BIZ & FINANCE BIZ & FINANCE FRIDAY | NOV 17, 2023 24 @thesundaily FOLLOW ON TWITTER Malaysian Paper ExxonMobil plans to invest up to US$15b in Indonesia JAKARTA: US oil major ExxonMobil is planning to invest up to US$15 billion (RM70.6 billion) in a petrochemical project and carbon capture and storage (CCS) facilities in Indonesia, President Joko Widodo said in a presidential palace statement yesterday. The planned CCS facilities would be the biggest in Southeast Asia. Jokowi, as the Indonesian president is commonly known, met with Exxon chairman Darren Woods during a trip to San Francisco for the Asia-Pacific Economic Cooperation (Apec) summit. Earlier this week, Indonesia signed an initial deal with an Exxon unit to explore investment in a petrochemical project in Indonesia to produce polymers. Exxon and Indonesian state energy company Pertamina also agreed to evaluate US$2 billion in investments in CCS facilities using two underground basins in the Java Sea. “These large-scale opportunities could substantially boost industrial growth and decarbonisation in Indonesia, as well as the Asia Pacific region,” said Carole Gall, president of ExxonMobil Indonesia. The CCS hub would have the potential to store at least three gigatons of carbon dioxide emitted by industries in Indonesia and the rest of the region, Pertamina said. Indonesia wants to use its depleted oil and gas reservoirs for carbon storage and is finalising a regulation that would open up storage schemes for carbon from abroad to be stored in the country. The agreements were signed during Jokowi’s visit to Washington to meet with US President Joe Biden, ahead of the Apec summit in San Francisco later this week. – Reuters AI threatens millions of South Korean jobs, says central bank SEOUL: Nearly four million jobs in South Korea are at risk of being replaced by artificial intelligence (AI) technology over the next two decades, a central bank study released yesterday said. Rapidly advancing AI technology has triggered global concern over everything from job losses and cyber attacks to humans losing control of the systems they have designed. The new study by the Bank of Korea said some 3.9 million jobs in South Korea were at risk as AI adoption grows domestically, with doctors, lawyers, accountants, and chemists among the most threatened professions. “High-income workers with high academic backgrounds face bigger exposure to AI and have a greater risk of being replaced,” the study said. These white-collar jobs were most threatened as AI can easily carry out their analytic and cognitive tasks, it added. The people least likely to lose their jobs to the advancing technology were those in religious fields, food services and teaching, the study said. The Bank of Korea report noted that while AI technology is a threat to existing jobs, it also creates new employment opportunities, including for engineers who develop and maintain AI systems, as well as at AI-related startups. But since the new positions are “concentrated” in one specific field, “some workers may experience difficulties in the job transition process prompted by the introduction of AI”, it added. – AFP B R I E F SSEOUL TWEAKS RULES ON SHORT SELLING OF SHARES SEOUL: South Korea’s financial regulator said yesterday authorities plan to loosen stock short-selling rules for retail investors, while tightening rules for institutional and foreign investors, to promote a “level playing field” in the market. The Financial Services Commission said in a statement it would lower the ratio of cash required as collateral for retail investors to borrow stocks to 105%, down from the current 120%, to match the ratio for institutional investors. For institutional investors, a new cap of a maximum 90 days will be imposed on borrowing of stocks for short selling, in line with retail investors, according to the statement. – Reuters CHINA’S NEW HOME PRICES DIP FOR FOURTH STRAIGHT MONTH BEIJING: China’s new home prices fell for the fourth straight month with dozens of cities hit by declines, the