Investment & Market Trends

KUALA LUMPUR: IHH Healthcare Bhd subsidiary Pantai Holdings Sdn Bhd (PHSB) has completed its acquisition of the entity that owns Timberland Medical Centre and the earmarked vacant land in central Kuching for the construction of a 200-bed tertiary hospital for RM245 million on a cash-free debt-free basis. This acquisition allows PHSB to expand its range of quality healthcare offerings in East Malaysia. PHSB chief executive officer Jean-François Naa said as its patient numbers grow, the company recognise the need to enhance its capacity and reach to better serve them. “Timberland Medical Centre, with its 30-year legacy in Kuching and strong brand presence, is an ideal healthcare institution to fulfil this purpose. “With the acquisition of Timberland Medical Centre and expansion into Sarawak, we will be preparing for the future, while ensuring a quality healthcare experience for all our patients, here and now,” he said in a statement. Jean-François said that in the near future, PHSB intends to further scale up Timberland Medical Centre’s operations via a new 200-bed tertiary hospital to be constructed in central Kuching. This hospital will serve local needs and cater to the growing medical tourism market in Indonesia. “Our geographical proximity to Indonesia makes us an ideal healthcare destination, with direct and affordable flights available between our countries,” he said. Timberland Medical Centre currently offers a wide range of medical and surgical services including cardiology, nephrology, oncology, gastroenterology, general surgery, orthopaedic surgery, hepatology surgery, orthopaedic and urology. PHSN has been present in East Malaysia since 2015 with the establishment of Gleneagles Hospital Kota Kinabalu. It is one of the largest private healthcare providers in Malaysia, with a healthcare network of 11 Pantai Hospitals, four Gleneagles Hospitals, Prince Court Medical Centre and now, Timberland Medical Centre. Jean-François said this marks PHSB’s This is the company’s inaugural acquisition in Sarawak, and it is eager to harness the full potential of its healthcare network to further enhance its services and patient care here.

KUALA LUMPUR: Construction and property player Varia Bhd signed a memorandum of understanding (MoU) with Sungai Klang Link Sdn Bhd (SKL) for an elevated highway project. This venture represents a strategic partnership aimed at harnessing Varia’s extensive construction expertise in the design, construction, operation, and management of this pivotal infrastructure development in the Klang Valley. Varia managing director Datuk Benson Lau said this collaboration is a testament to the company’s commitment to enhancing Malaysia’s urban infrastructure and an opportunity to set new benchmarks in construction and design excellence. “By combining our rich expertise in innovative construction solutions with our dedication to sustainable development, we are poised to deliver a project that will significantly ease traffic flow, improve connectivity, and contribute to the economic growth of the Klang Valley. “We look forward to the positive changes this project will bring to the community and the environment,” he said in a statement. SKL, a special-purpose vehicle company, has been actively engaged since 2019 in securing a concession agreement from the government for the right to build, manage, own, and operate the Sungai Klang Link elevated highway. The highway, spanning approximately 52.5 kilometres along the Klang River, will integrate with existing highway networks through 7 interchanges, providing an essential alternative route for road users in the region. The project has garnered substantial support from various government departments and local authorities and is now at an advanced stage of securing final approval from the government. Varia, with its comprehensive portfolio of construction works and history of undertaking design and build projects, is uniquely positioned to contribute significantly to this venture. SKL managing director Datuk Mohd Nazri  Ismail, this partnership aligns with the company’s goal of improving the transportation network in the Klang Valley by offering an additional route to ease traffic congestion. “Varia’s experience in managing significant infrastructure projects gives us confidence in the successful execution of this elevated highway. “We anticipate this project will contribute positively to the urban infrastructure, supporting more efficient transportation options. “Our combined efforts aim to address the current challenges in urban mobility and serve as a practical addition to the region’s infrastructure,” he said. As of March 8, 2024, Varia’s share price was RM0.89, with a market capitalisation of RM371.1 million, while the company’s orderbook remained strong at RM1.1 billion.

KUALA LUMPUR: Unitrade Industries Bhd (UIB) has declared a first interim single-tier dividend of 0.44 sen per share for the financial year ending March 31, 2024 (FY24). This translates to a dividend payout of RM6.9 million. Managing director Nomis Sim Siang Leng said the dividend declared reflects the company’s commitment to shareholder value creation and serves as a token of appreciation for their continued confidence in UIB. “It also aligns with our dividend policy to distribute up to 30 per cent of our net profit while prioritising a balanced approach that ensures both shareholder rewards and sufficient capital for future growth initiatives,” he said in a statement. UIB reported an 11.2 per cent year-on-year (YoY) revenue growth of RM1.14 billion, driven by the wholesale and distribution segment. Net profit for the period stood at RM23.1 million. UIB maintains a consistent record of rewarding shareholders. The company distributed dividends of 0.82 sen per share and 0.30 sen per share for FY22 and FY23, respectively, a 30 per cent dividend payout for both financial years.

