20100511 1210 Malaysia Corporate News.

Palm oil stockpiles in Malaysia fell for a second month as output declined. Inventory of the edible oil fell 2% to 1.63m tons from a revised 1,66m tons in March, the Malaysian Palm Oil Board said. Output dropped 5.84% to a one-year low of 1.3m tons from a revised 1.39m tons in March. Exports fell 8.17% to 1,3m tons from a revised 1.39m tons in March. The official export data was higher than the forecasts of two independent cargo surveyors. (BT)

Malaysians, mainly from Johor Baru, have been flocking by bus loads to Singapore to visit the two new integrated resorts (IRs). A check showed that most of the takers were older Chinese. More than 3,000 Malaysians were flocking to both casinos every weekend, the source said. “Basically, the trip is just another way to attract people to gamble and it is just over an hour’s drive away. The drive to the other casino in Malaysia takes more than four hours,” the source added. (NST)
This news is not a surprise. Both IRs have cited Malaysians as a key target market and Johor Baru is naturally a focus given its close proximity to Singapore. For Genting Malaysia’s Resorts World Genting (RWG), it remains to be seen if the diversion caused by the two new IRs is sustainable. Our earlier channel checks suggest that RWG continues to attract a steady stream of punters especially over the weekend.

Kuala Lumpur Kepong (KLK) plans to buy Uniqema GMBH & Co KG (UG) and its assets at Emmerich, Germany, for €60.5m (RM251.08m). UG manufactures basic oleochemicals such as fatty acids and glycerine for use in the manufacture of food additives, detergents, fabric softeners and cosmetics and its Emmerich plant has a production capacity of 150,000 tonnes per year. (BT)
We are positive on this news as: (1) the consideration for the oleochemical assets is attractive at around 1x of asset values after stripping off working capital, (2) the assets are strategically located, (3) the purchase will allow the group to grow their European clienteles, and (4) the acquisition will allow the group to raise their global oleochemical capacity by around 10%. We gathered the business posted an EBITDA of around €5m in FY09 but KL Kepong hopes to improve the future profitability of the business by raising the efficiency of the plant. Overall, we estimate the acquisition could add 1-2% to our FY9/11 earnings estimates.

Malaysia’s palm oil exports rose 21.8% in the first 10 days of May, independent market surveyor Intertek said. A total of 354,504 metric tons of the commodity were tracked on May 1 to 10, versus 291,033 tons in the same period in April, Intertek said. (Bloomberg)

Kumpulan Perangsang Selangor's (KPS) unit Konsortium Abbas has obtained the court's nod to recover some RM70m from Syabas. KPS said the amount of RM70.14m as at Mar 31, 2010 with a 8% interest p.a. is related to short payment of electricity costs and purchase of water by Syabas. "Konsortium Abbas shall consult its solicitors on the next steps to be taken in relation to recovery or execution of the judgment sum and will update the exchange accordingly," KPS said. (Financial Daily)
Although this is a negative surprise, we think this issue will be a protracted one, as Syabas' ability to pay its suppliers of treated water, eg. Konsortium Abbas, hinges on the status of the compensation from the Selangor state government for not being granted the 37% water tariff hike last year. This, all-in-all, depends on the progress of the consolidation of all water assets in the state. The RM70m claims would shave Puncak Niaga’s FY10 EPS by as much as 36%, and cut target price by as much as 17 sen/share.

CIMB Group has obtained the approval of Cambodia's central bank to offer banking services in the country. It said the in-principle approval allows its commercial banking arm, CIMB Bank, to operate a wholly owned subsidiary in the country of 14m people. The group is required to set up its operations within six months.

• "The group plans to establish its headquarters in Phnom Penh as soon as possible," says group chief executive Datuk Seri Nazir Razak. Other Malaysian banks with a presence in Cambodia include Malayan Banking and Public Bank. (BT)

Malaysia Airlines (MAS) has agreed to defer the implementation of the differential fee for bookings done on non-Abacus global distribution system (GDS). The fee was supposed to be effective May 15 but the move, announced without consultations with the Malaysian Association of Tour and Travel Agents (Matta), was opposed by its members.

• In a joint statement yesterday, Matta and MAS said they had met and would work together to resolve the matter. MAS senior general manager Datuk Bernard Francis, said the carrier would make another attempt to negotiate with the GDS providers. 
• "Travel agents are an integral part of our business and we want to ensure that it is a winwin situation for both sides. Under the now deferred ruling, MAS tickets issued through non-Abacus GDS by travel agents will be charged US$3 per sector. (Bernama)

In an interesting development that could impact the 3G spectrum auction even in its concluding stages and hold serious implications, the Telecom Regulatory Authority of India (Trai) plans to allow spectrum sharing between operators on commercial terms.

• “The telecom regulator is poised to come out with full-blown spectrum-sharing guidelines, including spectrum-sharing charges, in its much-awaited recommendations on overall spectrum management and review of licence terms and conditions,” sources said. However, spectrum trading between telcos will not be permitted. (Economic Times of India)

The Indian telecom regulator will unveil sweeping new rules that could strain the finances of some of India’s top mobile phone companies and set the stage for consolidation in a crowded and ultra-competitive market.

