CIMB Research revises KLCI year-end target to 1,800 points

KUALA LUMPUR : CIMB Research revised downwards its KLCI year-end target to 1,800 points from 1,900 points previously following a mixed bag of results during the latest corporate earnings season for the fourth quarter of last year (Q4FY15). 

In a note today, the research house said that 40% of the companies under its coverage reported results which were below expectations. 

“Plantation and aviation sectors positively surprised while the rest disappointed. However, 4QFY15 earnings per share (EPS) rose 9.7% on a quarter-on-quarter basis due to the strong earnings recovery in the two sectors,” it said. 

On the other hand, CIMB is lowering its 2016 EPS growth forecast to 5.7% from 7.5% previously.
 
“However, our 8.4% EPS growth forecast for 2017 is higher than consensus. While the revision for 2016 reflects our more conservative market recovery expectations, we believe the earnings growth momentum should continue into 2017. 

While its previous KLCI year-end target of 1,900 points was based on a 5% premium to the three-year moving average earnings multiple of 15.5 times, the research house added that it is removing this due to the uninspiring growth outlook this year. 

CIMB Research recommends the banking, construction and select small cap stocks as its preferred picks going forward.

http://www.thestar.com.my/business/business-news/2016/03/02/cimb-revises-klci-target-to-1800/m

Moody's lowers outlook on China's credit rating to negative from stable

Moody's Investors Service Wednesday lowered the outlook on China's credit rating from stable to negative, citing a weakening of fiscal metrics and a continuing fall in foreign exchange reserves.

The rating agency also noted uncertainty over the capacity of authorities to implement the reforms needed to address imbalances in the world's second-largest economy.

Moody's current Aa3 rating on China is seven notches above junk so even if the agency were to follow up on its warning and lower the rating, investors won't have to suddenly start selling the country's bonds.

Still, the warning underscores how the build-up in credit in the country's stuttering economy is making market observers nervous.

Rival Standard & Poor's assesses China's creditworthiness at similar levels to Moody's, while Fitch rates China a notch lower. S&P and Fitch both have stable outlooks on the country.

http://www.cnbc.com/2016/03/01/moodys-lowers-outlook-on-chinas-credit-rating-to-negative-from-stable.html

Has the tide turned for emerging market flows?

One of the most bruised asset classes in financial markets may be about to turn a corner.

Emerging markets have had a horrid few years as investors pulled funds amid the prospect of weaker growth in once-booming economies, volatility in China's markets and likely higher interest rates in the U.S. In 2015, capital outflows from emerging markets were the heftiest since the late 1980s.

Now, there are tentative signs of recovery.

Fund flows into emerging markets turned flat in February after seven straight months of outflows, according to data from the Institute of International Finance released on Monday.

http://www.cnbc.com/2016/03/01/has-the-tide-turned-for-emerging-market-flows.html

China Feb factory activity shrinks more than expected

SHANGHAI: Activity in China's manufacturing sector shrank for the seventh month in a row in February and more sharply than expected, an official survey showed, suggesting the government will have to ramp up stimulus to avoid a deeper economic slowdown.

Some investors had been bracing for a negative after the central bank unexpectedly eased policy late on Monday, injecting an estimated $100 billion worth of cash into the banking system to cushion the pain of upcoming reforms such as restructuring bloated state enterprises.

The official Purchasing Managers' Index (PMI) fell to 49.0 in February from January's reading of 49.4 and below the 50-point mark that separates growth from contraction on a monthly basis.

http://www.thestar.com.my/business/business-news/2016/03/01/china-feb-factory-activity-shrinks-more-than-expected/

AirAsia Q4 earnings at RM554m, drives FY15 higher

KUALA LUMPUR: AirAsia Bhd posted net profit of RM554.20mil in the fourth quarter ended Dec 31, 2015 compared with a net loss of RM428.51mil a year ago, boosting the full year FY15 earnings to RM540.96mil.

The low-cost carrier reported on Friday that quarterly revenue rose 47% to RM2.17bil fromRM1.48bil a year ago. 

“The strong revenue recorded was on the back of a 10% year-on-year growth in the number of passengers carried at 6.47 million which was ahead of the 1% capacity growth, allowing the company to record a high load factor of 85%, on-year growth of 7 percentage points (ppts).  

In 4Q15, AirAsia recorded strong operating profit of RM800.69 million (up 276% YoY) and net operating profit of RM694.33 million (up 620% YoY). 

AirAsia said revenue per available seat kilometre (RASK) was up 40% on-year to 22.29 sen. It pointed out RASK held up positively despite the company’s decision to remove fuel surcharge on Jan 26, 2015.

“Average fare similarly witnessed an increase to RM177 (up 4% on-year) on the back of strong and healthy demand. If excluding fuel surcharge, RASK for 4Q15 would have been up further at 59% on-year while average fare would have been up by around 26% on-year. 

Profit before tax was RM434.51mil compared with loss before tax of RM391.98mil a year ago. 

Elaborating on the Q4 FY15 profit after tax , it said there was a 229% increase to RM554.20mil, also boosted by deferred taxation of RM124.65mil. This was in contrast with the net loss of RM428.51mil a year ago.

“The growth in 4Q15 net profits is mainly attributable to the revenue growth during the quarter of 47% and a 21% reduction in the average fuel price from US$95 per barrel in 4Q14 to US$75 per barrel in 4Q15,” it said.

For FY15, its earnings of RM540.96mil was a sharp 553% increase from the RM82.84mil in FY14. Revenue increased 15% to RM6.30bil from RM5.41bil, supported by a 10% growth in passenger volume despite the lower average fare of RM157 in 2015
Ancillary income per passenger increased by 2% to RM47 on-year. The seat load factor was at 81% which was 2 percentage points higher than a year ago.

“Despite the improvements in revenue and operating profits for the year, profits before tax of the Group was negatively impacted from the recognition of current and prior year losses of Indonesia AirAsia of RM797.7mil in 2015,” it said.

AirAsia Berhad CEO, Aireen Omar said, “It was a very good quarter indeed for the Malaysian operations. The increase in RASK (including and excluding fuel surcharge) proved that lower fares stimulate the market as seen by the significant increase in the number of passengers that travelled with AirAsia who also received a windfall due to the removal of fuel surcharge”. 

Ancillary revenue rose 14% on-year with the highest contributor coming from baggage (43% of total ancillary revenue) followed by cargo (10% of total ancillary revenue) and insurance (7% of total ancillary revenue). 

The highest growth seen among the ancillary products were AirAsia Insure (up 43% on-year) and connecting fees for our “Flythru” service (up 56% on-year). These led to the Company recording an ancillary income per pax of RM49 this quarter (up 4%), “close to our near term target of RM50”.  

AirAsia’s cost, measured in terms of cost per available seat kilometre (CASK) rose 4% on-year to 14.06 sen. 

The slight increase in CASK was due to an additional 16 sale and leaseback aircraft undertaken throughout 2015 which led to an increase in aircraft operating lease expenses of 148% on-year. 

Maintenance and overhaul expenses increased by 53% on-year.  The decline in overall fuel expense by 15% on-year was on the back of 21% lower average fuel price at US$75 per barrel as compared to US$95 during the same period last year. This is despite the 7% increase in fuel consumption due to the increased number of flights and longer average stage length.  

AirAsia Group CEO Tan Sri Tony Fernandes said: “In Malaysia, we are benefiting from the weaker currency environment that has led to local consumers trading down when going on their travel and other nationalities looking at Malaysia as a value for money holiday destination. Regional destinations are also more appealing as compared to higher currency destinations such as Europe and North America”. 

On the outlook of cost environment, he said, “As seen in 4Q15, we are beneficiary of the low fuel price. As of now, the group has hedged 52% of its fuel requirement for 2016 at an average cost of USD59 per barrel on jet kerosene. Passing on this benefit to our passengers through the removal of fuel surcharge earlier last year proved to be rewarding with demand increasing double digit in 4Q15.”  

http://www.thestar.com.my/business/business-news/2016/02/26/airasia-q4-earnings-at-rm554m-drives-fy15-higher/

Cautionary tale of research reports

THE US$100,000 fine slapped on a former Deutsche Bank analyst for issuing a positive research report on a company when he actually had negative views on it is a stark reminder of why financial opinions should be taken with a pinch of salt.

It is also a firm reminder to retail investors, in particular, that financial opinions conveyed in research reports sometimes do not reflect the true belief of the analysts.

The more seasoned investors would know how to differentiate between the good ones and the rest. However, retailers are often caught in the game where everything is driven by commissions.

Last week, the Securities and Exchange Commission found that Charles Grom had published a glowing report on a discount retailer in March 2012.

However, in private communications with Deutsche’s research and sales staff, Grom indicated that he had maintained a positive recommendation on the company to maintain good relations with the management of the firm.

This runs in stark contrast to what is required of research analysts when they prepare their reports for investors. Research analysts are required to actually state what they truly believe about the stock.

In a nutshell, they cannot express an opinion or recommendation in public that runs contrary to what they state in private.

In Malaysia, of late, there have been some research reports that are conspicuously “lacking” in terms of material for proper analysis that it makes one wonder if the analysts who had crafted the reports really believe in the financial opinion stated.

The projections and assumptions used in arriving at earnings are long term in nature which makes it hard to justify a research report on the company in the first place. It could have been done when the assumptions had a higher degree of materialising.

