THE WEEK THAT WAS' - AUTHOR
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Research
‘THE WEEK THAT WAS’
04th February – 10th February 2019
The Colmore & The Fazeley,
Snow Hill Wharf, Birmingham,
Knight Frank Malaysia UK.
Prepared by:
Research & Consultancy
Knight Frank Malaysia
Suite 10.01, Level 10 Centrepoint South
Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur
T: +603 228 99 688
F: +603 228 99 788
Table of Contents
(A) RESIDENTIAL / TOWNSHIP ................................................................................ 4
Online searches surge (New Straits Times, 7th February 2019) ........................... 4
Limited rent increase for residential ‘hot spots’ this year: Speedrent CEO (The
Sun Daily, 7th February 2019) .......................................................................................... 4
(B) RETAIL ................................................................................................................. 5
Officine Panerai debuts its 1st boutique store in Malaysia (The Malaysian
Reserve, 4th February 2019) ............................................................................................. 5
Electronics retail chain opens revamped store in Melaka Baru (The Star, 8 th
February 2019) ....................................................................................................................... 5
Supermarket reopens its doors (The Star, 4th February 2019) .............................. 5
Hypermarket pays tribute to consumers for its growth in Malaysia over 17
years (The Star, 7th February 2019) ................................................................................. 6
Starbucks Malaysia to open more premium coffee stores this year (The
Malaysian Reserve, 04th February 2019) ...................................................................... 6
Flagging Mara Digital Mall may be relocated (The Malaysian Reserve, 4 th
February 2019) ....................................................................................................................... 6
Singapore’s Zalora mulls listing on Bursa as part of expansion (The Malaysian
Reserve, 8th February 2019) ............................................................................................. 7
(C) COMMERCIAL / OFFICE ...................................................................................... 8
Evergrande in talks to buy HK office tower from Malaysian govt (The Star /
Bloomberg, 8th February 2019) ....................................................................................... 8
(D) MIXED DEVELOPMENT ....................................................................................... 8
Crest Builder changes project plan (The Star, 04th February 2019) .................... 8
Prosperity campaign for the festive season (The Star, 5th February 2019) ..... 9
(E) INDUSTRIAL / LOGISTICS / PLANTATION ....................................................... 10
Daiso to set up regional distribution centre in M’sia (The Star, 04th February
2019) ........................................................................................................................................ 10
CM: Sarawak’s political stability attracts investors (The Star, 04th February
2019) ........................................................................................................................................ 11
Improve port efficiency to attract investment (New Straits Times, 4th February
2019) ........................................................................................................................................ 11
CCM unit secures RM50 mil financing from OCBC Al-Amin (Bernama, 4th
February 2019) ..................................................................................................................... 11
Malaysia manufacturing downturn continues in January (The Edge Markets,
4th February 2019)............................................................................................................... 12
Rising CPO prices drive plantation firms’ prospects in early 2019 (The
Malaysian Reserve, 8th February 2019) ...................................................................... 12
MRO players to gain from rising O&G activities completion of Petronas’ PIC
expected to boost gas development projects, with operators moving to
develop new offshore fields (The Sun Daily, 7th February 2019) ....................... 14
(F) INVESTMENT / TRADE ...................................................................................... 14
(G) CORPORATE ..................................................................................................... 14Paramount Corp redeems RM50 million in PDS (theedgemarkets.com, 7th
February 2019) ..................................................................................................................... 14
PJBumi gets RM18m building refurbishment project (theedgemarkets.com,
7th February 2019)............................................................................................................... 14
Tatt Giap to rent out property earmarked for development (The Malaysian
Reserve, 7th February 2019) ............................................................................................. 14
Tropicana aborts deal to sell Johor land for RM570m (The Sun Daily, 7 th
February 2019) ..................................................................................................................... 15
Felda plans to end ties with Indonesia’s Rajawali (The Star, 8th February 2019)
................................................................................................................................................... 15
TSH sets up RM3mil Indonesian subsidiary (The Star, 7th February 2019)..... 16
Gunung Capital gets letter of award to improve estate in Sarawak (The Edge
Markets, 4th February 2019) ............................................................................................ 16
Tropicana Corp calls off Pulai land sale (The Star, 8th February 2019) ............ 16
(H) REITS / FUNDS .................................................................................................. 17
Top 10 most expensive REIT buildings (The Malaysian Reserve, 7th February
2019) ........................................................................................................................................ 17
(I) LEISURE / TOURISM ......................................................................................... 18
Club Med eyeing Sabah? (New Straits Times, 7th February 2019) .................... 18
Theme park has new experiential attraction (The Star, 5th February 2019) .. 20
Travellers against departure levy (New Straits Times, 4th February 2019) ..... 20
Duty-free zones in the state attract hordes of visitors (New Straits Times, 5 th
February 2019) ..................................................................................................................... 21
(J) INSTITUTIONAL ................................................................................................. 21
Malaysia ranks 1st in world's best healthcare category (Bernama, 6th February
2019) ........................................................................................................................................ 21
MITEC making great strides (New Straits Times, 7th February 2019) ............... 21
(K) INFRASTRUCTURE ........................................................................................... 22
Uncertainties over ECRL sees CIMB Research cautious on construction (The
Star, 04th February 2019) .................................................................................................. 22
Pestech bags RM281m TNB underground cable jobs (The Malaysian Reserve,
04th February 2019) ........................................................................................................... 23
Perak govt looking to set up new international airport (The Star, 8th February
2019) ........................................................................................................................................ 24
(L) ISKANDAR MALAYSIA ...................................................................................... 24
All eyes on mall linked to Johor CIQ (The Star, 8th February 2019) .................. 24
Draft plan to develop Mersing ready (The Star, 5th February 2019)................. 24
(M) AFFORDABLE HOUSING .................................................................................. 25
Perak MB suggests developers buy off bumiputra quota so state can build
affordable housing (The Star, 04th February 2019) ................................................. 25
Perak to build houses costing as low as RM20,000 each (Bernama, 4th
February 2019) ..................................................................................................................... 25
(N) OTHERS ............................................................................................................. 26
PKNS offers RM1m in rebates (New Straits Times, 7th February 2019) ........... 26Govt hopes for discounts of up to 20% at home campaign (The Malaysian
Reserve, 4th February 2019) ............................................................................................. 27
Malaysia’s manufacturing downturn continues in January (The Edge Financial
Daily, 7th February 2019) .................................................................................................. 27
Reviewing expats’ wages will raise employability (The Malaysian Reserve, 7th
February 2019) ..................................................................................................................... 28
FT ministry intensifies efforts to gazette public parks nationwide (The
Malaysian Reserve / Bernama, 10th February 2019) ............................................... 28
Plush Services offers solution for developers with unsold units (The Star /
Bernama, 7th February 2019)........................................................................................... 28
(O) OVERSEAS ........................................................................................................ 29
London Office Deals Outpace Manhattan as Buyers Ignore Brexit (Bloomberg,
6th February 2019)............................................................................................................... 29
NYC’s Park Lane Hotel stake sold as part of 1MDB recovery (The Malaysian
Reserve / Bloomberg, 7th February 2019) .................................................................. 29
Australia Cuts GDP, CPI Forecasts on Consumption, Housing Risks
(Bloomberg, 8th February 2019) ................................................................................... 30(A) RESIDENTIAL / TOWNSHIP
Online searches surge (New Straits Times, 7th February 2019)
• Kuala Lumpur, Selangor, Penang, and Johor has seen amongst the top searches
for properties online.