KUALA LUMPUR: Dagang NeXchange Bhd’s (DNeX) wholly-owned subsidiary Dagang Net Technologies Sdn Bhd (DNT), signed a memorandum of understanding (MoU)  with Korea Trade Network (KTN) to develop services for the trade facilitation industry in the local and regional markets. Under the agreement, both companies will deploy home-grown technologies from Dagang Net and global capabilities from KTN in key areas such as port community systems, electronic customs and information technology (IT) consultancy services. The partnership will involve the integration of technologies and capabilities of both parties in the areas of integrated risk management system, customs cargo management and clearance system, port community system, customs processing and analytics/big data, artificial intelligence and machine learning, robotic process automation, blockchain and consultancy services. Moreover, the partnership can bring together the expertise of both parties to benefit their customers, specifically in digital and technology transformation of trade facilitation. The MoU was formalised in Cyberjaya, where Dagang Net’s chief executive officer Wan  Ahmad Syatibi Wan Abd Manan signed on behalf of the company, and KTN was represented by its chief executive officer Young-Hwan Cha. DNeX executive chairman Tan Sri Syed Zainal Abidin Syed Mohamed Tahir, group chief operating officer Azhar Othman, Dagang Net chief technology officer Jasbendarjit Kaur, and KTN director Sung-Heun Ha were also present at the event. According to Syed Zainal, the partnership aims to jointly develop trade facilitation services with enhanced features, leveraging both parties’ technologies and capabilities to improve the overall efficiency and productivity of the trade ecosystem. “This partnership allows us to work with KTN to expedite the transformation of the trade ecosystem, capitalising on our capabilities, breadth, and depth of offerings and technologies backed by our proven track records,” he said in a statement. “We need to continue embedding innovation in our services and product offerings, and our partnership with KTN is one such way towards this end,” he added. Since its establishment in 1989, Dagang Net has pioneered initiatives to create and integrate paperless, electronic customs-related services to facilitate and streamline international trading processes for import and export. Dagang Net has also been the operator of the National Single Window  (NSW) for trade facilitation for Malaysia since 2009, where the system facilitates electronic customs-related transactions and duty payments and electronic document transfer between members of its trading community. KTN is Korea’s national paperless trade infrastructure operator. In collaboration with the Korean government, it implements and operates the uTradeHub platform for all businesses in international trade. Leveraging the experience, KTN has successfully implemented e-customs systems in other countries.

KUALA LUMPUR: Duopharma Biotech Bhd (DBB), via its subsidiary Duopharma Marketing Sdn Bhd (DMSB), signed an exclusive distributorship agreement with Owen Mumford Sdn Bhd (OMSB), a subsidiary of UK-based medical device company Owen Mumford, for the distribution of medical devices in Malaysia, Singapore and Brunei. As per the agreement, DBB will distribute a range of diabetes care and eye care products, namely the Unifine, Pentips and Unifine Pentips Plus insulin pen needles, Unistik 3 and Unilet Excelite lancets and Autodrop eye drop guide, to government and private healthcare facilities, other patient care facilities and retail outlets, with potential expansion of the range of products distributed. Malaysian Investment Development Authority (MIDA) chief executive officer Datuk Wira Arham Abdul Rahman said the alliance between DBB and OMSB integrates two pivotal sectors of healthcare -pharmaceuticals and medical devices. “This integration showcases our dedication to improving healthcare access through innovative technologies, embodying our commitment to the well-being of our population. “The medical devices sector is prioritised in Mission 1 of the New Industrial Master Plan 2030, where the vision is to transform Malaysia into an innovation-driven manufacturing hub. “It underscores the capacity building in the medical devices and pharmaceutical industries by leveraging innovation and high-skilled talent to drive a high complexity economic agenda,” he said in a statement. DBB group managing director Leonard Ariff Abdul Shatar said OMSB’s innovative product range is a great fit for DBB’s current offerings to patients, healthcare providers and carers. “As a leading Malaysian healthcare company, we believe that having greater access to quality medical devices can improve patient compliance to routine care procedures such as blood sugar testing and insulin injections among diabetics, thus leading to better healthcare outcomes in the longer term. “This is especially important in light of the growing diabetes burden in Malaysia. “Besides, this is also in line with our environmental, social and governance (ESG) focus on improving access to healthcare, whereby providing more options to patients means improving their ability to get the care that best suits their needs,” he said. The prevalence of diabetes among Malaysian adults has grown from 11.2 per cent in 2011 to 18.3 per cent in 2019, with the disease is expected to affect 7 million Malaysian adults by 2025 at a prevalence of 31.3 per cent. The British High Commissioner to Malaysia Ailsa Terry said the coming together of DBB’s pharmaceutical expertise and OMSB’s acute understanding of medical devices will benefit and support millions of people living with diabetes. “This partnership represents what can be achieved when the very best from the United Kingdom (UK) and Malaysia join forces to support something incredibly important—the health and well-being of its people,” she said. Founded in the UK, OMSB is a pioneer in medical design innovation that revolutionised diabetes care with the first injector pen and currently has a wide product portfolio covering diabetes care, blood and patient specimen collection, point-of-care testing, neuropathy screening, ophthalmology care and sexual healthcare. “Since OMSB Malaysia began operations in 2015, we have focused on elevating healthcare through engagement with patients and healthcare professionals and tailoring medical devices to meet their needs, besides conducting ongoing education to ensure the correct usage of devices for optimal healthcare outcomes. “We are committed to delivering innovative, high-quality products and have launched initiatives such as including pen needles in complimentary bespoke starter kits at local government hospitals and providing vouchers to support patients in the B40 demographic. “With nearly RM100 million invested in our manufacturing facilities, operations and programmes in Malaysia since 2015, we aspire to continue serving as a source of advanced medical solutions in the country as well as the surrounding Asian region,” OMSB regional managing director Shirley Loh said.

