YTL looking at sizeable M&As, fresh assets

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 30, 2012

ACQUISITION TARGET: Group seeing some realistic opportunities coming into market and will consider those with 7-10pc yields

CONGLOMERATE YTL Corp Bhd, which has net cash of RM14 billion, is looking at sizeable mergers and acquisitions (M&As), as well as acquiring new assets to grow its businesses.

YTL group managing director Tan Sri Francis Yeoh sees some opportunities in the market today, amid the eurozone crisis.

"Those days, we were chasing for deals, but now, others are looking for us," he said.

"We are seeing some realistic assets coming into the market, especially in Australia. In China, a lot of mall operators are approaching us. There are other companies wanting to sell their assets, but it is not necessary that we will buy," he added.

He said YTL will consider assets that offer seven to 10 per cent yields.

Yeoh has said previously that if there was nothing attractive to buy, YTL might buy back its subsidiaries.

Speculation has been rife that YTL may consider buying its subsidiary, YTL Cement Bhd, if there are not many attractive M&A opportunities in the market.

At Invest Malaysia yesterday, Yeoh ruled out selling any assets under the group.

"We will never sell our assets, especially when they are all good assets like Wessex Water. Wessex is a top company in the world," he said.

Yeoh also said that YTL is planning a new 1.5-tonne cement factory in Pahang. The company is keen to be a big player in the country's infrastructure development.

"There are a lot of good infrastructure projects coming up under the Economic Transformation Programme. The foundation laid by the government is good and I am confident, as an investor," Yeoh said.

When asked about the status of the high-speed rail linking Kuala Lumpur and Singapore, Yeoh declined to comment.

Meanwhile, he said YTL will continue to expand its business overseas.

Overseas operations, mainly in Australia, the UK and Singapore, currently contribute around 85 per cent to the group's revenue and net profit.

"They are all regulated assets. We have a concession in Australia that runs for 200 years. Whether good or bad times, our overseas and local assets continue to be profitable," Yeoh said.

YTL's earnings rose 16.9 per cent to RM364.82 million in the third quarter ended March 31 2012 from RM312.05 million a year ago, led by its multi-utility business. Revenue rose 23.5 per cent to RM5.24 billion from RM4.24 billion. 

YTL shares closed five sen higher yesterday to RM1.82.

BRDB: Asset disposal plan still on

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 26, 2012

KUALA LUMPUR: Bandar Raya Development Bhd's (BRDB) planned disposal via tender of its 100 per cent stake in BR Property Holdings Sdn Bhd (BRPH) and selected investment properties for more than RM900 million is still ongoing, a top official said.

BRDB head of retail operations John Sironic said the group is currently working with its financial adviser CIMB Investment Bank Bhd for the asset sale.

"We are working with CIMB to assist the group to implement the proposed disposal in an efficient manner and will be making an announcement on the matter in due course,"he said.

Sironic was speaking to Business Times at the official opening of Pikom ICT Mall Capsquare here yesterday.


In September last year, BRDB received an offer from Ambang Sehati Sdn Bhd to buy Bangsar Shopping Centre (BSC), Menara BRDB and CapSquare Retail Centre in Kuala Lumpur, as well as Permas Jusco Mall in Johor for RM914 million.

BSC and Menara BRDB are parked under BRDB's wholly-owned unit BRPH. Ambang Sehati is 26 per cent controlled by BRDB chairman Datuk Mohamed Moiz Jabir Mohamed Ali Moiz. He also has an 18.8 per cent stake in BRDB.

BRDB accepted the offer after taking into account the advice and opinion of its main adviser CIMB and independent adviser Public Investment Bank Bhd.

But a month later, BRDB and Ambang Sehati mutually terminated talks for a tender to take place.

It is understood that BRDB will call for a tender by the end of this year or early next year.

Business Times reported last year that BRDB had received three offers from institutional investors for the key assets.

