Turnaround plan in store for ailing Masterskill

Transcription

FBM KLCI 1735.08
2.64
KLCI FUTURES 1736.50
9.00
STI 3344.89
6.45
RM/USD 3.5660
CPO RM2361.00
15.00
OIL US$48.76
1.35
PP 9974/08/2013 (032820)
PENINSULAR MALAYSIA RM1.50
TUESDAY JANUARY 13, 2015 ISSUE 1878/2015
FINANCIAL
DAILY
MAKE
BETTER
DECISIONS
What’s really
behind Li
Ka Shing’s
restructuring
plan? 2
www.theedgemarkets.com
2
Malaysia —
Southeast Asia’s
biggest sovereign
debt risk?
4 HOME BUSINESS
Mega bank merger
off, announcement
expected this week
5 HOME BUSINESS
‘TIV could rise 10%
with scheme’
14 H O M E
Indonesian divers
retrieve AirAsia
flight data recorder
by
u
o
y
o
t
t
h
g
u
o
r
b
s
i
y
p
o
c
l
a
t
Can China deliver T h i s d i g i
on Asian economy?
Turnaround plan in store for
ailing Masterskill
16 C O M M E N T
4 HOME BUSINESS
GOLD US$1220.60
4.50
FBM KLCI 1735.08
2.64
KLCI FUTURES 1736.50
9.00
STI 3344.89
6.45
RM/USD 3.5660
CPO RM2361.00
15.00
OIL US$48.76
PP 9974/08/2013 (032820)
PENINSULAR MALAYSIA RM1.50
TUESDAY JANUARY 13, 2015 ISSUE 1878/2015
FINANCIAL
DAILY
MAKE
BETTER
DECISIONS
What’s really
behind Li
Ka Shing’s
restructuring
plan? 2
2
Malaysia —
Southeast Asia’s
biggest sovereign
debt risk?
4 HOME BUSINESS
Mega bank merger
off, announcement
expected this week
5 HOME BUSINESS
‘TIV could rise 10%
with scheme’
14 H O M E
Indonesian divers
retrieve AirAsia
flight data recorder
16 C O M M E N T
Can China deliver
on Asian economy?
Turnaround plan in store for
ailing Masterskill
4 HOME BUSINESS
1.35
GOLD US$1220.60
4.50
2
T UESDAY JAN UARY 1 3 , 2 0 1 5 • TH EEDGE FI N AN C I AL DAI LY
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What’s really behind Li Ka
Shing’s restructuring plan?
Mega merger announced last Friday, ostensibly to create better shareholder value
BY ASSIF S HAM E E N
SINGAPORE: Investors gave a huge
thumbs up to one of the largest-ever
corporate restructuring exercises
in Asia as they chased up shares in
Hong Kong billionaire Li Ka Shing’s
flagship Cheung Kong Holdings and
its 49.97% conglomerate affiliate
Hutchison Whampoa yesterday.
The 86-year old billionaire Li,
who recently reclaimed the title
of Asia’s richest man (net worth
US$34.5 billion [RM122.47 billion]), unveiled the US$24 billion
mega merger last Friday ostensibly
to create better value for shareholders.
Shares in Li’s listed holding company Cheung Kong soared HK$18
or 14.42% to HK$142.80 (RM65.67),
while Hutchison Whampoa stock
was up HK$0.95 or 12.53% to
HK$98.53. Cheung Kong shares
opened up over 20% in heavy trading
in Hong Kong and Hutchison shares
opened up nearly 16% but both settled lower as the day wore on. Despite yesterday’s surge, Cheung Kong shares are up only 29%
over the past year while Hutchison shares are up just 3% over 12
months indicating that the two
stocks have not done that well over
the last 12 months.
Li is now the world’s 13th richest
man, ahead of Facebook founder
Mark Zuckerberg but just behind the
four Walton siblings (joint owners
of the giant Wal-Mart supermarket
chain) who are each worth between
US$38 billion and US$42 billion.
Li’s rags-to-riches story is the stuff
of legend. Starting out as a penniless plastic flower salesman over 60
years ago, Li was the first Hong Kong
Chinese businessman to gain control of a British hong (trading-based
conglomerate) when he emerged as
the largest shareholder of the then
troubled Hutchison Whampoa. The reorganisation will split Li’s
empire into two listed companies
— one focusing on real estate and
the other on global telecoms, ports,
retail and energy — as the octagenarian dubbed “Superman” for his
investing prowess tries to boost their
value and attract more investors.
The massive revamp removes
cross holdings within his empire
and simplifies the group structures
into two clean companies, each controlled by him. Cheung Kong investors will exchange their shares in
Hutchison Whampoa for stakes in
a new holding firm, CK Hutchison
Holdings, which will then issue new
shares to buy out minority owners
of Hutchison Whampoa.
See related stories on Page 18 & 22
As part of the revamp, CK Hutchison will include all of Li’s non-real estate assets including stakes in
Cheung Kong Infrastructure Holdings’ recently acquired aircraft leasing business as well as Hutchison’s
global assets in retailing, ports, telecom ventures in Asia and Europe
and electricity utilities. The deal has been sweetened
with the new Cheung Kong Hutchison acquiring an additional 6.24%
stake in Canada-listed Husky Energy from the Li family’s trust in
exchange for a 2.2% stake in CK
Hutchison. The deal does not include the Li family’s investments in
technology ventures through their
private Horizon Ventures. In recent
years, the Li family has acquired a
formidable portfolio of stakes in
early, intermediate as well as late
stage technology and biotech ventures in the US, Europe and Asia. The Li family — which currently owns a 43.2% stake in Cheung
Kong, which in turn owns 49.97%
of Hutchison — will end up controlling 30.15% of the two new companies. CK Hutchison will have a
40.2% stake in Husky Energy while
the Li family’s separate stake in
Husky will be cut to 29.3%.
The beauty of the revamp that
has been planned for nearly a year
is that “shareholders can now directly invest in both the new conglomerate (CK Hutchison) and the
new real estate company (Cheung Kong Properties)”, says David
Ng, conglomerate analyst for Macquarie in Hong Kong. “Investors
often see limited upside in holding
companies or assets in which Li
Ka-Shing had sold down his stake.”
The restructuring, says Ng, puts
investors on the same page as the Li
family trust, aligning their interests
and giving minority shareholders
more confidence in investing in
Li-run companies. Ng added that if the holding
company discount is removed, Cheung Kong’s valuation can be lifted
14% to HK$188 per share or another
32% upside after yesterday’s rally.
But the real upside at Cheung Kong
and Hutchison will come from a
cleaner structure which facilitates
faster and more global infrastructure deals or other acquisitions.
Aside from enhancing shareholder
value and simplifying the structure,
the revamp allows Li to do four things. First, Li gets a clean slate to make
a couple of large acquisitions. The
two companies will have over US$21
billion cash on their balance sheets
and around US$17 billion in borrowings, most of which are long term.
That’s a huge war chest for acquisition. Li is said to be hungry to buy
assets that are selling at a discount
and is particularly interested in infrastructure, telecom, energy and
retailing assets in Europe, whose
currency has fallen dramatically
against the Hong Kong dollar which
is pegged to the US dollar.
Second, Li has reportedly been
keen to cut his exposure to Hong
Kong and China real estate to purchase cheaper assets in the US and
Europe. Cheung Kong has been
facing strong competition from
mainland Chinese developers in
China as well as in Hong Kong.
Third, the big move may also
help smoothen succession planning
in the Li household. Li has two sons,
Victor and Richard, who eventually can inherit one company each. Though Cheung Kong top officials
deny that reorganisation had anything to do with recent democracy
protests in Hong Kong, it is no secret
that Hong Kong’s top tycoons have
been rattled by the protests which
have pitted Hong Kong’s middle class
against the territory’s powerful tycoons and elites who are backing
the central government in Beijing. And fourth, analysts say the
move will also make both the
new CK Hutchison and Cheung
Kong Properties more attractive to
mainland investors who can now
buy Hong Kong-listed shares. The
Shanghai-Hong Kong Stock Connect scheme was launched late last
year and a Shenzhen-Hong Kong
scheme is now in the works.
Assif Shameen is consulting editor
at The Edge Singapore
Southeast Asia’s biggest sovereign debt risk?
HONG KONG: The cost of insuring
Malaysian sovereign debt has risen
the most this year compared with
that of its Southeast Asian peers as
state investor 1Malaysia Development Bhd’s (1MDB) financing woes
grew and concerns deepened about
the prospects for the net oil exporter’s petroleum revenues.
Malaysia’s five-year credit default swaps (CDS), which investors use to hedge against risks of
debt default, have jumped some
40 basis points (bps) in the first
two weeks of 2015 to 142/148 bps.
That compares with the performance of Malaysia’s nearest peer
Thailand, whose CDS have risen 10
bps, and Indonesian CDS, which
have gained 14 bps. (A CDS is an dicates a higher chance of default Standard and Poor’s says 1MDB’s
insurance against default by a bond of a debt.)
failure to meet a loan obligation
issuer. A higher rate of a CDS inWhile global rating agency has little impact on the compa-
ny’s bonds, investors are worried
about the wider implications for the
country’s sovereign rating. About
45% of Malaysian sovereign debt
is owned by foreigners.
“Onshore participants are sceptical about the name, but they feel it is
too strategically important and will be
bailed out,” said a Singapore-based
credit trader, referring to the indebted and loss-making 1MDB. “You will
upset lot of people including [Malaysia’s] strategic partners in the Middle
East if a default happens.”
The concerns first emerged when
oil prices started to slide, a downdraft that has taken them to their
lowest levels since April 2009. Malaysia stands at A3/A-/A-, a notch higher
than Thailand’s Baa1/BBB+/BBB+
and three to four steps above Indonesia’s Baa3/BB+/BBB. — Reuters
4 HOME BUSINESS
EW Investment
to develop £2.2b
London projects
It is partnering Ireland-based Ballymore Group in the projects
BY MEENA L A KSHANA
KUALA LUMPUR: Eco World Investment Co Ltd (EW Investment),
a private vehicle controlled by Tan
Sri Liew Kee Sin and Datuk Voon Tin
Yow, will develop three large-scale
residential projects in central London together with the Ireland-based
Ballymore Group, with a total gross
development value (GDV) of £2.2
billion (RM11.8 billion).
The projects are likely to be injected into Eco World International
Bhd (EWI-SPAC), a special purpose
acquisition company (SPAC) that
Liew plans to list on Bursa Malaysia.
In a statement yesterday, EW
Investment said it had signed an
agreement with Ballymore Group
on Sunday to acquire a 75% stake
in Eco World Ballymore Holding Co
Ltd (EcoWorld-Ballymore).
The remaining 25% stake will be
taken up by Ballymore Group, a property investment and development
firm with over 30 years of experience
in property markets in the United
Kingdom and Ireland.
EcoWorld-Ballymore was formed
to acquire and develop three largescale residential schemes in the central London area, namely Arrowhead
Quay in Canary Wharf (with £591
million GDV); London City Island
— Phase 2 on the Leamouth Peninsula located at the northeast of
Canary Wharf (£614 million GDV);
and Embassy Gardens — Phase 2
in Nine-Elms (£995 million GDV).
According to the statement, the
joint-venture (JV) company will acquire all three sites from Ballymore
Group for a total £428.7 million.
“Of the three sites, Embassy Gardens has secured planning permission while London City Island has
outline planning consent.
“Meanwhile, a resolution to grant
planning consent was passed on Nov
6, 2014 for Arrowhead Quay. Accordingly, all three projects are expected
to be ready for launch in 2015,” said
EW Investment.
EW Investment is a private company incorporated in Jersey, Channel
Islands on Nov 18, 2014 with a 70:30
shareholding held by Liew and Voon.
Liew was formerly the president
and chief executive officer (CEO)
of S P Setia Bhd, and currently a
non-executive director of Bursa Malaysia-listed Eco World Development
Group Bhd.
Voon was the chief operating officer of S P Setia during Liew’s ten-
Turnaround plan in
store for Masterskill
BY SU PRI YA SU RENDRAN
KUALA LUMPUR: SMRT Holdings Bhd and Creador II LLC plan
to turn around ailing Masterskill
Education Group Bhd, which has
been loss-making for the past two
years. They have proposed a RM112
million acquisition of Masterskill’s
major shareholder and executive
director Siva Kumar M Jeyapalan’s
30.75% stake in the company.
Creador founder and chief executive officer (CEO) Brahmal
Vasudevan said he is confident
that by combining Creador’s expertise in strategy and financials with
SMRT’s experience in the education sector, they would be able to
turn around Masterskill’s operations — and have the group break
even — within a year.
“We see more upsides than
downsides in this transaction. We
plan to rename Masterskill as Asiamet Education Group Bhd and focus on building a new chapter and
bringing new life into the company. We also intend to maintain its
listing status on Bursa Malaysia,”
he told reporters yesterday.
SMRT and Creador, through
their respective subsidiaries Strategic Ambience Sdn Bhd (SASB) and
Arenga Pinnata Sdn Bhd (APSB),
entered into a share sale agreement
to acquire Siva Kumar’s 30.75%
stake in the company at a cash offer
price of 60 sen per share.
Under the agreement, APSB will
buy a 7.75% stake from Siva Kumar
while the remaining 23% will be taken up by SASB, subject to SMRT’s
shareholders’ approval. The acquisition is expected to be completed
by end-March this year. APSB has
also made a conditional takeover
offer of 60 sen per share for the
remaining 49.98% shareholdings
it does not own.
Combined with APSB’s current
stake of 19.26% in SMRT, the purchase of Siva Kumar’s stake will
result in Creador and SMRT becoming controlling shareholders
of Masterskill with a 50.02% stake.
“We will provide the minority
shareholders an option to accept
the [conditional takeover offer], or
to participate in the future growth
of company,” said Brahmal.
The education business is not
uncharted waters for SMRT as the
company owns Cyberjaya University College of Medical Sciences
(CUCMS), which it has turned
around since its acquisition in
May 2013.
Besides education services,
SMRT is also involved in human resource services. For its financial year
ended Dec 31, 2013 (FY13), SMRT
reported a net profit of RM8.2 million on revenue of RM52.3 million.
For the nine months ended Sept 30,
2014 (9MFY14) the company raked
in a net profit of RM6.8 million on
RM90.3 million in revenue.
SMRT chairman Datuk Dr R
Palan said there are plans to un-
(From left) Ballymore managing director John Mulryan, Sean, Liew and Voon after the
signing ceremony.
ure as president and CEO. He took
on the role of acting president and
CEO of S P Setia from May 1, 2014
to Jan 1, 2015.
“In view of the proposed listing
of [EWI-SPAC] as a SPAC on Bursa,
EW Investment is prepared to offer
EWI-SPAC a right of first refusal to acquire its 75% stake in EcoWorld-Ballymore,” said Liew in the statement.
“These three projects, which are
situated in geographically diversified
growth areas offering differentiated
pricing points, present an unrivalled
opportunity for EcoWorld to introduce its brand name to the Greater
London market.
“With our combined and complementary strengths, we believe
that the partnership with Ballymore
Group can become a strong platform
to grow our presence in the UK prop-
erty market,” Liew said.
“Combining our development
expertise and track record with EW
Investment’s own experience and
international marketing abilities will
create valuable synergies for our joint
venture and I look forward to working closely with them,” said Ballymore chairman and group CEO Sean
Mulryan.
The JV will see approximately 2,500 units of private residential apartments developed. The
apartments will be priced between
£500,000 and £900,000 per unit. Single residences will begin from 398 sq
ft for studio apartments to 890 sq ft for
a one-bedroom unit. Two-bedroom
units range from 770 sq ft to 1,000 sq
ft, three-bedroom units from 1,000 sq
ft to 1,400 sq ft and the penthouses
measure up to 2,000 sq ft.
Mega bank merger off,
announcement expected this week
BY A D E L IN E PAUL R A J
& J OYC E G O H
Brahmal: We plan to rename
Masterskill as Asiamet Education Group
and bring new life into the company.
Photo by Chu Juck Seng
lock synergies that could save costs
between Masterskill-owned Asia
Metropolitan University (AMU)
and CUCMS.
The new shareholders will bring
prominent figures from the education industry onto Masterskill’s
board, like former Education Ministry secretary-general Tan Sri Dr
Zulkernain Awang and Universiti
Sains Malaysia pro-chancellor Tan
Sri Dr M Jegathesan.
On whether Siva Kumar will remain as an executive director after
disposing of his shares, Palan said
nothing has been decided at this
point, although the former “has offered his experience and expertise”.
In a filing with Bursa Malaysia
yesterday, SMRT said SASB will also
enter into a management agreement with Masterskill to provide
advisory and management support
services. Additionally, SMRT will
undertake a proposed placement of
up to 10% of its issued share capital.
KUALA LUMPUR: The proposed
mega merger of CIMB Group Holdings Bhd, RHB Capital Bhd and
Malaysia Building Society Bhd
(MBSB) is off and an announcement is expected before the end
of the week, sources said.
“The respective boards are supposed to meet on Wednesday, [tomorrow] when it will be formally
expressed that the deal is off,” one
source close to the negotiations
told The Edge Financial Daily.
The move comes six months after the proposed merger was first
announced in July 2014.
The Edge weekly on Jan 10 reported there was a strong possibility the merger could be called
off due to several factors, including
that the economic landscape has
become tougher. Another factor
was that RHBCap was seeking a
revision of the terms, after the substantial fall in CIMB’s share price.
Sources said instead of an
all-share deal in its merger with
CIMB, RHBCap now wants a cash
portion to be included, making
the deal potentially more expensive for CIMB.
Some fund managers said
news that the deal is off will be
positive for CIMB and RHBCap.
This is because their share prices
have underperformed due to uncertainties and concerns arising
from the protracted negotiations.
“Both have been underperfoming — CIMB more so than RHBCap
— because of the uncertainties
surrounding the merger, coupled
with the tougher operating landscape. Many investors are concerned that a merger of this size, at
this time, could turn out negative
for the parties if they go ahead with
it,” said a fund manager. CIMB’s stock shed 14 sen or
2.6% to close at RM5.18 yesterday,
while RHBCap gained seven sen
to RM7.73. MBSB’s stock plunged
22 sen to RM2.19.
CIMB’s stock has shed
25.8% since the structure of the
mega merger was first announced
on Oct 9, while RHBCap’s share
price has declined by 11.1%.
MBSB’s stock has gained 1.7%
prior to the sharp fall yesterday.
The proposed merger has been
structured such that RHBCap
would acquire CIMB’s assets and
liabilities via a share swap at an
exchange ratio of one RHBCap
share for 1.38 CIMB shares. This
was based on a benchmark price
of RM7.27 per CIMB share and
RM10.03 per RHBCap share,
translating into a price-to-book
value (P/BV) ratio of 1.7 times
and 1.44 times for CIMB and RHBCap, respectively.
Their Islamic operations, which
would then come under CIMB
Islamic Bank Bhd, would then acquire MBSB to form a mega Islamic
bank at a price of RM7.77 billion or
RM2.82 per share. This translates
into a P/BV of 1.32 times and MBSB
shareholders have a choice to either accept cash or new shares in
the unlisted CIMB Islamic group.
HOME BUSINESS 5
TU E SDAY JA N UA RY 1 3 , 2015 • T HEED G E FINA NCIA L DA ILY
‘TIV could rise 10% with scheme’
Even without ‘cash for clunkers’ programme, MAI confident vehicle sales will grow by 5.1%
BY SU L H I A ZMA N
CYBERJAYA: The Malaysia Automotive Institute (MAI) expects vehicle
sales or total industry volume (TIV)
to increase 10% to 770,000 units this
year, if the government and carmakers reintroduce the car rebate system
this year, said MAI chief executive
officer Madani Sahari.
The system — also known as
“cash for clunkers” — is an incentive scheme for car owners to purchase a new vehicle in exchange for
an old one which is more than 10
years old. It is estimated that there
are five million cars aged between
10 and 15 years on the road.
“We are in talks with the government and manufacturers to reintroduce this scheme for all car types. If
implemented this year, the scheme
is expected to boost TIV by 10% to
a record high of 770,000 units by
year-end,” he told a media briefing
on “Malaysia Automotive Industry:
Review & Insight 2014/15” yesterday.
He said the rebate can amount to
RM5,000 per vehicle, to which both
the government and the carmakers
can contribute RM2,500 each.
The government introduced the
scheme in 2007 for national car
brands — Perusahaan Otomobil
Nasional Sdn Bhd (Proton) and
Perusahaan Otomobil Kedua Sdn
Bhd (Perodua) — at a cash rebate
of RM5,000 per vehicle to prevent a
crippling plunge in sales.
It was discontinued in 2009 after
31,046 vouchers were reported to
have been disbursed. The scheme
saw TIV jump 24% to 605,156 units
in 2010 from 487,176 units in 2007.
Even without the cash for clunkers
scheme, government-backed MAI
is confident TIV will grow 5.1% this
year to 700,000 units (2014: 665,675
Passenger traffic
growth for 2014 below
target, says MAHB
BY SHA L I N I KU MA R
KUALA LUMPUR: Passenger traffic
at the 39 airports Malaysia Airports
Holdings Bhd (MAHB) manages
climbed 4.7% to 83.32 million last
year from 79.59 million in 2013,
crossing the 80 million mark for
the first time.
However, MAHB said passenger
growth for 2014 was lower than
expected as the performance was
affected by the negative sentiment
from the two Malaysia Airlines
(MH370 and MH17) tragedies.
International passenger traffic
increased 4.9% to 40.14 million,
while domestic movements rose
4.5% to 43.19 million.
“December 2014 continued
to register the highest passenger
movements as in previous years.
December 2014’s performance
with 8.2 million passengers translating into a positive growth of
0.3% over December 2013 was
better than expected,” said MAHB
in a statement yesterday.
It added that December’s average load factor of 76.5% was the
highest recorded in a month in
2014, while aircraft traffic movements grew by 9.1% over December 2013.
Of the 83.32 million passengers
handled last year, nearly 80% came
from AirAsia Group and MAS and
about 15% from foreign carriers.
Cargo movements for full-year
2014 grew by 8% to 61.01 million
tonnes — the highest cargo volume handled by MAHB since 2006.
Kuala Lumpur International
Airport in Sepang (KLIA) saw 3%
more passengers last year, reach-
ing 48.92 million passengers from
47.5 million in 2013.
KLIA’s December passenger
traffic increased by a marginal
0.3% to 4.84 million. International
movements increased by 5.4%, but
domestic movements registered a
decline of 10.4% compared with
December 2013.
In addition, passenger traffic
at KLIA Main declined by 3.0%,
while klia2 increased by 10.1%.
MAHB said the growth of KLIA
Main was impacted by the shift
in airlines’ domestic operations
for direct flights between the domestic airports compared with
previously, when connections to
domestic airports were mainly
through KLIA.
“The decline registered for KLIA
Main was cemented by the expected transfer of Lion Air and Malindo Air operations to klia2,” it said.
Looking ahead, MAHB expects 2015 passenger traffic to
see 85.8 million movements, 3%
above 2014, based on the assumptions that gross domestic product
growth of 5% to 6% will hold, fuel
prices remain stable at the current
lower levels and airlines’ seat capacity supply remains in line with
its estimates.
“We also foresee another major carrier returning to Malaysia
in 2015, underlying the strong
fundamentals of KLIA and the airport system in Malaysia, despite
the unprecedented triple airline
incidents in 2014,” MAHB said.
“It is also hoped that the restructured MAS will bring about
positive growth to the industry,”
it said.
Malaysia Total Industry Volume (TIV) is expected to give an update on the
progress of NAP 2014 on Jan 29.
Based on data from the Road
YEAR
TIV
2014
665,675 Transport Department, Madani said
2013
655,793 TIV in 2014 has marginally increased
by 1.5% to 665,675 from 655,793 in
2012
627,753
2013.
2011
600,123
MAI’s target for 2014 was 670,000
2010
605,156 units while the Malaysia Automotive
2009
536,905 Association (MAA) thinks it will be
2008
548,115 680,000 units. MAA is expected to
2007
487,176 announce 2014’s performance on
Jan 21 but it is expected that it will
Source: MAI
fall short of both their targets.
units) on aggressive promotion of
Analysts, meanwhile, reckon TIV
new models that will be launched will contract this year on cautious
at competitive prices.
consumer spending, mounting pricIt was previously reported that the es and margin pressures.
government is targeting a TIV of one
“The sector is underweight and
million units by 2020, on successful TIV is likely to contract 3% this year
implementation of the National Au- on rising inflationary pressure that
tomotive Policy 2014 (NAP 2014). In- would dent growth. We forecast TIV
ternational Trade and Industry Min- will decline 3% to 650,000 units,
ister Datuk Seri Mustapa Mohamed translating to average monthly sales
of 54,000 units,” UOB Kay Hian Research analyst Chong Lee Len said
in her research note late last year.
According to Madani, Proton and
Perodua are expected to clinch a
combined market share of 52% this
year, based on the potential attractiveness of newly launched models
and variants.
