MSWG Weekly Newsletter 20 April 2018 (English)

Friday, 20 April, 2018

MESSAGE FROM THE CEO

 Remote Participation and Voting at General Meetings

 Many minority shareholders are unable to participate at general meetings and vote (except through proxies) due to the choice of venue for the general meeting.

 Minority shareholders may, going forward, be able to do so as the MCCG (Malaysian Code on Corporate Governance)  intends to enable shareholders to participate, engage the board and senior management effectively and make informed voting decisions at general meetings.

The two relevant key Intended Outcomes in MCCG relate to participation and voting at general meetings.

The MCCG states, that as a Practice, listed companies, with a large number of shareholders or which have meetings in remote locations, should leverage on technology to facilitate voting in absentia and remote shareholders’ participation at general meetings.

We note that quite a few companies have misinterpreted this Practice to mean electronic voting and have accordingly stated that they have adopted the said Practice and go on to explain about electronic voting.

Electronic voting is different from enabling remote shareholder participation and voting at general meetings. It only facilitates voting to produce the poll results in speedy manner.

But the words ‘large’ and ‘remote’ will raise some issues.

 

How large is ‘large’?

The MCCG is a principle-based code and listed companies are intended to give effect to the substance and spirit of the Practices against the backdrop of the Intended Outcomes which precede each set of Practices.

Amongst others, listed companies will have to consider the shareholding spread of their company and the geographical demographics of their shareholders before forming a view as to what constitutes ‘large’. (The Register of Depositors (ROD) from Malaysian Central Depository will indicate the addresses of the shareholders).

 

How remote is ‘remote’?

If a listed plantation company has its AGM in an estate, is that remote? Would a reply that the estate has good roads suffice to render the venue not-remote? Distance in relation to the geographical demographics of the majority of the shareholders is an important criterion and not just merely good roads.

Thus, we can expect some lively debate and candid deliberations on ‘how remote is remote’.

Tradition, has also been cited as a reason to hold general meetings at certain ‘remote’ locations on the premise ‘we have, over the years, always had our general meetings here’.

Tradition must, over time, give way to pragmatism and an utilitarian approach is required.

The question to ask is ‘which choice of venue will enable the largest number of our shareholders to attend and participate at our general meeting’.

We are not aware of any listed company which has adopted the Practice that advocates remote shareholder participation and voting at general meetings in Malaysia.

The most ambitious timeframe for adoption of this Practice, that we have come across to-date, is from Bursa Malaysia.

Bursa Malaysia aims to leverage on technology to facilitate voting in absentia and remote shareholders’ participation at general meetings. Bursa Malaysia also acknowledges that this can only be implemented with a system fit for this purpose and has given itself a timeframe of one year.

Remote shareholder participation and voting at general meetings will be a boon for minority shareholders and promote greater shareholder activism.

 

On intraday short selling

Bursa Malaysia is introducing intra-day short selling (IDSS) meaning that all positions will have to be ‘closed’ by the end of the same day. Investors will now have an opportunity to profit both ways – when prices are going up by ‘buying low and selling high’ and when prices are going down by ‘selling high and buying low’.

The intra-day short selling is expected to boost market liquidity and market volume. More importantly, it is expected to facilitate better price discovery. Now shares which are deemed ‘over-priced’ will be sold down to what is perceived to be their intrinsic price.

There is always a risk of market manipulation through short selling which may result in an unfair and disorderly market. And this was a reason for banning short selling to the public.

This risk is mitigated by the following features:

  1. The positions must be closed by the end of the same day
  2. Limited to an initial 280 stocks with the list being reviewed every six months
  3. IDSS suspensions if a stock price falls by more than 15% from the previous day closing price or if the gross short selling volume exceeds the daily maximum limit of 3% of outstanding shares per security.

Not all stock brokers are ready to offer IDSS and those that can will have first mover advantage.

