20100401 1006 Malaysia Corporate News.

Supermax Corp set to export an additional 500m piece of rubber gloves to the US this year, following the recent US healthcare reform that will lead to heighten usage of examination gloves. "About 32m uninsured Americans will now be covered and be able to seek regular health check at health centres, nursing homes, dental clinics, pharmacies and hospitals. The rising healthcare activity will lead to rising demand for examination gloves and we're poised to leverage on that," said Supermax executive chairman and group managing director Datuk Seri Stanley Thai. "We're looking at an additional 5 -7% demand from the US and that amounts to around RM40m in sales," he said.

• Thai said earnings this year will be buoyed by additional capacity from its new Meru plant in Klang, to be operational in phases from this month. 
• On the outlook of the rubber glove industry, Thai said it remains resilient and is expected to post 10% annual volume growth.
• Following this bright prospects, Supermax is hopeful of achieving RM168m profit this year. (BT) 

The group's net profit target is in line with our forecast of RM170m. New capacity is expected to be added progressively from 14.5bn pieces p.a last year to 21.7bn p.a by end of 2011.

Top Glove aims to raise its dividend payout ratio this year on the back of improved earnings, an executive said. The company aims to raise its dividend payout ratio to 40% from 30% of profits, executive director Lim Cheong Guan said. Earnings in the coming two quarters will match or exceed those in the 1H, Top Glove chairman Lim Wee Chai said. “Our company is still growing and there are still many areas we can improve and we can grow our business,” he said. Lim said the company is optimistic of delivering a profit margin of at least 14%, in view of rising global demand for gloves. (Bloomberg, BT)

Hartalega Holdings has allocated RM120m in capital expenditure for the next two years, part of which will be spent on plant expansion and technology investment, its chief says. The company, which operates five factories, is in the midst of upgrading an existing plant while completing the fifth one. The new capacity will boost its annual production by 3bn pieces of gloves by the end of next year when the plants are fully operational. (BT)
The capacity expansion plans is in line with our forecast. We believe most of the expansion will be financed by the company's internally generated funds given its strong net cash position since 1QFY3/10.

U.S. farmers may plant a record area with soybeans this year, after sowing the fewest acres with winter wheat since 1913, and on prospects for higher returns than corn. Soybeans will be planted on 78.1m acres (31.6m hectares), up 0.8% from 77.5m last year, the U.S. Department of Agriculture said. The average estimate of 31 analysts surveyed by Bloomberg News was for 78.5m acres. “Farmers are going to be intent on planting soybeans,” said Al Ambrose, a vice president of risk management with Country Hedging Inc. in Inver Grove Heights, Minnesota. “Conditions are about ideal” after two consecutive years of rain-delayed planting, he said. (Bloomberg)
The expectation of a record soybean planting and harvest in US may soften soybean and its related products prices. This could limit the upside potential of CPO price in the shortterm.

Malaysia’s palm oil exports rose 12.1% in March, independent market surveyor Intertek said. A total of 1,353,207 metric tons of the commodity were tracked on March 1 to 31, versus 1,206,859 tons in the same period in February, Intertek added. (Bloomberg)

IOI Corp will finish planting oil palms on 60,000 hectares of its Indonesian land holdings in five years and will then seek 'green certification' for these estates, a top official said.

• Group ED Lee Yeow Chor said that while the 'noise by the environmentalists' had slightly affected palm oil exports to Europe, they had overlooked the fact that oil palm estates helped drive developing countries like Indonesia. 'We don't plan to expand further into Indonesia but we will focus on planting and developing the areas,' he said. 'And we will apply to the Roundtable on Sustainable Palm Oil for a green certification,' he said. 
• 'There is a strong upward trend for palm oil prices and this current level of RM2,550 is very supportive,' Mr Lee said. 'Supply has been affected since a year ago and we only expect a moderate increase in Malaysian output this year.'
• Mr Lee said preview sales of its Seascape Collection Residences in Singapore's Sentosa Cove have been encouraging and he expects the project to contribute positively to this year's earnings. 'This year, the property arm should contribute about 25-30% of the group's profits,' he said. The group may write back the impairment loss made in the FY6/09 on a jv property project in Singapore towards the end of the current financial year since the value of property has risen in the island state. (Financial daily, Reuters)