The reports are particularly on small-cap stocks that do not have a track record.

For instance, a leading bank-backed research unit recently devoted 20 pages to a small-cap construction company.

The assumptions used in arriving at the profit projections were simply outrageous, to put it mildly.

And the basis of arriving at the profit numbers of the construction company was largely due to its connection with external parties that may pave the way for it to land some large construction jobs.

There was little devoted to the fundamentals of the company itself, its track record in carrying out large jobs and what happens if the “connections” do not pay off.

The research report on the construction firm is not the only one that glaringly lacked substance.

There are a few others and all involved small-cap stocks. There was a lengthy report on a pharmaceutical company whose valuations had already gone ballistic and another on an oil and gas (O&G) company where a “buy” call was maintained simply because it was able to recover some cost from its drilling operations.

The report did not delve into the risk of the earnings of the O&G firm coming down significantly, considering that jobs in the sector were scarce and margins were narrow.

A retired analyst, who is a successful fund manager, said that the structure of the equity research in the capital markets requires analysts to continuously come out with stock ideas and make definite calls.

The sales people and fund managers generally don’t like to hear a “hold” call. They expect a “buy” or “sell” recommendation because then they can proceed to advise their clients to trade with the stocks.

It brings them and the brokerage commissions. Most of the time, an analyst may have spotted a company that had potential, but the analyst needs time to come up with a credible research report that he himself is convinced of, which he or she may not have.

Due to time constraints and pressure from the bosses, the analyst has to come out with a report. And most of the time, because the company that the research is based on is a client of the brokerage, the analyst has to come up with a bullish report.

Essentially, the research analyst has two parties to answer to – one is the brokerage firm and the other is the company that the research is based on. The brokerage pays the analyst, while the company pays the brokerage.

There is nothing wrong in promoting stocks that have potential. However, not many investors are able to read between the lines and analyse a research report well.

Which is why all research reports are supposed to have limited circulation. But in today’s world, there is nothing limited in circulation.

Good analysts go on to become better fund managers because they employ the same set of skills.

Out of the many fund managers, very few can actually claim to be good equity analysts who consistently dish out credible research reports.

The reason is because their financial opinion conveyed in research reports does not always reflect their true beliefs. They are most of the time forced to comply with the nature of the business.

- The Star Biz 27/2/2016

Eye on stock: SHH Resources Holdings

AFTER peaking out temporarily at a high of RM2.48 on Nov 12, last year, the best level since Feb, 1998, SHH Resources Holdings Bhd (SHH, 7412) made two efforts to push to an upper ground, but each round was met with an apparent profit-taking activity.

Subsequently, this stock slipped into mild correction mode, which witnessed the shares retracing to a near four-month low of RM1.76 on Feb 12.

Thereafter, in the wake of fresh bargain hunting interest, prices staged a rebound, sending this counter to a high of RM2.12 during intra-day session yesterday.

Very evidently, SHH is making another move to resume the rally after a three-month consolidation period and it has a bright prospect of making it this time, with trading volumes growing and in favour of the bulls.

A breach of the immediate hurdle of RM2.15, followed by a decisive penetration of the RM2.30 will further raise investors’ optimism. The next upper strong barrier is expected at the RM2.48-RM2.50 range, of which a successful major breakout will signal the continuation of an uptrend.

If that happens, the near-term target to look for would be the RM2.80-RM2.82 band or the RM3 psychological level, which is also a heavy barrier.

Elsewhere, the oscillator per cent K and the oscillator per cent D of the daily slow-stochastic momentum index were curving up after triggering a short-term buy near the mid-range yesterday.

Also on the rise, the 14-day relative strength firmed from a reading of 45 in mid-week to settle at the 65-point level.

In addition, the daily moving average convergence/divergence histogram and the daily signal line advanced steadily towards the zero threshold. A buy call was issued the previous week.

Indicators are pretty promising, implying SHH shares are set to scale in the immediate term, with a potential of extending the previous leg of upward thrust.

As for the downside, current support is envisaged at the RM1.95 level. The lower floor is lying at RM1.76 and the 200-day simple moving average of RM1.67 will act as an important floor. —

The comments above do not represent a recommendation to buy or sell.

http://www.thestar.com.my/business/business-news/2016/02/27/eye-on-stock-shh-resources-holdings/

Karex proposes 1-for-2 bonus share issuance

KUALA LUMPUR (Feb 24): Karex Bhd, which today reported a 55.7% jump in its net profit for its second quarter ended Dec 31, 2015, plans to issue one bonus share for every two existing Karex shares held at an entitlement date to be fixed and announced later, to reward shareholders.

In total, the world’s largest condom maker could be issuing 334.13 million new bonus shares. Currently, Karex’ share base comprises 668.25 million shares.

At a par value of 25 sen per share, Karex could spend up to RM83.53 million from its share premium to fund the bonus issuance, which will trim its share premium to RM31.39 million, following the exercise.

In a statement, Karex chief executive officer Goh Miah Kiat said the bonus share issuance will allow existing shareholders to maintain their equity stake in the group. The bigger share base may also eventually allow Karex’s shares to be priced more affordably and in turn raise its marketability and tradeability on the open market.

“We are very thankful to have very supportive shareholders and we would like to take this opportunity to thank them for their unwavering support through our bonus issue exercise.”

Goh said the group intends to complete the bonus share issuance by the second quarter of this year.

- The Edge Market dd 24/2/2016

Aspen Group plans RM500m RTO with Yi-Lai

KUALA LUMPUR (Feb 24): Penang-based property development and real estate investment group Aspen Group is planning a reverse takeover of ceramic and homogeneous tiles maker Yi-Lai Bhd, which will see the latter branching out into property development.

According to a bourse filing today, Yi-Lai said it has entered into a heads of agreement (HoA) with Aspen Vision Group Sdn Bhd and Setia Batu Kawan Sdn Bhd (Setia Batu Kawan), to acquire Aspen Vision All Sdn Bhd for RM550 million.

Under the HoA, to be effective for 90 days from today, the parties involved have agreed to enter into definitive agreement for the sale and purchase of Aspen Vision All, with the purchase consideration still subject to the revalued net asset value (NAV) of Aspen Vision All, and other factors.

According to Yi-Lai, the purchase consideration shall be settled via the issuance of 450 million new Yi-Lai shares at an issue price of RM1, while the remaining RM100 million will be paid in cash, which shall be funded through internally-generated funds and/or bank borrowings.

“The issue price of RM1 represents a premium of 22.3% over the 5-day volume-weighted average market price of Yi Lai shares, including Feb 23," it added.

Aspen Vision All is principally involved in the provision of management services and investment holding, while its subsidiaries are principally involved in property development. It was formed two years ago to undertake the Aspen Vision City and Vervéa development at Batu Kawan, Penang.

Yi-Lai said the proposed acquisition is expected to enable the existing shareholders of Yi-Lai to participate in a new, viable and profitable core business in property development via Aspen Vision.

"The diversification of the core business of Yi-Lai into property development will be a synergistic down-stream fit for Yi-Lai’s existing tile manufacturing business," it said.

The proposed acquisition will result in a significant change in business direction or policy of Yi-Lai and will also result in a reverse take-over of Yi-Lai, it added.

Shares in Yi-Lai closed up 1.5 sen or 1.78% today, at its one-month high of 86 sen, for a market capitalisation of RM129.6 million.

- The Edge Market dd 24/2/2016

Saudi oil minister Naimi: Oil production cuts won't happen

Saudi oil minister Ali Ibrahim Naimi said Tuesday producers will hopefully meet in March to negotiate an output freeze, but production cuts will not happen.

Last week, Saudi Arabia, Russia, Qatar and Venezuela proposed a freeze that would cap production at January levels. Russian Energy Minister Alexander Novak said Saturday the deal, which is contingent on other producers participating, should be finalized by March 1, Reuters reported.

"Freeze is the beginning of a process, and that means if we can get all the major producers to agree not to add additional balance, then this high inventory we have now will probably decline in due time. It's going to take time," Naimi said.

"It is not like cutting production. That is not going to happen because not many countries are going to deliver even if they say they will cut production — they will not deliver. So there is no sense in wasting our time seeking production cuts," he added.

There is now less trust than normal among the world's oil exporters, he said.

http://www.cnbc.com/2016/02/23/al-naimi-we-in-oil-industry-have-more-that-unites-than-divides-us.html

Investor sentiment towards Malaysia's fundamentals has improved as
reflected in the turnaround in portfolio investment, from a net outflow of RM24.4bn in 3Q15 to a net inflow of RM14.9bn in 4Q15.

In a research note, Affin Hwang Capital said this was the first positive quarterly increase since 2Q14 due to the net buying activity on bonds, in particular Malaysian Government Securities (MSG). It said direct investment also recorded a net inflow of RM5.7bn in 4Q15 after four consecutive quarters of net outflows also supporting the reserve position.

- Bernama

Semicon equipment makers’ orders picking up

KUALA LUMPUR: North American manufacturers of semiconductor equipment reported an increase in orders in January with the book-to-bill ratio rising to 1.08 -- a significant increase since August and expectations are that the capital expenditure for 2016 would be similar to a year ago.

According to its statement posted on its website on Tuesday, the preliminary data for January was an improvement from the final December order of 1.0 and the highest since August’s 1.06.

“A book-to-bill of 1.08 means that US$108 worth of orders were received for every US$100 of product billed for the month,” it said.

