CEOMorningBrief TUESDAY, FEBRUARY 27, 2024 ISSUE 723/2024 theedgemalaysia.com SARAWAK TO FINALISE GREEN HYDROGEN FORAY WORTH US$4.2 BIL p4 SkyWorld Development Berhad (200601034211) HOME: Ex-CEO charged with transferring RM116 mil to unlicensed fund management company p6 Malaysia promises three-month approval for Main Market, ACE Market IPOs p7 Aviation in a ‘purple patch’ amid new plane crunch, says AirAsia co-founder p8 WORLD: ‘Built to last’ Berkshire nears US$1 trillion valuation after record profit p18 Alibaba discloses state ownership in more than 12 business units p19 Govt widens service tax scope to include maintenance and repair jobs King will not entertain any parties attempting to threaten nation’s political stability Report on Page 2. SHAHRILL BASRI/ THEEDGE Report on Page 3.
tuesday february 27, 2024 2 The E dge C E O m o rning brief published by ( 2 6 6 9 8 0 - X ) tel . 603-77218000 Level 3, Menara KLK, 1 Jalan PJU 7/6, Mutiara Damansara, 47810, Petaling Jaya, Selangor, Malaysia publisher + ceo . Ho Kay Tat editor-in-chief . Kathy Fong chief commercial officer . Sharon Teh chief operating officer . Lim Shiew Yuin editors . Jenny Ng . Tan Choe Choe Lam Jian Wyn to contact editors: [email protected] to advertise: [email protected] the edge ceo morning brief Read from desktop or mobile device. You can print in A4 to read. Set print mode to fit or shrink oversize page. to get on emailing list [email protected] King will not entertain any parties attempting to threaten nation’s political stability home by Choy Nyen Yiau theedgemalaysia.com KUALA LUMPUR (Feb 26): His Majesty Sultan Ibrahim, King of Malaysia, called on all Members of Parliament to refrain from causing political instability, emphatically stating that he would not entertain any parties attempting to threaten the nation’s political stability. During his inaugural address to the Dewan Rakyat for the opening of the First Meeting of the Third Session of the 15th Parliament on Monday, His Majesty reminded all parties to accept the reality and respect the Unity Government formed after the 15th general election. “I would like to emphasise that I will not entertain any request from any party that may compromise the political stability of the country. Anyone seeking to play politics should wait for the next general election,” Sultan Ibrahim said. The king also stated that the well-being of more than 33 million Malaysians is his utmost priority, and he hopes that all MPs will focus their efforts on safeguarding the people. “The success or failure of the country does not solely rest on the shoulders of the prime minister, but on all 222 MPs elected by the rakyat,” Sultan Ibrahim said. Last month, Kedah Menteri Besar Datuk Seri Muhammad Sanusi Md Nor claimed that the opposition had gathered sufficient statutory declarations to overthrow Prime Minister Datuk Seri Anwar Ibrahm’s administration. However, leaders of the coalition forming the government, including Anwar, dismissed such claims, with the prime minister challenging the opposition to bring a motion of no confidence to the Dewan Rakyat. Dewan Rakyat Speaker Tan Sri Johari Abdul also emphasised that he had not received any motion of no confidence against the prime minister for the Dewan Rakyat’s first session this year. King warns against uncouth behaviour in Parliament Meanwhile, Sultan Ibrahim also warned against any inappropriate conduct or disrespectful behaviour towards other MPs in parliamentary sittings, urging MPs to maintain good manners and set a positive example during the session. His Majesty reminded that the Dewan Rakyat is the place where laws are enacted, and MPs are the legislators, so it would be inconceivable if the legislators themselves do not comply with the rules they have made. Sultan Ibrahim added that he felt embarrassed to enter the Dewan Rakyat having observed such behaviour from certain MPs in the past. “Thus, I give the [Dewan Rakyat] speaker the green light to take stern action on MPs who go over the line. He may impose a 14- day ban if some are still stubborn,” he said. This marks the first time His Majesty has opened a Parliament session since being sworn in as the 17th Yang di-Pertuan Agong in January. Earlier, His Majesty arrived at Parliament Square at 10am, and was welcomed by the Dewan Rakyat speaker and Dewan Negara President Datuk Mutang Tagal. Prime Minister Datuk Seri Anwar Ibrahim, his wife Datuk Seri Dr Wan Azizah Wan Ismail, and the two deputy prime ministers, Datuk Seri Dr Ahmad Zahid Hamidi and Datuk Seri Fadillah Yusof, were also present at the event. Read also: ‘I don’t like systems with a lot of red tape’ — Sultan Ibrahim Sultan Ibrahim reminded the government machinery to enhance efficiency and practise the principle of integrity in order to achieve successful economic development. King backs govt’s austerity measures, including targeted subsidies “I hope that during my reign, the government will succeed in achieving a fiscal surplus every year,” Sultan Ibrahim said. ‘I would like to emphasise that I will not entertain any request from any party that may compromise the political stability of the country. Anyone seeking to play politics should wait for the next general election,” Sultan Ibrahim said during his inaugural address to the Dewan Rakyat for the opening of the First Meeting of the Third Session of the 15th Parliament, after reminding all parties to accept the reality and respect the Unity Government formed after the 15th general election. bernama
TUESDAY FEBRUARY 27, 2024 3 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Feb 27): With no prior warning or consultation, the government’s decision to include almost all maintenance and repair (M&R) jobs under the service tax’s scope came as a shock and has left the public ill-prepared for it, according to a tax expert. Grant Thornton Indirect Tax & Transfer Pricing senior executive director Alan Chung said the tax consultant industry had not been properly consulted nor forewarned about the change that came into effect on Monday (Feb 26). “Two aspects of this which concern me is first of all this was brought in under the radar — there was no announcement whatsoever until the gazette order was released. Frankly, it caught us (the tax advisers) by surprise,” Chung told The Edge. “Second, there was no proper consultation with the industry, with tax consultants — this is vital,” he said. Chung is also concerned about how far-reaching the terms “maintenance” and “repair” are. “Maintenance and repair are very broad terms, it doesn’t just cover air conditioning systems and elevators, it covers laptops too, everything’s in there. If your television is sent for repairs, it is subject to services tax. The coverage is very wide, that’s one perspective of it,” he said. While tax consultants have to analyse the impact of this move, the general public and businesses are not prepared for the services tax’s implementation. “They’ve given us too little time, with no consultation made. Nobody’s prepared for this. So, how we are going to go about this over the next four days is a big issue,” he added, referring to when the 6% service tax will be raised to 8% by March 1. Another concern Chung raised is the risk of cascading taxation or double taxation. KUALA LUMPUR (Feb 26): In a surprise move, the government has decided to expand the 6% service tax — which will be raised to 8% come March 1 — to include almost all types of maintenance and repair (M&R) jobs, and provided details on the exemptions to be given to certain logistics services. According to a federal government gazette on an amendment to the service tax regulation that was published on the website of the Attorney General’s Chambers last Friday (Feb 23), the service tax would be imposed on M&R services starting from Monday (Feb 26). This sudden inclusion of M&R services as a taxable service was accompanied by various other previously announced inclusions, namely brokerage, underwriting, karaoke, and logistics services. But the service tax rate for logistics services — together with the provision of food and beverage (F&B), telecommunications, parking, credit card or charge card services — will stay at 6% when the service tax is raised to 8% by March 1. The tax will apply to all logistics services except those involving export, import, handling of goods in transit, F&B, and goods sold via e-commerce platforms. Independent tax advisory firm TRATAX Sdn Bhd executive director Thenesh Kannaa said the service tax will be imposed on all M&R services going forward, barring two exclusions. The two exclusions are services relating to the maintenance of residential buildings and M&R services of joint management corporations (JMCs), such as building maintenance charges. As the inclusion of M&R services cover a wide range, Thenesh noted that the move will have a “wide impact”. According to him, the service tax was previously only imposed on M&R services for motor repair and ad hoc maintenance work on assets covered under a maintenance management contract. “Now, if you call someone to service your air conditioner, that is going to be subject to service tax,” he said as an example of a taxable M&R service. Govt widens service tax scope to include maintenance and repair jobs BY IZZUL IKRAM theedgemalaysia.com BY IZZUL IKRAM theedgemalaysia.com Tax expert raises concern over surprise service tax expansion “Unlike the goods and services tax (GST), whereby there is no cascading of taxes, the service tax has a very high tendency of being subject to (further) tax,” Chung said. “Tax on tax is a very apparent issue and in terms of like (similar) repair and maintenance services, you can have it cascading across the board,” he added. As example, Chung cited how a service provider, say Service Provider A, may outsource specialised repair work to Service Provider B, who will charge them for the work, which is subject to the service tax. This will then be included in Service Provider A’s bill to the eventual customer, which will then be subjected to another round of service tax. “So, when it comes to repair and maintenance, my worry here is that there will be cascading taxes,” he said. “Of course, I am advocating for a broadening of the service tax [and] this is something towards that, but please do have some consultation for us to go and ponder over this and see whether there are any negatives from the implementation so we can address it before we implement it,” he said. While the service tax for M&R services is now legally in effect, Chung does not think those who fail to comply with the tax will face any repercussions as yet. “Nobody on the ground who is affected by this change in legislation has charged for service tax today, (and this issue) is still being debated among professionals in the tax industry. We are trying to interact with the Finance Ministry (MOF) and the customs to deal with this,” Chung said. “Ultimately, I suspect that they will come up with some form of exemption but it’s going to be trying to rectify something that shouldn’t have appeared in the first place,” he added. At the time of writing, the MOF has yet to release an official statement on the issue.
TUESDAY FEBRUARY 27, 2024 4 THEEDGE CEO MORNING BRIEF HOME Sarawak to finalise green hydrogen foray worth US$4.2 bil BY INTAN FARHANA ZAINUL & ADAM AZIZ theedgemalaysia.com KUALA LUMPUR (Feb 26): Sarawak is forming several partnerships for green hydrogen projects said to be worth a total of US$4.2 billion (about RM20.7 billion), which include the development of largescale hydrogen plants at the Sarawak Hydrogen Hub in Bintulu and the Rembus Depot near Kuching. It is understood that SEDC Energy Sdn Bhd, a subsidiary of the Sarawak Economic Development Corp (SEDC), will be signing at least three agreements this week, as the state forges ahead with its plans to produce the green energy for both exports and domestic use. “The feasibility study is already done and several agreements will be signed at the Borneo Energy Transition Conference [to be held this week],” a source told The Edge. When contacted, SEDC Energy CEO Robert Hardin confirmed with The Edge that the state is finalising agreements for two large-scale green hydrogen projects that will form part of the Sarawak Hydrogen Hub. The first is a tripartite agreement, called Project H2ornbill, between SEDC Energy and two Japanese firms — oil firm Eneos and trading house Sumitomo Corp — for the development of two hydrogen producing plants, Hardin said. SEDC Energy is also collaborating with three South Korean companies — Samsung Engineering, Posco and Lotte Chemical — to develop hydrogen derivative facilities under a second project, namely Project H2biscus, he added. Concurrently, Hardin said SEDC Energy is forming a joint venture with Gentari, Petroliam Nasional Bhd’s (Petronas) green energy arm, to develop common facilities for the Sarawak Hydrogen Hub. “The common facilities include the pipelines to support the H2ornbill and H2biscus plants. Earlier, these plants were designed to be standalone, but we found that it would be more efficient to integrate the common facilities,” he said, adding the first phase of the hub will start operating in 2028. Gentari confirmed in a statement on Monday it has inked a heads of agreement with SEDC Energy for the project. “The planned global-scale hydrogen production hub in Bintulu is intended to serve as the sole supplier of green hydrogen for downstream facilities in the Bintulu division area, managed by a joint venture company to be formed by Gentari and SEDC Energy,” Gentari said in a statement. The JV Co will also be responsible for “optimising all hydrogen production projects within the region”, the statement added. Combined, H2ornbill and H2biscus could produce 