FBM KLCI 1825.11 2.82 KLCI FUTURES 1830.00 3.50 STI 3292.15 8.85 RM/USD 3.3455 CPO RM2262.00 27.00 OIL US$81.85 0.49 GOLD US$1150.90 8.90 PP 9974/08/2013 (032820) PENINSULAR MALAYSIA RM1.50 WEDNESDAY NOVEMBER 12, 2014 ISSUE 1837/2014 FINANCIAL DAILY MAKE BETTER DECISIONS BWF suspends Chong Wei over doping violation 31 S P O RT S www.theedgemarkets.com 2 China wins Apec support 4 HOME BUSINESS No luxury properties in Air Itam, Guan Eng tells 1MDB 6 HOME BUSINESS MRCB to submit final bid for RM800m incinerator job 7 HOME BUSINESS Inari Amertron on track to meet RM1b revenue target t t by b FY16 27 W O R L D B d of murdered Bodies Indonesians arrive home by u o y o t t h g u o r b s i y p o c l a t This digi Puncak Niaga signs sale agreement with PASSB 4 HOME BUSINESS FBM KLCI 1825.11 2.82 KLCI FUTURES 1830.00 3.50 STI 3292.15 8.85 RM/USD 3.3455 CPO RM2262.00 27.00 OIL US$81.85 0.49 GOLD US$1150.90 8.90 PP 9974/08/2013 (032820) PENINSULAR MALAYSIA RM1.50 WEDNESDAY NOVEMBER 12, 2014 ISSUE 1837/2014 FINANCIAL DAILY MAKE BETTER DECISIONS BWF suspends Chong Wei over doping violation 31 S P O RT S www.theedgemarkets.com 2 China wins Apec support 4 HOME BUSINESS No luxury properties in Air Itam, Guan Eng tells 1MDB 6 HOME BUSINESS MRCB to submit final bid for RM800m incinerator job 7 HOME BUSINESS Inari Amertron on track to meet RM1b revenue target by FY16 27 W O R L D Bodies of murdered Indonesians arrive home Puncak Niaga signs sale agreement with PASSB 4 HOME BUSINESS 2 WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY For breaking news updates go to www.theedgemarkets.com ON EDGE T V www.theedgemarkets.com Up to 40,000 illegal real estate agents operating in the country, says MIEA Malaysia the first country to introduce Sharp’s cloud-based security system The Edge Communications Sdn Bhd (266980-X) Level 3, Menara KLK, No 1 Jalan PJU 7/6, Mutiara Damansara, 47810 Petaling Jaya, Selangor, Malaysia Publisher and Group CEO Ho Kay Tat Editorial For News Tips/Press Releases Tel: 03-7721 8219 Fax: 03-7721 8038 Email: eeditor@bizedge.com Senior Managing Editor Azam Aris Executive Editors Kathy Fong, Jenny Ng, Siow Chen Ming, Surinder Jessy, Ooi Inn Leong Associate Editors R B Bhattacharjee, Joyce Goh, Jose Barrock, Vasantha Ganesan Editor, Features Llew-Ann Phang Deputy Editors Cindy Yeap, Kang Siew Li Assistant Editors Adeline Paul Raj, Tan Choe Choe Chief Copy Editor Halim Yaacob Senior Copy Editors Marica Van Wynen, Lam Seng Fatt, Melanie Proctor Copy Editors Evelyn Chan, Veronica Poopathy Art Director Sharon Khoh Design Team Cheryl Loh, Valerie Chin, Aaron Boudville, Aminullah Abdul Karim, Yong Yik Sheng Asst Manager-Editorial Services Madeline Tan Corporate Managing Director Au Foong Yee Deputy Managing Director Lim Shiew Yuin Advertising & Marketing To advertise contact GL: (03) 7721 8000 Fax: (03) 7721 8288 Chief Marketing Officer Sharon Teh (012) 313 9056 Senior Sales Managers Geetha Perumal (016) 250 8640 Fong Lai Kuan (012) 386 2831 Shereen Wong (016) 233 7388 Acting Senior Sales Manager Gregory Thu (012) 376 0614 Ad-Traffic Manager Vigneswary Krishnan (03) 7721 8005 Ad Traffic Asst Manager Roger Lee (03) 7721 8004 Executive Ad-Traffic Norma Jasma (03) 7721 8006 Email: mkt.ad@bizedge.com Operations To order copy Tel: 03-7721 8034 / 8033 Fax: 03-7721 8282 Email: hotline@bizedge.com China wins Apec support Free trade ‘roadmap’ endorsed BEIJING: An Asia-Pacific summit yesterday endorsed a Beijing-backed route towards a vast free trade area in the region, host China President Xi Jinping said, calling it a “historic” step. At the same time, the Asia-Pacific Economic Cooperation (Apec) meeting saw a flurry of diplomatic activity, with Russia’s President Vladimir Putin, often criticised by the West, meeting his US counterpart Barack Obama and, separately, Australian Prime Minister Tony Abbott. A day earlier Xi met with Japan’s Prime Minister Shinzo Abe in the first formal leaders’ meeting for nearly three years between the Asian neighbours who have an often difficult relationship. China has been keen to underscore its rising trade and diplomatic clout at the summit north of the Chinese capital. Xi said the bloc had “approved the roadmap for Apec to promote and realise the Free Trade Area of the Asia-Pacific (FTAAP)”. He called it a “historic” step reflecting the “confidence and commitment of Apec members to promote the integration of the regional economy”, and symbolising “the official launch of the process towards the FTAAP”. US National Security Advisor Susan Rice (left) shaking hands with Xi (front, second from right) as US Secretary of State John Kerry (second from left) and Obama (right) look on after participating in the Apec summit at the Zhongnanhai leadership compound in Beijing yesterday. Photo by Reuters The FTAAP would build on other and 40% of the world’s population. initiatives including the smaller USObama, Xi and Abe respectively backed Trans-Pacific Partnership. lead the world’s three biggest economies, while Russia is a powerful See related story on Page 23 player in energy exports. Russia’s annexation of Crimea and support Besides accounting for more for Ukrainian rebels have sent rethan 50% of global gross domes- lations with the United States into tic product, 21-member Apec also a tailspin, with the West imposing makes up nearly half of world trade sanctions on Moscow. — AFP his presentation to investors. Ten years of record earnings for Standard Chartered came to an abrupt halt in the summer of 2012 when it had to pay US$667 million for violating US sanctions on Iran. It has since been hit by surging bad debts in key markets such as China and India. Standard Chartered said in its slides that returns at its retail bank were being held back by high costs and that it aimed to cut 80-100 branches, out of the 1,248 it had at the end of June. Halford said the bank was aware of investor concerns, including whether its cost-cutting plans went far enough and whether its capital was high enough. He also acknowledged their concerns over a rise in bad debts and non-performing loans and whether management was doing enough to tackle these problems. “We understand and are responding to the challenges we are facing. You will see further progress in 2015,” he said. The slides said the bank aimed to increase assets under management in its wealth management and private banking businesses by 10% or more next year, from US$66 billion and US$56 billion, respectively, at the end of June. At 1030 GMT, Standard Chartered shares were little changed. — Reuters Daimler to revive Maybach FRANKFURT: Daimler yesterday said it will launch new top-end versions of its Mercedes-Benz S-Class, including a sports utility vehicle and a high-end luxury limousine adorned with the Maybach brand. Daimler, which owns the Mercedes-Benz brand, said it would unveil the new Mercedes-Maybach S 600 limousine at the Guangzhou Motor Show and Los Angeles Auto Show this month, confirming a Reuters re- AG’s Report: EPF’s fraud-checking is thorough K UA L A L U M P U R : T h e fraud-checking system developed by the Employees Provident Fund (EPF) has helped detect the reasonableness of contributions credited to members account. No fraud was found upon reviewing 313,982 cases from 2011 to 2013, according to the Auditor-General’s Report 2013 Series 3 released on Monday. According to the report, the EPF had created a fraud module to ensure that contributions were credited to the members’ account without any element of fraud, where it had been implemented in phases from 2009 to 2013 at the vendors’ level. — Bernama Indonesia’s 2015 palm output growth to slow StanChart to axe 80 to 100 branches LONDON: Asia-focused bank Standard Chartered plans to cut up to 100 retail branches in 2015, or 8% of its network, to help save US$400 million (RM1.33 billion) a year to improve profitability. The bank is under pressure to improve performance after three profit warnings this year and a 30% plunge in its shares, and is holding three days of meetings with investors in Hong Kong to spell out its plans. “We recognise our recent performance has been disappointing and are determined to get back on to a trajectory of sustainable, profitable growth, delivering returns above our cost of capital,” finance director Andy Halford said in slides accompanying IN BRIEF port from April. In 2012, MercedesBenz stopped making Maybach limousines after the vehicles, which were based on a unique design and cost around US$380,000 (RM1.27 million), failed to sell heavily enough. At the time, Maybach vehicles were marketed as a separate brand from Mercedes-Benz. Among the owners were rap stars, oligarchs and royals, including Russia’s Roman Abramovich, musician Jay-Z and King Juan Carlos of Spain. The new jointly branded Maybach-Mercedes is expected to sell well in China, the United States, Russia and Japan, said Ola Kaellenius, the Mercedes-Benz executive responsible for marketing and sales. In a further step, Mercedes-Benz said it would also launch a new system to label its various model series to help customers understand its range of vehicles. — Reuters JAKARTA: Indonesia’s output of palm oil will grow by just over 3% in 2015, less than half the 7% growth rate this year, a leading industry association said yesterday, after prolonged drought in the main growing region of Sumatra. Output in the world’s top producer of the tropical oil will be 31.5 million tonnes next year, up from 30.5 million tonnes in 2014 and 28.5 million tonnes in 2013, said Fadhil Hasan, executive director at the Indonesian Palm Oil Association. Despite reports of a continuing dry spell in the Kalimantan region, Fadhil said he had returned from there last month and that it had already begun raining then. — Reuters Budget deficit for next two years, says Thailand BANGKOK: Thailand is likely to face budget deficits in next two fiscal years as the government spends in areas such as public health and education, Finance Minister Sommai Phasee said yesterday. The budget deficit for 2015 to 2016 and 2016 to 2017 is estimated at about 350 billion baht (RM35.66 billion), equivalent to 15% of the government’s revenue collection, Sommai told reporters. The deficit estimate is larger than the 2014 to 2015 budget deficit of 250 billion baht which is equivalent to about 2% of gross domestic product. — Reuters Abe may announce snap election TOKYO: Japanese lawmakers have begun preparations for a potential snap election, the clearest signal yet that Prime Minister Shinzo Abe is considering dissolving parliament to shore up support. Hiroyoshi Sasagawa, a ruling Liberal Democratic Party (LDP) lawmaker, said in an interview yesterday that preparations have begun, though only Abe can call a general election. Local LDP constituency offices are getting ready for a poll, according to three other people with knowledge of the matter. — Bloomberg 4 HOME BUSINESS WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY Now, Ahmad Maslan says govt will step in if 1MDB defaults Obligations through a letter of support are not listed as a contingent liability of Putrajaya SUHAIMI YUSUF BY C Y NTHI A B L E M IN KUALA LUMPUR: In another aboutturn, Deputy Finance Minister Datuk Ahmad Maslan (pic) has conceded that the federal government will step in to meet the US$3 billion (RM10.02 billion) obligations of 1Malaysia Development Bhd (1MDB) under the letter of support it gave. He said this in a text message reply to a question posed by The Edge Financial Daily yesterday on what Section 3 of the letter of support meant. Ahmad, however, said this will happen only if 1MDB itself has made all efforts, including restructuring, to raise money to pay its debt but is still unable to do so. He also explained that unlike a normal guarantee, obligations of the government via a letter of support are not listed as a contingent liability of Putrajaya. “The key difference between a guarantee and a LOS (letter of support) is that firstly, government explicit guarantee will mean it is contingent on the government’s balance sheet whereas a LOS is not contingent as it is implicit. “Secondly, an explicit guarantee will mean that borrowers have a direct claim to the government in the event that 1MDB defaults,” Ahmad wrote. “In LOS scenario, borrowers will have to wait for 1MDB to restructure its assets to remedy the default and only when the assets (RM51.41 billion) are not sufficient to cover, only then the government will step in,” he added. Ahmad came under fire in the Parliament last week when he said the government did not provide the LOS for the US$3 billion loans that 1MDB Global Investments Ltd, a wholly-owned subsidary of 1MDB, has borrowed. The deputy minister, however, on Monday admitted that the government had issued the LOS to 1MDB for its loans. However, he insisted that it was not tantamount to a guarantee. In a legal opinion by Tommy Thomas, a prominent lawyer specialising in corporate litigation and insolvency, and commercial and public law, the key issue in its interpretation is whether the parties intended the LOS to have legal effect. In answering this issue, one has to inquire whether the government is undertaking legal obligations and, conversely, whether the beneficiaries of the LOS viz, the other three parties and all the creditors, possess legal rights. In other words, can these beneficiaries sue the government if the latter breaches the LOS? According to Thomas, the following statements in the LOS “plainly and obviously establish that the government is undertaking legal obligations”: (i) The letter “is given to provide necessary financial assistance to the issuer to provide capital to the JV Co.” — Recital. (ii) The government “undertakes to provide necessary financial assistance to the Issuer in respect of the Debt as follows: Teo Seng’s 3Q net profit jumps 56% KUALA LUMPUR: Teo Seng Capital Bhd, whose net profit jumped 56% on year to RM10.76 million from RM6.89 in its third quarter of financial year 2014 ended Sept 30 (3QFY14), has proposed a special dividend of 5 sen per share and a bonus issue of shares and warrants, to reward shareholders. The poultry farming company told Bursa Malaysia yesterday that the better earnings was due to higher selling prices and lower feed costs. Revenue for the quarter has also risen 19.1% on year to RM95.66 million. For the cumulative nine-month period of FY14 (9MFY14), net profit almost doubled to RM30.65 million from RM17.69 million in 9MFY13, while revenue was up 12.8% to RM272.48 million. The 5 sen dividend proposed for the quarter, if approved, makes its total year-todate dividend at 10 sen, significantly higher than the 1 sen declared for the (a) ………….. (b) … Malaysia shall then stepin to inject the necessary capital into the Issuer or make payments to ensure the Issuer’s obligations in respect of the Debt are fully met.” — Paragraph 3. (iii) “Malaysia hereby agrees, as independent obligations, (a) subject to Paragraph 3, to subscribe for further debt or equity in the Issuer or to lend to the issuer such amount(s) so that, at any time when the Issuer has a shortfall of internal funding, the Issuer has immediately available funds sufficient to pay … (b) “… if the Issuer fails to pay any sum owed under the Debt on the date specified for such payment to pay such sum to the Trustee.” — Paragraph 4. (iv) “The aggregate amount payable by Malaysia in total … shall not exceed the Principal Funds and the sum of the Interest Funds”. — Paragraph 5. (v) “Malaysia hereby agrees that this Letter of Support is irrevocable” — Paragraph 6. These words are clear and without any ambiguity, according to Thomas, Malaysia has undertaken legal obligations to ensure that the debt is repaid, and, if it is not, Malaysia will pay the shortfall. Thomas also pointed out that what is most worrying is the irrevocable and unconditional consent by Malaysia “to the enforcement of any order or judgment made or in connection with any proceedings and the giving of any relief in the English Court and the Courts of any other jurisdiction” under Paragraph 9 (iii). He commented that by this concession, Malaysia has given up its rights, recognised in public international law for over a century, as an independent, sovereign country of not having its assets seized by a Court to satisfy a judgment of that Court. AS HIGHLIGHTED BY Stocks With Momentum same period last year. In a separate filing, the group also proposed to issue up to 100 million bonus shares on the basis of one bonus share for every two existing shares held by its shareholders on an entitlement date to be determined later. — by Levina Lim & Foo Yen Ne No luxury properties in Air Itam — CM BY H IMA N S H U B H AT T GEORGE TOWN: If debt-saddled 1Malaysia Development Bhd (1MDB) is looking to turn its fate around by building luxury properties on its vast 234-acre (98ha) “prime site” land bank in Air Itam here, then it better start looking elsewhere. The Penang state government has made its unequivocal stand yesterday that it would not allow the sovereign wealth fund to do so as the tract of land there has been originally earmarked for affordable and public housing. “We know that 1MDB is trying to turn its losses into profits by doing other projects [there], other than the affordable housing that has been announced. Don’t dream. That we will not allow,” Penang Chief Minister Lim Guan Eng told reporters at the state assembly yesterday. Guan Eng, who is also the DAP assemblyman for Air Putih, said the state’s firm stand was in line with its commitment to not allow federal agencies Penang Regional Development Authority (Perda) and JKP Sdn Bhd to include luxury-priced units on lands that have been acquired for affordable and public housing. “We have to be consistent. You are set up to do affordable housing. Do affordable housing,” he said of Perda, which had plans for luxury residential units valued at RM1.85 million each in Teluk Kumbar. Guan Eng was commenting on reports by The Edge weekly on 1MDB’s debt, which stood at RM41.9 billion as at end-March. The weekly, in its latest edition (Nov 10-Nov 16), said 1MDB has largely funded its growth with debt rather than fiscal surpluses, operational cash flow or cash reserves. Hence, its liabilities have ballooned to RM48.97 billion in over half a decade. On Sept 21, Guan Eng had asked the federal government if it was going ahead with its highly-publicised affordable housing project following 1MDB’s purchase of more than 234 acres of land at a reported cost of RM1.38 billion around the Air Itam area. The purchase was made just before the 13th general election last year and was for the stated purpose of building 9,999 affordable units, which Prime Minister Datuk Seri Najib Razak himself had announced with much fanfare when campaigning for Barisan Nasional near the Rifle Range flats on April 30 last year. Guan Eng described the land in Air Itam as a “prime site” and noted that there are tens of thousands of people currently occupying the land. “That area is very dense and concentrated. It is not an easy issue. You must get the consent of the residents [to move out before development starts]. But do not dream that you will get the approval to try to make some money back, because we will defend the rights of the residents,” he added. Puncak Niaga signs sale agreement with PASSB KUALA LUMPUR: Puncak Niaga Holdings Bhd yesterday announced that it had signed a conditional sale and purchase agreement (SPA) with Pengurusan Air Selangor Sdn Bhd (PASSB), a wholly-owned subsidiary of state investment arm Kumpulan Darul Ehsan Bhd (KDEB). According to the announcement to Bursa Malaysia, for RM1.55 billion in cash, Puncak Niaga agreed to part with its wholly-owned subsidiary Puncak Niaga (M) Sdn Bhd (PNSB) and the water treatment operator’s cumulative convertible redeemable preference shares, and the 70% stake in loss-making water distributor Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), and its RM212 million nominal value of redeemable convertible unsecured loan stocks. Puncak Niaga noted that the SPA required the approval of at least 75% of Puncak Niaga’s present shareholders at an extraordinary general meeting to be convened. Puncak Niaga will set aside RM534.3 million to be distributed to its shareholders. The company, which is controlled by Umno-linked tycoon Tan Sri Rozali Ismail, said the actual amount to be distributed will be announced at a later stage. Bernama reported that Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said the acquisition would pave the way for the next steps to finalise the restructuring of the water supply industry in the Klang Valley. This was one of the steps in executing the master agreement on the water restructuring signed between the federal government and its Selangor counterpart, along with their relevant agencies, two months ago. Nonetheless, the master agreement still lacks a major piece of the puzzle, namely Selangor’s largest water treatment operator Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash), as two of its three shareholders rejected the state’s offer as the net gain from the sale was only one-tenth of its book value. Splash is co-owned by Gamuda Bhd (with a 40% stake) and tycoon Tan Sri Wan Azmi Wan Hamzah’s The Sweet Water Alliance Sdn Bhd (30%). The remainder is held by Kumpulan Perangsang Selangor Bhd (KPS), which accepted the Selangor government’s offer. KPS also was given four months to complete the sale of its 90.83%-owned water treatment operator Konsortium Abass Sdn Bhd, said Ongkili. “On the other hand, the equity transaction of Splash is expected to be completed within 10 months,” he said, as quoted by Bernama. — by Kamarul Anwar 6 HOME BUSINESS WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY SHAHRIN YAHYA MRCB to submit final bid for Kepong incinerator job Besides RM800m project, ‘bidding for construction jobs worth some RM100m each’ BY JEFFREY TA N KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) will put in the final submission for its bid for the RM800 million waste-to-energy incinerator project in Taman Beringin, Kepong, after passing the pre-qualifying stage, said group chief operating officer Mohd Imran Mohamad Salim (pic). “We have pre-qualified and now we are going for the full tender,” Mohd Imran told reporters yesterday after a ground-breaking ceremony for an RM115 million overhead bridge that will connect Old Klang Road to the New Pan- tai Expressway. The project will ease traffic flow in the vicinity of MRCB’s 9 Seputeh mixed development project. But he refused to confirm a report by The Edge Financial Daily on Sept 22 on whether the group, together with three other firms — UEM Environment Sdn Bhd, DRBHicom Bhd and Puncak Niaga Holdings Bhd — had been shortlisted for the construction of the incinerator, beating 29 other competitors. “I am not going to confirm. If we know, we will announce,” said Mohd Imran. Besides the incinerator, Mohd Imran said MRCB is also active- ly bidding for multiple construction jobs worth more than RM100 million each, and the group works on a minimum of 10 tenders each month. He revealed that MRCB has been shortlisted for some tenders, for projects under both the government and the private sector. “Yes, we are tendering [for] multiple projects,” he said, adding the group had secured an RM197.4 million construction job in Johor last month. He said MRCB’s construction order book now stands at between RM3 billion and RM5 billion, which comprises about 12 to 15 projects currently running. On Project MX-1 in Sungai Buloh, in which it is partnering with the Employees Provident Fundowned Kwasa Land Sdn Bhd to jointly develop a town centre for the proposed Kwasa Damansara township, Mohd Imran said construction works will commence a year from now as the group has many approvals to obtain. “We have already bought the land. So now we are waiting for the first layer of approvals from Kwasa Land [the master developer]. Then, we will submit our development order,” he said. On a separate project, Mohd Imran said construction of the PJ Sentral project is in “full swing”, with four out of five towers completed and 80% of tenant space taken up. Mohd Imran added that MRCB plans to launch Penang Sentral next January, and that piling works have already begun. MRCB closed down 2 sen or 1.3% yesterday at RM1.53, giving it a market capitalisation of RM2.68 billion. Ministry under fire for wrong decision in project awards BY C HE N S HAUA FU I An artist’s impression of the new AirAsia HQ. The moving of the group’s HQ could be a signal that the relationship between AirAsia and MAHB is on the mend. AirAsia to finally move its HQ to klia2 BY Y EN N E FOO KUALA LUMPUR: AirAsia Bhd and its long-haul arm AirAsia X Bhd are finally preparing to move their Malaysian headquarters (HQ) out of the old low-cost carrier terminal (LCCT) to klia2 in Sepang, setting Nov 14 for the groundbreaking of the construction of its new HQ there. The group’s new HQ will be located just next to its budget hotel, Tune Hotel klia 2. Media invites were sent out yesterday for the groundbreaking event. The decision to kick-start the construction of the group’s new HQ will put an end to a monthslong standoff between the budget airline operator and Malaysia Airports Holdings Bhd (MAHB), the operator for klia2. In the past, MAHB and its biggest customer in klia2 have not been able to see eye-to-eye. AirAsia had repeatedly voiced its dissatisfaction over being hurried by MAHB to move to the new terminal. It had also been vocal about its concerns over the state of klia2’s safety and security prior to the opening of the new terminal. It was so adamant in its protests that the budget airline only moved its operations out of LCCT to klia2 on May 9 after much pressure from MAHB and the Ministry of Transport — a whole week after klia2 had opened its doors to travellers. The moving of the group’s HQ could be a signal that the relationship between AirAsia and MAHB is on the mend since MAHB’s new managing director, Datuk Badlisham Ghazali, took charge and started agreeing to many of its requests. This includes his willingness to accommodate Tune Hotel at klia2 and allow