US TUMBLES & other news from EUROPE

Stocks trimmed losses by the close Thursday, but remained deep in the red, with techs falling after cautious outlooks from Qualcomm and Motorola. Ongoing worries about the labour market also gave investors a reason to retreat. Stock declines were broad based, with 24 of 30 Dow components falling. Weaker-than-expected economic readings on durable goods orders
and unemployment were also in play, overshadowing President Obama's push for jobs. Ford Motor's first annual profit in 4 years and other positive profit news were mostly ignored. Later in the day, Fed Chairman Ben Bernanke was confirmed for a second term after heavy lobbying by Democrats and the Obama administration. The Dow Jones industrial average lost 1.1% (-
115.7 pts, close 10,120.5). The Nasdaq lost 1.9% (-42.4 pts, close 2,179.0) and the S&P 500 lost 1.2% (-13.0 pts, close 1,084.5). U.S. light crude oil for February delivery fell 23 cents to settle at US$73.44 a barrel on the New York Mercantile Exchange. (CNNmoney)
* * * * *
Orders for capital goods rose in December, and more Americans than anticipated filed claims for unemployment benefits last week, indicating business investment is making a comeback while the job market stagnates. Bookings for durable goods excluding transportation equipment climbed 0.9% last month, exceeding the median forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed yesterday in Washington. Orders for durable goods excluding transportation equipment were projected to rise 0.5%, according to the survey median. Forecasts ranged from a 0.5% decline to a 3.1% increase. Total orders increased 0.3%, less than anticipated and suppressed by an unexpected 38% plunge in demand for civilian aircraft. Initial jobless applications fell to 470,000 in the week ended Jan. 23 from 478,000 the
prior week, the Labour Department said. Initial jobless claims were forecast to decline to 450,000 from a previously reported 482,000 the week before, according to the median estimate of 42 economists surveyed by Bloomberg. Estimates ranged from 400,000 to 480,000. (Bloomberg)
* * * * *
Ben S. Bernanke won Senate approval for a second term as Federal Reserve chairman, as supporters who credited his actions to stem the financial crisis and recession overcame opponents saying he failed to prevent them. The Senate voted 70 to 30 to confirm the 56-year-old former Princeton University professor, the narrowest margin since the chamber started
confirming Fed chiefs in 1978. Opponents said Bernanke failed to head off the worst financial crisis since the Great Depressionand then put taxpayer money at risk by participating in rescues of firms including American International Group Inc. and Citigroup Inc. Supporters, including some who criticized his record on bank supervision, credited Bernanke with averting a
deeper recession by slashing interest rates and pumping US$1trn into the economy. (Bloomberg)
* * * * *
German unemployment rose for the first time in seven months as a weakening economic recovery and the coldest January in 23 years forced companies to cut jobs. The number of people out of work this month climbed a seasonally adjusted 6,000 to 3.43m, the first increase since June, the Nuremberg-based Federal Labour Agency said yesterday. Economists
forecast an increase of 15,000, according to the median of 28 estimates in a Bloomberg News survey. The jobless rate rose to 8.2% from 8.1%. Rising joblessness in Germany underscores the stumbling rally in Europe’s biggest economy after it emerged from recession in 2Q09. While the export outlook is improving, investor and consumer confidence declined in January, and the
recovery remains “fragile,” Economy Minister Rainer Bruederle said Wednesday. January is set to be the coldest recorded since 1987, disrupting construction and transport, the German Weather Service said. Canals all over Germany have been frozen, interrupting shipments of steel, coal and grain. (Bloomberg)
* * * * *
European confidence in the economic outlook improved for a 10th month in January as reviving global demand helped stoke exports and bolstered earnings across the 16-nation euro region. An index of executive and consumer sentiment increased to 95.7 from a revised 94.1 in December, the European Commission in Brussels said yesterday. Economists expected confidence to rise to 92.3 from a previously reported December reading of 91.3, the median of 29 forecasts in a
Bloomberg News survey showed. Signalling a revival in production, capacity utilization rose for a second quarter, yesterday’s report showed. The index, compiled every three months, increased to 72.4 from 71. The euro region may grow 1% this year, the International Monetary Fund said on Jan. 26. (Bloomberg)

EONCAP, PUNCAK,SUNCITY, HOHUP, DRB-HICOM, GADANG

EON Capital Bhd (EONCap) has received a time extension of 5 days from Hong Leong Bank Bhd (HLBB) (HLBK, Hold, TP: RM8.71) to review the latter’s RM4.92bn takeover offer. EONCap said it had on the same day requested for a time extension and HLBB had granted it until Feb 2 to respond to its proposed takeover of its assets and liabilities. It is learnt that EONCap’s board had spoken to some of its major shareholders, namely Khazanah Nasional Bhd and Employees Provident Fund, and they had agreed with the board that it should ask for more time to review the offer more closely. Based on EONCap’s announcement, its board had only sought a time extension and did not request for changes to be made to the terms and conditions of HLBB’s offer. “The additional time will allow the board to fulfil its fiduciary duty to consider every reasonable option for securing the best value for all shareholders,” EONCap chairman Tan Sri Syed Anwar Jamalullail said. Under the terms set by HLBB in its offer, it had the right to withdraw its offer if EONCap was in acquisition talks with other parties. Another condition was that once the offer was accepted by EONCap, it would be binding on both parties for the sale of EONCap’s entire assets and liabilities. It was reported that EONCap might seek to reset some conditions put in by HLBB, which included being able to talk to HLBB on a non-exclusive basis. (Financial Daily)
* * * * *
The suit between Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and Puncak Niaga Holdings Bhd’s (PNH MK, Hold, TP: RM3.66) 70% owned subsidiary Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) has been set for mention at the KL High Court on Feb 22. Splash is suing Syabas for RM196.34m in alleged outstanding amounts, not including interest. According to Puncak Niaga, Splash’s claims were in respect to a supply charge and capacity charge from
Syabas under a privatisation agreement dated Jan 24, 2000, a Feb 3 2005 supplemental agreement and a novation agreement. Puncak Niaga announced that the KL High Court allowed Konsortium Abass Bhd’s application for adjournment of the hearing is now fixed for Feb 3. Konsortium Abass is suing Syabas for RM63m for non-payment of water invoices. (Star Biz)
* * * * *
Sunway City Bhd (SCITY MK, Buy, TP: RM3.60) has hired RHB Investment Bank and Credit Suisse as the main coordinators for the planned listing of its REIT in Malaysia. The listing of the REIT, the biggest ever in Malaysia, is likely to happen in the first half of 2010, and the company may raise about RM1bn in its public offering said sources. The REIT will have a market cap of more than RM3bn. Credit Suisse will act as the international global coordinator while RHB will handle all domestic issues. Sunway City said earlier this month the REIT would group at least four properties in KL and one in Penang. (Star Biz)
* * * * *
Ho Hup Construction Co Bhd’s management acknowledged the possibility of a “third force” emerging in the tussle for control of the company. The company said, “Fuelled by the tussle between two opposing shareholders, the third force appears to be preparing for a coup come Feb 4.” Ho Hup’s EGM is scheduled for Feb 4, and its outcome will determine the direction in which the company is going to take. The statement implies the third force is acting in concert with former MD Datuk Low Tuck Choy. (Star Biz)
* * * * *
DRB-Hicom Bhd, which mainly assembles and distributes automobiles, plans to pay RM80.83m to privatise its 79%- controlled unit Edaran Otomobil Nasional Bhd. The proposed privatisation would see Edaran’s shareholders receiving RM1.55 for every share they hold, or a 174.3% premium prior to the shares suspension on March 11, 2008. The proposed privatisation, which would be carried via a selective capital reduction and repayment exercise, is mooted as DRB-Hicom is facing difficulty in addressing the shortfall in the public shareholder spread requirement of 25%. DRB-Hicom would use its unit Hicom Holdings Bhd for the proposed exercise which may be financed via internal funds and bank borrowings of Edaran. With the privatisation, DRB-Hicom would be able to fully consolidate the earnings of Edaran going forward. (Malaysian Reserve)
* * * * *
Gadang Holdings Bhd has proposed to acquire a leasehold parcel of residential land off the Sungai Besi highway in Sungai Besi here for RM33m or RM62 per sq ft. Gadang said yesterday its sub-subsidiary Natural Domain Sdn Bhd had inked a sale and purchase agreement (SPA) with the vendor, GSS Properties Sdn Bhd, to acquire the land measuring about 49,377.47 sq metres (531,494.15 sq ft). It proposed to undertake a residential development there in the future. (Financial Daily)

Interest rate going to hike and they say property market will be good!

Bank Negara Malaysia (BNM) yesterday hinted of a sooner than expected interest rate hike after keeping the country’s overnight policy rate (OPR) unchanged at 2% at its first monetary policy committee (MPC) meeting for the year. “Moving forward, monetary policy would remain accommodative to ensure that the economic recovery is well entrenched. At the same time, MPC also recognises the need to ensure that the stance of monetary policy is appropriate to prevent the build up of financial imbalances that could arise from interest rates being too low for a prolonged period of time,” the central bank said in a statement. BNM said that going forward, the economy is expected to expand further in 2010, with growth being supported by strengthening domestic demand, particularly private consumption and further improvements in external demand. (Financial Daily)

**********

The Malaysian property market, estimated to have registered transactions worth RM75.42bn last year, is expected to improve further in 2010 in line with the economic recovery. The transactions involved 337,990 properties as compared with the 340,240 valued at RM88.34bn in 2008, said the director general of Valuation and Property Services Department, Finance
Ministry, Datuk Abdullah Thalith Md Thani. "This year will be a good year for all. The property market for this year will improve as the number of transactions involving new housing and construction activities, increases," Abdullah Thalith said yesterday. He pointed out that Malaysia is expected to steer towards a recovery path this year, driven primarily by domestic demand, with commodity prices for rubber, crude oil and palm oil also improving. These, he said, will help to increase the confidence level among consumers and provide a positive impact for the property sector. Abdullah Thalith said the government would continue to implement appropriatmeasures to restore confidence and market sentiment. He said the liberalisation of Foreign Investment Committee (FIC) guidelines, would lift the competitiveness of Malaysia, as an investment destination. Furthermore, Abdullah Thalith said, acquiring properties in Malaysia would be even more attractive, as the FIC approval is no longer required. (BT)
*

LOCAL BUSINESS NEWS 27.1.2010

Hong Leong Bank Bhd (HLBK MK, Hold, TP: RM8.71) (HLBB) is said to be sticking to its offer price of RM4.92bn or RM7.10 per share for EON Capital Bhd (EONCap) despite the target company’s board stating that the price is too low. It is learnt that HLBB would not revise its offer price and was prepared for the offer to lapse, which falls due tomorrow. The Minority Shareholder Watchdog Group (MSWG) describes HLBB’s offer as not a fair price and has called on shareholders of EONCap to reject the offer. MSWG CEO Rita Benoy Bushon said based on MSWG’s estimates, a fair price for EONCap shares would be between 1.6 and 1.7 times book value, translating to about RM8 per share based on the latest quarterly results. In addition, it is believed that property group Mulpha International Bhd has written to Bank Negara to seek the green light to start talks to acquire a stake in the bank. However, under the Banking and Financial Institutions Act 1989 (Bafia), the single shareholder limit for financial institutions is 20%, which would amount to some RM984m at RM71.0 per share. (Financial Daily & Starbiz)

