MBSB Q4 profit jumps three times on expected credit loss writeback

PETALING JAYA: Malaysia Building Society Bhd’s (MBSB) net profit tripled to RM356.69 million for the fourth quarter ended December 31, 2019 against RM117.96 million in the same quarter a year ago, due to the expected credit loss writeback.

Revenue was up 15.3% to RM784.14 million from RM680.37 million.

For the full-year period, MBSB’s net profit expanded 11.6% to RM716.9 million from RM642.4 million, while revenue increased 5.2% to RM3.01 billion from RM2.86 billion.

During the year, MBSB’s net impaired loans, financing and advances saw an improvement of 0.05% to 2.34% in FY19 compared to 2.39% in FY18.

However, net profit margin regressed slightly to 2.89% in FY19 compared to 3.06% in FY18 following the overnight policy rate (OPR) cut in May 2019.

MBSB’s common equity tier-1 capital ratio stood at 19.24% as at December 31, 2019.

The group’s cost-to-income ratio improved to 28.37% from 29.53% in FY18. Operating profit stood at RM1.01 billion, higher than the RM970 million in FY18.

In addressing the present economic challenges, MBSB group president & CEO Datuk Seri Ahmad Zaini Othman said the group takes cognisant of the unfavourable factors currently affecting the economy, especially the Covid-19 virus and the political landscape.

“We have taken the necessary steps to manage these risks as well as putting in place the initiatives to accommodate customers who are distressed by the negative impact of Covid-19. Our business diversification into other sectors for example, renewable energy has also shown results as we have granted financing facilities amounting to over half a billion ringgit to certain key players.”

source https://www.thesundaily.my/business/mbsb-q4-profit-jumps-three-times-on-expected-credit-loss-writeback-MC2062349

Macau gaming revenues tumble 87.8% in Feb over coronavirus impact

HONG KONG: Gambling revenue in Macau plunged 87.8% in February year-on-year, with casinos shuttered for two weeks in the world's biggest casino hub as authorities imposed a raft of measures to keep visitors away to contain the coronavirus outbreak.

February's figure of 3.104 billion patacas ($386.74 million) was worse than analyst expectations of a drop of around 80%.

While Macau authorities gave the greenlight for casinos to reopen from Feb. 20, casino executives and residents say revenue will remain badly crimped in the Chinese territory's 41 casinos and for the businesses dependent on them because of the health restrictions and strict entry regulations on tourists.

Macau makes over 80% of its revenues from casinos but tourist visits have all but dried up. - Reuters

source https://www.thesundaily.my/business/macau-gaming-revenues-tumble-878-in-feb-over-coronavirus-impact-DC2062243

Blip or bust: Coronavirus economic impact still in doubt

PARIS: Markets have shuddered as the coronavirus spreads worldwide, but analysts doubt it will plunge economies into a crisis like the one that followed the 2008 Lehman Brothers investment bank failure.

Where will the market slide end?

Stock markets held up fairly well in the first weeks of the coronavirus outbreak in China, but fell sharply when a large number of cases were reported in Italy. In one week more than half a year of gains were wiped out in a brutal swing reminiscent of the financial crisis more than a decade ago.

Yet analysts note that such abrupt market corrections -- a swift drop of at least 10 percent from a recent peak -- have happened nearly every year over the past decade.

"Drops of 10 to 20 percent, that's nothing special," said Alexandre Hezez, Group Chief Investment Officer at asset manager Richelieu Gestion.

But the shock wave differs from those felt in 2008, which ravaged the financial sector before paralysing the broader economy, and in 2000 when the internet bubble burst.

This time, stock markets faced "an external shock," Hezez said. "If investors do not see a political, medical and monetary response, the market could fall lower still," he forecast.

Christian Parisot at the Aurel BCG brokerage felt however that "central bankers will keep us from arriving at that point."

And the real economy?

Growth forecasts for the first quarter of 2020 and the year as a whole have been lowered by most economists, and that is based on a fairly limited impact from the virus leading to a rebound in the second quarter.

The slowdown will clearly be sharper in China. The International Monetary Fund (IMF) has revised its growth forecast for the world's second biggest economy down from 6.0 percent to 5.6 percent, and Moody's expects it to be weaker still, at 5.2 percent.

That is certain to affect other countries, so Swiss bank Credit Suisse has trimmed its 2020 global growth forecast by 0.2 percentage points to 2.2 percent.

Countries such as Germany that export a lot to China will probably be hit hard, and some others could fall into recession.

Japan is a case in point, given a drop in output already late last year, while a mini-rebound in Italy, the European country hit hardest by the virus so far, now appears to be in trouble.

In 2019, Italy's economy, the third biggest in the eurozone, grew by just 0.2 percent.

Across the Atlantic however, growth in the United States is fairly strong, owing to resilient consumer spending on the back of "solid job growth and real wage gains," noted Sara Johnson, director of the global economic unit at IHS Markit.

In 2009, the world suffered an overall recession, with global gross domestic product (GDP) contracting by more than three percent.

Could things get worse?

"The longer this goes on the more people will become afraid, which will weaken confidence," said Sylvie Matelly, deputy director of the French Institute for International Relations and Strategic Affairs.

"There will be quarantines or cities blocked, and that means less economic activity and more ruptures in supply chains," she added.

Johnson felt that "the danger is that the outbreak spreads more widely and rapidly than we expected, leading to production shutdowns and travel restrictions outside of the Asia Pacific region."

While she believes that "financial markets have over-reacted to the downside risks to the global economy," Johnson noted there is a danger "that reaction could have adverse consequences" to it, nonetheless.

Matelly said that could happen if the market panic sparked runs on banks in China or other countries hit hard by the coronavirus where government finances are fragile.

"That is the scenario that would lead to a very serious economic crisis," she warned.

But it's not certain such a scenario will come to pass.

"The hypothesis of a quick rebound" in the global economy has been discounted, said Christian Parisot.

But "that does not call into question the hypothesis that things will improve" even if the outbreak wreaks havoc with the economy in the first half of the year and not just the first quarter," he added. - AFP

source https://www.thesundaily.my/business/blip-or-bust-coronavirus-economic-impact-still-in-doubt-BC2062164

IHH Q4 profit plunges 92% to RM40m

KUALA LUMPUR: IHH Healthcare Bhd fourth-quarter net profit plunged 92% to RM40.6 million, from RM509.4 million due to foreign exchange losses and higher finance costs as additional loans were taken for the Fortis acquisition, working capital and swapping of Acibadem’s non-Lira loans to Lira loans upon refinancing and the adoption of MFRS 16 Leases.

Revenue was 21% higher at RM3.8 billion, from RM3.2 billion previously on sustained organic growth at existing operations and contributions from Gleneagles Hong Kong Hospital and Acibadem Altunizade Hospital, both opened in March 2017.

Amanjaya Specialist Centre and Fortis Healthcare, acquired in October 2018 and November 2018 respectively, also contributed to the higher revenue, the group stated in its Bursa filing.

IHH declared a first and final dividend of 4 sen per share for FY19 to be paid on April 30, 2020.

For FY19, IHH’s net profit fell 12.1% to RM551. 5 million, from RM627.7 million due to a RM200 million impairment loss from Global Hospitals which was acquired in 2015.

Revenue was 29.4% higher at 14.9 billion from RM11.5 billion previously.

The group’s balance sheet remained strong as at end-December 2019, with net cash generated from operating activities for the twelve months of RM2.4 billion and an overall cash balance of RM4.7 billion.

Net gearing edged up to 0.15 times, from 0.10 times in FY18 on strategic investments including Fortis in India.

Looking ahead, IHH managing director and CEO, Dr Kelvin Loh said the group will pursue a geographical cluster strategy for growth across its network to achieve greater economies of scale while delivering better patient services.

That said, Loh acknowledged the Covid-19 outbreak to have an impact on the global economy including markets where IHH operates in as medical tourism slows and patients delay non-emergency treatments.

source https://www.thesundaily.my/business/ihh-q4-profit-plunges-92-to-rm40m-EE2060053

TNB posts higher Q4 net earnings, pays record dividend of RM1

KUALA LUMPUR: Tenaga Nasional Bhd (TNB) recorded net earnings of RM653.3 million for the fourth quarter ended Dec 31, from a net loss of RM134.3 million a year ago, due to the impairment of the cost of investment in an associate of RM304.7 million.

Revenue stood lower at RM12.2 billion, from RM12.5 billion, due to the decrease in total sales of electricity of RM498.8 million recorded during the quarter.

The group has approved a final single tier dividend of 20 sen per share, raising the single tier dividend total to 50 sen per share for FY19, which translates to a dividend payout ratio of 56%.

In addition, TNB’s board also approved a special dividend of 50 sen per share, bringing the total dividend per share to RM1, amounting to RM5.69 billion for this financial year. This marks TNB’s highest dividend payout to date.

For the full year, TNB’s net profit rose 21.6% to RM4.5 billion from RM3.7 billion, on the recognition of the impairment as well as on a foreign currency translation gain of RM200.6 million.

Revenue for the period increased by 1.1% to RM50.9 billion from RM50.4 billion, consistent with the increase in total sales of electricity.

Sales in electricity for the group increased 3.5% in the reporting period to RM49.02 billion, from RM47.36 billion in 2018.

TNB president and CEO Datuk Seri Amir Hamzah Azizan (pix) described the group’s financial performance in FY2019 as “reasonable” amid operational challenges faced by TNB’s generation business in the last quarter, resulting in a lower contribution to the group.

On TNB’s international business, Amir said the turnaround exercise of assets in Turkey and India has led to a return of profitable contribution from the associates.

Following impairments taken out on TNB’s asset in India (GMR Energy Ltd) in 2018, the company is undergoing a restructuring, primarily through asset monetisation, while TNB’s UK investments are showing potential upsides due to technology enhancement initiatives currently being undertaken.