AirAsia’s head office to remain at the LCCT until its new one is completed by end-2015. Badlisham’s more agreeable stance is perhaps because, as he told The Edge Financial Daily in an interview published on Nov 10, MAHB is counting on the AirAsia group to help them reach an internal target of 83 million passengers this year. KUALA LUMPUR: The Urban Wellbeing, Housing and Local Government Ministry came under fire yesterday for awarding two incinerator projects worth RM88.74 million to a small, relatively unknown contractor, which had earlier experienced two failed pilot projects. The Public Accounts Committee (PAC) chairman Datuk Nur Jazlan Mohamed (BN-Pulai) questioned the ministry’s award of the two incinerator projects to XCN Technology Sdn Bhd (XCNT) via direct negotiation. He also raised concerns over how the ministry had approved the use of “unproven” incinerator technology by XCNT in the two projects. In 2007, XCNT was awarded two projects to build incinerators in Langkawi (RM68.4 million) and Pangkor (RM20.34 million), in addition to a RM34 million contract to improve a thermal oxidation plant in Labuan. The latter project was later aborted. XCNT was also appointed the technology provider for two incinerator projects undertaken by Sumur Mutiara Sdn Bhd in Pulau Tioman (RM22.8 million) and Cameron Highlands (RM42.2 million). “The technology proposed was lauded as local technology, but its (XCNT) pilot projects had [earlier] failed,” Nur Jazlan told reporters in Parliament after chairing a PAC meeting yesterday. PAC also noted that the ministry had failed in its due diligence to carry out proper inspection at the site of the two failed pilot projects before awarding the contracts to XCNT. “The government should award a project [only] after the first project is successfully completed. However, it had awarded these projects to the company at one go,” said Nur Jazlan. He added that upon investigation by PAC, it is clear that XCNT “is not in good standing, had no background of building incinerators and is not qualified for the projects”. A check with the Companies Commission of Malaysia (SSM) revealed that XCNT is 51% owned by Dawn Holdings Sdn Bhd, a company controlled by former Navy chief Tan Sri Abdul Wahab Nawi and his family. The remaining 49% take in XCNT is held by Clean Earth Technology Sdn Bhd, which is providing the incinerator technology. SSM filings showed that Clean Earth Technology is owned by the Khoo family — Gideon (15%), Caleb (20%) and Priscilla (15%), and major shareholder Teng Sui Kit (50%). When asked if there has been any abuse of power or corruption involved in the awarding process, Nur Jazlan said: “We are not clear, which is why we ask the government to take action.” “It is up to the government to instruct a probe by the Malaysian Anti-Corruption Commission,” he added. The issue was in the limelight again after a second series of the Auditor-General’s Report 2012 highlighted the weaknesses in the award of the contracts. The PAC report also found that XCNT had failed to complete the work on time and that the incinerators did not begin its operation according to schedule. PAC said the government should take action against XCNT, the government agencies and experts involved in the planning and implementation of the projects. Tey and Ooi jointly sell 5.2% stake in Nexgram BY G HO C HE E Y UAN KUALA LUMPUR: Nexgram Holdings Bhd’s chief executive officer and managing director Tey Por Yee and his counterpart Ooi Kock Aun are trimming their stakes in the company. The duo have been in the news recently as they are embroiled in a shareholder tussle in Protasco Bhd. Nexgram’s latest filings with Bursa Malaysia showed that Tey sold 7.3 million shares or a 0.4% stake in the company via two separate transactions on Nov 7 (5 million) and Nov 10 (2.3 million). After the disposal, Tey still controls a 15.71% equity stake or 295.83 million shares in Nexgram. He is also deemed interested in 160.06 million shares or an 8.5% stake in the company through Smart Tower Sdn Bhd, in which he has a 15% direct interest. In a separate filing, Ooi, another Nexgram substantial shareholder, sold some 97.03 million shares or a 5.16% stake via several transactions since the end of last month. HOME BUSINESS 7 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY Inari Amertron on track to hit RM1b revenue target Unrated bonds to erode market share and rating agencies’ market position BY C H A R LOT T E C H O N G Growth due to rising demand for radio frequency and opto-electronic products BY GHO C H EE Y UA N KUALA LUMPUR: Inari Amertron Bhd is on track to achieve its RM1 billion revenue target by financial year ending June 30, 2016 (FY16), said its chief executive officer Lau Kean Cheong. He said the electronic component maker’s revenue growth will be underpinned by rising demand for radio frequency (RF) and opto-electronic products. “The RF products’ growth rate outperforms the semiconductor sector as a whole, driven by rising demand for smartphones and tablets,” Lau told reporters after chairing the group’s extraordinary general meeting yesterday. “As such, we are focusing on producing electronic components to cater to the booming industries.” He noted that its fibre optic division is expected to emerge as a new revenue driver come FY16 or FY17. Lau says the radio frequency products’ growth rate outperforms the semiconductor sector as a whole. Photo by Kenny Yap Inari saw its net profit more than doubled to RM101.27 million in FY14. Revenue for FY14 more than tripled to RM793.66 million. To cater to rising demand for RF and opto-electronic products, Inari has acquired a new factory in Bayan Baru Industrial Park, Penang, which is expected to be partially operational by February next year and fully operational within 18 months. Lau said the group is targeting to increase the revenue contribution of its RF division, the second-largest contributor of the group’s earnings, to 50% from 40% currently. However, he declined to specify the timeframe as to when the group will be able to achieve the goal. Lau said Inari is currently manu- facturing RF chips for Avago Technologies and other multinational corporations. According to him, Avago, the global leader in the RF industry, contributed about 80% to 85% to the group’s RF revenue. On mergers and acquisitions (M&A), Inari’s vice-chairman Tan Seng Chuan said it is unlikely for the group to enter into another M&A within the next year. This was due to the group “still digesting” the merger with opto-electronics manufacturer Amertron Inc (Global) Ltd last year. “Nevertheless, we are open to any M&A if there is a viable company that plans to exit the market,” he added. On funding, he said the group will most likely raise funds from its shareholders by offering a rights issue should there be an M&A. To recap, Inari acquired Amertron for RM102.87 million last year. The acquisition also saw Inari taking over Amertron’s wholly-owned subsidiaries, Amertron Incorporated, which operates two factories in Clark Field and Paranaque, the Philippines, and Amertron Technology (Kunshan) Co Ltd which has a factory in Kunshan, China. Shares of Inari inched up 5 sen to close at RM3.04 yesterday, giving it a market capitalisation of RM1.85 billion. Pelikan enters HoA to list assets in Germany BY Y EN N E FOO KUALA LUMPUR: Pelikan International Corp Bhd has entered into a heads of agreement (HoA) with its Germany-listed subsidiary Herlitz AG (Herlitz) to pave the way for the listing of its key subsidiaries and assets in Germany via an asset injection exercise. In a filing with Bursa Malaysia yesterday, Pelikan said the group, its 96.45%-owned subsidiary Pelikan Holding AG (PHAG) and 98.54%-owned subsidiary MOLKARI Vermietungsgesellschaft mbH & Co Objekt Falkensee KG (Molkari), together with PHAG’s fully owned subsidiary Pelikan Netherlands BV (PNBV), had on Nov 10 entered into the HoA with Herlitz. The agreement stated that Pelikan will inject assets from its world- wide stationery businesses for an injection consideration value of €231.2 million (RM971 million) — into Herlitz by Feb 28 next year, in exchange for 231.2 million new Herlitz shares worth €1 each. The assets to be injected are: 3.24% of Pelikan Argentina, 9.13% of Pelikan Colombia, 100% equities of Pelikan Mexico Pelikan, Middle East, Pelikan Germany, Pelikan Vertrieb-Verwaltungs-GmbH, Pelikan Belgium, Pelikan Schweiz, Pelikan Japan, Pelikan Italia and Molkari’s logistic property. Collectively, they generated a turnover of approximately RM1.02 billion for the financial year ended Dec 31, 2013 (FY13). In addition, the agreement proposed the issuance of up to 32.9 million new Herlitz shares at a cash offer price of €1 per share and an offer for sale by Pelikan of up to 60 million Herlitz shares at a minimum price of €1 per share. Pelikan said independent auditor PricewaterhouseCoopers had valued these assets at €249.2 million (RM1.05 billion), which is €18 million more than the €231.2 million it had set for them. “The discount given will make it attractive for investors to subscribe for the cash issue and offer for sale for further upside in the post-listing valuations,” said Pelikan in a media statement. The successful completion of the corporate exercise will raise €92.9 million for Pelikan. After the offer for sale, Pelikan said it will continue to hold 63% of Herlitz. “The consolidation of the group’s stationery business into Herlitz will set a strong platform for us to grow this core business. We will be able to reap greater synergies and improved efficiencies in this enlarged entity, which we planned to rename as Pelikan AG,” said Pelikan president and chief executive officer Loo Hooi Keat. To further rationalise its business, Pelikan said it will close its toner plant in Switzerland and downsize its plant in Scotland by a third to eliminate losses incurred from the underutilisation of the two loss-making plants. Pelikan has been loss-making since FY2011 when it reported a net loss of RM88.42 million, which narrowed to RM58.04 million in FY2012, then RM13.66 million in FY2013. In the first half of its financial year ending Dec 31, 2014 (1HFY14), it returned to black with a net profit of RM6 million from a net loss of RM400,000 in 1HFY13. Genting Singapore 3Q net profit falls 43% to S$127.1m BY A H MA D NAQ I B I DRIS KUALA LUMPUR: Genting Singapore Plc saw its net profit drop 43% to S$127.1 million (RM328.28 million) for its third financial quarter ended Sept 30, 2014 (3QFY14) from S$222.69 million a year ago, mainly due to lower contribution from Resorts World Sentosa (RWS). Revenue also fell 17% to S$644.77 million from S$776.82 million in 3QFY13. In a filing with Singapore Exchange yesterday, Genting Singa- pore said RWS’ gaming business had underperformed during the quarter as it suffered from low win percentage. However, its attractions business achieved strong growth in 3QFY14, with average daily attractions visitation growing 10% quarter-on-quarter, while its hotel business saw a high occupancy rate. “Our hotel business enjoyed a high 95% occupancy with average daily room rate of S$408,” said Genting Singapore. For the nine months period to Sept 30, net profit fell 4% to S$516.33 million from S$537.70 million a year ago, while revenue rose 3% to S$2.22 billion from S$2.15 billion. The group attributed the improvement in revenue to higher visitation to Universal Studios Singapore. “Despite the 2014 modest growth outlook for Singapore and the continued slowdown in tourism arrivals, RWS continues to generate a steady stream of income for the group,” it said. Going forward, Genting Singa- pore is maintaining a challenging outlook on the Asian gaming and tourism industry due to a slowdown in its major visitor markets and other environmental factors. “We continue to spend in marketing and promotions to improve new and repeat visitation in our traditional markets both in the gaming and non-gaming businesses,” it said. Genting closed 1.5 cents or 1.42% lower at S$1.04 yesterday, bringing a market capitalisation of S$12.8 billion. KUALA LUMPUR: Unrated bonds, or debt instruments that have not been assessed by a credit rating agency, will erode the market share for rated bonds as well as the credit rating agencies’ market position, said RAM Rating Services Bhd chief executive officer Foo Su Yin. “If the [unrated bonds] market becomes too big, we might lose the ability to track the market on whether the credit risk (of issuers) has gone up significantly,” she said at RAM’s annual bond conference titled “Asian Bond Market: Risks & Opportunities” yesterday. Come January 2015, the current unrated papers in the market can be traded to create liquidity in the financial market, Foo told reporters later on the sidelines of the conference. Prime Minister Datuk Seri Najib Razak had in June announced the government’s new policy to remove mandatory requirements for credit ratings from 2017 to broaden its corporate bond market. On a more positive note, Foo opined that the unrated papers come in useful when issuers do not want to publicly disclose the debt instruments. This might also create a wider pool of issuers and thus create more secondary market transactions, she said. “Currently, unrated papers are allowed in the market as long as they are not transferred and traded,” Foo added. Many investors are willing to take up unrated bonds because of better yields, Foo explained, adding that unrated papers account for about 30% of the total bond gross issuance. On the prospect of bond issuance next year, Foo said it will be slightly more than this year’s issuance if not the same. The rating agency had estimated a gross bond issuance of RM90 billion to RM95 billion in Malaysia by the end of this year, driven by the infrastructure, financial services and banking sectors, and the Economic Transformation Programme. As of October this year, the local gross bond issuance stood at RM75.4 billion. “It should be able to touch RM90 billion by the end of this year,” said Foo. Foo also noted that private debt securities (PDS) issuance in the third quarter of this year was 12% higher at RM69.7 billion than last year’s. New issuance of PDS mainly came from sectors such as finance, insurance, real estate and business services, followed by construction, which is mainly in the infrastructure and utility segments, she said. 8 HOME BUSINESS WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY Historic 109-yearold RBS building up for sale It will be up for tender for a month from Monday BY SA NGEETHA AM ARTHALINGAM GEORGE TOWN: The iconic 109-year-old Royal Bank of Scotland (RBS) building within the island’s banking district is going up for sale via tender for a month beginning on Monday. Property consultancy firm CB Richard Ellis (Malaysia), or CBRE Malaysia, believes it will draw bidders from around the world. Chairman Christopher Boyd told newsmen yesterday there is no reserve price for the neoclassical two-storey building at 9 Lebuh Pantai. This is because the building, with a built-up area of 14,000 sq ft, is not being sold because of foreclosure and RBS is not keen on leading tenders. “We believe people would be excited about the sale of this historical building and will be bullish about the price. The value is subjective. However, we would be surprised if the sale does not get an excess of RM15 million,” he said. Sited in the core zone of Unesco World Heritage Site, it was built during the Edwardian era in 1905. Boyd stressed that it is a “rare asset”. The building sprawls over 7,720 sq ft of land, with an attic tower and a basement vault. It used to house the Netherlands Trading Society, which operated as a financial house to promote Dutch trade, investments and shipping interests outside Holland. The Netherlands Trading Society merged with De Twentsche Bank in the Netherlands in 1964 to form Algemene Bank Nederland NV or ABN Bank, which then later merged with the Amsterdamsche Bank and Rotterdamsche Bank to become ABN-Amro. In Malaysia, ABN-Amro was incorporated on Oct 1, 1994, and continued to occupy the building until it was taken over by RBS in 2008. RBS operated its business here till last year, when its headquarters decided to consolidate its wholesale banking operation and serve its customers only from Kuala Lumpur. As to why RBS does not want to keep the building and rent it out, Boyd, whose company is handling the sale for RBS, said the bank is intent on picking its assets “for them to be rationalised”. Boyd said the potential of the building, one of the oldest in Penang, is enormous as it can be turned into a boutique hotel, art gallery, an office, or a private home. Interested bidders can get the full set of tender documents for RM250 from CBRE Malaysia. September IPI up 5.4%, manufacturing sales 4.1% higher BY ME E N A L A K S H A N A KUALA LUMPUR: The industrial production index (IPI) grew 5.4% in September this year from a year earlier, the Statistics Department said. In a statement yesterday, the department said the IPI increase was attributed to growth in all three components of the IPI. Manufacturing output rose 4.7% and mining was up 7.1%, while electricity production increased 6.2%. The increase in manufacturing output was buoyed by the growth in electrical and electronic products besides mineral and metal products. Higher output of food, beverages and tobacco items also contributed to the growth of manufacturing output. Growth in the mining sector is attributed to the increase in crude oil and natural gas production. However, on a month-on-month (m-o-m) basis, the IPI for Septem- ber fell 0.2% due to a decline in manufacturing and electricity output. The mining index, however, registered an increase of 0.2%. Cumulative third-quarter IPI rose 4.1% year-on-year (y-o-y) on growth in all the three components of the index. The Statistics Department, however, did not specify IPI numbers for the nine months to September. The 5.4% y-o-y growth in the September IPI beat a median growth forecast of 5.1% based on a Reuters survey involving 12 economists. In a separate statement, the Statistics Department said the sales value of the local manufacturing sector rose 4.1% to RM55.4 billion in September compared with RM53.2 billion a year earlier. Cumulative nine-month sales value rose 7% to RM490.7 billion from a year earlier. On a m-o-m basis, September sales value fell 0.6% compared with August. Mercedes-Benz eyes new customer segments with all-new GLA-Class BY MEENA L A KSHANA KUALA LUMPUR: Mercedes-Benz Malaysia Sdn Bhd aims to tap into new customer segments by introducing the all-new Mercedes Benz GLA-Class in three variants (GLA 200, GLA 250 and GLA 45 AMG). Mercedes-Benz Malaysia president and chief executive officer Roland Folger said the new compact GLA will add diversity to the Mercedes-Benz portfolio. “The success of the new compact vehicles is an important element of our strategy for the future. With the compact GLA, we add another attractive sport utility vehicle variant to the Mercedes-Benz model portfolio on this constantly growing segment,” he said in a statement. “The GLA impresses mainly with its progressive character and agile handling. I am very confident that with its fascinating design and high everyday practicality, the new GLA will fill many new customers with enthusiasm for our brand,” he said. Folger noted that with a wide-ranging model portfolio, the company will be able to target new customer segments and also enable further purchasing opportunities for Mercedes Benz cars at a competitive level. “There is a healthy demand for our vehicles. Even with the impending goods and services tax, which will not impact our customers directly, we believe that there will be growth in the economy,” he said. Last year’s winners (from left) Unilever Malaysia assistant communications manager Junita Ali, Shell Business Service Centre general manager Mabal Tan, Guinness Anchor Bhd corporate communications manager Tiffany Chew and International Trade and Industry Minister Datuk Seri Mustapa Mohamed. MDBC Sustainability Awards 2014 sees 2 new segments BY ME E N A L A K S H A N A Folger (left) and Mercedes-Benz Malaysia acting head of sales and marketing, passenger cars Alveen Yeo at the launch of the new GLA models last Friday. “Mercedes-Benz Malaysia continues to be a committed investor in the local market and will continue to maintain the value of our vehicles and after sales service for our customers,” he said. With five model series (GLA, GLK, ML, GL and G), MercedesBenz Malaysia offers the widest range by any European premium manufacturer and meets all the individual mobility wishes of its customers. The GLA has a flexible and variable interior, with rear seat backrests that can not only be folded down completely, but is also adjustable for angle if required. Two lines are available in Malaysia, the “Urban” on the GLA 200 and the “AMG Line” with “Night” package on the GLA 250. The GLA 250 will also be available with the new generation of 4MATIC all-wheel drive featuring fully variable torque distribution. KUALA LUMPUR: The Malaysian Dutch Business Council (MDBC) has added two new segments to this year’s MDBC Sustainability Awards (MSA). The awards are open to the Malaysian business community. The new segments are They are the MSA Innovation Pioneer that recognises those who have encouraged innovation in their corporate organisations and the Jaafar Indot Award that honours those with exemplary corporate governance practices. MDBC executive director Marco Winter said in a statement the new Innovation Pioneer segment is a reflection of the continued growth and evolution of the awards. “It is in fact part and parcel of our own journey along the path of sustainability ... Those who do not have the foresight and willingness to invest in the future risk losing relevance in the market place,” he said. The MSA, now in its fourth year, is jointly organised by MDBC and the Netherlands Embassy. The awards aim to foster a deeper understanding of sustainability through the sharing of best practices and recognising sustainability efforts of organisations. The nomination deadline for both the MSA Innovation Award and the Jaafar Indot Award is this Friday. “Shortlisted companies will be decided after an evaluation by independent, expert judges, led by chief judge Harry Molenaar (Netherlands ambassador to Malaysia),” said MDBC. These companies will be announced on Nov 17 and are expected to take part in the MSA day programme scheduled for Dec 3 at the DoubleTree by Hilton here. ST O C KS W I T H M O M E N T U M 9 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY This column is an analysis done by Asia Analytica Sdn Bhd on the fundamentals of stocks with momentum that were picked up using proprietary algorithm by Anticipatory Analytics Sdn Bhd and that first appeared at www.theedgemarkets.com. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned. AWC BHD (ALL FIGURES IN RM MIL) AWC Bhd AWC provides integrated facilities management services including electrical distribution, lighting, and security as well as pneumatic waste conveying systems. The company has three main divisions — Facilities, Environment and Engineering. The Facilities division mainly derives income from a facilities management concession with the Federal Government which provides a stable stream of income. It is also venturing into facilities management for hospitals. The Environment division provides design, installation and commissioning services for projects in Malaysia, Singapore and the Middle East. The Engineering division provides building controls, heating and cooking systems for buildings. AWC’s shares have consolidated at around the 20 – 30 sen level for about three years. The stock appears to attract periodic bouts of buying interest, surging from 26.5 sen to 34.5 sen, or 30.2% in just a month early this year. However, volume fizzled out from a high of 46 million shares to just 1 million shares barely half a month later, and price retraced back to the 27-sen level. The same happened in July, with its share price and volume reaching as high as 37 sen and 18 million shares, respectively. The stock is currently seeing another rally, rising from 28 sen in mid-Oct to 34.5 sen yesterday. AWC’s net profit declined from FY June10 to FY12, followed by a recovery in FY13FY14. In FY14, net profit jumped 57.5% to RM7.2 million although revenue fell by 17.5% to RM119.6 million. Stripping out a gain on disposal of assets of RM1.23 million, net profit for the year was still higher at RM5.9 million. At 34.5 sen, the stock is trading at just about its book value of 35 sen with a trailing 12-month P/E ratio of 10.8 times. Notably, the stock is backed by large net cash of RM 40.5 million, or a significant 52.1% of its market capitalisation of RM77.8 million. Valuation factor * 2.40 Fundamental factor ** 2.50 Trailing 12m P/E (x) 10.84 Trailing 12m PEG (x) 0.16 P/NAV (x) 0.98 Trailing 12M Dividend yield (%) Market capitalisation (RM mil) 77.75 Shares outstanding (ex-treasury) mil 225.35 Beta 1.17 12-month price range 0.26 - 0.37 *Valuation factor — Composite measure of historical return & valuation **Fundamental factor — Composite measure of balance sheet strength & profitability Note: A score of 3.0 is the best to have and 0.0 is the worst to have AWC BHD RATIOS DPS (RM) Net asset per share (RM) ROE (%) ROA (%) Turnover growth (%) Net profit growth (%) Net margin (%) Current ratio (x) Gearing (%) Interest cover (x) BORNEO OIL BHD (ALL FIGURES IN RM MIL) Borneo Oil Bhd BORNEO Oil appears to have attracted much investor interest, following the company’s mid-year announcement of a new venture into alluvial gold mining in Pahang, and a capital reduction and private placement exercise that saw the entry of a new substantial shareholder. Bouts of heavy trading in recent months have pushed its share price to an all-time high of RM0.94 as at Nov 11, 2014. Investor interest heightened further following the announcement last month that Tan Sri Lau Cho Kun of the Hap Seng group had emerged as a new substantial shareholder with a 23% stake. Better known by its “Sugar Bun” franchise which is popular in Sabah and Sarawak, Borneo derives 83% of its revenue from its fastfood chain operations. It also has an oil, gas and energy related division that is mainly involved in EPCIC (engineering, procurement, construction and commission), but this division has been making losses. Income statement Turnover EBITDA Depreciation and amortisation EBIT Associates Interest income Interest expense Extraordinary gain/(loss) Pre-tax profit/(loss) Net profit/(loss) - owners of company Balance sheet Fixed assets - PPE Biological assets Intangibles & goodwill Cash and equivalents Total current assets ST borrowings Total current liabilities Total assets Shareholders’ fund Long term borrowings Borneo has been alternating between profit and losses for the last five years. In FY Jan 2014, it managed to turn profitable with net profit of RM3.07 million, compared with a net loss of RM8.09 million the previous year. However, the better results were due to one-off gains, from an allowance for receivables written back of RM2.5 million and a procurement fee of RM6 million. In 1HFY2015, it posted net profit of RM845,000 on revenue of RM27.4 million. Historically, Borneo has not paid dividends as it was on an expansionary path, with fixed assets having grown almost four times from RM15.5 million in FY2010 to RM56.3 million in FY2014. Gearing was minimal at only 1% in July 2014, before the private placement exercise. Following the private placement and capital reduction, Borneo is estimated to have pro-forma net assets of 88 sen per share, with the stock now trading at 1.07 times book. Valuation factor * 0.30 Fundamental factor ** 1.65 Trailing 12m P/E (x) 74.21 Trailing 12m PEG (x) P/NAV (x) 1.30 Trailing 12M Dividend yield (%) Market capitalisation (RM mil) 285.64 Shares outstanding (ex-treasury) mil 303.87 Beta 1.26 12-month price range 0.46 - 0.94 *Valuation factor — Composite measure of historical return & valuation **Fundamental factor — Composite measure of balance sheet strength & profitability Note: A score of 3.0 is the best to have and 0.0 is the worst to have Income statement Turnover EBITDA Depreciation and amortisation EBIT Associates Interest income Interest expense Extraordinary gain/(loss) Pre-tax profit/(loss) Net profit/(loss) - owners of company Balance sheet Fixed assets - PPE Biological assets Intangibles & goodwill Cash and equivalents Total current assets ST borrowings Total current liabilities Total assets Shareholders’ fund Long term borrowings BORNEO OIL BHD RATIOS DPS (RM) Net asset per share (RM) ROE (%) ROA (%) Turnover growth (%) Net profit growth (%) Net margin (%) Current ratio (x) Gearing (%) Interest cover (x) FY11 30/6/2011 FY12 30/6/2012 FY13 30/6/2013 LATEST 4QFY14 30/6/2014 153.9 21.5 3.7 17.7 0.7 0.3 (1.7) 16.4 8.3 105.4 21.3 3.8 17.5 0.2 (5.8) 11.9 3.2 145.0 13.6 2.1 11.6 0.4 (2.3) 9.7 4.6 43.1 12.0 0.4 11.6 0.3 0.1 1.2 13.0 6.0 10.0 14.8 64.0 139.3 3.2 66.2 101.4 71.5 4.3 11.5 8.2 49.4 125.1 3.3 41.5 105.5 72.0 4.6 8.7 6.1 63.8 135.0 1.6 54.0 101.3 71.1 3.1 6.8 5.9 43.5 129.4 1.4 34.0 110.7 78.8 1.6 FY11 30/6/2011 FY12 30/6/2012 FY13 30/6/2013 ROLLING 12-MTH 0.02 0.31 11.69 8.18 (16.70) (30.06) 5.37 2.11 80.19 0.02 0.31 4.47 3.10 (31.51) (61.21) 3.04 3.01 - 0.03 0.32 6.36 4.40 37.56 42.05 3.14 2.50 - 0.35 9.98 7.13 (17.48) 64.08 6.00 3.81 49.51 FY12 31/1/2012 FY13 31/1/2013 FY14 31/1/2014 LATEST 2QFY15 31/7/2014 25.5 (0.3) 4.2 (4.4) 0.0 0.7 (0.3) (5.4) (5.2) 33.3 (3.2) 4.6 (7.9) 0.1 0.6 0.5 (7.8) (8.1) 41.8 7.1 4.8 2.3 0.1 0.4 1.8 3.7 3.1 19.3 4.8 2.1 2.7 0.2 2.4 2.4 29.0 0.0 5.3 18.6 4.6 14.6 165.5 158.5 7.0 50.2 0.0 8.8 18.5 3.5 13.4 189.1 183.7 5.3 56.3 0.0 6.2 22.7 2.8 13.8 203.0 197.6 5.4 58.9 0.0 6.9 28.8 3.8 14.2 226.3 219.5 6.8 FY12 31/1/2012 FY13 31/1/2013 FY14 31/1/2014 ROLLING 12-MTH 0.96 (3.30) (3.15) 21.32 (20.51) 1.27 3.99 (0.44) 0.92 (4.73) (4.56) 30.67 (24.27) 1.38 0.02 (5.37) 0.95 1.63 1.58 25.46 7.43 1.65 1.04 17.11 0.72 1.97 1.91 16.65 7.50 2.02 1.65 20.79 1 0 I N V E ST I N G I D E A S WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned. S TO C K S W I T H L I K E L I H O O D O F C O R P O R AT E E X E R C I S E Fibon Bhd FIBON is involved in manufacturing chemical and electrical products, as well as financing activities. The company formulates polymer matrix fibre composites, manufactures and sell electrical insulators, electrical enclosures and meter boards. One third of its sales are derived from the domestic market and the rest overseas, mainly from Singapore, Australia and Europe. Despite having a small market capitalisation of only RM 46.1 million, Fibon also has operations in the UK and Australia, and has seen consistent revenue and profits, with high margins. Fibon’s turnover has been steady at between RM12 million and RM17 million from FY May 2010 to FY2014. Its net margins averaged over 25% annually, and were at 26.1% in FY2014. This translated to annual net profit of RM4 million to RM5 million in the same period. ROE was a high 12.3%. The company has a history of maintaining a roughly 25% payout ratio, with annual dividends of between 1.1 sen and 1.25 sen over the last three years. Net dividends in FY 14 equalled 1.1 sen per share — translating to a yield of 2.3%. As a result, its cash pile has been increasing, with net cash of RM23.4 million as of 31 Aug 2014. This is equivalent to a hefty 23.9 sen per share, or half of its current share price of 45 sen. The stock is trading at a small premium of 11.8 sen or 1.27 times its book value of 35.2 sen, with a 12-month trailing P/E ratio of 15.3x. With steady earnings and a cash-rich balance sheet, it will be interesting to see what Fibon may do to boost shareholder value. Possibilities include acquiring more assets to boost growth, expanding its new factoring and financing arm, or increasing dividends, which will not only reward shareholders, but also reduce the stock’s underlying P/E valuations. Valuation factor * 1.20 Fundamental factor ** 1.65 Trailing 12m P/E (x) 15.30 Trailing 12m PEG (x) (0.38) P/NAV (x) 1.27 Trailing 12M Dividend yield (%) 2.65 Market capitalisation (RM mil) 46.06 Shares outstanding (ex-treasury) mil 98.00 Beta 0.44 12-month price range 0.43 - 0.66 *Valuation factor — Composite measure of historical return & valuation **Fundamental factor — Composite measure of balance sheet strength & profitability Note: A score of 3.0 is the best to have and 0.0 is the worst to have BOUGHT DATE T O N G ’S MOMENTUM P O RT F O L I O ALTHOUGH stocks on the local bourse started off the week on a mildly positive note, the FBM KLCI reversed those gains on Tuesday, taking their cue from key regional markets which closed mixed. Although volatility on global stock markets has eased, sentiment for the local stock market has been somewhat dampened by the fall in crude oil prices and the weak ringgit. The fall in crude oil prices, in particular, will have an effect on government revenues and its ability to narrow the budget deficit. The FBM KLCI index lost 2.82 points or 0.15% on Tuesday. Market breadth was negative with losing stocks beating gaining ones by a 2.5-to-1 margin. My portfolio value declined in tandem with the FBM KLCI’s downtrend, with total returns decreasing by 0.79% to RM 106,225. The portfolio started on 8 July 2014 with a capital of RM100,000. Since then, it has outperformed the FBM KLCI by 9.8%, and has registered an annualised return of 17.9%. Total profits currently stand at RM 6,225. In my portfolio, only Crescendo rose by 0.7% to close at RM2.82. The stocks that lost ground were HIL Industries (-3.1%), Willowglen MSC (-2.7%), and IQ Group (-1.1%). I kept the portfolio unchanged on Tuesday. FIBON BHD (ALL FIGURES IN RM MIL) Income statement Turnover EBITDA Depreciation and amortisation EBIT Associates Interest income Interest expense Extraordinary gain/(loss) Pre-tax profit/(loss) Net profit/(loss) - owners of company Balance sheet Fixed assets - PPE Biological assets Intangibles & goodwill Cash and equivalents Total current assets ST borrowings Total current liabilities Total assets Shareholders’ fund Long term borrowings FIBON BHD RATIOS DPS (RM) Net asset per share (RM) ROE (%) ROA (%) Turnover growth (%) Net profit growth (%) Net margin (%) Current ratio (x) Gearing (%) Interest cover (x) FY12 31/5/2012 FY13 31/5/2013 FY14 31/5/2014 LATEST 1QFY15 31/8/2014 16.9 6.1 0.3 5.8 0.4 6.2 4.5 16.7 6.6 0.5 6.2 0.5 6.7 4.9 15.3 5.5 0.5 5.0 0.4 (0.0) 5.4 4.0 3.6 1.3 0.1 1.2 0.1 1.2 0.8 5.4 1.2 18.0 24.1 1.2 29.5 28.7 - 5.5 1.1 20.1 27.4 1.0 33.1 32.4 - 6.0 1.2 22.0 29.7 1.0 35.8 35.2 - 5.9 1.2 23.4 31.1 1.4 36.7 36.0 - FY12 31/5/2012 FY13 31/5/2013 FY14 31/5/2014 ROLLING 12-MTH 0.01 0.29 16.86 16.47 16.57 2.51 26.61 19.39 - 0.01 0.33 16.06 15.68 (1.34) 9.02 29.41 27.85 - 0.36 11.84 11.61 (8.13) (18.39) 26.13 28.58 - 0.01 0.37 9.00 8.83 (2.30) (40.54) 19.59 21.68 - QUANTITY BOUGHT PRICE RM BOUGHT VALUE RM CURRENT PRICE RM CURRENT VALUE RM GAIN / LOSS RM GAIN / LOSS 2,000 5,700 5,100 11,000 3,000 3,900 10,400 5,400 3,000 2.44 0.88 2.82 0.75 2.72 2.52 0.765 1.850 3.450 4,880.0 4,987.5 14,382.0 8,195.0 8,160.0 9,828.0 7,956.0 9,990.0 10,350.0 4.49 0.89 2.82 0.89 2.82 2.43 0.78 1.72 3.18 8,980.0 5,073.0 14,382.0 9,790.0 8,460.0 9,477.0 8,060.0 9,288.0 9,540.0 4,100.0 85.5 1,595.0 300.0 (351.0) 104.0 (702.0) (810.0) 84.0% 1.7% 0.0% 19.5% 3.7% (3.6%) 1.3% (7.0%) (7.8%) Shares held: KSL Holdings Bhd Willowglen MSC Bhd Crescendo Corporation Bhd Willowglen MSC Bhd Crescendo Corporation Bhd Teo Seng Capital Berhad Hil Industries Bhd IQGroup Bhd Sunway Bhd 10-Jul 1-Oct 1-Oct 17-Oct 17-Oct 3-Nov 4-Nov 4-Nov 4-Nov Total --------------78,728.50 --------------- --------------83,050.0 4,321.5 --------------78,728.5 --------------- --------------83,050.0 4,321.5 Shares bought: No shares were bought today. Total shares held 5.5% Shares sold: No shares were sold today. Cash balance 23,175.4 Realised profits / (losses) 1,903.9 Total Portfolio Returns Annualised returns for portfolio 100,000.00 106,225.4 6,225.4 6.2% 17.9% Portfolio Beta Risk adjusted returns for portfolio 0.724 24.7% Performance Comparison FBM KLCI FBM KLCI Emas At portfolio start: At portfolio start: 1,892.7 13,163.7 Current: Current: 1,825.1 12,637.1 Change Change (3.6%) (4.0%) Relative portfolio outperformance 9.8% 10.2% This is a personal portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy/sell any stocks. Portfolio started on 8 July 2014 with RM100,000. I N V E ST I N G I D E A S 1 1 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned. I N S I D E R A S I A’S S T O C K P I C K CHEETAH HOLDINGS BHD (ALL FIGURES IN RM MIL) Cheetah Holdings Bhd ESTABLISHED since 1977, Cheetah Holdings Bhd is a local fashion apparel company, with Cheetah, a home grown sports apparel label, as its core brand. The company also holds two international licensee brands — Ladybird and GQ. Cheetah seems to be unexciting compared with the more well-known local fashion players Padini Holdings Bhd and Bonia Corp Bhd. However, it operates in a different segment – sports apparel, and its valuations are at a steep discount to its peers and even its own underlying asset values. This suggests no value is being accorded to its brands. At the current stock price of 54.5 sen, Cheetah has a small market capitalisation of RM66 million. The stock trades at a huge discount of 49% to its book value of RM1.05 as at end-June 2014, with a trailing 12-month P/E ratio of 9.4 times. Padini, on the other hand, is trading at 3.1 times book and a trailing 12-month P/E of 13.2 times. Bonia trades at 2.6 times book and a trailing 12-month P/E of 16.0 times. There is little doubt that Cheetah is far less aggressive than Padini or Bonia, and its financial trends have been declining. Nonetheless, the company is still profitable, cash rich and may represent a value play. It had net cash of RM18.9 million as at June 2014, or 15.5 sen per share, although this has declined from RM32.4 million a year earlier. Sales were stagnant for the last five years, ranging between RM123.8 million and RM 130.4 million. Pre-tax profit has also been on a declining trend, from RM18.4 million in FY 30 June 2010, to RM14.7 million in FY2012 and RM7.1 million in FY2014. For FY2014, the company attributed the decline in profits to higher operating costs due to the imposition of minimum wages. Valuation factor* 1.80 Fundamental factor** 2.10 Trailing 12m P/E (x) 9.35 Trailing 12m PEG (x) (0.37) P/NAV (x) 0.51 Trailing 12M Dividend yield (%) 3.25 Market capitalisation (RM mil) 66.00 Shares outstanding (ex-treasury) mil 121.10 Beta 0.37 12-month price range (RM) 0.48 - 0.72 *Valuation factor — Composite measure of historical return & valuation **Fundamental factor — Composite measure of balance sheet strength & profitability Note: A score of 3.0 is the best to have and 0.0 is the worst to have Income statement Turnover EBITDA Depreciation and amortisation EBIT Associates Interest income Interest expense Extraordinary gain/(loss) Pre-tax profit/(loss) Net profit/(loss) - owners of company Balance sheet Fixed assets - PPE Biological assets Intangibles & goodwill Cash and equivalents Total current assets ST borrowings Total current liabilities Total assets Shareholders’ fund Long term borrowings CHEETAH HOLDINGS BHD RATIOS DPS (RM) Net asset per share (RM) ROE (%) Turnover growth (%) Net profit growth (%) Net margin (%) ROA (%) Current ratio (x) Gearing (%) Interest cover (x) FY12 30/6/2012 FY13 30/6/2013 FY14 30/6/2014 LATEST 4QFY14 30/6/2014 126.3 17.5 3.0 14.5 0.5 0.3 14.7 10.9 127.3 15.4 3.1 12.3 0.9 0.2 12.9 9.5 130.4 11.9 3.1 8.8 0.9 0.3 9.4 7.1 30.5 1.3 0.8 0.5 0.2 0.1 0.6 0.5 23.5 25.9 127.8 7.6 31.7 119.7 118.2 - 23.1 38.8 138.7 6.4 36.8 125.0 123.7 - 23.2 25.3 143.3 6.4 36.9 129.7 128.4 - 23.2 25.3 143.3 6.4 36.9 129.7 128.4 - FY12 30/6/2012 FY13 30/6/2013 FY14 30/6/2014 ROLLING 12-MTH 0.93 9.48 2.04 (2.97) 8.59 9.34 4.03 0.00 60.90 1.01 7.86 0.79 (12.39) 7.47 7.78 3.76 0.00 69.06 1.05 5.60 2.40 (25.80) 5.41 5.55 3.88 0.00 41.93 1.06 5.64 2.40 (25.81) 5.41 5.59 3.88 0.00 41.78 12 B R O K E R S’ C A L L / T E C H N I C A L S WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY Bearish momentum to continue in local market BY B ENN Y L EE T he market went into a correction as I had expected last week after seven days of gains. Despite the bullish performances in the Asian markets, the bearish market sentiment in the local market was led by the weakening ringgit and declining crude oil prices that dragged the prices of index-linked oil and gas companies down. The FBM KLCI declined 1.2% in a week to 1,825.11 points yesterday. The weaker ringgit put off foreign institutions which were net buyers two weeks ago after weeks of being net sellers on Bursa Malaysia. Trading volume was higher in the past one week and this indicates selling pressure. Average daily trading volume in the past week was only 2.6 billion shares compared with 2.2 billion shares in the previous week while the average daily trading value was the same as the previous week at RM2.3 billion. The trading has shifted from higher priced counters to lower priced counters and this indicates the return of the retail market. Total market valuation fell RM22 billion from last week to RM1,749 billion. Foreign institutions were the net sellers last week (Monday to Friday) at RM29.7 million. Local institutions’ net selling was RM3.4 million while local retail was the only net buyers at RM33.1 million. In the FBM KLCI, decliners out-paced gainers 4 to 1. Decliners in the index were led by IOI Properties Group Bhd (-7.3% from last week), SapuraKencana Petroleum Bhd (-5.5%) and Petronas Dagangan Bhd (-4.6%), and gainers were led by MISC Bhd (+9.8%), UMW Holdings Bhd (+3.1%) and Kuala Lumpur Kepong Bhd (+1.6%) Asian markets were mixed with China and Japan leading the market again last week. China’s Shanghai Stock Exchange Composite rose 1.6% in a week to 2,470.60 points yesterday, near a three-year high. Japan’s Nikkei 225 extended another 1.5% gain in a week to its highest level in seven years at 17,124.11 points after increasing 10% two weeks ago. Singapore’s Straits Times Index increased only 0.2% in a week to 3,289.74 points. Hong Kong’s Hang Seng Index also declined 0.2% to 23,808.35 points. Daily FBMKLCI chart as at November 11, 2014. Markets in the United States and Europe continue its bullish rally. On Monday, the US Dow Jones Industrial Average rose 1.4% in a week to another record close at 17,613.74 points. London’s FTSE100 Index increased 1% in a week to 6,611.25 points and Germany’s DAX rose 1.1% to 9,351.87 points. The US Dollar Index, that measures the US dollar against a basket of major currencies, rose from 87.41 points a week ago to 87.91 points, near four-year highs. Commodities rebounded last Friday after a pullback in the US Dollar Index but was temporary as prices continued to slump on Monday as the US dollar gained back strength. Commodity Exchange gold declined 1.2% in a week to US$1,151.80 (RM3,852) an ounce after rebounding from an intraday low of US$1,140 last Wednesday, the lowest level in four-and-a-half years. Nymex WTI crude oil fell 1.3% in a week to US$77.18 per barrel, the lowest in three years. Crude palm oil futures on Bursa Malaysia pulled DRB-Hicom’s KLAS acquiring Gading Sari for a steep RM72m DRB-Hicom Bhd (Nov 11, RM1.97) Maintain “buy” with a target price of RM3.60: DRB-Hicom’s subsidiary KL Airport Services Sdn Bhd (KLAS) is acquiring air freight operator Gading Sari Aviation Services Sdn Bhd (Gading Sari) for RM72 million in cash. The company said the transaction was on a “willing buyer, willing seller” basis and after taking into account Gading Sari’s audited net asset value (NAV) of RM7.2 million as at Dec 31, 2013, audited profit after tax of RM2.2 million and future earnings. We are of the view the purchase is steep at 10 times the NAV and 33 times financial year 2013 earnings. Earlier this year, DRB-Hicom assumed control of haulier Konsortium Logistik Bhd for about RM390 million via a takeover offer price of 2 times price-to-book value and a 23.6 times trailing price-earnings ratio. This is also part of KLAS’ bigger plan in providing an intermodal DRB-Hicom Bhd 2013 2014 2015F 13,134.7 184.6 9.5 (38.9) 6.0 20.7 4.7 2.8 8.4 45.2 14,200.7 280.3 14.5 51.8 6.0 13.7 5.5 2.8 6.4 56.0 15,827.1 399.4 20.7 42.5 365.0 7.0 9.6 4.8 3.3 5.4 58.4 FYE MAR 31 (RM MIL) Revenue Core net profit FD Core EPS (sen) FD Core EPS growth (%) Consensus net profit DPS (sen) PER (x) EV/Ebitda (x) Dividend yield (%) ROE (%) Net gearing (%) 2016F 2017F 18,338.4 19,816.0 544.3 587.2 28.2 30.4 36.3 7.9 440.0 502.2 8.0 8.0 7.0 6.5 3.8 3.4 3.8 3.8 7.0 7.2 45.9 37.2 Source: Company, AmResearch estimates logistics solutions and supply chain management (SCM) and will help transform the group to become a fully-integrated logistics service provider providing an end-to-end SCM. It will be funded via internal funds and borrowings. While the price is steep, this is a relatively small initial investment in the air cargo transport sector. DRBHicom now has the opportunity to scale up its logistics operations along with Pos Malaysia. Bhd. We maintain “buy”, with an unchanged fair value of RM3.60.— AmResearch Sdn Bhd, Nov 11 back for a correction and declined 1.9% in a week to RM2,262 per tonne. The ringgit was weaker against the US dollar at RM3.35 per dollar compared with RM3.33 a week ago. The index failed to stay above the long-term 200-day moving average (MA) after breaking above it two weeks ago and also did not manage to overcome the Ichimoku Cloud indicator. After climbing above the short-term 30-day MA two weeks ago, the FBM KLCI has pulled back to this average. The index also fell below the 1,840 points resistance level that it broke two weeks ago. Momentum indicators like the RSI fell back below their mid-levels. However, lagging momentum indicators like the MACD and Momentum Oscillator are still slightly above their mid-levels. The FBM KLCI has also pulled back to the middle band of the Bollinger Bands indicator after testing the top bands two weeks ago. However, the index has found support at 1,824 points, the 38.2% Fibonacci retracement level of the bullish trend that started in mid-October. The retracement is a normal correction of a trend. The index may rebound at this level and if it does rebound, the index is expected to continue its bullish trend. However, there are no signs of reversal and this indicates that the bearish momentum is set to continue, and the FBM KLCI is set to test the next support level at 1,810 points, 50% retracement of the bullish trend. Furthermore, the indicators are indicating that the market trend is bearish. Immediate resistance is at 1,830 points. Benny Lee is chief market strategist for Jupiter Securities Sdn Bhd. Jupiter Securities is a participating broker in Bursa Malaysia. He can be contacted at bennylee.kl@gmail. com. The views expressed in the article are the opinions of the writer and should not be construed as investment advice. Please exercise your own judgement or seek professional advice for your investment decisions. KLK’s JV with AALI will ensure full use of refinery in Dumai, Indonesia Kuala Lumpur Kepong Bhd (Nov 11, RM22.92) Maintain “neutral” with a target price (TP) of RM21.30: Kuala Lumpur Kepong (KLK) has entered into a joint venture with PT Astra Agro Lestari Tbk (AALI), in which KLK will dispose of its 50% stake in its subsidiary PT Kreasijaya Adhikarya (JV Co), a company which owns a 2,000-tonnes-perday refinery in Dumai, Indonesia. This transaction is conditional upon fulfilment of certain conditions including the execution of a loan agreement between AALI and JV Co for the extension of a shareholders loan for 296 billion rupiah (RM81.2 million) by AALI, and an increase in the authorised share capital of JV Co, as well as the issuance and allotment of 68,500 and 75,000 new JV Co shares of 1 million rupiah each in favour of KLK and AALI, respectively. All in, AALI’s outlay for the 50% stake in JV Co is approximately RM101.8 million. Pricing-wise, we estimate that KLK is selling its 50% stake in its Dumai refinery for RM308 per tonne, which is in-line with the current replacement cost and industry averages. We highlight that KLK’s Dumai refinery is relatively new and started operations in September 2014. AALI has no refinery in Sumatra and having AALI as a 50% partner will ensure that the refinery gets to full utilisation immediately. With the peak season almost over, we believe crude palm oil (CPO) prices have a window of opportunity to strengthen between now and the first half of 2015 — which would bode well for plantation companies like KLK with decent sensitivity to fluctuations in CPO prices. We estimate that every RM100 per tonne change in CPO price could affect KLK’s net earnings by 4% to 6% per annum. We maintain our sum-ofparts-based TP of RM21.30 and our “neutral” recommendation. — RHB Research Institute, Nov 11 B R O K E R S’ C A L L 13 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY MAHB to maintain credit rating with rights issue KENNY YAP Malaysia Airports Holdings Bhd (Nov 11, RM6.88) Downgrade from “market perform” to “underperform” with a lower target price (TP) to RM6.77 from RM7.46: Yesterday, Malaysia Airports Holdings Bhd (MAHB) made an announcement that they are proposing a rights issuance on the basis of one rights share for every five existing MAHB shares for the acquisition of 40% collective equity stake in Istanbul Sabiha Gökçen Uluslararasi Havalimani Yatirim Yapim Ve Isjetme AS (ISG) and Havalimani Isjetmeleri Ticaret Ve Turizm AS (LGM). Based on an illustrative rights issue price of RM4.80, it would represent approximately a 28.4% discount to its theoretical ex-all price price of RM6.70. The proposed rights issuance by MAHB to fund the acquisition of the remaining 40% stake in ISG and LGM amounting to €285 million (RM1.18 billion) was one of the funding options that was widely anticipated by the market. The rights issuance would allow MAHB to maintain its triple A credit rating without breaching its debt covenant of a gearing of 1.25 times. Post-acquisition of the remaining 40% of Sabiha Gocken International Airport (SGIA) with the proposed rights issuance which would raise up to RM1.3 billion, is expected to raise its gearing ratio closer to 0.9 times after assuming all the debts from SGIA. However, post the proposed right issuance, we should see its financial year 2015 (FY15) price to earnings ratio increase from 50.3 times to 57.1 times after factoring in the contribution from SGIA as the additional earnings to FY15 A section of the KLIA building. Malaysia Airports Holdings Bhd FYE DEC (RM MIL) 2013A 2014E 2015E Turnover 4,098.8 3,285.3 4,173.7 Ebitda 899.7 874.4 932.5 PBT 551.1 247.0 282.0 Net profit (NP) 389.1 169.5 193.5 Core net profit (NP) 389.1 169.5 193.5 Consensus (NP) na 152.3 236.8 Earnings revision (%) na 0 6 EPS (sen) 23.6 10.3 11.7 EPS growth (%) (1) (56) 14 NDPS (sen) 4.5 5.1 5.9 BVPS (RM) 2.8 2.9 3.7 PER (x) 28.4 65.2 57.1 Gearing (x) 0.8 0.8 0.8 Dividend yield (%) 0.7 0.8 0.9 Source: Kenanga Research from the remaining 40% stake is not enough to negate the dilution impact from the rights issuance based on FY15. In the near term, we expect MAHB to continue pursuing its operating agreement (OA) extension which it is targeting to conclude by year-end, and should it be able to IOI Properties Group Bhd FYE JUN (RM MIL) Total turnover Reported net profit Recurring net profit Recurring net profit growth (%) Recurring EPS (RM) DPS (RM) Recurring PER (x) P/BV (x) Dividend yield (%) Return on average equity (%) Return on average assets (%) Net debt to equity (%) Our vs consensus EPS (adjusted) (%) Source: Company data, RHB 2013 2014 2015F 2016F 2017F 1,323 694 694 1,454 913 425 1,528 470 470 1,769 544 544 1,934 558 558 15.6 0.21 0.00 12.6 0.85 0.0 (38.7) 0.13 0.08 20.6 0.78 3.0 10.6 0.14 0.08 19.0 0.79 3.0 15.8 0.15 0.08 17.7 0.84 3.0 2.6 0.15 0.08 18.3 0.82 3.0 13.4 8.5 4.1 4.6 4.5 11.6 0.6 6.8 12.7 3.2 10.2 3.5 5.9 3.5 4.3 - - (35.4) (30.8) (32.8) extend the OA, this could lower its depreciation cost from klia2. As for the acquisition of the remaining stake in SGIA, we expect the deal to be concluded by the end of the first