20100426 1003 Malaysia Corporate News.

PAAB has narrowed down the list of companies that can bid to build a RM2bn water treatment plant in Hulu Langat, Selangor, to 12 from more than 30 before. A source said PAAB will call for a tender in May or June. The 12 groups are expected to submit a detailed proposal, outlining the framework, costing and design of the project. "The 1,130 MLD treatment plant, which will take two to three years to construct, will process the raw water transferred from Pahang to Selangor via a 44.6km tunnel," the source said. The 12 groups are Gamuda and Biwater International, MMC and Salcon, Loh & Loh and UEM Builders, WCT and Sinohydro Corp, LGB Engineering, George Kent and Taliworks. Others include LBH Group, Puncak Niaga, IJM, Kumpulan Perangsang Selangor, Hati Muda Sdn Bhd, Mewah Kota Sdn Bhd and Asia Baru Construction Sdn Bhd. (BT)
The timeline of the tenders are within our expectations. This development is positive for the construction sector as the progress of water infrastructure works are beginning to pick-up pace. Initial estimates for the total project value of the Langat 2 water treatment plant was RM5bn for over 2,000 MLD, and it appears that the tenders in June/May is for phase 1 of the project.

Palm oil may advance in the second half as dry weather caused by El Nino pares output in Malaysia and Indonesia, according to Godrej International Ltd.

• The tropical commodity may rise as high as RM3,200 a metric ton after June, Dorab Mistry, a director at Godrej said, restating a prediction made in March. 
• El Nino, which damages crops of rice, corn, sugar cane and palm oil in Asia, has started to weaken after reaching a peak in the third week of December, according to India’s weather bureau. Still, its effects will be felt later in the year. “Typically the effect on production comes after a time lag and we are yet to see them,” said Mistry, who has traded edible oils for more than three decades. 
• Palm oil will rise “substantially” after June and trade between RM2,800 and RM3,200, he added. (Bloomberg)

Malaysian Palm Oil Council (MPOC) reiterated that palm oil is safe for consumption as well as the environment despite the negative news on palm oil, CEO Tan Sri Dr Yusof Basiron said. “Claims of negative health effect of palm oil was initiated by soybean producers in the mid-80s in order to protect interest of market share in the US,” he said. Basiron said the “public was misled” by allegation that saturated fat raised blood cholesterol level in the body, leading to hear diseases. He said the semi solid appearance of palm oil was also being claimed by soft oil producers as not healthy for human consumption. “Such claims subsided after research found that trans fatty acid formed during hydrogenation process have more adverse effect on health than saturated fats” he said, adding that many researches have been done and found palm oil was safe for consumption. (Starbiz)

Palm oil imports by India, the largest buyer, may drop this year as buyers switch to soybean oil to profit from China’s ban on shipments of the commodity from Argentina, the biggest global supplier. Purchases may fall to 6.7m metric tons in the year to Sept. 30, from 6.9m tons a year ago, Thomas Mielke, executive director of Oil World, said. Soybean oil shipments may rise to as much as 1.5m tons from 1.06m tons a year ago, he said. “The price of soybean oil is attractive because of the lack of Chinese buying,” he said. “That’s impacting palm oil as India is buying less.” he added. (Bloomberg)

Indonesia will keep May export taxes for crude palm oil and cocoa beans unchanged from April, the trade ministry said. The export tax for crude palm oil in May will remain at 4.5%, while the base export price for the vegetable oil is set at $752 a tonne against $755 in April, the ministry said in a statement. (Reuters)

Hong Leong Bank has submitted its improved RM5.06bn all-cash bid for EON Capital to Bank Negara Malaysia and shareholders of both banks are set to vote on it in May. At the same time, Hong Leong said it plans to raise up to RM1.6bn from a renounceable rights issue and RM1.8bn from the sale of capital qualifying securities.

• The submission brings the deal, which would create the country's fourth biggest banking group, a step closer to completion. However, it did not include a share option that was requested by EONCap. 
• Hong Leong's offer comes with several conditions. Chief among them is that it has to be satisfied after going through the books of EONCap. If the due diligence reveals any adverse effects on EON Capital's financial position or any contingent liability that amounts to at least RM100m, Hong Leong will offset its bid price against that sum or it could also choose to drop the deal. (BT)

Affin Bank will work with its parent company to convert PT Ina Perdana into a syariah bank once the purchase of the Indonesian lender is concluded, as the group expands into the populous Muslim country. "Our holding company is looking at it, it will acquire the bank and then we will work together to convert it into an Islamic bank. It is now a conventional lender," Affin Bank MD Datuk Zulkiflee Abbas Abdul Hamid said. The legal and financial due diligence have been done recently.

