FBM KLCI 1797.40 21.74 KLCI FUTURES 1801.00 25.50 STI 3513.23 15.69 RM/USD 3.9790 CPO RM2455.00 37.00 OIL US$76.44 2.35 GOLD US$1303.70 0.70 Malaysia committed to RM201b of leasing payments over next few decades 4 HOME BUSINESS FINANCIAL DAILY www.theedgemarkets.com MAKE BETTER DECISIONS PP 9974/08/2013 (032820) PENINSULAR MALAYSIA RM1.50 MONDAY MAY 28, 2018 ISSUE 2658/2018 6 HOME BUSINESS 8 HOME BUSINESS 8 HOME BUSINESS 9 HOME BUSINESS 16 HOME 17 COMMENT Factors to be considered in toll removal plan IFCA MSC set for busy 2018 AirAsia X chief not sweating over rising fuel prices Refinery stocks under pressure amid narrowing margins, uncertain oil prices Gobind takes aim Putin’s evasions on MH17 a disgrace Value emerging for battered stocks 5 HOME BUSINESS NAJIB MUST BE HELD RESPONSIBLE for 1MDB scandal Guan Eng says the MoF will work with the special committee to punish those responsible. Story on Page 4. AFP BREAK The Edge Financial Daily will be taking a break in conjunction with Wesak Day. Publication will resume on Wednesday.
Value emerging for battered stocks 5 H O M E B U S I N E S S
NAJIB MUST BE HELD RESPONSIBLE for 1MDB scandalGuan Eng says the MoF will work with the special committee to punish those responsible. Story on Page 4.
AFP
BREAKThe Edge Financial Daily will be taking a break in conjunction with Wesak Day. Publication will resume on Wednesday.
Value emerging for battered stocks 5 H O M E B U S I N E S S
NAJIB MUST BE HELD RESPONSIBLE for 1MDB scandalGuan Eng says the MoF will work with the special committee to punish those responsible. Story on Page 4.
AFP
BREAKThe Edge Financial Daily will be taking a break in conjunction with Wesak Day. Publication will resume on Wednesday.
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O N E D G E T V
www.theedgemarkets.com
Buying opportunities emerge
BY WA E L M A H D I & G R A N T S M I T H
BY G EO R G E H AY
BY C H R I S TO P H E R B E D D O R
TNB secures Siemens as diamond sponsor for Cepsi 2018KUALA LUMPUR: Tenaga Na-sional Bhd (TNB) has secured German conglomerate Siemens as a diamond sponsor for the Conference of Electric Power Supply Industry (Cepsi 2018) which the national utility com-pany will host from Sept 17 to 22. In a statement yesterday, TNB chief corporate officer Datuk Wira Roslan Ab Rahman said with the inclusion of Siemens, there are 18 sponsors to date, for Cepsi. Other sponsors are Asea Brown Boveri, General Electric, Accenture, Huawei, Sarawak En-ergy, CG Power Systems Indone-sia as platinum sponsors, while Tai Chyun Ind is a gold spon-sor. TNB also secured Schneider Electric, Pestech Energy and Er-nst & Young as silver sponsors, while Nokia, GMR Energy Ltd, Malakoff , Oracle, PWC, Andritz and Sagemcom are bronze spon-sors. — Bernama
Lower your prices with the zero-rating of GST, Customs tells businessesKUALA LUMPUR: Businesses are required to pass on sav-ings from the zero-rating of the goods and services tax (GST) that starts on June 1 to consum-ers in the form of lower prices, says the Customs Department. In a statement yesterday, the department’s director-gener-al Datuk Seri Subromaniam Th olasy urged all businesses not to exploit the government’s wish to lower prices and to pass the tax saving to consumers. Th e government will be taking stern steps to ensure that the prices of goods and services comply with the Price Control and Anti-Profi teering Act 2011, he added. — Bernama
Residents in 2 Sabah areas feel tremors yesterdayLAHAD DATU: Residents around Lahad Datu and Kunak felt two tremors in 10 minutes yesterday evening. Baharudin Labahu, 28, a private sector employee, said he felt a fi ve- to six-second trem-or while at home at Simpang Empat Kunak in Kunak. “After a few minutes, another tremor oc-curred,” he said when contacted by Bernama. Th e Meteorological Department’s website reported a weak earthquake measuring 3.8 on the Richter scale at 3.53 pm, located 8km north-west of Kunak at a depth of 10km. — Bernama
Trump: China’s ZTE to pay US$1.3b fi ne to re-openWASHINGTON: US Presi-dent Donald Trump said the US would allow Chinese tele-communications-equipment maker ZTE Corp to remain in business after paying a US$1.3 billion (RM5.17 billion) fi ne in addition to changing its man-agement and board and provid-ing “high-level security guar-antees.” In a tweet last Friday evening, Trump confi rmed a deal that his administration had outlined for members of Congress. — Bloomberg
I N BR I E F
The Edge Communications Sdn Bhd (266980-X) Level 3, Menara KLK, No 1 Jalan PJU 7/6, Mutiara Damansara, 47810 Petaling Jaya, Selangor, Malaysia
Editor-in-Chief Azam ArisExecutive Editors Ooi Inn Leong, Kathy Fong, Jenny Ng, Diana KhooSenior Editors Cindy Yeap, Jose Barrock, Kang Siew LiAssociate Editors R B Bhattacharjee, Vasantha Ganesan, Adeline Paul Raj Deputy Editor Tan Choe Choe Assistant Editors Khairie Hisyam Aliman, Kanagaraju S SithambaramChief Copy Editor Halim YaacobSenior Copy Editor Melanie ProctorCopy Editor Tham Kid ChengArt Director Sharon KhohChief Graphic Designer Cheryl LohDesign Team Valerie Chin, Mohd Yusry, Aaron Boudville, Aminullah Abdul Karim, Noorain Duasa, Tun Mohd Zafi an Mohd Za’abah
LONDON: Opec is changing course. For the past year and a half, the Organization of the Pe-troleum Exporting Countries and producers like Russia have dili-gently stuck to agreed oil supply cuts. Now Russia and Saudi Arabia are discussing opening the taps by an extra one million barrels per day, Reuters reported last Friday. It is more of a reset than a rethink.
Th e usual problem with car-tels is that individual members have an incentive to cheat. Since the cuts were agreed at the end of 2016, Opec and its supplier friends have had the opposite problem.
In April, they restricted output by over 2.4 million barrels per day, more than the agreed level of over 1.7 million barrels. On av-
HONG KONG: A trade fi ght be-tween the world’s two biggest pow-ers is a hazard to the World Trade Organization (WTO).
Th e US and China are sparring at the Geneva-based body about how it should handle Beijing’s brand of state capitalism.
An American threat to veto the appointment of judges could par-alyse the trading body’s dispute resolution mechanism — and hold the outfi t to ransom.
Th e US ambassador to the WTO on May 8 complained that the Peo-ple’s Republic’s attempt to portray itself as an upholder of the global trading system entered “the realm of Alice in Wonderland”.
Opec supply easing is more reset than U-turn
erage, Opec compliance has been 110% of the target, according to the International Energy Agency.
It may seem odd that Saudi Ara-bia and Russia, whose oil ministers are conferring at the St Petersburg International Economic Forum, see this as a problem. Th e com-bination of their cuts and steady demand has reduced the supply glut in developed markets to nor-mal levels, and pushed oil prices close to US$80 (RM318.40) a barrel.
Lower costs due to the recent depreciation of the rouble will help state-owned Russian group Rosneft make money hand over fi st. Higher prices also prop up the Saudi budget, and support the planned initial pub-lic off ering of state group Aramco.
Yet far-sighted Russians and Saudis know that pushing the cost of the black stuff to US$90 or be-
yond will be self-defeating. Th e desert kingdom will fear annoying US President Donald Trump, who has already tweeted his irritation at Opec’s role in raising prices.
Both countries will also be wary of giving US producers an incentive to crank up production of shale oil.
Th at is why it is time to act. Ven-ezuelan output has slumped from two million barrels per day in early 2017 to below 1.5 million in April due to underinvestment. Renewed US sanctions on Iran could remove as much as 800,000 barrels per day, ING analysts reckon.
Given Saudi alone has two mil-lion barrels of daily spare capacity, it could fi ll any gaps, increase its market share and still look like a sober steward of the oil market. In that sense, the change of direction is a no-brainer. — Reuters
US-China spat poses serious hazard for WTO
His Chinese counterpart ac-cused the US of holding the judicial appointment process “hostage” and last week asked if it and the European Union (EU) could bend the organisation’s rules to its whim.
The administration of Presi-dent Donald Trump has refused to let the WTO appoint judges to its Appellate Body, a key part of its system for resolving trade disputes among members.
If the US hold-up continues, the court might grind to a standstill by the end of next year. Members could pursue some creative options to keep the system moving, but these have signifi cant drawbacks.
US diplomats believe judges have been eff ectively writing new rules without the consent of mem-
bers. Th at claim has some mer-it but also looks like an attempt to threaten the WTO into siding with America against China on key issues.
The decision could change how some countries calculate anti-dumping duties, with tens of billions of dollars on the line.
Some sort of reckoning would probably have come even with-out Trump. His predecessor also rejected China’s bid for market economy status; many diplomats from the EU and elsewhere also fi nd the China’s Republic request unacceptable.
The difference now is that the Trump administration seems es-pecially ready to fight its case. — Reuters
KUWAIT/LONDON: Opec and al-lied oil producers including Russia concluded that the crude market rebalanced in April, when their collective production cuts achieved a key goal of draining the surplus in global stockpiles.
The excess in oil inventories, which has weighed on prices for three years, plunged in April to less than the fi ve-year average for stockpiles in developed nations, ac-cording to people with knowledge of the data assessed at the meeting of the Joint Technical Committee of Opec and other producers last week in Jeddah, Saudi Arabia.
determined that stockpiles held by developed nations dropped to about 20 million barrels below their fi ve-year average, for a total decrease of about 360 million barrels since the start of 2017, three of the people said, asking not to be identifi ed because the JTC discussions were private.
Th e decline was due to producers’ greater adherence to their pledged output cuts — their compliance rate reached 152% in April — and to sum-mer demand for crude and refi ned products, according to the people.
Th e JTC meeting precedes the producers’ main gathering next month in Vienna, where they will evaluate the results of output cuts they’ve been making since Janu-ary 2017.
With supplies from Iran and Venezuela now at risk, specula-tion abounds that Opec and its allies may ease the cutbacks.
Top producers Saudi Arabia and Russia said last week that Opec and other suppliers may boost out-put in the second half of the year, prompting a slide in prices which had reached US$80 (RM318.40) a barrel for the fi rst time since 2014.
Th e International Energy Agen-cy said on May 16 that Opec and its allies have fi nally succeeded in clearing a glut, with inventories falling below their fi ve-year average for the fi rst time since 2014.
However, Saudi Arabia and Rus-sia have both said the fi ve-year av-erage is fl awed. — Reuters
4 H O M E B U S I N E S S MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
Guan Eng: Najib must be held responsible for 1MDB scandalHe says the MoF will work with the special committee to punish those responsible
KUALA LUMPUR: Former prime minister and fi nance minister Da-tuk Seri Najib Razak must be held responsible and accountable for the 1Malaysia Development Bhd (1MDB) corruption scandal, Fi-nance Minister Lim Guan Eng said yesterday.
Najib was the chairman of 1MDB’s board of advisers until it was dissolved in May 2016 and the ministry of fi nance (MoF) took over its remaining assets.
In a statement yesterday, Guan Eng asked Najib how was it that payments made by MoF on behalf of 1MDB amounting to RM6.98 bil-lion since April 2017 were not tan-tamount to a bailout.
“Why should the MoF compen-sate 1MDB to the tune of tens of bil-lions of ringgit as asserted by Datuk Seri Najib Razak, when 1MDB has hardly carried out any development on the land?” Guan Eng said, re-ferring to the Tun Razak Exchange (TRX) and Bandar Malaysia land parcels here.
Last Tuesday, Guan Eng revealed that the MoF had since April 2017 made payments on behalf of 1MDB amounting to RM6.98 billion. He said the RM6.98 billion fi gure had yet to include another RM954 mil-lion payment that needs to be paid by MoF before the end of this year. All these payments tantamount to a major bailout of 1MDB, he added.
In response, Najib wrote on his Facebook last Friday that it was “wrong to call it a bailout of 1MDB”.
“Essentially, he (Najib) argued that 1MDB had transferred all of its real estate assets including TRX and Bandar Malaysia to the MoF as recommended by the Public Ac-counts Committee (PAC). Hence, he claimed these payments should be rightly construed as ‘compensation’ to 1MDB,” said Guan Eng.
“Datuk Seri Najib Razak could not be more wrong in making the presumption,” he added.
Guan Eng explained that the
transfer of these assets back to the MoF in April 2017 was not a sale and purchase transaction, nor should it be.
“MoF offi cials have confi rmed that no such sale and purchase agreement was executed to the ef-fect. Th is was consistent with [the] PAC recommendation.
“Th e PAC found that 1MDB had neither the financial means, nor the ability to develop, or even to sell these parcels of land. Hence, the MoF needed to take over these projects in order to ensure their continued viability,” he said.
Guan Eng pointed out that Najib should not forget that these parcels of land were originally sold by the government to 1MDB at bargain basement prices between 2010 and 2012.
“Th e 70-acre (28.33ha) plot was sold to 1MDB for RM230 million, or approximately RM74 per sq ft (psf), while the 486-acre Bandar Malaysia [land] was sold to 1MDB for RM1.6 billion, or approximately RM72 psf.
“Let me also remind the former prime minister that the MoF did not take over these entities for free. When MoF took over TRX City Sdn Bhd, it came attached with a RM800 million loan from the Social Secu-rity Organisation Malaysia, which is due in 2020.
“And when MoF took over Bandar Malaysia Sdn Bhd, it came attached with a RM2.4 billion sukuk, to be repaid from 2021 to 2024.
“It should also be noted that the Auditor-General in his report on 1MDB confi rmed the above bor-rowings were not used for their in-tended purposes, that is, they were not used for the development of the above projects,” he said.
“1MDB president Arul Kanda Kandasamy also confirmed this himself when he testified to the PAC. Hence, if anything, MoF should be claiming compensa-tion from 1MDB for also assum-ing these liabilities, not the other
KUALA LUMPUR: Th e previous Ba-risan Nasional (BN) government has been intentionally and aggressively circumventing even the classifi cation of “government guarantees” by com-mitting the government to lease pay-ments amounting to RM201 billion over the next few decades, said Tony Pua, the special offi cer to Finance Minister Lim Guan Eng.
Pua, who is also the member of parliament for Damansara and DAP national publicity secretary, said the Pakatan Harapan government was shocked when it discovered that the BN government had awarded more
than RM63 billion worth of pub-lic-private partnership (PPP) pro-jects, committing the government to RM201 billion of leasing payments over the next few decades.
“Not only are these obligations hidden from the government’s lia-bilities, the cost to the government to carry out these projects is much higher than if the government had just funded these projects with direct borrowings,” he said in a statement on Saturday.
He cited the Najib administra-tion’s intention to award a contract to certain parties to build a new
RM500 million polytechnic.“If the contract were awarded di-
rectly, it would have meant an addi-tional RM500 million in borrowings. Th is would worsen the perception of signifi cantly higher debt, and in-crease the budget defi cit,” said Pua.
“And even providing a govern-ment guarantee for a government subsidiary to undertake the project would look bad because our guar-antees have already increased by leaps and bounds over the past fi ve years,” he said.
Pua said the Najib administra-tion had “cleverly abused” the PPP
mechanism by awarding a contract to a private “crony” company where the government does not pay directly for the project construction.
“Instead, the government would commit to make monthly lease pay-ments to the company amounting to three times the value of the project, or RM1.5 billion in this case, over the next 10 to 20 years. Th e private com-pany would then take this lucrative contract to the banks as collateral to secure the necessary fi nancing to carry out the project,” he added.
Pua also noted that Datuk Seri Najib Razak remains in denial, urg-
ing the former prime minister to stop lying about the true levels of federal government debt.
Last Th ursday, Guan Eng revealed that the total federal government debt and liabilities amounted to RM1.09 trillion, or 80.3% of the country’s gross domestic product (GDP).
Th e sum comprised RM686.8 bil-lion of offi cial federal government debt (50.8% of GDP), RM199.1 bil-lion (14.6%) of committed govern-ment guarantees and RM201.4 bil-lion (14.9%) of lease commitments via the PPP projects, said Pua.
‘M’sia committed to RM201b leasing payments over next decades’
Guan Eng speaking to reporters last Wednesday after meeting with Arul Kanda at the MoF. Photo by Bernama
way around,” said Guan Eng.Guan Eng also noted that the
MoF had already made additional payments to, or on behalf of 1MDB, with regard to the TRX and Ban-dar Malaysia projects such as the acquisition of a 2.3-acre piece of land from TRX in September 2015 for RM250 million.
“Th e MoF [also] refunded a de-posit amounting to RM741 million on behalf of 1MDB to the consor-tium led by Iskandar Waterfront Holdings Sdn Bhd after the Bandar Malaysia sale and purchase agree-ment was terminated in May 2017. Th is was because 1MDB had used up the deposit for other purposes and did not have the money to re-fund the deposit,” said Guan Eng.
In addition to the payments made by the MoF, Guan Eng said 1MDB had sold two additional parcels of TRX land to government-linked en-tities, making “ludicrous profi ts” in the process.
Breaking down the transactions, they included the 1.57 acres of land sold to Lembaga Tabung Haji for RM188.5 million, or RM2,750 psf in April 2015, and 1.25 acres of land
sold to Affi n Bank Bhd, a subsidiary of Lembaga Tabung Angkatan Ten-tera for RM255 million, or RM4,680 pst, in August 2015.
“Perhaps most importantly, the RM6.98 billion paid by MoF on be-half of 1MDB was in relation to bor-rowings completely unrelated to the above real estate projects. Th e payments were instead made for servicing the coupon interest of RM5 billion 30-year bond issued in 2009. Th is was mainly used for 1MDB’s failed investment with PetroSaudi International Ltd,” said Guan Eng.
“[Th e payments were also used for] servicing the coupon interest for US$3.5 billion worth of 10-year bonds issued in May and October 2012. Th ese were intended for the acquisition of power plant assets. Th ese assets have since been dis-posed of and their proceeds have been completely utilised. Howev-er, the bonds remain outstanding in 1MDB,” he said.
Part of the RM6.98 billion was also used to service the coupon interest for US$3 billion of 10-year bond is-sued in March 2013. “Th e bond was intended to fund the development of
[the] TRX. However, the funds raised were never utilised to develop [the] TRX, as reported by the Auditor-Gen-eral,” said Guan Eng.
Fourthly, it was used to repay in full the US$1.2 billion of advance from Abu Dhabi’s International Petroleum Investment Corp. Th e advance was taken in April 2015 to repay US$975 million of borrowings from a Deutsche Bank-led consor-tium, he said.
“Th erefore, why should any re-turns from the real estate projects — land [parcels] which were origi-nally acquired cheap from the gov-ernment — be used to cover up the fi nancial holes created by all of 1MDB’s other fi nancial misad-ventures and shenanigans?” said Guan Eng.
“Given all of the above facts and figures, there could be no other description for the RM6.98 billion worth of payments by MoF on be-half of 1MDB to date, other than to describe it as the single largest bailout in history carried out by the government of Malaysia.”
Instead of debating whether the above payments were a bailout by the MoF, Guan Eng called for Najib to account for the following trans-actions:i. Where has the US$1.83 billion
invested with Petrosaudi Inter-national Ltd between 2009 and 2011 gone to?
ii. Where has the US$3.5 billion raised in 2012 for the purposes of acquiring power plants in Ma-laysia gone to?
iii. Where has the US$3 billion raised in 2013 for the purposes of in-vesting in TRX gone to?On its part, Guan Eng said the
MoF will work with the 1MDB Spe-cial Committee to “recover as much of the lost and stolen funds as pos-sible to plug the debts and defi cits created by the Najib administration, and punish those responsible for the worst corruption scandal ever in Malaysian history”.
CONTINUES NEXT PAGE
H O M E B U S I N E S S 5MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
Value emerging for battered stocks
US dollar/ringgit close to 4.0, could be aff ected by external factors
Analysts see technical rebound in some counters after GE14 selldown
BY B I L LY TO H
BY B I L LY TO H
KUALA LUMPUR: A total of 184 stocks have fallen to one-year lows since the 14th general elec-tion (GE14), and analysts say some of these counters could be poised for a technical rebound this week.
