MSM GROUP CEO SACKED AFTER ‘UNACCEPTABLE’

EXPLANATION ABOUT ACCOUNTING ADJUSTMENTS p8

T U E S DAY, O C TO B E R 6 , 2 0 2 0 w w w. t h e e d g e m a r k e t s. c o m
ISSUE 62/2020

CEOMorningBrief
HOME: PM under home quarantine after Religious Affairs Minister tests positive for Covid-19 p2
AirAsia Japan ceases ops while speculation abounds over AirAsia India’s closure p10
WORLD: US service industries expand more than forecast on orders p18

UEM SUNRISE TO MERGE

WITH ECOWORLD IN
SHARE SWAP DEAL
Report on Page 4.
 T U E S D AY O C T O B E R 6 , 2 0 2 0 2 THEEDGE CEO MORNING BRIEF

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H O M E

PM under home
KUALA LUMPUR (Oct 5): Prime
Minister Tan Sri Muhyiddin Yassin said

quarantine
he will be observing self-quarantine at
home for a period of 14 days as advised

after Religious
by the Ministry of Health (MoH), after
Minister in the Prime Minister’s Office

Affairs Minister
(Religious Affairs) Datuk Seri Dr Zulkifli
Mohamad Al-Bakri had tested positive

tests positive for

for Covid-19.
In a statement today, Muhyiddin said he

had chaired a National Security Council
meeting on Saturday (Oct 3), which was
attended by Dr Zulkifli.
He said the minister is currently receiv-
ing treatment at a hospital in Seremban.
“Based on the risk assessment by MoH,
those that have been identified as close
contacts during the meeting have been
given a Home Surveillance and Obser-
vation (HSO) letter for 14 days from Oct
3, 2020, and have been ordered to wear
surveillance bracelets.
“Non-close contacts are also advised to
undergo self-quarantine for 14 days from
Oct 3 to Oct 16, 2020, and undertake self-
Covid-19
BY AHMAD NAQIB IDRIS
theedgemarkets.com
health monitoring at home every day using
the Home Assessment Tool in the MySe-
jahtera application,” said Muhyiddin.
However, he said this will not dis- Muhyiddin said he has been doing swab
rupt the government’s operations, add- tests every two weeks since April and had
ing that he will continue to work from done three Covid-19 tests over the past
home and will chair meetings via video three weeks, on Sept 22, 26 and 29, and
conferencing. the results were negative.

Zafrul: Malaysia’s
KUALA LUMPUR (Oct 5): Finance Min- tive Package (Kita Prihatin) amounting
ister Tengku Datuk Seri Zafrul Aziz has to RM10 billion.

debt levels set

said Malaysia's debt levels are set to rise as CNBC noted that even before the pan-
the country embarks on measures to sup- demic broke out, Moody’s had warned

to rise amid
port businesses and citizens to deal with about Malaysia’s debt.
the economic fallout from the Covid-19 Moody’s Investors Service said in Janu-

pandemic.
“We're anticipating and forecasting that
deficit will go up this year for Malaysia,”
said Zafrul in an interview on CNBC's
“Asia Squawk Box”. He reiterated that the
fiscal deficit is expected to be around 5.8%
to 6% this year.
Zafrul said so far, fiscal injections into
the economy stand at around 20% of gross
domestic product (GDP), according to a
CNBC report today.
“We are still focused on fiscal respon-
sibility, of course. We have debt-to-GDP
now at around 53%. It will end at around
56%. We have approval from Parliament
to go up to 60%,” the minister said.
In August, Parliament voted to allow
pandemic
BY WONG EE LIN
theedgemarkets.com
the government to borrow up to 60%
of its GDP as part of temporary meas-
ures to ease the blow of the pandemic
on businesses.
Malaysia has rolled out about RM305
billion in stimulus packages so far this year,
to help inject cash into the economy and
prop it up.
Most recently, the government rolled
out the Prihatin Supplementary Initia-
ary that Malaysia’s debt burden was “sig-
nificantly higher” than that of other coun-
tries with an “A” sovereign credit rating. A
sovereign credit rating is an assessment of
a country’s creditworthiness, and an “A”
rating means low credit risk.
“However, deep domestic capital mar-
kets and high savings provide a stable
funding pool for the government’s debt,
and partly offset these fiscal weaknesses,”
Moody’s said at that time.
The bright spot, according to Zafrul, is
that the government is “optimistic” that the
economy next year will expand by around
5.5% to 8%, from negative growth this
year. For 2020, GDP is expected to con-
tract by between 3.5% and 5.5%.
 T U E S D AY O C T O B E R 6 , 2 0 2 0 3 THEEDGE CEO MORNING BRIEF

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Equity Global -
Malaysia Pension, 5 years The Edge | Thomson
Insurance Asia News
Equity Asia Pacific ex Japan - Reuters Lipper Malaysia
- Institutional Asset
Malaysia Pension, 10 years Fund Awards 2018
Management Awards
Best Fund Over 5 Years, Equity
2020 | Best Islamic Asia Pacific Global - Malaysia (CIMB-Principal
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Pacific ex Japan - Malaysia (CIMB-
Principal Asian Equity Fund)
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Asia Fund Management Asia Asset Management Pacific ex Japan - Malaysia CIMB
Awards 2020 2019 Islamic Asia Pacific Equity Fund)
Best Fund Over 5 Years, Equity
Best Asset Manager Best Asset Management House
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(Money Market & Balanced funds) in ASEAN
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Disclaimer: The information in this document contains general information only on investment matters and should not be considered as a comprehensive statement
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 T U E S D AY O C T O B E R 6 , 2 0 2 0
UEM Sunrise to merge with EcoWorld
in share swap deal
BY TAN SIEW MUNG & WONG EE LIN
theedgemarkets.com
KUALA LUMPUR (Oct 5): UEM Group
Bhd, the major shareholder of UEM Sun-
rise Bhd, has proposed a merger between
its property unit and Eco World Develop-
ment Group Bhd (EcoWorld).
The merger will be done through a
share swap exercise, after which EcoW-
orld will become a wholly-owned subsid-
iary of UEM Sunrise.
“The board will convene in the near
term to deliberate over the proposed merg-
er and will make a further announcement
thereafter,” said EcoWorld in a corre-
sponding filing on the matter.
As for the rationale of the merger, UEM
Group, which currently holds a 66.1%
stake in UEM Sunrise, explained that it
sees a “pressing need for industry players
to consolidate resources and capabilities”
to withstand the headwinds that property
developers are currently facing.
Under the deal, UEM Sunrise will issue
new shares at a proposed 44.3 sen each
to EcoWorld shareholders at an exchange
price of 46.9 sen.
In a nutshell, the share swap ratio is
1.0587 new UEM Sunrise shares for one
EcoWorld share held, according to the
bourse filing.
Meanwhile, the proposed new warrants
in UEM Sunrise will be issued to all hold-
ers of the outstanding warrants in EcoW-
orld at the share exchange ratio, which
translates into 1.0587 new UEM Sunrise
warrants for one EcoWorld warrant.
Year-to-date, both companies’ share
prices have slid about 45%. EcoWorld
shares closed at 41 sen today, while UEM
Sunrise shares closed at 39 sen.
After the merger, Khazanah Nasional
Bhd — through UEM Group — will re-
main as the single largest shareholder of
the merged entity.
Meanwhile, EcoWorld executive chair-
man Tan Sri Liew Kee Sin will have a 3.6%
stake in the merged entity, while his son
and executive director Liew Tian Xiong
will hold a 2.8% stake. Three entities that
have stakes in EcoWorld — namely Sinar-
mas Harta Sdn Bhd, Eco World Develop-
ment Holdings Sdn Bhd and Jernih Padu
Sdn Bhd — will hold stakes of 12.6%,
3.4% and 1.9% respectively.
“We envisage that the composition of
the board of directors and key manage-
ment of the enlarged UEM Sunrise will be
4 THEEDGE CEO MORNING BRIEF
H O M E
Before proposed
merger
Largest Largest
shareholder shareholder
UEM Group UEM Group
UEM Sunrise
(listed on Bursa
Malaysia)
Sources: Bursa Malaysia, UEM
determined by an Integration Committee
to be formed, which will comprise repre-
sentatives of UEM Sunrise and EcoW-
orld,” it said.
The Integration Committee will be
co-chaired by the respective chairmen of
UEM Sunrise and EcoWorld, according
to the statement.
UEM Group said a new employees’
share option scheme for staff of the en-
larged property developer has also been
proposed as part of the merger.
“We recognise there may be a need to
reorganise and streamline the enlarged
UEM Sunrise group’s operations upon
completion of the proposed merger.
“However, taking into account the ad-
verse impact of Covid-19 on the job mar-
ket, we hope there will not be any imme-
diate redundancy or dismissal of staff of
the parties as a direct consequence of the
proposed merger,” said UEM Group.
Investment analysts and fund manag-
ers contacted by The Edge view the merg-
er deal as positive for both the property
developers.
MIDF Research analyst Jessica Low
Jze Tieng told The Edge that she believes
the proposed merger could be good for
both companies as a bigger entity would
mean the company has more muscle for
After proposed
merger
Second largest
shareholders
(Collectively)
EcoWorld Minoritiy
significant shareholders of
shareholders UEM Sunrise
and EcoWorld
UEM Sunrise
(listed on Bursa
Malaysia)
100%
EcoWorld
(delisted from
Bursa
Malaysia)
27%
EcoWorld Int’l
(listed on Bursa
Malaysia)
overseas expansion and local projects.
“Although share prices of both com-
panies are low compared to the level be-
fore the global equity rout in March, the
proposed swap ratio implies a discount of
~70% to the respective companies’ latest
net tangible asset per share. Hence, I think
the valuation is fair,” said Low.
Phillip Capital Management Sdn Bhd
chief investment officer Ang Kok Heng
concurred that the merger will be benefi-
cial for both property developers as he be-
lieves the merger would enable economies
of scale, given that the property market is
still going through a difficult period.
“I think the issue now is that, other than
valuation, some people have the perception
that UEM Sunrise is on a better footing
than EcoWorld as the latter has higher
gearing,” Ang said.
“Khazanah must be looking at it as [a
deal] beneficial to both sides. Even if you
buy a cash rich company or a distressed
company, it all boils down to valuation.
And you cannot deny the fact that most
mergers will lead to cost savings, so both
sides will benefit,” he added.
While Khazanah is seen to be in con-
trol of the potential merged company, Ang
commented that the merged entity should
be run by professionals.
T U E S D AY O C T O B E R 6 , 2 0 2 0 5 THEEDGE CEO MORNING BRIEF

