Isnin, 7 Oktober 2013

The Star Online: Business

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The Star Online: Business

UMW assembly of Camry Hybrid in M'sia depends on NAP incentives


KUALA LUMPUR: UMW Toyota Motor Sdn Bhd is considering its options to assemble hybrid vehicles in Malaysia, depending on the incentives given by the authorities.

Deputy chairman Datuk Takashi Hibi said the company planned to introduce the Toyota Camry Hybrid as the new completely knocked down (CKD) model to be assembled locally.

However, whether the company would introduce it or not would depend on the incentives in the revised National Automotive Policy, expected to be announced soon.

"The Camry Hybrid could be priced higher than the conventional Camry with the 2.5 litre petrol engine, but we recognise the needs of our customers that are more environmentally concerned, that is why we are planning to introduce the hybrid variant," he said at the launch of the Lexus ES yesterday.

This is the first time UMW Toyota Motor has expressed its intention to assemble hybrid vehicles locally after its competitor, Honda Malaysia, started assembling the Honda Jazz hybrid.

Hibi said the Camry was a feasible model due to its high localisation rate, compared with the Prius, a standalone model with limited production and sales volume.

The company expects the Camry Hybrid CKD assembly line to be ready by the middle or third quarter of next year.

Currently, UMW Toyota assembles the Avanza, Vios and the Camry at its plant in Shah Alam.

As a yardstick, it will only be economical for car manufacturers to embark on CKD assembly when annual demand exceeds 10,000 units for each model.

Meanwhile, president Datuk Ismet Suki said the company expected the newly-launched Lexus ES model to command 40% of its overall Lexus sales in Malaysia next year.

"The new ES bridges the gap between the sporty Lexus IS and the Lexus GS executive sedan by offering an immaculately-crafted interior, spaciousness and comfort," he said. "We have sold about 800 units of Lexus year to date, and are on track to hit our sales target of 1,300 units this year. Next year we are targeting to sell 1,600 units of Lexus."

He said sales this year have been affected as buyers took a wait-and-see approach during the general election period. In 2012, the company sold 1,471 Lexus vehicles.

The new Lexus ES is available in two petrol variants and one hybrid version and is priced from RM259,800 onwards.

Moody's says Unico-Desa buy is credit negative for IOI


PETALING JAYA: Moody's Investors Service has rated IOI Corporation Bhd's acquisition of Unico-Desa Plantations Bhd as "credit negative", as it would diminish the former's existing cash positions.

Last week, IOI Corp had announced that its unit, IOI Plantation Sdn Bhd, would be acquiring Unico-Desa at an RM1bil price tag. The company had triggered a mandatory general offer after having acquired almost 40% of Unico-Desa from companies and parties linked to Unico-Desa's major shareholder Teoh Hock Chai for RM396.63mil.

Analysts had viewed the acquisition in a different light, saying that the deal was synergistic. PublicInvest Research said the acquisition could enhance IOI Corp's economies-of-scale and productivity at its plantations in Kinabatangan and Lahad Datu, given its close proximity to Unico-Desa's major plantation.

Analysts added that the price was in line with market values and justified, taking into account the scarcity of land.

As at end-June, IOI Corp's cash and cash equivalents stood at RM2.9bil. The company also expects to receive RM1.6bil from the proposed demerger of its property businesses. It intends to fund the acquisition via internally generated funds and/or borrowings.

"The cash consideration for the Unico-Desa acquisition would likely push IOI Corp's net debt per earnings before interest, tax, depreciation and amortisation (Ebitda) ratio beyond our downward rating trigger of 1.5 times by the end of the fiscal year ending June 2014 after deconsolidating the Ebitda of its property business," said Moody's in a statement.

This is contrary to what the rating agency had expected, as the company would need to keep more cash on hand for the redemption of its US$500mil (RM1.6bil) US dollar-denominated notes in March 2015.

It added that following the disposal of the property businesses, IOI Corp's large cash balance was a key rating driver because it would keep the majority of the existing group debt.

However, IOI Corp would be operating with a smaller income and asset base, resulting in a higher gross debt leverage of 4.1 times in 2013, compared to 3.5 times in 2012, as well as a weaker Ebitda interest coverage of 6.4 times.

"The company is also left with reduced business diversity and is wholly exposed to the cyclicality of crude palm oil (CPO) prices. Furthermore, the proposed purchase price of Unico-Desa works out to about RM79,000 per ha, which equates to approximately seven years' worth of sales at a CPO price of US$700 (RM2,231) per tonne," it said.

Analysts said the acquisition would help increase IOI Corp's total fresh fruit bunches production by 6% to 7%.

"Consequently, IOI Corp's plantation output remains well below its CPO refining capacity and the company would continue to need significant amounts of bought-in CPO to feed its downstream activities," said Moody's.