• Amongst the hotspots searches within the areas are:
Kuala Lumpur
➢ Area: Bangsar, Mont Kiara, Cheras/KL South
➢ Type of Properties: Condominiums, Apartments, Townhouses
➢ Development: Sunway Velocit, Mah Sing Group Bhd, M Vertica
➢ Buyers Profile: First-time house buyers, Upgraders
Selangor
➢ Area: Petaling Jaya, Shah Alam, Subang Jaya
➢ Type of Properties: Condominiums, Apartments, Two-Storey Terraced Houses
➢ Development: i-City
Penang
➢ Area: Georgetown, Bayan Lepas, Tanjung Tokong
➢ Type of Properties: Condominiums, Apartments, Townhouses
Johor
➢ Area: Johor Baru, Nusajaya, Bukit Indah
➢ Type of Properties: Two-Storey Terraced Houses
• Generally the area is easily accessible to major roads and highways, and is
located nearby public amenities and to their workplace.
Limited rent increase for residential ‘hot spots’ this year: Speedrent CEO (The Sun
Daily, 7th February 2019)
• Landlords in “hot spots” are advised to retain their original tenant and average rent
this year in order to reduce potential losses.
• The monthly rent of a non-landed residential unit shall not exceed RM1,200, whilst
landed property shall not exceed RM1,800 within the low demand area.
• The sales performance of the residential market has been sluggish in the past year
and the performance of the rental market has been mixed.
• In 2018, Speedrent compiled up to 150,000 worth of search data and listed out the
top five and top worst rental inquiries, adding that it has up to 38,000 unique
website visitors and more than 150,000 search inquiries.
• Most popular areas searched by tenants are Damansara Damai, Ara Damansara,
USJ, Ampang and Puchong.• Damansara Damai has become the area with the highest demand for the platform
due to lower rental of between 20% and 30% compared to Petaling Jaya.
• High inquiries have some common points, mainly, close to office buildings, good
traffic connectivity, rent in line with market prices and improved living functions.
• Bangi, Semenyih, Serdang and Puncak Alam are amongst the least inquired. Most
of the areas searched are more remote and in the southern part of Klang Valley.
(B) RETAIL
Officine Panerai debuts its 1st boutique store in Malaysia (The Malaysian Reserve,
4th February 2019)
• Luxury Italian watchmaker Officine Panerai has launched its first boutique store in
Malaysia, the fourth in the South-East Asian region, in an effort to strengthen its
market in the region.
• The boutique, in partnership with Valiram Group’s Swiss Watch Gallery, will boost
its presence in the South-East Asian region while cementing Malaysia as an
important market.
• With the opening of its boutique store in Malaysia, the luxury brand currently has
81 shops worldwide.
Electronics retail chain opens revamped store in Melaka Baru (The Star, 8th
February 2019)
• Grand Senheng has opened its ninth outlet in the country, and the latest one is in
Melaka Baru.
• Senheng’s store remodelling projects started last year, where older outlets were
renovated and expanded to feature a “lifestyle” format.
• The remodelling freshened the brand’s image, featuring contemporary décor,
enhanced with unique display features to bring out the best in the merchandise.
Supermarket reopens its doors (The Star, 4th February 2019)
• Giant Supermarket Sungei Wang in Kuala Lumpur has unveiled its new look
following a four-month refurbishment
• It now offers a broader selection of high quality goods, including fresh fruits and
vegetables, pre-packed meat and seafood, an array of Malaysian favourites and
pantry essentials at great value.
• The newly revamped store also offers a wider range of ready-to-eat meals,
including Korean, Japanese and Malaysian delights as well as eight kinds of mixed
rice.
• There are more than 120 Giant Supermarkets nationwide under GCH Retail (M)
Sdn Bhd.Hypermarket pays tribute to consumers for its growth in Malaysia over 17 years
(The Star, 7th February 2019)
• The opening of the Tesco outlet in Bagan Ajam, Butterworth, which is the 58th
outlet in the country and seventh in Penang, marks the strong continuous growth
of the Tesco brand in Malaysia.
• The Bagan Ajam outlet, costing RM30 million and featuring 9,500 sq m of retail
space, symbolised not only the growth of the Tesco brand but also enriched the
lives of the communities that the store served.
• Tesco has been in Malaysia for 17 years and in Penang for 14 years.
Starbucks Malaysia to open more premium coffee stores this year (The Malaysian
Reserve, 04th February 2019)
• Berjaya Starbucks Coffee Co Sdn Bhd (Starbucks Malaysia) launched its opening
of 5,000 sq ft Starbucks Reserve store at Berjaya Times Square in Kuala Lumpur
last Thursday.
• It aims to open two to three more Starbucks Reserve premium concept coffee
outlets this year backed by growing coffee knowledge among consumers, following
a good reception to the company’s first store at The Gardens Mall since three years
ago.
• The Starbucks Reserve concept is very exclusive due to the small number of farms
producing the kind of coffee that Starbucks Reserve stores serve to the customers.
• The allocated capital expenditure (capex) for expansion is between RM50 million
and RM60 million yearly, and the capex spent on a normal outlet is 30% lower
compared to a Starbucks Reserve outlet.