Looking ahead, Amir said that despite the economic challenges, the group’s performance for FY20 is expected to remain resilient.

source https://www.thesundaily.my/business/tnb-posts-higher-q4-net-earnings-pays-record-dividend-of-rm1-NK2059917

CIMB’s Q4 earnings drop 24%, declares 12 sen dividend

KUALA LUMPUR: CIMB Group Holdings Bhd saw a 24% drop in its net profit for the fourth quarter ended Dec 31, 2019, to RM848.6 million, from RM1.1 billion in the previous corresponding quarter due to a decline in non-interest income (NOII) and a lower gain on a non-performing loan sale during the quarter.

Revenue stood at 4.52 billion, 11% higher than RM4.1 billion previously.

The group declared a second interim net dividend of 12 sen per share to be paid via cash.

For FY19, the total dividend amounted to 26 sen per share or RM2.55 billion, translating to a higher dividend payout ratio of 56%.

For the full year, the group’s net profit declined 18.3% to RM4.6 billion, from RM5.9 billion, while revenue went up 2.4% to RM17.8 billion, from RM17.4 billion a year ago.

FY19 operating income grew 8.2% year-on-year (yoy) to RM17.8 billion, underpinned by growth in net interest income (NII) and NOII.

NII grew 6.3% yoy to RM12.66 billion from a 6.7% improvement in loan growth, while the 12.9% improvement in NOII to RM5.14 billion came largely on the back of improved capital market activity.

The gross loan growth of 6.7% was attributed to strong growth posted by Thailand and Malaysia. Total deposits were 5.8% higher yoy, while the loan to deposit ratio stood at 92% from 91.2% at Dec 31, 2018.

Net interest margin (NIM) was relatively flat at 2.46%, with some spread compression in Malaysia and Thailand, partially offset by an improvement in Indonesia.

As at Dec 31 2019, CIMB Group’s total capital ratio stood at 16.8% while the Common Equity Tier 1 capital ratio stood at 12.9%.

CIMB group CEO Tengku Datuk Seri Zafrul Aziz said the group’s FY19 performance was within expectations amid numerous macro challenges.

“2019 would be a year of investments under Forward23 and we are happy to see these investments beginning to bear fruit. We are also pleased that our underlying operating income showed robust growth.

“I am also happy to note that for Malaysia, we are on track in disbursing our RM15-billion allocation to SMEs, and in assisting the B40 through our RM12-billion allocation for financing and related products,” he said in a statement.

Moving forward, Zafrul added that the group continues to maintain a cautious stance for 2020 in view of sustained global economic headwinds, trade tensions, the threat from the Covid-19 outbreak as well as potential further interest rate cuts across the region.

“Tangible progress has been made in our Forward23-related investments to future-proof the group. The year 2020 will be a year of continued investment in our people and technology, to ensure the group’s resilience in an increasingly challenging operating landscape.

“However, we remain cautiously optimistic that in 2H20, the Malaysian economy, in particular, will improve from the recently announced stimulus package and other private sector initiatives,” he said.

source https://www.thesundaily.my/business/cimb-s-q4-earnings-drop-24-declares-12-sen-dividend-CK2059848

Shopping malls association to work on reducing tenants’ overheads

KUALA LUMPUR: The Malaysia Shopping Malls Association has urged members to work with their tenants and retailers for realistic and win-win solutions to reduce monthly overheads and/or enhance turnover as suggested in the 2020 Economic Stimulus Package to reduce the impact of COVID-19.

Interim Prime Minister Tun Dr Mahathir Mohamad, when announcing the stimulus package yesterday, called on industry players such as hotels and shopping malls to offer discounts and reduce rentals to their tenants respectively, in the spirit of shared responsibility to overcome the current challenges.

COVID-19 is the official name for the 2019 novel coronavirus given by the World Health Organisation.

The association said the issue can also be tackled in ways other than rental reduction, such as direct marketing assistance and closer joint collaboration on sales and promotions, which will increase footfall and sales turnover, thereby directly spurring the economic cycle.

“We further reiterate that shopping mall members will need to analyse and monitor data and trends and to curate appropriate and targeted action plans,” it said in a statement here today.

Also, as the impact differs for different categories of business operations, mall members need to tailor a different assistance programme that is most suitable and for the best results, it said.

“We recognise that each mall has its individual and unique business environment and such measures have to be tailored and implemented on a case-by-case basis.

“We are confident that shopping malls will evolve and enhance ourselves to cater to the constantly changing trends and business environment, and coupled with close collaboration with our retailers, we will remain resilient and overcome the hurdles together,” said the association.

Among the measures in the RM20 billion stimulus package that have a direct impact on shopping malls are: 15 per cent discount in monthly electricity bills from April to September 2020, option for all employees to reduce Employee Provident Fund (EPF) contribution by 4 per cent to 7 per cent from April to December 2020, and tax deduction of up to RM300,000 on renovation and refurbishment cost. -Bernama

source https://www.thesundaily.my/business/shopping-malls-association-to-work-on-reducing-tenants-overheads-EK2059710

AirAsia X defers A330neo deliveries as virus pressures frail finances

KUALA LUMPUR/SYDNEY: Malaysian long-haul budget airline AirAsia X said it will defer delivery of 78 Airbus SE A330neo planes and consider other changes to reduce its fleet, as the coronavirus outbreak adds pressure on the loss-making carrier.

AirAsia X said late on Thursday it might sell two A330s that could fetch up to $100 million and return five others to lessors early, adding it was already in negotiations with lessors about a targeted 30% cut in lease rates.

The airline cancelled 600 flights for March, according to an investor presentation published after it reported a higher quarterly net loss. AirAsia X flagged lower forward bookings and pressure on fares in the presentation.

The virus has deepened the challenges facing the airline and sister carrier AirAsia Group Bhd, whose Chief Executive Tony Fernandes and Chairman Kamarudin Meranun have both stepped aside for at least two months amid investigations into a corruption scandal. Airbus was alleged to have paid a $50 million bribe for plane orders.

Brendan Sobie, a Singapore-based independent aviation analyst, said AirAsia X was highly exposed to China and other markets in North Asia significantly impacted by the coronavirus but the carrier was also in a weak financial position prior to the crisis.

AirAsia X shares fell by 5% on Friday to a record low after it posted a net loss of 95.8 million ringgit ($22.62 million) in the quarter ended Dec. 31, increasing from an 88.1 million ringgit loss a year ago.

Flights to and from mainland China accounted for about 30% of AirAsia X’s capacity before the outbreak of the virus. It has a fleet of 24 A330 planes.

The carrier last August reached a revised deal with Airbus to take 78 A330neos and 30 long-range A321XLR narrowbodies, down from earlier plans for 100 A330neos. AirAsia X is Airbus’ biggest customer for the A330neo, a more fuel efficient version of the older A330 model.

AirAsia X said delivery of the A330neos would be deferred and it would move toward a dual-fleet strategy with A321s set to replace its A330s on routes of four to six hours when demand recovers.

“We believe advanced aircraft technology has changed business dynamics as we can now fly narrow body aircraft longer,“ AirAsia X Malaysia CEO Benyamin Ismail said in a statement.

An AirAsia X spokeswoman said the airline was evaluating market conditions and had yet to confirm the duration of the A330neo delivery deferrals. An Airbus spokesman said the manufacturer does not comment on delivery schedules for individual airlines. -Reuters

source https://www.thesundaily.my/business/airasia-x-defers-a330neo-deliveries-as-virus-pressures-frail-finances-AK2059673

Global corporate earnings to stagnate at best in 2020 -Citigroup analysts

BANGALORE: Major global companies will see no growth in earnings in 2020, analysts from U.S. bank Citigroup have predicted, the latest sign of a reining in of expectations for commercial performance this year as the coronavirus continues to spread.

The note from the bank, predicting that global corporate earnings per share would be flat and might even fall this year, followed a similar downgrading of expectations by Goldman Sachs for U.S. companies on Thursday.

The fast-spreading virus has sparked fears of a global recession and an end to a decade-long bull run for stock markets. Most major markets on Friday were heading for their worst week since the 2008 financial crisis.

“Maybe even flat EPS is too optimistic,“ Citigroup analyst Robert Buckland said in a note published late on Thursday.

“If the virus slows global economic growth to 2% in 2020, our models suggest global EPS could contract around 10%,“ he added.

Another U.S. peer, Bank of America, on Thursday cut its world growth forecast to 2.8%, the lowest since 2009.

Citigroup cut its end of year target for the MSCI all country world stocks index to 660 points, down from a previous 690. The index has lost 9.4% so far this week to trade at 516 points on Friday. -Reuters

source https://www.thesundaily.my/business/global-corporate-earnings-to-stagnate-at-best-in-2020-citigroup-analysts-XK2059653

BCorp to dispose of Four Seasons Hotel in Kyoto for RM1.87b

PETALING JAYA: Berjaya Corp Bhd (BCorp) has proposed to dispose of its interest in the Four Seasons Hotel & Hotel Residences Kyoto, Japan to Godo Kaisha Tigre for a cash consideration of 49 billion yen (RM1.87 billion) via its subsidiary, Kyoto Higashiyama Hospitality Assets Tokutei Mokuteki Kaisha (KHHA).

According to the group’s Bursa disclosure, it entered into a real property trust beneficial interest purchase and sale agreement with Tigre for the proposed disposal by KHHA on the hotel component of the Four Seasons Kyoto.

Subsequently, BCorp’s other subsidiary, Berjaya Kyoto Development Kabushiki Kaisha (BKD), will leaseback the hotel from Tigre for 17 years to maintain the present arrangements and operations of the hotel.

Both KHHA and BKD are 100%-owned subsidiaries of Berjaya Kyoto Development (S) Pte Ltd, which in turn is held by BCorp and its listed subsidiary Berjaya Land Bhd, each holding 50% equity interest.

BCorp estimated that the monetisation of its investments in the hotel will result in a gain exceeding RM600 million.

