MYData targets 1m users by mid-2017

KUALA LUMPUR — Bigdataworks Sdn Bhd expects around one million users to subscribe to the MYData SSM portal (MYData), as chief operating officer Sheriza Zakaria sees opportunities to grow the platform’s subscriber base.

He said currently the portal has around 2,000 subscribers and the company is looking at reaching one million users by the second quarter of next year,” he said.

MYData is a portal developed by the company along with the Companies Commission of Malaysia to deliver information for end users and shareholders to access business data.

It includes information of companies and businesses in Malaysia, corporate directory and also financial historical comparison that shows a company’s two most recent audited balance and loss accounts.

Currently there are 1,196,475 registered companies, of which 1,191,757 are local companies while 4,718 of them are foreign firms.

In comparison, the number of registered businesses is 6,316,089, with five million being sole proprietorships while the remainder one million are business partnerships.

Companies Commission of Malaysia chief executive officer Datuk Zahrah Abd Wahab Fenner said MyData will also enter into a strategic partnership with POS Digicert Sdn Bhd in the area of digital certification for SSM-related documents to customers and users.

For the second phase of MYData, the agency will introduce a ‘Company Watch’ service which allows anyone with interest to keep an eye on changes made to the selected companies or business.

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Hudud’s off the deck but Sarawak hydra lies in wait

THE hot button issue before Parliament opened its end-of-year Budget meeting was an anticipated bill to empower the Shariah courts.

Sure, the state of a sovereign wealth fund had sizzled in the public arena all of 2016, but PAS president Abdul Hadi Awang’s Private Member’s Bill, slated for tabling in the course of Parliament’s Budget meeting, had threatened supercession, simply because it had to do with religion which is a subject that in multi-religious Malaysia is more volatile than alleged secret financial activity.

The Lower House has been in session for a month now but the pre-Budget meeting hullabaloo about hudud looks, in the perspective of the four weeks that have passed, it had been much ado about nothing.

Hadi’s Private Member’s Bill to lift the curbs, except proscription of the death penalty, on the scope of punishments (hudud) that can be imposed by Shariah courts was to have been tabled by now.

He had shaped over the past one-and-a-half years to move the motion but after one wavering attempt earlier this year, the effort is stillborn: essentially, it hasn’t taken off from first base which is mere notifice to Parliament that he intends to table it.

Judging from what MCA president Datuk Seri Liow Tiong Lai said last Sunday at the Barisan Nasional component’s annual general assembly, Hadi’s bill will not even be tabled.

In the presence of Prime Minister and BN chairman Datuk Seri Najib Razak, Liow told MCA delegates that the party is flatly opposed to the bill which he correctly contended is against the constitution and other founding documents of the country.

The PM did not touch on the matter in his remarks he later made to the assembly.

This could be interpreted as a sign that Hadi’s bill will continue to languish in limbo because Umno’s agreement is necessary for its tabling — and that is not going to be available.

As things stand, it appears Umno’s acquiescence was obtainable only to the extent of enabling the Kelantan State Assembly to pass amendments in March last year to a 1993 Shariah bill — amendments, supported by Kelantan Umno, that have paved the way for Hadi to seek the federal warrants for hudud’s implementation in the PAS-controlled state.

Those amendments and Hadi’s subsequent notice to Parliament of intention to table a motion to further empower the Shariah courts have already served its subterranean purpose: the unceremonious unravelling of Pakatan Rakyat (PR), the opposition coalition that expired abruptly in June 2015, as a consequence of PAS’s determination, partly egged on by Umno, to implement hudud.

Umno-BN has gained its ulterior aim of PR’s disintegration and now Umno sees no reason to load the cart with more than the donkey can bear.

It appears Umno is unwilling to push the ruling coalition to divisiveness — the entire non-Muslim complement of BN, includng its Muslim cohorts from Sarawak and Sabah, are united in opposition to the bill — which is what a vote on hudud in Parliament would invite.

It appears PAS has been had and PR driven into oblivion.