240,000 tpa of green hydrogen, making the Sarawak Hydrogen Hub one of the largest producers of the clean energy globally. Sarawak is looking to produce close to 2,000 tonnes of green hydrogen for local consumption. Presently, China is the largest producer of hydrogen, which powers heavy vehicles such as lorries and trucks as well as some of its industries. However, according to Hardin, most of hydrogen is not considered as green energy, as it utilises hydrocarbons such as oil and gas to extract hydrogen gas from water. “The new technology now is to extract hydrogen through electrolysis from water, and for it to be green; the power sources will be coming from hydropower,” Hardin told The Edge. This bodes well for Sarawak, which has abundant hydropower resources. Its total capacity for hydroelectric power is currently about 3.5GW. It is looking at obtaining another 15GW of hydropower generation, including via the cascading dam method. First local company to build a hydrogen plant Meanwhile, to support the Rembus Depot, which is part of the Kuching Urban Transportation System (KUTS), SEDC Energy plans to develop a hydrogen production plant and refuelling station. Sources told The Edge that SEDC Energy will be signing tripartite agreements with Sarawak Metro Sdn Bhd and O&G firm ICE Petroleum Group this week to develop the green hydrogen plant at the Rembus Depot for local use. The depot is the central hub of the Autonomous Rapid Transit (ART), which is part of KUTS. The plant, targeted for completion by 2025, is projected to produce about 1,900 tonnes of hydrogen per year, and will cost about RM400 million-RM500 million to build. Hardin declined to comment on details of the partnership, but confirmed that ICE Petroleum will be taking on the engineering, procurement, construction, installation and commissioning (EPCIC) portion of the project. Sarawak Metro is the implementer of ART, which will serve as the backbone system to minimise and alleviate traffic congestion in Kuching. An oil and gas EPCC outfit based in Kuala Lumpur, ICE Petroleum acquired a 51% stake in Wood Group Engineering Sdn Bhd in 2022. In 2020, it was a takeover target of TH Heavy Engineering Bhd, but the deal did not pan out. When contacted, group managing director Abdul Jalil Maraicar told The Edge that ICE Petroleum has been actively looking to expand its expertise in the renewable energy sector, in line with the global movement towards net zero emissions. With Sarawak’s green hydrogen venture making significant strides, it is well placed to lead the net zero carbon economy. The initiatives are also in line with Sarawak’s Hydrogen Economy Roadmap, which focuses on utilising hydrogen to make the Land of the Hornbills a developed state by 2030. Read also: Petronas’ Gentari join hands with SEDC Energy to develop Sarawak’s centralised hydrogen production hub Combined, H2ornbill and H2biscus could produce 240,000 tpa of green hydrogen, making the Sarawak Hydrogen Hub one of the largest producers of the clean energy globally. Sarawak is looking to produce close to 2,000 tonnes of green hydrogen for local consumption. BLOOMBERG
TUESDAY FEBRUARY 27, 2024 5 THEEDGE CEO MORNING BRIEF
TUESDAY FEBRUARY 27, 2024 6 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Feb 26): A former chief executive officer (CEO) of an investment company was charged again in the Sessions Court here on Monday, this time with two counts of transferring RM116 million to a company conducting capital market activities without a licence. Syaiful Riezal Ahmad, 51, pleaded not guilty to both charges before Judge Datin Sabariah Othman. Syaiful Riezal, as then CEO of Infinity Trustee Berhad, is alleged to have transferred a total of RM116,292,904.15 from the company’s Affin Bank and Alliance Bank Berhad current accounts to Pixelvest Sdn Bhd’s CIMB current account. This was to further Pixelvest’s activity of conducting a fund management business although Pixelvest did not hold a Capital Markets Services Licence and was not registered. He allegedly committed the offences at Affin Bank Berhad PJ State Branch in Petaling Jaya between Dec 1, 2020 and July 28, 2022 and Alliance Bank Malaysia Berhad SS2 Branch in Petaling Jaya between Aug 12, 2022 and Oct 11, 2022. He was charged under Subsection 58(1) of the Capital Markets and Services Act 2007 (Act 671), read together with paragraph 370(b) and Subsection 367(1) of the same Act, and is liable to be fined a maximum of RM10 million or jailed for up to 10 years, or both, on conviction. KUALA LUMPUR (Feb 26): Former BSI Bank private banker Yak Yew Chee has refused to come to Malaysia to testify in Datuk Seri Najib Razak’s 1Malaysia Development Bhd (1MDB-Tanore) trial despite being linked to fugitive Low Taek Jho (Jho Low), the High Court was told on Monday. Malaysian Anti-Corruption Commission (MACC) senior superintendent Nur Aida Arifin said Singapore authorities had informed her that Yak did not want to come and testify in the trial. Yak, who is from Singapore, was one of the first people to be arrested and sentenced over his involvement in 1MDB. In 2016, he was sentenced to 18 weeks’ jail in Singapore and fined S$24,000 after being found guilty on two counts of failing to disclose information to the authorities on suspicious banking activities involving Jho Low. Questioned by Najib’s lawyer Tan Sri Shafee Abdullah, Nur Aida said Yak refused to come to Malaysia to testify in the trial, although she had already recorded his statement. However Yak’s counterpart at BSI Singapore, former head of wealth management services Kevin Swampillai, had testified last year in the trial. Shafee: Kevin gave his statement (in this trial). What about Yak? Nur Aida: From the Singaporean authorities, I was informed Yak did not want to testify in Malaysia. Shafee then asked her of his whereabouts to which she responded: “Singaporean authorities said he was not in the country.” She also said that he had already served his sentence and is free. Asked about the cooperation she received from other countries during her investigations into the case, she said she dealt with countries such as Singapore, Switzerland, Barbados and Hong Kong, and that the authorities from those countries were not very cooperative. She said she had applied, through the mutual legal assistance (MLA) system, to interview bank staff from the four countries which had dealt with 1MDB transactions but was met with silence. Ex-BSI banker Yak Yew Chee refused to testify in Najib’s 1MDB case, says MACC officer Shafee: They all did not now allow Puan Nur Aida to take or record statements from the witnesses? Nur Aida: I was not allowed and I did not get any statements from the banks. There was no response from all countries. Shafee: Even Singapore? Near to us? Nur Aida: Except for Kevin Swampillai and Yak who gave their statements. Our AGC (Attorney General’s Chambers) did make applications but there was no response from the other countries. Kevin admitted in the trial, when he was on the stand last year, to pocketing nearly US$6 million in commissions from BSI for his role in carrying out 1MDBlinked transactions. But the money had been “disgorged” when Singaporean authorities began investigations into 1MDB and Kevin’s role in the transactions. In October 2020, the Monetary Authority of Singapore (MAS) issued lifetime prohibition orders against Kevin for his role in the 1MDB scandal that they said resulted in him receiving US$5 million in “secret profits”. Yak was employed at BSI between 2010 and 2016, while Jho Low became a client of BSI between late 2010 and early 2011. Jho Low maintained a number of accounts with BSI, opened in his personal name as well as under entities owned by him. BSI was also found to have earned “substantial amounts of fees” from transactions between various entities owned by Jho Low between 2011 and 2014, during which Yak was paid hefty bonuses. Jho Low “exerted great influence” over the transactions, investigations revealed. BY TIMOTHY ACHARIAM & TARANI PALANI theedgemalaysia.com CONTINUES ON PAGE 7 Ex-CEO charged with transferring RM116 mil to unlicensed fund management company Bernama Former BSI Bank private banker Yak Yew Chee.
TUESDAY FEBRUARY 27, 2024 7 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Feb 26): Malaysia’s stock exchange operator and regulator on Monday jointly pledged to cut approval time to three months for both Main Market and ACE Market listings. The sped-up approvals are applicable to new initial public offering (IPO) applications received from March 1, the Securities Commission Malaysia (SC) and Bursa Malaysia said in a joint statement. The commitment, however, will be premised on advisers or sponsors “satisfactorily” addressing the regulators’ queries and comments within five market days, the statement read. “The more competitive time-to-market will enhance the exchange’s attractiveness to companies seeking to list in Malaysia,” said Bursa chief executive officer Datuk Muhamad Umar Swift. The time frame would be able to cater to the “dynamic business needs of companies looking to raise funds in the capital market, as part of our ongoing efforts to remain competitive and relevant for both local and international investors”, said SC chairman Datuk Seri Dr Awang Adek Hussin. The commitment tops current practice since 2021 of issuing queries and comments within 10 market days following a complete IPO application, as well as issuing subsequent queries and comments within five market days to each response round. Bursa is the sole approving authority for IPOs on the secondary board — the ACE Market — while a Main Market listing would still require the approvals of both Bursa and the SC. Further measures, including “training modules, will be developed to support market professionals towards meeting the unified objective of a smoother journey to IPOs”, the SC and Bursa said. A faster time-to-market for IPOs will not only benefit businesses seeking to raise capital, but also enhance the overall credibility and transparency of the capital market, said the Malaysian Investment Banking Association. On their part, the regulators said they will continue to maintain “rigour in the assessment” to avoid compromising investors’ protection and public interests. Advisers and professionals, meanwhile, should “uphold due diligence standards to enable the highest quality IPO applications by adhering to guidelines and requirements, ensuring quality disclosures, high standards of corporate governance, as well as timely and satisfactory responses to regulator queries and comments”, they said. KUALA LUMPUR (Feb 26): The Securities Commission Malaysia (SC) has announced an extension to the deadline for issuing a real estate investment trust’s (REIT) annual report. In a statement on Monday, the SC said that previously set at two months, the new timeline allows for four months after the financial year end. This adjustment aligns the reporting timeline for listed REITs with that of public listed companies on Bursa Malaysia Securities Bhd, granting them equal time for annual report issuance. Recognising the similarities in content requirements, this move ensures consistency across both types of entities. Despite the extended timeline, unitholders of listed REITs will still receive financial information within two months after the REITs’ financial year end through quarterly announcements on Bursa. Malaysia promises three-month approval for Main Market, ACE Market IPOs SC extends REITs’ annual report timeline to four months BY JASON NG theedgemalaysia.com BY SURIN MURUGIAH theedgemalaysia.com In the same court, Pixelvest’s former director Ang Jen Chuen, 33, also claimed trial to a charge of carrying on business in a regulated activity although the company did not hold a Capital Markets Services Licence and was not registered. Ang allegedly committed the offence at Emporis SOHO, Taman Sains Selangor in Petaling Jaya between Dec 15, 2020 and July 15, 2022 according to the same subsection. The court allowed Syaiful Riezal bail of RM100,000 and Ang bail of RM10,000 in one surety each and set March 26 for mention for both cases. The prosecution was conducted by Securities Commission (SC) deputy public prosecutor Muhammad Izzat FROM PAGE 6 Fauzan while Syaiful Riezal was represented by lawyer Md Yunos Shariff and Ang was unrepresented. On Jan 10 this year, Syaiful Riezal was charged in the Sessions Court here on three counts of receiving proceeds of more than RM2 million from unlawful activities and Ang with eight charges of receiving proceeds of unlawful activities involving more than RM116 million. In another Sessions Court, another former director of Pixelvest, Chin Wai Lan, 50, pleaded not guilty to a charge of conducting business in a regulated activity, namely fund management, although the company did not hold a Capital Markets Services Licence and was not registered. She allegedly committed the offence at Emporis SOHO, Taman Sains Selangor in Petaling Jaya between July 15, 2022 and Aug 31, 2022 under the same subsection. Muhammad Izzat offered bailed at RM250,000 in one surety, with an additional condition that Chin surrender her passport to the court and report to the SC office once a month, while her lawyer Datuk Tan Hock Chuan asked the court to use the bail previously imposed on his client. Judge Azrul Darus rejected Tan’s application and set bail at RM10,000 in one surety for Chin and granted the additional condition sought by the prosecution. On Jan 11 this year, Chin was charged in two Sessions Court here on 17 counts of receiving proceeds of more than RM160 million from unlawful activities. Umar thinks the more competitive time-to-market will enhance the local exchange's attractiveness to companies seeking to list in Malaysia.
