Magna Prima is buying the Lai Meng school's land

By Biz Times

Magna Prima plans to build commercial and residential properties worth RM1.3 billion on the land on which the Lai Meng Primary School and Lai Meng Kindergarten sits. Magna Prima Bhd (7617) appears to have struck gold as it is buying a piece of prime land in Jalan Ampang, Kuala Lumpur, a stone's throw from the Petronas Twin Towers.

It will spend RM148.2 million to buy the land on which the 44-year-old Lai Meng Primary School and Lai Meng Kindergarten currently sits.

In its place, the company plans to build commercial and residential properties worth some RM1.3 billion, Magna Prima told Bursa Malaysia in a statement.

This would probably be the third time that a school in the city centre is giving way for redevelopment. In 2000, the Bukit Bintang Girls School was moved to make way for the Pavilion Kuala Lumpur, a shopping mall.

Eastern & Oriental Bhd and the Lion Group relocated St. Mary's School in Jalan Tengah/Jalan P. Ramlee to Selayang and work on the new project has started.

"The proposed acquisition also creates an opportunity for the group to venture into the high-end property market, seeing that land within the KLCC area available for development is scarce," Magna Prima said in its statement.

Magna Prima will buy the existing land of 10,587.5 sq m from the Lai Meng Girls School Association.

The purchase price, which is a quarter less than its market value, will be paid in cash and funded with internal funds, bank loans or through a joint venture with partners.

As part of the deal, Magna Prima will give another piece of land double the size of the existing property for the relocation of Lai Meng. The new land is in Bukit Jalil.

Magna Prima will design, arrange and organise the construction of the new school. However, it is unclear which party will bear the construction cost.

Its project in Jalan Ampang will only start when the new school is completed.

The development has an estimated gross floor area of 1.2 million sq ft and an estimated gross development value of up to RM1.3 billion.

The project, due to start in 2012, is scheduled for completion in 2015.

*Does that means there will be a new Lai Meng school in Bukit Jalil? Hurray, any more land for property in Bukit Jalil?

Amanah Saham Malaysia (ASM) declared dividen for 2008 in 2009

By The Star

Amanah Saham Malaysia (ASM) has announced an income distribution of 6.25 sen per unit for the financial year ending March 31, the lowest since the fund’s inception in 2000.

Last year, ASM paid 7.8 sen per unit in income distribution. The income distribution involved a total payout of RM407.58mil, said fund manager Permodalan Nasional Bhd (PNB) chairman Tun Ahmad Sarji Abdul Hamid.

“The payment will benefit a total of 402,513 unitholders who subscribe to 7.21 billion ASM units,” he told a press conference yesterday.

PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman said that the fund had the capacity to declare an income distribution of 7.92 sen per unit, but the group decided to reserve the income for the next financial year.

“We feel that 6.25 sen per unit is already in line with the market at this condition,” he said.

He attributed the diminished performance to the global economic downturn and the fund’s 25% increase in the number of units in circulation that had resulted in dividend dilution.

Declining to disclose PNB’s investment strategy going forward, Hamad said PNB’s objective remained creating long-term and sustainable returns for shareholders.

“We are a long-term player; we are looking for opportunity to buy more shares (with good fundamentals and are reasonably priced) that are good for the long term,” he said, adding that PNB was looking to issue more new products this year. He said ASM currently had RM2.1bil in cash.

ASM is a fixed-priced equity-income fund aimed at providing unitholders with a long-term investment opportunity by generating regular and competitive returns through a diversified portfolio of investments.

Up to last Friday, ASM had recorded gross income of RM440.73mil.

Dividend income from investments contributed RM219.33mil (49.76%), profit from the sale of shares generated RM137.84mil (31.28%) and the remaining RM83.56mil (18.96%) came from investments in short-term instruments.

The income distribution was based on the average monthly minimum balance held throughout ASM’s financial year.

Weak SE Asia property stocks 2009

By Biz Times

Malaysian property stocks have taken a beating and analysts warn of more pain for investors

MALAYSIAN property stocks have fallen more than 30 per cent this year due to domestic politics and inflation, but an imminent increase in interest rates is dashing any hopes of bargain hunting.

