Plant capacity set to increase

"Our current production facility has a capacity to produce 11,000 tonnes of cooking oil, but with the new plant, our capacity will increase to 100,000 tonnes," Lee said. Green Ocean currently has a pilot plant near Port Klang, and the new plant, which will take about nine months to complete, will be located in the same area. He added that Pemandu is involved because the project undertaken by Green Ocean is part of the government's Economic Transformation Programme. Lee proudly pointed out that his company is 100 per cent export-based, namely to South Korea and China, and that Green Ocean is the only company in Malaysia with the exclusive Novelin technology. "We are the first and only company doing this right now," said Lee. By Francis Fernandez

Firm to close Montreal office

"While the new commercial team includes employees from both companies, TRT-ETGO will be closing its trading office in Montreal and relocating a few employees to Becancour or the joint venture's office in Oakville, Ontario," he said. However, financial terms of the transaction were not disclosed. A news wire reported last Tuesday that Felda, the state-run plantation operator, is discussing a strategic alliance with five global trading houses, including Bunge, Archer Daniels Midlands Co and Cargill Ltd. Quoting sources, the report said the strategic tie-up, likely to be in February, is expected to shore up investor interest ahead of Felda's US$2 billion (RM6 billion) listing of agribusiness arm Felda Global by mid-2012, turning it into a trading powerhouse dealing in palm oil and rubber. Felda, which accounts for 8 per cent of global palm oil output, is keen to tap that growing interest as it seeks to widen market access and monetise its assets.

World leaders slam eurozone foot-dragging on debt crisis

AFP - Sunday, January 29, 2012

DAVOS, (AFP) – World economic leaders turned their fire on the eurozone on Saturday at a Davos forum increasingly frustrated by the single currency bloc's struggle to come to grips with its debt crisis.
At the forefront of concerns were write-down talks in Greece, which had dragged on into the weekend and now threaten to overshadow an EU summit on Monday designed to showcase the continent's plans to escape the debt trap.
But senior officials from outside the eurozone also argued that Europe has not got on top of more long-term problems undermining the single currency, and needs to move further and faster in integrating eurozone economies.
"The fact that we're still, at the start of 2012, talking about Greece again is a sign that this problem has not been dealt with," British finance minister George Osborne told a public panel of senior finance officials.
"The danger here is that the tail wags the dog throughout this crisis, in other words the inability to deal with the specific problems in the periphery causes shockwaves across the whole European economy and the world economy."
Canada's central bank chief Mark Carney, who chairs the international bank regulator the Financial Stability Board, said Europe's woes were holding back the recovery and had effectively cut global growth by one percent last year.
European and eurozone officials at the World Economic Forum, an annual get-together of the great and the good in global business and politics, have spent the week attempting to drum up optimism on the debt talks.
But as the talking shop drew to an end, Greek leaders were still in talks with private lenders over the details of a plan to wipe 100 billion euros from their sovereign debt -- and thus avoid a messy default.
The private creditors said Saturday they were close to concluding an agreement next week.
"Further progress was made, building on the understandings reached yesterday (Friday) on the key legal and technical issues," they said in a statement after a two-hour meeting.
Meanwhile, Athens was distracted by another dispute, when European officials leaked the claim that Berlin wants the European Commission to take full charge of the Greek budget and oversee its austerity strategy.
Greek officials reacted with fury at this attack on their sovereignty, and Brussels was forced to concede that, while it would reinforce its "monitoring capacity", final fiscal responsibility would stay with Athens.
The drawn-out debt talks have undermined attempts to contain the crisis and shore up bigger eurozone economies, to the frustration of leaders from the emerging economies and the rest of the developed world.
"You need decisive action. You need overkill. Confidence must come from decisive actions from governments," declared Donald Tsang, chief executive of Hong Kong's autonomous regional administration.
"Two months ago in Greece you could make do with a 20 percent haircut, now even 50 percent is not easy. Maybe 70 percent is needed, so do it quickly. You need resolution and decisiveness."
World Bank chief Robert Zoellick praised the European Central Bank for increasing liquidity for eurozone banks to enable them to buy more sovereign debt, but warned that this could only be a stop-gap measure.
"I'm glad the ECB took action. But this buys time, you still have to act," he said, as the world waits to see if Monday's summit will produce agreement on a new "fiscal compact" setting in stone the bloc's deficit-cutting strategy.
"No-one is immune in the current situation. It's not just a eurozone crisis it's a crisis that could have collateral, spillover effects in the rest of the world," IMF director Christine Lagarde warned delegates.
"Now is the time. There has been a lot of pressure building in order to see a solution come about," she said, urging International Monetary Fund members to give her the 500 billion dollars she needs to stock as a bailout fund.
"And it's for that reason that I'm here, with my little bag, to collect a bit of money," she said, to laughter and applause.
Osborne, a eurosceptic who is glad that Britain stayed out of the euro, nevertheless said he hoped that Europe would overcome its woes.
But in an implicit rebuke for a reluctant Germany, he said this would have to mean "permanent fiscal transfers" between stronger and weaker member states.
"That's what is required to make a single currency work," he said, arguing that Europe will either have to make the ECB its lender of last resort, pool its debt through joint eurobonds or through direct budget transfers.
Demonstrators, including three topless Ukrainian feminists, made a feisty bid to get Davos' attention and demand more focus on the plight of the worst off, but deep snow and a tight security presence limited their numbers.
The Davos forum ends on Sunday, at which point the financial world's eyes will switch to Brussels and Monday's much anticipated EU summit.