* * * * *
Puncak Niaga Holdings Bhd’s (PNH MK, Hold, TP: RM3.66) 80% owned subsidiary Sino Water Pte Ltd has pumped in an additional RM1.71m into its China-based Xinnuo Water (Binzhou) Co Ltd unit. Puncak said as of Jan 20, 2010, the paid up registered capital of Xinnuo Water stood at about US$1.5m. (Malaysian Reserve)
* * * * *
AirAsia Bhd (AIRA MK, Buy, TP: RM1.67) is targeting 2m passengers in the first year on its newly launched Indian routes. “We are known for very aggressive marketing and we will use a lot of means to promote AirAsia. 2m passengers cannot be got without a lot of hard work. That is a huge number and a huge target in this economic environment. It can’t come without a lot of investment,” said CEO Datuk Seri Tony Fernandes said, adding that it would cost the group RM5m to RM6m in the initial period. (Financial Daily)
* * * * *
While Petra Perdana Bhd (PETR MK, Sell, TP: RM1.21) chairman and CEO Tengku Datuk Ibrahim Petra Tengku Indra Petra claims that the disposal of the 5.38% stake in Petra Energy Bhd (PEB) did not require shareholders’ approval, suspended executive director Shamsul Saad is disputing this. Shamsul disputed that the disposal of the 10.5m shares was based on the shareholder mandate, while the board of director claimed otherwise. On Sept 10, 2009, Petra Perdana placed 10.5m shares, representing 5.38% stake in its then subsidiary PEB at RM1.53 oer share to TA First Credit Sdn Bhd and as a result of this disposal, Petra Perdana suffered a loss of RM0.5m. He stressed that there were no mention of getting shareholders’ approval at any board meeting nor was there any board approval prior to the sale of the 5.38% stake. Shamsul said that at an EGM on Nov 9, 2009, Petra Perdana independent non-executive director Lawrence Wong had confirmed that the PEB stake sale was a negotiated sale and arranged by one of the leading broking firms. Shamsul said the controversial 25.03% PEB stake disposal by Petra Perdana on Dec 11, 2009 was brokered by TA Securities Holdings Bhd. TA Securities was appointed by Ibrahim at an “unusually high 3% placement fees”. Coincidentally, TA Securities was also appointed by Ibrahim as valuation agent for the transaction. (StarBiz)
* * * * *
Parkson Holdings Bhd wholly-owned subsidiary Parkson Vietnam Co Ltd has increased its shareholding in Parkson Hanoi Co Ltd to 70% from 49%, by contributing RM3.4m as charter capital of Parkson Hanoi. Parkson said Parkson Hanoi is now effectively a subsidiary of Parkson Vietnam. Parkson Hanoi has a total investment capital of RM20.4m and a charter capital of RM16.3m which has been fully paid. (Malaysian Reserve)
* * * * *
Global Industries Ltd announced that its majority Malaysian owned affiliate Global Offshore Malaysia Sdn Bhd has been awarded a contract for transportation and installation of offshore facilities for projects in Malaysia. The contract, under which the actual scope of work will be defined annually, is initially estimated at around US$70m (RM240.1m) for the first
year, and has options for two 1-year extensions upon the expiry of the contract. John Clerico, Global’s chairman CEO said: “This is the first contract we have been awarded in conjunction with our Malaysian partners, Kencana HL Sdn Bhd and we are very pleased that Petronas has showns such confidence in the Global-Kencana partnership’s ability to carry out the significant
scope of work involved with this project.” (Financial Daily)
* * * * *
INVESTMENT

EONCAP, SIME, MAS, DAYANG, AIR ASIA

The Prime Minister has met with the 3 candidates to succeed Tan Sri Mohd Hassan Marican, and a decision on the post of president and CEO at Petroliam Nasional Bhd (Petronas) will be made in the next few weeks. There is a good likelihood that an internal candidate may be picked among the three names that are being talked about – Datuk Shamsul Azhar Abbas (former MISC Bhd MD), Datuk Anuar Ahmad (Petronas Dagangan Bhd chairman) and Datuk Wan Zulkiflee Wan Ariffin (former MD/CEO of Petronas Gas Bhd (PTG MK, Buy, TP: RM10.90) from 2003-2007). Both Anuar, currently vice-president of human resources management, and Wan Zulkiflee, currently vice-president of the gas business are board members of Petronas.(Starbiz)

* * * * *
EON Capital Bhd (EONCap), while evaluating Hong Leong Bank Bhd’s (HLBB) (HLBK MK, Hold, TP: RM8.71) RM4.92bn takeover proposal, deems the offer price as “significantly” undervaluing the targeted banking group. EONCap chairman Tan Sri Syed Anwar Jamalullail said it had “sought clarification” from HLBB yesterday on a range of details in its acquisition proposal, with a particular focus on valuation. Last Thursday HLBB made an RM4.9bn cash offer to acquire all of EONCap’s assets and liabilities, which include its core operations in EON Bank Bhd, translating into RM7.10 per share. EONCap has seven days to confirm that it is agreeable to table the offer for consideration and approval by its shareholders at a general meeting and take steps to issue and despatch within five weeks from the offer date the notice of general meeting and the shareholders’ circular. (Financial Daily)
* * * * *
Sime Darby Property Bhd (SDPB), the property arm of Sime Darby Bhd (SIME MK, Hold, TP: RM8.10), will form joint ventures with both local and foreign property developers to help develop its 14,800ha of landbank in the country. "One of the strategies we have adopted is to accelerate the development of our landbank through joint ventures. We are now talking
to a few parties," SDPB managing director Datuk Tunku Badlishah Tunku Annuar said. He declined to name the potential parties. According to sources, SDPB has chosen Sunrise Bhd and IOI Properties Bhd as its joint venture partners to begin with. Tunku Badlishah also said SDPB will launch RM2bn worth of properties this year, amid prospects of an economic recovery
gaining strength. It will launch properties ranging from affordable to high-end homes and landed to high-rise within its 10 existing townships in the Klang Valley. (BT)
* * * * *
Malaysian Airline System Bhd (MAS MK, Sell, TP: RM2.21) has completed its fund-raising plan for this year and 2011 following a proposed one-for-one rights issue to raise RM2.67bn. Shareholders had voted in favour for the proposed rights issue meant to fund future fleet expansion, finance its fleet renewal program and as working capital. “Based on our projections,
we do not need any more rights issue this year and for next year,” MAS’s managing director/CEO Tengku Datuk Azmil Zahruddin Raja Abdul Aziz said. The right shares are priced at RM1.60 each, or at about 32.1% discount to the theoretical exrights price of RM2.36 based on a five day volume weighted average market price up to Dec 21, 2009. “However, should the
opportunity for consolidation such as merger and acquisition presented itself, MAS may return to the capital market again to raise fund, Tengku Azmil said. (Malaysian Reserve)
* * * * *
Dayang Enterprise Holdings Bhd (DEHB, Buy, TP: RM2.20) subsidiary Dayang Enterprise Sdn Bhd secured an RM8.5m job from Petronas Carigali Sdn Bhd. The job was for the provision of hook-up and commissioning of Petronas Carigali’s facilities at the Tangga Barat cluster development project phase 1. (Financial Daily)
* * * * *
AirAsia Bhd (AirAsia) (AIRA MK, Buy, TP: RM1.67) hopes to increase the contribution of food and beverage (F&B) to its ancillary income by 20% to RM48m this year from RM38m in 2009, said its chairman Datuk Aziz Bakar. Under the partnership, F&N’s 100PLUS and Coca-Cola would be sold on all AirAsia and AirAsia X flights departing Malaysia for one year from Feb 1, 2010 with an option for extension. Aziz said that AirAsia hopes to reach sales volume of 48,000 cans per month and the drinks would be priced at RM5 a can. (Financial Daily)

YTL,MAS,YNH, HOCK SENG LEE

YTL Corp Bhd (YTL MK, Buy, TP: RM8.00) has proposed to use 81.5% or RM1.108bn of a proposed RM1.36bn bond issuance to refinance its 2007/2012 exchangeable bonds. In a recent circular to shareholders, it said although the exchangeable bonds had a final maturity date of May 15, 2012, there was a put option to redeem the bonds on May 15, 2010. “The redemption would amount to 108.7% of the principal amount totalling RM1.108b,” it said. YTL said of the proposed RM1.36bn exchangeable bonds to be raised, RM1.108bn would be used to refinance the 2007/2012 exchangeable bonds, RM230.26m would be used to finance future investments or projects of the group and/or repayments of borrowings taken for such investments, and the remaining RM21m would be utilised within six months from the issue date of the bonds for expenses for the exercise. An EGM would be held on Feb 5 to seek shareholders’ approval to issue the bonds. (Financial Daily)
* * * * *
Malaysia Airlines' (MAS MK, Sell, TP: RM2.21) maintenance unit and its Indian partner have signed an initial deal to provide heavy maintenance services to Jet Airways over the next 10 years. The deal, which can be extended for another 5 years, was the first major deal for the partnership in India, a market where airline fleets are expected to triple in the next 10
years. MAS-GMR Aerospace Engineering Co Ltd (MAG), a 50:50 joint venture between MAS Aerospace Engineering (MAE) and GMR Hyderabad International Airport Ltd (GHIAL), signed the Memorandum of Understanding (MOU) with Jet Airways.The MAG facility in Hyderabad will be built on the eastern side of the Rajiv Gandhi International Airport with the capacity to
service an estimated 60-80 aircraft per year upon completion of Phase 1 in 2011. It will provide base maintenance services starting with C and D checks for narrow bodied aircraft like Airbus A320 and Boeing 737 and subsequently wide-body aircraft like A330 and B777. (BT)
* * * * *
YNH Property Bhd (YNHB MK, Hold, TP: RM1.72) unit Kar Sin Bhd (KSB) has been served with a writ of summons and statement of claim by the Inland Revenue Board (IRB) for back taxes for the years of assessment 1998 and 1999, amounting to RM1.059m and RM3.336m respectively. YNH said IRB was further seeking penalties amounting to RM150,164and RM517,112 for late payment of the abovesaid taxes. “KSB will be entering its appearance vide its solicitors to contest the abovesaid claims,” it said. (Starbiz)
* * * * *
PLUS Expressways Bhd is proposing to acquire a majority stake in an Indian company, Indu Navayuga Infra Project Pvt Ltd, which has a concession to widen and maintain an existing highway in Tamil Nadu. PLUS told Bursa Malaysia the acquisition involved up to a 74% stake in Indu Navayuga Infra. PLUS said the shareholders of Indu Navayuga would hand over a 49% stake of the company on the “commercial operation date” for RM57.3m. It added that on the third anniversary of the commercial operation date of the highway, the existing shareholders would transfer another 25% stake for a purchaseconsideration of RM16.7m. (Starbiz)
* * * * *
Hock Seng Lee Bhd has been awarded a contract worth RM35.79m by the state Public Works Department for the construction of package B of the Lubok Antu/Lemanak/Engkari road in Sri Aman division. The company said in a filing with Bursa Malaysia that the scope of works included earthworks, drainage, flexible pavement and bridges and would be completed by February 2011. (Starbiz)
* * * * *
Tanjung Offshore Bhd is bidding for up to RM1.5bn worth of projects as it pursues an organic growth strategy towards sustaining earnings over the longer term. The oil and gas support services provider, which is anticipating its maiden overseas income in the current fiscal year, was also planning to raise funds to refinance existing loans and facilitate business expansion plans, its managing director Omar Khalid said. On fund raising initiatives, Omar said Tanjung Offshore was considering bank loans and private placement of new shares. Foreign income will be supported by global sales of Tanjung Offshore’s gas generators and waste heat recovery units, which are manufactured in Indonesia and the UK respectively. According to Omar, Tanjung Offshore is also eyeing new businesses in the Middle East, India, Vietnam and Thailand.
(Financial Daily)

US & EUROPE NEWS----BAD!