The country’s property sector has also underperformed peers across Southeast Asia, themselves hit by rising interest rates that have stemmed the flow of cheap money to finance a boom in the region’s fast-growing economies.

“If the (regional) interest rate is still going up there’s still some downside risk,” said Jason Chong, chief investment office of Kuala Lumpur-based OSK-UOB Unit Trust Management, which manages the equivalent of US$1.15 billion.

“Right now we are underweight property stocks. We want to wait until we think the interest rate (cycle) is about to turn,” said Chong.

Every central bank in Southeast Asia, with the exception of Malaysia, has hiked rates in recent months.

Malaysia’s inflation hit a 27-year high of 7.7 per cent in June and is expected to remain above 7 per cent in July and August. The Southeast Asian nation, a net exporter of petroleum, slashed fuel subsidies in June, causing a 41 per cent rise in retail gasoline prices and a 63 per cent jump in diesel prices.

Malaysian politics has also been pretty turbulent in recent months, following the ruling coalition’s worst ever performance in a general election in March, which hit local markets.

Also, higher steel and building materials costs have forced developers to put new projects on hold. Even the relaxation of foreign ownership rules and a flood of money for upscale office and residential projects in the central business district in Kuala Lumpur has failed to dispel the gloom.

Investment bank UBS said it was far from clear that falling commodity prices would feed through to lower inflation and allow central banks to pause or even cut rates and thus stimulate the region’s economies.

“It may be wrong to peg hope on the current downtrend in commodity prices sustaining and bringing inflation lower,” UBS said in a report published last week.

Malaysia’s economy is officially projected to grow 5 per cent this year, slowing from 6.3 per cent in 2007, mirroring weakness across Southeast Asia.

This week, Singapore released data showing its economy contracted at an annualised rate of 6 per cent in the second quarter, its worst performance in five years.

Its export-oriented economy is a bellwether for how a global economic slowdown will affect Asia. Prospects for Thai property stocks, viewed earlier this year as beneficiaries of a tax stimulus package, are also uncertain.

MORE PAIN FOR PROPERTY SECTOR

Malaysian property stocks have taken a beating and analysts warn of more pain for investors.
IOI Properties, Malaysia’s top property firm by market value, has fallen 30 per cent this year and second-ranked SP Setia has dropped about 34 per cent, underperforming a 23 per cent loss on the benchmark index.

The two stocks could see more downside based on their valuations in previous crises such as the September 2001 attacks and the 2003 SARS crisis, Credit Suisse said in a research note.
IOI Properties trades at 10.7 times 2009 earnings, which is 22-26 per cent higher than the lows recorded in 2001 and 2003, while SP Setia’s current PE of 12 times 2009 earnings is much higher than the 7 times and 8.4 times in the crisis periods, Credit Suisse said.

Property stocks in Singapore and Thailand have fared better, with CapitaLand, Southeast Asia’s largest developer by market value, falling 21 per cent this year and Thailand’s top housing company Land & Houses down just about 5 per cent.

However, the worst may not yet be over for Singapore properties.

Some analysts predict private residential prices in Singapore will fall by up to 40 per cent over the next three years after a more than 10 per cent drop this year, ending a four-year housing boom that had seen home prices jump about 30 per cent in 2007.

Goldman Sachs, Credit Suisse and Morgan Stanley have trimmed their full-year estimates for Singapore’s top developers such as CapitaLand and City Developments, with CapitaLand’s 2008 earnings estimated to more than halve to S$1.0 billion.

“We see Singapore residential developers facing a double whammy of weakening demand amid incremental negatives on the economic front and rising construction costs,” Goldman Sachs said after developers announced first-half results last month. - Reuters

Malaysia largest import & export products in 1st quarter 2009

Malaysia's largest export statistics/contributor to the economy Jan 2009:

1st = Semiconductor devices (electrical and electronic appliances) RM13.7 billion/ 35.9%
2nd = Liquefied natural gas (LNG) RM4.2 billion/ 10.9%
3rd = Palm Oil & palm oil-based products RM3.8 billion/ 9.8%
4th = Crude Petroleum RM1.8 billion/ 4.7%
5th = Timber-based products RM1.4 billion/ 3.6%
6th = Petroleum products RM958.6 million/ 2.5%

