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 GLOVE STOCKS ON THE LAST LEG OF THEIR RALLY? p4

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CEOMorningBrief
HOME: Covid-19: Malaysia reports new record high deaths of 219, with active cases nearing 200,000 p2
July manufacturing subdued by surging Covid-19 infections p5
Maybank Singapore sues NFC chairman, children for defaulting on housing loans worth S$2.53m p6
Constitutional crisis? — A legal opinion p15
WORLD: HSBC steps up dividend plans, eyes buybacks as outlook brightens p19

Perlis, S’wak and

Labuan to move into
Phase three of PPN
this Wednesday
— PM Muhyiddin
Report on Page 3.
 t u e s d ay a u g u s t 3 , 2 0 2 1 2 TheEdge CEO morning brief

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h o m e

Daily Covid-19 figures:

Covid-19:
KUALA LUMPUR (Aug 2): Daily fatal-
ities linked to Covid-19 climbed to a new As at Aug 1, 2021:

Malaysia reports
high of 219 on Monday, while Malaysia re-
Vaccine doses administered 480,122
ported another 15,764 new infections that
% of population fully vaccinated 21.24
new record high
pushed its active cases — which carry trans-
mission risks — to a new peak of 199,051. % of population with at least
one dose 43.55
deaths of 219,
The previous highest daily fatalities were
207, recorded on both July 27 and 28.
As at Aug 2, 2021:
The latest fatalities raised the country’s
Covid-19 death toll to 9,403, according to with active cases Number of new cases 15,764

Health director-generalTan Sri Dr Noor Hish-
am Abdullah in a statement.Year to date, 8,932
people across the country have been killed
by the coronavirus, compared with the 471
fatalities recorded for the whole of last year.
While new daily infections fell to 15,764
from 17,150 a day ago — after staying
above the 16,000 mark for six consecu-
tive days — the rise in actives continued as
new cases surpassed new recoveries, which
nearing 200,000
Number of individuals tested 105,785
Positivity rate (%) 14.90
Category 1 8,783 (87.7%
by syafiqah salim [no symptoms] unvaccinated)
theedgemarkets.com
Category 2 6,695 (64.5%
[mild symptoms] unvaccinated)
• 64 cases from Category 4 (pneumonia
requiring oxygen therapy); 73.4% un- Category 3 135 (63.7%
vaccinated [with pneumonia] unvaccinated)

came in at 11,767, for 38 straight days. • 87 cases from Category 5 (critical cases Category 4 64 (73.4%
Total recoveries nationwide now stand at requiring assisted ventilation); 97.7% [with pneumonia, requiring unvaccinated)

937,732 versus cumulative infections de- unvaccinated oxygen therapy]

tected at 1.15 million.
The latest infections were detected
after 105,785 individuals were screened
across the country, representing a posi-
tive rate of 14.9%.
The bulk of them came from Selangor,
with 6,067 infections, followed by Kua-
la Lumpur (1,536), Johor (1,222), Sabah
(1,166) and Kedah (1,108), Negeri Sembi-
There are now 1,063 patients in inten- Category 5 87 (97.7%
sive care, including 532 who need respira- [critical & requiring assisted unvaccinated)
tory assistance. ventilation]
R0 falls to lowest in 10 days Number of patients in ICU 1,063
The Ministry said the country’s basic ICU capacity utilisation (%) 76.59
reproduction number for the coronavi- Number of deaths 219
rus, the R0 (pronounced R-Naught), fell Updated as at 7.30pm, Aug 2, 2021
to 1.08 on Aug 1 from 1.1 a day before. Sources: CITF, MoH

