The Edge Jan 5 2015

FBM KLCI 1752.77

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KLCI FUTURES 1745.50

5.50

STI 3370.59

5.44

RM/USD 3.5150

CPO RM2284.00

17.00

OIL US$56.42

0.91

GOLD US$1186.20

2.10

PP 9974/08/2013 (032820) PENINSULAR MALAYSIA RM1.50

MONDAY JANUARY 5, 2015 ISSUE 1872/2015

FINANCIAL DAILY MAKE BETTER DECISIONS

www.theedgemarkets.com

Best car that brand Honda makes 20 F O C U S

4 HOME BUSINESS

Iskandar Waterfront IPO postponed indefinitely 4 HOME BUSINESS

Oversea Enterprise targets 30% cafe chain contribution 5 HOME BUSINESS

Price war to squeeze nitrile glove margins this year 18 C O M M E N T

Could 2015 herald a ‘new oil order’?

19 F E AT U R E

JJapan’s ’ cash helicopter may be first to take off

by u o y o t t h g u o r b s i y p o c l a t This digi

FBM KLCI 1752.77

8.48

KLCI FUTURES 1745.50

5.50

STI 3370.59

5.44

RM/USD 3.5150

CPO RM2284.00

17.00

OIL US$56.42

0.91

GOLD US$1186.20

2.10

PP 9974/08/2013 (032820) PENINSULAR MALAYSIA RM1.50

MONDAY JANUARY 5, 2015 ISSUE 1872/2015

FINANCIAL DAILY MAKE BETTER DECISIONS

www.theedgemarkets.com 4 HOME BUSINESS

Iskandar Waterfront IPO postponed indefinitely 4 HOME BUSINESS

Oversea Enterprise targets 30% cafe chain contribution 5 HOME BUSINESS

Price war to squeeze nitrile glove margins this year 18 C O M M E N T

Could 2015 herald a ‘new oil order’?

19 F E AT U R E

Japan’s cash helicopter may be first to take off

Best car that brand Honda makes 20 F O C U S

2

M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

For breaking news updates go to www.theedgemarkets.com

ON EDGE T V www.theedgemarkets.com

More AirAsia wreckage found But weather thwarts divers’ attempt to reach 5th underwater object

Research houses maintain ‘neutral’ call on banking sector for 2015

The Edge Communications Sdn Bhd (266980-X)

Level 3, Menara KLK, No 1 Jalan PJU 7/6, Mutiara Damansara, 47810 Petaling Jaya, Selangor, Malaysia Publisher and Group CEO Ho Kay Tat Editorial For News Tips/Press Releases Tel: 03-7721 8219 Fax: 03-7721 8038 Email: [email protected] Senior Managing Editor Azam Aris Executive Editors Kathy Fong, Jenny Ng, Siow Chen Ming, Surinder Jessy, Ooi Inn Leong Associate Editors R B Bhattacharjee, Joyce Goh, Jose Barrock, Vasantha Ganesan Editor, Features Llew-Ann Phang Deputy Editors Cindy Yeap, Kang Siew Li Assistant Editors Adeline Paul Raj, Tan Choe Choe Chief Copy Editor Halim Yaacob Senior Copy Editors Marica Van Wynen, Lam Seng Fatt, Melanie Proctor Copy Editors Evelyn Chan, Veronica Poopathy Art Director Sharon Khoh Design Team Cheryl Loh, Valerie Chin, Aaron Boudville, Aminullah Abdul Karim, Yong Yik Sheng Asst Manager-Editorial Services Madeline Tan Corporate Managing Director Au Foong Yee Deputy Managing Director Lim Shiew Yuin Advertising & Marketing To advertise contact GL: (03) 7721 8000 Fax: (03) 7721 8288 Chief Marketing Officer Sharon Teh (012) 313 9056 Senior Sales Managers Geetha Perumal (016) 250 8640 Fong Lai Kuan (012) 386 2831 Shereen Wong (016) 233 7388 Acting Senior Sales Manager Gregory Thu (012) 376 0614 Ad-Traffic Manager Vigneswary Krishnan (03) 7721 8005 Ad Traffic Asst Manager Roger Lee (03) 7721 8004 Executive Ad-Traffic Norma Jasma (03) 7721 8006 Email: [email protected] Operations To order copy Tel: 03-7721 8034 / 8033 Fax: 03-7721 8282 Email: [email protected]

SURABAYA: Divers tried to reach sunken wreckage from a crashed AirAsia passenger jet yesterday but were forced to return to their ship by bad weather, as Indonesian officials said they had detected a fifth large underwater object believed to be part of the plane. “The weather is bad. There’s a storm. It’s windy,” said a Reuters photographer on board a search and rescue ship in the search area off Borneo island. “Earlier, four divers were transferred to (Indonesian navy ship) KRI Banda Aceh but they cancelled the diving because the sea currents were too strong.” The head of Indonesia’s search and rescue agency, Fransiskus Bambang Soelistyo, told a news conference in Jakarta yesterday that a fifth object almost 10m long had been found. Air Force Lt-Col Johnson Supriadi, speaking at a briefing for pilots in Pangkalan Bun, the southern Borneo town where the search operation was based, said efforts yesterday would be divided between recovering bodies and locating wreckage and the all-important cockpit voice and flight data recorders. Until investigators can examine the recorders the cause of the crash remains unknown, but the area is known for intense seasonal storms. BMKG, Indonesia’s meteorological agency, said bad weather was a likely factor. “The flight document provided by the BMKG office shows fairly worrying weather conditions for the aircraft at cruising level on the chosen route,” the agency said in a report. A source close to the investi-

Indonesian Search and Rescue crew unloading the body of an AirAsia QZ8501 passenger from a Singapore Navy helicopter at the airbase in Pangkalan Bun, Central Kalimantan yesterday. Photo by Reuters

gation said radar data appeared to show the aircraft made an “unbelievably” steep climb before it crashed, possibly pushing it beyond the A320’s limits. The objects that are the main focus of the search were located by ships about 90 nautical miles off the coast. The largest object is around 18m long. The suspected wreckage is lying in water around 30m deep, which experts say should make it relatively straightforward to recover if the rough weather abates. Efforts to capture images with remote operated vehicles were frustrated on Saturday by poor visibility. Meanwhile, an AirAsia plane, flying out of Surabaya, suffered engine failure shortly after moving on the runway for takeoff at 9pm on Saturday, reported Indonesia’s Metro TV.

Flight QZ7633 (registration PKAZC), bound for Bandung had taxied about three metres before the Airbus A320’s engine died. There was an explosion, which spooked the 120 passengers on board. See related story on Page 12 A passenger, Yusuf Fitriadi, told Metro TV that a pilot told passengers waiting at the departure lounge the starter monitor had malfunctioned. “The plane was ready and had moved when we suddenly heard a bang. The engine died and the plane moved backwards. We started panicking,” Yusuf told the TV station. The flight departed about two hours later, although a number of passengers reportedly refused to board the flight. — Reuters

Pelaburan Mara’s equity investment totals RM260m KUALA LUMPUR: Pelaburan Mara Bhd, the investment arm of Majlis Amanah Rakyat (Mara), said its equity investment stood at RM260 million as at Dec 31, 2014. “[Thus,] it defies logic for Pelaburan Mara to suffer paper losses of RM1 billion. Even if all investments are written off, the losses will only be to the amount of the initial investment,” said its group chief executive officer Nazim Rahman in a statement yesterday. He was responding to a news report that Pelaburan Mara was seeing huge paper losses of as much as RM1 billion, suggesting that they could stem from its direct major shareholdings in public-listed companies as well as through its unit trust fund, managed by PMB Investment Bhd. “The conclusion is not only fac-

tually wrong, but also illogical,” said Nazim. He said Pelaburan Mara has its own governance and risk management standards that include strategic asset allocation to achieve a diverse and balanced portfolio. “Consequently, our investment in equity market is not more than 40% of total investments in a portfolio that also includes money market, fixed income and alternative investments,” he added. Nazim also said Pelaburan Mara has consistently registered a high return on equity of more than 13% and profit for its business since its incorporation in 1967. It estimates to achieve income of RM50 million and net profit of RM30 million for the financial year ended Dec 31, 2014, representing a

50% year-on-year growth, the highest in its 47-year history. “[On the part of ] PMB Investment, being a licensed entity under the Capital Markets Services Act, (it) operates separately as an Islamic fund manager and a unit trust management company, and is not a ‘conduit’ for Pelaburan Mara as implied by the report,” said Nazim. To date, PMB Investment manages 14 unit trust funds, a wholesale fund and several discretionary portfolio accounts with investment mandates in equity, sukuk and money market. “PMB Investment posted a total return of 62.7% for the three years ended December 2013, while its one-year return for 2013 was 47.9%, a testimony of its strong governance and investment process,” he added.

IN BRIEF Pope names new cardinals ROME: Pope Francis yesterday named 20 new cardinals from around the world to the elite group at the top of the Roman Catholic hierarchy, including 15 who can enter a conclave to choose his successor after his death or resignation. It is the second time the 78-year-old Francis has put his stamp on the direction he wants the 1.2-billion-member church to move in, having named 19 cardinals a year ago. The new cardinals will be installed at a ceremony at the Vatican on Feb 14. The 15 new “cardinal electors” — those aged under 80 — come from Italy, France, Portugal, Ethiopia, New Zealand, Vietnam, Mexico, Myanmar, Thailand, Uruguay, Spain, Panama, Cape Verde and Tonga. It was the first time cardinals from Myanmar, Tonga and Cape Verde were appointed, a Vatican spokesman said, reflecting Francis’ desire for the College of Cardinals to represent the universal nature of the Church. — Reuters

‘Huawei sales revenue to rise 15%’ BEIJING: Chinese telecoms equipment maker Huawei Technologies expects advances in cloud computing and higher demand for smart devices to have lifted 2014 sales revenue by 15% to US$46 billion (RM162.38 billion), chief executive officer Ken Hu said in a new year’s message on the company’s website. The Shenzhen-based company said last year that it would achieve sustainable growth in 2014. It had also targeted revenue of US$70 billion by 2018, or annual growth of about 10% . Huawei’s smartphone shipments rose by more than 40% last year, failing to match its own target and the performance of faster-growing rivals such as Xiaomi. — Reuters

EU to fight new people smuggler tactic BRUSSELS: The European Union has vowed to fight people smugglers’ new tactic of abandoning “ghost ships” full of migrants off European coasts. The European Commission, the EU’s executive arm, said it was following closely the events surrounding the crewless Ezadeen merchant ship, which was drifting toward Italy’s southern shores carrying 450 migrants when Italian sailors took control of it last Friday. — AFP

Nairobi airport shut after plane lands on belly NAIROBI: The Kenyan capital’s main international airport was shut yesterday following the crash landing of a domestic flight, airport officials said. The Kenyan Airports Authority said a Fokker 50 flying from Wajir in the northeast and operated by Skyward suffered landing gear failure and landed on its belly at Jomo Kenyatta International Airport, blocking the sole runway. No casualties were reported. — AFP

HOME BUSINESS 3

M ON DAY JA N UA RY 5 , 2015 • T HEED G E FINA NCIA L DA ILY

Century Logistics’ major shareholders seek exit They are consolidating the group’s overseas operations and shifting its focus to the domestic market to drive value BY KA NG SI EW L I

KUALA LUMPUR: Century Logistics Holdings Bhd’s major shareholders who collectively hold about 44% are looking to sell their equity interest in the supply chain management and logistics provider, said sources. It is understood that Century Logistics’ major shareholders were willing to part their stakes at RM3 to RM3.20 apiece — the price before the company’s bonus issue and share split. This translates into RM1 to RM1.06 per share after taking into account a bonus issue and share split on Oct 9. The asking price is at a 60% to 70% premium to last Friday’s closing price of 62.5 sen. Century Logistics’ largest shareholder is its executive chairman Datuk Richard Phua Sin Mo, with a 26.67% stake in the company. As at Oct 21, 2014, Phua held a 19.18% direct stake and a 7.49% indirect stake through his wife Datin Lee Lay Hun and daughter Pamela Phua Jo Lyn.

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Other substantial shareholders include Century Logistics managing director Steven Teow Choo Hing, who has an 11.53% stake, while his brother Teow Choo Chuan — who is the group’s executive director — holds a 6.03% stake. Both Choo Hing and Choo Chuan are nephews of Phua. “In the past, they (major shareholders) have been approached by

foreign logistics providers to buy a stake in Century Logistics, but the deal didn’t materialise due to valuation issues,” a source told The Edge Financial Daily. In March last year, The Edge weekly reported Felda Global Ventures Holdings Bhd (FGV) as being in talks with Phua to acquire a significant stake in Century Logistics. In reply to the stock exchange’s query, the group then confirmed that it was exploring a potential corporate exercise with the Felda group, although nothing conclusive was agreed upon at that point. One source said while FGV had initially shown interest with an offer of RM2.95 a share for the stake, an 11% premium to the price of RM2.65 it was trading in March, the talks were called off by FGV’s board of directors. The group’s net asset per share was at RM2.13 as at Sept 30, 2014. “The major shareholders are still keen to divest their stakes in Century Logistics, but in the meantime they are consolidating the group’s

Last year, Century Logistics exited its loss-making oil transportation operation with the disposal of its 7,119-tonne clean product tanker.

overseas operations and shifting its focus to domestic market to drive its value,” said the source. Last year, Century Logistics exited its loss-making oil transportation operation with the disposal of its 7,119-tonne clean product tanker. It is also disposing of its distribution centre in Rojana Industrial Park, Thailand for 320 million baht (RM32 million), with an expected net gain on disposal of RM2 million. “We have taken a strategic decision to concentrate on growing our core domestic operations, while exiting investments abroad. The disposal presents the right opportunity for us to realise our property investment in Thailand,” Phua said in the group’s 2013 annual report. Century Logistics’ share price has been on a downtrend since June 30, following the failed talks. The price dropped to 66.7 sen on July 2, and plunged further to 54.5 sen on Dec 16. Based on last Friday’s closing price of 62.5 sen, Phua’s 97.63 million shares in Century Logistics were worth some RM61.02 million. Its market capitalisation stood at RM228.87 million. As at Sept 30, 2014, its cash and cash equivalents stood at RM62.84 million, while its borrowings totalled

RM72.58 million. According to theedgemarkets. com, Century Logistics has a valuation score of 3, which suggests the company gives higher-than-market average returns and is trading at a lower-than-average valuation. Its fundamental score, which measures a company’s balance sheet strength and profitability, stood at 1.8, while the stock’s volatility was 2, with 1 being the least volatile. For the nine months ended Sept 30, 2014, Century Logistics’ net profit grew 28% to RM16.25 million from RM12.68 million a year ago, while revenue rose 15% to RM209.55 million from RM181.81 million. In the latest quarterly announcement, Century Logistics said the group remains confident of its business model and expects to perform well in the current financial year ending Dec 31, 2014. The company started off as a forwarding agent back in 1970, under the name of Syarikat Wakil Penghantaran & Perkapalan Century, and its transformation started in 1996 when it changed to the current name. It has diversified into third-party logistics, oil and gas logistics as well as procurement logistics services.

Infrastructure boom for contractors in 2015 BY Y EN N E FOO

KUALA LUMPUR: Thanks to the government’s ambitious infrastructure goals, 2015 will likely be a busy year for contractors. “Judging by Budget 2015, it is going to be a good year for the construction sector because the government is ramping up infrastructure development. So, the usual challenges like job prospects and filling up an empty order book will not likely be what contractors worry about next (this) year,” Kenanga Research analyst Iqbal Zainal told The Edge Financial Daily. Last October, Prime Minister Datuk Seri Najib Razak announced the construction of the RM5.3 billion Sungai Besi-Ulu Klang Expressway, the RM5 billion West Coast Expressway, the RM4.2 billion Damansara-Shah Alam Highway and the RM1.6 billion Eastern Klang Valley Expressway. In addition to the highways, the RM23 billion Mass Rapid Transit 2 line from Selayang to Putrajaya, the RM69 billion Pengerang Integrated Petroleum Complex and the LRT 3 projects are all in the pipeline for the new year. As a result, Kenanga Research has an “overweight” rating on the

sector. Specifically, Gamuda Bhd and Muhibbah Engineering (M) Bhd are the research house’s top picks as they are likely to be beneficiaries of government infrastructure projects. The only challenge contractors may face, according to Iqbal, is in keeping cost structure efficient. “Cost will be challenging for construction players because there will be intense competition for resources to complete jobs. So, they will have to balance their order books against their own budget and resources,” he explained. UOB KayHian Research head of research Vincent Khoo is similarly optimistic about the sector and has an “overweight” rating on it, citing building material cost as a main reason and manpower shortage as the sector’s main challenge. “We are currently overweight on the sector as medium-term earnings visibility is good, underpinned by potential lower costs, amid lower oil prices of several building materials such as bitumen,” Khoo said. “Manpower will be a key challenge given there will be many construction projects undertaken concurrently. But there is also the potential of lower development expenditure by the government

2015

OUTLOOK

amid lower revenue derived from lower oil prices” he added. IJM Corp Bhd is UOB KayHian Research’s top pick as the research house sees the execution of the West Coast Expressway project is on the way and will anchor the company’s middle-term earnings of RM2.8 billion, with a potential upside of an additional RM22 billion, via open tender. It noted that IJM also stands to gain from the Kuantan Port extension project worth approximately RM1.5 billion. On the ground, industry players echoed analysts’ positive outlook for the sector but voiced concerns about completing the projects due to limited resources such as manpower and machinery. “I think 2015 is a year where contractors will enjoy themselves because there will be a lot of work going around, especially with government projects. But we hope that

this kind of boom in the sector will be sustainable. “We hope the government will implement its projects progressively, rather than all at one go, because there is a real shortage of manpower and machinery. Everyone is going for the same limited pool of resources,” Master Builders Association Malaysia president Matthew Tee told The Edge Financial Daily. “We are [already] seeing a real shortage of manpower at construction sites. The industry is dependent on foreign labour and with the recent government policies and crackdowns on migrant workers, we may face greater difficulty in completing our jobs,” he said. Tee is also worried that competition among industry players for resources could drive up costs and cause “bare, single-digit” profit margins to depreciate further. “Contractors are service providers and should be fairly paid for their services. But, at this point, competition is so stiff that contractors are more concerned about securing jobs than profit margin,” he said. While the outlook for infrastructure-related construction is upbeat, property development-cum-con-

struction firm Ken Holdings Bhd chief executive Sam Tan said the outlook for private sector construction may be “dampened” by persisting cooling measures introduced by the government on the property sector. “There is always a close link between the property development market and the private sector construction. When there is a slowdown in property development, construction firms will also feel the impact,” he said. “There is no question that the property market has seen softer growth in transactions and developers have held back or postponed their property launches. When that happens, it is inevitable that the private construction sector will have fewer jobs,” he said. Despite that, Tan is hopeful that private sector contractors will benefit from the knock-on effect of the government’s infrastructure development. “I don’t think property developers will be very aggressive this year with their launches. However, we hope that the ongoing infrastructure development will open up new areas and create [more] opportunities for property development eventually,” he said.

4 HOME BUSINESS

M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

Iskandar Waterfront IPO postponed indefinitely Company had initially targeted to be listed on Bursa Malaysia by end of 2013 or early 2014 BY Y I MI E YONG

KUALA LUMPUR: Iskandar Waterfront Holdings Sdn Bhd (IWH), which had postponed what would have been one of the country’s largest initial public offering (IPO) once, has decided to put the plan on the back burner indefinitely, said sources. IWH had initially targeted to be listed on Bursa Malaysia by end of 2013 or early 2014. “The [stock] market is still soft. The IPO will be delayed again, but IWH will be listed eventually,” a source close to the company told The Edge Financial Daily. IWH, a partnership between between Johor state government entity Kumpulan Prasarana Rakyat Johor (KPRJ) and IWH managing director Tan Sri Lim Kang Hoo through Credence Resources Sdn Bhd, is the master developer of the 4,000-acre (1,618.7ha) Danga Bay waterfront city in Johor Baru. Credence Resources holds a 60% stake in IWH, while KPRJ owns the remaining 40%. Reuters, quoting sources, had reported in November 2013 that IWH had postponed a US$300

million IPO to the fourth quarter of 2014, a year later than initially planned, on concerns that government measures to rein in property prices would slow demand from well-heeled foreigners. “It has always been their plan to list the company. It’s about branding. Floating the company can benefit their joint venture partners and also attract investors as well as property buyers worldwide,” the source said. “The progress of the listing is around 80%. Most of the procedures and preparations are in place,” said the source, adding that the timing of the IPO will very much depend on stock market conditions. “The current market condition is unfavourable. The sharp fall in oil prices has caused the share price of oil and gas counters to dip, causing the overall market sentiment to be weak,” the source added. Last year, the benchmark FBM KLCI shed 105.71 points or 5.9% to close at 1,761.25 points on the last day of trading on Dec 31. When asked whether the IPO plan would materialise within this year, the source said: “There is no timeline fixed yet as much will depend on the market conditions.”

“It would not look good if the share price dips right after it is listed. They will wait for the market to stabilise first,” the source added. Areca Capital Sdn Bhd chief executive officer Danny Wong Teck Meng said the IPO market for 2015 is expected to “remain soft” just like last year. “The IPO market was quite soft last year. Nine out of the 14 IPOs dropped below their IPO issue price last year,” he added. Looking at the statistics, coupled with concerns about falling oil prices having an impact on the Malaysian economy and the implementation of the goods and services tax in April, Wong said now is not a good time to be planning for an IPO. He expects the equity market to remain soft until oil prices stabilise. IWH would have been one of the mega IPOs anticipated for 2015, alongside Edra Global Energy Bhd (formerly known as 1MDB Energy Group Bhd), Malakoff Corp Bhd, Medini Iskandar Malaysia Sdn Bhd, Weststar Aviation Services Sdn Bhd and Permodalan Nasional Bhd’s planned property trust listing despite overall macro concerns.

