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2
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
For breaking news updates go to
www.theedgemarkets.com
ON EDGE T V
www.theedgemarkets.com
Muhyiddin absent
Ismail Sabri: Najib assures Umno division chiefs on 1MDB issue
Home prices to
start bouncing
back in 2016
GST to be
imposed on
individuals
selling more
than two
commercial
lots
The Edge Communications Sdn Bhd
BY G EO RG E H AY
BY SHERIDAN M AHAV E RA
& MELATI A JALIL
KUALA LUMPUR: Umno deputy
president Tan Sri Muhyiddin Yassin
raised eyebrows with his absence in
yesterday’s much-anticipated Umno
meeting between party president
Datuk Seri Najib Razak and division leaders.
However, an Umno leader
brushed off any significance to the
former’s absence, saying “no one
should read too much into it”.
Umno supreme council member
Datuk Seri Ismail Sabri Yaakob said
Muhyiddin, who is also the deputy
prime minister, had prior commitments he had to attend to.
“In the past, the deputy president
also did not attend [such a meeting]. In this case, he told me that he
wanted to attend but he had other
commitments,” the agriculture and
agro-based industry minister told
reporters after the meeting.
Muhyiddin’s statement on the
debt-ridden 1Malaysia Development Bhd (1MDB) last Friday
sparked talk that there were differences of opinion within the Cabinet
over how to deal with the company’s
suspicious deals.
Muhyiddin had said efforts to
handle 1MDB’s debts must not
involve a bailout of the government-owned strategic investment
firm using public funds.
The much-anticipated gathering
of Umno division chiefs with the
prime minister was declared off
limits to the media.
The foyer area of Menara Tun
Hussein Onn in the Putra World
Trade Centre was restricted to Umno
officials and their staff only.
A sign put up outside barricades
to the area read “closed-door function” (no media coverage) while the
only access point was guarded by
an auxiliary policeman.
Meanwhile, at the meeting, Najib
assured Umno grass roots leaders
that the government will not protect
anyone found to have committed
fraud in the operations of 1MDB.
Ismail Sabri said this was expressed by Najib to the morethan-154 division chiefs who attended the meeting at the party’s
headquarters in Kuala Lumpur
yesterday.
Najib told the division chiefs that
1MDB’s accounts had gone through
a forensic audit by accounting firm
Deloitte Malaysia, which cleared the
company’s officials of fraud, cheating and misappropriation of funds.
“He also said that the auditor-general himself will look into
1MDB and the results will be given
to the Public Accounts Committee
and staunch critics of 1MDB such
as [Petaling Jaya Utara member of
parliament] Tony Pua Kiam Wee,”
Ismail Sabri told reporters after the
meeting.
“So, there is nothing to hide and
no one [who has committed wrongdoing] will be protected,” Ismail Sabri
added. — The Malaysian Insider
(266980-X)
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UK retreat
from RBS
more important
than value
Singapore preview of auction
by The Edge impresses
BY GR ACE LI M
SINGAPORE: Art collectors, artists
and corporate figures such as Suntec Singapore chief executive officer
Arun Madhok, Veridian director
MC Lim, Ernst & Young director
Valerie Leong and Maya Gallery director and co-founder Jeffrey Wandly thronged The Edge Auction 2015
preview in Singapore on March 6.
There were 55 selected lots on
display at the preview held at Artspace @ 222, with works by top
Malaysian artists such as Datuk
Ibrahim Hussein, Yusof Ghani, Dr
Jolly Koh, Datuk Sharifah Fatimah
Syed Zubir, Jalaini Abu Hassan, Ahmad Zakii Anwar and Kow Leong
Kiang as well as other Southeast
Asian artists such as Lee Man Fong,
Chen Wen Hsi, Popo Iskandar, Jimmy Ong and Goh Beng Kwan.
Suntec marketing and product
development senior director CH
Kong was impressed with the many
different artworks on display.
“It’s nice to come by the variety
of works here. I especially thought
the horse drawing was very good,”
Kong said in reference to Ahmad
(From left) IJM Land sales and marketing senior manager Teo Lee Ean, Paul, IJM
Land brand and communications senior manager Wendy Kok and Au Foong Yee at
the preview.
Zakii’s Equus artwork.
Also in attendance were The
Edge Malaysia managing director
Au Foong Yee, deputy managing
director Lim Shiew Yuin, The Edge
Singapore circulation, events and
business development senior manager Sivam Kumar and editor Ben Paul.
The public preview ended yes-
terday and will continue in Kuala
Lumpur from March 13 to 20 with
all 136 lots on display. The Edge
Auction 2015 is supported by IJM
Land and will be held on March 22
at Hilton Kuala Lumpur.
For details, visit www.theedgegalerie.com or email [email protected]
LONDON: Re-privatising the Royal Bank of Scotland (RBS) used
to mean creating a world-class
universal bank and selling out at
a profit. The first objective has already fallen by the wayside — RBS
is well on the way to become a
United Kingdom-focused retail
bank. Happily the second, judging by comments by chancellor
George Osborne on March 5, could
soon follow.
Osborne acknowledges his part
in calling it wrong. With hindsight,
the initial strategy was flawed. Back
in 2010, exiting investment banking, as the bank is now effectively
doing, would have been a huge
call. It made more sense to back
the bank’s still-enormous trading
outfit, which had a bumper in 2009.
That seemed the best way to allow
RBS to be re-privatised as soon as
possible above the 500-pence-pershare (RM27.71) average in-price
at which the government bought
more than 80% from 2008 to 2009.
In retrospect, this was a mistake. The investment bank was
hobbled by misconduct fines and
a decline in bond trading that now
looks structural. More broadly, the
eurozone crisis meant RBS lost
even more through its subsidiary
Ulster Bank.
Now that chief executive Ross
McEwan is shrinking RBS back to its
pre-casino model, there’s a good argument for waiting for tangible progress. Selling out below 500 pence
could reprise the wrangling that
occurred after Royal Mail plc’s flotation. Britain’s selldown of Lloyds
Banking Group, from 43% to 24%,
has taken place above the in-price.
But there is a better case for
speed. The idea that Britain is an
“arm’s-length” shareholder is a
fiction — the government has repeatedly interfered with pay and
governance. That has made transforming the bank into a focused,
profitable institution much harder.
In other states like Spain, the emphasis has rightly been on incentives or deadlines to return banks
to the private sector.
Whoever wins the election
should aim to start re-privatising
RBS as soon as possible — perhaps
2016, when analysts expect the
bank to resume dividends. As the
bank escapes from the state’s headlock and restructures, the shares
should rise anyway. A staggered
selldown could eventually deliver
taxpayers a profit. — Reuters
Iran charges woman over alleged 10-marriage con trick
TEHRAN: A young Iranian woman
accused of marrying — and divorcing — 10 men in less than two years
under an elaborate con trick has
been charged with fraud, state media reported yesterday. The alleged
deception was made possible under
Islamic rules that entitle a woman to
a financial sum agreed before marriage but retrievable “on demand”
anytime after the ceremony takes
place. In Iran, an Islamic republic
that has followed the shariah law
since the 1979 revolution, a soon-to-
be bride sets a mehrieh payment — a
dowry traditionally measured in gold
coins — with her fiance. In the case
of the 20-year-old accused — who
denies the charges — she married
the men and immediately demanded
her payment, never consummating
the relationships, according to a daily
newspaper. The men had to pay half
the mehrieh payment to avoid breaking the law, but the woman said she
actually agreed to a 100-110 gold coin
settlement, technically less than she
could have claimed. — AFP
HOME BUSINESS 3
M ON DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
Back to the drawing board
Khalid-initiated Selangor water agreement lapses with new MB unlikely to give extension of time to sign
BY C Y NTHI A B L EMI N
KUALA LUMPUR: The Selangor
state government is unlikely to grant
the federal government a third extension to the master agreement
signed on Sept 12 last year to restructure the state’s water supply
industry. The agreement lapses today, said sources.
“The federal government has
asked for another one-month extension to the master agreement till
March 31 this year,” one source told
The Edge Financial Daily.
“But the Selangor government
has disagreed to extend the deadline to accommodate some changes to the master agreement, which
allow the federal government to
acquire all land utilised for water
assets (such as pipes, plants and
reservoirs) for free.
“The terms were never in the
[original] master agreement,” the
source added.
It is understood that Selangor
Menteri Besar Mohamed Azmin
Ali’s office is expected to issue a
press statement on the matter today.
Under the master agreement,
Air Selangor Sdn Bhd, a new entity, will take over the operations and
maintenance of the state’s water
treatment plants and water supply
services which are currently managed by four concessionaires.
They are Syarikat Pengeluar Air
Sungai Selangor Sdn Bhd (Splash),
Puncak Niaga (M) Sdn Bhd (PNSB),
Syarikat Bekalan Air Selangor Sdn
Bhd (Syabas) and Konsortium Abass
Sdn Bhd.
The master agreement was to
The water treatment plant in Kampung Lembah Paya, Salak, Selangor. Under the master agreement, Air Selangor, a new entity,
will take over the operations of the state’s water treatment plants and water supply services which are currently managed by four
concessionaires. The Edge ﬁle photo
have been finalised on Jan 12, but
was postponed to Feb 9 and again
to March 9, following the transfer of
water assets between the state and
federal governments.
The agreement would also pave
the way for the federal government
to proceed with the RM3 billion Langat 2 water treatment plant project
by giving it the necessary development approvals.
Energy, Green Technology and
Water Minister Datuk Seri Dr Maximus Ongkili on Feb 25 expressed
his optimism that the master agreement between the federal and state
governments, which was signed
by Mohamed Azmin’s predecessor
Tan Sri Abdul Khalid Ibrahim, can
be finalised by March 9 after being
postponed twice previously.
“The problem arose because
there are assets in Semenyih and
Bukit Nenas which were originally
known as Selangor state assets but
upon closer scrutiny, they belong
to the federal government.
“Although the land belongs to
the federal government, but the
infrastructure belongs to the concessionaires,” Ongkili said.
With the latest anticipated collapse of talks, the likelihood remains
that the federal and Selangor governments will return to the negotiating table, the source said.
“Taps won’t run dry yet.
“Phase 1 of the Langat 2 project
is still proceeding with some approvals already given earlier,” the
source said.
But this impasse may affect subsequent developments if it becomes
protracted, the source noted.
It is understood that Mohamed
Azmin is willing to go back to the
same master agreement even after
it lapses if the federal government
honours the original terms of the
agreement and not demand new
terms and conditions at the expense
of the state.
But if the water talks collapse,
the source said the agreement to
acquire PNSB and Syabas is also
expected to lapse as well.
PNSB manages a majority of the
more than 30 water treatment plants
in Selangor, while Syabas is responsible for managing the treated water
distribution system.
Mohamed Azmin late last year
announced the completion of the
takeover of PNSB and Syabas after
state-controlled corporation Pengurusan Air Selangor Sdn Bhd bought
over shares in both companies.
Splash, meanwhile, has been given a year to conclude an agreement
with the Selangor government.
Another source close to the matter told The Edge Financial Daily that
the federal government can extend
the master agreement by another
month when it lapses today, but will
leave it to the Selangor government
to decide.
The master agreement on the water supply was first signed between
the Selangor and federal governments on Sept 12 last year. Abdul
Khalid then witnessed the signing
on behalf of the state, while Ongkili
represented the federal government.
Prior to Sept 12, the federal and
Selangor governments had on Aug
1 signed a “heads of agreement”
(HoA) on restructuring the water
supply industry — paving a longterm solution to the water issue in
Selangor.
The HoA was an extension of
the memorandum of understanding signed between the state and
federal governments on Feb 26 of
the same year to build the Langat
2 water treatment plant and its distribution system.
No legal recourse yet, says Kidex concessionaire
BY C Y NTHI A B L EMI N
KUALA LUMPUR: Kidex Sdn Bhd,
the concessionaire of the controversial Kinrara-Damansara Expressway (Kidex), is pinning its hopes
on a last-ditch attempt by Works
Minister Datuk Seri Fadillah Yusuf
to reverse the Selangor state government’s decision for cancelling
the development of the highway
project.
Kidex Sdn Bhd chief executive
officer Datuk Mohd Nor Idrus said
he is leaving the matter in the hands
of the federal government and the
works minister to find an amicable agreement with the Selangor
government. The Kidex is a federal
project that needs state consent.
“There is a concession agreement (CA) signed with the federal
government that provides for a fair
settlement, but we are not looking
at that for now,” he told The Edge
Financial Daily.
“If there is no resolution, then we
will see what can be done,” Mohd
Nor said.
However, he declined to disclose
the terms and conditions of the CA.
To date, details of the 48-year
concession agreement between
the federal government and Kidex Sdn Bhd have not been disclosed to the public. The Selangor
government also raised concerns
that the company did not disclose
various reports for the project such
as a traffic impact assessment, a
social impact assessment and an
environmental impact assessment,
besides failing to reveal toll rates
and the full CA.
Despite the controversy surrounding the company’s plans,
Mohd Nor said he personally felt
that the development would in the
long run benefit the people and help
alleviate traffic woes in the state.
Fadillah was quoted in media
reports on March 1 as saying that
he would ask for a meeting with
Selangor Menteri Besar Mohamed
Azmin Ali soon to discuss the state’s
public works projects.
“We will talk about the [Kidex]
highway and other development
projects planned by the federal government for Selangor,” the minister
was quoted as saying.
Petaling Jaya residents have high-
lighted concerns about the proposed highway encroaching on
homes and public buildings like
schools and hospitals.
Among the areas that could be
affected by the Kidex project are
Tropicana Mall, SS2 Mall, Rothman’s traffic lights, Section 14, Amcorp Mall, Hilton Petaling Jaya, Tun
Hussein Onn Eye Hospital, Jalan
Templer roundabout, Taman Datuk Harun, Taman Medan Baru and
Bandar Kinrara.
Mohamed Azmin on Feb 16,
announced the cancellation of
the conditional approval for the
RM2.42 billion Kidex project for
failing to fulfil three conditions before its Feb 14 deadline. The following week the state put a final nail
in the coffin when it announced
that the 14.9km highway project
was no longer part of Selangor’s
2035 structural plan.
When contacted by The Edge Financial Daily, former Petaling Jaya
City Councillor Derek Fernandez,
who is an expert in local government
and planning law, said the company is only owed reimbursement for
expenses, not compensation for the
abrupt termination of the CA.
“It is unlikely that the federal
government will have to pay any
compensation if the concession
agreement is drafted with reasonable prudence,” he said.
“Any expenditure incurred by
one party is taken as a business risk.
There will be no refund especially if
work has not started,” he said.
Fernandez, however, noted that
the contents and conditions in the
CA signed between Kidex Sdn Bhd
and the federal government have
not been revealed publicly up to
today.
“As land and development control is the prerogative of the state
and local governments, they are
fully entitled to refuse permission
to use their land or amend their
local plans to accommodate the
Kidex proposal,” he said.
He pointed out that the Kidex
highway was never in any gazetted
development plans of the Petaling
Jaya City Council (MBPJ) or the state
government, as such it has not been
planned for and no compensation is
payable by the state or MBPJ.
This is because neither the state
government nor MBPJ is a party to
the contract between the concession
holder and the federal government
and no rights can be accrued from
the contract against them, he said.
On a news report that quoted
Mohamed Azmin as denying that
the Kidex project had been cancelled, Fernandez said: “There is
no confusion. It’s just playing with
semantics, and it will not alter the
fact that Selangor has decided not
to approve the Kidex project as it is
lawfully entitled to do.
“The removal of Kidex from the
preliminary survey report for the
Selangor Structural Plan further
affirmed this,” he said.
Kidex Sdn Bhd is owned by the
wife of former Chief Justice Tun
Zaki Azmi and Umno lawyer Datuk
Hafarizam Harun.
A search of the Companies Commission of Malaysia showed that
Kidex Sdn Bhd reported a net loss
of RM15,758 for the financial year
ended Dec 31, 2013 (FY13) compared with RM860 in FY12. Its total
liabilities stood at RM11.66 million
as of Dec 31, 2014. There was no
revenue generated.
4 HOME BUSINESS
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
Mokhzani: No plans to up
stake in Yinson for now
Yet to decide whether he will dispose of his 10.54% interest in SapuraKencana
BY WEI LY NN TA NG
KUALA LUMPUR: After his resignation from the board of SapuraKencana Petroleum Bhd last Wednesday, there is now speculation that
Tan Sri Mokhzani Mahathir could
be looking at raising his interest in
Yinson Holdings Bhd next.
When contacted however,
Mokhzani responded: “We have
no plans at the moment.”
Mokhzani, via Kencana Capital
Sdn Bhd, owns an 18.56% stake in
Yinson (fundamental: 1.50; valuation: 1.5) as at June 27, 2014. He
emerged as a shareholder in Yinson in June 2013, when Kencana
Capital purchased a 14.64% stake
for RM106.6 million via a private
placement.
Kencana Capital is Yinson’s second largest shareholder, after the
offshore services provider’s chairman Lim Han Weng’s personal direct stake of 22.04%. Lim’s spouse,
Bah Kim Lian, owns 8.82%.
“Mokhzani sees value in Yinson.
He may want another 4% to 5%,
worth possibly RM100 million, to
push it closer to 25%,” said a source,
adding that Mokhzani is likely to
purchase the stake through a direct
business transaction and not from
the open market.
Mokhzani, son of former prime
minister Tun Dr Mahathir Mohamad, resigned from his post as
vice-chairman of SapuraKencana
(fundamental: 1.3; valuation: 1.8)
on March 4, citing personal reasons. His associate Yeow Kheng
Chew also resigned on the same
day as a non-executive director
due to personal reasons.
The next day, SapuraKencana
shed 19 sen or 7.2%, making it one
of the top losers on Bursa Malaysia.
As at Dec 9, Mokhzani had a
0.16% direct stake in SapuraKencana and was deemed interested in
another 10.38% through Kencana
Capital and Khasera Baru Sdn Bhd,
another of his private vehicles.
Yeow had a 0.39% direct stake
or 23.18 million shares in SapuraKencana.
When asked if he would dispose
of his 10.54% interest in SapuraKencana, Mokhzani’s reply was the
same, saying there were no plans
In July 2013, SapuraKencana
issued a statement that was delibMokhzani resigned
erating whether Mokhzani’s acquisition of the stake in Yinson would
from the board of
create a conflict of interest. The
SapuraKencana last
board then decided there was no
Wednesday. Photo
conflict of interest.
by Patrick Goh
SapuraKencana closed four sen
lower at RM2.41 last Friday, for a
to do so at the moment.
market capitalisation of RM14.68
Mokhzani and Yeow had on Dec billion. Yinson closed one sen high5, 2013, relinquished their exec- er at RM2.73 last Friday, with a marutive directorships in SapuraK- ket capitalisation of RM2.8 billion.
encana and were redesignated as
non-executive directors. Prior to
that, Mokhzani was the executive The Edge Research’s fundamental
vice-chairman of the company.
score reflects a company’s profitabilWhen Mokhzani emerged as a ity and balance sheet strength, calshareholder in Yinson, there were culated based on historical numbers.
concerns this could create conflicts The valuation score determines if a
of interest as he was also holding stock is attractively valued or not,
an executive position in SapuraK- also based on historical numbers.
encana.
A score of 3 suggests strong fundaNote that Yinson also leases out mentals and attractive valuations.
floating production, storage and Go to www.theedgemarkets.com for
offloading assets, an area in which more details on a company’s finanSapuraKencana is also involved. cial dashboard.
Traditional Chinese medicine to get costlier post-GST
BY C H EN SH AUA FUI
KUALA LUMPUR: Traditional Chinese medicine (TCM) is about to
get more expensive.
Its practitioners are estimating
that owing to the 6% goods and services tax (GST), coupled with the
costs of compliance with the new
tax system and a weakening ringgit
which has made imported Chinese
herbs more expensive, TCM prices
are expected to increase by about
20% to 30% post-GST.
Federation of Chinese Physicians and Medicine Dealers Associations of Malaysia adviser Professor Dr Lee Kong Hung sees the
potential price increase affecting
small-scale, family-owned TCM
retailers in rural areas.
“They are concerned that a price
increase would prevent people
from seeking TCM and send them
off to seek medical attention at private clinics or pharmacies, given
that 359 generic drugs will be exempted from GST,” he told The Edge
Financial Daily in an interview. “Indeed, their concerns on the
GST consequences have led to
about 30% of the TCM operations
in the country, many of which are
family-run, considering winding
up their businesses,” he said.
Currently, the TCM consultation fee ranges between RM10 and
RM40 per session.
Lee pointed out that as all herbal medicine as well as medical supplies such as acupuncture needles
and traditional Chinese cupping
sets will be subject to GST, TCM
retailers whose revenue are less
than RM500,000 a year and not
registered will have to pass on their
costs to the consumers, making
them less competitive.
“Most of these TCM businesses in rural areas are run by a husband/wife team, and they are not
required to register under the GST
legislation (and thus, not entitled
to claim input tax on the supply or
importation of goods). As such,
they are likely to pass on their GST
costs to the consumers.
“At the same time, the registered TCM retailers will need to
employ more staff to maintain the
systems and processes to monitor
GST collection and payment which
could result in their overall costs
increasing by 10% to 15%,” he said,
noting that there are about 6,000
TCM retailers in the country.
Lee also highlighted the survival
of the traditional medicine cottage
industry or small-scale TCM producers post-GST, who are already
spending between RM1 million
and RM2 million to enhance their
manufacturing facilities for medicines to comply with the good
manufacturing practices (GMP)
standards.
“The weak ringgit has also resulted in higher costs of raw materials, which are mostly imported.
This poses problems of sustainability [for small-scale TCM producers]),” he said.
Lee said since the enforcement of GMP, about 90% of the
300 cottage industry players have
announced the closure of their
Lee: The weak ringgit
has also resulted in
higher costs of raw
materials, which are
mostly imported. This
poses problems of
sustainability. Photo
by Kenny Yap
manufacturing operations due to
unsustainability.
“This had led to a situation
where only the big factories survive and they would have a final
say on pricing, which would affect
TCM users,” he said.
On its part, Lee, whose federation represents about 12,000 therapists, pharmacists and acupuncturists together with other groups
involved in traditional medicine
and supplementary health such
as Gabungan Pertubuhan Pengamal Perubatan Tradisional Melayu
Malaysia, has sent a petition to the
government to declare all traditional medicine and related items and
services as zero-rated from GST.
Singapore-listed TCM company Eu Yan Sang International
Ltd, meanwhile, does not expect
any major impact on its business
post-GST.
“The GST charged by our suppliers is claimable as we are also
GST-registered. Still, GST is not
the only factor in our costing, and
our costs of goods sold and operating expenses may increase due
to factors other than GST such
as the recent depreciation of the
ringgit, and inflation.
“The extent of this increase in
costs is still manageable in our
opinion,” Eu Yan Sang Malaysia
managing director Eric Chiu told
The Edge Financial Daily.
Chiu assured that the company
will not pass on the increase in cost
from GST to the consumers even
though it has invested significant
time and effort in the customisation and programming of its enterprise resource planning systems
to be GST-compliant.
‘It is our promise to provide
quality TCM to customers at a reasonable price, and we always monitor the prevailing market price in
the TCM industry to ensure our
products are competitively priced,”
Chiu said in an email interview.
For its first financial quarter
ended Sept 30, 2014 (1QFY15),
Eu Yan Sang International posted a revenue of S$83.03 million
(RM221.78 million), a 4% increase
from S$79.54 million a year ago,
mainly due to increased contribution from its retail and wholesale
segments.
The clinic segment’s contribution to the group’s revenue in
1QFY15 was S$4.36 million or
5.25% of the total, which is expected to decline post-GST.
