DISCOVER the Road to Financial FREEDOM!

4 Responses to “Construction Sector Outlook and AmanahRaya REIT Corporate Presentation | CIMB”

1. alan on June 16th, 2010 at 7:54 am

   Sunway REIT IPO launched

   Analyst says listing may attract more foreign investors

   PETALING JAYA: Sunway City Bhd (SunCity) and Sunway REIT Management Sdn Bhd have launched the initial public offering (IPO) of 1.65 billion units in Sunway Real Estate Investment Trust (Sunway REIT).

   Sunway REIT, which has an approved fund size of 2.78 billion units, will become Malaysia’s largest listed REIT when it lists on the Main Market of Bursa Malaysia in July. Sunway REIT Management is the manager for Sunway REIT.

   Eight properties, with an appraised value of RM3.7bil, would be injected into the REIT. They are Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel and Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya and office properties.

   Sunway REIT Management chief executive officer Datuk Jeffrey Ng said the company was committed to actively providing value-added services to the properties.

   “Four of the assets are in Bandar Sunway, which has over the years proven its growth potential as a landmark tourist destination,” he said.

   He said there was a planned enhancement of several existing assets, and leasing of recently completed space, adding that the assets being injected into the REIT were assets in locations that had proven track records for growth.

   Sunway REIT’s IPO comprises an institutional and selected investors portion of 1.52 billion units and a retail portion of 134 million units.

   The final retail price per offer unit would be the lower of 97 sen, or 97% of the institutional offer price, to be determined by way of bookbuilding.

   Four cornerstone investors – the Employees Provident Fund, Permodalan Nasional Bhd, Government of Singapore Investment Corp and Great Eastern Life Assurance (M) Bhd – have secured 376 million units, or about 22.7% of the offer units.

   An analyst with a local brokerage said the listing of Sunway REIT next month would be a milestone for Malaysian REITs (M-REITs) not only because of its large fund size, but also because it had attracted several cornerstone investors.

   “Sunway REIT will be on the radar of the ‘big boys’ and this can only be good for the smaller REITs as well,” he said.

   The analyst also said Sunway REIT could bolster the equity market and make it more attractive to foreign institutional players.

   According to the analyst, Sunway REIT’s dividend yield was about 6.7% (based on forecast dividend per unit or DPU of 6.7 sen), which was below the average 8.5% for other REITs. He said the REIT’s IPO was at a premium to other M-REITs.

   “But taking account of the size of the trust and its potential, we believe Sunway REIT has its merits,” he said.

   A REIT adviser said that while Sunway REIT had its “attractiveness”, there could be some investors who preferred to invest in pure-play REITs that were focused on specific asset classes such as retail, office space and warehouse.

   “Sunway REIT is a fairly unique trust because it’s a mixed REIT that has retail and hospitality elements,” he said.

   The REIT adviser said if the different asset classes were integrated in a synergistic manner and managed well, Sunway REIT might actually offer a favourable return to investors over the longer term. “This is left to be seen,” he said.

   fr:biz.thestar.com.my/news/story.asp?file=/2010/6/16/business/6479129&sec=business

2. alan on June 19th, 2010 at 11:43 am

   Inflation – should we start worrying?

   LAST week, a report from World Bank warned of the re-emergence of inflationary pressures in Asian economies that could complicate the region’s prevailing policy stances to support growth.

   Consumer prices have been on the rise in the region’s economies since the beginning of the year, as economic activity starts picking up across the region. For instance, in the two largest Asian economies – China and India – inflation have already accelerated over the last two months.

   In China, consumer price index in May rose 3.1% from a year earlier, compared with April’s 2.8% rate, while property prices rose 12.4% from a year earlier.

   This has prompted World Bank to urge China to raise interest rates to curb the country’s rising inflationary pressure and soaring property prices.

   In India, on the other hand, inflation hit a two-year high last month, with wholesale price index rising 10.16% from a year earlier, compared with the 9.59% rate in April, as higher food and fuel prices continued to drive overall costs up.

   Local key government officers over the week said India’s inflation rate had reached “very uncomfortable” levels and that the central bank had to step in to curb the pressure.

   Singapore’s consumer prices jumped 3.2% in April, and are expected to rise around 2.7% in May, while Indonesia’s inflation rate has already exceeded the 4% mark since last month.

   In Malaysia, the numbers have yet to show any worrying sign, as the country’s inflation rate seems to be well on target.

   Figures from the Department of Statistics show that consumer price index (CPI) for May rose at a tame rate of 1.6% from a year ago, almost matching the April’s rise of 1.5%.

   Food prices remained the major contributor to the country’s inflationary pressure, rising 2.5% compared with 2.2% in the preceding month.

   Most economists expect consumer prices in Malaysia to move higher in the second half of the year, albeit moderately, as the low-base effects fade and as domestic demand continues to strengthen on improved economic prospects.