Stocks tumbled Thursday after the Obama administration announced a proposal to increase regulation of the nation's biggest financial firms, including limiting the size and scope of their trading operations. Stocks had fallen through the morning as lingering worries about China's lending practices hit commodities and the broader market. Reports showing a rise in jobless
claims and a drop in manufacturing activity added to the pressure, overshadowing Goldman Sachs' better-than-expected profit report. But declines accelerated as investors geared up for and then dissected the White House's afternoon announcement. The Dow Jones industrial average lost 2.0% (-213.3 pts, close 10,389.9). The Nasdaq lost 1.1% (-25.6 pts, close 2,265.7) and the S&P 500 lost 1.9% (-21.6 pts, close 1,116.5). U.S. light crude oil for February delivery fell US$1.66 to settle at US$76.08 a barrel on the New York Mercantile Exchange. (CNNmoney)
* * * * *
More Americans than anticipated filed claims for unemployment benefits last week, reflecting a backlog of applications from the year-end holidays. Initial jobless claims rose by 36,000 to 482,000 in the week ended Jan. 16, the highest level in two months, from 446,000 the prior week, Labour Department figures showed yesterday in Washington. The jump was due to an “administrative” accumulation from late December and early Januaryholidays, and did not reflect “economic” reasons, a Labour Department spokesman said. Initial jobless claims were forecast to decline to 440,000 from 444,000 the week before, according to the median estimate of 40 economists surveyed by Bloomberg. Estimates ranged from 430,000 to 457,000. Continuing claims fell by 18,000 to 4.6m in the week ended Jan. 9. The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs. (Bloomberg)
* * * * *
Bundesbank President Axel Weber said it’s unlikely that the German economy, Europe’s largest, stagnated in 4Q09, striking a more optimistic tone than the country’s statistics office. “It’s not likely that economic growth in Germany was flat in the fourth quarter,” he told reporters in Berlin yesterday. At the same time, “I can’t rule out flat growth in Germany in the first
quarter.” The German economy was probably unchanged in terms of growth in 4Q09, the Federal Statistics Office said on Jan. 13, capping the worst year for the country since World War II. Gross domestic product fell 5% in 2009, a sharper decline than economists had estimated, after expanding 1.3% in 2008. The Bundesbank said last month that the outlook has “brightened
perceptibly,” predicting 1.6% German growth this year and 1.2% in 2011. Still, unemployment is set to rise and the strong euro may hurt Germany’s export industry. (Bloomberg)
* * * * *
Expansion in Europe’s service and manufacturing industries unexpectedly slowed in January, adding to signs the pace of the economy’s recovery may weaken. A composite index based on a survey of purchasing managers in both industries in the 16-nation euro region fell to 53.6 from 54.2 in December, London-based Markit Economics said yesterday in an initial estimate. Economists expected an increase to 54.4, according to the median of 15 estimates in a Bloomberg survey. A reading above 50 indicates expansion. The euro-region economy may lose momentum as the effect of government stimulus measures tapers off and rising unemployment erodes consumers’ willingness to spend. An index of services dropped to 52.3 in January from 53.6 in the previous month, Markit said. A gauge of manufacturing increased to 52 from 51.6 in December. (Bloomberg)
* * * * *

GENTING, YTL CEMENT, AXIATA---all the HOLD call, or it should be SELL?

Genting Bhd’s (GENT MK, Hold, TP: RM7.50) proposed construction of a theme park and hotel in Johor is part of thegroup’s broader development plans in Iskandar Malaysia. Genting head of strategic investments Datuk Justin Leong said: “The development plan will be subject to a detailed market feasibility study and is contingent to the successful development of the Johor Premium Outlets, the retail shopping project that Genting Group is developing with US-based Simon Property Group Inc.” He added that the building of a theme park and hotel in Johor is part of a broader development plan that the Genting Group has for its operations in Iskandar Malaysia. The company is exploring the project through its plantation unit, Genting Plantations Bhd (GENP MK, Hold, TP: RM6.70), which is already working on a joint venture project to
develop a high-end shopping complex in Johor. (Financial Daily)
* * * * *
YTL Cement Bhd (YTLC MK, Hold, TP: RM4.50)’s unit YTL Cement Singapore Pte Ltd has made an offer to purchase Holcim Investments (Singapore) Pte Ltd’s entire 55.87% equity stake in Jurong Cement Ltd (JCL) for S$61.9m (RM148.98m) or S$2.50 per share. The offer price is 40 cents or 19% higher per share than the price Holcim has offered in December last year to acquire YTL Cement Singapore’s stake in JCL. YTL Cement’s offer comes on the heels of
Holcim’s rejection of its earlier S$50m bid to purchase only a cement plant and terminal at Pulau Damar Laut from JCL’s unit Jurong Cement Bulk Terminal Ptd Ltd (JCBT) last Monday. The board of Holcim rejected YTL Cement’s earlier offer on the basis that it would “emasculate the remaining business of the company”, according to a report. A fight between YTL Cement and Holcim has been on the radar since Holcim offered to buy shares it did not own in Jurong Cement for S$2.10 per share in December last year. However, YTL Cement was of the view that Hocim’s offer was not attractive. Instead of accepting, the group indeed later responded with a proposal to buy over some assets, namely a cement plant and terminal in JCL on Jan 11. (Financial
Daily)
* * * * *
Axiata Group Bhd (AXIATA MK, Hold, TP: RM3.13) may sell Islamic bonds to refinance about RM4bn of borrowings, its CFO said yesterday. Datuk Yusof Annuar Yaacob said the company was looking to secure better rates and longer tenure through refinancing. “We are looking to refinance some of our bank borrowings into Islamic but we haven’t finalised the structure nor have we gone to the market to raise the money yet,” Yusof said. “The facility we have is in place until 2012. We believe that rates are very low and we want to take the opportunity to lock in some of those low rates.” (Financial Daily)

LOCAL BUSINESS NEWS 21.1.2010

Baswell Resources Bhd has bagged a US$100m (RM336m) subcontract from Hong Kong-based project management and building material sourcing company Metroplex Resources Ltd for a mixed development project in Abu Dhabi. Baswell has signed a memorandum of understanding (MoU) with Metroplex to entirely manufacture and install the furniture and fittings of the development. Baswell said it would collaborate with Metroplex and the Al-Amry Group to design, build and install a project for the Al Reem Island mixed development. “The MoU is consistent with Baswell;s market development plans as the company intends to enter into various collaborative agreements with other parties to enhance its international furniture
manufacturing status,” said the company. (Financial Daily)
* * * * *
Vale to invest RM3bn in Perak. With land and port deals virtually sealed, a Brazilian mining giant’s plan to build a distribution centre in Perak is set to kick off this year. According to Vale SA, the first phase will involve US$900m (RM3bn) in capital expenditure, including US$98m (RM333m) in 2010. The Vale project took a significant step forward on Tuesday when KYM
Holdings Bhd said its agreement to sell 16 parcels of land in Teluk Rubiah, Manjung to Vale International SA, had become unconditional. (StarBiz)
* * * * *
A mixed development project has been proposed for the site located directly across The Renaissance Kuala Lumpur and next to the Sunway Tower. The developer of an abandoned hotel project at the junction of Jalan Sultan Ismail and Jalan Ampang in Kuala Lumpur has submitted a new proposal for a mixed development project on the site, the city's mayor said. The
site, a prime piece of land located directly across The Renaissance Kuala Lumpur and next to the Sunway Tower (previously Wisma Denmark), was previously slated for the opening of the five-star The Grand Duta Hyatt hotel. However, the project was stalled due to the 1998 Asian economic crisis. Kuala Lumpur City Hall (DBKL) mayor Datuk Ahmad Fuad Ismail said it has
received an application from the developer for a 52-storey mixed development project consisting of service apartments, offices and a hotel. Kuala Lumpur Landmark Sdn Bhd, a subsidiary of Olympia Industries Bhd, was given the contract to develop the RM570m Grand Duta Hyatt in 1994. Mycom Bhd, the holding company of Olympia, then teamed up with Kuala Lumpur
Landmark to develop a 52-storey building to house its headquarters and the hotel. However, construction was halted in July 1998, when the group encountered financial difficulties during the economic crisis. The project was to recommence in 2003, but never did start. The hotel was built up to the 29th level before it was stopped. (BT)
* * * * *
Sales of new vehicles could hit a new high this year after the industry turned in a better than expected performance in 2009. Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said total industry volume (TIV) could be higher than the all-time high record in 2005. Aishah, however, said MAA's official forecast for 2010 was 555,000 units, or 2.4%, more
than 2009, amid positive signs of an economic recovery and low interest rates. Last year, the TIV eased marginally 2% to 536,905 units, from the 548,115 units registered in 2008. MAA originally forecast that sales would contract by a double-digit percentage to 480,000 units in 2009. Last July, it revised the figure to 500,000 units. MAA expects the TIV to continue to grow around 3 per cent annually to 566,500 units in 2011 and 583,500 units in 2012 before breaching the 600,000 mark in 2013. Rising consumer sentiment, an improvement in the business confidence level and an expected rise in commodity prices, would provide support to the auto industry, she added. Passenger vehicles accounted for 91%, or 486,342 units, of the total sales in 2009. This was 11,117 units lower than in 2008. The commercial vehicle segment only eased 0.2%, or 93 units, to 50,563 units. Total production last year declined 41,541 units, or 7.8%, to 489,269 units. Of this, the passenger vehicle output stood at 447,002 units, down from 484,512 units in 2008. Aishah said the year-on-year sales volume in December surged by 20% to 47,668 units. On a month-on-month basis, it expanded 5.5%. (BT)
(so proton, EPMB A GOOD BUY ?)
* * * * *
Malaysia may approve the introduction of a goods and services tax in March to increase revenue as the government seeks to narrow a budget shortfall, second Finance Minister Ahmad Husni Hanadzlah said. Full implementation of the levy may take about one a half years after approval as the system’s infrastructure is put together. The goods and services tax of 4% is expected to generate an additional RM1bn annually in revenue. Essential items such as agricultural products, poultry and livestock products, sugar, rice, flour, cooking oil and eggs will be exempted from the tax, the government has said. “We know very well that the sources of revenue for the government have been dependent heavily on petroleum. By introducing the consumption tax, we can have alternative sources of revenue,” Ahmad Husni said. (Malaysian Reserve)