tuesday february 27, 2024 8 The E dge C E O m o rning brief home KUALA LUMPUR (Feb 26): Foreign buying of Malaysian equities more than doubled to RM786.1 million last week from RM352.9 million the prior week. In its fund flow report on Monday, MIDF Research said that similar to the previous week, foreign investors net bought every day. It said the net buying streak has gone on for 16 consecutive trading days, something not seen since February 2022. “The highest net inflow came on Tuesday at RM413.8 million, the day the ringgit fell to its all-time low since 1998. “The sectors with the highest net foreign inflows were Financial Services (RM287.2 million), Utilities (RM235.8 million), and Energy (RM76.9 million), while the sectors with the highest net foreign outflows were REITs (RM18.6 million), Plantation (RM12.4 million), and Construction (RM4.4 million),” it said. MIDF said as opposed to foreign investors, local institutions continued their trend of net selling domestic equities for the fifth consecutive week, totalling RM596.6 million, 2.1 times higher than the week before at RM277.5 million. “For the third consecutive week, local retailers stuck to their pattern of net selling domestic equities, with total sales reaching RM189.6 million net last week. “In terms of participation, there were increases in average daily trading volume (ADTV) across all investor classes,” it said. Foreign buying of Malaysian equities more than doubled to RM786.1 mil last week — MIDF (Feb 26): The aviation industry is experiencing a “purple patch” with demand for seats far outstripping capacity amid a long wait for new aircraft and a shortage of pilots further discouraging any fresh competition, Tan Sri Tony Fernandes, the co-founder of low-cost carrier AirAsia, said. Malaysia-based AirAsia for its part is set to witness its “best-ever period” with most of the carrier’s 240 planes back in the sky and “airfares at their best,” Fernandes said during an interview near Kuala Lumpur’s international airport on Monday. “I’ve never been this bullish before,” Fernandes, who started AirAsia 23 years ago, said. “Southeast Asia is going through a renaissance period of sensible economics, and that’s a good thing.” On the back of that, AirAsia plans to raise as much as US$600 million (RM2.87 billion) in the coming months, Fernandes said, as he tries to pull off a merger between his two aviation businesses — long-haul carrier AirAsia X Bhd and short-haul airline AirAsia, which is currently a unit under Fernandes’ more diversified company Capital A Bhd. Following the merger, which is expected to conclude mid-year, the new entity will look to raise up to US$400 million via selling equity, Fernandes said. Citigroup Inc and US advisory bank Evercore Inc have been appointed to lead the capital raising. A US$200 million revenue bond, securitised against revenue from new routes, is also expected to be finalised soon, he said. Fernandes said the merger of the two airlines will create a new firm called AirAsia Group that will subsequently take over AirAsia Aviation in a ‘purple patch’ amid new plane crunch, says AirAsia co-founder by Ram Anand & Netty Ismail Bloomberg by Surin Murugiah theedgemalaysia.com MIDF said local retailers saw an increase of 29.9%, local institutions an increase of 26.6% and foreign investors an increase of 21.6%. Commenting on the international markets, MIDF said policymakers have expressed concerns about the risk of premature interest rate cuts and emphasised uncertainty regarding the duration of maintaining a restrictive monetary policy stance to achieve the Federal Reserve’s (Fed) 2.0% inflation target. It said this was stated in the minutes of the Jan-24 Federal Open Market Committee (FOMC) meeting released last Wednesday. “Nevertheless, despite this, last week saw 16 out of the 20 major indices we track posting gains for the week, with top performers being the CSI 300 (3.71%), the CAC 40 (2.56%) and the Hang Seng Index (2.36%). “Conversely, notable decliners included Singapore’s Straits Times (1.15%), the Jakarta Composite Index (0.55%), and the ASX 200 (0.19%),” it said. X’s listing on Bursa Malaysia. The company may also do away with its AirAsia X branding as the aviation businesses consolidate. AirAsia has ambitions to expand its footprint from a predominately Asian airline to a global low-cost carrier with a more extensive network. It plans to start flying to Kazakhstan, its first route in Central Asia, later this year. Fernandes, who has previously spoken about succession at the company he founded, said on Monday that he would retain an advisory role at AirAsia Group following the merger. He’ll remain chief executive of Capital A, his other listed company that will ultimately hold all the non-aviation businesses he’s started. Those include Teleport, a logistics company, and Move, an online travel agency that also operates a ride-hailing business. Move is finalising a US$30 million capital raising while Teleport has raised US$35 million in debt, he said. The company’s aircraft-maintenance arm, Asia Digital Engineering, has also managed to raise US$100 million, Fernandes said. The Financial Times reported in October that Capital A is seeking to raise more than US$1 billion in debt and equity and list some of its businesses through a blank-cheque company in New York. The company said in November that it will seek a Nasdaq listing via a special purpose acquisition company merger with Aetherium Acquisition Corp. “2024 will be a very good year. 2025 will be an amazing year,” Fernandes said. “There’s a lot of growth for us.” I’ve never been this bullish before,” Fernandes, who started AirAsia 23 years ago, said. Patrick Goh/The Edge
TUESDAY FEBRUARY 27, 2024 9 THEEDGE CEO MORNING BRIEF
tuesday february 27, 2024 10 The E dge C E O m o rning brief home FGV’s 2023 profit shrinks 12-fold on lower palm oil prices United Plantations declares RM1.10 dividends as it makes record profit by Anis Hazim theedgemalaysia.com by Izzul Ikram theedgemalaysia.com KUALA LUMPUR (Feb 26): United Plantations Bhd (UP) has declared a final dividend of 70 sen per share, along with a special dividend of 40 sen per share, for the financial year ended Dec 31, 2023 (FY2023), as annual net profit jumped to a new record high of RM711 million. Both dividends will be paid on May 14, with April 26 as the ex-date and April 29 as the entitlement date, the Perak-based planter said in a bourse filing on Monday. UP in November last year declared an 80 sen dividend for FY2023, comprising an interim payout of 40 sen per share and an extraordinary dividend of 40 sen per share. This brings total dividends for FY2023 to a record high of RM1.90 per share, up 36% from the RM1.40 paid for FY2022. According to the annual report, which was also released on Monday, the group’s FY2023 record high net profit was 17% Earnings per share rose to RM1.71 sen from RM1.45 sen. The stronger profitability was achieved despite cumulative revenue dropping 19.92% to RM2.014 billion from RM2.515 billion. The group has not been releasing its fourth-quarter results separately since FY2015, but announces the full-year results in its annual report instead. “As of Dec 31, 2023, the group’s cash and cash equivalents stood at RM634 million, compared with RM779 million in FY2022. The reduction was mainly a result of the extraordinary dividend of 40 sen per share paid in December 2023. “Nevertheless, the group continues to maintain a conservative capital structure to have the flexibility to utilise internally generated funds for capital investments within the group, sustain a stable dividend to shareholders, and to have the capability to pursue new investments,” said the group’s chairman Datuk Mohamad Nasir Ab Latif in the annual report. He also said the record high dividend UP announced for FY2023 was based on the group’s exceptional results, and a “very strong cash position that has been accumulated over the past years and should not be taken for granted, especially when market conditions change due to, among others, commodity price volatility”. Trading of UP shares was halted for an hour from 9am to 10am on Monday, following the dividend and annual report announcements. After trading resumed, UP shares closed 12 sen or 0.58% higher at RM20.92, giving the group a market capitalisation of RM8.71 billion. The counter has risen 17.13% since the start of 2024, and gained 30.75% over the past one year. KUALA LUMPUR (Feb 26): FGV Holdings Bhd’s net profit fell 12-fold to RM103 million in 2023 from RM1.33 billion in 2022 as the group’s mainstay plantation business’ earnings plummeted amid lower average crude palm oil (CPO) prices. Revenue for the financial year ended Dec 31, 2023 (FY2023) dropped 24.26% to RM19.36 billion from RM25.56 billion in the previous year, according to the agribusiness group’s bourse filing on Monday. The plantation segment saw an 86.08% fall in profit to RM294.82 million from RM2.12 billion previously, as average CPO prices fell to RM3,901 per tonne from RM4,832 in FY2022. “This was further exacerbated by a 29% increase in CPO production costs ex-mill,” said FGV. Fresh fruit bunches (FFB) production was largely flat with a slight increase to 1.05 million tonnes from one million tonnes previously. Meanwhile, the decrease in the plantation sector’s profitability was offset by improved profitability in the logistics and other sectors, coupled with reduced losses in the sugar sector. FGV has agreed to declare a final dividend of three sen per share, involving a payout of RM109.44 million, for FY2023. For the fourth quarter of FY2023, FGV saw a four-fold drop in net profit to RM71.83 million from RM344.3 million a year earlier, as average CPO price fell to RM3,789 per tonne versus RM4,432 previously. “This was further compounded by a 13% increase in CPO production costs ex-mill and a 10% decrease in CPO sales volume,” it added. Quarterly revenue dropped 12.03% year-on-year to RM5.36 billion from RM6.1 billion. As for FY2024, FGV expects CPO prices to range between RM3,900 and RM4,200 per tonne premised on the B35 biodiesel mandate in Indonesia, weak demand from major importing countries, and price competition from rapeseed and sunflower oils. “In the coming quarters, our plantation sector foresees a slight increase in FFB production and yield as the labour supply recovers and improved estate costs driven by reduced fertiliser and energy cost,” the group said. “The sector remains steadfast on increasing yield, replanting with higher-yielding seeds and enhancing mechanisation,” it added, anticipating a satisfactory financial performance for FY2024. Shares in FGV closed unchanged at RM1.46 on Monday, giving the group a market capitalisation of RM5.33 billion. Source: United Plantations’ 2023 annual report United Plantations’ annual earnings 0 200 400 600 800 0 1 2 3 Net profit (RM mil) Revenue (RM bil) FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 284 402 522 606 711 2.01 1.171.34 2.032.52 Dividend (RM) FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 United Plantations’ dividend trend in the past five years Source: Bursa Malaysia 0.0 0.5 1.0 1.5 2.0 1.90 1.35 0.85 1.40 1.15 higher than the RM606 million it made in FY2022, and the increase was mainly due to higher commodity prices and the group’s efforts in optimising yields, with a “commendable performance recorded for the downstream segment”.
TUESDAY FEBRUARY 27, 2024 11 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Feb 26): Petronas Chemicals Group Bhd’s (PCG) net profit for the financial year ended Dec 31, 2023 slumped 73% to RM1.69 billion from RM6.32 billion, against a backdrop of volatile chemicals market and interruptions at its plants. Revenue for the year dipped to RM28.67 billion from RM28.95 billion. For the fourth quarter, PCG net profit fell 76% to RM112 million from RM481 million on the back of revenue of RM7.21 billion versus RM8.70 billion. Earnings per share dropped to one sen from six sen. PCG declared a dividend of five sen per share amounting to RM400 million payable on March 26. Total dividends for FY2023 came in at 41 sen per share, totalling RM1 billion. In a statement, PCG managing director cum chief executive officer Mazuin Ismail said FY2023 was a tough year for the group, both on the market and operational fronts. “Despite the persistent low spreads and operational challenges, we remain resilient with a healthy financial position,” he said. On its outlook, Mazuin said the challenges seen in 2023 are expected to continue into 2024 as economic recovery is expected to remain sluggish, but with pockets of opportunities in various sectors. “The chemicals industry is cyclical in nature, we therefore expect the current downcycle will turn as demand catches up with supply,” he said. At Monday’s midday break, PCG shares dipped 0.86% or six sen to RM6.89, with 1.35 million shares changing hands, valuing the group at RM55.12 billion. PetChem’s FY2023 profit falls 73% to RM1.69 bil, pays five sen dividend KUALA LUMPUR (Feb 26): Fuel retailer Petronas Dagangan Bhd (PetDag) said its net profit rose by 25% in the fourth quarter from a year earlier thanks to high volume growth on the back of higher demand. Net profit for the three months ended Dec 31, 2023 stood at RM180.81 million compared to RM144.46 million over the same period the prior year, PetDag said in a bourse filing. Revenue increased by 6% year-on-year to RM10.08 billion from RM9.5 billion. “On our fuel business, we view the impending regulatory changes in 2024 primarily on targeted subsidy programme present both challenges and opportunities,” PetDag said. “The group will continue to focus on new avenues for growth of our non-fuel business.” In terms of segments, quarterly reveKUALA LUMPUR (Feb 26): LPI Capital Bhd’s net profit for the fourth quarter ended Dec 31, 2023 (4QFY2023) jumped 44% year-on-year (y-o-y) to RM78.6 million from RM54.6 million, primarily due to the absence of the one-off Cukai Makmur or prosperity tax that was imposed in FY2022. The insurer group’s earnings per share improved to 19.72 sen from 13.71 sen, its stock exchange filing on Monday showed. Revenue rose 26.5% to RM481.4 million from RM380.5 million in 4QFY2022, boosted mainly by its general insurance segment. The group declared a second interim dividend of 40 sen per share, up from 35 sen per share in FY2022 payable on March 20. This brings its total FY2023 payout to 66 sen — up from 60 sen in FY2022 — representing 83.8% of the group’s net profit. The group’s profit before tax (PBT) in 4QFY2023 grew 24.8% to RM103.2 million from RM82.7 million in 4Q2022, attributable to higher profit from its general insurance segment, which rose 38% to RM104.5 million from RM75.7 million. The stronger insurance business offset the losses at its investment holding segment, which recorded a loss before tax of RM1.3 million versus a profit of RM7 million previously due to lower dividend income. Its wholly-owned Lonpac Insurance Bhd (Lonpac) recorded a PBT of RM104 million in 4QFY2023, up 37% RM75.9 million in 4QFY2022 due to a 34% y-o-y growth in the insurance service result, which rose to RM81.2 million from RM60.6 million. For the full FY2023, the group’s net profit came in 24.4% higher at RM313.7 million compared with RM252.2 million in FY2022 as revenue rose 16.5% to RM1.91 billion from RM1.63 billion on higher insurance revenue as well as increased interest and dividend income. nue rose by 12% to RM5.09 billion for retail while that for the commercial segment edged up 1% to RM4.92 billion. The convenience segment’s revenue climbed 17% to RM63.9 million. The company also noted that its mobile application Setel had sustained its double-digit growth in gross merchandise value, partly thanks to its participation in the e-Madani programme last year, thus increasing its customer reach in both fuel and non-fuel segments. PetDag declared a dividend of 27 sen per share for the quarter under review, bringing total dividend for the year to 80 sen per share, a slight increase from total dividend of 76 sen per share declared in FY2022. For the full year, PetDag registered a net profit of RM943.08 million, up 21.4% from the prior year’s RM776.60 million. Its revenue increased 2.2% to RM37.55 billion from RM36.75 billion. The company also aimed to seize opportunities in the cleaner energy space through initiatives such as the solarisation of Petronas stations and collaborations with industry players to equip Petronas stations with electric vehicle charging points. At Monday’s market close, PetDag’s share price was unchanged at RM22.72, giving the group a market capitalisation of RM22.57 billion ahead of the results announcement. PetDag posts 25% rise in 4Q profit, declares 27 sen dividend LPI pays 40 sen dividend as 4Q profit jumps 44% BY HEE EN QI theedgemalaysia.com BY CHOY NYEN YIAU theedgemalaysia.com BY SURIN MURUGIAH theedgemalaysia.com CONTINUES ON PAGE 12
TUESDAY FEBRUARY 27, 2024 12 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Feb 26): Egg producer Lay Hong Bhd said on Monday its net profit jumped nearly eight times for the third quarter ended Dec 31, 2023 (3QFY2024) from a year earlier, as government subsidies helped offset a decline in sales. Net profit stood at RM54.91 million, including subsidies, compared with RM6.96 million for the same period a year earlier, Lay Hong said in an exchange filing. Revenue for the quarter, meanwhile, was slightly lower year-on-year at RM266.7 million, from RM267.16 million previously. “Moving forward, the industry [remains] challenging, due to continuous importation of frozen chicken into the domestic market,” Lay Hong warned, flagging pressure from a weakening ringgit against the US dollar, despite declining feed cost. The company did not declare any dividend for the quarter. In terms of segments, revenue from integrated livestock farming decreased by 24.38% to RM219.25 million, due to lower eggs sales volumes from lower production of eggs. Food manufacturing revenue, however, was 3.8 times higher at RM138.54 million, due to higher volumes of primary processed and further processed poultry products. The company’s retail business, meanwhile, saw its revenue falling 13% to RM56.56 million, due to lower sales quantities. For the cumulative nine months ended Dec 31, 2023 (9MFY2024), Lay Hong reported a fourfold jump in net profit to RM62.95 million, from RM14.95 million a year earlier. Revenue slipped 4% to RM768.73 million, from RM800.47 million previously. Lay Hong remains positive that the group will remain profitable due to diversification into further processing and liquid egg proEgg producer Lay Hong’s 3Q net profit jumps nearly eight times as govt subsidies help KUALA LUMPUR (Feb 26): Inari Amerton Bhd’s net profit fell 7.26% year-on-year to RM86.81 million in the second quarter ended Dec 31, 2023 (2QFY2024) from RM93.61 million, due to set-up costs for new products and higher electricity costs. The decline more than offset the impact of higher revenue, which rose 2.89% to RM414.08 million, from RM402.46 million a year ago, thanks to a high loading volume in radio frequency (RF) and optoelectronics segments, it said. Quarterly earnings per share slipped to 2.32 sen, from 2.51 sen in 2QFY2023. Inari declared a dividend of 2.2 sen per share, bringing its 1HFY2024 payout to 4.4 sen per share, down from 4.8 sen per share a year ago. Notably, this is Inari’s third consecutive quarter of improvements on a quarter-on-quarter basis. The latest net profit went up 1.31% from RM84.98 million in the preceding quarter, while revenue rose 7.85% from RM383.93 million. In the first half ended Dec 31, 2023 (1HFY2024), Inari’s net profit fell 14.05% to RM171.79 million, from RM199.86 million a year ago, while revenue rose 2.38% to RM798 million from RM779.46 million on higher RF segment growth. “In its latest forecast for the semiconductor market in November 2023, World Semiconductor Trade Statistics (WSTS) anticipates revival in the global semiconductor market for 2024 with projections indicating a 13.1% growth. “International Data Corporation (IDC) in its publication on Dec 21, 2023 reported that with the gradual recovery of smartphone demand and the strong demand for AI chips, the semiconductor market is expected to recover in 2024 with an annual growth of 20%. “[As] the outlook for the semiconductor industry is positive in 2024, the group continues to work on new opportunities coming onshore into Malaysia’s OSAT (outsourced semiconductor assembly and test) ecosystem to grow our revenues, [and] at the same time focus on strategies to improve our production capacity and utilisation, strengthen our operational efficiencies,” it said. Inari shares fell 4.2% or 14 sen to close at RM3.16 on Monday, giving the group a market capitalisation of RM11.85 billion. Inari’s 2Q net profit down 7% as power, other costs drag BY ADAM AZIZ theedgemalaysia.com BY JASON NG theedgemalaysia.com More on corporate earnings: Hextar Healthcare posts worst year on record T7 Global posts record-high profit, shares surge to near five-year high Cahya Mata Sarawak 4Q net profit up 71% as cement business returns to profitability duction, it said, noting that downstream activities contributed 34% of revenue, compared with 25% for the previous year. “Going forward, the group is expected to achieve greater efficiency in food manufacturing through production integration”, with the recent acquisition of the remaining 51% stake in Nutriplus Food Manufacturing Sdn Bhd, Lay Hong added. At the time of writing on Monday, shares in Lay Hong had fallen two sen or 5.1% to 37 sen, valuing the company at RM274 million on Bursa Malaysia, ahead of the results announcement. FROM PAGE 11 Insurance revenue accounted for 93.5% of the group’s total operating revenue in FY2023. The group’s PBT grew 15.6% to RM394.9 million in FY2023 from FY2022’s RM341.7 million, mainly due to higher investment return, which increased by 62.5% or RM57.4 million to RM149.3 million from RM91.9 million in FY2022 driven by higher investment income and net fair value gains. Looking ahead, LPI said the phased liberalisation of the general insurance industry has led to increased price competition, putting pressure on underwriting margins. Additionally, extreme weather events such as floods have pushed up the cost of reinsurance, affecting insurers’ profitability. The group affirmed its commitment to appropriate pricing policies for certain flood-related products and prudent underwriting practices to mitigate risks. It also said it will continue focusing on strengthening and expanding its distribution channels especially agency and bancassurance to build larger market shares in its portfolio. Shares in LPI traded eight sen or 0.64% lower at RM12.36 on Monday, valuing the group at RM4.92 billion.
