member of the EU.
Currently, only South Korea has a free trade agreement with the EU among Fitch-rated APac countries (some smaller Pacific island economies also have agreements), it said.
The direct financial linkages are limited as well, and so the risks are more indirect with respect to Asia’s banking systems. – Bernama
PETALING JAYA: A planned multi-billion-ringgit project to upgrade the country’s immigration system and tighten national border security may now be repackaged into smaller portions, say industry sources.
Instead of awarding the full 12-year contract, which could be valued at close to RM6bil, the Government may opt to kickstart the security upgrades by awarding it in smaller work packages, they said.
A source explained that this may be due to the high cost of the planned upgrade, which is likely to rise even further due to the strong US dollar.
Another reason for the repackaging of the contract, he said, was due to the recent security breach in the Immigration Department’s system.
“The first portion from within this project, related to security upgrades, is likely to be awarded in the near future.
“This is being rolled out sooner than later due to recent security breaches found in the Immigration Department’s system,” said the source, adding that the portion would be valued at between RM400mil and RM500mil.
He said this in reference to the recent discovery of a sabotage on the Malaysian Immigration System (myIMMs).
Immigration Department director-general Datuk Seri Sakib Kusmi said on May 31 that disciplinary action had been taken against 37 officers found to be involved in sabotaging the system since February this year, while five officers were detained by the police to facilitate investigations.
The planned enhancement to the country’s immigration system was first announced last year – before the compromise in myIMMs was revealed. The integrated technology platform was aimed at upgrading the core applications and infrastructure of the country’s immigration system to tighten border security.
The system was to be installed at airports and the country’s entry points, and was slated to kick off this year.
ICT player Prestariang Bhd announced in November last year that it had received a confirmation letter of approval in principle to implement the project, which it called the “National Immigration Control System” or “Skin”.
The company was said to be the frontrunner for the project, following its tie-up with United States-based Unisys, which would provide the required security expertise.
According to its 2015 annual report, the project would leverage on new and emerging technologies to verify, validate and monitor the movement of people in and out of the country.
“Skin will effectively overhaul previous policies, systems, people, processes and operations to provide enhanced capabilities for immigration services and border security, as well as carrying out surveillance of potential risks in cross-border traffic,” it said.
Apart from Prestariang, other technology solution providers said to be vying for the award of the RM400mil security upgrade project include Datasonic Group Bhd, HeiTech Padu Bhd and S5 Systems Sdn Bhd (formerly Nexbis Sdn Bhd), the sources added.
GELANG PATAH: Port of Tanjung Pelepas (PTP) is set to invest over RM8.6bil on new berths and equipment under its latest plan to further improve the port’s capacity over the next five to 15 years.
Johor Mentri Besar Datuk Mohamed Khaled Nordin said PTP’s latest expansion plan reflects the highest level of confidence to position itself as the preferred port of choice in the region.
It is Malaysia’s biggest single port operator.
“Over the years, Johor has experienced tremendous economic and development transformation, rising to become one of the fastest growing economies.
“We acknowledged the contribution by PTP since its inclusion in the year 2000, not only in terms of the economic growth of the state but also to the social balance as well as equitable distribution of wealth among the community,” he said when met during a working visit at PTP here.
He said the expansion would create more job opportunities for the locals, and further position the state as a regional economic power and not just be part of the Malaysian economy.
The expansion plan was unveiled during Mohamed Khaled’s visit here, Tijarah Ramadan and Port of Tanjung Pelepas on Tuesday.
Meanwhile, PTP chairman Datuk Seri Che Khalib Mohamad Noh said the immediate plan was to embark on a comprehensive upgrading, refurbishment of their quay cranes, rubber tyre gantries (RTGs) and replacement of PTP's existing equipment.
He said that the upgrading was to increase the handling capacity from the current 10.5 million twenty-footer equivalent units (TEUs) to 13.2 million TEUs annually.
“This will be followed by the development of Phase three which is expected to take place in 2018.
“Phase 3A and 3B consists of six new berths of three kilometres in length that will enable us to increase our handling capacity to 22.2 million TEUs before 2030.
“The expansion is to ensure that PTP will remain competitive in the market and ultimately become the most preferred transhipment port in Asia,” added Che Khalib.
At the same event, Mohamed Khaled also presented RM30,000 worth of financial and essential aid to about 150 individuals including the less fortunate, single mothers, orphans as well as to five selected mosques in Gelang Patah area.