On the transaction, BCorp’s executive chairman, Tan Sri Vincent Tan commented that he is happy to dispose of the three and a half year old hotel for a huge gain.

“Together with the 23 units of the Four Seasons Kyoto residences which were already sold and the estimated profit from the potential sale of the remaining 34 units of the residences, the BCorp group is expecting to realise a total net gain of about RM1.55 billion with gross cash inflows surpassing RM3.22 billion for our entire Four Seasons Hotel and Residences project in Kyoto,” he said in a press statement.

Besides the hotel, the group developed 57 units of residences, also operated under the Four Seasons Hotel & Hotel Residences, Kyoto brand name. These residences are not part of the disposal.

The proposed disposal is expected to close in mid-March 2020.

source https://www.thesundaily.my/business/bcorp-to-dispose-of-four-seasons-hotel-in-kyoto-for-rm187b-CK2059325

FGV back in the black for 4Q, net earnings at 76m

KUALA LUMPUR: FGV Holdings Bhd returned to positive territory for the fourth quarter ended Dec 31, posting a net profit of RM75.8 million, from a net loss of RM209.2 million in the previous corresponding quarter due to improved crude palm oil (CPO) margins, and significantly reduced operating costs as a result of tighter controls and improved efficiencies across the group.

Revenue, however, declined 2.4% to RM3.15 billion, from RM3.23 billion previously, due largely to lower yields, which is in line with the national average, as a result of the lag effect from prolonged dry weather and lower rainfall in late 2018 and early 2019.

For the quarter, the group recorded lower impairment losses amounting to RM17 million, as compared to RM151 million in 4Q2018.

CPO prices were recognised at RM2,159 per metric tonne (MT), compared to RM2,055 per MT before.

FGV declared a final dividend payment of 2 sen per share for FY19 ended Dec 31, which is expected to be paid by mid-July 2020.

FGV group CEO Datuk Haris Fadzilah Hassan said he was pleased to report an improvement in the group’s earnings on the back of its aggressive transformation programme.

“We reached far into the core of the group to effect change at every level. Our intention is to institutionalise this change, to protect and enhance the interests of the owners of this company, now and in the future,” he said.

For the full year, the group posted a narrowed net loss of RM242.2 million, from RM1.08 billion recorded a year before, while revenue stood 1.5% lower at RM13.3 billion, from RM13.5 billion previously.

CPO prices for FY19 were realised at RM2,021 per MT, down 11% compared to RM2,282 per MT in FY2018 due to improved full-year CPO ex-mill costs which averaged at RM1,503 per MT compared to RM1,800 per MT in FY2018.

Group-wide cost rationalisation and improved procurement processes resulted in savings of approximately RM170 million for the full year, FGV noted.

Moving forward, Haris said FGV’s plans to diversify its revenue streams is well underway., with the group expecting to see additional revenues of RM45 million from its integrated farming, renewable energy and animal feed businesses in FY20.

“While palm oil will remain our mainstay, this is an exciting diversification that will bring us and our smallholder partners added revenue and opportunities for growth,” Haris said.

source https://www.thesundaily.my/business/fgv-back-in-the-black-for-4q-net-earnings-at-76m-DK2059342

Sime Darby Plantation in the red in Q4, FY19

PETALING JAYA: Sime Darby Plantation Bhd posted a net loss of RM45 million in the fourth quarter ended Dec 31, 2019 (Q4), largely due to lower fresh fruit bunch (FFB) production and lower contribution from Sime Darby Oils (downstream) operations.

There is no comparative for Q4 and the financial year ended Dec 31, 2019 (FY19) due to the change in the financial year end from June 30 to Dec 31.

However, for comparison, the net loss was against a net profit of RM172 million in the same quarter last year.

With the group’s discontinuing operations recording a net loss of RM13 million, the group’s net loss totalled RM58 million in Q4 against a net profit of RM129 million in the corresponding quarter of the previous year.

It posted a revenue of RM3.38 billion in Q4.

For FY19, Sime Darby Plantation posted a net profit of RM122 million from its continuing operations. For comparison, this was lower compared to its net profit of RM729 million in the corresponding period of the previous year, attributable to lower crude palm oil (CPO) and palm kernel (PK) prices realised, as well as lower FFB production in the year under review.

The group’s discontinuing operations, which comprise its Liberian operations and joint ventures in the oleochemical and biomass businesses, recorded a net loss of RM322 million mainly arising from the impairment of assets in Liberia. Accordingly, the group posted a net loss of RM200 million for the full year compared to a net profit of RM523 million in the previous year.

Its FY19 revenue stood at RM12.06 billion.

Chairman Tan Sri A Ghani Othman said FY19 proved to be challenging for its plantation industry and Sime Darby Plantation as it continued to face unfavourable weather conditions and the low CPO and PK prices for the most part of the year.

“However, we are progressing into the new year 2020 with renewed enthusiasm. CPO prices have rebounded towards the end of 2019 and this may offer some respite to the industry players if the price recovery is sustained,” he said in a statement.

It is cognisant that factors beyond its control, such as the recent outbreak of the Covid-19 in China, may have negative implications on global economic growth and demand for palm oil.

“The impact from restrictions placed by India on imports of refined palm oil will also be negative to the industry. Nevertheless, this will not affect our focus and determination to improve our financial performance as we continue to rely on the group’s resilience,” he added.

Group managing director Mohamad Helmy Othman Basha is confident that the group remains on track in its strategies of increasing profit contribution from its downstream segment, improving operational efficiencies in its upstream operations as well as in maintaining disciplined management of cost and liquidity.

On outlook, Sime Darby Plantation said the expectation of a slowdown in crop production in Malaysia and Indonesia in 2020 has resulted in the price recovery of palm products. However, the rise in prices is expected to be moderated over concerns on the global economic growth with the outbreak of the Covid-19.

Moreover, restrictions placed by India on imports of refined palm oil may have an impact on these prices. Despite these uncertainties, other factors such as biodiesel mandates in Malaysia and Indonesia are expected to keep palm product prices resilient in the near term.

source https://www.thesundaily.my/business/sime-darby-plantation-in-the-red-in-q4-fy19-KK2059149

Huawei to open European 5G factory in France

PARIS: Chinese telecom giant Huawei said Thursday that it would begin manufacturing radio equipment for next-generation 5G networks in France, its first such facility outside of China.

Huawei, which has become caught up in a bruising trade war between Beijing and Washington, has been attentively courting Europe as it tries to offset lost business in the US.

Its planned 200-million-euro ($218-million) French facility will employ 500 people and produce equipment for the European market, Huawei chairman Liang Hua told a press conference in Paris.

“The site will begin manufacturing radio equipment and then branch out to other products in future, depending on the needs of the European market,“ Liang said.

He did not say where the factory, which will produce around one billion euros worth of equipment a year, would be located nor when it would begin production.

Liang said the company was in discussions with the French government and local authorities about the project.

5G, or fifth generation, networks offer vastly higher cellular communication speeds compared with the 4G networks currently used widely, which could unlock a variety of new applications.

The US has been pressuring European allies to exclude Huawei from their 5G networks, but France and Britain have so far refused to be swayed.

French authorities said earlier this month they would not discriminate against the company but would nonetheless prioritise European operators, such as Nokia or Ericsson.

The US contends that Huawei is too close to the Chinese government and that its equipment could be used as a tool for spying -- a contention the company has denied.

A US court last week dismissed a challenge by Huawei to a ban on the purchase of its products by US federal agencies. -AFP

source https://www.thesundaily.my/business/huawei-to-open-european-5g-factory-in-france-NL2058960

Virus to cost world tourism at least $22 bn: global tourism body

MADRID: The deadly coronavirus epidemic will cost world tourism at least $22 billion owing to a drop in spending by Chinese tourists, the head of the World Travel and Tourism Council said Thursday.

The COVID-19 epidemic has killed more than 2,760 people, mostly in China -- where it first emerged in December -- and infected more than 81,000 in over 45 countries.

“It is too soon to know but the WTTC has made a preliminary calculation in collaboration with (research firm) Oxford Economics which estimates that the crisis will cost the sector at least $22 billion,“ Gloria Guevara told El Mundo daily.

“This calculation is based on the experience of previous crises, such as SARS or H1N1, and is based on losses deriving from Chinese tourists who have not been travelling in recent weeks,“ she said.

“The Chinese are the tourists who spend most when they travel.”

The loss figure, which equates to about 20.2 billion euros, is the most optimistic scenario envisaged by the study which was published on February 11 by Oxford Economics, taking the hypothesis of a 7.0 percent drop in overseas trips by Chinese nationals.

But the losses could more than double, reaching as much as $49 billion if the crisis lasts as long as the SARS outbreak, which erupted in November 2002 and was brought under control in July 2003.

And it could spiral to $73 billion if it lasted longer than that, Oxford Economics said.

The economies most likely to suffer would be those most dependent on Chinese tourism, such as Hong Kong and Macau, Thailand, Cambodia and the Philippines, researchers found.

On Wednesday, the WTO urged countries to avoid taking health measures that would cause “unnecessary interference with international traffic and trade” saying travel restrictions needed to be proportionate to ensure they did not have “negative repercussions on the tourism sector”. -AFP

source https://www.thesundaily.my/business/virus-to-cost-world-tourism-at-least-22-bn-global-tourism-body-NL2058942

IMF, World Bank funds ready to fight virus outbreak: spokesman

WASHINGTON: The International Monetary Fund and World Bank are ready to provide countries in need with immediate emergency funding to fight the coronavirus outbreak, a spokesman said on Thursday.

While they have yet to receive a request for aid, the institutions “have now developed contingency plans. We have various financial instruments that could be used,“ IMF spokesman Gerry Rice said at a press conference.

As the epidemic has spread beyond China, shuttering production and closing schools in Japan, economists are increasingly worried about a slowdown in the global economy.

