20091221 1155 Malaysia Corporate News.

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AirAsia and Qantas Airways-owned Jetstar, are in talks to form a potential cost-saving joint venture. Qantas, seeking regional alliances to exploit Australia's growing ties with Asia, said a joint venture could cut costs but discussions were at a preliminary stage and nothing had yet been agreed. (SBT, Reuters)
AirAsia and Australia's Jetstar have synergies and shared objectives, for instance in their ambitions to fly to Europe, and in their fleet development plans. We view a potential tie-up as beneficial to both airlines and a possible threat to incumbent full-service carriers.

Maybank has on 17 Dec 09, successfully completed the acquisition of 17.8m shares in An Binh Bank, representing 5% of the total charter capital of An Binh Bank for a total consideration of approximately VND356.3bn or the equivalent of approximately RM66.4m. Maybank now holds 60.6m shares in An Binh Bank, which represents 20% total Charter Capital of An Binh Bank. (BMSB)
The above does not come as a surprise to us because Maybank already had an option to acquire the additional 5% stake when it bought the 15% shareholding in An Binh Bank last year. The impact on the bottomline from the above deal is negligible.

Marina Bay Sands is likely to be open in April, Channel News Asia reported, citing unnamed sources. The casino, operated by Las Vegas Sands, had been originally scheduled to open its doors by end-09, but the date was put back to 1Q 2010. 'Sources have told MediaCorp the earliest the resort will start operations is in April. But some industry observers said June is a more realistic date,' Channel News Asia said. (Reuters)
A later debut for Marina Bay Sands is positive for Genting Singapore as it would mean that Resorts World Sentosa (RWS) would be enjoying a longer monopoly period. RWS is on track for opening in Jan-2010. 

While the recently-ended climate talks in Denmark may have been met with dismay by environmentalists, palm oil planters are relieved that calls to curb planting have been rejected. This comes under a scheme called Reducing Emissions from Deforestation and Forest Degradation in Developing countries (REDD). The World Bank had wanted this in place after the Kyoto Protocol, the current international pact to combat global warming, expires at the end-2012. Under the Kyoto Protocol palm oil millers can earn carbon credits if they install mini power plants at mills powered by biomass. REDD promises to continue this, but with a condition to "avoid deforestation", a clause that could be interpreted to mean "no more expansion of oil palm plantations".

• Malaysia and Indonesia, the world's top producers of palm oil, have rejected this proposal at the United Nations Copenhagen Climate Summit. The World Bank scheme highlights how anti-palm oil lobby appears to have been inextricably linked to climate change issues. But there are also bodies that are making attempts to show that nongovernmental organisations like Greenpeace can't see the forest for the trees. World Growth (WG), a pro-development NGO, is lobbying against any international binding agreements that seek to curb oil palm planting under the guise of "saving rainforest".(BT)

Malaysian crude palm oil (CPO) price could rise to the RM2,800-RM3,000/tonne by tend 1Q10 on higher global demand, says Dorab Mistry, director of Godrej International Ltd London. Global demand would rise by 5.5m tonnes and price of palm oil would rise higher compared to other vegetable oils. "I believe CPO prices must rise very soon. Between now and end 1Q10, I expect CPO futures on Bursa Malaysia to rise to a level between RM2,800-RM3,000/tonne. "That would put RBD Olien at about US$900 (RM3,087) FOB by the end of Jan-10," he said. (Bernama)

The Sarawak government is expected to decide on the electricity tariffs for energyintensive industries in Sarawak Corridor of Renewal Energy (Score) in three months. Sarawak state economic advisor (State Planning Unit) Chang Ngee Hui said, “Sarawak Energy (SEB) has come up with a pricing mechanism based on costs.” Once the state government agreed on the proposed tariffs, SEB would be ready to negotiate with Score investors, he added. SEB was already in talks with anchor industries, like aluminium smelting, steel manufacturing and polysilicon processing, on power supply and purchase.(Starbiz)

Sarawak has to “do it right” in the construction of the 944MW Murum hydroelectric dam project to win international funding for energy-intensive industries in the Sarawak Corridor of Renewable Energy (Score). State economic adviser (state planning unit) Chang Ngee Hui said this meant that the proposed dam must be built in compliance with international standards and processes. (Starbiz)

