Monday, May 7, 2012

20120507 1140 Malaysia Corporate Related News.

Claims for Bakun pile up
State-owned Sarawak Hidro SB, the chief promoter of the problem-plagued Bakun hydroelectric dam, is faced with claims of more than RM820m, raising the cost of what already ranks as one of the country’s most expensive infrastructure undertakings. Financial executives close to the project said the Malaysia-SinoHydro Corp Joint Venture, a JV company led by Sime Darby Bhd, has submitted claims amounting to RM670m for the civil works of the mammoth undertaking. Separately, a consortium led by Argentina’s IMPSA group, the chief supplier of turbines for the massive dam project, is seeking another RM140m from Sarawak Hidro. (Financial Daily)

Freight Management bullish on FY12
Logistics player Fright Management Bhd (FMB) is expecting another year of growth, boosted by its third party logistics (3PL) business and growth potential in the local logistics industry. Managing director Chew Chong Keat said FMB still has room to grow in the local logistics sector. He added that FMB has managed to maintain growth despite uncertainty in the logistics industry. (Financial Daily)

KFC and QSR buyout close to fruition
The buyout of KFC Holdings Bhd (KFC) and its parent, QSR Brands Bhd by the Johor Corp (JCorp)-led consortium is coming close to fruition with the JCorp board now finalizing the sale and purchase agreement (SPA), sources said. StarBiz had reported that a government-linked investment company (GLIC) would be part of a special purpose vehicle in the buyout exercise. They said the GLIC would be the second largest shareholder in KFC/QSR after JCorp, upon completion of the buyout. (StarBiz)- Please see accompanying report.

Brakes on plan to sell off Lotus
DRB-Hicom has put a stop to the plan by the former management of Proton Holdings Bhd to sell off Lotus Group International Ltd. It is understood that a closed-door meeting was held recently in Norwich, Britain, the home of the sportscar maker, headed by Proton’s executive chairman and new Lotus chairman Datuk Seri Mohd Khamil Jamil. British media reported that Khamil met with British Business Secretary Vince Cable and South Norfolk member of parliament Richard Bacon to allay fears that Proton was about to pull the plug on Lotus. (BT)

MMC Corp looking to relist Malakoff
With Gas Malaysia Bhd almost ready to start trading on Bursa Malaysia, MMC Corp Bhd, a construction, power and port group, is planning another initial public offering (IPO) for its other subsidiary, Malakoff Corp Bhd. Group managing director Datuk Hasni Harun said MMC, owned by businessman Tan Sri Syed Mokhtar Al Bukhary, hoped to relist Malakoff by next year. On the rationale of listing its existing subsidiaries, Hasni said MMC was focused on strengthening its business capabilities and further explore ways to unlock the value of its assets. (BT)

Hibiscus unit secures Norway JV deal
Hibiscus Petroleum SB is expanding its involvement in the Norwegian oil and gas industry through a jointly-controlled company with its local partner there, North Energy ASA. In a filing to Bursa Malaysia last Friday, it said that the joint company called Lime Petroleum Plc has secured 50% of North Energy’s interests in four concessions in Norway. (Malaysian Reserve)

Masterskill is likely to declare a bumper dividend from the end-11 RM74m balance of the RM147.6m funds raised during its IPO in 2010. An investment banker pointed out that the unutilised amount can be distributed to shareholders. The banker also said that since the business is declining, i.e. facing a decline in diploma student numbers, the group could sell the land that it had bought to build the university campus. According to the article, proceeds from a possible land sale plus the balance of the IPO funds bring the total distributable cash to c.RM112m or 27 sen/share. (Edge Weekly)

Shares in PT Bank CIMB Niaga Tbk may emerge as a preferred investment to CIMB Group Holdings Bhd, if the Indonesian central bank decides to implement a new ceiling on single shareholder stakes for the country's commercial banks. The stricter regulation could see CIMB's 96% stake in CIMB Niaga cut down to 50%, which will in turn significantly raise the free-float in the Indonesian arm of the financial grouping and make the company, which is listed on the Indonesian stock exchange, more palatable to investors. (Financial Daily)