twentyfive.7
Experience Gallery
 T U E S D AY O C T O B E R 6 , 2 0 2 0
A merger to leverage the strengths
of both UEM Sunrise and EcoWorld,
says UEM Group chairman
KUALA LUMPUR (Oct 6): News of the
proposed merger between UEM Sunrise
Bhd and Eco World Development Group
Bhd (EcoWorld), which will form one of
Malaysia’s largest real estate companies
by market value, set the market abuzz
yesterday.
Below is what Tengku Datuk Seri Azmil
Zahruddin, chairman of UEM Sunrise’s
parent UEM Group Bhd, said via an email
interview with The Edge on the matter:
The Edge: How did UEM Group come
to the conclusion that UEM Sunrise
should merge with EcoWorld, instead
of other local developers, especially
other government-linked companies
(GLCs)?
UEM Group chairman Tengku Datuk Seri
Azmil Zahruddin: We have seen a wave of
consolidation amongst property develop-
ers in some of the other markets in the re-
gion — notably China, Thailand and India
— generally driven by the fact that larg-
er players tend to be stronger, generating
higher returns and margins. The Malay-
sian property market has been challeng-
ing, with a significant overhang in most
6 THEEDGE CEO MORNING BRIEF
H O M E
Tengku Datuk Seri Azmil Zahruddin
theedgemarkets.com
segments in recent years. The situation
has been made even more challenging by
Covid-19. The environment seems ripe
for consolidation.
Against this backdrop, we have been
looking for a suitable partner for UEM
Sunrise. UEM Sunrise has a particular set
of challenges — geographically, it is con-
centrated primarily in the southern region
whereas in terms of skills and experience,
it is relatively strong in high-rise and in
the central region. We therefore wanted
to look for a partner which could help
address some of these challenges.
We looked at a number of potential op-
portunities but based on facts, data and
our assessment, it appeared to us that
EcoWorld was the most suitable candidate.
EcoWorld is one of the stronger brands in
the market, with a sizeable following and a
presence throughout Peninsular Malaysia.
We view the proposed merger as
an opportunity for an existing govern-
ment-linked company to be in partner-
ship with the private sector to create one
of the largest property developers in Ma-
SAM FONG/THE EDGE
laysia with a total landbank of more than
17,000 acres locally.
The Edge:Who first came out with this
idea — UEM Group or EcoWorld? Has
UEM Group received the green light
from Khazanah Nasional Bhd on the
proposed merger?
Azmil: The letter sent to both companies
to consider and deliberate on a potential
merger was issued by UEM Group. Khaz-
anah is aware and supportive of this.
The Edge:Who will be leading the man-
agement of the merged entity? Why?
Azmil: The composition of the board and
the management team will be decided by
the Integration Committee.We are propos-
ing for the chairman of the merged entity
to come from UEM Sunrise.
The Edge: Is EcoWorld’s chairman Tan
Sri Liew Kee Sin committed to remain-
ing as a shareholder of the merged enti-
ty, and in its management team?
Azmil: We can’t speak on his behalf. You
may want to pose the question to him.
JU MP TO PAG E 8
 T U E S D AY O C T O B E R 6 , 2 0 2 0
Lazada’s enhanced
customer
experience and
engagement a
boon for brands
and sellers
L
azada has witnessed significant
growth in 2020, thanks to a slew
of initiatives that empowers its
brand partners and merchants
with the tools, data and insights
to win the “new consumer” and
increase sales despite lockdowns and stay-
at-home recommendations.
The average daily transactions on the
leading e-commerce platform in the country
has increased by nearly 80% compared with
pre-Movement Control Order. Propelled
by Alibaba’s tech infrastructure and a solid
logistics network, Lazada continues to be the
preferred e-commerce partner in the region
for international and local brands owing to
its reputation for delivering business growth
and quality customer experience. Lazada’s
highly anticipated shopping festivals have
also been a key growth driver for it.
“As consumers get used to being at home,
shopping campaigns festivals such as our
9.9 Big Brands Sale and upcoming 11.11
annual shopping festival may hold greater
currency for marketers and brands. These
24-hour events on Lazada are curated to
deliver an engaging and exciting shopping
experience featuring the platform’s Shop-
pertainment innovations supported by
Lazada’s technology and digital solutions,”
says Leo Chow, CEO of Lazada Malaysia.
During the recently concluded 9.9 Big
Brands Sale Campaign, an increasing num-
ber of participating brands on LazMall re-
ported a spike in sales figures, as shoppers
grow accustomed to having special deals
during monthly campaigns.
Eric Lim, CEO of local electrical appli-
ance brand Perrysmith, says he managed
to sell 10 times more vacuum cleaners and
air fryers during the campaign than on a
normal day.
“Lazada’s shopping festivals, such
as the 9.9 Campaign, built up a lot of
hype before the campaign day itself,
with strong social media marketing and
even out-of-home billboard marketing
helping to boost our sales,” says Lim.
“Lazada promoted the event and drove
traffic to participating brands’ storefronts
one week before the campaign, one of the
most important elements that helped my
Eric Lim, CEO of local electrical
appliance brand Perrysmith
7 THEEDGE CEO MORNING BRIEF
Liu He, country director of
HUAWEI Consumer Business Group
business during the campaign. This helped us
build awareness of the Perrysmith brand among
our shoppers before the sale.”
Tech giant Huawei was also one of the ma-
jor participating brands in the 9.9 Big Brands
Sale Campaign. The global smartphone brand
managed to sell an average of 45 units of Huawei
Mate Pro 30 every 10 seconds. Liu He, coun-
try director of HUAWEI Consumer Business
Group, says the sales performance during the
campaign was definitely up to the company’s
expectation.
“Online shopping festivals such as 9.9 and
11.11 are great opportunities for us to give
back to our customers. Our promotional offers
enable them to save more while enjoying our
products,” says Liu.
“Lazada’s on-site resources such as home
page banners and campaign management tools,
as well as brand exposure on Lazada’s social
media and digital out-of-home capabilities are
some of the tools that helped deliver results for
us during the 9.9 campaign.”
Edwin Wang, CEO of Signature Market, also
saw visitors and orders at his online healthy
snack store almost triple during the 9.9 cam-
paign period compared with just two months
ago.
“Marketing opportunities, especially traffic
driving and advertising solutions by Lazada, are
the main factors to our business’ success. The
hype generated by the campaign and the idea of
a big sale also spurred customers to add more
to their cart during the campaign,” says Wang.
“Other than the increased sales revenue, our
brand visibility also increased. Thanks to the
support given by Lazada, we managed to sell
10,000 sets of our bundled products through
the campaign and the recent “Chief Discount
Officer” live-stream show. Lazada also partnered
with us to develop an exclusive package deal,
which attracted even more consumers for us.”
LIVE-STREAM IS
THE NEW MAINSTREAM
Demand for Lazada’s live-streaming tools has
soared during the pandemic as shoppers are
less inclined to shop outdoors to curb the
spread of the Covid-19 pandemic. Chow ex-
plains that live-streaming has allowed brands
to connect directly with consumers, especial-
ly during the pandemic, and has become an
effective avenue to boost sales.
In April, LazLive reported a 45% month-
on-month increase in total gross merchandise
volume across Southeast Asia, and it went on to
deliver a 17 times year-on-year GMV growth
in June, according to Chow.
“LazLive is a valuable tool for our brands
and sellers to engage with consumers under
our collective new normal. Through LazLive,
customers are able to obtain detailed product
demonstrations and have a live discussion
with the merchant regarding the purchase of
any products. This is a great way for brands
to build customer satisfaction,” says Chow.
“The viewers can also like, comment, share
links and even send emoticons in the live-
stream feed. This real-time conversation also
adds to satisfaction when purchasing a product,
reaffirming the product purchase.”
For the recent 9.9 Big Brands Sale Cam-
paign, Lazada rolled out its latest innovative
live-streaming programme, “Chief Discount
Officer Show”, hosted by its newly appointed
Chief Discount Officer, well-known television
personality Ain Edruce.
In the show, Ain Edruce interacted with
viewers, helped buyers navigate the e-com-
merce platform, negotiated and secured the
best product deals on behalf of shoppers and
merchants, and promoted product items that
matched the viewers’ needs and wants.
The show garnered 580,000 views and reg-
istered more than 72,000 engagements in less
than four hours of its broadcast. It ended on
Sept 8 with more than 97,000 product clicks.
All products from participating brands on the
show sold out.
“The significant success of the show breaks
new ground in live-stream commerce in Ma-
laysia. These new initiatives are part of our
continual effort to help our business partners
connect with consumers through innovative
technology as behaviours and practices are
reshaped across the country in the ‘new nor-
mal’,” says Chow.
ELEVATING CUSTOMER EXPERIENCE
WITH LAZMALL
According to Chow, LazMall is a significant
contributor to the e-commerce platform’s
growth. It is the biggest virtual shopping mall
in the region with more than 18,000 brands
listed on it, a ninefold increase since its launch
in 2018.
“LazMall plays a key role in Lazada’s over-
all business strategy as local and internation-
al brands look to advance their presence and
growth through an omnichannel approach
in Southeast Asia. We constantly invest in
key infrastructure services and user experi-
ence to support and complement our brand
partners. Currently, more than 80% of Forbes’
Most Valuable Consumer Brands are on Laz-
Mall. By strengthening the consumer’s online
commerce journey, we provide brands with
more avenues to diversify and increase their
consumer touchpoints,” says Chow.
“Companies such as Estée Lauder, Adidas,
P&G, Unilever, Dyson, Philips, as well as lo-
cal brands such as Sen Heng, Russell Taylor,
Edwin Wang, CEO of Signature Market
Tealive, Old Town White Coffee, Julie’s,
Golden Screen Cinemas, Bonia and Lewre,
have all signed up, and are expanding their
presence on Lazada during the pandemic.
Many foreign brands have selected Laz-
Mall as their gateway to Southeast Asia’s
e-commerce market to reach consumers
across the region.”
LazMall underwent a significant up-
grade and redesign in time for its recent
9.9 sales event. The virtual mall now sports
a new look as well as enhanced features,
such as an upgraded brand directory, the
ability for consumers to follow brands for
deals and discount updates, and brand
recommendations for shoppers.
Chow says these new features aim to
elevate consumers’ shopping experiences
and strengthen the end-to-end customer
journey for brands, helping them find new
growth opportunities in the new “digital
normal”.
Brands will also be able to leverage La-
zada’s logistics infrastructure and fulfil-
ment capabilities to improve the overall
customer journey on LazMall. Brands on
the platform can integrate their loyalty
programme into LazMall’s platform and
leverage Lazada’s technology infrastructure
for search, recommendations and LazLive
live-streaming.
“LazMall is now in its second year and
the number of brands joining our plat-
form and growing their business online
has tripled. By continually enhancing our
services, we aim to deepen our customers’
trust and provide a peace-of-mind premi-
um shopping experience for our consum-
ers,” says Chow.
With its recent enhancements and fea-
tures and the remarkable success of the
Chief Discount Officer Show, Chow is
optimistic that Lazada will continue its
upward growth trajectory. He explains that
Lazada’s continual efforts in innovation
and its state-of-the-art technology support
have continued to generate interest among
brands looking to partner with them.
“Our 9.9 Campaign this year boasted
more than 100 exclusive branded deals.
And these brand partners have since seen
tremendous growth on the platform. We
will continue to enable brands and sellers to
digitalise their business to be more nimble,
offering greater efficiency and a premium
quality customer experience,” says Chow.
 T U E S D AY O C T O B E R 6 , 2 0 2 0
MSM group
CEO sacked
after giving
‘unacceptable’
explanation
about accounting
adjustments
BY ARJUNA CHANDRAN SHANKAR
theedgemarkets.com
KUALA LUMPUR (Oct 5): Datuk Khair-
il Anuar Aziz has been axed as MSM Ma-
laysia Bhd’s group chief executive officer
(CEO) after the sugar company’s board
found his clarification about an adjustment
to write off inventories that amounted to
RM36.6 million, unacceptable.
Khairil, 53, had been placed on a leave
of absence since Sept 8 over the issue.
“The board of directors of MSM Ma-
laysia Holdings Bhd wishes to inform that
the board has undertaken due process to
allow the group chief executive officer to
clarify on the irregularities pertaining to
FROM PAGE 6
The Edge: Investment analysts com-
ment that there are hardly any syner-
gies from the proposed merger. What
do you say to this?
Azmil: Aside from allowing UEM Sunrise
to reduce its over-reliance on Johor ex-
posure from 75% to 63%, the proposed
merger will improve its central landbank
from 5% to 20%. As mentioned, EcoW-
orld has particularly strong branding and
a robust base of customers. It is one of the
most highly regarded property developers
in the country with a strong reputation as
a township developer and a credible track
record across the full suite of property
products — ranging from residential to
industrial parks.
Importantly, notwithstanding its bal-
anced landbank, it also has a proven track
record in Johor. On the other hand, from
the perspective of EcoWorld shareholders,
the proposed merger will provide them
with access to UEM Sunrise’s sizeable
landbank and strong track record in high-
rise residential [development].
Leveraging on the strengths of both
parties, we believe the merged entity will
be well positioned to serve its customers
better.
8 THEEDGE CEO MORNING BRIEF
H O M E
the adjustment to write-off inventories
amounting to RM36.6 million in MSM
Sugar Refinery (Johor) Sdn Bhd (MSM
Johor) in the 2019 Financial Statements.
The board has assessed the clarification
provided by the GCEO and finds them
unacceptable. The board has decided that
the GCEO ceases office with effect from
Oct 5, 2020,” MSM announced in a stock
exchange filing.
It also updated that Fakhrunniam Oth-
man will continue as the officer-in-charge
until the board identifies a suitable candi-
The Edge: Will you embark on any ra-
tionalisation exercise, for instance the
downsizing of workforce and stream-
lining of operations, to achieve better
efficiency?
Azmil: I think it is important to stress
here that in our view, the merger is pred-
icated on expected yield and revenue en-
hancement perspective — we are hoping
for better landbank utilisation through
optimising the products. We have not as-
sumed any cost efficiency in our merger
case.
The Edge: Simply put, the proposed
merger has met with criticisms. Some
quarters see it as a bailout of EcoW-
orld with taxpayers’ money.
Azmil: This is not a bailout. The main
premise for this proposed merger is for
UEM Sunrise and EcoWorld to leverage
off each other’s strengths. These include
UEM Sunrise’s sizeable landbank and
EcoWorld’s excellent execution capabil-
ities and track record, to create a best in
class property developer with strong ca-
pabilities in every segment of the indus-
try for the benefit of all shareholders and
property buyers.
EcoWorld had healthy unbilled sales of
date to fill the position of its GCEO.
Fakhrunniam, currently FGV Hold-
ings Bhd’s group investment officer, was
appointed as interim MSM CEO when