Read more at https://www.thestar.com.my/business/business-news/2018/04/16/bursa-malaysia-implements-intraday-short-selling/#w8lZlJQvRo6D7i1i.99

 

Regards,

Devanesan

20 April 2018

 


MSWG’S AGM WEEKLY WATCH 23 – 27 APRIL 2018

For this week, the following are the AGMs/EGMs of companies which are in the Minority Shareholder Watch Group’s (MSWG) watch list.

The summary of points of interest is highlighted here, while the details of the questions to the companies can be obtained via MSWG’s website at www.mswg.org.my.

Date & Time

Company

Venue

23.04.18 (Mon)
11.00 am

Public Bank Bhd
(AGM)

Shangri-La Hotel, Jalan Sultan Ismail, KL

23.04.18 (Mon)
12.00 pm

KPJ Healthcare Bhd
(AGM)

Persada Johor International Convention Centre, Jalan Abdullah Ibrahim, Johor Bahru

24.04.18 (Tue)
10.00 am

United Plantations Bhd
(AGM)

United Plantations Berhad, Jendarata Estate, Teluk Intan, Perak

24.04.18 (Tue)
10.00 am

Box-Pak (Malaysia) Bhd
(AGM)

Conference Room of Box-Pak (Malaysia) Bhd.Lot 4, Jalan Perusahaan Dua Batu Caves

24.04.18 (Tue)
11.00 am

Texchem Resources Bhd
(AGM)

Jen Hotel, Magazine Road, Penang

24.04.18 (Tue)
02.00 pm

Lotte Chemical Titan Holdings Bhd  
(AGM)

Sime Darby Convention Centre, No. 1A, Jalan Bukit Kiara 1

24.04.18 (Tue)
03.30 pm

Wesports Holdings Bhd
(AGM)

Sime Darby Convention Centre, 1A Jalan Bukit Kiara 1, Kuala Lumpur

25.04.18 (Wed)
10.00 am

Media Prima Bhd
(AGM)

Sime Darby Convention Centre, No. 1A, Jalan Bukit Kiara 1

25.04.18 (Wed)
10.00 am

Kian Joo Can Factory Bhd
(AGM)

Tropicana Golf & Country Resort Club, Jalan Kelab Tropicana, PJ

25.04.18 (Wed)
10.00 am

Petronas Dagangan Bhd
(AGM)

Mandarin Oriental Kuala Lumpur, KLCC

25.04.18 (Wed)
10.00 am

Cahya Mata Sarawak Bhd
(AGM)

Pullman Hotel, 1A Jalan Mathies, Kuching, Sarawak

25.04.18 (Wed)
10.30 am

RHB Bank Bhd
(AGM)

Royale Chulan Kuala Lumpur, 5 Jalan Conlay, KL

26.04.18 (Thur)
09.00 am

CIMB Group Holdings Bhd
(AGM)

Connexion @ Nexus, No. 7, Jalan Kerinchi, Bangsar South City, KL

26.04.18 (Thur)
10.00 am

Malakoff Corporation Bhd
(AGM)

Hotel Istana, 73, Jalan Raja Chulan, Kuala Lumpur

26.04.18 (Thur)
10.00 am

Telekom Malaysia Bhd
(AGM)

TM Convention Centre, Menara TM, Jalan Pantai Baharu, KL

26.04.18 (Thur)
10.00 am

Can-One Bhd
(AGM)

Tropicana Golf & Country Resort Club, Jalan Kelab Tropicana, PJ

26.04.18 (Thur)
10.00 am

Nestle (Malaysia) Bhd
(AGM)

Hilton Kuala Lumpur, 3 Jalan Stesen Sentral

27.04.18 (Fri)

10.00 am

MISC Bhd

InterContinental Kuala Lumpur, Jalan Ampang, KL

 

The points of interest to be raised:

Company

Points/Issues to Be Raised

Public Bank Bhd
(AGM)

Given that deposit position and growth in support of liquidity is important, Public Bank’s domestic deposit growth as indicated in its “Investor Presentation – December 2017 Financial Results” (page 13) indicates that deposit growth for both of its Group and domestic segment stand at 3.0% and 3.6% respectively below the banking industry growth of 3.9% for 2017.