The combined market share
for national carmakers eroded to
46.8% last year from 51.1% in 2013,
no thanks to stiff competition from
imported cars.
On car price reduction, Madani
reiterated prices should drop by 1%
to 3% once the goods and services
tax (GST) comes in on April 1.
“The GST means car manufacturers will be paying lower tax to the
government. In tandem, the car price
should also drop, unless extenuating circumstances would not allow
them to do so,” he said.
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Fitch keeps Malaysia outlook negative
BY SURIN MURUGIAH
& J O NATHAN G AN
KUALA LUMPUR: Fitch Ratings
has maintained Malaysia on a
“negative” outlook to reflect the
erosion of the current account
surplus amid large public sector
deficits and a drop in oil prices,
in the context of relatively weak
credit fundamentals for an “A”
range sovereign.
In its 2015 Outlook for Emerging Asian Sovereigns report, the
rating agency said the government has so far stuck to a path
of consolidation for the headline
federal deficit set out in July 2013,
although the drop in oil prices
could delay or derail fiscal consolidation, if sustained.
“The emergence of ‘twin’ public
and external deficits could affect
investor confidence, if it were to
occur,” said Fitch.
On Jan 11, Fitch said market
volatility in December 2014 could
be a foretaste of what is to come
in 2015 and that positive pressure
The emergence of
‘twin’ public and
external deficits
could affect investor
confidence.
on ratings was ebbing.
It said eight of 10 emerging
Asian sovereigns are on “stable”
outlook, with two (Malaysia and
Mongolia) on “negative” outlook.
Fitch expects real gross domestic product (GDP) in emerging
Asia excluding China to expand
by about 6% in 2015 and 2016, remaining the world’s fastest-growing region.
“We forecast China’s GDP will
expand at 6.8% in 2015 and 6.5%
in 2016, as the government’s bid
to rebalance the economy works
through.
“Lower oil prices and faster
growth in advanced economies
support most emerging Asian
countries, including China,” it said.
Local economists contacted
by The Edge Financial Daily dismissed concerns of a twin deficit
occurring in Malaysia.
MIDF Research chief economist Maslynnawati Ahmad does
not expect further negative impact from Fitch’s negative outlook, saying it has been in place
for some time.
“We should expect the public
sector to adjust to the low oil prices
by cutting back on some spending
to ensure the deficit target is met.
Going forward, we should also expect bond yields and interest rates
to trend higher, particularly if we
want to see the ringgit stabilising
at a stronger level,” she said.
AllianceDBS Research chief
economist Manokaran Mottain
said the rapid decline of oil prices
has eroded some of the positive
effects of the fiscal deficit measures, but overall improvements
are expected in coming quarters.
Warisan Merdeka project CEO joins S P Setia board
BY AHM AD NAQI B I DRI S
KUALA LUMPUR: S P Setia Bhd
has appointed PNB Merdeka Ventures Sdn Bhd chief executive officer (CEO) Tengku Datuk Abdul
Aziz Tengku Mahmud to its board
as a non-executive director, the
group told Bursa Malaysia yesterday.
PNB Merdeka Ventures is a
wholly-owned unit of Permodalan
Nasional Bhd and is responsible
for the development of the 118-storey Warisan Merdeka project.
Tengku Abdul Aziz was previously the head of property development at Sime Darby Property
Bhd from August 2008 to March
2010, where he led the company’s
property development operations
in the hospitality, leisure and as-
set management segments of the
group’s property division.
Prior to that, he was with Kumpulan Guthrie Bhd as its head of
property, and was CEO of Guthrie
Property Development Holding
Bhd from 2005 to 2007.
S P Setia rose four sen or 1.19%
to RM3.39 yesterday, bringing its
market capitalisation to RM8.58
billion.
6 HOME BUSINESS
Petronas conducts evaluation on Sabah-Sarawak gas pipeline
KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is in the
process of conducting a comprehensive evaluation of its Sabah-Sarawak gas pipeline (SSGP),
it said in a statement yesterday.
“This evaluation exercise is undertaken due to the fire incident
that occurred on June 10, 2014 at
the SSGP in the district of Lawas,
Sarawak, about 135km from the
Sabah Oil & Gas Terminal (SOGT)
in Kimanis, Sabah,” it said.
The evaluation, which includes tests and assessments
on both external and internal
parts of the pipeline, could take
a few months to complete as it
requires an in-depth study and
systematic tests to ensure the
integrity of the pipeline.
“The evaluation is part of Petronas’ unwavering commitment
to the safety of the SSGP as well as
the community residing around
the pipeline. Petronas will only
commence the SSGP operations
once the evaluation is completed
and all safety criteria are satisfied,” it said.
Petronas assures that it adheres
to stringent safety measures in
line with international standards
at all times, and will continue to
do so wherever it operates.
In addition, Petronas has
been engaging the communities
through continuous briefing sessions to inform them on the progress of remedial efforts being
carried out.
Petronas said a thorough inves-
Malaysia’s current account
could fall into deficit
This could happen if crude oil, CPO and LNG prices halve for a full year
BY L EVI N A L I M
KUALA LUMPUR: Malaysia could
see its current account balance fall
into a deficit of 1% of gross domestic
product (GDP) in the event that crude
oil, liquefied natural gas (LNG) and
crude palm oil (CPO) prices fall by
50% for one full year, said Standard
Chartered Global Research.
“If LNG and CPO prices were
to drop by 50% for a full year compared with a year ago, we may possibly face a current account deficit
of about 1% of GDP,” said Edward
Lee, who is Standard Chartered’s
head of macro research for Southeast Asia during his presentation
at Standard Chartered’s Global
Research Briefing 2015 yesterday.
“[However], this is [looking at] the
most severe case scenario, which is a
situation that is worse than the global
financial crisis [in 2008/09],” he said.
The current account deficit is
when a country imports more goods,
services and capital than it exports,
which is largely a sign of an unbalanced economy and could lead to a
Lee said Malaysia will really get hit by a
fall in LNG and palm oil prices.
Photo by Sam Fong
depreciation in its currency.
Brent crude oil prices have
halved to US$48.74 (RM173.02)
per barrel as at yesterday, from its
levels in June last year.
US natural average gas prices for
LNG dropped about 43% to US$2.864
from about US$5.000 in May last year,
while the CPO price is down 19% to
RM2,341 per tonne from RM2,885
per tonne in March 2014.
Lee noted that although during
the worst period of the 2008 global
financial crisis, oil prices did fall by
about 50%, LNG and CPO prices did
not drop to that extent.
“It is [also] worth noting that in
terms of oil and petroleum products,
Malaysia is just a slight net exporter.
“Where Malaysia will really get
hit is from a fall in LNG and palm
oil [prices]. Net crude, net petroleum, LNG and CPO combined, it’s
about 10% of GDP — that’s why the
ringgit has been relatively underperforming within the region [especially] when oil prices continue
to tumble,” he said.
Standard Chartered Global Research is keeping its GDP forecast
of 5.5% made in November, subject
to revision in accordance to oil price
movements going forward in the
first and second quarter of this year.
Meanwhile, Lee expects the ringgit to weaken further against the US
dollar to 3.65 in the second quarter
of this year, with the possibility of it
“overshooting” towards 3.70.
“We’re looking at a trajectory with
the ringgit hitting 3.65 in the second
quarter of 2015 before strengthening
at the end of the year to 3.55 against
the US dollar.
“We actually think the ringgit
could gain a bit back versus the US
dollar by the end of the year once the
US Federal Reserve’s [Fed] rate hike
starts and the market realises it’s going to be one of the most measured
rate hikes ever,” he said, citing the
Fed’s terminal funds target rate of 2%.
As at 6pm yesterday, the ringgit
changed hands at 3.5686 against the
greenback — its firmest level over
the last six months was at RM3.1415
on Aug 28, 2014.
Lee said with weaker market sentiment and continued weakness of
the ringgit, Malaysia’s trade balance
figures would be in focus.
“The worry is not so much about
the ringgit, but the impact from low
oil prices and the low ‘animal spirits’ we are facing at the moment,”
he said, referring to low levels of
business persons’ confidence on
their future business prospects.
“Otherwise, the fundamentals
are still pretty solid,” Lee said.
TNB’s offer for Integrax is reasonable
BY C H ESTER TAY
KUALA LUMPUR: Tenaga Nasional Bhd’s (TNB) offer of RM2.75 per
share for Integrax Bhd is deemed
reasonable, most analysts asserted
yesterday.
Last Friday, TNB surprised the
market by making a conditional voluntary takeover offer for Integrax at
RM2.75 each, by offering to acquire
a 77.88% stake or 234.26 million
shares it does not own currently for
a total of RM644.22 million.
“The offer price represents a
21.7% premium to the five-day
volume weighted average market
prices of Integrax shares up to and
including Jan 8, 2015 (of RM2.26),
being the last full trading day prior to the date of the notice,” said
TNB via a filing to the exchange
last week.
Integrax closed 42 sen or 18.18%
higher at RM2.73 yesterday, with
3.19 million shares traded.
Analysts are positive on the deal
for TNB.
“Despite the relatively expensive
offer price [for Integrax], we are
positive on the acquisition exercise. We believe TNB’s decision is
vested on protecting its long term
interest in Janamanjung,” Hong Leong Investment Bank Daniel Wong
said in a report.
With a 2,100mw capacity, TNB’s
Janamanjung coal-fired power
plant in Perak is its largest power
plant. Moreover, there will be new
commissioning of 1,010mw Manjung 4 and 1,000mw Manjung 5 by
March this year and October 2017.
Wong said that the privatisation
exercise will eliminate uncertainties
regarding the priority in utilising
the Lumut Port, which is owned
by Integrax.
He noted that there has always
been a concern on future potential involvement of Integrax with
Brazil’s Vale International SA’s iron
ore imports, which could affect the
operation of TNB’s coal import at
Lumut Port.
“The acquisition would be a strategic fit for TNB given the need for
management control over Integrax
to secure the coal-handling services for its power plant and enhance
the efficiency and operations of its
power station,” AmResearch’s Cheryl Tan asserted yesterday.
AllianceDBS’s Quah He Wei
concurred, saying that the acquisition could result huge cost savings for TNB subsequent to the
commencement of Manjung 4 and
Manjung 5.
“This [offer price] is not attractive for TNB, but we believe there
are substantial synergies to be de-
rived as Integrax is involved in port
operations with TNB as its single
largest customer,” Quah said.
Considering TNB was sitting on
a cash pile of RM8.1 billion as at
Aug 31, 2014, analysts collectively
opined that financing will not be
an issue.
On Integrax’s side, Kenanga Investment Bank’s analyst Lim Sin
Kiat said TNB’s offer was good.
“Based on FY15 [estimated financial year ending Dec 31,
2015] numbers, the implied PER
[price-earnings ratio] of the deal
is 18.9 times. This is about 6% premium to its peers which is at 17.9
times. This deal values it [Integrax]
at a premium to its peers,” Lim said.
Other than Lim, RHB Research
Institute’s Ahmad Maghfur, via his
research report yesterday, also advised minority shareholders to accept the offer.
tigation was conducted by various agencies following the incident, including theDepartment of
Safety and Health and DNV GL,
an independent world leader in
quality assurance, to ascertain
the cause of the incident.
No injury was reported and the
incident has not affected any of
the communities living along the
pipeline, Petronas said.
CIMB, Maybank,
Affin-Hwang
underwrite Mah
Sing’s RM630m
rights issue
KUALA LUMPUR: Mah Sing
Group Bhd has entered into an
underwriting agreement with
CIMB Investment Bank Bhd
(CIMB IB), Maybank Investment Bank Bhd (Maybank IB)
and Affin-Hwang Investment
Bank Bhd (Affin-Hwang IB) for
a RM630 million rights issue.
In a statement yesterday,
the property developer said
CIMB IB and Maybank IB are
appointed joint managing underwriters and joint underwriters, while Affin-Hwang IB
is joint underwriter.
KENNY YAP
BY Y I MI E YONG
Mah Sing group managing
director and group CEO Tan
Sri Leong Hoy Kum (pic) said
it has many plans in store for
this year to enhance and solidify its market position.
The development of its Puchong and Seremban land,
which have an estimated gross
development values of RM9.3
billion and RM7.5 billion respectively, is expected to commence this year and Mah Sing
expects revenue contribution to
commence from 2016 onwards.
Meanwhile, the property
developer has fixed the entitlement date for the rights issue on Jan 26, with the closing
date for acceptance and excess
application on Feb 12.
The new rights shares and
warrants will be listed on the
Main Market of Bursa Malaysia
on Feb 26.
Of the RM630 million proceeds, Mah Sing will allocate
RM530 million for land acquisition and property development
activities, while the balance is
for working capital, as well as
payment of the expenses in relation to the rights issue.
The developer would also
earmark RM370 million for
part payment for the acquisition of land in Puchong and
Seremban.
HOME BUSINESS 7
Foreigners sold
RM587.2m equities
first 6 days this year
Amount higher than in the corresponding period of last year
BY SURIN MURUGIAH
KUALA LUMPUR: Foreign investors sold RM587.2 million of
Malaysian equities in the first six
trading days of this year on Bursa Malaysia, according to MIDF
Research. This was higher than in
the corresponding period in 2014
of RM497.2 million.
In his weekly fund flow report
yesterday, MIDF Research head
Zulkifli Hamzah said after six trading days into 2015, the writing on
the wall was not so auspicious for
Malaysia, although he would not
interprete it as being ominous.
Zulkifli said the net sale by foreigners had already broken the
RM200 million mark last Tuesday.
He said in 2014, there had been
23 days during which the daily net
sale exceeded the threshold.
“On a slightly positive note, foreign funds turned net buyers last
Friday, albeit marginally to the
amount of RM24.2 million.
“We note that foreign participation surged last week to RM1.1
billion. It was the first time in three
weeks that the daily average gross
purchase and sale surpassed the
RM1 billion mark, which we deem
as active,” he said.
Zulkifli, however, said foreign
volume peaked last Wednesday
and had retreated thereafter.
He said local institutional investors supported the market last
week, mopping up RM433.3 million, but it was not aggressive as
participation rate was less than
RM2 billion at RM1.9 billion.
He said the average institutional
KUALA LUMPUR: Malaysia’s crude
palm oil (CPO) production in December 2014 contracted 22.04% to
1.36 million tonnes from a month
earlier, more than earlier forecast, as
floods in palm oil producing states
curbed harvest.
The Malaysian Palm Oil Board
(MPOB) earlier predicted CPO production in December to fall between
15% and 25% to 1.4 million tonnes
compared with 1.75 million tonnes
in November.
This followed devastating floods
that had inundated several areas in
the East Coast of Peninsular Malay-
HONG KONG: Some global banks
pulled back from Asia’s local currency bond markets in 2014, hit
by increasingly stringent capital
requirements and declining revenues, researcher Greenwich Associates said yesterday, creating new
opportunities for local operators.
“From the dealers’ perspective, maintaining a franchise in
domestic currency Asian bonds
is a very expensive and very
capital-intensive proposition,”
said Abhi Shroff, a Greenwich Associates consultant in Singapore.
The pullback by global institutions has created opportunities
for domestic banks such as KDB
Daewoo Securities and Woori Investment & Securities in South Korea, Industrial and Commercial
Bank of China, Bank of China and
Citic Securities in China, ICICI Securities and Axis Bank in India,
CIMB Bank Bhd and Malayan
Banking Bhd, Greenwich said.
Large global banks had steadily pulled out of the Asian local
currency bond markets because
they could not compete with local
players on costs, especially when
revenue flow began to slow down.
“None of the large global banks
are increasing headcount and they
are taking a long, hard look at their
fixed-income, commodity and currency businesses,” said a fixed-income credit strategist.
The Royal Bank of Scotland’s
planned exit from its Asian operations is the latest high-profile departure. In recent years, UBS Group
has broadly retreated from Asian
fixed-income markets while Barclays has cut back on staff numbers.
“Real money” foreign investors have also pulled back
from Asia’s local currency bond
markets, with foreign holdings
of domestic bonds as a percentage of their total ownership declining in most markets. Malaysia and the Philippines have seen
the biggest declines, according to
data compiled by BNP Paribas.
But not all global banks have left
the field. In Asia-ex Japan, Australia and New Zealand, HSBC is the
top fixed-income operator with an
11% market share, followed by Citi
with an 8.8% share and Deutsche
Bank at 7.4%. — Reuters
‘Falling oil prices have serious
implications for bondholders’
BY SURIN MURUGIAH
Local institutional investors supported the market last week, mopping up RM433.3
million, but it was not aggressive as participation rate was less than RM2 billion at
RM1.9 billion.
participation rate was RM2.3 billion in 2014.
Zulkifli said local retailers appeared to be rather sanguine, mopping up RM101.9 million, the first
buying in four weeks.
“However, only the brave ones
appear to be dabbling in the market as the participation rate was
only RM580 million. The average in
2014 was RM873 million,” he said.
Zulkifli said that regionally, after the first six trading days of this
year, it was apparent that the various equity markets were diverging.
He said Wall Street, the global
bellweather market, may be looking at a profit-taking year, after the
record-breaking 2014.
Zulkifli said the early pacers this
year had all been from Asia, with
the Philippines and Thailand in the
lead hitting the ground running.
“However the flow of fund data
suggests that global investors are
still in the process of forming their
conviction towards Asia for 2015.
“Trading in the first six days suggested that after early hesitations,
foreign investors appear to be giving
Indonesia the vote of confidence
with strong inflow last Friday.
“The Philippine market is still
on investors’ radar screen, even
after the PSEi index has risen for
six years in a row,” he said.
December palm oil output drops
22.04%, inventory at 5-month low
BY MEENA L A KSHA NA
Global banks extend retreat from
Asian bond markets — researcher
sia and left thousands displaced.
In a statement on the board’s
website yesterday, the MPOB said
total palm oil inventory, comprising
CPO and processed palm oil, had
hit a five-month low of 2.01 million
tonnes, a contraction of 11.55%.
Palm oil exports edged up 0.43%
to 1.52 million tonnes.
The latest MPOB data showed
that December palm oil stockpile
had decreased at a higher rate compared to a median forecast in a Reuters survey.
The survey — involving six planters, traders and analysts — forecast
that palm stocks would fall 11.4% to
2.02 million tonnes, a five-month
low, in December as monsoon floods
disrupted harvesting and transportation in the East Coast.
The survey expected December
CPO output to decline to 1.36 million tonnes.
Plantation Industries and Commodity Minister Datuk Amar Douglas Uggah Embas was also quoted
by news reports as saying a total of
190,600ha of oil palm plantations
in the country belonging to both
smallholders and major players were
affected by the floods.
He said out of the 190,600ha, the
bulk or 165,000ha in Pahang, Terengganu, Johor, Kelantan and Perak belonged to major palm oil companies.
KUALA LUMPUR: The plunge
in oil prices since the second
half of 2014 has serious implications for bondholders in the
oil and gas (O&G) sector, according to Moody’s Investors Service.
In a report last Thursday,
Moody’s said as prices fell and
companies’ credit positions became more precarious, their financing was most likely to take
a form that could raise subordination risk for their bondholders.
A c c o rd i n g t o M o o d y ’s
vice-president and head of Covenant Research Alexander Hill, oil
companies require a high level of
ongoing investment in exploration and development to maintain their asset base, much of
which has been funded by debt.
“Amid falling O&G prices, financing of the oil companies is
most likely to take the form of
second-lien debt secured by collateral of diminished value and
that ranks senior to liens held
by their bondholders,” he said.
Moody’s report on “Plunge in
oil prices raises risk of liens subordination in oil and gas bonds”
said the flexible structure of many
O&G bonds added to their liens
subordination risk.
It said this appeared most frequently in the midstream and
propane subsectors, which affected 86.7% and 85.7% of bonds,
respectively, and least often in
the oilfield services and refining
and marketing subsectors, whose
percentages were both below
the North American average for
all bonds.
Hill said the midstream and
propane subsectors offered the
poorest protection against liens
subordination.
Sulaiman Mahbob appointed
new chairman of TM
BY J E F F R E Y TA N
KUALA LUMPUR: Telekom Malaysia Bhd (TM) has named the
incumbent chairman of the Minority Shareholders Watchdog
Group, Tan Sri Dr Sulaiman Mahbob, as its new chairman.
Sulaiman, who is also chairman of the Malaysian Institute
of Economic Research (Mier)
and Jambatan Kedua Sdn Bhd,
replaces Datuk Seri Dr Halim
Shafie, who is taking up a position
at the Malaysian Communications and Multimedia Commission (MCMC) as its chairman.
Halim has served as chairman
of TM since July 2009.
“With his vast experience and
knowledge, we look forward to
Sulaiman’s guidance and leadership as the company continues on its transformation journey and next phase of growth,”
said TM group chief executive
officer Tan Sri Zamzamzairani
Mohd Isa in a statement yesterday.
Sulaiman, 65, is a member of
the board of several institutions
including Bank Negara Malaysia, the Institute of Strategic and
International Studies and Felda
Global Ventures Holdings Bhd.
He teaches economics and public policy as adjunct professor at
Universiti Malaya and Universiti
Tun Abdul Razak.
He is a former civil servant
and has served the government
for over 40 years.
8 ST O C KS W I T H M O M E N T U M
This column is an analysis done by Asia Analytica Sdn Bhd on the fundamentals of stocks with momentum that were picked up using proprietary algorithm by
Anticipatory Analytics Sdn Bhd and that first appeared at www.theedgemarkets.com. Please exercise your own judgment or seek professional advice for your specific
investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
INTEGRAX BHD
(ALL FIGURES IN RM MIL)
Integrax Bhd
LUMUT port operator Integrax Bhd saw
its share price surge by 42 sen or 18.2% to
RM2.73 after Tenaga Nasional Berhad (TNB)
announced its proposal to acquire the remaining 77.9% stake it does not own in the
former at RM2.75 per share last Friday.
The take-over offer is conditional only if
TNB holds more than 50% shares of Integrax
before the closing date, which shall not be
later than 60 days after the announcement
date. TNB currently owns 22.1% of Integrax
and intends to delist the latter upon completion of the corporate exercise.
Integrax owns and operates two port facilities in Lumut Port, namely Lekir Bulk Terminal (LBT) for dry bulk and Lumut Maritime
Terminal (LMT) for dry bulk, liquid bulk,
break bulk and containers. LBT handles the
unloading and delivery of coal to TNB’s Janamanjung power plant in Manjung, Perak.
In 2012, Integrax entered into 25-year port
utilisation agreement with TNB to supply coal
handling services to TNB’s Manjung 4 Power
Plant and is negotiating contract terms for
TNB’s upcoming Manjung 5 Power Plant.
TNB is presently Integrax’s largest shareholder, followed by its deputy chairman Amin
Halim Rasip who has a 21.4% stake and Perak
Corp, which indirectly holds a 15.7% stake.
The Edge Research rates Integrax with Fundamental and Valuation scores of 1.65 and 0.6,
respectively, both out of a maximum of 3.0.
For the past three years, Integrax was able
to maintain net margin of above 40%, although topline growth remained flattish.
As at end-September 2014, the company is
sitting on net cash of RM150.5 million, or a
substantial 50 sen per share.
The stock is trading at a trailing 12-month
P/E of 18.5 times and 1.1 times book. A first
interim dividend of 5 sen for FY2014 was paid
in June 2014.
Valuation factor *
0.60
Fundamental factor **
1.65
Trailing 12m P/E (x)
18.54
Trailing 12m PEG (x)
(1.45)
P/NAV (x)
1.07
Trailing 12M Dividend yield (%)
2.21
Market capitalisation (RM mil)
694.86
Shares outstanding (ex-treasury) mil 300.81
Beta
1.05
12-month price range
1.90 - 2.39
*Valuation factor — Composite measure of historical return & valuation
**Fundamental factor — Composite measure of balance sheet strength &
profitability
Note: A score of 3.0 is the best to have and 0.0 is the worst to have
Income statement
Turnover
EBITDA
Depreciation and amortisation
EBIT
Associates
Interest income
Interest expense
Extraordinary gain/(loss)
Pre-tax profit/(loss)
Net profit/(loss) - owners of company
Balance sheet
Fixed assets - PPE
Biological assets
Intangibles & goodwill
Cash and equivalents
Total current assets
ST borrowings
Total current liabilities
Total assets
Shareholders’ fund
Long term borrowings
INTEGRAX BHD
RATIOS
DPS (RM)
Net asset per share (RM)
ROE (%)
ROA (%)
Turnover growth (%)
Net profit growth (%)
Net margin (%)
Current ratio (x)
Gearing (%)
Interest cover (x)
FY11
31/12/2011
FY12
31/12/2012
FY13
31/12/2013
LATEST 3QFY14
30/9/2014
87.9
51.5
10.1
41.4
17.7
4.1
5.6
2.6
60.2
43.8
90.7
51.1
12.1
39.0
17.7
3.8
2.0
0.7
59.2
41.7
92.9
50.6
13.1
37.4
17.0
3.0
0.4
57.1
40.9
23.9
13.4
4.0
9.5
3.8
0.2
0.1
13.4
9.4
331.9
128.0
147.0
170.7
58.5
73.8
673.1
559.7
-
337.6
128.0
124.1
136.3
13.4
707.4
591.2
-
351.1
128.0
151.3
161.4
13.5
738.0
618.6
-
355.6
128.0
154.6
165.3
10.8
749.3
629.9
-
FY11
31/12/2011
FY12
31/12/2012
FY13
31/12/2013
ROLLING 12-MTH
0.12
1.86
7.86
6.25
(0.19)
(12.84)
49.82
2.31
9.17
0.03
1.97
7.24
6.04
3.16
(4.90)
45.93
10.15
25.95
0.05
2.06
6.76
5.66
2.45
(1.81)
44.02
11.94
119.83
0.05
2.09
6.12
5.13
0.34
(12.57)
40.40
15.28
129.26
I N V E ST I N G I D E A S 9
Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own
judgment or seek professional advice for your specific investment needs. We are not responsible for your investment
decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
I N S I D E R A S I A’S S TO C K O F T H E D AY
PANASONIC MANUFACTURING MALAYSIA BHD
(ALL FIGURES IN RM MIL)
Panasonic Manufacturing Malaysia Bhd
PANASONIC Manufacturing Malaysia Bhd
(Panamy), which manufactures of a wide
range of electrical appliances under brand
Panasonic, is an attractively priced company with stable, steadily growing earnings and
strong balance sheet. Between FYMar2010 and
FY14, turnover rose a compounded 7.2% per
annum while net profit grew 5.6% annually.
