HOME: Perlis MB knows about son’s arrest, leaves it to MACC to investigate p2 Miti to finalise comprehensive strategic semiconductor plan by next month p4 MYAirline loses licence to operate as commercial airline as CAAM revokes AOC p7 M’sian automakers expected to feel pinch from lower sales, higher costs, and rise of Chinese OEMs p9 WORLD: Hong Kong bourse operator’s 1Q profit drops on weaker listings, trading p21 CEOMorningBrief THURSDAY, APRIL 25, 2024 ISSUE 754/2024 theedgemalaysia.com JAPAN’S YEN HITS 155 PER DOLLAR, WEAKEST SINCE 1990 p18 KLCCP Stapled Group on active lookout to expand portfolio LOW YEN YEING/THE EDGE Indonesia’s central bank delivers surprise rate rise to support rupiah Report on Page 18. Report on Page 3.
thursday A P R IL 25, 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 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] No payment arrears to contractors, says SPNB KANGAR (April 24): Perlis Menteri Besar Mohd Shukri Ramli confirmed that he knew about his son being arrested by the Malaysian Anti-Corruption Commission (MACC), and will leave it to the authorities to complete their investigation. “I have been informed of the news by the MACC, and leave it to the discretion of the MACC. That’s all for now,” he said briefly when met by reporters afALOR GAJAH (April 24): There is no issue of payment arrears by Syarikat Perumahan Negara Bhd (SPNB) to the contractors appointed to complete housing projects under the company as has been circulating on social media recently. SPNB chairman Datuk Husam Musa said the issue of payment of arrears had been resolved in 2021, and the video that is being viralled now is an old one from 2019. “SPNB has introduced a new application to make the process of payments to contractors easier and done in less than a week, and the progress of construction can be checked online. “Therefore, payments can be made fast, and there are currently no arrears. SPNB has gained the trust of contractors across the country to carry out the planned housing projects,” he said when met by reportBernama home Read also: MB’s son among six remanded over document forgery, false claims involving RM600,000 ers at the Rumah Mesra Rakyat (RMR) handover ceremony for the Masjid Tanah parliamentary constituency at Kampung Durian Daun here on Wednesday. He said the efforts implemented by SPNB could help contractors manage capital and costs for each housing project well, and to complete the project on time. He said that currently, there are 3,000 contractors registered nationwide under SPNB, with 108 companies in Melaka. Therefore, Husam urged all parties to stop playing up the issue of arrears, as the allegations are not true and can tarnish SPNB’s image. Meanwhile, he said this year, SPNB will build a total of 3,500 units of RMR 1.0 and 3,100 units of RMR 2.0 nationwide, and so far, there are no delays or issues related to these projects. “In Melaka alone this year up till yesterday (Tuesday), we have built 130 units of RMR 1.0, and we will build another 39 units beginning next week,” he said. “Overall, the total number of RMR construction applications throughout the country has increased to 190,000, and in Melaka, there are currently 7,336 people waiting for their turn,” he said. ter the Perlis state assembly sitting here on Wednesday. Earlier, the MACC reportedly remanded six men, including the son of a menteri besar, to assist in an investigation into a case of producing falsified documents to make RM600,000 in claims since 2022. Two civil servants in the Menteri Besar’s Office and State Secretary’s Office and three company contractors were also detained. All the suspects, aged between 26 and 37, were detained by the MACC between 7am and 8am on Tuesday around the state. Magistrate Ana Rozana Mohd Nor granted a remand order against all the suspects from Wednesday to Thursday, to allow the MACC to conduct an investigation under Section 18 of the MACC Act 2009. Perlis Menteri Besar Mohd Shukri Ramli says he leaves the matter to the discretion of the Malaysian AntiCorruption Commission. Perlis MB knows about son’s arrest, leaves it to MACC to investigate Bernama bernama
thursday A P R IL 25, 2024 3 The E dge C E O m o rning brief home Hibiscus Petroleum completes drilling at Bunga Aster-1 well, first oil production set for next month KUALA LUMPUR (April 24): KLCCP Stapled Group, controlled by national oil and gas company Petroliam Nasional Bhd, said on Wednesday that it is still actively pursuing and exploring opportunities. The group, comprising KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust (REIT), is seeking matured assets “with good yield,” chief executive officer Datuk Md Shah Mahmood told reporters after the group’s annual general meeting. “We have not determined the location, but we are actively pursuing and also exploring,” Md Shah said. “For the REIT, it’s going to be very stringent, in terms of the requirement and the criteria of the asset that we want to invest.” The group owns a diverse property portfolio largely located within the Kuala Lumpur city centre, including Petronas Twin Towers, Menara ExxonMobil, Menara 3 Petronas and Menara Dayabumi. KLCCP Stapled Group’s planned foray abroad comes at a time when Malaysia’s economy faces potential slowdown as consumer spending moderates amid the increase in sales and service tax followed by the introduction of a High Value Goods Tax. There is an “increasing urgency for us to expand and diversify our business to maintain our leadership and relevance in a rapidly changing landscape,” KLCCP said in its annual report. The group has received a mandate to expand its investment portfolio and explore new investments from 2024 onwards, it said. KLCCP chairman Tan Sri Ahmad Nizam Salleh said at the same press conference that investing in global assets requires a “more demanding test” that considers the exposure to the risks when investing in foreign countries. “All sorts of things [such as security risk and economic exposure] must come together — to generate better results. The board is very strict on this [global assets], and it will require the management to comply with all the standards,” Ahmad Nizam said. Meanwhile, the surge in new mall inaugurations in the city is far from posing competition for Suria KLCC, as they complement one another, said Md Shah. “If we look into the retail outlets in Malaysia — we see the same brands [in every mall] — so there is no point in competKLCCP Stapled Group on active lookout to expand portfolio by Anis Hazim theedgemalaysia.com by Hee En Qi theedgemalaysia.com KLCCP Stapled Group is seeking matured assets 'with good yield', CEO Datuk Md Shah Mahmood said. Shahrin Yahya/The Edge extending the economic life of the PSC. It said it has plans to explore other nearfield prospects in the PM3 CAA PSC in the next three years through collaboration with various stakeholders under the stewardship of Petroliam Nasional Bhd (Petronas). Hibiscus holds a 35% participating interest in PM3 CAA, located within the commercial arrangement area between Malaysia KUALA LUMPUR (April 24): Hibiscus Petroleum Bhd said it has completed the drilling of the Bunga Aster-1 exploration well and is expecting its first oil production to begin in May. In a statement on Wednesday, Hibiscus said its wholly-owned subsidiary Hibiscus Oil & Gas Malaysia Limited has completed the drilling of the well that has approximately 17.5 metres of oil-bearing sandstone with up to 46 metres of potential oil column. “Multiple oil samples were collected during the logging campaign. Initial assessments indicate good reservoir characteristics,” it said, adding that the unit will progress with a thorough evaluation and appraisal of the discovery to further define the size of the discovery. The operator of the PM3 Commercial Arrangement Area Production Sharing Contract (PM3 CAA PSC) said the Bunga Aster-1 discovery will add additional reserves and oil production to the PSC, and Vietnam. The investment includes operations management relating to the petroleum production from seven existing oil fields. The other non-operating partners of PM3 CAA are Petronas’ wholly-owned subsidiary Petronas Carigali Sdn Bhd and PetroVietnam Exploration Production Corporation Ltd. For the financial quarter ended Dec 31, 2023 (2QFY2024), the group reported a net profit of RM102.33 million, up 45.2% from RM70.47 million during the previous year’s corresponding quarter, due to higher profit margins supported by higher average realised prices. Revenue was down 12% year-on-year to RM713.13 million from RM627.55 million. Its commercial arrangement area segment, which consists of the PM3 CAA PSC, reported a net profit of RM60.28 million for the quarter. Shares of Hibiscus rose eight sen or 2.95% to RM2.79 at Wednesday’s close, valuing the group at RM2.25 billion. ing, but instead we complement each other. I think that will be the spirit,” he said. Suria KLCC recently became a wholly-owned subsidiary of KLCCP after the completion of the proposed transaction worth RM1.95 billion with Ocmador (Malaysia) City Retail Centre Sdn Bhd, Port Moresby Investments Ltd and Bold Peak Sdn Bhd. Of late, Kuala Lumpur has seen a rise in new mall openings, including Pavilion Damansara Heights and The Exchange TRX. There is also the Warisan Merdeka Mall@118, which is owned by Permodalan Nasional Bhd (PNB), near the vicinity, slated to open by the third quarter of 2025. Although there will always be concerns when new malls open in its vicinity, KLCCP believes that Suria KLCC has an established reputation as a premier shopping destination and unique offerings that set it apart. “I think we don’t see [the new mall openings] as big of an impact [on Suria KLCC]. There was a risk initially, but now it has stabilised. We still do very well in terms of performance and occupancy,” said Md Shah. It was noted that Suria KLCC’s occupancy rate jumped to 98% in December 2023, while footfall rose by 30% compared to 2022. The mall also achieved its highest moving annual turnover of tenant sales, registering a 12% growth in 2023, with 35 new tenants last year. “The increase in tenant sales was particularly driven by fashion, food and beverages, and general retail,” Md Shah added. KLCCP settled up four sen or 0.53% higher at RM7.54 on Wednesday, valuing the group at RM13.61 billion.
thursday A P R IL 25, 2024 4 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): Malaysia is currently working on a free trade agreement (FTA) with the European Union (EU), according to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz, after initial negotiations between the two parties reached an impasse about 12 years ago. “The EU-Malaysia FTA is being discussed at a working level. A scoping exercise is being done. If it is agreed on what areas we can work with, then only it is meaningful,” he told reporters after the presentation of the Ministry of Investment, Trade and Industry’s (Miti) first-quarter report card here on Wednesday. “We are supportive, and we are working closely with the EU. It is just about timing, as the EU is having their parliamentary election right now,” Tengku Zafrul added. Elections for the European Parliament will take place in June. Negotiations between Malaysia and the EU for an FTA were formally launched on Oct 5, 2010, according to Miti’s website. Eight rounds of negotiations were held between December 2010 and September 2012. The negotiations reached an impasse in 2012, as both sides had exhausted their negotiating options at that time. Subsequently, it was agreed that negotiations would resume when a fresh mandate and/or flexibilities become available to both sides. Besides the EU, Tengku Zafrul noted that Malaysia had also resumed talks for an FTA with South Korea, which he said will potentially increase the two countries’ trade and investment in emerging sectors, including supply chains, the digital economy, bioeconomy, and green hydrogen. On top of that, the minister also revealed that the FTA with the United Arab Emirates, known as the Comprehensive Economic Partnership Agreement, will be finalised in June. Malaysia-EU FTA back on the table, says Zafrul KUALA LUMPUR (April 24): The Ministry of Investment, Trade and Industry (Miti) will finalise a comprehensive strategic plan for the semiconductor industry to ensure Malaysia remains competitive in the sector. “The semiconductor sector is critical to the country’s economy. Given our market share in the semiconductor industry, we need to have a concrete and strategic plan. The timeline given to us is until the end of May,” said Miti Minister Tengku Datuk Seri Zafrul Abdul Aziz. Last week, Prime Minister Datuk Seri Anwar Ibrahim said the National Investment Council (NIC), which he chairs, had decided that Miti would draw up a comprehensive strategic semiconductor plan to attract international semiconductor companies to establish high-quality semiconductor manufacturing facilities in Malaysia. “How do we ensure that we remain relevant and move up the value chain? What part of the supply chain do we want to focus on? We know other countries like the United States have announced the Chips Act, and Europe has also announced other legislation to promote investments in this area. “If we want to move up the value chain, we must have a concrete and strategic plan,” Zafrul told reporters after the presentation of Miti’s first quarter report card. He added that Miti will engage with all stakeholders and collaborate with other ministries, including the Ministry of Finance, to develop a plan that will address infrastructure, talent and incentive issues relevant to the semiconductor industry in Malaysia. The US passed the Chips and Science Act in 2022, allocating around US$52.7 billion (RM251.8 billion) to boost domesMiti to finalise comprehensive strategic semiconductor plan by next month by Hee En Qi & Emir Zainul theedgemalaysia.com “This will be our first FTA with a Middle Eastern nation. In fact, it is not just an FTA, but a comprehensive economic partnership agreement which will cover digital, green and everything else. It is unprecedented,” he added. Earlier, the minister reported that Malaysia had been making extensive use of the FTAs inked with external economies, with a free-on-board value of RM41.03 billion achieved during the first quarter of this year (1Q2024), compared with RM64.38 billion in the same period last year. A total of 85,062 certificates of origin (COs) were issued during the period under review, up from 82,997 COs issued in 1Q2023. The COs allow exporters to enjoy preferential treatment through lower or zero import duties. Furthermore, Tengku Zafrul highlighted that the top three FTAs benefiting Malaysian exporters are the Asean Trade in Goods Agreement, Asean-China Free Trade Area, and Asean-Korea Free Trade Area. tic research and manufacturing of semiconductors. Meanwhile, the European Union passed the European Chips Act (ECA) in 2023, mobilising around US$47.5 billion to reinforce the semiconductor ecosystem in the EU and reduce external dependencies. Moving forward, Zafrul remained optimistic that the local semiconductor industry will benefit from the upcoming technology upcycle amid geopolitical tensions. “The demand is strong, but there has been a lack of supply. We are optimistic that with the investment made globally [in this sector], the tech upcycle will benefit Malaysia because there are parts where the supply chain will be done through in Malaysia,” he said. Despite the recent downcycle in the global semiconductor sector, Malaysia’s exportsof semiconductor devices and integrated circuits (ICs) attained positive growth of 0.03% to RM387.45 billion in 2023. Malaysia holds a critical role in the global semiconductor supply chain, with some estimates chalking the country being responsible for 7% of semiconductor trade flows globally, as well as 13% of global backend operations. Read also: Malaysia-China trade improved amid republic’s better-thanexpected 1Q growth, says Zafrul Zahid Izzani/ The Edge by Emir Zainul & Hee En Qi theedgemalaysia.com
