OPINION

What led to the DNAA for Riza Aziz

Shafee Abdullah, FMT (May 30) The recent resolution to Riza Aziz’s case is not a controversial one. I fear that controversy was created by interested parties to get at Najib Razak by prejudicing his ongoing cases through the unkind attacks on Riza’s matter.

It has become imperative for me to write this piece to clear the air, to extract the truth from the womb of society that otherwise may be so fortified against truth itself.

Riza, Najib’s stepson, was charged on July 4, 2019 with five offences of money laundering, all of which purportedly had taken place in Los Angeles (two charges) and Singapore (three charges). The total amount of money involved (not stolen) in these five charges is about US$248 million.

It is important to stress that Riza was never charged with stealing or cheating anybody or the like.

In essence, these money laundering charges against him is that he received these monies which purportedly are proceeds of the unlawful activities emanating from 1 MDB.

Riza, in his statements to the Malaysian Anti-Corruption Commission (MACC), clarified that he received these monies as documented loans from Alsen Chance and Aabar, two entities connected to Petro Saudi of Saudi Arabia and IPIC of Abu Dhabi respectively.

It is important to stress this because the prosecution, if the trial had proceeded, would have to prove in Riza’s case that:

(a) Riza received these monies that emanated from 1MDB;
(b) these monies are in fact proceeds of identified crimes (the unlawful activities);

(c) the identified crimes were actually committed, not necessarily by Riza but maybe by third parties;

(d) Riza has actual knowledge that these funds are from the proceeds of these crimes.

Members of the public have been misled into thinking that the only thing that the prosecution needs to prove to convict Riza on money laundering is to show that he received these funds (only one element). That is wrong. You have to prove at least those four separate elements.

The point I want to stress is that had the prosecution embarked on a full trial against Riza, it would not be a walk in the park for them. It is an uphill battle. The scenario of the ongoing 1MDB case has to be proven first and then the chain of transmissions of these funds, from Malaysia to Saudi Arabia, Abu Dhabi, Lugano, Virgin Islands, Los Angeles and Singapore, among others, needs to be conclusively demonstrated.

Just imagine the kind of proof the prosecution would have to undertake; the foreign documents, the foreign and local witnesses, some of whom are immune due to their status as royalty or ministers or heads of state and therefore not compellable witnesses. And imagine the costs of the investigation and the prosecution that will run into millions.

This needs to be emphasised as former attorney-general Tommy Thomas was out of his depth when he hurriedly, post haste, preferred these five charges against Riza without thinking deeply on the complications of proof, the length of the anticipated trial and the costs.

Tommy was and is not a criminal lawyer and can never be one in a compressed time. He had, prior to his appointment never fully practised criminal litigation, not even for a day. But his political masters would have to be blamed for appointing such a candidate to be the AG and automatically the public prosecutor.

Some of those political masters have their own agendas to appoint him as they were facing criminal trials or investigations or accusations.

So, Tommy only attended courts to prefer charges but left the actual trials to be conducted by prosecutors on fiat or regular DPPs. In the SRC trial, actual trial work undertaken by Tommy was minimal.

Considering these complexities in Riza’s case, it is not surprising, therefore, that the US Department of Justice (DoJ) itself, appreciating these hurdles, decided to take action against Riza only for civil forfeiture, not criminal prosecution.

Civil forfeiture, being basically a recovery of assets action has a much lower standard of proof when compared to criminal proceedings which demand onerous proof beyond a reasonable doubt. The DoJ’s decision bears the hallmark of the experience and knowledge of their attorney- generals. This invocation of prosecutorial discretion is important and I will advert to it later.

Then, aside from the mere receipt of the funds in the five charges, the prosecution would have to prove Riza had the necessary knowledge that the funds he received are proceeds of some unlawful activities committed by him or some other persons.

This is a monumental task as Riza’s explanation to the MACC from the earliest opportunity is that these funds were loans provided to his movie production company, Red Granite Productions Inc, for his movie productions.

This is not a hollow narrative. There is a ring of truth to Riza’s claim, which a trial judge has to grapple with, because;

(a). Riza had produced all the contemporaneous loan documentation relating to the receipt of the funds to MACC during their investigations;

(b). Riza is a genuine producer of first-rate Hollywood movies (The Wolf of Wall Street, Dumb and Dumber, Friends with Kids, Children Rise, Daddy’s Home, among others);

(c). The loans from Alsen Chance and Aabar (lenders) dictate the use of the loan funds for movie production and entertainment business only;

(d). The dignitaries behind Alsen Chance and Aabar are people truly connected to the ruling powers of Saudi Arabia and Abu Dhabi respectively ;

(e). Riza’s contemporaneous statement in writing to the MACC when he was first questioned carries the same defence throughout, therefore he was consistent and credible.

At all material times, Red Granite, after successfully producing these movies, had paid off virtually all the loans, plus the accrued interest. This is a critical piece of information as it means the monies Riza received in all the five charges substantively were no longer with him as he had paid them off to the lenders.

The property purchases by Riza in New York, Los Angeles and London are therefore Riza’s own properties as he had discharged all the previous loans, the subject matter of the five charges.

Keep this in mind as it bears critical relevance to the issue of whether Riza really benefited from the Sessions Court compounding the offences and discharging him, all through the industry of his able solicitors, Scivetti & Associates (Scivetti), who had endlessly negotiated for him.

The representation and settlement in court

The representation by Riza to the then AG (Thomas) was made on Nov 18, 2019. It was sent in by the legal firm of Scivetti, whose lawyers, as acknowledged by prosecutor Gopal Sri Ram in open court, are competent.

They specialised in serious crimes, including corporate crimes, litigation and corporate work. Hariharan and I are the two counsel engaged by Scivetti for trial work, should the matter go to trial. I remained as an adviser even for the representation.

The senior DPPs in charge of the case, led by senior counsel Sri Ram and assisted by Akram Gharib, are experienced senior counsel. They could smell blood miles away to move for the kill, if required, and likewise would also appreciate if the hounds are leading them nowhere constructive. They would have carefully advised Tommy, who was in need of their professional advice.

So, when Thomas said in his press statement, dated May 18, 2020, that he would never accept a representation from Riza as he would not betray the prime minister and the Pakatan Harapan government, we will have to examine if Tommy could possibly be telling the truth or otherwise.

Thomas, after an earlier total denial, later back-pedalled and confirmed he minuted on the very letter of representation sent by Riza’s solicitors (Scivetti) on the next day, Nov 19, 2019.

This clearly would have meant that he must have read the representation fully and almost immediately to be able to minute the following to senior DPP Sri Ram:

“In light of the statement in paragraphs 5.10, 5.14, 5.15, 5.18 and 5.19, I am prepared to consider this representation: Paragraph 5.20 contained their terms of a proposed settlement. I await your advice.”

Thomas sought Sri Ram’s opinion on the proposed settlement without any noticeable input by him. The only contribution he offered in writing was with regard to one of the offers by Riza to be a witness in the 1MDB-Tanore trial (where Najib is on trial).

Thomas opined that he was “not convinced that Riza would be a good prosecution witness against his father”. This specific offer, to be a witness, among others, is in the earlier part of the representation letter. So, we can conclude empirically and objectively as follows:

(a) Tommy read the entire representation;

(b) He was not aghast with the representation and the “offer to settle”, otherwise he would have jumped up like a hot piston and summarily rejected the petition, without more;

(c) Due to the above, it is an irresistible conclusion we can draw that he himself was keen to explore the settlement proposed and sought Sri Ram’s opinion;

(d) If Thomas was telling the truth that he would never accept such a representation from Riza (as that would be betraying his PM and the Pakatan government), then why did he show interest in the proposals by seeking Sri Ram’s opinion? Why waste Sri Ram’s valuable time, when the latter was engaged in many urgent cases? So Thomas could not have been so against the proposals, as he now claims;

(e). Further, to enable the proposals to be properly considered, Thomas sanctioned for several adjournments of Riza’s trial, which were initially fixed for Jan 6, 2020 until Jan 9, 2020 and Jan 13, 2020 to Jan 16, 2020. The trial court records show the following reasons were provided to the court for the postponements by the parties:

(i) A senior DPP wrote to the court and copied the letter to Thomas seeking an adjournment of the trial on the grounds that Thomas was still considering Riza’s petition. Thomas minuted on this letter, that was copied to him, that he would want to see the senior MACC DPP to be briefed. They never met as the DPP was away overseas and when he returned, he learned that the petition had been accepted and details were being ironed out. When the DPP contacted Thomas’s office, he was told that it was no longer necessary to have a meeting as the matter had been resolved;

(ii) At least two other postponements were granted dated Jan 31, 2020 and Feb 25, 2020. On the latter date, a lady DPP offered similar reasons for the postponement, this time saying that Thomas was still deciding on the representation, including the supplementary representation sent by Scivetti dated Jan 23, 2020;

(iii) It is important to stress that these postponements consistently attributed that Thomas required more time to finalise a decision on the representation. So, it is not just one request for postponement, but several.

