KiniBiz

Ringgit opens sharply lower against US$

BERNAMA — Thu, 23 May 2013 02:36:09 +0000

The ringgit was traded sharply lower against the US dollar, in early session, this morning, on lack of buying interest, a dealer said.

At 9.10am, the local unit was quoted at 3.0345/0375 per greenback, from yesterday’s close of 3.0205/0225.

The dealer said investors’ interest were shifted towards the US dollar after US Federal Reserve Chairman Ben Bernanke incited speculation that the US central bank could slow its asset buying in coming months.

However, the ringgit was traded higher against other major currencies.

The local currency was higher against the Singapore dollar at 2.3920/3961 from 2.3965/3984 yesterday and rose against the yen to 2.9322/9365 from 2.9354/9385 on Wednesday.

The ringgit strengthened against the British pound to 4.5563/5620 from yesterday’s 4.5582/5622 and appreciated against the euro to 3.8917/8968 from 3.9067/9102, previously.

– BERNAMA

Share prices extend losses

BERNAMA — Thu, 23 May 2013 02:10:37 +0000

As at 9.23am, the benchmark FTSE Bursa Malaysia KLCI (FBM KLCI), declined 2.06 points to 1,781.82, after opening 6.32 points easier at 1,777.56.

Comments by US Federal Reserve Chairman Ben Bernanke that policy makers may scale down bond purchase programmes caused jitters in global equity markets.

The Finance Index, however, increased 16.609 points to 16,926.70, the Plantation Index slipped 21.81 points to 8,323.32 and the Industrial Index shed 2.88 points to 3,004.72.

The FBM Emas Index declined 11.14 points to 12,408.45, the FBMT100 fell 10.81 points to 12,171.20, the FBM Mid 70 Index increased 0.979 of a point to 14,351.76 while the FBM Ace Index slipped 1.40 points to 4,768.65.

Losers led gainers 205 to 145, with 194 counters unchanged, 1,052 untraded and 22 suspended.

Turnover stood at 179.1 million shares worth RM123.6 million.

Among actives, Luster Industries gained one sen to 19.5 sen, Luster Industries warrants was unchanged at 12 sen, Jasa Kita increased one sen to 18 sen and Time Engineering rose 1.5 sen to 36 sen.

Heavyweights, Maybank rose four sen to RM10.12, CIMB Group increased one sen to RM8.63, Axiata slipped one sen to RM6.95 and Sime Darby declined three sen to RM9.45.

– BERNAMA

Hua Yang posts higher pre-tax profit for FYE13

BERNAMA — Wed, 22 May 2013 15:51:20 +0000

Hua Yang Bhd’s pre-tax profit for the financial year ended March 31, 2013, increased 31.4% to RM95.31 million from the RM72.5 million recorded in the previous year.

Revenue rose 33.4 per cent to RM408.67 million from RM306.41 million previously, mainly attributable to its steady construction progress, the company said in a statement today.

Its Chief Financial Officer May Chan said the remarkable financial result is Hua Yang’s most prominent achievement in its corporate history of over 30 years.

“It will set a benchmark for us to expand our business, riding on our aim of becoming a leading property developer in the affordable property segment.

“Our ultimate goal is to register double-digit growth on a yearly basis and propel better performance in earnings,” she added.

Chan also believed that the strong financial performance would definitely increase the group’s credibility and overall investor confidence level in the capital market.

“With a total of RM523 million unbilled sales as at March 31, 2013, we are confident that this will continue to support our earnings visibility in the next financial year ending March 31, 2014,” she said.

-BERNAMA

Target Q1 profit falls 29% as weather damps sales

BLOOMBERG — Wed, 22 May 2013 15:49:03 +0000

Target Corp., the second-largest U.S. discount retailer, said first-quarter earnings fell 29% and cut its forecast for profit this year as higher taxes and cooler temperatures hampered sales.

Net income in the quarter ended May 4 dropped to US$498 million (RM1.5 billion), or 77 cents a share, from US$697 million, or US$1.04, a year earlier, the Minneapolis-based company said today in a statement. Analysts projected 84 cents, the average of 17 estimates compiled by Bloomberg. Sales rose 1 percent to US$16.7 billion, trailing the US$16.8 billion average estimate.

