AIRLINES UP IN ARMS OVER MALAYSIA’S NEWLY

ANNOUNCED COVID-19 RULES FOR CREW p4

T H U R S DAY, N OV E M B E R 1 8 , 2 0 2 1 w w w. t h e e d g e m a r k e t s. c o m
ISSUE 283/2021

CEOMorningBrief HOME: Solution Group obtains MoH approval for private sales of CanSino vaccine p4
Supermax marks third straight quarterly profit decline with 33% q-o-q fall in 1Q p6
MoH: Sinovac, AstraZeneca vaccines get conditional approval for use as booster shots p17
WORLD: UK inflation leaps to 10-year high, bolstering rate hike bets p21
Goldman CEO says market greed now outpacing fear p24

Prosecution withdraws appeal against

Ku Nan’s acquittal in RM2 mil graft case
Report on Page 2.

ATA IMS loses over

RM1b market cap
in three days after
reporting quarterly loss
Report on Page 3.
 T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1
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Prosecution withdraws appeal against
Ku Nan’s acquittal in RM2 mil graft case
PUTRAJAYA (Nov 17): The prosecution
is understood to have withdrawn its ap-
peal against the Court of Appeal’s deci-
sion to acquit former Cabinet Minister
Datuk Seri Tengku Adnan Tengku Man-
sor in an RM2 million corruption case.
The prosecution had filed a notice of
appeal at the Federal Court on July 19,
three days after the 70-year-old former
Umno secretary-general, better known
as Ku Nan, was freed in a 2-1 majority
decision.
However, no case management relat-
ing to the appeal has been fixed since
then.
Now, The Edge has reliably learnt that
the prosecution has withdrawn its appeal.
The Edge contacted Attorney-General
Tan Sri Idrus Harun via a text message
shortly after 2pm on Wednesday to con-
firm the matter, but he has yet to respond.
The Edge has also contacted Ku Nan’s
lawyer, Datuk Tan Hock Chuan, and is
awaiting his response.
On Dec 21 last year, High Court judge
Mohamed Zaini Mazlan found Ku Nan
guilty of graft for accepting a sum of
RM2 million from Aset Kayamas Sdn
Bhd managing director Tan Sri Chai Kin
Kong, and sentenced the former Min-
ister to 12 months’ jail and fined him
RM2 million.
Political donation
In reversing that decision, the Court
of Appeal bench led by Justice Da-
tuk Suraya Othman ruled that the
RM2 million paid by Chai to Ku
Nan was a political donation to
Umno for expenses in the Kua-
la Kangsar and Sungai Besar
by-elections in June 2016.
Justice Suraya, reading
out the majority decision on
2 THEEDGE CEO MORNING BRIEF
published by
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H O M E
theedgemarkets.com
July 16, noted that Chai had revealed
this during his testimony, and it was not
challenged by the prosecution.
“His testimony as the star witness
[of the sum] being a donation to Umno
was not challenged. The witness said that
Tengku Adnan had requested donations
for the two by-elections to the amount
of RM5 to RM6 million.
“Chai was willing to pay RM2 mil-
lion for this and the prosecution did not
cross-examine Chai on this or treat him
as a hostile witness or impeach him in
this case. The evidence was also corrobo-
rated by the evidence of Tadmansori Sdn
Bhd (a company controlled by Ku Nan)
chief operating officer Datuk Mohd Has-
bi Jaafar, that the money was for Umno.
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“In addition, the Malaysian Anti-Cor-
ruption Commission investigating officer
Mohd Saad Bordani also testified and
agreed that Chai and Tengku Adnan had
told him that the RM2 million [was a]
political donation,” said Justice Suraya.
She added it is trite that the prosecution
is bound by the testimonies of its own wit-
nesses, without cross-examinations done.
The written judgment released by the
Court of Appeal on Oct 29 showed that
the majority decision was written by an-
other member of the bench, Justice Datuk
Ahmad Nasfy Yasin.
Minority decision
Meanwhile, Justice Datuk Abu Bakar
Jais, in his minority decision, ruled that
the High Court was right to convict and
sentence Ku Nan as all elements of graft
had been proven, including that he was a
public officer.
The judge said it was a fact that money
entered into Tadmansori’s account with-
out consideration as Aset Kayamas had
no dealing with the company.
He added that there was also no evi-
dence that money from Tadmansori had
gone out to Umno.
“I find that the money was deposited
into the accused’s account for his own
use without a valuable consideration,” he
said, adding that there were also doubts
with regard to the issue of the receipt
produced by Chai.
“I find that the defence had not
created a reasonable doubt for
the case. The conviction and
sentence against the accused
is upheld,” Justice Abu Bakar
said.
Datuk Seri Tengku Adnan
Tengku Mansor
 T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1
KUALA LUMPUR (Nov 17): ATA IMS
Bhd saw over RM1 billion in its market cap-
italisation wiped off in the first three trading
days of this week as its share price fell below
the RM2 mark, after reporting a net loss of
RM11.17 million for the second quarter end-
ed Sept 30, 2021 (2QFY22) compared to a
net profit of RM52.29 million a year earlier.
This is the electronic products contract
manufacturer’s first quarterly net loss since
1QFY18 when the company, which was
then known as Denko Industrial Corp Bhd,
reported a net loss of RM2.23 million.
On Wednesday, ATA IMS’ share price
closed 29 sen or 15.59% lower at RM1.57,
after falling by as much as 33 sen or
17.74% to RM1.53, with 50.65 million
shares changing hands.
The company’s market capitalisation
stood at RM1.84 billion based on the com-
pany’s 1.2 billion issued shares, compared
with RM3.1 billion last Friday, when the
share price closed at RM2.57.
ATA IMS’ revenue for 2QFY22 fell to
RM594.48 million, from RM1.34 billion
a year earlier.
Cumulative net profit for the first half of
FY22 dropped to RM12.21 million, from
RM70.05 million in the previous corre-
sponding period, as revenue fell to RM1.49
billion from RM2.08 billion.
On Wednesday, CGS-CIMB Securities
Sdn Bhd analysts Nagulan Ravi and Sya-
zwan Aiman Sobri wrote in a note that the
firm remains concerned about ATA IMS’
profitability for FY22 amid a lack of clarity
on the timeline for foreign worker replenish-
ment as ATA IMS contends with Covid-19
pandemic-driven labour shortage.
The analysts, who attended ATA IMS’
recent analyst briefing, said the company will
continue to face a drop in sales orders should
KUALA LUMPUR (Nov 17): Cred-
it reporting agency CTOS Digital Bhd
has had access by its subsidiary CTOS
Data Systems Sdn Bhd to Bank Negara
Malaysia's (BNM) Central Credit Ref-
erence Information System (CCRIS) re-
stored effective Wednesday, according to
a bourse filing.
This comes after BNM imposed a tem-
porary suspension of CCRIS access to all
credit reporting agencies (CRAs) as a pre-
cautionary measure against potential cy-
berthreats on Oct 1.
The central bank had also requested
all CRAs to conduct a review of their data
infrastructure and assets with independent
cybersecurity experts.
“CTOS has concluded a comprehen-
sive and detailed review of CCRIS-re-
lated data assets and infrastructure with
independent global cybersecurity ex-
3 THEEDGE CEO MORNING BRIEF
H O M E
labour shortage issues persist in FY23.
ATA IMS loses “In light of this, we reduce our FY22
EPS (earnings per share) by 41% to re-
over RM1b market flect a further reduction in its foreign-to-lo-
cal worker ratio in 2HFY22 and our
cap in three days FY23-24 EPS by 7%-24% to reflect a
longer-than-expected time taken to ramp
after reporting up efficiency due to shortage of foreign
workers and components,” they said.
quarterly loss Hence, CGS-CIMB reduced its ATA
IMS share target price (TP) to RM1.93 from
RM2.48 previously, according to the analysts.
BY TAN SIEW MUNG “Despite the uncertainties surrounding
theedgemarkets.com its workforce shortfall, we retain our ‘hold’
call [for ATA IMS shares] as we think the
recent share price decline has partially, if
not mostly, reflected this,” they said.
UOB Kay Hian Private Ltd analyst Des-
mond Chong, who also attended ATA IMS’s
analyst briefing, wrote in a note on Wednes-
day that ATA IMS is pursuing measures in-
cluding local hiring programmes and dis-
cussions with ATA IMS’ main customers
to rejig product offerings to minimise ATA
IMS’ operational glitches.
ATA IMS Bhd According to Chong, ATA IMS is not
Vol (mil) RM looking to hire contract workers to make
60 3.5 up for the company’s manpower vacuum.
While there could be a possibility of
orders being temporarily diverted to other
3.0 electronic products contract manufactur-
40 ers from ATA IMS, Chong said UOB Kay
Hian understands that there is no product
2.5
RM2.22 pullout from ATA IMS at the moment.
20 “We cut our FY22-23 earnings [forecast
2.0 for ATA IMS] by 29% and 8% respective-
ly to account for lower sales and margins
RM1.57 assumptions,” he said.
0 1.5 He said UOB Kay Hian maintained its
Nov 17, 2020 Nov 17, 2021 “hold” call for ATA IMS shares but with
Source: Bloomberg
a lower TP of RM2.08 from RM2.30
previously.
perts as required by BNM.
CTOS unit’s “As Malaysia's leading credit report-
ing agency, CTOS has and will continue
access to BNM’s to make significant investments to ensure
all data and information in possession are
CCRIS restored protected with world-class certified data
security technology. Notably, CTOS' IT
and data security frameworks, policies,
BY SEAH EU HEN procedures, and systems shall continue
theedgemarkets.com to be benchmarked against ISO 27001,
as well as other global standards,” the fil-
ing added.
On Oct 26, The Edge reported that
CTOS completed and submitted its com-
promise assessment to BNM on Oct 20,
and that there was no breach of its data
infrastructure and assets.
Shares of CTOS traded down one
sen or 0.52% to close at RM1.91, giv-
ing it a market capitalisation of RM4.2
billion.
 T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1
Airlines up
in arms over
Malaysia’s newly
announced
Covid-19 rules
for crew
BY KANG SIEW LI
theedgemarkets.com
KUALA LUMPUR (Nov 17): Some for-
eign airlines, which had suspended flights
to Malaysia after the country closed its bor-
ders in March last year, are holding off
plans to reinstate their flights even as Ma-
laysia is set to reopen its borders to inter-
national travellers by Jan 1.
This follows impending Covid-19 guide-
lines that mandate all aircrew of both local
and foreign airlines arriving in the country
to undergo fever screening and Covid-19
Rapid Antigen (RTK-Ag) tests. And if a
crew member is tested positive, he or she
is required to undergo a seven-day hotel/
home quarantine in the country or until the
next flight scheduled. Foreign and local air-
crew are currently not required to undergo
RTK-Ag tests after arriving in Malaysia.
It is learnt that airlines are up in arms
about the latest guidelines issued by the
Ministry of Health (MoH) that are due
to come into effect on Sunday (Nov 21).
According to industry stakeholders, un-
der the proposed guidelines, foreign air-
crew — including pilots, cabin crew, engi-
neers, loadmasters, security and training
pilots — will need to take Covid-19 tests
every time they arrive in Malaysia and this
may take up to two to three hours.
“Crew members are required to have
a 10-hour rest period within each 24-
hour cycle. Thus, the new RTK-Ag test
requirement may affect the optimal rest
time available to the crew,” an industry
stakeholder, who declined to be named,
told theedgemarkets.com.
4 THEEDGE CEO MORNING BRIEF
H O M E
“Also, according to the circular from
MoH, aircrew that have a positive RTK-
Ag test result would be quarantined for
seven days in the country or until the next
flight scheduled.Which is which? If the for-
mer, this poses a risk because if the crew
member is a pilot who is tested positive
for Covid-19, he or she will have to under-
go quarantine in Malaysia and this means
the flight may not be able to operate at all
for a week,” the industry stakeholder said.
“Currently, countries like Singapore
and Thailand allow aircrew that are test-
ed positive for Covid-19 to return to their
crew base. That’s also why foreign airlines
opt to use Singapore and Bangkok as hubs
during the pandemic. They gain all the air-
lines while Kuala Lumpur International
Airport loses out.
“If these quarantine measures are put in
place, we might see some foreign airlines
deciding to stop making layovers altogether
in Malaysia because such measures would
only add costs to their operation,” the in-
dustry stakeholder added.
“The new rules are unworkable. That’s
making an already slow reopening of bor-
ders in Malaysia harder.You have also seen
how Hong Kong’s latest quarantine policy
has forced FedEx Corp to relocate its crew
base in Hong Kong to San Francisco,” an-
other industry stakeholder said.
The South China Morning Post reported
on Wednesday that global delivery giant
FedEx was closing its crew base in Hong
Kong and relocating pilots overseas be-
cause of the city’s strict anti-coronavirus
measures.
The announcement came a day after
Hong Kong — the world’s busiest inter-
national cargo hub — sent more than 100
Cathay Pacific cargo pilots into mandatory
21-day quarantine after three tested pos-
itive for the coronavirus upon returning
from Germany.
This comes as airlines are trying to re-
duce their monthly cash burn, according
to news reports. Cathay reportedly said
the requirement for crew to quarantine
could add as much as HK$400 million to
its monthly cash burn, which is already as
high as HK$1.5 billion due to an unprec-
edented slump in demand for air travel.
Solution Group
obtains MoH
approval for
private sales
of CanSino
vaccine
BY SEAH EU HEN
theedgemarkets.com
KUALA LUMPUR (Nov 17): Solu-
tion Group Bhd said it has obtained
approval from the Ministry of Health
(MoH) to begin private sales of Can-
Sino’s Convidecia Covid-19 vaccine
in the country.
The approval was given to Solu-
tion’s wholly-owned subsidiary, Solu-
tion Biologics Sdn Bhd, which is also
the manufacturing partner of CanSino
Biologics Inc in the ASEAN region.
In a statement on Wednesday
(Nov 17), Solution said the CanSi-
no vaccine will be made available to
hospitals and clinics and the corpo-
rate and manufacturing sectors from
early December.
The group added that it is in the