C O M PA N I E S I N T H E N E W S

BLand’s plan to sell stake in Great Mall of China project aborted KUALA LUMPUR: Based on corporate announcements and news flow last Friday, the companies that may be in focus today could include Berjaya Land Bhd (BLand), Paramount Corp Bhd, IJM Corp Bhd, LBS Bina Group Bhd and ML Global Bhd. BLand, controlled by tycoon Tan Sri Vincent Tan Chee Yioun (pic) with a 73.17% stake, has aborted a plan to sell its 70% stake in Berjaya (China) Great Mall Co Ltd (GMOC), which is developing the RM7.5 billion Great Mall of China project in Hebei, China, to Hong-Kong listed Carnival Group International Holdings Ltd. BLand said the memorandum of understanding (MoU) outlining the disposal of its 70% stake in GMOC to Carnival Group had lapsed on Dec 31 last year, hence the parties are no longer obligated to proceed with the deal. Property developer Paramount is buying 12 contiguous parcels of freehold land in Salak Tinggi, Sepang, Selangor, from NCT United Development Sdn Bhd for RM227.38 million or RM22 per sq ft. Paramount said it has signed a conditional sales and purchase agreement with NCT last Friday for the proposed acquisition of land totalling 237.3 acres (96.03ha). The land, with a gross development value of RM1.1 billion, forms undeveloped portions of an ongo-

ing mixed development scheme known as Salak Perdana, that is currently being undertaken by NCT. Paramount said the land will up its total GDV to RM9.1 billion. IJM’s wholly-owned subsidiary IJM Construction Sdn Bhd has bagged a construction and completion of superstructure works for the proposed mixed development known as Puteri Cove Residences in Johor Baru for RM538.5 million. IJM Construction has accepted a letter of award from Pearl Discovery Development Sdn Bhd for the job on Plot TR2-2, Mukim Pulai, Johor Baru, Johor. The contract is for 33 months and involves the building of three blocks of 32-storey serviced apartments with 998 units, one block of five-storey small office/home office with 56 units, serviced apartment facilities, two multi-storey car parks, two lobbies and a two-storey retail centre. Property developer LBS Bina has declared a special dividend of 6 sen per share, which is payable on Feb 6, with an entitlement date on Jan 27. It has also upped its stake in ML Global Bhd, previously known as VTI Vintage Bhd, a roof-tile steel trusses manufacturer. It bought 260,000 shares at 43.3 sen on Dec 30 last year, and another 450,000 shares at 43.6 sen on Dec 31. To date, LBS Bina owns 19.777 million shares or 22.06% stake in ML Global. 

Oversea Enterprise targets 30% cafe chain contribution BY Y EN N E FOO

KUALA LUMPUR: Oversea Enterprise Bhd, which owns and operates the Restoran Oversea chain, plans to step out of its comfort zone of operating Chinese restaurants and venture into a casual dining cafe chain as it looks to grow its current share of the food and beverage (F&B) market and earnings. Oversea executive director Yu Tack Tein said it is targeting revenue contribution from the café chain business to grow from 5% to 30% eventually, thereby reducing its reliance on the Chinese restaurant business. The group has taken the first steps toward the goal by establishing three types of multi-chain cafes — halal restaurants, burger restaurants and bakery cafes — on a small scale through joint ventures (JV) with relevant partners in Malaysia and abroad. Yu said the rationale for entering into JVs is to allow the ACE Market-listed company the flex-

ibility of expanding its business with its limited pool of resources and to prevent it from incurring high capital expenditure. Only 60% to 70% of Oversea’s retained profits are set aside each year to expand the multi-chain cafe business. “Every year, I only have RM2 million to RM3 million to invest. 90% of this budget for the next financial year will go toward these three concepts,” he told The Edge Financial Daily in an interview. “That is why we needed somebody that has the capacity to help us grow … without needing the company to spend money to build a centralised kitchen,” Yu explained. This is understandable as Oversea’s earnings growth in the past four financial years has been somewhat like a yo-yo due to its expansion plan and strategy. The group recorded a loss of RM4.5 million in the financial year ended March 31, 2013 (FY13), after its initial expansion plan was not successful. It had to discontin-

Yu said the company is venturing into casual dining cafe chains. Photo by Chu Juck Seng

ue the operation of one Chinese restaurant in Malaysia and sold another in Singapore. In FY14, the group returned to profitability, with a net profit of RM3.35 million after a consoli-

dation exercise and cost control measures. For the six months ended Sept 30, 2014, the group posted a net profit of RM1.37 million. Yu is confident Oversea will remain profitable in FY15 despite its current expansion exercise, and is keeping a modest low single-digit revenue growth target for the year. He said Oversea’s priority now is to create a strong presence in the halal restaurant market. “We are originally a Chinese restaurant [operator], but we found that the Malay or halal market is one that we cannot ignore. So we are venturing into this segment again and will focus on it over the next two to three years,” said Yu. Oversea had first tried to penetrate the halal F&B market through the sale of the group’s mooncakes. The attempt, Yu said, saw limited success as mooncakes are still viewed as traditional Chinese confectionery and does not appeal to the Malay audience. Despite having “next to zero penetration” in the halal F&B

segment after the initial attempt, Oversea is trying again to penetrate the market with its halal restaurants. The group counts CNI Holdings Bhd as one of its JV partners for this purpose. Together, through a JV company known as Tunas Citarasa Sdn Bhd, they have already set up two halal food outlets in the Klang Valley known as Otak Otak Café and Janji Temu @ Mark’s. Plans for more outlets under the Janji Temu @ Mark’s brand are in the pipeline. “We will expand [into the halal F&B market] more aggressively. We have plans for that once the business is proven to be profitable. “What we are trying to do now is to develop the business concept, build the team and prove that it is workable before we expand [aggressively],” Yu said. The same, Yu added, applies for Oversea’s burger restaurant business in Adelaide, Australia, and its bakery cafe business in Taipei, Taiwan, which is due to commence operations early this year.

HOME BUSINESS 5

M ON DAY JA N UA RY 5 , 2015 • T HEED G E FINA NCIA L DA ILY

Price war to squeeze nitrile glove margins this year But strengthening US dollar could lift earnings BY C H EN SHAUA FU I

KUALA LUMPUR: Malaysian glove makers expect competition in the nitrile glove segment to intensify this year and are bracing themselves for a price war that will result in thinner margins. “In an increasingly competitive environment, fully passing on cost increases is more difficult. But as it stands, we believe Hartalega is more efficient than our peers and will be better able to weather any cost increases,” Hartalega Holdings Bhd managing director Kuan Mun Leong told The Edge Financial Daily in an email. Nevertheless, the group, which saw its operating profit for the second quarter of financial year 2015 ended Sept 30, 2014, (2QFY15) decline to 23.17% from 31% a year ago, has already been warning its stakeholders that margins will likely continue to be impacted this year. The declining margins, together with lower selling prices, caused its 2QFY15 net profit to contract 24% to RM48.16 million against RM63.27 millon in the previous year. The world’s largest glove maker, Top Glove Corp Bhd, also expects a challenging business environment in 2015 for the same reason, though its chairman Tan Sri Lim Wee Chai believes the company’s new capacity for nitrile gloves will enable it to do more business with larger multinationals in developed markets compared with its peers. Top Glove’s net profit in 4QFY14 ended Aug 31, 2014 eased 5.2% to RM48.42 million from RM45.9 million a year earlier, owing to stiff competition, which resulted in margin pressure. Nitrile gloves accounted for 24% of the total volume of Top Glove’s production in 4QFY14 and its major markets are Europe (31%) and North America (27%). Further aggravating the situation is the knock-on inflationary effects from last year’s increases in electricity and natural gas tariffs, of which Lim said Top Glove is still feeling the effects. Also looming on the horizon is the

2015

OUTLOOK

goods and services tax (GST) in April. Nonetheless, Lim believes the industry’s prospects remain promising. Top Glove expects to deliver an improved performance in FY15 due to lower raw material prices and favourable currency exchange rates against the US dollar. “The global demand for rubber gloves from developed and emerging markets is still on the uptrend and is expected to continue growing steadily at a rate of 6% to 8% per annum.” According to RHB Research head Alexander Chia, competition resulting in average selling price (ASP) pressure is not the main concern, yet. But he noted that if supply grows too fast, price war may emerge and glove makers may slash their ASPs more aggressively to increase sales volumes. “Intense competition within the industry will exert pressure on margins as glove companies may face challenges in passing through the incremental costs [such as labour costs]. Competition is unavoidable. Those with superior margins or high production efficiency will do better,” Chia told The Edge Financial Daily. In a note dated Dec 31, RHB Research noted that any heightened compeitition would not bode well for Top Glove and Supermax Corp Bhd, “as both are margin laggards in the industry”. Nevertheless, it said the strengthening of the greenback against the ringgit will benefit the industry. “A 3% increase in the exchange rate could lift the industry’s earnings by approximately 2% to 4%,” it said. It maintained its “overweight” call on the sector as it expects global consumption to remain strong and to expand 8% to 10% per annum, led by demand

Kuan: We encourage investors to look beyond FY15. For FY16, we expect capacity to increase by 43%.

Lim: Global demand for rubber gloves from developed and emerging markets is still on the uptrend.

from the healthcare segment. Its top picks for the sector are Hartalega (target price (TP): RM7.70), Kossan Rubber Industries Bhd (TP: RM5.12) and Karex Bhd (TP: RM3.89). Meanwhile, Hartalega’s Kuan said Malaysian glove manufacturers will have to rise to the challenge of cost increases by moving up the value chain in glove manufacturing. “The only pathway is to innovate in the way that gloves are made and to come out with innovative products and production technologies,” he said, citing its nitrile glove innovation as an example. “Our nitrile gloves changed the global landscape of the glove market. Before our lightweight nitrile glove, the world’s glove market was dominated by natural rubber gloves (about 95%). Today, the global market share between the two materials is approximately 50:50,” Kuan said. Despite a weaker profit for

2QFY15, Kuan is confident Hartalega will continue to deliver growth in the coming years. But it does not expect significant growth in its current FY15 ending March as its Next Generation Integrated Glove Manufacturing Complex (NGC) will only be operational towards the end of 2014. “We encourage investors to look beyond FY15. For FY16, we expect capacity to increase by 43%. With an average capacity growth of 21% per annum for the next six years, we expect continued growth in our earnings per share,” said Kuan. For FY16, Kuan expects Hartalega’s output to increase to 18.4 billion pieces, 43% higher than FY15. “Despite margin compression, our profit margin is above the industry average as a result of our high-productivity manufacturing processes, derived from our advanced manufacturing technologies which were developed in-house. In addition, we expect NGC to provide a significant increase in our productivity. NGC will be 33% higher in productivity compared to our existing facilities. In the long run, this will put us in a very good position to defend our margins and maintain our dominance in the nitrile glove market,” Kuan said. As the developed markets have matured, both Hartalega and Top Glove are looking at emerging markets, such as India and China, for expansion. Kuan said there are vast untapped markets, especially in Asia, where hygiene and healthcare awareness in some countries is still low relative to the West. “Specifically, due to the low per capita consumption of gloves in China and India, Hartalega realised the enormous potential in these emerging markets,” Kuan said. For the same reason, Top Glove’s Lim thinks its operations in China will contribute positively to the group’s revenue in FY15, during which it expects to a volume growth of 10%, driven mainly by a consistently resilient demand for rubber gloves, and ongoing quality and automation improvement initiatives.

New Prasarana group MD says committed to achieving worldclass level KUALA LUMPUR: Azmi Abdul Aziz, who was appointed Prasarana Malaysia Bhd’s group managing director (MD) effective Jan 1, has pledged to bring the country’s public transport service to a world-class level. He brings with him more than 25 years’ experience in the public and private sectors in the public transport industry including serving as chief development officer at the Land Public Transport Commission (SPAD). He took over the duties from Datuk Seri Shahril Mokhtar, who was appointed the new chief executive officer of Mass Rapid Transit Corp Sdn Bhd (MRT Corp). “The appointment is a massive trust and a huge challenge in the efforts to continually upgrade and champion the works and good name of the Prasarana group. “Plenty still needs to be done to bring the country’s public transport service to world-class level,” Azmi said in a statement last Friday. He listed the LRT Line Extension Project (LEP) and preparations for managing the new assets that are due for delivery as the immediate assignments. He was referring to the remaining nine four-car monorail trains currently in the process of delivery, and the supply of 50 new six-car trains for the LRT Ampang Line scheduled to commence this month. Among the key events for this are the scheduled midyear opening of the Bus Rapid Transit-Sunway Line; the opening of Phase One of the LEP Ampang Line in October; and the initial works as the shadow operator of the Makkah Metro, Azmi said. “We also need to ensure continued efforts in generating income from the nonfare revenue sectors so that they continue to improve the financial performance of the Prasarana group,” Azmi said. — Bernama

6 HOME BUSINESS

M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

AFB targets double-digit growth Plans to beef up its investment banking ops this year BY SU L H I A ZMA N

KUALA LUMPUR: The smallest Middle-Eastern bank in Malaysia, Asian Finance Bank Bhd (AFB), is banking on its relationship with corporate clients to grow its revenue and funded assets by between 10% and 15% from next year onwards, said its chief executive officer (CEO) Datuk Mohamed Azahari Mohamed Kamil. “Our strategy is very simple: relationship, relationship and relationship. Our ambition is high but our growth target is modest, at double digits, in line with our current capability and capacity. “The business focus will be providing financing to corporate clients, which will mainly comprise government-linked companies, as well as beefing up our investment banking operations,” Mohamed Azahari told The Edge Financial Daily in an interview. He said AFB’s corporate financing business in the areas of oil and gas, shipping, aviation, infrastructure and real estate generates a higher profit margin, with an average of 2%. In 2015, Mohamed Azahari expects  AFB  to expand its investment banking business as it seeks fee-based income to contribute at least 20% beginning this year.

The remaining 80% will continue to be derived from its corporate financing, which includes treasury business and funded assets. “We currently have the investment banking team but it has not been formalised. We will start doing so beginning January, focusing on capital market, where we may look at arranging sukuk (Islamic bond) and various other securities instruments, as well as corporate advisory. This is especially in the area of mergers and acquisitions in which we may bring investors from the Middle East to participate,” he said. Mohamed Azahari said the bank’s focus on two areas — corporate financing and investment banking — is expected to increase its efficiency and profitability, as well as reduce its cost-to-income ratio to 50% this year from 55% currently.   “With our focus on these high-margin areas, we expect AFB to post an improved return on equity (ROE) that should be on par with the midsized banks’ market average of between 10% and 15% in the next three to five years,” he said. AFB’s ROE currently stands at 2.51%. On the outlook, Mohamed Azahari said AFB will maintain its growth momentum with a double-digit tar-

(From left) Saminathan, Toyota Capital (M) Sdn Bhd president Kuah Kock Heng and Citibank region head for treasury and trade solutions business in Asia-Pacific Amol Gupte at the award ceremony.

Citibank bags top direct debit service award KUALA LUMPUR: Citibank Bhd bagged the “Top Transaction Volume for Direct Debit Service” award at Malaysian Electronic Clearing Corp Sdn Bhd’s (MyClear) inaugural Bank Recognition Awards recently. MyClear also recognised four of Citibank’s corporate clients as 2013 Direct Debit Top Merchants. The four were AIA Bhd, BMW Credit (M) Sdn Bhd, Toyota Capital (M) Sdn Bhd and AXA Affin Life Insurance Bhd. “At Citibank, we actively seek to enable electronic payments for clients through services integrated with their business processes, and we are honoured that our endeavours have been recognised,” said Citibank managing director of treasury and trade solutions Noel Saminathan in a statement. MyClear, a subsidiary of Bank Negara Malaysia, offers services consisting of large value payment

and retail e-payment solutions that allow corporations and individuals to make payments and transfer funds effortlessly and safely. MyClear’s recognition of Citibank was for its direct debit service. Direct debit is an interbank collection service for regular and recurring payments enabling automated collection directly from a customer’s bank account at multiple banks with a single authorisation. The service facilitates timely settlement of bills and invoices through pre-agreed arrangements with banks. Saminathan said while Citibank is already a leader in this space, it wants to do more in e-payments and digital services, especially since the bank has a unique, global platform featuring best practice services from around the world for managing electronic transactions.

get as it has just recently returned to the black in the financial year ended Dec 31, 2013 (FY13), with a net profit of RM7.57 million. AFB was in the red for three years from FY10, with cumulative losses amounting to RM48.18 million. “We have gradually reduced our exposure to small and medium enterprises, currently at a marginal level of 5% and below. We will also maintain our retail banking as it is. We have no immediate plan to go aggressive,” he said. Mohamed Azahari said AFB does not expect much growth in the retail banking sector as it sees heightened competition and market cannibalisation. The bank currently has a branch in Kuala Lumpur and Johor, and a representative office in Indonesia. “AFB began its initial operation with a retail banking service and slowly branched out to other areas. We currently have three automated teller machines (ATM) that are not linked to any inter-bank services and we do not provide card services (credit card or debit card). But that does not mean we are not growing. It just means we are shifting our business to other areas,” he said. AFB may consider listing its bank in the next five years or more. For

now, it is trying to meet the Basel III requirements to strengthen its resilience and improve liquidity. Basel III is a global, voluntary regulatory standard on bank capital adequacy, stress testing and market liquidity risk. Bank Negara Malaysia, in a document issued in December 2011, targets to implement Basel III from 2013 until 2019. The central bank expects that by Jan 1, 2019, commercial banks should have a capital conservation buffer of 2.5%, a minimum Tier-1 capital ratio of 6%, a leverage ratio of 3%, and a liquidity coverage ratio of 100%. “It is no secret that our shareholders plan to bring the bank to the next level via new capital attraction, which will make the bank more liquid. But as of now, there is no listing proposal. Maybe we will look into this in the next five years,” he said. As at Sept 30, AFB has a Tier-1 capital ratio of 20.25%. On banking consolidation, Mohamed Azahari agreed it is good to create a more effective and competitive banking system, but said there is still room for a midsized boutique bank like AFB in Malaysia. “I think AFB and other midsized lenders play a big role in a country’s banking landscape. We can create

our own niche and edge by offering strategic value propositions to our customers,” he said. Mohamed Azahari has been the CEO of AFB since August 2008. Two other Middle-East lenders in the country, on the other hand, have been changing CEOs in between one and three years. CEO Datuk Azrulnizam Abdul Aziz of Saudi Arabia-backed Al Rajhi Banking & Investment Corp Malaysia Bhd resigned in October last year, barely after 2½ years at its helm. Kuwait Finance House Malaysia Bhd (KFH) in late November made a surprise announcement on the departure of its CEO Datuk Seri Abdul Hamidy Hafiz, who has been in office for a mere 1½ years since March 21, 2013. “Serving a Middle-East bank is definitely a challenge as I have to keep both my shareholders and customers happy. But Alhamdulillah (praise to God), I have managed to wade through the challenges,” Mohamed Azahari said with a chuckle. Incorporated in 2005, AFB is backed by Qatar Islamic Bank (66.67%), Saudi Arabia’s RUSD Investment Bank (16.67%), Yemen’s Tadhamon International Islamic Bank (10%) and Financial Assets Bahrain WLL (6.67%).

Splash refutes ex-Selangor MB’s allegations over water deal BY Y E N NE FO O

KUALA LUMPUR: Syarikat Pengeluar Air Sdn Bhd (Splash), a 40% subsidiary of Gamuda Bhd, has dismissed a call by former Selangor menteri besar Tan Sri Abdul Khalid Ibrahim for the current Selangor state administration to resist “any ludicrous and outlandish demands from any water concession companies” in the state’s water restructuring exercise. Splash refuted Abdul Khalid’s assertion that the previous state administration made four unchanged offers to water concession companies, calling the RM2.8 billion demanded by Splash “appalling” and “tantamount to gross injustice”. In a statement last Friday, Splash said it had previously accepted in principle two earlier offers from the state based on 1 time book value in principle. However, later offers were much reduced by 90% and were deemed unacceptable. The water concessionaire said the state’s valuation formula based on 12% return on equity minus historical dividend payout is flawed. The formula, Splash said, pays no heed to the company’s current financial position, does not consider actual operational efficiency, does not value remaining concession terms, favours companies that

Splash is the only one of four concessionaires in Selangor that has yet to agree to the state’s takeover offer totalling RM9.65 billion for the concessionaires. operate longer and takes only cash dividends into account. It said the RM2.8 billion quoted by Splash to the Selangor state government was based on discounted cash flow, a universally accepted method for the valuation of concession assets. “The state’s offer to Splash as stated is RM1.83 billion. However, netting off Splash loans of RM1.56 billion, the offer is worth only RM350.6 million, whereas the book value of Splash after netting off loans is RM2.8 billion,” it said in a statement. Further, Splash cited that six other states, namely Melaka, Negeri Sembilan, Johor, Perlis, Penang and Perak, have all completed their water industry consolidation exercises based on 1 time book value. “In four of the six states, the assets acquired by Pengurusan Aset Air Bhd were the same in value as their liabilities. The obvious result

of the 1 time book value principle of asset acquisition is that in all the six states’ consolidation exercises, there were no gains or losses reported by the exiting shareholders,” Splash said. On the issue of delay in the water restructuring exercise as pointed out by Abdul Khalid, Splash said the inconsistency in the offers made by the state had caused the delay. Splash also denied that it is “less willing” to bring the issue to arbitration to avoid disclosing terms and conditions of the privatisation agreement which favours water concessionaires. It said that is “agreeable to arbitration if the scope of the arbitration is not merely restricted to the flawed equity value method of valuation but includes universally accepted methods of valuation”. It was responding to a letter written by Abdul Khalid that was published in a local daily on Dec 16, 2014, calling for the current state administration to resist demands by water concession companies to prevent any impasse in “returning the water assets to the people, their rightful owners”. Splash is the only one of four concessionaires in Selangor that has yet to agree to the state’s takeover offer totalling to RM9.65 billion for the concessionaires.

