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Reports Malaysia

Malaysia stock market and companies daily report (January 21, 2014)

January 21, 2014, Tuesday, 06:23 GMT | 01:23 EST | 10:53 IST | 13:23 SGT
Contributed by Shares Investment

Government Aims To Reduce Car Prices By Up To 30% By The End Of 2018
- The Ministry of International Trade and Industry unveiled the National Automotive Policy (NAP) 2014, which targets to reduce car prices by 20 percent to 30 percent by the end of 2018. The new NAP contains a number of measures to increase competition in the auto sector, particularly in the energy efficient vehicle (EEV) segment.
- The policy’s main objective is to make Malaysia the regional automotive hub for EEV. The freeze on new car manufacturing licenses for cars below 1,800cc would be lifted, but only for EEV. The government hopes to issue three to four manufacturing licenses for EEV by 2018.
- The government will be providing RM2.1 billion in funds over seven years to attract foreign and domestic investments in the EEV segment. Soft loans amounting to RM765 million will be extended for the development of tool, dies and mould; RM575 million for component technology pre-commercialisation; and RM295 million for competitiveness related activities.
Significance: The present exercise duty and import tax exemptions for hybrid and electric vehicles will be discontinued for imported models. They will, however, be extended to models assembled in Malaysia until 31 December 2015 for hybrids and 31 December 2017 for electric vehicles.
Astro Malaysia’s FY15 Earnings Set To Soar
- Astro Malaysia Holdings is expected to see a 40 percent year-on-year rise in its 2015 earnings due to higher average revenue per user and the absence of new B.yong decoder-related expenses.
- UBS Securities Malaysia had lowered its earnings forecast for Astro in 2014 to factor in higher financing costs due to higher currency losses from unhedged vendor financing and higher depreciation/amortisation chargers for 2015-2016.
- Nonetheless, the house expects Astro’s revenue to hold up relatively well despite Malaysian consumers adjusting their spending patterns due to higher cost of living arising from subsidy rationalisation and weaker currency.
Significance: With the lagging share price performance of Astro, UBS Securities Malaysia is of view that its forward looking valuations now look reasonable. It maintained “Buy” on Astro and raised target price to RM3.80 from RM3.50 previously.
SP Setia’s Head Resigns
- SP Setia’s head honcho Tan Sri Liew Kee Sin announced his intention to resign as president and chief executive officer, as was widely expected by industry observers, and may eventually emerge in Eco World Development Group, where his eldest son is a major shareholder and director.
- The group’s chief financial officer Datuk Teow Leong Seng is also leaving, coming as a surprise to many as he was named deputy chairman in the property player’s succession plan earlier. It was also speculated that present chief operating officer Datuk Voon Tin Yow, who was appointed the company’s acting president and chief executive officer, might also resign later. Earlier, non-independent non-executive director Tan Sri Lee Lam Thye has also resigned as of 20 January.
- Nonetheless, Liew and Teow would continue to be involved in the Battersea Power Station project in London until September 2015 given the prominence of the international project.
Significance: Observers expected that SP Setia’s biggest owner, Permodalan Nasional, to take more proactive measures in managing its talents as well as setting the company’s direction going forward. Analysts said the market has priced in Liew’s retirement and they expect the company’s operation to remain intact for the time being.