Th e analysts noted that these stocks are trading at attractive valu-ations following the selldown dur-ing the 10 days of trading after Pa-katan Harapan’s shock win in the May 9 polls.
Th e top loser in the post-election selldown is My EG Services Bhd (MyEG), whose share price fell by 70.3% to hit a two-year low of 76.5 sen last Friday. Within a span of two weeks, it lost RM3.73 billion of its market value to close at RM2.73 billion last Friday.
Th e selldown has been attrib-uted to fears that the new govern-ment may stop using MyEG as the service provider for e-government services, and the possible negative impact on the company’s goods and services tax monitoring project now that the tax will be zero-rated from June 1.
UOB Kay Hian head of research for Malaysia Vincent Khoo, how-ever, has a positive view on MyEG, with a “buy” call and a target price of RM1.06, indicating a potential upside of 38.6%.
He said in a note last Friday that MyEG’s share price was hit by a malicious rumour that the Malay-sian Anti-Corruption Commission had raided its head offi ce and that all its directors had been arrested.
Stressing that the rumour was untrue, Khoo noted that MyEG has just secured a new project for the electronic bidding system for spe-cial series vehicle number, which is currently implemented by the Road Transport Department. Th is, he said, is an indication that the company has not lost traction with the new government.
MyEG, which has a fi ve-year av-erage price-earnings ratio (PER) of 36.7 times, is currently trading at a 12-month trailing PER of 12.3 times.
Another counter that has fallen sharply since GE14 is Telekom Ma-laysia Bhd (TM), dropping 19.8%
Politically linked counters with previous BN-government performance since GE14
NAME MARKET CAP TTM PE (X) AVERAGE PRICE 1-YEAR LOW % CHANGE (RM MIL) 5-YEAR PER (MAY 25,2018) (RM)
MyEG Services Bhd 2,731.28 12.34 36.66 0.765 0.765 -70.35George Kent (Malaysia) Bhd 788.58 6.81 12.15 1.4 1.40 -64.47Destini Bhd 236.82 7.71 21.48 0.205 0.205 -52.33Petra Energy Bhd 109.12 NA NA 0.34 0.33 -45.60Johan Holdings Bhd 93.44 7.01 NA 0.15 0.15 -33.33Malaysian Resources Corp Bhd 2,963.77 9.25 NA 0.675 0.675 -32.50KUB Malaysia Bhd 164.16 5.10 53.34 0.295 0.295 -25.32Utusan Melayu (Malaysia) Bhd 27.68 2.85 NA 0.25 0.215 -19.35CIMB Group Holdings Bhd 57,318.66 12.32 13.04 6.12 5.82 -11.30Datasonic Group Bhd 1,242.00 18.29 NA 0.92 0.77 -3.16Star Media Group Bhd 833.80 10.91 14.10 1.13 1.00 5.61Media Prima Bhd 399.31 NA NA 0.36 0.28 14.29Sources: Bloomberg, The Edge Media
to close at RM4.01 last Friday from RM5 on May 14 and is viewed to be in an oversold position.
TM lost RM3.73 billion in market capitalisation to close at RM15.07 billion last Friday.
According to Rakuten Trade Re-search, the decline in TM’s share price was mainly due to the recent-ly released fi rst-quarter fi nancial results. It believes the selling was overdone based on technical read-ings, and the stock is likely due for a technical rebound.
TM’s first-quarter net profit dropped 32% to RM157.16 mil-lion from RM230.43 million a year earlier.
“TM’s share price has been sold down to close at RM3.97 on May 24, pushing the stock to an oversold position and 52-week low,” it said.
TM is currently trading at a trailing PER of 17.6 times, which is about 37.4% cheaper than its fi ve-year average PER of 28.1 times.
MISC Bhd also appears to be due for a technical rebound after falling to a one-year low of RM5.96 last Friday. Rakuten Trade said while MISC’s recently released fi rst-quar-ter results were below expectations, the fundamentals of the group re-main strong and that the selling was overdone.
MISC, a 62.67%-owned subsidi-ary of Petroliam Nasional Bhd, saw its fi rst-quarter net profi t fall 54.1% to RM310.6 million from RM676.2 million a year ago, on lower con-
tributions from across all business segments.
MISC is currently trading at a trailing PER of 16.5 times, which is still slightly higher than its fi ve-year average PER of 14.6 times.
Another politically-linked coun-ter George Kent (Malaysia) Bhd — the second biggest loser after MyEG since GE14 — could also see some value emerging following the post-election selldown. George Kent’s share price has fallen 64.5% since GE14, closing at RM1.40 last Friday — its lowest level since Au-gust 2016.
It is currently trading at a trail-ing PER of 6.8 times, which is al-most half of its fi ve-year average of 12.1 times.
CIMB the biggest loser in terms of market capAnother victim of the selldown is CIMB Group Holdings Bhd, the third largest bank by market capi-talisation, and whose chairman is Datuk Seri Nazir Razak, the younger brother of former prime minister Datuk Seri Najib Razak.
A total of RM7.3 billion in mar-ket capitalisation was erased in the 10 trading days since the mar-ket reopened on May 14 after the election break.
The market value that CIMB lost during the two-week period is equivalent to the indicated en-terprise value of Liverpool Foot-ball Club of €1.58 billion (RM7.3
billion). (Incidentally, Liverpool is the arch-rival of Manchester United Football Club, which counts Najib as among its staunch supporters.)
CIMB’s closing price of RM6.12 last Friday was slightly higher than its one-year low of RM5.82. It is trading at a trailing PER of 12.3 times, which is lower than its fi ve-year average PER of 13 times.
Citing the Relative Strength In-dex, Rakuten Trade said CIMB has been oversold. Th e stock has an immediate resistance at RM6.86 and support level is seen at RM6.00.
“Negative sentiment on the stock is possibly due to perceived link to the previous administration. How-ever, fundamentals of the bank re-main solid and intact. Based on technical readings, the stock may stage a technical rebound,” the re-search house said in a note.
Two other politically linked stocks that have come under sell-ing pressure — Destini Bhd and KUB Malaysia Bhd — are also trad-ing at an attractive valuation with a single-digit PER.
Destini’s share price has fallen 52.3% to a one-year low of 20.5 sen, while KUB shares have declined 25.3% to 29.5 sen.
Destini is trading at a trailing PER of 7.7 times, which is signifi -cantly lower than its fi ve-year av-erage of 21.5 times, while KUB is trading at a trailing PER of 5.1 times compared with its fi ve-year average of 53.3 times.
KUALA LUMPUR: Th e ringgit has been on a downtrend along with other emerging market currencies amid a stronger US dollar, rising US treasury yields, Turkey’s lira crisis, as well as a cautious stance taken by investors and traders while waiting for more policy direction from the new Malaysian government.
For this week, Jameel Ah-mad, global head of currency strategy and market research at FXTM, said the ringgit will be in-fl uenced by external events giv-en the dearth of economic data scheduled for Malaysia this week.
“I would personally keep a close eye on how investors would behave towards the dollar, as the ongoing resurgence in the green-back has pressured emerging market currencies over the past couple of weeks, while breaking news that the US-North Korea summit will not be going ahead also has the potential to impact the local currency,” he said.
Buying demand for emerg-ing market assets such as ringgit would be lesser if investors’ risk appetite is reduced, following the latest development, he added.
It is worth noting that while the ringgit is one of the few emerging market currencies that have seen a gain year to date (YTD), there appears to be some volatility fol-lowing the change of government on May 9.
Th e decline of the ringgit co-incided with the change in gov-ernment after Pakatan Harapan’s historic victory in the 14th gen-eral election (GE14). Prior to the general election, the ringgit was the second best performing cur-rency (year to May 8) behind the Colombian peso, but since then, it has fallen by 0.81%. At the time of writing, the ringgit was trading at 3.9818 against the US dollar.
Moody’s said that although the ringgit has appreciated YTD, it has been subject to some volatility since GE14. It also noted that high foreign investment participation in the capital markets (particular-ly in Indonesia and Malaysia) has and will likely continue to amplify the eff ects of general emerging market risk aversion.
US dollar vs ringgit
May 25, 2017 May 25, 2018
3.9813
4.15
4.50
3.80
Pua: Pakatan government is committed to being transparent
“The very reason why we re-ferred to the ‘offi cial’ federal gov-ernment debt is precisely because the ‘offi cial’ fi gure used by the past Najib administration failed to take into account the true debt obliga-tions by the federal government,” he added.
Pua also pointed to the RM199.1 billion fi gure provided by the fi -
nance minister of committed gov-ernment guarantees.
“Th ese are guarantees which the government has already been called to service, for example, the RM42.2 billion DanaInfra Nasional which was used for the construction of the mass rapid transit, or the approx-imate RM38 billion for 1Malaysia Development Bhd (1MDB).
“Th e fact that the fi nance minis-
try has been secretly servicing some RM7 billion or more of 1MDB’s debts to date, shouldn’t 1MDB’s debt be considered as federal gov-ernment debt? Or is Najib trying to tell the new government that we should continue pretending that these are not our debts?” asked Pua.
Pua said the Pakatan government is committed to being “transparent and taking the bull by the horns”.
“We have no intention of main-taining the legacy practice of hiding debts and increasing costs in order to deceive markets. We are commit-ted to a competent, accountable and transparent government because we fi rmly believe that despite any short-term turbulence we might face, we will only come out of this much, much stronger together in the medium to longer term,” he added.
FROM PREVIO U S PAGE
6 H O M E B U S I N E S S MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
Factors to consider in toll removal planMany expect a decision to be announced soon
BY E M I R Z A I N U L
BY W O N G E E L I N
Leonard says: ‘We are also not adverse to joint ventures. We are in discussions, but regulations in various countries in Asean diff er.’ The Edge fi le photo
KUALA LUMPUR: Fresh out of a de-merger from Chemical Co of Malaysia Bhd (CCM) in December last year, CCM Duopharma Biotech Bhd ex-pects its performance to be better this year, driven by a stronger ringgit, bet-ter product mix and volume growth.
Its group managing director Leonard Ariff Abdul Shatar expects profi t margins for its pharmaceuti-cal products to be “quite good” this year, thanks to a stronger ringgit against the US dollar. Th e local cur-rency has appreciated by 7% over the past year to close at 3.9813 to the greenback last Friday.
Th e stronger ringgit is a boon for CCM Duopharma as about 80% of its raw materials are imported. Leonard sees this translate into im-proved profi ts for the group from the third quarter of this year as it pur-chases raw material for its products.
Th e group is targeting double-dig-it revenue growth across all busi-
ness segments for the current fi nancial year ending Dec 3 1 , 2 0 1 8 (FY18).
Govern-ment con-
KUALA LUMPUR: As the Coun-cil of Eminent Persons has been discussing the plan to abolish toll in the past weeks, many expect a decision to be announced soon.
In its election manifesto, the Pa-katan Harapan promised to review all highway concession agreements, taking over every toll concession with the ultimate aim of abolishing highway tolls in stages. With the Pakatan Harapan government in-stalled, it must now come up with a solution that is acceptable for toll concenssionaires, the business community and the rakyat at large.
In an interview with Th e Edge Malaysia weekly last week, Prime Minister Tun Dr Mahathir Moham-ad said the review of toll concession will be done in a gradual manner.
On whether the government will acquire all the concessionaires, he said, “Some we have already acquired. But we have to work with the private sector. I have read some of the pro-posals; they sound quite reasonable.”
Most analysts agree that an abol-ishment of tolls will be positive for consumers and businesses as toll charges eat up a signifi cant portion in everyday cost of living. With the
absence of these charges, TA Secu-rities Holdings Bhd head of research Kaladher Govindan said there should be cascading eff ects that would ben-efi t consumers as well as businesses.
“[Abolishing tolls] should lower operating cost for businesses, which will lower prices of goods and services along the supply chain and contribute to higher corporate profi ts in the long run,” he told Th e Edge Financial Daily.
Businesses will enjoy an increase in mobility as there will be reduction in freight transport costs — which in turn will contribute to higher productivity.
According to CIMB Investment Bank Bhd research analyst Sharizan Rosely, under the previous govern-ment, there were two possible ways of compensating toll concessionaires for delays in toll hikes or for not grant-ing the full quantum of toll increas-es as per the highway concession agreements. First, concessionaires could be compensated in cash for the loss in potential toll revenue; and second, compensation in kind via an extension in concession tenure.
However, under the present sce-nario where the abolishment of tolls is being considered, Sharizan opined that there should also be an element of compensation due to toll oper-ators if the government intends to
honour the concession agreement.“I understand that most toll con-
cessionaires at this juncture are hopeful that the government would honour the sanctity of contracts on any decision made on toll highways — toll rate reduction, abolishment of tolls in stages or a total abolish-ment of toll collection,” he told Th e Edge Financial Daily.
TA Securities’ Kaladher added that there could also be a third op-tion involving non-cash methods.
Th is is where the government may implement asset swaps with toll concessionaires for compensa-tion. For example, the government can swap land and development projects as most concessionaires are involved in construction and property development as well, which have been done previously.
However, the formula and method-ology to calculate the total compensa-tion for potential revenue loss has yet to be announced by the government, leaving toll concessionaires in jitters.
“Most toll concessionaires are uncertain of the direction of the new government in terms of carry-ing this (abolishment of tolls) out. For now, they are just waiting for more clarity as to which tolls are to be continued and which are to be
abolished,” Sharizan added.Th e uncertainty caused the stock
prices of listed companies with high-way concessions to fall. In the past week, IJM Corp Bhd, Gamuda Bhd, and Lingkaran Trans Kota Holdings Bhd have lost more than RM1 bil-lion of their market capitalisation.
The significant amount to be spent on abolishing tolls is also ex-pected to adversely aff ect the gov-ernment’s fi scal consolidation plan and may eventually lead to a change to Malaysia’s sovereign ratings.
If this happens, Sharizan said that the primary concern would then shift to the bond holders of the highways.
At present, debt market exposure to the toll industry is estimated at around RM53 billion. Th e holders of these debts are mainly Khazanah Nasional Bhd, Permodalan Nasion-al Bhd, Employees Provident Fund, Kumpulan Wang Persaraan (Diper-badankan), insurance companies and private funds. Since these debts need to be repaid, it would add RM53 billion to government borrowings.
For urban planner and transport expert Goh Bok Yen, director of MAG Technical and Development Con-sultant Sdn Bhd, in order to man-age these costs, he suggested the government to fi rst be selective of
the highway tolls to be abolished.For instance, the government
may wait out some toll concession agreements that only have a few more remaining years until the con-tract expires. Hence, no compen-sation will have to be accounted.
Besides that, Goh said the gov-ernment should focus on urban expressways with high traffi c fl ow and without any other alternative routes. On the other hand, he said abolishing intercity highways will not have a very signifi cant impact for most consumers.
“For me, it is not necessary to abolish all of the tolls. Instead of us-ing the money for compensation, the government should improve existing non-toll roads to provide a viable alternative for road users,” he said.
Goh also pointed out the impor-tance of upholding the concession agreements between the govern-ment and toll owners, to maintain the trust and confi dence from cor-porates and their investors.
“If the government is not careful with the way they resolve the con-cession agreements, it will have a negative eff ect on future infrastruc-ture investments in the country. The government will have to be reasonable in this sense.”
CCM Duopharma sees good times ahead
FY17FY16FY15FY14FY13
CCM Duopharma Biotech Bhd revenue and net profit
Financial year ending Dec 31Source: Bursa Malaysia
0
100
200
300
400
500
Revenue (RM mil)
10
20
30
40
50
Net profit(RM mil)
16
2.4
1
176
.96
26
9.7
9
312
.94
46
7.9
9
32.28
42.49
35.27 35.70
27.12
tracts currently contribute about 60% of CCM Duopharma’s revenue, while the private sector, over-the-counter (OTC) products and export contribute about 18%, 12% and 10% respectively.
“Private sector sales are expected to continue to be strong [in FY18]. But the eff ervescent OTC products are the strongest segment at the moment,” Leonard told Th e Edge Financial Daily in an interview.
According to healthcare informa-tion company IQVIA, CCM Duop-harma is the country’s largest phar-maceutical company by volume, but the third by value — behind Pfi zer Malaysia and Merck Sharp & Dohme.
“We want to be Malaysia’s sec-ond largest pharmaceutical compa-ny by value this year,” said Leonard.
For FY17, CCM Duopharma’s net profi t came in 56.7% higher at RM42.49 million, thanks to higher demand from the public sector via tenders and supply traded special-ty products. Revenue rose 49.5% year-on-year to RM467.99 million.
With the government contracts accounting for the biggest bulk of CCM Duopharma’s revenue, Leon-ard said he is “not overly concerned” about the group’s ability to continue supplying to the government sector.
“We are supplying our products based on merit, our ability to man-
ufacture cost eff ective products that work and our ability to distribute the products throughout the gov-ernment infrastructure,” he added.
Looking for alternative higher margin, less competition productsAs competition in the generic drug market heightens, margin squeeze becomes inevitable. Th us, CCM Du-opharma is looking for alternative areas with lesser competition and maintained margin, such as cardi-ovascular, diabetes and renal hae-modialysis.
The group is also moving into more speciality products. For in-stance, in an attempt to diff erentiate itself, it is focused on biosimilars such as insulin, which has been launched and supplied to the government for a three-year contract since January 2017 as well as EPO (Erythropoietin) that is expected to be launched by the second half of this year.
Leonard expects the supply of insulin to government hospitals to rise by 10% to RM100 million in FY18 from RM90 million in FY17, as part of the RM300 million worth of contracts it had clinched from the government over a period of three years.
“Th ere are a lot of potential areas to diversify into [such as] localising products that have traditionally been imported or processed over-seas,” said Leonard, adding that it is important for CCM Duopharma to grow beyond the oral dosage range of products and expand into the liquid facility, haemodialysis
facility, oncology and eff ervescent.Some of the potential areas
which CCM Duopharma is looking at are the Factor VIII (an essential blood-clotting protein), plasma products, bone banking, vaccines, and also vector control (for con-trolling mosquitoes).
However, Leonard noted that CCM Duopharma’s traditional product range will still continue to be its cash cow and remain to be profi table going forward.
“We are effi cient in manufacturing what we do. So, we are still able to re-tain a decent margin even with the growing competition,” said Leonard.
Leonard also noted that demand for pharmaceuticals is growing es-pecially with an ageing population and opportunities are ample in Ma-laysia. He added that generic drugs are seen to be growing between 6% and 10% by value.
While there is no new develop-
ments on its merger and acquisition (M&A) exercises in Indonesia, CCM Duopharma has already started look-ing for M&A targets in the Philippines as part of its expansion plans.
“We are also not adverse to joint ventures. We are in discussions, but regulations in various countries in Asean diff er. We are also cau-tious and we don’t want to take too much risk,” said Leonard, adding that most of the health markets in Asean are growing quite rapidly.
Meanwhile, CCM Duopharma has invested some RM15 million over the last three years for its back-end information technology infra-structure, which includes IT sys-tem management for warehousing, manufacturing and billing.
More recently, the group invest-ed about RM1 million in its front-end infrastructure. Th e group is also talking to a few app developers and parties, said Leonard.
However, the group is still un-sure if the e-commerce platform will be done by themselves, pre-ex-isting vendors, pharmacy chains or even e-commerce platforms such as Lazada.
“We need to fi nd out what ideal is most convenient for consum-ers as our products are temper-ature-sensitive products and we have to ensure the quality of the products as if they were to reach pharmacies,” Leonard added.
Year to date, CCM Duopharma shares have risen 24% to close at RM3.24 last Friday, giving it a market capitalisation of RM903.83 million.
8 H O M E B U S I N E S S MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
IFCA MSC set for busy 2018Group expects FY18 performance to improve against its previous year’s results
AirAsia X chief not sweating over rising fuel prices
KUALA LUMPUR: Rising jet fuel prices are the bane of airlines as they put the squeeze on costs, but AirAsia X Bhd’s (AAX) boss Ben-yamin Ismail is not sweating over this. At least not yet.
The 41-year-old chief execu-tive offi cer believes speculators are keeping oil prices afl oat and that the oil market remains oversupplied.
Oil has been trading near a 3 ½-year high on concern about the potential supply disruptions from Venezuela and Iran. Bloomberg data shows that year-to-date Singapore jet fuel kerosene spot price has ris-en by 13.6% to close at US$87.99 (RM350.20) per barrel last Friday, from US$77.44 on Dec 29 last year.