Interest in DBE due to clean balance sheet

Also, QL Resources Bhd, the biggest producer of surimi, surimi-based products and fishmeal manufacturer in Malaysia, bought a 23.8 per cent stake in the Klang-based poultry company Lay Hong Bhd to help expand its own food business. The biggest privatisation of a food-cum-poultry producer, however, is s unfolding here, with the offer from Johor Corp Bhd and PE firm CVC Capital Partners Asia III Ltd to take QSR Brands Bhd and KFC Holdings Bhd, which also owns the poultry firm Ayamas Bhd private, in a deal valued at RM5.3 billion. There is interest in DBE because the company has cleaned up its balance sheet and debts over the past couple of years and is set to register its first full-year profit in six years for the year ended December 31 2011. Up to the nine months ended September 20 2011, DBE registered a net profit of RM1.194 million. In 2010, it suffered a net loss of RM3.71 million, while in 2009 and 2008, its net loss was at RM2.9 million and RM20.40 million respectively. Apart from the two bidders, Datuk Raymond Chan Boon Siew, the controlling stakeholder of Sagajuta (Sabah) Sdn Bhd, is also said to be interested in DBE. By Sharen Kaur

'Weakening US$ to support palm oil prices'

Read more: http://www.btimes.com.my/articles/oois2/Article/

Asked if the amicable solution could involve further taxation on oil palm planters' harvest, he shook his head and replied, "not likely. The government is mindful that oil palm planters are the most heavily-taxed in this country." Also present at the dialogue were Nextview Sdn Bhd chartist Benny Lee, MPOC chief executive officer Tan Sri Yusof Basiron and Malaysian Palm Oil Board chairman Datuk Seri Utama Shahrir Abdul Samad. Yesterday, the third-month benchmark for crude palm oil contract on the Bursa Malaysia Derivatives Exchange slid RM16 to close at RM3,136 per tonne. Lee, in his palm oil price forecast presentation before 270 participants from the oil palm industry, said that palm oil prices is likely to trade as high as RM3,450 per tonne in the next 10 weeks. "The US dollar has started to weaken again and this will provide support to palm oil prices," Lee said. Shahrir concurred with Lee that global demand for palm oil is still strong. India and China will continue to buy large quantities of palm oil to feed its burgeoning population. "Emerging economies in Eastern Europe and North Africa will also continue to place more orders for palm cooking oil," he said. "Also, since palm oil is trading at a discount to soya oil, demand for palm oil should accelerate in the months to come," he added. When asked about this year's forecast of palm oil output, Shahrir expressed optimism that it is likely to hold up again this year, surpassing last year's 18.9 million tonnes. "More trees will mature and bear more fruits. This is especially so from Sarawak's oil palm estates," he said. This is good news for palm oil consuming countries around the world as Malaysia supplies half of the world's need of this cooking ingredient that is packed with vitamins. Shahrir explained that the developing world is heavily reliant on palm as a source of nutrition because the oil crop thrives in tropical climates and yields more fats and calories than other options. It gives the developing world - where hundreds of millions of men and women still live on a few dollars a day - the most caloric bang for the buck. By Ooi Tee Ching

'New Bursa rules are good but enforcement is key'

Bursa Malaysia has introduced a Corporate Disclosure guide that will see companies having to raise their standards of disclosure.

Read more: 'New Bursa rules are good but enforcement is key' http://www.btimes.com.my/articles/bursieef/Article/#ixzz1YsTANAb5

Kuala Lumpur: Analysts and fund managers like the fact that listed companies will have to make more timely and detailed disclosures from next year under changes to the listing rules, but stress that enforcement is key. Bursa Malaysia this week announced changes to its listing rules and introduced a Corporate Disclosure guide that will see companies having to raise their standards of disclosure. "It's one thing to have rules, but whether companies are complying with them is another. The regulator must be able to ensure compliance without fear or favour ... we don't want to see selective enforcement," said the head of research at a local brokerage outfit. From next year, for example, a company will be required to give a detailed analysis - as opposed to a review - of the performance of all its operating segments in the notes to its quarterly reports. It must comment on the prospects of each segment, including details such as contracts in hand, competitive challenges, significant changes in raw material prices, financial impact from recently completed deals, and new regulations that might affect its activities. Bursa will no longer accept general statements - such as "the board is optimistic of achieving better performance for the financial year" or "the board expects the group's results for the remaining period to be profitable" - if they are not followed by a discussion. The company also must announce when any director or external auditor has resigned and provide the reason for it. Interestingly, a company will also have to ensure that each of its directors, chief executive or chief financial officer "has the character, experience, integrity, competence and time" to discharge his or her roles. The new rules will help investors make better informed decisions, said Kaladher Govindan, head of research at TA Securities Bhd. Any move to improve disclosure and transparency will always be welcomed by investors, said Choo Swee Kee, executive director at TA Investment Management Bhd. "But how you set the standard and how you enforce it ... those will be issues that need to be looked at as well," he added. Most companies in Malaysia are scarce on details in their corporate announcements and tend to disclose the minimum possible in quarterly reports, analysts and fund managers often complain. "Based on actual rules, we're probably comparable to regional markets, but it's just the mentality that we're probably behind on. Companies here don't seem to have the desire to disclose more than necessary. Boards need to have a mindset change," Choo said.

