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Reports Malaysia

Malaysia stock market and companies daily report (December 20, 2013)

December 20, 2013, Friday, 05:02 GMT | 00:02 EST | 09:32 IST | 12:02 SGT
Contributed by Shares Investment

AMMB in RM812m Deal With MetLife

- AMMB Holdings is selling 51 percent stake in AmLife and 49 percent stake in AmFamily Takaful to US insurer, MetLife Inc in an RM812 million deal.

- As part of the deal, AmLife and AmTakaful will enter into exclusive 20-year bancassurance and banctakaful agreements, which are for the distribution of life insurance and family takaful products through AMMB’s banking network across Malaysia.

- The partnership underscores its vision to become Malaysia’s preferred diversified, internationally-connected financial solutions group and it will be seeking a written approval from Bank Negara Malaysia and/or the minister of finance.

Significance: Combining MetLife’s global expertise in life insurance products and the strength of AMMB’s distribution network will allow AMMB to offer market-leading products to its customers. This alliance would help AMMB materialise the full growth potential of its life insurance and takaful businesses.

Tariff Hike Insufficient To Cover TN’s Costs

- Energy Commission chief executive officer, Datuk Ahmad Fauzi Hasan noted that the impending electricity tariff hike, a raise of RM0.0499 to RM38.53 per kilowatt hour and RM0.05 in Sabah and Labuan, is still insufficient to cover Tenaga Nasional’s (TN) annual cost and other expenses, amounting to between RM6 billion and RM7 billion per year.

- Despite recording net profit of RM4.6 billion, TN still has to borrow and spend money to develop, upgrade and install new power generation, transmission and distribution infrastructure in Peninsular Malaysia, especially from the south to Klang Valley.

- TN would also require massive financial resources for the next 20 years to build more power plants as more and more existing power plants need to be shut down when they reach expiration dates.

Significance: The costs of maintaining the power plants will continue to be a drag on the company’s financial performance, requiring TN to keep a keen eye on its efficiency and operations as well as its expenses.

UMW In RM49.1m Land Sale

- UMW Holdings, via its wholly-owned unit, UMW Corporation, is selling a 47 hectares (118.56 acre) leasehold land in Ulu Selangor to associate, Perusahaan Otomobil Kedua (Perodua) for RM49.1 million cash.

- The disposal consideration was arrived at 5.5 percent above the highest valuation of RM46.5 million carried out by Messrs Rahim & Co Chartered Surveryor and Messrs Raine & Horne International Zaki + Partners.

- UMW has no plans to develop the land as it has identified another parcel of land adjacent to it for its future requirements while the sale will enable Perodua to expand its production capability within its existing plant.

Significance: UMW is expected to gain RM29.6 million from the disposal and the proceeds will be utilised from working capital purposes.