Thursday A P R IL 25, 2024 5 The E dge C E O m o rning brief trust who do you trust to tell the truth ? P r o v i d i n g y o u w i t h i n s i g h t s t o make better decisions P E N I NS U L AR MAL AYSIA RM7.00 SABAH & SAR AWAK RM8.00 ISSN 1675-1205 PP 8409/03/2013(031809) MCI (P) 051/11/2023 M A L AYS I A BUSINESS & INVESTMENT WEEKLY www.theedgemalaysia.com 1506 THE WEEK OF JANUARY 15 — JANUARY 21, 2024 THE STATE OF THE NATION 12 Challenges remain for China’s economy after disappointments in 2023 CORPORATE 20 JB needs LRT system to disperse traffi c coming in from Singapore via the RTS, says project proponent TONG’S PORTFOLIO 18 Malaysia’s 5G is now one of the world’s best, thanks to the unconventional SWN 1 Contrary to what many had anticipated, the new tax has a wider scope and broad defi nitions. Many are still grappling with its implications while much clarifi cation is needed on its application. COVER STORY I 61 to 63 COVER STORY 2 64 to 69 afi zi: Padu long overdue, not an verzealous data collection exercise 16 Edaran in the cross hairs B Y JOSE BARROCK 21 Investor Yu suffers hefty paper loss after y rapid fall of p p counters p B Y I NTAN FAR H A N A Z AINUL 16 Perplexing twists to p takeover offer for KUB B Y LEE WENG KHUEN CORPORATE CORPORATE CORPORATE Capital gains tax: at many had anticipated More than expected P E N I NS U L AR MAL AYSIA RM7.00 SABAH & SAR AWAK RM8.00 ISSN 1675-1205 PP 8409/03/2013(031809) MCI (P) 051/11/2023 M A L AYS I A BUSINESS & INVESTMENT WEEKLY www.theedgemalaysia.com 1512 THE WEEK OF FEBRUARY 26 — MARCH 3, 2024 ZAHID IZZANI/THE EDGE YNH Property Bhd’s RM1.1 billion investment in numerous property development joint ventures over the years has drawn much public scrutiny. Of particular interest is one involving a fi ve-acre parcel in Sri Hartamas. YNH justifi es the JVs and clarifi es why some of the land is under a Registrar’s caveat. COVER STORY 58 to 60 CORPORATE 10 Consolidation of TPG, Hong Leong Group and TE Asia Healthcare’s hospitals in the works, say sources BY JENNY NG AND VASA N T H A G A N E SA N NEWSBREAK CORPORATE 12 Five shortlisted for possible sale of Cement Industries BY I N TA N FAR H A N A Z AI N U L AND JOSE BARROCK NEWSBREAK CORPORATE 10 Khazanah, EPF and GIP forming consortium to run MAHB BY JOSE BARROCK NEWSBREAK CORPORATE 12 DNeX, HeiTech Padu, Theta Edge shortlisted for NIISe project BY JOSE BARROCK NEWSBREAK Th e curious case of YNH and its JVs THE STATE OF THE NATION 14 Watching the ringgit factor in stronger-thanexpected exports rebound TECH 28 Semiconductor veteran turned VC raising US$200 mil to back IPO-able chip fi rms TONG’S PORTFOLIO 18 Is residential property in Malaysia a good investment? Disclaimer: A copy of the Master Prospectus (MP) dated 19 December 2022 has been registered with the Securities Commission Malaysia (SC), who takes no responsibility for its contents. 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Our Consistency Can Be Your Advantage Stay invested over the long term. A consistent strategy has allowed us to consistently outperform the benchmark over the past decade. *Fund performance is calculated based on NAV to NAV and assumes reinvestment of distributions. The Fund was launched on 23 April 2007. #Average Returns of the funds in Peer Group under Lipper Classification “Equity Malaysia” Non-Islamic. There are total of 67 funds under this category. Source: Lipper as at 31 December 2023 Areca equityTRUST Fund *Fund Performance #Average Returns of Peer Group Areca equityTRUST Fund Best Fund Over 5 Years Best Fund Over 10 Years Equity Malaysia Refinitiv Lipper Fund Awards Malaysia 2023 Winner 80%26% 171%35% 477% 127% Explore how to diversify your portfolio with our Private Wealth Manager today. ARECA CAPITAL SDN BHD 200601021087 (740840-D) www.arecacapital.com 2 Th e yet-to-be-developed land in Sri Hartamas that is subject to a disposal to the Sunway Group P E N I NS U L AR MAL AYSIA RM7.00 SABAH & SAR AWAK RM8.00 ISSN 1675-1205 PP 8409/03/2013(031809) MCI (P) 051/11/2023 MA LAYSIA BUSINESS & INVESTMENT WEEKLY www.theedgemalaysia.com 1501 THE WEEK OF DECEMBER 4 — DECEMBER 10, 2023 CORPORATE 18 Good chance of EPF’s 2023 dividend beating last year’s 5.35% CORPORATE 20 Mavcom was shocked to see closure of MYAirline TONG’S PORTFOLIO 16 Finally, we are investing again — added six stocks with high, resilient dividend yields 123RF.COM CORPORATE 12 Highway concessionaires want to take charge of MLFF system implementation BY M SHAN M UG AM AND I N TA N FAR H A N A Z AINUL CORPORATE 12 Suria Cap to lease out Sapangar Bay Container Port to DP World BY JOSE BARROCK NEWSBREAK NEWSBREAK For distant goals and close friends. THE NEW CAYENNE. FURTHER TOGETHER. The sports car with room for family, friends and countless shared adventures. With space for up to five people, experience Porsche performance every day – both on- and off-road. Find out more. 12 TIME TO ACT, REAL ESTATE MATTERS 148-PAGE SPECIAL PULLOUT INSIDE FREE! with this issue of Th e Edge PUTRAJAYA Th e unity government spent its fi rst year fending off attempts to topple it, but its grip on Putrajaya appears secure now. As it enters its second year in power, will it walk the talk on the major reforms to restructure the economy so that Malaysia is not stuck in the middle-income trap, or will it be business as usual? COVER STORY 76 to 80 the edge | the best selling w e e k ly newsP a Pe r.
thursday A P R IL 25, 2024 6 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): Capital A Bhd’s unit AirAsia Consulting Sdn Bhd is the entity that is bidding to acquire SriLankan Airlines, and if it materialises, will raise its own capital for the acquisition, according to chief executive officer Tan Sri Tony Fernandes. “Just to clear that up for everyone, AirAsia is not buying SriLankan Airlines. AirAsia Consulting, which will set up its own fund, is looking at buying SriLankan Airlines. So, it’s not AirAsia,” he told reporters here at a briefing on Wednesday for Capital A to announce the extension of his tenure as CEO for another five years. “I know it’s confusing, and AirAsia Consulting will be changing [its name] to Capital A Consulting very soon. So, that’s for airlines who want to consult our 23 years of experience, but [AirAsia Consulting] is also looking for opportunities to invest in airlines outside of Asean. AirAsia is fully focused on Asean. That’s our goal,” he said. AirAsia Consulting, not AirAsia, is bidding for SriLankan Airlines, says Fernandes KUALA LUMPUR (April 24): Capital A Bhd’s board of directors has decided to extend Tan Sri Tony Fernandes’ tenure as the chief executive officer for another five years, and as a strategic adviser to the airlines business, which is poised to be merged into AirAsia X Bhd. “That’s the start of many announcements over the next two weeks,” said Fernandes at a briefing here, but declined to reveal further, due to regulatory restrictions. “From today onwards, there will be a bunch of announcements over the next few weeks, and then everyone will be clear. “The plan is obviously to get out of PN17 (Practice Note 17 status), to have a strong aviation group, and to start growing again. That’s the plan. [Priority] number one [is to] survive; number two [is to] bring back all the retrenched employees; [and] number three is to strengthen the balance sheets of both companies, Capital A and Aviation,” he said. Capital A is in the midst of a series of restructuring to reverse its negative equity of RM10.47 billion on its balance sheet as at Dec 31, 2023, including merging its airlines business with AirAsia X and listing its branding business in the US. “Investors want clarity, which we couldn’t give for two reasons: One, we didn’t know when the borders were going to open; and two, we couldn’t tell when we were going to get out of PN17. We had an enormous handicap to other airlines, so we haven’t been able to sell our story as well. “Hopefully from this week and today is the start of a comeback with my appointment, so that ends the speculation. Am I staying? Am I going? What is my job going to be? Basically, my job is helping Bo Lingam (AirAsia’s Tharumalingam Kanagalingam) and the team in aviation to get to three, four hundred planes, and help all the CEOs of Capital A,” said Fernandes. He said over the next two years, investors and shareholders will witness the rise of four pillars of business, born out of the AirAsia group. “All these businesses excite me, each set to become a free-standing entity, with its own robust capital structure. “Throughout the next five years, I envision Teleport, Move Digital, Capital A Fernandes to be CEO of Capital A for another five years by Chester Tay theedgemalaysia.com by Chester Tay theedgemalaysia.com Aviation Services Group and Capital A International evolving into separately listed public companies, which share the fundamental DNA of AirAsia — characterised by low-cost, high efficiency, and a relentless commitment to being independent and resilient market disruptors,” he said. The announcement was made on Wednesday by Capital A’s senior independent non-executive director Datuk Fam Lee Ee, who said Fernandes “has shown an unparalleled ability to successfully transform Capital A to drive growth and deliver financial returns, earning him a reputation as one of the world’s outstanding CEOs”. “He has set Capital A on the right strategic path for ongoing value creation, and the board determined that it is in the best interest of the shareholders to extend his tenure through the next five years. We are confident that, under his guidance, we will achieve even greater milestones in the years ahead,” Fam said. Capital A is carrying out a series of restructuring to remedy its Practice Note 17 status due to its negative equity position, which amounted to RM10.47 billion as at Dec 31, 2023 (FY2023). These corporate exercises, pending regulatory approvals, include merging Capital A’s airline businesses with AirAsia X Bhd, the listing of its branding businesses in the US, and raising accounting gains to hopefully be sufficient to offset its negative equity position. continues on Page 7 (From left) Capital A Bhd’s senior independent non-executive director Datuk Fam Lee Ee and chief executive officer Tan Sri Tony Fernandes, with AirAsia Aviation Group Ltd chairman Tan Sri Jamaludin Ibrahim. Fam says Fernandes ‘has shown an unparalleled ability to successfully transform Capital A to drive growth and deliver financial returns, earning him a reputation as one of the world's outstanding CEOs’. Sam Fong/The Edge
THURSDAY APRIL 25, 2024 7 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (April 24): The Civil Aviation Authority of Malaysia (CAAM) has revoked the air operator’s certificate (AOC) of cash-strapped low-cost carrier MYAirline Sdn Bhd, effective April 15, after it failed to find a new investor before the April 14 deadline. This means MYAirline will have to reapply for the AOC and an air service licence (ASL) from the aviation regulators — the first from CAAM, the technical aviation regulator; the second from its economic aviation counterpart, the Malaysian Aviation Commission (Mavcom) — if it hopes to restart services. The process can be long and tedious. On Oct 12 last year, MYAirline abruptly halted its operations citing financial pressures, less than a year after it began flying. Both Mavcom and CAAM had maintained that there were no signs of financial and operational distress in MYAirline prior to the suspension. Just three days before the airline’s decision to abruptly suspend its operations indefinitely, CAAM had even given the thumbs up to the airline’s air safety, security and operational proficiency for another two years. A day after MYAirline’s sudden decision, CAAM temporarily suspended its AOC for 90 days until Jan 16 this year. Since then, CAAM had extended the suspension period of the airline’s AOC once — for another three months until April 14. MYAirline’s ASL expired on Nov 14, 2023. Airlines need both an ASL and AOC to operate scheduled air passenger and cargo services. “There will be no more extension (of MYAirline’s AOC). Its AOC was revoked on April 15 under Regulation 193 of the Malaysian Civil Aviation Regulations 2016,” CAAM chief executive officer (CEO) Datuk Captain Norazman Mahmud told The Edge. “However, it is keeping the required post holders for reapplication,” he added. MYAirline’s interim accountable executive is Datuk Seri Azharuddin Abdul Rahman, former director general of the Malaysian Civil Aviation Department and former chairman of CAAM. Azharuddin is also a member of MYAirline’s board of directors. The other board members are MYAirline co-founder and major shareholder Datuk Allan Goh Hwan Hua, his son Sean Goh Tze Han, former Malaysia Airports Holdings Bhd chief operating officer Datuk Abd Hamid Mohd Ali, MYAirline co-founder and former MYAirline loses licence to operate as commercial airline as CAAM revokes AOC BY KANG SIEW LI theedgemalaysia.com CEO Rayner Teo Kheng Hock, and Trillion Cove Holdings Bhd director Jothi Prakash Murugan. Norazman also said the airline no longer has any aircraft registered with CAAM. A total of 10 aircraft were previously under MYAirline’s management. A MYAirline spokesman confirmed that CAAM had revoked the airline’s AOC on April 15. He said the airline still harbours hopes of securing a new investor to revive its operations. “We are in talks with several interested investors. We are handling the staff issues internally. We will issue an announcement in due time,” the spokesman told The Edge. Financial woes began to unfold last year due to a last minute withdrawal of a potential investor, prompting the operational shutdown. Some 125,000 passengers of MYAirline, who had purchased RM22 million worth of tickets for scheduled flights from Oct 12, 2023 until March 31, 2024, were left in a lurch subsequently. The welfare of its 900 employees were also affected. In January, MYAirline was reported to have found a white knight “from the Middle East” to revive the low-cost carrier. The Bernama report, citing sources, said MYAirline had signed a sale and purchase agreement with a new investor in late December 2023. However, in February, the potential Middle Eastern investor had reportedly decided not to pursue its interest in the carrier. FROM PAGE 6 AirAsia Consulting CEO Subashini Silvadas told The Edge on Tuesday that the company is still in the pre-qualification stage for the acquisition of national carrier SriLankan Airlines, and has yet to submit any price bid since due diligence has not been carried out. Reuters reported on Monday that the AirAsia group is among six bidders for Sri Lanka’s state-run carrier, as the island nation looks to reduce losses incurred by government-owned enterprises under a US$2.9 billion (RM13.8 billion) International Monetary Fund programme. “And yes, [AirAsia Consulting] has put in a bid to buy SriLankan Airlines. Nothing to do with AirAsia. [AirAsia Consulting] will raise their own capital to do that. New thing, there are two aims [for AirAsia Consulting]: one is to potentially take stakes in airlines outside of the AirAsia group and also just to provide consulting service,” said Fernandes on Wednesday. “Over the last 23 years, we have built up a whole lot of experience, but we have decided for AirAsia to only focus on Asean. Many airlines want us to help them set up a low-cost airline. Many governments have approached us to take over their airlines, AirAsia is not interested, [as] it is actually purely focused on Asean. So, we created this company called AirAsia Consulting, which sits under Capital A Aviation Services.”