• In recommendations, due out on Tuesday, the Telecom Regulatory Authority of India, or Trai, will say that GSM operators with more than 6.2 MHz of 2G airwaves must pay a one-time fee to keep spectrum beyond this limit, those aware of the recommendations said. 
• If the Trai proposal is implemented, companies such as Bharti Airtel, Vodafone Essar, Idea Cellular and BSNL, all of which hold up to 10 MHz of radio frequencies in several circles, must pay hundreds of crores each. The fee will be linked to the price of 3G spectrum that is now being auctioned. (Economic Times of India)

Revenue from the Indian 3G spectrum sale touched the Rs 540bn (US$12bn) mark with the bid for all-India 3G spectrum rising to Rs 134.7bn (US$3bn) on Day 26 of the auction on Mon. At the current all-India bid price for radio waves, the government is assured of at least Rs 540bn (US$12bn).

• The key point in Monday’s auction was Gujarat slipping into the negative demand zone after remaining on the radar of bidders for quite some time. Kerala, Haryana, Rajasthan, Madhya Pradesh, Himachal Pradesh, West Bengal and Jammu & Kashmir also witnessed the same fate. (Economic Times of India)

UMW Holdings is confident that its oil and gas division will become the group's biggest revenue contributor in the near future due to strong growth potential. Its president and group CEO Datuk Abdul Halim Harun said it had targeted 35% contribution from the division compared with the current 20%. "We can see a positive growth sign. Currently, the division is very busy bidding for a few projects locally," he said. (Bernama)

Sapura Auto is proposing the disposal of a piece of land in Kuala Lumpur, which presently houses an automobile showroom, to Sime Darby Motor Division for RM49m, cash. Sapura Auto, a subsidiary of Sapura Resources, said the proposed disposal could result in a net gain of RM22.98m and address the continued losses arising from the group's automotive business. Sapura Auto bought the land and the building for RM26.1m in Nov 06. (Bernama)

Berjaya Corp has acquired about a 0.83% stake in Berjaya Land. This brings BCorp’s holdings in BLand to 53.08%. The purchases were made at an average cost of RM3.86 apiece. (BT)

Sunway City’s units are disposing eight retail assets worth RM3.7bn to Sunway REIT. The assets are Sunway Pyramid Shopping Mall, Sunway Resort Hotel & Spa, Pyramid Tower Hotel, Menara Sunway, Sunway Carnival Mall, Sunway Hotel Seberang Jaya, Suncity Ipoh Hypermarket and Sunway Tower.

• The disposal consideration which is subject to price adjustment mechanism will be satisfied by issuance of 1.025bn in Sunway REIT, credit facility of RM1.1bn and proceeds from the proposed IPO of the REIT. The proposed disposals are expected to result in a gain of RM327.8m at Sunway City’s level. (Bernama)

Sunway Holdings has signed a memorandum of understanding (MOU) with China’s Xuan Cheng Municipal Government to develop a 2m sqm land into an integrated city in Xuan Cheng, 260km east of Shanghai.

• The project will feature an international-standard entertainment park, an exhibition centre, hotels, shopping malls, offices and residential units on land owned by the Xuan Cheng Municipal Government. Under the MOU, Sunway will be the master developer and will undertake a feasibility and market study on the proposed development. (BT)

Plenitude's wholly-owned subsidiary Plenitude Bayu signed a sale and purchase agreement (SPA) with Geotrade to buy a piece of land in Batu Ferringhi in Penang for RM45m. The land measures about 165,000 sqm and the transaction costs about RM273 per sqm or RM25 psf.

• Plenitude said it wants to develop "medium-high end, semi-detached houses and condominiums" and that this would provide the company with a new sustainable source of income and also enhance its position in the property development sector. (Financial Daily)

Mulpha Land has proposed to reduce its share capital by cancelling 90 sen of each RM1 share, which will give rise to a credit of RM82.2m to fully set off its accumulated losses with the balance to be credited to the company's capital reserves. (Financial Daily)

Naim Holdings plans to partner Cahya Mata Sarawak Bhd (CMS) and a local government agency to build a RM1.5bn township in Samalaju, Sarawak, which will cater for the expected boom in the working population. The Samalaju Industrial Park is located 80km north of Bintulu and the proposed township will be home to those who will work at a giant aluminium smelter and other high-technology industries.

• The new township, covering an area in excess of 2,200ha a few kilometres from the Samalaju Industrial Park, will cater for the estimated 50,000 workers and their families. Construction will start next year and the township will be developed over 10 years. 
• "The township is really required there. It won't work to have the workers commute between Bintulu and Samalaju," says Bintulu Development Authority (BDA) GM Datuk Mohidin Ishak. The state government has already approved the town's master plan, he said. Yesterday, BDA signed a memorandum of understanding with Naim and CMS to form a joint-venture company. Naim will hold 60% of the tie-up, with CMS having 30% and BDA the balance. (BT)

MMC Corp plans to officially launch its RM8.1bn Senai Airport City (SAC) project and new Aero Mall complex in Johor this month. MMC has inked several MOUs and is expecting to sign on an educational institution and logistic and transport service provider soon. MMC is likely to opt for a combination of leasing or outright sale for the land parcels and facilities. (Malaysian Reserve)

Penang Port (PPSB) is adamant that it wants Penang Port to remain in Penang. PPSB chairman Datuk Seri Dr Hilmi Yahaya said he had made known his intention to the relevant authorities, including the Transport Ministry. He said to show PPSB meant business, it had embarked on a multi-million expansion project using its own coffers while awaiting for allocation under the 10th Malaysian Plan (10MP). The port expansion project is expected to cost more than RM300m. (BT)

QSR Brands has signed a deal with Royal Group of Co Ltd to form a 51:49 JV to operate broiler and processing production in Phnom Penh. QSR holds the master franchise to operate KFC and Pizza Hut restaurants in Cambodia. The initial paid-up capital for the JV is US$300,000. (BMSB)