Singapore REITs may merge as Credit Squeeze Tightens

Singapore's once booming real estate investment trusts (REITs) may face a round of mergers to weed out the weak who find it increasingly tough to raise funds and refinance loans because of the global credit crisis.

At least six of Singapore's 20 listed REITs are valued below what their properties are worth, as are many trusts in Japan and Australia, which means expansion is hampered by higher financing costs and investor returns are limited.

Some of the trusts will face higher interest payments when they need to refinance their debts in coming months, leading to lower earnings and distribution to unitholders.
"I would expect consolidation to gather pace in the course of the next 6-12 months," said Tony Darwell, head of Asian equity research at Nomura. "The cost of debt has risen and it is impacting everyone, especially entities that are highly geared."

For investors, many of whom are already steering clear of property and other assets that rely on debt financing, the takeover speculation means some REITs such as Macquarie MEAG Prime may get bid up to prices closer to book value.

But others such as Mapletree Logistics Trust could see their shares fall further, due to large amounts of debt on their books.

"Singapore's REIT market is still young and shouldn't have reached the stage for consolidation, but the situation now is quite conducive (to that)," said Credit Suisse analyst Tricia Song.
Singapore's market for property trusts, Asia's third largest, has grown rapidly since 2002 when the first REIT, CapitaMall Trust, went to market. The industry has since grown to 20 REITs worth US$19 billion (US$1 = RM3.19), although that number may shrink as at least two players are up for sale.

Acquisition targets include REITs trading at high yields, at large discounts to book value, or with quality assets that bigger funds could be interested in, Song said.

Industry experts say the first Singapore REITs that may be taken over will be those that have ties to firms or property funds in Australia, Asia's biggest property trust market.

Macquarie MEAG Prime REIT, which owns two large properties on Singapore's Orchard Road shopping belt, said it may sell assets or go private after main shareholder Macquarie received unsolicited offers for its 26 percent stake.

Allco Commercial REIT, which owns office properties in Singapore and Australia, is being closely watched as its Australian parent, Allco Finance, is trying to sell assets to meet debt repayment deadlines.

"The yield is so high at 9 per cent; Allco REIT can't raise capital and their debt is due soon. They need to do something soon," said a hedge fund manager.

Allco in November dropped plans for a S$150 million (S$1 = RM2.29) share sale due to weak markets. In January, Moody's cut its credit rating to "Ba1", or junk, from a "Baa3" investment grade rating, citing potential problems in refinancing S$550 million in short-term debt due in July.

Other REITs downgraded or placed on review for downgrade this year include MMP, Mapletree Logistics Trust and Suntec REIT, on concerns of refinancing risks.

Suntec REIT last week closed a five-year convertible bond issue worth S$250 million at a 4.25 per cent yield to maturity, much higher than its average financing cost of 3.13 per cent as of end-December.

"Credit spreads have widened significantly over the past month. We believe this is likely to place pressure on both the cost and availability of future debt," Merrill Lynch analyst Melinda Baxter said in a note to clients last week. - Reuters

Malaysia Daily Media Highlight

TELCO Sector: WIMAX to be delayed to 2007
The arrival of high-speed wireless broadband, or WiMAX, has been delayed to next year as regulators said they need time to seek new clarification from those who are bidding to become service providers. The result of the tender had been expected to be announced this year. Energy, Water and Communications Minister Datuk Seri Dr Lim Keng Yaik said companies that have submitted applications to include a national rollout plan. The minister said the Government is not in a rush to roll out WiMAX services as WiMAX licenses, what the possibility of launching 2 licenses during the initial stage before releasing the remaining ones. 17 companies bid for the licenses, including Maxis Communications, DiGi, REDtone, MiTV and Nasion Com.

DRB-Hicom/Proton: Confirms interest in the latter’s stake
DRB-Hicom has recently submitted a proposal to the government indication its preliminary interest in the possibility and prospects of acquiring a portion of shares in Proton Holdings. Prime Minister Datuk Seri Abdullah Ahmad Badawi had said on that the government was considering giving approval for German carmaker Volkswagen AG to take up a 51% controlling stake in Proton’s manufacturing operations. (theedgedaily.com)

SCOMI: To be taken private?
Speculation is rife that major shareholders Scomi Group may take the integrated oil services firm private in a bid worth as much as RM1bn. Sources said the main shareholders, who include the son of Prime Minister Datuk Seri Abdullah Ahama Badawi, are considering this as an option as SCOMI’s market price does not reflect its true value. Citing swirling market speculation, bankers said the major shareholders could bid for the rest of SCOMI at a price range of RM1.20 to RM1.50 a share. At RM1.50, SCOMI would be valued at some RM1.5bn. The major shareholders of Scomi are Kamaludin and Shah Hakim. Both hold 34.66% of the company through Kaspadu Sdn Bhd as at May 11, 2006. Frence insurance group AXA is the second biggest shareholder with 6.3%, followed by the Employees Provident Fund with 5.73%. this means that if the main shareholders were to make a bid for the rest of the shares, they might have to fork out some RM976.6m based on an offer of RM1.50 a share. (BT)

PETRA: 67m new shares to list on Nov 15
Petra Perdana’s 67.65m new 50 sen shares arising from its bonus issue will be granted listing and quotation on Nov 15. A Bursa Securities circular said the new shares arose from the bonus issue of 1 new share for every 3 existing shares held. The new bonus shares will increase the paid-up capital by 270.6m to 338.25million shares. (theedgedaily.com)

Boon Koon Group: To fund growth with RM100m Islamic debt
Boon Koon Group is looking to use part of its RM100m Islamic debt securities for its Indonesian operations, acquisitions and the setting up of a Dubai plant, which will allow it to expand its used commercial vehicle business including sales and services centres into other cities in Indonesia, aside from Jakarta, Semarang, Surabaya and Medan to consolidate its position there. It is also looking to set up a reconditioning hub in dubai to tap into the India and, possibly Pakistan market over the next 1-2 years. A company has been engaged to explore the market there. It is also in the process of shifting its factory in Tawau to Kota Kinabalu, involving a capex of RM5m and is expected to be completed by 2Q07. The acquisition of GKY Machinery, which is involved in the rebuilding and distribution of heavy machinery and equipment, is expected to be completed by 1Q07. About 10% of the proceeds from the Islamic debt securities will be used to fund the GKY buy and another 5% - 10% for its fleet expansion. (theedgedaily.com)

MAS: Signs agreement with Russia’s Transaero Airlines
Malaysia Airlines System has signed an agreement with Russia’s Transaero Airlines to operate direct air services between Kuala Lumpur and Moscow from January 2007 through a code share arrangement. The partnership would initially offer 8 scheduled flights from Jan 02, 2007 to March 17, 2007 between Moscow Domodedovo Airport and KLIA using a Boeing 767-300 aircraft, with plans to increase the number of flights. MAS would have direct access to the seat inventory of all Transaero flights between KLIA and Moscow, which would be marketed using MAS flight numbers MH9055 and MH9056. (theedgedaily.com)

MINETEC: Clinches quarry jobs in Indonesia
Minetech Resources’ via its unit KS Chin Minerals Sdn Bhd (KSC) has expanded its operations into Indonesia after it was appointed as the operator and contractor of a quarry in Karimum Island, Indonesia. It has entered into several agreements with Batu Ayer Granite Pte Ltd (BAG) and PT Mirasindo Perdana (PTM) appointing KSC as the operator and contractor with management rights to manage, supervise and/or undertake all quarry operations. Under the deal, KSC would also acquire all quarry products as well as acquire a crusher plant and other quarry equipment from BAG/PTM for RM10.5m. (Bursa)

AIRASIA: Teams up with Fly Asian Xpress
AirAsia has formed a strategic partnership with rural air services (RAS) operator Fly Asian Xpress (FAX) in an effort to provide seamless air travel nationwide. The partnership will see AIRASIA include air routes served by FAX in its list of destinations, thus allowing both airlines to interline operations as well as automatically expand their respective air service network. The move will also allow FAX to leverage on AIRASIA’s massive sales distribution network, including its website. AIRASIA will introduce its Kuala Lumpur – Mulu and Kuala Lumpur – Lahad Datu Flights, which will begin operations on December 01. (BT)

Malaysia Daily Media Highlights

RHBCAP: RHB Islamic Talks with Dallah ended
It was reported that RHB Islamic Bank has broken off talks with Saudi’s Dallah al-Baraka Group, which had been seeking to take a strategic stake in the Islamic lender, RHB Islamic Bank Chairman Datuk Vaseehar Hassan Abdul Razak said. Dallah al-Baraka Group which has a 15% stake in Utama Banking Group (UTAMA) is interested getting a strategic stake in RHB via UTAMA with another Middle Eastern Islamic group.

RESORTS: Star Cruises turns in profit
Star Cruises, a 36% owned associate of Resorts World posted its first profit in four quarters, helped by increased travel demand and the sale of a vessel. Net income rose 83% to SG$60.4m in the three months ended September 30, compared with holidays is helping operators including Star Cruises to counter rising fuel costs. An estimated 11.7mn people will go on cruises this year, an increase of 4.5%, according to the 19-member Cruise Lines International Association. The company’s operating expenses per capacity day dropped 0.4%. Fuel made up 18% of operating expenses in the period, compared with 16% a year earlier. (Bloomberg)

The performance for Star Cruises was strong as group capacity had increased by 17.7% with the inclusion of 2 new ships.

