MSWG Weekly Newsletters 21 October 2017

Saturday, 21 October, 2017

PLEASE MARK YOUR CALENDAR

MSWG-ASEAN CORPORATE GOVERNANCE RECOGNITION 2017

TO BE HELD AT THE MAJESTIC HOTEL, KUALA LUMPUR

ON WEDNESDAY, 6 DECEMBER 2017

The findings and results of the governance level of Malaysian public listed companies will be announced  followed by an award presentation ceremony to recognise the companies that have demonstrated high level of corporate governance practices.

We look forward to your participation and support at the event.


MSWG IN THE NEWS

MSWG WANTS GOVT TO 'FINALLY END' CASH INJECTION INTO PROTON

http://www.theedgemarkets.com/article/mswg-wants-govt-finally-end-cash-injection-proton


MSWG’S QUICK TAKE ON-ONGOING CORPORATE DEVELOPMENTS

XINGHE HOLDINGS BERHAD (“XHB”)

The Board of Directors of XHB (“Board”) announced that the company is proposing to undertake a private placement of new ordinary shares (“Shares”) of up to 10% of the issued share capital of the company, to investor(s) to be identified at issue price(s) to be determined (“Proposed Private Placement”).

The Board also announced that the company had on 16 October 2017 entered into a Collaboration Agreement with Jefi Aquatech Resources Sdn. Bhd. (“JAR”) to establish a company under the name “XingHe-Jefi Sdn. Bhd.” or any other name agreed mutually by XHB and JAR and approved by the Companies Commission of Malaysia for the purposes of exploring business opportunities in tuna and other seafood processing (“Proposed Collaboration”).

[Source: XHB’s announcements on Bursa Malaysia’s website on 16 October 2017]

 

MSWG’S COMMENTS:

Given that both announcements pertaining to the Proposed Private Placement and the Proposed Collaboration were released on the same day, we believe that the Proposed Private Placement could be for issuing new shares to the new joint-venture partner, i.e. JAR in regard to the Proposed Collaboration.

We also noted that XHB was sitting on a huge cash pile of RM259.6 million as at 30 June 2017 (referring to the latest second quarterly report of FY 2017) and recorded a low gearing ratio of 0.05 times as at 31 December 2016 (as stated in the announcement).

Hence we are not convinced by the rationale stated in the announcement that “Proposed Private Placement would raise funds in a relatively expeditiously manner for the Group to meet the working capital/funding requirement for future investments or business projects in Malaysia, without incurring interest expenses associated with bank borrowings”.

The Board should consider making full use of the company’s existing cash pile of RM259.6 million before opting for cash raising exercise via private placement at the cost of the shareholders. It also depends on how much money is the company raising via the proposed private placement. Moreover, the company’s gearing ratio is still relatively low.


MSWG’S AGM WEEKLY WATCH 16 – 20 OCTOBER 2017

For this week, the following are the AGMs/EGMs of companies which are in the Minority Shareholder Watchdog Group’s (MSWG) watch list.

The summary of points of interest is highlighted here, while the details of the questions to the companies can be obtained via MSWG’s website at www.mswg.org.my.

 

Date & Time

Company

Venue

23.10.17 (Mon)
10.00 am

Berjaya Land Bhd 
(AGM)

Bukit Jalil Golf & Country Resort, Jalan Jalil Perkasa 3, Bukit Jalil

23.10.17 (Mon)
10.00 am

Hong Leong Bank Bhd 
(AGM)

Wisma Hong Leong, 18 Jalan Perak, KL

24.10.17 (Tue)
11.00 am

Caring Pharmacy Group Berhad
(AGM)

Bukit Jalil Golf and Country Resort, Jalan Jalil Perkasa 3, Bukit Jalil

25.10.17 (Wed)
10.00 am

ES Ceramics Technology Bhd
(AGM)

Hotel Armada Petaling Jaya, Lot 6, Lorong Utara C, Section 52, PJ

25.10.17 (Wed)
02.00 pm

Pensonic Holdings Bhd
(AGM)

1165, Taman Perindustrian Bukit Minyak, Simpang Ampat, Penang

26.10.17 (Thur)
10.00 am

Berjaya Corporation Bhd
(AGM)