midst of appointing a good distri-
bution practice certified partner to
ensure professional handling and
distribution of the vaccine.
The Convidecia vaccine distrib-
uted by Solution will be available in
both single- and three-dose per vial
configurations.
“We would like to thank MoH for
the timely approval as we have been
receiving tremendous interest from
the private sector for Convidecia
which has an excellent safety profile
and has proven to be highly effective
as a homologous and heterologous
booster in studies carried out in Chi-
na and Argentina,” said Solution dep-
uty group managing director Datuk
Dr Mohd Nazlee Bin Kamal.
He said the group has delivered 2.9
million doses of the vaccine to MoH,
with the remaining 600,000 doses to
be delivered by mid-December.
Meanwhile, the group has applied
to the National Pharmaceutical Reg-
ulatory Agency for Convidecia to be
used as a booster shot in the Na-
tional Immunisation Programme and
hopes to receive the approval soon.
T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1 5 THEEDGE CEO MORNING BRIEF
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
KUALA LUMPUR (Nov 17): Shrink-
ing profit margin as a result of the contin-
ued drop in average selling price (ASP)
eroded Supermax Corp Bhd’s net profit
for the first quarter ended Sept 30, 2021
(1QFY22), which plummeted by one
third to RM638.52 million compared with
RM958.71 million recorded in the preced-
ing quarter (4QFY21).
This is the third consecutive quarter of
lower net profit on a quarterly basis.
Supermax said in its financial result
release that many new glove players had
jumped onto the bandwagon at the height
of the global surge in demand.
“Many of the existing players also
ramped up their capacities on a large scale
especially from players who are public-list-
ed companies based in China, Malaysia
and in Thailand.
“With the substantial increase in market
supply, ASPs have started declining with spot
market prices currently much lower than con-
tracted prices,” said the rubber glove maker.
Supermax’s quarterly revenue con-
tracted 22.4% to RM1.45 billion quar-
ter-on-quarter (q-o-q) from RM1.88 bil-
lion in 4QFY21.
In the bourse filing, Supermax said com-
petition has intensified significantly following
a period of substantial capacity expansion
across the industry as both existing and new
players ramped up their production capacities.
Earnings per share dropped to 24.6 sen
compared with 36.93 sen in 4QFY21.
Nonetheless, Supermax declared a sin-
gle-tier interim dividend of five sen per
share which will be paid on Jan 3, 2022.
On a yearly basis, its quarterly net
profit was also lower, falling 19% against
RM789.52 a year ago. Revenue was 7.62%
higher compared with RM1.35 billion in
Stanley Thai to return to Supermax board as executive chairman
KUALA LUMPUR (Nov 17): Datuk Seri
StanleyThai is returning to the board of Su-
permax Corp Bhd after nearly four years.
He was named as the new executive chair-
man in a slew of boardroom changes an-
nounced by the glovemaker on Wednesday.
Thai, who was Supermax managing
director until April 2018, will take over
from Albert Saychuan Cheok, who has
been concurrently re-designated as in-
dependent non-executive director.
The glovemaker also appointed Sung
Fong Fui as independent non-executive
director. All the appointments will take
effect on Dec 8.
The re-emergence of Thai on the
board of directors of Supermax comes
about a year after he was acquitted by
the High Court of insider trading in re-
6 TheEdge CEO morning brief
h o m e
Supermax Corp Bhd’s quarterly revenue and net profit
Revenue (RM mil) Net profit (RM mil)
1,998.64 1,937.52
2000
2000 1,875.48
1500 1,455.66 1500
1,352.54
1,059.46
1000 929.12 958.71
1000
1,005.21
500 385.5 447.25 399.62 789.52 500
369.94 638.52
24.74 30.16 71.05
0 0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
FY20 FY21 FY22
Financial year ends on June 30 Source: Bursa Malaysia
Supermax marks
Nevertheless, the company noted that the
demand moderation will happen but will
likely be gradual and not drop sharply due to
third straight the structural change in consumption, such
as new consumption, and greatly heightened
quarterly profit healthcare and hygiene awareness.
According to Supermax, it completed
decline with 33% the commissioning of the remaining pro-
duction lines in Block B of Plant #12 in the
q-o-q fall in 1Q fourth quarter of 2020, adding 2.2 billion
to its annual installed capacity.
“We are seeing full quarter contribu-
tions since the first quarter of 2021 and
by shazni ong going forward. The company is currently
theedgemarkets.com building five glove manufacturing plants
concurrently and scheduled for comple-
the previous corresponding quarter. tion progressively,” it added.
Supermax said it recorded increased Supermax is investing RM1.39 billion
sales from the additional capacity gener- in new manufacturing plants that will
ated by its newest plant which was com- add 22.25 billion new capacity bringing
missioned during the year. the group’s total capacity to 48.42 billion
Commenting on its prospects, Supermax gloves when they are fully commissioned.
said demand for gloves as personal protec- Supermax’s share price has declined
tive equipment remains strong as the world 67% year to date to RM1.82, giving it
continues to fight the Covid-19 pandemic. market capitalisation of RM4.76 billion.
by adam aziz he was found guilty of insider trading.
theedgemarkets.com This disqualified him as a director of Su-
permax, and he resigned from the board
in April 2018. An application by Thai to
be reinstated as director in August 2018
was dismissed by the High Court.
In September 2020, Thai’s convic-
tion was overturned by the High Court,
alongside that of Tiong Kiong Choon,
who was the remisier alleged to have fa-
cilitated the insider trading.
Thai is the largest shareholder of Su-
permax via a 38.26% stake held via Su-
permax Holdings Sdn Bhd.
lation to APL Industries Bhd’s (APLI)
shares in 2007.
The 61-year-old Supermax founder was Read also: JP Morgan slashes TP for
sentenced to five years’ jail and fined RM5 glove makers again, warns of high ASP
million by the Sessions Court in 2017 after bottoming risk Click here
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
Najib questioned suspension of RM5b
TIA bond issuance despite Sultan Mizan’s
orders to do so, ex-1MDB director testifies
by Timothy Achariam &
Ahmad Naqib Idris
theedgemarkets.com
KUALA LUMPUR (Nov 17): Former
1Malaysia Development Bhd (1MDB)
director Tan Sri Ismee Ismail testified in
court on Wednesday that former prime
minister Datuk Seri Najib Abdul Razak
had questioned him and former CEO Da-
tuk Shahrol Azral Ibrahim Halmi on why
they signed a resolution to discontinue a
RM5 billion bond issuance despite being
told to do so by Terengganu’s Sultan Mi-
zan Zainal Abidin.
Testifying at the 1MDB-Tanore trial,
Ismee, reading from his sworn witness
statement, was detailing the formation of
1MDB, prior to which the state investment
arm was known as Terengganu Investment
Authority (TIA) in 2009.
Ismee was appointed as TIA director by
Sultan Mizan and the company had en-
deavoured to raise RM5 billion in Islamic
medium-term notes (IMTN) with AmIn-
vestment Bank Bhd to lead the issuance.
However after expressing his dissatis-
faction over TIA, the then Agong, Sultan
Mizan, had summoned Ismee and Shahrol,
who was also TIA CEO then, to Terengga-
nu to have a meeting with the Sultan and
Tengku Datuk Rahimah Sultan Mahmud.
During that meeting, Ismee testified
that he was told to sign a director’s res-
olution for the suspension of the IMTN
issuance.
“During the meeting, Sultan Mizan told
me: ‘My interest and concern is the well-
being of my state and of my people.’ He
then told me he wanted the IMTN to be
suspended,” he said.
Ismee said that in his opinion, it was
at the behest of Sultan Mizan that TIA
and the IMTN were started and if he had
wanted to suspend it, there would not be
an issue at all.
Sultan Mizan, Ismee and Shahrol had
then signed the resolution to suspend the
IMTN; Ismee testified that Shahrol told
him after the meeting that they could not
suspend the IMTN as instructions were
already given to AmBank, despite signing
the resolution.
“Shahrol told me after the meeting that
we have already pushed the button, I had
then asked him to sort this matter out, and
I asked Shahrol why he did not speak up
7 TheEdge CEO morning brief
h o m e
Najib as seen at the Kuala Lumpur Court Complex on Wednesday (Nov 17).
at the meeting just now or why he did not
tell me about it so I could have brought
it up with Sultan Mizan,” Ismee added.
Najib questioned Ismee and Shahrol
on signing the resolution
Ismee testified that upon his return from
Terengganu after having signed the reso-
lution, Najib had summoned Ismee and
Shahrol to his residence at Langgak Duta
to find out what had happened in their
meeting with Sultan Mizan.
Ismee said after explaining what had
happened, Najib had asked both the men:
“Why did you sign it?”
“Najib also asked us why we did not
seek an extension from His Highness to
give us time to think,” Ismee said.
“I wanted to tell Najib that these were
the wishes of the King, so what could we
have done,” he said.
He also added that from Najib’s re-
action and intonation at the meeting, it
seemed that the then finance minister
had wanted the IMTN bond issuance
to continue.
Ismee testified that after the meeting
with Najib, he did not get involved in this
issue and decided to let Sultan Mizan and
Najib sort it out themselves.
Shahrol had also previously testified
about these two meetings when he took
the stand in the trial, he also corrob-
Shahrin Yahya/The Edge
orated that he had signed the direc-
tor’s resolution for the suspension of
the IMTN issuance.
He said he was not aware of the rea-
son behind Tengku Rahimah’s intention
to suspend the issuance of the bonds,
adding that Sultan Mizan seemed angry
and mentioned an “unsavoury charac-
ter”, although Shahrol was not sure who
he was referring to.
Shahrol also testified that Najib had
instructed him to push through the
IMTN issuance despite signing the res-
olution to suspend it.
“[Najib] said something along the
lines of ‘you go ahead, I will talk to Tu-
anku’. I saw that as an order and a man-
date from the prime minister and minis-
ter of finance to carry on with the IMTN
because he was the minister that was re-
sponsible for the government guarantee,”
said Shahrol previously.
Because of Sultan’s Mizan’s reluctance
over the RM5 billion bond issuance, TIA
from Terengganu Menteri Besar Incorpo-
rated was taken over by Minister of Fi-
nance (Incorporated), where Najib was
the finance minister. In July that year, TIA
was transformed into 1MDB.
Najib is currently facing 25 counts of
money laundering and abuse of power for
alleged misappropriation of billions of ring-
git in 1MDB funds.
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
KUALA LUMPUR (Nov 17): Tan Sri
Mohd Bakke Salleh was said to be “fu-
rious” over the irregularities surrounding
1Malaysia Development Bhd’s (1MDB)
PetroSaudi joint venture (JV) in 2009,
which eventually spiralled to burn a sum
of US$1.53 billion in 1MDB’s coffers.
This was mentioned in the High Court on
Wednesday at the 1MDB-Tanore trial where
1MDB’s ex-director Tan Sri Ismee Ismail
was taking the stand to testify against for-
mer prime minister Datuk Seri Najib Razak.
In his testimony, Ismee said Bakke, who
was chairman of the board, was furious be-
cause the JV was not what the board had
previously agreed upon. He also said Bakke
was not happy that many extra clauses were
added to the JV which seemed “not right
and hidden”.
Recall that in 2009, Najib and financier
Low Taek Jho moved for 1MDB to enter
into a 40:60 JV agreement with Saudi Ara-
bia’s PetroSaudi International Ltd (PSI),
supposedly as a government-to-govern-
ment initiative.
The JV company (JVCo), named
1MDB-PetroSaudi Ltd, involved 1MDB
undertaking an equity investment of US$1
billion while PSI would inject US$1.5 bil-
lion worth of assets.
However, after the JV agreement was
signed, PSI said its US$1.5 billion asset
injection into the JVCo entailed a US$700
million advance for 1MDB, which meant
1MDB owed PSI.
Through the instructions of former
1MDB CEO Datuk Shahrol Azral Ibra-
Prosecution appeals against High Court decision to disallow forfeiture
of alleged 1MDB-linked assets belonging to Najib’s family, three others
KUALA LUMPUR (Nov 17):The pros-
ecution is appealing against the High
Court’s decision on Nov 8, 2021 to dis-
allow forfeiture of alleged 1Malaysia De-
velopment Bhd (1MDB)-linked assets
belonging to former prime minister
Datuk Seri Najib Razak’s family, Puan
Sri Goh Gaik Ewe besides ex-Goldman
Sachs banker Roger Ng Chong Hwa and
his wife Lim Hwee Bin.
Sources told theedgemarkets.com that
the prosecution had filed the notice of
appeal on Tuesday (Nov 16).
“With this, the matter may proceed
for appeal to the Court of Appeal,” the
sources said.
It was reported on Nov 8 that Justice
Mohamed Zaini Mazlan rejected the pros-
ecution’s attempt to forfeit the alleged
1MDB-linked assets belonging to Najib,
his wife Datin Seri Rosmah Mansor and
8 TheEdge CEO morning brief
h o m e
Bakke said to
be furious over
irregularities
surrounding
1MDB-PSI
venture
by Timothy Achariam &
Ahmad Naqib Idris
theedgemarkets.com
him Halmi, 1MDB had diverted US$700
million from the US$1 billion JV equity
investment into an account belonging to
Good Star Ltd, on grounds that PSI said
Good Star was its affiliate.
After all this was done, during a board
meeting on Oct 3, 2009, Ismee said the
board had raised many red flags as to the
JV in the board of directors (BOD) com-
ments section on the proposed JV.
In the comments section, Ismee stated
the board was not consulted on the change
of plans to remit the US$700 million to
PSI via Good Star.
“The BOD understanding was for the full
US$1 billion to be wired to a joint bank ac-
count under the name JVCo. And the JVCo
board of directors makes the decision to re-
mit the US$700 million to PSI,” it said.
by Hafiz Yatim
theedgemarkets.com
their children Nooryana Najwa Najib and
Nor Ashman Najib besides Rosmah’s oth-
er son Riza Shahriz Abdul Aziz as there
were no credible attempts by the pros-