thursday A P R IL 25, 2024 8 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): The potential imposition of plain packaging for cigarette and vape products, together with a ban on the display of such products in stores, will incur a “huge financial burden” on privately owned sundry shops, according to the Federation of Sundry Goods Merchants Associations of Malaysia (FSGMAM). Such measures also would not help achieve the government’s objective of discouraging smoking and vaping, but instead create complexity for businesses, said the federation in a statement on Wednesday, as it expressed deep concern about recent discussions on the potential measures to be taken by the government. In March, former health minister Khairy Jamaluddin proposed that the Ministry of Health (MOH) ban the display of cigarettes in shops and implement plain packaging for cigarettes, after the government dropped the provision for the tobacco and vape generational endgame in the Control of Smoking Products for Public Health Act 2024 that was passed in November last year. Shortly after, Deputy Health Minister Datuk Lukanisman Awang Sauni told the Dewan Rakyat that the MOH was considering imposing plain packaging on cigarettes, as well as standard packaging for vape products. The ministry was also considering controls on vape flavours that are increasing in the market, and which may attract children or people who want to take up vaping. Lukanisman also said the MOH was seeking views from other ministries and the industry on the planned regulations related to vape control under the Act. “The MOH has prepared draft regulations and orders under the Act that are now at the stage of legal review,” he was reported as saying. “A display ban will require retailers to incur costs to make adjustments in shop to comply with the regulations. This is going to be a huge additional financial burden for us, and we cannot afford to bear the cost. It also creates complexity for sundry operations. As retail operators will have to make adjustments to cover the products and keep them out of sight, this means every time a consumer comes to purchase the products, retail operators would have to look for the products to transact,” said FSGMAM president Hong Chee Meng in the statement on Wednesday. “This will be made worse with plain packaging requirements, where each prodPotential ban on display of cigarettes, vape products will burden retailers, on top of proposed plain packaging — sundry goods merchants KUALA LUMPUR (April 24): Carlsberg Brewery Malaysia Bhd, the locally-listed unit of the Danish brewer, confirmed the price increases for its beer products starting this month. The company’s priority is to preserve margin, Carlsberg Brewery Malaysia managing director Stefano Clini told at a press conference after the company’s annual general meeting. The last time the company raised the prices of its beers was in 2022, he noted. “There was a price increase,” Clini said. “The details, however, we cannot talk about.” Carlsberg Malaysia raises prices of beers to preserve margin by Justin Lim theedgemalaysia.com by Syafiqah Salim theedgemalaysia.com uct will look the same in colour and shape, making it more complicated for retail operators to look for a specific brand or product whenever a consumer asks for it,” he said. The federation thinks the ministry should first tackle the issue of illegal cigarettes to reduce smoking rates. “Instead of coming up with the idea of banning the display of products and introducing plain packaging requirements, the MOH should take stern action against illegal cigarette operators to reduce smoking rates. The real reason why many Malaysians are still smoking is because of illegal cigarettes that are sold at a very cheap price and easily available,” Hong added. ‘Consult with us first before introducing such drastic measures’ The FSGMAM views the proposed regulations as “drastic” and pose serious challenges to its members, who are already facing unprecedented economic pressures. “We have already written twice to the MOH to request meetings and information related to the proposed measures. But to date, we have not received any notice from the ministry to hold any discussions. It is not right for retail operators who are the frontliners and impacted the most by these proposed measures to have no details nor information on the implementation,” Hong said. In addition to the FSGMAM, the plan also drew criticism from the Malaysia Singapore Coffee Shop Proprietors’ General Association, citing potential initial costs of up to RM620 million for retailers. An extra RM277 million annually would also be required by retailers to adhere to the regulations, according to the association. Last month, The Petaling Jaya Coffeeshop Association chairman Keu Kok Meng said retailers received official notices of the price increases from Carlsberg and Dutch rival Heineken by around 5%. Carlsberg’s full-year net profit was rose 5.11% to a record high of RM333.24 million in the financial year ended Dec 31, 2023 (FY2023) against RM317.05 million a year ago, mainly in the absence of the RM21.6 million prosperity tax incurred last year. Full-year revenue however declined 6.28% to RM2.26 billion compared with RM2.41 billion in FY2022, dragged by lower sales on the back of softer market sentiment and inflationary pressures. At 2.40pm, the share price of Carlsberg rose six sen or 0.3% to RM18.46, bringing the brewer a market capitalisation of RM5.64 billion. Carlsberg Brewery Malaysia managing director Stefano Clini said it has increased the prices of beers since this month with priority to preserve margin. Patrick Goh/The Edge
thursday A P R IL 25, 2024 9 The E dge C E O m o rning brief home NINGBO (April 24): Zeekr, a luxury electric vehicle (EV) brand under the Geely group, is mulling about entering Malaysia’s automotive market with its newly developed right-hand drive (RHD) vehicles. Zhejiang Zeekr Intelligent Technology Co Ltd technology vice president Zhao Chunlin said the global electric mobility technology brand aims to sell the RHD vehicles together with the left-hand drive vehicles to at least 50 international markets by year-end. The brand is currently present in over 20 foreign markets, with plans to expand to Malaysia, Thailand, New Zealand and Australia, among others, he said to reporters during a site visit to Zeekr’s factory in Ningbo here on Wednesday. Zeekr is actively pursuing opportunities, including expanding into international markets — a move which could potentially benefit Malaysia in light of the partnership between Geely and Proton Holdings Bhd. Geely Holding currently owns a 49.9% stake in Proton. The Zeekr Intelligent Factory, located in Ningbo, utilises advanced technology and innovative processes to guarantee superior product quality by prioritising transparency, efficiency, and sustainability throughout its operations. Zeekr aims to double its delivery in 2024 to 230,000 cars from 118,685 cars in 2023. Last month, the automaker initiated pre-orders for the RHD Zeekr X urban SUV and Zeekr 009 MPV vehicles in Thailand. This decision was made in response to the growing demand for high-quality smart EVs in the Southeast Asian region. Zeekr utilises Sustainable Experience Architecture (SEA) and includes its own battery technologies, battery management systems, electric motor technologies and electric vehicle supply chain. Zeekr mulling entry into Malaysian market KUALA LUMPUR (April 24): Malaysian automotive companies may see earnings decline this year as sales dip and operating costs rise amid the emergence of several Chinese brands offering attractive pricing, analysts cautioned. Vehicle sales may fall below the Malaysian Automotive Association’s estimate of 740,000 units this year, research houses including UOB Kay Hian, Hong Leong Investment Bank (HLIB) and Kenanga Investment Bank warned as they kept the sector on “neutral”. “We maintain our conservative view on the sector, given the sector’s limited catalysts,” said UOB Kay Hian which is projecting sales of 660,000 units. Consumer sentiment may be hit by lingering concerns over fuel subsidy rationalisation, the increase in sales tax and the impending luxury tax, the house said. For HLIB, which expects total industry volume of 720,000 units this year, sales are expected to slow due to softening order backlogs while aggressive promotions by Chinese carmakers intensify competition for existing marques. Kenanga, meanwhile, is forecasting sales of 710,000 units and noted that fuel subsidy rationalisation could dampen demand for mid-market car models as the middle 40% household income group may delay purchasing new vehicles or opt for smaller cars to reduce fuel expenses. The comments follow the latest data showing a near 10% year-on-year decline in vehicle sales in March. At 71,052 units, the total industry volume was 10.5% higher when compared to February, thanks to a delivery rush by companies with financial years ending on March 31 and Hari Raya campaigns. To reduce its fiscal deficit, the government plans to remove the RON95 fuel subsidy, which contributed significantly to the previous year’s RM81 billion M’sian automakers expected to feel pinch from lower sales, higher costs, and rise of Chinese OEMs by Syafiqah Salim theedgemalaysia.com Bernama Reuters subsidy expenditure. Even with subsidy rationalisation challenges, Kenanga and HLIB see a possibility of growth from 2024’s new model launches, with proactive sales and marketing efforts expected to maintain manufacturer sales. Top picks are MBM Resources Bhd and DRB-Hicom Bhd for their strong leverage of national brands like Proton and Perodua, benefiting from more stable sales volumes and potential long-term growth through exports. Shares in MBM Resources hit a record high of RM4.95 earlier this month and have gained 16% so far this year, valuing the company at RM1.90 billion. DRBHicom is valued at RM2.65 billion after a 1.43% year-to-date loss. There are four “buy”, six “hold” and one “sell” calls on MBM Resources, with a 12-month target price (TP) of RM4.60, according to Bloomberg, and two “buy” and two “hold” ratings for DRB-Hicom with a 12-month TP of RM1.70. Total industry volume of Malaysian automotive market 0 20,000 40,000 60,000 80,000 Source: Malaysian Automotive Association Jan Feb Mar Apr May Jun Jan Feb Mar 2023 2024 Jul Aug Sep Oct Nov Dec 50,168 63,561 78,881 47,800 63,154 62,601 64,765 72,836 68,187 76,147 73,242 78,398 65,499 64,290 71,052
thursday A P R IL 25, 2024 10 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): Farm Price Holdings Bhd on Wednesday began taking orders from investors for its initial public offering (IPO) on the ACE Market to raise up to RM32.4 million. The IPO, priced at 24 sen apiece, involves a public issuance of 102 million new shares as well as an offer for sale of 33 million existing shares, according to its prospectus. All in, the listing offers investors a 30% stake in the Johor-based wholesalers and vegetables distributor. The application period for the IPO will close on April 30, with the listing scheduled for May 14. Farm Price is mainly involved in the wholesale and distribution of fresh vegetables. The company also operates a retail store in Ulu Tiram, Johor selling fresh vegetables together with food and beverages products and other groceries directly to end-consumers. The company has regional distribution centres across northern, central as well as southern regions of Peninsular Malaysia, alongside a centralised distribution centre in Johor serving both the Malaysian and Singapore markets. Under the public issue, 22.5 million new shares will be made available to the Malaysian public, followed by 11.25 million shares for eligible persons and 68.25 million shares set aside for private placement to select investors. Proceeds from the sale of new shares will total RM24.48 million, of which Farm Price plans to allocate 43% for working capital and 26% for the construction of new facilities. The company will also spend 8% of the gross for the purchase of machinery, equipment, and logistics fleet, and 7% for a planned regional distribution and procurement centre. The remaining 16% is set aside to cover listing expenses. The offer-for-sale of existing shares meanwhile will raise RM7.92 million that will go entirely to selling shareholders, managing director Dr Tiong Lee Chian and executive director Liew Tsuey Er, who is also Tiong’s wife. At the listing price of 24 sen per share, the company will be valued at 12.4 times the net profit of RM8.7 million for the financial year ended Dec 31, 2023 (FY2023). Revenue rose 21% to RM114.2 million thanks to higher sales of both wholesale and retail segments. Domestic market made up 75% of its revenue while exports to Singapore accounted for 25%. Alliance Islamic Bank Bhd is the principal adviser, sponsor, sole underwriter and placement agent for the IPO exercise. KUALA LUMPUR (April 24): ACE Market-bound Farm Price Holdings Bhd said it intends to expand in Singapore, leveraging the strengthening Singapore dollar against the ringgit for increased market advantage while anticipating a rise in regional demand. Farm Price managing director Dr Lawrence Tiong Lee Chian said the group is mainly involved in the wholesale and distribution of fresh vegetables, which it receives from both domestic and international markets suppliers, and stores them in a warehouse in Malaysia. In FY2023, the group sourced 18% of its vegetable supply from local suppliers, while the remaining 82% was sourced from five regional suppliers including Vietnam and Indonesia, among others. “Our demand in Singapore is growing; we plan to allocate more resources there,” Lee said during the initial public offering (IPO) prospectus launch on Wednesday. For the financial year ending Dec 31, 2023 (FY2023), the company’s export sales to the region amounted to RM29.08 million or 25.46%, while domestic sales accounted for the remaining RM85.12 million or 74.54%. However, Farm Price cited the potential risks of its business operations in Singapore to include labour shortages, increasing rental costs and fluctuations in foreign exchange. KUALA LUMPUR (April 24): I-Bhd, which develops properties and operates theme parks, said on Wednesday it is planning to issue preference shares to its major shareholder in a deal that could raise up to RM100 million. The proposal calls for the issuance of up to 100 million redeemable preference shares to Sumurwang Sdn Bhd at RM1 apiece, according to an exchange filing. The shares are non-tradable and not convertible into ordinary shares of the company, it noted. Sumurwang is controlled by I-Bhd chairman Tan Sri Lim Kim Hong, and Farm Price’s IPO comprises 102 million new shares, representing 22.67% of the group’s enlarged share capital. Additionally, an offer for sale of 33 million existing shares, or 7.33% of the enlarged share capital, is available through a private placement to selected investors. Priced at 24 sen apiece, Farm Price’s pricing-to-earnings ratio stands at 12.4 times, based on its net profit of RM8.7 Farm Price eyes Singapore expansion, bolstered by stronger dollar, rising demand I-Bhd to raise RM100 mil from preference share issue by Luqman Amin theedgemalaysia.com by Jason Ng theedgemalaysia.com Farm Price starts taking orders for ACE Market IPO to raise up to RM24.48 mil by Luqman Amin theedgemalaysia.com million for FY2023. The revenue for FY2023 was RM114.2 million, marking a 21% year-on-year increase. The application period for the IPO will close on April 30, with the listing scheduled for May 14. Alliance Islamic Bank Bhd is the principal adviser, sponsor, sole underwriter, and placement agent for the IPO exercise. the deal will allow I-Bhd to speed up development pipeline in i-City to “leverage the anticipated upswing” in the property market, I-Bhd said in a separate statement. I-Bhd has earmarked RM45 million of the proceeds to settle advances provided by Sumurwang for its business and RM40 million to fund the ongoing BeCentral Residences project. The company also plans to use RM14.65 million as working capital and the remainder to defray expenses for the issuance. continues on Page 11
