World shares fell sharply and the euro slipped to a two-week low on
Wednesday as growing opposition in Europe to measures aimed at resolving the
euro zone’s debt crisis unnerved investors already skittish about the weak
outlook for global growth.
Investors focused on Spain, where
the main share index lost 3.9 percent and yields on 10-year bonds hit 6 percent
on worries about Madrid’s commitment to reform due to violent protests and talk
of secession by the wealthy Catalonia region.
In Madrid, Prime Minister Mariano
Rajoy faced violence on the streets of the capital and growing talk of
secession in Catalonia as he moves cautiously closer to asking Europe for a
bailout, aware that such an action has cost other European leaders their jobs.
In public, Rajoy has been
resisting calls to move quickly to request assistance, but behind the scenes he
is putting together the pieces to meet the stringent conditions that will accompany
rescue funds.
Rajoy presents a tough 2013
budget on Thursday, aiming to send a message that Spain is doing its
deficit-cutting homework despite a recession and 25 percent unemployment.
Spain appears on course to miss
its public deficit target of 6.3 percent of gross domestic product this year,
and the central bank said the economy continued to contract sharply in the
third quarter.
Rajoy is facing intense pressure
from euro zone policymakers to take tougher measures, particularly on freezing
pensions.
On Friday, Moody’s will publish
its latest review of Spain’s credit rating, possibly downgrading the country’s
debt to junk status.
On the same day, an independent
audit of Spain’s banks will reveal how much money Madrid will need from a 100
billion euro ($130 billion) aid package that Europe has already approved for
the banks.
Neptune Orient Lines
US and European Union stimulus
measures should see an increase in demand for containerised shipping, according
to a Malaysian bank
Malaysian financial firm Maybank
Kim Eng has upgraded shares in Neptune Orient Lines (NOL) from ‘sell’ to ‘buy’,
and in so doing issued a vote of confidence in the beleaguered container
shipping industry.
According to a Reuters report,
the Malaysian bank predicts a demand-led recovery for container shipping on the
back of US and European government interventions to bolster the global economy.
Maybank believes the EU’s
bond-buying programme and the US’s most recent round of quantitive easing will
stimulate increased global trade.
“While the current EU and US
stimulus’ direct benefits will take some time to materialise, what we see most
important is the commitment to shoring up confidence in the respective regions’
economies,” Maybank wrote, according to the Singapore Business Review.
“While this news has not gotten
the market immediately euphoric, we see these steps paving the way for
emergence from the bottom for beta plays such as NOL, from a demand-led
perspective.”
PTTEP
Thailand’s top oil and gas
explorer, PTT Exploration and Production Pcl (PTTEP), said on Friday the
company and its partners including CNOOC Ltd and SONATRACH, discovered crude
oil at two exploration wells in Algeria.
PTTEP and its partners have
planned to drill nine exploration wells at the Hassi Bir Rekaiz project from
late 2011 to early 2013.
So far, five wells have been
drilled with four deemed a success. The sixth well is expected to be drilled at
the end of this month, PTTEP said.
Sime Darby Bhd
Sime Darby Bhd’s pre-tax profit
grew by six per cent to RM5.7 billion for the financial year ended June 30,
2012 compared with RM5.4 billion in the previous financial year.
Revenue rose to RM47.602 billion
from RM41.858 billion.
“This is an excellent set of
results and a record for the Sime Darby Group. It suggests that we are well on
track to realise the long-term targets outlined in our five-year strategy
blueprint,” said its President and Group Chief Executive Datuk Mohd Bakke
Salleh in a statement today.
The group registered a record
pre-tax profit despite lower profit contribution from the Plantation Division.
However, the marginal decline in
the Plantation Division’s earnings was more than offset by strong performances
in the Industrial and Motors Divisions.
The group’s net profit rose by 13
per cent to RM4.2 billion from RM3.7 billion in the same period last year.
The RM4.2 billion net profit
surpassed its RM3.3 billion net profit Key Performance Index (KPI) by 27 per
cent.
Return on average shareholders’
funds rose to 16.6 per cent against the 13.3 per cent KPI target.
This is the second consecutive
year that the group has exceeded its KPI target.
In the financial year under
review, the Plantation Division achieved a profit before interest and tax
(PBIT) of RM3.2 billion, a moderate decline of three per cent compared to RM3.3
billion in the preceding year.
The Division’s PBIT was lower due
to the reduction in fresh fruit bunches (FFBs) production, which had declined
by three per cent to 9.8 million metric tonnes, compared to 10.1 million metric
tonnes in the same period last year.
In particular, the estates in the
Kalimantan region saw a decline in FFB production by 11.4 per cent due to the
impact of the prolonged periods of dry spell in 2009 and 2011.
However, on a group basis, the
decline in FFBs production was mitigated by higher average crude palm oil (CPO)
price realised and the improvement in the oil extraction rate (OER).
The division had realised an
average CPO price of RM2,925 per metric tonne for the financial year as
compared to RM2,906 per metric tonne in the corresponding period last year.
The OER had also improved to 21.8
per cent from 21.4 per cent in the previous financial year.