“I am not starting to sweat [over the rising prices of jet fuel] yet be-cause even when prices soared above US$100 a barrel a few years ago, we still managed to sustain ourselves [even though] we were barely making money. So [at current levels] we are still okay, we just have to be smarter on how we approach things,” he told Th e Edge Financial Daily in an interview last week.
“Th ere is a segment of the market that is saying fuel prices will drop, while another segment believes oil prices will surpass the US$100 level. I think prices will come down because I believe the global fuel market is still oversupplied and speculators are moving the prices up,” he said.
Amid the uncertainty of fuel prices, Benyamin said the long-haul low-cost airline is holding off plans to hedge its future fuel requirements.
“We currently hedge about 12% to 14% of our fuel needs, at US$69 per
barrel, down from 60%-70% for our 2017 fuel needs when the fuel prices were low. We would love to hedge more, but the problem now is that I am still not very comfortable with where the fuel prices are heading. Th ere are still many uncertainties,” he said.
“I think it should come down to the US$70 per barrel level towards the end og the year, or probably next year. I am more comfortable [to start hedging] when fuel prices are within the US$60 to US$70 per barrel range,” he added.
For the first quarter ended March 31, 2018 (1QFY18), aircraft fuel expenses, which amounted to RM470.48 million, constituted 38.88% of the airline’s total oper-ating expenses of RM1.21 billion.
Benyamin said the airline will continue to reduce overall costs by increasing the utilisation of its aircraft.
“The most important thing is to make sure all our planes fl y. In comparison with last year, our uti-lisation [for 1QFY18] has increased to 16.5 hours per day from 15 hours previously, which is good for us as that means more revenue,” he said.
AAX saw its net profi t quadru-
ple to RM41.5 million in 1QFY18 from RM10.34 million a year ago, supported by a 13% year-on-year (y-o-y) growth in passenger vol-ume. Revenue in 1QFY18 also rose 7.2% y-o-y to a record RM1.27 bil-lion from RM1.18 billion in 1QFY17.
Benyamin said 2QFY18 and 3QFY18 are likely to be “lean quar-ters” for AAX as the number of holi-days in these two quarters is relative-ly lower than 1QFY18 and 4QFY18.
“Traditionally, the second and third quarters are lean periods. But potentially what you will see is we will be driving our passenger load factor at the expense of fares. As such, revenue will increase in tandem with rising load factor. When you see our [past] numbers, revenue always outpaced the past quarter and we will try to do that as much as we can,” he said.
AAX’s seat capacity for 1QFY18 grew by 14% to 1.9 million seats, from 1.66 million seats a year ago.
Benyamin said the airline is aim-ing for about 20% to 35% growth in seat capacity for FY18, through high-er aircraft utilisation and six aircraft deliveries this year, which will bring AAX’s total fl eet size to 36 aircraft.
“Operating profit [in 2QFY18]
should be sustainable. Looking at the second quarter, the local curren-cy has not moved much compared with the fi rst quarter, so there is still a buff er for us to make some good money. It [2QFY18 results] won’t be as good as 1QFY18 because usually the fi rst and fourth quarters [are the strong periods],” he added.
“But I am quite confident [of FY18]. Th e market has been quite buoyant in terms of travel demand and the industry has so far been quite rationale in terms of competition.
So I think it is still going to be good [remaining] quarters for us,” he said.
AAX will be adding a new desti-nation in China in the second half of this year, following the launch of its Amritsar-Kuala Lumpur fl ight on Aug 16. However, he declined to name the new destination as the airline has yet to obtain the neces-sary approvals from the authorities.
“We recently announced the new route to Amritsar, which is our third destination in India. Ticket sales have been great for us so far.
“Additionally, we will be increas-ing frequency of fl ights to certain [existing] destinations this year,” he said, but did not elaborate.
On AAX’s relationship with Malaysia Airports Holdings Bhd (MAHB) after the latter slapped a lawsuit against the airline seeking RM34.88 million in unpaid dues, Benyamin said: “Communication is now much better between us”.
“We are working together to fix things, that is important. I have to say that [our relationship] has improved from where we were in the past. We have a [joint] working committee now, working on issues at klia2,” he said.
MAHB on April 30 fi led a suit against AAX, claiming the airline owed it RM34.88 million in out-standing airport charges, rent and late payment charges.
AAX, however, disputed the claims, saying it had consistently made monthly payments to the air-port operator, and hence would fi le a defence against MAHB’s claims.
Year to date, AAX shares have risen 12% to close at 37 sen last Friday, giving it a market capitali-sation of RM1.54 billion.
KUALA LUMPUR: IFCA MSC Bhd is poised for a busy year as the busi-ness software solution company is seen to be a benefi ciary of the Pa-katan Harapan government’s plan to abolish the goods and services tax (GST) and bring back the sales and services tax (SST).
Any changes to the tax code will keep IFCA busy updating the ac-counting systems of business opera-tors, its chief executive offi cer (CEO) Michael Cho Ngai Ming said, some-thing that it experienced two years ago when the GST was implemented.
IFCA had a bumper year in the fi nancial year ended Dec 31, 2015 (FY15), posting record net profit and revenue of RM21.6 million and RM101.62 million respectively.
Back then, IFCA was an inves-tor favourite, with its share price hitting an all-time high of RM1.77 on May 18, 2015, giving it a market capitalisation of RM1.01 billion and making it the world’s top-perform-ing software company that year.
However, its net profi t has fall-
en since then to RM518,000 and RM9.67 million in FY16 and FY17 respectively after the GST eupho-ria subsided and due to weak do-mestic property market conditions. IFCA shares dropped to close at 28.5 sen last Friday, with its market cap standing at RM173.15 million.
“We are in the business of pro-viding automation and account-ing software [services], so it is very likely there will be positive impact (on IFCA as a result of the switch from GST to SST),” he told Th e Edge Financial Daily after the group’s annual general meeting last week.
Th e 43-year-old Cho, who joined IFCA as deputy CEO on March 27 last year and took the reins as CEO on Jan 19, however, said that the stellar performance seen in FY15 is unlikely to be repeated in FY18 as the conver-sion of existing GST module to SST is limited in job scope compared with when the GST was implemented.
“SST is only [targeted] for import-ers and manufacturers, [while] GST is a broad-based consumption tax, aff ecting all consumers,” he added.
Nevertheless, Cho expects the
group to benefi t from the govern-ment’s move to zero-rate GST from 6% effective June and once again from the transition to SST from GST.
Cho said it is too early to estimate the possible earnings of the switch to SST except that IFCA is expecting an improved FY18 performance against the previous year’s. It is set to release its 1QFY18 fi nancial results this week.
Th e group has an internal top line growth target of between 10% and 25% this year, driven by its overseas revenue.
Th e export market accounted for 49% (RM43.2 million) of the group’s revenue of RM88.83 million in FY17, but Cho hopes to increase the contribution to 55% this year, with focus on Asean and China.
Cho pointed out that as a result of the group’s internationalisation and revenue diversifi cation strategy in re-cent years, the group is no longer de-pendent on domestic contract wins.
“Th us, whatever changes in Ma-laysia is not going to ‘rock’ our sta-ble source of income from China and Indonesia,” he said.
Last year, IFCA saw positive ac-
tivities in the Asean region with sig-nifi cant contract wins in Myanmar, as well as Vietnam.
“Th e whole overseas expansion idea is based on Asean and China being developing nations, with a combined population of nearly two billion people,” according to Cho.
“Going forward, our focus will be [on Indochina]. Today, we have been established in Malaysia for over 30 years and China for 15 years. In our business, we support the entire property industry, so it takes time [to build]. Once we enter a
market, we want to leverage it and keep on growing,” he said.
“We want to establish ourselves as the Asean powerhouse in prop-erty development and management within the next 10 years,” he added.
Cho noted that the group is no longer just focusing on GST soft-ware upgrade, but it has diversifi ed its portfolio to provide software solution for the property, construc-tion and hospitality sectors.
Cho also said IFCA is on the look-out for acquisitions. “We are ready to make an acquisition anytime as long as it would complement our business. As IFCA is a listed com-pany and is in a net cash position, it gives us a lot of options to create this kind of partnership, as well as expand into new markets,” he said.
With total borrowings of RM683,216 and cash reserves of RM73.23 million, IFCA had a net cash of RM72.55 million as at Dec 31, 2017.
IFCA’s share price has fallen 32% over the past year. At last Friday’s closing price, IFCA was trading at a price-earnings multiple of 17.17 times.
H O M E B U S I N E S S 9MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
Refi nery stocks under pressureTh is is due to narrowing margins, uncertain oil prices
BY S A M A N T H A H O
BY W O N G E E L I N
KUALA LUMPUR: Share prices in oil refi ners in Malaysia continued facing pressure last week after weak fi rst-quarter fi nancial results con-fi rmed fears that margins would be hit by higher oil prices which drive feedstock costs up.
Hengyuan Refi ning Co Bhd saw its shares decline seven sen or 0.98% to RM7.06 last Friday, having lost RM2.17 or 23.33% over a two-week period from RM9.30 on May 14. Year to date (YTD), Hengyuan has seen RM3.25 or 60.3% of its market capi-talisation wiped out, leaving it with a market value of RM2.12 billion.
Meanwhile, Petron Malaysia Re-fi ning & Marketing Bhd lost RM1.54 billion or 40.94% of its market value YTD to stand at RM2.21 billion as at last Friday. Th e stock closed down three sen or 0.36% at RM8.18 per share last Friday.
Both refiners saw significant declines in net profi t for their fi rst quarter. Hengyuan’s net profi t for its first quarter of financial year 2018 (1QFY18) fell 68.9% year-on-year (y-o-y) to RM86.81 million on a lower motor gas (mogas) crack spread although revenue rose 4.41% to RM3.06 billion on higher volume and average product prices.
As for Petron, its 1QFY18 net
4
6
8
10
12
May 25, 2017 May 25, 2018
Singapore Mogas 92 ICEBrent Crack Spread
US$8.537
Source: Bloomberg data
profi t declined 33.55% to RM72.12 million y-o-y as the higher cost of crude oil squeezed refi ning mar-gins. This was despite revenue for the quarter growing 6.67% to RM2.73 billion compared with a year ago, also due to growth in sales volume and higher oil prices.
Unfortunately, the outlook for earnings for both refi ners remains hazy, as volatile crude oil prices prevent refi ners from being able to be certain of margins and keeping them reliant on hedging practices.
Hengyuan has said that it sees margins stabilising in the second quarter as oil prices and consequent-ly, the mogas crack spreads, are seen to have picked up over the last week. Th e group also sees a rebound in de-mand after a period of oversupply in 1QFY18, the management told re-porters following the group’s annual general meeting last week.
However, futures of the Singa-pore Mogas 92 Unleaded (Platts) Brent Crack Spread are trading above US$8 (RM31.84) per barrel only up to July this year, according to data from US-based futures trading giant, CME Group. As at last Friday, the market was positioned for crack spreads to stay below that mark un-til March 2019, after having traded between US$8.79 and US$10.27 a barrel between November 2017 and
January 2018. (see chart)Mogas futures, however, may
not be the best measure of the per-formance of Malaysian refi neries, according to one industry observ-er. The analyst who declined to be named explained that it is the holding time of feedstock that most greatly aff ects the margins of refi n-ers. Petron is believed to have a two-week holding time for its feedstock, which some said could be too long a time to keep costs responsive to changes in the oil price.
Hengyuan is also expecting to halt production for two-and-a-half months in the third quarter
of 2018 to facilitate a routine Major Turnaround for its Negeri Sembilan refi nery. It has already allocated RM700 million in capital expend-iture (capex) to its Euro 4M and Atlas II projects for the next one to two years.
As for Petron, PublicInvest Re-search analyst Rosnani Rasul be-lieves the company will soon see higher capex as it prepares for new Euro5 diesel requirements, which must be adopted by 2020.
“Investments have to be under-taken now, including the chang-ing of refi nery specifi cations and all related pump station fi ttings,” she said.
As a result, Rosnani has lowered her outlook on Petron to “neutral” and reduced her target price by 36.78% to RM8.61 from RM13.62.
However, RHB Research Insti-tute analyst Lim Sin Kiat kept his “buy” call on the counter in a note last Friday, saying the weak quar-terly earnings were not unexpect-ed and uncertainty over margins meant that the group would re-frain from investing in expanding capacity at the moment.
“We believe margin weakness-es have already been priced in,” Lim wrote, adding that the group’s earnings remain decent with stable sales volume growth.
Fuel price uncertainty another dampenerAnother uncertainty refi ners face is the proposed return of subsidy for fuel under the Pakatan Harapan government.
On May 16, Prime Minister Tun Dr Mahathir Mohamad announced that fuel prices would be fi xed at the current RM2.20 per litre for RON95, RM2.47 per litre for RON97 and RM2.18 per litre for Euro 5 Diesel. Th ese prices have remained un-changed for the past eight weeks.
It is still unclear whether or not the government will continue im-posing a cap on the fuel price and more importantly, how it will fund this policy.
According to one industry an-alyst, refi ners could feel the pinch on their margins if there is no com-pensation for higher input costs.
“It is hard to tell what the exact impact will be since we do not know whether the government will intro-duce a blanket or targeted subsi-dy,” said the analyst who declined to be named.
However RHB’s Lim opined that the government’s policy is unlikely to aff ect Petron’s 2018 bottom line.
“We believe the government will subsidise the diff erence between pump prices and Mean of Platt’s Singapore,” he said in his report.
KUALA LUMPUR: Kazakhstan is expecting a minimum of US$5 bil-lion (RM19.9 billion) worth of in-vestments from Malaysia, accord-ing to its Minister of Foreign Aff airs Kairat Abdrakhmanov, who said green projects have been gaining traction from Malaysian investors.
Kazakhstan has been working on improving its investing climate and Abdrakhmanov stressed the investment opportunities available.
“Our economy is growing and there is huge potential,” he said in an interview with Th e Edge Finan-cial Daily at the 15th Eurasian Me-dia Forum in Almaty, Kazakhstan last week.
He noted that the trade turnover be-tween Kazakh-stan and Malay-sia amounted to US$123.4 million in 2017, while di-rect investments from Malaysia to Kazakhstan stood at US$21 million.
Tapping Kazakhstan’s growth potential‘The role of media in international communications is even more crucial’BY W O N G E E L I N
KUALA LUMPUR: Th e 15th Eur-asian Media Forum (EAMF), themed “15 Years of Evolution” in Almaty, Kazakhstan last week was a full day of masterclasses, covering a challenging range of modern media methods and is-sues, as well as a two-day confer-ence on East-West relations and other topics on the world news agenda.
Th e forum discussions includ-ed the transformation of moral values and the evolution of the media, the incredibly expand-ed reach of bloggers and social networks, natural disasters and awareness of the need for envi-ronmental revolution.
Th e founder of the EAMF, Dr Dariga Nazarbayeva, who is also the chairperson of the EAMF or-ganising committee, said tech-nological change has aff ected the
younger generation and their ac-cess to new methods of communi-cation, social media, smartphones and free Internet access, as well as the impact on the media.
While the forum was unlikely to infl uence the political history of the world directly, she said, it at least offered an opportunity to try to fi nd common ground, a consensus, sometimes between delegates with diametrically op-posed views.
She noted that at a time of growing tension between world powers, the role of the media in international communications is even more crucial than in the past.
“We, the journalists, are be-coming hostages of circumstanc-es, and more often mass media are turning from a source of nec-essary, truthful, neutral informa-tion into a propaganda tool with a full set of sometimes dishonest instruments.”
On the whole, Kazakhstan has attracted US$200 billion of invest-ments, with half of the investments from the European Union, and the rest from the US, UK, China, Russia and other countries.
According to the Kazakh Invest website, agreements have been reached with 42 new foreign inves-tors for projects amounting to US$7.5 billion since the beginning of the year.
Of the projects, 18 construction and installation works worth US$1 billion have commenced, while four projects with major foreign investors have been signed. Th ere is “active de-velopment” in the 15 projects worth US$7.1 billion.
Given the mutually benefi cial re-lations between Kazakhstan and
Malaysia since the mid-90s, Ab-drakhmanov said both coun-
tries have reached a very high level of interaction in politics, economics, trade and investment and culture.
Known for its oil and gas industry, Abdrakhmanov said Kazakhstan is now making an attempt to diversify its economy to ensure that while oil and mining remain attractive to for-eign direct investments (FDIs) there is also diversifi cation into other sectors.
“Malaysia is serving for us as the best example on how to manage … and not only to attract FDIs but to make sure that development of the nation is sustainable and bringing in some very concrete results as Ma-laysia is now very established in the world economics scene.
“And on the other hand, we are very amazed by how Asean itself is growing today. For us, it is an exam-ple, how regional integration could evolve. So, now we are inviting Ma-laysian investors in sectors such as machinery building, food processing, agriculture, telecommunications, IT, defence-related industries, and textiles.”
In addition, with the Belt and Road Initiative, Abdrakhmanov sees more connectivity not only between the two countries, but also with South-east Asia.
Notwithstanding the change of government in Malaysia, Abdra-khmanov does not see any uncertain-ty, challenges or problems in terms
of investments and trade between the two countries.
“Despite the change of govern-ment and leadership, we will contin-
ue to invest heavily in our friendly bilateral relations. We are open and we see huge potential between the two countries.”
Abdrakhmanov: Our economy is growing and there is huge
potential. Photo by Eurasian Media Forum
1 2 ST O C KS W I T H M O M E N T U M MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
SARAWAK CONSOLIDATED IND BHD (-ve)
SARAWAK CONSOLIDATED IND BHD Valuation score*Fundamental score**TTM P/E (x)TTM PEG (x)P/NAV (x)TTM Dividend yield (%)Market capitalisation (mil)Shares outstanding (ex-treasury) milBeta12-month price range
0.300.75
--
1.01-
59.2685.88
0.500.50-0.80
*Valuation score - Composite measure of historical return & valuation**Fundamental score - Composite measure of balance sheet strength& profitabilityNote: A score of 3.0 is the best to have and 0.0 is the worst to have
*Valuation score - Composite measure of historical return & valuation**Fundamental score - Composite measure of balance sheet strength& profitabilityNote: A score of 3.0 is the best to have and 0.0 is the worst to have
LEE SWEE KIAT GROUP BHD (-ve)
LEE SWEE KIAT GROUP BHD Valuation score*Fundamental score**TTM P/E (x)TTM PEG (x)P/NAV (x)TTM Dividend yield (%)Market capitalisation (mil)Shares outstanding (ex-treasury) milBeta12-month price range
1.702.10
22.171.452.943.08
133.76163.13
1.460.29-0.84
*Valuation score - Composite measure of historical return & valuation**Fundamental score - Composite measure of balance sheet strength& profitabilityNote: A score of 3.0 is the best to have and 0.0 is the worst to have
www.theedgemarkets.com
Stocks with momentum were picked up using a proprietary algorithm by Asia Analytica Data Sdn Bhd and fi rst appeared at www.theedgemarkets.com. Please exercise your own judgement or seek professional advice for your specifi c investment needs. We are not responsible for your investment decisions.
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H O M E BU S I N E S S
KUALA LUMPUR: Th e advertising fi lm industry is at risk of losing its best tal-ents to neighbouring counties if local authorities do not safeguard its right to proper production standards, says the Malaysian Association of Advertising Filmmakers (PPFIM).
It said what is urgently needed in par-ticular is for the National Film Develop-ment Corp Malaysia (Finas) to reconsider its decision to withdraw a provision which requires fi lm production houses involved in television commercials to be a member of PPFIM in order to apply for a Made in Malaysia (MiM) certifi cate.
Finas introduced the provision and mandated it to PPFIM in 2015, but with-drew it at the end of 2017 without prior notice. It is understood that this was to pre-vent PPFIM from becoming a monopoly.
But according to PPFIM president Khoo Kay Lye, without this mandate, it would be diffi cult to regulate the compli-ance of production agreements between production houses and clients.
Khoo explained that when the man-date was granted to PPFIM, the associ-ation had subsequently implemented a production agreement to ensure that all parties involved in the advertising fi lm production industry were clear on who was responsible for what in the produc-tion of a commercial, as well as details on payment, work hours and insurance.
Khoo said the need for a production contract is to deter unprofessional prac-tices such as delayed payments, price undercutting and non-compliant working hours and to ensure insurance was pro-vided to all production personnel.