AIRPORT: Looking to expand LCCT
Malaysia Airports Holdings Bhd (MAHB) managing director Datuk Seri Bashir Ahmad said the company would expand the LCCT in three to four years to accommodate the anticipated passenger volume of over 10m a year. He said the budget carrier terminal would be expanded to handle up to 15m passengers annually. He said AirAsia was close to achieving six million passengers this year and believed the low-cost carrier would achieve 10m passengers annually within three to four years.

Express Rail Link Sdn Bhd (ERL) wants to build and operate the proposed KLIA and low cost carrier terminal (LCCT) rail link project to stem a decline in passengers on its high-speed train service to KLIA from KL Sentral. Its chief executive officer, Dr. Aminuddin Adnan, said the company had seen a drop of up to 30% to 4,000 passengers daily from 5,500 since the commencement of the LCCT in March this year. AirAsia passengers used to make up about 30% of our passengers before the LCCT opened. The 13.4km link would shorten travel time between the two terminals to 11 minutes from 20 minutes currently, adding it would take 15 months to complete construction of the link. (theedgedaily.com)

Bolton: Unit sells “The Body Shop” franchise for RM80m
Bolton unit Kejora Harta is disposing 100% stake in Rampai Niaga Sdn Bhd – which holds the “The Body Shop” franchise in Peninsular Malaysia to Rampai Niaga directors Datuk Foong Choong Heng and Datin Cheah Kim Choo for RM80m cash. Bolton will record a gain of RM9.4m from the proposed disposal which was in line with its strategy to sell non-core assets and refocus on property development. (theedgedaily.com)

LFECORP: Secures RM360m contract from Denmark
LFE Corporation unit LFE International LTD has received a letter of intent from Northcom ApS of Denmark for the purchase of electronic equipment for USD$100m. LFECORP had received the letter from Nothcom confirming its intent to enter a contract to purchase computer-processing units, electronic good and digital streaming devices over 36 months, starting on Jan 1, 2007. The contract would see LFE International contribute positively towards the future earnings of the group. (theedgedaily.com)

KUB: Subsidiary awarded RM54m job
KUB Malaysia, 70% subsidiary KUB-Fujitsu Telecommunications (Malaysia) Sdn Bhd has secured a RM54.3m contract from Telekom Malaysia to implement an end-to end service for TM’s metro Ethernet system. The contract was for the supply, delivery, installation, testing, commissioning, and post-acceptance maintenance and support services for the metro Ethernet system. (theedgedaily.com)

YTL Power: Unit is UK’s top water firm
YTL Power International’s wholly-owned utilities company, Wessex Water, has been named Britain’s top water and sewerage company. A report by the UK’s Water Services Regulation Authority (Ofwat) revealed that Wessex Water is the only business to receive the maximum seven stars for customer services for the second successive year. Wessex Water provides water and sewerage to over 2.5m customers within the south west region of England.

Malaysia: Launching of high impact projects in the next 6 months.
Malaysia’s Minister of the Prime Minister Department said the high impact projects approved by the National Implementation Taskforce Meeting chaired by the Price Minister will be launched sequentially in the next six months. He said the Prime Minister is pushing hard for all these projects to commence according to the specific timeline.

Malaysia Daily Media Highlights

Gamuda: Seals Bahrain Job
Gamuda Bhd inked the US$248.75 contract it won in July to build two causeways, associated embankment works flyovers at the Sitra Causeway as well as on Nabih Saleh Island in Bahrain. Gamuda is to build two three-lane causeways, one 200m going north and the other 400m going south, which can be converted into four lanes each in future. The job is scheduled to be completed in 32 months.

The causeway project was announced on the Bursa on 1 August this year to add to its other Middle East projects namely Qatar Airport and Dukhan Highway. Apart from this, Gamuda is also potential to benefit from double tracking rail project (value between RM0.5bn and RM0.9bn) and Pahang-Selangor Interstate Water Transfer and Flood Mitigation Projects.

Airport: Bids for Jeddah Terminal Project
Malaysia Airports Holdings has submitted a RM200mn working plan to upgrade and manage an airport terminal in Saudi Arabia. Sources said MAHB submitted the bid via a joint venture with its Arabian sponsor, Arabian Co for Water & Power Development (ACWA Power). ACWA Power, owned by A. Abunayyan Trading Corp & Al Muhaidib Holding Co, is also the partner for a Malaysian Venture that won the kingdom’s first power and water desalination privatization project. (BT)

MMC: RM7.9bn Islamic financing for Malakoff Bid
MMC Corporation Bhd has proposed to raise RM7.9bn in Islamic debt papers to finance the acquisition of independent power producer Malakoff Bhd and also refinance the latter’s debts. The total acquisition of MMC would total RM9.31bn. MMC said on Nov 10 that its unit, Nucleus Avenue (M) Bhd (NAB), had proposed to issue up to RM1.7bn in nominal value of cumulative non-convertible Islamic junior sukuk and up to RM600mn in Islamic commercial papers and medium term notes. The remaining rM5.6bn would be nominal value of Islamic medium term notes, it said. (theedgedaily.com)

MAS: Secured shareholders’ nod for RPS
Malaysian Airline System has clarified that it had secured its shareholders’ approval for a redeemable preference shares (RPS) option to the exercise, and not a rights issue as reported on Nov 10. The national air carrier said its managing director and chief executive officer Idris Jala was referring to the RPS and did not refer to any rights issue when speaking at the Asia-Pacific and Middle East Aviation Outlook Summit in Singapore on Nov 9. (theedgedaily.com)

International Tender For Pahang – Selangor Raw Water Transfer Project
An international tender for the proposed RM3bn Pahang-Selangor raw water transfer project to be financed through a soft loan from Japan, is expected to be carried out by the middle of next year. Energy, Water and Communications Minister Datuk Seri Dr. Lim Keng Yaik, in stating this, said the cost of the project, which has been delayed for years, would be reduced from RM3.8bn to around RM3bn. This was after the government decided to review the process of appointing the consultant for the project. The project consultant would now be decided through an international competitive tender bidding process instead of direct appointment by the Economic Planning Unit (EPU). he added.

Malaysia Daily Media Highlights

Strata Title Act to be amended
Natural Resources and Environment Minister Datuk Seri Azmi Khalid said that developers of gated community projects, unable to get bank loans due to problems of getting strata titles, can heave a sigh of relieve with the Cabinet’s approval to amend the Strata Title Act 1985. He added the other Act would deal with the management and maintenance of high-rise buildings, many of which do not have strata titles due to inadequate provisions in the law. Azmi said with more provisions, strata titles could be issued within two months.

IJM named main contractor for Kajang-Seremban highway
IJM Corp Bhd had been appointed as the main contractor to reactivate works on the RM840 million Kajang-Seremban Highway. The highway concession is now held by Lebuhraya Kajang- Seremban Sdn Bhd (LEKAS), of which IJM holds a 50 per cent stake in the company and the rest held by joint-venture partners Kaseh Lebuh Raya Sdn Bhd, Tunku Naquiyuddin Tuanku Ja'afar and Bumiputera institutions. To fund the project, IJM plans to raise RM750 million local currency bonds within the next three months. With a concession period of 32.5 years, the project, comprising a 48km three-lane dual carriage highway between Kajang and Seremban, is scheduled to be completed within 33 months.

Kumpulan Guthrie sells Guthrie Pavilion for RM26m
Kumpulan Guthrie Bhd is selling its 27,245 sq m Guthrie Pavillion to its subsidiary Guthrie Property Management Sdn Bhd (GPM) for RM26.1 million.

Malaysia Daily Media Highlights

Malaysian Firms Close to Securing Pakistan Deals
Malaysian companies are on the brink of clinching contracts for road and rail projects in Pakistan, as the governments from both countries will soon sign a memorandum of understanding for a contract to build elevated highways in Rawalpindi and Karachi, estimated to cost about rM202.95m/ Malaysia has also proposed to build a light rail transit system for Karachi. The Malaysian government submitted a conceptual report and another feasibility report, costing RM5.5m, will be done delivered to the Pakistan government soon. By doing the report, Malaysia will be first offered the contract or a first right of refusal, if the project is found to be viable. The Malaysian Works Ministry has given 12 names of Class A contractors to the Pakistan Government. However, one road project, a 17bn-rupee highway connecting Khanewal and Faisalabad may not take off for it is not suitable for privatization due to low traffic. Pakistan’s National Highway Authority and the Construction Industry Development Board signed an MOU to build the 184km highway in 2005. (BT)

Malaysia: Central Bank Malaysia (BNM) Reserves increase to RM293.4bn
BNM international reserves increased by RM0.1bn to RM293.4bn as at 31 October. BNM said the reserves position is sufficient to finance 8.1 months of retained imports and is 6.7 times the short-term external debt. The increase in reserves in October (RM1.3billion) was in tandem with the recent improvement in the stock market amid large trade surplus of RM9.8bn in September.
SIME: Bakun progress and plans to expand Hyundai Plant
Sime Darby said that the Bakun project is more than 60% completed and is “happy” with the rate of progress. In a separate development, Sime Darby is in talks with Hyundai Motor Co. to expand their car factory in Malaysia. The company may spend RM100m to quadruple the production capacity at the plant. Decision on the expansion would com e in the next 12 months. It would take three years for the plant to be expanded to enable it to produce 120,000 cars a year. (Bloomberg)