half of 2015 (1H15) post rights issuance. No changes to our FY14 forecasts. However, we have fine-tuned our FY15 earnings estimate higher by 6% from RM183.2 million to RM193.5 million as we factor in SGIA’s contributions. Following the announcement of the proposed rights issuance, we adjusted our sum-of-parts driven TP lower by 9% from RM7.46 to RM6.77 after factoring in the increased share base arising from the rights issuance and also 100% contribution from SGIA. Following our reduction in TP, we downgrade MAHB to “underperform” (from “market perform”) as the rights issuance is not earnings accretive in the near term. Risks are the inability to maintain its dividend commitment as per guided previously, significant drop in passenger numbers due to catastrophic events and higher-than-expected operational costs. — Kenanga Research, Nov 11 AirAsia investors should focus on bright earnings prospects AirAsia Bhd (Nov 11, RM2.59) Maintain “buy” with target price (TP) of RM3.20: Malaysia AirAsia’s (MAA’s) revenue passenger kilometres (RPK) grew by only 2% year-on-year (y-o-y) in the third quarter of 2014 (3Q14). But this still managed to drive its load factor up by 0.5 percentage points (ppt) y-o-y, as available seat kilometres (ASK) growth was more tepid at 1% y-o-y. Thai AirAsia’s (TAA’s) traffic growth was more decent, as RPK grew by 7% y-o-y in 3Q14. But, its load factor fell1.2 ppts y-o-y, on account of the faster ASK growth of 8% y-o-y. Both MAA and TAA’s statistics are in line with our expectations. Indonesia AirAsia (IAA) and Philippines’ AirAsia (PAA’s) statistics were more disappointing. IAA’s RPK fell 12% y-o-y, on the back of a 17% cut in ASK in 3Q14. PAA saw its load factor fall 4.2 ppts y-o-y in 3Q14, as RPK declined 20% y-o-y compared to the 14% y-o-y decline in ASK. Using ASK/aircraft as a proxy, we find that MAA’s aircraft utilisation fell 17% y-o-y in 3Q14. The key reason for this are 12 planes earmarked for disposal, which have been grounded but remain unsold. Management now intends to put these planes back into service in 4Q14. We believe this could be driven by difficulty in getting buyers for old aircraft and the drastic withdrawal (20% in 3Q by our estimates) of domestic capacity by Malaysia Airlines (MAS) which presents an opportunity for AirAsia. Excluding exceptional items, we expect AirAsia’s bottomline to range between a RM3 million loss and RM59 million profit in 3Q14. Consensus downgrade is almost a certainty (45% higher than our estimate). Despite the current weakness, we retain our “buy” rating on AirAsia. Investors should ignore the financial year 2014 earnings, and focus on the bright earnings prospects going forward. Low oil prices are set to stay, competitive pressures should normalise (with the restructuring of MAS), and Thailand tourism growth is recovering. All these factors point to a better 2015 for AirAsia. — Alliance DBS Research, Nov 11. AirAsia Bhd FYE DEC (RM MIL) 2013A 2014F 2015F 2016F Revenue Ebitda Pre-tax profit Net profit Net pft (pre ex) EPS (sen) EPS pre ex (sen) EPS gth (%) EPS gth pre ex (%) Diluted EPS (sen) Net DPS (sen) BV per share (sen) PER (x) PER pre ex (x) P/CF (x) EV/Ebitda (x) Net div yield (%) P/BV (x) Net debt/Equity (x) ROAE (%) 5,112 1,608 361 362 628 22.6 22.6 (12) (12) 13.0 4.0 179.8 11.5 11.5 7.5 10.5 1.5 1.4 1.9 7.3 5,321 1,492 229 228 369 13.3 13.3 (41) (41) 8.2 1.6 184.0 19.5 19.5 9.7 11.4 0.6 1.4 1.9 4.5 5,934 2,020 858 857 857 30.8 30.8 132 132 30.8 6.2 213.2 8.4 8.4 5.1 8.2 2.4 1.2 1.6 15.5 6,340 2,384 1,153 1,151 1,151 41.4 41.4 34 34 41.4 8.3 248.4 6.3 6.3 4.0 7.1 3.2 1.0 1.4 17.9 Source: Company, AllianceDBS, Bloomberg Finance LP IOI Properties’ fund-raising enhances future value of assets IOI Properties Group Bhd (Nov 11, RM2.56) Maintain “neutral” with lower target price of RM3.10: We are neutral on IOI Properties Group’s (IOI Properties) equity fund-raising exercise, as the dilution impact on revalued net asset valuation and earnings could be mitigated once new land bank is secured and/or IOI City Mall Putrajaya is revalued. IOI Properties announced its proposed rights issue exercise on the basis of one rights share for every six existing shares at an issue price of RM1.90 per rights share to raise RM1.03 billion. It also proposes an employee share option scheme of up to 10% of the enlarged share capital. Fifty per cent of the proceeds will be used to fund the development of investment properties, which should enhance the assets’ future value. While the market may be surprised by the fund-raising exercise, given that the company was only listed in January this year, with its current net gearing of only 13%, management indicates that no cash was raised during the initial public offering. Hence, financing is needed mainly for the construction of infrastructure and development of investment properties (RM500 mil- lion) such as IOI City Mall Putrajaya, and the offices and hotels in IOI Resort City. RM325 million is allocated for working capital, mainly for new township projects. The remaining RM200 million will be for future opportunities. Equity funding is generally a preferred choice, especially in a rising interest rate environment. The exercise is expected to be completed by the first quarter of 2015. As such, we lower our earnings per share estimate by 4% for financial year 2015 (FY15), and 14% for FY16 and FY17. — RHB Research Institute Sdn Bhd, Nov 11 14 H O M E WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY AG: New laws not best way Malaysia should learn from the experiences of others to preserve social order PUTRAJAYA: New laws may not be the optimum solution to preserve social order and national harmony, says Attorney-General (AG) Tan Sri Abdul Gani Patail. He said Malaysia had a tough battle ahead if it was to preserve social order and national harmony, and new laws might not be the optimum solution. In his keynote address entitled “Current Challenges in Preserving Social Order and National Harmony — A Critical Note” at the Judicial and Legal Training Institute National Law Conference 2014 here yesterday, Abdul Gani said Malaysia should learn from the experiences of others. Citing the experience of the United Kingdom, he said it was found that changing societal attitudes was a slow process and legislation was only effective if it was correctly implemented, while the Canadian experience had shown that multiculturalism encouraged racial and ethnic harmony and cross-cultural understanding. Abdul Gani said at the end of the day, the choice to preserve “our own model” of social order and national harmony was in the hands of the Malaysian citizen. “It will be also our choices that will show what we really are. We have to believe that in the long run, Malaysians will do the right thing,” he said. Abdul Gani said the law was not the solution to all of society’s ills. He cited eminent Australian ethicist and law profesor Charles Samford, who propounded that over-reliance on the law was unproductive. “This is because law does not change and cannot control human behaviour,” he said. Abdul Gani said based on media reports, it appeared that there was a nationalistic struggle about the future of the Sedition Act 1948, with the advocators for its wholesale repeal saying it was archaic, while those who fear its repeal would lead to social disorder or compromise the special position of the Malay rulers, argued for its retention. Abdul Gani said, if there was consensus that contempt of court and criticism of the administration and executive no longer warranted being treated as having “seditious tendencies”, perhaps these could be dealt with under separate laws. This, he said, would enable the Sedition Act 1948 to revert to dealing with serious threats which undermined the security, sovereignty and dignity of the nation, and the special position of the Malay rulers. “It will thus allow sedition to be used as a zealously guarded ultimate safeguard for social order and national harmony,” he said. — Bernama Ashram will be spared, says committee KUALA LUMPUR: Calling its detractors “misinformed”, the Vivekananda Ashram management committee said its redevelopment plans for the historic building did not include plans to demolish it. Instead, the building would remain intact, the committee said in a statement yesterday, its first public comment on the matter since coming under fire from heritage supporters, politicians and citizens who want the century-old building preserved and gazetted as a heritage site. “The widespread belief that the ashram building is going to be demolished is not true … There are absolutely no plans to demolish the ashram building, the building will be left intact and strengthened,” the statement said. It added that the new development plans — which include a multistorey apartment building around the ashram as reported by newspapers — would see amenities being added to provide better facilities to complement the existing ashram. According to the committee, the land was acquired by the ashram more than 80 years ago and current- Protesters taking part in a march over the weekend to save the Vivekananda Ashram, which is being earmarked for redevelopment. Photo by The Malaysian Insider ly comprises the ashram building, a hostel built in the 1960s and the Sangeetha Abivirithi Sabha auditorium, which is partially constructed. The ashram hall could only accommodate about 100 people and the “changing demographic and social environment” has made the hostel redundant, while the auditorium was never fully completed since the 1970s because of financial constraints, the committee said. “Notwithstanding the changes taking place, the management committee is fully aware that the ashram building has a lot of significance to the community because of various educational, cultural and spiritual activities,” it said. A signature drive was carried out, with tens of thousands signing the petition to save the ashram from redevelopment. The objections were scheduled to be handed to the Kuala Lumpur City Hall yesterday. The committee said the additional amenities included under the redevelopment plan would enable the ashram to better serve the needs of the future generation, while the ashram building will be issued a separate title to protect its ownership. “The terms of the development are such that the developer will be allowed to build in certain sections within the property and take measures to protect the structure of the ashram building. “The proposal to develop the ashram was conducted via a tender exercise which received submissions from developers,” the statement said. These submissions were reviewed by an advisory committee that was chaired by a senior independent adviser who has vast experience in property development. The committee also said that the redevelopment project had been approved by the management and members of the ashram, and that preservation of the ashram building was a key condition that received the members’ approval. — The Malaysian Insider Sack errant staff immediately, Daim tells Putrajaya BY L EE SHI - I A N & NATHELIE LEI KUALA LUMPUR: Civil servants responsible for wastage and leakages should be sacked immediately to set an example for others, says former finance minister Tun Daim Zainuddin. Daim said issuing warnings to such staff was pointless as the Auditor-General’s (AG) Report over the years had revealed various wastages and leakages within government departments and agencies. “Putrajaya must set an example for all civil servants to follow and abide. Otherwise, wastage, leakage and embezzlement will continue,” Daim said. “Those who are errant or lax in carrying out their duties responsibly must be disciplined. Problems arise when there is no discipline,” he said. Daim said the AG’s Report had shown that money was just being wasted without proper accountability, hence these civil servants should just be sacked. He said the government must also be swift in meting out the punishment and give these errant staff their marching orders since there was no point in retaining them as they would tarnish the reputation and image of the service. Daim was speaking to report- ers yesterday after launching the book The Colour of Inequality at the International Institute of Islamic Thought and Civilisation in Jalan Duta here. On Monday, the Public Accounts Committee (PAC) expressed shock at the number of government ministries involved in the wastage of public resources. PAC chairman Datuk Nur Jazlan Mohamed said 13 ministries and two agencies will be called up to account for mismanagement and leakage. This was based on the findings in the third instalment of the AG’s Report which was released in Par- liament on Monday. The ministries include the Education Ministry for wastage in the 1BestariNet e-learning project and the Health Ministry over the construction of a hospital in Shah Alam. The PAC’s inquiry proceedings are to begin at the next Parliament session next year. “We were also shocked. This time there were many issues that seemed serious enough for us to call them up,” Nur Jazlan said. “The increase in number of ministries could be because the audit was done at the same time as the tabling of the budget in Parliament,” the Pulai MP said. — The Malaysian Insider Financial consultant, five others charged over alleged IS support KUALA LUMPUR: A financial consultant was charged in the Magistrate’s Court here yesterday with allegedly soliciting property to benefit the Islamic State (IS) militant group through the Revolution Islam.com blog since last March. Rohaimi Abd Rahim, 37, was alleged to have committed the offence in Kampung Baru here between last March 29 and Oct 13. Another accused, car salesman Muhamad Fauzi Misrak, 34, was alleged to have abetted Rohaimi on the same charge by allowing his Maybank account to be used in the Revolution Islam.com blog as a medium to solicit property to benefit IS at the same time and place. Rohaimi and Muhamad Fauzi were charged under section 130G(c) of the Penal Code, which carries a maximum three years’ jail term and fine upon conviction. No plea was recorded from the duo when the charge was read before Magistrate Erry Shahriman Nor Aripin. The court fixed Dec 19 for a re-mention of the case. In SHAH ALAM, four individuals, including a married couple, were charged separately in the Magistrate’s Court with trying to give support to the IS last month. However no plea was recorded from food shop assistants, Muhammad Na’eem Apandi, 24, and Muhammad Fadhil Ibrahim, 24, Amir Azlan Zainudin, 48, and his wife Nazhatulshima Sahak, 44, a nursery operator. Muhammad Fadhil and Nazhatulshima were charged before Magistrate Norshakinah Ahmad Kamarudin with trying to give support to the terrorist group by purchasing flight tickets from Kuala Lumpur International Airport to Istanbul, Turkey for entering Syria via Istanbul. Both accused were alleged to have committed the offence at Restoran Hakim Sdn Bhd, Jalan Zirkon E7/E, Section 7 here, at about 10.50pm on Oct 13. Amir Azlan and Muhammad Na’eem were charged before Magistrate Ellyana Razali for committing the offence at the same place, time and date. All four accused were charged under Section 130J (1)(a) of the Penal Code and read together with Section 511 of the same code, which carries a life imprisonment or a maximum 30 years’ jail term or with a fine and liable to forfeiture of any property used or intended to be used in connection with the commission of the offence, upon conviction. Deputy public prosecutor Afzainizam Abdul Aziz who appeared for the prosecution applied for the court to fix the date of mention to transfer the case of all four accused to the Kuala Lumpur High Court. He did not offer any surety bond based on the Security Offences (Special Measures) Act 2012). Both courts set Dec 17 for a re-mention of the case. — Bernama 16 H O M E WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY Religious authority failed to argue medical issue Court says transgender case needs to be examined BY V A N B A L AGA N PUTRAJAYA: The Court of Appeal which decided last Friday that Muslim transgender males have the right to cross-dress said the Negri Sembilan religious authorities had failed to prove Islam’s position on how those who have gender identity disorder (GID) should dress. Judge Datuk Mohd Hishamudin Mohd Yunus, who led the appellate court’s three-member bench, said the three Muslims in the case were not “normal males” as they had the disorder, which had been confirmed through psychiatric and psychological tests. The religious authorities did not rebut the medical evidence, the court said in its written judgment of its decision on Nov 7 that Section 66 of the Negri Sembilan Syariah Criminal Enactment violates provisions in the Federal Constitution. The state religious authorities had filed an affidavit by the Negri Sembilan mufti, who said Section 66, which prohibits a male from dressing as a woman, is a precept of Islam. “[The appellants’ lawyer] makes a pertinent point that the mufti’s opinion remarkably fails to address the issue that is crucial for the purpose of the present constitutional challenge: what is the position in Islam as to the appropriate dress code for male Muslims who are sufferers of GID, like the appellants?” Hishamudin said in his written judgment obtained by The Malaysian Insider. The mufti’s affidavit was filed in response to findings by sociologist Professor Teh Yik Koon, who had given supporting evidence for the disorder suffered by the appellants, in addition to explanations on how Section 66 has adverse effects on transsexuals and the Malaysian society. Muhamad Juzaili Mohd Khamis, Shukor Jani and Wan Fairol Wan Ismail were the appellants in the case to declare Section 66 in the enactment as unconstitutional. In 2013, the Seremban High Court dismissed their judicial review application. Without medical evidence to prove insanity, the court also rubbished a claim by the state legal adviser, Iskandar Ali Dewa, that transgenders who behave and dress as women are of unsound mind. “Our answer to this is that in the absence of medical evidence, it is absurd and insulting to suggest that the appellants and other transgen- The appellants at the Court of Appeal in Putrajaya last Friday. The court declared unconstitutional a provision in the Negri Sembilan Islamic religious enactment that made it an offence for Muslim males to dress and behave as women. Photo by The Malaysian Insider ders are persons of unsound mind,” Hishamudin said. Ali, who represented the state religious authorities, told the court last July that the three had a defence of being incapable of knowing if what they did was against the law. This is under Section 11 of the enactment and is similar to Section 84 of the Penal Code where a person is unable to tell if he or she has broken the law. The appellate court in a unanimous ruling declared that Section 66 of the enactment was void as it violated the constitutional right of freedom of expression, movement and the right to live in dignity and equality. The other judges on the bench More seats for Sarawak Assembly KUCHING: Sarawak’s position as the state with the most number of state seats in the country has been further strengthened with the passing of a bill to increase the number of state assembly members. When tabling the Dewan Undangan Negeri (Composition of Membership) Bill 2014 at the State Assembly here yesterday, State Housing and Tourism Minister Datuk Amar Abang Johari Openg said the bill was aimed at increasing the number of assembly members from the current 71 to 82. He said the increase was principally due to the growing voting population, upon the accelerating pace of development and extension of economic activities in the state since the last review of the electoral constituencies in 2005. “Constitutionally, electoral constituencies are reviewed at an interval of not less than eight years,” he said. He said once the bill was passed, the new ordinance would be enforced on the date to be fixed by the Yang di-Pertua Negeri, in time for the next election. Abang Johari said the increase was a fair reflection of the rate of increase of electorates in the state. He said 82 constituencies were a reasonable number in terms of providing adequate and effective democratic representation for the people. According to him, Sarawak had only 48 state constituencies prior to its first direct elections in 1969, increasing to 56 in 1985, 62 in 1985 and 71 in 2005. — Bernama Fatwas must be based on reality, says Dr M BY L EE SHE- I A N & NATALIE TAY KUALA LUMPUR: Fatwas must be rooted in study and debate, not only Islamic teachings, but in reality, former prime minister Tun Dr Mahathir Mohamad said as a Court of Appeal decision that a ban on cross-dressing is unconstitutional continues to stir debate. He said fatwas by religious scholars are inadequate and ignored by many because of different interpretations of various Islamic injunctions. “We need to have fatwas on the many challenges facing Muslims. But the fatwas should only be made after a prolonged study and debate by all disciplines, including the realities of life,” he said in his keynote address when opening the Kuala Lumpur Summit 2014 yesterday. He said Muslims are finding it difficult to challenge the “excessive liberalism” of the West because they do not have the arguments to rebut positions on issues like same-sex marriages other than to say that such things are unIslamic. “At the moment, we have not debated this, except for religious scholars saying that these are sinful things which Muslims cannot accept. But additionally, we need experts in other fields to provide other inputs and reasons besides just saying that lesbians, bisexuals, gays and transvestites are wrong and sinful. “We need to have experts in other fields, experts in sciences and in societal behaviour to challenge the liberalism of the West,” Dr Mahathir said. During the press conference after his speech, he responded to a question about the Court of Appeal’s recent judgment declaring unconstitutional a provision in the Negri Sembilan Syariah Criminal Enactment prohibiting a man from posing as a woman. Dr Mahathir said transgender people were born “unsure of their gender, they may look like a man but are actually women, and vice versa ... their feelings are different, from the sex they were born with”. State Islamic laws were formulated against cross-dressing following a fatwa to the same effect in the early 1980s. Citing the French Revolution as an example, Dr Mahathir said that while the West developed its ideas of democracy, liberalism and human equality through uprisings and turmoil, Muslims continued to rely on their rulers and religious teachers. “Throughout all these evolutions and revolutions, Muslims did not play a part. We believed that our absolute monarchs and strongman governments would not be affected. “As such, no thoughts were directed at these new ideas on governance and how Muslims should deal with them,” Dr Mahathir said. “Muslim thinkers made no concerted effort to understand what was going on as there was a naive belief that Muslims would reject ideas which were contrary to the teachings of Islam.” Another reason for divisions among Muslims, he said, is different interpretations of the Quran. “The Quran is perfect, it is not wrong, but the interpretations can be wrong or inaccurate, and over time they can become irrelevant, unable to cope with new ideas and realities. We have a need to do some soul-searching, some revisions of the current teachings of Islam. We must go back to the real source of our religion, to the Quran.” — The Malaysian Insider were Datuk Aziah Ali and Datuk Lim Yee Lan. Hishamudin said the provision in the enactment directly affected the appellants’ right to live with dignity and deprived them of their worth as members of society. According to court papers, the litigants are make-up artists who were arrested for dressing as women and had suffered deep-seated discrimination, harassment and even violence because of their gender identity disorder. Hishamudin also said all enactments, including Islamic laws, passed by state assemblies must conform to the basic rights stated in the Federal Constitution. — The Malaysian Insider Five more teaching hospitals KUALA LUMPUR: Five more teaching hospitals will be set up in the country to supplement the three existing hospitals, said Deputy Education Minister Datuk Mary Yap Kain Ching. She said these would be established at Universiti Sultan Zainal Abidin, Terengganu, Universiti Putra Malaysia, Serdang, Universiti Malaysia Sabah, Universiti Islam Antarabangsa, Kuantan and Universiti Teknologi Mara, Puncak Alam. “At present there are only three teaching hospitals, namely Universiti Kebangsaan Malaysia Hospital, Universiti Malaya Medical Centre and Universiti Sains Malaysia Hospital, Kubang Kerian,” she said when replying to a question from Dr Mansor Abdul Rahman (BN-Sik) at the Dewan Rakyat sitting here yesterday. Meanwhile, in her reply to Datuk Mahfuz Omar (PASPokok Sena) about the status of the Digital Autopsy Diagnostic Station equipment procurement project, Yap said the ministry had made a decision to proceed with it. She said the decision had been made after examining the requirements and financial constraints as only one company was interested to supply the equipment. — Bernama H O M E 17 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY Will Kidex haunt Pakatan in the next election? It can still win Selangor even if the project goes on but its credibility may suffer BY SHERI DA N MA HAV ERA KUALA LUMPUR: On paper, the maligned Kinrara-Damansara Expressway (Kidex) project could dent the support for Pakatan Rakyat in one of its hard-core constituencies if the highway is constructed. Although the loss in support would not be enough for the coalition to lose Selangor, a more serious blow would be to its credibility and its promises to Malaysians in general that it could offer something different from Barisan Nasional (BN). This is why the majority of Pakatan politicians in Petaling Jaya are against the highway project even though many of them scored five-digit majorities