COCOALAND, F&N REQUEST TRADING HALT
PENDING ANNOUNCEMENT p4
FRIDAY, JUNE 3, 2022 w w w. t h e e d g e m a r k e t s. c o m
HOME: Banks reach settlement with Serba Dinamik on scheme of arrangement p4
Top Glove, Hartalega slump to pre-pandemic levels p6
Carlsberg to hike prices from July 1, blames rising input costs p10
WORLD: China raises pressure on banks to support struggling developers p17
US economy shows signs of downshifting as rates, inflation bite p19
LOW YEN YEING/THE EDGE
One month buffer
period before possible
chicken price hike
Report on Page 2.
FRIDAY JUNE 3, 2022 2 THEEDGE CEO MORNING BRIEF
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KUALA LUMPUR (June 2): The ex- One month the Ministry’s future moves will depend
tensions on both the subsidy for chicken buffer period on how the situation unfolds.
breeders and the price caps on chickens before possible
and eggs are set to serve as a buffer pe- chicken price hike “So far we do not have any suggestions
riod for consumers and chicken traders to do that (place price caps on F&B com-
before the prices of chicken head higher, BY IZZUL IKRAM panies’ consumer products). It will depend
according to the Deputy Minister of Do- theedgemarkets.com on the situation, whether it is good or not
mesticTrade and Consumer Affairs Datuk for the customer and the industry,” he said.
Rosol Wahid. fective June 1 until domestic prices and
production stabilise to boost the supply The inflationary environment has left
“What we were informed is that the of chickens in the country. F&B companies taking on higher input
Cabinet agreed to continue the subsidies costs stemming from increased costs of
[for chicken breeders] till July 1, while the The supply of chicken has been tight logistics, raw materials and labour.
first phase of the price caps ends on June 5. in the country as rising operating costs,
including prices of chicken feeds, have re- Some companies have already raised
“[The price caps were extended to June sulted in less production since the selling their selling prices due to the cost pressure.
30] because we want to condition the trad- prices are kept at below cost.
ers as well as the consumers that the price F&B companies’ price hikes not Farm Fresh Bhd said that it is set to
of chickens might go up slightly, there- a concern thus far increase the prices of its chilled ready-to-
fore we provided a month-long buffer zone Meanwhile, the rising foodstuff costs have drink (RTD) products in mid-July this year
for the consumers and the traders,” Rosol eaten into food and beverage (F&B) com- by an average of 5%.
told the press when asked if the June 30 panies’ profit margins.
deadline would be a decisive end of the This follows the group’s 5% increase on
price caps. Rosol said the KPDNHEP currently chilled RTD milk products and ultra-high
has no plans to control prices of the rel- temperature processing RTD products in
Rosol was speaking to the media after evant consumer products, but noted that September and December last year, re-
the launch of the Myori SmartSecure and spectively.
Smart Usage Program.
Likewise, Dutch Lady Milk Industries
To recap, the Ministry of Domestic Bhd had also cautioned that price hikes
Trade and Consumer Affairs (KPDN- of its products are on the cards depend-
HEP) on Thursday announced that the ing on market and consumers’ sentiment.
price caps on chickens and eggs are to be
extended till the end of the month, from It was reported that the Dutch Lady
its initial expiry date of June 5. had implemented several price hikes in
2021 as well as early this year for some of
Meanwhile, on Wednesday (June 1), its products.
Prime Minister Datuk Seri Ismail Sabri
Yaakob said the subsidy for chicken breed- Meanwhile, Mondelez Malaysia Sales
ers is slated to come to an end on July 1 in Sdn Bhd — the manufacturer of several
order to channel the aid directly to people goods such as Cadbury Dairy Milk choco-
in need of assistance. late and Oreo biscuits — had raised prices of
some of its goods by 7% to 10% in March.
According to Ismail Sabri, the subsi- Read also:
dy which was set to maintain the price of Govt extends maximum price of
chickens at a stable RM8.90 per kilogram chicken, eggs until June 30 Click here
(kg) had been largely unclaimed — less
than 10% — by chicken breeders, which Chicken breeders hope for free
led to the government’s move to provide floating chicken prices as subsidy ends
the subsidy directly to the people. Click here
The government had also implement-
ed a ban on chicken export activities ef-
Note: Dear readers, there will be no CEO Morning Brief on Tuesday (June 7) as we are taking a break for Yang Dipertuan Agong’s Birthday.
We will be back on Wednesday (June 8). For the latest news during the holidays, check out https://www.theedgemarkets.com/.
FRIDAY, JUNE 3, 2022 w w w. t h e e d g e m a r k e t s. c o m
FRIDAY JUNE 3, 2022 4 THEEDGE CEO MORNING BRIEF
KUALA LUMPUR (June 2): Six lend- Banks reach United Overseas Bank (Malaysia) Bhd,
ers are said to have arrived at a settlement settlement with had filed a winding-up petition against the
with Serba Dinamik Holdings Bhd and Serba Dinamik companies last month.
four of its subsidiaries with regards to the
scheme of arrangement and restraining on scheme of This followed the companies’ failure
order sought by the oil and gas related arrangement to service their RM1.2 billion syndicat-
companies. ed term financing. The consent order on
BY HAFIZ YATIM Thursday also covers Hong Leong Islam-
It is understood that the parties have theedgemarkets.com ic Bhd,.
agreed that the lenders would hold their
applications for a winding up petition The six syndicated and bilateral lend- Serba Dinamik said it is seeking the
against the Serba Dinamik companies, ers, namely HSBC Amanah Malaysia Bhd, creditors’ approval for a scheme of arrange-
provided that the companies do not de- Ambank Islamic Bhd, Bank Islam Malay- ment to restructure the group’s debt obli-
fault on the payment of debts as agreed sia Bhd, MIDF Amanah Investment Bank gations, which proposed “a 100% return
in the proposed scheme of arrangement. Bhd, Standard Chartered Saadiq Bhd and to the company’s creditors”.
The consent order was recorded at the The group said it has identified “some
High Court on Thursday (June 2) when assets for immediate sale” to generate the
the application for the scheme of arrange- cash flow required to meet the group’s li-
ment came for hearing before Justice Atan abilities.
The six lenders, and three other finan-
Serba Dinamik’s lead counsel Mak Lin cial institutions comprising Hong Leong
Kum proposed the settlement and it was Islamic, MBSB and Bank Rakyat, were also
agreed on by the lenders’ lawyers, Datin involved in a separate hearing onThursday
Jeyanthini Kannaperan and Benjamin before Justice NadzarinWok Nordin over
Dawson. a winding up petition and appointment of
an interim liquidator.
The parties are set to finalise the pro-
posal on Tuesday afternoon. Justice Nadzarin fixed June 8 to hear
the petitioner’s application to appoint an
Serba Dinamik Holdings, along with interim liquidator and also for the com-
Serba Dinamik Sdn Bhd (SDSB), Ser- pany’s application to cross-examine the
ba Dinamik Development Sdn Bhd petitioner.
(SDDSB), Serba Dinamik Group Bhd
(SDGB) and SD Controls Sdn Bhd Following the consent order, the pro-
(SDCSB) had filed for a restraining or- ceeding on June 8 may not take place, as
der and a scheme of arrangement against part of the order include a stay of the pro-
its creditors last month. ceeding and appointing an interim liqui-
KUALA LUMPUR (June 2): Trading in Cocoaland, F&N er peer Apollo Food Holdings Bhd is trad-
the shares of snack and candy maker Co- request trading ing at a PER of 25.89 times and P/BV of
coaland Holdings Bhd and its second larg- 1.4 times, while Oriental Food Industries
est shareholder Fraser & Neave Holdings halt pending Holdings Bhd is at a PER of 11.91 times
Bhd (F&N) will be suspended on Friday announcement and P/BV of 1.1 times.
(June 3) pending an announcement.
BY CHESTER TAY For the financial year ended Dec 31,
Both companies had requested the sus- theedgemarkets.com 2021 (FY2021), Cocoaland’s net prof-
pension, Bursa Malaysia said on Thurs- it grew 7.1% on-year to RM21.86 mil-
day (June 2). A check on AbsolutelyStocks shows lion, despite revenue falling by 2.7% to
that Cocoaland is currently trading at a RM210.3 million.The group’s net profit
F&N owns a 28% stake in Cocoaland, historical price-earnings ratio (PER) of for the first quarter ended March 31, 2022
second largest after the 41% sharehold- 25.5 times and price-book value (P/BV) grew 85% on-year to RM10.55 million,
ings of Leverage Success Sdn Bhd, which ratio of 2.29 times. For comparison, small- on the back of 21% growth in revenue to
is jointly-controlled by the Liew and Lau RM65.74 million.
family members, including Cocoaland ex-
ecutive directors Liew Fook Meng, Lau Cocoaland attributed the earnings im-
KeeVon and Lau Pak Lam, as well as key provement in the first quarter to strong-
senior management members LiewYoon er demand for gummies in Malaysia and
Kee, Lew Foo Chay and Lau Kwai Choon. higher snack demand from Saudi Arabia.
Cocoaland’s flagship products are Lot100
The Edge had reported in January that Fruity Gummy, chocolate pie, cookies and
Cocoaland is a takeover target of a Eu- wafer. It also sells snacks, beverages, jelly
ropean private equity firm and an Asian and pudding.
Cocoaland’s net asset per share stood
It was also reported that it is an open at 57 sen as at March 31, 2022, compared
secret that the co-founding brothers of with 54 sen at end-2021.
Cocoaland intend to let go of their fami-
ly-owned business at the right price. Cocoaland’s share price closed 4 sen
or 3.3% higher at RM1.28 while F&N
Year to date, shares of Cocoaland have ended the session 38 sen or 1.9% higher
gone up by 23% while F&N declined 17% at RM20.
since the beginning of the year.
FRIDAY JUNE 3, 2022 5 THEEDGE CEO MORNING BRIEF
KUALA LUMPUR (June 2):The US Customs No US CBP In February, US CBP had urged Malaysian
and Borders Protection (US CBP) does not officers stationed companies to work with the agency in taking
have any officers based in Malaysia to investi- the corrective actions needed, so that they can
gate allegations of forced labour in Malaysian in Malaysia to once again enjoy the benefits of having access
companies, a US government official said on probe forced to the US market.
Thursday (June 2). labour claims
US CBP acting executive director for trade
John P. Leonard, deputy executive assis- BY SULHI KHALID remedy law enforcement, Eric Choy said so
tant commissioner at the US Department of theedgemarkets.com far, there are a lot of encouraging signs within
Homeland Security, said US CBP conducted companies in the industries
an investigation within the United States after it According to US CBP’s website, a total of
received allegations from various sources such eight Malaysian companies from the plantation that have been affected in Malaysia.
as investigative journalists, law enforcement and glove sectors have been slapped with the However, he did not reveal as to how many
agencies, civil society and non-governmental WRO — with two of them having an inactive companies have engaged with the US agen-
organisations. status and the remaining six, an active status. cy so far.
US CBP also shared that Malaysia’s Hu-
Speaking at a roundtable event in Kuala Lum- The two with inactive status areTop Glove man Resources Ministry has engaged with the
pur,Leonard added that the US CBP relied heav- Corp Bhd and WRP Asia Pacific Sdn Bhd, agency to discuss the forced labour issues.
ily on experts and third party independent audi- while the other six companies are FGV Hold- “It’s a positive collaboration. We are very
tors in carrying out the investigation. ings Bhd, Sime Darby Plantation Bhd, Maxter happy with what Malaysia is doing, so both
Glove Manufacturing Sdn Bhd and Supermax governments are working together on this
“When we do our investigation, we are Glove Manufacturing, Smart Glove, Brightway front,” Leonard said.
looking at trying to find material and sources Holdings Sdn Bhd and YTY Industry Hold- On criticism over US CBP’s decision to
that helped us, so that we can corroborate in ings Sdn Bhd. go after only large plantations and glove man-
reaching a reasonable suspicion level, a reason ufacturing companies in Malaysia, Leonard
to believe that forced labour was used in the A WRO is issued when US CBP has rea- highlighted that the US agency is not being
manufacturing and production of the goods sonable evidence of the use of forced labour selective and will investigate any allegations
that are imported to the US. in the manufacturing or production of goods based on credible evidence and sources.
entering the US supply chain, and allows the “We are not issuing WRO to companies
“On how we clear the Withhold Release agency to detain the products in question, un- based on their size.
Order (WRO), we will rely upon third par- less the importers can prove the absence of “US CBP is compelled and bound by our
ty auditors that are retained by the company. forced labour in the products’ supply chain. law to investigate all allegations that come in,”
“As they (affected companies) go through Read also: Supermax completes refurbishment
the remediation process, we ask the third party of workers’ accommodation Click here
independent auditors and they will validate the
commitment the affected parties have made.
So once we validate what those auditors have
investigated, we will move forward with mod-
ifying the WRO,” he revealed.
KUALA LUMPUR (June 2):Electronics manu- SKP Resources The forced labour audit took two months
facturing service (EMS) provider SKP Resources says no systemic to complete, covering six of SKP’s subsidiaries
Bhd said an independent consultant has found hiring non-Malaysian workers, beginning in
out that the company’s practices do not amount forced labour early April 2022 and completed in May 2022.
to systemic forced labour after it took steps to found at firm
address allegations of such practices. SKP Resources executive director Ivan Gan
BY JUSTIN LIM said having examined the findings in detail on
To recap, independent migrant worker theedgemarkets.com completion of this audit, the management is
rights specialist Andy Hall had in December pleased with the outcome.
last year raised concerns regarding SKP Re- of the complaints by Hall.
sources’ management of its foreign workers, in TÜV Rheinland also verified that SKP Re- “This whole exercise has shed light on some
particular relating to overtime work and ade- shortcomings of our business operations and
quate remediation of recruitment fees. sources had now completed its remediation more importantly, the significant improvements
programme across all of its subsidiaries and that have been made.Specifically,all workers have
Subsequently, SKP Resources had appoint- that all foreign workers have been fully reim- now been fully reimbursed for all recruitment fees
edTÜV Rheinland Malaysia Sdn Bhd to exam- bursed for all recruitment fees previously paid previously paid to recruitment intermediaries,
ine and identify during its audit whether SKP to recruitment intermediaries at a justifiable and working hours and overtime issues have been
Resources and its subsidiaries were involved and reasonably calculated level. addressed. Both of these issues are those which
in practices that may be considered any of 11 Mr Hall constructively raised to us previously.”
indicators of forced labour, as defined by the As such, TÜV Rheinland also noted the
International Labour Organization (ILO). further progress that SKP Resources has made “Additionally, interviews conducted with
regarding the ILO’s forced labour indicators our workers also yielded positive feedback.
In a statement onThursday (June 2), SKP and, taking into account these ongoing efforts, Workers were increasingly satisfied with their
Resources saidTÜV Rheinland in its final audit established that the company’s practices do not working conditions and well-being as employ-
report revealed that considerable improvements amount to systemic forced labour and are in ees of SKP Resources.
have been made by SKP Resources since De- compliance with Malaysia Labour Law.
cember 2021 with regards to working hours, “The findings of this audit is another step
overtime work processes and adequate reme- forward that will enable SKP to achieve our
diation of recruitment fees at its subsidiary, ESG objectives,” he added.