That’s because the services provided by Eu Yan Sang International’s clinics are standard-rated and
subject to 6% GST. In addition, any
registered person is not allowed
to claim back the GST charged by
Eu Yan Sang TCM clinics because
medical expenses are treated as
blocked input tax.
“As a result, it is possible that
some companies may encourage
their staff to go to private clinics
instead of TCM clinics as they cannot claim back the GST charged by
TCM clinics,” said Chiu.
‘In view of this possibly negative perception about TCM clinics charging GST, we believe the
various health benefits offered by
TCM are still widely recognised by
the public, and we are confident
that TCM is irreplaceable in the
medicine industry. Hence, EYS
(Eu Yang Sang) TCM clinics will
continue providing quality TCM
to overcome the potential [consequences] of GST,” he added.
HOME BUSINESS 5
M ON DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
Green Packet eyes Latin
America and Europe
Focusing on being an asset-light technology company
BY L I EW JI A TEN G
& TAN C H OE C H OE
KUALA LUMPUR: Green Packet Bhd
— which divested its controlling stake
in Packet One Networks (Malaysia)
Sdn Bhd (P1) to Telekom Malaysia
Bhd (TM) last year — sees opportunities to strengthen its remaining
two businesses, solutions and communications, in the Latin American
and European markets.
In an interview last week, chief
executive officer (CEO) Tan Kay
Yen told The Edge Financial Daily
that Green Packet (fundamental:
1.3; valuation: 0.6) is now refocusing
on being an asset-light technology
company with its two businesses,
which “have been profitable from
day one” but were overshadowed by
its telecommunications business, P1.
In its solutions segment, Green
Packet provides 4G devices together with embedded software, such
as pocket modems, USB dongles,
indoor modems and outdoor routers.
Its communication services consist
of wholesale termination services
as well as retail calling card services.
Green Packet’s two core businesses, which made RM300 million odd
in revenue in the past 12 months, are
strong in emerging markets — to its
solutions segment alone, emerging
markets contributed 30% of revenue
last year.
“We’re already strong in emerging markets, in Asean and South and
North Asia. The Middle East is and
will continue to be a prime market
of focus for us — though not for the
communications segment yet.
“[The] developed market is where
the next stage of the market growth
is and that’s where the volume is.
Europe will probably be at higher
single-digit [growth]. The other place
to be is Brazil, the country with the
largest population in Latin America,”
said Tan, who took over from the
group’s founder and outgoing CEO
Puan Chan Cheong last October.
“We’ve already passed a few toll
gates in Brazil — its local certification
and the operators’ internal testing.
So let’s see how that will pan out.
We need to be in Brazil, that’s the
market with the largest population
in the region. The next down the list
is Argentina,” he said.
In Europe, Green Packet has its
eye on Spain, as telco giant Telefónica SA — a Spanish broadband and
telecommunications provider that
has business presence in 21 countries, with O2, Vivo and Movistar in
its stable of brands — is headquartered in Madrid.
“There are many small [telco] guys
in Europe, so we need a lot of reach
because it’s so disparate. In order
to reach these markets, we have got
in new sales people, new channel
partners. We are getting new local
distributors to sell for us,” he said.
Big players like Huawei Technologies Co Ltd also provide the same 4G
devices and software, so will Green
Packet be going head-to-head with
the big boys?
“Actually, besides Huawei, there
Tan: We’re already strong
in emerging markets, in
Asean and South and
North Asia. Photo by
Mohd Izwan Mohd Nazam
are not too many big boys in this
space. Apple, Motorola, Siemens and
Samsung — the big handset buys —
are not here. Perhaps this market
size is small to them compared to
the mobile market. So there is still
space for us,” said Tan.
In the 4G or long-term evolution
(LTE) solutions space, Green Packet is shaping itself up as a tech and
communications provider with a full
range of services, “much like Samsung’s strategy, where it has different
ranges of mobile phones for different markets”.
“So when some telco operators
look at us, we want them to see that
regardless of the market they serve,
we have the device that can serve
their market,” said Tan.
Generally, he said, emerging markets demand low-cost devices with
good indoor reception, while the
developed markets want high-end
products with the latest features on
offer.
To recap, TM (fundamental: 1.0;
valuation: 0.9) injected RM350 million last year for new shares in P1
for a 57% stake. It also agreed to buy
RM210 million worth of exchangeable bonds from Green Packet.
Green Packet is now left with a
31.1% stake in P1; TM now controls
55.3% while South Korea-based SK
Telecom Co Ltd (SKT) holds the remaining 13.6% stake.
Green Packet has been making
losses for six consecutive years from
2008 to the first half of 2014, since
P1’s commercial launch of WiMAX
services, due to the fact that “the
depreciation [of the P1 business]
was high”.
From July to September 2014, it
saw a net profit of RM121.62 million
from the RM152.68 million it gained
from the dilution of its interest in P1.
But it slipped back into the red with
a net loss of RM23.3 million from
October to December 2014.
Tan said this was because the profits of Green Packet’s two remaining
core businesses, which have and will
continue to grow this year, have yet to
surpass the potential equity losses in
P1. Hence, he expects Green Packet
to still report losses, albeit reduced
ones, in the next one or two quarters.
Green Packet has also been holding back spending on its solutions
and communications segments previously as P1’s losses stacked up. But
that is changing as Green Packet
reprioritises.
“Now that we have refocused all
our energy back to the solutions and
communications businesses, we will
continue to grow these two businesses organically. I see this as a new leaf
for Green Packet,” he said.
He also gave assurance that there
would be no heavy capital expenditure moving forward, as investments
for its two businesses will largely be
limited to research, development,
sales and marketing, and headcount.
The company has no plans to
look into mergers and acquisitions
to grow the two businesses further
at this moment because, as Tan said,
“we feel that even organically, we
haven’t done enough to make sure
the growth is there”.
The Edge Research’s fundamental
score reflects a company’s profitability
and balance sheet strength, calculated based on historical numbers. The
valuation score determines if a stock is
attractively valued or not, also based
on historical numbers. A score of 3
suggests strong fundamentals and
attractive valuations. Go to www.
theedgemarkets.com for more details
on a company’s financial dashboard.
Analysts positive on IOIPG shelving Taipei 101 deal
BY SU PRI YA SU REN DRAN
KUALA LUMPUR: IOI Properties
Group Bhd’s (IOIPG) decision not
to pursue its proposed RM2.74 billion acquisition of a 37.17% stake
in Taipei Financial Center Corp
(TFCC), owner of the iconic Taipei
101 skyscraper, is seen as a positive
move by analysts.
TA Securities’ head of research
Kaladher Govindan told The Edge
Financial Daily (TEFD) that the research house is positive on the news.
“We are positive on the news as
the purchase price for Taipei 101
translates into an unattractive 2.7%
gross rental yield, which is opposed
to our estimated dividend yield of
4% to 5% for IOIPG in its financial year ending June 2016 (FY16)/
FY17,” he told TEFD.
His sentiments were echoed by
an analyst who said that IOIPG’s
(fundamental:1.35; valuation:1.8)
decision not to pursue the acquisition was understandable given
the circumstances.
“Taipei 101 is a matter of nation-
al pride for the Taiwanese, Malaysia too would have taken a similar stance if any foreign company
wanted to purchase a stake in the
Petronas Twin Towers; therefore, I
think this decision is understandable and I don’t think it’s going
to have much impact on its share
price,” said the analyst.
Recall that IOIPG entered into
conditional share sale agreements
(SSAs) on Dec 5, 2014 to buy 546.46
million shares, equivalent to a
37.17% stake in TFCC for NT$25.14
billion (RM2.74 billion at the time
of the agreements).
In a filing with Bursa Malaysia last Friday, IOIPG said that the
three-month period for the seller
and purchaser to obtain the foreign
investment approval from the Investment Commission of Taiwan
expired on March 5, and that the
company had decided not to seek
an extension.
“The company has decided not
to extend the three-month period as
stated in Clause 10.1(c) of the SSA
and hence, the SSA is terminated,”
read the announcement.
It added that in accordance with
the SSA, the company will now
proceed to obtain the refund of the
deposits paid by IOIPG.
The proposed acquisition involved a few agreements. IOIPG
would purchase the entire stake
in Ting Gu Development Co Ltd,
which holds 78.45 million shares or
a 5.34% stake in TFCC, from Golden
Shine International Holding Ltd,
for NT$3.61 billion.
IOIPG would then buy 4.41 million shares or a 0.3% stake in TFCC
from Ting An Ltd for NT$200 million.
Subsequently the group was to acquire 385.98 million shares or 26.25%
stake in TFCC, held by Ting Ji Development Co Ltd, for NT$17.76billion.
It would also purchase 77.62 million
shares or a 5.28% stake in TFCC, held
by Ting Li Development Enterprises Co Ltd, for NT$3.57 billion, thus
bringing the grand total amount to
be forked out by IOIPG for the deal
to NT$25.14 billion.
If the deal had gone through,
IOIPG would have been the sec-
ond largest owner of Taipei 101,
after the Taiwanese government
which has a 44.35% stake.
Reuters reported last year that
Taiwan’s finance minister Chang
Sheng-ford had said in the Taiwanese parliament that TFCC should
not be controlled by foreigners as
it is a national landmark.
“Our evaluation shows that IOIPG
is seeking management control rather than just a financial investment,”
he reportedly told lawmakers.
The report also quoted the Investment Commission as saying
that there would be a “strict review”
of the deal.
IOIPG executive chairman Tan
Sri Lee Shin Cheng clarified in a
separate statement that the group’s
investment in TFCC had no political agenda, and the group would
not seek management control if
the deal materialised.
He also refuted claims that there
were China investors in the company, as the issue of mainland Chinese investment is seen as a taboo
when it comes to foreign invest-
ments in Taiwan. This is mainly
due to the two nations’ history —
mainland China considers Taiwan
as a renegade province.
This is not the first time that IOI
Group has terminated a deal. In late
2008 as the global financial crisis
brewed, IOI Corp Bhd (fundamental: 1.7; valuation: 2.1) terminated
the proposed purchase of Menara
Citibank from owner Inverfin Sdn
Bhd, forfeiting its deposit of RM73.4
million.
It is also not the first time that a
deal between a Malaysian corporation and Taiwan has fallen through.
In 2013, a Malaysian consortium led
by IGB Corp Bhd (fundamental:1.2;
valuation: 1.6) lost the chance to
build the US$2.7 billion(RM9.87
billion) Taipei Twin Towers.
The Taipei city government cancelled the consortium’s award after
the parties had failed to agree on
terms for the contract.
IOIPG shares closed two sen or
0.95 % lower to RM2.09 last Friday, with a market capitalisation
of RM7.9 billion.
6 HOME BUSINESS
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
CCM plans turnaround in 2 years
To return loss-making fertiliser division back to the black and improve profitability of chemical division
SUHAIMI YUSUF
BY SU L H I A ZMA N
& SU PRI YA SU RENDRAN
KUALA LUMPUR: Loss-making
Chemical Co of Malaysia Bhd
(CCM) plans to turn around in the
next 24 months, according to its
recently appointed group managing director Leonard Ariff Abdul
Shatar (pic).
The turnaround will involve returning the loss-making fertiliser
division back to the black, as well
as improving the profitability of
its chemicals division. The group
also has a pharmaceuticals division which is currently profitable.
“My view is that the turnaround
for CCM cannot take more than 24
months. I am placing a more predictable profit delivery number
with an effort to minimise, if not
eliminate, the cyclical nature of our
business, which is basically driven
by the percentage of commodity
products to speciality products,”
he said in an interview.
Leonard, 50, who has been at
the helm of CCM (fundamental:
0.35; valuation: 1.80) since Jan 9
this year, succeeded Amirul Feisal
Wan Zahir, who is now heading the
global banking division at Malayan
Banking Bhd.
Last week, CCM announced a
net loss of RM43.85 million for its
financial year 2014 ended Decem-
ber, (FY14), compared with a net
profit of RM647,000 a year ago.
Revenue slipped 15.5% to
RM1.09 billion, from RM1.29 billion in FY13.
On a segmental basis, profit at
CCM’s pharmaceutical division
grew 12.2% to RM34.6 million while
earnings at the chemicals division
slid 7.8% to RM15.3 million on lower sales.
The group’s fertilisers division
continued to bleed, with losses
widening by nearly five times to
RM59.8 million. During the year,
CCM closed its manufacturing
plant in Indonesia, incurring an
impairment loss of RM36.8 million.
In FY14, the fertiliser business
contributed 44.9% to the group’s
total revenue, followed by the pharmaceutical division (29%) and
chemical segment (25.9%).
Leonard said the pharmaceutical business commands a profit
margin of 40%; the chemical business 20% and the fertiliser business a single-digit percentage profit
margin.
Leonard said the fertiliser business is currently “the sore thumb”
within CCM, with plant utilization
hovering between 30% and 40% in
Lahad Datu, Sabah.
“My assessment of the fertiliser business is that the market has
changed quite substantially. Fertil-
iser manufacturing has the smallest value-add to the final product,
while variable cost is almost at 80%
to 85%. You could say that CCM did
not predict the change in the past,
and now [it is up to us] to restructure the division back to profitability,” he said.
He noted that the stronger US
dollar also poses a challenge for
the turnaround of the fertiliser division, as most of its raw materials
are sourced in the currency.
“We don’t take a hedging position but we lock our prices be-
forehand, normally on a one year
forward contract. We hope the reduction in electricity tariffs (effective March 1, 2015) will buffer the
foreign exchange impact on the
purchase of raw materials in US
dollars,” said Leonard.
As for its chemicals division,
Leonard said the group will focus
on growing its polymer coatings
segment and chloralkali business.
CCM’s polymer coating business caters to surgical glove manufacturers in Malaysia, Thailand
and Indonesia. It plans to expand
to China, Vietnam and Sri Lanka.
Meanwhile, Leonard said the
group’s 73.37%-subsidiary CCM Duopharma Biotech Bhd (CCMD) will
grow the pharmaceutical business
through identification of “new pipelines”, which consist of new products
in biotherapeutics and niche therapeutic areas, as well as regional
expansion via acquisition strategies.
Last November, CCM had announced that it will be disposing of
its pharmaceutical assets to CCMD
(fundamental: 2.6; valuation: 2.10)
for RM133.33 million cash.
“We believe the disposal of the
pharmaceutical business will provide CCMD with immediate access to capacity which it needs. If
CCMD were to start from scratch,
it would have taken at least another
36 months before the new plant can
be operated,” he said, adding that
he will continue to steer CCMD for
the time being.
On capital expenditure, Leonard said CCM has budgeted RM50
million this year, of which RM20
million has been allocated to the
pharmaceutical division, followed
by its chemical division (RM20
million) and fertiliser division
(RM10 million).
As for its expansion strategy,
Leonard said CCM targets to acquire pharmaceutical manufacturing companies in the Asean region.
As at March 31, 2014, CCM’s
largest shareholder was Permodalan Nasional Bhd with a 71.35%
stake.
The stock rose 3 sen or 3.16% to
close at 98 sen last Friday, giving it
a market capitalisation of RM431.90
million.
The Edge Research’s fundamental
score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers.
The valuation score determines if a
stock is attractively valued or not,
also based on historical numbers.
A score of 3 suggests strong fundamentals and attractive valuations.
Go to www.theedgemarkets.com for
more details on a company’s financial dashboard.
Daibochi anticipates higher profit margin in FY15
BY MEENA L A KSHANA
KUALA LUMPUR: Daibochi Plastic
and Packaging Industry Sdn Bhd,
which saw its earnings drop 13.5%
year-on-year due to higher operating costs in its financial year 2014
ended December (FY14), expects
to rebound with a higher profit
margin this year with new export
orders and fresh product lines.
Daibochi (fundamental: 1.5;
valuation: 0.9) executive director
Low Jin Wei told The Edge Financial Daily in an interview recently that the company is confident
of recording a double-digit profit
before tax (PBT) margin this year.
The cheaper ringgit against the
US dollar is also good news to the
company, said Low, as it means the
company’s exports, in US dollars,
will yield more ringgit.
“With the current climate, the
outlook is quite positive and we
are confident we can record a double-digit PBT margin. But we are
still cautious going forward. There
are a lot of uncertainties in the market,” he said.
He also said that the protracted
slump in crude oil prices will translate into lower cost of raw materials,
which constitute more than 60% of
the company’s selling price of its
products, thereby creating downward pressure on product prices.
“Some 50% of the company’s
Daibochi’s second plant in Jasin,
Melaka, began operations in the
second quarter of last year.
sales are in exports and these will
continue to grow,” he said, but declined to give a forecast number
due to the current uncertainties.
Daibochi is a manufacturer and
converter of flexible packaging in
Southeast Asia. It supplies packaging solutions for fast-moving consumer goods such as food and beverages, as well as pharmaceutical
and industrial uses.
In 2013, the company recorded
a PBT margin of 11.9%, with PBT at
RM36.374 million, but the margin
contracted last year to 9% as PBT
decreased to RM31.06 million.
Last year, the company’s fullyear earnings took a hit from higher
operating costs, higher electricity tariff and higher wages, even
though revenue increased 11% to
RM344.5 million from RM310.3
million in 2013.
Daibochi had moved quickly to
implement industrial electricity
savers for its machinery, spending
RM4.4 million on the retro-fitted
devices which could reduce the
machines’ electricity consumption
by half or RM2 million annually.
Meanwhile, Low said the drop
in crude oil prices since June last
year had not translated into cheaper
raw materials for the company last
year. But he expects the downtrend
to manifest in the next six months.
“Oil prices have been very volatile and very strongly downward
in the last couple of months but we
have not seen those kinds of reductions in our raw materials because
we are a little bit downstream.
“So, whether it is the intermediary guy holding on to profits for as
long as he can or something else,
we don’t know but that is our main
challenge this year,” he said.
Downward pressure on its margins notwitstanding, lower prices
of raw materials, coupled with cost
savings from energy efficiency and
control of wastage, will also trim its
operating costs, Low said.
Moving forward, the company is
going to see new revenue from two
new product lines that are going
online for its existing multinational
corporation (MNC) client, which
will collectively bring it an annu-
al income of RM18 million a year.
Low said the company’s strategy for the past five to six years is
to continue to expand its customer
base, particularly among MNCs in
Malaysia.
“There are not many big multinational companies out there and
Daibochi is serving quite a number of them already. To develop
one new (product line) is opening
up a huge amount of opportunity for us. So that will continue to
be our growth strategy,” he said,
adding that Daibochi currently
caters to about 60% of the Malaysian MNC market.
Daibochi, he said, also plans to
build up its capacity to allow it to
take on larger customers and has
invested significantly towards this.
It commenced operations of its
newly-established manufacturing
plant in Jasin, Melaka, in the second
quarter of FY14, which is located
near the company’s first plant in
Air Keroh. It has since invested
RM24.7 million in FY14 to equip
both plants with new machinery.
This year, Daibochi has allocated
RM15 million for capital expenditure, which will be channelled to
the purchase of laminating and
printing machines for its plants.
The counter closed at RM4.50
last Friday, up four sen or 0.9%,
giving it a market capitalisation of
RM512.42 million.
ST O C KS W I T H M O M E N T U M 7
M O N DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
This column is an analysis done by Asia Analytica Sdn Bhd on the fundamentals of stocks with momentum that were picked up using proprietary algorithm by
Anticipatory Analytics Sdn Bhd and that ﬁrst appeared at www.theedgemarkets.com. Please exercise your own judgment or seek professional advice for your speciﬁc
investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.
ECS ICT BHD
ECS ICT BHD (+ve)
SHARES for ECS (Fundamental: 2.0/3, Valuation: 2.4/3) closed 16.8% higher last Thursday
after announcing its appointment as an authorised distributor of Xiaomi MiPad tablets
in Malaysia — but gave back some gains to
end at RM1.56 on Friday.
ECS is Malaysia’s largest distributor of ICT
products — such as notebooks, personal computers, software, servers, smartphones and
tablets to end-users and corporations — with
sales totalling RM1.6 billion in 2014. It has over
ECS ICT BHD
5,000 resellers covering 40 well-known brands.
It is debt-free with cash of RM89.7 million
or 31.2% of its market capitalisation. From
2010-2014, pre-tax profit ranged between
RM36.6-40.9 million on RM1.3-1.6 billion
sales. ROE was a solid 14.2% in 2014.
The stock is trading at a trailing 12-month
P/E of 9.8 times and 1.3 times book. Dividends
totalled 6 sen per share in 2014, including final dividend of 3 sen, giving a yield of 3.8%.
The stock will trade ex-entitlement on June 3.
Valuation score*
2.40
2.00
Fundamental score**
9.79
TTM P/E (x)
1.03
TTM PEG (x)
1.29
P/NAV (x)
3.44
TTM Dividend yield (%)
288.00
Market capitalisation (mil)
Shares outstanding (ex-treasury) mil 180.00
1.06
Beta
1.04-1.66
12-month price range
*Valuation score - Composite measure of historical return & valuation
**Fundamental score - 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
FY11
FY12
FY13
FY2014Q4
(ALL FIGURES IN MYR MIL)
31/12/2011
31/12/2012
31/12/2013
31/12/2014
Financials
Turnover
EBITDA
Interest expense
Pre-tax proﬁt
Net proﬁt - owners of company
Fixed assets - PPE
Total assets
Shareholders' fund
Gross borrowings
Net debt/(cash)
1,250.69
42.17
0.20
40.93
30.14
4.53
172.73
172.71
(66.58)
1,276.12
40.90
0.01
40.25
29.86
4.66
187.58
187.57
(72.99)
1,326.27
36.97
0.03
36.58
26.89
4.04
204.56
204.56
(83.70)
451.47
13.01
13.09
9.85
3.30
224.09
224.09
(89.75)
ECS ICT BHD
RATIOS
DPS (MYR)
Net asset per share (MYR)
ROE (%)
Turnover growth (%)
Net proﬁt growth (%)
Net margin (%)
ROA (%)
Current ratio (x)
Gearing (%)
Interest cover (x)
NETX HOLDINGS BHD (-ve)
NETX HOLDINGS BHD
WHILST NETX’s (Fundamental: 1.65/3, Valuation: 0.6/3) share price remained range bound,
the counter was actively traded, with volume
tripling to over 44 million shares last Friday.
The company, formerly known as Ariantec
Global Bhd, is principally involved in research
and development of software systems, and
providing information technology services.
NetX went through a rough period over the
last 2 years. Revenue plunged to just RM2.8
million in 2012, from RM36.1 million due
Financials
Turnover
EBITDA
Interest expense
Pre-tax proﬁt
Net proﬁt - owners of company
Fixed assets - PPE
Total assets
Shareholders' fund
Gross borrowings
Net debt/(cash)
NETX HOLDINGS BHD
to delay in securing new projects. Revenue
recovered slightly to RM5.1 million over an
18-month period ending FYJune2014. Net
loss was reduced from RM15.5 million in
2013 to RM5.8 million. Over this period, NetX
replaced its whole board of directors twice.
In October 2014, Netx proposed a rights issue where proceeds would be used to acquire
Springworks Sdn Bhd. However, in February
2015, it called off the acquisition but will proceed with the fund raising exercise.
Valuation score*
0.60
1.65
Fundamental score**
TTM P/E (x)
TTM PEG (x)
1.47
P/NAV (x)
TTM Dividend yield (%)
43.79
Market capitalisation (mil)
Shares outstanding (ex-treasury) mil 625.55
1.07
Beta
0.05-0.08
12-month price range
*Valuation score - Composite measure of historical return & valuation
**Fundamental score - 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
(ALL FIGURES IN MYR MIL)
NETX HOLDINGS BHD
RATIOS
DPS (MYR)
Net asset per share (MYR)
ROE (%)
Turnover growth (%)
Net proﬁt growth (%)
Net margin (%)
ROA (%)
Current ratio (x)
Gearing (%)
Interest cover (x)
OPCOM HOLDINGS BHD (-ve)
OPCOM HOLDINGS BHD
ACE market-listed Opcom (fundamental:
2.2/3; valuation: 1.8/3) added 11 sen or 17.9%
over the last three days to close at 72.5 sen last
Friday. The fibre optic cable manufacturer
stands to benefit from the roll-out of High
Speed Broadband Phase Two (HSBB2). The
project, awarded to TM two weeks ago, will
cost RM1.8 billion over a period of ten years.