U.S. retailers have been struggling as an increase in Social Security taxes takes a larger bite out of shoppers’ paychecks while colder-than-normal temperatures hurt sales of spring apparel. Target last month said profit in the quarter would be less than it previously forecast.

“Unfavorable weather and higher payroll tax rates weighed on spring spending across most of the retail landscape,” Sean Naughton, an analyst at Piper Jaffray Cos. in Minneapolis, wrote in a note May 14. He rates the shares overweight, the equivalent of a buy.

Profit per share, excluding losses from the early retirement of debt and the company’s expansion in Canada as well as gains from the sale of the retailer’s credit card receivables, will be US$4.70 to $4.90 this year, down from a previous forecast of US$4.85 to US$5.05, Target said. Analysts estimated US$4.83.

Target fell 2.1% to US$69.78 at 8:03 a.m. in New York. The shares had gained 20 percent this year through yesterday, compared with a 17% increase for the Standard & Poor’s 500 Index.

Cold weather

The average temperature of Target’s store base, weighted by state, was 5.1 degrees Fahrenheit (2.8 degrees Celsius) colder than a year earlier in the first quarter, Naughton said. That likely hurt sales of apparel, seasonal home goods and sporting goods. Target said U.S. comparable-store sales fell 0.6% in the first quarter.

Retailers’ sales also have been hurt by a two percentage- point increase in the payroll tax. They also were slowed by tax returns that were delayed because of forms that were shipped late and additional, federally mandated fraud scrutiny.

-BLOOMBERG

Credit Suisse names new Germany head

BLOOMBERG — Wed, 22 May 2013 15:42:13 +0000

Credit Suisse Group AG, the second- biggest Swiss bank, named Nicolo Salsano as head of investment banking for Germany and Austria, replacing Ken Oliver Fritz, who is leaving for Lazard Ltd.

Salsano, a 43-year-old German native who is co-head of the Asia-Pacific financial institutions group, will relocate to Frankfurt from Hong Kong, the firm said in an e-mailed statement today. He previously worked from 2004 to 2011 in London advising financial companies with a focus on German and Austrian banks. He joined Credit Suisse from Deutsche Bank AG in 2000 and has been working in investment banking for 19 years.

Fritz is leaving the Swiss bank to become Lazard’s co-head for Germany alongside Eric Fellhauer, Lazard said last month. He’s replacing Alexander Doll, who was hired by Barclays Plc in August.

Salsano’s move is the latest shakeup in the German mergers and acquisitions sector. Kai Tschoeke, Morgan Stanley’s chief of German and Austrian deals, is leaving the New York-based bank after more than 20 years. Alexander Mann, a Frankfurt-based industrials banker at Deutsche Bank, left continental Europe’s largest lender as it cuts costs amid a slump in deal activity, two people with knowledge of the move said earlier this month.

Takeover volume in the country fell to US$24.1 billion (RM72.8 billion) in the first quarter, the lowest level since the second quarter of 2012, according to data compiled by Bloomberg. Credit Suisse is currently ranked No. 9 in German M&A, the data show.

-BLOOMBERG

Wal-Mart’s Massmart says sales growth to remain weak

BLOOMBERG — Wed, 22 May 2013 15:29:33 +0000

Massmart Holdings Ltd., the South African food and general goods retailer controlled by Wal-Mart Stores Inc., expects sales growth to remain subdued as the economy slows and rising inflation weighs on consumers.

Massmart’s comparable or same-store sales increased by 5.6% in the first 21 weeks of fiscal year 2013, the company said in a statement today. That compares with 7.3% growth in the second half of 2012. The financial year-to-date sales inflation was 3.1%.

“The decline in comparable sales growth has been evident in all product categories and across all South African geographies,” Chief Executive Officer Grant Pattison told investors at the company’s annual general meeting in Johannesburg. “We anticipate that comparable sales growth will remain soft for the remainder of the financial year.”

Massmart shares fell as much as 2.2% to 199.56 rand (RM63.44) by 1:42 p.m. in Johannesburg, paring gains for the year to 4.5%.

South Africa’s inflation rate remained unchanged at 5.9% in April as a decline in the value of the rand added to the cost of imports. The South African Reserve Bank’s monetary policy committee said in March it expects inflation to exceed 6%, the top of its target range, in the third quarter. Rising inflation increases the price of goods for the consumer, weighing on retail sales.