Thomas never rejected the petition outright, but was working towards the final resolution. But he suddenly resigned on Feb 28, 2020 and therefore the new AG completed the process in accordance with the understanding in principle that had been laid during Tommy’s watch.

The current AG need not be concerned with Thomas’s tentative opinion. He could have decided the matter himself but Idrus Harun, to those who know him, is a perfect gentleman and a class act, who paid respect to his predecessor’s views, in spite of the fact that in terms of experience in criminal practice, Thomas cannot measure up to Idrus, a former solicitor-general at the Attorney-General’s Chambers of many years standing in criminal and other fields and who also served as a Federal Court judge.

Among us lawyers, when we assess who is telling the truth, we look at mainly two things :

(a) The reasonableness of the two versions, that is, which is more reasonable in its narrative;

(b) Are the contemporaneous documents and actions supportive and corroborative of one version in preference of the other.

Using this established court technique, Thomas’s version, as demonstrated above clearly comes way short of the truth.

Next, the wide discretion of the AG to discontinue with a case already before the court, pursuant to Article 145(3) of the Federal Constitution and section 254 of the Criminal Procedure Code.

Salim Bashir’s comments

Salim Bashir Bhaskaran, the Bar president, in commenting on Riza’s case, stated quite clinically the position of law of the public prosecutor’s discretion to invoke section 254 of the CPC. I do not see any obvious flaws in that statement.

Salim impliedly conceded he did not have the factual matrix when he correctly observed that “the factors that ought to be taken into account must be dictated by wisdom, relevant consideration and driven by the facts and public interest”.

This is another way of saying that the PP’s discretion to invoke section 254 must be legal, rational and procedurally proper, depending on the factual matrix and the representation made. Only the current AG (not Thomas) knows the fullest facts for him to have invoked the discretion, in consultation with the senior prosecutors.

The criticisms of Salim’s statement is not fair. He meant only to educate the public on the law and its ambit. He did not want to go into the unknown. Salim himself is a seasoned criminal practitioner, among other areas he practises in, and sections 254 and 254A of the Criminal Procedure Code are relatively new amendments, quite unknown in most Commonwealth jurisdictions.

A previous Bar President, George Varughese, commented on the AG’s withdrawal (during Thomas’s watch) of Lim Guan Eng’s case, which was at a very advanced stage in the prosecution’s case, expressing, “not shocked” over the decision and saying the obvious, that it is the absolute prerogative of the PP to drop charges at any stage of a trial, before the delivery of a judgement.

He merely quoted section 254 of the CPC but did not expound on it as Salim did. He continued to say:

“ It is not uncommon for lawyers representing accused persons to make representations to the AGC seeking withdrawal and/or reduction of the charge/s profferred against their clients. And on a regular basis, the AGC does accede to these representations. Further, the DPP has since explained that it was his considered opinion that there is insufficient evidence to succeed at the end of the prosecution’s case. Thus, it is not shocking for the DPP to withdraw the charges as suggested by the MACC. ”

Now, considering the fact that Varughese did not know the factual matrix considered by the DPP who ordered the withdrawal of Guan Eng’s case (Varughese cited none), Varughese’s expression of opinion, as president of the Bar, adds nothing useful and is superficial.

Therefore, what Varughese said was not addressing “where the public thirst for insight lies”, of the issues which the media had described as a
shocking withdrawal of Guan Eng’s charges.

Varughese’s statement did not address:

(a) whether it is right and justified in the public interest, to withdraw serious charges against a senior member of the administration (chief minister) , when the prosecution’s case was in the advanced stage of almost concluding;

(b) what were the factual matters that were mysteriously uncovered by the “parachuted DPP” that was so compelling for the prosecution to withdraw the charges, especially taking into account an earlier similar situation in the case of Khir Toyo (former Selangor menteri besar), which ended in his conviction and imprisonment?

(c) why was the decision taken secretly without consultation with the MACC and the DPPs actually prosecuting the case? How come the “parachuted DPP’ only considered the defence petition and did not hear the views of the prosecution team/MACC? The apparent reason for secrecy was not convincing as it goes against all previous practices of the AGC, even in the most serious and sensitive cases. Given the super sensitive nature of the withdrawal of the charges, secrecy would be anathema to public confidence in the administration of justice. Thomas preached this concept of transparency his entire adult life but never practised this as an AG in this instance.

(d) was there not the appearance of favour shown considering the above factors and the known close relationship between Thomas and Guan Eng where the former was one of the lawyers in this very case and in the Anwar Ibrahim Sodomy 2 case? Should the AG not take extreme care dispelling any appearance of favour or bias shown by taking the safer route which the AGC has been accustomed to, “ let the court decide”. This is especially made worse in the “appearance” department as Guan Eng was appointed to a very senior Cabinet post as the finance minister while his corruption case was pending and ongoing. Would the public not entertain the notion that the premature appointment meant that Guan Eng’s acquittal was a foregone conclusion and someone would be “engineering” his case withdrawal?

In all recorded cases where menteris besar or serving Cabinet ministers were charged, they had to immediately resign (refer to Muhammad Taib’s and Kasitah Gaddam’s cases).

Even mere public servants facing such a dilemma would face interdictions. In the case of Guan Eng, the unthinkable reverse happened; while his trial was ongoing, he was rewarded with the senior Cabinet post.

Salim made a far more elegant and impartial statement, as compared to Varughese who said nothing useful, nor elegant. Salim warned that the court proceedings in Riza’s case are still not over, as indicated by the Senior DPP in relation to fulfilment of the agreed terms and conditions.

Yet, Salim is attacked by senior members of the Bar, including six former Bar Council presidents. Where were these “guys” when Varughese made his useless “tell nothing” statement ? Are there hidden agendas for this selective criticism? I do not think these senior Members of the Bar can preach the virtues of a “fiercely independent Bar” as they showed neither qualities, especially the latter .

The AG/PP’s discretion exercised under Article 145(3) or Section 254 CPC or any prosecutorial discretion is not an absolute power or an unfettered discretion. Our law in this regard has changed dramatically following the changes in England.

The AG/PP’s discretion to withdraw a case, especially one that is advanced in the trial (Guan Eng’s case), or one where the defence had been called , (as in the case of the two women accused in the North Korean KLIA murder case ) can be reviewed by the court, on application, on grounds of illegality, irrationality or procedural impropriety.

Not employing good faith ( power exercised in bad faith ) in such exercise of power is yet another ground. Given Thomas’s own “golden thread”, that runs through his veins when during his short-lived career as the AG/PP, he shamelessly declared he could not have decided Riza’s case the way it was resolved by the current AG as he “would not betray the PM and the PH government”.

Does Thomas know that as an AG/PP, he has to be impartial/independent of any government and/or the prime minister? That woeful statement by him indicates that he was the PH AG and that he takes orders from the PH Cabinet / or the PH prime minister.

This is not a slip of his tongue. It lays naked his thought processes of being political and is not judicious, as demanded of his august office, being the “fountain of justice”.