in their areas in the 13th general election (GE13). To these politicians Kidex is a serious test to their commitment to Pakatan’s ideals even if they defied the state government. The RM2.42 billion highway project runs through the two parliamentary areas — Petaling Jaya Utara and Petaling Jaya Selatan — which together have a total of four state seats. In 2013, the politically conscious voters of Petaling Jaya Utara and Selatan voted in Pakatan MPs Tony Pua and Hee Loy Sian with overwhelming majorities of more than 44,000 and 19,000 votes respectively. The four state lawmakers of Damansara Utama, Kampung Tunku, Bukit Gasing and Taman Medan were voted in with majorities of between 3,000 and 30,000 votes. Much of the anger towards the project, which residents believe would block already clogged roads and be dangerous to schoolchildren and pedestrians, has been directed at Pakatan. Although Kidex was started by the BN federal government, residents are upset that the Pakatan state government allowed it to continue, knowing that it would carve up the already densely populated neighbourhoods. In fact, a lot of the vitriol directed at Pakatan is characterised by feelings of betrayal and of being “sold out” by politicians they had put a lot of faith in. “Where does the Selangor government stand with your election promise as stated in your 2013 GE13 manifesto?” said Selve Sugumaran Perumal (pic) of anti-Kidex group Say No to Kidex, which has rallied opposition to the project. “I dare say if the Kidex Skyway gets built, Pakatan Rakyat will lose the next election and never again govern in Selangor as the rakyat will never forgive Pakatan Rakyat,” said Selve Sugumaran in a recent letter. According to polling expert Ibrahim Suffian, local government is- sues such as an unpopular highway project could have an effect on support for a state government and incumbent elected representatives. “It would turn off some people to Pakatan. But those numbers would be relatively small and would be limited to the people directly affected,” said Ibrahim, chief executive of the Merdeka Center. Selangor BN chief Datuk Seri Noh Omar declined to comment when asked what his coalition’s stand was on Kidex. DAP’s Rajiv Rishayakaran, who is Bukit Gasing assemblyman, and his colleagues have publicly opposed Kidex. Politicians like Rajiv, Yeo Bee Yin (DAP-Damansara Utama) and Lau Weng San (DAP-Kampung Tunku) have come out with numerous statements to disprove the developer’s claims that Kidex would cut down jams and travel time. “Our local councillors have also done a very good job of blocking [developer] Kidex Sdn Bhd from getting off the ground,” Rajiv told The Malaysian Insider. Kidex Sdn Bhd has not submitted all the necessary documents and assessment reports for the Petaling Jaya City Council to study and determine whether the project should be approved. Hee is arranging for businesses in his constituency to meet with Menteri Besar Mohamed Azmin Ali to press their case on why Kidex is bad for Petaling Jaya. DAP’s Charles Santiago, who is Klang MP, said the Kidex issue was not just about one project which affected many neighbourhoods. It was about Pakatan’s vision of Selangor’s future, which many had bought into, said Santiago. On paper, Pakatan can still win Selangor even if Kidex goes on. But the reality is, if Pakatan can’t hold fast to its vision for Selangor, which it says is a model of a future federal government, how is it supposed to convince Malaysians to buy into their vision for Malaysia? — The Malaysian Insider Hadi breaks silence, admits he is not feeling well KUALA LUMPUR: PAS president Datuk Seri Abdul Hadi Awang finally broke his silence months after the Selangor menteri besar (MB) saga, saying that he had been unwell lately. He told Harakahdaily at the Parliament lobby on Monday that his condition had forced him to turn down several ceramah invitations at night. It was reported that Abdul Hadi had also been skipping meetings with Pakatan Rakyat partners and his own party since the Selangor MB saga. “I have not been feeling too good these days. Even talking is difficult,” he said. Earlier, the PAS news portal reported that Abdul Hadi, who was taking his turn to debate the Budget 2015 in the morning, appeared frail, as if he had lost some weight. The portal added that the Marang MP was able to speak for no more than 10 minutes. Abdul Hadi said he was not as active as before his hospitalisation in Istanbul, Turkey, in May. “There are no programmes to- As Hadi’s health is frail he could only speak for about 10 minutes while debating Budget 2015 on Monday in Parliament. The Malaysian Insider file photo night (Monday), so I will rest,” he said. Quoting sources, The Malaysian Insider reported on Monday that Abdul Hadi, 66, was being persuaded by his peers in PAS to resign as party president, to prevent his health and relationship with other Pakatan leaders from worsening. The Islamist party’s relationship with partners, DAP and PKR, has been strained lately by Abdul Hadi’s ‘cold’ attitude towards the coalition. He has not been attending the coalition’s presidential council meetings since disagreeing with PKR and DAP over the move to remove Tan Sri Abdul Khalid Ibrahim as Selangor MB in August. He was also said to be absent during the launch of Pakatan’s shadow budget 2015 at the Dewan Rakyat on Oct 10. However, opposition leader Datuk Seri Anwar Ibrahim reportedly played down allegations that Abdul Hadi was giving Pakatan the cold shoulder, saying that he was in contact with the PAS leader. “It’s not nice to say that. I have communicated with him. It’s not a problem.” — The Malaysian Insider Najib: Final round of TPP talks early next year BEIJING: Prime Minister Datuk Seri Najib Razak said that all 12 countries involved in the Trans-Pacific Partnership (TPP) have agreed for the final round of negotiations to be held early next year. Leaders involved in the TPP negotiations, being held on the sidelines of the ongoing Asia-Pacific Economic Cooperation (Apec) summit in Beijing, however, agreed that the negotiations were subject to several factors. “I informed them that we have several sensitive areas which are close to our internal policies. Top among them is the bumiputera agenda and government-owned companies. We want the 12 countries in the TPP to allow flexibility for Malaysia’s request to be considered,” Najib told Malaysian journalists here on Monday night. Najib said if this was possible than Malaysia would be able to negotiate for a “TPP agreement that is on our terms”. “The timeline is rather tight but we will try. If we are unable [to reach a decision], then we will look at further developments. I expect negotiations to be intensive in the next few months,” the prime minister said. — Bernama Families furious over report MH370 to be declared ‘lost’ KUALA LUMPUR: Relatives of Malaysian Airline System (MAS) flight MH370 passengers have criticised the airline after an official reportedly said authorities would set a date to announce the plane “lost”, with an industry source saying such a declaration would see the search called off. Both MAS and officials in Australia — who are leading the search for the missing jet far off its western coast — have denied the reported comments by the carrier’s commercial director Hugh Dunleavy. But Voice370, an association of MH370 victims’ relatives, said in a statement late on Monday that it was “bewildered” by the report last week. “Such unilateral declaration brings intense agony and confusion to family members, and makes us lose faith in the search effort,” it said. A New Zealand Herald article, citing Dunleavy, said authorities were working to set a date — likely by the end of the year — to formally announce the loss of the Boeing 777, which vanished off the radars on March 8 with 239 people aboard. — AFP 18 C O M M E N T WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY China announces HK stock link Beijing is signalling it is time Leung’s government sent protesters home BY WILLIAM PESEK A s hedge fund managers declare victory with the launch of the Shanghai-Hong Kong stock link, spare a thought for the obvious losers: the city’s pro-democracy movement. For almost seven weeks, the student commandeering key streets around Hong Kong have sought modest concessions from Beijing. They probably would’ve folded their tents long ago if President Xi Jinping signalled he might, perhaps, maybe let Hong Kongers choose their own leader at some vague point in the years ahead. The angry masses might’ve even settled for the slightest hint unpopular Chief Executive Leung Chun-ying might step down early. But Xi hasn’t just held his ground — he’s managed to shift it right underneath the protesters still standing in the streets. And all it took was saying yes to the long-anticipated Shanghai-Hong Kong exchange link that allows for US$3.8 billion (RM12.69 billion) of daily cross-border purchases, a limit regulators will increase if the link is a success. Xi’s Communist Party may be clumsy at diplomacy, but it sure knows how to change the subject. Over in Beijing, where Xi is hosting Barack Obama, Vladimir Putin and other Asia-Pacific leaders, the buzz is about China’s meteoric rise and how it’s reshaping the world — not its encroachment on Hong Kong’s civil liberties. Such is China’s clout that it can keep US President Obama from giving a shout out to Hong Kong’s 7.2 million people. Xi can meet with Shinzo Abe and stare at the floor as the Japanese leader kisses the ring. As the global media pulsates with dollar signs and what might become of Hong Kong stock link, they’re not hitting China for its territorial expansion in Asia, chequebook diplomacy that supports many a rogue regime or the military arms race it’s inspiring. Rather, the talk is of poetry. In a closed-door meeting with Leung on Monday, Xi cited a line from a poem that Chinese emperors used to praise loyal ministers facing rough times. The verse Xi chose — “strong winds reveal the strength of sturdy grass” — was his say of patting Leung on the back for standing firm against those pesky protesters. It’s also the clearest sign yet that Xi plans to use carrots rather sticks to eclipse the biggest challenge to Beijing’s authority since the 1997 handover. Yet the quid pro quos for opening the international monetary spigot pose risks both to China and Hong Kong. Filepic of pro-democracy protestors watching formal talks between student protest leaders and city officials on a video screen in Hong Kong on Oct 21. President Xi Jinping has shifted the spotlight from the protesters by announcing the launch of the Shanghai-Hong Kong stock link. Photo by Reuters Some might conclude that this link is all China’s gain. After all, speculation has already turned to how much Beijing will increase the daily flow of investment into China’s underperforming bourses. Ditto for the next cities that will benefit from this so-called through train, including Shenzhen and Tianjin. But this is Hong Kong’s payday, too. Xi just strengthened the city’s parency and reduce the roles played by state-owned enterprises and the shadow-banking system. As China increases the number of financial products available to retail investors, it should allow some of Hong Kong’s higher governance standards bleed over to the mainland. But the train goes both ways. Now that Leung has his precious Shanghai tie-up, Beijing is signalling, it’s time his government — and police force — fulfilled its end of the bargain and sent protesters home (by force, if necessary). Also, by reminding the business community China is still the proverbial goose laying golden eggs, Hong Kong Inc has less incentive to push for greater democratic development. As I’ve argued before, Hong Kong’s tycoons have much invested in preserving the freedom of expression, transparency and legal certainty that make Hong Kong the thriving business centre it is. Those who see the anti-Beijing students blocking the streets as misguided nuisances haven’t thought things through. In order to maintain its pivotal role, narrow the widening gap between rich and poor and make winners of everyone, Hong Kong needs greater accountability to the people, not less. — Bloomberg position as clearing house for China with its rule of law and a first-world banking system. For China, there are long-term positives to being included in global stock indices. But welcoming walls of money is no replacement for the economic reform needed to internationalise the economy. That re- William Pesek is a Bloomberg News quires bold and steady progress to columnist. The opinions expressed open the economy, increase trans- are his own. A plutocrats summit? REUTERS BY WAY NE SWA N AT an official dinner in Washington, DC, ahead of November’s G-20 Summit in Brisbane, Australia-born media mogul Rupert Murdoch (pic) lectured ministers on the dangers of socialism and big government. A fervent opponent of Australia’s carbon price, and a battle-hardened opponent of US President Barack Obama, Murdoch lauded the virtues of austerity and minimal regulation, and railed against the corrosive effects of social safety nets. The ministers were in Washington to attend the Annual Meetings of the International Monetary Fund and the World Bank, where they attempted to thrash out differences and establish common ground before the upcoming summit. The tone set by Murdoch, however, suggests that a consensus on sustainable, inclusive growth will be hard to achieve. Murdoch’s comments are in keeping with views expressed by his friend, Australian Prime Minister Tony Abbott, and Abbott’s current administration. In January, for example, Abbott informed a startled Davos conference that the global financial crisis was caused not by unregulated global markets, but rather by too much governance. This was certainly news to the finance ministers who had spent the past few years struggling with the toxic fallout from financial-sector excess. Viewed in the context of such comments, one can better understand Australia’s refusal to put issues of climate change and inclusive prosperity on the Brisbane agenda. Of course, stimulating global growth is a big enough challenge in itself, even without considering inclusiveness or environmental sustainability. The IMF’s gloomy growth forecasts attest to that. And many policymakers view Australia’s G-20 chairmanship as an opportunity to re-energise and refine the group’s mission to boost global growth, create jobs, and raise living standards. G-20 finance ministers have already decided on a 2% target for annual growth through 2018, and are sifting through more than 900 proposals for structural reforms in order to achieve this. What reforms G-20 members propose in Brisbane, and how serious they will be about implementing them, remains to be seen. The bigger challenge, though, is hitting those growth targets in a sustainable and inclusive way. If structural reforms are not done right, the Brisbane Summit will come to be regarded as a failure. Structural reforms, in which certain interests are sacrificed for the greater good, will always be controversial and difficult to execute. But when such reforms involve sacrifices by ordinary citizens and benefit society’s most privileged groups, political gridlock and instability invariably follow. Over the past two years, academics, regulators, economists, and financial institutions have all linked the secular stagnation in demand with greater income inequality. It is ironic that, at a time when many in the developing world are entering, or aspire to enter, the emerging middle class, wealth in much of the developed world is becoming more concentrated at the top. Indeed, inequality of outcomes both in emerging and advanced economies has increased within and across generations. Australia’s refusal to discuss inclusive growth doch’s lecture) remarked earlier this year, “Unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself.” IMF managing director Christine Lagarde recently put it more starkly, noting that the world’s 85 richest people control more wealth than the world’s 3.5 billion poorest people, and that this degree of inequality is casting a dark shadow over the global economy. Inequality is not a fringe issue. Combating its rise is essential to achieving sustainable economic growth and political stability. The G-20’s real power is to highlight such challenges and generate informed debate on the issues as a prelude to action. The question now is which leader in Brisbane, in Brisbane may please plutocrats if any, will grab the global megalike Murdoch, but talk of unreg- phone and speak out. — Project ulated markets, lower taxes, and Syndicate the removal of social safety nets strongly indicates that the summit will offer no substantive policies Wayne Swan, a former deputy aimed at reducing inequality. prime minister and treasurer of With just days to go until the Australia, was a regular particiBrisbane meeting, the G-20 is ig- pant in the G-20 Finance Ministers noring the main long-term threats Meetings. His most recent book is to the global economy. As the Bank The Good Fight: Six years, two of England’s Governor Mark Car- prime ministers and staring down ney (who I assume also heard Mur- the Great Recession. 20 FO CU S WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY WE to thi ogn an les all com int we We Of ner com at l of t off Ezi Ho we pro Oth mo suff up ou tha pan oil bar lar to t tio is s Tay pro has now glo Rate watch down south Asset markets are turning more volatile with the end of the US Federal Reserve’s QE programme BY JOA N N G T he US Federal Reserve stopped its monthly bond buying programme last month, effectively ending a controversial experiment with extremely loose monetary policy known as quantitative easing. While it still plans to keep the federal funds rate near zero for a “considerable time”, higher interest rates now seem inevitable if the US economy continues strengthening. And, the transition has unsettled global markets in recent weeks. “The Federal Open Market Committee (FOMC) statement that came out was a little bit more hawkish than expected,” says Kelvin Tay, regional chief investment officer for the Southern Asia-Pacific market at UBS Wealth Management, referring to the branch of the Fed that determines the direction of monetary policy, which issued a statement on Oct 29 that struck an upbeat tone on the state of the economy. “This is something we think investors should be aware of. However, there is no reason to panic and exit the market altogether.” Tay is expecting the Fed to announce a 25-basis-point (bp) rate hike next June or July. The FOMC typically meets once in June and once in July. He expects a hike of another 50bps in 2016. “We see a very gradual increase spread out over a long period of time.” One reason Tay thinks the Fed will be able to keep interest rates low for longer is the drop in commodity prices, which reduces the risk of inflation getting out of hand. “Commodity prices are likely to remain very benign,” Tay says. Meanwhile, he notes that there has hardly been any wage pressure in the United States, despite steadily falling unemployment. As the US economy continues to pick up, he sees the core PCE price index (CPCE), which measures personal consumption expenditure excluding food and energy, trending up from the present 1.5%. But he doubts it will climb above the Fed’s target of 2%. “That means the Fed can afford to increase interest rates over a long period of time.” Tay says the markets tend to become edgy when real interest rates rise to about 2.5%. But he does not see that happening anytime soon. The 10-year US Treasuries currently have a yield of about 2.3%. With CPCE at 1.5%, that puts real interest rates at less than 1% at present. Tay expects the yield on 10-year US Treasuries to hit 3.5% by the end of next year. If inflation hits 2%, that would still put interest rates at a very low level of 1.5%. “And those are very aggressive estimates,” says Tay. “Real interest rates are probably not going to go beyond 1% by next year. It could be 2017 or 2018 before interest rates hit a level where [investors need to be concerned].” At the same time, Tay argues that debt levels among consumers and corporates are not high enough to cause a crisis. “US corporates have a lot of cash. They are also generating a lot of cash and they actually have very little debt,” he says. “Even if interest rates go up, they are not particularly vulnerable.” In certain Asian countries, Tay admits debt levels are quite high. Hong Kong and Malaysia, for instance, have household debt levels that are higher than he is comfortable with. In Singapore, he believes households have enough cash to pay down debt if interest rates rise significantly. And, while there are cases of corporates over-leveraging, these are mostly small and midsized ones and not the blue chips. Local corporates well positioned Kenneth Ng, head of Singapore research at CIMB Research, is similarly positive. “Across corporate Singapore, gearing levels among the large caps have come down,” he says. “This is true in the offshore and marine segment, in property and in transport. What has happened is that, ever since the 2008/09 crisis, everybody has been worried about not just the gearing ratio but also how debt is spread out. So, companies have reduced their gearing levels, lengthened their debt and spread out debt maturities.” Some companies have also managed to raise cash at opportune times. Ng points, for instance, to Genting Singapore’s issue of perpetual bonds in 2012 and CapitaLand’s issue of bonds this year. Other companies, such as Keppel Land, have sold assets to improve their balance sheets. Circumstances have also prevented companies from over-extending their balance sheets, Ng says. For instance, property developers have had to fight hard for land against developers from China and Malaysia that are willing to pay much higher prices. As a result, they have spent less on property than they otherwise might have. Likewise, in the offshore and marine space, Ng says many companies have not been able to invest very much or undertake too many mergers and acquisitions. At the same time, their order books have grown and put them in a more solid position. And, the government’s stance on consumer debt, which has been accompanied by regulations to prevent consumers from gearing up, has also helped keep overall debt levels down. Finally, he points out that costs are much lower today than they were in the lead-up is c ing fro or pri ma ver Am nie sup an gro pla be ren list Res me to i lea mo of U Ca net gro and Sar ber no litt to r des ma foo mo con cha als cou ica als ver ebt ced ebt d to nts, e of d’s es, to mnce dend Maher on ve. ne not ake the wn nd, ebt, ons has wn. uch up FO CU S 21 WE D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY to the recent financial crisis. “The good thing about the current climate is we recognise there is a slowdown led by Europe and China,” he says. “This means there is less cost pressure.” Taken together, Ng says, all these factors mean the locally listed companies are entering a period of rising interest rates in a better position than they were going into the crisis. both companies should enjoy steady earnings, as they operate in relatively resilient market sectors. Shares in Sarine, which makes machines that analyse, cut and assess diamonds, have soared dramatically this year. The stock is the second-best performer in The Edge Singapore’s list, after Stats ChipPac. Sarine also trades at a hefty 33 times earnings and has a dividend yield of just 0.8%. Given its Weakness in some segments outperformance, Sarine could be a target Of course, some companies are more vul- for profit-taking in the months ahead. But nerable than others. Among locally listed its strong balance sheet should allow it to companies with market capitalisations of keep expanding even in leaner times. at least S$1 billion (RM2.59 billion), some of the most heavily geared are second-tier Exchange rate impact offshore and marine companies such as Beyond the local market, the prospect of higher Ezion Holdings, PACC Offshore Services US interest rates could also spur volatility Holdings and Cosco Corp Singapore. in exchange rates of regional currencies in Ng warns that debt loads at Ezion as the months ahead. Among the currencies well as Swissco Holdings could become a that could be vulnerable is the Indonesian problem if interest rates rise significantly. rupiah, according to analysts. Other than their debt possibly becoming In fact, the rupiah was among the curmore expensive, their businesses could rencies that were hit over a year ago, during suffer too. Both companies refurbish and a so-called “taper tantrum” when investors upgrade their old assets to charter them responded to the prospect of a reduction out or sell them on — a business model in the size of the US Fed’s asset purchase that requires significant capital. programme. “It was not that interest rates Tay of UBS also warns that offshore com- moved, but that interest rates were going panies may suffer from weaker demand if to move. There was a concern about econoil prices fall below US$75 (RM250.50) a omies that were in a deficit,” says Ng. barrel, although he does not expect such a Tay thinks that, within Asia, Indonesia large fall. “We think oil prices will go back remains the most vulnerable, from a curto the US$85 to US$95 level.” The Organiza- rency standpoint. More than a third of the tion of the Petroleum Exporting Countries country’s stocks and government bonds is scheduled to meet later this month and are held by foreign institutions, and when Tay expects that it will decide to reduce US interest rates rise, these institutions are production slightly. “But Opec’s influence likely to sell some assets and move funds has been diminished significantly.” The US back to the US, Tay says. In short, rupinow accounts for a significant portion of ah-denominated assets might lose their global fuel production. attractiveness. Another sector that Ng is cautious about One US dollar currently buys 12,100 Inis commodities. He says companies