INTI: Investing RM40m to expand Subang Jaya Campus
Inti Universal Holdings is investing RM40m over 3 years to expand its Subang Jaya campus in 2 phases to accommodate 3,000 students and to tap into the lucrative working adult education segment. The 1st phase will cost RM20m generated from its own funds and is expected to be completed in mid-2008. the 2nd phase is expected to be funded partly from its own internal funds and/or borrowings and will be completed in year 2009. (theedgedaily.com)

Boustead Holdings: To acquire PSCI building and land for RM54m
Boustead Holdings has proposed to acquire 3 pieces of land measuring 6,672sq.m. and Menara PSCI in Penang from PSC Asset Holdings S/B for RM54m cash. The proposed acquisition is expected to be completed in 2Q07. The proposed acquisition will be financed entirely via bank borrowings. As at Sep 30, 2006, Menara PSCI has a total net lettable area of 211,428sq.ft., of which 71% or 149,643 sq.ft. has been let out to 48 tenants. For the financial year ended 2005, it generated a total gross income of RM5.48m. The building had an audited net book value of RM70m as at Dec 31, 2005. (theedgedaily.com)

APLI: To invest RM33m in Vietnam Plant expansion
APL Industries is investing RM33m to increase the output of its Vietnam plant next year, as it is making losses because it is running below capacity. Under the 1st phase of the expansion, APLI will invest RM8m in two boilers – biomass thermal-oil heat energy generators – and upgrade six dipping process machines, which will increase the Vietnam plant’s output and achieve economies. APLI will invest another RM25m in December next year to install 12 new production lines for its Vietnam plant to increase its annual production capacity to 7.1bn pieces of gloves. (theedgedaily.com)

MULPHA: Unsuccessful in Australia’s GHG bid
Mulpha International’s offer for Australia’s Grand Hotel Group (GHG) listed on the Australian Stock Exchange, was unsuccessful after it failed to secure at least 50% of the GHG securities when the offer closed on Nov 7. Mulpha said that it might bid for the GHG assets individually should the opportunity arise. MULPHA had on Aug 18 submitted an unsolicited bid for GHG at 85 Australian cents (RM2.40) per share. However, Singapore-listed Tuan Sing Holdings Ltd had on Nov 2 launched a A$213.4m bid for a 74.96% stake in GHG at A$1.10 each, which is 29.4% above MULPHA’s offer. GHG owns 4 of Hyatt International’s 8 Australian properties including the Grand Hyatt Melbourne, Hyatt Regency Adelaide and Hyatt Regency Perth. It also owns two Chefley hotels in Brisbane and Canberra and the Country Comfort Chain. (theedgedaily.com)

Indonesia: Central Bank cuts interest rates
Indonesia’s central bank cut its benchmark interest rate by 50bps to 10.25%, the sixth reduction in rate from a peak of 12.75% in May. The Central Bank Governor said interest rates may be reduced again next month after inflation slowed to a two-year low and the Indonesian Rupiah Strengthened. Lower borrowing costs are expected to spur consumer spending and revive business activities in the country.

Malaysia Daily Media Highlights

DRB-HICOM: Short-listed for US$9bn Saudi rail project
DRB-HICOM has been short listed for a US$9bn (RM32.9bn) rail project in Saudi Arabia. DRB-HICOM submitted a comprehensive bid last month, and will know by next month if it is successful. The four-phase project involves building a 2,400km network of long rails, 250 concrete bridges, supply of 1,000 culverts and 4.5m concrete sleepers. (BT)

MMCCORP: RM133m storage tank project MMC and consortium
MMC and consortium partner PECD have won a RM133m contract from Malaysian Refining Company to construct storage tanks for Petronas Refinery Phase 2 in Malacca. The project will involve the design, construction and installation of two crude storage tanks, including the construction of all general services engineering works and necessary tie-ins for the project facilities. The project will be completed within 26 months. (BT).

Tanjung Offshore: Shipbuilding contract with Boustead Naval Shipyard
Tanjung Offshore has awarded a RM41m shipbuilding contract to Boustead Naval Shipyard Sdh Bhd for an anchor-handling tug and supply vessel. The construction of the vessel would be financed by internal funds and borrowings. Completion of the vessel is expected to be the third quarter of 2008. The company said the 60-metre vessel would be able to perform as a safety vessel for offshore drilling and workover rigs on 24 hours a day basis. (theedgedaily.com)

KPJ: Signs MOU in Islamabad
KPJ Healthcare signed a memorandum of understanding (MOU) with a foundation based in Pakistan and a Bangladeshi company to collaborate on nursing, health sciences education and training. KPJ Healthcare signed the MOU with Pakistan’s Memon Health & Education Foundation and United Enterprises & Co Ltd of Bangladesh after the opening of the Second World Islamic Economic Forum at the Jinnah Convention Centre. (Star)

Sumatec: Output to double
Sumatec is planning to more than double its copper production despite the delay of its mining operations that were initially slated for commissioning this year end. Its executive director and group managing director, James Chan said it planned to invest in a new copper plant to boost annual copper mining operations had been delayed and will only come on stream by February 2007, due to the late delivery of parts of the plant. The group has mining interest in a copper mine at Mengapur, Pahang, and also a gold mine at Lubuk Mandi, Terengganu that will start operation by end of 2006. (theedgedaily.com)

PSCL: Sells building in Penang to lower debts
PSC Industries has proposed to sell a building well known as Menara PSCI in George Town to Boustead Holding for RM54m cash. Boustead owns a 32.5% stake in PSCI. “The proposed disposal provides an avenue for PSCI to realise the value of its investment and to reduce its loan obligations to regularise the financial position as part of its plan pursuant to Practice Note 17,” PSCI said. (Star)

GLOBALC: RM250m fleet replacement
Globac Carriers is investing some RM250m over the next 5 to 7 years to replace its fleet of singlue-hull tankers with double-hull tankers; a move aimed at consolidating its position as a niche clean petroleum product (CPP) carrier and facilitates its regional market expansion plans. “We are in the process of ordering two 7,000 deadweight tonnes (dwt) double-hull tankers from a Chinese shipyard, which will be funded by the sale of our two container ships for RM80million. This will take about 12 to 18 months’” its chairman Datuk Azlan Hashim said. The shipping company now has six units of 7,000dwt single-hull tankers and a 12,000dwt double-hull tanker which is currently undergoing testing before commission. (theedgedaily.com)

Malaysia: Graft Index Ranking drop to 44th Place
Malaysia’s ranking in the Transparency International corruption Perceptions Index 2006 slipped to 44th place from 39th position last year. Within the Asia Pacific region, Malaysia was ranked 10th after countries like Singapore, Hong Kong and Japan but has scored better than China, India, Indonesia and Thailand. The survey ranked Finland as the least corrupt nation while Haiti came in last.

EU:2007 growth forecast raised
The European Commission (EU) raised its economic growth forecast for 2007 to 2.1% from 1.8% (2006f:2.6%) given the carry-over of strong growth momentum in 2H 2006 and the optimism arising from the lower oil prices. The EU also cut its inflation forecast for the year 2007 to 2.1% (previously 2.2%) as crude oil prices have retreated to below US$70 per barrel.

Malaysia Daily Media Highlights

MMC: To develop US$30bn Saudi economic region
MMC Corporation (MMC) announced that it has been awarded the rights to develop and manage the new US$30bn “Jizan Economic City” (JEC) in Saudi Arabia, together with the Saudi Binladin Group. MMC received the letter of award from the Saudi Arabian General Investment Authority (SAGIA) in Jeddah. Located 725 km south of Jeddah, by the Red Sea, JEC is envisioned to be a fully integrated and self-contained development which would comprise industrial and non-industrial zones on a site measuring approximately 117 sq km. JEC would be Saudi Arabia’s fourth Economic City to be launched after the Economic Cities of King Abdullah, Prince Abdul Aziz bin Mousaed and Madinah. It would be implemented over 30 years at a development cost of about US$30bn. MMC said that out of this amount, about US$17bn is anticipated to be the investment cost for the various projects within the industrial zones which would be borne by the different project proponents. The balance would be the development cost for infrastructure, commercial areas, residential areas and public amenities. “The new city’s industrial zone, representing more than two-thirds of the project, will accommodate a port, an aluminium smelter, a steel processing plant, an oil refinery, a copper processing plant, as well as fisheries and an agro-based industry. It would also include a power and desalination plant to support the industries, which will have an eventual capacity to generate 4,000 mega watts of electricity”, said Feiza Ali, Group Chief Executive of MMC. (Bernama)

DIALOG: ProJET for Sale
ConocoPhillips is putting up for sale its 40 ProJET stations in Malaysia and 147 stations in Thailand as part of a decision to sell non-strategic businesses, according to an unconfirmed source. The group is retaining its investment in the refinery project in Malacca and other upstream projects. (Star)

RANHILL: Mitsui-Ranhill group bids for RM1bn Brunei jobs
Ranhill Bhd, the country’s biggest engineering company, has teamed up with Mitsui Corp, Japan’s second largest trading company, to bid for RM1bn worth of contracts in Brunei, a Ranhill company source said. The Mitsui-Ranhill consortium that also includes QAF Oilfield Services Sdn Bhd, the second largest employer in Brunei, is bidding for contracts from the Brunei Economic Development Board (BEDB). The BEDB has called for tenders seeking a service provider for the country’s Sungai Liang Industrial Park (SIP) project. The core aim of the SIP is to attract as much as US$4.5bn (RM16.4bn) in foreign direct investment as well as to position the industrial park on the back of Brunei’s gas reserves as the premier site for petrochemical and manufacturing industries in South-East Asia. (BT)