SAPURA CREST, DAYANG, LEADER ANNJOO

EON Capital Bhd (EONCap) was given the regulator’s consent to start merger talks with Hong Leong Bank Bhd (HLBK,Hold, TP: RM8.71). Bank Negara Malaysia has no objection for EONCap to begin negotiations with Hong Leong that will lead to the “merging (of) the licensed entities under EON Capital Group with Hong Leong Bank Group,” EONCap said in a stock
exchange filing. The approval is valid until June 30. (BT)
* * * * *
SapuraCrest Petroleum Bhd (SCRES MK, Hold, TP: RM2.48) plans to tap into the fast growing oil and gas (O&G) in India, having invested US$110m (RM369.6m) under two joint-ventures and building two derrick lay barges that are expected to start operations in the first quarter of 2010. The investments are part of SapuraCrest’s joint-ventures with Indian partners Larsen & Toubro Ltd (L&T) and Quippo Prakash Pte Ltd. Over the next five years, the company will focus on the installation of pipelines and facilities (IPF). Presently, SapuraCrest provides facilities maintenance and upgrading as well as soil investigation and survey works in India.SapuraCrest’s Indian operations over the last 10 years have contributed about US$200m to its overall earnings. (Financial Daily)
* * * * *
Korea Electric Power Corp (Kepco), which has just landed a US$20bn contract to build nuclear powered power plants in the United Arab Emirates (UAE), is apparently in talks with Malaysia on the possibility of building such a facility here. According to earlier reports, Tenaga Nasional Bhd (TNB MK, Buy, TP: RM9.90) and Kepco had agreed in June 2009 to work together on a nuclear pre-feasibility study. According to Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui, in a new long term energy policy was in the final stages of being drafted by his Ministry as well as the Science, Technology and Innovation Ministry. In October last year, he was quoted as saying that the government would look at the option of using nuclear power to generate electricity by 2025 as a long term solution to meet the country’s energy needs as it
could no longer depend on its existing power resources, namely natural gas, coal and hydro. (Malaysian Reserve)
* * * * *
Naim Holdings Bhd has been ordered to carry out a limited review by its external auditors on its quarterly report submissions, after the company delayed the recognition of a gain from the disposal of Dayang Enterprise Holdings Bhd (DEHB MK, Buy, TP: RM2.20) shares until its annual audited accounts. In reprimanding Naim, Bursa Securities said the company had breached the stipulation in the Listing Requirements (LR) that a listed issuer must ensure “each announcement is factual, clear, unambiguous, accurate, and succinct and contains sufficient information to enable investors to make informed investment decisions”. Naim had reported an unaudited profit after taxation and minority interest of RM62.51m in its 4Q report for the financial period ended Dec 31, 2008, which was announced on Feb 25, 2009. However on April 30, it announced an audited profit after taxation and minority interest of RM80.75m in its annual audited accounts for FY08. Naim explained that the difference was mainly due to the dilution of company’s equity interest in Dayang Enterprise, which resulted in a gain of
RM13.93m to the group. (Financial Daily)
* * * * *
Leader Universal Holdings Bhd has secured a US$107m (RM356.95m) project to develop power transmission system in Cambodia on a build-operate-transfer (BOT) basis. Construction works on the project to develop a 230 kilovolt power transmission system, which would be divided into three stages, is expected to be fully completed by December 2013. Leader Universal’s unit Cambodian Transmission Ltd has also signed the 25 year power transmission agreement with Electricite Du Cambodge, a wholly state owned limited liability company of Cambodia. “Negotiations with the design and build subcontractor and suppliers of materials required for this project are completed and pending finalisation of the agreements. The project is part
of a development of Cambodian grid system and provides future 230kV extension to other parts of the country around Tonle Sap in Cambodia. (Malaysian Reserve)
* * * * *
Ann Joo Corp Sdn Bhd, the single largest shareholder of Ann Joo Resources Bhd (AJR) disposed of nearly 20m shares in the latter recently. A filing to Bursa Malaysia showed AJC sold the shares in the open market between 15 and 19 January. After the recent disposals, AJC’s stake was reduced to 64.69%, comprising of 325.19m shares in AJR. (Financial Daily)

EONCAP,GENTING,MAXIS,YTL, PETRA,NOTION

EON Capital Bhd (EON Cap) has left the door open to negotiate with other banks, besides Hong Leong Bank Bhd (HLBB) (HLBK MK, Hold, TP: RM8.71), for a potential acquisition or disposal of assets and liabilities or a merger and acquisition (M&A). EON Cap said the negotiations would be for the banking group, which wholly owns EON Bank Bhd, to either dispose its assets and liabilities to a third party or to acquire the assets and liabilities of the third party banking group. However, the industry players are unsure how the central bank would respond to EON Cap’s request, given that no other banking group, at least publicly, had expressed interest in EON Bank. EON Cap’s application to BNM for permissions to talk to other parties may indicate that its major shareholder Primus Pacific Partners Ltd is reluctant to clinch deal with HLBB, without a competing bid towards extracting better value for EON Bank, Primus is the single largest shareholder of EON Cap with a 20.2% stake. Even if HLBB was not Primus preferred buyer, HLBB has already secured permission to talk with Rin Kei Mei and Tan Sri Tiong Hiew King, who own a combined stake of 32.57% in EON Cap, through Kualapura Sdn Bhd, Lintang Emas Sdn Bhd and RH Development Sdn Bhd. (Financial Daily)
* * * * *
Genting Bhd (GENT MK, Hold, TP: RM7.50) plans to build a theme park and hotel within the Iskandar region in Johor to complement the group’s Resort World Sentosa, said its chairman Tan Sri Lim Kok Thay. Lim said for a start, Genting would build a mall in the region in a joint venture with Simon Property Group, the largest mall operator in the US, with Genting’s
portion of the project cost estimated at RM200m. The group, under Genting Plantations Bhd (GENP MK, Hold, TP: RM6.70), had 10,000 acres in Kulai, Johor and this landbank would make it easier for the group to expand its Iskandar plan later. He noted that the response to the mall would determine the implementation of the theme park and hotel plan. By having a hotel in
Iskandar, it would give the visitors the choice of cheaper accommodation compared to hotels in Sentosa. Meanwhile, Lim said Genting was looking at various opportunities in the US that emerged in the aftermath of the global financial crisis. (Financial Daily)
* * * * *
Maxis Bhd (MAXIS MK, Buy, TP: RM6.10) expects half its revenue to come from non-voice services by 2013. Non-voice services like text messages, ring tone and game downloads as well as internet surfing made up about 32% of Maxis’ total revenue as at end-September 2009. One of the main growth drivers will be its non-text messaging services such as mobile content downloads and surfing. The segment accounts for a third of the group’s non-voice revenue, from 12% five years ago. (BT)
* * * * *
The government wants the developer responsible for developing areas in Sentul, to include low cost houses in their proposed mixed development project, said Federal Territories and Wellbeing Deputy Minister Datuk M Saravanan. He said Kuala Lumpur City Hall (DBKL) would discuss with the developer YTL Land & Developer Bhd, a unit of YTL Corp Bhd (YTL MK, Buy, TP: RM8.00) to build 2,400 low cost houses, in their proposed condominium and commercial development for the area. “The low cost houses are necessary for the low income group and squatters in the area to own a house in the area, once it is developed,” he said yesterday. Saravanan said to ensure low cost houses were build by the developer, DBKL would amend the
agreement on the development of the area to include the building of low cost houses. (Malaysian Reserve)
* * * * *
Petra Perdana Bhd (PETR MK, Sell, TP: RM1.21) executive chairman and CEO Tengku Datuk Ibrahim Petra said the sale of Petra Energy shares and the sale of Petra vessels to Petra Energy were done in the interests of shareholders. In a statement he said that the board is clear in its objectives and is determined to meet its financial and cash flow commitments, as the company is expected to encounter a cash flow deficit of RM40m – RM70m for the next 12 months. It was reported that Petra executive director Shamsul Saad has submitted a complaint to the Securities Commission alleging breaches in procedures for the sales. Tengku Ibrahim said “We have no choice now but to look for alternative funding arrangements until the postponed hearing on March 3.” He added that he was aware that all proceeds from the divestment of Petra Energy shares are placed in an escrow account and that the loan was not due until 2012 and 2013. “But the urgent financial commitments and tight cash flow of the company were far more important and required immediate redemption of the loan”, he said. (BT)
* * * *

Petroliam Nasional Bhd (Petronas) has been invited by the Timor-Leste government to invest in its offshore gas development, Petronas president and CEO Tan Sri Mohd Hassan Merican said yesterday. Timor-Leste recently rejected a proposal by Australian-based Woodside Petroleum and partners to develop the offshore Greater Sunrise gas field. The rejection was based on the fact that Woodside would develop the gas field without building an onshore plant to liquefy the gas.Hassan was speaking to reporters at the signing ceremony between Petronas Lubricants International Bhd (PLI) and ProtonHoldings Bhd. The agreement between Proton and Petronas is for a supply, technical and commercial collaboration in the area of automotive lubricants and functional fluids. PLI’s chairman and Petronas’ vice-president for the oil business, Md Arif
Mahmood said the tie-up would also provide for a profit-sharing arrangement with Proton in the aftersales or service-fill market segment and greater cooperation in initiating joint marketing and promotions. (Financial Daily)
* * * * *
Ho Hup Construction Co Bhd yesterday revealed that the reports by its investigative accountants showed various suspected offences of criminal breaches of trust, misappropriation of property and cheating had been committed against its group of companies. There also existed reasonable suspicion that various breaches of director’s duties had beencommitted. It said the Penal Code and Companies Act breaches concerned the nine projects and transactions including cashcheque payments totalling RM5m without proper supporting documents and payments via cash cheques amounting to RM2.4m for “Perlin Mandeera Project” in Sri Lanka that the company had no record of. Others included a RM14.5m development agreement with Syarikat Kemajuan Perumahan Negara Sdn Bhd without any board approval and the acceptance of road
projects in Madagascar for RM216.9m without proper feasibility study and board approval. The company had taken all necessary actions including filing of a suit against its former managing director, Datuk Low Tuck Choy for damages amounting to RM235.6m and legal costs. (Starbiz)
* * * * *
Japan’s Nikon Corp Ltd has emerged as a substantial shareholder in Notion VTec Bhd after taking up 10% or 13.84m shares in the precision component maker in a private placement exercise. The shares were placed out for a total of RM33.78m or RM2.44 a share, the price set on Jan 6, 2010 at a 10% discount to the weighted average market price of RM2.7066 for the five preceding market days. Notion executive chairman Thoo Chow Fah said in a statement yesterday that Nikon’s equity investment in the company indicated the strong confidence placed in the group, and that it should not affect the group’s other camera businesses. In a separate statement, Nikon said the investment would help the camera maker increase its presence in the digital camera market through the utilisation of Notion’s technologies in the manufacture of its products and development of a framework to achieve a stable supply of highly competitive digital cameras. The proceeds of RM33.78m will be used mainly for the expansion of its facility in Thailand with an additional 200,000 sq ft of floor space. The new plant is expected to be operational in the first quarter this year. With the completion of the private placement, Notion’s total paid-up share capital now stands at 152.24m shares. (Financial Daily)
* * * * *
The Kuala Lumpur High Court has fixed April 2 to rule on whether to make public the government’s water concession agreement with Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) and the company’s audit report, as sought by the Malaysian Trades Union Congress (MTUC) and other parties. Judge Datuk Mohamed Appandi Ali, who sat at the high court’s appellate and special powers division, fixed the new date in chambers yesterday. According to MTUC’s counsel Matthew Thomas Phillips, the court had instructed the parties concerned to file written submissions before April 2. Phillips also said that MTUC had instructed him to seek clarification from the Selangor state government on whether it was objecting to the judicial review. Klang member of parliament Charles Santiago, who spearheads the Coalition Against Water Privatisation initiative, said the judicial review was sought to challenge the state and federal governments to release information to the people. MTUC and 13 others filed for judicial review on Jan 15, 2007 after the Energy, Water and Communications Ministry denied their request to view the water concession agreement between Syabas and the federal and state governments as well as Syabas’audit report. (Malaysian Reserve)