  1. Do you have any plans to address this to be in line or better than the average deposit growth rate in the industry?

 

(ii)   In terms of deposit outstanding balance & industry market share, the average 3-year figures (year 2015 – 2017) reported were between16.6% to 16.9%. The share of core customer deposit for domestic market stood at 16.8% for FY 2017.

What are the challenges that you faced to improve the domestic market share position? What is the impact of the recent increase in BNM’s Overnight Policy Rate for January 2018 on the Group?

KPJ Healthcare Bhd
(AGM)

  1. As stated in the Management Discussion & Analysis (“MD&A”) on page 21 of the Annual Report, the Company had incurred higher costs in terms of repair and other capital expenditure as a result of its investment into developing world class medical facilities.

 

  1. How much was the total capital expenditure (“CAPEX”) incurred for the financial year under review?

 

  1. How much CAPEX is expected to be incurred for FY2018?

 

  1. In note 25 on page 243 of the Annual Report, it was stated that Other Receivables increased from RM54.5 million in FY2016 to RM134.8 million in FY2017.

What were the reasons for the increase?

United Plantations Bhd
(AGM)

As stated on Page 27 of the Annual Report, it was reported that the Company will proceed to replant large area of its older and less productive oil palm stands in Malaysia during 2018.

What is the hectarage earmarked for replanting in 2018 and would the production in 2018 be affected with this major replanting programme?

Box-Pak (Malaysia) Bhd
(AGM)

The Group’s profit had declined consecutively for the last 2 financial years along with the decline in the gross profit margin.

(i)    Please share on the measures taken to deal with the increasing labour costs, manufacturing costs and raw material pricing?

(ii)   When is the Group expected to reverse its deteriorating financial performance?

(iii)  Could the Board share with shareholders their views on whether automating the Group’s manufacturing activities could mitigate the increasing labour cost?

Lotte Chemical Titan Holdings Bhd  
(AGM)

As stated in the President and CEO’s Message, the Group’s plant utilisation rate decreased from 91% to 73% in FY2017 mainly due to two routine statutory turnaround exercises at the Malaysian site and the reduced load at the Indonesia polyethylene plant because of economic reasons.

(i)    Are there any planned maintenance activities for FY 2018 and how would these activities be expected to impact the plant utilisation rates?

(ii)   What would be the targeted average plant utilisation rate for FY 2018?

(iii)  Would the Board expect the polyethylene economics to improve in FY2018?

(iv)  What is the Board’s expectation on the margin spread for FY 2018?

Wesports Holdings Bhd
(AGM)

With the ongoing consolidation among the container liners and the emergence of the three major shipping alliances in 2017, what would be the impact on the Company in terms of business performance and revenue growth moving forward?

 

Kian Joo Can Factory Bhd
(AGM)

We noted in Note 28 on page 128 of the Annual Report, the Group recorded a higher write off of inventories amounting to RM13 million in FYE 2017, compared to RM3.1 million in FYE 2016. Please explain.

Petronas Dagangan Bhd
(AGM)

The revenue of the Retail Segment grew by 17% to RM13,855.2 million in FY2017 due to higher average selling prices. However, this was offset by lower sales volume. Despite the lower volume, gross profit had grown by 15%.

(i)    Given that the Retail Segment continues to be the highest revenue contributor to the Group, what are the strategies put in place to improve the sales volume in FY2018?

(ii)   What is the Board’s expectation on the performance of this segment for FY2018?

(iii)  How many new stations would be built in FY2018 and what would be the total capital expenditure involved?