All is not lost, says MAS chairman Tan Sri Md Nor Yusof after the collapse of the share swap. He says a lot has been achieved behind the scenes, including mopping up a lot of mess. “Plenty has been done and we are more focused on sales now,” adds Md Nor. The first thing on the agenda is to re-visit the business plan to see if there is any need for a re-setting. That is key as earlier plans call for MAS to remain a full service premium carrier. CEO Ahmad Jauhari Yahya adds there is no need to craft a new business, only the need to tweak. MAS has also been accused of selecting a handful of outside talent in the strategy planning and for the running of the airline during the share swap period when there are a lot of untapped talent from within. So this time the re-visit of the plan involves the employees. It would have input from the unions and head of units on what their wish list for the airline’s strategy going forward. MAS Employees Union president Alias Aziz’s stand is clear. “We support anyone who can help  MAS earn more revenue. We do not want those who cause the airline to lose money. Thus far, the feedback from staff is that they want to work with the management to move MAS forward.” Md Nor said that MAS will not compete with a low cost model. He believes MAS can tap the regional market by being a premium carrier as this is a catchment area. Our middle class is growing significantly. So there is traffic. Firefly would continue with its turboprop operations, but may be re-branded. MAS needs fresh injection of funds and cash call is not on the cards for now, those in the know claim. MAS said it had secured RM1bn short term advance, like a bridging loan till it gets the financing for the aircraft sorted. Mohd Rashdan Yusof is working on an innovative financing package, an asset backed type of facility which could be issued in two weeks time. Ahmad Jauhari says MAS will issue a RM3bn Islamic bonds. Md Nor adds that whatever the instrument, the rightful owners of the aircraft will still be MAS. Still the pessimists feel that a 25%-30% cut in staff strength is necessary to bring down the cost as MAS is seen to have too many employees and the productivity level is low. Md Nor is not talking about cuts but to get everyone motivated, having proper work scheduling systems to keep productivity levels up and reducing the need for after hours work. Tan Sri Tony Fernandes said, “I’m sad that the swap is being unwound only because I feel Datuk Kamarudin Meranun and myself could have made a much bigger difference. But the collaboration is being strengthened. And that’s a good thing.” Commenting on the collaboration without equity participation, “Equity interest was an idea from the financial guys. But it still can work without equity. We are in a far, far better place than before. Collaboration is critical in a very competitive global place,” said Fernandes. (Star Biz)

Thai Airways will begin deployed its newly-acquired A380 aircraft on the Bangkok-Frankfurt route from December this year, and this could pose a threat to Malaysia Airlines (MAS) on that sector. MAS has four weekly to Kuala Lumpur although there is demand for much more. With the deployment of the new aircraft by Thai Airways, MAS could lose market share in Germany. Many German tour operators who offer tour packages to Malaysia, have lamented the fact that they are losing out on business to the country, because of the inadequate number of flights. (Bernama)

More than 40,000 Felda settlers are expected to welcome Prime Minister Datuk Seri Najib Tun Razak who is scheduled to announce a windfall in conjunction with the listing of Felda Global Ventures Holdings this coming Tuesday. The prime minister is set to make the announcement during a massive Felda settlers gathering at Felda Jengka 8, Jerantut in Pahang. "The PM’s announcement is not just a windfall but a response to all the criticisms and accusations hurled at the government and Felda by the opposition all this while," said Jengka Felda deputy vice president Sulaiman Bakardi said. (Bernama)

Palm oil production in Malaysia probably gained the most in seven months in April, after recovering from the seasonally low-output months, according to a Bloomberg survey. Output advanced 6.6% to 1.29m metric tons, the biggest gain since September, from 1.21m tons in March, according to the median estimate in the survey of three plantation companies and two analysts. That’s still 16% lower than the 1.53m tons a year earlier. The Malaysian Palm Oil Board is scheduled to release the official data on May 10. (Bloomberg)

Toll rates on some of the country's expressways may either be reduced or abolished if the Cabinet endorses restructuring plans submitted by concessionaires. Works Minister Datuk Seri Shaziman Abu Mansor said there was also a possibility that toll rates might not be increased over a longer period against regular intervals now. Shaziman said the government might consider paying a reasonable amount of compensation to some of the concessionaires to prevent toll increases. On the move to abolish toll on some of the highways, he said this concerned companies which had more than one highway concession. He said the concessionaires had proposed to abolish collection on a particular highway but to extend collection on another. (Star)

VADS Bhd, a wholly-owned unit of Telekom Malaysia Bhd, may build up to five large data centres in Malaysia over the next three years, as it anticipates more demand for its services. "We are still in the planning stage. So far, the location of the data centres and their size have yet to be finalised. But the plan is to build three to five larger scale ones in Malaysia over the next three years," said CEO Ahmad Azhar Yahya. While the size of each of the new data centres have not been finalised, Azhar said that a larger-scale data centre could be in the range of tens of thousands to over 100,000 sq ft. "Demand for cloud computing and data centres are expected to grow significantly over the near to medium term. "It is possible that our data-centre business, which is a part of our ICT business, will one day become the company's largest revenue contributor," said Ahmad Azhar. "Small- and medium-sized companies, wanting to compete better and manage their cost better, will be moving towards cloud computing. This trend would create demand for data centres," said Ahmad Azhar. Although revenue has been steadily improving ever since it was listed in 2002 (and delisted in 2009), Ahmad Azhar said the company's full potential is yet to be unleashed. This was because a big bulk of its revenue came from servicing its parent company Telekom Malaysia. As at last year, just over 50% of its revenue came from external sources. "This is something we are seriously looking into. We aim to increase our external revenue significantly moving forward," he said without going into further details. (BT)