• On overall, the group, which is marking its 20th anniversary in the country, plans
to open some 30 outlets per year.
• The store mix would be differing from drive-through, Starbucks Reserve(s), normal
stores and located at transportation hubs.
• The average same-store sales growth hovers at 6% currently with a projection of
8%.
• Starbucks Malaysia currently holds about 60% of the market share in the coffee
store/outlet business.
• The business has been well with more confident in spending among consumer and
increase in number of tourists.
Flagging Mara Digital Mall may be relocated (The Malaysian Reserve, 4th February
2019)
• Mara Digital Mall would be undertaken a reassessment studies in order to
rejuvenate its mall.
• Mara Digital Mall started seeing a decline in sales a year after its inception in
December 2015. In September 2017, TMR reported that the poor sales and thedeclining number of visitors were due to a lack of product variation, non-
competitive prices and weak publicity.
• The mall’s anchor tenant, WGN Scan, recorded between RM4 million and RM5
million in sales last year, compared to an average annual turnover of about RM19
million in the last two years.
• Besides the Kuala Lumpur branch, Mara has another three digital malls in Shah
Alam (Selangor), Ipoh (Perak) and Kuantan (Pahang).
Singapore’s Zalora mulls listing on Bursa as part of expansion (The Malaysian
Reserve, 8th February 2019)
• Online fashion platform Zalora Group is looking at listing on Bursa Malaysia as an
option to fund an expansion of its product range to meet consumer demand.
• The Singapore-based e-retailer is also exploring opportunities to woo investments
to expand product offerings in the short term.
• Zalora is owned by Global Fashion Group, a holding company controlled by
founders Rocket Internet SE and Swedish investment firm Kinnevik AB.
• In 2012, the e-retailer launched its platform simultaneously in Malaysia, Indonesia,
the Philippines, Singapore, Taiwan, Hong Kong, Thailand and Vietnam.
• Zalora has since ventured into Brunei and Macau. Indonesia is Zalora’s largest
market by customer base, while Malaysia is the most penetrated market.
• The site currently has over two million active customers, 13 million subscribers and
an average of 41 million visits per month.
• Zalora’s competitor and Malaysian-based FashionValet Sdn Bhd had announced
last year its intention to float its shares for public subscription en route to a listing
on Bursa Malaysia. FashionValet intends to grow its profit and maintain it before
the proposed listing.
• Meanwhile, Zalora aims to host up to 400,000 live items in the next two years
compared to the 109,000 items currently available online. The new products will
come from within South-East Asia in line with the group’s objective to work closely
with small and medium enterprises (SMEs) in the countries Zalora serve.
• Zalora launched an initiative called Marketplace in 2015, where brands could list
on Zalora with a low financial commitment, as long as the brands pass the fashion
benchmark.
• Zalora will not expand geographically this year, as it aims to increase penetration
in existing markets and focus on diversification of product offerings. It is looking
into the sports segment, as for now, it is very fashion-based.
• Since Zalora was launched in 2012, the group has been doubling its business
volume every year, until a slowdown in 2015 where sales reached a considerable
scale and a bigger warehouse was needed. Between 2017 and 2018, sales
increased by 30% to 50%.• Zalora moved into the RM40 million warehouse at the Mapletree Shah Alam
Logistics Park in March 2017, making it the first e-fulfillment hub for the region and
the largest to date for the group.
(C) COMMERCIAL / OFFICE
Evergrande in talks to buy HK office tower from Malaysian govt (The Star /
Bloomberg, 8th February 2019)
• China Evergrande Group is in talks to buy a building in Hong Kong’s Wan Chai
area owned by Malaysian government.
• Evergrande issued HK$4 billion floating rate senior secured notes due 2020 in
November 2018 with CMBC Capital Holdings subscribing in the principal amount
of HK$234 million.
• The deal is expected to be closed soon.
(D) MIXED DEVELOPMENT
Crest Builder changes project plan (The Star, 04th February 2019)
• Construction and engineering group Crest Builder Holdings Bhd is converting 17
floors of office space in its transport-oriented development (TOD) to mainly small
offices, home offices (SoHos).
• The company will also reduce the size of a handful of larger-sized units of about
2,000 sq ft to overcome issues of affordability.
• It is in the process of resubmitting its plans to the local authorities.
• Change in space usage has been ongoing over the years. Office blocks have been
converted to hotels and serviced apartments. Holiday Inn Express in Jalan Raja
Chulan, Kuala Lumpur, was previously Menara ING. Wisma KLIH, where HSBC
Bank used to operate from at the Jalan Bukit Bintang-Jalan Sultan Ismail
intersection, is now Wolo Hotel.
• The factors to change the components of an ongoing construction mid-way must
be strong. Incidentally, Latitud 8 was touted as the city’s first TOD when it was
unveiled in 2016.
• The project, with a gross development value of RM1.1bil, was reported as a joint
land development between Crest Builder’s 51%-owned subsidiary, Intan Sekitar
Sdn Bhd, and Prasarana Malaysia Bhd.
• Intan Sekitar is a joint-venture holding company between Crest Builder’s wholly
owned subsidiary Crest Builder International Sdn Bhd and Detik Utuh Sdn Bhd.
• The decision to change the office component into SoHo units was made after
studying the oversupply situation in the office market, coupled with the slow sales
for its office space.• The 44-floor project is located on Lot PT 21, originally Lot 60, in Jalan Ampang. It
was initially planned as a single commercial block comprising 17 storeys of office
space with 418 SoHo units on top of the office component with a retail podium.
Below it is the Dang Wangi LRT station.
• The original 418 SoHo units have built-up areas ranging from 650 sq ft to about
1,000 sq ft; a handful of them have built-up areas of about 2,000 sq ft.
• In view of the change in plans, the company has returned the cheques to buyers.
Sales are at about 20%.
• Each of the 17 floors has a floor area of about 20,000 sq ft. The total office portion
totalled about 340,000 sq ft before the change.
• Latitud 8 will now have 840 units. The change would involve a number of parties
and a re-submission of plans which the company is in the process of doing. As a
result of the change, construction has been halted.
• The company has built up to the third floor. Once approval has been given, the
company plans to continue with construction to a certain level before re-launching
the project in 2020.
Prosperity campaign for the festive season (The Star, 5th February 2019)
• Award-winning developer Aspen Group is ushering in the unar New Year by
offering golden opportunities for investors and buyers to reap profits with selected
properties, via its Guaranteed Prosperity Campaign.