On the group's integrated real estate tourism project in Muscat, Oman, Sironic said development plans are being submitted and the group aims to launch the project's master plan in 2013.

The Pikom ICT mall, launched by Public Accounts Committee chairman Datuk Seri Azmi Khalid, is a new digital lifestyle mall with 102 kiosks, featuring a complete range of information and communication technology products and electronic gadgets.

Scomi: 4-car trains on track

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 25, 2012
SCOMI Rail Bhd will deliver the first batch of four-car trains for KL Monorail to Syarikat Prasarana Negara Bhd by year-end.

Its unit, Scomi Transit Projects Sdn Bhd, won a RM494 million contract from Prasarana in November last year to supply 12 sets of four-car Generation 2-type trains for its KL Monorail fleet expansion.

The contract is also to upgrade the existing monorail stations as well as the electrical and mechanical system, and build a new depot.

"Work is on schedule. The trains come with new designs, complete with aluminium body and are lighter. They are being assembled at our plant in Rawang," Scomi Brazil country president Hilmy Zaini Zainal said in an interview with Business Times recently.


Scomi's engineering, technology and innovation plant in Rawang is capable of producing 500 monorail cars a year.

Apart from bigger capacity, the trains are environment-friendly and can reduce carbon dioxide emissions by 200 tonnes a day because of their energy efficiency.

Scomi is currently one of two companies in the world providing integrated monorail solutions.

Its major breakthrough in the global monorail space came when it won a RM1.84 billion bid in 2008 for a monorail project in Mumbai, India, with its partner, Larsen & Toubro.

Scomi's share in the Indian venture is worth RM823 million, with projected margins between 10 per cent and 20 per cent.

The Mumbai project has been Scomi's launchpad to compete on an international scale to grab more jobs.

In the last one year, Scomi has won two monorail jobs in Brazil worth a combined RM5.6 billion.

Meanwhile, in a statement issued on Tuesday, Prasarana said the fleet expansion project is proceeding smoothly.

Group director for rail division Khairani Mohamed said two train sets will be in service by end-November and the rest, in the second half of next year.

The expansion project is part of the Government Transformation Programme plan to improve public transportation.

The KL Monorail now uses 12 two-car train sets to service commuters from the KL Sentral in Brickfields to the "Golden Triangle".

The new trains will replace the existing sets, which are running at 35 per cent over-capacity during peak hours. They will increase passengers per car by 50 per cent from 100 to 150 and current ridership of some 65,000 persons by twofold.

Prasarana managing director Datuk Shahril Mokhtar has said the older trains will be kept as spares once the new sets are delivered.

The trains were manufactured locally in 1996.

The KL Monorail services have been in operations since August 31, 2003. The project was completed at a cost of RM1.18 billion.

Ipoh-Padang Besar rail project hits snag?

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 21, 2012

The Ipoh-Padang Besar Electrified Double Track project (EDTP) has hit a snag over price due to cost overrun and the main contractor may ask RM1.5 billion in variation order (VO) claims from the government, people familiar with the matter said.

It is understood that MMC-Gamuda Joint Venture Sdn Bhd, the main contractor for the project, has also asked the government to extend the time to complete the job to 2015 or 2016.

Sources said the government has yet to approve the extension request.

MMC-Gamuda was awarded the northern sector EDTP contract in December 2007 for RM12.49 billion. The job was initially slated for completion in January 2013, but due to impending land acquisition issues, the government has given an extension for the project completion until end-2014.

The contract comprises the design and construction of the infrastructure and systems works for the entire 329km alignment of the EDTP. MMC-Gamuda had awarded the systems contract to Balfour Beatty Rail Ansaldo Systems JV Sdn Bhd.

A source said the total project cost is expected to escalate to about RM14 billion because of the two-year delay.

It is believed that MMC-Gamuda will submit the VO claims to the government later. The source said there is already cost overrun for the project, which is halfway completed.