Cahya Mata Sarawak Bhd
(AGM)

1)    Over the past two financial years, the contributions of revenue from Cement, and Construction Materials & Trading segments to the Group revenue have been declining.

How does the Board plan to address this decline in the revenue from both these segments? Does the Board foresee that these segments would be in a better position to generate much higher revenue in FY2018? Please explain. 

2)    What were the reasons for the significant increase in other expenses by approximately 200% from RM12,394,000 in FY2016 to RM37,126,000 in FY2017? Please explain.   

RHB Bank Bhd
(AGM)

We refer to page 83 of the Annual Report on Key Performance Indicators and note that Overseas Contribution has been registering negative Profit Before Taxation for 2016 & 2017 at -10% and -11% respectively.

How will the management address the negative results and turn-around the position of these business units under the new “Strategic Road Map, FIT22 2018 - 2022” in line with the 2020 Aspirations (page  76, Annual Report) as a regional powerhouse in ASEAN+ with target 20% profit contribution from international operations?

CIMB Group Holdings Bhd
(AGM)

In the Management Discussion & Analysis (MDA) under the Strategic Review – “Actual vs Target” on page 26 of the Annual Report, it was noted that that both Total Loans Growth and Loan Loss Charge were below the targets set for FY2017 registering only 0.2% and 0.69% respectively as compared to 7.0% and 0.60% - 0.65% range for FY2017.

What were the reasons for the shortfall in particular the total loans growth? What would be the outlook for the Group in FY 2018?

Malakoff Corporation Bhd
(AGM)

On page 42 of the Annual Report, we noted the low generation dispatch in 2017 from SEV and GB3 Power Plants with an average capacity factor of approximately 44.09% and 33.6%, respectively due to the commercial operations of newer and more efficient neighbouring power plants.

(i)    Could SEV and GB3 Power Plants remain competitive amidst the newer and more efficient neighbouring power plants?

(ii)   What is the Board’s strategy to address the low generation dispatch of power from SEV and GB3 Power Plants, moving forward?

  1. What is the Board’s expectation on the sale of power from SEV and GB3 Power Plants for the financial year ending 2018?

Can-One Bhd
(AGM)

On page 44 of the Annual Report, the consolidated statement of financial position recorded that the trade receivables of the Group had increased by 32.1%, from RM276.7 million in FYE 2016 to RM365.6 million in FYE 2017.

(i)    What were the reasons for the growth in trade receivables to outpace the revenue growth rate of 22.4% for the FYE 2017?

(ii)   We refer to Note 27.4, page 103 of the Annual Report where it was stated advances to subsidiaries amounting up to RM927,000 have been impaired. What was the reason for the impairment? Are the subsidiaries wholly-owned by the Company?


MSWG’S WATCHLIST

SUPERMAX CORPORATION BERHAD (“SUPERMAX”)

Supermax announced that the resignation of Tan Sri Rafidah Aziz, as the Independent Non-Executive Chairman of the Company does not affect the day-to-day business operations nor the performance of Supermax Group.

The Board of Directors of Supermax shall identify a suitable candidate for appointment as the new Chairman of the company and will make the necessary announcement in due course.

It is business as usual at Supermax Group.

[Source: Supermax’s announcement on Bursa Malaysia’s website on 16 April 2018]


 

LOCAL NEWS AND DEVELOPMENTS

World Bank lifts Malaysia’s economic growth forecast to 5.4%

https://www.thestar.com.my/business/business-news/2018/04/16/world-bank-lifts-malaysias-economic-growth-forecast-to-54/#ZWjuBkl7F6IzXbwi.99

Malaysian bankers concerned about household debt in Moody’s poll

http://www.theedgemarkets.com/article/malaysian-bankers-concerned-about-household-debt-moodys-poll

Malaysia February unemployment rate falls to 3.3%

http://www.theedgemarkets.com/article/malaysia-february-unemployment-rate-falls-33