operat- donesian rupiah. Tay calculates that a fall ing in this space could face some pressure in the Indonesian rupiah to 12,600 would from their bankers to meet debt covenants shave about 3% off the yield for government or interest coverage ratios as commodity bonds, which currently stands a little above prices fall. “As commodity prices fall, their 8%. “Once institutions reduce their holdmargins have come down. They could be ings of Indonesian government bonds, they very thin or maybe even negative,” he says. will have to repatriate that money. This will Among the most heavily geared compa- in turn affect the currency further. It also nies in the local market are commodity affects equity markets,” Tay adds. “That’s supply chain players Olam International why the Indonesian rupiah is our least and Noble Group as well as agribusiness preferred currency.” group Wilmar International and oil palm Currency weakness in the region could planter Bumitama Agri. also have a knock-on effect on corporate Another well-known company that could margins. “Say, a company is selling coffee be vulnerable is Neptune Orient Lines, cur- in Indonesia; its costs will rise because Rorently the third most indebted of the locally busta coffee is quoted in US dollars. So, the listed large caps. In a Nov 1 report, CIMB company will have to either settle for lowResearch says NOL’s high gearing level may er margins or raise its prices,” Ng explains. mean that the company lacks the finances However, a period of weaker currencies is to invest in larger ships necessary for cost not usually a good time for companies to leadership in the Asia-Europe trade. For its raise prices because inflation would already most recent quarter, NOL reported a loss be going up on the back of higher fuel pricof US$23 million. es. “Raising prices at this time would mean a double hit on the consumer.” Cash-rich companies Ng says investors should be wary of comMeanwhile, some of the companies in panies that have emerging market exposure net cash positions are Singapore Exchange, in general. “Particularly countries where grocery store operators Sheng Siong Group consumers have had artificial subsidies and Dairy Farm International Holdings, and from the government. When the currency Sarine Technologies. As at end-Septem- comes off, that can affect consumption a ber, SGX had S$837.4 million in cash and bit,” he says. no debt. With this large cash cushion, it is So, even though interest rates might not little wonder that SGX’s board has elected rise immediately, investors need to be preto retain its quarterly dividend of four cents pared for negative market movements in despite a 16% fall in earnings. the months ahead. “No matter what, there Sheng Siong operates a chain of super- will always be a period of softness right bemarkets in Singapore that sell both fresh fore the first rate hike,” says Tay. “And we food and dried goods. Dairy Farm is slightly are going to see quite a fair bit of weakness more diversified. Its operations also include because everyone is speculating when the convenience stores and health and beauty first rate hike will be. Every time data comes chains Guardian and Mannings. Dairy Farm out positive, there will be concerns that the also has significant operations outside the Fed might have to bring forward the rate country. Sheng Siong’s limited geograph- hike or increase it by 50bps instead of 25. ical presence could make it a safer bet. It The three-month period before the initial also has a higher dividend yield of 4.3%, rate hike will be a very volatile, speculative versus Dairy Farm’s 2.5%. Nevertheless, one.” — The Edge Singapore All geared up How the largest Singapore-listed companies rank by indebtedness COMPANY Oxley Holdings StarHub Neptune Orient Lines Olam International GuocoLand COSCO Corp Singapore Japfa STATS ChipPAC Wilmar International Fragrance Group Ezion Holdings PACC Offshore Services Holdings Noble Group United Engineers Gallant Venture M1 SMRT Corp CapitaLand Bumitama Agri Thai Beverage Hotel Properties Yanlord Land Group Mandarin Oriental International UOB-Kay Hian Holdings SIIC Environment Holdings OUE Keppel Land Jardine Cycle & Carriage Ho Bee Land City Developments United Envirotech First Resources Indofood Agri Resources GuocoLeisure Singapore Telecommunications Golden Agri-Resources United Industrial Corp Frasers Centrepoint UOL Group Straits Trading Co Keppel Corp Jardine Matheson Holdings (US$) Jardine Strategic Holdings (US$) Wing Tai Holdings Hongkong Land Holding (US$) IHH Healthcare (RM) Singapore Press Holdings Wheelock Properties Singapore Sembcorp Marine Sinarmas Land Sembcorp Industries Yangzijiang Shipbuilding Holdings ComfortDelGro Corp Global Logistic Properties Venture Corp Super Group Genting Hong Kong Fraser and Neave Bukit Sembawang Estates Biosensors International Group Yeo Hiap Seng SATS ARA Asset Management Haw Par Corp Raffles Medical Group Genting Singapore SIA Engineering Co Singapore Post Singapore Technologies Engineering Singapore Airlines Dairy Farm International Holdings Petra Foods OSIM International Silverlake Axis Sarine Technologies Sheng Siong Group Singapore Exchange Source: Bloomberg PRICE MARKET (S$) CAPITALISATION (S$ BIL) (%) PRICE NET DEBT-TOPER DIVIDEND CHANGE YTD EQUITY/ (TIMES) YIELD (%) (NET CASH) 0.54 4.20 0.81 2.11 1.90 0.60 0.64 0.58 3.13 0.22 1.47 0.68 1.6 7.2 2.1 5.1 2.2 1.3 1.1 1.3 20.0 1.5 2.3 1.2 -5.3 -2.1 -28.0 39.1 -15.9 -21.2 – 75.8 -8.5 2.5 -20.5 – 415.0 354.9 212.3 183.5 156.6 118.2 108.6 101.7 100.0 99.0 98.1 92.2 5.6 20.0 – 8.5 8.9 35.0 17.5 – 13.8 6.9 9.4 8.7 0.3 4.8 – 2.4 2.6 1.7 – – 2.4 0.5 0.1 – 1.19 2.89 0.24 3.64 1.60 3.18 1.11 0.75 4.06 1.09 1.77 8.0 1.8 1.2 3.4 2.4 13.5 1.9 18.7 2.1 2.1 1.8 10.7 62.4 -11.1 13.7 37.9 5.0 17.6 38.0 32.0 -11.4 6.0 89.2 84.5 77.8 68.3 67.9 58.0 57.0 53.9 53.9 50.9 50.9 13.2 10.4 56.1 19.7 30.8 15.6 15.9 21.5 14.2 5.9 20.8 1.0 2.4 – 3.9 1.7 2.5 1.2 2.4 2.0 1.2 4 .0 1.52 0.17 2.13 3.36 39.70 2.00 9.41 1.48 2.05 0.83 0.92 3.77 0.51 3.37 1.59 6.46 2.90 9.49 59.78 34.80 1.78 6.89 1.91 4.28 1.81 3.68 0.61 4.82 1.16 1.1 1.6 1.9 5.2 14.1 1.3 8.6 1.3 3.2 1.2 1.3 60.1 6.5 4.7 4.6 5.1 1.2 17.2 41.3 39.0 1.4 16.2 15.6 6.8 2.2 7.7 1.9 8.6 4.4 -8.5 -9.3 -9.4 0.6 10.4 -4.4 -1.6 63.0 -3.3 -6.8 7.0 3.0 -7.3 13.5 6.7 5.2 -18.8 -15.2 14.3 8.8 -9.4 16.8 27.0 3.9 6.5 -16.9 27.1 -11.9 -2.1 50.2 49.3 37.6 36.8 35.9 34.6 32.4 31.3 28.8 28.1 26.4 26.0 25.7 25.4 23.7 20.5 19.9 16.5 15.3 14.7 13.9 11.9 10.1 7.6 7.3 3.1 2.1 0.5 -0.9 15.8 28.5 2.2 5.9 12.3 2.5 14.6 29.3 12.0 14.0 23.7 17.3 17.5 12.5 3.0 8.1 17.4 9.3 13.8 12.3 5.5 14.0 55.4 17.1 38.7 13.5 9.8 10.3 5.8 4.3 – 1.4 3.9 3.4 2.5 0.9 0.2 2.2 0.6 2.2 4.5 2.2 0.9 1.5 2.3 1.4 4.4 2.4 0.7 1.7 2.6 0.4 3.5 3.3 3.0 0.8 1.0 4.3 2.58 2.69 7.62 1.10 0.35 2.94 5.32 0.62 1.92 3.13 1.65 8.52 4.00 1.06 4.48 1.95 3.65 5.5 13.0 2.1 1.2 2.8 4.2 1.4 1.0 1.1 3.5 1.4 1.9 2.3 12.9 5.0 4.1 11.4 28.4 -6.9 -0.8 -42.4 -19.8 -5.2 -11.8 -26.3 -19.9 -3.1 -11.3 5.3 28.6 -29.4 -10.6 47.2 -5.9 -1.7 -4.6 -7.9 -12.8 -16.3 -16.6 -17.4 -17.4 -17.5 -18.1 -19.0 -22.1 -23.0 -26.3 -28.1 -29.4 -29.6 19.9 17.3 15.2 16.5 3.7 8.3 18.1 21.1 21.2 19.8 17.2 15.7 25.0 19.4 22.6 28.5 19.9 3.0 1.7 6.6 4.1 2.9 4.8 0.8 – 1.0 4.2 3.0 2.3 1.4 0.9 4.2 3.2 2.2 10.13 9.38 11.8 12.7 -0.2 -1.3 -31.7 -40.5 43.7 25.1 2.1 2.5 3.79 1.73 1.36 3.11 0.67 7.07 2.3 1.3 3.1 1.1 1.0 7.6 18.7 -25.0 54.5 68.7 9.8 -2.6 -41.2 -54.7 -55.9 -57.9 -62.1 -106.4 31.1 12.5 31.8 33.0 20.4 24.7 1.3 3.5 2.9 0.8 4.3 4.0 22 F E AT U R E WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY What is F&N’s Myanmar Brewery worth? Global banks prepare for un-level playing field with FSB plan BY G EO RG E H AY Unit is one of the fastest growing in the group BY KA NG WA N C HERN F raser and Neave (F&N) is having a promising brewery business wrested from its grasp for the second time since Thai billionaire Charoen Sirivadhanabhakdi appeared on the scene. But the market isn’t taking it well this time around. Two years ago, as Charoen was in the throes of gaining control of F&N, Dutch brewer Heineken agreed to buy out F&N’s stake in Asia Pacific Breweries at $53 per share. Heineken and F&N had been partners in APB for decades, and the former was clearly concerned about the change in control of the latter. Taking APB private cost Heineken some $5 billion, and valued the brewer at 35 times earnings. Most analysts agreed that F&N wasn’t short-changed in the deal. On Oct 31, F&N said a Singapore arbitration tribunal had ruled that it should relinquish its 55% stake in Myanmar Brewery to its partner Myanma Economic Holdings Ltd (MEHL), which owns the remaining 45% stake. Myanmar Brewery is one of F&N’s fastest growing units, and is forecast to contribute more than one-third of its FY2015 earnings. MEHL formed a joint venture with APB in 1995 to set up and operate Myanmar Brewery. In 1997, APB transferred its stake in Myanmar Brewery to F&N. It was smooth sailing until 2012, when Charoen moved in on F&N. In April 2013, MEHL served notice to F&N, claiming its right to buy F&N’s stake in Myanmar Brewery, citing F&N’s change of controlling shareholder. F&N refused to sell its stake. The dispute went to arbitration in September 2013. While having to give up its stake in Myanmar Brewery is clearly a setback for F&N, much depends on how much MEHL eventually pays for the stake. MEHL had initially offered F&N US$246 million ($317.8 million). F&N says this values Myanmar Brewery at 7.5 times FY2014 earnings, which is too low given the brewery’s leadership position in Myanmar and its profit growth of 50% over the last year. The arbitration tribunal has ruled that an independent valuer should be appointed to determine an appropriate price for the brewery. The market isn’t waiting to find out what that price might be, though. “The ruling in favour of MEHL is clearly a big negative for F&N as its last crown jewel is taken out, leaving the group with a big earnings hole to fill, even if it is eventually paid fairly for its 55% stake,” writes CIMB’s Kenneth Ng in a Nov 2 report, which downgrades his call on F&N from “add” to “reduce”. On Nov 3, immediately after the outcome of the arbitration was known, shares in F&N fell 4.7% to $3. They have since slipped further. So what could Myanmar Brewery be worth? Global brewers currently trade at an average valuation of 21.4 times earnings, although many operate primarily in developed markets with little growth. The brewer with the highest priceto-earnings valuation is Tsingtao Brewery, which trades at 30 times earnings. However, Ng of CIMB points out that the value of Myanmar Brewery is not being determined in a competitive market. He figures that MEHL will ultimately pay some $1.6 billion for F&N’s stake in Myanmar Brewery, which is a valuation of 22 times earnings. Even so, that is a significant amount of cash for F&N, which has a current market value of $4.5 billion. The market may well be right to view F&N’s loss of Myanmar Brewery negatively, but a range of new opportunities could be about to open up for the company. — The Edge Singapore Banking on the nostalgia of a kampung house A TRADITIONAL kampung house at the foothill of Bukit Jana serves as an iconic attraction for the town of Kamunting in Taiping. Every morning, the house and its verandah are enveloped by mist as a stream gurgles down the hill. There is a nearby enclosure from which visitors can enjoy the view of the tranquil greenery surrounding the house. Known as “The Jana”, the house offers a much sought-after respite from the hustle and bustle of the town. The Jana is MK Land Holdings Bhd’s latest attraction using the kampung house concept. Located within the Taiping Golf Resort, it is the brainchild of the group’s chairman, Tan Sri Mustapha Kamal Abu Bakar. The first phase of the The Jana development consists of five kampung houses within the golf resort. Three houses each has two bedrooms and two bathrooms, while each of the remaining two has one bedroom and one bathroom. Another five houses will be built in 2015 to enable visitors to enjoy nature. The resort also offers five village accommodation packages that include the BBQ Package, Wedding Package, Fruit Trail Package and Team-Building Package. MK Land group senior general manager Kamarulzaman Abu Bakar said the idea behind the kampung house concept is to have people appreciate the rustic lifestyle of the past.”Everything about the kampung house is rep- The Jana is MK Land Holdings Bhd’s latest attraction using the kampung house concept. Located within the Taiping Golf Resort, it is the brainchild of the group’s chairman, Tan Sri Mustapha Kamal Abu Bakar. Photo by Nurul Halawati Azhari licated — from the house built on pillars to have it raised from the ground to many windows for ventilation, the airy verandah and intricate carvings on the pillars,” said Kamarulzaman. Having the surrounding areas planted with herbs and fruit trees also highlight the tradition of the Malays then who loved to plant trees around their homes. Taiping Municipal Council president Datuk Abd Rahim Md Ariff praised MK Land’s latest efforts that also helped to promote the heritage town of Taiping, as well as Perak. Visitors who had previously come to play at the 18-hole golf course, now also come to enjoy a traditional living experience at the resort. Taiping is among the oldest towns in the country. It has a fa- mous zoo and lake gardens, as well the Bukit Larut hill station and the fireflies in Kuala Sepetang as attractions. Abd Rahim hoped that the stakeholders in recreational and tourism-related activities would come together for a strategic cooperation. “This is necessary for drawing up comprehensive tourism packages to meet market demands.” — Bernama NO bank should be too big to fail. The world has taken a step closer to that admirable goal with Monday’s capital proposals from the Financial Stability Board (FSB), the body responsible for global coordination of bank regulation. But the latest plan has too many national carve-outs to do much for the FSB’s other aim of establishing a “level playing field”. The proposals in the FSB’s final consultation paper should reduce the chance that taxpayers would be called on to rescue failed banks. The key ratio is total loss absorbency capacity (TLAC) to risk-weighted assets. TLAC includes equity and debt that automatically becomes equity. The FSB suggests a TLAC ratio of 16% to 20%, which could rise to 25% or beyond, depending on the size of the lender and whether national regulators add an extra buffer. It was never likely that all of the world’s leading banks and governments would agree on a simple rule that applies to everyone and, indeed, they haven’t. Big banks based in China and other emerging markets will be exempt from the new regime. Japanese banks will benefit from being allowed to count their national resolution funds, an industry-financed pot of money to assist restructurings, as part of their TLAC. The FSB has also thrown a bone to European banks. Banks in the United States with a single holding company above their main operations already have a clear line between what can be bailed in and what cannot. Big European banks, which often have everything jumbled together, would have faced the cost and irritation of establishing holding companies and stuffing them with new and expensive bail-inable debt. Allowing debt held at operational level to potentially contribute 2.5 percentage points of the total TLAC ratio makes it easier to maintain their current structures without the need for holding companies. If European banks are given until 2019 to reach their new TLAC targets, it could only cost 3% of their forecast 2016 profits, Citi estimates. This is by no means nailed down, though. The main effect will be to hamper the big global players. They will need more bail-inable capital than local competitors, or rivals based in emerging markets. The banking world is set to become less global, and less concentrated. — Reuters W O R L D B U S I N E S S 23 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY Xi pushes free trade area China fears TPP will be used to force it to open markets or isolate it BEIJING: The global economic recovery is unstable and nations in the Asia-Pacific Economic Cooperation (Apec) bloc should speed up free trade talks to spur growth, Chinese President Xi Jinping said yesterday. Speaking at the start of a summit of Apec leaders, Xi urged the meeting to speed up talks on a trade liberalisation framework called the Free Trade Area of the Asia-Pacific (FTAAP) that is being pushed by Beijing. “Currently, the global economic recovery still faces many unstable and uncertain factors. Facing the new situation, we should further promote regional economic integration and create a pattern of opening up that is conducive to long-term development,” Xi said. “We should vigorously promote the Asia-Pacific free trade zone, setting the goal, direction and roadmap and turn the vision into reality as soon as possible.” Some see a proposed study on the FTAAP plan, which will be presented to Apec leaders for approval, as a way to divert attention from the Microsoft unveils first Lumia smartphone minus Nokia name World leaders taking their seats at the start of the Apec summit yesterday. Xi urged the meeting to speed up talks on the FTAAP, which is being pushed by Beijing. Photo by Reuters Trans-Pacific Partnership (TPP) trade agreement being pushed by the United States. China is not part of the TPP, which seeks to establish a free trade bloc stretching from Vietnam to Chile and Japan, encompassing about 800 million people and almost 40% of the global economy. China has not been enthusiastic about the TPP, fearing that it is Obama presses for tough ‘open Internet’ rules BY ROB LEV ER BANGALORE: Microsoft Corp said it would roll out its Lumia 535 smartphone this month with an affordable price tag in its key markets, dropping the Nokia name just months after buying the Finnish company’s handset business. Loaded with its latest Windows Phone 8.1 operating system, the Lumia 535 and Lumia 535 dual SIM will be priced at around €110 (RM457) before taxes and subsidies, Microsoft said in a statement. The phone will feature a wide-angle 5 megapixel front-facing camera and a 5-inch qHD display screen, the company said. Smartphones run on Microsofts’ Windows software, mostly Lumias, captured only 2.7% of the global smartphone market in the second quarter, down from 3.8% the year before, according to research firm Strategy Analytics. Microsoft completed its US$7.2 billion deal to buy Nokia’s handset business in April. Nokia continues as a network, mapping and technology licensing company. It owns and manages the Nokia brand and only licenses it to Microsoft. Microsoft had said in the past it planned to license the Nokia brand for its lower-end mobile phones for 10 years. — Reuters being used by Washington as a way to either force it to open markets by signing up or else isolate it from other regional economies as trade is diverted to TPP signatories. The TPP is widely seen as the economic backbone of US President Barack Obama’s “pivot” to Asia, what some experts view as an attempt to balance China’s rise by establishing a larger US presence in the region, including military assets. Xi was quoted by state news agency Xinhua on Monday as saying that FTAAP “does not go against existing free trade arrangements which are potential pathways to realise FTAAP’s goals”. He said Apec’s 21 economies should play a leading and coordinating role, break all sorts of shackles and usher in a new round of opening up, communication and integration. — Reuters WASHINGTON: US President Barack Obama voiced support on Monday for a new regulatory system for Internet providers aimed at avoiding a two-speed system leaving some services in an online “slow lane”. Obama endorsed an effort to reclassify the Internet as a public utility to give regulators authority to enforce “net neutrality”, the principle barring Internet service firms from playing favourites or opening up “fast lanes” for those who pay more. In a statement, Obama said he wants the independent Federal Communications Commission (FCC) to “implement the strongest possible rules to protect net neutrality”. His comment comes as the FCC seeks to draft new rules to replace those struck down this year by a US appeals court, which said the agency lacked authority to regulate Internet service firms as it does for telephone carriers. “’Net neutrality’ has been built into the fabric of the Internet since its creation — but it is also a principle that we cannot take for granted,” Obama said. “We cannot allow Internet service providers to restrict the best access or to pick winners and los- ers in the online marketplace for services and ideas.” Obama said that while the FCC is an independent agency, he wants the regulatory body to maintain key principles of net neutrality. He said the rules should ensure no blocking of any legal content, to ensure that an Internet provider does not shut out a service such as Netflix to promote a rival one. Obama seeks to ban “paid prioritisation”, which would allow one service to get into a faster lane by paying extra, or the flip side of that, which would be “throttling” or slowing a service that does not pay. — AFP IN BRIEF S&P cuts rating on Bumi’s US$700m bond JAKARTA: Standard & Poor’s Ratings Services has cut its rating on PT Bumi Resources Tbk’s US$700 million (RM2.34 billion) bond due 2017 to “D” after Indonesia’s biggest coal miner missed its interest payment. Bumi said last week it had delayed the interest payment to the end of this month from October. The bond paying 10.75% interest per annum was issued by Bumi Investment Pte Ltd Singapore. “We lowered the issue rating on the US$700 million notes because Bumi Resources, the guarantor, has failed to make the interest payment within the 30-day grace period allowed under the bond indenture,” said S&P credit analyst Vishal Kulkarni. — Reuters Avigan expected to be effective in treating Ebola TOKYO: Fujifilm Holdings Corp said yesterday it expects its influenza drug Avigan to become a highly effective drug to treat Ebola. “So far, four Ebola patients have recovered after being treated with the drug,” Shigetaka Komori, Fujifilm chairman and chief executive, told a news conference. “We believe that the drug will become highly effective to treat the disease.” Fujifilm, once among the world’s biggest makers of photography film, has been expanding its pharmaceutical business. In 2008 it bought Toyama Chemical Co, whose influenza drug Avigan has been drafted for the fight against Ebola. — Reuters China firm wins order for 30 home-grown planes ZHUHAI: China’s main commercial aircraft company said yesterday it had received 30 orders for its C919 passenger plane, bringing the total to 430. State-backed Commercial Aircraft Corp of China (Comac) signed an agreement with CMB Financial Leasing, a unit of China Merchants Bank, on the sidelines of the country’s premier Zhuhai air show, according to a Comac statement. The order marks a vote of confidence in the C919, a 158- to 168-seat narrow-body jet that would compete with the Boeing 737 and the Airbus A320. — AFP Hackers target CEOs in ‘Darkhotel’ scheme US, China reach IT tariff cuts ‘understanding’ WASHINGTON: Hackers have developed a scheme to steal sensitive information from top executives by penetrating the WiFi networks of luxury hotels, security researchers said on Monday. A report by Kaspersky Lab said the “Darkhotel” espionage effort “has lurked in the shadows for at least four years while stealing sensitive data from selected corporate executives traveling abroad”. Kaspersky said about 90% of the infections appear to be located in Japan, Taiwan, China, Russia and South Korea, but that the executives targeted include those travelling BEIJING: The United States and China have “reached an understanding” on an agreement to reduce tariffs on information technology trade, the White House said in a statement yesterday, in what Washington called a boost to World Trade Organization’s (WTO) efforts to slash trade duties. Washington hopes the move would “contribute to a rapid conclusion” of negotiations in Geneva on WTO’s first major tariff-cutting deal in 17 years, President Barack Obama told leaders gathered for an Asia-Pacific summit in Beijing, the statement said. — AFP from the United States and other countries. “The infection count numbers in the thousands,” the report said. “The more interesting travelling targets include top executives from the US and Asia doing business and investment in the [Asia-Pacific] region.” The hackers are able to compromise hotel WiFi networks, and to then trick executives into downloading malicious software that can allow their information to be accessed remotely. “These tools collect data about the system and the anti-malware software installed on it, steal all keystrokes, and hunt for cached passwords in Firefox, Chrome and Internet Explorer; Gmail Notifier, Twitter, Facebook, Yahoo and Google login credentials; and other private information,” the report said. “Victims lose sensitive information — likely the intellectual property of the business entities they represent. After the operation, the attackers carefully delete their tools from the hotel network and go back into hiding.” Kaspersky researcher Kurt Baumgartner said the attacks are highly sophisticated. — AFP W O R L D B U S I N E S S 25 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY Alibaba goes global to top US$5.7b Singles’ Day sales Over US$1b of merchandise sold in 1st 20 minutes, compared with an hour last year HONG KONG/SHANGHAI: Alibaba Group Holding Ltd turned an obscure Chinese holiday into the country’s biggest shopping event. Now it’s aiming to take the success of Singles’ Day global by tapping foreign brands, including Calvin Klein and Blue Nile Inc. Those companies, along with Costco Wholesale Corp, Origins Natural Resources Inc and American Eagle Outfitters Inc, were participating in yesterday’s event for the first time. China’s biggest e-commerce operator is looking to eclipse last year’s 35 billion yuan (RM19.12 billion) of transactions