For 9MFYMar15, net profit doubled to
RM2.6 million on the back of a 61.6% increase in revenue (to RM56.5 million) boost-
Financials
Turnover
EBITDA
Interest expense
Pre-tax proﬁt
Net proﬁt - owners of company
Fixed assets - PPE
Total assets
Shareholders' fund
Gross borrowings
Net debt/(cash)
OPCOM HOLDINGS BHD
ed by higher cables and accessories sales.
In FY2014, net profit had plunged 78.5% to
RM2.8 million, affected by intense competition from foreign suppliers.
Opcom has a debt-free balance sheet
with net cash of RM48.3 million, or 30 sen
per share. The stock trades at a trailing P/E
of 26.2 times and 1.46 times its book value.
Dividends totalled 4.8 sen per share (adjusted for 1-4 bonus) in FY2014, giving a
yield of 6.6%.
Valuation score*
1.80
2.20
Fundamental score**
26.15
TTM P/E (x)
1.07
TTM PEG (x)
P/NAV (x)
1.46
1.46
TTM Dividend yield (%)
110.46
Market capitalisation (mil)
161.25
Shares outstanding (ex-treasury) mil
0.40
Beta
0.51-0.84
12-month price range
*Valuation score - Composite measure of historical return & valuation
**Fundamental score - 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
(ALL FIGURES IN MYR MIL)
OPCOM HOLDINGS BHD
RATIOS
DPS (MYR)
Net asset per share (MYR)
ROE (%)
Turnover growth (%)
Net proﬁt growth (%)
Net margin (%)
ROA (%)
Current ratio (x)
Gearing (%)
Interest cover (x)
FY11
FY12
31/12/2011
31/12/2012
31/12/2013
FY13 ROLLING 12-MTH
0.08
1.44
18.83
(1.64)
4.20
2.41
18.81
2.10
207.75
0.06
1.04
16.58
2.03
(0.93)
2.34
16.58
2.26
4,544.56
0.06
1.14
13.71
3.93
(9.97)
2.03
13.71
2.38
1,087.24
0.06
1.24
14.19
19.97
9.46
1.85
14.19
2.17
9,805.25
FY11
FY12
FY14
FY2015Q2
31/12/2011
31/12/2012
30/6/2014
31/12/2014
36.19
2.03
1.18
0.39
0.15
6.23
50.00
45.85
4.88
0.64
2.87
(17.48)
0.24
(17.93)
(15.50)
5.97
34.17
30.35
4.20
2.84
5.17
(5.74)
0.33
(6.63)
(5.84)
5.58
33.91
30.50
3.66
0.30
1.18
(0.24)
0.05
(0.31)
(0.31)
5.52
33.15
29.87
3.53
1.27
FY11
FY12
31/12/2011
31/12/2012
30/6/2014
FY14 ROLLING 12-MTH
0.08
0.32
(25.57)
0.40
0.29
7.64
1.40
1.72
0.05
(40.67)
(92.08)
(540.61)
(36.82)
3.61
9.37
(74.32)
0.05
(19.20)
80.40
(112.94)
(17.16)
7.21
0.98
(17.27)
0.05
(10.77)
4.14
(83.69)
(9.64)
5.64
4.27
(16.70)
FY12
FY13
FY14
FY2015Q3
31/3/2012
31/3/2013
31/3/2014
31/12/2014
127.84
37.17
35.67
19.91
38.52
102.96
80.69
(50.35)
106.25
23.56
22.10
12.96
37.18
98.27
77.52
(60.87)
50.40
4.43
3.37
2.79
38.33
90.97
72.57
(48.53)
19.52
1.82
1.49
1.20
36.41
93.00
75.74
(48.32)
FY12
FY13
31/3/2012
31/3/2013
31/3/2014
FY14 ROLLING 12-MTH
0.25
0.63
23.72
(6.39)
(1.70)
15.57
18.55
2.29
-
0.13
0.60
16.38
(16.88)
(34.92)
12.19
12.88
2.45
-
0.06
0.56
3.72
(52.56)
(78.46)
5.54
2.95
2.66
-
0.01
0.47
5.72
31.40
24.53
5.88
4.57
2.08
-
8 I N V E ST I N G I D E A S
M ON DAY M ARC H 9, 2 0 1 5 • 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.
I N S I D E R A S I A’S S TO C K O F T H E D AY
YTL E-SOLUTIONS BHD
(ALL FIGURES IN MYR MIL)
YTL E-SOLUTIONS BHD
YTL E-solutions (Fundamental: 1.95/3, Valuation: 2.1/3) will appeal to investors looking for steady dividend income stream with
a low tolerance for risks.
The company owns 60% of the rights to
30MHz of the 2.3GHz WiMAX spectrum,
which it leases to YTL Communications,
operator of the “Yes” mobile and Internet
services. The company also creates content
and delivers advertising on digital narrowcast media networks — including the digital
“cube” fronting Lot 10 shopping center in
the Bintang Walk area and on the Express
Rail Link trains to KLIA.
For FYJune2014, the Communications
Technology segment, which owns the WiMax
spectrum, contributed RM75.1 million or
86.5% of YTLE’s total revenue and the bulk
of earnings. The remaining 5.9% and 7.6% of
YTL E-SOLUTIONS BHD
sales were from the Content & Digital Media
and Information Technology & E-commerce,
respectively.
The spectrum sharing business is expected
to remain the main earnings contributor for
the foreseeable future. Under the agreement
with YTL Communications, the company
will receive a minimum RM75 million annually or 15% of the WiMAX services revenue,
whichever is higher.
Thanks to the spectrum sharing agreement, YTLE’s turnover has been steady, ranging from RM74 - 88 million between FY11
and FY14 while net profit hovered around
RM30-36 million over the same period. Net
margin was roughly 41%, on average.
Dividends were raised to 4 sen per share
in FY14, up from 2 sen in FY11-FY13. We believe this new level is sustainable, at least,
supported by steady cashflow and strong
balance sheet. This translates into a higher-than-market average net yield of 7.48%.
YTLE has built up quite a cash pile, from
RM185.9 million in FY11 to RM192.3 million
in 2QFY15. This is equivalent to 14 sen per
share, or 26.2% of its market capitalization
of RM719.8 million.
The company is 74.1% owned by YTL Corp,
which also controls YTL Communications.
Insider Asia will feature a new stock pick on every alternate day.
T O N G ’S
MOMENTUM
P O RT F O L I O
REGIONAL markets mostly traded higher on Friday, tracking positive leads from
Wall Street. The Dow Jones Industrial Average gained 0.21% to close at 18,135.72
while the S&P 500 climbed 0.12% to close
at 2,101.04.
While losses in China, Hong Kong and Vietnam markets ranged from 0.12% to 0.49%,
bellwether indices in Japan, New Zealand
and Korea gained between 0.73% to as much
as 1.17%. Notably, the Laos Securities Exchange Composite Index surged 4.39% to
close at 1,483.83, emerging as the region’s
top gainer.
Closer to home, the benchmark FBM
KLCI registered marginal gains to close at
1,806.96 on Friday. Market breadth was also
positive with gainers outpacing decliners by
about 1.3 to 1.
Crude oil prices climbed marginally, with
Brent crude trading at $61 per barrel and
WTI crude at $51 per barrel at the time of
writing. Meanwhile, the ringgit strengthened
against the greenback at RM3.65.
I did not make any changes to my portfolio on Friday.
I continue to hold SCGM (unchanged)
and Inari (+0.3%).
My portfolio now has a total value of
RM99,935.60, down marginally from the
initial investment of RM100,000. Despite
this, it is still outperforming the FBM KLCI
by 4.5%.
Income Statement
Turnover
EBITDA
Depreciation
EBIT
Associates
Interest income
Interest expense
Extraordinary gain/(loss)
Pre-tax proﬁt
Net proﬁt - 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
YTL E-SOLUTIONS BHD
RATIOS
DPS (MYR)
Net asset per share (MYR)
ROE (%)
Turnover growth (%)
Net proﬁt growth (%)
Net margin (%)
ROA (%)
Current ratio (x)
Gearing (%)
Interest cover (x)
QUANTITY
BOUGHT PRICE
RM
4,000
3,100
2.470
3.250
FY12
FY13
FY14
FY2015Q2
30/6/2012
30/6/2013
30/6/2014
31/12/2014
86.05
70.98
0.42
70.56
5.76
0.70
77.02
34.49
87.88
61.40
0.44
60.96
0.09
5.88
0.01
66.93
30.97
86.83
68.64
0.64
68.00
0.61
5.64
0.01
74.23
34.51
22.86
18.52
0.15
18.37
0.14
1.65
20.15
9.79
1.58
2.59
214.16
230.60
7.19
227.76
202.55
-
2.80
2.60
206.95
224.96
0.12
19.25
218.45
206.26
0.19
2.29
2.55
211.52
228.92
0.13
12.64
229.21
215.53
0.06
2.03
2.53
192.38
208.96
0.11
16.99
204.92
180.56
0.02
FY12
FY13
30/6/2012
30/6/2013
30/6/2014
0.02
0.15
17.97
15.90
(3.41)
40.08
16.17
32.05
-
0.02
0.15
15.15
2.13
(10.21)
35.24
13.88
11.69
7,675.13
0.04
0.16
16.36
(1.19)
11.44
39.74
15.42
18.12
5,719.58
BOUGHT VALUE CURRENT PRICE
RM
RM
FY14 ROLLING 12-MTH
0.04
0.13
17.26
(0.03)
19.93
40.63
16.24
12.30
6,965.20
CURRENT VALUE
RM
GAIN / LOSS
RM
% GAIN / LOSS
9,880
10,106
31
0.3%
Shares held:
SCGM Berhad
Inari Amertron Berhad
Total
9,880
10,075
2.470
3.260
--------------19,955.0
--------------- --------------19,986.0
31.0
---------------
--------------- ---------------
Shares bought:
No shares were bought today.
Total shares held
Shares sold:
No shares were sold today.
Total brokerage, fees and duties paid
Net cash balance
1,443.0
79,949.6
Realised profits / (losses)
1,347.5
Total Portfolio Returns
Annualised returns for portfolio
100,000.00
99,935.6
(64.4)
Portfolio Beta
Risk adjusted returns for portfolio
(0.1%)
(0.1%)
1.218
(0.1%)
Performance Comparison
FBM KLCI
FBM KLCI Emas
At portfolio start
1,892.65
13,163.69
Current
1,806.96
12,440.96
Change
(4.5%)
(5.5%)
Relative portfolio outperformance
4.5%
5.4%
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.
B R O K E R S’ C A L L 9
M ON DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
Eversendai’s improved 4Q due
to higher construction billings
Eversendai Corp Bhd
(March 6, RM0.70)
Upgrade to buy call with an unchanged target price (TP) of 78
sen: Pursuant to the recent share
price weakness, we upgrade
Eversendai Corp to a “buy” recommendation with an unchanged
TP of 78 sen.
We peg our financial year ending Dec 31, 2015 (FY15) earnings
per share of 6.3 sen to one standard
deviation above of its latest threeyear quarterly price-earnings ratio
mean of 11 times. We applied a
slight premium valuation due to
its strong inflow of new contracts.
We attended Eversendai’s analyst briefing last Thursday. The
management has reaffirmed that
the improvement in the group’s
fourth quarter FY14 (4QFY14) numbers was due to higher local construction project billings.
Adding to this, progress works on
two units of liftboats have started
to contribute to the group’s bottom
line. We understand that the liftboats are likely to start floating and
to complete its final components
in December 2015 before it hands
over to its client, Vahana Offshore
(S) Pte Ltd.
The management indicated that
the group is in a strong position to
secure more new contracts valued
at more than RM1 billion this year.
Inclusive of the year-to-date
contracts, the value of new contract
wins was above its historical high
of RM1.67 billion secured in 2010.
As we noted, these projects will
be coming mostly from the Middle
East in preparation for the Dubai
Expo 2020, Qatar World Cup 2022
and world-class stadium developments in Saudi Arabia.
Apart from the aforesaid projects, we opine that political change
in India has encouraged more
projects in the country as the new
government is now more business
minded. On top of foreign jobs,
the group is in ongoing talks with
Eversendai Corp Bhd
FYE DEC (RM MIL)
Revenue
Ebit
Pre-tax profit
Normalised patami
EPS (sen)
EPS growth (%)
PER (x)
Net dividend (sen)
Net dividend yield (%)
2012
2013
2014
2015F
2016F
1,021.3
154.8
137.0
114.1
14.9
(3.2)
8.9
4.0
3.0
965.1
87.0
39.5
53.7
6.9
(53.7)
26.0
1.0
1.0
1,002.8
66.1
45.8
33.4
4.3
(37.7)
14.9
1.3
1.6
1,052.0
80.9
54.7
48.4
6.3
46.5
10.6
2.0
2.9
1,056.0
86.5
62.5
51.8
6.7
6.3
10.3
2.0
2.9
Source: Company, forecasts by MIDFR
the six main bidders for the KL118
Tower project.
The management is confident
that it will secure structural steel
works of this project in the second
half of this year worth approximately between RM250 million
and RM300 million.
We believe Eversendai enjoys
higher chances to secure this project as the group is the only local
Deleum’s RM3.8b order book
gives long-term earnings visibility
THE EDGE FILE PHOTO
Deleum Bhd
(March 6, RM1.65)
Maintain hold call with a lower
target price (TP) of M1.60: Our
TP is adjusted to RM1.60 (10 times
price-earnings ratio, financial year
ending Dec 31, 2015, FY15) from
RM1.65 previously, after we factored in higher interest expenses.
Our “hold” call is supported by a
healthy dividend yield of 5% going
forward. The RM3.8 billion order
book provides long-term earnings
visibility as the group’s lengthiest
contract extends to 2023.
Key contracts that will support
earnings going forward are umbrella Deleum Bhd
contracts for the supply and mainte2014A
nance of gas turbines (RM2 billion to FYE DEC (RM MIL)
RM2.5 billion estimated outstanding Revenue
657
value), provision of slickline equip- Ebitda
123
ment and services (RM750 million Pre-tax profit
92
estimated outstanding value), and
Net profit
59
smaller contracts for corrosion con59
Net proft (pre ex)
trol and chemical supplies.
14.8
But Petroliam Nasional Bhd (Pe- EPS (sen)
tronas) cutting operating expendi- EPS pre ex (sen)
14.8
ture will dampen growth. We expect EPS growth (%)
20
Petronas’ move this year to impact EPS growth pre ex (%)
20
Deleum’s contracts which are large- Diluted EPS (sen)
14.8
ly on an on-call basis.
7.2
This is especially so for the gas Net DPS (sen)
68.7
turbine contracts; there will be a BV per share (sen)
10.9
lower demand for new gas turbine PER (x)
packages.
10.9
PER pre ex (x)
Carrying the group through FY15 P/CF (x)
24.1
will be the slickline contract, of EV/Ebitda (x)
6.2
which 80% of the 55 units rolled out Net div yield (%)
4.4
are on a take-or-pay basis. For FY15,
2.4
we expect modest growth of 6% P/BV (x)
0.3
before offshore activities normal- Net Debt/Equity (x)
23.0
ise in FY16,driving growth of 11%. ROAE (%)
— AllianceDBS Research, March 6 Source: Company, AllianceDBS, Bloomberg Finance LP
company that has the capability to
build complex tall structural steel
buildings.
We also expect the group to secure subcontract works within the
refinery and petrochemical integrated development project.
All in, we expect the group to
secure more than RM1.67 billion
worth of projects this year. In the
past two months alone, it has al-
ready managed to win a number
of projects. In addition, we understand that there would be quite a
sizeable number of projects to be
announced in the coming weeks.
Meanwhile, the group is expected to spend RM60 million on capital expenditure this year in order to
expand its existing factory and also
for the completion works of the oil
and gas fabrication facility in RAK
Maritime City, Ras Al Khaimah, the
United Arab Emirates.
As the group will undertake
more projects going forward, we
view the expansion as a good move
to create more capacity.
Should the group secure RM1.7
billion worth of projects this year, it
will surpass our new jobs assumption
of RM1.2 billion and thus will translate into substantially higher profit.
However, we leave our FY15 and
FY16 forecasts unchanged at this
juncture, as we are taking a conservative approach on its earnings
outlook. — MIDF Research, March 6
Alam Maritim Resources Bhd
FYE DEC (RM MIL)
Revenue
Core net profit
FD core EPS (sen)
FD core EPS growth (%)
Consensus net profit
PER (x)
EV/Ebitda (x)
ROE (%)
Net gearing (%)
2014
2015F
2016F
2017F
396.7
60.6
6.6
(29.4)
10.8
8.1
8.4
9.0
417.4
65.1
7.0
7.6
85.9
10.0
6.6
7.6
n.m
425.5
68.2
7.4
4.6
107.4
9.6
6.0
7.3
n.m
434.1
71.2
7.7
4.5
127.5
9.2
5.4
7.1
n.m
Source: AmResearch
Alam Maritim secures Petronas
Carigali’s umbrella contract
2015F
2016F
2017F
682
139
101
63
63
15.8
15.8
6
6
15.8
7.9
88.1
10.3
10.3
6.1
5.1
4.9
1.8
0.1
20.1
726
154
111
70
70
17.6
17.6
11
11
17.6
8.8
96.9
9.2
9.2
7.3
4.6
5.4
1.7
0.0
19.0
766
165
117
74
74
18.5
18.5
6
6
18.5
9.3
106.2
8.7
8.7
6.6
4.3
5.7
1.5
Cash
18.2
Alam Maritim Resources Bhd
(March 6, RM0.715)
Maintain hold rating with an unchanged fair value of 67 sen: We
maintain our “hold” rating on Alam
Maritim Resources with an unchanged
fair value of 67 sen per share, pegged
to an forecasted financial year ending
Dec 31, 2015 (FY15F) price-earnings
ratio of nine times. As expected, Alam
Maritim was awarded an umbrella contract for the provision of spot
charter for marine vessels by Petronas
Carigali Sdn Bhd for its operations in
Malaysia. However, our earnings are
unchanged for now as the contract
value is not fixed and will depend on
the actual number of days the vessels
are on hire based on a call-out basis by
Petronas Carigali.The umbrella contract is for a two-year period starting
from January 2015, with an option for
a one-year extension.
Alam Maritim was awarded seven
of the eight packages which allow the
company to provide marine vessels
for the anchor handling tug supply
(60 million tonnes, 120 million tonnes
and 150 million tonnes), straight sup-
ply vessel, fast crew boat, workboat,
work barge, general purpose/utility
vessel and platform supply vessel.
Going forward, we have assumed
a marginally higher offshore support
vessel (OSV) utilisation rate of 73% in
FY15 versus 71% in FY14, as a lower
number of vessels will be dry-docked
compared with 10 vessels in FY14.
However, we see weaker charter rates
ahead given that Petroliam Nasional
Bhd has begun negotiating for lower
rates amid its focus on optimising its
cost structure which includes cutting
capital expenditure by 10% to 15% in
the next two years and reducing operating expenditure by 30%.
We expect a pickup in earnings
momentum in the offshore installation construction division in second
half of FY15. Alam Maritim is close to
securing a diving support vessel, as
the group has just managed to secure
financing recently. The group’s order
book stands at about RM1.1 billion
(excluding the umbrella contract), of
which about 50% is from OSVs, while
its tender book stands at RM2 billion.
— AmResearch, March 6
10 B R O K E R S’ C A L L
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
Another record year ahead
for IFCA MSC
GST to have a
mixed effect on
PPB’s key divisions
PPB Group Bhd
(March 6, RM14.54)
Maintain market perform with
unchanged target price (TP) of
RM15.42: Our forward price-earnings ratio (PER) of 19.5 times is based
on three-year historical mean valuation. We make no change to our
estimated financial year 2015 ending
December (FY15E) to FY16E core net
profit at RM937 million and RM988
million respectively. We think upside
is limited due to flattish core net profit
growth prospects (+2% in FY15E).
Downside risk to our call is lower-than-expected earnings from Wilmar International Ltd or PPB Group
Bhd’s core business divisions.
We attended PPB’s analysts briefing and came away feeling neutral
on its prospects with no surprises.
During the briefing, management
opined that the goods and services
tax (GST), to be implemented on
April 1, will have a mixed effect on
the company’s key divisions.
The environmental engineering,
waste management and utilities (engineering) division (1% of FY14 profit
before tax, [PBT]); and flour and feed
milling and grains trading (FFM) division (17% of PBT) are likely to see
minimal impact as the costs should
be passed on to customers.
The film exhibition and distribution business (6% of PBT) expects a
temporary drop in admissions immediately after implementation, but
due to a strong film line-up, it expects
sales to normalise later in the second
half (2H) of FY15.
The film division mentioned it is
working with the government to reduce the 20% entertainment tax on
movie tickets to partly offset the hike
in ticket prices.
PPB Group Bhd
FYE DEC (RM MIL)
2014A
2015E
2016E
Turnover
3,701 3,742 3,933
Ebit
325
336
341
PBT
1,028 1,016 1,068
917
937 988
Net profit (NP)
Core NP*
922
937 988
na
942 1013
Consensus (NP)
Earnings
revision
na
na
na
77.7 79.1 83.4
Core EPS (sen)
Core EPS
9.4
9.3
5.4
growth (%)
23.0 22.9 24.2
NDPS (sen)
14.19 14.28 14.87
BVPS (RM)
Core PER
18.8 18.4
17.5
1.03 1.02 0.98
Price/NTA (x)
Net gearing (x) cash cash 0.01
Net dividend
1.6
1.6
1.7
yield (%)
Source: Kenanga research
The property division (4% of PBT)
thinks the property sector downturn
is likely to continue but due to fewer
launches, hence lower supply, property prices could rise post-GST.
Overall, we agree with management’s view that consumer sentiment is likely to weaken in the second quarter (2Q) of FY15 but things
should improve in 2HFY15 as the
strong job market and low crude oil
prices should be positive for consumer spending.
However, note that these segments
contributed only 31% of FY14 PBT,
with the balance coming from PPB’s
18.3% stake in Wilmar.
Recall that the FFM division acquired 2.3ha of land in Pasir Gudang,
Johor, next to its existing plant to ex-
IFCA MSC Bhd
(March 6, RM1.30)
Maintain add rating with an unchanged target price of RM1.48: At
the results briefing for the fourth quarter of financial year 2014 ended December (4QFY14), the company said
it remains bullish about its prospects
for FY15. We maintain our earnings
per share forecast and target price,
based on an unchanged 21 times 2016
price-earnings ratio, in line with domestic peers. The stock remains an
“add”. Potential catalysts include transfer from the ACE Market to the Main
Market this year and strong take-up
rates for software as a service (SaaS).
There were two positive surprises
from the 4QFY14 briefing. First, IFCA
is looking to launch its SaaS business
in the next one to two months, starting with the domestic market. Under
SaaS, smaller property companies can
“rent”, instead of buy, IFCA’s software.
These companies will pay a monthly
subscription fee to IFCA, which will
contribute to the company’s recurring
income. We believe it will take some
time for customers to become familiar
with SaaS but it should be a long-term
positive towards building its recurring
income. We do not assume any potential earnings from SaaS.
Second, the company is offering customers an “insurance” pro-
pand its feed milling activity.
Management also updated that
plant construction is on track for completion in 2017.
