The Star Online: Business
The Star Online: Business |
- Emirates, Qantas tie-up wins final approval
- SILK posts higher Q2 net profit
- MISC privatisation RM5.30 offer per share not compelling enough based on low acceptance rate
| Emirates, Qantas tie-up wins final approval Posted: 27 Mar 2013 06:32 PM PDT SYDNEY: Australia's competition watchdog gave final approval for Qantas and Emirates to launch a "game-changing" global alliance, saying the tie-up will benefit passengers. The decision by the Australian Competition and Consumer Commission (ACCC), widely expected after a preliminary green light in December, allows the airlines to combine operations for five years. Under the alliance, they will coordinate ticket prices and flight schedules, and struggling Qantas will shift its hub for European flights from Singapore to the Emirates' Dubai base. It also means an end to Qantas's partnership with British Airways on the so-called kangaroo route to London, which has spanned nearly two decades. "The ACCC considers that the alliance is likely to result in public benefits through enhanced products and service offerings by the airlines, and improved operating efficiency," ACCC chairman Rod Sims said. The decision comes after a six-month review and just days before the first joint flight from Sydney to London, via Dubai, is scheduled on Sunday. However, the regulator said it was concerned that New Zealand was a key market where competition could be eroded. To deal with this, it imposed a condition on flights between Australia and New Zealand, forcing the airlines to maintain existing capacity on four overlapping trans-Tasman routes that were in operation before the alliance. "With this condition, the ACCC is satisfied that the relevant net public benefit tests are met," it said. The alliance is seen as vital to the sustainability of Qantas, which last year posted its first annual deficit since privatisation in 1995, due to tough regional competition and high fuel costs for its international arm. Qantas chief Alan Joyce called it good news for travellers and Australian tourism. "Qantas is an Australian icon and the future of its international business is much brighter with this partnership," he said. "Customers are already responding very strongly to the joint network that Qantas and Emirates have built, and to the frequent flyer benefits that extend across it, with a significant increase in bookings." Qantas shares rose 1.74% to A$1.75 (US$1.84) in afternoon trade. With services to Asia no longer tied to onward links to Europe, Qantas recently announced that new direct destinations from Australia are being considered, including Beijing, Seoul, Mumbai, Delhi and Tokyo-Haneda. For Emirates customers, it opens up Qantas's Australian domestic network of more than 50 destinations and nearly 5,000 flights per week. "This is a truly game-changing partnership that brings together two of the world's best airlines and offers some of the highest quality travel experiences," said Emirates chief Tim Clark. Dubai Airports has earmarked major funds to further expand the capacity of the international travel hub and expects to handle 75 million passengers by 2015 and 98 million by 2020. Australian Transport Minister Anthony Albanese forecasts lower fares for air travellers as a consequence of the deal. "The Flying Kangaroo has a special place in the heart of all Australians and this is good news for Australian travellers and the Australian economy," he said. "Millions of travellers stand to benefit from cheaper fares, reduced travel times and greater access to more destinations in the Middle East, Africa and Europe." - AFP
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| SILK posts higher Q2 net profit Posted: 27 Mar 2013 06:25 PM PDT PETALING JAYA: SILK Holdings Bhd posted a 13.15% increase in net profit to RM1.97mil for the second quarter ended Jan 31, 2013, against RM1.74mil in the corresponding quarter the previous year. Revenue for the quarter rose slightly to RM99.1mil from RM98.1mil a year ago. In its filing with Bursa Malaysia, the company said earnings before interest, tax, depreciation, and amortisation (EBITDA) for the quarter increased 11% to RM58.4mil from a year ago. SILK's oil and gas (O&G) division remained its main contributor of revenue and operating profit, with a 81% contribution to the group's revenue. Although 21 vessels were deployed by the O&G support services division for the quarter compared with 22 vessels last year, the company managed to maintain revenue from the division. Revenue from the division stood at RM80.1mil compared with RM80.2mil a year ago. Year-to-date, the division recorded revenue of RM159.5mil, 25.6% higher than the previous year. "Despite recording lower fleet utilisation due to scheduled vessel dockings, the division managed to maintain its revenue level on the back of the strengthening charter rates," it said in a statement. SILK's highway infrastructure division recorded a 14.2% improvement in average daily traffic volume (ADTV) to more than 169,000 vehicles per day resulting in RM1.1mil higher revenue in the current period. However, due to higher charges of amortisation, the division recorded a slightly higher pre-tax loss of RM3.6mil in the quarter compared to RM3.5mil pre-tax loss a year ago. Half-year revenue stood at RM197mil, 21.1% higher than RM162.7mil recorded in the previous year while EBITDA for the period was 28% higher at RM116.6mil from a year ago. "This improvement is mainly driven by better top-line performance during the period," it said. It said the board was confident that traffic volume at the highway infrastructure division would continue to grow in line with increased development activities in the vicinity it serves. In addition, it said the board was also of the view that the O&G support services division would continue to remain competitive. "Hence the decision to expand the fleet as announced recently. Barring any unforeseen circumstances, the board expects these developments to contribute positively towards bottom-line performance in the future," said chairman Datuk Mohd Azlan Hashim.