Some independent power producers (IPPs) have questioned the Energy Commission’s (EC) decision to lump Tenaga Nasional Bhd’s (TNB) older power plants together with the IPPs in the ongoing competitive bidding exercise to extend their power purchase agreements. The EC has announced that in addition to the first generation IPPs, five TNB plants have purchased documents to participate in the request for the proposal (RFP) for PPAs that will expire between 2015-2017. (Malaysian Reserve)

State-owned Sarawak Hidro Sdn Bhd, the chief promoter of the problem-plagued Bakun hydroelectric dam, is faced with claims of more than RM820m, raising the cost of what already ranks as one of the country's most expensive infrastructure undertakings. Financial executives close to the project said the Malaysia-SinoHydro Corp Joint Venture (MCHJV), a JV company led by Sime Darby Bhd, has submitted claims amounting to RM670m for the civil works of the mammoth undertaking. Separately, a consortium led by Argentina's IMPSA group is seeking another RM140m from Sarawak Hidro. (Financial Daily)

With Gas Malaysia Bhd almost ready to start trading on Bursa Malaysia, MMC Corp Bhd is planning another initial public offering (IPO) for its other subsidiary, Malakoff Corp Bhd. Group MD Datuk Hasni Harun said MMC, owned by businessman Tan Sri Syed Mokhtar Al Bukhary, hoped to relist Malakoff by next year. “We are putting in the process (to list). It will take time (for listing), probably about six months. “It’s a bit tough (to float this year). Next year will be a more realistic target,” he said recently. “We are starting the process now. Whether to list of not is a different matter but we are looking at the possibility of listing. Starting the process means appointing the advisers and so on,” he explained. (BT)

UMW Corp Bhd hopes its oil and gas (O&G) unit will turn around in the current year, said its president and group CEO Datuk Syed Hisham Syed Wazir. Syed Hisham is expecting higher contribution this year from the O&G unit's three operating jack-up drilling rigs, especially Naga 3 and its land rigs. The unit recently signed a two-year contract worth US$105m (RM319.2m) with Petronas Carigali Sdn Bhd for Naga 3. "We are expecting new business in India and China to manufacture pipes for the O&G sectors there. We are bullish on the outlook for the O&G unit," he said. (BT)

KPJ Healthcare Bhd hopes to reach beyond RM2bn in revenue this year based on its encouraging performance during the last quarter 2011. Besides looking at acquisition opportunities, the group is keen to grow its medical tourism which currently commands about 5% of its revenue. "Eight of our hospitals are already earning more than RM110m revenue a year with an occupancy rate of between 66-75%," said managing director Datin Paduka Siti Sa'diah Sheikh Bakir. "Our mergers and acquisition initiative depends largely on the opportunities that arise. We look at hospitals that are promising but with lack of fund to expand," she said. (BT)

The Malaysian Rubber Board (MRB) has awarded the RM1.4bn development on 2.2ha in Jalan Ampang, Kuala Lumpur to Crest Builder Holdings Bhd and its 49% joint-venture (JV) partner Detik Utuh Sdn Bhd, sources said. For the open tender of this land, request for proposals started last June. Various proposals had been submitted by property players which included those from SP Setia Bhd and Naza TTDI Bhd. “Many developers were looking to purchase of the land but MRB declined to sell it as it was looking for a longer term business model with recurring income,” said a source. The land, also known as Lot 76 is opposite the Great Eastern Mall and would be developed over seven years. The development cost would be borne by the Crest Builder and Detik Utuh JV. MRB, as the landowner would receive 22.5% of the project's gross development value (GDV) for land rights, which translates into about RM300m. The development would include four towers which consist of one office block, two SoFo' (small office, flexi office), and an apartment block atop a retail mall. This development strategy is similar to the RM1.04bn tower atop the Dang Wangi light rail transit station contract which was also recently secured by Crest Builder and Detik Utuh. While Crest Builder is better known as a contractor, it is starting to shift its focus to become a property developer. It currently has a construction orderbook of some RM950m and unbilled property sales orderbook of RM300m. With the MRB land and the Dang Wangi project, this would bring its unbilled property orderbook to over RM2.5bn. (Starbiz)

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