most since the peak of the Covid-19 pandemic last year. New home prices in October dropped 0.3% month-onmonth after a 0.2% dip in September, according to Reuters calculations based on National Bureau of Statistics data. Out of 70 cities, 56 reported declines in monthly prices last month, marking the most cities number since October 2020, up from 54 in September. Compared with a year earlier, nationwide prices were down 0.1%, matching a decline in September, August and July. – Reuters Japan export growth slows as China, global downturn risks loom TOKYO: Japanese exports grew for a second straight month in October but at a sharply slower pace due to slumping China-bound shipments of chips and steel, as weakening external demand takes its toll on the tradereliant economy. Exports rose 1.6% in October from a year earlier, Ministry of Finance data showed yesterday, faster than a 1.2% increase expected by economists in a Reuters poll but slower than the 4.3% rise in September. Weak exports have complicated Japan’s efforts to spur economic growth with sluggish domestic demand also weighing on the postpandemic recovery. “With China’s economy crawling at the bottom and demand from the United States and Europe slowing, we need to wait until the middle of next year for exports to bottom out,” said Atsushi Takeda, chief economist at Itochu Economic Research Institute. “Until then, Japan would need to count on consumption and capital expenditure to pick up the slack.” With the absence of growth drivers, some economists warn Japan could fall into a technical recession, defined as two straight quarters of contraction. Japan’s economy weakened in JulySeptember, snapping two straight quarters of expansion on soft consumption and exports, data showed on Wednesday. By destination, exports to China, Japan’s largest trading partner, fell 4% year-on-year in October, posting 11 straight months of declines. Exports to the United States, Japan’s key ally, rose 8.4% in the year to October, as demand for hybrid vehicles and mining and construction machinery helped drive the value of US-bound shipments to its largest on record. Imports fell 12.5% in the year to October, broadly in line with the median estimate for a 12.2% decrease. The trade balance came to a deficit of ¥662.5 billion (RM20.5 billion), versus the median estimate for a ¥735.7 billion deficit. Separate data from the Cabinet Office showed Japan’s core machinery orders, regarded as a leading indicator of capital spending, rose 1.4% in September from the previous month, faster than the 0.9% growth expected. In one positive sign for a domestic recovery, manufacturers surveyed by the Cabinet Office expect core orders to rise 0.5% in OctoberDecember, after a 1.8% drop in the previous quarter. – Reuters CBA to sell Indonesian unit to Singapore’s OCBC SYDNEY: Commonwealth Bank of Australia (CBA) said yesterday it will sell its 99% stake in Indonesian unit PT Bank Commonwealth (PTBC) to Singapore’s OCBC, exiting a noncore business after more than two decades. The A$220 million (RM670 million) sale to OCBC’s PT Bank OCBC NISP advances CBA’s strategy of quitting businesses outside of retail banking in Australia, where it has a quarter of the country’s A$2 trillion in mortgages. OCBC intends to acquire the remaining 1% of PTBC from the other shareholders, OCBC said in a separate statement yesterday. CBA and Australia’s other so-called “Big Four” lenders have been trying to sell offshore and non-banking financial services businesses since a regulatory crackdown six years ago. A year and a half of interest rate increases have put further stress on the sector as their core customers – home loan borrowers – shop around for better deals. OCBC said the acquisition will add scale and deepen its presence in Indonesia. OCBC counts Indonesia as one of its key markets besides Greater China, Singapore and Malaysia. The deal also marks OCBC Group CEO Helen Wong’s first acquisition deal since leading the Southeast Asia’s second largest lender by assets in 2021. Customefs