Critical shortage of gas supply

Kuala Lumpur: Malaysia is running its power plants close to breaking point due to a prolonged shortage of gas supply, which is also hurting the state-owned national utility.

Read more: Critical shortage of gas supply http://www.btimes.com.my/articles/bigstretch-2/Article/#ixzz1VOtaajC3

Although the supply shortage was due to be resolved in June, the situation is still the same now as the power sector receives a third less gas than what it's supposed to get, said Tenaga Nasional Bhd (TNB) president and chief executive officer Datuk Seri Che Khalib Mohamad Noh. "It can't go on like this. Probably we can avert (any problems) this time but I don't know how many times we can be lucky," he told Business Times in an interview yesterday. The power sector has been allocated 1,350 million standard cubic feet per day (mmscfd) by Petroliam Nasinal Bhd (Petronas) but supply has consistently been below 1,000 mmscfd since the start of 2011. Supply is now hovering around 900-950 mmscfd and it even hit a low of 595 mmscfd at one point. The shortage is mainly due to frequent Petronas' maintenance at its gas facilities. "The supply is still not stable. It is far less than what we need. This is not sustainable," Che Khalib said. Apart from having to spend more to buy alternative fuels like distillates and medium fuel oil to run power plants, the shortage could also hurt the country's power supply if it is not fixed soon. Already, coal plants are now running flat out at maximum capacity and TNB had to forgo maintenance at some plants just to ensure continuous electricity supply. In some cases, it had to ask for a special waiver from the government because not carrying out scheduled maintenance would be a breach of industrial requirements. TNB also has to use distillates for its gas plants. This fuel costs five times more than gas. "Gas plants are not designed to run on distillates for a long time because it will have a negative impact," he said. Burning distillates for gas plants would also stress the equipment. This means the plants must be maintained more often. Although TNB can contend with one plant taken off the national power grid, it is worried about breakdowns at multiple plants due to the stress put on the equipment. But it is working hard to avoid this. In fact, Malaysia literally ran out of distillates on June 17 this year due to TNB's purchases and Che Khalib said he had to make frantic calls to oil companies for extra supply from abroad. "We have to ensure the country has electricity at any cost." And the cost has been quite high for TNB. In July, it posted its first quarterly loss in almost three years because of higher fuel costs.

Personal Comment: Price will go down reacting to this news... but after a solution to this problem arises... price will surely go up...

And the new MAS MD is...

Kuala Lumpur: The new managing director (MD) of Malaysia Airlines (MAS) is - your guess is as good as mine. At least that is what analysts are saying.

Read more: And the new MAS MD is... http://www.btimes.com.my/articles/maai4f/Article/#ixzz1UmNb8MhN

While they expect an MD to be named in the next couple of weeks, a source believes that he or she could be named as early as today. The MAS executive committee (exco) is believed to have had its first official meeting yesterday. While analysts agree the person will be independent of all the three parties in the deal - Khazanah Nasional Bhd, AirAsia Bhd and MAS, no one has a clue as to who could be the likely candidate. "I think it's safe to say the person won't be from (Time) Warner," quipped one analyst who declined to be named. At the possibility of a foreigner coming in to run the troubled carrier, he said the exco seemed to brush off the idea when asked. Another analyst opined that having a foreigner would not be a politically sound move. "The new guy will probably just come out of the blue, just like how (Tan Sri) Tony Fernandes came out of the blue and bought Tune Air Sdn Bhd for RM1," he said. At the possibility of MAS' newly appointed executive director Mohammed Rashdan Yusof becoming the new managing director, an analyst said "definitely not". Furthermore, he would have already been made the chief if Khazanah had wanted him to be from the start, another reckoned. One of the biggest challenges for the new MD is to deal with the airline's eight unions and 19,000 employees. The new boss will also have to contend with a new board of directors who are known to be strong personalities. MAS and AirAsia stocks were the two top most traded shares yesterday, with MAS shares inching higher by 8 sen, extending gains seen on Wednesday, to close at RM1.80. AirAsia shares fell by another 4 sen, ending the day at RM3.50.

Pay hikes to filter through oil palm industry

Plantation companies have to adopt the Malayan Agricultural Producers Association's pay hike plan to attract Malaysian workers to join the labour-strapped sector, say industry executives.

Read more: Pay hikes to filter through oil palm industry http://www.btimes.com.my/articles/MAPAHIK/Article/#ixzz1UmHciSB0