TUESDAY FEBRUARY 27, 2024 13 THEEDGE CEO MORNING BRIEF HOME IPOH (Feb 26): All blasting works at quarry sites in Perak must be carried out by certified blasters and supervised by consulting engineers to ensure they do not pose any negative impacts on buildings and the general public. State Science, Environment and Green Technology Committee chairman Teh Kok Lim said monitoring of tremors and air explosions using seismometers should also be conducted at nearby locations of public interest or at any location directed by the Department of Minerals and Geosciences (JMG). He said that the moni- toring work should also be carried out by the quarry operators or through consulting engineers, with the results to be recorded and submitted to JMG periodically. According to him, blasting activities are subject to strict conditions, covering areas such as blasting design, blaster qualifications, timing of explosions, restrictions on tremor parameters, and air blasts. “In addition, the proposed blasting design prepared by a certified blaster must be verified by the mining consulting engineer and then submitted to the JMG before the blasting work is carried out,” he said during the question-and-answer session at the state legislative assembly sitting here on Monday. Teh said this in reply to a question from Azizi Mohamed Ridzuwan (PNLubok Merbau) about the state government’s monitoring of quarry activities in the state to ensure they do not harm the environmental ecosystem in nearby areas. Meanwhile, he said that the environmental ecosystem remains unaffected by any quarry activity conducted in Perak and that the state authorities ensure this by taking several measures, including issuing mining licences or mining leases for quarry land. He said that the action is in line with the amendment to the National Land Code Act 2008, which classified limestone and granite as minerals. Teh said the move was to ensure that the control of quarry activities in Perak was administered and regulated under the Minerals (Perak) Enactment 2003 and the Mineral Development Act 1994. Quarry blasting work must be carried out by certified blasters — Perak exco KUALA LUMPUR (Feb 26): Shares in state-owned fixed-line operator Telekom Malaysia Bhd (TM) surged on Monday to their highest in three years, as analysts broadly recommended investors to buy the stock following better-than-expected earnings for the fourth quarter ended Dec 31, 2023 (4QFY2023). The counter rose as much as 19 sen or 3.21% to RM6.10, its highest since February 2021, on Bursa Malaysia, before paring some gains to close at RM6.02 — still up 11 sen or 1.86%, after 8.63 million shares were done. In contrast, the benchmark FBM KLCI index ended the day 0.1% lower. The company’s set of guidance for FY2024 is “conservative in our view”, said Hong Leong Investment Bank, which reaffirmed its ‘buy’ rating with a higher target price (TP) of RM7.20. “We are particularly positive on TM’s cost optimisation measures, which [are] now yielding an impactful outcome.” Out of 22 analysts covering the stock, 18 have ‘buy’ calls, while two have ‘hold’ and two recommend to ‘sell’, according to Bloomberg. The median TP is RM6.68, a potential gain of about 11% from the current level. The stock has racked up an 8.5% gain in less than two months into the year, outperforming the rise in the telecommunications and media sector, thanks to robust earnings for recent quarters. TM reported last Friday that its 4QFY2023 net profit more than doubled to RM46.3 million from a year ago, thanks to tax credits and higher data revenue, as well as lower costs. The company booked a tax credit of RM46.3 million during the quarter, as opposed to tax expense of RM53.6 million. Revenue for the quarter, meanwhile, rose 5% year-on-year to RM3.12 billion from RM2.98 billion, mainly from an increase in data, internet and multimedia services, and TM surges to three-year high after above-view 4Q, analysts see further upside other telecommunications services. For FY2024, the company said it is targeting “low single-digit” growth in revenue and earnings before interest and tax of between RM2.1 billion and RM2.2 billion. The company is also planning for 14%- 18% capital expenditure as a percentage of revenue. “Despite the tepid guidance, we note that TM’s strong FCF (free cash flow) generation leaves ample headroom for increased dividends for the longer term,” said Maybank Investment Bank. The research firm reiterated its ‘buy’ call, with a TP of RM6.80. TM declared a second interim dividend and final dividend of 15.5 sen per share for a total of about RM594.9 million, bringing total dividend payout to 25 sen per share for FY2023. A minority of analysts, however, expect little further upside to TM’s share price from current levels, citing recent strong gains. The stock has climbed more than 20% gain in the last six months. UOB Kay Hian, which downgraded its rating to ‘hold’ from ‘buy’, noted that recent gains likely reflected the strong set of results, flagging a ‘muted outlook’ and elevated operational costs for FY2024. BY JASON NG theedgemalaysia.com Bernama State Science, Environment and Green Technology Committee chairman Teh Kok Lim said blasting activities are subject to strict conditions, covering areas such as blasting design, blaster qualifications, timing of explosions, restrictions on tremor parameters, and air blasts. BERNAMA
TUESDAY FEBRUARY 27, 2024 14 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (Feb 26): Automotive electronic parts manufacturer MCE Holdings Bhd is disposing of a piece of freehold land in Setia Alam, Selangor for RM43.69 million cash. MCE’s unit Vantage Realm Sdn Bhd entered into a conditional sale and purchase agreement with Mega First Corp Bhd’s indirect wholly owned unit Grant Ascent Sdn Bhd for the disposal, which has an estimated net pro forma gain of RM5.85 million. The land, measuring approximately 13,263.38 sq m, was purchased by MCE in 2014 from Bandar Setia Alam Sdn Bhd. The vacant land was specifically designated for the development of a medical centre and other ancillary buildings for medical related services. However, MCE has decided not to proceed with the development of the land, which was purchased by the group with the intention to diversify its core business into the provision of healthcare services. MCE intends to utilise the proceeds for working capital purposes. “The group will continue to focus on its existing core business in the automotive sectors as per its business strategies at this juncture,” it said in a filing with Bursa Malaysia on Monday. Barring any unforeseen circumstances, the proposed disposal is expected to be completed in the fourth quarter of 2024. MCE’s net profit in the first quarter ended Oct 31, 2023 (1QFY2024) jumped 39.4% to RM4.87 million from RM3.49 million a year ago, underpinned by heightened demand for the group’s products. Quarterly revenue rose 8.48% to RM41.27 million from RM38.56 million, primarily driven by higher sales in the automotive parts segment. Shares of MCE were up two sen or 1.15% to close at RM1.76 on Monday, with a market capitalisation of RM217.46 million. MCE to dispose of land in Setia Alam for RM44 mil cash KUALA LUMPUR (Feb 26): S&P Global Ratings said Axiata Group Bhd’s strategic review of its regional telco portfolio could weaken its portfolio diversification. In a statement last Friday, the rating agency said further loss of direct control over key subsidiaries’ cash flows could dent the telco’s earnings quality, despite ongoing efforts to strengthen its competitiveness in various markets. “We view Axiata’s portfolio diversification as a particularly key credit strength compared to its peers. “Should the review increase earnings concentration and diminish Axiata’s control of cash flows of its key subsidiaries, it could weigh on the company’s earnings quality and our assessment of its standalone credit profile (SACP),” it said. S&P said ongoing transactions under review include the merger of Sri Lankan subsidiary, Dialog Axiata PLC with Bharti Airtel Ltd’s Sri Lankan operations. It said Axiata also plans to seek a new strategic partner for Edotco Group Sdn Bhd, its tower subsidiary. “We expect this to become more likely because of Edotco’s plans to exit its Myanmar operations, which were a drag on equity raising,” it said. S&P said these transactions come amid Axiata’s (BBB/Stable/--) exit from its operations in Nepal, which had been contributing about 6% of the company’s earnings before interest, taxes, depreciation, and amortisation (Ebitda). It said the exit will reduce ongoing regulating uncertainties and tax disputes in the country. “The portfolio review could strengthen Axiata’s competitiveness in some of its operating markets but, in our view, it will be insufficient to offset the weakened diversification and control of its cash flows. “That said, the proposed merger in Sri Lanka will alleviate competitive pressure and strengthen Axiata’s position in the country as the largest mobile service provider. Infusion of new equity will also fund Edotco’s growth and reduce Axiata’s leverage,” it said. S&P expects the competitiveness of Axiata’s Indonesian operations to improve. It said the delayering of the Indonesia operations into serveco and fiberco will facilitate fixed mobile convergence in XL Axiata Tbk PT (serveco). The agency said this will enable service bundling and increase customer stickiness. Link Net Tbk PT (fiberco), with a new focus on wholesale and fiber rollout, could expand its service to other internet service providers, raising its earnings potential. “In our view, Axiata’s leverage will remain higher than historical levels of 2.5x over the next 24 months. “We estimate the company’s adjusted debt-to-Ebitda ratio to be about 2.9x-3.2x in 2024 and 2025, a similar level as about 3.1x in 2023. If leverage remains above 3x, it could weigh on Axiata’s SACP,” it said. S&P added that its base case has not considered potential proceeds and equity infusion from the ongoing transactions. “Axiata intends to keep its net debt-toEbitda ratio below 2.5x (based on its own calculation), from about 3.4x at end-2023. “Further depreciation of the Malaysian ringgit (which is down 7.3% against the US dollar in the past year) could hinder the company’s deleveraging efforts. “This is given 59% of company’s borrowings are denominated in US dollar as of end2023, of which 63% are unhedged,” it said. Portfolio review may weaken Axiata’s earnings mix, says S&P BY SURIN MURUGIAH theedgemalaysia.com BY EMIR ZAINUL theedgemalaysia.com More from brokers: HLIB downgrades Sports Toto, lowers target price to RM1.57 Buying interest in YTL Power has returned, says Rakuten Trade
TUESDAY FEBRUARY 27, 2024 15 THEEDGE CEO MORNING BRIEF Zaili. “With three components — retail, clubhouse and sales gallery — the complex is meant to serve the residents of Setia AlamImpian as well as the public.” The 2-storey LakePoint Central, which offers 28,038 sq ft of net lettable retail space, is currently 83% occupied by local tenants comprising F&B outlets (JomPa Café, RAWi Authentic Fusion Cuisine, The Gorpis Kafe and Frosted by Sheena). Other tenants include a wellness centre (DBC Physiotherapy), a grocer and anchor tenant (Urban Marketplace), hair and beauty salon (Adanis), fashion boutique (RHR Xcluseev) as well as an art gallery by UiTM (Crystal Art Gallery). “We collaborated with UiTM Shah Alam’s College of Creative Arts to establish an art gallery at LakePoint Central. This will allow them to establish their presence in line with the township’s theme of ‘Arts Inspired Living’ and also allow residents to commission painting and purchase artworks of various forms for their homes,” Zaili says. “The college will also help establish an art village at LakePoint Park, offering merchandise and art activities. Meanwhile, there are two available retail lots for lease at LakePoint Central. We are still looking for the right tenant mix,” he adds. The completion of LakePoint Central fills a gap and meets the demand for retail offerings within the township, says Zaili. “Before the completion of LakePoint Central and Impian Prisma (48 units of 2-storey shopoffices), residents of the township did not have many options in terms of retail outlets, especially F&B and grocers. Now, residents don’t have to travel out for their daily necessities.” Zaili: The township’s transformation is to cater to the current and future markets. We believe this will continue to position Setia AlamImpian as a highly sought after township in Shah Alam and the Klang Valley. S P Setia unlocks value at Setia AlamImpian with new LakePoint Complex S P Setia Bhd’s 1,235-acre Setia AlamImpian has many things going for it. Strategically located in Shah Alam, its homes are freehold with individual titles, and it is a well-planned development with seven arts-themed landscaped precincts — Performing Arts, Fine Arts, Musical Arts, Digital Arts, Cinematic Arts, Industrial Arts and Minimalist Arts. Launched in November 2006 by I&P Group Sdn Bhd as Alam Impian, Setia AlamImpian today continues to thrive and grow under S P Setia as its new flagship development, following the merger of the I&P Group with S P Setia in 2017. The appeal of the township is reflected in its latest projects. For instance, all 103 shopoffices at Impian Prisma 2 have been fully sold since they were launched in August 2022. Completion is expected in 2025. This follows the successful Impian Prisma, which comprises 48 shopoffices that are currently fully occupied. An ongoing project is Casablanca 2, which comprises 64 cluster homes, that has been 94% sold since its launch in September 2022, with handover scheduled for this year. Casablanca 3, comprising 60 units of cluster homes and 12 semidees, has been 60% taken up since its launch in June 2023. Completion is scheduled for November 2025. The township currently has over 3,500 completed residential properties and a population of more than 14,000. More recently, the township unveiled its brand new LakePoint Complex — comprising LakePoint Central (retail centre), LakePoint Club (clubhouse) and LakePoint Gallerie (sales