PETRA: Buying two vessels for RM189m
Petra Perdana Bhd is acquiring two new anchor handling offshore support vessels for RM94.57million each under its fleet renewal plan to provide marine support services to offshore oil and gas facilities. The company said it had entered into two separate memorandum of agreements with SK Line Company Ltd to purchase the vessels. Petra Perdana said it expected to take delivery of the two vessels in December 2008 and September 2009 respectively, which would be funded through internal financing and bank borrowings. (theedgedaily.com)

PECD: Unit accepts RM133m contract
PECD unit and its partner MMC Oil & Gas Engineering SB have secured a RM132.9m contract to build crude storage tanks for Petroliam Nasional Bhd’s (Petronas) second refinery, Phase 2 in Melaka. PECD said on Nov 3 that its unit Warga Hikmat Kejuruteraan Sdn Bhd had accepted a letter of award for the contract. It was awarded by Malaysian Refining Company Sdn Bhd, a joint venture between Petronas and Conoco. It said the project duration was 26 months from November 2006 and would include the construction of all general services engineering works. PECD said the project would contribute positively towards its earnings for the financial year ending Dec 31, 2007. (theedgedaily.com)

China: Reserve ratio is raised to curb over-investment
China’s central bank raised the statutory reserve requirement of banks to 9% from 8.5% to curtail a credit-fuelled investment boom. The increase in reserve ration, the third hike since July, coupled with the higher interest rates will slow the creation of domestic liquidity arising from high inflows of trade surplus. The central bank said it will continue to pursue a stable monetary policy and maintain a stable growth in bank lending.

US: Services growth surges in October
Activity in the US services sector compiled by the Institute for Supply Management rose to 57.1 in October (September: 52.9), higher than the consensus forecast of 54.5. Nine of 18 services sub-sectors reported increased activity in October. Prices paid index fell to 51.9 in October (September: 56.7), the lowest since July 2003, while new orders declined to 56.5 from 57.2 in September.

Malaysia Daily Media Highlights

MCMC to proceed with evaluation of WIMAX Spectrums
The Malaysian communications and Multimedia Commission (MCMC) has been given the go-ahead to proceed with the evaluation of the 17 applications for the 2.3GHz wireless broadband access WiMAX spectrum. Energy, Water and Communications Minister Datuk Seri Dr. Lim Keng Yaik said: “They (MCMC) are going through the applications and will be seeking clarifications where necessary. If the applications have been made based on the wrong premise, for instance a state rollout instead of the nationwide rollout that we want, the MCMC will ask the applicant to clarify its position” Up to four block of spectrum will be up for grabs, but the minister said early last month that he was “inclined” to award only two blocks of spectrum of 30MHz each initially. (theedgedarily.com)

IJM: Award of RM331m contract
IJM Corporation Bhd’s unit has secured a RM331.4m contract from Bandar Raya Developments Bhd for the superstructure of a condominium project in Jalan Binjai, Kuala Lumpur. IJM said on Nov 2 that IJM Construction Sdn Bhd would build the superstructure for three b locks of residential units and four basement parking levels. The construction period was 32 months. Its 49% associate IJM Construction (Middle East) LLC had received a letter from Swiss Tower about the cancellation of a contract. It said Swiss Tower’s representative; Asteco Development Management LLC had informed IJM construction about the withdrawal of the letter of acceptance dated Aug 6 for the RM177.5m Swiss Tower Project Dubai.

Nam Fatt: No talks to sell Nam Fatt Stake
Nam Fatt Corp Bhd president and chief executive officer, Datuk Ng Keng Joo has not entered into any negotiations to sell his entire 16.6% or any part of his stake in the company. Shares in Nam Fatt had attracted buying interest since Oct 30 on market talk of a possible management buyout of major shareholders at a significant premium to its current share price. (theedgedily.com)

SIMEENG: Bids for jobs worth RM3bn – Rm4bn
SIME Engineering Services Bhd is bidding for contracts worth between RM3bn and RM4bn, most of them in the Middle East. Managing Director, Mohd Shukri Baharom said the company’s order book currently stands at RM2.4bn and that it has submitted further bids for engineering, procurement, construction, installation and commissioning (EPCIC) projects – mostly in the oil and gas sector.

MFCB: Proposes internal revamp, selling power plant
Mega First Corporation Bhd (MFCB) has proposed to sell its 51% stake in the Tawau-based Serudong Power Sdn Bhd for about RM39.3m under its internal corporate reorganisation. The stake comprised 8.2m shares to be sold to its own unit Mega First Power Industries Sdn Bhd (MFPI). Serudong Power has been operating a 35MW power plant in Tawau since December 1996. it said the RM39.3m would be used by MFCB to repay bank borrowings. Under a group debt settlement, MFCB’s three units, Mega First Mining S/B, Mega First Industries S/B and Mega First Resources S/B, would write off RM97.7m which MFCB owed them. MFCB would then provide for impairment losses totalling RM54.8m arising from a diminution in the value of its investments in the three units. (theedgedaily.com)

Malaysia: Rolling out of RM100bn High Impact Projects soon
Minister in the Prime Minister Department said twenty high-impact projects worth at least RM100bn are expected to be implemented soon to boost growth and rural development. He said some of there projects are already listed under the 880 projects announced earlier and are already budgeted under the 9MP. The Government is still seeking the best source of financing for projects not covered under the 9MP, which may include funding through private financing initiative (PFI) and foreign-currency denominated bonds. The Minister also expects 2H GDP growth to be strong with 3Q growth exceeding the 2Q performance of 5.9%.

EURO: ECB keeps interest rate unchanged
The European Central Bank (ECB) left its benchmark interest rate unchanged at 3.25% as predicted by most economists, after five rate hikes since December 2005. however, the ECB signalled that it is ready to raise interest rate next month given the concern over faster-than-expected economic expansion and cheaper oil which may fuel wage demand.

US: Productivity growth stagnates in 2Q, weekly jobless claims rises
Worker productivity in the US grew by 1.2% in 2Q, matching the rate of expansion in 1Q. Meanwhile, labour costs increased by 3.8% y-o-y and was up 5.3% for the first nine months of 2006. The report suggests that productivity growth may not be strong enough to deliver a strong economic growth and low inflation. In a separate report, the US initial jobless claims jumped by 18,000 last week to 327,000, the highest reading in three months, suggesting that companies may have stepped up the pace of firings as the economy slows.

IMF: US 2007 growth forecast cut to 2.6%
The IMF revised downwards the growth forecast of the US economy to 2.6% from 2.9% project earlier in September. The revision was prompted by the shaper-than-expected housing slump and weaker consumer spending. However, the IMF maintains its forecast of 3.4% for the US economy in 2006.

Malaysia Daily Media Highlights

AIRASIA: Fuel surcharge
Transport Minister, Datuk Seri Chan Kong Choy, said the government would leave it to Malaysian Airline System (MAS) and low-cost carrier AirAsia to decide if they want to reduce fuel surcharges. “We will let their mechanism determine the fuel surcharge,” he said, when asked if the airlines would reduce the charges in view of the lower crude oil prices. On allowing budget airlines to operate flights between Kuala Lumpur and Singapore, he said the government needed more time before deciding on the matter. Singapore’s Transport Minister Raymond Lim was reported as saying that the republic was awaiting the Malaysian government’s go-ahead for budget airlines to fly between the two countries. (theedgedaily.com)

Plus: Appointed concessionaire in Indonesia
Plus’s 55%-owned PT Lintas Sedaya has been appointed as the concessionarie to undertake the design, construction, ownership, management, financing, operation, maintenance as well as toll collection for the 116-kilometre Cikampek-Palimanan toll highway project on a build, operate and transfer basis. The concession period is 35 years. The remaining stake is held by PT Baskhara Utama Sedaya. (Bursa)

MUI: buys Metrojaya for RM273m
Malaysian United Industries (MUI) is buying a 91.06% stake in Metrojaya (MJB) from its parent company Pan Malaysian Industries (PMI) for RM273cash. The deal will allow MUI to strengthen retailing as one of its core businesses and allow PMI to reduce its borrowings. MUI is buying a 24.4% stake or 30.53m MJB shares from PMI for RM73.27m and 66.62% stake or 83.22m MJB shares from PMI’s unit Excelton for RM199.73m. (theedgedaily.com)

Airport: Eyes more management contracts abroad
Malaysia Airports Holdings (MANB) is in talks on managing airports in Jordan, Oman and Saudi Arabia as part of its overseas expansion plan, its managing director Datuk Seri Bashir Ahmad said. MAHB had said last June that it was in talks on airport management contracts in Kazakhstan, Saudi Arabia and a few other countries in the Middle East. MAHB now provides airport operation and technical services for the development, operation and maintenance of the new Hyderabad International Airport in India. (theedgedaily.com)

Gropel: Sells Ladang Bertam
Guthrie Ropel (GRopel) said it has completed the sale of its 914.2ha Ladang Bertam estate to 4 companies – Flora Horizon, Hartawan Development, Pilihan Teraju and Paduwan Development – for RM91.35m. In a statement on Nov 01, GRopel said the gain on disposal was RM65.3m. Ladang Bertam is a freehold property planted with oil palm comprised 4 divisions – Durian Tunggal, Bertam, Parit Melana and Krubong. (theedgedaily.com)

US-Malaysia FTA to open US$250bn of US Government Procurement
The US government will open approximately US$250bn worth of procurement to Malaysia under the US – Malaysia Free Trade Agreement (FTA) currently being negotiated, said US senior procurement negotiator, Jean Hillman Grier. The procurement was presently not available to Malaysian firms because without an FTA, the US government is generally prohibited from purchasing goods or services from Malaysia. (Bernama)

Malaysia: Sale of foreign currency Islamic bonds allowed
The Governor of Central Bank Malaysia said Malaysia will now allow the sale of foreign-currency denominated Islamic bonds for the first time to further strengthen Malaysia’s leading positive in the Islamic bond market. The Securities Commission also said the a non-Ringgit sukuk issued by both local and foreign financial institutions which is rated at least single A will be deemed as approved and may be offered to offshore and onshore investors. The above move will provide additional flexibility for both resident and foreign investors to diversify their investment into non – Ringgit investment in Malaysia.

