HANOI: Leading regional oil and gas services provider SapuraCrest Petroleum Bhd (SapuraCrest) on Saturday signed a cooperation agreement with PetroVietnam Technical Services Corporation (PTSC) as a further step in establishing its commitment to Vietnam.
SapuraCrest was represented by Datuk Shahril Shamsuddin, executive vice-chairman of SapuraCrest Petroleum and Sapura Group president and chief executive officer, while PTSC was represented by its general director, Nguyen Hung Dung.
The ceremony was witnessed by Prime Minister Datuk Seri Najib Tun Razak on the sidelines of a three-day, 17th Asean Summit and Related Summits which ended Saturday.
"This collaboration will enable SapuraCrest to develop its existing stable of products, together with PTSC, in order to meet market requirements in Vietnam.
"This will further support SapuraCrest's international business development strategy," said Shahril, adding that the company's has had a presence for more than five year in Vietnam.
He also announced that SapuraCrest would offer five scholarships for PTSC personnel to pursue studies in chemical engineering, business management and related courses at the Asia Pacific University College in Technology Park, Bukit Jalil.
The two companies also committed to set up a comprehensive cooperation with which they would be able to co-develop their core businesses in supplying technical services for oil and gas projects, such as seismic surveying, installing and building ocean constructions.
SapuraCrest has already established a presence in India, Australia, Russia, Japan and Africa, in addition to most of Southeast Asia. -- Bernama
Read more: SapuraCrest expands business in Vietnam http://www.btimes.com.my/Current_News/BTIMES/articles/20101030211229/Article/index_html#ixzz13x8rf6TX
Sunday, October 31, 2010
Friday, October 29, 2010
Having a reasonable amount of debt is generally okay
MOST of us carry some kind of consumer debt. It could be in the form of a hire purchase, mortgage, personal loan or even credit card balances.
Many of us have credit cards (not just one, but a couple of them). And some of us carry some debt over from one month to the next.
A car purchased under a hire-purchase plan or a house mortgage is also a consumer debt. For most people, their first major loan is a car loan.
According to financial planners, having debt is not really a bad thing so long you are able to pay it off.
They say it is ‘okay’ to take on some consumer debt but be prudent as it can be a major headache when one is saddled with a mountain of debt.
It’s important to have reasonable debt. So how much is reasonable debt?
Consumer debt is an integral part of the banking sector and by extension, the economy.
The country requires the velocity of money in the market to drive its economy.
Velocity of money is essentially the rate at which the existing money supply changes hands over the course of a year.
Consumer spending is key in driving growth.
“Having debt isn’t a bad thing as long as you are taking steps to pay it off,” Jeremy Wong, a financial planner with a local insurance agency.
He says the ratio is best calculated on a monthly basis. For example, if your net income is RM2,500 and you pay RM500 per month in debt payment for car loans and credit cards, therefore the debt to income ratio is 20%.
“The debt to income ratio is a way the financial institutions determine what you can afford in the way of a mortgage. Consumers have to fall under a certain percentage of the ratio to qualify for a loan from the bank.
“Banks usually lend up to a certain ratio and it varies according to banks,” Wong says, adding that the ratio is generally around 40%.
Another financial planner Jess Lim says generally speaking, the lower your debt-to-income ratio, the better your financial situation.
“As your debt payments decrease over time, you will pay less interest. Then you can use your money to save, invest, or spend as you choose,” she points out.
She agrees that consumer debt is alright provided one spends within his or her means and pays up as the interest rate can be a burden and if left unchecked, can become a nightmare.
Lim advises consumers to make sound decisions when buying on credit or taking loans. The key is to pay more than the minimum credit card payments or the debt will keep revolving.
She says a rule of thumb is that monthly payments on consumer debt should be no more than 20% of monthly disposable income and another guideline is that the total outstanding consumer debt should be around or less than one-third of your annual disposable income.
“When it comes to debt, whether good or bad, the lower the debt you have, the better,” Lim adds.
Many of us have credit cards (not just one, but a couple of them). And some of us carry some debt over from one month to the next.
A car purchased under a hire-purchase plan or a house mortgage is also a consumer debt. For most people, their first major loan is a car loan.
According to financial planners, having debt is not really a bad thing so long you are able to pay it off.
They say it is ‘okay’ to take on some consumer debt but be prudent as it can be a major headache when one is saddled with a mountain of debt.
It’s important to have reasonable debt. So how much is reasonable debt?
Consumer debt is an integral part of the banking sector and by extension, the economy.
The country requires the velocity of money in the market to drive its economy.
Velocity of money is essentially the rate at which the existing money supply changes hands over the course of a year.
Consumer spending is key in driving growth.
“Having debt isn’t a bad thing as long as you are taking steps to pay it off,” Jeremy Wong, a financial planner with a local insurance agency.
He says the ratio is best calculated on a monthly basis. For example, if your net income is RM2,500 and you pay RM500 per month in debt payment for car loans and credit cards, therefore the debt to income ratio is 20%.
“The debt to income ratio is a way the financial institutions determine what you can afford in the way of a mortgage. Consumers have to fall under a certain percentage of the ratio to qualify for a loan from the bank.
“Banks usually lend up to a certain ratio and it varies according to banks,” Wong says, adding that the ratio is generally around 40%.
Another financial planner Jess Lim says generally speaking, the lower your debt-to-income ratio, the better your financial situation.
“As your debt payments decrease over time, you will pay less interest. Then you can use your money to save, invest, or spend as you choose,” she points out.
She agrees that consumer debt is alright provided one spends within his or her means and pays up as the interest rate can be a burden and if left unchecked, can become a nightmare.
Lim advises consumers to make sound decisions when buying on credit or taking loans. The key is to pay more than the minimum credit card payments or the debt will keep revolving.
She says a rule of thumb is that monthly payments on consumer debt should be no more than 20% of monthly disposable income and another guideline is that the total outstanding consumer debt should be around or less than one-third of your annual disposable income.
“When it comes to debt, whether good or bad, the lower the debt you have, the better,” Lim adds.
Thursday, October 28, 2010
Hai-O entry into property may add risk: OSK
Hai-O Enterprise Bhd's venture into the property business will add more risk to the group, given that its multi-level marketing (MLM) business is still trying to recover locally, says OSK Research.
"While the venture may help generate future earnings and reduce its reliance on the more volatile MLM business, our concern is that this will further divert its focus on its current businesses and add risk to the group if not executed properly," it said in its research note today.
The research house said apart from the risk of venturing into a non-core property business, in which Hai-O has no expertise, the group's MLM business was still struggling from the impact of more stringent rules on direct marketing.
The property venture is the second non-core business Hai-O has gone into after it diversified into the heat transfer technology in August 2009.
OSK said given the recovery in buying sentiment among Hai-O's members was taking longer than expected (members were ordering less even for the saleable products), the management believed the MLM division would need more than six months to recover.
"Nonetheless, the Hai-O management is confident that with all the measures put in place by the task force set up to beef up performance, its MLM division would regain momentum and continue to drive the group's earnings," it said. -- Bernama
Read more: Hai-O entry into property may add risk: OSK http://www.btimes.com.my/Current_News/BTIMES/articles/20101028112751/Article/index_html#ixzz13eMUDCjb
"While the venture may help generate future earnings and reduce its reliance on the more volatile MLM business, our concern is that this will further divert its focus on its current businesses and add risk to the group if not executed properly," it said in its research note today.
The research house said apart from the risk of venturing into a non-core property business, in which Hai-O has no expertise, the group's MLM business was still struggling from the impact of more stringent rules on direct marketing.
The property venture is the second non-core business Hai-O has gone into after it diversified into the heat transfer technology in August 2009.
OSK said given the recovery in buying sentiment among Hai-O's members was taking longer than expected (members were ordering less even for the saleable products), the management believed the MLM division would need more than six months to recover.
"Nonetheless, the Hai-O management is confident that with all the measures put in place by the task force set up to beef up performance, its MLM division would regain momentum and continue to drive the group's earnings," it said. -- Bernama
Read more: Hai-O entry into property may add risk: OSK http://www.btimes.com.my/Current_News/BTIMES/articles/20101028112751/Article/index_html#ixzz13eMUDCjb
Wednesday, October 27, 2010
MK Land, Embassy in RM4b property project
By BLOOMBERG MK Land Holdings Bhd, a Malaysian developer, signed an agreement with companies including Embassy Group to develop a RM4 billion (US$1.3 billion) property project in North Bangalore, India. The joint venture is aimed at developing affordable homes to help meet the acute shortage of housing for the masses in India, according to a company statement ...
Glomac : Buying back 18 units of Suria Stonor
News Update Outperform
- Glomac announced its proposed acquisition of 18 condo units of Suria Stonor from Dekad Darat and Progressive Berg. The purchase consideration of RM38.4m represents some 35% discount to the last transacted price of RM1,000 psf for comparable properties in the condominium.
- To recap, Dekad Darat and Progressive Berg previously acquired some 30-40 units of Suria Stonor, which was completed two years ago by Glomac. Although the reason for the re-sale was not mentioned, we think it could be due to some financing constraints.
- We are neutral on this latest development. The 18 units will be put into the market again by Glomac and these condo units will be categorised as “Investment” in Balance Sheet upon completion of the acquisition. The deal may signal the extent of speculative buying activities 2-3 years ago during the boom of high-rise residences especially within the KLCC area previously, leading to an oversupply now.
- No change in our forecast. We maintain our Outperform rating, with an unchanged indicative fair value of RM2.09, based on a 15% discount to RNAV.
- Glomac announced its proposed acquisition of 18 condo units of Suria Stonor from Dekad Darat and Progressive Berg. The purchase consideration of RM38.4m represents some 35% discount to the last transacted price of RM1,000 psf for comparable properties in the condominium.
- To recap, Dekad Darat and Progressive Berg previously acquired some 30-40 units of Suria Stonor, which was completed two years ago by Glomac. Although the reason for the re-sale was not mentioned, we think it could be due to some financing constraints.
- We are neutral on this latest development. The 18 units will be put into the market again by Glomac and these condo units will be categorised as “Investment” in Balance Sheet upon completion of the acquisition. The deal may signal the extent of speculative buying activities 2-3 years ago during the boom of high-rise residences especially within the KLCC area previously, leading to an oversupply now.
- No change in our forecast. We maintain our Outperform rating, with an unchanged indicative fair value of RM2.09, based on a 15% discount to RNAV.
Tuesday, October 26, 2010
Household debt not a worry, says Zeti
Going forward, Malaysia will implement measures to ensure it will not be a destabilising factor for the economy, says Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz
Bank Negara Malaysia is not concerned about rising household debt as the level of bad loans is still low and there are various ways to keep it in check.
The Malaysian Institute of Economic Research had noted that household debt had risen to 77 per cent of gross domestic product (GDP) last year, the highest in Asia, from 63.9 per cent in 2008.
"Right now, if we look at the non-performing loans for the household sector, they haven't increased significantly.
"So, right now, it is not an area of concern. But going forward, we will implement measures to ensure it will not be a destabilising factor for the economy," Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz told reporters on the sidelines of the Global Islamic Financial Forum 2010 in Kuala Lumpur yesterday.
One of the measures is to enhance financial literacy among youth. However, consumer groups have made calls to tighten the rules for approval of credit cards.
Bank Negara is also thinking about imposing mortgage caps although local banks appear to be reluctant over a blanket ruling. In contrast, Singapore has imposed limits on second mortgages to cool its property market. This means that buyers must use more of their own money to buy a second property.
As for the ringgit, Zeti said it has remained stable against regional currencies, which is what matters to the country as 60 per cent of its trade is with Asian nations.
The ringgit has gained some 10 per cent against the US dollar.
"We don't just look at our exchange rate with any single currency. We have the index that we monitor and, so far, the trend reflects our underlying fundamentals," she said.
The ringgit has also not been pressured by capital inflows into the region. Low interest rates in developing countries have resulted in massive money flows to emerging countries in search of better returns.
"The central bank is well positioned to undertake any sort of intervention in the market if conditions become disorderly or very excessive movements are taking place within a very short period of time. But so far, we are very pleased the market has been very orderly," Zeti said.
Bank Negara is also not too worried about rising consumer prices.
"We don't see inflationary pressure, so the interest rate is now at the appropriate level," she said.
An asset bubble is also not widespread in the country and Bank Negara has the measures and flexibility to contain it, she added.
Zeti also reiterated that the central bank will issue up to two mega Islamic bank licences and at least one will be announced before the year-end.
Bank Negara Malaysia is not concerned about rising household debt as the level of bad loans is still low and there are various ways to keep it in check.
The Malaysian Institute of Economic Research had noted that household debt had risen to 77 per cent of gross domestic product (GDP) last year, the highest in Asia, from 63.9 per cent in 2008.
"Right now, if we look at the non-performing loans for the household sector, they haven't increased significantly.
"So, right now, it is not an area of concern. But going forward, we will implement measures to ensure it will not be a destabilising factor for the economy," Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz told reporters on the sidelines of the Global Islamic Financial Forum 2010 in Kuala Lumpur yesterday.
One of the measures is to enhance financial literacy among youth. However, consumer groups have made calls to tighten the rules for approval of credit cards.
Bank Negara is also thinking about imposing mortgage caps although local banks appear to be reluctant over a blanket ruling. In contrast, Singapore has imposed limits on second mortgages to cool its property market. This means that buyers must use more of their own money to buy a second property.
As for the ringgit, Zeti said it has remained stable against regional currencies, which is what matters to the country as 60 per cent of its trade is with Asian nations.
The ringgit has gained some 10 per cent against the US dollar.
"We don't just look at our exchange rate with any single currency. We have the index that we monitor and, so far, the trend reflects our underlying fundamentals," she said.
The ringgit has also not been pressured by capital inflows into the region. Low interest rates in developing countries have resulted in massive money flows to emerging countries in search of better returns.
"The central bank is well positioned to undertake any sort of intervention in the market if conditions become disorderly or very excessive movements are taking place within a very short period of time. But so far, we are very pleased the market has been very orderly," Zeti said.
Bank Negara is also not too worried about rising consumer prices.
"We don't see inflationary pressure, so the interest rate is now at the appropriate level," she said.
An asset bubble is also not widespread in the country and Bank Negara has the measures and flexibility to contain it, she added.
Zeti also reiterated that the central bank will issue up to two mega Islamic bank licences and at least one will be announced before the year-end.
