Document 431398

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