Monday, May 21, 2012

20120521 1155 Malaysia Corporate Related News.

Feasibility of KLORR in question
The final stretch of the Kuala Lumpur Outer Ring Road (KLORR) has yet to take off because of project feasibility constraints that may require financial support from the government, said sources. Ahmad Zaki Resources (AZRB) has been given the mandate to construct the 40km toll highway linking the Silk Highway in Kajang to the Gombak toll of the Kuala Lumpur-Karak Highway. Although the company received the letter of intent from the government in 2008, it has yet to commence construction because certain stretches of the highway are not commercially viable, sources said. According to sources, AZRB would have no problem building the stretch from Semenyih to Klang Gates as there would be enough traffic to ensure that it would recoup its investments. (Financial Daily)

LTH closer to RM3bn sale
The first condition of Lembaga Tabung Haji’s (LTH) RM3bn proposed sale of a 95% stake in plantation company, PT TH Indo Plantations (THIP) has been fulfilled, sources said. LTH has found a buyer for THIP which has 83,879ha of plantation land in Riau, Indonesia. This is believed to be the biggest single piece of plantation landbank in the world. Apart from the land, THIP has a kernel crushing plant, six palm oil mills and one biomass plant. Since negotiation began in February, the buyer has obtained all the regulatory approvals from the Indonesian government as well as satisfied the due diligence requirements imposed by LTH and also put in a hefty cash pre-payment to signify its seriousness in the deal. At RM3bn, the sale is valued at a PBV of more than 3x and a PER in excess of 45x. LTH is set to make a gain of some RM2bn from this sale. Both the P/B and PER are based on the current net book value of the plantation land. (StarBiz)

Shareholders to decide on Ramunia’s future at upcoming EGM
Come Wednesday, shareholders of Ramunia will have to vote on significant issues facing the once-troubled company. Since July 2010, Ramunia has had a new CEO, Nor Badli Munawir Mohamad Alias Lafti, who has laid out plans to turn the company around. “It is early days yet, but signs of the turnaround are becoming clearer. Once we get the nod from our shareholders for the proposals, we expect to implement and complete our PN17 regularization plan by end-July and thereafter, apply to Bursa Malaysia for the upliftment of our PN17 designation”, Nor Badli said. He said with the company’s new fabrication yard, coupled with a fresh rebranding, Ramunia was ready to relaunch itself and tap into the numerous opportunities in the fabrication sector, which is expected to face capacity constraints offered by the current players over the next three years. (StarBiz)

SEB opens 3 more power transmission line projects for bidding
Sarawak Energy Bhd (SEB) has dished out three more power transmission line projects for open bidding, including a 275kV line from Mambong near here to neighbouring West Kalimantan to facilitate the export of electricity to the Indonesian province. The other two 275kV transmission lines will supply electricity from SEB Samalaju sub-station to OM Materials (Sarawak) SB proposed manganese and ferro alloy smelting plant and Japan’s Tokuyama Corp polycrystalline silicon plant (phase II), both in Samalaju Industrial Park, Bintulu. Tenders for the Tokuyama (phase II) transmission line project are being evaluated. The 132kV transmission line to its phase I project is near completion. SEB has just awarded a contract to Sawaja Timur SB to build a 275kV line to supply power to Asia Minerals Ltd (AML) manganese and ferroalloy smelter, sources told StarBiz. Construction work on the AML smelting plant is expected to start in the next few months on completion of earthworks. (StarBiz)

AirAsia and MAS terminate warrants agreement
Air Asia has entered into a formal agreement on the termination of a proposed warrants exchange with MAS in due course. In an exchange filing last Friday, it said on 18 May 2012, it had entered into a letter of termination on the warrants exchange agreement with MAS to formally terminate the proposed warrants exchange. Both companies had entered the exchange agreement on 21 Oct 2011, when both companies were still exploring the possibility of share swap exercise, which was called off earlier this month. (Malaysian Reserve)

