20100514 1552 Malaysia Corporate News.

The board at Sime Darby has asked CEO Datuk Seri Zubir to take a leave of absence following huge cost overruns and project losses at its energy and utilities division. A workgroup set up to review the losses at the divisions estimates a negative impact of RM964m on Sime's 2HFY10 results.

• Asked if Zubir was fired by the board, Sime Darby chairman Datuk Musa Hitam said "it was up to the people to interpret. The fact is he has left the Group as of today". Pending the appointment of a new group CEO, Datuk Azhar, currently executive VP plantation division has been appointed acting CEO. 
• The RM964m loss was derived from RM450m further losses allocated for Bakun dam project, reversed RM200m revenue from Qatar Petroleum job, RM159m further losses from Maersk Oil Qatar project and RM155m provision for the marine project. (Financial Daily)

Palm oil futures declined to the lowest level in three weeks as crude oil retreated for a third day and soybeans fell. July-delivery palm oil lost as much as 1.6% to RM2,466/tonne ton and closed at RM2,472/tonnet on the Malaysia Derivatives Exchange. Soybeans for July delivery in Chicago fell as much as 0.4% to US$$9.6125/bushel and last traded at $9.615 while soybean oil lost 0.4% at 38.28 cents a pound.

• The premium of soybean oil over palm oil widened for a third day to US$69.64/tonne, compared with a 12-month average of US$129.72/tonne. India, the world’s secondbiggest vegetable oil consumer after China, may boost imports of soybean oil by 80% this year as its premium over palm oil narrows amid a record global soybean crop, says Govindlal G. Patel, director of vegetable oils trading company Dipak Enterprise. (Bloomberg)

DiGi's EBITDA margin for 2010 may face some pressure due to its higher level of handset subsidies. "We had a strong 1Q10 with EBITDA margin of about 45%. We expect this to go to last year's level mainly due to handset subsidies," he said. The telco achieved an EBITDA margin of 43.3% last year.

• The subsidies were coming more into play as DiGi drove smarphone sales not just for iPhone but also other phones such as the Android. Dennlind said while its EBITDA margin would continue to be under some pressure but it targeted to improve the margin with further cost optimisation measures. 
• He also added that DiGi was optimistic of growth and that the group was in a great position in terms of capital management and was looking to maintain its dividend policy of 80% payout. (Starbiz)

Green Packet believes the worst is over and expects remaining quarters to perform better than 1Q10, says group CEO Puan Chan Cheong. Although 1Q10 expanded to RM44m from RM22m in the same period last year, the company remained optimistic that it will be able to achieve an EBITDA break even by the end of this year.

• 1Q10 EBIDTA loss was RM29.8m compared to 4Q09's RM56.2m loss. "These are planned losses, as we need to invest heavily to roll out our broadband coverage. In 2Q10, we expect EBITDA losses to be narrower, and by the end of this year, we will break even," said Puan. 
• Puan attributed the improvements in remaining quarters to its growing broadband subscriber base, as well as expansion in coverage. Firm currently has 175,000 broadband customers, as it added 35,000 new customers in 1Q10. It expects a significant increase in the second half, as laptops that have built-in WiMAX chips will be launched then. "We expect more than 10 WiMAX embedded notebooks or netbooks to be launched starting in July," said Puan.
• The company, which secured a WiMAX spectrum in Singapore recently, said it is still developing its business plan for the market. It expects to conduct trial in the second half of this year. It also added that it remains committed to commercially launch its broadband services in 2H10, although it warned that commercial launch may be delayed to 1H11. (BT)

Seeking to assuage fears of big four mobile service providers, including Bharti, of huge payout for excess spectrum telecom regulator, the Indian regulator TRAI on Thurs said their outgo would be only about Rs 120bn (US$2.7bn). "There is no need for anxiety ... the payout for each of these four companies are not much. As per TRAI estimations, the amount of money Bharti will have to pay is Rs 35bn (US$0.8bn) and for Vodafone Essar it is Rs 28.5bn (US$0.6bn). For MTNL, it is Rs 27bn (US$0.6bn) and for BSNL it is Rs 30.4bn (US$0.7bn)," TRAI Chairman J S Sarma told PTI. Sarma said this outgo would also come down if the proposed licence fee of 6% comes into picture. In that case, the net outgo for Bharti would be Rs 15bn (US$0.3bn). (Economic Times of India)

AirAsia will be flying to Teheran, Iran, from July onwards, expanding its range of destinations in the Middle East. Transport Minister Datuk Seri Ong Tee Keat said this will make the airline the only low-cost carrier to serve the region.

• He said the flights, which will run 5x weekly, was consistent with the government's aim to strengthen greater air links with the Middle East. Malaysia Airlines currently flies to eight Arab countries including Saudi Arabia, Jordan, Oman and Lebanon at a frequency of 33x weekly, including 21 routes under the MAS codeshare policy.
• "We currently have Air Service Agreements with 11 Arab countries. Of the 11, we have liberal traffic rights or no restrictions on passenger capacity, frequency and aircraft type in six countries. The countries with liberal traffic rights are namely Bahrain, Lebanon, Oman, Qatar, the United Arab Emirates and Yemen. (BT)

Oman Air plans to sign a code- share agreement with national carrier Malaysia Airlines by June 1. "Our growth in the east has been very minimal. We have been looking for a strategic partner and MAS fits the bill," says Oman Air chief commercial officer Barry Brown. Currently, KL is only Oman Air's second destination in the east, the other being Bangkok. The carrier started four weekly flights between Muscat and KL on May 1. Brown said he expects an initial load factor of 75-85% for the Kuala Lumpur-Muscat-Kuala Lumpur route.(BT)

Petronas has signed its first deal with Venezuela to develop oil projects in the country. Together with partners Repsol YPF, ONGC Videsh Limited, Indian Oil Corporation Limited and Oil India Limited, Petronas will develop blocks located in the Orinoco Heavy Oil Belt. The upstream facilities are expected to produce around 400,000 barrels per day of extraheavy oil. The licence term is for 25 years with the potential for a further 15-year extension to extract oil. (AFP)

New Hoong Fatt Holdings will spend RM36m capex this year, which include increasing factory capacity by 10% to 80% this year to tap on the rebounding automotive market in the country and the region, says MD Chin Jit Sin.

• Of the RM36m, RM8m will be used to build a new factory on 2.4ha next to its existing two plants Klang, Selangor. "The automotive market is already rebounding, especially under the Asean Free Trade Area which came into effect Jan-10, with zero import duties for all automotive parts among Asean countries," says Chin. 
• The new factory is expected to be completed by 3Q10 and would focus on ramping up plastic-based automotive parts. Chin said the firm will also spend RM12m to develop new products to prepare for a rebounding or a growing car market at its export destinations in 40 countries, especially in China and India which is rapidly rolling out cars from production lines and importing in huge volumes.
• Exports account for 22% of the group's total revenue and provide automotive spare parts to the local replacement market, 1,400 wholesalers, retailers and automotive repair shops nationwide. (BT)