Management buyout of Proton possible

By Sharen Kaur
sharen@nstp.com.my
Published in NST on November 17, 2011
Proton Holdings Bhd managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir has suggested that he and other senior company executives will be keen to buy over the national carmaker if offered.

“If we are offered (to bid for Proton), it is worth considering,” Syed Zainal told Business Times via a telephone interview.

Speculation is rife that Syed Zainal and Proton chairman Datuk Mohd Nadzmi Mohd Salleh have jointly bid for the company.

Syed Zainal, however, dismissed it as “mere speculation” and said that no management buyout (MBO) plan had been submitted to the government.

Such rumours sent Proton shares higher yesterday, becoming the second top gainer on Bursa Malaysia.
The stock close 32 sen higher at RM3.53 with 77.1 million shares traded.

Analysts said the steep rise in the share price may be due to talk that Khazanah Nasional
Bhd, which is currently Proton’s single largest shareholder, has found a buyer for it.

“There is talk that the buyer could be Nissan or DRB-HICOM Bhd. The current board of Proton may plan an MBO as they see value in the company, which is currently trading at 0.5 times the book value,” an analyst at Maybank Investment Bank told Business Times.

Proton, which has a market capitalisation of about RM600 million, has about RM1 mybillion cash.

Both its plants in Shah Alam, Selangor, and Tanjung Malim, Perak, are currently under utilised, offering great potential for growth.

Last year, Proton’s domestic sales volume grew 3 per cent to 162,012 units, supported by its popular models like Saga, Persona, Exora and Inspira.

“The board is expecting that its wholly-owned unit Lotus Group International Ltd will turn around in 2013. It will be a shame to let go now,” the analyst said.

An analyst from TA Research believes the rise in the company’s stock could be because Proton and Japan’s Mitsubishi Motors Corp are close to inking a formal agreement to come up with new models.

Proton’s first-quarter net profit ended June 30 2011 was lower, dragged by expenses associated with the ongoing turnaround programme at Lotus Group.

The company saw its earnings in the quarter fall 93 per cent to RM4.5 million from RM84.6 million a year ago.

High-speed rail project on track

By Sharen Kaur and Zuraimi Abdullah
Published in NST on November 9 2011


Kuala Lumpur: The high-speed rail system linking Kuala Lumpur and Singapore could take shape by next year, with three groups leading the early race to win the multi-billion ringgit job, people familiar with the plan said.

The Land Public Transport Commission (SPAD) is expected to start a feasibility study on the project early next year.

The commission had already completed a pre-feasibility study, SPAD chief development officer Azmi Abdul Aziz told Business Times.

SPAD will undertake a feasibility study next, which should take six to 12 months to complete, Azmi added.

If feasible, the project is estimated to cost as much as RM12 billion, with the interested parties offering either European or Chinese technologies.

It is believed that up-and-coming rail tycoon Tan Sri Ravindran Menon has teamed up with UEM Group to vie for the project.

Ravindran controls Skypark Terminal, which recently received an offer from the government to undertake a RM1.5 billion rail project.

The project is to connect the Keretapi Tanah Melayu Bhd (KTMB) station in Subang Jaya, Selangor, to the Skypark Terminal at the Sultan Abdul Aziz Shah Airport.

Business Times understands that the Ravindran-UEM venture made a presentation to the government early this year, specifically on the more than 300km high speed rail line.

Sources said they planned to lay railway lines parallel to the North-South Expressway from Kuala Lumpur, Seremban and Malacca to Johor Baru, before connecting to Singapore.

Others said to be in the running for the job are China Infraglobe Consortium-Global Rail Sdn Bhd and YTL Corp Bhd.

China Infraglobe-Global Rail consortium last made a submission for the job in 2009.

To date, it has yet to make a revised proposal to the government, a company official said.

YTL group managing director Tan Sri Francis Yeoh Sock Ping, who is in New York, declined to comment when asked if the company had made a fresh submission.

YTL, operator of the KLIA Express, first mooted the idea to build a high-speed rail in the late 1990s and again in 2006. 

The project was put on hold in April 2008 due to high cost, which was estimated at RM8 billion. 

In the middle of 2009, YTL expressed hope that the government would relook at the proposal.

It said it would build the rail line on the coastline of Peninsular Malaysia, rather than that mooted in an earlier proposal of building on the existing track.

Last year, the government said it would revive the project.