Malaysia's largest import products/goods:

1st = Intermediate goods (raw material) RM19.9 billion/ 67.4%
2nd = Capital goods (machinery) RM4.8 billion/16.4%
3rd = Consumption goods (final products) RM2.4 billion / 8.2%

Malaysia’s top ten trading partners were Japan, Singapore, the United States of America, the People’s Republic of China, Thailand, the Republic of Korea, the Federal Republic of Germany, the Republic of Indonesia, Hong Kong and Australia. These countries collectively contributed 71.7% or RM48.6 billion of Malaysia's total trade for January 2009.

Harvard referencing:

Source: Department of Statistics Malaysia, 2009, Preliminary Release of Malaysia External Trade Statistics January 2009, Putrajaya, Malaysia, Available from...... [Accessed 12th March 2009]

Critical to keep good employees during an economic downturn

By the Star

It is critical to keep employee engagement level high at all times, particularly during an economic downturn, so that an organisation can navigate a crisis and return to stability and profitability, say human resources consultants.

Hewitt Associates consultant Yap Yoke Wah said organisations that had highly engaged employees had better financial results and were more capable in building a sustainable business model.

“Our research shows that the best employers have a revenue growth of about 22% year-on-year and are still able to yield such results despite the downturn,” she told StarBiz.

Yap explained that employee engagement measured the extent to which an organisation had captured the “hearts and minds” of its people to build and sustain strong business performance.

“It goes beyond satisfaction (how much I like things here) and commitment (how much I want to be here) to engagement (how much I want to and actually do improve our business results),” she said, adding that one of the top factors driving engagement was opportunities for growth.

Meanwhile, ongoing WorkAttitudes studies by Watson Wyatt Worldwide showed a strong link between employee engagement and key business metrics such as productivity and turnover.

The studies found that highly-engaged employees are 70% more likely than low-engagement employees to exceed performance expectations. They miss 27% fewer days of work due to illness and they represent very low turnover risk.

Talent2 International Ltd director for South Asia Leigh Howard concurred that high levels of employee engagement correlate to improved performance in areas such as retention, turnover, productivity, customer service and loyalty.

Howard said employee engagement ranked well in Malaysia but predicted that its level would be tested as people begin to feel less secure about their jobs.

“As employees begin to feel there are less developmental opportunities at their workplace and are unsure about their long-term future, their sense of commitment and engagement will tend to fade,” he said.

Hence, he said it was not an option to ignore employee engagement during an economic slowdown.

“Don’t hide bad news from employees but instead be open and honest to eliminate gossip and speculation.

“Utilise your line managers in this instance to work more closely with their teams and create a sense of common purpose in their daily work lives,” he added.
Meanwhile, Yap agreed that the level of engagement among the best employers in Malaysia was still fairly high and had not gone through any drastic changes, despite the current economic environment.

“However, globally we are seeing a dip in engagement,” she said.

Watson Wyatt’s studies reiterated that economic uncertainties could potentially weaken engagement and it was crucial for employers to engage their employees even when business had slowed down.

“Companies in Malaysia must create a culture of continuous engagement built on strong strategic direction and leadership, intense customer focus as well as transparent and equitable compensation packages,” it said in a report on its findings.

It added that companies that excel in these areas were likely to make it through the current crisis and deliver superior results in the years ahead.

Kumpulan Sentiasa Cemerlang (KSC) says it..

By Biz Times

MALAYSIAN fund manager KSC is bullish on consumer stocks such as tobacco company BAT Malaysia and utilities such as YTL Power
due to the dividends they pay, but is steering clear of state-controlled power firm Tenaga Nasional.

Choong Khuat Hock, director of research at Kumpulan Sentiasa Cemerlang (KSC), which manages about US$150 million, told Reuters in an interview the deepening economic crisis boosted the allure of dividend-paying stocks as safe-haven plays.

Food maker Nestle Malaysia, mobile phone company DiGi.com and independent power producer (IPP) Tanjong were also expected to be resilient in a worsening economy, said Choong. But it was a different story with Tenaga, he said.

“The problem for Tenaga is that industrial production and electricity demand have dropped quite a bit. The company is suffering from a fall in electricity demand,” said Choong.