Sime Darby may miss its production target this year due to drier-than-usual weather conditions caused by El Nino, an executive said. Output might fall by between 5% and 7% below forecast, Sime Darby Plantation MD Datuk Azhar Abdul Hamid said. The company was targeting production of 2.4m tonnes from its plantations in Malaysia and Indonesia, Azhar had said on March 9. “It has a negative impact on us,” Azhar said. “Obviously production has been down.” Meanwhile, in an interview with Reuters, Azhar said Sime Darby would spend RM3 - RM5bn on its oil palm estates this year as global demand for the vegetable oil grows. (BT)

Menteri Besar Selangor Tan Sri Abdul Khalid Ibrahim said negotiations on the state's water industry restructuring will be extended till April 6 as no resolution had been found with the state's water concession companies. Asked on what issue had not been resolved, he said: "The price." (Bernama)

Telekom Malaysia says its high-speed broadband (HSBB) investments will hit its peak this year as it aims to wire up some 750,000 premises by year-end. "We are talking about RM2bn in capex," said group CEO Datuk Zamzamzairani Isa. Currently, the company is ahead of its rollout schedule. (BT)

DiGi Telecommunications wants to increase its proportion of Internet data revenue to between 15% and 20% in the next three to five years via a heavier usage of smartphones. DiGi CFO Stefan Carlsson said the data and short messaging service (SMS) revenue made up about 20% of its topline currently. "But only 6% to 7% is attributed to Internet data usage. We recognise that the revenue contribution will eventually be contributed by data, as opposed to voice currently," he said. On whether the high-speed broadband launched by Telekom Malaysia recently would put pressure on DiGi, he said it might not be the case as DiGi was more focused on the mobile network. (Financial Daily)

DiGi yesterday began offering the iPhone 3GS and the iPhone 3G in the country, ending Maxis' one-year monopoly. Pre-orders for the iPhone hit 10,000 and since the launch yesterday, new orders are stacking up as DiGi's tariff plan appears to be reasonable, at least for now. The big volume of pre-orders shows the strong demand for the phone as well as the expectation of lower pricing from DiGi. Its cheapest plan costs RM88/month, comes with 1GB of data, 200 voice minutes and SMS each and is RM12 cheaper than Maxis' iValue 1 offering. The most striking package is DiGi's all-in-one monthly fee of RM106/month where a user commits to 36 months' subscription but there is no upfront payment for the device. However, Maxis' Value1 Plan has the lowest iPhone prices and each model generally costs RM200 cheaper than DiGi's offerings. (Starbiz, BT)

Maxis will be spending more than RM700m or more than half its capex to expand its wireless broadband network this year as it wants to become the number one player in that segment, said its CEO Sandip Das. The investment may turn Maxis into the number one player in the mobile broadband segment in terms of coverage.

• It hopes to hit 75-80% in mobile broadband coverage by year-end. "We are clear that we want to be the number one in broadband," Sandip said."I think Maxis is back with a big bang. We have some small issues in the first half, (and) we have fixed them. We have come back very strongly in the broadband (segment) in the last quarter." 
• "This is the hype of competition in the country. Malaysia has never seen this kind of competition. You must give credit to Maxis that we still remain number one in most segments such as postpaid, prepaid and value-added services. (BT)

Maxis expect to maintain strong cash flow as the company targets a high single-digit revenue growth in 2010, a top executive said. Maxis' financing costs are expected to creep up this year after it recently borrowed RM5bn to repay its parent as part of its prelisting restructuring exercise. Maxis will spend RM1.4bn on capital expenditure this year, with the bulk on 3G broadband. Next year, the company expects to spend about "RM1bn or thereabouts," said CEO Sandip Das. (Financial Daily)

Malaysian Resources Corp is keen to participate in the development of a large area of land in Sungei Buloh, says it’s CEO Mohamed Razeek Hussain. MRCB's controlling shareholder, Employees Provident Fund (EPF) and the government will be forming a JV to promote the development of 1,214ha there into a new hub for the Klang Valley. PM Datuk Seri Najib Razak announced the JVwould lead to over RM5bn of new investments being made, with the private sector having enormous potential to participate prominently. "It is our task now to convince EPF to give us some work on the land. We'd like to participate in the development itself, a part of it, and also provide construction expertise and project management expertise for EPF," said Razeek. (BT)

Malaysia Resources Corporation (MRCB) is allocating up to RM380m to acquire more premium properties around Kuala Lumpur to add to its landbank following a rights issue earlier this year, said its CEO Mohamed Razeek Hussain. (Financial Daily)

