19 January 2009 Newz Bits

January 19, 2009 at 2:14 am 1 comment


On Malaysia

· Oil palm estate owners seek windfall tax refund
· Plan to barter palm oil for fertiliser with North Korea, Russia
· Tenaga’s 20% associate may participate in a US$1.5bn project in Vietnam
· Puncak’s Singapore unit invests in China
· Sales of new vehicles may drop by between 20% and 30%
On The Global Front
· UK may guarantee “toxic debt” worth up to US$298bn
· Obama administration may announce fresh plans to clean up US banks

Oil Palm estate owners want the government to refund some RM350m in windfall taxes they have paid in July, August and September 2008. They are also appealing to the government to revoke the Windfall Profit Levy (oil palm fruit) Order. Under current high production costs, oil palm estates owners said, many of them make very little profits. This is especially in estates with large replantings and new planting areas where the average fruit yield is still low. (BT)

Thoughts: We are sceptical on whether this appeal will go through as CPO prices were still at higher levels during the said periods. We believe though that this effort is largely from small holders and perhaps small newer planters as listed players have continued to report strong earnings over the July-September period. We maintain overweight on the plantations sector following last week’s show that production numbers are on a decline and stock levels are going to ease.
* * * * *
Malaysia, in efforts to reduce its fertiliser import bill, will barter US$70m (RM250.6m) worth of palm oil for fertiliser with North Korea and Russia. Last year, without much leverage from barter arrangement, oil palm planters paid more than RM6bn to fertiliser importers for an estimated 3.5mn tonnes at market pricing. Plantation Industries and Commodities Minister Datuk Peter Chin Fah Kui said his ministry and Bank Negara, last month, approved US$20m (RM71.6m) credit with North Korea for palm oil orders until end-2010. Bartering of palm oil for fertiliser could facilitate more competitive pricing in fertiliser components. The aim is to get better pricing from smaller suppliers. The giant crop nutrients suppliers are in Canada, Norway and Chile, Chin said. (BT)
Thoughts: We see this effort holding good promise for the industry but again, as mentioned in the news item above, may largely affect the small holders more as we see that the quantum of import would not be enough for big producers like IOI and KLK. Fertilizer costs have indeed come off significantly and despite a 4 month lag; these lower market prices are still not fully seen in Malaysia as many fertilizer importers continue to hold stock at high levels. Given time and with government and large planters’ efforts, we believe that fertilizer costs will reflect market prices. To note, the next fertilization period for plantations comes in March after the rainy season hence many companies are able to hold back on purchases at this juncture. We maintain overweight on the plantations sector following last week’s show that production numbers are on a decline and stock levels are going to ease.
* * * * *
Janakuasa Sdn Bhd is looking at the possibility of independent power producer (IPP) Teknologi Tenaga Perlis Consortium (TTPC), in which Tenaga Nasional Bhd (TNB MK, Buy, TP: RM8.20) has a 20% stake, participating in its expansion overseas. Janakuasa was recently awarded a US$1.5bn (RM5.4bn) project in Vietnam and has another two in the pipeline, according to its president and chief executive officer Ti Chee Liang. (Financial Daily)
* * * * *
Tenaga Nasional Bhd (TNB MK, Buy, TP: RM8.20) has allocated RM80.9m for the upgrading of power cables, some of which are more than 40 years old, in the city of George Town this year. Tenaga is also working with the state government’s investment arm Penang Development Corporation (PDC) to put up a RM100m transmission main intake station in the Batu Kawan industrial estate. Tenaga president and CEO Datuk Seri Che Khalib Mohamad Noh said the national utility company was waiting for the green light from the state government to implement the project in Batu Kawan. (The Edge)
* * * * *
Budget carrier AirAsia Bhd’s (AIRA MK, Buy, TP: RM1.90) proposal to build a low-cost carrier terminal (LCCT) in Penang has received the thumbs up from industrialists and tourism players on the island state. While industrialists are hailing the proposal as an answer to better flight connectivity and a magnet to lure more investors to the state, the tourism sector is hoping that the proposed LCCT will boost tourist arrivals and serve to insulate the uncertain economic outlook. “If Penang gets an LCCT, its residents will definitely be the major beneficiaries,” Federation of Malaysian Manufacturers (northern region) Datuk O.K. Lee told Business Times yesterday. (BT)
* * * * *
