HLIB Research: Robust growth prospects for Green Packet

Hong Leong Investment Bank (HLIB) Research sees robust growth prospects for Green Packet Bhd with its four new synergistic business pillars.

It also noted that Webe Digital Sdn Bhd (webe) has ceased to be an associate and Green Packet will no longer be required to equity account the share of net loss.

Green Packet’s stake in webe has been reduced to 13.3% on a fully diluted basis after few rounds of capital injections,

“With the closure of this chapter, Green Packet is still supported by two existing profitable businesses while embarking on two new synergistic businesses to widen and strengthen its connectivity solution offerings.

“With the new synergistic four pillar business structure, there is an exciting journey ahead of Green Packet which may be worth for a second chance,” it said in a note on Friday.

Excluding webe, Green Packet’s existing businesses are profitable, it added.

The four pillars are Hardware/Solution, Communications, Internet of Things, and the E-services Platform.

The report was non-rated and had a target price of RM0.34.

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Oil at two-week high after largest weekly crude-supply drop since 1999

Oil futures on Thursday logged their highest settlement in at least two weeks after U.S. government data revealed the largest drop in crude supplies since 1999.
The 14.5 million-barrel decline reported by the Energy Information Administration was even larger than the surprise 12.1 million-barrel drop reported by the American Petroleum Institute late Wednesday. Ahead of both reports, analysts polled by S&P Global Platts expected a 425,000-barrel climb.
“The large draw in crude oil inventory was driven by a large decline this week in crude oil imports, primarily weather-related, while refinery runs continued to be quite strong,” Robert Merriam, manager of Petroleum Supply Statistics at the EIA, told MarketWatch. He confirmed that the weekly supply drop was the largest since the week ended Jan. 1, 1999.
Oil prices also found support from Chinese data that showed another big increase in the country’s crude imports.




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South Korean stocks sink, leading Asian market slide

Asian shares traded broadly lower Friday, as investors were disappointed by the European Central Bank’s decision to leave its €1.7 trillion ($1.9 trillion) stimulus unchanged at a policy meeting Thursday.

Australia’s S&P/ASX 200 XJO, -0.85% was down 0.6% and South Korea’s Kospi SEU, -1.61% slid 1.2%. China’s Shanghai Composite Index SHCOMP, +0.02% was about flat. Japan’s Nikkei Stock Average NIK, +0.15% was last trading 0.1% lower after the yen appreciated against the U.S. dollar. A stronger yen makes Japanese exporters less competitive.

The South Korean won tumbled within minutes of headlines that North Korea may have conducted a nuclear test. The possibility of a sanctions-breaching test arose after a shallow 5.3 magnitude earthquake was detected near North Korea’s nuclear test site. The South Korean won fell as low as 1,103.0 to the U.S. dollar, representing a 0.9% fall from its Thursday closing level of 1,092.6.




Hong Kong’s Hang Seng Index HSI, +0.96% rose 0.4%, after a Chinese regulator said Thursday it will allow domestic insurers to invest in Hong Kong-listed stocks through a trading link with Shanghai. The China Insurance Regulatory Commission’s announcement came less than a month after the unveiling of the Shenzhen-Hong Kong Stock Connect program, set to begin later this year.

Asian markets’ weak start Friday also took cues from the ECB’s non-action Thursday, which fed into views that central banks globally were stepping back from their many aggressive market-boosting measures.

“It seems the recent deterioration in survey and inflation data is still not enough to push the ECB to ease further,” said Timothy Graf, head of macro strategy at State Street Global Markets EMEA.

“We were expecting some language that would help prepare the market for easing later this year.”

The ECB also said it wouldn’t immediately extend its bond-buying program. That lead to a selloff in U.S. bonds, sending the 10-year yield to 1.61% from around 1.53%.

The Fed and BOJ decide on monetary policies on Sept. 21.

The Bank of Korea kept its base rate unchanged for a third straight month on Friday, while the latest data from China showed consumer inflation slowed in August. India is scheduled to issue data on industrial production later Friday.

Brent was trading 0.9% lower at $49.52 a barrel, and gold was trading 0.1% higher.




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‘Dividend Aristocrat’ stocks post almost double the returns of the S&P 500 in 2016

Boards of directors that consistently reward investors with higher dividends don’t get enough praise.

While Amazon AMZN, -0.05% Oracle ORCL, -1.28% and Facebook FB, -0.60% are lauded for their genius-level CEOs and innovative business models, companies that keep raising dividend payouts year after year really enrich investors in the long run, and can be excellent performers within a diversified portfolio.