Monday, October 25, 2010
SP Setia to launch four residential projects worth RM546mil
GEORGE TOWN: SP Setia Bhd plans to launch four new residential projects with an estimated gross sales value RM546mil on the island beginning this December and next year.
SP Setia property (North) general manager S. Rajoo told StarBiz that the projects comprised the RM175mil Setia Greens, RM60.5mil Brook Residences, RM170mil Setia V Residences, and the RM139mil Pearl Villas in the Setia Pearl Island scheme.
Setia Greens, comprising 149 three-storey terraces and 18 semi-detached houses with dual frontage in Sungai Ara, would be launched in December.
“The selling price starts from RM918,000 onwards for terraced units with built-up areas ranging from 2,400sq ft and 3,200sq ft.
“The selling price for the semi-detached units, with built-up areas of around 3,300sq ft, is around RM1.6mil onwards,” he said.
Subsequently the group would launch Brook Residences in February 2011 and the Pearl Villas in April, and Setia V Residences in the second half of next year, Rajoo said.
“The Brook Residences in Brook Road, a prime residential area near Jesselton Road, comprises 11 luxurious bungalows priced from RM5.8mil onwards, while the Pearl Villas comprise 35 bungalows priced from RM2.8mil onwards.
“The Setia V Residences project in Kelawei near Gurney Drive, comprising 67 luxurious condominiums, tentatively priced from RM2.8mil onwards,” he said.
Rajoo said Setia Greens would be the northern region’s first Green Building Index-rated project.
“What makes the project unique are the environmental features such as solar water heater, rain-water harvesting system, water efficient fittings, and cool roof system for each unit.
“We are using a special low-volatile organic compound paint for the project,” he said.
Rajoo said these new projects were targeted at the executives working in the south-west district of the island as well as investors.
For the nine months of SP Setia’s fiscal year ended July 31, 2010, the group’s projects from Penang contributed close to RM150mil or about 10% of the RM1.95bil revenue posted for the nine month period.
“We are confident that the contribution from Penang this fiscal year closing Oct 31, 2010 will hit over 10% of the targeted RM2bil revenue of the group.
“Setia Vista, Reflections condominium, and the new semi-detached launches in Setia Pearl Island contributed significantly from Penang,” he said.
Rajoo said Penang would continue to play an important revenue generating role in the group’s property development business.
“We will continue to look for land in prime locations either to develop on our own or on a joint-venture basis,” he added.
Meanwhile, Henry Butcher (Malaysia) Penang director Dr Teoh Poh Huat said high-end properties were still sustainable in Penang, as there were now overseas Malaysians investing in the island’s property market.
“These are overseas Malaysians earning pounds and US dollars, who are buying high-end properties with the view to come home to stay one day.
“This segment is playing an increasingly important role in the Penang high-end property market developed by branded developers,” he said.
SP Setia property (North) general manager S. Rajoo told StarBiz that the projects comprised the RM175mil Setia Greens, RM60.5mil Brook Residences, RM170mil Setia V Residences, and the RM139mil Pearl Villas in the Setia Pearl Island scheme.
Setia Greens, comprising 149 three-storey terraces and 18 semi-detached houses with dual frontage in Sungai Ara, would be launched in December.
“The selling price starts from RM918,000 onwards for terraced units with built-up areas ranging from 2,400sq ft and 3,200sq ft.
“The selling price for the semi-detached units, with built-up areas of around 3,300sq ft, is around RM1.6mil onwards,” he said.
Subsequently the group would launch Brook Residences in February 2011 and the Pearl Villas in April, and Setia V Residences in the second half of next year, Rajoo said.
“The Brook Residences in Brook Road, a prime residential area near Jesselton Road, comprises 11 luxurious bungalows priced from RM5.8mil onwards, while the Pearl Villas comprise 35 bungalows priced from RM2.8mil onwards.
“The Setia V Residences project in Kelawei near Gurney Drive, comprising 67 luxurious condominiums, tentatively priced from RM2.8mil onwards,” he said.
Rajoo said Setia Greens would be the northern region’s first Green Building Index-rated project.
“What makes the project unique are the environmental features such as solar water heater, rain-water harvesting system, water efficient fittings, and cool roof system for each unit.
“We are using a special low-volatile organic compound paint for the project,” he said.
Rajoo said these new projects were targeted at the executives working in the south-west district of the island as well as investors.
For the nine months of SP Setia’s fiscal year ended July 31, 2010, the group’s projects from Penang contributed close to RM150mil or about 10% of the RM1.95bil revenue posted for the nine month period.
“We are confident that the contribution from Penang this fiscal year closing Oct 31, 2010 will hit over 10% of the targeted RM2bil revenue of the group.
“Setia Vista, Reflections condominium, and the new semi-detached launches in Setia Pearl Island contributed significantly from Penang,” he said.
Rajoo said Penang would continue to play an important revenue generating role in the group’s property development business.
“We will continue to look for land in prime locations either to develop on our own or on a joint-venture basis,” he added.
Meanwhile, Henry Butcher (Malaysia) Penang director Dr Teoh Poh Huat said high-end properties were still sustainable in Penang, as there were now overseas Malaysians investing in the island’s property market.
“These are overseas Malaysians earning pounds and US dollars, who are buying high-end properties with the view to come home to stay one day.
“This segment is playing an increasingly important role in the Penang high-end property market developed by branded developers,” he said.
Faber Group (RM3.03; Hold; Price Target: RM3.30; FAB MK)
Concession risk could cap upside
• Concession risk - East Malaysia contributes 50% of PBT;
Faber could still end up with sub-contractor role if
politics take precedence
• Expect 3Q10 result to be weaker q-o-q likely due to
slower progress billings from UAE
• Downgrade to Hold with SOP-derived RM3.30 TP
• Concession risk - East Malaysia contributes 50% of PBT;
Faber could still end up with sub-contractor role if
politics take precedence
• Expect 3Q10 result to be weaker q-o-q likely due to
slower progress billings from UAE
• Downgrade to Hold with SOP-derived RM3.30 TP
Wednesday, October 20, 2010
100-storey tower to be PNB new HQ
The tower forms part of Warisan Merdeka, which will be PNB's single biggest property project to date and its construction to create some 5,000 jobs.
The 100-storey tower that forms part of Warisan Merdeka will be the new headquarters of Permodalan Nasional Bhd (PNB) as the fund manager is already thinking about redeveloping its existing head office.
Come 2016, its main building on Jalan Tun Razak, Kuala Lumpur, will be 30 years old. It is already fully occupied by PNB and its companies.
"We have to ensure we have occupancy. We need to move to this place. It will be mainly used by us and our investee companies," group chief executive officer Tan Sri Hamad Kama Piah Che Othman said at a briefing in Kuala Lumpur yesterday.
Warisan Merdeka, a 10-year mixed-development project estimated to cost RM5 billion, will be PNB's single biggest property project to date. Its construction is set to create some 5,000 jobs.
The tower alone, of about 525 metres, makes up half of the cost. The project will be done by PNB's wholly-owned PNB Merdeka Ventures Sdn Bhd, but it is open to having partners.
It may also sell part of the 14.6ha site, but this has yet to be finalised as it also wants to have recurring income from the properties.
"We must make sure returns prevail," Hamad Kama Piah said, adding that 8-10 per cent a year would be a good rate.
More importantly, Warisan Merdeka will boost the prices of residential, office and retail properties in the Golden Triangle, especially the Jalan Hang Tuah area, Pudu and Imbi, said Zerin Properties founder and chief executive officer Previn Singhe.
Property valuers said property prices shot up when the Petronas Twin Towers was built in 1985. Some foresee Warisan Merdeka to be the next KLCC.
"We need to look at the project very objectively. New York had five tallest towers in the world at any one time and they are all doing well," Previn said.
The land price in the Golden Triangle area is currently around RM2,000 per sq ft, while the net lettable area of a top office building is about RM800 per sq ft.
But valuers who were not so bullish said the key challenge is how to deal with traffic flow.
"You must look at the project site. It is very dense and road access and public transportation is limited. If the government can improve that, then we will have a different price outlook," said a valuer who declined to be named.
This was acknowledged by Hamad Kama Piah, who stressed that PNB has consultants working on the traffic issue. The cost of improving infrastructure in the area has also been factored into the overall RM5 billion cost, he explained.
The 100-storey tower that forms part of Warisan Merdeka will be the new headquarters of Permodalan Nasional Bhd (PNB) as the fund manager is already thinking about redeveloping its existing head office.
Come 2016, its main building on Jalan Tun Razak, Kuala Lumpur, will be 30 years old. It is already fully occupied by PNB and its companies.
"We have to ensure we have occupancy. We need to move to this place. It will be mainly used by us and our investee companies," group chief executive officer Tan Sri Hamad Kama Piah Che Othman said at a briefing in Kuala Lumpur yesterday.
Warisan Merdeka, a 10-year mixed-development project estimated to cost RM5 billion, will be PNB's single biggest property project to date. Its construction is set to create some 5,000 jobs.
The tower alone, of about 525 metres, makes up half of the cost. The project will be done by PNB's wholly-owned PNB Merdeka Ventures Sdn Bhd, but it is open to having partners.
It may also sell part of the 14.6ha site, but this has yet to be finalised as it also wants to have recurring income from the properties.
"We must make sure returns prevail," Hamad Kama Piah said, adding that 8-10 per cent a year would be a good rate.
More importantly, Warisan Merdeka will boost the prices of residential, office and retail properties in the Golden Triangle, especially the Jalan Hang Tuah area, Pudu and Imbi, said Zerin Properties founder and chief executive officer Previn Singhe.
Property valuers said property prices shot up when the Petronas Twin Towers was built in 1985. Some foresee Warisan Merdeka to be the next KLCC.
"We need to look at the project very objectively. New York had five tallest towers in the world at any one time and they are all doing well," Previn said.
The land price in the Golden Triangle area is currently around RM2,000 per sq ft, while the net lettable area of a top office building is about RM800 per sq ft.
But valuers who were not so bullish said the key challenge is how to deal with traffic flow.
"You must look at the project site. It is very dense and road access and public transportation is limited. If the government can improve that, then we will have a different price outlook," said a valuer who declined to be named.
This was acknowledged by Hamad Kama Piah, who stressed that PNB has consultants working on the traffic issue. The cost of improving infrastructure in the area has also been factored into the overall RM5 billion cost, he explained.
Kencana rated 'buy' at AmResearch
AmResearch notes that Kencana Petroleum Bhd group order book of RM1.9 billion is likely to rise further with new jobs from tenders of RM4 billion, largely from the Kebabangan cluster platform contracts.
The research house projects new orders of RM1.5 billion to RM1.8 billion for financial year 2011-13 against RM1 billion in financial year 2010.
AmResearch also expects further margin expansions.
"Kencana’s EBITDA margins have consistently been improving, rising by a commendable 9 percentage points over the past four years to 18 per cent in financial year 2010 largely due to improving operational efficiencies."
AmResearch sees Kencana a "buy" at RM2.50. - Reuters
The research house projects new orders of RM1.5 billion to RM1.8 billion for financial year 2011-13 against RM1 billion in financial year 2010.
AmResearch also expects further margin expansions.
"Kencana’s EBITDA margins have consistently been improving, rising by a commendable 9 percentage points over the past four years to 18 per cent in financial year 2010 largely due to improving operational efficiencies."
AmResearch sees Kencana a "buy" at RM2.50. - Reuters
Berjaya Corp gains after securing licence
Berjaya Corp, a Malaysian betting, property and auto distributor, rose the most in almost one month in Kuala Lumpur trading after saying it won a licence to assemble commercial and passenger vehicles.
The stock gained 5.8 per cent to RM1.10 at 9:05 a.m. local time, set for its biggest increase since Sept. 21. -- Bloomberg
The stock gained 5.8 per cent to RM1.10 at 9:05 a.m. local time, set for its biggest increase since Sept. 21. -- Bloomberg
SP Setia upgraded to 'outperform' at RHB
SP Setia Bhd, Malaysia’s biggest property developer, was upgraded at RHB Research Institute Sdn Bhd, which said a “liquidity-led asset reflation” will boost property prices and strengthen profit margins.
The company’s stock rating was raised to “outperform” from “market perform” and its fair value increased to RM5.94 from RM4.95, Loong Kok Wen, an analyst, said in a report today. -- Bloomberg
Read more: SP Setia upgraded to 'outperform' at RHB http://www.btimes.com.my/Current_News/BTIMES/articles/20101020090338/Article/index_html#ixzz12spvCxzJ
The company’s stock rating was raised to “outperform” from “market perform” and its fair value increased to RM5.94 from RM4.95, Loong Kok Wen, an analyst, said in a report today. -- Bloomberg
Read more: SP Setia upgraded to 'outperform' at RHB http://www.btimes.com.my/Current_News/BTIMES/articles/20101020090338/Article/index_html#ixzz12spvCxzJ
Monday, October 18, 2010
Citigroup posts $2.2 billion profit
NEW YORK (CNNMoney.com) -- Citigroup posted second-quarter earnings of $2.2 billion Monday, marking its third straight quarterly profit and beating Wall Street expectations, as the bank continued to trim its loan loss reserves thanks to improving credit trends.
Earnings for the banking giant came in at 7 cents per share, compared to a loss of 27 cents per share during the period a year ago.
Last month, Citigroup (C, Fortune 500) said Discover Financial Services (DFS, Fortune 500) was buying the troubled Student Loan Corporation business, in which Citi owns a big stake. Excluding charges from that sale, the New York-based bank earned $2.6 billion, or 8 cents per share.
Analysts polled by Thomson Reuters expected the company to earn 6 cents for the quarter.
The provision for credit losses, the funds set aside for the allowance of bad loans, was reduced to $5.9 billion, the lowest since the second quarter of 2007, prior to the onset of the financial crisis. That's a decrease of 11% from the previous quarter.
Citigroup' is the second big bank in the past week to report better-than expected results. JPMorgan Chase (JPM, Fortune 500), which raked in $4.4 billion last quarter, reported last week.
The rest of the banking sector is slated to deliver results this week, including Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), and Wells Fargo (WFC, Fortune 500).
Shares of Citi were up more than 2% in pre-market trading. But all big bank stocks have been hit hard on the past week due to concerns about the foreclosure scandal. To top of page
Earnings for the banking giant came in at 7 cents per share, compared to a loss of 27 cents per share during the period a year ago.