SPI Plastic Industries (M) Sdn Bhd, which
was the company that was the original source SKP Resources shares closed up two sen
or 1.31% at RM1.55 on Thursday, giving it a
market capitalisation of RM2.42 billion.
FRIDAY JUNE 3, 2022 6 THEEDGE CEO MORNING BRIEF
Top Glove, Hartalega slump to
KUALA LUMPUR (June 2): Top Glove BY ADAM AZIZ & HAILEY CHUNG “The drop in ASP was mainly due [to]
Corp Bhd and Hartalega Holdings Bhd’s theedgemarkets.com demand-supply imbalances with more sup-
share prices had on Thursday (June 2) ply entering the market while demand is
slumped to pre-Covid-19 levels at below REUTERS moderating. ASPs are likely to bottom in
RM1.30 and RM4 respectively after an- 2HCY22 as industry players adjust for in-
alysts said the latest-reported quarterly Top Glove Corp Bhd RM flationary pressures.We think companies
profits of Malaysian rubber glove manu- 10 are unlikely to be able to fully pass on the
facturers under their coverage were below Vol (mil) cost to buyers however due to the intense
expectations following exponential demand 350 competition.
growth due to the Covid-19 pandemic
which began around March 2020. 280 8 “On a slightly encouraging note, the
re-opening of Malaysia’s borders should
At Bursa Malaysia’s 5pm market close 210 6 help to relieve labour shortage issues, al-
on Thursday, Top Glove settled down 11 though supply chain disruptions are still
sen or 8.03% at RM1.26 with 72.44 mil- 140 4 likely to persist.
lion shares traded to become Bursa’s third RM1.34 RM1.26
most-active entity. “Overall, long-term outlook for the rub-
70 2 ber glove sector remains intact, support-
Top Glove, which was also Bursa’s sev- ed by growing awareness for hygiene and
enth-largest decliner, had fallen as much 0 0 growing usage per capita from developing
as 12 sen or 8.76% to RM1.25 earlier on May 9, 2019 June 2, 2022 countries. Re-opening of economies could
Thursday. further increase glove demand, particularly
Source: Bloomberg from non-medical sectors,” Public Invest-
At Bursa’s close, Hartalega settled down ment’s research team said.
eight sen or 1.99% at RM3.95 with 4.98 “The ASP (average selling price) for
million shares traded. Hartalega’s share gloves has been declining and demand is Top Glove’s latest-reported quarterly
price had fallen as much as nine sen or also on a downturn as we are now enter- net profit had dropped from a year ear-
2.23% to RM3.94 earlier on Thursday. ing the endemic phase.The influx of new lier, while Hartalega reported a net loss.
players results in higher supply, thus creat-
At Top Glove’s closing share price of ing more downward pressure on the ASP. According toTop Glove’s latest quarter-
RM1.26 onThursday, the company has a ly financial report, the company’s net prof-
market capitalisation of about RM10.09 “The buying activities have moderated in it fell to RM87.55 million in the second
billion based on Top Glove’s 8.01 billion tandem with the reduction in consumption quarter ended Feb 28, 2022 (2QFY22)
outstanding shares. levels as large buyers, such as governments from RM2.87 billion a year earlier.
and large hospital chains are full or near full
Hartalega’s finishing share price at in terms of PPE (personal protective equip- Top Glove said cumulative 1HFY22
RM3.95 values the company at around ment) supplies,” MIDF’s strategy team said. net profit was lower at RM273.27 million
RM13.51 billion based on Hartalega’s 3.42 versus RM5.23 billion a year earlier.
billion outstanding shares. Meanwhile, Public Investment Bank
Bhd’s research team wrote in a note on Hartalega reported a net loss of
Top Glove’s share price has been adjusted Thursday that glove companies under its RM197.9 million in the fourth quarter
for its two-for-one bonus share issue under coverage mostly delivered weaker-than-ex- ended March 31, 2022 (4QFY22) from
which about 5.4 billion new shares were list- pected results, mainly due to falling ASPs. a profit of RM1.12 billion a year earlier.
ed and quoted on Bursa and the Singapore
Exchange on Sept 7, 2020, according to the Among others, Public Investment’s re- For the full year, Hartalega said cumu-
company’s Bursa filing on that day. search team saidTop Glove’s quarterly fi- lative FY22 net profit, however, rose to
nancial performance was below Public In- RM3.23 billion from RM2.89 billion a
Hartalega’s share price has been adjusted vestment’s expectation while Hartalega’s year earlier.
for its one-for-one bonus share issue under quarterly result was in line with Public
which 1.66 billion shares were listed and Investment’s forecast. Top Glove and Hartalega, which are con-
quoted on Bursa on March 28, 2018, ac- stituents of the Bursa Health Care index, are
cording to Hartalega’s bourse filing then. also members of the 30-stock FBM KLCI.
On Thursday, MIDF Amanah Invest- At 5pm onThursday, the KLCI closed
ment Bank Bhd’s strategy team wrote in down 3.51 points or 0.23% at 1,549.9
a note that the respective latest-reported while Bursa’s Health Care index ended
financial performances of glove companies down 13.48 points or 0.71% at 1,886.4.
under the research house’s coverage were
below its expectations. Trading dynamics of KLCI constituents
onThursday came ahead of FTSE Russell’s
MIDF’s Malaysian rubber glove sector announcement on its June 2022 KLCI
coverage includesTop Glove and Hartale- semi-annual review, the results of which are
ga, according to MIDF’s note. scheduled to be revealed in early June 2022.
“The lacklustre performance was due During FTSE Russell’s previous Decem-
to the industry coming off a period of ex- ber 2021 KLCI semi-annual review, Inari
ponential growth on the back of the Cov- Amertron Bhd was added to the KLCI and
id-19 pandemic (which began around as a result, Hap Seng Consolidated Bhd was
March 2020). removed from the index, according to FTSE
Russell’s statement on Dec 2, 2021.
FRIDAY JUNE 3, 2022 7 THEEDGE CEO MORNING BRIEF
PETALING JAYA (June 2): Sunway Malls Sunway Malls restaurants and hotels, recreational services
expects a stronger sales performance for expects strong and household furnishings.
the second quarter of 2022 (2Q22) at
117% of pre-Covid-19 pandemic levels 2Q sales “With the 2Q22 forecast, Sunway Malls
on the back of a better Raya 2022 sales performance will see three consecutive quarters of sales
performance, the country’s transition to at 117% of pre- performance achieving 100% and more.
the endemic phase, an improved labour pandemic levels We achieved our first quarter of 100%
market and stronger domestic and exter- against pre-pandemic levels in 4Q21 and
nal demand. BY RACHEL CHEW repeated the feat in 1Q22. With the lat-
theedgemarkets.com est 2Q22 projection, we are sighting nine
According to a press statement on months of uninterrupted 100%. Sunway
Thursday (June 2), the mall group op- Chan: Sunway Malls will see three consecutive Malls is seeing an accelerated and sus-
erator with seven physical malls and one quarters of sales performance achieving 100% (of tained recovery,” explained Chan.
digital mall saw its sales performance come
in above expectations at 143% in April and pre-pandemic levels) and more. The improved performance was also
110% in May. It also expects its perfor- attributed to Sunway Malls’ replacement
mance to be sustained at 100% or above recover with stronger growth as reflected of outgoing weak and ailing retailers with
in June, while the sales performance es- in the retail and leisure-related sub-sec- strong and vibrant retailers with a proven
timated at 117% in 2Q22 would surpass tors. Private consumption, which grew at track record in driving footfall and high-
100% in 1Q22. a faster pace of 5.5% in 1Q22, is expected er psf sales.The continued strong perfor-
to continue in the coming quarters, sup- mance of these retailers is expected to sus-
“Certainly, the high sales performance ported by higher spending on necessities tain the mall group’s performance moving
during Raya in April provided a significant, and selected discretionary items such as forward.
leading and comfortable start to 2Q22. In
fact, April’s 143% sales performance is the “From our diverse malls portfolio, we
highest till date and surpassed even Janu- forecast a return to 2019’s profitability.
ary’s 116% during the Chinese NewYear Depending on the location, some malls
period. Even if we compare Raya 2022 to might even exceed pre-pandemic level
pre-pandemic Raya levels, it was 121%. profitability,” shared Chan.
Definitively, this is a very strong perfor-
mance however you measure it,” Sunway In terms of ageing, the mall group is also
Malls & Theme Parks chief executive of- seeing a marked improvement in lowering
ficer HC Chan noted. outstanding arrears that stood at RM100
million in September 2021.The mall group
Despite geopolitical tensions and esca- forecasts a reduction of 80% by the end
lating oil prices, the country’s transition of 2022.
into the endemic phase of Covid-19 and
international border reopening shored up This year, the mall group is also an-
Malaysia’s consumer sentiments.The lat- ticipated to keep its new shop opening
est MIER Consumer Sentiment Index for momentum resilient with 300 new shops
1Q22 rose 11.7 points quarter-on-quarter opening following the expansion of Sun-
to 108.9, signalling a return to past the way Carnival and other renewals across
100-point optimism after a contraction at its malls.
97.2 points in 4Q21.The brighter outlook
for employment prospects, increased in- For the record, Sunway Malls welcomed
come and boost in domestic demand lifted 200 new shops in 2020 and 160 additions
consumer spending. in 2021 despite the ongoing Covid-19 pan-
demic. “When we examine the metrics of
Amid the reopening of the economy, profitability, arrears and new shops open-
consumer-related activities continued to ing, Sunway Malls is performing well on
all fronts and even buckling the industry’s
trend,” remarked Chan.
KUALA LUMPUR (June 2): MR DIY Creador pares at RM3.21 apiece.
Group (M) Bhd’s substantial sharehold- stake in MR DIY Following the acquisition, he now has
er Creador has disposed of 86.65 million
shares in the home improvement retailer. BY SULHI KHALID a total of three million shares or a 0.05%
theedgemarkets.com stake in MR DIY.
Following the disposal, which took place
on May 31, the private equity fund is left For the first quarter ended March 31,
with 540.83 million shares or an 8.61% 2022, MR DIY’s net profit dropped 19.5%
stake in MR DIY, according to the group’s to RM100.5 million, from RM124.79 mil-
filing with Bursa Malaysia on Thursday lion a year ago, due to higher expenses as
(June 2). it opened more stores.
In a separate filing, MR DIY notified Quarterly revenue, however, rose 4.02%
that Creador chief executive officer Brah- to RM905.16 million from RM870.18
malVasudevan acquired 500,000 shares in million, driven by contributions from
MR DIY on June 2 for a cash considera- new stores.
tion of RM1.61 million.
MR DIY shares were trading one sen
Based on a back-of-the-envelope cal- or 0.31% lower at RM3.21 at 3.20pm on
culation, Brahmal acquired the shares Thursday, giving the group a market cap-
italisation of RM20.17 billion.
FRIDAy june 3, 2022 8 TheEdge CEO morning brief
Rising tide does not lift
all boats in O&G sector
by Adam Aziz O&G companies with analysts’ coverage
Company 1Q22 EPS y-o-y Forward Revision Consen- Last price Market cap
KUALA LUMPUR (June 3): Given the (sen) chg EPS (sen) sus TP (RM) (RM mil)
high crude oil prices at above US$90 per (RM)
barrel, not all domestic oil and gas (O&G) Petronas Chemicals 26 91.8 11.18 9.99 79,920.00
companies made handsome profits in the 7.91 7.28 32,496.07
first quarter of 2022 (1Q22), although an MISC 8.4 40.9 3.31 2.36 13,316.46
increasing number of analysts have turned 2.08 2.08
optimistic on the sector’s prospects ahead. Dialog Group 2.36 9.4 1.70 0.995 4,737.32
0.65 0.45 3,140.47
A random check on 35 O&G-linked Lotte Chemical Titan 4.57 11.7 1.51 1.28 2,663.12
companies by The Edge revealed that 23 1.06 0.99 2,575.90
companies or 66% of them posted year- Dagang NeXchange 1.64 5.6 2.47 1.87 1,146.19
on-year growth while 22 or 63% posted 0.17 0.115 983.56
quarter-on-quarter improvements. How- Bumi Armada 3.14 10.9 0.55 0.4 944.79
ever, 12 companies or 34% were still loss 0.90 0.7 640.00
making in the quarter. Hibiscus Petroleum 15.32 14.7 1.04 0.695 575.32
0.16 0.105 538.15
Among the O&G firms that are tracked Dayang Enterprise 1.19 5.5 0.55 0.66 284.01
by analysts, the earnings forecasts of six 0.52 0.435 265.03
companies have been revised downward Coastal Contracts 8.46 19.5 153.13
while seven have been upgraded, and one
company’s earnings projection remained Velesto Energy -0.56 -0.1
unchanged [see table].
MMHE 0.2 0.1
Interestingly, consensus downward
revision is also seen in Hibiscus Petro- Pantech Grou 2.74 9.2
leum Bhd, which is considered as the
close proxy to the strong oil prices given Wah Seong Corp 4.9 6.7
its upstream operation. The company’s
earnings in 1Q22 was impacted by pro- Icon Offshore 0.11 1.8
duction platform interruption in Sabah.
Deleum 2.02 7.8 -
The 1Q22 results also pointed to some
negative surprises among upstream con- Uzma 0.34 2.6
tractors, such as Petra Energy Bhd and
Carimin Petroleum Bhd, as well as rig op- As at June 2, 2022
erator Velesto Energy Bhd — all of which Note: Excludes companies who did not report for quarter ended March 31
entered into the red on lower activities Source: Bloomberg
and impairments, and subdued utilisa-
tion respectively. This is “rather reflective” of 2019 capex costs, due to the fuel shortage caused by
levels, said RHB Research in its June 1 supply chain disruptions and the closure
Meanwhile, refiners are the obvious note. Petronas spent RM10.1 billion in of refineries during the Covid-19 pan-
winners when oil prices are high and de- capex in 4Q21. demic,” it said.
mand outstrips supply, but this is not the
trend across the board. Overweight on O&G but more clarity Petronas, which posted one of the best
would help — if not the best — quarterly results in
Petron M Refining & Marketing Bhd Overall, analysts are still overweight on 1Q22, is also seen to be ramping up ac-
and Petronas Chemicals Group Bhd post- the O&G sector.While earnings have yet tivities.
ed q-o-q and y-o-y growth, but their peers to catch up with expectations, oil pric-
have not, with Hengyuan Refining Co es have climbed further, going beyond “Evidently, 1Q22 actual capex spent
Bhd earnings down q-o-q, while Lotte US$120/bbl at end-May and averaging merely comprises 15%-19% of Petronas’
Chemical Titan Holding Bhd underper- at US$109/bbl in the April-May period. 2022 guidance of RM40 billion-RM50
formed q-o-q and y-o-y as margins came billion. Hence, this alludes to accelerated
down. Some also cited continued trading capex momentum for the remainder of
opportunities among refiners and ex- the year,” wrote TA Research on its latest
In 1Q22, Brent crude oil price aver- ploration and production players de- result review.
aged US$97.90/bbl, up 22.9% from 4Q21 spite the share prices having run by
average of US$79.70/bbl and higher by 55%-60% so far this year, with oil price However, UOBKayHian commented
59.6% from the average of US$61.30/ forecasts among analysts catching up to that the sector’s valuation remains a lag-
bbl in 1Q21. the US$100/bbl-range. gard to the oil price uptrend.
