20100423 0935 Malaysia Corporate News.

Loading of Malaysian palm oil destined for China fell in April 1-20 to the lowest level this year because of weak demand and large domestic stockpiles, the China National Grain and Oils Information Center said. About 173,000 metric tons of the cooking oil were loaded during the period, 27% lower than the same period last month, the center said. (Bloomberg) Malaysia's palm oil exports to China grew 37% yoy in 1Q10. Following the strong take-up in 1Q, we are not surprise by the slower demand for palm oil in April.

Mah Sing Group has acquired 0.58ha freehold commercial land in Ampang, Selangor, from a unit of Fraser & Neave Holdings for RM53.8m cash. "The land will be developed into serviced residences, M Suites@Jalan Ampang, with an estimated gross development value of RM257m," it told Bursa Malaysia yesterday. The project is expected to commence by the second half of this year for completion in three years. (Starbiz)
The acquisition is not entirely a surprise as the group continues to actively scout for new land bank locally and internationally. We view the purchase positively as the project is ready for launch with completed show units and should reap pretax margins of 20-25%, boosting pretax profit of the group by RM51m-64m over the next three years. Mah Sing intends to add value to the project by making some slight changes and we will adjust our earnings forecasts accordingly.

Malaysia could boost foreign direct investments substantially with the proposed Renewable Energy Act. "Malaysia has attracted more than RM10bn in FDIs for solar power. This could double or triple in a short period," said Thomas Brandt, general manager of the Malaysian-German Chamber of Commerce and Industry.

• A feed-in tariff mechanism modelled after Germany's system will be introduced under the new law, which allows electricity produced from renewable energy resources to be sold to power companies at a fixed premium and for a specific duration. 
• Malaysia aims to derive 5% of its energy needs from renewable sources by 2050, excluding hydropower which is already a major power source now. Brandt said the Act will partly adopt Germany's model on how tariffs are set and will be tabled in Parliament this October. (BT)

Top Glove Corporation is now required to answer to the US-based Tillotson Corporation's charges of patent infringement, Tillotson said. However, it is not known how this had come about as the US courts had already ruled against Tillotson's complains of patent infringement.

• In a statement on Wednesday, Tillotson announced that the stay on the patent infringement complaint that it had filed against Top Glove Sdn Bhd and TG Medical Sdn Bhd in the US District Court for Northern Georgia had been lifted. 
• "This complaint, in which Tillotson seeks damages for infringement of its nitrile glove technology, was originally filed in 2007, but had no activity while the (US) International Trade Commission (ITC) investigation was active.
• "With the conclusion of that ITC investigation, the Top Glove companies are now required to answer this complaint by the end of April 2010". (Financial Daily) 

Tenaga Nasional has succeeded in getting a RM113m suit by Irham Niaga Sdn Bhd and Irham Niaga Logistic Sdn Bhd struck out at the Court of Appeal. (Financial daily)

Axiata announced its headline FY10 KPIs, with revenue growth of 12.1%, EBITDA growth of 14.1% and ROIC of 10.7%. In establishing the KPIs, the Management took the following into consideration: 1) Increasing competition in tMalaysia, Indonesia, Sri Lanka, Bangladesh and Cambodia; 2) Concentration of the Group’s business activities is in the emerging markets of South and South East Asian region; 3) Currency volatility, liquidity shortages and higher interest rates; and 4) No significant change in foreign exchange rate versus prior year. (Bursa Malaysia)

Axiata's successful placement of its US$300m 10-year bonds is a strong endorement of the company's prospects considering that a similar bond issue by higher-rated Petronas carried similar yields. Proceeds of the bond are to be used to refinance a S$240m term loan granted to SunShare Investments (holding company for M1) which is due in Oct 10. On whether dividends will be paid this year, Axiata's CFO Datuk Yusof Annuar Yaacob said this depends on the capital struture although his personal opinion is that dividends will have to wait until next year. A dividend policy will be announced in 3Q10. (Financial Daily)

Biofuels such as biodiesel from soybeans can create up to four times more climatewarming emissions than standard diesel or petrol, according to an European Union document released under freedom of information laws. The EU has set itself a goal of obtaining 10% of its road fuels from renewable sources, mostly biofuels, by the end of this decade, but it is now worrying about the unintended environmental impacts. (Reuters)

Maxis has fully redeemed and cancelled its RM500m CP/MTN programme and RM500m MTN programme. (Financial Daily)

