Honda Malaysia leads the way

Honda Logo

IT has been a good year for Honda Malaysia as its sales figures from January to November has steadily increased to 69,150 units

Honda_cityThis is a 34% increase compared to the brand’s total sales of 51,550 units last year..

In fact, Honda Malaysia claims that it is now the market leader in the non-national passenger car market, taking away the title from UMW Toyota.

According to Akkbar Danial, general manager for Honda Malaysia and also the company’s head of marketing, Honda Malaysia is well on track to hit its 2014 target, which is 76,000 units.

“The tsunami and earthquake in 2011 disrupted our production and parts supply but we restructured our business operation and devised a threeyear plan to achieve a high volume sales in Malaysia,” says Akkbar.

He adds that the main strategy is to offer affordable products that give buyers value for money in order to be competitive in the Malaysian market.

“We achieved this by increasing the localisation of our parts and the result is the current City and Jazz, which both carry competitive prices with added features.”

The other approach was a re-look into its operations and as a result, Honda Malaysia has expanded its production with the new No.2 Line at its Pagoh plant in Malacca.

This has increased its production capacity from 50,000 units to 100,000 units a year.

In the same period, Honda Malaysia also looked into increasing efficiency in its factory and expanded its pre-delivery inspection process and parts warehousing.

“Finally, to accommodate the high volume of sales, we have also expanded our dealer network from 62 dealers in 2012 to 78 dealers this year. This is to ensure that our customers are more satisfied. We plan to have a dealer in all major towns in Malaysia,” explains Akkbar.

Currently, its best selling model is the City, which has sold 32,465 units from January to November this year. Honda has also introduced variants that cater to all budgets.

The Jazz for example, has three variants and prices start at RM72,800 and go up to RM87,800. The City has four variants and its prices start at RM75,800 with the highest variant priced at RM90,800.

Such a wide range of prices offer options to the consumers, which translate to more offerings and higher sales.

Honda Malaysia has 11 models in its list and this includes three hybrid models – the Civic Hybrid (RM185,500), CR-Z (RM183,000) and the Jazz Hybrid (RM89,912). The latter is assembled locally and enjoys the hybrid benefits introduced by the government.

Startups sharing ideas and seeking validation from others to progress and gain benefits – final part 10

Startup_build relationships

Start building relationships with investors

ENTREPRENEURS are naturally protective of their ideas. Understandably, they keep their ideas to themselves to avoid having them stolen.

Startupup-Don't keep itDon’t keep it to yourself Tell your idea to as many people as possible and seek their opinions. Talk with people you trust and whose opinion you value.

While it is important to protect proprietary information from being copied, entrepreneurs can also gain valuable insight and perspective from feedback before investing heavily in a product that only looks good conceptually.

A startup’s journey is very much akin to running a series of experiments before it finds a path to sustainable growth. A product or an idea should be subjected to validation before it can be tweaked and scaled up to form a viable company.

And what better way to get some form of early validation than to share your ideas with like-minded people for constructive input.

While entrepreneurs are more willing to share and discuss their ideas these days, this culture of sharing is still new in the local scene.

Seasoned entrepreneurs have found bouncing ideas off other people to be more helpful than harmful. Apart from getting feedback on their ideas, they note that more often than not, sharing connects them with other people who can help fill the gaps and turn ideas into reality.

Additionally, sharing ideas and resources could also help accelerate innovation in a field.

For example, American electric car manufacturer Tesla Motors recently announced that it will be making its patents available to other companies that want to use them.

Tesla chief executive officer Elon Musk explained that the move would help advance electric vehicle technology.

Startup_Elon Musk Tesla car

Elon Musk, CEO of Tesla, unveils the dual engine chassis of the new Tesla ‘D’ model at the Hawthorne Airport October 09, 2014 in Hawthorne, California.

“Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day,” Musk had said.

By allowing the use of its patents, industry observers note that Tesla will be clearing the way for more collaboration with other electric car makers to develop new technologies and would enable the company to take a leadership role in developing standards for the industry and its value chain.

Entrepreneurs are increasingly being encouraged to share and collaborate to innovate and build better products.

And a beauty about being in the present time is that there are more ways than ever to tap into a support network that can provide startups with a platform to share and build on ideas and resources.

Some of these platforms include spaces such as incubators, accelerators and co-working spaces. Apart from being just a shared working station, incubators, accelerators and co-working spaces have evolved into collaborative work spaces that provide entrepreneurs with the opportunity to meet and collaborate on ideas with a host of other people to innovate better solutions.