Bukit Jalil Golf & Country Resort, Jalan Jalil Perkasa 3, Bukit Jalil

26.10.17 (Thur)
02.30 pm

Hong Leong Capital Bhd 
(AGM)

Wisma Hong Leong, 18 Jalan Perak, KL

26.10.17 (Thur)
04.00 pm

Hong Leong Financial Group Bhd
(AGM)

Wisma Hong Leong, 18 Jalan Perak, KL

27.10.17 (Fri)
03.00 pm

Plenitude Bhd
(AGM)

Novotel Kuala Lumpur City Centre, No. 2, Jalan Kia Peng, KL

27.10.17 (Fri)
03.00 pm

Hong Leong Industries Bhd
(AGM)

Wisma Hong Leong, 18 Jalan Perak, KL

 

The points of interest to be raised:

Company

Points/Issues to Be Raised

Berjaya Land Bhd 
(AGM)

The pre-tax profit of Perdana Hotel Philippines Inc (“PHPI”) decreased by 91% to Peso0.3 million compared to Peso3.9 million in the previous financial year mainly due to lower revenue from hotel rooms as well as higher operating expenses.

 

Could the Board comment on the performance of PHPI for FY2018?

 

Hong Leong Bank Bhd 
(AGM)

Please comment further on its strategy to maintain NIM and NII ratios at above 2.1% and approximately 26% respectively given the current funding requirements and market dynamics.

 

Digitalisation platform is important to the bank transformation. Please elaborate on the estimated CAPEX to be allocated to the approach and what would be the likely impact to the overall bank branch network, manpower size and skills sets to achieve this goal.

 

Caring Pharmacy Group Berhad
(AGM)

  1. The Group had recently launched new products under the brand names “Herbs of Gold” and “Linola”.

(i)   Kindly brief shareholders on the status of these new products and its expected contribution to the Group’s business.

(ii)  Would there be any additional new products to be launched in this financial year?

(iii) Would the Company be introducing new super-premium products which cater for female and young consumers who have strong consumption power?

  1. What is the total estimated CAPEX allocated for 2017 and how would it be funded in line with its expansion of around 10 to 12 outlets with focus on outside Klang Valley region?

 

ES Ceramics Technology Bhd
(AGM)

The Group had registered declining profit after taxation in the past financial year. What measures have been taken to address the Group’s deteriorating performance and when is the Group expected to turn around?

 

Pensonic Holdings Bhd
(AGM)

The Company’s export sales had declined by 15.9% with overseas demand dropping tremendously in the Middle East due to new import ruling implemented by the local authority.

Does the Company expect further decline in export sales for FY2018 and what would be the expected decline in terms of percentage?

 

Berjaya Corporation Bhd
(AGM)

What measures have been taken to address the deteriorating financial performance of Cosway’s operation and when is Cosway’s operation expected to post a growth and be profitable?

Hong Leong Capital Bhd 
(AGM)

We noted that the Gross impaired loan ratio had deteriorated to 4.9% in 2017 compared to an average of 0.2% over the last 3 financial years as indicated under the Five Year Group Financial Highlights. Please explain and would there be any further worsening of the asset quality for the 1st quarter figures FY 2018?

Hong Leong Financial Group Bhd
(AGM)

Please comment on the statement made on page 30 that the company would consider raising alternative forms of capital to comply with the framework for financial holdings companies deadline on 1st January 2019.

Plenitude Bhd
(AGM)

The Group looks forward to improving contributions from the hospitality division as substantial upgrading and refurbishment works will be carried out at Novotel KLCC and Bangsar Residences.

  • How much would be incurred in the refurbishment works for Novotel KLCC and Bangsar Residences?
  • What would be the duration of the refurbishment works and the expected date of completion?
  • Would the refurbishment works be expected to affect the occupancy of these properties?

Hong Leong Industries Bhd
(AGM)

The Management Discussion and Analysis (MD & A) reported that HLY Marine Sdn Bhd (“HLY”), a wholly-owned subsidiary of the Company signed an agreement with Yamaha Motor Co. Ltd (“YMC”) whereby HLY was appointed as the exclusive re-seller and distributor of Yamaha outboard motor products.