gallery and office) next to and integrated with the new and improved LakePoint Park (31-acre park and lake) — complete with landscape and infrastructure enhancements. The developer expects the complex to attract visitors from local and neighbouring communities, and targets to receive monthly footfall of 10,000 to 12,000. According to S P Setia general manager Datuk Muhamad Zaili Muhammad Yusof, the new additions and enhancements are all part of a rebranding exercise that started in 2021, following the merger. “The township’s transformation is to cater to the current and future markets. We believe this will continue to position Setia AlamImpian as a highly sought after township in Shah Alam and the Klang Valley.” Reflecting the transformation of Setia AlamImpian, the township’s original tagline “Township of the Arts” has been changed to “Arts Inspired Living”. “This reflects our mission to position Setia AlamImpian as a desirable, wholesome township that is artistically pleasant for all; a place for people to call a sanctuary, a place for growth, a place where everything works, and a place for the creation of joyous moments,” says Zaili. LakePoint Complex eyes 15,000 visitors Situated within the Digital Arts commercial precinct, the components of the LakePoint Complex were completed in the second half of last year. The complex will be the township’s main hub, says The retail space also boasts an al fresco terrace with seating spaces that overlook the central park. “Apart from accommodating community events and activities — such as FitBeat Sunday, a poundfit workout activity that is currently held on two Sundays a month — this space offers a good view of the park’s musical fountain. There are three shows a day on Fridays, weekends and public holidays.” The exclusive LakePoint Club offers state-of-theart facilities for residents. “The purpose of introducing the clubhouse is to promote a healthy lifestyle among the residents in line with Setia AlamImpian’s value propositions and sustainable development goals (SDGs),” says Zaili. The facilities offered include four badminton courts, a futsal court, an Olympic-size infinity swimming pool, wading pool, sauna, dance studio, games room, a gym overlooking LakePoint Park and a grand ballroom that can accommodate up to 1,000 people for various functions and events. The badminton and futsal courts and the grand ballroom are open to the public but the other facilities are exclusive to residents. Seamlessly integrated with the LakePoint Complex, the scenic LakePoint Park — comprising a 14-acre lake and 17-acre park — is now open to visitors after its closure in mid-2018 for upgrading works. Apart from the musical fountain, other key attractions are a jogging and walking track, skate park, tricycle/bicycle park, children’s playground, the Expression Bridge and open amphitheatre. “We’ve reshaped and redesigned the park, turning it from a passive park into an active one, and incorporating art-themed features such as musical instruments and sculptures,” says Zaini. “We have also installed solar-powered lighting for the park so people can jog at night. This is in line with our ESG (environmental, social and governance) initiatives.” Upcoming developments S P Setia plans to offer a wider, more differentiated range of products at Setia AlamImpian. It will build a new phase of premium resort-style semidees and bungalows within the Cinematic Arts precinct. The 40 units of semidees are scheduled to be launched in 4Q2024 and the four individually designed bungalows will be launched in 2025. Other upcoming launches this year include that of Casablanca 4 (60 units of cluster homes, 10 semidees) and Ferrous 3 (101 units of 2-storey terraced houses) in June, and Hamlet (60 units of cluster homes) and Ferrous 4 (146 units of 2-storey terraced houses) in 3Q and 4Q respectively. Ongoing projects include Ferrous 2 (116 units of 2-storey terraced houses; 40% taken up) and Ferrous (136 units of 2-storey terraced homes; fully sold). Both are targeted for completion in 2025. About half of the township has been developed and S P Setia estimates that it will be fully completed by 2036 with a total of 20,000 residential units and a population of more than 80,000.
TUESDAY FEBRUARY 27, 2024 16 THEEDGE CEO MORNING BRIEF WORLD BEIJING (Feb 26): China firmly opposes the decisions of Britain, the European Union and the United States to impose sanctions on its companies for Russia-related reasons, its commerce ministry said on Monday. On Friday, the Biden administration announced new trade curbs on 93 entities from Russia, China, Turkey, the United Arab Emirates, Kyrgyzstan, India and South Korea for supporting Russia’s war effort in Ukraine. The EU had approved on Wednesday its own package of sweeping sanctions against Russia, including some against three Chinese firms and one Hong Kong-based company, while curbs announced by Britain on Thursday included sanctions on three Chinese electronics companies. “China will resolutely safeguard the legitimate rights and interests of Chinese enterprises,” the commerce ministry said in three statements on its website. The latest tranche of sanctions is designed to prevent firms around the world circumventing measures already adopted to keep Moscow from procuring military hardware or equipment needed to replenish its munitions and other military items. Saturday marked the second anniversary of Russia’s war in Ukraine, which began on Feb. 24, 2022. China warned the European Union and Britain the measures would have a “negative impact” on economic and trade ties, but did not make use of the phrase in its statement aimed at the United States. China hits back at US, EU, UK for Russia-related curbs on its companies MOSCOW (Feb 26): The Kremlin said on Monday that the idea of holding peace talks without Russia was ridiculous, after Ukrainian President Volodymyr Zelenskiy said he hoped to hold a spring summit in Switzerland to discuss his peace vision with Kyiv’s allies. Kremlin spokesman Dmitry Peskov told reporters: “We have repeatedly said that this is a strange format, to say the least, because certain peace plans are being implemented without the participation of Russia, which in itself is frivolous and even laughable.” Zelenskiy’s chief of staff, Andriy Yermak,said on Sunday, however, that a blueprint from the summit in Switzerland could be handed to Russia at a later date. “There can be a situation in which we together invite representatives of the Russian Federation, where they will be presented with the plan in case whoever is representing the aggressor country at that time will want to genuinely end this war and return to a just peace,” Yermak said. After two years of war, Russia holds just under a fifth of Ukraine’s internationally recognised territory. Moscow has repeatedly said it is open to talks, but that these must recognise the “new realities on the ground”. Ukraine demands the restoration of its territorial integrity and a full withdrawal of Russian forces. Reuters reported exclusively this month that Putin sent signals to the United States in 2023 in public and privately through intermediaries, including through Moscow’s Arab partners in the Middle East, that he was ready to consider a ceasefire in Ukraine that would freeze the conflict at the current lines. A US source denied there had been any official contact and said Washington would not engage in talks that did not involve Ukraine. Read also: Ukraine floats possibility of inviting Russia to peace summit Zelenskiy says 31,000 troops killed as Ukraine seeks US aid decision within month BEIJING (Feb 26): China’s ministry of industry and information technology (MIIT) unveiled a plan on Monday that aims to improve data security in China’s industrial sector and effectively contain “major risks” by the end of 2026. The plan comes at a time when China and the US both frequently accuse each other of cyber attacks and industrial espionage. Russia says idea of Ukraine peace talks without Moscow is absurd China to increase protections against hacking for key industries Reuters BY EDUARDO BAPTISTA Reuters Reuters Reuters reported last year that Chinese government entities and stateowned enterprises were accelerating efforts to replace Western-made hardware and software with domestic alternatives, partly due to fears of hacking from foreign adversaries. “In response to frequent risk scenarios such as ransomware attacks, vulnerability backdoors, illegal operations by personnel, and uncontrolled remote operation and maintenance, we will strengthen risk self-examination and self-correction, and adopt precise management and protective measures,” according to the plan, published on MIIT’s website. Protective measures, including emergency drills simulating ransomware attacks, must be applied to over 45,000 companies in China’s industrial sector by 2026 year-end, covering at least the top 10% in terms of revenue in every Chinese province. BLOOMBERG
TUESDAY FEBRUARY 27, 2024 17 THEEDGE CEO MORNING BRIEF WORLD (Feb 26): Traders hoping to profit from large swings in the dollar-yen may be in for a rude awakening as the currency pair risks being trapped between rising intervention odds and US interest-rate bets. One-month implied volatility on the dollar-yen, a measure of its expected movement over the period, may fall to its lowest level since March 2022, strategists said. Fueling that decline is the pair’s narrowing daily trading range which is due to duelling forces capping moves both ways. “Dollar-yen appears to be caught between the Ministry of Finance threatening intervention on the topside, while the Bank of Japan talking down the chance of rate hikes is supporting the exchange rate on the downside,” said David Forrester, a senior foreign-exchange strategist at Credit Agricole CIB in Singapore. The currency pair’s one-month implied volatility rose as high as 8.14% last week as investors factored in the BOJ’s monetary policy decision on March 19. That rebound may end up being short-lived. Forrester said the paring-back of Federal Reserve rate expectations following strong US inflation data is also limiting the downside to dollar-yen. The largest daily range last week was just ¥0.75, compared with over two yen in early January. Japan’s currency is trading at around ¥150.50 against the dollar in Asia Monday. With the currency pair looking vulnerable to becoming trapped at around ¥150, option traders will be watching to see if Japan’s inflation data on Feb 27 can be the catalyst for it to break out of a narrow range. BOJ governor Kazuo Ueda last Yen volatility set to fall as duelling forces curb trading range (Feb 26): Stock markets have room to extend gains beyond record highs if the economic outlook remains upbeat, and if investors pour money into recent laggards, according to Goldman Sachs Group Inc strategists. The S&P 500’s run to an all-time peak has left investor positioning “extremely” concentrated in the so-called Magnificent Seven, the team led by Cecilia Mariotti wrote in a note. While that does create the risk of a pullback, there’s also “space for bullish sentiment and positioning to be further supported, especially if we start seeing a more meaningful rotation out of cash and into risky assets and laggards within equities”, the strategists wrote. US and European stocks have hit record highs this year, as investors bet that central banks would start cutting interest rates even though the economy remains resilient. Most of those gains have been driven by technology behemoths. In the US, the performance of the benchmark S&P 500 is hovering near 2009-highs relative to the equal-weighted index, which dilutes the impact of the tech megacaps. Other strategists including Michael Hartnett at Bank of America Corp also see more support for equity markets from the buzz around artificial intelligence and confidence about economic growth. JPMorgan Chase & Co’s Marko Kolanovic is an outlier, warning about the risks to stocks from 1970s-style stagflation. Overall, strategists tracked by Bloomberg expect the S&P 500 to end the year around 4,897 points on average — implying a drop of about 4% from the current level. Goldman strategists see scope for stock rally to broaden BY SAGARIKA JAISINGHANI Bloomberg BY DAVID FINNERTY Bloomberg week signaled continued confidence over the prospects of achieving stable inflation, which some analysts said was an indicator of policy change. If the yen doesn’t break out of its range, then implied volatility for the dollar-yen appears likely to continue its slide. “Our base case is for one-month volatility to drift lower to the 6.25-6.75 region in the coming weeks,” said Ruchir Sharma, global head of FX option trading at Nomura International Plc. This is due not only to forces keeping the currency pair rangebound, but also trading factors that may come into play, he said. Some clients have put on option positions that benefit from a slow move higher in the currency pair in the coming weeks, London-based Sharma said. “Dealers would need to sell dollar-yen volatility to hedge themselves to compensate for the increase in the value of these trades, further depressing volatility,” he said. An example of such a trade would be a purchase of call option contract with a reverse knock-out condition included. In this scenario the value of the call option increases as the dollar-yen rises, with the caveat that if the currency pair rises high enough to hit the knock-out level before the contract expires, it becomes worthless. REUTERS