Also, PPB’s recently completed
Vietnam flour mill has started operation, which should increase milling
capacity by 500 tonnes per day to a
total of 19,750 tonnes per day. Note
that the FFM division contributed
8% of FY14 PBT.
We are neutral on the new plant
capacity as we believe the FFM division’s earnings are very much
dependent on the pricing of wheat
(as input cost). Hence, the revenue
growth expected from higher capacity may not translate directly into the
bottom line.
Furthermore, we gather from
management that production may
take some time to be ramped up and
profitability would be satisfactory only
after four to five years of operation.
IFCA MSC Bhd
We gather that the film division
is targeting 11 new cinemas by 2017
for a total of 42 locations (from 31 FYE DEC (RM MIL)
Revenue
currently).
Year-to-date, the company has Net profit
opened three new cinemas (Nu Core EPS (RM)
Sentral, IOI Putrajaya and Ipoh Core EPS growth (%)
Parade) and the company plans to FD core PER (x)
open another three at locations in Price to sales (x)
Alor Setar, Bintulu and Klang PaDPS (RM)
rade this year.
Dividend
yield (%)
We think the targeted 11 new cin(x)
EV/Ebitda
emas by 2017 should be fully achievable as six locations (or 55%) of the P/FCFE (x)
targeted 11 locations should be com- Net gearing (%)
pleted in 2015. We are positive on P/BV (x)
the film division’s prospects due to ROE (%)
the 35% growth by 2017. However,
in the near term, weaker consumer % Change in core
sentiment due to the GST could limit EPS estimates
demand in 2QFY15. — Kenanga Re- CIMB/consensus EPS (x)
search, March 6
Source: CIMB, company reports
gramme. For a small monthly fee,
IFCA will update the software for any
changes in goods and services tax
(GST) regulations. The company believes it can collect in total around
RM20 million in revenue from the
“insurance” premium this year.
We already assume in total RM35
million revenue from GST-related
work for 2015 but this could surprise
on the upside. IFCA looks like it’s heading for another record year in FY15,
with growth coming from the China
market and GST software upgrade
jobs. We are particularly excited about
SaaS. In the next few years, SaaS could
boost recurring income so the company will be less dependent on revenue
from just selling software.
Interestingly, the impending implementation of GST on April 1 is
forcing smaller companies to computerise and this should be positive
for IFCA’s SaaS. However, while SaaS
is popular in the United States, we
believe it might take some time for
domestic and regional customers to
get used to it.
Remain invested in the stock.
It is gaining interest among institutional investors, as retail and institutional shareholders better understand IFCA’s long-term potential
and growth prospects. — CIMB Research, March 6
2013A
2014A
2015F
2016F
2017F
52.0
1.70
0.01
(45)
179.5
10.33
0.00
112.0
327.7
(70.7)
11.35
7.4
89.2
21.10
0.05
528
31.7
6.04
0.010
0.84
18.1
44.3
(69.0)
7.56
36.8
132.0
35.90
0.08
68
19.0
4.08
0.013
1.09
11.2
20.7
(75.9)
5.39
43.0
151.2
42.10
0.09
17
16.3
3.57
0.019
1.60
9.0
18.6
(79.6)
4.03
36.8
178.0
52.00
0.12
23
13.3
3.03
0.023
1.93
6.7
15.1
(81.6)
3.08
34.2
-
-
0
1.07
0
1.03
0
0.96
Output capacity to be absorbed by resilient global demand
Rubber gloves sector
(March 6)
Maintain overweight with Kossan
Rubber Industries Bhd as top pick:
Our positive view on the sector is supported by: (i) resilient glove demand;
(ii) stable and lower raw material
prices; (iii) the strengthening of the
US dollar against the ringgit; and (iv)
capacity expansion.
Furthermore, a pandemic, especially in developed countries, would
be a catalyst for demand for gloves.
With a 10% capital appreciation
upside for the sector, we maintain
our “overweight” call. Our top sector pick is still Kossan (“buy”, target
price: RM6.38), for its higher earnings
growth potential and 20% capital appreciation upside.
In 2014, most rubber glove companies (excluding Kossan) reported
Glove sector
STOCK
Kossan
Top Glove
Supermax
Hartalega
Simple average
RATING
SH PR
(RM)
TP
(RM)
SHARES
OUT
MKT CAP
(RM MIL)
YEAR
END
CORE PER (X)
CY15
CY16
EPS GROWTH (%)
CY15
CY16
Buy
Hold
Hold
Buy
5.32
4.99
2.08
8.00
6.38
5.30
2.11
8.66
639.5
617.4
677.1
799.0
3,402
3,081
1,408
6,392
Dec
Aug
Dec
Mar
17.7
15.6
12.2
23.8
17.3
36.0
6.4
14.0
19.7
19.0
15.8
15.0
10.7
17.8
14.8
11.8
4.0
14.0
33.6
15.8
EV/EBITDA
(X)
P/BV
(X)
ROE (%)
FY15
FY16
8.1
7.6
6.5
14.1
9.1
3.6
1.9
1.2
5.3
3.0
21.8
13.5
12.2
20.9
17.1
21.4
13.3
12.8
23.4
17.7
NET DIV YIELD (%)
FY15
FY16
1.9
3.0
2.9
1.6
2.3
2.1
3.2
2.9
1.9
2.5
Note: Pricing as of close on 5th March 2015
Source: AffinHwang
weaker earnings, which can be attributed to cost increases as well as
competitive pressure.
After underperforming in 2014,
we expect most glove players to produce earnings growth, driven by a
favourable operating environment
and capacity expansion.
With more capacity coming onstream, strong earnings growth is
expected to be driven by capitalising
on strong demand.
We are confident that additional
glove production capacity will be well
absorbed by the resilient global demand and outsourcing opportunities.
Kossan is expected to lead the
market with the strongest earnings
growth with two-year earnings compound annual growth rate of 24%
against overall sector growth of 16%.
In view of the resilient demand for
rubber gloves, glove manufacturers
have been aggressively expanding
production capacity, which will grow
by 10.8 billion pieces in 2015.
While there are concerns of a
potential supply glut in Malaysia,
the closure of a 3.2-billion-piece
plant in Thailand has a very high
chance of transferring demand to
Malaysian manufacturers given
that customers source gloves from
both countries.
Key risks to our view include: (i) a
sudden spike in raw material prices;
and (ii) stiffer-than-expected price
competition, which would lead to
margin erosion. — AffinHwang Research, March 6
H O M E 11
M O N DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
A year on, MH370 still a mystery
Need for Parliamentary Select Committee to be set up to look into incident
BY EL I ZA B ETH ZACHARIAH
KUALA LUMPUR: One year since
Malaysia Airlines flight MH370 vanished, the plane’s whereabouts has
remained a mystery, as does the nagging question — why can’t anyone be
held responsible?
Scrutiny of the timeline of events
after the Boeing-777 disappeared from
radar on March 8, 2014 revealed gaps
in communication and a lapse of judgment, in particular by the military,
which saw the plane on primary surveillance radar, but did nothing to investigate why it had flown off course.
Malaysian military officials revealed on March 12 that an unidentified aircraft, believed to be MH370,
had travelled across the peninsula
after doing an air turn-back, and was
last sighted on military radar 370km
northwest of Penang.
Following this, the search area
was then expanded from the Gulf of
Thailand and the South China Sea to
include the Strait of Malacca.
It was reported then that senior
military officers only became aware
of the radar data after news of the
aircraft’s disappearance had spread.
“Clearly, they had let an unidentified aircraft pass through Malaysian
sovereign territory without bothering
to identify it; not something they were
happy to admit,” aviation consultant
David Learmount said.
“There was clearly a significant
failure of response on behalf of the
Malaysian air force. There’s no real
way around it and you might imagine heads would roll for that,”
Bangkok-based analyst for defence-and-security-intelligence
firm IHS-Jane, Anthony Davis, was
quoted as saying in a report by Time.
Veteran DAP leader Lim Kit
Siang also called for “heads to
roll”, demanding that an inquiry
be launched to seek accountability
for the plane’s disappearance and
subsequent response.
Renewing his calls for accountability, the Gelang Patah MP said no one
had been brought to book for the grave
error that could have saved millions
of ringgit and given the families of the
239 on board the closure they need.
“This only highlights the need to hold
an inquiry through the setting up of
a Parliamentary Select Committee
to look into the incident,” he added.
Lim said then that one of the areas that should be investigated was
whether the disappearance of the jet
could have been averted if military radar operators had been more vigilant
and had acted promptly.
DAP’s Bukit Mertajam MP Steven
Sim also attempted to learn more
about the military radar which detected MH370 in Parliament but
his queries were rejected as such
information was deemed “secret”.
He also asked if there was any
follow-up action on the lack of
emergency response in the early
hours when the aircraft went missing but was shot down.
Speaking to The Malaysian In-
sider recently ahead of the first
anniversary of MH370’s disappearance yesterday, Sim expressed his
disappointment in Putrajaya for
its lack of concern over the errors
that had contributed to the plane’s
whereabouts still being a mystery.
“Before Parliament convenes next
week, I urge the prime minister to
do several things to show his commitment towards truth, justice and
closure for MH370.
“He has to answer if there was any
audit conducted on the tragedy, especially with regard to the government
standard operating procedure, given the reported negligence such as
the lack of response after the loss of
communication with MH370 and the
lack of response after military radar
detected a so-called unidentified flying object moments after MH370 went
off communication,” Sim said.
He said he had called for a
post-mortem report to be tabled in
Parliament but this was never done.
In the absence of any admission of
wrongdoing or negligence by the Malaysian authorities, the International
Civil Aviation Organisation (ICAO)
has noted the failure of Malaysia’s
military to communicate information
about MH370 as it went off course.
In a paper presented in January at
the Third Meeting of the Asia/Pacific
Regional Search and Rescue Task Force
in the Maldives, ICAO said the delay
had resulted in the loss of valuable
time in the initial search for the plane.
It was some 20 hours before civil
aviation authorities were informed
and a week before the information
that military radar had detected
MH370 flying north of Pulau Perak
in the Strait of Malacca was released,
the paper noted.
“Primary surveillance radar (PSR)
information from Malaysian military
and the two PSRs in Thailand at Hat
Yai (near the Thai-Malaysian border)
and Phuket (Bang Duk Hill) that could
have observed the west-bound track
of MH370 were not provided to civilian authorities during the immediate
period following the disappearance,”
the paper titled “ICAO brief on the
SAR response to MH370” said.
Though the ICAO paper did not
mention the need to scramble jets, it
noted the lack of cooperation between
military and civil aviation authorities.— The Malaysian Insider
12 H O M E
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
‘Probe into MH370 not to
apportion blame or liability’
Sole objective to prevent future accidents or incidents, says investigation team
PUTRAJAYA: The investigation into
the disappearance of Malaysia Airlines (MAS) flight MH370 is to prevent future aviation accidents, and
not to apportion blame or liability
to any party, the Malaysian International Civil Aviation Organization Annex 13 Safety Investigation
Team said yesterday, a year after
the Boeing 777 aircraft vanished.
The team said it is currently focused on analysing the information
it has gathered since its formation
last year, but added that it was “interim in nature” and new details
may become available that would
alter the information before the
final report was published.
“The sole objective of the investigation of an accident or incident shall
be the prevention of future accidents
or incidents,” said Datuk Kok Soo
Chon, the head of the investigation
team, who read out the statement
that was aired on RTM’s TV1.
“It is not the purpose of this activity to apportion blame or liability, as stated in paragraph 3.1 of
Annex 13,” he said, referring to the
Convention on International Civil
Aviation on aircraft accident and
incident investigations.
Kok said the team had gathered
information from air traffic control
recordings and aircraft maintenance
records, carried out simulator sessions to reconstruct the plane’s flight
operator and system operation, and
interviewed more than 120 people.
It had also visited cargo operators, freight-forwarders and consignees of lithium batteries and
mangosteens, as well as air traffic
centres in Malaysia, Indonesia, Vietnam and Thailand, and the Civil
Aviation Authority of Singapore.
He said the analysis of the facts
would consider eight areas: airworthiness, maintenance and aircraft
systems; air traffic control operations from 1.19am to 6.32am on
March 8, 2014; cargo consignment;
crew profile; diversion from filed
flight plan route; organisational
and management information of
the Department of Civil Aviation
and MAS; and satellite communications.
The investigation team has also
prepared standard operating procedures and checklists for the investigation to prepare for the plane’s
recovery once it is located.
“In the months ahead, the investigation team will need to analyse to draw conclusions and give
safety recommendations based
on the information that have been
gathered,” said Kok.
“In addition to the analysis and
the conclusion phase of the investigation, steps taken will also include
further validation of the [facts] on
emergence of new evidence.” — The
Malaysian Insider
MAS pays tribute to 13-member crew
PHOTO COURTESY OF MAS, MARCH 8, 2015
BY MUZL I ZA MU S TAFA
PETALING JAYA: Malaysia Airlines
(MAS) yesterday held a ceremony
(pic) in remembrance of the 13 crew
members who vanished along with
the passengers on board MH370 a
year ago.
Some 500 MAS employees and
about 100 family members of the
crew attended the gathering held
at the MAS Academy in Kelana
Jaya.
MAS senior officials, includAmong the families who attending group chief executive officer ed the event were those of MH370
Ahmad Jauhari Yahya and chair- pilot Captain Zaharie Ahmad Shah
man Tan Sri Md Nor Yusof, were and stewardess Christine Tan.
also present.
“Today we acknowledge the real-
ity of our shared loss and remember
13 dear friends and colleagues who
left us when MH370 disappeared
one year ago,” said Md Nor.
Ahmad Jauhari, meanwhile,
paid tribute to MAS employees
for their dedication and support
to the airline and the families of
the passengers.
“While MH370 was tragic for all
of us, it also brought out the best in
Malaysia Airlines,” he said.
“Watching how the whole organisation came together, united,
supported each other as a family
in crisis, really amazed me. I am
deeply honoured and touched by
the spirit of volunteerism by everyone who came forward to offer help
in any way they could.”
Search operations, led by Australia, are expected to be completed
by May. — The Malaysian Insider
Chinese MH370 relatives mark anniversary under police gaze
BEIJING: Chinese relatives of passengers on board the missing Malaysia
Airlines flight MH370 gathered under
a heavy police presence yesterday to
mark one year since the plane disappeared. About two thirds of those on
board flight MH370 were Chinese, but
relatives say they have faced harassment from authorities in their own
country as they seek answers on the
world’s biggest aviation mystery.
China’s ruling Communist Party
commonly clamps down on organised
gatherings or collective expressions of
anger as it seeks to enforce stability.
Chinese relatives had planned to
commemorate the disappearance of
the Boeing 777 at a number of sites
in Beijing, including the Malaysian
embassy, the airport and the Yonghegong Lama Temple, a popular
Tibetan Buddhist place of worship
and tourist site.
Dozens of uniformed security
sealed the street around the diplomatic mission, an AFP reporter saw,
while relatives said they had opted to
avoid the airport as police were out in
force. About 30 visited the Lama Temple, with around 10 entering the site
in groups of two or three to pay their
personal respects, as if attempting to
keep a low profile.
The remainder waited outside the
temple in a group, wearing T-shirts
saying “Pray for MH370”, and waving
placards reading “Keep searching for
MH370” to photographers. But most
media had been moved on from the
area by police, with one officer telling
AFP that it was a regulation enforced
by the temple.
“The ones wearing the clothes with
the words ‘Pray for MH370’ would find
it hard to get in (to the temple),” relatives’ leader Steven Wang told AFP.
“We were originally planning to
go to the embassy or the airport, but
I heard there are tonnes of police officers in the two places, especially the
embassy. The police have enforced
martial law in the area surrounding
it,” added Wang, whose mother was
on the plane.
Chinese foreign minister Wang Yi
told a press conference on the sidelines of the National People’s Congress, China’s Communist-controlled
parliament, that the search effort for
MH370 would continue.
“Today (yesterday) will be a tough
day for the next of kin of passengers
on board the flight, our hearts are
with you,” he said, telling the relatives Beijing would “help safeguard
your legitimate and lawful requests
and interests”.
After waiting for about 90 minutes outside the temple, the relatives walked away to a nearby restaurant, under the close watch of
the police. — AFP
Catherine Gang, whose husband Li
Zhi was on board the missing ﬂight
MH370, holding a banner as she walks
outside Yonghegong Lama Temple after
a gathering of family members of the
missing passengers in Beijing yesterday.
Photo by Reuters, March 8, 2015
Report: ULB
expired before
disappearance
PUTRAJAYA: Malaysia Airlines
(MAS) flight MH370’s battery for its
underwater locator beacon (ULB)
had expired more than a year before
the aircraft vanished on March 8,
2014, the Malaysian team investigating the flight’s disappearance
revealed in its interim report.
The report, which was released
yesterday, said that the battery’s
expiry date was December 2012,
and no evidence suggested it had
been replaced before then.
“However, once beyond the expiry date, the ULB effectiveness
decreases so it may operate for a
reduced time period until it finally
discharges,” read the report prepared by the Malaysian International Civil Aviation Organization
Annex 13 Safety Investigation team.
“While there is a definite possibility that a ULB will operate past
the expiry date on the device, it is
not guaranteed that it will work or
that it would meet the 30-day minimum requirement. There is also
limited assurance that the nature
of the signal [characteristics such as
frequency and power] will remain
within specification when battery
voltage drops below the nominal
30-day level.”
The report also said the technical
logs showed that the aircraft’s solid
state flight data recorder (SSFDR)
and the ULB were last replaced on
Feb 29, 2008. According to the report, the MAS engineering technical
records staff told the investigation
team it had failed to replace the battery before its expiry date because
the engineering maintenance system had not been updated correctly
when the SSFDR was replaced in
2008. — The Malaysian Insider
‘M’sians united
in remembering
victims’
KUALA LUMPUR: In conjunction
with the first anniversary of the
disappearance of Malaysia Airlines flight MH370, Prime Minister Datuk Seri Najib Razak said
Malaysians have stood united in
remembering and honouring the
victims of the tragedy. Najib reiterated that Malaysia remained
committed to the ongoing search
for the missing aircraft and hoped
that MH370 will be found.
Admitting that the disappearance was unprecedented, Najib
also noted that the search operation was by far the most complex
and technically challenging in aviation history.
“Today, we stand united in remembering and honouring the
239 people, including 50 Malaysians who were onboard MH370.
Our prayers are with them and
their loved ones left behind —
whose sorrow we share,” he said
in a statement yesterday.
He also expressed his gratitude
to each personnel involved in the
search mission for MH370.
“To the men and women who
continue to work tirelessly to find
MH370’s final resting place: thank
you,” he said. — Bernama
H O M E 13
M ON DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
PSD to look into call to
extend retirement age
Cuepacs says civil servants should work till they’re 62
NIBONG TEBAL: The Public Service Department (PSD) will look
into the call made by the Congress of Unions of Employees in
the Public and Civil Service (Cuepacs) to extend the retirement
age for civil servants from 60 to
62 years old.
PSC director-general Tan Sri Mohamad Zabidi Zainal, however, said
the PSD cannot make any decision
on the matter alone as it involves
government policy.
“We have to look thoroughly into
it first. The decision is not ours to
make, it’s the government’s ... it’s
a government policy, so we have
to take it back to the government.
“So, right now, I think we don’t
have to comment further on this
matter,” he told reporters after
opening the Penang Regional Development Authority Advanced
Technical Institute’s (Perda-Tech)
Centre of Advanced Skills yesterday.
On Saturday, Cuepacs called
on the government to consider ex-
tending the retirement age for civil
servants from 60 to 62 years old
following the country’s economic
uncertainty towards becoming a
developed nation.
Cuepacs president Datuk Azih
Muda said most countries such
as Thailand, Singapore, Sri Lanka, European countries and the
United States had extended their
retirement age to 65, and Malaysia,
which is heading towards becoming a developed nation, should take
similar steps. — Bernama
Mohd Zabidi: The decision is not ours to
make, it’s the government’s.
IN BRIEF
Measures taken to avoid
water rationing, says
Selangor MB
SHAH ALAM: The Selangor
government is taking measures to ensure residents will
not have to endure water rationing like last year, said Menteri Besar Mohamed Azmin
Ali (pic). He
said tighter enforcement would
also be implemented
to address
water pollution issues,
especially in
the rivers to ensure adequate
water supply for consumers.
“The state government has
directed the Selangor Water
Management Board to
increase the presence of enforcement officers in the areas
at risk,” he told reporters after
launching the Malaysia Women’s Marathon. — Bernama
Pahang to deepen, clean up rivers
Nik Nazmi of PKR held
over ‘#KitaLawan’ rally
TEMERLOH: The Pahang government is in the process of deepening
and cleaning up 272km of rivers to
solve flood woes in the state.
Pahang Drainage and Irrigation
Department director Ir Shahruddin
Ibrahim said the project will be
implemented in two phases, with
the digging up of sand and pebbles
from the riverbeds to be done using technology from China by the
contractor appointed by the state
government.
“The first phase of the project,
which involves an allocation of
RM568 million, has been approved
by the state government in January
this year with the aim to reduce
flood risk in the state.
“The appointed contractor will
also carry out river rehabilitation
by deepening and improving the
water flow in five rivers, namely
Sungai Jelai, Sungai Lipis, Sungai
Pahang, Sungai Kenau and Sungai
Kuantan.”
He was speaking to reporters
after attending a briefing and dialogue with residents at the Kuala Krau Municipal Council Hall
yesterday.
Shahruddin said once the project is completed, the size of floodprone areas in the state will be reduced to 2,700ha from the current
8,000ha.
Haemodialysis to be
expanded to health clinics
KUALA LUMPUR: PKR Youth
chief Nik Nazmi Nik Ahmad
was arrested yesterday to facilitate investigations into the
“#KitaLawan” rally held in the
city centre on Saturday afternoon. Dang Wangi OCPD, ACP
Zainol Samah said Nik Nazmi was arrested after giving a
statement at Dang Wangi police station at 10am. “He was
detained under Section 143 of
the Penal Code for further investigations over the rally,” he
said. The rally was held to show
support for Datuk Seri Anwar
Ibrahim, who has been imprisoned for sodomy. — Bernama
An aerial view of Sungei Pahang.
“If the first phase of the project
runs smoothly, approval will be
sought to implement the second
phase spanning 279km involving
Sungai Pahang, Sungai Semantan,
Sungai Bentong and Sungai Tele-
mong,” Shahruddin said.
He said the state government
would be able to save money in the
second phase as all costs would be
borne by the contractor, who will
make reciprocal profit from the sale
of sand and pebbles from the rivers.
“The project will be implemented soon after it receives the Environmental Impact Assessment certificate, as well as approval from the
local residents,” he said. — Bernama
Fishermen praised for
handing in injured turtles
Tourist arrivals from China increasing
KUALA LUMPUR: The number of
tourist arrivals from China has recovered by an increase of 5.9% from
last October compared with the
same period in 2013 following the
disappearance of Malaysia Airlines
(MAS) flight MH370 in 2014.
Tourism Malaysia (Planning)
deputy director-general Chong Yoke
Har said 118,289 tourists from China
visited Malaysia last October compared with 111,730 in October 2013.
She said Tourism Malaysia is
confident the exemption of visa fees
for Chinese tourists which came
into force on Feb 15 will attract more
tourists from China this year.
“The government initiative to offer visa on arrival (VoA) to Chinese
tourists entering Malaysia from Singapore at Sultan Abu Bakar Complex, Tanjung Kupang, Johor, from
Nov 1 can also [help] attain the targeted entry of 29 million tourists
from China this year,” she told a
media conference after launching
the “Make It Malaysia 2015” programme jointly with 148 tourism
agencies and media from China
yesterday.
Chong said Chinese tourists visited the country for shopping and
relaxation in resorts besides enjoying the food.
