14 January 2009 Newz Bits

January 14, 2009 at 3:57 am Leave a comment

TALKING POINT

In need of more space
After a disappointing year for the airline sector due to high fuel cost, AirAsia grabbed the headlines when it confirmed recent news reports that it is part of the plans to build a dedicated low cost carrier terminal (LCCT) in Labu, Negeri Sembilan via a partnership with Sime Darby. This does not come as a surprise to us as AirAsia’s need for a LCCT with higher capacity is imperative for its future growth. On a separate issue, jet fuel costs have declined sharply to US$63 per barrel currently. However, the concern now is demand amid global economic slowdown and increasing
competition. Nevertheless, given AirAsia’s low cost structure, we believe it will still be able to defend its turf in the event of a price war and benefit from down-trading by air travellers who are
expected to become more cost conscious going forward. We reiterate our BUY call and DCF-derived target price of RM1.90.

HIGHLIGHTS
On Malaysia
· MAS removes domestic fuel surcharge
· CIMB Bank completes acquisition of BankThai
On The Global Front
· US exports fall 15.2% from August to November
· China’s exports fall 2.8% in December
REPORTS
· AirAsia – In need of more space (Buy; RM0.89; TP: RM1.90)

Malaysian Airline System Bhd (MAS) (MAS MK, under review) has removed its domestic fuel surcharge for travel in the country effective yesterday following lower fuel prices, increased competition and a slower economy that threatens a lower seat factor for the airline. Managing director/CEO Datuk Seri Idris Jala said fuel remains MAS’ biggest cost, noting that the fuel surcharge only covers about 30% of the fuel cost. (Malaysian Reserve)
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CIMB Bank Bhd, a unit of Bumiputra-Commerce Holdings Berhad (BCHB MK, Buy, TP: RM8.60) has completed its acquisition of Thailand’s BankThai with a controlling stake of 92.04% after its tender offer closed on Jan 6, it said yesterday. CIMB became the single largest shareholder in BankThai after completing its purchase of a 42.13% stake in the Thai bank for 5.9bn Thai baht on Nov 5 last year. (StarBiz)
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Proton Holdings Bhd’s much awaited MPV will be launched in April, a month later than the original March target, the national carmaker’s chief said. Managing director Datuk Syed Zainal Abidin Syed Mohamed Tahir said export of the 1.6-litre MPV will kick off three months after that. Indonesia will be among the first “high growth countries or regional markets” to get the MPV, Syed Zainal told participants at the third Islamic Economic Congress in Kuala Lumpur yesterday. He did not give a reason for the change in the MPV launch date. (BT)
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Edaran Tan Chong Motor Sdn Bhd, distributor of Nissan cars, aims to increase its market share in the Malaysian automotive industry to 6% this year through launches of new models of luxury cars and Grand Lavina Impul variances. Its executive director, Dr Ang Bon Beng said the new models, to be launched this year, will be all completely-built-up units (CBUs). He added that while the weakening of the Ringgit continued to put pressure on car prices, they will likely be maintained at current levels. (Malaysian Reserve)
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Star Publications (M) Bhd has appointed Datuk Clement Hii and Ng Beng Lye executive deputy chairman and executive director respectively with effect from yesterday. The largely-expected appointments were made at a meeting of the board of directors and followed the retirement of Datuk Steven Tan as executive deputy chairman yesterday by mutual consent. Tan also stepped down as non-independent and non-executive director, marking his final exit from the media
company. At yesterday’s board meeting, Paul Geh Cheng Hooi and Datuk Oh Chong Peng also resigned as independent and non-executive directors. The board also re-designated Datuk Seri Kamal Hashim as executive director. Geh has also resigned as chairman of the audit committee of Star Publications. The company has been undergoing succession planning in the past two years with the retirement of several key executives and the recruitment of younger executives.  StarBiz)
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Existing biofuel manufacturing licence holders have been given until end-April to reapply for a new operating licence from the Primary Industries and Commodities Ministry said minister Peter Chin. The ministry took over the task of issuing biofuel manufacturing licences from the International Trade and Industry Ministry from November 1, 2008, under the new Malaysian Biofuel Industry Act 2007. Given that of the current 91 apporved licences, only 16 plants had taken off (1.5m mt capacity), Peter Chin said some licences were going to be reviewed. (Starbiz)
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Malaysia should adopt an expansionary fiscal policy, allow its budget deficit to run slightly beyond 5% and lower interest rates further to lift itself from slowdown this year, said Professor Dr Danny Quah, head of LSE Economics Department. He added that the country could come out of this recession within 3-6 months under the right leadership and policy guidance. (Malaysian Reserve)
