12 December 2008 Newz Bits

December 12, 2008 at 1:55 am Leave a comment

HIGHLIGHTS

On Malaysia
· HSBB project cost may be reduced with use of Tenaga cables
· Power demand may dip for first time in 11 years
· MMC confirms it is in advanced talks to dispose minority stake in Port of Tanjung Pelepas
· Malaysia’s industrial production falls for a second month in October
On The Global Front
· U.S. first-time unemployment claims surges to a 26-year high
· IEA: World oil demand growth will return in 2009
· China’s inflation cools to the weakest pace in almost two years
REPORTS
· Tanjong Plc – 3QFY09 Results (Buy: RM13.20; TP: RM17.40)

The cost to develop the high-speed broadband (HSBB) project by Telekom Malaysia (TM) (T MK, Hold, RM2.74) may be scaled down with the use of the fibre optic cables of Tenaga Nasional Bhd (TNB) (TNB MK, Buy, RM8.20). Energy, Water and Communications Minister Datuk Shaziman Abu Mansor if there is cost-saving, money will be refunded. He said there will be no duplication in the usage of the fibre optic cables to implement the RM11.3bn project. Shaziman said work on the project has started, with TM calling for tenders for upgrading of equipment. He also said there are no plans to delay or defer the project following the economic slowdown. According to Shaziman, the immediate positive impact of the broadband service to the country’s gross domestic product is 1% and more than 135,000 jobs will be created by 2010. (Financial Daily)
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Tenaga Nasional Bhd (TNB) (TNB MK, Buy, RM8.20) sees the possibility of power demand in its current fiscal year ending Aug 31, 2009 (FY09) contracting for the first time in 11 years amid the global and domestic economic slowdown, according to CEO Datuk Seri Che Khalib Mohamad Noh. He said this stemmed from the substantial reduction of electricity demand in the steel, cement and semiconductor industries. He said electricity usage in the steel industry had fallen by 60% and in the cement industry by 50%. According to Che Khalib, TNB would to have cut down on capex given the contraction in electricity demand. Still, not all is bearish on TNB as the silver lining comes in the form of cheaper coal prices which had shed 60% to US$75 a tonne from US$200 a tonne in July. Che Khalib said TNB had secured its coal supply for next year but declined to comment on the average contractual price. In the last three months when coal prices were high, TNB purchased coal at an average price of US$110 a tonne. (Financial Daily)
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Tenaga Nasional Bhd’s (TNB) (TNB MK, Buy, RM8.20) upcoming capacity charges for the Jimah power plant, estimated at RM500m over the next eight months, are expected to hit its operating margins. Lower earnings are expected for the financial years ending Aug 31, 2009 and 2010 because of the rising capacity payments to the independent power producers (IPPs). TNB president and CEO Datuk Seri Che Khalib Mohamad Noh said yesterday the Jimah plant came on-stream “prematurely” as capacity would only be required in 2011 to 2012. He said Malaysia currently did not need a new power plant but the commitment was made when electricity demand was forecast to be high. However, Malaysia’s economic growth is likely to contract next year and demand for electricity is anticipated to be flat. (StarBiz)
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Tenaga Nasional Bhd (TNB) (TNB MK, Buy, RM8.20) and the federal government will both most likely have a majority stake of more than 50% in the RM9bn undersea cable transmitting power from the Bakun hydroelectric dam to the peninsula. TNB CEO Datuk Seri Che Khalib Mohamad Noh said that such an arrangement would facilitate the financing of the cable. Sarawak state government and Saraway Energy Bhd (SEB) would hold the majority stake in the Bakun dam, according to Che Khalib. On the funding of the transmission cables, he said discussions with the Ministry of Finance were under way to raise government-to-government financing. The Bakun project together with the undersea cable is expected to amount to RM16bn. He said TNB had received the go-ahead to proceed with the building of the submarine cables which are expected to cost RM9bn. (Financial Daily)
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Zelan Bhd yesterday announced the resignation of two of its founding members Chong See Fock and Lam Kar Keong. Chong was the chief executive officer while Lam was the managing director of the company. Zelan also announced that chief operating officer Khoo Boo Seong ceased to be the executive director. Yong Nim Chee, who is currenly the director of corporate affairs of MMC Corp Bhd and director in Zelan, was made Zelan’s executive director. Datuk Anwar Aji was appointed as the chairman of the company. (Financial Daily)
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MMC Corporation Bhd is in the advanced stage of negotiations for a proposed disposal of a minority stake in Pelabuhan Tanjung Pelepas Sdn Bhd (PTP), the country’s second largest container port, the company said yesterday. MMC said following the proposed disposal, PTP would remain a subsidiary. News reports said that MMC would sell a part of PTP to fund its expansion plans. MMC owns 70% of the port. (Financial Daily)
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Malaysia’s industrial production fell for a second month in October as the deepening global economic slump hurt the demand for the country’s electronics. Production at factories, utilities and mines dropped 3.1% from a year earlier after a 1.7% contraction in September, the Statistics Department said. Economists expected a 2.8% decline. Exports posted the first drop in 15 months in October as electronics and palm oil sales fell. The slowdown may trigger an international interest-rate cut next month. (Financial Daily)