HLBK, MAS, PETRA & LOCAL business news

The Board of EON Capital Bhd (EON Cap) is expected to send in a letter to Bank Negara possibly today for permission to talk to Hong Leong Bank Bhd (HLB), (HLBK MK, Hold, TP: RM8.71) for a potential sale of its assets and liabilities.
EON Cap held a board meeting last Thursday to discuss the invitation from HLB, which had earlier obtained the green light from Bank Negara to negotiate on an institutional basis. On an individual basis, HLB has already received the nod to talk to two major shareholders – Rin Kei Mei and Tan Sri Tiong Hiew King – who own a combined indirect stake of 31.7% The Employees Provident Fund (EPF), which owns a 10.7% stake in EON cap and 9.31% in HLB, is expected to study the proposal via the board of EON Cap. The much awaited proposal from HLB, which announced on Jan 6 that it intended to purchase the assets and liabilities of EON Cap, will be submitted after EON Cap receives the go-ahead from Bank Negara for the talks. Under the assets and liabilities method, HLB only requires 50% shareholders’ approval plus one share for the deal to go through. (StarBiz)
* * * * *
MAS Aerospace Engineering (MAE), Malaysia Airlines' (MAS MK, Sell, TP: RM2.21)maintenance, repair and overhaul arm (MRO), has sealed a three year maintenance support agreement with India's low-cost carrier SpiceJet for its fleet arm Boeing 737 New generation series aircraft. No value was given for the contract. SpiceJet's current fleet of 19 aircraft and
future aircraft will be sent to MAE for "C" and "D" checks from 2010 until 2013. "C" and "D" checks are periodic checks that all aircraft have to go through after a specific amount of flight hours (“C” checks could be out of service for 5-6 days whilst “D” checks could be out of service for a month). SpiceJet plans to add another 12 B737 NG aircraft to its fleet over the next 2
years. The deal will make SpiceJet MAE's first customer for its Indian joint-venture company. MAS-GMR Aerospace Engineering, MAE's 50:50 joint-venture company with GMR Hyderabad International Airport Ltd, is expected to start operations by 1Q11. Prior to the completion of MAS-GMR's facility at the Rajiv Gandhi International Airport in India, SpiceJet aircraft that
are due for checks will be serviced at MAE hangars in Subang, Selangor. MAE MD Mohd Roslan Ismail said the company is in advanced stages of discussions with other airlines like Jet Airways, but did not quantify the number of airlines it hopes to sign on this year. (BT)
* * * * *
Malaysia Airlines Cargo Sdn Bhd (MASkargo), a subsidiary of Malaysian Airline System Bhd (MAS MK, Sell, TP: RM2.21) is eyeing a 10% to 15% revenue growth as it reviews its fleet composition and expands strategic cooperations this year. MASkargo MD Shahari Sulaiman said the cargo segment took a sudden turn upwards towards the end of 2009. He believes the industry will experience positive growth this year although it remains a challenging environment. He added that MASkargo is looking at growth of about 10% of their networks given the economic conditons. He also said MASkargo was working closely with China-based Hainan Airlines Group (HNA) to expand its presence in China, and specifically in Shanghai. MAS signed a strategic co-operation framework with HNA last October. The collaboration enabled
MASkargo access to HNA’s strong global network, increase its market share and thus allow the national carrier to have a wider presence worldwide. Shahari said MASkargo’s revenue could contribute up to 20% of the group’s revenue. He said cargo demand was expected to grow by some 7% to 37.7m tonnes this year following a 13% decline in 2009. Lastly, he said that
MASkargo was reviewing its fleet and may reduce the number of aircraft. It currently has four 747-200 and two 747-400 freighters. The lease of its two 747-400Fs will be expiring in April. (Financial Daily)
* * * * *
The Securities Commission (SC) is looking into the submission of Petra Perdana Bhd (PETR MK, Sell, TP: RM1.21) executive director Shamsul Saad, purportedly relating to “breaches in procedures” over the sale of a block of Petra Energy Bhd shares belonging to Petra Perdana and also the sale of vessels by Petra Perdana to Petra Energy. The complaint comes in the wake of three major incidents that mark the totally divergent views of two groups of Petra Perdana shareholders – one led by executive chairman and CEO Tengku Datuk Ibrahim Petra ad the other by Shamsul Saad, and brothers Datuk Henry Kho Poh Eng and Kho Poh Wat, both senior general managers of Petra Perdana. On Dec 23, Shamsul obtained an injunction, which has been extended to March 3, to stop the sale of the remaining 29.59% in Petra Energy following an earlier sale of 25.05% or 48.8m shares to Shorefield Resources Sdn Bhd for RM1.91 per share. The divestment on piecemeal basis did not go well with some of the shareholders. The sale of three vessels by Petra Perdana to Petra Energy also represented a bone of contention. (StarBiz)
* * * * *
Genting Singapore plc is ready to start operating Singapore’s first legal casino as soon as the government issues its gambling licence, the company said yesterday. Genting Singapore’s stock added as much as 4% on speculation gambling may begin at Resorts World Sentosa as soon as February’s Chinese New Year holiday. Four hotels and 10 restaurants within the US$4.5bn (RM15.03bn) Sentosa island complex would begin accepting guests from Jan 20. A Universal Studios theme park in the complex is also waiting for a licence to operate, and would open as soon as that is issued. The second casino resort, Marina Bay Sand, being built by Las Vegas Sands Corp, will open later after encountering construction delays. (Financial Daily)
* * * * *
Dubai Group LLC, an investment firm of the Dubai ruler, is eyeing to sell its stake in Bank Islam Malaysia Bhd at an indicative RM1bn, marking the exit from its major investment in Malaysia. It is learnt that the proposed divestment, which had been mooted even before the Dubai debt crisis last year, would be completed by June this year as the unidentified buyer is now near completion of its due diligence, according to sources close to the negotiation. “The debt crisis in Dubai has, in some ways, put the sale on fast track,” the source said. Dubai Group presently owns about 30.5% stake after it opted out of a preference shares issuance exercise of Bank Islam, a unit of BIMB Holdings Bhd, as plans for the proposed divestment was already in place then. “There is a process running and we expect the sale to be done over the next few months,” Rothschild
Malaysia Sdn Bhd MD/CEO Piers Willis said. Rothschild is the sole financial advisor to Dubai Group. (Malaysian Reserve)
* * * * *
An international marina, premium water-taxi service, upscale food and retail outlets and commanding views of the Andaman Sea are among the attractions property developer E&O Property Development Bhd will offer potential buyers at its RM1.8bn Quayside Seafront Resort Condominum development in Penang next month. The company's general manager (sales and marketing) Lim Hooi Yen yesterday said the luxury condominium project - which is part of E&O's Seri Tanjung Pinang waterfront development - will also boast the region's first private waterpark within a gated community. The Quayside condominiums, which comprise 7 blocks of seafront units, will be sprawled on a 8.4ha site, with 1.8ha of land dedicated to a signature waterpark and clubhouse. Lim said the proposed project is expected to be completed in about 7 to 10 years and about 60% of the total 1,200 Quayside condominium units are expected to be sold to Malaysians. (BT)
* * * * *
Petronas Dagangan Bhd has launched a newly enhanced RON 97 fuel, the Petronas Primax 97, which offers motorists more power, better acceleration and fuel economy benefits. Petronas said yesterday the new fuel is now available at more than 300 of its 900 stations nationwide. (BT)
* * * * *
The board of Ho Hup Construction Co Bhd has rejected an alternative regularisation plan proposed by former MD Datuk Low Tuck Choy, saying it will further constrain cashflow and fail to lift the company out of Practice Note 17 (PN17) status. In a statement released to Bursa Malaysia, Ho Hup said Low’s alternative plan did not clearly address the group’saccumulated losses, nor did it provide certainty that such losses would be substantially eliminated immediately upon the plan’s completion. Low’s plan was unveiled two weeks ago. (Financial Daily)
* * * * *
Bank Negara Malaysia is in the process of formulating a new blueprint for the financial sector for the next decade which would ensure the development of a more inclusive financial system. Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said Malaysia will ensure that all segments of society continue to have access to financial services. The financial inclusion measures have seen positive results so far, with the country having among the highest level of deposit and loan accounts in the world. Zeti said the strategies implemented had generated 6 characteristics of the financial system, firstly a business environment that allowed a diverse range of financial service providers. Secondly, basic banking products and services have been made available at reasonable costs, and thirdly a diverse set of delivery channels had been introduced to ensure
widespread access to financial services. "The central bank's branching policy has encouraged financial institutions to establish an extensive branch network across the country to ensure widespread physical access to financial services." Another feature of the system is the enhancement of financial literacy and protection of consumer rights. Finally, recognising the importance of human capital development in the industry, the central bank also established centres of excellence for learning for the financial services sector. (BT)