“Yes, you would think that there were already contracts set in place. But not really. Even actors have their own con-tracts. Production houses should there-fore do the same,” Khoo told The Edge Financial Daily.
He said the problem lies in the numer-ous complaints he has been receiving from production houses claiming they were not treated fairly.
“Recently a production house boss called me and reported that another pro-duction house had undercut his quote to get a job. A two-day shoot was squeezed into one, therefore shooting for 26 hours or more. And some of them were not paid on time [by clients]. I told them I could not do anything as Finas had removed the mandate,” said Khoo.
He said if the rules were in force, he
could have called for a meeting and sus-pended the membership of the member company which had broken the rules and not allow it to apply for MiM.
“But they don’t seem to care now. Th at’s why we need the mandate back to regulate our advertising industry. It is hard without it,” said Khoo.
Another problem, said Khoo, is that as production houses grow frustrated, the lo-cal talents resort to looking for alternative jobs overseas.
“Why do they go overseas? Because the money is bigger there, and they get more jobs and are treated fairly. Th is is a loss of potential revenue and it’s in the millions,” he said.
Khoo stressed that production agree-ments are necessary to be enforced to protect all levels of talents in the industry, as it forms an integral part of the RM17 billion advertising expenditure.
Th e salient terms stated in this contract include the mandatory fi rst 50% payment by the creative advertising agencies or “direct clients” (known as Party A). For locally produced jobs, the new terms of payment are: 50% before the shoot com-mences, 30% two weeks after the shoot, and the balance 20% no later than 60 days from last day of the shoot.
For production houses rendering their service to produce foreign jobs, Party A has to pay 60% upon signing of the contract and 40% upon completion of the online edit.
Other concerns Khoo has about the ecosystem is the future of the talent pool for the industry.
“What is the future for the kids who are studying to join this industry? Why would we want to train so many students in the local universities especially when we do not have our ecosystem right?
“We have a lot of problems, but no-body seems to care. Th ey say we should just project a good image of the industry, regardless of the actual situation. I hope the new minister (of communications and multimedia) will take this issue serious-ly,” said Khoo.
TV ad industry at risk of losing best talents to other nations — associationBY S YA H I R A H S Y E D J A A FA R
SHARES in K-Star Sports Ltd (fundamental: 0.15/3; valuation: 0.9/3) triggered our stocks with momentum algorithm last Friday for the fi rst time this month.
Th e stock closed down 4.54% or 0.5 sen to 10.5 sen last Friday, with 16.65 million shares done versus the counter’s 200-day average of 3.62 million shares.
K-Star Sports is principally engaged in the design, manufacture and distribution of sports footwear, based mainly in China.
For the fi rst quarter ended March 31, 2018 (1QFY18), it posted a net profi t of RM1.35 million compared with a net loss of RM5.5 million in the previous year on cost effi cien-cies and higher margins.
Earnings per share stood at 0.42 sen in the quarter compared with a loss per share of 2.03 sen in 1QFY17. Revenue increased slightly to RM48.11 million from RM48.03 million a year ago. Star Sports was last traded at 6.89 times its net book value.
SHARES in Lee Swee Kiat Group Bhd (funda-mental: 2.1/3; valuation: 1.7/3) triggered our stocks with momentum algorithm last Friday for the fourth time this month.
Th e stock closed 7.5 sen or 9.15% higher at 89.5 sen last Friday, with 8.22 million shares done versus the counter’s 200-day average of 865,498 shares.
For the fourth quarter ended Dec 31, 2017 (4QFY17), the mattress manufacturer post-ed a 41.73% growth in net profi t to RM3.02 million from RM2.13 million a year earlier
thanks to robust sales.Revenue increased 40% to RM22.83 million
versus RM16.36 million a year ago. Th e group said the robust growth of 39.6% in sales con-tributed to 59.1% growth in profi t before tax in 4QFY17 compared to a year ago.
For the full year, net profit rose 15% to RM6.03 million from RM5.24 million a year earlier, while revenue rose 17% to RM74.93 million compared to RM64.2 million a year ago.
Lee Swee Kiat was last traded at 3.2 times its net book value.
SHARES in Sarawak Consolidated Industries Bhd (fundamental: 0.75/3; valuation: 0.3/3) triggered our stocks with momentum algorithm last Friday for the fi rst time this month.Th e stock closed one sen or 1.45% higher at 70 sen last Friday, with 2.26 million shares done versus the counter’s 200-day average of 10,715 shares.
On April 24, the group said it had terminated its share sale agreement to acquire the own-er and operator of an industrialised building system factory Carlton Gardens Sdn Bhd for RM9.5 million. In return, it is claiming for yet-
to-be-quantifi ed losses and damages suff ered due to what it alleged was the sellers’ breach of contract and/or misrepresentation.
Th e group had issued a notice of termina-tion on April 19 to the sellers Gaya Belian Sdn Bhd, Brian Francis Ticcioni and Asgari Mohd Fuad Stephens. The agreement was inked on Dec 28, 2016, under which the purchase consideration was paid in a combination of cash and new Sarawak Consolidated shares. Sarawak Consolidated was last traded at 1.01 times its net book value.
What is the future for the kids who are studying to join this industry? Why
would we want to train so many students in the local
universities especially when we haven’t gotten
our ecosystem right?
Khoo: ‘We have a lot of problems, but nobody seems to care. They say we should just project a good image of the industry, regardless of the actual situation.’ Photo by Suhaimi Yusuf
P R O P E RT Y 1 3MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
Headache for London mayor
BY B R E N D A G O H & P R A K C H A N T H U L
BY C H R I S R E I T E R
BY O S H R AT C A R M I E L
Housing slowdown aff ects Sadiq Khan’s building plan
BY S H A R O N R S MY T H
LONDON: Th e mayor of London says enough homes can be built over the next decade to solve a housing shortage that is driven prices beyond the means of aver-age Londoners. Signs the proper-ty boom is ending may make his ambitious goals harder to reach.
Sadiq Khan, whose victory in 2016 was built on a pledge to fi x the UK capital’s broken housing market, is calling for 65,000 new homes a year, with half aff ordable for mod-erate earners. But his eff ort depends on developers, who are leery about the outlook for prices after delivering 39,560 housing units last year, the most in more than a decade.
“Who is going to start a major residential scheme in central Lon-don at the moment when no one has any idea where house prices are going?” said John Tutte, the chief executive offi cer of Redrow plc, a builder based in Flint, England. “I just can’t see they are going to get the housing numbers delivered.”
Falling prices aren’t the only hur-dle. Industry analysts cite a shortage of skilled labour, insuffi cient central government funding and stonewall-ing by local authorities. Some devel-opers also balk at building blocks of aff ordable fl ats because in recent years, they have often been less lu-
crative than expensive ones target-ed at wealthy international buyers.
“Developers have been building in London — just the wrong kind of home,” said Richard Donnell, the head of research of Hometrack, which provides data and analysis of the property market. Th e fi rm es-timates it costs a record 14.5 times the average London salary to buy a property, after incomes failed to keep pace with a surge in home prices since 2012.
Construction starts for su-per-prime homes, the most expen-sive, jumped by more than half from 2015 to 2017, according to Molior London, a research fi rm. In price brackets most Londoners can af-ford, starts declined. An increasing
number of high-end properties remain unsold as demand falters.
Khan’s draft London plan, un-veiled late last year, provides a blue-print to shape development across the capital for the next two decades, from housing to transport and infra-structure. To spur homebuilding, it encourages local councils to identify sites for development, relaxes limits on the density and seeks to speed ap-provals, without encroaching on the so-called green belt around the city.
Khan is also using a £250 mil-lion (RM1.32 billion) land fund to buy plots for housing. Earlier this month, the mayor acquired a site in Haringey for hundreds of homes, half of which will be aff ordable. — Bloomberg
Signs the property boom is ending may make Khan’s ambitious housing goals harder to reach. Photo by Reuters
PHNOM PENH: Guo Qirui, 30, says it’s a lonely journey when he goes home to his rented luxury condominium in Phnom Penh, the capital of Cambodia, the country where the Chinese retail executive has lived for nearly half a decade.
Guo now lives on Diamond Island, also known as Koh Pich, a neighbourhood in the city where fi ve condominium projects are underway or have been built. Th e majority of the homes, sales agents and residents said, are sold to absent Chinese landlords.
“Half of the completed units have been handed over, but every night it’s all dark. Not one light is switched on,” Guo told Reuters.
A boom in high-end real estate investment by Chinese buyers in Phnom Penh has stoked concerns that they are pumping up a mar-ket already unaff ordable for most Cambodians. Phnom Penh will have 22,828 luxury apartments by year end, more than double the current number of 8,942 units, according to Ross Wheble, the Cambodia country head at prop-erty consultancy Knight Frank.
He added this number, which includes condominiums sold for an average of US$3,500 (RM13,930) per sq m, will swell to roughly 30,000 units by 2020. Many may soon face a struggle to fi nd renters or local buyers who can aff ord the price tag.
“In the high-end segment, there is an oversupply,” he said. “Th is is a question that everyone’s asking in terms of sustainability. With Chinese investors buying these units, are they actually go-ing to be occupied?”
In Cambodia’s capital, Chinese buyers pump luxury property bubble
Chinese fervourWarming political ties between the countries and the promotion of Beijing’s One Belt, One Road (Obor) initiative has attracted a surge of Chinese investment in the country, fuelling construction activity and a fl urry of new hotels and casinos, especially in cities like Sihanoukville. Th e Chinese be-gan arriving around the time Presi-dent Xi Jinping visited Cambodia in 2016 in a visit that yielded a series of bilateral deals and a pledge to strengthen ties, said James Hodge, an associate director of real estate services fi rm CBRE Cambodia, and other industry executives.
Among the Chinese developers active in Phnom Penh are Guang-zhou Yuetai Group and Prince Real Estate, which are selling schemes of over 1,000 units, larger than that of their foreign peers. Jiayuan Interna-tional Group and Guangzhou R&F Properties have also bought land in the city, with the latter’s project slated to have around 5,000 units, property agents said.
Th ese developers have turned to Chinese buyers. Sales agents said many buyers came via property purchasing tour groups organised by agencies and developers.
A Chinese buyer, who asked to only be identifi ed as Alex, said he bought more than 100 fl ats over 12 stories of one condominium in the city’s centre. He said he was not worried about being able to rent them out, saying that it was comparable to being in Beijing or Shanghai’s business districts. Xi’s signature Obor initiative was key to his decision, he said. “Phnom Penh is the initiative’s starting point, so development here is booming.” — Reuters
BERLIN: Germany is seeking to counter surging rents and real es-tate prices with a pledge to invest more than €6 billion (RM27.84 billion) to build new homes.
The programme targets the construction of 1.5 million apart-ments and houses over the next four years, Chancellor Angela Merkel’s said in her weekly video address on Saturday. Th e plan in-volves €2 billion in federal funds for social housing projects as well as tax incentives to promote the development of aff ordable homes for mid-income earners. Th e gov-ernment is also making money available to help families aff ord their own homes.
“For many, one of the burn-ing topics of our time is fi nding aff ordable housing,” Merkel said in the video. “Th e federal gov-ernment is reacting to this with a housing off ensive that we will
Merkel pledges €6b to ease Germany’s housing squeeze
implement step by step.”The surging cost of housing
has threatened to tear at Germa-ny’s social fabric. In Berlin, rents have climbed by an average of al-most 60% since 2009, according to data compiled by Bulwiengesa AG, as construction failed to keep pace with the thousands of people moving to the capital every year. In April, about 13,000 people marched from Potsdamer Platz to Kreuzberg in protest against rising rents, ac-cording to the DPA news agency.
New housing supply is “desper-ately needed”, said Merkel. “Th is is truly a balanced off ensive.”
Highlights included more than €6 billion for 1.5 million new homes; €2 billion in federal funds for the country’s social housing projects; families can receive €12,000 per child over 10 years to help with the purchase of a home; making federal land available at low rates; improv-ing renters rights; and seeking to control rent increases. — Bloomberg
NEW YORK: Kushner Cos is leav-ing Philadelphia with the sale of its only asset in the city, a stake in an apartment-and-retail complex with a party-ready courtyard.
Th e real estate fi rm once run by presidential son-in-law Jared Kush-ner sold its portion of Schmidt’s Commons, a 10-building complex in the Northern Liberties neigh-bourhood, for US$44.1 million (RM175.52 million), according to the buyer, Post Brothers. Th e com-pany is a local apartment developer that had been eyeing the property ever since Kushner Cos and Oaktree Capital Management LP acquired it fi ve years ago.
“Th ey made a great buy and did a good job, but I think they knew the property could be more than it is today,” Mike Pestronk, the chief executive offi cer of Post Brothers, said of the Kushner-Oaktree part-nership. “Over time, they came to realise that they could use a local partner with a little bit more lo-cal expertise to keep the property more aligned with the neighbour-hood.”
Kushner Cos and Oaktree paid US$130 million for the site in 2013,
Kushner Cos exits Philadelphia with sale of property stake
according to research firm Real Capital Analytics Inc, which lists no other Philadelphia holdings for the Kushner fi rm and doesn’t say how large its stake in the complex was. Oaktree hasn’t sold its stake. Post Brothers will take over man-agement of the property, with 500 rental apartments, 130,000 sq ft (12,000 sq m) of ground-fl oor retail and a cobblestone plaza.
Kushner Cos brought in of-
fice-sharing firm WeWork Cos, which opened its fi rst Philadelphia location at the complex. WeWork has seven years left on its lease, with an option to renew for five more, Post Brothers said.
A representative of Kushner Cos couldn’t immediately comment on the sale, which was completed last Friday. An email to Oaktree’s media representatives wasn’t re-turned. — Bloomberg
Schmidt’s Commons in Philadelphia. Kushner Cos sold its portion of the 10-building complex for US$44.1 million. Photo by Bloomberg
1 4 B R O K E R S’ C A L L MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
Stronger 2H expected for Kossan
Apex Healthcare’s improved marginlevels seen sustainable in coming quarters
Kossan Rubber Industries Bhd(May 25, RM7.18)Maintain hold with a fair value (FV) of RM7.16: Kossan Rubber Industries Bhd is on the cusp of burgeoning capacity after a year in the lull. We await its earnings delivery for a rerating of existing valuation, which we think is fair at this juncture. We maintain our “hold” recommendation with a discounted cash fl ow-derived FV of RM7.16 per share (weighted average cost of capital: 6.5%; ter-minal growth: 2.5%). It implies a price-earnings ratio of 18 times calendar year 2019 forecast.
Kossan registered a profi t for the fi rst quarter of fi nancial year 2018 (1QFY18) ended March 31, 2018 of RM45.1 million (quarter-on-quar-ter [q-o-q]: -1.7%) against a rev-enue base of RM484.2 million (q-o-q: 1.3%). Th e results came in line with consensus forecasts, at 20% of estimates. Th e top line for 1QFY18 contracted 3.2% year-on-year (y-o-y) against a higher volume growth of 2.7% and aver-age selling prices. Th e US dollar/ringgit dragged as it was 11.7% lower y-o-y. On a sequential basis, profi t declined 1.7% despite reve-
Ajinomoto (Malaysia) Bhd(May 25, RM22.40)Maintain hold with an unchanged target price (TP) of RM22.75: Ajinomoto (Malaysia) Bhd’s net profi t for the fourth quarter of fi -nancial year 2018 (4QFY18) ended March 31, 2018 dropped 90% year-on-year (y-o-y) to RM14.7 million due to the absence of a RM145 million gain from compulsory ac-quisitions of its land and plant for the mass rapid transit project. Ex-cluding the one-off gain recorded in 4QFY17, 4QFY18 operating profi t grew 16% y-o-y to RM16.6 million, while profi t before tax (PBT) in-creased 18% y-o-y to RM19 mil-lion. Quarterly revenue was flat at RM115 million as a decline in industrial products (-8% y-o-y to RM29.3 million) was mitigated by an increase in consumer products (+3% y-o-y to RM85.7 million). Net profi t for the quarter dropped 14% quarter-on-quarter (q-o-q) due to the absence of tax reversal, while revenue rose 5% q-o-q as a gain in consumer products (11% q-o-q) absorbed the decline in industrial products (-10% q-o-q). Compared with the previous quarter, the op-erating margin was unchanged at 14%, as consumer products saw an increase of three percentage points (ppts) to 14%, while industri-al products declined 3ppts to 17%.
For the full year, net prof-it dropped 70% y-o-y to RM56.3 million due to a gain from disposal of land and plant in FY17. Without the exceptional gain, operating
profi t declined 4% y-o-y to RM57.7 million but PBT grew 1% y-o-y to RM67.1 million, thanks to a higher interest income of RM9.9 million (versus RM5.5 million in FY17). Full-year revenue grew 4% y-o-y to RM436.3 million as revenue from consumer and industrial segments increased 3% and 7% y-o-y respec-tively.
As at March, Ajinomoto was in a net cash position with a cash reserve of RM296.7 million versus RM281 million in 3QFY18. The company announced a dividend of 46.5 sen per share, translating into a yield of 2.1%. Th e dividend payment is within our expectation of 48 sen per share.
Full-year net profi t of RM56.3 million met our FY18 forecast of RM54 million, while cumulative sales of RM436.3 million hit our full-year forecast of RM435 million. As such, we maintain our forecasts for FY19 and FY20.
Despite dominating the mon-osodium glutamate market, Ajinomoto faces competition in other food and seasoning prod-ucts from local brands and over-seas producers. The removal of the goods and services tax could result in lower retail prices but we see little upside due to the inelastic nature of its products. We main-tain “hold” at an unchanged TP of RM22.75 based on 3.1 times FY18 price-to-book forecast, implying +1.5 standard deviation to its three-year mean of 2.12 times. — JF Apex Securities, May 25
Apex Healthcare Bhd (May 25, RM6)Maintain outperform with a high-er target price (TP) of RM6.77: Apex Healthcare Bhd reported a healthy net profi t for the fi rst quar-ter of fi nancial year 2018 (1QFY18) ended March 31, 2018 of RM13.2 million (+30.6% year-on-year [y-o-y]), which met 29% of our full-year estimate. Th e higher earn-ings were attributed to a stronger performance from manufactur-ing of its own products, as well as the marketing and distribution of pharmaceutical and consumer healthcare products. We adjust our earnings estimates higher by 6% to 9% for FY18-FY20, and main-tain our “outperform” call with a higher TP of RM6.77 premised on 15 times multiple to rolled over FY19 earnings per share.
We continue to like Apex Healthcare for: i) an additional capacity from its new Oral Solid Dosage (SPP NOVO) manufactur-ing facility to be ready in FY18; ii) a strong balance sheet with a net cash position of 73.3 sen per share; and iii) its synergistic relationship with a number of multinational drug companies and a wide distri-bution network for pharmaceuti-cal, over-the-counter and consum-er products in Malaysia.
Apex Healthcare’s 1QFY18 rev-enue was stronger at RM168.4 million (+8.9% y-o-y), attributed to increased contributions from group-branded pharmaceutical sales to the government sector in Malaysia and Singapore, ex-
ports and contract manufactur-ing services. Segment-wise, ex-ternal 1QFY18 revenue for the manufacturing and marketing division rose by 110.1% y-o-y, while wholesale and distribu-tion increased by 5.2% y-o-y. Im-provement was also noted in the share of results from its associ-ate company Straits Apex, which increased 61.1% y-o-y to RM1.6 million (1QFY17: RM1 million) as initiatives taken to broaden its customer base gained trac-tion. Going forward, we are con-servatively looking at an 8%-11%
growth in FY18-FY20, on the back of trading strength and emphasis on research and development in-itiatives resulting in quality phar-maceutical product formulations. We also look forward to the new SPP NOVO coming on board in 4QFY18, which should provide Apex Healthcare with ample ca-pacity to drive production growth in the years to come.
Apex Healthcare’s 1QFY18 op-erating, pre-tax and net margins were better at 8.8%, 9.8% and 7.8% respectively (compared with 7.7%, 8.3% and 6.5% in 1QFY17), in line with positive performances of its subsidiaries and associates. As Apex Healthcare continues to con-centrate efforts on group-brand-ed pharmaceuticals, we expect the increased margin levels to be sustainable in coming quarters. — PublicInvest Research, May 25
Kossan Rubber Industries Bhd FYE DEC (RM MIL) 2017 2018F 2019F 2020F
nue growing 1.3% largely due to a time lag in the cost pass-through of natural gas and nitrile butadiene.