  • Could the Board enlighten shareholders on the exclusive arrangements in the said agreement?
  • Besides its 35 offerings covering sales, service and spare parts of Yamaha outboard motor products, what are the strategies and business plans that the Board has established for HLY?
  • In which markets would HLY expect to expand the Yamaha outboard motor products given the knowledge that the Group’s businesses are largely in Malaysia, up to 85% from 81% in the previous year?
  • What are the likely expected HLY’s contributions to the Group’s revenue and bottom-line for the FY 2018 and beyond?

MSWG’S WATCHLIST

IGB CORPORATION BERHAD (“IGB”)

The Company announced that pursuant to Paragraph 11.02 of the Rules on Take-overs, Mergers and Compulsory Acquisitions, the Securities Commission Malaysia (“SC”) had, via its letter dated 17 October 2017 (which was received on 19 October 2017), notified that it has no further comments on the Explanatory Statement. The High Court of Malaya had also granted an order dated 19 October 2017 for IGB to hold a Court Convened Meeting pursuant to Section 366 of the Act (“Order”) within 90 days from the date of the Order to seek approval from all shareholders of IGB other than Goldis Berhad for the Proposed Scheme.

[Source: IGB’s announcement on Bursa Malaysia’s website on 19 October 2017]

 

WILLOWGLEN MSC BERHAD (“WILLOWGLEN”)

The Independent Adviser (“IA”), Mercury Securities Sdn Bhd, in their Independent Advice Circular to the holders of the offer shares in relation to the unconditional mandatory take-over offer dated 17 October 2017, is of the view that the unconditional mandatory take-over offer of RM0.80 per offer share was not fair and not reasonable.  Thus, the IA in their Independent Advice Circular had advised the entitled shareholders to reject the offer. The Board of Directors of Willowglen, save for the interested Directors, concurred with the IA’s views and had recommended that shareholders reject the offer.

[Source: Willowglen’s announcement on Bursa Malaysia’s website on 17 October 2017]

WINTONI GROUP BERHAD (“WGB”)

WGB (Respondent) announced that the company was served with a Notice of Motion dated 2 October 2017 to Set Aside / Stay Winding Up Order dated 17 August 2017 by Cheah Kwong Lee (Applicant / Contributory) through their solicitors Messrs. Siddiq Azani & Co.

The application, briefly, is based on the following grounds:

  1. That the company was not given any notice whatsoever of the winding up process and in particular it was not served with the statutory demand under section 466(1)(a) Companies Act 2016, it was not served with the Petition and it was not served with a copy of the Order of 17 August 2017;
  2. That the debt due to the Messrs. Syed Ibrahim & Co (Petitioner) for unpaid legal fees amounting to RM516,488.00 was based on invoices which the company has no record of receipt nor was there any record of any demand  for the fees.

Case Management for the application was heard on 10 October 2017 at the High Court in Kuala Lumpur.

[Source: WGB’s announcement on Bursa Malaysia’s website on 12 October 2017]


 

LOCAL NEWS AND DEVELOPMENTS

Vehicle sales up 2.8% in August

http://www.thestar.com.my/business/business-news/2017/10/14/vehicle-sales-up-28-in-august/

Industrial Production Index up 6.8 pct in August, beats market expectations

https://www.nst.com.my/business/2017/10/290255/industrial-production-index-68-pct-august-beats-market-expectations

Volume Index of Wholesale & Retail Trade rose 7.9 per cent in August 2017

https://www.dosm.gov.my/v1/index.php?r=column/cthemeByCat&cat=394&bul_id=c3Y0QWI1cnBsQjRjdThHVU9oY1JvQT09&menu_id=b0pIV1E3RW40VWRTUkZocEhyZ1pLUT09

Bursa Malaysia Securities reprimands, fines and suspends Wong Min Jun for engaging in manipulative dealing activities

http://www.bursamalaysia.com/corporate/media-centre/media-releases/5333

Wintoni executive director applies to set aside winding-up order

http://www.theedgemarkets.com/article/wintoni-executive-director-applies-set-aside-windingup-order

SMRT board unaware of reason for unusual market activity of shares

http://www.theedgemarkets.com/article/smrt-board-unaware-reason-unusual-market-activity-shares

Asiamet unaware of reason for surge in share price

http://www.theedgemarkets.com/article/asiamet-unaware-reason-surge-share-price

Government to impose up to 111.61 pct anti-dumping duties on CRSS imports

https://www.nst.com.my/business/2017/10/290092/government-impose-11161-pct-anti-dumping-duties-crss-imports