lan (862), Perak (748), Penang (667), Kelan- co n ti n ues o n Pag e 3

tan (552), Pahang (475), Melaka (463),
Terengganu (425), Sarawak (411), Putra- Active cases reach a new record
jaya (46), Perlis (nine) and Labuan (seven). Daily Covid-19 deaths since
March 1, 2021 high on August 2
98.2% of cases show little to no symptoms Total number 199,051
The ministry said 15,478 of the new Cov- Malaysia’s Covid-19 200000
of active cases
id-19 cases (98.2%) were in Category 1 death toll: 9,403
250 (as of Aug 2, 2021) 219
and 2, while 286 cases or 1.8% were in 150000
Categories 3, 4 and 5. Close to eight in 10 200
infections (77.6%) were those who were 150 100000
not vaccinated.The breakdown of the cases 100
are as follows: 50000
• 8,783 cases from Category 1 (no symp- 50
23,433
toms) ; 87.7% unvaccinated 0 0
• 6,695 cases from Category 2 (mild March 1, 2021 Aug 2, 2021 Jan 1, 2021 Aug 2, 2021
symptoms); 64.5% unvaccinated
Sources: Ministry of Health, Sources: Ministry of Health,
• 135 cases from Category 3 (patients CPRC Kebangsaan CPRC Kebangsaan
with pneumonia) ; 63.7% unvaccinated
 t u e s d ay a u g u s t 3 , 2 0 2 1
Perlis, S’wak and
Labuan to move
into Phase three
of PPN this
Wednesday —
PM Muhyiddin
Bernam a
KUALA LUMPUR (Aug 2): Perlis, Sar-
awak and Labuan will move into Phase
Three of the National Recovery Plan
(PPN) beginning this Wednesday, Prime
Minister Tan Sri MuhyiddinYassin said.
In a post on his official Facebook
account, Muhyiddin said this decision
was made at the special National Secu-
rity Council (MKN) meeting, which
he chaired this evening, after the three
states showed very good results.
“Congratulations and well done…
[but] I would like to remind that stand-
ard operating procedures (SOPs) and
regulations must continue to be ad-
hered to and all efforts to improve the
[Covid-19] pandemic situation in the
respective states must continue.
“I hope with the cooperation of all par-
ties nationwide, more states would be able
to move into the next phase… we must be
optimistic and move forward so that Ma-
laysia’s recovery [plan] can be carried out
systematically and safely,” he said.
Meanwhile, the prime minister said
relaxations for economic sectors and
for individuals who have completed two
doses of the Covid-19 vaccine will be
announced soon.
He said the matter needs to be scru-
tinised carefully to ensure the govern-
ment’s efforts to revive the economy
and the people’s quality of life can be
carried out smoothly and efficiently.
“InsyaAllah, I will be announcing the
relaxations in the near future, which I
hope will benefit those fully vaccinated
and also help our economic sectors, while
also taking into account the people’s safe-
ty,” he said. Muhyiddin said the govern-
ment’s strategy is to vaccinate as many
adults in the country as possible to ensure
Malaysia’s recovery plan runs smoothly.
“The more people vaccinated means
more people are protected; there will be
less pressure and burden on the country’s
health system, and more economic and so-
cial sectors can be safely opened,” he said.
3 TheEdge CEO morning brief
h o m e
Sam Fong/The Edge filepix
Efficacy trials of
different vaccines
are not comparable,
just take what is
offered and protect
yourself, says
vaccine developer
by syafiqah salim
theedgemarkets.com
KUALA LUMPUR (Aug 2): Just trust
the regulator and take whatever brand of
approved Covid-19 vaccine offered to you,
Professor Teresa Lambe, the principal re-
searcher (Oxford Covid-19 Vaccine Devel-
opment) at The Jenner Institute, University
of Oxford, UK, advised the public.
“For me, you need to look at the re-
al-world effectiveness data, trust the regu-
lator and trust the safety monitoring board
et cetera on the recommendations of the
best vaccine in your country.
“You cannot compare the efficacy
across the trials of these different kinds
f ro m Pag e 2
This is the lowest the R0 has been in 10
days.The previous low was 1.07 on July 22.
The R0 projects the average number
of people each new Covid-19 patient
will infect — or what is termed the ef-
fective reproduction number. An R0 of
less than 1.0 means the infection is not
spreading.
480,122 vaccine doses administered
on Aug 1
Malaysia administered 480,122 doses of
the Covid-19 vaccine on Sunday (Aug 1)
— down from 519,111 shots the day be-
fore — with 298,236 going to individuals
who got their first dose and 181,886 shots
going to second-dose recipients.
Cumulatively, 21.2 million Covid-19
vaccine doses had been administered as
of Sunday, with 14.25 million people or
of vaccines – it is not comparable.
“Take the vaccine you were offered, get
the vaccine in your arm, make yourself safe
and make the world safe,” she said this at
a virtual media briefing today during the
3rd International Conference of Pharmacy
& Health Sciences (ICPHS 2021) hosted
by Universiti Kuala Lumpur Royal Col-
lege of Medicine Perak (UniKL RCMP).
Lambe, who oversaw the University of
Oxford’s Covid-19 vaccine programme at
The Jenner Institute, which led to the de-
velopment of the Oxford-AstraZeneca vac-
cine, has now been administered to almost
half a billion people around the world.
Themed ‘Modern Research, Innovation
and Practice: The Need of the Hour’, the
conference provides a platform for local
and international academics, researchers,
healthcare professionals and students for an
exchange of ideas, knowledge and expertise
in related areas of interest and research in
the fields of pharmacy and health sciences.
Currently, Malaysia’s national vacci-
nation programme uses Pfizer-BioNTech
that is reportedly 95% effective against
the coronavirus, as well as AstraZeneca
(62% to 90% efficacy) and Sinovac (51%).
The Coordinating Minister of the National
Covid-19 Immunisation Programme (PICK)
Khairy Jamaluddin said in June that vaccine
recipients were not allowed to choose the type
of Covid-19 vaccine they wanted to receive.
It was reported at the time that some
elderly recipients who turned up for their
vaccination appointments at the Kuala
Lumpur Convention Centre had reject-
ed the Sinovac vaccine and asked for the
Pfizer vaccine instead.
Khairy said the World Health Organiza-
tion had also approved Sinovac and given
assurance that the vaccine was safe to use.
43.55% of the nation’s population having
received their first dose, including 6.95 mil-
lion or 21.24% who had completed their
two-dose regimen.
Read also:
EMCO at five localities in three states
from Wednesday, says Hishammuddin
Click here
Walk-in vaccination: 3,600-8,000 vaccine
doses to be administered daily at KLCC
PPV Click here
Delta variant in Pasir Puteh may have
spread to other districts, says Kelantan
health authorities Click here
 T U E S D AY A U G U S T 3 , 2 0 2 1
Glove stocks on the last leg of their rally?
BY AHMAD NAQIB IDRIS
theedgemarkets.com
KUALA LUMPUR (Aug 3): While the
valuations for rubber glove makers can
still be seen as attractive currently, the
pandemic-driven rally these counters
have seen may be able to gather much
steam if one looks at analysts’ earnings
forecasts for 2022 onwards.
Most analysts’ “buy” calls are based
on the strong earnings growth forecasts
in 2021.
However, equity markets are usually
six months ahead at least.
This explains why the stellar quarterly
earnings figures have failed to whet inves-
tors’ appetite for glove stocks, despite the
fresh waves of infections globally.
Several glove companies are expect-
ed to release their quarterly earnings
this month. Some quarters foresee in-
vestment analysts to take the chance
to downgrade the sector when they re-
view the latest profit numbers amid the
downward pattern of the rubber glove
average selling prices, let alone the ad-
ditional new capacity that will come on
stream.
Looking at Top Glove Corp Bhd’s
earnings forecasts, for example, ana-
lysts are expecting the world’s largest
rubber glove maker to post a net profit
of RM8.91 billion for its financial year
2021 (FY21) ending Aug 31, 2021 ac-
cording to Bloomberg data. This would
be a 376% year-on-year (y-o-y) jump
from RM1.87 billion the year before.
Similarly, Hartalega Holdings Bhd is
expected to post RM3.89 billion for its
FY22 ending March 31, 2022 (up 35%
y-o-y), Kossan Rubber Industries Bhd
to report RM3.3 billion for its FY21
ending Dec 31, 2021 (up 203% y-o-y),
while Supermax Corp Bhd is seen to
post a net profit of RM3.7 billion for its
FY21 ended June 30, 2021 (up 602%
y-o-y).
However, analysts’ earnings projec-
tions for these companies are substan-
tially lower from 2022 onwards, which
may indicate that the second half of
2021 could be the last leg of high growth
and supernormal profits for the glove
makers.
Beyond 2022, the valuations for these
stocks look vastly different. Top Glove
is projected to post RM3.73 billion in
net profit for its FY22, a 58% y-o-y
drop from the forecast earnings for the
preceding year.
4 THEEDGE CEO MORNING BRIEF
H O M E
Top Glove Corp Bhd
RM
10
8
6
4
RM3.92
2
RM1.872
0 5
April 1, 2020 Aug 2, 2021
Source: Bloomberg
Kossan Rubber Industries Bhd
RM
10
8
6
4 RM3.33
RM2.363
2 0
April 1, 2020 Aug 2, 2021
Source: Bloomberg
This translates into an estimated
earnings per share (EPS) of 44 sen for
its FY22, versus the EPS of RM1.09 for
FY21, based on projections. At the clos-
ing price of RM3.92, Top Glove shares
are trading at a price-earnings ratio (P/E
ratio) of 8.9 times. Pre-Covid-19 pan-
demic, glove stocks were trading at a
P/E ratio of less than five times.
The same goes for the other big four
glove makers, as well as the smaller play-
ers like Rubberex Corp (M) Bhd and
Comfort Gloves Bhd.
Rubberex is expected to post a net
profit of RM175 million for its FY22
ending Dec 31, 2022, 26% lower than
the RM238 million in its current financial
year, while Comfort Gloves is expected
to see a 42% y-o-y decline in net profit to
RM215 million for its FY23 ending Jan
31, 2023, from RM373 million in its cur-
rent financial year ending Jan 31, 2022.
Target prices (TPs) for these coun-
ters have also been lowered in recent
months. Looking at Kenanga Invest-
Hartalega Holdings Bhd
RM
20
15
10
RM7.03
RM6.543
April 1, 2020 Aug 2, 2021
Source: Bloomberg
Supermax Corp Bhd
RM
12
8
4
RM3.20
RM0.761
April 1, 2020 Aug 2, 2021
Source: Bloomberg
ment Bank Bhd’s monthly rating sum-
mary, the TPs on Hartalega and Top
Glove were lowered from RM15.76
and RM6.49 respectively as at June 4
to RM13.80 and RM5.60 as at July 30.
Hong Leong Investment Bank Bhd also
trimmed its TP for Top Glove to RM6.66
on July 7, from RM6.76 in mid-June,
while Public Investment Bank Bhd low-
ered its TP for Kossan to RM3.65 on July
28, from RM6.10 on June 11.
BIMB, on the other hand, cut its TP
for Supermax to RM3.15 on July 8, from
RM7.30 on May 7.
That said, the raging Delta variant
worldwide would mean a relatively strong
demand for rubber gloves at the front
line of the battle with the virus. No one
would rule out that could possibly delay
the normalisation of global demand.
Read also: Hartalega prospects strong
as short-term glove demand to remain
high — chairman Click here
 t u e s d ay a u g u s t 3 , 2 0 2 1
July manufacturing subdued
by surging Covid-19 infections
BY Surin Murugiah
theedgemarkets.com
KUALA LUMPUR (Aug 2): Malaysian
manufacturers continued to report that
operating conditions were severely ham-
pered by a renewed rise in COVID-19
infections.
IHS Markit said both production lev-
els and new orders moderated further in
July, with the former being scaled back
to the greatest extent since April 2020.
However, it said that more positively,
employment levels stabilised, ending a
period of three consecutive reductions,
as manufacturers noted a renewed de-
gree of optimism about the year-ahead
outlook, underpinned by hopes that re-
strictions would lift as the current wave
recedes, boosting domestic and external
demand.
The headline IHS Markit Malaysia
Manufacturing Purchasing Managers’
Index (PMI) — a composite single-fig-
ure indicator of manufacturing perfor-
mance — edged up from 39.9 in June
to 40.1 in July.
IHS Markit said that in remaining
well below the 50.0 no-change level, the
latest reading pointed to a steep decline
in operating conditions, albeit one that
was fractionally softer than that seen in
June.
It said looking at the historical rela-
tionship between the PMI and official
statistics, the latest reading is represent-
ative of a downturn in both industrial
production and GDP, as the survey in-
dicates that the manufacturing sector re-
mains heavily impacted by the pandemic.
IHS Markit said survey gauges of both
output and new orders signalled further
marked reductions in July.
It said the former saw the rate of de-
crease quicken from June to reach the
fastest since the first wave of the pan-
demic in April 2020.
Companies reported that renewed
pandemic restrictions dampened de-
mand and client confidence in both do-
mestic and international markets.
That said, the reduction in new export
sales was considerably softer than aggre-
gate new orders, as some firms comment-
ed on pockets of demand improving in
Europe and the US in particular.
However, according to IHS Markit,
a brighter picture came from the jobs
market, with Malaysian goods producers
5 TheEdge CEO morning brief
h o m e
Malaysia Manufacturing PMI vs Gross Domestic Product
Malaysia Manufacturing PMI
sa, >50 = growth since previous month
60
55
50
45
40
35
30
'13 '14 '15
Sources: IHS Markit, Department of Statistics Malaysia.
signalling a stabilisation of employment
in July, ending a three-month period of
job shedding.
Preparation for orders in the future
reportedly required additional capaci-
ty,though some businesses comment-
ed on difficulty in hiring workers from
abroad.
Input costs meanwhile increased for
the fourteenth consecutive month in
July, reflecting higher prices for a range
of raw materials and higher freight costs.
The overall rate of inflation was steep
overall and the quickest since May.
Manufacturers sought to partially
pass these higher costs to clients in the
form of higher output charges, although
the rate of inflation was the softest re-
ported for five months.
Shortages of materials, as well as de-
lays in receiving shipments caused av-
erage supplier lead times to lengthen to
the greatest extent since May.
At the same time, both purchases and
inventory levels fell. Some firms noted
that supply delays had hindered restock-
ing efforts and, in some cases, curtailed
production.
Backlogs of work consequently de-
creased for the third month running in
the latest survey period.
IHS Markit said despite headwinds
from supply shortages amid a renewed
surge in COVID-19 infections, Malay-
sian manufacturers displayed a renewed
sense of optimism regarding the outlook
for output in the coming year.
It said the degree of sentiment was
modest overall, but marked a welcome
Gross domestic product
%yr/yr
20
10
0
-10
-20
'16 '17 '18 '19 '20 '21
improvement from June’s record low.
Panel members attributed the im-
proved outlook to hopes that national
and international restrictions would lift
and aid a recovery in production and
sales.
IHS Markit chief business economist
Chris Williamson said Malaysia’s man-
ufacturing sector continued to be bad-
ly hit by the ongoing pandemic in July,
though companies are already planning
for better times ahead.
He said production fell sharply for a
second successive month as the recent
rise in infections and containment meas-
ures associated with the Delta variant
both dampened demand and disrupted
supply chains.
Williamson said both domestic de-
mand and export orders fell sharply at
the start of the third quarter, while sup-
plier delays continued to develop at one
of the fastest rates yet recorded by the
survey.
“There was better news in terms of
the outlook, however, with companies
becoming more optimistic after the rise
of the Delta variant had pushed confi-
dence in June to its lowest on record.
“More companies are now seeing
some light at the end of the tunnel, and
employment consequently stabilised.
“There was also better news on pric-
es. Although input cost inflation ticked
up slightly, it continued to run well be-
low the steep rates recorded earlier in
the year, helping push selling price in-
flation down to its lowest since Febru-
ary,” he said.
 t u e s d ay a u g u s t 3 , 2 0 2 1
KUALA LUMPUR (Aug 2): Petroliam
Nasional Bhd (Petronas) and Indian Oil
Corp Ltd’s equally-owned joint venture
(JV) company Indian Oil Petronas Pvt Ltd
(IPPL) is planning to launch a new fuel
and gas retail venture, the latest develop-
ment in the two-decade-old JV between the
Malaysia and India national oil companies,
according to news reports quoting Indian
Oil Corp chairman SM Vaidya.
It was reported that IPPL will get into
retailing of transportation fuel besides nat-
ural gas in India.
“The entire energy pie is increasing
so there is no question of cannibalising,”
Vaidya was quoted as saying by The Eco-
nomic Times on Friday (July 30).
“We intend to get the best practices of
global companies into India. But it will
not be at the cost of our own (Indian Oil
Corp) market share,” he said.
It was reported that Indian Oil Corp
did not share more details on investments,
timeframes, or the sourcing of fuel as those
details are still being worked out.
KUALA LUMPUR (Aug 2): Maybank Sin-
gapore Ltd has filed a suit against National
Feedlot Corp Sdn Bhd (NFC) chairman
Datuk Seri Dr Mohamad Salleh Ismail and
his two children for defaulting on two hous-
ing loan facilities for properties in Singapore.
Maybank Singapore, which is the plain-
tiff, filed the suit at the High Court registry
here on July 19 through law firm Messrs
Benjamin Dawson. The suit named Mo-
hamad Salleh as the first defendant, while
his children Wan Shahinur Izran and Wan
Izzana Fatimah Zabedah were named as
second and third defendants respectively.
Mohamad Salleh is the husband of for-
mer women, family and community devel-
opment minister Tan Sri Shahrizat Abdul
Jalil, who is also former Wanita Umno chief.
According to the statement of claim sight-
ed by theedgemarkets.com today, Maybank
Singapore is seeking the court’s judgement
on a total of S$2.53 million being the out-
standing amount under the loan facilities
that the defendants still owed with the bank.
For the first housing loan facility,
Maybank Singapore granted a loan of
S$4.37 million in 2009 to the three de-
fendants to finance the purchase of a lux-
ury apartment in Orchard Scotts.
However, the three defendants default-
ed in the monthly instalment payments of
S$7,225, with S$3.94 million being the
outstanding amount due as at June 22,
2018, together with all accrued interests.
After the defendants failed to pay the
sum demanded, Maybank Singapore then
exercised its rights by repossessing and sell-
ing the property through an auction at the
6 TheEdge CEO morning brief
h o m e
Petronas JV
Meanwhile, Natural GasWorld, quoting
the Press Trust of India, reported that Indi-
embarks on new
an Oil Corp owns the largest network of
petrol pumps in India.
retail venture
“It also has licences to retail CNG (com-
pressed natural gas) to automobiles and
in India
piped cooking gas to households in sever-
al geographical areas,” Natural Gas World
reported.
Natural Gas World reported that IPPL
by justin lim is a liquefied petroleum gas importer.
theedgemarkets.com According to Natural Gas World, the
Press Trust of India quoted Vaidya as say-
ing the JV will “diversify into natural
gas and transportation fuel retailing
business”.
At the time of writing today, Petronas
had not issued a statement in response to
news reports on IPPL’s plan to launch its
new fuel and gas retail venture.
Read also: Petronas Carigali confirms con-
tractor’s staff test positive for Covid-19 in
Bintulu Click here
Maybank
Maybank Singapore granted a loan of
S$5.38 million in 2010 to the first two
Singapore sues
defendants to finance the purchase of a
luxury condominium in Marina Bay.
NFC chairman,
Again, Mohamad Salleh and Wan
Shahinur Izran defaulted on the month-
children for
ly instalment payments of S$8,700, with
S$5.06 million being the outstanding
defaulting on
amount due as at June 4, 2018, together
with all accrued interests.
housing loans
Maybank Singapore also then exercised
its rights by repossessing and selling the
worth S$2.53m
property through a private treaty sale at the
price of S$4.68 million. The sale, however,
was insufficient to settle the whole out-
standing amount, and as at Dec 29, 2020,
by emir zainul the sum of S$1.17 million remains due.
theedgemarkets.com The suit alleged that all three defend-
ants have failed, ignored and/or neglected
Patrick Goh/The Edge to pay the sum demanded, which resulted
in the bank pursuing the matter through
the Malaysian courts.
It is worth noting that the family is also
embroiled in a RM250 million suit by the
Malaysian government. Under the suit, the
government is seeking RM253.62 million,
representing the sum owed by NFC, with
a 2% interest from May 1, 2019.
They are accused of misappropriating
and wrongly using RM118 million from a
RM250 million loan granted to NFC by
Datuk Seri Dr Mohamad Salleh Ismail the government in December 2007 to set
up and operate a national feedlot centre
price of S$3.2 million. The sale, however, in Gemas.
was insufficient to settle the whole out-
standing amount, and as at Dec 29, 2020,
the sum of S$1.37 million remains due. Read also: Maybank Indonesia 1H profit
For the second housing facility, falls on Covid-19 impact Click here
T U E S D AY A U G U S T 3 , 2 0 2 1 7 THEEDGE CEO MORNING BRIEF
 t u e s d ay a u g u s t 3 , 2 0 2 1
Sime Darby
banks on RM2.6b
cash as company
eyes first share
buyback
by Izzul Ikram
theedgemarkets.com
KUALA LUMPUR (Aug 2): Sime Darby
Bhd said the diversified group’s prospects
remain strong, particularly in its core busi-
nesses of heavy equipment distribution, car
dealerships and hospital operations, and
that its estimated RM2.6 billion cash is a
source of confidence at a time when the glob-
al economy is contending with the impact
of Covid-19-pandemic-driven movement
restrictions.
Sime Darby’s estimated RM2.6 billion
cash, which the group refers to as “dry pow-
der”, is also expected to be handy as the
company prepares for its first share buyback.
In an emailed statement to theedgemarkets.
com, a Sime Darby spokesperson said the
group continues to see strong demand for
luxury cars in China and that the Australian
market holds upside potential in both the
heavy equipment and automotive markets.
The group’s heavy equipment distribu-
tion and car dealerships are placed under
the group’s industrial and motors segments,
while the healthcare unit runs the group’s
hospital operations.
Besides its core operations in the indus-
trial, motors, logistics, and healthcare seg-
ments, Sime Darby is also involved in the
insurance segment in Malaysia.
“Our prospects remain strong particularly
in the areas of our core businesses namely
industrial and motors, as well as in growing
our healthcare division.The group is bullish
given the dry powder we have on our balance
sheet in addition to the gains we are making
in the markets that we operate in,” said the
Sime Darby spokesperson.
8 TheEdge CEO morning brief
h o m e
“The strength of our two major markets
— China and Australia — coupled with the
geographical diversity of our regional opera-
tions which span 18 countries, has enabled
us to maintain our growth trajectory, as ev-
idenced by the 89% increase in net profit
to RM1.2 billion for the nine-month period
ended March 31, 2021 (9MFY21).
“Additionally, as demonstrated by our
recent announcements relating to the dis-
posal of non-core assets, we have stayed true
to our focus on our core businesses,” the
spokesperson said.
The spokesperson, however, did not elab-
orate on how Sime Darby plans to use its
estimated bank balances, deposits and cash
that amounted to about RM2.6 billion as at
March 31, 2021, compared with RM1.69
billion as at June 30, 2020.
Sime Darby’s net profit rose to RM300
million in 3QFY21 from RM115 million a
year earlier, as revenue climbed to RM11.02
billion from RM8.43 billion. For 9MFY21,
its cumulative net profit rose to RM1.21 bil-
lion from RM643 million a year earlier, while
revenue jumped to RM33.14 billion from
RM28.11 billion.
Sime Darby’s latest reported net assets
per share stood at RM2.30.
At Bursa Malaysia’s 5pm close today,
Sime Darby’s share price settled unchanged
at RM2.15 for a market value of about
RM14.62 billion based on the company’s
6.8 billion issued shares.
Sime Darby’s share price chart since 2006
showed that its shares closed at their highest
of RM3.33 on Jan 11, 2008, and was at its
lowest at 35 sen on Feb 20, 2009.
Sime Darby, which recently appoint-
ed CGS-CIMB Securities Sdn Bhd as the
stockbroker to facilitate the group’s share
buy-back, said it believes there is value in the
group’s shares and that buy-back will provide
some support to its share price.
“We are preparing for the possibility of a
share buy-back, as we feel that our shares are
undervalued,” the spokesperson said with-
out specifying when Sime Darby’s first share
buy-back may happen.
Based on Sime Darby’s Bursa filings since
Jan 3, 2000, the group has not done any share
buy-backs all this while.
BNM, Bank
Indonesia include
direct investment,
income and
transfer in
ringgit-rupiah
settlement
Bernama
KUALA LUMPUR (Aug 2): Bank Ne-
gara Malaysia (BNM) and Bank Indone-
sia have announced that the expansion of
the local currency settlement framework
to include direct investment, income and
transfer, in addition to trade, as eligible
underlying transactions effective today.
“It also includes expansion of eligible
users of the framework, such as individ-
uals, and additional foreign exchange
policy flexibilities, such as more simple
documentation requirement, to facilitate
the operationalisation of the framework,”
BNM said in a statement today.
It said this expansion is part of con-
tinuous effort to facilitate wider use of
local currencies for settlement of trade
and direct investment between Malaysia
and Indonesia.
Given the expansion, BNM and Bank
Indonesia have also appointed additional
qualified commercial banks in both coun-
tries to support the operationalisation of
the expanded ringgit-rupiah settlement
framework.
In general, the appointed banks are ex-
perienced in facilitating trade and direct
investment between the two countries,
have a wide customer base and have estab-
lished strong business relationships with
banks in the counterpart country, it said.
The settlement framework was first
launched on Dec 11, 2017 in accordance
with the memorandum of understanding
(MoU) between BNM and Bank Indo-
nesia that was signed on Dec 23, 2016.
 T U E S D AY A U G U S T 3 , 2 0 2 1
KUALA LUMPUR (Aug 2): Pecca Group
Bhd is buying a 51% stake in healthcare
products distributor Rentas Health Sdn
Bhd for RM100 million in a cash and stock
deal to venture into the healthcare-relat-
ed business, to expand its revenue stream.
The 51% stake purchase shall be sat-
isfied via a combination of RM50 million
cash and the issuance of 11.99 million new
Pecca shares at an issue price of RM4.17
apiece to Teoh Zi Yuen, the daughter of
Pecca’s founder and managing director
(MD) Datuk Teoh Hwa Cheng.
ZiYuen holds 99.99% in Rentas Health,
said the car-upholstery specialist in a Bursa
Malaysia filing, adding the proposed ac-
quisition is deemed a related party transac-
tion. Hwa Cheng currently holds a 49.63%
stake in Pecca. Post-acquisition, his stake
in Pecca will shrink to 46.58%.
The deal comes with a profit guarantee,
where Rentas Health guarantees it would
achieve an audited profit after tax (PAT)
of no less than RM23 million for the fi-
nancial year ending June 30, 2022. Of this,
the profit attributable to Pecca is RM11.73
million, calculated based on the 51% equi-
ty interest to be acquired by Pecca.
Rentas Health, which started its busi-
ness operations on March 20, 2020, is
primarily involved in the supply of medi-
cal equipment that include Covid-19 test
kits and personal protective equipment
(PPE). It is the distributor of two face mask
brands, namely Rentas Health and Callie,
as well as an appointed agent for BioSe-
woom Real-Q 2019-nCoV Detection Kit.
Through the proposed acquisition, the
group said it will be able to tap into the
existing customer base and distribution
networks of Rentas Health to attain a wid-
KUALA LUMPUR (Aug 2): British news-
paper The Sunday Mirror has issued a pub-
lic apology on allegations of exploitation at
a facility managed by ATA IMS Bhd that
manufactures for Dyson and others.
“We accept that the photograph accom-
panying the article did not show accom-
modation for any Dyson-assigned workers
and we apologise for its inclusion.
“We also accept that Dyson’s third par-
ty suppliers are regularly and thoroughly
audited by both Dyson and independent,
internationally recognised auditing compa-
nies, and that Dyson states that the allega-
tions do not relate to their products man-
ufactured by ATA Industrial,” The Sunday
Mirror noted in a July 25 article.
“We would like to make clear that the
article was not suggesting Dyson knew or
was complicit in any alleged poor treatment
of ATA’s workers and we apologise if any
readers understood it in this manner.
9 THEEDGE CEO MORNING BRIEF
H O M E
Pecca to buy
relevant in the new business environment.
This dynamism and agility led us to the
controlling stake
diversification into the healthcare business,
which we believe would be the business of
in MD daughter’s
the future,” said Hwa Cheng in a separate
statement.
healthcare
“We believe the demand for masks,
PPE and other Covid-19 products will
product
be here to stay as more officials describe
Covid-19 as an endemic, similar to the
distribution biz
likes of HIV and Hepatitis C. To continue
maintaining our competitive edge, we will
for RM100m
dedicate efforts to R&D (research and de-
velopment) which has always been the in-
gredient of success for our group for more
than 25 years. We are optimistic to make
BY JUSTIN LIM new R&D breakthroughs in the short to
theedgemarkets.com medium term.With this new business add-
ed into our group, we are now ready to
roll out our vision for Pecca 2.0, our new
growth ecosystem that will pave Pecca to
new heights,” he added.
Pecca has appointed independent advis-
er FHMH Corporate Advisory Sdn Bhd to
advise Pecca’s non-interested sharehold-
ers on the acquisition, which is expected
to be completed in the fourth quarter of
2021. The cash portion of the price tag
will be funded using internal funds and
bank borrowings.
Pecca will also seek shareholders’ ap-
proval on its proposed diversification into
er customer outreach and to achieve busi- healthcare, as it expects the business to
ness synergy between its existing healthcare divert 25% or more of the group’s net as-
business and Rentas Health’s business. sets as well as contribute over 25% of the
“We are a dynamic company that is group’s net profit in the future.
quick to acknowledge that business con- The trading of Pecca shares, which was
ditions have significantly changed because halted today prior to the announcement,
of the Covid-19 pandemic. We saw imme- will resume tomorrow. The stock was last
diate need to embrace new ways of doing traded at RM4.14, giving it a market cap-
business in order to ensure that we remain italisation of RM778 million.
Britain’s The
Sunday Mirror
issues apology
on allegations
of exploitation
at Dyson
“We are happy to set the record straight,”
manufacturer it added.
The British newspaper added that on
ATA IMS
June 20 it published an article making
allegations about a facility managed by
ATA IMS that manufactures for Dyson
and others.
BY SULHI KHALID At the time of writing, shares in ATA
theedgemarkets.com IMS were up 20 sen or 8.1% to RM2.67,
valuing the company at RM3 billion.Year
to date, the stock has risen by 13%.
 T U E S D AY A U G U S T 3 , 2 0 2 1 10 THEEDGE CEO MORNING BRIEF