thursday A P R IL 25, 2024 11 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): OCR Group Bhd on Wednesday entered into a deal with a landowner to jointly develop a residential project on 18.37 acres (7.43 hectares) of freehold land in Templer, Rawang, with an estimated gross development value of RM313 million. The project comprises 118 semi-detached houses, 37 bungalow lots, and five shoplots, the property developer said in a bourse filing. OCR said that under the joint-venture (JV) agreement, the landowner, Lecca Properties (M) Sdn Bhd, stands to gain RM45 million for partnering with the developer. Any profit sharing depends on the difference between 50% of the development profit and Lecca’s minimum entitlement, and if 50% of the development profit falls short of RM45 million, no additional payment is due to Lecca. OCR said that the project is expected to be launched in 2025, and will be financed by the group’s internally generated funds and/or bank borrowings. OCR managing director Billy Ong Kah Hoe said the landed residential development in Templer boasts a strategic location, offering private and tranquil surroundings appealing to Klang Valley residents seeking both urban convenience and a closeto-nature lifestyle. “With its prime location and attractive merits, we are confident in its success, and look forward to delivering a unique development that enriches the lifestyle of its residents,” Ong added. Shares in OCR closed half a sen or 8.33% lower at 5.5 sen on Wednesday, giving the group a market capitalisation of RM76.23 million. OCR Group inks JV agreement for residential development in Rawang KUALA LUMPUR (April 24): Axis Real Estate Investment Trust (Axis REIT), which focuses on industrial assets, is disposing of its property in Nusajaya, Johor, for RM162 million cash to a data centre operator. It did not disclose the identity of the purchaser. In a bourse filing on Wednesday, Axis REIT said the proposed disposal is in line with the trust’s investment objectives. “Axis REIT Managers Bhd (the REIT’s manager) believes that in the nine years of owning this property, it has maximised the income-generating potential of this asset, and there is limited upside to future rental growth in the asset’s current capacity as a manufacturing facility. “Given the favourable price of this asset sale and leveraging on the best and highest use of the property as a data centre development, this is an opportune time to dispose of the property, and to redeploy the capital towards potential yield-accretive properties,” it added. Axis Steel Centre @ SiLC is sprawled over 26.96 acres (10.91 hectares) of industrial land. There are two single-storey detached factories, a two-storey office building, a two-storey canteen and maintenance office, a single-storey training centre, a three-storey worker hostel, and other ancillary buildings sited on it. Axis REIT said the original cost of investment of the property was RM153.5 million, and it had an audited net book value/carrying value of RM159 million as at end-December 2023. The disposal, which is slated to be completed by the second half of this year, is expected to rake a disposal gain of RM500,000. It will have no material impact on the trust’s earnings for the financial year ending Dec 31, 2024. Net proceeds of the proposed disposal will be utilised to repay existing financing, the REIT added. Axis REIT units settled one sen or 0.5% higher at RM1.87 on Wednesday, giving the REIT a market capitalisation of RM3.27 billion. The units have risen 5% so far this year. Read also: AME REIT’s 4Q net property income jumps 12%, declares 1.87 sen distribution per unit Axis REIT to dispose of Axis Steel Centre @ SiLC in Johor for RM162 mil cash by Justin Lim theedgemalaysia.com by Choy Nyen Yiau theedgemalaysia.com Sumurwang owns a direct 57% stake in I-Bhd and another 6% indirectly. “The board is of the view that the proposed issuance is an appropriate avenue to raise the necessary funding”, allowing the company to raise funds without security and at a rate lower compared to the existing bank borrowing rate that ranges from 4.21% to 5%, I-Bhd said. The BeCentral Residences, comprising two towers with a total of 986 units, is currently under construction and is expected to be completed by the end of 2025. The entire project is expected to cost RM336.7 million, of which 45% has been spent and the remaining will be funded from proceeds of the share issue and internally generated funds, I-Bhd said. The proposals are expected to be completed in the third quarter of 2024, the company added. Apart from BeCentral Residences, another project under construction is the 8 Premier corporate-and-retail spaces. The two projects have a combined gross development value of about RM700 million. The RM100 million infusion will “catalyse” the development of the remaining gross development value of RM5 billion in i-City “and strengthen the path for unparalleled growth and prosperity”, the company said. “With the financial backing in place, the group is set to grow its RM1 billion investment property portfolio and maximise returns from assets” such as Mercu Maybank tower, DoubleTree Hilton i-City, Best Western hotel, Central i-City regional mall, Tier-3 Data Centre and carpark facilities, it added. AmInvestment Bank is the adviser to I-Bhd for the proposed issuance while cfSolutions Sdn Bhd has been appointed by the company to act as independent adviser to other directors and minority shareholders. from Page 10
THURSDAY APRIL 25, 2024 12 THEEDGE CEO MORNING BRIEF HOME KUALA LUMPUR (April 25): YNH Property Bhd is aborting the sale of a 6.49- acre land in Segambut, and has appointed Chin Hin Group Property Bhd to develop the plot for a serviced apartment project that carries a potential gross development value (GDV) of RM685.1 million. According to a bourse filing by Chin Hin on Wednesday, YNH’s wholly-owned Kar Sin Bhd, together with New York Empire Sdn Bhd (NYESB), had inked a development agreement with Chin Hin’s unit, Chin Hin Property (Segambut) Sdn Bhd, for the project. Kar Sin is the beneficiary owner of the plot, while NYESB — 80%-owned by Ding Chee Ling and 20% by Lim Leong Wouh — is the registered proprietor. Chin Hin is to develop a 2,434-unit serviced apartment on the plot, which it estimated will cost about RM575 million. In return, Chin Hin will be entitled to a sum of RM633 million, plus 84.5% of the GDV if it exceeds RM685 million. Kar Sin, as the beneficiary owner, will get at least RM52 million from Chin Hin, even if the GDV of the project is less than RM685 million. If the estimated GDV is met, it will get an “additional” but unspecified entitlement. Chin Hin will pay the RM52 million as security deposit within three months after the agreement gets all the necessary approvals. Of the sum, Chin Hin will pay RM24 million to Frazel Group Sdn Bhd on behalf of Kar Sin. According to Chin Hin, Frazel had inked a sale and purchase agreement (SPA) with Kar Sin on Sept 6 last year to buy the land. But the SPA had been revoked by the parties on Wednesday. YNH, however, did not announce either the SPA or the revocation of the deal. Meanwhile, part of the deposit will go towards paying the redemption sum of a financing provided by RHB Bank, to whom the Segambut land is currently charged. The balance, net of the redemption sum, will be paid to Kar Sin. Chin Hin’s disclosure showed that NYESB had in June 2008 sold the land to Kar Sin. It is unclear whether the title of the freehold land has been transferred to Kar Sin, as NYESB is still listed as the registered proprietor of the land. Kar Sin had in August 2016 rented the land to Nation Drive Wilayah Sdn Bhd, but the length of the tenure was not disclosed. Chin Hin said the project is expected to commence in July next year and estimated to be completed in June 2030. The project will be funded by external borrowing and internally generated funds, it said. Chin Hin said taking on the development is in line with its strategy to source new landbank, and given the land’s strategic location, it is confident that it will contribute positively to its future earnings. Chin Hin appointed to develop Dutamas land caveated by MACC Separately, Chin Hin announced it has been appointed to develop a 2.67-acre freehold land in Dutamas, Mukim Batu, into a 974-unit serviced apartment, with a GDV of RM395.51 million, costing RM323.2 million to build between May 2025 to April 2030. The land, however, is caveated by the Malaysian Anti-Corruption Commission, and is currently charged to United Overseas Bank (M) Bhd’s Ipoh branch. For this development, Chin Hin was appointed by Archmill Sdn Bhd and Suasa Sentosa Sdn Bhd. BY CHESTER TAY theedgemalaysia.com YNH aborts sale of Segambut land, appoints Chin Hin Group Property to develop it instead Archmill, the registered proprietor to the land, is controlled by Yew Hock Ming and Manogaran A/L PA Devanathan; while Suasa Sentosa, as beneficiary owner, is equally owned by Lau Sheng Ming and Yu Teong Wei. All four names were involved in a series of joint ventures with YNH for lands in the vicinity of the Sri Hartamas area. For this Dutamas land, Chin Hin will be paying Suasa Sentosa RM42 million as security deposit. Chin Hin will be entitled to the sum of RM353 million “plus 81% of the GDV which exceeds RM395 million”, while Suasa Sentosa is entitled to a sum equivalent to 19% of the GDV. Within the next 12 months, the parties involved have to discharge the land from existing charge, free it from MACC’s caveat, and terminate a turnkey construction agreement entered between Suasa Sentosa and Kar Sin in January 2011 to jointly develop the land. Shares of Chin Hin, which has more than doubled year-to-date, closed two sen or 1.1% higher at RM1.85, giving it a market capitalisation of RM1.22 billion. YNH, on the other hand, closed half sen or 1.1% lower at 45 sen, valuing it at RM238.05 million. YNH unit appoints Chin Hin Group Property to develop RM685.1 mil serviced apartment
thursday A P R IL 25, 2024 13 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): Construction outfit Fajarbaru Builder Group Bhd has bagged a RM252.26 million contract from WCT Holdings Bhd to undertake Phase 1 of a two-phase development of two blocks of serviced apartments in Johor Bahru. In a filing with Bursa Malaysia on Wednesday, Fajarbaru said its wholly owned subsidiary Fajarbaru Builder Sdn Bhd has accepted a letter of award from WCT Construction Sdn Bhd, an indirect subsidiary of WCT, for the proposed job. The construction works for Phase 1 comprise eight towers housing 2,048 units and 69 units of commercial lots. The contract period for Phase 1 is 36 months, commencing on May 6 this year and to be completed on May 5, 2027. “Phase 2 works, comprising four serviced apartment towers, is subject to the Fajarbaru Builder bags RM252 mil construction job in Johor Bahru from WCT KUALA LUMPUR (April 25): Eden Inc Bhd’s major shareholder Tan Sri Abd Rahim Mohamad is proposing to settle a RM45.65 million debt his company owes Eden by transferring the ownership of a 2.4 million sq ft (about 55 acres) leasehold land to the listed entity. Abd Rahim — the father-in-law of entrepreneur Datuk Fakhri Yassin, son of former deputy prime minister Tan Sri Muhyiddin Yassin — is the sole owner of Zil Enterprise Sdn Bhd (ZESB), which owes Eden the sum mentioned. ZESB has a direct 6.73% stake in Eden and another 8.67% indirect stake via Serata Padu Sdn Bhd. This gives Abd Rahim control of an indirect 15.4% in Eden. ZESB is also the owner of the industrial plot in the Mukim of Sungai Karang, Kuantan, valued at RM50.5 million — as appraised by an independent valuer — that Abd Rahim wants to transfer to Eden. There are 72 years left to the land’s lease, which will expire on Oct 28, 2096. ZESB’s original investment in the land was RM549,700, made in October 1997. On transfer of the land to Eden’s unit Stratavest Sdn Bhd (STV), Eden will pay ZESB the balance of the land value, net of the debt, that amounts to RM4.85 million, in cash. Eden acquired STV from Serata Padu in August 2003 for RM123.33 million by issuing 123.33 million shares representing the 8.7% interest in Eden. In that same year, Eden bought 540.67 acres of industrial land in Kuantan, Pahang from ZESB for RM76 million, which was paid by the issuance of irredeemable convertible unsecured loan stocks. Prior to those acquisitions, STV had advanced a series of payments, at an interest-free basis, to ZESB and its 52%-owned unit Serve Vest (M) Sdn Bhd for working capital. After that, Eden consolidated the debts owed by ZESB (RM10.87 million) and Serve Vest (RM11.36 million) into STV, which totalled RM22.23 million, with no fixed repayment period. Eden then imposed annual interests on the debts from 2002 to 2018, with interests accrued amounting to RM38.69 million. The sum owed by Serve Vest was also reassigned to ZESB, making ZESB solely liable for the total RM60.92 million debt. Over the years, ZESB has managed to trim RM24.28 million of the amount owed, including fully repaying the principal owed — leaving RM45.65 million of interest costs. Eden said the recoverability of the debt had been highlighted by its independent auditor in an October report last year as a “key audit matter”, as it had been long outstanding, while the interest-bearing principal had Eden’s major shareholder proposes land transfer to settle RM45.65 mil debt owed to company by Luqman Amin theedgemalaysia.com by Luqman Amin theedgemalaysia.com confirmation of award by WCT Construction within a 12-month period from the date of commencement of the contract. The company will make the relevant announcement as and when there is confirmation of award,” Fajarbaru added. In a separate statement, Fajarbaru group executive chairman Datuk Seri Chan Kong Choy said the contract win brings its total construction orderbook to RM1.2 billion. “This job is one of Fajarbaru’s biggest contract wins year-to-date and brings our orderbook of ongoing projects to over a billion ringgit. Securing this job reaffirms our position as a trusted construction partner for major real estate developers such as WCT,” he added. already been fully repaid, hence it does not contribute further to the group’s earnings. By recovering the debt through the land transfer, Eden said it will strengthen its overall financial position as its non-current assets are expected to rise to RM292.1 million from RM241.6 million as at June 30, 2023, and grow its landbank to 416.63 acres from 361.53 acres. The group may also benefit from the land’s capital appreciation from commercial and industrial developments, it added, as well as the development of the East Coast Rail Link nearby. Free warrants, ESOS Eden is also planning to issue free warrants to reward its shareholders, and to set up a five-year employee share option scheme (ESOS) that will involve up to 15% of its total issued shares. It intends to issue up to 252.68 million free warrants on the basis of one warrant for every two Eden shares held, at an entitlement date to be fixed. The exercise price for the warrants is yet to be determined. At market close on Wednesday, Eden shares settled half a sen or 3.13% higher at 16.5 sen, giving the group a market capitalisation of RM83.38 million.