Renewal of ASEAN Swap Arrangement between ASEAN Central Banks and Monetary Authorities

http://www.bnm.gov.my/index.php?ch=en_press&pg=en_press&ac=4524&lang=en

MITI: Malaysia's market too small for Industry 4.0

http://www.theedgemarkets.com/article/miti-malaysias-market-too-small-industry-40

Malaysia addressing inaccurate claims in EU draft palm oil report

http://www.theedgemarkets.com/article/malaysia-addressing-inaccurate-claims-eu-draft-palm-oil-report

August natural rubber output up 11.1%

GLOBAL NEWS AND DEVELOPMENTS

China's economic momentum may continue in H2 - Central Bank Governor

http://www.thesundaily.my/news/2017/10/14/chinas-economic-momentum-may-continue-h2-central-bank-governor

US said to make proposal that could kill Nafta in five years

http://www.themalaymailonline.com/money/article/us-said-to-make-proposal-that-could-kill-nafta-in-five-years#xfS5UyjJMoldwi7b.97

US retail sales surge, driven by autos and gasoline purchases

http://www.themalaymailonline.com/money/article/us-retail-sales-surge-driven-by-autos-and-gasoline-purchases#XiMDg1bYBC0dRMWc.97

Kobe Steel, Nissan scandals tarnish image of Japan Inc

http://www.themalaymailonline.com/money/article/kobe-steel-nissan-scandals-tarnish-image-of-japan-inc#OIxl00K4x7ColrDR.97

World Bank must stop encouraging harmful tax competition

http://www.thestar.com.my/business/business-news/2017/10/14/world-bank-must-stop-encouraging-harmful-tax-competition/

‘Most’ Fed members see rising inflation in 2018, says Yellen

http://www.themalaymailonline.com/money/article/most-fed-members-see-rising-inflation-in-2018-says-yellen#BtAPV23hHCBKFysh.97

World Bank sets spring 2018 target to enhance financial capacity

http://www.themalaymailonline.com/money/article/world-bank-sets-spring-2018-target-to-enhance-financial-capacity#BjQ2wcE1FFAzDYws.97


MSWG Analysts

Lya Rahman, General Manager, lyarahman@mswg.org.my
Rebecca Yap, Head, Corporate Monitoring rebecca.yap@mswg.org.my
Quah Ban Aik, Head, Corporate Monitoring banaik.quah@mswg.org.my
Norhisam Sidek, Manager, Corporate Monitoring norhisam@mswg.org.my
Wong Kin Wing, Manager, Corporate Monitoring, kinwing@mswg.org.my
Hoo Ley Beng, Manager, Corporate Monitoring linnert.hoo@mswg.org.my

Elaine Choo, Manager, Corporate Monitoring, elaine.choo@mswg.org.my
Muhammad Faris bin Mohamed Yusof, Analyst, Corporate Monitoring farisyusof@mswg.org.my


DISCLOSURE OF INTERESTS

•          With regard to the companies mentioned, MSWG holds a minimum number of shares in all these companies covered in this newsletter save for Willowglen MSC Berhad and Wintoni Group Berhad.


Feedback
We welcome your feedback on our newsletter and our work. Email us at mswg.ceo@mswg.org.my with your comments and suggestions.


DISCLAIMER

This newsletter and the contents thereof and all rights relating thereto including all copyright is owned by the Badan Pengawas Pemegang Saham Minoriti Berhad, also known as the Minority Shareholder Watchdog Group (MSWG).

The contents and the opinions expressed in this newsletter are based on information in the public domain and are intended to provide the user with general information and for reference only. Best efforts have been made to ensure that the information contained in this newsletter is accurate and current as at the date of publication. However, MSWG makes no express or implied warranty as to the accuracy or completeness of any such information and opinions contained in this newsletter. No information in this newsletter is intended to be or should be construed as a recommendation to buy or sell or an invitation to subscribe for any, of the subject securities, related investments or other financial instruments thereof.

MSWG must be acknowledged for any part of this newsletter which is reproduced.

MSWG bears no responsibility or liability for any reliance on any information or comments appearing herein or for reproduction of the same by third parties. All readers or investors are advised to obtain legal or other professional advice before taking any action based on this newsletter.

 

Language: