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FBM KLCI 1753.31
9.74
KLCI FUTURES 1746.00
11.00
STI 3307.70
7.02
RM/USD 3.5700
CPO RM2304.00
3.00
OIL US$49.82
0.35
PP 9974/08/2013 (032820)
PENINSULAR MALAYSIA RM1.50
TUESDAY JANUARY 20, 2015 ISSUE 1883/2015
FINANCIAL
DAILY
MAKE
BETTER
DECISIONS
How Nippon
Paint
made Goh
Singapore’s
richest man
18 F E AT U R E
www.theedgemarkets.com
4 HOME BUSINESS
Malaysia to unveil
policy changes
today as oil
earnings slide
5 HOME BUSINESS
HSBC: Budget 2015
may see operating
expenditure cut
6 HOME BUSINESS
MPOB: RM178b
GNI target a
tall order
13 H O M E
Saiful accuses
TV3 of
giving
Anwar
too much
uc
coverage
by
u
o
y
o
t
t
h
g
u
o
r
b
s
i
y
p
Indonesia’s true-life
o
c
l
a
t
This digi
cop drama
2021 FOCUS
GOLD US$1276.80
0.10
FBM KLCI 1753.31
9.74
KLCI FUTURES 1746.00
11.00
STI 3307.70
7.02
RM/USD 3.5700
CPO RM2304.00
3.00
OIL US$49.82
PP 9974/08/2013 (032820)
PENINSULAR MALAYSIA RM1.50
TUESDAY JANUARY 20, 2015 ISSUE 1883/2015
FINANCIAL
DAILY
MAKE
BETTER
DECISIONS
4 HOME BUSINESS
Malaysia to unveil
policy changes
today as oil
earnings slide
5 HOME BUSINESS
HSBC: Budget 2015
may see operating
expenditure cut
6 HOME BUSINESS
MPOB: RM178b
GNI target a
tall order
13 H O M E
Saiful accuses
TV3 of
giving
Anwar
too much
coverage
2021 FOCUS
Indonesia’s true-life
cop drama
How Nippon
Paint
made Goh
Singapore’s
richest man
18 F E AT U R E
0.35
GOLD US$1276.80
0.10
2
T UESDAY JAN UARY 2 0 , 2 0 1 5 • TH EEDGE FI N AN C I AL DAI LY
For breaking news updates go to
ON EDGE T V
Investors pile into
eurozone debt
As focus turns to QE details
REUTERS
Signature
International
confident of
double digit
growth despite
property
slowdown
The Edge Communications Sdn Bhd
(266980-X)
Level 3, Menara KLK, No 1 Jalan PJU 7/6,
Mutiara Damansara, 47810 Petaling Jaya,
Selangor, Malaysia
LONDON: Investors grabbed eurozone sovereign debt yesterday,
sending implied borrowing costs
for many countries to record lows, in
anticipation of the European Central
Bank (ECB) announcing a sovereign
bond-buying scheme this week.
ECB president Mario Draghi met
German chancellor Angela Merkel
last week and, according to German newspaper reports, outlined
detailed plans for a quantitative
easing (QE) programme.
While governing council member Ewald Nowotny (pic) became
the latest policymaker to stress the
limits of ECB easing yesterday, 70%
of economists polled by Reuters last
week expected QE to be announced
after this Thursday’s meeting.
Yields on Italian and Spanish
bonds fell to record lows, with Germany’s matching lows hit last Friday. Even an early sell-off in Greek
yields, after Fitch Ratings put a neg-
launch QE to counter deflation, attention has turned to the mechanics.
The ECB may leave the burden
of risk for purchases with national
central banks, and set limits on how
much debt can be bought from each
country, German newspapers said.
See related story on Page 16
ative outlook on its rating, proved
short-lived.
“The ECB is under significant
pressure to deliver a large and credible QE package this week — not
easy given ongoing resistance from
the hawks on the Governing Council, but we think that the ECB will
overall deliver,” said UBS economist
Reinhard Cluse.
With most market participants
now convinced the ECB will need to
Gianluca Ziglio, executive director of fixed income research at
Sunrise Brokers LLP, said the ECB
may even exclude junk-rated Greek
debt on concerns that political developments there could lead to a
further default.
But others said any exclusion of
Greece would be against the founding principles of the currency union.
Fitch last Friday revised the outlook on its “B” rating to negative
from stable, saying that national
elections this weekend could torpedo economic recovery. — Reuters
Publisher and Group CEO Ho Kay Tat
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Oil’s plunge to siphon Gulf
petrodollars from global markets
DUBAI: Plunging oil prices could
prompt Gulf Arab sovereign wealth
funds to pull tens of billions of dollars out of global markets this year,
with much of the money expected
to come out of US dollar debt and
deposits with banks abroad.
But — in a crucial balancing act
for funds tasked with diversifying
their economies away from hydrocarbons — many are expected to
remain active in making long-term
investments such as infrastructure
and real estate, with an increasing focus on developing nations
as opposed to sluggish European
economies.
For over a decade, the funds of
the six-nation Gulf Cooperation
Council (GCC) have been big play-
ers in the securities markets of the
developed world, buyers of stakes
in high-profile companies such as
Total SA and Volkswagen AG, and
investors in European real estate.
They have grown rapidly; including the foreign assets of Saudi
Arabia’s central bank, the GCC’s
sovereign funds now total about
US$2.43 trillion (RM8.668 trillion),
according to the International Monetary Fund. Most of that is invested
overseas.
But the growth is set to falter as
oil’s 60% tumble over the past seven months slashes governments’
energy export revenues — “petrodollars” — the main source of new
money for the funds.
Capital Economics Ltd estimates
if Brent crude averages US$60 a
barrel this year, the GCC will run
a current account deficit of US$60
billion, its first deficit since 1998.
That could halt net flows of fresh
petrodollars into the funds entirely.
In fact, flows could reverse. Governments will probably liquidate
some of their fund assets to cover
budget deficits as their revenues
fall; if Brent stays at its current level of around US$50, all GCC governments are likely to run deficits.
The projected deficits are small
compared with the size of the funds,
so in contrast to crisis-hit oil exporters such as Russia, Gulf states will
avoid any mass sell-off of assets, say
bankers and analysts familiar with
the funds’ operations. — Reuters
IN BRIEF
Global regulators mull
swaps rules reprieve
HONG KONG: Derivatives
watchdogs expect to agree
a new timeline for the introduction of new capital requirements for swaps transactions
after strong resistance from
the international banking industry, Europe’s top securities
regulator said. Speaking on the
sidelines of the Asia Financial
Forum in Hong Kong yesterday, Steven Maijoor, chair of
the European Securities and
Markets Authority, told Reuters
that international regulators
hope to reach an agreement
on a new timeline for introducing margin requirements for
privately-traded derivatives in
the coming weeks. — Reuters
Banks’ losses from SNB
shock seen mounting
ZURICH: The US$400 million
(RM1.427 billion) of cumulative losses that Citigroup Inc,
Deutsche Bank AG and Barclays plc are said to have suffered from the Swiss central
bank’s decision to end the cap
on the franc may be followed
by others in coming days. “The
losses will be in the billions
— they are still being tallied,”
said Mark Williams, an executive-in-residence at Boston
University specialising in risk
management. — Bloomberg
S’pore bill to restrict
public alcohol drinking
SINGAPORE: The drinking of alcohol between 10.30pm to 7am
in public places, including parks
and Housing and Development
Board void decks, could soon
be banned if the new Liquor
Control (Supply and Consumption) Bill tabled in Parliament
yesterday is eventually passed.
The Straits Times report said retail shops islandwide will also
not be allowed to sell take-away
liquor from 10.30pm.
Thailand to launch first
SEC in north
BANGKOK:Thailand will launch
its first special economic zone
(SEC) located in the country’s
north this year to help boost
trade and attract investors keen
to set up logistics and supply
chain networks, the country’s
deputy transport minister said
yesterday. — Reuters
Credit crackdown exposes flimsiness of China rally
BY P ETER THAL LARS E N
HONG KONG: Regulators are withdrawing some of the air from China’s
stock market bubble. A two-pronged
crackdown on margin trading and
shadow finance has temporarily
reversed the near-vertical rise in
mainland stocks. It’s a reminder
of how much the recent mania depends on borrowed money.
Chinese authorities have mostly
remained on the sidelines as stocks
soared in recent months. Now they
are cracking down. The country’s
securities regulator announced last
Friday that it had caught some brokerages breaking the rules on providing margin finance to customers.
Two of the largest, Citic Securities
Co Ltd and Haitong Securities Co
Ltd, were among those banned from
opening new margin accounts for
three months. On the same day,
China’s banking watchdog published
draft rules restricting entrusted loans
— a popular technique for lending
among non-financial companies.
On the face of it, neither measure
looks excessive. Yet the stock mar-
ket frenzy shows regulators have
reason to be concerned. Chinese
investors have borrowed heavily
to finance their share buying: margin loans against Shanghai-listed
shares have soared by 80% to 772
billion yuan (RM442.68 billion) in
the past three months. Inter-company loans may also be helping to
fuel speculation: new entrusted
loans jumped to 458 billion yuan
in December, according to central
bank data — the highest level on
record. Leverage could turn a selloff into an economic blow.
Financial companies are the
main victims. Shares in many
mainland securities firms and
banks fell by the maximum permitted 10% yesterday. Haitong’s Hong
Kong-listed shares dropped below
the price at which the company
raised US$3.9 billion (RM13.88 billion) from investors in December.
Citic Securities will face questions
over its plans for a similar fundraising. — Reuters
See related story on Page 22
HOME BUSINESS 3
TU E SDAY JA N UA RY 20, 2015 • T HEED G E FINA NCIA L DA ILY
E&O buys London office
towers for RM309m
Developer adds Landmark House and Thames Tower to its portfolio
BY KAMARUL ANWAR
KUALA LUMPUR: Eastern & Oriental Bhd (E&O) is adding two more
properties to its London portfolio by
acquiring vintage office buildings
Landmark House and Thames Tower for a total of £57 million (RM309
million). In a filing with Bursa Malaysia yesterday, E&O (fundamental: 1.5; valuation: 0.6) said its wholly-owned subsidiary, Hammersmith
Properties Ltd, last Friday signed a
property sale contract with Gems
Hammersmith (Luxembourg) Sarl.
The agreement was for Hammersmith Properties to acquire Landmark House and Thames Tower,
which sit on 1.2 acres (0.4856ha) in
Hammersmith Bridge Road. The two
buildings, which were constructed
in the 1960s, are close to the A4, the
principal road connecting Central
London to Heathrow Airport.
There is a total net internal area
of 135,448 sq ft between Landmark
House and Thames Tower.
While 63% of Landmark House
is currently occupied by short-term
tenants and generates an annual rental income of £1.63 million,
E&O group managing director Datuk
Terry Tham said there is potential
for a major refurbishment of both
office towers.
“This prime freehold parcel in
the established commercial hub
of Hammersmith represents a significant refurbishment or redevelopment opportunity for E&O in
the future. Subject to the relevant
a-uthority approvals, there is the
potential to create Grade A office
space and residential accommodation in an area where demand for
quality new build property is strong,”
he said in a statement.
E&O’s filing stated that Thames
Tower is currently vacant. However,
its associated car park is subject to
short-term parking leases.
Established offices based in
Hammersmith include Bechtel, Disney, L’Oreal, Sony Ericsson, AOL
UK, Accor UK, GE Capital and US
Airways. Hammersmith’s London
Underground stations provide access to the Piccadilly, Hammersmith
& City and District lines, and are
within two minutes’ walking distance of the site.
The acquisition of the office
buildings, however, could theoretically result in E&O’s net borrowings
flirting in the ideal ratio of 0.5 times
of its equity. The group currently
intends to use bank borrowings for
70% of the purchase value, which
will raise its pro forma net borrowings by 68.5% to RM759.93 million
from its audited net borrowings of
RM450.99 million for its financial
year ended March 31, 2014 (FY14).
This will result in its pro forma net
gearing rising to 0.52 times from 0.31
times. The deposit and remaining
15% payment will be funded via internal funds and/or bank borrowings.
However, as at Sept 30, 2014,
E&O’s total debt net of cash and cash
equivalents stood at RM475.72 million, or 31.33% of its shareholders’
funds. Assuming that it borrowed
RM244.26 million for the acquisition of the London offices, E&O’s
net gearing would be 0.47 times.
E&O is looking to capitalise on
the current popularity of the London property market. Citing data
from CBRE, the group said: “Hammersmith is experiencing strong
demand and price growth reflected by a 7% increase in the second
quarter of 2014 alone. Sentiment is
supported by significant enhancements to the wider area, including
major regeneration works that are
helping it to close the gap on the
neighbouring affluent borough of
Kensington and Chelsea.”
Tham says there is potential for a major
refurbishment of both office towers.
Photo by Patrick Goh
Landmark House and Thames
Tower’s acquisition does not require
E&O shareholders’ approval.
The two properties will join the
group’s existing Princes House and
ESCA House properties. Together,
E&O’s London investment has a gross
development value of RM1.4 billion.
E&O shares closed two sen higher
at RM2.48 yesterday, giving it a market capitalisation of RM2.77 billion.
The Edge Research’s fundamental
score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers.
The valuation score determines if a
stock is attractively valued or not,
also based on historical numbers.
A score of 3 suggests strong fundamentals and attractive valuations.
4 HOME BUSINESS
M’sia to unveil policy changes today
Move is to help economy adjust to impact of slumping global crude prices
KUALA LUMPUR: Prime Minister
Datuk Seri Najib Razak will announce policy changes, including likely budget revisions, today
to help the country’s oil exporting
economy adjust to the impact of
slumping global crude prices.
Southeast Asia’s third-largest
economy relies on oil and gas (O&G)
export revenues to maintain strong
growth and control a mountain of
debt. The adverse turn in the crude
market has put its current account
balance under strain and ruined
budget projections.
A 10% fall in the ringgit currency
in the past four months has reflected
investors’ mounting worries, as the
government’s budget for 2015 was
based on over-optimistic forecasts for
oil prices and economic expansion.
Quoted by Bernama yesterday,
Najib flagged the need for change
to meet the more straitened times.
“An accurate and wise approach
is necessary to mitigate the effects
of the oil price slump on economic
growth, national revenue, and the
value of the ringgit,” Najib said.
Bernama reported that he would
announce “economic modifications
and interventions” today. A government official told Reuters that
Najib was also likely to announce
a revised 2015 budget.
The country’s 2015 budget, tabled
in October 2014, was presented with
the assumption that oil prices would
have kept to US$100 (RM356) a barrel, whereas the price of Brent crude
has fallen by more than half.
Aside from the impact of a
plunging oil market, Malaysia is
also feeling the chill from slowing
economic growth in China, the second largest export market.
A budget revision could help assuage investors’ concerns, if it com-
mits to reducing its fiscal deficit by
cutting spending to counter a loss of
revenue from the commodities sector.
The stock market fell 3.8% over the
past year, taking its biggest hit in December when the decline in oil prices
became more acute. Its government
bond market could see further selloff as foreign investors hold 46% of
the country’s bonds.
The ringgit was emerging Asia’s
worst-performing currency in 2014,
and having lost 1.9% since the start
of this year it still holds that unwanted ranking.
The decline in oil prices has hit
state oil firm Petroliam Nasional Bhd
(Petronas), which accounts for most
of the government’s O&G revenue.
The company warned in November
that payments to the government in
the form of dividends, tax and royalties could be 37% lower this year if oil
stays around US$75 a barrel.
Are tech stocks the new black?
BY KAMARUL ANWAR
KUALA LUMPUR: Technology
stocks were all the rage again last
week, with many counters dominating the top active ranking. Now,
their share prices are valued at premiums that even most oil and gas
(O&G) giants could not rival during
the industry’s heydays.
Case in point, Systech Bhd (fundamental: 1.65; valuation: 1.5),
which was consistently in the top
five most active ranking, jumped
26.09% between Jan 9 and yesterday to close at 29 sen and had a
trailing 12-month price-earnings
multiple of 31.13 times, according
to The Edge Research.
In the same period, Nova MSC Bhd
(fundamental: 1.4) gained 18.52% to
16 sen and has a price-earnings ratio
(PER) of 66.59 times, while Privasia
Technology Bhd (fundamental: 1.4;
valuation: 0.6) rose 11.11% to 15 sen,
which was 17 times its past 12-month
earnings per share.
Meanwhile, Censof Holdings
Bhd (fundamental: 1.45; valuation:
0.6) gained 10% from Jan 9 to close
at 44 sen yesterday.
IFCA MSC Bhd, which was
last year’s best-performing stock,
breached the RM1 mark last week
from its high of 8.5 sen a year ago.
Closing at 96.5 sen yesterday, IFCA
(fundamental: 3; valuation: 1.5) has
a PER of 38.3 times.
My EG Services Bhd (MyEG) (fundamental: 2.6; valuation: 1.5) instead
fell 8.75% from its closing high of
RM2.70 to RM2.48 yesterday, after a
rally when it was reported that it had
struck a deal with the government
to provide online renewal permit to
foreign workers. Its 12-month trailing price-earnings multiples were
56.05 times.
However, analysts and fund managers are of the view that the current
trend is just a trend. The flavour will
run out eventually for many of the
technology stocks, especially those
with small share bases and lack of
earnings growth story.
Inter-Pacific Securities head of
research Pong Teng Siew noted that
many of these technology counters
constitute software makers, which
may have been part of the goods and
services tax (GST) play since last year.
With the exception of Censof and
MyEG, all the stocks mentioned have
been featured as The Edge Research’s
Stock with Momentum. These stocks
do not necessarily have to be fundamentally solid or undervalued, as a
mathematical algorithm will detect
the counters with ascending momentum in share prices and volumes.
“GST is a theme play. It’s a good
trading idea that spilled over to
makers of other forms of software.
However, the question remains:
what will happen to these stocks
once the GST is implemented [on
April 1]?” Pong asked.
He told The Edge Financial Daily
that technology stocks are mainly
favoured by retail investors.
Pong said he generally avoids
these stocks as they lack institutional
presence and have small issued share
capitals and expensive valuations.
“Their share prices can also be
volatile because of little-to-no institutional funds supporting the
stocks,” Pong said.
The Edge Research data also
showed that all the aforementioned
technology stocks, save for MyEG
and Censof, have a volatility score
of 5 out of 5, which measures the
volatility of a stock based on its share
price movement relative to the whole
market over a period.
Apart from IFCA, Systech has also
charted its growth plans post-GST.
Its chief executive officer and largest shareholder Raymond Tan told
The Edge Financial Daily in an interview last November that Systech
was creating a third revenue stream
by providing new security solutions
and intelligence big data analytics
— which serve to prevent computer
hacking. This is expected to be Systech’s catalyst.
Currently, Systech designs, develops, customises and implements proprietary software solutions to mostly multilevel marketing companies
under its subsidiary Syscatech Sdn
Bhd. It also develops franchise software system for retail and franchises’
operational and management needs
under Mobysys Sdn Bhd.
As for technology stocks in general, Tan believes that Alibaba Group
Holding Ltd’s recent initial public offering — which was the largest ever at
US$25 billion (RM89 billion) — had
rejuvenated investor interest in technology stocks worldwide, particularly
in the software and services segment.
“We do believe that there will be a
further shift in interest towards technology stocks following the decline in
[crude] oil prices affecting the O&G
players as well as various government
initiatives in moving towards e-government and services.
“These factors will generate demand for technology companies
involved in software and services
segment, potentially further increasing their valuations in the near
future,” he added.
Tan confirmed that no institutional fund currently has any holding in
Systech, or has yet to approach the
company to subscribe to a stake.
“Petronas will make capital expenditure deferments and reductions in operational expenditure in
response to the recent steep 60% decline in oil prices,” it said in a statement on Sunday night.
Analysts were uncertain how far
Najib would change policies, but expected him to reaffirm the commitment to bring down the fiscal deficit.
“It’s a tough balancing act but the
preference would be to try to stick to
their fiscal target as much as they can,”
said Euben Paracuelles, economist at
Nomura Holdings Inc.
The fiscal deficit target for 2015
is 3% of gross domestic product
(GDP), reduced from a target of
3.5% for 2014. The government is
likely to hold on to its 3% fiscal deficit target by using savings derived
from the elimination of fuel subsidies and earnings gained from a
consumer tax to be introduced in
April. The goods and services tax is
set at 6% and is expected to bring in
a revenue of RM23 billion this year.
“This offers a buffer and flexibility for the non-essentials in terms
of operating expenditure. It’s still
possible for them to get 3%,” said
Paracuelles, adding that the government risks a ratings downgrade
if its fiscal deficit goes beyond 4%.
Analysts believe the government
needs to reduce its growth forecast,
as an unrealistic assumption will
lead to a sharp rise in Malaysia’s
debt-to-GDP ratio. The government
has forecast a 5% to 6% growth for
this year, whereas market forecasts
are around 4%.
“Najib may hint that a 5% to 6%
growth may not be achievable due
to the global oil price plunge but
it’s likely the official figure will only
be released in March,” said Paracuelles. — Reuters
Sanichi to gain RM40m from
maiden property foray
BY C H E S T E R TAY
KUALA LUMPUR: ACE Market-listed Sanichi
Technology Bhd is expected to reap a pre-tax
gain of RM40 million from its maiden mixeduse property development in Klebang, Melaka,
which will be launched in March.
“This is simply by subtracting the project’s
GDV (gross development value) and its development cost,” its managing director Datuk Dr Jacky
Pang Chow Huat (pic) told The Edge Financial
Daily in a phone interview yesterday.
Dubbed “Marina Point”, the project features 352 small office/home office (SoHo)
units and 120 retail units, with a total GDV
of almost RM170 million.
“Showroom units are currently under construction and are expected
to be completed by the end of next month,” said Pang, adding that the
project will contribute “significantly” to the group’s earnings by 2015/16.
Sanichi, a precision plastic injection mould maker, last year ventured
into property development.
For its first financial quarter ended Sept 30, 2014 (1QFY15), Sanichi
(fundamental: 1.95; valuation: 1.2) saw its net profit shrink to RM589,000
from RM1.83 million a year ago; while revenue fell 28.2% to RM4.9 million from RM6.82 million in 1QFY14.
Despite a slowing property market, Pang is confident that Marina
Point will attract foreign buyers mainly due to lower foreign property
ownership barriers in the state and the weaker ringgit.
“I think it is the Klang Valley and Johor Baru (property markets) that
are slowing down, not Melaka’s. The minimum entry point for foreign
ownership is still RM500,000, and coupled with the weakening ringgit, our
property project becomes cheaper for them [foreigners to buy],” he said.
Pang said Sanichi had engaged CBD Properties Sdn Bhd to market
the project in Singapore and Hong Kong, forecasting equal ownership
from foreign and local buyers at Marina Point Melaka.
Going forward, he said the group is keen on acquiring affordable
suburban land around the Klang Valley.
As at Sept 30, 2014, Sanichi’s cash position stood at RM57.4 million.
Apart from land acquisitions, Pang said the money will also serve to
expand its plastic business albeit on a segmental basis. He foresees property development will contribute about 80% of Sanichi’s revenue in the
future. Pang has been accumulating shares in the group since October
last year. As at Jan 6, 2015, he had a 3.28% stake in the group.
“As long as there are people willing to sell, I am willing to buy. Shareholders are confident of the company, so am I,” he said.
The group’s largest shareholder is currently Pelaburan Mara Bhd with
a 15.33% stake, followed by Mah Wee Hian @ Mah Siew Kung who owns
10.4%, according to filings with Bursa Malaysia.
Sanichi shares closed up one sen or 11.11% to 10 sen yesterday,
with 15.29 million shares transacted, giving it a market capitalisation of RM91.25 million.
HOME BUSINESS 5
TNB likely to win in Integrax deal
This is without having to revise upwards its offer price to take over the port operator
BY C Y NTHI A B L EMI N
KUALA LUMPUR: Tenaga Nasional
Bhd (TNB) is likely to end up with
a controlling stake in Integrax Bhd
without having to revise upwards
its offer price for the port operator,
said analysts.