The PM has been deft player of the game of balancing the forces over which has control and dealing with those he can’t but is able to distract and divide.

But before anyone can raise a toast to political manoeuvring of intriguing order, there arises a challlenge to deal with a question that has been looming on the horizon for some time and now seems set to intrude into national calculations with inescapable urgency.

This concerns the bipartisan movement in Sarawak, under the baton of Chief Minister Tan Sri Adenan Satem, to reclaim lost constitutional ground.

In April of 1976, Parliament passed a constitutional amendment that had the effect of reducing Sarawak and Sabah to the status of states within the Malaysian federation rather than territories that were equal partners, with Malaya and Singapore, in the formation of Malaysia in 1963.

Strictly speaking, this amendment was unconstitutional in much the same way that hudud in Kelantan would be but few federal legislators, save from the DAP, saw it that way in 1976 when the amendment was debated and passed.

Now all 82 members of the newly expanded Sarawak State Legislative Council are expected to approve a bill in this month’s meeting of the august body that will set in train a parliamentary motion revoking the 1976 amendment.

These moves, at state and federal levels, should they come to pass, will give new bite to Sarawak’s assertion of its autonomy in sectors the 1963 Malaysia Agreement cedes to the territories of Sarawak and Sabah.

This autonomy has been rendered nugatory by the 1976 constitutional amendment.

In recent months, Adenan has tried to re-assert Sarawak’s rights to autonomy in education, religion, employment in the civil service and government-linked companies (GLCs), besides, of course, immigration where Sarawak has long exercised its autonomy unhindered, sometimes in less than laudable ways.

All these demands come on top of that for higher royalty on the oil and gas found in Sarawak.

The current rate of 5 per cent is parsimonious but, with the slumping price of oil in international markets and shrivelling federal finances, there is no prospect of an imminent raise.

Hence the exercise of autonomy in education, religion, civil and GLC appointments, are demands that have become well-nigh irresistible.

Federal authorities, however, will be wary of being viewed as munificent in the matter of state autonomy, for the expansive effect this may have on other states, like Sabah or even Johor.

If the hudud issue has been headed off, Sarawak’s demands on autonomy present a challenge not as easily eluded.

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Daibochi to invest RM29m 
for 60% in Myanmar JV

KUALA LUMPUR — Flexible packaging manufacturer Daibochi Plastic and Packaging Industry has signed a memorandum of agreement (MoA) with Myanmar Smart Pack Industrial Company Ltd (MSP) to invest US$6.8 million (RM29 million) for a 60% stake in the joint venture (JV).

Daibochi, through its wholly-owned subsidiary Daibochi Flexibles Sdn Bhd, has set up a JV company called Daibochi Packaging (Myanmar) Co Ltd (DPM) to formalise the collaboration.

Managing director Thomas Lim Soo Koon said that the investment would be made through a combination of internally-generated funds and bank borrowing.

“MSP would inject its production assets into the JV company, together with its ongoing business to supply flexible packaging for home personal care products,” he said during the official signing ceremony yesterday.

Lim said the JV was formed towards extending Daibochi’s regional footprint into the Myanmar market.

“This is our first overseas production facility in our regional expansion and it aims to tap into the burgeoning consumers packaging market in Southeast Asia,” he said.

In view of encouraging prospects, the group is looking to invest additional capital expenditure via internally generated funds of US$5.5 million (RM23.8 million) over the next three years.

“The investment would be used to enlarge JV company DPM’s production capacity and enhance its processes to adhere to internationally-recognised standards, to be ready for our next phase of growth,” Lim said.

He said the JV would allow the group to hit the ground running, with DPM expected to post more than US$8 million in revenue in its full year of operations based on MSP’s annualised 2016 financials, not to mention being profitable.

The JV is also an advantage for the group to enhance its competitive edge as DPM will enjoy low manufacturing costs and access to a large labour force with Myanmar’s 50 million people.

“We believe Myanmar has vast potential for high growth trajectory, with its increasing economic development and the anticipated influx of global brands of fast moving consumer goods, and food and beverages entering the country as it opens up,” Lim said.