thursday A P R IL 25, 2024 14 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): Tan Sri Muhammad Ikmal Opat Abdullah, founder and controlling shareholder of Widad Group Bhd, has continued to trim his stake in the construction company as well as in IT products and services firm Dataprep Holdings Bhd. Muhammad Ikmal, through his private vehicle Widad Business Group Sdn Bhd, divested 12.59 million shares in Widad via open market transactions between April 22 and April 23. Consequently, his indirect stake in the company decreased from 18.11% to 17.702%. Additionally, his direct stake declined to 0.166% following the sale of 100,000 shares during the same period. The combined value of these share transactions amounted to RM81,408.74, according to Widad’s bourse filing. Currently, Ikmal holds a 17.868% direct and indirect stake in the company. In a separate filing, Muhammad Ikmal, through Wardah Communication Sdn Bhd, sold 16.13 million shares or a 2.19% stake in Dataprep via the open market on April 2. Wardah Communication now holds a 3.79% stake in Dataprep — below the 5% threshold required for substantial shareholding status — a decrease from the 7.859% it held in early January this year. The transaction price was not disclosed. Based on Dataprep’s closing price of 13.5 sen on April 22, the block of shares would have been worth about RM2.18 million. Read the full story Muhammad Ikmal continues to trim stake in loss-making Widad, Dataprep KUALA LUMPUR (April 24): United Plantations Bhd’s (UP) net profit grew 18.54% year-on-year to RM132.87 million for the first quarter ended March 31, 2024 (1QFY2024), mainly due to a sharp drop in finance cost, on the back of slightly higher revenue, thanks to higher crude palm oil (CPO) and palm kernel (PK) prices. The plantation group stated in a bourse filing that its revenue grew 3.64% to RM476.75 million, from RM459.99 million a year earlier, due to increases in revenues for the plantation and refinery segments, as a result of higher CPO and PK prices. The group’s profit before tax of RM178.4 million for the latest quarter was 18.9% higher than RM150 million a year ago, mainly due to higher contributions from the plantation segment. According to UP, CPO prices have recovered — from a low of RM3,067 in early January to a high of RM4,197 in late March — due to lower-than-expected production in Malaysia and Indonesia, resulting in lower stocks, and also a reduction in Brazil’s estimated soybean production. This halted the bearish trend in soybean prices, which in turn supported the positive price trend in CPO prices. Going forward, UP will be watching the impact of weather conditions on total palm oil production of its Malaysian operations. “Weather has been good. Combined with an improved labour situation within the plantation sector, it is expected that production [in Malaysia] will increase in the forthcoming quarter. “This could put pressure on prices. However, much will depend on the severity of the forthcoming dry season this May to September, which management will be monitoring closely,” said the group. Another factor that will influence both the equity and commodity prices is the assessment of global economic growth for the remainder of 2024, not least the speculation on possible interest rate cuts in the US and the development of the Chinese economy. The escalation of geopolitical conflicts and their impact on global supply chains, which will affect business and consumer spending and ultimately determine deUnited Plantations kicks off FY2024 on positive note as 1Q profit rises 18.5% mand for vegetable oils and fats, are also factors that will influence commodity prices, the group said. “Amid the global uncertainties and challenges, we continue to focus on our field operations by taking steps to improve on our yields, costs and productivity. This aim is pursued through ongoing mechanisation initiatives, and through the replanting of older, less productive oil palm stands with our latest in-house produced superior planting materials. “These efforts are vital to our ability to remain competitive and profitable, as increasing labour costs, [and costs of] energy, fertilisers, chemicals and building materials, are expected to remain at high levels, thereby exerting upward pressure on our cost base,” said UP. The board of directors expects UP’s FY2024 results to be satisfactory, based on current palm oil prices and the company’s focus on securing the budgeted crop in the remaining part of the year. Shares in UP climbed to a record high of RM26.48 in early trade on Wednesday. The counter later pared gains to close at RM26.10, still up 34 sen or 1.32%, pushing its market capitalisation to RM10.86 billion. It is trading at a price-earnings ratio of 15.3 times. The counter has surged over 46% yearto-date, and 57% in the past year. by Syafiqah Salim theedgemalaysia.com by Syafiqah Salim theedgemalaysia.com Widad Group Bhd 0 200 400 600 800 Mar 31, 2023 Apr 24, 2024 0 20 40 60 Vol (mil) Sen *7 sen 42 sen *As at market close on April 24, 2024 Source: Bloomberg Dataprep Holdings Bhd 0 50 100 150 200 Mar 31, 2023 Apr 24, 2024 10 15 20 25 Vol (mil) Sen *12.5 sen 17.5 sen *As at market close on April 24, 2024 Source: Bloomberg
thursday A P R IL 25, 2024 15 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): E-government services provider MyEG Services Bhd has inked an agreement to collaborate on the launch of a virtual asset fund or Hong Kong virtual assets exchange-traded fund (ETF) products. The group and Zetrix Foundation signed a memorandum of understanding (MOU) with Hong Kong licensed virtual asset manager MaiCapital, to collaborate on launching a Securities and Futures Commission of Hong Kong (SFC)-approved ETF, which would consist of a basket of cryptocurrencies, such as Bitcoin and Zetrix. MaiCapital has received SFC’s approval to manage funds that may comprise up to 100% virtual assets. The firm is subject to SFC’s “Proforma Terms and Conditions for Licensed Corporations which Manage Portfolios that Invest in Virtual Assets”. In a statement on Tuesday, MyEG managing director Wong Thean Soon said the collaboration marks another milestone in integrating digital assets into mainstream finance, as this would provide investors with additional avenues for diversification across multiple cryptocurrencies, and help them to mitigate the risks and volatility associated with owning a single cryptocurrency. This partnership follows MyEG-developed Zetrix’s announcement of a strategic alliance with Web3Labs Hong Kong, a powerhouse in Web3 development and investment, alongside venture capital firm Summer Capital. MyEG and MaiCapital aim to drive forward Hong Kong’s Web3 ambitions and position Zetrix as the preferred blockchain infrastructure for applications aligned with the Hong Kong government’s objectives, an initiative launched earlier this year. For the financial year ended Dec 31, 2023 (FY2023), MyEG’s net profit grew 22.3% to RM487.65 million from RM398.66 million a year earlier, as revenue increased by 20.57% to RM774.28 million against RM642.16 million previously. This was mainly contributed by MyEG’s Zetrix blockchain platform, sale of Zetrix tokens, and the initial exchange offering of Zetrix tokens on three major global digital asset exchanges. Besides its Zetrix blockchain platform and tokens, the annual earnings were also driven by existing concession and commercial services, as well as an increase in foreign worker job-matching service due to the uplifting of the freeze on foreign worker recruitment. According to MyEG, its long-term outlook remains positive as the group continues to introduce innovative series in Malaysia and in the global. At 10.24am on Wednesday, shares of MyEG rose half a sen or 0.64% to 79 sen, giving the group a market value of RM5.97 billion. MyEG inks partnership to launch Hong Kong virtual assets KUALA LUMPUR (April 24): Meta Bright Group Bhd said its wholly owned subsidiary FBO Land (Serendah) Sdn Bhd and Doople Tech Sdn Bhd have entered a solar supply agreement with Cherengin Hills Sdn Bhd, following its recent collaboration with Doople to form a joint venture (JV) company to bid for renewable energy (RE) projects with a Bumiputera equity requirement. According to a bourse filing on Tuesday, the rights and obligations of Doople under the agreement dated Nov 20, 2023, have been novated to FBO Land. Subsequently, FBO Land will install, maintain and operate the solar photovoltaic system at Cherengin Hills’ properties in Bentong, Pahang, for 21 years from the operational start date. Doople is involved in, among others, the business of solar energy, electrical installation, wiring and fittings. Meanwhile, Cherengin Hills will purchase all of the net electricity output generated by the system at the rate of 38.175 sen per kilowatt hour (kWh) throughout the term. The filing does not include any estimation of the total electricity output. Doople, on the other hand, will receive a sum of three sen per kWh for every energy produced by the system within the term, in consideration of the novation of its rights and obligations. Meta Bright said in a statement on Tuesday that FBO Land will capitalise on the carbon credits generated by the system, while Cherengin Hills will benefit from reduced energy costs and lower carbon footprints. Cherengin Hills is principally involved in the business of hotels, motels and holiday camps. “The novation of the solar supply agreement, which marks our maiden solar project in the resorts segment, represents a strategic initiative by the company to consolidate expertise and resources to ensure long-term growth and optimised operational capabilities,” it said. Meta Bright reported that its total value of completed installation projects stands at RM3.55 million, while those currently in progress are valued at around RM11.89 million. Meta Bright lands solar supply deal after forming JV company with Doople On April 19, Meta Bright announced that it entered into a subscription and JV agreement with Doople to form a JV company, in which Doople will own a 51% stake and FBO Land will hold the remainder. Under the agreement, FBO Land will also subscribe to one million redeemable, non-convertible preference shares (RNCPS) in the JV company at an issue price of RM1 per share. In the JV company, FBO Land shall provide the financing — via the RM1 million from the subscription of RNCPS — and oversee general administration matters, while Doople will be responsible for all technical aspects, as well as applications for relevant approvals, certification and licences for the RE projects. For the second financial quarter ended Dec 31, 2023 (2QFY2024), the group reported a net profit of RM2.7 million, more than double the net profit of RM1.11 million in the corresponding quarter of the previous year. Quarterly revenue climbed 25% to RM9.98 million from RM7.96 million. At the time of writing, shares of Meta Bright were unchanged at 15.5 sen, valuing the group at RM388 million. Read also: Meta Bright bags equipment leasing contract from Australian copper mining firm by Hee En Qi theedgemalaysia.com by Syafiqah Salim theedgemalaysia.com
thursday A P R IL 25, 2024 16 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): The Malaysian Anti-Corruption Commission investigating officer (MACC IO) probing Datuk Seri Najib Razak in relation to the 1Malaysia Development Bhd (1MDB) debacle never asked the former prime minister if he had instructed for the controversial transfer of US$700 million to a company linked to fugitive Low Taek Jho (Jho Low), the court heard on Wednesday. Nur Aida Arifin, the prosecution’s 49th witness in the ongoing 1MDB-Tanore trial, said that she had asked former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi, and that was sufficient information. The IO was responding to defence counsel Wan Azwan Aiman’s questions during cross-examination. Wan Azwan: Did you ask Najib if [the instruction] to transfer 70% of the sum came from him? Nur Aida: I asked Shahrol. Wan Azwan: Did you ask Najib? Nur Aida: No. Wan Azwan: Don’t you think you should have asked Najib as it is important? Nur Aida: No. The controversial transfer is related to 1MDB’s joint venture (JV) with Saudi Arabia-based PetroSaudi International Ltd (PSI), under which 1MDB undertook an equity investment of US$1 billion, while PSI injected US$1.5 billion worth of assets into the JV. However, after the JV agreement was signed, PSI said its US$1.5 billion asset injection into the JV entailed a US$700 million advance for 1MDB, which meant 1MDB owed PSI. However, the so-called JV agreement was not entered into with PSI, but with a company called PetroSaudi Holdings (Cayman) Ltd. Through Shahrol’s instructions, 1MDB had diverted US$700 million from the US$1 billion JV equity investment into an account belonging to Good Star Ltd, on the grounds that Good Star was PSI’s affiliate. In truth, Good Star was linked to Jho Low. Defence: Purported phone call that ‘pressured’ board to join JV did not take place Previously, the prosecution’s 15th witness, former 1MDB chairman Tan Sri Mohd Bakke Salleh, testified that the time constraints to approve the JV, coupled with the management’s blatant disregard of the board’s advice, and the split remittance had prompted his resignation on Oct 19, 2009, only a few weeks after his reappointment on Aug 11. The resignation of the well respected member of Malaysia’s business circle prompted talk that something was amiss within 1MDB. The late Tan Sri Azlan Mohd Zainol also resigned in protest against the remittance of the funds, leaving about three months later on Jan 11, 2010. While on the stand in mid-2022, Bakke also revealed that just before a board meeting on Sept 26, 2009, Jho Low, who was not part of 1MDB, had taken a phone call from Najib before the meeting and passed the phone to him. Bakke testified that Najib asked him to forget all the past 1MDB transactions related to the Islamic medium-term note issuance, and to ‘firm up’ the JV with PSI. This phone call, Bakke testified, pushed the board to lock in the JV deal. However, on Wednesday, Wan Azwan said his client had indicated to the defence that the phone call never took place. Nur Aida, the MACC IO, disagreed. Wan Azwan: That phone call never took place. Nur Aida: I disagree. Wan Azwan: Even if the call happened, Najib never instructed Bakke to pass the resolution to enter the JV. Nur Aida: I don’t know [about that]. by Tarani Palani & Timothy Achariam theedgemalaysia.com MACC officer did not ask Najib if he instructed controversial transfer US$700 mil to Good Star Wan Azwan: In your investigation, [did you ask] Bakke? Nur Aida: No. Wan Azwan: In that purported phone call, Najib never instructed the BOD (board of directors) to make the US$700 million [transfer] to Good Star. Nur Aida: Yes. ‘Najib never instructed Shahrol or Casey to transfer funds to PSI Holdings Cayman’ Earlier, Nur Aida also testified that Najib didn’t instruct Shahrol or former 1MDB executive director of business development Casey Tang Keng Chee to transfer the US$700 million to PSI Holdings Cayman or Good Star. Wan Azwan: Najib never instructed Shahrol or Casey to hide from the board the fact that 1MDB had to transfer US$700 million to PSI Holdings Cayman. Nur Aida: [That’s] correct. Wan Azwan: Najib never instructed Shahrol or Casey to transfer the funds to Good Star. Nur Aida: Correct. The counsel also went into Jho Low’s ties with celebrities and Middle Eastern royalties. Nur Aida responded that she did not investigate Jho Low, hence she doesn’t know about his connections. Wan Azwan further said that his client had instructed the defence to point out that the late King Abdullah and the Saudi government in general were known for their “generosity” and “philanthropic nature”. He went on to cite newspaper articles detailing large donations made to other Islamic countries like Egypt, Pakistan and Palestine. The IO said she was not aware of this. Najib has maintained that the monies in his accounts were donations from Saudi Arabia. In this trial, Najib faces four counts of abuse of power for using his position as the then prime minister, finance minister, and chairman of 1MDB’s board of advisers to receive gratifications worth US$620 million (RM2.27 billion). He also faces 21 money-laundering charges. Read also: 1MDB fails in bid to transfer suit against Riza Aziz and Red Granite to another court Nur Aida Arifin, the prosecution's 49th witness in the ongoing 1MDB-Tanore trial, says that she had asked former 1MDB chief executive officer Datuk Shahrol Azral Ibrahim Halmi, and that was sufficient information. Zahid Izzani/the edge
thursday A P R IL 25, 2024 17 The E dge C E O m o rning brief home KUALA LUMPUR (April 24): OYO plans to add 100 self-operated hotels in Malaysia in 2024 and will be looking to secure annual to long-term management contracts on a revenue-sharing basis for these properties. This is part of OYO’s programme aimed at fostering economic growth in communities via partnerships. As a start, OYO launched its first self-operated hotel in the country with the opening of GS Hotel in Kota Damansara, Selangor on March 5, this year. The global hospitality technology company aims to partner with real estate developers to identify and develop new hotels at several key destinations such as Kuala Lumpur, Penang and Kota Kinabalu. OYO will ensure the realtors receive assured monthly or yearly rent for their properties, comprehensive training and other ongoing support with regards to managing the OYO properties. Most of these hotels will be under the company’s premium hotel offerings such as Sunday, Townhouse, Townhouse Oak and Collection O. “Malaysia is an important market for OYO where we are empowering our hotel partners with innovative programmes to help them increase their revenue and stay competitive in the market. This programme will create a collaborative ecosystem where hotel operators taking up properties on lease with OYO will have increased autonomy and opportunities to manage these properties effectively,” OYO plans to launch 100 selfoperated hotels in Malaysia for 2024, with the first in Kota Damansara KUALA LUMPUR (April 24): GXBank, Malaysia’s first digital bank, said it plans to establish a regional centre of excellence (COE) for shared services in Malaysia, serving Grab-led digital banks and financial and operational services in the region. The COE is slated to be operational by the end of 2024 and set to progressively offer almost 400 roles focusing on core banking activities such as banking operations, technology and risk management, said GXBank. “Establishing the COE is part of GXBank’s RM1.5 billion investment into Malaysia over the next five years, positioning the country as a central hub to revolutionise the region’s digital finance and banking landscape,” the bank added in a statement. GXBank said the COE will leverage the country’s dynamic infrastructure and progressive policies, aligning with KL20’s purpose to elevate Malaysia as an innovation hub, leading technology and digital advancements. GXBank chief executive officer Lai PeiSi said the COE is part of the bank’s longterm goal to not only become the digital bank of choice for Malaysians, but also cultivate high-value skills that will enhance the region’s digital banking industry. “Building on our current more than 400-strong team, we want to harvest and nurture the rich talent we have in Malaysia. We aim to create a dynamic environment in which they can challenge the status quo, raise the overall competencies and create best-in- class Grab-led GXBank to establish regional centre of excellence in Malaysia by year-end by Justin Lim theedgemalaysia.com by Chin Wai Lun theedgemalaysia.com said OYO Malaysia country head Akshay Rathod in a press statement on Wednesday, adding that the company’s goal is to empower the hotel operators with the support necessary to optimise the performance of their hotels. These hotels will be tagged as “Managed by OYO” on the company’s app and website to highlight OYO’s active involvement in their operations. The company will closely monitor the hotel’s upkeep and customer reviews to evaluate and reward top operators. “We were looking forward to a professional team adept at handling hotel operations. This programme has delivered all that we needed while addressing our concerns. It reflects OYO dedication to creating a mutually beneficial environment, fostering growth, and driving collective success. We see great potential of growth through this programme,” said GS Hotel owner Datuk Gordev Singh. OYO Rooms provides a digitised platform to help patrons increase their visibility and in turn, improve their revenue. Its revamped technology products, like CoOYO, allow patrons to design and run their own promotional offers to increase occupancy. practices in the digital finance industry. “We are eager to answer the government’s call to action; with their support, we are well positioned to serve Grab-led digital banks in the region. Our collective mission is to serve the millions of financially underserved individuals, facilitating their intergenerational social mobility and boosting the region’s overall economy,” she said. To build capable tech talents, GXBank and Grab will be working with an entrepreneur support organisation, Endeavor Malaysia, to help mentor selected local, high-potential entrepreneurs to accelerate their growth. Grab Malaysia managing director Adelene Foo said working with Endeavor gives the group a meaningful opportunity to give back, sharing their knowledge and experiences to assist the country’s burgeoning start-ups in realising their full potential. “With physical presence regionally and global R&D centres, we bring a wealth of experience in identifying and addressing hyperlocal needs whilst navigating various regulatory, socio-economic and technological terrains,” Foo added. OYO plans to add 100 self-operated hotels in Malaysia in 2024 via partnerships with realtors.