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Stocks were mixed Tuesday as questions about Citigroup’s future and Alcoa’s big quarterly loss exacerbated worries about the weak corporate profit environment. The DJIA lost 25.4 points (-0.3%, close 8,448.6). The S&P 500 added 0.2% (+1.5 pts, close 871.8) and the Nasdaq composite gained 0.5% (+7.7 pts, close 1,546.5). In currency trading, the dollar gained versus the euro and the yen. U.S. light crude oil for February delivery fell US$0.19 to settle at US$37.78 a barrel on the New York Mercantile Exchange. (CNNMoney)
* * * * *
The U.S. trade deficit narrowed in November by the most in 12 years as tumbling oil prices and slumping consumer spending cut imports. The gap shrank 29%, more than forecast, to US$40.4bn, the Commerce Department said yesterday. A record 12% drop in imports propelled the improvement. Exports fell for a fourth straight month. The drop in imports is unlikely to ease pressure on President-elect Barack Obama to take a harder line against countries such as China that U.S. steel and textile makers say unfairly benefit from an undervalued currency. Federal Reserve Chairman Ben S. Bernanke yesterday warned that a fiscal stimulus won’t be enough to spur an economic recovery, and that the government may need to buy or guarantee banks’ tainted assets to revive growth. (Bloomberg)
* * * * *
U.S. exports fell in November, capping the biggest four-month decline in more than a decade and signalling trade will contribute little to economic recovery, even as the recession depresses imports. Exports decreased 15.2% from August to November, the most since at least 1992, according to Commerce Department figures released yesterday. American exports and imports are both contracting as the global economy faces the first simultaneous recession in the U.S., Japan and the Euro region in the post-war era. While plummeting demand helps trim the nation’s purchases of foreign goods, falling exports of U.S.-made products will hobble American factories and jobs. (Bloomberg)
* * * * *
Economists slashed forecasts for U.S. growth in 2009 and projected Federal Reserve policy makers won’t be able to start raising interest rates until 2010, according to a monthly Bloomberg News survey. The world’s largest economy will contract 1.5% this year, a half percentage point more than projected last month, according to the median of 59 forecasts in the survey taken from Jan. 5 to Jan. 12. The slump will push inflation below what some Fed officials consider price stability, the survey showed. How quickly the U.S. will pull out of the slide may depend on the US$775 billion stimulus package that President-elect Barack Obama is pushing lawmakers to enact next month. The projections indicate he’ll be seeking to halt what may be the longest recession since World War II. (Bloomberg)
* * * * *
The British economy slumped the most in at least two decades during 4Q08 and home sales dropped to the lowest since the measure began in 1978 as the recession deepened, reports by lobby groups showed. The British Chambers of Commerce’s survey of almost 6,000 companies showed the weakest results since it started in 1989, the London-based group said yesterday. The average number of home sales per surveyor slipped and retail sales had the worst December in 14 years, reports by the Royal Institution of Chartered Surveyors and British Retail Consortium showed. (Bloomberg)
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Australian employers probably cut workers for a second month in December as slower domestic growth threatens to tip the economy into its first recession since 1991. Employment fell 20,000 after declining 15,600 in November, according to the median estimate of 17 economists surveyed by Bloomberg News. The jobless rate rose to 4.5%, the highest in almost two years, the survey predicts. The figures will be published today in Sydney. Rio Tinto Group and Australia & New Zealand Banking Group Ltd. are among companies firing workers amid mounting evidence Australia will follow the U.S., Europe, U.K. and Japan into a recession. A decline in employment will increase pressure on central bank Governor Glenn Stevens to extend the biggest round of interest-rate cuts in almost two decades. (Bloomberg)
* * * * *
New Zealand home-building approvals rose in November, adding to signs that falling interest rates may slow a slide in the property market. Approvals rose 4.3% from a record low in October, when they fell 20%, Statistics New Zealand said today, citing seasonally adjusted figures. Approvals have gained twice in seven months and the trend in the series has been in decline since July 2007. Reserve Bank Governor Alan Bollard began cutting the benchmark interest rate in July to kick-start the economy, which fell into a recession in 1Q08. (Bloomberg)
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China’s exports fell the most in almost a decade in December as the deepening global recession cut demand for the nation’s toys, clothes and electronics. Shipments dropped 2.8%, the customs bureau said on its website yesterday. That compares with a 21.7% gain a year earlier. Exports grew 17.2% for all of 2008, down from 25.7% in 2007. Waning export demand has led to protests by fired factory employees, an exodus of 600,000 migrant workers from the manufacturing hub of Guangdong, and an estimated urban unemployment rate of more than 9%. Premier Wen Jiabao pledged Jan 11 to add to the nation’s 4trn yuan (US$585bn) stimulus package to create jobs and avoid social instability. (Starbiz)
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Plantations December MPOB Data AirAsia In need of more space

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