“The civil works are 70 per cent completed, and the systems side, only 30 per cent. There are still land issues and other unresolved matters on MMC-Gamuda JV’s part.

“For Balfour Beatty-Ansaldo, they are still awaiting approval for the systems part. No signaling and electrification systems have been installed, except for concrete poles in isolated areas,” said a source.

People familiar with the dealings in Balfour Beatty-Ansaldo confirmed that the joint venture has not received approval for the systems part.

“We think this is going to be another case like the Rawang-Ipoh EDTP, which took more than seven years to complete. The project cost had escalated from RM4.2 billion to RM6.3 billion,” the source said.

When contacted, Gamuda Bhd executive director Datuk Ng Lee Leen declined to comment as he was overseas.

MMC-Gamuda project director Datuk Mohd Nor Idrus also did not return calls made by Business Times.

Transport Minister Datuk Seri Kong Cho Ha, when asked about the extension for the project completion, stuck to the 2014 deadline.

He said the northern sector EDTP project would be completed in two phases, to Butterworth and Padang Besar.

"The first phase is expected to be completed by the end of next year, and the second phase in 2014," Kong told Business Times.

Among factors for variation order claims include incorrect estimation of the project's work; the obstacles that the customer or project team discovers that require deviation from the original plan; or additional money, time, or resources to be added to the project.

The northern sector EDTP is important for loss-making Keretapi Tanah Melayu Bhd (KTMB), the national railway company. Freight is currently KTMB's biggest money earner, with the northern section contributing over 70 per cent to its revenue.

When completed, the northern sector of the EDTP will cut travel time from Penang to Kuala Lumpur by threefold from nine hours currently.

Kim Yew plans water ventures

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 17, 2012

Tan Sri Lee Kim Yew, founder of the Country Heights group of companies, is embarking on new ventures, including building mini-hydro sets to supply power to rural areas.

Lee is also looking at the possibility of transporting untreated water from Malaysia to developing countries like South Africa.

To spearhead the development of the hydro sets, Lee’s private investment arm, Solar LED Sdn Bhd, will spend RM5 million to set up a factory in Pajam in Nilai, Negri Sembilan.

As a pilot project, the company plans to produce 100 mini-hydro sets, each capable of producing nine kilowatt (kw) of power.

“Each hydro set will be able to supply power to three houses. Hopefully we will get the licence to supply power to rural areas,” Lee told Business Times yesterday.

Lee said Solar LED had signed a memorandum of understanding with Feng Jia University of Taiwan to study the viability of the hydro project.

Solar LED is also in discussions with the university to conduct a study on how to channel water from Malaysia to developing nations.

“The idea is to harvest rainwater and transport them overseas at a reasonable cost. We are still brainstorming. We are thinking of using tugboats to transport the water.

“I am not looking at making billions of ringgit from these ventures. It is more on humanity grounds and for the future generations.

I have 10 to 20 ideas, some of which will be implemented through private investments,” he said.

An established businessman and an innovative entrepreneur, Lee has more than 30 years of experience in residential,
industrial park, hotel and leisure, commercial and recreation projects.

Lee is the founder of Country Heights Holdings Bhd and the 625ha The Mines Resort City. He also sits on the board of Golden Horse Palace Bhd, Mines Excellence Golf Resort Bhd, Plentiful Gold-Class Bhd, Bluwater Developments Bhd and a few other private firms.

CSR Zhuzhou faces 5 rivals for RM1.8b MRT job

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 15, 2012

CHINA’S CSR Zhuzhou Electric Locomotive Co Ltd will have to face competition from five contenders to win a RM1.85 billion job to supply electric trains for the Klang Valley – MY Rapid Transit (MRT) project. CSR Zhuzhou is currently the sole party to have submitted a bid to supply 58 four-car electric train sets for the MRT.