in a 24-hour period. Alibaba, which less than two months ago completed the biggest initial public offering (IPO) ever, is using 27,000 labels to attract international merchants and consumers for a promotion with almost triple the sales of Cyber Monday. The company will offer steep discounts on Tmall and its other websites to entice shoppers, who may spend more than 50 billion yuan, accord- globalORE eyes new iron ore contract in liquidity push Employees and journalists taking pictures and videos of a giant electronic board showing the online transaction value on Alipay, an online payment system of China’s leading e-commerce retailers Taobao.com and Tmall.com, at the parent company Alibaba’s headquarters in Hangzhou, Zhejiang province early yesterday. Photo by Reuters ing to an estimate by consultant OgilvyOne Shanghai. “November 11 is a key milestone for Alibaba,” said Allen Xu, the consultant’s managing director. “The company used the festival to build Hyundai, Kia to spend US$616m to buy back shares BY ROSE KIM BY MA N OLO SERA PIO JR SINGAPORE: The world’s biggest trading platform for spot iron ore cargoes, globalORE, is looking to launch a new contract next year to further boost volumes that hit record levels in October as prices tanked, its chief executive said. Cargoes of the steelmaking ingredient sold on the platform help determine benchmark spot prices that have this year tumbled more than 40% as supply surged and demand growth in top buyer China cooled. GlobalORE is equally owned by seven companies including top iron miners Vale, Rio Tinto and BHP Billiton, Chinese steelmaker Baoshan Iron and Steel and mining and commodity trading major Glencore. “We’re definitely looking to broaden out the global nature of what’s traded on the platform and the geographies that it’s delivered into,” Louis Fel told Reuters in an interview. The platform may introduce an iron ore lump contract in the first quarter of 2015 and is considering offering cargoes from other countries, Fel said. — Reuters its dominance as an e-commerce player linking businesses to consumers in China. With the IPO of Alibaba, the company has the ambition to make this brand go global.” More than US$1 billion (RM3.34 billion) of merchandise sold in the first 20 minutes yesterday, compared with an hour to reach that mark last year, Alibaba said on its website. Half of this year’s sales were placed via mobile devices, the company said. Singles’ Day, a Chinese twist on Valentine’s Day, was invented by students in the 1990s, according to the Communist Party-owned People’s Daily. When written numerically, the date is reminiscent of “bare branches,” the Chinese expression for bachelors and spinsters. Xiaomi Corp, China’s biggest smartphone vendor, sold 720,000 Mi phones worth one billion yuan in 12 hours, vice-president Hugo Barra said in a Twitter post yesterday. Building Singles’ Day into an international event could be the next test for Alibaba’s momentum. Still, the company isn’t expecting a significant contribution from global sales this year, chief operating officer Daniel Zhang said yesterday at a press briefing in Hangzhou. — Bloomberg SEOUL: Hyundai Motor Co and Kia Motors Corp will buy back a combined 670 billion won (RM2.05 billion) of stock after their purchase of a Seoul property for three times the assessed price spurred a sell-off. Hyundai, South Korea’s largest automaker, will buy back 2.2 million common shares and 652,019 preferred shares, while affiliate Kia will buy back 4.05 million common shares, both at Monday’s closing prices, according to separate regulatory filings by the companies yesterday. The buybacks will be completed by Feb 11 to “stabilise share prices and improve share- holder value,” the companies said. The announcement comes almost two months after the automakers and Hyundai Mobis Co won an auction for prime property in South Korea’s central Gangnam district, offering triple the assessed price to state-run Korea Electric Power Corp. Hyundai shares slumped 24% since the deal was announced on Sept 18 through Monday, compared with a loss of 5.1% for South Korea’s benchmark Kospi Index. “Today’s (yesterday) announcement helps ease concerns that Hyundai may cut dividend payout and is meaningful in that the companies have taken an actual step to improve shareholder value,” said Heo Pil Seok, chief executive officer at Midas International Asset Management Ltd, which oversees US$10 billion (RM33.4 billion), including Hyundai shares. “It will definitely improve investor sentiment and bring up market expectation for an increase in dividend.” Last month, Hyundai said on behalf of the land-deal consortium that the three companies, all part of billionaire chairman Chung Mong Koo’s automotive group, won’t issue debt and will use cash to fund the 10.6 trillion won purchase. This damped investor optimism that the companies may increase their dividend payouts. — Bloomberg Galaxy at week high on strong high-stakes gambling SHANGHAI:Galaxy Entertainment Group Ltd, controlled by billionaire Lui Che Woo, climbed to a week high in Hong Kong after posting third-quarter revenue that showed resilience in its high-stakes gambling business. Galaxy rose as much as 4.4% to HK$53.30 (RM23), the highest intraday level since Nov 4. It traded 3.2% higher as of 1.39pm and the benchmark Hang Seng Index gained 0.5%. Adjusted earnings before interest, taxes, depreciation and amortisation rose 1% to HK$3.3 billion, Hong Kong-based Galaxy said in a stock exchange statement yesterday. That compares with the HK$3.32 billion average of six analyst estimates compiled by Bloomberg. Galaxy drew more players from both the high-end and the mass-market segments of the industry even as its competitors such as SJM Holdings Ltd and Wynn Macau Ltd saw VIP traffic drop off. Macau’s monthly casino revenue fell for the fifth straight month in October amid an overall economic slowdown and President Xi Jinping’s crackdown on corruption. “What stood out is that their VIP business tends to be outperforming the market,” said Michael Ting, a Hong Kong-based analyst at CIMB Securities Ltd. “Galaxy’s relationships with the junkets are quite strong.”— Bloomberg IN BRIEF S’pore port authority says little disruption to fuel oil supply SINGAPORE: The Maritime and Port Authority of Singapore (MPA) said yesterday that, based on its assessment, there will be minimal disruption to bunker supply in the Port of Singapore following the bankruptcy of the world’s biggest supplier, Denmark’s OW Bunker, The Straits Times reported. There are currently more than 60 bunker suppliers in Singapore, and OW Bunker Far East (Singapore) Pte Ltd accounted for less than 3% of the 42.6 million tonnes supplied here in 2013. Bunker is any type of fuel oil used by ships. MPA added that it is working with the industry and the industry associations to mitigate any potential impact on bunkering operations in Singapore. Hin Leong prepares lawsuit against bankrupt OW Bunker unit SINGAPORE: Singapore’s Hin Leong Trading is preparing a lawsuit against the Singapore unit of bankrupt Danish ship fuel trader OW Bunker, court documents showed. Hin Leong Trading, Singapore’s biggest independent oil trader, is preparing a writ of summons, which is a court document used to commence legal proceedings in Singapore. The trader is seeking S$1.67 million (RM4.32 million) from OW Bunker East, a subsidiary of OW Bunker, over the sale of goods, according to the court document. OW Bunker filed for bankruptcy last week. Calls to OW Bunker East’s offices in Singapore went unanswered. — Reuters Blumont posts third-quarter loss of S$13.5m SINGAPORE: Troubled Blumont Holdings reported a S$13.5 million (RM34.89 million) loss-making third quarter. This was a reversal of the S$33.7 million profit it had reported for the same period last year, The Straits Times reported. Revenue was 38% lower at S$779,000 for the quarter ended Sept 30. Net asset value per share was 2.02 cents as at Sept 30 compared with 2.98 cents as at Dec 31, 2013. Loss per share was 0.52 cent compared with 1.97 cents a year ago. Oil supplier Vanguard Energy files for bankruptcy SINGAPORE: Singapore ship fuel supplier Vanguard Energy filed for bankruptcy in late October, court documents showed. Vanguard’s filing on Oct 29 took place just about a week before the world’s largest marine fuel supplier OW Bunker filed for bankruptcy. — Reuters 26 WORLD WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY Captain of doomed ferry gets 36 years in jail S Korean court finds him guilty of negligence for tragedy that killed 304 BY JU - MI N PA RK GWANGJU (South Korea): The captain of a South Korean ferry that capsized in April killing 304 passengers was jailed for 36 years yesterday after a court found him guilty of negligence, but was acquitted of homicide for which prosecutors had sought the death penalty. The court convicted the ship’s chief engineer of homicide for not aiding two injured fellow crew members, making him the only one of four facing homicide charges to be found guilty on that count, and sentenced him to 30 years in prison. The remaining 13 surviving crew members of the ferry Sewol were found guilty of various charges, including negligence, and handed down prison terms ranging from five to 20 years. Cries and shouts of anger and disbelief erupted in the packed courtroom in the southern city of Gwangju as the verdict and sentences were read. “Judge, this is not right,” a woman screamed in anguish as some of the other family members broke down in tears. The death penalty had been sought for the captain of Sewol, Lee Joon-seok (centre), who is in his late 60s. He, instead, faces the rest of his life in prison. “Is this how little the lives of our children were worth?” another said. “The death sentence is not enough for the crew.” Video footage of the crew abandoning the vessel after instructing the passengers, mostly teenagers, to remain in their cabins had caused outrage and calls for harsh punishment. The victims’ families issued a statement after the verdict, saying they were devastated by the decision and justice had failed. The overloaded Sewol capsized while making a turn on a routine voyage to the holiday island of Jeju. The vessel was later found to be defective, with additions made to increase passenger capacity making it top-heavy and unstable. The ferry operator also loaded the ship with excess cargo and not enough water in the ballast tank to maintain balance, causing it to sink rapidly when it made the ill-fated ferry turn on April 16. Only 172 of the ferry’s 476 passengers and crew were rescued. Of the 304 confirmed dead or still listed as missing, 250 were schoolchildren. The government announced earlier yesterday it was halting the search for the nine still missing as conditions at the wreck have become too dangerous. The public outcry provoked by the tragedy had led to concerns over whether the crew would be able to get a fair trial, especially after the prosecutors charged four of them with homicide. They had sought the death penalty for the captain of Sewol, Lee Joonseok, who is in his late 60s. He, instead, faces the rest of his life in prison. The crew on trial have said they thought it was the coastguard’s job to evacuate passengers and that they were not adequately trained for that role, but most admitted they did not do enough. — Reuters Japan PM urged to call early snap poll BY L I NDA SI EG TOKYO: Momentum appears to be building for Japan’s Prime Minister Shinzo Abe to call an early general election, as speculation swirled he would postpone an unpopular sales tax hike and officials of the ruling coalition urged preparations for a poll. Media reports yesterday said Abe might call a snap election before the end of the year if he decides to delay a planned hike in the sales tax to 10% from next October. No election for parliament’s lower house need be held until 2016. The Yomiuri newspaper reported yesterday that Abe might dissolve the lower house as early as next week and call an election for next month, possibly on Dec 14. A government source told Reuters a snap election within the year was one option being considered, while an opposition party source put the probability of an early vote at 90%. “If Abe doesn’t call an election now, he will lose credibility,” the opposition source said. Abe surged to power in December 2012, promising to revive the economy with his triple “Abenomics” recipe of hyper-easy monetary policy, fiscal spending and structural reform. But a sales tax hike to 8% from April, part of a two-stage plan to rein in huge public debt, sent the economy into a slump and recovery has been less robust than officials hoped. Abe’s ratings took a hit from a series of money scandals in his cabinet, and some political insiders said he might want to call the snap election before they slide further. — Reuters Hong Kong protesters told to clear streets or risk arrest Nearly third of Indian cabinet charged with crimes HONG KONG: Hong Kong’s acting chief executive yesterday called on pro-democracy protesters to clear sites they have occupied for more than six weeks and warned holdouts they could face arrest, a move that could swell protest numbers. Hundreds of student-led demonstrators are camped out in two key districts of the Chinese-controlled city where they have pitched tents and set up supply stations on roads bisecting some of the world’s most expensive real estate. Hong Kong media reported that authorities could start removing protesters as early as today. BY ANDRE W M AC AS K I LL The protesters are demanding fully democratic elections for the former British colony’s next chief executive in 2017, instead of the vote between pre-screened candidates that Beijing has allowed. Hong Kong media had speculated that China was waiting to clear the protesters until after the Asia-Pacific Economic Cooperation summit in Beijing ended yesterday. United States President Barack Obama is due to meet Chinese President Xi Jinping today before flying out. Many protesters said they would simply regroup if police moved in. — Reuters NEW DELHI: Attempted murder, waging war on the state, criminal intimidation and fraud are some of the charges on the rap sheets of ministers Indian Prime Minister Narendra Modi appointed to the cabinet on Sunday, jarring with his pledge to clean up politics. Seven of the 21 new ministers face prosecution, taking the total in the 66-member cabinet to almost one third, a higher proportion than before the weekend expansion. At least five people in the cabinet have been charged with serious of- fences such as rape and rioting. Finance Minister Arun Jaitley said any suggestions there were criminals in the cabinet were completely baseless. “These are cases arising out of criminal accusations, not cases out of a crime,” he told reporters on Monday, adding that Modi had personally vetted the new ministers. The inclusion of such politicians does not sit easily with Modi’s election promise to root out corruption, and has led to criticism that he is failing to change the political culture in India where wealthy, tainted politicians find it easier to win votes. — Reuters IN BRIEF China targets ‘wild imams’ in mass sentencing BEIJING: China has jailed almost two dozen people including “wild imams” who preach illegally in the western region of Xinjiang where the government says Islamists are waging a violent campaign for a separate state, Chinese media reported yesterday. The 22 suspects were sentenced to prison terms ranging from five to 16 years at a mass public sentencing in Xinjiang on Monday, the state-controlled China News Service reported. As well as the imams, or Muslim religious leaders, those sentenced included religious leaders who engaged in religious activities after being sacked, and those who broke the law while at their posts, it said. — Reuters Houthi advance raises alert for Saudi guards JIZAN (Saudi Arabia): Gains by the Shi’ite Houthi rebel movement in Yemen are ringing alarm bells in Saudi Arabia, concerned for what it means for its vulnerable southern border, already the conduit for a constant flow of illicit activity. The Houthis control much of the territory along the 1,700-km frontier, and five years ago fought a brief border war with the world’s top oil exporter. With no border patrols or guard posts in the south, the only obstacles for smugglers, economic migrants and groups the Saudis worry about even more, such as al-Qaeda, are on the Saudi side. — Reuters Allies weigh next moves in Iran nuclear drama MUSCAT/BEIJING: The United States, Iran and Europe were weighing their next moves yesterday after two days of nuclear talks in Oman failed to produce any apparent breakthrough ahead of a Nov 24 deadline. One of Iran’s chief negotiators, Deputy Foreign Minister Abbas Araqchi, described the Oman talks as “two days of very hard work”, the official IRNA news agency reported. “We are still not in a position to claim that progress is achieved, although I cannot say that it was no good, either,” he added. “Every dimension of the negotiations, over any particular topic, has many side issues and technical, legal and political complications.” — Reuters Eight women die at sterilisation ‘camp’ BHUBANESWAR (India): Eight women have died after undergoing sterilisation surgery at a government-run “camp” in the central Indian state of Chhattisgarh, state officials said yesterday. Ten more women who also had the procedure were in serious condition. The women fell ill on Monday after having laparoscopic tubectomies two days earlier at a so-called family planning camp at a village. The 83 women who underwent tubectomies received incentive payments of 1,400 rupees (RM76.62) to have the surgery. — Reuters W O R L D 27 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY Bodies of murdered Indonesians arrive home ‘Why must this be my daughter’s fate?’ asks victim’s mother JAKARTA: The bodies of two Indonesian women allegedly murdered by a British banker in Hong Kong arrived back home yesterday, as one victim’s mother tearfully spoke of her “torment”. The mutilated corpses of Seneng Mujiasih and Sumarti Ningsih, both in their 20s, were found in the apartment of a 29-year-old securities trader earlier this month. Rurik Jutting, who until recently worked at Bank of America Merrill Lynch, was arrested after calling police to the scene, and has been charged with the women’s murder. Yesterday afternoon, the women’s bodies arrived in the Indonesian capital Jakarta on a Cathy Pacific flight from Hong Kong, an AFP reporter at the city’s airport said. They were taken off the plane in wooden coffins and placed in ambulances. Ningsih’s body was being taken to her home town of Cilacap, in southern Java, accompanied by her brother, said foreign ministry official Krisna Djaelani. Mujiasih’s body would remain overnight at the airport before be- ing flown to her family’s home on Muna island, central Indonesia, today, said the official. The mother of Ningsih, whose decaying body was found stuffed in a suitcase, wept as she told how the whole family was waiting to receive the body. “I’m so tormented,” Suratmi, who like many Indonesians goes by one name, told AFP from Cilacap. “I will never accept that my daughter was tortured until she died. Why must this be my daughter’s fate?” The victims were discovered in Jutting’s flat in the city’s Wanchai district in the early hours of Nov 1. Seneng was found naked in the living room, with knife wounds to her neck and buttocks. Sumarti’s decaying body was found hours later by police, stuffed into a suitcase on the apartment’s balcony. According to court documents, she was killed on Oct 27. On Monday, Jutting appeared in court for the second time since his arrest — and flashed a grin as he left the hearing in a prison van after his case was adjourned for psychiatric reports. — AFP SINGAPORE: Former China tour guide Yang Yin’s bail order has been revoked, the High Court decided yesterday, The Straits Times reported. Yang had earlier been granted bail of S$150,000 (RM387,639) by District Judge Eddy Tham. The prosecution, however, applied to the High Court a day after to challenge Judge Tham’s decision. On Monday, the Attorney-General’s Chambers reiterated why Yang should not be granted bail in court, arguing that the earlier decision by Judge Tham had disregarded the 40-year-old China national as a high flight risk, among other things. Yang is in a legal tussle with the niece of wealthy widow Chung Khin Chun over her estimated S$40 million assets. New monitors for Aussie asylum camps Errant moneylender fined S$82,000 on 18 charges REAL-LIFE SUPERHEROES... Donning superhero outfits, a dozen or so people patrol San Diego’s streets at night armed with radios, first aid kits and self-defence weapons. The Xtreme Justice League have a serious task at hand: they walk through dark, empty streets, check in on the homeless and even break up fights in their effort to stop violent crime in the city and, as they say, ‘spread good will among the community’. Photo by Reuters Man charged with 450 counts of cheating SINGAPORE: A man allegedly conned a friend into giving him a total of S$2.36 million (RM6 million) over three years by claiming that he was the beneficiary of an inheritance amounting to hundreds of millions, a court heard. The Straits Times reported Brendan Robert Don, 46, was hauled to court yesterday to face 450 charges of cheating Alan Lye Cher Kang, in his 40s, of between S$300 and S$33,000 each time. Don, who is unemployed, allegedly deceived Lye into believing that Former China tour guide Yang Yin’s bail order revoked SYDNEY: Australian Immigration Minister Scott Morrison said yesterday he is establishing a new monitoring team for centres holding asylum seekers, including camps on remote Pacific islands, after a series of abuse allegations. Under Australia’s hardline immigration policies — designed to stop would-be refugees from risking their lives on people-smuggling boats — asylum-seekers face mandatory detention. Hundreds are being held in detention centres on Papua New Guinea’s Manus Island and the small state of Nauru despite criticism that these camps, which have endured riots, are harsh. — AFP Unemployed admits to abuse of PMO website SINGAPORE: A jobless man admitted yesterday to a raft of charges under the Computer Misuse and Cybersecurity Act, most of which involved the entering of unauthorised script into the Prime Minister’s Office (PMO) website on Nov 7 last year, The Straits Times reported. Abusing a Google search box embedded on the page, Mohammad Azhar Tahir, 27, created script which would generate an image referencing international hacktivist group Anonymous, when triggered, the daily reported. He then posted on social media websites a link, which superimposes a Guy Fawkes mask and a sentence reading “It’s great to be Singaporean today” over what the site’s search page would normally display, the daily reported. Internet users would form the impression that the PMO website had been defaced though data on its server had not been altered, leading to public speculation and concern, the prosecution said. IN BRIEF the government had seized his “inheritance”, the Singapore daily reported, and that he needed loans to pay various kinds of fees for the release of the money to him. The alleged offences occurred between Aug 30, 2011 and Aug 2 this year. The newspaper reported that in one of the charges, Don is said to have induced Lye to hand over S$16,000, saying the amount was needed to pay lawyer fees to the Ministry of Home Affairs for the release of S$250 million to S$500 million to him. Court documents show he gave a slew of reasons for the loans such as paying banks, insurance companies, overtime fees to various bank officers, tax deposits to the Inland Revenue Authority of Singapore, audit fees, and miscellaneous fees to CISCO. The Straits Times reported that his lawyer Irving Choh sought an adjournment to make representations. Deputy Public Prosecutor Grace Goh told the court that the prosecution would proceed on 20 charges if Don takes a certain course. She asked for the case to be adjourned for two weeks, the daily reported. Asked by District Judge Eddy Tham, she said there was no restitution of the S$2.36 million involved, and the money went to Don to “fund his lifestyle”. Don, who is stout and balding, showed no emotion when the charges were read to him in court. Bail of S$500,000 was offered, and pre-trial conference date is scheduled for Dec 18. If convicted, he faces a jail term of up to 10 years and a fine on each charge. SINGAPORE: An errant moneylender was fined S$82,000 (RM211,906) on Monday after being convicted of 18 charges under the Moneylenders Act, the Straits Times reported. Koo Guan San, 48, the sole proprietor of the moneylending business JBM Credit pleaded guilty to five charges for failing to extend completed loan application forms to borrowers and three charges of failing to supply statements of account to borrowers. He was also charged for giving false information to the Registrar, as well as granting an unsecured loan exceeding the limit of S$3,000 to a Singaporean borrower with an annual income below S$20,000. Bus crash in southern Pakistan kills 56 people KARACHI: At least 56 people, including 18 children, were killed yesterday when a bus collided with a goods truck loaded with coal in southern Pakistan, officials said. The accident happened near the city of Khairpur, 450km north of Karachi, the capital of southern Sindh province. Pakistan has an appalling record of fatal traffic accidents due to poor roads, badly-maintained vehicles and reckless driving. Crashes killing dozens of people are not uncommon. — AFP 28 live it! WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY WE WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE Personal ASSISTANT British singer-songwriter Ed Sheeran at a concert at the Ziggo Dome in Amsterdam last Monday. Sheeran will be among stars to raise money to fight Ebola with a 30th anniversary version of Band Aid’s Do They Know It’s Christmas? Photo by AFP COMPI L ED BY MAE CHAN WORK. LIFE. BALANCE Catching a