Malaysia Airports Holdings (MAHB) expects revenue from its non-aeronautical business to increase by 20% to RM430m from RM350m last year, its CFO Faizal Mansor said. Meanwhile, managing director Tan Sri Bashir Ahmad said passenger tariff is expected grow better than the 4-5% projected for 2010. He also said there has been request for MAHB to manage two airports in Asia, but declined to reveal details. (BT)

The new low-cost carrier terminal (LCCT) is expected to be ready by late 2011 or early 2012, said Malaysia Airports' (MAHB) managing director, Tan Sri Bashir Ahmad. Earlier, it was expected to be ready by September 2011. "So far, MAHB has given out two contracts for earth works to WCT Bhd and Gadang Holdings Bhd," he said. He said the major contracts had not been given out yet. (Bernama, BT)

Malaysia Airports Holdings (MAHB) will unveil its plans for a special purpose vehicle (SPV) to spearhead overseas expansion. It is understood that the SPV will be a standalone company which MAHB will co-own with other partners. (BT)

S P Setia has recorded RM900m sales as of March 22, less than five months into the current FYE10/10. President and CEO Tan Sri Liew Kee Sin attributed this to the strong underlying demand for good properties, fuelled by an increasingly confident business and consumer sentiment as well as highly supportive financial sector. "This achievement clearly shows we are on track to meet the sales target of RM2bn set for the financial year," he said. Meanwhile, Liew said the company is keen to bid for the parcels of government land as announced by PM Datuk Seri Mohd Najib Tun Razak. (Bernama)

"Astro has better value in being taken off the market with the current stage of development of high definition television (HDTV) and the Indian market," says Khazanah Nasional’s MD, Tan Sri Azman Mokhtar. However, given Astro's substantial shareholder, Usaha Tegas Sdn Bhd's track record, it may relist the unit later, similar to Maxis, he said. (Bernama)

Khazanah Nasional hopes to conclude the divestment of a 32.2% stake in Pos Malaysia within this year. MD Tan Sri Azman Mokhtar said the company was seeing keen bidders but would not confirm or deny, that DRB-Hicom and Tune Group were among them. It was reported that the 32% Pos Malaysia stake is worth about RM390m. (Bernama)

The state government has rejected the timber industry's request for a 50% discount on royalty for timber extracted from agro-conversion areas. Sarawak Timber Association chairman, Datuk Wong, said its appeal for a similar royalty reduction for timber with a diameter of 30cm to 30cm was also turned down. (Star)

Sarawak’s tropical log exports have fallen sharply as the current dry spell is causing the water level in rivers to drop, making it difficult to transport the logs out from the interiors. Sarawak Timber Association chairman Datuk Wong Kie Yik said logging operators had problems rafting timber from Kapit and Baram areas because most of the rivers had been drying up in the past three to four months. “Some companies have temporarily halted logging operations as there is no point harvesting the timber if you cannot transport the logs downstream because of shallow rivers,” he said. (Starbiz)

KIC Group, a local private oil terminal operator, will purchase 22 vessels of various sizes valued at US$200m (RM654m) via a consortium set up with its partner, Nathalin Group of Thailand. Through the consortium, and in collaboration with Thailand's PTT Public Co Ltd, the parties will set up a shipping trust by the end of this year to finance the acquisition that will be completed within three years. KIC owns and operates petroleum terminals at the Port of Tanjung Pelepas in Johor and Westports, Port Klang, while Nathalin is Thailand's largest private shipping company.

• KIC is also in the midst of developing the Asia Petroleum Hub (APH) in Johor that is slated for completion in 3Q11, with PTT Public Co committed to take up the entire space. APH, which is 61% completed, will help raise the group's capacity to 1.8m cu m from the current total combined storage capacity of over 0.9m cu m once operational in August next year. (BT)

Seremban Engineering (SEB), a process equipment fabricator, enroute for listing on the Main Market of Bursa Malaysia Securities in mid-May, plans to increase its production capacity following its flotation exercise. The company is expected to raise RM17m from its initial public offering (IPO) on the Main Market of Bursa Malaysia. The prospectus is expected to be out around mid April. (Bernama)

Ho Hup Construction Co may have to resort to bringing Malton to court if it is not able to renegotiate a fairer deal in their joint development agreement (JDA) involving a 60-acre plot of land in Bukit Jalil. “Any court proceedings will be messy, but Ho Hup must go through if it doesn’t have a choice,” the source said. (Financial Daily)