Wednesday, 13 December 2017

(The Star) ’Freeze does not include KL city centre’

The blanket ban to freeze four types of high-end developments in the country will not be implemented in Kuala Lumpur yet.

During a meeting with Kuala Lumpur mayor Tan Sri Mohd Amin Nordin Abd Aziz yesterday, Segambut MP Lim Lip Eng said Kuala Lumpur City Hall (DBKL) would be discussing the matter further with the Finance Ministry.

“We were informed that the ban would not be feasible for Kuala Lumpur, especially in the Golden Triangle area. However, the mayor said DBKL would suggest to the ministry that the ban be implemented in other areas of the city,” he said during a press conference after the meeting.

Following a Bank Negara report released in June, Second Finance Minister Datuk Seri Johari Abdul Ghani said the Government had put in place a blanket ban on four types of developments, namely shopping complexes, offices, service apartments and luxury high-rise apartments priced over RM1mil effective Nov 1 this year.

On the shelved draft Kuala Lumpur City Plan 2020, Lim said they were informed that DBKL would be working on a 2040 or 2050 version of the plan.

“DBKL will use the KL Structure Plan 2020 as well as the Kuala Lumpur City Plan 2020 as a base to fine-tune and improve the new plan.

“However, there is still no timeline on when the new plan will be gazetted,” said Lim.

Meanwhile, Cheras MP Tan Kok Wai rapped DBKL for not providing a detailed report for the 2018 DBKL budget for each constituency located within the Federal Territory of Kuala Lumpur.

“In previous years, the MPs would be called for a meeting once the draft budget was ready, but this year we were only informed once the budget was announced.

“We do not know what is the breakdown of expenditure for each constituency or what were the projects or programmes that would be undertaken,” he said, adding they were only given a booklet with the summary of the budget.

Other MPs who attended the meeting were Wangsa Maju MP Dr Tan Kee Kwong and Bandar Tun Razak MP Tan Sri Khalid Ibrahim.

(The Star) October industrial output expansion at slower pace

PETALING JAYA: Malaysia’s industrial production index (IPI) expanded at a slower-than-expected pace of 3.4% compared with a Bloomberg survey of a 4.1% due to slower manufacturing growth.

The Statistics Department said yesterday the increase in October from a year ago was driven by positive growth in manufacturing (4.2%), mining (0.8%) and electricity (4.6%).

“The IPI in September remained unchanged at 4.7% year-on-year.

“In seasonally adjusted terms, IPI in October posted a decline of 0.8% month-on-month due to a decrease in the manufacturing index by 1.1%. The mining index and electricity index increased by 0.4% and 2.1%,” it said.

The department said the major sub-sectors which contributed to the increase in October were: electrical and electronic products (5.9%); petroleum, chemical, rubber and plastic products (2.1%) and food, beverages and tobacco products (7%).

For January to October, the IPI expanded by 4.7% compared with the previous corresponding period.

(The Star) MIDF positive on property sector outlook next year

PETALING JAYA: There were more interest in property purchases for the first 10 months of this year compared to 2016 based on the latest Bank Negara statistics, said a research house.

MIDF Research said in a report it is maintaining a positive stance on the property sector based on loan statistic from Bank Negara and a stable House Price Index outlook from the National Property Information Centre (Napic).

It also viewed certain property counters with Klang Valley projects positively.

The report said total applied loans for property purchases in October increased 17.6% year-on-year (y-o-y) to RM29.6bil. On a 10-month basis, it grew 13% y-o-y to RM275bil.

Total approved loans for property purchases also grew y-o-y. Over a 10-month period this year, cumulative total approved loans totalled RM111bil, an increase of 11%.

MIDF said: “The higher approved loans disbursed into the market is a good leading indicator that property sales... as a whole should improve compared to last year.”

The report said Selangor saw the highest expansion in house prices, notching a growth of 8.4% y-o-y. Negri Sembilan saw a y-o-y increase of 7.6%. Both Kuala Lumpur and Johor saw y-o-y growth of 6.7%.

This, said MIDF, showed that the outlook for property price growth in greater Kuala Lumpur, which comprises both Kuala Lumpur and Selangor, remained “positive”.

Quoting Napic, MIDF said preliminary reading of the House Price Index for the third quarter of 2017 is 187.6, representing a growth of 5.1% compared to second quarter reading of 186.3 (6.8% growth), and 6.7% in the first quarter of 2017.