U.S. companies that have raised their regular dividends on common shares for at least 25 years are included in the S&P 500 Dividend Aristocrats Index SPDAUDP, -0.53% It doesn’t matter how high a stock’s current yield is, just that the dividend continues to rise. Beloved Aristocrats include real estate investor HCP Inc. HCP, -1.81% soft-drink giant Coca-Cola Co. KO, -0.02% and pharmaceutical company AbbVie Inc. ABBV, -1.40% So even though investors tend to think of dividend stocks as vehicles for income, the Aristocrats have been a fantastic vehicle for growth. So far this year, the dividend index has returned 14.1% (with dividends reinvested), compared with 8.3% for the benchmark S&P 500 Index SPX, -0.22% — that’s almost twice the increase.



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Asian Market Update : Epic Research Malaysia

Asian stocks fell as investors weighed the outlook for monetary policy in the US and Japan after the European Central Bank downplayed the need for more economic stimulus. South Korean shares dropped amid concern North Korea may have conducted a nuclear test.

The MSCI Asia Pacific Index dropped 0.7 per cent to 141.03 as of 10:49am in Tokyo. The measure is heading for a 2.1 per cent advance this week as traders pared bets the Federal Reserve will raise rates at its September meeting while speculation swirled over whether the Bank of Japan will add to already record stimulus.

Shares in the US and Europe fell after ECB chief Mario Draghi played down the prospect of an increase in asset purchases at a time when concern over the impact of Brexit on the euro area is mounting.

"While the ECB disappointed, we could still expect additional stimulus later in the year as there's so much uncertainty in Europe," James Woods, a strategist at Rivkin Securities in Sydney, said by phone.



"Investors will probably sit on the sidelines ahead of the Fed and Bank of Japan policy meetings."

South Korea's Kospi index lost 1.3 per cent, on course for its biggest drop since July 6. A shallow 5.0-magnitude earthquake was detected near North Korea's nuclear test site, according to the European Mediterranean Seismological Centre.

South Korea's government said North Korea may have conducted a nuclear test, Yonhap News said, citing an unidentified government official.

Draghi Decides Europe's Stoxx 600 index slid 0.3 per cent on Thursday while the US S&P 500 Index lost 0.2 per cent, retreating from a record high. Mr Draghi said the ECB didn't discuss an extension to its bond-buying programme at its latest meeting, where interest rates were left unchanged.

The European decision comes before this month's closely watched BOJ meeting, at which the board will announce the results of a comprehensive review of monetary policy and decide whether it should expand easing.

Japan's Topix index slid 0.3 per cent as the yen added 0.4 per cent against the US dollar on Friday. New Zealand's S&P/NZX 50 Index declined 0.6 per cent. Australia's S&P/ASX 200 Index fell 0.7 per cent.

Hong Kong's Hang Seng Index climbed 0.4 per cent to the highest level since Aug 2015. Chinese shares in Hong Kong rose for a seventh day, increasing 0.8 per cent.

The Shanghai Composite Index added 0.2 per cent. Data showed China's factory-gate deflation eased for an eighth straight month signalling less need for the central bank to ease further.




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Opening Market Update : Epic Research Malaysia

MALAYSIA share prices opened lower on Friday with the FTSE Bursa Malaysia Kuala Lumpur Composite Index down 0.260 points to 1,691.120.

Volume was 21.500 million lots worth RM4.936 million.

Gainers outnumbered losers 65 to 57.



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CIMB Research: Bioalpha major shareholders undertaking to fully subscribe to rights issue is positive

The move by Bioalpha Holdings Bhd major shareholders to subscribe to the health supplements maker’s latest rights issue is a positive one as it will ensure the rights shares will be fully subscribed.

CIMB Research on Thursday said the company’s major shareholders, William Hon and PNS, have given an undertaking to subscribe for their portion of the rights issue shares. “In addition, Hon and PNS have also undertaken to subscribe for 16% and 56%, respectively, of the allocated rights issue not subscribed by minority shareholders.

“This means, Hon and PNS have undertaken to subscribe for 100% of the proposed rights issue. We view this move positively as this ensures Bioalpha‘s proposed rights issue will be fully subscribed,’’ it added.

Yesterday, the company had proposed 1-for-5 rights issue (one rights share for every five shares owned) and in addition would give one free warrant for every rights share subscribed. The issued share base would rise to 800 million shares, or 934 million shares assuming warrant conversion. Based on the indicative RM0.21 rights issue price, the company would raise around RM28mil cash.