The stock was featured as one of InsiderAsia’s top ten stock picks for 2015. The Edge
Research rates it a 2.4 and 2.8 out of 3 for
Valuation and Fundamental, respectively.
High dividend yields and a well-established
brand presence in Malaysia are definite plus
points. The company, which has rode through
multiple financial crises in the past, should
be well able to weather what is expected to
be a very challenging 2015. It is sitting on net
cash totalling RM536 million.
Panamy has, historically, rewarded its
shareholders well through special, interim
and final dividends with payout ratios ranging from 80% to over 100%. Total dividends
of 69.2 sen per share for FYMar2014, however, were considerably lower compared to the
RM1.41 for FY13. Even so, this still translates
to a yield of 3.59% based on the current share
price of RM19.26.
One possible reason for the lower dividend could be the yen, which has slumped
to seven-year lows on Prime Minister Shinzo
Abe’s policies to halt deflation and kick-start
the economy. Over the last year, the yen has
slumped from 3.14 to 2.99 versus the ringgit.
It will be more advantageous for Panamy to
repatriate dividends when the yen is weaker.
If so, we could see higher dividends in the
near future, once the Japanese currency is
seen to have stabilised.
The stock is attractively priced, with a
12-month trailing P/E of 12.6 times and at
1.7 times book.
Valuation factor *
2.40
Fundamental factor **
2.80
Trailing 12m P/E (x)
12.60
Trailing 12m PEG (x)
0.56
P/NAV (x)
1.73
Trailing 12M Dividend yield (%)
3.77
Market capitalisation (RM mil)
1169.96
Shares outstanding (ex-treasury) mil
60.75
Beta
0.35
12-month price range
18.06 - 22.18
*Valuation factor — Composite measure of historical return & valuation
**Fundamental factor — Composite measure of balance sheet strength &
profitability
Note: A score of 3.0 is the best to have and 0.0 is the worst to have
T O N G ’S
MOMENTUM
P O RT F O L I O
THE FBM KLCI managed to claw back some
gains in late trading on Monday after spending
most of the day in the red. In a spurt of buying momentum at the eleventh hour, market
breadth turned mildly positive, with gainers
outpacing losers by a 1.2 to 1 ratio.
The benchmark index added 2.64 points or
0.15%, to close at 1,735.08. This pared its year- todate loss slightly to 1.5% at the close. Trading was
dominated by penny stocks, led by IFCA MSC,
likely for its GST-software exposure. Tenaga Nasional’s surprise takeover offer for Integrax also
added some excitement to the market.
However, by and large, investors remained
generally cautious. Indeed, the volatility in crude
oil prices and the ringgit appears far from over,
both falling in late afternoon trading. Crude oil
fell US$1 to just over US$47 per barrel in late
trading. The ringgit, which had firmed to RM3.55
per USD in the morning, started sliding towards
the RM3.57 level in the evening.
Regionally, markets closed mostly mixed.
US and China stocks fell after the former rallied for two days, while the latter’s stocks are
deemed overvalued compared to the market
outlook. European stocks however, gained in
hopes that the European Central Bank’s bond
buying programme of $500 billion euro will
help shore up the economy.
I continue to be cautious on the outlook for
Malaysian equities and have therefore kept my
portfolio unchanged with a high cash holding
level. Currently, I am only holding Willowglen,
which closed unchanged at 74.5 sen.
My portfolio is currently registering a gain of
1.1 % since inception, and has still outperformed
the benchmark KLCI by 9.4%
Income Statement
Turnover
EBITDA
Depreciation and amortisation
EBIT
Associates
Interest income
Interest expense
Extraordinary gain/(loss)
Pre-tax profit/(loss)
Net profit/(loss) - owners of company
Balance sheet
Fixed assets - PPE
Biological assets
Intangibles & goodwill
Cash and equivalents
Total current assets
ST borrowings
Total current liabilities
Total assets
Shareholders’ fund
Long term borrowings
PANASONIC MANUFACTURING MALAYSIA BHD
RATIOS
DPS (RM)
Net asset per share (RM)
ROE (%)
ROA (%)
Turnover growth (%)
Net profit growth (%)
Net margin (%)
Current ratio (x)
Gearing (%)
Interest cover (x)
QUANTITY
BOUGHT PRICE
RM
9,000
0.789
FY12
31/3/2012
FY13
31/3/2013
FY14
31/3/2014
LATEST 2QFY15
30/9/2014
825.8
87.2
24.2
63.0
6.5
15.8
0.0
0.0
85.2
66.4
864.6
101.7
26.7
75.0
4.3
15.6
0.0
0.0
94.9
75.1
899.2
107.0
27.2
79.8
9.1
16.3
0.0
0.0
105.2
80.8
249.2
33.0
6.4
26.6
2.7
4.8
0.0
0.0
34.0
26.1
75.6
0.0
0.0
470.4
544.6
0.0
113.8
649.1
647.7
0.0
71.3
0.0
0.0
500.4
598.5
0.0
149.2
668.5
668.1
0.0
67.6
0.0
0.0
520.2
607.2
0.0
167.7
663.5
663.3
0.0
59.1
0.0
0.0
535.5
664.1
0.0
204.9
677.5
677.3
0.0
FY12
31/3/2012
FY13
31/3/2013
FY14
31/3/2014
ROLLING 12-MTH
0.90
10.66
10.25
10.22
8.46
(19.68)
8.04
4.78
-
1.41
11.00
11.41
11.40
4.70
13.08
8.68
4.01
-
0.46
10.92
12.13
12.13
4.00
7.58
8.98
3.62
-
0.73
11.15
14.03
14.02
5.36
22.35
9.92
3.24
-
BOUGHT VALUE CURRENT PRICE
RM
RM
CURRENT VALUE
RM
GAIN / LOSS
RM
% GAIN / LOSS
6,705.0
(399.3)
(5.6%)
Shares held:
Willowglen MSC Bhd
Total
7,104.3
0.745
--------------7,104.3
--------------- --------------6,705.0
(399.3)
--------------7,104.3
--------------- --------------6,705.0
(399.3)
Shares bought:
No shares were bought today.
Total shares held
(5.6%)
Shares sold:
No shares were sold today.
Cash balance
94,369.9
Realised profits / (losses)
1,474.3
Total Portfolio Returns
Annualised returns for portfolio
100,000.00
101,074.9
1,074.9
Portfolio Beta
Risk adjusted returns for portfolio
1.1%
2.1%
1.166
1.8%
Performance Comparison
FBM KLCI
FBM KLCI Emas
At portfolio start
1,892.7
13,163.7
Current
1,735.1
11,921.3
Change
(8.3%)
(9.4%)
Relative portfolio outperformance
9.4%
10.5%
This is a personal portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy/sell any stocks.
Portfolio started on 8 July 2014 with RM100,000.
10 B R O K E R S’ C A L L
Evergreen expected to turn around
Evergreen Fibreboard Bhd
(Jan 12, 78 sen)
Initiate coverage with a buy with
a target price (TP) of RM1.11:
We initiate coverage on Evergreen
Fiberboard Bhd with a “buy” recommendation and a TP of RM1.11
(52% upside). We are valuing the
stock based on price-to-book value
(P/BV) by applying 0.7 times P/BV
to its book value of RM1.59.
We expect Evergreen to turn
around in financial year 2015
(FY15), propelled by operational
efficiency, better selling prices, favourable foreign exchange (forex)
and lower raw material prices. Currently, the company is still trading
below its BV/per share of RM1.56
as at end-September 2014.
Evergreen Fibreboard is a prominent manufacturer of medium
density fibreboard (MDF), parti-
Evergreen Fibreboard Bhd
Evergreen reported its first loss in
FY13 with a net loss of RM42.8mil2012
2013
2014F
2015F
2016F
FYE DEC (RM MIL)
lion, attributed to weak demand
Total turnover
1,032
939
940
982 1,031 from its major market, new supply
Reported net profit
32.2 (42.8)
(4.7)
35.6
45.1 from other regional producers, an
Recurring net profit
33.0 (42.8)
(4.7)
35.6
45.1 increase in logistics cost and a drop
(47.5) (229.7) (89.1)
na
26.6 in average selling prices.
Recurring net profit growth (%)
Currently, the company is em0.06 (0.08) (0.01)
0.07
0.09
Recurring EPS (RM)
barking on a series of restructuring
0.02
0.00
0.00
0.00
0.02 exercises in FY14 to FY16: (i) shiftDPS (RM)
11.3
na
na
10.4
8.2 ing one of the Malaysian producRecurring PER (x)
0.45
0.47
0.48
0.46
0.44 tion lines to its Indonesian plant
P/BV (x)
na
8.07
5.52
4.34
3.63 to achieve economies of scale and
P/CF (x)
2.1
0.0
0.0
0.0
2.8 greater cost savings; (ii) upgrade
Dividend yield (%)
6.1
19.4
8.2
4.6
4.3 its machine and equipment in the
EV/EBITDA (x)
Segamat plant, with more auto3.9
(5.3)
(0.6)
4.5
5.4
Return on average equity (%)
mation processes to improve ef33.7
34.8
30.6
22.8
25.1 ficiency and (iii) streamlining its
Net debt to equity (%)
0.0
0.0
0.0 Batu Pahat plant operations for
Our vs consensus EPS (adjusted) (%)
Source: Company data, RHB
better cost savings and smoother
cleboard, furniture, value-added Thailand and Indonesia with a com- production flows.
wood-based products and resin. It bined annual production exceeding
With more than 70% of export
has 10 plants located in Malaysia, 1.3 million cu m.
sales, Evergreen is benefiting from
Axiata’s Robi going public
Axiata Bhd
(Jan 12, RM7.05)
Reiterate buy with unchanged
target price of RM7.59: Axiata’s
91.59%-owned Bangladeshi operating company, joint venture with
NTT DoCoMo, Robi Axiata Ltd is
slated for initial public offering
(IPO) in 2016.
This corporate exercise will have
a higher priority than tower listing,
which requires more time for profitability and efficiency improvements
as well as regulatory clearances.
Robi is Axiata’s fourth largest
contributor, with 11% of sales, 11%
of earnings before interest, taxes
and amortisation and 7.3% of profit
after tax and minority interest as
at the first nine months of 2014.
Relatively small contributions, but
improved tremendously since 2010
with great potential to grow further.
In Bangladesh, mobility is still
at the infancy stage, dominated
by prepaid voice and short message service. As at November 2014,
mobile and data penetration rates
stood at circa 72% and about 25% on
the back of 166 million population
with both three-year compound
annual growth rates projected at
12% and 19.2%, respectively.
With circa 25% revenue market
share (RMS), Robi is the second
largest telco behind Grameenphone (GP) with about 52%. In
terms of subscribers, Robi ranks
third with circa 21% behind GP
(about 42%) and Bangalink (about
26%). With 96% population coverage, its strongholds are Chittagong,
Dhaka and Comilla (CDC). Data
only contributes 5% of its total sales
while smartphone penetration remains low at 5%.
Robi has a high tax regime of
about 50%, including subscriber
identity module (SIM) taxes, new
and replacement; universal service
provision (USP), 6% of sales; and
corporate tax (45%). It will enjoy
lower corporate tax of 40% as a
public entity.
Positive initiatives to spur growth
TNB acquires Integrax
Axiata Bhd
FYE DEC (RM MIL)
Revenue
Ebitda
Pre-tax profit
Patami
Adj Patami
Rep EPS (sen)
Adj EPS (sen)
PER (x)
Net DPS (sen)
Net div yield (%)
P/BV (x)
EV/Ebitda (x)
Net D/E (%)
ROA (%)
ROE (%)
2013A
2014E
2015E
2016E
18,371
7,475
3,533
2,550
2,762
29.86
32.34
21.5
22.0
3.2
2.8
8.2
32.8
6.35
12.92
18,795
6,979
3,184
2,356
2,390
27.47
27.87
24.9
23.0
3.3
2.7
9.1
42.2
5.01
10.82
19,559
7,361
3,832
2,538
2,538
29.60
29.60
23.5
25.0
3.6
2.6
8.6
43.2
5.25
11.18
19,683
7,349
3,936
2,607
2,607
30.40
30.40
22.9
26.9
3.9
2.6
8.5
38.1
5.33
11.22
Source: HLIB
include reviewing of Bangladesh’s
National Telecom Policy, mobile
number portability and spectrum
auctions (1.8/2.1GHz in 2015/16
and 700MHz in 2016/17).
Robi has a vision to lead small
screen data and become a strong
No 2 in RMS by 2016 via simple and
relevant offerings and enhanced
end-to-end experience.
With GP trading at enterprise
value/earnings before interest, taxes, depreciation and amortisation
(EV/Ebitda) of 8.5 times compared
with HLIB’s ascribed value of six
times, this will enhance Axiata’s valuations (12 sen or 1.6% to RM7.71).
a stronger US dollar. In addition,
the company is also enjoying lower
raw material costs, thanks to lower rubberwood logs and crude oil
prices (both constituting 60% of its
total cost).
We believe that the company will
turn around in FY15, premised on
improved efficiency internally, favourable forex and relatively stable
raw material costs.
Our target price is derived by
applying 0.7 times P/BV to its FY15
forecast BV of RM1.59. Evergreen
currently trades at FY15 forecast
P/BV of 0.46 and FY15 forecast
price-earnings ratio of 10.4.
Key risks include: (i) fluctuation
in the prices of raw materials; (ii)
unfavourable forex movements
and (iii) execution risk — restructuring is underway. — RHB Research, Jan 12
An effective avenue to fund future capital expenditure chiefly in
data infrastructure and spectrums
(auction price circa US$21 million
[RM74.55 million] per MHz) allows
Robi to expand beyond CDC.
Catalysts include: (i) higher
smartphone penetration boosting
data average revenue per user; (ii)
strong growth in developing markets with low penetration and (iii)
more cost savings from collaboration with DiGi.Com Bhd.
Risks include: (i) regulatory
risks; (ii) foreign exchange fluctuations and (iii) competitive risks.
— HLB Research, Jan 12
Tenaga Nasional Bhd
(Jan 12, RM14.20)
Maintain buy with target price
of RM15.13: We maintain our
recommendation on TNB with
an unchanged discounted cash
flow-(DCF) derived fair value of
RM15.13 per share, which implies a forecast financial year 2015
(FY15F) price-earnings ratio (PER)
of 12 times and a price-to-book
value (P/BV) of 1.7 times.
Last Friday, TNB made a conditional takeover offer to acquire all
the remaining shares it does not own
in Integrax Bhd at a cash offer price
of RM2.75 per share. This translates
into a total of RM644.2million for
the remaining 77.88% stake.
Integrax, which owns 80% of
Lekir Bulk Terminal (LBT) and
50% less one share of Lumut Maritime Terminal (LMT) through
Lumut Port, provides coal handling services and port facilities for
TNB’s 3,100mw Janamanjung coalfired power plant called Stesen
Janakuasa Sultan Azlan Shah,
Manjung, Perak.
TNB is presently Integrax’s largest shareholder, having acquired a
22.12% stake at a PER of 10 times in
March 2011 to ensure the smooth
operations of LBT against the backdrop of a board tussle.
At present, Amin Halim Rasip
(deputy chairman of Integrax) holds
21.37% of Integrax and is its second
largest shareholder while Perak
Corp Bhd indirectly has 15.74%.
The acquisition would be a
strategic fit for TNB given the need
for management control over Integrax to secure the coal-handling
services for its power plant and
enhance the efficiency and operations of its power station.
The offer price, which is at a
19% premium to Integrax’s last
traded price of RM2.31 per share,
values Integrax at a FY13 historical
PER of 20.2 times. This is in contrast to TNB’s 12 times currently.
That said, this appears to be fair
given that the PER for ports ranges
between 20 and 23 times.
We are “neutral” on this acquisition as the financial impact
from this deal is insignificant. Our
back-of-envelope calculations,
which assume that TNB will fund
the acquisition entirely through
borrowings, show that incremental earnings and rise in net gearing
would be negligible (less than 1%).
TNB will be releasing its first
quarter FY15 results on Jan 22.
We expect the numbers to meet
our expectations on the back of
stable energy costs and decent
electricity demand growth of 3%.
While coal prices continue to remain low at about US$62 (RM220)
per tonne, we expect the savings to
be largely offset by higher liquid natural gas prices, which have ticked up
to RM58 per million British thermal
units. — AmResearch, Jan 12
Tenaga Nasional Bhd
FYE AUG (RM MIL)
Revenue
Core net profit
FD core EPS (sen)
FD core EPS growth (%)
Consensus net profit
DPS (sen)
PER (x)
EV/Ebitda (x)
Div yield (%)
ROE (%)
Net gearing (%)
Source: AmResearch
2014
2015F
2016F
2017F
42,792.4
6,021.7
106.7
23.8
29.0
13.3
8.1
2.2
16.0
40.1
45,059.3
6,554.6
116.1
8.8
5,199.9
33.0
12.2
7.0
2.5
14.4
36.1
46,482.7
6,133.4
108.7
(6.4)
5,428.8
32.0
13.0
6.9
2.4
12.3
27.1
47,953.0
6,514.3
115.4
6.2
5,843.8
36.0
12.3
6.7
2.7
12.0
28.9
B R O K E R S’ C A L L 11
FGV looking for
a rebound
Felda Global Venture
Holdings Bhd
(Jan 12, RM2.17)
Upgrade to trading buy but with
a lower target price of RM2.70:
Felda Global Ventures Holdings
Bhd (FGV) will likely report lower-than-expected results in the
coming quarters due to the ongoing aggressive replanting exercise
and severe flooding in the East
Coast will dampen its fresh fruit
bunch (FFB) production growth.
In addition, the recent acquisition of Asian Plantations Ltd will
not yet make a significant boost
to the group’s production given
the young age profile and small
mature planted area.
The stock was under some selling pressure recently as Kumpulan Wang Persaraan and the Employees Provident Fund pared
down their stakes in FGV. Since
early 2014, they have sold their
stakes down to 6.1% and 5.6%
from 7.2%respectively. Foreign
shareholding currently stands at
around 9.5%.
We reduce our earnings forecast
by 13% to 16% for financial years 2014
to 2016 (FY14 to FY16) after lowering
our FFB production forecast by 4% to
5% as we expect disappointing FFB
numbers for December.
The 11-month FFB production
has come down by 3.1% year-onyear, with expectations of a more
pronounced decline in December by more than 13% monthon-month. We also expect FFB
production to decline by 4.5%
for FY14 followed by 1% growth
for this year.
After adjusting our earnings
forecasts for the plantation arm
and attaching a 10% discount on
our sum-of-parts valuations due
to the heightening risk exposure
to downstream activities, we cut
our target from RM3.65 to RM2.70.
We upgrade our call from “neu-
Kimlun clinches two contracts worth
RM110.6m
FGV will likely report lower-than-expected results in the coming quarters due to the
ongoing aggressive replanting exercise and severe flooding in the East Coast. Photo by
Felda Global Venture
Kimlun Corp Bhd
(Jan 12, RM1.24)
Maintain underperform with a
target price of RM1.25: Kimlun
Corp Bhd (Kimlun) announced
last week that it had secured two
projects with a collective contract
value of RM110.6 million.
The first project, worth RM63.6
million, was awarded by United
Malayan Land Bhd (UMLand). It
involves main building works for
89 factories in Johor Baru. This
job is scheduled to be completed
in December 2016.
The second project awarded
by UEM Land Bhd is worth RM47
million. The job scope includes
infrastructure works for Phase 3
of the southern industrial and
logistics cluster in Nusajaya, Johor. It is scheduled to be completed in December 2016.
We are neutral to positive on
the news. The new contract wins
have made up about 22% of our
financial year 2015 (FY15) replenishment of new jobs. If this
momentum continues for the
rest of this year, we believe that
our new FY15 contracts of RM500
million will be achievable.
However, we are wary on
Kimlun’s ability to fetch healthy
margins for these jobs after seeing the group’s construction
margins for the past four quarters staying below its three-year
historical average of 8.5%.
Assuming a 6% profit before tax
(PBT) margin on average, these
jobs would add to Kimlun’s net
profit by RM2.5 million (5.5% of
FY15 earnings) per annum until FY16.
Including these jobs, we estimate Kimlun’s current outstanding order book to stand at RM1.6
billion. This will provide earnings
visibility for the next two years.
Despite the strong outstanding order book, we believe that
the near-term outlook remains
lacklustre, as profit margins in
both the construction and manufacturing segments came in below
expectations.
We believe that the company is
still facing earnings risks in view
of the group’s persistent earnings
disappointments. Moreover, the
stock’s valuation is not compelling at this juncture.
Maintain the target price of
RM1.28 based on unchanged
ascribed FY15 price-earnings
ratio (PER) of 8 times. Our ascribed PER of 8 times is within
the small cap peers’ range of 8
to 10 times.
Risks to our call include better-than-expected margins, faster construction works and higher-than-expected order book
replenishments. — Kenanga Research, Jan 12
Felda Global Ventures Holdings Bhd
FYE DEC (RM MIL)
Revenue
Gross profit
Pre-tax profit
Core net profit
EPS (sen)
PER (x)
DPS (sen)
Dividend yield (%)
2012A
2013A
2014F
2015F
2016F CAGR (%)
12,886.5 12,568.0 14,657.9 14,918.3 15,055.0
1,567.4
878.3
944.4 1,061.0 1,133.1
1,126.3 1,536.4
579.1
679.2
742.6
765.5
653.0
347.4
413.0
451.5
21.0
17.9
9.5
11.3
12.4
10.4
12.2
22.9
19.3
17.6
14.0
16.5
6.3
7.5
8.2
6.4
7.6
2.9
3.4
3.8
4.0
(7.8)
(9.9)
(12.4)
(12.4)
-
Source: Company, PublicInvest Research estimates
tral” to “trading buy”. However, we
think that the current share price
has been over-priced in view of
negative news flows. Over the last
two months, the share price has
slumped by more than 37%.
Meanwhile, its downstream ac-
tivities will likely face more pressure this year given the upcoming
additional 30% capacity from Indonesia, while its oleochemical
business could be further hit by
weaker crude oil prices. — Public
Investment Bank, Jan 12
Kimlun Corp Bhd
FY DEC (RM MIL)
Turnover
Ebit
PBT
Net profit (NP)
Core net profit
Consensus (NP)
Core EPS (sen)
Core EPS growth (%)
NDPS (sen)
BV/Share (RM)
Core PER
Price/BV (x)
Net gearing (x)
Dividend yield (%)
2013A
2014E
2015E
951.2
49.6
38.2
36.4
36.4
na
15.2
(26.4)
3.0
1.25
8.2
1.0
0.8
2.4
1045.0
67.9
57.5
43.4
32.6
38.2
10.8
(28.5)
3.0
1.21
11.5
1.0
0.4
2.4
1193.5
72.8
60.2
45.4
45.4
48.3
15.1
39.4
4.0
1.32
8.3
0.9
0.5
3.2
Source: Kenanga Research
P1 may be a drag on TM’s near-term performance
Telekom Malaysia Bhd
Telekom Malaysia Bhd
(Jan 12, RM6.78)
Maintain hold with a target price
of RM6.81: After a disappointing third quarter of financial year
2014 (3QFY14), Telekom Malaysia
Bhd’s (TM) financial performance
is likely to have been lacklustre in
4QFY14.
The largest risk to earnings in
the near term will arise from the
consolidation of P1, the recently
acquired 55%-owned WiMax operator.