“We have various financial instruments that could be used to support countries with balance of payment problems that arise from epidemics or natural disasters,“ Rice said, noting that the lenders rapidly deployed funds during the Ebola epidemic.

He singled out China, saying the IMF remains “very supportive” of the country where the coronavirus outbreak started with efforts to tackle its spread.

The fund and the World Bank expect to make a decision soon on whether to hold their spring meetings in Washington.

Thousands of people attend the twice-yearly gatherings, which attract activists, economists and investors as well as officials and reporters.

The planning for the April meeting is “under active review,“ Rice said, but he added, “We are confident that, whatever the format of the spring meetings will be, that we will have effective meetings... and dialogue with our membership.”

The US Centers for Disease Control warned this week that the epidemic will reach American shores, and urged organizations to cancel mass gatherings.

Health officials on Wednesday announced they’d found the first case of the virus of unknown origin in the United States. -AFP

source https://www.thesundaily.my/business/imf-world-bank-funds-ready-to-fight-virus-outbreak-spokesman-NL2058924

Baidu warns of big hit from coronavirus outbreak

BEIJING: Internet search giant Baidu has warned the deadly coronavirus outbreak could drive revenues down in the first quarter, as it reported steady annual revenue growth.

The Beijing-based group has forecast a plunge of between five percent and 13 percent due to the economic uncertainty surrounding the new virus, which is rapidly spreading around the world.

It is forecasting revenues between 21.0 billion yuan ($3.0 billion) and 22.9 billion yuan in the first three months of the year.

“The coronavirus situation in China is evolving, and business visibility is very limited,“ the firm said in its statement, adding that the outlook was “subject to substantial uncertainty”.

The group’s total revenues for the year ended December 31 rose five percent to 107.4 billion yuan ($15.43 billion), with income during October-December rising six percent on-year.

Considered China’s answer to Google, Baidu has traditionally relied on advertising for much of its revenue.

But the ad sector is particularly vulnerable to economic slowdowns, and Baidu has had to battle with popular start-ups such as Bytedance.

Baidu’s online marketing revenues were 78.1 billion yuan for the year -- a drop of five percent.

Chairman Robin Li said the company had made “tremendous progress in strengthening Baidu’s mobile ecosystem”.

The firm has also been spending huge sums trying to reposition itself as a leader in advanced technologies such as artificial intelligence (AI) and driverless cars.

Revenue growth was driven largely by strong growth in cloud services, smart devices and its Netflix-style platform iQIYI.

Nasdaq-listed iQIYI added 19.5 million new subscribers over the year, and projected revenue gain of 2-8 percent this quarter.

The coronavirus outbreak has hit businesses across the country and beyond.

But China’s streaming giants have seen an unexpected boost from millions of people stuck at home, and shares surged in January for the likes of iQiyi.

Baidu said it had “devoted significant efforts” to fighting the coronavirus, including facial recognition and AI technology to power screening systems that can remotely measure up to 200 people a minute. -AFP

source https://www.thesundaily.my/business/baidu-warns-of-big-hit-from-coronavirus-outbreak-LL2058904

Hong Kong home prices fall for second straight month in January

HONG KONG: Hong Kong private home prices fell for the second straight month in January on low transaction volumes, easing 0.2% amid the emergence of the novel coronavirus in a property market already hit hard by anti-government protests in the last year.

Prices fell a revised 1.6% in December. January prices were 4.7% lower than the peak in May 2019.

Fears over the virus outbreak have clouded one of the world’s most expensive property markets, but property agents said business recovered slightly this month after the lunar new year holiday, as sellers cut prices and buyers sought bargains.

While the volume is expected to remain low in the short term, agents do not expect a collapse in prices, given the strong pent-up demand and low interest rates.

Realtor Ricacorp lowered its forecast for the full year, saying prices would climb 3-5%, compared with its original forecast of a 10% rise.

The property sector has been relatively resilient compared with tourism and retail, which have been hit badly by the protests and the epidemic.

But some agents project no growth or a small decline, saying that could worsen when the recession-hit city’s unemployment rate rises.

At least two Hong Kong banks have introduced relief measures for home mortgage borrowers hurt by the coronavirus outbreak, in a move analysts say could help lower foreclosures in an economy already in recession. -Reuters

source https://www.thesundaily.my/business/hong-kong-home-prices-fall-for-second-straight-month-in-january-HL2058854

FMM disappointed export sector not featured in stimulus measures

KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) has lauded the timely announcement of the federal fiscal stimulus package, but expressed disappointment that the export sector has not been given prominence.

FMM president Tan Sri Soh Thian Lai thanked the government for including some of its recommendations on boosting domestic consumption and said the federation was looking forward to further details of the measures to be introduced as soon as possible.

“FMM thanks the government for taking heed of our recommendations in our stimulus package wishlist to boost domestic consumption by announcing the 4% reduction in the employees’ contribution to the Employees Provident Fund (EPF), introducing the digital domestic travel vouchers and the 15% discount in electricity bills to hotels, shopping malls, etc. to stimulate the tourism industry,” he said in a statement.

However, he added that based on feedback received from FMM members, the main concern of manufacturers is the impact of Covid-19 on production, which has slowed down due to low supply of raw materials sourced from China.

“Imports of these raw materials from China are affected as certain cities are currently under lockdown and production has been stopped.

“Similarly, exports to China are affected as most of the customers and importers are still close due to the Chinese government’s directive,” he said.

Soh then outlined eight initiatives which he said would have both direct and indirect impact on the manufacturing sector, including a RM200 million microcredit facility at 4% interest rate to affected businesses, a RM2 billion special relief facility for SMEs for working capital, and a RM300 million SME automation & digitalisation facility.

In relation to government procurement and implementation of development projects, Soh said FMM urges the government to place greater emphasis on ‘Love Malaysia, Buy Made-in-Malaysia Products’ in order to ensure robust and sustained domestic market demand for Malaysian manufactured products and to promote import substitution which will strengthen the capacity and capability of the domestic manufacturing industry.

Meanwhile, he said FMM was urging its members to be persistent in their efforts to sustain business and also find alternative sources from within Asean or via other trade partners if supplies from China are not coming in on time.

source https://www.thesundaily.my/business/fmm-disappointed-export-sector-not-featured-in-stimulus-measures-EL2058776

Bank of Canada to stay put for now, but 2020 rate cut in play

BENGALURU: The Bank of Canada will hold interest rates at 1.75% on Wednesday, according to most economists polled by Reuters, although a significant minority expects at least one rate cut by year-end.

About 60% of respondents, 20 of 34, said the central bank would leave its benchmark overnight rate unchanged until the end of 2020, down slightly from about 70% when forecasters were last polled by Reuters a month ago.

Those prospects have flipped back and forth in monthly polls since October as optimism around the Canadian economy has see-sawed. While more economists expect a 2020 rate cut than in January, there were even more in December.

However, optimism about the economy has started to sour again.

"The labour market is starting to slow down, consumer spending is definitely not there, business investment is clearly disappointing and exports outside energy are not rising in any significant way," said Benjamin Tal, deputy chief economist at CIBC Capital Markets.

"So there are many factors suggesting GDP growth will be suboptimal and although the BoC would like to avoid cutting, the overall weakness in the economy will convince them that a cut is needed," said Tal, who expects a cut in Q2.

Still, only six of 34 economists surveyed from Feb. 24-27 expect a rate cut at the March 4 policy meeting. Analysts provided a median 30% probability of a rate reduction then, roughly in line with market pricing.

Canada's economic growth likely ground to a near-halt in the final three months of 2019 - 0.3% - according to a separate Reuters poll. It is forecast to recover only modestly to an annualized 1.6% rate in the current quarter.

But with financial markets hammered by fears over the spread of the coronavirus and swathes of Asia now expected to take a direct economic hit from factory shutdowns, travel restrictions and less consumer spending, that may look optimistic.

Canada has had economic disruptions of its own this month.

"The shutdown of large sections of the Canadian rail system following First Nations protests and blockades will be a larger drag on economic activity than the coronavirus," said Sebastien Lavoie, chief economist at Laurentian Bank.

Asked if those blockades had significantly dulled the expected strength of the economy's rebound this quarter, 13 of 19 economists said it had.

Four of the five biggest Canadian banks are expecting the BoC to cut rates at least once by end-2020.

But BMO Capital Markets, the top economic forecaster in Reuters polls for Canada in 2019, said rates will stay on hold until at least the end of next year. Inflation, which the BoC targets at 2%, has remained steady and is not set to pick up.

There remains a high degree of uncertainty over the longer-term interest rate outlook, even before the latest shocks. The range of probabilities given by economists for a March rate cut ran from 10% to 90%. For end-year it was 20% to 100%.

Looking further out, views on where rates will be at the end of next year ranged from 0.5% to 2.5%, roughly as wide as those on U.S. benchmark rates. - Reuters

source https://www.thesundaily.my/business/bank-of-canada-to-stay-put-for-now-but-2020-rate-cut-in-play-CL2058756

Lynas sees opportunity in coronavirus outbreak; profit slides

MELBOURNE: Australian miner Lynas Corp is talking to customers about the risks of relying too heavily on China for rare earth supplies in the wake of disruptions from the new coronavirus outbreak, the company's CEO said on Friday.

There has so far been little direct impact on the market for the metals used in everything from electric vehicles to military equipment, given current levels of oversupply, Lynas Chief Executive Amanda Lacaze told an analyst briefing.

However, she said logistics issues in China, which dominates the rare earths market, presented an opportunity.

"The conversation which [Lynas is] having with end-user customers is a conversation about the risk that they introduce into their supply chain by not having a diversified supply," she said, pointing to both political and geographical risk.

Lynas, the world's largest rare earths producer outside China, earlier posted a nearly 80% plunge in half-year profits, hurt by a weak market, a security bond payment at its Malaysian processing facility and higher operational expenses.