using CBA ATMs in Sydney. Australia’s ‘Big Four’ lenders have been trying to sell offshore and non-banking financial services businesses since a regulatory crackdown six years ago. – REUTERSPIC oDeal is in line with Commonwealth Bank of Australia’s strategy to dispose of non-core businesses Wong told Reuters in an interview in October last year that OCBC, also Singapore’s second biggest bank, is hunting for acquisitions in Indonesia to speed up growth. “As there is little overlap in customer relationships between OCBC Indonesia and PTBC, the proposed acquisition is expected to create synergies and strengthen the franchise value of OCBC Indonesia,” OCBC’s statement said. PTBC focuses on retail and small and medium-sized enterprises segments, providing a range of banking and wealth management products. Its net asset value and net tangible asset value amounted to 4.1 trillion rupiah (RM1.23 billion) and 3.5 trillion rupiah respectively as at Sept 30, 2023, according to OCBC. CBA expects the sale to be broadly neutral to its common equity tier 1 ratio – a closely watched measure of spare cash – which stands at 11.8%, as at Sept 30. The sale is expected to close in the second or third quarter in 2024, subject to regulatory approvals. – Reuters
BIZ & FINANCE BIZ & FINANCE FRIDAY | NOV 17, 2023 26 /thesuntelegram FOLLOW ON TELEGRAM Malaysian Paper MARKETS/FROM THE BROKERS SUNBIZ presents extracts of a selection of commentaries and research reports received from stockbrokers on counters that could be of interest to investors. [ Compiled by SunBiz Team DISCLAIMER: The information is extracted from stockbrokers’ commentaries and research reports and do not represent the views or opinions of Sun Media Corporation Sdn Bhd. It is not a solicitation, recommendation or an offer to buy or sell the equities featured. Sun Media Corporation shalll not be liable or responsible for any consequences resulting from usage of the information. IN 1QFY24, Malaysian Pacific Industries Bhd (MPI) stayed profitable for the second consecutive quarter as it reported a net profit of RM16.5mn (+103.0% QoQ, -68.7% YoY) on a revenue of RM513.2mn (+6.4% QoQ, -9.0% YoY). The YoY earnings decline reflects softer global semiconductor demand alongside inventory correction and weaker end-market electronics demand amid macroeconomic headwinds. On a brighter note, QoQ earnings growth marked recovery for the second consecutive quarter due to higher loadings and the stronger US$ versus ringgit. While 1QFY24’s net profit accounted for only 8.6% and 9.7% of ours and consensus full-year estimates, we deem results to be within expectations as we anticipate QoQ earnings recovery to sustain and pick up further in 2HFY24 alongside the recovery in global semiconductor demand. Meanwhile, MPI declared a 1st interim dividend of 10 sen (1QFY23: 10 sen). Barring near-term headwinds, we remain optimistic about MPI’s medium-to-longer-term prospects, anchored by its strengthening product portfolio and automotive-centric strategy. Over the past five years (FY18 to FY23), the percentage of group revenue from the automotive segment had grown from 29% to 43%. MPI has targets for the automotive segment to contribute over 50% of group revenue alongside drivers, including electrification, advanced driver-assistance systems, autonomous driving, safety, and connectivity trends. Meanwhile, excitement could also come from potential acquisitions. This is backed by MPI’s war chest with its net cash of RM871.9mn (+8.8% QoQ, +3.7% YoY) as at end-1QFY24. In all, we maintain our BUY recommendation on MPI with an unchanged TP of RM32.15 based on a PE multiple of 26.0x CY24F EPS. - (Nov 16, 2023) PERAK Transit Bhd (Ptrans) 9M23 core profit of RM47.8mn was in line with our expectation but below consensus estimate. The company declared a fourth interim dividend of 0.75sen/share, bringing the total FY23 dividend to 3 sen/share. 