February natural rubber output up 14.9%

http://www.thesundaily.my/news/2018/04/12/february-natural-rubber-output-149

EPF outsources RM114.56b to external portfolio managers

http://www.themalaymailonline.com/money/article/epf-outsources-rm114.56b-to-external-portfolio-managers

EPF ends 2017 with record investment income of RM53.14b since 1951

https://www.nst.com.my/business/2018/04/356795/epf-ends-2017-record-investment-income-rm5314b-1951

Bursa Malaysia implements intraday short selling for all investors

http://www.bursamalaysia.com/corporate/media-centre/media-releases/5637

NWP aborts deal for stake in aviation player, appoints new group ED

http://www.theedgemarkets.com/article/nwp-aborts-deal-stake-aviation-player-appoints-new-group-ed-0

Idris Jala: Companies still giving excuses

https://www.thestar.com.my/business/business-news/2018/04/17/idris-jala-companies-still-giving-excuses/

Proton receives 170 3S/4S upgrade applications

http://www.theedgemarkets.com/article/proton-receives-170-3s4s-upgrade-applications

Rafidah resigns as Supermax chairman after MD's apology to PM

http://www.thesundaily.my/news/2018/04/16/rafidah-resigns-supermax-chairman-after-mds-apology-pm

Bank Negara: Foreign insurers can’t choose alternative initiatives for divestment

http://www.thesundaily.my/news/2018/04/15/bank-negara-foreign-insurers-can’t-choose-alternative-initiatives-divestment

SC Issues Notice to Investors to File Claims For Restitution

https://www.sc.com.my/post_archive/sc-issues-notice-to-investors-to-file-claims-for-restitution-2/

Residential overhang in 2017 highest ever recorded, says MoF division

http://www.theedgemarkets.com/article/residential-overhang-2017-highest-ever-recorded-says-mof-division

M'sia sets May crude palm oil export tax at 5% after 4-mth suspension

http://www.theedgemarkets.com/article/msia-sets-may-crude-palm-oil-export-tax-5-after-4mth-suspension

IRB slaps IWCity unit with additional tax

http://www.theedgemarkets.com/article/irb-slaps-iwcity-unit-additional-tax

Bursa Malaysia Securities publicly reprimands Harn Len Corporation Berhad for breach of the Main Market Listing Requirements

http://www.bursamalaysia.com/corporate/media-centre/media-releases/5629

Bumi Armada's Nigeria-based FPSO vessel ordered to halt operations, crude oil seized

http://www.thesundaily.my/news/2018/04/17/bumi-armadas-nigeria-based-fpso-vessel-ordered-halt-operations-crude-oil-seized

IRB: No timeline yet for cryptocurrency guidelines

http://www.thesundaily.my/news/2018/04/17/irb-no-timeline-yet-cryptocurrency-guidelines


 

GLOBAL NEWS AND DEVELOPMENTS

China's Q1 economic growth beats expectations on firm consumption, property sector

https://www.thestar.com.my/business/business-news/2018/04/17/china-q1-economic-growth-beats-expectations-on-firm-consumption-property-sector/

U.S. stocks rise as Syria fears ease; yield curve flattens

http://www.theedgemarkets.com/article/us-stocks-rise-syria-fears-ease-yield-curve-flattens

China Mar industrial output up 6%, misses expectations, Jan-Mar investment growth slows

http://www.theedgemarkets.com/article/china-mar-industrial-output-60-misses-expectations-janmar-investment-growth-slows

Japan's economy likely stalled in first quarter, but set to pick up again: Reuters poll

http://www.theedgemarkets.com/article/japans-economy-likely-stalled-first-quarter-set-pick-again-reuters-poll

China's March exports unexpectedly fall but 1Q trade surplus with US soars

http://www.theedgemarkets.com/article/chinas-march-exports-unexpectedly-fall-1q-trade-surplus-us-soars

Japan, China agree trade war will harm global economy

https://www.nst.com.my/business/2018/04/358175/japan-china-agree-trade-war-will-harm-global-economy