The public and organisations have been encouraged to apply for project grants offered by Think City Sdn Bhd to rejuvenate old Butterworth.
Its programme director Murali Ram said the cumulative power of small yet bold contributions from individuals and communities could improve cities so they had decided to continue giving out grants following the successful programmes last year.
“This year, we are offering RM500,000 and the amount will be divided among the qualified applicants, based on the project’s scale.
“Each allocation can be from RM10,000 to RM200,000,” he told a press conference at the Seberang Prai Municipal Council (MPSP) headquarters on Tuesday.
Murali said applicants should meet the two or more criteria set by Think City.
“The projects must be of historical significance or involve public facilities, improve the economic and social conditions of communities or encourage inter-cultural participation.
“The projects can also be a research relating to the city, culture or community, or act as a positive catalyst.
“The locations must fall within the 1km radius of Butterworth, such as Bagan Dalam and Bagan Luar, he said, adding that projects outside the core zone would still be considered on a case-by-case basis.
Application period is now open and will close on July 31.
The projects have to be completed within a year after the grant is given.
Most sales galleries would have a model of their property, salespeople and property-related talks.
However, IJM Land decided to use a different approach and celebrated the Malaysian fashion scene with creations by local designers, including hosting a talk on the fashion industry at its ICE Gallery Pantai Sentral Park.
The property gallery’s modern interior and high ceiling provided a fitting venue for the event, dubbed PSP (Pantai Sentral Park) En Vogue.
During the event, Fairuz Ramdan showcased his latest collection of men’s polo shirts called FR Blue Label; Fern Chua displayed her women’s batik-wear range, and Xavier Mah and Alfred Hor, their footwear collections.
Fairuz said this is his fourth collection, which marks his fourth anniversary as a designer in the fashion industry.
“What differentiates this range from the previous ones is the style and detailing of each shirt. Plus, I decided to go with darker shades like denim blue and chilli red instead of yellow and green, because I feel that the market is still conservative about colours,” said Fairuz, whose label is Fairuz Ramdan Bespoke.
Chua, on the other hand, wants to reintroduce the aesthetic elegance of Malay batik by combining traditional and contemporary elements together.
“I wanted to break the perception of what batik is supposed to be by infusing a modern feel through simple and abstract prints to attract the younger generation,” she explained, adding that her pieces were all hand-painted.
Chua’s label is titled FERN, with the tagline “The New Batik”.
Founders of footwear label XALF Mah and Hor brought in three out of their nine collections – The Nude, Eternal Love and Out of Africa.
“Our footwear combines classic vintage aesthetics of the past with bohemian New York-style and meticulous craftsmanship. We provide custom-made shoes that allow our customers to change the design and height of the heels, besides having their feet measured to size to ensure comfort,” revealed Hor.
IJM also invited celebrity stylist and fashion critic Zaihani Zain to share with the guests her vision of fashion, and offered tips in her “Are You Fashion Enough?” talk.
“The most important advice that I can give you is that you can’t create style. If you pay attention to trends and details, you will know what is fashionable and what is not.
“Even with a small budget, you can come up with a beautiful outfit. It’s not about how expensive something is, but how well you combine the pieces and the use of accessories to add the final touches to your attire,” she said.
It was interesting how a property developer managed to bring together the elements of fashion and property together.
IJM Land sales and marketing manager Grace Foo explained that their new township – Pantai Sentral Park – was a premium development project that stressed on quality living.
“We try to cover every angle so that everybody finds something they love about PSP.
“With PSP En Vogue, we want to provide our guests an exclusive look into the luxurious world of fashion and design, and let them experience the values of Pantai Sentral Park firsthand.
“And just like a fashion designer who pays a lot of attention to details such as stitching, the right fabric or the perfect colour combination, every aspect of PSP has been carefully designed to be ecologically sustainable, community friendly and economically efficient,” Foo commented.
Pantai Sentral Park, which spans across 23.47ha is an integrated development designed to seamlessly blend into the forest to give the residential and working community a privileged and balanced lifestyle of being one with nature.
Located in the New Golden Triangle connecting Kuala Lumpur, Bangsar and Petaling Jaya, the township can be accessed by the New Pantai Expressway (NPE) and the NPE interchange, which will be ready in two years’ time.
To-date, the first two residential phases have begun, with Inwood seeing a full take-up rate, and Secoya Residences with over 50% take-up rate.