KUALA LUMPUR: Domestic banks experienced steep margin compression and increased operating expenses in 2023, which were partly balanced by stronger non-interest income and lighter provisioning charges. RAM Rating Services Bhd said the average pre-tax return on assets and return on equity (ROE) of eight selected local banks was lower at 1.36 per cent and 13.6 per cent, respectively, compared to 1.41 per cent and 14.0 per cent recorded in 2022. The rating agency said at the after-tax level. However, the one-off Cukai Makmur’s absence lifted profitability metrics higher than the previous year. Further, the average net interest margin (NIM) of the eight banks narrowed by 28 bps to 2.07 per cent—the lowest level seen in the last five years. While multiple overnight policy rate (OPR) hikes initially resulted in considerable margin expansion in 2022, RAM Ratings noted that banks have grappled with higher funding costs in the past year as deposits gradually repriced upwards. The firm further said stiffer competition for deposits and the expiration of forbearance allowing the use of government securities for statutory reserve requirement compliance exacerbated the pressure on margins. “As we expect the OPR to be kept unchanged this year, NIMs are anticipated to stay steady although modest compression is possible should deposit competition intensify,” RAM Ratings’ co-head of financial institution ratings Wong Yin Ching said in a statement. Domestic loans grew by a fairly strong 5.3 per cent in 2023. While lending momentum was tepid for much of the year, it accelerated in the fourth quarter (Q3), led by businesses. RAM Ratings noted that early signs of a recovery in global trade and the robust job market are expected to support loan demand this year. “However, as we remain watchful of challenges in the global macroeconomic environment, elevated cost pressures and petrol subsidy retargeting, loan growth for 2024 is projected to ease somewhat,” the agency said. On the asset quality front, given lower reported provisioning expenses in 2023, the average credit cost ratio of the eight banks improved from 30 bps to 23 bps. A large portion of management overlays set aside during the Covid-19 pandemic remains on bank balance sheets. ”Looking ahead, banks’ profitability should stay intact in the coming year, but the upside will be limited in light of prevailing uncertainties in the operating landscape,” Wong said.

