CORPORATE

Ann Joo: Looks abroad to tackle slumping domestic demand. Ann Joo Resources Bhd has started to look more closely at export markets to mitigate slowing local demand for steel products in the wake of the large scale-back of infrastructure projects in the country by the new Pakatan Harapan administration. Its MD Datuk Lim Hong Thye said the group would keep to plans to ramp up its crude steel production to 850,000 tonnes this year from 700,000 tonnes last year as this had been based on an earlier anticipation of strong domestic demand before a number of projects, including the Kuala Lumpur-Singapore high-speed rail and Klang Valley mass rapid transit Line 3 or circle line, had been scrapped or deferred by the government to cut cost. Lim said the company would look at Southeast Asia, particularly Thailand and Indonesia, for two main reasons. According to him, firstly, the demand for steel in the two countries is high. Secondly, the group has a cost competitive advantage over steel producers in the region because it can optimize production costs by adopting the hybrid blast furnace and BF-EAF (blast furnace-electric arc furnace) technology. (Source: The Edge Financial Daily)

Green Packet: Plans right issue to raise RM52.6m. Green Packet Bhd has proposed to undertake a renounceable rights issue with warrants in an effort to raise RM52.6m to expand its solutions and Internet of Things (IoT) business segment through the purchase of trade equipment. The company’s rights issuance will see it issuing of up to 150,202,583 new shares on the basis of one rights share for every five existing Green Packet share held. The rights shares will come together with up to 450,607,749 free detachable warrants on the basis of three warrants for every one rights share subscribed to. “The proposed rights issue with warrants is for us to grow our solutions and IOT segment which we believe is a blue ocean opportunity. We also believe that this is the best option as it is non-dilutive and will provide entitled shareholders with an opportunity to participate in an equity offering in the group which will allow them to share in the prospects, future growth and earnings of the group in the future,” said its group CEO and executive director Tan Kay Yen in a press release. (Source: The Star)

Icon Offshore: Secures RM23m job from Hess Exploration. Icon Offshore Bhd's unit has bagged a RM23m contract to provide a utility vessel to Hess Exploration and Production Malaysia B.V. It said on Friday the contract would be for three years with two extension options of one year each, subject to the approval from Hess and/or Petronas Carigali Sdn Bhd. Icon Offshore said the contract was expected to contribute positively to its earnings, order book and net assets for the financial year ending 31 Dec 18 and beyond. (Source: The Star)

MAHB: Badlisham retires as MD. Badlisham retires as MD of MAHB Datuk Mohd Badlisham Ghazali has retired as the MD of Malaysia Airports Holdings Bhd (MAHB) while CFO Raja Azmi Raja Nazuddin will be appointed acting group CEO. MAHB said Friday was the last day of Badlisham’s contractual tenure; a position he has held since 23 Jun 14. “The necessary announcement will be made once Badlisham’s successor has been identified,” the company said. (Source: The Star)

Pertama: Eyes full capacity in October for smelting plant. Ferrosilicon and manganese alloys maker Pertama Ferroalloys Sdn Bhd expects to run its smelting plant in Samalaju Industrial Park, Bintulu at full capacity in October. Executive chairman Hirotaka Suzuki said the plant was unable to meet its full production capacity this month as it had planned earlier due to technical hitches. “We have now reached 85% of installed production capacity, from below 80% earlier this year. We had to rectify some mechincal problems. So we need four months to enable us to go into full production,” he told StarBiz. (Source: The Star)