US to back US$13b World Bank capital increase

https://www.thestar.com.my/business/business-news/2018/04/14/us-to-back-us$13b-world-bank-capital-increase/#kD9SqdlMHLfr8uEq.99

Bitcoin has another quick spike as weekly rally surpasses 20%

https://www.thestar.com.my/business/business-news/2018/04/13/bitcoin-has-another-quick-spike-as-weekly-rally-surpasses-20pc/#JIIXaol8lJl7WyQq.99

World Bank raises East Asia’s 2018 GDP outlook, but is wary of trade war

https://www.thestar.com.my/business/business-news/2018/04/13/world-bank-raises-east-asias-2018-gdp-outlook-but-is-wary-of-trade-war/#UJyAHopF04IVowdc.99

UK housing hit by weak demand with no pickup in sight

https://www.thestar.com.my/business/business-news/2018/04/13/uk-housing-hit-by-weak-demand-with-no-pickup-in-sight/#bAScqaI7SAUvZlrP.99

US bank regulators propose easing capital curb on leverage

https://www.thestar.com.my/business/business-news/2018/04/12/us-bank-regulators-propose-easing-capital-curb-on-leverage/#w1V6G8yRTi2bO4BQ.99

China boosts holdings of US Treasuries by most in six months

http://www.themalaymailonline.com/money/article/china-boosts-holdings-of-us-treasuries-by-most-in-six-months

China central bank announces surprise cut in bank reserve requirements

http://www.themalaymailonline.com/money/article/china-central-bank-announces-surprise-cut-in-bank-reserve-requirements

China to relax foreign ownership limits on cars, other industries 

http://www.themalaymailonline.com/money/article/china-to-relax-foreign-ownership-limits-on-cars-other-industries


MSWG Analysts

Lya Rahman, General Manager, lyarahman@mswg.org.my
Rebecca Yap, Head, Corporate Monitoring, rebecca.yap@mswg.org.my
Quah Ban Aik, Head, Corporate Monitoring, banaik.quah@mswg.org.my
Norhisam Sidek, Manager, Corporate Monitoring, norhisam@mswg.org.my
Wong Kin Wing, Manager, Corporate Monitoring, kinwing@mswg.org.my
Hoo Ley Beng, Manager, Corporate Monitoring, linnert.hoo@mswg.org.my

Elaine Choo, Manager, Corporate Monitoring, elaine.choo@mswg.org.my
Lee Chee Meng, Manager, Corporate Monitoring, cheemeng@mswg.org.my 

Abdul Halim Alias, Manager, Corporate Monitoring, halim.alias@mswg.org.my

Mustaqim Yusof, Analyst, Corporate Services, mustaqim.yusof@mswg.org.my

Muhammad Faris bin Mohamed Yusof, Analyst, Corporate Monitoring farisyusof@mswg.org.my

 

DISCLOSURE OF INTERESTS

•           With regard to the companies mentioned, MSWG holds a minimum number of shares in all these companies covered in this newsletter.


Feedback
We welcome your feedback on our newsletter and our work. Email us at corporateservices@mswg.org.my with your comments and suggestions.


DISCLAIMER

This newsletter and the contents thereof and all rights relating thereto including all copyright is owned by the Badan Pengawas Pemegang Saham Minoriti Berhad, also known as the Minority Shareholder Watch Group (MSWG).

The contents and the opinions expressed in this newsletter are based on information in the public domain and are intended to provide the user with general information and for reference only. Best efforts have been made to ensure that the information contained in this newsletter is accurate and current as at the date of publication. However, MSWG makes no express or implied warranty as to the accuracy or completeness of any such information and opinions contained in this newsletter. No information in this newsletter is intended to be or should be construed as a recommendation to buy or sell or an invitation to subscribe for any, of the subject securities, related investments or other financial instruments thereof.

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