KUALA LUMPUR: The Federal Land Development Authority losses doubled to RM1 billion, almost twice the RM545 million losses reported in the previous year. According to the 2022 auditor-general’s report, Felda’s external debt stood at RM8.66 billion in 2022, slightly lower than the RM8.8 billion owed in the preceding year. The agency has recommended that Felda establish a clear path to operate independently, without relying on additional financial support from Putrajaya. It pointed out that Felda has been heavily reliant on financial assistance from the federal government, receiving RM200 million in grants in 2022, a decrease from the RM342 million received in 2021. “The reduction in grants received by Felda affected its operational sustainability,” the report noted. Further, the auditor-general’s report  also suggested that Felda closely monitor its subsidiary companies to ensure their self-sustainability and the ability to yield profits for the company without relying on the parent company. Felda has group-level loans, including a RM2.5 billion tawarruq financing facility agreement with GovCo Holdings Bhd. The report highlighted that FIC Properties Sdn Bhd failed to repay the loan, leading Felda to enter into a new agreement with GovCo as a corporate guarantor for the tawarruq financing facility agreement. Furthermore, PR1MA Malaysia reported a loss of RM257 million in 2022 and is facing challenges in repaying a RM1.75 billion Islamic medium-term note loan due in October 2024, with only RM428 million in cash by the end of 2022. The report recommended that PR1MA ensure cash projections from unit sales fund operational activities and facilitate the repayment of sukuk tranche 2. The report highlighted that the Armed Forces Fund Board (LTAT) had not accounted for impairments for investments in 13 subsidiaries, including Boustead Holdings Bhd (BHB) and Pharmaniaga Bhd, resulting in an overstatement of net profit and investment in subsidiaries by RM0.812 billion. LTAT has been in a negative reserve balance since 2020, with unrealised losses of RM0.662 billion from 41 old share portfolios. The auditor-general advised LTAT to restructure its investment strategies, enhance governance in investment management, and ensure dividend declarations are based on realized gains to maintain payout ability to eligible contributors. Additionally, the report highlighted that four federal agencies have not yet submitted their financial statements for the year 2022.

KUALA LUMPUR: Cypark Resources Bhd has expressed confidence in the solar projects in Kelantan and Terengganu and assured the company has ample funds to fulfil these ventures. The company has opted to postpone the coupon payment scheduled for March 4 on its perpetual sukuk. In a statement, Cypark said it is dedicated to delivering 270 megawatts of solar projects in Kelantan and Terengganu. “The decision to defer the March 4, 2024 coupon payment on the perpetual sukuk is a strategic move aimed at prioritising funds for the completion of the projects by the second quarter of 2024, as permitted by the terms of the perpetual sukuk,” Cypark statement said. The company clarified that this deferment aligns with Cypark’s debt optimisation strategy, strategically matching facilities with long-term concession assets. Despite the deferment, the sukuk remains secure, with Cypark benefiting from 95 per cent cash sweeps from the generated revenue, which currently amounts to RM86.5 million. Highlighting its financial strength, Cypark asserted that it possesses sufficient cash flow to attain its ongoing projects’ commercial operation date (COD). This assurance is backed by the major shareholder’s support through an RM265 million sukuk in the fourth quarter (Q4) of 2023, along with available banking facilities from principal bankers. RHB Investment Bank Bhd is the principal adviser and lead arranger for all three tranches of the unrated perpetual sukuk Musharakah program, totaling up to RM500 million, issued in 2020 and 2023.

KUCHING:  Will the 8 per cent sales and service tax (SST) hike on power usage of more than 600kWh critically impact the B40 and M40 middle-income groups? Malaysian Chinese Association (MCA) president Wee Ka Siong has recently stated that there will be a snowball effect on these lower-income groups despite being directly exempted from the additional 2 per cent spike in the SST rate. “Although those who use less than 600 kilowatt-hours of electricity a month would be exempted from the rise in the SST rate from 6 per cent to 8 per cent,” Wee in a recent video posted on Facebook said. He added that the fact that the two percentage point increase applies to commercial entities means that it would still indirectly impact the B40 and M40 groups. According to Wee, although those who use less than 600 kilowatt-hours of electricity a month would be exempted from the rise in the SST rate from 6 per cent to 8 per cent, he said the fact that the two percentage point increase applies to commercial entities means that it would still indirectly impact B40 and M40 groups. “The B40 group will be affected by the increase in SST. Why? Factories, warehouses, and shops will increase their rent, affecting the price of goods. Who will bear the increased cost? The people. So this is the effect that it will have on consumers,” he added. Echoing Wee’s thoughts, Sarawak Premier Datuk Patinggi Abang Johari Tun Openg said yesterday: “Electricity tariffs in Sarawak are expected to increase in line with the implementation of the revised SST from 6 per cent to 8 per cent. “The state has no option but to comply with the expected changes as the imposition of the tax is in force nationwide.” However, the premier has given assurance that the state government will continue to help domestic consumers through its initiative. “We have exemption (initiative), so we can make our own decisions within the state,” he told reporters in Kuching yesterday. However, a Sarawak politician, Michael Kong, begs to differ. According to him, the SST would only be applicable for electricity usage above 600kWh, which should not affect almost 85 per cent of users nationwide, as announced by the Ministry of Finance last year. “While I note Wee Ka Siong’s concerns about a snowball effect of increased cost, he has first used the wrong example. “Commercial electricity is currently exempt from taxation, and the hike to 8 per cent SST does not affect its exemption status. Thus there will be no snowball effect due to electricity tariff,” he told The Exchange Asia. According to him, it is important to recognise the need for Malaysia to broaden the tax base for a stronger fiscal foundation now. He said the government is equally responsible for this increase in SST and must find ways to alleviate the financial burden of the people. “Therefore while some businesses will have to increase the price for their services, the Ministry of Finance has given its commitment to utilise the additional estimated RM3 billion in revenue to enhance social assistance for the people. “This will not only help to mitigate the costs of living faced by the people but more importantly to redistribute financial assistance to those who need them such as the B40 and M40,” added the DAP politician, a special officer to Sarawak party chief Chong Chieng Jen.

