American O&G invest in IDR

By Star Biz

American oil and gas company Halliburton has opened a RM200mil manufacturing centre in the Iskandar Development Region (IDR).

The facility, spanning 20,000 sq m in Johor Technology Park, targets supply chain production and delivery capabilities across Halliburton’s completion and production division.

It is also the sixth eastern hemisphere-based manufacturing centre in the region, supplementing 16 existing production facilities across North and Latin America, Europe and Asia.

The Johor facility performs procurement and customer service activities as well as engineering, machining and product assembly primarily for customers in the Asia Pacific, Middle East, Africa and Europe Eurasia regions.

At present, the manufacturing centre has around 100 employees, with the headcount expected to exceed 250 by year-end.

Halliburton completion and production division president David King said the company was excited to launch a greater offering of its products and equipment to its customers in the region.

“The addition of the Johor facility is another step in our company’s strategic plan to concentrate more of our investment and supply chain resources to our key growth areas,” he said after the launch of the facility on Thursday.

Supply chain and management systems senior vice-president Len Cooper said the facility catered to Halliburton’s international customers while building regional supply networks that supported local economies.

Meanwhile, country lead for Central Asia, Rao Abdullah, said the company decided to invest in Johor given that the state was an economic development hub.

Halliburton plans to continue expand in the eastern hemisphere with a combined manufacturing and technology centre expected to open in Singapore later this year.

The group is one of the world’s largest providers of products and services to the energy industry.

Maybank buys Indonesia’s sixth largest bank

By Star Biz

Malayan Banking Bhd’s share price fell as much as 10.6% or 95 sen in early trade on Thursday on some investors’ concerns that it was paying a high price of RM8.6 bil for a 100% stake in PT Bank Internasional Indonesia Tbk.

It opened at RM8.40, down 55 sen. Within the first hour of trade, there were 14.81 million shares done at prices ranging from RM8 to RM8.45.

At 10am, it was trading at RM8.45, down 50 sen or 5.6%.

The KLCI fell points to 12.18 points to 1,233.24 as investors locked in gains, uninspired by the weak closing on Wall Street. US financial shares slid when concerns resurfaced that bank profits will take much longer than expected to recover from the housing slump. The Dow Jones industrial average closed down 109.74 points, or 0.88%, at 12,422.86.

On Maybank, OSK Investment Research said in a note to clients that the acquisition price was not cheap as based on the acquisition price.

“We must admit that the acquisition price is not cheap as based on the acquisition price, BII is essentially priced at 4.45 times and 61.5 times FY07 BPS and EPS, respectively, or 4.26 times and 33.0 times FY08 BPS and EPS,” it said.

However, it always believed that Maybank should expand its overseas presence in order to mitigate the saturated domestic market share.

“We believe the Indonesia banking sector offers more upside in the long-run as per the ratio of total outstanding loans-to-nominal GDP. However, due to the potential near-term profitability dilution, we have lowered our fair value to RM10.80 but maintain our BUY call,” it said.

On Wednesday, Maybank announced it wanted to take over Sorak Holdings Ltd, which has a 55.7% stake in PT Bank International Indonesia Tbk (BII), from Fullerton Financial Holdings and Kookmin Bank for RM4.8bil cash. It will later make a general offer for all BII shares it does not own. Starbiz reported that to some people, Maybank’s move to pay RM8.6bil, or 4.6 times book value, indicated how desperately the group wanted BII, Indonesia's sixth biggest bank.

The valuation is among the highest in the industry. The offer price is about 20% above Jakarta Stock Exchange-listed (JSE) BII's market price. The book value of 4.6 times is about double the average valuation among Indonesia's publicly traded banks.

The top four banks listed on JSE are currently trading at about 3.9 times. BII's net profit has been declining since 2004. For the year ended Dec 31, 2007, the bank's net profit fell to 404.7 billion rupiah (RM142mil) from 633.7 billion rupiah (RM222.3mil) in 2006.

Malaysia Tourism 2010

By Biz times

TOURISTS are expected to spend half of their money shopping in Malaysia by 2010, which will give the country its much sought after international shopping heaven status.

Tourism Malaysia calculates that tourists will be spending up to RM30 billion by then to buy anything from apparel and bags to watches and souvenirs.

It plans to promote the country more aggressively to achieve this goal, said Rosly Selamat, general manager of its Shopping Malaysia Secretariat.

"We need to make Malaysia more visible, especially in countries where the people love to shop," he told Business Times in an interview, adding that Thais, Indonesians, Koreans, Indians and Middle Easterners were among those keen to shop.

According to Rosly, Tourism Malaysia has proposed the lifting of duties on more items.

He said this would help promote Malaysia as a duty-free shopping destination and attract more tourists.