H O M E

Revenue Group Bidders of Malaysia’s five digital banking licenses

consortium
submits
application for
digital banking
licence
BY SURIN MURUGIAH
theedgemarkets.com
KUALA LUMPUR (August 2): A consorti-
um comprising Revenue Group Bhd, Sarawak
State and Kenanga Investment Bank Bhd has
submitted its application for a digital banking
licence from Bank Negara Malaysia (BNM).
In a bourse filing today, Revenue said
SSG Digital Resources Berhad, a special
purpose vehicle for the consortium had on
June 29 submitted the application for a dig-
ital banking licence from BNM.
It said the Consortium, which benefits
from the complementary strengths of its three
strategic partners, aims to improve and trans-
form the lives of underserved and unserved
1. Consortium of Paramount Corp Bhd, Star Media Group Bhd, RCE Capital Bhd, Prosper
Palm Oil Mill Sdn Bhd and an unnamed technology partner
2. A 40:60 JV between AEON Credit Service (M) Bhd and parent AEON Financial Service Co Ltd
3. Consortium of Green Packet Bhd, Zico Holdings Inc and M24 Tawreeq Sdn Bhd
4. Consortium of Pertama Digital Bhd, Crowdo Holdings Pte Ltd and INFOPRO Sdn Bhd
5. A 40:60 JV between RHB Bank Bhd and Axiata Group Bhd via Boost Holdings Sdn Bhd
6. Consortium of Sunway Bhd and partners
7. ManagePay Systems Bhd with up to 3 partners
8. Consortium of iFAST Corp, LTAT’s Koperasi Angkatan Tentera Malaysia, THZ Alliance, and
99 Speedmart founder Lee Thiam Wah
9. Consortium of Boustead Holdings Bhd, Angkatan Koperasi Kebangsaan Malaysia Bhd and
an independent insurance brokerage company
10. Consortium of AirAsia Group Bhd via BigPay, MIDF, private equity firm Ikhlas Capital Master
Fund Pte Ltd, and another foreign conglomerate
11. Consortium of Hextar Global Bhd, with DNeX’s major shareholder Arcadia Acres Sdn Bhd,
and Fass Payment Solutions Sdn Bhd’s SPV Ihsan Equity Sdn Bhd
12. Consortium of PUC Bhd with two state governments and a conglomerate
13. Consortium of Revenue Group Bhd, Kenanga Investment Bank Bhd, and the Sarawak state
government
List is non-exhaustive.
Sources: Bursa Malaysia, The Edge
Malaysians, including individuals and micro/ Group to bid for a digital banking licence.
small/ medium businesses, through transpar- In a separate announcent, Revenue said
ent and affordable digital banking solutions. trading in its securities will be halted for one
The announcement today confirms a re- hour from 9am today and resume at 10am.
port by The Edge, which cited sources as say- Revenue was last traded at RM1.88, giv-
ing that the Sarawak state government was ing it a market capitalisation of RM861.05
teaming up with Kenanga IB and Revenue million.

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 t u e s d ay a u g u s t 3 , 2 0 2 1 11 TheEdge CEO morning brief