KUALA LUMPUR: The Negeri Sembilan state government and Tanco Holdings Bhd (THB) signed a joint venture agreement to develop Malaysia’s first smart artificial intelligence (AI) container port at Dickson Bay, Port Dickson, in Negeri Sembilan. This pioneering project, which has received a nod from the Ministry of Transport, marks a significant milestone in Negeri Sembilan’s strategic development supporting the nation’s economic growth. Negeri Sembilan chief minister Datuk Seri Utama Aminuddin Harun expressed immense enthusiasm for the project. “This smart AI container port is not just a development. It is a leap towards revolutionising our state’s and Malaysia’s economic landscape. “We are setting the foundation for future generations, ensuring Negeri Sembilan plays a crucial role in both the state’s and nation’s economic growth and global maritime logistics,” he said at the signing ceremony. The event was held in Negeri Sembilan and was graced by transport minister Anthony Loke Siew Fook and Aminuddin. Midports Holdings Sdn Bhd (MHSB), a 79 per cent-owned subsidiary of THB and Menteri Besar Negeri Sembilan (Pemerbadanan) (MBNS), signed a joint venture (JV) to develop the smart AI container port. The deal includes an additional 83.19 acres of seabed land submerged off Dickson Bay in Port Dickson. Both entities will set up a joint venture company (JVC), which will serve as the development backbone of the project, driving forward the construction and future operation of the smart AI container port. The shareholding of the JVC will be 80 per cent by MHSB and the balance will be 20 per cent by MBNS. Aminuddin added that the smart AI container port marks a transformative development for Negeri Sembilan, promising job creation and enhanced land values, potentially leading to the development of new and existing industrial zones close to the smart AI container port and attracting local and foreign investments. This growth in infrastructure will generate significant revenue for Negeri Sembilan and the nation, reinforcing Malaysia’s position in international trade and establishing the region as a key economic hub. Aminuddin further emphasised the project’s significance in attracting investment and technology. “Establishing this port is a clear signal to the world that we are ready to enable the future of trade and technology. “This venture is expected to attract more foreign direct investment that will positively contribute to the gross development product (GDP) and foster the growth of high-tech technology factories, further solidifying Malaysia’s position as a key player in the global economy,” he said. The smart AI container port will be supported by a 480-acre landbank owned by THB, eliminating additional land acquisition costs. The site is strategically located at the midway point of the Straits of Malacca and features natural deep water access with more than 21 meters in depth, which is 1.8km from the shoreline. It can accommodate the largest container ships globally. This strategic advantage is critical, as the Straits of Malacca is one of the busiest straits in the world and positions Negeri Sembilan to capitalise on this bustling maritime route. It is designed to leverage cutting-edge technologies that will enable automated and efficient container handling, predictive maintenance, and enhanced security measures, setting new standards in operational efficiency and environmental sustainability. THB group managing director Datuk Sri Andrew Tan Juan Suan said this port in Port Dickson is a testament to the company’s commitment to innovation and sustainability. “Integrating advanced AI and smart technologies will enhance our logistics capabilities and ecosystem and position Malaysia as a leader in automated and sustainable port operations,” he said. The smart AI container port also offers logistical advantages by significantly reducing transportation costs for gateway containers for businesses dependent on distant ports and enhancing speed and efficiencies for transhipment containers. Tan said that this strategic proximity is also expected to decrease carbon emissions, demonstrating THB’s contribution to sustainable practices. “We have started our groundwork and invited foreign industrialists to the smart AI container port location. “These industrialists have expressed positive feedback and interest in the potential development of new industrial parks close to the smart AI container port to establish a more conducive trade and logistic ecosystem to accelerate the state’s industrialisation plans,” Tan said. With keen interest from various groups expressed to realise this strategic initiative to establish a smart AI container port, Tan said THB also plan for MHSB to seek permission from the relevant local authorities to undertake an infrastructure listing on the local exchange soon.