Kuala Lumpur: Malaysia's oil palm plantation industry is expected to gradually adopt the Malayan Agricultural Producers Association (Mapa) pay hike proposal for some 157,270 plantation workers nationwide. Industry executives say the plantation companies have no choice but to offer the same thing to avoid losing staff and more importantly attract local workers to join the already labour-strapped sector. Johor-based Kim Loong Resources Bhd managing director Gooi Seong Heen said the sector has to follow suit to prevent workers from jumping ship. "Labour cost will go up but it will not be significant. Hopefully with the pay hike, the workers will work harder and plantation companies will get higher productivity," Gooi told Business Times. From September 1, some 157,270 plantation workers will get a 10 per cent pay increase and are guaranteed a minimum monthly pay of RM850. Malaysia has some 500,000 plantation workers, half of which are foreigners. Most of Malaysia's plantation companies in Peninsular Malaysia are members of Mapa while only a handful from Sabah are Mapa members. The pay hike by Mapa follow closely Sime Darby Bhd's unprecedented pay hike effective July 1 for its 37,000 estate workers. Separately, Genting Plantations Bhd, the plantation arm of Genting Group, is also giving all of its more than 12,000 estate and oil mill workers and non-executive staff a RM200 pay increase a month, effective September 1 in conjunction with Mapa's scheme. CIMB Investment Bank analyst Ivy Ng Lee Fang said over time, other plantation companies will have no choice but to respond with incentives for their staff to work harder. "But I think, most of the plantation companies in Malaysia will wait until September 1, to get a clearer picture of the scheme. This is because most plantation companies in Sabah are not members of Mapa and for now they are not adopting to it yet. They would want to evaluate it first, talk to their human resource department, go on the ground and talk to their workers first and learn about it more before implementing it," she said. She added although raising pay will increase production cost, this could be offset by higher worker productivity if the salaries are linked to performance. A TDM Bhd official said the hike is long-awaited as foreign workers are known to work harder than their local counterparts, which leads to their salaries being almost equal or higher than that of Malaysian workers. "Cost of production will definitely go up but plantation companies have no problems in absorbing it. Hopefully, the higher cost will be offset by higher productivity from the workers who are happy with their pay hikes," said the official.

Asian stock marts dive

Analysts and fund managers in Malaysia have mixed advice for investors: some suggest a disposal of stocks in any rally and others urge investors to hold on to their positions

Read more: Asian stock marts dive http://www.btimes.com.my/articles/bloodb/Article/#ixzz1UmGciTHX

Kuala Lumpur: Stock markets in Asia were a sea of red yesterday as investors panic-sold shares on fears that the US may go into another recession. This followed rating agency Standard and Poor's move last Friday in downgrading the credit rating of the world's biggest economy for the first time ever, by one level to AA+. Key markets in Asia, led by China, fell by between 3 per cent and 5 per cent in the morning, before calming down somewhat in the afternoon. At home, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) plunged as much as 48.19 points (or 3.1 per cent) in the morning session to 1,476, with less than 30 of 1,000-odd counters posting gains. It, however, gained some ground in the afternoon session, closing 27.44 points (1.8 per cent) lower to 1,496.99, its lowest in about five months. Some RM34 billion in market capitalisation was wiped out. China's Shenzhen Composite Index (down 4.4 per cent lower to 1,113.37 points), Singapore's Straits Times Index (down 3.7 per cent to 2,884) and Korea's Kospi Index (down 3.8 per cent to 1,869.45) were among the worst performing indices in the region. Analysts and fund managers here had mixed advice for investors, with some suggesting a disposal of stocks in any rally and others asking investors to hold on to their positions while waiting for greater clarity on the situation. They expect Asian markets to take direction from Wall Street over the short term. Markets in US had yet to open for Monday trade as at press time, but key European markets were down by between one per cent and 2.5 per cent in early trade. "It's a dynamic situation ... we have to watch Wall Street closely over the next few days," said Terence Wong, head of research at CIMB Research. Wong noted that the pullback in the last two trading days, though strong, is still within a bull-market pullback. "We don't think it's game over for the bulls yet. We're advising investors to hang on to their positions and seek greater clarity," he told Business Times. Investors will also be looking for clues at a Federal Open Market Committee meeting in the US today. "There could be added expectations for the policymakers to announce fresh economic stimulus initiatives, or at least prevent confidence from tanking further by spelling out contingency plans should the world's largest economy threaten to slip into a double-dip recession, while keeping interest rates low for an extended period," HwangDBS Vickers Research said in a note to clients yesterday. The weaker fundamentals in the US and persistent debt worries in the eurozone are taking a toll on investor sentiment and causing investors globally to liquidate on any and every rebound rally in markets, analysts said. "We believe the market concerns will continue to overwhelm sentiment, and the downshift in equities will persist," said Yap Huey Chiang of RHB Research Institute. OSK Research cut its year-end target for the index to 1,557 from 1,680, and downgraded its recommendation on the Malaysian market to "neutral". Other research houses, like CIMB, said they may follow suit after looking at the current slew of corporate earnings to come out. "As of now, based on both technical and quantitative analyses, the downside risk is heightening," Kenanga Research said. Maybank Investment Bank urged investors to dispose of stocks on any rally and keep more cash rather than equity. "Any attempt to bargain hunt will be futile and shortlived. Therefore, any quick bargain hunting profits may quickly erode if clients do not take their positions off the table swiftly," its head of retail research Lee Cheng Hooi said in a note to clients yesterday. Losers thumped gainers 67 to 1,051 losers, with 99 counters unchanged. Top gainers included Nestle (up 48 sen to RM47.60) and Shell (up 16 sen to RM10.28). Some 1.9 billion shares worth RM3.6 billion changed hands in the market.

Bursa sees RM60.6b wiped out in two days

Good news is that, analysts say, the selling over the past two days may be overdone and a short-term rebound may be under way.