The midstream and downstream
segments reported a lower loss of RM62 million compared to a loss of RM75
million.
This segment was adversely
affected by lower utilisation and tight margins as a result of Indonesia’s new
export tax structure.
The Industrial Division had its
strongest showing yet with a PBIT of RM1.4 billion compared to RM1.1 billion in
the same period last year, an increase of 27 per cent over the preceding
financial year.
This was mainly attributable to
the strong performance of the Australasia, Malaysia and Singapore operations on
the back of higher sales of new mining equipment and higher revenue from the
parts and services businesses.
This accomplishment includes a
maiden contribution from the newly acquired Bucyrus business.
The Motors Division exceeded
expectations by recording an 11 per cent growth in PBIT to RM702 million from
RM633 million in the same period last year.
This was mainly due to the strong
performances from Malaysia and Singapore, which grew by 71 per cent and 26 per
cent, respectively.
The excellent results were driven
by strong sales growth from all brands.
Higher sales contribution from
various townships, including Bandar Bukit Raja and Denai Alam, contributed to
the Property Division’s improved performance.
PBIT rose by two per cent to
RM467 million in FY2011/2012 from RM456 million in the same period last year.
Profit contributions from
associate companies of RM36 million had also elevated the profitability of the
Property Division.
The Energy and Utilities Division
registered a PBIT of RM335 million in the period under review, an increase of
36 per cent compared to RM246 million in the previous financial year.
The profit improvement was mainly
attributable to the recognition of the deferred revenue from the Malaysian
power plant and higher contribution from the ports operations in China due to
the increased cargo handling throughput at Weifang Port.
The Healthcare Division’s PBIT
was maintained at RM26 million as the impact from higher patient volume was
moderated by the slower nursing education sector and start-up expenses for the
new Ara Damansara hospital.
“These results reflect the
meticulous implementation of the key strategic thrusts to ensure that the group
has a strong portfolio of winning businesses,”Mohd Bakke said.
“We have also made significant
strides towards achieving our strategic growth initiatives. The last financial
year witnessed several milestones achieved at the various divisions.
“The Plantation Division achieved
steady growth in new planting in Liberia. The Battersea Power Station project
offers an exciting new opportunity for high-growth property development
overseas, while Bucyrus continues its integration into the CAT framework.
“In the Motors Division, we
opened four new showrooms and secured new distributorships and dealerships
across the region. We also completed the disposal of the oil and gas
fabrication yards, thus marking the group’s exit from the oil and gas business.
“We have also strengthened our
commitment towards the ports business in China. Finally, the launch of Sime
Darby Medical Centre Ara Damansara adds yet another feather in our cap, he
said.
Despite the group’s strong
performance for the year just ended, Mohd Bakke struck a more cautious note for
the immediate future.
“Notwithstanding the encouraging
results, we remain mindful of the uncertainties in the business environment as
we move ahead amidst volatility in the global economy.
“However, given our strong
balance sheet position, diverse portfolio of businesses and unrelenting focus
on execution and prudent cost management, I am confident that we will be able
to withstand these challenges and continue to deliver solid returns,” he said.
The group proposed a final
dividend of 25 sen per share for the financial year.
Together with the earlier interim
dividend of 10 sen per share, total dividend for the year is 35 sen per share.
Sime Darby is a Malaysia-based
diversified multinational involved in key growth sectors, namely plantations,
property, motors, industrial equipment, energy, utilities and healthcare.
The Lippo Group
The Lippo Group has committed to
investing in the development of education facilities in East Nusa Tenggara
province.
“I am planning to invest in the
education sector in East Nusa Tenggara. The total fund that will be invested is
Rp 800 billion [$83 million] for a period of five to seven years,” the Lippo
Group’s chief executive officer, James T. Riady, told journalists in Kupang,
the province’s capital, on Tuesday.
James, who came with the leaders
of nine leading US universities, said he hoped the funds would draw more
investment to East Nusa Tenggara.
“I hope that what I am doing in
NTT can draw the interest of, or prompt, investors to invest in other sectors
in this region,” James added, referring to the province by its Indonesian
acronym.
James and his retinue had
previously visited Manado in North Sulawesi, where they also checked up on
local schools.
He did not detail which schools
or universities would receive the funding, but said the investment was aimed at
improving local education as well as elevating student performance to national
standards.
The entourage made a visit to the
Lentera Harapan school in Bonipoi, Kupang, together with the former chairman of
the NTT chapter of the Indonesian Chamber of Commerce and Industry (Kadin),
Mech Saba.
They later met with Governor
Frans Lebu Raya and his deputy, Esthon L. Foena, at the governor’s office in El
Tari, Kupang.
“I really believe that this
investment will be really significant and we do not doubt it, as there is the
presence of the leaders of several US education institutes who will tell their
friends about us when they return to the United States,” Frans said.
The governor thanked James for
his support of the province’s development and its people.
“The [NTT] government needs to
obtain the support of domestic and foreign entrepreneurs through investing in
this region so that the process of development can proceed well,” Frans added.
Philex Mining Corp
Philex Mining Corp., the
country’s biggest gold producer, has been slapped with a P1-billion fine for
the leaks from its tailings pond in Benguet province, the Mines and Geosciences
Bureau (MGB) of the Department of Environment and Natural Resources (DENR) said
on Wednesday.