Puncak Niaga Holdings Bhd’s (PNH MK, Buy, TP: RM3.00) 80% owned subsidiary in Singappore, Sino water Pte Ltd, has invested US$500,000 (RM1.8m) in Xinnuo Water (Binzhou) Co Ltd, its wholly-owned limited liability subsidiary incorporated in Yangxin County Shandong Province in China This has raised the paid-up capital of Xinnuo Water Binzhou to US$1m (RM3.6m). (BT)
* * * * *
Malaysia’s medical devices market, including gloves and hospital support systems, is expected to expand at a slower rate this year due to weaker export markets. But the industry is expected to remain resilient due to the nature of the business and the increase in both private and public healthcare spending, according to industry players. Dr Pawel Suwinski, a senior consultant of healthcare for Asia-Pacific in the research firm Frost and Sulivan said he expected the medical devices industry to grow at 8% this year, slower than last year’s growth. (StarBiz)
* * * * *
The government should offer housing grants to first-time buyers to lessen their burden amid the current economic turbulence, a top property official said. Real Estate and Housing Developers’ Association (Rehda) Malaysia president Datuk Ng Seing Liong said the grants will help stimulate the sector, which is depressed with selective buying. He said the biggest challenge for developers this year would be gaining buyers’ confidence. Rehda expects property launches to slow 15-30% this year and property prices to drop by 5-15%, but not in all locations. Choice locations will still be Mont’Kiara, Damansara, Bangsar and the KLCC enclave. (BT)
* * * * *
The Malaysian automotive sector is bracing for a tough time this year with industry leaders saying sales of new vehicles may drop by between 20% and 30%. They do not, however, think that the domestic market will be as bad as those in the US and Japan where demand has been the lowest in decades. The Malaysian Automotive Association (MAA) said demand for new vehicles may ease by as much as 20%. Meanwhile, Honda Malaysia Sdn Bhd managing director and chief
executive officer Atsushi Fujimoto expects sales of passenger vehicles to slip to 400,000 units this year. (BT)
* * * * *
Real Estate and Housing Developers’ Association Malaysia (Rehda) has asked the authorities to reduce electricity tariff following a drop in global crude oil price. Its president, Datuk Ng Seing Liong, said the move was essential for them to ease their burden in terms of cost of doing business. “We hope that electricity tariff can be reduced between 10% and 20%,” he told Bernama last Friday. (Bernama)
* * * * *
The auction of the Putra Place in Kuala Lumpur – which houses The Mall, the Legend Hotel and Putra Place office tower – has been postponed to April 16, 2009 to attract more potential buyers. The property was supposed to go under the hammer at the Kuala Lumpur High Court on January 20, 2009. Commerce International Merchant Bankers Bhd (CIMB) is selling Putra Place to recover monies owed by the property owner Metroplex Holdings Sdn Bhd. Putra Place was put up for auction once before in April 2008, at a reserve price of RM705m, but no bids were received. The price was then reduced by 10% to RM634.5m. (BT)
* * * * *
Penang Chief Minister Lim Guan Eng has appealed to the Transport Ministry to urgently consider any proposal it receives to set up a low-cost carrier terminal (LCCT) in the state. He said that a budget terminal was crucial for Penang’s tourism development and to ensure its position as a logistics hub in the north. Under the Northern Corridor Economic Region masterplan, a RM100m international LCCT has been identified for the state. (BT)
* * * * *
U.S. manufacturers in Penang saw a 20 to 40% drop in work orders over the last two quarters, but are looking to retrenchment as a last resort. Penang Chief Minister Lim Guan Eng said while most of these companies have indicated that they have no plan to lay off their staff, some may have to resort to doing so after the Chinese New Year. For more than 35 years, Penang has served as a preferred offshore base for US technology giants such as Intel, AMD, Agilent Technologies, Seagate, Motorola and Dell. Some of these firms have been badly hit in recent months and have had to resort to factory closures, pay cuts, layoffs and forced leave at some of their global sites. (BT)
* * * * *
EON Capital Bhd said its subsidiary EON Bank Bhd has received Bank Negara approval to start discussions for a proposed acquisition of 40% of MCIS Zurich Insurance Bhd. MCIS Zurich is the second insurer that EON Cap is looking to acquire. In November last year, EON Cap said Bank Negara had given EON Bank the approval to commence discussions with PacificMas Bhd for the proposed acquisition of its unit, The Pacific Insurance Bhd. (Starbiz)
* * * * *
The Securities Commission (SC) says it approved more initial public offerings (IPO) last year than in 2007, but the bulk of these have yet to be listed. The market regulator approved 31 IPO applications last year compared with 26 in 2007, reflecting companies’ continued interest in raising funds in Malaysia despite weakened IPO markets worldwide. However, out of the 31, only 10 have been listed: four each on the main board and Mesdaq and two on the second board. The remaining 21 are timing their listings to take into account the current market environment, after being given an extension by the SC. (BT)