He recognised that “the AG is no longer a political appointment” in his book “Abuse of Power (2016)” and yet declared he was a political appointee. If in May 2020 he was with that attitude and mentality, the same attitude and mentality would have existed and governed him when he decided to appoint senior DPP Hanafiah Zakaria to review Guan Eng’s case which led to the latter’s charges being withdrawn by the AGC surreptitiously and without the actual DPPs conducting the trial or the MACC being told in a timely fashion and/or consulted.

How could one man, Hanafiah alone, have dictated the fate of that case when Thomas purportedly recused himself from deciding? Do you seriously expect the general public to believe this “Chinese wall” put up by Thomas in the decision made to withdraw Guan Eng’s charges?

Thomas is fond of preaching, and may I remind him now of the famous legal maxim “ Justice must not only be done, but must be seen to be done”, which Thomas is fond of throwing about in less relevant situations.

The law on prosecutorial discretions of the AG/PP is clear. The latest Federal Court judgment in Chin Chee Kow (2019) has cleared the air, namely:

(a) The AG/PP has the sole discretion on matters of prosecution and withdrawal of charges:

(b) But his discretionary decision is not unfettered. In suitable cases, the court can review the decision if the decision is flawed by illegality, irrationality or procedural impropriety or arrived at in bad faith;

(c) Although the AG/PP need not have to disclose his reasons for exercising discretion in such manner in any particular cases, the court can in suitable cases compel the AG/PP to disclose the reasons in order to discover if the discretion has been properly invoked;

(d) For the court to compel disclosure of reasons and to review any particular decision of the AG/PP, the case has to be exceptional although many reported cases in the Commonwealth have reviewed the AG/PP’s discretion on matters of prosecution and withdrawals.

Riza Aziz’s DNAA

The above formulations of law can resolve the two important issues raised herein. In Riza’s situation, any challenge to the decision must show that there are obvious flaws in the four senses mentioned earlier.

Speaking for myself, I cannot point to anything that would indicate that the discretion was wrongly used. Further, the AG/PP is allowed to consider various factual and legal matters in arriving at the decision to accept the representation of Riza on terms.

Consider the following as possibilities : –
(i) the AG/PP may have reconsidered the overall strength of the prosecution’s case to be influenced to accept the representation;

(ii) the AG/PP may have looked at the prosecution’s case in the context of the defence alluded to in the representation;

(iii) the AG/PP may have considered if Riza had actually paid all or most of the loans. Flow of the funds can be easily studied, for this can be established with Riza’s cooperation;

(iv) there may be concern if Riza had actual or constructive knowledge that the funds he received were from proceeds of the crimes or any crimes;

(v) there could be concern that if Riza had paid the loans with interest, there is the possible element that the profits he made using the initial loans are not tainted due to his lack of knowledge and his assets (properties and cash) may not be forfeitable after all;

(vi) the AG/ PP may also have considered that Riza’s offer is sincere as he had long before this been making similar and consistent offers to the DoJ in his recent civil forfeiture case, through his US and Malaysian solicitors.

(vii) the AG/ PP may have also considered the risks of a full trial and Riza may be successful in his defence and the assets Riza offered to the Malaysian government may have to be returned to Riza. You may know that in many of the recent forfeiture cases in our courts, somewhat relating to 1MDB, the prosecution had not been successful to forfeit the assets targeted as they could not show the necessary nexus in the chain of evidence. So, I want to ask those who criticised Riza’s case; how do you know the current AG has not considered all these relevant factors and more?

There is one niggling matter I need to address. This relates to the misleading statement generated by Thomas (and erroneously echoed by Dr Mahathir Mohamad) that Riza’s assets would by agreement between the DoJ and Thomas ( as the previous AG ) be returned to Malaysia.

Both of them are under the misguided assumption that Riza’s seized assets by the DoJ would be returned to Malaysia as of right apparently because Thomas had established strong relations with the DoJ after he took office.

This is a completely misleading statement, The DoJ has been upset with Thomas and the PH government because the DoJ felt they were treated as the “debt collection agency” for Malaysia. Establishing strong relationships with the DoJ will not bring back the money as the due process of US civil forfeiture must be observed.

The Scivetti team thoroughly researched Riza’s case, including meeting up with Riza’s New York lawyers and other lawyers working in DoJ as early as 2017/2018. To believe that DOJ would have returned the money anyway, since it belonged to the country is a naive statement.

Firstly, the civil forfeiture proceeding in the US has to be won by the DoJ. Riza had been contesting them for the last five years. Now, Riza, through his New York lawyers, had negotiated on terms to relinquish his rights to the assets as part of his settlement with DoJ and Malaysia.

Upon DoJ agreeing to the terms, only then those assets would be repatriated to Malaysia. If Riza had continued to contest, for all the reasons earlier mentioned, he may win the proceedings in the US and nothing will be returned to Malaysia as Riza would keep them all.

So when Riza entered into the discharge not amounting to an acquittal (DNAA) arrangement in the KL Sessions Court, he is relinquishing all his affected US and Malaysian assets to the Malaysian government as a global settlement.

For those who think Riza had made a gain by this arrangement, you should get your arithmetic correct. By the global settlement, Riza had paid or agreed to relinquish US$40 million more than the amount of US$248 million, the subject matter of the five charges.

All this because the young man wants to walk away from this nightmare. Riza’s arrangement for a global settlement, including that recently achieved in the Sessions Court, Kuala Lumpur, was undertaken with the sole purpose of providing solace to Riza so that he can start a new life pursuing his interests.

He maintains his innocence of any criminal doings and for that reason agreed to the compound arrangement, which brings about no conviction in law.

Muhammad Shafee Abdullah is a senior lawyer.

**The views expressed are those of the author and do not necessarily reflect those of FMT.

TODAY

Today is Saturday, tomorrow is Sunday, and then Monday. Good morning, Folks! You can’t get a drink at the pub, go to the cinema or workout at the gym, so how on Earth will you spend these long hours?

Celine Dion – It’s All Coming Back To Me Now

Here are some things to do before the CMCO period lifts:

Try a new Recipe: Recently I tried Chicken Rendang Minang. This dish is a version of dry chicken rendang & is so rich in flavours and spices. Nice!

M. Nasir – Satu Hari Di Hari Raya

Rearrange the Furniture: My hubby and I did this last weekend. I love the new look and feel of our living room now!

Sam Cooke – A Change Is Gonna Come

Hmm. While I don’t dictate my family’s “fun” activities, I do have a list of things I personally want to teach them, and this includes making rendang and lemang from scratch, and cooking using only what’s in the pantry 😀


The latest Local Business News:

CIMB (1023) has appointed Datuk Abdul Rahman Ahmad as its chief executive officer (CEO) and executive director (ED) effective June 10. The former CEO of Permodalan Nasional Bhd (PNB) will also be the CEO and ED of CIMB Bank Bhd.

GDEX (0078) independent and non-executive chairman Datuk Ahmad Sufian @ Qurnain Abdul Rashid is stepping down by the end-May. Meanwhile former Bank Negara Malaysia governor Tan Sri Muhammad Ibrahim is succeeding Ahmad as chairman on Monday (June 1).

Oil price surges on US-China trade optimism

REUTERS via StarBiz (May 30) – NEW YORK: Oil prices soared on Friday, with U.S. futures closing out May with record monthly gains, on hopes that the U.S.-China trade deal would remain intact and on falling crude production.

West Texas Intermediate crude futures for July delivery settled at US$35.49 a barrel, jumping $1.78, or 5.3%.

July Brent crude closed at $35.33 a barrel, gaining 4 cents. However, the more active August contract ended at $37.84, rising $1.81, or roughly 5%.

Both benchmarks saw steep monthly rises due to falling global production and expectations for demand growth as parts of the United States, including New York City, and other countries move to reopen after coronavirus-related lockdowns.

WTI recorded an all-time monthly rise of 88% after trading negative last month. Brent logged an increase of about 40% for its strongest monthly bounce since March 1999.

U.S. President Donald Trump said his administration will begin to eliminate special treatment for Hong Kong in response to China plans to impose new security legislation in the territory, but he did not say the first phase of the Washington-Beijing trade deal was in jeopardy.