SUNCITY, AXIATA, MAS, AIR ASIA,WAHSEONG & local business news

Sunway City Bhd (SunCity) (SCITY MK, Buy, TP: RM3.60) may inject Sunway Towers at Jalan Ampang and Sunway Hotel Seberang Jaya in Penang into its RM4bn real estate investment trust (REIT), said MD for property investment Ngeow Voon Yean. Ngeow acknowledged that the group had been planning to float its property assets through a REIT for a number of years, but delayed it due to poor market conditions. He added that SunCity was hopeful of listing its REIT this year. “We’re seriously considering it (but) it all depends on timing. Once the window is open for an IPO, we’ll list. We hope to do it this year,” he told reporters after the launch of Sunway Tower on Friday. Sunway Tower comprises 27 levels of Grade-A office space with a net lettable area of 276,000 sq ft, eight levels of car park space and a freehold parcel of adjoining vacant land. (Starbiz)
* * * * *
Celcom Axiata Bhd (a unit of Axiata Group Bhd (AXIATA MK, Hold, TP: RM3.13)) unveiled its latest BlackBerry Bold 9700 and BlackBerry Storm2 9520 yesterday with projections to sell over 70,000 BlackBerry smartphones by the end of this year. Celcom aims to continue to strengthen its position as the BlackBerry market leader in Malaysia, where it currently
has a 52% market share and is also the biggest BlackBerry seller in Southeast Asia. “We are confident that we are going to do 70,000 units this year and it is an achievable target,” chief corporate officer Mohamed Adlan Ahmad Tajudin said. (Starbiz)
* * * * *
Malaysian Airline System Bhd (MAS) (MAS MK, Sell, TP: RM2.21) is expected to spend some RM460m on buyer furnished equipment (BFE) to put the super jumbo jets A380 onstream. Based on its circular to shareholders last week, the national carrier said the BFE was not an incremental cost, as it would have the exact same financial commitment under the leasing agreement with Penerbangan Malaysia Bhd (PMB). The six A380 aircraft, worth some US$2.2bn (RM7.4bn) are scheduled for delivery from late 2011. MAS is being compensated some RM330m for the delivery delay of the A380s which were originally slated for its first delivery three years ago. MAS had said last month that it was taking over the super jumbo jets
from PMB involving some RM1.54bn worth of pre-delivery payments. MAS would also take over two B777 and two B747 from PMB at a cash consideration of RM190m and assume RM1.46bn worth of liabilities. The purchase of the new aircrafts and the takeover of the A380 ownership by the airline is part of its strategy to streamline its fleet. Currently, MAS’s fleet of 90 aircraft is leased from PMB due to a restructuring agreement with the government in 2002. (Financial Daily)
* * * * *
The majority of AirAsia Bhd (AIRA MK, Buy, TP: RM1.67) shares are in the hands of foreigners while the bulk of shares in its rival Malaysia Airlines (MAS) are held by local institutions. AirAsia announced to Bursa Malaysia that 50.36% of its issued and paid-up share capital was held by foreigners as at end-2009, compared with 37.98% foreign shareholding in June. It did not name the foreign shareholders. AirAsia told the exchange that foreign ownership of shares in the company had exceeded the limit of 45% of its total issued and paid-up share capital. The airline said the shares held by foreigners within the prescribed limit shall be entitled to all rights and entitlements attached to the shares. Shares held by foreigners which have exceeded the prescribed limit shall also be entitled to all such rights and entitlements except for the exercise of voting rights in respect of the shares. (Starbiz)
* * * * *
Wah Seong Corp (WSC MK, Buy, TP: RM3.40) is interested in buying a stake in Italian pipe coating company Socotherm. An unsourced report in Italian business weekly Il Mondo said Wah Seong is ready to invest 50m - 100m euros (RM240.2m – RM480.3m) to help save Socotherm. Wah Seong deputy manager Giancarlo Maccagno said, “The 50m - 100m is pure speculation on the part of the writer. It’s far too early to talk about numbers and what equity is available to us.” At the start of August, Socotherm, which specialises in coatings for petrol, gas and water pipes, filed for creditor protection. In the first half of the year, Socotherm reported a net loss of 57.2m euros, widening from 14.9m euros a year earlier, with sales of 84.2m euros, down 42.1%. (Malaysian Reserve)
* * * * *
Affin Holdings Bhd is expected to commence negotiations soon with shareholders of PT Bank Ina Perdana (Bank Ina) for a possible acquisition of a controlling stake. Affin said the central bank had granted approval for Affin to start talks on the Bank Ina stake buy. It said the board chose Indonesia for its first overseas venture for the country’s significant growth potential due to its high population and low banking penetration. The bank said it would seek the necessary approvals from Bank Negara should it intend to proceed with the proposal upon conclusion of the negotiations. (Starbiz)
******

An internal candidate, rather than an outsider as some have speculated, will likely succeed Tan Sri Mohd HassanMarican, whose contract as president and chief executive of Petronas ends in February. Sources say Prime Minister Datuk Seri Najib Razak will choose the successor from among 3 senior Petronas executives. They are Datuk Shamsul Azhar Abbas, who was formerly the MD of MISC Bhd before retiring in January last year, and Petronas board members Datuk Anuar Ahmad and Datuk Wan Zulkiflee Wan Ariffin. A decision is likely in the next few weeks. So far there has not been any word on the renewal of Hassan’s contract. It is leart that Najib is looking at a new candidate to continue Petronas’ growth to higher levels and wants to ensure the person is given a free hand in discharging his duties. But at the same time, he wants to keep
Hassan in the oil company. It is likely that Hassan will be offered a position in an advisory role. (The Edge)
* * * * *
PetroSaudi International Ltd intends to privatise and delist UBG Bhd, and its two subsidiaries Putrajaya Perdana Bhd (PPB) and Loh & Loh Corp Bhd, once it has completed acquiring stakes in UBG in deals valued at RM1.4bn. The entire exercise, assuming full acceptance by the shareholders of UBG, PPB and Loh & Loh, is scheduled to be completed by the end
of 1Q10. “This will represent the second significant investment by the Saudi company in Malaysia and signals growing economic ties between Kuala Lumpur and Saudi Arabia,” the company said. (Starbiz)
* * * * *
Packet One Networks (M) Sdn Bhd (P1) has secured a RM50m loan from Malaysia Debt Ventures Bhd (MDV) to expand its WiMAX service nationwide. CEO Michael Lai said the MDV loan would likely be fully utilised this year and would be repaid over 48 months. “The loan will go towards financing our capital expenditure (capex) for further expansion of our WiMAX
network infrastructure as well as related services,” he said. He added that the capex for P1 would be at least RM200m this year compared with about RM400ml last year. We spent more last year as we needed more capital to build up the networks, sites and facilities,” he said. On P1’s listing plan, Lai said it would depend on the market condition. “We definitely hope for it to
happen in 2 years but we have not started to talk to investment banks,” he said, adding that Malaysia would be its first choice venue for listing. He said the company also planned to expand its WiMAX service to east Malaysia by 2H10. (Starbiz)

KHAZANAH,EONCAP,PETRA,GREENPACKET,HONG LEONG & local business news

Khazanah Nasional Bhd saw a 34% rise in the value of its portfolio asset to RM92.2bn last year. It will continue to divest non-core holdings but adopt a more cautious investment strategy this year. MD Tan Sri Azman Mokhtar said Khazanah had divested some US$18bn (RM59.94bn) worth of non-core investments over the past five years. He said Khazanah averages about US$3.5bn a year of divestments, and a significant part of the divestment proceeds would be used for investment. Last year Khazanah made a total of eight divestments worth RM3.1bn, with gains of about RM1.2bn. The divestments involved stakes in Tenaga Nasional Bhd (TNB MK, Buy, TP: RM9.90), Malaysia Airports Holdings Bhd and PLUS Expressways Bhd. Asked to comment on this year’s market conditions, Azman said, “We are cautiously optimistic. Broadly recovery is still fragile.” He said the key investment focus in 2010 and the medium term would continue to be domestic investments that were “growth drivers” and had strong economic impact. Historically Khazanah undertakes RM5bn to RM7bn worth of investments a year.
(Financial Daily)
* * * * *
The board of EON Capital Bhd (EON Cap) is believed to be delaying a decision to apply to Bank Negara for permission to negotiate for the potential sale of its asset and liabilities to Hong Leong Bank Bhd (HLB) (HLBK, Hold, TP: RM8.71). Sources said among the reasons given were that apparently, this was not the right time for such a decision. Earlier, HLB had received the green light to talk to 2 major shareholders of EON Cap – Rin Kei Mei and Tan Sri Tiong Hiew King who own a combined 31.7% - on an individual basis. If EON Cap had decided yesterday to write to the central bank for similar permission to talk, HLB would then be able to negotiate with them on an institutional basis. “Even if they are willing to talk to HLB, that does not mean they cannot talk to other bidders,” a source said. “By doing this, they are not giving other shareholders a
chance to even look at the proposal from HLB although it is common knowledge that the boss, Tan Sri Quek Leng Chan, has not been known to pay high prices for his deals. By not allowing the proposal to surface, they may be robbing themselves ofthe chance to get another bidder to throw in the challenge.” (Starbiz)
* * * * *
Petra Perdana Bhd (PETR MK, Sell, TP: RM1.21), an offshore marine services provider, yesterday assured shareholders that business continues as normal despite the temporary suspension of 11 key executives. “We are now looking at the best possible plans and steps we can solidify and ensure Petra Perdana survives in the challenging 12 months” its executive chairman and CEO, Tengku Datuk Ibrahim Petra said in a statement. On the company’s move to sell its 25% stake in subsidiary Petra Energy Bhd, he said it was only decided upon full discussion with the board, the finance department and careful consideration examining all facts on the table as CEO. Petra Perdana intended to use the funds raised from the sale of Petra Energy to make payments on its financial obligations and meet its business operation responsibilities. Tengku
Ibrahim said the board gave him the mandate to sell the 54.6% block in PEB with the conditions that it was sold en bloc, through open tender, valuation done and not for less than RM1.80 per share net. (Financial Daily)
* * * * *
Greenpacket, the international arm of Green Packet Bhd, is targeting to be the world’s No 1 WiMAX modem vendor and connectivity solutions provider by year-end. Senior general manager Kelvin Lee said in just two years, Greenpacket had become the world’s No. 3 WiMAX modem vendor in terms of market share, totalling 14% in 2009. “Our connection management software is the preferred software solution in the Asia-Pacific region, and we have set out sights on taking leadership position globally in this market in the near future,” he said after the launch of the company’s New Horizons brand campaign yesterday. Lee said the campaign was aimed at changing the mindset of its workforce to enhance efficiency. Lee said Greenpacket had developed a full range of indoor, outdoor and USB modems for its sister company and 4G WiMAX
operator arm, Packet One Networks (M) Sdn Bhd. (Starbiz)
* * * * *
Hong Leong Company (M) Bhd’s (HLCM) wholly owned subsidiary Spectrum Arrangement Sdn Bhd is proposing to privatise Hume Industries Bhd at RM4.30 per share under a voluntary takeover. The notice came after HLCM transferred its 64.94% direct stake comprising 118.8m shares in Hume to Spectrum yesterday. Hume makes concrete and steel products and premix road surfaces, and holds a 41.46% stake in Southern Steel Bhd. As at Sept 30, Hume had net cash and cash equivalents translating to a net asset value of RM5.04 per share. In the notice to Bursa Malaysia, Spectrum said it did not intend to maintain Hume’s listing status and would not make arrangements to comply with the public shareholding spread it its interest exceeded the 75% mark. (Financial Daily)
* * * * *

New vehicle sales in Malaysia should rebound 4.5% to a record 555,000 units this year. The high 2010 sales would be due to the improved economic outlook and rising consumer sentiment, said Frost & Sullivan head of automotive and transportation, Kavan Mukhtyar. Multi-purpose vehicle would be the fastest growth segment. It should grow 12.7% y-o-y in 2010 to 68,000 units largely buoyed by Proton Exora and Perodua Alza. Mukhtyar said interest rates fluctuation would impact vehicle sales most. Other downside factors are global economic uncertainties, lower external demand and new fuel subsidy. There will be continued interest and development in electric vehicles and hybrids by carmaker, but local demand should be negligible. (BT)
* * * * *
The nationalisation of the country’s toll operators, should it materialise, will be expensive when now is the time for fiscal rectitude and discipline to reduce the fiscal deficit, says Khazanah Nasional Bhd MD Tan Sri Azman Mokhtar. Khazanah is the major shareholder of PLUS, the country’s biggest toll concessionaire. “In terms of financial operating performance and operating margin, the company (PLUS) is already in the top 10 toll-roads companies of the world and in terms of upgrading, toll-booth experience, rest-stops quality and cleanliness of its toilets, I think they are already running a very tight ship.” Azman said. (Starbiz)
* * * * *
Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) calls for quick resolution to restructuring issue in Selangor, KL and Putrajaya. This will ensure that the project of replacing old pipes, which has been long postponed, can be carried out again. Executive chairman Tan Sri Rozali Ismail said the delay in the project directly affected about seven million consumers as many services have been delayed as a consequence, especially the replacement of pipes. Pipes aged more than 40 years are the cause of polluted water supply problems. (Malaysian Reserve)
* * * * *