Last Monday, TNB made a general offer of RM2.75 per share for
the remaining 77.88% stake it does
not own in Integrax. The offer price
was already a premium of 21.7% to
the closing price of Integrax (fundamental: 1.65; valuation: 0.6) prior
to the takeover announcement.
But Integrax’s single largest
shareholder Amin Halim Rasip,
who holds a 22.81% stake, last Friday rejected TNB’s bid, stating that
the takeover was unfair and unreasonable.
Perak Corp Bhd (fundamental:
1.90; valuation: 1.2) holds another
15.74% in Integrax, while TNB itself
owns 22.12% of the port operator.
“TNB could make a better offer but the question is how much
would be enough? Even if TNB
does not make a better offer, we
think that it would still end up
with a controlling stake in Integrax,” said CIMB Research in a
note yesterday.
CIMB Research analyst Faisal
Syed Ahmad said TNB need not
raise its offer price to convince the
shareholders of Integrax (Amin in
particular) to part with the company.
“The current offer price values
Integrax at 20 times historical priceto-earnings (P/E), which is a bit
steep, as we have highlighted before. Valuations aside, Amin’s reluctance may be prompted by his
aim of securing a deal from Vale
International SA,” he added.
If this is the case, Amin may not
sell at any price, Faisal said. And,
therefore, TNB (fundamental: 1.3;
valuation: 1) upping its offer would
not make a difference, he pointed out.
“If TNB does make a better offer,
we would be neutral, as we believe
that TNB is very keen to secure
control of Integrax for strategic
purposes.
“On the flip side, if TNB decides to maintain its current offer, it could still end up with 60%
of Integrax (excluding Amin and
Perak Corp), which would give it
more control over the company
than the other parties,” said CIMB
Research.
It added that this majority stake
may be enough for TNB to steer
the direction of Integrax in order
to meet its own strategic targets.
The current takeover offer would
cost TNB RM644.23 million, of
which several research houses said
was already at a decent premium
and advised minority shareholders
to take the offer.
It has been reported that TNB
wants Integrax to focus on handling
the coal shipment for its power
plants near the latter’s Lekir Bulk
Terminal (LBT), while Amin intends
to broaden its client base.
A minority shareholder of Integrax said the offer price, which is
based solely on net asset per share
or discounted cash flow valuation
based on existing contracts, “does
not do justice to the minority shareholders”.
“Integrax ought to be valued on
a more holistic approach on the basis of revised net asset value taking
into consideration the replacement
cost of its facilities. Even the unused
stockyard is worth a lot of money,”
the minority shareholder told The
Edge Financial Daily, adding that
there’s also RM154.6 million cash
reserves sitting in Integrax, which
has negligible debt.
“And then there’s the M5 coal
handling services contract (with
TNB) which should be signed soon.
Who knows with the delays in completion of the two coal-fired power
plants, 1Malaysia Development
Bhd’s 2,000mw Jimah power plant
and Tanjung Bin’s power plant expansion, TNB’s Janamanjung power
plant (in Perak) may need to plant
up more capacity to pick up the
slack,” the minority shareholder
added.
Integrax owns two terminals
with an 80% stake in LBT and 50%
less one share in Lumut Maritime
Terminal. TNB is Integrax’s only
customer at LBT (90% to 95% utilisation rate), which facilitates the
import of coal for its power plants.
Nevertheless, another analyst
said TNB does not have to pay more
than it is currently offering as the
amount is already at a premium.
More so, TNB is the only customer
of Integrax in LBT.
If it fails to gain control of Integrax, TNB can always build its own
port in the same vicinity, without
relying on the former, said the analyst.
“Tenaga could use the RM644.23
million to build its own port instead,” the analyst said.
Shares of Integrax yesterday
closed 1 sen or 0.36% lower at
RM2.74, while Perak Corp shares
also closed 3 sen or 1.05% lower at
RM2.82. TNB’s share price settled
12 sen or 0.83% higher at RM14.50.
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Budget 2015 may see operational
expenditure cut, says HSBC
BY JEFFREY TA N KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak may
announce a cut in operational
expenditure (opex) when he presents the government’s policy responses to reduced earnings from
the fall in oil and gas prices today.
The premier had last week
announced that the government
would relook the national budget
tabled last year following the tumble in crude oil prices and a weakened ringgit against the US dollar.
“There is room for adjustments
in opex. So let’s see which part of
the opex can be cut back,” said
HSBC Bank Malaysia Bhd economist for Southeast Asia Lim Su Sian.
On the other hand, capital expenditure (capex) is expected to
be retained, Lim said at HSBC’s
Economics and Markets Outlook
for 2015 briefing yesterday.
As there continues to be a
“thrust” in government spending, she believes capex should
be retained as it would help the
nation achieve medium- to longterm economic growth.
She said fiscal spending “should
not be overly conservative” as it is
still required for economic growth,
despite recognising the need to
maintain the fiscal target of 3% of
gross domestic product (GDP).
Lim said capital expenditure is expected
to be retained. Photo by Kenny Yap
Lim also lauded Najib’s move to
revise the budget as it would serve
to reassure investors and the business community.
“We are encouraged that the
prime minister has come out to be
communicative. That is going to be a
good thing for the investment community, rather than keeping mum
and not doing anything,” said Lim.
She disagreed that the government’s move to revise the budget
now, after crude oil prices have declined significantly, and not earlier,
was “doing too little too late”. Instead,
she observed that the government
was already doing the best it can.
“We think they (the government)
are in a very difficult position. No-
body could have predicted such a
rapid and steep decline in oil prices,” she said.
Lim also commended the government for initiating subsidy rationalisation as it knew full well
that the national coffers would be
impacted by lower oil revenue.
HSBC forecasts Malaysia’s GDP
this year will grow at a slower pace
of 5.2% compared with 5.8% last
year in the face of a moderate
growth outlook.
Lim said the drag will come from
the exports and investment sides,
even more so now in light of significantly lower crude oil prices.
HSBC also expects inflation to
hit 3.8% this year with the upcoming goods and services tax, up from
an expected 3.1% last year.
The figure is well above Bank Negara Malaysia’s “comfort range” of
2% to 3% but Lim does not expect
any policy tightening in response.
On the ringgit, HSBC head of foreign exchange research for Asia-Pacific Paul Mackel said the currency
will trade at around 3.57 against the
US dollar this year and at around
3.65 next year.
He said the volatility is going to
continue for the time being, given
the uncertain variables such as
monetary policy divergence, commodity prices and outcomes of
central banks’ upcoming meetings.
Domino’s Pizza offers 30% discount
to help ease burden of Malaysians
BY Y IMIE YO N G
SHAH ALAM: Domino’s Pizza
Malaysia is offering 30% discount
on all items to “help ease the burden” of local consumers.
“Given the impact of the rising cost of living and challenges
faced by consumers in today’s
economy, we felt it is timely to
introduce this promotion to help
ease the burden and ensure affordability,” said Domino’s Pizza
Malaysia and Singapore general
manager Shamsul Amree (pic),
at the launching of the “Get 30%
Off All Menu Items” promotion
yesterday.
He also said consumers will
be cautious in their spending
and consumption will be slower
when the goods and services tax
(GST) is implemented in April.
“This is why we are taking
the initiative to have such a promotion in order to cushion the
impact,” he said, adding that
Domino’s will be having more
value-for-money promotions
throughout 2015.
Domino’s will be having eight
national campaigns this year,
with many layers of promotions
to push its revenue.
Futhermore, Shamsul said
Domino’s is GST-ready as it has
already registered and all the systems are in place.
Meanwhile, the pizza chain
is expecting double-digit growth
in 2015 as it plans to open 20
to 25 outlets in the country this
year. “Last year we posted double-digit growth. We are expecting the same thing this year,” said
Shamsul.
He added that Domino’s is
still new and the pizza market
in Malaysia has yet to mature,
therefore the company is still
growing and expanding despite
a weaker outlook. Last year, Domino’s opened
18 outlets in Malaysia.
In Malaysia, Domino’s is managed by master franchise holder Dommal Food Services Sdn
Bhd.
To date, there are 125 Domino’s Pizza stores in the country.
6 HOME BUSINESS
Headwinds dampen
Sarawak Oil Palms outlook
Privatisation
offer for IJM
Land ‘fair and
reasonable’
BY C H E N S H AUA F UI
Company expects flat revenue growth in FY15
BY MEENA L A KSHANA
BINTULU: Sarawak Oil Palms Bhd
(SOPB) (fundamental: 1.4; valuation: 1.8) is not seeking to expand
its land bank this year as it sees that
the plantation industry is fraught
with challenges that will particularly affect the downstream activities
of palm oil companies.
It is for this same reason that the
group is only expecting flat growth
in its revenue for the financial year
ending Dec 31, 2015.
“I think the downstream [sector]
has been challenging these past two
years. [So] we are not expanding.
In terms of revenue, [this year will
be] about the same as last year,”
SOPB group chief operating officer
Eric Kiu Kwong Seng told reporters after Plantation Industries and
Commodities Minister Datuk Amar
Douglas Uggah Embas officiated at
the opening of the group’s biodiesel
plant here on Saturday. The new plant was developed by
the company’s subsidiary, SOP Green
Energy Sdn Bhd, and cost RM50 million. It is also the first biodiesel plant
in Sarawak, with an annual operating
capacity of 100,000 tonnes.
“The outlook for this year will still
be challenging [because for] all commodities, their prices have fallen,”
said Kiu. He said the group remains
open to expansion opportunities,
provided that the price is right. For
example, the group has visited Indonesia several times, but has not
identified suitable opportunities. “It
all depends on the opportunity. If the
value is right, we are always open. If
the value is not right, then we are not
hard-up for any acquisitions,” he said.
SOPB currently has 63,000ha of
plantations in Sarawak. The group
has yet to expand its plantations
beyond the state.
Its group chief executive officer
Paul Wong Hee Kwong said the group
is now consolidating its business and
is therefore careful in choosing new
areas to expand to. “Instead, we are
looking at tightening our sustainable
practices,” he said.
SOPB entered into a joint venture with Pelita Holdings Sdn Bhd
(PHSB) in October 2011 for the
development of some 1,646ha of
native customary rights (NCR) land
in Sungai Arang, Bakong, in Miri,
Sarawak into oil palm plantations.
But the deal fell through on June 30
last year when SOPB, PHSB and the
NCR landowners involved were
unable to create sufficient land
bank after months of negotiations.
Another deal that fell through
was SOPB’s proposed acquisition of
a 60% stake in DD Pelita Sebungan
Plantation Sdn Bhd and Mutiara Pelita Genaan Plantation Sdn Bhd from
Double Dynasty Sdn Bhd (DDSB)
and Mutiara Hartabumi Sdn Bhd
(MHSB) for RM134.9 million.
The acquisition was mooted
in March last year, but SOPB on
Dec 17 said the deal was off after
the vendors failed to get the authorities’ nod for the sale and transfer
of their sale shares, which was one
of the conditions precedent to their
conditional share sale agreement
(SSA). Under the conditional SSA,
there was also an arrangement to
contract DDSB and MHSB for their
services to “procure the natives with
up to 8,000ha of NCR land to come
within the Sarawak government’s
scheme for the development of this
land into oil palm plantations”, at
RM3,500 per ha.
“We were hoping to involve the
local community in the project and
[one of ] the preceding conditions
of the deal was that they would be
able to obtain approvals from the
necessary authorities,” said Wong.
“They [DDSB and MHSB] were given a deadline [to obtain the approvals] but they couldn’t fulfil the
condition,” he added. Shares in SOPB closed unchanged at RM5.70 yesterday,
bringing it a market capitalisation
of RM2.51 billion.
score reflects a company’s profitability
and balance sheet strength, calculated based on historical numbers. The
valuation score determines if a stock is
attractively valued or not, also based
on historical numbers. A score of 3
suggests strong fundamentals and
attractive valuations. Go to www.
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on a company’s financial dashboard.
MPOB: RM178b GNI target a tall order
SAM FONG
BY Y EN N E FOO
KUALA LUMPUR: The Malaysian
Palm Oil Board (MPOB) said the
industry still has “a long way to go”
before it can achieve the “very high”
gross national income (GNI) contribution target of RM178 billion by
2020 under the government’s Economic Transformation Programme.
“It is a tall order to achieve the
RM178 billion target. We are still
talking about over RM60 billion
[in GNI] a year.”
“We are trying to break the RM100
billion mark but it is still a challenge
for the [industry] players and the
government,” MPOB chairman Datuk Wan Mohammad Khair-il Anuar
Wan Ahmad (pic) told reporters at
the Palm Oil Economic Review and
Outlook Seminar 2015 yesterday.
The palm oil sector is the largest
component of Malaysia’s agricultural sector, with more than 70%
of agricultural land in the country
used for palm oil cultivation. Last
year, the palm oil industry’s GNI
contribution to the country stood at
RM63.4 billion. For 2015, MPOB is
“quite confident” the industry’s production will improve on 2014’s GNI
achievements to RM66.7 billion.
Meanwhile, crude palm oil (CPO)
price is estimated to range between
RM1,820 per tonne and RM2,750
per tonne as volatility in CPO prices
would continue this year.
Wan Muhammad said higher
GNI would come on the back of the
depreciation of the ringgit, lower
stock levels after the flood situation
in the peninsula, and the government’s export tax policies.
Domestically, the implementation of the government’s commitment to use biodiesel under the
B7 mandate would contribute to
the sector’s income. The B7 programme will sustain demand and
reduce stock built up for palm oil
locally. It is expected that 576,000
tonnes of CPO will be utilised under the B7 programme.
Despite acknowledging that the
palm oil sector is still more than
half way off the mark of its 2020
GNI target, Wan Muhammad said
upstream and downstream players
can do more to boost its contribution to national income.
For upstream production, he
said that CPO production can
be increased as some remaining
700,000ha of agricultural land left
in the country for palm oil cultivation can be planted in the next
few years.
KUALA LUMPUR: IJM Corp Bhd’s
offer to privatise IJM Land Bhd at
RM3.55 per share is “fair and reasonable”, said independent adviser Hong Leong Investment Bank
(HLIB).
HLIB recommends that shareholders of IJM Land (fundamental:
2.2; valuation: 1.8) vote in favour
of the privatisation exercise, after
taking into consideration the valuation of the proposal.
Under the privatisation proposal, IJM Corp (fundamental: 1.6; valuation: 2.4) has valued IJM Land
at RM3.55 per share, which will be
satisfied by an issuance of 0.5 ordinary shares of IJM Corp at RM6.66
each, plus a 22 sen cash consideration for every IJM Land share.
The total consideration for IJM
Corp to take over the remaining
35.85% stake in IJM Land it doesn’t
control, is RM1.98 billion.
IJM Land will hold an extraordinary general meeting on Feb 12,
2015, to deliberate the matter.
In an independent adviser letter yesterday, HLIB said the valuation on the fairness of the offer
is carried out using the revised
net asset value (RNAV) method, a
commonly used valuation methodology for valuation of asset-based
companies.
It found that the RNAV for IJM
Land is RM5.618 billion, which
translates into an RNAV per share
of RM3.60. Hence the office price
of RM3.55 would represent a 1.39%
discount.
The independent adviser urged
the shareholders to take into account the 22 sen cash consideration, when assessing the fairness
of the offer price.
Based on the historical market price of IJM Land shares, the
share price had traded below the
offer price of RM3.55 for the past
three years.
“We are of the view that the proposed privatisation presents an
opportunity for the scheme shareholders to exit their investment in
IJM Land at a premium to its historical market prices, in exchange
for the cash consideration and the
IJM Corp shares,” HLIB said.
IJM Land closed two sen higher
at RM3.40 yesterday, giving it a market capitalisation of RM5.27 billion.
Chin Well to consolidate Vietnam unit’s earnings in 2HFY15
BY SU PRI YA SU RENDRAN
KUALA LUMPUR: Chin Well Holdings Bhd is poised to fully consolidate the earnings of its subsidiary
Chin Well Fasteners (Vietnam) Co
Ltd (CW Vietnam) in the second
half of its financial year ending June
30, 2015 (2HFY15), following Bursa Malaysia’s approval yesterday
for the acquisition of the remaining 40% it does not already own
in the unit.
In November 2014, Chin Well
proposed to acquire the remaining 40% interest in CW Vietnam by
acquiring the entire share capital
of Asia Angel Holding Ltd, which
owns the stake.
Chin Well (fundamental: 2.1; valuation: 2.4) will have to pay RM47.5
million for Asia Angel, which is to
be satisfied by the issuance of 27
million new Chin Well shares at
RM1.45 per share and a cash payment of RM8.3 million. The group
will also assume net advances from
the vendors of Asia Angel amounting to RM44.5 million.
In a filing with Bursa Malaysia yesterday, Chin Well said the regulator
had approved the listing and quotation of 27 million new Chin Well
shares pursuant to the acquisition.
“With the upcoming completion of this acquisition exercise,
Chin Well is poised to fully consolidate the earnings of CW Vietnam to the group in 2HFY15,”
Chin Well managing director Tsai
Yung Chuan said in a separate
media statement.
He added that the acquisition
is timely for the group to leverage
on the strong demand for do-ityourself fasteners in Europe and
the United States, which would
subsequently be a positive boost
to its financial performance from
FY15 onwards.
Upon completion of the acquisition exercise, Chin Well will have a
direct 60% equity stake in CW Vietnam, and an indirect 40% interest
though its wholly-owned subsidiary Asia Angel.
Chin Well shares closed down
two sen or 1.33% to RM1.48 yesterday, giving it a market capitalisation of RM408.8 million.
HOME BUSINESS 7
Foreigners offloaded
RM1.42b last week
Highest amount since August 2013
BY SURIN MURUGIAH
KUALA LUMPUR: Foreign money
outflow from the Malaysian equity market last week surged to its
highest level since August 2013,
according to MIDF Research.
In his weekly fund flow report
yesterday, MIDF Research head
of equity Syed Muhammed Kifni
said that last week, foreign investors offloaded local equity in the
open market (excluding off-market
deals) amounting to RM1.42 billion.
He said this was the highest
since the last week of August 2013,
and the second time in six weeks
that money outflow exceeded the
RM1 billion mark.
Syed Muhammed said foreign
investors were net sellers every
single day last week.
He said the selling peaked last
Wednesday, when a net amount
of RM413.1 million was offloaded.
He said foreigners had not sold
more than RM400 million in a single day on the open market since
Feb 4, 2014.
“Indeed, the amount sold in the
last three trading days exceeded
RM300 million per day, a level of
intensity that Bursa had not experienced in 2014.
“For the year to Jan 16, the cumulative net outflow has already
exceeded the RM2 billion mark at
RM2.003 million,” he said, adding
that this was about 30% of the total
outflow recorded in 2014.
He said the foreign selldown
on Bursa Malaysia was happening
amid a heightened level of participation.
Syed Muhammed said the foreign participation rate (daily average gross purchase and sale) surged
to RM1.14 billion, the second week
in a row that the amount exceeded
RM1 billion.
He said the average daily foreign participation rate in 2014
Syed Muhammad said foreign investors
were net sellers every single day last
week. The Edge file photo
was RM980 million.
Syed Muhammed said that local
institutions supported the market
aggressively last week, mopping up
RM1.34 billion net.
“The participation rate was also
elevated at RM2.2 billion.
“Local retailers were cautious
last week, buying only RM75 million net. Most retail investors were
still on the sidelines although participation rate climbed to RM756
million. That was even lower than
2014’s average of RM873 million,”
he said.
Commenting on the region, Syed
Muhammed said the flow out of
Asian equity continued last week
as global funds made a general retreat for the second week in a row.
Nevertheless, he said the rate of
net outflow for the week was rather measured at less than US$1.5
billion thanks to a strong reversal
into India.
“A surprise rate cut by the Indian
central bank last week provided a
big boost for its stock market and
sent key indices higher.
“For Malaysia, it was a week to
remember but for the wrong reason,” he said.
Press Metal exemption ‘fair and reasonable’
BY GHO C H EE Y UA N
KUALA LUMPUR: The proposed
exemption sought by Press Metal
Bhd’s major shareholders, Alpha
Milestone Sdn Bhd (AMSB) and
persons acting in concert (PACs),
from undertaking a mandatory general offer (MGO) for the remaining
shares and convertible securities in
the group is considered to be “fair
and reasonable”.
In a letter dated Jan 19 to Press
Metal’s (fundamental score: 0.65;
valuation score: 2.4) minority shareholders, independent adviser Public Investment Bank Bhd (PIVB) is
advising them to vote in favour of
the proposal at Press Metal’s extraordinary general meeting on
Feb 4.
“Premised on our overall assessment of the proposed exemption on
a holistic approach together with
the proposed conversion as set out
in this independent advice letter,
Press Metal is expected to be on
a better financial footing and in
a better financing term upon the
completion of the proposed conversion,” said PIVB.
“In this respect, we are of the
opinion that the proposed exemption is fair and reasonable and not
detrimental to the non-interested
shareholders,” PIVB said.
AMSB and its PACs currently
hold a combined 446.31 million
shares or a 40.54% stake in Press
Metal.
However, with the intention of
AMSB and Ong Soo Fan to convert a total of up to RM210.51 million nominal value of 2011/2019
Redeemable Convertible Secured
Loan Stocks (2011/2019 RCSLS) to
reduce the group’s gearing level,
the shareholdings of AMSB and its
PACs in Press Metal are expected to
increase to 46.85% under the minimum scenario or to 49.34% under
the maximum scenario.
AMSB is controlled by Press Metal chief executive officer Datuk Koon
Poh Keong and his brother Koon
Poh Ming, who are also directors
of Press Metal. The other PACs are
their respective spouses — Datin
Khoo Ee Pheng, and Ong Soo Fan.
Press Metal’s gearing level stood
at 1.5 times as at Sept 30, 2013.
Press Metal had on Jan 6 announced that AMSB and PACs intend to convert a total of RM233.9
million nominal value of 2011/2019
RCSLS, representing their entire
holdings of the securities, into
106.32 million shares.
“The conversion would result
in AMSB and its PACs triggering a
MGO for the remaining Press Metal
shares and convertible securities
which is not owned by AMSB and
its PACs,” the group had said.
Press Metal owns the Samalaju aluminium smelter in Bintulu,
Sarawak, which has an installed
capacity of 320,000 tonnes per year.
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more details on a company’s financial dashboard.
Palm oil seen pressured by rising production, slump in petroleum
KUALA LUMPUR: Palm oil prices
will be pressured by an increase in
reserves, rising production and the
slump in crude, said the minister
of Plantation Industries and Commodities. Malaysia is the world’s
second largest supplier of palm oil,
which is used in food and biofuels.
“The regular build-up of stock,
particularly towards the last quarter of the year, will continue to put
pressure on palm oil prices,” said
Datuk Seri Douglas Uggah Embas.
The supply situation will be
“exacerbated” by large harvests of
competing oilseeds and expanding
palm production in other countries, he said.
While futures have rallied 22%
from a five-year low in September
after Malaysia’s worst floods in four
decades, prices still posted a 15%
decline in 2014. That’s the third
drop in four years as stockpiles in
Malaysia reached a 21-month high
and US farmers harvested a record
soybean crop, used to make an alternative oil. Crude prices dropped
almost 50% last year, eroding demand for biofuel.
“These challenges will have to
be met in 2015,” Uggah said in a
speech read by the ministry’s secretary-general Himmat Singh at a
conference yesterday.
The “price will continue to be
volatile” during the first half of 2015,
Datuk Dr Choo Yuen May, director-general of the Malaysian Palm
Oil Board, said at the conference.
She expects production in Malaysia to climb “marginally” this year,
from a record high 19.67 million
tonnes in 2014.
The monsoon that hit the
east coast of Peninsular Malaysia spawned the worst floods since
1972. Flood damage reduced Malaysian output to 1.36 million
tonnes in December, the lowest
for that month since 2010 and a
22% slump from November. The
decline reduced inventories for the
first time in six months.