“The growth, although decelerating, shows that house price increase in Malaysia remains in positive territory,” MIDF said.

The report also highlighted certain property counters – SP Setia Group Bhd, Mah Sing Group Bhd and UOA Development Bhd.

It liked SP Setia for its plan to achieve FBM KLCI status by 2018, its attractive price for the I&P deal and for its good dividend yield.

SP Setia will be reviewing its operations over the next few months following its purchase of sister company I&P Group Sdn Bhd from Permodalan Nasional Bhd (PNB). Launches are being planned in late 2018 and from 2019 onwards post-review process.

Both SP Setia and I&P form part of PNB’s property portfolio. PNB portfolio of companies are involved in different sectors of the economy.

The purchase enabled SP Setia to increase its total land bank by almost 80% to nearly 9,730 acres and fast-track its expansion plans. SP Setia bought the sister company for RM3.65bil.

The I&P group, a township developer, has land bank of about 4,276 acres located in the central part of Klang Valley and Johor Baru.

It also liked Mah Sing for its mass-market projects in the Klang Valley and UOA for its healthy balance sheet at net cash position, with sales prospect underpinned by urban-based affordable housing.

(The Star) OldTown hits seven-month high after JDE buyout offer

Analysts upbeat on deal, recommend shareholders to accept bid

PETALING JAYA: Coffee manufacturer and cafe outlets operator OldTown Bhd’s share price surged to a seven-month high yesterday, following a buyout offer from Dutch coffee company Jacobs Douwe Egberts (JDE).

The counter opened for trading higher by 19 sen, or 6.6%, at RM3.07 and rose to an intra-day high of RM3.17. At 5pm, the stock closed one sen higher at RM3.08, with 3.73 million shares changing hands.

In a filing with Bursa Malaysia on Monday, OldTown announced that JDE had proposed to privatise the former at RM3.18 per share for RM1.47bil.

Analysts are upbeat on the deal and have recommended the remaining shareholders to accept the takeover offer.

According to Kenanga Research, the offer price is deemed fair as it is slightly higher than its unchanged target price of RM3.15 per share.

“We are positive on the news, as it demonstrates the growing brand equity of the homegrown ‘Oldtown’ brand in the global food and beverage scene.

“With the added connections made available by the offeror, the group’s internationalisation could be further accelerated. However, this would render investment opportunity in OldTown out of the public reach,” it said in a note.

The research house also stated that the pre-conditional cash offer at RM3.18 per share represented a 10.42% premium over the group’s last transacted share price on Dec 7.

In order to privatise OldTown, JDE requires a total stake of at least 90%. The move will also need approval from the Competition Commission of Singapore and any other antitrust regulators, if any.

The takeover offer will not be made to shareholders of OldTown unless the pre-conditions have been satisfied by August 11, 2018.

AmInvestment Bank Research indicated that the pre-conditions are unlikely to be a stumbling block for JDE’s takeover move, as the combined white coffee market share of Singapore amounts to 50%, which is below the 60% threshold for a possible breach of anti-trust laws.

JDE, which is second only to Nestle in global coffee retail, recently took OldTown’s competitor Super Group private in late 2016.

RHB Research Institute also recommended investors to accept the offer, in view of the decent offer price versus the challenging business outlook, moving forward.

“The offer price for OldTown translates into a 38% discount, which we think is justifiable. We believe the acquisition price offers decent value and a clean cash opportunity for OldTown shareholders to unlock the value of their investments in the company.

“Major shareholders have each provided irrevocable undertakings to JDE. Besides the pricing premium, we also think the attractive appeal and potential of OldTown under JDE – a sizeable global player with deep expertise – might have further convinced the founding shareholders to undertake the decision to divest.

“We recommend to accept the offer as the shareholders could otherwise be exposed to the risk of holding shares in an unlisted private company, in view of JDE’s plans to delist OldTown’s shares,” it said.

(The Star) UEM Sunrise to acquire nearly 20 acres in Taman Equine

PETALING JAYA: UEM Sunrise Bhd through its unit, Sunrise Alliance Sdn Bhd, has entered into a sales and purchase agreement with Kemaris Residences Sdn Bhd to acquire 19.24 acres for RM109.5 mil in Taman Equine in Seri Kembangan, Selangor.

“We believe this land presents an opportunity for UEM Sunrise to create a boutique development for the upper-mid market purchasers. The key selling points for the project would be the location and its accessibility.