P1 has histor ically been
loss-making and may be a drag
on TM’s near-term performance.
For the longer term, we would not
rule out a turnaround, especially
with TM’s financial muscle and a
successful business plan.
We do not expect any major
positive earnings surprises from
TM’s existing Internet and data
business. While still a key growth
driver for TM given the still strong
demand for data, growth will likely be diluted by the continued
decline in TM’s voice revenue,
which still accounts for 31% of
group revenue.
Meanwhile, TM has announced
a host of projects of late, but we do
not expect the contribution from
these projects to be anytime soon
nor significant.
Without any immediate rerating
catalyst for the stock and an emerging risk of earnings disappointment,
we think that the stock may under-
perform the broader telco sector.
However, given the downside
risk in the Kuala Lumpur Composite Index in view of the current
uncertainties, the stock and sector
may be preferred given their relatively more certain cash flows.
Dividend yields for TM are
also fairly decent at an estimated
4% in 2015. Maintain “hold” and
our discounted cash flow-derived
target price of RM6.64.
Key upside risks would be positive earnings and dividend surprises. Downside risks include
larger-than-expected losses from
the consolidation of P1 and fierce
competition in the Internet segment. — Affinhwang Capital,
Jan 12
FYE 31 DEC (RM MIL)
Revenue
Ebitda
Pretax profit
Net profit
EPS (sen)
PER (x)
Core net profit
Core EPS (sen)
Core EPS growth (%)
Core PER (x)
Net DPS (sen)
Dividend yield (%)
EV/Ebitda (x)
Change in EPS (%)
Affin/Consensus (x)
2012
9,993.5
3,185.7
1,069.6
1,263.7
35.3
19.3
881.0
24.6
38.8
27.6
52.0
7.6
8.7
-
2014E
2015E
2016E
10,628.7 11,029.9
3,583.4 3,622.3
1,046.0
1,161.9
1,012.2
819.8
28.3
22.9
24.0
29.7
1,038.5
794.5
29.0
22.2
17.9
(23.5)
23.4
30.6
26.1
22.9
3.8
3.4
7.9
7.4
0.9
2013
11,158.5
3,687.5
1,381.8
982.6
27.5
24.8
982.6
27.5
23.7
24.8
27.5
4.0
7.3
1.0
11,343.7
3,844.8
1,584.0
1,132.2
31.6
21.5
1,132.2
31.6
15.2
21.5
31.6
4.7
6.9
1.1
Source: Company, Affin Hwang estimates, Bloomberg
12 H O M E
Red Crescent to
adopt nine worst
flood-hit villages
Each village will be allocated RM500,000
BY YA SMI N RA MLAN
KUALA LUMPUR: The Malaysian
Red Crescent Society (MRCS) will
identify nine of the worst flood-hit
villages in the east coast states of
Peninsular Malaysia and “adopt”
them under a rebuilding programme
that will require RM4.5 million.
Under its “Kampung Angkat”
(Adopt a Village) programme, the
MRCS will allocate RM500,000 to
each village, its chairman Tunku
Tan Sri Shahriman Tunku Sulaiman
said.
“Our three main priorities for
these adopted villages are to provide clean water supply, temporary
shelter and medical treatment for
the flood victims,” he said at the
MRCS headquarters yesterday.
Shahriman said so far, only one
village has been confirmed on the
society’s list of adopted villages and
that is Kampung Pasir Tumbok in
Gua Musang, Kelantan, one of the
worst-hit states in the floods that began before Christmas Day last year.
The other eight villages for the
programme will be identified and
announced in two weeks’ time,
Shahriman said.
The MRCS is still in the process
of ascertaining the needs of various
The scene in Manek Urai, Kelantan, after the floods. Photo by The Malaysian Insider
villages affected by the floods and
will choose the remaining eight villages based on those suffering the
worst damage, he added.
The plan is to help four villages
in Kelantan, three in Terengganu
and two in Pahang.
“So far, we had garnered a sum
of RM3.2 million in cash. Therefore,
we still need more donations from
various sectors so that the amount
will be sufficient for the Kampung
Angkat project,” he said.
The floods were the worst Malaysia had experienced in recent decades, displacing more than 200,000
people in several states over the
past few weeks and causing the
new school term to start a week
late. Although the flood waters have
receded, the monumental task of
cleaning up and rebuilding has
only just begun. The government
has estimated a loss of RM2 billion
in terms of infrastructure losses. —
The Malaysian Insider
Apex court’s verdict to end
nine-year Altantuya murder saga
BY V A N B A L AG A N
PUTRAJAYA: One of Malaysia’s
most high-profile murder cases,
the gruesome death of Mongolian
Altantuya Shaariibuu, could come
to an end today when the Federal
Court decides whether to allow
the prosecution’s appeal against
the acquittal of two former police
commandos who were charged
with the crime.
A five-man bench chaired by
Chief Justice Tun Arifin Zakaria,
which heard the appeal last June,
will deliver their verdict on whether the two former special action
unit personnel were responsible
for the Mongolian woman’s death
nine years ago.
Evidence in court revealed that
the Mongolian translator was either murdered by C4 explosives
or was killed first and her remains
destroyed on Oct 18, 2006, in the
outskirts of Shah Alam, near Kuala Lumpur.
On April 9, 2009, the High
Court meted out the death sentence on Chief Inspector Azilah
Hadri and Corporal Sirul Azhar
Umar after a marathon 159-day
trial.
Former political analyst Abdul
Razak Baginda, who was Altantuya’s lover, was acquitted in 2008
of abetment without his defence
being called. The prosecution did
not appeal his acquittal.
It emerged during the trial
that Abdul Razak, a confidante
of Prime Minister Datuk Seri Najib
Razak, had enlisted Deputy Superintendent Musa Safri’s help as he
could not tolerate the harassment
by Altantuya.
Musa was at the time the aidede-camp of Najib, who was then
the deputy prime minister.
On Aug 23, 2013, a three-man
Court of Appeal bench acquitted
the two policemen due to lack
of evidence. In fact, judge Datuk
Tengku Maimun Tuan Mat, who
delivered the written grounds,
said the two should have been
freed without their defence called.
The bench ruled that the failure to call Musa proved fatal to
the prosecution’s case.
Tengku Maimun said it should
not be overlooked that the ugly
and horrendous episode had
started with the request by Abdul Razak to Musa before Azilah
and Sirul came into the picture.
However, the prosecution in its
appeal to the apex court said even
without the testimony of Musa,
the Court of Appeal should have
upheld the conviction of the two
police commandos.
The prosecution said there was
no need to put Musa on the stand
as he was only a peripheral figure
in the case and that an affidavit by
Abdul Razak in support of his bail
application revealed that the senior police officer’s role was limited
to introducing him (Abdul Razak)
to the Brickfields police chief.
Even Sirul, who gave an unsworn statement from the dock,
had said that Musa was not involved and neither did he (Musa)
give any directive.
Sirul had pleaded with the
judge not to impose the death
sentence on him, saying: “I am
the black sheep who has to be
sacrificed to protect unnamed
people.”
Lawyer M Manoharan, who
has followed the case closely, told
The Malaysian Insider the Federal
Cout could order a retrial if there
was a miscarriage of justice.
“However, I doubt that will
happen. It is either a conviction
or accquittal as decided by the
appellate court,” he added.— The
Malaysian Insider
Logging caused unusual flooding, say NGOs
KUALA LUMPUR: The floods that
struck the east coast of Peninsular
Malaysia last year have been described as the worst in history. It left
in its wake much destruction and
loss of property and afflicted victims
with a host of psychological issues.
Kelantan was the worst affected,
with over 100,000 victims relocated
to relief centres. Many of them had
lost their homes which were swept
away by strong currents.
It is not unusual for the east coast
states to be affected by the Northeast
Monsoon, which occurs from November to March, every year.
The months of November, December and January typically record
the highest amount of rainfall, causing floods in the lowlands.
However, last year’s floods occurred on an unprecedented scale,
resulting in destruction akin to that
brought by the Asian tsunami. It left
many wondering how such a disaster
could have happened.
The true cause of the unusual
flooding has yet to be determined
to this day.
Deputy Prime Minister Tan Sri
Muhyiddin Yassin has stated that
the government would conduct a
post-mortem on the issue once the
situation improves.
However, several environmental
non-governmental organisations
(NGOs) have pointed out that the
disaster that happened was due to
the massive environmental destruction that took place in the state.
Pertubuhan Pelindung Khazanah
Alam Malaysia (Peka) is one of the
NGOs formed to stop the destruction
of natural resources.
Its president Puan Sri Shariffa
Sabrina Syed Akil said the NGO had
time and again reminded the state
government and the media about
the importance of protecting the
state’s forests and natural resources in order to prevent disasters like
floods.
She said each state government
was responsible for its own natural
resources. It also needed to stress the
importance of preserving its forests,
instead of trading it for short-term
gains and benefits.
“Perhaps they (the state government) may gain RM20 million in
income from logging activities, but,
it will cost them billions of ringgit in
recovery costs when floods of this
scale occur,” she told Bernama, when
contacted.
She said if logging activities were
to take place, those responsible
should incorporate ways of ensuring the conservation of the ecosystem in the affected area.
Giving the example of good logging practices, she said in Canada,
every tree felled needed to be replaced with the planting of eight to 10
new trees to preserve the ecosystem.
“We should not wait until disaster
strikes to implement such measures,”
she said.
The president of Sahabat Alam
Sekitar Malaysia (Friends of the Environment Malaysia), Datuk Abdul
Malek Yusof, said widespread and
indiscriminate logging created a ripple effect in the long run.
“Logging would usually result in
erosion, causing mud to flow down
from the highlands during rain,
eroding hills and destroying water
catchments and causing lowlands
to become flooded,” he said.
A huge cause for concern is
the logging activities detected in
Tasik Chini, Pahang, and several
areas in Kedah, which could lead
to floods of a similar scale.
“Last week I visited Tasik Chini in
Pahang and saw for myself the illegal
logging taking place which has now
resulted in muddy water in the lake,”
said Abdul Malek.
He said the surrounding area was
at high risk of flooding if the lake became shallower due to mud flowing
in from logging activities.
In fact, he said, the hills in the
area have become bald as no trees
were replanted after logging activities took place.
Abdul Malek said there was also
massive logging taking place in areas
like Padang Terap in Kedah and along
the slopes at the Titiwangsa range.
He said the issue of indiscriminate
logging should not be politicised or
regarded as something normal because it was a real problem with dire
consequences.
“I am urging for political inclinations to be set aside and for the federal and state governments to work
together to solve the issue of logging.
“If it is possible, a commission
should be set up to oversee logging
activities,” he suggested.
He, however, said it was not the
only underlying cause for the floods,
as poor irrigation and garbage disposal systems could also lead to the
disaster.
Environmental Protection Society of Malaysia president Nithi Nesadurai said public awareness on
environmental issues were still very
low, leading to environmental abuse.
He said Malaysians needed to understand the importance of natural
forests and the effects of logging and
illegal land clearing.
“When trees are felled, it causes
rain to flow down the soil instead of
being absorbed into the earth [and
later slowly released into water catchments]. This causes rainwater to flow
down at a faster rate into the rivers.
Rivers will not be able to contain
such an amount of water in a short
time, and this causes floods.
“Almost everyone is aware of the
phenomenon, but no one gives it
due attention,” he said.
Nithi said there was also a need for
the state government to review the
destruction of forests for the purpose
of urbanisation as this contributes to
flooding. — Bernama
H O M E 13
Major Zaidi sacked
Found guilty of breaking protocol over indelible ink issue
BY MUZL I ZA MU STA FA
KUALA LUMPUR: Whistle-blower Major Zaidi Ahmad has been
dishonourably discharged from
the armed forces after being found
guilty yesterday on two charges of
breaking protocol in revealing problems with the indelible ink used
in the May 2013 general election.
Before delivering the sentence,
military court presiding officer Col
Saadon Hasnan said the sentence
was not because of the issues Major
Zaidi raised regarding the indelible ink, which was found to have
washed off after application.
“It is because of the two offences he committed by going against
the two standing orders issued by
the Air Force’s higher authorities,”
said Saadon.
Earlier yesterday, the court ruled
that prosecutors had established a
prima facie case against Major Zai-
di in two out of the seven charges
made against him.
The panel led by presiding officer
Col Saadon said eight witnesses had
been called to the stand since the
trial began in May 2013.
“The prosecutors have created a prima facie case against the
accused for the second and the
third charges and therefore we have
found him guilty of these charges,”
Col Saadon said.
He earlier announced that Major
Zaidi would represent himself in
court as the defence counsel “could
not attend the proceeding”.
“The defence counsel could not
attend the court but the court will
still resume,” he said before proceeding to announce the court’s
decision.
Major Zaidi was found guilty of
breaching two standing orders, that
is, speaking to the media without the
consent of the Defence Ministry and
for sharing confidential information
on his transfer order with the media
without the consent of the Armed
Forces Council under Section 51 of
Armed Forces Act 1972.
On Dec 15 last year, the military
court hearing the case of Major
Zaidi in the indelible ink issue, dismissed a request for a postponement of the case pending a judicial
review application, saying the case
had dragged on “for so long”.
The panel led by Col Saadon said
the authorities had instructed them
not to delay the case any longer as
much time and money had already
been spent.
Defence counsel Nasar Khan
Mirbas Khan then informed the
panel that Major Zaidi and his defence team would not participate
any further in the court martial
proceedings as they had chosen
to remain silent.
The authorities had previously
decided to retain the same panel
after hearing an application from
the defence to dissolve the bench.
The defence complained that
they had discovered that Col Saadon had posted an “unfavourable
comment” against the accused in
an article in a news portal.
Col Saadon had allegedly responded to a news report by saying
that Major Zaidi should be a rubber tapper if he did not like being
in the military.
“Fairness has been compromised. Our client doesn’t want
the presiding officer on the case
to stay,” Hanipa Maidin, the defence’s leading counsel had said
in a news report on Nov 5 last year.
The five-member panel then
decided to hand the matter to the
court martial’s convening authority, as it was the only body that
could decide if the panel should
be dissolved.
Col Saadon allegedly made the
comment using a Facebook account
under the name of Saadon Tson.
The comment was in response
to an article “Peguam: Kesalahan
Mejar Zaidi hanya kerana berani”
(Lawyer: Major Zaidi charged for
being courageous) published in
Malaysiakini in its Bahasa Malaysia
section on Oct 20 last year.
The user named Saadon Tson
had said: “klu tak nak jd tentera
duk kampung motong getah je”
(If you don’t want to be in the military, then stay in the village and
tap rubber).
Hanipa said the comment was
noticed after Major Zaidi had
lodged a complaint with the commander of the Air Force Division
at its headquarters in Sungai Besi.
The authorities recently decided
to retain the panel for the case after
hearing the defence submission on
the matter. — The Malaysian Insider
Why the green lung next to your condo won’t last
BY JEN N I FER GOMEZ
KUALA LUMPUR: Returning from
Australia to settle here, Ashok Gorasia sought a quiet, green haven away
from the concrete jungle that suburbs in Petaling Jaya, Selangor, and
the outlying areas of Kuala Lumpur
were fast turning into due to a spurt
in high-rise development projects.
So, he bought the first property
he viewed in Damansara Perdana,
Petaling Jaya — taken in by the view
of lush greenery and the morning
mist on a neighbouring hill from his
15th floor duplex condominium.
Now, the hill view is gone and
when he looks out of his Armanee
Terrace unit, all he sees are concrete
structures being built on the once
green slope.
“When the property agent showed
us our unit, my wife said it was the
perfect place as she looked out and
saw the wonderful green view.
“We were also told that the hill
would be maintained as it was part
of the master title of the land where
our condos are,” he said.
Later, they found that while there
was one land title number in their
sales and purchase agreement, the
30ha of land their condo stands on,
was sub-divided into three lots, one
lot was sold to another developer,
another lot is slated for a 48-storey building, and the third is for
extended development of Armanee Terrace.
Now, they have to put up with
daily pollution from the ongoing
construction barely 20m from
their corridors, and worry about
the dangers posed by cranes and
machinery surrounding their condominium.
Such scenarios happen, said
lawyer and town planning activist Derek Fernandez, because the
policy of spreading development
across a wider area and away from
existing high density areas is often
disregarded.
This principle is behind the National Urbanisation Policy passed
in 2005 which is meant to ensure
sustainable development.
But developers’ proposals, in
which new projects rely on existing infrastructure to generate larger
sales margins, have only ended up
squeezing development into already
overcrowded areas, the former Petaling Jaya city councillor said.
Demand is just too good, as figures from the National Property Information Centre (NAPIC) show. In
Kuala Lumpur, for the second quarter of 2014 only 854 units, worth
RM1.29 billion, of a total of 5,031
condominiums and apartments
launched, were left unsold. In Selangor, there were only 620 units,
worth RM688 million, not sold, out
of 4,655 launched. Future developments of 12,394 condominiums and
apartments in Kuala Lumpur and
13,805 in Selangor were planned
in the same period.
With the good take-up of properties, it’s probably wishful thinking for owner-occupier buyers like
Ashok to expect that no more new
projects will sprout up on empty
land nearby, or even on a hill, in
their vicinity.
From Malaysian Institute of
Planners president Md Nazri Mohd
Noordin’s perspective as a town
planner, however, the cramming
of new projects in already dense
areas is not due to a lack of planning but is a mismatch between
“needs” and “wants”.
“Property development is
based mainly on the private sector’s ‘wants’ which do not meet
the ‘needs’ of the growing urban
population. For example, there are
more high-end properties being
Instead of beautiful greenery, Ashoknow sees patches of barren landscape when he
looks out of his condominium. Photo by Ashok Gorasia
developed which are beyond the
affordability of the majority of our
population,” he said.
Property sales figures do show
that developers focus more on
building higher-end condominiums, with the take-up rate getting
better as the price gets higher.
Part of the problem also lies with
decision-makers who fail or refuse
to heed the advice of town planners,
Nazri said.
Planners would always take
into account surrounding developments, prevailing national, state
and local development policies and
guidelines, when making development proposals.
Statutory requirements meant to
control the development planning
process require the planner to prepare reports with all these considerations to accompany layout plans.
This is necessary to get project approval from the local authorities.
“However, the final decision
lies in the hands of the local authorities and their councillors, but
some decisions may be influenced
by external factors, which include
the lobbying power of developers.
“There must be stricter enforcement to ensure adherence to existing laws and guidelines and a more
efficient system of governance to
effectively manage our cities, as well
as to lessen the influence of the big
‘P’,” he said, referring to politics or
the lobbying power of developers.
Still, Nazri disagreed that main
urban areas such as Kuala Lumpur and Petaling Jaya are suffering
from “haphazard” development.
“Haphazard” would mean a lack
of order or planning, he said, and
town planning laws have been in
existence since 1923.
He added that local authorities
also have their statutory development plans, in the form of structure
plans and local plans, prepared under
the Town and Country Planning Act
1976, to guide and control development within their respective areas.
“One cannot say that development is out of control. However,
the current pace of development is
arguably not sustainable because
one aspect of development, namely property development, has not
been matched by the corresponding needs to enhance and improve
the supporting public infrastructure,” he said.
Such infrastructure includes accessibility and traffic management,
mass public transport, recreational
facilities and public parks, and other public facilities, he said.
Fernandez echoed this view, saying policymakers are wrong to treat
the Klang Valley as if it were Hong
Kong or Singapore and to follow development models in these places.
It is like “comparing a Kancil to
a Ferrari” because Singapore and
Hong Kong have far better levels
of infrastructure, he said.
“They can only justify the comparison if they show the level of
transport infrastructure that Singapore and Hong Kong have.
“We don’t have anything like
them and yet we allow development
to carry on, taxing the existing infrastructure and causing the problems we face today, which include
shortage of water, pollution, flash
floods and an increase in diseases,” he said.
While this might sound like
“overdevelopment” to most people, Nazri stresses that the term
is relative to how well a city can
accommodate population and development growth. Sustainability is
not static, he said, and is not determined by the size of a city but its
ability to provide adequate support
and control over the forms, development types and needs within it.
Existing laws and guidelines are
all there, he said, and what is needed is “a more efficient system of
governance”, not only to manage
Malaysian cities, but to reduce the
lobbying power of influential developers. — The Malaysian Insider
14 H O M E
Indonesian divers retrieve
AirAsia flight data recorder
Lawyer lodges
report over
death threats
in Jakim
tweet
BY S H AUN LO W
Officials hope the black box will reveal the cause of the crash
SURABAYA: A team of Indonesian
navy divers retrieved yesterday one
of the two black boxes from an AirAsia airliner that crashed two weeks
ago, killing all 162 people on board,
a government official said.
“At 7.11am, we succeeded in lifting the part of the black box known
as the flight data recorder,” Fransiskus Bambang Soelistyo, the head
of the National Search and Rescue
Agency, told reporters at a news
conference.
The second black box with the
cockpit voice recorder has been
located, based on pings from its
emergency transmitter, but not
yet retrieved, Madjono Siswosuwarno, the main investigator at
the National Transportation Safety
Committee, told Reuters.
Officials hope the black box,
which was found under the wrecked
wing of the plane, will reveal the
cause of the crash. The national weather bureau said seasonal
storms were likely a factor.
Investigators said the recorder
Military policemen carrying the flight data recorder of AirAsia QZ8501 at the airbase in
Pangkalan Bun, Central Kalimantan yesterday. Photo by Reuters
would most likely be taken to the
capital, Jakarta, for analysis and it
could take up to a month to get a
complete reading of the data. Officials did not provide details of the
condition of the black boxes.
“The download is easy, probably
one day. But the reading is more
difficult ... could take two weeks to
one month,” Siswosuwarno said.
Over the weekend, three vessels detected “pings” that were
believed to be from the black
boxes’ emergency locator transmitter. But strong winds, powerful currents and high waves
hampered search efforts.
Indonesian navy divers took advantage of calmer weather in the
Java Sea yesterday to retrieve the
flight recorder and search for the
fuselage of the Airbus A320-200.
Forty-eight bodies have been
retrieved from the Java Sea and
searchers believe more will be
found in the plane’s fuselage.
“All the ships, including the ships
from our friends, will be deployed
with the main task of searching for
bodies that are still or suspected to
still be trapped underwater,” Soelistyo said, referring to the multinational force helping in the search
and recovery effort.
Separately on Sunday, a DHC-6
Twin Otter operated by Indonesia’s
Trigana Air crashed on landing at
Enarotali Airport in Paniai, Papua.
Strong winds caused the aircraft
to roll over, domestic news website
Detik.com reported, with no injuries to the three crew members on
board. The plane was not carrying
any passengers. — Reuters
Armed forces
chief: Join
fight against
terrorism
MIC must get a total makeover
or become irrelevant
KUALA LUMPUR: Armed Forces
chief General Tan Sri Zulkifeli Mohd
Zin has taken the battle against terrorism to the people.
He said the people should be alert
and sensitive to their surroundings,
and be the “eyes and ears of the government” to check on activities in
their neghbourhood which might
be linked to terrorism.
Such an approach was one of the
preventive measures to assist the
government in nipping such terrorist
activities in the bud, he said.
“Security forces cannot be at every
nook and corner of the country, especially in the interiors which could be
used as training venues for terrorist
activities.
“People with information or who
have suspicions of terrorist activities
should report the matter to the authorities or the nearest police station,”
said Zulkifeli.
He was speaking to reporters
after handing over a flag to Armed
Forces shooting team manager Lt
Kol Nubli Hashim at the Transit
Camp Hall in Jalan Padang Tembak here yesterday.
Nubli will lead a team to participate in the triennial Brunei International Skill-At-Arms (Bisam) championship scheduled for Jan 14 to 30.
The event is aimed at promoting
relations and cooperation among
participating countries. — Bernama
AS the MIC seems stuck in a quagmire that it may find difficult to
escape from, the rifts in the party
appear to be getting wider as the
days go by.
With the clock ticking towards
the deadline for re-elections set by
the Registrar of Societies (RoS), party president Datuk Seri G Palanivel
seems ever more isolated as hardly
any leaders, at least publicly, have
come to his defence.
Reeling from what seems to be
coordinated attacks from various
fronts, the situation now looks like
as if Palanivel is against everyone
else within the party and also from
outside the party.
One of his most outspoken critics, former Youth Chief Datuk T Mohan, had led the group that pressed
the RoS to investigate the irregularities in the 2013 party polls, resulting
in re-elections being ordered after
more than a year.
Many within the MIC believe
that for the RoS to make a decision
against the current leadership, it
must have the tacit approval of the
prime minister as the party is one
of the cornerstones of the Barisan
Nasional coalition.
Armed with this belief, some
now feel that Palanivel has fallen out of favour with the PM and
change is now imminent.
“It’s just a matter of time! But
BY V SHANK AR G ANE S H
never underestimate a wounded
tiger,” warned a senior MIC leader.
“Palanivel is a master politician
and some even say he is much more
skilful than [Datuk Seri] Samy Vellu in getting rid of his opponents,”
he said.