h o m e

Analysts raise target price for Unisem

after stellar 2Q results
KUALA LUMPUR (Aug 2): Unisem (M) by Cheryl Poo spite depreciation of the US dollar versus
Bhd’s stellar set of quarterly results has theedgemarkets.com the ringgit, which together with increased
gained analysts’ bullish outlook for the interest income contributed to earnings.
coming quarters with some upping their Hong Leong Investment Bank (HLIB)
target prices (TPs) for the stock. Research forecast Unisem’s 3QFY21 rev-
“Unisem remains a good proxy for enue to be up 5% to 8% q-o-q, with good
growth momentum in the semiconductor order visibility across all market segments.
sector, which is expected to remain robust The research house said today that the
at least for the next two to three quarters. positive estimate took into consideration its
Thus, we expect earnings growth to per- clients’ forecasts and past loadings, short-
sist in the upcoming quarters on sustained ages of wafer and substrates and lead frame
demand and optimistic forecasts from all shortages, as well as a two-week closure of
customers,” RHB Research said in a re- Unisem’s Ipoh plant.
port today as it maintained its “buy” call On dividends, HLIB noted that Un-
on the stock and raised its TP to RM10.02 isem had approved an interim tax-ex-
from RM9.17, in line with the anticipat- empt dividend per share (DPS) of two
ed results. sen (2QFY20: two sen) going ex on Aug
“Management expects sequential- 16, and year to date (YTD), DPS also
ly stronger quarters ahead, sustained by amounted to two sen versus the same for
strong demand across power management, 1HFY20.
radio frequency, automotive and consum- “Traditionally, Unisem divvies three
er electronics products in the upcoming expenditure (capex) of RM156 million times every financial year,” it added.
two to three quarters, coinciding with the mainly catered for plant capacity expansion Despite risks arising from the trade war
seasonally strong 2H (second half) for the for assembly and testing in Chengdu and and Covid-19 pandemic, HLIB noted im-
semiconductor industry,” it added. Ipoh, leading to higher capex of RM293.7 proved prospects for the company that in-
MIDF Research also upped its TP for million — increasing 76.4% year-on-year clude the closure of its loss-making Batam
the stock to RM10 from RM8.62 previ- (y-o-y) — in 1HFY21. plant, favourable foreign exchange (forex)
ously as it upgraded its call to “buy” from “Given the upbeat outlook for semi- and a healthy balance sheet.
“neutral”. conductor consumption and application HLIB maintained its “buy” call on the
The research house said in a report to- ahead, we expect capital spending to re- stock with a TP at RM9.88, pegged at 33
day that it was inputting higher revenue main elevated to support the group expan- times FY22 earnings per share (EPS).
forecasts for the financial year ending Dec sion as well as new customer acquisition Meanwhile, CGS-CIMB Research reit-
31, 2021 (FY21) and FY22 on the premise plans,” MIDF said. erated its “add” call for Unisem and TP of
of strong demand across products and ser- For 2QFY21, Unisem raked in a net RM10.50, two standard deviations (SD)
vices, namely wafer level packaging and mi- profit of RM54.64 million, up 60% from above the sector mean in view of the global
cro-electro-mechanical systems (MEMs). RM33.95 million for the same period last semiconductor supercycle.
It also expects a better profit margin due year, and improving 20% from RM45.4 “We think the higher multiple is jus-
to better economies of scale. million for 1QFY21. At RM402.23 mil- tified since Unisem was reinstated as a
“As such, our FY21 and FY22 earn- lion, revenue was 30% higher than RM310 constituent of the FTSE4Good Index in
ings estimates have been revised upwards million last year and 7.6% higher quar- June 2021. The stock trades at 24 times
by 21.7% and 13.1% to RM233.4 mil- ter-on-quarter (q-o-q). CY22F P/E (calendar year 2022 forecast
lion and RM265.5 million respectively,” In a July 30 filing with Bursa Malay- price-earnings), which is a 10% discount
MIDF said. sia, Unisem attributed the improvement in to the Malaysian outsourced semicon-
It added that Unisem’s second quarter revenue to higher sales volume and an in- ductor assembly and test sector P/E of
ended June 30, 2021 (2QFY21) capital crease in average selling prices (ASPs) de- 27 times CY22F,” CGS-CIMB said in a
report today.
Analysts’ recommendation on Unisem (M) Bhd as at Aug 2, 2021 It is worth noting that Unisem had also
proposed a one-for-one bonus issue reward
Reserch house Recommendation Target price (RM)
for its shareholders.
KAF Research Hold 8.64 “We are positive on the bonus issue.
Kenanga Research Outperform 9.80 Although it does not alter the company’s
RHB Research Buy 10.02 fundamentals, we expect this corporate
Affin Hwang Investment Bank Buy 10.00 exercise to boost the stock’s liquidity and
MIDF Research Buy 10.00 improve near-term trading sentiment. The
TA Securities Holdings Buy 11.80 group expects to complete the exercise in
CGS-CIMB Research Add 10.50 4QFY21,” CGS-CIMB said.
Hong Leong Investment Bank Buy 9.88 At the time of writing today, shares in
Unisem were up 33 sen at RM8.68, valu-
ing the company at RM6.7 billion.
 t u e s d ay a u g u s t 3 , 2 0 2 1
Analysts still upbeat on banks despite
loans growth moderating and asset quality
weakening in June
KUALA LUMPUR (Aug 2): Analysts re-
mained upbeat on banks despite the sec-
tor’s moderating loan growth and weaken-
ing asset quality in June.
UOB KayHian’s analyst Keith Wee
said in a note today that the banking sys-
tem’s loans growth for June moderated to
a 3.4% year-on-year (y-o-y) growth from
3.9% in May, though he thinks this could
be “temporary” as the stricter lockdown
from June onwards could have impacted
loan disbursements, which are likely to re-
cover from 3Q21.
Wee is still expecting 2021’s system loan
growth to stage a modest recovery to 4%,
versus 3.4% in 2020.
While the extended lockdown has raised
concerns of an upside risk to credit cost this
year, he believes this is unlikely to surpass
2020’s credit cost level of 82 basis points
(bps), as most banks have adequately set
aside provisions for the vulnerable groups.
“Even if we were to assume that sector
2021 credit cost [was] to mirror 2020’s 82
bps versus our current estimates of 65 bps,
we are still expecting the sector to deliver
a 12% y-o-y earnings growth (versus cur-
rent 25% growth estimates). This will be
underpinned by a slight improvement in
net interest margin, stronger loans growth
and mid-single-digit non-interest income
growth,” Wee said.
He kept his “overweight” call on the
sector, saying “the sector’s current con-
solidation phase provides an excellent op-
portunity for investors to accumulate on
weakness”.
“The sector is still expected to register
a healthy earnings growth even if provi-
sions were to surprise on the upside in
2021 while common equity tier 1 (CET1)
ratio at 14.8% is well above the minimum
requirement,” he said.
CIMB Group Holdings Bhd (target
price [TP]: RM5.10) is Wee’s top pick
for the banking segment, as he believes
the group is best positioned in the sector
to benefit from the economic recovery and
reopening theme, given its strong earnings
growth off a low base, attractive valuations,
large cap and liquid high beta nature.
He also likes Hong Leong Bank Bhd
(TP: RM22.30) and Public Bank Bhd
(TP: RM4.60) for their solid asset quali-
ty track records, and RHB Bank Bhd (TP:
RM6.35) for its strong capital position and
well-balanced growth.
12 TheEdge CEO morning brief
h o m e
by Tan Siew Mung
theedgemarkets.com
Meanwhile, Hong Leong Investment
Bank Research’s analyst Chan Jit Hoong
said in a separate note that June’s loan
growth was trending below his 3.5% to
4% full-year FY21 growth estimates, re-
sulting in him revising his forecast down
to 3% to 3.5%.
According to Chan, asset quality for
the sector also showed some weakness as
gross impaired loans (GIL) ratio nudged
up 3bps month-on-month to 1.62%.
“We expect to see GIL ratio continue
climbing but would not be overly worried
as banks have made heavy pre-emptive pro-
visioning in FY20 and we reckon credit risk
has been adequately priced in by the mar-
ket, looking at the elevated net credit cost
(NCC) assumption used for FY21 by both
us and consensus (above the normalized
run-rate but below FY20’s level),” he said.
“Also, the government and BNM will
remain supportive in helping troubled bor-
rowers, limiting a significant deterioration
in GIL ratio,” he added.
He also retained his “overweight” call
on the banking sector, saying he remained
optimistic on the sector taking into con-
sideration the Covid-19 vaccination roll-
out, undemanding valuations, and ample
market liquidity. “Hence, any selldown is
an opportunity to accumulate, in our opin-
ion,” he added.
For large-sized banks, Chan likes
Malayan Banking Bhd (Maybank) (TP:
RM9.40) for its strong dividend yield, and
Public Bank (TP: RM4.50) for its defen-
sive qualities, over CIMB (TP: RM4.60).
For mid-sized banks, he favours RHB
(TP: RM6.85) over AMMB Holdings
Bhd (TP: RM2.85), as the former has a
higher CET1 ratio and a larger fair val-
ue through other comprehensive income
reserve to buffer against potential yield
curve volatility.
For small-sized banks, he prefers BIMB
Holdings Bhd (TP: RM5.20) and Affin
Bank Bhd (TP: RM2.15) over Alliance
Bank Malaysia Bhd (TP: RM 2.60). He
said he likes the former given its positive
long-term structural growth drivers and
better asset quality, while the latter has
value unlocking potential.
CGS-CIMB Research analyst Winson
Ng noted in a report today that the in-
dustry’s total loan expanded 1.6% in the
first half, translating into an annualised
rate of 3.2%.
“This was within our projected loan
growth of 2.5% to 3.5% for 2021, even if
we factor in a slowdown in loan growth in
the second half. Furthermore, the auto-
matic loan moratorium, which banks start-
ed to offer on July 7, should lend support
to banks’ loan growth as loans under mor-
atorium would not be paid down within
three-six months,” he said.
He said the increase in GIL ratio was
expected, given the credit risks triggered
by the Covid-19 pandemic, and expects
the GIL ratio to continue to rise to his
projected 2% at end-2021.
Ng also noted total provision for banks
only increased by RM978.1 million in
2Q21, versus RM2.04 billion in 1Q21,
and versus RM1.24 billion in 2Q20.
From that, he deduced that the downcy-
cle in banks’ loan loss provisioning (LLP)
continued in 2Q21F, with likely y-o-y and
quarter-on-quarter drops in 2Q21F LLP.
“This, together with the expected y-o-y
expansion in banks’ net interest margin,
should have been the earnings drivers for
banks in 2Q21F. These likely more than
offset the weaker loan and fee income
growth (due to the lockdown), leading to
y-o-y increases in banks’ 2Q21 core net
profit (stable or higher q-o-q),” Ng said.
He also kept his “overweight” call on
banks, premised on the sectory’s expected
net profit growth recovery to a projected
9.4% in 2021. His picks are Public Bank
(TP: RM5.30), Hong Leong Bank (TP:
RM20.78) and Maybank (TP: RM9.10).
 t u e s d ay a u g u s t 3 , 2 0 2 1
KUALA LUMPUR (Aug 2): Straits Inter
Logistics Bhd said its unit Victoria STS
(Labuan) Sdn Bhd has received approval
from the Marine Department to develop
an integrated offshore ship-to-ship (STS)
transhipment hub within the port limits of
Victoria Bay, Labuan.
Victoria STS is a 70% owned subsid-
iary of Fajar Maritime and Logistics Sdn
Bhd, which in turn is a 60% owned sub-
sidiary of Straits.
“The company has mobilized its re-
sources and infrastructure in prepara-
tion to commence operation of the STS
Transhipment Hub in the fourth quarter
of 2021,” Straits said in a statement today.
The oil trading and fuel bunkering ser-
vice provider said Victoria STS has also
received approval from the Marine De-
partment on the marine risk assessment.
The assessment, it said, was done as
part of the requirements to be complied
before Jan 8, 2022 to develop the hub.
“The company expects to commence and
complete the development of the STS Energy
Transhipment Hub, which includes setting
up the key facilities and equipment such as
tugboats, pneumatic fenders, LNG cryogenic
equipment and single point mooring system
by the fourth quarter of 2021,” it said.
Straits said the hub will be its flag-
ship energy project which will be locat-
ed within the port limits of Victoria Bay
deep water area spanning 3,309 hectares,
supporting an initial six STS berths with
Cahya Mata extends CFO
suspension till Aug 31
KUALA LUMPUR (Aug 2): Cahya Mata
Sarawak Bhd (CMS) has further extended
the suspension of its group chief financial
officer (CFO) Syed Hizam Alsagoff until
Aug 31, to accommodate the additional
time required by independent consultant
KPMG Management & Risk Consulting
Sdn Bhd, whom it appointed in June
to review the financial management
of certain investments and contracts,
to complete its job. In a bourse filing
today, CMS said it expects the results
of the review to be announced by the
end of August. Previously the group’s
board decided to extend Syed Hizam’s
suspension by 60 days to accommodate
KPMB’s review. The group first
suspended Syed Hizam for 30 days
on May 5 to facilitate investigations
into allegations of possible financial
mismanagement in relation to the
company’s investments and operations. —
by Syafiqah Salim/theedgemarkets.com
13 TheEdge CEO morning brief
h o m e
safe water depths of up to 30 metres.
Straits Inter “The development will advance the in-
troduction of state-of-the-art multi-func-
Logistics gets tional energy transhipment facilities that
will be able to accommodate LNG carriers
green light to up to the size of a Q-Max and Very Large
Crude Carrier,” said Straits.
develop Asia’s Noting thatVictoria Bay is strategically lo-
cated along international shipping and energy
largest STS energy trade routes, Straits said the proposed hub
is set to be one of the largest offshore LNG
transhipment hub and LPG energy transhipment hubs in Asia.
The hub, it added is also strategically lo-
in Labuan cated within the vicinity of Labuan Liberty
Port, which is managed and operated by
Megah Port Management Sdn Bhd (MPM),
by syafiqah salim a 51%-owned subsidiary of the group.
theedgemarkets.com Straits said since its announcement on
July 12 on the hub, it has received numer-
ous enquiries from both international and
local entities that are interested in partner-
ing the group to develop the hub into Asia’s
largest STS Transhipment Hub.
“We are engaged in discussion with
many parties in preparation for this pro-
ject and Straits is gearing to kickstart this
within the next few months.The other enti-
ties within the Straits Group will also stand
to benefit from the business spin-offs of
this project,” said Straits Group managing
director Datuk Seri Ron Ho Kam Choy.
Shares of Straits rose half a sen or 2.5%
to 20.5 sen today, giving the group a market
capitalisation of RM160.06 million. The
counter saw 6.99 million shares traded.
news In brief
Sunway Malls facilitating up to RM200m in working capital to assist
retailers facing cash-flow crunch
KUALA LUMPUR (Aug 2): Sunway Malls announced today that it is facilitating up to RM200
million in working capital to assist its retailers through financing facilities provided by RHB
Banking Group and Credit Guarantee Corporation Malaysia Bhd (CGC). The financing
facilities — the Sunway Malls SME Retailers Relief Financing Programme will be made
available to the mall group’s retailers across seven malls, it added in a statement. Under the
scheme, qualified retailers under Sunway Malls can apply for RHB financing facilities of up
to RM500,000 with a loan tenure of seven years, where up to 80% of the principal financing
amount is guaranteed by CGC. There is also an option for an overdraft facility of up to 30% of
the financing limit with one of the lowest interest rates in the market. — theedgemarkets.com
Dolphin International proposes second share placement in eight months
to raise RM24m
KUALA LUMPUR (Aug 2): Dolphin International Bhd plans to raise about RM24.17
million through a private placement — equivalent to 35% of its market capitalisation of
RM70 million — to fund its food and beverage business, to repay borrowings and for the
group’s working capital. This is the second private placement that Dolphin International
proposed this year. The previous placement was announced on Jan 16, from which it
raised RM13.4 million by placing out 186.32 million shares at 7.19 sen apiece. In a bourse
filing, the company said the new placement entails the issuance of up to 335.67 million
placement shares, representing 36% of the group’s total issued shares, at an issue price to
be decided to third party investors to be identified. The expected proceeds raised is based
on an indicative price of 7.2 sen per placement share. — by Justin Lim/theedgemarkets.com
 t u e s d ay a u g u s t 3 , 2 0 2 1
Roads to
Parliament
closed, opposition
assemble at
Dataran Merdeka
and demand for
PM’s resignation
by Surin Murugiah
theedgemarkets.com
KUALA LUMPUR (Aug 2): Major roads
leading to the Parliament building in Kuala
Lumpur have been closed, while opposi-
tion Members of Parliament (MPs) were
prevented from entering Dewan Rakyat.
In separate live feeds on social media,
opposition MPs including Nurul Izzah
Anwar, Segambut MP Hannah Yeoh and
Kota Kinabalu MP Chan Foong Hin said
the roads to Parliament were closed de-
spite the postponement of today’s sitting.
Dewan Rakyat was ordered shut for
two weeks from July 29 after Covid-19
cases were detected among attendees
last week.
After being prevented from entering
Parliament by police, several opposition
lawmakers from PKR, DAP and Aman-
ah instead gathered at Dataran Merdeka.
De facto opposition leader Datuk Seri
Anwar Ibrahim and former prime minister
Tun Dr Mahathir Mohamad also voiced
their dissatisfaction over the blockade by
the police.
14 TheEdge CEO morning brief
h o m e
bloomberg
Calling for the resignation of Prime
Minister Tan Sri Muhyiddin Yassin, the
opposition MPs criticised the move by the
ruling government led by Muhyiddin to
revoke the Emergency Ordinances despite
denial by Yang di-Pertuan Agong that he
had given his consent to the revocation.
The MPs then proceeded to Dataran
Merdeka.
Among the opposition MPs marching
to Dataran Merdeka were Bagan MP Lim
Guan Eng, Amanah president Mohamad
Sabu and Semporna MP Datuk Seri Mohd
Shafie Apdal. Using loud hailers, the MPs
stressed that the government led by Mu-
hyiddin had acted in bad faith.
Anwar said the government had diso-
beyed the wishes of the King as well as dis-
regarded the public, and thus must resign.
Meanwhile, Shafie said the Dewan Rak-
yat Speaker had undertaken that questions
about the Emergency Ordinances will be
answered today.
“But Parliament is shut, using Covid-19
as an excuse.
“Legally, we have the right to be in Par-
liament,” he said.
Yeoh, meanwhile, tweeted that the op-
position MPs planned to debate the emer-
gency proclamation and its ordinances in
Dewan Rakyat but were blocked by police.
“An MP with a walking stick, [another]
seven-month pregnant as well as those aged
above 90 came along. This is our duty,”
she said.
The opposition MPs finally dispersed
after a face-off with Federal Reserve Unit
(FRU) personnel in riot gear.
Read also: Umno to hold special Supreme
Council meeting on Tuesday on political
developments Click here
Sarawak
election to be
held within
60 days after
revocation of
Emergency
Proclamation
— EC
Bernama
KUALA LUMPUR (Aug 2): The Sar-
awak state election will be held within
60 days from the date the Emergency
Proclamation for Sarawak is revoked
or annulled, said Election Commis-
sion (EC) secretary Datuk Ikmalru-
din Ishak.
He said the EC had taken note of
Prime Minister Tan Sri Muhyiddin
Yassin’s statement on July 31 on the
Emergency Proclamation by Yang
di-Pertuan Agong Al-Sultan Abdul-
lah Ri’ayatuddin Al-Mustafa Billah
Shah.
“The declaration of the proclama-
tion by Yang di-Pertuan Agong was