Capital expenditure by Petroliam Na- “High O&G and product prices are “A key hurdle is the uncertainty of fur-
sional Bhd (Petronas) stood at RM7.4 expected to benefit Hibiscus, Dagang ther capex ramp-up, which can improve
billion, up from RM6.7 billion in 1Q21, NeXchange Bhd, Dialog Group Bhd, once high-level issues are concluded, and
and domestic capex rose by close to 30%. PetChem, Heng Yuan and Petron Ma- this should benefit the local industry,”
laysia,” UOBKayHian Research said in it said.
a June 1 note.
And that includes whether Petronas
“Refineries are enjoying multi-year will need to churn out more dividends
highs of more than US$30/bbl for refin- to the government in light of the elevat-
ery margins, and these are expected to ed oil prices, and when the targeted fuel
remain elevated despite higher feedstock subsidy can be rolled out to offset the
government’s subsidy burden, UOBKay-
FRIDAy june 3, 2022 9 TheEdge CEO morning brief
PUTRAJAYA (June 2): French authori- MACC: France ruption case related to the MRT project
ties have sought mutual legal assistance has sought our worth over RM650 million.
from Malaysia via the Attorney-Gener- assistance on
al’s Chambers (AGC) in relation to their Four men, including one with the ti-
probe on possible bribery involving the graft probe tle “Datuk”, and a woman, all aged be-
Mass Rapid Transit (MRT) and Light involving MRT, tween 43 and 63, were detained when they
Rail Transit (LRT) projects, said the Ma- LRT projects turned up to give their statements at the
laysian Anti-Corruption Commission MACC headquarters on March 21.
(MACC). by Shazni Ong
theedgemarkets.com Two former company directors are be-
MACC chief commissioner Tan Sri lieved to have received RM27 million in
Azam Baki said the French authorities cited sources as saying there were elements bribes from another engineering firm as
are investigating several parties, includ- of bribery in public transport infrastruc- kickback to be appointed as a consult-
ing certain companies in both Malaysia ture construction projects. ant for the project in 2017, according to
and France, on alleged corrupt practices MACC sources.
by public officials. The public transportation operator said
in a statement that they involved MRT Subsequently, Mass RapidTransit Corp
“I can’t reveal the names but we are and LRT projects. Sdn Bhd (MRT Corp) clarified that the
examining their application and we must investigation being carried out by the
remember that any information we want In March, three directors and two for- MACC into the alleged corruption by the
to provide to France or any other country mer directors of an engineering firm were two engineering firms was not related to
is through the AGC. detained by the MACC to assist in a cor- MRT Corp or any of its staff.
“We are in talks with the AGC to scru- In April, Pestech International Bhd an-
tinise what we can [do in providing] assis- nounced that its subsidiary CRSE Sdn
tance to them.We will not fulfil all their re- Bhd is assisting in the MACC investigation
quests.We look at which ones we can help into a case related to the MRT2 project.
and vice versa,” he said at MACC’s meet-
the-media session on Thursday (June 2). Pestech had explained that CRSE was
executing the power supply and distribu-
Azam said the French authorities, on tion system package for MRT2.
their part, must also assist the MACC if
there are any application by MACC to
them as the agency had opened an inves-
tigation into the matter in March.
Azam said MACC had opened two in-
vestigation papers over allegations of cor-
ruption involving past MRT and LRT pro-
jects in the Klang Valley.
Azam said the scope of the investiga-
tion in Malaysia is related to the issue of
corruption that has already occurred in-
volving payments to certain parties.
On May 30, Prasarana Malaysia Bhd
said it viewed seriously media reports that
PUTRAJAYA (June 2): The Malaysian MACC opens tuk Seri Dr Adham Baba to assist in the
Anti-Corruption Commission (MACC) 25 investigation investigation as well.
has opened 25 investigation papers on
mismanagement of Covid-19 relating to papers on Prior to this, Azam was reported to have
procurement which are alleged to have mismanagement said the agency was investigating the al-
elements of corruption and malpractice. leged corruption, malpractice and abuse of
of Covid-19 power in Covid-19-related procurement.
MACC chief commissioner Tan Sri procurement
Azam Baki said it covers various issues Following that, Adham was reported
of offences including claims and mask by Shazni Ong to have said he was willing to give his co-
supplies, and the agency will call those theedgemarkets.com operation in the MACC probe into alle-
involved to assist in the investigation. gations of corruption and irregularities in
porters at the Program PemantapanWarta- Covid-19-related procurement.
“Based on the report we receive from wan bersama SPRM onThursday (June 2).
various parties, we have opened 25 in- Adham, who held the portfolio when
vestigation papers. I’m not naming any Azam, who did not pinpoint any spe- the pandemic first hit the country, ad-
agencies but it is related to Covid-19 man- cific party on the matter, also did not rule mitted that he had received complaints
agement from the time when it happened out roping in former health minister Da- about the matter which occurred at the
till present. administrative level.
“We are investigating from all aspects It was reported that according to
and to manage the sensitivity of various him, during the pandemic, many pro-
parties involved, what I can say is it is relat- curement processes were done without
ed to Covid-19 management. Any further going through normal procedures and
updates we will inform then,” he told re- there also was confusion in implement-
ing the matter.
F R I D A y j u n e 3 , 2 0 2 2 10 T h e E d g e C E O m o r n i n g b r i e f
Banks, planters No changes in KUALA LUMPUR (June 2):There will be
and telcos KLCI FBM KLCI no changes to the constituents of FTSE Bur-
outperformers sa Malaysia KLCI (FBM KLCI) following
composition in the latest semi-annual review.
in 1Q, MIDF latest review
says FTSE Russell and Bursa Malaysia, in
by Chester Tay a joint statement on Thursday (June 2),
by Hailey Chung theedgemarkets.com said the FBM KLCI reserve list compris-
theedgemarkets.com ing the five highest-ranking non-constit-
KLCI constituents market cap uents of the benchmark index by market
KUALA LUMPUR (June 2): Banks, plan- as at June 2 capitalisation, will beWestports Holdings
tation companies and telecommunications Bhd, QL Resources Bhd, AMMB Hold-
companies (telcos) were the outperformers Name Market cap ings Bhd, Malaysia Airports Holdings Bhd
among the FBM KLCI component stocks (RM bil) and Gamuda Bhd.
in terms of earnings performance for the Malayan Banking Bhd 106.41
quarter ended March 31, 2022 (1Q22) Public Bank Bhd 89.87 The stock exchange operator also an-
based on MIDF Amanah Investment Bank Petronas Chemicals Group Bhd 80.48 nounced eight constituent changes to FTSE
Bhd’s estimates. IHH Healthcare Bhd 57.22 Bursa Malaysia Mid 70 Index and two con-
CIMB Group Holdings Bhd 54.47 stituent changes to the FTSE Bursa Malay-
In an earnings review, MIDF Research Tenaga Nasional Bhd 51.53 sia Hijrah Shariah Index.
said three financial services groups, Hong Leong Bank Bhd 45.74
namely CIMB Group Holdings Bhd, Press Metal Aluminium Holdings Bhd 44.91 New inclusions to the FTSE Bursa Ma-
Hong Leong Bank Bhd and Hong Le- Sime Darby Plantation Bhd 33.96 laysia Mid 70 Index are AEON Co (M)
ong Financial Group Bhd, two plantation Petronas Gas Bhd 33.44 Bhd, Boustead Plantations Bhd, Chin Hin
companies, namely Sime Darby Planta- MISC Bhd 32.45 Group Bhd, Farm Fresh Bhd, Hengyuan
tion Bhd and IOI Corporation Bhd, and Nestle (M) Bhd 31.28 Refining Company Bhd, Hextar Global
two telcos, namely Axiata Group Bhd Axiata Group Bhd 29.64 Bhd, Hibiscus Petroleum Bhd andTa Ann
and Telekom Malaysia Bhd (TM), were Maxis Bhd 29.19 Holdings Bhd.
among the outperformers. Kuala Lumpur Kepong Bhd 28.03
DiGi.Com Bhd 26.90 Allianz Malaysia Bhd, ATA IMS Bhd,
In addition, IHH Healthcare Bhd, IOI Corp Bhd 26.47 Cahya Mata Sarawak Bhd, GDEX Bhd,
Nestlé (Malaysia) Bhd and Petronas RHB Bank Bhd 25.02 Hong Leong Industries Bhd, Magnum Bhd,
Chemicals Group Bhd also outperformed PPB Group Bhd 23.62 Sapura Energy Bhd and YTL Hospitality
in the quarter under review, the research Hong Leong Financial Group Bhd 22.88 REIT are among those to be excluded from
firm said in an earnings wrap review of Petronas Dagangan Bhd 21.48 the FTSE Bursa Malaysia Mid 70 Index.
corporate earnings for 1Q22 released on Mr D.I.Y. Group (M) Bhd 20.23
Thursday (June 2). Genting Bhd 20.18 The latest review also saw FGV Hold-
Telekom Malaysia Bhd 20.11 ings Bhd and Sunway Bhd being included
Meanwhile, MIDF stated in the report Genting Malaysia Bhd 17.22 in the FTSE Bursa Malaysia Hijrah Sha-
that the underperformers comprised of Sime Darby Bhd 14.91 riah Index, replacing Inari Amertron Bhd
two glove companies, namely Top Glove Hartalega Holdings Bhd 13.77 and Press Metal Aluminium Holdings Bhd.
Corporation Bhd and Hartalega Holdings Dialog Group Bhd 13.66
Bhd, two utilities companies, namely Pet- Top Glove Corp Bhd 10.97 All constituent changes will take effect
ronas Gas Bhd andTenaga Nasional Bhd, Inari Amertron Bhd 10.08 on June 20, while the next review will take
as well as Dialog Group Bhd, Digi.Com Source: Bloomberg place in December.
Bhd, MISC Bhd, Petronas Dagangan Bhd,
PPB Group Bhd and RHB Bank Bhd. Carlsberg to hike which is further exacerbated by the Rus-
prices from July 1, sia-Ukraine conflict, we have taken the de-
The research house revised down- cision to implement price adjustments for a
wards its aggregate earnings forecast for blames rising selection of our products,” the brewer said.
the KLCI constituents for 2022 mar- input costs
ginally by 0.3% or RM187 million to The new prices for the group’s beer,
RM64.5 billion. by Izzul Ikram stout and cider will take effect from July
theedgemarkets.com 1, said Carlsberg, adding that retail sell-
“The lower aggregate forecast for 2022 ing price remains at the sole discretion of
was mainly contributed by downward earn- KUALA LUMPUR (June 2): Carlsberg the retailers.
ings revisions forTop Glove and Hartalega, Brewery Malaysia Bhd said it will increase
MISC, Petronas Dagangan, Petronas Gas, the prices of some of its products from July “Despite our best efforts to mitigate this
Digi and RHB Bank but moderated by 1 due to rising input costs. price adjustment with several cost con-
upward revisions for Petronas Chemicals, trol measures, including absorbing partial
Kuala Lumpur Kepong Bhd (KLK),Hong In a document sighted by The Edge, Carls- input costs, we are unable to sustain the
Leong Bank and Hong Leong Financial berg said that despite its cost-mitigation ef- increasing cost inflation,” said Carlsberg.
Group,” said the research outfit. forts, the group had to “adjust” the prices of
the products because of the increasing input The brewer said it is cognizant that a
Click here for the full story costs worsened by the Russia-Ukraine conflict. price adjustment in the current tough en-
vironment is a challenge for all parties,
“We wish to inform you that due to the and has therefore limited the price hike
unprecedented escalation in input costs, to selected brands and SKUs (stock-keep-
Shares in Carlsberg ended 20 sen or
0.89% higher at RM22.70, giving the
group a market capitalisation of RM6.94
F R I D A y j u n e 3 , 2 0 2 2 11 T h e E d g e C E O m o r n i n g b r i e f
Malaysia remains the geopolitical tension have exacerbated FGV, MPC
committed to price rises in food commodities, which collaborate
implementing were already running at 10-year highs in to sustain
the Food and Agriculture Organization’s productivity in
National Biofuel index, threatening not only a jump in global plantation sector
Policy — MPIC malnourishment but a spike in global in-
flation across developed, developing and Bernama
by Sulhi Khalid under-developed economies.
theedgemarkets.com KUALA LUMPUR (June 2):The Ma-
“True enough, Indonesia declared an laysia Productivity Corporation (MPC)
KUALA LUMPUR (June 2):The Ministry export ban on April 28 on cooking oil and remains committed to collaborating
of Plantation Industries and Commodities its raw material (which lasted until May 23) with FGV Holdings Bhd in implement-
(MPIC) in a statement has assured the Ma- in the quest to make cooking oil available ing and creating additional productivity
laysian Biodiesel Association (MBA) that at affordable prices for its citizens. improvement programmes, especially
it is all ears to the group’s proposal that in FGV’s plantation sector.
Malaysia should retain its existing biodiesel “But now that normalcy has resumed
mandate after all. and calmer heads have prevailed, the MPIC The MPC-FGV collaboration start-
wishes to state that it is all status quo on ed in 2019 and will continue until 2024
In the Thursday (June 2) statement, the Malaysia’s biodiesel mandate front,” it said. to produce an innovative, skilled, and
ministry said the MBA previously mentioned knowledgeable sustainable workforce
that any knee-jerk reaction to banning biofuels Meanwhile, the MPIC also said Malaysia’s in the plantation sector.
derived from vegetable oils would cause havoc National Biofuel Policy, which was rolled out
in the global vegetable oil market. in March 2006, remains committed to reduc- FGV group plantation sector direc-
ing the greenhouse gas (GHG) emissions rate tor Mohd Sarian Md Sahid said the
The MBA also highlighted why Malaysia in line with the country’s aspiration towards signing of the memorandum of col-
should not reduce or stop its biodiesel man- achieving a GHG emissions reduction target laboration (MoC) with MPC is one
date as the biodiesel industry hardly consumes of 45% based on gross domestic product by of the efforts in the Plantation Sector
one million tonnes of palm oil annually as op- 2030, among other things. Transformation Plan starting in 2019
posed to over 40 million tonnes used globally. until 2030.
“To the MBA, we thank them for their
“Needless to say that disruptions from invaluable feedback on our big role and the “The MPC-FGV collaboration in-
effect of the biofuel policy towards conserving cludes capacity building, awareness and
nature for younger-generation Malaysians. outreach, audit and certification, and
organisational and business excellence.