Assuming the rights issue is set at RM0.21, this is at 25% discount to the estimated ex-rights issue price, the research house said, which it view fair as shareholders would also get a free warrant for very rights share subscribed.

On a fully diluted basis, the issued share base would rise from 667 million to 934 million shares. Estimated 2017 earnings per share (EPS) dilution ex-rights issue is around 35%, it said, noting that the research house ex-rights target price (fully-diluted basis) would fall from RM0.52 to RM0.37.

CIMB said the proposed rights issue was a positive surprise as the proposed funds raised would be mainly used for planting 880 acres in Pasir Raja with herbs (RM10mil), and purchase of raw materials, packaging costs and working capital needs for new products (RM13.5mil).

Bioalpha is planning to launch new products in all markets (China, Indonesia and Malaysia) over the next few months.



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New era for F1 as Liberty agrees US$8b takeover

Formula One entered a new era on Wednesday as US billionaire John Malone’s Liberty Media agreed a takeover that values the motorsport at US$8 billion and raises questions over the role of its colourful, long-time mastermind, Bernie Ecclestone.

In a deal that ends years of speculation over F1’s future, Liberty said it had struck an agreement to buy out Formula One’s parent company from CVC Capital, and had already acquired a minority stake of 18.7%.

Liberty Media group will pay a total equity price of US$4.4 billion in cash, newly issued shares, and exchangeable debt to complete the deal, which gives Formula One an enterprise value of US$8 billion.

Liberty said it would keep Ecclestone, who built Formula One into a global operation over nearly four decades, as chief executive, but also named 21st Century Fox vice-chairman Chase Carey as the company’s new chairman.

The takeover is set to be completed next year, subject to approval by regulators, Liberty Media’s shareholders and F1’s governing body, the Federation International de l’Automobile (FIA).

It gives Liberty control of a global and highly profitable sport which includes 21 races this year stretching from Melbourne and Shanghai to Sochi, Mexico City and finishing in Abu Dhabi.

Formula One rakes in billions from advertisers and broadcasting rights for what is one of the world’s most-viewed competitions.

It also earns millions from Formula One-branded merchandise. F1’s future under CVC has long been in question and a mooted share flotation in Singapore was shelved in 2012.

Despite the big profits, some F1 teams are plagued by financial problems and the sport faces challenges to its fanbase and TV viewership, with its races often criticised as predictable.

‘NEVER A DULL MOMENT’

Ecclestone, a former motorcycle dealer and racing driver, has been the flamboyant figure at the centre of Formula One since the 1970s, crafting it into one of the world’s most glamorous and best-known sports.

After months of talks with the sellers, Liberty agreed to retain the canny and combative 85-year-old, who insisted his role would remain unchanged despite the arrival of Carey as chairman.

”I will stay on as F1 chief executive,’ Ecclestone told the Autosport website. “I will continue to do all the things I have previously done, such as negotiate with the circuits, television companies and people like that.

”The good news is we will have someone on board in Chase, and he will hopefully be able to push F1 into new territories with social media. I have never found a way to make money from that.”

CVC co-chairman Donald Mackenzie praised Ecclestone, who forked out us$100 million to German authorities to end a high-profile bribery trial in 2014.

”Bernie has been a wonderful CEO for us over the last 10 years,” Mackenzie said in a statement.

”There have been many successes and the occasional challenge but there has never been a dull moment and we have had a lot of fun. The combined skills of Chase and Bernie mean that the successes should continue and we wish them well.”

The purchase also adds a new gem to the growing collection of savvy, low-key tycoon Malone, who Forbes estimates has a fortune of us$7.1 billion.

The broader Liberty group runs a wide range of media-centric businesses, including Time Warner cable television, concert promoter Live Nation, the Atlanta Braves Major League Baseball team, and a stake in Formula E, the all-electric version of Formula One which launched in 2012.

”We are excited to become part of Formula One,” Liberty Media president and chief executive Greg Maffei said. ”We think our long-term perspective and expertise with media and sports assets will allow us to be good stewards of Formula One and benefit fans, teams and our shareholders.”




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Nintendo is a winner on sluggish day for other Asian stocks

Shares in Japan’s Nintendo Co. rallied strongly early Thursday, following the announcement of a new mobile game featuring its famed Mario character, though broader stocks across the Asian region were mostly lower.