9M23 core profit rose 8.2% YoY to RM47.8mn, underpinned by higher revenue and lower effective tax rate. The higher revenue, up 3.2% YoY, came mainly from the integrated public transportation terminal segment, which helped to ease some cost pressures especially the whopping 34.1% YoY rise in finance cost. Meanwhile, the effective tax rate normalised to 23.4% for 9M23 versus 30.1% a year ago. QoQ, 3Q23 adjusted PBT grew 3.6% to RM20.8mn on the back of 5.1% increase in revenue. PBT margin was stable at 48%. In terms of financial leverage, 3Q23 net gearing climbed higher to 0.65x from 0.5x a year ago due to additional borrowings to finance the construction of Bidor Sentral. Previously, management guided the construction of Bidor Sentral would be completed this year and the company is confident of securing an occupancy rate of 70% in 2024. Meanwhile, for Tronoh Sentral development, the construction would likely begin in 2024 after securing the development orders. Note that the project financing for Tronoh Sentral estimated at RM300mn has already been secured. We maintain Ptrans’ SOP valuation at RM1.55/share. Maintain BUY. - (Nov 16, 2023) TT Vision Holdings Bhd (TTV) is poised for exponential growth until 2025. The company is not only enhancing its existing products but also driving innovation with the introduction of new offerings such as wafer AOI, AXI equipment, Solar Wafer Sorter, and Tandem Cell Photoluminescence (PL) Inspection Module. Furthermore, the submission of these new products for pioneer status may lead to substantial tax savings hence enhancing overall financial performance. TTV’s orderbook of RM72m as of Oct 31, 2023 translates to a comfortable 1.4x of FY22 revenue. We anticipate a sustained healthy order book replenishment rate, supported from improving demand for its automotive semiconductor sector, expected to commence in 4QFY23 or early next year. As part of its growth strategy, TTV aims to continue expanding its footprint targeting the European market. Notably, almost half of its RM72m order book is from overseas markets. As such, we forecast a strong FY24-FY25F earnings growth averaging around 34%, underpinned by a potent product pipeline, new market opportunities, and capitalising on highgrowth industries. TTV currently trades at an attractive FY24F PE of 21x, which is below Bursa Technology Index’s of 40x currently. Backed by a strong orderbook, BUY with a TP of RM0.99 based on FY24F PE of 25x, in line with industry peers. - (Nov 16, 2023) FOREIGN CURRENCY SELLING TT/OD BUYING TT BUYING OD 1 US Dollar 4.783 4.650 4.640 1 Australian Dollar 3.111 2.988 2.972 1 Brunei Dollar 3.540 3.438 3.430 1 Canadian Dollar 3.470 3.378 3.366 1 Euro 5.197 5.031 5.011 1 New Zealand Dollar 2.872 2.767 2.751 1 Papua N Guinea Kina N/A N/A N/A 1 Singapore Dollar 3.540 3.438 3.430 1 Sterling Pound 5.942 5.759 5.739 1 Swiss Franc 5.373 5.250 5.235 100 UAE Dirham 130.900 124.190 123.990 100 Bangladesh Taka 4.372 4.088 3.888 100 Chinese Renminbi 66.020 63.270 N/A 100 Danish Krone 70.980 65.350 65.150 100 Hongkong Dollar 61.530 58.490 58.290 100 Indian Rupee 5.810 5.460 5.260 100 Indonesian Rupiah 0.032 0.029 0.024 100 Japanese Yen 3.170 3.071 3.061 100 New Taiwan Dollar N/A N/A N/A 100 Norwegian Krone 45.100 41.500 41.300 100 Pakistan Rupee 1.690 1.580 1.380 100 Philippine Peso 8.660 8.160 7.960 100 Qatar Riyal 131.860 125.170 124.970 100 Saudi Riyal 128.150 121.650 121.450 100 South Africa Rand 27.100 24.490 24.290 100 Sri Lanka Rupee 1.500 1.380 1.180 100 Swedish Krona 46.460 42.320 42.120 Exchange Rates Source: Malayan Banking Bhd/Bernama Ringgit ends easier as dollar shored up by US retail data KUALA LUMPUR: The ringgit closed easier against the US dollar yesterday as the greenback rebounded from an over two-month low earlier this week on the back of a stronger-than-expected United States (US) retail sales data. The data for October again prompted uncertainties surrounding the US interest rate path, a dealer said. At 6pm, the ringgit eased to 4.6850/6910 against the greenback from Wednesday’s close of 4.6695/6755. Bank Muamalat Malaysia Bhd chief economist and social finance head Dr Mohd Afzanizam Abdul Rashid said the ringgit