Malaysia Daily Media Highlights

MISC: Buys Aframax tankers
MISC bought 4 Aframax tankers from Japan’s Tsuneishi Corp for US$260m (RM730m) strengthening its position as the world’s second largest owner-operator of Aframax tanker. The first unit of the 107,500 deadweight tonnage (DWT) tankers will be delivered in 2009, while the rest in 2010. The continuous expansion of MISC’s petroleum fleet under American Eagle Tankers (AET), supported by regional offices in London, Singapore and Houstan will provide MISC with the critical mass to better service customers globally. (BT)

UMW: To list China Ops
UMW Holdings has stepped up the re-organisation of its China-based associate Wuxi Seamless Oil Pipe Co Ltd (WSP), which would lead to a possible listing of the new holding company of WSP. UMW’s effective interest in WSP shall remain unchanged at 30.6% after the restructuring. The proposed restructuring was to unlock and enhance the value of its investment in WSP.

Malaysia Finance Ministry to ensure swift 9MP implementation
Malaysia’s Deputy Finance Minister said the Ministry of Finance (MOF) will do its part to ensure that the 9MP projects will be implemented quickly to get the economic momentum rolling into 2007. He said the MOF is also involved at “hands-on level” of 9MP implementation, such as land issues with state administration. He also reassured that the bulk of the financing for 9MP will be from domestic sources.

US: Consumer sentiment falls marginally in October
US Consumer confidence complied by the Conference Board fell slightly to 105.4 in October (September: 105.9) weighed down by job prospects in the coming months despite the easing of energy prices. The report suggest that the positive impact of lower energy prices could be offset by the negative wealth effect from the housing sector correction. In a separate report, the Chicago based National Association of Purchasing Management (NAPM) said its business index fell to 53.5 in October, the lowest reading since August 2005.

IMF: China should make Yuan more flexible
The IMF said China should allow more flexibility in its currency and reduce its dependence on exports as the main engine of growth. The IMF said the robust growth in China has accorded the right timing to introduce more flexibility in Chinese Yuan as a more flexible Yuan would help to make China’s growth more sustainable. The IMF also raised China’s 2006 growth forecast to 10.5% from earlier estimate of 10%.

Malaysia Daily Media Highlights

Malakoff: Gets desalination project in Algeria
Malakoff’s wholly-owned subsidiary, Malakoff International Limited (MIL) and Spring Utility Limited (SUL), a wholly-owned subsidiary of Hyflux Ltd, Singapore had received a letter of award from the Algerian Energy Company to develop, construct and operate a seawater desalination plant of 200,000m3/day at Souk Tleta, Algeria. The company will be granted a 25-year concession to supply desalinated water to L’Algerienne Des Eaux, the state-owned national public water entity of Algeria and Sonatrach. The total construction period is anticipated to be 24 months from financial close with total project costs estimated at US$238m (or RM881m). It will be project financed by a group of Algerian local banks. Malakoff’s investment based on its 40.8% effective equity interest in the project is circa US$19.42m (or RM73.44m). (Bursa Malaysia)

Carlsberg Brewery Malaysia Joint Venture in Taiwan
Carlsberg Brewery Malaysia is acquiring a 50% stake in Carlsberg Distributors Taiwan Ltd (CDT) for a total of NTD26.17m (RM3.05m). Under a joint venture agreement with Wiseline Ltd, which is ultimately owned by Hong Kong-based Lei Shing Hong (HK) Ltd, Carlsberg acquired an initial 3m shares in CDT for NTD6.71m. Carlsberg and Wiseline will each subsequently subscribe for another 2m shares in CDT for NDT20m cash. Carlsberg’s substantial shareholder, Carlsberg Breweries AS, has a distributor agreement with CDT that allows the latter to sell Carlsberg brands and products manufactured by Carlsberg in Taiwan. (theedgedaily.com)

Sugar Bun Corp: Queried by BursaMalaysia Daily Media Highlights
Sugar Bun Corporation has been queried by Bursa Malaysia Securities over the sharp increase in price and high volume in its securities recently, requesting SUGAR to make an announcement for public release after making a due enquiry seeking the cause of the Unusual Market Action in the company’s securities. The food-chain operator had announced to BURSA last week that its unit Borneo Oil and Gas Corp S/B acquired Borneo Oil (Thailand) Ltd for RM15,000 which would be used as a vehicle to venture into the oil, gas and energy industry. On another issue, SUGAR is raising funds via a special issue of up to 30m new shares, or 27.5% of its enlarged paid-up share capital, to Bumuputera investors in line with the National Development Policy and a renounceable rights issue of up to 52.62m new warrants 2007/2012 on the basis of one warrant for every 3 shares after the special issue. (theedgedaily.com)

LCL: Extension of Project Value
Atlantis The Palm Project, undertaken by a one-off non-integrated joint venture (namely LCL Mice Kraftwork JV) between LCL Corporation’s associated company LCL Interiors LLC and Mice Kraftwork LLC worth Dirhams 92.9m has a variation work order of Dirhams 12.7m which has therefore increased the total contractual value to Dirhams 105.6m. (Bursa)

IOICORP: No plans to de-list the latter
IOI Corp has dismissed ongoing market talk that it pans to take its profit-making property unit private, IOI Properties. According to IOICORP, IOIPROP will launch a new 220ha township in Cyberjaya early new year. The company is also building a RM100m jewellery retail centre in Hyderabd, India, which is expected to be ready in 2-3 months. (BT)

Nissan/ETCM Vehicle: Sales down 13.5% in 3Q
Nissan/Edaran Tan Chong Motor S/B’s overall vehicles sales fell 13.5% to 4,756 units in 3Q06 from 5,496 units in the preceding quarter. Total sales for January to September fell 18.5% to 16,435 units compared with the 20,148 units sold in the previous corresponding period. Key models from the company’s stable of products, however, remain significant market leaders. The Sentra continues to dominate the non-national 1.6 litre (perol) passenger segments with 72% market share. Quoting the Malaysian Automative Association figures, the X-Trail lead the non-national 4x4 station wagon 2.0 – 2.5 litre (petrol) passenger with a 48% market share. The company’s second assembly line in Serendah, Selangor will start in 2Q07 with a single shift production capacity of 14,000 units up to a maximum of 54,000 units per annum. Two models will be assembled when production starts next year. (theedgedaily.com)

Atrium REIT gets SC Approval for listing
Atrium REIT Managers S/B has received the Securities Commission’s (SC) approval to list Atrium Real Estate Investment Trust (Atrium REIT). 4 industrial properties comprising 3 warehouses and a specially built office and factory complex with approved valuation of RM158.3m with a gross revenue of RM14m a year will be injected into Atrium REIT. The properties, which are leased to multinational companies, Exel, TNT, DHL and Unilever, have a net lettable area of 75,220 sq.m., and are located in Shah Alam, Puchong and Rawang. Distributable yield shall be above 7.4% per annum based on the offer price of RM1.05 per unit. The proposed listing of the Atrium REIT includes the issue of 121.8 units of which 60m units will be offered for sale to institutional investors through a book-building process. A total of 13.5m units have been set aside for public subscription while 2m units are allocated to directors, employees and business associates. The vendors, Glory Blitz Industries S/B and Sparkle Skyline S/B, will retain 21.1m and 25.2m units, respectively. Atrium REIT is targeted to be listed by January next year. (theedgedaily.com)

Thailand: Central Bank Lifts growth forecast
Bank of Thailand (BOT) raised the lower end of its GDP growth forecast for the year 2006 and 2007 to 4.5-5% and 4.5-5.5% respectively. The upward revision in forecast was prompted by surging exports and declining fuel costs. BOT Assistant Governor said the formation of new interim government has reduced political instability, bossting consumer and investor confidence.

