M’sian Company To Subscribe RM1.87mil Shares In Chinese F&B Enterprise, Boosting E-Commerce Via Digital Free Trade Zone

NetX Holdings Berhad announced its subscription of shares in Flavours of Malaysia (FoM) on Thursday, May 25.

NetX’s subscription of FoM’s shares represent 51% of the issued and paid-up share capital, for a cash consideration sum of RMB 3 million (RM1.87 million).

FoM is a wholly-owned foreign enterprise company incorporated under the laws of China and has its business operations in Shenzhen, China and intends to expand by establishing fulfilment centres in HangZhou together with NetX.

As FoM offers Malaysian specialty Food & Beverage products in China, these fulfilment centres will conduct research and development on Chinese national acceptance of Malaysian products and to use the research findings to acclimatise the product to suit the local taste buds.

Together with NetX, the partnership also intends to develop a Halal-certified e-commerce market place for goods and services between Chinese and Malaysian consumers and will use NetX’s integrated Mobile Electronic Payment Exchange for the payment services of this eCommerce market place.

“According to a report online, Consumers in China spent $798 billion on food and beverage in 2014 and this is projected to grow by a Cumulative Annual Growth Rate (CAGR) of 11 per cent to reach $1.5 trillion by 2020.

“Of this aggregate, China’s estimated 26 million Muslims contributed around 0.1 percent, or $10 billion, estimates the State of the Global Islamic Economy 2015/16 report.

“To disregard this huge market group is foolhardy.

“NetX is always and will continue to be on the lookout for populous, profitable market penetration and our ultimate goal is to provide and ensure a seamless, e-commerce and e-payment experience,” said Steve Tan, Executive Director of NetX Holdings Berhad.

The decision to open the new fulfilment centres in HangZhou is based on Malaysia’s recent e-commerce roadmap for the Digital Free Trade Zone (DFTZ) and the establishment of regional e-fulfillment centres in Malaysia.

The DFTZ was launched by Prime Minister Datuk Seri Najib Razak and Alibaba founder Jack Ma on March 22, 2017 to provide physical and virtual zones to facilitate SMEs to capitalise on the convergence of exponential growth of the internet economy and cross-border e-commerce activities.

“DFTZ is a testament to Malaysia’s unwavering commitment to propel the growth of SMEs through e-commerce. It also marks a new phase of collaboration between Malaysian and Chinese businesses through the participation of Mr. Ma and Alibaba Group. I strongly believe that together, we can achieve a more prosperous economic landscape that benefits the industry and people,” Najib had commented.

The partnership between NetX and FoM could also be seen as a prelude to China’s One Belt, One Road (OBOR) initiative, which is poised to contribute to the local economic development.

Singapore Exchange trendings

Singapore Exchange (SGX) has introduced three new Asian Index Futures to provide investors wider access to almost all of Asia’s key capital and growth markets. The new contracts, namely the SGX-PSE MSCI Philippines Index Futures, SGX MSCI Thailand Index Futures and SGX MSCI India Index Futures, complement SGX’s extensive suite of equity derivatives offerings. 

In addition, it provides global investors deeper and more extensive reach into Asia’s emerging markets. The three new contracts will commence trading from 25 November 2013. For both on screen and off screen liquidity, SGX has secured participation from leading market makers including Barclays Capital Securities Limited, Goldman Sachs Futures Pte Ltd and Virtu Financial Singapore Pte Ltd.

Singapore shares close higher after five straight days of losses

After having fallen 109 points in five straight sessions up to Monday, the Straits Times Index on Tuesday rebounded 25.15 points to 2,999.56. This was in line with an overnight rally in Wall Street and gains in Hong Kong and China, although weakness in the Dow futures probably led to a stalling of the upward momentum - the index rose to near its closing level in the late morning and stayed there for all of the second half.

As has become the norm in past months, turnover was low at 1.3 billion units worth S$880.3 million. Volume in STI components amounted to 220.4 million units worth S$603.5 million, which means that non-STI stocks only contributed about S$277 million or 31 per cent of total business. Excluding warrants, there were 265 rises versus 140 falls.

The three banks have been the main drivers of the index throughout the year and it was again the case on Tuesday. DBS led the way with a S$0.35 or 2 per cent jump to S$17.60 on volume of six million shares following its Monday release of third quarter figures.

Macquarie Warrants (MW) said in its daily newsletter that Macquarie Equities Research (MER) believes the key reasons to buy DBS are (i) good earnings momentum in a relative context, (ii) relative beneficiary of higher rates given the strong S$ liquidity position, (iii) potential to lift dividend payout ratios, and (iv) potential to shift the strategic focus towards cost efficiency if growth opportunities continue to disappear. It has a 12-month target price of S$20.

Stocks to watch: CapitaLand, Pteris, VIT, Grand Banks Yachts

CORPORATE news is likely to drive trading activity here on Tuesday morning, amid a lack of catalysts and a retreat on Wall Street overnight.