The Semiconductor Equipment Manufacturers Industry (SEMI) said these manufacturers posted US$1.32bil in global orders in January 2016 (three-month average basis).

SEMI reported that the three-month average of worldwide bookings in January 2016 was US$1.32bil.

“The bookings figure is 1.4% lower than the final December 2015 level of $1.34bil, and is 0.1% lower than the January 2015 order level of US$1.33bil,” it said.

SEMI added the three-month average of worldwide billings in January 2016 was US$1.23bil.

It pointed out the billings figure was 8.8% lower than the final December 2015 level of US$1.35bil and it was 3.7% lower than the January 2015 billings level of US$1.28bil.

SEMI president and CEO Denny McGuirk said recent semiconductor order activity was on par with the figures reported one year ago.

“While uncertainty clouds the near-term economic outlook, we currently expect 2016 capex to remain in range of 2015 spending," he added.

http://www.thestar.com.my/business/business-news/2016/02/24/semicon-equipment-makers-orders-picking-up/

Padini’s Q2 earnings double on better sales, lower expenses

PETALING JAYA: Padini Holdings Bhd’s net profit more than doubled to RM33.07 million for the second quarter ended Dec 31, 2015 versus RM16.21 million in the same period a year ago, on higher sales and slower expenses growth.

Revenue soared 38.6% from RM245.59 million to RM340.38 million. It has proposed to declare an interim dividend of 2.5 sen per share.

While a weaker ringgit has driven up merchandise costs, Padini said its selling prices have remained relatively unchanged as retail sentiment is still low. “While there is a real need at some future point to increase selling prices to cope with falling gross margins, the reality of the situation discourages that in the short term.

Thus we will continue with policies that will drive top-line growth while holding prices steady,” it reiterated. Padini said whenever opportunities arise, the distribution network must be expanded not just in size but also in geographical and market reach. “Falling gross margins can then be compensated by rising sales and the resultant larger absolute amount in gross profits would go a long way towards keeping bottomline healthy,” it noted.

The company expects to open another two Padini Concept Stores and three Brands Outlet stores within the financial year, on top of the total nine outlets that have opened within the first seven months of the financial year.

For the first half of the year, Padini’s net earnings surged 83.06% from RM35.45 million to RM64.9 million on the back of a 29.13% increase in revenue from RM472.34 million to RM609.95 million. -

http://www.thesundaily.my/news/1708659

CIMB Research keeps Add on Tune Protect, ups target to RM2.29

KUALA LUMPUR (Feb 24): CIMB IB Research has maintained its “Add”rating on Tune Protect Group Bhd at RM1.19 with a higher target price of RM2.29 (from RM2.20) and said the company’s FY15 net profit was 13.5% above house forecast due to lower-than-expected tax rate.

In a note Feb 23, the research house said the results were in line with market consensus.

It said FY15 net profit dwindled by 4.2% to RM72.9 million.

“Global travel insurance’s premium and net profit rose by 22% and 15%, respectively, in FY15.

“Non-life insurance net profit advanced only 3.9% in FY15.

“Tune remains an Add given the positive growth prospects for travel insurance,” it said.

- The Edge Market dd 24/2/2016

Unisem FY15 earnings surge on higher demand, forex

KUALA LUMPUR: Chip maker Unisem (M) Bhd’s earnings surged 127% to RM155.54mil in the financial year ended Dec 31, 2015, boosted by higher demand for its products and forex gains.

It said on Tuesday the higher FY15 revenue and earnings were mainly due to greater demand for the products and services and an appreciation in the US dollar against the ringgit and the yuan compared to a year ago.

“The improvement in net profit for the current quarter and financial year to date was due to increased revenue, better contribution from our wafer bumping and advanced package operations and lower interest expense,” it said.

Unisem said the earnings were a sharp improvement from the RM68.42mil a year ago, Revenue also increased 21.4% to RM1.260bil from RM1.038bil.

For the final quarter, the group recorded revenue of RM351.97mil, up 23.3% from RM285.37mil a year ago. Its earnings surged 185% to RM60.42mil from RM21.19mil.

Earnings per share were 8.23 sen compared with 3.14 sen. It rewarded shareholders with a final dividend of four sen a share, making it a total of 10 sen for FY15 compared with six sen in FY14.

“The improvement in net profit for the current quarter and financial year to date was due to increased revenue, better contribution from our wafer bumping and advanced package operations and lower interest expense,” it said.

- The Star Biz dd 23/2/2016

Cont/n

However, the main factors that could, individually or collectively, lead to a negative rating action include a sustained deterioration in fiscal discipline and the public finances leading to a sharper rise in government debt ratios than Fitch currently expects.

Other factors are the further weakening of the balance of payments that strains domestic economic and/or financial stability and deterioration in political stability or governance that lead to a weakening of credibility of policy-making institutions,

The main factors that could, individually or collectively, lead to a positive rating action are sustained reductions in government debt ratios and also the narrowing of structural weaknesses relative to peers, including development indicators and governance

Fitch said the ratings assume the global economy evolves broadly in line with the projections in Fitch's latest Global Economic Outlook; that there is no sharp, disruptive slowdown in China; and that there is no global systemic crisis in emerging markets.

http://www.thestar.com.my/business/business-news/2016/02/23/fitch-affirms-malaysia-currency-ratings-with-stable-outlooks/

Fitch affirms Malaysia’s currency ratings with stable outlooks

KUALA LUMPUR: Fitch Ratings has affirmed Malaysia's long-term foreign- and local-currency issuer default ratings (IDRs) at 'A-' and 'A' respectively with Stable Outlooks. 

It said on Tuesday the issue ratings on Malaysia's senior unsecured local-currency bonds were also affirmed at 'A'. The country ceiling was affirmed at 'A' and the short-term foreign-currency IDR at 'F2'.

The international ratings agency said that Malaysia's IDRs reflected the following key rating drivers:

Firstly, the authorities have remained committed to their fiscal consolidation path, adopting a budget recalibration in January 2016 that cut 0.6% of GDP from spending to match a decline in oil revenues and other smaller revenue adjustments. 

“Fitch views the macroeconomic assumptions in the recalibrated budget as broadly realistic: the budgeted oil price is expected to average US$30 to US$35 per barrel in 2016 while Malaysian GDP growth is projected in a range of 4%-4.5%. 

“Fitch expects the ratio of federal government debt to GDP to rise modestly to 2017 but to remain below the authorities' 55% policy ceiling. Contingent liabilities in the form of explicit federal-government guarantees have stabilised at around 15% of GDP since 2013,” it said.

The agency also noted that the ringgit fell by 18.6% against the US dollar in 2015, or by 13.5% on a nominal trade-weighted basis, while foreign reserves dropped by 18%. 

The decline in global oil prices that began in August 2014 coincided with the onset of portfolio and debt-capital outflows from Malaysia that put pressure on the external finances, a situation that persisted for the first three quarters of 2015. 

“However, the currency and reserves have stabilised since September 2015, despite a further decline in oil prices. Malaysia's external liquidity has weakened but remains in line with 'A' range peers' medians for coverage of current external payments and the liquidity ratio. Fitch expects the current account to remain in modest surplus out to 2017,” it said.

Fitch acknowledged that the economy was slowing, but growth remained stronger than in 'A' peers. 

It expects real GDP growth of about 4% in 2016 and 2017, below the five-year average of 5%. 

Credit growth of 7.9% in 2015 was the weakest since 2009 partly owing to a tightening of financial conditions faced by the banks, to which the central bank responded with an easing of reserve requirements in January 2016. 

However, the decline in the ringgit has supported non-commodity exports, and the government and state-owned enterprises expect to continue with strategic investment projects.

Fitch also said Malaysia's banking system indicator of 'bbb' was in line with that of Poland (A-/Stable) or Israel (A/Stable), although weaker than those of the Czech Republic or Chile (both A+/Stable). 

The Malaysian private sector is relatively highly indebted. Bank credit to the private sector was the third highest among Fitch-rated emerging markets at end-2015, at 121% of GDP (behind only China and Thailand). 

Aggregate indebtedness across the Malaysian economy rose by 43 percentage points of GDP between end-2007 and June 2015 according to Bank of International Settlements data, more than in Thailand, Brazil or Turkey although much less than in China (+91pp). 

Malaysian household debt has grown fastest, by nearly 18pp against 17pp for the general government. 

High private-sector debt lessens the resilience of the Malaysian financial system and sovereign credit profile to macroeconomic volatility, such as a sharp rise in unemployment or interest rates, if it occurred.

Malaysia's levels of income (at market exchange rates) and development are weaker than 'A' range medians and closer to 'BBB' range norms. 

“Governance is also a weakness relative to other sovereigns in the 'A' rating range. 

“Malaysian politics and governance standards have come under the spotlight due to a range of domestic and international investigations into the state-owned investment company 1Malaysia Development Berhad (1MDB). 

“However, the political heat generated by these issues has not so far had a discernible impact on policy-making. For example, the government has pressed ahead with controversial structural fiscal reforms, including a goods and services tax and reduction in fuel subsidies,” it said. 

Fitch also said that sovereign funding flexibility benefits from Malaysia's deep local capital markets. The share of government debt denominated in ringgit is very high (over 95%). The Malaysian sovereign has no debt restructuring history.

“The stable outlooks reflect Fitch's assessment that upside and downside risks to the ratings are current broadly balanced.