The strategic venture partnership between Felda Global Ventures Holdings and commodities giant Louis Dreyfus was a closely calculated decision that considered all political and economic factors, said FGVH president and CEO Datuk Sabri Ahmad. The decision was reached after FGVH concluded that the French private holding company could synergise best with Felda's operations, Sabri said. "Felda is strong in its up- and mid-stream activities. We are confident that the strategic venture partnership with Louis Dreyf

The Sustainable Energy Development Authority (SEDA) is looking at adjusting the feed-in-tariff (FiT) for renewable energy (RE) before it calls for the next round of quotes in July-Aug 2012 as there is an imbalance in the RE resource mix. At a recent talk on RE updates, SEDA said that almost half of the installed capacity for RE being generated since the beginning of the FiT on 1 Dec 2011 was using solar energy, which could be a wrong signal for the market. (Malaysian Reserve)

Selangor State Development Corp (PKNS) aims to build 9,831 units of affordable housing in phases in the Klang Valley with a total GDV of RM1.5bn in the span of 10 years beginning 2012. PKNS wants to offer more options to buyers from low and middle income groups. PKNS general manager Othman Omar said it has shifted into high-end development to induce higher yield to finance its affordable housing development as it does not receive any funding from the Selangor state government to finance its affordable housing development. (Malaysian Reserve)

YTD April 2012 adex in the country slipped 0.8% yoy to RM3.15bn, according to Nielsen. However, industry experts are not pushing any alarm bells yet, as they feel that the numbers are within expectations. MEC Malaysia managing director Law Chan Keong said adex in the first quarter was slow due to shorter working days in January as a result of Chinese New Year holidays. The other reason could also be due to uncertainty in the global economy, especially with the eurozone crisis which has had a chain effect. It is not about consumer sentiments. Some clients are maintaining a cautious mindset in terms of spending. They are still investing and spending but they are adopting a more cautious approach, he said. The YTD adex dip was led by free-to-air television, which shrank 9.1%. Newspapers still continued to command the lions share of total ad spend, accounting for 42% of total YTD April adex this year. The product/service categories with the highest ad spend in the first four months of 2012 were local Government institutions, mobile line services, womens facial care, fast-food outlets and photography. According to Nielsen, adex in April, however, increased to RM878.24m from RM873.89m a year earlier. Vogiatzakis expects adex to improve in Q2. I am confident it will bounce back in Q2, especially with the Euro (European Football Championship in June) and Olympics (in July), he said. Law concurred, pointing out that the two sporting events would be critical in determining ad spend for the rest of 2012. Also, the timing of the General Elections will be critical, as it will be a factor that will trigger adex growth, he said, adding that Q2 would be the defining quarter for the rest of the year in terms of ad spend. How Q2 performs will set the tone for the rest of the year. Vogiatzakis said this year's adex could mirror that of 2008, which also featured the General Elections, Olympics and Euro tournament that year. Ad spend that year began slow and peaked in Q3 during the major sports seasons. Hari Raya was also in Q3, so we expect a huge amount of spend in that quarter (for 2012). (Starbiz)

Shareholders of QSR Brands Bhd (QSR) and KFC Holdings (M) Bhd (KFCH) stand to get nearly RM5.4bn from the sale of the companies’ shares to Massive Equity Sdn Bhd. QSR and KFCH signed deals with Massive Equity to sell all the shares and warrants in the companies for up to RM5.4bn and said they would give back all the money to their shareholders via capital repayment schemes. Johor Corp (JCorp), being the largest direct shareholder of QSR and indirectly of KFCH, is poised to get the bulk of the money from the proposed capital repayment. JCorp, which is Johor’s investment arm, owns 56.6% of Kulim (Malaysia) Bhd. Kulim will get RM1.16bn from the sales of QSR and KFCH. This means that JCorp will get more than half of the money, given its controlling stake in Kulim. Kulim said in a filing to Bursa Malaysia it would distribute the RM1.16bn to its shareholders by way of a special dividend. This would work out to a special dividend of 93 sen per Kulim share, based on its issued and paid-up capital of about 1.23bn shares as of December 31 last year. In separate statements to Bursa Malaysia yesterday, QSR and KFCH announced that they had signed definitive agreements of a share sale with Massive Equity. Massive Equity, through wholly-owned Triple Platform Sdn Bhd, will buy the entire business and undertaking, including all of the assets and liabilities of KFCH, for up to RM3.29bn or RM4 per share and RM1 per warrant. It will also fork out up to RM2.12 bn, or RM6.80 per share and RM3.79 per warrant, to buy all QSR securities, assets and liabilities. The QSR and KFCH acquisitions were expected to be completed in the second half of the year, the companies said, adding that their boards of directors had no intention to maintain their listing status upon completion of the deals. (BT)