made in accordance with Clause (1)
of Article 150 of the Federal Con-
stitution to suspend the state elec-
tion and that this proclamation
shall extend throughout the state
of Sarawak from Aug 2, 2021 to
Feb 2, 2022,” he said in a statement
today.
According to him, an ordinance
was promulgated by the King under
Clause (2B) of Article 150 of the Fed-
eral Constitution, known as the Emer-
gency (Essential Powers) (Sarawak)
Ordinance 2021 P.U. (A) 324.
He said under the provisions of
Clause (3) of Article 21 of the Con-
stitution of the State of Sarawak, the
State Legislative Assembly that should
have been dissolved after five years
from its first meeting had no effect
pursuant to Section 3 (1) of the Emer-
gency Ordinance.
The Sarawak State Legislative As-
sembly should have stood dissolved
on June 7, five years from the date
of its first meeting. However, the
provision could not take effect due
to the implementation of the Emer-
gency (Essential Powers) Ordinance
2021.
 t u e s d ay a u g u s t 3 , 2 0 2 1
Constitutional crisis? — A legal opinion
(Aug 1): 1. Great controversy has been
stirred regarding the recent parliamenta-
ry session. I hope this explanation will help
to clarify the misconceptions and heated
statements which falsely suggest there is a
constitutional crisis.
The Parliamentary Session
2.This Parliamentary Session was a Special
Session. It was called by virtue of Standing
Order 11(3).
3. Standing Order 11 states as follows:-
“11. (1) The first sitting of the House
in each Session shall be held in such place
on such day and at such hour as the Seri
Paduka Baginda Yang di-Pertuan Agong
may by Proclamation appoint.
(2) Subject to the provisions of para-
graph (1), the Leader or Deputy of the
House shall determine at least 28 days be-
fore the commencement of each Session,
the dates on which the House shall meet
in the Session:
Provided that the Leader or Deputy
Leader of the House may vary from time
to time the dates so fixed.
(3) If, during an adjournment of the
House, it is represented to TuanYang di-Per-
tua by the Prime Minister that the public
interest requires that the House should meet
at an earlier date than that to which the
House was adjourned,TuanYang di-Pertua
shall give notice thereof forthwith and the
House shall meet at the time stated in such
notice. The business set down for that day
shall be appointed by the Prime Minister
and notice thereof shall be circulated not
later than the time of meeting.”
4. This was a Special Session called upon
an adjournment of the last sitting of the
House. It was a session that was called by
the Prime Minister making representations
to the Speaker of the House. The purpose
of this special session was to discuss mat-
ters of public interest. In this case, it was
to discuss the Covid-19 Pandemic and the
Government’s response to it.
5. The business of the Special Sessions
is to be determined by the Prime Minis-
ter. This is unlike an ordinary sitting of
Parliament.
6. In an ordinary sitting of Parliament the
order of business is determined by Stand-
ing Order 14. Standing Order 14 is repro-
duced below:-
“14. (1) Unless the House otherwise
directs, the business of each sitting shall
be transacted in the following order:
15 TheEdge CEO morning brief
h o m e
by Rosli Dahlan
theedgemarkets.com
(a) Formal entry of TuanYang di-Pertua.
(b) Prayers as shall be approved by the
House. The prayers for a joint session shall
be accordingly amended to include refer-
ences to the Senate and to members of the
Senate and shall be read by the Setiausaha
Dewan Rakyat.
(c) Taking of Oath by any new member.
(d) Messages from the Seri Paduka
Baginda Yang di-Pertuan Agong.
(e) Announcements by Tuan Yang
di-Pertua.
(f) Petitions.
(fa) Minister’s Question Time.
(g) Questions to Ministers for oral
answers.
(h) Motion on matters of urgent public
importance.
(i) Statements by Ministers.
(j) Tributes.
(k) Obituary speeches.
(l) Personal explanations.
(m) Presentation of Government Bills
(First Reading).
(n) Motions relating to the Order of
Business (to be moved by a Minister).
(o) Public Business.
(p) Motions for the introduction of
non-Government Bills.
(q) Other items of business in the order
they appear on the Order Paper for the day.
(2) The House may, at any time, upon
a motion (to be moved by a Minister) to
be decided without amendment or debate
which may be made without notice and
shall take precedence over all other busi-
ness, decide to proceed to any particular
business out of the regular order.
(3) A foreign dignitary may as shall be
decided by the Government address the
House or the House jointly with the Sen-
ate and such address may be given at any
time during sitting of the House.”
7. It is therefore clear that unlike Stand-
ing Order 14, Standing Order 11 does
not provide for votes on motions or bills
etc. The only business that is provided
for in Standing Order 11 is that which
is determined by the Prime Minister. In
this instance, the Prime Minister set the
business of the House so as to allow the
Prime Minister and the Cabinet to brief
Parliament on the Covid-19 National Re-
covery Plan.
The Statement by the Law Minister
8. The law minister is alleged to have said
something about the revocation of the
emergency ordinances that apparently were
done without the consent of theYDPA. Set
out below is the black letter of the Hansard
for that day:-
“Dato’ Takiyuddin bin Hassan
[Kota Bharu]: Saya ada tiga perka-
ra sahaja. Respons kepada yang saya
hormati Yang Berhormat Ketua Pem-
bangkang untuk memandu perjalanan
mesyuarat ini. Baik, isu mengenai Ti-
tah Yang di-Pertuan Agong. Saya in-
gin menunjukkan di sini secara bertu-
lis bahawa pemberitahu daripada Yang
Amat Berhormat Perdana Menteri kepa-
da Tuan Yang di-Pertua yang berbunyi.
Izinkan saya baca. “Dengan hormatn-
ya, saya ingin memaklumkan bahawa
Seri Paduka Baginda Yang di-Pertuan
Agong telah memperkenankan untuk
kerajaan memanggil Mesyuarat Khas
Penggal Ketiga, Parlimen Ke-14 bagi
Dewan Rakyat yang bersidang pada 26
Julai sehingga 2 Ogos 2021”. Dokumen
speak louder than words. Ini adalah....
Dato’ Seri Dr. Shahidan bin
Kassim [Arau]: Faham tidak?
Dato’ Takiyuddin bin Hassan [Kota
Bharu]: Yang kedua,TuanYang di-Pertua,
saya ingin mengesahkan pada hari ini di
dalam Dewan ini – saya tertakluk kepada
kalau saya bercakap tidak benar, baha-
wa Kerajaan Persekutuan memutuskan
tidak akan menasihatkan Yang di-Pertuan
Agong untuk mengisytiharkan Proklama-
si Darurat baharu apabila tamat 1 Ogos
2021. [Tepuk]
Yang ketiga, yang terakhir. Please lis-
ten to me. Kerajaan telah buat keputusan
berdasarkan kepada Perkara 150(3) un-
tuk membatalkan semua Ordinan Daru-
rat yang telah dibuat semasa Proklamasi
Darurat ini. Oleh sebab telah di revoke,
maka isu ungkai ataupun annulment su-
dah tidak lagi relevan....[Dewan riuh].
Terima kasih.”
9. The allegation that has been levelled
against the Law Minister and the Gov-
ernment is that it has revoked the Emer-
gency Ordinances without the consent of
the YDPA.
10. As one can see this is not the case.
The Minister did not mislead parliament.
He stated facts. The government had de-
cided not to advise the YDPA to declare
a fresh emergency after 01.08.2021 and
the Government had decided to revoke
the Emergency Ordinances made during
the Proclamation of Emergency.
co n ti n u es o n Pag e 16
 t u e s d ay a u g u s t 3 , 2 0 2 1
from Pag e 15
The Process of Emergencies
11. Emergencies are regulated under
Article 150 of the Federal Constitution.
Article 150 is reproduced below.
“150. Proclamation of emergency
(1) If theYang di-Pertuan Agong is sat-
isfied that a grave emergency exists where-
by the security, or the economic life, or
public order in the Federation or any part
thereof is threatened, he may issue a Proc-
lamation of Emergency making therein a
declaration to that effect.
(2) A Proclamation of Emergency
under Clause (1) may be issued before
the actual occurrence of the event which
threatens the security, or the economic life,
or public order in the Federation or any
part thereof if the Yang di-Pertuan Agong
is satisfied that there is imminent danger
of the occurrence of such event.
(2A) The power conferred on the Yang
di-Pertuan Agong by this Article shall in-
clude the power to issue different Procla-
mations on different grounds or in differ-
ent circumstances, whether or not there is
a Proclamation or Proclamations already
issued by the Yang di-Pertuan Agong un-
der Clause (1) and such Proclamation or
Proclamations are in operation.
(2B) If at any time while a Proclamation
of Emergency is in operation, except when
both Houses of Parliament are sitting con-
currently, the Yang di-Pertuan Agong is
satisfied that certain circumstances exist
which render it necessary for him to take
immediate action, he may promulgate such
ordinances as circumstances appear to him
to require.
(2C) An ordinance promulgated un-
der Clause (2B) shall have the same force
and effect as an Act of Parliament, and
shall continue in full force and effect as if
it is an Act of Parliament until it is revoked
or annulled under Clause (3) or until it
lapses under Clause (7); and the power
of the Yang di-Pertuan Agong to promul-
gate ordinances under Clause (2B) may be
exercised in relation to any matter which
respect to which Parliament has power to
make laws, regardless of the legislative or
other procedures required to be followed,
or the proportion of the total votes required
to be had, in either House of Parliament.
(3) A Proclamation of Emergency and
any ordinance promulgated under Clause
(2B) shall be laid before both Houses of
Parliament and, if not sooner revoked,
shall cease to have effect if resolutions
are passed by both Houses annulling such
Proclamation or ordinance, but without
prejudice to anything previously done by
virtue thereof or to the power of the Yang
16 TheEdge CEO morning brief
h o m e
di-Pertuan Agong to issue a new Procla-
mation under Clause (1) or promulgate
any ordinance under Clause (2B).
(4) While Proclamation of Emergency
is in force the executive authority of the
Federation shall, notwithstanding any-
thing in this Constitution, extend to any
matter within the legislative authority of
a State and to the giving of directions to
the Government of a State or to any of-
ficer or authority thereof.
(5) Subject to Clause (6A), while a
Proclamation of Emergency is in force,
Parliament may, notwithstanding anything
in this Constitution make laws with respect
to any matter, if it appears to Parliament
that the law is required by reason of the
emergency; and Article 79 shall not apply
to a Bill for such a law or an amendment to
such a Bill, nor shall any provision of this
Constitution or of any written law which
requires any consent or concurrence to
the passing of a law or any consultation
with respect thereto, or which restricts the
coming into force of a law after it is passed
or the presentation of a Bill to the Yang
di-Pertuan Agong for his assent.
(6) Subject to Clause (6A), no provi-
sion of any ordinance promulgated un-
der this Article, and no provision of any
Act of Parliament which is passed while
a Proclamation of Emergency is in force
and which declares that the law appears
to Parliament to be required by reason
of the emergency, shall be invalid on the
ground of inconsistency with any provi-
sion of this Constitution.
(7) At the expiration of a period of six
months beginning with the date on which
a Proclamation of Emergency ceases to be
in force, any ordinance promulgated in
pursuance of the Proclamation and, to the
extent that it could not have been validly
made but for this Article, any law made
while the Proclamation was in force, shall
cease to have effect, except as to things
done or omitted to be done before the
expiration of that period.”
12. From Article 150 (1) and (2B) it is
clear that the YDPA does two things. His
Majesty issues a ‘proclamation’ of emer-
gency and His Majesty ‘promulgates’ ordi-
nances under the Emergency. There is no
provision for the YDPA to revoke, annul
or cancel the proclamation or the prom-
ulgated ordinances.
13. It is also clear that by virtue of Article
40 of the Federal Constitution, the YDPA
is constitutionally bound to accept the ad-
vice of the Government and act in accord-
ance with such advice. The only instances
of personal discretion for the exercise of
any power provided to the YDPA is when
the words “in his discretion” are used. This
principle was codified by amendment of
the Federal Constitution. The principle
has been affirmed by the Federal Court
and has been repeated and adopted mul-
tiple times.
14. In Teh Cheng Poh v. Public Prosecu-
tor [1979] 1 MLJ 50, the Privy Council,
when describing the Emergency powers
of the YDPA said:-
“Although this, like other powers under
the Constitution, is conferred nominally
upon the Yang di-Pertuan Agong by virtue
of his office as the Supreme Head of the
Federation and is expressed to be exercisable
co n ti n u es o n Pag e 17
 t u e s d ay a u g u s t 3 , 2 0 2 1
from Pag e 16
if he is satisfied of a particular matter, his
functions are those of a constitutional
monarch and except on certain matters
that do not concern the instant appeal, he
does not exercise any of his functions under
the Constitution on his own initiative but is
required by art 40(1) to act in accordance
with the advice of the Cabinet. So when
one finds in the Constitution itself or in
a Federal law powers conferred upon the
Yang di-Pertuan Agong that are expressed
to be exercisable if he is of the opinion or
is satisfied that a particular state of affair
exists or that particular action is necessary,
the reference to his opinion or satisfaction
is in reality a reference to the collective
opinion or satisfaction of the members of
the Cabinet, or the opinion or satisfaction
of a particular Minister to whom the Cab-
inet have delegated their authority to give
advice upon the matter in question.”
15. The YDPA, with the deepest of respect,
does not have the discretion to refuse the
advice of the Government. Chang Min Tat J
made this clear in N Madhavan Nair v. Gov-
ernment of Malaysia [1975] 2 MLJ 286:-
“As I have earlier shown, executive pow-
er is in the hands of the Yang Dipertuan
Agung and his Cabinet. Though the Yang
DiPertuan Agung is with customary and
loyal courtesy asked to be pleased to prom-
ulgate the Ordinance, it is clear that he as
the Constitutional Monarch does not re-
fuse. He has no discretion in the matter
but surely the events of those days were
clearly sufficient and only too apparent
to show the necessity for the Ordinance
without any agreement.”
16. As recently as 2001, a five man bench
of the Federal Court restated the position
in Abdul Ghani bin Ali v. Public Prosecutor
[2001] 3 MLJ 561:-
“In his book, Governments & Crisis
Powers, which is a legal study on the use
of emergency powers, Cyrus V Das said
at p 237 that although a debate had pre-
viously ranged on the subject, there can
be no doubt now that the Privy Council
opinion on the Teh Cheng Poh case settles
the point firmly that the Yang di-Pertuan
Agong does not have a personal discretion
under art 150(1) but has at all times to act
on Cabinet advice.
It is my considered view, based on the
constitutional provisions and the authori-
ties cited, that the Yang di-Pertuan Agong,
in acting under cl (1) of art 150 of the
Constitution in the position of a consti-
tutional monarch, must act on the advice
of the Cabinet as provided in art 40 of the
Constitution.”
17 TheEdge CEO morning brief
h o m e
17. The law on this subject has remained
unchanged since the late 1970s. There is
no doubt that the YDPA is bound to act
on the advice of the Government to either
proclaim an emergency or to promulgate
any ordinance and finally to revoke them.
There is no discretion in the matter.
18. When we examine Article 150(3) with
the statements of the Law Minister, it is
clear that there has been no misleading of
Parliament or any constitutional violation.
19. Article 150(3) envisages two ways in
which an emergency ordinance can be
brought to an end. It can be laid before the
House and the House can pass a resolution
to annul it or it can be ‘sooner revoked’.
In other words, the Emergency Ordinanc-
es which the Law Minister referred to as
being revoked by the Government would
fall within this proviso to Article 150(3).
20. In addition to the methods outlined
above, the Proclamation of Emergency
in this case had a sunset provision. It was
due to naturally expire on 01.08.2021. By
virtue of Article 150(7), any ordinances
promulgated under the Proclamation of
Emergency would likewise lapse and cease
to have effect 6 months after the Procla-
mation ceased to have effect.
21. Consequently, there has been no mis-
leading of Parliament or constitutional vi-
olation because the Government:-
a) Called for the special sitting of Par-
liament under Standing Order 11;
b) The business of the meeting was to
brief the House on the Covid-19 Recov-
ery Plan;
c) There was no business set by which
any motions or bills could be debated or
voted upon. Standing Order 14 was not
in effect. There was no ordinary business
of the House to be transacted;
d) The Law Minister did in fact inform
the House about the ‘decision of the Gov-
ernment’ not to seek a further proclama-
tion of Emergency;
e) The Law Minister also informed the
House that “the Government has made
the decision pursuant to Article 150(3) to
revoke all the Emergency Ordinances”;
f) The Government did lay before the
House the Emergency Ordinances; and
g) There was no need to debate or move
a motion on the continued existence of the
Emergency Ordinances given the fact that
the Government had made the decision to
‘sooner revoke’ them under Article 150(3).
The Statement by the Palace
22. The Palace issued two statements.
Shorn of the formal language and ni-
ceties, the substance of the statements
were:-
a) That the YDPA had not consented
to the revocation of the Emergency Or-
dinances because the YDPA wanted the
Emergency Ordinances to be debated in
Parliament;
b) That the revocation of the Emergency
Ordinances were to circumvent (“mem-
belakangi”) the constitutional function of
the YDPA;
c) That the revocation was backdated
to 21 July 2021 notwithstanding that the
application for consent of the YDPA was
only received on 23 July 2021;
d) That the power to revoke the Emer-
gency Ordinances was a power that vests
in the YDPA and not exclusively in the
Cabinet; and
e) That the YDPA has directed that the
revocation of the Emergency Ordinances
be laid before and debated by Parliament
before the YDPA signs the revocation.
23. The YDPA has not been properly ad-
vised of his constitutional role. This can be
seen as follows:-
a) TheYDPA’s power is to proclaim the
Emergency and promulgate the Ordinanc-
es under Article 150(1) and 150(2B);
b) That decision to proclaim and prom-
ulgate is not a personal decision of the
YDPA or a personal power to be exercised.
It is to be carried out on advice of the cab-
inet and must be followed;
c) There is similarly no power of revo-
cation. Even if there is a formal require-
ment for the written assent of the YDPA,
the YDPA is bound to accede and carry
out the advice of the Government;
d) There is certainly no power to di-
rect that the revocation of the Emergen-
cy Ordinances to be tabled and debated
before the House before the YDPA can
consent to it;
e) The YDPA does not have the power
to direct what is to be laid before and vot-
ed on in Parliament. That is exclusively a
Government power; and
f) The Emergency Ordinances are not
bills of Parliament that they have to be de-
bated and voted on before they are signed.
24. The YDPA is being advised to exceed
his authority under the constitution. In this
respect the Minister of Law had simply
stated the facts. The Cabinet had decid-
ed to revoke the Emergency Ordinances.
There was therefore no need to debate it
in Parliament. While the YDPA may have
suggested to the Government that it be so
debated, the Government was under no
constitutional duty to do that.
 T U E S D AY A U G U S T 3 , 2 0 2 1 18 THEEDGE CEO MORNING BRIEF

