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Reports Malaysia

Malaysia stock market and companies daily report (May 20, 2014)

May 20, 2014, Tuesday, 06:53 GMT | 01:53 EST | 10:23 IST | 12:53 SGT
Contributed by Shares Investment

Economic Growth To Drive Up Malaysia’s Key Interest Rate

- A stronger-than-expected economic growth of 6.2 percent in the first quarter of the year has fuelled expectations of economists that interest rates in Malaysia could go up as early as July at the next Bank Negara’s Monetary Policy Committee meeting .

- Economists expect the central bank to raise the overnight policy rate (OPR) by 25 basis points from the current 3 percent to 3.25 percent.

- The prolonged low levels of interest rates in Malaysia had contributed to the rising household debt level, which reached a record 86.8 percent of gross domestic product at end-2013.

Significance: Bank Islam noted that there is a high possibility of the rate hike given the rising risk of financial imbalances due to the elevated levels of household indebtedness though the adjustment would likely be gradual.

FGVH Plans On Inorganic Expansions To Hit Revenue Target Of RM100b

- Felda Global Ventures Holdings (FGVH) plans to acquire new businesses and increase plantation acreage and crude palm oil (CPO) production to achieve its revenue target of RM100 billion.

- FGVH is aiming to manage more than one million hectares of plantations and raise CPO production to above four million tonnes. Currently, it has 853,000 hectares of plantations in Malaysia and Indonesia and produced 3.2 million tonnes of CPO.

- The company is scouting for plantations in Southeast Asia as well as oil palm estates in Indonesia and rubber plantations in Cambodia, new markets in China and investments in India and eastern Africa.

Significance: FGVH noted that in order to be a RM100 billion turnover company, it needs to grow by eight times and it plans to achieve this via increasing investments in both upstream and downstream activities, where downstream activities could protect upstream volatility.

Sunsuria Expected To Be Injected With RM10b Worth Of Projects

- Datuk Ter Leong Yap, the executive chairman and major shareholder of Sunsuria, is likely to inject property projects, which would increase its land bank by 403 acres, worth some RM10 billion into the firm.

- These developments are owned by firms that are either fully owned or majority controlled by Sunsuria Development, where Ter holds a majority stake.

- Sunsuria will purchase these companies in order to gain ownership of the said projects, funding the acquisitions through a rights issue, expected to raise between RM184.5 million and RM356.3 million, followed by a private placement.

Significance: Sunsuria’s net profit is projected to surge to RM22 million for the fiscal year ending March 2015, mainly attributed to the company’s foray into property development, given that Sunsuria previously focused on making wooden and fire rated doors said UOB-Kay Hian, while Kenanga Research eyes a lower figure of RM15.6 million.