ecution to show the nexus between the
properties seized and unlawful activities.
“No evidence has been proffered to
show that the properties seized were
bought using the monies in Najib’s bank
accounts,” Justice Mohamed Zaini said.
According to news reports, Justice
Mohamed Zaini had also rejected the
prosecution’s attempt to forfeit alleged
1MDB-linked assets belonging to Goh,
who is fugitive businessman Low Taek
Jho’s mother, besides the prosecution’s
attempt to forfeit assets belonging to
Ng and Lim.
Ismee also said the entire board did not
agree with the transfer of US$700 million to
PSI via Good Star without prior permission.
“At that time, none of the board had
known that the US$700 million which was
advanced by 1MDB went into an account
owned by Jho Low (Good Star),” he said.
The board was also upset with the fact
that the assets injected by PSI underwent pa-
per valuation only, thus raising the uncertain-
ty on the valuation and quality of the assets.
Ismee also recalled Bakke instructing
Shahrol to go and meet with PSI at their
offices in London and broker a deal to
bring back the US$700 million which was
transferred to them.
“Bakke also told him to present the re-
sults of his meeting to the board after his
discussions with PSI,” Ismee said.
“Tan Sri Bakke was furious as the JV
agreement was not the same as approved by
the board previously and that there were sev-
eral additional items included in the agree-
ment that seemed suspicious,” said Ismee.
Bakke’s involvement in 1MDB ended
when he resigned as chairman on Oct 19,
2009.
Under the workings of Jho Low and
PSI, 1MDB got itself in a position where
it had to fork out another US$830 mil-
lion into the 1MDB-PSI JV — of which
US$500 million went missing and US$330
million was again transferred to Good Star.
Najib, who is the only accused, is current-
ly facing 25 counts of money laundering and
abuse of power for alleged misappropriation
of billions of ringgit in 1MDB funds.
Low, who is popularly known as Jho
Low, is alleged to be a key figure in the
1MDB scandal.
It was reported that the assets belong-
ing to Goh involve monies in three Hong
Leong Bank accounts and a bungalow
in Penang while those related to Ng and
Lim involve monies held in seven bank
accounts.
Justice Mohamed Zaini said: “The
prosecution had merely shown monies
credited into the bank accounts but did
not provide any evidence of how these
bank accounts were related to, or used for,
the commission of the unlawful activities.”
“The prosecution also did not offer
any evidence to show how the monies
deposited in these bank accounts were
linked to any illegal transactions or that
they were proceeds of the unlawful ac-
tivities,” the judge said.
T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1 9 THEEDGE CEO MORNING BRIEF
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
KUALA LUMPUR (Nov 17): WZ Satu
Bhd is exploring the potential of taking over
a 100% stake in Citaglobal Engineering Ser-
vices Sdn Bhd (CESSB) from Citaglobal Sdn
Bhd, the private vehicle of WZ Satu’s chair-
man and largest shareholder Tan Sri Moham-
ad Norza Zakaria.
The indicative value of CESSB is at
RM140 million, according to the bourse fil-
ing. The transaction will be settled by issuing
new WZ Satu shares and new redeemable
convertible preference shares (RCPS).
WZ Satu and Citaglobal have entered into
a binding agreement to exclusively explore
and negotiate further.
In a press release, WZ Satu said the acqui-
sition of CESSB will be satisfied via 421.05
million new shares in WZ Satu at 19 sen per
share or RM80 million, and 315.79 million
new RCPS in WZ Satu valued at 19 sen per
share or RM60 million.
The acquisition comes with a profit guar-
antee of RM60 million in the three financial
years ending Dec 31, 2022 (FY22) to FY24,
according to the company’s filing.
CESSB is a class-G7 contractor which
is principally engaged in engineering con-
sultancy and construction-related services.
CESSB is also a licensed Network Facili-
ties Provider by the Ministry of Communica-
KUALA LUMPUR (Nov 17): Malay-
an Flour Mills Bhd’s (MFM) net profit
for the third quarter ended Sept 30, 2021
(3QFY21) fell 58.4% to RM3.91 million
from RM9.4 million a year ago, as its flour
and grains trading segment was impacted by
higher wheat costs and operating expenses.
MFM said the higher operating expens-
es were mainly as a result of a provision of
RM15 million being accounted for a profit
guarantee payment.
“[This is] in anticipation of the latest
management review of possible earnings be-
fore interest, taxes, depreciation and amorti-
sation achievement shortfall in this financial
year end, mainly due to the prolonged Cov-
id-19 effect to poultry industry and slower
recovery in economic circumstances,” the
company said in a bourse filing.
Quarterly revenue rose 22.78% to
RM620.52 million from RM505.4 mil-
lion a year earlier, due to higher sales in
both the flour and grains trading and aqua
feed milling segments, which increased by
22.3% and 42.6% respectively.
Compared to the preceding quarter of
2QFY21, MFM’s net profit tumbled 96.95%
from RM128.31 million, despite a 7.7% rise
in revenue from RM576.17 million.
For the nine months ended Sept 30, the
company posted a net profit of RM149.88
million compared with a net loss of RM11.86
million previously, as revenue grew 12.41%
to RM1.73 billion from RM1.54 billion.
10 TheEdge CEO morning brief
h o m e
WZ Satu major
shareholder to
inject engineering
consultancy firm
into group for
RM140 mil
by Adam Aziz
theedgemarkets.com
tions and Multimedia to own or provide any
network facility, with four years’ experience
in telco tower developments.
Based on WZ Satu’s current issued share
capital of 752.23 million shares, Norza currently
holds a 23.3% indirect stake in the company.
Separately, the company onWednesday pro-
posed to place out 150.45 million new shares
representing 20% of its exciting share capital at
17 sen apiece to raise up to RM25.56 million.
The shares will be placed to Aaron
Chen Khai Voon, Datuk Jeeventhiran Ra-
manaidu, Francis Sa Chee Peng and Raja
Malayan Flour
Mills 3Q net
profit falls 58% on
higher wheat costs,
operating expenses
by Shazni Ong
theedgemarkets.com
On prospects, MFM said the board is
concerned with the group’s performance
for 2021, particularly its flour and poultry
business in Malaysia.
It said the poultry industry has de-
mand disruptions caused by the Move-
ment Control Order since March 2020,
and a surge in the prices of corn, soy-
meal, ocean freight and crude oil since
October 2020 that is expected to contin-
ue unabated until 3QFY22. The emer-
gence of low pathogenic avian influenza
(LPAI) and Newcastle disease in July
2021 also further curtailed the supply
of commercial day-old-chicks.
“Arising from the above, the poultry in-
dustry has suffered tremendous losses and
needs to be resuscitated to ensure the food
security of the nation is restored.
Datuk Mufik Affandi Raja Khalid.
With the injection of CESSB into WZ
Satu, Norza’s stake will swell to around 60%,
according to the statement.
“With this exercise, WZ Satu will be my
flagship company, and I intend to bring the
company to greater heights. I look forward
to growing WZ Satu to becoming a serious
player in the facilities management, telecom-
munications, energy, infrastructure and tech-
nology sectors,” said Norza.
Norza first emerged as a substantial share-
holder in WZ Satu on Feb 4, 2020, when he
acquired a 10.95% stake.
The proposed acquisition is subject to ap-
proval of shareholders at an extraordinary
general meeting to be held later.
Astramina Advisory Sdn Bhd is the ap-
pointed transaction arranger for WZ Satu and
the appointed financial advisor for Citaglobal
in relation to the proposal.
WZ Satu was loss making in 2018 to 2020.
For the nine-month period ended Sept 30, 2021
(9MFY21), the company booked a net profit of
RM127,000 on revenue of RM190.41 million.
WZ Satu had suspended its shares from
trading for one day on Wednesday ahead of
the announcement. The counter last traded
at 22.5 sen, giving it a market capitalisation
of RM165.11 million.
“However, with the partnership with Ty-
son International Holding Co since end May
2021 and the improved economic prospect
for 2022 due to the herd immunity arising
from high and full vaccination rate in the
nation, Dindings Tyson Sdn Bhd (the joint
venture company) is optimistic of its outlook
for 2022 and beyond,” said MFM.
For the flour industry, the company said
as of November, the price of wheat has in-
creased 63% from October 2020. As such,
the company has been working closely with
the Ministry of Domestic Trade and Con-
sumer Affairs since March 2021 to adjust the
price of subsidised and non-subsidised flour.
“We hope to receive [a] positive re-
sponse from the ministry to allow us to
adjust the price by December 2021 and
beyond,” the company said.
MFM’s share price closed one sen or
1.36% lower at 72.5 sen on Wednesday,
giving the group a market capitalisation
of RM739.25 million, with 2.39 million
shares traded.
More corporate results:
Amway’s 3Q net profit falls 49% on
higher sales incentives, pays five sen
dividend Click here
Tomei 3Q net profit shrinks 92.6% y-o-y
on lockdown impact Click here
T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1 11 THEEDGE CEO MORNING BRIEF
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
KUALA LUMPUR (Nov 17): The mod-
ule that will be used by the government in
implementing the 5G network will be ex-
plained in detail by the Finance Ministry
in the Dewan Rakyat on Thursday, said
Communications and Multimedia Min-
ister Tan Sri Annuar Musa.
He admitted that there is currently a
debate on which is better, the multi-system
concept, namely the 5G network operated
by various telecommunication companies
or the single wholesale network system,
which only involves a single company as
planned to be used by the country.
Annuar said the government is aware
that the single provider concept had a his-
tory of failure in several other countries
such as Mexico.
“Studies have been done on the caus-
es of failure and the information we’ve
obtained so far is that the basis and back-
ground of the problems are very different
and the single wholesale network model is
not the same as what is planned to be used
through DNB (Digital Nasional Bhd).
“However, Finance Minister will elabo-
rate about DNB, because DNB is a compa-
ny under the responsibility of the Finance
Ministry, while the [communications and
multimedia] ministry will regulate the
spectrum distribution and the implemen-
tation of services later,” he said.
Annuar said this when winding up the
debate on the 2022 Supply Bill at the pol-
icy stage for the ministry in the House on
Wednesday.
Replying to a question from Khalid Sam-
ad (PH-Shah Alam), who wanted to know
if the government is confident that the 5G
network would be rolled out faster under
More announcements on institutional reforms
in next few months — MoF deputy sec-gen
KUALA LUMPUR (Nov 17): More an-
nouncements on institutional reforms
will be coming in the next few months
apart from policies that have been out-
lined in Budget 2022, said Ministry of
Finance (MoF) deputy secretary-general
of treasury (policy) Zakiah Jaafar.
She said the current administration
had the appetite for change and a sense
of urgency to ensure institutional reforms
are set in place.
“For instance, we will be embarking on
a Fiscal Responsibility Act to emphasise
governance and transparency of all fiscal
parameters,” she said in a panel discussion
at the Hasanah Forum 2021 on Wednes-
day (Nov 17).
The two-day forum beginning on
Wednesday themed “From Charity to
12 TheEdge CEO morning brief
h o m e
Finance Minister
to explain module
for 5G network
today — Annuar
Bernama
the single wholesale network system mod-
ule, Annuar said this had been guaranteed
by DNB itself.
“DNB has given a guarantee and the
government has set a timeline within
three years by next year for 36% cover-
age, after that before 2024, it will reach
80%. This is the timeline mandated to
the DNB,” he said.
Bernama
Justice — A Vision for an Equal and Just
Malaysia” is organised by Yayasan Hasan-
ah, a Khazanah Nasional Bhd foundation.
Meanwhile, Zakiah said civil society
complements the government in deliver-
ing public service more efficiently to reach
the targeted groups and in Budget 2022,
the roles are further elevated in the form
of triple helix collaboration.
“In Budget 2022, initiatives are curated
to be incorporated between government,
government-linked companies, the private
sector and non-governmental organisations
in delivering assistance, social protection,
jobs, business support and green initiatives.
“Social enterprises are given special fo-
cus in Budget 2022 as they have proven
On the pricing, Annuar said negotia-
tions are still ongoing and there has not
been any final decision on it yet.
“For your information, negotiations be-
tween telecommunication companies and
DNB are being handled by MCMC (the
Malaysian Communications and Multimedia
Commission), as price negotiation and price
regulation will be determined by MCMC
through a mechanism provided under the law.
“The responsibility of the ministry and
MCMC is to ensure a reasonable price and
the price paid by the people is cheap,” he said.
On the cost of RM16.5 billion to pro-
vide the technology, Annuar explained that
it did not involve any direct funding from
the government.
“This will be explained to the MPs dur-
ing a meeting with the backbenchers later,”
he said, adding that the topic can be dis-
cussed in more detail on other platforms.
to be an important agent to promote
and encourage social change,” she said.
Meanwhile, Zakiah noted that Ma-
laysia is at the tail end of the pandem-
ic crisis and the economic recovery is
gaining traction.
“However, after two years of econom-
ic losses due to the Covid-19 pandemic,
it will be challenging to return to sus-
tainable growth, particularly the target
to reach high-income nation status as
envisioned in the 12th Malaysia Plan,”
she added.
Read also: Govt to set up State Digital
Economic and 41R Policy Council to
harmonise digital development plans
Click here
 T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1 13 THEEDGE CEO MORNING BRIEF

