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Thursday, June 24, 2010

News Highlights

BToto: To issue RM800m debt notes

Berjaya Sports Toto Bhd (BST MK, Hold, TP: RM4.91) announced that its unit Sports Toto Malaysia Sdn Bhd has proposed to undertake a medium term notes (MTNs) programme of up to RM800m and it has received the approval of the Securities Commission. The anticipated initial drawdown of the MTNs is expected to be sized at approximately RM500m, of which the proceeds will be used principally towards the refinancing of BToto Group’s existing bank borrowings and for working capital. BToto said MARC had on 14 Jun assigned a AA-rating with stable outlook on the MTN programme. (Financial Daily)

KNM: Open to possibility of another privatisation

Lee Swee Eng, MD of KNM Group (KNMG MK, Hold, TP: RM0.55), said he would not rule out the possibility of a future privatisation exercise. He said the stumbling block was the funding issue and that if the opportunity arises, they will look into it. Despite the setback, Lee has been plodding along and he said he was looking to replace the current low to mid-end process equipment with higher-end products and services. Lee also said that KNM increased its order book to RM2.1bn from RM1.5bn a year ago. The order book, which consists mainly of Middle Eastern and Australian orders, is expected to last 18 months. The commissioning date of KNM’s plant in Saudi Arabia is estimated to be a further two months later than the original target of mid-2010, as the company has yet to obtain full approvals. (Financial Daily)

Konsortium Logistik: Seeks strategic partner for Pos

Konsortium Logistik Bhd (KLB), which is eyeing the entire 32% stake held by Khazanah Nasional Bhd in Pos Malaysia Bhd, is looking for a strategic partner to manage the company if it qualifies for the bidding process. Chairman Ismett Azyze Hamad Abdul Azyze said KLB had submitted its profile to Khazanah and added that the strategic partner would add value to Pos Malaysia’s service. Ismett said the potential tie-up between KLB and Pos Malaysia could benefit both parties as Pos Malaysia has an extensive network in the country, while KLB has years of experience in logistics. He said KLB had hoped to emulate the success of courier services rovider DHL, unit of Deutsche Post, which transformed itself from a postal group to the world’s leading logistics company. Meanwhile, Ismett said that KLB is on the lookout to buy four vessels, two bulk carriers and two car carriers as part of its expansion plans. (Financial Daily)

Sunway City: Mulling RM1bn university hospital development

The Sunway construction (SCITY MK, Buy, TP: RM5.00) and property group may build a RM1bn university hospital to expand its education and healthcare businesses. Targeted to be completed in 2015, the hospital is likely to be named Sunway Academic Health Sciences Centre, sources said. Sources said the group plans to expand the outdoor car park next to Sunway Medical Center to accommodate a 700-bed teaching hospital. There are some 2.7ha available on which to build the new hospital. The site is understood to be the last piece of land left for the hospital expansion. Together with the new facility, the hospital will take up 5.27ha. (BT)

Berjaya Land: Proposes share split with bonus issue

Berjaya Land Bhd has proposed a share split coupled with a bonus issue that would see its paid up share capital balloon to 5.0bn shares from 1.26bn shares in a move to enhance the liquidity and marketability of its shares. The share split will see shareholders getting two Berjaya Land shares with a reduced par value of 50sen from RM1 while the proposed bonus issue will provide investors with two additional shares for the two subdivided new shares from the proposed split. Berjaya Land is proposing to use all of its share premium account and RM1.2bn from retained earnings to facilitate the bonus issue. (Malaysian Reserve)

Crest Builder: Targets to double revenue to RM658m

Crest Builder Holdings Bhd targets to double its revenue from the RM329m achieved in FY09. The group has a few major jobs and projects lined up and is all set to meet the task ahead, said its managing director Yong Soon Chow. “We are still confident about the prospects of the construction industry and hope to double the numbers by next year,” he said. In FY09, the company managed to secure two prestigious construction projects namely the Green Mark certified Chua Tower Office development along Jalan Ampang and Setia Sky Residence along Jalan Raja Muda Abdul Aziz. (Malaysian Reserve)

HeiTech Padu: Aims to double overseas revenue this year

HeiTech Padu Bhd targets to double its overseas revenue this year, eyeing public sector projects abroad even as governments worldwide plan spending cuts. Within the next five years, the company is looking at a five-fold increase of international revenue particularly from developing markets such as Indonesia and United Arab Emirates. “We believe the need for computerisation is increasing as governments will spend to improve public service delivery,” said Chairman Datuk Mohd Hilmey Mohd Taib. HeiTech Padu plans to introduce solutions such as e-government to developing countries. (Malaysian Reserve)

Economy: Steel consumption forecast to grow at slower pace

Domestic steel usage is projected to grow at oly 5% to 7.5m tonnes this year – lower than an earlier forecast of 8 – 10% growth, Malaysian Iron and Steel Industry Federation (Misif) president said. “There will be growth but the rate will be subdued. In the last two months, the government has been indicating impending rise in natural gas and electricity prices,”he said. “Also, the implementation of government projects is not as consistent as we had anticipated,” he added. (BT)