The veteran leader said Palanivel
is capable of pulling the rug from
beneath everyone else and may just
survive this political imbroglio and
emerge even stronger.
This is exactly what is believed
to have happened to former party secretary-general A Prakash
Rao. A strong ally of Palanivel, it
is believed that he was removed
from his post barely an hour after
meeting the president to discuss
party matters.
It is said that he learned of his
sacking only from online media
reports.
However, many lambasted the
sacking of Prakash, saying Palanivel
himself did not know about it and
that it was engineered by his wife
Datin Seri R Kanagam.
Palanivel denied this, saying his
family was not involved in running
the party and labelled it as a “below
the belt” blow.
Another front opened up when
his deputy Datuk Seri Dr S Subramaniam claimed he was unaware
of some developments in the party
involving the RoS.
He was taken aback by Palanivel’s revelation that he had already
met with the RoS director-general
(DG) despite publicly saying that
they would be meeting him together.
Vice-president Datuk M Saravanan then revealed that Palanivel
met the DG with a lawyer and also
Petaling Jaya Selatan MIC division
chief Senator Datuk V Subramaniam on Dec 24.
Palanivel also handed a letter to
the RoS, raising some concerns about
the lack of collective decision-making
relating to party affairs.
This infuriated many, who felt
that even the deputy president
was left out of such an important
meeting, Palanivel must be up to
something.
Subramaniam said he had no
indication of the contents of the
letter and was also not aware that
the Ros replied on Dec 31 to the
issues raised in the letter.
“I am also not aware that the
MIC responded to that letter on
Jan 2, requesting for an extension
of time,” he said.
Subramaniam said he had urged
Palanivel to speed up the formation
of a special committee to resolve
the issue but had failed to meet him
despite many requests.
“I have been bombarded with
many questions from members.
Frankly, I don’t have the answers
to these and many other questions
directed at me. Only the president
knows the answers,” he said.
KUALA LUMPUR: Concerned about
death threats on the online media,
human rights lawyer Eric Paulsen
has lodged a police report at the
Petaling Jaya police headquarters.
Paulsen said he had been receiving a backlash from netizens after his
tweet on Sunday, criticising the Malaysian Islamic Development Department (Jakim) for promoting extremism via Friday sermons, went viral.
He said yesterday that he had
not meant to insult Islam when
criticising Jakim.
“I have never referred to the religion of Islam in my tweet. I only
criticise Jakim as an agency under
the Prime Minister’s Department,”
the co-founder of Lawyers for Liberty, told reporters yesterday.
The sermon is a
requirement in Friday
prayers which is
delivered orally and
carries educational
elements to give
advice on religion, to
give inspiration and to
create consciousness.
Paulsen said he was surprised
to have been accused of criticising
Islam because of the posting.
“When I said Friday, I meant it in
the general sense,” he said, adding
that he had been receiving threats on
social media sites such as Twitter and
the WhatsApp messaging service.
Among the threats, he said, they
included “You should be dead by
now” and “Nak kena cincang mamat
ni” (This guy is going to be slashed).
Paulsen took down the tweet
following the backlash.
Meanwhile, his lawyer Latheefa Koya said they considered the
threats serious matters.
“These messages are very serious. The police must take immediate action,” she said.
It was reported that Inspector-General of Police Tan Sri Khalid Abu Bakar
said Paulsen would be investigated
under the Sedition Act 1948.
Minister in the Prime Minister’s
Department Datuk Seri Jamil Khir
Baharom denied Paulsen’s claim,
saying that Friday sermons have
never encouraged extremism or
violence as alleged.
On the contrary, he said, the
sermon is a requirement in Friday
prayers which is delivered orally and
carries educational elements to give
advice on religion, to give inspiration and to create consciousness.
“It also conveys the national policies and current issues among the
Muslims. Can the reminders among
the Muslims be construed as extreme?” he said, adding that the
allegation linking Jakim with extremism was an irresponsible act
which should be viewed seriously.
16 C O M M E N T
Can China deliver on Asia?
Markets continue to doubt positive policy outcomes
BY MI C H A EL I VA NOV ITCH
F
inancial markets are focusing on China’s moderating economic growth
and on its ability to manage compositional changes of its aggregate demand and alleged excesses in some
sectors that may have benefited from
administered credit flows.
Beijing’s assurances that these
problems are being addressed have
registered, but markets continue to
doubt positive policy outcomes, despite indicators showing that policies
are moving activity and structural
changes in the right direction. These
doubts persist even after a 60% increase of Chinese equity prices in the
course of last year.
Broader market trends in Asia are
also missed because this fastest growing segment of the world economy
— and by far the world’s largest capital exporter — is incorrectly seen as
being entirely dominated by external
economic and financial events.
All this, in my view, stems from
improper attention being paid to intra-Asian economic relations, where
China, Japan, India and South Korea
give the region an increasing influence in shaping the global business
cycle and international capital flows.
China and Japan — the secondand the third-largest economies in the
world — could soon turn the page and
enter a more constructive relationship. Their slowly thawing tensions
are Asia’s most important political
and economic development to watch
in the months ahead.
The stakes for Japan could hardly be higher. A restoration of Japan’s
strong trade and investment ties with
China may well be the missing piece
that could help to set the economy on
a steady and sustainable growth path.
Stronger exports to China, for example, would raise capacity utilisation rates in Japan’s manufacturing
sector, which represents one-fifth
of the economy. That would trigger
capital outlays, employment growth,
rising incomes and stronger household spending, generating a typical
Japanese export-led recovery.
Sadly, not much of that is happening at the moment. In the first 11
months of last year, Japanese exports
to China fell 1.3% from the year earlier. With exports to China accounting
for about 20% of Japan’s total sales
abroad, it is not surprising that the
growth of Japanese business investments virtually ground to a halt during the first three quarters of last year.
Equally worrying are Japan’s dwindling direct investments in China.
In the first nine months of last year,
Japanese companies invested US$4.5
billion (RM15.975 billion) in their
Chinese production facilities. That is
less than half of what they invested in
China during 2013, and only one-third
of their investments in China in 2012.
The time profile of these Japanese
trade and investment transactions
with China closely coincides with
the sharp deterioration of the two
countries’ political relations.
This year may hold a promise of
better ties. Both countries have made
steps in that direction. China has accepted Japan’s overtures last November with regard to competing territorial claims in the East China Sea, and
it now seems that events are moving
toward some sort of compromise.
Last month’s resounding election
victory of Japan’s governing Liberal
Democratic Party (LDP) gives it a
strong mandate to pursue a more
constructive dialog with Beijing.
China also seems ready to reciprocate. China’s President Xi Jinping
told the 10,000 people gathered at the
ceremony of the 77th anniversary of
the Nanjing Massacre (atrocities committed by Japan’s occupying forces
in 1937) last December that China
should not “bear hatred against an
entire nation just because a small
minority of militarists launched aggressive wars.”
Hostile inter-Korean relations
are another obstacle on the way to
a stronger economic development
in Northeast Asia. China and Japan
could help with contacts between
Seoul and Pyongyang.
China, in particular, could use its
strong trade and investment ties with
Seoul and its “special” relationship
with Pyongyang to reduce tensions
between estranged Korean cousins.
That will be tough, though. But it
does seem that Koreans want to talk
about a broad range of economic,
social and security matters.
Snarled up by overlapping territorial claims along their 3,500km frontier, the Chinese-Indian relations also
looked hostile and crisis-prone until
both countries agreed to move on.
Who would have thought, for example, that instead of trading bullets
and military incursions into contested areas, Chinese and Indian border
guards would be holding together a
New Year party last week?
That unexpected bonhomie is an
interesting sequel to Chinese President Xi Jinping’s visit to India last
September. Sporting an impeccably
tailored white kurta, Xi celebrated
Indian Prime Minister Modi’s 64th
birthday in Ahmadabad, the capital
city of the state of Gujarat, where his
host earlier served as chief minister.
The key points of a Sino-Indian
deal involve a settlement of border
problems and China’s large infrastructure investments — about US$20
billion only in Indian railways. These
investments would partly compensate
for China’s trade surplus with India,
which amounted to US$36.2 billion
in India’s fiscal year 2013-14.
Both issues are under active consideration. China’s Foreign Minister
Wang Yi announced during his visit
to New Delhi in early June of last year
that Beijing was ready to settle border
issues — a signal that China was eager
to open up big investment and trade
flows with India.
China’s broadening economic
transactions with the rest of Asia form
a strong regional investment platform.
Political and security problems in
Southeast Asia and on the Korean
Peninsula are serious obstacles to a
faster economic development, but
there are important moves currently
under way in both areas that should
be watched.
Asian economy is part of China’s
development strategy. That is an objective where China won’t fail to deliver. — CNBC
For more, visit www.cnbc.com
Putin in denial
REUTERS
BY A ND ERS A SLUND
AS 2014 came to a close, an enormous
financial crisis erupted in Russia.
World oil prices had fallen by almost
half since mid-June, and the ruble
plummeted in December, finishing
the year down by a similar margin.
Russia’s international reserves have
fallen by US$135 billion (RM479.25
billion), and inflation has reached
double digits. Things are only going
to get worse. The current oil price
will force Russia to cut its imports
by half — a move that, together with
the continuing rise in inflation, will
diminish Russians’ living standards
considerably. Add to that ever-worsening corruption and a severe liquidity freeze, and a financial meltdown,
accompanied by an 8% to 10% decline
in output, appears likely.
Russia’s ability to negotiate its current predicament hinges on its powerful president, Vladimir Putin (pic).
But Putin remains unprepared to
act; in fact, so far, he has pretended
that there is no crisis at all. In both
of his major public appearances in
December, Putin carefully avoided
any reference to the economy. But,
with the economy in free fall, Putin
cannot pretend forever. And when he
finally does acknowledge reality, he
will have little room for manoeuver.
Of course, Putin could withdraw
his troops from eastern Ukraine,
thereby spurring the United States
and Europe to lift economic sanctions
against Russia. But this would amount
to admitting defeat — something that
Putin is not prone to do. Likewise,
short of initiating a major war, Putin has few options for driving up oil
prices. Moreover, even before the oilprice collapse, crony capitalism had
brought growth to a halt — and any
serious effort to change the system
would destabilise his power base.
In fact, Putin’s leadership approach seems fundamentally incompatible with any solution to Russia’s
current economic woes. Though accurate and timely statistics on Russia’s
economy — needed to guide effective
measures to counter the crisis — are
readily available to the public online,
Putin claims not to use the Internet.
Instead, the journalist Ben Judah
reports, Putin receives daily updates
on Kremlin politics, domestic affairs,
and foreign relations from his three
key intelligence agencies. His actions
suggest that he considers economic
data to be far less important than
security information.
To be clear, there is no dearth of
economic expertise among Russian
policymakers. The problem is that
policymaking is concentrated in the
Kremlin, where economic expertise
is lacking. Indeed, the last of the economic heavyweights — all of them
holdovers from the 1990s — in Putin’s
personal circle was Alexei Kudrin,
who resigned as Finance Minister in
2011. Unlike in the US, none of Russia’s top economic managers sits on
the National Security Council.
Putin has usurped authority not
just from his more knowledgeable colleagues, but also from the
prime minister, who has traditionally served as Russia’s chief economic
policymaker. Indeed, since Putin
returned to the presidency in 2012,
Prime Minister Dmitri Medvedev
has been all but irrelevant.
In short, Putin — who is no economic expert — makes all major economic policy decisions in Russia. As a
result, Russian economic policymaking is fragmented and dysfunctional.
Nowhere is this lack of coordination more obvious than in the
sensitive currency market. In Russia, unlike in most other countries,
the central bank does not retain the
exclusive right to intervene. When
the ruble tumbled in December, the
finance ministry — which holds
almost half of Russia’s foreign reserves, US$169 billion, in two sovereign-wealth funds — deemed
the central bank’s intervention to
be insufficient. So it announced
that it would sell US$7 billion from
its reserves to boost the ruble — a
move that caused the exchange rate
to overshoot on the upside.
When the exchange rate plum-
As hard as the finance ministry
may try to balance expenditures and
revenues, it lacks the needed political
weight. Last year, the central government delegated more education and
healthcare expenditures to regional
bodies, without allocating more resources — and there was nothing
anyone could do about it.
If Putin wants to save Russia’s
economy from disaster, he must
shift his priorities. For starters, he
must shelve some of the large, longterm infrastructure projects that he
has promoted energetically in the
last two years. Though the decision
in December to abandon the South
Stream gas pipeline is a step in the
right direction, it is far from adequate.
Likewise, Putin should follow Finance Minister Anton Siluanov’s sensible recommendation to cut public
expenditure, including on social programmes and the military, by 10%
this year. But experience suggests
that Putin is unlikely to do so.
Russia faces serious — and intensifying — financial problems.
But its biggest problem remains
its leader, who continues to deny
reality while pursuing policies and
projects that will only make the situation worse. — Project Syndicate
meted again, the Kremlin urged the
five largest state-owned exporting
companies to exchange a portion
of their assets into rubles, leading
to another overshoot, followed by
yet another sharp decline. Clearly,
such uncoordinated interventions
are exacerbating currency-market turmoil, with the ruble’s value
fluctuating by 5% — and as much
as 10% — in a single day.
Russia’s fiscal situation, determined by Putin’s arbitrary budget
management, is hardly better. Putin’s
priorities are clear: first come the military, the security apparatus, and the
state administration; second are the
major infrastructure projects; social
expenditures (primarily pensions),
needed to maintain popular support, Anders Aslund is a senior fellow at the
come last. Suddenly, oil revenues are Peterson Institute for International
no longer sufficient to cover all three. Economics in Washington, DC.
18 F E AT U R E
REUTERS
Li Ka-shing converts to
shareholder value religion
Separating property assets from rest of conglomerate
BY U NA GA L A NI
A
sia’s richest man
has embraced a
new faith. Li Kashing (pic) is splitting his empire into
two, separating his
property assets which are mostly
in Hong Kong and China from the
rest of the global ports-to-telecomto-retail conglomerate.
The rejig should help to shrink
the group’s persistent stock market
discount, allowing Li to leverage up
the real estate business, and pay
higher dividends. It’s a long-overdue acknowledgement that there
is value to unlock.
Shareholders of Cheung Kong
— Li’s US$37 billion (RM131.35
billion) holding company — will
swap their shares for a new vehicle registered in the Cayman Islands. It will then absorb its 50%
subsidiary Hutchison Whampoa.
The combined group will spin off
its property assets, which will be
loaded with an additional US$7.1
billion of debt. Relocating to the
Cayman Islands gives both compa- shareholders into line with the Li
nies greater flexibility to distribute family, which has enjoyed the best
cash to shareholders.
returns in recent years.
Conspiracy theorists will interSee related story on Page 22
pret the restructuring as a move
away from the group’s roots in Hong
Li reckons that removing a tier Kong real estate, and lack of confifrom Cheung Kong’s cascading dence in the former colony. Yet Li
structure of interlocking subsidi- is hardly selling up. He will remain
aries will release value. At its clos- chairman of both companies, with
ing price on Jan 9 — before the his son Victor as his deputy, and
plan was announced — the compa- the family will own 30% of each
ny’s market capitalisation was 24% business.
below last June’s book value. The
Nevertheless, Li’s belated consimpler structure brings external version to shareholder dogma is
still a surprise. In more than four
decades at the helm of a listed company, the 86-year-old tycoon has
shown more interest in keeping a
grip on his empire than in maximising its stock market value.
He could go further.
After the reshuffle, CKH Holding
will still own stakes in everything
from Singapore-listed Hutchison
Port Holdings to Toronto-listed
Husky Energy.
If Li is serious about unlocking
value, there will be further reshuffles to come. — Reuters
Lessons from Uber
BY SUMIT AGARWAL
REMEMBER when getting a taxi
meant calling a despatcher or
standing by the roadside waving
your arms frantically in the hope
of catching the eye of a passing
cabbie?
Today, many of us turn instead
to our smartphones to quickly and
conveniently hail a ride.
Indeed, we have seen a profusion of taxi apps in this region. From
San Francisco-based Uber to Malaysia-founded GrabTaxi (MyTeksi),
we also have Easy Taxi from Brazil
and London-born Hailo, which
recently debuted its service in Singapore.
As well as established taxi firms
developing their own apps, dozens of other firms have sprung up,
promising to match our transport
needs with the drivers to service
them.
The ubiquity of affordable smartphones and cheap, always-on mobile data, combined with a critical
mass of tech-savvy consumers has
been the key enabler; while the
speed with which consumers have
taken to these apps shows there is
certainly a demand for this kind
of service.
Among these newcomers promising to reshape the urban transportation market, Uber is easily
the most high profile, for reasons
both good and bad.
As well as allowing users to book
regular taxis, Uber has also crafted
a new business model, taking on
the taxi firms by acting as an intermediary to connect private hire
drivers in an emerging sub-industry
dubbed “ride sharing”.
US$40 billion valuation
As a disruptive tech startup, Uber
has taken on its mission with an enthusiastic — some might say abrasive — zeal. Using none-too-flatter-
ing language, it has made no bones
about its full frontal assault on the
established, and in many cases
highly-regulated, taxi industry.
Uber’s argument is that the entrenched taxi order — as it is practised in much of the world — unnaturally restricts competition, reduces
consumer choice, encourages poor
service and puts a stranglehold on
economic opportunity for drivers.
In short, it sees the taxi trade as
flabby and outdated.
Founded in 2009, Uber’s most
recent fundraising round valued the
company at around US$40 billion,
placing it on a par with Delta, the
world’s largest airline with a heritage going back 80 years.
That is not bad for a five-yearold firm that is essentially an app
and little more.
Indeed, by creating a whole new
transport market — aiming to provide a faster, more convenient and
cheaper service than long-established players — Uber is to be commended.
But while this mega-valuation
naturally grabs headlines, what it
means in reality is unclear.
Roadblocks ahead
Uber, as its name perhaps suggests,
has grand ambitions and says it wants
to reshape the way cities work. Its
next round of expansion, it says, will
be focused on building its presence
here in Asia.
But is it already coming up against
roadblocks?
Reports in recent months have
seen Uber faces a series of legal challenges and protests from transport
regulators and taxi unions, with authorities in Madrid and Bangkok ordering a halt to Uber’s services.
The firm has also been banned
from operating in some states and
cities even in the United States — a
nation usually seen as most welcoming to disruptive technologies.
At the same time, Uber’s management has been accused of a “frat boy”
approach to business, allegations of
operations.
And there is the need to incorporate Uber and other similar services
into urban transportation planning.
Leaving Uber and its kind to
operate as free agents, unencumbered by such obligations, undermines the effectiveness of such
planning.
There will need to be some kind
of meeting of minds between regulators and the upstart Ubers of
this world.
In Singapore, this is already happening, with new rules on appbased services due to take effect
this year. Regulators elsewhere,
meanwhile, are wrangling with their
own issues over how to respond.
Uber’s argument is that the entrenched taxi order — as it is practiced in much of the
world — unnaturally restricts competition, reduces consumer choice, encourages poor
service and puts a stranglehold on economic opportunity for drivers.
underhand tactics against competing
service providers, and what critics say
is a cavalier approach to the norms
of corporate responsibility.
Uber’s business model is essentially to be the ultimate outsourcer. It
needs few staff to operate, but creams
off a cut for each journey from its
thousands of freelance drivers around
the world.
The critical point, the firm argues,
is that it is not a transportation service.
Instead, Uber says, it is a service —
an app — that brings people to the
market place. It operates by matching
demand (passengers) with supply
(drivers) and beyond that, Uber argues, its responsibility ends.
It does not own the cars or employ
the drivers therefore, it argues, it is
legally not subject to the regulations
that apply to traditional taxi firms.
It is a subtle but important distinction, and one most consumers
are probably unaware of.
For example, customers who opt
to use Uber’s ride-sharing service
rather than a standard licensed taxi
might find they get a cheaper and
quicker service, but with a driver and
vehicle that are not subject to the
same regulator-monitored security
and safety checks.
Uber’s approach to date has been
to go for rapid expansion and worry
about regulation later. But as it grows,
the question arises as to whether
waiting until something goes wrong
before acting is the right approach.
Safety and security
While Uber’s argument over the
limits of its responsibility may legally hold water, at least for the time
being, the regulatory framework in
various countries will have to catch
up with this new reality.
This is not only for reasons of
customer safety and security —
although this is undoubtedly important. Customers should, at the
least, expect that their drivers aren’t
criminals and have adequate insurance.
There are also key issues surrounding accurate taxation, especially in a business that commonly involves cash transactions
and which inherently makes use
of public roads as a basis for their
Just the tip of iceberg
But we should take from this some
important lessons. Not least that
the taxi industry is far from the
only business ripe for an Uber-style
shake-up.
Indeed, as technology develops,
we should expect to see this kind
of app-based intermediary service
emerge in virtually any industry,
disrupting existing business models and recalibrating established
norms with similar implications
for regulatory response.
We are seeing it already in the
financial sector, where non-banking actors are acting as intermediaries matching those with capital
to those that need it.
We might well even see it in my
own trade — education — with students needing tutoring on specific
subjects being matched up with
professors anywhere in the world
willing to teach them.
Uber, then, may just be the tip
of the iceberg.
Sumit Agarwal is Low Tuck Kwong
Professor of Finance at the National University of Singapore Business
School. This article was first published on the school’s Think Business portal (thinkbusiness.nus.edu).
W O R L D B U S I N E S S 19
Singapore rate spike to
weigh on property prices
Hike driven by stronger US dollar and new liquidity requirements for banks
BY POOJA THAKUR
SINGAPORE: A sudden new-year
jump in Singapore interest rates
threatens to push up mortgage costs
and steepen a slide in home prices.
The three-month Singapore interbank offered rate, against which
most home loans are benchmarked,
has risen 18 basis points to 0.6392%
this year to the highest since April
2010, driven by a stronger US dollar
and new liquidity requirements for
Singapore banks.
Short-term interest rates may
head toward 1% this year as a resurgent US economy could spur the
US Federal Reserve to raise borrowing costs, according to United
Overseas Bank Ltd and Maybank Filepic of a residential condominium project in Singapore. Home prices may fall a further
Kim Eng Research Pte. A stronger 10% by mid-2016, while short-term interest rates could top 1% this year. Photo by Reuters
greenback is also making US dollar-denominated debt raised by outstanding mortgage debt, posted interest rates could top 1% this
Singapore banks more expensive a 4% drop in home prices last year. year, more than double the level
to service. The island, which has
Home prices may fall a further in 2014, said Vishnu Varathan, an
S$177 billion (RM471 billion) of 10% by mid-2016, while short-term economist at Mizuho Bank Ltd in
RBS said to weigh sale of Asia
corporate banking business
BY RI CHA RD PA RTINGTON
& B RI A N FOWL ER
LONDON: Royal Bank of Scotland
Group plc (RBS) is looking to put
most of its Asian corporate banking business up for sale, according
to a person with knowledge of the
discussions.
Chief executive officer Ross
McEwan, 57, held a series of
meetings in Singapore yesterday to consider ways to scale back
the lender’s Asian business, said
the person. The lender said last
month that it’s shutting its Japanese trading business.
Since taking over in 2013, McEwan has been selling units and
cutting jobs outside of the United
Kingdom as he seeks to focus on
the bank’s domestic market to help
reverse six straight annual losses.
The bank has about 2,000 employees in the Asia-Pacific region
that could be affected, said the person with knowledge of the matter.
RBS would probably keep some
operations in Singapore offering
clients dollar, euro and yen fixed-income products, the person added.
RBS’ corporate and institutional banking division is led in
the Asia-Pacific region by Pierre
Ferland, who is responsible for
a 10-country network offering
clients foreign exchange, interest
rates, fixed income, debt capital
markets and transaction services. — Bloomberg
Singapore. “About 30% to 40% of
the price decline could come from
the interest rate effect,” he added.
Every percentage point increase
in interbank rates raises repayments on a S$1 million property
by 12%, assuming an 80% loanto-value ratio and a 25-year loan
duration, according to calculations
by Maybank Kim Eng.
Most Singapore lenders reset
their variable mortgage rates every
three months, so the full effect of
the latest rate increase won’t be felt
until the second quarter.
Government measures imposed
since 2009 to cool the property market will help cushion the effect of
rate increases on borrowers, according to Varathan at Mizuho.
The most stringent restriction, in
effect since June 2013, prevents
borrowers from taking on mortgages that push their total debt
servicing costs above 60% of their
income. — Bloomberg
US$3.8b funds for
Indonesia state firms
BANDUNG: Indonesia will inject
48 trillion rupiah (US$3.8 billion
or RM13.5 billion) this year into
state-owned enterprises mainly
in the infrastructure sector as the
government’s move to slash fuel
subsidies will give it more fiscal flexibility, the president said yesterday.
The funds will be allocated to
state companies such as port operator PT Pelabuhan Indonesia,
construction firm PT Wijaya Karya Tbk, railway operator PT Kereta
Api Indonesia and airport operator PT Angkasa Pura, Indonesian
President Joko Widodo, or Jokowi,
told reporters.