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| MISC privatisation RM5.30 offer per share not compelling enough based on low acceptance rate Posted: 27 Mar 2013 06:25 PM PDT ON Jan 31 this year, our national oil company Petronas offered to buy the rest of the shares it did not already own in the global shipping company Malaysia International Shipping Corp Bhd (MISC) for RM5.30 per share. MISC, incorporated in 1968 and the country's leading international shipping line, is currently worth RM23.8bil and majority-owned by Petronas at about 63%, while Employees Provident Fund (EPF) at about 9% and Permodalan Nasional Bhd (PNB) at about 6% are the next largest shareholders. Today, with over 130 liquefied natural gas (LNG) and Aframax (oil) tankers, MISC is one of the most important transportation players in the global oil and gas industry, an industry that Malaysian service providers have built a niche in, with customers in the LNG, petroleum and chemical industry. The offer document stated the reasons behind Petronas' move to privatise MISC were, among others, the prevailing industry backdrop and uncertain global economy which had made efforts to sustain and transform the business challenging. The exercise will also allow Petronas to obtain full control of the company, thus having greater flexibility in deciding MISC's strategic direction. It also stated that this move will provide minority shareholders the opportunity to exit and realise their investment at RM5.30 per share. MISC has been going through some difficult times because of a combination of factors including a global oversupply of vessels, which has driven tanker rates to rock-bottom levels and recessionary concerns in the eurozone due to its ongoing debt problems, which, along with an uneven economic recovery, has pressured global energy prices. These woes have been reflected in MISC's share price. Before the offer was made, MISC stock traded in the RM4 levels compared to its high of RM9.94 in December 2007 (after adjusting for rights). In financial year 2012, there were early signs of recovery as the group operating profit had a growth of 3.0% compared to previous financial year, coming out from a rock bottom level in 2011. The increase in operating profit was largely due to the commencement of the LNG regasification project and lower losses in the group's petroleum business from lower operating costs. In addition, the loss-making liner division had been hived off and the bulk of the provisions had already been made in 2011. Adding to this, the acquisition by Petronas of Progress Energy Resources Corp could provide MISC a more dominant role in the global transportation of energy which is expected to benefit MISC in the medium to long term. To reiterate, the offer of RM5.30 per share represents a premium of 18% over MISC's last traded price on Jan 30 and as much as a 27% premium to the three-month volume weighted average price (VWAP) of MISC shares. However, the offer price is at a discount to MISC's sum-of-part value (SOPV) with independent adviser's, AmInvestment Bank Bhd, valuation ranging from RM5.69 per share to as much as RM6.10 per share. The independent adviser had said the offer was unfair as it was priced at a significant discount to MISC's SOPV but considered it reasonable due to a weak shipping outlook that may persist and the absence of a competing bid, hence recommended minorities to accept the offer. There was a rights issue in November 2009 at RM7 per share to raise funds mainly for the Gumusut-Kakap project, where 50% was later sold off to Petronas. On March 19, MISC announced that the offer was extended without revising its offer price to April 5, indicating that minority shareholders did not see Petronas' offer as particularly appealing despite the independent adviser's recommendation. This was on the back of only 0.74% acceptance rate, bringing its total ownership to 63.41%, far short of the 90% needed to make the offer unconditional. We ourselves felt that the offer price was not compelling enough. And for the institutional investors, we urge them to discharge their stewardship responsibilities wisely in considering this offer, to ensure that the investment value for their ultimate beneficiary or client is adequately protected. All minority shareholders whether institutional or retail, should take into account their entry levels and risk considerations. Petronas might do well to consider putting a larger carrot on the stick if their intention is to fully take MISC private.
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