We expect earnings to be stronger in the second half of FY18 (2HFY18) with the full commis-sioning of Plant 16 (three billion pieces per annum or 14%). Plant 16 initially had some teething operational issues back in De-cember and did not contribute
to the quarter, but we gather that five lines are now in operation. It will gradually ramp up eight more lines by July. Over the midterm, Kossan will aggressively ramp up production after a quiet FY17, which saw no capacity addition. Plants 17 (1.5 billion pieces per annum) and 18 (three billion piec-es per annum) are both slated to be completed by end-FY18. It
Ajinomoto FY18 results within forecasts
Apex Healthcare Bhd
CAGRFYE DEC (RM MIL) 2016A 2017A 2018F 2019F 2020F (%)
Revenue 581.3 620.3 685.2 743.2 799.9 8.8Pre-tax profit 46.3 56.0 64.5 68.8 73.7 9.5Net profit 35.0 44.5 49.6 52.9 56.7 8.4EPS (sen) 29.8 38.0 42.3 45.2 48.4 8.4PER (x) 19.3 15.2 13.6 12.8 11.9Dividend yield (%) 2.0 2.1 2.1 2.1 2.2Debt to equity (x) Net cash Net cash Net cash Net cash Net cashROA (%) 8.4 9.7 9.9 9.6 9.4ROE (%) 11.2 12.9 13.1 12.7 12.3NTA/Share (RM) 2.6 2.9 3.2 3.6 3.9Price to NTA (x) 2.2 2.0 1.8 1.6 1.5Sources: Company, PublicInvest Research estimates
Going forward, we are conservatively looking at an 8%-11% growth
in FY18-FY20.
would enlarge capacity to 29.5 billion pieces per annum or by 18% heading into FY19. By 2023, Kossan plans to almost double capacity to 47.5 billion from the existing 25 billion. Aside from Plants 17 and 18, expansion will be through four phases per year in Bestari Jaya, Selangor, amounting to 4.5 billion pieces each.
Aside from that, Kossan recent-ly purchased 824 acres (333.46ha) of land in Bidor, Perak. While it is large (almost 15 times bigger
than the one in Bestari Jaya), it is contiguous well, making it highly strategic for effi cient production and expansion. On the fl ip side, it is almost 100km away from the nearest port in Lumut, Perak.
We are positive about Kossan’s ambitious expansion plans. How-ever, we await the execution and delivery of its plants coming to fruition. Teething issues have un-dermined Kossan in the past, with Plant 16 being delayed for a year. — AmInvestment Bank, May 25
Over the midterm, Kossan will aggressively ramp up production after a quiet FY17, which saw no capacity addition.
B R O K E R S’ C A L L 1 5MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
Removal of GST could benefi t 7-Eleven
AirAsia Group Bhd (May 25, RM3.22)Maintain buy with a lower tar-get price (TP) of RM4.65: AirA-sia Group Bhd (AAG) reported a core profi t after tax and minor-ity interest (Patmi) of RM346.9 million, achieving 18.7% of Hong Leong Investment Bank’s (HLIB) fi nancial year 2017 (FY17) fore-cast and 22.1% of consensus, af-ter excluding the disposal gain of RM350 million for Ground Team Red Malaysia (GTR) and remeasurement gain of RM535 million for Asia Aviation Capi-tal Ltd (AAC). First quarter usu-ally contributes around 20% to full-year profi t (due to weak sea-sonality). As such, we deem fi rst quarter of 2018 (1QFY18) results to be below expectations given the continuous rise in jet fuel cost to above US$90 (RM358.2) per barrel year to date and increasing cost structure which would impact its margin for upcoming quarters. AAG declared a net interim divi-dend of 12 sen per share.
Quarter-on-quarter, core Pat-mi declined by 9.1%, aff ected by seasonally lower yield and ancil-lary income; and higher jet fuel cost. Nevertheless, this was par-
tially off set by stronger associate contribution (mainly from Th ai Air Asia [TAA]) and lower net fi -nancing cost.
Year-on-year, Core Patmi in-creased by 19.4% attributed to higher associate contribution from TAA; and higher core loss attributed to minority interest of Indonesia AirAsia (IAA), follow-ing Mt Agung’s eruption aff ecting IAA operation in 1QFY18.
Management expects yield and ancillary income to im-prove towards second half of 2018 (2HFY18) given the strong regional air travel demand. How-ever, the increase in jet fuel price will increase AAG cost structure. Management will focus on im-proving its operational effi ciency and reduce non-fuel cost/unit while improving yield and ancil-lary income to off set the higher jet fuel cost. AAG will hedge its jet fuel cost requirement in tandem with the percentage sales of total available seat capacity.
Despite the closure of Bora-cay island for six months from end April 2018, the management reallocated traffi c to other Philip-pines destinations. — Hong Leong Investment Bank Research, May 25
Strong air travel demand to push up AirAsia’s yield and ancillary income
7-Eleven Malaysia Holdings Bhd(May 25, RM1.51)Maintain reduce with a lower target price (TP) of RM1.12: 7-Eleven Ma-laysia Holdings Bhd’s fi rst quarter of 2018 (1QFY18) sales ticked up 2.5% year-on-year (y-o-y) to RM535.7 mil-lion while core earnings rose 11.6% y-o-y to RM8.9 million. Th e results are below our and Bloomberg’s consensus expectations, with 1Q core earnings making up only 16% of both full-year forecasts, mainly due to higher-than-expected oper-ating costs.
Th e group’s y-o-y sales growth was mainly supported by better product mix, higher number of stores added (+10 net new stores in 1QFY18) and active consumer promotional activ-ities which helped to boost sales. In addition, operational issues back in 1QFY17 also impacted sales during that quarter. 1QFY18 gross profi t mar-gin expanded 1.3% points y-o-y 31.9% on the back of improved product mix. As such, 1QFY18 core net profi t grew 11.6% y-o-y, in line with higher rev-enue and higher operating income
The removal of the goods and services tax (GST) could potentially benefi t the convenience store sec-tor. We expect the price of almost all goods to eff ectively decrease by around 6%, directly translating into thicker pockets for consumers. In addition, initiatives by the newly formed government to reduce the cost of living could further boost the consumers’ disposable income, in turn spurring consumer spend, lead-ing to stronger topline growth for consumer companies.
AEON Co (M) Bhd(May 25, RM2.42)Maintain outperform with a high-er target price (TP) of RM2.60: First quarter of 2018 (1QFY18) core net profi t (CNP) of RM27.9 million (+7%) came in within our/consen-sus expectations at 23%/24% of full-year estimates. No dividend was declared for the quarter, as ex-pected. Th e group typically pays its dividend in fourth quarter.
Year-on-year, 1QFY18 revenue increased by 4% from the strong-er performance in both division of retailing business division (+3%) and property management divi-sion (+4%). Th e positive growth was attributed to the stronger contri-bution from the opening of a new shopping mall in September 2017 (in Kempas, Johor) and supported by shopping malls that were reno-vated and expanded in the previous year. Subsequently, 1QFY18 earn-
With 1QFY18 results below ex-pectations, we cut our fi nancial year 2018 forecast (FY18) to FY20F earn-ings per share (EPS) by 3.9% to 4.1% to account for higher operating costs due to increased rental and utili-ty costs. We also factor in potential earnings from the abolishment of the GST. Looking ahead, we understand that the group remains committed to opening 200 new stores a year and will be refurbishing up to 150 stores this year.
We maintain our “reduce” call, with a lower end-2018F TP of RM1.12, still based on calendar year 2019 forecast target price-earnings (PE) multiple of 24 times, in line with its regional peer average. We think
its current valuation of 35 times/33 times FY18F/FY19F PE is unjustifi a-ble against its modest 3-year (FY18F to FY20F) EPS compound annual growth rate (CAGR) of 6.7%. We ad-vocate that investors avoid the stock pending an eff ective execution of its cost savings initiatives.
Potential de-rating catalysts in-clude increased competition from domestic and foreign convenience store players, and slowdown in con-sumer spending. Upside risks to our call include quicker-than-expect-ed recovery in domestic consumer spending and faster-than-expected execution of its cost savings pro-gramme. — CGSCIMB Research, May 24
AEON’s 1Q profi t within expectationsAEON Co (M) Bhd
ings before interest and tax (Ebit) were higher by 16%, with improved margin by 0.6 percentage point to 5.4% from 4.8% in 1QFY17, attrib-uted to the higher Ebit in both the retailing business division (+38%) and property management divi-sion (+6%), as a result of better marketing and pricing strategies. CNP grew slower by 7% due to a higher eff ective tax rate of 43.9% (1QFY17:38.9%).
Quarter-on-quarter 1QFY18 rev-enue increased by 4% due to better Chinese New Year festive season sales compared to the usual year-end promotion in 4QFY17. Never-theless, CNP plunged 31% due to lower other operating income by RM1.5 million to RM21.3 million in 4QFY17 (year-end rebate vouch-er recognition in 4QFY17 as other operation income).
With the zero-rated goods and services tax (GST) starting June,
AEON Co (M) Bhd may lower the prices, which will encourage con-sumer to spend more. Th e man-agement noted that it will continue
to employ appropriate marketing and pricing strategies for its re-tailing business,, and seek to ex-pand its supermarket business and
online e-commerce presence. For property management ser-
vices, the company expects the oc-cupancy and rental rates to remain stable and sustainable through-out the year. In 2QFY18, the group opened one new AEON mall at Kuching and in 1QFY19, the group plans to open another mall in Neg-eri Sembilan. The group has set aside RM400 million in capital ex-penditure this year (FY17: RM500 million) to build the new mall and renovate existing ones.
Maintain “outperform” with a higher TP of RM2.60 based on the revised 26.5 times fi nancial year 2019 estimate (FY19E) earnings per share (EPS), at its fi ve-year his-torical mean price-earnings ratio (PER) (from TP of RM2.00 based on 23.5 times FY18E EPS, implying -0.5 standard deviation of its 5-year historical mean PER). — Kenanga Research, May 25
AirAsia Group Bhd FYE DEC (RM MIL) 2016 2017 2018F 2019F 2020F
1 6 H O M E MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
Jamal says he had rushed out of the hospital to withdraw money from Tabung Haji to pay for the cost of remand and so on. Photo by Bernama
Gobind takes aimMCMC minister says he is looking into peculiar incidents
Jheains applies to raise Sabah imams’ allowanceTAWAU: Th e application of the Sabah Islamic Religious Aff airs Department (Jheains) regard-ing the allowance for imams in the state to be on a par with that of the imams in Peninsular Malaysia will be brought to the attention of the relevant min-istry for consideration. Sabah Deputy Chief Minister Chris-tina Liew said: “Th e allowance given to imams in Sabah is low when compared with the duties they perform ... I will submit the application [to the minis-try] as it merits consideration”. Liew, who is also Sabah Paka-tan Harapan chairman, said this after handing over boxes of dates to mosque and surau in the Tawau parliamentary constituency at the al-Kautar Mosque here yesterday. It is learnt that the allowance for imams in Sabah was RM850 compared to between RM1,000 and RM1,200 for imams in Pen-insular Malaysia. — Bernama
Kedah mobilises over 200 offi cers to monitor pricesJITRA: Th e Kedah offi ce of the domestic trade, cooperatives and consumerism ministry has commissioned more than 200 enforcement offi cers to mon-itor the prices of goods before and after the implementation of the zero goods and services tax (GST) which will take eff ect on June 1. Its deputy director Chin Ching Chung said they would monitor the change in prices of raw and dry goods in public markets and super-markets to ensure traders com-ply with the zero GST policy. “Each enforcement offi cer is assigned to monitor fi ve prem-ises and record the prices of 30 types of goods when the GST is charged at 6% now and after at zero rate.” — Bernama
Former Sarawak DCM Daniel Tajem diesKUCHING: Former Sarawak deputy chief minister (DCM) Datuk Seri Daniel Tajem died at his home in Jalan Urat Mata, Tabuan Jaya here yesterday. He was 82. According to his widow, Datin Seri Ivy Tajem, the for-mer deputy chief minister died about 7am after complaining of breathing diffi culties. “He was a diabetic but it was un-der control,” she told Bernama. Th e former high commission-er to New Zealand is survived by three children and seven grandchildren. — Bernama
ESSZone curfew extended to June 12KOTA KINABALU: Th e 6pm to 6am curfew in the Eastern Sa-bah Security Zone (ESSZone) which was to expire yesterday has been extended to June 12, Sabah police commissioner Datuk Ramli Din announced in a statement here yesterday. Th e curfew covers the districts of Tawau, Semporna, Kunak, Lahad Datu, Kinabatangan, Sandakan and Beluran and the waters off them. — Bernama
I N BR I E F
KUALA LUMPUR: Several incidents such as the bot attack on hand-phones that occurred on the May 9 election day — as well as reports of directives issued such as the block-ing of online portals on election night — have caught the attention of Communications and Multimedia Minister Gobind Singh Deo.
Also on his radar was the person-al data breach fi asco that reportedly aff ected tens of millions of mobile phone subscribers.
“I have called for various reports
I have called for various reports on such incidents from my ministry, says Gobind.
on such incidents from my min-istry,” Gobind said on Facebook and Twitter.
Among others, complaints on spam calls from unknown numbers were reported by politicians on both sides of the divide on election day that some said had hampered communications with the respec-tive election machinery.
Th e minister further said there would be a review of certain provi-sions in the Communications and Multimedia Act 1998, and proposals
to amend them would be considered.“I welcome suggestions from all
concerned and I’ll be in touch with Eric Paulsen from Lawyers for Lib-erty (LFL) and the Bar Council for discussions in this process,” the Pu-chong member of parliament said.
It was reported that LFL had called on the minister to probe al-leged past misdeeds of the Malay-sian Communications and Multi-media Commission (MCMC) and to ensure that it becomes accountable to the public. — Bernama
SEPANG: Some 66 victims from 18 families were evacuated to a safe area following fl ash fl oods in two villages, in the district, at midnight.
Kuala Lumpur Internation-al Airport Fire and Rescue Sta-tion chief Khairuddin Jamaludin said of the total, 46 victims from 13 families were from Kampung Salak Tinggi, while 20 victims from fi ve families were from Kampung Giching.
“Th e fl oods occurred at about 8pm last night and the victims were transferred to the Kampung Salak Tinggi and Kampung Gich-ing Community Halls.
“Both evacuation centres were opened at midnight,” he said when contacted here yesterday.
However, the victims have been returning home in stages since this morning when water levels in their respective areas began to recede.
Meanwhile, a report from Kulim said more than 250 residents of 10 villages in Lunas have been aff ect-ed by fl ash fl oods due to heavy rain from 2pm to 8pm on Saturday.
Lunas state assemblyman Az-man Nasrudin said all the victims were placed at two fl ood relief cen-tres opened at the Sungai Seluang Mosque and Taman Sang Kancil Surau.
“Th e main road connecting Pa-
KUALA LUMPUR: Sungai Besar Umno division chief Datuk Jamal Md Yunus, who reportedly disappeared from the Ampang Puteri Specialist Hospital here after he was charged there last Friday, contacted his legal team yesterday.
Th e prosecution proceedings for Jamal, 48, charged with causing pub-lic nuisance when he led a protest by smashing beer bottles with a hammer in front of the Selangor State Secre-tary Building in Shah Alam last year, was conducted at the hospital where he was being treated for back pain.
His lawyer Datuk Mohd Imran Tamrin said Jamal’s “disappearance” was a misunderstanding because at that point he thought that his bail
process had been completed. “He has explained that he left the
hospital in a hurry after the discharge process to pursue other aff airs within offi ce hours,” Mohd Imran said in a statement here yesterday.
He said Jamal was ready to coop-erate with the police once he recov-ers from the back pain, for which he was warded.
He said Jamal would appear in court to complete the bail process.
“We believe that there was a mis-understanding until his situation was exploited with negative perceptions. He did not run away and was pre-pared to provide the necessary as-sistance,” said Mohd Imran. Jamal’s disappearance was realised by the
Shah Alam court assistant registrar handling his bail process at about 5.30pm.
Meanwhile, Jamal via a voice recording which he sent through a WhatsApp application said he did not disappear but on the contrary there was a misunderstanding as he thought the bail process had been completed.
He said he had rushed out of the hospital as he had to withdraw mon-ey from Lembaga Tabung Haji to pay for the cost of the remand and so on.
However, after withdrawing the money, he received a call that the police were looking for him for al-legedly escaping from the hospital. — Bernama
Sixty-six fl ood victims evacuated in Sepang
dang Serai and Lunas was also flooded, denying access to two villages, namely Kampung Na-galilit and Kampung Permatang Durian,” he said during a briefi ng session here last night.
The 10 affected villages are
Kampung Sungai Seluang Atas, Kampung Sungai Seluang Bawah, Kampung Paya Serdang, Kampung Bukit Sarang Ayam, Kampung Balik Bukit, Kampung Batu 7, Kampung Permatang Durian, Kampung Per-matang Tok Dik, Kampung Naga
Lilit and Kampung Sungai Li-mau-Taman Kancil.
“We have planned a range of measures, including providing im-mediate relief assistance such as food supplies, blankets and mats to the victims,” Azman said. — Bernama
Missing Jamal contacts lawyers, says will cooperate with police
BERNAMA
C O M M E N T 1 7MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
Putin’s evasions on MH17 a disgraceTh e Kremlin may not want to admit guilt over the downed airliner, but it can at least stop dodging responsibility
BY LEONID BERSHIDSKY
Ru s s i a n P re s i d e nt Vladimir Putin had a peculiar response to last Thursday’s an-nouncement by the Dutch-led investi-
gating team that it was a missile owned by the Russian military that downed Malaysia Airlines flight MH17 over eastern Ukraine in July 2014. Putin said he had no idea how that conclusion was reached because Russia was not allowed to take part in the investigation.
“Th e Ukrainian side is working there, though Ukraine broke in-ternational rules and didn’t close its airspace over a territory where combat was taking place,” Putin said during a joint press confer-ence with French President Em-manuel Macron. “And yet it’s work-ing and Russia isn’t. So we don’t know what they’re writing there and what this commission’s writ-ings are based on.”
Th is is a stunningly callous and insulting line to take. Information about the provenance of the Buk 9M38 missile has been public-ly available since 2014 from the independent investigative blog Bellingcat. Last Th ursday, the Joint Investigative Team confi rmed its conclusion. Russia never had to accept it on faith. It was uniquely qualifi ed to track the movements of the 53rd Anti-Aircraft Missile Brigade’s Buk launchers. Th e Rus-sian military is not some kind of chaotic rebel band: It is a major power’s armed force, which does not drive around missile launch-ers or especially take them across borders without leaving any kind of trail.
Th ere is no doubt by now that Putin knows every available de-tail of the case, which triggered the European Union’s toughest sanctions on Russia. He knows
BY K AU S H I K B A S U
IN modern economics, the interac-tion between supply and demand with regard to goods and services is well understood, thanks to the pioneering work of the late Ken-neth Arrow and Gérard Debreu.
But the links between the domain of goods and services and that of money and fi nance are so mathe-matically complex that, despite re-peated attempts, our understanding of them remains rudimentary.
As a result, most policy decisions in the domain of money and fi nance
Th e value of measuring fi nancial inclusion are based on observed regularities in the data.
That is why the World Bank’s triennial Global Findex report is so important.
Based on a survey of more than 150,000 representative individuals, the report provides a bird’s-eye view of patterns and regularities in data pertaining to fi nance and fi nancial inclusion — such as saving behav-iour, use of mobile money, and pre-ferred modes of sending and receiv-ing remittances — in 140 economies.
Th e insights gleaned from these data provide vitally important help in shaping eff ective policy.
Th e latest Global Findex report informs us that 515 million individ-
uals opened a “bank account” at a traditional fi nancial institution or through a mobile money provider between 2014 and 2017.
As a result, 69% of adults world-wide now have bank accounts, up from 62% in 2014 and 51% in 2011. Th is rise in fi nancial inclusion is welcome news, not least because, in the event of a downward income shock, a household’s consumption will fall much less if it is linked to the formal fi nancial sector.
Th e latest Global Findex report also underscores the benefi ts, es-pecially for women, conferred by access to mobile money.
According to a study — cited in the World Bank report — by Mas-
sachusetts Institute of Technolo-gy’s Tavneet Suri and Georgetown University’s William Jack, mobile accounts have enabled 185,000 Kenyan women to leave farming and start more remunerative small businesses and retail activities.
More broadly, access to mobile money has supported a 20% increase in the savings of women-headed households in Kenya. And, as the Global Findex report, using data from India, shows, leakage of funds for pension payments declines sharply when the payment is made with smart cards instead of cash.