Additionally, there are various forums as well as startup events and programmes that provide a conducive environment for entrepreneurs to network, share ideas and work together. There are also a number of agencies that are targeted at guiding entrepreneurs with developing their ideas.

Most entrepreneurs still worry about letting on too much on their ideas. But if they can overcome that fear, entrepreneurs stand to gain much from collaborating with one another.

Take advantage of the entrepreneurial community brought together by such platforms to innovate and rather than develop your ideas in silos.

■ This is the final article in a 10-part tie-up between Metrobiz and the Malaysian Global Innovation & Creative Centre (MaGIC) to explore startup ecosystems.

By Joy Lee The Star/Asia News Network

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Homes are cracking !

Homes cracking

PENGERANG: Dozens of residents who were relocated due to the development of the Refinery and Petrochemical Integrated Development (Rapid) expressed disappointment over the poor workmanship of their new homes in Taman Bayu Damai.

They are upset that their houses, which are less than a year old, have already started cracking, with some wide enough for fingers to go through.

They blamed this on soil movement.

“The foundation for many of the houses have started to slip, causing huge holes to appear below our single-storey bungalow,” said retiree Lukiman Sastaro.

The 67-year-old, who moved from Sg Kapal, said his house was among the worst hit.

“I got over RM300,000 in compensation and used RM105,000 to buy this house. The rest went into renovations,” he said, adding that he was now having sleepless nights.

“Even my driveway sank by several centimetres,” said Lukiman.

Another resident, Sia Pek Im, 61, said she was worried about the safety of her two grandchildren after huge cracks appeared in her kitchen.

“But I have nowhere else to go,” she said.

Another, Hamidon Ahmad, said he, too, suspected that there was soil movement and that the developer had not carried out proper mitigation works before building the houses.

“I decided to carry out repair works on my own as I am worried for my family’s safety,” said the 56-year-old.

“Even my relatives’ home next door is affected. The relevant agencies should check if the houses have met the safety criteria before the Certificate of Fitness is issued,” he said, adding that the site used to be a swamp.

Kota Tinggi district officer Mohd Noorazam Osman confirmed that it was a geological problem due to earth movement.

“We are working with the state Economic Planning Unit (Upen), which is in charge of the project to remedy this,” he said.

“Residents’ safety is our main concern and houses that are badly damaged will be demolished,” he said, adding that it was up to Upen to decide what action should be taken against the developer or contractor.

State Upen director A. Rahim Nin said the Johor government had appointed a private contractor under the design-and-build concept for the 631 houses in the area.

“So far, 555 units have been given to residents who were relocated from Kg Sungai Kapal, Kampung Langkah Baik and Kampung Teluk Empang,” he said.

“We have directed the contractor to repair the defects – as based on our agreement with them. The defect liability period is two years,” he said, adding that 67% of the complaints had been addressed so far.

By Nelson Benjamin The Star/Asia News Network

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 House buyers, learn your rights

Startups rising from failure – part 9

Startup_failure by design “Failure is simply the opportunity to begin again- this time more intelligently.” — Henry Ford

Startups can learn much when they do not succeed

Success stories have always been a source of great encouragement for struggling entrepreneurs. It seems easy enough to romanticise accomplishments.

After all, there seems to be no shortage of stories on budding entrepreneurs who worked hard to develop great products that were later acquired for hefty price tags.

Perseverance pays: Grove says he learnt the value of persistence when the bursting of the dotcom bubble drastically altered the company’s fortunes in 1999.

In reality, the path of entrepreneurship involves plenty of speed bumps, potholes and dead ends.

Entrepreneurs who have made it often recount how they lacked time for anything other than work, how they had to fumble through everything on their own and how some of their ventures failed before they became successful.

Additionally, entrepreneurs are making a big bet by putting their money into something that has no promise of returns on top of not having a secure income for what can be extended periods.

But serial entrepreneurs persevere through their failures.

Patrick Grove, co-founder and chief executive officer of Catcha Group, understands the importance of picking up the pieces and persisting after a failed attempt.

Grove established Catcha Group, which holds a portfolio of online assets, in 1999 and had plans to list the group on the Singapore Exchange the following year.

But shortly before the exercise, the Nasdaq crashed and brought the end of the dotcom bubble.

Subsequently, Grove and his partners were saddled with debts of US$1.5mil (RM5.2mil).

Teetering on the brink of bankruptcy, he slashed his headcount, diversified the business and persisted.

Grove refers to that period as “the school of hard knocks.”