Malaysia Daily Media Highlights

MMCCORP: PTP Open to foreign stake/Malakoff bidding for Pakistan Power Plant Job
MMCCORP’s 70% owned subsidiary, Port of Tanjung Pelepas (PTP) says it remains open to selling a part of its equity to foreign entities if it makes commercial sense. However, unconfirmed sources told the BT that talks between PTP and the Port of Singapore Authority (PSA) were called off as one of the conditions was for PSA International to shift half of its container business from Singapore to PTP. (BT)

In other news, Malakoff, MMC’s 22% owned subsidiary, is expected to know by the end of next week whether it has secured a Pakstan power plant construction and management contract worth as much as US$300m. The contract value is believed to be just for the construction of a 1000MW coal fired plant near Karachi while the winner of the bid will have to negotiate tariff terms with the Pakistan government. (BT)

Pos Malaysia: Shareholder Khazanah plans capital repayment
Pos Malaysia & Services Holdings said its biggest shareholder, Khazanah Nasional plans to restructure the group and implement a capital repayment. Khazanah is proposing a “restructuring of the group and a material capital repayment in cash to its shareholders,” Pos Malaysia said today. The proposal will be deliberated at a board meeting on Oct 31, it said, without giving more details. (Bloomberg)

Malaysia Daily Media Highlights

Golden Hope: To bid for KUB’s oil Palm Plantations
Golden Hope Plantations will bid for the oil palm plantation lands held under KUB Agrotech and KUB Sepadu, subsidiaries of KUB Malaysia. KUB Malaysia announced on June 9 that it proposed to dispose off its oil palm plantation lands. It owns 100% of KUB Ekuiti, which in turn has a 100% stake in KUB Agrotech and 60% of KUB Sepadu. KUB Sepadu owns a total of 8,203ha of oil palm plantations in Sarawak, while KUB Agrotech has 2,656.3ha in Johor. (theedgedaily.com)

TOP Glove: To turn around Medi-Flex by Aug’07
Top Glove will use its proven business model to turn around loss-making Medi-Flex Ltd within six months after the completion of its acquisition of 60.06% of the latter in February next year. Top Glove Chairman, Datuk Seri Lim Wee Chai said the group would transfer its technology, management skills and marketing strategies to the new subsidiary. Top Glove has proposed to subscribe for 300.3m Medi-Flex shares at seven Singapore cents each for a total of S$21m (RM48.93m). Medi-Flex will also issue 28m new shares to other investors. Top Glove executive director KM Lee said the group had seen several successful cases in turning around newly acquired, loss-making subsidiaries for the past few years. (theedgedaily.com)

CME Awarded Fire Department Deal
CME has won a RM211.2m 23-month contract to build 200 light fire-fighting vehicles from the fire Department. It received a letter of award to design, manufacture and supply 200 units of Light Fire/Rescue Tender complete with accessories, it said in a statement to Bursa Malaysia yesterday. (BT)

Nextnation Communications: Eyes India entry in six months
Nextnation Communications, which is aiming for a transfer to the Main Board within a year, expects to enter India in the next six months via a joint venture. Its chief executive officer and managing director Tey Por Yee said NEXTNAT would focus on its core business of providing application services in India similar to its operations in China, where it has nationwide connectively with the most major mobile operators. He said NEXTNAT’s business model to enter into JVs or seek acquisitions abroad was to facilitate it to overcome the language, cultural and political barriers. (theedgedaily.com)

Kannaltec: Lands RM400m ICT Concession
Kannaltec has secured a 20-year concession worth up to RM400m to build and manage the Selangor State government’s broadband infrastructure network for 345 government offices (Sel*Net) the state. Under the concession, the state government will subscribe to the broadband services and applications at agreed rates for a period expiring Sept 22, 2025. Sel*Net will be the state government private network infrastructure that links its departments, statutory bodies, local authorities and agencies with high-speed broadband that support data, voice and images. (theedgedaily.com)

Hektar: To raise RM176m from REIT Listing
Hektar Group expects to raise about RM176m from the listing of its real estate investment trust on the main board of Bursa Malaysia before the end of the year. Known as the Hektar REIT, it comprises Subang Parade and Mahkota Parade shopping malls in Selangor and Malacca respectively and is the country’s first focused retail specialist. The REIT will be managed by Hektar Asset Management Sdn Bhd (HAM), which is part of Hektar Group. (BT)

Malaysia Secures more aviation rights in China
Malaysia has secured more air rights in China and significantly, permission for cargo freighters to operate from several Chinese cities to third destinations in Europe, Central Asia and the US. The two countries inked a memorandum of understanding (MOU) here yeaterday which comes into effect immediately, expanding the scope of services allowing airlines from both countries to enter into code-share arrangements to third countries. The agreement comes ahead of an “open skies” policy between the two countries which is expected to start by 2010 under the MOU, the frequency of Malaysian and Chinese passenger and cargo flights between the two countries would increase by 25% to 125 per week using any type of aircraft. Currently, Malaysian carriers operate 47 weekly flights to China which in turn flies 34 times a week into Malaysia. (BT)

Malaysia Daily Media Highlights

F&N: Buy Nestle’s Liquid Milk for RM310m
Fraser & Neave Holdings Bhd (F&N) will fork out about RM310mil to buy Nestleˇs liquid milk business and, in the process, double F&N groupˇs dairies operations and expand its regional footprint. “The deal would increase the dairies divisionˇs annual turnover to over RM1.5bil from RM600mil now”, said Tan Ang Meng, chief executive officer of F&N.At present, Nestle has leading positions in the condensed, evaporated and sterilised milk markets in Thailand via the Carnation, Milkmaid and Bear brands. As part of the deal, these brands will be licensed to F&N, which will also acquire relevant Nestle production facilities and equipment in Thailand.

IJM: Awarded contract worth RM717m
IJM Corporation’s unit, IJM Construction S/B was awarded two contracts worth RM717m from Talam Corporation to complete the remaining construction works for several development projects in the area such as Taman Puncak Jalil, Putra Perdana, Ukay Perdana, Kinrara Section 3, Bukit Berunting and Lagoon Perdana for a period of 36 months. The award of the contracts has been pursuant to the settlement agreements reached by TALAM for the outstanding amount of the Al-Bai Bithaman Ajil Islamic Debt Securities of RM528.87m and Murabah Notes Issuance Facility of RM196m respectively, as announced on 6 October 2006 and 11 October 2006. (Brusa)

Puncak: Windfall for shareholders
Puncak Niaga Holdings plans to reward shareholders with up to RM767.8million, or 65 sen cash a share, under a capital distribution to improve its capital structure and shareholders’ value. It has also proposed a 1-for-1 bonus issue of up to 590.6m payout, Puncak Niaga plans to sell RM320m worth of inter-company advances for RM419m via preference shares and cash. It also plans to sell a 17.5% stake in subsidiary Puncak Niaga (M) S/B for RM306m to Arena Tekad S/B. Both deals would raise some RM439m for Puncak Niaga. The proposals still need the approval of regulators and shareholders. (BT)

TECFAST: 25% stake acquired by London’s Trifast Plc
Techfast Holdings’s 25% stake or 38m shares have been acquired by Trifast Plc, which is listed on the London Stock Exchange for RM19m cash. The vendors area Tecfast’s chairman and managing director Yap Yoon Sing, executive directors Lim Tock Ooi and Fong Kong Leong and substantial shareholder Chin Chee Heun. The vendors said assuming the completion of the sale and purchase agreement and based on the vendor’s shareholding as at Oct 13, 2006, Yap’s shareholding in Techfast would be reduced to 10.97% or 16.67m shares after selling 14.80m shares or 9.74% equity. Lim’s stake would decrease to 5.63% (8.55m shares) from 12.07% (18.35m) and Fong’s to 7.21 (10.96m shares) from 14.05% (21.36m shares). Chin’s stake would be reduced to 5.71% or 8.68m shares from 7.68% or 11.68m shares. (theedgedaily.com)

GHOPE: In JV with China’s detergent company
Golden Hope Overseas Capital (GHOC) has signed a JV agreement with Cognis Oleochemicals (HK) Ltd and China’s Lonkey Industrial Co Ltd to establish, Guangzhoe Keylink Chemical Co Ltd. The new company will manufacture, distribute and sell methyl ester sulphonates (MES), an oleochemical derivative used in the production of detergent. GHOC is a subsidiary of Golden Hope International Investments, which is wholly owned by Golgen Hope Plantations. Under the agreement, Lonkey will hold 49% of equity in the JV company with 36% under GHOPE and the remaining 15% under Cognis. Guangzhou Keylink will be responsible for building, developing and operating a plant to be built in Guangzhou to manufacture MES. (Bernama)

Genting: Unveils details of Singapore Casino Bid
The Genting group plans to re-invest more than S$200m (RM465.13m) annually in its proposed RM11.62bn integrated resort on Singapore’s Sentosa Island. Genting International plc and Star Cruises Ltd have unveiled details of the consortium’s world-class Resort World at Sentosa, which will hold 4 world-class gated attractions. They are Universal Studios Singapore, Quest Marine Life, Equarius Water Park and the Xperiential Maritime Museum, which will be developed by Univeral Studios, Dolphin Quest, Forrec Ltd and Ralph Appelbaum Associates, respectively. The resort will also boast 6 hotels with 1,830 hotel rooms, which include the exclusive ESPA Villas, the Hotel Michael boutique hotel designed by famed US architect Michael Graves and the Hard Rock Hotel. It will also have a Festivewalk promenade and the Bull Ring entertainment centre. The resort would also be home to the largest collection of flagship concept stores that include Nike, Cartier, Massimo Dutti and Hamley’s first toy store outside of Europe. The resort will have a soft launch planned for end-2009 with its official opening slated for early 2010. (theedgedaily.com)

Malaysia Daily Media Highlights

Tronoh: Win Power Deals
Tronoh and its subsidiary, Zelan Holdings, are set to win potentially lucrative contracts to build coal-fired power plants in Indonesia. Company sources said that working jointly with Indonesia’s PT Primanaya, the consortium has by default won at least one of four jobs tendered out by PT Perusahaan Listrik Indonesia (PLN) to construct power plants in the 300 megawatts (MW) to 400MW category. The four projects within the category tendered out were the Labuan Power Plant (2 x 300MW), Rembang Power Plant (2 x 300MW), Tanjung Awar – Awar Power Plant (2 x 300MW) and Indramaya Power Plant (3 x 300MW). Each of the projects attracted only one bidder, and as a condition to the tenders, should there be only one bidder for any of the projects, that bidder would automatically win the job. (BT).