The iron and steel industry is expected to perform better this year, with demand going up, boosted by the pick-up in the construction sector. International Trade and Industry Minister Datuk Seri Mustapa Mohamed said a new investment of RM300m by a Malaysian company is expected for this industry over the next one to two years. Approved total investments in the metal industry for 2009 amounted to RM3.96bn, a significant drop from RM26.84bn recorded in the previous year. (Bernama)

Iron and steel industry players have cautioned the government to be on the lookout for low-value added companies entering the Malaysian market. "The country should not be recipient of discarded technology since many Chinese steel mills are being scrapped," the Malaysia Iron and Steel Industry Federation (Misif) said. It urged the government to curb companies that produce second-grade materials and do not have industrial standards, looking to enter the market.

• The Apparent Steel Consumption, which is expected to register a 7.5m tonnes production in 2009, is expected to grow by 10-12% this year. 
• Misif also urged the government to accelerate the liberalisation process for flat products instead of 2018, to cope with the competitive environment. (BT)

Malaysia Airlines is expected to mount six additional flights today, subject to the approval of airport authorities, to fly out passengers stranded by flight cancellations due to the volcanic ash cloud over Europe.

• MAS Director of Operations Capt Azharuddin Osman said the additional flights would be KL-Gatwick (London), KL-Amsterdam, and KL-Sydney. The additional flight to Gatwick is fully booked. "As of today, we have managed to clear over 2,500 passengers. However, there are still some 11,000 passengers stranded system-wide, with most of them in Kuala Lumpur." (Bernama, NST)

UMW Holdings plans to make a fresh application sometime this year to list its oil and gas (O&G) business, an official said. Those plans are now being revived, said Suseela Menon, an executive director at UMW Corp, a unit of UMW Holdings. "We'd like to do a fresh submission (to the SC) sometime this year.

• That's our target. But exactly when it's going to be listed would depend on the market conditions," she said. Suseela said it was possible that the listing might happen this year or early next year. It is expected to be "a much bigger listing exercise" than it would have been two years ago as the group now has more companies under its O&G division, she said. 
• There could be more than 30 such companies. Also, a number of entities in the division which were not included in the original listing scheme have since become operational. (BT)

Perodua is now looking into several factors, including the political environment and a suitable partner to market its range of vehicles in Thailand, says MD Aminar Rashid Salleh. The company might enter Thailand by end-10 as part of its move to increase contribution from the export segment.

• The carmaker wants exports to account for 5% of its total sales volume within 3 years and 10% beyond 5 years. It is 2% currently. "We (Perodua) are not happy with the current export figures. We know we can do better," said Aminar. (BT)

Honda Malaysia is confident of selling 1,600 units of its newly-launched Freed, a premium compact multi purpose vehicle (MPV), in its first year of launch. The new model will help Honda Malaysia meet its annual target of 40,000 units this year. MD and CEO Toru Takahashi said the company is confident of achieving the 1,600 sales target, based on response received in countries where Freed has been introduced. (BT)

KUB-Berjaya S/B, the developer and operator of the Bukit Tagar landfill in Selangor, plans to set up a waste recycling plant worth more than RM100m. The company, a 40:60 JV between KUB Malaysia and Berjaya Corp collects 2,500 tonnes of garbage a day from Kuala Lumpur City Hall and the Selayang Municipal Council.

• A bulk is organic waste which the firm plans to process and turn into fertiliser, KUBBerjaya assistant GM Peter Wong said. The Bukit Tagar sanitary landfill is a government-funded project and KUB-Berjaya would need approval to build the plant. 
• KUB-Berjaya is negotiating the concession agreement with the government. It hopes to sign a 30-year concession within the next few months, Wong said. "The Economic Planning Unit and the Ministry of Finance are finalising the agreement now," he said. (BT)

The selling price of processed food such as cereal products and candies, which use sugar as the key ingredient, is likely to go up in the second half of 2010 due to rising raw material and packaging costs. This is because small and medium producers of processed food are finding it hard to maintain a decent profit margin.