“We welcome all constructive criticism or
views that can enable both sides of the divide “Based on the effectiveness of the
— authorities or industry players — to derive cooperation achieved from 2019, FGV
a win-win situation,” the ministry said. and MPC extended the MoC period
for another three years, with the addi-
KUALA LUMPUR (June 2): Key Alliance Key Alliance, tion of further initiatives in line with
Group Bhd (KAG) announced that its sub- Koperasi Felcra ink current trends and demands,” he said
sidiary Agrocloud Sdn Bhd had entered into MoU to collaborate in a statement on Thursday (June 2).
a memorandum of understanding (MoU)
with Koperasi Peserta-Peserta Rancangan on increasing Meanwhile, MPC director-general
Felcra Seberang Perak Bhd (Koperasi Fel- rice yield Datuk Abdul Latif Abu Seman said the
cra) to collaborate on the development and smart collaboration between MPC and
implementation of the Rice Information Bernama FGV is expected to produce competent
System at the estate of Felcra Bhd Seberang talent and create a business environ-
Perak in Kg Gajah, Perak. The MoU took effect on June 1, 2022, and ment that supports the development
will remain in force for a period of 12 months. of the country’s plantation and agri-
In a filing with Bursa Malaysia, KAG said culture industries.
the proposed collaboration aims to increase The MoU will not have any effects on the
the yield of rice cultivation through the Inter- share capital and shareholding structure of “Previous productivity specialists
net of things technology and decision support KAG. However, it is expected to have a posi- produced from this improvement pro-
system via the the Rice Information System. tive contribution to the group’s future earnings gramme have successfully managed a
per share, net assets per share and gearing. consultancy project at FGV’s palm oil
It also aims to ensure that the farming mill, and transformed the mindset of
methods used are modern and fully mech- Koperasi Felcra is a cooperative organisa- employees towards efficient and effec-
anised farming methods, as well as imple- tion incorporated in Malaysia and registered tive management.
ment the appropriate farming methods to with the Malaysia Co-operative Societies
be determined later. Commission with the purpose of improving “This collaboration creates a water-
the socio-economic status of the participat- fall effect with significant spillover ef-
“Pursuant to the MoU, Koperasi Felcra ing communities via the establishment of fects on FGV, factories, plantations and
will act as the coordinator of the proposed commercial and business entities orientated the entire value chain for yield produc-
collaboration and facilitate the necessary towards the welfare and empowerment of tion, hence increasing productivity and
requirements for the implementation of the participating members. the economy in the plantation sector,
Rice Information System. as well as the country,” he said.
“Agrocloud, meanwhile, will provide Ko-
perasi Felcra with the relevant information
technology, equipment and platform, as well
as training for the proposed collaboration,”
F R I D A y j u n e 3 , 2 0 2 2 12 T h e E d g e C E O m o r n i n g b r i e f
New judge to a judge with “zero connections” with SRC Worries from
preside over or its former parent company 1Malaysia international investors
SRC civil suit Development Bhd (1MDB).
against Najib among temporary
Mohd Arief’s recusal, however, does not factors of ringgit
by Tarani Palani impact the Mareva injunction granted on
theedgemarkets.com March 24.The injunction, among others, depreciation
prevents Najib or his agent from transfer- —Tengku Zafrul
KUALA LUMPUR (June 2): SRC Inter- ring or dissipating his assets amounting to
national Sdn Bhd and its subsidiary Gan- RM42 million. Bernama
dingan Mentari Sdn Bhd’s civil suit against
former premier Datuk Seri Najib Razak A Mareva injunction is a court order KUALA LUMPUR (June 2):Worries from the
will now be heard before High Court Judge which essentially freezes the defendant’s international investor community are among the
Datuk Amarjeet Singh Serjit Singh. assets to prevent any transfer of said assets temporary factors contributing to the deprecia-
that a plaintiff is seeking to recover. tion of the ringgit at the moment, said Finance
This comes after Judicial Commissioner MinisterTengku Datuk Seri Zafrul Abdul Aziz.
Datuk Mohd Arief Emran Arifin recused The court on Thursday also set Aug 2
himself from the case on May 13, due to to hear Najib’s stay application for this suit He said this caused investors to reallocate in-
his previous attachment to a local law firm and extension of time to file his defence. vestments in higher yielding assets in the United
that had rendered its services for SRC re- States and caused the depreciation of various
lated engagements. The Pekan MP is seeking a stay in the world currencies, including the ringgit.
proceedings until the disposal of his appeal
Plaintiff’s counsel Elani Mazlan from at the Federal Court against his conviction He said China’s growth prospects, which
Messrs Rosli Dahlan Saravana Partner- for seven charges involving RM42 million were expected to be weaker this year due to
ship confirmed this with The Edge when in the SRC criminal trial. movement restrictions in major cities, had weak-
contacted, following case management on ened the yuan and had an impact on the ringgit.
Thursday (June 2). Among others, he claims that the facts
in this civil suit are similar to the SRC “This is because the Malaysia-China trade
In May, Mohd Arief said although he matter and there is a “real risk” that the volume is large, with Malaysia’s exports to China
was never involved with the SRC related prosecution may amend their prosecution representing 10.7% of gross domestic product
work at the law firm, the parties should based on evidence given in this suit. (GDP) (compared with Indonesia: 2.1% and
inform him of any objections. Thailand: 1.3%),” he said in the 97th Lapo-
In this civil suit, the companies are suing ran Kewangan Rakyat (LKR) published on
Najib objected to the judicial commis- the former premier for breach of fiduci- Thursday.
sioner presiding over the matter, preferring ary duties, knowing receipt of the funds,
dishonest assistance, tort of misfeasance In addition, he said the volatile situation of
KUALA LUMPUR (June 2): Malaysia Air- and abuse of power. global geopolitical tensions also put pressure
ports Holdings Bhd (MAHB) has indicated on economies around the world.
that the revision of the operating agreement It is part of a larger 22 civil suits filed
(OA) as well as the land lease agreement that in May 2021 to claim billions of ringgit on Tengku Zafrul stressed that the factor was seen
it is currently negotiating with the govern- behalf of 1MDB and SRC against several as temporary and the value of the ringgit was ex-
ment is in the final stage to be concluded. individuals and entities allegedly involved pected to remain stable and continue to strengthen.
in the financial scandal.
“We are at the very end of finalising [the “The ringgit is actively managed by Bank Ne-
agreements], not only the OA, but also the New operating, gara Malaysia (BNM) to ensure that ringgit fluctu-
land lease [agreement].As soon as we get that, land lease ations are controlled and not excessive so that the
we will be able to publish it out to the pub- agreements economic sector can make investment and expend-
lic,” said MAHB managing director Datuk iture plans based on a more stable ringgit value.
Iskandar Mizal Mahmood at a virtual press being finalised
conference after the annual general meeting. — MAHB “Actually, what is more important is the
strong fundamentals in our economy, such as
“We certainly hope that the new OA by Justin Lim the country’s economic growth prospects that
will be able to provide us with an upside theedgemarkets.com remain strong,” he said.
to our shareholders,” he added.
MAHB has already negotiated the terms of He added that the expansion of the Malay-
The current OA allows MAHB to run the new development agreement and land sian economy by 3.6% in the fourth quarter of
the 39 airports including Kuala Lumpur lease agreement (DA-LA) that will permit 2021 and 5% in the first quarter of 2022 will
International Airport (KLIA) and klia2 in future development of the aeropolis to be on continue to help strengthen the ringgit.
Sepang until 2069. 99-year lease terms commencing from the
date of the development, rather than to be “This is also reflected in the latest analysis by
Previously, an analyst said the new OA constrained by the end of the current con- the International Monetary Fund (IMF) which
could be a structural rerating catalyst for cession agreement in 2069F,” a CGS-CIMB projects Malaysia’s GDP growth at 5.75% for
MAHB, as the airport operator would ben- analyst said in a note dated Jan 19, 2022. 2022, driven by pent-up domestic demand and
efit from an increase in aeronautical tariffs. continued strong external demand,” he said.
Click here for the full story
“Another positive is with respect to the Tengku Zafrul said the Finance Ministry
KLIA Aeropolis, which is the 8,500-acre was confident of the country’s strong econom-
land area surrounding KLIA and klia2. ic growth prospects which was expected to grow
between 5.3% and 6.3% in 2022, thus contrib-
uting to the stability of the ringgit.
Click here for the full story
F R I D A y j u n e 3 , 2 0 2 2 13 T h e E d g e C E O m o r n i n g b r i e f
FMM backs on inputs can be recovered along the supply Malaysia among
planned chain,” he said. countries that
face high pass-
reintroduction of However, Soh said that as the change and through to core
GST to support transition to GST 2.0 can be challenging, CPIs — HSBC
economic revival the FMM called for the government to con-
sult all stakeholders for a thorough review Global Research
by Surin Murugiah process to ensure the success of introducing
theedgemarkets.com an effective tax regime. by Chester Tay
KUALA LUMPUR (June 2):The Federa- He said while switching back to the pre-
tion of Malaysian Manufacturers (FMM) vious automated model under the GSTTax- KUALA LUMPUR (June 2): Malay-
has lauded the planned reintroduction of the payer Access Point (TAP) system will not sia appears to be among countries that
goods and services tax (GST) to support a be difficult as GST compliance systems are are prone to face higher inflation amid
stronger economic revival. already in place, companies asked for a six- rising food costs following the surge in
month transition period to change from the energy prices, according to an estimate
In a statement on Thursday (June 2), current SST to GST 2.0 based on the May by HSBC Global Research.
FMM presidentTan Sri SohThian Lai said 2020 survey.
that the GST is a more transparent and The risk of a spill-over from rising
effective tax regime compared to the sales Soh also said the reintroduced GST must energy and food prices into core infla-
and service tax (SST). include the provision of interest on late pay- tion, coupled with pent-up local demand
ments and refunds in the GST legislation amid recovery from the pandemic, would
“Based on a survey carried out by the to ensure strict compliance with the client accentuate price adjustments throughout
FMM on the reintroduction of the GST in charter and integrity of the system. the economy and tightening job markets,
May 2020, a total of 499 companies which said the research house’s economistYun
responded to the survey strongly supported “Create more efficient schemes to re- Liu in a note on Thursday.
for the GST to replace the current SST 2.0 place the ApprovedTrader Scheme (ATS)
as the GST provides a fairer tax structure and Approved Toll Manufacturer Scheme The economist estimates that core
and eliminates cascading and compounding (ATMS) as they are complicated and dif- inflation in the Philippines, Indone-
of taxes commonly found in the SST regime. ficult to implement,” he said. sia and Malaysia is especially sensitive
Read also: to a pick-up, less so in Thailand and
“In addition, prices of Malaysian exports Australia partners with FMM Vietnam.
will become more competitive on the glob- Institute to upskill Malaysian food
al stage as no GST is imposed on exported manufacturers Click here continues on Page 14
goods and services, while the GST incurred
Research firms expect Malaysia’s
manufacturing activity to remain on
recovery path Click here
KUALA LUMPUR (June 2): The rein- GST the consumer price index to increase.
troduction of the goods and services tax reintroduction “The current consumer price index is
(GST) to replace the sales and services tax
(SST) must be implemented in a targeted needs to be rising but it does not translate into more
manner, so as not to burden the people implemented in a revenue for the government because the
who are facing rising inflation. targeted way, says impact of SST only reaches the import
and manufacturing level for goods com-
According to former director-general Subromaniam pared to GST which impacts up to the
of the Royal Malaysian Customs Depart- retail level,” he said.
ment Datuk Seri Subromaniam Tholasy, Bernama
the GST tax imposed at 6% previously Apart from that, Subromaniam also
should be extended to goods tax at 5% GST should take into account the appro- suggested that the government not set
and service tax at 7%. priate timing, the strength of the ringgit, as the threshold value too low as before at
well as public policies provided by certain RM500,000, so that small businesses are
“The government needs to look back ministries besides ensuring that inflation not included in the implementation of GST.
at zero-tax items where this time it should can be controlled.
only be limited to basic items,” he said dur- “Maybe we can see a threshold value
ing the “Malaysia Petang Ini” programme “There is no denying that the previous that is more suitable with a rate of between
on Bernama TV on Thursday (June 2). implementation of GST in 2015 had sev- RM1 million and RM2 million, so as not
eral weaknesses such as subsidy reduction, to burden businesses like a regular grocery
Subromaniam said if the tax rate was set rationalisation of electricity tariff rates and store,” he said.
too low up to four per cent, it would only the depreciation of the ringgit which caused
contribute to neutral income, while higher He said GST is a very efficient, transpar-
rates could increase the country’s income ent and fair and business-friendly taxation
and finances, and raise the stock market. system that can improve the country’s econ-
omy and provide stronger competitiveness
“It will directly impact the strength of to the country’s exports.
the ringgit against the US dollar,” he ex-
plained. “Therefore, GST will definitely stabi-
lise the price of goods in the long run,”
He also said the re-implementation of he added.
F R I D A Y J U N E 3 , 2 0 2 2 14 T H E E D G E C E O M O R N I N G B R I E F
KUALA LUMPUR (June 2): Unitrade Unitrade’s Siang Leng said the positive response
Industries Bhd, which is expected to be 78.13 mil reflected the market’s healthy interest
listed on the ACE Market of Bursa Ma- IPO shares and confidence in Unitrade’s business
laysia on June 14, said the 78.13 million oversubscribed model and growth prospects.
shares made available for the public at by 2.35 times
32 sen per share has been oversubscribed “Looking ahead, we are confident in
by 2.35 times. BY HAILEY CHUNG maintaining our positive growth momen-
theedgemarkets.com tum, driven by the rising construction
The building materials wholesalers activities and acceleration of large-scale
said it received a total of 7,169 appli- shares to selected investors. infrastructure projects in the pipeline.
cations for 261.95 million shares with a The company’s existing shareholders
value of RM83.8 million. “With that in mind, the listing comes
have also offered 125 million shares by at an opportune time as we will deploy
“For the general public portion, a to- way of private placement to selected in- a large portion of our IPO proceeds as
tal of 3,684 applications for 39.06 mil- vestors. working capital to enhance our invento-
lion shares were received, translating to ries range and product mix to meet the
an oversubscription rate of 3.9 times,” Unitrade had sought to raise RM100 increasing demand for building materials.
Unitrade said in a statement on Thurs- million for working capital, repayment
day (June 2). of bank borrowings, as well as to fund a “As a wholesaler and distributor, the
new pipe fabrication centre. additional working capital is essential for
“For the remaining Bumiputera pub- us to fuel our future growth. By tapping
lic portion, a total of 3,485 applications Its managing director Nomis Sim into the equity capital market, it allows
for 39.06 million shares were received, us to achieve just that without incurring
representing an oversubscription rate of additional interest expenses,” he said.
M&A Securities Sdn Bhd is the advi-
It added that the notices of allotment sor, sponsor, underwriter and placement
will be posted to all successful applicants agent for Unitrade’s IPO exercise.
on or before June 14.
Founded in 1979, Unitrade operates
Unitrade’s listing entailed a public is- in Shah Alam, Selangor and serves 1,232
sue of 312.5 million new ordinary shares active customers nationwide including
at 32 sen per share, representing approx- mechanical and electrical contractors,
imately 20% of the enlarged share capital building contractors, traders, manufac-
of 1.56 billion shares. turers, and retailers.
