TODAY

Good morning, Folks. For if there is one thing I have learned over the years about men, it is that feelings of powerlessness do not usually bring forth their finest qualities. LOL

It’s Thursday 4th June and it really feels like a Thursday. Sometimes things just work out. Chris Vadham – Hanya Nyanyian Dalam Sepi.

M+ Online Technical Focus – 3 June 2020

Author: MalaccaSecurities  |    Publish date: Wed, 3 Jun 2020, 9:34 AM


The FBM KLCI marked its fifth straight session of gains as the key index surpassed the 1,500 psychological level to close at 1,507.69 level yesterday. The MACD Histogram has extended another green bar, but the RSI is overbought. Resistance will be pegged around the 1,510-1,530 levels. Support will be set around the 1,460 level.

FPGROUP has formed a flag-formation breakout above the RM0.795 level on improved volumes. The MACD Histogram has turned green, while the RSI remains above 50. Price may advance, targeting the RM0.89-RM0.925 levels. Support will be anchored around the RM0.745 level.

PWRWELL has formed a bullish engulfing candle to close above the EMA9 level on mildly improved volumes. The MACD Histogram has turned green, while the RSI has risen above 50. Price may trend higher, targeting the RM0.31-RM0.35 levels. Support will be located around the RM0.275 level.

RGB has formed a bullish candle to close above the EMA60 level on high volumes. The MACD Line has risen above the zero level, while the RSI remains above 50. Monitor for a breakout above the RM0.145 consolidation level, targeting the RM0.17-RM0.185 levels. Support will be pegged around the RM0.135 level.

Source: Mplus Research – 3 Jun 2020

If 40 is the new 30 and 50 is the new 40, why can’t Thursday be the new Friday? LOL Sheila Majid – Hitam Putih Kehidupan

TODAY

Good morning, Folks. My breakfast is ready. A cup of hot coffee. Coconut jam and a piece of soft fluffy Hailam bread.

Feeling Good – Michael Buble

What’s Up Buddy

*Dow Jones* : 25,742.65⬆️ 267.63 / 1.05%‼️
*Nasdaq* : 9,608.38⬆️ 56.33 / 0.59%

GOLD PRICE : 1,727.68⬇️ 12.30 / 0.71%
WTI CRUDE OIL : 36.87⬆️ 1.31 / 3.68%‼️
BRENT OIL : 39.62⬆️ 1.01 / 2.62%‼️
USD/MYR : 4.27‼️

*CGS-CIMB: Revision of Universal Price Cap for Glove Counters*
1. Supermax Corporation BHD *Revised Capped Price*RM5.00 or 100% of preceding day closing price whichever is lower 
2. Comfort Gloves BHD *Revised Capped Price*RM2.80 or 70% of preceding day closing price whichever is lower
3. Rubberex Corporation BHD  *Revised Capped Price*RM3.00 or 90% of preceding day closing price whichever is lower
4. Top Glove Corporation BHD  *Revised Capped Price*RM11.00 or 100% of preceding day closing price whichever is lower
5. Hartalega Holdings  *Revised Capped Price*RM9.00 or 100% of preceding day closing price whichever is lower
6. Kossan Rubber Industries BHD *Revised Capped Price*RM7.00 or 100% of preceding day closing price whichever is lower

Joyful morning, good morning, good day!. As I wish you a very good morning, I want you to know that mornings are there for us to start afresh and make people know that we can still become successful at what we failed at yesterday. So don’t stop pushing till you get what you want. Good morning once again, Folks.

Bank Muamalat Malaysia Bhd has appointed Datuk Seri Tajuddin Atan as its new chairman effective today, succeeding Tan Sri Mohd Munir Abdul Majid whose tenure ends yesterday.

The Securities Commission (SC) has rejected TA Enterprise Bhd’s (TAE) application to withdraw its voluntary takeover offer (VTO) to buy the remaining 39.83% stake it does not own in TA Global Bhd — a move to take the property arm private. In a bourse filing, TAE said the SC had, vide its letter dated June 1, resolved to decline the application for the withdrawal after having considered the justifications provided on a holistic basis. This means that TAE will have to carry on with the VTO at 28 sen per share. Nonetheless, uncertainty remains on the privatisation deal.

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.

When you have a positive mind – especially in the morning to start your day – you are allowing that positive mind to nurture happiness and health for the remainder of your day.