That put oil investors, worried that a breakdown in trade relations would further hurt oilconsumption, at ease.

“There was a lot of nervousness going into this press conference, so it looks like the worst case scenario doesn’t appear to be emerging,” said John Kilduff, a partner at Again Capital Management in New York.

Oil was also supported by a record-low number of U.S. and Canadian oil and gas rigs, which indicates a further drop in supply out of the world’s biggest crude producer.

The U.S. oil and gas rig count fell by 17 to an all-time low of 301 this week, according to data from energy services firm Baker Hughes Co going back to 1940.

Stock on the move: Boustead jumps 18% on privatisation offer

StarBiz (May 29) – Kuala Lumpur: BSTEAD (2771) jumped as high as 18% on Friday, on news of an offer by Lembaga Tabung Angkatan Tentera (LTAT) to take the company private.

The conglomerate rose 18.25%, or 11.5 sen to 74.5 sen with over 20.6 million shares traded. Trading in Boustead shares resumed at 2.30pm.

LTAT, which holds a 59% stake in Boustead, is considering a proposal to privatise the company at 80 sen a share.

The indicative price of 80 sen per share given by LTAT is 26.9% premium over Thursday’s closing price of 63 sen.

The fund said the proposal was subject to, amongst others, the finalisation of the structure of the proposal, the requisite funding and the required regulatory approval.

“We wish to highlight that this notification does not amount to a firm intention that we will undertake the proposal. Accordingly, there can be no certainty that we will proceed with the proposal.

Technical Analysis

StarBiz (May30) LOTTE Chemical Titan Holding Bhd (code: 5284) made a break above the 200-day simple moving average (SMA) on Thursday and sustained its rally into the end of the week.

The convincing late-week rally indicated a surge of buying interest in the stock as investor sentiment turned positive.

At current prices, the stock has returned to December levels of trading, which signals a full recovery from coronavirus-induced weakness.

Based on the daily price chart, the short-term outlook on the stock is looking rosy as the share price has moved ahead of all the key SMA lines. The 14- and 21- day SMAs are on a rise while the 50-day SMA has also curved higher to indicate the positive trend.

Further advances could see the 50-day SMA rise above the 100-day SMA, which would reverse the negative crossing set over a year ago and signal a more bullish outlook.

The sharp rally however has taken the stock to overbought levels of trading, which raises the spectre of consolidation pressures moving forward. Profit-taking is to be expected after such a strong rally, although the uptrend could resume after a breather should buying interest remain.

Nevertheless, the technical indicators remain healthy as they continue to pace higher. The slow-stochastic momentum index and 14-day relative strength index are both ascending in overbought territory, but are maintaining a steep incline.

The daily moving average convergence/divergence line has also spiked off the signal line to indicate growing momentum and a firmer short-term positive trend.

Overhead, the immediate resistance is pegged to RM2.50 before attempting to reach RM2.85, which upon arrival would see the stock at its highest level since September 2019.

The counter finds support at the 200-day SMA, which is currently moving at the RM2.10 level. Below that, further support is found at RM1.94.

**The comments above do not represent a recommendation to buy or sell.

Just a song before I go, to whom it may concern. LOL.

Little Big Town – Tornado.

TODAY

Good morning, Folks. Alone we can do so little; together we can do so much. Let’s do it Together! LOL

Music always sounds better on Friday. Oakley Philip – Together In Electric Dreams. Oakley Philip is best known as the lead singer, songwriter, and co-founder of English synth-pop band The Human League.

Malaysia in good position to benefit from Japan’s stimulus package: Ambassador

BERNAMA via SUNBIZ KUALA LUMPUR (May 29): Asean member states, particularly Malaysia, will be in good position to reap benefits from Japan’s economic stimulus package due to its close proximity to Japan economically and historically, besides having extensive Japanese business network, said Japan’s Ambassador to Malaysia Hiroshi Oka.

Oka said Malaysia – being a politically stable country, having people with good command of English, and high value-added supply chain to produce spare parts for aircraft and medical equipment – can make the country an ideal destination for Japanese companies to diversify their production bases.

“There is an urgent need to strengthen the resilience of the global supply chain in the wake of Covid-19 pandemic and make it less vulnerable to any re-emergence of deadly infectious diseases in (the) future.

“In order to strengthen the resilience of the global supply chain, it is important to have diversification in manufacturing bases.

“This means, instead of putting all the production facilities in one country, diversifying the production bases will make production processes less vulnerable (to disruption due to any future infectious diseases),“ he said, adding that Japan’s subsidy programme doesn’t have any particular country in mind at the moment.

The ambassador disclosed this to Bernama when responding to media reports that Japan will launch a subsidy programme to encourage domestic manufacturers to transfer their production bases to Asean as the Covid-19 pandemic has greatly disrupted their supply chains heavily dependent on China.

Foreign media has reported that Japan has earmarked ¥243.5 billion (RM10.2 billion) of its record economic stimulus package, compiled to try to offset the devastating effects of the pandemic, to help its manufacturers to diversify the production bases to strengthen their supply chain resilience, as the coronavirus disrupts supply chains between the major trading partners.

Oka said in order to attract foreign investments, Malaysia should give tax incentives besides allowing movement of foreigners to facilitate business activities locally.

The envoy also said there are 1,400 Japanese companies in Malaysia, of which about half are in the manufacturing sector.

“Japan is the largest cumulative investor in manufacturing sectors in Malaysia and these Japanese manufacturers produce some 348,000 employment opportunities,” he said.

Every Friday, I like to high five myself for getting through another week on little more than caffeine, will power, and inappropriate humour. LOL

Prince – I Wanna Be Your Lover. Prince Rogers Nelson (June 7, 1958 – April 21, 2016) was an American singer-songwriter, musician, record producer, dancer, actor, and filmmaker.

CGS-CIMB upgrades Kawan Food, raises target price to RM2

EDGE – KUALA LUMPUR (May 29): CGS-CIMB Research has upgraded Kawan Food Bhd to “Add” at RM1.70 with a higher target price (TP) of RM2 (from RM1.41) and said it deemed Kawan’s 1Q20 core net profit of RM4.8 million to be above expectations from higher-than-expected domestic sales and better cost efficiencies.

In a note May 28, the research house said it expects export and local demand for Kawan’s frozen products to remain high, on the back of increased consumer demand for home consumption.

“We upgrade Kawan Food to Add due to: i) defensive global demand for frozen food, ii) strong brand name in the frozen bread market globally and iii) strong balance sheet with a net cash position of RM32.8 million (as at end-1Q20).

“Upgrade to Add, with a higher TP of RM2.00 (23.2x CY21 P/E),” it said.

What’s Up Buddy?

Mplus Research – 29 May 2020

Econpile Holdings- Looking Beyond FY20

Results Highlights
Econpile’s 3QFY20 net profit slumped 93.9% Y.o.Y to RM1.3 mln, dragged down by the slower execution of orderbook amid the shorter duration of working period in the quarter. Revenue for the quarter slipped 28.2% Y.o.Y to RM99.3 mln.
For 9MFY20, cumulative net profit surged 704.0% Y.o.Y to RM18.8 mln. Revenue for the period, however, declined 23.5% Y.o.Y to RM372.4 mln. The reported earnings came below our expectation, amounting to 44.4% of our previous estimated net profit of RM42.4 mln for the year. The reported revenue also came below our expectations, amounting to 65.4% of our previous full-year forecast of RM569.7 mln. The variance is mainly due slower execution of orderbook following the implementation fo Movement Control Order (MCO).
In 9MFY20, piling and foundation works for property projects remain as the largest contributor to the group’s revenue, representing 71.7% or RM267.0 mln of total revenue, with the remainder RM105.4 mln (28.3%) derived from piling and foundation works for infrastructure projects.
In 3QFY20, Econpile continues to maintain a healthy balance sheet with a low net gearing of 0.1x (unchanged from 0.1x recorded in 2QFY20). No dividend was declared as the group declares dividend at the final quarter of the financial year end.

**No representation or warranty (express or implied) is given as to the accuracy or completeness of the information nor shall it be construed as an offer/solicitation or recommendation to buy/sell any stocks.