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NOT PART OF
THE SOLUTION
YOU WILL BE
PART OF
THE PROBLEM
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*Covid-19 Vaccines Advice

– World Health Organization

*Benefits of Getting Covid-19 Vaccines

– US Centre For Disease Control & Prevention

THIS IS A COMMUNITY SERVICE MESSAGE ON FIGHTING COVID-19

 t u e s d ay a u g u s t 3 , 2 0 2 1
LONDON/SINGAPORE (Aug 2): HSBC
Holdings Plc is accelerating plans for
shareholder payouts, as it said the global
economy was starting to emerge from the
worst effects of the pandemic.
The bank said it now expects to meet
its target of paying out 40% to 55% of
earnings in dividends this year, rather than
next. It is also examining the possibility of
share buybacks, the latest lender to unveil
such plans after the Bank of England re-
moved restrictions imposed at the height
of the pandemic.
“We definitely feel more confident,”
Chief Financial Officer Ewen Stevenson
said on Bloomberg Television. “We will keep
buybacks under review” together with div-
idends.
HSBC is one of the biggest dividend
payers in European banking, and after a
year of restrictions is expected to set aside
more than any of its rivals this year and
next, according to estimates collated by
Bloomberg Intelligence.
The bank will pay a 7 cents a share
TOKYO (Aug 2): Mitsubishi UFJ Finan-
cial Group Inc (MUFG), Japan’s largest
lender by assets, on Monday reported
that first-quarter net profit doubled year-
on-year as credit-related costs dropped
sharply.
MUFG, which owns about 20% of Wall
Street investment bank Morgan Stanley,
reported profit of ¥383.1 billion (US$3.49
billion) for the three months to June 30,
against ¥183.5 billion a year earlier.
The bank retained its full-year profit
forecast of ¥850 billion. That compared
with an average forecast of ¥859 billion
from nine analyst estimates compiled by
Refinitiv.
Japanese banks have been struggling
with years of ultra-low interest rates and
a shrinking population. In the past financial
19 TheEdge CEO morning brief
w o r l d
HSBC steps up
dividend plans,
eyes buybacks as
outlook brightens
by Harry Wilson,
Ambereen Choudhury & Denise Wee
Bloomberg
interim dividend, after adjusted sec-
ond-quarter profit doubled from a year
earlier to top analyst estimates, according
to a statement Monday. The jump came as
Europe’s biggest lender joined its British
peers in reversing loan provisions that it
booked in the early stages of the pandemic.
Costs were higher than expected, driv-
en by spending on technology and higher
performance-related pay, even after HSBC
reduced headcount by around 3,500 in the
bloomberg
Japan’s biggest
bank MUFG
doubles quarterly
profit as credit
costs drop
by Takashi Umekawa
Reuters
year, three major lenders including MUFG
collectively booked ¥1.1 trillion in cred-
it-related costs, which nearly doubled year-
on-year, amid the Covid-19 pandemic.
first half of the year.
Revenue at the investment bank was
down more than a fifth, as trading reve-
nue slumped on lower market volatility.
Banking revenue at the unit also dropped
on lower client activity and lower inter-
est rates.
Wealth overhaul
HSBC began a fresh restructuring this year
that aims to refocus the bank on the Asian
markets where it makes most of its money.
The bank wants to manage more assets for
the region’s wealthiest residents – a lucra-
tive but highly competitive market. In May,
HSBC sold 90 branches in the US, mark-
ing a retreat from mass-market banking
in the country. Weeks later, the company
agreed a potential disposal of its unprofit-
able French retail business.
“We have taken firm steps to define the
future of our US and continental Europe
businesses, and further enhanced our glob-
al wealth capabilities,” Chief Executive Of-
ficer Noel Quinn said in the statement.
The bank said it has hired 600 wealth
managers in Asia in the first half of the year
and is eyeing deals in the region.
“We are currently looking at a num-
ber of smaller opportunities in the wealth
space across Asia, spanning insurance, as-
set management and traditional wealth,”
CFO Stevenson said in a phone interview
Monday, adding on a call with analysts
that the lender was looking at three or four
potential deals, each about US$500 mil-
lion in size.
Click here to read the full story
Read also: HSBC exits or downsizes 77 of-
fices as hybrid work takes hold Click here
MUFG’s credit-related costs in the
first quarter came in at ¥5.1 billion,
versus ¥145 billion in the same period
last year.
The lender had estimated ¥350 billion
of credit-related costs for the current fi-
nancial year which runs through March.
In contrast, net interest income —
mainly derived from its traditional lend-
ing business — came in at ¥496.9 bil-
lion for the quarter, marking a 5.9%
year-on-year rise, as corporate clients
rushed to borrow to overcome the pan-
demic fallout.
Peers Sumitomo Mitsui Financial
Group Inc and Mizuho Financial Group
Inc last week both reported their net
profits for the quarter more than dou-
bled as credit-related costs dropped.
 t u e s d ay a u g u s t 3 , 2 0 2 1
Tide of US debt set to recede,
countering effect of Fed taper
NEW YORK (Aug 2): For the first time
in more than five years, the US Treasury
in coming months will be scaling back its
mammoth quarterly sales of notes and
bonds, Wall Street dealers said — in a shift
so large it is likely to more than counter the
Federal Reserve’s (Fed) looming reduction
in purchases.
The Treasury Department on Wednes-
day will announce its so-called quarterly
refunding of longer-term securities, when
it typically lays out any coming changes to
debt-issuance strategy. While most dealers
expect no change in the US$126 billion
size of recent refundings, many see offi-
cials setting the stage for a reduction from
November.
Issuance has been going the other way
for years, thanks to surging federal budget
deficits in the wake of president Donald
Trump’s tax cuts and later the emergency
spending caused by the pandemic. Even
with Congress negotiating new spending
on infrastructure and social programmes,
borrowing needs are set to drop, as law-
makers plan fresh revenue measures for
those multi-year initiatives.
“Their financing needs will fall very
sharply from 2021 into 2022,” said Meghan
Swiber, a rates strategist at Bank of America
Corp. “We think Treasury needs to imple-
ment cuts sooner rather than later — or it
risks being overfunded,” she said.
The reduction in sales will likely — if
economists’ forecasts are right — come
during a time when the Fed will be reduc-
ing its purchases of Treasuries. Fed chair
Jerome Powell said last week that policy-
makers had begun discussing the timing
and pace of future tapering. Analysts expect
them to start by early 2022.
JPMorgan Chase & Co predicts total net
issuance of debt, including bills, at US$1.46
trillion for 2022, down about US$860 bil-
20 TheEdge CEO morning brief
w o r l d
by Liz Capo McCormick
Bloomberg
lion from this year.
For notes and bonds alone, net issuance
will be about US$1 trillion less next year
versus 2021, the bank said. Meantime, the
Fed will only be buying, from the second-
ary market, US$316 billion of such secu-
rities in 2022, given its tapering — down
from US$960 billion this year, JPMorgan
forecasts.
Reduced Treasuries issuance could fur-
ther diminish any lingering concerns about
a 2013-style taper tantrum, when markets
took fright at the prospect of Fed stimulus
withdrawal. The slide in Treasury yields in
recent months had already helped quell
such worries.
Apart from the refunding, the Treasury
is currently grappling with manoeuvres to
avoid hitting the federal debt limit, after a
two-year suspension of the ceiling ended
on Sunday. Economists and strategists alike
anticipate Congress will act to boost or
suspend the limit again before the Treas-
ury runs out of room to avert a payments
default in the fall.
Primary dealers, which trade directly
with the Fed, are not united on when the
scaling down in issuance of so-called cou-
pons — notes and bonds — will occur.
Among those in the November camp:
• Bank of America
• Credit Suisse Group AG
• Deutsche Bank AG
• JPMorgan
• NatWest Markets
• Societe Generale
• Wells Fargo & Co.
Goldman Sachs Group Inc and Mor-
gan Stanley see the February refunding
as a more likely starting point. But Bar-
clays plc and RBC Capital Markets said
it could start with the auctions being held
next week.
If the majority are right, the Treasury
will keep the refunding at US$126 billion,
composed of the following:
• US$58 billion of three-year notes
• US$41 billion of 10-year notes
• US$27 billion of 30-year bonds
It is a far cry from the pattern since even
before the pandemic struck.Total Treasury
debt outstanding has surged by about 50%
since late 2017, to US$21.7 trillion.
Much of the increase in 2020 came in
the form of bills, as the Treasury rushed
to accumulate cash to use for emergency
relief spending. T-bills hit some 25% of the
total share of the Treasury debt pile out-
standing last year.
It is now about 20%, after cutbacks in
issuance to work down what had been a
record cash pile. The Treasury Borrowing
Advisory Committee, made up of major
dealers and investors, advised a recom-
mended range of 15% to 20%.
The Treasury on Monday releases its
quarterly financing estimates, and will
give a fresh reading on cash balance as-
sumptions for coming quarters. Details on
plans for bill issuance should be revealed
on Wednesday.
The shrinking of the deficit — to
US$1.2 trillion next year from US$3 tril-
lion this year, in the latest Congressional
Budget Office projections — is mainly a
reflection of the pandemic’s retreat.
“Of course, these debt reductions aren’t
coming because we are getting anywhere
near having balanced budgets,” said John
Briggs, global head of desk strategy at Nat-
west Markets. “Our equilibrium end state
— say, after August 2022 — will still have
the debt higher than before the pandemic,
with the recognition that deficits are going
to be here for a long time.”
 t u e s d ay a u g u s t 3 , 2 0 2 1 21 TheEdge CEO morning brief

w o r l d

Tesla’s India
NEW DELHI (Aug 2): India said it has no sells every other car on Indian roads, glum
plans to cut import duties on electric vehi- about the uptake of electric cars in the nation.

plans dealt blow

cles, weeks after Tesla Inc appealed to the “Unfortunately the technology presently
government to slash taxes, and its billion- available leads to electric cars being pro-

as minister rules
aire chief Elon Musk floated the possibility duced at a cost much higher than the con-
of a local factory once it starts selling whol- ventional cars,” Maruti’s Chairman R.C.

out tax cut

ly-built units from overseas in the world’s
second-most populous nation.
“No such proposal is under considera-
tion in Ministry of Heavy Industries,” jun-
ior minister Krishan Pal Gurjar told parlia-
ment on Monday, referring to the ministry
in charge of making policies for the auto
industry. He added that the government is
however taking steps to promote the use of
electric cars by lowering domestic taxes and
adding charging stations.
The reply to lawmakers may be perceived
as part of the tug-of-war between Prime
Minister Narendra Modi’s administration,
which wants to boost local manufacturing,
and Tesla, which is urging India to allow it
to import cars more cheaply, before it com-
mits to setting up a factory in the country.
Tesla last month wrote to the transport and
industry ministries requesting them to cut
import duty on electric cars to 40% from
the current range of 60%-100%, Bloomberg
News had reported.
A Tesla factory to produce cars in In-
dia is “quite likely” if the electric auto-
maker can first begin sales with imported
vehicles, Chief Executive Officer Musk
said in a subsequent tweet. Musk has for
years showed his eagerness to enter one
of the world’s most-promising automobile
markets, but complained that Indian rules
prohibit him from testing the waters first
with imports, as high duties make Tesla
cars “unaffordable.”
by agini Saxena
Bloomberg
bloomberg
Tesla is seeking to make inroads into
Asia’s third-largest economy, where elec-
tric vehicles account for less than 1% of
annual car sales, compared with about 5%
in China. The sparse charging infrastruc-
ture and expensive cost have deterred large
scale adoption of electric vehicles in India,
unlike China where Tesla set up its first fac-
tory outside of the US and now dominates
electric-car sales.
Those deterrents have also turned Maruti
Suzuki India Ltd, the top local carmaker that
Bhargava said in the company’s annual re-
port Monday. “This, along with the lack of
charging infrastructure makes it very diffi-
cult to sell electric cars to people who can
only afford small cars.”
The market penetration of electric vehi-
cles will be “very small” given that only 5%
of cars sold in India are priced above 1.5
million rupees (US$20,169), said Bharga-
va, who heads the local unit of Japan’s Su-
zuki Motor Corp. The per capita income
in India is only US$2,000 — 5% of that in
Europe and Japan — which puts expensive
electric cars beyond the reach of most con-
sumers, he said.
Such statistics have raised concerns that
without progress in cleaning up poorer na-
tions’ roads, global warming won’t be kept
below dangerous levels, even as richer na-
tions plan to phase out combustion-engine
vehicles to combat climate change. Most
EVs are sold in the US, China and Europe,
where state-backed purchasing incentives
and investments in charging infrastructure
make it easier for customers to abandon
combustion cars.
To achieve net-zero emissions, Maruti
will work on hybrid models, improve tech-
nology for cars running on compressed natu-
ral gas and look into biofuels, Bhargava said.
“The use of hydrogen is also an interesting
alternative and should be considered spe-
cially to reduce dependence on importing
Lithium.”

European
FRANKFURT (Aug 2): Euro-area facto- est level since at least 1985, according to
ries are hiring new workers at record pace a separate survey.

factories hire
to keep up with persistently strong orders. The International Monetary Fund has
Job creation was particularly pro- raised its economic forecasts for the 19-na-

workers at record
nounced in Germany and Austria last tion region, predicting momentum in the
month, according to an IHS Markit survey bloc’s four largest economies will pick up

pace to fill orders

of purchasing managers. Manufacturers
continued to face substantial supply-chain
bottlenecks and passed on rising costs to
customers.
With economies around the world re-
covering from the coronavirus pandem-
ic, Europe’s factories are running at full
steam. Businesses in North Asia are also
benefitting from rising global demand,
while a slump in activity in Southeast
Asia — currently seeing one of the world’s
worst Covid-19 outbreaks — serves as a
reminder of how quickly the crisis can
flare up again.
Still, confidence in the outlook for the
euro area is running high. A gauge measur-
ing economic sentiment rose to the high-
in the coming months.The European Cen-
tral Bank is bracing for a “strong” increase
in output in the current quarter, though it
has also warned that resurgent infections
by Jana Randow and supply constraints risk damping the
Bloomberg recovery.
“Manufacturers and their suppliers are
bloomberg struggling to raise production fast enough
to meet demand, driving prices ever high-
er,” said Chris Williamson, an IHS Markit
economist. “Capacity constraint indicators
continue to flash red.”
New orders jumped in July, fuelling a
considerable increase in backlogs of work.
Widespread shortages of materials and
poor transport availability produced re-
cord gains in input costs and selling prices.
 t u e s d ay a u g u s t 3 , 2 0 2 1
(Aug 2): SPAC bosses are finding they
have to speed up their deal hunt if they
want to attract investors these days.
About half the blank-cheque compa-
nies that filed for US listings since the
start of June are giving themselves an in-
itial period of 18 months or less to find
an acquisition target, according to data
compiled by SPAC Research. That’s a big
change from earlier in the boom, when
more than 80% set their duration at a
standard 24 months.
Stock buyers are getting more selec-
tive as the market for special purpose
acquisition companies cools, making it
more difficult for lesser-known issuers to
raise capital. Hedge funds investing with
borrowed money are more willing to bet
on an unproven team if they can profit
quickly — or at least get their money
back soon if it doesn’t pan out.
“Pricing IPOs is difficult with so many
in the market,” said Nicholas Skibo, a
managing partner at Gritstone Asset
Management, which invests in SPACs.
“So you either have to be a world-class
sponsor or you have to provide an in-
centive.”
Time crunch
Seasoned dealmakers from former Face-
book Inc executive Chamath Palihapitiya
to billionaire investor Paul Singer are still
taking their time with their latest SPACs,
giving themselves two years to find a tar-
get. Newcomers are promising to deliv-
er a deal in half that time, with many of
the SPACs that unveiled listing plans last
week intending to merge with a private
company within 12 months.
SINGAPORE (Aug 2): Singapore’s Grab
Holdings Inc, set to go public in the US
through a deal with a blank-cheque com-
pany, reported a narrower loss for the
first quarter as the pandemic boosted
demand for food delivery.
Net loss shrank to US$652 million
in the quarter ended March 31 from
US$771 million a year earlier, South-
east Asia’s most valuable start-up said
in a statement on Monday. Adjusted net
sales, a revenue measure that does not
comply with international accounting
standards, rose 39% to US$507 million.
Grab reported its first-ever quarter-
ly financial results in a filing connect-
ed to its planned merger with Altime-
ter Growth Gorp, the special-purpose
acquisition company (SPAC) of Brad
Gerstner’s Altimeter Capital Manage-
ment. Grab has postponed the US$40
billion deal — one of the largest-ever
mergers with a SPAC — to the fourth
22 TheEdge CEO morning brief
w o r l d
Blank-cheque
us Tsang, is among the new listing hope-
fuls. It aims to raise US$80 million to buy
IPOs show time
a company in the technology or e-com-
merce industry in Asia.
is money with
Neo Technology Acquisition Corp
and Singularity Acquisition Corp, both
speedier deal
run by little-known China dealmakers,
will also have just a year to find a target.
chases
Both can be extended multiple times,
each time by three months, if they can’t
find a deal within the initial window and
their sponsors deposit more funds into a
by Crystal Kim & Crystal Tse trust account.
Bloomberg
Investor demands
The duration of blank-cheque compa-
bloomberg
nies is going to be a topic that investors
will push back on, according to Jennifer
Deason, the chairman of Beyond Acqui-
sition Corp.
“It’s the market,” Deason, whose
blank-cheque firm started trading in
July, said in an interview. “There are a
lot of SPACs out there, and the pendu-
lum swings back and forth in terms of
supply and demand.”
The shorter timespans mean these new
blank-cheque companies have deadlines
closer to those of SPACs that are already
listed, said Steven Halperin, co-head of
capital solutions at investment bank Mo-
elis & Co.
The benefit for serial dealmakers,
though, is that they may not need too
The shorter durations are helping much time to seal a deal.
these blank-cheque companies stand out “For a repeat issuer, the sponsor will
among the more than 300 SPACs wait- already have the experience and poten-
ing to sell shares in New York. A SPAC I tially a shortlist of targets required to
Acquisition Corp, led by former Franklin complete the SPAC lifecycle in a shorter
Templeton Investments executive Claudi- timeframe,” Halperin said.
Grab loss
Commission guidance.
Grab said the change will not affect
narrows on food
its historical balance sheet, cash flow,
gross merchandise value (GMV), gross
delivery ahead
billings, adjusted net sales, or adjusted
earnings before interest, taxes, depreci-
of US SPAC
ation and amortisation.
The company also provided an update
merger
on its post-merger board. Grab co-found-
er Tan Hooi Ling and Rich Barton, chief
executive officer (CEO) of Zillow Group
Inc and a director of Altimeter Growth,
by Yoolim Lee will join as independent members on the
Bloomberg six- person board. They will replace two
outgoing members, who are represent-
quarter as it works on an audit of the atives of shareholders SoftBank Group
past three years. Corp and Toyota Motor Corp. Other in-
Quarterly revenue based on Interna- dependent directors include Uber Tech-
tional Financial Reporting Standards, nologies Inc CEO Dara Khosrowshahi,
or IFRS, rose to US$216 million from Ng Shin Ein, and Oliver Jay.
just US$1 million a year ago, after Grab
changed its accounting methods to com-
ply with US Securities and Exchange Click here to read the full story
 t u e s d ay a u g u s t 3 , 2 0 2 1 23 TheEdge CEO morning brief

w o r l d

Square to buy
SAN FRANCISCO (Aug 2): Square Inc, The deal should also help boost Cash
the digital-payments platform led by Twit- App’s total user base by adding Afterpay’s

Afterpay for
ter Inc founder Jack Dorsey, agreed to buy 16 million users to Cash App’s existing user
Australian buy-now, pay-later company base of 70 million annual users, Ahuja said.

