20 January 2009 Newz Bits

January 20, 2009 at 1:20 am 8 comments

TALKING POINT


Tenaga Nasional sees weaker demand growth

TNB’s results recorded a sharp fall in 1QFY09 as the group felt the impact of lower demand, higher fuel cost and a weakening RM. Electricity demand growth has turned negative in December (-3% y-o-y) and is not expected to pick up pace until July 2009. Forex loss of RM1.4bn also weighed heavily on TNB. While fuel cost is expected to ease due to declining coal prices, higher capacity payments to the Jimah power plant which came on-stream this month will negate future cost savings. We reiterate our buy call but have trimmed our TP to RM6.75, which is at a 10% discount to our DCF valuation of RM7.50, imputed due to the uncertainties facing the group at this time.

HIGHLIGHTS


On Malaysia

• MISC halves its orders of chemical tankers
• HLG Capital proposes a 1:1 rights issue
• Manufacturing sales decreases by 1.6% in November
On The Global Front
• The Euro-area economy will contract in 2009
• Bank of England wins unprecedented power to buy assets
REPORTS
• Tenaga Nasional – 1QFY09 results (Buy; RM6.05; TP: RM6.75)
• SP Setia – Easing financing to boost sales (Sell; RM3.44; TP: RM2.62)

TM International Bhd (TMI MK, Buy, TP: RM5.95) is expected to raise funds this year to repay its loans, totalling RM2bn, owed to Telekom Malaysia Bhd (T MK, Buy, TP: RM2.74). According to Khazanah National Bhd MD Tan Sri Azman Mohktar, the details would be announced in the first quarter and the exercise would involve a rights issue of an equity-linked product. TMI is due to service the loan to TM in April and he said that Khazanah would be participating in the exercise. (Starbiz)
* * * * *
Cityneon Holdings Ltd, 63% owned by Star Publications Bhd (STAR MK, Hold, TP: RM3.60), said its orderbook for 2009 to 2012 stood at S$52m (RM124.6m) to date. The contracts included a S$35m (RM83.9m) deal to build three attractions at Universal Studios being built by the Genting group on Sentosa island as well as exhibition booths and other on-site installations to support a three year international roadshow by the Oman Tourism Authority. (Starbiz)
* * * * *
AirAsia Bhd (AIRA MK, Buy, TP: RM1.90) is working on securing more landing rights in the Philippines to expand its network in the republic, its group chief executive officer Datuk Tony Fernandes said. In particular, he said they were keen for both of its associates – Indonesia AirAsia and Thai AirAsia – to fly to Cebu, Manila, Davao, and Zamboanga in the Philippines
next year. (FinancialDaily)
* * * * *
Malaysian Airlines (MAS MK, Under Review) needs a strategic alliance to become a “regional champion” while Proton Holdings Bhd will still need a strategic partner for a sustainable turnaround, said Khazanah Nasional Bhd. Khazanah MD said yesterday although MAS had been restructured with leadership and capital structure in place, these were not enough. “We’ve been quietly active in the last 18 months, scanning the world and talking to parties including Qantas,” continued Tan Sri Azman Mohktar. He also said that for Proton, Khazanah would consider any capital raising exercise if the need arose. Currently, Proton’s cash level of over RM1bn was still sufficient. (Starbiz)
* * * * *
MISC Bhd has halved its orders of chemical tankers to be built by South Korea’s SLS Shipbuilding Co Ltd from 8 to 4 vessels. MISC said yesterday the revision was mutually agreed between the company and SLS after amicable negotiations. MISC did not reveal the final contract sum for the 4 vessels. The vessels are to expand the Group’s chemical fleet capacity and extend geographical coverage of operations. (Financial Daily)
* * * * *
HLG Capital Bhd has proposed a renounceable rights issue of up to 123.45m new shares of RM1 each at an indicative price of RM1 on the basis of one rights share for every one existing share. HLG Capital said it was to meet the group’s immediate funding requirements and to retire borrowings. It expects the entire proceeds to be utilised within one year after receipt thereof. To meet the minimum subscription level, it would obtain a letter of undertaking from its substantial shareholder, Hong Leong Financial Group Bhd to subscribe to 92.59m rights shares. HLG Capital said the final issue price would be determined at a price fixing date after the receipt of all relevant approvals. (Financial Daily)
* * * * *
The Energy, Water and Communications Ministry hopes the Economic Planning Unit (EPU) in the Prime Minister’s Department will announce the new gas price not later than June. The ministry had asked EPU to revisit the gas price for the energy sector to enable electricity tariff to be lowered. (Financial Daily)
* * * * *
Overall sales value in the manufacturing sector decreased by 1.6% or RM734.2m to RM45.3bn in November last year compared with November 2007, the Statistics Department said. Despite this, a total of 53 industries or 50% of the 106 industries surveyed reported growth in sales value. (Bernama)
* * * * *
Prices of most construction building materials are likely to remain stable this year amid slowing demand and lower production costs on falling commodity prices. Master Builders Association Malaysia (MBAM) president Ng Kee Leen predicted prices of all construction materials would eventually drop closer to the levels before the fuel hike in June last year. He said the current prices should stay stable unless the Government made drastic changes to the base materials price. (Starbiz)