Read more: Bursa sees RM60.6b wiped out in two days http://www.btimes.com.my/articles/juniper08/Article/#ixzz1UmFrahRj

Kuala Lumpur: The stock market has lost more than RM60.6 billion in value over the past two trading days, but situation could worsen if more selling pressure is in the offing, as this may trigger a series of margin calls by brokerages. "If the markets go down a bit more, broking houses will likely require its clients to top up cash, failing which investors who are trading on margins will have their shares foresold," said a stock broker, adding for now none of the major firms have made the margin call. Jupiter Securities head of research Pong Teng Siew said when the margin call is made, the market will dip again. "We can certainly expect another round of dumping," said Pong, adding analysts were also concerned of "sell orders" by foreign funds. "We need to keep a close watch on how the foreign market perform over the next few days, for signs of any possible sell orders," said Pong. Over the past two trading days, the value of the local stock market has gone down from RM1.34 trillion to about RM1.28 trillion. Yesterday alone, market value lost was RM33.76 billion. Good news is that, analysts said that the selling over the past two days may be overdone and a short-term rebound may be underway. The Relative Strength Index (RSI) of the benchmark KLCI yesterday was at 20.36. The RSI measures the momentum of a security to determine whether it is in an overbought or oversold condition. A reading between 70-80 warns users of an overbought condition and is likely to encounter a downward correction. Reading between 30-20 are considered oversold condition, and warns users of an imminent upward correction. Stocks that may rebound include DRB-HICOM Bhd (share price fell 3.17 per cent to RM2.14 yesterday), Coastal Contracts Bhd (down 8.25 per cent to RM2.11), UEM Land Bhd (down 8.86 per cent to RM2.16), Malaysian Building Society Bhd (down 2.4 per cent to RM1.61), Gamuda Bhd (down 4.76 per cent to RM3.20), Malaysia Resources Corp Bhd (down 3.95 per cent to RM2.19) and SP Setia Bhd (down 4.64 per cent to RM3.70). According to analysts, these are some of the many stocks that they were optimistic over in the long run, backed by fundamentals. DRB-HICOM has a target price of as high as RM3.95, Gamuda RM5.63, UEM Land RM3.90, Coastal Contracts has a target price of more than RM3.80, SP Setia more than RM5.40, and MRCB above RM3.00. There were also 47 stocks that were trading at the 52-week low yesterday. They included Bursa Malaysia Bhd, Naim Holdings Bhd, Star Publications Bhd, UOA Development Bhd, Alam Maritim Resources Bhd, YTL Corp Bhd, YTL Power Bhd, KNM Group Bhd, Ma-xis Bhd, Kinsteel Bhd, Puncak Niaga Holdings Bhd, JCY International Bhd, Berjaya Land Bhd and KLCC Property Holdings Bhd.

World rallies to tame debt crisis, avoid market sell-off

World rallies to tame debt crisis, avoid market sell-off

Read more: World rallies to tame debt crisis, avoid market sell-off http://www.btimes.com.my/articles/mame/Article/#ixzz1UmEV9OnW

Frankfurt: The G20 vowed to bolster stability and the European Central Bank went shopping for eurozone bonds yesterday to stem a debt crisis gone global but economists raised doubts and battered markets were knocked back down. Finance ministers and central bankers from the Group of 20 industrialised and emerging economies pledged to "take all necessary initiatives in a coordinated way to support financial stability and to foster stronger economic growth in a spirit of cooperation and confidence." Their statement came after Asian stock markets posted substantial losses while European trade saw promising gains disappear by midday, with Friday's unprecedented US ratings downgrade adding to the toxic mix. A sharply-worded editorial in the Chinese People's Daily - the mouthpiece of China's Communist Party - said Western nations threatened global prosperity by "ignoring their responsibility" to the rest of the world. The G20 stressed that members would "cooperate as appropriate, ready to take action to ensure financial stability and liquidity in financial markets." - AFP

Maxis broad plan

The data business is where the company is in the investment mode, says Maxis chief executive officer

Read more: Maxis broad plan http://www.btimes.com.my/articles/maxisceo/Article/#ixzz1UNsxLsEm

Kuala Lumpur: Maxis Bhd, the country's largest mobile operator, expects its operating margin to improve in as early as three years, once its broadband customer base reaches critical mass. The company, which has been registering an earnings before interest, tax, depreciation and amortisation (Ebitda) margin of more than 50 per cent for more than three consecutive years, has recently guided that margins are expected to ease over the near term. "I believe in the next three to four years, you will see margins coming up because we would have then achieved the critical mass of broadband users," said chief executive officer Sandip Das in an interview recently. The company expects easing of margin in the short term to be driven by investments in the data business (such as broadband) and beyond telecom business (like machine-to-machine and cloud computing). But he stressed that this does not mean that the conventional voice and text messaging business is dwindling. "Sometimes, people misunderstand me when I say our Ebitda margin will go down," he said. Maxis, controlled by tycoon T Ananda Krishnan, currently has three businesses - the "cash-cow" voice and text messaging business, the data business and the beyond telecom business. Sandip said its existing voice business has now reached maturity and does not require much capital expenditure (capex), as its network has covered more than 95 per cent of the country. "This is where growth is marginal but Ebitda margin is at its peak. This is the part of business where we can make 50-51 per cent margin for as long as we can," said Sandip. However, in order for the company to continue growing, it needs to venture into new businesses. One of it is the data business. This is where the company offers broadband services via smart phones and USB dongles. "The data business is where we are in the investment mode ... it is not as big as the voice business, so it is not generating enough revenues at this point in time for that kind of Ebitda margin. "But there will come a time when we will not have to invest anymore in network but the business will reach critical mass. Like right now, we only have 600,000 odd broadband customers, but voice we have 13 million, the day I have my broadband users go into millions, my margins will become higher," explained Sandip. The company is also exploring into businesses that are "beyond telecoms", such as IPTV, machine-to-machine solutions and cloud computing. "However, it's still too early to really determine what will work, what will not work, how long it will take, the incubation period, and others. But because this is a smaller fraction of the overall business today, so it will not affect so much on the overall margin," he said. Of all the potential beyond telecom services, he sees the trend of machine-to-machine picking up in Malaysia. "The machine-to-machine will be a trend in the future. For example, we can put chips in the vending machines, so soft drink companies can monitor their stock level in the vending machines remotely," he said. Like any new trends, Sandip believes it will take time before a new one emerges. "I remember 12 to 15 years ago, one of my friends told us that we can send text messages using the mobile phone, and all of us sitting in the room said who has the time to type. But, as you can see, SMS has exploded. "Once ecosystem is established, reliability established, consumer behaviour will change. "We have so many applications and solutions in our pipeline, some may succeed, some may not. A lot of it is a function of time," he said.