"There are still some items like apparel and jewellery ... removal of duties will help boost sales."

Rosly pointed out that Singapore and Dubai have the advantage of being tax-free for tourists.

Malaysia decided in 1999 to brand itself as a shopping heaven, competing against cities like Singapore, Hong Kong and Dubai - the long-established shopping destinations in Asia.

The then Ministry of Culture, Arts and Tourism decided that three nationwide sales would be held annually - in March, August and December - from 2000.

The ministry also gave itself four years, from January 2000 to December 2003, to become Asia's top shopping paradise.

However, eight years have passed and Malaysia has yet to catch up with Hong Kong, Dubai and Singapore as a shopping destination.

Tourism Malaysia has proposed the lifting of duties on more items as this will help promote Malaysia as a duty-free shopping destination

Gold hitting US$1,200 in three months

By Star Biz

US gold futures, which surged to a record US$1,001.50 on Thursday, is likely to breach US$1,200 an ounce within the next three months.

MIMB Investment Bank Bhd technical analysis manager Lee Cheng Hooi said gold could hit new highs this year on expectations of further Federal Reserve rate cuts and inflationary concerns.

“Based on monthly trends, gold prices are seen to be strong as investors see gold as a real and tangible asset and safe value haven amid economic uncertainties,” he added.

Aseambankers chief economist Suhaimi Ilias said gold was used as a hedge against the weakening dollar and inflationary pressures.

“History also proves that traditionally, gold is favoured during inflationary periods,” he said, adding that gold would continue its upward trend due to the volatility in the dollar.

TA Securities head of research Kaladher Govindan concurred that gold price, which was also driven by soaring crude oil prices that had scaled to a record US$111 a barrel, would continue to rise due to the weak US economy.

According to an AFP report, Asian economic giants China and India have also boosted demand for the precious metal, which is used in jewellery, dentistry and electronics.

“Gold, which is priced in dollars, becomes cheaper for buyers using other currencies when the US unit falls in value. The dollar slumped on Thursday against both the euro and yen as fresh credit jitters swept across global markets,” the report said.

The report added that gold price had risen by about 17% so far this year, spurred also by supply problems in the world's largest producer, South Africa.

“Stoppages by miners protesting unsafe working conditions and ongoing power cuts in South Africa have hampered supplies,” it said.

On the local front, Datuk Andrew Kam Tai Yeow, chairman and chief executive of London-listed Malaysian gold miner Peninsular Gold Ltd, said the overwhelming global demand for gold bode well for the local gold mining industry.

The company has invested RM60mil in the East Coast Economic Region to build a plant in Raub, Pahang. The plant, expected to start production soon, will be able to extract 85% of the gold residue left in mine tailings.

“We would consider increasing our investment as we see a lot of potential, going forward,” he said.

However, trading in local jewellers such as Poh Kong Holdings Bhd and DeGem Bhd was thin despite the recent spike in gold price.

An analyst attributed this to the local political situation and global volatility.

The upward trend in gold price would not necessarily translate into higher share prices for gold jewellers; instead investors preferred to invest in the commodity itself, the analyst added.

Yeah man, quickly go to yr nearest Poh Kong! i'm not joking man!

Air Asia future and goals

By Star Biz

AirAsia is not a beverage, yet Datuk Tony Fernandes, who has been instrumental in building the low-cost airline, believes that the AirAsia brand can become as popular as Coca-Cola.

His wish is to see the AirAsia’s name plastered across billboards and banners in travel offices around the globe, even on watches and football stadiums, in six years.

A recent article described Coke as “truly a model of marketing power as its image has transcended national borders to cultural barriers to reach almost everyone on earth”.

“I would like the AirAsia brand to be as big as Coca-Cola,” Fernandes, the group CEO of AirAsia, told StarBiz in an interview recently.

“Given fair competition, we can be as big or even bigger than Singapore Airlines (SIA) too.

“We can be, and it is my goal that we, AirAsia, become bigger than SIA, and carry more passengers than SIA.”

He is using SIA as the benchmark as it is a well-recognised global airline brand although the national carrier, Malaysia Airlines, has for several years been winning accolades for having the world’s best crew.

But in terms of brand reach, Fernandes prefers the market reach to be as big as that of Coke.

“Even before AirAsia can fly to Europe, it was already flying Europeans and other nationalities around Asia and that just goes to show that our brand is spreading all over.

“AirAsia is a strong brand and an airline that has managed to create a market for itself. It has gone beyond Malaysia’s borders and would continue to carry the Malaysian flag to more countries,” he said.

Today, AirAsia flies 90 routes and to 47 destinations, has a fleet of 67 aircraft and has ordered 175 new aircraft in the hope of becoming as big as Ryanair. It employs nearly 5,000 people.