But in the end, Catcha got its groove back and Grove went on to list four online companies.

“I learnt the value of persistence… because we were humbled early on, we don’t forget that,” Grove said in an interview with an Australian publication, adding that it is alright if entrepreneurs fumble.

MyTeksi technical head Aaron Gill is likewise no stranger to failure. Before joining the Malaysian startup that has grown regionally, Gill had three failed ventures under his belt.

His ventures had started off with ideas good enough to obtain government pre-seed funding from the Multimedia Development Corp and Cradle Fund. But the companies did not survive.

However, Gill says that his failed attempts taught him a lot about running a company and managing a team.

Additionally, he learnt the importance of being focused when running a business and the need for structure in the face of expansion.

Grove and Gill are only two of many more entrepreneurs who have encountered hardships before finding that one successful startup. The road taken by entrepreneurs is often long, winding and certainly stressful.

But fear of failure shouldn’t stop entrepreneurs from taking risks. There are rewards to be reaped from thinking outside the box and pushing boundaries.

The lessons learned from failures can be brutal. But taken the right way, these lessons can bring you one step closer to success.

Entrepreneurs describe themselves as people who hop from one failed business to another until they hit a jackpot. To them, failure is a part of their experiences.

■ This is the ninth article in a 10-part tie-up between Metrobiz and the Malaysian Global Innovation & Creative Centre (MaGIC) to explore startup ecosystems.

By Joy Lee The Star/Asia News Network

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SoftBank invests $250M (RM860mil) in GrabTaxi, an Internet company founded in Malaysia


SoftBank Invests $250M In GrabTaxi, Uber’s Archrival In Southeast Asia

Not content with leading a $627 million mega-round for Snapdeal and a $210 million raise for Ola as part of a $10 billion commitment to startups in India, Japanese telecom giant SoftBank has now turned its attention to Southeast Asia and sunk $250 million into GrabTaxi, Uber’s major rival in the region.

Neither party has confirmed what the deal values GrabTaxi at, but the company’s valuation is likely to exceed the $1 billion mark. The duo did confirm that SoftBank has become GrabTaxi’s largest investor.

The round is the highest raise for a startup in Southeast Asia to date — Rocket Internet companies aside — and it is GrabTaxi’s fourth funding activity this calendar year, taking it past $320 million in capital from investors. GrabTaxi’s previous $65 million round closed in October and was led by Tiger Global — which also invested in Uber rival Ola — while GGV Capital led a $15 million raise in May. Its $10 million-plus Series A was announced in April.

GrabTaxi was founded in Malaysia in 2012, has over 500 staff and is live in 17 cities across six countries in Southeast Asia: Malaysia, Philippines, Thailand, Singapore, Vietnam and Indonesia. Its core offering is a service that connects registered taxis with would-be passengers via its app — thus working with the existing industry rather than against it — but it also offers an Uber-like private car service and is trialling motorbike taxis in Vietnam.

Uber is present in each of GrabTaxi’s markets, offering its standard Uber Black service in all and its cheaper UberX service in most. Hailo is present in Singapore, while Rocket Internet-backed Easy Taxi is a minority player in a handful of countries in Southeast Asia.

Uber doesn’t break out user numbers, but GrabTaxi — which says it is leading the taxi app space in Southeast Asia — claims 500,000 monthly active users from 2.5 million app downloads. It says there are 60,000 drivers on its network, and that three bookings are made per second on average across its platform — which is an 800 percent increase over the past year.

Back in May, GrabTaxi claimed 1.2 million downloads and 250,000 monthly users.

Collecting War Chests

This Series D round comes at a fascinating time. Uber raised $1.2 billion earlier this year and is tipped to be closing in on another billion-dollar round again soon at a rumored $40 billion valuation. GrabTaxi, it seems, is building its own war chest, and bringing on a formidable ally in SoftBank, at just the right moment.

anthony tan grabtaxiGrabTaxi didn’t explicitly reveal how it will invest the money from SoftBank, but CEO and co-founder Anthony Tan told TechCrunch in an interview that it will go towards fortifying its efforts in existing markets and continuing its expansion across Southeast Asia.

There are no plans to move outside of the region, which has a cumulative population of around 600 million, he said.

“We’re going to be staying regional. [We want to] grow very fast and focus on expanding in this region, whilst staying very very focused,” Tan commented, speaking after the Bloomberg ASEAN Business Summit in Bangkok, Thailand.

“We’ll also be hiring. We want the right kind of people, people who love people and believe in our mission,” he added.