But, beyond providing evidence to support eff ective policymaking, the Global Findex report has anoth-
er crucial benefi t: It spurs healthy competition among countries in areas that ultimately improve cit-izens’ well-being.
After all, it is an unavoidable hu-man trait that credible and promi-nently displayed charts and rank-ings can stir up aspirational spirits.
Mainstream neoclassical eco-nomics largely ignores this fact, instead suggests that our “utility function”, or that which we aspire to maximise, is exogenous.
But if that were true, there would not be so much jockey-ing over credit ratings, the World Bank’s Doing Business rankings, or even Olympic medals.
where the missile launcher came from, on whose orders it arrived in eastern Ukraine and probably even who operated it when MH17 was shot down. Yet, when asked about it, he chose to gripe about not being invited to take part in the outside investigation and to shift blame to Ukraine for not closing its airspace.
Years of Russian dissembling about MH17 — including various claims from Moscow that it was shot down by a Ukrainian fi ghter plane, that the Buk was Ukraini-an, even that the plane, fi lled in advance with dead bodies, was a plant — could not alter the reality. Th e missile launcher was brought in from Russia, apparently to help pro-Russian rebels defend against possible raids by the Ukrainian air force, and used — almost certainly by mistake — to shoot down the
passenger airliner.Th ere are only two ways for Rus-
sia to internalise that reality and react to it. One could be called the “Great Power” way. Here, Putin has a precedent to lean on — the July, 1988 downing of Iran Air fl ight 655 by the USS Vincennes, in which 290 passengers and crew, almost as many as MH17’s 298, lost their lives. Th e US, like Russia today, blamed Iran for allowing the air-liner to fl y over a fi ghting area. It also attributed the firing of the two missiles that brought down the plane to human error from “combat stress”. Th e US govern-ment never accepted responsi-bility or apologised to Iran, where government propaganda has since made the incident a cornerstone of Iran’s enmity toward the US. Th e Iranian line is that the shoot-down was intentional, a way for the US to
signal it would do anything to end the war in favour of its then-ally, Iraqi dictator Saddam Hussein.
Despite dodging the blame and withholding an apology, the US did, however, pay out US$61.8 mil-lion to the families of the Iranian victims.
Th e other way for Russia to deal with the disaster is to fully own up. Here, too, there is a strong prece-dent. In October 2001, Ukrainian air-defence forces shot down a Russian passenger airliner, Sibir flight 1812, during an exercise. Th e incident was likely similar in nature to what happened to MH17: Th e S-200 missile was supposed to hit an airborne target but was accidentally aimed at the passen-ger plane, bound from Tel Aviv to Novosibirsk, that was accidentally on the same course as the target. All 78 people on board — Russian
and Israeli citizens — were killed. Th en-Ukrainian president Leonid Kuchma’s initial reaction was to downplay the incident, but after Israeli offi cials and Ukraine’s chief rabbi appealed to his conscience, Kuchma accepted the country’s full responsibility, fi red the defence minister and a number of senior offi cers and apologised to Russia, Israel, and the victims’ families.
Ukraine paid US$15.3 million in compensation to each of the families.
Following the Ukrainian prec-edent would be infinitely pref-erable. Admitting responsibility would not change much in how the war in eastern Ukraine is per-ceived: Russian help to the rebels is by now well-documented, and official denials have long since stopped serving any purpose. By taking the blame, Russia would show that the Putin government’s geopolitical goals have nothing to do with its sympathy for the vic-tims and desire to reach out to the families. Th at is something all Russians could relate to.
But even if Putin, who calls him-self a devout Christian, somehow cannot bring himself to take this path; there is no valid precedent for not paying compensation. Th e case of the South Korean airliner shot down by the Soviet Union in 1983, in which neither the Sovi-ets nor the Russian government paid anything, was substantially diff erent because fl ight KE007 was downed deliberately after going far off course. Even so, president Boris Yeltsin met with some vic-tims’ families and apologised “for the tragedy” to his South Korean counterpart.
Even if Putin regards the Rus-sian military’s actions as legiti-mate, he should make it clear that he considers the downing of the plane a terrible mistake and off er compensation to MH17’s victims. Not doing that is an aff ront to his fellow citizens as much as to the rest of the world. — Bloomberg
CONTINUES ON PAGE 18
1 8 W O R L D B U S I N E S S MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
Qualcomm to meet China regulatorsIt is in a fi nal push to clear US$44b NXP deal — sources
Hong Kong needs an Ant to move its IPO mountain
BY M AT T H E W M I L L E R
BEIJING: Qualcomm Inc is expect-ing to meet this week in Beijing with China’s antitrust regulators in a fi -nal push to secure clearance for its proposed US$44 billion (RM175.12 billion) acquisition of NXP Semi-conductors NV, three sources told Reuters.
Th e acquisition has been caught in the crosshairs of rising US-China trade tensions, with sources saying an approval would depend on the
HONG KONG: Tencent Hold-ings Ltd chairman pledged to advance China’s semiconduc-tor industry, saying the blow to ZTE Corp from Washington’s ban on US fi rms supplying the telecommunications compa-ny was a “wake-up” call, local media reported.
China’s No 2 telecom equip-ment maker ZTE was banned in April from buying US tech-nology components for seven years for breaking an agree-ment reached after it violated US sanctions against Iran and North Korea. American fi rms are estimated to provide 25% to 30% of the components used in ZTE’s equipment.
While the US administration said last Friday it had reached a deal to put ZTE back in business after the company pays a US$1.3 billion fi ne and makes manage-ment changes, the plan has run into resistance in Congress, indi-cating that ZTE was still far from out of the woods. Also, ZTE has yet to confi rm the deal.
“The recent ZTE incident made everyone more clearly realise that however advanced one may be in mobile payment, without the mobile, the chips and the operating system, you still cannot compete,” Chinese media reports cited Tencent’s Pony Ma as saying at a forum in Shenzhen on Saturday. Ten-cent, which alternates with Alibaba Group to be Asia’s most-valuable listed firm, is the largest social media and gaming fi rm in China and oper-ates the WeChat app. — Reuters
NEW YORK: Bitcoin is still a buy despite its continued losses, block-chain venture capitalist Spencer Bogart told CNBC.
Th e digital currency’s increased number of use cases is proof that the popular form of money is being institutionalised.
“Every major bank is trying to do something in the space,” Bogart, a partner at Blockchain Capital, told CNBC’s Fast Money last Friday.
HONG KONG: It will take an Ant to move this Hong Kong stock moun-tain. Until recently, Hong Kong was an initial public off ering (IPO) de-sert. Issuance had been falling for four consecutive years as investors grew weary of deal after deal from state-owned Chinese fi rms.
Th en came ZhongAn Online P&C Insurance Co Ltd and Tencent Hold-ings Ltd-backed China Literature Ltd, which both ignited interest with their new-economy business models. Last month, the city loosened share-sale rules to allow for dual-class stocks. It also did away with a revenue re-quirement for innovative companies.
Now, Hong Kong’s listing com-mittee is facing a fl ood that threat-ens to topple Goldman Sachs Group Inc’s IPO forecast of US$38 billion (RM151.24 billion) for this year. Th ere’s smartphone maker Xiaomi Corp, Lufax, WeLab Ltd, Meituan Di-anping and Jack Ma’s Ant Financial
progress of broader bilateral talks. Th e deal has got a nod from eight of the nine required global regu-lators, with Chinese clearance the only one pending.
Qualcomm is likely to meet Chi-nese regulators before US Com-merce Secretary Wilbur Ross arrives in China on Saturday, the sources briefed on Qualcomm’s discus-sions said.
A Qualcomm team and offi cials from the State Administration for Market Regulation met in Beijing
last Friday and had “productive” talks, the sources said.
The San Diego-based firm is now “cautiously optimistic” that the deal will go forward, one of the sources said, amid recent indica-tions of a thaw in US-China trade tensions that have seen both sides propose tens of billions of dollars in tariff s.
Last Friday, the Trump admin-istration said it had reached a deal that would put ZTE Corp back in business after the Chinese tele-
communications company pays a US$1.3 billion fine and makes management changes.
Resolving the ZTE sales ban has been of chief importance to China’s leadership. Th e fi rm was banned in April from buying US technology components for seven years after breaking an agreement it reached for violating US sanctions against Iran and North Korea.
“It feels as though it’s getting close to the end,” said the source quoted above. — Reuters
‘Tencent chair pledges to advance Chinese chip industry’BY S I J I A J I A N G
Bitcoin still a buy despite recent losses — expert
BY K E L L I E E L L
For more, visit www.cnbc.com
“Either they’re going to be off ering bitcoin to their clients, they’re work-ing on a custody platform or they’re opening up a trading desk,” he add-ed. “A deeper institutionalisation of bitcoin is overall positive,” he said.
Still, the coin has seen better days. After surging last December to around US$19,500, bitcoin has declined more than 50% since the
start of the year. Last Thursday, amid increased regulatory scru-tiny in the cryptocurrency space, the coin fell yet again — this time below US$8,000 (RM31,840), where bitcoin had hovered for several weeks. Late Friday, bitcoin changed hands around US$7,400. — CNBC
An illustration of a bitcoin standing on a motherboard. The digital currency’s increased number of use cases is proof that the popular form of money is being institutionalised, says an analyst. Photo by Reuters
Services Group, which operates pay-ment platform Alipay. Th at’s on top of US cancer detection start-up Grail Inc, 3D Medicines Corp and China Tower Corp. At this rate, Hong Kong will have no problem vaulting into the No 1 spot for share sales globally.
But apart from China Tower, which is sure to fi nd plenty of main-land support, many may have a problem meeting the heady valu-ations being bandied about.
Xiaomi isn’t generating much excitement with its promise of low operating margins on hardware. Ride-hailing service Didi Chuxing may have defeated Uber Technol-ogies Inc in China, but Meituan Dianping is now muscling in on its territory. Meanwhile, biotech fi rms are notoriously prone to boom-and-bust cycles, and let’s not even talk about risk of cryptocurrency plays.
Hong Kong’s lack of trading depth is another concern. Turnover in Ali-baba Group Holding Ltd’s US shares this year has ranged between 20%
and 30% of the value of all securities changing hands on Hong Kong’s main board, for example. And investors in the former British colony tend to be less discerning, prizing profi t above all else and turning a blind eye to other important considerations like a com-pany’s longer-term growth potential.
Already, there are signs that everything might not be going the way Hong Kong Exchanges and Clearing Ltd had hoped. Razer Inc is down 37% since listing, while Ping An Healthcare and Technology Co Ltd, or Good Doctor, is also under water. Chinese companies that are listed in the US, like Baidu Inc’s iQiyi Inc and Huya Inc, are having a much better time of it.
To guarantee big gains, Hong Kong really needs another Tencent. There aren’t many in the queue that fi t the bill. But if it successfully navigates its way through stricter regulations being imposed by Bei-jing, Ant Financial Services might be the one. — Bloomberg
BY N I S H A G O PA L A N
The competition prompted by the Global Findex rankings could be particularly valuable, especially with regard to fi nan-cial inclusion.
According to the latest report, the world’s most fi nancially in-clusive economies are the Nordic countries, as well as Canada and the Netherlands, all of which have a score of 100% (meaning virtu-ally everybody has an account).
At the other end of the spec-trum are the Central African Re-public, where just 14% of resi-dents are fi nancially included, and Afghanistan, where 15% are.
Between these two poles lie Pa-kistan (21%), Tanzania (47%), In-donesia (49%), Bangladesh (50%), China (80%) and Kenya (82%).
Th e US has a score of 93% — decent overall, but rather poor for a rich country. Indeed, it trails behind Singapore (98%), the UK (96%) and Hong Kong (95%). This should provide incentive for stronger eff orts to raise the US score.
Th e Global Findex report also quantifi es and ranks countries according to the gender gap in fi nancial inclusion. Here, Jordan does the worst, followed by Tur-key. Interestingly, there are six countries where more women than men have bank accounts: Argentina, Georgia, Indonesia, Laos, Mongolia, and the Phil-ippines.
Of course, current rankings are not the only valuable insights the Global Findex report provides; the data are much more nuanced than that.
For starters, it shows change over time. India, for example, has made huge strides in expanding fi nancial inclusion.
In 2011, only 35% of adults had bank accounts. By 2014, that fi gure had risen to 53%. Today, it stands at 80%.
Yet it should also be noted that 48% of accounts in India are “in-active” — that is, they have not been used at all in the previous 12 months. That is the highest share of inactive accounts in the world, and exactly double the de-veloping-country average of 24%.
Simply put, the Global Fin-dex report gives policymakers both the information and moti-vation they need to take action that genuinely improves citizens’ well-being.
In lieu of a solid theory ex-plaining the relationship between goods and services, on the one hand, and money and fi nance, on the other, this could not be more benefi cial. — Project Syndicate
Kaushik Basu, former chief econ-omist of the World Bank and for-mer chief economic adviser to the government of India, is professor of economics at Cornell University and non-resident senior fellow at the Brookings Institution.
FROM PAGE 17
Global Findex also spurs competition in areas that improve citizens’ well-being
W O R L D 1 9MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
HONOLULU: A broad lava fl ow crossed onto the property of a Hawaii geothermal power station on Saturday, posing a new hazard as molten rock from the erupt-ing Kilauea volcano bulldozed relentlessly through homes and backyards.
Th e lava crossed onto the Puna Geothermal Venture on Saturday evening local time, according to the US Geological Survey, having destroyed dozens of nearby hous-es in the past few days.
Since Hawaii’s Kilauea volcano began a once-in-a-century-scale eruption on May 3, authorities have shut down the plant, re-moved 60,000 gallons of fl amma-
ble liquid, and deactivated wells that tap into steam and gas deep in the Earth’s core.
Magma has drained from Ki-lauea’s summit lava lake and fl owed around 40km east under-ground, bursting out of about two dozen giant cracks or fissures near the plant.
Hawaii governor David Ige has said the wells are stable.
But lava has never engulfed a geothermal plant anywhere in the world and the potential threat is untested, according to the head of the state’s emergency manage-ment agency. Local residents fear an explosive emission of deadly hydrogen sulfi de and other gas-es should wells be ruptured. — Reuters
WASHINGTON: US President Donald Trump resumed up his verbal assault on the special coun-sel investigation probing Russian interference in the 2016 presiden-tial election with a fresh series of Twitter messages on Saturday.
“This whole Russia probe is rigged,” Trump said in one of three tweets that appeared as his mo-torcade returned to Washington from his golf course in suburban Virginia, where he spent about four hours. “#SPYGATE & CON-FLICTS OF INTEREST!”
Th e president repeated an un-substantiated claim that an FBI in-formant who contacted advisers to his campaign was a political “spy,” days after Justice Department offi -cials briefed lawmakers on classi-fi ed materials about the probe into Russian meddling in the election.
“With spies, or ‘informants’ as the Democrats like to call them because it sounds less sinister (but it’s not), all over my campaign, even from a very early date, why didn’t the crooked highest levels of the FBI or ‘justice’ contact me to tell me of the phony Russia problem?” Trump said.
Th e Justice Department held two meetings last Th ursday with lawmakers — at Trump’s demand — after revelations that the FBI had a confi dential informant who had long helped the bureau make contact with three advisers to his campaign. House Speaker Paul Ryan said after the meetings that Republicans are now “getting the cooperation necessary” to resolve their demands for the classifi ed information.
Representative Adam Schiff , the top Democrat on the House Intel-ligence Committee, told reporters there’s “no evidence to support any allegation the FBI or any intelli-gence agency planted a spy in the Trump campaign”. — Bloomberg
March in France against Macron reforms
Trump still sees June 12 summit with KimWhite House team to go to Singapore for meeting preparations
BY N A D ÈG E P U L J A K
BY R O S K R A S N Y
BY J O LY N R O S A
WASHINGTON/SEOUL: US Pres-ident Donald Trump said on Sat-urday that things are moving “very nicely” towards a summit on June 12 in Singapore with North Korean leader Kim Jong-un.
“We’re looking at June 12 in Sin-gapore. It hasn’t changed,” Trump said at the White House during a meeting with a US prisoner freed by Venezuela.
Trump rattled the region last Thursday by cancelling his June 12 meeting with Kim, citing “open hostility” from Pyongyang.
But within 24 hours he reversed course, saying it could still go ahead after productive talks were held with North Korean offi cials.
His comments came after North Korea said Kim was “fi xed” on hold-ing the summit with Trump.
The latest conciliatory decla-ration from Pyongyang came as the White House confi rmed it was sending a team to Singapore to prepare for the talks.
On a related matter, on Saturday South Korean President Moon Jae-in met with Kim on the north side of the Demilitarized Zone (DMZ) separating the two Koreas “to en-sure a successful US-North Korea summit”, Seoul’s presidential Blue House said in a statement.
Kim believes a summit with Trump will be a landmark oppor-tunity to end decades of confronta-tion, Moon said yesterday following his surprise meeting with the North Korean leader.
“He (Kim) also expressed his in-tention to put an end to the history of war and confrontation through the success of the North-US sum-mit and to cooperate for peace and prosperity,” Moon told reporters, adding that both he and Kim agreed to meet or talk in person “if neces-sary”. Moon and Kim held a surprise
summit in the DMZ on Saturday in a scramble to save a slated June 12 summit between North Korea and the US in Singapore.
During his two-hour meeting with Kim, Moon said he urged both Washington and Pyongyang “to remove misunderstandings through direct communication and to have suffi cient dialogue in advance through working-level negotiations on the agendas to be agreed upon at the summit”.
“Chairman Kim agreed on that,” he added.
Moon said the Pyongyang re-gime reaffi rmed its commitment to give up its nuclear weapons but had its own security concerns if it took that step.
“Kim stressed again that he had a fi rm determination towards com-plete denuclearisation,” Moon added.
“The thing he was uncertain about was not denuclearisation but concerns over whether he could trust that the US would end its hos-tile policy and guarantee the secu-rity of his regime when the North denuclearises itself.” — AFP
A commemorative coin released by the White House for a potential ‘peace summit’, featuring the names and silhouettes of Trump and Kim, in an arranged photograph taken in Washington, DC, the US, last Thursday. Trump rattled the region last Thursday by cancelling his June 12 meeting with Kim, citing ‘open hostility’ from Pyongyang. But within 24 hours he reversed course, saying it could still go ahead after productive talks were held with North Korean offi cials. Photo by Bloomberg
Trump says ‘whole Russia probe is rigged’
PARIS: Tens of thousands of people took to the streets across France on Saturday to demonstrate against Emmanuel Macron’s policies, but the turnout fell short of expecta-tions and the president said nothing would stop his economic reforms.
Organisers had called for a “pop-ular tide” of protest for the marches, which were organised by 60 unions, political parties and associations an-gry at Macron’s policies perceived to favour the rich. But the turnout was well below previous similar marches and Interior Minister Gerard Col-lomb said it was “a bit thin”.
Th e ministry estimated that just over 93,000 demonstrated in 142 places throughout the country, while the left-wing CGT union put the number at 250,000. In Paris, the
US missionary released from Venezuela jailWASHINGTON/CARACAS: American missionary Josh Holt, held by Venezuela without tri-al on weapons charges since 2016, returned home with his wife on Saturday after the South American country’s socialist government unexpectedly re-leased them. They were wel-comed to the White House by US President Donald Trump, who told Holt he had been “in-credibly brave”. Th e freeing of the Mormon missionary from Utah came despite deepening US-Venezuelan tensions that in the last week saw tit-for-tat expulsions of diplomats, Wash-ington’s refusal to recognise the May 20 re-election of Venezue-lan President Nicolas Maduro, and the imposition of new US sanctions on Caracas. — Reuters
Moonwalking astronaut Alan Bean dies at 86WASHINGTON: US astronaut Alan Bean, the fourth person to walk on the moon, has died, his family announced in a state-ment released by Nasa. He was 86 years old. Th e moonwalker died on Saturday in Houston after suddenly falling ill weeks before, the statement said. He was among the elite group Nasa chose for its third group of astro-nauts in 1963, having served as a test pilot in the US Navy. He twice ventured into space, originally in 1969 on the Apollo 12 moon landing mission, and later as the commander of the second crew to fl y to the fi rst US space station Skylab in 1973. — AFP
Seven hurt in Hong Kong acid attack HONG KONG: Seven people were injured at a busy Hong Kong restaurant yesterday when a man allegedly attacked a female employee with corrosive drain cleaner. According to the South China Morning Post, police were sent to a restaurant in the bustling tourist district of Tsim Sha Tsui after a man reportedly attacked his wife with the substance before being restrained by onlookers.