Macquarie Group Ltd said in
a Jan 7 report that it expects the
palm-oil rally to last because of the
long-term impact of heavy rains on
harvesting, roads and bridges. —
Bloomberg
Weak El Nino
unlikely to
disrupt SEA
palm oil supply
KUALA LUMPUR: The weak El
Nino conditions expected over
the next three months are unlikely to disrupt palm oil output
in Southeast Asia, the source of
most of the world’s supply, the
head of a palm research company said yesterday.
Ling Ah Hong, director
at Malaysia-based plantation
research company Ganling Sdn
Bhd said that while it is still
possible for El Nino to emerge
in the first quarter of the year,
it will be weak and will have
little impact on palm output
and prices.
“A weak El Nino emerging in
1Q 2015 is unlikely to prove a
major catalyst for supply disruption in 2015 ... (or) a spike
in palm prices,” said Ling at
an industry conference here.
“The dry weather in Indonesia in the last two years is
going to put a break on supply coming out of Indonesia,”
he said, and that will result in
below average output growth
which may help support palm
prices this year.
Ling expects Indonesian
output to rise to 32.43 million
tonnes this year, up slightly
from 31.42 million tonnes in
2014.
Malaysia, the No 2 grower, is
forecast to produce 20.3 million tonnes of crude palm oil
in 2015, up from 19.7 million
tonnes. — Reuters
Axiata Digital
ties up with
US-based firm
KUALA LUMPUR: Axiata Digital
Advertising Sdn Bhd, a unit of
Axiata Group Bhd, has entered
into a strategic alliance with
US-based Adknowledge Inc to
boost Axiata’s mobile advertising presence in the Asia-Pacific.
“With more than two billion
mobile users in the Asia-Pacific
region, we believe this partnership will ensure that consumers
see more relevant, targeted advertisements. That means more
efficient, intelligent advertisement buys for brands and agencies,” said Axiata president and
group chief executive officer
Datuk Seri Jamaludin Ibrahim
in a statement yesterday.
He said Adknowledge’s advertising technology would enhance mobile advertising in
the Asia-Pacific by bringing
innovative solutions that are
less intrusive and more intuitive, turning advertising into a
contextual service rather than
a business proposition.
It will work with businesses,
advertising agencies and app
developers to provide data-driven advertising strategies to raise
brand awareness, and drive
sales and app installs through
digital video, mobile and social
media marketing. — Bernama
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
COCOALAND HOLDINGS BHD
(ALL FIGURES IN RM MIL)
Cocoaland Holdings Bhd
WE like Cocoaland’s resilient business model — high volume fast-selling candies at
affordable prices, strong brand names,
capable management, undemanding valuations and growth potential.
Cocoaland manufactures fruit gummy,
hard candy, chocolates, cookies, wafer, and
beverages under its own brand names —
including the popular Lot100, Cocopie,
Mum’s Bake, Koko Jelly and Fruit 10 — and
also OEM.
The Edge Research rates Cocoaland with
Fundamental and Valuation scores of 2.1
and 2.4 out of 3.0, respectively. The stock
is trading at a trailing 12-month PE of 14.3
times and P/BV of 1.32 times. These valuations are inexpensive for a consumer company with strong, growing brands.
Its share price has declined by 27.4% to
RM1.67 from one-year high of RM2.30 in
April 2014. This may be attributed to the
14.3% y-o-y drop in net profit for 9M2014,
which was due primarily to higher spending on advertising and promotion (A&P).
The company is pushing hard to grow sales
volume following recent expansions, particularly for fruit gummy where capacity
increased by 160%. Utilisation rate is now
only 50%.
As the sole producer of fruit gummy in
Malaysia, it commands gross margin of
about 30%, well above that for the other
products. Fruit gummy currently accounts
for about 38% of sales. If successful, the
shift to high-margin fruit gummy bodes
well for Cocoaland’s margins and earnings
going forward.
With export accounting for 60% of
sales, Cocoaland will also benefit from
the strengthening US dollar.
Despite spending RM135 million in capex
over the past four years, it has zero borrowings — underscoring Cocoaland’s steady
operating cashflow. Net cash stands at
RM23.9 million. ROE averaged 10.8% for
the past three years.
The company pays dividends consistently, averaging 50% of net profit for the
last four years. Dividends totalled 6.5 sen
per share in 2013, translating into a net
yield of 3.9%.
Insider Asia will feature a new stock pick on every alternate day.
T O N G ’S
MOMENTUM
P O RT F O L I O
STOCKS on the local bourse started the week
on a positive footing, thanks to Wall Street’s
stronger close last week and in line with regional gains, with the exception of China stocks.
The closely watched Dow Jones Industrial
Average and S&P 500 Index gained more than
1% each last Friday. China stocks slumped after excessive margin trading prompted securities regulator to bar brokerages from opening
new margin trading accounts for clients for
three months.
European stocks, meanwhile, advanced in
early Monday trading, in anticipation of more
quantitative easing measures when the ECB
meets later in the week.
Elsewhere, oil prices stabilised somewhat,
recovering to around $48 and $49 for WTI and
Brent, respectively.
The benchmark FBM KLCI added 9.74
points or 0.56% to finish higher at 1,753.31.
Market breadth was positive with gainers
outperforming losers 1.68 to 1.
Market sentiment has improved some in recent days, following steep losses in December
and the first week of January. This is due, in
part, to tempered expectations for economic
growth and the pace of interest rate increases in the US, which will slow capital outflow.
The current rebound may persist in the nearterm. However, investors should stay cautious
and be nimble as market conditions remain
volatile. I am still cautious on the outlook for
Malaysian equities for the year.
Currently, I am only holding Willowglen,
which closed unchanged at 80.5 sen.
My portfolio is currently registering a gain
of 1.6 % since inception, and has still outperformed the benchmark KLCI by 9.0%.
FY11
31/12/2011
FY12
31/12/2012
FY13
31/12/2013
LATEST 3QFY14
30/9/2014
174.0
28.5
7.7
20.8
0.9
0.0
21.7
19.2
223.2
36.7
9.6
27.1
0.9
0.0
28.0
21.2
254.5
40.7
11.8
28.8
0.4
0.0
29.3
22.1
63.8
9.3
2.7
6.6
0.1
6.7
4.2
101.0
43.0
118.0
30.3
188.7
188.7
-
118.7
26.1
118.6
38.1
199.2
196.2
-
146.9
23.9
105.1
39.4
212.6
207.6
-
141.0
23.9
116.9
33.6
224.3
217.1
-
COCOALAND HOLDINGS BHD
RATIOS
FY11
31/12/2011
FY12
31/12/2012
FY13
31/12/2013
ROLLING 12-MTH
DPS (RM)
Net asset per share (RM)
ROE (%)
ROA (%)
Turnover growth (%)
Net profit growth (%)
Net margin (%)
Current ratio (x)
Gearing (%)
Interest cover (x)
0.06
1.10
10.51
10.52
22.31
95.45
11.03
3.89
6,472.15
0.06
1.14
11.02
10.94
28.28
10.56
9.50
3.11
22,908.31
0.07
1.21
10.92
10.71
14.00
3.92
8.66
2.66
21,396.63
0.07
1.26
9.68
9.47
3.80
8.29
7.85
3.47
19,321.00
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
QUANTITY
BOUGHT PRICE
RM
9,000
0.789
BOUGHT VALUE CURRENT PRICE
RM
RM
CURRENT VALUE
RM
GAIN / LOSS
RM
% GAIN / LOSS
7,245.0
140.7
2.0%
Shares held:
Willowglen MSC Bhd
Total
7,104.3
0.805
--------------7,104.3
--------------- --------------7,245.0
140.7
--------------7,104.3
--------------- --------------7,245.0
140.7
Shares bought:
No shares were bought today.
Total shares held
2.0%
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
101,614.9
1,614.9
Portfolio Beta
Risk adjusted returns for portfolio
1.6%
3.0%
1.166
2.6%
Performance Comparison
FBM KLCI
FBM KLCI Emas
At portfolio start
1,892.7
13,163.7
Current
1,753.3
12,072.7
Change
(7.4%)
(8.3%)
Relative portfolio outperformance
9.0%
9.9%
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
Supermax’s new plants may start soon
Supermax Corp Bhd
Supermax Corp Bhd
(Jan 19, RM1.86)
Upgrade to buy with a higher
target price (TP) of RM2.30 from
RM2.20: Supermax Corp’s share
price has fallen by 34% since January 2014. Notable drops occurred
from Feb 20, 2014 to July 1, 2014 (a
decline of 32% due to delays in the
commissioning of Plants 10 and
11 in Meru, Klang), and on Dec
15, 2014 a decline of 17% when
its chief executive officer [CEO]
was charged with insider trading
of APL Industries Bhd.
Plants 10 and 11 are widely expected to start commercial production in the first quarter of 2015
(1Q15). The management has yet
to confirm this, but conversations
with industry sources suggest that
these two plants have indeed started operations. If proven true, this
would serve as an important rerating catalyst for the stock, as it
puts the company’s expansion
plan back on track after repeated delays.
We revised our foreign exchange assumptions to RM3.27,
RM3.41, RM3.41 per US dollar
for the financial year 2014 (FY14),
FY15 and FY16 respectively to
bring it in line with DBS Vickers Securities’ (DBSV) internal
forecasts.
In doing so, we lowered our
average selling price (ASP) assumptions, as Supermax will likely pass on some of the benefits
from the stronger US dollar to its
customers. Also, we pushed back
the expected date of commercial
production for Plants 10 and 11
to 1Q15 from 4Q14, resulting in
a 2% drop in FY14 sales volume.
These adjustments led us to revise
our FY14, FY15, FY16 earnings
by an increase of 3% in FY14 and
an increase of 6% in both FY15
and FY16.
We upgrade Supermax to a
Uzma’s entrepreneurial spirit
may keep earnings growth intact
Uzma Bhd
(Jan 19, RM1.86)
Maintain outperform with a target
price (TP) of RM2.02: Last Friday,
Uzma Bhd announced that it had
secured a contract for the provision
of through tubing downside tools
and services from Petroliam Nasional
Bhd (Petronas).
The contract period will last for
two years effective from Jan 1, 2015
to Dec 31, 2016 with an extension
option of one year. The value of the
contract is estimated at RM50 million.
“Positive” on the win as it is another service that Uzma can render
within the well maintenance segment, and to none other than Petronas Carigali Sdn Bhd.
While the project timeline is uncertain (within the two years), the
management guides that the risk of
such projects being uneconomical
will only be if crude oil price dips further below US$25 (RM89) to US$30
per barrel. Hence, should Brent crude
oil prices stabilise at US$50 per barrel, work will continue.
Uzma’s business could slow down
in financial year 2015 (FY15), given
Petronas’ potential operating ex-
penditure cuts (on top of capital expenditure announced previously).
However, we are banking on Uzma’s innovative and entrepreneurial
spirit to keep earnings growth intact.
Drilling for its risk sharing contract
(RSC) is still expected within the first
quarter of 2015. Uzma’s order book
stood at RM1.8 billion (as at end2014) while bids are at RM2.8 billion.
We maintain our forecasts for now
but will closely monitor earnings
trend for FY15.
Our TP is maintained at RM2.02
pegged to nine times FY15 forward
price-earnings ratio (PER), which
is in-line with small-cap oil and gas
(O&G) peers’ valuations.
Given that Uzma’s share price has
fallen significantly in the past few
months, we believe value is emerging with its forward FY15 PER at 7.7
times, implying that the market
might had been overly pessimistic
about the stock.
Risks are lower-than-expected
margins and O&G activities, delay
in first-oil of the RSC and a no-go for
its MMSVS Group Holding Co Ltd
acquisition.— Kenanga Investment
Bank Bhd, Jan 19
Uzma Bhd
FY DEC (RM MIL)
2013A
2014E
2015E
Turnover
Ebit
PBT
Net profit (NP)
Core net profit
Consensus (NP)
Core EPS (sen)
Core EPS growth (%)
NDPS (sen)
NTA/Share (RM)
BV/Share (RM)
Core PER
Price/NTA (x)
Gearing (x)
Dividend yield (%)
407.9
45.5
47.3
33.6
33.6
12.7
45.5
2.0
1.0
1.0
13.6
1.8
0.03
1.2
436.5
55.4
54.8
38.7
38.7
40.9
14.7
15.2
2.3
1.0
1.0
11.8
1.7
(0.37)
2.7
556.2
70.7
80.8
59.2
59.2
58.8
22.4
52.8
1.8
1.2
1.2
7.7
1.4
(0.25)
2.0
Source: Kenanga Research
FYE DEC (RM MIL)
“buy” with a revised TP of RM2.30,
based on 11 times FY15 earnings
per share (EPS). We think its current share price presents an attractive entry point (that is nine times
FY15 EPS which is a 45% discount
to industry average), due to sharp
decline since January 2014.
Concerns over its CEO’s insider
trading case seem to be overdone
as it is unlikely to affect the fundamentals of the company. — Alliance DBS Research Sdn Bhd, Jan 19
Revenue
Ebitda
Pre-tax profit
Net profit
Net profit (pre ex)
EPS (sen)
EPS pre ex (sen)
EPS growth (%)
EPS growth pre ex (%)
Diluted EPS (sen)
Net DPS (sen)
BV per share (sen)
PER (x)
PER pre ex (x)
P/CF (x)
EV/Ebitda (x)
Net div yield (%)
P/BV (x)
Net Debt/Equity (x)
ROAE (%)
2013A
2014F
2015F
2016F
1,048
182
148
120
120
17.6
17.6
(2)
(2)
17.6
7.0
132.1
10.5
10.5
9.2
7.7
3.8
1.4
0.2
13.8
1,003
175
139
116
116
17.0
17.0
(3)
(3)
17.0
6.8
142.2
10.8
10.8
9.4
8.6
3.7
1.3
0.3
12.4
1,242
208
172
143
143
21.1
21.1
24
24
21.1
8.4
156.4
8.7
8.7
11.8
7.4
4.6
1.2
0.3
14.1
1,366
226
190
158
158
23.3
23.3
10
10
23.3
9.3
171.3
7.9
7.9
8.5
6.8
5.1
1.1
0.3
14.2
Source: Company, AllianceDBS, Bloomberg Finance LP
Lower FY15 to FY17 net profit
expected for TAS
TAS Offshore Bhd
(Jan 19, RM0.745)
Downgrade to neutral with a
lower target price (TP) of 81 sen
from RM1.42: For TAS Offshore’s
(TAS) first half of financial year
2015 (1HFY15) ending May, revenue surged 62% year-on-year (y-o-y)
to reach 45% of our full-year target,
but its core net profit declined 21%
due to lower margins.
Downgrade to “neutral” with a
lower 81 sen TP (8.7% upside) from
RM1.42, pegged to eight times FY16
price-earnings ratio (PER).
With no material contract announcement for the past 10 months
and in view of declining oil prices,
we lower our FY15 to FY17 net profit
forecasts by 21% to 39%.
While TAS Offshore’s 1HFY15 revenue jumped 62% y-o-y to RM127.6
million, coming in at 45% of our fullyear target, its core net profit of RM9.6
million (a decline of 21% y-o-y) accounted for 47% of our FY15 target.
The higher topline was mainly due to higher profit recognition
upon delivery of five vessels in the
first quarter of FY15 (1QFY15), while
the lower bottom line was caused by
lower margins.
The 2QFY15 core net profit fell
24% to RM4.2 million from RM5.5
million in 1QFY15, led by a 33% quarter-on-quarter drop in revenue to
RM51.3 million in the quarter.
The weaker 2Q results were mainly attributed to higher sales recognition of four tugboats and an anchor
handling tug supply (AHTS) vessel
sold in 1QFY15. Note that there was
a reversal of a RM3.3 million impairment loss on trade receivables
recognised in 1HFY14.
We are concerned with TAS’ earnings sustainability in FY16 to FY17 as
declining oil prices may prompt major oil and gas (O&G) players to slash
TAS Offshore Bhd
FYE MAY (RM MIL)
2013
2014
2015F
2016F
2017F
Total turnover
Reported net profit
Recurring net profit
Recurring net profit
growth (%)
Recurring EPS (RM)
DPS (RM)
Recurring PER (x)
P/BV (x)
P/CF (x)
Dividend yield (%)
EV/Ebitda (x)
Return on average
equity (%)
Net debt to equity (%)
138
13.5
13.5
254
32.0
29.3
284
20.8
20.8
244
17.8
17.8
238
18.0
18.0
20.2
0.07
0.02
9.97
0.88
n.a
2.6
7.84
117.5
0.16
0.02
4.58
0.77
n.a
2.6
4.90
(29.0)
0.12
0.03
6.46
0.71
6.19
3.9
6.10
(14.1)
0.10
0.03
7.52
0.66
2.83
3.9
5.01
0.8
0.10
0.03
7.46
0.62
3.94
3.9
3.60
9.2
Net cash
19.6
7.8
11.4
Net cash
9.1
8.6
Net cash Net cash
Source: Company data, RHB
their capital expenditure spending.
We cut our FY15 to FY17 revenue and net profit forecasts by
10% to 29% and 21% to 39% respectively, assuming lower order
book replenishments during that
period. This is in view of lower oil
prices and potentially lacklustre
O&G activities for at least the next
one year, coupled with no material
contract announcements for the
past 10 months.
We roll over our valuation to
FY16 and lower our TP to 81 sen
from RM1.42, pegged to a lower
FY16 PER of eight times, in line
with the average PER valuation of
shipbuilding companies under our
O&G coverage. — RHB Research
Institute Sdn Bhd, Jan 19
12 B R O K E R S’ C A L L
AirAsia X tackling
problems creatively
AirAsia X Bhd
(Jan 19, RM0.675)
Maintain “hold” with a higher target price (TP) of 70 sen: AirAsia X
Bhd (AAX) is doing all in its power
to turn around from a tough 2014,
and we think it might just succeed.
Loss-making flights will be cut,
profitable wet leases will be increased, and aircraft deliveries have
been delayed. Low oil prices add
to the likelihood of reported profits
in 2015.
We maintain our “hold” call and
raise our TP (end of calendar year
2015 or CY15) based on the sector
average CY16 price-earnings ratio
(PER) of 11 times.
Our previous 78 sen target was an
atypical two-year end-CY16 target.
Our core loss forecast for financial
year 2014 (FY14) is raised slightly for
housekeeping matters, but FY15 to
FY16 numbers are upgraded.
AAX has responded with creative
solutions to tackle its issues, including reducing its aircraft fleet additions, and by cutting unprofitable
flights to Adelaide and Nagoya in
January to February 2015.
AAX has also locked in substantial
outward wet leases in 2015 in order
to remove excess capacity during
the winter lull in Australia.
In addition, after factoring in a
much lower jet fuel price of US$90
(RM320.40) per barrel, we are now
expecting AAX to achieve a small
core net loss of RM31 million in
2015 (revised from a RM149 million loss), followed by a RM151
million core net profit in 2016 (re-
AirAsia X Bhd
FYE DEC (RM MIL)
Revenue
Operating Ebitda
Net profit
Core EPS (RM)
Core EPS growth (%)
FD core PER (x)
EV/Ebitda (x)
P/FCFE (x)
Net gearing (%)
P/BV (x)
ROE (%)
Change in core
EPS estimates (%)
CIMB/consensus EPS (x)
2012A
2013A
2014F
2015F
2016F
1,967
159.7
33.9
(0.00)
(99)
NA
17.27
27.00
210
2.65
(0.2)
2,307
174.8
(87.0)
(0.02)
3512
NA
18.72
NA
140
1.24
(4.2)
2,879
(152.7)
(516.0)
(0.21)
1210
NA
Na
3.14
193
2.14
(51.0)
3,519
276.7
62.8
(0.01)
(94)
NA
8.96
1.27
120
1.96
(4.1)
4,013
390.5
207.3
0.06
Na
10.23
5.36
6.68
56
1.55
17.0
-
-
(3.0)
1.34
79.5
(3.79)
30.4
2.19
Source: CIMB, company reports
vised from a RM116 million profit).
Although the stronger US dollar
is negative for AAX’s operating costs
and debt burden, its impact is unable
to offset the huge savings from lower jet fuel prices, even from a cash
perspective.
We are hopeful that new management at AAX’s competitors will seek to
control medium-haul seat capacity
and raise fares from later this year.
The Malaysian government is also
considering waiving the visa fees
for Chinese travellers into Malaysia,
which will surely help to restore and
grow the volume of inbound Chinese
traffic. China routes account for 21%
of AAX’s seat capacity.
We previously set a two-year for-
ward TP of 78 sen, based on eight
times CY17 PER, because we could
not value AAX based on its CY16
earnings, which we had earlier expected to be very small.
After the earnings per share upgrades, we are now reverting to our
usual one-year forward TP, which
we set at 70 sen, based on the sector
average CY16 PER of 11 times.
We emphasise that although our
official TP has been changed, this is
not at all a downgrade, only a change
in the time horizon.
For illustrative purposes only,
our two-year TP would have been
85 sen based on our new earnings
forecasts. — CIMB Investment Bank
Bhd, Jan 19.
CIMB FY15 results likely
to be subdued
CIMB Group Holdings Bhd
(Jan 19, RM5.95)
Maintain “hold” with a lower target
price (TP) of RM5.70 from RM6.45:
Focus returns to the fundamentals
and earnings outlook for the individual banks, now that the proposed
merger of CIMB, RHB Capital Bhd
(RHBCap) and Malaysia Building Society Bhd (MBSB) has been aborted.
Near-term concerns would be
of higher provisioning in the fourth
quarter of 2014 (4Q14), while financial year 2015 (FY15) earnings are
likely to be subdued.
In our report dated Jan 12, we stated that the sell-down on CIMB has
been a function of both the merger
and its poor 3Q14 results and Indonesian concerns, but probably mainly
the latter.
The group’s 4Q14 results (due out
before Feb 19), could still be impacted
by higher provisions.
FY15 earnings, meanwhile, would
likely be subdued amid weak capital
markets and ongoing concerns over
PT Bank CIMB Niaga Tbk.
CIMB Group Holdings Bhd
FYE DEC (RM MIL)
2012A
Operating income
13,494.8
Pre-provision profit
5,882.7
Core net profit
4,341.8
0.58
Core EPS (RM)
7.7
Core EPS growth (%)
0.23
Net DPS (RM)
9.8
Core PER (x)
1.5
P/BV (x)
4.1
Net dividend yield (%)
3.83
Book value (RM)
16.0
ROAE (%)
1.4
ROAA (%)
2014E
2015E
2016E
14,146.6 14,621.7
5,905.8 5,813.8
4,178.2 3,748.7
0.55
0.45
(5.5)
(18.5)
0.24
0.18
10.4
12.8
1.4
1.3
4.1
3.1
4.02
4.47
14.3
11.1
1.2
1.0
2013A
15,506.8
6,286.5
4,160.0
0.50
11.0
0.20
11.5
1.2
3.5
4.77
10.8
1.0
16,498.6
6,772.2
4,464.0
0.54
7.3
0.21
10.7
1.1
3.7
5.10
10.9
1.0
Source: Maybank IB Research
Our FY14 and FY15 net profit forecasts are 8% and 10% lower than consensus.
With the merger off, we have reverted to valuing CIMB on a standalone basis.
We cut our TP to RM5.70, pegged
to a new FY15 price to book value (P/
BV) of 1.2 times (risk-free rate: 4.2%;
cost of equity: 10.5%; growth: 8.6%).
We still prefer RHBCap for better earnings visibility and cheaper
valuations — FY15 price-earnings
ratio of 9.5 times (CIMB: 11 times),
P/BV of one times (CIMB: 1.2 times)
for a similar 10.8% return on equity. —Maybank Investment Bank
Bhd, Jan 19
Room for more margin upside as
Inari expands its RF business
Inari Amertron Bhd
(Jan 19, RM2.87)
Maintain “buy” with a higher
target price (TP) of RM4.07
from RM3.80: We raise our financial year 2015 to financial
year 2017 (FY15 to FY17) earnings per share (EPS) forecasts
by 2% to 11% to account for the
earlier-than-expected ramp up
in Inari Amertron Bhd’s (Inari)
P13 facility.