MRT Co had shortlisted six groups for the job. They include Kawasaki Heavy Industries Ltd, a consortium comprising Bombardier (Malaysia) Sdn Bhd, Bombardier Sifang (Qingdao) Transportation Ltd and Scomi Rail Bhd; Changchun Railways Vehicles Co Ltd, Germany’s Siemens AG and South Korea’s Hyundai Rotem Co/CMC Engineering.

Tender offer closes this week but MRT Co is expected to extend it to June 14.

“The potential bidders have asked for extension.
This is not just for the rolling stocks, but for the systems work like signalling and power supply, and depot workshop equipment.

“We expect the remaining five groups to submit their bids over the next three weeks. It is very unlikely for companies like Scomi, Siemens, Kawasaki and Hyundai not to bid for the rolling stocks,” said sources close to MRT Co.

A source said the criteria for selection will be transparent and no group will be favoured.

Scomi Rail, a leading provider of urban transit systems, is known for its success in launching Malaysia’s first monorail system – the KL Monorail in 2003.

“The company is fine-tuning the details of its bid and expects to make a submission soon,” said people close to the company.

Scomi Rail has an engineering, technology and innovation centre in Rawang, Selangor, which is MRT-ready.

CSR Zhuzhou, meanwhile, is building an assembly plant in Batu Gajah, Perak, for RM400 million.

The plant will supply 20 sets of six-car trains for a RM530 million job it won recently for the Ampang Line extension in Kuala Lumpur.

CSR Zhuzhou also has a RM1.89 billion contract from the Transport Ministry to supply 38 sets of six-car trains for national railway company Keretapi Tanah Melayu Bhd.

Meanwhile, Siemens Malaysia Sdn Bhd president and chief executive officer M.Prakash Chandran has said it will set up a local assembly plant for rolling stocks if it were chosen as the system provider for the MRT project.

MMC races closer to KTMB takeover

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 10, 2012

KUALA LUMPUR: MMC Corp Bhd is raising funds for its planned takeover of Keretapi Tanah Melayu Bhd (KTMB) through the listing of its subsidiaries, analysts said.

Business Times reported last December that MMC, a construction, power and port group, was planning to pump up to RM1 billion to take control of the national railway operations.

MMC has began due diligence on the proposed KTMB privatisation and expects to complete it between July and August.

KTMB is currently incurring losses averaging RM200 million a year.

MMC is targeting to list Gas Malaysia Bhd on the Main Market of Bursa Malaysia in the current quarter and raise RM750 million.

It also plans to relist Malakoff Corp Bhd in the first half of next year.

M&A Securities Sdn Bhd said Gas Malaysia's listing was likely to raise funds for MMC's proposed acquisition of KTMB.

"This is similar to the purpose of relisting Malakoff," it said in its latest research note.

MMC group managing director Datuk Hasni Harun had said the proposed initial public offering for Malakoff, MMC's flagship power utility company, was going to be "very big".

On the rationale of listing its subsidiaries, Hasni said MMC was focused on strengthening its business capabilities.

M&A Securities has recommended a "buy" call on MMC, with a new fair value of RM3.47.

This is based on expectations that the MMC-Gamuda Klang Valley Mass Rapid Transit (KVMRT) joint venture will win more MY Rapid Transit (MRT) tunnelling jobs from MRT 2 and MRT 3, which are expected to be tendered out in 2013 for around RM12 billion.

MMC-Gamuda KVMRT last month won the RM8.28 billion tunnelling job for MRT 1 and expects to start work by January next year.

MMC was up one sen yesterday to close at RM2.74.

Prasarana awaits govt signal

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 4, 2012

Syarikat Prasarana Negara Bhd hopes the government will award soon the systems contract for the Ampang light rail transit (LRT) line extension project to avoid further delay in completing the job.

The Ampang line extension project has been delayed by about two months because of the delay in awarding the systems contract, said Prasarana group managing director Datuk Shahril Mokhtar.