I N BR I E F
Lava fl ow crosses onto Hawaii geothermal plant property
police reported just 21,000 protest-ers, while the CGT claimed 80,000.
Macron said last Friday during a visit to Russia that the protests “won’t stop” his progress.
Saturday’s marches follow strikes last Tuesday when public-sector em-
ployees walked out over “an attack against public services”. It was the third day of stoppages and demon-strations by public workers since last year’s election win by Macron, who has pledged to reduce spending and trim jobs. — AFP
Demonstrators taking part in a ‘maree populaire’ (working-class tide) demonstration called by political organisations, associations and unions to protest against the French president and government’s policy in Paris on Saturday. Photo by AFP
20 live it! W E L L B E I N G . T H E A R T S . W I N E + D I N E . S T Y L E + D E S I G N . L E I S U R E
MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
PersonalASSISTANTC O M P I L E D BY C H A N G Y E E Z H W E N
W O R K . L I F E . B A L A N C E
THE Jeremy Monteiro Trio will be performing at No Black Tie tonight. The band comprises pianist Jeremy Monteiro, bassist/composer Jay Anderson and jazz drummer Lewis Nash. Jeremy Monteiro has performed to critical acclaim all around the world, including nu-merous performances in Singapore, where he has been dubbed “Singapore’s King of Swing” by the local media. On Oct 12, 2006, he was elected a Fellow of the Royal Society for the encouragement of the Arts, Manufactures & Commerce in the UK (RSA), joining the ranks of Stephen Hawking, Benjamin Franklin, Nelson Mandela and other Fellows of the RSA. Catch his performance tonight from 9pm at No Black Tie. For more details, log on to www.noblacktie.com.my.
HOSTED by Rizal van Geyzel, The Comedy Death Race promises a merciless night of stand-up comedy. Comedians will go on stage to perform, where audiences will get to decide their fate by fl ashing a red card, sending them off the stage. It’s a “do or die” show where the bravest and funniest sur-vive. Watch as up to 20 acts battle it out for the prize money of RM500 for the last man standing. The Comedy Death Race #1 will take place tonight from 9pm at Crackhouse Comedy Club KL. To perform, sing up from 8pm until 8.30pm at the door. Find out more at http://thecrackgong.peatix.com.
A WEEKLY yoga class hosted by Black And White Fitness will take place today from 7pm. The instructor Aiden, graduated from his 200-hour teacher training course with Iryne and R2, the founder of Ispirit. Now taking his second 200-hour training course, he blends traditional yoga practice with modern exer-cise methods. Come join him at the Bangsar Sports Centre today from 7pm. Participants must bring their own yoga mat.
Rethink the Greek party capital this summer
BY N I K K I E K S T E I N
A LOCAL’S GUIDE TO THE BEST OF MYKONOS
PHOTOGRAPHER Lizy Manola spent the past year chronicling the island of Mykonos for her new travel tome, Mykonos Muse, but her obsession with the island is a lifelong story. “Even though I’ve lived and spent all my summers — the last 40 years’ worth — on the island, I still learnt so many things in the last year,” she said. “I found streets I’d never walked before, and met diff erent people I’d never had the chance to talk to — local people.”Her robust discovery process is proof that, despite Mykonos’ small footprint (just 40 square miles [103.6 sq km]) and decades-long popularity among the international jet set, many of the island’s charms have fl own under the radar. Here, an insider’s guide to the Greek isle that will contain surprises for even the most loyal of visitors. — Bloomberg
“I’ll tell you something,” Manola began. “I love eating.” So where does this self-proclaimed gourmand indulge on the island? “Tasos is a small tavern on Paranga beach, and I like it especially because the tables are on the sand and the fi sh is so fresh.” (Her favourite dish is the fi sh-and-tomato salad with capers.) Also at the top of her list is Oti Apomeine. “It means ‘whatever is left’, and it’s a small family tavern that is really my best recommendation. It’s a grill house, and they have the most tender meats; the tomato meatballs are excellent.” The pictured spread, however, comes from Scorpios, which Manola categorises as “one of the famous beach bars with all the people — a good place to sit at the bar, have a salad and a drink, and mingle with nice couples”.
Though most people fl ock to Mykonos for its exceptional beaches and crystal-clear waters, it is nearly impossible to have a sliver of sand all to yourself during the peak season. That is, if you are not in the company of a local in the know. Manola’s favourite places to soak up the Aegean sun include scenic Kapari, which has sunset views over Delos, and secluded Mersini, with shallow waters off the island’s northern coast. Agios Sostis, pictured here, is a place where you are more likely to see fi shermen than lithe models. “There is a big caveat with these beaches, though,” she warned. “They don’t have umbrellas or sunbeds or music. But this is my Greek vacation.”
Sunsets are one of the island’s mythical draws. Catch the most beautiful evening vistas in Little Venice, one of Mykonos’s oldest, most colourful corners. If that feels a bit too on-the-nose, follow Manola to the 127-year-old Armenistis Lighthouse, just north of Chora town. “The scenery is amazing from there — you see all the boats that come and leave from Mykonos, and you feel like you can almost touch Tinos, the next island to the north; it looks so close.” Photos by Lizy Manola
live it! 21
W E L L B E I N G . T H E A R T S . W I N E + D I N E . S T Y L E + D E S I G N . L E I S U R E
MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
At the San Giorgio Hotel, you can fi nd Mykonos’s buzz and its boho spirit at once. A gypset-inspired design includes white-beamed ceilings, rattan rugs and weathered wood furnishings; it is a sparse but chic look that would pass muster in Ubud or Tulum.
“I believe that Mykonos still has its bohemian soul, no matter what they say” asserted Manola. “Of course, it’s fl ashy, but it’s also simple. Yes, it’s cosmopolitan, but it’s also traditional. It’s a mosaic of diff erent things.” The beach in front of the popular bar Alemagou proves the point.
To catch the island’s best weather — and enjoy such uncrowded landscapes as this one, in Agios Sostis bay — Manola suggested planning trips in the early summer. “To be honest, I never go in August,” she explained. “Only in June, and through the middle of July. From then until the end of the summer, it’s just too many people.”
Some mainstream attractions are worth visiting, even to the locals. Delos is one. Known in Greek mythology as the birthplace of Apollo and Artemis, it is a protected archaeological site that has been uninhabited since the 7th century.
Ask Manola how she defi nes Mykonian hospitality, and she will say that it is all about the people. “The Mykonians make Mykonos what it is today — they know how to give visitors what they want,” she said. “They’re free spirits, good dancers, and on the other hand, very, very hard workers.” But the most important quality they share, she said, is that Mykonians are generally open-minded. “Puritanism and tourism don’t go together,” she added.
Manola’s favourite place on the island, though, is a surprise. “If you ask me, it’s the old port,” she said, referring to the area tourists visit when taking a ferry over to historic Delos. “I get up early in the morning and take my fi rst coff ee there. It’s the place where you can see how locals start the day, how they talk to each other, and how they collect the gossip of the island.” Fishermen still pull into the harbour in the early hours to clean and sell their catch; farmers sell fruit, vegetables and fl owers from their gardens. “This is the icon I don’t want to lose,” she continued. “Around 8am is best — by 10am or 11am, the cruise boats come and we (the locals) disappear. We run.”
2 2 H O M E B U S I N E S S MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY
WEEK IN FOCUS
1 (From left) Radio Televisyen Malaysia deputy director of radio programming Tengku Idris Tengku Din and director of radio program-ming Noriah Letuar, Agensi Kaunseling dan Pengurusan Kredit (AKPK) chief executive offi cer Azaddin Ngah Tasir and International Green Hub Bhd group president and execu-tive chairman Datuk Seri Wan Nasser Ismail Al-Hashemi at AKPK’s buka puasa event in Kuala Lumpur recently.
2 (From left) BonusLink business develop-ment manager Karen Kow, AirAsia BIG head of commercial Rhyner Cheong, Raku-ten Securities Inc president Yuji Kusunoki, Rakuten Trade Sdn Bhd managing director Kaoru Arai, and B Infinite general manager Grace Pak celebrating Rakuten Trade’s first
anniversary this month with loyalty partners — AirAsia BIG, B Infinite and BonusLink — in Kuala Lumpur recently.
3 (From left) Renault vice-president of sales and marketing for Asia-Pacific Sicard Guil-laume, Tan Chong Motor Holdings Bhd group chief executive offi cer (CEO) Datuk Rosie Tan, TC Euro Cars (TCEC) CEO Kuan Kim Luen, GoCar president Nicholas Tan, GoCar Malaysia CEO Alan Cheah, Renault head of Asean operations Quincy Govin at TCEC’s announcement that it will be pro-viding 150 units of the stylish and versatile Renault Captur compact crossover to GoCar in Kuala Lumpur on May 24. TCEC is the sole franchise holder for Renault vehicles in Malaysia.
4 The Prime ProGIGuard recently hosted a dynamic and memorable event where scientific and clinically sound results supported the use of Saccharomyces cerevisiae CNCM I-3856 in abdominal symptomatic relief such as pain and generalised discomfort in Petaling Jaya recently. Seen at the event were (from left) Taiping Poly (M) Sdn Bhd managing director Canmy Ang, TV host Maria Tun-ku Sabri, Cambert (M) Sdn Bhd product manager for The Prime ProGIGuard Teo Tze Seng, Cambert (M) Sdn Bhd general manager S L Ho, international gastro-enterological expert Professor Pierre Desreumaux, and celebrity chef, own-er of Antara & Bistro à Table, and food stylist Isadora Chai.
5 CIMB Group chief executive officer (CEO) of group commercial banking and group asset management and investments Ef-fendy Shahul Hamid (centre) at CIMB Group’s treat for children from Pertu-buhan Kebajikan Anak-Anak Yatim to a Hari Raya shopping outing, organised by CIMB Foundation in Kuala Terengganu, Terengganu recently.
6 Petronas Gas Bhd managing director and chief executive officer Kamal Bahrin Ahmad (centre) and Petroliam Nasional Bhd (Pe-tronas) vice-president and group general counsel Maliki Kamal Mohd Yasin (right) at Petronas’ Sentuhan Kasih programme at Projek Perumahan Rakyat in Bukit Jalil, Kuala Lumpur on May 25. — Photo by Bernama
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IWC’S 150TH ANNIVERSARY DINNER ... (From left) Valiram executive director Mukesh Valiram, IWC Schaff hausen Southeast Asia managing director Stanislas Rambaud, Swiss Watch Gallery ambassador, dancer and choreographer Datuk Ramli Ibrahim, Valiram executive director Sharan Valiram and Valiram Watch Division general manager Lee Siew Hoong at IWC’s 150th anniversary dinner and launch of the watchmaker’s Jubilee collection in Malaysia hosted by Valiram-owned Swiss Watch Gallery and the Schaff hausen luxury watchmaker at Slate at The Row, Kuala Lumpur on May 23.
S P O RT S 2 3MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
Real Madrid win Champions LeagueBrilliant Bale breaks Liverpool hearts
BY A N DY S C OT T
KIEV: Gareth Bale came off the bench to score twice, including one of the all-time great goals in a Champions League fi nal, as Real Madrid beat Liverpool 3-1 in Kiev on Saturday to take the trophy for the third year running.
Bale’s jaw-dropping overhead kick in the 64th minute put Real 2-1 up moments after his intro-duction, following a dramatic start to the second half in which Karim Benzema gave Real the lead as a result of a Loris Karius howler.
Sadio Mane had briefl y restored parity, but Bale put Real in front again and then sealed the triumph late on with a long-range strike that the unfortunate Karius could only punch into the net.
Jurgen Klopp’s and Liverpool’s own evening was marred by the loss of a distraught Mohamed Sa-lah to injury in the fi rst half, the Egyptian coming off half an hour in having damaged his shoulder.
This was not to be Salah’s night, with Real allowing Zinedine Zi-dane to become the first coach ever to win the Champions League
LOS ANGELES: Australian Minjee Lee fi red a bogey-free four-under par 68 on Saturday to put herself in position to give herself the Ladies Profession-al Golf Association (LPGA) Volvik Championship title for her birthday.
Lee, who turned 22 yesterday, held a two-stroke heading into the fi nal round at Ann Arbor, Michigan.
She has been knocking on the door all season, with her fi ve top-10 LPGA fi nishes including a play-off loss to Lydia Ko in San Francisco in April.
Lee nabbed her fourth birdie of the day at Travis Pointe’s par-fi ve 18th to build a 12-under par total of 204.
American Stacy Lewis, expecting her fi rst child later this year, fi red a
BENGALURU: Dominic Thiem warmed up for the French Open by winning the Lyon Open title on Saturday with a gritty 3-6, 7-6(1), 6-1 victory over French veteran Gilles Simon in the fi nal.
Th e 24-year-old was staring at defeat while down a set and a break but dug deep to prevail in two hours 24 minutes for his 200th tour match victory and his 10th Association of
three years in a row.“With a team like this we can
go far, but to win three of them, it’s something crazy,” Zidane said.
Madrid are the first team to achieve that feat since Bayern Mu-nich in 1976. Th is is their fourth title
in fi ve years, and their 13th overall.Cristiano Ronaldo has now won
fi ve in his great career, although he later cast a cloud over the night by hinting that he could soon leave the club, saying: “It was very nice to be at Real Madrid.”
However, it was Bale’s evening, and when asked if it was the best goal he had ever scored, he said: “I’d have to say it is, on the biggest stage in world football to score a goal like that is a dream come true.” — AFP
Real Madrid celebrating winning the Champions League fi nal with the trophy at the Real Madrid against Liverpool match at the NSC Olympic Stadium, Kiev, Ukraine on Saturday. Photo by Reuters
Australian Lee seizes LPGA lead in Michigan
Th iem gears up for Roland Garros with Lyon titleBY S H R I VAT H S A S R I D H A R Tennis Professionals title.
“I’m super happy. I fought really hard for this title,” Th iem said. “I’m really happy that I won. It’s always something special. It’s my 10th title, which is a great number. I have a little ‘decima’, I think.”
Th iem has eight clay court titles in his career and is seen as one of the few players capable of denying world No 1 Rafa Nadal a record-ex-tending 11th title at Roland Garros.
The Austrian snapped Nad-
al’s year-long winning streak of 50 consecutive sets when he beat the Spaniard in the Madrid Open quarter-fi nals earlier this month.
His tenacity and endurance will serve him well at the clay court Grand Slam that began yesterday.
Th iem was forced to play twice last Friday, coming through a three-setter in the semi-final against Dusan Lajovic after ear-lier completing his quarter-fi nal against Guillermo Garcia-Lopez
which had been suspended due to fading light the previous day.
The long hours on court ap-peared to tell as Th iem tamely ca-pitulated the fi rst set on Saturday, but he found a way back into the match and did not look back.
Th iem, twice a semi-fi nalist at the French Open, will have a day’s break before he begins his cam-paign at Roland Garros with a fi rst-round match against unseeded Belarussian Ilya Ivashka. — Reuters
MONACO: Formula One (F1) aims to have new engine regu-lations for 2021 drawn up by the end of June after a meeting with teams at the Monaco Grand Prix.
Commercial rights holders Liberty Media and the govern-ing Federation Internationale de l’Automobile sat down with teams for an update on future plans and Mercedes F1 boss Toto Wolff told reporters pro-gress had been made in some areas.
“I think on the engine regu-lations, we are pretty close on being able to tick the box,” said the Austrian when asked what had transpired from last Friday’s meeting in the Mediterranean principality.
“Th e only major thing which we need to solve is that we are still spending a lot on engine development and what we need to avoid is double spending over the next years, continuing to develop the current engine and also doing the new one.”
Wolff said concessions had been made from Mercedes’ standpoint, with acceptance that the MGU-H — one of the two motor generator units on the current V6 turbo hybrid en-gine — would have to go.
Th e engines would be loud-er, higher-revving and less fu-el-limited.
F1 announced in April it wanted to have cost caps and a more balanced distribution of revenues for the next cycle after the current team contracts and engine regulations expire at the end of 2020. — Reuters
F1 aims to agree 2021 engine rules by end-JuneBY A L A N B A L D W I N
67 to join a group sharing second on 206. She was joined by South Korea’s Kim In-kyung, who also posted a 67, and by England’s Jodi Ewart Shadoff and American Lindy Duncan, who both signed for 69s.
“I had a pretty solid day today (Sat-urday), made no bogeys,” said Lee, who is seeking a fourth LPGA title and her fi rst since 2016. She fi nished sec-ond in this event by a stroke last year.
Although play was halted for more than two hours by rain, Lee said the greens fi rmed up by the time she fi nished her round.
“I think just keeping it in play was pretty important today (Saturday),” she said. — AFP
Lee hitting from a bunker to the sixth green during the third round of the LPGA Volvik Championship on Saturday at Travis Pointe Country Club, Ann Arbor, Michigan. Photo by AFP
PARIS: Former Uefa president Michel Platini called on Fifa to lift his ban over a €1.8 million (RM8.35 million) payment af-ter Swiss prosecutors said on Saturday they had found no evidence so far to bring charges against him.
Platini’s lawyer Vincent So-lari claimed the former head of European football was now in the clear.
“Th ere are no charges; he will not be prosecuted,” Solari told AFP.
Platini said he had been vin-dicated after having “a lot thrown at me”, and called on Fifa to now end his exile from football.
“I hope that Fifa will have the courage and the decen-cy to lift my suspension,” the former France midfi elder said in a telephone interview with AFP. — AFP
Platini calls on Fifa to end his banBY E R I C B E R N AU D E AU & P H I L I P P E G R E L A R D
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Wall Street ahead — S&P 500, Dow fall as oil drop hurts energy; chipmakers boost Nasdaq
NEW YORK: The S&P 500 Index and the Dow Jones Industrial Average eased last Friday after a steep drop in oil prices pressured energy stocks, but losses were limited by gains in chipmakers and retail stocks. US crude oil tumbled 4% to settle at US$67.88 a barrel after Saudi Arabia and Russia said they were ready to ease supply curbs that have pushed prices to their highest since 2014. The S&P Energy Index slid 2.6% and registered its biggest daily percentage drop since early February, while Chevron dropped 3.5% and Exxon Mobil fell 1.9% and were among the biggest drags on the Dow and S&P 500. “It’s been a very rough week for oil, and that has weighed” on energy names, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. At the same time, the continued pullback in yields has pressured fi nancials, he said. The S&P 500 Banks Index fell 0.4% after US Treasury yields hit their lowest in three weeks. Stock markets last week also have been roiled by trade tensions with China, a US threat of imposing tariffs on imported cars and uncertainty over the US-North Korea summit.