One hundred and fifty new
testers are estimated to be fully
installed by October 2015.
Prior to this, however, management has squeezed a further
50 testers into its existing plants,
raising its test equipment to 522
units currently.
Our raised forecasts also
take into account a new wafer
processing service which has
been recently agreed with Avago
Technologies (Avago).
Its P13 facility has a production
floor space of 160,000 sq ft compared with the current 120,000 sq
ft, which is nearly fully taken up.
With the expansion in its radio
frequency (RF) business, there is
room for further margin upside.
Inari is currently working on
a new outsourcing job involving wafer processing, a contract
which would not only push it
up the value chain but also increase its relevance within the
value chain, particularly for its
key customer Avago.
Management has guided that
this wafer job could account for
nearly 10% of its revenue and
is likely to enhance margins
as this project involves higher
value add services.
Separately, an additional 150
testers are expected to be consigned by Avago, bumping up
its testing capacity and filling
much of its new P13 production
floor space.
To account for the ramp-up
in Inari’s RF business, we raise
our FY15 to FY17 EPS forecasts
by 2.4%, 10.8% and 7.1% respectively although this takes into
account a further increase in
the share issue base to 623 million shares (613.4 million shares
previously) due to further conversion of warrants.
At the net profit level, our
FY15 to FY17 earnings forecasts
are raised by 4%, 12.5% and 8.7%
respectively.
We like Inari given its position as a leading RF test house in
the region. Backed by its strong
technical expertise, cost efficiency, reliability and execution capability, Inari is likely to
continue to benefit from greater
outsourcing opportunities from
Avago.
We raise our TP based on an
unchanged 16 times calendar
year 2015 (CY15) EPS.
The stock offers a three-year
net profit compound annual
growth rate of around 30% against
its fixed deposit CY15 price-earnings ratio (PER) of 11.4 times (ex
all PER of 12.1 times).
Key risks to our “buy” rating
include a loss of the key customer and a sharper-than-expected
slowdown in demand. — Affin
Hwang Investment Bank Bhd,
Jan 19.
Inari Amertron Bhd
FYE JUNE 30 (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)
2013
2014
2015E
2016E
2017E
241.1
62.7
43.3
42.0
6.7
43.0
46.1
7.4
146.2
39.2
4.5
1.6
28.6
-
793.7
129.3
107.2
101.3
16.3
17.8
96.1
15.4
108.6
18.8
6.8
2.3
13.9
-
956.1
182.3
156.6
142.8
22.9
12.7
142.8
22.9
48.6
12.7
9.2
3.2
9.7
2.4
1.0
1,193.3
232.5
207.2
187.4
30.1
9.6
187.4
30.1
31.2
9.6
12.0
4.1
7.4
10.8
1.2
1,339.0
258.5
231.8
209.0
33.6
8.6
209.0
33.6
11.5
8.6
13.4
4.6
6.3
7.1
1.0
Source: Company, Affin Hwang estimates
H O M E 13
DPP: Khir’s conviction safe
Line Cleared,
Penang cracks
down on famous
street stall
‘He was a public servant within the meaning of the Penal Code and SEDC enactment’
GEORGE TOWN: The famous
Penang side lane eatery, Line
Clear, had a few tables, chairs
and cooking equipment seized
yesterday in a crackdown by the
Penang Municipal Council. Despite the seizure, the street stall
continued serving food to patrons, who queued up for the
mixture of rice and South Indian
curries, fried food and vegetables.
Line Clear which first began
operations in 1947, is run by a
large family of cousins who take
turns to operate the restaurant.
The Penang Island Municipal
Council (MPPP) said it took the
action at 4am as the operator of
the eatery is running the business without a licence this year.
“The enforcement action is in
line with the provisions under the
Hawkers By-law 1979,” the MPPP
said in a statement. It said it had
issued a licence to a new operator following a decision made
by the council on Oct 8 last year.
Said to have begun from a
makeshift pushcart stall in the
1950s, the Line Clear restaurant,
was featured by celebrity chef
Anthony Bourdain in his television series during his visit to
Penang in 2012.
MPPP, which issues back lane
hawker licences, announced in
June last year that it wanted to
take action on the eatery following a dispute between the
cousins who claimed to have
inherited the business from the
founding family.
When met by reporters later,
operator Abdul Hamid Seeni Pakir questioned the MPPP’s move
to raid the 24-hour restaurant
without issuing any notice. He
said he would have been willing to address any issue had the
council given notice beforehand.
The restaurant hit the news
in June when the family dispute between Abdul Hamid
and his cousins Sahubarali
China Mohd Hanibah, Abdul
Latiff Thulkarunai and Pathumah Iskandar became public,
as all of them claimed to have
rights over the restaurant. —
The Malaysian Insider
BY V A N B A L AGA N
PUTRAJAYA: The graft charge against
former Selangor menteri besar Dr
Mohamad Khir Toyo was defective
but it did not render his conviction
unsafe, the Federal Court heard yesterday. Deputy public prosecutor
Masri Mohd Daud said the accused
was charged with corruption in his
capacity as menteri besar but the
Court of Appeal convicted him in his
position as Selangor Economic Development Corp (SEDC) chairman.
“Despite the difference in the positions, he was still a public servant
within the meaning of the Penal Code
and the SEDC enactment,” he told a
five-man bench chaired by Tan Sri
Zulkefli Ahmad Makinudin, who is
hearing Khir’s appeal.
Masri said the irregularity was
“curable” under Section 422 of the
Criminal Procedure Code. “It is not
fatal and there is no miscarriage
of justice on the accused.”
The High Court had found Khir
guilty of the charge in his capacity
as menteri besar but the Court of
Appeal which upheld the conviction
said he committed the offence in his
position as SEDC chairman.
The defence team, led by lawyer
Tan Sri Muhammad Shafee Abdullah,
said Khir’s conviction (by the Court
of Appeal in his capacity as chairman
of the corporation) was prejudicial to
their client. The defence maintains
that the charge was defective because
Khir as menteri besar was not a public
servant as defined under the Penal
Code. Muhammad Shafee said the
apex court has to determine whether the chief executive of the state is a
public servant as there is no case law
on the matter.
In December 2010, Khir was
charged in the Shah Alam Sessions
Court with corruption involving the
purchase of two lots of land and a
bungalow in Section 7, Shah Alam.
He was accused of obtaining for
himself and his wife, Datin Zahrah
Kechik, 46, the plots and the house
at No 8 and 10, Jalan Suasa 7/1L, in
Shah Alam from Ditamas Sdn Bhd
through one of its directors, Shamsuddin Hayroni. He committed the
offence at the official residence of
the Selangor menteri besar in Shah
Alam on May 29, 2007. His case was
later transferred to the High Court
and in December 2011, he was convicted and sentenced to 12 months’
jail. The trial court also ordered him
to forfeit ownership of the property
and hand it over to the government.
Masri, who urged the apex court
judges to maintain the conviction
by the Court of Appeal, said the
prosecution had proven beyond
reasonable doubt the ingredients
of the charge. He said it was shown
that the accused was a public servant and he bought the property
for an inadeqaute consideration.
“The accused also knew Shamsuddin Hayroni, whose company had
extensive business dealings with the
SEDC,” he said.
Masri said the accused had been
interested in the property since 2004
and knew the market price was about
RM7 million. He said Shamsuddin
sold the property at RM3.5 million
because he feared his business would
be affected if he did not meet Khir’s
wishes.
On Nov 13, Khir also withdrew
his RM10 million defamation suit
against Sekinchan assemblyman Ng
Suee Lim over Ng’s expose of a scandal involving the former state chief
executive and a luxury mansion in
Shah Alam. In the suit filed in January
2010, Khir said Ng tried to tarnish his
image in a public statement.
The Federal Court, which heard
submissions for six hours, reserved
judgment. — The Malaysian Insider
No evidence of terrorism in AirAsia crash
SURABAYA: Indonesian investigators
said yesterday that they had found
no evidence so far that terrorism was
involved in the crash of an AirAsia
passenger jet last month that killed
all 162 people on board. Andreas
Hananto said his team of 10 investigators at the National Transportation
Safety Committee (NTSC) had found
“no threats” in the cockpit voice recordings to indicate foul play during
AirAsia flight QZ8501.
The Airbus A320-200 vanished
from radar screens on Dec 28, less
than halfway into a two-hour flight
from Indonesia’s second biggest city
of Surabaya to Singapore. There were
no survivors.
Asked if there was any evidence
from the recording that terrorism was
involved, Andreas said: “No. Because
if there were terrorism, there would
have been a threat of some kind ... the
recording indicates that the pilot was
busy with the handling of the plane.”
Indonesian officials with AirAsia flight QZ8501’s flight recorder. Andreas says the
recording indicates that the pilot was busy with the handling of the plane. Photo by
Reuters
Investigators said they had listened to the whole of the recording but transcribed only about half.
“We didn’t hear any voice of other
persons other than the pilots,” said
Nurcahyo Utomo, another inves-
tigator. We didn’t hear any sounds
of gunfire or explosions ... based on
that, we can eliminate ... terrorism.”
Nurcahyo said investigators could
hear “almost everything” on the recording from one of the flight’s two
“black boxes”. The other is the flight
data recorder . He declined to give
details about what was said during
the doomed flight’s final moments,
citing Indonesian law.
Indonesian authorities have said
that bad weather was likely to have
played a part in the disaster. According to Andreas, evidence also showed
that an explosion was unlikely before
the plane crashed, disputing a theory
of an official from the National Search
and Rescue Agency last week.
“From the [flight data recordings]
so far, it’s unlikely there was an explosion,” Andreas said. “If there was,
we would definitely know because
certain parameters would show it.”
The final minutes of the flight
were full of “sounds of machines and
sounds of warnings” that must be filtered out to get a complete transcript
of what was said in the cockpit, said
Andreas, who has been an air safety
investigator since 2009. — Reuters
Saiful accuses TV3 of giving Anwar too much coverage
PETALING JAYA: Mohd Saiful
Bukhari Azlan, the man who had
accused Datuk Seri Anwar Ibrahim of sodomising him, hit out at
Umno-owned TV3 yesterday for
its extensive and continuous coverage of the opposition leader and
his party, PKR.
In a blog posting yesterday, Mohd
Saiful accused the television station
— where his wife used to work — of
becoming a PKR mouthpiece.
“It is not my intention to question why TV3 is attacking Tun Daim
(former finance minister Tun Daim
Zainuddin), but I want to question
why they insist on giving coverage to
PKR? Has TV3 become PKR’s media?
“It was Shamsul Iskandar (PKR
lawmaker) that day, and now Anwar
Ibrahim. Datuk Ashraf Abdullah,
[Datuk] Manja Ismail? Can you explain why?” he said, referring to the
top management of Media Prima
Bhd, the company that owns TV3.
Mohd Saiful, Anwar’s former personal assistant, had also published
screen grabs of WhatsApp messages
that his wife received from Ashraf
late last year, instructing the former
reporter to cover press conferences by PKR.
Saiful accused Anwar of sodomising him in 2008 but the High
Court acquitted the Permatang
Pauh MP in 2012. The Court of Appeal then overturned the decision
and Anwar had appealed against
his conviction in the Federal Court.
The hearing concluded in November last year but the court has yet
to make a decision.
Saiful’s wife, Nik Suryani Megat
Deraman, took the mutual separation scheme (MSS) offered by Media Prima in December but he said
that several factors, including the
fact that she had felt she was working for the “enemy”, were reasons
she decided to leave the company.
The 30-year-old said his wife felt
“disgusted” when she was instructed
to cover press conferences by PKR’s
Shamsul to attack Daim, a leader she
respected. Those assignments were
marked “must cover, must use” by
her bosses.
“She made a drastic, risky decision though there was no guarantee
of another job. Let it be a life with
principles. Livelihood is in Allah’s
hands.”
Opposition politicians had previously urged anti-graft authorities
to investigate Daim. Shamsul, who
is PKR Youth chief, had highlighted
the lack of police action against the
former finance minister despite a
police report lodged in 1999.
Anwar lodged that report 15
years ago, accusing Daim of amassing billions of ringgit in African
and Eastern Europe banks through
proxies.
Pro-Umno bloggers recently reported that Daim had been attacked
by cybertroopers aligned to Prime
Minister Datuk Seri Najib Razak for
criticising Putrajaya’s handling of
the economy.
Daim and former prime minister Tun Dr Mahathir Mohamad
have emerged as strong critics of
Najib’s administration over the latter’s handling of the economy and
national politics.
In what is seen as a psychological war, Najib’s supporters in the
press and online portals have been
attacking Daim with critical articles.
Veteran journalist Datuk A Kadir
Jasin warned a few days ago that
Media Prima should stop sniping at
Daim as it could backfire on Najib.
— The Malaysian Insider
14 H O M E
‘Spad not interested in
curbing rogue cabbies’
Political involvement giving industry bad reputation
BY MELATI A JALIL
KUALA LUMPUR: The owner of
Premium Big Blue taxi company
Datuk Shamsubahrin Ismail has
accused the Land Public Transport Commission (Spad) of not
being serious about enforcement,
allowing unscrupulous taxi drivers
to rip off their customers.
He claimed that “political involvement” in the taxi industry is
also one of the reasons the industry
had acquired its bad reputation. He
urged the Malaysian Anti-Corruption Commission (MACC) to start
an investigation into the matter,
especially budget taxis.
“If there is interference from politicians, please take action, because
you cannot transform the industry
if politicians are involved,” he told
press conference in Kuala Lumpur
yesterday.
Shamsubahrin said most major
taxi companies would receive support from politicians, especially to
obtain permits for their companies,
which was the norm before Spad
took over the oversight of the industry in 2010.
Declining to provide details, he
said most companies with political
links could easily get around 2,000
permits compared with only two
or three permits for those without
connections.
Shamsubahrin said he is willing
to cooperate with MACC if called
up by the anti-graft body.
Premium Big Blue owner Datuk
Shamsubahrin Ismail says the Land
Public Transport Commission’s
lack of enforcement is allowing
unscrupulous taxi drivers to rip
off customers. Photo by Najjua
Zulkefli/The Malaysian Insider
“If MACC calls me, then I will
give my cooperation,” he said.
In the meantime, he said Spad
officers appear to be reluctant to
act against the unscrupulous taxi
drivers and are not serious when
conducting enforcement.
He said that if Spad ignores its
enforcement duties, problems
such as overcharging will never
be solved. — The Malaysian Insider
CM grilled over protection of heritage, nature
BY HI MA NSHU B HATT
GEORGE TOWN: Penang Chief
Minister Lim Guan Eng refuted a
suggestion yesterday that his administration is not serious about
implementing the delayed Penang
Island Local Plan.
On the first day of court proceedings for his defamation suit against
news portal Free Malaysia Today
(FMT), Guan Eng denied a news
report that he had allowed the heritage and environment of the state
to be damaged, saying the article
was defamatory and offensive.
Guan Eng said the delay in implementing the local plan was because the state has to comply with
“instruments” set by Unesco, which
requires a Special Area Plan (SAP)
for the George Town World Heritage Site.
The draft of the Local Plan was
passed by the Penang Island Municipal Council in November 2008.
The SAP, which is not ready, is to
be included in the plan.
Guan Eng said the state received an “incredible offer” from
the Aga Khan Foundation (AKF)
which wanted to participate in the
restoration and refurbishment of
heritage sites.
He said that the hearings for
the SAP, which include the latest
proposals by AKF, are expected to
begin in February.
Guan Eng was questioned by
defence counsel Clement Lopez
the Penang High Court, hearing his
defamation suit over the report by
FMT dated Dec 6, 2013.
The report titled “Guan Eng has
failed, says NGO”, was authored by
FMT journalist Athi Shankar, who
quoted Penang Citizens Awareness Chant Group advisor Jimmy
CS Lim, urging the chief minister
to “walk his political talk” on preservation and conservation of the
state’s heritage and history.
Lopez asked if Guan Eng agreed
that the local plan had not been
approved.
Guan Eng said this was due to a
requirement to comply with Unesco
World Heritage Site status.
“My suggestion is that the state
government is not serious in implementing the local plan,” Lopez said.
Guan Eng replied: “That suggestion is wrong.”
The article quoted Jimmy as telling a press conference that Guan
Eng allowed demolition of many
heritage and historical structures,
even in the vicinity of the city, to
make way for skyscrapers, especially hotels and posh condominiums.
It reported Jimmy as saying that
Guan Eng allowed destruction of
natural heritage such as the “Botak
Hill’” as Bukit Relau came to be
known, in Gelugor.
It said Jimmy accused the state
of allowing the demolition of the
Indian heritage village Kampung
Buah Pala, commonly known as
Tamil High Chaparral, in the early
days of Pakatan’s rule.
Questioned by his lawyer Datuk
Mureli Navaratnam, Guan Eng said
he found the article to be defamatory and offensive to him.
He said the illegal clearing on
Bukit Relau was never sanctioned
by the local authority and the developer was taken to court.
He added that the eviction of
Kampung Buah Pala was pursuant to a court order, and was not
sanctioned by the state.
Lopez acted as counsel for MToday News Sdn Bhd, the operator of
FMT, and Athi, whose real name is
S Karunakaran.
Jimmy, or Lim Cheok Siang, was
represented by Baljit Singh and V
Amareson.
Judicial Commissioner Datuk
Nordin Hassan, who presided, adjourned hearing to Feb 27. — The
Malaysian Insider
Subramaniam: Water-borne diseases among flood victims under control
PEKAN: The Health Ministry has
confirmed that the spread of water-borne diseases among flood victims in the country is under control.
Health Minister Datuk Seri Dr
S Subramaniam said although 30
cases of leptospirosis were reported in Kelantan previously, it was
not high risk.
“Up to now, we have yet to receive any reports on the spread of
other water-borne diseases such as
cholera or typhoid,” he told reporters
yesterday after visiting the Padang
Rumbia health clinic, which was
affected by the floods.
Also present was state health director Dr Zainal Ariffin Omar.
However, he advised residents in
flood affected areas to be constantly
vigilant and take care of their health
by consuming only cooked food and
boiled water as prevention against
bacteria contamination.
In a related development, he said
the ministry was also studying the
best way to rebuild the Mambang
health clinic near here, which was
badly damaged by the recent floods.
“We will first see if the existing
location will be changed or a new
clinic rebuilt on the same site but
we will make sure it will be free from
flood disasters,” he said.
Earlier, in Kemaman, Subramaniam said that the Health Ministry
still requires 15,000 hospital beds to
accommodate the needs of patients
nationwide, especially in densely populated areas like the Klang
Valley.
Subramaniam said, however, the
facility could only be provided within the next 10 years.
He said at present urban areas
require additional beds which need
to be given urgent attention.
“In our ministry’s current estimation, we require at least 15,000 additional beds throughout the country
as the ratio is 1.9 for a population of
every 1,000 at present.
“If we can provide at least 15,000
beds, we will get a ratio of 2.5 for
every 1,000 population, which is
considered moderate. This means
every year we have to provide beds
and only then we will reach that target,” he told reporters after a working visit to the Kemaman Hospital.
Subramaniam said the government was constantly taking steps to
address the problem as providing
such facilities took time and had
to be undertaken in stages besides
involving high costs.
While the densely populated
Klang Valley contributed to congestion at hospitals, he said the government needed only to add extra
facilities in rural hospitals which did
not face such problems. — Bernama
Workplaces to
be made safe
for women
following
Putrajaya attack
PUTRAJAYA: The government will
consider amending the standard
operating procedure (SOP) concerning the safety of women at the
workplace to prevent them from
being harmed.
Women, Family and Community Development Minister Datuk
Seri Rohani Abdul Karim said the
assault of a female civil servant last
Friday should be viewed seriously
as it could jeopardise the government’s objective of having women
form 55% of the workforce.
“To me, this is a wake-up call
because I feel many, especially the
dedicated workers, will be traumatised and afraid to work overtime
when we need to move towards
becoming a developed nation.
“So, we will discuss with all parties, including the Public Services
Department, as improvements to
the present SOP would involve all
ministries and government agencies,” she said.
She spoke to reporters at the
Putrajaya Hospital after visiting
the staff member of the Ministry
of Communications and Multimedia who was injured after she
was attacked by a technician while
working overtime.
The attack on the 30-year-old
woman got the attention of various parties after a photograph of
her covered in blood and asking
for help was circulated on the Internet.
Rohani said the civil servant
was still in a state of trauma, and
her ministry was prepared to provide counselling, if necessary.
“At present, a counsellor who
is the victim’s friend is constantly
with her, besides her close family
members,” she said.
Rohani also urged that stern action be taken against the attacker
in terms of the law so that such an
incident does not happen again.
Among the laws which provided for such punishment were
the Domestic Violence Act 1994,
Section 14(3) of the Employment
Act 1955 pertaining to sexual harassment in the workplace, and the
Convention on the Elimination
of All Forms of Discrimination
against Women (Cedaw), she said.
Commenting on the issue,
Communications and Multimedia Minister Datuk Seri Ahmad
Shabery Cheek emphasised that
the use of force or violence in any
way against women was unacceptable.
“We have to be concerted in
being zero-tolerant with regard to
violence against women. Education and awareness should begin
from the men themselves.
“We cannot regard women as
the cause of violence because
much of the cause of violence is
the weakness of the men themselves,” he told reporters after addressing staff of the ministry at a
special gathering in Putrajaya in
connection with the assault case.
— Bernama
H O M E 15
Time for open debate on
syariah law, say academics
Not about moderates or non-moderates but ‘different shades of same spectrum’
BY SHERI DA N MA HAV ERA
PETALING JAYA: The entry of a second group of Malay intellectuals and
former civil servants into the public
debate on the role of Islamic law
in Malaysia is a sign that Putrajaya
cannot ignore the issue any longer,
say academics, pointing to the numerous cases where religious laws
have conflicted with civil law and
the rights of non-Muslims.
Although the two groups — one
made up of 25 former high-ranking
civil servants and the other comprising 35 ex-civil servants, Muslim
scholars and academics — hold
different positions on syariah law,
they both want a relook at how the
Federal Constitution and syariah
laws are supposed to function in
Malaysia’s multi-religious society.
The academics argue that instead of looking at these two groups
as different camps and labelling
them “moderates” or “non-moderates”, they should be seen as representing “different shades of the
same spectrum”.
The question is how syariah law
should complement the Federal Constitution and deal with the
rights of non-Muslims.
The debate goes beyond party
politics or who will win the next
general election. It will determine
what kind of country Malaysia will
evolve into in the next few decades.
The academics said that instead
of deciding on the issue behind
closed doors, the ruling Barisan
Nasional should open the door and
manage this discussion so that it
occurs rationally and freely.
To do the opposite and selectively use the law to silence critics of
the issue while allowing religious
incitement to continue would only
worsen tensions, they added.
To sum up, one group is termed
the 25, because of their open letter
published on Dec 8 that was signed
by 25 former high-ranking civil
servants, including directors-general, secretaries-general, ambassadors and prominent individuals.
The other can be called the 35
and they wrote a Jan 12 open letter
rebutting the arguments of the 25.
The 35 are made of ex-civil servants,
Muslim scholars and academics.
The 25 want Putrajaya to start open
discourse and consultation to put an
end to conflicts between state syariah
laws and the Federal Constitution.
They claim that overzealous state
religious authorities have breached
their jurisdictions when implementing syariah law. At the same time, extremist non-governmental organisations have been allowed to get away
with inflammatory statements while
dissenting voices are silenced.
The 35, on the other hand, argue
that it is not religious extremism
that is the biggest problem in Malaysia but the growing communal
divide in politics, business, education and housing.
The 35 accuse the 25 of wanting
to “roll back” the policy of integrating syariah law into Malaysia’s
legal system.
A close look at their two open letters reveal that they have some similarities despite their different views.
Political scientist Associate Professor Shaharuddin Badaruddin of
Universiti Teknologi Mara said their
letters reflect a deep frustration over
the direction in which the country
has been heading.