PIE Industrial: Embarks on biggest expansion plan. PIE Industrial Bhd is embarking on its biggest expansion exercise ever. The move is in response to growing interest in the group’s printed-circuit-board assembly (PCBA) products and box-built equipment. Group MD Alvin Mui told StarBiz PIE is now in negotiations for several new major contracts. “We are also getting feedback that our orders will continue to grow this year,” he said. Some of the new deals should be concluded in the second half of 2018. “If the deals are finalised, we will produce in Penang data transmission equipment and electronic component for the automotive industries,” Mui said. He added that the budget for the expansion had yet to be finalised. “This will be the biggest expansion in the history of the group. We can expect the initial spending to be around RM30m, which was the amount spent for the expansion four years ago. The current expansion exercise involves renovating an existing warehouse in Seberang Jaya into a production facility and increasing the number of surface mount technology production lines to 25 from 14. The renovation should be completed by early 2019,” he said. (Source: The Star)

SECTOR

Construction: Controversial ECRL to proceed but Malaysia hopeful of lower price tag. With already RM20b paid out, the controversial East Coast Railway Line (ECRL) project is going to escape the government’s guillotine on mega projects. However, the Pakatan Harapan government is committed to re-negotiating the pricing of China’s landmark ‘One Belt One Road’ project in Malaysia. On the other hand, the government is still undecided on whether to go ahead or defer the KL-Singapore High-Speed Rail (HSR). “In the ECRL, we have already paid RM20b. So it doesn’t really make sense to just scrap it because we’ve already paid RM20b,” Lim told The Malaysian Insight. “It’s one of the projects we are looking to renegotiate,” said Lim of the 688km railway line to connect Port Klang on the west coast with Kuantan, Pahang and Pengkalan Kubor, Kelantan on the east coast. Lim said the ECRL is being renegotiated while the HSR is being reviewed. “Review means that it may not go on. That it may be deferred. Re-negotiating means we are talking about pricing," he said.

(Source: The Malaysian Insight)

Oil & Gas: Oil prices soar as OPEC agrees to modest output hikes. Oil prices soared on Friday after oil producers agreed to modest crude output increases to compensate for losses in production at a time of rising global demand. The Organization of the Petroleum Exporting Countries and other top crude producers, meeting in Vienna, agreed to raise output from July by about 1m barrels per day (bpd). The real increase, however, will be around 770,000 bpd, according to Iraq, because several countries that recently suffered production declines will struggle to reach full quotas, while other producers may not be able to fill the gap. (Source: The Star)

ECONOMICS

Foreign exchange: Mahathir says ringgit’s fair value at 3.8, same as Asia crisis peg. Prime Minister Tun Dr Mahathir Mohamad said the ringgit’s fair value today is the same as the peg that his previous government established in 1998 in a controversial move during the Asian financial crisis. Asked in an interview Friday where he saw the fair value for the ringgit, Dr Mahathir said “3.8.” That’s more than 5% stronger than its current level against the dollar, and a rate it hasn’t seen since mid-15, when worries about China hit emerging markets. “We would like to strengthen our ringgit, but it should be done naturally,” said Dr Mahathir, the architect of capital controls in 1998, that ultimately were seen to help stabilise the nation’s economy though were criticised then by the International Monetary Fund. He did not elaborate on steps needed to allow for natural appreciation. (Source: The Star)

POLITICS

1MDB: Mahathir seeks to recover RM18b of 1MDB funds, Goldman Sachs fees. Malaysia will seek to recoup US$4.5b (RM18b) of funds that were potentially lost through 1MDB, as well as fees paid to Goldman Sachs Group Inc., according to Prime Minister Tun Dr Mahathir Mohamad. “We have to prove ownership of the money,” Mahathir, 92, said in an interview with Bloomberg Television’s Haslinda Amin on Friday. “The previous government, in order to avoid accusation of some wrongdoing, decided that the money was not theirs, so they’re not making any claims. But we know the money is ours. It’s from 1MDB.” In the interview, Mahathir raised concern over the large commission paid to Goldman Sachs, which made US$593m for arranging three bond sales for 1MDB. The state fund paid a 10% fee to the bank for its role and accepted a 6% interest rate, he said, adding that the borrowing cost for the government should be closer to 3%. (Source: The Star)

Source: UOB Kay Hian Research - 25 Jun 2018