ST O C KS W I T H M O M E N T U M 7

M ON DAY JA N UA RY 5 , 2015 • T HEED G E FINA NCIA L DA ILY

www.theedgemarkets.com

This column is an analysis done by Asia Analytica Sdn Bhd on the fundamentals of stocks with momentum that were picked up using proprietary algorithm by Anticipatory Analytics Sdn Bhd and that first appeared at www.theedgemarkets.com. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.

HOMERITZ CORP BHD (ALL FIGURES IN RM MIL)

Homeritz Corp Bhd HOMERITZ was picked up by our momentum algorithm for the second consecutive trading day (refer our Stocks with Momentum at www.theedgemarkets.com), after volume rose 62% to 3.04 million shares. The stock price has risen 5 sen or 5.8% to 91 sen on Friday. A net exporter with products exported to over 40 countries including Asia, Australia, Europe and the US, Homeritz offers investors exposure to the strengthening US dollar (USD) with some 97% of its trade receivables denominated in USD. Revenue for the company has grown from RM89.8 million in FY Aug 2011 to RM112.9 million in FY2013. In the same period, net profit increased an outsized 40% from RM10.8 million to RM15.1 million while EBITDA margins expanded from 15.9% to 20% due to economies of scale, increased productivity and efficiency. For FY2014, the company posted revenue

of RM127.2 million, boosted by recovery in demand from its key export markets and the strengthening USD. Net profit was RM20.2 million, a significant 33.9% increase from the previous year. Homeritz’s valuations are fairly attractive. The stock trades at a price-to-book ratio of 1.86 times with a trailing 12-month P/E ratio of only 8.5 times. Return on equity (ROE) is high at 24.5%. It has a strong balance sheet with net cash of RM49.3 million, equivalent to 24.6 sen per share or 27.0% of its share price. Last but not least, Homeritz offers good yields. The company has a minimum 40% dividend payout policy. For FY2014, Homeritz has declared a final dividend of 3.1 sen. This brings total dividends for the financial year to 5.1 sen per share — up from 3.75 sen in FY2013 — or about 50% of net profit. This earns shareholders a substantially higher than market average net dividend yield of 5.9%. Valuation factor * 2.40 Fundamental factor ** 1.95 Trailing 12m P/E (x) 8.50 Trailing 12m PEG (x) 0.25 P/NAV (x) 1.86 Trailing 12M Dividend yield (%) 5.52 Market capitalisation (RM mil) 172.00 Shares outstanding (ex-treasury) mil 200.00 Beta 0.98 12-month price range 0.61 - 0.95 *Valuation factor — Composite measure of historical return & valuation **Fundamental factor — Composite measure of balance sheet strength & profitability Note: A score of 3.0 is the best to have and 0.0 is the worst to have

Income statement Turnover EBITDA Depreciation and amortisation EBIT Associates Interest income Interest expense Extraordinary gain/(loss) Pre-tax profit/(loss) Net profit/(loss) - owners of company Balance sheet Fixed assets - PPE Biological assets Intangibles & goodwill Cash and equivalents Total current assets ST borrowings Total current liabilities Total assets Shareholders’ fund Long term borrowings

HOMERITZ CORP BHD RATIOS

DPS (RM) Net asset per share (RM) ROE (%) ROA (%) Turnover growth (%) Net profit growth (%) Net margin (%) Current ratio (x) Gearing (%) Interest cover (x)

FY12 31/8/2012

FY13 31/8/2013

FY14 31/8/2014

LATEST 4QFY14 31/8/2014

103.2 20.1 2.5 17.6 0.2 0.2 17.7 14.7

112.9 22.6 2.4 20.3 0.4 0.1 20.6 15.1

127.2 27.9 2.5 25.5 0.0 1.1 0.1 0.0 26.5 20.2

33.2 6.6 0.6 6.0 0.3 0.0 6.2 5.2

35.3 0.5 24.5 55.6 0.3 9.3 82.0 72.8 2.7

33.5 0.5 34.7 69.8 0.4 11.9 91.9 81.4 2.3

33.1 0.5 51.6 82.5 0.5 10.9 105.2 92.2 1.9

33.1 0.5 51.6 82.5 0.5 10.9 105.2 92.2 1.9

FY12 31/8/2012

FY13 31/8/2013

FY14 31/8/2014

ROLLING 12-MTH

0.03 0.36 21.66 19.29 14.94 35.96 14.23 5.95 121.34

0.04 0.41 19.61 17.39 9.36 2.85 13.39 5.85 164.78

0.05 0.46 23.33 20.55 12.64 33.92 15.92 7.57 230.87

0.05 0.46 24.48 21.61 12.64 33.93 15.92 7.57 230.96

8 I N V E ST I N G I D E A S

M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

I N S I D E R A S I A’S S TO C K O F T H E D AY

SCGM BHD (ALL FIGURES IN RM MIL)

SCGM Bhd SCGM is involved in, primarily, the manufacture of thermo-vacuum formed plastic packing — basically, disposal plastic trays for the food and beverage, electronics & electrical and medical sectors. Aside from growing demand, the company will benefit from lower raw material cost for plastic resin. As an exporter — sales to Asia, Europe, Oceania and North America accounted for 44% of sales in FY April 2014 — SCGM will also gain from the weak ringgit. The stock is not well known amongst the investing community, perhaps due to its relatively small market capitalisation, currently about RM154 million. But the company has been doing quite well. SCGM’s underlying business looks fundamentally sound. As of 1Q2015, it has a net cash of RM6.6 million or 8 sen per share. From FY2010 to FY2014, revenue and net profit grew at CAGR of 10.3% and 14.6%, respectively.

For 1QFY2015, net profit grew an outsized 13.3% y-o-y to RM3.5 million on the back of 6% rise in revenue to RM27.3 million. Net margin widened to 13% from an average of 11.5% in FY2014, boosted by lower raw material cost, increased production and economies of scale. To further drive growth, SCGM will invest over RM11 million to boost production capacity by 20% for FY2015. The company is adding a new plastic cup line that will lift capacity and sales by some 10% this year and planning further automation to improve efficiency. The Edge Research rates SCGM a high Fundamental score of 3 out of 3 and Valuation score of 2.1 out of 3. The stock is trading at a trailing 12-month P/E of 12.4 times, low relative to prospective growth. It has a minimum 40% dividend payout policy. Dividends totalled 10 sen per share in FY2014, translating into a higher-than-market average net yield of 5.2%. Valuation factor * 2.10 Fundamental factor ** 3.00 Trailing 12m P/E (x) 12.41 Trailing 12m PEG (x) 0.33 P/NAV (x) 2.18 Trailing 12M Dividend yield (%) 6.25 Market capitalisation (RM mil) 153.60 Shares outstanding (ex-treasury) mil 80.00 Beta 0.89 12-month price range 0.84 - 2.44 *Valuation factor — Composite measure of historical return & valuation **Fundamental factor — Composite measure of balance sheet strength & profitability Note: A score of 3.0 is the best to have and 0.0 is the worst to have

T O N G ’S MOMENTUM P O RT F O L I O THE local bourse fell on the first trading day of 2015, led by banking and plantation stocks. Trading was light with some 1.08 billion shares valued at RM0.92 billion changed hands. The FBM KLCI index closed 0.48% lower to settle at 1,752.77. However, market breadth was positive with gainers outweighing losers by a ratio of 1.3 to one. Already down 7% last year, the ringgit weakened further against the US dollar. It is trading at 3.51 per US dollar at the time of writing. Falling crude oil prices and capital outflows will continue to weigh on the ringgit’s performance this year. Meanwhile, Asian stocks mostly ended higher on low trading volume while the stock markets in China and Japan are closed. US markets extended losses on the last trading day of 2014 amid weaker consumer confidence data. The Dow and the S&P closed down 0.89% and 1.03% respectively. Brent crude and WTI crude are hovering around $57 and $54 per barrel respectively. The Euro slumped to a 4 ½ year low on speculation of further stimulus measures by the European Central Bank (ECB). My portfolio started on 8 July 2014 with a capital of RM100,000. Since then, it has outperformed the FBM KLCI by 8.2%, registering an annualized return of 1.6%. I kept the portfolio unchanged.

Income statement Turnover EBITDA Depreciation and amortisation EBIT Associates Interest income Interest expense Extraordinary gain/(loss) Pre-tax profit/(loss) Net profit/(loss) - owners of company Balance sheet Fixed assets - PPE Biological assets Intangibles & goodwill Cash and equivalents Total current assets ST borrowings Total current liabilities Total assets Shareholders’ fund Long term borrowings

SCGM BHD RATIOS

DPS (RM) Net asset per share (RM) ROE (%) ROA (%) Turnover growth (%) Net profit growth (%) Net margin (%) Current ratio (x) Gearing (%) Interest cover (x)

QUANTITY

BOUGHT PRICE RM

9,000

0.789

FY12 30/4/2012

FY13 30/4/2013

FY14 30/4/2014

LATEST 2QFY15 31/10/2014

82.1 12.1 3.8 8.3 0.0 0.3 8.0 5.6

96.9 14.8 4.1 10.7 0.0 0.3 0.1 10.4 7.8

100.3 19.8 4.6 15.2 0.1 0.3 15.0 11.5

26.1 5.2 1.1 4.1 0.0 0.0 4.1 3.0

35.2 2.9 41.0 2.7 10.5 63.9 60.5 0.5

32.1 6.3 43.7 0.4 8.6 70.3 65.9 0.2

33.0 15.8 52.6 0.2 8.3 76.5 73.4 -

33.0 10.2 48.1 0.1 8.3 72.8 70.4 -

FY12 30/4/2012

FY13 30/4/2013

FY14 30/4/2014

ROLLING 12-MTH

0.02 0.76 9.54 8.86 9.38 (11.72) 6.83 3.89 0.62 35.75

0.05 0.82 12.41 11.69 18.00 39.65 8.09 5.06 58.30

0.10 0.92 16.49 15.66 3.52 46.54 11.45 6.31 64.30

0.12 0.88 17.92 17.02 1.70 36.74 12.14 5.80 112.97

BOUGHT VALUE CURRENT PRICE RM RM

CURRENT VALUE RM

GAIN / LOSS RM

% GAIN / LOSS

6,435.0

(669.3)

(9.4)

Shares held: Willowglen MSC Bhd

Total

7,104.3

0.715

--------------7,104.3

--------------- --------------6,435.0 (669.3)

--------------7,104.3

--------------- --------------6,435.0 (669.3)

Shares bought: No shares were bought today. Total shares held

(9.4)

Shares sold: No shares were sold today. Cash balance

94,369.9

Realised profits / (losses)

1,474.3

Total Portfolio Returns Annualised returns for portfolio

100,000.00

100,804.9

804.9

Portfolio Beta Risk adjusted returns for portfolio

0.8 1.6 1.166 1.4

Performance Comparison FBM KLCI FBM KLCI Emas

At portfolio start 1,892.7 13,163.7

Current 1,752.8 12,035.9

Change (7.4%) (8.6%)

Relative portfolio outperformance 8.2% 9.4%

This is a personal portfolio for information purposes only and does not constitute a recommendation or solicitation or expression of views to influence readers to buy/sell any stocks. Portfolio started on 8 July 2014 with RM100,000.

B R O K E R S’ C A L L 9

M ON DAY JA N UA RY 5 , 2015 • T HEED G E FINA NCIA L DA ILY

Automotive business said to contract in first half Automotive sector Maintain neutral: We expect first half 2015 (1H15) total industry volume (TIV) growth to contract 3% to 5% year-on-year (y-o-y) to approximately 320,000 against a high base in 1H14 (+6% y-o-y to 333,000 units) before catching up in 2H15 to meet our 2015 target of 660,000 units. This is in view that consumers will tighten their belts and adopt a wait-and-see approach as they brace for higher cost of living and uncertainties to car prices from the goods and services tax implementation in April. Nonetheless, shortfalls in the public transportation system coupled with the normal

replacement for old cars should sustain the TIV level. We like auto players with presence in the economical car segments (in view of higher cost of living) and which are not overcrowded by intense competition (i.e. in the B-segment). We favour Perodua for we believe its newly-launched A-segment Axia is a game changer, timely for potential trading down by consumers. Globally, we see a shift in consumer preference to sports utility vehicles and as such, we laud Honda and Mazda for their planned model launches in the smaller and more economical crossover utility ve-

hicle (CUV) segment (i.e. Honda HR-V & Mazda CX-3) in 2015. Auto players import cars/components in either US dollars or Japanese yen, and foreign exchange has proven to have a material impact on auto players’ cost of goods sold and margins. In view of a softer yen and stronger dollar against the ringgit, we prefer Japanese importers and avoid US importers. In the past five months, the dollar has surged 9% against the ringgit to US$1 per RM3.50 and our forex research expects an average US$1 per RM3.50 in 2015. We expect the yen-ringgit exchange rate to stay soft, averaging ¥100 per RM3 in

2015 with recently re-elected Japanese Prime Minister Shinzo Abe expected to continue the stimulus and quantitative and qualitative easing programme. We favour MBM Resources Bhd and Berjaya Auto Bhd primarily for their (i) presence in the economical car segment (i.e. A and CUV segments respectively), (ii) positive yen exposure and (iii) undemanding valuations. Meanwhile, we avoid raising exposure in UMW Holdings Bhd and Tan Chong Motor Holdings Bhd for their (i) dependence in the competitive B-segment and (ii) negative US dollar exposure. — Maybank IB Research, Jan 2

Automotive sector STOCK

UMW Hldgs Tan Chong BAuto MBMR MCap WT avg

REC

SHR PX (RM)

MKT CAP (RM MIL)

TP

PER (X)

PER (X)

PER (X)

P/BV (X)

P/BV (X)

ROE (%)

ROE (%)

(RM)

CY13A

CY14F

CY15F

CY13A

CY14F

CY14F

CY15F

NET YIELD (%) CY15F

Hold Hold Buy Buy

10.96 3.28 3.30 2.90

12,805 2,141 2,781 1,133

11.20 3.50 4.20 3.50

14.8 7.3 25.3 8.2 15.1

15.2 25.6 14.0 10.3 15.9

15.1 15.9 10.7 7.5 14.1

2.0 0.8 9.3 0.8 2.9

1.9 0.8 5.9 0.7 2.3

12.6 3.0 45.7 7.2 16.1

11.9 4.7 43.9 9.3 15.7

3.3 1.8 3.9 3.3 3.2

Telcos to outperform this year as investors seek earnings stability Telecommunications sector Maintain overweight: Mobile service revenue is unlikely to have registered growth in 2014, owing to monetisation challenges faced by both Maxis Bhd (organisational restructuring and fixing its prepaid business) and Celcom Axiata Bhd (unstable IT systems). As we head into 2015, mobile revenue growth should resume as operators overcome monetisation challenges and potentially benefit from the goods and services tax (GST). Meanwhile, the competitive intensity in the mobile space would likely increase going forward, as 1) U Mobile Sdn Bhd maintains its pursuit of revenue share, and 2) Telekom Malaysia Bhd (TM)-P1 prepares to roll out long-term evolution services. For now, the big three remain cognisant of the need to not compete on pricing.

Source: Maybank KE

CPO production affected by floods THE EDGE FILE PHOTO

Plantations sector Maintain neutral: The government expects crude palm oil (CPO) production to come down by 15% to 20% due to the severe flood situation in the East Coast. A total of 7,500 smallholder estates covering 24,000ha and 230 oil palm estates spanning 160,000ha were affected. As a result, CPO inventories were also expected to be reduced to two million tonnes from 2.2 million tonnes. It unexpectedly disrupted the CPO supplies in the short term. The worst flood in the East Coast due to the monsoon season affected fresh fruit bunch (FFB) harvesting and milling activities as well as transportation. The flood situation in Kelantan, Terengganu, Pahang, Perak and Johor, which collectively account for 40.8% of Malaysian oil palm plantation, improved last week. These five states also contribute about 44% of total CPO production in Malaysia. We think that it could at least take one to two months for the production to normalise.

Maxis went through operational hiccups in 2014, and underperformed its peers. Photo by Sam Fong

In contrast with other plantation counters, Felda Global Ventures Holdings Bhd’s (FGV) share price had unexpectedly tanked 34% over the last month despite the recovery of CPO prices. Besides selling pressure from two major shareholders, the Employees Provident Fund and Kumpulan Wang Persaraan, the group’s earnings were also clouded by the exposure

of plantation land to flood-hit areas. This is likely to affect its upcoming quarterly results. As of Dec 29 last year, the group estimated a total loss of RM21 million due to flood damage and loss of FFB production totalling 11,000 tonnes, which is about 0.2% of estimated annual production. Based on the current share price, the company is trading at only 16

times to our financial year 2015 (FY15) forecasts compared with industry average of 18 to 19 times. CPO prices are likely to recover further driven by lower CPO inventories for December 2014. They have recovered more than 7.5% since early December. We think that they could easily go above RM2,400 per tonne in the short term. — PublicInvest Research, Jan 2

Plantation sector COMPANY

PRICE @ DEC 31 (RM)

MKT CAP (RM MIL)

2.18 10.00 4.80 22.80 9.19 3.88 2.31

7,953.1 7,696.0 30,660.5 24,327.6 55,729.1 1,437.5 3,130.1

Felda Global Ventures Genting Plantations IOI Corp KL Kepong Sime Darby Ta Ann TSH Resources Source: : PublicInvest Research estimates

EPS (SEN) 2014F 2015F

EPS GROWTH (%) 2014F 2015F

PER (X) 2014F 2015F

11.5 42.4 22.0 95.2 45.5 27.0 9.3

(35.7) 8.4 9.4 13.3 (10.6) 75.3 17.8

19.0 23.6 21.8 23.9 20.2 14.4 24.8

13.6 50.0 21.0 108.1 46.4 33.9 10.8

18.2 17.9 (4.5) 13.5 1.9 25.5 16.5

16.0 20.0 22.9 21.1 19.8 11.4 21.4

P/BV (X) 2014F 2015F

1.2 2.1 5.3 3.1 1.9 1.4 2.6

1.1 1.9 4.8 2.9 1.8 1.3 2.6

ROE (%) 2014F 2015F

8.1 8.8 22.4 13.1 9.3 9.6 10.8

9.4 9.7 21.4 14.0 9.2 11.5 11.5

DIV. YLD (%) 2014F 2015F

3.6 1.3 0.8 2.2 3.3 4.3 0.7

4.3 1.5 0.5 2.2 3.4 5.4 0.9

Sector valuations remain uncompelling (both DiGi. Com Bhd and TM set new enterprise value over earnings before interest, taxes, depreciation and amortisation [EV/ Ebitda] highs in 2014), but as we repeatedly noted in the past, telecoms are increasingly becoming liquidity proxies. As general risk aversion sets in, we expect the telecoms sector to outperform in 2015 as investors gravitate towards sectors with strong earnings stability. Our preferred sector picks are Axiata Group Bhd and Maxis, essentially the laggards of 2014. Both went through operational hiccups in 2014, and thus underperformed their peers. However, operations for both look set to normalise heading into 2015, and we expect their share prices to be rerated. Conversely, DiGi, TM and Time dotCom Bhd are all trading near peak valuations given their strong share price run-up in 2014. Thus we see limited near-term upside for these stocks. — Maybank IB Research, Jan 2

10 B R O K E R S’ C A L L

M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

Bank loans grew 7.7% YTD Banking sector Maintain neutral: As at November 2014, the banking system loans grew by 7.7% year-to-date (YTD), which translated into an annualised loan growth of 8.4%. This was slightly ahead of our 2014 target of 8.2%. On a month-on-month (m-o-m) basis, loans grew at 0.8% (vs. +0.9% m-o-m in October 2014), underpinned by both business loans and household loans at the same rate of +0.8% m-o-m. Economic sectors such as utilities, logistics, real estate, construction and households underpinned stronger loan growth against the system’s +9.3% year-onyear (y-o-y) as at November 2014. Overall, November 2014 loan indicators appeared more negative, with approval and disbursement declining by 5.8% and 9.4% m-o-m respectively while new applications were up 5.6% m-o-m, driven by the business segment. All in all, the 11-month 2014 (11M14) loan repayments (+14.2% y-o-y) remained ahead of total loan disbursements (+12.4% y-o-y), hence pressuring the system’s loan growth (financials,

Banking peer comparison RATING PRICE (RM) DEC 31

MKT CAP (RM MIL)

FYE

AFG Hold 4.70 4.90 1,548 7,276 AMMB Sell 6.60 4.80 3,014 19,894 CIMB Hold 5.56 5.00 8,337 46,351 HLB Buy 13.98 15.50 1,799 25,147 Maybank Hold 9.17 8.00 9,151 83,917 PBB Buy 18.30 20.00 3,852 70,498 RHB Cap Hold 7.62 6.90 2,573 19,602 Affin Not rated 2.90 1,943 5,634 BIMB Not rated 4.07 1,067 4,342 MBSB Buy 2.43 2.75 2,689 3,783 Banking sector weighted average (ex MBSB & PBB) Banking sector weighted average -

Mar Mar Dec June Dec Dec Dec Dec Dec Dec -

STOCK

PT (RM)

Note: Pricing as of close on Dec 31, 2014

manufacturing and construction are key sectors with high repayments on a y-o-y basis). We believe that higher funding cost and availability of offshore financing were the key factors which suppressed loan growth. Banks with bigger exposure to the corporate segment, Malayan Banking Bhd (Maybank) and

SHARES O/S (M)

PER (X) CORE EPS (SEN) P/BV (X) ROE (%) NET YIELD (%) NET DPS (SEN) CY14E CY15E CY14E CY15E CY14E CY15E CY14E CY15E FY14E FY15E FY14E FY15E

12.7 15.5 11.8 12.3 13.0 16.4 9.5 8.8 17.3 7.6 12.36 12.97

12.6 37.0 14.2 42.6 11.9 47.1 11.4 114.1 14.0 70.3 16.4 111.9 10.4 80.3 7.8 32.8 16.6 23.5 7.7 31.8 12.37 12.98 -

CIMB Group Holdings Bhd could face the risk of weaker than expected loan growth. In our view, despite the slowing momentum in the credit market, outperformers (with above industry loan growth) such as Public Bank Bhd (group annualised loan growth at 10% against industry at 8.4%) stands out given its minimal

Revenue Operating costs Ebitda Ebitda margin (%) Depn & amort Ebit Interest expense Interest & invt inc Pre-tax profit Tax Tax rate (%) Net profit Core net profit EPS (sen) Core EPS (sen) Source: CIMB, Company reports

1.6 14.0 1.3 11.5 1.2 11.7 1.5 14.3 1.6 13.2 2.4 16.4 1.0 11.6 0.7 8.9 1.0 12.3 1.3 24.3 1.31 12.38 1.47 13.26

13.0 9.7 10.3 13.6 11.7 15.1 9.7 8.9 13.3 17.6 11.00 11.79

4.3 3.6 3.4 2.9 5.2 2.9 1.3 4.3 1.4 3.8 3.91 3.66

4.3 3.0 3.3 2.8 4.7 3.0 1.3 4.7 1.7 3.9 3.62 3.48

20.0 24.0 18.7 41.0 48.0 53.0 10.0 12.6 5.8 9.3 -

20.0 20.0 18.6 38.6 43.0 55.0 10.0 13.7 6.8 9.4 -

exposure to corporate lending (at 10.9% of portfolio) while simultaneously having a relatively established franchise in retail lending. Even Maybank’s Consumer Financial Services division continues to perform well — 9M14 loans grew at an annualised rate of 9.5%, and hence cushioned the impact of the slowdown in the corporate segment. In

fact, the system household loan growth remained steady (with YTD growth of 9.4%, equivalent to an annualised growth of 10.3%) with no severe pullback despite Bank Negara Malaysia’s macroprudential measures vis-à-vis business loans, which has only grown by 5.5% YTD (annualised 6%). — AffinHwang Capital Research, Jan 2

Increased newspaper prices may improve Media Prima’s margins Media Prima Bhd FYE DEC (RM MIL)

Cypark’s Pajam solar farm.