Khairil was placed on his leave of absence.
At the time of his appointment, Fakhrun-
niam was also tasked to conduct a compre-
hensive review of the production record-
ing and reporting system for MSM Johor.
Shares in MSM finished unchanged at
46.5 sen today, giving the group a market
capitalisation of RM326.89 million. It saw
200,000 shares transacted.
up to RM3.4 billion as at Aug 31, 2020;
its net gearing was reduced from 0.7x in
October 2019 to 0.6x in July 2020. In
addition, EcoWorld’s April to mid-June
sales of RM642 million were higher than
the second quarter 2020 peer average of
RM257 million. EcoWorld’s current net
debt to unbilled sales of 0.9x is lower com-
pared to UEM Sunrise’s 1.6x and peer
average of 1.3x.
The Edge: How confident are you that
the proposed merger will materialise
despite the criticisms against it?
Azmil: This is a proposal for the respec-
tive boards of directors of UEM Sunrise
and EcoWorld to consider, and we hope
they will see the commercial benefits of
this merger, just as we do.
The Edge: Do you expect more con-
solidations ahead in the property in-
dustry?
Azmil: We wouldn’t be surprised if we do
end up seeing more consolidations in the
industry. Such consolidations will make
more sense for players with complemen-
tary capabilities and strengths that can de-
liver synergies and create more value for
shareholders.
 T U E S D AY O C T O B E R 6 , 2 0 2 0
T
hey say there is no such thing as a free lunch
and that if something sounds too good to be
true, it probably is. But is this always the case?
When life and general insurer Allianz Malaysia
Berhad (Allianz Malaysia) launched its Allianz We
Care Community initiative in June, many people
were sceptical.
The programme provides complimentary Cov-
id-19 coverage and healthcare benefits not only
to Allianz Malaysia’s own customers but also to
non-customers with “no strings attached”, says Jo-
seph Gross, CEO of Allianz Life Insurance Malaysia
Bhd, a subsidiary of Allianz Malaysia.
“There’s no catch. Our objective is to build a
community, especially in these trying times,” he
tells The Edge in a recent interview.
According to him, the initiative — the first of
its kind by Allianz Malaysia, provides Malaysians
aged 18 and above with three types of compli-
mentary Covid-19 coverage.
Categorised as Standard, Advanced and Pre-
mium, these coverage, which are valid from June
1 to Dec 31, include cash relief upon diagnosis of
Covid-19 and hospitalisation as well as death ben-
efits to the next of kin in the event the recipient
succumbs to the viral disease.
For non-Allianz Malaysia customers, the cash
aid for Covid-19 diagnosis and hospitalisation is
RM1,000, while Allianz Malaysia customers can
9 THEEDGE CEO MORNING BRIEF
Allianz Malaysia
launches ‘We
Care Community’
programme with
no strings attached
receive up to RM6,000. The death benefit, mean-
while, is set at RM8,000 and RM20,000 respectively.
To be entitled to the benefits, one only needs
to sign up for the programme on Allianz Malaysia’s
official website, says Gross.
“We often get asked, ‘Are there strings attached?’
or ‘Are you asking me to sign up for a policy?’ My
answer is absolutely not. You can take my word for
it,” says Gross.
Apart from the cash relief and death benefit, the
We Care Community programme, which has been
extended to Dec 31 from July 31, also provides sev-
eral other medical-related services.
These services include access to a medical enquiry
hotline, free general practitioner consultation, a com-
plimentary one-hour online physiotherapy session
and a general health screening with 50% discount.
In fact, except for the Covid-19 coverage, Gross
says all the current benefits are valid till 31 Decem-
ber 2020. We will try to introduce more new services
and benefits.
“The reason for launching this initiative was the
huge insecurity in society because of the pandemic.
There were so many concerns and questions unan-
swered. On top of that, no one could really tell how
long the pandemic was going to last.
“So we thought, it’s our duty to give a bit of re-
assurance to the community. Can I resolve the inse-
curity in Malaysian society? Of course not. It would
be arrogant to say that. But as an insurance com-
pany, we knew we could do something about it.
“We wanted the public to know that we have
their backs covered and that if anything happened
to them because of Covid-19, they would get the
necessary protection needed. It would at least bring
the anxiety level down a little bit,” says Gross, who
has been in the insurance business for 20 years.
According to a survey by data, insights and
consulting firm Kantar, 55% of Malaysians were
worried about financial security while 35% were
concerned about their health during the second
phase of the Movement Control Order (MCO).
The study also found that 21% of Malaysians
who had no plans to purchase insurance would
consider buying a policy in the near future.
It is worth noting that many countries are
experiencing a resurgence of new Covid-19 cases
after successfully slowing the spread of the coro-
navirus earlier in the year.
In Malaysia, the number of daily cases was
fluctuating between double and triple digits since
last week, after staying in the single to low dou-
ble digits since the Recovery MCO was enforced
on June 10.
In view of this, Gross says the insurer is not
discounting the possibility of extending the We
Care Community’s Covid-19 coverage beyond Dec
31, particularly on a case-by-case basis.
“We will look at it on a case-by-case basis. Is
there a chance that we will extend it? Yes. If the
numbers and the insecurity are still there, there
is a very good chance that we will extend the
Covid-19 coverage into next year.
“So far, we have signed up far above 100,000
[people], without major marketing. My aim is to
get multiple hundreds of thousand people signed
up. The more, the better, because then you will
build a really strong community,” he says.
Gross adds that Allianz Malaysia is looking
at expanding the list of services offered under
the programme to include “concierge services”
for those who are quarantined or hospitalised
due to Covid-19.
 T U E S D AY O C T O B E R 6 , 2 0 2 0
AirAsia Japan ceases ops while speculation
abounds over AirAsia India’s closure
KUALA LUMPUR (Oct 6): AirAsia
Group Bhd announced yesterday that its
33%-owned associate AirAsia Japan Co
Ltd (AAJ) is ceasing operations due to
“highly challenging operating conditions”.
In a statement to the stock exchange,
the low-cost carrier said it had been noti-
fied of the decision taken by the board of
directors of AAJ to stop operations with
effect from today.
“We respect and have agreed to the
decision made by AAJ, as this would reduce
the cash burn of AAJ and the company,
amid the highly challenging operating con-
ditions in Japan which have been aggra-
vated by the Covid-19 pandemic that has
plagued the world since early this year,”
AirAsia said.
In a separate statement, AAJ said travel
restrictions and uncertainties due to the
pandemic have severely curtailed demand
for business and leisure travel, resulting
in flight reductions, cancellations and
grounding of aircraft.
“These factors have weighed heavily on
the company's ability to continue opera-
tions,” the airline said.
AAJ, which owns three aircraft, has
since its incorporation in July 2014, been
operating domestic and international
flights from its base in the Chubu Cen-
trair International Airport in Nagoya.
AAJ stressed that the cessation only af-
10 THEEDGE CEO MORNING BRIEF
H O M E
BY TAN SIEW MUNG
theedgemarkets.com
fects its domestic and international flights
operations in Japan with the letter code DJ,
and does not affect flights into and out of
Japan operated by other airlines within the
AirAsia Group.
“International services to Japan, from
Malaysia,Thailand and the Philippines will
resume in the future, after travel restric-
tions are lifted and borders with Japan are
reopened,” AAJ said.
Separately, Bloomberg reported that a
local aviation minister in India said over
the weekend that AirAsia is closing its affil-
iate operations in India, a comment which
his office later suggested was taken out of
context.
“AirAsia’s shop is anyway shutting
down,” Hardeep Singh Puri said in tele-
vised comments that were widely circulated
on social media. “Their parent company
has problems.”
A spokesman for AirAsia India, which
is majority owned by Indian conglomer-
ate Tata Group, declined to comment, the
news agency wrote. A spokesman for the
civil aviation ministry said Puri’s comments
were taken out of context and that he had
immediately clarified them, it added.
AirAsia India started flying in 2014
with the promise of breaking even in four
BLOOMBERG
months. But it has never made money in
what is one of the world’s most difficult
markets, where high fuel taxes and cut-
throat fares often make operations unprof-
itable, Bloomberg wrote, adding the carrier,
which has a market share of 6.8%, employs
more than 3,000 people in the country.
It further quoted a report by the Times
of India on Monday, which wrote that
Tata Sons is reviewing the joint venture
with AirAsia, and is in talks to buy out
the 49% stake the Malaysian firm holds
in the Indian affiliate. The report, quoting
an unnamed source, wrote that AirAsia
is not keen on infusing more funds into
the venture and instead wants it to take
on debt.
Meanwhile, financial woes aside, the
news agency noted that India’s aviation
regulator suspended two senior executives
at AirAsia India in August this year, after
a pilot claimed there were safety lapses at
the airline.
Indian officials are also investigating
AirAsia chief executive officer Tan Sri Tony
Fernandes and other officials for alleged-
ly paying bribes to influence local policy,
it added.
AirAsia shares closed 1 sen lower at 65
sen today, giving it a market capitalisation
of RM2.16 billion.Year to date, the stock
has fallen over 60% from when it was trad-
ing at RM1.70.
 T U E S D AY O C T O B E R 6 , 2 0 2 0
KUALA LUMPUR (Oct 5): Securities
Commission Malaysia (SC) said the funds
raised by alternative fundraising chan-
nels such as equity crowdfunding (ECF)
and peer-to-peer (P2P) platforms have
breached the RM1 billion mark this year,
benefitting more than 2,500 small and me-
dium enterprises.
During his welcome remarks for the
SCxSC Fintech Conference today, SC
chairman Datuk Syed Zaid Albar said these
platforms are more widely accepted today
as an avenue to raise funds.
He pointed out that investors under the
age of 35 accounted for 60% of individ-
ual investors on these platforms, with the
presence of retail investors, which consti-
tute 84% of participating investors, further
underscored the appeal of these platforms.
“Despite this challenging environment,
it is encouraging that investors have contin-
ued to show confidence in the Malaysian
capital markets.
“We have seen a considerable increase
in individual investor participation via dig-
ital investment managers, ECF and P2P
financing platforms, digital asset exchanges
(DAXs) and online brokers. So, the retail
participation in this challenging environ-
ment has only increased,” said Syed Zaid.
He said the SC had issued three more
digital investment management licences this
year, bringing the total to seven and that
these digital investment managers have at-
KUALA LUMPUR (Oct 5): FGV Hold-
ings Bhd said it working towards resolving
issues related to the ban on the company’s
palm oil in the US and getting the US Cus-
toms and Border Protection’s (CBP) with-
hold release order (WRO) against palm oil
and palm oil products made by the planta-
tion group lifted as soon as possible.
FGV said in an emailed statement in
response to queries from theedgemarkets.
com that it is unable, at this stage, to pro-
vide a definitive timeline to resolve issues
related to the ban, but the company expects
the matter to be resolved in several months.
“We hope to meet with the CBP as soon
as possible. At the moment, we are not
in the position to indicate when such a
meeting will take place as that depends
on the CBP.
“There is not much information about
the sort of evidence needed for the lifting
of the WRO. Information that is available in
this regard is rather vague.Therefore, getting
clarification from the CBP on this matter is
a priority for FGV, so that we could submit
to the CBP the necessary evidence.
“Since August 2019, FGV has been
submitting information about its efforts
and initiatives in enhancing its labour
11 THEEDGE CEO MORNING BRIEF
H O M E
SC: Funds raised
via ECF, P2P
platforms breach
RM1b mark
BY AHMAD NAQIB IDRIS
theedgemarkets.com
tracted many first-time investors, with close
to 90,000 new accounts opened this year.
Demand for online brokerage services
have also increased, with new account
openings through online-only brokers
growing by more than 270% year-on-
year. The average trading volume has also
tripled this year.
FGV hopes to
lift US ban on
its palm oil,
products as soon
as possible
BY ARJUNA CHANDRAN SHANKAR
theedgemarkets.com
practices to the CBP through our legal
counsel.We will indeed continue to engage
and communicate with the CBP to provide
them with additional information and evi-
dence of the various programmes we have
carried out and continued to implement to
enhance our labour practices,” FGV said.
LastWednesday (Sept 30), the CBP said in
a statement that effective from the same day,
at all US ports of entry, the CBP would de-
tain palm oil and palm oil products made by
FGV, its subsidiaries or joint ventures (JVs).
The CBP said its Office of Trade di-
rected the issuance of the WRO against
The SC had also approved three DAXs
last year, with all three already going live,
with four digital assets permitted for trad-
ing on these platforms. More than 400,000
accounts have been opened across the three
DAXs, with the value of trades surpassing
RM100 million in August.
However, he noted that the risks that
come with increased technology adoption
need to be recognised. He added that the
SC remains vigilant and will continue to en-
hance the market’s cyber-resilience, particu-
larly against cyber-attacks and online scams.
Market intermediaries also need to play
their parts and complement the SC’s sur-
veillance by ensuring the resilience of their
own cyber risk management frameworks
and data protection protocols.
“I’d like to take this opportunity to re-
mind investors once again to exercise com-
mon sense.Verify the individual or company
offering capital market products or servic-
es — that they are on SC’s public register.
“Please also help us by reporting any
suspicious activities. As you know, the
number of online scams is increasing, so
investors must avoid being deceived in their
search for yield in this low interest rate
environment,” Syed Zaid said.
Read also: Covid-19 lockdown acceler-
ates fintech growth, acceptance, say digital
players. Click here
palm oil and palm oil products made by
FGV based on information that reasona-
bly indicates alleged use of forced labour.
“The order is the result of a year-long
investigation that revealed forced labour
indicators, including abuse of vulnerabil-
ity, deception, restriction of movement,
isolation, physical and sexual violence, in-
timidation and threats, retention of identi-
ty documents, withholding of wages, debt
bondage, abusive working and living con-
ditions, and excessive overtime. The inves-
tigation also raised concerns that forced
child labour is potentially being used in
FGV’s palm oil production process,” the
CBP alleged.
Brenda Smith, an executive assistant
commissioner of the CBP’s Office of Trade,
alleged in the statement that “the use of
forced labour in the production of such a
ubiquitous product allows companies to
profit from the abuse of vulnerable workers”.
On Bursa Malaysia today, FGV’s share
price was up one sen or 0.97% at RM1.04
as at the time of writing, giving the com-
pany a market capitalisation of about
RM3.76 billion.
The counter saw 2.56 million shares
traded.
 T U E S D AY O C T O B E R 6 , 2 0 2 0 12 THEEDGE CEO MORNING BRIEF

H O M E

NEWS IN BRIEF

Guan Chong to raise up to RM800m Foreign selling rose to RM1.43b in

via sukuk for overseas expansion September — MIDF Research
KUALA LUMPUR (Oct 5): Guan Chong Bhd KUALA LUMPUR (Oct 5): Foreign selling
plans to raise up to RM800 million via sukuk of local equities on Bursa Malaysia rose
to support the expansion of its international to RM1.43 billion in September from
operations. In a bourse filing, the cocoa RM1.19 billion in August, according to
grinder said it is establishing a 20-year- MIDF Research. In its weekly fund flow
tenure Islamic Medium Term Notes (Sukuk report today, the MIDF Research team said
Wakalah) Programme for that. The first foreign investors sold RM543.91 million
tranche of issuance is expected to amount net in the first week of October. If this trend Tafi shareholders advised to accept
up to RM300 million, which will go towards continues, there could be a higher foreign new controlling shareholder’s
funding its new cocoa grinding facility in fund outflow in the month of October, it takeover offer
Cote d’Ivoire, which aims to start operations said. “Last week, retailers were net sellers KUALA LUMPUR (Oct 5): Minority
in the second half of 2021. “The programme of RM171.54 million worth of equities, with shareholders of Tafi Industries Bhd have
would also support our expansion in Europe, local institutions at RM715.48 million net... been advised to accept the 50 sen per share
following our acquisitions of industrial This marked the second consecutive week of takeover offer from its new controlling
chocolate provider Schokinag in Germany, local institutions as net buyers on Bursa,” it shareholder Armani Synergy Sdn Bhd, who
and the land and building in the United said. It also marked the second consecutive emerged in the group after acquiring a
Kingdom,” said Guan Chong managing week of net selling by retailers as they exited 51.01% stake last month. In its independent
director and chief executive officer Brandon the market en masse, albeit with a smaller advice circular to the minorities, BDO
Tay Hoe Lian. Guan Chong’s gross gearing outflow, it said, adding this could be due to Capital Consultants recommended
stood at 0.6 times as at June 30, 2020, the ending of the loan moratorium. — by shareholders accept the offer as it found
which will rise to 0.8 times after the first Surin Murugiah/theedgemarkets.com the offer “reasonable”, though “not fair”. The
issuance. The programme has been assigned offer is deemed not fair because, among
a preliminary rating of AA-IS with a stable Westports gets RM120m tax bill others, it is at a discount of 18% or 11 sen
outlook by Malaysian Rating Corporation from IRB to the estimated fair value per Tafi share
(MARC). — by Justin Lim/theedgemarkets.com KUALA LUMPUR (Oct 5): Westports of 61 sen. However, the offer is deemed
Holdings Bhd’s wholly owned Westports reasonable as it presents shareholders an
JF Technology plans bonus issue, Malaysia Sdn Bhd (WMSB) has been opportunity to realise their investment in
with free warrants slapped with a RM120.58 million bill by the Tafi shares. Although the offeror intends
KUALA LUMPUR (Oct 5): JF Technology Inland Revenue Board (IRB) for additional to maintain Tafi’s listing status, it said Tafi
Bhd has proposed a bonus issue with free tax liabilities, inclusive of penalties, for shares are relatively illiquid compared
warrants, to be issued on the basis of years of assessment from 2013 to 2018. to the trading liquidity of Bursa Malaysia
three bonus shares and two free warrants The port operator said the additional tax Consumer Product Index, and in the
for every one JF Tech share held at an assessment is in relation to the annual absence of competing offers. — by Tan Siew
entitlement date to be fixed, the group said lease payment made by WMSB to the Port Mung/theedgemarkets.com
in a stock exchange filing. The issuance will Klang Authority (PKA) totalling RM299.9
involve up to 693 million bonus shares and million, which it has assessed as not Econframe to raise RM18.2m
462 million free warrants. The exercise allowable for tax deduction. It also involves from IPO
price of the warrants is yet to be fixed. The a deferred revenue of RM7.97 million in KUALA LUMPUR (Oct 5): ACE Market-
proposal is expected to be completed in 2018, Westports said in a bourse filing. The bound total door system solution provider
the fourth quarter of 2020. JF Tech’s share group, however, said WMSB has obtained Econframe Bhd, which is slated to be listed
price hit its all-time high of RM4.31 on Aug confirmation from its tax advisors and legal on Oct 27, aims to raise RM18.2 million from
24. It closed at RM3.83 today, giving it a advice from tax solicitors to contend that its initial public offering (IPO) for expansion.
market capitalisation of RM964.62 million. IRB’s interpretation is erroneous. Hence, Of that, RM5 million will be used for land
Year-to-date, the counter has jumped 152% WMSB will appeal and contest the notice of acquisition and to build a new manufacturing
from when it was trading at RM1.52. — by additional assessment, said Westports. — by facility, RM4 million for investment in
Justin Lim/theedgemarkets.com Wong Ee Lin/theedgemarkets.com manufacturing automation, RM6.2 million
for working capital and the remaining RM3
million for estimated listing expenses. The
MAVCAP appoints Shahril Anas as CEO IPO entails an issuance of 65 million new
KUALA LUMPUR (Oct 5): Malaysia Venture Capital Management Bhd (MAVCAP) has shares and an offer for sale of 32.5 million
appointed Shahril Anas Hasan Aziz as its chief executive officer, effective Oct 1. existing shares at 28 sen per share. “We
In a statement, MAVCAP said Shahril has over 25 years of experience in the intend to acquire a new piece of land and
investment industry, including venture capital (VC). Having joined MAVCAP subsequently construct a manufacturing
in 2015, Shahril has played an instrumental role in collaborating with foreign plant to house all our facilities under one
partners and corporate partners to create VC funds, known as the Strategic roof. This will significantly improve our
Funds model, generating more funds in the ecosystem, it said. Before operational efficiency and productivity as
MAVCAP, Shahril worked with the Employees Provident Fund, Malaysia compared to having four separate factories,”
Technology Development Corporation and Unit Peneraju Bumiputera said Econframe managing director Lim Chin
(TERAJU), among others. — by Surin Murugiah/theedgemarkets.com Horng in a statement. — by Tan Siew Mung/
theedgemarkets.com
T U E S D AY O C T O B E R 6 , 2 0 2 0 13 THEEDGE CEO MORNING BRIEF
 T U E S D AY O C T O B E R 6 , 2 0 2 0
Malaysia’s daily
Covid-19 cases hit
new record of 432
BY SYAFIQAH SALIM
theedgemarkets.com
KUALA LUMPUR (Oct 5): Malaysia’s
new Covid-19 cases surged to 432 today
— a new record high since the pandem-
ic began in early January, the Ministry of
Health (MOH) reported.
The previous highest figure for daily
infections was 317, recorded last Saturday.
This is also the fifth straight day that Ma-
laysia reports triple-digit new infections since
the start of this month, with 260 cases on
Oct 1.
With today’s cases, the total number of
Covid-19 cases reported in the country has
risen to 12,813, MOH director-generalTan Sri
Dr Noor Hisham Abdullah said in a statement.
The total number of active cases
breached the 2,000 mark again today to
reach 2,336.
Of these, 32 patients are in intensive
care units, including eight who require
respiratory assistance.
The last time active cases stood above
2,000 was April 15, with a total of 2,342.
Of the 432 new cases, 429 were locally
Trump’s trip from hospital to wave at
fans endangers others, doctor warns
WASHINGTON (Oct 5): U.S. President
Donald Trump briefly left the military hospital
where he is being treated for COVID-19 in a
motorcade on Sunday to wave to supporters
gathered outside, sparking criticism that
he was putting others at risk for a political
stunt. Trump was captured on video waving
from the back seat of a black SUV Sunday
evening, wearing a mask, as crowds cheered
and waved American flags and pro-Trump
banners outside Walter Reed National
Military Medical Center in the Washington
suburb of Bethesda, Maryland. Two people
could be seen in the vehicle’s front seats. “The
movement was cleared by the medical team
as safe to do,” said White House spokesman
Judd Deere. “Every single person in the
vehicle during that completely unnecessary
Presidential ‘drive-by’ just now has to be
quarantined for 14 days,” James Phillips, an
attending physician at Walter Reed said on
Twitter. “They might get sick. They may die.
For political theater.” — Reuters
14 THEEDGE CEO MORNING BRIEF
H O M E
Malaysia’s Covid-19 new daily cases breach new highs
Number of new daily cases
500
400
300
200
100
0 0
Aug 1, 2020
transmitted infections involving 409 Malay-
sians and 20 foreigners, said Noor Hisham.
The remaining three imported cases in-
volved two Malaysians and one foreigner.
They recently returned from India, Kuwait
and Myanmar.
Noor Hisham said 224 of the locally
transmitted cases were from the Tembok
cluster in Kedah, while 29 cases comprised
returnees from Sabah.
This brought to 235 the total number
of cases involving those who had travelled
to Sabah since Sept 20.
Elaborating on the breakdown of new
cases today, Noor Hisham said Kedah
topped the list with 241 cases, followed
by Sabah with 130, Selangor (34), Tereng-
ganu (five) and Kuala Lumpur (five).
Labuan registered four cases, followed
by Johor (two), Perak (two), Putrajaya
(two), Negeri Sembilan (one), Pahang
(one), Melaka (one) and Kelantan (one).
NEWS IN BRIEF
Japanese fashion designer Kenzo
Takada dies from Covid-19
PARIS (Oct 5): Japanese fashion designer
Kenzo Takada, better known as Kenzo,
who created his label in Paris in the 1970s,
died on Sunday, the brand that still carries
his name said. Aged 81, Takada died of
complications linked to COVID-19 at the
American Hospital of Paris in Neuilly-sur-
Seine, a residential suburb on the western
outskirts of the capital, his spokesman told
French media. Known for his colourful
motifs and original silhouettes, which
mixed inspirations from Japan, such as
the kimono, with other cuts, Takada also
branched into perfumes and skincare
lines, helping his business boom. He had
retired from his eponymous label several
decades ago, however, after selling it to
LVMH, the world’s biggest luxury group, in
the early 1990s. Confirming his death in a
statement on Instagram, the Kenzo brand
paid tribute to his use of colour, and said
the label was still inspired by his zest for
life and optimism. — Reuters
7-day moving average on new daily cases
300
250
200
150
100
50
Oct 5, 2020
To date, the ministry said Kuala Lumpur
has the highest number of infections in the
country with 2,701 cases, followed by Sabah
with 2,519 cases, Selangor (2,412), Negeri
Sembilan (1,055) and Kedah (1,050).
Meanwhile, 57 Covid-19 patients were
discharged in the 24 hours as of noon to-
day, bringing total recoveries to date to
10,340 or 80.7% of total cases.
The Covid-19 death toll remained at
137 for the second consecutive day, as no
new deaths were reported.
Read also:Two new Covid-19 clusters report-
ed in Kedah, one in Terengganu. Click here
CMCO for Kota Kinabalu, Penampang,
Putatan starting Oct 7. Click here
Sabah asks for tighter measures to curb
Covid-19. Click here
Paris bars to close as French capital
placed on maximum Covid-19 alert
PARIS (Oct 5): Paris is to be placed on
maximum COVID-19 alert, meaning bars
will be forced to close for two weeks from
Tuesday and restaurants will have to put in
place new sanitary protocols to stay open,
the prime minister’s office said. Prime
Minister Jean Castex’s office said there had
been no improvement in the Paris region
since the capital passed all three of the
government’s criteria for being put on the
highest level of alert mid last week. Working
from home should be prioritised “now more
than ever” in the Paris area and university
lecture halls should be no more than half
full, Castex’s office said in a statement.
The reinforced restrictions will take effect
from Tuesday. For a city to be placed on
maximum alert, the incidence rate must
exceed 100 infections per 100,000 among
elderly inhabitants and 250 per 100,000
among the general public, while at least
30% of intensive care beds are reserved for
coronavirus patients. — Reuters
 T U E S D AY O C T O B E R 6 , 2 0 2 0
Final two prosecution witnesses to testify
in Rosmah’s solar hybrid power graft trial
KUALA LUMPUR (Oct 5): An official
from the Prime Minister’s Department
(PMD) and the Malaysian Anti-Corrup-
tion Commission (MACC) investigating
officer (IO) in Datin Seri Rosmah Man-
sor’s solar hybrid graft case are the final
two witnesses to be called by the prose-
cution before it closes its case.
However, the defence could not call
former education minister Datuk Seri
Mahdzir Khalid for cross-examination
today as the Umno vice president is
under quarantine following his return
from Sabah after campaigning in the
state elections.
Senior deputy public prosecutor
(DPP) Datuk Seri Gopal Sri Ram in-
formed High Court judge Justice Mo-
hamed Zaini Mazlan that since Mahdzir
would finish his quarantine on Oct 12,
he suggested that the former minister
come on Tuesday (Oct 13) afternoon.
“Mahdzir is scheduled to undergo
his third Covid-19 test on Wednesday
and results [will] only [be] obtained
on Thursday. Hence, I propose that
the 1Malaysia Development Bhd au-
dit trial which is fixed for the [whole]
of next week, that we take that Tuesday
afternoon for Mahdzir’s evidence to be
heard,” he said.
“This is to get this case over and done
with that testimony,” said Sri Ram, who
is also a former Federal Court judge.
Rosmah’s lawyers Datuk Jagjit Singh
and Datuk Akberdin Abdul Kader said
they would have to look at their diaries
and inform the court tomorrow if this
is possible.
Meanwhile, PMD’s chief assistant
secretary for Human Resources Nory-
usran Sairan testified about former Ros-
mah’s aide Datuk Rizal Mansor’s service
record during examination-in-chief by
DPP Poh Yih Tin.
During cross-examination by Akber-
din, Noryusran agreed that Rizal initially
served at the First Lady of Malaysia unit
and was later placed under the Special
Functions Unit. He also concurred that
Rizal’s last drawn salary was in excess
of RM7,000.
When re-examined by DPP Ahmad
Akram Gharib, Noryusran agreed that
Rizal worked for Rosmah and identified
former prime minister Datuk Seri Na-
jib Razak’s wife, who was seated in the
accused dock.
Meanwhile, MACC IO Noornabilah
15 THEEDGE CEO MORNING BRIEF
H O M E
BY HAFIZ YATIM
theedgemarkets.com
PHOTOS MOHD IZWAN MOHD NAZAM/THE EDGE
Prime Minister’s Department chief assistant
secretary for Human Resources Noryusran Sairan
is one of the final two witnesses to testify in
Rosmah’s solar hybrid power graft trial.
Datin Seri Rosmah Mansor at the Kuala Lumpur
Court Complex on Oct 5.
Mohd Aziman, 30, told the court that she
lodged a report against the former pre-
mier’s wife on Nov 9, 2018 based on an
earlier investigation as she was suspected
to have received bribe money from Jepak
Holdings Sdn Bhd to help the company
secure the solar hybrid project worth
RM1.25 billion via direct negotiations.
Rosmah was charged six days after
the report was lodged.
Noornabilah, who was answering
questions from DPP Idham Abdul
Ghani, said that following the report,
the MACC obtained various documents
related to the case including from the
Education Ministry, Finance Minis-
try, Maybank Jalan Tuanku branch and
CIMB Bintulu branch.
She also verified that the two Maybank
cheques for RM5 million and RM1.5
million were issued by former Jepak
managing director Saidi Abang Sam-
sudin dated Dec 20, 2016 and Sept 7,
2017.
These cash, as per testimonies by Sai-
di and Jepak consultant Rayyan Radzwill
Abdullah, was given to Rosmah.
Rosmah, 68, is facing three counts
of graft, namely soliciting a RM187.5
million bribe from Jepak’s Saidi, and re-
ceiving the total RM6.5 million in bribe
money from Saidi.
Noornabilah further testified of the
various documents including letters from
Jepak, the notation done by Najib, the
former premier’s letters and memos to
the Education Ministry, various text
messages from Rayyan to former Ed-
ucation Ministry secretary-general Tan
Sri Madinah Mohamad, Mahdzir and
Datuk Seri Alias Ahmad, who was Mad-
inah’s successor.
She also identified sketches of Ros-
mah’s house and pictures taken of where
the money-exchange took place.
All in all, previous documents which
were marked for identification were now
marked as evidence after Noornabilah
revealed where she retrieved the docu-
ments from.
Also tendered as evidence was a CD
recording of a covert conversation be-
tween Rosmah and Najib and the tran-
script. The conversation was among
those revealed by former MACC chief
commissioner Latheefa Koya.
The hearing before Justice Zaini con-
tinues tomorrow with Noornabilah’
cross-examination.
 T U E S D AY O C T O B E R 6 , 2 0 2 0
Ex-spy chief
objects to trial
behind closed
doors
BY TIMOTHY ACHARIAM
theedgemarkets.com
KUALA LUMPUR (Oct 5): Former Ma-
laysian External Intelligence Organisation
(MEIO) director-general Datuk Hasanah
Abdul Hamid has objected to the prosecu-
tion’s bid to have ‘in-camera’ proceedings
for parts of her criminal breach of trust
(CBT) trial, which is yet to commence.
The prosecution today made an appli-
cation to the High Court to have 11 of its
37 witnesses in the trial be heard ‘in-cam-
era’, as it involves divulging national se-
curity issues. An in-camera proceeding is
a proceeding carried out in private, in the
absence of the public and the press.
Hasanah’s lawyer Hamdan Hamzah,
however, argued today that ‘in-camera’
proceedings would be prejudicial to his
client, and that there was no evidence to
support the claim that the 11 witnesses’
testimonies would be threatening to na-
tional security.
“This blanket ban will be detrimental to
the rights of the accused,” he said before
High Court Judicial Commissioner Datuk
Ahmad Shahrir Mohd Salleh.
He also said there was no proof that
diplomatic ties with other nations will be
affected by having the witnesses testify in an
open court, as adduced by the prosecution.
On the other hand, he said the defence
KUALA LUMPUR (Oct 5): The 1Ma-
laysia Development Bhd (1MDB)-Tan-
ore trial involving ex-prime minister Da-
tuk Seri Najib Razak has been postponed
or vacated till Oct 19, 2020 as he is under
voluntary self-quarantine at home after he
returned from campaigning at the state
election in Sabah, which has seen an in-
crease in Covid-19 infections.
High Court Judge Collin Lawrence Se-
querah had set Oct 19 as the next trial date
after Najib’s lawyer Tan Sri Muhammad
Shafee Abdullah informed the court to-
day about the former premier’s current
situation.
The Sabah state election was held on
Sept 26.
Muhammad Shafee told Justice Seq-
uerah that Najib, who had returned from
Sabah on Sept 27, is undergoing volun-
16 THEEDGE CEO MORNING BRIEF
H O M E
will be handicapped if the identities, roles
and testimonies of the 11 witnesses are
not disclosed prior to the start of the trial.
He also said the court should decide if
the testimonies constitute a threat to na-
tional security.
He was rebutting arguments put forth
by Deputy Public Prosecutor Muhamad
Iskandar Ahmad, who argued that because
this is a “highly covert” agency, the testi-
monies of the witnesses in question could
negatively impact the country.
Muhamad Iskandar said the role and
duties of the organisation would be laid
bare before the public and would jeop-
ardise the workings of the agency. “The
witnesses’ identities will be revealed and
there will possibly be threats on their lives,”
he said.
He also said Malaysia’s foreign intelli-
gence relationship would be exposed and
if sensitive information like this is public-
1MDB-Tanore
trial postponed
to Oct 19
as Najib under
self-quarantine
BY TIMOTHY ACHARIAM
theedgemarkets.com
ly disclosed, it could significantly impact
diplomatic ties.
Following the prosecution and defence
submissions today, Justice Ahmad Shahrir
said he will decide on the matter tomorrow.
Hasanah is alleged to have committed
CBT by misappropriating RM50.4 million
(US$12.1 million) in funds belonging to
the Malaysian government.
On Oct 25, 2018, the ex-spy chief
pleaded not guilty in the Sessions Court
to the CBT charge.
Hasanah allegedly committed the of-
fence at the office of the director-gener-
al, Research Division, Prime Minister’s
Department Complex, Federal Govern-
ment Administrative Centre in Putrajaya
between April 30 and May 9, 2018.
She was charged under Section 409 of
the Penal Code, which carries a maximum
jail term of 20 years, whipping and fine,
upon conviction.
tary quarantine at home for 14 days.
The lawyer said Najib’s quarantine pe-
riod will end next Monday (Oct 12).
Explaining the court’s decision to post-
pone the trial, Justice Sequerah said: “In
the light of the current situation, it’s a bit
of a risk. It could be nothing, but the symp-
toms can manifest on the 13th day.”
The judge subsequently asked Muham-
mad Shafee if Najib was granted a home
surveillance order but the lawyer said his
client was not granted one.
In the 1MDB-Tanore trial, Najib is
facing four counts of abuse of power for
using his position as the then prime min-
ister, finance minister and 1MDB board
of advisers chairman to receive gratifica-
tion worth RM2.28 billion. He also faces
21 counts of money laundering involving
over RM4.3 billion.
 T U E S D AY O C T O B E R 6 , 2 0 2 0 17 THEEDGE CEO MORNING BRIEF

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 T U E S D AY O C T O B E R 6 , 2 0 2 0
US service industries expand more
than forecast on orders
NEWYORK (Oct 5): US service industries
expanded in September by more than fore-
cast as faster growth in new orders and a
pickup in employment pointed towards a
better pace of economic recovery.
The Institute for Supply Management’s
(ISM) services index, which represents
about 90% of the economy, climbed to
57.8 during the month from 56.9 in Au-
gust, according to data released today.
Readings above 50 indicate expansion,
and the September figure exceeded the
56.2 median estimate in a Bloomberg sur-
vey of economists.
Improving orders and business activity
are encouraging more service providers to
add to headcounts. The figures, in combi-
nation with an improvement in the group’s
manufacturing gauge, suggest the econom-
ic rebound is gradually broadening, even if
18 THEEDGE CEO MORNING BRIEF
W O R L D
BY JARRELL DILLARD
Bloomberg
Improving orders and
business activity are
encouraging more
service providers to
add to headcounts.
activity remains below pre-pandemic levels
in various sectors.
“Respondents’ comments remain mostly
optimistic about business conditions and
the economy, which correlates directly to
those businesses that are operating,” An-
thony Nieves, chair of the ISM Services
Business Committee, said in a statement.
BLOOMBERG
“There continues to be capacity and logistics
issues, as business volumes have increased.”
Sixteen service industries reported
growth in September, including enter-
tainment and recreation, transportation,
healthcare, and real estate. Professional,
scientific, and technical services was the
only industry reporting a decrease.
The ISM’s measure of services employ-
ment jumped 3.9 points to 51.8, marking
the first time since the onset of the pan-
demic that the gauge has shown expansion.
The ISM report does not detail the ac-
tual levels of activity from one month to
the next since the survey asks purchasing
managers whether activity is increasing,
decreasing, or stagnant.
A report last Friday from the Depart-
ment of Labor showed job growth slowed
in September, with employers adding a
less-than-forecast 661,000 jobs. The fig-
ure was restrained by a 280,500 decline in
state and local education payrolls.
Federal government “stimulus is nec-
essary”, Nieves said on a call with report-
ers. “It’s a big issue right now, not only for
the consumer, but all the associated type
of funding that would come from that.”
The ISM’s index of new orders at service
providers increased 4.7 points to 61.5. The
measure of service-related business activity,
which parallels the ISM’s factory produc-
tion index, rose to 63 from 62.4, marking
the fourth month of robust readings.
The group’s gauge of exports expand-
ed at a slower rate in September, indi-
cating cooler overseas demand. Invento-
ries at service providers also shrank for
a second month.
 T U E S D AY O C T O B E R 6 , 2 0 2 0
Saudi Arabia
pegs budget to oil
at around US$50,
Goldman says
BY ABEER ABU OMAR & MATTHEW MARTIN
Bloomberg
(Oct 5): Saudi Arabia’s Finance Ministry
is budgeting for oil prices to be around
US$50 a barrel for the next three years,
according to a Goldman Sachs Group Inc.
analysis of the kingdom’s fiscal plans.
“Using our own estimates for the break-
down of government revenues, we calculate
that the numbers presented in the budget
statement are based on an average oil price
of around US$50 a barrel between 2020
and 2023,” said Farouk Soussa, a Lon-
don-based analyst at Goldman, referring
to a pre-budget statement from Sept. 30.
Brent crude fell 6.3% to US$39.27 a
barrel last week as more countries tight-
ened restrictions to counter the coronavi-
rus pandemic and U.S. President Donald
Trump got infected, causing traders to fret
about the outlook for energy demand.
While oil at US$50 would represent
a 25% rise from current prices, it would
still be far below the pre-pandemic level of
around US$65 and less than Saudi Arabia
needs to balance its budget.
Goldman’s calculations are roughly in
line with those of Cairo-based investment
Singapore extends
pandemic-
induced loan
relief measures
into 2021
BY CHEN LIN
Reuters
SINGAPORE (Oct 5): Singapore said to-
day it would extend relief programmes on
mortgages and loans for individuals and
small firms into next year because of the
prolonged impact of the coronavirus pan-
demic.
The programmes, which include de-
ferrals on mortgage payments and lower
interest rates on loans, were introduced
19 THEEDGE CEO MORNING BRIEF
W O R L D
bank EFG Hermes, which said Saudi Ara-
bia is basing next year’s budget on an oil
price of US$50 to US$55. Goldman is
itself more bullish, forecasting that Brent
will climb to US$65 by the end of 2021.
Saudi officials expect the country’s fiscal
deficit to narrow to 5.1% of gross domes-
tic product in 2021 from 12% this year as
they cut spending, according to last week’s
statement.
The kingdom tends to take a relatively
conservative view of crude prices in draw-
ing up its budget and doesn’t divulge its
assumptions, leaving analysts to estimate
them from other projections. The Finance
Ministry didn’t immediately respond to a
request for comment on Sunday.
Saudi Arabia would need oil to trade
at US$66 to balance its budget in 2021,
according to estimates from the Interna-
in April and were set to expire on Dec 31.
“Many individuals and businesses will
continue to experience cash-flow pressures
into early 2021,” the Monetary Authority
of Singapore and associations represent-
ing the city state’s financial industry said
in a statement.
The extended measures will expire in
phases over 2021, they added.
REUTERS
tional Monetary Fund.
Saudi Arabia’s caution on prices comes
as oil giants including BP Plc and Total
SE predict the era of growing global de-
mand for energy is over or coming to an
end barely a decade from now.
That’s especially a concern for countries
such as Saudi Arabia, where oil accounted
for nearly two-thirds of government reve-
nue in 2019. In the second quarter, Saudi
earnings from crude exports dropped to
the lowest on a quarterly basis since at
least 2016, despite the kingdom leading
OPEC’s efforts since May to cut supply
and bolster prices.
“It seems they are assuming some pick-
up next year, but oil income will be flat be-
tween 2021 and 2022, and will only start to
pick up again in 2023,” said Mazen Al-Su-
dairy, head of research at Al Rajhi Capital.
BLOOMBERG
Singapore has spent about S$100 bil-
lion, or 20% of its gross domestic product,
in virus-related relief to support house-
holds and businesses.
The government is introducing a pro-
gramme that provides faster and lower-cost
insolvency proceedings for small firms to
restructure their debts or shut down be-
cause of the pandemic’s impact.
 T U E S D AY O C T O B E R 6 , 2 0 2 0 20 THEEDGE CEO MORNING BRIEF

W O R L D

REUTERS

Indonesia says in
early talks with
Tesla on potential
investment
BY BERNADETTE CHRISTINA MUNTHE
Reuters

JAKARTA (Oct 5): Indonesia’s government

is in early discussions with electric vehicles
maker Tesla Inc about a potential investment
in the Southeast Asia country, a major pro-
ducer of nickel, an official said.
Indonesia is keen to develop a full supply
chain for nickel at home, especially for ex-
tracting battery chemicals, making batteries
and eventually building EVs.
It has stopped exports of unprocessed
nickel ore to support investment in its do-
mestic industries.
Ayodhia Kalake, a senior official at
the Coordinating Ministry for Maritime
and Investment, said Tesla had reached
out to the government informally about
a possible venture, but he did not specify
what it had in mind.
“It was still an early discussion and was
not detailed yet,” Ayodhia said in a state-
ment on Monday.
“We need further discussion with Tesla,”
he said, adding that Indonesia has a number
of incentives for investment in EVs.
Tesla did not immediately respond to a
Reuters email seeking confirmation.
Indonesia last month said it had secured
a deal to build a lithium battery plant in
the country with South Korean LG Chem
Ltd and China’s Contemporary Amperex
Technology Ltd (CATL).
Tesla is looking to ramp up production of
trucks and solar projects and its boss Elon
Musk earlier this year urged miners to pro-
duce more nickel and offered “giant”, long-
term contracts if mined “efficiently and in
an environmentally sensitive way”.
While EVs are expected to help reduce
global carbon emission, activists are con-
cerned that production of EV parts and
increased mining may damage the envi-
ronment.
An Indonesian nickel smelting project
being built by China’s Tsingshan Group and
partners to produce battery-grade chemicals
withdrew a request to dispose of waste in the
ocean, a government official said on Friday.

Vietnam likely to
HANOI (Oct 5): The industry and trade a value of US$54.7 billion, a year-on-year
sector is exerting all-out efforts to achieve the rise of 22.6%.

earn US$300b in
target of US$300 billion in export turnover To achieve US$300 billion in export
this year in the context that the COVID-19 turnover, the Ministry of Industry and

exports this year

pandemic is seriously affecting global trade. Trade worked on a trade promotion plan
According to the Ministry of Industry for 2020-2025, which focuses on potential

— ministry
and Trade’s Import-Export Agency, Viet- and advantageous products.
nam earned US$202 billion from exports The ministry will assist local businesses
in the first nine months of 2020, a year-on- in intensifying exports, especially to South
year rise of 4%. Korea, Japan and China, and continue or-
Of note, the domestic economic sector Bernama ganising virtual business exchanges and
is the driver of the growth as it enjoyed a trade promotion activities.
year-on-year increase rate of 19.5%, with BLOOMBERG

US$71.4 billion, Vietnam news agency

(VNA) reported.
The export value is expected to surge
in the fourth quarter when Vietnam brings
into full play incentives of signed free trade
agreements, especially the EU-Vietnam Free
Trade Agreement (EVFTA) which became
effective on August 1.
In August,Vietnam’s export turnover to
the EU reached US$3.25 billion, up 4.65%
compared to that of July. The turnover in
September also posted a 14.4% surge year-
on-year.
Deputy head of the agency Tran Thanh
Hai said that during January-September,
the US was Vietnam’s largest importer with
 T U E S D AY O C T O B E R 6 , 2 0 2 0
GENEVA (Oct 5): Alibaba Group Hold-
ing Ltd has agreed to buy as much as
a 9.99% stake in Dufry AG, giving the
Swiss duty-free giant a lifeline, as the pan-
demic hammers the business.
Dufry said on Monday that it’s pro-
posing a capital increase that will raise
up to 700 million Swiss francs (US$763
million), and Alibaba will participate. Ad-
vent International Corp, a private equity
company, also plans to invest as much as
455 million francs. Dufry shares surged
as much as 16%.
The Swiss company said the proceeds
from the share sale will help it buy out
its Hudson Ltd’s US unit, as previously
announced.
The capital increase will bolster
the company, whose market value has
dropped to 1.6 billion francs, as the
shares trade near the lowest in a dec-
Japan startup
Freee K.K. surges
300% on demand
for cloud-based
accounting
BY MIN JEONG LEE & TOSHIRO HASEGAWA
Bloomberg
TOKYO (Oct 5): Daisuke Sasaki has seen
his cloud-based accounting company’s val-
uation swell to US$3.7 billion, despite hav-
ing yet to show a profit, but he’s not letting
that pressure him.
Shares of Freee K.K. have quadrupled
since going public on the Tokyo Stock Ex-
change in December, along with rising
demand for cloud services amid the re-
mote-working trend. The stock rose 1.3%
Monday to a new high.
“We don’t have a set timeframe for
when the company will swing to prof-
its,” Sasaki, founder and chief executive
of Freee, said in an interview on Aug 17.
“Our business is about subscription.”
The Tokyo-based firm’s stock is one
of the many technology names that have
surged during Covid-19, fueled by inves-
tor euphoria over stay-at-home and DIY
themes. While the pandemic roiled the
outlook for companies around the world,
US accounting software giant Intuit Inc
beat recent earnings estimates, helped by
better-than-expected growth for its cloud-
based service for small businesses.
Freee has the top shares of the Japanese
21 THEEDGE CEO MORNING BRIEF
W O R L D
Alibaba to buy up
to 10% stake in
duty-free retailer
Dufry
BY THOMAS MULIER
Bloomberg
BLOOMBERG
cloud accounting and human-resources
software markets, according to an August
report from Daiwa Securities Co, with
competitors including Money Forward
Inc Subscriptions to Freee’s flagship ac-
counting service stand at over 220,000,
having grown at more than 50% annually
over the past five years. Its sales surged
53% in the year ended June 30.
Acquiring new users takes priority over
near-term earnings, said Sasaki. He esti-
mates that Japan has a total of about six
million small- to medium-sized enterpris-
es, with only 15% of them currently using
cloud-based accounting. Freee’s goal is to
outpace market growth to be the domi-
nant player.
“We’re still extremely small in terms of
where we could be,” Sasaki said, whose
resume includes stints in marketing at
Google and as an analyst at CLSA.
ade. The companies are also forming a
joint venture in China that will combine
Alibaba’s digital capabilities and network
with Dufry’s travel retail business in that
market.
Dufry employs about 31,000 people
and said in June that it plans to reduce
personnel expenses by 20% to 35%, as
revenue plummets.
Alibaba has spent billions acquiring
slices of brick-and-mortar retail chains,
seeking to broaden its reach in an attempt
to use its technology to modernise phys-
ical commerce.
Richemont bought a stake in Dufry in
2017. Luxury-goods makers have invested
in the sector to promote their brands to
travelers. LVMH owns rival chain DFS.
Richemont has an online joint ven-
ture with Alibaba called Feng Mao, which
started operating last year.
Market expert views on Freee are
mixed, with just two buy recommenda-
tions among the six analysts that cover
the stock.
Masato Araki, an analyst at Mitsubishi
UFJ Morgan Stanley Securities Co, cut
his rating on the company to underweight
on Aug 26. While Freee has the poten-
tial for strong sales growth longer term,
the coronavirus outbreak will likely be a
“short-term drag” on its marketing efforts
by making it harder to conduct face-to-
face meetings, the analyst said.
In contrast, Sasaki sees the pandemic
as an opportunity to help accelerate the
shift toward digitalisation of office tasks.
“It’s possible for this trend to be
ignited, accelerating the adoption of
cloud-accounting software even fur-
ther,” he said. “Our business is really
just getting started.”
 T U E S D AY O C T O B E R 6 , 2 0 2 0
How Evergrande’s billionaire founder
skirted latest crisis
BY LULU YILUN CHEN, EMMA DONG & BLAKE
SCHMIDT, ZHENG LI, PEI YI MAK, JUN LUO,
INA ZHOU, TONGJIAN DONG, STEVEN YANG,
JESSICA ZHOU & HENG XIE
Bloomberg
HONG KONG/SHANGHAI (Oct 5): Hui
Ka Yan (pictured), the rags to riches bil-
lionaire who runs China’s most indebted
developer, skirted his latest crisis in much
the same way he always has: with help from
wealthy friends and a government fearful
of financial instability.
Hui’s China Evergrande Group sealed a
deal last week with a group of investors that
waived their right to force a US$13 billion
repayment by the property firm, avoiding
a potential default that would have sent
shock waves across financial markets in
China and beyond.
The accord provides a much need-
ed reprieve for Evergrande, though with
US$120 billion in debt — and at least
US$5.8 billion maturing in the next two
months alone — China’s largest developer
by revenue isn’t out of the woods yet. The
firm still needs to drastically pare debt and
sell assets, or analysts say it risks lurching
back into another credit crunch.
The group photo taken Sept 29 in Bei-
jing to announce the agreement, with Hui
standing in the middle of 35 smiling and
clapping strategic investors, belies just how
close the tycoon and his firm had been to
the brink.
With the January payment deadline ap-
proaching, Hui and his executives went
to work to bring the investors on board,
tapping his billionaire friends and indus-
try contacts, while turning to local gov-
ernments for support to avert a crisis, ac-
cording to people familiar with the efforts.
Evergrande sent a letter to the provin-
cial government of Guangdong in August,
warning officials that the payments could
cause a liquidity crisis and potentially lead
to cross defaults in the broader financial
sector. News of the plea for help emerged
on Sept 24, sending Evergrande’s stock and
bonds Tumbling, even as the company dis-
missed the concerns as based on rumours
and “fabricated” documents.
Guangdong and the city of Shenzhen,
where Evergrande is based, stepped in to
help stabilise the situation, according to
people familiar with the plans who asked
not to be identified discussing private mat-
ters. The governments have a lot at stake
with Evergrande, the third-largest com-
22 THEEDGE CEO MORNING BRIEF
W O R L D
pany in the province by revenue in 2018.
Making calls
Officials in Shenzhen backed Hui’s efforts
to bring the investors on board, while Hui
made at least one of these investor calls
himself, the people said. Under the terms
of a 2017 agreement, the investors have
the right to demand a repayment of 130
billion yuan (US$19 billion), unless the
company gets a listing on the Shenzhen
stock exchange by Jan 31. Some analysts
doubt Evergrande will get approval as na-
tional policymakers restrict funding op-
tions for developers to cool property mar-
ket speculation.
Evergrande didn’t immediately reply to
an inquiry seeking comment on a public
holiday Friday. Calls to the media offices
of Guangdong and Shenzhen governments
weren’t answered.
Evergrande shares rose 1.8% in ear-
ly Hong Kong trading on Monday to
HK$20.05, following a two-day break.
One of the biggest investor targets was
Suning Appliance Group. The retailer was
the second-largest holder, with 20 billion
yuan at stake, and had made it clear it
would demand repayment to cover its own
debt.
Yet like many of these investors, Suning
is an Evergrande supplier, so a collapse
could have ripple effects on their busi-
ness, as well. Another backer, Guangtian
Holdings, counts on Evergrande for 47%
of revenue at its main unit, while an arm
of the interior design firm even invests in
Hui’s soccer club in Guangzhou.
Hui, 61, who has a knack for align-
ing with the priorities of the Communist
BLOOMBERG
Party, also may have benefited from Bei-
jing’s desire for a quick resolution. With
the eight-day “golden week” national holi-
day approaching on Oct 1, regulators were
anxious to avoid an Evergrande meltdown
in global markets, while China was closed,
one of the people said. The developer has
international exposure through its US$27
billion in offshore dollar bonds, and its
listing on the Hong Kong stock exchange.
Beijing would also have wanted to avert
any distractions ahead of its Central Com-
mittee meeting at the end of October, when
the Communist Party is set to lay out its
next five-year plan, and draw up a blue-
print that runs through 2035.
As a result, Evergrande’s plight reached
the highest levels in Beijing. The Chinese
cabinet and its financial stability commit-
tee, chaired by Vice Premier Liu He, dis-
cussed the company without making any
decisions on whether to intervene, the peo-
ple said. Some regulators considered op-
tions such as directing state-owned compa-
nies to take stakes, or giving the company a
green light for a listing of its electric-vehicle
unit, one of the people said.
As Evergrande’s assets swooned last
month, Hui also got some help from his
longtime backers. Among them was an in-
vestment company part owned by Cheung
Chung Kiu, a real estate tycoon known for
being one of Hui’s poker buddies. Lom-
bard Odier, which has invested in Ever-
grande’s offshore debt since 2017, and two
Hong Kong property developers — Asia
Standard International Group Ltd and
Asia Standard Hotel Group Ltd — also
added to their holdings.
JUMP TO PAG E 2 3
 T U E S D AY O C T O B E R 6 , 2 0 2 0
FROM PAG E 22
In the end, the arm twisting paid off.
The majority of the investors, holding 86.3