• With the tagline “Golden Decision”, the campaign lets investors prosper with
auspicious annual prospects in either the Golden Future Package or Golden
Success Package.
• They include cash angpow privileges of up to 20%, rebate of 8% and a 2% down
payment. Purchasing the properties featured in the campaign includes free legal
fees for both sales and purchase and loan agreements. Investors will also enjoy a
2% bonus for every successful referral they bring in.
• Aspen Group’s properties in Penang covered by the campaign includes Tri
Pinnacle in Tanjung Tokong; Beacon Executive Suites in George Town; and,
Vogue Lifestyle Residence, Vertu Resort and Vervea Commercial Precinct at
Aspen Group’s flagship development Aspen Vision City in Batu Kawan.
• Tri Pinnacle is the state’s first private-initiated affordable housing project and the
first affordable condominium in Penang to feature an infinity sky pool and sky
facilities on Level 46 with breathtaking views of the city and the sea. At 74 sq m
(800 sq ft) per unit at RM416,000 onwards, it received its certificate of completion
and compliance December last year.
• Vertu Resort is located within Aspen Vision City only five to 10 minutes walking
distance to IKEA Batu Kawan, Regional Integrated Shopping Centre, Vervea
Commercial Precinct, Columbia Asia Medical Centre and 10-hectare Central
Island Park. Units of 95.7 sq m (1,030 sq ft) onwards start at RM492,000.• The Beacon Executive Suites is five minutes away from the Jelutong Expressway
in a low density development on a sought-after location on Penang Island. An
executive suite of 91 sq m (980 sq ft) costs RM645,000 and onwards.
• For luxurious modern lifestyle, Vogue Lifestyle Residence offers an integrated
lifestyle with an international business-class hotel, office suites and retail spaces.
It has direct access to wellness, retail, shopping, commercial, food and
entertainment destinations within IKEA Batu Kawan for only RM450,000 onwards.
• The first phase of Aspen Vision City, Vervea is connected via link bridges to
surrounding developments. Its commercial development has units from 306 sq m
(3,300 sq ft) that are business-ready with a first-of-its-kind 300m covered walkway
in High Street and strategically positioned with external linkages to Vervea Trade
and Exhibition Centre. The three- and four-storey shop offices range from RM2.5
million onwards.
SEC enters JV deal for property project (The Star, 5th February 2019)
• SC Estate Construction Sdn Bhd (SEC), a wholly-owned subsidiary of SC Estate
Builder Bhd has entered into a joint venture (JV) agreement with BS Civil
Engineering Sdn Bhd to develop 7.9h of freehold land into a mixed development
in Bandar Alor Setar.
• The mixed development would consist of apartments, low cost apartments and
shoplots with an estimated gross development value of about RM93mill.
(E) INDUSTRIAL / LOGISTICS / PLANTATION
Daiso to set up regional distribution centre in M’sia (The Star, 04th February 2019)
• PKT every24 Logistics Sdn Bhd (PKT) has signed a service agreement with Daiso
Industries Co Ltd to operate the latter’s regional distribution centre (RDC) in Port
Klang, in the second quarter of this year.
• Daiso decided to locate their RDC for their popular household products in
Malaysia, serving few countries initially in 2019 and increasing to more than 15
countries once the new warehouse is completed.
• This RDC is the centrepiece in Daiso’s business expansion strategy to streamline
their logistics operations for the South-East Asia and Middle East regions, allowing
them to better serve these two fast-growing markets.
• In order to serve Daiso in this RDC, PKT would be constructing a purpose-built
warehouse at an estimated investment cost of RM250mil while creating 500 new
jobs.
• PKT shall be providing Daiso haulage, freight forwarding and warehousing
services for their transshipment and local cargo, reaching approximately several
hundred containers per month.
• PKT every24 Logistics is a joint venture company between PKT Logistics Group
Sdn Bhd and Daisei every24 Co Ltd.CM: Sarawak’s political stability attracts investors (The Star, 04th February 2019)
• Investors, notably from China and South Korea, continue to support Sarawak's
industrialisation programme due to the state political stability
• The investors were keen to invest particularly in the Samalaju Industrial Park and
Samajaya High-Tech Park here due to the state's policies which were consistent
and well-defined coupled with its enormous renewal energy capabilities.
• The success of the Samajaya High-Tech Park is encouraging. The first phase of
an elecfoil production facility was launch recently in Samajaya costing RM400mil.
• Total investments by companies in Samajaya have exceeded RM12bil with more
foreign companies have indicated their readiness to invest.
• On the Sarawak Corridor of Renewable Energy (SCORE), it had recorded about
RM80bil worth of both public and private investments.
• The SCORE Development Plan was forecast to generate about RM334bil in terms
of investments, which, when fully realised, was expected to create 1.6 million new
job opportunities, especially for young Sarawakians.
Improve port efficiency to attract investment (New Straits Times, 4 th February
2019)
• The state government wants port operators in the state to improve their efficiency
in an effort to attract more foreign investments to Johor.
• The state government planned to call for a dialogue with the port operators to help
identify problems and discuss measures to improve efficiency and to optimise the
operation of the ports in Johor in order to be at par with Singapore, more efficient
and able to attract more foreign direct investments (FDI), especially during the
current trade war between China and the United States.
• There are three major ports in Johor - Port of Tanjung Pelepas (PTP), which is
located on the western part of Johor Baru, the Johor Port and the Tanjung Langsat
Port in Pasir Gudang.
• PTP and Johor Port are units of MMC Corp Bhd while the Tanjung Langsat Port is
owned by Johor Corp.
CCM unit secures RM50 mil financing from OCBC Al-Amin (Bernama, 4th February
2019)
• Chemical Company of Malaysia Bhd’s wholly-owned subsidiary, CCM Chemicals
Sdn Bhd (CCMC), has accepted an Islamic financing facility of RM50 million from
OCBC Al-Amin Bank Bhd to part finance its Pasir Gudang Works Plant 1 (PGW1)
reactivation project.
• In a filing to Bursa Malaysia, the company said the PGW1 reactivation project was
expected to increase the production capacity for chlor alkali products by about 50%and would potentially fill in the gap in the market, which is currently met by imports,
thereby increasing CCMC’s market share.
• The PGW1 reactivation project is currently in progress and is expected to be
completed and commence production in the second quarter of this year.