Khazanah to remain MAS' single largest shareholder

Khazanah clarifies reports that AirAsia founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun would end up as the single biggest investors

Read more: Khazanah to remain MAS' single largest shareholder http://www.btimes.com.my/articles/kaz/Article/#ixzz1UNs1p5wW

Kuala Lumpur: Khazanah Nasional Bhd, which owns nearly 70 per cent of Malaysia Airlines (MAS), said it will stay as the single largest shareholder of the national carrier as the company undergoes a transformation plan. It was clarifying weekend reports that AirAsia founders Tan Sri Tony Fernandes and Datuk Kamarudin Meranun would end up as the single biggest shareholder in MAS. "These reports are incorrect. The aviation sector is a strategic sector to the economy and MAS remains a core holding in Khazanah's portfolio," the investment group said in a statement. In a separate statement, Fernandes and Kamarudin also said it was not true that they would end up as the single largest shareholder. "As the major shareholders of AirAsia Bhd and AirAsia X Sdn Bhd, we are committed to increasing shareholder value in both our core investments by continuously exploring various opportunities to enhance our franchise," they said. It was reported that MAS would partner Asia's largest budget carrier, AirAsia, and an official announcement is likely to be made by the government this week. It is learnt that MAS will swap shares with AirAsia in a move that could see AirAsia chief executive officer Fernandes getting a 20 per cent stake in the national carrier. This will allow both Malaysian carriers to rationalise their fleet frequencies and destinations within the country and abroad while ensuring MAS returns to becoming a premier airline. Khazanah, in its statement, did not deny that a revamp was on the way. "As an active strategic investor, Khazanah constantly reviews ways to improve the performance of its portfolio companies and concurrently the competitiveness of key strategic sectors of the economy."

Nod for merger

Kuala Lumpur: The RM11.85 billion merger of Sapuracrest Petroleum Bhd and Kencana Petroleum Bhd is literally "one big approval" away before officially creating the country's largest oil and gas service provider by asset size.

Read more: Nod for merger http://www.btimes.com.my/articles/SAKEN-2/Article/#ixzz1UCNBeBMF

The board of directors of SapuraCrest and Kencana yesterday approved the merger exercise, deciding to take up the offers made by special purpose vehicle (SPV) Integral Key Sdn Bhd (IKSB). This leaves the need for both companies to secure at least 75 per cent shareholders nod as the next big hurdle before the deal goes through. SapuraCrest and Kencana are expected to call for special shareholders' meetings to vote on the deal soon. Overall, the companies are expecting the whole merger exercise that will create a new entity with some RM6 billion of assets to be completed by the first quarter of next year. SapuraCrest and Kencana yesterday issued a statement each to say that their board of directors had decided to accept IKSB's offers. "The board ... has resolved to accept the offer by IKSB to acquire the SapuraCrest business for a total consideration of RM5.87 billion," SapuraCrest said in its announcement to Bursa Malaysia yesterday. "The board is not seeking other alternative bids to make an offer to acquire the SapuraCrest business," it added. IKSB has offered to buy all the assets and liabilities of SapuraCrest and Kencana under a cash and share swap deal. The SPV will pay almost RM5.98 billion or RM3 per Kencana share satisfied by the issuance of 2.5 billion new IKSB shares at RM2 apiece and a cash payment of RM968 million. For SapuraCrest, IKSB will pay RM5.87 billion or RM4.60 per SapuraCrest share. This will be satisfied by the issuance of 2.5 billion new IKSB shares, also at RM2 apiece and a cash payment of RM875 million. Kencana, in its announcement to Bursa Malaysia yesterday, cautioned that moving forward, there will be no assurance that the merged entity will be able to attain a higher or equivalent combined earnings. This is after taking into consideration the cultural and management differences, possible customer overlap, and the additional borrowings amounting to about RM1.8 billion repre-senting the total cash payments, which will be incurred by IKSB pursuant to the merger offer. Kencana and SapuraCrest posted a net profit of RM136.2 million and RM231.4 million respectively in their last financial year. Once the deal is completed, IKSB will be listed on Bursa Malaysia's Main Market, in place of Sapura-Crest and Kencana. Analysts estimate that the Sapura group founder Tan Sri Shamsuddin Abdul Kadir and his family will own slightly over a fifth of IKSB, and Kencana's Datuk Mokhzani Mahathir about 16 per cent. Norwegian rig contractor Seadrill will also be a substantial shareholder given its current 23.6 per cent stake in SapuraCrest.