“As the community in Malaysia
is unique because it comprises various races and religions, Chinese
tourists have the opportunity to
sample the traditional food of the
diverse races besides Chinese food
from the local Chinese community,” she said.
GEORGE TOWN: The Health
Ministry is in the process of
expanding haemodialysis
service to more health clinics
nationwide to enable underprivileged kidney patients to
get treatment. Health Minister
Datuk Seri Dr S Subramaniam
said eight health clinics in the
country have been providing
the service since 2013 and the
ministry hopes to see five more
clinics providing the service
soon. He was speaking to reporters after opening the World
Kidney Day 2015 celebration
yesterday. — Bernama
She said Chinese tourists also
enjoy beach resorts and frequently visit the islands including Pulau
Pangkor, Pulau Langkawi, Pulau
Perhentian and island resorts in
Sabah.
The six-day “Make It Malaysia
2015” programme, which began on
Saturday until March 13, comprises
interactive sessions with Tourism
Malaysia staff and visits to various interesting tourist destinations
in the federal capital and Genting
Highlands. — Bernama
DUNGUN: Fishermen handed
over two seriously injured turtles — a Chelonia mydas and
a Lepidochelys olivacea — to
the Turtle and Marine Ecosystem Centre in Rantau Abang.
Head Syed Abdullah Syed
Abdul Kadir said: “It is rare
indeed that fishermen hand
over injured turtles ... Normally
they just kill the animal outright.” The turtles’ front flippers
were injured when they were
trapped in nets at the end of
last year. Both are now “stable”
and will be released when they
are ready, he said. — Bernama
14 H O M E B U S I N E S S
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
WEEK
IN FOCUS
1
Ministry of Finance secretary-general of treasury
Tan Sri Dr Mohd Irwan
Serigar Abdullah (second
left) and its national strategy unit director Datuk Dr
Sundaran Annamali (right)
at the launch of 1 Asean Entrepreneurs Summit 2015
in Putrajaya on March 2.
— Photo by Shahrin Yahya
2
(From left) Securities
and Exchange Commission Thailand deputy secretary-general Tipsuda
Thavaramara, Securities
Commission of Malaysia
chairman Datuk Ranjit Ajit
Singh, Monetary Authority of Singapore assistant
managing director (capital
market) Lee Boon Ngiap,
and Singapore Exchange
Ltd chief executive officer
Magnus Bocker at the Asean
Capital Markets Forum in
Kuala Lumpur on March 3.
— Photo by Shahrin Yahya
MERCEDES GOLF... (From left) TaylorMade Malaysia commercial manager Eileen Fong, The Edge Communications Sdn Bhd managing director Au Foong Yee, ATG Watch
Sdn Bhd (distributor of Epos watches) chief executive oﬃcer (CEO) Tham Onn Chuan, Mercedes-Benz Malaysia Sdn Bhd president/CEO Roland S Forger, and Cresent Links (M) Sdn Bhd
director Carlton Chua at the MercedesTrophy 2015 international golf tournament series press conference in Shah Alam on March 3. Photo by Chu Juck Seng
3
(From left) BMW Group
Malaysia managing director
and chief executive officer
Alan Harris, tennis players Misa Eguchi and Hsieh
Su-Wei at the unveiling of
the new BMW 520d Sport at
the BMW Malaysian Open
2015 in Kuala Lumpur on
March 4.
1
2
4
PBB Group Bhd managing director Lim Soon Huat
(left) and its property division chief operating officer
Chew Hwei Yeow at a briefing on the group’s prospects
for 2015 in Kuala Lumpur
on March 5. — Photo by
Shahrin Yahya
5
3
4
(From left) Ni Hsin Resources Bhd managing
director (MD) Chen Shien
Yee, chairman Mohd Nazir Mohd Kassim, Helios Photovoltaic Sdn Bhd
MD Ken Ong and executive chairman Datuk Omar
Faudzar at a heads of agreement signing ceremony
between the two companies in Kuala Lumpur on
March 3. — Photo by Sam
Fong
6
KDU University College students registering for The
EdgeWiz Campus Investment Challenge 2015 at a
road show at the college’s
Glenmarie campus in Shah
Alam on March 3.
5
6
COMMENT 15
M ON DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
China takes lessons from Japan
Regulators turn to past master on slowdown, deflation
BY KA ZU N ORI TA K A DA
& L EI KA K I HA RA
C
hinese regulators are
turning to Japan for
lessons on economic
history, determined
to keep the world’s
second biggest economy from taking the same path of
recession and deflation that has
blighted its neighbour for the past
20 years.
Beijing views Tokyo’s handling
of the liberalisation of capital flows
and the yen over 30 years ago as
key factors that led to the creation
and subsequent bust of the asset
bubble in Japan in the early 1990s,
according to Japanese government
and other sources who are in direct
contact with Chinese regulators.
“They aren’t a single bit interested in Japan’s successes. Their
biggest interest is in Japan’s mistakes,” one China-based source who
is directly in touch with Chinese
regulators told Reuters on condition of anonymity.
“Japanese and Chinese economies do share many similarities,
so I assume there is quite a lot to
learn from our experiences.”
Chinese policymakers and analysts at government think-tanks are
already well versed in the experiences of Japan and other countries,
and the sources say two-way communication at both government
and private-sector level continued
even through a chill in diplomatic
ties after a territorial spat in 2012.
But as economic growth slows
and signs of deflation emerge, China’s interest in Japan has increased
notably around policy details, according to the sources.
At an annual parliamentary
meeting that began last Thursday,
China announced an economic
growth target of around 7% for this
year, down from 7.4% in 2014, already the slowest in 24 years.
China is carrying out three key
financial reforms Japan undertook
over the past decades — liberalising
interest rates, internationalising its
currency and opening up its capital account.
These reforms should help develop the economy, but mis-steps
could have huge repercussions.
Chinese policymakers see the
1985 Plaza Accord between Japan
and the Western powers, which effectively approved a stronger yen
and the opening up of the capital account during the 1980s and
1990s, as pivotal events for Tokyo
which ultimately led to the Japan’s
“lost two decades”, sources say.
The surge in the yen that followed the agreement hit the country’s main exports; Japanese auto
makers, for example, started shifting more production overseas. This
started to hamper economic growth
and prompted the Bank of Japan to
ease monetary policy.
However, much of the cash from
the easing, along with hot foreign
money that followed the liberalisation of the capital account, flowed
into stocks, property and other assets,
often magnified through leveraging.
“China is already applying lessons from Japan’s experience. Even
when growth is slowing, Chinese
policymakers aren’t taking policy
measures that could heighten financial imbalances. That’s very wise
of them,” Bank of Japan board member Takahide Kiuchi told a news
conference in Maebashi, north of
Tokyo, last Thursday.
He said that even when asset bubbles were forming, Japan wasn’t able
to tighten monetary policy because
of the impacts it would have on the
United States, its biggest partner.
“One of the lessons from Japan’s
experience is that achieving domestic economic stability should
be the top priority for policymakers
(rather than international considerations),” Kiuchi added.
China has other challenges that
echo Japan’s past.
Its property market has cooled
since the government tightened
policy to prevent overheating and
due to oversupply, and that, coupled with economic slowdown, is
raising fears of a rapid rise in bad
loans at banks and a further dent
in local government finances.
Sources said regulators have
also been asking how Japan dealt
with bank bankruptcies, and that
could be a signal Beijing is preparing for a likely consolidation in the
fragmented banking sector once
interest rates are liberalised.
“It makes perfect sense for them
to look to Japan rather than other
countries since our financial systems are very similar,” said another
Shanghai-based source.
Like Japan, Chinese firms rely
heavily on bank loans to meet their
financing needs as opposed to debt
or equity issues. Also China heavily
regulates its banking sector, for example by limiting the number and
locations where banks can open
branches, similar to Japan in the
1970s and 1980s.
“The consolidation in the banking sector Japan saw in the 70s and
80s was mainly a result of stronger banks rescuing weaker ones so
they could expand their network.
It’s possible this kind of move will
happen in China,” the source said.
On the surface, government relations between Tokyo and Beijing
remain cool after Japan nationalised disputed islands in the East
China Sea in 2012, which triggered
anti-Japan protests in China and a
boycott of Japanese goods.
But the sources say communication between the countries remained frequent, though often at
low-key, private meetings. — Reuters
TPP might be better for health; fears seen as overblown
BY MARTÍN KRAUSE
THIS week, trade negotiators from
some of the world’s most powerful
economies are meeting in Hawaii
to thrash out the final stages of the
Trans Pacific Partnership (TPP).
This free trade agreement — which
includes the United States, Canada, Australia, a number of Latin
American countries and Singapore, Malaysia, Japan and Brunei
— stands to become a milestone
in the deeper integration of the
global economy.
Despite the economic potential of the TPP, many commentators fear that improved access by
middle-income countries such as
Malaysia and Vietnam to lucrative
markets like the US will come at a
cost to human health.
In particular, NGOs fear poorer
TPP countries will be forced as part
of the deal to accept tough new intellectual property rules that will undermine the ability of local healthcare
systems to procure cheap generic
drugs, thereby denying essential medicines to the sick and dying.
An alarming vision, certainly.
But to what extent are such fears
justified?
A first point to recognise is that the
vast majority of drugs prescribed by
physicians in middle-income Asia are
off-patent, including those for growing problems such as heart disease,
diabetes and chronic lung problems
— and therefore outside the scope
of any trade agreement.
Second, the US — arguably the
negotiating country with the most
clout — has stated that the TPP will
respect the flexibilities agreed in
World Trade Organization talks in
2003, that allow countries to ignore
international intellectual property
rules in a range of circumstances,
including health emergencies. This
means that the generic drugs that
underpin the successful government AIDS programmes in Vietnam and Malaysia (and in Latin
American TPP countries) will be
unaffected.
Third, intellectual property provisions that have attracted particular criticism — such a potential
12-year period during which drug
developers can legally withhold
the clinical trials data necessary
to create cheaper generic copies
— relate only to new and highly
specialised biologic drugs.
US law already grants 12 years of
data exclusivity to innovative biologic drugs, recognising that traditional
patents by themselves are insufficient to stimulate innovation in this
highly complex, risky and difficult
area. This time period is backed by
an “innovation declaration” signed
by over 100 groups representing,
among others, cancer patients, who
argue that biotech companies need
these incentives to develop the next
generation of cures.
Although it is likely an exemption will be granted for Vietnam,
other richer countries that hope to
develop innovative biotech sectors
could do worse than adopting similar laws to the country that leads
the world in biotech innovation.
At any rate, new provisions on
data exclusivity in the TPP will not
impact the vast majority of drugs
on the market, which are chemical
rather than biologic. US law currently
grants five years of data exclusivity
to chemical drugs, so Washington
cannot push for more. Five years
also happens to be the standard to
which Vietnam, Malaysia and Singapore already subscribe.
Seen through this lens, fears
about the impact of the TPP on
health are overblown. But what
is more interesting than concerns
about intellectual property is the
wider impact of free trade on health.
In the 1980s and early 1990s
many governments in Southeast
Some of this improvement is certainly attributable to government
investments in healthcare, but it is
hard to deny the role that economic
growth — largely a result of more
open borders — has played in this
remarkable story.
This story is not unique to Singapore: an increasing body of economic evidence points to a strong
link between trade and better
health, particularly for lower-income countries. Some of this is
due to higher incomes and economic growth that come from free
trade, and some is a result of medical technologies and knowledge
spreading more rapidly across
borders.
The real story about health and
the TPP is economic growth, not
intellectual property. A successful
conclusion to the deal will see tariffs abolished on dozens on products, and new opportunities for
Asian TPP partners to integrate
more closely into the global economy. New jobs and investment will
raise living standards and create
more resources for spending on
healthcare.
Several Asian neighbours — including the Philippines, Laos, Taiwan, Indonesia and Cambodia —
will be watching the outcome of the
negotiation with a view to joining
the TPP in years to come. Time will
show them the TPP might be better
for health than they first thought.
Asia pursued a strategy of trade and
investment liberalisation, opening
borders to trade, slashing import
tariffs, removing exchange controls,
and limiting restrictions on the free
movement of capital — policies that
have generally continued to this day.
As countries opened their borders, so too did life expectancy
rocket as citizens became wealthier and more resources became
available for healthcare, sanitation,
better nutrition and new medical
technologies.
In 1960, life expectancy in Singapore was only 66 years, but by 2012,
after three decades of free trade, Martín Krause is professor of ecoit increased to 82 years, putting it nomics at the University of Buenos
on a par with even wealthy Japan. Aires, Argentina.
18 FO CU S
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
MO
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This Bentley
will get you all
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World’s fastest four-seat convertible may also be its
most practical
BY HANNAH ELLIOTT
T
he Bentley Continental GT Speed
Convertible weighs 6,300lbs
(2,863kg). It can hit 100kph in
four seconds. It’s the fastest
four-seat convertible you can
buy right now.
You can imagine that when that beast
gets up to speed on, say, the winter road out
to Southampton, you’re going to need some
killer stoppers.
That’s what we have here. Carbon ceramic
brakes with fire engine red calipers on 21inch special alloy wheels tinted with a dark
metal finish. You can catch a sliver of them
with a glance from the sidewalk.
The rest of the car isn’t bad, either. The diamond lattice grill and polished LED headlights play off the understated body line that
swoops, uninterrupted, from the strong nose
to the short, muscular haunches. It’s a little
blingy, in a solemn way. Very alluring.
The handsome look is nothing new from
Bentley. It’s the update to last year’s GT Speed
Convertible. It’s also the prime option if you
need a quicker version of the Bentley Continental GTC.
With the heated steering wheel, heated
seats, and myriad chrome-finished pipe organ heating vents embedded in the doors
and dash, you could drive top down in cold
weather. Your cocoon would be augmented
by the US$1,055 (RM3,882) heaters placed
neck-height in the head rests of each seat,
blowing a cushion of hot air around your
head like a halo.
The Continental GT Speed Convertible is
relatively understated from the outside, especially when the very quiet, very tightly-fitted
top is fully deployed. The interior is where
this car will win your affection.
Bentley employs generations of workers at
its headquarters in Crewe in the United King-
01. You’re going to want brakes like
you want the perfect watchdog:
alert, responsive, ﬁrm to the point
of insistence, but also gentle, and
with kind eyes. Not reactionary, not
harsh. But lethally accurate when
needed. Photos by Bloomberg
BM
an
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02
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02. The US$267,000 Bentley Continental
GT Speed Convertible is capable —
and quiet — in the snow.
03
BY
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AG
ma
aw
up
the
It has a top speed of 326kph, nearly
as fast as the new track-ready
McLaren 675LT.
dom to make the internal detailing special.
Ladies there use long, thick, silver needles to
hand-stitch leather around a steering wheel
— and their work is as tight as the seams
around a baseball. Men fit burled walnut on
dashboard panels with the same nail-less
magic that woodworkers use for fine cabinets.
The Bentley that I drove has diamond-quilted leather seats in dark bourbon and contrast
stitching, drilled alloy pedals, and a beautiful
B-emblazoned shifter with brushed steel accents. The word “Speed” is embroidered on
the headrests and written in silver across the
dashboard and floor panels.
Did I mention the back seat? It’s big, as
far as convertibles go. It’ll fit two adults for
an afternoon drive, with enough headroom
even when the top is up to avoid arguments
over who has to sit in the back. This is not a
car for a chauffeur, but for real driving enthusiasts, and sitting in the back will get old
after an hour or two. But on the off-chance
you do have to sit back there, rest assured
that your hair will stay in place (the sides of
the car are high enough to shield you from
tumult), and you’ll still hear the radio with
clarion-like precision.
There are some things to note about how
it drives. The GT Speed Continental is different from its predecessor in that it is lower
rea
spa
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03
and stiffer, with new springs, dampers and
suspension components. The body control
that this affords reaches near-flawless levels.
It does best as you pass 96kph. At low
speeds — stop-and-go traffic, say — it can
feel big and unwieldy. The steering is looser
as you drive slower, and the low bumpers and
wide rear require constant vigilance against
casual curb-grazing.
That’s about the worst I can say about it. In
fact, the GT Speed Convertible sits at a funny
spot in the four-seat convertible spectrum:
The BMW 650i convertible and Mercedes E
Class Cabriolet, for instance, cost far less, but
their performance and interior trim under-
standably reflect the price difference. And
the (far slower, though roomier) Rolls-Royce
Phantom Drophead Coupe, which surpasses the Bentley in opulence and driving elan,
costs over US$100,000 more.
You’ll be hard-pressed to find something
in this price range that can match both the
calibre of craftsmanship and the potency of
the 626hp, W12 engine.
And that’s just it. Usually with cars, you
can’t have it all. You must trade power for
practicality, or space for sex appeal. But the
GT Speed Convertible brings you pretty close
to the edge of everything. Brakes included.
— Bloomberg
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FO CU S 19
M O N DAY MA RC H 9 , 20 15 • T HEED G E FINA NCIA L DA ILY
The Mercedes-Maybach S600 Pullman is fit for a king
BY HA NN A H EL L I OT T
01
MERCEDES has finally unveiled the
Mercedes-Maybach S600 Pullman, a limited-edition limo that will cost US$1 million
(RM3.68 million) in armoured form.
The car, which made its global debut last
week at the Geneva Motor Show, is a new
version of the Pullman Mercedes first made
in 1963 as a conveyance for high-ranking
monarchs and heads of state.
The car is a full metre longer than the S
Class sedan, from which it evolved.
Elvis, a king in his own right, owned one.
So did Coco Chanel and Elizabeth Taylor.
These days, I’m hoping Kanye and Kim get
one. Or maybe George and Amal Clooney,
for pulling up to red carpet events such as
the Oscars.
The new version is based on the modern
S Class sedan, with a wheelbase a full metre
longer than a car.
It has a 530hp V12 turbocharged engine
and specially refined suspension and trans-
mission systems to ensure that any ride in
the back of this goes undisturbed by whatever is happening on the outside, whether
it’s paparazzi or hand grenades.
The grille is impressive.
Inside, you can make the car whatever
you want it to be. (Popular necessities include hand-stitched leather pillows, silver
champagne sets, and privacy curtains.) John
Lennon installed a special hi-fi sound system in his during the late 1960s.
You, on the other hand, could add champagne coolers, a theatre system, a fragrance
system and any number of supple leather
and exotic wood combinations.
The floor mats are thick and plush and
the windows cancel out virtually all exterior noise and harmful UV rays. The quilted
stitching on the dashboard and centre armrest alone is far superior to the interiors of
lesser vehicles.
And if you haven’t guessed, the back is
big enough for three rows of seats, or a layflat lounger. I’d go with the lounger.
The car is modelled on the S Class sedan but has a wheelbase that’s a full metre longer, plus a 530hp V12
turbocharged engine and extra-soft suspension and transmission.
Tech drive strips old-school carmakers of clout
BY ANTO NY C U RRI E , O L A F S TO R B EC K
& K E V I N ALLI S O N
BMW AG chief executive oﬃcer Norbert Reithofer introducing the BMW 220i Gran Tourer automobile (right),
and a BMW 220d xDrive Gran Tourer automobile during a news conference on the opening day of the 85th
Geneva International Motor Show in Geneva on March 3. Photo by Bloomberg
02
BMW wagon for families, not racing
BY EL I SA B ET H B EH R M ANN
03
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ssan,
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ed.
BAYERISCHE Motoren Werke AG (BMW
AG) will test its self-proclaimed image as the
maker of the “ultimate driving machine” with
a wagon designed more for parents picking
up children at school than for zipping along
the autobahn.
The van-like 2-Series Gran Tourer offers
rear seats that fold down for more storage and
space for as many as seven passengers. The
€26,950 (RM109,621)-vehicle, which debuted
last week at the Geneva International Motor
Show, challenges BMW’s fans by emphasising
family-oriented functionality over the flair of
stablemates like the M5 performance sedan.
“It’s a fairly frumpy car,” said Tim Urquhart,
an analyst at IHS Automotive. “The compact
seven-seater is a pretty small market, and it’s
already pretty well populated by the likes of
Ford Motor Co’s Grand C-Max, Renault SA’s
Grand Scenic and GM’s Opel Zafira Tourer
in Europe.”
With Audi and Mercedes-Benz closing the
gap on BMW’s sales lead, the world’s biggest
luxury-car brand is under pressure to woo
customers aside from affluent executives.
That means pushing into segments BMW
once shunned and compromising its focus
on acceleration and handling.
“We’re broadening our appeal,” Ian Robertson, BMW’s sales chief, said in an interview with Bloomberg TV. “We’re bringing in
new customers to the brand, and ultimately,
they will probably progress into other BMWs
in the family.”
What amounts to the first BMW van is
aimed at offsetting demand declines of ageing
models such as the top-end 7-Series sedan.
The brand’s deliveries are likely to rise by
just 4% this year, about half the growth rate
predicted for its two German competitors,
according to Bankhaus Metzler.
“We expect to grow our sales during this
year and of course the brand has a very, very
broad spectrum now,” said Robertson. “We
intend to maintain our position and be the
world’s leading provider of premium automobiles.”
The Gran Tourer boasts as much as 1.9 cu
m of storage and marks the debut of a BMW
smartphone application called myKidio that
allows the driver to control the videos that
back-seat passengers can watch on linkedup tablet computers.
After favouring sportier rear-wheel drive,
the brand has now introduced a second vehicle with the engine power directed to the
front wheels. The first was the smaller 2-Series Active Tourer, which came out last year
and is geared mainly toward older drivers.
When it comes to space, it’s new territory
for Munich-based BMW and raises concerns
that the brand’s veering too far from its roots
in performance-oriented vehicles.
Dave Flogaus, co-vice president of the
Philadelphia-area Delaware Valley chapter
of the BMW Car Club of America, said: “One
way or the other, it’s is a bold move.”
The standard version of the Gran Tourer, priced about 15% more than competing
models, will reach European showrooms in
June. The company has no current plans for
a US release date. — Bloomberg
SILICON Valley is driving in to try to strip
traditional carmakers of their clout. Apple
is the latest technology powerhouse to
dabble in vehicles — it has hired several
hundred engineers and other automotive
experts and has held talks with car parts
supplier Magna. From Tesla Motors to
Google to Uber and beyond, though, the
shift to putting large numbers of connected, self-driving vehicles on the roads may
take a while.
But it could shake up everything in the
industry, from systems to materials to car
usage. The winners may be able to rev up
returns but traditional carmakers risk being on the losing side.
The industry is still dominated by the
chassis, the power train and other traditional hardware. That is changing in two
ways. First, technology systems are fast becoming at least as important to car buyers
as the shell and the engine. As intelligent
cameras, sensors and other advanced driver assistance systems (ADAS) proliferate,
they’ll become more important, and open
up avenues into the business that current
manufacturers might not always be best
placed to navigate.
Second, software is taking on a far more
important role. Currently it accounts for
just 10% of the value of what goes into a
car, compared to hardware at 90%. As autonomous driving takes the wheel, these
trappings could cover 40% of a vehicle’s
make-up, with content accounting for
the rest.
Software and some of the new hardware
add up to the initial sweet spot for Silicon
The shift to putting
large numbers of
connected, self-driving
vehicles on the roads
may take a while.
Valley. What vehicles need to be able to
drive themselves is all manner of algorithms and other tools that can coordinate
the systems within a car as well as communicate with other vehicles on the road,
traffic signals and the like. Think everything
from cameras to voice recognition software
to artificial neural networks that can learn,
remember and make decisions.
Automakers can certainly compete here.
with basic ADAS capabilities already in
many cars. Even now, though, 70% of the
value added to cars comes from parts makers. The danger for old-school auto firms is
that the complexity of the systems required
plays into the hands of deep-pocketed,
code-savvy technology companies.