Last month, Citigroup (C, Fortune 500) said Discover Financial Services (DFS, Fortune 500) was buying the troubled Student Loan Corporation business, in which Citi owns a big stake. Excluding charges from that sale, the New York-based bank earned $2.6 billion, or 8 cents per share.
Analysts polled by Thomson Reuters expected the company to earn 6 cents for the quarter.
The provision for credit losses, the funds set aside for the allowance of bad loans, was reduced to $5.9 billion, the lowest since the second quarter of 2007, prior to the onset of the financial crisis. That's a decrease of 11% from the previous quarter.
Citigroup' is the second big bank in the past week to report better-than expected results. JPMorgan Chase (JPM, Fortune 500), which raked in $4.4 billion last quarter, reported last week.
The rest of the banking sector is slated to deliver results this week, including Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500), and Wells Fargo (WFC, Fortune 500).
Shares of Citi were up more than 2% in pre-market trading. But all big bank stocks have been hit hard on the past week due to concerns about the foreclosure scandal. To top of page
Saturday, October 16, 2010
Full loan for first-time house buyers
First-time house buyers with a family income of less than RM3,000 per month need not pay the 10% down payment under the My First House Scheme (Skim Rumah Pertamaku).
The 10% down payment will be guaranteed by Cagamas Bhd for houses priced below RM220,000.
This will allow the first-time buyers to obtain 100% loan.
They will also be given stamp duty exemption of 50% on instruments of transfer on a house not exceeding RM350,000.
The Government also proposed a stamp duty exemption of 50% for loan agreement instruments to finance first-time purchasers.
There will also be a housing assistance programme with an allocation of RM300mil for the construction and repair of some 12,000 houses nationwide – particularly in Sabah and Sarawak.
For estate workers, the Government will help them own houses under a RM50mil housing sponsorship scheme.
The scheme is open to all Malaysian estate workers to assist them in obtaining housing loans with a maximum of RM60,000 for the purchase of low-cost houses at 4% interest, and a repayment period of up to 40 years, which can be extended to the second generation.
For government servants, the goodies include an increase in the maximum loan eligibility from RM360,000 to RM450,000 effective Jan 1.
Fomca secretary-general Muhammad Sha’ani Abdullah said these moves would help first-time purchasers get housing loans, but failed to tackle the core issue of house prices which had skyrocketed.
“A first-time buyer may get the loan to buy a house, but it may not be the type of house he wants because prices are just too high,” he said.
He added that the Government should set specifications and standards for houses under the RM220,000 price range.
“A house can be priced at RM220,000, but the specifications and the quality of the house may not be much better than a low-cost house,” he said.
Malaysian Small Holders Plantation Co-operative secretary Datuk Aliasak Ambia said the move to help estate workers to own houses was a good move.
“The co-operative provides houses for estate workers to live in while they are still working, but once they leave their jobs, they will not have any homes of their own,” he said.
Thursday, October 14, 2010
Lower toll rates ahead?
PLUS to be privatised?
PETALING JAYA: The Employees Provident Fund, together with Khazanah Nasional Bhd’s wholly-owned UEM Group Bhd, is likely to make an offer to acquire the entire assets and liabilities of PLUS Expressways Bhd in a deal which values the highway operator at some RM23bil or close to RM4.60 per share.
However, it is believed that talks were still ongoing till late yesterday and the deal’s final outcome (as at press time) remained fluid on the takeover of PLUS, which is hoped will pave the way for the restructuring of the toll concession agreement (CA) to allow for “more equitable and fair” toll rate increases in future.
Khazanah owns a 56% stake in PLUS, directly (17%) and through wholly-owned UEM (39%). The EPF has a 12.3% stake while Kumpulan Wang Persaraan (KWAP) has a direct stake of 6% in PLUS.
“The whole premise of this deal is that the Government is concerned about the impact of toll rates on the cost of living of the people and is keen to manage a more affordable and fair toll structure where the burden can be shared by the Government, toll users and the toll operator’s shareholders,” said a source.
Sources close to the deal said the asset and liability route was the preferred option because a general offer (GO) for the shares could “end up messy.”
“You can’t tinker with a concession agreement when there are minority shareholders. It would be unfair unless they agree to it. A GO doesn’t give the certainty that it can take out everybody. If a minority decides to stay on, they could hold the Government hostage by refusing to restructure the concession. The only way to do it is to offer minorities an exit plan,” said the source.
PLUS Expressways’ crown jewel is PLUS, the highway concessionaire of the North-South Expressway (NSE), New Klang Valley Expressway (NKVE), Federal Highway Route 2 between Subang and Klang (FHR 2) and Seremban-Port Dickson Highway), which contributed a bulk or some 90% to group revenue in 2009.
The restructuring of the concession, it is believed, will largely involve tweaking the quantum of toll rate hikes, which as it stands now is too high. As raising toll rates would lead to public outcry given its impact on the cost of living, the Government has been forking out huge sums as compensation to PLUS for deferring toll rate revisions in recent years. The next rate revision is due in January 2011.
Currently, the PLUS concession agreement, which was revised and implemented in 2002, allows for toll rates to be raised by 10% every three years (as opposed to 26%-33% hikes every 4-5 years previously). The concession which was originally awarded for 30 years in 1988, was extended in 1999 by 12 years to 2030 and in 2005, by another eight years to 2038.
“We are not talking about no increase in toll rates forever. The whole purpose behind PLUS was to build a convenience on the basis that people who use it, will pay for it. The issue is that the rate of toll increases under current agreement is on the high side. If there’s a way to reduce the rate increase and restructure the concession while still ensuring that EPF, as a shareholder is not worse off, that would be the way to go,” said the source.
Sources said that once PLUS is owned by EPF and Khazanah, which enjoy much lower cost of funds or financing by virtue of being Government-linked, the highway operator’s capital structure can be improved, resulting in cost savings which could be used to lower toll rate hikes.
No doubt, the toll operator’s plus points are aplenty – a strong business profile, largely backed by the NSE’s strategic alignment, steady cash and resilient traffic flow. For this reason, in recent months it has been the takeover target of two companies – Asas Serba Sdn Bhd, perceived to be linked to Tan Sri Halim Saad and MMC Corp Bhd, controlled by Tan Sri Syed Mokhtar Albukhary – who have ambitiously stated that if they were to secure the asset, toll rates would be capped or cut.
Given the strategic interest of an asset such as PLUS, Government-owned Khazanah and EPF have managed to outflank these bids from the private sector. Khazanah will manage to retain its hold on the highway operator while EPF will end up with a bigger slice of the cash cow.
“The end game is that the Government wants a fairer toll rate for the people. For that, the owners of PLUS need to be funds with a long-term asset outlook. For EPF, PLUS is a solid asset – its returns are extremely visible over the years and predictable over the future. It falls in place with EPF’s objective of investing in assets that can give it a double-digit internal rate of return and good dividend.
“The best part is that PLUS is not a greenfield project,” said the source.
In the past weeks, on the back of the potential takeover, the share price of PLUS has been steadily rising, closing at a high of RM4.46 on Wednesday from a low of RM3.20 in May 27 this year. Trading in the counter is suspended for two days following a request by its major shareholder (Khazanah) pending an announcement which is expected to be made today.
PETALING JAYA: The Employees Provident Fund, together with Khazanah Nasional Bhd’s wholly-owned UEM Group Bhd, is likely to make an offer to acquire the entire assets and liabilities of PLUS Expressways Bhd in a deal which values the highway operator at some RM23bil or close to RM4.60 per share.
However, it is believed that talks were still ongoing till late yesterday and the deal’s final outcome (as at press time) remained fluid on the takeover of PLUS, which is hoped will pave the way for the restructuring of the toll concession agreement (CA) to allow for “more equitable and fair” toll rate increases in future.
Khazanah owns a 56% stake in PLUS, directly (17%) and through wholly-owned UEM (39%). The EPF has a 12.3% stake while Kumpulan Wang Persaraan (KWAP) has a direct stake of 6% in PLUS.
“The whole premise of this deal is that the Government is concerned about the impact of toll rates on the cost of living of the people and is keen to manage a more affordable and fair toll structure where the burden can be shared by the Government, toll users and the toll operator’s shareholders,” said a source.
Sources close to the deal said the asset and liability route was the preferred option because a general offer (GO) for the shares could “end up messy.”
“You can’t tinker with a concession agreement when there are minority shareholders. It would be unfair unless they agree to it. A GO doesn’t give the certainty that it can take out everybody. If a minority decides to stay on, they could hold the Government hostage by refusing to restructure the concession. The only way to do it is to offer minorities an exit plan,” said the source.
PLUS Expressways’ crown jewel is PLUS, the highway concessionaire of the North-South Expressway (NSE), New Klang Valley Expressway (NKVE), Federal Highway Route 2 between Subang and Klang (FHR 2) and Seremban-Port Dickson Highway), which contributed a bulk or some 90% to group revenue in 2009.
The restructuring of the concession, it is believed, will largely involve tweaking the quantum of toll rate hikes, which as it stands now is too high. As raising toll rates would lead to public outcry given its impact on the cost of living, the Government has been forking out huge sums as compensation to PLUS for deferring toll rate revisions in recent years. The next rate revision is due in January 2011.
Currently, the PLUS concession agreement, which was revised and implemented in 2002, allows for toll rates to be raised by 10% every three years (as opposed to 26%-33% hikes every 4-5 years previously). The concession which was originally awarded for 30 years in 1988, was extended in 1999 by 12 years to 2030 and in 2005, by another eight years to 2038.
“We are not talking about no increase in toll rates forever. The whole purpose behind PLUS was to build a convenience on the basis that people who use it, will pay for it. The issue is that the rate of toll increases under current agreement is on the high side. If there’s a way to reduce the rate increase and restructure the concession while still ensuring that EPF, as a shareholder is not worse off, that would be the way to go,” said the source.
Sources said that once PLUS is owned by EPF and Khazanah, which enjoy much lower cost of funds or financing by virtue of being Government-linked, the highway operator’s capital structure can be improved, resulting in cost savings which could be used to lower toll rate hikes.
No doubt, the toll operator’s plus points are aplenty – a strong business profile, largely backed by the NSE’s strategic alignment, steady cash and resilient traffic flow. For this reason, in recent months it has been the takeover target of two companies – Asas Serba Sdn Bhd, perceived to be linked to Tan Sri Halim Saad and MMC Corp Bhd, controlled by Tan Sri Syed Mokhtar Albukhary – who have ambitiously stated that if they were to secure the asset, toll rates would be capped or cut.
Given the strategic interest of an asset such as PLUS, Government-owned Khazanah and EPF have managed to outflank these bids from the private sector. Khazanah will manage to retain its hold on the highway operator while EPF will end up with a bigger slice of the cash cow.
“The end game is that the Government wants a fairer toll rate for the people. For that, the owners of PLUS need to be funds with a long-term asset outlook. For EPF, PLUS is a solid asset – its returns are extremely visible over the years and predictable over the future. It falls in place with EPF’s objective of investing in assets that can give it a double-digit internal rate of return and good dividend.
“The best part is that PLUS is not a greenfield project,” said the source.
In the past weeks, on the back of the potential takeover, the share price of PLUS has been steadily rising, closing at a high of RM4.46 on Wednesday from a low of RM3.20 in May 27 this year. Trading in the counter is suspended for two days following a request by its major shareholder (Khazanah) pending an announcement which is expected to be made today.
Wednesday, October 13, 2010
Maxis first to offer phone with WP7
PETALING JAYA: Maxis Bhd will be the first telco in Malaysia to release HTC’s new HD7 which carries the Windows Phone 7 (WP7) operating system for mobile platforms.
Chief operating officer Jean-Pascal van Overbeke said the offering is aimed at boosting user experience from its combination of device and system design in tandem with Maxis’ high-speed mobile data network and integrated services platform.
“Our partnership puts Maxis customers first when it comes to enjoyment of the widest variety of advanced devices, together with the latest advancements in operating systems,” he said in a statement yesterday.
The HD7 boasts a 4.3in screen, eight megapixel camera and 16Gb internal memory among other features.
The new WP7 operating system has also been acclaimed for its neat system of integrated homescreen shortcuts to high quality control over live updates for social networking mobile sites and an ability to integrate with Xbox Live for mobile gaming, said van Overbeke.
“This continues our track record of offering devices that are constantly expanding in their applications.”
Chief operating officer Jean-Pascal van Overbeke said the offering is aimed at boosting user experience from its combination of device and system design in tandem with Maxis’ high-speed mobile data network and integrated services platform.
“Our partnership puts Maxis customers first when it comes to enjoyment of the widest variety of advanced devices, together with the latest advancements in operating systems,” he said in a statement yesterday.
The HD7 boasts a 4.3in screen, eight megapixel camera and 16Gb internal memory among other features.
The new WP7 operating system has also been acclaimed for its neat system of integrated homescreen shortcuts to high quality control over live updates for social networking mobile sites and an ability to integrate with Xbox Live for mobile gaming, said van Overbeke.
“This continues our track record of offering devices that are constantly expanding in their applications.”
Tighter BNM rules on property sector likely
By BERNAMA
The Government is expected to adopt tighter regulations in the 2011 Budget to curb potential dangerous run-up in consumer credit card spending and speculative activities in the property market.
“We believe Bank Negara Malaysia (BNM) is focusing on tackling household debt in 2011 to promote healthy credit card spending,” said Kenanga Research.
In its 2011 “Wish List”, Kenanga said the central bank should consider imposing tighter borrowing limit for the property sector to avert potential over-leveraging on the household segment and speculations.
It said bank loans should be lowered to between 70 and 80 per cent value ratio for third mortgage, it said.
Bank Negara should also consider capping maximum of two mortgages for each borrower, it said, adding that such a rule would slow down housing price appreciation rate, going forward.
Should tighter borrowing rules be enforced in 2011, it would not have any impact on loan growth this year as borrowings are anticipated to remain strong till year-end, it said.
“But we are cautiously optimistic on business loans as businesses in the next six months may be negatively impacted by global economic turmoil and Malaysia”s economy is not immuned from moderating global growth,” it said.
The research house said it was cautious for the second half of this year due to healthy loan growth but increasing risk on slower growth in the business segment, namely manufacturing and exports.