In a letter to the mining firm,
MGB Director Leo Jasareno asked Philex to pay some P1.034 billion in penalties
for over 20 million metric tons of mine tailings that spilled from its Padcal
mine straddling the towns of Itogon and Tuba following days of heavy rains
spawned by typhoons “Ferdie” and “Gener” in August.
In a phone interview, Jasareno
told the Philippine Daily Inquirer this was the “final amount” and already
included the P325 million the agency earlier computed. Under the Mining Act of
1995, each ton of waste spilled shall correspond to a P50 fine.
However, the amount does not
cover other liabilities Philex may still be facing under the Clean Water Act,
which imposes a maximum of P200,000 fine every day that a sediment spill is
taking place. “That is not yet part of the computation,” he said.
Jasareno said Philex has seven
days to respond to the letter imposing the fine “as part of due process.”
Asked for his reaction to
Philex’s earlier statement that the company should not be fined because the
incident was “force majeure,” Jasareno said this was under consideration.
As of press time yesterday,
Michael Toledo, Philex vice president for corporate affairs, said they have not
received an official copy of the letter from the DENR.
But Philex on Wednesday insisted
that the breach in the tailings dam at its Padcal mine site was due to natural
causes, and is ready to challenge any charges that the DENR may bring as a
result of the accident.
In a statement, Philex said that
it is “prepared to review any decision on penalties that the DENR will release”
regarding the tailings dam breach at the Padcal mine and “contest” it at a
proper forum.
Diligent in their duties
It said company officials were
always on top of the situation, “acting accordingly and providing timely
notices to regulators.”
Philex said the MGB had confirmed
there was a system in place for the maintenance and monitoring of its tailings
pond and secondary facilities during the Padcal accident, and that Philex
personnel were diligent in the performance of their duties.
“The findings came as no surprise
because the company’s environmental management system, including the operation
and maintenance of Tailings Pond No. 3, has long been ISO-compliant and
-certified,” said Toledo, noting the company’s ISO-14001 certification for
years 2002, 2006 and 2008, and the latest certification issued on May 10, 2011.
Toledo stressed that
“historically unprecedented heavy rains” brought by Typhoon Gener reached
331.80 millimeters (mm), exceeding only by 88.30 mm Padcal’s 50-year rainfall
record of 234.50 mm.
Force majeure
He said Philex was prepared to
refute whatever penalties the government might impose on it in connection with
the Padcal accident.
“We shouldn’t be held liable for
something that was caused by force majeure. But we are willing and, in fact, we
have said repeatedly that we have the resources and capabilities to deal with
all the remediation activities needed to address the Padcal accident,” he said.
Yesterday
Tokyo tumbled 2.03
percent, or 184.84 points, to 8,906.70, Sydney shed 0.26 percent, or 11.3
points, to 4,361.6 and Seoul slipped 0.55 percent, or 10.97 points, to
1,980.44.
Hong Kong fell 0.83 percent, or
170.95 points, to 20,527.73 and Shanghai lost 1.24 percent, or 25.12 points, to
end at 2,004.17, a 44-month low.
Singapore closed 0.67
percent, or 20.45 points, lower at 3,046.68.
SingTel tumbled 3.90 percent to
Sg$3.20 after state-linked investment firm Temasek Holdings said it will cut
its stake in the local telecom giant to 51.9 percent from 54.4 percent. DBS
Bank was off 0.83 percent to Sg$14.26.
Taipei fell 0.83 percent,
or 64.50 points, to 7,669.63.
TSMC rose 0.58 percent to Tw$86.4
while Hon Hai Precision lost 3.53 percent to Tw$90.2.
Manila closed 0.61 percent
lower, losing 32.54 points to 5,292.63.
Alliance Global Group slipped
1.45 percent to 13.60 pesos but Bloomberry Resorts rose 4.01 percent to 10.90
pesos.
Wellington lost 0.42
percent, or 15.99 points, to 3,809.32.
Fletcher Building fell 3.0
percent to NZ$6.85, Sky City slid 3.6 percent to NZ$3.78 and Telecom was up 0.2
percent at NZ$2.40.
Jakarta fell 1.11 percent,
or 46.72 points, to 4,180.16.
Coal company Bumi Resources fell
2.9 percent to 670 rupiah, its rival Indika slid 1.9 percent to 1,590 rupiah
and car maker Astra International lost 2.7 percent to 7,200 rupiah.
Kuala Lumpur was flat,
edging up 0.72 points to 1,619.30.
Bangkok eased 1 percent, or
12.91 points, to 1,274.50.
Mumbai slid 0.33 percent,
or 62.24 points, to 18,632.17.
India’s biggest mobile phone firm
Bharti Airtel fell 3.93 percent to 265.2 rupees on profit-taking after a sharp
run-up in prices recently.
Cash-strapped Kingfisher Airlines
rose 8.65 percent to 15.7 rupees after promoter-billionaire Vijay Mallya said
talks were on with foreign carriers to sell a stake in his ailing airline.
Business & Investment Opportunities
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