Dams, rivers and canals are drying up in Johor and the northern states of Peninsular Malaysia as well as Sabah due to the
El Nino phenomenon which brings about less rainfall than usual. The Malaysian Meteorological Department said the situation is expected to last until next month for the peninsula while Sabah is expected to experience dry weather till May. Among the worrying developments:
- No rain is expected to fall in Perlis, Penang, Kelantan, Terengganu and Sabah over the next week.
- Kudat, Sandakan and Tawau divisions in Sabah placed under drought alert; water rationing expected to start at any time.
- The department’s Fire Rating System showed a very high probability of fires starting in Sabah and the northern part of the peninsula. (Star)
This is positive for CPO price and negative for FFB yields. A prolonged drought in the key palm oil regions in Malaysia could negatively impact palm oil yields leading to supply shortfall. This will be positive for short-term and medium term CPO price.
Genting Malaysia has completed the subscription of US$18m (RM60m) nominal amount 9% senior secured notes issued by MGM Mirage. The notes were offered as part of a US$845m placement exercise, the proceeds of which will be used by MGM to repay borrowings. The notes are secured by a mortgage on MGM Grand Las Vegas. (BMSB)
This news is only a slight positive surprise for us as this is GENM’s second subscription to MGM’s bonds .To recap, GENM first subscribed to some US$50m of MGM’s bonds in May-09. This latest subscription represents <1% of GENM’s RM5.3bn cash stash as at end-Dec 09. From an earnings perspective, this small subscription is estimated to have a negligible (<1%) enhancement to FY10-12 earnings.
Astro Holdings Sdn Bhd, a special purpose vehicle of Usaha Tegas, proposed a conditional RM8.3bn takeover offer to acquire all the shares in
Astro for RM4.30/share cash. 18 shareholders with a combined stake of 72.9% have irrevocably accepted the offer, leaving the offer open to the remaining shareholders with a combined 27.1% stake over the next 60 days. The offer is conditional on Astro Holdings achieving more than 90% of the voting shares in Astro. Astro Holdings will pursue the delisting of Astro. The deal is expected to be completed in mid-June 2010. (BMSB)
AirAsia chief executive Datuk Tony Fernandes told Bloomberg yesterday that the airline’s first-quarter earnings are “looking strong” and it doesn’t need to raise more capital. During the interview, he said forward bookings for the second quarter were higher than last year, adding that the first-quarter passenger numbers were “very strong”. (Star)
Wah Seong made a proposal to buy troubled Italian pipe-coating company Socotherm about three weeks ago, to expand into the lucrative South American market. says deputy MD Giancarlo Maccagno. “We made a proposal about three weeks ago and we should know the result by the end of April”, says Giancarlo. He declined to disclose the offer price but said it will be funded internally as the company has RM400m in cash reserves.” They are a pipe-coating group that we know well and in a business that we know well. The synergistic value will be tremendous,” he said. If it succeeds, Wah Seong will become the world’s second-largest pipe-coating company, after US firm Bredero Shaw. (BT)
Top Glove unveiled plans for two new factories costing RM70m to meet expected increase in demand after quarterly profit doubled recently. Dubbed "Factory 22" and "Factory 23", the two new production facilities would be part of an on-going expansion exercise to increase capacity by 8.25bn pieces a year once the expansion is completed by May 2011, according to Top Glove's chairman Tan Sri Lim Wee Chai. For 2010, Top Glove estimates the world demand to reach 150bn pieces of gloves, up from 140bn pieces annually projected back in December 2009. (Malaysian Reserve)
Despite the global downturn last year, the
Penang property market has not recorded any significant drop in prices and is expected to improve this year in line with the economic recovery. Henry Butcher Malaysia (Seberang Perai)'s senior manager Fook Tone Huat said that development land, especially in Seberang Perai, is still in good demand, particularly those near town areas. The Seberang Perai area is expect to record a 10% rise in appreciation rate due to its high population density compared to neighbouring states like Kedah and Perak, Fook said. On the outlook for 2010, Fook said the residential sector will still be the main player in the property market in Seberang Perai and among the hotspots to be developed are Raja Uda, Bagan Lallang, Juru, Bukit Tambun and Simpang Ampat. (Bernama, BT)