Commenting on the future strategy for DPM, Lim said the group would target to develop new product lines for its existing customer base in addition to securing supply contracts with more growth-oriented domestic brands.

The operation is expected to commence in three to six months after the approval by the Myanmar government.

“Once operations begin, DPM is expected to see exports comprise 30% of its business in three years. The expansion in Myanmar will also help improve Daibochi’s export sales to 66% within three years, up from the current 55%,” he added.

Currently, Daibochi exports to Australia, New Zealand and other Southeast Asian countries such as the Philippines and Thailand.

Daibochi saw its export sales surge 20.3% to RM56.7 million in the second quarter ended June 30, 2016 from RM47.2 million in the previous corresponding period.

Mosti invests RM2.5m in local technopreneurs

KUALA LUMPUR — Local entrepreneurs yesterday received RM2.5 million in funding under the Science, Technology and Innovation Ministry’s (Mosti) Social Innovation Programme.

Malaysian Technology Development Corporation (MTDC) signed a cooperation agreement with eight technology and services providers under the programme yesterday.

MTDC — which is owned by sovereign wealth fund Khazanah Nasional Bhd — manages two grants on behalf of Mosti: the Commercialisation of R&D Fund (CRDF) and the Technical Acquisition Fund (TAF).

MTDC chief executive officer Datuk Norhalim Yunus said the corporation is proud to partner with fund-recipient companies as the projects they are involved in will improve the wellbeing of communities at large.

“This is one initiative within the MTDC ecosystem that allows our recipients to be able to give back to communities as concerted efforts will enable Malaysians to lead a better life,” Norhalim said.

He said MTDC’s commercialisation ecosystem has provided funding and assistance to over 500 technology-based companies.

“Currently MTDC manages six funds including CRDF, TAF, halal fund, start-up fund, business growth fund and the business expansion fund.

“Under the 11th Malaysia Plan which ends in 2020, RM900 million has been allocated to MTDC with RM156.97 million already approved under five funds except CRDF. We have already disseminated funds to 44 companies for the
year,” he said.

The eight companies are RVR Diagnostic Sdn Bhd, Membrane Technology Sdn Bhd, Norsym Sdn Bhd, Phytogold Sdn Bhd, Novapene Sdn Bhd, Triple A Engineering Sdn Bhd, LaDIY Healthcare Sdn Bhd and Cell Tissue Technology Sdn Bhd.

The eight recipients will be provided between RM300,000 to RM350,000, depending on the projects undertaken.

Community-related programmes will be undertaken to meet the needs and improve the wellbeing of various communities, including the poor, the elderly and women, through projects, services, skill upgrading or innovations utilising technologies developed by these eight companies, as well as several institutes of higher learning.

These programmes kickstarted last Saturday with five out of eight projects ending in January.

Brace for higher financial market volatility, says expert

KUALA LUMPUR — Malaysia has to brace for increased volatility in financial markets, given the surge in reverse capital flows, which are in line with the expected US interest rate hike, as well as improved growth prospect in the US economy.

Sunway University Business School Professor of Economics Yeah Kim Leng said this came about as there had been a shift in the US economic expectation after Donald Trump’s election as the 45th US president.

“The increased volatility will likely take place in most emerging markets as investors are uncertain over the US policies when Trump assumes the presidency.

“But the degree of volatility will vary in each country. In the case of Malaysia, foreign investments in bonds market, especially in the government securities, may see some increased outflow,” he told Bernama here yesterday.

Yeah said this would also result in greater weakness in the ringgit.

“However, we think this is just one of the episodes taking place in the Malaysian financial market, like in the past episodes, where we have been able to cope with this kind of outflow.

“What the ringgit is exhibiting is that both Malaysian and foreign investors are trying to hedge their currency positions due to increased demand for the US dollar,” Yeah said. — Bernama

WCT bags RM896m MRT work package

KUALA LUMPUR — WCT Holdings Bhd’s wholly-owned unit, WCT Bhd, has accepted a letter of acceptance from Mass Rapid Transit Corporation Sdn Bhd to undertake and complete a RM896.41 million work package.