* * * * *
Berjaya Corporation Bhd’s 51%-owned subsidiary Changan Berjaya Auto Sdn Bhd has launched two China-made completely knocked down (CKD) cars to test the local and Asean markets pending plans to build its own assembly plant in Malaysia, said Changan Berjaya executive director Datuk Francis Lee. The Chana Era cars, produced by China’s Chang’an Automobile Co Ltd, are currently assembled in Johor by Oriental Assemblers Sdn Bhd, a subsidiary of Oriental
Holdings Bhd. Lee said Changan Berjaya’s plan to assemble the cars could be realised if it could sell between 10,000 and 15,000 units of its Era CM8 multi-purpose vehicle (MPV) and Era CV6 hatchback over the next two years. He said a 100-acre site belonging to Berjaya Corporation in Bukit Tagar, Rawang, had been identified as the potential site of the planned assembly facility. Berjaya Changan would produce 10,000 cars this year with half of the vehicles intended for the domestic market while the remainder was to be exported to Asean countries, with Indonesia and Thailand set to receive the vehicled by mid-year, said Lee. (Financial Daily)
* * * * *
The Euro-area economy will contract this year for the first time since the currency was introduced a decade ago, the European Commission forecast, cutting its outlook for the region amid the worst financial crisis since World War II. The economy of the 16 countries sharing the euro will shrink 1.9% in 2009, the Brussels-based commission said yesterday, revising a November estimate for growth of 0.1%. European Central Bank President Jean-Claude Trichet said economic prospects are “substantially” worse than the ECB predicted just last month. (Bloomberg)
* * * * *
The Bank of England won unprecedented powers from the British government to buy assets and expand its policy toolkit to fight the risk of deflation as interest rates approach zero. The central bank can make initial asset purchases of up to 50bn pounds (US$74bn), the Treasury said yesterday. The government will indemnify the purchases against any losses in the facility, which will start on February 2. The announcement may pave the way for the central bank to engage in so-called quantitative easing if lower interest rates fail to stimulate the economy. Chancellor of the Exchequer Alistair Darling and Bank of England Governor Mervyn King will spell out exactly how the plan will work in an exchange of letters by the end of this month. (Bloomberg)
* * * * *
Spain had its AAA sovereign credit rating removed by Standard & Poor’s in the second downgrade of a Euro-region government in five days, as the country’s first recession in 15 years swelled the budget deficit. The risk of losses on Spanish government debt rose to a record yesterday, credit-default swaps showed, after S&P lowered the rating one step to AA+ and
assigned it a “stable” outlook. It was S&P’s first reduction in Spain’s rating and puts it on the same level as Belgium and Hong Kong. The cost of economic stimulus packages and bank bailouts is boosting budget deficits around the euro-region, fuelling concern governments will have difficulty paying their debt. S&P cut Greece’s rating one step to A- on January 14. A day earlier,
it threatened to downgrade Portugal’s debt. S&P also reduced the outlook on Ireland’s rating to negative from stable. (Bloomberg)
* * * * *
Indonesia plans to start physical trade in crude palm oil (CPO) via an exchange in 2H09, a move that will give the world’s top producer its own benchmark price, a Jakarta Futures Exchange official said yesterday. The plan to create a physical market has received support from state-owned plantations, which account for about 15% of the country’s CPO output, Hasan Zein
Mahmud said. He said state plantations, which together produce 2.25 – 2.5m tonnes per annum, had pledged to sell 20% of their production through the exchange. The exchange planned to use an electronic trading system so that sellers and buyers could trade online, he added. (Financial Daily)
* * * * *
Saudi Arabia and the United Arab Emirates cut their benchmark interest rates by half a percentage point after oil prices tumbled and economic growth was forecast to slow. The Saudi Arabian Monetary Agency reduced its key repurchase rate to 2% and its reverse repurchase rate to 0.75% from 1.5%. The U.A.E. central bank said it lowered its repurchase rate to 1%.
Central banks across the Persian Gulf have been cutting rates, guaranteeing deposits and lending to banks to help avert a liquidity crisis as foreign investors pulled money out of the region due to the global credit crunch and crude oil prices tumbled almost 75% from their July high. The Saudi rate cut is the fifth since October 12. (Bloomberg)
* * * * *
India is likely to sign a free trade agreement (FTA) with Asean during the 14th summit of the bloc slated for February in Thailand, a Thai media agency reported. Under the FTA, Asean and India will be committed to liberalising trade in goods. (Financial Daily)
* * * * *

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Water Weekly Review: 12th – 18th January 2009 Tenaga Nasional 1QFY09: Weaker demand growth

8 Comments Add your own

  • 1. 43  |  January 20, 2009 at 1:48 am

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  • 3. 20 January 2009 Newz Bits  |  January 20, 2009 at 2:14 am

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