H O M E

MAA: October Monthly vehicle sales in Malaysia

vehicle sales jump 80000 Vehicles sold

43.4% m-o-m as 60000

companies ramp 40000

up production
20000

48,450
39,810
54,776
49,935
60,760
44,695
50,854
51,148
44,666
53,870
52,584
54,842
42,867
41,088
21,242

23,309
42,586
57,552
52,800
56,444
57,695
56,489
68,836
32,829
42,784
64,875
57,912
46,663

17,500
44,275
63,489
BY TAN SIEW MUNG

1,921
7,086
143
theedgemarkets.com
0

June

June

Oct
Dec

June

KUALA LUMPUR (Nov 17): The Ma-
laysian Automotive Association (MAA)
said on Wednesday total industry volume
(TIV) in Malaysia rose 43.4% month-on-
month (m-o-m) to 63,489 units in Octo-
ber this year compared with 44,275 units
recorded in September.
In a statement, the association said the
higher sales were underpinned by compa-
nies ramping up production and deliveries
of vehicles to fulfil backlog orders, as well
as a full and thus longer month of business
operations nationwide.
This was the second time this year that
the monthly TIV exceeded 60,000 units.
2019
Source: The Malaysian Automotive Association (MAA)
The last time TIV exceeded 60,000 was
March when it stood at 64,875 units.
On a yearly basis, October car sales
grew 10.04% from 57,695 in 2020.
However, for the cumulative 10 months,
vehicle sales fell 4.81% to 382,379 from
401,714 a year ago.
Meanwhile, total vehicle production
was down 11.56% year-on-year to 65,410
Dec
2020 2021
units in October from 58,631 units a year
earlier.
For the cumulative 10 months, total
vehicle production also slipped 1.36% to
369,406 from 374,494 a year earlier.
MAA expects sales in November to be
maintained at October 2021 level, as year-
end promotional campaigns are likely to
spur sales.
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
KUALA LUMPUR (Nov 17): Inari Amer-
tron Bhd is set to be added as a constituent
of FBM KLCI, while Hap Seng Consoli-
dated Bhd is likely to be dropped from the
stock market barometer as the latter fails
to meet the liquidity criteria.
Inari is at the frontrunner to be included
in the KLCI index in the next review as
it is the highest market ranking company
among the non-KLCI constituents with a
market capitalisation of about RM15 bil-
lion, according to CGS-CIMB analysts Ivy
Ng Lee Fang and Nagulan Ravi.
“This would be the first time a tech-
nology company is represented in [the]
KLCI index and that could help [catalyse]
Inari’s share price,” they said in a strategy
note dated Nov 16.
Shares of Inari had risen four sen
or 0.98% to RM4.14 as at the time of
writing, giving the semiconductor play-
er a market capitalisation of RM15.28
billion. The stock has climbed 52.21%
year-to-date.
This is followed by Westports Holdings
Bhd, whose market capitalisation is about
RM14 billion, the analysts noted. West-
ports was unchanged at RM4.24, valuing
the group at RM14.46 billion.
FTSE Russell is due to announce the
results of its upcoming semi-annual review
of FTSE Bursa Malaysia Index Series on
Dec 2, 2021.
The review will use the market capi-
talisation data at the close of trading on
Nov 22 and all constituent changes in the
review will take effect on Dec 20.
KUALA LUMPUR (Nov 17): Hong Le-
ong Investment Bank (HLIB) Research has
maintained its “Buy”rating on Press Metal
Aluminium Holdings Bhd at RM5.35 with
an unchanged target price (TP) of RM7.42
and said it expects Press Metal’ s 3Q2021
results to come in at a record high with a
net profit of between RM275 million (+8%
q-o-q, +125% y-o-y) and RM300 million
(+17% q-o-q, +146% y-o-y).
Press Metal’s third quarter results are
tentatively scheduled for release on Nov 26.
In a note Wednesday (Nov 17), HLIB’s
Jeremie Yap said that if met, this would
bring 9M2021’ s sum to RM736 -761
million, which is more than double ver-
sus a core net profit of RM315 million in
9M2020.
“We are expecting a further q-o-q spike
in 4Q2021 earnings, due to: (i) the full
commissioning of Press Metal’ s Phase 3
Samalaju expansion project; (ii) soaring
LME aluminium spot prices; and (iii) addi-
tional earnings boost from its 25%-owned
Phase 1 PT Bintan alumina refinery busi-
ness,” he said.
14 TheEdge CEO morning brief
h o m e
CGS-CIMB:
“Our analysis suggests that HSC (Hap
Seng Consolidated) has only met this cri-
Inari Amertron
terion in six out of the past 11 months. As
such, it could be removed from the KLCI
likely to replace
index in the upcoming review, and be re-
placed by the highest market cap ranking
Hap Seng
company that is presently not included
in the index as of Nov 22, 2021,” said the
Consolidated as
analysts.
The FTSE Bursa Malaysia index
KLCI constituent
ground rules stipulate that security would
be inserted into the FBM KLCI during the
periodic review if its market cap has risen
to the 25th position or above, and security
by Syafiqah Salim would be deleted at the periodic review if
theedgemarkets.com it has fallen to the 36th position or below.
Apart from market capitalisation crite-
ria, companies will need to satisfy free float
(share capital of the company that is free-
ly available for trading) of 15% or more,
and a liquidity screening test to qualify for
KLCI inclusion.
As of Oct 29, CGS-CIMB noted
that the banking sector had the largest
weightage on the KLCI index at 35.3%,
followed by the telecommunications sec-
tor at 11.7%, and the food and beverage
sector at 11.6%.
Since the last KLCI review date on Nov
23, 2020, Top Glove Corp Bhd, Hartalega
Holdings Bhd and Sime Darby Plantation
“In our assessment of market data as Bhd were among the KLCI constituents
at the end of today (Nov 16), we found that posted the largest declines in market
that Hap Seng Consolidated is unlikely to capitalisation.
meet the liquidity criteria as it is unlikely Meanwhile, the biggest three gainers
to meet the median daily trade per month were IHH Healthcare Bhd, CIMB Group
of 0.04% for eight out of 12 months. Holdings Bhd and Genting Malaysia Bhd.
Press Metal
“We may increase our ascribed P/E
multiple for PMETAL as we note that
poised for record
the group deserves a premium in its val-
uations to reflect: (i) the group’s favour-
high quarterly
able cost structure as bulk of its energy
costs are locked in via 15-25 year power
profit in 3Q,
purchase agreement (PPA) with Sarawak
Energy Bhd; (ii) the scarcity premium
says HLIB
of a growing large-cap, investible alu-
minium proxy in Malaysia; and (iii ) its
low carbon footprint as its smelters are
hydro powered, making its ESG pro-
by Surin Murugiah file more favourable to investors,” he
theedgemarkets.com said.
Yap said he is projecting Press Metal’s
core PATMI to grow massively by 130% Read also:
and 116% to RM1.1 billion and RM2.4
billion for FY21-22F respectively. Fitch revises outlook on Hong Leong
“This would represent a CAGR of 123%, Bank to stable, affirms ‘BBB+’
which we reckon is a pretty scarce phenom- Click here
enon for a large-cap company, in our view.
“Our TP is based on FY22F EPS of
13.7 sen pegged to a P/E multiple of 25x, RHB ups Dialog TP, says 1Q core
which is in line with its 3-year historical earnings in line with estimates
mean P/E. Click here
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1 15 TheEdge CEO morning brief

h o m e

Pos Malaysia not seen as a bargain

despite plunge in share price
e LT Std (text font)
TheEdge logo in
KUALA LUMPUR the
(Nov 17): charts.
While Pos Deletebyblack box after align.
Syafiqah Salim is adjusted for a 3% discount to reflect our
Malaysia Bhd’s share price has plunged theedgemarkets.com two-star ESG [environmental, social, and
almost 40% from the peak of RM1.20 in governance] rating for the company,” said
late December last year, some analysts do the research house.
not think the postal group is a good bargain Based on AmInvestment’s projection,
unless it fixes its operations. Pos Malaysia will record a wider net loss of
Pos Malaysia’s share price fell to an intr- RM197.9 million in FY21 (from RM164.9
aday low of 73 sen on Wednesday’s morn- million it projected previously).
ing trade, declining as much as five sen or The research house also tweaked its
6.41% after the postal service company FY22 earnings forecasts slightly to RM89.2
reported worsened results for the third million loss (versus RM88.8 million loss)
quarter ended Sept 30, 2021 (3QFY21). and a smaller profit of RM2.7 million in
It later closed at 74 sen, still down 4.5 sen FY23 (versus RM3.6 million profit), to
or 5.73%, with some 2.68 million shares reflect a slower recovery of Pos Malaysia’s
traded. At 74 sen, the group was valued at businesses from the Covid-19 impact due
RM575.59 million.Year to date, the coun- to the prolonged lockdown.
ter has fallen about 39%. “We are cautious of the significant drop
According to Bloomberg, Pos Malaysia in parcel volume handled by Pos Malay-
has two “neutral” calls, two “hold” calls, sia. The company’s operation is still being
and one “market perform” rating. There Pos Malaysia Bhd affected by the resurgence in Covid-19 in-
is no ‘buy’ recommendation on the stock. Vol (mil) RM fections locally.
It saw some two million shares transact- 35 1.5 “Nonetheless, we believe all is not lost
ed, lower than its 200-day average volume for Pos Malaysia if it is able to get its act
of 2.16 million. 30 together given the bright outlook for the
According to Bloomberg, Pos Malaysia 25 parcel delivery segment (of which Pos Ma-
has two “neutral” calls, two “hold” calls, 1.2 laysia is one of the top three players in Ma-
and one “market perform” rating. 20 RM1.04 laysia) underpinned by: the structural and
The group’s 3QFY21 net profit wid- 15 irreversible change in consumer preference
ened to RM43.9 million from RM7.43 0.9 towards online shopping, and the freeze
million a year earlier amid lower revenue 10 RM0.74 on new courier licences in Malaysia from
and higher finance costs. Its quarterly rev- 50 Sept 2020 to Sept 2022 to ensure ration-
enue also fell 13.93% to RM536.26 mil- al competition in the segment,” it added.
lion from RM623.03 million previously. 0 0.6 Hong Leong Investment Bank (HLIB)
For the nine months ended Sept 30, Nov 17, 2020 Nov 17, 2021 Research, meanwhile, said the group’s op-
2021, its cumulative net loss grew 180.9% Source: Bloomberg
erating environment continues to be chal-
to RM212.52 million from RM75.67 mil- lenging, hampered by the fast-shrinking
lion on the impairment of property, plant snail mail volume as well as the fierce com-
and equipment during the period, while tained its “hold” rating for the stock, but petition in the last-mile delivery industry.
revenue fell 6.7% to RM1.67 billion from with a lower fair value (FV) of 76 sen as Nonetheless, HLIB has maintained its
RM1.79 billion. the research house projects a wider net “hold” call with an unchanged target price
However, all is not lost for Pos Malay- loss for the group’s financial year ending (TP) of 76 sen, based on P/B multiple of
sia despite facing operational headwinds Dec 31, 2021 (FY21). 0.65 times on FY21 book value per share
moving forward if the national courier gets “We tweak our FV down slightly to (BVPS) of RM1.18.
its parcel delivery segment strategy right. RM0.76 (from RM0.78 previously) for Kenanga Research, which has kept its
AmInvestment projects wider net loss Pos Malaysia, based on a P/B of 0.60x, at “market perform” rating on the stock,
in FY21; tweaks FY22 and FY23 forecasts a premium to its historical P/B of 0.45x added: “Pos Malaysia’s inability to close
In a note on Wednesday (Nov 17), to factor in the bright spot in the high- down post offices, coupled with its un-
AmInvestment Bank Research has main- growth parcel delivery segment. Our FV ionised workforce could well mean prof-
itability at its postal services segment is
Stockbroking firms’ TPs and recommendations for Pos Malaysia Bhd capped. The courier business is expected
to improve on e-commerce demand but
Stockbroking firm Target price (RM) Recommendation will continue to operate in a competitive
Nomura 1.04 Neutral environment pressured by price and cost
RHB Research 0.78 Neutral challenges.”
AmInvestment Bank Research 0.76 Hold Kenanga also did not make any changes
Hong Leong Investment Bank Research 0.76 Hold
on its TP but noted that the saving grace
is a 5% dividend yield. The TP is kept at
Kenanga Research 0.72 Market perform
72 sen based on 10 times FY22 earnings
Source: Bloomberg
per share.
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1 16 TheEdge CEO morning brief

h o m e

news In brief

Kimlun lands construction and maintenance contract worth RM780m

KUALA LUMPUR (Nov 17): Kimlun Corp Bhd’s unit Kimlun Sdn Bhd has secured a
contract worth RM780 million for the construction and maintenance of the Sarawak-
Sabah Link Road project (the Lawas-Long Lopeng junction) from Samling Resources
Sdn Bhd. In a filing, Kimlun said the job is expected to be completed in the second
quarter of 2025. It added that it had secured RM1 billion worth of construction
projects and manufacturing orders to date. — by Surin Murugiah

CIMB Bank issues call warrants over

Genting Malaysia shares
KUALA LUMPUR (Nov 17): CIMB Group
Holdings Bhd’s 99.99%-owned CIMB Bank
Bhd on Wednesday announced a proposed
issue of up to 150 million European-
style non-collateralised cash-settled call
warrants (GENM-C1H) at 15 sen each
over casino and hotel operator Genting
Malaysia Bhd shares. In a bourse filing,
CIMB Bank said GENM-C1H is expected
to be listed on the Structured Warrants
Board of Bursa on Thursday. CIMB Bank
said GENM-C1H, which was launched and
allotted on Wednesday, has an exercise
ratio of three call warrants for one Genting
Malaysia share. “Exercise price [of GENM-
C1H is] RM3.05, being 97.44% of the
closing price of Genting Malaysia shares
on Nov 5, 2021 (price-fixing date). On
the price-fixing date, the closing price of
Genting Malaysia shares was RM3.13,”
CIMB Bank said. GENM-C1H’s expiry date
is July 29, 2022. — by Tan Siew Mung
T7 Global’s energy division bags
RM150m contracts from Petronas
Carigali, PTTEP Group
KUALA LUMPUR (Nov 17): T7 Global
Bhd has secured two contracts worth a
combined value of about RM150 million
under its energy division for integrated
well services and operations and
maintenance businesses. The energy
solutions provider said in a statement
that the first contract was from Petronas
Carigali Sdn Bhd for the provision of plug
and abandonment integrated services for
the M3 oilfield, valid from Oct 14, 2021
to Dec 31, 2022. The second contract was
from PTTEP Sabah Oil Ltd, PTTEP Sarawak
Oil Ltd and PTTEP HK Offshore Ltd (PTTEP
Group), and is for the provision of Gastec
nitrogen generator maintenance services
and spare parts. The contract will be for
two years from July 2, 2021. According
to T7 Global, the M3 oilfield contract was
awarded under the Pan Malaysia umbrella
contract for the provision of integrated well
services for intervention, work-over and
abandonment for Petronas and petroleum
arrangement contractors back in Sept 20,
2019. — by Shazni Ong
Talam Transform sells Chinese unit
with creditor rights for RM46.67 mil
KUALA LUMPUR (Nov 17): Talam
Transform Bhd is selling its entire 85%
stake in Jilin Province Maxcourt Hotel
Ltd (JPMHL) together with an assignment
amount of creditors rights to Jilin Provincial
Expressway Group Co Ltd (JPEGCL) for
a combined cash sum of 72.74 million
yuan (RM46.67 million). Talam Transform
previously proposed the sale of JPMHL
for 84.66 million yuan (RM55.6 million
at the time), but the plan was called off in
2018 due to the failure of the purchaser
to obtain regulatory approval for the deal.
JPMHL was involved in the operations of
Maxcourt Hotel in Changchun, Jilin, China
but the hotel ceased operations since
2014 and is currently in liquidation. Under
this latest deal, JPEGCL will acquire all of
Talam Transform’s 85% equity interest in
JPMHL for one yuan, and all the creditors’
rights belonging to Talam Transform and its
subsidiary Malim Enterprise (HK) Ltd that
amount to 72.74 million yuan for the same
value. Talam Transform’s original cost of
investment in JPMHL on Dec 31, 1997 was
RM73.38 million. — by Adam Aziz