Under the package, WCT will undertake and complete the construction and completion of a viaduct guideway and other associated works from Bandar Malaysia South Portal to Kampung Muhibbah, the company said in a filing to Bursa Malaysia yesterday.

“The contract is expected to be completed in about 64 months from the date for possession of the project site,” it said, adding that it would contribute positively to the group’s future earnings and net assets. — Bernama

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IOI Prop new Marina Bay land bank ups gearing to 0.65x

KUALA LUMPUR — Local research house Kenanga Research is neutral to slightly negative on IOI Properties Group Bhd’s (IOI Prop) successful tender for 2.68 acres of 99-year leasehold land at Central Boulevard, Singapore for RM7.77 billion.

“The deal will increase its fully diluted revalued net asset valuation (RNAV) by 5% to RM5.98 and net gearing above our comfort level of 0.65x, which increases the odds of cash calls,” property analyst Sarah Lim pointed out in a note to investors yesterday.

“We make no changes to earnings forecasts but we will lower dividends expectations by 25% and maintain a ‘market perform’ call with a lower target price of RM2.50 (from RM2.57 previously) on a wider fully diluted RNAV discount of 58%,” Lim said.

The 2.68-acre piece of land is a white-site development within the Marina Bay area and it has a permissible gross floor area (GFA) of 1.52 million square feet. The land will have a direct link to One Raffles Quay and the Marina Bay Financial Centre, Raffles Place and Shenton Way via underground and second storey pedestrian links with seamless connection to the Downtown MRT Station (nearby Raffles Place MRT Station and the future Shenton Way MRT station).

“The news comes as no surprise to us considering the news of it being the highest bidder in the last couple of days while the group has existing exposure in Singapore. Note that the group had earlier extended the use of the balance of its rights proceeds (RM238.9 million) to Aug 2017.

“The land cost implies S$1,689 (RM5,168) per square foot (psf) on a GFA basis, which is fair being 62% of the recently transacted Asia Square Tower 1 (S$2,700psf GFA) which is adjacent to the site (buildings in the area were recently transacted at S$2,276-3,713psf GFA).

“In Singapore, land cost can comprise of 50%-65% of gross development value (GDV). Overall, this bodes well for the long-term replenishment of the group’s intentions to diversify overseas.

“However, we see FY17 expected net gearing to rise to 0.65x from 0.23x, which is above our comfort levels of 0.5-0.6x i.e. if there are more sizeable acquisitions, we can expect potential cash-calls,” the analyst said.

While IOI Prop has not given any GDV guidance, Lim remarked that based on the land cost to GDV ratio in Singapore, this implies a GDV of RM12 billion to RM15.5 billion.

“It is unclear if the entire development is up for sale, although based on previous Singapore developments, they are likely to keep large components to grow its recurring income stream. Due to the ‘white site’ status, we reckon planning will require 12-18 months before commencement (of project) starts.

“Hence, there are no changes to FY17-18 expected earnings pending clarity from management. We have also opted to lower FY17-18 expected net dividend per share slightly by 25% to six sen given the heavy capital commitment.

“For now, we opt to conservatively maintain our FY17 sales estimates at RM2.2 billion,” she said.

Taikang deal to accelerate IHH’s China growth

KUALA LUMPUR — TA Research is positive on IHH Healthcare Bhd’s strategic partnership with China’s Taikang Insurance Group, through which Taikang will undertake a 29.9% equity stake in PCH Holdings Pte Ltd (PCH), the holding entity for IHH’s portfolio of primary care clinics and greenfield hospital projects in China for a cash consideration of 1.1 billion yuan (RM700 million).

“This would accelerate IHH’s growth in China, a key market where it seeks to grow its presence in,” TA Research analyst Wilson Loo said in a research note published yesterday.