Related to that, Tan said GrabTaxi is open to potential acquisitions, but he stressed that in any possible deal, the focus would be on finding the right cultural blend.

GrabTaxi has been focused on providing a pure-play transportation service to date. Uber, however, has experimented with a range of alternative services across the world. While he didn’t explicitly advocate that GrabTaxi will follow suit, Tan did admit that the company’s new funding intake gives it “the resources” to potentially explore new areas of business in the future.

Price Battles

Harvard graduate Tan admitted that the price battles between rival services in Southeast Asia necessitate significant funding just to compete, although he said GrabTaxi still maintains the “heart of a startup” — such as working hard, traveling via economy class and low-cost carriers where possible — and generally being thrifty.

While Uber has raised boat loads of money for its operations, the company is engaged in every continent on the planet. That’s something that could mean GrabTaxi is actually better capitalized, which Cheryl Goh, GrabTaxi’s VP of marketing, hinted.

“Our strong focus in this region means that each of [the] six GrabTaxi markets stands to receive a significant portion of funding compared to larger players that have to stretch their funding much further,” Goh said in a statement without explicitly mentioning the ‘U’ word.

While SoftBank provided the entire round for GrabTaxi, TechCrunch understands that the startup had multiple alternative offers on the table. That certainly bodes well for the future, since GrabTaxi’s track record and the ongoing battle will almost certainly require further rounds of funding in the not-too-distant future.

Uber, GrabTaxi and others have come under pressure from the governments of Vietnam and Thailand this past week, and numerous other regulators in the past. Tan didn’t provide specific comment on either of those incidents, but he did reveal that GrabTaxi has set up a dedicated government liaison team that works directly with authorities across Southeast Asia to help smooth out issues and communications.

Southeast Asia’s startup scene continues to heat up. Just last week Carousell raised $6 million and PocketMath bagged $10 million. But this investment from SoftBank is sure to put the region on the map, particularly coming right after Rocket Internet’s Amazon rival Lazada raised $250 million led by Singapore’s Temasek Holdings.


Making a Difference

When I put it to Tan that many founders will want to know how he’s been so successful in Southeast Asia, he points to his faith in God and his company’s mission to make a difference.

“There are a lot of well-run startups in Southeast Asia. We hope that the values we’ve been pushing for — helping drivers make more money, women feel safer and more — and changing the current ecosystem and how we treat each other makes a difference,” he explained.

With SoftBank and its renowned founder Masayoshi Son on his side, Tan’s company is closing out the year in a very different position to how it began 2014. Then it was an outsider that was full of ambition and plans but lacking resources. Now it has gathered steam in multiple markets and pulled in the financial muscle to potentially battle Uber, one of the world’s most talked-about companies, blow for blow.

Certainly, 2015 is gearing up to host a fascinating battle between these two, particularly now that SoftBank has stepped into the ring.

Source: by Jon Russell

Japanese group invests RM860mil in Internet company founded in Malaysia


KUALA LUMPUR: GrabTaxi Holdings Pte Ltd, whose roots can be traced back to Malaysia, received a major boost in its challenge to keep up with the market share fight in the taxi booking mobile application market with a US$250mil (RM864mil) investment from Japan’s Softbank Corp.

The investment, which was made through SoftBank Internet and Media, Inc (SIMI), is the largest for GrabTaxi, which is known as MyTeksi in Malaysia.

It is also among the largest, if not the largest, Internet company in South-East Asia.

The company that provides the mobile taxi booking application was founded by Anthony Tan and Hooi Ling Tan, both Harvard Business School graduates, in 2011, according to a statement from the company.

Anthony is the grandson of Tan Sri Tan Yuet Foh, the co-founder of the Tan Chong group of companies.

MyTeksi currently serves 17 cities across six countries in South-East Asia, including Malaysia, the Philippines, Thailand, Singapore, Vietnam and Indonesia.

Through the strategic investment and partnership with MyTeksi, the SoftBank group aims to further build its presence in South-East Asia and maximise synergies with its network of Internet companies around the world.

Nikesh Arora, the vice-chairman of SoftBank Corp and chief executive officer of SIMI, said in a statement that in two years MyTeksi had become the dominant player in South-East Asia’s taxi booking mobile app industry, which is a testament to Anthony’s outstanding leadership.

“We look forward to working with his team and supporting MyTeksi’s further expansion in the region,” he said.

SIMI will become the largest investor in GrabTaxi, Anthony told Bloomberg in an interview in Bangkok yesterday, without providing stake details.