CapitaLand

CAPITALAND Vietnam has entered into a joint venture with Saigon Commercial & Tourism Corporation, a subsidiary of Vietnamese developer Thanh Nien Corporation, to develop a prime site in District 2 in Ho Chi Minh City, for an estimated project value of US$55 million.

Pteris

PTERIS Global, a provider of integrated airport facility equipment globally, has secured contracts worth S$64.2 million from customers in China and the US.

Viva Industrial Trust

Viva Industrial Trust (VIT) reported a 2.4 per cent decline in distribution per stapled security (DPS) for the third quarter ended Sept 30 to 1.647 cents, due to enlarged DPS base following the issuance of 80.3 million new stapled securities in June. But distributable income rose 15.1 per cent to S$11.6 million and net property income for the quarter rose 29.6 per cent to S$12.5 million, driven by additional rental contribution from Jackson Square and Jackson Design Hub, and higher rental and other income from Technopark@Chai Chee.

Grand Banks Yachts

GRAND Banks Yachts managed to swing to a net profit of S$1.2 million in the first quarter ended Sept 30, from a net loss of S$1.3 million in the year-ago period. Following restructuring efforts after a major acquisition, gross profit margin jumped to 24.5 per cent from 9.5 per cent over the comparative periods.

Stocks to watch: Noble, UOB, CDL, Oxley

THE following stocks had announcements or developments that could affect their trading activity on Thursday.

Noble Group: Its chief aluminium trader in Europe, Erik Gundersen, will leave the Asian commodities merchant, according to a Reuters report which cited sources. News of his planned exit comes after two of his US counterparts, Scott Evans and Jeff Romanek, who handled copper, lead and zinc, left the company on Tuesday.

UOB: The bank has gained pace in the cash management business, with a record 42 per cent jump in revenue for the first half of this year from a year ago.

CDL Hospitality Trusts: It has officially opened Claymore Connect - formerly known as Orchard Hotel Shopping Arcade - following a renovation exercise, which started in December 2013.

Stocks to watch: Ramba Energy, Sinocloud Group, Global Yellow Pages

THE following companies released material announcements either after Friday's close or before the start of trading on Monday morning.

Mandala Energy will invest up to US$179.6 million in a 35 per cent stake in the Lemang Production Sharing Contract (Lemang PSC) from Ramba Energy's subsidiary, PT Hexindo Gemilang Jaya.

Ramba Energy is an Indonesia-focused oil & gas exploration and production company. The Lemang block is located in the northernmost part of the South Sumatra basin, a proven region for oil and gas production.

The sum includes an upfront cash payment of US$26.25 million, sliding-scale future contingent payments based on certification of oil & gas reserves, partial carry for Ramba's share of three exploration wells; and a cash payment upon declaration of the first new exploration discovery.

STI unmoved by new benchmark entrants

THE usual suspects were strikingly missing from the line-up of local index movers after a significant change to the Straits Times Index (STI) basket took effect on Monday, but the market's attention was already elsewhere.

Singapore shares open higher on Tuesday in Wall St's footsteps

SINGAPORE share prices opened higher on Tuesday with the Straits Times Index (STI) up 11.13 points or 0.39 per cent to 2,893.40 at 9am.

This followed the Dow and S&P 500 which rallied on Monday, recovering some of the prior session's losses. Gains were minimal on the tech-rich Nasdaq, however, due to weakness among biotech shares.

The Dow Jones Industrial Average shot up 125.61 points (0.77 per cent) to 16,510.19. The broad-based S&P 500 rose 8.94 points (0.46 per cent) to 1,966.97, while the Nasdaq Composite Index edged up 1.73 points (0.04 per cent) to 4,828.95.

In Asia, financial markets in Japan are closed from Monday to Wednesday for a public holiday.

Stocks to watch: Sembcorp, S-Reits, Ascendas Reit, Asiatravel.com, SHS Holdings

Sembcorp Industries: The group on Monday said its subsidiary Sembcorp Environment has agreed to divest its 40 per cent stake in SembSita Pacific to 60 per cent joint venture partner Suez Environnement Asia for A$485 million (S$488 million). This will be settled in cash.\

Separately, on Friday, Sembcorp also said it has tied up with the Singapore Economic Development Board to be the country's first industrial "living laboratory". This means Sembcorp will grant technology providers access to its proprietary wastewater-treatment and waste-to-energy facilities on Jurong Island for late-stage test-bedding and co-innovation of water and environmental technologies.

Singapore real estate investment trusts (S-Reits): The FTSE ST Reits Index rose as much as 2.5 per cent on Friday, before ending at 694.15, up 0.5 per cent. This outdid the Straits Times Index, which fell 0.6 per cent to 2,879.59. This came after the US Federal Reserve kept interest rates unchanged.

Reits are rate-sensitive vehicles whose prices tend to move inversely to interest rates, but analysts advised investors against getting carried away, and remained doubtful that the near-term liquidity rush into the sector will revive its index back to the over-770 level that it was at in late July.