TODAY

Good morning, Folks. Cats & Dogs are dying of starvation. Be grateful and happy by providing food and water to stray animals.

Justin Timberlake, feat. Carey Mulligan & Stark Sands for the soundtrack of the film Inside Llewyn Davis – Five Hundred Miles

*Dow Jones* : 25,548.27⬆️  553.16 / 2.21%‼️‼️
*Nasdaq* : 9,412.36⬆️ 72.14 / 0.77%

*GOLD PRICE* : 1,708.80⬇️ 2.98 / 0.17%‼️
*WTI CRUDE OIL* : 32.22⬇️ 1.95 / 5.71%‼️
*BRENT OIL* : 34.19⬇️ 1.84 / 5.11%‼️
*USD/MYR* : 4.35

CORPORATE NEWS

GDEX (0078) reported a 96% fall in net profit to RM210,000 for 3QFY20 from RM5.43 million last year, due to supply chain disruptions that started since January, as a result of the Covid-19 outbreak. The weaker quarterly earnings were also due to the effects of assessments and adjustments it had to make under the MFRS 16 accounting standard. Quarterly revenue, however, was 13% higher at RM88.24 million versus RM77.97 million previously, partly contributed by its newly-acquired Vietnamese subsidiary.

LAMBO (0018) subsidiary Lambomove Sdn Bhd has been engaged as a fulfillment agent for last mile delivery by online shopping platform operator Presto Mall Sdn Bhd (previously known as 11street Malaysia). Under the deal, LamboMove will assign drivers and riders to dedicated warehouses daily to facilitate last mile delivery jobs. It will also provide event tracking of parcels during the deliveries.

What’s Up Buddy?

RHB: Technical Analyzer28 May 2020
FKLI & FCPO: FKLI: Tightening Up Trailing-Stop   Maintain long positions. Although it failed to retain a large portion of intraday gains yesterday, the FKLI closed 15 pts higher at 1,453.5 pts. It also tested the immediate resistance of 1,454 pts, with a high of 1,461.5 pts. The latest session’s price action around this resistance was not enough to indicate that a price rejection has happened. As such, we still believe the rebound – which began over two months ago – remains in place. Also, the RSI reading is still below the overbought threshold. If the immediate support of 1,427.5-pt is not breached, the risk of a retracement being triggered is still contained.   Trading Stocks: Malaysian Resources Corporation, QES Group & Yinson

David Gray – Ain’t No Love. Hmm. I think it’s an awful realization, one of those “realizations” that you have deep inside of you, but then someone else articulates it, and you’re like, “Damn!” You know they’re so right, and you can’t say anything. Kind of speechless. Thank you David Gray for that! LOL

Petronas’ capex cut another shock to local O&G companies

EDGE – KUALA LUMPUR (May 27): Battered by plunging oil prices, local upstream oil and gas services companies were hit by another piece of negative news last Friday – that Petroliam Nasional Bhd (Petronas) plans to cut its annual capital expenditure by 21%, despite having said earlier that it would keep to what it had budgeted for previously.

The announcement places Petronas among oil majors like Exxon Mobil, Royal Dutch Shell, Saudi Aramco and Petrobras that have announced capex cuts ranging from 20% to 30% this year.

The International Energy Agency (IEA) has been expecting upstream investment from oil companies to plunge 32% in 2020 to US$335 billion from US$490 billion, due to efforts to rebalance the supply-demand dynamics arising from the unprecedented demand destruction during the COVID-19 outbreak that forced most parts of the world into a temporary shutdown.

IEA forecast that US exploration and production (E&P) companies would cut spending by as much as 40%, with oil majors set to reduce upstream investment by 20%. The agency said the cut will likely emanate from reduced activity, new project delays and greater cost control.

Petronas, however, said in early March that it planned to continue with its domestic capital expenditure (capex) programme of RM26 billion to RM28 billion this year, despite the recent oil price slump. The capital spending was 10% more than the payout last year.

In April, it said there were increasing risks of some projects being delayed due to the prolonged lockdowns globally and in Malaysia. Nevertheless, it still said it would try to maintain its domestic spending for this year.

Hence, the announced capex cut, which will come together with a 12% operating expenditure cut, comes as a negative surprise, especially for O&G companies focused on the local upstream space.

While Petronas also said last week that it will strive “as far as practically possible” to minimise the impact of the cuts to its Malaysian capex programme, it is anticipating constraints in the supply chain as a result of the pandemic.

Downcycle on repeat

In an O&G sector note published today, TA Securities Research analyst Kylie Chan, who has downgraded his sector recommendation to “underweight”, highlighted that earnings and balance sheet risks loom over upstream service contractors following Petronas’ announcement of spending cuts.

“Against this dire backdrop, upstream service providers are in a precarious situation. This is due to the lack of order book replenishment, margin compression and balance sheet risks.

“The reduction in capex spend will result in the lack of new projects and contract awards. Therefore, this would lead to intense competition in an oversupplied market. Finally, this would propel a fall in daily charter rates and fleet utilisation,” Chan said.

As such, she said O&G players are at risk of slipping into the red, which would derail their fragile recovery following the 2015-17 downcycle, unless they react nimbly to optimise costs.

During the downcycle period, local O&G companies have gone through a series of aggressive cost-optimization measures including asset impairments, debt restructuring, asset sales, fleet rationalization, labour force downsize, renegotiation of supplier terms, and upgrade efficiency of internal operations.

Chan opined that these companies will likely face a déjà vu situation as the downcycle repeats.

Kenanga Research analyst Steven Chan held the same notion as Chan and expects the effects of project delays, operational disruptions and margin squeeze to cascade down to all value chains across the sector over the next few quarters, especially for local-centric players.

“The lower capex would translate into greater job deferments and fewer contracting opportunities, impacting fabricators (Sapura Energy Bhd as well as Malaysia Marine and Heavy Engineering Holdings Bhd), hook-up and commissioning works (Dayang Enterprise Holdings Bhd and Carimin Petroleum Bhd), drilling activities (Velesto Energy Bhd) as well as FPSO (floating production storage and offloading) activities (MISC Bhd and Yinson).

“Meanwhile, the lower opex could also exert margin and pricing pressures on local-centric contractors and services providers (Dayang and Uzma Bhd). Overall lower offshore activities could also translate into slower OSV (offshore support vessel) demand, impacting players such as Perdana Petroleum Bhd, Icon Offshore Bhd and Alam Maritim Resources Bhd.”

UOB Kay Hian’s Kong Ho Meng viewed that Petronas had been slow versus its peers to implement cost cuts, and sees a protracted period of contract deferrals and renegotiations that could result in earnings risk, even if oil price recovers.

“This is reminiscent of the 2015-17 period, when sector valuations consistently hit new lows in tandem with earnings, despite oil price having recovered from US$27 per barrel at end-15 to US$60 per barrel.”

Kong notes that currently Velesto Energy was one of the first listed contractors to guide for a bleak local rig outlook, and this may see a spillover to the other upstream value chain, asset utilisation and contractual rates.

Resilient maintenance players won’t be hit as hard

However, analysts think it is not all gloom and doom. They think other segments, like mid-stream maintenance players, brownfield service providers as well as naphtha-based petrochemical producers will remain largely resilient.

“As evident from Petronas’ relatively lower opex cuts compared to capex cuts, maintenance jobs will likely sustain. This is because operations and maintenance (O&M) are needed to ensure equipment compliance to safety standards, and enhance asset lifespan and efficiency which are integral to ensure continued cash flow generation from existing production assets,” Chan noted.

Meanwhile, for naphtha producers, product spread in the near term is expected to widen, which means operating margin is expected to expand. This is because the fall in naphtha feedstock prices will translate to lower input costs, with the fall surpassing the decline of average selling prices (ASPs).

As for brownfield service providers, outlook remains bright as energy producers are likely to increase spending to decommission work under the current environment.

“A protracted low-price environment can potentially motivate operators to leverage on low contract prices and commit to their asset retirement obligations, thus spurring decommissioning activity,” an analyst said.