Selldown continues


PETALING JAYA: Since late last week, three Singapore-listed stocks with Malaysian major shareholders have plunged for reasons still unclear, thrusting their operations, the Singapore Exchange Ltd (SGX) and Malaysian owners, who have seen a significant portion of their wealth being wiped out, into the limelight.

At yesterday's close, Blumont Group Ltd and Asiasons Capital Ltd, whose stocks remain designated, were 93.5% and 94.4% down since last Friday. This means that a total of S$4.88bil (RM12.47bil) and S$2.5bil (RM6.39bil) of their respective market capitalisation had been wiped out over that period.

Blumont and Asiasons closed the day at 13 cents and 15 cents, respectively.

Meanwhile, Blumont said in a statement that Alex Molyneux, together with Pacific Advisers Pte Ltd had acquired some 135 million Blumont shares for 40 Singapore cents (RM1.04), representing 5.2% of the company's total outstanding shares.

Consequently, Molyneux, who is a seasoned natural resources industry entrepreneur, executive and investor, agreed to join Blumont as chairman.

He also holds directorships with Ivanhoe Energy and Goldrock Mines. Molyneux is also chairman of Celsius Coal and Azarga Resources.

Blumont is also calling for a press conference today in Singapore to address issues surrounding its stock selldown.

Following the stock designation on Oct 4, Blumont and Asiasons resumed trading yesterday.

The third stock affected is LionGold Corp Ltd, the gold miner in which Asiasons is the single largest shareholder.

Following its designation and suspension from trading last Friday, LionGold's trading was halted yesterday morning, but resumed trading at 2:45pm yesterday.

In the last two trading days, LionGold shaved off S$1.18bil (RM3.02bil) in its market capitalisation to close at 25 Singapore cents yesterday.

The SGX had declared Blumont, Asiasons and LionGold as designated securities last Friday. The exact basis for such a move is still not clear, but SGX officials have pointed to its rules, which state that the exchange can designate a security "if, in its opinion, there has been manipulation of the security, excessive speculation in the security, or it is otherwise desirable in the interests of markets established or operated by SGX".

The conditions of this designation are that investors have to pay in cash for the stocks and that short selling, which is allowed in Singapore, is not allowed for these stocks.

Asiasons is controlled by Datuk Mohamed Azlan Hashim and Datuk Jared Lim, with a combined 49.3% or 483 million shares. Azlan also directly owns 14.7% or 144 million shares via his own name.

Last month, Asiasons had bought a stake in United States-based oil and gas producer Black Elk Energy Offshore Operations LLC.

Blumont counts its executive chairman Neo Kim Hock as its single largest shareholder, with a 9.67% stake.

Clearwater Development Sdn Bhd is the second-largest shareholder, with a 6.97% stake or 180 million shares. The founder of Clearwater is Dian Lee, the wife of Lim.

Asiasons, in turn, has an 8.72% stake in LionGold. Media reports have said that the stocks have suffered severe attacks by short sellers.

Bloomberg reported that trading was suspended to "safeguard the interests of the markets, as there could be circumstances that would result in the market not being fully informed", according to a statement from the bourse.

"The concern is that short sellers are taking advantage of the weak market sentiment," Kelly Teoh, a strategist at IG Markets in Singapore, said by telephone, the Bloomberg report stated.

Blumont had soared more than 1,112% this year through the end of September to lead gains in Singapore.

In reply, the company said this week it had held talks with 20 potential takeover targets or joint-venture partners since December.

The company sees an "unprecedented opportunity resulting from the recent severe impairment of asset prices in the mineral resources sector", Blumont said in an Oct 2 statement.

Last month, Blumont had agreed to invest A$116mil (RM348mil) in Australia's Discovery Metals Ltd in a deal that could give it control of the copper producer.

Still, the move by SGX to designate the stock has garnered some controversy with investors who are claiming that issues of valuation were best left to the market to decide.

"Unless there's proof of manipulation, it does seem rather odd that the exchange had dived in suddenly to designate these stocks, after so late in their meteoric rises," one investor said.

Asiasons Capital Group is an alternative asset investment and management group focused on opportunities in South-East Asia.

LionGold is a gold company with primary concessions in Australia, Ghana and Bolivia. Based on its website, the acquisition of a Canadian gold miner was now pending.

Blumont, meanwhile, invests in minerals and energy.

In a press release to the SGX yesterday in response to the trading activities of the company, LionGold stated that it was at an advanced stage of negotiations with Minera IRL Ltd.

"The company wishes to reiterate that no formal agreement has been executed in connection with the acquisition yet.

"In view of the suspension of trading of the shares of the company, Minera is considering whether the acquisition should proceed.

"There is no assurance or certainty that the acquisition will proceed; and there is no obligation on the part of the company to make the possible offer," it said.


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