thursday A P R IL 25, 2024 18 The E dge C E O m o rning brief world (April 24): The yen fell on Wednesday to its weakest levels against the dollar since 1990, with markets alert to any signs of intervention from the Japanese authorities to prop up their currency. The dollar reached as high as 155.17 yen, its strongest since 1990, before falling back in choppy trading, a sign of market nervousness around the 155 level. It was last at 154.97, up 0.09%. Japan’s yen hits 155 per dollar, weakest since 1990 JAKARTA (April 24): Indonesia’s central bank delivered a surprise rate hike on Wednesday, stepping up efforts to support the rupiah currency against selling linked to global risk aversion and a delay in the expected timing of any US policy easing. Bank Indonesia (BI) raised the seven-day reverse repurchase rate by 25 basis points to 6.25%, its highest since the bank made the instrument its main policy rate in 2016. Six of 35 economists polled by Reuters had predicted the hike, which was BI’s first since October. The rest had expected BI to stand pat. BI also increased the overnight deposit facility and lending facility rates by the same amount to 5.50% and 7.00%, respectively. “This hike in interest rates is to strengthen the stability of the rupiah exchange rate against the risk of a worsening global economy,” BI Governor Perry Warjiyo told a briefing where the rate hike was announced. The rupiah extended gains after the announcement and was up 0.45% against the dollar at 0736 GMT at 16,140. The central bank has been intervening to defend the currency, which had fallen to around 16,200 per dollar — the weakest since 2020 — amid risk-off sentiment in markets as traders scale back expectations for US rate cuts and worry about escalating tensions in the Middle East. Indonesia’s annual inflation rate climbed to a seven-month high in March, though it remained close to the midpoint of BI’s 1.5% to 3.5% target range. Warjiyo said headline inflation was seen staying within the target range this year, and said core inflation was seen under control. BI kept its outlook for growth in Southeast Asia’s biggest economy at a range of 4.7% to 5.5% this year, compared to last year’s 5.05% growth. (April 24): Foreign investors have sold Indonesian stocks for 15 straight days, the longest stretch since January 2023, on expectations of a prolonged period of higher interest rates and a stronger US dollar. Global funds offloaded US$814.5 million of the nation’s stocks on a net basis Indonesia’s central bank delivers surprise rate rise to support rupiah Global funds sell Indonesian stocks in longest streak in a year by Gayatri Suroyo Reuters by Eduard Gismatullin Bloomberg Reuters The decline in the yen comes after a string of strong U.S. inflation data pushed the dollar to five-month highs and reinforced expectations that the Federal Reserve is unlikely to be in a rush to cut interest rates this year. The yen’s slide against the dollar has revived anticipation of currency intervention. Japanese Finance Minister Shunichi Suzuki and other policymakers have said they are watching currency moves closely and will respond as needed. The strong dollar prevailed at last week’s International Monetary Fund/World Bank Spring meetings in Washington too, and the United States, Japan and South Korea issued a rare joint statement on the issue. Speaking after the Group of 20 (G20) finance leaders’ meeting in Washington, Bank of Japan governor Kazuo Ueda said the Japanese central bank may raise interest rates again if the yen’s declines significantly push up inflation, highlighting the dilemma the weak currency has become for policymakers. The Bank of Japan concludes its latest policy meeting on Friday. this month, according to data compiled by Bloomberg as of Tuesday. They’re still net buyers so far this year. Other Southeast Asia markets, including Malaysia, Vietnam and the Philippines, have seen overseas investors withdraw funds in April. “Capital outflow accelerated on an abrupt shift in interest rate expectations, compounded by heightened geopolitical risk in the Middle East,” said Alan Richardson, a fund manager at Samsung Asset Management Co Ltd. “The combination of a stronger US dollar, higher bond yields, widening credit spreads and higher VIX equity volatility has heightened risk aversion to equities.” bloomberg
thursday A P R IL 25, 2024 19 The E dge C E O m o rning brief world BANGKOK (April 24): Thailand’s 500 billion baht (RM64.6 billion) handout scheme aims to reach the wider population and boost the overall economy through stimulus, a finance official said on Wednesday, responding to central bank recommendations it be targeted towards the poor. The central bank confirmed to Reuters it had sent a letter to cabinet with its recommendations on the digital wallet policy, following a request from the government to provide feedback. The Bank of Thailand had earlier on Wednesday told a press conference it had no objection to stimulus but wanted it to be targeted The policy received cabinet approval on Tuesday, clearing another hurdle for the government to roll out the stimulus plan, which would give 10,000 baht to each of 50 million Thais to spend in their communities in a six-month period. Paopoom Rojanasakul, secretary to the finance minister, on Wednesday told reporters the policy sought to reach the broader population, not only vulnerable sectors. The digital wallet, rollout of which has been delayed until the end of this year, has been widely criticised by economists and some former central bank governors as fiscally irresponsible. The government has insisted it will not negatively affect finances. The prime minister says the handout is necessary to breathe life into an economy in “crisis”, a depiction the central bank governor has disagreed with. Thailand’s US$13.5 bil handout aims to boost overall economy, not geared to poor, official says BANGKOK (April 24): The Bank of Thailand (BOT) has intervened in currency markets at times to ease any excessive moves in the baht while the current policy rate is robust and conducive to economic recovery, central bank officials said on Wednesday. Although volatility was high, it was not unusual and the baht was moving in line with regional currencies, assistant governor Piti Disyatat said, in remarks that come after the baht breached 37 to the dollar this week, a more than six-month low. The central bank has no specific levels for the baht in mind, he added. Current interest rate were robust and could handle future risks to the economy, the central bank said amid continued pressure from the government to lower borrowing (April 24): Cocoa resumed gains in New York, with prices the most volatile in almost five decades amid uncertainty over a historic crunch and as traders pull out of the market. Futures have soared about 160% already this year as poor West African harvests leave the world desperately short of beans. But the rally has made it more expensive to maintain positions, prompting investors to close out trades, draining liquidity and making the market more vulnerable to large price swings. Cocoa jumped as much as 4.5% on Wednesday, snapping an almost 9% two-day slide. That helped push a 60- day measure of volatility to the highest since 1977. Cocoa’s rally to a recent record above US$11,000 (RM52,558) a tonne means traders — including those who’ve hedged against physical holdings — have to come up with more money to pay margin calls, which work as an insurance policy to cover potential losses. When they can’t do that, they’re forced to close out their positions. That’s pushing down open interest, the number of outstanding contracts. costs and help jumpstart sluggish growth. “The current policy rate is close to neutral,” Piti said, adding the central bank was ready to adjust it if needed. He said, however, any big rate cuts would not be appropriate for the economy at the moment and lower rates would not help with financial access for smaller businesses. The BOT left its key interest rate unchanged for a third straight meeting on April 10. The next rate review is on June 12. Cutting rates could help lower debt in the short run but could also induce risks in the longer term, the BOT said on Wednesday, adding that by holding rates steady at 2.50% it created “policy optionality”. Thailand’s economy was still challenged by structural pressures while inflation remained low due to government measures and supply side factors, the BOT said. Thai central bank intervenes to ease baht volatility, says policy rate ‘robust’ Cocoa price swings are the craziest since the 1970s by Orathai Sriring & Kitiphong Thaichareon Reuters by Pratik Parija Bloomberg by Orathai Sriring, Kitiphong Thaichareon & Satawasin Staporncharnchai Reuters reuters bloomberg There’s still much uncertainty over global supplies. Still, a shift from the El Nino weather phenomenon to La Nina will likely help global production recover next season, and that weighed on prices early this week, The Hightower Report said in a note. Read the full story
thursday A P R IL 25, 2024 20 The E dge C E O m o rning brief world (April 24): The US Securities and Exchange Commission (SEC) wants to impose a US$5.3 billion (RM25.32 billion) fine on Terraform Labs Pte Ltd and its co-founder Do Kwon, the inventor of the failed TerraUSD stablecoin. Details of the proposed fine, which would be the crypto industry’s largest, come after Kwon and Terraform were found liable for fraud earlier in April, following a two-week trial in New York. Kwon and Terraform made more than US$4 billion in ‘ill-gotten gains’ from unregistered sales of tokens including Luna and UST, the SEC said in a filing with the Southern District Court of New York. Terraform’s UST, an algorithmic stablecoin that was supposed to be pegged to the price of the US dollar, wiped out US$40 billion in market value when it collapsed in 2022. The court should send “an unequivocal message that this sort of brazen misconduct” will not be tolerated, the SEC said in the filing. The proposed fine comprises a US$4.2 billion disgorgement penalty and US$545 million in prejudgement interest, as well as US$420 million and US$100 million civil penalties for Terraform and Kwon respectively. All told, the fine would surpass the US$4.3 billion paid by Binance to settle anti-money laundering and US sanctions violations charges with the US Department of Justice in November 2023, itself one of the largest corporate agreements in US history. Lawyers representing Kwon and Terraform challenged the SEC’s claims, arguing that token sales took place outside of the US and didn’t violate federal securities law. Kwon was arrested in Montenegro a year ago and convicted of attempting to travel using a fake passport. He is currently awaiting extradition either to the US or his native South Korea, and faces criminal fraud charges in both countries. The SEC also asked the court for a permanent bar on Kwon, who owns 92% of Terraform, serving as an officer or director, and seeks a ‘sworn accounting’ of his assets. US regulator seeks US$5.3 bil fine for Terraform Labs, Kwon (April 24): The US Department of Justice (DOJ) recommended a 36-month prison sentence for Changpeng Zhao, the former chief executive officer of Binance, the world’s largest crypto exchange. The sentence “will not just send a message to Zhao but also to the world”, the DOJ wrote in a court filing on Tuesday, adding the price for violating US law “must be significant to effectively punish Zhao for his criminal acts and to deter others”. Late last year, Binance pleaded guilty to US anti-money-laundering and sanctions violations, incurring US$4.3 billion (RM20.55 billion) in penalties as well as having to agree to oversight from authori- (April 24): JPMorgan Chase CEO Jamie Dimon said the U.S. economy was booming and consumer spending continued to be resilient. The U.S. economic boom is “unbelievable,” Dimon told the Economic Club of New York on Tuesday. “Even if we go into recession, the consumer’s still in good shape,” he said. Still, he reiterated caution about the potential economic impact of deficit spending, inflation and geopolitical conflicts. US seeks three-year prison sentence for ex-Binance CEO Zhao JPMorgan CEO Dimon says US economy is booming by Emily Nicolle Bloomberg by Nupur Anand & Niket Nishan Reuters by Suvashree Ghosh Bloomberg ties. Zhao also pleaded guilty and stepped down as the CEO. A three-year sentence for Zhao, who co-founded Binance, would be double what he was previously expected to serve. In a separate filing, lawyers for Zhao argued that he should receive a probation instead of prison time, citing a lack of precedent for incarceration in similar cases. Zhao’s case is the second major sentencing this year for a crypto executive in US courts. Prosecutors in the case against former FTX boss Sam Bankman-Fried had initially sought a term of up to 50 years for his role in the platform’s 2022 collapse. Criminal sentencing guidelines in that case recommended a 100-year term, but Bankman-Fried was ultimately sentenced to 25 years in prison in March. Binance pledged to make several changes to its structure and transparency in the wake of its US case, including the establishment of a global headquarters. The exchange received a long-awaited full registration of its services in Dubai earlier this month, after Zhao agreed to give up voting control in the local entity. A three-year sentence for Changpeng Zhao, who co-founded Binance, would be double what he was previously expected to serve. bloomberg
thursday A P R IL 25, 2024 21 The E dge C E O m o rning brief world (April 24): Mobvoi Inc, a Chinese artificial intelligence (AI) developer backed by Alphabet Inc’s Google, finished its first day of trading lower in Hong Kong, marking the third stock debut to flop in the city this week. The shares ended 3.2% lower even after they were sold near the low end of the indicated price range for the initial public offering (IPO). The company and its shareholders raised HK$321 million (US$41 million or RM195.81 million), much lower than the US$200 million to US$300 million it was said to be targeting last year. The slide also contrasted with gains in Hong Kong and Asian stocks markets on Wednesday. Known for its Ticwatch smartwatches and Chumenwenwen voice-activated search services, Beijing-based Mobvoi was founded in 2012 by a group of former Google employees. It drew Alphabet’s backing just three years later, marking the US tech giant’s first direct investment in China since withdrawing its search engine from the country in 2010. The disappointing debut adds pressure to Hong Kong’s ailing equity capital market, which saw IPO proceeds decline last year to the lowest level in over two decades, amid concerns over China’s ecoGoogle-backed AI firm Mobvoi is Hong Kong’s third stock debut flop this week HONG KONG (April 24): Hong Kong’s bourse operator reported a 13% drop in first-quarter profit on Wednesday, as sluggish trading and muted listing activities weighed on its businesses. The profit attributable to shareholders of Hong Kong Exchanges and Clearing Ltd (HKEX) fell to HK$2.97 billion (US$379 million), but was slightly above analysts’ forecasts of HK$2.82 billion compiled by LSEG. The drop in profit highlights the challenges ahead for HKEX, which has suffered since late 2020 from Beijing’s crackdown on a broad range of industries and is struggling to revive listings and trading amid geopolitical tensions and economic volatility. The bourse, once the world’s top destination for initial public offerings (IPOs), slid to the tenth spot in the first quarter in terms of funds raised via IPOs, according to data from Deloitte. Profits for the bourse operator rose in the four quarters over October 2022 to September 2023, driven mostly by its own investment fund gains and a low base for the corresponding year-ago periods. Starting October 2023, sluggish trading and static listing activities has driven down its income. Hong Kong bourse operator’s 1Q profit drops on weaker listings, trading by Selena Li Reuters by Filipe Pacheco Bloomberg Read also: Hong Kong bourse operator names Carlson Tong as new chairman Hong Kong’s crypto ETF launches to test its ambition to be digital-asset hub HKEX announced key leadership changes this year, with Bonnie Chan coming on as CEO in March and the board set to elect a new chairman later in the day, as it looks to improve performance. Chan said in a statement that “despite the prevailing backdrop”, she was “optimistic about HKEX’s ability to capitalise on the long-term growth of China, the considerable opportunities to connect with the fast-growing capital hubs of Southeast Asia and the Middle East”. HKEX’s revenue in the first quarter fell 6% to HK$5.2 billion, mainly due to shrinking trading and listing fee income. The bourse operator, however, said its IPO pipeline remained “healthy” with 85 active applications. A total of HK$4.7 billion were raised by 12 companies via IPOs in the first three months, down 30% from a year ago and the smallest such fundraising since 2009, data from Deloitte shows. Bigger listings in Asia’s financial hub remain elusive, with Alibaba last month deciding to ditch the IPO plan of its logistics unit, citing dour markets outlook. London Metal Exchange, owned by HKEX, saw its trading and clearing fees increase by 40% and 39% respectively in the first quarter, reflecting buoyant activity in metals’ derivative trading. reuters Bloomberg nomic growth. On Tuesday, bubble-tea maker Sichuan Baicha Baidao Industrial Co fell 27% in its first session, following the largest IPO in the city since November last year. Mobvoi’s stock slumped as much as 22% early in the session, recovering most of the losses to end below the IPO price at HK$3.68. The shares were sold at HK$3.80 apiece, compared with the marketed range of HK$3.70 to HK$4.10. Bankers were trying to price the IPO above Mobvoi’s last private round valuation of about US$757 million, according to analyst Andrei Zakharov. “Management expects to record a decrease in revenue, gross profit and the gross profit margin for the AI enterprise solutions business segment in 2024,” Zakharov wrote in a recent note on Smartkarma, setting a target price of HK$2.70 per share for Mobvoi.