Masterskill announced that it decided to defer the construction of buildings for their proposed main campus for the time being and to reallocate the unutilised amount allocated for the purchase of land and construction of buildings amounting to RM76.9m for use as working capital in view that such sum has not been utilised within the expected timeframe of 24 months as disclosed in the prospectus. It will continue to aggressively pursue growth in the domestic and international markets via franchising and under the business diversification strategy. The group will realign offerings from medical and allied health science programmes into business, hospitality and tourism programmes. (BMSB)

Time dotCom will continue to focus on gaining market share by managing its costs, strengthening its network, having coverage in key areas, and improving its product offerings. Its initiatives could require higher costs for initial set-up and deployment but would be beneficial for the company in the long term. Moving forward, with its proposed acquisitions of several communications companies, the company hopes to tap into its acquirees’ regional customer base as well as give Time access to international bandwidth. (Malaysian Reserve)

The final stretch of the Kuala Lumpur Outer Ring Road (KLORR) has yet to take off because of project feasibility constraints that may require financial support form the government. Ahmad Zaki Resourced Bhd (AZRB) has been given the mandate to construct the 40km toll highway linking the SILK Highway in Kajang to the Gombak toll of the Kuala Lumpur-Karak Highway. While AZRB received the letter of intent for the project in 2008, the company has yet to commence construction because certain stretches of the highway are not commercially viable. (Financial Daily)

Wearnes Automotive Group's local unit Swedish Marque Sdn Bhd will cease as a Volvo dealer in Malaysia by June 30, leaving MBM Resources subsidiary Federal Auto Cars as the sole dealer in Peninsular Malaysia. Wearnes Automotive said it has the ambition to grow further in Malaysia like what it is doing in other markets where it represents Volvo. "Unfortunately, [the principal] of Volvo Car Malaysia is not supportive of our strategy for expansion and growth to become a multi-brand dealer for premium cars in Malaysia," it added. "Volvo is fully committed to the Malaysian market. We are working on informing Swedish Marque's customers and will refer them to Federal Auto outlets," said Volvo Asia vice-president of sales, marketing and PR Peter Johnson. (Financial Daily)

Gas Malaysia Bhd will spend RM130-140m to expand its 1,800km pipeline by 70km to 90km to supply new customers and strengthen its supply network. Gas Malaysia said that the funding for the expansion will be financed via internal funds and no additional capital would need to be raised. (Malaysian Reserve)

Dataprep Holdings Bhd is likely to announce its partnership with several strategic partners soon to grow its business as part of its plan to turnaround the company. We are looking to partner three to four companies. It is almost final. We will make the announcement in the next few weeks, chief executive officer Ahmad Rizan Ibrahim said. Other strategies included moving away from its low-margin businesses, building greater recurring income, going into new industries, being less dependent on government projects and venturing overseas. It also intends to change the companys revenue mix between the government and the private sector to 50:50 from the current 60:40. Separately, it is also looking at securing contracts in Indochina to tap on the vast ICT potential in Cambodia, Vietnam and Laos. It is also looking at Indonesia. Overseas contribution to the groups revenue at the moment is minuscule, only about 1%. Currently, Dataprep has a backlog order worth RM35m out of which RM23m are recurring income. Its orderbook will last the company for more than a year. Its most notable contract is being appointed as the main ICT and Project Delivery Partner for the Secret Garden Resorts Project in the city of Chong Li, Province of Hebei, China. With an estimated gross development value of US$6bn (RM3.1bn), Secret Garden Resorts, which is located 250km west of Beijing, aims to be a world-class integrated ski resort development covering an area of 100 sq km. It will be built over several years. (StarBiz)

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