movie may be nice, but a midweek movie quiz night is much more fun. If you’ve watched more Disney movies than you would like to admit, here’s a chance to put your knowledge to good use with The Bee’s monthly At The Movies quiz night. The theme this month is all things fairy tales from the land “where dreams come true”. So gather your team of fellow Disney fans and head to The Bee Publika, Solaris Dutamas, Kuala Lumpur, at 9pm tonight. For more details, call (03) 6201 8577 or visit thebee.com.my Tech enthusiasts take note: Google Business Group (GBG) Malaysia’s GDays Kuala Lumpur 2014 conference is back tomorrow with the aim to bring professionals, business owners, entrepreneurs, start-ups, programmers and students together to share knowledge and insights on innovation, and help achieve greater impact within the industry. Divided into two tracks — Business and Educational — GDays aims to engage participants in their specific interests, be it hearing from successful entrepreneurs and networking, or learning first hand from the technophile community. To be held at the Taylor’s University Lakeside Campus, Subang Jaya, Selangor, from 9am. Visit www.gbgmalaysia.org for more details. Band Aid’s wit FOURTH RETURN ne Direction, Ed Sheeran and a host of other stars are to raise money to fight Ebola with a 30th anniversary version of the Band Aid charity single Do They Know It’s Christmas?, Bob Geldof announced on Monday. It will be the fourth incarnation of the song, which became one of the world’s biggest-selling singles ever after its release in 1984 to raise funds for famine relief in Ethiopia. “[Ebola] is a particularly pernicious illness because it renders humans untouchable and that is sickening,” Geldof said at a London press conference with Midge Ure, who co-organised the first Band Aid with the Irish singer. “Mothers can’t comfort their children in their dying hours. Lovers can’t cradle each other. Wives can’t hold their husbands’ hands. People are chased down the streets because of it — and it could come our way,” Geldof said. ish be phy wit cha Irish singer and U2 frontman Bono, who sang on the original Band Aid track in 1984, has confirmed his participation in the 30th anniversary version of Do They Know It’s Christmas? Photo by AFP The rocker-turned-activist said he had been spurred into action not out of nostalgia but by a call from the United Nations three weeks ago, concerned about not having the necessary funds to combat the epidemic. The Ebola outbreak in West Africa has claimed almost 5,000 lives, according to the at S the dow Stars come together for new single to raise funds to fight Ebola O Tickle those funny bones with a night of stand-up comedy by The Comedy Club KL, featuring performances and acts by international comedians Brendon Burns, Sharul Channa and Thenesh Skip. Hosted by Malaysian writer, actor and funny man Phoon Chi Ho, the show titled Notorious November is sure to get you rolling on the floor with laughter. The two-day show, which starts at 9pm, will be held at Zouk Kuala Lumpur (today) and the Hard Rock Café Kuala Lumpur (tomorrow). Tickets are priced at RM53 with free seating. Drop an email to bookings@thecomedyclubkl.com for table reservations or visit www.ticketpro.com. my for more details. Ch Em dru and World Health Organization — almost all in Liberia, Guinea and Sierra Leone — while the number of infected cases registered worldwide has soared to more than 13,000. Other artists already signed up for the single include U2 frontman Bono — who sang on the original recording — Coldplay’s live it! 29 WE D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE PHOTOS BY AFP 01 02 N o s? l in hile red 00. the who ay’s Chris Martin, Bastille, Elbow, Ellie Goulding, Emeli Sande, Foals, Paloma Faith, Queen drummer Roger Taylor, Sinead O’Connor and Underworld. Band Aid is also reported to be in talks with British superstar Adele. The vocals will be recorded this Saturday at Sarm Studios in west London, just as on the original recording. The sleeve artwork will be done by British artist Tracey Emin and the single will be available for download on Nov 17, with physical copies three weeks later. The track will cost 99 pence (RM5.40) to download or £4 to buy as a physical record. Fundraising was underway yesterday with fundraising site Prizeo offering fans a chance to win a “day in the studio” as the single is recorded, in exchange for donations However, there will not be a giant Live 01. Rock singer and poverty activist Bob Geldof has between US$5 (RM16.70) and US$50,000. Aid concert, because there was no “political announced that Band Aid will return in aid of logic” to doing one, he said. Ebola victims. Geldof slams China, UAE efforts Geldof slammed certain countries for Geldof said he thought the British govern- not doing enough to contribute to the lev- 02. British pop star Midge Ure co-organised the first ment would agree to drop the tax on sales, el of Britain, France and the United States. Band Aid with Geldof in 1984. and called on people to buy it rather than The Dubliner said the United Arab Emirwatch it for free on the Internet. ates’ small donation to Ebola was a “disgrace”, Ure, the frontman of Ultravox, said: “It’s swore over China’s contribution and said a record none of us want to make and I wish Australia “isn’t doing great”. it wasn’t necessary.” “If these countries claim global leadership, The lyrics have been tweaked to reflect then they must accept the responsibility of lush, economically developing West Africa those things,” the 63-year-old said. in 2014 rather than the barren Ethiopia deThe original 1984 version, which featured picted 30 years ago. the likes of Phil Collins, George Michael and Geldof also said there would be French, Sting, was re-recorded with new artists in German and US versions featuring artists 1989, and again in 2004 for Sudan’s troubled from those countries. Darfur region. — AFP PICK OF THE DAY BRINGING together fashion and gastronomy, linked by a sense of elegance in both design and taste, Elegantology Gallery & Restaurant combines fine dining cuisine with designer couture. Helmed by chefs Johnny Fua and Sherson Lian, alongside Malaysian designer Beatrice Looi, Elegantology celebrates the fashionable man with its collections by local designers such as Michael Ong, Hayden Koh, Justin Yap, Beatrice Looi, Ian Chang, Venie Tee, Daniel Chong and Jason Zeck Lee. To make way for the latest collections, this season’s tailored suits, jackets, shirts, trousers and shoes are now on sale, with discounts of up to 50%. Women wear is also not left out, with dresses, shoes and accessories on sale. The Elegantology end-of-season sale is on from now till Dec 31. For more information, call (03) 6206 5577. Elegantology Gallery & Restaurant is open from 10am to 11pm and is located on Level G2, Publika, Solaris Dutamas, in Kuala Lumpur. 30 live it! WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE Zen TODAY Keep me away from the wisdom which does not cry, the philosophy which does not laugh and the greatness which does not bow before children. — Kahlil Gibran SEXIEST hotel bedroom Vietnamese water villa wins title in Smith Hotel Awards T here is no stripper pole or ceiling mirror in the bedroom that has just been named the sexiest hotel bedroom in the world. Instead, the water villa at Six Senses Ninh Van Bay in Vietnam offers sunset views of the bay, thanks to a king-sized bed positioned to face the water in an open-concept, doorless hideaway that harnesses its natural surroundings — water, tropical jungle and light — to seduce its tenants. For the second edition of the Smith Hotel Awards, hosted by boutique hotel specialists Mr & Mrs Smith, the Six Senses luxury resort and spa nabbed the title of sexiest bedroom for offering “ravishingly romantic” villas that evoke the notion of a castaway romance. This year’s pick marks a stark contrast to last year’s winner, the Corfu Suite in London’s Blakes Hotel, a lavish bedroom featuring exquisitely detailed motherof-pearl dressers and a four-poster bed draped in gossamer nets. Instead, the seduction of Water Villa 5 could be its understated minimalism, accented simply by a draping mosquito net over a king-sized bed and open concept to excite the imagination. “Water Villa 5 is the pick of the bunch, with an infinity-edge plunge pool set seductively into the rocks, a private ladder leading into the ocean, and rustic-luxe good looks that conjure a cocoon of pure A view of Water Villa 5 at Vietnam’s Six Senses Ninh Van Bay. Photos by Mr&Mrs Smith castaway romance,” editors wrote. The runner-ups in the category were Viceroy New York in the United States and the Bellevue Syrene in Sorrento, Italy. The Uxua Casa Hotel and Spa in Bahia, Brazil, was also a big winner in the Smith Hotel Awards, taking the title of best Smith hotel for offering all-natural spa treatments in tree-flanked pavilions, a quartz-lined pool and inventive Brazilian cuisine, editors said. The hotel was designed by the former creative director of Italian clothing company Diesel. Other winners on the list are Harnett, Holder & Co at Lime Wood in the United Kingdom for best hotel restaurant, Sal Salis in Australia that bagged the eco award, and The NoMad Hotel in the US which won hottest hotel bar, while the best spa hotel went to House Spa at the Dormy House Hotel in Cotswolds in south central England. — AFP S P O RT S 3 1 W E D N E SDAY N OV E MBER 12, 2014 • T HEED G E FINA NCIA L DAILY BWF suspends Chong Wei over doping violation Doping Hearing Panel will make final decision REUTERS BY T VI GN ESH PETALING JAYA: The Badminton World Federation (BWF) has provisionally suspended World No 1 Datuk Lee Chong Wei due to an apparent anti-doping regulation violation. Chong Wei was tested positive for the banned substance dexamethasone during the World Championships in Denmark in August. His B-sample which was tested in Oslo, Norway last week was also positive. The world governing body has imposed this suspension due to the findings as the world body has referred the matter to the BWF Doping Hearing Panel and the Chair of the Panel will set the time, date and location of a hearing. The Panel will determine whether Border calls for end to T20 internationals SYDNEY: Former Australia captain Allan Border has called for an end to Twenty20 internationals outside the World Cup and hopes the 50-over game will not be allowed to “wither and die”. Australia’s domestic international season began last week when they played three T20s against South Africa with both sides fielding weakened sides in front of disappointing crowds. To follow that are a five-match one-day international (ODI) series against the Proteas, a four-Test series against India, a triangular ODI series also featuring India and England as well as the Feb 14 to March 29 one-day World Cup. With some fearing that 84 days of international cricket in one summer is close to saturation point, Border made it clear which format he felt was surplus to requirements. “I wouldn’t be playing T20 international cricket at all, I would save that for a World Cup every two years,” Border said in an interview with ABC radio. “I think there is enough domestic Twenty20 cricket to fill the programme out quite nicely ... there’ Twenty20 competitions in basically every country. Why we have to play international Twenty20 cricket as well as that?” Border led Australia to the first of their four 50-over World Cup triumphs in 1987, retiring before internationals were played in Twenty20. — Reuters or not the player has committed an anti-doping regulation violation. In accordance with Clause 14.4.1 of the BWF Anti-Doping Regulations, and following the imposition of the provisional suspension, the BWF and the member association — the Badminton Association of Malaysia (BAM) — are now able to publicly identify the player. The Provisional Suspension (Clause 7.6.2) means the athlete is barred temporarily from participation in any competition prior to the BWF Doping Hearing Panel’s decision. BWF will not comment further until the BWF Doping Hearing Panel makes its decision. On a separate note, BAM president Tan Sri Tengku Mahaleel Tengku Ariff was furious over former player Razif Sidek’s claim that Chong Wei had been taking the banned substance for a very long time and BAM officials were aware of the matter. It was also reported that Razif said the issue was kept mum by officials due to the glorified status of Chong Wei as the country’s top player. “Ask him [Razif] if he can prove it or else,” said Tengku Mahaleel when contacted by The Edge Financial Daily. Young guns aim to fire at Resorts World Manila Masters ASIAN TOUR MANILA: Asian Tour young guns Jazz Janewattananond of Thailand, Sri Lankan Mithun Perera and Malaysia’s Nicholas Fung (pic) will be shooting for glory at the US$1 million (RM3.34 million) Resorts World Manila Masters next week. The ambitious trio, who are all chasing a maiden Asian Tour victory, are among a new generation of young talents breaking through on the region’s premier Tour and are tipped to contend at the Manila Southwoods Golf and Country Club from Nov 20 to 23 in the richest golf tournament in the Philippines. At last year’s inaugural edition, Jazz and Fung shared fifth place while Perera enjoyed a tied ninth finish, results which will spur them on when they tee up in the prestigious event again. Jazz, who turns 19 three days after the Resorts World Manila Masters, will be hoping to celebrate his birthday a few days earlier with a successful campaign. “I really like the golf course. It fits my fade shots and the tournament set-up was great. All the players stay at Resorts World which makes it a perfect week. Everything was good last year and I had a great week as I was leading after two rounds. I played well and it was a really fun week for me,” said Jazz. The 24-year-old Fung also enjoyed a solid outing at the inaugural Resorts World Manila Masters. The slightly-built Malaysian, who was a captain’s pick in the EurAsia Cup presented by DRB-Hicom earlier this year, is hopeful of reproducing another title charge. “My game has certainly improved from 12 months ago. It was great to be in contention and the result also helped me to finish runner-up in Indonesia the following week last year. I’m keen to do well again in Manila,” said Fung, who fired a second round of eight-under par 64 to get into contention last season. The ever smiling Perera will arrive in Manila in good form after challenging for a maiden Asian Tour victory in India where he lost in a play-off last week. The Sri Lankan finished equal ninth at the Resorts World Manila Masters and will be keen to improve on that position next week. — Asian Tour Djokovic and Wawrinka win in under an hour BY M ARTYN HE RM AN LONDON: Woe betide any ticket holder who got stuck in the queue for an ice cream at the O2 Arena on Monday — the action might have been all over by the time they returned to their pricey seat. Stanislas Wawrinka pummelled Tomas Berdych 6-1 6-1 in 58 minutes before the evening’s main course turned into fast food as world No 1 Novak Djokovic needed two minutes less to send newcomer Marin Cilic packing by the same scoreline. Defending champion Djokovic can clinch the year-end No 1 ranking if he wins his next two Group A matches and few would bet against the Serb doing that. As for Czech Berdych and Croat Cilic, they had a day to lick their wounds before meeting today in a match each must win to keep their hopes of reaching the semi-finals alive. Monday’s singles were the most one-sided contests since the Tour Finals arrived in London in 2009, eclipsing Roger Federer’s victory over Rafael Nadal in 2011 for the loss of three games. — Reuters IN BRIEF Pakistan’s Shehzad suffers cheek bone fracture KARACHI: Pakistan opener Ahmed Shehzad fractured his cheek bone when he was struck by a short pitched ball during the first test against New Zealand in Abu Dhabi, The Pakistan Cricket Board said on Monday. A CT scan carried out after Shehzad was taken to a hospital in some pain in Dubai showed a depressed fracture of the zygomatic arch (cheek bone) of his skull, a press release said. Shehzad was hit by a ball from Corey Anderson and was out hit wicket for 176 runs owing to the impact in 116th over of the Pakistan innings on the second day of the test. — Reuters Pulev misses news conference, accuses Klitschko of ‘sneaky tricks’ SOFIA: Kubrat Pulev failed to turn up at the news conference on Monday before his IBF title bout against Vladimir Klitschko after being informed that only three people from his camp could be present. “The sneaky tricks of the world champion are just the beginning,” the unbeaten Pulev wrote on his Facebook page ahead of the bout against the world heavyweight champion this Saturday in Hamburg. “That kind of behaviour isn’t suitable for a world champion of four federations with such a huge experience and with that name. It is just not suitable.” — Reuters Scott has ‘score to settle’ with McIlroy at Australian Open SHANGHAI: Adam Scott says he has a “score to settle” with Rory McIlroy when they clash at the Australian Open in Sydney in two weeks. Scott missed a chance for a perfect ending to 2013 when he bogeyed the final hole of last year’s Open at Royal Sydney to allow McIlroy to capture the historic Stonehaven Cup when the Northern Irishman holed a 16-foot (4.8m) birdie putt at the same hole. They will return for a rematch from Nov 27 to 30 most likely as the two top-ranked players in the world. — Reuters Lack of English could doom Jimenez bid, says Garcia BELEK (Turkey): Darren Clarke’s quest to become the new European Ryder Cup captain has been given a surprise boost with Spain’s Sergio Garcia believing compatriot Miguel Angel Jimenez’s lack of English will rule him out of captaincy contention. Unlike the mess the US finds itself in, the vote for the 2016 European Team captaincy at Hazeltine, Minnesota seems a clear cut choice between Clarke and Jimenez, the Tour’s oldest champion. — AFP 3 2 S P O RT S WEDN ESDAY N OVEM B ER 1 2 , 2 0 14 • TH EEDGE FI N AN C I AL DAI LY David Moyes hired as Real Sociedad coach IN BRIEF Sounders hang on to squeeze past Dallas on away goals LOS ANGELES: The Seattle Sounders will meet the LA Galaxy in the MLS Western Conference Finals after grinding out a 0-0 home draw with FC Dallas on Monday to advance from their semi-final on the away goals rule. After the teams battled to a 1-1 draw in the opening leg in Dallas, the scoreless draw was enough for top-seeded Seattle to advance. The Sounders are the first Supporters Shield winners (highest points scorers in the regular season) to advance beyond the first round of the play-offs in three years and they remain on course to become the first team ever to sweep season honours after also winning the US Open Cup. — Reuters He will be coach of first team till June 30, 2016 MADRID: David Moyes has made his return to football, after a disastrous 10-month spell in charge of Manchester United last season, joining La Liga strugglers Real Sociedad, the Basque club announced on Monday. “Real Sociedad have reached an agreement with David Moyes to be the coach of the first team until June 30, 2016,” Sociedad said in a statement published on their website. “Tomorrow [Tuesday] the details for his official presentation and the backroom staff led by the Scottish coach will be finalised.” Moyes was sacked in April after less than a season in charge of United as they failed to qualify for the Champions League for the first time since 1995. Melbourne City sign ex-Ireland player Miller for midfield duties AFP SYDNEY: Melbourne City have signed former Celtic, Manchester United and Ireland playmaker Liam Miller (pic) on a shortterm contract as they deal with a chronic shortage of midfielders. The 33-year-old, who had his contract cancelled in acrimonious circumstances by A-League champions Brisbane Roar last month, will be available to play against Central Coast Mariners this Sunday. The club, rebranded this season after the takeover by English champions Manchester City, will be without midfielders Aaron Mooy and Stefan Mauk, who will be on national team duty this weekend. Their midfield stocks have been further depleted by injuries to Slovenian Robert Koren, Argentine Jonatan Germano and Massimo Murdocca, while Spain striker David Villa’s loan spell was cut short last week. Miller demanded his contract cancelled two weeks ago, feeling he had been “disrespected” by being dropped without explanation. Brisbane have lost their first four matches of the new season. — Reuters The Scot enjoyed a broadly successful 11-year spell at Everton prior to taking the job at Old Trafford, although he has yet to win a major trophy as a coach. Sociedad have been looking for a new boss since Jagoba Arrasate was sacked last weekend after just one win in their opening 10 league games. However, they responded in style to beat La Liga champions Atletico Madrid 2-1 last Sunday to move out of the relegation zone. Sociedad have a history of appointing British managers as John Toshack enjoyed three spells as boss in San Sebastian, whilst current Wales manager Chris Coleman had an ill-fated six months in charge during the 2007/08 season. — AFP CAF weighs Morocco demand to delay Nations cup over Ebola fears Moyes was sacked in April after less than a season in charge of Manchester United. Photo by AFP I was Man United scapegoat, says Fellaini LONDON: Manchester United midfielder Marouane Fellaini (pic) has claimed that he was made to feel like a scapegoat for his team’s struggles during the 2013/14 season, in remarks published yesterday. Fellaini followed manager David Moyes from Everton to Old Trafford last year in a £27.5 million transfer, but failed to impress as the club slipped to a disappointing seventh place finish in the Premier League. The gangly Belgium international with the afro haircut did not manage to score in his debut season and became an object of derision for rival supporters, but he has improved under Moyes’ successor, Louis van Gaal. Asked if he felt he had been made a scapegoat for United’s fail- AFP ings under Moyes, the 26-yearold told reporters at a sponsors’ event: “Yes, a little bit. That is a difficult question. It is difficult to answer that.” He added: “I didn’t lose faith in myself. In football, you have to be strong in the head. The mentality is important and I do have this quality, so I can keep going. “My family helped me through it. I was also in the national team for Belgium at the World Cup and I played well and the team also played well. For my confidence that was important. I came back after the summer confident. “The manager [Van Gaal] said to me I would have to fight if I wanted to play. I did fight and trained hard and that was it. When I got my chance, I tried to show myself and tried to do my best.” — AFP Charges dropped against suspect in S Africa football capt murder Poland out to show Germany win was no fluke BY P IOTR K WI ATO WS K I WARSAW: Poland face Georgia this Friday desperate to show that their shock win over Germany in Euro 2016 qualifying Group D was no fluke as their fans dream of a new era of international success. Victory over the world champions suddenly raised expectations in a country desperate to end years of massive under-achievement after finishing third in the 1974 and 1982 World Cups. Generations of leading Polish players including Zbigniew Boniek, Jan Tomaszewski, Grzegorz Lato and Kazimierz Deyna never tasted victory over the Germans. But just months after Germany won the FIFA World Cup in Brazil the Poles inflicted their first defeat in the opening qualifying match for a major tournament since 1998. Many Polish supporters returned home from the National Stadium in absolute silence, stunned by their first win over a major footballing country since beating Portugal during qualifying for Euro 2008. Poland failed to reach the 2010 and 2014 World Cups in South Africa and Brazil and were knocked out in the group stage of Euro 2012 CAIRO: The Confederation of African Football (CAF) met in Cairo yesterday to decide on host Morocco’s request to postpone the 2015 Africa Cup of Nations tournament because of the Ebola epidemic, possibly leading to its cancellation or relocation. Morocco is holding fast to its request two months before the tournament is to kick off on Jan 17, but CAF insists it is not up to the host country. The federation could impose a fine and suspension of Morocco’s national team if it does not reconsider. In the meantime CAF has scrambled to find another host country on short notice, without any indication yet that any has accepted. — AFP which they co-hosted with Ukraine. But coach Adam Nawalka now has a squad full of big-name players who ply their trade with major European clubs. Striker Robert Lewandowski is at Bayern Munich, Wojciech Szczesny is Arsenal’s first-choice goalkeeper, Grzegorz Krychowiak is a regular for Sevilla and Dortmund’s Lukasz Piszczek is second in the standings for Champions League assists this season. Nawalka has a strong nucleus to his squad and the atmosphere within the group is as good as it has ever been. — Reuters JOHANNESBURG: South African prosecutors yesterday withdrew charges against a man arrested for the murder of South Africa’s national football captain Senzo Meyiwa. The Boksburg Magistrate’s Court heard there was “not sufficient evidence” to put Zanokuhle Mbatha on trial. “I note the withdrawal of charges by the State against Mbatha and consequently the court orders the release of Mbatha,” said magistrate Daniel Thulare. — AFP Mixed reviews as Balotelli returns to Italy fray MILAN: Mario Balotelli’s return to the Italy fray was met with mixed reviews as the misfiring Liverpool striker prepares to end his enforced exile with a potential appearance against Euro 2016 opponents Croatia next week. Balotelli has not played for Italy since their first-round exit from the FIFA World Cup in Brazil and until his call-up last Sunday was left on the sidelines by new Italy coach Antonio Conte for their first three Group H qualifiers. — AFP
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