Tenaga, which supplies two-thirds of the country’s electricity needs, must purchase all capacity produced by IPPs regardless of its requirement.

The company swung to a net loss in the first quarter and warned that its financial performance would worsen due to ballooning capacity payments to IPPs.

MORE EARNINGS DOWNGRADES?

KSC currently owns 106,000 shares of Tanjong and 217,000 shares of YTL Corp, according to Thomson One Analytics.

YTL Corp is the parent of YTL Power. Choong declined to comment on what stocks the company is buying or selling.

Malaysian companies finished their reporting season for the October-December quarter last week, where many companies such as No. 2 palm oil producer IOI and builder WCT reported a big drop in net profits due to a surge in customer defaults, provisions and investment writedowns.

JPMorgan said in a report on the quarterly results from 44 Malaysian companies that 39 per cent had reported earnings below expectations.

“The world economy is getting worse, Malaysia is not immune. Going forward, there will be worries about further earnings downgrades,” said Choong.

The fund manager said he does not expect any major surprises from the second stimulus package to be unveiled by Malaysia’s government on March 10.

The second stimulus package is widely expected to be larger than the first one which was put in place last November and worth about US$2 billion.

“I guess they will pump prime, spend more money on infrastructure and they will presumably relax or open up the services sector as well.

But then there is only so much they can do given that our budget deficit is already quite high,” said Choong. - Reuters

Malaysia's top 10/20 companies performed 2008

Last week we saw the article by the star stating corporate's economic reports to be due at the end of Feb 2009. This week we are able to see the chart provided by Biz Times on Malaysia's top 20 companies performed in 2008.

* Source by Business's Times

By Biz Times's Goh Thean Eu

Most companies reported worse-than-expected numbers, only six of the top 20 posted better quarterly results - PPB Group, Hong Leong Bank Bhd, BAT (Malaysia), RHB Capital, Public Bank and Malayan Banking.

MOST Malaysian companies reported weak financial numbers recently, highlighting the many ways a global economic downturn can hit earnings.

Apart from sluggish demand from consumers abroad, currency movements are also becoming a more important reason for lower profits.

"Foreign exchange (forex) losses are certainly one of the main themes for most companies in this reporting season. However, at the end of the day, it is just accounting losses," ECM Libra Investment Research head Ching Weng Jin told Business Times.

Companies must deal with the effects of a stronger or weaker foreign currency in their accounts immediately, due to accounting rules. However, they are unrealised, which means that no payments were made and it won't change a company's cash position. Big companies, mainly those with international presence or have borrowed in the US currency, were badly hit in the final quarter of 2008.

A weaker ringgit against some major currencies has made debt payments more expensive for these companies.

The quarter's worst two performers, Tenaga Nasional Bhd and TM International Bhd, were mainly hit by a weak ringgit. IOI Corp Bhd was partly hit by currency losses too. But analysts said investors should pay attention to a company's business.

"The main thing for us is still the company's operations, because a company which suffered forex losses last year could bounce back this year as soon as the economy recovers and ringgit strengthens," Ching said.

Still, most companies reported worse-than-expected numbers.

"Overall, companies performance were slightly below my expectations. So many rapid developments the effects of which were difficult to quantify," said Jupiter Securities Sdn Bhd's head of research Pong Teng Siew.

Only six of the top 20 companies posted better quarterly results, they include, PPB Group, Hong Leong Bank Bhd, British American Tobacco (Malaysia) Bhd, RHB Capital Bhd, Public Bank Bhd and Malayan Banking Bhd.

"The banks did much better than I had expected," said Pong.

This year, analysts expect earnings to fall further, mainly due to a weaker economy, with forex translation continuing to hurt.

"(Currency) volatility is going to be quite evident this year, with economies still trying to find their footing in the current environment. So reported earnings could be affected somewhat," Ching explained.

Analysts added that corporate earnings may also be hit due to higher provisions, money set aside to cover potential losses, and write- downs.

"Any strong sets of earnings numbers would probably be lost in a market like this where sentiment is poor and interest is weak. So, it may be a good time for companies to take all these hits now," said an analyst who declined to be named.