Top picks among research firms favour midstream companies such as Dialog Group Bhd and Serba Dinamik Holdings Bhd, whose resilient earnings and balance sheet are expected to provide a degree of defensiveness.

In announcing the spending cuts, Petronas reported a 68% year-on-year (y-o-y) fall in its profit after tax (PAT) for the first quarter ended March 31 this year to RM4.52 billion from RM14.25 billion a year ago.

Its earnings for 1QFY20 were dragged by low prices of oil, gas and condensates, as crude oil prices fell to 20-year lows, as well as lower revenue – which declined 4% to RM59.59 billion from RM61.99 billion. Brent crude oil price averaged at US$50.26/bbl in 1QFY20, down 20.47% from US$63.20/bbl in 1QFY19.

Among its three core businesses, which all recorded a weaker performance for the quarter, the upstream segment was the worst hit, with PAT falling 63.1% to RM1.93 billion from RM5.22 billion, despite segment revenue climbing 6.22% to RM9.7 billion from RM9.13 billion.

Petronas also noted that its upstream gas production volume in Malaysia fell on lower consumption by the power sector in Peninsular Malaysia, likely because the Movement Control Order (MCO) halted business and office operations nationwide.

Gentle Reminder: No representation or warranty (express or implied) is given as to the accuracy or completeness of the information nor shall it be construed as an offer/solicitation or recommendation to buy/sell any stocks.

TODAY

Good morning, Folks. It’s just wonderful to be outside but I’m still a little leery of going to any stores.

What’s Up Buddy?

AMBANK: STOCK FOCUS OF THE DAY
Public Bank: Steep compression in interest margin, higher provisions HOLD

We keep our HOLD call on Public Bank (PBB) as we continue to see declining ROEs which will reduce the its premium valuation compared to its peers. Our FV is revised to RM15.50/share from RM15.95/share, pegging the stock to a lower FY20 P/BV of 1.3x, supported by an ROE of 11.1%. We tweak our FY20/21/22 earnings by -0.5%/2.3%/3.1% on lower loan growth forecast of 2%/2%/4% and fine-tune our NIM assumptions.

The group reported a 1Q20 net profit of RM1.33bil, down 5.7% YoY due to lower net interest income from OPR cuts, higher overhead expenses and provisions. The group delivered an ROE of 12.2% for 1Q20.

Group NIM fell by 12bps QoQ or 10bps YTD to 2.05% in 1Q20 due to OPR cuts of 25bps each on Jan and Mar 2020. In 2Q20, NIM is anticipated to be compressed again due to the 50bps reduction in OPR to 2.00% on 5 May 2020. The recent OPR cut will have an impact of 3–4bps on the group’s NIM. With a YTD OPR cut of 100bps, management is now guiding for the group’s FY20 NIM to be compressed by 15bps compared to 5–10bps earlier.

AFFIN: Top Calls

Results Note – Public Bank (SELL, maintain)

1Q20 a decent quarter, but moderation to set in

Public Bank’s (PBB) 1Q20 net profit came in at RM1.33bn (-5.7% yoy and -5.5% qoq), within our expectations but below the consensus estimate. We anticipate moderation in the quarters ahead vis-a-vis 1Q20 on the back of: i) more NIM pressure kicking in following another 50bps OPR cut in 2Q20; ii) more pre-emptive provisioning that may be set aside (though buffered by its high LLC of 261.7%); iii) a potential ‘modification loss’ in the HP portfolio that may be recognized in 2Q20 (our estimate at ~RM913m). There are no changes in our 2020-22 earnings forecasts, which remain conservative relative to consensus. Reiterate SELL, PT unchanged at RM10.50 (0.86x 2021E P/BV target).

Meatloaf ft Ellen Foley – Paradise by the Dashboard Light. This song makes me laugh every time I hear it. A song about a young bloke trying to score!! And that’s it!!! LOL

TODAY

What’s on in KLSE tomorrow? No one really knows. What will be the best stocks to invest tomorrow? Hmmm… I don’t think I’m the right one to answer this.

Carpenters – Ticket To Ride (cover)

Folks, I’m not interested in buying new stocks. My portfolio remains the same HIBISCS (5199), PELIKAN (5231), THRIVEN (7889) & COMCORP (7195).

CORPORATE NEWS

DEGEM (7119) shares will be suspended from June 9, until its delisting. As June 8 is a public holiday, the last day for trading of the jewellery manufacturer will be Friday, June 5. – EDGE

HENGYUAN (4324) saw a fire break out at 4.20pm at a crude tank located in its Port Dickson refinery. The damage is restricted to the one crude tank affected. – EDGE

Gotye ft. Kimbra – Somebody That I Used To Know

India looks to store cheap oil in United States, says oil minister

REUTERS via FocusM (May 26) INDIA is looking at storing some low priced US oil in facilities there as its local storage is full, oil minister Dharmendra Pradhan told CNBC TV18 news channel.

India’s plan could be similar to a move by Australia, which last month said it would build up an emergency oil stockpile initially by buying crude to store in the US Strategic Petroleum Reserve to take advantage of low oil prices.

“We are exploring some possibility if we can store some of our investment in a different country … we are exploring the possibility in the USA if we can store some of the low priced oil,” Pradhan said.

Oil prices have dropped more than 40% so far in 2020 but have picked up in the past few weeks partly due to efforts by the Organisation of the Petroleum Exporting Countries and allies to reduce supply.

Pradhan said India, which is the world’s third biggest oil consumer and importer, had already filled its 5.33 million tonnes of strategic storage and parked about 8.5-9 million tonnes of oil on ships in different parts of the world, primarily in the Gulf.

Indian refiners have also filled their commercial tanks and pipelines with refined fuel and oil.

Pradhan said stored oil and products amounted to about 20% of India’s annual needs. India imports more than 80% of its oil requirements.

India plans to build new strategic storage to expand capacity by 6.5 million tonnes. Pradhan said India was keen to have participation from global investors in building these facilities.

India’s fuel demand nearly halved in April to its lowest level since 2007 as a nationwide lockdown and travel curbs to combat the spread of novel coronavirus eroded economic activity.

So far in May India’s petrol and diesel demand is about 60%-65% of what it was in the same month last year and in June fuel consumption will return to the same level as June 2019, he said.

Avicii – Hey Brother. Avicii, was a Swedish DJ, remixer, record producer, musician, and songwriter who specialized in audio programming, remixing, and record producing. American bluegrass singer Dan Tyminski provides vocals for the track. Avicii died on 20 April 2018 near Muscat at the age of 28. No cause of death was immediately given.

TODAY

When the health crisis passes, what do you expect the “new normal” to look like?

Haley Reinhart – Black Hole Sun (cover). Where there’s a happy veneer over something dark. Chris Cornell got the idea for this song while driving home from Bear Creek Studio, near Seattle, where Soundgarden were recording a version of “New Damage” for a charity album.

Closure of Bursa Malaysia for public holidays

  • Monday, 25/05/2020 – Second day of Hari Raya,- Tuesday, 26/05/2020 – Third day of Hari Raya (Replacement holiday). Market resume on Wednesday, 27/05/2020
  • Monday, 08/06/2020 – King’s birthday. Market resume on Tuesday, 09/06/2020

Casey Abrams – Sweet Child O’ Mine (cover) The lyrics came from a poem Axl Rose of the Guns N’ Roses was working on. He wrote the song about his girlfriend, Erin Everly, the daughter of Don Everly of the Everly Brothers.

TODAY

Dear Folks, I will not be in here till Monday (May 25). Stay safe and Happy Holidays!

Sungai disusur sehari-hari,
Dalam gelap menangkap ikan,
TESSA meyusun sepuluh jari,
Salah dan silap harap maafkan
Selamat Hari Raya Aidilfitri!

