28 January 2009 Newz Bits

January 28, 2009 at 7:25 am Leave a comment

HIGHLIGHTS


On Malaysia

· AMMB Holdings proposed a special issue of 96.3m shares to eligible Bumiputera shareholders
· Sime Darby Property Bhd will undertake an integrated property development valued between RM25bn and RM30bn, spanning 20 years
On The Global Front
· The Japanese government yesterday launched a ¥1.5trn capital injection scheme
· U.S. home prices plunged a record 18.2% in November from a year earlier
· Over 71,400 more job cuts were announced in the US on Monday alone

AMMB Holdings (AMM MK, Buy, TP: RM3.90) has proposed a special issue of 96,300,000 shares to eligible Bumiputera shareholders, at an issue price to be determined after obtaining all relevant approvals, to enable the Group to comply with the Bumiputera equity condition imposed by the Securities Commission pursuant to its approval for the equity participation of
Australia and New Zealand Banking Group (ANZ) in AMMB Holdings. (Bursa)
Thoughts: While this is a “house-keeping” matter in the sense of maintaining regulatory compliance, the added capital raised will stand the Group in stronger stead to withstand the increasingly tougher operating conditions in the immediate term. Core and risk-weighted capital ratios (9.05% and 14.09% respectively) will certainly improve with this issue, which represents 3.4% of the enlarged share capital and will bring in some RM200m for working capital purposes when completed in 2Q09. On the operational front, the recent round of OPR cuts benefits AMMB the most given its large fixed-rate loan portfolio, the only significant risk to earnings being the potential rise in delinquencies. The Group’s larger exposure to consumer loans as against big-ticket business loans give us more confidence in riding out this difficult period, as our BUY call and target price remain unchanged.
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Sime Darby Property Bhd will undertake an integrated property development across two states valued between RM25bn and RM30bn, spanning 20 years. Dubbed the Sime Darby Vision Valley (SDVV), the group released its master plan last Friday, elaborating development plans for 32,375ha of its land in Selangor and Negri Sembilan. “The vision valley allows us to realise the value of our land bank in these states, which have been earmarked by the government for future growth and development,” said Datuk Seri Ahmad Zubir Murshid. Ahmad Zubir also expects an earnings margin of not less than 15%. The Selangor Vision City will cover some 4,452ha with a gross development value of RM10bn. It will use the Guthrie Corridor Expressway as a catalyst for its residential and commercial developments. The Negri Sembilan Vision City will use an airport
as its catalyst, given the close proximity of the Kuala Lumpur International Airport. (BT)
Thoughts: Naturally, with the very long span of the project we would not be expecting much substantial changes to our numbers for the property segment especially within the coming 2 financial years. To note, the property segment currently takes up some 13-15% of Sime’s PBT. Looking at the GDV figures and area statements issued by the group, it implies that just the Selangor portion of the SDVV amounts to RM0.9m per acre which is comparable to other mass market housing developments in the Klang Valley. As for the Negri Sembilan portion, assuming an RM20bn GDV on the 27,923ha, it amounts to RM0.3m per acre which we find to be rather low. However, we make no conclusions given the lack of clearer details at this point. Also, while the airport continues to be cited in the news, our conversation with Sime indicates that they do indeed hope for the airport but would most likely only have the part of land sale and development in the project. We continue to have a buy call on Sime Darby (SIME MK, Buy, TP: RM6.40) at this juncture as we see strengthening CPO prices buoying up their earnings.
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IJM (IJM MK, Buy, TP: RM6.10) is well on track towards completing a crucial part of the 19km New Delhi-Indra Gandhi Internatonal Airport Metro Line by next year. A Delhi Metro spokesman said IJM Corp Bhd, one of six foreign companies handling civil projects under Phase 2 of the Metro Line, was on schedule in complete its projects on the ultramodern network. (BT)
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Deputy Prime Minister Datuk Seri Najib Razak has confirmed that the Cabinet is re-evaluating its approval to AirAsia Bhd (AIRA MK, Buy, TP: RM1.90) and Sime Darby Bhd (SIME MK, Buy, TP: RM6.40) to build a low-cost carrier terminal (LCCT) in Labu, Negri Sembilan. Najib, who is also Finance Minister, said no formal decision had been made as the Cabinet was still evaluating the proposals, declining to say more so as to not “pre-empt the decision”. (Financial Daily)
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Industries may receive electricity tariff incentives from the government to reduce their burden and enable them to carry on operations in the midst of the global economic slump. The government, Tenaga Nasional Bhd (TNB MK, Buy, TP: RM6.75) and related parties are in active discussions on the matter. (Financial Daily)
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Mobile operators expect to see a decline in their enterprise segment and business users this year, as employers downsize staff strength and reduce employees’ benefits. The trend is ongoing in several countries in the region, including China, which is poised to be one of the better performing economies. “Companies will be less inclined to sign up employees’ (mobile) subscription. In places like China, where the employees have to pay themselves and the companies reimburse them, I think a lot of companies are going to review their reimbursement this year. They are going to say that managers, senior managers, and key salesmen will get a phone account, while the rest won’t,” said IDC Asia Pacific director of telecom services William Rojas.(BT)