“There has been a feeling of frustration among intellectuals and
the middle class about where the
country is going. Where these two
groups differ is in the source of the
problem,” he said.
Another political scientist, Assistant Professor Maszlee Malik, felt it
would be too simplistic to say the
differences between the two groups
mean that the Malay Muslim community is split between one group
and the other.
Rather, they represent a diver-
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Kelvin Ong Wei Chong of Melaka (fifth from left),
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Campaign (Round 1) gives the thumbs-up for
the contest along with Edaran Tan Chong Motor
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Round 2 of the campaign ended on Dec 31, and
winners will be notified at the end of January.
Photo courtesy of Edaran Tan Chong Motor
sity of opinion on the subject of Islamic law and communal relations
instead, he said.
“Differences of view are not something to be perceived as something
bad, however arrogant and adamant
they are,” said Maszlee, of the International Islamic University Malaysia.
The review both groups are calling for should be openly debated,
said Shaharuddin, adding that after
57 years, Malay Muslim attitudes
have changed.
In the early 1980s, the government introduced conservative Muslim practices and rituals in the civil service and public schools as a
response to an emerging wave of
Muslim groups that were influential in society.
A 2005 survey by Universiti Malaya of 1,000 Muslims found that a
majority of them chose being “Muslim” as their primary identity followed by “Malaysian” and “Malay”.
“Religious authorities are also
more assertive now in terms of moral policing. Some say that is their
function. But when their work starts
conflicting with the Federal Constitution, that becomes a problem,”
Shaharuddin said.
Shaharuddin said the fact that
the two groups are currently driving the debate about how to resolve
these conflicts is a good thing since
up till now Muslim voices have been
perceived to be coming only from
the likes of Pertubuhan Pribumi
Perkasa Malaysia (Perkasa) and
Ikatan Muslimin Malaysia (Isma),
both right-wing Malay groups.
“These two groups are rational,
alternative voices that want the debate to be peaceful. Which is better
than just having Perkasa and Isma.”
How that debate will be resolved
and whose policy prescription ultimately gets adopted is a process
that will be long and exhaustive,
and which needs as much input
from experts as ordinary Malaysians, said Shaharuddin.
“It cannot be done through open
letters in the media. There must be
actual discussion between the two
sides that must be controlled so
that it remains peaceful.”
It would also be unwise at this
point to say that only one of the two
groups is right, said Shaharuddin,
“There are valid points that both
groups make.”
The 25, for instance, are right
to point out that there is selective
prosecution. Voices that criticise
policies on Islam and syariah law (as
opposed to Islam itself) are silenced.
“Whereas some extremist groups
are not prosecuted under the same
law,” said Shaharuddin.
The 35 are also right to highlight the very real ethnic divide
that threatens communal stability.
But both also have blind spots.
For all the publicity the 25 have received, Shaharuddin and Maszlee
questioned their silence on Malaysia’s other critical problems.
“Where are they to champion
other crucial issues in Muslim society, such as poverty, injustice, unequal opportunities, urban poverty,
cronyism, corruption and leakages?” asked Maszlee.
Shaharuddin also said neither
group seems to pay attention to
the problems in Malaysia’s economy which affect far more people
and are a bigger worry for ordinary
Malaysians.
This is why Shaharuddin believes it is important that the debate on syariah law be properly
and transparently managed.
A proper ongoing debate or
discussion would ensure only the
best and most enlightening ideas
emerge which Malaysians can either agree or disagree with.
Also, it prevents the issue from
being hijacked by extremists to sow
fear and intimidation, which distracts people’s attention from other
pressing problems in the economy
and politics. — The Malaysian Insider
Manpower
firms in Nepal
protest M’sia’s
biometric
health check
KUALA LUMPUR: Malaysia’s introduction of biometric health checks
for Nepali workers by an outsourced
private company has raised fierce
opposition among recruitment firms
due to added costs and security concerns over worker information, Nepalese English daily Republica reports.
Citing a letter from the Malaysian
embassy in Kathmandu dated Jan 15
addressed to Nepal’s Foreign Affairs
Ministry, the report said Malaysia’s
Immigration Department would
only accept and process medical
reports submitted under a biometric
system that took effect last Thursday.
This led to recruiting companies
declaring they would halt sending
new workers to Malaysia until the
Nepalese government makes a final decision.
Republica reported that Kathmandu has yet to give its final approval for the system to be implemented in the Himalayan nation.
“The Malaysian side sent their
response nearly a year after we sent
our letter expressing some concerns.
“Albeit late, most of our concerns
have been addressed. We will take
a decision either to reject or allow
implementation of the new system
soon,” Labour and Employment
Ministry secretary Bhola Prasad
Shiwakoti told Republica.
An estimated 800 Nepali workers
leave their country daily for Malaysia,
which is host to more than 450,000
documented Nepali migrant workers.
The report said the Nepalese government and recruitment firms were
concerned that workers would have
to pay extra costs, but the Malaysian
embassy letter said no new or additional charges would be imposed.
Republica quoted Nepal Health
Professionals Federation president
Kailash Khadka as saying that no
additional charges would be levied
on workers, who currently pay 2,526
Nepalese rupees (RM91) each for
medical tests.
This, however, could change as
the embassy’s letter also said any
new charges would be determined
by the respective authorities.
The daily reported that 38 medical firms will carry out the medical
checks using the biometric system.
It reported that recruitment firms in
Nepal are unconvinced about the
new system, arguing that the security of its Malaysian-bound workers
might be jeopardised as the system
had been outsourced to a private
company, Bestinet Sdn Bhd.
“We might not have any qualms if
the biometric tests were to be done
by the Malaysian or Nepal government. However, the data on the
workers will be going into the hands
of a private company, and this raises serious safety concerns,” Kumud
Khanal, vice-president of the Nepal
Association of Foreign Employment
Agencies, told Republica.
“We are awaiting the government’s decision as this new system cannot be enforced unless it
gives its approval,” he said. — The
Malaysian Insider
16 C O M M E N T
ECB faces crucial test
QE to combat deflation and revive the economy with ‘whatever it takes’
REUTERS
BY PAU L TAY LOR
T
he European Central
Bank (ECB) faces a crucial test of its resolve to
do “whatever it takes”
to preserve the euro
when it decides this
week on buying government bonds
to combat deflation and revive the
economy.
The EU top court’s adviser and
the Swiss National Bank have
smoothed the way for quantitative
easing (QE), or printing money, but
fierce opposition from Germany’s
central bank, politicians and public
may yet shackle the ECB.
At issue is no longer whether
the bank buys sovereign bonds, but
how the programme is designed
and whether it is seen as credible
and sufficient.
The risk is that the institution that
has held the single currency area
together through five years of debt
crisis adopts a “QE-lite” plan that
sends the wrong signal to markets.
News that ECB president Mario
Draghi met German Chancellor Angela Merkel privately last week highlights the acute political sensitivity
of the decision. While the Bundesbank is opposed to the policy, which
it sees as a back door to monetary
financing of feckless governments,
creating potential liabilities for German taxpayers, the ECB is hoping
Merkel won’t denounce it.
Some QE supporters fear Draghi
may make too many concessions to
Germany by framing a programme
that is limited in volume and scope,
which doesn’t share risk across borders and excludes buying bonds
of countries with the lowest credit
ratings.
A draft plan circulated by ECB
staff this month would cap purchases at €500 billion (RM1.785
trillion). Some market analysts say
it may need to be twice that size or
open-ended to reach its objective.
Draghi has a majority on the policymaking Governing Council but
the two German members, Bundesbank president Jens Weidmann and
ECB executive board member Sabine Lautenschlaeger, seem sure to
vote against QE. A handful of other
governors may join them.
One option seriously under consideration, ECB sources say, is to
make each national central bank in
the 19-nation Eurosystem shoulder
the risk of default on all or most of
its own country’s bonds that are
purchased.
“This would be at best ineffective
and at worst dangerous,” said Guntram Wolff, director of the Bruegel
economic think-tank in Brussels.
“[It] would be a strong signal that
the ECB is no longer a ‘joint and
several’ institution.”
Veteran Danish economist Niels
Thygesen, one of the experts who
designed original blueprint for the
The risk is that the ECB adopts a ‘QE-lite’ plan that sends the wrong signal to markets.
euro in the 1980s, told Reuters: “If
these are the circumstances for some
QE, it may not be worthwhile even
for strong enthusiasts.”
Yet by declaring ECB bond-buying
legal and urging courts to be cautious
about challenging the central bank
when they lack the expertise, the
European Court of Justice’s advocate
general last week effectively gave a
green light for full-blooded action.
Although his opinion concerned
a lawsuit brought by German Eurosceptics against a previous, as yet
unused bond-buying scheme, it had
a clear read-across to QE.
In particular, he argued that announcing limits on bond-buying
in advance would undermine its
effectiveness, that the ECB should
not be given seniority over private
creditors in case of a debt restructuring, and that there was no bar on
it buying bonds of countries with
low credit ratings.
This should give Draghi a free
hand to buy bonds of all eurozone
states proportionate to their contributions to the ECB’s capital for
as long as needed. But the politics
may make that impossible.
Economists distinguish two main
ways in which QE, already used in
the US, Britain and Japan, works to
revive an economy and raise prices — the “signalling effect” and the
“portfolio effect”.
In layman’s terms, the former
describes an unambiguous message
to financial markets that a resolute
central bank is determined to use
unlimited resources to achieve its
goal. The US Federal Reserve is the
frequently cited model.
“Just as markets know never to
fight the Fed, they need to understand that you don’t bet against the
ECB,” said a senior Eurosystem official.
The latter term describes the
mechanism through which a central
bank creates money to buy bonds
from banks, insurers and pension
funds, that reinvest it in higher-return assets such as stocks or corporate bonds, often outside the eurozone. That exit of funds lowers
the exchange rate, making exports
cheaper and imports dearer, hence
raising the inflation rate.
The euro has already fallen
from nearly US$1.40 in May 2014
to US$1.15 (RM4.09) last Friday, its
slide gathering pace as expectations
mount that the ECB will launch QE.
Switzerland’s central bank’s
shock move, which sparked global
currency turmoil and inflicted heavy
losses on some banks and brokers,
showed how hard it is for central
banks to tame volatile markets and
how easy long-accumulated credibility can be put at risk.
That carries lessons for the ECB
as it contemplates one of the toughest decisions in its 16-year history.
— Reuters
Election year subdues UK property market
BY LIM YIN FOONG
WELL-KNOWN for its brightly-coloured Mini Coopers and aggressive sales team, London estate
agency Foxtons has become synonymous with Central London’s property market boom of recent years.
Its IPO in September 2013 was
enthusiastically welcomed by investors; the oversubscribed market debut saw share prices soar by
some 20% on the first day of trading.
Listed at 230p apiece and a valuation of £649 million, Foxton shares
climbed to a high of 398.8p and a
£1.1 billion market cap by endFebruary last year, City AM reports.
But its fortunes are starting to
turn. Just over a week ago, Foxtons
— along with other FTSE-quoted
estate agents, house builders and
property websites — saw its share
price tumble as stockbrokers downgraded their “buy” recommendations on property-related stocks.
Analysts from Credit Suisse — coincidentally a co-manager for Foxtons’
flotation — changed their “buy” call
on the estate agency to “neutral” on
the back of concerns that its earnings growth could be compromised
by “extreme uncertainty” over the
London property market this year.
Foreseeing share price weakness in the UK residential sector in
1Q2015, stockbroking firm Jefferies
downgraded 14 stocks in the building and construction sector. Factors
cited for this bearish outlook include
weak house price data and lower
mortgage approvals. But the biggest
concern for most property market
observers this year is political.
Uncertainties over the outcome
of the upcoming general elections
in May, described as the most
unpredictable in a century, are
expected to keep the UK housing
market fairly subdued in 1H2015.
Concerns about the Labour Party’s
plans for a mansion tax on properties worth over £2 million ($4.05
million) have already seen a fall in
both domestic and foreign demand
for high-end London property. According to property consultants
Savills, such a tax could trigger average price falls of 5% across London’s prime housing market.
The British capital city recorded
the country’s strongest house price
growth in 2014 — up 15.3% in the
year to end-November 2014, which
helped raise overall UK house prices
by 10%, latest official data from the
Office of National Statistics shows.
The strong performance surprised many, who predicted at
the start of 2014 that the London
market would slow drastically to
a growth of between 4% and 5%.
Much of the gains were made in
1H2014 however, before the market began to soften in the second
half of the year, ahead of political
and tax concerns.
With London residential property values now considered to have
hit their peak, this cooling trend is
expected to continue into the new
year, and house prices are predicted
to flatline in 2015. The Royal Institution of Chartered Surveyors describes the market as “pausing for
breath” after having outperformed
in the early stages of the market’s
recovery. Buyers are saying that
“enough is enough” as London
homes have become overpriced
and unaffordable to many, adds
Capital Economics’ Ed Stansfield.
The Centre for Economics and
Business Research is even more
bearish. It believes that house prices in London will fall by 3.3% this
year, citing key indicators that include fewer new buyer inquiries
and properties taking longer to sell.
Just as a booming London property market had a positive effect on
the overall UK market, stagnant
house prices in the capital will have
a dampening effect on the rest of
the country, which market analysts
expect to show more growth than
London, albeit at a slower pace of
between 3% and 5%.
While London house prices are
expected to remain subdued, 2015
looks positive for landlords as the
prime residential rental market is
predicted to continue its strong
growth trend from 2014. Election
uncertainty is likely to boost demand in the corporate letting sector, as relocating employees choose
to wait until after the polls to purchase their homes, Marsh & Parsons believes. The London-based
estate agency is predicting a 10%
rise in rental rates this year, with
the biggest rental increases for oneand two-bedroom flats.
Given the pessimistic outlook on
house prices, however, estate agents
reckon it will be a buyer’s market at
least for the first half of the year. For
those daring to brave the political
uncertainty, hot spots to look out
for in 2015 include the London Underground’s Zone 3 area, which is
tipped to become the new Zone 2.
According to the Evening Standard’s Homes & Property section, developers believe buyer demand will
be strongest in Zone 3, particularly
in south and east London, where
more affordable new housing projects are located. Property values in
these areas are said to be two-thirds
of those in north and west London.
The transportation theme will
continue to feature prominently in
buyers’ decisions, with the Crossrail
mega railway project due to open
in 2018. Its first phase will improve
east-west links between Central London and outlying commuter areas in
Berkshire, Buckinghamshire, Essex
and South East London. The advent
of 24-hour Tube trains in 2015, and
proposals for Underground line extensions in South East London to
the Kent border and to Battersea
in South West London, will also be
talking points for property watchers,
Evening Standard reports.
Political uncertainty notwithstanding, market observers believe
2015 will see a more stable property market in London and the UK
in general. Confidence will remain
strong, they say, given positive factors such as improving economic
conditions, rising employment and
wages, as well as continued low
interest rates and a better balance
of property supply and demand.
Lim Yin Foong was founding editor
of Personal Money, a Malaysian
personal finance magazine that was
published by The Edge Communications. She is currently based in
the UK.
18 F E AT U R E
How Nippon Paint made
Goh S’pore’s richest man
87- year-old and son keeps a low profile
BY TOM METCALF & STERLING WONG
T
he Raffles Hotel in Singapore styles itself as
the city’s most graceful
landmark, a 115-yearold colonial edifice that
draws thousands of
guests and visitors each year.
Since being repainted in 2014,
its bright white facade has become
even more of a beacon. The touch-up
required about 2,500 litres of Vinilex
5000 acrylic emulsion, according to
paintmaker Nippon Paint.
That’s a fraction of the one billion
litres of paints and coatings produced
annually by Nippon Paint South-East
Asia Group or Nipsea, whose success has made founder Goh Cheng
Liang Singapore’s richest person with
an US$8.2 billion (RM29.27 billion)
fortune, according to the Bloomberg
Billionaires Index.
Goh and Osaka-based Nippon
Paint Holdings Co jointly own closely-held Nipsea. In the past year, the
duo cemented their half-century-old
partnership after the billionaire
boosted his stake in Nippon Paint
to 39%, making him the largest shareholder in Asia’s biggest paintmaker.
“If you mention the Goh name in
the painting industry, it isn’t known,”
Rajesh Palaha, an independent marine paint consultant based in New
Delhi, said in a telephone interview.
“Nippon Paint is known.”
Goh set up his first paint shop
in 1955 in Singapore, when the city
was a British colony. He became
a distributor for Nippon Paint and
the Japanese company established
a paint manufacturing plant in the
city-state in 1962.
Nipsea now operates in 15 Asian
countries. Goh’s stake in the joint
venture is held through his Singapore-based investment company,
Wuthelam Holdings.
“Nipsea has been selling paint
from 1962 in Asia,” said Krithika
Tyagarajan, a Singapore-based senior
director at consultants Frost & Sullivan. “Over the last 50 years, it has really grown into a major Asian player.”
Goh’s wealth puts him ahead of
Wee Cho Yaw, the largest shareholder
of Singapore’s United Overseas Bank
Ltd and the city’s second richest with a
US$6.9 billion fortune. Tan Kim Choo,
the widow of late property tycoon
Ng Teng Fong, follows with a US$4.9
billion fortune. Her sons Philip and
Robert Ng, have fortunes of US$4.6
billion and US$4.5 billion respectively.
While Nipsea’s paints are sold in
stores across Asia and adorn some
of the region’s most prominent landmarks, the 87- year-old keeps a low
profile. His son Goh Hup Jin, 61, has
headed the company since the 1980s
and is similarly discrete.
The scale of Goh’s fortune came
into the spotlight when his son
began exploring a takeover of Nippon Paint in 2012. After the talks
stalled, Wuthelam switched tack
and the two companies instead
announced a deepening of their
Goh set up his first paint shop in 1955 in
Singapore.
strategic alliance in February 2014.
Nippon Paint raised its stake
in eight joint ventures it runs with
Wuthelam to 51%, while the Singapore company received 60 million Nippon shares. That helped the
Gohs to increase their stake in the
Japanese paintmaker to 39% from
15% by December 2014, according
to stock exchange filings.
The consolidation of Nipsea units
made the Japanese company Asia’s
biggest paintmaker and estimated to
be the fourth-largest globally, according to Akihiro Kishi, a Tokyo-based
analyst at IHS Chemicals, which researches the paint industry.
“The alliance will accelerate their
Goh’s son Hup Jin has headed the
company since the 1980s.
investment to Asian countries, where
the paint market is expected to grow
considerably,” Kishi said by email.
The Nippon Paint stake was valued at US$4 billion as of Jan 16.
Wuthelam’s minority holdings in
Nipsea are valued at US$4.1 billion, based on the average enterprise value-to-sales, enterprise value-to-earnings before interest and
tax, and price-to-earnings multiples
of Nippon Paint, based on financial
information disclosed in a May 2014
company presentation.
Singapore proved to be a lucrative
market for Goh’s paint venture, as
government rules require buildings
to be repainted every five years. The
joint venture flourished and expanded into the rest of the region, including China, the Philippines, Malaysia
and Indonesia.
Nipsea’s access to high-growth
markets underscores the joint venture’s importance to Nippon Paint.
While revenue from the Japanese
market increased 7.4% in the year
ended March 2014, sales by Nipsea
affiliates surged 48%, according to
company data.
Such growth has ensured Goh’s
place among the region’s richest people and funded the Goh Foundation,
which gave S$50 million (RM134 million) to Singapore’s National Cancer
Centre in March 2014 and underwrites scholarships to several Singaporean universities.
Goh also has a passion for luxury
boats. His collection includes the 61m
(200-foot) superyacht White Rabbit
Echo, according to a Wuthelam company newsletter.
The family’s otherwise low profile
contrasts with the reach of the family’s business empire, whose expansion has been powered by a focus
on decorative paints and Nipsea’s
ability to tailor products to different
markets, according to Frost & Sullivan’s Tyagarajan.
“Compared to the banking industry or the telecommunications
industry, the paint industry isn’t
seen as glamorous,” Tyagarajan
said. “But even with strong competition, Nipsea has done very well
for itself.” — Bloomberg
Why banking is flawed and how to fix it
BY D OMI NI C EL L IOTT
THE End of Banking is an important
book about finance. Jonathan McMillan, the nom de plume taken by
an investment banker and a macroeconomist, provides a holistic and
compelling explanation of the crisis
of 2008. The authors predict a repeat,
barring a revolution in finance.
McMillan, as the co-authors can
be called, defines banking as the private sector creation of money from
extending credit. Loans create deposits — private money. The monetary liabilities are distinct from the
physical or electronic money which
comes out of central banks.
The book’s central argument is
that private money creation is impossible to control in the digital age.
Until computers became widespread
in the 1970s, banks could keep track
of borrowers.
But with electronic systems, transactions became more complex as
lenders repackaged loans. Financial
assets were spread across myriad interlocking chains of balance sheets,
both of traditional banks and so-
called shadow banks, which have
grown into a US$35 trillion (RM124.6
trillion) monster in the United States
and European Union.
The illustration of how balance
sheets multiply and money grows in
The End of Banking is illuminating.
The focus is on how computing permitted massive regulatory arbitrage.
“Over the last 40 years, IT has turned
the stick [of capital requirements]
into a toothpick.”
Financial watchdogs are alert to
shadow banking’s risks, but their
efforts to bring non-regulated firms
into a defined perimeter are akin to
using a net to gather water. Thanks
to electronic bookkeeping, firms can
shift balance sheets out of the authorities’ purview at the tap of a button.
Whether to prevent runs on banks
or to firm up the financial stability
of quasi-banks, weak governments
have steadily extended guarantees to
bigger portions of the private sector.
McMillan has a solution. It starts
with an accounting distinction. Bank
assets would be classified either as
real, in other words claims on physical or distinct immaterial objects;
or as financial, assets which appear
as liabilities on the balance sheet of
some other institution.
Next, regulators would ensure that financial assets were
100%-backed by common equity.
And lastly, in a combined regulatory
and accounting change, the value
of a company’s real assets would
have to be greater or equal to the
value of the total of its liabilities.
This final fix is where the book
goes beyond previous proposals to
mend finance through concepts such
as narrow- or limited-purpose banking. The implication of McMillan’s
recommendation is that many derivatives, for which a counterparty’s
losses could be infinite, would be
banned. What’s more, the intended
application to financial and non-financial companies alike would include shadow banking, addressing
the so-called “boundary problem”
of regulation that other approaches
to improve the system fail to solve.
Under these rules, banks would
no longer create money. Rather,
independent central banks would
take on that task. McMillan suggests
they could moderate inflation or
deflation by charging companies
a fee for gathering liquidity, or by
distributing cash directly to citizens.
The requirement for a surplus of
real assets over financial liabilities
would crush the US$691 trillion
over-the-counter global derivatives
market at a stroke. At least in the
short term, the quantity of credit in
the economy would shrink sharply.
That sounds like a better and safer financial world, but the McMillan
system has a potential serious flaw.
The idea of an all-powerful price-setting central bank which is truly independent sounds utopian. As Felix
Martin shows in his book Money:
The Unauthorised Biography, governments do not give up control of
money creation entirely.
The book is purposely impractical.
It does not discuss how to get from
here to there. The influential banking lobby is hardly going to surrender without a generously financed
fight. Still, the next time a financial
crisis erupts, the revolutionary ideas
in the The End of Banking may get a
serious hearing.
At just 180 pages, including footnotes and many charts and tables,
The End of Banking is succinct. Its
prescriptions for a better banking
system may be excessively ambitious.
But wild ideas may be more helpful
for fixing finance than an endless
series of enhancements of a system
which is unsuitable for the modern
age. — Reuters
W O R L D B U S I N E S S 19
Oil declines as Iraq pumps
crude at record pace
Opec’s second-biggest producer aims to boost exports this year
BY B EN SHA RPL ES
MELBOURNE: Oil declined as Iraq
pumped crude at a record pace,
with the second-biggest producer
in the Organization of the Petroleum Exporting Countries (Opec)
planning to boost exports this year.
