20100428 1252 Malaysia Corporate News.

A mobile gamble may be the next thing that Telekom Malaysia will have to consider getting itself into if it wants to enhance its existing triple play offering. But it will have to wait till early next year as it had in 2008 signed an agreement with Axiata that forbids it to get involved in the cellular business.

• TM CEO Datuk Zamzamzairani said "it is too early to talk about it" but added that "we are open to opportunities." "We are excited about Unifi and we will exploit it when the time comes. We have options to consider wireless (or cellular) technology to enhance what we have. 
• To enhance Unifi we could use some other (player's) network, have a technology partner or even built it ourelves (to bundle the services)."The company is sitting on the 450 and 800MHz spectrum, but whether these could be used for 4G offerings is unclear should TM decide to build its own network." (StarBiz) 

If TM were to build its own mobile network, we would view it negatively as this would: 1) make it the 5th player in a very saturated market, and 2) drain the telco's cashflow. Such a scenario is possible if TM acquires LTE spectrum. The regulator is looking to auction off 3 blocks of LTE spectrum next year.

Notion has announced the acquisition of the remaining 60% share in Autic Mekki, a nickel plating company, it does not own for a total purchase consideration of RM3.4m. Following the acquisition, Autic Mekki will become a wholly-owned subsidiary and the entire acquisition is expected to close within three months.
This is not a surprise as we had mentioned this acquisition in our recent visit note. We take a positive view of the move as it would help to retain the value of the nickel plating process within Notion and enable it to realise cost savings on plating cost.

Indonesian coal miner PT Bayan Resources has declared force majeure on shipments from its Gunung Bayan coal mine in Kalimantan because of heavy rains and flooding. "Shipments for May to Malaysian and Italian buyers will be delayed because of the floods," Jenny Quantero, Bayan's spokeswoman said. Buyers affected include Tenaga Nasional and Italian firm Enel Trade SpA, she said. (Reuters)
This news is a negative surprise. At this point, it remains unclear how long the shipment could be delayed. We note that Tenaga is increasingly reliant on coal-generated electricity units to meet its strong demand patterns of late.

Las Vegas Sands (LVS) chairman and CEO Sheldon Adelson has set Marina Bay Sands (MBS) the goal of seeing a return on its US$5.5bn investment in five years. Earlier estimates by LVS had been more conservative. Mr Adelson expects MBS to do very well and he also said the IR will become the 'standard for economy changing tourism projects'. MBS president and CEO Thomas Arasi said he expects the IR to attract 70,000 visitors when fully completed, more than double the figure expected at Genting Singapore’s Resorts World Sentosa (RWS). (SBT)

Officials from the World Bank and the International Finance Corp (IFC) will be in Kuala Lumpur next month to discuss the establishment of an Islamic financing facility for the green technology sector, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said. The officials will be in KL from May 10 for discussions with Bank Negara Malaysia and the Ministry of Energy, Green Technology and Water to develop a suitable model in the creation of a syariah-compliant US$200m (RM636m) fund. (BT, Bernama)

Bursa Malaysia expects to attract a few large banks from the Gulf Cooperation Council (GCC) to be members of its syariah-compliant electronic commodity trading platform, Bursa Suq Al-Sila', by this year. When larger banks in the GCC countries come on board, trading volume through the platform is expected to increase substantially, Bursa CEO Datuk Yusli Mohamed Yusoff.

• Bursa Suq Al-Sila' offers a platform for Islamic banks to buy and sell commodities to manage their short-term liquidity, as they cannot go to the conventional money market. 
• Yusli said since Bursa Suq Al-Sila' was launched in August last year, progress has been good where about 90% of Malaysian Islamic banks are using the platform. There are also some cross-border trades being done by international Islamic banks through the platform.
• He said Bursa has a dedicated marketing team that promotes the platform in the GCC region. "Their work involves convincing syariah committee of the respective banks in GCC on the value of Suq Al-Sila'," he said, adding that the team is making good progress.
• Yusli also said that Bursa will expand the range of commodities traded on Bursa Suq Al Sila' within a few months to a year. He said the in-house team is still working on sourcing the supply of the commodity. "We are looking at various types of commodities. They may not necessarily originate from Malaysia, as long as their physical presence can be verified as the underlying asset," he said. It was reported that Bursa was looking at expanding the commodity traded on the platform to include non-precious metals. (BT)