The Government will continue exempting payment of domestic electricity bills of less than RM20 until end-2010. Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui said this is in view of the recovering economic situation and concern for the low-income group. The exemption which was introduced at the 2009 Budget was supposed to end this month. “We will need an additional RM143m to continue with the exemption until Dec-2010,” he said. (The Star)

Tenders for the RM900m Kimanis power plant from the consortium of Petronas Gas and Yayasan Sabah are in the process of being given out to the shortlisted 12 companies, says sources. Pre-qualification, which started in Apr-09, was only completed in the beginning of Dec-09 and it is learnt that local parties in the running include Muhibbah Engineering and Gadang Holdings. A source says shortlist also includes a few familiar names from Japan like Sumitomo, Marubeni and the Mitsui group. The source says the final cost of the 300MW gas plant is still undetermined as there are a number of factors to be considered, most importantly, the supply of gas. (The Edge Weekly)

The value of construction contracts in Penang is expected to grow by 20% next year as new projects from the Government and the private sector come onstream, which in turn, will boost the revenue of the local building materials and construction industry. The projects expected to kick off in 2010 include the expansion of the Penang International Airport, Second Link and the Mengkuang Dam expansion project. 

• Private projects are the Penang International City and the Batu Kawan golf resort. Penang Master Builders and Building Materials Dealers Association (PMBBMDA) secretary Ong Soo Yong said about RM4bn of construction contracts were awarded in Penang in the first nine months of the year. “We are confident that the figure will reach RM5bn by the year-end.
• When work on the government and private projects starts next year, we expect an increase of 20% in the value of contracts awarded in Penang,” he said.Ong said about 60% of the RM5bn awards projected for this year would go towards the purchase of raw materials. “The bulk of the purchase would be for superstructure materials such as steel and cement, and the remainder for renovation products,” he said. PMBBMDA president Finn Choong said in 2010 there would be about RM240m worth of renovation jobs available, which would benefit the majority of the association’s 117 members.
• The renovation jobs would come from the high-end condominium projects scheduled for completion next year, including the Looc Residence, Infinity, the Kelawei View, Harmony, Central Park and Fettes Residence. “The total sales value of these projects is about RM800m.These condominiums will easily generate about RM240m worth of renovation jobs as it is normal for the owner of a condominium unit to spend 30% of the unit’s value on renovation,” he said. (Star)

The government is expected to finalise the toll concession period for the second Penang Bridge by 1Q10, Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop said yesterday. The bridge is expected to be completed by end of 2012. "There are many methods of setting the concession period and deciding on the amount of toll. We will consider all these and decide what is best for the people, especially those in Penang," he said. (Bernama)

India has proposed to set up a high-powered team to entice more Malaysian road builders to invest in the country's growing highway infrastructure projects. Road Transport and Highways Minister Kamal Nath said the team would help to facilitate government-togovernment support in the sector, where India is seeking large foreign investments and expertise. "We have discussed the possibility of government-to-government engagement between both countries.

• A team will be formed with immediate effect to facilitate Malaysian investment in the highway development sector," said Nath. India is on fast track to complete a massive 7,000 km of roads annually, with a target of 20 km daily, to connect the length and breath of the country with the much needed infrastructure to propel its economy. India's 3.3m km road network system is the second largest in the world, after the United States.
• Indian roads carry 60% of the freight and over 80% of the passenger traffic. The government had allocated US$92bn until 2012 to develop its highway projects. "We want Malaysian companies to participate in highways development programmes in the capacity as bidders and consultants, says Nath. (Bernama)

Malaysia's rebar prices have slid to their lowest in six months as the market quietens down ahead of the year-end holiday. Domestic market prices have fallen to RM1,850-1,900 per tonne, down from RM1,900-2,000 per tonne last week, said sources. Many Malaysian mills continue to give discounts of RM50-150 on official rebar prices of RM2,000 per tonne, said a mill official. "Market is very quiet now. Sales volume is also very thin," he said. 

• Many mills were operating at 50-60% of capacity in response to sluggish demand, although stock levels were reportedly still normal.
• The recent hikes in billet and scrap prices have not been able to boost the debar prices, said a steel trader with operations in Malaysia. Billet prices were trading at $465-470 per tonne in Malaysia, up from $455-460 in November.
• HMS 1:2 scrap imports in bulk from US, Europe, and Australia have also gone up to $350-360 per tonne cfr, up from $330 per tonne last week, and $290 per tonne in November.
• "But demand for rebar itself is still very weak," said the trader. The market will pick up in January, but prices were likely to stabilise only after the Chinese New Year in February, said sources. (Metal Bulletin)

The nine-member empowered group of ministers (EGoM) in India to debate a proposal to limit the upcoming 3G spectrum auctions to three private players, has postponed the meet to Dec 21. The EGoM must also decide if private participation be restricted to only two players in Rajasthan and North -East circles due to non-availability of airwaves. 