Ho Hup Construction shareholders voted out all the directors linked to deputy chairman Datuk Vincent Lye Ek Seang and replaced them with a group that effectively help the founding Low family back in control. All the resolutions were passed without any debate by shareholders. Newly appointed Tan Sri Kamaruzzaman Shariff and Hew Thin Chay said the new board would examine both the original and proposed plans to come up with one that was equitable to all shareholders. "We should be able to submit a new regularisation plan within two weeks," said Hew. (Financial Daily)
Johor Corp, the investment arm of the Johor state government, has another 2,000ha to be developed in the
Iskandar Malaysia region, said CEO Tan Sri Muhammad Ali Hashim. "The landbank is there for future development of industries in the growth region," he said. While the newer part of the growth corridor located in the west of the state, namely in the Tanjung Pelepas and Nusajaya areas have attracted strong interest, Pasir Gudang and the Tanjung Langsat Port in the east, are equally vibrant. "With good infrastructure, power, electricity and gas readily available, industries can look to setting up operations here, while the new bridge linking to Desaru provides good connectivity." (BT)
Premium air travel is recovering amid the robust global trade and economic recovery, according to Iata.
- Premium travel demand grew 5.5% yoy in January and was up 0.2% mom. The recovery has been so strong that premium demand is now 9.4% above its early 2009 low, but premium demand remains more than 16% below its previous peak.
- In 2009, revenue from premium passengers fell nearly 30% yoy. In January, premium revenue was up 20% from its 2009 low and showing positive yoy growth again, but remains 30% below early 2008 premium revenue levels are reached. 'It now looks as though the recession in premium travel has been cyclical rather than a permanent fall,' Iata said.
- Economy passenger numbers grew 5.7% yoy in January. 'Passenger kilometres flown (RPK) is growing faster, by 6.4% in January, as average distances flown were increased by the concentration of the upturn in the relatively longer-route areas of Asia,' Iata said.
- Average fares have risen around 10% for premium and economy seats since mid-2009, lifting international passenger revenue 20% from its mid-2009 lows by January. This comes after an 18% full-year decline in total international passenger revenue and a near 30% fall in revenue from premium passengers. Economy revenue is now 7% below the previous peak. (SBT)
Syarikat Takaful Malaysia expects at least 2,000 of its insurance agents to sign up under
DiGi Telecommunication's special mobile voice and broadband package by the end of 2010. The two companies joined forces to introduce services that will enable agents to better meet customer demands. (BT)
Templeton Asset Management's unit Templeton Emerging Markets Group has emerged as a substantial shareholder with a 5% stake in
KSL Holdings after taking up part of a placement of new shares by the property outfit. (Financial Daily)
Scomi Engineering (SEB) is exclusively negotiating with a foreign-listed multinational corporation to sell its entire oil and gas machine shop business for US$110m (RM363m). The purchase has given SEB a bank guarantee of US$2bn, representing 2% of the proposed sale consideration. "This corporate exercise is in line with the business strategy of SEB, to position itself as an Urban Transportation Solutions Provider focusing in monorail solutions," SEB president Syahrunizam Samsudin said. (Malaysian Reserve)
Malton plans to develop a RM2.5bn commercial and residential project in Kuala Lumpur on a parcel of land owned by
Ho Hup Construction Company . The proposed development, which would be carried out over 10 years, is expected to comprise of shopping complex, shop offices, office tower, service apartments and hotel. Malton's unit Pioneer Haven is solely responsible to meet the cost of the proposed development. Under the joint agreement, Ho Hip's unit Bukit Jalil Development will receive 17% of the gross development value with a minimum of RM265m while the remaining balance of 83% would go to Malton's unit. (Malaysian Reserve)