As the Nikkei Stock Average NIK, -0.32% eased 0.3% amid further yen strengthening against the dollar, the videogame maker has jumped 14%, reversing some of the late-July pullback seen after Nintendo’s stock surge that month in the wake of the release of “Pokemon Go.” But broader equity weakness in Japan came as a revised economic report showed inflation slowed and stagnated wage growth.

Elsewhere, Australia’s S&P/ASX 200 XJO, -0.71% was recently down 1%, Hong Kong’s Hang Seng Index HSI, +0.67% was off 0.1% and Korea’s Kospi SEU, +0.09% was down 0.2%.

Overnight, Nintendo 7974, +13.20% said “Super Mario Run” — the latest push into mobile-phone gaming for a company which long stayed out of the sector — will launch in December on smartphone platforms beginning with Apple Inc.’s AAPL, +0.61% iOS. Analysts forecast the impact being greater than from what Nintendo is liable to see from “Pokemon Go.”

“Earnings contribution was said to be limited from ‘Pokemon Go,’ but Mario is Nintendo’s content...We can expect earnings improvement,” said Hideyuki Ishiguro, senior strategist at Daiwa Securities.

Apple, meanwhile, unveiled the iPhone 7 to mixed reviews. While its stock rose slightly in the U.S. on Wednesday, the tech firm’s Midas touch didn’t extend to Taiwan, where shares of key manufacturing suppliers -- Hon Hai Precision Industry Co. 2317, -1.26% , Wistron Corp. 3231, -1.29% and Compal Electronics Inc. 2324, -0.26% — were down modestly.

“Overall, this update is much better than Apple’s past few events,” said Neil Saunders, CEO of retail research firm Conlumino. “However, in our view it still falls some way short of the magical launches Apple used to conduct. As such, while it will stimulate demand we do not expect it to completely remedy the more sluggish sales Apple has faced over the past few quarters.”

In Australia, institutional selling and a recalibration of expectations surrounding rates in the country following the Reserve Bank of Australia’s decision to keep interest rates unchanged pressured stocks.

“The financials are taking the big points out of our market today,” said Chris Weston, chief market analyst at IG Market Ltd.

Still on tap later Thursday is trade data from China, which could trigger market volatility.





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Home Economy & Politics Market Extra Get email alerts Pressure mounts on ECB to do QE3 — what to watch at today’s meeting

Will they or won’t they? Extend the European Central Bank’s quantitative easing program, that is.

Investors are becoming increasingly convinced the ECB will prolong its asset-buying program beyond March 2017, but the big question is whether they will make the move as early as this week. The ECB kicked off its corporate bond buying program in June, complementing its purchases of government debt.

The gathering Thursday marks the second meeting for ECB policy makers since the U.K.’s June 23 Brexit vote. After a dovish message in July, economists are scrutinizing every possible hint in a bid to predict the next move. But with ECB President Mario Draghi remaining remarkably quiet in recent weeks, analysts are left to inspect economic data, which aren’t pointing to a clear path for policy.

“The decision to announce further policy accommodation at the September meeting or wait for further evidence is likely to be a close call. The recent survey and hard data, credit flow data and inflation paint a mixed picture of the eurozone economy,” analysts at Deutsche Bank said in a note.

Second-quarter gross domestic product numbers out on Tuesday confirmed eurozone economic growth at 0.3%, in line with expectations, but still way below the historic average. The purchasing managers indexes showed private-sector activity in the bloc overall expanded in August, but with weakness starting to emerge in Germany and the periphery. A slowdown in Europe’s largest economy was also the takeaway from the country’s July factory orders that grew an underwhelming 0.2%.


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Oil prices rise on Chinese bump in crude imports

Oil futures rose Thursday, extending their recent gains following a report of steep draw in U.S. crude inventories and another big increase in Chinese oil imports.

On the New York Mercantile Exchange, light, sweet crude futures for delivery in October CLV6, +1.71% traded up 1.6% at $46.24 a barrel. November Brent crude on London’s ICE Futures exchange LCOX6, +1.38% rose 1.3% to $48.61 a barrel.

Futures maintained their gains after Chinese government data showed the country’s oil imports rose to their highest level of the year last month, the latest sign that China’s appetite for foreign crude remains voracious amid depressed oil prices.

China, the world’s No. 2 oil user after the U.S., imported 32.85 million tons of oil in August, equivalent to 7.8 million barrels a day, data from the General Administration of Customs showed Thursday. The figure is the highest level of monthly imports since December and marks an increase of 7% from a year ago.