Cypark declares dividends post annual general meetings. We expect more RE projects to be secured by Cypark in 2015 as the government aims to increase contribution from RE sources to 10% of total generation capacity by 2020. This implies that there will be more projects beyond the feed-in-tariff (FiT), which will give opportunities for Cypark to expand its RE capacity

further. We expect its main focus to be on solar projects although we do not discount the possibility of other types of RE, such as biomass or biogas, which it is currently executing at Ladang Tanah Merah (LTM). Cypark’s LTM project will add more RE capacity as it will produce electricity using biogas and biomass generated from the waste that it collects. — CIMB Research, Jan 2

Cypark Resources Bhd FYE OCT (RM MIL)

1.7 1.4 1.3 1.6 1.6 2.6 1.1 0.7 1.3 1.4 1.41 1.59

Source: Affin Hwang estimates, Bloomberg

Cypark to expand into green tech Cypark Resources Bhd (Jan 2, RM2.08) Maintain add with unchanged target price of RM3.09: Cypark’s fourth quarter 2014 (4Q14) revenue declined 11.8% year-on-year (y-o-y) as its environmental engineering division’s revenue fell 51% y-o-y. The decline in revenue was mainly due to the wrapping up of Phase 1 of one of its projects while Phase 2 will only commence in financial year 2015 (FY15). Its other divisions continued to show improvement, particularly its renewable energy (RE) division, where revenues surged 41% y-o-y to RM8.2 million in 4Q14 as Cypark continued to expand its capacity. For the full year, Cypark’s revenue increased by 7.4% y-o-y to RM237 million while core net profit grew by 11.2% to RM39.9 million, driven by tax savings from RE-related tax incentives. No dividends were declared which is unsurprising as

37.2 46.5 46.5 123.0 65.6 111.3 73.4 37.3 24.5 31.4 -

4Q FY14

4Q FY13

Y-O-Y % CHG

3Q FY14

Q-O-Q % CHG

4QFY14 CUM

4QFY13 CUM

Y-O-Y % CHG

PREV FY14F

50.0 (35.8) 14.3 28.5 (3.4) 10.9 (3.5) 0.4 7.8 (1.4) 18.3 6.4 6.4 3.5 3.5

56.8 (38.8) 16.5 29.1 (2.7) 13.8 (2.9) 0.9 11.8 (2.9) 24.4 8.9 8.9 5.4 5.4

(11.8) (7.8) (13.5) (1.9) 22.8 (20.8) 21.2 (53.2) (33.6) (50.3) (25.2) (28.2) (28.2) (35.8) (35.8)

66.6 (47.7) 18.9 28.4 (3.4) 15.5 (4.4) 1.7 12.9 (0.7) 5.7 12.1 12.1 7.6 7.6

(24.8) (25.0) (24.5) 0.5 0.3 (29.8) (20.7) (74.8) (39.0) 96.6 222.5 (47.2) (47.2) (54.2) (54.2)

237.0 (167.9) 69.1 29.2 (13.0) 56.1 (14.9) 1.8 43.0 (3.1) 7.1 39.9 39.9 21.7 21.7

220.7 (158.1) 62.6 28.4 (7.7) 54.9 (14.3) 2.4 43.1 (7.2) 16.6 35.9 35.9 21.8 21.8

7.4 6.2 10.4 2.8 70.2 2.1 4.6 (24.2) (0.2) (57.3) (57.2) 11.2 11.2 (0.4) (0.5)

215.6 (124.6) 91.0 42.2 24.8 66.2 (16.4) 3.1 52.9 (6.0) 11.3 45.7 45.7 28.6 28.6

Revenue Operating Ebitda Net profit Core EPS (RM) Core EPS growth (%) FD Core PER (x) DPS (RM) Dividend yield (%) EV/Ebitda (x) P/FCFE (x) Net gearing (%) P/BV (x) ROE (%) % change in core EPS estimates CIMB/consensus EPS (x)

2012A

2013A

2014F

2015F

2016F

1,698 593.2 209.3 0.19 (2.1) 9.03 0.19 10.7 2.68 4.65 (10.0) 1.23 14.0

1,723 591.4 214.2 0.20 0.8 8.96 0.17 9.4 2.78 4.17 (7.1) 1.17 13.4

1,589 493.9 156.2 0.14 (27.7) 12.40 0.09 4.8 3.19 5.02 (11.9) 1.13 9.3

1,628 519.0 178.1 0.16 14.0 10.87 0.12 6.9 2.93 4.84 (14.9) 1.10 10.2

1,661 546.4 202.5 0.18 13.7 9.57 0.14 7.8 2.66 4.48 (18.1) 1.07 11.3

-

-

0.00 1.02

2.48 1.01

4.67 1.05

Source: CIMB, Company reports

Media Prima Bhd (Jan 2, RM1.76) Maintain hold with lower target price of RM1.80: Media Prima raised the cover prices of its Malay and English newspapers effective Jan 1. Both the cover prices of Malay-medium newspapers Berita Harian and Harian Metro (HM) increased by 20% or 30 sen from RM1.50 to RM1.80 for Peninsular Malaysia, while the cover price of HM was increased by 33% or 50 sen for Sabah and Sarawak. In addition, the cover prices for its English newspaper New Straits Times was raised by 25% or 30 sen to RM1.50 from RM1.20 for Peninsular Malaysia and by 11% or 20 sen for Sabah and Sarawak. We are positively surprised by the company’s decision to raise its cover prices amidst market uncertainty and soft advertising

expenditure. We estimate that the price hike could improve the group’s print margin and increase its financial year 2015 (FY15) and FY16 earnings per share (EPS) by 5% to 6% if the group can maintain its circulation volume. Nevertheless, we see a potential 10% to 20% drop in circulation volume on top of the already declining trend in print circulation, which may reduce the positive impact of the newspaper price hike. The company had also recently completed its mutual separation scheme which could bring annual savings of about RM45 million, based on a 10% headcount reduction. We maintain our “hold” rating due to its attractive FY15 yield of 6.9% and strong balance sheet position with a healthy free cash flow generation. — CIMB Research, Jan 2

12 H O M E

M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

30 bodies from AirAsia jet tragedy recovered Some still strapped in their seats, many more may be in fuselage of aircraft SURABAYA: Thirty bodies of mostly Indonesian passengers and crew on Indonesia AirAsia flight QZ8501 have so far been recovered, including some still strapped in their seats. Many more may be still trapped in the fuselage of the aircraft, media reports said yesterday. Channel News Asia reported that one more body was found and recovered yesterday. The body was spotted by personnel on RSS Persistence at 7.58am and recovered on board the ship at 8.46am Indonesian time, the report said, citing a statement from Singapore’s Ministry of Defence (Mindef ) in a statement. The body was found within the Republic of Singapore Navy’s designated search area in the Java Sea. It is not clear yet if the victim was a male or female, according to a Channel News Asia reporter

on board RSS Persistence. The Indonesian authorities have been informed and arrangements will be made to deliver the body to the authorities, said Mindef. Indonesian officials believe they are close to a major breakthrough after pinpointing four large objects on the sea floor thought to be parts of the Airbus A320-200 that crashed a week ago with 162 people on board, Reuters reported. The suspected wreckage is lying in water around 30 metres deep, which experts say should make it relatively straightforward to recover if the rough weather that has hampered the search all week abates, the report said. Efforts to capture images with remote operated vehicles (ROVs) were frustrated on Saturday by poor visibility. Speaking at yesterday’s morning briefing for pilots, Air Force Lt

Col Johnson Supriadi said efforts would be divided between recovering bodies and locating wreckage and the all-important cockpit voice and flight data recorders. “Weather should provide the search effort with a window of opportunity today (yesterday), with lower waves expected for the next two days,” Reuters quoted Rukman Soleh, weather bureau chief in Pangkalan Bun, as saying in the southern Borneo town where the search operation is based. Until investigators can examine the black box flight recorders the cause of the crash remains unknown, but the area is known for intense seasonal storms and Indonesia’s meteorological bureau has said bad weather was likely a factor. A source close to the investigation told Reuters radar data appeared to show the aircraft made an “unbelievably” steep climb be-

fore it crashed, possibly pushing it beyond the A320’s limits. The Indonesian captain, a former air force fighter pilot, had 6,100 flying hours on the A320 and the plane last underwent maintenance in mid-November, according to Indonesia AirAsia, 49% owned by AirAsia Bhd. The crash was the first fatal accident by the AirAsia budget airline group, whose Indonesian affiliate flies from at least 15 destinations in the sprawling archipelago. The airline has come under pressure from Indonesian authorities, which have suspended its Surabaya to Singapore operations, saying the carrier only has a licence to fly the route on Mondays, Tuesdays, Thursdays and Saturdays. Indonesia AirAsia said it would cooperate with the transport ministry while it investigates the licence. — Agencies

‘Palanivel trying to have MIC deregistered’ BY MELATI A JALIL

KUALA LUMPUR: MIC president Datuk Seri G Palanivel has been accused of deliberately trying to deregister the party as there is no initiative taken towards re-election as requested by the Registrar of Societies (RoS). Former MIC’s central working committee (CWC) Datuk R Ramanan, who was among key party members ousted by Palanivel on Saturday, said the party is at risk of being deregistered and the party president appeared reluctant to hold a re-election, and open the president’s post for contest. Palanivel’s move comes in the wake of a decision by the RoS on Dec 5 to nullify the election of three vice-presidents and 23 members of

the central committee at the party elections in 2013. The RoS recommended that the posts be re-elected within 90 days, following alleged irregularities and breach of the party’s constitution and the Societies Act. “I was shocked when Palanivel said in a meeting that he did not want the president’s post to be contested,” Ramanan said. He said in the meeting, Palanivel promised to meet the RoS with his deputy president but had gone there alone instead of two days later after being advised by his wife, Datin P Kanagam. He said all this while, it was Kanagam who was responsible for making many party decisions during Palanivel’s absence. “This party is being led by Da-

tin Seri Kanagam ... not Palanivel. Many party decisions were made in the president’s house without his presence. “If Kanagam believes she can run and manage this party, then she must contest. Don’t hide behind her husband,” said Ramanan. In order to resolve the issues plaguing the party, he urged deputy president Datuk S Subramaniam and vice-president Datuk M Saravanan to step forward and save the 68-yearold party from being deregistered. On the reason he was dropped from the CWC, Ramanan believed it was because he had spoken out in meetings on the party’s need for fresh elections and change. “Fresh elections are still the best avenue,” he said. — The Malaysian Insider

said Jennifer Stevens, executive editor of InternationalLiving.com. “They’re safe, offer good value and are places you can settle in with relative ease,” she announced the results in a statement. Its full report on Malaysia said, inter alia: “Influences from across Asia and beyond have melded together here to create an extraordinary cross-cultural melting pot of custom, dress, architecture and cuisine. “The country’s diverse ethnic mix makes being a stranger here

easy. Whether you live in bohemian Penang or Kuala Lumpur, the country’s hip capital, you’ll meet friendly locals who are happy to stop and chat and welcome you into their home. “People are accepting ... just ask the international mix of expats all on the same journey as you ... and happy to share. “You certainly won’t go short of anything in Kuala Lumpur, or the other popular expat hangout, Penang Island. “Malaysia has both public and

KUALA LUMPUR: The KL Car-Free Morning programme to promote a greener Kuala Lumpur as well as a healthy lifestyle and unity among city folk is to be held twice a month beginning this year. The programme, which enters its second year in 2015, will now be held on the first and third Sunday, said Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor. The programme was held only on the first Sunday of the month last year. Tengku Adnan spoke at the launch of the KL Car-Free Morning 2015 at the Kuala Lumpur City Hall Square here. At the same event, he also launched the “Fly the Federal Territories Flag” campaign in view of Federal Territories Day on Feb 1. The campaign promotes flying of the flag for a month. Tengku Adnan told reporters that this year’s Federal Territories Day would be celebrated without much fanfare because the country was still recovering from the severe floods that had struck several states. As of yesterday morning, more than 50,000 people were still at evacuation centres in several states, including Kelantan, Pahang and Perak. Kuala Lumpur mayor Datuk Seri Ahmad Phesal Talib said City Hall was striving to build more bicycle lanes in the city. “We will also provide bicycle lanes in areas within the city, such as Jalan Raja Laut and Bukit Bintang, because we realise that there are people already cycling in the city,” he said. — Bernama

IGP deflects questions about report Ramanan is accusing the party president of being reluctant to open the president’s post for contest. Photo by Nazir Sufari /The Malaysian Insider

Malaysia voted third best place to retire KUALA LUMPUR: Malaysia has been voted the third best place in the world to retire in. The top spot in the 2014 Retirement Index went to Panama and Ecuador was in second spot. The index was compiled by International Living magazine, which has been scouring the globe for the best retirement destinations for over 30 years. “The world’s top retirement havens for 2015 may dot the landscape from Asia to Latin America to Europe, but they share certain assets,”

KL extends carfree mornings to two Sundays a month

private healthcare with medical expertise on a par with Western countries. “Most hospitals and healthcare facilities are staffed by English-speaking professionals with international qualifications. Internet coverage here is on a par with services in France and Italy … the cost of living is cheap and it’s easy to live here (English is widely spoken). And with some of the world’s most stunning white-sand beaches, there are a lot of likes about Malaysia.” — Bernama

KUALA LUMPUR: The nation’s top cop has refused to comment on allegations that police made a mistake on its report about alleged gambling kingpin Paul Phua Wei Seng and his alleged underworld ties. Inspector-General of Police Tan Sri Khalid Abu Bakar instead advised Phua to focus on his illegal bookmaking case in Las Vegas, the United States. “Since the matter is being heard in US courts, I do not wish to comment,” he told an online news portal. He said police were in touch with the Federal Bureau of Investigation, which is handling the case against Phua. “I can confirm that we are in communication. My advice to Phua is to focus on the charges [against him],” Khalid told Malaysiakini. Phua and his son, Darren Phua Wai Kit, were arrested in Las Vegas last June during the World Cup for conducting gaming activities without a licence. — The Malaysian Insider

14 H O M E

M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

MO

Sluggish response to floods raises questions The lack of support for Kelantan victims could turn the disaster into a watershed moment for the state or the federal government BY A ZRI L A N N UAR

T

otal and utter devastation — this, in essence, describes the situation in the East Coast, which bore the brunt of the worst flooding to hit the country in decades. An estimated 150,000 people have been affected, and hundreds of homes lost. Entire villages have been practically wiped out in Kuala Krai, Manek Urai and Dabong, among the worst hit areas in Kelantan. Roads and bridges have been destroyed and communication lines cut. Wireless telecommunication has been reduced to the most basic levels. Electricity was cut off for days and treated water supply is still not back. The only time I have seen a disaster on this scale was the earthquake in Padang, Indonesia, about five years ago. For my editor, Terence Fernandez, the scenes of houses piled up on top of one another compare with the scenario in Aceh following the tsunami of 2004. A scene closer to home with a similar impact but on a smaller scale would be the Bukit Antarabangsa landslide that took several lives during Hari Raya Haji in 2009. However, the difference between all these disaster areas and the chaos we have witnessed in Kuala Krai and Manek Urai is quite simple: The aftermath of the other disasters was managed expeditiously. It would be unfair to make a comparison between Padang and Aceh and the situation here as the devastation in those two places was more widespread and they received far more international aid. Even so, the response to the two disasters was still more efficient although the magnitude of the disasters in terms of lives lost and area affected was bigger. My comparison is closer to home — the Bukit Antarabangsa landslide. Comparatively, the tragic incident in 2009 happened on a far smaller scale than the widespread chaos of the year-end floods of 2014 which affected nine states. However, the Bukit Antarabangsa landslide brought out the military engineering corps and a strong military and police presence. The authorities were there in full force to organise everything. Admirably, the army’s engineering corps quickly constructed a ramp to replace a destroyed bridge in barely a day to facilitate search and rescue operations. The police ensured smooth traffic and looked to it that everyone had shelter. This gave the victims a sense of security — that some-

The floods saw the damage of many vehicles. Photos by Terence Fernandez and Azril Annuar

The Manek Urai rail bridge looking like a scene straight out of a horror flick.

one was in charge and looking out for them. As Bukit Antarabangsa is in my neighbourhood, I saw first hand how organised the Malaysian military and police force can be. They are more than capable of organising this kind of relief effort. My questions are: Why are Kuala Krai and Manek Urai in total chaos? Why are they not managing traffic in Manek Urai where “tourists” clog up the narrowed and destroyed roads, snapping photos, taking selfies and impeding relief efforts? Worse still, these visitors might put themselves in danger as they arrive not in four-wheel drives but in small sedans or motorcycles that can easily get stuck in the slurry and mud left in the wake of what the locals have dubbed the “Adik Tsunami”. Where is the Engineering Corps to build ramps and replace destroyed or damaged bridges and roads so that remote areas can have some access to food, shelter, medicine and basic necessities? Why are

they not deploying their teams en mass to repair the water utilities so that folks here can have clean water? Where are the police? Since arriving in Kuala Krai on Dec 31, I hardly saw a police officer on duty throughout the entire town and its outskirts. Why must business owners sleep outside their shops to ward off looters? Granted, the Kuala Krai police may have been incapacitated as the floods inundated the headquarters and adjoining barracks, destroying many assets including patrol cars. However, if an emergency was declared, the army would be patrolling the streets to maintain law and order. Also, why is it that my editor and I are able to send relief supplies to remote areas with only a four-byfour pick-up truck, courtesy of a corporate sponsor, whereas many victims did not get help from the authorities although the security forces are much better equipped to do a better job?

Flood victims who have lost their homes and have nowhere to go.

This family is sheltering under a tarpaulin.

We came here in an individual capacity to render what small aid we could as this is Fernandez’s hometown and his parents’ home was inundated as well. Yet unlike the well-equipped authorities, two journalists with a few friends man-

aged to find some remote areas which have not received any aid since the disaster struck. What happened to the army’s Logistics Corps who should know which remote outlying areas would need aid to be sent?

Ku Mi Ind ham me wo

H O M E 15

M O N DAY JA N UA RY 5 , 2015 • T HEED G E FINA NCIA L DA ILY

A man performing prayers amid the devastation in Kuala Pertang’s destroyed mosque.

Where are the police or military needed to organise Manek Urai’s chaotic traffic? A house in Manek Urai destroyed and washed up on the street.

1Mindef Volunteer Wave deployed to assist aid efforts

A scene of devastation in Manek Urai.

Aid finally arriving in Dusun Bunut via a pair of reporters, including Fernandez (left).

eas aid

my’s ow uld

Last, I read, before heading to Kuala Krai was that Jeli MP and Minister of International Trade and Industry Datuk Seri Mustapa Mohamed has admitted the government’s weaknesses in handling the worst flooding in decades. If this is so, why has the prime

minister not declared an emergency in areas like Kuala Krai? After all, he cut short an important meeting with the US president to return home in our time of need. He even recalled members of his cabinet who were overseas to come home and do their duty.

Even so, during a national disaster, should these ministers not cut short their travel and return home without being told to? The government has to act impartially to avoid being accused of focusing assistance on its vote banks. Have our politicians forgotten their oath of office to serve all regardless of affiliation? It is bad enough that the government is accused of being partial in distributing national development. Here, there is talk that relief is also apportioned along party lines, as some flood victims have alleged. After normalcy returns, it would be important to find out if there is any truth in such talk. For the PAS-held state for the last 25 years, it is possible that the flood havoc may make the people of Kelantan think about a change. But, at the end of the day, the disappointing lack of support for the victims of the East Coast floods could turn the disaster into a watershed moment for either the state or the federal government.