was weaker in the morning session at RM4.7175 to the US dollar but improved in the afternoon towards RM4.6890. “Market sentiment is still centered on the US Federal Reserve’s next move, which could see US rates nearing its peak. Tomorrow, markets would be focusing on the announcement of Malaysia’s third-quarter Gross Domestic Product - whether the 3.3% growth can be maintained as indicated by advanced estimates,” he told Bernama yesterday. SPI Asset Management managing director Stephen Innes said the local currency suffered a mild setback at the open as US yields rose overnight on more robust-than-expected US retail sales, but as the day wore on, the yields eased as the markets concluded that the retail sales were far less hawkish when taking the softer Producer Price Index figures into context. At the close, the ringgit was traded mostly higher versus other currencies - it advanced against the Japanese yen to 3.0963/1005 from 3.1049/1091 at Wednesday’s close and improved vis-a-vis the British pound to 5.8103/8178 from 5.8187/8261, but slipped against the euro to 5.0832/0897 from 5.0669/0734 previously. MARC affirms rating of PLUS RM25.2b sukuk as AAAIS(s) KUALA LUMPUR: MARC Ratings has affirmed its AAAIS(s) rating on Projek Lebuhraya Usahasama Bhd’s (PLUS) RM25.2 billion Islamic Medium-Term Notes Programme (sukuk programme) with a stable outlook. The rating incorporates a two-notch rating uplift from PLUS’ standalone rating of AA. The uplift is supported by the irrevocable and unconditional Letter of Undertaking (LoU) provided by the government through the Ministry of Finance, to cover any cash shortfall in meeting a minimum LoU finance service cover ratio of 2.0x on the determination date for the duration of the sukuk programme. PLUS’ close credit link to the government is further evident in the interdependence between the default events of the sukuk programme and its RM11 billion government-guaranteed sukuk, which is repayable only after the full redemption of the former. The government’s golden share and significant indirect stake in PLUS, along with the importance of its North-South Expressway, further underlines the rating agency’s views on the government’s support for the toll concessionaire. PLUS’ standalone rating reflects its matured highway portfolio, characterised by a history of stable traffic and revenue performance. Overall, traffic in 2022 and 7M’23 showed strong growth, increasing by 67% year-on-year (y-o-y) (due to a sharp rebound from pandemic-induced restrictions) and 8% y-o-y over prior corresponding periods. This positive trend has translated into higher tolling revenue of RM1.9 billion (up 6% y-o-y) and broader operating profit before interest and tax margin in 7M’23. MARC Ratings expects the traffic pickup to continue through 2023 but volume therefrom to return to a normalised and steady growth rate of 1% to 1.5% per annum, as historically seen. TT Vision Holdings Bhd Buy. Target price: RM0.99 Perak Transit Bhd Buy. Target price: RM1.55 MPI Bhd Buy. Target price: RM32.15 Source: TA Securities Source: TA Securities Source: Rakuten Trade
theSun is published and printed by Sun Media Corporation Sdn Bhd (221220-K) of Lot 6, Jalan 51/217, 46050 Petaling Jaya, Selangor. Tel: 03-7784 6688 Fax: 03-7783 7435 • Tel (Editorial): 03-7784 6688 Fax: 03-7785 2624/5 Email: [email protected] • Tel (Advertising): 03-7784 8888 Fax: 03-7784 4424 Email: [email protected] SCAN ME FRIDAY | NOV 17, 2023 or download app from the App Store or Google PlayTM . www.thesun.my Free access to iPaper PDF Download SCAN ME Malaysian Paper Read iPaper at Malaysian Paper Malaysian Paper theSun is published and printed by Sun Media Corporation Sdn Bhd (221220-K) of Lot 6, Jalan 51/217, 46050 Petaling Jaya, Selangor. Tel: 03-7784 6688 Fax: 03-7783 7435 • Tel (Editorial): 03-7784 6688 Fax: 03-7785 2624/5 Email: [email protected] • Tel (Advertising): 03-7784 8888 Fax: 03-7784 4424 Email: [email protected] Virat, Shami star for India -Story on page 30 -Story on page 28 England can win Euro 2024: Becks