Sunway Group, Indonesia’s Kejora

Bursa seeks to procure consulting
services on voluntary carbon market
KUALA LUMPUR (Nov 17): Bursa Malaysia
Bhd is seeking a vendor to provide
advisory services on designing a blueprint
to establish a voluntary carbon market
(VCM) for Malaysia and for the launch
and operationalisation of the market. A
VCM refers to a rules-based market where
standardised contracts of high-quality
carbon credits can be traded in a transparent
and orderly manner, Bursa said in a tender
notice. Bidders must have knowledge
pertaining to the provision of advisory or
consulting services on the establishment
or the running of a VCM, the notice read.
The tender follows the government’s
announcement in Budget 2022 that Bursa
will launch a VCM as a voluntary platform for
carbon credit trading between green asset
owners and other entities. — by Adam Aziz
Capital launch US$25 mil Orbit
Malaysia Fund
KUALA LUMPUR (Nov 17): Sunway Group
and Indonesia’s leading venture capital
(VC) firm, Kejora Capital, has launched a
US$25 million Orbit Malaysia Fund, focusing
on early-stage Malaysian startups. In a
statement, Sunway said Malaysia Venture
Capital Management Bhd (MAVCAP) will
act as an anchor investor and the fund will
actively invest in Series A financing, not only
in Malaysian startups but also significantly
in other high-growth Southeast Asian
startups. Orbit Malaysia Fund director
Raymond Hor said the fund is an alliance set
up in the spirit of collaboration to leverage
the combined resources not just to help
startups, but also as a platform for more
private corporations to participate in VC
investment. “Malaysia is home to a fast-
growing and vibrant startup ecosystem
and there is great potential for Malaysian
companies to become Southeast Asia’s
next unicorn,” he zaid. Meanwhile, Sunway
Group chief innovation officer, Matthijs
(Matt) van Leeuwen said Orbit Malaysia
is an extension of the conglomerate’s
unique innovation ecosystem and startup
funding funnel. To date, Kejora Capital
has over US$600 million in assets under
management (AUM) with 38 portfolios
across eight years of existence, birthing
four unicorn exits, said Sunway. — Bernama
 T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1
KUALA LUMPUR (Nov 17): Malaysia’s
Drug Control Authority (DCA) has given
conditional approval to the Covid-19 vac-
cines from Sinovac and AstraZeneca to be
used as booster shots, according to the Min-
istry of Health (MoH).
MoH director-general Tan Sri Dr Noor
Hisham Abdullah said approval had been
given for the two vaccines to be used as
booster doses for individuals aged 18 years
and above who had received vaccines of the
same type (homologous).
“The booster dose for AstraZeneca’s vac-
cine is administered six months after the
receipt of the second dose of vaccine, while
the booster dose for [Sinovac] CoronaVac’s
vaccine is administered three to six months
after the receipt of the second dose.
“The administration of booster doses of
these two vaccines to specific target groups
will be detailed by the Covid-19 Immunisation
Task Force (CITF-B) and will be announced
from time to time,” said Dr Noor Hisham in
a statement on Wednesday (Nov 17).
Health Minister Khairy Jamaluddin shared
in a tweet: “Sinovac and AstraZeneca [vac-
cine] booster have gotten regulatory approval
which paves way for the Vaccination Technical
Working Group to make recommendations
on who qualifies to receive the shot under the
heterologous booster programme.”
17 THEEDGE CEO MORNING BRIEF
H O M E
MoH: Sinovac,
AstraZeneca vaccines
get conditional
approval for use as
booster shots
BY SYAFIQAH SALIM
theedgemarkets.com
The approval for these two vaccines to be
used as booster shots came after the DCA
granted the same for Pfizer’s Comirnaty
vaccine last month.
Meanwhile, the DCA has also agreed
to grant conditional registration approval
for the AstraZeneca vaccine from a third
manufacturer, namely SK Bioscience Co
Ltd in South Korea, said Dr Noor Hisham.
The registration holder for this vaccine is
AstraZeneca Sdn Bhd.
He said the first manufacturer who ob-
tained the conditional registration approval
from DCA was AstraZeneca Nijmegen BV in
the Netherlands, while the second manufac-
turer was Siam Bioscience Co Ltd inThailand.
“MoH would like to inform that this
conditional registration approval requires
information on the quality, safety, and effec-
tiveness of the vaccine product to be moni-
tored and evaluated based on the latest data
from time to time. It is to ensure that the
comparison of benefits over risks for the
vaccine remains positive.
“MoH is also always committed to im-
proving access to Covid-19 vaccine products
in Malaysia, by ensuring that they have been
evaluated in terms of quality, safety, and ef-
fectiveness by the NPRA (National Pharma-
ceutical Regulatory Agency) and approved by
the DCA,” Dr Noor Hisham added.
A total of 22,332,571 individuals or
95.4% of Malaysia’s adult population had
completed the two-dose vaccine regime as
of Tuesday (Nov 16).
Based on the MoH’s COVIDNOW portal,
they were among 22,882,504 individuals or
97.7% of the adult population who had re-
ceived at least one vaccine dose.
Read also:
New Covid-19 cases increase to 6,288 on
Nov 17 Click here
95.4% of Malaysian adults fully vaccinated
as of Nov 16 Click here
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
KUALA LUMPUR (Nov 17): A commo-
tion broke out during the winding-up ses-
sion of the Supply Bill 2022 on Wednes-
day when several Opposition Members of
Parliament (MPs) were not satisfied with
National Unity Minister Datuk Halimah
Mohamed Sadique’s answer on the Ma-
laysian Indian Transformation Unit (MI-
TRA) funds issue.
Things started to heat up when RSN
Rayer (PH-Jelutong) interrupted the wind-
ing-up session to demand an answer from
Halimah, prompting an argument between
them.
“This is important because after the
matter was exposed during the last session,
the MACC (Malaysian Anti-Corruption
Commission) had launched an investiga-
tion and made several arrests.
“My question is whether MIC lead-
ers are directly involved, we need to know
because 16 people have been detained,”
said Rayer.
Earlier, Halimah said the decision not
to answer questions regarding the issue was
made following the advice of the MACC for
fear of disrupting the ongoing investigation.
KUALA LUMPUR (Nov 17): The Min-
istry of Housing and Local Government
(KPKT) has established a committee to
coordinate the implementation of 500,000
units of affordable housing for the duration
of the 12th Malaysia Plan (12MP).
Its Minister Datuk Seri Reezal Merican
Naina Merican said the committee would
monitor the implementation and provision
of housing supply by 15 housing provision
agencies, in addition to the Ministry, State
governments and the private sector.
“From the targetted 500,000 afforda-
ble housing units under the 12MP, the
Ministry plans to contribute 20%, which
is around 100,000 units,” he said during
the winding up of the Supply Bill 2022 at
the policy level at the Dewan Rakyat on
Wednesday.
He said besides the committee, the
National Affordable Housing Council
(NAHC) is also a platform to monitor
the construction of affordable housing in
the country.
The Ministry is continuing its efforts
to identify the causes behind Malaysians’
inability to afford homes in line with the
12MP strategy of increasing the supply
of affordable housing to target groups, he
said.
Also, Reezal Merican said the Ministry
would pay attention to housing projects
for B40 and M40 groups throughout the
country to ensure that they were more in-
clusive and with complete infrastructure.
On the People’s Housing Projects
18 TheEdge CEO morning brief
h o m e
Commotion in
“After the issue was raised in the pre-
vious session, the Ministry has expressed
Dewan Rakyat
readiness to cooperate with MACC. Even
before the issue was raised, we have asked
over MITRA
the MACC to come to the Ministry to re-
view all applications and approvals made
issue
from 2019,” she said.
Besides Rayer, P Kasthuriraani (PH-Ba-
tu Kawan) also interrupted the session and
suggested that relevant MITRA reports be
Bernama made available to MPs.
In a bid to calm the situation, Depu-
ty Speaker Datuk Mohd Rashid Hasnon
warned Rayer and Kasthuriraani for in-
terrupting the winding-up session without
his permission.
“Standing Order 37(1)(b) (of the
Standing Orders of the Dewan Rakyat), if
you wish to say something you have to ask
for permission from me. I do not allow it.
“...you (Kasthuriraani) keep on talking
without getting permission. I’m warning
you Batu Kawan,” he said.
The situation calmed down after that
and Halimah continued to respond to oth-
er issues raised by MPs during the debate
session.
total PPR units built in the country with
Housing Ministry 3,897 units unfilled, he added.
In other developments, he said the Min-
sets up committee istry is drafting a policy regarding the tran-
sition of solid waste management towards
to monitor a circular economy that will emphasise sus-
tainable consumption and manufacturing
affordable housing practices after realising the need to create
a holistic solid waste management system.
implementation He said the effort would reduce the gen-
eration of solid waste in the long term and
reduce the costs of solid waste manage-
Bernama ment, thereby contributing to the achieve-
ment of Sustainable Development Goals
(SDGs).
“By encouraging a circular economy
and to reduce waste at landfills, the Min-
istry is targeting to increase the national
recycling rate to 40% by 2025,” he said.
More Parliament stories:
Incentive of up to 80% for contributors
under social security scheme for
self-employed next year, Dewan Rakyat
told Click here
(PPR) in Sabah, he said 33 projects have Study on cooking oil subsidy to be
been completed in the State, for a total completed next year — Nanta Click here
of 23,009 units, while five more projects,
totalling 3,090 units, are still under con-
struction so far. Khairy: Cannabis-based products
Overall, the number of completed PPR for medical purposes with sufficient
projects in Sabah represents 21.4% of the evidence can be registered Click here
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
Non-renewal of
gaming licences
not meant
to deprive
anybody’s rights
— Kedah MB
Bernama
ALOR SETAR (Nov 17): The move by
the Kedah State Government to discon-
tinue the renewal of gaming licences of
all gaming shops in the State is not meant
to deny the human rights of others or to
discriminate against any race in the State.
Menteri Besar Datuk Seri Muham-
mad Sanusi Md Nor said the decision
was one way to obey the command of
God and to be grateful for the blessings
given to the State.
“When I was appointed to lead the
government I can see Kedah being bless-
ed. The value of investment coming in is
high. In fact, each household in the State
received a food basket. So I decided not
to renew the licences of gaming shops.
It is one way how I show how grateful I
am for the many blessings that Allah had
given to the State.
“But some protested using human
rights as an excuse, using racism as an
excuse to deprive the non-Muslims. All
these are not true,” he said in his wind-
ing-up speech on the debate of Kedah
Budget 2022 at the State Legislative As-
sembly at Wisma Darul Aman, here on
Wednesday.
Besides that, Sanusi that there has
been no study to show that gambling
activities are profitable. In fact, the Chi-
nese government had banned gaming in
the State since 1949.
“There are many Muslims here. The
decision was made based on the need
to maintain harmony and on the basis
of being grateful for the bountiful bless-
ings,” he said.
19 TheEdge CEO morning brief
h o m e
Zahid urges
Melaka voters
not to listen
to rumours of
Sulaiman only
as interim chief
minister
Bernama
MELAKA (Nov 17): Barisan Nasional (BN)
chairman Datuk Seri Dr Ahmad Zahid Ha-
midi has refuted claims that Datuk Seri Su-
laiman Md Ali will only be the interim Mel-
aka chief minister if the coalition wins in the
state election on Saturday (Nov 20).
In a post on Facebook, the Umno pres-
ident urged voters not to be influenced by
such rumours.
“To voters and the people of Melaka,
don’t listen! Don’t be fooled ... there is
no such thing as an interim chief minis-
ter,” he said.
Sulaiman has been named the can-
didate for the post of the Melaka chief
minister if BN is given the mandate to
form the state government in the state
Terengganu still
negotiating with
federal govt on
reimbursement
for East Coast
Expressway 2
Bernama
KUALA TERENGGANU (Nov 17): The
Terengganu government is still in nego-
tiations with the federal government to
recover the balance of RM1.43 billion
spent for the construction of the East
Coast Expressway 2 (LPT2).
Menteri Besar Datuk Seri Dr Ahmad
Samsuri Mokhtar said although the Min-
istry of Finance had previously stated
that the federal government had no debt
with Terengganu until 2021, the state
government is of the view that the fed-
Zahid Izzani Mohd Said/The Edge
In a post on Facebook, the Umno president urged
voters not to be influenced by such rumours.
election to be held on Nov 20.
It was announced by BN’s Melaka state
election director Datuk Seri Mohamad
Hasan, who described Sulaiman as a lead-
er accepted by the Melaka people and is
free of issues.
Pakatan Harapan (PH), meanwhile, has
named Adly Zahari, who is contesting for
the Bukit Katil seat as its chief minister
candidate.
Sulaiman, who is the incumbent Len-
du assemblyman, is defending the seat in
a contest against Major (Rtd) Abdullah
Mahadi of Perikatan Nasional and PH’s
Mohamad Asri Ibrahim.
The Melaka state election was called
following the dissolution of the State Legis-
lative Assembly on Oct 4 after four assem-
blymen withdrew support for Sulaiman.
eral government still had unresolved fi-
nancial matters.
“Based on the state government re-
cords, it has been agreed to and at that
time, there was also a Cabinet paper
which approved the repayment to the
state government,” he said during the
question-and-answer session at the State
Legislative Assembly sitting in Wisma
Darul Iman here on Wednesday (Nov 17).
Ahmad Samsuri said this in response
to a question from Wan Hapandi Wan
Nik (PAS-Sura) on the federal govern-
ment’s debt with the state government
until 2021.
According to records, the actu-
al amount funded by the Terengga-
nu government for the construction
of the LPT2 is RM1.85 billion, while
the amount that has been channelled to
the state government until June 2019 is
RM418.5 million.
Replying to a supplementary ques-
tion from Datuk Rozi Mamat (Barisan
Nasional-Telemong) on the​​ payment for
the LPT1 by the federal government, Ah-
mad Samsuri said the payment of about
RM200 million a year ended last year.
 T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1 20 THEEDGE CEO MORNING BRIEF
Official Solar Partner Supported By

REAL ESTATE
MATTERS

PRESENTS

Property Excellence
Awards
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1 21 TheEdge CEO morning brief

w o r l d

UK inflation
LONDON (Nov 17): British inflation around 5% in the coming months.
surged to a 10-year high last month as The BoE is expected to become the

leaps to 10-year
household energy bills rocketed, accord- first of the world’s major central banks to
ing to data on Wednesday that will bolster raise rates since the coronavirus pandemic

high, bolstering
expectations that the Bank of England will swept the global economy, with investors
raise interest rates next month. and economists increasingly predicting that

rate hike bets

Consumer prices rose by 4.2% in annu-
al terms in October, leaping from a 3.1%
increase in September. Both the BoE and a
Reuters poll of economists — none of whom
had predicted such a big increase — had
pointed to a reading of 3.9%.
“Today’s inflation data will reinforce
the Bank of England’s resolve to act,”Yael
Selfin, chief economist at KPMG UK, said.
The pound climbed to a one-week high
versus the US dollar and a 21-month high
against the euro after the data.
Finance minister Rishi Sunak said ris-
ing inflation was not just a British problem
and the government was taking action to
offset the hit to spending power, even as it
scales back most of its coronavirus emer-
gency support.
Britain’s inflation rate puts it in the mid-
dle of the pack among G7 countries, with
annual US consumer price inflation now
running north of 6%.
The Office for National Statistics said
household energy bills were the biggest
driver of inflation following the lifting of
a regulatory cap on bills last month, with
gas prices paid by consumers up 28.1%
in the year to October.
British energy suppliers are grappling
with soaring wholesale gas prices that have
led to the collapse of a number of energy
by Andy Bruce & William Schomberg
Reuters
companies, forcing more than 2 million
customers so far to switch providers —
often on higher tariffs.
The BoE — which has a target of 2%
inflation — has said higher borrowing costs
can do nothing to influence energy pric-
es. But it is concerned that high rates of
inflation could harm its credibility in the
eyes of the public.
Forecasts published by the BoE this
month showed it expected inflation to hit
will happen on Dec 16.
On Monday BoE Governor Andrew
Bailey said he was “very uneasy” about
the inflation outlook and that his vote
to keep rates on hold earlier this month,
which shocked financial markets, had been
a very close.
On Tuesday, data suggested Britain’s
labour market was withstanding the end of
the government’s job-protecting furlough
scheme, a key factor for the BoE and its
decision on rates.
Robert Alster, chief investment officer
at wealth manager Close Brothers Asset
Management, cautioned against assum-
ing a BoE rate hike next month was a
done deal.
“Ultimately, the impact of rising infla-
tion on consumer spending and confidence
will be a critical measure of stability, and
determine how hawkish the Bank needs
to be,” he said. “We may well see the rate
rise kicked into 2022.”
There were signs in Wednesday’s data
of further inflation pressure in the pipe-
line. Prices charged by factories rose by
more than expected, up 8% compared
with October 2020, the sharpest increase
since 2011.
Manufacturers’ input costs jumped by
13%, the most since 2008, the ONS said.