Massmart, which owns the cash and carry chain Makro and DIY specialist Builders Warehouse, is expanding in Africa to offset slower growth in its domestic market.

“Massmart will continue to expand its store network in sub-Saharan Africa,” Pattison said. The company will open 27 stores before the end of 2013, including a Makro in Amanzimtoti, Durban, and a Builders Warehouse store in Botswana and Mozambique. he said.

The company was able to buy seven Makro properties that were previously lease-held after receiving a loan from parent company Wal-Mart, he said.

-BLOOMBERG

Guinness Anchor or Carlsberg?

---use-custom-author-field--- — Wed, 22 May 2013 14:00:53 +0000

Guinness Anchor and Carlsberg are running neck to neck in Malaysia at the moment. KiniBiz looks at the challenges both brewers face in catering to a new generation of drinkers and the world of social media while utilising entirely different strategies.

A former employee of Anheuser Busch (the beer company that brews Budweiser) when interviewed for a book said, “If you think about beer in your own personal circles, there are probably people who drink a different beer when they’re in a bar than they do at home, when nobody sees them.

“There’s a badge associated with the bottle you’re holding in your hand when you’re out in public or with your friends, and it’s important. That didn’t happen by accident. It happened because beer companies poured a tremendous amount of money into developing the image of their brands.”

In Malaysia, the two main brewers are neck to neck, with Guinness Anchor Bhd (GAB) having the larger market share of 57%, but Carlsberg Brewery (M) Bhd’s Carlsberg Green being the largest selling individual beer.

Some of the sales pitches, “Come up to Carlsberg” and “Guinness Stout is good for you” are entrenched, thanks to expensive marketing initiatives.

According to Carlsberg’s annual report, for its financial year ended December 2012, the company spent RM295.79 million in sales and distribution expenses. GAB for its year ended June 2012, spent RM217.41 million in distribution, marketing and selling expenses.

After customs and excise duties (where Malaysia has the second highest levies in the world), the largest expenditure as percentage of revenue for the brewers is sales and marketing related.

For its year ended December 2012, Carlsberg posted net profits of RM191.63 million from RM1.58 billion in revenue.

GAB meanwhile for its nine months ended March this year registered net profits of RM184.14 million on the back of RM1.26 billion in sales.

Soren Ravn

In separate interviews both managing directors Carlsberg’s Soren Ravn, who is leaving end June and Hans Essaadi who has taken over the helm of GAB for all of four months, talk about the need for exciting beers, and the need to take into account consumer preferences.

Carlsberg’s Soren said to KiniBiz, “Today consumers want variety… If you open up a bar or restaurant, you want to have at least three to four beers on tap and then you want to have another ten beers by bottle.”

Meanwhile Essaadi said, “We try to excite consumers…we focus on big events. But these days it’s more about social media. Facebook is huge, look at the number of followers we have. The next challenge is what we do with it.”

Beer is not just a beer

Both GAB and Carlsberg have strong parentage. Carlsberg’s 51% parent is Denmark-based Carlsberg AG, which has some 300 odd brands under its belt.

GAB meanwhile has Heineken, the world’s third largest brewer with some 200 beer brands under its portfolio, as its parent. The shareholding structure has GAPL Pte Ltd controlling 51% of GAB. Asia Pacific Breweries Ltd, a 95% unit of Heineken’s has 50% in GAPL.

Also GAB with its association with Guinness can tap onto Diageo, the holding company for the stout brewer, which came about from the merger of Guinness plc and Grand Metropolitian, and is the world’s largest whisky producer.

While Carlsberg has such brands as Tuborg, Kronenbourg and Holsten under its belt, Heineken controls Amstel, Fosters, Sol and Kingfisher to name a few brands.

Basically there’s very little differentiating the two brewers.

While Carlsberg’s Soren says that its plate is full, and it is unlikely to come out with any new offerings for the next 12 months, GAB’s Essaadi said that if all went well, in 12 months his company would have commenced brewing new beers.

Although he did not elaborate, indications are that GAB may commence brewing Mexican brands, with Heineken’s subsidiary Cervecería Cuauhtémoc-Moctezuma brewing Sol, Dos Equis and Guadalajara among others..

Analysts’ preference

Carlsberg lost its market leader position in 2006, with GAB taking over. Carlsberg was too dependent on its Carlsberg Green, while GAB gained the upper hand with its variety.