Regulation is one of the major sticking
points to wider adoption of self-driving
cars. Officials need to be persuaded new
and unfamiliar systems are safe. That could
take five years or more. Writing and implementing rules could take another five years.
Price is another factor. Only 20% of
drivers would be willing to pay an extra
US$4,000 (RM14,720) for ADAS features.
The cost of new tech will come down. But
it’s logical that buyers will spend more and
more money on self-driving systems and
software supplied by Silicon Valley at the
expense of more traditional features from
automakers.
After all, greater efficiency is touted as
one of the main advantages of self-driving cars. Improved safety is meant to be
the other big plus from all the new car
technology.
These changes are a big threat to all
carmakers, especially to luxury manufacturers that market their vehicles as driving
experiences and status symbols. — Reuters
20 F E AT U R E
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
How MH370 changed Malaysia
Country is vastly different from what it was a year ago
BY A DA M MI N TER
O
ne year later, the disappearance of Malaysia Airlines flight
MH370 is still Malaysia’s biggest story, dominating front
pages when even the smallest new
details emerge. That’s with good
reason. The missing flight, and the
Malaysian government’s controversial early responses to it, have had
a staggering impact on the country. Politically, diplomatically, and
economically, Malaysia is vastly
different than it was a year ago.
Transparency at the top
For more than 50 years, Malaysia has
been ruled by the same governing
coalition, one with a reputation for
lacking transparency and scorning media scrutiny. Its inexperience
dealing with the press became apparent in the hours and then days
following MH370’s disappearance.
Senior Malaysian officials held meetings with international journalists
during which they were evasive, contradictory, and even condescending.
At a March 10 presser, for example,
Datuk Seri Hishammuddin Hussein,
the defence minister, petulantly answered one question by snapping:
“You are talking to a defence minister and acting transport minister.
I wouldn’t know.”
For those covering Malaysia for
the first time, such evasions made
it seem that Malaysia might be hiding something it knew about the
disappearance.
The blowback was immediate,
especially on Facebook and other
social media, where Malaysians expressed astonishment and anger at
their government’s seeming incompetence. The government heeded the
online anger, and quickly became
more forthcoming about what exactly it did and did not know about
MH370 — including unflattering revelations about Malaysia’s slow initial
response to the disaster. This marked
an almost unprecedented degree of
transparency and public accountability for the Malaysian government.
And that was only a prelude to the
government’s quick and coherent
response to the downing of MH17
over Ukraine several months later.
More importantly, Malaysia’s
independent media and political
opposition were energised by the
government’s sudden responsiveness. MH370 was proof that enough
pressure (combined with international shaming) could bring at least
some transparency to Malaysian
politics and governance. In the year
since the disappearance, independent media and the opposition have
been much more aggressive in their
questioning of the government. And
they’ve produced real results, including a long-sought audit of 1Malaysia Development Bhd, which
has been plagued by allegations of
financial mismanagement.
Pivot to the US
Of the 227 passengers on flight
MH370, 153 were Chinese. In the
days and weeks after the disappearance, China’s official media criticised the government’s efforts and
attitude. At the same time, it permitted families of Chinese victims to
publicly berate the Malaysian am-
Chinese relatives of
passengers aboard MH370
pray at the Thean Hou temple
in Kuala Lumpur on March 1.
Photo by Reuters
bassador and allowed them to hold
a rowdy demonstration outside of
the Malaysian Embassy in Beijing.
In Malaysia, popular sympathy
for the Chinese quickly gave way
to online revulsion and a public
rebuke from the defence minister,
who said that flawed Chinese satellite data had “distracted” Malaysia
from the search for the plane.
Such open hostility marks a significant shift in Malaysia. Bilateral
relations with China were so close
in 2013 that a Malaysian official announced that Malaysia was willing
to collaborate with China on developing natural resources in the
South China Sea — a blatant break
with other countries in the region.
That spirit of cooperation is now
gone. Not long after the disappearance, a former Malaysian ambassador to Beijing told The Malaysian
Insider that he believed that China’s
reaction revealed a “bullying tendency”, and added: “China has bullied the Philippines and Vietnam.
So Malaysia has to be careful.” He
also said that Malaysia should review ties between the two countries.
Over the last year, the Malaysian government has also made an
effort to build closer ties with the
United States. It even invited US spy
planes to use bases on Malaysian
territory — an invitation that likely
infuriated China. Though MH370’s
disappearance isn’t solely responsible for this important diplomatic hedge, it certainly played a key
role in widening a gap that barely
existed on March 7, 2014.
Privatising the public economy
Founded in 1972, state-owned Malaysia Airlines has long been one
of the country’s most prominent
GLCs — or government-linked
companies — that make up an
astonishing 54% of the entities on
the Kuala Lumpur Composite Index, and dominate key industries
across the country. They are government controlled and owned,
and widely viewed as patronage
programmes that bleed public cash.
However, even before MH370 disappeared, Malaysia Airlines was
in dire financial condition, having
lost money for three years straight
(while most other airlines worldwide were booming).
Prior efforts at making the airline more efficient were vetoed by —
among others — Malaysia’s powerful
unions. But the precipitous drop in
ticket revenue that followed the disappearance of MH370 (and then, MH17)
brought the company to the edge of
bankruptcy and dissolution. Rather
than allow what would be viewed as
a national humiliation, Khazanah
Nasional Bhd, the sovereign wealth
fund that controls the airline, took
it private, and hired a foreign chief
executive officer — the first in its
history — who is cutting 6,000 jobs,
in addition to many of the airline’s
international routes outside of Asia.
It raises modest hopes that a stubborn Malaysian government will be
willing to treat other GLCs similarly
— especially as its oil-dependent
economy falters. That the discussion
is even possible, however, is solely
the result of MH370. — Bloomberg
Time for Japan to cut off Sharp and break the cycle
BY WILLIAM PESEK
SORRY, but can anyone provide a
good reason why Sharp should still
be in business?
As Japan Inc icons go, the beleaguered tech giant counts as borderline royalty. Founded in 1912, the
year Emperor Meiji, whose reforms
transformed Japan from feudal state
to capitalist power, died, Sharp was
among the core engines of the nation’s global ambitions.
In 1964, Japanese revelled in
Sharp’s introduction of the first
transistor calculator just in time
for the Tokyo Olympics — the nation’s post-World War II return to
the global stage. In 1997, the Osaka-based star gave the world the
first commercial camera phone,
inspiring Steve Jobs in California.
Now, it’s hard to figure out a business in which Sharp can really excel.
In 2012, when the company should’ve
been celebrating its 100th anniversary, executives were releasing the
company’s worst financial results
ever (nearly US$5 billion of losses).
Despite a slew of cosmetic tweaks
since then, the bleeding has not
stopped.
Sharp is forecasting a US$251
million (RM923.68 million) loss
in the 12 months ending March as
its Aquos TVs struggle to compete
against China, South Korea and
Japanese rivals like Sony.
Display panels show little promise given this voracious competition. Sharp says it’s banking on
selling smartphone panels to China’s handset makers. Yet mainland
suppliers can make high-quality
ones at lower prices. Last Thursday, the company denied reports
it’s selling off its loss-making solar
panel business.
That begs the question why not.
As I say, why is Sharp still with us?
Banks bailed out the company in
2012, only to lose US$8 billion over
the next two years.
In a more conventional market
economy, the company would’ve
gone bust by now — or at least been
acquired. “Sharp’s core business
is as bad as it could get,” analyst
Atul Goyal of Jefferies Group told
Bloomberg.
Sooner or later, Japan has got
to get serious about letting zombie companies like Sharp die. That
would be terrible news for its 50,000
workers — and a political headache
for Prime Minister Shinzo Abe, who
is already struggling to halt declines
in Japanese wages.
But Sharp’s woes epitomise
much of what’s still wrong with
Japanese business culture. It might
be worth more as a sacrificial lamb
than as a perpetually struggling
enterprise.
Since its heyday, Sharp has
over-expanded, lost track of core
competencies and grown complacent thanks to ready support
from banks. While executives get
most of the blame, Tokyo deserves
some, too.
In 2009, the Ministry of Economy, Trade and Industry of Japan, or
Meti, helped set up the Innovation
Network Corp of Japan (INCJ) to
boost the nation’s entrepreneurial
capital and competitiveness.
Instead, the partly taxpayer-funded entity largely became a bailout
mechanism for failed projects. INCJ
conjured up Japan Display out of
assets from other prominent names
— Sony, Toshiba and Hitachi — and
then steered lots of the iPhone business to the new company.
That took food right off Sharp’s
plate. The company suddenly faced
yet another competitor, one with
ready cash from INCJ’s investment
and a 2014 initial public offering.
Sharp has remained alive
mostly because of the cozy web
of cross-shareholdings that bind
the company and its creditors. The
company’s management declared
last week that it was considering
“drastic reform”, including cutting
executive pay by as much as 20%
(a tired Japan Inc manoeuvre that
makes great headlines, but changes
nothing). In fact, the strategy looks
to be a familiar one — hitting up
the bankers again.
Takahashi Kozo is reportedly
chatting with Mitsubishi UFJ Financial and Mizuho Financial. Options may include a debt-for-equity
swap. (Last Friday, the Nikkei reported that Sharp is also angling for
US$250 million from Japan Industrial Solutions, a turnaround fund
partly held by Japan’s megabanks.)
Sharp has some serious leverage; its bankers are stuck with more
than US$3 billion of Sharp debt.
Takahashi’s opening line to his financiers could be: If you cut us off,
you’ll get hurt, too.
Where have we heard this before?
Tokyo has found itself in this same
predicament countless times over
the last two decades. Continuing to
prop up complacent companies takes
the onus off executives to create new
products and wealth that generate
jobs and higher incomes.
It deadens the creative destruction that chastens stagnant industries — like Japanese tech — and
makes way for innovative and new
ones. It’s time to break this cycle.
Sharp is a great place to start. —
Bloomberg View
William Pesek is a Bloomberg View
columnist.
22 W O R L D B U S I N E S S
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
ECB launches longawaited QE gambit today
Will start to buy about €60 billion of public and private bonds each month
BY MATHI L DE RI CHTER
BERLIN: In what may be its best and
last chance to stimulate growth and
ward off deflation across the eurozone, the European Central Bank
today will launch its long-awaited
€1.1 trillion (RM4.4 trillion) quantitative easing programme.
The kickoff was announced last
Thursday by ECB president Mario
Draghi, who confirmed the euro-
Apple takes
leap into new
territory with
smartwatch
BY GL EN N C H APM AN
& ROB L EVER IN WASHINGTON
SAN FRANCISCO: Apple’s hotly-anticipated smartwatch is
expected to debut today as the
trend-setting firm sets out to
make stylish wrist-worn computers must-have accessories
for modern lifestyles.
Industry trackers say Apple Watch will star at a media
event being held at the same
San Francisco theater where
the California tech giant introduced the iPad.
Apple chief executive Tim
Cook has revealed little about
the sophisticated wrist wear,
but has said that he “can’t live
without it”.
The company announced
its plans for Apple Watch last
year to much fanfare and has
said it would begin shipping
in April.
It will mark Apple’s first
new product type since the
iPad in 2010.
Apple has indicated that
the entry price would be
US$349 (RM1,284) in the United States, and that two different sizes would be available in
three collections, including
the “Apple Watch Edition,” featuring 18-karat gold cases in
yellow or rose, sapphire crystal
and finely crafted bands and
closures.
The Apple device will connect with the iPhone, and also
have a range of apps and sensors, notably for health and
fitness.
The watch is also expected
to include map software that
guides people to destinations
with gentle “taps” on the wrist.
Fitness apps on the Apple
Watch and its rivals could spell
trouble for makers of fitness
bands from companies like Jawbone, Fitbit and Nike. — AFP
zone central bank will begin its programme of buying around €60 billion
of public and private bonds each
month starting today — a policy it will
apply until at least September 2016.
The move comes as traditional
efforts to boost sluggish economic
activity in the 19-nation eurozone
have been exhausted through rate
cuts that have brought borrowing
costs to nearly zero.
The policy known as quantitative
easing or QE is also being adopted as the eurozone faces growing
threats of deflation, in which falling prices lead consumers to put
off purchases in expectation they
will drop further, sparking a damaging cycle of falling production,
job creation and prices.
The strategy behind the ECB’s
QE programme is similar to that
of earlier schemes introduced by
the US Federal Reserve and the
Bank of England to pump money
into the economy with massive
purchases of government bonds,
aiming to foster easier credit and
rising economic activity.
To bring that about, the ECB will
snap up bonds issued by euro member states on secondary markets
used by private banks, investment
and pension funds, insurance companies and other major investors
of sovereign debt. — AFP
European central bank won’t agree to
Greece issuing more short-term debt
BERLIN: The European Central
Bank (ECB) will not agree to Greece
issuing more short-term debt because that would be tantamount
to it illegally financing the Greek
government, ECB executive board
member Benoit Coeure said in a
German newspaper interview on
Saturday.
Echoing comments from ECB
president Mario Draghi (pic),
Coeure told the Frankfurter Allgemeine Sonntagszeitung in comments published yesterday the ECB
would not allow Greece to raise a
limit on issuance of short-term debt
so that leftist Prime Minister Alexis
Tsipras can avert a funding crunch.
“The ECB cannot finance the
Greek government,” Coeure said.
“We’re not allowed to do that. That
is illegal.”
Last Thursday, Draghi said the
ECB will resume normal lending
to Greek banks only when it sees
Athens is complying with its bailout programme and is on track to
get a favourable review.
He also made clear the eurozone
bank would not raise a limit on Athens’ issuance of short-term debt to
help the Tsipras government since
the EU treaty barred monetary financing of governments. — Reuters
BY F IONA M AHARG -BRAVO
The infusion of
fresh capital and
Slim’s (pic) business
acumen could be a
boon for FCC , which
also counts Bill
Gates as minority
shareholder.
Photo by Reuters
He is eyeing a takeover in the next
nine months. Property company
Hispania had bid an even lower
price than Slim.
Realia is where the corporate
governance starts to get fuzzy. FCC
owns 37% of Realia and had plans
to sell the stake. The plans were put
on hold after Slim’s arrival. It’s not
clear whether FCC would now sell
to Slim. The headline price looks
low, but Realia requires fresh capital. Even if FCC stays put, Slim
would effectively control Realia via
his direct 25% stake, and through
his FCC shareholding. That pretty
much rules out a counterbid from
Brazil corruption scandal sends shock waves
through ruling coalition
RIO de JANEIRO: Investigations ordered into dozens of
politicians linked to a massive
corruption scandal at state
oil giant Petrobras is sending
shock waves through Brazil’s
governing coalition and South
America’s largest economy. After a day of high suspense, Brazil’s Supreme Court last Friday
greenlighted investigations into
a who’s who of the country’s
politics. The list encompasses
49 politicians, headed by Senate president Renan Calheiros
and Speaker of the Chamber of
Deputies Eduardo Cunha, both
leaders of the centrist Brazilian
Democratic Movement Party,
a key component of President
Dilma Rousseff ’s ruling coalition. — AFP
Report: Greek ex-ﬁnance
minister probed
for hiding income
ATHENS: Ex-Greek finance
minister Gikas Hardouvelis is
being investigated for alleged
failure to comply with his tax
obligations, a Greek newspaper
reported on Saturday. According to the weekly Real News,
the deposits in Hardouvelis’
bank accounts in 2011 did not
match the incomes he declared
that year. Also, in 2012 he was
suspected of sending money to banks abroad that was
not accounted in his declaration of assets. The inquiry was
launched by anti-corruption
minister and outgoing head of
the independent money laundering authority, Panagiotis
Nikoloudis, on Jan 20. — AFP
Pakistan moves to widen
tax net, but big ﬁsh
yet to be caught
Carlos Slim buys Spanish real estate on the cheap
MADRID: The world’s top billionaires are battling for Spanish property. Bill Gates, George Soros and
Amancio Ortega have all taken stakes
in real estate companies or bought
emblematic buildings in Spain. Now
Carlos Slim is building his own Spanish empire on the cheap.
Last December, the Mexican
magnate beat out Soros to become
the largest shareholder of builder FCC after a €1 billion (RM3.99
billion) rights issue rescue left
him with a 25.6% stake. Slim’s
arrival gave the company some
much-needed breathing space from
its lenders. He has four of 12 seats
on the board. Heiress and former
top shareholder Esther Koplowitz
controls another four.
Slim hasn’t wasted time in making his mark. He placed one of his
own men, Miguel Martinez, as
FCC’s new chief operating officer.
He also named the chief executive
of Cementos Portland, which is
78% owned by FCC. Now he has
bought a 25% stake in property
firm Realia from lender Bankia at a
large discount to the market price.
IN BRIEF
Hispania, which counts George
Soros and John Paulson as shareholders. At least Slim has offered to
buy out the rest of Realia’s shareholders at the same price.
The Mexican has a big say in all
three companies via FCC. Arguably,
the infusion of fresh capital and
Slim’s business acumen could be
a boon for FCC, which also counts
Bill Gates as minority shareholder.
Slim’s contacts could open doors to
lucrative contacts in Latin America.
But his interests may not be always
aligned with minorities in those
companies. Going along for the
ride has its risks. — Reuters
ISLAMABAD: Pakistan has
begun chasing wealthy tax
dodgers who enjoy lives of
extravagance and luxury, but
revenue officials face huge
challenges in trying to force
the richest — and most influential — to pay up. Pakistan’s
tax-to-gross domestic product ratio of 9.5% is among the
lowest in the world and the
government is under pressure from foreign donors and
lenders, including the International Monetary Fund, to increase collection to boost the
struggling economy. — AFP
Foreign banks tighten
lending rules for China
state-backed ﬁrms
SHANGHAI: Some banks are
adopting stricter lending criteria for China’s state-owned
enterprises (SOEs), demanding
collateral from some companies they used to deem as safe
as government debt, as Beijing
tries to reform its bloated firms
and the economy slows.
Singapore’s DBS Group,
which recently suffered a loss
on a bad loan to an SOE-related firm it had assessed as riskfree, plans to launch a “decision
grid” to assess the creditworthiness of SOEs. — Reuters
W O R L D B U S I N E S S 23
M ON DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
China February trade
surplus hits US$60.6b
Govt says it’s a new record for the world’s second largest economy
BEIJING: China’s monthly trade surplus hit US$60.6 billion (RM223 billion) in February, the government
said yesterday, a new record for the
world’s second largest economy.
Exports leapt 48.3% year-on-year
to US$169.2 billion while imports
fell 20.5% to US$108.6 billion, China Customs General Administration
said on its website.
The country’s trade surplus, long
a source of tension with its trading
partners, rose above a previous alltime monthly high of US$60 billion
recorded in January. But analysts
were pessimistic about the outlook
for China’s exports’ and blamed
the weak imports’ reading on fall-
Oil price likely
to stabilise at
US$50 to US$60
KUWAIT CITY: World crude prices are expected to gain this year
or at least to stabilise at between
US$50 (RM184) and US$60 a
barrel, Kuwaiti Oil Minister Ali
al-Omair was quoted as saying
late on Saturday in Bahrain by
KUNA news agency.
The minister said prices are
currently supported by conflict
in Iraq and Libya and by a drop
in sand oil and shale oil output.
But that is counterbalanced by
slow global economic growth,
which is dampening demand.
World prices dropped at the
close last Friday as the US dollar
rose sharply, making dollar-priced
crude more expensive for buyers
using weaker foreign currencies.
West Texas Intermediate for
delivery in April slid US$1.15
to US$49.61 on the New York
Mercantile Exchange, ending
near its level the previous week.
Brent North Sea crude for April
dropped 75 US cents to US$59.73
a barrel in London. — AFP
ing commodity prices, with stringent bank financing for traders also
a factor.
China is a key driver of global
growth but its economy grew 7.4%
in 2014, its weakest for almost a
quarter of a century, and recent indicators show signs the slowdown
is continuing.
Customs attributed the surge in
exports to a rise in outbound shipments ahead of the lunar new year,
which fell on Feb 19 this year.
“Affected by the Spring Festival
factors, export companies in the
country again rushed to export ahead
of the holiday and only resumed
working after it,” the statement said.
The lunar new year fell on Jan
31 in 2014, followed by a week-long
national holiday, leading to a low
comparison base for this February. For the first two months of the
year, China’s trade surplus totalled
US$120.7 billion, said the statement.
The figure stood at US$8.9 billion in
the same period last year, Customs
data showed.
“We still see strong headwinds
facing China’s exports this year,” ANZ
economists Liu Ligang and Zhou Hao
said in a research note, pointing to
a continuing contraction streak in
export orders.
Premier Li Keqiang announced
a lowered growth target of “approx-
imately 7%” for 2015 last Thursday
and — underscoring concern — the
central People’s Bank of China cut
benchmark interest rates for the second time in three months last weekend. Li also cut China’s trade growth
target for this year to “around 6%”,
after trade expanded 3.4% last year,
below the 7.5% goal and the third
consecutive year it had been missed
amid softened domestic and foreign
demand.
China’s huge trade surpluses
were long a source of friction with
the United States as the workshop
of the world pumped out manufactured goods and US debt mounted,
but the issue has receded in more
Chinese province will have
to sell assets to pay debt
BEIJING: Some parts of China’s
eastern Shandong province will
have to sell off assets in order to pay
down debt, the province’s governor
said on Saturday.
Guo Shuqing, the former head of
the country’s securities watchdog,
was speaking to reporters on the
sidelines of the country’s annual
parliament.
“There are some regions, towns
and counties with a high debt ratio, and repaying the capital with
interest is difficult. Funds need to
be raised through various channels,
including restructuring, and selling off of some assets to resolve the
debt repayment issues,” Guo said.
“Nobody need worry. When
Shandong owes a debt, it will certainly repay the money, and pay
the interest.”
Guo would not say how much
debt the province has, but said it
does not exceed 1.2 trillion yuan
(RM705.9 billion).
Last October, China issued new
HONG KONG: China’s new target
for gross domestic product (GDP)
growth is a missed opportunity.
Premier Li Keqiang says economic
output will expand by “about 7%”
this year. Though the lack of precision is welcome, the People’s Republic would be better off without
its big, reassuring objective.
For most of the last decade, China’s annual growth target was actually a threshold: even when GDP
was expanding at double-digit rates,
the goal never exceeded 8%. In
recent years, however, the target
has become a leading indicator
of the ruling Communist party’s
willingness to accept a slowdown.
Last year, China missed its growth
objective for the first time since the
late 1980s — though only by a 10th
of a percentage point.
Planners seem to acknowledge the flaws in trying to steer
the world’s second largest economy towards a precise annual target. That explains why the crucial
number is prefixed with “about”. The
vagueness shows Chinese leaders
would be willing to accept growth
Goal to complete Asian
free-trade bloc talks by
December
BEIJING: China hopes to finish
talks on creating an Asian freetrade bloc estimated to cover 28% of the world economy
by the end of this year. Trade
Minister Gao Hucheng said
on Saturday on the sidelines
of China’s annual parliament
that China would work hard to
wrap up talks for the Regional Comprehensive Economic
Partnership (RCEP) before the
end of this year. RCEP, which
comprises the 10-nation Asean
club plus six others — China,
India, Japan, South Korea, Australia and New Zealand — is
a Beijing-backed trade framework that has gained prominence as an alternative to US
trade plans. — Reuters
Microsoft sues Japan’s
Kyocera for patent
infringement
NEW YORK: US-based Microsoft is suing high-tech manufacturer Kyocera for patent
infringement over technology used in the Japanese
company’s cellular phones.
Microsoft claims Kyocera’s
Android-based Duraforce,
Hydro and Brigadier smartphones use geolocation and
SMS technology protected by
Microsoft patents, according
to the lawsuit filed in the US
state of Washington last Friday.