“Profit margin squeeze is directly triggered by the wave of intensely- competitive pricing, moderate growth expectation and possibility of a slowdown on mortgages if 70 per cent to 80 per cent loan-to-value ratio (LVR) is implemented.
“We see the implementation of a blanket 70 per cent to 80 per cent LVR cap as a real challenge to the industry’s loan growth next year and could put pressure on retail banks,” it said.
However, strong asset quality suggested lower credit charge-off, going forward, compensating net profit for the lower top line growth, it said.
As for credit cards, Kenanga said new measures should see tougher limits on the number of cards a person could hold and lower credit limit on each card.
Bank Negara should restrict a consumer to own only two credit cards from two banks of their choice and allow people with an annual income of above RM24,000 to own a credit card from the current minimum requirement of RM18,000.
The central bank should also reduce spending limit by 1.5 times their monthly salary (currently 2.5-3.0 times), set at the bank’s discretion for first-time applicants.
“In our view, stricter credit card rules are prudent and limit the risk of rising household non-performing loans. It will curb spending-spree cultures that have surfaced in certain segments of the population recently,” it added.
The Government is expected to adopt tighter regulations in the 2011 Budget to curb potential dangerous run-up in consumer credit card spending and speculative activities in the property market.
“We believe Bank Negara Malaysia (BNM) is focusing on tackling household debt in 2011 to promote healthy credit card spending,” said Kenanga Research.
In its 2011 “Wish List”, Kenanga said the central bank should consider imposing tighter borrowing limit for the property sector to avert potential over-leveraging on the household segment and speculations.
It said bank loans should be lowered to between 70 and 80 per cent value ratio for third mortgage, it said.
Bank Negara should also consider capping maximum of two mortgages for each borrower, it said, adding that such a rule would slow down housing price appreciation rate, going forward.
Should tighter borrowing rules be enforced in 2011, it would not have any impact on loan growth this year as borrowings are anticipated to remain strong till year-end, it said.
“But we are cautiously optimistic on business loans as businesses in the next six months may be negatively impacted by global economic turmoil and Malaysia”s economy is not immuned from moderating global growth,” it said.
The research house said it was cautious for the second half of this year due to healthy loan growth but increasing risk on slower growth in the business segment, namely manufacturing and exports.
“Profit margin squeeze is directly triggered by the wave of intensely- competitive pricing, moderate growth expectation and possibility of a slowdown on mortgages if 70 per cent to 80 per cent loan-to-value ratio (LVR) is implemented.
“We see the implementation of a blanket 70 per cent to 80 per cent LVR cap as a real challenge to the industry’s loan growth next year and could put pressure on retail banks,” it said.
However, strong asset quality suggested lower credit charge-off, going forward, compensating net profit for the lower top line growth, it said.
As for credit cards, Kenanga said new measures should see tougher limits on the number of cards a person could hold and lower credit limit on each card.
Bank Negara should restrict a consumer to own only two credit cards from two banks of their choice and allow people with an annual income of above RM24,000 to own a credit card from the current minimum requirement of RM18,000.
The central bank should also reduce spending limit by 1.5 times their monthly salary (currently 2.5-3.0 times), set at the bank’s discretion for first-time applicants.
“In our view, stricter credit card rules are prudent and limit the risk of rising household non-performing loans. It will curb spending-spree cultures that have surfaced in certain segments of the population recently,” it added.
Monday, October 11, 2010
5 bids to buy over UEM
The Malaysian Government is studying all five proposals and the Prime Minister hints that he would mention something about them in his budget speech on Friday
Prime Minister Datuk Seri Najib Razak yesterday revealed that there were in fact five proposals made to buy over the government's stake in UEM Group Bhd.
The market had hitherto known of only two: one submitted by MMC Corp Bhd and the other by privately-owned Asas Serba Sdn Bhd, which proposed several months ago to buy over UEM listed unit PLUS Expressways Bhd.
Najib, who made the disclosure in Putrajaya, said the government was studying all five proposals.
"There are five proposals (which are) very interesting propositions (involving) companies and innovative methods," Najib told reporters after launching the 61st Session of the World Health Organisation Regional Committee for the Western Pacific.
The Prime Minister did not elaborate on the proposals, but hinted that he would mention something about them in his budget speech on Friday.
UEM has been eyed by potential suitors of late, with analysts saying that the gem attracting interest is PLUS, concessionaire for most of the highways in the country, including the heavily-used North-South Expressway.
Apart from MMC, which said that it had submitted an early proposal to the government, Asas Serba has also made known its intention to acquire PLUS.
In making its proposal public several months ago, Asas Serba promised that it would keep the toll rates low.
The stake in PLUS, and UEM, which outside companies are eyeing is owned by government sovereign fund manager Khazanah Nasional Bhd.
Khazanah managing director Tan Sri Azman Mokhtar has pointed out that PLUS is a critical national asset.
He also said that the toll highway concessionaire is well managed.
Azman said that a decision on the proposals would not take too long and that the government would look at all aspects of the proposals, including the one from MMC.
Read more: 5 bids to buy over UEM http://www.btimes.com.my/Current_News/BTIMES/articles/PMUEM-2/Article/index_html#ixzz1265eOs00
Prime Minister Datuk Seri Najib Razak yesterday revealed that there were in fact five proposals made to buy over the government's stake in UEM Group Bhd.
The market had hitherto known of only two: one submitted by MMC Corp Bhd and the other by privately-owned Asas Serba Sdn Bhd, which proposed several months ago to buy over UEM listed unit PLUS Expressways Bhd.
Najib, who made the disclosure in Putrajaya, said the government was studying all five proposals.
"There are five proposals (which are) very interesting propositions (involving) companies and innovative methods," Najib told reporters after launching the 61st Session of the World Health Organisation Regional Committee for the Western Pacific.
The Prime Minister did not elaborate on the proposals, but hinted that he would mention something about them in his budget speech on Friday.
UEM has been eyed by potential suitors of late, with analysts saying that the gem attracting interest is PLUS, concessionaire for most of the highways in the country, including the heavily-used North-South Expressway.
Apart from MMC, which said that it had submitted an early proposal to the government, Asas Serba has also made known its intention to acquire PLUS.
In making its proposal public several months ago, Asas Serba promised that it would keep the toll rates low.
The stake in PLUS, and UEM, which outside companies are eyeing is owned by government sovereign fund manager Khazanah Nasional Bhd.
Khazanah managing director Tan Sri Azman Mokhtar has pointed out that PLUS is a critical national asset.
He also said that the toll highway concessionaire is well managed.
Azman said that a decision on the proposals would not take too long and that the government would look at all aspects of the proposals, including the one from MMC.
Read more: 5 bids to buy over UEM http://www.btimes.com.my/Current_News/BTIMES/articles/PMUEM-2/Article/index_html#ixzz1265eOs00
Four new highways to be announced in Budget 2011
KUALA LUMPUR: Four new tolled highways have been proposed for the peninsula and are likely to be announced during the Budget 2011 speech on Friday.
The Edge Financial Daily learned that of the four, one road is already in existence while the other three will be new alignments of existing roads, or roads that are in the process of being built.
It is understood that PLUS Expressways Bhd would be the concession operator of two of the roads, while Permodalan Nasional Bhd (PNB) would run the other two.
The highways to be operated by PLUS are from Sungai Dua to Juru in Penang, and from Kinrara to Damansara in the Klang Valley, while the PNB-operated highways are said to be from Ampang to Cheras, and from Damansara to Sungai Buloh.
It is learned that a bypass or upgrading is being considered for the Sungai Dua-Juru road, which sees heavy traffic flow and is presently a toll-free road.
According to sources, the upgrading of the road could involve the broadening of the lanes to facilitate smoother flow of traffic, but the cost of the upgrading is not known.
Meanwhile, the other three proposed toll roads are new alignments and seek to alleviate traffic woes plaguing road-users in the suburbs of Kuala Lumpur.
The Kinrara-Damansara stretch would serve to divert some of the traffic from the Lebuhraya Damansara-Puchong (LDP), while the Cheras-Ampang highway may see upgrading works.
It is also said that the Damansara-Sungai Buloh stretch could see a new highway or bypass being built.
Infrastructure project rollouts are expected to be a key focus of Budget 2011, according to UOB Kay Hian Research.
The construction sector is poised to be the key beneficiary of the budget proposals despite lower development expenditure, it said.
There are presently 22 toll road concessionaires in the country.
Investors have of late kept a close eye on these operators following proposals by three parties — MMC Corp Bhd, Asas Serba Sdn Bhd and the Employees Provident Fund (EPF) — to acquire PLUS, which is the largest concessionaire and largest listed toll expressway operator in Southeast Asia.
While Asas Serba is said to be looking to consolidate all of the country’s concessionaires, EPF is understood to be eyeing only PLUS, while MMC is said to be after PLUS as well via its acquisition of PLUS’ parent UEM Group Bhd, which is in turn owned by Khazanah Nasional Bhd.
Khazanah is the single largest shareholder in PLUS, with 2.76 billion shares or a 55.24% stake, followed by EPF with 613.47 million shares representing a 12.27% stake. Kumpulan Wang Persaraan (KWAP) is the third largest shareholder with a 5.78% stake.
PLUS closed at RM4.16 last Friday with 5.91 million shares done.
The Edge Financial Daily learned that of the four, one road is already in existence while the other three will be new alignments of existing roads, or roads that are in the process of being built.
It is understood that PLUS Expressways Bhd would be the concession operator of two of the roads, while Permodalan Nasional Bhd (PNB) would run the other two.
The highways to be operated by PLUS are from Sungai Dua to Juru in Penang, and from Kinrara to Damansara in the Klang Valley, while the PNB-operated highways are said to be from Ampang to Cheras, and from Damansara to Sungai Buloh.
It is learned that a bypass or upgrading is being considered for the Sungai Dua-Juru road, which sees heavy traffic flow and is presently a toll-free road.
According to sources, the upgrading of the road could involve the broadening of the lanes to facilitate smoother flow of traffic, but the cost of the upgrading is not known.
Meanwhile, the other three proposed toll roads are new alignments and seek to alleviate traffic woes plaguing road-users in the suburbs of Kuala Lumpur.
The Kinrara-Damansara stretch would serve to divert some of the traffic from the Lebuhraya Damansara-Puchong (LDP), while the Cheras-Ampang highway may see upgrading works.
It is also said that the Damansara-Sungai Buloh stretch could see a new highway or bypass being built.
Infrastructure project rollouts are expected to be a key focus of Budget 2011, according to UOB Kay Hian Research.
The construction sector is poised to be the key beneficiary of the budget proposals despite lower development expenditure, it said.
There are presently 22 toll road concessionaires in the country.
Investors have of late kept a close eye on these operators following proposals by three parties — MMC Corp Bhd, Asas Serba Sdn Bhd and the Employees Provident Fund (EPF) — to acquire PLUS, which is the largest concessionaire and largest listed toll expressway operator in Southeast Asia.
While Asas Serba is said to be looking to consolidate all of the country’s concessionaires, EPF is understood to be eyeing only PLUS, while MMC is said to be after PLUS as well via its acquisition of PLUS’ parent UEM Group Bhd, which is in turn owned by Khazanah Nasional Bhd.
Khazanah is the single largest shareholder in PLUS, with 2.76 billion shares or a 55.24% stake, followed by EPF with 613.47 million shares representing a 12.27% stake. Kumpulan Wang Persaraan (KWAP) is the third largest shareholder with a 5.78% stake.
PLUS closed at RM4.16 last Friday with 5.91 million shares done.
Tanjung Offshore (RM1.86; Hold; Price Target: RM1.60; TOFF MK)
Tanjung Offshore (TOFF) announced that its wholly-owned
subsidiary, Tanjung Kapal Services Sdn Bhd, has been served
with a notice of claim by Newfield Peninsula Malaysia Inc
(Newfield) for damages to pipeline allegedly caused by one
of TOFF’s vessels at the East Belumut Field, off Terengganu.
The USD15.9m (c.RM49m) claim was mainly for costs
associated with the repair and clean up of the damages to
the pipeline.
We are surprised by the announcement as when the news
of the damaged pipeline first broke out, we did a check
with the marine operators under our coverage and none
admitted to their vessels being involved in the incident.
Provision could be made but details remain sketchy as
investigation on the incident is still on-going. We would relook
into the impact on earnings once more details are
made available.
We maintain our Hold call on TOFF with TP of RM1.60/share
is pegged to 12x FY11F earnings, based on TOFF’s
normalised historical valuation. Valuation seems high at 14x
PE (diluted EPS) against peers’ average of 10x. TOFF is also
trading at a premium to the much larger and more liquid oil
& gas companies that are trading at FY11F PE of 12x.
subsidiary, Tanjung Kapal Services Sdn Bhd, has been served
with a notice of claim by Newfield Peninsula Malaysia Inc
(Newfield) for damages to pipeline allegedly caused by one
of TOFF’s vessels at the East Belumut Field, off Terengganu.
The USD15.9m (c.RM49m) claim was mainly for costs
associated with the repair and clean up of the damages to
the pipeline.
We are surprised by the announcement as when the news
of the damaged pipeline first broke out, we did a check
with the marine operators under our coverage and none
admitted to their vessels being involved in the incident.
Provision could be made but details remain sketchy as
investigation on the incident is still on-going. We would relook
into the impact on earnings once more details are
made available.
We maintain our Hold call on TOFF with TP of RM1.60/share
is pegged to 12x FY11F earnings, based on TOFF’s
normalised historical valuation. Valuation seems high at 14x
PE (diluted EPS) against peers’ average of 10x. TOFF is also
trading at a premium to the much larger and more liquid oil
& gas companies that are trading at FY11F PE of 12x.
Sunday, October 10, 2010
Malaysia gets 5 proposals to buy GLCs
The Malaysian government has received five proposals from the private sector to buy state-linked companies, Prime Minister Najib Razak told reporters today in Putrajaya, near Kuala Lumpur.
Najib, who is also finance minister, said he will comment on these in Malaysia’s Budget on October 15. He didn’t mention which businesses may be involved. -- Bloomberg
Najib, who is also finance minister, said he will comment on these in Malaysia’s Budget on October 15. He didn’t mention which businesses may be involved. -- Bloomberg
Saturday, October 9, 2010
Increase in property gains tax unlikely
PETALING JAYA: The property market, especially in the Klang Valley and Penang, are showing signs of getting frothy, so much so that talks about higher tax on property gains are getting louder as Budget 2011 announcement gets nearer.