Economy: Malaysia listed as China’s QDII destination

The ample investment funds in China can now flow into Malaysia capital markets as the country as been approved as an investment destination under the republic’s Qualified Domestic Institutional Investor (QDII) scheme. Malaysia is the 11thmember of a small group of approved investment destinations which comprises Australia, Canada, Hong Kong, Germany, Japan, Luxembourg, Singapore, South Korea, UK and US. Securities Commission chairman Tan Sri Azrinah Anwar said the QDII programme presents a major opportunity for Malaysian capital market intermediaries to gain access to the Chinese market in reaching a new pool of investors. At present, the quota for funds investing offshore under the QDII scheme sits at some US$47.69bn. Of that quota, 41% has yet to be invested. (Financial Daily)

Economy: No FX intervention after yuan policy

Bank Negara Malaysia governor said she did not expect to intervene in foreign exchange markets following China’s
announcement of a more flexible policy on the yuan. She said that this is not expected to have implications on the region in terms of impact on financial markets including the foreign exchange markets. Tan Sri Zeti Akhtar Aziz further added that eurozone debt woes had not posed a threat to market stability and only when there was a potential disruption or disorderly market conditions would BNM consider intervening in the currency market. (Financial Daily)

US: Stocks end volatile session mixed

Stocks ended mixed Wednesday as investors struggled to balance the Federal Reserve's statement, a weak housing
market report and a sell off in commodity prices amid the stronger euro. The central bank opted to hold the fed funds rate, a key overnight banking rate, steady at historic lows near zero. In its closely-watched statement, the bankers said the economic recovery is proceeding and the labour market is "improving gradually." But the bankers also cautioned about the weakness in the housing market and the "less supportive" financial conditions as a result of the "development abroad," meaning the European debt crisis. The Dow Jones industrial average gained 0.1% (+4.9 pts, close 10,299.4). The Nasdaq lost 0.3% (-7.6 pts, close 2,254.2) and the S&P 500 lost 0.3% (-3.3 pts, close 1,092.0). U.S. light crude oil for August delivery fell US$2.40 to settle at US$76.35 a barrel on the New York Mercantile Exchange. (CNNmoney)

US: Fed keeps rate pledge, says markets ‘less supportive’

Federal Reserve officials retained a pledge to keep the benchmark interest rate at a record low for an “extended period” and signalled that Europe’s debt crisis may harm American growth. “Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad,” the Fed’s Open Market Committee said in a statement in Washington. Central bankers cited slowing inflation and said the recovery is “proceeding,” altering April language that the economy has “continued to strengthen,” while reaffirming they foresee a “moderate” pace of growth. The
Fed said the labour market is “improving gradually,” changing April’s assessment that it was “beginning to improve.” Consumer spending still “remains constrained” by joblessness and “tight credit,” the Fed said. The central bank, at a two-day meeting, left the overnight interbank lending rate target unchanged in a range of zero to 0.25%, where it’s been since Dec 2008. (Bloomberg)

US: Sales of new homes plunged in May to record low

Purchases of U.S. new homes fell in May to the lowest level on record after a tax credit expired, showing the market remains dependent on government support. Sales collapsed an unprecedented 33% from April to an annual pace of 300,000, less than the median estimate of economists surveyed by Bloomberg News and the fewest in data going back to 1963, figures from the Commerce Department showed in Washington. Sales were projected to drop 19% to a 410,000 annual pace, according to the median estimate of 76 economists surveyed. Forecasts ranged from 300,000 to 530,000. The government revised April’s purchase rate down to 446,000 from a previously reported 504,000. The median price decreased 9.6% from the same month last year, to US$200,900, the lowest since Dec 2003, report showed. (Bloomberg)

UK: BOE splits on rate hike as Sentance pushes for increase

Bank of England policy maker Andrew Sentance made the first push for an interest-rate increase in almost two years this month, opening a split among officials on the strength of the economic recovery. The Monetary Policy Committee voted 7-1 to keep the benchmark interest rate at 0.5%, according to minutes of the June 10 decision released in London. Sentance favoured an increase to 0.75%, arguing that inflation was proving to be “resilient” after the recession. Governor Mervyn King cautioned last week that the bank shouldn’t react to faster inflation based solely on energy-cost and exchange-rate fluctuations, after the annual pace of consumer-price increases reached a 17-month high in April. (Bloomberg)

Germany: Consumer confidence to hold steady in July

Consumer confidence in Germany will hold steady next month as a drop in unemployment and the soccer World Cup encourage spending, GfK AG said. The Nuremberg-based market research company said its sentiment index, based on a survey of about 2,000 people, will remain at 3.5 points in July. Economists forecast a decline to 3.3 points, the median of 27 estimates in a Bloomberg News survey shows. Germany’s economy is showing few signs of discomfort from Europe’s sovereign debt crisis, which has forced governments across the 16-nation euro region to make spending cuts. While tighter fiscal policy may damp economic growth, the crisis has also pushed the euro down 13% against the dollar this year, boosting German exports outside the currency bloc. Unemployment fell to 7.7% last month as companies added workers and ramped up production to meet booming orders. (Bloomberg

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