KOTA BARU: The Defence Ministry deployed its team of volunteers yesterday to assist states entering the post-flood phase. Defence Minister Datuk Seri Hishammuddin Hussein said they are focusing on Kelantan where 2,500 volunteers comprising National Service trainees, Territorial Army personnel and ex-servicemen were sent to badly affected areas. “Our volunteers will help with the clean-up, which includes rebuilding houses which were damaged in the recent floods,” he told reporters after launching the 1Mindef Volunteer Wave at the 8th Brigade Camp, Pengkalan Chepa, yesterday. Hishammuddin said some of the volunteers were already in Manik Urai, Kuala Krai, to help residents and clean up schools which will open on Jan 11. “I will also head over to Manik Urai after this to oversee the situation and join the team of volunteers there,” he said, adding that his ministry will cooperate with other agencies to facilitate the reconstruction of homes destroyed in the disaster. In another development, the government has assured those who lost their homes or whose houses are badly damaged by the floods in the state that they will move into temporary settlements before school starts on Jan 11. Kelantan Flood Disaster Com-

mittee deputy chairman Tan Sri Shukry Mohd Salleh said those currently sheltering in schools will be housed temporarily at community halls, the Gua Musang civic centre and army camps. “The government will also provide tents for flood victims, while trying to identify suitable sites for the construction of transit houses,” he told reporters after chairing the committee meeting yesterday. Shukry, the Prime Minister’s Department Implementation Coordination Unit (ICU) director-general, said the temporary settlement would be equipped with basic necessities, including clean water. He said the restoration of power supply to the state was 97% completed and the remaining 3% would be completed within the next five days. Shukry said the restoration of water supply by Syarikat Air Kelantan Sdn Bhd was 84.2% completed as 23 of 35 water treatment plants resumed operations, while the remaining 12 plants are still being repaired and are expected to resume operation in nine more days. He said the State Education Department had also decided that all students affected by flood do not have to wear uniforms to school. Right now, he said, more volunteers are needed to help clean houses and public buildings affected by the floods. — Bernama

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M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

WEEK IN FOCUS 1

(From left) Xingquan International Sports Holdings Ltd non-executive director Ooi Guan Hoe, chief financial officer Teo Cern Yong and chairman and chief executive officer Datuk Qing QuanWu at the annual general meeting in Kuala Lumpur on Dec 29, 2014. The China-based company is seeking to double the contribution of its point of sales to its revenue in the next three to five years. —Photo by Suhaimi Yusuf

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GREATER INTEGRATION ... (From left) Bank Indonesia governor Agus DW Martowardojo, Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz and Otoritas Jasa Keuangan chairman of board of commissioners Dr Muliaman D Hadad at the signing ceremony of the heads of agreement on the banking sector in Jakarta on Dec 31, 2014. The conclusion of the heads of agreement aims to pave the way for the finalisation of the Asean banking integration framework (Abif) guidelines and the subsequent endorsement of Abif under the Asean framework agreement on services. Abif is an innovative and pragmatic approach that will enable Asean countries to deepen regional banking integration via mutually beneficial arrangements.

F&N Beverages’ plant in Kuching, Sarawak has emerged as the winner in the medium industries — manufacturing category of the Chief Minister’s Environmental Award 2014. (From left, front row) Sarawak Chamber of Commerce and Industry president Datuk Abang Abdul Karim Tun Openg, Natural Resources and Environment Board controller Peter Sawal, Sarawak Chief Minister Datuk Patinggi Tan Sri Adenan Satem, Assistant Environment Minister Datuk Len Talif Salleh and F&N Beverages national head of manufacturing Lee Joon Hin (receiving the award) at a ceremony in Kuching on Dec 15.

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Linde ROC Sdn Bhd, part of The Linde Group of Germany, launched its regional high-tech remote operating centre to manage gas operations in Shah Alam on Dec 16, 2014. Linde Malaysia Holdings Bhd chairman Tan Sri Dr Ahmad Tajuddin Ali (right) and International Trade and Industry Minister Datuk Seri Mustapa Mohamed were at the official opening of the centre. —Photo by Suhaimi Yusuf

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Malaysia Pacific Corp Bhd chief executive officer Ch’ng Soon Sen (right) at the annual general meeting in Kuala Lumpur on Dec 30, 2014. The group is in the final stages of negotiations with potential local joint-venture partners to build residential properties in Johor. —Photo by Suhaimi Yusuf

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(From left) Bank Rakyat managing director Datuk Mustafha Abd Razak, chairman D Mat Noor Nawi, Deputy Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Ahmad Bashah Md Hanipah and Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hasan Malek at the official launch of Ar-Rahnu Flexi package in Kuala Lumpur on December 24, 2014. The package is a facility for cooperative bodies to obtain working capital funding for Ar-Rahnu’s franchise business, which offers a maximum withdrawal of 80% of the value of gold mortgaged and a maximum period of up to five years. — Photo by Shahrin Yahya

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M ON DAY JAN UARY 5 , 2 0 1 5 • TH EEDGE F I N AN C I AL DAI LY

Could 2015 herald a ‘new oil order’? Glut of the commodity and its impact on currencies and economies has been felt across the world BY HOL LY EL LYATT

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ast year was a tumultuous year for oil, with Brent crude prices declining around 50% since June on the back of an over-supplied market and lack of global demand. From “old school” oil producers Russia and Saudi Arabia in the east to shale oil in California and oil sands in Alberta in the west, the glut of oil and its impact on currencies and economies has been felt across the world. When the Organization of the Petroleum-Exporting Countries (Opec) decided not to cut production when it met in November, the 12 major oil producers effectively threw down the gauntlet to the young guns of US oil to see who could withstand the fall in prices and who would blink first and trim production. On Jan 2, benchmark Brent crude was trading at US$57.11 (RM201), having fallen from a high of around US$115 a barrel hit in mid-June. With prices falling fast and hitting five-year lows in mid-December, commodities research teams

at the world’s investment houses and banks scrambled to revise their 2015 predictions for oil and the potential impact on global economies. And as wildly fluctuating as the price of oil has been, so have the predictions. While HSBC told investors to prepare for US$95 a barrel by the end of 2015, other analysts were far more bearish. Morgan Stanley cut its 2015 forecast for Brent saying that in a worst case scenario crude prices could fall to US$43 per barrel in 2015, although its base case scenario was for US$70. The US shale revolution and its accompanying rise in oil production has been a decisive factor in the fall in the price this year. The newcomer has affronted the old guard of producers like Saudi Arabia, the biggest oil exporter in the Opec group and analysts believed its decision not to cut production was a move to put price pressure on US producers. The US might not give up so easily though, according to Citi’s

commodities research team who said in their 2015 outlook for the commodities markets that there is a “distinctive underlying ‘Made in America’ quality that looks likely to dominate the commodity complex through 2015.” Whether US shale oil producers can withstand the fall in prices into 2015 and dent Opec’s market share is a key matter for debate, however. “Prices are already approaching the danger point for the bulk of US shale output, so industry costs would have to fall for prices to be sustainable at these lower levels,” Melanie Debono, economist at Capital Economics, said in the consultancy’s accompanying note. There was a risk, Debono added, that an extended period of lower oil prices would lead to large cuts in output in both the US and Canada. Companies like ConocoPhillips which are active in the US shale industry have already announced that it would “defer significant investment” in Canada and the US as returns looked far less attractive.

“It’s very clear if oil prices remain below in the region of US$64 per barrel for a sustained period of time — that’s about a three-to-sixmonth period at least — we would start seeing increased scale backs in the US,” said Abhishek Deshpande, oil and gas analyst at Natixis. “But the impact on production would only start to be felt in 2016 onwards and not as much as we would like to see in 2015.” If the oil price continues to fall, global markets are sure to turn again to closely watch the next move from Opec, which produces about 40% of the world’s crude oil, according to the US’s Energy Information Administration. While countries like Saudi Arabia could potentially cope with lower oil prices for around a year, weaker Opec members like Venezuela are on the brink of economic collapse. Despite watching its fellow members flounder, Natixis’ Abhishek Deshpande forecast that Saudi Arabia was “in no hurry” to cut production and would hold out as long as it takes to retain market share. “Saudi Arabia will hold out on low oil prices for two reasons,” he

told CNBC, “both in order to instill output discipline on other Opec members and to inflict collateral damage on marginal, unconventional producers” such as those in the US. As such, markets would remain oversupplied in 2015 according to Deshpande. “We do see that in the first and second quarters of 2015, which are seasonally low in demand, we could see more pressure coming on Brent if there are absolutely no scale backs from the Opec side.” As for the future of Opec itself, the latest meeting of the group had shown strained relations between the members, with some able to withstand lower prices and others like Iran, Ecuador and Venezuela desperate for a cut to stem the price fall. Keeping the so-called oil cartel together could be a decisive factor if Saudi Arabia agrees to a cut. “The cracks are already showing in Opec,” Deshpande said. “Sooner or later, they’ll have no choice [but to cut] otherwise Opec as a cartel will break apart.” — CNBC For more, visit www.cnbc.com

Break up Citigroup BY SI MON JOHN SON

AMERICA’S presidential campaign is already well underway. The election is not until November 2016, and very few candidates have formally thrown their hats into the ring, but the competition to promote and develop ideas — both behind closed doors and publicly — is in fully swing. Earlier this month, Citigroup Inc took advantage of this formative political moment by seizing an opportunity to score a tactical victory — but one that amounts to a strategic blunder. Using legislative language apparently drafted by Citi’s own lobbyists, the firm successfully pressed for the repeal of some of the 2010 Dodd-Frank financial reforms. The provision was then passed after it was attached to a last-minute spending bill — a tactic that ensured very little debate in the House of Representatives and none at all in the Senate. At a stroke, Citi executives demonstrated both their continued political clout in Washington and their continued desire to take on excessive amounts of financial risk (which is what this particular legal change permits). Lobbying to be allowed to load up on risk is exactly what Citi did during the 1990s and 2000s under

Presidents Bill Clinton and George W Bush — with catastrophic consequences for the broader economy in 2007 to 2009. As a result, breaking up Citigroup is under serious consideration as a potential campaign theme. For example, in a powerful speech — watched online more than a half-million times — Senator Elizabeth Warren responded uncompromisingly to the megabanks’ latest display of muscle: “Let’s pass something — anything — that would help break up these giant banks.” Defenders of the mega banks — Citi, JPMorgan Chase & Co, Bank of America Corp, Wells Fargo & Co, Goldman Sachs Group Inc, and Morgan Stanley — dismiss Warren as an avatar of left-wing populism. But this is a serious misconception; in fact, Warren is attracting a great deal of support from the centre and the right. Senator David Vitter of Louisiana is the most prominent Republican member of Congress in favour of limiting the size and power of the biggest banks, but there are others who lean in a similar direction. Similarly, the vice-chair of the Federal Deposit Insurance Corp (FDIC), Thomas Hoenig, a political independent, consistently warns about the dangers associated with mega banks. And former FDIC chair Sheila Bair, a Republican from Kansas, argues strongly for additional measures to rein in the biggest banks. From the perspective of anyone

A group of protesters gathering outside Citi’s headquarters in New York on Dec 19, last year, chanting “break big banks”.

seeking the nomination of either of America’s political parties, here is an issue that cuts across partisan lines. “Break up Citigroup” is a concrete and powerful idea that would move the financial system in the right direction. It is not a panacea, but the coalition that can break up Citi can also put in place other measures to make the financial system safer — including more effective consumer protection, greater transparency in markets, and higher capital requirements for major banks. From the left, the emphasis has been on the megabanks’ abuse of power and the great rip-off of the middle class. From the right, the stress is on the hazards of crony capitalism,

owing to the massive implicit government subsidies that these banks receive. But both left and right agree on the fundamental asymmetry that the recent “Citigroup Amendment” implies: Bankers get rich whether they win or lose, because the United States taxpayer foots the bill when their risky bets fail. Potential Republican presidential candidates have hesitated to take up this issue in public — perhaps feeling that it will inhibit their ability to raise money from Wall Street. Among the Democrats, however, the opportunity seems to be much more compelling; indeed, avoiding a confrontation with Wall Street might actually create problems for a candidate (as Hillary

Clinton may well find out). The Progressive Change Institute is currently running “The Big Ideas Project”, whereby people can vote on what they regard as the most important policy proposals. Three of the top 10 ideas under “Economy & Jobs” are about imposing greater constraints on the big banks — and there is a sharp upward trend in support for Break Up Citigroup (full disclosure: I suggested this item for the website). This idea would play well in the Democratic primary elections (which start in early 2016). And, because it forms the basis for responsible policies, it would attract support from centrists. And voters on the right like proposals that offer a credible way to end the favouritism — if not outright corruption — that has come to define the relationship between the top levels of government and Wall Street. “Break up Citigroup, end dangerous government subsidies, and bring back the market.” The US presidential candidate who says this in 2016 — and says it most convincingly — has a good chance of winning it all. — Project Syndicate Simon Johnson is a professor at Massachusetts Institute of Technology’s Sloan School of Management and the co-author of White House Burning: The Founding Fathers, Our National Debt, And Why It Matters To You.

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M ON DAY JA N UA RY 5 , 2015 • T HEED G E FINA NCIA L DA ILY

First cash helicopter to take off? Japan could become the first rich nation to launch final trick in the monetarist playbook BY A N DY MU KHERJE E

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apan could become the first rich nation to launch helicopter money. Dissatisfaction with deflation and growing disillusionment with quantitative easing might prompt the country to reach for the final trick in the monetarist playbook. Economist Milton Friedman first conjured up the enticing image of bank notes dropping from the skies in 1969. Thirty years later, Ben Bernanke proposed a helicopter drop of cash as an antidote for Japan’s anaemic demand and falling prices. The future Fed chairman’s suggestion was too outlandish for what was then still a conservative Bank of Japan (BoJ). The central bank had already cut interest rates to zero, and subsequently embarked on quantitative easing. But that’s about as far as it has been prepared to go. Yet quantitative easing (QE) is failing to live up to its billing.

The monetary authority is buying staggeringly large quantities of financial assets from banks in return for newly-printed yen. Government bonds worth about US$1.7 trillion (RM6 trillion) — a quarter of the outstanding amount — have already vanished into the BoJ’s vaults. This bond-buying spree has yet to launch a self-sustaining cycle of private demand, or lift inflation to the central bank’s 2% target. A panicky BoJ policy board decided in October to expand its asset purchases by as much as 60%. QE makes cheap cash available to banks to lend, but they can’t do so unless there are willing borrowers with profitable investment opportunities — a problem in ageing Japan. This is where Friedman’s helicopter comes in by giving cash directly to households. The mechanics would be relatively straightforward. Assume each of Japan’s 52 million households received a debit card with, say, 200,000 yen (RM58,584) loaded onto it by the central bank. Any remaining balance on the cards would disappear after a year, ensuring that recipients spent the

windfall. The move would inject an extra 10 trillion yen, or 2% of gross domestic product (GDP), of private purchasing power into the economy. This in turn would encourage companies to invest and pay higher wages. The net effect would resemble a tax cut, but one financed by newly printed money rather than government debt. For Japan, whose government debt already equals 245% of GDP, being able to stimulate the economy without having to sell more bonds would be a major advantage. Consumers could spend freely in the knowledge that they would not have to repay the windfall in future in the form of higher taxes. But if Friedman’s helicopter is such a doughty anti-deflation tool, why has no central bank used it yet? The usual answer is that tax cuts are fiscal decisions that only elected governments can make. Monetising the government’s debt is a recipe for a debased currency and hyperinflation. Japan has given cash to its citizens in the past and may do so again. But the cheques have always come from the government,

Friedman first conjured up the enticing image of bank notes dropping from the skies in 1969.

not the central bank. Upsetting this status quo will mean the finance ministry loses control of fiscal policy. Politicians won’t let such a thing happen. The BoJ might also baulk at such a radical move: its policy board only narrowly approved the recent expansion of QE. Yet Japan could introduce a money-financed tax cut by stealth. Suppose that QE ends in late 2016. By then, the BoJ will own almost

two-fifths of Japan’s government debt. Any attempt to sell those bonds back to the private sector could undermine the country’s economic and financial stability. Adair Turner, former chairman of Britain’s Financial Services Authority, has suggested converting the central bank’s government bonds into perpetual, zero-coupon securities. With one stroke of its pen, the government would be free of its obligation to repay the debt. The pressing need for Japan to raise taxes would vanish. The fragile consumer economy, which buckled under the burden of a modest increase in the sales tax last April, would breathe a sigh of relief. This too will be a money-financed tax cut by the back door, without the need for helicopters or debit cards. Such an experiment in monetary manipulation would attract a worldwide audience. Many rich nations have depleted their rate-cutting arsenal. If the fight against long-term deflationary stagnation becomes a losing battle, Friedman’s helicopters might not just be flying over Japan. — Reuters

Is this Asia’s new manufacturing hub? BY N YSH KA CHA ND RAN

THE Greater Mekong Subregion (GMS) could become Asia’s new low-cost production hub as the region becomes more integrated, experts say. The GMS comprises Vietnam, Myanmar, Cambodia, Laos and Thailand as well two regions in China: the Yunnan province and the Guangxi Zhuang Autonomous Region. “With China’s industrial heartland in the coastal regions of the Pearl River Delta and Yangtze River Delta facing increasing pressures on competitiveness due to rising labour costs, the GMS offers considerable potential as an alternative location for the establishment of low cost manufacturing,” Rajiv Biswas, Asia-Pacific chief economist at IHS Global Insight, said in a note last week. Biswas estimates the region’s combined gross domestic product (GDP) at US$1.1 trillion (RM3.88 trillion) this year, larger than in Indonesia, Southeast Asia’s most populous country. By 2015, the region is forecast to grow 6.2% and hit a combined GDP of US$3 trillion by 2024. The area currently accounts for less than 5% of global manufacturing in value-added terms, but IHS notes that infrastructure is key to realising the region’s potential. “If infrastructure connectivity is strengthened in Southeast Asia to allow high-speed rail networks and modern roads to link prov-

inces such as Yunnan in southern China to the Indian Ocean via Thailand and Myanmar, this could significantly improve freight logistics ... and create significant opportunities for the development of major ports and free trade zones in Thailand and Myanmar, boosting their economic development as entrepots.” While China still retains its reputation as the world’s leading production centre, its slowing economy and double-digit wage increases are causing foreign firms to look to Asia’s frontier economies. Minimum wages increased by 13% in 20 out of 32 Chinese cities this year, according to data from non-governmental organisation China Labor Bulletin. Average factory labour costs are roughly US$7 a day in Vietnam, versus US$28 in China, official data shows. “While China has many advantages, including a much better developed supply base, advanced infrastructure, robust manufacturing and engineering capacity, and a huge domestic market, this [wage increase] could still create an opening for Southeast Asian economies to become the next factories to the world,” global consulting firm McKinsey said in an October report. Aside from infrastructure, the firm identifies three develop-

ments could stimulate growth in the region’s manufacturing sector: the implementation of the Asean Economic Community integration plan, attracting production from multinationals, and the application of big data and disruptive technologies. Beijing doesn’t appear concerned about potential competition for manufacturing. Instead, it recently pledged US$11.5 billion in financial assistance, including US$1 billion in infrastructure aid, during the 5th GMS Leaders Summit earlier this month. The money comes on top of Beijing’s commitment of US$40 billion for financing projects aimed at improving infrastructure across key GMS economies, such as Laos, Myanmar and Vietnam in its establishment of a Silk Road Fund in November. So, why exactly is China so interested in the GMS? “Improved connectivity in the Southeast Asian economies of the GMS will also assist the economic development of the inland Chinese provinces in southwest China such as Yunnan province, which is already growing more rapidly than the Chinese national average,” Biswas said. “The economic development of the GMS will therefore help to realise a key strategic priority

of the Chinese government, for Chinese coastal provinces,” he reducing the economic develop- added. — CNBC ment gap between inland Chinese provinces and the more advanced For more, visit www.cnbc.com

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Acura introduced the TLX to replace the TSX and TL models.

Relaxing and modest Acura TLX It is actually the best car that brand Honda makes Back to the TLX: Fuel efficiency is 24mpg in the city and 35mpg on the highway — respectably above average for a luxury car of that size. The car shifts 25% faster than the V6 TL and is 150 pounds lighter to boot — a strong combination that gives the general affect of a modern, fresh, new sedan. It was long overdue.

BY HANNAH ELLIOTT

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irst the bad news: Last week Honda told US dealers to stop selling some versions of its 2015 Acura TLX sedan because of problems with the transmission. Apparently 9,500 of the 2015 TLX had errors that could cause the 9-speed automatic to fail to properly shift into park. The gear shifter would indicate that the car was safely stopped and secure — when it wasn’t. Poor timing. That problem came after Acura’s October announcement that it incorrectly recorded the gross vehicle and axle weights on the car’s safety labels. Not long after, the company’s president, along with all Japan-based executives, had to take a 20% pay cut for three months as punishment for recalls relating to Honda, according to an Acura spokesman. Now, the good news: I drove the 2.4L 4-cylinder version of the TLX recently in New York and experienced no such problems. In fact I found the TLX perfectly inoffensive, even mildly entertaining. The US$30,995 (RM109,412) sedan is a capable if lesser-known option against other entry-level offerings from Infiniti, Lexus and Volvo. (Like Lexus to Toyota and Infiniti to Nissan, Acura is Honda’s luxury car brand.) If, that is, you can get past those pesky recalls. Bigger — and smaller — than predecessors Acura introduced the TLX to replace the TSX and TL models. According to the brand, it was built by a team of Ohio-based engineers — several of whom owned multiple TLs and wanted to continue that tradition. (I didn’t realise the TL had a tradition, but I suppose that’s beside the point.) Anyway, the TLX has quickly become Acura’s best-selling model

The interior of the Acura TLX looks very futuristic. The panel is clean and unfettered by too many distracting buttons. Photo by Bloomberg

after the MDX SUV, even despite the recall, selling more than 15,000 units since its introduction this year. The car is indeed wider and longer than the TSX and current ILX but more compact that the TL and RLX. Confused yet? I find it difficult to keep all of these letter combos straight, and I do this for a living. It’d be great if Acura applied some simplification to these monikers. Faster and more efficient I found the TLX relaxing and modest as I drove it around Manhattan; its interior trim materials and general look nicely equal its entry-level premium price and brand image. The car is surprisingly quiet, thanks to improvements like acoustic spray foam applied throughout, triple door seals, acoustic barrier panels and something called “active noise control”. It’s also noticeably stiffer to drive than its predecessors, which makes for responsive handling and braking. (I have read reports that the transmission can jerk momentarily under lower gears, but I did not experience this.) Options from BMW, Audi and Mercedes are quieter and drive better — try the BMW 3-Series or Audi A4 — but they are also more expensive.