GrabTaxi has raised about US$340mil (RM1.18bil) in the last 14 months, it said in a statement. GrabTaxi’s funding comes as rival Uber is said to be close to raising a round of financing that would give it a valuation of as much as US$40bil (RM138bil).

Ride-hailing apps on smartphones are gaining popularity across the world by providing transportation alternatives, with the investment by SoftBank adding to the 1,300 made by the Tokyo-based technology company.

“We will do whatever it takes to ensure that we maintain our leadership in an ethical and moral way,” Anthony was quoted by Bloomberg. “It’s a fight for market share. We’re many, many times bigger than our closest competitors and we intend to grow that fast.”

GrabTaxi counts Singapore’s Temasek Holdings Pte Ltd and Alibaba Group Holding Ltd backer GGV Capital among its investors.

There were now 500,000 active users who used the app at least once a month, up six-fold from a year earlier, GrabTaxi said. It received about three taxi bookings every second across the region, the company said.

SoftBank, founded by Masayoshi Son in 1981, controls wireless carriers in Japan and the United States, as well as owning the largest stake in Alibaba Group Holding.

In October, the unit of SoftBank said it would lead an investment of US$210mil (RM726mil) in ANI Technologies Pvt, which offers a taxi booking service called Ola Cabs in India.

Uber has been attempting to gain a foothold in the region despite multiple regulatory tangles and already fierce competition.

Within South-East Asia, Uber is said to operate in the same six markets as GrabTaxi, after entering Singapore last year. It does not release operational statistics.

Malaysian and Indonesian authorities have said Uber services that utilise private vehicles are illegal, while Thai authorities last week indicated that they are also banning the service.

Other major taxi apps in South-East Asia include Indonesia’s Blue Bird, regional player EasyTaxi, backed by German start-up incubator Rocket Internet, as well as London-based Hailo, which operates in Singapore.

Taxi-hailing apps have become popular in South-East Asia, especially Singapore, one of the most expensive places in the world to own a private car.

Finding a cab during peak hours and during frequent tropical downpours can be difficult in the city-state, which last month said it planned to start regulating third-party taxi booking services for the first time.

Heavy traffic in cities such as Manila and Jakarta also makes finding taxis tough.

Those troubles are benefiting apps such as GrabTaxi. The apps are seen as revolutionising the taxi industry, which has long been plagued by inefficient cartels and price-gouging drivers.

Source: The Star/Asia News Network

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Endeavouring to give back to startups – part 8 

Startup’s components of a support system, govt incentives, market access – part 5,6,7


Endeavouring to give back to startups – part 8

Magic Logo_SmallSuccessful entrepreneurs join forces to fund and support businesses

Malaysia has seen quite a number of successful entrepreneurs coming into the market over the last two decades or so. They have established strong businesses and built up significant wealth and experience.

While any normal person would likely retire and enjoy the fruits of their labour, entrepreneurs have a knack for staying in their jobs.

Not only do they move on to bigger ventures, they also relish the opportunity to invest in other passionate entrepreneurs who have ambitious visions.

Many of these early entrepreneurs have come full circle.

They recall their early days of struggle to get their ideas off the ground, their first successful rounds of funding and remembering how they persevered to grow their startups to become successful companies.

Most of them understand the importance of giving back to the ecosystem.

Angel investors are valuable to the ecosystem not just because they have capital to back startups, but also other experiences that will help to nurture budding entrepreneurs.

sssssss: Afzal Abdul Rahim, Chief Executive Officer - TIME dotComBerhadSome of these entrepreneurs, including Time dotCom Bhd chief executive officer Afzal Abdul Rahim (left picture), Terato Tech founder Reza Fahmi Razali and JobStreet Corp Bhd founder Mark Chang.

After establishing their businesses, they remain actively involved in investing in other people.

Afzal started his entrepreneurial journey in 2006 after he and his partner successfully raised RM20mil to execute a management buyout of AIMS Group.

In 2008, he took over Time and grew it from a penny stock company to a formidable telco solutions provider.

But Afzal is far from done.

Today, he is an active angel investor and currently leads Endeavour Malaysia, the local affiliate of the global non-profit organisation Endeavour.

Under Endeavour Malaysia, Afzal, along with the other board members and partners, provide funds, mentorship and access to networks to help startups scale up and expand.

“As an entrepreneur, I know how important mentorship can be,” Afzal said at the launch of Endeavour Malaysia.