KLIFD takes shape

Kuala Lumpur: 1Malaysia Development Bhd (1MDB), the government-owned firm in charge of setting up the Kuala Lumpur International Financial District (KLIFD), has picked Akitek Ju-rurancang (Malaysia) Sdn Bhd and its international partner, Machado Silvetti and Associates (MSA), as the project's master planners.

Read more: KLIFD takes shape http://www.btimes.com.my/articles/imbi/Article/#ixzz1UAoMMiup

The US$8 billion (RM23.7 billion) KLIFD, one of Malaysia's biggest projects, aims to tightly cluster financial institutions and top global firms on 30.3ha of land in the Imbi area, fronting Jalan Tun Razak here. A detailed masterplan of the project is expected to be completed in the first quarter of next year, 1MDB said in a press statement yesterday. The project is a joint venture between 1MDB and Mubadala Development Corp, Abu Dhabi's investment arm. 1MDB had, in late 2010, organised a design competition for master planners, attracting some of the world's best. "The two companies (Akitek Jururancang and MSA) represent the fusion of local and international talents that best translate 1MDB's vision for the future financial district, through their concept and rendering of the masterplan," said Datuk Azmar Talib, chief operating officer of 1MDB Real Estate Sdn Bhd, a subsidiary of 1MDB. He said the two companies share a vision for a "highly functioning, interesting, innnovative and aesthetically pleasing urban district" that would establish KLIFD as a financial centre of choice. Construction work is expected to take off in June, according to news reports earlier this year. The project is seen to be providing significant stimulus for the construction and related industries. It will leverage on Malaysia's existing strength in Islamic finance and play on its strategic location to complement other financial centres within the region. The RHB banking group is expected to be the first to set up presence there. According to 1MDB, the Akitek Jururancang-MSA partnership is to deliver a sustainable, modern and progressive KLIFD. This will be projected through buildings, a pedestrian-friendly green public realm and seamless links to public transportation. "We have a real contribution to make to the urbanscape of Kuala Lumpur in line with the objective of the Greater KL initiative to make Kuala Lumpur a world-class city. The increasing emphasis on the greening of the city - as manifested in the recent River of Life and upgrading of the Lake Gardens - signals a welcome reception of KLIFD's unique 'Financial Centre in the Park'," Akitek Jururancang's managing director Datuk Seri Esa Mohamed said in the same statement. The River of Life is a project name for the beautification of a 10.7km stretch of the Klang and Gombak river. Akitek Jururancang's partner MSA, a US-firm based in Boston, has worked on projects like The Mint Museum (Charlotte, North Carolina) and the Boston Public Library. It won an architecture prize last year for its work on the Suliman S. Olayan School of Business at the American University of Beirut, Lebanon.

Affin scraps plan to buy Indonesian bank

Kuala Lumpur: Affin Holdings Bhd has become the first casualty of a possible foreign ownership cap rule for Indonesian banks when it calls off plans to buy PT Bank Ina Perdana.

Read more: Affin scraps plan to buy Indonesian bank http://www.btimes.com.my/articles/afnobuy/Article/#ixzz1UAo2OITR

"In view of the study (by Bank Indonesia to cap foreign ownership) ... Affin and the (selling) parties are of the view that it would be in the best interest of all parties to discontinue with the existing agreements," Affin said in a statement to Bursa Malaysia yesterday. However, it may renegotiate the deal to buy 80 per cent of Bank Ina for RM138 million after Indonesia's central bank announces its new policy. Current rules in Indonesia make it possible for foreigners to hold up to 99.9 per cent stake in banks. This may be cut to 50 per cent, Bank Indonesia deputy governor Halim Alamsyah told Financial Times in an interview on Wednesday. Affin was in the final stages of completing the deal, which was signed a year ago. The bank's shares closed unchanged at RM3.39 yesterday.

Bears hold grip

Kuala Lumpur: Malaysian stocks fell to their lowest in two months yesterday on concerns of weak US economic data but analysts think improving private investments may help cushion the local economy.

Read more: Bears hold grip http://www.btimes.com.my/articles/stockbear-2/Article/#ixzz1U0ILj48E