Yasin Sulaiman & Amy Search – Asmaul Husna

You know what I do almost every day? I wash away germs. Personal hygiene is part of the package with me. LOL

LYC (0075) is partnering with Biofresh Hygiene Services Sdn Bhd to market cleanliness, hygiene and sanitation services in Malaysia amid rising awareness of hygiene due to the Covid-19 pandemic. – STAR

SANICHI (0133), AT (0072), PNEPCB (6637) and a US-based company have joined forces to produce medical-grade mechanical air ventilators to take advantage of the worldwide shortage of the product. – STAR

MY PORTFOLIO; HIBISCS (5199), PELIKAN (5231), THRIVEN (7889) & COMCORP (7195).

Portugal. The Man – Rich Friends

Hmm. Who says that money don’t matter? If you are Rich all the world will know about you, if you are poor no one give a crap about what it’s happening to you!

Hibiscus Petroleum 3Q net profit halves on lower revenue

EDGE KUALA LUMPUR (May 19): Hibiscus Petroleum Bhd’s net profit for the third quarter ended March 31, 2020 (3QFY20) declined by 48.42% year-on-year as its revenue sank.

Net profit fell to RM28.47 million from RM55.18 million, while revenue retreated 22.23% to RM175.86 million from RM226.12 million. The group’s earnings before interest, taxes, depreciation and amortisation (Ebitda) fell to RM94.7 million from RM115.1 million.

Consequently, its earnings per share (EPS) for the quarter declined to 1.79 sen from 3.47 sen.

For the nine months ended March 31, 2020 (9MFY20), the group’s net profit slumped 53.26% y-o-y to RM95.94 million from RM205.29 million; revenue declined 19.2% to RM607 million from RM751.23 million.

The group said its key focus in the current pandemic outbreak and low crude oil price envionment is to mitigate risks posed by these events to ensure business continuity and safe operations.

One of the ways it is doing so is the activation of its asset action plans, it said. Under these plans, both its teams in the North Sabah and Anasuria assets are targeting a reduction in unit production cost (UPC) in calendar year 2020 (CY20), which has been set at US$18.50 (RM80.48) per boe (barrels of oil equivalent) for the Anasuria Cluster and US$15 per bbl (barrel) for North Sabah.

The UPC reduction will be realised through the deferral of non-critical activities and prudent management of general and administrative expenses, it said. At the same time, the group is focused on maintaining a positive cash flow.

Meanwhile, the group is targeting to deliver 3.2 million barrels of oil by the end of this financial year on June 30, 2020.

However, the group said the planned offtake in 4QFY20 may be deferred to 1QFY21 in order to realise higher crude prices for both its North Sabah and Anasuria assets.

As a forward step for the remaining period of CY20, the group has locked in future sales of 750,000 bbls at an average price of US$35 per bbl for North Sabah, it added.

Shares in Hibiscus, which were heavily traded today with 182.4 million done, closed one sen or 1.63% lower at 60.5 sen, valuing the group at RM960.88 million. The stock, which sank to a low of 26 sen on March 19, has rebounded 133% since.

Oil prices lifted for 4th day by signs of output cuts and demand pick-up

REUTERS via SUNBIZ (May 19) TOKYO: Oil prices rose on Tuesday, extending gains for a fourth straight session, amid signs that producers are cutting output as promised just as demand picks up, stoked by more countries easing out of curbs imposed to counter the coronavirus pandemic.

Brent crude climbed $0.85, or 2.4%, to $35.66 a barrel by 0033 GMT, after touching its highest since April 9.

U.S. West Texas Intermediate crude was up $1.30, or 4.1%, at $33.12 a barrel, after hitting its highest since March 16.

The June WTI contract expires on Tuesday, but there was little sign of a repeat of the historic plunge below zero seen a month ago on the eve of the May contract’s expiry amid signs that demand for crude and derived fuels is recovering from its nadir.

The market was also boosted by signs that output cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC) and others including Russia, a group known as OPEC+, are being implemented on the ground.

OPEC+ has cut its oil exports sharply in the first half of May, companies that track the shipments said, suggesting a strong start in complying with a new production cut agreement.

“Investors’ sentiment has improved as OPEC+ are apparently slashing output as they promised for this month, with more voluntary cuts expected in June,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities.

“At the same time, there is growing optimism that the easing of global (coronavirus) lockdowns will help boost economic activity and fuel demand,” he said, predicting the U.S. crude benchmark could rise to $35 a barrel.

In further support for prices, U.S. production is also falling, with crude output from seven major shale formations expected to fall by a record 197,000 barrels per day in June to 7.822 million barrels per day. That would be the lowest since August 2018, according to the U.S. Energy Information Administration.

No representation or warranty (express or implied) is given as to the accuracy or completeness of the information nor shall it be construed as an offer/solicitation or recommendation to buy/sell any stocks.

I went into the bathroom to brush my teeth. It is good to brush your teeth when you are angry, because you brush harder and do a better job. LOL

Ane Brun – Big in Japan

Well, a lot’s happened since I last showered. LOL

AMY SEARCH & YASIN SULAIMAN – TAKBIR CINTA

Be safe! Wash your hands. With soap. Then wash them again. It’s not sexy, but it works. If you need to leave your house, wear a mask. Try to stand 6 feet apart from other people. Wave, bow or give an elbow bump, rather than shaking hands. No, you cannot tell if a person is infected just by looking at him or her. You don’t have that superpower. Plus, people can infect you before they develop any symptoms. So please take care of yourself!

TODAY

Hmm. People say that life is the thing, but I prefer reading. LOL

Oil rises above USD30 for first time in two months on output cuts

*WTI CRUDE OIL* : 29.520 / 0%
*BRENT OIL* : 32.84⬆️ 1.71 / 5.49%‼️‼️
*USD/MYR* : 4.35

I’ve got nothing to do today but smile.

Steven Tyler and Chris Botti – Smile

There are two means of refuge from the misery of life — music and cats.

ABBA – Mamma Mia

Mplus Market Pulse – 18 May 2020

Improving Sentiment

  • The FBM KLCI (+0.4%) marched higher for the third straight session in tandem with gains across regional peers following higher commodity prices such as crude oil. Consequently, the key index climbed 1.5% W.o.W. The lower liners – the FBM Small Cap (+1.7%), FBM Fledgling (+0.8%) and FBM ACE (+1.6%), all advanced, while the REIT sector (- 0.3%) underperformed the positive broader market.
  • Market breadth turned positive as advancers outpaced the decliners on a ratio of 592-to-316 stocks. Traded volumes rose 31.7% to 9.23 bln shares spurred by the positive market sentiment.
  • Japanese equities advanced as the Nikkei rose 0.6% taking cue from the stronger performance on Wall Street overnight. Both the Hang Seng Index and Shanghai Composite, however, extended their losses by 0.1% each after enduring a choppy trading session. Asia stockmarkets, meanwhile, closed mostly higher on last Friday.
  • U.S. stockmarkets extended their gains as the Dow climbed 0.3% but upsides were limited owing to renewed trade uncertainty between U.S. and China. On the broader market, the S&P 500 added 0.4%, while the Nasdaq march 0.8% higher.
  • Earlier, European stockmarkets – the FTSE (+1.0%), CAC (+0.1%) and DAX (+1.2%), all rebounded in tandem with gains across global equities. Meanwhile, Germany 1Q2020 GDP shrank -2.2% Y.o.Y, marking the sharpest contraction since the previous financial crisis but was in line with economists’ consensus expectations.

THE DAY AHEAD

  • Expectedly, the FBM KLCI nudged higher last Friday following higher commodity prices. This came after the Energy Information Administration (EIA) raised the outlook of crude oil forecast, whilst Malaysia slashed the export duty for crude palm oil to 0% for June 2020 contract.
  • Moving forward, we think that the buying momentum may see some choppiness amid the renewed Sino-U.S. trade tension. A build-up from last week’s gains may see with the FBM KLCI to re-test the upper band of the consolidation range at around the 1,430 level after the key index managed to rise above the 1,400 psychological level. At the same time the 1,360 will serve as the support level.
  • After a two-day pause, the lower liners resume their recovery as investors continue to ramp up their position, capitalizing on the positive market sentiment. We reckon that rotational play may continue with trading interest to hinge towards the energy and plantation stocks over the near term following the higher commodity prices as of late.