The data are another indication that oil demand around the world has been spurred on by low prices, although signs have emerged that in the U.S. and other developed countries fuel consumption may be slowing down.

In China, oil imports have been high all year due in part to strong buying from independent refiners known as teapots. A loosening of import rules on teapots has led to a surge in foreign oil purchases by these refiners. Beijing, meanwhile, is widely seen as taking advantage of low crude prices to build its strategic oil reserves.
U.S. stockpiles

The course of U.S. oil inventories is expected to come into focus later this week. Data from the U.S. Energy Information Administration due during U.S. trading hours early Thursday are expected to show stockpiles there rose by 500,000 barrels last week, according to a Wall Street Journal survey of analysts.

But recent data from the American Petroleum Institute, an industry group, bucked those expectations, helping to fuel Thursday’s rally. The API showed a 12.1 million-barrel drop in inventories.

Prices have been rallying this week following a cooperation pact between Saudi Arabia and Russia aimed at stabilizing the oil market as a supply glut persists. But skepticism over whether big producers will follow through on formal production caps has kept those gains in check, and prices have failed to maintain any rally above $50 a barrel since June.

“Mostly, the [price] movement is down to speculation,” said Peter Lee, an oil and gas analyst at BMI Research.

“There hasn’t been a clear-cut sign from any of the other players that they will come to an agreement.”




In addition, given that output levels among members of the Organization of the Petroleum Exporting Countries are so high, “even if they would agree on a production freeze, it basically means that everyone would be producing at their peak rates,” Lee said. “It doesn’t do much in terms of the oversupply.”

An informal OPEC meeting is set for later this month.

Nymex reformulated gasoline blendstock for October RBV6, +1.72% — the benchmark gasoline contract — rose 1.3% to $1.3646 a gallon.




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KLSE IForex Stocks Recommendations : Epic Research Malaysia

INTERNATIONAL CURRENCY BUZZ

• Forex – Dollar broadly weaker on Fed rate hike doubts.

• Forex – GBP/USD slides lower after U.K. data disappoints.

• Forex – Aussie edges lower after GDP data, kiwi hits 16-month high.

EUR/USD

EURUSD closed above 1.1200 yesterday with price action now likely to stay flat within 1.1300 – 1.1270 price level into tomorrow’s ECB meeting. In the near term, expect the price to dip towards 1.1200 on the minor bearish divergence that is formed on the chart. Resistance at 1.1270 – 1.1280 remains key to the upside, and a break out above this resistance could keep the bullish momentum send EURUSD to test 1.1300 followed by 1.1341.A possible reversal near the resistance level could, however, signal a near-term weakness ,
which could be confirmed if EURUSD breaks down below 1.1200.

GBP/USD

The pound slid lower against the U.S. dollar on Wednesday, after data showing that U.K. manufacturing production fell more than expected in July dampened optimism over the strength of the economy.GBP/USD hit 1.3378 during European morning trade, the session low; the pair subsequently consolidated at 1.3388, shedding 0.36%.Cable was likely to find support at 1.3292, Tuesday’s low and resistance at 1.3446, Tuesday’s high and a one-and-a half month peak.The U.K. Office for National Statistics said that manufacturing production decreased by 0.9% in July, worse than expectations for a decline of 0.4% and following a drop of 0.2% a month earlier that was revised from an initial 0.3% decline.On an annualized basis, manufacturing production rose 0.8% in July, worse than forecasts for a 1.7% increase.However, the report also showed that industrial production inched up by 0.1% in July, better than forecasts for a 0.2% decrease and following the 0.1% gain in the preceding month.

RECOMMENDATION :

• BUY GBP/USD ABOVE 1.3445 TGT 1.3465 1.3495 SL 1.3415.

• SELL GBP/USD BELOW 1.3355 TGT 1.3335 1.3305 SL 1.3385.

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KLSE Stocks Recommendations : Epic Research Malaysia

Malaysia Stock Market:

• The FBM KLCI index lost 0.35 points or 0.02% on Wednesday. The Finance Index increased 0.26% to 14550.55 points, the Properties Index up 0.65% to 1206.69 points and the Plantation Index down 0.84% to 7845.25 points. The market traded within a range of 11.52 points between an intra-day high of 1691.61 and a low of 1680.09 during the session.