   No doubt, with subsidy rationalisation plan on the cards, inflationary pressures could accelerate further in the future. But with the Government reiterating its position of not rushing in to implement changes to the subsidy scheme, economists say the inflationary pressures in the country could still be kept at a restrained level for the rest of this year.

   That is not to deny the fact that consumers will still be challenged by the rising cost of living in the country.

   Malaysia’s CPI is based on a basket of goods and services, ranging from food and beverage, utilities and fuel, clothing and footwear to transport and communications. This means the actual prices paid by consumers for certain type of goods or services are actually much higher than that indicated by the CPI.

   As it is, inflation expectations in the country are already building up. Such expectations tend to result in employees demanding for higher wages and businesses to potentially raise prices further to protect their margins.

   In an annual survey conducted by international recruitment and human resource services agency Randstad, it was found that around 47% of Malaysian employees are expecting a pay rise of 5% to 10% this year.

   On the other hand, the average salary increases this year, based on a survey by the human-resource specialist Kelly Services, is expected to range from only 4% to 5%.

   “Many businesses are already struggling to cope with the rising cost of production that’s eating into their profit margins,” an economist with a local investment bank explains.

   For instance, figures from the Department of Statistics showed that producer price index had remained on the up trend for the sixth straight month in May, as higher prices of domestic inputs continued to exert pressure on production costs.

   “Eventually, businesses will have to pass on their higher costs to consumers – which would translate into higher prices of goods and services – to bolster their revenues and profit margins,” the economist explains.

   Nevertheless, for the immediate term, the latest CPI numbers do suggest that there is less pressure for Bank Negara to raise interest rates in the next Monetary Policy Committee meeting in July.

   The central bank had repeatedly indicated the importance of maintaining an accommodative interest rate regime to support the country’s economic growth.

   Bank Negara has so far raised the country’s benchmark overnight policy rate (OPR) twice as part of the normalisation process this year. In fact, it became the first in the region to do so in March when it raised the OPR by 25 basis points from the record low of 2%.

   Last month, Bank Negara revised the OPR again by another 25 basis points to the present level of 2.5%.

   Some economists are betting on the central bank to pause its rate normalisation process for a while as a result of the mounting uncertainties arising from the 16-nation euro zone that are currently weighing on market sentiment and dampening global economic outlook.

   Leading indicators seem to suggest that Malaysia’s gross domestic product growth have peaked in the first quarter of the year, after a double-digit expansion of 10.1% year-on-year.

   The subsequent quarters are expected to record slower growth rates due to the waning effects of the low-base factor and economic stimulus measures as well as slower exports growth.

   fr:biz.thestar.com.my/news/story.asp?file=/2010/6/19/business/6502596&sec=business

3. alan on July 9th, 2010 at 8:50 am

   Bank Negara raises OP rate
   By FINTAN NG

   PETALING JAYA: Bank Negara raised the overnight policy rate (OPR) by 25 basis points to 2.75% yesterday as local economic indicators continued to show robust growth. It is the third time the rates have been increased this year.

   The floor and ceiling rates of the corridor for the OPR were correspondingly raised to 2.5% and 3% respectively, the central bank said.

   Kenanga Investment Bank Bhd economist Wan Suhaimie Saidi told StarBiz that Bank Negara likely raised rates due to the latest Industrial Production Index (IPI) numbers, which showed a rise of 12.5% in May from a year earlier, higher than market expectations of a 10.5% growth (See B3).

   “Even if the June IPI came in lower, the second quarter’s manufacturing output will already be higher than first quarter’s,” he said.

   Bank Negara, in its monetary policy statement released yesterday evening, noted that recent trends in industrial production, financing activity, labour market conditions and external trade indicated that economic activity had remained robust in the second quarter.

   “Going forward, while external developments may result in some moderation in the pace of growth, the domestic economy is expected to remain strong with continued improvements in private consumption and investment, and augmented by public investment spending,” it added.

   Suhaimie said Bank Negara probably wanted to get all the rate hikes “done and over with” before a long pause as the global economy slowed in the second half of the year before picking up again in 2011.

   Singapore-based Standard Chartered Bank economist Alvin Liew was quoted by Bloomberg as saying the rate decision was appropriate, given the good things happening in Malaysia’s economy.

   “Given that we see the economy slowing down in the second half because of the external environment, we expect the central bank to keep rates unchanged for the rest of the year,” he said.

   Bank Negara said that April and May saw modest increases in inflation, mostly on account of supply factors, and it was expected to remain moderate going into 2011.

   “Prices are expected to rise at a gradual pace in the coming months in line with the continued improvement in domestic economic conditions, and taking into account possible adjustments in administered prices,” it said.

   fr:biz.thestar.com.my/news/story.asp?file=/2010/7/9/business/6632996&sec=business

4. alan on September 25th, 2010 at 9:39 am

   Construction, property sectors will benefit
   By RISEN JAYASEELAN

   DESPITE the fact that the proposed Economic Transformation Programme (ETP) is not a pronouncement of the Government dishing out contracts it would pay for, analysts have highlighted the construction and property sectors as key beneficiaries.