COMPANY BRIEF

  • Icon Offshore Bhd’s 1Q2020 net profit stood at RM20.4 mln against a net loss of RM7.6 mln recorded in the previous corresponding quarter, boosted by higher vessel utilisation rate, while the company benefited from one-time gain on its debt restructuring exercise. Revenue for the quarter climbed 17.0% Y.o.Y to RM48.9 mln. (The Star)
  • The major shareholder of Ho Wah Genting Bhd (HWGB) have raised the takeover price for the shares from 14 sen to 20.5 sen as minority shareholders deemed the earlier offer as unattractive. While Ho Wah Genting Holding Sdn Bhd raised the offer for the shares, it retained the offer price of warrants at one sen a unit.
  • The offerors are Datuk Lim Ooi Hong, Lim Wee Kita and Datuk Teo Tiew. They had through Ho Wah Genting Holding acquired 97.2 mln shares or 19.2% as at 8th May 2020. This latest purchase saw them increasing their shareholding in HWGB from 29.8% or 150.6 mln shares to 247.8 mln shares or 49.0%. (The Star)
  • Genting Malaysia Bhd (GenM) wants Miami-Dade County in the US to fund a US$770.0mln (RM3.35 bln) monorail system, linking Miami mainland with South Beach. GenM and its partners (which include Meridiam, the company behind the PortMiami tunnel) have proposed to build and operate the 6.44km “Miami Beach Monorail” and turn over fare revenue to the country authority, in exchange for yearly payments of US$59.4 mln over 30 years. (The Edge)
  • Kronologi Asia Bhd’s 1Q2020 net loss stood at RM11.2 mln, from a net profit of RM3.7 mln recorded in the previous corresponding quarter, as it recognised an RM11.6 mln one-time non-cash impairment “out of prudence” on property, plant and equipment amid the economic slowdown and uncertainties induced by Covid-19. Revenue for the quarter, however, jumped 59.9% Y.o.Y to RM52.0 mln. (The Edge)
  • LKL International Bhd will see MIDF Amanah Investment Bank Bhd cease to be its sponsor effective on 16th May 2020, as the medical equipment provider has successfully maintained the services of a sponsor for at least three financial years since listing. This is in accordance with Bursa Malaysia’s listing rules. (The Edge)
  • Malayan Flour Mills Bhd (MFM) 1Q2020 net loss stood at RM16.8 mln, from a net profit of RM19.9 reported in the previous corresponding quarter, following losses from its poultry integration business and Indonesian joint venture. Revenue for the quarter, however, grew 3.0% Y.o.Y to RM654.3 mln. (The Edge)
  • Malaysian Genomics Resources Centre Bhd (MGRC) saw Khazanah Nasional Bhd ceasing to be a major shareholder. Khazanah’s indirect unit and MGRC’s largest shareholder Syntamatix Sdn Bhd disposed of 12.0 mln shares or 11.6% on 13th May 2020. Khazanah had a 61.2% stake in MGRC as of October 2019. It is unclear who took up the stake sold by Khazanah. (The Edge)
  • Minetech Resources Bhd won a RM30.4 mln subcontract to build the 36- classroom SMK Pelangi Perdana secondary school in Parit Buntar, Perak. Work will start on 1st June 2020 and is expected to be completed by 13th February 2021. (The Edge)
  • Pentamaster Corporation Bhd’s 1Q2020 net profit fell 14.3% Y.o.Y to RM16.8 mln, following its revenue being hit by travelling restrictions amid the Covid-19 outbreak. Revenue for the quarter dropped 15.7% Y.o.Y to RM100.1 mln. (The Edge)
  • Petra Energy Bhd’s 1Q2020 net loss amounted to RM20.8 mln vs. a net profit of RM1.7 mln reported in the previous corresponding quarter as it faced upstream activities revision amid the recent oil price crash and Covid-19 outbreak. Revenue for the quarter fell 35.3% Y.o.Y to RM72.4 mln. (The Edge)
  • Rohas Tecnic Bhd has bagged a RM102.0 mln contract from the Power Grid Company of Bangladesh Ltd to supply transmission lines in that country. The turnkey contract is expected to start in 3Q2020, and has tenure of 24 months. (The Edge)  

No representation or warranty (express or implied) is given as to the accuracy or completeness of the information nor shall it be construed as an offer/solicitation or recommendation to buy/sell any stocks.

MY PORTFOLIO; HIBISCS (5199), PELIKAN (5231), THRIVEN (7889) & COMCORP (7195).

TODAY

Good morning, Folks! The word “saturday” has the word “sat” in it. Make sure your take the time this day to sit, relax and watch TV.

CORPORATE NEWS

GENM (4715) wants Miami-Dade county in the US to fund a US$770 million (RM3.35 billion) monorail system, linking Miami mainland with South Beach. GENM and its partners (which include Meridiam, the company behind the PortMiami tunnel) have proposed to build and operate the 6.44km “Miami Beach Monorail” and turn over fare revenue to the country authority, in exchange for yearly payments of US$59.4 million over 30 years. – EDGE

LKL (0182) will see MIDF Amanah Investment Bank Bhd cease to be its sponsor effective tomorrow, as the medical equipment provider has successfully maintained the services of a sponsor for at least three financial years since listing. This is in accordance with Bursa Malaysia’s listing rules. – EDGE

MGRC (0155) saw Khazanah Nasional Bhd ceasing to be a major shareholder. Khazanah’s indirect unit and MGRC’s largest shareholder Syntamatix Sdn Bhd disposed of 12 million shares or 11.59% on May 13. Khazanah had a 61.24% stake in MGRC as of October last year. It is unclear who took up the stake sold by Khazanah. – EDGE

No representation or warranty (express or implied) is given as to the accuracy or completeness of the information nor shall it be construed as an offer/solicitation or recommendation to buy/sell any stocks.

Sad as it may seem, my portfolio remains the same; HIBISCS (5199), PELIKAN (5231), THRIVEN (7889) & COMCORP (7195). LOL

Technical Analysis

STAR (May 16) – EFORCE (0065) continued its rally yesterday to push past the 200-day simple moving average (SMA).

The stock’s V-shaped recovery after hitting a trough on March 17 to return to January 2020 levels underlines the bullish momentum that has come into play.

Coupled with the healthy trading volume yesterday, which was its highest in more than three months, there looks to be growing investor interest in the counter.

At the current trajectory, the share price is looking towards its 2020 peak of 58.5 sen, which serves as the overhead resistance.

On the daily price chart, the sustained rebound is unwinding the longer-term bearish formation. While the short-term SMAs are rising at a rapid clip, the 50-day SMA has also made a U-turn higher to indicate the stock’s changing fortunes.

Still, the 50-day SMA remains submerged below the 100-day SMA and there remains some ways to go before the stock can reverse the dominant downtrend.

For the coming term, however, the technical indicators suggest the onset of bullish momentum and more gains over the horizon.

The slow-stochastic turned higher on Wednesday and crossed into a “buy” signal. It remains below the overbought line, which suggests that momentum continues to be at healthy levels.

The 14-day relative strength index, however, has moved into overbought territory at 83 points but remains in an upward angle, indicating continued growth.

The current uptrend is reflected in the daily moving average convergence/divergence (MACD) line, which is pacing higher above the zero signal. Should the MACD outpace the signal line, it would indicate growing momentum in the ongoing rally.

Resistance for the stock can be found at 58.5 sen and 67 sen. To the downside, support is found at the recent low of 45 sen and 41.5 sen.

The comments above do not represent a recommendation to buy or sell.

I’m more or less on my own. If I’m lucky I meet maybe 20 people in a supermarket. But I don’t want to leave the house totally. 😀 Miranda Lambert – The House That Built Me

Things I thought I would never say: “Tessa, let your hubby try the game so he can beat that level for you.” 😀 Miranda Lambert – Gun Powder and Lead.

Pandemic is not a word to use lightly or carelessly. It is a word that, if misused, can cause unreasonable fear, or unjustified acceptance that the fight is over, leading to unnecessary suffering and death.

M Nasir – Mentera Semerah Padi