“After we redirect the fuel subsidies, there’s a lot of fiscal room
in our budget,” Jokowi said. Once
funds are injected into state enterprises, they will be able to leverage
on their enhanced equity to get
bigger bank loans, he added.
Indonesia’s new administration,
which took office in October, will
also allow state-owned firms to use
their profits for capital expenditure
instead of sharing it with the government in the form of dividends.
Local media had previously reported the government’s plan to
direct more funds into state enterprises. — Reuters
Proxy fight as much about Peltz’s Trian as DuPont
BY KEVI N A L L I SON
CHICAGO: Nelson Peltz’s latest
proxy fight will resonate beyond
its immediate target, DuPont. The
billionaire activist’s Trian Partners
is seeking four director seats at the
venerable chemicals group, its first
public battle since squeezing onto
Heinz’s board nine years ago. Flexing muscle sends a message to other stubborn targets, like PepsiCo.
It also gives Peltz’s potential successors experience in the trenches.
It’s been over three months since
Peltz, 72, and his partners went
public criticising DuPont’s performance under chief executive Ellen
Kullman, and 18 months since the
activist fund started holding private
conversations with the company.
Trian wants DuPont to cut bureaucracy and invigorate performance by breaking itself up, a strategy Peltz has successfully pushed
at other targets including Ingersoll
Rand, Cadbury Schweppes and
Kraft. DuPont says it’s happy with
its strategy and that Trian’s criticism is misplaced, arguing its total
shareholder return has bested that
of both the S&P 500 Index and a
gaggle of industrial and chemical
companies since the end of 2008.
But that hasn’t swayed Trian.
It’s a heady period for sharehold-
er activism, yet while other uppity
investors have waged successful
proxy battles at the likes of Sotheby’s, Darden Restaurants and Cliffs
Natural Resources, such a public
fight is a departure for Trian.
Peltz and his founding partners,
Peter May and Ed Garden, have a
reputation as savvy operators and
tend to be seen as a constructive
presence in boardrooms, a goal
they’ve managed to achieve in recent years through a combination
of public prodding and private suasion.
It’s important to flex a little
muscle once in a while, though.
Proxy fights can be bruising affairs,
and even experienced operators
may run the risk of atrophy after
a near-decade lull. Going to the
mattresses also sends a signal to
other Trian investments, like softdrink maker Pepsi, that the firm’s
patience is not infinite. It will also
give younger members of Peltz’s
team, including his son Matthew,
who joined in 2008, useful experience on the front lines of a boardroom tussle.
Trian may be more focused on
the potential financial benefits
it sees from pushing its strategy
though. But the longer-term fringe
benefits of a successful proxy battle
would be substantial. — Reuters
IN BRIEF
Singapore business
optimism index plunges
at start of 2015
SINGAPORE: Amid mounting
concerns of stronger global political headwinds and softer regional demand hitting exports,
an index measuring confidence
among Singapore businesses has tumbled at the start of
the new year, The Straits Times
reported. The Singapore Commercial Credit Bureau said
yesterday that its latest Business Optimism Index (BOI)
fell sharply from +10.79 percentage points in the fourth
quarter of last year to +1.11
percentage points in the first
quarter of 2015. The latest BOI
reading marks the second lowest score in two years since the
first quarter of 2013 when the
BOI contracted at -0.82 percentage points.
Kuwait plans US$155b
projects over five years
despite oil slump
KUWAIT CIT Y: Kuwait’s
government on Sunday announced plans to spend 45.5
billion dinars (US$155 billion
or RM550.3 billion) on projects
over the next five years despite
the plunge in world oil prices,
a lawmaker said. The spending
is slated to cover 523 key projects in a five-year development
plan starting in the fiscal year
which begins on April 1, said
the parliament’s financial and
economic affairs committee
secretary, Mohammad al-Jabri.
He said the oil-rich Gulf country’s state minister for planning and development, Hind
al-Sabeeh, had discussed the
draft development plan with
his panel. — AFP
TEE Land’s 2Q profit up
46% on higher sales
SINGAPORE: Higher recognition of sales at a new project
has helped to lift developer TEE
Land’s second quarter net profit, The Straits Times reported.
Its profit for the three months
ended Nov 30, 2014, rose 46%
to S$2.42 million (RM6.45 million), the company said yesterday. Revenue jumped 519.5%
to S$15.1 million from S$2.4
million over the period, as the
firm said higher progressive
revenue was recognised for its
Aura 83 development. Cost of
sales also went up significantly from S$1.4 million to S$11.3
million.
Japan fashion label
Lowrys Farm closing down
SINGAPORE: After barely three
years in the Singapore market,
Japanese fashion brand Lowrys Farm is calling it quits, The
Straits Times reported. The label’s eight outlets, in prime locations such as Suntec City Mall
and 313@somerset, will close
down by Feb 18, a day before
Chinese New Year, staff told The
Straits Times. The brand’s parent company, Adastria Holdings, will also yank its other fashion label here, Global
Work, which has one outlet in
Westgate Mall in Jurong East.
20 FO CU S
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Final call for Malaysia Airlines
The three aviation disasters which took a total of 699 lives
are connected to Malaysian concerns, presenting the Najib
administration with a major challenge to restore public
confidence in its beleaguered aviation sector
BY L ESL I E LOPEZ
E
ven before the crash of
the AirAsia jet bound
for Singapore from
Surabaya in the last
days of 2014, Malaysia’s aviation sector
was looking seriously distressed.
For Malaysia Airlines (MAS),
the reminders were the coda to
a dire year. The disappearance in
March of MH370 and the shooting down of MH17 in July not only
pushed Malaysia’s national carrier
into bankruptcy, but also bashed
public confidence in the government’s handling of crisis and the
management of its aviation sector.
The question now is: can the
sector recover? The problem is
complex and only a major overhaul
of the civil aviation crisis-management protocol will be able to
restore public confidence.
More importantly, aviation analysts, senior airline executives and
bankers note that the government
will need to shed its protection
of state-controlled entities and
allow for greater competition in
the sector.
Like most so-called legacy carriers, the odds are stacked against
MAS.
“The whole business model is
broken because legacy airlines like
MAS are struggling, squeezed by
budget carriers on one end and
heavily subsidised airlines, such
as Etihad, Qatar and Emirates, on
the other,” says Manu Bhaskaran,
regional strategist with Centennial
Advisory in Singapore.
“[Aviation sector] reforms need
to be anchored on the basic principle that the industry can have a
huge multiplier effect on the economy. Policies of the past have only
institutionalised the inefficiencies
of the sector and around MAS,”
says one former director of the
airline who requested anonymity.
The stakes are high for Prime
Minister Datuk Seri Najib Razak’s
(pic, left) administration, which is
struggling to deal with a growing
clutch of economic woes, ranging
from staggering public and household debt loads and a weaker government balance sheet because
of lower income from falling oil
and gas prices to concerns over
the health of many of the country’s state-controlled entities — including MAS — that dominate the
economy and suck up the available
lending from the banking system.
Particularly vulnerable is the
country’s tourism sector, which
accounts for roughly 13% of gross
domestic product and is the second-largest contributor to the
economy. Unless the country’s
air carriers restore public confidence in their services, an impor-
tant crutch for an already slowing economy could get a serious
knock.
Most analysts believe that
AirAsia, which has the deepest
cross-border penetration among
the region’s low-cost carriers, will
be able to weather the storm.
But the problems at MAS, which
was delisted from the Malaysian
stock exchange at the end of December as part of a RM6 billion
government-led restructuring
plan, run very deep.
MAS is very much a victim of a
Malaysian malaise that dates back
to the early 1990s and is tied to the
many policy fiascos during the 22year premiership of Dr Mahathir
Mohamad (pic, right).
“The problems have long roots
and are multi-dimensional in nature, making it very hard for the
current administration to deal with
them,” notes Manu of Centennial
Advisory.
Ironically for MAS, many of the
personalities involved in the failures that led to the airline’s protracted troubles are in some way
also involved in the government
plan to resuscitate the flagging
national air carrier.
MAS’s woes can be traced back
to the aggressive speculation in
international foreign exchange
markets by Malaysia’s central bank,
Bank Negara Malaysia (BNM),
cou
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A sign reading ‘No Entry!’ at the site of the Malaysia Airlines flight MH17 crash near
the village of Hrabove (Grabovo) in the Donetsk region of the Ukraine on Dec 15, 2014.
Photo by Reuters
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from the late 1980s.
The controversial strategy, endorsed by Dr Mahathir, ended in
disaster. By the end of 1993, BNM’s
capital base was wiped out after
it suffered accumulated losses of
RM15 billion from its foreign ex-
change trading.
The financial debacle led to
the resignations of BNM’s governor at the time and also Tan Sri
Nor Mohamed Yakcop, a deputy
governor of the central bank and
chief architect of its international
s
w
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FO CU S 21
T U E SDAY JA N UA RY 1 3, 2015 • T HEED G E FINA NCIA L DA ILY
AFP
MALAYSIA AIRLINES: 1997 - 2014 (Q1) FINANCIAL DATA
REVENUE (RM MILLION) VS NET PROFIT (RM MILLION)
Malaysia Airlines then chief executive
officer Ahmad Jauhari Yahya (front row,
second right) praying at the mosque at
MAS’ headquarters in Kuala Lumpur
on August 26, 2014. About a quarter
of MAS’ 20,000 staff are likely to lose
their jobs under a restructuring plan
for the loss-making airline hit by two
separate jet disasters this year. Photo
by Reuters
Revenue
(RM Million)
Net profit
(RM Million)
16,000
14,000
12,000
336.53
-259.85
10,000
326.10
-417.42
1,000
600
-430.74
8,000
4,000
1,600
522.94
237.34
-442.42
271.79
-700.05
-400
-1,33.73
-835.56
-1,400
-1,900
-1,251.60
2,000
-1,168.84
-2,521.32
-2,400
-2,900
Azman’s idea, fancily called
“widespread asset unbundling”,
was accepted and essentially
turned MAS into an operating
entity that leased its planes and
other assets from the government.
Azman was shortly afterwards
appointed managing director of
state-owned sovereign fund Khazanah Nasional Bhd, which controlled MAS, and the turnaround
plan appeared to be working. In
2004, MAS reported profits of
RM461 million, the highest since
the carrier’s listing in 1985.
In more recent times, though,
the turnaround has turned sour.
Since the government took over
MAS, investment analysts say, the
airline has bled more than RM8
billion in losses despite receiving several financial lifelines from
taxpayers estimated at more than
RM10 billion.
MAS is undergoing another restructuring which is set to cost
taxpayers another RM6 billion.
The plans will involve massive
write-downs on loans and bonds
amounting to RM12.5 billion, and
major job cuts of up to 25% of the
airline’s workforce.
Financial executives involved
in the restructuring plan say that
2013
2011
2012
2010
2009
2008
2014-Q1
Year
2007
2006
2005
2004
2003
2001
2002
1999
2000
1998
1997
0
plunged MAS into more trouble.
When he took over the company,
MAS had cash reserves of more than
RM600 million. But the government
was forced to bail out Tajudin and
MAS in 2001, by which time the airline was riddled with mismanagement and had accumulated losses
of more than RM8 billion.
Nor Mohamed had by this time
returned to government as a key
trouble-shooter and was tasked by
Dr Mahathir with overhauling MAS.
The former central banker tapped a
fast-rising corporate restructuring
executive, Tan Sri Azman Mokhtar,
to come up with a plan.
100
-900
-258.57
6,000
forex trading campaign.
But that didn’t stop Dr Mahathir from pursuing another
controversial gambit. In a bid to
recapitalise the central bank’s
balance sheet, he tapped one of
the government’s favoured businessmen, Tan Sri Tajudin Ramli,
to acquire a controlling 32% interest in MAS that was held by BNM.
Tajudin, a major player in the
country’s telecommunications
sector, paid RM1.79 billion, or
RM8 a share, for the bank’s holdings in MAS. In court documents
submitted by Tajudin in a subsequent legal battle with a Malaysian government agency, he
claimed to have bought the shares
at Dr Mahathir’s behest, paying
a sky-high premium over MAS’s
trading price of RM3.30 a share
at the time, as part of the plan to
bail out BNM.
Tajudin’s takeover only
852.74
461.14
several options are being considered, including closing all routes
outside Asia save for the London
sector. The plan also calls for the
disposal of all of MAS’s new Airbus
A380 aircraft.
“The downsizing and job cuts
could make the airline a viable
business proposition. But it may
be too radical for the politicians,”
says a banker closely involved in
the restructuring plan.
This article first appeared in this
week’s edition of The Edge Review
at http://www.theedgereview.com
QZ8501 — Will lessons be learnt?
Indonesian Navy personnel evacuate
recovered bodies of passengers from
AirAsia flight QZ8501 on the the deck
of the KRI Banda Aceh on January 3.
Photo by Reuters
BY PN B A L JI
.
to
erSri
uty
nd
nal
FROM the murky floor of the Java
Sea, a doomed AirAsia plane is sending important signals that, if taken
seriously, will make air travel safer.
But the hopes of that happening are dim, like the clouded early
morning skies that confronted flight
QZ8501 on Dec 28. Already, air transport associations are trying to wish
away this disaster — along with the
two that befell Malaysia Airlines last
year — with statistics showing a good
track record for safety in the skies.
Instead of investigating possible
contributory causes such as overcrowded skies, incompetent airport
administration, the pressures on
pilots and budget airlines’ tendency
to cut corners, an intriguing blame
game is being played in Indonesia
with information being leaked and
accusations made that AirAsia did
not pay due diligence to airport rules.
A Singapore-based pilot with
more than 10 years’ experience told
The Edge Review: “I find the reports
that the airline didn’t have the clearance to fly on that doomed date and
that the pilot did not have the weather report very strange.
“We should not jump to conclusions and start pinning blame; let us
wait for the recordings of the black
box before throwing stones.”
The voracious appetite for air
travel in the Asia-Pacific has seen
many jump on the bandwagon to
start budget airlines. Industry analyst Frost and Sullivan estimates
that total passenger throughput from
Asean nations alone grew from 211
million in 2011 to 233 million last
year, a compound annual growth
rate of 3.3%.
In anticipation of further demand, aircraft are being ordered
by the thousands. Boeing estimates
that Southeast Asian airlines will
acquire 2,750 new planes over the
next 20 years.
Amid this frenzied pace of expansion, who has time to take a
breather and think through what
their actions will do to the safety of
the passengers?
In the case of the AirAsia crash,
it is clear that the pilot had a prob-
lem getting permission to fly higher
because there were at least six other
planes above.
Navigation operator AirNav Indonesia has said a request by the
AirAsia pilot to fly from 32,000ft to
38,000ft could not be approved immediately because of other aircraft in
the vicinity. Three minutes later, AirNav was ready to give approval but
the plane had already lost contact.
The Singapore pilot is convinced
that a catastrophic malfunction took
place. “There is no other explanation for the steep descent into the
sea,” he said.
“I have flown the Surabaya-Singapore route many times and I can
tell you one has to be at his nimblest
best to avoid a crash mainly because
famous for rolling up his sleeves and
helping out on the ground, assisting
at the check-in counter or helping
to clear luggage.
With such a tight grip on expenses, cutting corners is a common practice in the industry. For example,
flight QZ8501 got its weather report
only after it was in the air.
“It is not an uncommon practice
among pilots,” said the pilot who
spoke to The Edge Review. “As long
as there are no major variations in
climate, having a weather report
is not essential. What is important
is how the pilot reacts if there is a
weather emergency.”
That brings up the question of
whether pilots are well-enough
trained to tackle emergencies. Aviation lawyer James Healy-Pratt told
British newspaper The Daily Telegraph that the explosion of air travel
has not only heightened demand for
pilots — and thus a tendency to rush
their training — but also an over-reliance by pilots on automation in
modern aircraft cockpits. That was
established as an important factor in
the Air France crash in 2009, he said.
Now another 162 lives have been
lost with no indication that some of
the biggest lessons in modern aviation have been learnt.
of the overcrowding and the tricky
weather conditions.”
The Indonesian government’s
decision to suspend seven airport
officials is a telltale sign of an airport administration in a mess. A
scandalous attack on AirAsia for not
having the permission to fly on the
day of the crash got many asking: if
so, why was it allowed to take to the
skies on that day?
Said Endy Bayuni of The Jakarta
Post: “By doing that they are drawing
attention to themselves because the
the airline could not have flown if
there was no permission in the first
place. It gets messier and messier.”
Adding to the confusion were
Changi International Airport officials
in Singapore saying that the budget
airline had the clearance to fly into
the airport on that date.
Low-cost airlines operate on a
no-frills business model that cuts
costs to the bare bones. Fast turnarounds are important because every
minute’s delay adds to the cost of
operation. To drive home the point This article first appeared in this
to his staff, AirAsia chief executive week’s edition of The Edge Review
officer Tan Sri Tony Fernandes is at http://www.theedgereview.com
22 W O R L D B U S I N E S S
Li set to reclaim top spot
Tycoon poised to regain position as Asia’s richest with Cheung Kong restructuring
BY ZI JI N G WU
HONG KONG: Li Ka-shing is set to
regain his spot as Asia’s richest person as flagship Cheung Kong Holdings Ltd’s shares surged the most in
17 years following his announcement of a US$24 billion (RM85.2
billion) reorganisation plan.
The 86-year-old Hong Kong tycoon has a US$30.8 billion fortune
based on the trading of his shares
as of 11.15am local time yesterday.
That puts him almost US$3 billion ahead of Jack Ma, the billionaire chairman of Hangzhou, China-based Alibaba Group Holding
Ltd, who’s worth US$28.2 billion as
of last Friday, according to Bloomberg Billionaires Index.
The increase in Li’s wealth is set
to make him the 15th richest person
in the world, overtaking European
retail billionaires Bernard Arnault
and Stefan Persson. Li proposed to
restructure the assets of his companies into two new entities with
specific focuses: one on property
Shire to buy
NPS for raredisease drugs
BY MA N U EL B AIGORR I, SIM EON
B ENN ETT & C AROLINE CHEN
LONDON: Shire plc, the drugmaker seeking to boost growth
after its proposed sale to AbbVie Inc collapsed, agreed to buy
NPS Pharmaceuticals Inc for
about US$5.2 billion (RM18.46
billion) to add medicines used
to treat rare diseases.
Shire will pay US$46 a share
in cash, the Dublin-based company said yesterday in a statement. That’s a 9.8% premium
to NPS’s closing price last Friday and more than 50% higher
than its close on Dec 16, before
news broke of Shire’s interest.
The deal has been approved by
both companies’ boards.
Adding Bedminster, New Jersey-based NPS will enable Shire
to expand in rare diseases such
as gastrointestinal and endocrine disorders. The deal comes
before NPS learns whether its
Natpara medicine to treat hypoparathyroidism wins approval
from the US Food and Drug Administration (FDA). A decision
on the drug, which would be
the first marketed treatment for
the potentially fatal disorder, is
scheduled to be made by Jan 24.
“[NPS has] a rare-disease focus and in addition it builds on
our strong expertise in gastrointestinal diseases,” Shire chief
executive officer Flemming
Ornskov said in a telephone
interview. “So it’s a strategic fit,
growth enhancing, and we can
afford it. It ticks almost all the
boxes.” — Bloomberg
Li (right) and his son Victor Li Tzar-kuoi at a news conference in Hong Kong last Friday,
when Cheung Kong announced plans to reorganise group companies into two new
Hong Kong-listed entities. Photo by Reuters
mainly in Hong Kong and China,
and the other on global assets from
utilities and ports to retail stores
across more than 50 countries.
“This reorganisation is far from
a surprise and has long been discussed,” Andrew Lawrence, an an-
alyst with CIMB Group Holdings
Bhd, wrote in a research note yesterday. “It will make for a cleaner
corporate structure and remove
many of the cross-group investments that made it difficult to understand the group.”
Cheung Kong shares jumped
as much as 20%, the biggest intraday advance since February
1998. At 11.15am in Hong Kong,
the stock was up 14% at HK$142.80
(RM65.31). Hutchison Whampoa
Ltd, which is 50% controlled by
Cheung Kong, climbed as much as
18%, the most since October 1997.
More than half of Li’s wealth is
derived from Cheung Kong, which
had declined 4.2% this year before
yesterday’s surge. Alibaba’s Ma, 50,
last month overtook Li as Asia’s
wealthiest, the first change in Asia’s
top spot since April 2012.
Ma, a former English teacher
who started the e-commerce company in his apartment in 1999, added about US$25 billion to his wealth
last year, riding a 54% surge in the
company’s shares since its September initial public offering.
Li’s proposal will help streamline
the structure of his companies and
make it easier for shareholders to
choose which businesses they want
to invest in. — Bloomberg
New rules for Chinese banks will
inject less cash than some hope
BY LU JIAN XI N & P E TE S WE E NE Y
SHANGHAI: New rules changing
how Chinese banks measure their
savings base have more to do with
squeezing shadow banking than
monetary easing, and will inject far
less cash into the system than many
believe, Chinese money traders say.
The People’s Bank of China
(PBoC) has enlarged the deposit
base for banks by telling them to
count in it their interbank deposits
from non-bank financial institutions.
There’s a 75% loan-to-deposit
ratio (LDR) for banks. Thus making deposits larger, by definition,
should let banks lend more.
Many see the PBoC move as a
stimulus measure. Fitch Ratings
said in a report last Tuesday that
the change would enable banks to
boost total credit by up to six trillion
yuan (RM3.43 trillion).
Zhu Haibin, economist at JP
Morgan, wrote last Friday that as
banks temporarily do not need to
set aside reserves on the additional deposits, the rule change lowers
the system LDR by about 500 basis
points and “hence removes LDR
binding constraint in bank lending”.
But others don’t expect the rule
change to have much impact on
lending. “Some analysts have exaggerated the potential effect of the
central bank’s move because they
only see half of the moon,” said Lu
Zhengwei, chief economist at Industrial Bank in Shanghai.
“The move is not a policy tool [to
ease] but a reform to include depos-
its that should have been included
in the LDR supervision long ago,”
he said. “That means the PBoC can
follow up by including interbank
loans into the LDR’s lending base
to keep policy consistency.”
To some analysts, the LDR ratio
has not been a constraint on Chinese bank lending, so the broadened definition of deposits provides
room for lending that banks won’t
necessarily use.
Traders see the new regulations
as targeting the growth of interbank
deposits created by non-bank institutions. The crackdown makes
sense, given signs new players —
in particular brokerages — have
exploited regulatory loopholes to
expand their shadow banking business rapidly. — Reuters
Roche takes majority stake in Foundation for US$1b
BY CAROLINE C HE N
SAN FRANCISCO: Roche Holding
AG will pay more than US$1 billion (RM3.55 billion) for a majority stake in Foundation Medicine
Inc, giving the drugmaker access
to genomic tests to screen tumours
and aiding the development of a
new generation of treatments that
use the body’s own immune system
to fight cancer.
Roche will buy five million newly issued shares in Foundation for
US$50 each, then buy about half
of the company’s existing shares
for the same price, the companies
said in a statement yesterday. The
share price is a 109% premium to
Foundation’s closing stock price
last week. It will give Roche a stake
of as much as 56% and the rights to
sales of Foundation’s tests outside
the United States.
“This is a transformational relationship for us,” said Foundation
chief executive officer Michael Pellini in a telephone interview.
Foundation, based in Cambridge, Massachusetts, makes cancer genomic tests, one for solid
tumours and the other for blood
cancers. The tests take a tissue sample from a patient’s cancer and analyse it for gene mutations that could
be causing the tumour’s growth.
That information can help doctors
pick the best possible drug.
The tests are particularly attractive to drugmakers working on a
new wave of cancer treatments that
rely on personalised approaches.
Roche and Foundation are planning to develop a profiling test specifically to be used for what are known
as immunotherapies, treatments that
aid the immune system’s function
against tumour cells. — Bloomberg
IN BRIEF
Adani, SunEdison to build
US$4b solar panel unit
MUMBAI: Indian conglomerate Adani Group and global
energy firm SunEdison have
announced a deal to build the
largest solar panel factory in the
energy-starved nation, worth
US$4 billion (RM14.2 billion).