“Aeon Taman Equine, Alice Smith International School and two hypermarkets are located within 3km radius. The MRT2 line would connect Taman Equine to key commercial areas,” UEM Sunrise managing director and CEO Anwar Syahrin Abdul Ajib said in a press release.

(The Star) RM5.1bil financing secured

Petronas and partners get funding for Pengerang project

PETALING JAYA: Petroliam Nasional Bhd (Petronas) and its three partners building the PT2SB industrial terminal in Pengerang, Johor have secured US$1.25bil (RM5.1bil) in financing from nine banks.

The other partners are Dialog Group Bhd, the Johor state government and Royal Vopak.

Vopak, an independent tank storage company, started work on the industrial terminal in early 2015. It is scheduled for commissioning in various phases during the first half of 2019.

PT2SB will have an initial storage capacity of 1.65 million cu m for crude, refined products, petrochemical products and liquefied petroleum gas.

The marine infrastructure includes 12 berths. The draft of 24m can also accommodate very large crude carriers.

Vopak said the project cost is about US$1.6bil, of which about 20% will be funded with equity contributions by shareholders. The remaining 80% would be project financing from the nine banks.

The final maturity of the financing facility is 15 years while repayment schedule starts after commissioning.

The financing is initially based on variable interest rates and PT2SB will enter into financial hedge instruments to reduce the potential interest exposure.

Vopak executive vice-chairman and CFO Jack de Kreij said: “This capital efficient funding of the project also creates significant additional financial flexibility for our company.”

The syndicate of banks consists of AmInvestment Bank, DBS, ING Bank, Maybank, MUFG, Natixis, OCBC, SMBC, and UOB. These banks all acted as mandated lead arrangers. SMBC acted as financial advisor and Allen & Overy acted as international legal advisor with PNC as Malaysian counsel to PT2SB.

The syndicate of nine banks were advised by Norton Rose Fulbright as International counsel and ASL as Malaysian counsel.

(The Star) EPF ups stake in Sapura Energy to around 11.5%

PETALING JAYA: The Employees Provident Fund (EPF) has upped its stake in integrated oil and gas services company, Sapura Energy Bhd, to 11.508% or 689.61 million shares in the company.

According to a Bursa Malaysia filing yesterday, Sapura Energy said the biggest fund in the country had acquired an additional three million shares in the company last Thursday.

Last Thursday also saw Sapura Energy announcing a huge quarterly loss – causing the stock to plunge 24.5 sen to 96.5 sen on that day in heavy trading.

The company suffered a net loss of RM274.4mil in its third financial quarter versus a net profit of RM158.06mil a year ago as it recorded lower contributions from its engineering and construction and drilling segments as well as lower share of profit from joint ventures.

(The Star) Anzo unit bags RM29mil sub-contract for office project

KUALA LUMPUR: Anzo Holdings Bhd, a manufacturer of solid timber doors, has via its unit, Anzo Construction Sdn Bhd, bagged a RM28.91mil sub-contract from QuicBuild System Sdn Bhd.

The contract is expected to have a positive contribution on the earnings per share, net assets per share and gearing of the Anzo group, the company said in the statement. — Bernama

(The Star) IMF expects Malaysia’s economy to expand by 5% to 5.5% next year

PETALING JAYA: The International Monetary Fund (IMF) expects Malaysia’s economy to expand by 5% to 5.5% next year on exports and domestic demand with moderating headline inflation.

The IMF team lead, Nada Choueiri, said in a statement following the annual Article IV meeting with Malaysian government officials and private-sector representatives that “risks to the near–term outlook are balanced” as strong global demand for electronics, which has benefited the country’s exports, could last longer than anticipated.

The Article IV meeting refers to the annual meetings held to assess economic and financial developments of member countries.

Choueiri noted that striking the right balance in policies will be key as downside risks including policy uncertainty in advanced economies and tighter global financial conditions continue to shadow global sentiment.

Headline inflation is expected to decline to the 3% to 3.5% range on lower impact from global oil prices,” she said, adding that real GDP growth this year has surprised on the upside with growth projections at 5.5% to 6%.

Choueiri said the planned pace of fiscal consolidation for 2017/2018 “is appropriate” and will help build buffers and maintain financial market confidence.

“In the medium term, fiscal policy should follow a gradual consolidation path, and the composition of adjustment could be improved to make it more revenue based and to make room for the structural reforms and increased social spending for inclusive growth.

Medium term fiscal targets should be better communicated,” Choueiri said.