Net profit slumped to just A$3.9 million ($2.57 million) for the six months ended Dec. 31, while revenue rose slightly to A$180.1 million.

Its shares fell 5.8 percent, outpacing a virus-related risk selloff in Australian sharemarkets. The ASX 200 fell 3.3 percent.

Lynas has been a target of investor focus amid concerns that China's dominant position in rare earths could have played a part in the Sino-U.S. trade war, while the company has faced an environmental row over its operations in Malaysia.

On Thursday, Malaysia approved a new three-year licence, that allows Lynas to continue processing rare earths at its Kuantan plant, subject to meeting several conditions that the miner expects to meet.

As part of the process, the company said it deposited A$11.6 million with Malaysia's Atomic Energy Licensing Board for operating its $800 million plant in Kuantan.

Lynas said the production of Neodymium and Praseodymium, used in magnets, fell more than 10% for the half-year to 2,512 tonnes, while Rare Earth Oxide production dropped over 22% to 7,518 tonnes.

While it has received a permit to import more concentrate to Malaysia, Lynas will now turn its focus to getting a permit to process the extra material, an issue that has constrained production for the past few years, Lacaze said. - Reuters

source https://www.thesundaily.my/business/lynas-sees-opportunity-in-coronavirus-outbreak-profit-slides-FL2058733

S.Korea’s extra budget to fight coronavirus set to beat $9.5 bln MERS spending

SEOUL: South Korea said on Friday a supplementary budget due next week to cushion the economic hit of the coronavirus will be larger than the 11.6 trillion won ($9.5 billion) package spent during the 2015 MERS outbreak.

The extra budget is part of a series of urgent measures President Moon Jae-in's government announced on Friday as the virus disrupts exports and weakens consumer spending.

The finance ministry did not disclose the size of the extra budget but said it would be equal to or bigger than the 11.6 trillion won package deployed when the Middle East Respiratory Syndrome hit the economy in 2015.

The supplementary budget will be submitted for parliamentary approval next week. The ministry did not elaborate on how the budget will be funded.

Once approved by the parliament, the government plans to spend more than 75% of the budget within the first two months.

Much of the new outlays will be allocated to small businesses, the medical and tourism sectors, as consumers pull back on discretionary spending.

A separate 16 trillion won package of tax breaks and cheap loans will go to small businesses that are struggling to pay wages to their workers and people who have lost their jobs for training, the ministry said in a statement. - Reuters

source https://www.thesundaily.my/business/s-korea-s-extra-budget-to-fight-coronavirus-set-to-beat-95-bln-mers-spending-FL2058698

World stocks set for worst week since 2008 as virus fears grip markets

TOKYO: Global share markets were headed for the worst week since the depths of the 2008 financial crisis as investors ditched risky assets on fears the coronavirus would become a pandemic and derail economic growth.

Asian stocks tracked another overnight plunge in Wall Street's benchmarks on Friday with the markets in China, Japan and South Korea all posting heavy losses.

Hopes that the epidemic that started in China would be over in a few months and economic activity would return to normal have been shattered, as new infections reported around the world now surpass those in China.

The worsening global threat from the virus prompted investors to rapidly step up bets the U.S. Federal Reserve would need to cut interest rates as soon as next month to support economic growth.

"We don't even need to wait for economic data to see how badly the economy is being hit. You can tell that the sales of airlines and hotels are already falling by a half or something like that," said Tomoaki Shishido, senior economist at Nomura Securities.

"It is fair to say the impact of the coronavirus will be clearly much bigger than the U.S.-China trade war. So the Fed does not have a reason to take a wait-and-see stance next month," he said.

MSCI all country world index fell 0.3% after 3.3% drop on Thursday. So far this week it has lost 9.2%, on course for its biggest weekly decline since a 9.8% plunge in November 2008.

Wall Street shares led the rout as the S&P 500 fell 4.42%, its largest percentage drop since August 2011.

It has lost 12% since hitting a record close on Feb. 19, marking its fastest correction ever in just six trading days while the Dow Jones Industrial Average fell 1,190.95 points, its biggest points drop ever.

The CBOE volatility index, often called the "fear index", jumped to 39.16 on Thursday, the highest level in about two years, well out of the 11-20 range of recent months.

The index, which measures expected swings in U.S. shares in the next 30 days, often shoots up to around 50 as bear market selling hits its heaviest although it approached 90 during the 2008-09 financial crisis.

In Asia, MSCI's regional index excluding Japan shed 1.4%. Japan's Nikkei gave up 3.3% on rising fears the Olympics planned in July-August may be called off due to the coronavirus.

Australian shares dropped 2.8% to a six-month low while South Korean shares shed 2.1%.

"The coronavirus now looks like a pandemic. Markets can cope even if there is big risk as long as we can see the end of the tunnel," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities. "But at the moment, no one can tell how long this will last and how severe it will get."

WHO Director General Tedros Adhanom Ghebreyesus said the virus could become a pandemic as the outbreak spreads to major developed economies such as Germany and France.

The global rout knocked mainland Chinese shares lower, which have been relatively well supported this month, as new coronavirus cases in the country fell and Beijing doled out measures to shore up economic growth.

CSI300 index of Shanghai and Shenzhen shares dropped 2.4%, on track to post its first weekly loss in three.

Fears of a major economic slump sent oil prices to their lowest level in more than a year.

U.S. crude futures fell 1.6% to $46.35 per barrel, having lost 13.2% so far on the week, which would be the deepest fall in more than five years.

As investors flocked to the safety of high-grade bonds, U.S. yields plunged with the benchmark 10-year notes yield hitting a record low of 1.241%. It last stood at 1.274%.

That is well below the three-month bill yield of 1.439% , deepening the so-called inversion of the yield curve. Historically an inverted yield curve is one of the most reliable leading indicators of a U.S. recession.

Expectations the Fed will cut interest rates to cushion the blow are rising in money markets. Analysts say Fed funds futures are now pricing in more than a 50% chance of a 25 basis point cut at the central bank's March 17-18 meeting.

As investors rushed to safe assets, gold stood at $1,646.4 near seven-year high of $1,688.9 hit earlier this month.

In currency markets, the yen rose to a three-week high of 109.33 to the dollar and last stood at 109.40.

The euro stood at $1.0993, having jumped over 1% in the previous session, the biggest gain in more than two years as investors wound back bets against the currency versus the dollar. - Reuters

source https://www.thesundaily.my/business/world-stocks-set-for-worst-week-since-2008-as-virus-fears-grip-markets-AL2058662

Oil prices fall again, on track for biggest weekly drop in over 4 years

SINGAPORE: Oil prices fell for a sixth straight session on Friday and were on track for about a 12% weekly fall, the biggest in more than four years, as the spread of the coronavirus outside China raised fears of slowing global demand.

The virus, which has killed more than 2,700 people in China, has been found in another 46 countries and caused 57 deaths. Investors worry the epidemic could turn into a pandemic and deliver a damaging blow to the global economy.

The most active Brent crude contract for May was down 90 cents, or 1.7%, at $50.83 a barrel by 0141 GMT, a 14-month low. The front-month April contract expires today.

The international benchmark, which fell about 2% on Thursday, has shed around 12% this week and is on track for its steepest weekly decline since mid-January 2016.

West Texas Intermediate (WTI) crude futures fell 73 cents, or 1.6%, to $56.36 per barrel. U.S. crude has fallen about 13% for the week, the biggest weekly decline since November 2014.

With new infections reported around the world now surpassing those in mainland China, the World Health Organization said on Thursday that all countries need to prepare to combat the coronavirus.

“Oil prices are moving tangentially to news flows around the deluge of secondary cluster outbreaks,“ said Stephen Innes, chief market strategist at AxiCorp.

“And for the oil market, none more so worrying than those reports emanating from the U.S. market, which is the biggest consumer of oil on the planet by a long shot.”

U.S. health officials urged Americans to begin preparing for the spread of coronavirus in the United States earlier this week.

The oil market is hoping for steeper supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, who have said they will take a responsible approach in the wake of the virus outbreak.

The producer group known as OPEC+, which is currently reducing output by roughly 1.2 million barrels per day to support prices, is set to meet in Vienna on March 5-6.

“We now believe the group needs to make much steeper cuts than the 600,000 barrels per day (bpd) recommendation from their technical committee to support prices,“ Jefferies analyst Jason Gammel said.

“At least a 1 million bpd cut for the second quarter strikes us as necessary to merely moderate inventory builds, and we confess to underestimating demand destruction over the last several weeks.” -Reuters

source https://www.thesundaily.my/business/oil-prices-fall-again-on-track-for-biggest-weekly-drop-in-over-4-years-YL2058643

Ringgit opens higher against US dollar

KUALA LUMPUR: The ringgit continued its uptrend against the US dollar at the opening today on improved demand as the 2020 Economic Stimulus Package introduced yesterday boosted investors’ sentiment, analysts said.

At 9 am, the local note was trading at 4.2050/2120 against the greenback compared with 4.2100/2200 recorded at Thursday’s closing.

Yesterday, the Interim Prime Minister Tun Dr Mahathir Mohamad announced the RM20 billion economic stimulus package to safeguard the country’s economy from impacts associated with the COVID-19 outbreak.

The economic stimulus package is anchored on three strategies, namely mitigating the impact of COVID-19, spurring rakyat-centric economic growth and promoting quality investments.

Analysts said the stimulus package would provide some early growth insurance to the Malaysian economy, while also ensuring Malaysia remains on a strong foundation and economic viability in the long run.

Meanwhile, the ringgit was traded mixed against other major currencies.

It rose against the Singapore dollar to 3.0150/0211 from 3.0181/0264 but marginally eased versus the Japanese yen to 3.8398/8473 from 3.8210/8308 on Thursday.