Re-introduced earlier this year at the rate of 5% after a three-year hiatus, there are those who view that the real property gain tax (RPGT) should be implemented back on a original progressive scale where short-term gains are taxed the heaviest.
But industry players, understandably, are not too thrilled about the prospect on higher taxes.
“Personally, I don’t think the Government will increase it,” Master Builders Association of Malaysia (MBAM) president Kwan Foh Kwai told StarBizWeek in a telephone interview.
“But you’d never know what will happen next week,” he said.
The Government will table its Budget 2011 in Parliament on Oct 15.
From the contractors’ point of view, Kwan said, a healthy property market would benefit the whole economy.
“Prices had gone up in the past few quarters, but can be still considered relatively low because the market was stagnant in 2008,” said Kwan, who is a director at Sunway Holdings Bhd.
OSK Research, in a recent report said one potentially negative news for the sector could come in the form of a cap on loan to value ratio.
Such a move would probably be aimed at second or third home purchases, while first-time house buyers would probably be allowed to continue to borrow up to 90% of the property value.
Meanwhile, Bank Negara had increased interest rate three times so far this year from a record low level.
The Government re-introduced RPGT in the Budget 2010, but at concessional rate of 5% for disposal of properties held less than five years.
Re-introduced earlier this year at the rate of 5% after a three-year hiatus, there are those who view that the real property gain tax (RPGT) should be implemented back on a original progressive scale where short-term gains are taxed the heaviest.
But industry players, understandably, are not too thrilled about the prospect on higher taxes.
“Personally, I don’t think the Government will increase it,” Master Builders Association of Malaysia (MBAM) president Kwan Foh Kwai told StarBizWeek in a telephone interview.
“But you’d never know what will happen next week,” he said.
The Government will table its Budget 2011 in Parliament on Oct 15.
From the contractors’ point of view, Kwan said, a healthy property market would benefit the whole economy.
“Prices had gone up in the past few quarters, but can be still considered relatively low because the market was stagnant in 2008,” said Kwan, who is a director at Sunway Holdings Bhd.
OSK Research, in a recent report said one potentially negative news for the sector could come in the form of a cap on loan to value ratio.
Such a move would probably be aimed at second or third home purchases, while first-time house buyers would probably be allowed to continue to borrow up to 90% of the property value.
Meanwhile, Bank Negara had increased interest rate three times so far this year from a record low level.
The Government re-introduced RPGT in the Budget 2010, but at concessional rate of 5% for disposal of properties held less than five years.
Billions to be invested in two projects
PUTRAJAYA: Billions of ringgit in investments are in the pipeline from Abu Dhabi, and are set to flow into two major projects in Kuala Lumpur and Sarawak.
The emirate’s investment unit, Mubadala Development Co, is teaming up with the Government-owned 1Malaysia Development Bhd to participate in property and aluminium ventures in the two areas.
At the signing of two agreements yesterday, Prime Minister Datuk Seri Najib Tun Razak said the first would pave the way for Mubadala’s involvement in the Kuala Lumpur International Financial District (KLIFD) real estate development, which is estimated to cost more than RM26bil.
In the second tie-up, Najib added, Mubadala, through Mubadala Industry, was looking to commit up to US$7bil (RM21.7bil) in long-term projects in the Sarawak Corridor of Renewable Energy (SCORE).
Sealing the deal: Najib and Khaldoon looking on as 1MDB chief executive officer Shahrol Halmi (right) exchanges the collaboration agreements with Mubadala Development chief operating officer Waleed Al Mokarrab Al Muhairi in Putrajaya yesterday.
“We are happy that 1MDB and Mubadala see each other as partners in driving strategic initiatives for the long-term sustainable economic development of their countries,” he said.
Mubadala Real Estate and Hospitality (MREH) has agreed to work with 1MDB to explore the potential joint development of key strategic projects within the 34ha KLIFD, near Jalan Tun Razak.
“The full scope of MREH’s participation in the projects to be located within the KLIFD will be finalised in 2011, following completion by 1MDB of the KLFID master plan,” Mubadala and 1MDB said in a joint press statement.
KLIFD will provide a state-of-the-art home for important banking and financial entities.
It is meant to further cement Malaysia’s position as a leader in global Islamic finance.
“The KLIFD is critical in the development of a globally competitive financial sector that will promote economic growth, attract foreign direct investment and create jobs,” Najib said.
“We will invite, encourage and persuade the local and international financial community to work with us, not only in shaping Kuala Lumpur as a global financial centre but also to benefit from what the KLIFD has to offer.”
Najib said the potential investment in SCORE, which is for the development of a major initiative in the aluminium sector based on hydro power, was expected to generate spillover economic activities in multiple sectors and create more than 10,000 jobs during construction and 2,000 specialist jobs.
Specific details of these projects, all of which would be led by 1MDB, would be available in due course, he added.
Mubadala and 1MDB said they were starting preliminary assessment work on the SCORE project.
In his speech, Mubadala chief executive officer and managing director Khaldoon Khalifa Al Mubarak said Abu Dhabi viewed Malaysia as an ideal investment platform linking the emirate to this region.
“The Abu Dhabi government is very optimistic about Malaysia’s prospects as an investment destination of choice,” said Khaldoon, who is also special envoy to the Crown Prince of Abu Dhabi and deputy supreme commander of the UAE Armed Forces.
At the same event, Najib, who is also chairman of the board of advisers of 1MDB, announced that 1MDB posted a net profit of RM425mil for its first financial year ended March 31.
Synergies expected in MMC’s takeover of UEM
KUALA LUMPUR: The planned acquisition of UEM Group by MMC Corp Bhd is seen as a move for the highways under the group but there are other synergies that may be extracted after the takeover.
Sources with knowledge of the proposal say concerns over the indebtedness of MMC are overblown should MMC secure PLUS Expressways Bhd as the shared benefits from other businesses in UEM would offset the reduction in profit from the capping of toll rates.
“There is great opportunity for the two entities to combine their expertise and further strengthen their position in the various sectors,” said the source. “These synergies could invariably unlock benefits in terms of scale and efficiency, which could translate into higher margins and returns.”
In some ways, UEM and MMC share a number of similarities.
UEM has built highways and bridges while MMC was part of the consortium that built the SMART tunnel and is currently involved in the electrified double-tracking railway project.
In terms of land, MMC has almost 5,000 acres in Johor, which ranks it as one of the biggest private land owners in the country. With UEM Land, too, a major player in the property development business in Johor, and with relationship between Malaysia and Singapore warming up, the combination of both companies’ assets would be positive and add value to MMC.
“This can go both ways as MMC may have areas of strength from which UEM may tap into, which ultimately will enhance their value to their shareholders,” said the source.
The source said that should the proposal of no toll increases and no extension of the concession period materialise, it would benefit both the Government and the people.
“This would mean the rakyat would not bear the burden of increased costs and this also relieves the Government from the burden of having to manage this strategic asset and entrust the private sector to carry out this responsibility efficiently within the set parameters,” the source added.
Banking sources said the fear many had from the capping of toll rates would mean increased risks for any concessionaire.
With the proposed minimum wage set to be implemented in the near future, and also a proposed high-speed rail link that not only goes to Singapore but eventually up north in the peninsula, that should lead to cost rises and even a decline in traffic flow on the highways.
Should traffic growth on the highways drops, then revenue will shrink and the debt taken to fund the acquisition of UEM becomes shaky.
“What guarantee is there that this would not happen?” the banking source asked, adding that bonds would then have to be restructured and bondholders and stakeholders stand to lose a lot of money.
Sources with knowledge of the proposal said like any business initiative, the management would have to ensure that all revenues were maximised and costs minimised.
“In a situation where revenue from the toll concession would be capped for the remainder of the term, a careful assessment of the areas within the group must be made to identify where revenue may be enhanced and costs reduced without compromising service levels,” said the source.
The thought is that MMC may implement both revenue-enhancing and cost-saving initiatives in order to mitigate the reduction in profit from the cap on toll rate.
“This can be better accomplished with the synergies MMC would achieve with the takeover,” said the source, which added that MMC’s proposal would presumably incorporate the relevant capex required to ensure that the interests of road users were not compromised.
The proposed acquisition of UEM would be funded via a combination of debt and equity and the believe is that the debt-equity ratio is expected to be in line with what is required to meet the returns by both the lenders and the equity investors.
“As there is sufficient liquidity in the domestic loan and bond market, support for such acquisition funding would be accessible,” said the source.
Whether MMC can afford to buy over UEM considering the reported RM15.6bil purchase price has been flagged as a concern given the leverage MMC is carrying but the source said the gearing of the group was 2.4 times based on borrowings and debt and much of that was attributed to Malakoff Corp Bhd.
Malakoff had approximately RM14bil of debt as at June 30, 2010 and those debts were mainly project financing and “ring-fenced”.
“Malakoff’s cashflow is reported to be sufficient to service its debt obligations in a timely manner, thus should not be a cause for undue worry to investors,” said the source.
MMC on its own has a gearing of less than 0.8 times.
MMC’s preliminary bid for UEM has been submitted to the Government and institutional fund giants EPF and PNB have not yet been approached to be its partner in the takeover of UEM.
The source said that if the Employees Provident Fund and Permodalan Nasional Bhd are approached by MMC to be their partners in the takeover of UEM, it’s likely that those bodies will evaluate the merits of the proposal and make the appropriate investment decision or recommendation.
“If MMC’s proposal can provide a reasonable yield to interested investors on a recurring basis, there is no reason why it should not attract the required participation,” said the source.
Although there are complementary businesses between MMC and UEM where synergies may be extracted, a divestment of non-core business post-acquisition could very well take place.
“Therefore, it would not be unreasonable to assume that MMC would undertake a rebalancing of its portfolio post-acquisition and divest non-core businesses or realign certain businesses as part of its strategy,” said the source.
To answer concerns that the bid might undervalue the value of UEM, the source said the RM15.6bil acquisition price was also not set in stone.
“The proposal is still at the preliminary stage and it is likely that MMC will need to review the consideration price post-due diligence,” said the source.
Sources with knowledge of the proposal say concerns over the indebtedness of MMC are overblown should MMC secure PLUS Expressways Bhd as the shared benefits from other businesses in UEM would offset the reduction in profit from the capping of toll rates.
“There is great opportunity for the two entities to combine their expertise and further strengthen their position in the various sectors,” said the source. “These synergies could invariably unlock benefits in terms of scale and efficiency, which could translate into higher margins and returns.”
In some ways, UEM and MMC share a number of similarities.
UEM has built highways and bridges while MMC was part of the consortium that built the SMART tunnel and is currently involved in the electrified double-tracking railway project.
In terms of land, MMC has almost 5,000 acres in Johor, which ranks it as one of the biggest private land owners in the country. With UEM Land, too, a major player in the property development business in Johor, and with relationship between Malaysia and Singapore warming up, the combination of both companies’ assets would be positive and add value to MMC.
“This can go both ways as MMC may have areas of strength from which UEM may tap into, which ultimately will enhance their value to their shareholders,” said the source.
The source said that should the proposal of no toll increases and no extension of the concession period materialise, it would benefit both the Government and the people.
“This would mean the rakyat would not bear the burden of increased costs and this also relieves the Government from the burden of having to manage this strategic asset and entrust the private sector to carry out this responsibility efficiently within the set parameters,” the source added.
Banking sources said the fear many had from the capping of toll rates would mean increased risks for any concessionaire.
With the proposed minimum wage set to be implemented in the near future, and also a proposed high-speed rail link that not only goes to Singapore but eventually up north in the peninsula, that should lead to cost rises and even a decline in traffic flow on the highways.
Should traffic growth on the highways drops, then revenue will shrink and the debt taken to fund the acquisition of UEM becomes shaky.
“What guarantee is there that this would not happen?” the banking source asked, adding that bonds would then have to be restructured and bondholders and stakeholders stand to lose a lot of money.
Sources with knowledge of the proposal said like any business initiative, the management would have to ensure that all revenues were maximised and costs minimised.
“In a situation where revenue from the toll concession would be capped for the remainder of the term, a careful assessment of the areas within the group must be made to identify where revenue may be enhanced and costs reduced without compromising service levels,” said the source.
The thought is that MMC may implement both revenue-enhancing and cost-saving initiatives in order to mitigate the reduction in profit from the cap on toll rate.
“This can be better accomplished with the synergies MMC would achieve with the takeover,” said the source, which added that MMC’s proposal would presumably incorporate the relevant capex required to ensure that the interests of road users were not compromised.
The proposed acquisition of UEM would be funded via a combination of debt and equity and the believe is that the debt-equity ratio is expected to be in line with what is required to meet the returns by both the lenders and the equity investors.
“As there is sufficient liquidity in the domestic loan and bond market, support for such acquisition funding would be accessible,” said the source.
Whether MMC can afford to buy over UEM considering the reported RM15.6bil purchase price has been flagged as a concern given the leverage MMC is carrying but the source said the gearing of the group was 2.4 times based on borrowings and debt and much of that was attributed to Malakoff Corp Bhd.
Malakoff had approximately RM14bil of debt as at June 30, 2010 and those debts were mainly project financing and “ring-fenced”.
“Malakoff’s cashflow is reported to be sufficient to service its debt obligations in a timely manner, thus should not be a cause for undue worry to investors,” said the source.
MMC on its own has a gearing of less than 0.8 times.
MMC’s preliminary bid for UEM has been submitted to the Government and institutional fund giants EPF and PNB have not yet been approached to be its partner in the takeover of UEM.
The source said that if the Employees Provident Fund and Permodalan Nasional Bhd are approached by MMC to be their partners in the takeover of UEM, it’s likely that those bodies will evaluate the merits of the proposal and make the appropriate investment decision or recommendation.
“If MMC’s proposal can provide a reasonable yield to interested investors on a recurring basis, there is no reason why it should not attract the required participation,” said the source.
Although there are complementary businesses between MMC and UEM where synergies may be extracted, a divestment of non-core business post-acquisition could very well take place.
“Therefore, it would not be unreasonable to assume that MMC would undertake a rebalancing of its portfolio post-acquisition and divest non-core businesses or realign certain businesses as part of its strategy,” said the source.