• Actively traded stocks include SANICHI, SANICHI-WD, M3TECH-WA, IRIS, CENTURY, FGV-C16, NWP, KRONO, VIVOCOM and FGV. Trading volume decreased to 1565.07 mil shares worth RM1578.42 mil as compared to Tuesday’s 1733.30 mil shares worth RM1570.06 mil.

• Leading Movers were GENM (+8 sen to RM4.58), CIMB (+7 sen to RM4.90), SKPETRO (+1 sen to RM1.57), DIGI (+3 sen to RM5.08) and HLBANK (+6 sen to RM13.20). Lagging Movers were IOICORP (-6 sen to RM4.45), WPRTS (-5 sen to RM4.45), AMMB (-4 sen to RM4.36), TENAGA (-12 sen to RM14.56) and HLFG (-12 sen to RM15.88). Market breadth was positive with 411 gainers as compared to 354 losers.

• The KLCI inched down and closed lower at 1689.57 points despite overnight gains in US market.The performance of our local bourse was limited as profit taking kicked in.

STOCK RECOMMENDATION :

• BUY KRONO ABOVE 0.275 TGT 0.290 0.300 SL 0.260.

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Asian Market Update : Epic Research Malaysia

Asian shares hovered near one-year peaks on Thursday as investors awaited Chinese trade data and a policy meeting by the European Central Bank, where it may announce an extension of its asset buying campaign.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.2 per cent, but that followed four days of gains which took it to the highest since late July 2015.

South Korea's market added 0.4 per cent, having also touched a one-year top this week.

Japan's Nikkei lost 0.1 per cent, easing away from a three-month top in the face of a strengthening yen.



China's trade report should offer some guidance on the state of global demand. So far, Asia's trade recession shows no sign of abating and economists polled by Reuters expect China's exports fell 4 per cent in August, a similar rate to July.

Imports may have fallen 4.9 per cent, which would be a significant improvement from July's 12.5 per cent fall, likely due to higher commodity prices.

Beijing would welcome any sign of improvement on the trade front as the economy has become increasingly unbalanced, with growth ever more reliant on government spending as private investment fizzles.

There was little in the way of a lead from Wall Street. The Dow ended Wednesday down 0.06 per cent, while the S&P 500 lost 0.02 per cent and the Nasdaq added 0.15 per cent to eke out a record high finish.

Apple shares rose 0.6 per cent, after the biggest company by market value unveiled its new iPhone.

The main event later on Thursday will be the ECB's regular policy meeting.

Nearly all analysts polled by Reuters expect rates to remain unchanged on Thursday, though there was more uncertainty on whether the ECB would announce an extension of its 80 billion euro (S$121 billion) of monthly asset buys.

If it were to make that call, it would likely reinforce speculation of more easing before year end and could pressure the euro.

The single currency was parked at US$1.1243 on Thursday, just off the week's top of US$1.1269.

It jumped earlier in the week when a disappointing reading on the US services sector seemed to diminish the chance of a rate hike from the Federal Reserve and slugged the US dollar across the board.

Neither was there much urgency to tighten in the Fed's latest Beige Book report on the economy, which was littered with the words "modest" and "moderate".

In particular, there was little sign of the wage pressures that the Fed is counting on to push inflation higher.

Futures markets imply only around a 15 per cent chance of a rate rise in September, rising to 42 per cent for December.

The US dollar was also steady against a basket of currencies at 94.930, having touched a one-week low at 94.690.

The yen remained firm at 101.81 per US dollar due in part to talk the Bank of Japan's board was struggling to agree on a common front for more easing at its policy review later this month.

In commodity markets, US crude extended an overnight bounce after US inventory data showed what might be the largest weekly stock draw in over three decades.

US crude was 82 US cents higher at US$46.32 a barrel, while Brent futures rose 72 US cents to US$48.70.




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Opening Market Update : Epic Research Malaysia

MALAYSIA share prices opened higher on Thursday with the FTSE Bursa Malaysia Kuala Lumpur Composite Index up 1.860 points to 1,691.530.

Volume was 17.496 million lots worth RM7.794 million.

Gainers outnumbered losers 68 to 44.



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TNB inks deal with SIPP Energy, a private vehicle owned by the Johor Sultan

After two years of uncertainty and negotiations, SIPP Energy Sdn Bhd has finally received the go-ahead from the Government to build a 1,440MW power plant in Pasir Gudang, Johor.

Towards this end, it inked a 21-year power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB) yesterday.

The national utility company told the stock exchange that SIPP’s unit, Southern Power Generation Sdn Bhd, will construct, own, operate and maintain the gas-fired combined cycle electricity generating plant.