Cont/n

Resorts World Genting redevelopment cost to double to RM10.4bil

KUALA LUMPUR: Genting Malaysia Bhd will double the capital investment under the Genting Integrated Tourism Plan (GITP), which involves redeveloping and transforming Resorts World Genting, from the earlier-announced RM5bil to an estimated RM10.38bil.

The company said in a press statement that it would significantly expand and add new facilities under the 10-year GITP launched in December 2013.

It said it would offer “an extensive and wide array of new and exciting entertainment options, unique to visitors from across the region.”

The capital investment under Phase 1 of the GITP will increase from RM4bil to RM8.11bil, with total investment in the Twentieth Century Fox World theme park expected to exceed RM2bil.

“Under this phase, the first-ever world-class branded Twentieth Century Fox World theme park will see a substantial increase in investment with more spectacular, thrilling and state-of-the-art rides than previously announced,” said Genting.

This phase also will see the indoor theme park undergo a major transformation, offering a total of 18 rides from the existing nine.

The Sky Avenue shopping mall and Genting Premium Outlets also come under the first phase.

Genting said the expansion plans also included a substantial increase in staff accommodation to cater for an additional 7,000 new job opportunities at the resort as well as new power sub-stations and water treatment plants to cater for future growth demands.

Phase 2, estimated to cost over RM2bil, will see the construction of more luxury hotels at the resort as well as a show arena with a seating capacity of up to 10,000.

Genting said the construction and development works for GITP were progressing well. Its first offering, the new 1,300-room First World Hotel Tower 3, has been fully operational since June last year.

http://www.thestar.com.my/business/business-news/2016/02/23/resorts-world-genting-redevelopment-cost-to-double-to-rm10bil/

Tiong Nam's 3Q net profit more than doubles to RM22.08m

KUALA LUMPUR (Feb 22): Tiong Nam Logistics Holdings Bhd posted a net profit of RM22.08 million or 5.3 sen a share for the third quarter ended Dec 31, 2015 (3QFY16), 2.4 times or 136.7% higher compared to RM9.33 million or 2.22 sen a share a year ago, largely contributed by its logistics and warehouse services, as well as the property development segment.

In a filing with Bursa Malaysia today, Tiong Nam said that revenue for the period was 19.3% higher at RM173.89 million from RM145.7 million a year ago.

"Logistics and warehousing services revenue increased 11.8% to RM119.4 million compared to RM106.8 million in 3QFY15, mainly due to securing of new total logistics customers as well as business expansion from existing customers," the logistics player said in its filing.

Revenue for property development, meanwhile, increased by 40.8% to RM54.5 million for the quarter from RM38.7 million, as it secured new sales on completed projects, as well as smooth construction progress for ongoing projects.

For the nine-month period (9MFY16), net profit rose 15.3% to RM43.06 million or 10.34 sen a share from RM37.33 million or 8.87 sen a share a year ago, while revenue increased 4.6% to RM446.7 million from RM427.2 million in 9MFY15.

Moving forward, the group expects the global and regional economic climate in 2016 to be challenging to its core business segment.

"The group will continue seeking new business opportunities, focus on operational efficiency and cost control effectiveness to better contend with competition," Tiong Nam said.

It added that the property development segment is expected to contribute positively to the group for the remaining FY16.

Tiong Nam shares closed 1 sen or 0.81% higher at RM1.25 with 900,500 shares traded. It has a market capitalisation of RM521 million.

- The Edge Markets 22/2/2016

Tien Wah's 4Q net profit jumps 14.1%, plans 14 sen dividend

Kuala Lumpur (Feb 22): Tien Wah Press Holdings Bhd's net profit jumped 14.1% to RM11.8 million in the fourth quarter ended Dec 31, 2015 (4QFY15) from RM7.82 million a year earlier, boosted by RM2.1 million gain on disposal of 50% of Toyo (Viet) Paper Product Co. Ltd, sales rebate of RM3.9 million in 2014 and improvement in operating margins, favourable foreign currency exchange rate and lower depreciation charge.

The lower depreciation charge in the current quarter was RM1.5 million as the group had assessed and revised the residual useful life of certain plant and machineries to reflect its longer estimated useful life based on past experiences and machine vendor's validation.

Quarterly revenue grew by 11.9% to RM97.1 million from RM86.8 million in 4QFY14.

Tien Wah recommended a final single tier dividend of 14 sen, subject to shareholders' approval at the forthcoming annual general meeting. The payment date is June 30, 2016.

Tien Wah's full year (FY15) net profit more than doubled to RM33.8 million from RM13.5 million in the previous year while revenue was only up 3.87% at RM367.4 million from RM353.7 million in FY14.

In its filing to Bursa Malaysia, the management said that Tien Wah had completed its strategic restructuring of the production footprint within the group last year to service the customers and reduce operating cost, which incurred a total redundancy cost of RM6.7 million.

The group expects the outlook for 2016 to remain challenging with the current volatile global environment.

"Besides efficiency improvement, wastage control and active cost containments, the group continues to develop new opportunities which could lead to volume growth in new customers and geographical segments," the management said in a filing to Bursa.

As at closing today, Tien Wah shares rose 21 sen or 7.5% to RM3.01 for a market capitalisation of RM290.45 million. The stock saw 167,900 shares traded.

- The Edge Markets 22/2/2016

Quarter Result as at 31 Dec 2015
http://www.bursamalaysia.com/market/listed-companies/company-announcements/5005013

Stocks to watch in the current economic slowdown

SMALL to mid cap stocks under the FBM70 are holding firm and selectively, there is potential for higher gains.

Within this list, Karex, IJM, Kulim, YTL Power, Sunway REIT, Berjaya Sports, WCT and IGB REIT are among some of the stocks in spotlight.

Why Karex? News that the Zika virus can be sexually transmitted may spur demand for condoms manufactured by Karex, said Pong Teng Siew, head of research, Inter-Pacific Securities.

Stocks in construction, plantations and utilities are under the radar of Chris Eng, head of research, Etiqa Insurance & Takaful. Within these categories, Mitrajaya, Protasco, KLK, IOI Corp, Tenaga and Malakoff are also recommended.

“Most of these stocks in the construction, REITs and gaming sectors are fairly insulated from the global economic slowdown as they are in mostly domestic-centric businesses,’’ said Vincent Khoo, head of research, UOBKayhian.

Hong Leong Industries is another overweight stock by UOBKayhian.

Magni-Tech has also been highlighted for its surprisingly strong earnings for the second quarter of financial year ending April 30, 2016. The company earned a revenue of RM197.3mil, giving it a profit of RM21.6mil and earnings per share (EPS) of 19.9 sen.

This compares with the previous second quarter where it recorded lower revenue of RM162mil, profit of RM8mil and EPS of 7.0 sen.

Commodities-related stocks could be the next to watch out for, said Danny Ng, CEO, Areca Capital.

Under this category, he favours IOI Corp, Sime Darby, KNM and Muhibbah for mediul to long-term exposure.

Problems in the Chinese economy may spill over to Singapore banks which could experience massive capital outflows if China comes down with a “hard landing,” said the Singapore Business Review, quoting Swiss billionaire investor Felix Zulauf.

http://www.thestar.com.my/business/business-news/2016/02/22/stocks-to-watch-in-current-economic-slowdown/

Is Komtar OWG’s next catalyst

http://www.thestar.com.my/business/business-news/2016/02/20/is-komtar-owgs-next-catalyst/

Is Komtar OWG’s next catalyst?

ONLY World Group Holdings Bhd (OWG) which operates food outlets, water amusement parks, retail service outlets and other family attractions could bring in an average of RM17.5mil in sales per annum once its completes the refurbishment of the Komtar tower in Penang this year.

That estimate is based on ticket prices for the themed attractions it will introduce within the tower, which will range between RM10 and RM60 per ticket or an average of RM35 per ticket and a total of 500,000 visitors per annum.

Founder Datuk Seri Richard Koh Cheng Keong, who gave the estimate says the group, tasked to revive one of the island’s most famous landmarks, hopes to introduce more than eight family attractions as well as food and beverage (F&B) outlets.

Among the key attractions is the Jurassic Research Centre which will showcase a combination of entertainment and education via a variety “informative exhibits and displays.”

“There will also be the 5D Sea Explorer, where technology meets underwater and the 7D Planetarium Dome which will be an intensively visual experience,” Koh tells StarBizWeek.

Although Koh did not say when the attractions will be ready, CIMB Research, which tracks the company, notes that all components including the themed attractions, an observation deck and an “interactive” lift will be launched together as a single coherent destination by April this year.

Assuming a lower average price of RM30 per ticket and a pre-tax margin of 30%,the themed attractions could lift the company’s FY16-FY18 earnings per share (EPS) by 10%-25%, the research outfits notes.

“The combined upside potential from higher ticket prices and the attractions could lift our FY16-18F EPS by 16% to 71%, which could then lift our share price valuation to RM6.70,” it told clients in a Jan 13 note.

OWG yesterday reported a net profit of RM5.33mil on sales of RM28.35mil for its second quarter ended Dec 31, 2015.

Its share price last traded at RM2.46 yesterday, up 5% in a broader market which finished lower.

“Due to the delicate structure of Komtar, the refurbishment and renovation have to be done with precaution,” Koh says.