US President Donald Trump said last Friday the summit with North Korean leader Kim Jong-un could still take place on June 12 as originally planned, a day after cancelling it. The Dow fell 58.67 points or 0.24% to 24,753.09; the S&P 500 lost 6.43 points or 0.24% to 2,721.33; and the Nasdaq Composite added 9.43 points or 0.13% to 7,433.85. For the week, the Dow was up 0.2%, the S&P 500 was up 0.3% and the Nasdaq gained 1.1% . The Nasdaq was boosted by chipmakers, including Broadcom, which rose 2.7%. Intel climbed 1.3%. A 20.2% surge in shares in Foot Locker boosted the S&P Consumer Discretionary index, which rose 0.2%, after the company reported a better-than-expected quarterly profi t and helped shares edge higher in Nike, which has a partnership with the footwear retailer. The S&P Retail Index rose 0.2%. Global markets — Malaysia snaps four sessions of fall; Indonesia gains further
BENGALURU: Malaysian shares rose more than 1% last Friday and snapped four straight sessions of fall, as the fi nance minister’s announcement that the government would pay all obligations on 1Malaysia Development Bhd (1MDB) debt calmed investors. The government will honour all payments on debt raised by insolvent state fund
1MDB, even though it is unhappy about money missing from the fund, said Finance Minister Lim Guan Eng. Malaysian stocks closed the session 1.2% higher, but the week was 3.1% lower, the biggest since September 2015, on concerns about worrying amounts of debts left behind by the previous government. Public Bank Bhd and Tenaga Nasional Bhd were the biggest boost with gains of 2.3% and 1.9% respectively. Among other Southeast Asian stock markets, Indonesian shares gave up early gains to close 0.5% higher, marking their fourth session of gains. Financials accounted for most of the gains with Bank Negara Indonesia rising 3.9% and Bank Central Asia climbing 0.5%. Bank Indonesia’s newly sworn-in governor promised last Thursday to focus on stabilising the rupiah in the near term and to be “more pre-emptive” and ahead of the curve on monetary settings. Investors welcomed the statement after weeks of weakness in local assets on the back of capital fl ight fears. The key Jakarta stock index closed the week 3.3% higher, the biggest since the week ended Dec 30, 2016. An index of the country’s 45 most liquid stocks was up 0.5% last Friday. Singapore shares closed 0.4% lower after data released earlier in the day showed that industrial production rose at a slower-than-expected pace in April month-
on-month. For the week, Singapore stocks declined 0.5%, in their second weekly drop. Philippine shares closed 0.1% lower, dragged down by fi nancial and real estate stocks. The peso fell to a fresh 12-year low after the central bank last Thursday announced its second cut in banks’ reserve requirement ratio in three months. The Philippine key stock index shed 0.3% this week. Vietnam shares closed 2.2% lower, while Thai stocks ended 0.5% higher. China’s major stock indices fell last Friday to post their worst week in less than one month, as sentiment soured after US President Donald Trump called off a planned June meeting with North Korean leader Kim Jong-un. The blue-chip CSI 300 index fell 0.3%, while the Shanghai Composite Index ended down 0.4%. Italian Prime Minister-designate Giuseppe Conte began assembling his cabinet last Thursday, with party leaders pushing for an 81-year Euro-sceptic economist to be given the pivotal post of economy minister. Italy’s president is opposing the appointee. Political risk also reared its head in Spain, where a threat of no-confi dence motions against Prime Minister Mariano Rajoy sent Spanish stocks and bond prices plunging. The pan-European FTSEurofi rst 300 Index rose 0.05% and MSCI’s gauge of stocks across the globe shed 0.29%. — Reuters
MarketsI N S I D E R M O V E S . T R A D I N G T H E M E S . E V E N T S . F O R E X
2 9
MONDAY MAY 28, 2018 • THEED G E FINANCIAL DAILY
Local events to watch out for today
While every eff ort is made to ensure accuracy, the information presented is not an exhaustive list and is not an offi cial record of shareholder fi lings. Direct and indirect share are combined due to space constraints. Readers who are interested should check the offi cial fi lings fi led with Bursa Malaysia. Note: * denotes Ace Market
AIRASIA GROUP (1,500,000) EMPLOYEES PROVIDENT FUND BOARD 21/5AMMB (1,000,000) EMPLOYEES PROVIDENT FUND BOARD 277,108,637 21/5AXIS REAL ESTATE 579,600 KUMPULAN WANG PERSARAAN 125,886,311 16, 21 & 22/5INVESTMENT TRUST (DIPERBADANKAN) BUMI ARMADA 3,000,000 EMPLOYEES PROVIDENT FUND BOARD 393,535,380 21/5CAHYA MATA SARAWAK 850,000 LEMBAGA TABUNG HAJI 102,178,300 22/5DAYANG ENTERPRISE (834,367) KUMPULAN WANG PERSARAAN 122,925,233 21 & 22/5 (DIPERBADANKAN) DIALOG GROUP (3,883,300) EMPLOYEES PROVIDENT FUND BOARD 489,321,016 21/5DIALOG GROUP (1,664,867) KUMPULAN WANG PERSARAAN 406,382,633 22/5 (DIPERBADANKAN) DIGI.COM (1,457,300) EMPLOYEES PROVIDENT FUND BOARD 1,226,580,470 21/5DUFU TECHNOLOGY CORP. 609,500 SUNG, CHENG-HIS 609,500 28/11/2017GAMUDA (2,596,100) EMPLOYEES PROVIDENT FUND BOARD 252,164,005 21/5IHH HEALTHCARE (6,767,000) EMPLOYEES PROVIDENT FUND BOARD 713,142,300 21/5IJM CORPORATION (600,200) KUMPULAN WANG PERSARAAN 193,041,900 14, 17, 18 (DIPERBADANKAN) & 21/5INARI AMERTRON 1,135,700 KUMPULAN WANG PERSARAAN 439,305,375 21 & 22/5 (DIPERBADANKAN) IOI PROPERTIES GROUP 4,600,000 VERTICAL CAPACITY 2,885,915,341 21 - 23/5KUALA LUMPUR KEPONG 644,300 EMPLOYEES PROVIDENT FUND BOARD 137,881,688 21/5LINGKARAN TRANS KOTA (800,000) EMPLOYEES PROVIDENT FUND BOARD 32,392,900 21/5 HMALAYAN BANKING 656,200 PERMODALAN NASIONAL 788,255,850 22/5MALAYAN BANKING 3,276,500 AMANAHRAYA TRUSTEES 3,749,919,647 22/5 - SKIM AMANAH SAHAM BUMIPUTERA MALAYSIAN RESOURCES 1,014,200 LEMBAGA TABUNG HAJI 305,034,046 22/5 CORPORATION MILUX CORPORATION (1,852,900) DINAMIK HARTANIAGA 23/5MISC 1,000,000 EMPLOYEES PROVIDENT FUND BOARD 276,219,511 21/5MRCB-QUILL REIT 1,000,000 EMPLOYEES PROVIDENT FUND BOARD 80,188,700 21/5MYNEWS (844,700) EMPLOYEES PROVIDENT FUND BOARD 38,196,400 21 & 22/5NEXTGREEN GLOBAL (2,000,000) DATO’ DR KOE SENG KHENG 3,950,602 22/5PETRONAS CHEMICALS (1,799,900) EMPLOYEES PROVIDENT FUND BOARD 569,010,000 21/5GROUP PUBLIC BANK (558,100) EMPLOYEES PROVIDENT FUND BOARD 543,671,100 21/5SERBA DINAMIK 1,531,300 EMPLOYEES PROVIDENT FUND BOARD 81,888,800 18/5SIME DARBY (2,169,500) AMANAHRAYA TRUSTEES 2,806,589,000 22/5 - SKIM AMANAH SAHAM BUMIPUTERA SIME DARBY (2,959,100) EMPLOYEES PROVIDENT FUND BOARD 745,140,410 21/5SIME DARBY PLANTATION 500,000 EMPLOYEES PROVIDENT FUND BOARD 947,118,131 21/5SIME DARBY PROPERTY (1,937,300) EMPLOYEES PROVIDENT FUND BOARD 713,870,810 21/5SUNWAY REAL ESTATE 3,000,000 AMANAHRAYA TRUSTEES 223,608,700 22/5INVESTMENT TRUST - SKIM AMANAH SAHAM BUMIPUTERA TDM (500,000) KUMPULAN WANG PERSARAAN 147,705,950 22/5 (DIPERBADANKAN) TELEKOM MALAYSIA 854,200 EMPLOYEES PROVIDENT FUND BOARD 667,389,046 21/5TENAGA NASIONAL 3,749,300 EMPLOYEES PROVIDENT FUND BOARD 698,196,682 21/5TENAGA NASIONAL 1,342,000 AMANAHRAYA TRUSTEES 471,713,000 22/5 - SKIM AMANAH SAHAM BUMIPUTERA TIGER SYNERGY (5,800,000) DATIN SEK CHIAN NEE 41,425,800 23/5VERTICE (2,300,000) VISTA LESTARI DEVELOPMENT 21,481,588 23/5WESTPORTS 715,400 EMPLOYEES PROVIDENT FUND BOARD 177,402,400 21/5YINSON 998,700 KUMPULAN WANG PERSARAAN 154,470,000 22/5 (DIPERBADANKAN) YINSON (991,800) EMPLOYEES PROVIDENT FUND BOARD 137,652,500 21/5YNH PROPERTY (3,371,000) DATO DR YU KUAN CHON 162,022,248 24/5YTL CORPORATION 8,500,000 YEOH TIONG LAY & SONS 5,247,838,594 21 & 22/5YTL POWER INTERNATIONAL 10,600,000 YEOH TIONG LAY & SONS 4,976,408,271 21 & 22/5
COMPANY SHARES ACQUIRED DIRECTOR/SUBSTANTIAL SHARES HELD TRANSACTION (DISPOSED) SHAREHOLDER AFTER CHANGE DATE
Insider moves (Filings on May 24, 2018)Insider Moves show what substantial shareholders are doing with their stakes, which could be a signal of their views on the company’s outlook.
Note: Run your fi nger down the left-hand side until you reach the country of origin you plan to exchange. Then move your fi nger until that line intersects with the vertical column of the currency you wish to buy. The fi gure is how much you will get. The above rates are subject to change and provided by Thompson Reuters.
Foreign exchange rates NZ EURO US SWISS BRIT CANADA BRUNEI S’PORE AUST M’SIA CHINA BANGL’H DENM’K UAE INA INDIA JAPAN NORWAY PHIL QATAR SAUDI SWEDEN THAI HK
This table shows stocks that are trading near their year low. This could suggest a build-up in selling momentum, or the possibility that bargain hunting could set in later.
This table shows stocks that are trading near their year high. This could suggest a build-up in buying momentum, or the possibility that profi t-taking activities could set in later.
Trading themes
Stocks closest to year high Stocks closest to year low
Making France more competitive globally
Making France labour market more fl exible
• Xinghe Holdings Bhd’s annual general meeting (AGM) at Balai Tunku Abdul Rah-man, Th e Royal Commonwealth Society, Jalan Birah, Damansara Heights, Kuala Lumpur at 9.30am.
• Lee Swee Kiat Group Bhd’s AGM at Setia City Convention Centre, Function Room 7, Jalan Setia Dagang AG U13/AG, Setia Alam Seksyen U13, Shah Alam at 9.30am.
• IHH Healthcare Bhd’s AGM at Hilton Hotel, Kuala Lumpur Sentral, Ballroom A and B, Level 6, Jalan Stesen Sentral at 10am.
• Central Industrial Corp Bhd’s AGM at Th e Royale Chulan Damansara, Th e Royale 2, Level 2, Jalan PJU 7/3, Mutiara Daman-sara, Petaling Jaya at 10am.
• Sino Hua-An International Bhd’s AGM at Th e Royal Selangor Golf Club, Banquet Hall, Jalan Kelab Golf, off Jalan Tun Razak, Kuala Lumpur at 10am.
• Mi Equipment’s prospectus launch at JW Marriott Kuala Lumpur, Bayu Room, Level 4 Bukit Bintang at 10am.
• CB Industrial Product Holding Bhd’s AGM at Th e Saujana Hotel Kuala Lumpur, Sau-jana Ballroom, Jalan Lapangan Terbang SAAS, Shah Alam at 10.30am. A press con-ference will be held at 12.30pm.
• Kerjaya Prospek Group Bhd’s AGM at Swiss Garden Residences Kuala Lumpur, Grand Lotus Room, Jalan Pudu, Bukit Bintang at 11am.
French President Emmanuel Macron has been cutting corporate tax, easing labour laws, and overhauling the vocational training systems to make France more competitiveinternationally.
Traditionally, mant French fi rms have avoided permanent contracts saying strict labourlaws make it hard to let workers go during tough times. Macron’s government sought to give companies more fl exibility to hire and fi re workers by overhauling the labour code.
MarketsF U T U R E S . M O N E Y M A R K E T . C O M M O D I T I E S
3 0 MONDAY MAY 28, 2018 • THEEDGE FINANCIAL DAILY MMMMMMaaaaaarrrrrrkkkkkkeeeeeettttttssssssF UF UF U T UT UT U R ER ER E SSS . M OM OM O N EN EN E YYY M AM AM A R KR KR K E TE TE T . CCC O MO MO M M OM OM O D ID ID I T IT IT I E SE SE S
CPO prices react to various factors including soyoil prices, weather conditions and stockpiles. Open interest shows either increasing or decreasing market participation.
Oil slumps as Opec and Russia consider output boost
METAL & PRECIOUS METALSTIN US$/TON KLTM 20,420 -130COPPER USC/IBS CMX 3.0775 -0.0185GOLD US$/TROY OZ CMX 1,303.70 -0.70PLATINUM US$/TROY OZ NYMEX 901.30 -11.30PALLADIUM US$/TROY OZ NYMEX 975.70 9.60SILVER USC/TROY OZ CMX 16.49 -0.14ALUMINIUM RMB/TON SHF 14,825 -25ZINC RMB/TON SHF 23,615 190
MONTH SETTLEMENT CHANGE VOLUME OPEN PRICE INTEREST
Klibor
Malaysian palm oil futures saw their sharpest fall in seven weeks last Friday evening, weighed down by weak export demand and losses in related edible oils on the US Chicago Board of Trade and China’s Dalian Commodity Exchange (DCE). Th e palm oil contract for August delivery on Bursa Malaysia Derivatives was down 1.5% to RM2,455 a tonne, its biggest drop since April 9. It earlier fell as much as 1.8% to RM2,447, but was still up 0.2% for the week in a third straight week of gains. “Th e market is down following DCE and poor exports,” said a Kuala Lumpur-based futures trader, adding that the market was also weighed down by a technical correction. Palm oil prices hit a seven-week top in the previous session tracking US soyoil strength and supported by a weaker ringgit. Malaysian shipments of palm oil products during May 1 to May 25 fell 16.6% from the corresponding period last year, according to independent inspection company AmSpec Agri Malaysia last Friday. Another data release by cargo surveyor Societe Generale de Surveillance last Friday showed exports in the same time period fell 13.5%. Full-month exports are seen weakening as Malaysia resumed its crude palm oil export tax at a 5% rate for May, after a four-month duty exemption to boost demand and reduce stockpiles. — Reuters
REGION GRADE A GRADE B GRADE C OER (RM/TON) OER (RM/TON) OER (RM/TON)
(IN RM/TON) MAY’18 JUN’18 JUL’18
CPO DELD 2,405 NO TRADE NO TRADEPK EX-MILL NO TRADE NO TRADE NO TRADECPKO DELD NO TRADE 3,613 NO TRADERBD P.OIL FOB NO TRADE NO TRADE NO TRADERBD P.OLEIN FOB NO TRADE NO TRADE NO TRADERBD P. STEARIN FOB NO TRADE 2,429 NO TRADE
MPOB Palm oil physical
Oil prices fell more than US$2 per barrel last Friday as Saudi Arabia and Russia discussed easing production cuts that have helped push crude prices to their highest since 2014. Global benchmark Brent crude futures declined US$2.35 or 3% to settle at US$76.44 a barrel. Th e global benchmark lost about 2.7% last week, its largest weekly drop since early April. Th e contract hit its highest since late 2014 at US$80.50 previous week. US West Texas Intermediate (WTI) crude futures slumped US$2.83 or 4% to fi nish at US$67.88 a barrel. For the week, WTI tumbled about 4.9%, its biggest loss since early February, a sharp course reversal after six weeks of gains. Th e premium of Brent to WTI hit US$8.75 per barrel in post-settlement trade, its widest since March 2015. — Reuters
Commodities
driven by positive sentiment from investors, including Chinese. — Bernama
CPO & Open Interest
CPO RM/tonne Open Interest
Jan 6, 2008 May 25, 2018
10000
57500
105000
152500
200000
1200
1950
2700
3450
4200
(-37)2,455
CPO vs Soyoil
CPO RM/tonne Soyoil US$/Ibs
Jan 6, 2008 May 25, 2018
0.3158(RM2,770/tonne)
2,455(-37)
0.000
0.175
0.350
0.525
1100
2425
3750
5075
6400 0.700
Th e US dollar rose against a basket of peers last Friday and was on pace to fi nish the week at its strongest since mid-November, as commodity-linked currencies fell following a slump in oil prices and as political concerns in Italy and Spain hurt the euro. Th e US dollar index, which measures the greenback against a basket of six currencies, was up 0.44% at 94.188, after hitting a high of 94.249, its strongest since mid-November. Th e index was up 0.6% for the week. Oil prices fell about US$2 last Friday as Saudi Arabia and Russia discussed easing supply curbs that have helped push crude prices to their highest since 2014. “We are seeing a bit of a rebound on the crosses, particularly against the commodity-linked currencies,” said an analyst. — Reuters
US dollar rises as commodity-linked peers slip
Th e FBM KLCI futures (FKLI) contracts on Bursa Malaysia Derivatives ended higher last Friday, in tandem with the better underlying cash market. Spot month May 2018 and June 2018 rose 25.5 points each to 1,801 and 1,798.5 respectively; September 2018 added 17.5 points to 1,796; while December 2018 gained 23.5 points to 1,795. Turnover rose to 15,314 lots from last Th ursday’s 14,825 lots, while open interest widened to 45,422 contracts from 44,598 contracts. Th e underlying benchmark FBM KLCI ended 21.74 points higher at 1,797.4. Hermana Capital Bhd chief cxecutive offi cer and chief investment offi cer Datuk Dr Nazri Khan Adam Khan said the FBM KLCI was targeted to hit the 1,800 level this week,
KUALA LUMPUR: Th e FBM KLCI recovered from a four-day slide last Friday, supported by bargain-hunting activities after the sell-off . Th e benchmark index closed 21.74 points or 1.22% higher at 1,797.4. Market breadth was positive with gainers outpacing losers at 506 versus 397. Volume stood at a total of 2.2 billion shares valued at RM2.95 billion. Th e ringgit was trading at 3.9808 against the greenback at the time of writing. Malacca Securities Sdn Bhd senior analyst Kenneth Leong said the rebound on the back of bargain-hunting activities could be short-lived. “Th ere might still be some weakness in the local stock market over the near-term period,” Leong said. “Foreign funds are still offloading Malaysian equities given the uncertainty over the new government policies, but the weakness in the ringgit too has played a role”. Finance minister Lim Guan Eng earlier last Friday said the government will honour all payments on the debt raised by 1Malaysia Development Bhd, although the new government was unhappy about money missing from the state fund. Guan Eng hoped this will reassure the fi nancial markets that the “government knows what it is doing and it is market-friendly and follows international fi nancial norms.” Gaming counter Genting Malaysia Bhd and banking stocks Public Bank Bhd and CIMB Group Holdings Bhd anchored the gain in the key index last Friday. — by Tan Xue Ying
FBM KLCI snaps four-day losing streak on bargain hunting
KLCI CHANGE CLOSE VOLUME POINTS (RM) (RM) ('000)PUBLIC BANK 3.59 0.560 24.920 9856.2AXIATA GROUP 3.29 0.220 4.520 8758.2GENTING MALAYSIA 2.84 0.290 5.220 14497.7TENAGA NASIONAL 2.62 0.280 15.040 15199.0GENTING 1.66 0.260 8.700 6587.9IHH HEALTHCARE 1.09 0.080 6.260 9310.9CIMB GROUP 1.08 0.070 6.120 20641.1SIME DARBY 0.90 0.080 2.760 20571.4PETRONAS GAS 0.59 0.180 18.020 994.6HAP SENG CONSOLIDATED 0.49 0.120 9.850 351.5MAXIS 0.39 0.030 5.790 3377.8PPB GROUP 0.27 0.140 20.000 1275.9YTL CORPORATION 0.27 0.015 1.010 37462.4PETRONAS CHEMICAL -0.26 -0.020 8.320 12784.3DIGI.COM -0.51 -0.040 4.510 3947.4MISC -0.74 -0.100 5.960 2947.9SUB-TOTAL 17.56 OTHERS 4.18 GRAND TOTAL 21.74
STOCK VOLUME CHANGE CHANGE CLOSE HIGH LOW ('000) (%) (RM) (RM) (RM) (RM)
Table above is from Reuters Volume break 3x 5-day average volume, meaning the total number of shares traded for a particular counter on the previous trading day is more than triple the average volume for the last 5 trading days. The table captures the build-up of interest in these companies and is thus a gauge of market expectations for these counters.
UNUSUAL M ARKET ACTIVITIES
* How stock price changes affected the index on the previous trading day
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Moving average - 20-dayKL Composite Index
Volume (’mil)
Jan 2, 2008 May 25, 2018
1,797.40(+21.74)
1,843.27
820.0
1122.5
1425.0
1727.5
2030.0
0
300
600
900
1776.0
1778.6
1781.2
1783.8
1786.4
1789.0
1791.6
1794.2
1796.8
1799.4
1802.0
17:1516:3015:3014:3012:4511:3010:309:308:45
Index point
KL Composite Index
KLCI futures1,801.00
(+25.50)
1,797.40(+21.74)
MAY 18 1,801.00 25.50JUN 18 1,798.50 25.50SEP 18 1,796.00 17.50
There was another life that I might have had, but I am having this one. — Kazuo Ishiguro