US$29 bil to tap

Afterpay Ltd for US$29 billion in its larg- Larger competitors have pushed into
est-ever acquisition. the market recently, adding to the challeng-

The all-stock offer values Afterpay
shares at A$126.21 each, 31% higher
than Friday’s closing price of A$96.66,
the companies said in a statement. Still,
that’s less than Afterpay’s February high of
A$158.47. The stock jumped as much as
29% to A$125 in Sydney trading Monday.
Square said the buy-now, pay-later con-
cept represents a chance to capitalize on a
shift away from traditional credit, especially
among younger consumers. The plan is for
Square to integrate Afterpay into both its
consumer Cash App, and its Seller prod-
uct for small businesses, Chief Financial
Officer Amrita Ahuja said in an interview.
“It’s very different from the tradition-
al consumer-financing business model,”
Ahuja said, describing “buy now, pay lat-
er” as an “alternative” to traditional credit.
“Since our founding days we have seen it as
a key priority for our customers, whether
merchants or consumers, to get fast access
to funds,” she added, but declined to say
whether Square would offer other tradi-
tional finance options, like a credit card.
Afterpay lets consumers purchase items
on credit and pay later with a series of in-
younger users
by Kurt Wagner, Angus Whitley
& Peter Elstrom
Bloomberg
Bloomberg
stallments. It’s particularly popular with
younger consumers — who may not have a
credit card — to buy clothes, beauty prod-
ucts and homewares. There are no fees or
interest on the loan as long as people pay
on time, according to Afterpay’s website.
es for Afterpay and its peers. Apple Inc is
teaming up with Goldman Sachs Group
Inc on a buy now, pay later service that
would be tied with Apple Pay, Bloomberg
News reported in July. Afterpay shares fell
10% the day following the report.
Afterpay shareholders may reject the
proposed Square offer, Bloomberg Intel-
ligence analysts Matt Ingram and Regan
Burrows wrote. They pointed out the offer
is below the stock’s peak earlier this year
and its growth is much faster than the US
company.
Under the proposed agreement, After-
pay co-founders and co-CEOs Anthony
Eisen and Nick Molnar would join Square
and help lead Afterpay’s merchant and
consumer businesses as part of Square’s
Seller and Cash App division.
The acquisition would be easily the big-
gest deal for an Australian company, eclips-
ing the US$16.6 billion a group of pension
funds last month bid for Sydney Airport,
only to have the offer rejected as too low.
Click here to read the full story

UK’s Meggitt
LONDON (Aug 2): Parker-Hannifin the best owner,” Williams said in an inter-
Corp, the US maker of industrial mo- view. “This is a company we’ve liked for

soars on US$8.8b
tion-control systems, agreed to buy Meg- a long time.”
gitt Plc for £6.3 billion (US$8.8 billion) in The deal is so big it will rule out fur-

buyout by
cash to strengthen its hand in a rebounding ther M&A by Parker-Hannifin for the
aerospace industry. next three years, Williams said, as the