Secoya is the latest phase to be introduced to home buyers. It was launched at the end of 2015 and is expected to be ready by 2019.
Its strength lies in the shallow floor plate that promotes sustainable living which allows daylight penetration to all units and adequate natural lighting, giving a stunning panoramic view.
Sitting on just 1.2ha, the condominium offers home buyers 243 units with built-up areas between 1,050 sq ft and 1,670 sq ft. Prices start from RM800,000.
The total gross development value (GDV) is RM275mil.
Subang Jaya Municipal Council (MPSJ) has hired 20 enforcement officers in anticipation of traffic and parking issues as the Kelana Jaya and Ampang Jaya LRT Line Extension Project (LEP) began operations yesterday.
MPSJ also purchased two tow trucks in addition to its existing three.
Speaking to the press after the council’s monthly full board meeting, MPSJ president Datuk Nor Hisham Ahmad Dahlan said this was to manage traffic flow and prevent indiscriminate parking.
“For sure there will be traffic and parking problems, which existed even before the LRT began operations.
“We have submitted a proposal to LRT operator Prasarana Malaysia Bhd (Prasarana) to provide us 10 tow trucks but till now we have yet to hear from them.
“Now the most important thing is to handle the situation, we want to provide good service to the public,” he said.
Residents have expressed their concerns over parking problems.
At a recent press conference, Subang Jaya residents said the new feeder bus service for the LRT extension line did not sufficiently cover many areas.
Subang Jaya assemblyman Hannah Yeoh was also quoted saying that there was insufficient park-and-ride facilities at the stations.
On the project’s controversial Certificate of Completion and Compliance (CCC), Nor Hisham said MPSJ had received the Form F for all LRT stations in the municipality.
“This means the Principal Submitting Person (PSP) appointed by Prasarana is solely responsible for the LEP.
“The architect appointed by Prasarana has certified that the building is safe to begin operations as stated in Act 133 of the Street, Drainage and Building Act 1974,” he said.
With the upcoming Hari Raya Aidilfitri, the council urged residents to ensure that all containers be emptied or sealed before leaving home for Raya holidays, to prevent mosquitoes from breeding. Residents are also encouraged to put Abate larvaecide into water tanks.
According to the council’s Health Department, last year’s statistics showed that 204 dengue fever cases were reported during Hari Raya.
Bus and Light Rail Transit (LRT) passengers in Subang Jaya and Shah Alam were taken by surprise yesterday when their usual bus routes and bus numbers were changed with the opening of the Kelana Jaya and Sri Petaling LRT extension lines yesterday.
Ten feeder bus routes are in place along the new Kelana Jaya extension line and it costs RM1 for a single trip on any of the buses.
In Subang Jaya, four feeder bus routes serviced Subang Jaya, SS15, USJ 7, Taipan and USJ 21 LRT stations.
StarMetro checked on the T770 feeder bus (Subang Jaya station - Sunway Pyramid) and the T776 (Taipan - Subang Mewah).
On the 8km-route from Subang Jaya station to Sunway Pyramid, very few passengers boarded the feeder bus, probably because many were unaware of the service.
The bus driver, who declined to be named, said between 6am and 11am, she had only six passengers.
Travelling from KL Sentral station to Sunway Pyramid, Methodist College student Liew Ken Ray, 18, said the service made travelling more convenient.
“Driving may be faster but it is more convenient and cheaper to take the LRT and the feeder bus to get to Sunway Pyramid,” he said.
At Taipan station, confusion ensued as passengers were unsure if the T776 bus would take them to Mydin Hypermarket and to USJ 1.
The bus driver explained that the bus servicing the route was originally T770 but had been changed to T776.
He added that Subang Mewah residents, who were regular bus users, were not informed of the route change.
“The T776 bus starts from Taipan LRT station and passes by Goodyear Court 6, Subang Mewah and Mydin.
“But it is only a one-way route now. Passengers have to get to the other side of the road to take the bus,” he said.
Armed with his walking stick and an LRT map, an excited Georgie Khoo, a USJ 1 resident of 14 years, said he was disappointed with the lack of information.
“The usual bus did not stop for me today. I was told later that the route had changed.
“I wish they informed us before changing it. So many of us were waiting at the bus stand,” he said.
Passengers travelling to Sunway can also utilise the Bus Rapid Transit (BRT) service that connected to the USJ 7 LRT station.
Travelling from Brickfields to Monash University campus, student advisor Hazri Haili said he saved a lot of money by using the LRT and BRT services.