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The government has not yet decided on the new price for sugar, Domestic Trade and Consumer Affairs Minister Datuk Shahrir Samad said. Before this, Shahrir was reported to have said that the price of sugar might be increased after the Chinese New Year. He said the government was looking at the possibility of raising the price following the rise in sugar price in the international market. Around 80% to 90% of the country’s sugar supply is imported. According to him, if the price of sugar remained at RM1.45/kg, the government would have to subsidise it. (Financial Daily)
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The tobacco industry could see a slowdown in cigarette consumption says Philip Morris (Malaysia) Sdn Bhd’s managing director Il-woo Chong. “The Asian market is not a growing market. For Malaysia, it has come to a point where growth would be stagnant,” Chong said. According to statistics by the Confederation of Malaysian Tobacco Manufacturers, the overall industry volume in the first three quarters of 2008 dropped 2.2% from the same period a year earlier. (Financial Daily)
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Stocks gained Tuesday, rising for the third-straight session, as investors breathed a sigh of relief that some of the quarterly earnings were less terrible than had been expected. The DJIA gained 58 points, or 0.7%, closing higher for the second session in a row. The S&P 500 index added 9 points, or 1.1% and the Nasdaq composite added 15 points or 1%. Both the S&P 500 and the Nasdaq ended higher for the third session in a row. U.S. light crude oil for March delivery fell $4.15 to settle at $41.58 a barrel on the New York Mercantile Exchange. (CNNMoney)
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The Japanese government yesterday launched a ¥1.5trn (RM60.98bn) scheme to buy shares in companies whose future has been threatened by the financial crisis, in a new move to ease the credit crunch that has starved key industries of cash. Confirmation of the capital injection scheme pushed Japanese stocks higher, taking the Nikkei share average’s gains for the day to 4.6%, but dragged on already falling bonds and the yen. (Financial Daily)
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India’s central bank reduced its growth forecast for Asia’s third-largest economy on Tuesday due to the deepening worldwide recession as it held leading interest rates at historic lows. The bank cut its growth estimate for this fiscal year to 7% “with a downward bias” from an earlier projection of 7.5 to 8.0%. The bank said it was pausing in its series of aggressive interest rate cuts to assess the impact of the reductions. (BT)
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U.S. home prices plunged a record 18.2% in November from a year earlier according to an index from Standard & Poor’s (S&P). Prices in 20 metropolitan areas tracked by S&P fell 2.2% from October as housing continues to suffer from a huge supply of unsold homes, tighter lending standards and record foreclosures. However, the annual rate of decline for the S&P/Case-Shiller composite index for 20 cities was not as steep as economists had expected. (Reuters)
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Over 71,400 more job cuts were announced in the US on Monday alone. At least six companies from manufacturing and service industries announced cost-cutting initiatives that included slashing thousands of jobs. More than 200,000 job cuts have been announced so far this year, according to company reports. Nearly 2.6m jobs were lost over 2008, the highest yearly jobloss
total since 1945. (CNNMoney)
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Britain’s economy shrank at its fastest pace in nearly three decades at the end of last year, sending the economy into recession for the first time since 1991 as the financial crisis hit even harder than expected. Friday’s bleak data piles pressure on Prime Minister Gordon Brown, under fire after massive job losses, banking sector turmoil and a plummeting currency knocked Britons’ faith in his ability to deal with the global economic downturn. The Office for National Statistics said the economy shrank by 1.5% in 4Q08, the biggest drop since 1980. That followed a 0.6% decline in 3Q08, fulfilling the technical definition of recession. (Reuters)
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U.K. house prices had the biggest annual decline since at least 2001 in January, as the recession worsened and banks curtailed lending, Hometrack Ltd. said. The average cost of a home in England and Wales fell 9.4% from a year earlier to 158,300 pounds, the London-based property researcher said in a report today. The monthly decline of 1% was led by London, where prices slid 1.1% from December. (Bloomberg)
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The International Monetary Fund (IMF) will cut its 2009 global growth forecast again, this time to between 1% and 1.5%, as economic conditions deteriorate further, an IMF official said on Sunday. The IMF’s most recent forecast, made in November, was for growth of 2.2%. An official release of updated IMF economic forecasts is expected on Wednesday, said Axel Bertuch-Samuels, deputy director of the IMF’s monetary and capital markets department. (Reuters)
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Russia plans a 900bn rouble (US$27.4bn, or RM98.96bn) capital injection for commercial banks hit by the economic crisis, with state-controlled lenders set to receive the largest share, government sources said yesterday. Sberbank, Russia’s biggest lender, was likely to receive a 500bn rouble subordinated government loan, one source told Reuters, citing a decision taken at a meeting of the government’s anti-crisis committee. The source said another state-controlled bank, number-two lender VTB, would receive 200bn roubles as part of the latest rescue package. (Reuters)
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23 January 2009 Newz Bits 29 January 2009 Newz Bits

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