The ringgit strengthened against the British pound to 5.4219/4314 from 5.4317/4459 but depreciated vis-a-vis the euro to 4.6234/6328 from 4.6032/6154 yesterday. -Bernama

source https://www.thesundaily.my/business/ringgit-opens-higher-against-us-dollar-NL2058528

Bursa Malaysia opens in red across board as political crisis continues

KUALA LUMPUR: All listed index on Bursa Malaysia opened in the red today due to increased selling pressure as local political crisis continues to influence the market despite the announcement of RM20 billion stimulus package to battle COVID-19 impacts.

As of 9.08 am, FBM Bursa Malaysia KLCI (FBM KLCI) was 1.26 per cent or 19.08 points lower at 1,486.51, after opening at 20.69 points lower at 9 am sharp.

On the broader market, losers trounced gainers 499 to 54 with 140 counters unchanged, 1,350 untraded and 65 suspended.

Turnover stood at 346.67 million shares worth RM161.85 million.

An analyst said the slide in Bursa followed the interim Prime Minister’s, Tun Dr Mahathir Mohamad statement yesterday said that an emergency parliament sitting will be convened on March 2 to pick a Prime Minister in a bid to bring the ongoing political standstill to an end.

“The only two options that stands as of now is that a snap election might be called or a decision on who has the majority support would continue to lead. In our opinion, the most likely scenario would be a snap election,“ she said.

Meanwhile, the Conference of Rulers are scheduled to meet this morning with the country’s current political impasse expected to dominate their discussions.

As for the stimulus package announced by Dr Mahathir yesterday to shield the country’s economy from the COVID-19 spread, she said the economy would benefit from it in total.

“Even though the positive push has pushed the market for a short period of time, political uncertainty would continue to fend off investors from entering the market for now,“ she said.

On the KLCI index, 28 out of the 30 companies listed marked a decline with Tenaga Nasional declining 22 sen to RM12.28, followed by MISC as it slipped 22 sen to RM7.54, Petronas Chemicals slid 12 sen to RM5.68, PPB as it shed 56 sen to RM17.74 and Maxis lost nine sen to RM5.42.

These five stocks have contributed to the decline of 8.36 points to the index.

On the broader market, technology, medium and small caps, as well as energy, were the least performing index at the opening which saw it declined 2.28 per cent, 6.59 per cent and 3.04 per cent respectively.

Consumers continues to dominate the losers list with Nestle shedding RM2.80 to RM139.20, F&N dipped RM1.24 to RM30.06, Dutchlady dimmed 84 sen to RM43.00 while Carlsberg and Heineken declined 84 sen and 64 sen to RM32.94 and RM26.90 respectively.

As of actives, Sapura Energy and its warrant both declined 1.5 sen and half-a-sen to 18.5 and 8.0 sen respectively, while Avillion and Pegasus Heights were flat at 16 sen and half-a-sen respectively.

On the index board, all were in red with FBM Emas Index declined 148.82 points to 10,535.85, the FBMT 100 Index decreased 141.49 points to 10,347.72 and the FBM ACE shed 108.62 points to 5,476.50.

The FBM Emas Shariah Index slipped 203.07 points to 11,151.71 and the FBM 70 declined 213.69 points to 13,015.22.

Sector-wise, the Industrial Products and Services Index eased by 2.64 points at 135.99, while the Financial Services Index slid 78.60 points to 14,415.07 while the Plantation Index slipped 117.88 points to 6,838.5. - Bernama

source https://www.thesundaily.my/business/bursa-malaysia-opens-in-red-across-board-as-political-crisis-continues-KL2058509

7-Eleven Malaysia 2019 sales hit record RM2.36 billion

PETALING JAYA: 7-Eleven Malaysia Holdings Bhd’s total sales hit a record high of RM2.36 billion last year.

For the full-year period ended Dec 31, 2019, 7-Eleven’s net profit grew 5.4% to RM54.06 million from RM51.31 million, underpinned by the increase in revenue, favourable sales mix and higher marketing income.

Revenue stood at RM2.36 billion, up 6.4% from RM2.22 billion, driven by the growth in new stores, higher customer count, higher average spend per customer and better consumer promotion activity.

For the fourth quarter alone, 7-Eleven’s net profit fell 9.1% to RM11.35 million against RM12.49 million in the same quarter a year ago, with revenue rising 6.8% to RM592.73 million from the RM555.21 million achieved previously.

7-Eleven CEO Colin Harvey said the group managed to delivered full-year same-store-sales growth of 2.5% and net profit growth of 5.4% despite accounting for the impact of MFRS 16 adoption.

Without the adoption, net profit would have grown 21.8%.

“We opened 41 stores in the quarter and crossed the 2,400 mark ending on 2,411 stores for the year. Costs were kept in check reducing to 28.4% despite minimum wage increases,” he said in a statement yesterday.

The convenience store group is confident that continuous implement-ation and improvement of its strategy roadmap in strengthening the key areas of assortment, supply chain, operational excellence, store base and digitally enabling the organisation will con-tinue to deliver positive results despite challenging headwinds.

“The board of directors is of the view that the trading conditions for the next quarter are expected to be stable,” it added.

source https://www.thesundaily.my/business/7-eleven-malaysia-2019-sales-hit-record-rm236b-DA2057858

Ringgit ends higher on Covid-19 stimulus package

KUALA LUMPUR: The ringgit closed sharply higher against the US dollar for the second consecutive day today, thanks to the 2020 Economic Stimulus Package that helped boost appetite in the market.

The local note finished strong at 4.2100/2200 against the greenback compared with 4.2230/2280 recorded at 6pm yesterday.

Earlier, the government introduced the economic stimulus package worth RM20 billion to safeguard the country’s economy from impacts associated with the Covid-19 outbreak.

Interim Prime Minister Tun Dr Mahathir Mohamad said the stimulus package would assist businesses most adversely affected by Covid-19 to facilitate their cash flow and reduce business costs,

Among the measures was to allow deferment of monthly income tax payments for businesses in the tourism sector from April to September 2020.

Dr Mahathir also assured that Malaysia has enough money to fund the stimulus package, alluding to the almost RM2 trillion of savings from Bank Negara Malaysia, Tabung Haji, Retirement Fund Inc (KWAP) and the Employee Provident Fund (EPF).

Today’s announcement of the stimulus package was Dr Mahathir’s second after 2003 when as the country’s fourth Prime Minister he tabled an RM8.1 billion economic package to deal with another global health-related crisis, the Severe Acute Respiratory Syndrome (SARS).

A dealer said the stimulus package helped ease worries in the market over growth outlook to the economy.

“The market reacted positively to the announcement. This also offset US dollar-sentiment, which demand has significantly increase as safe-haven assets following the Covid-19 outbreak,” he told Bernama.

Malaysia was among the earliest country that mounts a stimulus package to combat impacts from Covid-19 effectively.

Meanwhile, the ringgit was traded mostly higher against other major currencies.

It rose against the Singapore dollar to 3.0181/0264 from 3.0205/0245 on Wednesday, increased versus the Japanese yen to 3.8210/8308 from 3.8280/8335 and strengthened against the British pound to 5.4317/4459 from 5.4679/4761 yesterday.

The local note, however, depreciated vis-a-vis the euro to 4.6032/6154 from 4.5980/5047 previously. - Bernama

source https://www.thesundaily.my/business/ringgit-ends-higher-on-covid-19-stimulus-package-DA2057720

Thai tycoons in fray for Tesco’s Asia business worth up to US$9b

SINGAPORE: British retailer Tesco has asked bidders to submit binding offers for its Asian business by tomorrow, in a deal that will see Thai billionaires fight for an asset valued at up to US$9 billion (RM37.8 billion), sources with direct knowledge of the matter said.

The bidding is shaping up as a battle between Dhanin Chearavanont’s Charoen Pokphand (CP) Group, Central Group, controlled by the Chirathivat family, and beer-and-property magnate Charoen Sirivadhanabhakdi’s TCC Group, they said.

Tesco’s Asian operations comprise some 2,000 supermarket outlets and convenience stores in Thailand, where it is one of the biggest retail players, and 74 stores in Malaysia.

“This is a very competitive process pursued by serious bidders. Looking at the deal size and financing perspective, most large banks are involved,” said one banking source who did not want be identified as the information is confidential.

Antitrust concerns could pose a challenge to some bidders as Thailand’s antitrust office said last month that the deal should not violate anti-monopoly laws.

Tesco will review the bids and is set take a decision next month, the sources said.

The three Thai groups did not immediately respond to a Reuters query. There was also no response from Tesco, outside office hours.

Britain’s biggest retailer said in December it started a review of its Asian operations, made up mainly of the Thai and Malaysian operations, after receiving interest.

In the six months to Aug 24, Tesco’s Thai and Malaysian businesses together generated sales of £2.56 billion (RM13.9 billion) and operating profit of £171 million (RM930.2 million).

The sources said that though the tycoons are taking a long-term view of Tesco’s Thai business, their bids are likely to factor in the impact of the coronavirus outbreak, which has curbed near-term growth estimates for the country.

Regionally, Thailand is considered one of the most vulnerable economies to the virus outbreak due to its heavy reliance on Chinese tourists and China trade.

Still, Tesco’s business offers bidders a chance to scale up their portfolio significantly. “How often do you get these assets in Thailand? And financing is so cheap,” said another source.

For Central Group, Tesco’s stores would bulk up its supermarkets and convenience business, while offering CP Group a chance to buy back the supermarket chain it sold to Tesco during the Asian 1997/98 financial crisis.

CP owns cash-and-carry Siam Makro, which operates some 130 stores and over 10,000 7-Eleven convenience stores under CP ALL.

Sirivadhanabhakdi’s TCC Group, through Berli Jucker , already owns the country’s second-largest hypermarket operator Big C Supercenter.