“I travelled from Bangsar to USJ 7 via LRT that cost RM3.30 using Touch ‘n Go. Then I switched to the BRT service from USJ 7 station to Monash University for RM3.60.
“My return trip should cost me RM13.80 on LRT and BRT.
“If I use my car, toll and parking charges will be RM12.60, excluding petrol cost which adds up to RM16 a day, and not to mention my mental well-being,” he said.
There are four LRT stations in Shah Alam namely Subang Alam, Alam Megah and Glenmarie.
Based on the quiet Glenmarie station with very few parking spots taken, it was obvious that many residents were unaware of new bus routes.
Bus T774 travelling from the station to Batu Tiga KTM, Management and Science University, Shah Alam stadium and Giant Section 13, made five trips but had only the StarMetro reporter as a passenger.
Over at Putra Heights, there are two bus routes – bus T759 travelling to Giant Putra Heights and Kampung Bukit Lanchong while T752 heads to Section 14 and 15 in Shah Alam.
There are three buses to Bukit Lanchong and six to Section 14 and 15.
The buses had very few passengers until 1pm, one of whom was Putra Heights resident Chong Vui Hung, 27.
Chong usually takes the bus at Giant Putra Heights to go to Kuala Lumpur, but yesterday, he was told by a RapidKL bus driver that the bus would only take him to the LRT station where he had to take the train to KL Sentral.
Although he had spent RM2 more than usual by taking the bus and LRT from Putra Heights to KL Sentral, he said the journey was shorter and more comfortable without traffic jams.
Chong hoped that bus schedules would be put up for passengers’ convenience.
K.Prakash, 59, said in the past, one could use the T752 bus from Section 14 to Kuala Lumpur but now the bus only picked up passengers to the LRT station.
Several of those taking the newly launched LRT service between the Kelana Jaya and Putra Heights stations were first-timers who had never taken the train before.
The service officially began yesterday at 6am but most of the passengers strolled in after 9.30am.
They comprised mostly senior citizens and tertiary-level students who wanted to try out the new service.
StarMetro decided to join them to test the service too. We took the train from Kelana Jaya to Putra Heights, The journey cost RM4.30 one way.
“I’m actually not going anywhere. I just came to try it out for fun and see what its like,” said retiree Michael Chee.
Chee, who was on the train with a couple of friends, said he had never taken the LRT before because it was not convenient and there were no stops in Subang Jaya.
But with this new Kelana Jaya and Sri Petaling LRT Line Extension, there are now 13 new stations from Kelana Jaya cutting through Subang Jaya all the way to Putra Heights before connecting to the Ampang and Sentul Timur lines.
“This is really convenient and I think if I’m going into Kuala Lumpur for a day or just to walk around KLCC, I will definitely take the train to avoid traffic congestion,” said Chee, who boarded the train from Subang Jaya and got off at Putra Heights.
As it was the first day of operations, there were many police officers, security personnel as well as Prasarana Malaysia Bhd (Prasarana) representatives on hand to help passengers.
Most of the Prasarana staff assisted commuters with ticket purchases and how to use the ticketing machines.
Despite the three-storey Putra Heights station being spacious, we noticed that there were enough signs to guide first-time passengers onto the platform on level three.
A huge board detailing the train routes and the respective platforms is on the second floor, along with the ticketing machines and customer service counters.
“We are very excited to take the LRT from Putra Heights to Kuala Lumpur as we have never taken the train before,” said retiree Tang See Moi, who drove to the station from Shah Alam.
Marc Chow, from Subang Jaya, said he plans to take the train to work every day to avoid traffic congestion.
“The train was quite empty at the SS18 station but filled up from the Taman Bahagia station onwards.
“It was packed like sardines after that but it is still better than being sardines on the road,” said Chow.
The track cuts through major roads such as the Federal Highway, New Klang Valley Expressway and Kesas near the Sunway exit.
As we travelled above, we could see the bumper-to-bumper traffic on the roads even after 10.30am.
Some stations such as Ara Damansara, Glenmarie, Subang Jaya, USJ 21, Alam Megah, Subang Alam and Putra Heights also have park-and-ride facilities.
“This new line is definitely faster compared to the Ampang line where the trains are older,” said Ahmad Soliheen Saadon.
The 23-year-old was trying out the new route as he will be starting work at KL Sentral in September.
The frequency of trains ranges from three to six minutes.