BENGALURU (Nov 17): The United
States has signed contracts worth about
US$1 billion to secure the antibody-based
Covid-19 treatment developed by Britain’s
GlaxoSmithKline (GSK) and US-based
Vir Biotechnology, the drug makers said
on Wednesday.
GSK said the deal brought the total
number of doses secured for the treat-
ment, sotrovimab, to more than 750,000
globally, adding that supply was expected
by Dec 17. The United States would have
an option to buy additional doses through
March 2022.
The companies did not specify how
many doses the US government had signed
up for. However, other deals include 10,000
doses for Canada and up to 220,000 doses
for the European Union.
Sotrovimab is authorised for emergency
use in the United States to prevent mild
or moderate cases of Covid-19 from wors-
ening. The European Medicines Agency
has given its go-ahead for use by mem-
ber states although EU-wide approval is
still pending.
The treatment has shown to cut the risk
US secures of hospitalisation or death by 79% in adults
with mild to moderate Covid-19.
GSK-Vir Covid-19 While vaccines remain at the heart of
the fight against Covid-19, treatments in-
antibody drug cluding oral antiviral pills offer options to
contain infections.
doses worth Last week, partners GSK and Vir said
the drug was shown in a trial to work as
US$1 billion well when given as a shot in the arm when
administered via the standard infusion, po-
tentially offering more convenience.
by Pushkala Aripaka “Given ongoing evidence, which demon-
Reuters strates its ability to maintain activity against
the tested circulating variants of concern,
reuters including Delta, we are confident sotro-
vimab will continue to be important,” Vir
chief executive George Scangos said in a
statement.
The treatment, branded Xevudy,
brought in sales of £130 million (US$175
million) for GSK in the first nine months
of 2021.
Similar products are offered or being
developed by Eli Lilly, Regeneron, and As-
traZeneca.
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1 22 TheEdge CEO morning brief

w o r l d

China can’t
(Nov 17): China and the world must tween the two presidents, keep their focus
work together to boost global economic on cooperation and manage and control

develop isolated
growth, Vice President Wang Qishan differences.”
said, vowing that Beijing will continue In recent years, the US and some of its

from the world,

opening up more to foreign investment allies have put more restrictions on Chinese
at a time when more countries are investment over national security concerns

Xi’s No. 2 says

raising barriers over national security
concerns.
“China can not develop in isola-
tion from the world and nor can the
world develop without China,” Wang
said Wednesday at the Bloomberg New
Economy Forum in Singapore. “China
will not waver in its resolve to deepen
reform and expand opening up.”
“Going forward, China will keep its
arms wide open, provide more market
investment and growth opportunities to
the world,” he added. “And to contrib-
ute its part to the building of a noble
world economy and a community with
a shared future for mankind.”
Wang, technically second-in-charge
to President Xi Jinping, spoke a day
after the Chinese leader held a virtual
summit with US President Joe Biden.
The outcome was generally positive,
with both sides agreeing to continue
talking on a range of topics even as they
continue to spar over issues like Taiwan.
by Iain Marlow
Bloomberg
Reuters
Wang Qishan
Wang said the US-China relationship
impacts “the future of the world,” and
said both sides should “act on the impor-
tant common understandings reached be-
while also blocking exports of advanced
technology.Those moves, along with a glob-
al shortage of crucial semiconductors that
go into everything from phones to cars, has
prompted Xi’s government to seek tech-
nological breakthroughs to ensure China
isn’t dependent on the West as it strives to
dominate industries critical to growth over
the coming decades.
Although there’s clearly competition
between the US and China, the Chinese
side hopes that “healthy competition” is
possible between the two countries, said
Wang Huiyao, an adviser to the Chinese
government and founder of the Center
for China and Globalization, a non-gov-
ernment think tank. He added that the
warm meeting between Xi and Biden sent
a “positive message” that the world’s two
superpowers can cooperate.
“It really set a new tune, and sent a strong
message, that the two largest economies have
to work together,” Wang Huiyao said in an
interview with Bloomberg Television.

Alibaba-led
(Nov 17): A consortium led by Alibaba on the US for chips that power everything
Group Holding Ltd., has emerged as the from phones to cars.

group nears
frontrunner to take over Tsinghua Uni- Any deal is likely to include conditions
group Co., a deal that could fetch more for restructuring Unigroup’s roughly 100

US$8 billion
than 50 billion yuan (US$7.8 billion) to billion yuan-plus of onshore and offshore
help keep China’s indebted chip cham- debt, another person familiar with the dis-

Unigroup
pion afloat. cussions said. Alibaba representatives had
The Chinese central government is no immediate comment, while a Unigroup

leaning towards the Alibaba-led offer
given the e-commerce giant’s financial
heft and the potential synergies with its
own cloud and semiconductor business,
people familiar with the matter said. The
consortium, which includes funds backed
by the Zhejiang government, is edging
out several competitors for Beijing-based
Unigroup, several other people said, ask-
ing not to be identified as the informa-
tion is private.
A successful deal could help avert
one of China’s biggest potential corpo-
rate failures, while securing for Alibaba
valuable chip know-how and a supply of
semiconductors to fuel the country’s larg-
est cloud computing platform. While the
transaction is expected to be completed as
soon as December, negotiations are ongo-
ing and details on timeline, deal size and
a final buyer could still change, they said.
Shares in Unisplendour Corp., one of the
Tsinghua group’s biggest listed entities,
surged as much as 7.6% in Wednesday
afternoon trading in Shenzhen.
takeover
Bloomberg
Billionaire Jack Ma’s empire is mostly
known for its ecommerce leadership, but
the Hangzhou-based firm he co-found-
ed has in recent years made enormous
headway into computing and last month
unveiled one of the country’s most ad-
vanced chips. A deal could help Alibaba
score points with Beijing, which punished
the e-commerce giant for monopolistic be-
havior but also wants to reduce its reliance
spokesperson didn’t immediately respond
to requests for comment. Representatives
for Zhejiang, the province that includes Al-
ibaba’s headquarters in Hangzhou, didn’t
immediately respond to an emailed inquiry.
The State Council Information Office also
didn’t respond to a fax requesting com-
ment.
Aside from the Alibaba-led consorti-
um, several state-backed companies in-
cluding semiconductor investment fund
JAC Capital, Wuxi Industry Development
Group, and Beijing Electronics Holdings
also weighed bids, the people said.
Investors are placing wagers on a better
deal for Unigroup as Xi Jinping advances a
self-sufficiency agenda in key technologies
in a strategic race with the US Three out of
the four dollar bonds sold by the firm have
hovered around their highest levels — albeit
still distressed — since at least early No-
vember, after their best month-ever in June.
Click here to read the full story
 T H U R S D AY N O V E M B E R 1 8 , 2 0 2 1 23 THEEDGE CEO MORNING BRIEF

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 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
SINGAPORE (Nov 17): UBS Group AG’s
chairman Axel Weber has warned on crypto
in one of his strongest statements yet on
digital currencies after Bitcoin surged to
an all-time high in recent weeks.
The banker said he is “sceptical” and
the concept of anonymous payments will
not last, in comments at the Bloomberg
New Economy Forum on Wednesday in
Singapore.
Weber, a former central banker, has main-
tained a bearish stance on crypto for years,
even as Bitcoin rallied to a record on opti-
mism for mainstream acceptance. The dig-
ital currency has since dropped slightly on
concerns surrounding regulations in the US
and China to trade around US$59,527 on
Wednesday. A little less than four years ago,
Weber warned of a massive potential drop in
Bitcoin when it was worth just US$11,000.
“I love the technology. I think the idea of
LONDON/HONG KONG (Nov 17):
Goldman Sachs Group Inc chief executive
officer (CEO) David Solomon has said that
markets could face a rocky time ahead as the
global economy seeks to emerge from the
abrupt impact of the pandemic.
“When I step back and think about my
40-year career, there have been periods of
time when greed has far outpaced fear —
we are in one of those periods,” Solomon
said in an interview at the Bloomberg New
Economy Forum in Singapore. “My expe-
rience says those periods aren’t long-lived.
Something will rebalance it and bring a little
bit more perspective.”
Global markets have surged during the
pandemic, fuelled by massive stimulus
that has also stoked profits at banks such
as Goldman. Concern is now rising that
accelerating inflation will pose a challenge
to a sustained recovery as central banks may
be forced to raise interest rates in response.
“Chances are interest rates will move up,
and if interest rates move up that in itself will
take some of the exuberance out of certain
markets,” Solomon said.
Solomon also discussed the challenge of
climate change, saying the transitioning to
a green economy was “hugely important”.
Goldman was among banks, investors,
and insurers that earlier this month com-
mitted to decarbonising by mid-century as
signatories of the Glasgow Financial Alliance
for Net Zero. Still, the initiative was met with
scepticism as climate activists and non-prof-
it organisations questioned whether big fi-
nance was capable of rapidly weaning itself
off fossil fuels. Goldman, along with others,
have previously made it clear it was not fea-
sible to stop working with the industry.
“We have to recognise we are trying
to drive very dramatic change,” Solomon
24 TheEdge CEO morning brief
w o r l d
UBS chairman
warns on crypto
after Bitcoin hits
record high
by Krystal Chia &
Chanyaporn Chanjaroen
Bloomberg
having instantaneous transactions between
a large number of peothple — fantastic,”
Weber said. Still, the idea of moving “pay-
ments from banks and cash to something
that is an anonymous vehicle where both
sides of the transactions are not known —
that will not survive”, he said.
Goldman CEO
says market
greed now
outpacing fear
by Francine Lacqua & Denise Wee
Bloomberg
said, emphasising that the transition will
take time.
China
Goldman is at the forefront of a push by
global banks to gain a bigger foothold as Chi-
na’s market opens, jostling to capture billions
of dollars in potential profits. The firm last
month gained approval to take full owner-
ship of a securities venture, ending a 17-year
joint venture. The firm has plans to double
its workforce in China to 600 and ramp up
in asset and wealth management. As of last
month, it had added 116 staff onshore this
year, boosting the total to more than 400.
But Wall Street banks are also dealing
with a number of flash points between Chi-
na and the US. Some US lawmakers have
questioned the push into China, which is
counting on investments to help support its
economy. Beijing has been cracking down
on broad swathes of its private sector, roil-
ing markets and prompting investors such
as George Soros to warn against investing
in the country.
According to Solomon, there is no direct
pressure in the US to change the bank’s long
term to plans in China, but said that from
time to time, there may be pressure to do
Weber’s comments contrast with an in-
creasing number of lenders looking to ex-
pand into crypto. JPMorgan Chase & Co
and Bank of America are among banks
hiring for the space, while Goldman Sachs
Group Inc has started trading crypto fu-
tures. DBS Group Holdings Ltd — whose
chief executive officer was at the same pan-
el — is set to expand its digital exchange
to retail individuals next year.
Drawing comparisons to times when
governments phased out big-denomina-
tion bank notes to avoid unidentifiable,
large transactions, Weber said authorities
are working hard to avoid illegal activity.
“Governments will not tolerate this to
become really big,” he said.
The New Economy Forum is being
organized by Bloomberg Media Group,
a division of Bloomberg LP, the parent
company of Bloomberg News.
certain things differently.
Also attending the forum, Chinese Vice
President Wang Qishan said China and the
world must work together to boost global
economic growth, vowing that Beijing will
continue opening up more to foreign in-
vestment at a time when more countries
are raising barriers over national security
concerns.
“I think China wants to grow its capi-
tal markets. They want more listing activi-
ties in Hong Kong and onshore,” Solomon
said.The participation of global institutions
“strengthens their capital markets and so my
guess is they’ll continue to support that, but
the world can change”, he said.
Hong Kong
Solomon said that this is his first visit to Asia
since early 2020, but that he has no plans to
visit China and Hong Kong. His counterpart
at JPMorgan Chase & Co, Jamie Dimon,
touched down in Hong Kong this week af-
ter receiving an exemption from the city’s
stringent quarantine, where he highlighted
that the restrictions were making it harder
for the bank to retain talent.
Solomon said the strict approach to Cov-
id-19 in China and Hong Kong is a “cer-
tainly a headwind for global talent in that
part of the world”.
The finance industry is ratcheting up
pressure on Hong Kong to ease quaran-
tine rules and abandon its zero-Covid-19
policy. A survey found almost half of major
international banks and asset managers were
contemplating moving staff or functions out
of the city.
The New Economy Forum is being or-
ganised by Bloomberg Media Group, a di-
vision of Bloomberg LP, the parent company
of Bloomberg News.
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
Google CEO sees
company’s next
trillion in value
from search, AI
by Mark Bergen
Bloomberg
(Nov 17):While many other technology gi-
ants embrace the metaverse as the next fron-
tier of growth, Sundar Pichai sees Google’s
future in its oldest offering: Internet search.
“I feel fortunate our mission is timeless,”
Pichai, who is the chief executive officer
(CEO) of Google and its parent Alphabet
Inc, said in an interview with Bloomberg
Television’s Emily Chang for the Bloomb-
erg New Economy Forum in Singapore.
“There’s more need to organise informa-
tion than ever before.”
Earlier this month, Alphabet briefly
crossed US$2 trillion (RM8.35 trillion)
in market value, thanks to sales and prof-
it growth during the Covid-19 pandemic.
When asked where the next trillion would
come from, Pichai pointed to his company’s
core service. Consumers will ask computers
more questions with voice and “multimod-
al experiences”, he predicted. “Being able
to adapt to all that and evolve search will
continue to be the biggest opportunity,”
the CEO said.
Since taking over Google in 2015, Pichai
has pushed the company deeper into cloud
computing and artificial intelligence, while
facing an increase in regulatory scrutiny. In
the interview, Pichai ticked off Google’s key
growth businesses — cloud, the YouTube
video service and its app store — and said
The India-born executive also says he expects that more of Google’s products will be developed and
tested in Asia first before spreading across the globe. Not in China, though.
25 TheEdge CEO morning brief
w o r l d
AI investments are “underlying” each of
them.
The India-born executive also said he
expects that more of Google’s products will
be developed and tested in Asia first before
spreading across the globe. Not in China,
though. After icing plans to bring search to
mainland China in 2018 following an em-
ployee uproar, Google has kept most of its
services out of the most populous nation.
“I don’t see that changing,” Pichai said.
But he doesn’t share other Silicon Valley
executives’ dim view of China’s tech ad-
vances. Pichai acknowledged that Google
is “neck to neck” with Chinese companies
in AI and quantum computing, but argued
that the US and China would have room
to collaborate in areas like climate change
and AI safety.
Some of Google’s largest peers, such
as Microsoft Corp and Facebook parent
Meta Platforms Inc, have pitched their
futures around the virtual worlds of the
metaverse. Google has taken several ap-
proaches at virtual and augmented reality
products with limited success.Years ago, its
first attempt, the Google Glass headgear,
famously flopped. Google recently placed
these efforts in a new division reporting to
Pichai, although he didn’t provide specifics
about the strategy.
“I’ve always been excited about the fu-
ture of immersive computing,” he said.
“This doesn’t belong to any company.This
is the evolution of the Internet.”
Evangelists of the metaverse often talk
about the potential to build in new technol-
ogies like the blockchain and cryptocurren-
cies. Aside from some cloud partnerships,
Google has largely steered clear of this part
of the industry.
Pichai said he doesn’t own any crypto-
currency. “I wish I did,” he said. “I’ve dab-
bled in it, you know, in and out.”
bloomberg
Baidu beats
quarterly revenue
estimates on
robust ad sales, AI
by Tiyashi Datta & Akash Sriram
Reuters
BENGALURU (Nov 17): China’s
Baidu Inc on Wednesday reported quar-
terly revenue above Wall Street estimates,
helped by stronger advertising sales and
demand for its artificial intelligence (AI)
and cloud products.
A recovering domestic economy en-
couraged higher marketing spending,
helping Baidu’s ad sales, even as it faced
tough competition from e-commerce
giant Alibaba and ByteDance. Baidu’s
foray into AI, cloud, and autonomous
driving has also helped its growth.
In a bid to expand its portfolio, the
company last year introduced robotaxi
vehicles and entered into a partnership
with Chinese auto manufacturer Geely
to develop electric vehicles, a fast-evolv-
ing sector in which many tech companies
are looking to make a mark.
“Baidu Core delivered another sol-
id quarter, powered by our AI cloud
revenue growing 73% year-over-year,”
said Rong Luo, chief financial officer
of Baidu.
The company’s results come amid
a wide-ranging regulatory crackdown
by China on its technology sector that
includes heavyweights like Tencent and
Alibaba in a bid to keep a check on their
monopolistic practices.
Baidu said total revenue was 31.92
billion yuan (US$5 billion) in the third
quarter, slightly above analysts’ average
estimate of 31.71 billion yuan, according
to IBES data from Refinitiv.
Read also: Amazon to stop accepting
Visa credit cards issued in UK ‘due to
high fees’ Click here
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
LONDON/THE HAGUE/AMSTERDAM
(Nov 17): A 20-minute stroll through The
Hague — the pretty but low-key city that
houses the Netherlands’ government —
takes you from the prime minister’s office
to the workplace of someone who is argua-
bly even more powerful: the chief executive
officer of Royal Dutch Shell plc.
But when Ben van Beurden, who has
worked at Shell since he graduated from
nearby Delft University in 1983, called Mark
Rutte on Sunday afternoon, the conversa-
tion was anything but close. He rang to tell
the prime minister that Europe’s biggest oil
company was moving its headquarters to
London, a step that would simplify its cor-
porate structure and cut taxes for investors.
What is more, the company would drop
Royal Dutch from its name, discarding a
link to the ruling House of Orange that goes
back to its founding in the 19th century.
Rutte, head of a fragile caretaker govern-
ment, reacted with dismay and embarked on
a last-ditch effort to persuade Shell to stay,
according to people briefed on the conversa-
tions. He lobbied coalition partners to back
the abolition of a tax on dividends that was
one of the main drivers for Van Beurden’s
decision.
But the rushed plan never got off the
ground:The idea of tax breaks for one of the
world’s largest carbon emitters was too much
for the leaders of several political parties.
WASHINGTON (Nov 17): U.S. President
Joe Biden’s nominee as the next chair of the
Federal Reserve, expected as soon as this
week, will inherit an economy headed for the
fastest annual growth in a generation with
wage increases flowing to the lowest-paid
workers, strong hiring, and household bank
accounts flush with cash.
They’ll also inherit a situation where
homes, cars, food, and clothing are becom-
ing steadily more expensive, and whether it’s
current chair Jerome Powell for a second
four-year term or a promotion for current
Fed Governor Lael Brainard, dealing with
that inflation shock carries risks for both
the president, the economy and the Fed.
Rising prices have already begun to sour
the public mood, pushing Biden’s approval
numbers to the lowest point of his presiden-
cy, cited in polls as a concern that crosses
party lines and income brackets and which
is shared even among those for whom higher
prices have been offset by ongoing govern-
ment payments.
For the Fed, it has presented an old prob-
lem in fresh circumstances - with tangled
global supply chains, a hard-to-read and po-
tentially diminished U.S. labor market, and
rising prices potentially forcing them to raise
interest rates and slow growth before the
26 TheEdge CEO morning brief
w o r l d
Dutch divorce:
How Shell splits
with Netherlands
after 114 years
by Laura Hurst, Diederik Baazil
& Fred Pals
Bloomberg
“Shell threatens to leave because they have
to pay taxes on dividends,” Jesse Klaver, the
leader of GroenLinks, a left-wing political
party, tweeted on Monday. “What does the
Cabinet do? Propose to scrap the entire tax.
That is not the solution. That is blackmail.
Who runs the Netherlands actually?”
The relationship between Shell and its
home country had been under strain for some
time. Hosting a company that pumps more
than three million barrels equivalent of oil
and gas (O&G) each day is increasingly awk-
ward for many in Dutch society, even though
Van Beurden has committed the company to
achieving net-zero carbon emissions by 2050.
Earlier this year, a judge ruled Shell’s
transition to clean energy was not happen-
ing quickly enough and ordered the company
to slash greenhouse gases even faster out of
Growth, jobs and
inflation clash in
Biden Fed choice
by Howard Schneider
Reuters
economy recovers the jobs and workforce
levels seen before the coronavirus crisis.
It’s a choice both Biden and the Fed
hoped could be avoided in a drive to push
job growth further and deeper into the econ-
omy, on the expectation inflation would be-
have roughly the same as it did before the
pandemic. It hasn’t.
“Six percent inflation is not the right level
of inflation, we can all agree on that,” said
Nela Richardson, chief economist for pay-
roll processor ADP, citing recent consumer
price increases, at a 30-year high, that have
wiped out rising wages and far outstripped
the Fed’s 2% target.
The Fed still expects that high pace
of price increases to be “transitory,” but
“wealthier consumers have the luxury of
time,” Richardson said. “Low-income
respect for the human rights and opinions
of Dutch citizens. Last month, the pension
fund for government employees in the Neth-
erlands decided to dump all oil company
shares, a decision that infuriated Shell’s man-
agement team.
The Netherlands — home to many multi-
nationals that punch above the weight of the
US$900 billion economy — is traditionally
seen as one of Europe’s most business-friend-
ly nations. But Shell is not the first compa-
ny to balk at the burdens of corporate life
there. Unilever plc, the Anglo-Dutch con-
sumer goods giant, chose London for its
headquarters last year.
Click here to read the full story
Read also:
Singapore wealth tax ‘not so easy’, says
Prime Minister Lee
“We need to find a system of taxation which
is progressive and which people will accept as
fair. And fair means everybody needs to pay
some, but if you’re able to pay more, well you
should bear a larger burden. And if you’re less
well off, you should enjoy a greater amount
of the government’s support schemes and
benefits,” said Lee.
Click here
less-skilled consumers do not. As much
as I understand the transitory argument,
waiting it out is not the best option for
some people.”
‘A lot of continuity’
Biden said Tuesday he would make a deci-
sion on the Fed in around four days. Powell’s
current term ends in February and whether
Biden chooses him or Brainard — both have
been interviewed — the nominee will need
to go through a confirmation hearing and
vote in a closely divided Senate.
But a process that began as a somewhat
clear-cut choice — stick with the Republican
Powell for continuity and bipartisanship or
tap the Democrat Brainard to reward sup-
porters and pursue a broader remake of the
central bank — has turned trickier.
Both are practiced central bankers who
have worked together for years and shared in
remaking Fed policy to put more emphasis
on jobs and allow some higher inflation to
do so. Both will have to wrestle in coming
months with the same dilemma of how far
to let those inflation risks run before tak-
ing action.
Click here to read the full story
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
Banks that helped GE, others
bulk up now profit from break-ups