Total deposits of full-pledged Islamic banks and Islamic windows of conventional banks operating in Labuan International Business and Financial Centre (IBFC) rose 14.5% to US$386.4m as at 31 Dec 09 from US$337.3m in 2008. There were six full-pledged Islamic banks and six Islamic windows of conventional banks operating during the period in Labuan IBFC, Labuan Financial Services Authority (Labuan FSA) said in its 2009 Annual Report released here today.

• It said the year 2009 also recorded a significant increase in the non-resident deposits, where the bulk of the deposits were placed in institutions operating Islamic windows. The placements by non-residents as at last year stood at US$135.1m, an increase of 87.9% from US$71.9m in 2008. 
• Meanwhile, total Islamic financing fell slightly to US$226.4m from US$231.4m mainly due to the reduction of financing to residents. Total Islamic assets also posted a slight decline last year, standing lower at US$794.7m from US$957.3m in 2008.
• Labuan FSA said the Islamic capital market in Labuan IBFC grew modestly during the year reviewed after a landmark issuance of US$1.5bn sukuk out of Labuan IBFC. The sukuk, which was oversubscribed by 19 times and listed on the Labuan International Financial Exchange (LFX) highlighted that the Labuan IBFC remained a major centre for sukuk issuance.
• The retakaful industry in Labuan IBFC also registered its third consecutive year of growth, exceeding 40% by the end of 2009, with the total takaful and retakaful contributions posting an increase of 44.2% in gross distributions amounting to US$234.1m. As at last year, there were five full-pledged retakaful companies, nine retakaful windows and 10 retakaful brokers in Labuan IBFC.
• The total Islamic private funds in Labuan IBFC stood at US$3.2bn with market share of 33.4%. During 2009, one trust company had been deregistered due to merger with another Labuan trust company, bringing the total number of registered trust companies to 22. These companies posted an aggregate operating income of US$13m, down by 11.2% from US$14.6m in the previous year. (Bernama)

Media Prima is requesting NSTP to undertake the proposed withdrawal of listing status as NSTP’s current public shareholding spread is below the 25% threshold. Media Prima currently controls 89.6% of NSTP (194.7m shares) following the share swap exercise announced in Nov-09 which aimed to take NSTP private.

• Media Prima is extending its voluntary general offer (VGO) to the remaining 10.4% stake in NSTP (22.6m shares) at RM2.40/share. This will be satisfied by six new Media Prima shares at RM2.00/share and one free Media Prima warrant for every five NSTP shares accepted. 
• The share swap ratio of 1:1.2 is unchanged from the original offer. According to the proposal, this translates to an effective VGO price of RM2.83/share for NSTP, after taking into account the value of Media Prima warrants per offer shares. The proposed delisting and exit offer is expected to be completed by 3Q10. (Financial Daily, BMSB)

Johor will stop the sale of raw water to Singapore from the Skudai water treatment plant here upon the expiry of the related agreement next year, MB Datuk Abdul Ghani Othman said. "Negotiations are underway to return (the Skudai plant to the state government)," he said.

• The Skudai plant is managed by PUB, Singapore's national water agency. Singapore's Environment and Water Resources Minister Dr Yaacob Ibrahim was quoted by the republic's media as saying that the city-state would not renew the agreement when it expired next year, saying Singapore has enough water supply. Another water supply agreement between Johor and Singapore will only expire in 2061. (Star)

The Southern Integrated Transportation Terminal in Bandar Tasik Selatan could be ready by July, Transport Minister Datuk Seri Ong Tee Keat said. The terminal will cater to all types of transportation.