The Rolling Stones – Paint It, Black

3 FUN FACTS

What is the use of surgical gloves? The primary purpose of surgical gloves is to act as a protective barrier to prevent the possible transmission of diseases between healthcare professionals and patients during surgical procedures.

What is the meaning of sanitizer? Sanitizer is a substance or fluid designed to kill germs on skin and objects. Sanitizer also refers to household products (especially hand sanitizer) that are used to prevent the spread of disease by killing germs on surfaces and skin.

WHAT IS A VENTILATOR? These machines are used to treat patients suffering from conditions including pneumonia, brain injury and stroke. A hospital-grade ventilator is a costly machine , running between USD25,000 and USD50,000 each. Because the coronavirus, in extreme cases, can cause breathing difficulties, these machines are vital to saving lives during the pandemic. Ventilators help a patient breathe by assisting the lungs to inhale and exhale air.

Have a great Wednesday !!

TODAY

Knowledge is like underwear. It is useful to have it, but not necessary to show it off. LOL

BREAD – Diary

CORPORATE NEWS

Ismail and Loo resign from Media Prima board

NST Business (June 1) KUALA LUMPUR: Media Prima Bhd has announced the resignation of Tan Sri Ismail Omar and Datuk Loo Took Gee as independent and non-executive directors effective today. In an exchange filing today, the integrated media conglomerate said Ismail and Loo both had decided to resign to focus on other commitments.

Ismail, 67, started his career as an investigation officer in the Criminal Investigation Department of the Royal Malaysian Police Force.

For the first 25 years of his career, he was assigned to various police departments in several states in the country.

He was also chairman of The New Straits Times Press (Malaysia) Bhd and a board member of Media Prima Digital Sdn Bhd.

Loo, 63, served the government for 37 years as an officer of the Administrative and Diplomatic Service.

Within the Media Prima Group, she was chairman of Primeworks Studios Sdn Bhd and a board member of Synchrosound Studio Sdn Bhd and Big Tree Outdoor Sdn Bhd.

She currently sits on the boards of YTL Power International Bhd and Hartalega Holdings Bhd.

What’s Up Buddy?

Mplus Market Pulse – 2 Jun 2020

Re-Testing 1,500 Level

  • The FBM KLCI (+1.2%) marched higher alongside with gains across regional peers, led by gains from healthcarerelated heavyweights, coupled with the stronger than expected Chinese economic data. The lower liners – the FBM Small Cap (+0.1%), FBM Fledgling (+1.4%) and FBM ACE (+5.5%), all extended their gains. Amidst the mixed broader market, the healthcare sector (+5.4%) outperformed.
  • Market breadth turned negative as decliners outmatched the advancers on a ratio of 574-to-511 stocks. Traded volumes gained 14.1% with 10.31 bln shares exchanging hands implying that market risk appetite remain well put in the equity markets.
  • Asia benchmark indices advanced as the Nikkei (+0.8%) recovered all its previous session losses, while the Hang Seng Index jumped 3.4%. The Shanghai Composite (+2.2%) advanced for the third straight session on the back of the stronger-than-expected Purchasing Manager’s Index (PMI) in May 2020 that stood at 50.6, whilst the Caixin/Markit manufacturing PMI for May 2020 stood at 50.7. Asia stockmarkets, meanwhile, were traded in a robust manner on Monday.
  • U.S. stockmarkets ended modestly higher as the Dow climbed 0.4% as investors shift their attention from the recent civil unrest to the prospect of economy re-opening in all 50 states in America. On the broader market, the S&P 500 (+0.4%) extended its gains with only the healthcare sector in the red (- 1.0%), while the Nasdaq finished 0.7% higher.
  • Major European stockmarkets also marched higher alongside with gains across the globe as the FTSE and CAC gained 1.5% and 1.4% each as investors breathe sigh of relief after there were no signs of escalating U.S.-China tensions. Germany’s DAX was closed for the Whit Monday public holiday.