Boustead: Buying 6.3m naval shipyard shares for RM21.54m
Boustead is acquiring KUB Malaysia’s 4.85% stake in Boustead Naval Shipyard (BNS), formerly known as PSC-Naval Dockyard, for RM21.54mn. Boustead said the acquisition of the stake, comprising 6.3mn RM1 shares, would raise its stake in BNS to 35.62 or 46.3mn shares, and it would be obliged to undertake a general offer for the remaining shares in BNS. However, it said it would seek an exemption from undertaking a mandatory general offer, which may arise from the acquisition, if required. Boustead said the acquisition was in line with its strategic intention to consolidate its investments and control BNS, given the importance of the Offshore Patrol Vessels Contract (theedgedaily.com)

RHBCAP: 2 Middle-East Groups Eyeing UTAMA
It was reported by the Edge Weekly that there are 2 Middle-East (Kuwait and Abu Dhabi based) Groups that are interested to acquire the equity stake of Utama Banking Group (UTAMA) from Cahya Mata Sarawak (CMS). As at 20th April 2006, CMS controls 51.83% of UTAMA.

AIRASIA: SIA to reduce fuel surcharge/Asmara Air no threat to other players
Singapore Airlines (SIA) is reducing its fuel surcharges following a decline in jet fuel prices in recent weeks. There reductions will apply for ticket purchased on or after Oct 14, 2006. The airline said the surcharge for flights between Singapore and the Asean countries would be reduced from US$20 to US$18. For flights between Singapore and the United States or Canada, the surcharge would be reduced from US$90 to US$82 while the surcharge for all other flights woud be reduced to US$54 from US$60. (theedgedaily.com)

In other news, soon to be launched Asmara Air says that it is not a threat to AirAsia or Malaysian Airline System (MAS) as it is expected to provide charter services rather than scheduled services. Asmara Air clarified that it will provide full-service charter flights through KLIA within Peninsular Malaysia. Although initially operating Fokker 50s, Asmara hopes to have B737s by early next year and start flights to Sabah, Sarawak and neighbouring countries. (Star).

Cabinet approves water tariff hike for Klang Valley
Malaysia’s Cabinet has approved a 6% to 15% rise in water tariffs for users in Kuala Lumpur and its vicinity although the effective date has yet to be announced. Water, Energy and Communications Minister Datuk Seri Dr Lim Keng Yaik announced Saturday that the government had agreed to increase water tariff in the Klang Valley but it would not affect 42 percent of its residents consuming less than 20 cubic metres of water a month. (Bernama)

Oil Price drop may cut fuel price
Malaysia could see fuel prices cut if oil prices fall below $50 or $45 a barrel Deputy of Domestic Trade and Consumer Affairs Minister said recently. He added that despite the sharp drop in crude oil prices in recent weeks the government is unable to cut prices now as it is still heavily subsidizing fuel prices. (Bernama)

PROTON: Police buying 2,000 Protons for RM80m
The Royal Malaysian Police is acquiring 2,000 Proton cars this year for about RM80m to beef up its mobile patrol vehicle programme. The Inspector General of Police Tan Sri Musa Hasan said on Oct 13 that the police are considering to buy another 300 more cars next year. Of the 2,000 cars this year, the police will receive 1,000 Wajas, 500 Wiras, 400 Iswaras and 100 Perdana V6s. The police are looking to have a fleet of about 3,990 by the end of next year. Currently, the police have about 1,690 Proton Cars. (theedgedaily.com)

Sarawak wants to take over Bakun Dam Project
The Sarawak state government has expressed interest in wanting to take over the Bakun Hydro-electric dam project as it seeks to keep the electricity generated in the state to help draw foreign investment. The Sarawak state government is keen for the aluminium smelter project to take off which would consume 80% of the power generated from the dam. Sarawak may use its publicly traded company, Sarawak Enterprise Corp Bhd to take over Sarawak Hydro. (BT)

Malaysia Daily Media Highlights

Puncak: RM1.25/share capital repayment
Puncak Niaga Holdings shareholders are expected to be rewarded with a bumper cash payout of RM1.25 per share on the prospects of its assets and debts being taken over by Finance Ministry-owned Pengurusan Aset Air Bhd. (theedgedaily.com)

TOPGLOV: Acquiring 300m new shares inSingapore’s MediFlex
Top Glove Corp Bhd has proposed to acquire 300.3m new shares in Singapore-listed Medi-Flex Ltd for S$21m (about RM49m), a move which will make the latter a subsidiary. The company said that it would pay seven Singapore cents for each new Medi-Flex share, which is below the latter’s last traded price of 12.5 cents. Simultaneously with the Proposed Subscription, Medi-Flex has also proposed to issue 28m new Medi0Flex shares to other investors. Medi-Flex’s subsidiaries are principally involved in the manufacturing and trading of rubber gloves and have a paid-up capital of S$19.5m. Medi-Flex posted a net loss of S$12.6m for the first half ended June 30, 2006 and had borrowings of S$26.8m. (theedgedaily.com)

LFE CORP: Bids for RM250m, jobs in China and Middle East
LFE Corporation Bhd, which is on track to return to the black next year, is bidding for RM250m in mechanical and electrical engineering projects in Chinaand the Middle East, its executive director Kevin Chin Soong Jin said. He said the LFE is tendering for sub-contracting jobs totalling some RM200m in the Middle East and another RM50m jobs in China. Kevin said LFE’s currenty order book amounted to about RM480m with the bulk of it from overseas projects that would last it over the next two financial years. (theedgedaily.com)

MTAKAB: Plans RM30m expansion
Mentakab Rubber company (M) Bhd plans to invest RM30m to increase its plantation land area to 10,000ha and also to set up a mill, its executive director Datuk Sabri Ahamd said. To ensure Mentakab Rubber has sustainable earnings, the company is looking to increase it heactarage to 10,000ha. Land is almost exhausted in the peninsula and will be looking at green fields in Sabah, Sarawak and Indonesia. (theedgedaily.com)

CCM: Acquires 15% stake in US R&D firm for RM18.5m
Chemical Company of Malaysia Bhd (CCM) is acquiring a 15% stake for US$5m (RM18.5m) in a US-based research and development (R&D) company, Synergy America Inc (SynAm) which is developing a new vaccine against pneumococcal deseases. CCM said SynAm had a strong scientific team with extensive experience in caccine research and development and was familiar with US Food and Drug Administration (US FDA) regulations. (theedgedaily.com)

Malaysia Daily Media Highlights

TM: In talks to get fixed-line business deregulated
Telekom Malaysia Bhd (TM), is in talks with the Government about de-regulation of the fixed-line business so TM can have more flexibility in determining call rates and rental fees. Once the fixed-line business is deregulated, TM can move to lower its long-distance call rates and compete with the much lower rates offered on the Voice over Internet Protocol (VoIP) and by some mobile players. This will mean cheaper calls for subscribers in general. It could also mean that TM will be able to increase local call rates to offset lower long-distance call rates. The current arrangement does not give TM the flexibility to adjust call rates or to review phone rental fees, even though there is a ceiling rate for call charges. “The whole fixed-line business should be reviewed. The idea here is to deregulate the business and let the market forces dictate the rate that can be offered” said TM’s Malaysia business chief executive officer Zamzairani Mohd Isa. He said that the company is in constant talks with the Government and authorities on the matter. However, no official proposal has been made. (BT).

Genting: To get RM5.5bn bridging loan
Genting has secured loans of close to US$1.5bn (RM5.54bn) from five banks for its proposed Singapore casino project. Genting had announced on Oct 10 its joint bid with Star Cruises Ltd to spend more than US$3.1bn (RM11.64bn) to build the casino on Sentosa Island, competing with rivals Kerzner International Ltd and Eight Wonder. Genting hired Barclays Plc, Citigroup Inc, DBS Group Holdings Ltd, HSBC Holdings Plc and Royal Bank of Scotland Group Plc for a bridging loan for one year according to unconfirmed source. The five banks also provided GBP368m (RM2.52bn) in funding to help finance Genting’s acquisition of Stanley Leisure Plc, according to data compiled by Bloomberg. (theedgedaily.com)

SIME: Tipped to launch Ramunia bid soon
Sime Darby Bhd plans to launch a takeover offer for Ramunia Holdings as early as next week, bankers familiar with the matter said. Sime would buy out the controlling shareholder of Ramunia, Ramunia & Marine Corp Sdn Bhd (Remcorp), which holds 55.92 per cent of Ramunia. Under the deal, Sime will offer Remcorp RM161.82m or RM1.24 a share for every ordinary share it owns in Ramunia.

