Perdana bags RM700 million job from Dayang

Perdana Petroleum Bhd is undeperdana 2rstood to have bagged a contract for six vessels valued at between RM600 million to RM700 million, from Dayang Enterprise Holdings Bhd, sources say.

Officials from Perdana declined to comment when contacted.

“We will make an announcement to the Bursa Malaysia when the time is right, we cannot say anything to you,” an official said.

The contract is understood to be linked to Dayang’s RM2.5 billion hook up, construction and commissioning (HUCC) contract which it secured earlier this week.

dayangDayang is Perdana’s largest shareholder with about 26 % equity interest in the marine services company.

For Perdana the contract could be a boon, with its fortunes taking a turn for the better. For its first financial quarter ended March this year Perdana posted net profits of RM11.09 million, on the back of RM56.78 million in revenue. Earnings per share for the three months in review was 2.24 sen.

In the corresponding period a year ago, Perdana suffered a net loss of RM8.18 million from RM53.45 million in sales.

Perdana has been in limbo since a shareholder tussle took place a few years ago, resulting in the company disposing off its 60% unit Petra Energy Bhd, to well-connected businessman Bustari Yusof and Wah Seong Corp Bhd.

Dayang first surfaced as a substantial shareholder in Perdana after a 10% private placement in end 2011. Since then it has built up its shareholding in the company.

The marine spread makes up about 40% of the cost of any HUCC contract, which explains Dayang’s interest in Perdana.

Cagamas adds momentum to lagging dollar market

Asia’s dollar sukuk market looks set for a boost from the entry of Cagamas Bhd., Malaysia’s biggest corporate debt issuer.

The state-owned mortgage provider asked banks to pitch for a combined Shariah-compliant and non-Islamic program, three people familiar with the deal said. Top-rated Cagamas has issued RM265.6 billion ringgit (US$88 billion) of securities in Malaysia since its inception in 1986 and accounts for 22% of AAA debt outstanding, according to the company’s annual report citing data from the end of 2012.

Cagamas would become only the fourth Asian company to tap the dollar Islamic bond market after Malaysia’s Sime Darby Bhd., Petroliam Nasional Bhd. and Japan’s Nomura Holdings Inc. Sime Darby ended a two-year drought in issuance in January, when it got orders for 11 times the US$800 million raised. The Persian Gulf currently dominates U.S. currency sukuk offerings, with sales totaling US$6.7 billion this year.

“Cagamas’s plan to sell dollar bonds would add more color to the Malaysian dollar yield curve,” Ray Choy, regional head of fixed-income research in Kuala Lumpur at RHB Research Institute Sdn., a unit of RHB Capital Bhd., said in an interview yesterday. “It will improve market liquidity.”

Asset pool

Chung Chee Leong

Chung Chee Leong

The company will use the proceeds to buy loans and debt from Malaysian financial institutions, assets that could back its bond offerings, said the people who asked not to be named as the information is private. Chief Executive Officer Chung Chee Leong declined to comment when contacted by telephone on May 21.

“They won’t have an issue selling dollar debt,” Fariza Taib, a fixed-income manager overseeing RM1 billion at Kuala Lumpur-based Asian Islamic Investment Management Bhd., said in a May 21 interview. “Cagamas is looked at in the likes of Khazanah Nasional Bhd., the sovereign wealth fund.”

Sime Darby, the world’s biggest palm-oil producer, sold five- and 10-year Shariah-compliant notes, while Petroliam Nasional’s debt matures in August 2014. Nomura’s securities have already expired. The government only has three dollar sovereign notes outstanding, which are all Islamic, and come due in 2015, 2016 and 2021.

The yield on Sime Darby’s 3.29%, 10-year sukuk increased 25 basis points, or 0.25 percentage point, to 3.58% this month, according to data compiled by Bloomberg. The rate on Malaysia’s 4.646% securities due July 2021 climbed 20 basis points to 3%, the highest since March 26.