OWG was listed on Bursa Malaysia in late 2014 at an issue price of 88 sen. It raised close to RM50mil via that initial public offering.

In December 2012, the company won a tender to revitalise the 65-storey iconic Komtar tower, a project mooted by the state government.

Its responsibility was initially to transform five levels of the tower namely levels five, 59, 60, 64 and 65 which have a net lettable area (NLA) of 60,000 sq ft.

The original NLA had later doubled, with the extra area coming from an additional floor (Level 66) as well as new space on levels three, four, five, and six.

OWG has said that it intends to operate most of the F&B outlets, which would include a sky restaurant as well as other outlets there via its own brands or third party operators.

Its target market is primarily tourists.

In exchange for the company undertaking the project, OWG has been granted a lease to operate the attractions and F&B outlets by the Penang Development Corpo for 45 years with an option to renew for 15 more years.

Koh, in his personal capacity, has had experience in developing theme parks such as the Resorts World Genting, Universal Studios Singapore and Sunway Lagoon.

Moving forward, he says among the challenges he foresees for OWG is the identification of new investment opportunities in the current economic climate that will be able to bring in healthy margins to supplement the firm’s existing business model.

According to him, OWG has a unique business model compared with other F&B operators and the company intends to “actively” look out for organic growth opportunities to complement its future growth trajectory.

“With our continued growth, we believe we can increase our margins and enhance our shareholders value.”

As of Dec 31, 2015, the company had cash and cash equivalents of RM18.32mil, with total borrowings amounting to RM42.99mil.

http://www.thestar.com.my/business/business-news/2016/02/20/is-komtar-owgs-next-catalyst/

Foreign capital returning?

Malaysian debt market attracting inflows as developed economies turn dovish

THIS is no monkey business: capital is finding its way back to emerging Asian markets, including Malaysia, to seek better yields. This happens as doubts about further interest rate hike in the United States arise, while other developed countries have pushed their interest rates deeper into the negative territory.

Figures from international banking giant JP Morgan show that US$5.5 trillion (RM23 trillion) worth of advanced-economy government bonds were traded at negative yields as at the end of last month. But today, the amount of sovereign debt trading at negative yields is estimated to have grown to US$8 trillion; hence the inflows of capital to emerging Asian markets that offer positive returns.

“We are cautiously optimistic that longer-term foreign investors are the ones coming back into the emerging markets, as these fresh flows are coming in at a stage where there is still volatility in emerging markets,” CIMB Investment Bank director of regional fixed-income research Nik Ahmad Mukharriz Nik Muhammad tells StarBizWeek in an email.

“The fact that emerging markets offer better returns than most developed markets help (drive this round of foreign capital inflow), especially with emerging-market currencies now performing better than last year, while commodities prices have likely seen the worst behind them,” he says, pointing to the trend of low or negative interest rates in developed economies and the dovish tone of the US Federal Reserve of late.

In Thailand and Malaysia, for instance, Nik Ahmad Mukharriz notes that 10-year government bonds offer yields of 2% and 3.90% respectively, compared with levels much lower than 2% in developed countries.

As one of the beneficiaries of these capital inflows to emerging economies, Malaysia has seen increased foreign holdings in its bond market in recent months, while the ringgit has rebounded from its multi-year lows.

Year-to-date, the ringgit has gained 2.05% against the US dollar. This makes the Malaysian currency one of the top performers in the region so far this year.

http://www.thestar.com.my/business/business-news/2016/02/20/foreign-capital-returning/

I can't stopped laughing on 'The best sales person who able to sell stone into gold' award. Abang duit, you are very humorous. You deserve the most kind and sincere award.....cheers!!!

Only World Group's 2Q net profit up 28.3% on higher contribution from amusement, recreation ops 

KUALA LUMPUR (Feb 19): Only World Group Holdings Bhd's (OWG) net profit rose 28.3% to RM5.33 million or 2.88 sen per share in the second financial quarter ended Dec 31, 2015 (2QFY16) from RM4.16 million or 2.25 sen per share a year ago, due mainly to higher contribution from its amusement and recreation operations. 

Revenue grew 15.4% to RM28.35 million in 2QFY16 from RM24.56 million in 2QFY15. 

In a filing with Bursa Malaysia today, OWG said its amusement and recreation operations and other services segment posted pre-tax profit of RM2.9 million and RM776,158, compared with RM1.1 million and RM177,458 a year ago, respectively. 

However, the food service operations recorded slightly lower pre-tax profit at RM3.8 million from RM4.3 million in 2QFY15. 

For the cumulative six-month period (1HFY16), net profit grew 16.5% to RM8.39 million or 4.53 sen per share from RM7.2 million or 3.89 sen per share a year ago. 

Revenue also increased 16.5% to RM51.03 million compared to RM43.79 million in 1HFY15. 

Moving forward, the group is generally positive of its performance, but cautious of the prevailing economic conditions for the financial year. 

OWG's expansion plan includes the Komtar Tower Revitalisation Project in Penang, the franchise programme for Only Mee and opening new food service outlets. The provider of leisure and hospitality services will also open "Fun, Food and Good Living" locations that package multiple food and beverage, attractions and other outlets in a single location, as well as expand and enhance the Wet World Water Park Shah Alam and Escaperoom. 

Shares of OWG closed up 12 sen or 5.13% at RM2.46 today, giving it a market capitalisation of RM543.9 million. 

- The Edge Markets

Only World Group's 2Q net profit up 28.3% on higher contribution from amusement, recreation ops

KUALA LUMPUR (Feb 19): Only World Group Holdings Bhd's (OWG) net profit rose 28.3% to RM5.33 million or 2.88 sen per share in the second financial quarter ended Dec 31, 2015 (2QFY16) from RM4.16 million or 2.25 sen per share a year ago, due mainly to higher contribution from its amusement and recreation operations.

Revenue grew 15.4% to RM28.35 million in 2QFY16 from RM24.56 million in 2QFY15.

In a filing with Bursa Malaysia today, OWG said its amusement and recreation operations and other services segment posted pre-tax profit of RM2.9 million and RM776,158, compared with RM1.1 million and RM177,458 a year ago, respectively.

However, the food service operations recorded slightly lower pre-tax profit at RM3.8 million from RM4.3 million in 2QFY15.

For the cumulative six-month period (1HFY16), net profit grew 16.5% to RM8.39 million or 4.53 sen per share from RM7.2 million or 3.89 sen per share a year ago.

Revenue also increased 16.5% to RM51.03 million compared to RM43.79 million in 1HFY15.

Moving forward, the group is generally positive of its performance, but cautious of the prevailing economic conditions for the financial year.

OWG's expansion plan includes the Komtar Tower Revitalisation Project in Penang, the franchise programme for Only Mee and opening new food service outlets. The provider of leisure and hospitality services will also open "Fun, Food and Good Living" locations that package multiple food and beverage, attractions and other outlets in a single location, as well as expand and enhance the Wet World Water Park Shah Alam and Escaperoom.

Shares of OWG closed up 12 sen or 5.13% at RM2.46 today, giving it a market capitalisation of RM543.9 million.

- The Edge Markets

Financial Performance as at 31 December 2015

B1. Review of Performance of the Group :-

Current Year to-date vs. Preceding Year Corresponding Period

The Group achieved revenue and profit before tax of RM51.02 million and RM11.52 million respectively for the 6 months financial period ended 31 December 2015. The revenue of RM51.02 million represented an increase of RM7.22 million or 16.5% as compared to the revenue of RM43.80 million recorded for the 6 months financial period ended 31 December 2014.

The increase in revenue was mainly contributed by food service operations of RM4.53 million and RM1.07 million from amusement and recreation operations.

The increase in food service operations was due to opening of a food service outlet in KOMTAR Penang, namely 59Sixty in June 2015, which contributed RM4.38 million current year to-date.

For amusement and recreation operations, the increase was mainly attributed to the commencement of operations of Jungle Gym, Atria Mall in September 2015 which posted RM1.17 million of revenue current year to-date.

Other services segment recorded a revenue of RM4.26 million in current year to-date, an increase of 61.9% over the preceding year’s corresponding period revenue of RM2.63 million mainly due to the promotional campaigns undertaken.


B2. Variation of Results with the Immediate Preceding Quarter

The Group’s revenue increased by 25.0% from RM22.68 million in the immediate preceding quarter to RM28.35 million in the current financial quarter. Profit before tax of the Group increased from RM4.03 million in the previous financial quarter to RM7.49 million in the current financial quarter representing an increase of 85.9%.

The higher revenue and profit before tax as compared to preceding quarter was mainly due to the increase in patronage in the current financial quarter which coincided with year-end school holidays and festive seasons.

Revenue from the food service operations segment in the current financial quarter increased by 11.2% from RM17.18 million in the immediate preceding quarter to RM19.11 million in the current financial quarter due to increase in patronage.

For the amusement and recreation operations, revenue generated increased by 92.1% from RM3.59 million in the immediate preceding quarter to RM6.89 million in the current financial quarter. Besides the higher patronage in this financial quarter, the increase was also due the commencement of operations of Jungle Gym, Atria Mall in September 2015 and the acquisition of 60.0% of Escaperoom Holdings Sdn Bhd completed on 26 October 2015.

B2. Variation of Results with the Immediate Preceding Quarter

Other services segment recorded a revenue of RM2.35 million in the current financial quarter, an increase of 23.3% over the immediate preceding quarter of approximately RM1.91 million mainly due to the promotional campaigns undertaken.