It was highligted as a high impact project in the government's Economic Transformation Programme roadmap in a bid to increase economic activities.

Yesterday, the government reiterated that it may go ahead with the project.

Transport Minister Datuk Seri Kong Cho Ha said it would wait for feedback from its Singaporean counterparts as the track would go into its land.

Germany's Siemens had previously offered its solutions to the project.

It proposed the use of its Velaro trains, which have a top speed of 350kph.

Five in race for MRT job

By Sharen Kaur

sharen@nstp.com.my

Published in NST on November 7 2011

Kuala Lumpur: Two groups comprising local and foreign firms are the favourites to win a contract worth between RM9 billion and RM12 billion for underground tunneling works for the Klang Valley Mass Rapid Transit (KVMRT) Sungai Buloh-Kajang line, industry sources said.

The two are Gamuda Bhd-MMC Corp Bhd and Gadang Holdings Bhd-Hyundai.

Business Times understands that five groups were shortlisted to bid for the contract.

The other contenders for the job are China's Sinohydro Group, China Railway Corp and Japan's Taisei Corp.

A source said competitive pricing could pose a challenge to the parties interested to make a bid. 

"Heavy machinery and equipment, as well as skilled workers, are required for the job as it will involve 9km of underground tunnelling works in the city centre and this will raise their pricing.

"The government may award the contract to either Gamuda-MMC or Gadang-Hyundai as it wants more local involvement in the project. Both groups have the expertise in handling railway matters." 

It is understood that MRT Corp, owner of the multi-billion ringgit railway project, had last week called for a tender for the tunnelling contract. 

Bids were expected to close by the end of January and the contract might be awarded by mid-2012, the source said. 

MRT Corp was formed to take over the MRT project from Syarikat Prasarana Negara Bhd, effective Sept 1.

The MRT project, which is worth RM50 billion, represents one of the economic entry point projects identified for the Greater Kuala Lumpur/Klang Valley National Key Economic Area under the Economic Transformation Programme. Some awards have already materialised for the elevated works.

The government approved the MRT project in December last year and appointed Gamuda-MMC as the project delivery partner (PDP). 

As the PDP, apart from tunnelling works, Gamuda-MMC will not be allowed to bid for the other eight parcels of the project.

There has been speculation that Gamuda-MMC may get the contract due to its role as the PDP.

In a recent news report, MRT Corp chief executive officer Datuk Azhar Abdul Hamid said Gamuda-MMC would have to bid for the tunnelling package via a Swiss Challenge.

The Swiss Challenge form of public procurement is when a public authority receives an unsolicited bid for a public project to be provided to the government and the bid is then published and third parties are invited to match or exceed it.

TH Prop expects wave of interest in Bandar Enstek

By Sharen Kaur
sharen@nstp.com.my
Published in NST on November 4 2011

SEPANG: TH Properties Sdn Bhd, the property arm of Lembaga Tabung Haji, a pilgrims' fund management institution, expects a new wave of investments next year from local and foreign parties at its Bandar Enstek development in Sepang, Selangor.

TH Properties chairman Datuk Azizan Abd Rahman said although the market now is a bit uncertain as far as the global economy is concerned, he is optimistic the company will be able to attract investments of up to RM60 million.

"We are in negotiations with a few multi-national companies (MNCs). We are also not keeping our doors close on Google Inc, which once said it was looking to invest here.

"Should they (Google) decide to make an investment in Malaysia, we hope to attract them back here," Azizan said yesterday at the launch of Rembulan, a new series of houses within "timur@enstek" yesterday.

Since its inception, Bandar Enstek has attracted investments of more than RM2 billion from government bodies and the corporate sector.

Bandar Enstek is a 2,046-hectare integrated township located nearby the Sepang F1 Circuit and the Kuala Lumpur International Airport.

It comprises four main components namely residential, a commercial hub, institutional zones and techpark@enstek. timur@enstek is the third residential phase for the development.

On Rembulan, TH Properties is introducing 124 semi-detached homes each priced between RM622,400 and RM1.07 million, or collectively at RM95 million.

Azizan is confident that the houses will attract buyers from within the neighbourhood and Kuala Lumpur.

""As far as the property market is concerned, I would expect a bit of a slowdown next year. But since we are targeting the middle income group, I don't think our development will be affected.

"Any major setback in the economy, the speculative kind of investment would suffer. Here, we don't have speculators. They buy and stay for their own use," he added.