thursday A P R IL 25, 2024 22 The E dge C E O m o rning brief world (April 24): The People’s Bank of China (PBOC) ramped up its verbal pushback against the rally in long-term government bonds, warning of a reversal and hinting that a mismatch between market prices and the economic outlook will be corrected. The central bank is optimistic about China’s long-run growth prospects, and yields “will be within a reasonable range that matches the economic outlook,” the PBOC-backed Financial News reported on Tuesday, citing an interview with an unidentified official in charge of a relevant department at the policymaker. That’s the case despite a temporary deviation between the two that’s been driven by supply and demand, the report added. Markets reacted to the message with a selloff in government bonds. Futures on China’s 30-year debt closed down 1.1%, the worst loss on record since their debut a year ago. Cash bonds also fell, with the 10-year sovereign yield rising three basis points and the 30-year yield up by four. The comments followed other recent signs that the authorities are growing uncomfortable about the relentless declines in yields. Regulators have stepped up efforts to cool the rally through a slew of measures but long-term yields remain on track to test the record lows set about two decades ago. Investors have piled into bonds due to a variety of factors including China’s dovish monetary policy, haven demand from local institutions and a shortfall in debt supply. Chinese sovereign bonds have outrun major global peers in the past three months, with 10-year and 30-year yields now in the rare position of trading at a discount to the PBOC’s key policy rate. While lower funding costs in the bond market may benefit borrowers including the government, there’s also concern the situation might backfire on bond bulls. In the report, the unnamed PBOC official cited as a lesson the case of SVB Financial Group, the US lender trapped by a liquidity crisis last year when its heavy wagers on longer-dated US bonds were squeezed by Federal Reserve rate hikes. “Investors should be highly aware of interest rate risks” and those holding heavy long-duration bond positions — particularly leveraged ones — might face larger losses amid rising volatility, the PBOC official told the newspaper. Meanwhile, banks and insurers should avoid locking large amounts of funds into long-duration bonds at excessively low yield levels, as the returns may not be able to cover funding costs should the latter start to rise, the report said. The report also responded to recent market discussion of potential PBOC bond trading in the secondary market, after a comment by President Xi Jinping spurred speculation of a shift in central bank tools. China will stick to normal monetary policy, and the PBOC’s buying and selling of government bonds is “completely different” from the quantitative easing operations conducted by others, the report said. PBOC warns of rally in long-end government bonds BENGALURU (April 24): South Korea’s economy likely grew 0.6% last quarter, maintaining the same pace of expansion as in the previous three months, as improving exports offset weakening household consumption, a Reuters poll of economists found. The trade-dependent economy experienced a notable uptick in export performance last quarter, buoyed by a resurgence in the semiconductor sector, a good indicator of global trade health. Gross domestic product (GDP) for the January-March period grew 0.6% quarter-on-quarter on a seasonally adjusted basis, according to the median forecast of 21 economists in the April 17-22 poll, the same as the previous quarter. Forecasts ranged from 0.3% to 1.1%. “Consumer demand remains a weak point. Retail sales data from January and February point to continued weakness in spending. We expect further softening as elevated interest rates and the cooling labour market weigh on demand,” wrote Gareth Leather, a senior Asia economist at Capital Economics. “In contrast, manufacturing and exports have remained strong, helped by an increase in global demand for semiconductors. We expect exports to remain buoyant — although global growth is likely to struggle in the near term, a turn in the tech cycle should ensure that export growth holds up well.” South Korea’s economy likely saw steady economic growth in 1Q On a year-on-year basis, GDP was expected to have expanded 2.4% last quarter, according to the median forecast of 25 economists, faster than the 2.2% growth in the preceding quarter. If realised, that would be the fastest growth rate since the third quarter of 2022. However, uneven growth in China, South Korea’s biggest trading partner and a key driver of the global economy, could disrupt the ongoing recovery. Moreover, Asia’s fourth-largest economy, one of the most indebted in the world, has experienced subdued growth due to spending being restrained by a cumulative 300 basis points of interest rate hikes by the Bank of Korea since August 2021. The central bank has said it needs to see inflation moving towards the bank’s 2% target before considering lowering borrowing costs, which will prolong the pressure on already slowing consumption. Inflation was 3.1% in March. by Veronica Dudei Maia Khongwir Reuters Bloomberg
thursday A P R IL 25, 2024 23 The E dge C E O m o rning brief world LONDON (April 24): London Stock Exchange Group (LSEG) shareholders will vote on Thursday on whether to potentially double the pay of chief executive officer (CEO) David Schwimmer, after the 300-year old bourse campaigned to raise executive rewards to strengthen UK capital markets. LSEG’s annual general meeting will vote on proposals to allow Schwimmer’s total yearly remuneration to rise to up to 13.063 million pounds (US$16.14 million), from 6.25 million pounds. Executive compensation at Britain’s top companies has drawn shareholder anger in recent years, with most critical of a widening gap between average worker earnings and CEO pay. But some UK fund managers are backing calls to give boards more flexibility on paying top talent to staunch a brain-drain to countries where pay is less of a hot topic. Much of Schwimmer’s package would remain performance based, given that his annual basic pay would rise from one million pounds at present, to 1.375 million pounds from January 2024. The former Goldman Sachs banker earned 5.127 million pounds in 2023, which LSEG says lags rivals such as CME, Nasdaq, ICE, and big data companies such as S&P Global and MSCI. LSEG told Reuters that it has transformed itself into a highly successful, complex and global organisation to deliver a strong performance and significant shareholder value since its pay policy was last reviewed in 2020. “We have also aligned executive compensation with the median of our global sector peer group and reinforced a pay-for-performance philosophy,” said LSEG, which also publishes a first quarter trading update on Thursday. LSEG has faced listings competition from EU-based financial centres like Paris and Amsterdam since Brexit, adding to already stiff rivalry from New York and piling pressure on regulators to bolster London’s global competitiveness as a financial centre. Julia Hoggett, CEO of London Stock Exchange plc, chairs the Capital Markets Industry Taskforce, which says executive remuneration policy can help attract, retain and reward top talent, and is a key component of competitiveness. Schwimmer’s planned pay hike comes after Britain removed a cap on banker bonuses inherited from the European Union (EU), and as the country faces a cost of living crisis. The US$27 billion takeover of data and analytics company Refinitiv in January 2021 transformed LSEG into a company where data accounts for about 70% of its business, and it is better able to compete with financial market data leader Bloomberg. Thomson Reuters, which owns Reuters News, has a minority shareholding in LSEG after the Refinitiv deal. LSEG also pays Reuters for news. Read also: Bank of England tells lenders to get data on private equity or risk ‘large loss’ LSEG shareholders to vote on doubling CEO’s potential pay LONDON (April 24): Britain’s government borrowed more than expected in the 2023/24 financial year, data showed on Tuesday, in bad news for Prime Minister Rishi Sunak who hopes to woo back voters with tax cuts ahead of a national election. The budget deficit for 2023/24 totalled £120.7 billion (US$149 billion or RM716.90 billion), equivalent to 4.4% of economic output, the Office for National Statistics said. The Office for Budget Responsibility last month forecast a deficit of £114.1 billion, or 4.2% of economic output. The figures pose a headache for finance minister Jeremy Hunt, whose Conservative Party trails the opposition Labour Party by a wide margin in opinion polls. Last month Hunt announced tax cuts in a budget that met the government’s own fiscal rules by the slimmest of margins. Tuesday’s figures meant Hunt was in danger of running out of headroom altogether, said Rob Wood, the chief UK economist of consultancy Pantheon Macroeconomics. “We expect the Chancellor to cut taxes again before a likely October or November general election despite borrowing UK budget deficit overshoots, turning fiscal screw on Sunak govt overshooting his forecasts,” Wood said, adding that Hunt could pencil in “unrealistically weak public spending” to create more headroom. “We suspect whoever the next government is will end up pushing through at least some tax rises to balance the books.” In response to Tuesday’s data, Britain’s debt agency ramped up its planned sales of gilts for the current 2024/25 year by £12.4 billion to £277.7 billion. The Debt Management Office said the increase reflected the fact that central government’s net cash requirement for 2023/24 came in almost £10 billion higher than forecast. In March alone, public sector net borrowing, excluding state-controlled banks, was £11.94 billion. March’s borrowing, the last of the 2023/24 financial year, was above the median forecast of £10.2 billion in a Reuters poll of economists. Despite the budget deficit for 2023/24 coming in higher than forecast, it was £7.6 billion less than in 2022/23, when the state subsidised household soaring energy bills, and double-digit inflation led to a surge in debt interest payments. The Finance Ministry said Tuesday’s figures showed it was important to stick to the plan to reduce Britain’s debt. by Andy Bruce Reuters by Huw Jones Reuters reuters
thursday A P R IL 25, 2024 24 The E dge C E O m o rning brief world (April 24): Heineken sold more beer than expected in the first quarter, reporting its first quarterly year-on-year growth in volumes in a year as it stuck to its forecast for profit growth in 2024. The world’s second-largest brewer said on Wednesday that beer volumes rose 4.7% organically in the January-March period, beating the 2.5% growth expected by analysts in a company-provided poll. Its shares rose as much as 1.6%, paring some of the gains to trade 0.4% higher by 0805 GMT. Heineken is focused on restoring volume growth this year, which was hurt in 2023 as it hiked its prices to offset the rising costs of everything from energy to barley. CEO Dolf van den Brink said in a statement that all regions posted higher volume and net revenue. He added the quarter was helped by an earlier Easter and one-off effects. Still, the brewer said it continued to see the economic environment as “challenging and uncertain”. “Despite the solid start to the year, we cannot extrapolate the reported topline growth to the rest of the year,” it said. Heineken sells more beer in 1Q, sticks to outlook (April 24): Gold’s record-setting rally this year has puzzled market watchers, as bullion has roared higher, despite headwinds that should have held it back. With prices sagging this week, the explanation may lie in China. After weeks of debate about whether a mystery buyer was stoking the rally, several prominent figures in the global gold market are coming to the conclusion that the major new driving force is a legion of fleet-footed retail investors on the Shanghai Futures Exchange (SHFE). In a matter of weeks, the SHFE has gone from a sedate futures venue to a nexus of the global gold market. While rival centres such as London and New York have also seen activity rise, the fact that SHFE volumes have spiked from a low base offers a compelling sign that a newly arrived cohort of Chinese investors has helped drive prices sharply higher. Gold has soared this year, topping US$2,000 (RM9,556) an ounce from early March, in the face of major pressures that, in ordinary times, would have capped gains. Driven by fading expectations for a pivot to lower interest rates from the US Federal Reserve, these included higher Treasury yields and a rallying US dollar. On top of that, there was a virtual buyers’ strike in India, the second-largest consumer, disinterest from western funds, and net sales by exchange-traded funds. Yet SHFE volumes started to spike, and prices powered higher. “The only thing that drives it in a bitcoin-esque kind of way is massive speculative play,” according to Ross Norman, a former trader at Credit Suisse Group AG and Rothschilds & Sons, who now helms the Metals Daily journal. Given elevated rates and the dollar’s strength, that’s unlikely to have come from hot-money in the US, so the most likely buyers would be highly leveraged Chinese investors, he said. Gold has a long-standing history in China as a savings tool, and the country is the top consumer and leading producer. That traditional interest has been given a new lease of life by turmoil in the local property and stock markets, with imports surging in 2022 and 2023 despite being tightly controlled. Read the full story (April 24): Tesla expects to book more than US$350 million (RM1.6 billion) in costs in the current quarter for the mass layoffs it began last week, the automaker disclosed on Wednesday, as it shifts focus to more afGold’s recordsetting rally may have its roots in Chinese frenzy Tesla expects to book over US$350 mil in costs for layoffs by Mark Burton, Sybilla Gross & Yvonne Yue Li Bloomberg by Harshita Mary Varghese & Aditya Soni Reuters by Anna Pruchnicka Reuters fordable models that it plans to introduce by early 2025. The company is laying off about 10% of its global workforce to help prepare for the “next phase of growth” by reducing costs and improving productivity. The electric vehicles maker said on Tuesday that it was working on “new models” that would use its current platforms and production lines — a move that is expected to let it better control capital expenditures during “uncertain times.” Wall Street analysts expect Tesla to report a profit of US$2.24 billion for the second quarter, according to LSEG data. While that would be lower than the year-ago figure, it is an improvement from the US$1.59 billion first-quarter profit, its lowest in three years, it posted on Tuesday. bloomberg reuters