TUESDAY FEBRUARY 27, 2024 18 THEEDGE CEO MORNING BRIEF WORLD (Feb 26): Warren Buffett’s favourite Japanese trading houses climbed after he said in his letter to investors the companies follow shareholder-friendly policies that are “superior” to those practised in the US. Marubeni Corp gained the most in four months, rising as much as 5.6% on Monday. The other four trading companies that Berkshire Hathaway Inc holds — Mitsubishi Corp, Itochu Corp, Mitsui & Co, and Sumitomo Corp — also rose, outperforming the broader market. “Buffett used a lot of space in his letter to talk about Japanese trading firms,” which boosted investor confidence in the companies, said Mineo Bito, president of Bito Financial Services Co in Tokyo. The US investor took up about a page of his 16-page annual letter to shareholders to discuss the Japanese firms. Buffett endorses Japan trading firms in letter, boosting shares BENGALURU (Feb 26): Warren Buffett-led Berkshire Hathaway inched closer to a US$1 trillion (RM4.78 trillion) market value on Monday, a milestone that would put it among a rarefied list of American businesses, after it posted its second straight record annual profit. The 93-year-old investing legend assured shareholders that the investment conglomerate, currently the biggest financial firm by market capitalisation, was ‘built to last’. Berkshire’s Class B shares, which carry higher voting rights and whose value was 1/1,500th of Class A shares, gained 2% before the bell and were last trading at US$425.61. In his annual letter to shareholders, Buffett, however, toned down expectations for share price, saying it did not have many lucrative investment opportunities left. Buffett told investors that Berkshire would perform slightly better than the “average American corporation”, but anything beyond that is “wishful thinking”, even as it had a cash pile of US$167.6 billion. Investors closely watch Berkshire as its results are often seen as a bellwether for the US economy. “There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others.... All in all, we have no possibility of eye-popping performance,” Buffett wrote. Berkshire’s annual operating profit climbed 21% to US$37.4 billion on improved underwriting and higher investment income from the insurance segment. Operating profit for the fourth quarter also came in ahead of analysts’ expectations. ‘Built to last’ Berkshire nears US$1 tril valuation after record profit BY NIKET NISHANT & MANYA SAINI Reuters BY AYA WAGATSUMA Bloomberg There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others.” “While this reads as if Buffett is saying that global equities are fairly valued, the truth is more nuanced than that,” Nicholas Colas, co-founder of DataTrek Research, wrote in a note. “Berkshire is a huge business and needs to take substantial positions in large companies in order to ‘move the needle’. Markets are generally good at pricing those sorts of stocks, hence the lack of opportunities.” Buffett also mourned the passing of his longtime second-in-command Charlie Munger in his annual letter, while assuring investors that vice chairman and designated successor Greg Abel was “ready to be CEO of Berkshire tomorrow”. Buffett will likely increase his stakes in them as they’re still undervalued and there’s still room before reaching the maximum 9.9% stake limit that Berkshire has declared, said Bito, who has attended US insurer’s shareholder meetings since 2014. The gains come after the Nikkei 225 Stock Average reached an all-time high last week, driven by the weaker yen, a global tech rally and improving shareholder returns. Buffett’s renewed endorsement last year also supported overall confidence in the market. Japanese trading houses have surged to record highs since Buffett said in April that he would be raising his holdings in them. Mitsubishi, Japan’s biggest trading house, has surged about 111% over the past year, while Mitsui & Co has jumped more than 70%. Berkshire’s year-end unrealised gain in Japan’s five largest trading houses was US$8 billion (RM38.2 billion), it said in its earnings statement. It now owns about 9% of each of the five trading houses with the total cost coming to ¥1.6 trillion, it said. REUTERS
TUESDAY FEBRUARY 27, 2024 19 THEEDGE CEO MORNING BRIEF WORLD (Feb 26): Alibaba Group Holding Ltd disclosed a wider web of Chinese government stakes in its business units than previously known, following an inquiry from the US Securities and Exchange Commission. The Hangzhou-based e-commerce pioneer said in filings in the US and Hong Kong over the weekend that more than a dozen of its entities are partially owned by Chinese state-owned enterprises or foreign sovereign wealth funds. In the notice, the company said the disclosures were made “in response to certain comments from the staff of the SEC” as an amendment to its earlier filing from July. The filings come as China’s ruling Communist Party said this month that it will play a bigger role in steering the country’s technology and science development. Beijing’s tightening grip over its tech companies in recent years has intensified investor concern and the potential for greater scrutiny in the US. Chinese state-owned enterprises had shares in six of Alibaba’s direct-sales businesses, which contributed less than 6% of its total revenue in the fiscal year to March 2023. Five of those stakes were below 10% and the other was below 30%, according to the filings. The company also said that state-owned companies took ownership in several business entities in sports, health, logistics, and local consumer services. In addition, Alibaba disclosed small stakes in some units by sovereign wealth funds from Singapore, Malaysia, the United Arab Emirates and Qatar. Alibaba discloses state ownership in more than 12 business units Alibaba did not identify the specific entities in its filing. Its corporate structure is highly complex and undergoing an overhaul as the company considers splitting off several tentpole business lines into standalone companies. A representative for the company did not immediately respond to a request for comment. The latest filing adds to the so-called “golden shares” — nominal stakes of typically 1% — that Chinese government entities took last year in units from Chinese tech leaders including Alibaba and Tencent Holdings Ltd. This share structure in theory allows the government to nominate directors or sway key company decisions, a move seen as granting Beijing another lever to influence players in the world’s largest internet arena. Alibaba has struggled over the past year to revamp its vast e-commerce, logistics and cloud empire, after setbacks in its ambitious restructuring project. Chief executive Officer Eddie Wu has now taken direct control of its core businesses, in a bid to win back users in the face of rising competition and regulatory risks domestically and abroad. BY SARAH ZHENG Bloomberg Are you one of the best financial service leaders? Make sure you’re recognized with a 2024 MDRT Culture of Excellence Award. Read also: Ant outbids Citadel Securities for Credit Suisse’s China unit BLOOMBERG
TUESDAY FEBRUARY 27, 2024 20 THEEDGE CEO MORNING BRIEF WORLD JAKARTA (Feb 26): Indonesia sees its annual gross domestic product growth for 2025 in a range of 5.3% to 5.6% and is aiming for a fiscal deficit of 2.48% to 2.8% of GDP, its planning minister said on Monday. Suharso Monoarfa spoke to reporters after discussing the 2025 state budget plans with President Joko Widodo, who finishes his second and final term later this year. The president told his cabinet earlier that its 2025 state budget proposal must adjust to the programmes of the new president, who will take office in October. Official data earlier this month showed Indonesia’s annual GDP rate fell slightly to 5.05% last year, from the 5.3% recorded in 2022, as falling commodity prices hit exports and tight monetary policy dampened demand. The government has said it expects the growth rate to pick up to 5.2% in 2024, hoping spending for an election on Feb 14 and a return of private investment once political uncertainty eases will boost GDP. Read also: Indonesia to boost rice import quota on outlook for lower crop Indonesia sees 2025 annual GDP growth at 5.3%-5.6%, says planning minister (Feb 26): Indonesia plans to propose a wider budget deficit for next year to fund new policies by the incoming president, which may include Prabowo Subianto’s free lunch programme. The fiscal gap may rise to 2.45-2.8% of gross domestic product (GDP) in 2025, Finance Minister Sri Mulyani Indrawati told reporters after a cabinet meeting on Monday. This year’s target was 2.29%. Meanwhile, economic growth could reach 5.3-5.6% next year, from 5.2% in 2024. The deficit estimate has accounted for priority projects like the free lunch and milk for students across the nation, said Indrawati. That programme is a key campaign promise from Prabowo, who’s poised to succeed President Joko Widodo after winning nearly 60% of votes in unofficial quick counts at the Feb 14 election. The official results should be announced by March 20. Prabowo’s free lunch plan has raised concerns over Indonesia’s fiscal health, with Fitch Ratings warning that the programme could cost around 2% of GDP and a material increase in the debt burden could lead to a credit rating downgrade. The government will ensure a sustainable budget that can support the new policies, Indrawati said on Monday. The free lunch programme will be implemented gradually, starting with a pilot project in 2025, said Coordinating Minister for Economic Affairs Airlangga Hartarto after the cabinet meeting. The government will propose the budget deficit and growth forecasts for parliament discussion as a basis for drafting the 2025 state budget. JAKARTA (Feb 26): The biggest party in Indonesia’s parliament is seeking a legislative investigation into alleged violations around this month’s presidential election and plans also to file a case with a top court, a senior party official said on Monday. The Indonesian Democratic Party of Struggle (PDIP) backed Ganjar Pranowo for the presidency, who finished a distant third behind Defence Minister Prabowo Subianto, the clear winner of the Feb 14 election according to unofficial vote tallies and an ongoing preliminary count by the poll body. “We found there was abuse of power, ranging from legal aspects to the use of state facilities,” PDIP Secretary General Hasto Kristiyanto told Reuters, without providing specifics or evidence to support the allegation. The presidential palace did not immediately respond to a request for comment on the allegations or the planned investigation. Despite various accusations by parties, none have provided specifics or details of the scale of the alleged violations. Though the Constitutional Court typically handles election disputes, Indonesia’s parliament has the power to investigate government policy or implementation of certain regulations and can examine the conduct of public officials, including the president. Hasto said PDIP and other backers of Ganjar would file a case over alleged electoral irregularities with the Constitutional Court, but gave no timeframe. He said the investigation aimed to safeguard democracy. “If we did not do this comprehensive correction, then what’s the point of having an election in the future?” he said, adding PDIP did not intend to impeach President Joko Widodo, better known as Jokowi. Read the full story Indonesia to propose wider budget deficit to fund free lunches Indonesia’s largest party eyes probe into alleged election irregularities BY CHANDRA ASMARA & GRACE SIHOMBING Bloomberg BY ANANDA TERESIA Reuters Reuters
TUESDAY FEBRUARY 27, 2024 21 THEEDGE CEO MORNING BRIEF WORLD BRUSSELS (Feb 26): The European Union (EU) Council on Monday adopted rules to make instant payments in the euro currency fully available round-theclock in a move it expected to help European payments companies compete against US firms Visa and Mastercard. The new regulation will allow customers to transfer euro-denominated money within 10 seconds at any time, including outside business hours, not only within the same country but also to another EU member state, the EU Council said. Currently, payments using existing cards and deposits can take several business days. EU adopts euro instant payments rules to take on Visa, Mastercard ABU DHABI (Feb 26): Trade ministers from around the world gathered in Abu Dhabi on Monday for a World Trade Organization (WTO) meeting that aims to set new global commerce rules, but its chief Ngozi Okonjo-Iweala and delegates sought to curb expectations. The almost 30-year-old global watchdog, whose rules underpin 75% of global commerce, tries to strike deals by consensus, but such efforts are becoming more difficult amid signs that the global economy is fragmenting into separate blocs. “Let’s not pretend that any of this will be easy,” Okonjo-Iweala said in her opening speech, describing the atmosphere as “tougher” than the WTO’s last 2022 meeting, citing wars, tensions and elections and signs that trade growth will undershoot the organisation’s own estimate. She called on ministers to “roll up their sleeves” and complete negotiations, but seemed to rule out any deal in Abu Dhabi on reforming the body’s mothballed appeals court. “We are not there yet,” she said. Thani Al Zeyoudi, conference chair and UAE’s foreign trade minister said in an opening address: “The multilateral trading system with the WTO at its core is at a critical juncture; it is confronting many challenges.” “I now ask all of you to show the world that the WTO is alive and well and fully capable to deliver results that matter to people everywhere,” he said. Some delegates privately voiced concerns that India’s trade minister, seen as the main holdout on some key issues including agriculture, was absent on Monday although New Delhi said he would be in Abu Dhabi on Tuesday. WTO meeting seeks modest outcomes, with global trade at ‘critical juncture’ Cocoa jumps to fresh record on persistent supply fears BY EMMA FARGE, RACHNA UPPAL & ALEXANDER CORNWELL Reuters BY ÁINE QUINN Bloomberg BY SUDIP KAR-GUPTA Reuters (Feb 26): Cocoa’s rally shows no sign of slowing, with prices surging to a fresh record in New York on mounting fears about supply shortages. Futures climbed as much as 4.6% on Monday, after capping the biggest weekly jump since 1999. Prices have soared as drought and disease ravaged crops in key West African producers, threatening to raise costs for chocolate makers that risk being passed on to consumers. There are persistent signs of tightening supplies from key exporters. Bean arrivals at ports for shipment in top grower Ivory Coast are running about a third behind last year’s pace, while Nigerian exports were down in January. “West African production issues have the cocoa market looking at a sizeable global production deficit this season that continues to fuel cocoa’s upsurge,” The Hightower Report said late Friday. The International Cocoa Organization said that supply concerns could further deepen as enforcement of European Union regulations on deforestation nears. REUTERS REUTERS REUTERS The Council added that the new rule would factor in countries outside of the eurozone economic bloc. “The new rules will improve the strategic autonomy of the European economic and financial sector as they will help reduce any excessive reliance on third-country financial institutions and infrastructures,” the EU Council said in a statement. The EU has been working on reforms to prise open a payments market long dominated by banks and US firms Visa and Mastercard, which are now being challenged by fintechs that offer rival services using data from customers’ bank accounts. Read also: Nickel faces existential moment with half of mines unprofitable
