20100520 1121 Malaysia Corporate News.

Kencana Petroleum has terminated its proposed JV with Global Offshore. Both parties could not arrive at mutually agreed terms and therefore will not proceed with the proposal. (BMSB)

Genting Bhd has subscribed for a 51% stake in Hari Hareshwar Power Company Private Ltd (HHPC) for INR 104,550 (RM7,419). HHPC is a pre-operating company and its intended principal activity is to make investments. (BMSB) The group's power arm currently has interests in two power plants in India – a 30% stake in 368MW Lanco Kondapalli plant and a 36% stake in the 113MW Aban Power plant.

The Malaysian Anti-Corruption Commission will let Sime Darby complete its internal investigations first, says MACC deputy commissioner Datuk Mohd Shukri Abdull. The Malaysian Anti-Corruption Commission (MACC) will open an investigation file into the financial affairs of conglomerate Sime Darby Bhd if any element of corruption is suspected in its massive losses.

• "If Sime Darby doesn't have the experience on how to pinpoint corruption, they can ask for MACC's help," he said. Sources say an internal probe started some eight months ago had extended its scope of investigations into determining the real extent of the losses and whether they came about from anything beyond just making bad investment calls. 
• While losses identified so far came from its energy and utilities division, the sources did not discount the possibility that the probe may also look into other divisions in the group and, possibly, other projects. (BT)

Former Prime Minister Mahathir Mohamad yesterday said that conglomerate Sime Darby's losses in the Bakun hydroelectric dam project occurred because its bid of RM1.8 bn (S$775m) was too low.

• 'Without accusing Sime of anything, Dr Mahathir attempted to guess why the bid was so low. 'Sometimes, and I am not saying this of the contractor . . ., sometimes a very low price would be proposed to win the contract,' said the former premier. 'Then as the construction is in progress, there would be cost overruns and eventually the total cost is higher than the price of the bid. The owner of the project would be asked to pay for the new cost.' 
• Dr Mahathir maintained that the actual cost overruns were greater than what Sime admitted. 'Now the CEO has been dismissed because of cost overruns in Bakun amounting to RM900m,' he wrote. 'But I believe . . . the overrun is more . . . because the government has compensated Sime Darby with about RM700m. So the total . . . would be almost equal to RM1.8bn. The price has doubled!' 
• The former premier then began asking questions. 'How come the bid was so low?' asked Dr Mahathir. 'I would think the engineers would know that they would not be able to build at RM1.8bn.' 
• 'Who are the consultants in Sime Darby?' he continued. 'How come they okayed such a low cost for the project? Is it only the CEO who was responsible? Who are the others who were involved with the project and failed to see that the cost overrun was very high with the project (having) been delayed by almost three years.'
• 'I think responsibility should be shared,' Dr Mahathir maintained. 'I was told of this cost overrun and delay three years ago.'
• 'Have we, or rather has Sime Darby, learnt lessons and begun to look at other major projects it is handling?' Dr Mahathir inquired. 'I think the people are entitled to know when a public company loses over a billion RM.' (Spore Press)

PPB Group, the largest shareholder in Wilmar International Ltd, reiterated Wilmar's denial of fraudulent tax claims for its operations in Indonesia. "Wilmar's announcement says it all. Nowadays, people can claim anything," PPB chairman Datuk Oh Siew Nam. Oh was responding to reports that some of Wilmar's Indonesian units are being investigated over questionable and fictitious value-added tax restitutions.

• Wilmar told the Singapore stock exchange that its Indonesian units, collectively the biggest exporters of Indonesian palm oil, are and have at all times been complying with all relevant Indonesian tax laws. The statement also revealed that Wilmar's Indonesian units collectively export more than US$3bnworth of palm oil annually from 2007-2009. 
• On the group's outlook, MD Tan Gee SooiTan said it will start to produce and sell sandwich loaves and buns from its new RM100m factory in Port Klang. This new business will compete with other bread brands like Gardenia, High 5 and Mighty White. Earlier this year, PPB Group completed the sale of its entire stake in two sugar units and land used for sugar cane cultivation to a unit of Felda for RM1.29bn. (BT)

The Bursa Malaysia bourse may have been hit with another technical glitch yesterday, which caused a temporary disruption on its stock indices, including the benchmark FTSE Bursa Malaysia KLCI. The exchange, in a statement, said that all the FTSE Bursa Malaysia indices could not be disseminated since 11.09am and it was investigating the cause of the problem. The problem was resolved just over an hour later — at 12.16pm, when the exchange resumed its normal dissemination of all indices.

• Bursa Malaysia said all its offices will be closed on 28 May 10 in conjunction with the Wesak Day public holiday. The stock exchange will resume operations on 31 May 10. (BT)

RHB Capital said it hopes to conclude its purchase and subsequent listing of Indonesian lender Bank Mestika Dharma in the 3Q of this year. Its plan to buy 80% of the lender for RM1.16bn, first announced in Oct last year, was supposed to have been completed in the second quarter. It, however, ran into delays because of queries from the Indonesian central bank relating to "structure and disclosure", group CEO Datuk Tajuddin Atan said.