Futures lost as much as 1% in
New York and 0.9% in London. Average Iraqi output is at four million
barrels a day, Oil Minister Adel
Abdul Mahdi said at a news conference after meeting his Turkish
counterpart, Taner Yildiz, in Baghdad. US producers idled a record
number of drill rigs during the past
six weeks, according to data from
Baker Hughes Inc.
Crude slumped almost 50% last
year as the US pumped oil at the
fastest rate in more than three decades while Opec resisted calls to
cut supply. Producers outside the
group will boost output this year at
a slower rate than previously forecast, according to the International
Energy Agency (IEA).
“The bigger picture remains from
a fundamental point-of-view,” Ric
Spooner, a chief strategist at CMC
Markets in Sydney, said by phone.
“We have a supply surplus and there
is yet to be any significant news of
reduction in capacity so the market
remains very vulnerable to further
price decline.”
Iraq plans to increase crude exports to 3.3 million barrels a day
this year, including sales from the
semi-autonomous Kurdish region
in the north, Abdul Mahdi said.
The Opec producer pumped 3.35
million barrels a day in December,
according to oil marketing organisation Somo.
The IEA lowered its non-Opec
supply growth estimate by 350,000
barrels a day, the first reduction
since the 2015 forecast was introduced in July. Half the cut is from
Colombian output while effects on
US production are so far “marginal”,
the Paris-based group, which advises 29 nations on energy policy,
said in its monthly market report
last Friday.
The number of operating oil
rigs in the US has declined by 209
since Dec 5, the steepest six-week
drop since Baker Hughes Inc began
tracking the data in July 1987. The
count was down 55 in the week
ended Jan 16 to 1,366. — Bloomberg
HTC plans better camera phone, smartwatch
BY TI M C U L PA N
TAIPEI: HTC Corp plans to unveil a marquee phone in March
with improved camera and audio
features, and its first smartwatch,
according to a person familiar with
the matter, as the Taiwanese company tries to stem three years of
falling sales. Shares rose.
Code-named M9, the phone
features a 20-megapixel rear camera and an HTC UltraPixel front
camera, the person said, asking
not to be identified because the
details aren’t public. The smartwatch will link with Under Armour
Inc’s fitness service, building on a
partnership announced earlier this
month, the person said.
HTC will release the products
around the time of the Mobile
World Congress in Barcelona,
where the world’s biggest smartphone makers, including Samsung
Electronics Co and Huawei Tech-
nologies Co, will showcase their
models. The smartwatch represents
HTC’s latest effort to move beyond
the slowing smartphone market
after last year’s introduction of the
“Re” action camera.
Its new phone resembles last
year’s M8 in size and design, with
gold, gray and silver options, and
features Qualcomm Inc’s eightcore Snapdragon 810 processor,
which has advanced video capabilities, the person said. The device
includes Dolby Laboratories Inc’s
Dolby 5.1 audio technology and
HTC’s latest Sense 7 user interface with improved location-based
services.
The UltraPixel sensor developed
by HTC features fewer, larger pixels
designed to get clearer images in
lower light.
HTC posted its first quarterly
sales growth since 2011 in the final three months of last year, while
full-year sales fell. — Bloomberg
Temasek eyeing 18%
stake in India’s Medanta
hospital owner
SINGAPORE: Temasek Holdings, the Singapore government’s investment company,
is in talks to acquire a stake of
about 18% for nearly seven billion rupees (RM403.8 million)
in Global Health Pte Ltd, which
owns, manages and operates
Medanta hospital outside Delhi,
The Straits Times quoted India’s
Economic Times as saying yesterday. Quoting unidentified
sources, the newspaper said
Temasek is in advanced discussions with Punj Lloyd Ltd,
one of the founding promoters
of Medanta along with cardiac
surgeon Naresh Trehan and
Sunil Sachdeva. Punj Lloyd is
a Delhi-based diversified engineering and project management company run by Atul Punj.
Investors nibble only on
first morning of smaller
board lots on SGX
SINGAPORE: The reduction
in minimum lot sizes sparked
muted interest from investors
yesterday morning, The Straits
Times reported. Remisiers said
they were not expecting a surge
in trading volumes or investor interest, though there had
been some nibbling at bluechip stocks. The Singapore Exchange’s (SGX) reduction of
minimum lot sizes from 1,000
shares to 100 shares took effect yesterday. The change
means component stocks of
the Straits Times Index such as
DBS Group Holdings, United
Overseas Bank and Singapore
Airlines will come within reach
of more retail investors.
Indonesia sees 2015
current account deficit at
3.3% to 3.5% of GDP
Bitcoin is latest victim of disinflation
JAKARTA: Indonesia’s central
bank expects the country’s current account deficit for 2015 to
be around 3.3% to 3.5% of gross
domestic product (GDP), bigger
than its 3% estimate for 2014, its
governor said yesterday. “Import for productive component
will be higher, but it will be better because the consumptive
component will be smaller,”
Bank Indonesia governor Agus
Martowardojo told reporters.
Last week, the central bank gave
3% of GDP as its projection for
the new year’s current account
deficit. — Reuters
BY ED WA RD H A DA S
LONDON: Bitcoin is proving a big
disappointment. The would-be currency is down 33% against the dollar so far in 2015, and 71% in the
last year. There’s almost certainly
more bad news to come.
The electronic token has lots
of enduring problems. As a store
of value that is not subject to government intervention, it lacks the
support of authorities and is always
in danger of being banned.
The market was illiquid to begin
with and is becoming even more
so, increasing the risk of abuse.
Bitcoins generate no income, so
they count as collectibles — more
like an artwork than a few shares
in Google. In these matters, beauty
and value depend on the fickle eyes
of the beholder and potential buyer.
Anonymity and free transactions
offer some allure. But the former
leads to an association with illegal
activity. The latter is an illusion,
since someone has to pay for the
computers used to process and
store bitcoin information. Bitcoin
“miners” provide the service in exchange for new bitcoins.
Right now, the biggest problem
is psychology. In a more ebullient
and inflationary world, the novelty
IN BRIEF
Shanghai widens lead
over Singapore as world’s
busiest box port
and limited supply of bitcoins might
appeal. These days, disinflation and
discontent are the dominant themes.
Bitcoins touched US$171.41
(RM610.22) last Wednesday and
traded at US$216 last Friday. At
these levels, the economics of bitcoin mining look terrible. Full cost
of production is closer to US$600 per
token, based an a recent study by
Australian researcher Hass McCook.
If miners retreat, users may end up
paying directly for the service.
Defenders of bitcoin have not
given up hope. Their emphasis has
shifted though, from the curren-
cy to the underlying blockchain
processing software. That may be
a good investment. It may even
be revolutionary. But it will not
bring up the price of bitcoin. The
currency is suffering an erosion of
confidence from which it could be
hard to recover. — Reuters
SHANGHAI: Shanghai retained
its title as the world’s busiest
container port for a fifth consecutive year after widening the gap
with its closest rival Singapore.
Singapore handled 33.9 million
20-foot containers last year, according to a statement posted
on the Maritime & Port Authority of Singapore’s website last
Friday. Last month, Shanghai
said it expects to process about
35.2 million boxes in 2014. A
year before, the gap between
the two ports was about one
million boxes. — Bloomberg
20 FO CU S
TUE
A true-life
cop drama
Indonesian president’s pick for national police
chief has been snared on corruption charges.
But why was he tapped in the first place?
01
BY JOHN MCB ET H
T
he shock indictment of General Budi Gunawan on bribery
charges just days after President
Joko Widodo sparked an outcry
by nominating him as Indonesia’s next police chief has raised
intriguing questions about whether it was all
supposed to be a political charade.
If so, then the president’s failure to withdraw the nomination after Gunawan was
declared a graft suspect now means he must
play the game to the end, as parliament’s
legal commission has gone ahead and consented to the candidacy in a confirmation
hearing at the general’s home.
The president, widely known as Jokowi, still
holds the final decision. Although Gunawan,
already under a cloud for suspiciously inflated
bank accounts, could only be legally ruled out
by a conviction, Jokowi can justifiably point to
the indictment as a reason for killing off the
nomination. Morally and politically it would
seem to be a no-brainer, given the negative
public reaction to the appointment.
But that would inevitably draw him into an
unwanted conflict with Megawati Sukarnoputri, the leader of Jokowi’s party, the Indonesian Democrat Party for Struggle (PDI-P).
Gunawan, 56, was always perceived to be
Megawati’s choice after serving her during
her 2001-2004 presidency and remaining a
member of her inner circle.
Indeed, there is widespread speculation
that his nomination was a quid pro quo for
the president’s recent appointment of retired
army general and business partner Luhut
Pandjaitan as his chief of staff, in the face
of strong opposition from Megawati and
Vice-President Jusuf Kalla.
Analysts wonder how the president could
not have been aware that the Anti-Corruption Commission (KPK) and the Financial
Transactions Reporting and Analysis Centre (PPATK) had Gunawan in their sights,
particularly after he was red-flagged last
er
sen
up
the
of T
exe
bee
far,
nes
02
October while under consideration for a
ministerial post.
Both agencies now claim they have been
investigating Gunawan since July, although it
is now four years since the PPATK discovered
he had 54 billion rupiah (RM15.3 million) in
suspected ill-gotten funds squirrelled away
in domestic bank accounts.
His indictment on the eve of his confirmation hearing was widely portrayed as a
slap in the face for Jokowi, who used the KPK
to vet his provisional Cabinet but pointedly
did not do the same with the nine contenders for top cop.
Gunawan’s quick nomination infuriated
anti-graft activists, already critical of Jokowi
for apparently having paid a political debt
to coalition ally Surya Paloh, leader of the
National Democrat Party, by choosing old
guard career prosecutor HM Prasetyo as
attorney-general.
Jokowi endorsed Gunawan in a letter to
parliament just two days before a smiling
Megawati declared herself re-elected as PDI-
P’s chairwoman, a post she has held largely unchallenged since she first confronted
president Suharto in 1994.
Adding fuel to the debate over whether
Gunawan was meant to fail is the question
of why the president apparently wanted the
issue resolved fully nine months before the
incumbent police chief, Gen Sutarman, is
due to retire.
But with Megawati pushing hard and the
opposition Golkar Party behind Gunawan
as well, parliament’s so-called fit and prop-
FO CU S 21
T U E SDAY JA N UA RY 20 , 2015 • T HEED G E FINA NCIA L DA ILY
The builder’s budget
BY S I M O N RO U G HNE E N
03
01. Jokowi clapping during a plenary
session of the 25th Asean summit
at Myanmar International
Convention Centre in Naypyitaw on
Nov 12, 2014. Photos by Reuters
02. Then Indonesian president
Megawati, flanked by her adjutant
Colonel Gunawan (right) and
ceremony commander Police
Commissioner Sunaryono (left)
at the 56th anniversary of the
country’s police force in Jakarta on
July 1, 2002.
03. Jokowi (centre) and running mate
Jusuf Kalla (left) celebrating with
party head Megawati after the
official results of the presidential
election in Jakarta onJuly 22, 2014.
01
04. Former national chief of detectives
General Susno Duadji arriving
for his trial in the South Jakarta
District Court on Sept 29, 2010.
Duadji was on trial for alleged
corrupt practices but was
subsequently released.
ground makes him a very different president,
and while he may be forced to compromise
at times, he has shown he is choosing his
battles carefully as he settles into the job.
He, as much as anyone, realises that reform — both police and bureaucratic — is
still one of the country’s biggest challenges. For all of the war on corruption, the
480,000-strong national police force remains
at the root of the ongoing rot.
Even activists agree the search for a clean
police chief is a vain endeavour in a culture
where new recruits pay to join and salaries
and retirement benefits are so low it is impossible to sustain a general’s lifestyle.
Gunawan has actually been on the radar
since 2008 when leaked PPATK documents
revealed he and four other officers held collective bank balances four times higher than
the US$2.1 million (RM7.5 million) listed in
their official wealth reports.
Internal affairs investigators later insisted they could find nothing untoward. But
asking the police to investigate themselves
is like hiring the fox to guard the henhouse.
Gunawan at the time reported assets of
only 4.6 billion rupiah, which by 2013 had
ballooned to 22.6 billion rupiah — still well
short of the 54 billion rupiah the PPATK
claimed he had back in 2010.
Indonesia’s police chief officially earns
29.2 million rupiah a month, but invariably
the generals claim their grossly swollen accounts come from inheritances, donations
or a rich wife — that is if they declare the
full amount. — The Edge Review
er test, a standard hurdle in selections for
senior officials, had already been shaping
up as a mere formality.
“Joko should have at least gone through
the motions,” said Natalia Soebagjo, head
of Transparency International Indonesia’s
executive board. “There would have at least
been the illusion of a selection process. So
far, despite all the good intentions, it is busi- This article first appeared in this week’s ediness as usual.”
tion of The Edge Review at http://www.thBut is it? Jokowi’s ordinary-man back- eedgereview.com
the final bill could come to around US$500
billion (RM1.78 trillion) over the next five
years, government agencies estimate.
Jokowi has said that private sector investment, public-private partnerships as well as
loans and grants from donor agencies will
be needed to cover the expected outlay.
The Asian Development Bank (ADB), the
regional lender headquartered in Manila,
said last Tuesday that it would support Indonesia’s upgrade efforts following a meeting
between Jokowi and ADB president Takehiko Nakao in Jakarta.
“Poor infrastructure is one of the main
factors holding back the development of a
competitive manufacturing sector in Indonesia. While it will take years to get the
country’s infrastructure up to standard, the
extra spending is clearly welcome news,”
said Gareth Leather of Capital Economics,
a London-based consultancy.
Indonesia’s generous fuel subsidies were
popular with middle-class car owners but
in recent years high oil prices meant they
accounted for around a fifth of government
spending — more than was allocated to infrastructure and social welfare combined.
Plummeting world oil prices in the past
few months allowed Jokowi to abolish petrol subsidies altogether and drastically cap
diesel subsidies with relatively little pain to
consumers. This should in turn help bring
down the budget deficit to under 2% of gross
domestic product, given that Indonesia is a
net oil importer. However, the passing of the
revised budget by lawmakers is not a given,
as Jokowi can only count on a minority of
representatives. Over half of lawmakers are
loyal to a coalition headed by Prabowo Subianto, who was defeated by Jokowi in the
July 2014 presidential election and who has
since waged an on-off campaign to undermine the new president.
Prabowo pledged during his campaign to
spend around US$60 billion per year on infrastructure if elected, so it may be awkward
for even someone of the former general’s
well-known chutzpah to oppose Jokowi’s
spending proposals.
“Indonesia is no stranger to political compromise and I suspect the budget will be
passed once a certain amount of horse-trading has taken place. I think the key point
to bear in mind is that increasing capital
spending isn’t too controversial,” said Gareth Leather. — The Edge Review
INDONESIA’S government has proposed
boosting capital spending on infrastructure
to 290 trillion rupiah (RM81.9 billion) this
year, a doubling of last year’s 139 billion rupiah that is intended to drive much-needed
development across the archipelago.
The figure is contained in a proposed
revision of the 2015 state budget put before legislators for approval at the end of
last week. It is also a near 50% increase on
the 196 trillion rupiah figure proposed in
the draft budget tabled by former president
Susilo Bambang Yudhoyono in August 2014,
prior to his succession on October 20 by Joko
Widodo, better known as Jokowi.
This wedge of extra productive cash has
been created by Jokowi’s near-elimination
of longstanding and expensive fuel subsidies
at the end of December. The revised budget
sees the estimated cost of the fuel subsidies
in 2015 drop from 276 trillion rupiah to 81
trillion rupiah.
Although the budget breakdown has not
been revealed in detail, the proposed infrastructure outlay is already welcome news to
farmers and business owners across Indonesia, who have long struggled with poor
roads and unreliable power supply.
Aziz Pane, chairman of Indonesia’s Tyre
Manufacturers Association, blames lagging
investment in infrastructure for problems
including inefficiencies and high costs in
Indonesia’s rubber and other agricultural
sectors. “We need roads, we need harbours,”
Pane said. “That is both for farmers getting
raw material to producers, and for producers distributing later on.”
Indonesia is the world’s second-biggest
rubber exporter, and other commodities
such as oil, gas and palm oil make up seven
out of the country’s top 10 exports.
Indonesia’s government is aiming to modernise the country’s economy and reduce
reliance on primary commodity products
— an ambition that requires the government to spend big on ports, rail, airports
and power stations.
World Bank figures show that Indonesia is responsible for only 15% of Southeast
Asia’s manufactured exports, despite having
more than 40% of the region’s population.
In contrast, Thailand, home to only 11%
to 12% of the 600 million people across the
10 nations that make up the Association of
Southeast Asian Nations (Asean), accounts
for a third of the region’s manufactured
exports.
This article first appeared in this week’s
If Indonesia is to upgrade its infrastruc- edition of The Edge Review at http://www.
ture adequately by the close of the decade, theedgereview.com
02
geted
her
ion
the
the
, is
the
wan
op-
Labourers replacing railway track and sleepers on a section of line in east Jakarta. Needing some
US$450 billion to spend on Indonesia’s infrastructure by 2019, President Jokowi has ordered ministers
to give private investors first pick of money-making projects rather than let state agencies grab them as
they usually do. Photo by Reuters
04
22 W O R L D B U S I N E S S
China stocks plunge
Shares tumble after crackdown on credit products, margin trading
SHANGHAI: China stocks collapsed
in morning trade yesterday, with financials hammered after regulators
cracked down on credit products
that have been blamed for fuelling
excessive market speculation over
the past three months.
Brokerage shares tumbled after
the securities regulator punished
industry heavyweights for illegal
operations in their margin trading business while banks were hit
after the banking regulator issued
draft rules to tighten supervision of
entrusted loans, a kind of shadow
banking product.
“The entrusted loan regulation
and margin trading penalties had
combined impacts on market sentiment, adding to volatility and leading investors to turn negative,” said
Du Changchun, analyst at Northeast Securities in Shanghai.
“These two regulatory moves,
in essence, hinder capital inflows,
which have been the most significant reason behind the market’s
recent rally,” he said.
The CSI300 index tumbled 6.3%
to 3,404.69 points at the end of the
morning session. The Shanghai
Composite Index (SSEC) also shed
6.3%, to 3,163.72 points. In contrast,
Alcatel-Lucent
China JV’s HR
manager missing
SHANGHAI: The China flagship firm of French telecom
equipment group Alcatel-Lucent confirmed yesterday a human resources (HR) manager
is missing, after media reports
said he had accused some of
the joint venture’s top executives of corruption.
Alcatel-Lucent Shanghai
Bell said it had “lost contact”
with Jia Lining and was helping police and his family locate
him, according to a statement
on its official microblog.
The influential magazine
Caixin last week reported that
Jia was head of HR and had in
a social media posting accused
“many” high-level executives in
the firm and its subsidiaries of
corruption and abuse of power.
The company said yesterday
the posting on messaging app
WeChat was inaccurate. “The
content of the Jia Lining WeChat has clear discrepancies
with the facts,” it said, adding
that the posting contained “several” fabrications and distortions.
The original entry could not
be found. A 3,500-word version
circulating online, whose authenticity could not be confirmed, listed nine names — all
Chinese — of former and current company officials.
Relatives and friends said they
lost contact with Jia last Wednesday, Caixin reported. — AFP
The financial sub-index plummeted 9.4%, led down by China’s top two brokerages Citic
Securities and Haitong Securities. Photo by Reuters
China’s Nasdaq-like ChiNext Composite index rose 1.4% yesterday.
The SSEC, the index most closely watched by mainland Chinese
investors, was on track to suffer its
biggest one-day percentage drop
since September 2009.
“When large caps fall, we often
see the ChiNext rise,” said Huang
Cendong, an analyst at Sinolink
Securities.
The financial sub-index plummeted 9.4%, led down by China’s
top two brokerages Citic Securities Co and Haitong Securities Co,
which fell by the 10% daily limit.
This dragged smaller rivals lower
as well, with every stock on the
sub-index dropping.
Bank shares also tumbled, with
the sector sub-index falling 9.6%
at midday.
Bank and brokerage shares were
the biggest beneficiaries of the fourth
quarter 2014 recent rally, with the
financial sub index rising 80% compared with a 44% rise in the CSI.
The brokerages are among the
top five holdings of investors using borrowed money, according
to Shao Ziqin, a Shenzhen-based
analyst for Citic, who cited calculations as of last Thursday, Bloomberg
reported. Of the top 20, six were
brokers and seven were banks.
Investors borrowed 32.6 billion
yuan (RM18.67 billion) to buy Citic
Securities shares as of last Thursday,
accounting for about 3% of outstanding margin loans, according to Shao,
who cited Wind Information Co data.
Haitong purchases had attracted 14.8
billion yuan of margin loans.
The total amount of shares purchased on margin has surged more
than tenfold in the past two years to a
record 1.1 trillion yuan, or about 3.5%
of the nation’s market capitalisation.
The Hong Kong market followed the mainland market as the
Hang Seng index dropped 1.1%, to
23,828.87 points.
The Hong Kong China Enterprises Index plummeted 4.2%, to
11,564.27. — Reuters/Bloomberg
Hong Kong-Shanghai stock
link needs time to improve
HONG KONG: The chairman of
China’s securities regulator said
yesterday it will take time for trading on the Hong Kong-Shanghai
equity link to grow as international
investors get familiar with China’s
securities rules while regulators
improve the scheme.
His comments come amid growing pressure from foreign banks
and asset managers on Hong
Kong and Chinese authorities to
iron out regulatory and technical
wrinkles that have kept many foreign investors away from the Hong
Kong-Shanghai Stock Connect.
“Two months have passed
and we still lack experience, but
everything has gone well,” said Xiao
Gang, chairman of the China Securities Regulatory Commission (CSRC),
speaking on a panel at the Asian Financial Forum in Hong Kong.
“International investors are not
used to this mechanism. It will still
take time for the two sides to get
familiar, and on this basis, both
sides need to work hand in hand
to improve this mechanism.”
Launched in November, the link
lets international investors trade
Shanghai shares via Hong Kong’s
stock exchange while mainland
investors can deal in Hong Kong
“H” shares via the Shanghai Stock
Exchange.
Foreign investors have been
grappling with the Shanghai exchange’s unusual settlement rules
and are also seeking assurances
that Chinese law fully recognises
investor rights to shares held in
China on their behalf by a custodian.
The link’s technical and regulatory hurdles have sparked a
China equity derivatives boom
as foreign funds sought a back
door to gain exposure to China’s
record-breaking stock rally in late
2014. — Reuters
Alpari exploring all options including sale
LONDON: Retail currency broker
Alpari (UK) Ltd, which last week
said it had entered into insolvency after suffering losses stemming
from the scrapping of the Swiss
franc’s cap, announced it was
considering all options including a sale.
“For the avoidance of any doubt
and notwithstanding previous announcements by the company, Alpari (UK) Ltd has not entered a
formal insolvency process,” the
company said on its website.
“The board of directors are urgently considering all options in-
cluding a sale and are liaising closely with the FCA (Financial Conduct
Authority). We hope to make a further announcement shortly,” it said.
The FCA, which regulates the
financial services industry in the
United Kingdom, said last Friday
it was working closely with Alpari.
The sponsor of English Premier
League soccer club West Ham is just
one of many retail currency brokers
reeling from the Swiss National
Bank’s sudden move last week to
ditch its three-year capping of the
franc at 1.20 per euro.
The decision had resulted in a
surge in the Swiss franc, exceptional volatility and an extreme lack of
liquidity, which in turn saw many
clients sustain huge losses that brokerages ultimately had to bear.
New York-listed FXCM Inc was
forced to turn to Leucadia National Corp to secure a US$300 million
(RM1.07 billion) loan to cover losses of US$225 million suffered by
its clients.
