Wednesday, February 17, 2010

20100217 1155 Malaysia Corporate News.

Sime Darby is believed to have concluded negotiations to acquire the BMW dealership owned by Sapura Resources for about RM50m, industry sources say. The deal is understood to have been concluded over the weekend with an announcement likely to be made in the next few days. (Financial daily)
We are neutral on this news. The cost of the acquisition is small and this acquisition is not expected to significantly impact future earnings of the group. However, it will help boost Sime Darby's market share of BMW sales in Malaysia.

A Bill to amend the Hire-Purchase Act (HP Act) is expected to be tabled in Parliament for first reading in April to safeguard vehicle owners against unscrupulous repossession practices. The Government has said it is looking at amending the Act this year owing to the rising number of reported cases of vehicle owners being harassed by repossessors hired by financial institutions. A source told StarBiz that a meeting was held on Feb 8 between the various consumer groups and officials of the Domestic Trade, Cooperatives and Consumerism Ministry to look into the possible amendment to the HP Act. (Starbiz)

Steel prices are expected to jump a further 15-20% after the Chinese New Year as governments in East Asia restart spending on major infrastructure-related projects and restocking activities increase, said Malaysia Steel Works (KL) Bhd (Masteel) managing director Datuk Seri Tai Hean Leng. The current steel bar price in the domestic market is about RM2,000 (US$585) per tonne while the international market price is about US$565. He said the steel industry was heading for a recovery with an average capacity utilisation of about 70-75% due to an improvement in steel demand from East Asia. The higher cost of raw materials like iron ore and scrap metal, given the extreme cold winter, could also result in steel prices rising in the coming months. (Star)

Proton Holdings Bhd may decide by the end of this year or early 2011 if it wants to sell or lease its main car manufacturing plant in Shah Alam, Selangor, says its chief. Managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir told Business Times that Proton expects to move its staff and some of its machines in Shah Alam to its manufacturing facility in Tanjung Malim, Perak, within the next two to three years. Based on book value, the land and building in Shah Alam is worth around RM700m. Proton is doing a feasibility study on the consolidation. It expects to complete it by end-2010. The move to Tanjung Malim would help cut costs and make it more efficient in production. Five times larger than the Shah Alam plant, the Tanjung Malim manufacturing facility, which occupies a 518ha site, can produce up to 1m cars a year. Proton makes 230,000 cars in Shah Alam. (BT)

Green Packet plans to partner mobile operators in Indonesia to roll out its wireless highspeed Internet access service in the region. The company, which offers broadband services to homes and offices using the WiMAX technology, has a licence to operate in Malaysia and Singapore. But it wants to grow and have more licences to operate the WiMAX in South Asia, which includes India, Pakistan and Bangladesh, its group managing director Puan Chan Cheong said. "We are actively seeking WiMAX licences. The three key markets that are attractive for WiMAX's success are Indonesia, Vietnam and Thailand and that's where we will focus on for the next three years," Puan said. (BT)

Consumer product retailers and manufacturers in the country are expecting a strong first quarter but are, however, cautious about the second quarter. Pensonic Holdings MD Dixon Chew told StarBiz that the group’s domestic sales grew about 5% in the second half of 2009 versus a year earlier. “Sales of consumer electrical and electronics products did well during the festive holidays because of the year-end bonuses. Consumers were more willing to spend due to their perception of an improving economic environment,” he added. Pensonic’s domestic sales division was expected to perform better in the first quarter of 2010 compared with the year-ago period, he said. However, due to the prevailing uncertainties in the global economy, the company was cautious on the second quarter, he said. On the implementation of the Asean Free Trade Area (Afta) Plus China on Jan 1, Chew said the group could now increase imports of China-made finished and semi-finished raw materials without duties for the group to do manufacturing and assembly work in Penang. (Starbiz)

Property developers are optimistic that there will be growth in the local sector despite the cooling off of the broader regional market. This is based on the Government’s projection of a 3.2% gross domestic product (GDP) growth this year, the brisk sales of high-end properties in Kuala Lumpur and Penang in 2009 and the fact that prices of Malaysian properties are still affordable to investors. Real Estate and Housing Developers Association (Penang) chairman Datuk Jerry Chan said the prices of Malaysian homes, having appreciated 5% to 10% annually, was still affordable. “The prices, with room to appreciate further, are still attractive to foreign buyers wanting affordable holiday homes and those with the disposable income to upgrade their properties,” he added. Chan said given the high cost of land in Penang and the increase in building material prices, property values in the state were likely to rise by 5% to 10% this year. (Starbiz)