• Right after it completes the purchase, it will take Bank Mestika for a listing on the Jakarta Stock Exchange, he said. Bank Mestika, though small, is efficiently run and has consistently produced profits in the last ten years, he said. Last year, it made a net profit of about RM65m. He expects the bank to start contributing significantly to the RHB group only from next year. 
• RHB doesn't need to inject capital into Bank Mestika for business expansion purposes till possibly two or three years later, he said. 
• RHB's shareholders yesterday approved a plan to raise RM1.3bn via a renounceable rights issue to help fund the Bank Mestika purchase.
• On another matter, Tajuddin said RHB is aiming for its net profit to rise to RM1.4 billion this year from RM1.2 billion last year on the back of an improvement in fee-based and treasury income, as well as business banking. 
• It is also targeting for loan growth to improve to 15% this year from 10% last year. Net interest margin is expected to remain stable at 2.78%. 
• He hopes to finalise the appointment of a MD for RHB Islamic Bank "soon", as several candidates have already been identified. The previous MD, Jamelah Jamaluddin, left in Feb to helm Kuwait Finance House (Malaysia). (BT)

Bank Negara Malaysia and the Australian Treasury have signed a Memorandum of Understanding (MoU) to facilitate cross border co-operation in the financial services industry, including Islamic finance and the regulation of financial products. The MoU aims to foster long-term strategic business development in conventional and Islamic finance between Malaysia and Australia, focusing on several key areas –

• enhancing mutual co-operation on capacity building and human capital development in the financial services industry, 
• the exchange of information and experience in the legal, regulatory and supervisory frameworks, 
• facilitating and promoting the development of an effective and conducive financial market infrastructure and
• enhancing cross-border financial activities including research on Shariah matters in Islamic finance products and services to promote consistent application for cross-border transactions. (BNM)

Maxis will be spending RM1.4bn in 2010, believed to be one of the highest commitment in the company's history. It hopes to expand its (3G) coverage from 60% to around 80% of the country's population by year-end. "As we have expanded to most parts, I expect the annual capex moving forward to be lower than 2010," Maxis executive VP and head of network and technology Mark Dioguardi said.

• Dioguardi said that it may take another two years to see all its sites operating on 3G technology.The company said about one-third of its capex will be used on 3G, another one-third on 2G technology, while the remaining will be spent on other areas like enterprise infrastructure. (BT)

Tan Chong Motor is bullish that car sales could improve by 8-10% this year, despite interest rates increasing. Edaran Tan Chong Motor executive director Datuk Dr Ang Bon Beng said it is working to improve car sales to cushion any shortfall in the coming months.

• "Our strategy is to sell more cars now and have a 15% buffer. It things are encouraging in the second half, then it will be a bonus for us," Ang said. It is expected to roll out a facelift version of its Nissan X-Trail (in completely built-up form) and CKD version of Teana. "Our long-term plan is to introduce one CKD and one CBU per year. New products are a way to improve our car sales and have repeat buyers," he said. (BT)

Stop-work orders for hillslope developments in Kuala Lumpur remain in force, Federal Territories and Urban Well-being Minister Datuk Raja Nong Chik Raja Zainal Abidin said. "We're still waiting for the cabinet to make the decision on the other projects. Aside from UMLand's project in Bukit Ceylon, the status quo remains for other hillslope developments in KL. One of the projects affected by the freeze on the hillslope developments in KL is Selangor Dredging's Damansara 21 project in Damansara Heights. (Financial Daily)

Malaysia's steel consumption will rise 10-12% this year, helped by a resurgent manufacturing sector and continued government spending, said Chow Chong Long, president of the Malaysian Iron and Steel Federation (Misif). Steel demand could reach 8.3-8.4m tonnes, compared to 7.5m tonnes last year, he said.

• Malaysia's important manufacturing sector should swing back to 6.5% growth this year, after declining 9.3% last year, he said, but also warned that economic turbulence in developed economies could hurt local steelmakers. “Europe and the US are a big market for finished manufacturing goods produced in Malaysia, and when global demand falls, local industries will cut purchases and this could affect local demand for steel,” he said. 
• Consumption of flat products is likely to be higher than long products this year, which was the case for five years until 2009, he said. 
• Steel demand has been "good" so far in 2010, but much of the steel purchasing has been speculative. “The real demand is still there. But I would say 50% of the demand is because of speculation,” he said. “We are still waiting for private sector to come back. The growth in Malaysia’s steel demand this year will be slow but steady,” said Chow. (Metal bulletin)

The privatisation of Astro may be a “done deal. ”An industry source say some shareholders of the Employees Provident Fund (EPF) are in favour to the terms and conditions of the proposed privatisation. “We believe the deal is likely to go through once consensus by the EPF shareholders is achieved,” he said,