He continued: “IHH stands to benefit from Taikang’s deep local expertise and extensive insurance coverage base via the potential for increased referrals and coverage for Taikang’s clients to IHH’s primary care clinics and hospitals.

Taikang has more than 170 million clients — around 12% of China’s population — through 4,200 branches across China.

On Friday, IHH announced a strategic partnership with Taikang, a leading and renowned insurance and financial services provider in China.

This entails a combination of a primary subscription and secondary purchase of shares — following which IHH and Taikang will respectively hold 70.1% and 29.9% in PCH. The 807.1 million yuan proceeds from the primary subscription will be retained with PCH to finance its future expansion activities in China.

“Note that demand for private insurance in China is expected to rise in tandem with its growing affluence and the increasing demand for high quality foreign healthcare services.

“While the public social health insurance system covers about 96% of China’s population, this coverage is only available at public and local private hospitals, and it is generally shallow and purported to lack quality,” the analyst said.

Financially, TA Research is not too concerned on earnings dilution to IHH as contributions from China to the overall group is relatively small — with both revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) at less than 3%.

“The reduction in IHH’s equity stake in PCH from 100% to 70.1% implies a dilution of less than 1%. Meanwhile, with regards to the consideration of 291.1 million yuan which IHH would receive from its divestment of 20.7 million shares in PCH to Taikang, we are unable to justify its attractiveness at this juncture pending clarity on financials from management.

“We maintain our ‘sell’ recommendation on IHH with a higher target price of RM6.60 per share (from RM6.55 per share) based on sum-of-parts valuation.

“Against 2017, this translates into an implied enterprise value/Ebitda of 20.9x and price-to-earnings ratio of 43.8x. Our higher target price accounts for higher fair valuation for PLife REIT and Apollo, along with the weakening of the ringgit against the Singapore dollar and Indian rupee,” Loo said. (RM1 = 1.57 yuan)

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Malaysia is running out of trump cards

AMID a deepening emerging-market rout, three of Donald Trump’s seven promises to American workers are making Asia particularly nervous.

A US withdrawal from the Trans-Pacific Partnership (TPP) would kill the 12-nation deal, while labelling China as a currency manipulator is set to provoke a tit-for-tat response. If the president-elect delivers on those two threats, the export-led region will wait for Trump to make good on his vow to end “all foreign trading abuses”.

Although no Asian nation would relish the prospect of an all-out trade war, Malaysian investors are perhaps most at risk.

Why Malaysia? China, Japan, South Korea, India and Singapore are among America’s 15 biggest trading partners; Malaysia is not. And while it’s a TPP member, the accord’s demise is the least of Kuala Lumpur’s worries. It might even be a short-term boon. After all, the Southeast Asian country is an energy and palm-oil exporter. It’s not terribly competitive at much else.

Opening up Malaysia’s consumer economy of 30 million people as part of the free-trade bargain could turn a fast-vanishing current-account surplus into a permanent deficit. That would weigh on the ringgit, scare away investors in Malaysian bonds, and lead to a spike in companies’ cost of capital.

But TPP being dead doesn’t help either. For one, dollars are in short supply in the banking system, and therefore a flight to safety among investors jittery about a Trump presidency makes Malaysia a particularly vulnerable emerging market.

This can be seen in the overall cost for a bank trying to raise dollar funds by borrowing locally in the interbank market, using those ringgit to purchase greenbacks in the spot market and then selling them forward by, say, three months. That operation now costs 1.78%, the stiffest premium over Libor among major Asian economies, according to data compiled by Bloomberg.

Tight squeeze

Malaysian lenders’ cost of dollar funding is one of the steepest among major Asian economies

The dollar crunch may ease if the ringgit falls, so foreign investors would find local currency-denominated assets cheap again. But authorities can’t allow an abrupt exchange-rate adjustment to take place right now. Among other things, a weaker home currency would push up dollar-linked coal-purchase costs for power producer Tenaga Nasional Bhd; those pressures would in turn get passed on to consumers who are already among the most indebted in the region.

