MBSB ... Nov12

Over the years, it has evolved from giving out just home loans to providing retail and corporate loans as well as civil servant personal financing. Now (2012) it has set its sights on a banking license that will crystallize its status as a full fledged financial institution.

However its CEO said that it is no rush to get a banking license but is moving towards becoming a banking entity in the near future. At this juncture, it is tying up the loose ends and improving business operations so that MBSB will behave like a bank when it is ready the banking license.

In 2013 would be good for MBSB, among the gaps (moving towards being a bank) is the group’s capital. Currently (Nov 2012), it is doing to close the gap. The gaps are in business, operations, capital and everything else that requires it behave like a bank.

It has been adhering to BNM’s guidelines although it is not required to do so, as it prepares itself to be declared a bank.

A critical step for MBSB to become a bank is its target to go live with its new core banking system.

A banking license would be good for MBSB as it would formalize its best practices. MBSB is already in compliance close to compliance with most of the requirements, so it would not make much a difference.

A license would lower financing costs for MBSB and allow it to tap the interbank market. At the same time, it would open up new types of securities that MBSB could offer.

It is true that MBSB will have to comply with the stricter guidelines, but that will give shareholders more confidence in the company, knowing that it has regulatory oversight.

However other said that MBSB will not try and become a full blown commercial bank. MBSB is likely to continue to focus on its niche which has been very lucrative.

The company, in which the EPF has a 64% stake could always take the route of a development financial institution and be governed by the DAFIA instead of falling under the BAFIA.

MBSB is an exempt finance company that was given the green light by the MOF in 1972 to undertake a financing business in the absence of a banking license. It is not subject to BAFIA or BNM’s responsible lending guidelines but is answering to the MOF.

Unlike other financial institutions, MBSB may finance loans with a loan to value ratio exceeding 70% for a third mortgage and above, a ruling that was enforced in 2011. However personal financing accounted for the bulk of its current’s loans, amounting to rm16.78 billion of 65% of total loans as at Sept 30, 2012.

Be that as it may, MBSB’s growth has been impressive. MBSB’s NPL is also at a record low at 4.33%. On Dec 31, 2011 the NPL stood at 8.85%.

There were even rumors of a takeover by RHB Cap Bhd, in which the EPF has a 44.84% stake. However nothing has come of that and RHB Cap is in the midst of a merger with OSK Holdings Bhd.

IPO ... HiapHuat

Hiap Huat Holdings Bhd, which is seeking a listing on the ACE Market of Bursa Malaysia, plans to raise RM17mil from the initial public offer (IPO).

The IPO comprised of 85 million new 10 sen shares, of which 80 million would be placed out and the remaining five million units would be offered to the public.

Of the RM17mil, it would used RM8.2mil for working capital, RM4.5mil for capital expenditure, RM2.3mil to fund the listing process and the remaining RM2mil to repay bank borrowings.

The shareholders were also offering for sale 50 million existing shares which would be placed out.

The group is licensed to collect, treat and process waste oil, waste solvents, used drums and containers. As an integrated licensed scheduled waster oil recycler, it is involved in collecting, recycling refining and producing recycled products.

The company is a used oil recycler. Its core activity is collecting, recycling, re-refining and producing recycled products. The group stores, treats and recycles waste oil collected from industrial and commercial companies and then formulates them into end products ready to be used by end consumers.

The group's recycled end products derived mainly from its recycling and recovery process are sold under their own “AF1”, “Top Up”, “NEKKO”, “Cap Rumah” and “Flag” brand names.

Muhibah ... Nov12

It will meet the Official Receiver (OR) appointed by the court on 12 Nov 2012, together with the other contractors and creditors of the project, which may include CIMB Bank Bhd..

According to the group’s MD, Muhibbah wants to restructure the project, and willing to inject more money into it, as the group believes in the viability of Southern Johor as an oil and gas storage terminal alongside Singapore.

If it is required for Muhibbah to become a major shareholder of the project, it is willing to do that.

The meeting with the OR on 12 Nov 2012, the group hope that CIMB will listen to what the other creditors would want to say in regards to how best to save the APH project. The group is looking forward for a solution to be achieved and agreed by all the parties involved in the project.