Malaysia manufacturing downturn continues in January (The Edge Markets, 4th
February 2019)
• The Malaysian manufacturing sector began 2019 with a fourth successive monthly
deterioration in operating conditions, with output and new business both declining
during January.
• The Manufacturing Purchasing Managers’ Index (PMI) registered 47.9 in January,
up from 46.8 in December.
• Export sales has declined with softer demand arising from China, Japan and South
Korea enabled firms to reduce backlogs of work.
• Although there was a marginal up-tick in employment, costs were cut elsewhere
as input buying decreased and stocks were scaled back.
• Keeping the headline index in negative territory were further reductions in new
business and output.
• Elsewhere, survey data indicated falling purchasing prices, enabling firms to raise
their own prices more slowly. Looking ahead, companies were optimistic that
output would be higher in 12 months.
Rising CPO prices drive plantation firms’ prospects in early 2019 (The Malaysian
Reserve, 8th February 2019)
• The rise in crude palm oil (CPO) prices since the beginning of this year has boosted
plantation stocks, which have suffered from a three-year low price dilemma.
• Given the current slow improvement in CPO price, analysts are predicting a
revived prospect for many plantation companies.
• The CPO price hit a three-year low in November 2018 at RM1,718 per tonne, with
the inventory surpassing three million tonnes at the end of the year.
• Since then, the commodity’s price has improved to a five-month high at end-
January, giving a spark of hope for oil palm planters.
• Analysts have remained favourable of a potential CPO price rebound this year, to
trade between RM2,200 and RM2,400 per metric tonne (MT), thanks to the
biodiesel initiatives and the slowing production in Indonesia following a robust yield
in 2018.
• The strong prospects of recovery in CPO price will also reflect on the growth of
earnings in most plantation companies.
Sime Darby Plantation➢ Sime Darby Plantation Bhd’s (SDP) fresh fruit bunches (FFB) segment is
expected to grow at 5% in the current financial year ending December 31,
2018 (FY19).
➢ Operational efficiency may also drive cost reduction efforts.
➢ The group’s ex-mill cost of production is expected to improve to RM1,200/ MT
in FY19 from RM1,260 in FY18.
➢ The planter aims to achieve cost reduction by optimising the fertiliser
application that will lower its usage, rationalising the head office expenses in
Papua New Guinea (PNG) and improving labour efficiency. At present, SDP’s
labour efficiency has ample room for improvement.
➢ The group’s plantation in Indonesia has the labour-to-hectare ratio of 1:7.5,
while PNG is at 1:5. Its plantation in Malaysia has a better benchmark of 1:10.
Sarawak Oil Palms
➢ Sarawak Oil Palms Bhd’s (SOP) prospects is to be lifted by its recent
replanting exercise with a 10% output growth projection in 2019 due to its
relatively young crops.
➢ The group has two parcels of prime land for property development in Sarawak,
which is some 12,000 acres (4,856.23 hectares) of Taniku estates on the
fringe of Miri city and has a market price of around RM12 per sq ft. The two
parcels of land have a combined market value of RM5.33 billion.
IJM Plantations
➢ IJM Plantations Bhd’s production is projected to be on track to exceed the one
million mark in FY20 as its crops have matured.
➢ Production in the Sugut region accounts for about two-thirds of Sabah’s
output is still seeing some lagged impact of El Nino in FY19. Production in
the region is expected to fully recover by mid-FY20 to achieve FFB yield of
20MT/ha.
➢ As for Indonesia, IJM Plantations’ FFB yield is expected to improve from
17MT/ha in FY19 to 20MT in FY20.
IOI Corp
➢ IOI Corp Bhd is poised to have a better performance in its resource-based
manufacturing segment than the previous quarter, supported by the low palm
kernel (PK) selling prices and the higher demand of components in the
oleochemical segment.
➢ However, the group’s improved performance in its manufacturing division will
not be sufficient to mitigate the near-term weakness in CPO prices.
➢ The group’s core net profit forecasts for FY19 until FY20 have been reduced
by 17.3% and 11.5% respectively, largely to account for realised palm product
prices during 1Q19, lower FFB yield for plantation segment and lower margin
assumption at the manufacturing division.
Kuala Lumpur Kepong
➢ Despite the favourable projection on most palm oil planters, Kenanga
Research remained unexcited on Kuala Lumpur Kepong Bhd’s (KLK)
immediate-term prospect as the research house is projecting a delicate
quarter for the last three months of 2018 due to soft CPO prices.
➢ “We expect a soft patch in 1Q19 for the group as we believe
➢ The drop in CPO price, which is estimated at 12% quarter-on-quarter, is
expected to outweigh the effect of KLK’s 8% growth projection in the FFB
segment in the same period.➢ KLK’s 1Q19 earnings may see some weakness amid soft CPO prices and the
narrowing oleochemical margins due to competition from Indonesia coupled
with a sharp drop in the crude oil prices.
➢ The drop in the crude oil price has made the methyl ester-based products less
attractive.
MRO players to gain from rising O&G activities completion of Petronas’ PIC
expected to boost gas development projects, with operators moving to develop
new offshore fields (The Sun Daily, 7th February 2019)
• More of Malaysia’s oil and gas services and equipment (OGSE) companies are
expected to set their sights on the downstream sector mainly in the maintenance,
repair and overhaul (MRO) segment with the completion of Petronas’ Pengerang
Integrated Complex (PIC) in southern Johor.
• According to its “Top 100 OGSE Companies in Malaysia FY2017” report by MPRC,
while volatility of the oil price is expected to persist in 2019 global oil and gas
development activities are expected to increase in the coming years, with
operators aiming to move forward to develop new offshore fields, particularly those
located in deep waters.
• This development brings about significant opportunities for OGSE companies, in
particular subsea, drilling, and MRO players.
(F) INVESTMENT / TRADE
(G) CORPORATE
Paramount Corp redeems RM50 million in PDS (theedgemarkets.com, 7th February
2019)
• Paramount Corporation Bhd has redeemed RM50 million worth of its RM200
million perpetual private debt securities (PDS) issued five years ago.
PJBumi gets RM18m building refurbishment project (theedgemarkets.com, 7th
February 2019)
• PJBumi Bhd’s unit, PJBumi Construction Sdn Bhd, has bagged an RM18.7 million
contract to refurbish 84 units of residential and commercial buildings as well as
infrastructure in Chenor, Pahang.