OYL: Daikin’s takeover offer now unconditional
Daikin of Japan has secured more than 50% of OYL shares and the mandatory takeover offer for the remaining shares has become unconditional. Billionaire Tan Sri Quek Leng Chan’s Hong Leong Secretarial Services and Liu Wan Min, who is the president and chief executive officer of OYL, sold their stakes of 40% and 5.2% respectively to Daikin for RM3.05bn and RM395.37m respectively, or RM5.73 per share. Upon their agreement becoming unconditional, Daikin would undertake a mandatory general offer (MGO) for the remaining 54.8% stake in OYL for a total of RM4.17bn. (theedgedaily.com)

THPLANT: Seeks RM250m to expand
TH Plantations, the plantation arm of Lembaga Tabung Haji, is expected to raise RM250m from a bond sale to finance its oil palm land expansion. TH Plantations plans to double its current landbank of about 16,000ha in three years. It also manages about 122,000ha of plantation land owned by Lembaga Tabung Haji. Bankers said part of the bond issue could be subscribed by Tabung Haji. This would be a two-prong strategy that would enable both parent and subsidiary to help each other. (BT).

LCL: Plans Main Board transfer to boost profile
LCL is planning a transfer to the Main Board within the next six months via a corporate exercise that could include a bonus issue and private placement, as part of the effort to enhance its corporate profile among investors. Its group managing director Low Chin Meng said LCL was unable to attract investors’ interests despite its growth potential as long as it remained on the Second Board. Low said LCL had met the financial requirements for a Main Board listing and was now planning the corporate exercise pursuant to the intended transfer. As at April 24, 2006, LCL’s paid up capital stood at RM40.49m. (theedgedaily.com)

Malaysia Daily Media Highlights

TELCO Sector: The Government will sell up to 4 WIMAX Licenses
Malaysia’ government said it plans to issue up to 4 WIMAX licenses that will allow companies to offer wireless high-sped Internet services. The government hasn’t decided on a price for the so-called WIMAX permits, Energy, Energy, Water and Communications Minister Lim Keng Yaik told reporters toady in Kuala Lumpur. The government expects a decision “by the end of this month,” he said. The commission, which oversees the telecommunications and the multimedia industry in the country, changed an original plan to announce the winners in July after the minister said some specifications weren’t in line with government policy. Lim declined to say if the government wants the bidding process to be repeated. He said the government prefers companies which plan to roll out the service nationwide. The government will allocate 30MgH of spectrum for each of the winners to start WIMAX services. (BT)

No Tender for MNP clearing house
Energy, Water and Communications Minister, Datuk Seri Dr. Lim Keng Yaik has shot down any suggestion of a tender to appoint a central clearing house operator, a lucrative job, for the implementation of mobile number portability (MNP). “There will be no tender. There will be only one company,” he told reporters. Dr Lim had said one company, Talian Gerak Alih Sdn Bhd, had presented its plans to him and that he was impressed with it because of its US-based technology partner, Telcordia Technologies Inc. In an immediate response on Oct 10, Malaysian Communications and Multimedia commission (MCMC) chairman Datuk Dr. Halim Shafie said he was unaware of the minister’s decision not to have a tender for the clearing house operator. MCMC had also identified NP Clearinghouse Sdn Bhd (foreign partner Syniverse Technologies of Florida), MSCtrustgate.com (foreign partner Verisign of California), Solution Provider Asia and Swedtel Southeast Asia (foreign partner Worldtel Ltd of Sweden) and Nusa Advanced Systems (foreign partner Neustar plc of Virginia). The lucrative nature of the clearing house job stems from the high and growing mobile volume, which saw 75 billion calls and data traffic being sent last year. The report said the MCMC had hoped the charge by the clearing house through a competitive bidding process would be less that 0.1 send per re-routing. Dr. Lim on Oct 10 said that the ministry was sticking to its target to implement MNP next year.

Johore Tin: In Talks on 2nd Indonesian Plant
Johore Tin is in talks to set up another can-making factory in Indonesia, said its managing director Edward Goh Swee Wang. The company sees Indonesia as a high growth market due to the huge demand for cans there, and because the company has not yet gone aggressively into that market. He said the factory would service another part of Indonesia and not North Sumatra, where it already has operations. The North Sumatra factory caters to local demand only. On the home front, Johore Tin will see the completion of its factory in Seelong, Johor by the end of the month. (BT).

Genting: Proposed to invest RM11.4bn to develop resorts at Sentosa
Genting group has proposed to invest over S$5bn (RM11.4bn) to develop a world-class integrated resort at Sentosa Island in Singapore. The bid to build Singapore’s second casino resort was submitted by Genting International Plc and Star Cruises Ltd, both of which are part of the Genting group, on Oct 10. Two other groups – Kerzner International Ltd, which owns Atlantis gaming resort in the Bahamas, and Las Vegas based Eight Wonder – also submitted their bids to the Singapore authorities before the Oct 10 deadline. The winner is expected to be announced by year-end. (tehedgedaily.com)

Malaysia Airport: Bids for RM1b Jordan Terminal Job
Malaysia Airports Holdings has submitted a bid to build, operate and manage a US$280m (RM1bn) new terminal at the Queen Alia International Airport in Jordan according to company sources. Senior Airport officials confirmed a bid was made late last week and that it was a joint one with AIRPORT’s Kuwaiti partner. The new terminal in the Jordanian capital of Amman is expected to be built over a period of three years to help meet anticipated increase in passenger traffic over the next 30 years. Jordan is expected to announce the winning bid by as early as March next year. (BT)

SCN: Secures RM15m contract
Scan Associates has secured a RM15m government contract to provide maintenance and security support services to various agencies all over Malaysia. Scan had received a letter of award from the Malaysian Administrative Modernisation & Management Planning Unit (MAMPU) to provide its services for the government’s PRISMA project. The 24-month contract was expected to contribute positively to its earnings for the period of the contract. (thedgedaily.com)

Malaysia Daily Media Highlights

Genting: Stamps control over Stanley Leisure
Genting subsidiary Genting International Plc has stamped its control over UK’s largest casino operator, Stanley Leisure Plc, after its cash offer became unconditional with its stake raised to about 69.4%. Genting International announced over the weekend that it had received Stanley shareholders’ acceptances for 17.95m shares representing a 25.3% stake. With that, the total number of shares already held and to be acquired by the Genting International group rose to 49.3m, representing the 69.4% stake. The investment in Stanley provided it the platform to expand its business in the soon-to-be deregulated UK gaming industry and in Europe in Future. (theedgedaily.com)

DiGi: Introduce New Prefix Numbers
DiGi has introduced two prefix – 014-30x xxxx and 014-31x xxxx to meet surging growth in DiGi Prepaid subscribers. The new prefix numbers would be available in both the northern and southern regions due to the overwhelming demand in these areas. It said Kedah, Penang and Perak was allocated the 014-30 prefix and Johor the 014-31 prefix. The new packs will carry the same quality of service and coverage and the same benefits as 016 and 014-6. with the new prefix, a DiGi subscriber calling a DiGi subscriber will have to use the prefix 016, 014-6, 014-30 and 014-31 as per the receiver’s prefix number. (theedgedaily.com)

Gamuda: In running for US$2bn Saudi Rail Contract
Gamuda is vying for a job to build a US$2bn (RM 7.4bn) rail network in Saudi Arabia. According to unconfirmed sources, Gamuda submitted the bid late last month and will know by the year end if it is successful in clinching any of the jobs on offer. The North-south link, tipped to be Middle East’s largest ever rail project, will be split into four main contracts, comprising earthworks and bridges, ballast and track installation. Sources confirmed that a Gamuda-led consortium had been prequalified, but declined to elaborate further. The Gamuda-WCT partnership is also said to be eyeing for projects in Oman, especially infrastructure works related to Al Duqm Port. (BT)

Kotra: Proposes transfer to Main Board
Kotra Industries is seeking a transfer to the Main Board and has proposed a 6-for-5 bonus issue to facilitate the exercise. Its paid-up capital would increase to at least 123.7m shares of 50sen each or RM61.9m, assuming no exercise on its ESOS options. Kotra expects its transfer to be effected early next year. (theedgedaily.com)

KPJ: Buys 2 more hospitals for RM72m cash
KPJ Healthcare is acquiring the operator of two medical centres, Sentosa Medical Centre SB, from AMDB Bhd and 22 other corporate and individual shareholders for a total of RM72m cash. KPJ subsidiary, Kumpulan Perubatan (Johor) SB would acquire Sentosa’s entire paid up capital of 8.7m shares and 5.2m redeemable cumulative preference shares (RCPS) for RM66.8m and RM5.2m respectively. Sentosa operates a medical centre in Kuala Lumpur under Sentosa Medical Centre, while a subsidiary Hospital Sentosa SB also operates a centre in Kajang. (theedgedaily.com)

LBS: Signs development MoU in China
LBS Bina Group 51% subsidiary Linkway Property Co Ltd has signed a memorandum of understanding with the local authority of Wuhu City, China, to develop a 203.3ha recreational and ecological park. LBS said it would comprise property development, golf course, hotel, clubhouse and other recreational facilities in Wuhu City of Anhui Province. Phase one, which involve about 123.3ha, comprises 43.3ha for property development and 80ha for an 18 hole-golf course and other recreational facilities. The estimated gross development value for the 43.3ha of property development was RMB1.5bn (RM750m). (theedgedaily.com)