The Federal Land Development Authority (Felda), the world's largest plantation owner and manager, plans to build 51 biogas plants in Malaysia to grow its income, while being friendly to the environment. It now has five biogas plants, which burn trapped methane gas into carbon dioxide (CO2) and water. Methane is 21 times more harmful to the environment than CO2, but it is also a byproduct of oil palm plantations. It is produced over time at oil palm mills from liquid waste stored at effluent ponds after a fresh fruit bunch is squeezed to extract crude palm oil. Felda Palm Industries Sdn Bhd senior general manager operations Mokhtar Mat Min said the initiative, which started in 2007, is progressing well and set to become an income earner for Felda as it can now claim carbon credits from the United Nations.” Completion date will vary depending on individual feasibility studies," Mokhtar added. (BT)

Guinness Anchor is confident its flagship brand Tiger Beer will topple rival Carlsberg this year to become the country's best-selling beer for the first time in its 78-year history. The company is counting on the Year of the Tiger to give the brand an added sales boost this year, particularly during the Chinese New Year (CNY). "Tiger will become, for the first time, the biggest beer brand in Malaysia by the end of 2010," marketing director Mark Jenner said. "The Year of the Tiger only comes once in every 12 years, so for us its a big opportunity to really drive our business," he said, adding that there was "enormous opportunity" to cash in on the link between the name of the beer and the Year of the Tiger. Interestingly, every Year of the Tiger has tended to feature a football World Cup, an event that also boosts beer sales. (BT)

Malaysia's 40 richest people recorded an increase in their fortunes as they were collectively worth RM156.7bn as at Jan 15, or 63% more than the RM96.3bn a year ago, on the back of a recovery in the stock market, a "Malaysian Business" survey reveals.
  • However, according to the fortnightly magazine's survey results released in a statement today, their combined wealth was still less than the RM171.9bn recorded in 2008.
  • Tan Sri Robert Kuok, the Kuok Group patriarch who relinquished his "Sugar King" crown last year, still tops the list with a wealth of RM42.76bn, up RM16.1bn from RM26.6bn a year ago. Media-shy and telecommunication tycoon Ananda Krishnan ranked second, clocking in at RM27bn. IOI Corporation Bhd's Tan Sri Lee Shin Chen was third with a wealth of RM11.92bn, followed by prominent banker Tan Sri Teh Hong Piow at RM10.86bn. Genting Group's Tan Sri Lim Kok Thay, valued at RM10.38bn, leapt a full 10 spots to five. This was because he assumed a large chunk of the wealth of his late father, Tan Sri Lim Goh Tong. 
  • Hong Leong Group's Tan Sri Quek Leng Chan took the sixth spot at RM7.09bn while Tan Sri Syed Mokhtar Albukhary of the Albukhary Foundation, valued at RM6.01bn, settled at seventh. Others in the Top-10 ranking were Lim Goh Tong's widow Puan Sri Lee Kim Hua, Tan Sri Tiong Hiew King of Rimbunan Hijau Group and Tan Sri Vincent Tan of Berjaya Group.
  • There were five newcomers to the list, namely Lee Swee Eng of KNM Group, brothers Datuk Shahril Shamsuddin and Shahriman Shamsuddin of Sapura, Datuk Seri Nazir Razak of CIMB Group and OSK Holdings' Ong Leong Huat, who makes a comeback to the list after a one-year absence. (Bernama, BT)
Sime Darby Property, the property arm of Sime Darby, is building its investment portfolio as it mulls setting up a property trust with assets worth more than RM2bn, in two to three years. It also wants to grow its rental income, which now contributes some 10% to its bottom line, group MD Datuk Tengku Putra Badlishah said.
  • "Property development is very cyclical while asset management provides regular income and we want to grow that. "We have assets that give us good rental but more is better. We are building three towers in Ara Damansara and have a few more coming up in the Klang Valley," Tengku Putra Badlishah added. 
  • Tengku Putra Badlishah also said the company has several assets suitable for a real estate investment trust (REIT). "We have reached there as far as a REIT is concerned but we want to set a target. We will launch the REIT if we think it makes sense to do one. For now, we don't require any fund raising," he added. 
  • Sime Property may buy or build new properties in Malaysia, Australia, China, Indonesia and Vietnam. It will ride on the success of its parent which operates in over 20 countries.
Rubber prices in Shanghai may drop as much as 17% this year and drag down Tokyo futures after gains outpaced demand growth in China, the largest consumer, Global Broker Services Ltd said. The Shanghai Futures Exchange price may drop to as low as 20,000 yuan a metric tonne by the end of 2010 from 24,045 yuan on February 12, Tetsuji Wakao, president of the Hong Kong-based commodities and securities broker, said. The Tokyo contract, the global benchmark, will move in tandem with the market in China, he said, without giving a specific forecast. Declining prices may benefit tyre producers after rubber in Tokyo almost doubled in the past year as China led a recovery from the global recession. (Bloomberg)