The project will be set up in the
next three to four years in Mundra city in the western state of
Gujarat, a press release said
late Sunday. “By pairing SunEdison’s solar technology expertise with Adani’s experience
in creation of infrastructure,
we will be able to transform
the region into a solar-production powerhouse,” said Ahmad
Chatila, president and chief executive of United States-based
SunEdison. — AFP
China to launch first
stock options in February
SHANGHAI: China will start
trading its first stock options
next month, according to the securities regulator, with state media saying yesterday the move
could cause greater market
volatility. The Shanghai Stock
Exchange will begin offering
options on an exchange-traded fund from Feb 9, the China
Securities Regulatory Commission (CSRC) said late Friday in a
statement, which described the
launch as a “trial”. “The trial of
stock options ... is of great significance to promoting the healthy
development and enhancing
the global competitiveness of
China’s capital markets,” CSRC
said. — AFP
Maduro holds talks with
Opec kingpin Saudi
RIYADH: Venezuelan President
Nicolas Maduro held talks in the
Organization of the Petroleum
Exporting Countries’ (Opec)
leading oil producer Saudi Arabia on Sunday, officials said, before he headed to Algeria. “The
visit aims to strengthen ties and
friendship,” a Venezuelan official told AFP. Maduro arrived in
the Saudi capital Riyadh on Saturday from Iran. Saudi Crown
Prince Salman bin Abdul Aziz
and Maduro discussed “developments in the international
arena” and ways of enhancing
ties between the two countries,
the official Saudi Press Agency
reported. — AFP
Japan’s Amari expects
real wages to turn positive
TOKYO: Japanese Economics
Minister Akira Amari said yesterday he expects real wages to
turn positive in the fiscal year
starting April as the economy
recovers from nearly two decades of mild deflation. Wage
growth is crucial for the success of Prime Minister Shinzo
Abe’s reflationary policies of
monetary and fiscal stimulus to
promote private-sector expansion. Inflation-adjusted “real”
wages fell 4.3% year-on-year in
November, down for the 17th
straight month and marking the
steepest decline in five years, as
wages failed to keep pace with
consumer price gains. — Reuters
24 WORLD
France boosts security at
Jewish schools
Prime minister says gunman ‘likely had accomplice’
PARIS: France will deploy nearly
5,000 security forces and police
to protect the 700 Jewish schools
in the country, as Prime Minister
Manuel Valls said yesterday that
the gunman who attacked a kosher supermarket probably had
an accomplice.
Amedy Coulibaly, who killed
a policewoman in southern Paris
then four Jewish shoppers in a hostage drama, probably received help
from someone else, Manuel Valls
said, pledging “the hunt will go on”.
Interior Minister Bernard Cazeneuve promised to boost security at Jewish institutions, telling
parents of a Jewish school to the
south of Paris that soldiers would
also be posted as reinforcements.
The Jewish community has been
particularly shaken by last Friday’s
attack on the kosher supermarket
in eastern Paris, which came just
two days after two other gunmen —
Said Kouachi and his brother Cherif Kouachi — stormed the offices
of Charlie Hebdo satirical weekly,
slaughtering 12 people.
As it emerged that Cherif met
Amedy in prison, Valls said France
would move to isolate Islamist detainees from the rest of the prisoner population, so as to prevent
jails from being used as a breeding
ground for radicals.
This measure “must become
widespread” but “it must be done
discerningly and intelligently”, he
said. — AFP
Police kill six attackers in Xinjiang
BEIJING: Police in China’s far western Xinjiang region shot dead six
attackers yesterday, a state-run
news portal said, amid a security
clampdown in the violence-torn,
mainly Muslim area.
There were no police or civilian
casualties, according to the report
by Xinjiang’s government-run Tianshan news site.
Xinjiang is home to China’s ninemillion-strong Turkic-speaking and
mostly Muslim ethnic minority.
Yesterday’s clash was triggered
when residents of Shule county,
near the ancient Silk Road city of
Kashgar, noticed “a suspicious person carrying an explosive device”,
Tianshan said.
They called police, who opened
fire after the assailant tried to attack
an officer with an axe and detonate
the device, according to the report.
The assailant was killed, but
soon afterwards five more attackers “sought to ignite explosive devices one after the other”, Tianshan
said. The five were “resolutely” shot
dead by police, it added.
China’s ruling Communist Party
tightly restricts access to the restive
region, and information is difficult
to independently verify.
Violence linked to Xinjiang has
intensified over the past year, with
at least 200 people killed in a series
of clashes and increasingly sophisticated attacks in the resource-rich
region and beyond it.
Beijing, which blames Xinjiang-related violence on “religious extremists”, “separatists”
and “terrorists”, has responded by
launching a severe crackdown in
recent months, with hundreds of
arrests and around 50 executions
and death sentences publicly announced since June last year. — AFP
Sri Lanka’s new
leader delays
forming cabinet
COLOMBO: Sri Lanka’s new
president again delayed naming a cabinet yesterday, as he
failed to reach agreement with
partners in his wide-ranging
coalition over apportioning
ministerial portfolios.
Maithripala Sirisena originally pledged to form a government on Sunday, but aides
said discussions were still under way.
Analysts have already
warned that Sirisena, who ousted veteran strongman Mahinda
Rajapakse in last week’s election, may struggle to satisfy the
diverse coalition that backed
his campaign.
“The cabinet is almost finalised, but there is some tweaking going on to accommodate
partners,” said an official who
asked not to be named.
The president, who needs
a majority in the 225-member assembly to push through
ambitious reforms, has moved
to strengthen his hold on parliament by securing further
defections from Rajapakse’s
party.
He has pledged to reverse
many of the constitutional
changes made by the former
president, who gave himself
huge powers over all key institutions, including the judiciary. — AFP
IN BRIEF
HRW urges Kuwait to drop
charges against Sisi critic
KUWAIT CITY: Human Rights
Watch called on Kuwait yesterday to drop charges against former lawmaker Saleh al-Mulla,
facing trial for tweets deemed
critical of the emir and the Egyptian president. “Kuwait authorities should also cease prosecutions against other peaceful
critics,” the New York-based
rights group said in a statement.
Mulla, a liberal former lawmaker,
was detained for five days before
being released on bail on Sunday
pending trial on Feb 15. He was
accused of insulting Emir Sheikh
Sabah al-Ahmad al-Sabah and
Egyptian President Abdel Fattah
al-Sisi, who visited the Gulf state
last week. He was also charged
with endangering Kuwaiti-Egyptian relations. — AFP
Nusra Front threatens
action against Lebanese
soldiers
BEIRUT: The al Qaeda-linked
Nusra Front threatened action
yesterday against members of
the Lebanese security forces it
holds as captives after police
stormed a wing of the country’s
largest prison where Islamist
militants are detained. “As a
result of the deterioration of
security in Lebanon, you will
hear about surprises regarding
the fate of the prisoners with
us,” the Nusra Front said on its
Twitter account. Four of the soldiers held by the Nusra Front
have been killed in detention
despite ongoing negotiations
with the Lebanese authorities
for their release. — Reuters
Somali prime minister
names cabinet of 60 people
TRIBUTE... People holding panels to create the eyes of late Charlie Hebdo editor Stephane Charbonnier as hundreds of thousands
of French citizens took part in a solidarity march (Marche Republicaine) in the streets of Paris on Sunday. Photo by Reuters
Japan, China resume talks on maritime hotline
TOKYO: Japan and China resumed
talks yesterday about setting up a
hotline to prevent sea clashes, following frequent sparring between
ships from the two sides around
disputed islands.
The working-level talks, the first
since 2012, were held in Tokyo,
Kyodo News and Tokyo Broadcasting System reported.
The Japanese government has
not disclosed a detailed schedule
for the talks.
Japan’s Prime Minister Shinzo
Abe and Chinese President Xi Jinping agreed last November to ease
tensions over the sovereignty of
the Senkaku islands, an uninhabited rocky chain in the East China
Sea which China also claims as
the Diaoyus.
The meeting — the first face-toface encounter since each came to
power — followed a long period of
hostile relations due to the territorial dispute and China’s historical grievances over Japan’s 20th
century aggression.
Japanese and Chinese defence
authorities have agreed in principle to set up a hotline, and use a
common radio frequency for their
ships and planes around the disputed islands.
But further talks were suspended when relations soured in 2012
after Tokyo nationalised some of
the Senkaku islands.
Since then the islands have
been the scene of regular confrontations between paramilitary
vessels and jet fighters as both
countries press their ownership
claims.
Analysts have warned that a
miscalculation could spark a military conflict that would draw in Japan’s ally the United States. — AFP
MOGADISHU: Somalia’s newly appointed prime minister
named a giant cabinet of 60 people late on Sunday, as he warned
of the “huge task” ahead to bring
peace to the war-torn nation.
Prime Minister Omar Abdirashid
Ali Sharmarke, endorsed by parliament last month after the president fell out with the previous
premier amid bitter infighting,
released his choice of names for
lawmakers to approve. The 60
members include 26 ministers,
25 deputies and nine state ministers, an increase of five posts
from the previous cabinet. Many
of those named were in the previous cabinet. — AFP
Paris attacks suspect
entered Syria on Jan 8
ISTANBUL: The suspected female accomplice of Islamist
militants behind the attacks in
Paris last week crossed into Syria on Jan 8 from Turkey, Foreign
Minister Mevlut Cavusoglu said
in comments posted on staterun news agency Anatolian’s
website yesterday. The suspect,
Hayat Boumeddiene, arrived at
an Istanbul airport on Jan 2 via
Madrid and stayed in a hotel, Cavusoglu said in an interview with
Anatolian. Those dates would
put her in Turkey before the violence in Paris began, and leaving for Syria while the attackers
were still on the loose. — Reuters
26 WORLD
Attacks on Hong Kong
media tycoon’s property
Cases have been classified as arson — police
BY D ENN I S CHONG
HONG KONG: Firebomb attacks on
the Hong Kong home and office of
pro-democracy newspaper tycoon
Jimmy Lai yesterday have triggered
new fears over the safety of outspoken media figures in the city.
The twin attacks in the early hours
of the morning came as tension remains high in the southern Chinese
city after more than two months of
protests for free leadership elections,
which ended when rally camps were
cleared in December.
S Korea’s Park
says open to
summit with
N Korea’s Kim
BY JU NG HA - WON
SEOUL: South Korean President
Park Geun-hye said yesterday she
was willing to hold unconditional talks with North Korean leader
Kim Jong-un, and to “meet just
about anyone” to seek peace and
reunification on the peninsula.
It’s not the first time Park has
held out the possibility of a summit, but senior government officials admit the chances of such
a meeting are remote given the
difficulty the Koreas have in organising talks at any level.
Park’s remarks at a New Year
press conference followed an address last week by Kim in which he
also hinted at a summit — saying
he was open to the “highest-level”
talks with the South.
“I can do an inter-Korean summit if it helps. There is no pre-condition,” Park said yesterday.
“I can meet just about anyone
necessary to open the path towards
peaceful reunification,” she added.
But Park stressed that the first
priority was for North Korea to
respond to Seoul’s latest proposal
— made last month — to resume
a high-level dialogue.
“The North should come forward to the talks proactively,” she
said.
Despite Park’s talk of “no
pre-conditions” Seoul has repeatedly insisted that any substantive
dialogue would require Pyongyang
to show some tangible commitment to denuclearisation.
The two Koreas have only held
two leadership summits, with the
South’s late liberal presidents, Kim
Dae-jung and Roh Moo-hyun, travelling to the North in 2000 and
2007 respectively.
Both met with former leader
and Kim Jong-un’s father, Kim
Jong-il, who died in 2011. — AFP
Lai was targeted during the protests by a group of men who threw
rotten meat at him and printworks
producing his outspoken Apple
Daily newspaper were repeatedly
attacked.
Other journalists and media
workers have also been targeted
including the former editor of liberal newspaper Ming Pao who was
stabbed in the street in broad daylight last February.
“Anti-democratic forces in Hong
Kong keep resorting to violence,” Lai’s
spokesman Mark Simon told AFP.
Yesterday’s two almost simultaneous attacks were reported
just before 2am (1800 GMT) at
Lai’s home and the Next Media
headquarters, which publishes
Apple Daily, according to a police spokesman.
“The cases have been classified
as arson. We are still verifying the
details,” the spokesman told AFP.
Security camera footage uploaded to the Apple Daily website shows
a masked man throwing a flaming
glass bottle towards the gate of Lai’s
mansion in upmarket Ho Man Tin.
It explodes on the ground outside
as the suspect flees in a car.
Footage from outside the Next
Media headquarters in a suburban industrial park also shows a
flaming bottle thrown towards the
building entrance and smashing on
the ground.
There were no reports of injuries.
The South China Morning Post
newspaper reported that two cars
suspected to have been used in the
attacks were later found torched.
No arrests have been made so
far, police said. — AFP
Rohingya woman suffocates
in migrant truck in Thailand
BANGKOK: A Rohingya woman
has died after suffocating in a truck
packed with migrants from the Myanmar Muslim minority group as
they travelled through southern
Thailand, police said yesterday.
Authorities found five pickup
trucks carrying nearly 100 Rohingya
before dawn on Sunday in the Hua
Sai district of Nakhon Si Thammarat
province on the Gulf of Thailand.
“There were total 98 Rohingya.
Of them, one woman aged around
20 years old died from suffocation
while travelling,” provincial police
commander Kiattipong Khawsamang told AFP.
“The truck was crowded and
she also had not eaten,” Kiattipong
said, adding the group was travelling from Phang Nga province on
the western seaboard.
Two of the pickup drivers have
been arrested on suspicion of people-trafficking, he added.
Thai authorities will now process
the group to establish whether they
were being trafficked by smugglers
through Thailand.
Authorities have in recent weeks
discovered scores of other migrants
who fled dire conditions in Myanmar, taking advantage of the slightly
calmer winter waters in the Anda-
man Sea to head south.
On Jan 5 police detained 53 migrants from Myanmar — the majority of them Rohingya — in Phang
Nga province, a hub for boat people being transported on to mainly
Muslim Malaysia.
Thousands of Rohingya have fled
deadly communal unrest in Myanmar’s Rakhine state since 2012.
Myanmar views its population
of roughly 800,000 Rohingya — described by the United Nations as
one of the world’s most persecuted
minorities — as illegal Bangladeshi
immigrants and denies them citizenship. — AFP
Children return to Taliban massacre school
BY LEHAZ ALI
PESHAWAR: Survivors of Pakistan’s
worst-ever militant attack returned
yesterday to the school where Taliban gunmen massacred their classmates, with students and parents
expressing a mixture of defiance
and apprehension.
The Dec 16 attack on the Army
Public School in Peshawar claimed
the lives of 150 people, mostly children, and prompted a bout of national soul-searching even in a country
used to high levels of violence.
Across the country, schools had
remained shut for an extended winter break as authorities strengthened
security and announced new measures including the death penalty to
combat insurgents.
Most reopened yesterday along
with the army school in the northwestern city.
For 16-year-old Shahrukh Khan,
who was shot in both legs while pretending to play dead in his school’s
auditorium, going back was traumatic.
“I have lost 30 of my friends. How
Filepic of the Army Public School. The Dec 16 attack on the school has prompted a
bout of national soul-searching even in a country used to high levels of violence.
Photo by Reuters
will I sit in the empty class, how will
I look towards their empty benches?” he told AFP before the school
reopened.
At least 20 soldiers were seen at
the main entrance of the Army Public
School, with an airport-style security
gate installed at the front.
Elevated boundary walls with
steel wire fencing have been put in
place in some schools around Peshawar and nationwide.
Raheel Sharif, the head of Paki-
stan’s powerful army, made an unannounced visit with his wife, greeting and hugging students dressed in
green blazers.
Parents spoke of having to sit
down with their children and mentally prepare them for their return to
the school, which has undergone a
complete renovation to remove all
traces of the bloody attack.
Of the 150 victims killed in Pakistan’s deadliest-ever militant attack,
134 were children. — AFP
IN BRIEF
Fewer Chinese parents
than expected seek
second child
BEIJING: China’s push to encourage more couples to have
a second child after decades of
restrictive family planning policies has fallen short of expectations in the first year, state media
reported yesterday.The National Health and Family Planning
Commission received less than
half of the expected two million
annual applications for couples to have a second child, the
official Xinhua News Agency
reported, without citing exact
numbers. China has restricted
most families to a single child
since the late 1970s, but the
Communist Party has started
easing controls, allowing couples to have two offspring so
long as one of the parents is an
only child, rather than both. The
change began with a pilot programme in the wealthy coastal
province of Zhejiang before expanding nationwide. Couples
must still submit an application
to the commission before having
a second child, and not all have
been approved. — AFP
Tanzanian girls return
after escaping genital
mutilation
ARUSHA (Tanzania): Hundreds
of Tanzanian schoolgirls returned
home yesterday after spending
three months hiding in safe houses to escape genital mutilation,
state television said. Female genital mutilation (FGM) can range
from hacking off the clitoris to the
removal of the entire female genitalia. Some 800 schoolgirls fled
to shelters run by charities and
church organisations, which offer protection during the months
FGM is traditionally carried out,
from October to December. Minister of Labour and Employment
Gaudensia Kabaka called on traditional leaders to use their influence to stop “this retrograde
practice.” — AFP
Kerry tells Sri Lanka
president US wants
stronger ties
GANDHINAGAR (India): Top
US diplomat John Kerry has told
Sri Lanka’s new president that
Washington wants to strengthen its ties with the island, a US
State Department official said
yesterday. Maithripala Sirisena
has pledged to mend Sri Lanka’s relations with the West after
his election victory over veteran
leader Mahinda Rajapakse, who
alienated many foreign leaders
by refusing to allow an international probe into alleged wartime
abuses. — AFP
Separatist gunmen kill
seven paramilitary
soldiers in SW Pakistan
QUETTA (Pakistan): Seven Pakistani paramilitary troops were
killed yesterday when their post
came under attack by separatist
insurgents early yesterday in the
southwestern province of Baluchistan, an official said. The
incident occurred in the Loralai
area, some 310km east of the
provincial capital Quetta. — AFP
R E TA I L
M A R K E T I N G 27
PHOTOS BY SUHAIMI YUSUF
Mum knows best
C’est Moi cosmetics line-up launched to
cater to kids segment
BY L L EW- A N N PH A NG
W
hen Jessica Tang first
pitched the idea of a
skincare and cosmetics line-up for children to fellow mums,
she found herself in
quite a quandary.
“I was ridiculed to the point of being
called crazy but my intention was not to
sell vanity. It was to cater to a need — the
performing arts,” the sales and marketing
director of C’est Moi Pte Ltd says.
Tang, a mother of two young daughters
and a teenage son, relates her experience
when her eldest, Annabele, then five, was
very involved in gymnastics and dance
performances.
“As a parent, it was clear to me that children love the dance floor. And when they
are on stage and in the limelight, they need
proper make-up, but there were no brands
formulated specifically for their skin.
“Because she needed to put on makeup, there was an incident when Annabele
broke out in red bumps that took two weeks
to subside. So I thought of working on a
product that catered to the delicate skin
of children. And if it’s safe for children, it
is also safe for adults,” Tang says with glee,
in an exclusive interview with The Edge Financial Daily recently.
Thus began the three-year journey of
coming up with C’est Moi (French for
“it’s me”).
In her first market survey, Tang discovered how adults of different age categories
responded to the idea. Those in their 30s
were keen while couples in their 40s, while
agreeable to the idea, limited children wearing make-up only to performances.
“Those in their 50s were saying ‘kids can
use my make-up’ and it was ‘not a drop of
make-up for children’ for those past 60.
But children, especially those taking to the
stage, want to emulate performers and the
available products were harsh on their skin,
so I pondered seriously about creating a
brand new category,” she shares.
Tang had working experience with big
brands like Hermes, Givenchy and Paco
Rabanne before she joined forces with her
husband in toy distributing firm Camtec in
1997. Camtec wholly owns C’est Moi and
Tang says both companies have children
at heart.
“In reaching the final decision, it was
not a question of doing something good
or bad but the need to sell from the heart
because I knew the desire wouldn’t last
long if I didn’t follow it through,” she adds.
Formulated in Europe, C’est Moi’s products are free of parabens, phthalates and
other synthetics harmful to children’s skin.
Instead, they are packed with 97% natural
products which comprise fresh fruit cells
and minerals.
Tang’s hard work resulted in C’est Moi’s
six skincare products — cleanser, hydrating gel, cleansing milk make-up remover,
scar repair cream, night cream and tinted
sunscreen. These are in addition to the 10
make-up categories of eyeshadow, eyeliner
pencil, liquid eyeliner, face crayons, lipstick
crayons, blush, water-based nail polish,
compact foundation, mascara and lip gloss.
“It was quite a journey from finding laboratory facilities who shared the same passion
and vision to deciding on the packaging,
the brand, and finally setting up shop in
November (2014) at C’est Moi’s ‘box’ outlet
in Metro Centrepoint, Singapore,” she said,
adding that she set a very stringent criteria
to go by as far as the products and packaging and brand were concerned.
“I wanted to see kids take to wearing it,
so it was good to hear one coax his friend,
‘This is different! You don’t feel anything!’
“I also didn’t want it to have too much of
an adult or a childish feel to the packaging,
and the brand had to be one with attitude
because while I wanted it to be cool, I didn’t
want it to be ‘against school’ because I myself am a very traditional mother,” Tang said.
The plan was to launch C’est Moi in
the United Kingdom eventually because
“London is the hub of theatre and musicals and generally all stage performances” but the brand had to make an impact
Tang, a mother herself, puts the interests of children first in coming up with C’est Moi.
A selection of C’est Moi products.
on home ground first.
“The greatest mission of C’est Moi is to
teach children and their parents about skincare — that is a fact — and to address the
teenage market which doesn’t care about
skincare. It is especially needed now when
pollution is high and the ultra-violet rays
from the sun are more powerful,” Tang adds.
Tang reports of positive response in
Singapore, and the Malaysian market can
order C’est Moi online as the e-commerce
function will be in operations starting
March. Tang also shares that she is laying the foundation so the brand can be
exported to the UK sometime this year.
At this juncture, C’est Moi and the need
for proper skincare is being introduced in
performance schools, but where the masses
are concerned, Tang is depending on the
social-media front for marketing besides the
typical beauty magazine advertisements.
This will include YouTube beauty tutorials catering to children — maybe starring
her own daughters and eventually some
of their friends.
“I think the best spokespersons about
this product are kids themselves and wordof-mouth works just as well,” Tang adds.
28
live it!
TUE
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE
Personal
ASSISTANT
COMPI L ED BY MAE CHAN
WORK. LIFE. BALANCE
TO get a current overview of Malaysian
art and artists, why not pay a visit to
Malaysian Art, A New Perspective at
Richard Koh Fine Art (RKFA) at Level 2,
Bangsar Village II, Kuala Lumpur. Curated
by Richard Koh, the group exhibition seeks
to introduce and highlight the diverse
practices developing in Malaysia in recent
years. Featuring a mix of 11 emerging and
established artists making their mark
in the local art scene — Gan Chin Lee,
Haffendi Anuar, Hasanul Isyraf Idris, Justin
Lim, Liew Kwai Fei, Phuan Thai Meng,
Raduan Man, Saiful Razman, Tan Wei
Kheng, Wong Perng Fey and Yeoh Choo
Kuan — each will present recent works on
various issues and themes. The exhibition
will be held until Jan 29. For more
information, visit www.rkfineart.com.
LOOKING
for a fresh
experience?
Why not spend
an evening
tuning in to
San Franciscobased
electronic/
ambient
band Tycho
tomorrow
night at Pentas 1, KLPac, Kuala Lumpur.
Headed by ambient music artist and
photographer Scott Hansen, who is known
for his visual design works. Hansen has
now turned what started as a solo project
into a four-piece band, releasing a brand
new album Awake. Their sound is best
described as old school meets the future,
creating a distinct organic sound with
vintage-style synthesisers, old school
sound clips and live instrumentation.
Having played at Burning Man and
Latitude festivals, Tycho is bringing their
Awake Asia Tour to Kuala Lumpur in their
debut show here. For tickets (RM88, RM98
and RM118) and more information, visit
www.ticketpro.com.my.
DON’T miss the
last two weekends
of the all-youcan-eat dim sum
buffet at Eastin
Hotel’s Ee Chinese
Cuisine restaurant.
At RM55++ per
person (minimum
two persons),
expect to savour
a wide range of
dim sums at the
recently voted “Top 10 Best Asian Cuisine
Restaurant” by Hospitality Asia. The dim
sum buffet at the hotel in Petaling Jaya is
available on Saturday (12pm-2.30pm) and
Sunday (10am-2.30pm) until Jan 31. For
reservations and enquiries, call (03) 7665
1111 (ext 138) or (03) 7628 7338.
01.
01
Paris remembered
AMID GLAMOUR
02.
03.
04.
Hollywood pays tribute to French terrorism victims at Golden Globes
W
hile it was all glitz and
glamour, Hollywood
showed its solidarity
with France at the
Golden Globes on
Sunday as the first
major prizes of Tinseltown’s annual
award season were handed out.
Paris had come under deadly attacks
in the past week, starting with 12 lives lost
when two gun-wielding brothers identified as Said and Cherif Kouachi attacked
the office of satirical magazine Charlie
Hebdo last Wednesday. The next day, a
policewoman was shot dead and a man
injured in Avenue Pierre Brossolette in
another shooting incident. The drama
ended with shootouts at two locations —
a printing company north of Paris where
the brothers were killed and at a Jewish kosher supermarket in the Vincennes district
of the French capital where the gunman
identified as Amedy Coulibaly, who was
suspected to have killed the policewoman
earlier, had held several hostages. Coulibaly was killed while he had apparently
shot dead four of the hostages before the
shootout.