Microsoft entered the mobile
phone sector when it agreed to
buy Nokia’s handset division in
2013. — AFP
Singapore bond market
luring Japanese investors
Cranes unloading iron ore from a ship at a port in Rizhao, Shandong, last month.
Some regions, towns and counties in the east of the province are facing repayment
issues. Photo by Reuters
rules on handling outstanding
Guo also dismissed rumours
local government debt, which he may return to Beijing to head a
stands at roughly US$3 trillion financial regulator or the central
(RM11 trillion).
bank. — Reuters
of less than 7% this year, though it’s
not clear how much of a shortfall
they would tolerate.
Nevertheless, even a less precise target can lead to distortions.
It encourages regional bureaucrats to prioritise short-term expansion over longer-term reforms
or objectives that are less easy
to quantify, like environmental
sustainability. If China shows
any sign of falling far short, officials will come under pressure
to cut interest rates or loosen
restrictions on credit. Any desire
to avoid a big miss might also
SINGAPORE: Singapore isn’t
just a destination for Japanese
tourists. It’s now becoming
one for bond investors. Tenyear yields of 2.33% were 21
basis points (bps) more than
same-maturity US Treasuries,
and the premium reached
a 16-year high of 33bps in
February. Singapore’s yields
came within 16bps of Australia’s last month. Japanese investors plowed a record ¥42.2
billion(RM1.28 billion) into
Singapore bonds in January,
up 129% from a year earlier,
Investment Trusts Association of Japan data show. —
Bloomberg
Google gearing Android
for virtual reality
Beijing’s lower growth target is missed opportunity
BY PET ER T HA L L A R SEN
IN BRIEF
give China an added incentive
to fudge GDP statistics, which
many already regard as dubious.
Scrapping the target would be
a sign of economic maturity. After
all, no other large country claims to
have the same level of control over
its economy. Besides, leaders like Li
regularly stress the importance of
other measures like employment,
which have more direct relevance
to the population’s prosperity. That
China is not yet ready to let go of
its GDP goal suggests a truly enlightened way of thinking hasn’t
yet taken hold. — Reuters
NEW YORK: Internet giant
Google is making a version
of its Android operating system to power virtual reality
apps, the Wall Street Journal
reported. The California-based
company has set up a team of
“tens of engineers” to build the
version of the operating system that can be integrated in
future devices, the Journal said
last Friday, citing two sources familiar with the project.
It added that Google plans to
distribute it for free, much as
it did with Android in a move
that made it the most popular
operating system for smartphones. — AFP
24 WORLD
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE FI N AN C I AL DAI LY
Two more suspects
held over Nemtsov killing
Security Council of Russian Republic of Ingushetia official: Both are from Chechnya
MOSCOW: Russian police have arrested another two men over the
killing of opposition activist Boris
Nemtsov, who was gunned down
in the centre of Moscow, state media reported yesterday, bringing the
number held to four.
Albert Barakhoyev, secretary of
the Security Council of Russian Re-
N Korea rejects
links to US envoy
attacker
public of Ingushetia told state news
agency RIA Novosti that the pair had
been taken into custody over the assassination of the 55-year-old former
prime minister.
Both of the men, arrested in Ingushetia, are from neighbouring
Chechnya in the volatile northern
Caucasus. One of them is the younger
brother of Anzor Gubashev, whose
arrest alongside Zaur Dadayev was
announced by Russian security officials on Saturday.
RIA Novosti reported that Dadayev
was a deputy commander for a battalion attached to the Chechen interior
ministry, while Gubashev worked for a
private security company in Moscow.
The suspects were due to appear in court in central Moscow
yesterday, where security had been
stepped up, to determine whether
to extend their detention, a spokesman for the court Anna Fadayeva
told the news agency. However it
was not clear if all four men would
be appearing. — AFP
Solar plane revs up for
historic round-the-world flight
BY JU NG HA - WON
BY W ISSAM K E Y RO UZ
SEOUL: North Korea hit out yesterday at accusations that it may be
behind a shocking knife attack on
the US envoy to the South, branding the claims a “vicious” smear
campaign by Seoul.
Kim Ki-Jong slashed Mark Lippert with a paring knife last Thursday in an assault that left the US
envoy needing 80 stitches to a deep
gash on his face.
Kim, 55, was immediately arrested and charged with attempted
murder, and police are investigating whether he has any links to the
communist North.
He has reportedly told police
that he had acted alone and denied
any links to the North, calling the
suggestion “outrageous”.
The profile painted of him —
based on past brushes with the
law and his blog postings — is
that of a lone assailant with strong
nationalist views who saw the US
as one of the main obstacles to
the reunification of the divided
Korean peninsula. But Kim has
also visited the North seven times
since 1999, and once tried to erect
a memorial in Seoul to the late
North Korean leader Kim Jong-Il
after his death in 2011.
Kim told police he had stabbed
Lippert in protest at massive USSouth joint army exercises currently underway. The annual exercises are routinely slammed by the
North as a practice for invasion.
After the attack last Thursday,
the North hailed Kim’s act as “just
punishment” and a valid “expression of resistance” to the US-South
military drills.
But on Sunday the North’s
Committee for the Peaceful Reunification of Korea bristled at
suggestions that it might have been
behind the assault, calling it an
attempt to defame its leadership.
“Even the police and conservative media of South Korea joined
the [South’s] regime in attempting
to link the case with the [North],”
it said in a statement carried in
English by the state-run KCNA
early yesterday. — AFP
ABU DHABI: A solar-powered plane
aims to fly into history today, taking
off from Abu Dhabi on a round-theworld odyssey to promote alternative energy.
The flight of Solar Impulse 2,
whose hoped-for Saturday takeoff had to be put off due to strong
winds, will cap 13 years of research
and testing by two Swiss pilots
whose idea was ridiculed by the
aviation industry.
The Si2 made a third successful test flight in the United Arab
Emirates last Monday, and mission
chiefs reported no problems.
Solar Impulse’s chairman and
one of the pilots is Bertrand Piccard, who hails from a family of
scientist-adventurers and was the
first person, in 1999, to circumnavigate the globe in a hot air balloon.
“We want to demonstrate that
clean technology and renewable
energy can achieve the impossible,” he told AFP.
“Renewable energy can become
an integral part of our lives, and together we can help save our planet’s
natural resources,” he said when the
Si2’s route was unveiled in January.
Gunmen attack Islamic
State in eastern Syria,
killing 12
BEIRUT: Unidentified gunmen
killed at least 12 Islamic State
(IS) militants in the eastern
Syrian town of al-Mayadin in
an overnight attack in an area
near the Iraqi border controlled
by IS, a group monitoring the
conflict reported. Gunmen on
at least two motor bikes first
opened fire on an IS patrol
before attacking IS militants
guarding a nearby courthouse,
the Syrian Observatory for Human Rights reported. A second
group of gunmen, meanwhile,
attacked an IS checkpoint in the
same town, killing and injuring
an unknown number of the IS
militants, the Observatory reported. — Reuters
Death row Australians
in last-ditch bid to halt
executions
JAKARTA: An Indonesian court
will on Thursday hear an appeal by two Australian drug
smugglers on death row against
President Joko Widodo’s refusal to grant them clemency,
a last-ditch effort to halt the
looming executions. Myuran
Sukumaran and Andrew Chan,
the ringleaders of the so-called
“Bali Nine” drug smuggling
gang, were sentenced to death
in 2006 for trying to smuggle
heroin out of Indonesia. Their
appeals for presidential clemency, typically a death row convict’s final chance of avoiding
the firing squad, were rejected
by Widodo. — AFP
Taiwan ship with 49 crew
missing in South Atlantic
The plane is powered by more
than 17,000 solar cells built into
wings that, at 72m, are almost as
long as those of an Airbus A380
superjumbo.
Thanks to an innovative design,
the lightweight carbon fibre aircraft
weighs only 2.3 tonnes, about the
same as a family 4X4 and less than
1% of the weight of the A380.
Si2 is the first sun-powered aircraft able to stay aloft for several
days and nights.
The propellor craft has four
17.5hp electric motors with rechargeable lithium batteries. — AFP
18 arrested in India after mob lynches rape suspect
NEW DELHI: Police in India
charged 18 people yesterday after a frenzied mob stormed a prison and lynched a man accused of
rape in the country’s northeast, as
tensions remained high, a senior
officer said.
Police arrested the men for rioting in Nagaland state, but it was
unclear if they were directly involved in killing Syed Farid Khan,
whose body was then strung up
to a clock tower last Thursday.
He had been accused of raping a 19-year-old tribal woman
multiple times.
“So far we have arrested 18
people for rioting and unlawful
assembly,” the Inspector General
IN BRIEF
of Police, Wabang Jamir, told AFP.
“We are now verifying if besides being part of the mob they
were also directly involved in the
lynching,” Jamir said by phone
from Dimapur city.
“We have already identified
many more people [for arrest]
from videos and photos [of the
incident on social media],” he
added.
Several thousand people overpowered security at the Dimapur
Central Prison searching for Khan,
whom the mob also believed was
an illegal immigrant from Bangladesh.
The Bengali-speaking Khan
was stripped and paraded on the
streets outside, while men armed
with sticks beat him to death, according to local media.
Hundreds of riot police have
been patrolling the streets of
Dimapur district since the incident, while Jamir said a curfew remained in place along with mobile
phone and Internet restrictions.
Tensions have been rising in
Dimapur since Khan was arrested on Feb 24 for the alleged rape.
The lynching comes as India is
in the midst of a raging controversy over a government order to ban
the broadcast of a documentary
about the December 2012 fatal
gang-rape of a young student in
New Delhi. — AFP
TAIPEI: A Taiwanese ship carrying 49 crew has vanished
in the remote South Atlantic
Ocean without any sign of a
mayday call but shortly after its
skipper reported it was taking
on water, authorities said yesterday. The Hsiang Fu Chun, a
700-tonne squid fishing vessel,
lost contact with its owners
“soon” after reporting that water was leaking on to the deck
at around 3.00am on Feb 26,
officials said. The vessel, built
28 years ago, was sailing about
1,700 nautical miles (3,148km)
off the Falkland Islands when it
vanished, according to recorded satellite data. — AFP
Mali hunts jihadist
nightclub killers
BAMAKO (Mali): Malian security forces mobilised yesterday to
hunt the killers of two Europeans
and three locals in a nightclub
attack claimed by jihadists — the
first to target Westerners in the
capital. A Frenchman, a Belgian,
a Malian policeman and two others died early on Saturday when
a masked gunman burst into the
nightclub in the capital Bamako,
spraying automatic gunfire and
throwing grenades. Al-Murabitoun, a jihadist group run by leading Algerian militant Mokhtar
Belmokhtar, has claimed responsibility in an audio recording carried by Mauritanian news agency
Al-Akbar. — AFP
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M ON DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
Nigeria’s Boko Haram
pledges allegiance to IS
Audio clip highlights increased coordination between jihadi movements
LONDON: Nigeria’s Islamist militant group Boko Haram pledged allegiance on Saturday to the Islamic
State (IS), which rules a self-declared
caliphate in parts of Iraq and Syria,
according to an audio clip posted
online.
The symbolic move highlights increased coordination between jihadi
movements across North Africa and
the Middle East and prompted an
appeal from Nigeria’s government for
greater international help in tackling
the Boko Haram insurgency.
Boko Haram has killed thousands
and kidnapped hundreds in its sixyear campaign to carve out an Islamist state in northern Nigeria. It has
increased cross-border raids into
Cameroon, Chad and Niger in recent months.
“We announce our allegiance to
the caliph ... and will hear and obey
in times of difficulty and prosperity,
in hardship and ease,” read an English-language translation of the audio
broadcast in Arabic that purported to
be from the Nigerian militant group.
“We call upon Muslims everywhere to pledge allegiance to the
caliph,” it read.
The pledge of allegiance was
attributed to Boko Haram leader
Abubakar Shekau.
The audio script identified the
caliph as Ibrahim Awad Ibrahim
al-Awad al-Qurashi, who is better
known as Abu Bakr al-Baghdadi, the
leader of the IS and self-proclaimed
caliph of the Muslim world.
“[The audio] is confirming what
we always thought ... it’s sad; it’s bad,”
said Nigerian government spokesman Mike Omeri.
“It’s why we were appealing to
the international community ...
hopefully, the world will wake up
to the disaster unfolding here,” he
told Reuters.
On Saturday, four bomb blasts
killed at least 50 people in the northeastern Nigerian city of Maiduguri in
the worst attacks there since Boko
Haram militants tried to seize the
town in two major assaults earlier
this year. — Reuters
Teens stopped at Sydney airport
SYDNEY: Australia said yesterday it
stopped at the Sydney Airport two
teenage brothers believed to be
heading to the Middle East to fight,
amid growing concern in Western
countries over young people joining jihadist groups.
Immigration Minister Peter Dutton said the two boys, aged 16 and
17 and from Sydney, had tickets
to an undisclosed Middle Eastern
country and raised the suspicion of
customs officers last Friday night.
Man arrested for
trespassing on
roof of British
parliament
LONDON: British police arrested
a man yesterday after he was seen
walking on the roof of Britain’s
parliament buildings for several
hours overnight.
A police statement said they
had arrested the man on suspicion of trespass and criminal
damage at 0501 GMT, having
been made aware of his presence
on top of the Palace of Westminster at 2115 GMT on Saturday
night.
“At this stage it is too early to
ascertain the reason as to why
the man was trespassing on the
roof,” the statement said, adding that police negotiators had
attended the scene.
The roof had been the scene
of stunts by campaigners in the
past, including by protesters
demonstrating against plans
for a third runway at the London Heathrow Airport in 2008,
and by Greenpeace a year later.
The BBC said the man was on
his own, moving around a lot and
seemed calm with his hands in
his pockets, staring down at the
swelling crowd of onlookers on
the ground. — AFP/Reuters
The case came as the families
of three British schoolgirls who
left their London homes to join
Islamic State militants in Syria in
February criticised authorities for
not warning them their children
risked being radicalised.
“These two young men ... are
kids, not killers, and they shouldn’t
be allowed to go to a foreign land
to fight and to come back to our
shores eventually more radicalised,”
Dutton told reporters.
“In some cases, these young people who are going off to fight in areas like Syria will be killed themselves and that’s a tragedy for their
families, for their communities, and
for our country.”
The minister said a search of the
boys’ luggage raised more questions
about their trip and they were referred to the federal police’s counterterrorism unit.
He said the two youths “had
taken a very radical decision ulti-
mately without the knowledge of
their parents”.
“Their parents, as I understand
it, were as shocked as any of us
would be.”
An Australian federal police
spokeswoman said in a statement
that the boys, whose identities were
not released, were “arrested under
suspicion of attempting to prepare
for incursions into foreign countries for the purpose of engaging
in hostile activities”. — AFP
Obama in Selma: Our march is not over
Abe welcome to China war
parade if ‘sincere’ — Beijing
BEIJING: Japanese Prime Minister Shinzo Abe will only be welcome at Beijing’s commemorations of the end of the Second
World War if he is “sincere” about
history, China’s foreign minister
said yesterday in a finger-wagging denunciation. Beijing has
not given a specific date for the
parade, but it regards Sept 3,
the day after Japan signed its
formal surrender to allied forces on board the USS Missouri
in Tokyo Bay, as the victory day.
When asked whether Abe will be
invited, Foreign Minister Wang Yi
told a press conference: “We will
extend invitations to the leaders
of all relevant countries and international organisations. We
welcome the participation of
anyone who is sincere about
coming.” — AFP
China and Canada to grant
citizens 10-year visas
BEIJING: China and Canada
will grant each other’s citizens
visas valid for up to 10 years,
Beijing’s foreign minister announced yesterday. The agreement, which goes into force
today, comes as Western countries increasingly seek Chinese
businesses and investments,
and mirrors one with the United States last year. “China and
Canada have just reached an
agreement issuing visas to each
other’s citizens with the validity
period of up to 10 years,” Chinese Foreign Minister Wang Yi
said at a press conference on
the sidelines of the National
People’s Congress, the country’s Communist-controlled
parliament, in Beijing. — AFP
Beleaguered Hadi considers
Aden Yemen ‘capital’
ADEN (Yemen): Beleaguered
President Abedrabbo Mansour
Hadi, who fled to Aden after
escaping from Shiite militia
controlling Sanaa, considers
the southern port city to be
Yemen’s capital, an aide said
on Saturday. But tensions were
running high in Aden, as special forces suspected of links
to the militia known as Huthis
readied defences against an anticipated assault by Hadi loyalists. “Aden became the capital
of Yemen as soon as the Huthis
occupied Sanaa,” the aide quoted Hadi as saying in reference
to their takeover of Sanaa several months ago. — AFP
BY JÉRÔM E CARTI LLI E R
& ANDR EW BEATTY
SELMA (United States): US President
Barack Obama rallied a new generation of Americans to the spirit of
the civil rights struggle on Saturday,
warning that their march for freedom “is not yet finished”.
In a forceful speech in Selma,
Alabama on the 50th anniversary of
the brutal repression of a peaceful
protest, America’s first black president denounced new attempts to
restrict voting rights.
And he paid stirring tribute to
the sacrifice of a generation of activists who marched so that black
Americans could enjoy civil rights
and opened the road that eventually
led him to the White House.
“We gather here to celebrate
them,” he declared, standing on the
spot where Alabama state troopers
launched an assault on the marchers in scenes that shocked America.
“We gather here to honour the
courage of ordinary Americans willing to endure billy clubs and the
chastening rod, tear gas and the
trampling hoof — men and women
who despite the gush of blood and
splintered bones would stay true to
their north star and keep marching
toward justice.”
After the Selma march and others
like it, then-president Lyndon John-
IN BRIEF
Egypt adjourns trial of
al-Jazeera journalists
Obama rallying a new generation of Americans to the spirit of the civil rights struggle
in Selma, Alabama on Saturday, warning that their march for freedom ‘is not yet
ﬁnished’. Photo by Reuters
son passed the Voting Rights Act
that sought to prevent racist officials
from excluding African Americans
from the ballot.
That law, Obama said, is again
under threat from state governments
seeking to tighten voter registration
rules in a bit to restrict the size of
the franchise.
“How can that be?” he asked, noting that previous Republican presidents Ronald Reagan and George
W Bush — who was present for the
speech — had renewed it. — AFP
CAIRO: An Egyptian court adjourned yesterday the trial of
two al-Jazeera television journalists until March 19. The pair
is charged with aiding a terrorist
organisation, a reference to the
Muslim Brotherhood. A court
last month released Mohamed
Fahmy, a naturalised Canadian
who gave up his Egyptian citizenship, and Egyptian Baher
Mohamed, on bail after over a
year in detention. A third al-Jazeera journalist, Australian Peter Greste, was deported earlier
in February. — Reuters
26
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M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
MO
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE
Personal
ASSISTANT
COMPI L ED BY MAE CHAN
WORK. LIFE. BALANCE
THE popular boys of the Malaysian
Association of Chinese Comedians (MACC)
are back and more tongue-in-cheek than
before! Douglas Lim, Kuah Jenhan, Phoon
Chi Ho and Dr Jason Leong take the stage
once more as the MACC boys, with their
brand new stand-up comedy show I Want
to Touch a Douglas. The act runs from
tomorrow to Sunday, March 15 at The
Gardens Theatre, Level 6 of The Gardens
Mall, Mid Valley City, only for those aged
18 years and above. For more information,
visit www.gardenstheatre.com.my or call
(03) 9222 8811.
Danger of
blurring
LINES
HAVING questions about philosophies
and the history of science? Fancy some
intellectual discussions with like-minded
people? The At Least It’s A Theory group
welcomes you to its weekly Monday
session at Café 9, Jalan Ampang, Kuala
Lumpur in the Ming Annexe. Meeting
at 8pm, the group opens up an ongoing
conversation about the origins of scientiﬁc
thinking, its links to sociology and the
stance of postmodern analyses. To
learn more and for regular updates on
related topics, visit www.facebook.com/
atleastItsatheory.
FASHION
designer Jovian
Mandagie
has opened
the second
branch of his
Manadonese
restaurant Roa
in Bangsar last
week. Staking
claim to recipes
“passed down
from generation
to generation”
within his family, Roa brings a menu
ﬁlled with Sulawesi-inspired hot and
spicy ﬂavours, serving down-to-earth
traditional food in a chic modern vintage
setting. Head down to Jalan Telawi 5
in Bangsar for a taste of its signature
shredded garﬁsh (roa) deep-fried with
chillies, shallots and garlic. For more
information and reservations, visit www.
roabyjovianmandagie.com.
BMW Shorties Best Actress lets reality bites in ‘Khatijah’ bullying scenes
BY C ARM E L DO M I NI C
K
hatijah lives in her make-believe world where she has a
group of good friends and
a steady boyfriend whom
she equates with the Rock
of Gibraltar. Her reality is
sadly, quite the opposite.
Khatijah — the title of the film and
the name of the protagonist — made it
to the final list of the BMW Shorties 2014.
The 14-minute-and-51-second film tells
the story of a simple kampung girl who
develops an unconventional way of dealing with her agonising reality. Khatijah
is bullied at school and understandably,
rapidly becomes fearful of going to school.
When she expresses her intention of
not wanting to go to school to her widowed father, he misunderstands her as
being lazy and accuses her of being unappreciative of all his efforts of ensuring
education for her. Disheartened by his
outburst, coupled with the lack of courage
to come clean to her father, Khatijah creates an “alternate universe”. It is here that
she is accepted, loved and is surrounded
by friends. Her actual situation worsens
when she, unknowingly even to herself,
begins to blur the lines between fantasy
and reality. And because the relationship
between the father and the daughter is
already strained, Khatijah moves further
into her created universe. However, the
film does end on a positive note.
live it! recently caught up with Siti Nur
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est
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fath
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cha
spi
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ran
ver
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all
had
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op
you
you
Afyqah Aryani Khairi, 15, who won the
Best Actress award at the BMW Shorties
2014 awards ceremony for her portrayal
of Khatijah, and director Chong Yew Fei
who shared his inspiration and motivation behind this project.
Chong said the film was inspired by
videos of local schoolgirls in baju kurung
uniforms and headscarves, bullying a
fellow student. These videos shocked
him but Chong successfully reflected the
scenario to the teen in his film.
“Usually, bullying happens among
boys. I’m not saying that it is right, but
when you see girls in uniforms beating
Khatijah’s bullying experience causes her to
withdraw and retreat into her make-believe
world where things are more stable.
up another girl for no apparent reason,
personally, I think it’s vital that the issue
gets addressed,” Chong said.
He found it important to address the
issue of bullying, particularly in school,
because it is becoming rampant to the
point that students think it is acceptable
to record bullying incidents and post
them online, instead of helping the victims or reporting the incidents.
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M O N DAY MA RC H 9 , 20 15 • T HEED G E FINA NCIA L DA ILY
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE
Bullying scene shown in the middle of
the short ﬁlm leaves the audience to
guess why Khatijah is afraid of going to
school. Photo by Chong Yew Fei
01.
01. The crew shooting the ﬁlm in Tanjung Karang,
taking three days to complete the movie.
02. Chong (left) giving Fyqah pointers to perfect her
portrayal of Khatijah.
.
“To me, stories about human connections, how people communicate with one
another — be it between family members
or even between strangers — are very interesting. This is my style of storytelling, and
I have always wanted to tell a story about a
father-daughter relationship. So, after much
research about how I wanted to portray the
characters and using the videos as an inspiration, I came up with the concept and
script for the film,” Chong shared.
The crew took three days in Tanjung Karang for shooting and though the finalised
version of the script was not ready on the first
day of filming, the crew managed to capture
all the pivotal scenes. Chong said the film
had two main objectives — to give hope to
those going through a similar situation and
to encourage children to have a healthy and
open relationship with their parents.
Chong pleaded: “Don’t be afraid of what
you are going through and don’t keep it to
yourself. Talk to someone. For cases like this,
02.
your parents are the best people to talk to.