SIPP, which is a private vehicle owned by the Johor Sultan, was first awarded the project in June 2014 as part of a consortium with TNB and YTL Power International Bhd to build a 1,000MW-1,400MW power plant.






However, YTL Power and TNB subsequently left the consortium, leaving SIPP to negotiate the deal on its own.

SIPP continued its negotiations, but was reportedly faced with roadblocks in getting the final go-ahead, mainly due to tariff rates.

The company is believed to have sought a tariff rate of about 39 sen per kWh. However, the rate of new concessions has to be benchmarked against the last completed gas-fired power plant.

In this case, Malaysia’s last completed gas-fired power plant was built by TNB in Prai, Penang, and was paid a tariff of 34.7 sen per kWh.

According to an industry source, the tariff rate for the Pasir Gudang power plant is likely to be slightly above the 34.7 sen per kWh benchmark.

This, he said, was in relation to the stronger US dollar, which translates to higher costs for the contractor.

“The Energy Commission makes the final decision on tariff rates and will inform the related parties.

“In this case, the rate is likely to be slightly higher than that of the power plant in Prai, because of the currency exchange rate,” he told StarBiz.

Previous reports, quoting industry sources, stated that SIPP had put in a revised submission of 36.7 sen per kWh after its initial submission of 39.19 sen per kWh was rejected by the Energy Commission (EC).

TNB, in its brief announcement yesterday, said the new plant would comprise of two generating blocks, with each block having a capacity of 720MW and an expected commercial operation date of Jan 1, 2020.

“The PPA governs the obligations of the parties to sell and purchase the generating capacity and, to the extent despatched, the electrical energy generated by the facility.

“The PPA will be for a period of 21 years from the commercial operation date of the first generating block,” said the power giant.

It said the signing of the PPA would not have any effect on the issued and paid-up share capital and the shareholdings of its substantial shareholders.

It added that the PPA would have a neutral impact on its earnings over the term of the PPA.

Back in 2014, the project, dubbed Project 4A, had been awarded directly to the consortium, without going through a competitive bid.

The move raised eyebrows as it went against the general principle in the reform of the energy sector, whereby all power plants are to be awarded based on a competitive tender.

In response, the Energy, Green Technology and Water Ministry (KeTTHA) had stated that the project was directly awarded as it needed to be fast-tracked and brought forward to 2018 from an earlier planned commissioning period in 2020.

It added that there had been an emergency situation on May 7, 2014, during which six states were affected by power outages and TNB had to exercise load-shedding in order to stabilise the system.

YTL Power subsequently pulled out of the consortium due to the misconceptions, leaving SIPP to work with TNB.

However, TNB later confirmed that it had also exited the consortium after their proposal, submitted in May 2015, was not accepted by the EC.

Following TNB’s exit from the project, SIPP was reportedly given a three-month extension to put in its proposal.

In November last year, StarBiz reported that SIPP submitted its proposal for the 4A project with at least two different options for the Government to consider.

The submissions reportedly included revised tariff rates.

They also included a possible increase in the capacity of the power plant.




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Japan's Daikin to build US$29.3m air conditioning equipment plant in M'sia

Daikin Industries of Japan will build a commercial air conditioning equipment plant in Malaysia.

The plant will be constructed on the outskirts of Kuala Lumpur, with initial investment projected to top 3 bln yen (US$29.3 mln), Reuters reported quoting Japan's Nikkei.

Daikin Industries' new factory is to produce large air conditioning units beginning in 2018 for installation in airports and other commercial facilities, the report said.


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Why many firms are at risk of sliding and failing

Many companies, even well-established ones, are at risk of sliding into irrelevance and failure because they do not reinvent themselves continuously.

This was the key message of former Harvard Business Review editor Kate Sweetman, who said companies today were vulnerable to “six blindfolds” and risk losing out to competition.

Sweetman said many established companies became too arrogant and end up either being replaced or overtaken by their competition, adding that many firms refused to believe that any problems existed.

“This means being either completely blind to organisational or individual problems or dismissing them to protect oneself and or the company,” Sweetman said at Menara Star during a learning session organised by leadership development firm Leaderonomics.



“Many also dismiss their competitors’ successes by refusing to accept a competitor’s success as valid and downplaying a competitor’s strategy and product innovations.”

This, she said, was usually because of companies’ own past successes.

Another blindfold, Sweetman said, was that companies refused to acknowledge negative feedback.