Shares of Meggitt surged the most on
record after the 170-year-old company
said its board would recommend the 800
pence-per-share offer, 71% above Friday’s
closing price. The massive premium will
make it harder for a rival to jump in and
snatch the Coventry, England-based target,
after a string of buyouts of UK aerospace
and defence firms by US suitors.
The deal would be the biggest ever for
Parker-Hannifin, which has accelerated its
buyout activity under Chairman and Chief
Executive Officer Tom Williams. The com-
pany, which supplies a variety of industries,
was on a tear before the coronavirus pan-
demic, with the US$4.3 billion purchase of
filtration-products manufacturer Clarcor
in 2017, and materials-science specialist
Lord Corp for US$3.7 billion in 2019.
Adding Meggitt will nearly double the
size of Parker’s aerospace systems unit, it
said in a statement. That would position
the Cleveland-based company to better
compete in an aviation sector that’s just
Parker-Hannifin
BY Charlotte Ryan
Bloomberg
Bloomberg
coming out of its biggest slump in history,
as demand for aircraft returns.
“We wanted a price that would be very
compelling, that would gain shareholder
support and would be very clear that we’re
company focuses on investment, divi-
dends and paying down debt to get lev-
erage ratios down.
The deal is the latest example of US
buyers eyeing UK aerospace. Cobham
Ltd, the UK defence contractor that was
acquired by US private equity firm Ad-
vent International Corp in early 2020, last
month made a £2.6 billion buyout ap-
proach for Ultra Electronics Holding Plc.
Senior Plc, a UK supplier of aerospace
parts to Boeing Co and Airbus SE, reject-
ed a buyout offer from Texas-based Lone
Star Funds last month.
Parker-Hannifin said it would offer
commitments to the UK, including a
pledge to continue supplying the govern-
ment, and maintain existing technology
and manufacturing in the country. A ma-
jority of Meggitt’s board will continue to
be British, it said.
Click here to read the full story
 t u e s d ay a u g u s t 3 , 2 0 2 1
Keppel Corp makes S$2.2 bil offer
to acquire SPH’s non-media portfolio;
SPH valued at S$3.4 bil
SINGAPORE (Aug 2): Keppel Corpora-
tion has proposed to acquire the non-me-
dia portfolio of Singapore Press Holdings
(SPH) for S$2.2 billion on Aug 2.
This includes SPH’s businesses and
assets such as its purpose-built student
accommodation (PBSA) and senior liv-
ing businesses, stakes in SPH REIT and
its REIT manager, as well as its other de-
velopment assets.
The move, which comes after the group
proposed to spin off its media business into
a not-for-profit entity on May 6, values
SPH’s non-media business at S$3.4 billion.
Keppel Corporation, through its whol-
ly-owned subsidiary, Keppel Pegasus, will
acquire all the issued and paid-up ordinary
shares in the capital of SPH via a scheme
of arrangement.
Under the terms of the scheme, share-
holders will receive a total of S$2.099 per
share, which comprises 66.8 cents in cash,
0.596 issued units in Keppel REIT valued
at 71.5 cents and 0.782 units in SPH REIT
valued at 71.6 cents from a distribution
in-specie by SPH.
The consideration represents a 16.2%
premium over the one-month volume
weighted average price (VWAP) of SPH’s
shares as at July 30. It also represents a
11.6% premium to the last traded price
of $1.88 per share on July 30 and a 21.4%
premium to the three-month VWAP of
24 TheEdge CEO morning brief
w o r l d
by Felicia Tan
theedgesingapore.com
S$1.729 per share in SPH.
Shareholders will also receive any fi-
nal dividend declared by the board for the
FY2021.
According to Keppel, the acquisition
will boost its Vision 2030 plans, where
it seeks to move beyond “a developer
model to providing urban development
solutions”.
The group adds that SPH possesses a
“quality portfolio of businesses and assets
which are strongly aligned with Keppel’s
business”. The acquisition will also com-
plement and strengthen three out of four
focus areas for Keppel, which are Urban
Development, Connectivity and Asset
Management.
The proposed acquisition would also
allow Keppel to consolidate its existing
ownership of M1 and the jointly-owned
Genting Lane data centre.
Furthermore, the addition of SPH RE-
IT’s assets under management (AUM) will
potentially grow Keppel Capital’s pro for-
ma AUM by about 27% to S$47 billion
from S$37 billion as at end-2020.
Had the scheme been effective Jan
1, Keppel’s earnings per share (EPS)
would have increased from 16.5 cents
to 17.5 cents.
In a separate statement, SPH reasoned
that the privatisation of the entire company
is the “preferred solution” in which share-
holders receive a better valuation outcome
where the control premium is paid for the
entire company.
The move also maximises value and
minimises disruption for its sharehold-
ers, SPH adds.
The proposed transaction is expected to
be completed by December and is subject
to the approvals of Keppel’s and SPH’s
shareholders at their respective extraor-
dinary general meetings (EGMs).
Upon the completion of the scheme,
SPH will be delisted. It will then become
a wholly-owned subsidiary of Keppel.
Keppel will hold a remaining 20% stake
each in both SPH REIT and Keppel REIT.
“The proposed acquisition of SPH is
very much in line with Keppel’s Vision
2030, where we seek to grow Keppel’s
business as a provider of solutions for
sustainable urbanisation through organ-
ic and inorganic options. This is a rare
opportunity to acquire SPH’s non-me-
dia portfolio, which fits very well with
Keppel’s business and growth strategy,”
says Loh Chin Hua, CEO of Keppel
Corporation.
Click here to read the full story
 t u e s d ay a u g u s t 3 , 2 0 2 1
Oil Search, Santos
to merge into
US$16 billion LNG
powerhouse
Bloomberg
by James Thornhill
Bloomberg
SYDNEY (Aug 2): Australia’s second- and
third-biggest oil and gas companies are set
to merge to become one of the largest in the
region and in the top 20 globally.
Oil Search Ltd on Monday said it agreed
to an improved all-share offer from Santos
Ltd that would give its equity holders 0.6275
new Santos share for each one held, giving
them about 38.5% of the merged group.
The combined entity would have a market
capitalisation of about US$16 billion, vying
with Woodside Petroleum Ltd to be Austral-
ia’s biggest independent liquefied natural
gas (LNG) producer.
The move follows a wave of tie-ups
among exploration and production com-
panies in the US shale patch, as smaller pro-
ducers seek to cut costs while majors look to
exit carbon-intensive operations. It may not
be the last deal in Australia this year, with
Woodside said to be eyeing BHP Group’s
petroleum business in the nation, accord-
ing to Wood Mackenzie Research Director
Andrew Harwood.
“We’ve been expecting to see more consol-
idation among international E&Ps, following
the lead of the US independents that have
sought strength and resilience in scale,” he
said in a statement. “The Santos-Oil Search
merger follows the consolidation template,
bringing together two firms with overlapping
interests, building scale in a strategic resource
theme, LNG in this case, and on terms that
provide additional value upside potential for
both sets of shareholders.”
Monday’s announcement comes less
than two weeks after Oil Search rejected
an earlier proposal that offered 0.589 share
in Santos.
Click here to read the full story
25 TheEdge CEO morning brief
w o r l d
Heineken sees
‘material’
commodity
costs crimping
earnings
by Thomas Buckley
Bloomberg
LONDON (Aug 2): Heineken NV, the
world’s second-largest brewer, joined rival
Anheuser-Busch InBev NV and scores of
other consumer goods companies from
Nestle SA to Unilever plc in warning that
soaring commodity costs will depress earn-
ings in the near term.
Although the maker of Heineken lager
has annual hedging contracts in place that
cover about 90% of its exposure to com-
modity inflation, the price of aluminium
and freight is rising at such a pace that the
beermaker sees a “material effect” on prof-
it next year, chief financial officer Harold
van den Broek said by phone. Heineken
will seek to offset some of the impact by
raising prices, he said.
The company is experiencing inflation-
ary pressures not seen at any time in the
past decade, chief executive officer (CEO)
Dolf van den Brink said in an interview
with Bloomberg TV, echoing recent com-
ments from Unilever that the maker of
Dove soap and Ben & Jerry’s ice cream
Unacademy value
tops US$3.4b
in Temasek-led
funding round
by Saritha Rai
Bloomberg
(Aug 2): India’s online education
startup Unacademy said its valuation
reached US$3.44 billion in a funding
round led by Temasek Holdings Pte, a
nearly 10-fold increase in the past year
and a half as the coronavirus boosts de-
mand for remote learning.
The startup raised US$440 million in
a Series H round, with General Atlantic,
Tiger Global Management, SoftBank
Vision Fund and Mirae Asset Securities
Bloomberg
was grappling with the toughest inflation
since the 2008 financial crisis.
Heineken shares, which had gained
7.7% this year before today, were little
changed in Amsterdam on Monday.
Heineken said it would also sell less
beer in 2021 than in years before the pan-
demic due to the impact of Covid-19 in
key African and Asian markets, even as
half-year earnings beat estimates as bars
reopened across the world. The subdued
performance of its Asia division amid lock-
downs in Southeast Asian markets was a
“surprise”, the CEO said by phone.
Restrictions in South Africa also hurt
performance, he said.
Still, the company delivered strong rev-
enue and volume numbers as restrictions
eased in the first half of the year.
Growth was led in the half-year period
by Heineken’s namesake lager, with ship-
ments of the brand rising by about a fifth
on demand from countries such as Brazil,
China,Vietnam, and Nigeria. Heineken’s
operating profit on an organic basis rose to
€1.63 billion (US$1.93 billion). Analysts
expected €1.23 billion.
Budweiser maker AB InBev reported
results last week that missed estimates be-
cause of currency-related effects and higher
commodity and marketing costs.
Co., according to a statement from the
company Monday.
The coronavirus pandemic has boost-
ed the popularity of online education as
students and professionals seek to up-
grade their skills, while schools and offic-
es have shuttered. Indian digital educa-
tion peer Byju’s has become the country’s
most valuable startup and is expanding
aggressively through acquisitions.
Unacademy was founded by Gau-
rav Munjal, Hemesh Singh and Ro-
man Saini in 2015. It specializes in test
preparation for a wide array of competi-
tive fields including India’s civil service,
banking and programming through a
roster of celebrity teachers. It has more
than 50,000 educators and 62 million
users and offers courses in 14 Indian
languages.
The Bangalore-based company also
got funding from entrepreneurs Ritesh
Agarwal of Oyo Hotels and Homes Pvt
and Deepinder Goyal of Zomato Ltd.
 t u e s d ay a u g u s t 3 , 2 0 2 1
Pfizer, Moderna
raise Covid-19
vaccine prices
in EU — report
by Sabahatjahan Contractor
Reuters
BENGALURU (Aug 1): Pfizer Inc and
Moderna Inc have raised the prices of their
Covid-19 vaccines in their latest European
Union supply contracts, the Financial Times
reported on Sunday.
The new price for the Pfizer shot was
€19.50 (US$23.15) against €15.50 previ-
ously, the newspaper said, citing portions
of the contracts seen.
The price of a Moderna vaccine was
US$25.50 a dose, the contracts show, up
from about €19 (US$22.60) in the first pro-
COPENHAGEN/LONDON (Aug 2): Eu-
ropean fund managers are gradually having
to acknowledge that claims of sustainability
across their portfolios may be inflated, as
new regulations force the industry to take
a more measured approach.
“It’s clear that the Sustainable Finance
Disclosure Regulation is starting to work its
purpose of aligning ESG definitions across
the industry,” said Mandeep Jagpal, an eq-
uity analyst at RBC Capital Markets in
London. “Asset managers are now rethink-
ing what can and should be classified as an
‘environmental, social or governance in-
vestment,’ although there may still be some
variation in interpreting the new rules.”
Europe’s asset management industry al-
ready had to remove the ESG label from an
estimated US$2 trillion in assets between
2018 and 2020, as tougher regulations were
gradually put in place. Europe’s Sustainable
Finance Disclosure Regulation, which took
effect in March, requires asset managers to
document claims of sustainability in their
portfolios, as policy makers in the region
set the world’s most ambitious agenda to
drive capital away from carbon emitters.
A poll conducted last year by Schroders
Plc revealed that 60% of 650 institutional
investors said “greenwashing,” where the
environmental benefits of an investment
strategy are exaggerated or misrepresented,
was the biggest thing standing in the way
of their sustainability goals.
Meanwhile, demand for ESG assets
seems insatiable, providing a lucrative
source of business for fund managers. The
market is set to exceed US$50 trillion by
26 TheEdge CEO morning brief
w o r l d
curement deal but lower than the previous-
ly agreed US$28.50 because the order had
grown, the report said, citing one official
close to the matter.
The European Commission said onTues-
day that the EU was on course to hit a tar-
get of fully vaccinating at least 70% of the
Fund managers’
ESG claims face
credibility test as
gaps found
by Tasneem Hanfi Brögger
& Alastair Marsh
Bloomberg
reuters
2025, which would be well over a third of
the global total in assets under manage-
ment, according to Bloomberg Intelligence.
The expectation is that the rollback of
ESG labelling will continue across the asset
management industry, Jagpal said. “I think
the gap will continue to close for the next
12 months or so, as asset managers make
progress on the more onerous disclosure
requirements under SFDR, but it’s hard to
say whether it will close all the way,” he said.
reuters
adult population by the end of the summer.
In May, the EU said it expected to have
received more than a billion doses of vac-
cines by the end of September from four
drug makers.
Pfizer and Moderna were not immediate-
ly available for comment to Reuters.
Some asset managers are already fac-
ing scrutiny as questions are raised over
their ESG classifications. The Wall Street
Journal reported Sunday that DWS Group
GmbH, the fund management firm con-
trolled by Deutsche Bank AG, has at times
overstated the ESG content of its portfoli-
os, citing its former sustainability chief and
internal emails. Desiree Fixler, who start-
ed in DWS’s newly created role of group
sustainability officer in September 2020,
was dismissed earlier this year.
In a statement to the newspaper, DWS
said it’s always been transparent and stands
by the annual report, audited by KPMG.
A representative confirmed the comments
when contacted by Bloomberg News.
The second-quarter reports of some of
Europe’s biggest publicly traded asset man-
agers have revealed a difference between
ESG-labeled products and what can be
defined as ESG under SFDR.
Amundi SA’s results show the manager
had total ESG assets under management of
€798 billion (US$948 billion), though only
€680 billion of that was defined under the
SFDR framework. At DWS, the gap was
even wider, with €459 billion carrying an
ESG label at the end of last year, though
only €87 billion qualified under the SFDR
framework as recently as June 30.
For now, investors appear to be unde-
terred by the reporting gap. “It seem DWS
was still able to generate excellent flows
over the year so far,” RBC’s Jagpal said.
“Including €8 billion into ESG funds, of
which half were in the second quarter, after
SFDR was implemented.”
 T U E S D AY A U G U S T 3 , 2 0 2 1
M A R K E T S
CPO RM 4,312.00-235.00 OIL US$ 74.50-0.91 RM/USD 4.2248 RM/SGD 3.1248 RM/AUD 3.1073 RM/GBP 5.8811 RM/EUR 5.0205
Top 20 active stocks
NAME VOLUME CHANGE CLOSE YTD MARKET
(MIL) (RM) CHANGE CAP
(%) (RM MIL)
RESINTECH BHD 113.4 0.140 0.735 129.69 100.8
GREENYIELD BHD 90.2 0.08 0.38 100 126.8
SERBA DINAMIK HOLDINGS BHD 89.1 -0.015 0.380 -78.41 1409.7
SAUDEE GROUP BHD 80.3 -0.015 0.120 -71.22 85.9
PUC BHD 78.3 0.010 0.190 18.75 237.5
SERSOL BHD 60.3 -0.050 0.500 156.41 107.7
DAGANG NEXCHANGE BHD 54.5 -0.005 0.715 217.78 2128.3
ADVANCE SYNERGY BHD 54.0 0.000 0.165 10.00 153.3
M3 TECHNOLOGIES ASIA BHD 44 -0.01 0.055 -15.38 49.1
DATASONIC GROUP BHD 38.9 0.015 0.475 -9.52 1368.9
TANCO HOLDINGS BHD 36.8 -0.005 0.205 310 320.1
YBS INTERNATIONAL BHD 35.5 0.05 0.465 151.35 114.6
SALUTICA BHD 35.3 0.000 0.600 42.86 231.0
FOCUS DYNAMICS GROUP BHD 34.8 0 0.04 -93.85 254.9
GLOBALTEC FORMATION BHD 34.3 0.05 0.73 75.9 196.4
MAG HOLDINGS BHD 33.1 -0.01 0.18 -10 250.8
GOLDEN PHAROS BHD 30.7 0.095 0.525 114.29 72.9
BUMI ARMADA BHD 29.5 -0.015 0.41 17.14 2421.9
CABNET HOLDINGS BHD 27.5 0.03 0.375 44.23 67
LYC HEALTHCARE BHD 26.8 0.045 0.345 4.55 148.9
Data as compiled on Aug 2, 2021 Source: Bloomberg
Top gainers (ranked by %)
NAME CLOSE CHANGE VOLUME YTD MARKET
(%) (‘000) CHANGE CAP
(%) (RM MIL)
GREENYIELD BHD 0.380 26.670 90232.7 100.00 126.8
RESINTECH BHD 0.735 23.53 113359.5 129.69 100.8
GOLDEN PHAROS BHD 0.525 22.090 30715.5 114.29 72.9
CHUAN HUAT RESOURCES BHD 0.650 17.120 8017.8 49.43 109.6
LYC HEALTHCARE BHD 0.345 15.000 26778.6 4.55 148.9
HARN LEN CORP BHD 0.935 14.720 12930.1 28.08 166.0
KOBAY TECHNOLOGY BHD 4.000 13.960 10402.8 402.09 1201.1
IDIMENSION CONSOLIDATED BHD 0.085 13.330 5962.9 6.25 23.1
YBS INTERNATIONAL BHD 0.465 12.050 35461.4 151.35 114.6
YLI HOLDING BHD 0.420 12.000 3226.5 -6.67 43.2
VISDYNAMICS HOLDINGS BHD 1.040 11.230 11315.3 37.75 181.4
TOP BUILDERS CAPITAL BHD 0.05 11.11 2237.3 -56.52 33.4
CHINA OUHUA WINERY HOLDINGS 0.050 11.110 3629.8 -16.67 33.4
CLASSIC SCENIC BHD 0.790 10.490 550.0 74.59 190.4
ATA IMS BHD 2.700 9.310 5809.0 13.45 3247.7
YGL CONVERGENCE BHD 0.300 9.090 18151.0 93.55 76.7
EMICO HOLDINGS BHD 0.305 8.930 1477.9 7.02 35.1
CABNET HOLDINGS BHD 0.375 8.700 27474.7 44.23 67.0
EUROSPAN HOLDINGS BHD 1.29 8.4 1733.8 113.22 57.3
HEXTAR GLOBAL BHD 1.3 8.33 9749.6 131.11 1707
Data as compiled on Aug 2, 2021 Source: Bloomberg
Top gainers (ranked by RM)
NAME CLOSE CHANGE VOLUME YTD MARKET
(RM) (‘000) CHANGE CAP
(%) (RM MIL)
MALAYSIAN PACIFIC INDUSTRIES 45.56 1.06 286.3 75.5 9061.7
KESM INDUSTRIES BHD 13.98 0.82 176.3 2.95 601.3
VITROX CORP BHD 19.62 0.72 989.5 33.47 9264.8
KOBAY TECHNOLOGY BHD 4 0.49 10402.8 402.09 1201.1
CHIN TECK PLANTATIONS BHD 6.93 0.33 14.8 3.57 633.1
NESTLE MALAYSIA BHD 133.3 0.3 13.4 -4.03 31258.9
PANASONIC MANUFACTURING 32.5 0.28 5.4 5.52 1974.2
UNISEM M BHD 8.6 0.25 3470.4 39.16 6936.2
PETRONAS GAS BHD 15.48 0.24 598.6 -9.61 30630.8
PENTAMASTER CORP BHD 5.54 0.24 5850.4 9.7 3946.2
CARLSBERG BREWERY MALAYSIA 21.46 0.24 46.6 -7.66 6561.4
UWC BHD 5.97 0.23 6070.2 21.84 6570.8
ATA IMS BHD 2.7 0.23 5809 13.45 3247.7
GREATECH TECHNOLOGY BHD 6.63 0.21 3820.4 45.71 8300.8
MI TECHNOVATION BHD 4.1 0.21 8610.8 4.06 3363
PETRONAS DAGANGAN BHD 18.6 0.2 159.9 -13.08 18478.2
INARI AMERTRON BHD 3.5 0.17 20286 27.52 12879.9
WESTPORTS HOLDINGS BHD 4.22 0.16 1779.2 -1.86 14390.2
D&O GREEN TECHNOLOGIES BHD 5.45 0.15 3321.5 139.04 6459.4
RESINTECH BHD 0.735 0.14 113359.5 129.69 100.8
Data as compiled on Aug 2, 2021 Source: Bloomberg
27 THEEDGE CEO MORNING BRIEF
World equity indices
CLOSE CHANGE CHANGE CLOSE CHANGE CHANGE
(%) (%)
DOW JONES 34,935.47 -149.06 -0.42 INDONESIA 6,096.54 26.50 0.44
S&P 500 4,395.26 -23.89 -0.54 JAPAN 27,781.02 497.43 1.82
NASDAQ 100 14,959.90 -88.46 -0.59 KOREA 3,223.04 20.72 0.65
FTSE 100 7,079.86 47.56 0.68 PHILIPPINES 6,446.31 176.08 2.81
AUSTRALIA 7,491.45 98.83 1.34 SINGAPORE 3,161.22 -5.72 -0.18
CHINA 3,464.29 66.93 1.97 TAIWAN 17,503.28 255.87 1.48
HONG KONG 26,235.80 274.77 1.06 THAILAND 1,525.11 3.19 0.21
INDIA 52,950.63 363.79 0.69 VIETNAM 1,314.22 4.17 0.32
Data as compiled on Aug 2, 2021 Source: Bloomberg
Top losers (ranked by %)
NAME CLOSE CHANGE VOLUME YTD MARKET
(%) (‘000) CHANGE CAP
(%) (RM MIL)
KEY ALLIANCE GROUP BHD 0.025 -28.57 25338.2 -50.00 58.9
COMPUGATES HOLDINGS BHD 0.015 -25.00 1030.0 -25.00 46.0
NEXGRAM HOLDINGS BHD 0.020 -20.00 3406.0 -55.56 73.5
M3 TECHNOLOGIES ASIA BHD 0.055 -15.38 44006.4 -15.38 49.1
LIEN HOE CORP BHD 0.320 -14.67 222.5 23.08 106.4
MNC WIRELESS BHD 0.030 -14.29 1929.3 -33.33 52.8
GREEN OCEAN CORP BHD 0.030 -14.29 6108.9 -66.67 52.8
JOHAN HOLDINGS BHD 0.095 -13.64 17592.2 -50.00 111.0
JOE HOLDING BHD 0.035 -12.50 309.0 -68.18 107.1
XOX BHD 0.035 -12.5 5030.5 -68.18 141.3
SCOMI GROUP BHD 0.035 -12.50 1374.4 16.67 33.6
QUALITY CONCRETE HOLDINGS 1.330 -11.33 838.8 33.00 77.1
MLABS SYSTEMS BHD 0.040 -11.11 16711.1 -50.00 48.3
SAUDEE GROUP BHD 0.120 -11.11 80261.8 -71.22 85.9
DGB ASIA BHD 0.045 -10.00 5646.9 -80.00 60.8
BRAHIM’S HOLDINGS BHD 0.190 -9.52 1.0 -42.42 58.4
SERSOL BHD 0.5 -9.09 60336.9 156.41 107.7
ARTRONIQ BHD 0.355 -7.79 9145.2 -29.70 102.6
KEJURUTERAAN ASASTERA BHD 0.66 -7.69 17024.7 13.14 1116.6
BERTAM ALLIANCE BHD 0.12 -7.69 231.3 -7.69 29.8
Data as compiled on Aug 2, 2021 Source: Bloomberg
Top losers (ranked by RM)
NAME CLOSE CHANGE VOLUME YTD MARKET
(RM) (‘000) CHANGE CAP
(%) (RM MIL)
HONG LEONG FINANCIAL GROUP 17.020 -0.220 144.9 -5.76 19492.1
HENGYUAN REFINING CO BHD 4.110 -0.210 721.9 -31.39 1233.0
QUALITY CONCRETE HOLDINGS 1.33 -0.17 838.8 33 77.1
KOSSAN RUBBER INDUSTRIES 3.330 -0.130 4669.1 -24.38 8496.9
TOYO VENTURES HOLDINGS BHD 2.020 -0.130 50.5 19.53 216.1
SAM ENGINEERING & EQUIPMENT 10.680 -0.120 2239.2 44.91 1445.5
TRANSOCEAN HOLDINGS BHD 3.86 -0.11 103.7 388.61 174.1
OM HOLDINGS BHD 2.530 -0.100 148.1 0.00 1868.7
SIME DARBY PLANTATION BHD 3.300 -0.100 5640.7 -33.56 22821.9
RIVERVIEW RUBBER ESTATES BHD 3.000 -0.100 3.6 -1.04 194.6
MALAYSIA SMELTING CORP BHD 2.020 -0.080 564.7 41.26 848.4
LPI CAPITAL BHD 13.760 -0.080 61.1 0.29 5481.7
KEIN HING INTERNATIONAL BHD 1.090 -0.080 3349.4 52.45 118.7
LOTTE CHEMICAL TITAN HOLDING 2.540 -0.080 3825.7 -8.30 5785.0
DUOPHARMA BIOTECH BHD 2.780 -0.080 835.6 -17.75 1963.6
DUTCH LADY MILK INDUSTRIES BHD 33.020 -0.080 4.4 -11.95 2113.3
MULPHA INTERNATIONAL BHD 2.010 -0.080 91.4 50.00 634.4
MISC BHD 6.630 -0.070 1710.4 -3.49 29594.6
PERUSAHAAN SADUR TIMAH M’SIA 3.780 -0.070 34.0 -3.08 488.0
MALAYSIA AIRPORTS HOLDINGS 5.71 -0.070 784.7 -3.55 9474
Data as compiled on Aug 2, 2021 Source: Bloomberg