Tesco completed this week its exit from China with the £275 million sale of its joint venture stake to state-run partner China Resources Holdings. – Reuters

source https://www.thesundaily.my/business/thai-tycoons-in-fray-for-tesco-s-asia-business-worth-up-to-us-9b-XA2057505

Bursa Malaysia KLCI ends higher driven by economic stimulus

KUALA LUMPUR: Bursa Malaysia main index, the FTSE Bursa Malaysia KLCI (FBM KLCI) ended on a high driven by the economic stimulus package announced by the interim Prime Minister, Tun Dr Mahathir Mohamad today.

At the close, the index strengthens 10.40 points to 1,505.59 compared with yesterday’s close of 1,495.19.

Throughout the day, the FBM KLCI moved between 1,494.94 to 1,508.27.

However, on the broader market; losers trounced gainers 622 to 264, while 400 counters were unchanged, 755 untraded and 70 others suspended.

Turnover declined to 3.51 billion shares worth RM2.66 billion compared with 3.86 billion shares worth RM3.07 billion.

An analyst said while heavyweight stocks listed on the FBM KLCI has the steady backing of institutional investors, the latest announcement on the much-awaited RM20 billion economic stimulus package is expected to push several indexes including consumer products, plantation as well as transportation and logistics up.

“This shows that despite the political situation surrounding the nation today, putting the economy on the correct footing is the main agenda of the interim Prime Minister as long as he holds office,” she said.

On the technical forefront, the KLCI index is expected to be on the uptrend as market resumes for tomorrow.

“The immediate resistance now stands at 1,520 with the support level of 1,490,” she said.

Of the heavyweights, Maybank rose 19 sen to RM8.52, Tenaga Nasional edged up 12 sen to RM12.50, Public Bank increased 10 sen to RM17.30, IHH was gained two sen to RM5.68 and Axiata edged up five sen to RM4.20.

As for top gainers, Panasonic added 42 sen to RM34.32, Hong Leong Bank went up 28 sen to RM15.46 and Genting Plantation climbed 38 sen RM10.38.

Of the actives, Advance Synergy shed four sen to 18.5 sen, Sapura Energy declined one sen to 20 sen while Avillion was flat at 16 sen.

On the overall index performance, the board ended the session mixed.

The FBM Emas Index added 14.64 points to 10,684.67, the FBMT 100 Index increased 25.10 points to 10,489.21 and the FBM ACE shed 94.32 points to 5,585.12.

The FBM Emas Shariah Index perked 3.61 points to 11,354.78 and the FBM 70 declined 163.46 points to 13,228.91.

Sector-wise, the Industrial Products and Services Index eased by 0.21 of-a-point at 138.63, while the Financial Services Index gained 117.58 points to 14,493.68 while the Plantation Index slipped 14.85 points to 6,956.46.

Main Market volume was slightly up to 2.28 billion shares worth RM2.35 billion compared with 2.25 billion shares worth RM2.69 yesterday.

Warrants turnover declined to 455.20 million units worth RM83.09 million compared with 467.90 million units worth RM88.16 million.

Volume on the ACE Market slipped to 776.48 million units worth RM225.51 million from Wednesday’s 847.89 million units worth RM287.31 million.

Consumer products and services accounted for 503.59 million shares traded on the Main Market, industrial products and services (258.21 million), construction (112.31 million), technology (446.82 million), SPAC (nil), financial services (57.86 million), property (127.10 million), plantations (54.20 million), REITs (11.10 million), closed/fund (20,800), energy (547.77 million), healthcare (34.28 million), telecommunications and media (53.88 million), transportation and logistics (47.02 million), and utilities (30.28 million). - Bernama

source https://www.thesundaily.my/business/bursa-malaysia-klci-ends-higher-driven-by-economic-stimulus-HA2057382

Maybank sees tough year ahead with NIM compression

KUALA LUMPUR: Malayan Banking Bhd (Maybank) is expecting a challenging FY20 ending Dec 31, due to external and internal political disruptions, the US-China trade war and uncertainty over the length of the Covid-19 outbreak.

Speaking to the media at the group’s financial briefing today, group president and CEO Datuk Abdul Farid Alias said Maybank is expecting a potential compression on its net interest margin (NIM) of up to five basis points this year.

“We also see a cost-to-income ratio between 46-47%, a net credit charge of 45-50 basis points including the initial impact from the Covid-19 outbreak and an return on equity between 10-11% on slower economic growth and a lower interest rate environment,“ he said.

For FY19, Maybank saw a marginal reduction in its NIM by six basis points to 2.27% from 2.33% in FY18.

Elaborating further on the impact seen from the Covid-19 pandemic, Abdul Farid said the overall exposure of the group’s loan portfolio to sectors vulnerable to the effects of Covid-19 is less than 10%.

“That said, the impact is real. There will be some impact to our earnings but that is hard to quantify. I’m hoping for a V-shaped recovery and for the situation to be contained soon,“ he said, noting that it is too early to say how much in terms of loan reliefs has been disbursed to affected customers.

Meanwhile, on the expected rate cut in the Overnight Policy Rate (OPR), Abdul Farid said it would have an effect on the group’s NIM.

“We have many other tools to mitigate the impact so as the year goes we’ll see how certain variables play out,“ he said.

source https://www.thesundaily.my/business/maybank-sees-tough-year-ahead-with-nim-compression-CA2057217

Thai tycoons in fray as Tesco sets bid deadline for $9 bln Asia business-sources

SINGAPORE: British retailer Tesco has asked bidders to submit binding offers for its Asian business by Friday, in a deal that will see Thai billionaires fight for an asset valued at up to $9 billion, sources with direct knowledge of the matter said.

The bidding is shaping up as a battle between Dhanin Chearavanont's Charoen Pokphand (CP) Group, Central Group, controlled by the Chirathivat family, and beer-and-property magnate Charoen Sirivadhanabhakdi's TCC Group, they said.

Tesco's Asian operations comprise some 2,000 supermarket outlets and convenience stores in Thailand, where it is one of the biggest retail players, and 74 stores in Malaysia.

"This is a very competitive process pursued by serious bidders. Looking at the deal size and financing perspective, most large banks are involved," said one banking source who did not want be identified as the information is confidential.

Antitrust concerns could pose a challenge to some bidders as Thailand's antitrust office said last month that the deal should not violate anti-monopoly laws.

Tesco will review the bids and is set take a decision next month, the sources said.

The three Thai groups did not immediately respond to a Reuters query. There was also no response from Tesco, outside office hours.

Britain's biggest retailer said in December it started a review of its Asian operations, made up mainly of the Thai and Malaysian operations, after receiving interest.

In the six months to Aug. 24, Tesco's Thai and Malaysian businesses together generated sales of 2.56 billion pounds ($3.3 billion) and operating profit of 171 million pounds.

The sources said that though the tycoons are taking a long-term view of Tesco's Thai business, their bids are likely to factor in the impact of the coronavirus outbreak, which has curbed near-term growth estimates for the country.

Regionally, Thailand is considered one of the most vulnerable economies to the virus outbreak due to its heavy reliance on Chinese tourists and China trade.

Still, Tesco's business offers bidders a chance to scale up their portfolio significantly. "How often do you get these assets in Thailand? And financing is so cheap," said another source.

For Central Group, Tesco's stores would bulk up its supermarkets and convenience business, while offering CP Group a chance to buy back the supermarket chain it sold to Tesco during the Asian 1997/98 financial crisis.

CP owns cash-and-carry Siam Makro, which operates some 130 stores and over 10,000 7-Eleven convenience stores under CP ALL.

Sirivadhanabhakdi's TCC Group, through Berli Jucker , already owns the country's second-largest hypermarket operator Big C Supercenter.

Tesco completed this week its exit from China with the 275 million pound sale of its joint venture stake to state-run partner China Resources Holdings. - Reuters

source https://www.thesundaily.my/business/thai-tycoons-in-fray-as-tesco-sets-bid-deadline-for-9-bln-asia-business-sources-EB2056798

RHB Bank declares record dividend payout of 50.1% as FY19 net profit up 7.7%

PETALING JAYA: RHB Bank Bhd posted a net profit of RM621.01 million in the fourth quarter ended Dec 31, 2019, 9.8% higher compared with RM565.43 million in the same quarter a year ago, mainly due to higher net fund based and non-fund based income as well as the absence of one-off impairment on other non-financial assets.

The bank’s revenue grew 3.37% to RM3.42 billion from RM3.31 billion previously.

It has proposed a final dividend of 18.5 sen per share, bringing the total dividend to 31 sen per share for the year with the highest ever payout ratio 50.1%.

For the full-year period, RHB posted a net profit of RM2.48 billion, up 7.7% from RM2.31 billion in the previous year, thanks to higher net income, lower expected credit losses (ECL) for loans and higher writeback of impairment losses for financial assets.

Revenue was up 6.6% to RM13.53 billion from RM12.69 billion.

RHB said gross fund based income increased 5.2% on the back of a 4.3% increase in gross loans and financing, whilst funding and interest expense rose 9.2% due to the impact from the OPR hike in January 2018 and higher deposit base. As a result, net fund based income grew marginally by 0.4% to RM4.96 billion. Net interest margin for the financial year was 2.12%.

Non-fund based income rose 14.7% to RM2.14 billion, contributed largely by higher net trading and investment income, higher insurance underwriting surplus and higher capital market related fee income.

Allowances for credit losses was RM278.5 million, 9.0% lower than the previous year, primarily due to lower ECL on loans and higher ECL writeback on other financial assets. Full year credit cost improved to 0.18% from 0.19% a year ago.

Its common equity tier-1 and total capital ratio after the FY2019 final dividend stood at 16.27% and 18.59% respectively.

RHB’s gross loans and financing expanded 4.3% to RM176.2 billion supported by growth in all businesses, notably in mortgages and SME segment.

Gross impaired loans ratio improved to 1.97% from 2.06% a year ago with gross impaired loans at RM3.48 billion as at Dec 31, 2019. Loan loss coverage stood at 107.9%.

The group expects loans and financing growth for the local market to moderate slightly to 3.6%, supported by a resilient household sector.

