Public Mutual to launch new Islamic equity fund

By the Edge

Public Mutual Bhd will launch a domestic Islamic fund, Public Islamic Optimal Growth Fund (PIOGF) on April 8 for investors who want an optimal combination of capital appreciation and income growth over the long term.

Its chairman Tan Sri Teh Hong Piow said PIOGF was an Islamic equity fund that sought to provide income and capital growth by investing in Syariah-compliant stocks which offer attractive dividend yields and growth stocks in the domestic market.

“PIOGF invests 50% of its equity investment in syariah-compliant growth stocks in the domestic market while the remaining 50% of its equity investment is invested in syariah-compliant stocks which offer attractive dividend yields,” he added.

The equity exposure of PIOGF will generally range from 75% to 95% of its net asset value. It is priced at 25 sen per unit during the 21-day initial offer period from April 8 to April 28. The minimum initial investment is RM1,000.

Air asia best in innovation

By Biz Times

AIRASIA Bhd has been recognised as one of the world's most innovative companies by Fast Company magazine, the only Asean brand and the only airline to make it to the "Fast 50" list.

Other notable companies include Google, Nike, Facebook, Apple, Disney, GE, BMW and IBM.

AirAsia ranked number 43 this year on the "Fast 50" list, announced in the March 2008 issue of Fast Company.

From green consumer-products phenomenon Method to 100-year-old Corning, which spends US$2 million (RM6.38 million) each workday on R&D, the list celebrates companies that are redefining the rules of business through new ideas.

Twelve of the 50 firms are based outside the US. Fifteen of them are based in and around the Silicon Valley.

"This is a feat we are very proud of, considering we are placed in the same platform as some of the most recognised brands in the world. We are humbled by this news as we've evolved from a Malaysian brand to an Asean brand within a short span of six years and to be recognised on the global front by the coveted Fast Company magazine, is indeed very rewarding," AirAsia group chief executive officer Datuk Tony Fernandes said in a statement.

Fast Company editors described AirAsia as "innovative down to its corporate bones".

"Most passengers think of it as one carrier, but it's actually a co-branded collection of several, a unique structure Tony Fernandes devised to allow AirAsia to set up hubs in three countries (Malaysia, Thailand, and Indonesia)," it said.

It also credited AirAsia for operating costs that are the lowest of any airline in the world, and so are its fares.

Previous awards won by AirAsia include "Airline of the Year 2007" by the Centre for Asia Pacific Aviation (CAPA) and the "Best Low Cost Airline in Asia" by Skytrax Research of London.

Fast Company's final 50 were selected from a list of 300 finalist companies. The magazine placed a high premium on companies that had demonstrated significant innovation over the past year. Actual rankings were determined by vote by a panel of editors and writers.

Fast Company is a monthly business magazine that reports on innovation, digital media, technology, change management, leadership, design and social responsibility. It was launched in November 1995 by Alan Webber and Bill Taylor, two former Harvard Business Review editors.

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.