B3. Prospects for the Group

The Board has in place a business and expansion plan moving forward, which are focused in the following areas :-

a) The KOMTAR Tower Revitalisation Project will upon completion enhances the Group’s branding and physical presence in a new market. The project is expected to contribute positively to the Group’s financial position on completion;

b) The franchise programme for Only Mee will enable us to expand our chain of food service outlets under this brand name, and diversify our revenue streams;

c) Opening new food service outlets will enable us to expand the range of dining options that we provide and operate at new locations;

d) Opening “Fun, Food and Good Living” locations that package multiple F&B, attractions and other outlets in a single location with a unified theme, focusing on family-centric activities;

e) Expand and enhance Wet World Water Park Shah Alam by executing the phase two (2) expansion plan; and

f) Expand and enhance the Escaperoom in new market for greater exposure.

The Board is generally positive of the Group’s performance but cautious of the prevailing economic conditions for the financial year.

You are welcome Coldrisks :-)

SKP Resources' 3Q net profit doubles

KUALA LUMPUR (Feb 19): SKP Resources Bhd's net profit for the third quarter ended Dec 31, 2015 (3QFY16) more than doubled to RM24.15 million, or 2.20 sen a share, from RM10.54 million, or 1.17 sen a share, a year ago, due to higher revenue recorded from existing customers as well as contribution from newly acquired subsidiaries.

In a filing with Bursa Malaysia today, revenue also more than doubled to RM314.77 million for the period, compared to RM150.18 million in 3QFY15.

For the nine-month period (9MFY16), net profit stood at RM60.47 million or 5.58 sen a share, against RM30.71 million or 3.41 sen a share a year ago.

Revenue, meanwhile, came in at RM819.06 million from RM422.16 million in 9MFY15.

Moving forward, the group expects to remain profitable as strong order books from existing customers will contribute positively to its performance for FY16.

"The acquisition of new subsidiaries would allow the group to leverage on their additional production capacity and broaden the product mix to better tailor its services to suit the demand of customers," SKP Resources said.

The plastic moulding manufacturer added that it would diversify its customer base with the acquisitions as the new subsidiaries have established long-term relationships with several multinational companies as its customers, which are spread over a diverse range of industries.

Shares of SKP Resources closed unchanged at RM1.32 with 2.4 million shares traded, giving it a value of RM1.48 billion.

- The Edge Markets

SKP Resources' 3Q net profit doubles

KUALA LUMPUR (Feb 19): SKP Resources Bhd's net profit for the third quarter ended Dec 31, 2015 (3QFY16) more than doubled to RM24.15 million, or 2.20 sen a share, from RM10.54 million, or 1.17 sen a share, a year ago, due to higher revenue recorded from existing customers as well as contribution from newly acquired subsidiaries.

In a filing with Bursa Malaysia today, revenue also more than doubled to RM314.77 million for the period, compared to RM150.18 million in 3QFY15.

For the nine-month period (9MFY16), net profit stood at RM60.47 million or 5.58 sen a share, against RM30.71 million or 3.41 sen a share a year ago.

Revenue, meanwhile, came in at RM819.06 million from RM422.16 million in 9MFY15.

Moving forward, the group expects to remain profitable as strong order books from existing customers will contribute positively to its performance for FY16.

"The acquisition of new subsidiaries would allow the group to leverage on their additional production capacity and broaden the product mix to better tailor its services to suit the demand of customers," SKP Resources said.

The plastic moulding manufacturer added that it would diversify its customer base with the acquisitions as the new subsidiaries have established long-term relationships with several multinational companies as its customers, which are spread over a diverse range of industries.

Shares of SKP Resources closed unchanged at RM1.32 with 2.4 million shares traded, giving it a value of RM1.48 billion.

- The Edge Markets

OWG

Financial Performance as at 31 December 2015

B1. Review of Performance of the Group :-

Current Year to-date vs. Preceding Year Corresponding Period

The Group achieved revenue and profit before tax of RM51.02 million and RM11.52 million respectively for the 6 months financial period ended 31 December 2015. The revenue of RM51.02 million represented an increase of RM7.22 million or 16.5% as compared to the revenue of RM43.80 million recorded for the 6 months financial period ended 31 December 2014.

The increase in revenue was mainly contributed by food service operations of RM4.53 million and RM1.07 million from amusement and recreation operations.

The increase in food service operations was due to opening of a food service outlet in KOMTAR Penang, namely 59Sixty in June 2015, which contributed RM4.38 million current year to-date.

For amusement and recreation operations, the increase was mainly attributed to the commencement of operations of Jungle Gym, Atria Mall in September 2015 which posted RM1.17 million of revenue current year to-date.

Other services segment recorded a revenue of RM4.26 million in current year to-date, an increase of 61.9% over the preceding year’s corresponding period revenue of RM2.63 million mainly due to the promotional campaigns undertaken.


B2. Variation of Results with the Immediate Preceding Quarter

The Group’s revenue increased by 25.0% from RM22.68 million in the immediate preceding quarter to RM28.35 million in the current financial quarter. Profit before tax of the Group increased from RM4.03 million in the previous financial quarter to RM7.49 million in the current financial quarter representing an increase of 85.9%.

The higher revenue and profit before tax as compared to preceding quarter was mainly due to the increase in patronage in the current financial quarter which coincided with year-end school holidays and festive seasons.

Revenue from the food service operations segment in the current financial quarter increased by 11.2% from RM17.18 million in the immediate preceding quarter to RM19.11 million in the current financial quarter due to increase in patronage.

For the amusement and recreation operations, revenue generated increased by 92.1% from RM3.59 million in the immediate preceding quarter to RM6.89 million in the current financial quarter. Besides the higher patronage in this financial quarter, the increase was also due the commencement of operations of Jungle Gym, Atria Mall in September 2015 and the acquisition of 60.0% of Escaperoom Holdings Sdn Bhd completed on 26 October 2015.

B2. Variation of Results with the Immediate Preceding Quarter

Other services segment recorded a revenue of RM2.35 million in the current financial quarter, an increase of 23.3% over the immediate preceding quarter of approximately RM1.91 million mainly due to the promotional campaigns undertaken.

B3. Prospects for the Group

The Board has in place a business and expansion plan moving forward, which are focused in the following areas:
a) The KOMTAR Tower Revitalisation Project will upon completion enhances the Group’s branding and physical presence in a new market. The project is expected to contribute positively to the Group’s financial position on completion;
b) The franchise programme for Only Mee will enable us to expand our chain of food service outlets under this brand name, and diversify our revenue streams;
c)Opening new food service outlets will enable us to expand the range of dining options that we provide and operate at new locations;
d)Opening “Fun, Food and Good Living” locations that package multiple F&B, attractions and other outlets in a single location with a unified theme, focusing on family-centric activities;
e)Expand and enhance Wet World Water Park Shah Alam by executing the phase two (2) expansion plan; and
f)Expand and enhance the Escaperoom in new market for greater exposure.

The Board is generally positive of the Group’s performance but cautious of the prevailing economic conditions for the financial year.

KTC

Financial Performance as at 31 December 2015

Review of Performance :-

The Group recorded revenue of RM84.27 million and profit before taxation of RM0.45 million for the second quarter ended 31 December 2015. The Group main revenue stream is derived from the distribution of third party brands of consumer packaged goods (“CPG”), which represented RM80.18 million or 95.15% of the total Group’s revenue for second quarter ended 31 December 2015. This is followed by the distribution of own brands of CPG, which accounted for RM2.28 million or 2.71% of the total Group’s revenue for second quarter ended 31 December 2015. A small proportion of the Group’s business is the manufacturing of bakery products, which accounted for RM1.80 million or 2.14% of the total Group’s revenue for second quarter ended 31 December 2015.

Included in the administrative expenses was amounts totalling RM1.20 million of one-off professional fees in relation to the listing on the ACE Market of Bursa Securities.

No comparative figures for the preceding quarter and preceding year are available as this is the second interim financial report on the consolidated results for the second quarter ended 31 December 2015 being announced by the Company in compliance with the Listing Requirements of Bursa Securities.

Comparative with Preceding Quarter’s Results :-

No comparative figures for the preceding quarter and preceding year are available as this is the second interim financial report on the consolidated results for the second quarter ended 31 December 2015 being announced by the Company in compliance with the Listing Requirements of Bursa Securities.

Prospects :-

As disclosed in the Prospectus of the Company dated 28 October 2015, the Group has in place a series of future business plans that are focused in expanding its distribution and manufacturing operations which are in the following areas:
(i) Establish a new distribution centre in Brunei;
(ii) Acquisition of warehousing facilities in Sarawak;
(iii) Construction of new warehousing facility in Kota Kinabalu, Sabah;
(iv) Expansion of own brands of CPG;
(v) New markets for manufactured bakery products;
(vi) Expansion of manufacturing facility and new bakery products in Sabah; and
(vii) Setting-up a new manufacturing facility for bakery products in Sarawak.

Despite the global economic challenges, the Group’s operating environment which is involved primarily with consumer products coupled with the growth and expansion plans in place, the Board of Directors expects that the overall performance for the Group’s financial year ending 30 June 2016 is anticipated to be positive.

Review of Performance for 2nd Quarter as at 31 Dec 2015 ( Revenue growth was good but profit after tax was below expectation).