Sales dwindle

Sime’s Darby’s debt is rated A by Standard & Poor’s and Fitch Ratings, their sixth-highest investment grades and one level above the sovereign. The Kuala Lumpur-based firm is 35% owned by Permodalan Nasional Bhd., the state asset- management company.

Sales of Islamic bonds, which pay returns on assets to comply with the Koran’s ban on interest, have fallen this year as average yields climbed from a record low.

Global issuance dropped 7.7% to US$15.4 billion from a year earlier, after reaching an all-time high of US$46.5 billion in 2012, data compiled by Bloomberg show. Yields rose 38 basis points to 3.19 percent in 2013, below the five-year average of 5.95%, the HSBC/Nasdaq Dubai US Dollar Sukuk Index shows. They touched an unprecedented low of 2.67% on Jan. 10.

The difference between the average yield and the London interbank offered rate narrowed two basis points in 2013 to 180, according to HSBC. The debt returned 1.3 percent this year. Bonds in emerging markets declined 0.5 percent, according to JPMorgan Chase & Co.’s EMBI Global Index.

Government links

sukukCompanies in the Southeast Asian nation that have government links are spearheading dollar sukuk sales in the region. Export-Import Bank ofMalaysia Bhd. plans to sell its first Islamic bonds denominated in the U.S. currency in June, two people familiar with the deal, who asked not to be named as the information is private, said in March.

Seven firms from the six-member Gulf Cooperation Council have sold Shariah-compliant dollar notes this year. The latest offering was from Dar Al Arkan Real Estate Development Co., a property developer in Saudi Arabia.

The sale this month attracted orders exceeding US$1.6 billion for the US$450 million of five-year debt on offer, according to a company statement released yesterday. The securities were issued at a coupon rate of 5.75%.

Volume boost

Malaysia has also attracted foreign issuers such as General Electric Co. of the U.S. and Jeddah, Saudi Arabia-based Islamic Development Bank, who have listed their debt in the world’s biggest Islamic bond market.

The Bloomberg Malaysian Sukuk Ex-MYR Index of global Shariah-compliant notes, which includes securities of GE, Sime Darby, Khazanah, and IDB, rose 0.2% to 111.942 this year, and reached a record of 112.627 on May 8.

Cagamas was formed to boost home ownership and mortgages for Malaysia’s 29 million people. It posted a 6.5% drop in net profit to RM413.2 million in the 12 months ended Dec. 31, 2012, with assets totaling RM23.3 billion, according to its annual report.

“A dollar sukuk from an Asian country would be snapped up quickly, more so if it’s from Cagamas,” Azdini Nor Azman, the Kuala Lumpur-based head of fixed-income investment at Bank Muamalat Malaysia Bhd., said in an interview yesterday. “It will help improve trading volume in the dollar sukuk market.”

-BLOOMBERG

“Understand underlying principles of green building”

The danger in trying to secure the green building certification in Malaysia is that, one can get too caught up with categories, numbering and achieving points.

But what is important, says Veritas Architect Director Lillian Tay, is understanding the underlying principles of a green building.

“If it is not possible to go all the way to securing the green  principles, as possible.

“Malaysia has actually been undertaking green buildings for a long time.

“In the 50’s and 60’s, even as a young Malaysia or Malaya, it was green buildings such as the Parliament house, Stadium Negara, the Kuala Lumpur General Hospital and Angkasapuri,” she told Bernama in an interview.

Tay said these first green buildings, in terms of design principles, are very responsive to the climate, not overly reliant on air conditioning and know how to respond to the hot afternoon sun.

“These are the underlying principles for green buildings in terms of design for the tropics. We have been doing it from the start. It is just that in those days we didn’t have all the green labeling such as LEAD Certified, GBI certified, Green Mark Certified,” she added.

She is of the opinion that around the 80’s, Malaysians somehow got caught up with looking at international examples, such as glassy buildings, which are more appropriate for the cold overseas climate.