• The group's deputy chairman Tan Sri Lodin Wok Kamaruddin told reporters this month that he hopes the purchase will be concluded by the third quarter this year. 
• PT Bank Ina Perdana is a tiny lender in Indonesia's fragmented market, which has 121 commercial banks. It operates about 20 branches, most of them in Jakarta. Despite its small size, Zulkiflee said the bank is profitable with relatively low NPLs. Most of PT Bank Ina Perdana's business comes from consumer banking, like car loans, while business banking only takes up a small portion of its portfolio.
• "We are of the view that, if we want to go (into Indonesia), this is the time for us to go. There are not too many Islamic banks in Indonesia considering its big population. Islamic finance is still in the early stage of development as compared to Malaysia, so there is vast potential for growth," he said. (BT)

MASkargo plans to mount additional charter flights into Europe in the coming weeks, said MD Shahari Sulaiman. "2010 has started off with a much more optimistic outlook with demand improving to pre-crisis levels and shows sign that it will be sustainable at least for the rest of the year." Cargo load factors have improved to above 70% and revenue has increased by more than 50% yoy so far.

• MASkargo will start additional flights to Narita, Japan, from May 16. "This is timely in light of Japan Airlines' decision to pull away from the freighter business," he said. Also in the pipeline is an additional flight to Jakarta and two flights to Manila onwards to Shanghai. If approval is granted for the Kuala Lumpur-Manila-Shanghai route, MASkargo will be the only airline which has freighter capacity between Manila and Shanghai. 
• Meanwhile, to meet the government's request to support the local perishable industry, MASkargo will increase the allocation to certain key destinations by over 20% compared to 2009. MASkargo will also be upgrading the material handling system in KLIA not only to resolve the obsolescence issue but also to increase the capacity from 700,000 tonnes to 1m tonnes.
• Finally, MASkargo is exploring the viability of freighter flights into the US via China, with its newly signed US-based wet lease operator. MASkargo is expected to make a firm decision by the end of June. The last time the air cargo operator had a freighter service into the US was in 2001. (BT)

The bid for all-India 3G spectrum crossed the Rs 79bn (US$1.8bn) mark on Saturday, ensuring the government a minimum revenue of Rs 319bn (US$7.2bn). On the 13th day of the auction, the activity level in the metros and 'A' category circles continued to remain high. The operators are yet to venture into the categories 'B' and 'C' service areas, according to DoT sources. There was a jump of Rs12bn (US$0.3bn) today in government's revenues, from yesterday's level of Rs308bn (US$6.9bn). India now expects its 3G and broadband spectrum auctions to raise Rs500bn rupees (US$11.2bn), much higher than the government's budget estimates of Rs 350bn (US$7.9bn), India telecommunications minister Andimuthu Raja said. (Economic TImes of India)

Rubber is one of the hottest commodities traded so far this year with price rallies seen in most international rubber exchanges. Tyre-grade Standard Malaysian Rubber (SMR 20) has also been hitting new highs particularly in the past three months and currently trading above the RM10,600 per tonne level.

• According to Association of Natural Rubber Producing Countries (ANRPC) directorgeneral Prof Djoko Said Damardjati, tightness in rubber supply would remain an issue amid an upsurge in demand from China and India for their booming auto and tyre manufacturing industries. “Severe drought, the current wintering season as well as active replanting activities in most major producing countries could affect rubber output. “Even the preliminary estimates from members of ANRPC indicate that the global rubber supply is unlikely to rise above 6% this year,” he added. (Starbiz)

Hartalega Holdings remain buoyant on the outlook of the rubber glove industry this year and beyond despite concerns over raw material costs of following the rise in natural rubber (NR) prices to a 20-month high and the ringgit's speculation against the US$. Hartalega's managing director Kuan Kam Hon sees demand growth stemming from the healthcare reform in the US and China, as well as emerging markets such as South America, Middle East and Africa. He said the recent US Healthcare reform would boost demand by 10%, while the reform in China which spreads over the next decade, would see an initial 850bn yuan (RM397bn) to be spent by 2011. "The impact is very much dependent on the execution of the reform. Conservative estimate usage of 30 pieces per capita will drive China's increase in glove usage exceeding 40bn pieces per annum". (Financial Daily)

Northport said in the January-March period, the port handled a total of 779,867 TEUs, which was one of the strongest growth in recent years.

• The number of export containers rose by 25% to 223,450 TEUs for the quarter under review, while import container volume climbed 21% to 231,450 TEUs over a year earlier. Transshipment containers rose 30% to 324,899 TEUs. “It exceeded all expectations considering the fact that the container traffic fell marginally by 2% in 2009 on account of the global economic slowdown," said managing director Datuk Basheer Hassan. Noncontainerised traffic grew 40% in 1Q10 to 1.8m tonnes. 
• Basheer expects the year-on-year growth in cargo volumes (both containerised and noncontainerised cargo) at Northport could even increase to between 10-15% in 2010. Meanwhile, NCB Holdings Bhd has put aside some RM300m to expand Northport. (BT)

Takaful Ikhlas, a subsidiary of Main Board-listed MNRB Holdings, is weighing options of expanding its business overseas and is looking at three countries including Indonesia as its foreign debut. "We are monitoring certain markets and we have our eyes set on three countries which include Indonesia," its president and CEO Datuk Syed Moheeb Syed Kamarulzaman said. He did not name the other two countries under their expansion radar but said they were neither from the Gulf region nor Asia.

• Takaful Ikhlas is confident of meeting its targeted premium growth of RM625 million in the current year to 31 Mar. The company, which has 1.4 million customers, posted a premium growth of RM580m last year. (BT)