Industry news site Forex Magnates, citing unnamed sources
close to the matter, said FXCM has
emerged as a potential buyer for the
business of Alpari UK. — Reuters
IN BRIEF
Burgundy 2013 prices
stable, starting to drop
LONDON: Prices for 2013 vintage Burgundy wines going on
sale now are holding stable
or declining relative to the
peaks reached in 2012 even
as supplies remain tight after
cold, wet weather reduced
yields for the fourth straight
year. Late flowering, combined
with rot in some vineyards and
hail showers in the Cote de
Beaune, contributed to making the vintage difficult for
winemakers, according to Jasper Morris, Burgundy director
for London merchant Berry
Bros & Rudd. While the four
Burgundy vintages from 2010
to 2013 have all had yields
below average, putting pressure on growers to raise prices, especially for 2012 wines,
merchants say that trend is
easing. — Bloomberg
BHP may cut shale spending to shore up dividends
MELBOURNE: BHP Billiton
Ltd may be forced to slash its
planned US$4 billion (RM14.24
billion) spending this year on
US shale wells and book writedowns on its shale assets as it
battles plunging prices for its
biggest earners, iron ore, oil
and copper. The mining giant,
which has cut capital spending
for the past two years, needs
further savings to have enough
cash to meet a promise not to
reduce its dividend, analysts
and investors said, with some
tipping it could slice its US onshore drilling budget in half.
The spending cuts could come
as soon as tomorrow, when
BHP releases its December
quarter operational review.
— Reuters
Sharp issues profit warning as competition bites
TOKYO: Japan’s Sharp Corp
warned yesterday it will likely
miss this year’s earnings target
as an intensifying price war
with cheaper Asia rivals in display panels and TVs cuts deep
into its profit margins. Sharp
shares skidded 9% to two-year
lows after the maker of screens
for Apple Inc’s iPhones said it
now doesn’t expect to meet an
earlier forecast of a ¥30 billion
(RM912.3 million) net profit in
the 12 months ending March.
The warning dashed investor
hopes that growing sales to
Chinese smartphone makers
could provide a new springboard for Sharp as it emerges
from years of restructuring.
— Reuters
Bumi Resources posts
US$13.3m profit for 9M14
JAKARTA: PT Bumi Resources
Tbk, Indonesia’s biggest coal
miner, said yesterday it swung
to a net profit of US$13.3 million (RM47.35 million) for the
nine months ended September
from a loss of US$377.5 million
a year earlier. The company
posted revenue of US$2.2 billion for the same period, down
from US$2.65 billion a year
earlier. — Reuters
24 WORLD
Hundreds trapped in
Myanmar — Global Times
Chinese nationals caught between fighting government troops and insurgents
BEIJING: Hundreds of Chinese citizens, including miners and jade
traders, are among 2,000 civilians
trapped by fighting between government troops and insurgents in northern Myanmar, China’s state-backed
Global Times reported yesterday.
The Chinese nationals and Myanmar civilians are trapped in the
northern state of Kachin, which
borders southern China, where the
Myanmar military has been battling
the rebel Kachin Independence
Army (KIA) for years, the newspaper said.
It cited an unidentified intelli-
‘Nut rage’ trial
of Korean Air
heiress opens
SEOUL: The trial of Korean Air
(KAL) heiress Cho Hyun-ah,
charged with aviation safety
violations following a now notorious “nut rage” incident that
triggered a national uproar,
opened yesterday.
Cho, who has been in custody since her formal arrest three
weeks ago, was whisked into
the western district court complex in Seoul by bus through a
heavy media presence.
Wearing a green prison uniform, she stood with her head
bowed in the packed courtroom, answering preliminary
questions in a near whisper.
The 40-year-old daughter
of KAL chief executive officer
Cho Yang-ho could face a
maximum 10-year sentence
if convicted of the aviation
safety violations and a possible five years on additional
charges of coercing KAL staff
to give false testimony and
interference in the execution
of duty.
The charges all stem from an
incident which saw Hyun-ah allegedly forcing the chief purser
off a Dec 5 New York-to-Seoul
KAL flight — compelling the taxiing plane to return to the gate
so he could disembark. — AFP
gence official for a Myanmar rebel
group, although the group also was
not specified.
The Chinese nationals included jade dealers, gold miners and
lumberjacks, the paper said. There
is an open-pit mine in the Kachin
town of Hpakant, the largest source
of Myanmar jade.
The trapped people have limited food and water and no medical
supplies, the rebel intelligence official told the Global Times.
China is working to verify the situation in northern Myanmar, said
Hong Lei, a spokesman for its Min-
istry of Foreign Affairs. No Chinese
nationals had sought assistance,
a Chinese consular official told a
state television reporter yesterday.
Officials from ethnic armed
groups told the Global Times they
would let the Chinese go home “if
conditions allow”.
Myanmar has beefed up its military presence at the Kambaiti Pass,
on the border with China, in a bid
to curb illegal cross-border traffic,
the paper said.
That could cut off passage for
Chinese nationals without the documents to return home, the Global
Times said, quoting unidentified
sources. Some of them had gone
into hiding in homes and forests
nearby, it added.
The area is known for a flourishing illegal trade in jade, much of it
smuggled over the border into China.
In Myanmar, peace talks between rebel groups and the semi-civilian government that took over in
2011 after nearly 50 years of military
rule ended last September without
agreement. The KIA took up arms
in 1961 and is the second largest
of about 20 ethnic armed groups
in Myanmar. — Reuters
Hong Kong creates student cadet
group modelled after PLA
BY TAN HW E E ANN
HONG KONG: Hong Kong inaugurated a student cadet group that
will practise Chinese army foot
drills and wear similar uniforms,
as almost three months of pro-democracy protests led to increased
scrutiny of the city’s youths.
Dozens of students from universities and secondary schools joined
the Hong Kong Army Cadets group
at a ceremony on Sunday in the
Ngong Shuen Chau Naval Base in
the city, the state-run China Daily
reported yesterday.
“The new voluntary uniformed
youth group aims to promote civic awareness, a sense of responsibility and rights as Chinese citizens, and personal qualities such
as perseverance, self-discipline and
leadership among youngsters,” the
newspaper said.
The newly created cadet group
highlights China’s rising concern
with Hong Kong students, who led
the unprecedented protests last
quarter seeking to remove Chinese
limits on the city’s election. Hong
Kong chief executive Leung Chunying last week criticised a university publication in his annual policy
address for advocating self-determination, and said young people
IN BRIEF
HK ‘graffiti teen’ allowed
to stay with family
HONG KONG: A 14-yearold girl who was arrested for
chalking flowers on the wall of
a Hong Kong democracy protest site and faced being taken
into care will be allowed to stay
with her family, a court ruled
yesterday. City authorities had
been seeking a “care and protection” order for the teenager,
who was sent to a children’s
home after being caught scribbling on the “Lennon Wall” at
the city’s main protest site in
December. Although she was
later allowed to return to her father on bail and under curfew,
the case sparked fears authorities are carrying out a clampdown on protesters. — AFP
Erdogan chairs first cabinet
meeting as president
ANKARA: Turkish President Recep Tayyip Erdogan was scheduled yesterday to chair a cabinet meeting for the first time as
head of state, in a move seen by
the opposition as a sign of his
increasingly authoritarian rule.
Erdogan, who took the presidency in August elections after
over a decade as premier. The
Turkish president has the right
under the constitution to chair
cabinet meetings, which are
usually overseen by Prime Minister Ahmet Davutoglu. — AFP
‘Police kill two Uighurs in
south China’
Filepic of Leung and his wife Regina, who is the cadet group’s commander.
Photo by Reuters
need to be guided better.
Leung’s wife, Regina, is the cadet group’s commander, while
former Hong Kong chief executive
Tung Chee-hwa is its honorary
chairman, the China Daily reported. The oath-taking ceremony was also attended by Zhang
Xiaoming, the director of China’s
liaison office in the city. Other than
pledging to care for others and to
build Hong Kong, the students
also agreed to serve the country,
the newspaper said.
The uniform worn by the cadets
is a brighter shade of the green
summer uniform of the People’s
Liberation Army Ground Force,
China Daily reported. The creation
of the cadet group doesn’t mean
the People’s Liberation Army is
interfering in Hong Kong affairs,
the city’s Secretary for Home Affairs Tsang Tak-sing told reporters
yesterday. Only a few media outlets
were invited to cover the event, the
South China Morning Post reported
yesterday. — Bloomberg
BEIJING: Police in southern
China shot dead two Uighurs
trying to cross the border into
Vietnam, state media reported
yesterday, with rights groups
saying repression at home
causes members of the ethnic minority to flee. Officers
discovered a group of Uighurs
near a highway toll gate on Sunday evening and two who “assaulted” the officers with knives
were shot dead, the government-run China News Service
said. — AFP
Bangladesh ends
confinement of Zia
DHAKA: Bangladesh yesterday
ended its confinement of opposition leader Khaleda Zia after
a surge in political violence left
27 people dead, but her party
vowed to continue a nationwide transport blockade. Zia
had been barred from leaving
her office for the last 16 days to
prevent her from spearheading protests aimed at toppling
her arch-rival, Prime Minister
Sheikh Hasina. — AFP
Australian beaches reopen as sharks scram
SYDNEY: Australian beaches which
had closed due to sightings of large
sharks for a record nine days, reopened yesterday, officials said, but
rough surf kept most swimmers away.
A 5m great white estimated to
weigh 1,700kg and nicknamed Bruce
was first spotted off Merewether
Beach near Newcastle north of Syd-
ney on Jan 10. Several other sharks,
including tiger sharks feeding on
dolphins, were also seen along the
coast, prompting the closure of all
six Newcastle beaches despite sweltering summer temperatures.
Authorities reopened the beaches yestereay after jet ski patrols
found no sign of the animals, said
Henry Scruton, president of the
Hunter branch of Surf Life Saving
New South Wales.
“The big one is the monster,”
Scruton said, referring to Bruce.
“Bruce, he has been sighted on Saturday, Sunday, Tuesday, Wednesday, definitely Friday,” Scruton told
AFP. “But I don’t think they’ve
sighted him again this weekend.”
Sharks are a regular feature in
Australian waters and swimmers
and surfers have had their fair share
of encounters with the animals this
summer.
Scruton said there had been
a number of sharks seen around
Newcastle and the Hunter region
this summer, with another large
one taunting two fishermen on the
weekend by circling and nudging
their small boat.
“He’s (Bruce) worn out his welcome. We want him to go,” Scruton
said. “We’ve never had one come
that was so big and stayed for so
long.” — AFP
26 WORLD
Manhunts, death threats
raise Europe’s terror alert
EU prepares for special leaders’ summit on Feb 12 dedicated to fighting terrorism
BY A L I X RI JC K A ERT
& JU L I ETTE MONTESSE
BRUSSELS: Europe was on high
alert yesterday as the suspected
mastermind of a jihadist cell in Belgium remained at large and jittery
authorities blocked anti-Islamist
rallies in Germany and France.
In the wake of the deadly attacks
in France and anti-terror raids in
Belgium, EU foreign ministers were
to meet in Brussels to discuss ways
to boost cooperation to combat the
threat posed by radicalised Europeans returning home after fighting
in Iraq and Syria.
The meeting yesterday comes
as the bloc prepares for a special
leaders’ summit on Feb 12 dedicated to fighting terrorism.
With tensions heightened, the
second gunman in the attack on
Charlie Hebdo magazine which
killed 12 people was buried discreetly in an unmarked grave near
Paris late Saturday in the hope that
it would not become a pilgrimage
site for radical Islamists.
Me a n w h i l e, Ab d e l ha m i d
Abaaoud, considered the brains
behind the cell plotting to kill Belgian police, was still on the run days
after the group was dismantled by
intelligence services.
But the probe appeared to be
progressing with Belgian federal prosecutors announcing they
would seek the extradition of a suspect arrested in Athens on Saturday
“who could be linked” to the cell.
In Germany, police banned a
rally by the anti-Islamic Pegida
movement and other open-air
gatherings planned for yesterday
in the eastern city of Dresden, saying there was a “concrete threat”
of an attack against its leadership.
The group claimed the threat
came from the Islamic State group
based in Syria and Iraq, with local
media reporting that Pegida’s most
prominent leader Lutz Bachmann
was the target.
The Pegida marches have grown
steadily since they began in October and drew a record 25,000
people last Monday in the wake of
the Paris attacks that left 17 people dead.
The anti-Islamic rallies have
spread to other European countries as well, with the first Danish
Pegida march to take place in Copenhagen yesterday. Organisers
said they were expecting some 300
people.
Separately, a French court on Sunday prevented a rally by anti-Islamist
groups in Paris on the grounds that
they were promoting Islamophobia. — AFP
France, Iraq woes to dominate Davos meet
BY HU I MI N N EO
PARIS: The deadly Islamist attacks
in France and conflicts in Iraq and
Ukraine are set to dominate discussions at this week’s gathering of the
world’s political and economic elite
in the Swiss ski resort of Davos.
French President Francois Hollande, Belgian Prime Minister
Charles Michel and German Chancellor Angela Merkel will be among
the 2,500 prominent figures attending
the World Economic Forum’s annual
meeting opening today, with all eyes
on their countries’ battle to root out
jihadists planning attacks in Europe.
France, Belgium and Germany
have carried out a series of raids, arresting dozens of Islamist suspects in
the wake of the attacks on the Charlie
Hebdo satirical magazine, a policewoman and a kosher supermarket
in Paris.
The threat posed to the continent
by young extremists returning to Europe after fighting with Islamic State
and al-Qaeda-linked groups in the
Middle East has soared to the top of
Western leaders’ agenda following
the Paris attacks.
At Davos, the topic will be examined with renewed urgency on a global level, with Iraqi leaders including
Prime Minister Haidar al-Abadi and
Kurdish leader Massud Barzani, as
well as African leaders from Mali and
Nigeria expected to make a strong
call for international support to beat
back the Islamist militants.
Another conflict likely to be raised
is Ukraine’s battle against a pro-Russian rebellion in its eastern industrial
heartland.
Both Ukrainian President Petro
Poroshenko and Russian Foreign Minister Sergei Lavrov are in attendance
at the week-long talk shop. — AFP
US, Cuba set for Ukrainian troops retake most of Donetsk airport
historic talks to
normalise ties
BY NATALIA Z I NE TS
& LINA KUS HC H
BY FRANCISCO JARA
HAVANA: The United States and
Cuba will hold their highest level
talks in decades tomorrow, ditching
decades of Cold War-era hostility to
pave the way to reopen embassies
and normalise ties.
Senior US and Cuban officials
will meet over two days in Havana
to discuss immigration issues and
a road map to return ambassadors
to each other’s nation.
The talks in the Cuban capital come
five weeks after US President Barack
Obama and Cuban counterpart Raul
Castro simultaneously made the momentous announcement that their
countries would seek to normalise ties.
Roberta Jacobson, the US assistant
secretary of state for Western Hemisphere affairs, will head the American
delegation while the Cubans will be
represented by the foreign ministry’s
director for US affairs, Josefina Vidal.
The first day of the talks will centre
on migration. Then on Thursday, the
two sides will discuss the process to
re-establish diplomatic relations and
bring back their embassies. — AFP
KIEV: Ukrainian troops have recaptured almost all the territory of
Donetsk airport in eastern Ukraine
they had lost to separatists in recent
weeks and thousands gathered in
Kiev for a state-sponsored peace
march.
Sunday’s offensive brought fighting close to the industrial city of
Donetsk, centre of a pro-Russian
rebellion, while shelling intensified
in other parts of the region known
as “Donbass”.
With attempts to restart peace
talks stalled, pro-Russian rebels
have stepped up attacks in the past
week and casualties have mounted, including 13 civilians killed
in an attack on a passenger bus,
which Kiev blamed on the separatists.
Military spokesman Andriy Lysenko said the army’s operation
had returned battle lines near the
airport to the previous status quo
and thus not violated the 12-point
peace plan agreed with Russia and
separatist leaders last September by what he called an escalation by
in Minsk.
Ukrainian forces that did not conKremlin spokesman Dmitry tribute to peace efforts.
Peskov said Moscow was concerned
He later said Ukrainian President
IN BRIEF
Yingluck’s fate sealed,
says Pheu Thai
BANGKOK: It is clear that former
prime minister Yingluck Shinawatra will be impeached when
the National Legislative Assembly (NLA) decides her fate on
Friday, according to the Pheu
Thai Party. The military and the
NLA, meanwhile, have reiterated
that lawmakers are free to vote
however they see fit and claim
there has been no direction from
the National Council for Peace
and Order (NCPO) or the government on which way to vote.
However, Pheu Thai core member Surapong Tovichakchaikul
said NLA members have already
made up their minds about the
allegations against Yingluck, citing her absence from last Friday’s
questioning. Another key Pheu
Thai member, red-shirt leader
Worachai Hema, said the impeachment process against Yingluck is part of a campaign to
uproot obstacles in the way of
the coup-makers and those who
want to prolong Prime Minister
Prayut Chan-ocha’s stay in power. — Bangkok Post
Lorry driver jailed for
threatening cabby
SINGAPORE: A lorry driver picked
a fight with a woman who had
stopped a taxi behind his lorry,
and then threatened the cabby
with what looked like a metal rod,
The Straits Times reported. Koh
Yong Kwee, 41, then repeatedly
hit Norashid Mohamad Nor’s taxi
with the rod after the cabby had
wound up the window in fear. Yesterday, Koh, who is now jobless,
was sentenced to two months’
jail for criminally intimidating the
35-year-old cabby in 2013. His total jail term comes to 29 months,
after including punishment for
cheating offences he committed
last year with stolen credit cards.
Bomb injures teacher
in Narathiwat
BANGKOK: A teacher was injured when a bomb planted in
a drain was detonated while a
morning motorcade of teachers
escorted by soldiers was passing
by in Bacho district of Narathiwat
province yesterday morning. The
attack happened at a junction
at the entrance to Ban Buecho
village at about 8.30am. The intersection is about 150m off a
main road and is on the route
followed by motorcades guarded by soldiers taking teachers to
schools. — Bangkok Post
S’pore’s bill to ban public
consumption of alcohol
Petro Poroshenko had rejected a
peace plan contained in a letter
Russian President Vladimir Putin
sent him last Thursday. — Reuters
SINGAPORE: The drinking of
alcohol between 10.30pm and
7am in public places, including
parks and HDB void decks, could
soon be banned if the new Liquor
Control (Supply and Consumption) Bill tabled in Parliament
yesterday is eventually passed,
The Straits Times reported. Retail
shops islandwide will also not be
allowed to sell takeaway liquor
from 10.30pm. The bill allows
for areas where there is a higher
risk of public disorder associated with excessive drinking to be
designated liquor control zones.
R E TA I L
M A R K E T I N G 27
01. Street vendors selling
T-shirts and calendars with
images of Pope Francis
during the pontiff ’s visit.
Photos by AFP
02. A Catholic store with
mugs and other
kinds of Pope Francis
merchandise.
03. A sample of the range of
Pope Francis merchandise
seen across Manila as the
‘Brand Pope’ marketing
frenzy hit the Philippines.
01
Brand Pope hits Philippines
Big businesses generate marketing frenzy on papal visit
P
ope Francis says he came to
the Philippines, during his last
Thursday to Monday Apostolic
Visit, to help the poor but the
country’s biggest businesses and
multinationals are also cashing
in with a not-so-subtle hijacking of his image.
The pontiff is the most trusted figure for
many in the Philippines, where 80% of the
nation’s 100 million people are Catholic, and
the visit has generated a marketing frenzy
for “Brand Pope”.
Images of a smiling Francis are splashed
on towering billboards and full-page newspaper advertisements, stamped with logos
of McDonald’s, Pepsi, Hyundai and myriad
big local companies.
Gerald Bautista, a marketing strategist
for 20 years who runs his own consulting
firm in Manila, said putting the pope and
a brand together has a hypnotic effect on
consumers in the Philippines.
“He has no negative attributes, [and]
gives 100% benefits in terms of credibility
and integrity,” Bautista told AFP. “They (consumers) would subliminally think that the
brand is good. Subliminally, it influences
their choice when they go to a supermarket.”
Local luxury department store Rustan’s
rolled out a two-page spread on the day of
his arrival last Thursday, with its logo on the
shoulder of the 78-year-old pontiff.
A yellow ribbon, a symbol of allegiance
to President Benigno Aquino and his late
mother Corazon, who was an icon of democracy in the country, was also pinned
on the pope’s collar.
The yellow ribbon appeared to be digitally
manipulated, with a presidential spokesman
telling AFP she was not aware the pope had
worn the pin.
Next to the pope were photos of a spread
of ornate jewellery with the pontiff ’s image for sale, including a champagne pearl
bracelet.
The ad also reminded readers that a
former ambassador to the Vatican owned
02
Rustan’s, masquerading its promotion as a money used for advertising be given to the
“welcome” message to the pope.
poor,” Tornielli told AFP.
Philippine Long Distance Telephone Co
Unfazed
(PLDT), the nation’s biggest telecommuniThe Catholic Bishops Conference of the Phil- cations company owned by business titan
ippines, which organised the pope’s five-day Manuel Pangilinan, is one of the official
trip, said it was unfazed by the pope’s image sponsors of the pope’s trip.
being used for commerce.
PLDT spokesman Ramon Isberto insistAsked if it was proper to profit from the ed the company’s motives were altruistic,
pope’s image, conference spokesman Bish- pointing out it was providing free phone and
op Mylo Vergara said the decision to do so Internet infrastructure so Filipinos could
was “really up to” the businesses involved. share information about the pope.
The conference had in fact signed on some
“This is not a money-making event for
of the Philippines’ biggest companies as of- us ... our main effort is to help every Filipificial sponsors for the tour, allowing them no experience the pope,” Isberto told AFP.
to place their brands on welcome banners
Papal sales surge
erected throughout Manila.
Francis would frown upon blatant usage Meanwhile, small business owners are also
of his likeness to sell products, according to enjoying a surge in sales out of the papal visit,
Andrea Tornielli, coordinator for the Vatican as they flood sidewalks and malls with a dizInsider website in Rome.
zying array of papal souvenir merchandise.
“The reality is that the pope loves the poor
Filipino bishops did not put out guideso much, it would be much better that the lines on the use of the pope’s image for
03
merchandising to give the poor a chance to
make money, Father Rufino Sescon, from
the organising committee, told AFP.
“(And) if we regulate, it might look like
we’re the ones trying to make money off the
pope,” he said.
Josie Rudavites, who runs a tiny stall outside one of Manila’s most popular churches,
said daily sales had jumped 10-fold to 3,000
pesos (RM240) since she started selling
badges and calendars with the pope’s image.
“The pope is all the rage,” Rudavites, 36,
who normally sells candles for praying at
the church, told AFP.
A customer at a nearby stall, Angie Nalang,
said she had brought her 17-year-old autistic son to the religious market surrounding
the church because he was desperate for a
souvenir.
“He said he wants anything with the pope
on it,” Nalang told AFP, as her son picked
a white T-shirt with an image of the pope
smiling and waving. — AFP
28
live it!
TUE
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE
Personal
ASSISTANT
COMPI L ED BY QUAH SU ANN
WORK. LIFE. BALANCE
AWARD-winning
rapper Daniel
“Hush” Carlisle
and his homegrown pack
of friends and
family are on
a mission to
clean up Detroit,
one homeless
hound at a time.
Together with
his tight-knit crew, Hush — who is the
co-founder of Detroit Dog Rescue (DDR) —
braves rough streets, dodgy buildings and
gnashing teeth to rescue destitute mutts,
many of which have been abandoned due
to Detroit’s destitute economic situation.
The 60-minute specials brings to light the
concerning number of stray dogs running
loose on the streets of Detroit and the
insufficient resources, funding, rescue
workers, foster homes or people who are
willing to adopt them. Detroit Unleashed:
Motor City premieres at 11pm tomorrow
on Astro channel 556. The repeat is on
Thursday at 5 pm.
Cost of
KLEX is hosting composer and musician
from USA — Gerry Hemingway and Sarah
Weaver — for a day of improvised music
workshop, audio-visual concert and film
screening. The two have been collaborators
for six years in a variety of experimental
solos, ensembles and telematics works.
This tour offers options of sets including
solo drum sets with pieces composed by
both artists, multimedia pieces for drums
and videos, education workshops in drum
sets and many others. This workshop is
open to all ages, instruments and ability
levels. It will take place tomorrow from
10am to 1pm at FINDARS, 4th Floor, No.