Ryanair, according to its website, was set up in 1985 and is today Europe’s largest low-fare airline. This year, Ryanair will carry 52 million passengers on 645 low-fare routes across 26 European countries.

By the end of March, Ryanair will operate a fleet of 163 new Boeing 737-800 aircraft and has placed firm orders for 99 more new aircraft to be delivered over the next five years. The airline employs 5,000 people.

AirAsia's sister company, AirAsia X, is a long-haul low-cost carrier which began flying passengers last November. Its first destination was Australia's Gold Coast and the airline has now added Hangzhou to its network.

More destinations are on its route map but the airline needs to get new planes before it can start operating more routes. It wants to reach out to as far as London to connect Asians to Europe and vice-versa.

AirAsia was incorporated in 1983. It started off as a joint venture between Hicom Holdings Bhd and Mofaz Air Sdn Bhd but only took to the skies in November 1996 after a two-year delay.

The idea of setting up a second airline for Malaysia was to offer travellers new destinations to complement MAS' regional services. But it did do as expected and was sold to Tune Air Sdn Bhd in September 2001 for RM1.

The deal was completed five days before the Sept 11 attacks that threw the aviation sector into a tailspin. Many people had then wondered if Fernandes and his friends, who were from the music industry, knew how to operate an airline amid turbulent times. Not long after that, the Severe Acute Respiratory Syndrome outbreak also shook up the aviation sector.

Tune Air’s strategy was tactical. It re-launched the brand and used red as a base coat. The airline lured travellers by offering several hundreds free seats. Low-cost travel was a new thing then and the promoters of AirAsia just knew how to get people excited with its low, and at times zero, fares.

Many first timers flew with AirAsia and this speaks volumes of the airline's tagline “Now, everyone can fly.” With AirAsia, Malaysians had the choice to travel cheap and it is no a surprise that one planning a holiday would ask: “Does AirAsia fly there?''

AirAsia, as a brand, has gone beyond cities to towns and small villages. Today, it links many Asian cities to Kuala Lumpur. Soon, it will be linking Europe, India and the Middle East to Malaysia.

Entering the Singapore market was a major coup for the airline, which initially had no future in the republic. Today, it provides the linkage for many travellers from Singapore and via Singapore to Malaysia and Asia at low fares.

Giving away free seats and dropping fares to very low levels has helped the brand spread. Encouraging travellers to book online has allowed many to book seats from remote cities anywhere in the world.

Fernandes said many new routes and destinations were on the cards. “We will fly to Amritsar and London soon,” he promises.

Many AirAsia billboards and banners will be put up in other countries but will the AirAsia brand eventually come close to the omnipresence of the Cocal-Cola name?

A lot of work lies ahead of AirAsia as the clock starts ticking.

KL share market slumped

By Biz Times

MALAYSIAN shares plunged 9.5 per cent today in a session marked by a one-hour trading suspension as surprise weekend election results shook the stock market, dealers said.

Trading was halted when the stock market fell 10 per cent during the day, after the Barisan Nasional coalition lost its two-thirds majority in parliament.

It was the biggest decline in a decade, since stocks dived 21 per cent in a single session at the height of the Asian financial crisis in September 1998.

Bursa Malaysia said the stock market was suspended between 2.58 pm and 3.58 pm, when the 10 per cent drop triggered a failsafe.

The losses continued when trading resumed, but by the end of the session the Kuala Lumpur Composite Index had recovered slightly and closed down 123.11 points to 1,173.22.

Yeah Kim Leng, group chief economist with RAM Holdings Bhd, said the dramatic fall, which was also compounded by fears of a US recession, had been much steeper than anticipated.

“I only expected the bourse to dive by five per cent Monday,” he said.

Dealers said there was some element of panic selling but that volume was still manageable and that the selldown was confined to blue chips and big caps.

The worst-hit sectors were construction, services and property.

Declining stocks overwhelmed advancers 905 to 26, with 62 stocks unchanged and 435 counters untraded. Trading volume totalled 1.2 billion shares, valued at RM3.2 billion.

The construction sub-index plunged 15.8 per cent or 40.7 points to 217.41 while the property sub-index dived 9.2 per cent or 77.4 points to 761.93. The services sub-index tumbled 9.7 per cent or 16.94 points at 157.36.

Yeah said the bourse was expected to head south for the next few days but that it would later rebound.

“The Barisan Nasional is still in power and the country’s economic fundamentals remain intact,” he said.

Among construction and property stocks, Malaysian Resources Corp sank 66 sen or 34.0 per cent to RM1.27 and Equine Capital dived 72 sen or 50.4 per cent to 71 sen.