• Sources in the Department of Telecom of India say that since the country’s defence forces, which occupy considerable amount of 3G airwaves, have failed to vacate additional spectrum in time for the auctions, it has no option but go ahead with the auction process for just three private pperators. (Economic Times of India)

Penang-based public listed companies involved in the semiconductor, electronics and automated equipment manufacturing are looking forward to a reasonably strong 1Q10, which is seasonally a weaker period for them. The positive prognosis is based on indicators such as increased spending on worldwide semiconductor equipment, rising demand for LCDs and integrated circuit (IC) chips. The Japan Electronics and Information Technology Industries Association, in a recent report, forecast that global electronics sales could rise 5% to US$2.2tr in 2010. (Starbiz)

Permodalan Nasional Bhd (PNB) has bought the Kenanga International Building on Jalan Sultan Ismail, Kuala Lumpur, for an estimated RM250m, sources say. The 22-storey commercial building with a three-and-a-half- storey annexed podium block was purchased from Injaz AsiaEquity Property, a JV set up by Middle East Injaz Mena Investment Co and Singapore-based AsiaEquity Partners Inc.

• The acquisition by PNB was completed on Thursday (Dec-17), said the source. Another source said that the building was sold for about RM700sf. Based on reports, the building is said to have a net lettable area (NLA) of 297,522sf and sits on 6,804sqm land. However, under a planned refurbishment and upgrading exercise, the building will have an additional lettable area of 70,000sf.
• In Sep-08, Tower Real Estate Investment Trusts (Tower REIT) said that it had planned to buy Kenanga International Building for RM157.5m or RM550sf but it was not completed as some conditions were not met. Sources say PNB is paying more for the deal because of the upgrading work. In Jun-07, K&N Kenanga sold the building to Injaz AsiaEquity for RM165m. 
• Three years ago, PNB bought the 35-storey Bangunan MAS on Jalan Sultan Ismail located across Kenanga International Building for RM130m. PNB has indicated that it plans to convert Bangunan MAS into a business or five-star hotel and to demolish the podium next to it for a luxury serviced apartment tower. The hotel and apartments would be worth a combined RM1bn. (BT)

Zurich Financial Services AG (Zurich FS) may sell its shares in MCIS Zurich Insurance after an aborted plan to expand the business has strained relationship between the major shareholders. The majority shareholders of MCIS Zurich, are Koperasi MCIS with 43.7% while Zurich FS has another 40%. People with the knowledge of the matter say all has not been well since the proposed sale of a 30% stake in MCIS Zurich to EON Bank was blocked by the cooperative.

• The proposed deal, mooted by Zurich FS, would mean EON Bank buying a stake in MCIS Zurich from Koperasi MCIS Bhd, Atalantik Sdn Bhd and other minority shareholders. "Koperasi MCIS was unhappy with the EON Bank deal because it would mean losing control of its insurance arm, MCIS Zurich, its most prized and valuable asset," says a source. Talks on the EON Bank deal started in Jan-09 but halted five months later when a deal was close to conclusion, the source said.
• One issue was the expected lower dividends from Koperasi MCIS following the sale. Cooperative members are believed to earn about 15% in dividends annually from MCIS Zurich. However, as a compromise so that Koperasi MCIS has another source of recurring income, Zurich FS had proposed that sale proceeds be used to buy Wisma MCIS in Petaling Jaya, Selangor. "Unfortunately, Koperasi MCIS wanted MCIS Zurich to sign a long-term lease, between 15-20 years which Zurich FS did not agree to," he said. The building is MCIS Zurich's headquarters.
• On the other hand, Zurich FS is frustrated for not being able to chart the business direction of MCIS Zurich after investing some RM180m for its 40% stake in 2001. Company executives said that Zurich FS' impending exit could be inferred when it recently decided not to support Koperasi MCIS's plan to apply for one of the two new takaful licences before the Oct 31 deadline. "Zurich said it would only support the takaful plan if Koperasi MCIS relinquishes its control in the insurance unit. Of course, thecooperative did not agree to the condition," said the source. (BT)