• The contract was awarded by Salam Properties Sdn Bhd.
Tatt Giap to rent out property earmarked for development (The Malaysian Reserve,
7th February 2019)
• Tatt Giap Group Bhd is to rent out its Penang-based property to MGudang Sdn
Bhd for RM350,000 a month for two years to raise capital for its private vehicle,
while improving the group’s gearing.
• The steel manufacturer’s wholly owned unit, Dynaciate SPI Sdn Bhd, has entered
into a conditional tenancy agreement with the tenant for the demised property
sitting on 550,000 sq ft of land.• Located in Seberang Perai Selatan on Penang island, the property is currently
vacant and comprises a two-storey office building, single-storey detached factory
and a standalone building.
• Under the agreement, the tenant will pay Dynaciate SPI a monthly rental of
RM350,000 over a two-year period with the option to renew for an additional year.
• The demised property in question was initially intended to be developed into a
property development project by the group and would largely be funded with cash
raised from the RM40.95 million rights issue completed on January 3 this year.
• In view of the proposed tenancy, the company is now seeking to divert the funds
initially earmarked for the proposed project to help repay the group’s borrowings.
• Both exercises are subject to shareholders’ approval and the proposed tenancy is
expected to begin in the fourth quarter of the fiscal year ending May 31 this year.
Tropicana aborts deal to sell Johor land for RM570m (The Sun Daily, 7th February
2019)
• Tropicana Corp Bhd has called off its proposed disposal of 251.59 acres freehold
land in Gelang Patah, Johor, for RM569.87 million.
• The sale and purchase agreement (SPA) has lapsed on February 1 and shall be
rendered null and void.
• The conditions precedent (CP) have not been fulfilled on February 1. Therefore,
the parties have mutually agreed not to extend the first extended CP period and
accordingly the timeframe to fulfil such conditions have lapsed.
• The agreement was inked in July 2016 by the group’s unit Tropicana Desa Mentari
Sdn Bhd with Tiarn Oversea Group Sdn Bhd, in which Tropicana expected to
realise a gain on disposal of about RM55.5 million.
• Tiarn intended to undertake a two-phase development on the land, with Phase 1
comprising 60 acres and the remainder 191.6 acres constituting the second phase.
• The land disposal was expected to complete in the second half of 2022.
Felda plans to end ties with Indonesia’s Rajawali (The Star, 8th February 2019)
• The Federal Land Development Authority (Felda) is proposing to walk away from
its partnership with the Jakarta-based Rajawali Group and demand the return of
more than US$500 milliom it had ploughed into a clutch of oil palm estate and
sugar-related manufacturing assets in Indonesia in May 2017.
• Felda’s controversial acquisition of a 37% interest in Rajawali’s Eagle High
Plantations Tbk came with a so-called “put option” that provided for the Malaysian
concern to sell back the equity interest at the purchase price of US$505.4 million,
together with an annual interest charge of 6% that must be borne by the
Indonesians.• Under the deal, Eagle High was required to secure the Roundtable on Sustainable
Palm Oil certification, an internationally recognised accreditation that allows for
access into key markets, before the end of 2019.
TSH sets up RM3mil Indonesian subsidiary (The Star, 7th February 2019)
• TSH Resources Bhd has incorporated a new subsidiary in Indonesia for the
development of industrial estate and ownership and leasing of real estate.
• PT Aman Mulia Gemilang will have a share capital of 10 billion rupiah (RM2.92
million) comprising of 10,000 shares of one million rupiah each and a paid-up
capital of 2.5 billion rupiah divided into 2,500 shares of one million rupiah each.
Gunung Capital gets letter of award to improve estate in Sarawak (The Edge
Markets, 4th February 2019)
• Gunung Capital Bhd has received a letter of award from Jendala Padu Sdn Bhd
for a profit-sharing pilot-project (LOA) to improve the yield of the Pandan Land
Bintulu Palm Oil Estate.
• The six-month LOA tenure is from Feb 1, 2019 to July 31, 2019. Gunung Capital
has the option to automatically extend the tenure for an additional tenure of up to
15 years by written confirmation to Jendala Padu.
• “Gunung Capital shall perform the project management with the degree of
professional skill, care and diligence expected of a consultant experienced in
providing the same or similar services,” the group said in a filing with Bursa
Malaysia today.
• This receipt of the LOA also indicates the Memorandum of Understanding inked
on Jan 9 is deemed expired.
• Based on the LOA, RM20 per ton of fresh fruit bunches harvested in a calendar
month shall equal the Jendala Padu distribution, while the profit sharing distribution
to Gunung Capital equals to project revenue minus the total of Jendala Padu
distribution and project direct costs.
• The project will see both parties develop strategies to improve the yield of
biological assets on the land, which may also include commodity hedging
strategies and other financial instruments to protect yields against commodity price
fluctuations.
Tropicana Corp calls off Pulai land sale (The Star, 8th February 2019)
• Tropicana Corp Bhd has called off a major land sale worth RM569.87mil involving
251.8 acres located in Pulai, Johor.
• The land deal was announced back in 2016, which the group had signed with a
China-based developer – Tiarn Oversea Group Sdn Bhd – to sell the freehold land
in Iskandar, Johor.
• The sale and purchase agreement (SPA) had lapsed on Feb 1 after the condition
precedents were not fulfilled.• The SPA was signed in July 2016, with the aim of completing the disposal by 2022.
• Tropicana had bought the land in 2013 for RM366.55mil and the firm had targeted
to gain about RM55.5mil from the disposal.
• The land sale was part of its degearing exercise, which was to pay bank
borrowings and be partly used for working capital.
(H) REITS / FUNDS
Top 10 most expensive REIT buildings (The Malaysian Reserve, 7th February 2019)
• Real estate investment trust (REIT) has been a key investment instrument in the
country. For many investors, these are among the safe bets. With consistent
returns, rising values and sustainable demands, REITs in the country now are the
jewels of the property industry.
➢ The most expensive structures included in REITs portfolio based on the current
sales value include the following:
Petronas Twin Towers (KL) — RM7b
➢ At the top of the chart is the Petronas Twin Towers. The world’s tallest twin
towers located on Jalan Ampang, Kuala Lumpur (KL), have been dominating
the city’s skyline since 1997.