SURIA, YTLCEMENT,PETRA,DIALOG

Port operator and builder Suria Capital Holdings Bhd has been qualified to make a bid for the RM1.2bn power plant in Kimanis, Sabah, and is preparing a proposal to submit to the project owner by April. Group MD Datuk Dr Mohd Fowzi Mohd Razi said the company is working on the proposal with its partner from Taiwan, a major engineering, procurement and commissioning (EPC) contractor, as well as a local firm. A consortium, comprising the 3 companies, has been formed and it will be led by the EPC contractor, he said. The project owner is Kimanis Power Sdn Bhd, a 60:40 joint venture between Petronas Gas Bhd (PTG MK, Buy, TP: RM10.90) and NRG Consortium Sdn Bhd, the business arm of Yayasan Sabah Group. It is understood that Petronas is planning to award the contract by August this year. The planned capacity of the 300 megawatts (MW) Kimanis power plant will be implemented in two phases. So far, 12 companies have been shortlisted. The first phase will have a capacity of 100MW, which will be increased by another 200MW in the second. The power plant, covering 41ha, is expected to be completed by the end of 2013 and fully operational by early 2014. (BT)
* * * * *
YTL Cement Bhd (YTLC MK, Hold, TP: RM4.50), through Singapore unit YTL Cement Singapore, has offered to buy the cement assets of Singapore-listed Jurong Cement Ltd for S$50m. In a letter to Jurong Cement Ltd, YTL said that the asset, Jurong Cement Bulk Terminal, was worth more than the price offered by Holcim Investments Singapore. Holsim had
previously made a takeover offer for Jurong Cement (the company) at S$2.10 a share. In YTL’s letter to the company, it said it was making the offer because it felt the take over offer by Holcim “significantly undervalues the company, its business and its assets.” YTL also noted that if the Holcim’s takeover was successful, the company would no longer be listed on the Singapore
Exchange. (Starbiz)
* * * * *
Petra Perdana Bhd (PPB) (PETR MK, Sell, TP: RM1.21) said it had identified experienced supervisors and managers within the company to perform relevant job functions pending the appointment of independent consultants. In a reply to Bursa Malaysia’s query, PPB said Suhaimi Badrul Jamil had been appointed management consultant to take charge of the finance and accounts department of the company and its subsidiaries from Jan 13 2010 to Feb 3 2010. Suhaimi is a nonindependent non-executive director of Petra Energy, and is the brother-in-law of executive director Datin Nariza Hajjar Hashim. This will be treated as a related-party transaction with his remuneration fixed at RM25,000. Meanwhile, Capt Abdul Halim
Ahmad Said had been appointed management consultant to take charge of the daily marine operations of PPB and subsidiaries at the same remuneration package. PPB also said Ferrier Hodgson MH had been appointed independent consultant to review the management and operations of the PPB group for FY09. The appointed parties will report directly to
PPB’s CEO. (Financial Daily)
* * * * *
India’s GTL Infrastructure to buy tower assets of Aircel for US$1.8bn (RM6.03bn), according to sources. This will make GTL one of the largest independent mobile mast firms in the country with 32,000 towers. GTL will pay about 85bn rupees (RM6.23bn) for 17,500 telecom towers owned by Aircel, India’s No. 7 mobile operator and a unit of Maxis Communications Bhd
(, said the sources. New mobile operators in India are looking to cut costs by sourcing telecom masts from independent tower firms. The deal would be the largest so far in the Indian telecom tower sector. (Financial Daily)
* * * * *
AXA Affin Life Insurance Bhd hopes to grow its share of the local life insurance market from 1.5 % to 8% by 2012, as it undertakes an AXA global branding exercise. Its CEO Loke Kah Meng said the insurer will look to grow organically or via acquisition to achieve its target. In Malaysia, the insurer plans to increase its agency force and strengthen its product portfolio. “As for bank partnerships, we have five presently and will concentrate on these partnerships,” Loke said. On whether it will acquire another insurer or look at partnerships to grow its local presence, Loke said both options are possible. “We are open if the opportunity presents itself for the right partnership at the right price,” he said. (BT)
* * * * *
Dialog Group Bhd expects to increase its profit after tax by 20% to 30%, for the current financial year. The company’s chairman, Ngau Boon Keat, said the company has been experiencing a steady growth of 30% annually in terms of profit for the past 14 years. For the financial year ended June 30, 2009 the company posted a growth in revenue of RM1.104bn, against
RM790.5m the previous year. He also said the company, a leading integrated specialist technical services provider, has forecast a bright future for the oil and gas industry despite the global economic slowdown as well as the recent Dubai crisis. In a related development, the company is negotiating with relevant quarters on the group’s global network expansion plan.
(Financial Daily)

UMW, IOI, AFG,GADANG and other business news

UMW Toyota Motor Sdn Bhd, a unit of UMW Holdings Bhd (UMWH MK, Hold, TP: RM5.59)expects to account for 15% to 16% of the automotive total industry volume (TIV) this year, driven by new car launches and its network expansion programme. UMW Toyota president Kuah Kock Heng said this year’s TIV was expected to be about 540,000 units. “We are sure to achieve this target as we plan more car launches and also through the smooth ride of our network expansion programme in various locations,” he said. Newly appointed Lexus Malaysia director Harry Loo Chee Yan said the company
aimed to sell 400 Lexus vehicles this year, including 20 units of the newly launched facelift model – the LS460L and the new LS460 sport- versus 300 units last year. Loo said the RM2m Lexus 3S centre in Penang that started operations this month
would help the company reach out to more potential customers, along with providing better services to its existing users. “We plan to open another 3S centre in Johor by year-end,” he said. Lexus has a 3S centre in Mutiara Damansara. (Financial Daily)
* * * * *
The proposal join venture (JV) between plantation giant IOI Corp Bhd (IOI MK, Hold, TP: RM5.21) and Pelita HoldingsSdn Bhd will not go ahead as planned, IOI announced yesterday. The JV, which was announced in August 2008, would have seen IOI Corp and Pelita Holdings form a new company, IOI Pelita Kanowit Sdn Bhd, to develop about 7,000ha of land in Sibu, Sarawak into oil palm estates. IOI Corp said the JV agreement was terminated by mutual consent, and IOI’s share in IOI Pelita would be sold to Pelita Holdings. The company did not provide a reason forthe termination of the JV. (Financial Daily)
* * * * *
Alliance Bank Malaysia Bhd chief executive officer (CEO) Datuk Brigdet Lai, who is currently on extended leave as the bank’s board carries out an internal probe, says her immediate priority is to defend her reputation. In a meeting with selected media last night, Lai stressed that she was still the bank’s CEO. “Last week, my immediate priority is to defend the company. But this week, it is to defend my integrity” she said. Chairman Datuk Thomas Lee, in the board’s first briefing to the reporters since the news of the probe become public, said the investigation was related to the renovation of property and that it could take about two to three weeks to complete. Lai confirmed that she had a letter from the Board on Monday and that the
questions were related to branch renovation. Both Lai and the bank’s Board stressed that the probe would not affect the bank’s operation or profit. (BT)
* * * * *
Citigroup Inc has become the latest to obtain approval from the Securities Commission (SC) to establish stockbroking operations in the country. Citibank Bhd CEO Sanjeev Nanavati said that the news underlined Citi’s continued investment in
Asia and its desire to play an expanded role in the Malaysian capital markets. Citigroup will complement existing broking firms in enhancing the intermediation services industry in Malaysia. The group is also expected to play a crucial role in attracting more funds from the Middle East to Malaysia, given the company’s strong presence in the Middle East. (Financial Daily)
* * * * *
Gadang Engineering (Malaysia) Sdn Bhd and its joint-venture (JV) partner Bukit Jerneh Quarry Sdn Bhd have received a letter of acceptance for a contract worth RM291.18m from Malaysia Airports Holdings Bhd (MAHB). The contract pertains to a works package under the proposed development of the new low-cost carrier terminal and related works at the Kuala Lumpur International Airport (KLIA), Gadang Engineering’s parent company Gadang Holdings Bhd said yesterday. “The scope of works under the contract comprises site preparation, earthworks and main drainage for Runway 3 and its associated taxiways which are expected to be completed on Dec 18, 2010,” it said. The contract was awarded to the Gadang-Bukit Jerneh Quarry JV in the proportion of 70:30 respectively. (Financial Daily)
* * * * *
Tan Sri Hassan Marican is likely to stay on as CEO of Petroliam Nasional Bhd for another year when his contract expires next month, the Malaysian Insider reported yesterday without identifying its source. An announcement on the extension is expected soon from the Government. The Government’s reason for renewing Hassan’s contract was because “he is the best man for the job”, the online newspaper was quoted. (Malaysian Reserve)
* * * * *