Besides CIMB (which was owed rm1 billion by the promoter of the project), KIC Oil and Gas Sdn Bhd, Muhibbah was the second largest creditor with about rm407 million owed.

The group has made provisions of about rm160 million for the project in its balance sheets, with the remaining net additional impact of rm245 million.

However Muhibbah is still optimistic about the viability of the project, and wanted to salvage and add value to it. If a solution could be found and the project could be resumed, Muhibbah might not have to provide the additional rm245 million in its book at all.

MAHB ... Nov12

It needs to raise more cash to finance KLIA2, the new LCCAT that is now estimated to cost between rm3.6 billion and rm3.9 billion.

 

MAHB is expected to issue sukuk amounting to rm1 billion to rm1.5 billion for the purpose. It will be MAHB's second largest sukuk issuance after its restructuring exercise in 2009, when the company raised rm2.5 billion.

 

Of that amount, rm2 billion was allocated for the development of KLIA2 while the remaining rm500 mikllion was paid to the government as consideration for the restructuring.

 

However, it has been found that the rm2 billion is not sufficient to complete KLIA2 because it is 70% bigger than planned. With six months from Nov 2012 to go to complete KLIAw, MAHB has to finish the job.

 

With the new paper, MAHB would have issued sukuk of up to rm3.5 billion for KLIA2.

Although KLIA2 project is loss making on a net income level for the first three years, it will be cash flow positive from its first year of operations. This should ally fears of a cash flow drain on the parent because the KLIA2 project would be self funding.

 

KLIA2 will definitely be a game changer for MAHB, which operates and manages 39 airports in Malaysia . The company has also four foreign airports in its portfolio.

Scomi ... Nov12

Its tag team of Shah hakim and Datuk Zamaluddin Abdullah apears headed for a break up, a spilt that could seriously complicate the entry of IJM Corp Bhd as the engineering concern's new strategic shareholder.

 

Sources say that Kamaluddin has put in motion a bid to split the equity holdings he and his business partner control jointly in Scomi Group.

 

The two businessmen together own a commanding 14.63% equity interest in Scomi Group through privately held Kaspadu Sdn Bhd and its wholly owned subsidiary Onstream Marine Sdn Bhd.

 

The process to split the shareholder is not straightforward and could get bigged down in legal issues, bankers and lawyers say. But Kamaluddin's latest corporate gambit is set to have far reaching implications for the group and could scuttle IJM's bid to take a major stake in the company.

 

The campaign to block IJM from emerging as the single largest shareholder in Scomi could find traction with the looming uncertainty in the relationship between Shah Hakim and Kamaluddin,

 

As an interested party IJM will not be able to vote on plan to issue the new debt paper. The uncertainty over the 14.63% stake held by Kaspadu and Onstream Marine could take out that block of shres from the voting equation and give Messrs Abu Sahid & Siew a major say in corporate restructuring plan. What's more Kamuluddin enjoy close ties with Abu Sahid.

Genting ... Nov12

Anticipation that an 18 year long mega casino project being planned in South Korea will provide it the much needed investment opportunities outside Malaysia .

 

It was reported that the South Korean port city of Incheon has partnered with a group of investors to develop a US$290 billion leisure and gaming destination to rival Macau and Las Vegas .

 

The SK government liberalized laws to lift a major hurdle for foreign investment in opening foreigners only casinos.

 

The partnership could be a win win situation for all parties in turning SK into a gaming destination … Casino players could benefit given the opportunity to penetrate into a new market.

 

Market observers would not be surprised if Genting is interested as it had earlier shortlisted SK as one of the group’s potential new market, given the country’s well established infra and high GDP per capita.

 

Genting is looking for ways to expand outside Malaysia and this is one opportunity. With its track record in casino operations in Malaysia and globally, there is merit to believe that Genting may gain a footing in SK.

 

In fact, Genting share has not brightened up for some time till late Oct 2012 due to the perception of election risk. Since mid Sept 2012, it had hovered at below rm9.00 following news reports that PAS might close down Genting casinos if PAS won the coming state election in Pahang.

 

Other catalysts for Genting include the higher than expected visitors’ arrival into Malaysia , Genting Malaysia ’s UK development completed earlier than expected and the license to develop full scale casino will be granted by the NY legislators.