“We expect 2020 business outlook to remain challenging. With the recent OPR cut and potentially further cuts, our net interest income would be adversely impacted. We are strengthening our efforts to mitigate any possible adverse effects to our asset quality,“ RHB group managing director Datuk Khairussaleh Ramli said in a statement.

source https://www.thesundaily.my/business/rhb-bank-declares-record-dividend-payout-of-501-as-fy19-net-profit-up-77-YB2056735

China’s surging small-cap stocks stir bubble fears as Beijing ramps up support

SHANGHAI/HONG KONG: A surge in small-cap Chinese stocks, fueled by government stimulus measures to support the virus-hit economy, is triggering fears of a repeat of the boom that preceded the 2015 market crash.

China has injected massive funds into the banking system, cut interest rates and encouraged lenders to extend cheap loans to limit the financial fallout from the coronavirus epidemic, which has hit businesses hard, from retailers to manufacturers.

Shenzhen's tech-heavy start-up board ChiNext has jumped 13.1% this month through Wednesday, far outpacing the 1.7% gain in China's blue-chip CSI 300 index.

A broader index of tech shares including start-ups and more established names such as ZTE has gained 14%.

"This is already a bubble. It's a game of the greater fool," said Shen Shikai, an investor who has been managing money pooled from his friends for over a decade.

"The economy has stalled for two months, and companies' first-quarter earnings will be ugly. Why on earth are stocks trading at such a level?"

ChiNext is trading at 59 times last year's earnings, up from roughly 30 a year ago and 47 at end-2019. In New York, the Nasdaq is trading at 26.5 times trailing earnings, according to Refinitiv data.

Fan Huang, head of wealth management at Deutsche Bank (China) Ltd, said the central bank's monetary easing was "directly contributing to investors' speculative activities."

In a Feb. 24 blog post, he urged investors not to forget the lessons of the 2015 market meltdown. That crash wiped more than $5 trillion in capitalisation off the Shanghai and Shenzhen markets, with ChiNext losing half its value within months.

Li Shoushuang, a capital markets lawyer at Dentons, called on the government to cool the market by introducing capital gains tax on share trading - something Beijing has always avoided.

"China's stock market is not a barometer of economic health. Rather, it's a barometer of liquidity," he said.

Some investors, however, believe the rally has solid footing, based in large part on Beijing's drive to make China more technologically self-sufficient as it battles the United States over trade.

Others are also pointing to an expected innovation boom in 5G, the fifth-generation wireless technology.

"If you look through the lens of China's great economic transformation over the next 3-10 years, you'll realize we're just at the starting point of a big bull (market)," said Wen Xunneng, a Shanghai-base hedge fund manager. "Don't fight the trend."

Adding to the fervour, mutual fund managers have been aggressively pitching tech-focused products.

Hwabao WP Fund Management Co's flagship technology ETF has seen its assets under management nearly double this year to over 14 billion yuan ($2 billion).

Huang Yue, fund manager at Guotai Fund Management Co, was promoting products via an online roadshow on Tuesday that invest in the semiconductor, telecommunication, and computer industries.

"It's true that valuation of chip stocks is near historic highs. But we also expect to see a big jump in earnings."

Bubble believers have pointed to particular share jumps as signs that markets have grown too frothy.

Shares in Jiangsu Xiuqiang Glasswork Co have tripled this month on speculation that the glass maker will enter into a tie-up with Tesla. The company says it's unaware of any factors that pushed up its stock.

Last week, cleaning robot maker Beijing Roborock Technology jumped 85% in its STAR Market debut after an initial price offering (IPO) oversubscribed more than 3,000 times.

"With all the millions and millions of Chinese on lock-down, more people have more time to dabble in the stock markets," said Grizelda Lee, head of discretionary portfolio management, Asia, Indosuez Wealth Management, referring to strict public health measures to contain the virus.

Daily trading volume in Shenzhen - home to many smaller firms - hit an all-time high on Tuesday, surpassing that of blue-chip and large-cap heavy Shanghai market.

Rocky Fan, economist at Sealand Securities, said regulators appeared to be tolerating speculation as a booming market will help already-listed companies raise fresh funds.

He cautioned against calling it a bubble, however, saying lower interest rates were also making stocks more attractive.

"You only know it's a bubble after it bursts." - Reuters

source https://www.thesundaily.my/business/china-s-surging-small-cap-stocks-stir-bubble-fears-as-beijing-ramps-up-support-YB2056540

StanChart posts strong results but coronavirus, economic headwinds to hamper profit growth

HONG KONG/LONDON: Standard Chartered booked a robust 46% jump in annual profit but warned a key earnings target would take longer to meet as the coronavirus epidemic adds to headwinds in its main markets of China and Hong Kong.

The epidemic could lead to a rise in bad loans, it said but did not provide specific guidance on the potential impact. Rival HSBC Holdings said last week it could face loan losses of up to $600 million if the virus outbreak persists into the second half of the year.

"The outbreak of the novel coronavirus comes with unpredictable human and economic consequences," Chief Executive Bill Winters said in a statement.

Noting that lower interest rates were also putting pressure on net interest income, StanChart said it would take longer to achieve its goal of a 10% return on tangible equity (RoTE) previously targeted for 2021.

The bank, which makes the bulk of its revenue in Asia, posted a pretax profit of $3.7 billion for 2019. Although that was slightly below an average forecast of $3.9 billion, it marked the steepest profit growth since 2017 when the bank posted a six-fold rise.

Hong Kong's economy has been hit hard, first by anti-government protests and now by the virus as tourist arrivals slump and residents steer clear of shops. Many employees, including those at StanChart, are working from home.

The bank said its provisions for expected losses from Hong Kong bad loans rose by $46 million in the second half of last year.

Analysts and bankers have warned that lenders which derive a large part of their earnings from Hong Kong face at least two quarters of worsening asset quality and slowing loan growth as the virus outbreak hits trade and consumer banking.

StanChart also said it had approved a buyback of up to $500 million worth of shares starting shortly and will review the potential for making a further capital return upon the completion of the sale of a stake in Indonesian lender Permata.

Its Hong Kong shares extended morning gains to be up 2.5% in the afternoon trade after the results.

Winters won plaudits from StanChart investors for his first three years at the helm when he patched up the lender's battered balance sheet and tackled an internal risk culture that had grown reckless.

The bank last year embarked on a new three-year plan to double its returns and dividends by cutting $700 million in costs and boosting income.

Winters' pay fell 6% to 5.93 million pounds, after he and Chief Financial Officer Andy Halford agreed to a reduction in their pension allowance following pressure from investors who criticised them for enjoying greater benefits than the wider workforce. - Reuters

source https://www.thesundaily.my/business/stanchart-posts-strong-results-but-coronavirus-economic-headwinds-to-hamper-profit-growth-IB2056486

Datasonic sees Q3 profit doubling after Bursa query

PETALING JAYA: Datasonic Group Bhd, which was queried by Bursa Malaysia yesterday over a sharp fall in its share price, saw its net profit for the third quarter ended Dec 31, 2019 double to RM20.18 million from RM9 million a year ago, thanks to higher revenue from the supply of smart cards, passports and provision of personalisation services, as well as lower finance costs.

Revenue jumped 32.1% to RM74.97 million from RM56.76 million. Of this, RM57.7 million or 77% of the group’s revenue was derived from the supply of smart cards, passports and provision of personalisation services.

The group has declared a third interim dividend of 1 sen per share, amounting to RM13.5 million.

For the nine-month period, Datasonic’s net profit surged 92.9% to RM48.05 million from RM24.91 million in the same period a year ago, while revenue grew 20.5% to RM196.29 million versus RM162.84 million previously.

On prospects, the group said the management continuously negotiates for better competitive pricing for purchases of the required materials and services from suppliers coupled with the prevalent cost control initiatives.

“The order book as at Dec 31, 2019 was in the vicinity of RM611 million which would have a positive impact on revenue generation in future operations,“ it said.

Despite the economic challenges and uncertainties prevailing in the business environment with potential impact globally, the board is cautiously optimistic that the results for the financial year ending March 31, 2020 to be better than that achieved in the previous financial year.

At 3pm, Datasonic’s share price was trading 17 sen higher at RM1.21 with 101.86 million shares changing hands, the third most actively trade stock on Bursa.

source https://www.thesundaily.my/business/datasonic-sees-q3-profit-doubling-after-bursa-query-BB2056407

TA Global minority shareholders cry foul over privatisation offer

KUALA LUMPUR: The minority shareholders of TA Global Bhd have expressed their dissatisfaction over the conditional general offer to delist the property firm at 28 sen per share.

Over 20 investors and remisiers were present at the TA Global’s “Privatisation”: Implication to Minority Shareholders forum organised by the Minority Shareholders Watch Group (MSWG) today.

One investor opined that the 28 sen offer price is a slap in the face of minority investors as it does not reflect the value of the shares.

According to MSWG’s calculation, it represents a 74.5% or 82 sen discount on the counter’s revised net asset value of RM1.10 per share

Apart from the cash offer, TA Global shareholders can opt for the share swap option based on an exchange ratio of 0.4211 new TA Enterprise shares to be issued at an issue price of 66.5 sen each for every offer share surrendered.

“If they take share swap, indirectly get to enjoy both TA Global’s growth through TA Enterprise given that TA Enterprise will have both stockbroking and property businesses,“ MSWG CEO Devanesan Evanson said at the forum.

On February 12, TA Enterprise co-founder and chairman Datuk Tiah Thee Kian proposed to privatise TA Global by acquiring the remaining 39.83% stake he does not own in TA Global.

MSWG also cautioned that the proposal could trigger a mandatory general offer in TA Enterprise, if 16% of TA Global shareholders opt for cash settlement.

This is because Tiah had said that he will inject fund into TA Enterprise to finance the privatisation of TA Global.

source https://www.thesundaily.my/business/ta-global-minority-shareholders-cry-foul-over-privatisation-offer-FB2056241