20091120 1019 Malaysia Corporate News.

Kossan Rubber Industries said some scheduled shipments will be delayed due to a fire at one of its rubber glove making factory in Jeram, Selangor, on Tuesday. However, the impact on operations is minimal, the company said. “The increased capacity from the company’s recent expansion will be diverted to satisfy the confirmed orders commitment to existing customers. "The company has commissioned a new plant with 22 new production lines located in Jalan Meru in July 2009,” Kossan said. (BMSB) 
As highlighted in our 18 Nov note, the fire should have minimal impact on Kossan’s production, delivery schedule or earnings. The company has reassured that any damage to equipment or stocks can be claimed from its insurer. Kossan has a policy of keeping on average a 5% buffer of finished goods at all of its factories to allow for changes or increase in orders by its customers. Moreover, it also has the ability to channel the production interruption to its recently completed 22 lines which are currently under utilised due to insufficient workers.

Splash has filed a suit against Syabas with a claim of RM196m in relation to the supply of treated water to the latter. This relates to the payment of invoices, plus interest on the capacity charges between Oct 08 to May 09. (Financial Daily)
Though this news is a negative surprise, our check indicates that failure of payment for capacity charges by Syabas to Splash was mainly due to cashflow issues at Syabas which arose from the delay of the 37% water tariff hike for 2009. Syabas has so far received 3 months worth of compensation from the Selangor state government but there has been no news on the status of the tariff hike up to this point. Syabas has grounds for defense as there is a clause in the concession agreement (CA) which allows for deferment in payment to treated water suppliers like Splash if there is no tariff hike. 

AirAsia has plans to issue new shares in a dual listing in Thailand to achieve its vision of becoming a full-fledged Asean airline. "The plan is to list AirAsia group in Thailand and later on in Indonesia. The performance of both associates is dramatically improving and we are working on a suitable structure to inject them into a common share," CEO Tony Fernandes said.

• The airline is currently in discussions with lead arranger CIMB Group to map out its listing details. Both CIMB Investment Bank Bhd and CIMB Thai Bank are actively engaging regulators from Malaysia and Thailand on AirAsia's behalf.
• AirAsia, which will release its third quarter results today, expects its associate airlines to turn profitable by the end of this fiscal year. This will be achieved as the associates grow their routes and replace their ageing fleet of Boeing 737s with new Airbus 320s. (BT) 

Malaysia Airlines announced yesterday that it will not extend the expired Letter of Intent with Transmile signed on 19 August 2009 to acquire Transmile's Engineering & Maintenance unit. However, both parties will continue to be in dialogue in the event that opportunity arises for the parties to pursue the proposed transaction in the future. (BMSB)

British American Tobacco expects its full year results to be lower than last year following continued pressure from illicit cigarettes. "On the outlook for the rest of the year, in light of the significant contraction in legal volumes, the group does not expect to maintain earnings in line with the previous year," said MD William Toh. (Malaysian Reserve)

The ban on cigarette sponsorship for sports activities, especially football, will not be withdrawn by the government, deputy minister of Youth and Sports Datuk Razali Ibrahim said. Razali said there will be no change in the government's commitment to support the World Health Organisation's (WHO) global ban on cigarette companies sponsoring any kind of sports activities under the Framework Convention on Tobacco Control (FCTC). (Bernama)

The revised National Automotive Policy (NAP) announced recently may not be able to attract new FDIs into the sector and turn the country into a production hub for the region, according to panelists at NAP Forum. The decision not to scrap the AP system, lack of incentives offered to old cars or commercial vehicle owners to scrap their vehicles or cut in duty left many disappointed. “The government needs to have a policy that helps generate demand in the local market and also attract other automotive makers to set-up operations here,” said Kavan Mukhtyar of Frost & Sullivan. (Malaysian Reserve)

Proton Holdings will introduce a basic Exora multi-purpose vehicle (MPV) tomorrow, two days before the launch of the new Perodua MPV. The Exora basic model with manual transmission will be sold at an on-the-road price of RM57,548 in Peninsular Malaysia. Senior company executives have expected sales of about 4,000 units a month of the MPV. Proton MD Datuk Syed Zainal Abidin Syed Mohamad Tahir said the new entry-level MPV should account about 5% of the total Exora sales volume in FY10. (BT)

Proton Holdings is ready for the competition and confident of getting at least a "slice of cake" of the MPV market in the country. Responding to questions on whether Perodua’s new MPV, due to be launched in Monday, would affect demand for Proton’s Exora, Group MD Datuk Syed Zainal Abidin said the company has strong confidence with its own products. "Generally, there has been a slight slowing down in booking but I think it is typical," he said. Proton is targeting 150,950 vehicle sales for FYE3/10 and planned to sell about 36,000 units of Exora in the current year. (Bernama)

European Commission official said the low carbon emission savings calculation for palm oil, was the best figure known at the time the EU Renewable Energy Directive was put together. Paul Hodson, the European Commission Directorate-General for Transport and Energy (TREN) said this in explaining to dissatisfied Malaysian officials, how its scientists had derived the 19% level for palm oil compared to rapeseed (38%), sunflower (51%) and soya (31%). 

• "If this figure is changed, then the EU will have problems in also changing the numbers to the directive," he explained. He also said that Malaysian officials had spoken to the Commission on changing the figure.
• During the forum, the CEO of the Malaysian Palm Oil Council (MPOC) Tan Sri Dr Yusof Basiron lambasted the EU figure as that gathered by the industry experts had shown the carbon emission savings level to be about 60% and with the "methane capture process", it was pushed to a further 80%. (Bernama) 

Panamax dry bulk owners operating in the Atlantic can expect rates to remain what one broker described as “hot” this week as increasing demand for US grain exports continues to absorb available tonnage. 