AFTER more than four decades Formula 1 returns to Las Vegas bringing together the world’s hottest sport property and the planet’s party capital for a turbocharged weekend that could see more action off the track than on it. With Red Bull’s Max Verstappen having weeks ago clinched a third consecutive drivers’ crown and a miserable forecast predicting cold, rainy weather for the blitz down the Strip, the sporting elements for F1’s most hyped race ever are not optimal. But otherwise it is all systems go for the launch of an event F1 owners Liberty Media believe can propel the sport into a new money spinning orbit. “I think once we have the event in Vegas there’s going to be a whole new recognition for Formula One in the United States, which still is our most important sponsorship market,” said Liberty Media CEO Greg Maffei in April. “A night race down the Strip, that’s going to be iconic. I think that is going to kick off a new round of sponsor interest as well, and more broad sponsor interest.” While jaw-dropping prices have had fans thinking twice about a trip to Sin City, the sponsors, who provide the cash that fuels the sport, have no such concerns. Close to 2,000 private jets packed with a cargo of well-heeled A-listers and deal-makers are expected to squeeze into local airports with visitors pouring US$1.7b (RM7.8b) into the local economy. Wynn resort is offering the first-ever Las Vegas Grand Prix Million Dollar All-Access Experience that includes a US$100,000 (RM460,000) philanthropic gift. Red Bull has constructed a 20,000-square-foot hospitality complex where the centre piece is the Holzhaus, an alpine inspired three-level party palace for VVIPs and team use only. Ferrari, Mercedes, Aston Martin and every other team will also spend lavishly to entertain sponsors. From McLaren partners Hilton to Red Bull sponsor PokerStars everyone wants in on the Las Vegas F1 action, tying their businesses to the glamour sport’s most glamorous event through local activations and a massive global television audience. A quick glance at the companies setting up camp around the 6.1km circuit reads like the New York Stock Exchange with American Express, Heineken, Hilton Grand Vacations, MGM Resorts International and others constructing luxurious trackside suites. The Bellagio Fountain Club in the heart of the Strip will provide the backdrop for the winner’s stage and post-race ceremonies but if you do not already have a ticket, which started at US$11,247 (RM51,000), you are too late. “I don’t know who is responsible for designing the track but they did a great job, the track runs right along our premier property Elara,” Mark Wang, CEO of Hilton Grand Vacations said. “We’re going all out to make this a first class experience.” Formula One has long been a magnet for the celebrity class and Las Vegas is sure to be an irresistible pull. For US$7,000 (RM32,000) you can mingle with David Beckham and Shaquille O’Neal, who will be at Club SI hosting Sports Illustrated’s Swimsuit and Saturday Race Night party, or bump into Mark Wahlberg at Drai’s Beach Club for what is billed as “The Ultimate Team Race Viewing Experience with McLaren F1”. Even with temperatures expected to dip into single digits, you can still watch the action on giant screens from heated pools at Circa’s Stadium Swim, or dine trackside with celebrity chef Gordon Ramsay at Hell’s Kitchen Caesars Palace. Las Vegas may be the gambling capital of the world but there will be little bet on F1. “I would say this is due to lack of parity,” Derek Stevens, owner of Circa and several other Las Vegas casinos told Reuters. “The fact Max Verstappen is such a heavy favourite it’s now everyone thinks how much is he going to win by.” – Reuters █ BY STEVE KEATING All systems go Celebrities, sponsors descend on Las Vegas as F1 returns to Sin City This handout satellite image released by Maxar Technologies shows a nighttime view of the Las Vegas Sphere and Formula One race course in Las Vegas. – AFPPIX F1 drivers during a press conference yesterday. – AFPPIX