billion yuan in equity, signed off on the
deal. That included former holdout Zhang
Jindong of Suning, who was standing be-
side Hui for the photo. On the other side
of Hui stood Ye Yuanxi of Guangtian.
Another group with stakes worth 15.5 bil-
lion yuan have tentatively agreed to waive re-
payment, pending approval, Evergrande said.
That leaves investors with 28.2 billion yuan
that are still in talks. Among the investors
that haven’t signed off is a trust unit of Citic
Group, one of China’s biggest conglomer-
ates, the people said. Citic would need con-
sent from individual investors for the deal.
With the massive waiver, Hui dodged a
financial bullet, and highlights how his ability
to lean on contacts and read the Beijing tea
leaves have served him well over the years.
From tapping the infrastructure and
housing booms that have come to define
23 THEEDGE CEO MORNING BRIEF
W O R L D
China, to venturing into soccer — a passion
of President Xi Jinping — or jumping on the
electric-car bandwagon, Hui has leveraged
China’s shifting needs, latching onto the hot-
test sectors that enjoy government support.
“It is extremely important to conduct
business in line with government policy in
China, and in the past Evergrande has done
quite well in this regard,” said Maggie Hu,
assistant professor of finance and real estate
at The Chinese University of Hong Kong.
That agility has contributed to the
meteoric rise of China’s fourth-wealth-
iest man, from humble beginnings to a
fortune now worth almost US$30 billion.
Hui, also known as Xu Jiayin in Manda-
rin, was born in Henan province in 1958.
He lost his mother when he was eight
months old, and was raised by his grand-
mother, who sold homemade vinegar, and
his father, who cut wood for a living. The
family struggled to afford his son’s school-
ing. Adversities in life strengthened Hui’s
belief that “knowledge will change desti-
ny,” according to his company’s website.
“About poverty, I know it very well,”
Hui said in a rare 2018 speech after receiv-
ing a philanthropic award. “In school, all I
ate was sweet potato and steamed bread. I
really hoped I could leave the village and
eat better.”
Three lines
Encouraged by the prospect of Deng
Xiaoping’s economic reforms plan, Hui
quit his job at a steel firm in 1992 and
headed to Shenzhen. He later began devel-
oping property in Guangzhou, the capital
of Guangdong.
Hui credited Deng’s reforms for
his group’s growth in his 2018 speech:
“Everything for me and Evergrande is given
by the party, the state and society,” he said.
Yet the state now has Evergrande
squarely in its sights, as it reins in the real
estate sector. Chinese regulators are intro-
ducing a “three red lines” rule to reduce
property debt, according to people famil-
iar. The restrictions currently target large
developers including Evergrande, and may
be extended to others.
Under the new guidelines, develop-
ers will face refinancing restrictions if
they breach three debt metrics including
a 100% cap on net debt to equity. Ever-
grande crosses all three lines, according to
Glenn Ko, an analyst at HSBC.
Short sellers
Evergrande, which controls land five times
the size of Manhattan and operates in 280
cities, has confronted similar issues before.
As far back as 2012, it was the target of
short seller Andrew Left, and has faced
calls from investors and ratings companies
to cut its debt just about every year since.
Even with the investor deal, the debt
overhang remains.
Evergrande in August reiterated an ag-
gressive target to cut borrowings by about
150 billion yuan each year from 2020 to
2022, or about half its current debt load.
So far, it’s fallen short.
The company has since launched a
nationwide sales blitz with deep property
discounts to raise cash, added US$3 bil-
lion by selling a stake in its property ser-
vice arm and reduced spending on land.
Condo sales during the current “golden
week” holiday will provide a fresh gauge of
its progress, and whether Evergrande will
continue to roil China markets.
“Evergrande triggers a chain effect
across the entire financial and real estate
sector,” said Louis Tse, Hong Kong-based
managing director of VC Asset Manage-
ment Ltd. “If it goes down, it will send a
shock wave to the property, finance sector
and China as a whole.”
 T U E S D AY O C T O B E R 6 , 2 0 2 0
M A R K E T S
CPO RM 2721.0013.00 OIL US$ 40.801.53 RM/USD 4.1530 RM/SGD 3.0530 RM/AUD 2.9850 RM/GBP 5.3844 RM/EUR 4.8838
Top 20 active stocks
NAME VOLUME CHANGE CLOSE YTD MARKET
(MIL) (RM) CHANGE CAP
(%) (RM MIL)
AT SYSTEMATIZATION 294.2 0.005 0.075 87.50 185.0
CAELY HOLDINGS 179.2 0.055 0.520 14.29 92.6
XOX 173.3 0.000 0.120 200.00 368.3
BINTAI KINDEN CORPORATION 125.2 0.075 0.685 495.65 217.3
NI HSIN RESOURCES 104.0 0.030 0.235 56.67 73.8
CAREPLUS GROUP 97.1 0.170 3.500 2,094.67 1,891.3
ADVANCE SYNERGY 86.8 0.010 0.145 11.54 134.7
HLT GLOBAL 81.0 0.030 1.710 850.00 1,019.5
TOP GLOVE CORP 78.6 0.160 8.920 469.36 72,563.9
METRONIC GLOBAL 70.9 0.005 0.085 88.89 105.9
KANGER INTERNATIONAL 70.1 -0.005 0.150 87.50 274.9
TECHNODEX 69.0 -0.005 0.175 218.18 134.2
IRIS CORP 66.7 0.010 0.320 128.57 949.2
MNC WIRELESS 61.1 0.000 0.045 125.00 64.7
PROLEXUS 59.5 0.070 1.290 57.32 225.8
D’NONCE TECHNOLOGY 57.1 0.015 0.680 78.95 190.3
ASIA POLY HOLDINGS 53.1 0.080 0.500 733.33 342.1
MLABS SYSTEMS 52.6 0.000 0.025 -37.50 31.5
SUPERMAX CORP 50.5 0.730 9.710 1,297.12 24,942.4
IKHMAS JAYA GROUP 50.4 0.005 0.120 60.00 70.6
Date as compiled on Oct 5, 2020 Source: Bloomberg
Top gainers (ranked by %)
NAME CLOSE CHANGE VOLUME YTD MARKET
(%) (‘000) CHANGE CAP
(%) (RM MIL)
GLOBAL ORIENTAL 0.575 43.75 11,100.3 139.58 261.4
DPI HOLDINGS 0.275 30.95 37,900.0 52.78 133.9
PELANGI PUBLISHING GROUP 0.335 28.85 195.7 -1.47 32.4
EKA NOODLES 0.070 27.27 5,016.8 27.27 21.8
DPS RESOURCES 0.100 25.00 14,894.9 25.00 58.8
BERTAM ALLIANCE 0.100 25.00 210.1 -60.00 20.7
EA HOLDINGS 0.025 25.00 2,441.4 150.00 126.8
COMPUGATES HOLDINGS 0.025 25.00 3,712.5 25.00 65.0
COMPUTER FORMS (MALAYSIA) BH 1.280 24.27 6.0 16.36 52.5
CNI HOLDINGS 0.080 23.08 8,489.0 33.33 57.0
G3 GLOBAL 3.340 22.34 631.6 25.09 1,563.6
ASIA POLY HOLDINGS 0.500 19.05 53,061.7 733.33 342.1
KEY ALLIANCE GROUP 0.065 18.18 47,165.3 85.71 63.8
AHB HOLDINGS 0.230 17.95 19,765.1 109.09 56.0
JERASIA CAPITAL 0.430 16.22 7,439.2 22.86 35.3
BRAHIM’S HOLDINGS 0.220 15.79 1,400.5 -29.03 52.0
SCH GROUP 0.110 15.79 11,530.9 4.76 61.1
MINHO M 0.340 15.25 9,230.4 3.03 116.9
ACO GROUP 0.430 14.67 33,084.0 — 129.0
NI HSIN RESOURCES 0.230 14.63 103,746.5 56.67 73.8
Date as compiled on Oct 5, 2020 Source: Bloomberg
Top gainers (ranked by RM)
NAME CLOSE CHANGE VOLUME YTD MARKET
(RM) (‘000) CHANGE CAP
(%) (RM MIL)
SUPERMAX CORP 9.710 0.730 50,526.2 1,297.12 24,942.4
MALAYSIAN PACIFIC INDUSTRIES 19.600 0.640 1,051.7 71.33 3,898.4
G3 GLOBAL 3.340 0.610 631.6 25.09 1,563.6
UWC 6.480 0.480 3,305.2 203.75 3,565.3
PETRONAS DAGANGAN 20.240 0.440 95.0 -11.74 20,107.5
KOSSAN RUBBER INDUSTRIES 15.040 0.420 5,564.9 261.54 19,235.2
HONG LEONG FINANCIAL GROUP 14.200 0.360 65.1 -15.98 16,262.5
RUBBEREX CORP M 6.030 0.320 3,643.2 1,016.67 1,628.4
PETRONAS CHEMICALS GROUP 5.900 0.300 3,376.3 -19.73 47,200.0
JF TECHNOLOGY 3.830 0.280 2,788.6 151.97 864.6
GREATECH TECHNOLOGY 6.950 0.270 1,358.5 189.58 4,350.7
COMPUTER FORMS (MALAYSIA) 1.280 0.250 6.0 16.36 52.5
BLD PLANTATION 7.520 0.220 8.8 41.89 703.1
RAPID SYNERGY 5.550 0.200 102.7 -6.41 492.8
AEON CREDIT SERVICE M 10.340 0.200 91.8 -26.87 2,639.9
PENTAMASTER CORP 5.140 0.190 3,423.3 69.82 3,661.3
POH HUAT RESOURCES HLDGS 1.800 0.180 10,092.9 18.42 451.9
GLOBAL ORIENTAL 0.575 0.175 11,100.3 139.58 261.4
CAREPLUS GROUP 3.500 0.170 97,123.1 2,094.67 1,891.3
SIME DARBY PLANTATION 5.000 0.170 1,299.3 -8.26 34,422.9
Date as compiled on Oct 5, 2020 Source: Bloomberg
24 THEEDGE CEO MORNING BRIEF
World equity indices
CLOSE CHANGE CHANGE CLOSE CHANGE CHANGE
(%) (%)
DOW JONES 27682.81 -134.09 -0.48 INDONESIA 4958.77 32.04 0.65
S&P 500 3348.44 -32.36 -0.96 JAPAN 23312.14 282.24 1.23
NASDAQ 100 11255.69 -327.51 -2.83 KOREA 2358.00 30.11 1.29
FTSE 100 5951.93 49.81 0.84 PHILIPPINES 5938.95 -60.45 -1.01
AUSTRALIA 5941.58 150.08 2.59 SINGAPORE 2517.23 21.12 0.85
CHINA 3218.05 -6.31 -0.20 TAIWAN 12548.28 32.67 0.26
HONG KONG 23767.78 308.73 1.32 THAILAND 1242.99 5.45 0.44
INDIA 38973.70 276.65 0.71 VIETNAM 914.68 4.77 0.52
Date as compiled on Oct 5, 2020 Source: Bloomberg
Top losers (ranked by %)
NAME CLOSE CHANGE VOLUME YTD MARKET
(%) (‘000) CHANGE CAP
(%) (RM MIL)
TRIVE PROPERTY 0.010 -33.33 18,637.4 0.00 37.6
EDUSPEC HOLDINGS 0.020 -20.00 19,849.6 -60.00 39.0
PRICEWORTH INTERNATIONAL 0.025 -16.67 6,543.8 -28.57 112.6
LAMBO GROUP 0.025 -16.67 16,365.4 -37.50 88.4
KONSORTIUM TRANSNASIONAL 0.085 -15.00 5,950.1 0.00 34.2
DFCITY GROUP 0.480 -14.29 10.9 -31.43 42.2
BIG INDUSTRIES 0.370 -12.94 7.0 5.71 19.6
KPS CONSORTIUM 0.405 -11.96 14.0 -18.18 59.9
SMTRACK 0.300 -11.76 21,277.7 185.71 68.9
BORNEO OIL 0.040 -11.11 18,025.2 -11.11 239.0
HUBLINE 0.045 -10.00 1,160.0 -10.00 175.5
MENTIGA CORP 0.450 -10.00 21.0 -10.00 31.5
TRI-MODE SYSTEM M 0.340 -8.11 427.8 -2.86 56.4
AVILLION 0.060 -7.69 2,482.3 -57.14 56.7
UMS HOLDINGS 1.590 -7.56 6.0 -17.56 64.7
TAMBUN INDAH LAND 0.555 -7.50 884.3 -22.92 240.8
WARISAN TC HOLDINGS 1.120 -7.44 0.2 -34.12 72.9
NETX HOLDINGS 0.140 -6.67 7,496.7 -63.97 29.4
GOPENG 0.600 -6.25 15.0 -14.29 161.4
REACH ENERGY 0.075 -6.25 534.0 -54.55 82.2
Date as compiled on Oct 5, 2020 Source: Bloomberg
Top losers (ranked by RM)
NAME CLOSE CHANGE VOLUME YTD MARKET
(RM) (‘000) CHANGE CAP
(%) (RM MIL)
DUTCH LADY MILK INDS 38.400 -0.300 3.5 -21.79 2,457.6
BATU KAWAN 15.160 -0.240 3.5 -13.07 6,031.2
AJINOMOTO MALAYSIA 15.500 -0.180 7.5 7.04 942.4
UMS HOLDINGS 1.590 -0.130 6.0 -17.56 64.7
FRASER & NEAVE HOLDINGS 32.660 -0.120 23.2 -6.26 11,979.0
MALAYSIA AIRPORTS HLDGS 4.580 -0.120 842.6 -39.74 7,599.1
HEINEKEN MALAYSIA 20.700 -0.100 549.9 -23.67 6,253.4
PETRON MALAYSIA REFINING & M 3.260 -0.100 39.3 -35.06 880.2
QL RESOURCES 9.750 -0.090 237.4 19.93 15,818.8
WARISAN TC HOLDINGS 1.120 -0.090 0.2 -34.12 72.9
KESM INDUSTRIES 8.020 -0.090 53.5 -10.69 345.0
DFCITY GROUP 0.480 -0.080 10.9 -31.43 42.2
UNITED MALACCA 4.460 -0.070 10.8 -16.64 935.6
SIME DARBY 2.300 -0.060 8,274.5 4.04 15,643.3
GLOBETRONICS TECHNOLOGY 2.590 -0.060 1,390.0 12.94 1,733.9
MBM RESOURCES 3.090 -0.060 137.0 -19.95 1,207.8
SYARIKAT TAKAFUL MALAYSIA 4.900 -0.060 136.6 -14.04 4,069.1
ALLIANZ MALAYSIA 13.800 -0.060 59.9 -14.45 2,441.1
BIG INDUSTRIES 0.370 -0.055 7.0 5.71 19.6
KPS CONSORTIUM 0.405 -0.055 14.0 -18.18 59.9
Date as compiled on Oct 5, 2020 Source: Bloomberg