➢ A recent valuation put the sales value of the building at an astonishing RM7.01
billion, making it the most expensive structure in the country.
Pavilion KL Mall (KL) — RM4.7b
➢ Second on the list is KL’s favourite shopping location — the Pavilion KL Mall.
Built on the former site of the oldest school in the city, Bukit Bintang Girls’
School, the Pavilion KL has earned the title for the place to shop for renowned
fashion labels since it was opened in 2007. The mall hosts most of the
expensive brands in the retail stratosphere.
Mid Valley Megamall (KL) — RM3.7b
➢ Mid Valley Megamall comprises a shopping mall, an office tower block, 30
offices and three hotels — strategically located between Petaling Jaya,
Selangor, and KL. The mall has been drawing large crowds since 1999 partly
due to the number of shops and varieties available, including signature anchor
tenants.
Petronas Tower 3 (KL) — RM2.1b
➢ Petronas Tower 3, which was opened in 2011, is another addition to the world-
class Petronas Twin Towers complex. It features a sixlevel extension to the
Suria KLCC, while the remaining floors are the offices. The 58-storey building
is also surrounded by many prominent office buildings, including Menara
Maxis and Menara Citibank.
Gurney Plaza (Penang) — RM1.6b
➢ The mall in Gurney Drive, Penang, one of the most popular seafront
promenades in the country, was opened in 2001. It is now the second- largest
shopping mall in Georgetown with 879,930 sq ft of net lettable area. It consistsof nine retail floors, housing anchor tenants, and is one of the popular
shopping haven for visitors and locals in Penang.
The Gardens Mall (KL) — RM1.3b
➢ The Gardens Mall is located within The Gardens Hotel and Residences,
adjacent to the Mid Val ley Megamall. It is a premium six-level shopping haven
for more than 200 outlets with top international fashion brands. The Gardens
Mall is also home to Robinsons from Singapore and Isetan of Japan, as well
as Malaysia’s most premier cinema, GSC Signature.
The Mines (Seri Kembangan) — RM728m
➢ The contemporary neighbourhood shopping mall is located in Seri
Kembangan, Selangor. It has recently been transformed with major upgrading
works including additional retail spaces, a revamped carpark system and
additional linked-bridges.
Plantinum Sentral (KL) — RM724m
➢ Platinum Sentral is located within KL Sentral, Malaysia’s largest transit hub —
interconnecting Kuala Lumpur Internat ional Airport transit, KLIA Express, the
light railway transit (LRT), KTM (Keretapi Tanah Melayu) intercity, KTM
commuter and the KL monorail. It is a commercial development consisting of
five blocks of office-cumretail space and a multi-purpose hall. Platinum
Sentral’s major tenants include SME Corp Malaysia, SBM Malaysia Sdn Bhd
and the Land Public Transport Commission, among others.
Menara Shell (KL) — RM650m
➢ Menara Shell is a commercial development consisting of a 33-storey stratified
office tower, together with a five-storey podium and a four-storey basement
carpark. It is situated on Jalan Tun Sambanthan, at the south western portion
of KL Sentral. Menara Shell is a grade-A office tower and its unique
architecture building is Malaysia’s first integrated commercial development
with Leadership in Energy and Environmental Design Gold standards.
Elite Pavilion Mall (KL) — RM580m
➢ Elite Pavilion Mall is a new retail landmark project located adjacent to Pavilion
KL Mall. It is a 10-storey retail mall with an underground pedestrian tunnel
connection to Fahrenheit88. Elite Pavilion Mall was acquired by Pavilion REIT
at the end of April 2018.
Note: The market values are based on the revaluation of properties by respective REIT
managers as at December, 2018.
(I) LEISURE / TOURISM
Club Med eyeing Sabah? (New Straits Times, 7th February 2019)
• Is Club Med looking to open a second resort in Malaysia?
• It is understood that the global upscale resort operator based in France is eyeing
an opening in Sabah.
• The resort could be about the same size as Club Med Cherating Beach in Pahang.
The plan is preliminary.• Club Med Cherating is the company’s flagship resort here and also the first Asian
resort established almost 40 years ago. It still holds the record of having the
longest longhouse in the Guinness World Records. There are also plans to
renovate and revitalise the entire resort to make it an eco-chic flagship resort in
Asia.
• Club Med Cherating was the first resort to introduce Cherating Beach to travellers.
The resort has the highest occupancy rate in the east coast, fuelled by domestic
and international travellers.
• The resort is successful during the peak season as well as the monsoon season
because it offers a myriad of indoor and outdoor activities for all ages, including
evening entertainment in theatres.
• Club Med charges an average RM500 per person per night.
• The resort continues to have double-digit growth, leveraging the eco-chic beach
resort positioning.
• Most visitors come from Malaysia, Australia, Singapore, China, Europe, Japan and
South Korea.
• The company is looking for opportunities to expand the Club Med footprint in Asia
Pacific. It is seeking the right opportunities with the right partner in the right
destinations and aim to open three villages per year.
• There are around 70 Club Med resorts in the world, with about 15 in Asia Pacific.
• China is the largest source market with the most number of travellers.
• The next largest source markets are Japan, Singapore and Australia. Malaysia is
among the top feeder market in Asia.
• The leisure travel business, especially in Asia, has been booming this decade and
the region is the fastest growing tourism market in the world.
• Asia has the highest proportion of millennials in the world, with almost two-thirds
of the world’s millennials by the end of this decade, and the company expects a
positive growth of experience-seeking travellers over short to long term.
• Worldwide, there will be at least 15 new beach and mountain resort opening.
• The company plans to grow its mountain footprint in Asia in the next three years
with new snow resorts in Anyingzhai (Beijing, China), Thaiwoo (Beijing, China) and
South Korea.
• According to Asia Pacific’s first snow holiday report, 200 million people in the
region had taken a snow holiday in the last three years.
• The top four snow mountain resorts in Asia are Club Med Tomamu and Club Med
Sahoro in Hokkaido, Japan and Club Med Beidahu and Club Med Yabuli in China.• To consolidate the company’s leadership in mountain vacations, Club Med aims
to open at least one resort in the Alps every year and introduce the brand in North
America, with the first resort in Charlevoix, Canada.
Theme park has new experiential attraction (The Star, 5th February 2019)
• Legoland Malaysia Resort’s brand new addition, Lego 4D Movie, is expected to
“wow” the audience by giving them an experience to remember, following the
launch of its Lego City 4D movie titled Officer in Pursuit.