Besides the 78.125 million shares of- For the financial year ended March
fered to the Malaysian public, the com- 31, 2021 (FY21), Unitrade posted a low-
pany has also offered 117.18 million new er revenue of RM1.02 billion compared
shares to bumiputera investors approved with RM1.08 billion in FY20.The group
by the Ministry of International Trade recorded a revenue of RM1.05 billion
and Industry (MITI) and 63.5 million in FY19.
shares to its eligible directors, employees
and persons who have contributed to the The group’s revenue is mainly derived
success of the company. On top of that, from its wholesale and distribution busi-
Unitrade placed out 53.68 million new ness, which accounted for over 96% of
total revenue between FY19 and FY21.
FROM PAGE 13 demand and thus necessitating monetary ings in other markets should also ratchet
tightening. up in the coming months.
“Subsidies and price controls, of
course, help to cushion the impact, no- “Over the past year, things were much Liu raised 2022 CPI forecasts higher
tably in Indonesia and Malaysia. But quieter on the inflation front in Asean again for Thailand, the Philippines, Sin-
these are becoming increasingly costly, than in other parts of the world. Well, gapore, and Indonesia.
even for the latter two where high com- no longer: price pressures have picked
modity prices boost fiscal revenues,” she up notably in a number of markets, no- “With the Fed set to press the brakes
explained. tably, in Thailand, the Philippines, and even harder, the argument for speedier
Singapore,” the economist said. action by Central Banks in Asia is only
Over time, subsidies and price controls growing,” she said, expecting rate hikes in
will need to be adjusted and made more The consumer price index (CPI) read- Indonesia and the Philippines this month.
targeted, as it is crucial to free up funds
for things like investment in infrastruc-
ture and social welfare, she said.
However, Liu said this will come at
the cost of higher inflation.
“Central Banks will need to act more
forcefully to tamp down price pressures,”
she pointed out.
She added that the nature of the shock
from price pressures varies across the re-
gion: in Indonesia and Malaysia, for in-
stance, high commodity prices are more
akin to a demand shock, lifting aggregate
F R I D A Y J U N E 3 , 2 0 2 2 15 T H E E D G E C E O M O R N I N G B R I E F
Boustead says mentary contract,” it said. IOI Corp
‘no significant “Further developments on the above matter announces
differences’ in settlement in long-
contract to deliver six will be announced to Bursa Malaysia Securities standing land
littoral combat ships Bhd in due course,” it added. dispute in Sarawak
BY ADAM AZIZ Boustead Holdings has an 82% effective BY SULHI KHALID
theedgemarkets.com stake in BNS, its annual report showed, with theedgemarkets.com
shares in the latter also held via Boustead Heavy
KUALA LUMPUR (June 2): Boustead Hold- Industries Corp Bhd (BHIC). KUALA LUMPUR (June 2): IOI Corpora-
ings Bhd said on Thursday (June 2) that its tion Bhd said its joint venture in Sarawak, IOI
subsidiary Boustead Naval Shipyard Sdn Bhd BNS was first awarded with the project in late Pelita Plantation, has signed a landmark final
(BNS) and the Ministry of Defence (Mindef) 2011,before a formal contract was signed in 2014. settlement agreement with eight local com-
have entered into a supplementary contract to munities, ending a decades-long land dispute.
remobilise the RM9 billion contract for delivery Through the project execution, variation
of six littoral combat ships. orders (VOs) piled up and the vessel delivery Under the agreement,IOI Pelita Plantation
was delayed from 2019, following discussions — which the group owns jointly with the Sar-
Among others, the remobilisation of the pro- on the VOs and the way forward. awak State Land Custody and Development
ject will see a resumption of payment to BNS Authority — will relinquish or excise 4,615
creditors, namely original equipment manufac- Former defence minister Muhammad Sabu hectares of land from its provisional lease.
turers (OEMs),vendors,and financial institutions, reportedly said the government has paid out
Boustead Holdings said in a filing onThursday. RM6 billion of the RM9 billion contract value, The Sarawak government will subse-
and that the project will incur additional costs quently gazette that excised land as native
“Apart from the activities to be undertak- of RM1.4 billion. communal reserves for agricultural use by the
en by BNS towards remobilising the project, affected communities, effectively giving these
there are no significant differences between Comparatively, overall project completion communities an ownership title to the land.
the substance of the contract and the supple- stood at 56.67% as at July 31, 2020, accord-
ing to Datuk Seri Ismail Sabri, who served as “All the parties have agreed that any fur-
defence minister at the time. No single vessel ther division of the excised land among the
has been fully completed. eight communities, should that be their wish,
must be in accordance with the native cus-
Shares of Boustead Holdings were un- tomary law,” said IOI Corp in a statement
changed at 80 sen at noon market break, giv- on Thursday (June 2).
ing it a market capitalisation of RM1.62 billion.
Year-to-date, the counter has risen by 50.94%. The dispute with the eight communities
from theTinjar area started before IOI Corp
BHIC shares last traded at 48 sen, giving it a acquired the land in 2007.
market capitalisation of RM119.26 million.The
counter is unchanged from the end of last year. “Over the course of this land dispute,
there have been many attempts to resolve the
KUALA LUMPUR (June 2):Tenaga Nasional TNB unit issues dispute, including through the court system
Bhd (TNB) said its wholly-owned subsidiary RM1.5 bil and mediation.
TNB Power Generation Sdn Bhd has issued
RM1.5 billion worth of sustainability Sukuk sustainability sukuk “However, the dispute was complicated
Wakalah to fund its Nenggiri Hydroelectric to fund hydroelectric as it involved eight different communities
Power Plant project in Kelantan. comprising more than 3,500 settlers, with
power plant many of them having overlapping claims on
The sukuk was issued under its 30-year Sukuk the land,” said IOI Corp.
Wakalah Programme of up to RM10 billion,TNB BY IZZUL IKRAM
said in a bourse filing onThursday (June 2). theedgemarkets.com In 2018, a new attempt to resolve the dis-
pute was launched by IOI Pelita Plantation,
The issuance was done in three tranches tiative demonstrates the latter’s commitment with guidance provided by the Roundtable
comprising RM150 million (10-year tenure), to support the group’s aspiration to achieve on Sustainable Palm Oil (RSPO) and certain
RM750 million (15 years) and RM600 mil- net-zero emissions by 2050, a move towards non-governmental organisations to ensure the
lion (20 years), which hold a periodic distri- decarbonisation and renewable energy. resolution process was conducted transparently.
bution rate of 4.70%, 5.05% and 5.20% per
annum respectively. CIMB Investment Bank Bhd and Maybank “IOI would like to express its sincere grat-
Investment Bank Bhd are the joint principal itude to all the above-mentioned stakeholders
“At the peak of the book-building exercise, advisers, joint lead arrangers and joint sus- for their contribution towards the successful
the sustainability sukuk wakalah was oversub- tainability framework advisers for the Sukuk closing of this long-standing dispute.
scribed by approximately 3.41 times, from the Wakalah Programme, as well as the joint lead
issue size of RM1.5 billion, with orders received managers for the first issuance of sukuk to be “The company is looking forward to
amounting to an aggregate of RM5.1 million made under the programme. a new chapter in its relationship with the
from over 30 accounts,” said TNB. neighbouring communities and wishes them
Meanwhile, CIMB Islamic Bank Bhd and a prosperous future,” the group said.
“TNB Power Generation Sukuk Frame- Maybank Islamic Bhd are the joint Shariah
work has been accorded a “GOLD” rating by advisers for the programme. IOI Corp shares were four sen or 0.94%
MARC Ratings Bhd as the independent ex- higher at RM4.30 in afternoon trading,
ternal reviewer,” it added. Shares in TNB finished down three sen or giving the group a market capitalisation of
0.33% at RM8.97 onThursday, giving the group RM26.96 billion.
The utility giant saidTNB Power Genera- a market capitalisation of RM51.36 billion.
tion will play an important role in supporting
its sustainability aspirations and commitment
in mitigating climate change via the adoption
of greener, cleaner and more efficient power
It added that the subsidiary’s funding ini-
F R I D A y j u n e 3 , 2 0 2 2 16 T h e E d g e C E O m o r n i n g b r i e f
KUALA LUMPUR (June 2): TA Invest- TA Investment and remain focused on our long-term in-
ment Management Bhd (TAIM) has de- declares two vestment objectives.
clared gross income distributions of two sen income
sen per unit for TA Islamic Fund (TAIF) “Sporadic weaknesses in the market are
to the registered unitholders of the funds distribution for expected but also presents great investment
as at May 31, 2022. TA Islamic Fund opportunities for some investors.The cur-
rent worries about inflation, war and short-
The subsidiary of stockbroking compa- unitholders ages should ease given time and a quicker
ny TA Securities Holdings Bhd (TASH) reopening of the world economy to travel
said in a statement on Thursday (June 2) by Hailey Chung and trade should help alleviate some of
that TAIF had a three-year total return of theedgemarkets.com these pressures,”TAIM said.
34.53% as of April 29, 2022.
the United States, the United Kingdom, TAIM said its immediate strategy is to
“TA Islamic Fund aims to provide Australia, South Korea and Brazil are rais- seek either value or oversold stocks that
steady capital growth over the medium to ing their benchmark interest rates so far should have limited downside but are sen-
long-term period by investing in a portfolio in 2022,” it said. sitive to positive news.
of authorised investments which conforms
strictly to Shariah principles. TAIM added that the market is ex- “We believe that fund managers need
tremely volatile and uncertain as to how to be sector and stock specific to increase
“Despite market volatility over the re- high inflation can surge with recent debate the chances of generating decent returns.
cent market cycle,TAIF has delivered con- revolving around whether the prescription Hence, we remain positive on sectors
sistent returns to its investors with a three- of raising interest rates is the right medi- that will benefit from the full re-opening
year total return of 34.53% as of April 29, cine or worsens the situation. of the economy such as airlines, airports
2022,”TAIM said. and consumer goods that tourists will buy
“Investing in such market conditions or consume.
It said governments and investors are is challenging and the uncertainties can
either “panicking” or “getting intolerant” scare many investors away. As such, we “Oversold technology stocks are also
of rising inflation from the high oil and have to be firm in our fundamental views good for technical rebounds and future
gas prices, rising food prices and labour prospects,” it said.
costs that were triggered by post-pandem-
ic shortages and the Russia-Ukraine war. According to its latest press release,
TAIM stated to have a total asset under
“There are concerns that regulators management (AUM) of RM10.74 billion
could over-react by quickly closing the gap as of April 30, 2022, being a combina-
between interest rates and headline infla- tion of unit trust funds and direct mandate
tion numbers where central banks from portfolios under its management.
KUALA LUMPUR (June 2): Alliance Alliance Bank “We want to help them build their cred-
Bank Malaysia Bhd said it is providing provides additional it history by starting them with a small
an additional RM200 million in in digi- RM200 mil in digital credit line, and subsequently help them
tal loans to help small and micro enter- loans to help small, expand by providing them quick access
prises grow. micro enterprises to financing via Digital SME once they
are ready. This financial year, we aim to
The bank said its latest digital solution, grow provide up to RM200 million in digital
Digital SME, offers up to RM500,000 col- SME loans,” he added.
lateral-free financing via a simple online by Shazni Ong
process that only requires submission of theedgemarkets.com Alliance Bank said its Digital SME fi-
the company’s six-month bank statement. nancing is applicable to businesses that
have been in operation for at least a year
“To facilitate the application process, and with an annual turnover of between
the Digital SME loan application is avail- RM50,000 and RM30 million.
able in three languages — English, Bahasa Click here to read the full story
Malaysia and Mandarin. Customers can
also request for assistance with their on-
line application at any stage by contact-
ing the bank’s contact centre,” it said in
Alliance Bank senior vice president and
head of digital SME Kevin Shum said the
bank also provides advice to micro enter-
prises on how to establish credit history
and improve their credit profile.
“Applicants are notified in as little as
24 hours of their loan approval. In FY22
[financial year ended March 31, 2022],
the bank provided RM60 million in dig-
ital SME loans to help micro and small
“We also know that micro enterprises
may face issues obtaining financing due
to their limited credit history.
F R I D A y j u n e 3 , 2 0 2 2 17 T h e E d g e C E O m o r n i n g b r i e f
China raises pressure on banks
to support struggling developers
(June 2): Chinese banks are facing growing forts to salvage the US$2.4 trillion (about It’s relatively rare for banks to shrug off
pressure to support cash-strapped develop- RM10.54 trillion) market for new homes regulatory guidance to lend more, and they
ers after months of pleas by regulators failed that has seen prices fall for eight months have been hurt by such advice in the past.
to boost lending to the industry. and more than a dozen real estate compa- When the government urged lenders to
nies default. combat an economic slowdown following
Local branches of the People’s Bank of the 2008 global financial crisis, it led to a
China (PBOC) have called for meetings These measures have yet to bear fruit. credit glut that saddled them with trillions
with banks in multiple cities since last week Developers’ cash inflow from banks shrank of yuan in bad debts.
to assess why loans have slowed, along with almost 30% in March and April from a year
the difficulties faced by banks and how reg- earlier, exacerbating their liquidity crunch, The country’s deepening anti-corruption
ulators can help, according to people with statistics bureau data shows. Home sales by drive is further restraining banks’ lending
knowledge of the matter. The move rep- the nation’s top 100 developers plummeted appetite. About 60 former officials in the
resents increasing concern from officials 59% in May from a year earlier. House- financial sector have been investigated this
following repeated so-called window guid- hold mortgages shrank by 60.5 billion yuan year, Bloomberg calculations based on offi-
ance for faster property lending in previous (US$9 billion or about RM39.74 billion) cial announcements show.
months, the people said, asking not to be in April from a month earlier, according to
identified discussing private information. central bank figures. Authorities have recently begun to wid-
en the crackdown to include the property
Builders and regulators are counting The PBOC and banking regulator last sector. One recent target was the head of fi-
on banks to provide a lifeline to the indus- week urged lenders to use “all resources” nancing at Fuzhou-basedTahoe Group Co,
try as bond funding and home sales dry to accelerate the delivery of approved loans the first top 10 builder to default. Huang
up.Yet developers’ cash flows from bank and maintain stable growth of property Xi, who was a general manager at China
loans have plunged almost 30% in recent lending. At a briefing on Thursday (June Construction Bank Corp’s institutional
months, undermining Chinese President Xi 2), central bank officials promised to step business department before joining Tahoe
Jinping’s efforts to arrest a property slump up their plans to implement monetary pol- in mid-2018, was probed for serious vio-
that’s worsening a slowdown in the world’s icy to stabilise growth. lations, the Central Commission for Dis-
second-largest economy. cipline Inspection said last month.
Yet banks will remain cautious about fi-
As the number of developers that have nancing developers — especially distressed Chinese banks will be reluctant to lend
defaulted on or extended debt obligations ones — despite the recent active policy guid- to small and private developers due to the
mounts, banks are reluctant to increase ance, Moody’s Investors Service analysts anti-corruption investigations, Jefferies an-
their exposure to the sector in response to wrote on Tuesday. alysts led by Shujin Chen wrote in a note
regulators’ demands. Some are only rolling in May.
over debt to prevent a souring of loans, the “Real estate’s share of new bank lending
people said. China’s widening crackdown is set to suffer another blow” in the second Ziv Ang, an analyst with UOB Kay Hian
on corruption in the financial system has quarter due to weak demand for mortgages in Kuala Lumpur, expects financial insti-
added to bankers’ reticence. and Covid-19 lockdowns hindering new tutions to remain cautious towards lending
projects, said Bloomberg Intelligence analyst to developers.