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The current petrol retail price of RM1.90 per litre can be maintained if the world crude oil price does not exceed US$83 a barrel, Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad said yesterday. He added that the ministry’s proposed mechanism to determine fuel prices would be brought to the Cabinet at its meeting today or next week. (Financial Daily)
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RHB Capital Bhd (RHBCap) has proposed to raise up to RM1.1bn via commercial papers and/or medium term notes programme (CP/MTN programme) for its working capital and to repay its existing borrowings. RHBCap said the Securities Commission (SC) had approved of the proposed issuance via a letter dated Dec 2, 2008 and the waiver for the bank from having to comply with the requirement to obtain all necessary approvals prior to the submission to the SC as set out in the Private Debt Securities guidelines. However, approval from Bank Negara Malaysia was still pending. RHBCap said RHB Investment Bank would be the lead arranger and facility agent for the note issuance. It added that short-term CP would be issued via competitive tender or direct placement on a best effort basis, while the MTN would be issued via book building or direct placement. (Financial Daily)
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The Terengganu state government is channelling its share of oil royalty to a proposed RM10bn fund that will invest in and outside the country. The fund, called the Terengganu Investment Authority (TIA), is styled after the sovereign wealth funds in the Middle East. Under the proposal, which was mooted by the Sultan, who is also the King, the funds that are to be raised
will be backed by cash flow from the oil royalty the state gets from Petronas annually. Sources said the fund will also get a RM5bn guarantee from the federal government, which will reduce the risk of the papers released. Investors for the fund are expected to be drawn from local and foreign capital markets. (Financial Daily)
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Stocks slumped Thursday, Dow Jones industrial average lost 196 points, or 2.2% on worries that the $14 billion auto rescue bill won’t pass in the Senate due to Republican opposition. (CNN Money)
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The US government reported Thursday that household debt in the third quarter fell for the first time ever. Meanwhile, net worth dropped by the largest amount on record based on data going back to 1951. Household debt fell by a seasonally adjusted $30bn, or an annualized 0.8% in the third quarter to $13.91trn, according to the Federal Reserve’s flow of funds report. Americans holding less debt may sound like a positive, but it also means consumers are spending less, as debt has become more expensive and harder to come by. Debt mainly fell because more than a million Americans have lost their homes to foreclosure since the housing crisis hit in August 2007. When a home is foreclosed upon, the debt is transferred away from the homeowner to the bank. As a result, home mortgage debt sank a whopping 2.4% in the quarter. (CNN Money)
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The US trade deficit rose unexpectedly in October as U.S. exports plummeted. The U.S. Department of Commerce reported that imports exceeded exports by $57.2bn, up from the $56.6bn gap in September. Exports decreased 2.2% to $151.7bn in October from $155.1bn in September, pushing them to the lowest levels since March. There were across-theboard declines in all categories of exported goods. Imports decreased 1.2% to $208.9bn in October from $211.6bn in September, the lowest since February. Petroleum made up a greater proportion of imports from September, comprising nearly 18% of total imports. (CNN Money)
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The number of Americans filing first- time claims for unemployment benefits surged more than forecast last week to a 26-year high. Initial jobless claims increased 58,000 to 573,000 in the week ended Dec. 6, the highest level since November 1982, from a revised 515,000 the previous week, the Labor Department said today in Washington. The number of workers staying on benefit rolls reached 4.429m, also the most since 1982. (Bloomberg)
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World oil demand growth will return in 2009 after shrinking this year for the first time since 1983 due to the global economic slowdown, the International Energy Agency (IEA) said yesterday. In its monthly report, the Paris-based IEA cut its 2008 oil demand estimate by 350,000 bpd to 85.8m bpd — a 200,000 bpd year-on-year fall. The adviser to 28 industrialized countries sees demand rebounding to 86.3m bpd in 2009, based on the International Monetary Fund’s assumption the global economy will gradually recover in the second half of next year. David Fyfe, head of the IEA’s Oil Industry and Markets Division said the agency’s forecast still demonstrated global economic weakness in 2009. “It’s marginally higher growth from a lower base,” Fyfe said. “Less than half a million barrels per day of demand growth still indicates a weak market in 2009.” (Reuters)
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China’s inflation cooled to the weakest pace in almost two years, giving the central bank room to cut interest rates and shore up growth in the world’s fourth-largest economy. Consumer prices rose 2.4% in November from a year earlier, the statistics bureau said today, after gaining 4% in October. That was less than the 3.3% median estimate of 18 economists surveyed by Bloomberg News. China may add to its most aggressive interest-rate reductions in 11 years after food and
commodity prices eased. Policy makers, who 10 months ago were battling inflation at a 12-year high, are trying to prevent a spiral of falling prices, profits and consumption as the global recession pushes the economy into a slump. (Bloomberg)
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Thursday, 11 December 2008 Asian Markets Tanjong Plc 3QFY09: Within expectations

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