(Nov 16): Some of the Wall Street banks
that helped General Electric Co, Toshiba
Corp and Johnson & Johnson become mas-
sive conglomerates through acquisitions
over the years are now profiting from their
break-ups, a Reuters analysis showed.
The three companies, which in recent
days announced plans to spin off divisions,
doled out hundreds of millions of dollars
in fees to banks, including Goldman Sachs
Group Inc, JPMorgan Chase & Co and
UBS Group AG, to advise them on acqui-
sitions over the years. Now, the same banks
are getting paid to undo the outcomes of
those deals.
Spokespeople for Goldman Sachs, JP-
Morgan and UBS did not respond to re-
quests for comment.
While it’s not uncommon for an invest-
ment bank to advise a company on a spin-
off after previously working on the compa-
ny’s acquisitions, the spate of high-profile
spin-offs by companies in recent days
shines new light on the practice.
Banks have so far earned over US$1
billion on spin-offs globally so far this year,
nearly twice what they earned in 2020, ac-
cording to Refinitiv.
Investors in those companies are not as-
sured similar riches. Shares of companies
that engage in acquisitions or divestments
have had a mixed track record, often un-
derperforming peers in the last two years,
according to Refinitiv.
Erik Gordon, a professor of law and
business at the University of Michigan,
said banks do not generally break any rules
when working on these deals because they
are carrying out their clients’ wishes. But
he noted that this did not absolve banks of
27 TheEdge CEO morning brief
w o r l d
by An irban Sen & David French
Reuters
reuters
the responsibility to advise against a deal
they view as not in a company’s long-term
interest.
“If the bankers deserve criticism, it is
for not pushing back against a CEO who
pushes a bad deal,” Gordon said.
In the case of GE, Goldman Sachs was
one of the banks, alongside Evercore Inc,
PJT Partners Inc and Bank of America
Corp, that stand to collect tens of mil-
lions of dollars from advising on the com-
pany’s break-up, according to estimates
from M&A lawyers and bankers.
Goldman Sachs had previously collect-
ed nearly US$400 million in fees advising
the company on acquisitions, divestitures
and spin-offs since 2000, making it GE’s
top adviser based on M&A fees collected,
according to Refinitiv.
JPMorgan, which advised J&J on its
planned break-up, had previously made
US$206 million in fees since 2000 advis-
ing it on deals, according to Refinitiv. UBS,
which worked on Toshiba’s break-up, had
collected US$12 million in fees, the Ref-
Reuters graphics
initiv data showed.
Industrywide, Goldman Sachs has
earned the most in fees from advising on
corporate break-ups thus far in 2021, fol-
lowed by JPMorgan and Lazard Ltd, ac-
cording to Dealogic.
Corporate break-ups are on the rise
amid a growing consensus on Wall Street
that companies perform best only if they
are focused on adjacent business areas, as
well as increasing pressure from activist
hedge funds pushing them in that direction.
Some 42 spin-offs collectively worth
over US$200 billion have been announced
globally so far this year, up from 38 spin-
offs worth roughly US$90 billion in 2020,
according to Dealogic. Investment banks
have collected more than US$4.5 billion
since 2011 advising on spin-off deals glob-
ally, the Dealogic data shows.
Independent advice
Investment bankers often argue that com-
panies did not necessarily get it wrong when
they embarked on deals they later reversed,
because some combinations do not make
sense forever.
Changes in a company’s technological
and competitive landscape or in the at-
titude of its shareholders can push it to
change course.
For example, GE shareholders were
initially supportive of its empire-build-
ing acquisitions in businesses as diverse
as healthcare, credit cards and entertain-
ment in the 1990s, viewing them as diver-
sifying its earnings stream. When some of
these businesses started to underperform
and GE’s valuation suffered, investors lost
faith in the company’s ability to run dispa-
rate businesses.
Bankers also argue that most companies
want to pay bankers for delivering deals
rather than advice on whether they need
to do a deal in the first place. This creates
incentives for bankers to try to clinch a
transaction rather than encourage a bet-
ter outcome for their client that may not
involve a deal.
But it also offers ammunition to Wall
Street critics who argue that companies
cannot rely on banks for independent ad-
vice on whether they should pursue a deal.
“Companies should develop valuations
in house and with help from unbiased
third-party advisers, whether or not they
also hire an investment bank,” said Nuno
Fernandes, professor of finance at IESE
Business School.
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
Bill Hwang made a huge, secret bank
bet before Archegos collapse
NEW YORK (Nov 17): It’s a move that’s
almost unthinkable even for Wall Street’s
most maverick investors, for fear of land-
ing in regulatory crosshairs.
But buried in the billions Bill Hwang
wagered and lost, the man behind Arche-
gos Capital Management used derivatives
to secretly build a more-than 20% stake in
a US regional bank, right under the noses
of financial watchdogs, according to peo-
ple with knowledge of the situation. That
sent the stock on a wild surge, and when
Archegos collapsed, a dramatic plunge.
What’s more, Archegos and the bank
had private conversations about a sig-
nificant investment that wasn’t revealed
to other shareholders, said the people,
asking not to be identified because they
weren’t authorized to speak publicly. As
the stock soared, executives at the Dal-
las-based lender raised record new capital
from unwitting investors.
The events at Texas Capital Bancshares
Inc offer a rare look at what happens
when a risk-taking investing whale such
as Hwang dives into a stock — let alone
one belonging to a highly regulated bank.
Authorities have long discouraged outsid-
ers from potentially influencing institu-
tions that gather deposits, even thwarting
the likes of Warren Buffett from beefing
up some of his favourite bank bets. But
their concerns also extend to the danger
a big shareholder could quickly retreat,
sending a lender’s stock into a tailspin,
and rattling counterparties and customers.
The extent of Archegos’s involvement
with the Texas bank adds another di-
mension to a saga that’s already prompt-
ed probes and reviews around the world.
Watchdogs including the US Securities
and Exchange Commission have said
they’re examining whether the rules them-
selves need to be rewritten to close any
loopholes and eliminate grey areas to en-
sure investors like Archegos disclose out-
size wagers.
“It goes against the intent of what the
regulations and laws were set up for,” said
Bill Dudley, the former New York Federal
Reserve President. “If people go around
and circumvent those laws and regulations,
then you have a problem, and you’ve got
to do something about it.”
Archegos’s enablers — the prime bro-
kers who effectively helped Hwang gamble
away his fortune — showed up in filings
as owners of more than a quarter of the
outstanding shares by the end of 2020.
28 TheEdge CEO morning brief
w o r l d
by Sridhar Natarajan &
Katherine Burton
Bloomberg
They included Credit Suisse Group AG,
where executives grew uneasy after dis-
covering their firm alone owned 9% of a
regional US bank, and Morgan Stanley,
which in the midst of the stock’s surge
helped Texas Capital raise more money.
The question of whether Texas Capital
should have disclosed Archegos’s role in
driving up the stock price comes down to
how much the bank knew and whether it
was material information. In the months
since the episode, no regulator has pub-
licly accused the lender of wrongdoing.
The wave of purchases sent the bat-
tered stock soaring 93% in last year’s sec-
ond half, making the company the top
performer in the S&P Midcap Financials
Index tracking 63 lenders. This year —
since Archegos imploded — it’s among
the worst.
“It’s one thing for Archegos to have
big stakes in commercial companies, but
with a depository institution, the risks are
much greater,” said Jeremy Kress, a for-
mer banking policy attorney at the Fed. “If
a big holder sells it could trigger a run.”
The descriptions of Archegos’s wagers
on Texas Capital, the firms’ communica-
tions and Credit Suisse’s internal delib-
erations are based on interviews with five
people close to those companies.
Spokespeople for Archegos, Texas Cap-
ital, Credit Suisse and Morgan Stanley
declined to comment. Regulators haven’t
brought claims against any of them, and
no signs have emerged of a probe target-
ing Texas Capital.
‘Bruised’ bank
Texas Capital was born in 1998, found-
ed by Jody Grant, who’d just finished a
high-profile stint as finance chief of Elec-
tronic Data Systems through its spinoff
from General Motors Corp. The aim was
to build a regional powerhouse that could
bankroll an economy bigger than the likes
of Canada, Russia and Australia.
By the mid-2000s, Grant helped one
of the lender’s investment bankers at Bear
Stearns, Brian Jones, start a private equity
firm with backing from Texas Capital. Jones
kept that firm, BankCap Partners, going
when he later joined Archegos and became
its head of research. Hwang invested in
a BankCap fund that’s still in operation.
Jones encouraged Hwang to take a look
at Texas Capital and connected him with
its management, according to the people
close to the situation. The shares had been
beaten down over the years by misadven-
tures in energy lending, management mis-
steps and what the bank called a “bruised”
brand. As the Covid-19 pandemic set in,
the stock tumbled to its lowest in a dec-
ade. Hwang decided it was time to go big.
His family office had honed a strategy
for placing outsize bets on stocks without
drawing attention to itself. Prime brokers
would typically buy up a company’s shares
and, using a swap agreement, let Hwang
reap the gains or losses as the price moved.
In a number of cases, his firm placed par-
allel bets with a roster of prime brokers.
In regulatory disclosures, those middle-
men — not Archegos — were listed as the
stock’s owners.
In late 2020, Texas Capital’s stock
soared as Archegos built a position that
would peak somewhere above 20% of the
shares, two people familiar with the matter
said. In addition to using swaps, Arche-
gos also bought some stock directly. But
because that portion of the wager was shy
of a 5% stake, the family office concluded
that it didn’t need to disclose it.
Inside Archegos, some staff members
voiced concerns about whether regula-
tors would be upset if they learned about
the bank’s total position. Hwang and his
team brushed off those worries, the people
said, assuring staff that lawyers had vet-
ted the strategy of using swaps and that
it was OK. The contracts gave Archegos
the economic effect of holding the stock,
but not direct ownership.
Archegos told Texas Capital’s manage-
ment that it was building a stake in the
bank both directly and through swaps,
though it’s unclear whether the amount
was specified, the people said. The spokes-
person for Texas Capital declined to com-
ment on whether the bank knew the full
extent of Archegos’s wager or sought to
find out.
“Everyone knew about the positions
of Archegos” and its status as a large
shareholder, said Grant, the Texas Cap-
ital founder, who said he spoke with ex-
ecutives at both firms. Still, he said he
was led to believe that the stake was less
than 10%.
Click here to read the full story
 t h u r s d ay n o v e m b e r 1 8 , 2 0 2 1
M A R K E T S
CPO RM 4,899.00 111.00 OIL US$ 81.87 -0.56 RM/USD 4.1803 RM/SGD 3.0774 RM/AUD 3.0436 RM/GBP 5.6162 RM/EUR 4.7295
Top 20 active stocks
NAME VOLUME CHANGE CLOSE YTD MARKET
(MIL) (RM) CHANGE CAP
(%) (RM MIL)
Vsolar Group Bhd 127.30 0.000 0.015 -62.50 68.50
Brahim’s Holdings Bhd 88.0 -0.080 0.140 -57.58 43
Dagang NeXchange Bhd 76.20 -0.010 0.820 264.44 2587.3
KNM Group Bhd 55.60 0.000 0.170 -17.07 568
Cuscapi Bhd 54.70 0.040 0.295 136.00 253.5
NWP Holdings Bhd 51.90 0.000 0.380 52.00 200
ATA IMS Bhd 50.70 -0.290 1.570 -34.03 1888.5
Tanco Holdings Bhd 49.9 -0.01 0.265 430 443.3
Top Builders Capital Bhd 40 0 0.03 -73.91 21.20
CTOS Digital Bhd 38 -0.02 3.82 0 8404
PESTECH International Bhd 37.4 -0.160 0.990 6.38 753.6
JAG Bhd 36.1 -0.02 0.375 38.89 226.8
Scope Industries Bhd 36 -0.015 0.42 41.25 484.5
WZ Satu Bhd 35.7 0 0.225 39.53 169.3
Vinvest Capital Holdings Bhd 32.6 -0.01 0.82 -104.65 743.3
Inari Amertron Bhd 29.5 -0.02 4.08 48.66 15059.1
KYM Holdings BHD 29.4 0.045 0.5 42.86 74.9
Careplus Group Bhd 25.3 0.1 1.1 -46.2 624.7
My EG Services Bhd 22.8 0.01 1.05 9.38 7779
OPCOM Holdings Bhd 21.4 0.01 1.02 164.94 245.4
Data as compiled on Nov 17, 2021 Source: Bloomberg
Top gainers (ranked by %)
NAME CLOSE CHANGE VOLUME YTD MARKET
(%) (‘000) CHANGE CAP
(%) (RM MIL)
Eduspec Holdings Bhd 0.02 33.3 3002.4 0.00 57.9
Adventa Bhd 1.27 21.0 14376.5 -16.99 194.0
OSK Ventures International Bhd 0.50 17.7 0.50 2.04 98.2
Scomi Group Bhd 0.04 16.7 303.5 16.67 38.3
XOX BHD 0.04 16.7 6054.3 -68.18 142.0
Nestcon Bhd 0.92 16.5 19729.8 0.00 592.3
Concrete Engineering Products 0.93 16.3 2.7 47.62 69.4
Cuscapi Bhd 0.30 15.7 54689.7 136.00 253.5
Mlabs Systems Bhd 0.04 14.3 30.00 -50.00 58
TFP Solutions Bhd 0.13 13.0 13375.9 -43.48 74.9
Annum Bhd 0.96 12.9 4648.8 -25.58 72
Bina Puri Holdings BHD 0.05 11.1 1619.2 -54.55 79.5
Careplus Group Bhd 1.10 10.0 25305.8 -46.20 624.7
Ageson Bhd 0.06 10.0 2474.0 -57.69 71.4
KYM Holdings BHD 0.50 9.9 29405.8 42.86 74.9
Iqzan Holding Bhd 0.06 9.1 25.5 -47.83 13.3
HLT Global Bhd 0.51 8.5 19841.0 -55.26 360.8
Priceworth International Bhd 0.07 8.3 2030.5 -78.33 32.5
Rapid Synergy Bhd 9.96 8.1 182.7 50.91 1064.7
Kia Lim Bhd 0.47 8.1 590.4 63.16 28.8
Data as compiled on Nov 17, 2021 Source: Bloomberg
Top gainers (ranked by RM)
NAME CLOSE CHANGE VOLUME YTD MARKET
(RM) (‘000) CHANGE CAP
(%) (RM MIL)
Rapid Synergy Bhd 9.96 0.75 182.7 50.91 1,064.70
Nestle Malaysia Bhd 133.80 0.50 81.2 -3.67 31,376.10
Genetec Technology Bhd 42.00 0.40 524.4 2327.75 2,186.90
Kuala Lumpur Kepong Bhd 20.44 0.30 561.2 -13.68 22,032.00
Petronas Dagangan Bhd 19.88 0.24 196.8 -7.10 19,749.90
Adventa Bhd 1.27 0.22 14376.5 -16.99 194.00
Batu Kawan Bhd 21.80 0.20 0.50 21.79 8598.4
Concrete Engineering Products 0.93 0.13 2.70 47.62 69.40
Hong Leong Capital Bhd 7.53 0.12 1,980.10 21.65 1,859.10
Annum Bhd 0.96 0.11 4,648.80 -25.58 72.00
Hong Leong Financial Group Bhd 17.50 0.10 70.7 -3.10 20,041.80
Careplus Group Bhd 1.10 0.10 25305.8 -46.20 624.70
Yinson Holdings BHD 6.10 0.10 8662.4 6.09 6496.2
Top Glove Corp Bhd 2.51 0.09 17,060.20 -58.27 20,097.80
Press Metal Aluminium HLDGS Bhd 5.44 0.09 10259.1 29.68 43,934.60
Gamuda Bhd 3.10 0.08 1,280.60 -20.31 7,791.90
OSK Ventures International Bhd 0.50 0.08 0.50 2.04 98.2
Paragon Union BHD 1.44 0.07 263.4 114.93 110.10
Atlan Holdings Bhd 2.77 0.07 35.00 -24.52 702.60
Nestcon Bhd 0.92 0.07 19,729.80 0.00 592.3
Data as compiled on Nov 17, 2021 Source: Bloomberg
29 TheEdge CEO morning brief
World equity indices
CLOSE CHANGE CHANGE CLOSE CHANGE CHANGE
(%) (%)
DOW JONES 36,142.22 54.77 0.15 INDONESIA 6,675.80 24.60 0.37
S&P 500 4,700.90 18.10 0.39 JAPAN 29,688.33 -119.79 -0.40
NASDAQ 100 16,309.77 120.65 0.75 KOREA 2,962.42 -34.79 -1.16
FTSE 100 7,307.00 -19.97 -0.27 PHILIPPINES 7,349.82 -17.60 -0.24
AUSTRALIA 7,369.93 -50.50 -0.68 SINGAPORE 3,232.68 -6.12 -0.19
CHINA 3,537.37 15.58 0.44 TAIWAN 17,764.04 70.91 0.40
HONG KONG 25,650.08 -63.70 -0.25 THAILAND 1,644.60 0.59 0.04
INDIA 60,008.33 -314.04 -0.52 VIETNAM 1,475.85 9.40 0.64
Data as compiled on Nov 17, 2021 Source: Bloomberg
Top losers (ranked by %)
NAME CLOSE CHANGE VOLUME YTD MARKET
(%) (‘000) CHANGE CAP
(%) (RM MIL)
MCOM Holdings Bhd 0.050 -54.55 0.1 -80.77 9.4
Brahim’s Holdings Bhd 0.140 -36.36 87987.2 -57.58 43.0
Fintec Global Bhd 0.015 -25.00 1,989.60 -81.25 79.3
Pinehill Pacific Bhd 0.415 -18.63 33.0 -3.49 62.2
Success Transformer Corp Bhd 0.880 -16.98 19966.7 16.56 201.7
Metronic Global Bhd 0.025 -16.67 2758.9 -75.00 54.2
Borneo Oil Bhd 0.025 -16.67 2470.1 -37.50 181.3
ATA IMS Bhd 1.570 -15.59 50652.4 -34.03 1888.5
PESTECH International Bhd 0.990 -13.91 37426.8 6.38 753.6
Melati Ehsan Holdings Bhd 0.520 -12.61 0.2 2.97 60.5
JOE HOLDING BHD 0.035 -12.50 237.0 -68.18 107.1
BSL Corp Bhd 1.770 -12.38 14266.2 831.58 342.1
mTouche Technology Bhd 0.075 -11.76 514.4 -78.00 69.5
Kamdar Group M Bhd 0.225 -10.00 8.1 -15.09 44.5
Tiger Synergy Bhd 0.045 -10.00 2974.3 -58.98 115.7
M3 Technologies Asia Bhd 0.050 -9.09 91.2 -23.08 44.7
Advanced Packaging Technology 2.710 -9.06 60.0 20.44 51.8
Mobilia Holdings Bhd 0.255 -8.93 10179.8 0 178.5
AppAsia Bhd 0.105 -8.70 1420.6 -55.94 113.6
Trive Property Group BHD 0.055 -8.33 321.90 -59.45 57.9
Data as compiled on Nov 17, 2021 Source: Bloomberg
Top losers (ranked by RM)
NAME CLOSE CHANGE VOLUME YTD MARKET
(RM) (‘000) CHANGE CAP
(%) (RM MIL)
Fraser & Neave Holdings Bhd 25.900 -0.640 240.9 -19.26 9499.6
Sam Engineering & Equipment 20.680 -0.620 344.0 180.60 2799.0
Malaysian Pacific Industries Bhd 47.800 -0.480 71.40 84.13 9507.2
PMB Technology Bhd 12.320 -0.480 195.8 169.00 2617.9
MyTech Group BHD 6.220 -0.360 1352.1 936.67 278.4
Transocean Holdings BHD 3.670 -0.300 287.8 364.56 238.9
Carlsberg Brewery M Bhd 20.900 -0.300 176.3 -10.07 6390.1
ATA IMS Bhd 1.570 -0.290 50652.4 -34.03 1888.5
Advanced Packaging Technology 2.710 -0.270 60.0 20.44 51.8
BSL Corp Bhd 1.770 -0.250 14266.2 831.58 342.1
DKSH Holdings Malaysia Bhd 5.730 -0.250 745.7 69.03 903.4
TAFI Industries Bhd 2.780 -0.250 6051.9 361.07 344.5
Kesm Industries Bhd 12.060 -0.220 10.1 -11.19 518.8
ViTrox Corp Bhd 19.740 -0.220 109.5 34.29 9322.6
Khind Holdings Bhd 4.250 -0.200 286.1 45.05 170.3
OM Holdings Ltd 6.060 -0.200 358.0 0.00 4476.1
BP Plastics Holding Bhd 2.770 -0.180 1439.7 93.04 519.8
British American Tobacco m Bhd 14.320 -0.180 115.2 1.70 4088.8
Success Transformer Corp Bhd 0.880 -0.180 19966.7 16.56 201.7
PESTECH International Bhd 0.990 -0.160 37426.8 6.38 753.60
Data as compiled on Nov 17, 2021 Source: Bloomberg