Regulators stopped short of imposing Kristy Hung.
any punishment on banks that fail to boost “Banks remain wary about their expo-
lending, said the people. “Chinese banks safeguarding their loan sure to the property sector and a potential
books against developers with sliding credit increase in bad loans,” Ang said. “It’d be
The dearth of lending isn’t entirely a ratings and rising default risks could also hard for the lenders to appease their own
supply issue: The risk of weak sales had weigh on new bank lending to the sector,” investors if they went too aggressive with
also made some private builders reluctant she wrote in a note. lending to developers.”
to borrow for new housing projects, the
people added. And the housing slump is
weighing on demand for mortgages even
as interest rates fall.
The PBOC didn’t immediately respond
to a faxed request for comment.
“Whichever bank provides a lifeline to
a developer will have to shoulder the risk,
and why would a developer take on more
debt without seeing better sales prospects?”
said Shen Meng, a director at Beijing-based
boutique investment bank Chanson & Co.
“Without enough home-buying demand,
it’d be a dead end for either banks or de-
From easing mortgage costs to relaxing
ownership rules, China has stepped up ef-
F R I D A y j u n e 3 , 2 0 2 2 18 T h e E d g e C E O m o r n i n g b r i e f
Fitch withdraws Meituan sales nation reported its fewest new cases in
ratings on debt- beat after new more than three months, vindicating Cov-
business offsets id Zero in the eyes of Beijing despite the
laden China China slowdown policy’s rising economic toll.Yet uncer-
Evergrande, tainty persists because of the readiness
subsidiaries by Coco Liu with which the government is expected
Bloomberg to clamp down on any future outbreaks,
by Sumeet Chatterjee with unknown consequences.
Reuters (June 2): Meituan’s quarterly revenue
grew 25%, after the Chinese food deliv- China’s internet firms are also grap-
HONG KONG (June 2): Fitch Rat- ery titan withstood the economic fallout pling with a wide-ranging government
ings said onThursday it has decided from coronavirus-related lockdowns in crackdown that’s chilled a once-frenet-
to withdraw its rating on embattled cities such as Shanghai. ic pace of industry expansion. Gaming
property developer China Evergrande conglomerate Tencent Holdings Ltd last
Group and two of its subsidiaries as Sales rose to 46.3 billion yuan (US$6.9 month reported near-zero revenue growth
the firms have stopped participating billion) in the three months ended March, for the March quarter, while e-commerce
in the process. propelled by a 47% surge in revenue from titan Alibaba Group Holding Ltd grew
the division that groups new businesses revenue at its slowest pace since its 2014
The rating agency in December such as ride-hailing and community com- listing.
downgraded Evergrande and its sub- merce. Revenues exceeded the average
sidiaries, Hengda Real Estate Group analysts’ estimate of 45.3 billion yuan, Sentiment concerning China’s inter-
Co Ltd and Tianji Holding Ltd, to but marked the slowest pace of growth net industry has swung wildly in recent
so-called “restricted default” status, for the company in almost two years. weeks. Investors initially saw economic
saying the firms had defaulted on their czar Liu He’s pledge to support the dig-
offshore bond obligations. Beijing-based Meituan is one of the ital economy as a signal of an easing, if
few Chinese tech companies that appear not an end, to the country’s crackdown
In its statement onThursday, Fitch to have maintained its momentum in a on Big Tech. But Chinese tech executives
said that it would no longer have suffi- challenging macro environment. China’s including Tencent President Martin Lau
cient information to maintain the rat- retail sales in April contracted 11.1% told analysts during recent earnings calls
ings on Evergrande, the world’s most from a year ago, underscoring the impact that it will take time for regulators to
indebted developer with more than of a Covid Zero policy that’s snarled the enact policies in line with that sweeping
US$300 billion in debt, and two of country’s supply chains and hammered endorsement.
its subsidiaries. consumer sentiment. Led by high-pro-
file billionaire Wang Xing, the company Quarterly sales from Meituan’s core
“Accordingly, Fitch will no longer is also under scrutiny over the welfare of food delivery business matched analyst
provide ratings or analytical coverage its delivery riders and the commissions projections. climbing 17% to 24.2 billion
for Evergrande and its subsidiaries,” it charges restaurants. yuan, while its in-store, hotel and trav-
it said. el unit generated revenue of 7.6 billion
China has declared victory over yuan, up 16%. Its net loss widened to 5.7
Evergrande,which has struggled to Shanghai’s coronavirus outbreak as the billion yuan, versus the market estimate
repay suppliers and complete housing for a 6 billion yuan loss.
projects, has become the poster child
of China’s property sector crisis as Meituan’s shares closed down 1.3%
it lurched from one missed offshore in Hong Kong before the earnings an-
debt payment deadline to another. nouncement. Its share price has shed
about 20% this year.
The firm is considering repaying
offshore public bondholders owed
around US$19 billion with cash in-
stalments and equity in two of its
Hong Kong-listed units, Reuters re-
ported last month, as the developer
struggles to get back on better footing.
Its US$22.7 billion worth of off-
shore debt including loans and private
bonds is deemed to be in default after
missing payment obligations late last
year. It said in March that it will un-
veil a preliminary debt restructuring
proposal by the end of July.
Late last year rating agencies in-
cluding S&P downgraded Evergrande
to “selective default” after missed off-
shore debt payment.
F R I D A y j u n e 3 , 2 0 2 2 19 T h e E d g e C E O m o r n i n g b r i e f
US economy shows signs of
downshifting as rates, inflation bite
by Jonnelle Marte
(June 2): US economic growth looks to es, three districts said that price increases Holdings. “We don’t know if it’s a minor
have downshifted in recent weeks in the had “moderated somewhat”. one or Superstorm Sandy.You better brace
face of headwinds that include rising in- yourself.”
terest rates and inflation, the US Federal Some areas also reported some softness
Reserve (Fed) said. in the labour market. Most districts said St Louis Fed President James Bullard
employment rose “modestly or moderate- told reporters on Wednesday that it would
Expansion and price gains may be mod- ly”, but the pace of job growth slowed in be “natural” to see slower economic growth.
erating in parts of the country as house- one district, the Fed said in the Beige Book “We would expect growth to be slowing to a
holds and businesses navigate higher rates, that was based on anecdotes collected by pace that is more consistent with the longer-
the Russian invasion of Ukraine and ongo- the Fed’s 12 regional banks through May term potential growth rate of the US econo-
ing disruptions from Covid-19 infections, 23 and compiled by the Federal Reserve my, which many economists put at 1.75% to
the central bank said in its Beige Book re- Bank of Philadelphia. 2%,” Bullard said after a virtual presentation
port on Wednesday (June 1). to the Economic Club of Memphis. “We
Earlier onWednesday, JPMorgan Chase have certainly been growing well above that
“Four districts explicitly noted that the & Co chief executive officer Jamie Dimon over the last year or more.”
pace of growth had slowed since the prior warned investors that tightening monetary
period,” it said. Business contacts in several policy and Russia’s invasion of Ukraine A separate report released on Wednes-
districts reported becoming more cautious could create unprecedented headwinds for day by the Labor Department showed that
as their outlooks grew more pessimistic. the economy and cautioned them to pre- US job openings fell in April from a record
pare for an economic “hurricane”. in the prior month but remained elevated,
Fed officials lifted interest rates by a with roughly two job openings for every
half point in May and signalled that they “That hurricane is right out there down unemployed American.That suggests little
are likely to make similar increases in June the road coming our way,” he said at a con- relief for employers struggling to attract
and July as they work to tame the hottest ference sponsored by AllianceBernstein and retain workers. Another update on
inflation in decades. Policymakers are aim- the labour market will come on Friday,
ing to reduce demand for labour, in turn when the government releases the jobs
cooling wage growth and helping to low- report for May.
er inflation, without tipping the economy
into a recession. Atlanta Fed president Raphael Bostic said
last month that the Fed could take a pause
The Beige Book suggested that uncer- in September if inflation comes down over
tainty about the economic outlook is caus- the summer. But Fed governor ChrisWaller
ing some businesses to pull back on spend- said this week that he supports raising rates in
ing and investing. “Eight districts reported half-point increments until he sees inflation
that expectations of future growth among coming down to the Fed’s 2% goal.
their contacts had diminished; contacts in
three districts specifically expressed con- Policymakers will also begin shrinking
cerns about a recession,” the Fed said in the Fed’s US$8.9 trillion (about RM39.1
the report. trillion) balance sheet this month, launch-
ing a second tool to help them battle rising
While contacts in most Fed districts said prices. But officials are unsure of what its
they continued to see robust price increas- effects will be on the economy and on mar-
kets.The Federal Open Market Committee
will hold a policy meeting on June 14 to 15.
F R I D A y j u n e 3 , 2 0 2 2 20 T h e E d g e C E O m o r n i n g b r i e f
(June 2): Traders are rushing to price in Rate hikes spur 2. South Korea
a higher peak to the rate cycle in emerg- bets that Asian In last week’s policy decision, the Bank
ing Asian markets as they anticipate that central banks of Korea raised its inflation forecast for
central banks will have to hike faster and will keep going this year to 4.5%, from a 3.1% projection
more aggressively. made in February, as its new governor em-
by Marcus Wong phasised prioritising inflation over growth.
Central banks raising rates from India Bloomberg
to Malaysia have spurred bets in swap mar- Investors were quick to front-load rate
kets, with traders raising terminal rate ex- bloomberg expectations, with won swaps pricing in
pectations in the South Asian nation by three quarter-percentage-point hikes in
more than 75 basis points in recent weeks. points at the end of April. Nomura Hold- the next six months to over 2.5%.
Even countries in the region, like New Zea- ings Inc expects front-loaded hikes, and for
land, which have been ahead of others in policy rates to rise to the terminal level of Over the 12-month horizon, won swaps
policy normalisation, are raising the peak 6.25% by April 2023, economists includ- mostly held, still pricing rates between 3%
rate forecasts. ing Sonal Varma wrote in a May 22 note. and 3.3%.
Those who have bet that rates hikes have The Japanese firm’s projection is above 3. Malaysia
been largely priced in are increasingly at consensus expectations for a terminal rate Bank Negara Malaysia’s unexpected de-
risk of being proven wrong. Inflationary of close to 5.9% by the second quarter cision to hike policy rates on May 11 ac-
pressures are refusing to ebb across the of next year as suggested by a median of celerated hawkish bets, with swaps pricing
globe as oil trades near a three-month economists surveyed by Bloomberg.The Re- in for rates to rise as high as 3.8% over the
high, while European inflation data for serve Bank of India’s next policy meeting 12-month horizon before easing.
May topped economists’ forecast. is slated for June 8.
This has buoyed local bonds, which
“Risks of higher terminal rates in Asia have offered total returns of 1.8% in May
are certainly there, although compared to to dollar-based investors, the highest in
the start of the year, market pricing of ter- emerging Asia.
minal rates has already moved up by a lot,”
according to DuncanTan, a rates strategist 4. Philippines
at DBS Group Holdings Ltd in Singapore. Two-year Philippine yields have risen to the
highest in over two years even as shorter
Here is how rate expectations have yields in Malaysia,Thailand and Indonesia
moved in four markets in the region. have pulled back since mid-May.
1. India This signals that traders have main-
Rate expectations have surged following tained hawkish expectations for Bangko
an off-cycle surprise hike on May 4, with Sentral ng Pilipinas after the rate hike in
rupee overnight indexed swaps now pricing May, with incoming Philippine central
nearly 190 basis points of tightening over bank governor Felipe Medalla signaling
a 12-month horizon, up from 112 basis a possible interest-rate increase in June.
(June 2):Tomato prices are surging in India, Tomatoes are rive in about three months, said Bais, who
putting politicians on notice as vegetables the next big risk is now selling tomatoes at about 80 rupees
have an unusual history of toppling govern- to Modi’s fight a kilogram, up from as much as 50 rupees
ments in the country. against inflation two months ago.
Tomatoes, potatoes and onions form the by Malavika Kaur Makol Mango prices are also rising in some ar-
holy trinity of Indian cooking, where they’re & Adrija Chatterjee eas after unusually hot weather slashed out-
often mixed with spices to form the base for Bloomberg put. Prices of the popular Himsagar variety
curries, such as chicken tikka masala. The have doubled in Kolkata, the capital ofWest
average retail price of tomatoes in India has Bharatiya Janata Party is set to face voters at Bengal, from 50 rupees last year. Production
jumped 70% from a month ago and 168% the end of the year in Prime Minister Nar- of mangoes has slumped about 40% in the
from a year earlier to 53.75 rupees (69 cents) endra Modi’s home State of Gujarat, a cam- state, partly due to heat waves in previous
a kilogram as ofTuesday, according to data paign that will set the tone for his re-election weeks, according to Kamal Dey, president of
compiled by the food ministry. for a third time in 2024. theWest BengalVendors’ Association.
The costs of everything from cooking During Modi’s 2018 campaign, he fa- India endured a record heat wave in
oil to wheat flour have climbed in India, mously said farmers are his ‘top’ priority, March and April, with temperatures in some
stoking inflation to an 8-year high in April explaining that ‘TOP’ means “Tomato, On- places reaching almost 50 degrees Celsius
and squeezing household budgets.The gov- ion and Potato.” (122 degrees Fahrenheit).The blistering heat
ernment has risked global ire by restricting damaged India’s wheat output, prompting
wheat and sugar exports and the central bank There is a shortage of tomatoes current- authorities to restrict exports that the world
is seen heading for another interest-rate in- ly, said Prem Bais, 36, a vegetable vendor was counting on to alleviate shortages caused
crease this month after surprising with a in Mumbai. Supplies from the old harvest by the war in Ukraine. India has also curbed
hike in May. A dovish member of the cen- are dwindling and a new crop will only ar- sugar exports to protect its own supply.
tral bank’s rate-setting committee has said
that food prices had risen more than the “I have to pay higher prices as I can’t pick
monetary authorities had expected. just one child to feed,” said Sushma Sonde,
38, a domestic helper in Mumbai, adding
Soaring food prices, including tomatoes, that the costs of everything have risen. “I
may also have a political impact as the ruling have two children and they’re both my own.”
F R I D A y j u n e 3 , 2 0 2 2 21 T h e E d g e C E O m o r n i n g b r i e f
World’s from Mercedes-Benz AG production by Vlad Savov
biggest truck chief Joerg Burzer this week who said Bloomberg
manufacturer the chip crunch was no longer causing
says chip crunch serious production stoppages. (June 2): China’s cooling economy is
going to be the biggest drag on world-
easing A global shortage of trucks contribut- wide smartphone shipments this year, ac-
ed to a jump in shipping rates as compa- cording to the latest IDC forecast, which
by William Wilkes nies raced to restore depleted inventories. points to a 3.5% global decline in 2022.