That would be an ill-timed blow. Friday’s gross domestic product report might have masked the weakness in Malaysia’s consumer economy, but bank lending trends offer a clue.

The so-called Amanah Saham Bumiputera unit trusts, which are available only to the indigenous Malay Muslim population, have been a popular asset for banks to lend against. But advances against such securities are slumping. According to Bloomberg Intelligence analyst Diksha Gera, retail clients may be redeeming their unit-trust investments to manage their cash flow better amid higher living costs.

Cashing out

Malaysian banks loved lending against unit trusts that were bought for their juicy returns, but retail buyers may be selling them now to cope with a higher cost of living

A global probe into allegations of theft and the laundering of billions of dollars from Malaysian state-run investment fund 1MDB led to the first conviction in Singapore on Friday. The scandal has weighed on both investor and consumer sentiment.

However, an early election may be in the cards and the government has been throwing money around to placate voters. Since May, domestically-focused Public Bank Bhd has outperformed its larger and more international rival Malayan Banking Bhd on expectations consumers will shake off their blues.

But on Friday, the Malaysian currency fell 0.7% onshore. If that doesn’t sound like much, it’s only because the central bank may have intervened to prevent a steeper slide. In offshore forward markets, where the bets are settled in dollars, the ringgit dropped to a 12-year low.

If fears about a Trump presidency keep exchange rates volatile, and the US$5.5 billion (RM23.8 billion) of foreign inflows into Malaysian bond markets turn into outflows, hopes consumers will provide a floor to the economy may quickly disappear.

Andy Mukherjee is a Bloomberg Gadfly columnist covering industrial companies and financial services.

Fitch: Most Asian telcos to come under pressure next year

KUALA LUMPUR — Fiercer competition and rising capital expenditure (capex) needs will put pressure on the credit profiles of most Asian telcos over the next year, says Fitch Ratings.

The rating agency has a negative outlook on the telecoms sectors in India, Singapore, Malaysia, Thailand and the Philippines. However, South Korea, Indonesia, China and Sri Lanka are all on stable outlook.

In a statement yesterday, Fitch said competition is likely to intensify in India, Singapore and Malaysia, with new entrants poised to offer cheaper tariffs to poach customers from incumbents.

“Competition could be the most intense in India, where a well-capitalised new entrant, Reliance Jio, is offering free voice and text services and cheaper data tariffs than the incumbents.

“We expect the blended tariff to decline by 5-6% for Indian telcos.

“In Malaysia, the fixed-line market leader, Telekom Malaysia Bhd, is making a move into the wireless market, which will prevent a recovery in the revenue of wireless incumbents next year,” it said.

Fitch said rising competition will add to pressure on revenue, which it expects to grow by 0-5% in most Asian telco markets next year.

“Data usage will continue to rise strongly. But, most telcos are pricing data in such a way that increased usage is not translating into similar revenue growth.

“The trend of falling data tariffs and the substitution of data for voice and text will continue in most markets. Fixed-line and international long-distance services are in a structural decline,” it said.

The rating agency said China is the only market where it expects higher data usage to translate into growth in average revenue per mobile user.

Fitch said earnings before interest, taxes, depreciation and amortisation margins are likely to shrink the most in the Philippines and India, where telcos still derive the majority of their revenue from voice and text services.

“Chinese and South Korean telcos’ profitability will remain stable, reflecting weaker competition and lower marketing and handset subsidy costs. Chinese telcos will benefit further from lower tower lease rental costs,” it added.

Fitch said rising capex needs will mean that many Asian telcos will have minimal-to-negative free cash flow next year.

“Thai, Philippine and Indian telcos are likely to have the highest capex/revenue ratios, at 28-30%, as they strengthen 4G networks in response to fast-growing data consumption and the rising importance of network quality.

“In contrast, Chinese telcos’ capex could decline by 10% as their 4G development cycle has peaked,” it said.

Fitch said it expects industry consolidation in India, Indonesia and Sri Lanka, as weaker telcos exit the market or seek merger and acquisition to strengthen their competitive position. — Bernama

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