TUESDAY FEBRUARY 27, 2024 22 THEEDGE CEO MORNING BRIEF WORLD Micron starts mass production of its memory chips for use in Nvidia’s AI semiconductors Microsoft strikes deal with France’s Mistral, OpenAI rival Cathie Wood sells into Nvidia frenzy again, cutting TSMC stake BY MARK BERGEN Bloomberg BY ABHISHEK VISHNOI Bloomberg BY SAMRHITHA ARUNASALAM Reuters (Feb 26): Microsoft Corp, under mounting political scrutiny globally for its deep ties to OpenAI, has cut a deal with the startup’s primary competition in Europe. On Monday, the French company Mistral AI announced a “strategic partnership” with Microsoft that includes making the startup’s latest artificial intelligence (AI) models available to customers of Microsoft’s Azure cloud. Mistral develops algorithmic models similar to those from OpenAI used for chatbots and other AI services, but Mistral models are open-source and shared openly. With the announcement, the company also unveiled a model, called Mistral Large, that it says has “unique reasoning capacities” and is fluent in five languages. Microsoft said it has made a small investment in the French firm but declined to say how much. In AI, Microsoft has worked primarily with OpenAI, investing roughly US$13 billion (RM62.1 billion) in the California startup. Microsoft’s ties to OpenAI, as its chief financial backer and business partner, is the subject of antitrust probes in the European Union and the UK. Microsoft has said that the companies operate independently. Earlier in February, Microsoft announced a €3.2 billion (RM16.57 billion) commitment for data centres in Germany, part of a broader investment push across Europe. Mistral, formed in early 2023 by former engineers at Google’s DeepMind and Meta Platforms Inc, has positioned itself as a plucky European champion challenging US dominance in the field. In December, the startup closed a US$415 million round from a range of investors, including Salesforce Inc and Nvidia Corp. The financing valued the firm at about US$2 billion. BENGALURU (Feb 26): Micron Technology has started mass production of its high-bandwidth memory semiconductors for use in Nvidia’s latest chip for artificial intelligence (AI), sending its shares up more than 4% before the bell on Monday. The HBM3E (High Bandwidth Memory 3E) will consume 30% less power than rival offerings, Micron said, and could help tap into soaring demand for chips that power generative AI applications. Nvidia will use the chip in its next-generation H200 graphic processing units, (Feb 26): Cathie Wood sold shares in Taiwan Semiconductor Manufacturing Corp (TSMC) for the first time in more than two years, adding to its moves to cut exposure to the chipmaker’s key customer Nvidia Corp. Ark Autonomous Technology and Robotics Exchange Traded Fund (ETF) sold 8,599 American depository receipts of Taiwan’s largest company last Friday in its first sale of the stock since the end of 2021, Ark Investment Management LLC data compiled by Bloomberg showed. The same ETF sold 2,362 shares in Nvidia on the same day. Wood is trimming her holdings in the global chip bellwethers at a time the artificial intelligence (AI) frenzy intensifies, with Nvidia’s stellar earnings powering global markets to new heights. Nvidia is up 59% year-to-date, and TSMC’s US-traded shares have soared 25%. BLOOMBERG BLOOMBERG expected to start shipping in the second quarter and overtake the current H100 chip that has powered a massive surge in revenue at the chip designer. Demand for high-bandwidth memory (HBM) chips, a market led by Nvidia supplier SK Hynix, for use in AI has also raised investor hopes that Micron would be able to weather a slow recovery in its other markets. HBM is one of Micron’s most profitable products, in part because of the technical complexity involved in its construction. The company had previously said it expects “several hundred million” dollars of HBM revenue in fiscal 2024 and continued growth in 2025. Ark funds purchased shares in TSMC multiple times in 2023, and still collectively hold about 221,848 shares in the company, according to data compiled by Bloomberg. Wood was one of the most prominent voices predicting AI would be a game changer. Despite that, She sold Nvidia shares throughout last year, betting on growth potential in less talked about software companies such as UiPath Inc and Twilio Inc. The autonomous ETF, which focuses on companies relevant to industrial innovation, has missed out on the rally that has given Nvidia a near US$2 trillion (RM9.55 trillion) valuation, surpassing Amazon.com Inc and Alphabet Inc. Both TSMC and Nvidia have dropped out of the fund’s top 10 holdings Read also: Chipmaker Broadcom sells remote-access unit to KKR in US$4 bil deal
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TUESDAY FEBRUARY 27, 2024 24 THEEDGE CEO MORNING BRIEF WORLD (Feb 26): Goldman Sachs Group Inc has clinched US$1 billion (RM4.8 billion) from Mubadala Investment Co to scour for more private credit deals in Asia. The Abu Dhabi sovereign wealth fund and Goldman’s asset-management arm struck a partnership to invest alongside each other in the Asia-Pacific region, with a particular focus on India. The pact follows a similar mandate the New York-based firm received from the Ontario Municipal Employees Retirement System in September. “Some of the investors might be underpenetrated across private credit in general and they are looking at getting more exposure across this asset class,” James Reynolds, the head of direct lending at Goldman’s money management unit, said in an interview. “That’s where partnering with these powerful institutions creates a win-win.” The US$1.7 trillion private credit market has more than doubled in size over the past five years as investors flocked to the asset class seeking higher returns. It’s quickly established itself as a permanent investment bucket for pension funds, endowments and sovereign wealth funds and become a major source of funding for companies and private equity firms. For years, investors across the Middle East showed little interest in private debt: the asset class offered yields that were too low for their return targets. Yet higher interest rates and the market’s overall growth have recently led to a shift in sentiment. Institutions like Mubadala and the Abu Dhabi Investment Authority have struck partnerships to strengthen their presence in the market and managers including Blue Owl Capital Inc and Hayfin Capital Management have expanded their presence in the region to drum up business. While North America and Europe have gotten crowded with dozens of private credit firms looking to lend money directly to companies — mostly in the context of leveraged buyouts — the market is significantly less developed in Asia Pacific. Goldman is among the few private credit titans making a big push into the region. Som Krishna helps run the asset management unit’s credit business in Asia. “What these markets need is a blossoming, growing private equity industry,” Reynolds said. “We want to partner up with investors who want to have Asia exposure and they want to go with a platform that has experience and track record.” Private credit tie-ups have been on an upswing in the Middle East over the past year. Barclays is pursuing a partnership with AGL Credit Management with anchor capital from the Abu Dhabi Investment Authority, while Mubadala has already struck deals with Ares Management Corp and Blue Owl. Mubadala, which has around US$300 billion in assets under management and is one of Abu Dhabi’s three main sovereign wealth funds, is looking to double its exposure to Asia by 2030 to capitalise on faster-growing economies and diversify its investment portfolio. Goldman oversees about US$110 billion in private-credit assets and has outlined plans to double that in the coming years. In pursuit of that target, the firm recently tapped Greg Olafson as its new global head of private credit and elevated Reynolds to his current role. Goldman strikes US$1 bil private credit deal with Mubadala (Feb 26): A Singapore remittance company is hitting back against the city-state’s financial regulator, disputing its recounting of events amid a fund-freeze scandal and denying allegations of suspected fraudulent trading. Samlit Moneychanger Pte categorically rejects that it carried on any business for any fraudulent purpose and “any claims to such effect are entirely false and or misconceived,” the firm said in an emailed statement to Bloomberg News, re-iterating an earlier denial after the Monetary Authority of Singapore (MAS) and police last week jointly said they were investigating the firm and two of its managers. Samlit and its director have no unusual transfer activity in any bank account and all transactions are in accordance with legislations of Singapore, it said, adding that cases where customers have complained about their money being frozen in China “are totally extraneous developments and totally beyond the remittance companies’ control.” The company is among several remittance firms that drew hundreds of customer complaints after fund transfers to China were frozen by local authorities. China last month vowed to step up cooperation with Singapore to crack down on cross-border money laundering crimes, highlighting its concerns about illicit flows in the region. Samlit told the regulator on Feb 20 that it planned to surrender its payments services licence and discontinue its business. The company said a MAS probe on its premises will complete on Feb 27 and its last day of operations as a MAS licence holder is Feb 29. Read also: Great Eastern reports annual earnings of S$774.6 mil, up 27% Singapore remittance firm hits back at MAS, denies fraud BY CHANYAPORN CHANJAROEN & JOSH XIAO Bloomberg BY SRIDHAR NATARAJAN & LISA LEE Bloomberg REUTERS
TUESDAY FEBRUARY 27, 2024 25 THEEDGE CEO MORNING BRIEF WORLD LONDON (Feb 26): Europe’s automakers and their already-stretched suppliers face a tough year as they race to cut costs for electric models to counter leaner Chinese rivals which are bringing cheaper vehicles to challenge them on their home turf. A big question is how much more Europe’s automakers can squeeze out of suppliers that have already started laying off workers, with many smaller companies hard hit by supply chain issues during the pandemic. The difference between Europe’s legacy automakers and more EV-focused Chinese manufacturers will be on stark display this week at the Geneva car show, which is returning after a four-year hiatus due to the pandemic. The only major companies holding media events are France’s Renault, and China’s SAIC and BYD — two of a number of the country’s automakers that have set their sights on Europe. Renault is launching its electric R5 and SAIC’s MG brand will unveil its M3 hybrid. Meanwhile, BYD’s Seal sedan is shortlisted for the Car of the Year award. If it wins, it would be the first Chinese model to get the prestigious award. “They really are like chalk and cheese,” Nick Parker, a partner and managing director at consulting firm AlixPartners, said of the legacy European automakers and their Chinese rivals. Unlike European automakers that are reliant on external suppliers with separate Chasing those rivals means European automakers’ profit margins could be “heavily challenged” moving forward because there is only so much they can squeeze out of external suppliers, AlixPartners’ Parker said. The challenge has been made more difficult by a slower-than-expected shift to EVs, leaving legacy automakers stuck with their dual supply chains. Data this week showed EU fully-electric car sales in January fell 42.3% from December. Both Renault and Stellantis have stressed their EV cost-cutting efforts this month while Mercedes toned down expectations for EV demand and said it will update its traditional lineup well into the next decade. Stellantis CEO Carlos Tavares has gone further, telling suppliers that with 85% of EV costs related to purchased materials, they need to bear a proportionate burden in reducing costs. “I am translating that reality to my partners: If you don’t do your part of the job, then you exclude yourself,” he said. Nickel and aluminium prices have also risen this week as Western countries expanded sanctions lists against Moscow, highlighting the lingering risks to raw materials prices even though there was no mention of the two metals. Read the full story Facing Chinese EV rivals, Europe’s automakers squeeze suppliers on costs BYD’s new US$233,450 EV supercar to rival Ferrari, Lamborghini BY NICK CAREY Reuters BY DANNY LEE Bloomberg REUTERS supply chains for fossil-fuel and electric, their Chinese rivals are highly vertically integrated, producing almost everything in-house and keeping costs down. That helps them undercut their European rivals. In Britain, BYD’s electric Dolphin hatchback starts at £25,490 (RM154,313), about 27% less than Volkswagen’s equivalent ID.3 model. Tesla works in the same way. (Feb 26): BYD Co debuted its most expensive car on Sunday, a 1.68 million yuan (RM1.1 million) high-performance fully-electric supercar pitted against luxury gas-guzzling options offered by rivals such as Ferrari NV and Lamborghini. The Yangwang U9 will initially be exclusively for the China market, the company said at a live-streamed event in Shanghai. The car can hit 100km/h (62mph) in 2.36 seconds and reach a top speed of 309.19km/h, it said. BYD became the world’s biggest EV seller — overtaking Tesla — in the last quarter of 2023. While it is better known for making affordable EVs, the company markets its luxury models under the Yangwang and Fang Cheng Bao brands. With a post-Lunar New Year price war looming in China, the Shenzhen-based giant is betting there remains a market for high-end products which deliver better margins. Other pricey EVs under the Yangwang brand are due to launch later this year in China, including a luxury sedan that will cost around one million yuan. Yangwang started delivering cars in late November. It has one production model so far, a luxury sports utility vehicle known as the U8 which costs 1.1 million yuan. The company has delivered 3,653 units as of the end of January. BYD shares jumped as much as 4.7% in Hong Kong on Monday, after chairman Wang Chuanfu proposed doubling a buyback of its China-traded shares to 400 million yuan. The company said the move could boost investor confidence, and stabilize and enhance the company’s value. The automaker’s Hong Kong-listed shares have fallen 12.0% this year as investors punish EV stocks over concerns sagging demand is forcing companies to cut prices, and impact margins. The company is rolling out refreshes of its existing line-up using the tagline “electricity is cheaper than oil,” cutting prices as well. Morgan Stanley said in a Feb. 19 note that the move is likely targeting combustion engine brands and models including Nissan Motor Co and Toyota Motor Corp. Separately, BYD’s first EV-carrying ship docked in Vlissingen, in the Netherlands, last week, concluding an approximate six-week journey from China carrying the company’s newest exports to the BYD Yangwang U9 European continent. BLOOMBERG