Financial Performance :-

A) The Group performance for the quarter under review against the corresponding quarter of the previous financial :

For the current quarter, the Group recorded revenue of RM346.54 million, an increase of 215% compared to revenue of RM110.13 million recorded in the corresponding quarter last year. The higher revenue for the current quarter and the increase in the profit after tax of RM7.58 million as compared to the profit after tax of RM2.27 million was mainly attributable to the edible oil products division.
Included in other income is an amount of RM1.14 million arising from the net realised and unrealised gain on foreign exchange.

B) Variation of Results Against Preceding Quarter

For the current quarter, the Group posted higher revenue as compared to the preceding quarter mainly due to an increase from sales in the edible oil products division. The decrease in profit after tax of RM7.58 million as compared to the preceding quarter profit after tax of RM13.80 million was due to lower foreign exchange gain during the quarter under review and higher administrative expenses attributed to higher banking facility fees, agency fees, patent registration fees and professional fees.

Current Year Prospect :-

The Group will continue with its expansion plans for revenue growth for its edible oil operations and with smart partnership tie-up with property developers for the tap-ware and sanitary ware divisions to enhance shareholders' value .

Indonesia’s central bank reduced its main interest rates and reserve ratio for lenders, taking more determined action to boost the economy in the face of political pressure.

Governor Agus Martowardojo and his board lowered the benchmark
reference rate by 25 basis points to 7%, Bank Indonesia said Thursday.
That’s in line with the forecasts of 17 of the 28 economists surveyed by Bloomberg, while the rest predicted no change. The monetary authority also lowered the reserve-requirement ratio for lenders by 100 basis points to 6.5%.

Bank Indonesia stated that “The move is consistent with greater room to
ease monetary policy on the back of solid macroeconomic stability,
especially in terms of less intense inflationary pressures in 2016 as well as less uncertain global financial markets.” (Bloomberg, Reuters)

S&P cuts Saudi Arabia, Brazil, Oman, Kazakhstan, Bahrain, spares Russia

LONDON: Rating agency Standard & Poor's downgraded Saudi Arabia, Brazil, Kazakhstan, Bahrain and Oman's credit ratings on Wednesday, in its second mass cut of large oil producers in almost exactly a year.

S&P cited the pressures being created by the drop in oil prices for the moves which included double-notch downgrades of Saudi Arabia to A- stable from A+ negative and stripping Bahrain of its investment grade status.

"The decline in oil prices will have a marked and lasting impact on Saudi Arabia's fiscal and economic indicators given its high dependence on oil," the ratings agency said in a statement.

The plunge in oil prices since mid-2014 had already brought a blizzard of downgrades for oil producers, including Saudi Arabia, Russia, Brazil and Venezuela, where the oil rout has raised fears of a sovereign default.

The moves were a near repeat of similar co-ordinated cuts made this time last year. The firm's head of sovereign ratings in EMEA, Moritz Kraemer, told Reuters last month that another such move was being considered.

One country that was spared this time was Russia. S&P said Moscow's fiscal buffers gave it more leeway, though it could still cut its BB+ rating again if those were eroded faster than expected or if international sanctions were "significantly" tightened again.

Brazil was kept on a negative outlook, meaning a roughly 1-in-3 chance of another cut as its rating dropped one notch to BB from BB+.

However, it was Brazil's political difficulties as much as the economic pressures from falling oil prices that were cited for the move.

For the Middle East there is far more intense pressure from low oil because many currencies, including the Saudi riyal, are pegged to the dollar, limiting scope for currency weakness that could stimulate the economy.

Authorities are also having to dig into reserves to keep spending at levels that support their highly dependent economies.

Like Saudi Arabia, Bahrain saw its rating cut two notches. Significantly, though, it also lost investment grade as it went to BB from BBB-.

Oman was lowered two steps as well to BBB- stable from BBB+ negative while Kazakhstan was cut one notch to BBB- from BBB but left on a negative outlook due to concerns about inflation, exchange rate pressures and banking sector stability. - Reuters

Don't Panic About China's Slowdown, Goldman Says

China’s growth is poised to decelerate this quarter and the road ahead will be bumpy. But don’t panic, says the most accurate forecaster on the nation’s economy.

Growth will slow to 6.7 percent in the first three months of this year as financial services contributes less to the expansion than a year ago and because policy measures to support growth have tapered off from the last quarter of 2015, says Song Yu, Beijing-based chief China economist at Goldman Sachs Gao Hua Securities Co. and the best overall forecaster of China’s economy according to Bloomberg Rankings for the past two years.

Even though full-year growth will drop to 6.4 percent in 2016 as wages, employment and consumption "take a hit," Song says he’s not negative about China’s economic prospects and dismisses dire predictions of a coming collapse.

"Some people are making extreme arguments to say the whole machine is not working," said Song. "That’s not what we see. Overall, the plane is moving in the direction it should be and it’s broadly under control."

This week, policy makers stepped up support for the economy, with the nation’s chief planning agency making more money available for local infrastructure projects, according to people familiar with the matter.

http://www.bloomberg.com/news/articles/2016-02-17/goldman-sachs-top-analyst-says-don-t-panic-as-china-growth-slows

Strong U.S. industrial output bolsters growth picture

U.S. industrial production in January rose by the most in 14 months as manufacturing and utilities output increased, the latest sign the economy regained some ground early in the year.

While other data on Wednesday showed a surprise decline in housing starts last month, that was probably because of bad weather, especially in the Northeast and Midwest regions of the country. With building permits ahead of groundbreaking activity, home construction is likely to pick up in the months ahead.

The first increase in industrial output in five months should help allay the fears of a recession that have roiled the stock market and eliminated bets for an interest rate hike from the Federal Reserve in March. The chances of an increase in borrowing costs this year hang in the balance.

"If we step back and view the economy from afar, we see that consumers are spending, manufacturing is beginning to rebound and housing, though not great, is hardly weak. The domestic economy is fine," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Industrial production jumped 0.9 percent last month, the largest gain since November 2014, the Fed said. The increase followed a 0.7 percent decline in December and was boosted by a 0.5 percent advance in manufacturing output.

The rise in manufacturing production reflected gains in the output of long-lasting goods such as machinery, furniture and primary metals. Motor vehicle assembly accelerated. The production of food, textiles and chemicals also rose.

http://www.reuters.com/article/us-usa-economy-idUSKCN0VQ1NV

Chinese bank hit by $4.9bn loan fraud

Fraudulent loans are on the rise in China as economic growth slows, threatening to further undermine the country's $29tn banking system, which is already under pressure from an indebted corporate sector.

A series of loan frauds has ripped holes in the balance sheets of a range of lenders, from the large — Agricultural Bank of China — through to the phalanx of small commercial lenders.

The latest victim to emerge is Bank of Liuzhou where $4.9bn (Rmb32.8bn) in fraudulent loans were discovered by the bank late last year, according to the state-backed China Business Journal. That represents more than 40 per cent of the bank's total assets of Rmb80bn at the end of 2014 — a dent so large on the bank's balance sheet that it is likely to require government intervention.

"I guess local government may have to swap the bad loans with asset injections to address the solvency issue," said Liao Qiang, director of financial institutions ratings at Standard & Poor's in Beijing.

http://www.cnbc.com/2016/02/17/chinese-bank-hit-by-loan-fraud.html

Iran oil minister: Support any effort to stabilize market and prices

Iran could support any effort to stabilize oil prices, including cooperation between OPEC and non-OPEC oil producers, the nation's oil minister said after a meeting Wednesday, according to Reuters.

Oil Minister Bijan Zanganeh said while he supports a production "ceiling" to stabilize oil prices, it's the first of several steps that should be taken, according to Reuters reports quoting the ministry's official Shana news agency.

OPEC ministers had traveled to Iran to talk about a possible production freeze between global oil producers. Oil prices bounced slightly on the Iranian oil minister's comments, with U.S. oil popping above $30 per barrel and Brent futures nearing $34.

http://www.cnbc.com/2016/02/16/russia-saudi-arabia-output-freeze-helps-oil-price-higher-in-asia.html

Posted by rikki > Feb 15, 2016 07:02 PM | Report Abuse X

Tek Seng's profit surges 76%, power by solar panel business

KUALA LUMPUR: PVC-related flooring and packaging product maker Tek Seng Holdings Bhd received a strong boost from the sale of photovoltaic products in the final quarter of 2015, resulting in a 76% annual growth in net profit to RM21.27mil for the year.

The company, whose profit slipped 13.7% year-on-year in Jan-Sept 2015, powered ahead in the fourth quarter (Q4) when it recorded a net profit of RM10.41mil, a turnaround from a net loss of RM513,000 a year earlier.

According to its filing with Bursa Malaysia on Monday, the Q4 growth was largely due to the much higher sales volume of solar-related products. The solar segment’s pre-tax profit surged by RM14.3mil to RM11.5mil.

Revenue for the quarter grew a whopping 150% to RM122.36mil, pulling up the annual revenue by 54.9% to RM359.52mil.

Tek Seng manufactures photovoltaic products such as solar cells and solar panels through 68.09%-owned subsidiary TS Solartech Sdn Bhd.

In late 2014, Tek Seng had brought in a strategic equity partner, Taiwan-listed photovoltaic product manufacturer Solartech Energy Corp, which led to its stake in TS Solartech to be diluted from 86.1% to 68.09%. The decision has proven to be a good move based on the latest results.