Bloomberg While warnings over the health of the
global economy are intensifying, Rad- The world’s biggest smartphone mar-
FRANKFURT (June 2): Daimler Truck strom said there was no signs yet of a ket is expected to shrink by 38 million
Holding AG sees promising signs of mov- slowdown in truck manufacturing, typ- units this year, down 11.5% on 2021
ing past the prolonged chip shortage that ically a sector that’s sensitive to down- and accounting for about four-fifths of
has beset manufacturers globally, the turns. the global reduction in shipment vol-
head of the company’s Mercedes truck ume. Only the war-stricken Central
brand said. “There’s still very, very high demand and Eastern Europe region is projected
relative to supply,” Radstrom said. “De- to shrink faster, as the compounding ef-
After months of factory outages due spite the changes in the economy, we fects of Covid-19 lockdowns, geopolit-
to the component shortfalls, the order don’t see any downturn in demand. It ical tensions and surging inflation cool
backlog is keeping factories busy even as can change very quickly, however.” consumer sentiment.
the global economy shows signs of sput-
tering, Karin Radstrom, who also leads Daimler Truck, which split from from “The lockdowns hit global demand
the truckmaker’s business in Europe and Mercedes last year, is working to improve and supply simultaneously by reducing
South America, said in an interview.The margins after historically struggling to demand in the largest market globally and
world’s biggest truckmaker has so far also turn unrivaled industrial scale into re- tightening the bottleneck to an already
evaded disruption from coronavirus lock- turns matching the likes of Volvo and challenged supply chain,” IDC research
downs in China, she said. Paccar Inc. Meanwhile, electric-vehicle director Nabila Popal said in the report.
specialists including Tesla Inc and Nikola “Apple appears to be the least impact-
“It’s better, it’s not perfect, but it’s Corp are plotting inroads into the truck- ed vendor due to greater control over its
better than last year,” Radstrom said in ing market amid the global crackdown supply chain and because the majority of
an interview. “I try to not celebrate too on transport emissions. its customers in the high-priced segment
early, we’re still monitoring the situation are less influenced by macroeconomic
closely.” Daimler Truck’s zero emissions strate- issues like inflation.”
gy focuses on developing battery-powered
Manufacturers like Daimler Truck trucks for shorter journeys and hydrogen Apple Inc is keeping its iPhone pro-
— which also counts the Freightliner, fuel-cell models for longer stretches.The duction flat this year, having previously
Western Star and Fuso brands — and manufacturer last year started production been expected to increase output as it
peer Volvo Group have had to curtail of its electric eActros vehicle in Germany. worked toward a significantly upgraded
output as plants globally couldn’t source Orders for battery big rigs rose to 619 iPhone 14 generation, Bloomberg News
enough of the high-tech components even in the first quarter of 2022 compared to has reported.The company’s steady per-
as demand for transport boomed. Rad- 169 in the same period of 2021. formance is in contrast to its Chinese
strom’s comments echo an assessment competitors, which recently suffered their
“Infrastructure has to be sped up,” worst drop in shipments since the out-
Radstrom said of challenges facing the break of the pandemic.
company’s push to accelerate its electri-
fication strategy. “We also need to know IDC’s global forecast is a reversal from
where the electricity and green hydrogen its previous prediction for 1.6% growth.
will come from. I’m in favour of carbon Still, IDC sees headwinds for the smart-
pricing to speed it up.” phone industry dying down in the latter
half of the year — barring any additional
setbacks — and projects a rebound to 5%
growth in 2023.The market researchers
also see growth in the wider Asia-Pacif-
ic region, excluding China and Japan,
which is likely to finish the year 3% up,
according to their projections.
F R I D A y j u n e 3 , 2 0 2 2 22 T h e E d g e C E O m o r n i n g b r i e f
TOKYO (June 2): Toshiba Corp, the Japan’sToshiba The conglomerate did not name any
troubled Japanese conglomerate explor- receives eight of the potential investors or say how
ing strategic options, said it has received proposals to go many were from overseas. According to
eight initial proposals to take it private as sources familiar with the matter, KKR
well as two proposals for capital alliances private & Co Inc, Blackstone Inc, Bain Capi-
that would see it remain listed. tal, Brookfield Asset Management, MBK
by Makiko Yamazaki & Scott Murdoch Partners, Apollo Global Management
The news comes amid recent signs that Reuters and CVC Capital Partners were con-
Toshiba, which has long been at logger- sidering bids.
heads with its large activist shareholder line for non-binding proposals was Monday.
base, is growing more receptive to calls The company said that it will evaluate Domestic funds Japan Investment Corp,
from foreign hedge fund investors to con- Japan Industrial Partners and Polaris Capi-
sider going private. financing arrangements and the feasibility tal Group were also looking at participating
of the proposals and then after its annual in bids, sources have also said.
Last month it nominated Akihiro shareholders’ meeting on June 28, it will
Watanabe, an executive from boutique US select potential investors to be given due The participation of local funds is seen
investment bank Houlihan Lokey, as chair- diligence opportunities. as critical as some of Toshiba’s key busi-
man of its board and two representatives from nesses — including defence equipment and
activist shareholders as outside directors. Toshiba represents “a big potential nuclear power — are seen as strategically
deal” and its activist shareholders “are important to the Japanese government.
“We are encouraged by the multiple clearly highly motivated so it is worth a
proposals as we feel they reflect big expec- look for any large PE funds”, said Light- Japan’s economic security minister
tations about Toshiba’s potential,” Chief Stream Research analyst Mio Kato, who Takayuki Kobayashi has said, however,
ExecutiveTaro Shimada told a briefing on publishes on Smartkarma. that the government will not block for-
Thursday where he also unveiled bullish eign investors from buying industrial giants
new earnings targets as part of an updated “It hasn’t even gotten to due diligence provided they comply with regulations that
business strategy. yet so there isn’t much reason to not give govern the handling of sensitive technology.
it a look.”
Bedevilled by accounting and governance Toshiba also said it expects operating
crises since 2015, Toshiba set up a special profit to more than double to 360 billion
committee in April to solicit proposals af- yen (US$2.8 billion) in the year through
ter shareholders voted down a manage- March 2026 from the last financial year —
ment-backed restructuring plan.The dead- an outlook it wants to be the springboard
for discussions with potential investors.
It aims to beef up data-related services,
production of power management chips
and research on next-generation nuclear
The plan did not take into account
whether the company would remain list-
ed or not, Shimada said.
Shimada, who only took the helm in
March, also reversed the company’s stance
on several units. Toshiba TEC’s point of
sales systems as well asToshiba’s elevators
and lighting businesses are now considered
key to growth instead of non-core, he said.
COPENHAGEN (June 2): Denmark has Denmark votes to more united than ever on EU policy.
voted to join the European Union’s (EU) join EU defence Due to the defence opt-out, Denmark
defence pact and scrap its 30-year-old
opt-out from the bloc’s common secu- pact amid could not participate in EU military oper-
rity and defence policies, according to concerns over ations or cooperation on the development
Xinhua. Russia-Ukraine and acquisition of military capabilities
within the EU framework. Furthermore,
In a referendum held on Wednesday conflict the country was not obligated to provide
(June 1), a vast majority, or 66.9%, of military support or supplies to EU-led
Danish citizens, voted for the move, ac- Bernama efforts in conflict zones, nor to participate
cording to the preliminary results from in any operational decisions or planning.
Statistics Denmark, which gives the Nor-
dic country a seat at the EU table to dis- In March, the Danish Parliament de-
cuss military cooperation. cided to hold on June 1 the referendum,
part of a new multiparty agreement on
The vote occurred with a turnout of defence, amid mounting concerns over
65.76% of the 4,260,944 electoral roll. the Russia-Ukraine military conflict.
“I believe that it is the right thing for In addition, Denmark aims to meet
Europe and for Denmark and our fu- NATO countries’ target defence spend-
ture,” said Prime Minister Mette Fred- ing of 2% of gross domestic product by
eriksen after casting her ballot earlier in 2033, with efforts starting to be made in
the day, believing that Denmark may be 2024, according to the agreement.
F R I D A y j u n e 3 , 2 0 2 2 23 T h e E d g e C E O m o r n i n g b r i e f
(June 2): European Union (EU) efforts EU push for day meeting, according to the people.
to approve a partial ban on Russian oil partial Russian Budapest also asked that it be granted
imports hit an obstacle after Hungary oil ban delayed
raised new or already rejected demands, by Hungary’s the right to sell Russian oil that it refines,
further slowing a push to clinch a deal, the two people said, exempting Hunga-
according to people familiar with the ne- demands ry from the current proposal that would
gotiations. prohibit countries that import pipeline
by Alberto Nardelli, Ewa Krukowska oil from selling it to others once the ban
EU ambassadors may meet again on & Zoltan Simon on seaborne supplies kicks in. This re-
Thursday (June 2) in Luxembourg to try Bloomberg quest was rejected when Orban raised it
to green-light the bloc’s sixth sanctions at the leaders’ summit.
package that would target Russia for its ry demanded that Patriarch Kirill, who
invasion of Ukraine, said the people, who heads the Russian Orthodox Church and Hungary crossed a line in the ambas-
asked not to be identified because the has been a vocal supporter of President sadors’ meeting and the mood was not
discussions were private. Vladimir Putin and his war in Ukraine, good, one of the people said. Hungary’s
be removed from the EU’s proposed list stance at the talks was scandalous, an
Sanctions in the EU require the unan- of sanctioned individuals, two of the peo- official added. The French presidency
imous consent of its 27 nations and Hun- ple said. of the EU told the gathering that the
garian Prime Minister Viktor Orban credibility of the ambassadors, and of
has blocked the latest package of meas- The Hungarian request was not raised the European Council, was at stake, an-
ures for weeks. EU leaders appeared to by Orban with the leaders in the Mon- other official said.
achieve a breakthrough on Monday when
they gave their political blessing to the A spokesperson for the Hungarian
sanctions, leading many to say approval government didn’t reply to a request
was close at hand. for comment.
Hungary’s latest intervention, in a During the leaders’ meeting on Mon-
meeting of EU ambassadors in Brussels day, the EU granted assurances that Bu-
on Wednesday, further strained its dete- dapest could source alternative oil sup-
riorating relations with the EU, which plies should Hungary’s pipeline deliveries
sparked speculation over whether Hun- be disrupted.
gary would one day follow the UK in
leaving or being forced out of the bloc. Orban has argued that continued
access to cheaper Russian oil is crucial
The new sanctions measures, which for Hungary, where he has capped fuel
would represent the EU’s toughest yet, prices and maintained lavish household
are aimed at curbing Russia’s ability to utility subsidies. The costs of maintain-
finance the war in Ukraine.The proposed ing the measures soared as commodity
sanctions aim to ban the import of sea- prices spiked following Russia’s invasion
borne oil by year end, while exempting of Ukraine.
pipeline crude as a concession to Hun-
gary and other landlocked countries, Orban has tested the limits of EU
which rely on Russian supplies through membership with a domestic power
the Druzhba pipeline. grab since 2010 and foreign policy that
cultivated close relations with authori-
During the closed-door meeting on tarian leaders of Russia, China and Tur-
Wednesday when ambassadors were key, which led Budapest several times to
trying to finalise the sanctions, Hunga- block EU pro-democracy statements that
would have required unanimity.
LONDON (June 2): OPEC+ is working on OPEC+ working
making up for a drop in Russian oil output, on making up for
two OPEC+ sources said onThursday, as
Russia’s production has fallen by around 1 lower Russian
million barrels per day as a result ofWest- oil output
ern sanctions on Moscow over Ukraine.
One OPEC+ source familiar with the
Russian position said Moscow could agree duction and export cuts from the world’s
to other producers compensating for its second largest oil exporter of as much as
lower output but it may not happen at a 2-3 million bpd, according to various es-
Thursday meeting and might not be in full. timates.
A Gulf OPEC+ source said a decision Russia was already producing below its
on the matter was “highly possible” at a OPEC+ target of 10.44 million barrels per
meeting on Thursday. day (bpd) in April with output of around
9.3 million bpd.
The group is meeting online later on
Thursday and has been widely expected to
stick to its planned monthly modest output
increases despite tighter global markets.
However, Western sanctions imposed
on Russia over Ukraine may result in pro-
F R I D A y j u n e 3 , 2 0 2 2 24 T h e E d g e C E O m o r n i n g b r i e f
Elon Musk’s demand staffers stop
‘phoning it in’ may cost him talent
(June 2): Elon Musk’s demand that Tesla by Matthew Boyle ers log in remotely, rather than coming in
Inc staff stop “phoning it in” and get back Bloomberg every day. Mitsubishi Motors North Amer-
to the office has thrust the world’s richest ica Inc offers its corporate employees the
person into the noisy debate over the future office five days a week, compared with 35% option to work from home all the time.
of work, and shows again that some CEOs of nonexecs, Future Forum found.Those
remain tone-deaf to employees’ growing who are in the office full time report higher Musk’s dismissal of remote work, which
demands for flexibility. levels of stress and anxiety, and more than he dismissed as “pretend”, illustrates a com-
half would prefer to work flexibly at least monly held perception among bosses that
“Everyone atTesla is required to spend part of the time. remote workers aren’t as productive, inno-
a minimum of 40 hours in the office per vative or collaborative as those in the office.
week,” Musk wrote in a message addressed Tesla’s chief executive officer isn’t having
to employees at the electric-car maker.That that. In his return-to-office memo, Musk Goldman Sachs Group Inc CEO David
“must be where your actual colleagues are saidTesla would have “long ago gone bank- Solomon last year called remote work an
located, not some remote pseudo office. rupt” if he hadn’t “lived in the factory so “aberration”, while Morgan Stanley CEO
If you don’t show up, we will assume you much — so that those on the line could James Gorman expressed frustration that
have resigned. The more senior you are, see me working alongside them.” NewYorkers were visiting the city’s restau-
the more visible must be your presence.” rants but avoiding their offices.