The Day Ahead

  • It was another strong performance on the FBM KLCI as investors turned optimistic following the softer undertone from U.S. President Donald Trump remarks against China. The unabated firm buying interest in healthcare-related heavyweights also provided additional legs for the FBM KLCI to march higher as we see buying momentum are not tapering anytime over the foreseeable future.
  • Moving forward, we reckon that the 1,500 psychological level would likely to be retested as investors continue to cheer on the gradual re-opening of economy across the globe. Beyond that, the 1,510 level will serve as the resistance. On the flipside, the support is now pegged at the 1,460 level.
  • The lower liners and broader market shares continue to show resilience. This is demonstrated by high trading volumes that suggest rotational play is still on the table. Apart from the healthcare stocks, we expect the oil & gas stocks to garner some limelight as Brent oil prices finished at its highest level in two months.

COMPANY BRIEF

  • K-One Technology Bhd (K-One Tech) has been granted a non-exclusive license agreement (NELA) by NASA Jet Propulsion Laboratory (NASA-JPL) United States (US) to manufacture and distribute the Ventilator Intervention Technology Accessible Locally (VITAL) ventilators worldwide. The manufacturing and distribution of the low-cost VITAL ventilator is to meet the shortage of ventilators in specific countries and also to prepare for the second wave of COVID-19 infections as countries begin to lift their respective lockdowns. (Bernama)
  • Pintaras Jaya Bhd has announced that its sub-subsidiary Pintary Foundations Pte Ltd has secured a piling project valued at about RM119.0 mln. The projects commences in August 2020 for a period of 10 months. (The Star)
  • Berjaya Corporation Bhd (BCorp) will be taking over home electronic appliances distributor Singer (M) Sdn Bhd. The transaction might involve the issuance of BCorp shares. Singer is currently owned by BCorp’s controlling shareholder Tan Sri Vincent Tan. BCorp has requested for a trading suspension of its shares yesterday and today pending the announcement of a material transaction. (The Edge)
  • Berjaya Food Bhd’s (BFood) 3QFY20 net loss stood at RM1.4 mln on top of revenue of RM158.6 mln as it was adversely affected by the Covid-19 pandemic. There were no comparison numbers for the previous year’s corresponding quarter, due to a change in its financial year end from 30th April to 30th June. (The Edge)
  • Eversendai Corp Bhd’s wholly-owned unit Eversendai Offshore has secured two European offshore wind renewable energy projects worth a total of RM186.0 mln combined from Petrofac Ltd. This brings its outstanding construction order book to an all-time high of RM2.88 bln. The first project is to fabricate and construct an offshore wind substation platform topside, jacket and piles for an offshore wind farm in the UK, while the other project is to fabricate and construct jacket and piles for an offshore wind substation platform in the Netherlands. (The Edge)
  • Malayan United Industries Bhd (MUI) has clarified that its 98.2%-owned subsidiary Metrojaya Bhd continues to operate its retailing business as usual through various subsidiaries including MJ Department Stores Sdn Bhd’s outlets and EIC Clothing Sdn Bhd’s East India Company specialty store. A day earlier, there had been some confusion over the news of the winding-up of Metrojaya Department Stores Sdn Bhd and East India Company Clothing (Malaysia) Sdn Bhd, which are dormant subsidiaries of Metrojaya Bhd. (The Edge)
  • Parkson Holdings Bhd‘s 55.0%-owned Hong Kong-listed unit has inked a 20- year tenancy agreement for a commercial space measuring 54,000 sq m in Wuzhou City, China. The agreement was inked between Parkson Retail Group Ltd’s indirect wholly-owned Nanning Brilliant Parson Commercial Co Ltd and landlord Wuzhou Sankee Investment Co Ltd. (The Edge)
  • Sime Darby Plantation Bhd‘s indirect wholly-owned unit Ultra Oleum Pte Ltd has disposed of its entire 52.0% stake in Verdant Bioscience Pte Ltd (VBS) to SIPEF and Ackermans & van Haaren NV for US$8.6 mln (RM37.4 mln). VBS, incorporated in Singapore is principally engaged in the research and development of life sciences and biotechnology in the areas of plantation science, plant breeding and seed production. (The Edge)
  • UMW Holdings Bhd has announced a change in its boardroom after the sudden passing of its president and group CEO Badrul Feisal Abdul Rahim, 50, yesterday had left the positions vacant in the diversified group. Badrul Feisal had served as the president and group CEO of UMW Group since his appointment on 1st October 2015. He joined UMW Group as senior general manager at the president & group CEO’s office in December 2010 and was appointed as the acting executive director for the UMW oil & gas division from April 2011 to December 2011. (The Edge)  

What is June? June is the sixth month of the year in the Julian and Gregorian calendars, the second of four months to have a length of 30 days, and the third of five months to have a length of less than 31 days.