   Recall that the ETP requires the private sector to come up with most of the funding for the projects. However, it is still unclear if the Government will provide any kind of guarantee to the companies that are awarded the contracts.

   In any event, the stocks that have benefited the most from the ETP seems to be Gamuda Bhd and MMC Corp Bhd, the two companies that had earlier submitted an ambitious plan to build a Mass Rapid Transit (MRT) project in the capital city.

   That’s because, as HwangDBS Vickers report puts it, the MRT “has received a high level of commitment, increasing the project’s approval.” The research house adds that the RM36bil MRT project can double the order book of Gamuda and triple that of MMC’s. It also says the construction sector as a whole will benefit from the MRT project, given its sheer size.

   Meanwhile, CIMB Research points out: “The MRT project is massive and represents the single largest contract in Malaysian history, beating the previous largest project, the RM12.5bil northern double-tracking, which is also being built by Gamuda-MMC.”

   CIMB notes that Gamuda has the expertise in tunnelling and that the tunnelling portion of the MRT project is worth RM13bil to RM14bil.

   The research house also says that should the MRT project take off, “there will be plenty of work to go around and other major players such as Malaysian Resources Corp Bhd (MRCB), IJM Land Bhd and WCT Bhd should also be able to ride on it.”

   OSK Research points out that of the 12 national key economic activities, the one on Greater KL had attracted the most interest as it had a scale model of KL and all the new proposed property developments, as well as more tangible projects such as the KL MRT and the river of life project, “with high-level financial figures available.” OSK adds that these projects are the most likely to kick off first.

   The property sector has also been highlighted as another big winner.

   This is on the basis that if the MRT project is carried out, it may lift the value of properties in central KL by improving underground connectivity and enhancing the shopping experience, analysts say.

   Furthermore, the Greater KL plans for 10 million people living in the city by 2020 from 6 million currently. Of the additional residents, it is estimated that around 500,000 are expected to be expatriates or Malaysians returning from abroad.

   “All in, it is estimated that a million homes will have to be constructed to meet the requirements of an enlarged population base,” notes CIMB.

   HwangDBS Vickers points out that the Greater KL initiative should benefit owners of large land bank in KL that include Bolton Bhd, SP Setia Bhd and DNP Holdings Bhd.

   The plan also includes the redevelopment of the RMAF base at Sungai Besi, Dataran Perdana, the Matrade development at Hartamas, the old Pudu Jail site and the redevelopment of Kampung Baru.

   CIMB also singles out the High-Speed Rail project from KL to Singapore and Penang, which has been identified in the ETP as one of the projects that has partial or near commitment from a named investor.

   The research house also highlights that the ETP mentioned Johor Baru as being listed as a geographic location that is a driver of economic activity.

   “If the High-Speed Rail project materialises, it could boost property prices in Kuala Lumpur significantly, as values are far behind Singapore’s and travelling time between the two cities could be reduced to 2.4 hours. The rail project will also benefit property prices in Iskandar Malaysia as the proposed train will stop in Johor Baru before proceeding to Singapore.

   “What is surprising from the map of the proposed project is that phase two extends to Penang island, which is good news for the Penang property market too,” CIMB says in a report.

   It adds that while many developers have land in Johor, the biggest beneficiary will be UEM Land, due to its vast and strategic landbank in Iskandar.

   “Arguably, UEM Land’s 10,000-acre land bank in Nusajaya is at the heart of Iskandar and the proposed MRT from Singapore will also pass through its project.”

   CIMB says other developers with a sizeable land bank in Johor include SP Setia, Mah Sing Bhd, UM Land Bhd, KSL Holdings Bhd, Bandar Raya Developments Bhd, Mulpha International Bhd, IJM Land, Tebrau Teguh Bhd, Plenitude Bhd and Daiman Development Bhd.

   As for developers with exposure to high-end project in KL that may garner interest from Singaporean buyers, they include Eastern & Oriental Bhd, Sunrise Bhd, UM Land, Bandar Raya, Mah Sing and Glomac Bhd, CIMB says.

   Genting Bhd and Genting Malaysia Bhd can also gain if Singaporeans choose to take the high-speed train ride here to a casino that they needn’t pay fees to enter, unlike the two integrated resorts in Singapore, analysts say.

   Building materials companies such as Ann Joo Resources Bhd and Malaysia Steel Works Bhd, and Southern Steel Bhd as well as the big cement players such as YTL Cement Bhd, Tasek Corp Bhd and Lafarge Malayan Cement Bhd may also gain.

   A head of research at a broking house adds that other beneficiaries may include education stocks for private schools such as Help International Corp Bhd, PIE Industrial Bhd for the focus on the electronics and electrical sector, MyEG Services Bhd for the broadband and electronic government push and ETI Tech Corp Bhd for the focus on renewable energy.

   fr:biz.thestar.com.my/news/story.asp?file=/2010/9/25/business/7099717&sec=business