He also ridiculed companies with more
But that mandate might not be accept- flexible workplace policies, saying “when Research from Nicholas Bloom at Stan-
able to some at Tesla, and will certainly was the last time they shipped a great prod- ford University and other academics has
spook staffers at Twitter Inc, which Musk uct? It’s been a while.” shown that remote workers are just as pro-
is seeking to acquire, who have enjoyed a ductive, and typically more satisfied, than
work-from-anywhere policy throughout the Carmakers, along with retailers and office workers.
pandemic. In today’s tight labour market, other firms with a mix of white-collar and
with salaries soaring and workers quitting frontline workers, walk a fine line when Twitter’s take
at a record clip, Musk’s policy could also they extend flexibility to some employees Musk’s ultimatum also runs counter to cur-
cost him some talent. and not to others. rent policy at Twitter, which is one of the
most prominent tech companies to let most
“Companies that demand that their em- The pandemic laid bare how depend- employees work from home permanently.
ployees come back to the office are likely ent society is on the physical presence of
to face a set of problems,” said Brian Kro- blue-collar workers in hospitals, meatpack- “If our employees are in a role and situ-
pp, head of human-resources research at ing plants and grocery stores.The idea of ation that enables them to work from home
Gartner Inc, a technology-consulting com- white-collar employees logging in safely at and they want to continue to do so forever,
pany. “They will either have access to a home, while lower-paid employees risked we will make that happen,” Twitter said
smaller talent pool or will have to pay a their health to show up in person, has been last year. Half of the world’s workers do
compensation premium to force employ- an added source of resentment in an al- so remotely or in a hybrid setup, up from
ees to come back.” ready stratified US economy. 9% prior to the Covid-19 pandemic, ac-
cording to a global study of employers by
More than two out of three so-called Going it alone WillisTowersWatson, a risk-management
knowledge workers — data scientists, en- Musk’s office mandate contrasts with and human-resources firm.
gineers, graphic designers — prefer hybrid some auto-industry rivals. Ford Motor
work, according to an ongoing survey of Co in April adopted a “flexible hybrid” “The widespread adoption of these work
more than 10,000 white-collar workers model where some salaried staff- e r s arrangements during the pandemic has chal-
from Future Forum. The research con- mainly come in for collab- lenged some of myths that have accompa-
sortium is backed by Slack Technologies, orative work and other- nied remote work over the years, namely
a unit of Salesforce Inc that offers a pop- wise work from home. that people cannot be productive working
ular workplace communications service. General Motors Co remotely, which has fed into greater open-
has a “work appro- ness and acceptance,” said Brad Bell, di-
Empty offices priately” strategy that rector of the Center for Advanced Human
Just 19% of executives are working from the lets white-collar work- Resource Studies at Cornell University. At
Tesla, though, “clearly that is not true”.
F R I D A y j u n e 3 , 2 0 2 2 25 T h e E d g e C E O m o r n i n g b r i e f
WASHINGTON (June 2): A US jury in US jury hands Meanwhile, Heard said she was “heart-
the state of Virginia handed actor Johnny Johnny Depp broken” by the verdict shortly after it was
Depp a court victory, finding that he was victory, backs read aloud.
the victim of defamation from ex-wife Am- Amber Heard’s
ber Heard in a 2018 op-ed. counterclaim “I’m even more disappointed with what
this verdict means for other women. It is
But it also supported the actress’ coun- Bernama a setback. It sets back the clock to a time
tersuit, the Anadolu Agency reported. when a woman who spoke up and spoke
Reuters out could be publicly shamed and humil-
The jury awarded Depp US$15 mil- iated. It sets back the idea that violence
lion (about RM65.9 million) in com- against women is to be taken seriously,” she
pensatory and punitive damages but the said in a statement on herTwitter account.
amount of punitive damages is capped at
US$350,000 under state law, giving the “I am sad that I lost this case. But I am
actor a US$10.35 million settlement. sadder still that I seem to have lost a right I
thought I had as an American — to speak
The jury also awarded US$2 million freely and openly,” she added.
Heard said she was ‘heartbroken’ by the verdict shortly after it was read aloud.
Depp lauded the decision, saying the
jury “gave me my life back”.
“I am truly humbled,” he said in a state-
ment. “From the very beginning, the goal
of bringing this case was to reveal the truth
regardless of the outcome. Speaking the
truth was something that I owed to my chil-
dren and to all those who have remained
steadfast in their support of me. I feel at
peace knowing I have finally accomplished
Depp had sued for US$50 million but
Heard countersued for US$100 million
based on allegations that the 58-year-old
Pirates of the Caribbean star defamed her
when he said her claims of abuse were false.
Depp was not present in the courtroom
but his legal team appeared overjoyed by
the verdict. The trial had garnered glob-
al attention and became fodder on social
PUTRAJAYA (June 2):There are no Rus- No Russian ey system versus 0.15% in crypto,” he noted.
sian oligarchs found on Binance’s platform oligarchs found “So that is the misconception.We will
and the notion that cryptocurrency is widely
used to facilitate illicit activities is a “miscon- on Binance still take time to educate the masses, but
ception”, according to Changpeng Zhao, the platform, eventually people will understand that
chief executive officer (CEO) of the world CEO says crypto is actually a lot safer than the tra-
largest digital currency trading exchange. ditional money system,” he added.
by Chester Tay
“When we talked about sanctions on theedgemarkets.com Zhao also likened the importance of
Russian oligarchs, we looked at our data, cryptocurrency to the emergence of the
and none of them are on our platform,” Reuters Zhao: When Internet two decades ago.
he said at a forum named “Crypto Market we talked
Trends and Future Opportunities” here about “So we are seeing that these smart regu-
on Thursday (June 2). sanctions lators are realising that, look:This is a new
on Russian technology for money. If you want to build
Zhao’s response came after MX Global the best fintech sector, you cannot ignore
CEO Datuk Fadzli Shah requested the for- oligarchs, we new technology for money. Just like if you
mer to comment on the general perception looked at our wanted to build a high tech sector 20 years
that cryptocurrency is used to facilitate data, and none ago, you cannot ignore the Internet,” he said.
terrorism and money laundering. of them are on
our platform. Zhao also said the US is one of the most
The Binance founder also cited data progressive countries in terms of promoting
published by blockchain data provider cryptocurrency innovation and adoption.
Chainalysis that only 0.15% of crypto cur-
rency transactions last year were possibly “Today, different countries have differ-
linked to illicit activities. ent standards. China is probably the most
negative in terms of going all out [to ban
“The United Nations published a report cryptocurrency], but they are promoting
saying that up to 5% of the traditional money their central bank cryptocurrency.
system, banks, cash, may be related to money
laundering. So it’s 5% in the traditional mon- “Central bank cryptocurrency, while
very useful, is still different from native
cryptocurrencies,” he said.
F R I D A y j u n e 3 , 2 0 2 2 26 T h e E d g e C E O m o r n i n g b r i e f
CPO RM 6,468.00112.00 OIL US$ 113.17-3.12 RM/USD 4.3895 RM/SGD 3.1948 RM/AUD 3.1562 RM/GBP 5.5076 RM/EUR 4.6919
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DOW JONES 32,813.23 -176.89 -0.54 INDONESIA 7,148.72 -0.25 0.00
Hibiscus Petroleum Bhd 24.70 -0.040 1.280 57.06 2,575.9
Cypark Resources Bhd 23.00 -0.020 0.370 -59.34 217.9 S&P 500 4,101.23 -30.92 -0.75 JAPAN 27,413.88 -44.01 -0.16
Sedania Innovator Bhd 22.30 0.050 0.425 -17.48 147.6 NASDAQ 100 12,548.36 -93.74 -0.74 KOREA 2,658.99 -26.91 -1.00
Jade Marvel Group Bhd 20.90 0.005 0.915 38.64 294.6 FTSE 100 7,532.95 -74.71 -0.98 PHILIPPINES 6,686.83 -25.38 -0.38
Genting Bhd 20.50 -0.030 5.210 11.56 20,061.5 AUSTRALIA 7,175.94 -58.04 -0.80 SINGAPORE 3,226.72 -17.28 -0.53
South Malaysia Industries 20.40 0.005 0.415 107.50 87.1 CHINA 3,195.46 13.30 0.42 TAIWAN 16,552.57 -122.52 -0.73
Inari Amertron Bhd 19.00 0.120 2.840 -29.00 10527.2 HONG KONG 21,082.13 -212.81 -1.00 THAILAND 1,647.67 -12.34 -0.74
Lay Hong BHD 18.70 0.020 0.260 8.33 192.5 INDIA 55,818.11 436.94 0.79 VIETNAM 1,288.62 -10.90 -0.84
Data as compiled on Jun 2, 2022 Source: Bloomberg Data as compiled on Jun 2, 2022 Source: Bloomberg
Top gainers (ranked by %) Top losers (ranked by %)
NAME CLOSE CHANGE VOLUME YTD MARKET NAME CLOSE CHANGE VOLUME YTD MARKET
(%) (‘000) CHANGE CAP (%) (‘000) CHANGE CAP
(%) (RM MIL) (%) (RM MIL)
EA Holdings Bhd 0.015 50.00 3650.7 -25.00 96.8 Fintec Global Bhd 0.010 -33.33 2,546.1 0.00 59.2
China Automobile Parts 0.015 50.00 185.6 0.00 20.4 Compugates Holdings BHd 0.010 -33.33 51.4 -33.33 45.8
Xidelang Holdings Ltd 0.025 25.00 340.5 -28.57 52.9 Dolomite Corp Bhd 0.025 -28.57 200.0 -16.67 14.8
Eduspec Holdings Bhd 0.025 25.00 280.1 66.67 76.2 MNC Wireless Bhd 0.015 -25.00 86,953.3 0.00 34.3
Sanichi Technology Bhd 0.03 20 573.8 20 42.1 Vertice Bhd 0.130 -21.21 705.2 -40.91 41.5
Citra Nusa Holdings Bhd 0.090 20.00 3288.0 20.00 64.8 Impiana Hotels Bhd 0.030 -14.29 310.0 -60.00 43.3
Borneo Oil Bhd 0.030 20.00 2441.7 0.00 224.6 Sapura Energy Bhd 0.060 -14.29 296,762.2 20.00 958.7
BCM Alliance Bhd 0.030 20.00 9871.5 0.00 61.0 Alam Maritim Resources Bhd 0.035 -12.50 582.9 40.00 53.6
XOX Networks Bhd 0.035 16.67 123.0 16.67 39.7 BTM Resources BHD 0.120 -11.11 15.3 -27.27 20.5
Sedania Innovator Bhd 0.425 13.33 22286.2 -17.48 147.6 Marine & General Bhd 0.080 -11.11 50.0 45.45 57.9
Vizione Holdings Bhd 0.085 13.33 3411.8 6.25 173.9 ABM Fujiya Bhd 0.405 -10.99 0.1 0.00 72.9
IFCA MSC Bhd 0.350 12.90 15439.3 16.67 212.2 Khee San BHD 0.125 -10.71 60.8 -10.71 17.2
Kia Lim Bhd 0.365 12.31 23.8 -24.74 22.6 FSBM Holdings BHD 0.255 -10.53 362.0 37.84 45.3
Menang Corp M Bhd 0.570 11.76 0.7 5.56 282.9 TFP Solutions Bhd 0.085 -10.53 2,707.5 -19.05 49.7
GIIB HOLDINGS Bhd 0.1 11.11 4633.3 -23.08 59.1 Woodlandor Holdings Bhd 0.815 -9.44 614.1 5.84 32.6
Fast Energy Holdings Bhd 0.050 11.11 39036.0 -47.37 36.9 Solution Group Bhd 0.240 -9.43 573.4 -56.36 105.5
Kanger International Bhd 0.050 11.11 968.2 -75.00 30.2 Key Asic Bhd 0.050 -9.09 1,756.8 -28.57 68.2
Chin Well Holdings BHD 1.850 10.78 1091.9 34.06 529.9 Advance Information 0.100 -9.09 45.2 -23.08 26.6
CYL Corp BHD 0.430 10.26 11.0 -8.51 43.0 Top Glove Corp Bhd 1.260 -8.03 72,442.4 -51.35 10089.1
Quality Concrete Holdings 1.370 9.60 0.4 2.24 79.4 Lambo Group BHD 0.060 -7.69 306.9 -29.41 92.4
Data as compiled on Jun 2, 2022 Source: Bloomberg Data as compiled on Jun 2, 2022 Source: Bloomberg
Top gainers (ranked by RM) Top losers (ranked by RM)
NAME CLOSE CHANGE VOLUME YTD MARKET NAME CLOSE CHANGE VOLUME YTD MARKET
(RM) (‘000) CHANGE CAP (RM) (‘000) CHANGE CAP
(%) (RM MIL) (%) (RM MIL)
Petronas Dagangan Bhd 22.50 0.880 297.3 9.22 22352.7 PPB Group Bhd 16.400 -0.200 337.6 -4.09 23330.6
Malaysian Pacific Industries 32.40 0.400 193.2 -34.36 6444.2 British American Tobacco 12.200 -0.160 219.2 -12.73 3483.5
Fraser & Neave Holdings Bhd 20.00 0.380 666.8 -19.16 7335.6 Genting Plantations Bhd 7.370 -0.150 268.6 11.80 6612.4
AEON Credit Service M Bhd 14.88 0.280 6.4 9.25 3799.0 HAP Seng Consolidated Bhd 7.750 -0.150 85.1 0.65 19294.9
DKSH Holdings Malaysia Bhd 4.55 0.210 31.9 -5.21 717.3 Bursa Malaysia Bhd 6.620 -0.140 577.2 1.07 5357.6
Carlsberg Brewery Malaysia 22.70 0.200 152.4 13.05 6940.5 Kesm Industries Bhd 7.650 -0.130 21.3 -37.70 329.1
Oriental Holdings BHD 7.35 0.200 641.1 40.00 4559.7 Top Glove Corp Bhd 1.260 -0.110 72442.4 -51.35 10089.1
DKLS Industries Bhd 2.20 0.180 18.2 25.71 203.9 Nestle Malaysia Bhd 133.300 -0.100 41.5 -0.67 31258.9
Shangri-La Hotels Malaysia Bhd 3.48 0.180 396.1 4.82 1531.2 Pimpinan Ehsan Bhd 1.440 -0.100 17.4 -1.37 99.5
Rapid Synergy Bhd 11.68 0.180 31.4 17.39 1248.6 FAR East Holdings BHD 3.700 -0.100 11.3 25.42 2197.2
Chin Well Holdings BHD 1.85 0.180 1091.9 34.06 529.9 Malaysia Smelting Corp Bhd 3.610 -0.100 398.9 11.08 1516.2
Scientex Packaging Ayer Keroh 2.33 0.160 2.7 -2.92 762.8 Hengyuan Refining Co Bhd 6.300 -0.100 4142.3 62.79 1890.0
Batu Kawan Bhd 27.40 0.140 8.9 20.70 10783.6 Tong Herr Resources Bhd 3.020 -0.100 65.2 3.78 463.6
UWC BHD 3.06 0.120 1546 -50.72 3370.2 Sarawak Oil Palms Bhd 5.430 -0.100 295.0 55.59 3162.3
Inari Amertron Bhd 2.84 0.120 19016.7 -29.00 10527.2 Coastal Contracts Bhd 1.870 -0.090 990.5 36.50 983.6
Guan Chong Bhd 2.61 0.120 1082.4 -6.79 2760.5 Woodlandor Holdings Bhd 0.815 -0.085 614.1 5.84 32.6
Quality Concrete Holdings Bhd 1.37 0.120 0.4 2.24 79.4 Hartalega Holdings Bhd 3.950 -0.080 4979.3 -31.06 13499
Power Root Bhd 1.73 0.110 2066.2 30.08 673.3 Dutch Lady Milk Industries 33.100 -0.080 2.7 -1.25 2118.4
Heineken Malaysia Bhd 24.90 0.100 309.5 19.48 7522.2 YNH Property Bhd 3.400 -0.080 54.6 28.30 1796.9
Pentamaster Corp Bhd 3.89 0.100 4201.4 -29.91 2767.0 Texchem Resources Bhd 3.880 -0.080 575.3 234.48 456.3
Data as compiled on Jun 2, 2022 Source: Bloomberg Data as compiled on Jun 2, 2022 Source: Bloomberg