BREAD – Aubrey

TODAY

Good morning, Folks. I miss getting acquainted with the next generation of our family. But to a certain extent, Skype and Whatsapp Video Calling are filling that niche.

Bad Company – If You Needed Somebody

The resumption of operations of Kedai Tenaga in Kuala Lumpur (KL), Selangor and Negeri Sembilan today from 9am to 4pm except on weekends, TNB kiosk between 8am and 8pm. TNB customers can also contact TNB CareLine at 1-300-88-5454 on bill enquiries.

Malaysia, Singapore defer high-speed rail project until year-end

REUTERS via SUNBIZ (May 31) KUALA LUMPUR: Malaysia and neighbouring Singapore said today they had agreed to suspend until Dec 31 a high-speed rail (HSR) project between Malaysia’s capital, Kuala Lumpur, and the city-state, to allow discussion of changes.

Analysts estimate the project, first announced by both nations in 2013, will cost about US$17 billion (RM74 billion), though the two have tried to renegotiate the terms of an initial pact.

“The government of Malaysia and the government of Singapore have agreed to resume discussions on the Kuala Lumpur-Singapore high speed rail infrastructure project in the near future,“ said Datuk Seri Mohamed Azmin Ali, Minister of International Trade and Industry.

“The discussions will encompass some of the proposed changes in the commercial and technical aspects of the project,“ he said in a statement.

Singapore’s transport ministry said in a separate statement that it had agreed to a “final extension” and that it looked forward to receiving Malaysia’s formal proposal on the changes soon.

Singapore’s transport minister Khaw Boon Wan said in a Facebook post today that the extension should provide sufficient time for Malaysia to clarify its proposal and for both sides to assess the implications of the proposed changes.

“The key is joint commitment to the project’s vision and mutual trust. Nevertheless, the HSR is a complex project, and both sides have to be convinced that the changes do not undermine the original intent of the project,“ he said.

Green Packet Bhd has inked a deal with United Chinese School Committees’ Association of Malaysia (Dong Zong) to deploy its KipleLive thermal scanners in 63 independent Chinese secondary schools nationwide. – EDGE

What’s Up Buddy?

AMBANK: STOCK FOCUS OF THE DAY – RHB Bank: Sizeable FVTOCI reserves to mitigate NIM pressure   BUY

We maintain our BUY recommendation on RHB Bank with a revised fair value of RM5.80/share (previously: RM5.70/share). We continue to peg the stock to an FY20 P/BV of 0.9x supported by an ROE of 8.6%. We fine-tune our 20/21 earnings by +0.4%/-0.8 to reflect slower loan growth of 2%/3% and a moderation in deposit growth.

1Q20 earnings were RM571mil (-9.4% YoY), a flat total income of +0.2% YoY. Higher net interest income was offset by lower non-interest income attributed to unrealised marked-to-market (MTM) losses on FVTPL securities from swings in MGS yields. In April 2020, yields have turned more favourable, and this has reversed the losses, turning into gains. Net profit was within expectations, making up for 25.0% of ours and 25.2% of consensus estimate.

Valuation continues to be appealing with the stock trading at FY20 P/BV of 0.7x. Its capital position remains strong compared to its peers with a high CET1 ratio at the group and bank entity levels. With its higher FVTOVCI reserves and low interest rate environment sustaining, there is room for the group to further dispose of a portion of its securities to realised gains from the favourable movement in yields.

DATUK DR NOOR HISHAM

RHB: Hong Leong Bank (HLBK MK, BUY, TP: MYR15.80)

Asset Quality Slippage Is Transitory; Keep BUY

Results Review

Maintain BUY, new MYR15.80 TP from MYR16.20, 16% upside and c.3% yield. Hong Leong Bank’s 3QFY20 (Jun) results missed expectations. Still, we expect earnings to remain resilient in FY20F-21F helped by the bank’s solid asset quality, proactive credit risk management, declining cost of funds and stable contributions from the Bank of Chengdu. With its share price down 21.4% YTD and current valuation of 1.06x P/BV against ROAE of 9.9%, risk-return profile is appealing given its strengthened balance sheet.

The coronavirus has left to us to fear the unknown, to worry about what will be tomorrow.

KALEO – I Can’t Go On Without You.

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.