8 Jalan Panggong, Kuala Lumpur. The
workshop admission is RM50 per person.
DO you have a
sweet tooth and
need to satisfy
your sugar
cravings? Head
to The Bakery
at the Concorde
Hotel Shah Alam
to sink your teeth
into some of their
most delicious,
flavourful and
gorgeous cakes from now till Jan 31. The
Bakery is open daily from 10am to 10.30pm.
Cakes are priced from RM6.80 per slice and
RM68 per cake. The Concorde Hotel Shah
Alam is in Jalan Tengku Ampuan Zabedah
C9/C, Shah Alam. For enquiries, please call
(03) 5512 2200.
CARING
Stress and social media: It’s complicated
U
sing digital technologies
does not directly cause
stress, but social media
can increase awareness
of problems facing friends
and family, and this stress
is “contagious,” researchers said.
A report by the Pew Research Center
and Rutgers University researchers concluded that the stress facing some users
of social networks was related to “the
cost of caring.”
“There is no evidence in our data that
social media users feel more stress than
people who use digital technologies less
or not at all,” said Rutgers researcher Keith
Hampton, one of the authors of the report.
Hampton said data did not support
the notion that people become stressed
from keeping up with social media networks like Facebook and Twitter.
But he added that “learning about and
being reminded of undesirable events in
other people’s lives makes people feel
more stress themselves. This finding about
the cost of caring adds to the evidence
that stress can be contagious.”
Overall, the researchers found fre-
Researchers have found that frequent Internet users do no thave higher level of stress but social
media’s sharing could impose a ‘cost of charing’.
quent Internet and social media users do ture sharing report lower levels of stress.
not have higher levels of stress than the
There were, however, some gender
general population, and that many who differences in how social media use afuse Twitter, email, and cell phone pic- fected stress.
stre
me
wh
sea
tim
day
her
on
do
Fac
In c
aw
of o
res
for
lev
G
ess.
der
af-
live it! 29
T U E SDAY JA N UA RY 20 , 2015 • T HEED G E FINA NCIA L DA ILY
PHOTOS BY AFP
A woman with an average size
network of Facebook friends is
aware of 13% more stressful
events in the lives of her closest
social ties. Photos by AFP
“There was no statistical difference in
stress levels between men who use social
media, cell phones, or the Internet and men
who do not use these technologies,” the researchers wrote.
But “a women who uses Twitter several
times per day, sends or receives 25 emails per
day, and shares two digital pictures through
her mobile phone per day, scores 21% lower
on our stress measure than a woman who
does not use these technologies at all.”
Facebook can spread stress
In cases where digital technologies increase
awareness of stressful events in the lives
of others, in particular with Facebook, the
researchers found stress to be contagious.
“Facebook was the one technology that,
for both men and women, provides higher
levels of awareness of stressful events taking
place in the lives of both close and more distant acquaintances,” the researchers wrote.
A woman with an average size network
of Facebook friends is aware of 13% more
stressful events in the lives of her closest
social ties, and men are aware of eight per
cent more, the study found.
“The cost of caring is particularly felt by
women,” the researchers said.
“This is a result of two facts about women
and stress: first, women report higher levels
of stress to begin with, and second, women
are aware of more stressful events in the lives
of their friends and family.”
The report is based on a survey of 1,801
American adults from Aug 7 to Sept 16,
with a margin of error estimated between
2.6 and 3.3 percentage points, depending
on the group.
A related study released last week by Pew
found Facebook remains the most popular
social network among Americans, used by
71% of those who use the Internet.
Other platforms saw growth but remained
far behind, including Pinterest and LinkedIn
(28%), Instagram (26%) and Twitter (23%).
That report showed 81% of Americans use
the Internet. — AFP
PICK OF THE DAY
PURIFYING and incredibly gentle on the skin, Guerlain’s brand new Orchidee Inperiale
Cleansing Foam bursts with pure energy. Through Guerlain’s international research
centre’s efforts on uncovering the secrets of the orchid, there is now a formula that
promises to keep the vitality of skin. Follow up with Guerlain’s Orchidee Imperiale Lotion, which has become an essential step in the Orchidee Imperiale ritual. It has been
reinvented to make the Gold Orchid its new emblem. Subtly infused with the exclusive
properties of a precious extract of the golden-petalled orchid, this lotion is an elixir
of beauty and intense hydration for pumping up skin. The cleansing foam retails at
RM371 and the lotion retails at RM465 and can be purchased at Guerlain outlets in
Parkson KLCC, Parkson Pavilion, Parkson Gurney Plaza Penang, Parkson Imago KK,
Sogo, Isetan Gardens MidValley, Isetan KLCC, and Sephora Paragon Penang.
30
live it!
Zen TODAY
If you’re walking down the right path and you’re willing to keep
walking, eventually you’ll make progress. — Barack Obama
Let’s go GREEN
How to be more environmentally friendly
BY QUA H SU A N N
I
t’s clichéd, yes we know, but how many
of us actually do our part to conserve
the environment? Not all of us have to
become the next Al Gore, travelling
around the world giving talks about
the state of the Earth, but there are
many little tips from www.50waystohelp.
com that we can do to help keep the Earth
in good shape for a longer time.
1. Recycle
It’s a habit that very, very few Malaysians
take seriously. We happily throw recyclable bottles, cans, papers and boxes into the
trash; filling up landfills with materials that
can easily be recycled. There are various recycling centres in Kuala Lumpur that you
can drop your recyclable waste at. Check
out the recycling centre in Ikano (Mutiara
Damansara) or the Recycling Centre in Damansara Jaya, for examples. You may even
make a buck or two from your trash.
2. Change your light bulbs
In recent years, energy-saving light bulbs have
fallen dramatically in price. The latest energy
savers in the market are light-emitting diode or
LED light bulbs which are becoming increasingly reliable and more widely available, but
they are still pricey. These are quickly replacing incandescent light bulbs that use far more
electricity and generate more heat.
3. Turn off computers at night
Many of us find it tedious to wait for our computers to power up every morning. However,
turning off your computers at night adds up
to quite a bit of energy saving. If you’re the
impatient kind and don’t want waiting for
the computer to power up, you can always
download software that enables you to set
the computer to power itself up minutes
before you wake up.
4. Don’t leave the tap running
The tap running while you’re brushing your
teeth? Well, you could potentially conserve
up to 19 litres per day if you take a couple
of seconds to turn the tap off before brushing. What with the threat of water rationing
again, it’s one of the
simplest things you
can do to save water.
5. Carry reusable bags
Plastic bags. They not only clog up landfills,
but also pollute the oceans and beaches.
These bags are not biodegradable, and thus,
stay in their original shapes for hundreds of
years. Hundreds of marine animals each year
die from ingesting plastic bags, or suffocating in them. The next time you go grocery
shopping, bring a fabric bag instead — one
you can wash and reuse however many
times you like!
S P O RT S 3 1
Arsenal masterclass sets
standard, says Wenger
First away win against a team defending the Premier League title since May 2002
BY TOM WI L L I A MS
MANCHESTER: Arsenal manager
Arsene Wenger said his side had
established a benchmark for the
rest of their season after recording
an impressive 2-0 victory at Manchester City.
Santi Cazorla scored from the
penalty spot and set up Olivier Giroud for a 67th-minute header on
Sunday as Arsenal registered a first
away win against a team defending the Premier League title since
May 2002.
As well as leaving City five points
adrift of leaders Chelsea in the title
race, the result took Arsenal to within a point of the Champions League
places and Wenger called on his
players to build on their display.
Asked if it could prove a significant victory, the Frenchman told
Giroud
celebrating his
goal against
Manchester City
at the Etihad
stadium in
Manchester on
Sunday. Photo
by Reuters
his post-match press conference:
“Time will tell. What is for sure is
that it increases the level of belief
and confidence.
“The five months in front of us
are very important in the lifespan
of the team. What you make of that
will of course decide our season.
Games like that can help [you] to
do very well.”
Cazorla’s performance earned
warm praise from both his teammates and his manager, with Aaron
Ramsey describing him as “differ-
ent class” and Wenger branding
the 30-year-old Spaniard “superb”.
“He is fantastic because he gets
you out of pressure in very tight
situations and finds openings that
are very interesting. He’s a good example for young players. He shows
as well how important it is to be
two-footed in the middle of the park.
I think it’s a vital quality for a midfielder today.”
Arsenal were dealt some humiliating away defeats last season, losing
6-3 at City, 5-1 at Liverpool and 6-0
at Chelsea in Wenger’s 1,000th game
at the club, but they defended with
discipline and resilience on Sunday.
With Alexis Sanchez and Alex Oxlade-Chamberlain tucking in from
wide positions, Arsenal succeeded
in smothering City’s midfielders,
and Ramsey felt it was the key to
their success. — AFP
Gerrard eyes Mourinho scalp in League Cup
BY TOM WI L L I A MS
MANCHESTER: Steven Gerrard’s
quest for a golden send-off as Liverpool captain reaches a pivotal juncture today when his side
hosts Chelsea in the first leg of their
League Cup semi-final.
Gerrard could yet end his final
Liverpool season with three pieces
of silverware, and having inspired
his team to a 2-1 win at AFC Wimbledon in the FA Cup, he now turns
his attention to England’s other
domestic cup.
Seventeen points off the pace
in the league, Liverpool host second-tier Bolton Wanderers in the
FA Cup fourth round this Saturday
and will tackle Besiktas in the Europa League next month.
The League Cup is a competition that Gerrard has won on three
previous occasions, in 2001, 2003
and 2012, and he was left out of
Saturday’s 2-0 win at Aston Villa to
Frustration for Tunisia, Zambia
at Cup of Nations
keep him fresh for the visit of Jose
Mourinho’s side.
With the days of his Liverpool career shortening, Gerrard is learning
to pick his battles, and Mourinho is
an adversary who has caused the
34-year-old more pain than most.
Today’s game will rekindle memories of the 2005 League Cup final
in Cardiff, when Liverpool were
leading 1-0 until a headed own
goal by Gerrard allowed Chelsea to
equalise in the 79th minute.
Mourinho was sent to the
stands for shushing Liverpool
fans as he celebrated the goal,
but Chelsea went on to win 3-2
in extra time, giving the posturing Portuguese his first trophy in
English football.
Brendan Rodgers’ side have lost
only once in 14 matches in all competitions, with a haul of 13 points
from a possible 15 that has regalvanised their bid for a Champions
League place. — AFP
Wins, losses but no draws as
Asian Cup makes record
BY A N DY SCOT T
MALABO: There was frustration for much-fancied Tunisia and for
2012 champions Zambia as the Africa Cup of Nations moved to the
remote outpost of Ebebiyin on Sunday. The small town where the
borders of Equatorial Guinea, Cameroon and Gabon all converge
welcomed a capacity crowd at its 5,000-seat stadium as Zambia and
DR Congo opened their Group B campaigns with a 1-1 draw, with
Premier League star Yannick Bolasie rescuing a draw for the Leopards.
And later in the day Cape Verde came from behind to draw 1-1
with Tunisia thanks to a well-taken penalty by the impressive Heldon
to leave the group finely poised ahead of the second round of games.
Zambia extended their unbeaten record in the finals to 12 games,
although they were unable to hang on to the second-minute lead
handed to them by Given Singuluma, who plays for leading DR Congo
club Tout Puissant Mazembe. Crystal Palace winger Bolasie netted
midway through the second half to ensure a share of the spoils, and
the result appeared to satisfy Zambia coach Honour Janza.
Meanwhile, DR Congo captain Youssouf Mulumbu, of Premier
League club West Bromwich Albion, rued his side’s poor finishing
while accepting that the conditions in Ebebiyin were not ideal.
“We knew Equatorial Guinea obviously wasn’t ready to host this
Cup of Nations. I don’t want to criticise them, they do their best. If
we want to be in better conditions we need to get past this group
stage,” he said. — AFP
SYDNEY: It could be the bumbling
defending, or perhaps the vanishing
spray has a mysterious side-effect,
but the Asian Cup has yet to produce a draw in 20 matches — now
officially a record at major football
tournaments.
The Asian Football Confederation (AFC) said yesterday the tournament has surpassed the previous mark of 18 matches without
a stalemate set at the 1930 World
Cup in Uruguay.
Those who grumble about how
football games often end without a
winner, would approve, although
it is debatable how much the phenomenon owes to fine attacking
football and how much to defensive errors.
The new record includes European championships and the
African Cup of Nations, according
to the AFC’s website, and remains
largely unexplained.
After victories by China and Uzbekistan on Sunday, just four group
matches remain before the business
end begins with the quarter-finals
this Thursday and Friday.
The Socceroos needed only a
point to finish top of Group A at the
weekend, with short odds available
for a draw. But South Korea failed
to read the script, and they caught
the hosts with a sucker punch to
win 1-0.
Other records have tumbled at
the 16th Asian Cup, notably when
Ali Mabkhout scored after just 14
seconds as the United Arab Emirates beat Bahrain 2-1 in midweek
and Palestine scored their first ever
Asian Cup goal.
The total attendance has soared
past the 300,000-mark and FIFA
president Sepp Blatter may be
watching closely from Zurich, after
he once suggested banning draws
in football. — AFP
IN BRIEF
Officials rule out
semi-final venue change
BRISBANE: The Asian Football
Confederation (AFC) has ruled
out any possibility of switching
the venues for the Asian Cup
semi-finals even if the host-nation ends up playing at the smallest stadium. The first semi-final is scheduled to be played at
Sydney’s 83,000 seater Olympic
stadium on Jan 26, which is also
Australia’s national holiday. The
second semi is set to be played a
day later at Newcastle’s Hunter
Stadium, which has a capacity
of just 23,000. If Australia wins
their quarter-final against China
this Thursday, they will play in
the second semi-final in Newcastle, possibly against Japan in
a repeat of the 2011 Asian Cup
final. — Reuters
Rangers considering using
Ibrox as security
LONDON: Scotland’s Rangers
soccer club, battling to raise cash
to stay afloat, said yesterday it
was in talks to agree new funding which could use the club’s
Ibrox stadium as security. Rangers said it was in talks with two
of its stakeholders about raising
funds to bolster the team, and
that part of a deal could include
using Ibrox as protection. Two
stakeholders — Sports Direct
founder and Newcastle United owner Mike Ashley, and a
wealthy consortium called the
Three Bears — are separately
ready to provide £10 million
(RM54 million) loans, with Ashley reported to want Ibrox as
protection. — Reuters
Iran stars warned over
‘selfies’ with women fans
SYDNEY: Iran’s footballers have
been warned they could face
punishment if they take “selfie” pictures with female fans
who have turned out in large
numbers at the Asian Cup. The
head of the Iranian Football
Federation’s moral committee
said players risk being used
as a “political tool” if snapped
with women fans. Women are
banned from attending men’s
sports events in the Islamic
republic. Ali Akbar Mohamedzade, head of the moral committee of the Iranian Football
Federation, issued the warning
last week as photos of players
with women fans circulated on
social media. — AFP
North Korea befuddled by
Asian Cup prize
MELBOURNE: North Korea
may have exited at the Asian
Cup group stage after three
defeats, but they don’t leave
Australia completely empty-handed. Following Sunday’s
2-1 reverse to China, organisers awarded a plaque to a
bemused but seemingly delighted coach Jo Tong-Sop. As
they shook hands and smiled
for cameras, Jo was informed
the prize was for North Korea
having met the tournament’s
“Don’t Delay, Play” initiative . It
remains to be seen what North
Korean leader Kim Jong-Un
makes of the souvenir. — AFP
3 2 S P O RT S
First up success for
Federer, Nadal and Murray
Rising star Dimitrov also swept to victory
BY ROB ERT SMI TH
MELBOURNE: Grand Slam titan
Rafael Nadal eased some selfdoubts and Andy Murray took the
first steps in overcoming a minefield men’s draw as the curtain
went up on the Australian Open
yesterday.
Nadal, a beaten finalist to Stan
Wawrinka last year, turfed out Russian journeyman Mikhail Youzhny in an uncomplicated straight
sets victory, while Murray began a
campaign hoping to end the heartbreak of three runners-up finishes
in Melbourne.
Tokyo Olympics
top sponsors
to pay at least
US$128m: report
TOKYO: Sponsors wanting top
billing at the Tokyo Olympics
in 2020 will have to cough up a
minimum 15 billion yen (US$128
million or RM455 million) for the
privilege, Kyodo News reported
yesterday. Seven companies, including brewer Asahi, telecoms
giant NTT Docomo, and Toyota,
the world’s largest automaker,
are expected to be among the
bidders for the prestigious title
of “Gold Sponsor”.
Footing the sponsorship bill
buys companies the right to use
the Games logo and slogans in
advertisements for the duration
of the contract, which runs until the end of 2020. Tokyo organisers are aiming to raise at
least 150 billion yen through
the sponsorship bidding war,
Kyodo News reported, without
identifying its sources.
If the price tag for the top
sponsor is accurate, it would
represent a hefty premium on
what it cost for the 2012 Games
in London, when Coca Cola paid
an estimated US$100 million,
according to data compiled by
The Guardian. Sponsors will be
divided into three ranks and only
one company will be selected per
category. It was not immediately
clear if the auction process would
be restricted to domestic firms.
The rank below Gold Partner
will be “Official Partner”, with
the reserve set at six billion yen,
Kyodo said. Third tier sponsors
wishing to be “Official Supporters” will pay between one billion
yen and three billion yen. The
final bill for a sponsor may vary,
depending on the terms of the
contract, the agency said. — AFP
The two-time Grand Slam
champion Scot emerged a 6-3,
6-4, 7-6 (7/3) winner over India’s
Yuki Bhambri on Margaret Court
Arena.
Rising Bulgarian star Grigor
Dimitrov also swept to victory over
Germany’s Dustin Brown in just
69 minutes, while Czech seventh
seed Tomas Berdych blew away
Alejandro Falla.
World No 2 Roger Federer had
a tussle before dispatching Taiwan’s Lu Yen-Hsun as he searches for an elusive 18th Grand Slam
title. Federer, who is gunning for
his fifth crown at Melbourne Park,
won 6-4, 6-2, 7-5 in one hour 53
minutes on Rod Laver Arena and
will play Italian Simone Bolelli in
the second round.
There were no boilovers on the
men’s side of the draw, but Spain’s
15th seed Tommy Robredo retired
just five games into his match with
Frenchman Edouard Roger-Vasselin.
Spanish world No 3 Nadal was
delighted with his straight forward
win over Youzhny, a former US
Open semi-finalist, and will next
play American qualifier Tim Smyczek.
“Very positive result for me. I
think a very good start. Very important,” Nadal said.
Youzhny was considered a testing first-up opponent as the Spaniard searches for matches to work
his way into the men’s draw.
The 14-time Grand Slam winner
has had only seven matches since
Wimbledon last July due to ongoing back and wrist injuries and an
appendectomy.
His lack of match fitness was
apparent in Qatar this month
when he was humiliated in the
first round by German Michael
Berrer, a qualifier ranked outside
the top 100. — AFP
Ruthless Sharapova fires Open
warning shot
MELBOURNE: Second seed Maria
Sharapova launched her Australian
Open campaign in emphatic fashion
yesterday, crushing Petra Martic of
Croatia in straight sets to send an
ominous warning to her rivals.
The Russian five-time Grand
Slam champion can regain the coveted No 1 ranking from arch-rival
Serena Williams if she wins a second title at Melbourne Park and was
all business as she downed Martic
6-4, 6-1.
The 27-year-old said she was
benefiting from a strong lead-in to
the season opening Grand Slam,
when she won the Brisbane International. “I made a few to many
unforced errors but overall I’m glad
I got through. She [Martic] was a
tough opponent and was really inspired.”
There were promising signs her
hot run of form in Brisbane was
continuing at Melbourne Park as
she fired down two early aces and
won around 90% of points on her
first serve in the opening exchanges.
Sharapova broke Martic in the
fifth game and then again in the sev-
Former Test spinner
MacGill sues Cricket
Australia
MELBOURNE: Former Australian leg-spin bowler Stuart
MacGill has begun legal action against Cricket Australia
(CA), suing his former employers for more than A$2.5
million (RM7.3 million) over
lost earnings. MacGill, 43, filed
a writ in the Victorian Supreme
Court yesterday, claiming injury payments after his retirement from test cricket in May
2008. His lawyers said he suffered multiple injuries during
his career and has some ongoing health issues. According
to the writ, CA failed to pay
MacGill A$1.6 million while
he was injured and unable to
play. He also sued for more
than A$900,000 in interest. —
Reuters
Record-breaking De
Villiers sets up huge
South Africa win
JOHANNESBURG: AB de Villiers took 31 balls to smash
the fastest century in oneday internationals as South
Africa crushed West Indies
by 148 runs at The Wanderers on Sunday. The Proteas
posted 439 for two wickets,
their highest team total in
this format, before restricting the tourists to 291 for seven in their 50 overs to take
a 2-0 lead in the five-match
series. De Villiers blasted a
record-equalling 16 sixes and
nine fours in his blistering
44-ball knock of 149, bettering New Zealander Corey
Anderson’s 36-ball century
against West Indies last year.
— Reuters
Montpellier deny Du
Plessis brothers deal
Sharapova plays a shot during her match against Martic on day one of the 2015
Australian Open in Melbourne yesterday. Photo by AFP
enth, threatening to run away with
the match until mistakes at crucial
points, including two double faults
late in the first set, allowed the Croat
to hang on.
Sharapova, the Australian Open
champion in 2008, had the chance
to serve out the first set at 5-2 but
Martic rallied and it finally ended
6-4 in the Russian’s favour.
The world No 2’s intensity and
volume increased as the match progressed and she psyched herself up
with cries of “C’mon Maria”. She will
face compatriot Alexandra Panova
in the second round. — AFP
Australia’s Warner defends ‘speak English’ demand
SYDNEY: Explosive Australian opener David Warner defended a heated
on-field exchange yesterday with
Indian batsman Rohit Sharma in
which he demanded the Indian
cricketer “speak English”.
Warner said the verbal fireworks
at a one-day international at the
Melbourne Cricket Ground on Sunday earned him a fine of 50% of his
match fee from the International
Cricket Council.
The Australian fielders had taken
offence when the Indians went for a
IN BRIEF
single off an overthrow which they
wrongly believed was in breach of
cricket etiquette.
“When I went over to say something to him, he sort of said something in their language and I said
‘speak English’ because, if you’re
going to say something for me to understand, theoretically I cannot speak
Hindi,” Warner told Sky Sports Radio.
“So I did the polite thing and asked
him to speak English, therefore he
did and I can’t repeat what he said.”
Asked whether there was any-
thing wrong in the manner in which
he asked the question, Warner said:
“I thought I was ok by asking him to
speak English and I am going to say
it a couple of times if he keeps saying
it in Hindi.”
Warner admitted he should
not have confronted Sharma but
said the pair had been engaging in
“friendly banter” during the match,
which Australia won with six balls
to spare despite a century by Sharma, and he didn’t feel the need to
apologise. — AFP
MARSEILLE: Montpellier president Mohed Altrad yesterday
“categorically denied” reports
of a deal to sign South African
forwards Bismarck and Jannie
Du Plessis. The brothers, various domestic media suggested, were due to join the Top
14 side after the conclusion
of the 2015 World Cup in November on a two-year deal.
But Altrad told AFP: “I categorically deny these reports.
And what troubles me a lot
is that all this could hurt the
players...” — Reuters
Retired star Li Na
announces pregnancy
MELBOURNE: Pioneering
Chinese tennis star Li Na
announced she is pregnant
yesterday in front of 15,000
cheering fans at the Australian Open. The two-time Grand
Slam winner, hugely popular
at the Australian Open where
she won the title last year and
reached the final in 2011 and
2013, unexpectedly retired in
September. She is a guest of
honour at Melbourne Park this
year and told the crowd in Rod
Laver Arena ahead of Roger
Federer’s opening match that
she is expecting her first child.
— AFP

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