Overly attentive technology Where this car really shines, though, is in its technological improvements. It starts with the Integrated Dynamics System, which has buttons on the centre console that move it to econ, normal, sport to sport-plus modes. Acura also gives us collision warning, adaptive cruise control, lane-departure warning, blind-spot information and the multi-view rear camera that is becoming de rigueur for any sedan these days hoping to compete in the luxury space. I also noticed that the paddle-shifting on the TLX is sufficiently quick, though not anywhere near track-ready. The new standard four-wheel steering system well mitigates understeering, which is sometimes an unwelcome by-product to front-wheel drive, and it noticeably helps the car better balance around corners. There are also some polarising extras. Polarising because it depends whether or not you like company. One time cruising down FDR Drive my afternoon reverie was startled by the voice of a polite lady asking me to “please fasten” my seat belt. Another time the lane-keeping assist bossily took effect: it uses a camera placed near the rear-view mirror which, if you steer the TLX outside of the lane without signalling, causes the steering wheel to gently tug you back toward the centre of the lane. It felt a little intrusive. But I could easily hold course to where I wanted the car to go; it didn’t actually take control of the wheel.

of its front end, from the (standard) slanted LED headlights and well-sculpted fenders to the upward slope of its discrete front grill, looks inviting and capable. It is well proportioned through the long side-body, with a nice piece carved out along the front and rear doors and a short rear end that finishes the look on a strong note. On the inside, the car reminds me in a way of the BMW i8. It looks very futuristic. The centre console touchscreen is a little too flat for optimal viewing at speed, but the panel is clean and unfettered by too many distracting buttons. The steering wheel is wide and thin, and the digital gauges are covered by nicely sloped roofs jutting out from the dash. Everything is subtly swooped toward the back, like gentle sound waves falling aside the car as it surges forward.

Options and standards Bluetooth and a USB connection — surprisingly absent in many high-end cars — are standard. So are the power moon roof and faux-leather heated sport seats. Voice recognition, navigation, traffic and Zagat reviews are optional, as are rain-sensing wipers and remote start. The leather-wrapped shift knob, woodgrain steering wheel and all-weather floor mats make the car seem pleasant inside. It feels a little bare — and is not as tightly constructed as a German automobile — but it more than passes muster. This car is a good value. And that, really, is the point. The TLX is neither as beautiful as a Mercedes nor as cool as an Audi. It doesn’t have the swagger of a Jaguar. But it is efficient and affordable, a decided improvement over its predecessors. It is the best car Acura makes. Which, given those recalls, perhaps doesn’t count for as much as it should. But Winningly nondescript things can be fixed. And no accidents or From the outside, the Acura TLX expertly injuries were reported. Myself included. — advances the brand. The welcoming shape Bloomberg

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M O N DAY JA N UA RY 5 , 2015 • T HEED G E FINA NCIA L DA ILY

PHOTOS BY BLOOMBERG

The five most expensive hotel suites in the world BY JI NN A YA NG

1. From US$65,000 (RM229,450) a night This 12-bedroom, 12-bathroom suite sprawls across 18,000 sq ft, taking up the entire eighth floor of the hotel, which is why nightly rates start at US$65,000 (and can reach upwards of US$80,000). Features include armoured doors, a human-sized safe, bulletproof windows, a private elevator and helipad access — making it a favourite among visiting dignitaries, heads of state, and other VIPs in need of privacy.

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2. From US$47,000 a night Stay at the Royal Villa, and you’ll be flown into Athens on a private jet, courtesy of the hotel. You’ll also have a private chef, personal trainer and personal pianist available during your stay. Not sure which pool you want to take a dip in? No problem: The suite has both an indoor and outdoor pool. If it’s good enough for Leonardo DiCaprio or Meryl Streep, it’s good enough for us. 3. From US$45,000 a night Sitting pretty on the 52nd floor, this 4,300-sqft suite features a 360-degree view of Manhattan. It has cathedral ceilings, diamond skylights and floor-to-ceiling windows, offering the greatest luxury in the city: space. Inside the dressing room, walls are decorated with soft calfskin leather. This lavish suite comes with a 24-hour personal butler, personal trainer and Rolls-Royce chauffeur.

01. The Royal Penthouse Suite at Hotel President Wilson, Geneva, Switzerland. 02. The Royal Villa at Lagonissi Resort, Athens, Greece . 03. Ty Warner Penthouse Suite at Four Seasons Hotel, New York, NY. 04. Shahi Mahal Suite at Raj Palace, Jaipur, India. 05. Hilltop Estate at Laucala Island Resort, Fiji. 01

4. From US$40,000 a night The Raj Palace really was a raj’s palace before it was converted into a hotel, so expect some major opulence. This six-bedroom suite has ivory and gold furniture, a private theatre, a library and a dining room. Guests also have access to a personal kitchen staff and a team of butlers. 5. From US$40,000 per night Billionaire Dietrich Mateschitz owns the Laucala Island Resort in Fiji and the Hilltop Estate — a suite running US$40,000/night — is only available by application or personal referral. You’ll be spoiled with a private chef and nanny, plus access to a horse-riding school, 72-hole golf course and a private beach. — Bloomberg 02

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BILLIONAIRE Carl Berg, the Silicon Valley real estate mogul and venture capitalist, collects rent from Tim Cook (chief executive officer of Apple Inc), loves asking stupid questions and owns a suspect van Gogh. Berg has been included in Forbes Magazine’s list of the 400 richest people in America numerous times. As of March 2013, his net worth was estimated at US$1.1 billion. He is married with one daughter and resides in Atherton, California. Here’s an interview with him.

A Van Gogh or a ‘Van Goo’? Berg bought this painting, supposedly by the Dutch master, for US$315,000. Photo by Bloomberg

Question: What was your best investment? Answer: Sun Microsystems. Scott McNealy, the founder, was a manager at one of my venture investments and wanted me to be the first investor. In 1982, for US$1 get very expensive very quickly. I wasn’t comfortable with million, I got 25% of Sun at 25 cents a share. that market and saw things going that way. You also made a fortune on tech real estate. How? What have you retained? For decades, if you did anything in a decent location, the The Silicon Valley campuses of Apple and Microsoft. The question was, will you lease your building today or next combined square footage is about 1.1 million. week? A market like that just doesn’t exist in many places. You own a possible van Gogh? You’ve sold most of your portfolio. Why? It’s either a van Gogh or a van Goo. I bought it at an auction I built mostly one- and two-story structures. High-rises in 1997 for US$315,000. Half the art world said it was an

So what’s the safer play: Treasuries or a Picasso? If it’s a real Picasso, that could be very safe. The art market has gone up, consistently and dramatically. More multiple choice: gold, bonds or hedge funds? Gold. Right now, I think we’re very close to the bottom, so it’s got a relatively small downside and an awful big upside. What’s been your worst investment? The battery company Valence Technology. I’ve been in it 22 years, and we’ve never made a profit. It drives me crazy. My goal in life is to make that damn company profitable. Do you miss owning San Jose’s soccer team? It was a lot of fun, but I lost an incredible amount of money. I’ll never touch a sports team again. You’ve got to be insane. Any other lessons from your playbook? Common sense is more important than anything else. And I’m not afraid to ask a question that’s a stupid question. — Bloomberg

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State banks need more leeway Indian finance minister says public lenders must be given far greater autonomy BY D EVI DU T TA T RIPATHY

PUNE (India): Indian Finance Minister Arun Jaitley said on Saturday that state-owned banks needed much more autonomy, but he stopped short of giving any details of proposed reforms. Jaitley made the comment at a two-day meeting of public sector bankers convened by Prime Minister Narendra Modi’s government to suggest a road map for reforms. The meeting ended on Saturday. “There is a need for far greater autonomy being given to them,” Jaitley said at the meeting, which was also

attended by Modi and Reserve Bank of India governor Raghuram Rajan. “There are unacceptable levels of NPAs (non-performing assets) in some cases. And the banks have to be given sufficient amount of leeway ... to deal with commercial issues with a commercial mindset.” India’s state-run banks recorded the highest level of stressed loans at 12.9% of their advances in September last year, while the same ratio for private sector banks was at 4.4%, according to central bank data. Modi told the bankers there would be no interference from the government, according to a statement.

More than two dozen state banks have been constrained by a pile of bad loans and governance issues. They also lag private sector rivals in profitability. For years, political interference and union opposition have thwarted major reforms such as mergers and lowering of the government’s holding to give more autonomy in decision-making. The bankers suggested the government, whose stakes in the staterun banks range from 56% to 84%, should transfer its holding to a new investment company and over time cut its ownership to below 51%.

The bankers also recommended creation of “independent high performing boards” that would drive capital raising and acquisition strategies. They also pitched for minimum interference by various government institutions. Hasmukh Adhia, financial services secretary in the finance ministry, said Jaitley told the public sector bankers their suggestions would be looked at “very positively”. He did not elaborate. If reformed, India’s big state lenders offer investors the best exposure to any sustained upswing in the economy, analysts say. — Reuters

Higher revenues for tourism factories in Taiwan BY HUA NG C H I AO-W EN & L EE HSI N-Y I N

TAIPEI: Enthusiasm for tourism factories among both domestic and overseas tourists has generated NT$3.32 billion (RM368.32 million) in revenues last year, the Ministry of Economic Affairs (MoEA) said Saturday, predicting that the earnings

will reach NT$3.8 billion in 2015. Thanks in part to nearly 10 million foreign visitor arrivals to Taiwan in 2014, a record high, the tourism factory sector had seen 16.6 million visits, a 38% annual growth, according to the MoEA. The ministry is predicting that tourism factory visits could rise to 19 million this year as a result

of economic recovery, increasing revenues by up to 14%. It has actively promoted the niche tourism sector since 2003 to provide a new source of income for manufacturers of traditional products that have been losing their competitive edge largely due to higher labour costs. The project blends Taiwan’s in-

dustrial culture and tourism by converting select factories into popular tourist destinations, the ministry said. Under the programme, run by the ministry’s Industrial Technology Research Institute, the ministry screens existing old economy factories and chooses a certain number every year to be transformed into tourist attractions. — CNA

Europe returns to Franco-German axis of neurosis BY P I E RRE BRI ANÇ O N

Filepic of the Melco Crown’s City of Dreams resort in Macau. The casino operator says it is delisting from the Hong Kong stock exchange ‘for reasons of cost and utility’. Photo by Reuters

Melco Crown to delist in Hong Kong HONG KONG: Casino operator Melco Crown Entertainment, a joint venture involving Australian billionaire James Packer, plans to delist its shares in Hong Kong after gambling hub Macau reported its first-ever fall in casino revenues. Official figures published by the former Portuguese colony last Friday showed gaming revenues fell 2.6% year-on-year to 351.52 billion patacas (RM155.29 billion) in 2014 — the only drop since annual figures were first released in 2002. Hours later, Melco Crown — which owns Macau’s vast City of Dreams resort complex — said it would delist from the Hong Kong stock exchange “for reasons of cost and utility”. “Maintaining the listing ... requires additional ongoing regulatory compliance obligations and such requirements involve significant additional costs,” the company said in a statement late last Friday, adding that it did not see opportunities to raise additional equity. The company will retain its listing on the Nasdaq in the United States, where its shares closed last Friday down 4.88% at US$24.16 (RM85.28). Melco Crown is a joint venture between Hong Kong businessman Lawrence Ho and James Packer, son of the late Australian media and gambling magnate Kerry Packer. — Reuters

PARIS: Europe’s economic stagnation has a lot to do with its political paralysis. In 2014, the emphasis was on what governments should have done — and could still do — to boost the continent’s potential after two years of European Union (EU) economic contraction. In 2015, the crisis at the heart of Europe’s malaise, the breakdown of the French-German partnership, will take centre stage. Either Paris and Berlin make the case for a rejuvenated, reformed Europe and justify the hopes of the many countries which still want to join, or they fail and the European project is at risk of sinking slowly, from crisis to crisis, into oblivion. The EU has always been first and foremost a political project, kept in check by economic and financial market realities. If its two main architects lose interest, or are too focused on their own problems to work on their relationship, the undertaking can fast turn sour. Europe’s economic disputes are fading, despite dramatic headlines. A broad consensus has emerged on the need for both fiscal discipline and structural reforms to boost gross domestic product growth, forecast by the International Monetary Fund to be an anaemic 0.8% in 2014 and 1.3% in 2015. The disagreement is on timing. “Austerity now” partisans — among them German Chancellor

The European Union has always been first and foremost a political project.

Angela Merkel, looking increasingly isolated — say only fiscal rigour can foster sustainable growth. Growth advocates, including France under President François Hollande, don’t disagree but insist on stimulus first to counter the short-term cost of reforms. Another problem is trust, or the lack of it. Berlin doesn’t believe France is committed to sound economic policies. The Germans remember that Europe’s pre-euro history was marked by repeated French franc devaluations. Meanwhile, the French worry that ageing Germany has lost interest in the European project since the Cold War ended. But cracks are beginning to show in the German economic model and France seems at last to have a government that means business. Both countries have to deal with challenges such as the rise of radical parties and the crisis in Ukraine, a reminder that peace on the continent is not a given. These are opportunities for leaders on both sides of the Rhine to remember why they built Europe in the first place. — Reuters

IN BRIEF Thai debt collection law to take effect soon BANGKOK: Thailand’s first debt-collection law will take effect early this year despite criticism that it gives debtors so much protection it makes lenders cringe. The law defines “debt collectors” as creditors, regardless of whether the debts are legitimate or not, as well as the persons or entities authorised by them to collect debts on their behalf. A debt collector may not contact another person about the debt except the debtor himself. The exception is when he needs to get the debtor’s contact information. The collector may not act in a harassing or threatening manner. — Bangkok Post

Independent experts to help SGX board in probe SINGAPORE: The committee of inquiry looking into a major trading disruption on the Singapore Exchange (SGX) on Nov 5 has confirmed the appointment of independent experts to assist in its investigations, The Straits Times reported. The SGX said in a statement last Friday the investigations will include a review of the bourse operator’s technical, operational management and communications issues. Work by these independent experts began last month and they will submit their findings and recommendations to the committee of inquiry, made up of four SGX board directors who are independent of the management.

Ship collision causes 33,000-barrel oil spill SINGAPORE: An oil tanker and a bulk carrier collided off Singapore last Friday, causing a crude oil spill, the Maritime and Port Authority (MPA) said. The Libyan-registered oil tanker Alyarmouk collided with the Singapore-registered bulk carrier Sinar Kapuas about 11 nautical miles (20km) northeast of Pedra Branca, east of Singapore. “Alyarmouk reported that one of her cargo tanks sustained damage, resulting in some spillage of crude oil,” the MPA said in a statement. V Ships UK Ltd, which manages Alyarmouk, estimated that 4,500 tonnes (33,000 barrels) of Madura crude oil had been spilled from the tanker, it added. — Reuters

Taiwan bourse to face more volatility in 2015 TAIPEI: Shares in Taiwan are expected to be more volatile in 2015 as concerns over a rate hike cycle to be kicked off by the US Federal Reserve later in the year will make investors more cautious, market analysts said on Saturday. David Chu, chairman of Hua Nan Securities Investment Management, is one of the cautious analysts who believe higher interest rates could impose an adverse impact on Wall Street and in turn affect the performance of other global equity markets, including Taiwan. — CNA

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‘Germany believes eurozone could cope with Greece exit’ Group has implemented enough reforms to make potential departure manageable BERLIN: The German government believes that the eurozone would now be able to cope with a Greece exit if that proved to be necessary, Der Spiegel news magazine reported on Saturday, citing unnamed government sources. Both Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble believe the eurozone has implemented enough reforms since the height of the regional crisis in 2012 to make a potential Greece exit

Tycoon prince assails Saudi fiscal policy over deficit

manageable, Der Spiegel reported. “The danger of contagion is limited because Portugal and Ireland are considered rehabilitated,” the weekly news magazine quoted one government source saying. In addition, the European Stability Mechanism (ESM), the eurozone’s bailout fund, is an “effective” rescue mechanism and was now available, another source added. Major banks would be protected by the banking union.

if the left-wing Syriza opposition party led by Alexis Tsipras wins an election set for Jan 25. The Greek election was called after lawmakers failed to elect a president last month. It pits Prime Minister Antonis Samaras’ conservative New Democracy party, which imposed unpopular budget cuts under Greece’s bailout deal, against Tsipras’ Syriza, who want to cancel austerity measures and a chunk of Greek debt. — Reuters

France’s 75% ‘supertax’ quietly dies with few mourners BY ERIC R ANDO LP H

RIYADH: Billionaire Prince Alwaleed bin Talal has lashed out at the Saudi fiscal policy after projecting the largest-ever budget deficit for 2015 following the slump in oil prices. “We have reached the danger point ... after starting to withdraw from the reserves,” to meet the budget shortfall, Alwaleed said in a letter addressed to the finance minister. Last week, the world’s biggest crude exporter announced an expansionary 2015 budget with the largest-ever deficit of US$38.6 billion (RM136.26 billion). It projected spending at US$229.3 billion, a slight rise from last year’s estimates, and revenues at US$190.7 billion, sharply down from US$228 billion projected in 2014. Saudi Arabia, the lead producer in the Organization of the Petroleum Exporting Countries (Opec), also said it estimates 2014 actual budget deficit at US$14.4 billion as both spending and revenues far exceeded projections. Alwaleed, a member of the Saudi ruling family and the wealthiest Arab private investor, said Riyadh should not have let spending rise above projections, especially after oil prices began to decline. Oil income contributes about 90% of public revenues in the Opec kingpin which pumps around 9.6 million barrels per day. As a result of failing to check rising spending, a total of US$53 billion will be withdrawn from fiscal reserves, estimated at US$750 billion, in just two years, he said. Alwaleed also criticised the way Saudi reserves are invested, saying because most of them are invested in US and European bonds, they have low yields at around 2.4% annually. — AFP

The German government in Berlin could not be reached for comment. It is still unclear how a eurozone member country could leave the euro and still remain in the European Union, but Der Spiegel quoted a “high-ranking currency expert” as saying that “resourceful lawyers” would be able to clarify. According to the report, the German government considers a Greece exit almost unavoidable

PARIS: Once a flagship policy of French President Francois Hollande, the 75% “supertax” on top earners limps into its final weeks this month having sparked plenty of controversy but few economic results. It was no surprise that the policy, which expires on Feb 1, would be quietly dropped: it was only ever slated to last two years and the So-

cialist government has for months declared it would not be renewed. The tax had also been watered down until it was barely a shadow of the “exceptional contribution to solidarity” proclaimed by Hollande when he came to power in 2012. France’s top court had declared as unconstitutional the original plan to levy the tax on all individuals earning €1 million (RM4.24 million). The government came back with

a version that made companies pay the 75% rate only for the portion of employees’ salaries above the million-euro ceiling. But by then, it had already become a symbol of France’s opposition to big business and attracted high-profile derision. Actor Gerard Depardieu stormed out of the country in a huff over the tax and took up Russian citizenship in 2013. It was reported he only paid 6% tax in his new home. — AFP

IBM turnaround requires atypical activist fix BY ROBERT C Y RAN

NEW YORK: IBM requires an atypical activist fix. Big Blue’s strategy of cost cuts and debt-fuelled buybacks is no longer working — even though the company keeps trying. A tarnished balance sheet, lean staffing and a history of disposals rule out typical activist wheezes. Encouraging chair and chief executive Ginni Rometty to invest in IBM’s core businesses could pay off. For two decades IBM has run the same playbook. It sells low-margin businesses, slashes expenses, buys some profitable software companies, and returns a lot of cash to investors. Over the past four quarters, the US$152 billion (RM536.56 billion) company has spent more than US$23 billion on dividends and buybacks. The snag is that IBM is investing too little. Big Blue has only spent about US$11 billion over the past four quarters in total on research and development (R&D), capital expenditure and acquisitions. That’s a problem in tech, where old products soon become obsolete. While Google spends about 16% of its sales on R&D, IBM spends 6%. The effect is becoming clear on the top line. Revenue has shrunk for 10 quarters in a row. Costs have

For two decades IBM has run the same playbook. It sells low-margin businesses, slashes expenses, buys some profitable software companies, and returns a lot of cash to investors. In a good year for stocks, Its shares have fallen more than 15%. Photo by Reuters

been cut to the bone, sending customers fleeing to better service providers. In a good year for stocks, IBM shares have fallen more than 15%. That means IBM has overpaid on its last three years of buybacks. That has spurred talk of activists. But what could rabble-rousing shareholders demand? Unlike Yahoo, there’s no obvious gem to dispose of or cash-laden balance sheet to raid. IBM has been selling off hardware, like last quarter’s disposal of the chip division, lessening the appeal of an HP-style breakup. IBM hasn’t done any big acquisitions recently, so an activist can’t argue it is wasting capital like HP, which wrote off three-quarters of the US$12 billion it paid for Autono-

my. And year after year of punishing cost cuts leave no obvious fat to cut. A better idea is to invest more in the business. Assume IBM repurchases US$10 billion of stock next year. Bought back at current rates, that would result in a 7% increase in earnings per share. Meanwhile, IBM’s pre-tax return on its business assets is 22%. Diverting that US$10 billion into the business could result in more than US$2 billion of pre-tax profit. Put this on IBM’s low 20% tax rate and the result is more than a 12% increase in earnings per share. IBM’s focus on financial, rather than product, engineering has caused low employee morale, falling sales and shareholder dissatisfaction. It’s time to invest. — Reuters