Consumer spending in the US, Malaysia's fourth biggest export destination, declined in June, the first drop in nearly two years, hin-ting that the economy is stalling at midyear. "With the US borrowing limit issue solved, investors are now concerned on the long-term challenges to US public finance," said Jupiter Securities Sdn Bhd head of research Pong Teng Siew when contacted. The US deficit has now reached about 9 per cent of the country's economy, close to the highest since World War II. US lawmakers approved a plan to cut US$2.1 trillion (RM6.24 trillion) in spending over the next 10 years. However, analysts remained split on the likelihood of a US recession this year. Pong believes there's a 50-60 per cent chance of a US recession this year, while Chris Eng, head of research of OSK Research, believed otherwise. "I think there's a 20-30 per cent chance that the US will enter into a recession this year. There're risks, but they're minimal. We believe, if a recession were to happen in US, it would probably be next year," added Eng. Investors will also keep a close watch on rating agencies' next move. Moody's, which maintained its US ratings for now, assigned a negative outlook to the "AAA" ra-ting. This means a downgrade is possible in the next 12-18 months. Standard and Poor's, which has been tougher than its rivals, threatened to downgrade by mid-October if lawmakers do not come up with a plan to meaningfully cut the budget deficit. The FTSE Bursa Malaysia KLCI fell by as much as 1 per cent yesterday before recouping losses to end 0.6 per cent lower to 1,545.10 points yesterday. Casualties were across all sectors - from banks and plantation companies to gaming and tobacco companies. Top losers include British American Tobacco (Malaysia) Bhd (down 44 sen or 0.9 per cent), MISC Bhd (down by 17 sen or 2.25 per cent), Nestle Bhd (down 16 sen or 0.3 per cent) and Genting Plantation Bhd (down 9 sen or 1.1 per cent). The decline is in line with the regional market performance. Stocks in Singapore, Hong Kong, South Korea, Indonesia, Thailand, fell by as much as 3 per cent yesterday. Although the Malaysian stock market will not be spared should the US enter a recession and Europe's sovereign debt crisis worsen, the negative impact on local stocks and economy may be cushioned. "The Economic Transformation Programme (ETP) is going to play an important role in cushioning the effects of these global issues. I think the ETP came at the right time and without the ETP, we would be in a much, much worse situation," said Pong. Nevertheless, this may not be able to prevent a downgrade by local analysts, as they are now considering lowering their year-end forecasts on the benchmark index. Jupiter has a 1,640-point target on the FBM KLCI, and may lower its forecast once it obtains more data. OSK remained optimistic of its 1,680 target.

Md Nor is MAS chairman

Tan Sri Md Nor Md Yusof now serves as the chairman of Khazanah Nasional Bhd's executive committee.

Read more: Md Nor is MAS chairman http://www.btimes.com.my/articles/mezz-2/Article/#ixzz1TYtFIGHz

Kuala Lumpur: Malaysian Airline System Bhd (MAS) yesterday announced that Tan Sri Md Nor Md Yusof will be its new chairman effective August 1. Md Nor was formerly MAS managing director before becoming executive chairman of the Securities Commission until March 31 2006. He currently serves as the chairman of Khazanah Nasional Bhd's executive committee. Md Nor also sits on the board of several companies and institutions, including Malaysian Agrifood Corp Bhd and Pelaburan Hartanah Bhd, and is also a trustee of Yayasan Khazanah. He was president and CEO of Bank of Commerce (M) Bhd which is now CIMB Bank Bhd.

Petronas: No deal with joint venture

Kuala Lumpur: Petroliam Nasional Bhd (Petronas), the national oil company, has disputed claims by a Malaysian-Iranian-Chinese (MIC) joint venture that they are poised to be awarded a contract to develop a marginal oil field.

Read more: Petronas: No deal with joint venture http://www.btimes.com.my/articles/petre/Article/#ixzz1TMIhJE3q

Earlier this week, it was reported that China's largest petroleum refiner Sinopec Petroleum Services Corp (Sinopec) was poised to take a major stake in a planned RM2.06 billion venture to help develop a Petronas marginal oil field located off the coast of Terengganu. At a press conference held on Monday, it was disclosed that under the deal, Sinopec will hold 40 per cent stake in the consortium, while Sabio Oil and Gas Sdn Bhd (SOG), a unit of Sabio Technology Bhd (STB), and Iranian group International Oil and Design and Construction Sdn Bhd (IODC) will have 30 per cent stake, respec-tively. "This is our maiden foray in the oil and gas industry. We have set up SOG solely for this project and we are optimistic to be given a chance by Petronas to develop this project," STB executive chairman Datuk Seri Ahmad Sukimi Ibrahim was reported to have said. "The Sinopec-Sabio-IODC consortium has not taken part in any of our prior processes," Petronas said in a late statement yesterday. "We had already completed a data review process with parties interested in the fields identified for the first phase of the development and has so far awarded a Risk Service Contract (RSC) for the Berantai field to the Petrofac-Kencana-Sapura partnership," Petronas added. Petronas also added that as part of its selection criteria, any local company to be selected by foreign partners to participate in the RSC petroleum arrangement is required to have a proven track record as an established oil and gas service provider, apart from being a listed entity. None of the local companies in the MIC joint venture are listed, but it was also reported that STB, incorporated just last November, had obtained approval to list on Bursa Malaysia and soon will be issuing its public prospectus. However, a quick check on Bursa Malaysia and the Securities Commission's website did not reveal any details concerning a draft prospectus by STB. Analysts, meanwhile, were puzzled on why Petronas took more than a day before issuing a statement, but pointed out that Malaysia has been prone to mega oil deal announcements. In 2007, Trans-Peninsula Petroleum outlined plans for a US$7 billion pipeline, to be laid across northern Malaysia, which will divert up to a third of oil now being carried through the Straits of Malacca. Trans-Peninsula linked up with a Saudi firm, Al-Banader International Group, for oil supplies while a unit of Ranhill Bhd was slated to help in the design and construction of the pipeline. While today in the city, a US$100 billion (RM294 billion) Trans-Asian Oil and Gas Pipeline memorandum of understanding signing ceremony is slated to take place.