“The buildings are closed up to keep the heat in, and we followed these type of models.

“But we actually need to start thinking about new kinds of buildings that can respond to our climate,” she said.

construction-architectShe also said that at present, there is a lot of awareness of green buildings, both among design professionals and the public.

“We now have a Malaysian Green Building Index, to actually categorise green rated buildings and which need to have all the criteria fulfilled.

“With the green building rating and green building certification, Malaysians are looking forward to having a certificate to indicate their buildings are green rated,” she added.

Tay highlighted that even the old “kampung houses”, were very green building because they didn’t depend a lot on electricity, with the breeze coming through  the verendahs and roof.

“We have a lot of wisdom in green buildings design already embedded in traditional buildings, and in the first generation Malaysian public buildings,” she added.

Tay said Veritas Architect had done a lot of green buildings, even before the need for certificates.

The company was also already looking at rain water harvesting 15 years ago for public housing and incorporating buildings with simple designs to deal with the climate.

-BERNAMA

Danajamin’s new independent non-executive director

Cheah_Tek_KuangDanajamin Nasional Bhd, the country’s Financial Guarantee Insurer, has appointed Cheah Tek Kuang as an independent non-executive director, for a three-year term, effective May 20.

Cheah was group managing director of AMMB Holdings Bhd until his retirement last year.

Danajamin Chief Executive Officer Ahmad Zulqarnain Onn said the group looks forward to benefiting from Cheah’s wealth of knowledge and expertise, from over 30 years in the banking industry.

“Cheah is an invaluable addition to Danajamin’s board,” he said in a statement today.

- BERNAMA

Aging Asia to strain world’s long-term economic growth

asian-stock-market-watchVANCOUVER- The Asia-Pacific region will continue to power global economic growth in 2013, but the region’s increasing aging population will cast a shadow on the long-term development, according to a Canadian think-tank.

“Productivity gains and a large, young working-age population have done much to boost Asian economic growth over the past three decades. But Asia’s demographic dividend is quickly coming to an end,” China’s Xinhua news agency quoted Kip Beckman, author of the Conference Board of Canada’s recent published report World Outlook: Spring 2013, as saying.

Due to fewer births and longer life expectancies, the average age of the population in Asia is increasing rapidly.

Today, seven percent of Asia’s population is above 65 years old, while the share has increased to 23% in Japan, according to the Conference Board of Canada.

The demographic shift has been especially prevalent in Chinese Mainland. By 2035, the median age will increase to 45 from 35, equal to Japan’s current level, whose experience has shown that it will lead to reduction in savings rate and made it more difficult to finance investment domestically, it said.

According to the organisation’s analysis, the changing demographic profile in the region comes from two major shifts. First, women in Asia have become better educated, making them more financially independent and less likely to rush into marriage at a young age.

Second, the cost of raising children has risen substantially. For instance, in South Korea, education costs are a major contributor to the country’s huge household debt — currently 160% of income.

To maintain future economic growth, the think-tank suggested the region increase investment in education to enhance productivity and consider more open immigration policies than currently existing ones.

- BERNAMA

Kenanga Research maintains ‘market perform’ call on AEON

Kenanga Research has maintained its “market perform” call on AEON Co (M) Bhd, with an upgraded target price of RM16.40 from RM14.14 previously, due to bright prospects and better performance.

“We remain positive on the company’s future prospects as there will be more new outlet openings in the 2013 and 2014 financial years, as well as the refurbishment of existing ones,” it said in a note today.

Year-on-year, the group’s first quarter ended March 31, 2013 revenue increased by 11.5% on the back of better performances from its  retail segment and property management services.

Meanwhile, RHB Research said it continued to favour the stock because of its solid fundamentals, strong branding and expansion.

“We maintain our “neutral” stance on AEON with a higher fair value of RM15.20 from RM11.80 previously,” it said in a separate note.

- BERNAMA