• Inscereals MD Lee Guan Soon said due to the higher raw material prices, there had to be some 10% to 15% increase in selling price. Sugar comprises about 30% of the raw materials of Inscereals’ cereal products. (Starbiz)

Fraser & Neave Holdings (F&N) plans to sell its “Ampang Hilir 233” project on Jalan Ampang, Kuala Lumpur, to Star Residence Sdn Bhd for RM53.8m. F&N, via its unit Elsinburg Holdings Sdn Bhd, yesterday entered into a sale and purchase agreement with Star Residence for the 1.44-acre 0.58ha development, which comes with approved building plans for two blocks of serviced apartments, signature offices and retail outlets. Upon completion of the proposed disposal in 2HFY9/10, the F&N group is expected to derive a gain of RM21.98m. (BT)

Nestle (Malaysia) will spend between RM130m-RM140m this year to increase production capacity and for product innovation. "We will be spending the money to increase capacity, (product) renovation, and replacements," Nestle finance and control executive director Marc Seiler said. The spending this year will be lower than last year's RM257m, which was mainly for new manufacturing lines.

• Nestle MD Peter R. Vogt said the company may see a lower second-quarter earnings compared with its first-quarter results due to higher advertising and marketing promotions. (BT)

Bangkok Bank will have four branches in Malaysia by end of this year. The bank which has its headquarters in Kuala Lumpur, opened its first branch on Jalan Bakri, Muar, several weeks ago. The second was officially opened in Taman Molek here Thursday. "Another two branches will be opened in Klang and Penang by end of this year," said Bangkok Bank Chairman Staporn Kavitanon. (Bernama)

HLG Capital (HL Cap) wholly owned subsidiaries Hong Leong Investment Bank (HLIB) and HLG Futures Sdn Bhd (HLG Futures) have signed a business transfer agreement that will see the latter transferring all its assets, liabilities, activity, business and undertaking to the former, effective July 31,2010, or at a later agreed transfer date.

• HLCap said the consideration for the transfer of the HLG Futures business would be based on the value of the net assets of HLG Futures as at the transfer date, and would be satisfied by HLIB in cash. It said the proposed exercise would enhance the operational efficiency of the merged entity. (Malaysian Reserve)

Encorp plans to buy a piece of freehold land in Pulai, Johor, from UEM Land for RM26m to build commercial and residential properties. It plans to build properties with an indicative gross development value of RM330m, Encorp said. Work is due to start in 2011 and span five years. (BT)

Northport, the country’s largest multi-purpose port operator, has posted a 26% growth in the volume of containers handled in the first three months this year to 779,867 TEUs. The increase in the volume of containers handled was one of the strongest in recent years and exceeded all expectations considering that the container traffic fell marginally by 2% last year on account of the global economic slowdown.

• Based on the demand-side developments, cargo volumes at Northport could increase between 10% and 15% in 2010 compared with the volume of containers handled in 2009. (Bernama, Star) 

Malaysia’s largest nursing school operator, Masterskill Education Group, plans to raise as much as RM779m from its initial public offering, according to the term sheet. The company, which provides medical nursing training services through Masterskill University College of Health Sciences, set the indicative price range of its offering of up to 205 million new and existing shares at RM3.00-RM3.80 each. (BT)

The auction price for Putra Place, located opposite the Putra World Trade Centre in Kuala Lumpur, has come down by a tenth to RM571.05m as there have been no bids to date. On Wednesday, the Kuala Lumpur High Court set June 28 as the new auction date.

• Putra Place, which houses The Mall shopping complex, Legend Hotel and an office tower, failed for a second time to attract a buyer, resulting in the price cut. Commerce International Merchant Bankers (CIMB) is selling Putra Place to recover loans given to property owner Metroplex Holdings. (BT)

Datuk Ramesh Rajaratnam, who is suing Malaysian Merchant Marine Bhd (MMM) over his employment contract with the firm, said the reason he reduced his shareholding in the company since the third quarter of last year was to finance the operations of MMM.

• “It may look otherwise, but I was selling my shares to fund MMM as most of my monies are tied up in MMM,” he said. He said under his stewardship, MMM had negotiated a deal that would have “moved the company to another playing level.” “The company needed some funds until we closed that deal and approached me to help out with shortterm advances, as nearly all our corporate facilities were exhausted. So, I sold a significant stake in MMM. I need to recover whatever I can now.” he said. (Starbiz)

Murphy Oil Corp said that its interest in two blocks offshore Malaysia has been terminated after a dispute over control over the assets. The offshore exploration areas designated as Block L and Block M are no longer a part of Malaysia, the country's state oil company told Murphy after Malaysia and Brunei determined the designated offshore areas are no longer a part of Malaysia. Murphy's potential participation in replacement production sharing contracts covering these areas is under discussion, the company said. (Reuters)

After just over a month in the hot seat as non-exec director tasked with turning the beleaguered Ho Hup Construction Co around, Hew Thin Chay has resigned from his position on the board, citing personal commitments. (Financial daily)