• “There’s been a lot of grain cargoes for the Far East in the past month. I think exports from the gulf are close to 3m tonnes per month. There’s been berthing delays and congestion of about 10-14 days in US ports,” a London-based SSY broker said.
• Interest in ships to take iron ore within the Atlantic basin was also on the rise. “The steel mills seem to be coming out of their recession. There’s been a bit more inquiry from them with the likes of Mittal being more active than they have been recently,” the SSYbroker said.
•  Tonnage supply in the Atlantic market was still tight, with very few ships available for hire in the UK Continent, which also helped support rates in the basin. More ships were available in the Mediterranean, but many of these were likely to be taking grain cargoes from the Black Sea to the Middle East or Far East. (Lloyd's List).

YTL Power’s YTL Communications has appointed Ali Tabassi as a director. Tabassi is the SVP of global ecosystem and standards for Clearwire Corp. Tabassi has more than 20 years of experience in the development, integration and operation of wireless systems in the telecommunications, networking and Internet Protocol industries. (BT) 

Tanjong Plc has appointed Mr. Goh Seow Eng as the CEO of its entertainment division, responsible for both its gaming and cinema businesses. (BMSB)

Dialog Group has budgeted some RM1bn for past and future projects, especially to build storage tanks. Executive chairman Ngau Boon Keat said Dialog wants to invest in more storage tank terminals to gain recurring income. Currently, the group operates a storage tank terminal in Kertih and is also building storage tanks with a 400,000 cubic metres capacity jointly with MISC and Puma Energy Asia Pacific B.V in Tanjung Langsat. In June this year, it signed an MOU with the Johor government to study whether an independent deepwater storage terminal in Pengerang would be feasible. (BT)

Gadang Holdings is bidding for more than RM2bn worth of projects in the country, which include works for the new low-cost carrier terminal in Sepang and the gas-fired power plant in Kimanis, Sabah, says MD Tan Sri Kok Onn. The bidding period for both projects will close by next month. On its water business project in Indonesia, Kok said revenue is expected to rise by 50% for the current FY May-10, from RM11.4m a year ago. In the next 3-5 years, Gadang will see water business contribute RM40m to its revenue once the expansion plans come into place. "We are eyeing Vietnam and China next to expand our water business," Kok said. The group's property business stands at RM630M GDV, which will keep it busy for the next five years. (BT)

M3nergy will bid for a new floating, production, storage and offloading (FPSO) project in Indonesia in Jan-10, says MD Datuk Shahrazi Sha'ari. "We are bidding for the first contract for FPSO project in Indonesia. We were called up a week ago to see whether we want to participate," The closing date for the FPSO tender is 3-Jan and Shahrazi expects the results to be known sometime in April. If successful, M3nergy would take 2 years to complete the FPSO conversion. The project will start contributing to the company's coffers from 2012. The company is also looking to bid for the liquefied petroleum gas-floating, storage and offloading (LPGFSO) in Indonesia. Currently, M3nergy has operations in Malaysia and Thailand only. M3nergy is confident that the FPSO division would account for half the company's revenue from 34% presently. (BT)

The Indian telecom Minister A Raja asked mobile operators to cut SMS charges on the lines of one paisa per second tariff for voice calls. "Increasing competition from new players and adoption of better technology have led to reduction in call charges significantly, and I feel the same can happen in case of SMS tariff also," Raja said. Now the mobile call tariff have come down to as low as 1 one paisa per second and in some cases even half-apaisa per second, the minister said, adding operators now must focus on a similar telecom revolution in the rural areas. (Economic Times of India)

Uncertainty over auction of 3G spectrum continues as an empowered group of ministers appeared to have been unable to resolve differences between the Indian telecom and defence ministries over vacation of the airwaves. Asked whether the government would be able to meet the deadline, Telecom Minister A Raja said: "As a minister I would like to see the auction on time." The government has scheduled to commence auction of 3G spectrum on January 14, next year. (Economic Times of India) 

Astro All Asia Network 's wholly owned subsidiary Astro Global Ventures (L) Ltd has secured a US$35m term loan facility from DBS Bank Ltd. Astro said it had guaranteed the loan facility and had a tenure of 3 ½ years from the first date of utilisation of the facility. (Starbiz) 

Global Carriers’s wholly-owned subsidiary Budisukma Sdn Bhd is selling a tanker to Indonesian ship financing company, Pengembangan Armada Niaga Nasional, for about RM5.8m. It will make a loss of about RM3.2m on the sale. However, proceeds will be used for shipping related activities and fleet expansion. The sale is also due to the International Maritime Organisation rule that bars the use of single hull vessel in Malaysia from 2010. (BT)

MBM Resources has accepted an additional offer of a Mitsubishi dealership operation in Petaling Jaya, Selangor from Mitsubishi Motors Malaysia. (Malaysian Reserve) 

DSC Solutions, which provides automatic identification and data capture solutions, hopes
to net RM6.3m from its listing on the ACE Market of Bursa Malaysia. Founder and group managing director Seah Liang Chiang said research and development (R&D) had been earmarked as the biggest gainer with a RM1.8m allocation for a three-year period from the initial public offering proceeds. (Bernama)