He added that the mentoring network of Endeavour would provide valuable support to Malaysia’s next generation of high-impact entrepreneurs.

Likewise, UnrealMind Interactive Bhd founder Tan Swee Yong sees much value in providing support to the new wave of up-and-coming entrepreneurs.

“I enjoy a startup environment more than a corporate environment. There are plenty of ideas and talent out there.

“It is all about giving them a helping hand,” Tan had said in an earlier interview.

Tan started UnrealMind, a mobile content company, in 2001 with a personal investment of RM300,000.

The company grew regionally, was listed and subsequently privatised by a British company in 2005.

Not one to sit on his profits, Tan has been actively looking out for other startups to invest in and participated in events such as Echelon Malaysia.

Like other angel investors, Tan believes in investing more than just finances into his investee companies and takes an active role in guiding them as well.

There are many other entrepreneurs who are willing to grow other startups.

And most of them are accessible through various angel investor networks, including Malaysian Business Angels Network (MBAN) and through organisations such as MaGiC.

It takes every party to keep the investment and nurturing cycle going in order to establish a strong startup ecosystem.

And successful entrepreneurs who have come full circle certainly have a lot to offer in terms of guiding new startups to greater heights.

This is the eighth instalment of MetroBiz’s tie-up with Malaysian Global Innovation and Creativity Centre (MaGIC) to explore startup ecosystems.

By Joy Lee The Star/Asia News Network

Oil & Gas lead to wealth crunch, Malaysian Ringgit beaten and dropped!

PETALING JAYA: With the oil and gas (O&G) sector being the hardest hit in the current market rout, tycoons who own significant stakes in these companies have seen a huge loss in their net worth.

These tycoons had collectively had their shareholding in these companies valued at some RM15.89bil when O&G stocks were trading at their highest prices. The fall in global crude oil prices and the plunge in the value of O&G stocks on Bursa Malaysia saw the value of their shareholding cut by almost half to some RM7.86bil yesterday.

Accelerating the decline in share prices yesterday and the loss in their net worth was the decision by Petroliam Nasional Bhd (Petronas) to slash its capital expenditure (capex) by between 15% and 20% next year.

Petronas’ capex cut has spooked investors in the local O&G sector as many companies rely on the national oil company for work. Petronas’ huge capex, estimated at RM60bil a year prior to the planned cuts, was also a buffer for the domestic industry from the onslaught of crumbling crude oil prices and its effect elsewhere.

The largest of these companies, SapuraKencana Petroleum Bhd, has seen its share price dip by 48.78% year-to-date. At its peak, SapuraKencana was trading at RM4.81, translating to a wealth of RM4.85bil for Tan Sri Shahril Shamsuddin’s 16.84% stake in the integrated O&G concern.

SapuraKencana was the most actively traded counter yesterday, falling 10.36% to close at RM2.51. At yesterday’s market capitalisation of RM16.76bil, Shahril’s shareholding in the company was valued at RM2.53bil.

Another major shareholder of SapuraKencana is Tan Sri Mokhzani Mahathir, whose 10.25% interest has also seen a decline by almost half its value. At yesterday’s price, Mokhzani’s stake in SapuraKencana was valued at RM1.54bil compared to the RM2.95bil it was worth during its highest level.

Mokhzani had sold a block of 190.3 million shares in SapuraKencana earlier this year when the stock was trading at around RM4.30 per share, giving the entire sale a value of RM818.29mil. The shares were taken up by seven institutions.

Another stock in which Mokhzani has an interest in, Yinson Holdings Bhd, was also not spared from the bearish sentiment surrounding O&G stocks. Yinson’s share price has declined from its peak to close at RM2.45 on Dec 1. Based on yesterday’s price, Mokhzani’s stake in the company was worth RM235mil.

Billionaire Robert Kuok, T Ananda Krishnan, Tan Sri Ngau Boon Keat and Tan Sri Quek Leng Chan are also part of the list of value losers in this O&G stock meltdown.

Kuok owns 80% of PACC Offshore Services Holdings (POSH Semco), an offshore marine services provider that was listed on the Singapore Exchange in mid-2013 at a price of S$1.15 per share. POSH Semco closed yesterday at S$0.51, meaning that Kuok has lost more than half the value of his stake in that company.

Similarly, Ananda’s worth from his 42.3% shareholding in Bumi Armada Bhd has gone down by half the value it was during the peak of its share price. To be noted is that Bumi Armada had undertaken a rights issue in August this year that has seen the dilution of Ananda’s shareholding in the company.