“We have our own master implementation programme for the LRT line extension project and hope the award of the systems contract for the Ampang line can be decided soon so as not to delay the project further,” Shahril told Business Times yesterday.

“The award of the systems contract for the Ampang line is in the hands of the government. It is not within our authority. We have done all the evaluation according to the processes and procedures and presented them to the government for their consideration and approval,” he said.

Business Times reported on Wednesday, quoting Prasarana key officials, that the group involving South Korean steelmaker Posco is the best candidate for the award of the systems contract.

Commenting on the report, Shahril stressed that there is no truth to the inference that Prasarana favours any party and that the company was in no position to make any media statements with regard to awards until an official announcement is made by the government.

“All the bidders are well-known and technically competent,” Shahril said.

Tenders for the systems contract for the Ampang line extension closed on June 16 2011. Eight groups had made the bids.

Apart from the Posco-Sojitz-Daewoo International-Thales group, the others are Invensys-Balfour Beatty Rail-Ingress, George Kent-China Railway-Thales, Colas-CMC Engineering-Thales, Samsung-LG-Thales, SNC Lavalin-WW Engineering-Bombardier, Siemens-Scomi Engineering, and Ansaldo- Emrail-Leighton.

Prasarana is a wholly-owned government company established by the Finance Ministry to facilitate, undertake and expedite public infrastructure projects.

Shahril is confident that the LRT line extension project will stay within the government’s budget and completed in 2014, despite the twomonth delay.

The government had budgeted RM7 billion for both the LRT line extensions.

“The tender process has allowed Prasarana to enjoy competitive pricing which keeps the cost within budget,” he said.

Shahril hopes that the remaining three contracts for the Ampang line extension – systems work, card access system and construction of station 10 and 11 – will be awarded before the end of this year.

This includes the award of a contract for the card access system for the Kelana Jaya line.

Scomi Engr looking into O&G business in Brazil

By Sharen Kaur

sharen@nstp.com.my

Published in NST on May 2, 2012

PETALING JAYA: Scomi Engineering Bhd is conducting due diligence on a plan to venture into the oil and gas business in Brazil, including opening a plant there to produce drilling fluids.

According to Scomi Brazil country president Hilmy Zaini Zainal, the due diligence, which will complete within the next few months will help Scomi decide the best partners for its venture.

"We do not have a clear cut position on what we want to do yet but we have decided to put our resources in oil and gas developments in Brazil, instead of just being involved in monorail projects.

"We need to strategise and find the easiest way to enter the market. We hope something will materialise for us in the oil and gas sector in Brazil by the end of this year or early next year," he said.

Hilmy did not rule out a partnership with Montagens e Projetos Especiais SA (MPE), which is involved in oil and gas, fabricating topside models.

Scomi and MPE are partners for the RM2.6 billion monorail project in Sao Paulo, secured last year. 

"Scomi in Brazil should not just focus on monorail projects, but also oil and gas as plenty of opportunities are coming up. So, the next phase of development for Scomi in Brazil is going to be in that area," Hilmy told Business Times in an interview.

Scomi is a leading provider of oilfield services to the oil and gas industry and one of three integrated monorail system providers in the world.

It is also one of the world's leading providers of high performance drilling fluids solutions and waste management services, through its subsidiary, Scomi Oiltools.

Hilmy said Scomi has been exploring oil and gas opportunities in Brazil in the last one year.

He said the company can supply its products and services to the Brazilian market.

"We are looking at fluid services. We plan to set up a blending plant in Brazil to develop the right fluids for the market. The due diligence will determine the size of the plant," he said. 

Hilmy said Scomi plans to target oil and gas operators and drilling contractors in Brazil.

The company may also plan to offer its waste management services there, he added.

Business Times reported last week that Scomi is eyeing a new monorail project in Brazil, which is estimated to be worth more than RM2.5 billion. The company had already won two monorail projects in the country - in Sao Paulo and Manues worth a combined RM5.2 billion.