• We will have the bus services, taxi and rail services including the light rail transit, Keretapi Tanah Melayu’s commuter train service and Express Rail Link under one roof. The RM570m terminal is located on 19.8ha site adjacent to the Tasik Selatan’s LRT station and the Tasik Selatan KTM Komuter station. It has the capacity of handling about 40,000 passengers a day. (Star)

A new RM400m project has been proposed to the EPU to upgrade the existing Kota Baru- Kuala Krai road to ease heavy traffic flow between the towns. State Federal Development Department director Makhtar Mustapha said the department was waiting for the green light from the EPU to implement the project under the 10MP.

• “This project is important because the road is a gateway for the north-bound traffic from Kuala Lumpur. Upgrading the 70km road will ensure smooth traffic flow during peak seasons.’’ he said. 
• He said there was also a suggestion that Kota Baru and Kuala Krai be linked by a new highway, and the option was being looked into. Other major 10MP proposals include 16 new primary and secondary schools in the state. (Star)

Bank Negara Malaysia (BNM) wants to assess the feedback on the reform of third-party motor insurance before coming up with a proposal, says governor Tan Sri Dr Zeti Akhtar Aziz. "The matter will go through a consultative process.

• We'll take note of the feedback we have received and do an assessment and a proposal," she said. Zeti said the scheme and the tariffs have been in place since 1978 and needed to be revised. 
• BNM said last week that the revamp will be finalised by the third quarter of this year. So far, the Malaysian Bar Council has protested the proposed RM2m liability cap and the setting up of a new company to manage the scheme, under the central bank's proposed reform. It has urged Bank Negara to establish a cross-industry working committee to review the public feedback and propose a holistic solution. (BT)

Transmile Group has filed its first civil suit against its former chief executive officer, Gan Boon Aun and chief financial officer, Lo Chok Ping, after spending three years clearing up the mess left behind from an accounting scandal.

• The former industry darling is seeking compensatory damages to be determined by the High Court, special damages of RM10.6m, costs on a full indemnity basis and interest on special and/or general damages as may be awarded by the High Court. 
• Transmile and Transmile Management Sdn Bhd are suing Gan and Lo for grossly overstating the group's revenue by RM622m from 2004-06 and causing questionable payments and receipts in relation to the affairs of two wholly-owned subsidiaries - Transmile Air Services Sdn Bhd and Grouptech Sdn Bhd. (BT)

AirAsia’s subsidiary AirAsia Corporate Services Ltd has received the nod to carry on a Labuan captive insurance business in, from or through tax haven Labuan. It said the primary purpose of establishing the captive insurance business was to provide access for the company to commercial insurance markets and provide flexibility in managing and retaining its own risks.

• It will also enable to directly insure AirAsia’s international aviation, maritime and liability risks. AirAsia will also be able to pay its insurance premium to the Labuan Captive Insurance business instead of paying through local insurers, bringing down insurance costs for the airline. (BT)

Malaysia's two main brewers say they will raise the prices of their beer and stout products by about 3% next month to offset higher costs. "The increase is industry-wide and across all categories (of products). It's primarily to catch up with rising raw material prices and input costs in the last three to five years," Carlsberg Brewery Malaysia's MD Soren Ravn said.

• He said raw material prices have escalated by an average of about 10% per year over the last five years, making current product prices unsustainable. While a rising ringgit of late has helped cushion the blow somewhat, a moderate product price increase is still deemed necessary to secure the company's profitability going forward, he added. (BT)

Minority shareholders of MBf Holdings have rejected plans by its major shareholder to take the company private for 65 sen apiece. MBf will remain listed on the Main Market of Bursa Malaysia Securities as all resolutions were rejected. As a result, MBf's major shareholder, Tan Sri Dr Ninian Mogan Lourdenadin, shot down minority shareholders' request for a proposed final dividend of 10 sen per share for the FY12/09. (BT)

There were two listings on the Labuan International Financial Exchange (LFX) last year by Petronas Nasional. In August 2009, Petronas via its Labuan incorporated special purpose vehicle (SPV), listed a five-year US$1.5bn sukuk and a ten-year US$3bn conventional bond on LFX. The market capitalisation of the LFX as at 31 Dec 09, stood at US$18.1bn with a total of 28 listed instruments. (Bernama)