At the Golden Globes, it was when Hollywood Foreign Press Association (HFPA)
head Theo Kingma took to the stage to
pledge support for freedom of expression
in connection with the French terrorist
attacks and the recent hacking of Sony
Pictures that the event took a serious turn.
“Together we will stand united against
anyone who will repress free speech, anywhere, from North Korea to Paris,” Kingma
said, bringing the Beverly Hilton audience
to its feet.
Hostesses of the evening Tina Fey and
Amy Poehler welcomed the event with a
sharp monologue poking fun at the Sony
hack and the firestorm over The Interview
— a farce about killing North Korea’s leader,
05.
06.
07.
08.
02
03
AFP reports. The duo joked about how the Wins for Birdman, Boyhood
awards were to celebrate “all the movies Coming-of-age drama Boyhood emerged
that North Korea was okay with.”
triumphant on Sunday at the Golden
Globes, winning three Globes including
More tributes pour in
the coveted Best Drama prize and Best
Oscar-winning actor Jared Leto also paid Director honours for Richard Linklater
a moving tribute, even speaking French. at the star-studded ceremony.
“On vous aime. Je suis Charlie (We love
The pioneering movie — made over 12
you. I am Charlie),” Leto had said.
years with the same cast of actors portrayGeorge Clooney, upon accepting the ing a child’s growth to adulthood — also
Cecil B DeMille award — an honorary won a Best Supporting Actress trophy for
Golden Globe for outstanding contribu- Patricia Arquette.
tions to the world of entertainment — also
“This was a very personal film for me
voiced his support, saying: “Je suis Charlie.” ... and it means so much to us that people
On the red carpet, several stars includ- have seen it and responded to it in that
ing Clooney and his wife Amal, Helen personal way,” Linklater said.
Mirren and Kathy Bates displayed the “Je
Dark comedy Birdman — which had
Suis Charlie” slogan, which has become a started the evening with the most nomrallying cry in the wake of the deadly attack inations at seven — and The Theory of
on the French satirical weekly, AFP reports. Everything, about world-famous scientist
live it! 29
T U E SDAY JA N UA RY 1 3, 2015 • T HEED G E FINA NCIA L DA ILY
05
06
07
08
suggest that Selma and Into the Woods could
be set for best film honours.
The films were briefly posted on the Globes
website as the Best Drama and Best Musical/
Comedy Film awards, before the captions
were taken down, according to industry journal Variety.
ple that died too young,” said series creator
Jill Soloway. “Maybe we’ll be able to teach
the world something about authenticity and
truth and love.”
In October, Amazon ordered a second season of the series — the creation of Soloway,
an Emmy-nominated writer on cult series
Six Feet Under. The first season was released
on Sept 26.
Unlike the Oscars, which are voted on by
some 6,000 industry members of the Academy of Motion Picture Arts and Sciences, the
Globes are selected by fewer than 100 journalists from the HFPA.
But a Globes win can still provide a huge
boost for an Oscars campaign. Oscar nominations will be announced on Thursday.
The Academy Awards will then be held on
Feb 22. — AFP
04
01
d
01. (From left) Director Alejandro Gonzalez
Inarritu who won Best Screenplay for
Birdman and actors Naomi Watts and
Michael Keaton who won Best Actor,
Musical/Comedy for Birdman are seen at the
Beverly Hilton. Photos by AFP
02. The hostesses of the 72nd Golden Globes
awards actresses Tina Fey (left) and Amy
Poehler are seen on the red carpet.
03. Composer Alexandre Desplat paying tribute
at the Golden Globes.
04. Theatre director Sophie Hunter (left) and
fiance actor Benedict Cumberbatch attending
The Weinstein Company & Netflix’s 2015
Golden Globes after party.
05. Richard Linklater took the winning title of
Best Director for Boyhood which incidentally
also won the Globe for Best Film — Drama.
06. The Best Actress in a Motion Picture —
Drama Globe went to Julianne Moore for her
role in Still Alice.
07. Actor and musician Jared Leto was among
those who paid tribute to those killed in the
Charlie Hebdo attack.
08. Amy Adams took the Best Actress, Musical/
Comedy title for her role in Big Eyes at the
Golden Globes.
03
ged
den
ing
est
ter
r 12
aylso
for
me
ple
hat
had
my of
tist
Stephen Hawking, each took home two awards.
Birdman which tells the story of a washedup film actor trying to revive his career on
stage, took Best Musical/Comedy actor prize
for Michael Keaton, and director Alejandro
Gonzales Inarritu won Best Screenplay.
The Theory of Everything, the moving story of Hawking’s descent into disability, won
Best Drama Actor honours for Britain’s Eddie Redmayne, as well as best original score.
The Best Comedy/Musical Film went to
The Grand Budapest Hotel, a stylish caper
starring Ralph Fiennes, while Amy Adams
won best actress in a musical/comedy for art
fraud film Big Eyes.
Among the earlier winners were JK Simmons who won the first prize of the night —
the Best Supporting Film Actor Globe for his
performance as a bullying jazz drumming
teacher in Whiplash, Amy Adams won Best
Actress in a Musical/Comedy for Big Eyes — a
story of art fraud based on real-life event and
Fargo took home the prize for Best Miniseries
or Television Movie.
Real-life dramas
This year’s crop of nominated movies is heavy
on true stories: four of the five Globes best drama contenders are based on real-life events.
Among the historical figures featured are
British geniuses Stephen Hawking and Alan
Turing, and Martin Luther King Jr.
Barely 48 hours before the curtain went up
for the Globes, a website glitch appeared to
Amazon scores breakthrough
On the small screen, online retail giant Amazon scored its first ever Golden Globes for
best comedy series Transparent — a breakthrough in its bid to catch up with streaming
pioneer Netflix.
The series, starring Globes winner Jeffrey
Tambor, tells the story of a man who has transitioned to become a woman and is working
out the thorny details of telling his family.
“This is dedicated to too many trans peo-
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30
live it!
Zen TODAY
Surely silence can sometimes be the most eloquent reply.
— Ali Ibn Thalib
TV of the future may
BE A SPHERE
T
New viewing experience demonstrated at CES 2015 show
he TV of the future may not be
a rectangle, but a sphere.
Some visitors to the 2015
Consumer Electronics Show
(CES) held in Las Vegas from
Jan 6 to 9 got a peek at this new
way to view 360-degree video.
The new viewing experience was shown
as part of a collaboration among several
partners, including French video software
firm Ateme and Britain-based Pufferfish
Displays, which makes the spherical projection module.
Although a 360-degree video can be
viewed on a standard television or tablet,
the spherical module adds a new dimension,
said Mike Antonovich, the Ateme general
manager for the Americas.
This “can augment the experience of
viewing a live concert or sporting event,”
Antonovich said.
Using the sphere makes the viewing an
interactive and collaborative experience,
said Geoff Kell of Pufferfish.
“It will be an addition to the viewing
experience, but it also has great value as a
data visualisation tool” for research or other
purposes, Kell said.
Ateme and its partners recently produced
the first live 360-degree broadcasts using the
trademark LiveSphere.
“You can view from different angles, so if
you are watching a concert you might want
to be part of the audience, and then switch
to be part of the band,” Antonovich said.
01
While the 360-degree imaging has been
around for several years in services such as
Google Maps, Ateme said it is far more challenging to produce this for live television.
It “is completely different to do 360 degrees for live TV, and making it seamless,”
said Ateme research manager Jerome Vieron.
Other partners in LiveSphere include
the Finnish technology group Finwe and
France-based Kolor, which specialises in
“image-stitching”.
The partners are working with broadcasters around the world to produce live events,
using the 360-degree interactive format.
The navigation on the Pufferfish display
is done by hand, while remote control can
be used for viewing on a television screen.
— AFP
02
01. The PufferSphere featured in a BBC
Knowledge channel advertisement.
02. Ateme general manager Mike Antonovich
demonstrating the LiveSphere 360-degree
television system last Friday during
the Consumer Electronics Show in Las
Vegas. The TV of the future may not be a
rectangle, but a sphere. Photo by AFP
S P O RT S 3 1
Japan’s Tomita on trial
for camera theft
He was booted out of last year’s Asian Games after paying a fine
SEOUL: Disgraced Japanese swimmer Naoya Tomita appeared in a
South Korean court yesterday on
charges of stealing a journalist’s
camera at the Asian Games in September.
Tomita, a gold medallist at the
2010 Asian Games, was booted out
of last year’s event in the western
port city of Incheon after paying a
one million won (RM3,300) fine
for the alleged theft.
In Japan, the 25-year-old was
slapped with an 18-month ban by
the Japan Swimming Federation.
Witnesses said Tomita asserted
his innocence when he was questioned by a group of journalists
outside the court in Incheon.
Initially he admitted stealing
the US$7,600 (RM26,980) camera
after police studied images from
closed-circuit TV cameras at the
pool in Incheon.
But he later denied the theft, insisting he had confessed because
he feared he would not otherwise
be allowed to return home.
He also claimed an unidentified person had put the camera
in his bag.
Tomita’s lawyer accused South
Korean police of fabricating the
charges and suggested the real
culprit had been someone with a
vendetta against the Japan swimming team.
The Japanese Olympic Committee, however, called the incident a “very serious violation” of its
code of conduct, while the country’s
Asian Games chief Tsuyoshi Aoki
said the swimmer had not been “in
his usual mental state”.
The hearing in Incheon is continuing. — AFP
Lahiri is Asian
Tour Player of
the Year
Wozniacki has wrist setback
ahead of Australian Open
KUALA LUMPUR: Anirban Lahiri
has been voted the 2014 Players’
Player of the Year for his successful exploits on the Asian Tour
where he won two titles and finished second on the Order of
Merit.
The talented Indian won his
first title outside of India when he
eagled the 72nd hole at the CIMB
Niaga Indonesian Masters before
going on to claim his second win
of the year at the Venetian Macau
Open, which increased his tally
to five Asian Tour titles.
In a highly successful season,
Lahiri contended for the Asian
Tour Order of Merit crown before losing out to David Lipsky
of the United States, who sealed
the win in the second last event
on the 2014 Asian Tour season at
the Thailand Golf Championship.
“I feel honoured and privileged
to be chosen by my friends and
competitors for this award. The
previous recipients of this award
include legends of Asian golf like
Jeev [Milkha Singh] and Thongchai [Jaidee] and it’s inspiring to be
counted among them,” said Lahiri.
The 27-year-old was also a key
figure at the inaugural EurAsia
Cup presented by DRB-Hicom
Bhd where he played a pivotal
role in helping Team Asia secure
a dramatic 10-10 tie against Team
Europe, which featured five players from the successful Ryder
Cup team.
Australia’s Cameron Smith was
named the Rookie of the Year
for a commendable season. —
Asian Tour
SYDNEY: World No 8 Caroline
Wozniacki retired with a wrist injury in her opening match at the
Sydney International yesterday,
but is confident she will play in next
week’s Australian Open.
The Danish star had several visits from the trainer before calling
it quits after the second game of
the second set after dropping the
opening set to Czech Barbora Zahlavova Strycova.
Wozniacki shook her head and
walked to the net to shake hands
with Zahlavova Strycova and forfeited the match.
Zahlavova Strycova will now
meet Australia’s Sam Stosur for a
place in the quarter-finals.
Wozniacki, who lost to Venus
Matsuyama seizes share
of Kapalua lead
KAPALUA, United States: Japan’s Hideki Matsuyama had
eight birdies in a seven-under
66 on Sunday to share the thirdround lead at the US PGA Tournament of Champions with
Jimmy Walker. Matsuyama
notched the low round of the
day, a birdie at the Kapalua
Plantation course’s 18th hole
giving him a 54-hole total of
17-under 202. Walker, who was
part of a four-way tie for the top
spot after the second round,
carded a 67 to maintain a share
of the lead. The duo were two
strokes ahead of Patrick Reed,
who carded a 68, and South
Korea’s Bae Sang-Moon, who
signed for a 69. — AFP
Federer beats Hewitt in
short-form exhibition
Filepic of Naoya Tomita competing in the men’s 50m breaststroke heat at the 10th FINA
World Swimming Championships in Dubai on Dec 18, 2010. Photo by Reuters
Williams in the final of the Auckland Classic on Saturday, said she
withdrew to help her chances of
recovering in time for the year’s
opening Grand Slam, which got
under way in Melbourne yesterday.
“I felt it during a shot. I hit it
against the wind and hit it late and
I felt it in my wrist,” she said.
“I’ve had it before so I know what
it is. It was painful every time I had
to hit a backhand, so I didn’t want
to do it worse before Melbourne.
“I’m just going to try and get
some treatment on it and try and
get ready for next week.”
Wozniacki said she was not concerned about a lack of matches because of the injury setback.
“Definitely feel like I’ve had
enough matches. I feel like I’ve
had some good matches last week
[in Auckland] and made it to the
final,” she said.
Defending champion Tsvetana Pironkova reached the second round after eliminating Italian
eighth seed Flavia Pennetta 6-3,
7-6 (7/4).
Bulgaria’s Pironkova, who once
again had to play qualifiers to reach
the main draw, will next take on
American Madison Keys.
Stosur took over three hours to
overcome the Czech Republic’s
world number 16 Lucie Safarova
7-6 (7/3), 5-7, 6-3 to end a run of
six successive defeats for the 2011
US Open champion. — AFP
Nishikori eyes Kooyong title defence
MELBOURNE: Japan’s Kei Nishikori will hope to use the Kooyong
Classic starting today as final preparation for a run at a possible first
Grand Slam title at the Australian
Open.
The Asian ace, who has worked
himself up to a record-setting fifth
in the world rankings, claimed the
Kooyong trophy a year ago over
Tomas Berdych.
Nishikori is now a serious threat
in every event he enters thanks in
large part to a breakthrough 2014
season, sparked by his Kooyong
win, in which he reached the US
Open final against Marin Cilic.
Though the Croatian won the
IN BRIEF
title, Nishikori’s performance
launched the 25-year-old into the
tennis elite.
The semi-finalist at last week’s
Brisbane International is the man
to beat at the eight-player Kooyong
event, which runs till this Friday at
the former home of the Open, the
historic Kooyong Club in the Melbourne neighborhood of Toorak.
He heads a field comprising
Frenchmen Gilles Simon and Richard Gasquet, the Spanish pair of
Fernando Verdasco and Feliciano
Lopez, Ukrainian Alexandr Dolgopolov, Serbia’s Filip Krajinovic and
Australian hope Jordan Thompson.
The Japanese star begins with a
match against local player Thompson, the world No 274 who won last
month’s Australian Open wild-card
play-off to earn a place in the Grand
Slam main draw. In other day one
matches, Simon faces Verdasco,
Dolgopolov takes on Krajinovic
and Lopez plays Gasquet.
The Florida-based Nishikori remains humble about his career,
saying that any dream Grand Slam
title is likely to come later rather
than sooner.
“Winning might take some time,
you need some luck too when you
play,” he said. “Hopefully it comes
and one day I win a Grand Slam.
— AFP
SYDNEY: Roger Federer fought
his way to a tough win over
old rival Lleyton Hewitt in the
Fast4 tennis exhibition in Sydney yesterday.The Swiss world
No 2 continued his unbeaten
run into the new season with a
4-3, 2-3, 3-4, 4-0, 4-3 win over
the Australian in the short-form
contest. Coming off a fourmatch winning run in Brisbane, where he took the title
in three sets over Milos Raonic on Sunday, Federer started
where he left off. The match
featured an experimental style
of play, with sets being won after four games, no deuces and
play allowed to continue after
lets on serve. — AFP
I’m not going anywhere,
fires indignant Messi
BARCELONA: Four-time World
Player of the Year Lionel Messi shot back angrily Sunday at
rumours that he could leave
Barcelona after clashing with
coach Luis Enrique and the
club’s board. The Argentine
was in top form with a goal
and two assists as the Catalan
giants ended and unsettling
week off the field with a crucial
3-1 win over La Liga champions
Atletico Madrid. “I have never
demanded anything to ensure
that I stay because I have never
had any intention of leaving,”
he told Barca TV after Sunday’s
match. — AFP
Van Gaal defends
methods after defeat
MANCHESTER: Manchester
United manager Louis van Gaal
was forced to defend both his
tactics and squad management
following a disjointed 1-0 home
defeat by Southampton in the
Premier League. Substitute Dusan Tadic’s 69th-minute goal
earned Southampton a first victory at Old Trafford since January 1988, which allowed Ronald
Koeman’s side to climb above
United to third place in the table. Victory was the visitors’
reward for a disciplined and
intelligent display, but United
misfired badly in attack, failing
to muster a shot on target in a
home league game for the first
time since a 0-0 draw with Arsenal in May 2009. — AFP
3 2 S P O RT S
Cahill puts emotions
aside in ‘hometown’ tie
IN BRIEF
Jagielka eyes Everton
revival in Cup replay
Oman will have ‘11 players behind the ball’
BY TA L EK H A RRI S
SYDNEY: Tim Cahill called it a
“massive honour” yesterday to
captain Australia in his home city,
but he promised to leave emotions
aside with an Asian Cup quarter-final spot on the line.
The ex-Premier League striker, who retains his goal-scoring
knack at 35, will lead the Socceroos
against Oman in Sydney today in
the absence of injured skipper Mile
Jedinak. But the Sydney native said
he would not let the occasion get
to him as Australia seek the victory that could put them into the last
eight, and three wins from the title.
“It’s amazing, I love playing for
Australia regardless of which country I’m in but to play at home, in
front of my hometown fans and
Buoyant Lyon
keep feet on
ground after
climbing to top
PARIS: Having snatched the
Ligue 1 lead in spectacular
fashion, Olympique Lyonnais are now trying to keep
their feet on the ground, bearing in mind their shambolic start to the season. Lyon,
who gradually dropped out
of sight after clinching seven consecutive top-flight titles from 2002, were 17th in
August after losing their first
three games.
But Alexandre Lacazette’s
rise as a top-notch striker
helped them climb up the
ladder as everything fell into
place for a team essentially
made of home-grown players.
Eight starters in Sunday’s 3-0
home win against Toulouse
came from Lyon’s youth academy, including France striker
Lacazette.
Lyon have been producing
some free-flowing football to
leapfrog their rivals and reach
a tally of 42 points from 20
games. The road to an eighth
Ligue 1 title is still a long one,
however.
“I do remember where we
come from. If we are less rigorous, we can expect another
month of August,” defender
Christophe Jallet warned in
French sports daily L’Equipe
yesterday.
Coach Hubert Fournier
said: “We can pronounce the
word ‘title’ but we have to
remain realistic.” — Reuters
obviously family and friends is very
special,” Cahill told reporters.
“But with me, not a lot of emotion comes into it when I cross that
white line. I feel that it’s going to be
a massive game for us ... there’s a lot
on the line. We just want to do our
country proud and do really well.”
Despite the loss of Jedinak, confidence is high in the Australian
camp after last Friday’s 4-1 win
over Kuwait left them on the brink
of the quarter-finals.
Australia will guarantee their
place in the knock-out stages today
if they win and South Korea defeat
Kuwait earlier in the day.
Coach Ange Postecoglou said
he would make “at least a couple”
of changes to his starting line-up
as he tries to keep his players fresh.
But Australia will be wary of
Cahill (left)
celebrating
Massimo
Luongo’s goal
(right) during
their Asian Cup
Group A match
against Kuwait in
Melbourne last
Friday. Photo by
Reuters
Japan cruise to 4-0 win
over Palestine
Paul Le Guen’s much improved
Oman, against whom they have
lost and drawn twice in their last
three meetings.
Sydney fans expecting another
big win may have to be patient with
Cahill, who scored the equaliser
last Friday, warning Oman will “literally have 11 players behind the
ball”. — AFP
S Korea must show killer instinct
BY P ETER HU TC HI S O N
CANBERRA: South Korea coach
Uli Stielike urged his players yesterday to find a killer touch against
defence-minded Kuwait as they
look to secure their place in the
Asian Cup quarter-finals.
The Taeguk Warriors are far
from prolific and they only defeated Oman 1-0 on Saturday despite
dominating possession in their
opening Group A clash.
And they would have paid for
their lack of goals had goalkeeper
Kim Jin-Hyeon not expertly tipped
a header onto the crossbar at the
death.
Stielike said South Korea has to
learn to “kill the game” and take
their chances when they come.
“Our problem was that during a
very good phase when we came out
for the second half we had 70% of
ball possession and we had three
clear chances,” Stielike said. “In that
moment you have to kill the game.
You have to make it 2-0 and then
play the last half hour quietly,” the
German said.
“We will not change our philosophy. The team that has control of
the ball has control of the game but
this team in the big moments has
to score and that’s what we have to
learn from the Oman game.”
South Korea’s bid for a first Asian
Cup trophy in 55 years was dealt a
blow shortly before the start of the
tournament when target man Kim
Shin-Wook was ruled out through
injury. But they still have the in-
genuity of Bayer Leverkusen star
Son Heung-Min and Saturday’s
goal-scorer Cho, who is fit to face
Kuwait after shaking off an injury.
Stielike warned that the Gulf
side, who lost 4-1 to Australia in
their opening match, would be determined not to concede.
South Korea last won the Asian
Cup in 1960 and are under pressure to deliver after a disappointing
World Cup in Brazil last summer
saw them exit at the group stage.
They can ill afford to drop points
against Kuwait before they square
off against the Socceroos in Brisbane on Jan 17.
Victory would see them qualify
for the last eight if Australia also
beat Oman in Sydney later today.
— AFP
Fates entwined, Toure and Bony lead exodus
BY TOM W I LLI AM S
LONDON: Ivory Coast teammates
and probable future clubmates Yaya
Toure and Wilfried Bony (pic) headline the departures from the English
Premier League for the Africa Cup
of Nations, which begins this week.
Toure, star of Manchester City’s
title success last season, made a
sluggish start to the campaign, but
he has rediscovered his best form in
recent weeks, scoring seven times
in his last 11 appearances.
His goals and driving midfield
displays will be badly missed by
Manuel Pellegrini’s side, who are
breathing down Chelsea’s necks
in the battle for the English crown.
But the blow has been softened
by the news that Frank Lampard’s
LONDON: Everton captain
Phil Jagielka says today’s FA
Cup third round replay at West
Ham offers his side the perfect
chance to step up their recent
mini-revival. Roberto Martinez’s side have endured a disappointing season which sees
them languishing at the wrong
end of the Premier League, but
they have shown signs of getting back on track with a pair
of battling draws over the last
week. A 1-1 draw against champions Manchester City on Saturday was the second time in
four days they had come from
behind at Goodison Park after earning a late FA Cup third
round equaliser against West
Ham in midweek. — AFP
contract has been extended until
the end of the season, delaying
his arrival at City’s sister club New
York City FC.
City also coped reasonably well
in Toure’s absence during the last
Africa Cup of Nations in 2013, win-
ning twice and drawing twice while
the former Barcelona player was in
South Africa.
Swansea City are likely to find it
altogether more difficult to compensate for the absence of Bony,
who was the league’s top scorer in
2014 with 20 goals and has found
the net nine times this season. But
with the 26-year-old poised to complete a £28 million (RM150 million)
move to Manchester City, he is likely to have played his last game for
Swansea already.
Swansea manager Garry Monk
can at least turn to France international Bafetimbi Gomis, signed
from Lyon during the close season, but he has found the net only
four times in his 22 appearances to
date. — AFP
NEWCASTLE (Australia): Defending champions Japan
thrashed Palestine 4-0 in their
Asian Cup opener yesterday,
giving them the perfect start
in their quest for a fifth title.
The Blue Samurai, who won
the tournament for a record
fourth time in 2011, needed
only eight minutes to take the
lead against a Palestine team
making their first appearance
in Asia’s showcase competition. Yasuhito Endo rifled a
shot into the bottom corner,
while Shinji Okazaki, who has
been in a rich vein of form for
German club Mainz, scored
with a poacher’s strike in the
25th minute. — AFP
Ball boy, 12, becomes
China penalty hero
BRISBANE: If China go far
in this Asian Cup, they may
have a 12-year-old ball boy to
thank. Unassuming Brisbanite
Stephan White has been hailed
in China after helping goalkeeper Wang Dalei save a crucial penalty in the 1-0 win over
Saudi Arabia. As Naif Hazazi
lined up his kick, Wang asked
White which way to dive. The
ball boy answered “left”, Wang
followed his advice and saved
the spot kick with his legs. After Wang’s vital stop, China
scored through Yu Hai’s freekick to claim a priceless opening Group B win. — AFP
Equatorial Guinea braced
for Cup of Nations
MALABO (Equatorial Guinea): The Africa Cup of Nations
begins in Equatorial Guinea
on Saturday, with organisers
crossing their fingers for a
successful tournament after
a build-up dominated by Morocco’s refusal to act as hosts
amid fears over Ebola. The
small, oil-rich central African state stepped in to save
the day for the Confederation
of African Football (CAF) in
mid-November when they
agreed to host the competition, despite having barely
two months to prepare. — AFP

Turnaround plan in store for ailing Masterskill

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