To answer concerns that the bid might undervalue the value of UEM, the source said the RM15.6bil acquisition price was also not set in stone.
“The proposal is still at the preliminary stage and it is likely that MMC will need to review the consideration price post-due diligence,” said the source.
Thursday, October 7, 2010
YTL may offer new personalised digital hybrid TV
Deal with Sezmi TV expected for exclusive rights in Asia
PETALING JAYA: YTL Communications Sdn Bhd (YTL Comms), which is gearing to launch its WiMAX-based services on Nov 18, is expected to sign an agreement with US-based Sezmi TV for a new personalised digital television content offering on its network.
It is learnt that the agreement will give YTL Comms exclusive rights to offer hybrid TV services, comprising traditional TV, on-demand and Internet content to Malaysia and the Asian region.
It may take YTL Comms a year to roll out the services in Malaysia. The overall cost of bringing digital TV on its network to TV screens, computers and via mobile screens may be a whopping RM1bil to RM2bil. This amount would also cover the extension of the services to the region, sources said.
It is unclear how YTL Comms will fund this venture.
Separately, YTL Comms – a unit of YTL Power Bhd – is investing RM2.5bil to build its WiMAX network which will have nationwide coverage by Nov 18.
“It is really an alternative for TV viewers and it comes in digital format and can be delivered via various ways,” said a source.
Sezmi is based in California and is a four-year-old Silicon Valley start-up. It is offering an Internet-connected set-top box with a digital aerial. It combines free over-the-air channels with net content and uses spare bandwidth on the digital broadcasts to provide popular cable channels.
According to the Sezmi website, its all-in-one personalised television service is available to viewers in 36 markets across the United States. Those in the know claim that YTL Comms has taken up at least a 20% stake in Sezmi.
What content YTL Comms will provide is unclear but it will have to compete with Astro TV which has been in the business for over a decade and Astro has exclusive rights to many programmes.
Global convergence is forcing telcos and celcos to get into the broadcasting business since the lines are blurring between the two. Telecoms operators – such as AT&T and Verizon in the United States and BT, France Telecom and Telecom Italia in Europe – are also offering content over broadband.
Locally, Telekom Malaysia Bhd is offering IPTV via its high-speed broadband network and the other cellular players are also looking into ways to get into the TV content business for their users. Maxis Communications Bhd is conducting trials for IPTV and it will be much easier for the company than many others as its sister company, Astro, sits on many exclusive content rights.
PETALING JAYA: YTL Communications Sdn Bhd (YTL Comms), which is gearing to launch its WiMAX-based services on Nov 18, is expected to sign an agreement with US-based Sezmi TV for a new personalised digital television content offering on its network.
It is learnt that the agreement will give YTL Comms exclusive rights to offer hybrid TV services, comprising traditional TV, on-demand and Internet content to Malaysia and the Asian region.
It may take YTL Comms a year to roll out the services in Malaysia. The overall cost of bringing digital TV on its network to TV screens, computers and via mobile screens may be a whopping RM1bil to RM2bil. This amount would also cover the extension of the services to the region, sources said.
It is unclear how YTL Comms will fund this venture.
Separately, YTL Comms – a unit of YTL Power Bhd – is investing RM2.5bil to build its WiMAX network which will have nationwide coverage by Nov 18.
“It is really an alternative for TV viewers and it comes in digital format and can be delivered via various ways,” said a source.
Sezmi is based in California and is a four-year-old Silicon Valley start-up. It is offering an Internet-connected set-top box with a digital aerial. It combines free over-the-air channels with net content and uses spare bandwidth on the digital broadcasts to provide popular cable channels.
According to the Sezmi website, its all-in-one personalised television service is available to viewers in 36 markets across the United States. Those in the know claim that YTL Comms has taken up at least a 20% stake in Sezmi.
What content YTL Comms will provide is unclear but it will have to compete with Astro TV which has been in the business for over a decade and Astro has exclusive rights to many programmes.
Global convergence is forcing telcos and celcos to get into the broadcasting business since the lines are blurring between the two. Telecoms operators – such as AT&T and Verizon in the United States and BT, France Telecom and Telecom Italia in Europe – are also offering content over broadband.
Locally, Telekom Malaysia Bhd is offering IPTV via its high-speed broadband network and the other cellular players are also looking into ways to get into the TV content business for their users. Maxis Communications Bhd is conducting trials for IPTV and it will be much easier for the company than many others as its sister company, Astro, sits on many exclusive content rights.
Motorola sues Apple for patent infringement
Motorola asks the ITC to prohibit sales of Apple iPhone, iPad, iTouch, and certain Mac computers that it claims infringe its patents.
By Suzanne Deffree, Managing editor, news -- EDN, October 7, 2010
Motorola Inc subsidiary Motorola Mobility is claiming that Apple Inc's iPhone, iPad, iTouch, and certain Mac computers infringe Motorola patents.
The company filed three separate complaints this week with the US International Trade Commission (ITC), the Northern District of Illinois, and the Southern District of Florida.
The three complaints include 18 patents related to "early-stage innovations" developed by Motorola in key technology areas found on many of Apple's core products and associated services, including MobileMe and the App Store, the company claimed.
Motorola did not give specific patent numbers in its statement, but said the patents include wireless communication technologies, such as WCDMA, GPRS, 802.11, and antenna design, and smartphone technologies including wireless e-mail, proximity sensing, software application management, location-based services, and multi-device synchronization.
Motorola Mobility has requested that the ITC commence an investigation into Apple's use of Motorola's patents and, among other things, bar Apple's importation of the allegedly infringing products, prohibiting further sales of such products that have already been imported, and halting the marketing, advertising, demonstration, and warehousing of inventory for distribution and use of such imported products in the United States.
In the District Court actions, Motorola Mobility has requested that Apple cease using what Motorola claims to be patented technology and provide compensation for Apple's past so-claimed infringement.
"Motorola has innovated and patented throughout every cycle of the telecommunications industry evolution, from Motorola's invention of the cell phone to its development of premier smartphone products," Kirk Dailey, corporate vice president of intellectual property at Motorola Mobility, said in the statement. "We have extensively licensed our industry-leading intellectual property portfolio, consisting of tens of thousands of patents in the U.S. and worldwide. After Apple's late entry into the telecommunications market, we engaged in lengthy negotiations, but Apple has refused to take a license. We had no choice but to file these complaints to halt Apple's continued infringement. Motorola will continue to take all necessary steps to protect its R&D and intellectual property, which are critical to the company's business."
Apple did not immediately reply to request for comment on the Motorola claims.
Motorola is not the only mobile player to call out Apple in a courtroom. Handset makers Nokia and HTC have also filed separate complaints against Apple, claiming patent infringement in its popular consumer products. Nokia in May took legal action against Apple, claiming that Apple iPhone and iPad 3G products infringe five of its patents. In HTC's effort, also filed in May, the Taiwan-based company asked the ITC to stop iPad, iPhone, and iPod sales in US on patent infringement complaints. HTC's filing followed a March complaint from Apple that the company infringed 20 patents related to the Apple iPhone user interface, underlying architecture and hardware.
By Suzanne Deffree, Managing editor, news -- EDN, October 7, 2010
Motorola Inc subsidiary Motorola Mobility is claiming that Apple Inc's iPhone, iPad, iTouch, and certain Mac computers infringe Motorola patents.
The company filed three separate complaints this week with the US International Trade Commission (ITC), the Northern District of Illinois, and the Southern District of Florida.
The three complaints include 18 patents related to "early-stage innovations" developed by Motorola in key technology areas found on many of Apple's core products and associated services, including MobileMe and the App Store, the company claimed.
Motorola did not give specific patent numbers in its statement, but said the patents include wireless communication technologies, such as WCDMA, GPRS, 802.11, and antenna design, and smartphone technologies including wireless e-mail, proximity sensing, software application management, location-based services, and multi-device synchronization.
Motorola Mobility has requested that the ITC commence an investigation into Apple's use of Motorola's patents and, among other things, bar Apple's importation of the allegedly infringing products, prohibiting further sales of such products that have already been imported, and halting the marketing, advertising, demonstration, and warehousing of inventory for distribution and use of such imported products in the United States.
In the District Court actions, Motorola Mobility has requested that Apple cease using what Motorola claims to be patented technology and provide compensation for Apple's past so-claimed infringement.
"Motorola has innovated and patented throughout every cycle of the telecommunications industry evolution, from Motorola's invention of the cell phone to its development of premier smartphone products," Kirk Dailey, corporate vice president of intellectual property at Motorola Mobility, said in the statement. "We have extensively licensed our industry-leading intellectual property portfolio, consisting of tens of thousands of patents in the U.S. and worldwide. After Apple's late entry into the telecommunications market, we engaged in lengthy negotiations, but Apple has refused to take a license. We had no choice but to file these complaints to halt Apple's continued infringement. Motorola will continue to take all necessary steps to protect its R&D and intellectual property, which are critical to the company's business."
Apple did not immediately reply to request for comment on the Motorola claims.
Motorola is not the only mobile player to call out Apple in a courtroom. Handset makers Nokia and HTC have also filed separate complaints against Apple, claiming patent infringement in its popular consumer products. Nokia in May took legal action against Apple, claiming that Apple iPhone and iPad 3G products infringe five of its patents. In HTC's effort, also filed in May, the Taiwan-based company asked the ITC to stop iPad, iPhone, and iPod sales in US on patent infringement complaints. HTC's filing followed a March complaint from Apple that the company infringed 20 patents related to the Apple iPhone user interface, underlying architecture and hardware.
Wednesday, October 6, 2010
SP-Setia
Guy, SP-Setia is moving again this few day....I still hold on it...Plan to sell when it touch RM5.. I bought at RM3.98...This company..have benefit alot from the property boom in Selangor and Penang...Good prospect ahead with the new MRT project in KL and Selangor...
Heavyweight buying lifts KL mart
Share prices on Bursa Malaysia closed higher yesterday with the key FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) holding firmly above the 1,470 level, dealers said.
At 5pm, the key index rose 7.42 points to 1,479.61 on continuous follow-through buying in heavyweights like Genting, Tenaga Nasional and Axiata.
During the session, the index rose to a high of 1,483,25 before giving up some of its gains.
A dealer said the key index could not sustain itself at the 1,480 level due to profit-taking in lower liners, especially in the ACE market and in heavyweights like CIMB, Gamuda and MMC. The FBM ACE Index fell 9.84 points to 3,965.60.
Generally, the local bourse was tracking gains in Asia and on Wall Street.
Most Asian bourses advanced after the Bank of Japan's surprise interest cut yesterday.
"Expectations of another round of asset purchases by the US Federal Reserve to stimulate the economy further encouraged investors to take position in riskier assets like stocks," a dealer said.
Bursa Malaysia's Industrial Index increased 14.97 points to 2,834.87, the Finance Index advanced 33.59 points to 13,488.65 and the Plantation Index expanded 57.96 points to 6,905.87.
The FBM Emas Index perked 46.55 points to 9,928.48, while the FBM70 gained 36.76 points to 9,870.63.
Gainers thumped losers by 443 to 330 while 283 counters were unchanged, 301 untraded and 27 suspended.
The market breadth, however, was negative with 954.74 million shares worth RM1.66 billion transacted compared with Tuesday's 985.74 million shares worth RM1.51 billion.
Volume leaders Genting gained 16 sen to RM10.20, Tenaga Nasional went up 10 sen to RM8.94, Axiata climbed 5 sen to RM4.48 and MISC rose 9 sen to RM8.85.
Tenaga shares rose after Credit Suisse Group AG said the power producer would likely record a 22 per cent gain in earnings for the financial year ended August 31, bolstered by higher electricity sales.
Of the heavyweights, Maybank rose 4 sen to RM8.98, Sime Darby added 6 sen to RM8.56, while CIMB fell 4 sen to RM8.13.
Volume on the Main Market fell to 779.72 million shares valued at RM1.62 billion from the 795.17 million shares valued at RM1.46 billion previously. .
Consumer products accounted for 36.96 million shares traded on the Main Market, industrial products 124.1 million, construction 73.44 million, trade and services 260.63 million, technology 22.17 million, infrastructure 20.61 million, finance 51.21 million, hotels 9.02 million, properties 136.84 million, plantations 34.1 million, mining 331,000, REITs 10 million and closed/fund 318,200. - Bernama
At 5pm, the key index rose 7.42 points to 1,479.61 on continuous follow-through buying in heavyweights like Genting, Tenaga Nasional and Axiata.
During the session, the index rose to a high of 1,483,25 before giving up some of its gains.
A dealer said the key index could not sustain itself at the 1,480 level due to profit-taking in lower liners, especially in the ACE market and in heavyweights like CIMB, Gamuda and MMC. The FBM ACE Index fell 9.84 points to 3,965.60.
Generally, the local bourse was tracking gains in Asia and on Wall Street.
Most Asian bourses advanced after the Bank of Japan's surprise interest cut yesterday.
"Expectations of another round of asset purchases by the US Federal Reserve to stimulate the economy further encouraged investors to take position in riskier assets like stocks," a dealer said.
Bursa Malaysia's Industrial Index increased 14.97 points to 2,834.87, the Finance Index advanced 33.59 points to 13,488.65 and the Plantation Index expanded 57.96 points to 6,905.87.
The FBM Emas Index perked 46.55 points to 9,928.48, while the FBM70 gained 36.76 points to 9,870.63.
Gainers thumped losers by 443 to 330 while 283 counters were unchanged, 301 untraded and 27 suspended.
The market breadth, however, was negative with 954.74 million shares worth RM1.66 billion transacted compared with Tuesday's 985.74 million shares worth RM1.51 billion.
Volume leaders Genting gained 16 sen to RM10.20, Tenaga Nasional went up 10 sen to RM8.94, Axiata climbed 5 sen to RM4.48 and MISC rose 9 sen to RM8.85.
Tenaga shares rose after Credit Suisse Group AG said the power producer would likely record a 22 per cent gain in earnings for the financial year ended August 31, bolstered by higher electricity sales.
Of the heavyweights, Maybank rose 4 sen to RM8.98, Sime Darby added 6 sen to RM8.56, while CIMB fell 4 sen to RM8.13.
Volume on the Main Market fell to 779.72 million shares valued at RM1.62 billion from the 795.17 million shares valued at RM1.46 billion previously. .