Now Carlsberg has among others Kronenbourg, Asahi and Skol to name a few, while GAB has Tiger, Anchor, Heineken, Guinness and Kilkenny under its belt.

Maybank IB’ analyst, Choong Ooi Ming is more bullish on Carlsberg, and believes that there could be change as far as market leadership is concerned, over the next few years.

“When there are only two players, the market leader is likely to shift between the two. Now Carlsberg looks more aggressive, its beers are more geographically diversified,” he said, explaining his preference for the Danish brewer.

In a report on Carlsberg a week ago, Maybank’s Chong said, “Carlsberg’s focus on new super-premium brews such as Kronenbourg, catering to new, female or young consumers, will continue to drive growth,” he wrote.

While both GAB and Carlsberg pay good dividends, Carlsberg’s cheaper share price makes its yields higher.

Hong Leong Investment Bank’s has a hold call on both counters. “You will never see a downturn in both companies, but both are limited to single digit growth,” the analyst said.

An analyst from a local bank backed brokerage said she would currently shun both stocks as both their prices have run. Over the past 12 months, both GAB’s and Carlsberg’s stocks have gained more than 55%, and about 45% respectively, and both are trading at historical highs, of RM20.82 and RM16.20 respectively.

“Yields are already very low, I wouldn’t buy both at this point,” she said.

However if he were to pick one stock, she would go with Carlsberg, as she feels its portfolio is stronger, and with 30% of its revenue coming from Singapore, the company is better insulated from the expected tax hike this year.

This year there is a strong likelihood that the Government will impose higher excise duties after sparing the two, GAB and Carlsberg, for the last seven years.

Carlsberg in Malaysia brews beer for the Singapore market as well, after Carlsberg Singapore Pte Ltd was taken over for RM370 million in 2009. Carlsberg also has almost 25% equity interest in Lion Brewery Ceylon Plc.

While the analysts fraternity seem to favour Carlsberg, GAB’s Essaadi however could have been brought in to prevent such decline, and the loss of market share.

And then there’s Carlsberg’s new managing director Henrik Juel Andersen, who takes over the helm of the company starting July this year.

What is clear is that the two, both GAB and Carlsberg are likely to be closely scrutinised by the analyst fraternity and market watchers alike. With both offering solid fundamentals, it may just be a matter of investor preference, much like the beers they brew.

AirAsia reports lower profits, higher revenue for 1Q

BERNAMA — Wed, 22 May 2013 12:10:56 +0000

AirAsia Bhd reported a lower pre-tax profit of RM131.84 million for its first quarter ended March 31, 2013, compared with RM212.406 million registered during the same period last year.

In contrast, revenue for the three-months period jumped 11% to RM1.3 billion from RM1.17 billion, previously.

In a statement, the frills-free airline operator said the turnover growth was mainly due to the increase in the number of passengers which grew 7% to 5.17 million.

An increase in ancillary income per pax and average fare, as well as, capacity growth as the number of aircraft operating in Malaysia increased to 66, also contributed to the higher turnover.

However, no explanation was provided for the airline’s lower profits.

AirAsia Chief Executive Officer Aireen Omar said the company started to gain traction with a seven per cent increase in ancillary income to RM42 per passenger in the first quarter, year-on-year, backed by strong numbers coming in from baggage and cargo.

“The company’s revenue, measured in terms of revenue per available seat per kilometer, remained at 16.89 sen, through a two per cent increase in average fare in the first quarter to RM180 from RM177 in the previous year, which offset the one per cent decline in load factor.

“This demonstrates the success of our routes, service quality and strong brand creating a continuous demand in passenger growth every year,” she said.

Aireen said AirAsia’s cash position was also at a comfortable position, with RM2.17 billion in deposits, bank and cash balances, added with a manageable net gearing level of 1.38 times, as at March 31, 2013.

“We have also received positive feedback from investors regarding the formalisation of a dividend policy which is to pay 20% of annual net operating profit,” she said.

For the first quarter, AirAsia registered an operating profit of RM254.93 million, up 6%, year-on-year.

Aireen said moving forward, the Malaysia AirAsia would take delivery of six aircraft this year to mainly cater to the increase in frequencies on its existing and high load routes.