Azizan said TH Properties aims to start developing an 18-hole golf course on 64ha surrounded by resort homes at Bandar Enstek by mid-2012.

It is also looking to partner a company in India to jointly undertake a luxury development in the area.

"While we are deciding to move to the luxury market, our base will always be the middle income segment. We just need some form of recreation for the MNCs and other investors at the development," Azizan said.

RM1.5b railway link to Subang airport

By Sharen Kaur
sharen@nstp.com.my
Published in NST on November 3 2011

Kuala Lumpur: Tan Sri Ravindran Menon's Subang Skypark Sdn Bhd is believed to have received an offer from the government to undertake a RM1.5 billion project to build a railway line, people familiar with the matter said yesterday. The railway line is to help connect the Keretapi Tanah Melayu Bhd (KTMB) station in Subang Jaya, Selangor, to the Skypark Terminal at the Sultan Abdul Aziz Shah Airport.

Business Times understands that Subang Skypark will also link the line to the Sungai Buloh-Kajang Mass Rapid Transit (MRT) system, where it will integrate with the MRT and KTMB stations in Sungai Buloh.

Subang Skypark is the developer for SkyPark Terminal, formerly known as Terminal 3.

The company has been lobbying the government to build the railway line for more than five years, sources said.

It is understood that the railway project was recently approved under the Economic Transformation Programme to improve public transportation.

"This is a Private Financing Initiative where the project will be funded by Subang Skypark. The project involving 23km may cost between RM1 billion and RM1.5 billion," the source said.

Ravindran, who is Subang Skypark executive director, was not available for comment.

The source said the project will be undertaken in two phases over a period of two to three years.

Under the first phase of development, the firm will construct a new railway line using the existing alignment from the KTMB station right up to Sri Subang near the roundabout leading to the airport.

Petronas funded the existing alignment for KTMB to transport petrol from the station to the airport. The train service was halted a few years ago.

The source added that Subang Skypark will then extend the railway line by about 8km from Sri Subang to Skypark Terminal.

"The government wants train services between KL Sentral in Brickfields right up to Skypark Terminal to start in two years," the source said.

For phase two, the company will extend the railway line by about 15km from Skypark Terminal to Sungai Buloh.

Plan to inject assets into Harvest Court

By Sharen Kaur
sharen@nstp.com.my
Published in NST on November 1 2011


Kuala Lumpur: Datuk Raymond Chan Boon Siew, the controlling stakeholder of Sagajuta (Sabah) Sdn Bhd, plans to inject several assets into Harvest Court Industries Bhd in a bid to turn around the company.

Since emerging as a substantial shareholder in Harvest Court with a 13.85 per cent stake in the company, there has been some related-party transactions (RPTs) between Sagajuta and Harvest Court.

A filing to Bursa Malaysia shows that Harvest Lumber Sdn Bhd, a wholly-owned unit of Harvest Court Industries Bhd, won a contract worth RM7.03 million from Sagajuta to supply door leaves for its 1 Sulaman and 1 Likas projects in Kota Kinabalu, Sabah.

To recap, Chan's Sagajuta rose to prominence after it was linked to a reverse takeover of Jerneh Asia Bhd, which is 37 per cent owned by Robert Kuok. The talks in the end fell through due to a disagreement over defini-tive terms.

There has been speculation that since then, Chan has been looking for another listed vehicle to inject his assets.

Cash-rich Sagajuta currently has three ongoing projects worth a combined RM1.7 billion. They are 1 Sulaman and 1Likas, and 1Gateway in Klang.

The group' core asset is the RM1.2 billion 1Borneo complex, the first and largest lifestyle hypermall in Kota Kinabalu.

1Borneo consists of a 1.5 million sq ft hypermall, four hotels, four residential towers, shop offices and a recreational park. 

Sagajuta's other developments are Mutiara Heights and Mutiara Idaman in Penang, Ujana Kingfisher Park and Warisan Square in Kota Kinabalu.

Asked on his plans for Harvest Court, Chan was coy in his answer.

"We have not decided what to do with Harvest Court but the immediate plan is how to grow the company and make it profitable. It is still too preliminary to say anything now as we just came on board," Chan told Business Times via a telephone interview.

Sagajuta chairman Mohd Nazifuddin Mohd Najib and Chan were appointed to the board of Harvest Court effective October 28 2011.

Port Klang-based Harvest Court, which makes high value-added timber finished products, posted a net loss of RM2.7 million on revenues of RM6.4 million in fiscal 2010. 