PETRA, AFG,KENCANA ,UEMLAND & LOCAL NEWS

The High Court here yesterday extended to March 3 an injunction preventing Petra Perdana Bhd (PETR MK, Sell, TP:RM1.21) from divesting its remaining shares in associate company Petra Energy Bhd (PEB) pending an EGM set for Feb 4. Judicial Commissioner Mah Weng Kwai allowed the extension after meeting the lawyers in chambers. CEO Tengku Ibrahim Petra Tengku Indra Petra and the 4 others are ordered to hang on to the shares pending the disposal of the suit or the EGM, whichever comes first. According to a lawyer involved in the matter, there could be up to 2 EGMs if the first meeting next month failed to secure the removal of the 4 directors. If it came to that, Shamsul may give 21 days notice to requisition a
second EGM to let shareholders determine whether to divest the shares, said the lawyer. Depending on the outcome of the proposed EGMs, the court may then proceed to examine Petra Perdana’s disposal of 3 vessels and 2 tranches of shares which
represent a 5.38% and 25.03% stake in PEB, the lawyer added. (Financial Daily)
* * * * *
Datuk Bridget Lai is still the group CEO of Alliance Financial Group Bhd (AFG) and no acting CEO has been appointed while she is on annual leave, the banking group said yesterday. The group’s board of directors did not deny that Lai or “some
senior management personnel” could be under an internal probe in matters relating to “governance issues”. AFG directors said the investigation was “purely a disciplinary investigation” looking into branch refurbishment contracts and was not related to dealing in shares, nor the sale and leaseback of a commercial building. The AFG board also confirmed Lai was on “voluntary annual leave” and she had not been forced to take leave. She is expected to be on leave for another 2 to 3 weeks. AFG’s board has also called for a media briefing today. No details have been given but the briefing is believed to be on the same matter. Investors have been spooked by the apparent lack of transparency over the latest developments in the banking group that had hogged the media limelight recently. (Financial Daily)
* * * * *
Kencana Petroleum Bhd plans to set up operations in Terengganu due to the potential growth of the state’s oil and gas industry. To start, the company will use the service of an RM46m vessel to operate in nearby South China Sea, said group CEO Datuk Mokhzani Mahathir. He also added that Kencana will try to invest in Terengganu and in border areas with Thailand in the industry. Simultaneously the company is also looking to set foot in the oil and gas industry in Kemaman. Mokhzani also said the group would be looking to acquire several vessels for future works in the oil and gas industry in the South China Sea, but would also look into the ship and boat building industry in Terengganu before making the order. (Starbiz)
* * * * *
KL Plaza, one of Kuala Lumpur’s oldest shopping centres on Jalan Bukit Bintang, will undergo an RM100m facelift and be renamed “fahrenheit 88”. Slated for opening on August 8 this year, the owners of the 511,000 sq ft mall are confident of the performance of fahrenheit 88 which will be positioned as a trendy lifestyle shopping complex offering affordable luxury. KL Plaza was acquired by Makna Mujur Sdn Bhd for RM470m and is being developed by Kuala Lumpur Pavillion Sdn Bhd. Its
strategic location on Jalan Bukit Bintang as well as new access from Jalan Imbi is expected to lure an annual visitorship of between 24m and 36m to fahrenheit 88. (BT)
* * * * *
Saudi Arabia’s PetroSaudi International (PSI) will be about 1m shares short of triggering a compulsory sale by UBG Bhd shareholders should all it its acquisition proposals go through and raise its stake to 89.9%. The stake will cost a total of RM1.12bn at RM2.50 per UBG share, which will also be the price in a general offer (GO). PSI announced yesterday that it was set to acquire another 52.62% stake in UBG from Majestic Masterpiece Sdn Bhd (MMSB), a wholly owned subsidiary of the Abu Dhabi-Kuwait-Malaysia Investment Corp (ADKMIC). This would raise its stake in UBG to 89.9%. MMSB confirmed the proposal and added that its acceptance of the offer was now subject to shareholder approval. PSI agreed to cooperate last September with 1Malaysia Development Bhd (1MDB), it is not clear from the Bursa Malaysia announcements whether the UBG share purchase by PetroSaudi involves IMDB as the acquisition of UBG fits the stated goals of JV. (Financial Daily)
* * * * *
Silk Holdings Bhd’s unit Jasa Merin secured a RM12.4m contract from Carigali Hess Operating Company Sdn Bhd. In a filing to Bursa Malaysia, Silk said it would provide Anchor Handling Tug Supply Vessel (AHTSV) to support Carigali’s drilling programme in the Malaysia-Thailand Joint Development Area. The contract is for a primary term of one year with two extension options of one year each, adding that the contract was expected to commence in February. The contract is expected to contribute positively to earnings and assets of Silk for the financial year ending July 31, 2010 and 2011 respectively. (Starbiz

UEM Land Holdings Bhd proposed a renounceable rights issue of new shares to entitled shareholders to raise gross proceeds of about RM970m towards repaying a term loan, for acquisition consideration and working capital. In a statement, UEM Land said the entitlement basis and the issue price had not been fixed yet to provide flexibility to its board in respect of pricing and the number of shares to be issued. It aims to complete the exercise by April 30, 2010. CIMB Investment Bank Bhd has been appointed as the principal adviser to the proposed rights issue. UEM Land said the issue price was expected to be fixed at a discount of not less than 30% to the theoretical ex-rights price immediately before the price-fixing date, but shall not be lower than the par value of 50 sen. Major shareholder UEM Group Bhd had provided an irrevocable
written undertaking to subscribe in full or procure the subscription in full of its entitlement. Of the proceeds, RM633m will be used to repay a term loan owing by Bandar Nusajaya Development Sdn Bhd to UEM Group, RM266.2m for property
development expenditure, payment of trade payables and general working capital, and RM65.1m as payment for the firstinstalment for the acquisition of land parcels in Cyberjaya from Setia Haruman Sdn Bhd. (Financial Daily)
* * * * *
The State Grid Corp of China (SGCC) plans to invest in Sarawak’s economic corridor which may generate US$11bn(RM36.7bn) worth of economic activities. To kick-start the proposed investment, SGCC has signed an agreement with 1Malaysia Development Bhd (1MDB) that would eventually lead to the joint venture company to undertake the projects within Sarawak Corridor of Renewable Energy (Score). The planned investment would see an increase in the current planned projects in Score up to US$24bn. The agreement would also see both parties working together to engage the relevant
authorities in both countries on legal compliance and securing approvals. (Malaysian Reserve)
* * * * *
The country’s industrial production in November unexpectedly fell 6% from the previous month and 1.3% from a year earlier, due to a dip in the mining sector. In November the mining index fell 7.4% y-o-y following softening in crude oil prices
while the manufacturing and electricity sectors posted an increase of 0.9% and 5.9% respectively. The Statistics Department said the country’s IPI for January-November fell 9% against the same period in 2008. Malaysia’s IPI grew 0.9% y-o-y in
October, the first annual increase since September 2008. From January to November 2009, the sales value of the manufacturing sector was down 21.2% to RM426.9bn. The number of employees fell 3.6% or 35,055 to 942,013 persons.
(Financial Daily)
*

HLBK,AXIATA,AIR ASIA,PETRA

EON Capital Bhd’s board is believed to be meeting on Thursday to discuss the proposal from Hong Leong Bank Bhd(HLB) (HLBK MK, Hold, TP: RM8.71) to negotiate for the sale of stakes belonging to two major shareholders – Rin Kei Mei andTan Sri Tiong Hiew King. Sources said following that, the board would likely apply for permission from Bank Negara to talk to
HLB on an institutional level. The much-awaited proposal from HLB, which has proposed to purchase the stakes via an assets and liabilities route, can be submitted after EON Cap receives the go-ahead from Bank Negara for the talks. (Starbiz)
* * * * *
Celcom Axiata Bhd (AXIATA MK, Hold TP: RM3.13) expects to double the number of foreign subscribers this year by launching a new prepaid pack that gives low rates for international calls. Senior VP for marketing Zalman Aefendy Zainal Abidin said there are almost 3m foreign workers in Malaysia and they spend double what locals do on phone calls. Zalman was launching a new prepaid pack, Celcom Sukses, which provides the lowest IDD call rate to 11 countries at 18 sen per minute. The countries are Indonesia, India, the Phillippines, Bangladesh, Nepal, Pakistan, Thailand, Myanmar, Vietnam, Cambodia and Sri Lanka. In contrast DiGi’s (DIGI MK, Hold, TP: RM20.00) lowest IDD rate on a prepaid pack to Indonesia is 60 sen per minute. (BT)
* * * * *
AirAsia Bhd’s (AIRA MK, Buy, TP: RM1.67) non-equity alliance with Jetstar, the low-cost unit of Australia’s Qantas, will not involve an exclusive maintenance deal. AirAsia’s group CEO Datuk Seri Tony Fernandes said although the airlines were looking at joint procurement of maintenance services and supplies, AirAsia would not be obliged to send its planes only to Qantas’ facilities for engineering work. Fernandes said AirAsia would not be keen to ink an exclusive agreement to maintain its aircraft only at Qantas’ facilities and that the matter was still “in discussion”. He had said the alliance could save AirAsia and Jetstar some A$300m (RM936.75m) in costs, with the bulk of it coming from procurement of maintenance services and supplies. Under the alliance, the 2 low-cost carriers would cooperate in areas that include future fleet specification, airport
passenger and ground procurement of engineering and maintenance supplies and services. (Financial Daily)
* * * * *
Petra Perdana Bhd’s (PETR MK, Sell, TP: RM1.21) Tengku Datuk Ibrahim Petra has suspended 11 senior management and key personnel until Feb 4. He said the suspension would allow the board to appoint external and independent consultants to review and investigate the group’s operations and management. It is also to avoid any leaks of confidential information that could further tarnish the image of the company and its business objectives. During the suspension period, independent consultants may be appointed to take charge of the relevant job functions to ensure continued operations of the company. Meanwhile the EGM on Feb 4 to remove four directors of the company by the shareholders will go on despite the 11 requisitioners receiving suspension letters. (BT)
* * * * *
Cahya Mata Sarawak Bhd (CMS) has decided to sell its 37.21% stake in UBG Bhd to PetroSaudi International Ltd for RM465.53m. CMS in a statement to exchange last Friday, said it has accepted the RM2.50 a share offer tabled by PetroSaudi, an upstream hydrocarbon company based at Al-Khobar in Saudi Arabia. UBG’s other main shareholders is Abu Dhabi-Kuwait-
Malaysia Investment Corp which holds a 52.63% stake via Majestic Masterpiece Sdn Bhd. The RM2.50 a share offer is 87sen above UBG’s unaudited consolidated NTA per share of RM1.63 as at Sept 30, 2009 or price to book multiple of 1.53times. UBG shares closed the week at RM2.39 a piece. CMS said its rationale to dispose the UBG stake was premised on the fact that the associate level stake meant the company only stood to gain from dividend payments while the chances of capital appreciation were limited due to poor market conditions as well as UBG’s low share liquidity. CMS also said it would like to take advantage of the extensive business opportunities emerging especially in Sarawak; projects such as the Sarawak Corridor of
Renewable Energy and the proposed aluminium smelter in the steel cluster and iron ore hub near Bintulu. (Malaysian Reserve)
* * * * *
The ongoing internal probe at Alliance Finance Group Bhd’s banking unit is not related to fraud and will not have a material impact on the bank’s earnings or balance sheet, a board member said. Analysts and fund managers were told by independent non-executive director Tee Kim Chan that rumours the probe may involve the police or Malaysian Anti-Corruption Commission are “not true”. He also denied that it had anything to do with a particular public-listed company or a multi-storey building. Tee declined to say what the probe was about except that it would take about two to three weeks to complete. He also did not say when CEO Datuk Bridget Lai would return from her annual leave. He also mentioned that business was as usual
and regulators were being kept informed of developments. (BT)

LPI CAPITAL ---BUY

FROM STANDARD & POOR
LPI CAPITAL -- BUY
Still An Attractive Dividend Play

LPI reported 2009 net profit of MYR126.1 mln (+21% YoY) on revenue of MYR738.3 mln (+15.6% YoY). This was slightly ahead of our expectations, coming in higher than our full-year net profit forecast of MYR120 mln.

LPI's revenue rose on the back of higher growth in gross premium underwritten. Meanwhile net profit also saw significant improvement, supported by better underwriting results. The company’s claims ratio improved significantly to 47% from 51% in 2008. Underwriting improvement came predominately in the fire and miscellaneous segments and management guides that these will be the areas which the company will look to grow in the near to mid term.

The company announced a net final dividend of 41.25 sen per share for 2009 (2008: gross final dividend of 55 sen). Cumulative net dividend of 67.5 sen for 2009 (2008: gross dividend of 85 sen) was, however, lower than our forecast of 71.25 sen.

We project its gross premium to grow by 15%-16% in 2010 and 2011, driven by new branch openings (three new branches in 2010), increased agency sales force and growing bancassurance sales. In view of LPI’s prudent management record, we expect its underwriting results to remain stable and project claims ratio of 50% in the next 2 years. Our 2010 earnings forecast is largely unchanged and we introduce our 2011 forecast.