Reports » Malaysia

Malaysia stock market and companies daily report (September 11, 2012)

Contributed by Shares Investment

Malaysia Will Sustain Trillion Ringgit Trade
Despite prolonged uncertainties in the Eurozone and the slower recovery of the United States’ economy, Malaysia is expected to sustain its trillion ringgit trade this year according to Deputy Minister of International Trade and Industry. The target itself would very much be influenced by the trade exports to China and fast-growing Middle East and India markets. Currently, the main concern is the declining exports in electrical and electronic products over the past two months to its largest importer of this sector, China. Although the drop in exports, the minister asserts that the overall picture will see positive results. Last year, Malaysia’s trade was valued at RM1.26 trillion. Meanwhile, small and medium enterprises (SMEs) to date have contributed to one third of Malaysia’ gross domestic product and constitutes about one-fifth of total exports. As such, the minister states that SME sector plays a crucial role, as a growth avenue that propels the economy forward during times of uncertainty.
Significance: Malaysia’s trade surplus plunged down to RM3.6 billion in July, its lowest in more than a decade. China on the other hand had recently released its trade data signalling a new level of concern emerging which could develop into a potential threat for the Asia region.

ABS Samudera Obtains AA+ Rating Despite Negative Outlook
Malaysia Rating Corporation (MARC) affirmed its rating on ABS Samudera Receivables’ (ASRB) debt notes at AA+ even after assessing the company’s negative outlook. The rating action is said to reflect adequate credit support for the programme’s outstanding notes of RM1.3million after taking into account of reasonable estimates made for potential tax liabilities and penalties at the special purpose vehicle (SPV) level under the circumstances. In contrast, the negative outlook indicated continued uncertainty posed by ASRB’s potential tax liabilities which are of uncertain timing and amount. The tax returns have yet to be filed since 2007 and without any provisions made for the aforementioned tax liabilities. ASRB, a financially strong special purpose vehicle, was incorporated for the purpose of issuing up to RM250million in Medium Term Notes (MTNs) to finance the purchase of eligible consumer financing receivables from Koperasi Shamelin (KSB).
Significance: The primary source of uncertainty in the performance of the debt issued is ASRB’s ultimate tax liabilities. MARC will continue to monitor ASRB’s progress with its potential tax liabilities in order to ensure the rating assigned remains consistent with available credit support.

BAT Sips 2.3% On Possible Cigarette Tax Hike
British American Tobacco Malaysia (BAT) shares dipped 2.3 percent as investors saw concerns over possibilities of a hike in tobacco duty in the upcoming Budget 2013. BAT’s share price stood above all price targets from 17 analysts polled on Bloomberg since July, in which most analysts were neutral on the stock. According to RAM ratings agency, the industry-wide sales were still susceptible to excise-duty hikes as well as the spike in circulation of illicit cigarettes. The industry saw total volumes climb 0.6 percent year on year to 7.12 billion sticks in the first half of 2012 despite the absence of an excise duty hike last year. The group remained a clear market leader in the local tobacco industry, with its domestic sales volume inching up 1.2 percentage points to 60.9 percent in 2011 versus 59.7% in 2010.
Significance: The outlook for BAT maybe dimmer than expected as consumers would likely turn to illicit cigarettes should the hike in tobacco duty come into effect, thus causing further erosion on sales.