For the first half of 2011, its net loss was RM678,000 on a turnover of RM6.1 million.

Harvest Court shares rose 0.5 sen yesterday to close at 40.5 sen on a volume of 16.5 million shares.

The stock's average volume for the past four weeks was 37.05 million with a price range of between 20.5 sen and 43 sen.

KIH investing nearly US$100m on expansion

By Sharen Kaur
sharen@nstp.com.my
Published in NST on October 31 2011

KUALA LUMPUR: Hong Kong-based Kosmopolito Hotels International Ltd (KHI) is investing close to US$100 million (RM307 million) to expand its hotel portfolio. The plan includes managing two new properties in Malaysia.

Elsewhere, the company is setting up two hotels each in China and Hong Kong under the Dorsett Regency label, which will open next year, said president Winnie Chiu Wing Kwan.

By 2013, KHI will open a hotel each in Singapore and London, under the same label, she said.

"The whole company is about growth. In the next five years, we aim to increase the rooms to 6,630 from 4,176 currently. We have enough loans to cover our expansion so there is no need to raise funds for now," Chiu told Business Times in an interview recently.

"The strategy for us is really China. We believe in the growth of tourism in China. If you look at statistics, Chinese people are still travelling. As they get more accustomed to our brand, we believe they will continue to stay with us. We plan to have a presence in more cities, albeit cautiously," she said.

Set up in January 2007 and listed on the Hong Kong Stock Exchange in October 2010, KHI is a fast-growing developer, owner and operator of 17 hotels in Hong Kong, Malaysia, Singapore and China. 

The company, wholly owned by Far East Consortium International Ltd, was founded by Malaysian tycoon Tan Sri David Chiu.

It operates hotels under four key brands in different market segments. They are the upscale Hotel Kosmopolito, boutique series by Kosmopolito, mid-scale business hotel Dorsett Regency and economy hotel Silka.

For the financial year ended March 31 2011, KHI posted net profit of HK$208 million (RM82 million), 354.9 per cent higher than the previous year, driven by strong growth in revenue (HK$876 million or RM346 million) and net gains from non-recurring items.

Its average room occupancy rate was 79 per cent. 

Chiu said plans in the pipeline include KHI buying industrial buildings and converting them into hotels, and taking advantage of cheap properties available under the current market conditions.

"I believe in good corporate governance and transparency and will continue to have quarterly updates on what we do and plan. This is to let our shareholders know where we are heading," she said.

"We are heavily bought by foreign funds from the US, Europe and Singapore. Our next growth area will be Australia and Taiwan," she added.

Kosmopolito to expand in Malaysia

By Sharen Kaur
Published in NST on October 31 2011

Kuala Lumpur: Hong Kong's Kosmopolito Hotels International Ltd (KHI) aims to expand its hotel portfolio in Malaysia, either by building properties from scratch or taking over abandoned buildings.

President Winnie Chiu Wing Kwan said the company may also buy hotels that are not performing well, and turn around the properties by strategising on its key brands.

"We like distress properties and are interested in three- and four-star hotels. We believe in turning around. Our group also has the experience to convert industrial and office buildings into hotels, so there are a lot out there for us.

"We are optimistic of Malaysia and growth in the three- and four-star hotel category. Budget airlines like AirAsia and FireFly have revolutionised this place and contri-buted to industry growth," Chiu told Business Times in an interview recently.

Currently, KHI has five hotels in Malaysia - Dorsett Regency Hotel Kuala Lumpur, Grand Dorsett Subang, Grand Dorsett Labuan, Dorsett Johor and Maytower Hotel and Serviced Residences - all opera-ting in the three- and four-star ca-tegories.

Chiu said the company is looking to set up more hotels in the Klang Valley and Sabah.

KHI is also interested in management contracts to boost income, she said.

By the third quarter of next year and in 2013, the company expects to manage two new hotels under Malaysia Land Properties Sdn Bhd (Mayland) in Cheras and at Plaza Damas 3 in Sri Hartamas, Kuala Lumpur.

In Cheras, Mayland had acquired Phoenix Plaza, now called Cheras Central Shopping Mall, in 2009 for some RM80 million.

Mayland is re-modelling the complex for more than RM120 million and the new set-up will include a shopping mall and a four-star hotel, which will operate under the Dorsett Regency brand.

At Plaza Damas 3, MayLand is also building a four-star hotel, which will carry the same brand name.