Last Wednesday, Moody’s Investors Service affirmed the country’s local and foreign currency issuer and senior unsecured bond ratings at A3.

The rating agency also maintained the outlook at ”stable”. Malaysia targets to reduce the fiscal deficit to 2.8% of GDP next year from 3% this year.

The fiscal deficit has steadily fallen since rising to a high of 6.7% in 2009 as the Government rolled out pump priming incentives and projects to stave off a slow down from the global financial crisis of 2008/2009.

The introduction of the goods and services tax and the gradual abolition of various subsidies have also helped in reducing the deficit.

“Fiscal policy should follow a gradual consolidation path prioritising adjustment through higher revenues, making room for increased pro-growth social spending. The current accommodative monetary policy stance is appropriate, including the forward bias towards reduced accommodation,” Choueiri said.

Bank Negara has signaled that tighther monetary policy may be around the corner with analysts expecting a 25-basis point hike to the benchmark overnight policy rate as early as January when policymakers next meet.

Choueiri said the comprehensive structural reform agenda as laid out in the 11th Malaysia Plan focusing on higher productivity and improving labour market outcomes would help boost medium-term growth and improve living standards.

“Priority should be given to policies to encourage female labor market participation and reduce skill mismatches,” she pointed out.

Choueiri also said that while housing price growth has moderated, pockets of risks exist in exposures to household mortgages and the property development sector.

“However, their impact on macro-financial stability appears contained,” she said, noting that the financial sector remains resilient with sound bank profitability and liquidity.

(The Star) Year-end rally in the works?

Dealers say equities linked to local funds are poised for active buying

PETALING JAYA: Some large caps on Bursa Malaysia are poised for active buying this week as major funds such as Permodalan Nasional Bhd (PNB) and the Employees Provident Fund (EPF) head closer to their book closures, dealers said.

“As much as it is really old news, this phenomenon still holds, especially considering that PNB will be closing its books on Dec 15,” pointed out a fund manager.

PNB related stocks that are likely to see some active buying this week include Malayan Banking Bhd, the three Sime Darby stocks, SP Setia Bhd and UMW Holdings Bhd.

In the case of Sime Darby Bhd, which split itself into three separate listed companies on Nov 30, the combined market capitalisation of these three companies was less than what Sime Darby Bhd was on Sept 30.

Bloomberg data showed that Sime Darby’s market cap on Sept 30, the end of its first quarter for financial year 2018, stood at RM61.35bil, versus the current combined value of its three listed entities at RM60.8bil.

The share prices of Sime Darby Plantations and Sime Darby Property fell on the first four days after their listing. Both have chartered 13% and 30% increase in share prices respectively and are still off their listing prices.

As for Sime Darby, it went as high as RM2.30 after the demerger on the account of a 17 sen dividend that went ex on Dec 4. It come down to RM2.12 yesterday.

UMW Holdings Bhd, which went through a demerger exercise in July this year with UMW Oil and Gas Corp Bhd, saw its sales improving since the launch of four facelift models and new variants in September – Vios, Fortuner, Hilux, and Innova.

Its subsidiary, UMW Toyota Motor Sdn Bhd, is working on a network reform programme to strengthen its retail operations.

According to MIDF Research report, UMW’s growth catalysts include the reversal of prior years’ market share loss, monetisation of its 711-acre Serendah land, as well as the quadrupling of mechanical and engineering segment earnings.

Meanwhile, another group of companies likely to benefit from a year end market boost are stocks aligned to the EPF.

MBSB is expected to complete its merger exercise with Asian Finance Bank Bhd by end-January.

The deal, which amounts to RM644.95mil, will enable non-bank lender MBSB to be a full-fledged Islamic bank.

A research report by Kenanga Research stated that the forward shareholders’ funds of MBSB in 2018 were expected to be higher by RM197mil to RM6.52bil, following the completion of the merger exercise and based on the proforma accounts.

Meanwhile, MRCB is tying up with Gamuda Bhd to bid for the project delivery partner role in the Kuala Lumpur-Singapore high speed rail project.

MRCB’s external construction order book amounted to an estimated RM5.3bil, which, coupled with unbilled property sales at RM1.2bil, would provide the group earnings visibility for the next four years.

MRCB has also recently completed a RM1.73bil rights issue exercise.

“The recent completion of our rights issue has significantly strengthened our balance sheet, and we are well-positioned making it well positioned to fund future growth,” MRCB group managing director Tan Sri Mohamad Salim Fateh Din had said in a previous report.