• Legoland Malaysia Resort is the first Legoland resort worldwide to launch a 4D
movie.
Travellers against departure levy (New Straits Times, 4th February 2019)
• As the feud intensifies between Malaysia Airports Holdings Bhd (MAHB) and
AirAsia, so too the voices from air travellers against the imposition of a departure
levy, as well as increase in passenger service charge (PSC).
• Malaysians, however, said they were determined to continue travelling.
• The New Straits Times’ travel pullout, JOM!, inasurvey conducted on its Facebook
page to identify the travel trends of Malaysians, found the majority objecting to both
charges.
• Of the 663 respondents, 73.2 per cent did not agree that klia2 and other Malaysian
international airports should charge the same PSC as the Kuala Lumpur
International Airport (KLIA).
• The survey, which comprises eight questions, ran for 11 days.
• Effective Jan 1 last year, PSC for those travelling beyond Asean was increased
from RM50 to RM73.
• It has more than doubled since 2017 for passengers using klia2.
• Passengers were charged RM32 before 2017 for travelling beyond Asean via klia2,
and it increased to RM50 in 2017.
• Since the increase, AirAsia Group Bhd and AirAsia X Bhd have refused to collect
the additional RM23, with the justification that the facilities in klia2 were inferior
compared with a full-service carrier terminal.
• On Dec 11 last year, Malaysia Airports (Sepang) Sdn Bhd, a subsidiary of MAHB,
served a writ of summons on AirAsia Group’s unit, AirAsia Bhd (AAB), for RM9.4
million in PSC that AAB had not and refused to collect from travelling passengers.
• Malaysians said the departure levy would not encourage domestic tourism as
envisaged. Travellers said they would continue to travel, with 4.3 per cent of
respondents saying they would travel within the country, 71.6 per cent within
Asean and 24.1 per cent beyond that.
• The departure levy proposed in the 2019 Budget for air travellers leaving the
country is set to roll out in full force in June.• It is set at RM20 to Asean countries and RM40 for non-Asean countries.
• The levy was to raise revenue allowing the government to collect a few hundred
million ringgit annually.
Duty-free zones in the state attract hordes of visitors (New Straits Times, 5 th
February 2019)
• All three duty-free zones in Kelantan are attracting hordes of visitors to Kelantan
• These visitors, mostly from outside Kelantan, choose to visit the duty-free zones
for shopping
• One of the duty-free zones is near Pengkalan Kubor while the other two are at
Rantau Panjang and Bukit Bunga.
• A survey at the Pengkalan Kubor duty-free zone showed that nearly 500 visitors
came by 9am. They caused heavy traffic jam in the area.
(J) INSTITUTIONAL
Malaysia ranks 1st in world's best healthcare category (Bernama, 6th February
2019)
• Malaysia, with a score of 95 out of 100, ranked first in the Best Healthcare in the
World category of the 2019 International Living Annual Global Retirement Index.
• According to the International Living website, among top six countries that obtained
the best ratings in the category of Best Healthcare in the World for this year,
Malaysia ranked first with its world-class healthcare services and sophisticated
infrastructure.
• 13 hospitals in the country are accredited by Joint Commission International (JCI).
Almost all doctors, with majority trained in the United Kingdom, the United States
or Australia, are fluent in English, thus communication is flawless.
• There are both private and public hospitals for expatriates to choose from, to suit
one’s needs though the private hospitals tend to be a bit more expensive but are
more up to Western standards than the public hospitals. Even at the private
hospitals, the treatment is affordable for minor visits.
MITEC making great strides (New Straits Times, 7th February 2019)
• The Malaysia International Trade & Exhibition Centre (MITEC) strategic growth
plan for this year will be to attract sectors like digital automation, smart
manufacturing, agriculture, medical, science and technology.
• Strategic growth in the country’s business events landscape is making great
strides for MITEC, which is a relatively new industry player.
• MITEC is capable of hosting “mega-exhibitions” for over 100,000 visitors and
conventions with the capacity of 20,000. It also wins when it comes to a well-
thought of architectural structure. With detailed planning, MITEC has heavy-dutyloading exhibition halls on level one with a maximum floor loading of 50kN/sqm,
enabling it to support the weight of heavy machinery and vehicles.
• The ceilings also go up to 36m high making even indoor sporting events feasible.
These features are the first of its kind in Malaysia.
(K) INFRASTRUCTURE
Uncertainties over ECRL sees CIMB Research cautious on construction (The Star,
04th February 2019)
• CIMB Equities Research is underweight on the construction sector following
certainties over the East Coast Rail Line (ECRL).
• It said on Monday it would be cautiously positive on the impact on local contractors
if the ECRL is allowed to proceed this year.
• ECRL has left us with more questions than answers as to the project’s status since
a stop work order/project suspension was issued in July 2018.
• Its observations from various news reports and channel checks still point to two
key takeaways.
• Firstly, negotiations on whether to terminate/cancel, proceed on the existing scope
or on a smaller-scale version of the ECRL project have been challenging, given
the bilateral issues involved, and the fact that the project was suspended at 14%
completion.
• Secondly, while the government has on numerous occasions broadly indicated its
intention to discontinue the ECRL project, financial implications continue to be the
main hurdle.
• CIMB Research said on the other extreme, if the project is terminated, the
immediate financial impact on the Malaysian government is the compensation to
be paid to China Communications Construction Co. (the EPCC contractor), which
would typically be dictated by the termination clause of the EPCC contract.
• In terms of what has been paid, the MOF indicated previously that RM20bil has
been drawn down from Exim Bank (as at April 2018) of which RM10.2bn has been
paid as advance payment to CCCC (15.2% of construction cost) and RM9.7bn for
the actual progress payment as at July 2018.
• It also indicated that CCCC has committed a redeemable performance bond
amounting to RM10.2bil.
• At this juncture, what has been reported in the press but remains
unconfirmed/unverified by the government (pending an official announcement), is
1) whether the EPCC contract with CCCC has been terminated, and 2) if the
government is indeed considering a new contractor, should it decide to proceed
with the project at a significantly lower price tag of under RM40bil, as reported by
The Edge Markets,” it said.
• Prime Minister Tun Dr Mahathir Mohamad was quoted in the press as saying that
negotiations for an amicable solution regarding the ECRL have been tough, withYou can also read