thursday A P R IL 25, 2024 25 The E dge C E O m o rning brief world (April 24): US President Joe Biden’s recent polling bump in key battleground states has mostly evaporated, as a deep current of pessimism about the trajectory of the US economy hurts his standing with voters. The April Bloomberg News/Morning Consult poll found Biden is ahead in just one of the seven states most likely to determine the outcome of his matchup with Donald Trump, leading Michigan by two percentage points. Biden trails the presumptive GOP nominee slightly in Pennsylvania and Wisconsin, and his deficit in Georgia, Arizona, Nevada and North Carolina is larger. Those results are largely a return to the previous state of the presidential race, before a strong State of the Union address appeared to power Biden in March to his best showing in the monthly poll since it began in October. The reversion comes as poll respondents offered a bleak near-term view of the economy, the issue that has consistently registered as their top concern at the ballot box. A majority of swing-state voters see worsening economic conditions in the coming months, with fewer than one in five saying they expect inflation and borrowing costs to be lower by the end of the year. Despite a resilient job market, only 23% of respondents said the employment rate would improve over the same time period. For undecided voters — a group crucial to Biden’s effort to close the gap with Trump — the share who expect improvement on those economic factors was in the single digits. “Some of the shine of the State of the Union address has worn off,” said Matt Monday, a senior manager of Morning Consult. “People are really tying Bidenomics and their perception of the economy to the inflation rate.” More than three quarters of poll respondents said the president is responsible for the current performance of the US economy, and nearly half said he was “very responsible”. Read the full story Read also: Taiwan happy with US aid package, China objects to arms sales Biden trails Trump in six of seven key states, poll shows (April 24): For TikTok, the clock has started running in its existential fight to avoid a US ban. Legislation requiring the social media app’s Chinese owners to divest sailed through Congress, capped by Senate passage late on Tuesday as part of a larger foreign-aid package. President Joe Biden plans to sign it on Wednesday — beginning a 270- day countdown for a sale or a US prohibition of the popular video-sharing platform. TikTok and Beijing-based ByteDance Ltd have vowed to do all they can to stop the measure. They have argued it infringes the free-speech rights of the app’s 170 million monthly US users, and plan to file suits to void the law or at least delay its enforcement. “We’ll continue to fight,” Michael Beckerman, TikTok’s head of public policy for the Americas, said in a memo to US staff this past week. “This is the beginning, not the end of this long process.” Biden’s signature will cap years of scrutiny in Washington, where regulators and lawmakers from both parties have voiced increased concern that TikTok’s Chinese ownership poses a risk to US national security. Proponents of the bill claim that China’s government uses TikTok as a propaganda tool, and could demand that ByteDance share US users’ data — allegations the company and officials in Beijing have denied. US ban on TikTok looms with Biden poised to start 270-day countdown With the legal battle set to unfold, TikTok’s US users face a wave of uncertainty about a place to express themselves via video, make money as influencers or sell wares on TikTok Shop. If implemented, a TiKTok ban would risk disrupting “a critical channel for engaging with younger audiences and building brand visibility”, said Damian Rollison, a director of market insights at SOCi. “TikTok’s unique format has allowed businesses to showcase products and services creatively, leveraging trends and user-generated content to connect with potential customers,” Rollison said. TiKTok has invoked economic arguments against the law, saying content creators and merchants who make a living from posting videos and selling goods would be hurt financially. While many US lawmakers who backed the newly passed federal bill think it would survive court review, some rights groups say the First Amendment will be a more difficult hurdle to clear. “The US government can say that a foreign company can’t do business in the US — it’s just more difficult when the foreign business is a communications system that US users use to communicate with each other,” David Greene, a civil liberties director for the Electronic Frontier Foundation, said in an interview. “That just has different legal issues.” by Alex Barinka Bloomberg by Gregory Korte Bloomberg TikTok chief executive officer Shou Zi Chew made personal appeals on Capitol Hill in an unsuccessful bid to stifle the legislation. bloomberg bloomberg
thursday A P R IL 25, 2024 26 The E dge C E O m o rning 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) Talam Transform Bhd 183.1 0.005 0.015 0.00 64.4 Ingenieur Gudang Bhd 116.5 -0.005 0.130 0.00 197.2 TWL Holdings Bhd 108.7 0.000 0.030 0.00 171.2 Bina Puri Holdings BHD 95.6 0.000 0.075 -11.76 253.1 My EG Services Bhd 68.1 0.015 0.800 -1.84 5,967.2 Velesto Energy Bhd 56.0 -0.008 0.260 13.04 2,136.1 SNS Network Technology Bhd 39.3 -0.015 0.375 59.57 604.8 Sime Darby Property Bhd 33.1 0.015 0.915 46.40 6,222.8 Alpha IVF Group Bhd 32.3 -0.005 0.325 - 1,579.5 Zantat Holdings Sdn Bhd 30.8 0.040 0.510 - 142.8 RGB International Bhd 29.6 0.000 0.385 42.59 593.2 Borneo Oil Bhd 27.2 0.000 0.005 -66.67 60.0 CIMB Group Holdings Bhd 27.0 0.000 6.670 15.26 71,209.6 DXN Holdings Bhd 26.8 0.010 0.630 -0.79 3,132.8 VS Industry Bhd 24.8 0.025 0.905 11.04 3,455.4 Pan Malaysia Holdings Bhd 22.9 0.005 0.215 126.32 199.7 Ramssol Group Bhd 22.6 0.010 0.470 23.68 149.9 Reneuco BHD 22.3 0.005 0.100 -54.55 113.0 Hong Seng Consolidated Bhd 21.4 0.000 0.010 -60.00 51.1 SKP Resources Bhd 21.3 0.100 1.000 26.58 1,562.4 Data as compiled on April 24, 2024 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) Fintec Global Bhd 0.010 100.00 13.3 0.00 59.3 Key Alliance Group Bhd 0.010 100.00 0.5 0.00 36.8 Focus Dynamics Group Bhd 0.015 50.00 0.2 0.00 95.6 Talam Transform Bhd 0.015 50.00 183.1 0.00 64.4 XOX BHD 0.015 50.00 0.4 0.00 77.9 Destini Bhd 0.035 40.00 2.5 -41.67 58.2 Awanbiru Technology Bhd 0.265 26.19 12.4 -32.05 208.9 KGW Group Bhd 0.210 20.00 16.6 5.00 101.4 Ta Win Holdings BHD 0.035 16.67 0.9 -12.50 120.2 Widad Group Bhd 0.070 16.67 19.3 -85.57 216.8 Supercomnet Technologies Bhd 1.520 15.15 16.3 24.59 1,248.1 Permaju Industries Bhd 0.045 12.50 0.2 -10.00 87.7 AGX GROUP Bhd 0.300 11.11 4.1 - 129.9 Industronics BHD 0.050 11.11 8.0 0.00 35.4 SKP Resources Bhd 1.000 11.11 21.3 26.58 1562.4 Signature International Bhd 1.130 10.78 8.2 32.16 717.2 Eversafe Rubber Bhd 0.220 10.00 1.2 2.33 52.9 Rekatech Capital Bhd 0.055 10.00 0.5 -15.38 32.6 Sinaran Advance Group Bhd 0.055 10.00 0.1 -35.29 50.3 Ni Hsin Group Bhd 0.115 9.52 1.2 0.00 60.2 Data as compiled on April 24, 2024 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (%) (‘000) CHANGE CAP (%) (RM MIL) Metronic Global Bhd 0.015 -25.00 1.3 0.00 23.0 Saudee Group Bhd 0.025 -16.67 1.9 0.00 39.0 Xidelang Holdings Ltd 0.025 -16.67 0.3 0.00 52.9 Ivory Properties Group Bhd 0.060 -14.29 0.2 -25.00 29.4 Vizione Holdings Bhd 0.035 -12.50 0.7 -41.67 71.6 Silver Ridge Holdings Bhd 0.325 -12.16 4.2 -71.74 72.4 Fitters Diversified Bhd 0.045 -10.00 8.2 -10.00 105.4 XOX Technology Bhd 0.050 -9.09 0.1 -28.57 44.7 OCR Group Bhd 0.055 -8.33 2.0 -8.33 76.2 Varia BHD 0.825 -8.33 0.0 -17.50 344.0 HB Global Ltd 0.170 -8.11 10.9 88.89 132.9 Zelan Bhd 0.060 -7.69 0.2 -25.00 50.7 Green Ocean Corp Bhd 0.125 -7.41 0.4 -44.44 26.4 Advance Information 0.065 -7.14 0.0 -13.33 25.4 Luster Industries Bhd 0.065 -7.14 8.3 -7.14 196.5 Ageson Bhd 0.065 -7.14 4.9 -13.33 20.3 Progressive Impact Corp Bhd 0.075 -6.25 0.2 -21.05 49.2 Smile-link Healthcare Global 0.150 -6.25 0.2 -11.76 37.8 GIIB HOLDINGS Bhd 0.080 -5.88 0.2 -15.79 47.3 Handal Energy Bhd 0.080 -5.88 1.6 -33.33 29.8 Data as compiled on April 24, 2024 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) Allianz Malaysia Bhd 21.120 -0.320 0.0 14.53 3,758.7 Apollo Food Holdings Bhd 6.410 -0.140 0.1 11.28 512.8 Khind Holdings Bhd 2.650 -0.100 0.0 3.52 111.4 Nestle Malaysia Bhd 126.300 -0.100 0.1 7.40 29,617.4 LPI Capital Bhd 12.040 -0.080 0.1 0.67 4,796.5 Varia BHD 0.825 -0.075 0.0 -17.50 344.0 Oriental Holdings BHD 6.900 -0.070 0.3 9.00 4,280.5 Chin Hin Group Bhd 4.930 -0.060 0.1 39.66 8,723.2 Heineken Malaysia Bhd 23.000 -0.060 0.1 -4.72 6,948.3 Metrod Holdings BHD 1.390 -0.060 0.0 15.83 166.8 Petronas Gas Bhd 18.020 -0.060 0.5 3.56 35,656.8 Alliance Bank Malaysia Bhd 3.780 -0.050 3.2 11.50 5,851.8 Apex Equity Holdings Bhd 0.930 -0.050 0.0 -13.89 188.5 Muda Holdings Bhd 1.440 -0.050 0.0 0.70 439.3 Silver Ridge Holdings Bhd 0.325 -0.045 4.2 -71.74 72.4 APM Automotive Holdings Bhd 2.640 -0.040 0.1 5.60 516.1 Carimin Petroleum Bhd 0.885 -0.040 1.9 9.26 207.0 Greatech Technology Bhd 4.530 -0.040 1.5 -5.63 5,681.5 Hong Leong Bank Bhd 19.500 -0.040 0.8 3.17 42,270.5 IHH Healthcare Bhd 6.200 -0.040 5.8 2.82 54,603.4 Data as compiled on April 24, 2024 Source: Bloomberg NAME CLOSE CHANGE VOLUME YTD MARKET (RM) (‘000) CHANGE CAP (%) (RM MIL) United Plantations BHD 26.100 0.340 0.6 46.63 10,825.9 AEON Credit Service M Bhd 7.250 0.250 0.5 30.16 3,702.0 Sam Engineering & Equipment 4.880 0.250 0.7 22.25 3,303.7 Malaysian Pacific Industries 30.220 0.240 0.3 7.16 6,011.7 Ajinomoto Malaysia Bhd 19.380 0.220 0.0 21.89 1,178.3 UWC BHD 3.280 0.220 2.6 -6.82 3,614.4 Petronas Dagangan Bhd 21.800 0.200 0.1 -0.18 21,657.3 Supercomnet Technologies 1.520 0.200 16.3 24.59 1,248.1 PPB Group Bhd 15.880 0.160 1.3 9.67 22,590.9 Tenaga Nasional Bhd 11.860 0.140 9.8 18.13 68,637.8 Axiata Group Bhd 2.730 0.130 12.3 14.71 25,066.6 PIE Industrial BHD 6.030 0.130 3.8 85.54 2,315.8 Press Metal Aluminium Holdings 5.510 0.130 14.5 14.55 45,400.3 Kuala Lumpur Kepong Bhd 22.880 0.120 0.9 4.86 25,085.8 Signature International Bhd 1.130 0.110 8.2 32.16 717.2 Crescendo Corp Bhd 3.610 0.100 0.6 55.60 1,008.7 Ge-Shen Corp Bhd 3.950 0.100 0.2 240.52 496.1 Ideal Capital Bhd 3.300 0.100 0.0 10.00 1,650.0 RCE Capital Bhd 2.790 0.100 1.0 -8.82 2,044.7 SKP Resources Bhd 1.000 0.100 21.3 26.58 1,562.4 Data as compiled on April 24, 2024 Source: Bloomberg CLOSE CHANGE CHANGE (%) CLOSE CHANGE CHANGE (%) DJIA * 38,503.69 263.71 0.69 S&P 500 * 5,070.55 59.95 1.20 NASDAQ 100 * 17,471.47 260.59 1.51 FTSE 100 * 8,044.81 31.33 0.39 AUSTRALIA 7,683.00 -0.51 -0.01 CHINA 3,044.82 22.84 0.76 HONG KONG 17,201.27 372.34 2.21 INDIA 73,852.94 114.49 0.16 INDONESIA 7,174.53 63.72 0.90 JAPAN 38,460.08 907.92 2.42 KOREA 2,675.75 52.73 2.01 PHILIPPINES 6,572.75 65.95 1.01 SINGAPORE 3,293.13 20.41 0.62 TAIWAN 20,131.74 532.46 2.72 THAILAND 1,361.10 3.64 0.27 VIETNAM 1,205.61 28.21 2.40 Data as compiled on April 24, 2024 * Based on previous day’s closing Source: Bloomberg CPO RM 3,953-18.00 OIL US$ 88.05-0.37 RM/USD 4.7775 RM/SGD 3.5103 RM/AUD 3.1074 RM/GBP 5.9396 RM/EUR 5.1064