Consumer products accounted for 36.96 million shares traded on the Main Market, industrial products 124.1 million, construction 73.44 million, trade and services 260.63 million, technology 22.17 million, infrastructure 20.61 million, finance 51.21 million, hotels 9.02 million, properties 136.84 million, plantations 34.1 million, mining 331,000, REITs 10 million and closed/fund 318,200. - Bernama
Mudajaya suspended for announcement
KUALA LUMPUR: Trading in Mudajay Group Bhd shares was suspended at 11.12am on Thursday, Oct 7 for a material announcement.
A Bursa Malaysia Securities said on Thursday, the suspension was at the company’s request and it would remain suspended until 5pm.
The share price rose 17 sen to RM4.61 with 2.44 million units done before the suspension.
A Bursa Malaysia Securities said on Thursday, the suspension was at the company’s request and it would remain suspended until 5pm.
The share price rose 17 sen to RM4.61 with 2.44 million units done before the suspension.
Tuesday, October 5, 2010
JPP Penang need to act .....
Several house owners at Jalan Kota Permai, Penang, started to notice cracks on their walls which they claimed to be caused by the underground blasting by JPP's contractors nearby.
Adun Padang Lalang, Tan Cheong Heng inspected two homes and urged JPP to look into this issue and stop all works immediately in order to get proper reports from related authorities.
Tan added that this could be another Taman Kota Permai case where nearly 70 over houses were effected.
Video by Jimmy Leow Beng Hock, Citizen Journalist
Monday, October 4, 2010
Stocks to watch: MGRC, DiGi, O&G, MMC, EON Cap
KUALA LUMPUR: Markets could start off on Tuesday, Oct 5 on a cautious note in line with the profit taking on Wall Street while at Bursa Malaysia, Malaysian Genomics Resource Centre Bhd (MGRC) will list on the ACE Market.
On Wall Street, U.S. stocks fell in light trading on Monday as investors took profits on recent gains, using middling economic data and worries about euro zone debt as a catalyst for shedding long positions.
The Dow Jones industrial average fell 78.41 points, or 0.72 percent, at 10,751.27. The Standard & Poor's 500 Index lost 9.21 points, or 0.80 percent, at 1,137.03. The Nasdaq Composite Index dropped 26.23 points, or 1.11 percent, at 2,344.52.
Stocks to watch are MGRC, DIGI.COM BHD [], oil and gas (O&G) related companies including Kencana Petroleum Bhd, MMC Corp Bhd and EON CAPITAL BHD [].
MCRC, which focuses on contract genomics services, raised RM18.47 million for its initial public offering at RM1.08 apiece. MGRC announced on Monday it received the approval to implement two genome sequencing and analysis projects from the Malaysian Government. MGRC intends to accept the allocated RM5.97 million, being the first of two tranches
DiGi could stage a rebound after unusual market transactions, in the last 10 minutes of trade, pushed the FBM KLCI into the red. This could raise concerns among market participants over such action which could “destabilise” the market. Market concerns were whether the late sell-off was to impact the KLCI futures.
DiGi closed down RM3.58 to RM21 with 161,000 shares done in the absence of any negative news. This saw RM2.78 billion erased from its market capitalisation to end the day at RM16.327 billion.
The FBM KLCI, which was trading around the 1,470 level throughout the day, fell 4.05 points to close at 1,462.27. The KLCI futures fell 8.5 points to 1,464.50. More details in The Edge FinancialDaily.
O&G stocks could see trading interest as Petronas said it would focus on domestic in terms exploration. It has allocated US$2 billion over three years for local exploration which is higher than US$1.2 billion previously.
Kencana’s two units have secured two contracts worth RM30.7 million. The first contract was from Newfield Peninsula Malaysia Inc. to build the jackets for wellhead platform and central processing platform for PM329 East Piatu Development Project off Peninsular Malaysia. The contract is valued at RM21.6 million.
MMC Corp submitted a preliminary proposal to the government for the acquisition of UEM Group Bhd and has not received any indication on the proposal as yet.
“MMC will lead a consortium for the proposed acquisition and to-date, we have not approached Employees Provident Fund and/or Permodalan Nasional Bhd to be our partners,” it said.
Primus (Malaysia) Sdn Bhd has filed an originating summons with the High Court of Malaya at Kuala Lumpur over the EON Capital Bhd EGM on Sept 27.
Primus had on Monday sought to have the motion for an adjournment of the EGM as “a valid motion”.
It also sought to have a declaration that act of the chairman of the EGM in refusing to put the motion for an adjournment of the EGM to a vote was unlawful and also sought “… a declaration that the motion for the removal of the chairman of the EGM is a valid motion,” it said.
Primus said the chairman’s refusal to put to vote the motion for adjournment properly and validly moved by a shareholder at the EGM infringed the fundamental proprietary right of the shareholders, including that of the plaintiff, and was contrary to the Articles of Association of the Company.
On Wall Street, U.S. stocks fell in light trading on Monday as investors took profits on recent gains, using middling economic data and worries about euro zone debt as a catalyst for shedding long positions.
The Dow Jones industrial average fell 78.41 points, or 0.72 percent, at 10,751.27. The Standard & Poor's 500 Index lost 9.21 points, or 0.80 percent, at 1,137.03. The Nasdaq Composite Index dropped 26.23 points, or 1.11 percent, at 2,344.52.
Stocks to watch are MGRC, DIGI.COM BHD [], oil and gas (O&G) related companies including Kencana Petroleum Bhd, MMC Corp Bhd and EON CAPITAL BHD [].
MCRC, which focuses on contract genomics services, raised RM18.47 million for its initial public offering at RM1.08 apiece. MGRC announced on Monday it received the approval to implement two genome sequencing and analysis projects from the Malaysian Government. MGRC intends to accept the allocated RM5.97 million, being the first of two tranches
DiGi could stage a rebound after unusual market transactions, in the last 10 minutes of trade, pushed the FBM KLCI into the red. This could raise concerns among market participants over such action which could “destabilise” the market. Market concerns were whether the late sell-off was to impact the KLCI futures.
DiGi closed down RM3.58 to RM21 with 161,000 shares done in the absence of any negative news. This saw RM2.78 billion erased from its market capitalisation to end the day at RM16.327 billion.
The FBM KLCI, which was trading around the 1,470 level throughout the day, fell 4.05 points to close at 1,462.27. The KLCI futures fell 8.5 points to 1,464.50. More details in The Edge FinancialDaily.
O&G stocks could see trading interest as Petronas said it would focus on domestic in terms exploration. It has allocated US$2 billion over three years for local exploration which is higher than US$1.2 billion previously.
Kencana’s two units have secured two contracts worth RM30.7 million. The first contract was from Newfield Peninsula Malaysia Inc. to build the jackets for wellhead platform and central processing platform for PM329 East Piatu Development Project off Peninsular Malaysia. The contract is valued at RM21.6 million.
MMC Corp submitted a preliminary proposal to the government for the acquisition of UEM Group Bhd and has not received any indication on the proposal as yet.
“MMC will lead a consortium for the proposed acquisition and to-date, we have not approached Employees Provident Fund and/or Permodalan Nasional Bhd to be our partners,” it said.
Primus (Malaysia) Sdn Bhd has filed an originating summons with the High Court of Malaya at Kuala Lumpur over the EON Capital Bhd EGM on Sept 27.
Primus had on Monday sought to have the motion for an adjournment of the EGM as “a valid motion”.
It also sought to have a declaration that act of the chairman of the EGM in refusing to put the motion for an adjournment of the EGM to a vote was unlawful and also sought “… a declaration that the motion for the removal of the chairman of the EGM is a valid motion,” it said.
Primus said the chairman’s refusal to put to vote the motion for adjournment properly and validly moved by a shareholder at the EGM infringed the fundamental proprietary right of the shareholders, including that of the plaintiff, and was contrary to the Articles of Association of the Company.
Sunday, October 3, 2010
Glove makers rebound
KUALA LUMPUR: Latex glove makers, which had been hammered down in recent weeks over recent concerns about over expansion and the stronger ringgit, staged a rebound in the morning session on Monday, Oct 4.
The FBM KLCI rose 8.3 points ti 1,474.62. Turnover was 111.21 million shares valued at RM97.54 million. There were 231 gainers, 70 losers and 114 stocks unchanged.
Top Glove rose 21 sen to RM5.56, Latexx 16 sen to RM2.86, Supermax 15 sen to RM4.18 and Latexx-WA 14 sen to RM2.29.
CIMB Research said on Oct 1 that despite considerable headwinds encountered by the sector this year, demand for rubber gloves continues to grow at a healthy clip.
With continued technological advancement of glove products and facilities, we believe Malaysian rubber glove manufacturers will maintain its leadership in the global market.
“In light of the positive long term prospects of the industry, we maintain our OVERWEIGHT call. All the glove stocks under our coverage remain as Outperforms.
“Potential re-rating catalysts include the continuing uptick in demand from the healthcare industry, ongoing capacity expansion and strong earnings growth. The recent sharp pullback in share prices has made the sector even more attractive with undemanding average P/Es of 7-8x. Supermax and Latexx remain our top picks,” it said.
The FBM KLCI rose 8.3 points ti 1,474.62. Turnover was 111.21 million shares valued at RM97.54 million. There were 231 gainers, 70 losers and 114 stocks unchanged.
Top Glove rose 21 sen to RM5.56, Latexx 16 sen to RM2.86, Supermax 15 sen to RM4.18 and Latexx-WA 14 sen to RM2.29.
CIMB Research said on Oct 1 that despite considerable headwinds encountered by the sector this year, demand for rubber gloves continues to grow at a healthy clip.
With continued technological advancement of glove products and facilities, we believe Malaysian rubber glove manufacturers will maintain its leadership in the global market.
“In light of the positive long term prospects of the industry, we maintain our OVERWEIGHT call. All the glove stocks under our coverage remain as Outperforms.
“Potential re-rating catalysts include the continuing uptick in demand from the healthcare industry, ongoing capacity expansion and strong earnings growth. The recent sharp pullback in share prices has made the sector even more attractive with undemanding average P/Es of 7-8x. Supermax and Latexx remain our top picks,” it said.
4-10-2010 Hwangdbs KNM Group (RM0.46; Buy; Price Target: RM0.55; KNMG MK) Second lease
Second lease of life
• Better times ahead, with money ploughing back into
E&P and O&G development
• Growth opportunities reflected in rising tender book
with c. RM3.0b worth of jobs at 20% hit rate
• Upgrade to Buy; valuation is attractive given strong
earnings growth ahead
British American Tobacco (RM48.40;
• Better times ahead, with money ploughing back into
E&P and O&G development
• Growth opportunities reflected in rising tender book
with c. RM3.0b worth of jobs at 20% hit rate
• Upgrade to Buy; valuation is attractive given strong
earnings growth ahead
British American Tobacco (RM48.40;
Lotus shows off 5 models at Paris show
PARIS: The 2010 Paris Motor Show seems to be quite a significant occasion for Group Lotus Plc.
The Proton-owned company has taken the opportunity to show off up to five new models which will be introduced into the world market gradually.
The Lotus Elan, Esprit, Elite, Elise and Eterne were instant and constant crow pullers among sports car enthusiasts. The extraordinary reception just goes to show that Group Lotus is back on track to make a comeback into the world of super sports cars after a long lapse from the industry.
Group Lotus chairman Datuk Seri Mohd Nadzmi Mohd Salleh said he was elated with the overwhelming response. "In my 25 years in the automobile industry, I have never seen anything like this.
The crowds just keep coming and stay long at the Lotus exhibition area. This just goes to show their interest in the Lotus cars on display," he told Malaysian reporters here.
Mohd Nadzmi said executives from other car makers, who were also at the Paris Motor Show, were amazed with the Group Lotus's ability to launch five cars at one go after working on them for only nine months.
They were also impressed with the captivating design of the models which would be released in the market gradually over five years.
Meanwhile, Proton Holdings Bhd Group Managing Director Datuk Syed Zainal Abidin Syed Mohamed Tahir said the unveiling of the five new models would not only help rebuild and raise Lotus's image but also that of Proton as the owner of Lotus.
"As you are aware, Lotus is a 100 per cent wholly-owned subsidiary of Proton. Whatever spin off effects and perception of Lotus will indirectly benefit Proton as shareholder and owner.
Syed Zainal also said Malaysians should be proud of this feat as it was proof of Proton's achievement in transforming Lotus. He said Proton would continue to work closely with Lotus which has in turn agreed to help the national car company emerge a global player. -- Bernama
Read more: Lotus shows off 5 models at Paris show http://www.btimes.com.my/Current_News/BTIMES/articles/20101002175414/Article/index_html#ixzz11JGGeqjB
The Proton-owned company has taken the opportunity to show off up to five new models which will be introduced into the world market gradually.
The Lotus Elan, Esprit, Elite, Elise and Eterne were instant and constant crow pullers among sports car enthusiasts. The extraordinary reception just goes to show that Group Lotus is back on track to make a comeback into the world of super sports cars after a long lapse from the industry.
Group Lotus chairman Datuk Seri Mohd Nadzmi Mohd Salleh said he was elated with the overwhelming response. "In my 25 years in the automobile industry, I have never seen anything like this.
The crowds just keep coming and stay long at the Lotus exhibition area. This just goes to show their interest in the Lotus cars on display," he told Malaysian reporters here.
Mohd Nadzmi said executives from other car makers, who were also at the Paris Motor Show, were amazed with the Group Lotus's ability to launch five cars at one go after working on them for only nine months.
They were also impressed with the captivating design of the models which would be released in the market gradually over five years.
Meanwhile, Proton Holdings Bhd Group Managing Director Datuk Syed Zainal Abidin Syed Mohamed Tahir said the unveiling of the five new models would not only help rebuild and raise Lotus's image but also that of Proton as the owner of Lotus.
"As you are aware, Lotus is a 100 per cent wholly-owned subsidiary of Proton. Whatever spin off effects and perception of Lotus will indirectly benefit Proton as shareholder and owner.
Syed Zainal also said Malaysians should be proud of this feat as it was proof of Proton's achievement in transforming Lotus. He said Proton would continue to work closely with Lotus which has in turn agreed to help the national car company emerge a global player. -- Bernama
Read more: Lotus shows off 5 models at Paris show http://www.btimes.com.my/Current_News/BTIMES/articles/20101002175414/Article/index_html#ixzz11JGGeqjB
Saturday, October 2, 2010
Property loans safer bet for banks
EXUBERANCE is often an indicator of an unsustainable pattern, be it for equities, collectibles or real estate. A rumbustious atmosphere in any asset class, more often than not, eventually leads to a deflation, which can be painful to swallow for its participants.