IN BRIEF Indonesia’s faster inflation, weak exports cloud economic outlook JAKARTA: Indonesia’s annual inflation accelerated to its fastest pace in almost six years in December, while exports fell more sharply than expected, raising concerns about economic growth prospects. Southeast Asia’s largest economy has been wrestling with bringing down a worryingly large current account deficit, but a move to cut burdensome oil subsidies has been countered by weak commodities that have hit the country’s exports. “We’ll be lucky to get 5.1% growth” in the fourth quarter, said Wellian Wiranto at OCBC bank in Singapore. — Reuters

US slaps more sanctions on North Korea after Sony hack HONOLULU/WASHINGTON: North Korea was hit with more sanctions last Friday designed to impede access to the US financial system in the wake of a cyberattack on Sony Pictures Entertainment, which the Obama Administration has said was supported by the reclusive country. The US government named three entities, including North Korea’s military intelligence agency, and sanctioned 10 people with links to weapons sales and proliferation. Financial sanctions have had limited impact on North Korea which has been sanctioned by the United States for more than 50 years. — Reuters

Brazil minister recants minimum-wage plan aimed at cutting budget RIO DE JANEIRO: Brazilian President Dilma Rousseff ’s promise to cut spending during a second term that began last Thursday got off to a rocky start, as her new planning minister recanted a pledge to change how the country’s minimum wage is calculated. Minister Nelson Barbosa told reporters, last Friday on his first day in the post, that he planned to send Congress a bill changing the formula to be used to adjust the minimum wage starting in 2016. But a day later he published a note on the ministry web site saying the current formula will be maintained. — Reuters

South Sudan oil revenue at US$3.38b, hit by conflict and price falls JUBA: South Sudan’s oil revenue last year was hit by reduced output because of conflict in the African republic and the rapid decline in oil prices, petroleum minister Stephen Dhieu Dau said in a statement seen by Reuters on Saturday. Oil is the main source of cash for South Sudan, but total oil income was US$3.38 billion (RM11.9 billion) last year from the sale of 36.6 million barrels as output was hit by the fighting that began in December 2013 in the wake of a power struggle between President Salva Kiir and former Vice-President Riek Machar. — Reuters

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More homes destroyed in major S Australia bushfire Officials warn of threat to lives even as weather conditions improve ADELAIDE: More than 30 homes are feared destroyed as firefighters battle the worst bushfire in South Australia for three decades, with officials warning yesterday of a threat to lives even as weather conditions improve. The state’s Country Fire Service said the intense fire, which broke out last Friday in the Mount Lofty Ranges east of Adelaide, was continuing to burn in all directions at Sampson Flat, threatening lives. But a cool change yesterday helped to contain the fire ahead of a forecast rise in temperatures again on Wednesday. “I can confirm that 12 homes have been destroyed and it’s feared that a further 20 homes have also been lost,” South Australian Premier Jay Weatherill told reporters. “However, the conditions for firefighting have improved. The weather is cooler and the weather conditions will permit aerial firefighting. “This is important because it

Five arrested in India over Japanese tourist gang rape

Embers glowing against the smokefilled sunset near Gumeracha in the Adelaide Hills on Saturday. More than 30 homes are feared destroyed. Photo by AFP

is forecasted that we will have worsening weather conditions on Wednesday so it’s critical that we make headway on reducing the active edges of this fire front.” Weatherill said following a visit

burnt in the Adelaide Hills, an area in the Mount Lofty Ranges with a population of about 40,000, dotted with scenic villages and known for its farming produce and wineries. — AFP

Singapore gives 15 more trees heritage status BY KASH CHEO NG

BY SA I L EN D RA SIL

KOLKATA: Five men have been arrested over the gang rape and extortion of a Japanese tourist held as a sex slave for nearly a month in a basement close to a famous Buddhist shrine in India, officials said yesterday. The 22-year-old’s ordeal began in Kolkata, capital of West Bengal state, where she was befriended by three local men shortly after arriving on Nov 20, one of the city’s top police officers told AFP. The men, one of whom spoke Japanese, first managed to persuade her to withdraw around US$1,200 (RM4,236) in cash before travelling with her to the holy shrine of Bodh Gaya in the neighbouring state of Bihar. There she was then handed over to two brothers who locked her in a secluded underground room and repeatedly raped her for nearly a month. The two brothers, who were working as tourist guides, were arrested last Friday and taken to Kolkata where they appeared in court late Saturday. A magistrate ordered that they be remanded in custody until Jan 9 so the victim can take part in an identification parade. — AFP

to the site of the bushfire yesterday afternoon that he had seen “many burnt-out houses” and also “fires licking at the edges of a number of houses”. More than 11,000ha have been

SINGAPORE: Tall and majestic, more than 200 trees have made the Heritage Tree list in the past 13 years, The Straits Times reported. The special title is conferred by a panel consisting of National Parks Board (NParks) staff as well as landscape and plant experts in recognition of a tree’s historical or ecological significance to Singapore. NParks takes special care of these heritage trees, equipping

them, for example, with lightning conductors to prevent them from being struck, the daily reported. Perhaps most well loved among the heritage trees is a Tembusu tree at the Singapore Botanic Gardens. The 150-year-old giant is featured on Singapore’s S$5 (RM13.25) bills. Recently, 15 new trees joined the league, which according to The Straits Times include: (i) Tamalan tree (Fort Canning) — native to Myanmar and Thailand, the tree was exclusively planted at Fort Can-

ning in the early part of the 20th century; (ii) Buah Keluak tree (Botanic Gardens) — the fruit of this tree is used in Asian cuisines, most notably the Peranakan dish ayam buah keluak; (iii) Giant Cola tree (Botanic Gardens) — with spectacular large leaves and a dense spreading crown, this tree is the only one of its type recorded in Singapore; and (iv) Teak tree (Botanic Gardens) — this tree dates back to 1884 and was first recorded by the gardens’ director Isaac Burkill in his 1927 guide book.

Bangladesh police lock opposition leader in office BY SHAF IQU L ALAM

DHAKA: Bangladesh police banned all protests in the capital from yesterday and locked main opposition leader Khaleda Zia in her office in Dhaka as tension rose before the first anniversary of an election her party boycotted. Zia had threatened to hold mass rallies in Dhaka to mark “Democracy Killing Day” today — the first anniversary of the polls that her Bangladesh Nationalist Party (BNP) and its Islamist allies refused to join on the grounds that they would be rigged by the ruling party.

We’ve not detained her — only her security has been enhanced.

“She has been confined in her office. Police have cordoned off the area and barricaded [the] road. She wanted to see a sick party colleague around midnight, but they did not let her out,” Zia’s aide SR Shimul Biswas told AFP. Police banned all protests, meetings and demonstrations in the capital from 5pm (1100 GMT)

yesterday until further notice to prevent violence after the ruling party announced rival rallies. “We imposed the ban as rival rallies by the political parties raised fears of clashes,” Dhaka police spokesman Masudur Rahman told AFP. Zia was forced to spend the night at the party office despite attempting to leave by car, the aide said. Police inspector Firoz Kabir denied that Zia was being forcibly detained in her office. “We’ve not detained her — only her security has been enhanced. She is not leaving her office,” he told AFP. — AFP

IN BRIEF Source: Libya Islamists abduct 20 Egypt Christians BENGHAZI: Islamist militants have abducted 20 Egyptian Christians in Libya in recent days, a source close to the government said on Saturday. The Ansar al-Syariah militia kidnapped 13 of them on Saturday in the coastal city of Sirte and the rest of them there over the past few days, the source said. Their identity was not immediately clear, except that they were said to be Coptic Christians. Thousands of Egyptians work in Libya, mainly in the construction and craft sectors, and they have been targeted as the country descended into chaos. — AFP

Man jailed for molesting teenage girl during ‘exorcism’ SINGAPORE: A 52-year-old man who performed a ritual on a teenage girl to rid her of spirits has been sentenced to a year’s jail after she accused him of touching her inappropriately under her clothes, The Straits Times reported. Mohamed Said Mohamed Sani, a technical officer who treats people with “spiritual disturbances” for free, is appealing against his conviction and sentence for outrage of modesty. He is out on bail. The girl, whose name has been withheld as there is a gag order on her identity, was 17 when he “treated” her at her uncle’s Marsiling flat in June 2011.

First CoE bidding exercise for January starts at noon today SINGAPORE: This first Certificate of Entitlement (CoE) open bidding exercise for January 2015 starts at noon today, the Land Transport Authority was quoted by The Straits Times in a statement. The total quota for tender is 2,024, including 704 CoEs in Category A, for cars up to 1,600cc and 130bhp; and 571 CoEs in Category B, for cars above 1,600cc or 130bhp. For Category E, which can be used for any vehicle type, there are 272 CoEs for tender, and in Category D, for motorcycles, there will be 321 CoEs. The bidding will end at 4pm on Wednesday.

Vigilance stepped up in Narathiwat BANGKOK: Security units in all 13 districts of Narathiwat province were put on high alert yesterday on the 11th anniversary of the attack by separatist insurgents on the 4th Development Battalion at the Kromluang Narathiwat Ratchanakarin military camp in Cho Airong district on Jan 4, 2004. Military, police and civilian forces set up security checkpoints on main and secondary roads, searching people and vehicles for armed militants to prevent possible attacks. A number of insurgents launched a surprise attack on the headquarters of the 4th Development Battalion in 2004, killing four soldiers. — Bangkok Post

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Palace issues fresh denial over Andrew sex claims Report: Accuser says she refuses to be ‘unjustly victimised again’ REUTERS

BY ROB I N MI L L A RD

LONDON: Buckingham Palace issued a fresh denial yesterday of allegations an American woman kept as an underaged “sex slave” by a Wall Street billionaire was forced to have sexual relations with Britain’s Prince Andrew (pic). The woman, identified in legal documents only as “Jane Doe #3”, has alleged in a US court filing that she had been kept as a “sex slave” by financier Jeffrey Epstein, a friend of the prince. Andrew, the Duke of York, and prominent US attorney Alan Dershowitz, one of Epstein’s defence lawyers, have both vigorously denied the allegations. In a strongly-worded response

Canadian who killed eight spared two infants — police MONTREAL: A Canadian who murdered eight people including his wife spared two infants during his deadly rampage, police said, while reports emerged on Saturday that he had previously threatened his family. Police are still investigating the motive behind the killing spree last week in Edmonton by 53-yearold Phu Lam. But the new details shed some light on what may have prompted the killings that shocked the northern capital of the oil-rich province of Alberta at the end of December. Last Sunday, Lam killed his wife Tien Truong, 35, her eightyear-old son, her parents, her sister, her three-year-old niece and an acquaintance of Truong’s. At a different location the next day, Lam killed a 37-year-old woman who police say was a friend of the family. Lam threatened to kill the whole family after learning through a biological test that he was not the father of Elvis Lam, the eight-year-old victim. Lam also had a record of sexual assault and drug use with Edmonton police. Two years ago, Lam threatened to kill his family, according to a legal complaint filed by his wife. Truong accused Lam of repeated violence over the years, according to court documents reported by the local press. Police said last Friday there were two young children that Lam spared, leaving them at a relative’s house before killing again. The children were aged one and eight months old. — AFP

last Friday, Buckingham Palace said that “any suggestion of impropriety with underage minors is categorically untrue”. But the palace took the even more

unusual step of issuing a second statement after British Sunday newspapers printed details of interviews the plaintiff has given in recent years. “It is emphatically denied that the Duke of York had any form of sexual contact or relationship” with the woman, the palace said. “The allegations made are false and without any foundation.” The Mail on Sunday and the Sunday Mirror newspapers both published details of interviews given by the woman in recent years, in which she discusses three alleged encounters with Andrew. Meanwhile, the Sunday Express reported that the prince was due to fly back into Britain after taking a ski trip to Switzerland. A royal source confirmed Andrew had been away

on a private holiday abroad. Following the denials from the prince and Dershowitz, Jane Doe #3 told The Guardian newspaper that she refuses to be “unjustly victimised again”. Epstein, a known friend of Queen Elizabeth II’s second son, was convicted in 2008 of soliciting an underage girl for prostitution and served a prison term. The woman claimed she was his sex slave from 1999 through to 2002. In a statement to The Guardian she said: “These types of aggressive attacks on me are exactly the reason why sexual abuse victims typically remain silent and the reason why I did for a long time. That trend should change. I’m not going to be bullied back into silence.” — AFP

NYC mayor, commissioner saluted when entering wake NEW YORK: New York City police officers saluted as Mayor Bill de Blasio and his police commissioner entered a Brooklyn funeral home on Saturday for the wake of a policeman killed in an ambush last month that deepened a rift between the mayor and the NYPD (New York City Police Department). Ahead of the wake for Wenjian Liu, Commissioner Bill Bratton told officers to refrain from the “act of disrespect” seen at the funeral of Liu’s partner, Rafael Ramos, when thousands of officers turned their backs on de Blasio. “A hero’s funeral is about grieving, not grievance,” Bratton wrote in a memo to be read on police roll calls over the weekend. The funeral was to take place yesterday. Liu, 32, and Ramos, 40, were shot to death on Dec 20 as they sat in their squad car in Brooklyn. Their killer, Ismaaiyl Brinsley, who killed himself soon after, had said he was seeking to avenge the deaths this summer of two unarmed black men at the hands of white police officers. On Saturday, a few hundred mourners, most of them police of-

US healthcare worker under watch after Ebola exposure WASHINGTON: An American healthcare worker who has been in Sierra Leone will be placed under close observation at a Nebraska hospital after high-risk exposure to the Ebola virus, doctors said on Saturday. The unnamed patient was scheduled to arrive yesterday aboard a private air ambulance for observation and possible treatment. Two of the previous three Ebola patients at the facility were treated and released but the third — a surgeon who was infected while working in his native Sierra Leone — died in November. Ebola has killed 7,890 people in the past year, out of 20,171 cases, according to the latest tally by the World Health Organisation. — AFP

Nine choke to death on Japanese New Year delicacies TOKYO: Nine people have choked to death in Japan after eating traditional glutinous “mochi” rice cakes to celebrate the New Year, an official and local media said yesterday. In Tokyo alone, 18 people were sent to hospital due to suffocation after eating the New Year delicacy, and three of them died, a fire department official said. The Yomiuri Shimbun newspaper said the death toll from rice cake accidents had reached nine by last Friday across the nation and 13 others were in a serious condition. — AFP

Two Filipinos dead, 16 missing in ship sinking

A police officer saluting De Blasio as he walked in to attend slain New York Police Department officer Wenjian Liu’s wake in Brooklyn on Saturday. Photo by Reuters

ficers in dress blue uniforms, lined up outside the funeral home on a frigid, snowy afternoon. De Blasio and Bratton entered the funeral home together shortly after it opened, with officers standing guard by the entrance saluting both men as they went inside. The

wake was closed to the public. The killing of Liu and Ramos has frayed the already strained relations between the police force and De Blasio, who sharply criticised the NYPD’s “stop and frisk” tactics when he ran for mayor in 2013. — Reuters

US drone strike kills 6 in NW Pakistan PESHAWAR: A US drone strike targeting a Taliban-linked warlord killed at least six militants in Pakistan’s restive tribal region near the Afghan border yesterday morning, Pakistani security officials said. The strike aimed at the stronghold of prominent warlord Hafiz Gul Bahadur, as well as the nearby base of an Uzbek

IN BRIEF

commander in North Waziristan, one of seven semi-autonomous tribal districts that border Afghanistan. The area has been a hub for al-Qaeda and Taliban militants since the early 2000s. Washington pressed Islamabad for years to wipe out militant sanctuaries in North Waziristan, which have been used to launch at-

tacks on Nato forces in Afghanistan. Bahadur, once seen as “pro-Pakistani”, is unhappy with the military offensive in North Waziristan. He is aligned with the feared Haqqani network, which is frequently accused of sending fighters and suicide bombers against US and Nato troops in neighbouring Afghanistan. — AFP

MANILA: Two Filipino sailors have died and 16 others are missing after their cargo ship sank in waters near Vietnam, the Philippine foreign department said yesterday. The cargo vessel Bulk Jupiter went down on Jan 2 off the coast of Vung Tau City and so far, only one Filipino crewman has been rescued alive, the department said in a statement, without specifying why the ship sank. Vietnamese authorities are leading the rescue operations and have recovered two bodies and are still searching for the other 16 crew, the statement said quoting the embassy in Hanoi. — AFP

UK nurse in ‘critical’ condition LONDON: A British nurse who contracted Ebola in Sierra Leone was in a “critical” condition yesterday, locked in isolation inside a specialist London hospital. Pauline Cafferkey’s health has taken a turn for the worse in recent days, the Royal Free Hospital said in a statement. “The condition of Pauline Cafferkey has gradually deteriorated over the past two days and is now critical,” the Royal Free Hospital in London said in a statement. Last Wednesday, doctors had said the 39-year-old Scot was sitting up in bed, reading and talking to staff from inside her isolation tent in the hospital. — AFP

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WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE

Personal ASSISTANT

An employee checking the quality of sturgeon caviar. Photo by AFP

COMPI L ED BY QUAH SU ANN

WORK. LIFE. BALANCE

THE Maskini Theatre Company, for the first time ever, is bringing us Wayang — Malaysian stories. It’s a collection of performances by local performers that are set to not only entertain, but amaze us with their unique style of presentation of music, dance and stories. Chan Ming Lye, a well-known Malaysian singer who is based in New York will be opening the night. Chan was involved in the famed musical, Miss Saigon, for seven years. This show will consist of actors sharing legendary stories of Qixi, Narashima, and Ulek Mayang using self-made puppets. Show dates are at 8.30pm from Jan 7-10 and at 3pm on Jan 11 at the DBKL Auditorium in Kuala Lumpur. Tickets are priced at RM55 for adults and RM35 for students and senior citizens, and can be purchased at http:// www.theatreantics.com/ticket.php.

GISELLE, a ballet presented by Dance Space is a tale of love, betrayal, revenge and forgiveness. It begins with a mystical legend of girls who had been deserted and have become ghostly visitants in the moonlight, dancing to entice men to breathe their last as retaliation. Haunting and poetic, Giselle tells the story of a peasant girl who falls in love with a prince, and the heartbreak and despair that follow. Giselle offers both the promise of young love and the tragedy of it slipping away. It is the fourth full-length ballet of Dance Space after the great success of The Swan Lake in 2013. Giselle will be playing at the Damansara Performing Arts Centre (DPAC) in Petaling Jaya from Jan 9 to 11, at 8.30pm. Tickets are at RM58 for adults and RM48 for students and senior citizens, and can be purchased at DPAC by calling (03) 4065 0001.

ENJOY a relaxing, charming time at The Verandah for a traditional English favourite of fine teas, ovenfresh scones with clotted cream, fluffy cakes, golden pastries, and scrumptious savouries. This English Afternoon Tea special is priced at RM75. The Verandah is located at Carcosa Seri Negara in Taman Tasik Perdana, Persiaran Mahameru in Kuala Lumpur. For reservations and additional information, please call (03) 2282 1888.