Bumi Armada, Malaysia’s largest offshore support vessel firm, was relisted in 2011 at a price of RM3.03 per share. The stock dived into penny-stock territory yesterday, falling to a low of 98 sen before ending the day at RM1.01 per share. Based on yesterday’s price, Ananda’s stake in Bumi Armada was valued at RM2.06bil.

Dialog Group Bhd’s Ngau, meanwhile, has seen the value of Dialog’s stock fall. His stake was worth RM1.45bil based on yesterday’s closing price of RM1.26. This is about a one-third decline from the RM2.25bil his 23.2% stake was valued at when the stock had hit a high of RM1.96.

Stock investors such as Quek and his lieutenant Paul Poh are also edging into negative territory.

Quek had bought his 9% in TH Heavy Engineering Bhd (THHE) in 2013 at a price of 45 sen per share, enjoying gains for most of this year – the stock had hit a high of RM1.03 on Feb 19 this year. THHE closed yesterday’s trade at 40.5 sen a share, giving Quek a paper worth of RM38mil for his shareholding in the company as opposed to RM80mil as at the end of last year.

In April, Quek and Poh also took a block of 15.5% in Alam Maritim Resources Bhd at RM1.35 a share. They are sitting on a paper loss of some RM80mil today, or a decline of over 40%.

By: GURMEET KAUR The Star/Asia News Network

Ringgit Slides With Stocks as Oil Slump Poses Risk to Revenues

Malaysia’s ringgit posted the biggest two-day decline since the 1997-98 Asian financial crisis and stocks slumped on concern a protracted slide in crude will erode the oil-exporting nation’s revenue.

The currency weakened 1.5 percent to 3.4340 per dollar in Kuala Lumpur, according to data compiled by Bloomberg. The ringgit has dropped 2.5 percent in two days, the steepest decline since June 1998. The benchmark FTSE Bursa Malaysia KLCI Index of shares fell 2.3 percent in the worst one-day performance in 22 months.

Brent slid to a five-year low after OPEC’s decision last week not to cut production to shore up prices, which have slumped 41 percent from a June high. The potential revenue loss may make it harder for Prime Minister Najib Razak to lower the fiscal deficit to 3 percent of gross domestic product next year from 3.5 percent.

“Malaysia is probably most affected by oil prices in the Asian space,” said Andy Ji, a Singapore-based strategist at Commonwealth Bank of Australia. “The ringgit could fall to 3.45 this week.”

A 1997 devaluation of the Thai baht triggered the Asia financial crisis and prompted Malaysia’s government to adopt a pegged exchange rate to the dollar in 1998. The ringgit was fixed at 3.8 until the policy was scrapped in 2005.

The currency dropped to 3.4392 earlier, the lowest level since February 2010, when it last traded at 3.45 and went on to reach 3.4545 on the 5th of that month, data compiled by Bloomberg show.

Stocks Fall

Oil-related industries account for a third of Malaysian state revenue and each 10 percent decline in crude will worsen the nation’s fiscal shortfall by 0.2 percent of GDP, Chua Hak Bin, a Bank of America Merrill Lynch economist in Singapore, wrote in an Oct. 22 report.

The FTSE Bursa Malaysia Index was dragged down by oil, gas and plantation stocks. The gauge has dropped 6 percent from its 2014 high in July.

SapuraKencana Petroleum Bhd., Malaysia’s biggest listed oil and gas services company by market value, fell 10 percent, the most on record. Dialog Group Bhd. (DLG), a contractor in the same industry, dropped 15 percent.

“We are watching the stocks closely,” said Gerald Ambrose, who oversees the equivalent of $3.6 billion as managing director at Aberdeen Asset Management Sdn. in Kuala Lumpur. “There are a lot of oil and gas companies that meet our quality and criteria but there was no upside previously. Now prices are falling.”

Bonds, Exports

Malaysia is already seeing a deterioration in its terms of trade. The current-account surplus narrowed to 7.6 billion ringgit ($2.2 billion) in the third quarter, the smallest gap since June 2013. A Dec. 5 report may show the nation’s exports declined 0.3 percent in October from a year earlier, according to the median estimate in a Bloomberg survey. That would be the worst performance since June 2013.

The nation’s sovereign bonds fell. The yield on the 4.181 percent notes due 2024 rose three basis points, or 0.03 percentage point, to 3.89 percent, data compiled by Bloomberg show. That’s the highest since Nov. 24. The five-year bond yield advanced five basis points to 3.81 percent.