National power company Tenaga tumbled 1.30 sen or 15 per cent to RM7.35, while Telekom Malaysia shed 95 sen or 8.7 per cent to RM9.95.

Singapore invest in citigroup?

By The Edge

Investment guru Jim Rogers believes US bank stocks could fall further and predicts Singapore’s state investors will lose money on their multi-billion dollar investments in Citigroup and Merrill Lynch.

“I’m shorting investment banks on Wall Street,” Reuters reported the long-time commodities bull as saying yesterday at a launch event for ABN AMRO certificates linked to commodities.

“It grieves me to see what Singapore is doing. They are going to lose money,” he added, referring to investments by Government of Singapore Investment Corp and Temasek in Citigroup, Switzerland’s UBS and Merrill Lynch.

Rogers, an American who co-founded the Quantum Fund with billionaire George Soros in the 1970s, now lives in Singapore as he wants his four-year-old daughter to learn Mandarin.

Rogers, who also writes investment books, said Wall Street had to work off 10 years of excesses and predicted that losses linked to risky mortgages will eventually spread to credit card bills, student loans and other debt.

Meanwhile, Bloomberg quoted Rogers as saying that crude oil prices would go up much higher, but “how high I don’t know”.

“Commodities are going to go higher because there’s just not enough. The dollar’s weakness is the icing on the cake for commodities.”

On stocks he was buying, Rogers said: “I have been buying Chinese shares, water treatment, power generation and tourism. I plan to buy more shares in China. I bought more Taiwan this week. I’m buying the renminbi, Swiss Francs and the yen.”

“Inflation is going to get worse and you have to be prepared for higher prices of everything. Higher prices always eat into demand patterns but that’s part of the cycle,” he said.

Analysts expect slower corporate earnings growth mainly because of a global economic slowdown and inflation 2008

By Biz Times

THE recently concluded reporting season saw most of the country's top 100 listed companies posting solid numbers, thanks to bright results by lenders, oil and gas service companies, palm oil producers, and property and construction firms.

A closer look at the top 25 companies by market capitalisation showed that five registered lower net profits in their quarterly results, while three posted lower earnings in their cumulative financial results. None, however, made losses.

Analysts, in general, were happy to see the results of Malaysia Airlines and Public Bank, while those of Malayan Banking, Puncak Niaga, YTL Power and conglomerate Sime Darby were below expectations.

"Most of the companies under our coverage are either above or within our expectations," MIMB Investment Bank research head Pong Teng Siew said.

However, analysts expect slower earnings growth this year, due mainly to a global economic slowdown and inflation.

"We expect companies under our coverage to grow by about 10 per cent this year, slightly below the 12. 2 per cent growth in 2007," said Pong.

The good news is that the weaker earnings estimates do not apply across all industries. Companies involved in steel, plantation, and oil and gas are seen as major beneficiaries.

Steel companies are expected to benefit from ceiling price adjustments and demand from China, plantation firms to see better numbers helped by higher crude palm oil prices, and multi-billion-ringgit jobs to be up for grabs by oil and gas firms this year.

Construction companies are also expected to see earnings growth as many major infrastructure projects under the Ninth Malaysia Plan (9MP) have yet to be awarded.

"We expect the award of contracts to take place after the elections, which are critical in meeting the objectives of the 9MP," Kenanga Investment Bank said in a report.

Foreign investment coming into Malaysia?

By Biz Times

BRITAIN'S Newcastle University will set up its first international branch campus within the Iskandar Development Region (Iskandar), putting the price of medical studies within reach of Malaysians.

South Johor Investment Corp Bhd (SJIC), the promoter of Iskandar, said the university will offer degree courses in medicine and bio-medicine studies.

"While the university's Iskandar campus is expected to be completed in 2011, the target date for the first intake of students will be for September 2009," SJIC said in a statement.

Higher Education Minister Datuk Mustapa Mohamed handed over the letter of invitation to the university's dean of International Medical Education professor Reg Jordan in Johor Baru yesterday.

Mustapa said students could get a Newcastle University medical degree at about half the cost of doing so in the UK.

"The cost for completing a course in the UK is currently about RM1 million for a five-year programme," he said.

According to SJIC, the Newcastle University will be housed in the Iskandar region under its EduCity concept.

EduCity is a fully integrated education hub where all the educational disciplines will come together in one location.

"EduCity serves to provide a platform for facilities from world-renowned universities to work together within a multi-varsity university environment," SJIC said.

SJIC will develop the campus, accommodation and recreational facilities for EduCity, and is currently finalising the design of the campus. Infrastructure work is expected to commence in the third quarter this year.

Do u think all the corridors proposed by our malaysia prime minister Abduallah Ahmad Badawi will succeed? hahaha...