Prasarana says Posco ‘best candidate’

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 2, 2012

Syarikat Prasarana Negara Bhd is proposing to the government that the RM950 million systems contract for the Ampang light rail transit (LRT) line extension project be awarded to Posco, a South Korean steelmaker.

Business Times (BT) reported recently that a consortium comprising Balfour Beatty Rail Sdn Bhd (BBRail), Ingress Corp Bhd and the UK’s Invensys was tipped to win the contract this month.

“The government is still deciding who to award the contract to. The bidders are lobbying hard for the job. We at Prasarana think Posco and its consortium partners are the best candidates,” said Prasarana key officials.

In December last year, BT reported that Prasarana had recommended Posco to the government for the job because the company offered to use the French based Thales’ Communication-
Based Train Control (CBTC) signalling system.

Thales is a leader in the CBTC market. It invented the CBTC technology, a train control system based on telecommunications, in the 1980s. Its technology was used for the KL monorail
project and the existing Kelana Jaya LRT line.

Posco had bid for the systems contract for the Ampang LRT line extension project in a consortium comprising Japan’s Sojitz, Thales and South Korean Daewo International.

“Posco has the track record, financial strength and expertise,” said the Prasarana official.

Posco, which is more than 40 per cent controlled by the National Korean Pension Fund and about five per cent by investor Warren Buffet, is South Korea’s largest contractor based on order book value, beating Samsung and Hyundai.

The group, which posted more than US$35 billion (RM1.05 billion) in revenue last year, is also the world’s third largest steelmaker.

“The LRT project would require a lot of steel and there will be guaranteed supply from Posco. These are the reasons why Prasarana is confident of Posco and believes it will be able to execute the systems work without any constraints,” the official added.

Tenders for the systems contract closed on June 16 2011 where eight companies had made the bids. The other six bidders were George Kent-China Railway-Thales, Colas-CMC Engineering-Thales, Samsung-LG-Thales, SNC Lavalin-WW Engineering-Bombardier, Siemens-Scomi Engineering and Ansaldo-Emrail-Leighton.

By Sharen Kaur
sharen@nstp.com.my
Published in NST on May 1, 2012

Elias takes helm at KTMB from tomorrow

KUALA LUMPUR: Keretapi Tanah Melayu Bhd's (KTMB) cargo division head Datuk Elias Kadir will be the new boss of the railway company.

Elias, chief executive officer (CEO) of KTMB's cargo division, will take over the helm from current president Dr Aminuddin Adnan effective tomorrow, KTMB said in a statement yesterday.

It is understood that Elias was given a three-year contract to help turn around KTMB.

Elias - the former managing director of Kontena Nasional Bhd, the country's biggest haulage firm - is understood to have the backing of the KTMB rank and file.

He is said to be popular with the rank and file because of its hands-on approach to work-related matters.

The Railwaymen's Union of Malaya (RUM) president Abdul Razak Md Hassan said the appointment of Elias as KTMB president augurs well for the company.

"We believe in Elias and are confident he can turn around KTMB. RUM has a good working relationship with him," Abdul Razak told Business Times.

Elias had been on the KTMB board for two years before being appointed recently to head the cargo division.

Business Times reported last month that Aminuddin was expected to leave the national rail company in August, after only a year into his extended two-year contract.

Apart from Elias, others in the running for the KTMB hot seat were Mohd Azharuddin Mat Sah and Azahar Ahmad.

Mohd Azharuddin is a vice-president of special projects at the managing director's office in Khazanah Nasional Bhd, while Azahar is the chief operating officer of the Land Public Transport Commission .

"Aminuddin had a meeting with key officials of the Ministry of Finance Inc last Friday and he was told to tender in his resignation," one source said.

Aminuddin was not available for comment. His last day at KTMB was yesterday.

Aminuddin was appointed as KTMB president in August 2009 on a two-year contract, before being extended for another two years in August 2011.