Family is important and is the main pillar
of strength for anyone.”
For Siti Nur Afyqah Aryani Khairi, a girl
of few words and prefers to be fondly known
just as Fyqah, playing the role of Khatijah
was a challenge simply because she likened
Khatijah to be gila (crazy) while she is just
the opposite.
“I am the kind of person that would take
whatever that comes my way in my stride.
I can accept the harsh realities of life and I
know how to deal with people. Khatijah was
gila because she created a world for herself
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with 100% natural ingredients, it currently stock 21 diﬀerent snacks, including
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Subscribers can opt for a package of ﬁve preferred snacks. Can’t make up your
mind? Go for the “surprise snack” option and let it do the hard work for you.
Subscriptions can be made monthly for RM59.90, quarterly, semi-annually
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and subscriptions, visit www.signaturesnack.com.
and didn’t stand up to the bullies,” Fyqah
said with a chuckle.
She confessed finding several scenes difficult because there were so many people
and she kept laughing at some of the serious scenes. Chong interjected to say he was
worried about getting those scenes done on
time but “all’s well, ends well”.
When asked how she felt during the
scenes where she was beaten, Fyqah said
that she told her co-stars to “buat je apa
yang perlu. Jangan risau” (Do what needs to
be done. Don’t worry). She said the scenes
needed to be real and the only way to do it
was to put themselves in their respective
characters’ shoes.
She took on the role to challenge herself
as an aspiring actress and the panellists of
the BMW Shorties 2014 acknowledged her
effort and awarded her for it. As this was her
first acting attempt, she did not believe her
mother (who is also her agent) when she
was told about her nomination in the Best
Actress award category.
“My mother loves to play pranks on me
and I honestly thought it was one of her
pranks. It was only when my mother said
‘let’s go shopping for a dress to wear to the
awards ceremony’ that I realised she wasn’t
joking. It is still unreal to me that I actually
won. But, I am grateful for this opportunity
and experience,” she added.
Besides acting, Fyqah also sings and dances but through it all, maintains her straight-A
grades as she believes above everything
else, education is important. She also emphasised the importance of addressing the
issue of school bullies because one of her
family members was a victim.
“Don’t be silent if you are being bullied.
It is not okay and you need to speak out.”
Watch the short film at http://www.bmwshorties.com.my/top-10-finalists-2014/
28
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M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE FI N AN C I AL DAI LY
WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE
Zen TODAY
Since we cannot change reality, let us change
the eyes which see reality. — Nikos Kazantzakis
Building passion
for THE GAME
‘Rugby for all’ at the KL Saracens International
Rugby 10s 2015
BY V I C HI TRA NADE S
T
he vast field at the Bukit Kiara
Equestrian Club and Country
Resort in Kuala Lumpur was
packed with the excited and
determined faces of children,
pre-teens and teenagers from
Malaysia and other countries, for the KL
Saracens Green Rubber International Rugby
10s 2015 which was held over the weekend.
Local teams were joined by several international
teams and their players for the 8th edition of
the KL Saracens International Rugby 10s 2015.
Photo courtesy of KL Sacarens Club
Organised by the KL Saracens Club, the
event saw thousands of children and their
parents, complete with their customised
uniforms and banners, on the field. Undeterred by the scorching heat, the youngers
aged five to 18 had a ball.
The eighth edition of the KL Saracens
tournament saw participants from Brunei,
Macau, Indonesia, Sri Lanka, Singapore,
and of course Malaysia.
KL Saracens Club committee member
Previndran Singhe explained that the club
was formed purely for the love of the sport.
With their motto “rugby for all”, the
club has over 400 registered members
aged five to 18. Upon reaching the age of
18, members are allowed to join a senior
member’s team.
The first edition of the tournament in 2008
saw 40 teams participating, and impressively,
this eighth edition saw it hosting 159 teams
comprising 2,225 participants.
Singhe adds that while KL Saracens is a
non-gender biased club, the event was open
only to male participants. Yet, he added there
was a separate match for women yesterday,
the final day of the tournament and incidentally International Women’s Day.
Though participation in the tournament
was not limited to KL Saracens members
only, not just anyone is invited to play; the
club ensures that only premier teams are
invited from other countries, similarly for
local teams. Those who took part in the event
were either state champions, national champions or were from premier rugby schools.
KL Saracens — previously known as Bintang Rugby Club — is a non-governmental,
non-profit organisation that relies solely
on sponsorship to fund the club and tournaments.
This year’s sponsors for the tournament were Green Rubber Malaysia, Baker Hughes Sdn Bhd, Zerin Properties Sdn
Bhd, Wave Tech Sdn Bhd, Mitra Energy
Sdn Bhd, Global Power Services Sdn Bhd,
New Bloom Sdn Bhd, Ben Line Agencies
(M) Sdn Bhd, ISC Innovators Sdn Bhd,
HLAP Ltd, Allied Pickfords (M) Sdn Bhd,
Turcomp Engineering Services Sdn Bhd,
Amtech Signal Solutions, and Out of Africa
Restaurant and Kudu Bar.
Singhe — a rugby fan himself —said, “We
just want kids to have a good time and learn
something in the process. Rugby is a great
sport, especially for character development.”
S P O RT S 2 9
M ON DAY MA RC H 9 , 2015 • T HEED G E FINA NCIA L DA ILY
Double victory for
Park in Singapore
IN BRIEF
Australia into World Cup
quarter-ﬁnals
SYDNEY: Glenn Maxwell hit the
second-fastest World Cup century as Australia beat Sri Lanka
by 64 runs to reach the quarter-finals yesterday. Chasing
377 to win, Sri Lanka finished
on 312-9 with Dinesh Chandimal not returning to the field
having retired hurt on 52. Kumar Sangakkara hit a third successive century — and passed
14,000 ODI runs — but was
out for 104 while Tillakaratne
Dilshan added 62. Maxwell hit
his hundred off 51 balls, and
his innings of 102 was also his
maiden one-day international
hundred. Maxwell and recalled
all-rounder Shane Watson (67)
put on 160 for the fifth wicket
while Steve Smith (72) and skipper Michael Clarke (68) also hit
half-centuries. — AFP
Father owes her US$7,500 after she sinks 15 birdies
BY PAT RI C K JOH N STON
SINGAPORE: South Korea’s
Park In-bee picked up a healthy
win-double in one of the world’s
biggest gambling cities yesterday after a father-daughter wager helped her focus to success at
the HSBC Women’s Champions in
Singapore.
Before the tournament, the
five-time major winner bemoaned
the toughness of the notoriously
tricky Serapong Course on Sentosa Island, home to one of the city
state’s two casinos, so much that
her father said he would pay her
US$500 (RM1,840) for every birdie she made. In return, he wanted
US$1,000 for each bogey.
Unfortunately for the dad, his
daughter went bogey free over
four days to complete a wire-towire success at the US$1.4 million
restricted-field LPGA Tour event
thanks to 15 pricey birdies.
“I took the bet thinking maybe
Najibullah
counter-attacks
against New
Zealand pace
BY GREG ST U TC H BURY
NAPIER: Najibullah Zadran
wrote himself into cricketing
folklore yesterday when he deposited a delivery from Tim
Southee onto the roof of the
Harris Stand at McLean Park,
a shot with a distance of close
to 100 metres.
It was one of two sixes the
22-year-old hit off Southee, the
World Cup’s joint top wicket-taker who had destroyed England’s
batting line-up just over two
weeks ago with seven for 33.
Najibullah also had a particular liking for Adam Milne’s express pace, hitting the fast bowler
for four boundaries in his run-aball 56. The left-hander’s aggressive innings rescued Afghanistan
from 59 for six as he combined in
a 86-run partnership with Samiullah Shenwari, who went on to
make 54 as the associate nation
were dismissed for 186.
“He’s an aggressive player,”
Afghanistan captain Mohammad Nabi told reporters in Napier of Najibullah. “We put him in
to use him in the last 10 or 15
overs to hit the big shots.
“We did not give him the platform for him to do that. Every
match he has been under pressure after losing early wickets and
low scores, but today [yesterday]
he played really well.”— Reuters
even if I make bogey, he’s not going
to take my money. I think it ended
up really nicely,” a grinning Park
told reporters after the 13th title
of her career.
“It gave me extra motivation I
guess. It’s so fun and something
other to motivate and something
else to concentrate on. I don’t
think I can even believe myself
that I didn’t make any bogeys for
72 holes. I mean, if I thought about
bogeys, when am I going to make
bogey, if I was afraid of the bogeys,
I’d probably make bogeys.”
Park said she didn’t think her
father would be paying up the
US$7,500 prize yesterday.
“He ran out of money since yesterday. I’m lending him money.”
The 26-year-old, though, said
she was indebted to him and the
rest of her family for their support
in Singapore as she claimed one
of the few titles to have previously
escaped her clutches.
“Yeah, it’s good to have a fam-
Landmark night for
Sangakkara in Sydney
Park said betting with her father gave
her extra motivation. Photo by AFP
ily here and they are big energy,”
Park added.
“This week just went so quick. I
was just having dinner with them
and chat with them. Every day went
so quick, I didn’t have to think
about so much golf when I’m not
on the golf course, so I think that
was a big help.”
Starting the day with a two-shot
lead over world No 1 Lydia Ko and
American Stacy Lewis, Park remained cool and composed as the
red-hot New Zealander drew level
after only five holes.
Ko, 17, however, could not continue the momentum and struggled
from the tee and with her putter as
Park closed out a two-shot win.—
Reuters
Hamilton feeling ‘stronger than ever’
BY ALAN BALDWI N
LONDON: Formula One world champion Lewis Hamilton says he is going
into the new season mentally stronger
than ever after learning to keep his
personal and professional life apart.
Hamilton won 11 of the 19 races
last year on his way to a second title.
However, he and on-off girlfriend
Nicole Scherzinger have separated since she watched him win the
Abu Dhabi season-ender and title
last November.
“I think last year, I adapted ... a
mental attitude that was kind of, I
would like to say, impenetrable,” the
Mercedes driver told British reporters before heading to Australia for
the March 15 season opener.
“In the previous years it has been
the case where it [personal issues]
has affected my life in general but
I feel that I still carry that kind of
mentality from last year. Having
been in this position before, I feel
stronger than ever so I don’t feel that
it’s going to be a problem.”
The Briton started the 2014 season,
the first of the new V6 turbo hybrid
era, with some pundits suspecting
his team mate Nico Rosberg might
get the better of a man who so often
wears his heart on his sleeve and lives
in the public glare. Instead, Hamilton won more of the mind battles
between the two title rivals.
Everything aligned for the double
champion last year and he said that
was a rarity.
“It’s like once in a blue moon
that it’s all in line but I still feel like
I’ve got enough in place to do what
I need to do and to be the best I can
be,” said the 30-year-old. “It’s not
easy to better a season like last year.
In terms of performance, it was the
best year that I think I’ve ever had,
but it doesn’t mean I can’t beat it so
that’s what I’m trying to do.”
Hamilton is also negotiating
his own contract extension with
Mercedes, with the existing one running out at the end of the year, and
he said that was progressing well.
“Hopefully we’re in the final stages.” — Reuters
Pakistan’s Sarfraz elated at equalling Gilchrist record
BY SHAHID HAS HM I
AUCKLAND: Recalled Pakistan wicketkeeper-batsman Sarfraz Ahmed
said yesterday he was excited at being
bracketed with Australia great Adam
Gilchrist after equalling the record
for most catches behind the stumps
in a one-day international innings.
The 27-year-old, who did not feature in Pakistan’s first four matches
of the World Cup, marked his debut
at this tournament in style with a
run-a-ball 49 before holding six
catches in Pakistan’s 29-run Pool B
victory over South Africa in Auckland on Saturday that gave his side
a chance of a quarter-final spot.
“It’s a great honour,” Ahmed told
AFP. “I didn’t know about the record
but after the match someone told
me that I have equalled Gilchrist’s
record and that made me proud.”
Gilchrist became the first of seven
keepers to take six catches behind the
stumps when he achieved the feat
against South Africa at Cape Town in
2000. He repeated the feat four times,
while Alec Stewart (England), Mark
Boucher (South Africa), Matt Prior
(England), Jos Buttler (England), Matthew Cross (Scotland) and now Sarfraz have all since equalled the now
retired Australian’s achievenment.
Ahmed said his catch to dismiss
South African master blaster AB de
Villiers was the most important of
all his dismissals on Saturday.
“AB is the most destructive batsman of all and he was threatening
to take the game away,” said Ahmed
of the South Africa skipper, who
smashed a 58-ball 77 with five sixes
and seven boundaries.
But once de Villiers was caught
behind off paceman Sohail Khan,
Pakistan sealed the match by defending a revised 232-run target after
rain twice interrupted their innings.
The left-arm pace trio of Rahat
Ali (three for 40), Wahab Riaz (three
for 45) and Mohammad Irfan (three
for 52) reduced the Proteas to 202
all out.— AFP
SYDNEY: Sri Lanka’s Kumar
Sangakkara became the first
batsman to score hundreds in
three consecutive World Cup
matches when he made a brilliant run-a-ball century against
Australia in a Pool A match in
Sydney yesterday. The 37-yearold left-hander’s 24th ton in his
402nd match at this level also
saw him equal the overall ODI
record for consecutive hundreds
held jointly by the Pakistan pair
of Zaheer Abbas and Saeed Anwar, the South African trio of
Herschelle Gibbs, AB de Villiers
and Quinton de Kock and New
Zealand’s Ross Taylor. Earlier,
Sangakkara became only the
second batsman after Sachin
Tendulkar to score 14,000 ODI
runs when he got to 39 with a
paddled two off spinner Glenn
Maxwell. — AFP
South Korea edge out
Thailand in Davis Cup
BANGKOK: South Korea beat
Thailand 3-2 in their first round
Davis Cup Asia-Oceania tie, with
a victory in the reverse singles
on Sunday enough to spoil the
hosts’ hopes of a final day comeback. The visitors came in with
a slim 2-1 lead after two days
of competition, with the Thais
hoping to overturn the deficit.
But Chung Hyeon snatched away
Thailand’s chances, breezing by
Danai Udomchoke 6-4, 6-1, 6-1
in the early Sunday game — giving the visitors an unassailable
3-1 lead and registering his second singles win of the tie. — AFP
New Zealand down China
in marathon Davis Cup tie
AUCKLAND: New Zealand outlasted China after a marathon
start to finish 4-1 winners in their
Davis Cup Group I Asia-Oceania first round tie in Auckland
yesterday. The deciding third
singles was taken out by New
Zealand’s Rubin Statham over
China’s Zhe Li 6-3, 6-4, 6-3 in
the only straight sets match in
the tie. The opening singles on
Friday were both five-setters with
Wu Di winning for China and
Michael Venus registering a win
for New Zealand. — AFP
3 0 S P O RT S
M ON DAY M ARC H 9, 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY
Taechaubol agrees to
buy AC Milan
Berlusconi agrees to sell 30% of club to Thai tycoon
BY JU ST I N DAVI S
MILAN: AC Milan owner Silvio Berlusconi has signed a preliminary
agreement to sell 30% of the club to
Bee Taechaubol following a meeting
between the Italian media magnate
and the Thai businessman, according to reports yesterday.
Speculation surrounding the sale
or part sale of the seven-time European champions has swirled in recent months with Taechaubol now
touted as the leading contender to
purchase a sizeable share in the
legendary Serie A club.
Last month Chinese billionaire
Wang Jianlin, who recently bought
influential Swiss sports marketing giants Infront for €1.05 billion (RM4.2
billion) as well as a 20% stake in defending Spanish champions Atletico
de Madrid, had entered the fray as
a possible investor.
But a report in yesterday’s La
Gazzetta dello Sport claimed Berlusconi and Taechaubol held a
meeting at Berlusconi’s family
home in Arcore last week where a
“preliminary agreement was put
down in black and white”.
It said a financial broker from the
Rothschild bank was in attendance
for the signing of a memorandum of
understanding between the parties
and that the proposal would “now go
through a process of due diligence”.
The deal would see Taechaubol
acquire a 30% share in the club at
the end of May for €250 million. If
Berlusconi goes back on the decision
he would be liable to pay a penalty
amounting to 10% of the price of
the €250 million stake.
Taechaubol, the executive director of a Southeast Asian private
equity group, admitted his interest
in the club last month.
“I do not deny the interest for
a possible share acquisition into
such a prestigious club such as AC
Milan, but at the moment it’s only
cordial and private discussions with
representatives from the AC Milan
group,” he said on Feb 18.
Rumours of a possible deal between the parties resurfaced at the
end of last week, prompting Berlusconi’s Fininvest company to issue
a statement which effectively sug-
Taechaubol had admitted his interest in
the club last month.
gested the former two-time Italian
prime minister wants to retain a
majority share in the club.
“Following the recent media reports, Fininvest reiterates it is not
interested in selling majority shares
of AC Milan,” said the statement.
“All we can do is confirm what
we already stated on Feb 14: that
various parties have shown an in-
terest in investing in the club but
that no concrete discussions have
taken place.”
Fininvest last month played down
reports Berlusconi had rejected an
offer of €970 million for the embattled Serie A club but was willing to
sell a minority stake if it came with a
pledge to help build a new stadium.
The reports claimed Berlusconi
rejected a Singaporean-led bid, led
by “friends” of Inter Milan’s Thai
owner Erick Thohir, to buy the club
for €970 million.
According to Gazzetta’s report
yesterday, the preliminary agreement between Berlusconi and Taechaubol fixed the value of Milan at
€800 million. The club’s revenues
in 2013/14 were €254.6 million although its overall debt currently sits
at €244 million.
Gazzetta’s report yesterday, however, suggested Berlusconi has an
alternative plan to sell the entire
club and has contracted the Lazard
bank — who brokered the deal between Inter’s former president Massimo Moratti and Thohir — to find
a suitable buyer. — AFP
Real Madrid
stumble to
defeat in Bilbao
Pochettino delighted with
Kane-inspired Spurs’ revival
BY KI ERA N C A NNING
BY IAN W IN RO W
MADRID: Real Madrid’s poor
form in 2015 continued as they
were beaten 1-0 by Athletic Bilbao at San Mames on Saturday.
Aritz Aduriz scored the
only goal of the game midway
through the first half with a
thumping header from Mikel
Rico’s cross.
The visitors improved after
the break, but couldn’t find a
way past Gorka Iraizoz as Athletic recorded their first victory
over the European champions
in five years.
Madrid’s third defeat in
11 league games means that
Barcelona can move one point
clear at the top of the table with
victory over Rayo Vallecano on
Sunday.
“I think the problem we are
having at the moment is quite
clear,” said Madrid boss Carlo
Ancelotti.
“It is not a defensive problem, it is an attacking problem. We are not finding a
way through like we did in
the games before. We’ve only
scored one goal, from a penalty, in two games. That is the
problem we have to fix. We lack
efficiency up front.” — AFP
LONDON: Mauricio Pochettino admitted he is running out of words
to describe Harry Kane after the
forward boosted Tottenham Hotspur’s hopes of claiming a place in
next season’s Champions League.
Kane scored twice as Spurs beat
relegation-threatened Queens Park
Rangers 2-1 to take his season tally
to 26 goals in all competitions and
move his side to within three points
of Manchester United.
The forward had failed to score
in his previous three games but he
took both his goals well to cap a
fine display in front of the watching
England manager Roy Hodgson.
Not for the first time this season
Pochettino was able to reflect on a
match-winning contribution from
the 21-year-old although the Spurs
manager refused to be drawn on
whether his player should receive
a first England call-up.
He said: “It’s difficult to say anything else about Harry, his performance shows his strength to keep
working. It’s Roy Hodgson’s decision if he plays for England or not,
but all of us here in the Tottenham
family are happy with him.”
Kane himself is taking nothing
for granted ahead of England’s Euro
qualifier against Lithuania at the
end of this month.
He said: “I just need to keep doing what I’m doing. There are still
a few more games until the international break so I just need to do
the best I can for Spurs. I’m loving
my football, being out there with
my teammates and my mates. I
feel good and confident, it’s important for a striker to have that. The
second goal was a nice composed
finish.” — AFP
Make or break for Man Utd, Arsenal in FA Cup
BY TOM W I LLI AM S
LONDON: The FA Cup has been an
underdogs’ tournament this season,
but its first genuine heavyweight
clash arrives today when holders
Arsenal visit old rivals Manchester
United in the quarter-finals.
The eliminations of Chelsea,
Manchester City, Tottenham
Hotspur and Southampton have
cleared the route for United and
Arsenal, and it is an opportunity
that both teams are desperate not
to squander.
Recent events have left the FA
Cup as the last realistic opportunity
for both sides to apply a silver sheen
to seasons that are rolling towards
uncertain conclusions.
The pair remain well placed to
qualify for next season’s Champions League. But Arsenal are on
the brink of elimination from this
season’s Champions League while
doubts continue to dog United as
they struggle for form under Louis
van Gaal.
Arsenal have won four matches
in a row in the league, but recent
history has given them reason to
fear trips to Old Trafford.
Arsene Wenger’s side have not
won there since September 2006.
The Arsenal manager refuses
to entertain talk of bad omens,
saying: “I don’t believe too much
in history. I just believe in the performance on the day. At the moment we are doing very well away
from home.
“We are confident from our Premier League run, so we go to Manchester United to qualify and to
give absolutely everything.” — AFP
IN BRIEF
Villa face FA probe after
pitch invasion
BIRMINGHAM: The Football
Association are set to launch
an investigation into the crowd
trouble which marred Aston
Villa’s FA Cup quarter-final victory over West Brom on Saturday. The first sign of trouble came shortly after Delph’s
51st-minute goal when a smoke
bomb was let off by the home
fans in the lower tier of the
North Stand. Tensions became
further heightened later in the
half when West Brom supporters in the North Stand’s upper tier tore out several seats,
throwing them at Villa fans situated below them. Next, in added time, stewards were forced
to gather up hordes of home
fans who flooded onto the field
to prematurely celebrate before the final whistle.Then a
mass pitch invasion ensued at
the final whistle, with players
from both sides caught up in a
melee. — AFP
Inzaghi still on brink as
Verona peg back Milan
MILAN: The future of AC Milan coach Filippo Inzaghi was
left hanging in the balance on
Saturday after Uruguayan Nico
Lopez came off the bench to
hit an injury-time leveller for
Verona in an insipid 2-2 draw
at the San Siro. Milan looked
to have done enough to claim
only their third win in 11 games
after an own goal by midfielder Panagiotis Tachtsidis gave
the hosts a second-half lead
after first half goals from Luca
Toni and Jeremy Menez, both
from the spot. However Inzaghi
and his fallen Serie A giants
were whistled and jeered off
the pitch by an increasingly
hostile home crowd. — AFP
Routine win sets PSG up
for Chelsea showdown
PARIS: Paris Saint-Germain
warmed up for their decisive
Champions League date with
Chelsea by recording a routine
4-1 home win against struggling Lens on Saturday that
took them provisionally to the
top of Ligue 1. Paris remain
unbeaten at home this season
and have now gone 14 games
without losing in all competitions. However, manager Laurent Blanc will be aware of the
need for an improved display
against Chelsea, with the last16 tie level at 1-1 and PSG needing to score in the second leg at
Stamford Bridge on Wednesday
to have a chance of progressing
to the quarter-finals. — AFP
Messi hits Spanish record
32nd hat-trick for Barca
BARCELONA: Lionel Messi hit
his 32nd hat-trick for Barcelona against Rayo Vallecano
yesterday to set a new Spanish
record. The Argentine struck
a penalty after 56 minutes followed by further goals after 63
and 68 minutes to go one ahead
of former AthleticBilbao great
Telmo Zarra. Cristiano Ronaldo has notched up 27 for Real
Madrid. — Reuters