“This refers to the inability to hear anything negative about a project, the company, or yourself and to confront the brutal facts as they will get in the way of agendas, deadlines and commitments,” she said.

She also said plenty of companies had the inability to transfer learning, knowledge, ideas and information across boundaries in ways that resulted in the ability to take action.

The sixth blindfold, said Sweetman, was that companies often thought they knew what’s best for their customers.

“This refers to an inability to have empathy for customer frustration and needs and a lack of inquisitiveness to find out ways to perfectly align to customers’ current and future needs.”

To avoid the blindfolds or rather, pitfalls, Sweetman emphasised that a mindset shift was imperative.

The learning session, themed “Reinvention: Accelerating Results In The Age of Disruption,” also featured a panel discussion that comprised Sweetman, Connecting the Dots Consultancy chief executive officer Bharat Avalani, Selfdrvn founder and chief executive officer Lam Mun Choong, Valiram Group global chief operating officer Ashwin Rajgopal and Uber Malaysia general manager Leon Foong.

The panel discussion was moderated by Leaderonomics chief executive officer Roshan Thiran.



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VW to explore new China venture with JAC Motor

Volkswagen AG is exploring a potential joint venture with Chinese automaker Anhui Jianghuai Automobile (JAC Motor), Chinese media reported on Wednesday.

JAC said in a statement on the Shanghai stock exchange late Tuesday that it was halting trading in its shares because it planned to sign a cooperative memorandum of understanding but gave no further details.

State-owned newspaper China Daily reported, citing sources, that VW and JAC likely aim to build a new joint venture together. Independent financial news outlet Caixin also reported that VW was the unnamed potential partner mentioned in JAC's filing.

According to Caixin, the joint venture would be aimed at making electric cars, with sales in the so-called "new energy vehicle" segment having more than quadrupled in China last year thanks to a raft of government incentives and targets.

An official in JAC's media office declined to comment in advance of a public announcement.

A VW spokesman said the company would release a statement later on Wednesday when contacted about the matter. He did not elaborate.

VW is locked in a dead heat with US automaker General Motors for the title of largest automaker in China, the world's biggest auto market, with GM's primary joint ventures slightly edging out VW's to sell the most cars in the market last year, according to automaker association data.

Global auto brands are only allowed to manufacture cars domestically in China through joint ventures with local partners, with automakers typically limited to two JV partners.

VW already has joint ventures with SAIC Motor and China FAW Group.

JAC Motor is the ninth largest automaker in China by group sales, according to the China Association of Automobile Manufacturers.


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India to focus reforms on tax, banks, infrastructure

India will press ahead with tax reforms, repairing the banking system and getting stalled infrastructure projects moving to drive growth, Finance Minister Arun Jaitley said on Wednesday, but it is not yet ready to sell off its state banks.

Asked what his top economic policy priorities were, Jaitley told a conference he was determined to stick to a "very stiff" schedule that foresees passing critical enabling legislation for a new goods and services tax (GST) this autumn.

Jaitley said the new GST, once implemented, would have a "transformational" impact by creating a common market in India for the first time, while also acting as a transfer mechanism that would aid poorer federal states.

The goal of the federal and state governments would be for the tax to be revenue-neutral and, as the tax becomes established, for its rate to come down over time, Jaitley said.

A revenue-neutral tax changes a country's tax structure but is not intended to increase the overall amount of tax levied.

Jaitley did not say what rate he preferred but the government's economic adviser has pegged a revenue-neutral rate at about 18%.

Jaitley said it was vital to revive the banking sector, but ruled out selling controlling stakes in public-sector banks that control 70% of assets in the financial system and hold the lion's share of India's US$120 billion in bad loans.

"I don't think that public or political opinion has converged to the point where we can think of privatisation in the banking sector," Jaitley told The Economist India Summit in New Delhi.

The government is consolidating some of the public sector banks to strengthen them, but does not plan to reduce the state's share below a threshold of 52%, Jaitley said.

India currently owns stakes of between 60% and 86% in nearly two dozen state-run banks.

Getting stalled infrastructure projects moving would help drive growth and provide development benefits for the 1.3 billion people living in India, the economy of which continues to perform below potential, he said.

The latest gross domestic figures showed that growth in Asia's third-largest economy slowed to 7.1% in the three months to June, from 7.9% previously.

"We are still far below our best," Jaitley said in a podium interview, adding that as India looks to key state elections next year and a general election in 2019, economic reforms should bring growth benefits to voters, but the government must also "blend" them with social programmes.


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