“Hopes for Malaysia have rested on the fiscal consolidation story,” said Tim Condon, head of Asian research at ING Groep NV in Singapore. “Markets need to be re-priced for diminished hopes on that front.”

Source: Bloomberg By Liau Y-Sing and Choong En Han

Beating for KLSE and ringgit

PETALING JAYA: The stock market and the ringgit have taken a beating from falling oil prices, which have sunk below the US$70 per barrel mark.

The benchmark FBM KLCI, which measures the key 30 stocks of Bursa Malaysia, was down 42 points or 2.34% at its close at 5pm, marking its worst performance since mid-October, while the ringgit declined to 3.4340 against the US dollar, a four-and-a-half-year low.

At 5pm, Brent crude oil was down 94 cents to a five-year low of US$69.21 while US light crude oil – better known as West Texas Intermediate (WTI) – fell US$1.09 to US$65.06 as markets continued to be spooked by the plunge in oil prices.

The plunge follows an Opec decision not to cut production despite a huge oversupply in global markets.

The technical indicators are all pointing to even lower oil prices.

Technical analysts said the WTI – the benchmark oil price used by Bank Negara to calculate the economic indicators – should find some support at US$64 per barrel.

If it goes below that level, it could plunge all the way to US$32.40 per barrel – the lowest recorded price in recent years when it hit US$32.40 per barrel on Dec 19, 2008, before rising to US$114.83 on May 2, 2011.

Taking the cue from the plunging oil prices and a chilling warning issued by Petronas on declining revenues, oil and gas stocks on Bursa Malaysia also faced a rout which affected market sentiment as a whole.

Yesterday, some 981 counters declined compared to 82 gainers while 150 were unchanged.

Petronas president and chief executive Tan Sri Shamsul Azhar Abbas had said on Friday that the national oil corporation was cutting its spending for next year by between 15% and 20% and asserted that its contribution to the Government’s coffer in the form of taxes, royalties and dividends could be down by 37% to RM43bil from RM68bil this year.

Analysts said the selling could be over-done and expected a relief rebound when oil prices settle.

Oil prices fell to their lowest in five years yesterday due to the production war between Opec and the American oil boom from shale oil producers.

In recent months, the United States has become a major producer of shale oil and gas – fuel that’s extracted from rock fragments – threatening the position of Saudi Arabia as the dominant oil-producing country.

In response to the threat, Opec, which is influenced by Saudi Arabia, has vowed to continue production of oil in a market where supply has outstripped demand.

This has led to a free fall in global oil prices that have declined by more than 40% since July this year.

Late last night after the opening of the US counters, oil price fell to below US$65 a barrel.

Saudi Arabia hopes to break the back of shale oil and gas producers by making their operations not financially viable.

It had been reported earlier that at prices below RM80 a barrel, shale oil producers would go bust.

However, Bloomberg reported that only about 4% of US shale oil output needs US$80 a barrel or more to be economically viable.

Among the top losers of the Bursa yesterday were SapuraKencana Petroleum Bhd, Bumi Armada, Dialog Group Bhd, UMW Oil and Gas Bhd and Petronas-related counters.

The paper wealth wiped out due to the rout on the oil and gas stocks was close to RM8bil.

The selling pressure also spread to plantation stocks, with crude palm oil for third month delivery down RM63 to RM2,109 per tonne. The fall in crude oil prices would make biodiesel less viable as an alternative at current prices.

However, low-cost carrier AirAsia Bhd bucked the trend as it stands to benefit from weaker oil prices. AirAsia rose 21 sen to RM2.79.

Investors were also worried about the impact Petronas’ reduced payout would have on the Government that counts on the national oil corporation as a key source of funding for its expenditure.

UOB Kay Hian Malaysia’s head of research Vincent Khoo said a much lower crude oil price scena­rio would bring negative implications on the ringgit and the Federal Government’s ability to spend its way to pump prime the economy.

The head of research, products and alternative investments at Etiqa, Chris Eng, said that based on the weakening of the ringgit, foreign funds could be behind the selling.

“However, today’s selling was over­­done and I believe there could be a relief rebound,” he said, based on improving US economic growth and ample liquidity from China and Japan.

Eng said according to reports, Bank of America believed Malaysia’s budget deficit could balloon to 3.8% from a planned 3% while Citi thought the 3% deficit could still be maintained.

“The outlook for investing in 2015 remains challenging but it also depends on what level the local bourse ends the year,” he said.

By JOSEPH CHIN The Star/Asia News Network

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