The two asset classes that have seen their fair share of bubbles are stocks and property, fuelled by euphoric expectations of higher profits and easy credit. The banking sector has always been in the forefront of such situations.
Prior to the 1997/98 financial crisis, banks had lent most of their money to businesses while a lot of cash was also diverted for the purchase of shares.
Then, household debt was much lower as a percentage to gross domestic product (GDP) than it is today and residential loans accounted for about 16% of total loans.
When the economy crumbled during the crisis more than a decade ago, the banks were severely hurt, not just in Malaysia but throughout much of South-East Asia and other countries that saw their currencies attacked and a spooky flight of capital.
Many banks in Malaysia had to be recapitalised and that was the catalyst to the consolidation of the banking sector that today, has resulted in the creation of nine anchor banks in the country.
Learning from the causes of troubles back then, companies shifted their funding needs to the debt capital market, which defrayed the risks and funding needs of corporations away from banks.
That transition by all accounts has been a success. Malaysia’s debt capital market is one of the most robust in Asia but the migration of corporations meant banks had to look for a new source of business.
Financial institutions then steered their sights to the household sector, which was prime for more credit as debt levels within homes were low as a percentage of GDP.
Household debt demand
As it stands today, household debt has grown by leaps and bounds. As a percentage of GDP, it was 40% in 2000 and that has grown by more than 50% to around 65% today.
Much of the credit demand has come by way of providing financing for the purchase of cars and of late, a surge in giving money to people for consumption needs. But the lions’ share of that funding constitutes home loans, largely owing to low interest rates and a steady rise in income levels.
“Interest rates have fallen and that has attracted people to borrow more,’’ said ECM Libra head of research Bernard Ching.
Housing loans are also seen as a safer bet for banks as traditionally, the non-performing loans for houses are low.
Margins for housing loans are not the best for banks as competition in the segment means that most financing packages out there today charge rates that are below the base lending rate.
Analysts say banks can afford to take a margin hit as funding for such loans, and for all loans in general today, comes from their own deposits where the cost of funds are the lowest.
Banks are awash with cash as, on average, the loans-to-deposit ratio is around 80% for the industry compared with above 100% during the financial crisis.
Also, lending towards the residential sector is a way of diversifying risk. Business loans tend to be lumpy and riskier.
Analysts say for the same amount of money, banks would lend to a single large business and they can carve that out into smaller slices and lend to multiple borrowers in the housing market.
The main difference is the amount banks lend to the value of collateral they get. As property prices in Malaysia tend to rise over time, so would the collateral, usually the home itself.
Financing packages
As interest rates remain low and competition in the housing loan segment has become a cut-throat war for many banks, real estate loan packages have also morphed.
In the past, larger downpayments were needed from homebuyers to purchase houses and the tenures were extended to 25 or 30 years.
Today, reports indicate that some properties, depending on the customer, can be fully funded by a bank loan and the amount of downpayment in general can be as low as 5% or 10%. The tenures are also elongated, up to a borrowers’ age of 60 years.
Also to help households afford homes, the minimum threshold for monthly payments have increased beyond the historical norm of 30% limit.
Analysts say this is possible as long as income rises and interest rates remain low. That risk would, however, compound should the interest rate environment flip in the future.
Mortgage broker Chew Thiam Hock says the low interest rate environment is enticing more people, even those who can afford to pay, to the banks for a higher loan amount.
“In the past, people did not want a high margin of financing but with interest rates so low, they have no problem taking a 90% loan,’’ he says.
The growth of the housing loan industry has also created business opportunities for brokers like Chew who have astute knowledge on the credit appetite of the panel of banks they represent.
Are banks taking too much risk?
With residential loans now accounting for 27% of all loans for banks, the question is are banks are over exposing themselves to housing loans?
Defining a housing bubble is not easy. Prices of property do experience periods of swift rises but the general understanding of a property asset bubble is when the price increase is too rapid devoid of fundamentals.
Some basic indicators include income levels, jobless data, rentals against the cost of a property or even affordability ratios can be used to gauge whether a bubble is forming.
“The risks are essentially the same for the banking sector, whether it’s corporate or housing loans, as consumer loans are a large part of the total banking sector loan,’’ says an economist.
“The ratio was the same in the business sector in 1997/98.’’
But based on the example of Hong Kong market, one analyst disagrees.
Sunil Garg, a banking analyst at JPMorgan Securities, says the housing loan represents one of the safest segments for banks.
“During the Asian financial crisis, losses taken on properties and residential loans were small,’’ he says, adding: “It’s a sector where there is real tangible collateral.’’
With housing loans by banks in Hong Kong accounting for roughly 40% of their loan books, one would think they would have suffered badly when the property market tanked during the 2008 global financial crisis.
However, property prices have since, not only rebounded off their lows, but have scaled new heights, and the loan-to-value ratio in banks means those assets are in a healthier state than before.
Still, the threat of a housing bubble and its far reaching impact can be damaging to any economy. The repercussions are only too well documented world over.
“We need to make sure we do not put our guard down against such risks,’’ says the economist.
Banks becoming more prudent?
One worry surrounding the property market is that building activity tends to ratchet up to take advantage of a boom in prices.
As it stands now, the anecdotal evidence points to a surge in the building of high-end properties. For developers, this segment represents the cream of their business as margins are always the fattest.
According to National Property Information Centre, the ratio of unsold units in the property sector is rising.
While those percentages in Kuala Lumpur and Selangor, where concerns that prices are rising way too fast, are below the national averages, it is nonetheless rising.
With that, analysts say banks are becoming cautious over their lending patterns as internally, they are scrutinising loans with a fine tooth comb.
“Banks might have their own assessment on the value of properties and the intrinsic value, which is the force sale price of a house,’’ says the analyst.
One proposed measure involving the loan-to-value ratio has generated significant debate. Still, it is widely perceived that genuine homebuyers would not be penalised with having to fork out a large downpayment. Those who could be penalised are the third or so on home buyers who will have to come up with 20% or more of the cost of the house.
“It’s a paradox for banks. When loans growth is strong, people will say banks are contributing to speculative activity and the bubble. When they are conservative, people will say banks are not supportive,’’ says a banking analyst.
Social justice
As developers make a beeline to build costlier homes in the hot markets in the country, more people are feeling they cannot afford to buy homes these days.
With workers’ salaries no where close to keeping pace with asset inflation or even the cost of living in the country, the issue of social justice – where every Malaysian should be able to afford a home for themselves – has cropped up.
“There is always a need for affordable housing, so prices remains within the reach of people. You don’t want the banking system to allocate too much money for speculative home-buying purposes,’’ said an economist.
Analysts say banks already have a social obligation to provide a certain amount of financing for the purchase of low-cost housing.
“Banks have a quota. If they don’t meet that, they will be penalised,’’ says an analyst.
As property prices rise, financing packages too tend to evolve alongside. In the past, the minimum downpayment for housing loans used to be much higher than today largely because housing was much more affordable back then.
For banks, the business of home lending has long been viewed as a safe bet. Houses have sound collateral value as they tend to appreciate over time; the downpayments paid for those houses when loans are disbursed act as a buffer for many banks.
The two asset classes that have seen their fair share of bubbles are stocks and property, fuelled by euphoric expectations of higher profits and easy credit. The banking sector has always been in the forefront of such situations.
Prior to the 1997/98 financial crisis, banks had lent most of their money to businesses while a lot of cash was also diverted for the purchase of shares.
Then, household debt was much lower as a percentage to gross domestic product (GDP) than it is today and residential loans accounted for about 16% of total loans.
When the economy crumbled during the crisis more than a decade ago, the banks were severely hurt, not just in Malaysia but throughout much of South-East Asia and other countries that saw their currencies attacked and a spooky flight of capital.
Many banks in Malaysia had to be recapitalised and that was the catalyst to the consolidation of the banking sector that today, has resulted in the creation of nine anchor banks in the country.
Learning from the causes of troubles back then, companies shifted their funding needs to the debt capital market, which defrayed the risks and funding needs of corporations away from banks.
That transition by all accounts has been a success. Malaysia’s debt capital market is one of the most robust in Asia but the migration of corporations meant banks had to look for a new source of business.
Financial institutions then steered their sights to the household sector, which was prime for more credit as debt levels within homes were low as a percentage of GDP.
Household debt demand
As it stands today, household debt has grown by leaps and bounds. As a percentage of GDP, it was 40% in 2000 and that has grown by more than 50% to around 65% today.
Much of the credit demand has come by way of providing financing for the purchase of cars and of late, a surge in giving money to people for consumption needs. But the lions’ share of that funding constitutes home loans, largely owing to low interest rates and a steady rise in income levels.
“Interest rates have fallen and that has attracted people to borrow more,’’ said ECM Libra head of research Bernard Ching.
Housing loans are also seen as a safer bet for banks as traditionally, the non-performing loans for houses are low.
Margins for housing loans are not the best for banks as competition in the segment means that most financing packages out there today charge rates that are below the base lending rate.
Analysts say banks can afford to take a margin hit as funding for such loans, and for all loans in general today, comes from their own deposits where the cost of funds are the lowest.
Banks are awash with cash as, on average, the loans-to-deposit ratio is around 80% for the industry compared with above 100% during the financial crisis.
Also, lending towards the residential sector is a way of diversifying risk. Business loans tend to be lumpy and riskier.
Analysts say for the same amount of money, banks would lend to a single large business and they can carve that out into smaller slices and lend to multiple borrowers in the housing market.
The main difference is the amount banks lend to the value of collateral they get. As property prices in Malaysia tend to rise over time, so would the collateral, usually the home itself.
Financing packages
As interest rates remain low and competition in the housing loan segment has become a cut-throat war for many banks, real estate loan packages have also morphed.
In the past, larger downpayments were needed from homebuyers to purchase houses and the tenures were extended to 25 or 30 years.
Today, reports indicate that some properties, depending on the customer, can be fully funded by a bank loan and the amount of downpayment in general can be as low as 5% or 10%. The tenures are also elongated, up to a borrowers’ age of 60 years.
Also to help households afford homes, the minimum threshold for monthly payments have increased beyond the historical norm of 30% limit.
Analysts say this is possible as long as income rises and interest rates remain low. That risk would, however, compound should the interest rate environment flip in the future.
Mortgage broker Chew Thiam Hock says the low interest rate environment is enticing more people, even those who can afford to pay, to the banks for a higher loan amount.
“In the past, people did not want a high margin of financing but with interest rates so low, they have no problem taking a 90% loan,’’ he says.
The growth of the housing loan industry has also created business opportunities for brokers like Chew who have astute knowledge on the credit appetite of the panel of banks they represent.
Are banks taking too much risk?
With residential loans now accounting for 27% of all loans for banks, the question is are banks are over exposing themselves to housing loans?
Defining a housing bubble is not easy. Prices of property do experience periods of swift rises but the general understanding of a property asset bubble is when the price increase is too rapid devoid of fundamentals.
Some basic indicators include income levels, jobless data, rentals against the cost of a property or even affordability ratios can be used to gauge whether a bubble is forming.
“The risks are essentially the same for the banking sector, whether it’s corporate or housing loans, as consumer loans are a large part of the total banking sector loan,’’ says an economist.
“The ratio was the same in the business sector in 1997/98.’’
But based on the example of Hong Kong market, one analyst disagrees.
Sunil Garg, a banking analyst at JPMorgan Securities, says the housing loan represents one of the safest segments for banks.
“During the Asian financial crisis, losses taken on properties and residential loans were small,’’ he says, adding: “It’s a sector where there is real tangible collateral.’’
With housing loans by banks in Hong Kong accounting for roughly 40% of their loan books, one would think they would have suffered badly when the property market tanked during the 2008 global financial crisis.
However, property prices have since, not only rebounded off their lows, but have scaled new heights, and the loan-to-value ratio in banks means those assets are in a healthier state than before.
Still, the threat of a housing bubble and its far reaching impact can be damaging to any economy. The repercussions are only too well documented world over.
“We need to make sure we do not put our guard down against such risks,’’ says the economist.
Banks becoming more prudent?
One worry surrounding the property market is that building activity tends to ratchet up to take advantage of a boom in prices.
As it stands now, the anecdotal evidence points to a surge in the building of high-end properties. For developers, this segment represents the cream of their business as margins are always the fattest.
According to National Property Information Centre, the ratio of unsold units in the property sector is rising.
While those percentages in Kuala Lumpur and Selangor, where concerns that prices are rising way too fast, are below the national averages, it is nonetheless rising.
With that, analysts say banks are becoming cautious over their lending patterns as internally, they are scrutinising loans with a fine tooth comb.
“Banks might have their own assessment on the value of properties and the intrinsic value, which is the force sale price of a house,’’ says the analyst.
One proposed measure involving the loan-to-value ratio has generated significant debate. Still, it is widely perceived that genuine homebuyers would not be penalised with having to fork out a large downpayment. Those who could be penalised are the third or so on home buyers who will have to come up with 20% or more of the cost of the house.
“It’s a paradox for banks. When loans growth is strong, people will say banks are contributing to speculative activity and the bubble. When they are conservative, people will say banks are not supportive,’’ says a banking analyst.
Social justice
As developers make a beeline to build costlier homes in the hot markets in the country, more people are feeling they cannot afford to buy homes these days.
With workers’ salaries no where close to keeping pace with asset inflation or even the cost of living in the country, the issue of social justice – where every Malaysian should be able to afford a home for themselves – has cropped up.
“There is always a need for affordable housing, so prices remains within the reach of people. You don’t want the banking system to allocate too much money for speculative home-buying purposes,’’ said an economist.
Analysts say banks already have a social obligation to provide a certain amount of financing for the purchase of low-cost housing.
“Banks have a quota. If they don’t meet that, they will be penalised,’’ says an analyst.
As property prices rise, financing packages too tend to evolve alongside. In the past, the minimum downpayment for housing loans used to be much higher than today largely because housing was much more affordable back then.
For banks, the business of home lending has long been viewed as a safe bet. Houses have sound collateral value as they tend to appreciate over time; the downpayments paid for those houses when loans are disbursed act as a buffer for many banks.
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