* * * * *
Beneton Properties Sdn Bhd will open a 110,000-sq-ft lifestyle mall called Viva on Jalan Ipoh, Kuala Lumpur, in mid-2009. Located opposite the Sentul Park, the project is scheduled to be launched this quarter and is expected to be fully occupied when it opens next year. Viva is a mixed-development comprising a 27-storey apartment block with a retail podium. Its gross development value is estimated at RM100m. According to a press release by Henry Butcher Retail, the company instrumental in the planning and leasing of the mall, the annual rental collection from the retail components will be about RM2.7m. (BT)
* * * * *
Stocks rallied Friday, ending a choppy session on a high note as investors eyed the federal bailout of Bank of America, Citigroup’s plan to split its businesses and geared up for next week’s presidential inauguration. The DJIA gained 0.8% to 8281.22. The S&P 500 index added 0.8% to close at 850.12 and the NASDAQ climbed 1.2% to 1529.33. U.S. light crude oil for February delivery rose $1.11 to settle at $36.51 a barrel on the New York Mercantile Exchange. (CNNMoney)
* * * * *
Britain is poised to guarantee “toxic debt” worth up to US$298bn in a second bank bailout designed to boost lending and fend off a prolonged recession. Government officials and bank chiefs have spent the weekend in talks, a finance ministry spokesman told Reuters, as they seek a solution to a credit freeze that has crippled industry, small businesses and homeowners already struggling to cope with the downturn. Prime Minister Gordon Brown said details of the package would be announced “in the next day or two”. The package is designed to “get lending moving in the economy” to help families and businesses, he added. (CNNMoney)
* * * * *
China, Japan and South Korea have agreed to create a pool of US$120bn in foreign-exchange reserves to be tapped by Asian nations in case they need to protect their currencies, the Seoul Economic Daily reported. The three nations and the 10-member Association of Southeast Asian Nations plan to announce the agreement at the ASEAN Summit to be held in Thailand from Feb. 27 to March 1, the Korean- language newspaper said. China, Japan and South Korea will likely contribute about 80% of the pool and ASEAN members the rest, according to the report. (Bloomberg)
* * * * *
House Democrats in the US on Friday introduced the tax portion of their proposed $825bn economic recovery package. Roughly $145bn of the $275bn in tax breaks would be allocated for a tax cut for low- and middle-income workers. The Make Work Pay Credit, which was a centrepiece of President-elect Barack Obama’s campaign, would be worth $500 a year for individuals and $1,000 for couples. (CNNMoney)
* * * * *
Speculation grew on Friday that the Obama administration could announce fresh plans to clean up US banks within days of taking office next week, after a top regulator called for a new bank to be set up to unblock the system. Sheila Bair, the head of the Federal Deposit Insurance Corporation, called for the creation of an “aggregator bank” to buy toxic assets now hampering bank balance sheets and making it difficult for them to raise capital or expand lending. Outgoing Treasury secretary Hank Paulson offered support for such a move, telling reporters “a lot of work has been done on an aggregator bank” and other ways of “dealing with illiquid assets”. (FT)
* * * * *
All but five U.S. cities will experience job losses this year, with New York suffering the largest decline, according to a forecast released by the U.S. Conference of Mayors on Saturday. Global Insight, an international economic forecasting firm that put together the outlook for the mayors’ group, projected that by the end of 2009 one-third of all metropolitan areas in the country would have experienced no overall job growth for the first decade of the century. Unemployment rates will rise above 10% this year in 70 of the 363 metropolitan areas in the United States, Global Insight said. (Reuters)
* * * * *
Mexico’s central bank reduced its benchmark interest rate for the first time in almost three years to bolster a slumping
economy hurt by the U.S. recession. The bank’s five-member board, led by Governor Guillermo Ortiz, lowered the key lending
rate a half point to 7.75%. The decision matched the forecasts of 14 of 27 economists surveyed by Bloomberg. (Bloomberg)
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Kuala Lumpur Kepong : U-turn Land Sale Banking Weekly Review : 12th – 18th January 2009

1 Comment Add your own

  • 1. » 19 January 2009 Newz Bits  |  January 19, 2009 at 2:19 am

    […] Marketing Money Work at Home Business Lifestyle eXchange wrote an interesting post today onHere’s a quick excerpt HIGHLIGHTS […]

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