• The final outcome of the privatisation is expected to be announced tomorrow. As it stands, about 84% of Astro shareholders are in favour of the privatisation. There must be at least 90% acceptance of the other shareholders for the deal to go through. Shareholders of EPF, which hold an 8.61% stake in Astro, have become the deciding factor to make or break the deal. (Star)

Alam Maritim Resources has proposed a 1-for-2 bonus issue of up to 274.48m shares of 25 sen each. The bonus issue would be wholly capitalised from its share premium account for RM68.12m, assuming all the ESOS options were exercised prior to the entitlement date. It will make the applications to the authorities within one month for completion of the exercise in 3Q10. (Financial Daily)

Petra Energy's wholly-owned unit Petra Resources Sdn Bhd (PRSB) has, based on the findings in a preliminary confidential status report by Ferrier Hodgson MH Sdn Bhd dated 26 Apr, filed a writ of summons and statement of claim against seven defendants at the High Court of Malaya at Kuala Lumpur on 13 May. The defendants were in 2005 either employees of the then holding company of PRSB or persons connected to or associated with those employees. (BMSB)

Petroliam Nasional (Petronas) has awarded two exploration blocks, SB307 and SB308, offshore Sabah under a single production-sharing contract (PSC) to a partnership comprising Lundin Malaysia BV, Nio Petroleum Ltd and Petronas Carigali Sdn Bhd. The two blocks measured about 6,230 sq km and were located in water depths of up to 70 metres, Petronas said. (Financial Daily)

Retired MD Datuk Ramli Ismail has been removed from K&N Kenanga Holdings' board, a move said to have been initiated by its majority shareholders. Ramli, who was redesignated as a non-executive director on 31 Mar this year, was to have stood for reelection at annual general meeting (AGM).

• Apart from Ramli, three other directors stood for re-election yesterday, namely Kevin How Kow, Datuk Syed Ahmad Alwee Alsree and Ismail Harith Merican. Successful reappointments included chairman Tengku Datuk Paduka Noor Zakiah Tengku Ismail, Abdul Aziz Hashim and Raja Datuk Seri Abdul Aziz Raja Salim. 
• K&N Kenanga said it had hired a recruitment firm to find a candidate for the post of managing director following the resignation of Tengku Zafrul Aziz as group director.
• On its Saudi Arabian joint venture, Kenanga Investment Bank CEO Lee Kok Khee said the company should break even by the year-end now that it has an asset management licence. (BT)

Tradewinds Corp’s group CEO Shaharul Farez Hassan will go on a year's sabbatical beginning June 1 2010, sources say. Shaharul will take leave to pursue his MBA. A chief operating officer is expected to be in charge in his absence. Tradewinds is expected to make an announcement on the matter soon.(BT)

Kurnia Setia plans to invest up to RM2bn over the next 15 years to develop an integrated township called Kota Sri Ahmad Shah (KotaSAS) in Kuantan, Pahang. The group's maiden venture into property development will be via its property arm, KotaSAS.

• "We plan to build 10,000 units of residential and commercial units and the development will be carried out in several phases spanning 15 years," KSB director Tengku Datuk Zubir Tengku Datuk Ubaidillah said. Nevertheless, plantation of oil palm will remain its core business. (BT)

Dutch Lady Milk Industries expects to grow both revenue and net profit this year and to possibly pay as much dividend as it did in 2009. Recently appointed managing director Sebastian Van Den Berg said the improving economy will be reflected in consumer behaviour and spending trend which he expects will contribute to the dairy market growth.

• Moreover, the company will raise its advertisement and promotion budget this year to push sales. "We will increase it by 20% this year," Van Den Berg said. Dutch Lady does not expect to raise the price of its products at least until August 2010. (BT)

Amway (Malaysia) Holdings will launch seven new products that will help contribute about 6% of its total sales this year. "We are not happy with the 3% sales growth posted last year. This year we hope to grow a better single digit," said Amway Malaysia ED Paul Yee.

• Amway Malaysia is optimistic of growth this year after it moved to its new RM100m HQ, which will provide increased capacity and brand new facilities to its distributors and customers. The new headquarters is much larger and has an advanced warehouse that can process up to 6,000 orders daily. 
• Previously, the group was processing about 2,000 orders per day.Amway Malaysia will invest RM4.8m capex this year to open three more shops and for infrastructure upgrading and maintenance, including information technology. (BT)

KKB Engineering has been appointed as a sub-contractor to undertake some RM20m worth of structural steel works for the MEMC Merdeka Project within the Sama Jaya Free Industrial Zone in Kuching. KKB said the structural steel job was due for completion in the second half of this year. (Financial Daily)

SEG International (SEGi) has proposed a 2-for-5 bonus issue of 71m shares of RM1 each. SEGi said the proposed bonus issue shall be effected via the capitalisation of reserves of RM35.6m entirely from the company's share premium account. The proposed bonus issue is expected to enlarge the issued and paid-up capital to RM124.7m comprising 249.4m subdivided shares. The proposed bonus exercise is estimated to be completed by mid-July 2010. (Malaysian Reserve)