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Poland takes on

BLACK CAVIAR

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Trickiest part of the production process is seasoning the eggs

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giene mask, nurse cap and scrubs. The air No ready-made recipe is swapped out 20 times an hour, and the Traditionally, caviar was made from eggs oodies, take note: After flood- room is sterilised for six hours every night. from wild sturgeon in the Caspian and Black ing the global market with its seas with the best known producers in Rusvodka, apples and berries, Po- Crystal clear water sia and Iran. land has gone gourmet and Outside, thousands of sturgeon swim around Years of overfishing and pollution is trying its hand at making in fish canals fed by the crystal clear water of have left the sturgeon at risk of extincblack caviar. the Lyna River. tion. The fish is protected under the 1973 Dressed from head to toe in sterile The fish are slim and muscular, with a Convention on International Trade in clothing, a worker leans over a sieve con- pointed mouth for the Siberian sturgeon Endangered Species of Wild Fauna and taining roe from Russian and Siberian and a rounder one for the more covet- Flora (CITES). sturgeon. She uses tweezers to remove ed — and expensive — Russian variety. Yet demand continues and caviar pricany leftover bits from the ovary sack — anEach female weighs between 10 and es have skyrocketed, now retailing from ything to ensure the quality of the caviar. 20 kg and carries roe totalling around around €1,700 (RM7,201) per kg and Nor is hygiene to be trifled with at 12% of its weight. prompting many a country to try to cash the fish farm in the northern Polish vilBefore winding up in Rus, the sturgeon in on the luxury food. lage of Rus. spend the first seven or eight years of In 2012, caviar producers made 260 “We produce unpasteurised, fresh their lives on a parent farm in Goslawice, tonnes of the fishy delicacy in countries caviar, so we have to make sure it doesn’t central Poland. It extends across nearly including France and Italy but also Israel, come in contact with even the smallest 5,000 acres (2,000 ha) of lakes and 500 ha Uruguay and even Vietnam, according to speck of bacteria,” says farm head Marek of ponds heated by a nearby power plant. the World Sturgeon Conservation Society. Szczukowski. “We are the biggest fish farm in Poland The trickiest part of the production “The taste of caviar largely depends on and one of Europe’s three main sturgeon process is seasoning the eggs. Many years the quality of the air, the water, its tem- producers,” says marketing and sales of experience go into determining just perature, the feed, but also the method manager Agata Lakomiak-Winnicka. the right amount of salt. used to obtain the eggs.” “We began farming sturgeon in 1992 and “Making caviar is an art. There’s no Everything here is up to hospital stand- have been supplying Europe’s top caviar ready-made recipe,” Szczukowski says. ards. Employees handle the precious eggs, producers with it since 2008,” she tells AFP. The whole operation takes no more whose colours vary from a golden brown “They’ve been a huge hit, so it was just than 15 minutes: from carving out the to olive to black, in a room fit for surgery. a matter of time before we launched our roe-filled ovaries to vacuum packaging All the equipment, the walls, the floor own brand, Antonius.” the caviar in elegant black and white and even the ceiling are stainless steel. Today, the two farms have more than boxes with the Antonius label. As for the staff : no shower, no entry. 1,000 tonnes of sturgeon swimming “We want Poland to have its own The same goes for anyone without a hy- throughout their waterways. caviar brand recognised around the

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BY BE RNARD O S S E R

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WELLBEING . THE ARTS . WINE+DINE . STYLE+DESIGN . LEISURE

01. A fish farm worker in the northern Polish village of Rus weighing a tub of sturgeon before it is sealed. Photo by AFP 02. Agata Lakomiak-Winnicka, marketing and sales manager for Antonius caviar, with two cans of the Polish product. Photo by AFP 03. Female sturgeon swimming in a tank at a fish farm in the northern Polish village of Rus which is the first in Poland to begin producing the coveted delicacy. Photo by AFP 01

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world,” says Lakomiak-Winnicka. The potential is there, says French chef Michel Moran, who has lived in Poland for 15 years. “Poland makes really good vodka for example. We’re able to raise great quality livestock, we have great fish,” says the chef

at Warsaw’s “Bistro de Paris”. “I don’t mean the Baltic Sea unfortunately, but if we get our fish from fresh water, we’re able to raise some really good stuff,” he tells AFP. “And now, a caviar like this, I’m convinced there’s a place for it on the market.” — AFP

TIMEPIECE Breguet ends 2014 with a serious update to tradition BY S TE P HE N PULV IR E N T

well as the black finish on the bridges and plates, gives this Tradition a very non-traditional look. No images of the rose gold 7097 have been released yet, but we’re still betting white gold will be the way to go here. Cocktail Party Fact: The (extremely long and cumbersome) name of this watch nods to the retrograde seconds and automatic winding system, but there’s a lot more technology packed into this watch than just those two things. The escapement is a straightline inverted lever (enjoy, nerds!) and the silicon balance spring is shaped with a Breguet overcoil to ensure accuracy. There’s also a unique Breguet-invented device called a “parechute” hanging over the balance that protects the sensitive staff mechanism from shocks. It’s innovation, but 18th-century style.

AS 2014 wound down, watch nerds are anxiously awaiting the flood of new wristwear to come at SIHH 2015 which starts on Jan 19. Not to be outdone, Breguet has offered up a small peek at its 2015 collection to stoke the fires as we look forward to bonus season. The Tradition Automatique Seconde Rétrograde 7097 is as impressive as it is a mouthful. It has all the little antiquarian flourishes you expect from Breguet while feeling thoroughly like a watch for the future. First Thoughts: This isn’t necessarily a 10th anniversary watch, but it does come a decade after the first Tradition models, now the basis of Breguet’s collection. This means the 7097 has certain boxes to check—the floating smaller dial, the exposed movement components, and the fluted caseband are all there. But the brushed silver finish on The basics the dial and retrograde seconds, as Case diameter: 40mm Case materials: White gold or rose gold, both with fluted case band Dial: Solid gold with silvered finish and engine-turning decoration Strap: Leather strap with white gold buckle Complications: Retrograde seconds display Reference number: 7097

A closer look at the outstanding finishing.

The movement Caliber: 505SR1 Power reserve: 50 hours Winding: Automatic Finishing: Black bead-blasted plates and bridges, circular graining, blued hands and solid gold winding rotor. — Bloomberg

on nc973 in and ricom nd ash 260 ies ael, g to ety. ion ars ust

no ys. ore the ing hite wn the

PICK OF THE DAY THIS holiday season, bebe’s “Winter in Wonderland” collection presents an enchanted, fantasy-inspired take on holiday style. Dreamy exclusive prints, whimsical feather details and glittering sequins define the look and adds a signature glam that is essentially bebe. The collection embodies the readiness of the season with standout cocktail dresses, from fit and flare silhouette, bodycons and long-sleeved designs, making these special pieces the anchor of the collection. Other sophisticated pieces include desk-to-drinks suiting, silky blouses, dramatic jumpsuits and embellished denim, as well as accessories and shoes. The price range for clothes is RM200 to RM2,000, bags are from RM200 to RM700 and shoes are from RM200 to RM800. bebe stores are located at Pavilion Kuala Lumpur and at Highstreet, 1 Utama Shopping Centre, Petaling Jaya. Visit www.facebook. com/bebemalaysia for latest product information and updates.

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Zen TODAY

Gossip is when you hear something you like about someone you don’t — Earl Wilson

From new Windows to

GOOGLE GLASS Eight technologies to be introduced this year four tablets under the Kindle Fire product family. They’ll come in various colours and new year also means new specifications such as differing screen sizes technologies to look forward and Bluetooth connectivity. to. Every year, we all wait in anticipation of some of the Samsung Galaxy S6 most exciting new gadgets, The successor to 2014’s Galaxy S5 is expected software and electronics to to be announced at the Samsung Unpacked be unveiled. This year is no different. From event, which will be running from March 2-5 … iPhones to Google Glass, 2015 is set to be an and the rumour is that the Galaxy line plastic interesting one. build quality is finally going to be upgraded, in line with its rivals. BY QUA H SU A N N

A

Sony Xperia Z4 The Sony Xperia Z4 is slated to be announced in March this year, and although the specifications have yet to be confirmed, industry experts are predicting that it’ll run on Android Lollipop and sport a Quad HD screen. iPhone 7 or 6s Obviously, no year is complete without a new addition to Apple’s flagship iPhone brand. They’ve always been announced in September, and this year is no different. This time around though, the brand new iPhone will be running on iOS 9.

Apple Watch While so many others have failed in their bid to popularise smart watches, the world is looking intently at Apple this year to see if it’ll succeed where others have failed. The Apple Watch is scheduled to be released early this year, and is compatible with iPhones Google Glass running on iOS 8.2. Google Glass has been one of the most highly anticipated wearable technology for a while Amazon Kindle Fire 2015 now but it still hasn’t been released to the The Kindle Fire was released in 2011, and in public. Those interested can only obtain one 2012 it became the second bestselling tablet in from Google through its Explorer Program the world. This year, Amazon is set to release (a prerequisite is that you must have a US

mounted display that is set to be released this year and will be perfect for gamers who want to step inside their favourite games and virtual worlds while allowing one to seamlessly look around the virtual world, just as one would in real life. shipping address). There are rumours that Windows 10 2015 is the year that it’ll finally be available After 8, comes 10. Wait, what? Yes, according to the masses! to Bill Gates, 10 comes after 8. Windows 10 is the successor to Windows 8.1, and is schedOcculus Rift uled to be released within the year. Windows Virtual reality is no longer a thing of the fu- 8 haters will be very happy to note that the ture. The Occulus Rift is a virtual reality head desktop Start menu is being brought back!

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M ON DAY JA N UA RY 5 , 2015 • T HEED G E FINA NCIA L DA ILY

Gerrard begins goodbyes amid echoes of 1988 The original Wimbledon stunned champions Liverpool 1-0 at that memorable match BY TOM WI L L I A MS

LONDON: Steven Gerrard will begin his farewell tour of English football today, when Liverpool visit fourth-tier AFC Wimbledon for an FA Cup third round tie rich in historical significance. Recalling as it does the 1988 final, when the original Wimbledon stunned league champions Liverpool 1-0, the match was a captivating fixture even before Gerrard’s announcement last Friday that he will leave Anfield at the end of the season. The FA Cup gave Gerrard one of his greatest triumphs when, in 2006, he inspired Liverpool to victory on penalties over West Ham United with a brace that included a sensational 32m equaliser in stoppage time. Gerrard also lifted the trophy in 2001, when Liverpool came from behind to beat Arsenal 2-1, and victory in May’s final would go some way towards healing the pain of last season’s spectacular

‘Barca transfer ban gives youth chance to flourish’ BY TI M HA NLON

BARCELONA: Barcelona coach Luis Enrique believes the club’s transfer ban is an “invitation” for players from their famed youth academy to push for a place in the first team. The Catalan club have been renowned for their development of young talent through the “Masia” since the arrival in the late 1980s of coach Johan Cruyff, who put a special emphasis on nurturing home grown players. Now they will have to rely on youth to replenish the first team after losing an appeal last Tuesday against a FIFA sanction for an alleged breach of rules on the transfer of foreign under-18 players. That means they are unable to buy during the coming two transfer windows. Enrique told a news conference: “The squad is sufficiently strong and this is a stimulus for the youth players. It is an invitation for them to show what they can do. “Barca B is set up to feed the first team with players and I am happy with the way things are going and what they are offering us.” — Reuters

Gerrard has been used sparingly by manager Brendan Rodgers over the opening months of the campaign and may start on the bench at Wimbledon’s 4,800-capacity Kingsmeadow stadium in south-west London. A place in the League Cup final is closer for Liverpool, who are scheduled to face Chelsea in a twoleg semi-final later this month, but Gerrard will not want a shock FA Cup exit to tarnish his swansong. Asked what Liverpool’s visit represents for the club, AFC Wimbledon chief executive Erik Samuelson, who was present at Wembley in 1988, told Britain’s Press AssoGerrard in action in a Champions ciation: “Dreams.” League Group B match against FC He added: “That’s what it is Basel at Anfield in Liverpool last all about. It is a chance to dream month. Photo by Reuters about what might happen and fond imaginings of the end result. “I want people to come away thinking this is a decent club, they collapse in the Premier League league Jordan Henderson believes know how to do things properly title race. lifting the FA Cup would be the and they’re respectful, but they Gerrard will turn 35 on the day perfect way for the club’s inspira- gave them a hard time on the of the final and his midfield col- tional captain to sign off. pitch.” — AFP

Pulis hails four-goal Berahino after West Brom romp LONDON: Tony Pulis watched Saido Berahino (pic) score four goals in his first match in charge of West Bromwich Albion on Saturday and dampened speculation about the striker’s future by saying he is looking forward to working with him. Media reports have suggested the new manager is prepared to sacrifice Berahino and use the funds from a £20 million (RM107 million) transfer to shore up his new club’s fight for Premier League survival. However, after seeing the player shine in the 7-0 drubbing of minor league Gateshead in the FA Cup third round, Pulis told

reporters: “Saido Berahino is a very talented boy. “I look forward to working with him as a player for however long I am here as manager.” Berahino’s moods had been of concern at The Hawthorns in the past and he did not even celebrate his goals against Gateshead. Pulis said: “There is always going to be transfer speculation and you can see why. He has great pace, great balance and scores goals. “When I came here the chairman had not received any offer for looks as though he’s got the pohim and we will try our damnedest tential to be a good player.” to try and improve him. West Brom are fourth from bot“He can score a goal and he tom in the league. — Reuters

Evans told to rule out Malta move LONDON: Convicted rapist Ched Evans was warned on Saturday that he won’t be allowed to resume his career overseas. Evans has been looking for a new club following his release from prison last year and the former Wales and Sheffield United striker was offered the chance to join Maltese side Hibernians last Friday until the end of the season. But the Ministry of Justice (MoJ) moved quickly to rule out that possibility, pointing out that, as a

convicted sex offender on licence, the 26-year-old is effectively barred from working abroad. “We are determined to have one of the toughest regimes in the world for managing sex offenders, to stop them re-offending and to protect victims,” a MoJ spokesman said. “Probation officers must give permission for sex offenders on licence to take up new jobs and this includes ensuring they hold regular face to face meetings — this effec-

IN BRIEF UAE, Kuwait call off friendly over dispute GOLD COAST (Australia): A disagreement over the recording of a pre-Asian Cup friendly between the United Arab Emirates and Kuwait led to a last-minute cancellation of the match on Saturday, robbing both teams of vital match practice before the Jan 9 to 31 tournament. The players had lined up in the tunnel ahead of the game on the Gold Coast but it was called off after the UAE refused to agree to Kuwait’s request to record the match. In a statement on its website, the UAE Football Association said both sides had agreed to play the friendly behind closed doors without recording, broadcasting and the presence of the media or public. — Reuters

Podolski meets Inter boss, leaves Arsenal MILAN: Lukas Podolski’s transfer to Inter Milan moved closer on Saturday when the Germany forward met coach Roberto Mancini at the Serie A side’s training ground and said his goodbyes to Arsenal. “The World Cup winner was at the Centro Sportivo Angelo Moratti today (Saturday) to get to know his new training ground and meet the Nerazzurri coach,” an Inter statement said as media reported that a medical had been passed and he would soon sign. The 29-year-old has become a bit-part player at Arsenal despite injuries to Olivier Giroud and Theo Walcott, with Arsene Wenger appearing to better trust the speed and skills of younger players such as Danny Welbeck and Alex Oxlade-Chamberlain. — Reuters

‘Trimmed Cerci can help Milan trim gap’ MILAN: New AC Milan signing Alessio Cerci has been half-jokingly ordered to shave off his scruffy beard by owner Silvio Berlusconi who believes the improving Rossoneri can do little more to better their squad. Cerci will officially join Milan on loan from Atletico Madrid as part of the swap deal with Fernando Torres when the Italian transfer window opens today (Saturday) and trained with the seventh-placed Serie A side on Saturday. “We have been following Cerci for three years. Finally he has arrived and he has already promised me he will cut off his beard for his first match,” Berlusconi told Milan Channel. — Reuters

West Ham secure signing of defender Henry tively rules out working abroad. The announcement is a further setback to Evans who has been seeking to return to action following his release from prison in October after serving 2½ of a fiveyear sentence for rape. Evans was jailed in April 2012 for raping a woman in a hotel room in Rhyl, North Wales. The player denied the offence, saying the sex was consensual, but he was found guilty by a jury at Caernarfon Crown Court. — AFP

LONDON: West Ham United have signed Canadian defender Doneil Henry from Apollon Limassol of Cyprus, the English Premier League club announced on Saturday. Henry, 21, arrives for an undisclosed fee on what West Ham have described as “a long-term contract”. Henry started his career at Toronto FC and spent time training with West Ham in 2013 before being signed by Apollon Limassol and loaned back to Toronto. — AFP

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Nadal, Djokovic, Federer set for gripping season All three are chasing their own personal goals BY RI C H A RD EATON

DOHA: Rafael Nadal and Novak Djokovic lead the Qatar Open field from today while, 12,000km away in Brisbane, Roger Federer starts his 18th year on the tour as tennis heads for another gripping season. The details of Nadal’s plan to preserve his hopes of one day becoming the most successful player of all time may become clearer when he starts his title defence at Qatar. Although the Spaniard is almost five years younger than Federer, and is only three Grand Slams behind his all-time record of 17, changing his goals and his schedule will be vital if he is to surpass the Swiss genius. After an appendectomy cut short a 2014 season which also brought problems with his back and wrist, Nadal has accepted that stringent compromises are required. The wear and tear of more than 850 matches has left Nadal unable to sustain intense physical pressure for long periods, and has caused him to give up ambitions of ever again being world No 1. Preserving his physical condition is a precondition for Nadal preserving his career as well, though he has mental repair work as well.

Sri Lankan player reconsidering retirement after Bradman record WELLINGTON: Sri Lankan great Kumar Sangakkara is reconsidering retirement plans after his 203 against New Zealand yesterday put him one behind Australian legend Don Bradman for the most double centuries. The 37-year-old had indicated the second Test in Wellington could be his last with the intention of retiring from all international cricket after the World Cup which starts next month. But after a match-changing innings of 203 to lead Sri Lanka out of trouble and put them in control of the Test at the Basin Reserve, Sangakkara said the lure of overtaking Bradman meant he may extend his career. — AFP

Johnson out of final Test against India (From left) Nadal, Djokovic and Federer are ready for more exciting tennis. Photos by AFP

After missing the whole of the 2014 American hard court season and not competing since October 24, the effect of these absences is important. The Doha seedings suggest he should face world No 1 Djokovic in this Saturday’s final, but a fever caused Djokovic’s withdrawal from the final of the weekend exhibition event in Abu Dhabi. It remains to be seen whether he recovers enough to make his first appearance in Doha. Djokovic, who picked up his seventh major at Wimbledon in

2014, became a father only three months ago and has been taking advice from Federer on how best to cope with having a family on tour. The only thing which has prevented the 27-year-old Serb from joining Federer and Nadal in the career Grand Slam club is the absence of the French Open title, the rectifying of which has become his biggest career goal. He will try again at Roland Garros in May and June by which time both Djokovic’s state of mind and Nadal’s physical fitness may be better understood.

Federer, meanwhile, continues to confound the doubters. The Swiss great was runner-up to Lleyton Hewitt in last year’s final in Brisbane and should he win four more matches this week and lift his 74th tour-level title, he would become just the third player in the Open Era to reach the 1,000 match wins milestone after Jimmy Connors (1,253) and Ivan Lendl (1,071). World No 2 Federer compiled an ATP World Tour-best 73-12 match record in 2014, including five titles, and helped Switzerland win a first Davis Cup crown. — AFP

tralia this week as the 18-time grand slam singles champion bids for a sixth title at the Melbourne showpiece later this month. Temperatures in Perth are expected to reach 41°C and Williams, who won the last of her Australian Open titles in 2010, said she was looking forward to the warm feeling in today’s opener against Italy after a cool winter at home.

“If anything it’s going to help me for Melbourne,” Williams told reporters yesterday. “Perth is one of the most hottest places I’ve ever played, so it will be really good for the preparation in Melbourne, which is always super hot. “I haven’t won in Australia for several years, but there’s also a lot of other people who want too. I’ll just have to do my best.”

SYDNEY: Australia fast bowler Mitchell Johnson has been ruled out of next week’s fourth Test against India because of the injury he sustained to his right hamstring during the third game in Melbourne. “We have been closely monitoring his recovery since that match but feel he has not fully recovered,” team physio Alex Kountouris said in a statement yesterday. “He will not play in the upcoming Sydney Test match. “We expect him to recover in time to play a part in the upcoming tri-series against England and India.” The rescheduled fourth Test begins on tomorrow before the international tri-series starts 12 days later. — Reuters

Bangladesh recall Nasir for World Cup

Williams welcomes Perth heat PERTH: World No 1 Serena Williams backed the searing Perth conditions as perfect preparation for her Australian Open title bid but the weather proved too hot for Canadian Eugenie Bouchard, who was thrashed in yesterday’s Hopman Cup opener. Williams will pair up with John Isner for the United States in the mixed-team event in Western Aus-

IN BRIEF

With Flavia Pennetta, Czech Lucie Safarova and Bouchard as opponents in the round robin matches, Williams will have no dearth of quality opposition. “The women’s field is excellent here. It’s going to be great,” the 33-year-old said. “More than anything it’s a great time to get match play and not get stressed out too much.” — Reuters

Sangakkara gives Sri Lanka advantage in second Test

White off to winning start as Montpellier stuns Toulon

WELLINGTON: Kumar Sangakkara completely changed the complexion of the second Test against New Zealand with an outstanding double century as the visitors finished the second day with a 113-run lead. Sangakkara, who scored just seven runs in the first Test loss in Christchurch, made 203 in Sri Lanka’s 356 and held together four important partnerships that rescued his side from a precarious 78 for five at the start of play yesterday. The visitors, who need to win the Test to level the two-match series, were dismissed with about an hour’s play remaining to give Sri Lanka a 135-run lead after New Zealand were bowled out for 221 on the first day. The hosts finished the day on 22 without loss, with Tom Latham on nine and Hamish Rutherford 12 not out. Sangakkara, who became the fastest man to score 12,000 Test runs last Saturday, dominated the day’s play. The 37-year-old’s 11th Test double century moved him to within one of the record held by Australia’s Don Bradman. — Reuters

PARIS: South African World Cup winning coach Jake White got off to a winning start at Montpellier as the Top 14 strugglers beat European and French rugby champions Toulon 16-12 last Saturday. White was brought in as a consultant to replace the suspended Fabien Galthie in an aim to stem the tide of eight losses in their last nine matches in European and domestic action. And powered by a second-half Alex Tulou try converted by Ben Lucas, Montpellier grabbed a determined victory in front of their home crowd to move up to seventh with 35 points, a point behind Bordeaux (36) and ahead of Toulouse (33) who played in Clermont yesterday. Benoit Paillaugue had put Montpellier ahead with two early penalties as the score was balanced 6-6 at half time while all of Toulon’s points came off the boot of Welsh full-back Leigh Halfpenny. “Jake White told the players to get back to basics and what we repeated throughout the week was produced on the pitch,” said Montpellier president Mohed Altrad. — AFP

DHAKA: Bangladesh yesterday recalled batsman Nasir Hossain and picked all-rounder Soumya Sarkar in their 15-man squad for this year’s cricket World Cup in Australia and New Zealand. Nasir missed the recent home series against Zimbabwe but returned to form in the domestic 50-over league. All-rounder Soumya, 21, was chosen ahead of the experienced Imrul Kayes and Shamsur Rahman despite having played just a single oneday international so far. “The return of Nasir will add depth in our batting,” chief selector Faruque Ahmed told a press conference. — AFP

De Villiers takes South Africa closer to lead CAPE TOWN: AB de Villiers remained undefeated as South Africa edged towards a first innings lead on the third day of the third and final Test against the West Indies at Newlands yesterday. South Africa were 313 for five at the interval, 16 runs behind the West Indian first innings total, with their hopes resting largely with De Villiers, who was on 84 not out, the highest score of the match. — AFP