“We were initially looking at adding 10 aircraft this year but as a group we decided to make room for our associates to grow, primarily Thailand AirAsia and the upcoming AirAsia India.

“In addition, with the recent announcement of a delay in the opening of klia2, we are certain the current low-cost carrier terminal (LCCT)’s capacity will be a constraint,” she said.

As of May 22, 2013, AirAsia Group has a total fleet of 124 A320s and is expecting 356 more aircraft to be delivered up to 2026, excluding leased aircraft.

Meanwhile, AirAsia Group Chief Executive Officer Tan Sri Tony Fernandes said Malaysia AirAsia would continue to be the group leader in terms of financial strength and would focus on retaining their market dominance by focusing on cost discipline and driving ancillary products.

He also reminded that it was important not to be complacent, especially with the new competitive landscape in the aviation industry and country.

On AirAsia India, Fernandes said:”I am excited about AirAsia India. The start-up process has been smooth sailing so far. We have submitted our air operator’s certificate application and are currently waiting for approval before we start operating in Chennai.

“Last week, we announced the new Chief Executive Officer of AirAsia India, Mittu Chandilya who, will assume office effective June 1, 2013.”

- BERNAMA

Axiata 1Q pre-tax profit rises to RM915.7mil

BERNAMA — Wed, 22 May 2013 11:51:29 +0000

Axiata Group Bhd’s (Axiata) pre-tax profit for the first quarter ended March 31, 2013 increased to RM915.7 million from the RM905.13 million recorded in the same quarter last year.

Revenue rose to RM4.48 billion from RM4.25 billion previously, the company said in a filing to Bursa Malaysia today.

In a seperate statement issued today, Axiata said the group saw solid performance, in a seasonally slow quarter, amidst heightened competitive pressures and a strengthening Ringgit.

The group’s Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) dipped 2.4% year-on-year (y-o-y) due to higher costs associated with a push for data coverage expansion, especially at XL, to RM1.8 billion.

“EBITDA was also impacted following the introduction of SMS interconnection and price competition at XL which started in the second quarter 2012,” it added.

Axiata’s profit after tax and minority interest was up by 8.7% y-o-y to RM615 million from excellent performances seen at Dialog as well as the integration of Smart and Hello.

Axiata Chairman Tan Sri Datuk Azman Mokhtar said: “It has been a tough start to the year but the group delivered resilient results.

“Focused execution on strategy enabled the group to grow data significantly whilst withstanding the decline in traditional businesses and competition.

“We will continue to maintain execution focus on fundamentals and our long-term objectives of ensuring strong profit and cash, whilst looking at more revenue growth opportunities”.

President and Group Chief Executive Officer Jamaludin Ibrahim said the results are a reflection of the group’s balanced portfolio of emerging and matured assets alongside its diligence on cost management initiatives and capex efficiency.

“We are executing our transformation plan to grow in the new digital era, to invest in networks to drive longer-term growth whilst strengthening our core business.

“Our focus on data has already shown results and we expect this to be more tangible as 2013 progresses,” he added.

- BERNAMA

MYEG 3Q pre-tax profit up 31.8% to RM9.5mil

BERNAMA — Wed, 22 May 2013 11:43:14 +0000

My E.G. Services Bhd’s (MyEG) pre-tax profit for the third quarter ended March 31, 2013 rose 31.8% to RM9.5 million from RM7.2 million in the same period a year ago.

Revenue increased 11.3% to RM20.4 million from RM18.3 million previously.

In a statement today, the e-Government services provider said the higher revenue was driven by the encouraging response for the company’s existing and new services.

MyEG Executive Chairman Norraesah Mohamad said the group remained firmly on an expansion path.

She said the positive reception for its new services aptly complemented the continued strong growth for existing scope of services, especially in online insurance renewal and road tax transactions under the purview of the Road Transport Department.

For the nine-month period, the company’s net profit jumped by 25.1% to RM24.1 million on the back of 12.6% growth in revenue to RM55.7 million.

“On prospects, we are doing our best to continuously harness the growth potential of existing range of e-Government services and we are also setting our sights on further strengthening the business sustainability by introducing new services,” she said.

Norraesah said MyEG would focus on completing the implementation of the online service tax monitoring project for the customs department -– the pilot of which had been proven successful.

“We are collaborating closely with the relevant parties for smooth progress as and when the government is prepared to launch the service,” she added.

- BERNAMA