StarBiz reported on Monday that Tek Seng plans to triple its solar products’ production capacity this year to 740MW by spending RM237mil to add five production lines. (SeeTek Seng set to triple production capacity)

Group managing director Loh Kok Beng said the solar panel business would contribute 60% to 70% of the group’s revenue this year.

Tek Seng has proposed a final dividend of 1.5 sen for the 2015 financial year, which will give a total dividend of 3 sen for the year. There was no dividend declared the previous year.

Tek Seng shares gained 3 sen to close at RM1.12 on Monday.

Aemulus skids after weaker earnings

KUALA LUMPUR: Semiconductor company Aemulus’ share price skidded early Tuesday after the weaker-than-expected results in the first quarter ended Dec 31, 2015

At 9.16am, it was down 6.5 sen to 37.5 sen. There were 4.99 million shares done.

The FBM KLCI rose 5.66 points or 0.34% to 1,655.62. Turnover was 133.27 million shares valued at RM57.07mil. There were 169 gainers, 72 losers and 148 counters unchanged.

Aemulus’ Q1 revenue fell by 69% on-year to RM2.7mil from RM8.7mil due to lower tester and module shipments.

CIMB Research said this was due to the weakness in seasonal demand and a slowdown in global semiconductor industry demand.

It added the 1QFY16 results were below CIMB Equities Research and consensus expectations due to lower-than-expected sales in the quarter.

http://www.thestar.com.my/business/business-news/2016/02/16/aemulus-q1-earnings-below-forecast/




http://www.thestar.com.my/business/business-news/2016/02/16/aemulus-q1-earnings-below-forecast/

BP Plastics' 4Q net profits jumps 264 %

KUALA LUMPUR (Feb 15): BP Plastics Holding Bhd’s net profit for the fourth quarter ended Dec 31, 2015 (4QFY15) surged 264% to RM8.3 million, from RM2.28 million, mainly attributable to higher sales volume with better product mix, higher process efficiencies and the weaker ringgit.

Its 4QFY15 revenue gained 16.34% year-on-year (y-o-y) to RM81.07 million, from RM69.68 million.

According to the filing to Bursa Malaysia, BP Plastics has proposed a second interim dividend of three sen, payable on March 17. The ex-date and entitlement date fall on March 1 and March 3. This will bring its full year dividend to eight sen.

In a separate filing, the company said it has adopted a dividend policy of distributing minimum 40% of the consolidated profit after tax and non-controlling interests in respect of any financial year to its shareholders.

“This dividend policy shall commence for the financial year ending Dec 31, 2016 (FY16),” it added.

For the full year, BP Plastics' net profit climbed 119.3% to RM22.08 million, from RM10.07 million a year ago, due to lower raw material costs, favourable foreign exchange gained from export sales arising from the weaker ringgit, better product mix and higher process efficiencies.

Revenue was almost flat at RM283.46 million, compared with RM283.96 million.
 
Despite low crude oil and weak commodities prices that are unfavourable to producing countries, the group said it helps to ease and increase global consumer disposable incomes.

With a stronger economic recovery anticipated in US and additional stimulus in Japan and Europe Zone, BP Plastics has envisaged that the demand for manufacturing goods, as well as packaging goods, would remain resilient.

“Barring any unforeseen circumstances, the group is cautiously optimistic of delivering a satisfactory performance in FY16,” it added.

BP Plastics lost two sen or 1.09% at RM1.85 today, for a market capitalisation of RM347.22 million.

Tek Seng's profit surges 76%, power by solar panel business

KUALA LUMPUR: PVC-related flooring and packaging product maker Tek Seng Holdings Bhd received a strong boost from the sale of photovoltaic products in the final quarter of 2015, resulting in a 76% annual growth in net profit to RM21.27mil for the year.

The company, whose profit slipped 13.7% year-on-year in Jan-Sept 2015, powered ahead in the fourth quarter (Q4) when it recorded a net profit of RM10.41mil, a turnaround from a net loss of RM513,000 a year earlier.

According to its filing with Bursa Malaysia on Monday, the Q4 growth was largely due to the much higher sales volume of solar-related products. The solar segment’s pre-tax profit surged by RM14.3mil to RM11.5mil.

Revenue for the quarter grew a whopping 150% to RM122.36mil, pulling up the annual revenue by 54.9% to RM359.52mil.

Tek Seng manufactures photovoltaic products such as solar cells and solar panels through 68.09%-owned subsidiary TS Solartech Sdn Bhd.
 
In late 2014, Tek Seng had brought in a strategic equity partner, Taiwan-listed photovoltaic product manufacturer Solartech Energy Corp, which led to its stake in TS Solartech to be diluted from 86.1% to 68.09%. The decision has proven to be a good move based on the latest results.

StarBiz reported on Monday that Tek Seng plans to triple its solar products’ production capacity this year to 740MW by spending RM237mil to add five production lines. (SeeTek Seng set to triple production capacity) 

Group managing director Loh Kok Beng said the solar panel business would contribute 60% to 70% of the group’s revenue this year.

Tek Seng has proposed a final dividend of 1.5 sen for the 2015 financial year, which will give a total dividend of 3 sen for the year. There was no dividend declared the previous year.

Tek Seng shares gained 3 sen to close at RM1.12 on Monday.

AllianceDBS Research starts coverage on SKP Resources, target RM1.78

KUALA LUMPUR (Feb 15): AllianceDBS Research has initiated coverage on SKP Resources Bhd with a “Buy” rating and target price of RM1.78 and said the company was benefitting from Dyson’s aggressive expansion plans.

In a note today, the research said ample spare capacity at new plant to cater to further contract wins.

“Attractively priced at 0.25x PEG with strong 3-year EPS CAGR of 44%

“Initiate coverage: Buy, target price RM1.78,” it said.

Supermax gains 2.15% on rating and target upgrade

KUALA LUMPUR (Feb 15): Shares of Supermax Corporation Bhd rose 2.15% in early trade today after AffinHwang Capital Research upgraded the stock to “Buy” with a higher target price of RM3.40 (from RM2.20) and said Supermax is scheduled to release its 4QCY15 results in the last week of February.

At 9.14am, Supermax gained 6 sen to RM2.85 with 624,700 shares done.

In a note today, the research house said it is expecting a strong set of results due to higher installed capacity as Plants 10 & 11 are now operational.

“Its share price has corrected by 14% year-to-date; given our upward earnings revisions, we see value emerging in the stock.

“We raise our target price to RM3.40 at 16x FY16 PE due to the better earnings visibility. Upgrade to Buy on valuations,” it said.

CNY Small-cap ralli in sight

Stocks on KL market likely to jump if international markets stabilise

THE fact that the FBMFledgling index (FBMFL) has been stable indicates that a small rally in small caps is possible after Chinese New Year (CNY).

“Small caps look like priming for a small rally after CNY. The FBMFL hardly fell at all (in the earlier part of last week when the main index was falling in tandem with international markets),’’ said Pong Teng Siew, head of research, Inter-Pacific Securities.

“Foreigners are still buying. Anytime international markets stabilise, stocks on the KL market are likely to jump,’’ said Pong.

Besides the reduction in banks’ statutory reserve requirement (SRR) – interest free money deposited by banks with the central bank – sentiment is also expected to be buoyed by good earnings from Public Bank whose profits are up 19% year-on-year, Pong said.

Banking stocks, once seen as facing challenging times, may now be back in vogue as there may be a short-term boost to earnings from potentially more SRR reductions.

http://www.thestar.com.my/business/business-news/2016/02/08/cny-smallcap-rally-in-sight/

Onshore Foreign Currency Loan (OFCL) is a short term foreign currency loan available for exporters and importers. The unique features of OFCL is that companies need to repay the loan in foreign currency upon maturity. Companies preferred OFCL due to the cheap financing cost.

For exporters in foreign currencies, this is not an issue due to natural hedging bcoz their export proceeds will be in foreign currencies and thus will be able to repay the foreign currency loan upon maturity.

For importers, the risk is higher if they do not have foreign currency proceeds to repay the loan and they will incurred foreign exchanged losses if the foreign currency appreciated. This risk can however be mitigated by entering into a foreign exchange contract.

As for Tguan, they are exporting in USD, thus there is no added risk as they are able to naturally hedge their position. The risk will only come in if they finance more than their foreign currency export proceeds. Even that, Tguan can always hedged their position under foreign exchange contract.

OFCL financing in USD is presently very cheap at a cost of less than 2 % per annum.

IMF: Malaysia’s economic growth likely to remain solid

PETALING JAYA: Malaysia’s economic growth is expected to remain solid this year despite the challenging external and domestic conditions in 2015.

In a statement yesterday, the International Monetary Fund (IMF) said the implementation of goods and services tax was among the things that helped limit the impact on government finances amid the oil price decline.

IMF made the conclusion after a team led by its division chief Alex Mourmouras met with senior government and Bank Negara officials as well as representatives from the private sector, think-tanks and academia. “Economic growth should remain solid in 2016, edging down to around 4.4% from an estimated 4.8% in 2015. Activity should be underpinned by healthy, albeit moderating domestic demand but constrained by weak external demand. “Credit growth is expected to slow down, dampening the accumulation of debt, but financial conditions are expected to remain supportive of growth,” he said, adding that consumption growth would be supported by high rates of household formation, strong employment and expanded federal transfers to lower income groups.

- Star Biz