Malaysian Airline System (MAS) will increase capacity next year to prepare for an industry upturn, after a 12-13% reduction this year. Its managing director and CEO Tengku Datuk Azmil Zaharudin said the national carrier had added frequencies on selected routes since September, a move which had proved fruitful. "When we increased capacity by 10%, there was a 20% increase in passenger traffic", he said. Azmil said it had increase capacity to destinations such as Tawau in Sabah, Bali in Indonesia, Seoul in South Korea, Taipei in Taiwan and Colombo, Sri Lanka. MAS also started offering direct flights to Istanbul in Turkey and will launch direct flights to Brisbane, Australia in March next year. (Financial Daily)

IOI Corp's renounceable rights issue of up to 420.7m shares was oversubscribed by 105.5% or 420.7m shares. The company announced that at the close of acceptance and payment for the rights issue on Dec 14, the total valid acceptances and excess applications received were 819.4m rights shares or a subscription level of 205.5%. 

• Total proceeds received from the valid acceptances and excess applications amounted to approximately RM2.38bn, of which oversubscription monies totalling approximately RM1.22bn will be refunded," it said. The corporate exercise involved the rights issue of up to 420.7m new shares of 10 sen each at RM2.90/right share on the 1:15 basis.(Financial Daily)

Hua Yang plans to sell RM300m worth of properties in its next financial year ending March 2011 as the company gears up to achieve its goal of emerging among the country's top five developers by sales value in five years. "We hope to sell 900-1,000 units of affordable housing in 2010, which represents a 25-30% increase on present sales volume of around 800 to 900 units," Hua Yang chief operating officer Ho Wen Yan said. The projects slated for implementation next year include the expansion of its Taman Pulai Indah and Polo Park in Johor, Symphony Heights in Selayang, One South in Sungai Besi, Seremban Country Heights and Senawang Industrial Development, Negri Sembilan. (Financial Daily)

Equine Capital's unit Taman Equine is selling a parcel of land in Petaling, Selangor, to property developer Tanjung Balai Development for RM28m. The land is charged to a local bank as part of a security for a term loan facility to Equine and is currently being leased to Aeon Co, which has erected, and is operating, a shopping centre onsite. 

• The annual lease rental currently being paid by Aeon is RM1.5m. Equine intends to use about RM10m of the proceeds from the proposed disposal to partially reduce its borrowings while the RM18m balance would be used to provide working capital for its property development activities. (Malaysian Reserve)

The new Magnum 4D Jackpot game by Multi-Purpose Holdings’ (MPHB) Magnum Corp Bhd has created five millionaires since its launch nearly three months ago. “We are bringing in the percentages from the illegal gaming companies (and there is no cannibalisation),’’ says MPHB’s MD Datuk Surin Upatkoon. Magnum’s CEO Lawrence Lim adds that the new game "has shown positive results. It may still be early days yet but we have seen a 10% growth in sales.’’

• With so much excitement over the new 4D Jackpot game at Magnum, a relisting of Magnum is therefore being seriously considered. “We are looking to re-list Magnum on Bursa Malaysia at the end of next year or 2011. It is an option that will give investors a chance to invest in a pure gaming company,’’ Surin says. Lim puts a market capitalisation of about RM6bn for Magnum upon relisting. (Starbiz)

Berjaya Sports Toto (B-Toto) is acquiring a 20% stake in Berjaya Lottery Vietnam Ltd (BLVL) from Berjaya Corp for a cash consideration of RM6,900. BLVL is intended to be the vehicle to enter the lottery business in Vietnam. BLVL has, since May-08, applied to the government of Vietnam for the right to operate a nationwide lottery. (BMSB)

MISC and MMC Corp’s Pelabuhan Tanjung Pelepas (PTP) have agreed to scrap a JV deal that would have promoted PTP as a main transshipment hub. MISC will still continue to use PTP through a direct Terminal Services Agreement. (BT)

PLUS Expressways expect to meet its key performance indicator (KPI) of 30% in lane-km length by early next year through potential acquisitions or successful concession bids in India. PLUS's managing director Noorizah Abd Hamid said the toll operator's lane-km KPI is still short by 1.8% or 70km. 

• It has targeted to growth lane-km a base of 3,640 lane-km by 30% by year-end. "We are actually looking at several potential acquisitions and we have also submitted certain bids for concessions in India. The results are coming end of this year or early next year," Noorizah said. (Malaysian Reserve)