TUESDAY FEBRUARY 27, 2024 26 THEEDGE CEO MORNING BRIEF WORLD Baltic Exchange shipping updates A weekly round-up of tanker and dry bulk market (Feb 23, 2024) CAPESIZE Throughout the week, the capes witnessed a notable increase in activity after a slow start. This uptick is evidenced by the BCI 5TC, which commenced at US$20,378 on Monday, experienced a slight dip on Tuesday, and rose to US$26,079 by Friday’s close. Early in the week there were reports in the Pacific of weather factors that could potentially cause delays. Strong winds and dense fog forced the closure of several ports in China. Additionally, attention was drawn to a tropical cyclone expected to move west across the Kimberley region in Western Australia, prompting mining companies to monitor the situation closely and leading to reduced activity on C5. However, by mid-week, the level of activity in both the Atlantic and Pacific picked up as well as the market. The Atlantic was extremely busy, particularly from South Brazil and West Africa to the Far East with several fixtures being concluded on C3, initially there were reports of US$24 being fixed, followed by US$24.75, then on Thursday reports of US$25.75, resulting in a 1.73 increase on the C3 index from Tuesday to Thursday, which published at US$25.65, today the C3 index has risen by 0.53 to US$26.180. In the Pacific all three major miners were active towards the end of the week, brokers observed a slight tightening in tonnage availability against a healthy cargo list, resulting in fixtures on C5 moving up quickly from US$9.50 levels to US$10.50 and as the week draws to a close there have been reports of low US$11.00s being concluded, with the C5 index rising by 0.815 to US$11.205. All in all, it has been a very positive end to the week. PANAMAX It returned a week of steady declines for the Panamax market. With the Atlantic basin providing a heavy ballaster list and increased tonnage count, resistance proved to be mostly scarce. This resulted in charterers driving down bids, noticeably for the few trans-Atlantic runs, whereas from South America the nearby dates remained heavily discounted, an 82,000-dwt delivery aps load EC South America early March dates agreeing to US$17,000 + US$700,000 for a trip redelivery Singapore-Japan. Asia bucking the trend for the first part of the week returned decent levels of activity culminating in firmer rates only to falter a little as the week ended with several deals fixing and failing mid-week and we end the week with a mostly flat outlook with split views and the bid/offer spread widening. NoPac rounds initially concluding closer to US$16,000 were now mean priced at around the US$15,000 mark. Period activity limited, the highlight being an 82,000-dwt delivery China fixed basis one year at US$18,000. ULTRAMAX/SUPRAMAX Rather mixed fortunes for the sector over the past week. The Atlantic was described as positional by many as limited fresh enquiry was seen from the US Gulf and Continent – Mediterranean regions seeing an easing of rates. However, from the South Atlantic demand remained which kept rates relatively stable. By contrast a good amount of fresh enquiry was seen in both the Indian Ocean and Asia leading to stronger rates being achievable. In the Atlantic, a 61,000- dwt fixed a trip from West Africa to China with iron ore in the upper US$20,000s. Whilst another 61,000-dwt fixed a trip from the Continent to the East Mediterranean at US$18,000. From Asia, a 54,000-dwt fixed from Singapore for a trip via Indonesia to China at US$16,000. Whilst a 57,000- dwt open Inchon fixed a round voyage via Australia in the mid US$11,000s. In the Indian Ocean, a 64,000-dwt fixed a tripe delivery Port Elizabeth redelivery China at US$26,000 plus US$260,000 ballast bonus. HANDYSIZE Gains were seen on the BHSI this week mainly led by the resurgence in the Pacific with levels of fresh enquiry improving across Australia, Indonesia, China and NoPac, a 33,000-dwt opening in Fancheng was fixed via Vietnam with redelivery Singapore-Japan with an intended cargo of cement at US$6,500 whilst a 32,000-dwt opening in Japan was fixed for a round trip via Nopac at US$10,000. Period interest also remained with a 33,000-dwt opening in China linked to fixing for four to six months at US$11,550, whilst a 28,000-dwt opening in WC India fixed for multiple legs at US$10,000. The Continent remained active with a 37,000-dwt opening in Immingham fixing via Murmansk to Brazil with an intended cargo of fertilizer at US$17,000. With recent reductions to the draft in the River Plate Charterers are now having to utilize larger vessels to lift the handy stems. The lack of cargo in the US Gulf continued with a 37,000-dwt fixing from Savannah to the Continent with pellets at US$10,500. CLEAN LR2 LR freight levels in the MEG continued downward this week. The 75kt MEG/Japan TC1 index shed 54.44 points to WS190.56. The 90kt MEG/UK-Continent TC20 trip to the UK-Continent steadily came down from US$6.12 million to US$5.06 million. West of Suez, Mediterranean/East LR2’s remained level all week with little open market activity. The TC15 index remained between US$5.85 million and US$5.9 million. LR1 In the MEG, LR1 freight remined under pressure this week. The 55kt MEG/Japan index of TC5 has was again pushed down to the tune of 35 points to WS208.13. The 65kt MEG/UK-Continent of TC8 lost a little over US$700,000 of its value across the week settling down at US$4.44 million. Read the full report
TUESDAY FEBRUARY 27, 2024 27 THEEDGE CEO MORNING BRIEF MARKETS Top 20 active stocks World equity indices Top gainers (ranked by %) Top losers (ranked by %) Top gainers (ranked by RM) Top losers (ranked by RM) NAME VOLUME CHANGE CLOSE YTD MARKET (MIL) (RM) CHANGE CAP (%) (RM MIL) HONG SENG CONSOLIDATED BHD 394.60 0.000 0.020 -20.00 102.2 TWL HOLDINGS BHD 104.70 -0.005 0.035 16.67 189.1 EKOVEST BHD 90.40 -0.010 0.485 -1.02 1,438.2 YTL POWER INTERNATIONAL BHD 66.90 0.040 4.060 59.84 32,898.8 YTL CORP BHD 65.50 0.030 2.500 32.28 27,413.5 LAY HONG BHD 59.20 0.030 0.420 44.83 310.9 DAGANG NEXCHANGE BHD 49.50 0.015 0.375 -6.25 1,183.6 RENEUCO BHD 45.30 -0.015 0.075 -65.91 84.1 TOP GLOVE CORP BHD 38.50 -0.050 0.830 -7.78 6,646.8 MASTER TEC GROUP BHD 35.30 0.115 0.650 0.00 663.0 DIALOG GROUP BHD 35.20 -0.100 2.130 2.90 12,018.7 LEONG HUP INTERNATIONAL BHD 33.40 0.020 0.725 28.32 2,646.3 MALAYSIAN RESOURCES CORP BHD 32.60 -0.005 0.600 34.83 2,680.5 ISKANDAR WATERFRONT CITY BHD 28.80 0.020 0.795 8.90 732.3 VELESTO ENERGY BHD 27.90 0.005 0.275 19.57 2,259.3 MINETECH RESOURCES BHD 27.60 -0.005 0.170 17.24 303.3 EASTERN & ORIENTAL BHD 27.60 -0.035 0.910 58.26 1,803.6 MY EG SERVICES BHD 26.90 0.000 0.785 -3.68 5,855.7 SIME DARBY PROPERTY BHD 25.90 -0.020 0.775 24.00 5,270.7 MR DIY GROUP M BHD 24.50 0.040 1.570 8.28 14,830.5 Data as compiled on Feb 26, 2024 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) MLABS SYSTEMS BHD 0.015 50.00 1,298.0 0.00 21.7 COMPUGATES HOLDINGS BHD 0.015 50.00 510.0 0.00 82.5 GE-SHEN CORP BHD 2.600 30.00 5,491.0 124.14 317.1 MASTER TEC GROUP BHD 0.650 21.50 35,334.0 0.00 663.0 HEITECH PADU BHD 1.450 20.83 6,032.6 64.77 146.8 CITRA NUSA HOLDINGS BHD 0.060 20.00 477.7 9.09 43.1 REACH ENERGY BHD 0.035 16.67 20.0 -12.50 74.5 SAM ENGINEERING & EQUIPMENT 4.850 13.85 3,867.9 21.50 3,283.4 MERIDIAN BHD 0.090 12.50 5.8 -5.26 20.3 CHIN HIN GROUP PROPERTY BHD 0.900 12.50 1,880.6 7.78 594.4 JOE HOLDING BHD 0.230 12.20 15,103.1 27.78 70.4 MEDIA CHINESE INTERNATIONAL 0.140 12.00 2,239.8 3.70 236.2 EDARAN BHD 1.410 11.90 3,467.7 62.07 81.6 ASIA MEDIA GROUP BHD 0.100 11.11 132.0 5.26 23.9 SINMAH CAPITAL BHD 0.100 11.11 163.4 -4.76 39.2 PDZ HOLDINGS BHD 0.050 11.11 461.0 0.00 29.4 FITTERS DIVERSIFIED BHD 0.050 11.11 1,177.0 0.00 117.1 MSM MALAYSIA HOLDINGS BHD 2.660 10.83 11,421.5 65.22 1,869.9 WMG HOLDINGS BHD 0.155 10.71 4,749.1 55.00 68.9 HARVEST MIRACLE CAPITAL BHD 0.155 10.71 10,420.9 29.17 190.0 Data as compiled on Feb 26, 2024 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) SC ESTATE BUILDER BHD 0.010 -33.33 2,074.9 -35.71 32.2 BCM ALLIANCE BHD 0.015 -25.00 54.1 -25.00 30.5 METRONIC GLOBAL BHD 0.015 -25.00 1,835.0 0.00 23.0 MQ TECHNOLOGY BHD 0.020 -20.00 1,173.0 -20.00 30.4 RENEUCO BHD 0.075 -16.67 45,304.7 -65.91 84.1 SAUDEE GROUP BHD 0.025 -16.67 11,483.0 0.00 39.0 ALAM MARITIM RESOURCES BHD 0.025 -16.67 98.1 -16.67 38.3 RAPID SYNERGY BHD 0.905 -15.42 9,978.2 -96.82 96.7 INNITY CORP BHD 0.415 -15.31 20.0 -13.54 57.9 TWL HOLDINGS BHD 0.035 -12.50 104,700.9 16.67 189.1 GREEN PACKET BHD 0.040 -11.11 4,896.4 0.00 79.8 GROMUTUAL BHD 0.315 -10.00 706.0 3.28 118.3 PUC BHD 0.045 -10.00 7,312.7 12.50 111.1 CHINA OUHUA WINERY HOLDINGS 0.045 -10.00 576.0 -18.18 30.1 PARKWOOD HOLDINGS BHD 0.135 -10.00 73.1 -6.90 37.1 SAPURA ENERGY BHD 0.045 -10.00 7,868.6 0.00 826.9 ENRA GROUP BHD 0.620 -9.49 2.5 0.81 83.6 EDELTEQ HOLDINGS BHD 0.295 -9.23 15,123.8 -4.84 157.1 JOHAN HOLDINGS BHD 0.050 -9.09 276.8 -23.08 58.4 MI TECHNOVATION BHD 1.860 -8.82 7,701.9 0.54 1,662.1 Data as compiled on Feb 26, 2024 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) MALAYSIAN PACIFIC INDUSTRIES 28.500 -0.380 248.1 1.06 5,669.5 HEINEKEN MALAYSIA BHD 22.820 -0.260 196.2 -5.47 6,893.9 VITROX CORP BHD 7.320 -0.250 1,385.9 0.41 6,920.5 KUALA LUMPUR KEPONG BHD 22.240 -0.240 571.2 1.92 23,984.4 SIME DARBY PLANTATION BHD 4.230 -0.200 8,597.1 -5.16 29,253.5 BATU KAWAN BHD 19.700 -0.200 20.7 -4.37 7,749.6 MI TECHNOVATION BHD 1.860 -0.180 7,701.9 0.54 1,662.1 RAPID SYNERGY BHD 0.905 -0.165 9,978.2 -96.82 96.7 HONG LEONG FINANCIAL GROUP 16.500 -0.160 210.0 0.36 18,896.5 PENTAMASTER CORP BHD 4.390 -0.150 630.7 -4.57 3,122.7 ALLIANZ MALAYSIA BHD 18.560 -0.140 83.9 0.65 3,303.1 INARI AMERTRON BHD 3.160 -0.140 11,353.2 4.98 11,848.6 RCE CAPITAL BHD 2.540 -0.130 4,977.1 -16.99 1,861.4 PETRONAS GAS BHD 17.940 -0.120 1,768.2 3.10 35,498.5 SPRITZER BHD 2.160 -0.100 554.0 18.03 689.7 PERUSAHAAN SADUR TIMAH 3.080 -0.100 127.6 -0.65 397.6 DUTCH LADY MILK INDUSTRIES 23.900 -0.100 8.7 3.20 1,529.6 DIALOG GROUP BHD 2.130 -0.100 35,196.2 2.90 12,018.7 KECK SENG MALAYSIA BHD 5.800 -0.090 103.1 21.34 2,084.0 TIME DOTCOM BHD 5.420 -0.090 2,333.4 0.37 10,020.6 Data as compiled on Feb 26, 2024 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) GE-SHEN CORP BHD 2.600 0.600 5,491.0 124.14 317.1 SAM ENGINEERING & EQUIPMENT 4.850 0.590 3,867.9 21.50 3,283.4 MALAYSIA AIRPORTS HOLDINGS 8.440 0.410 4,822.6 14.67 14,082.6 NESTLE MALAYSIA BHD 121.600 0.400 109.5 3.40 28,515.2 PARAGON UNION BHD 4.050 0.370 410.2 45.16 339.5 MSM MALAYSIA HOLDINGS BHD 2.660 0.260 11,421.5 65.22 1,869.9 HEITECH PADU BHD 1.450 0.250 6,032.6 64.77 146.8 AJINOMOTO MALAYSIA BHD 17.200 0.200 17.6 8.18 1,045.7 AEON CREDIT SERVICE M BHD 6.480 0.180 1,124.1 16.34 3,308.8 EDARAN BHD 1.410 0.150 3,467.7 62.07 81.6 UNITED PLANTATIONS BHD 20.920 0.120 481.2 17.53 8,677.3 MASTER TEC GROUP BHD 0.650 0.115 35,334.0 0.00 663.0 CAN-ONE BHD 2.750 0.110 195.7 13.17 528.4 TELEKOM MALAYSIA BHD 6.020 0.110 8,634.9 8.47 23,102.5 PANASONIC MANUFACTURING 18.000 0.100 40.9 0.00 1,093.4 NPC RESOURCES BHD 1.950 0.100 3.1 8.33 221.8 CHIN HIN GROUP PROPERTY BHD 0.900 0.100 1,880.6 7.78 594.4 KLCCP STAPLED GROUP 7.400 0.100 123.4 4.37 13,359.5 DAYANG ENTERPRISE HOLDINGS 2.420 0.090 15,562.3 51.25 2,801.8 PBA HOLDINGS BHD 2.480 0.090 2,645.8 69.86 820.9 Data as compiled on Feb 26, 2024 Source: Bloomberg CLOSE CHANGE CHANGE (%) CLOSE CHANGE CHANGE (%) DJIA * 39,131.53 62.42 0.16 S&P 500 * 5,088.80 1.77 0.03 NASDAQ 100 * 17,937.61 -67.09 -0.37 FTSE 100 * 7,706.28 -22.96 -0.30 AUSTRALIA 7,652.84 9.26 0.12 CHINA 2,977.02 -27.86 -0.93 HONG KONG 16,634.74 -91.12 -0.54 INDIA 72,790.13 -352.67 -0.48 INDONESIA 7,283.82 -11.27 -0.15 JAPAN 39,233.71 135.03 0.35 KOREA 2,647.08 -20.62 -0.77 PHILIPPINES 6,891.49 -21.72 -0.31 SINGAPORE 3,171.12 -13.79 -0.43 TAIWAN 18,948.05 58.86 0.31 THAILAND 1,398.14 -4.33 -0.31 VIETNAM 1,224.17 12.17 1.00 Data as compiled on Feb 26, 2024 * Based on previous day’s closing Source: Bloomberg CPO RM 3,863.0010.00 OIL US$ 81.24-0.38 RM/USD 4.7773 RM/SGD 3.5541 RM/AUD 3.1274 RM/GBP 6.0573 RM/EUR 5.1786