The Week Ahead: Corporate earnings, Singapore tax hike take centre stage

TheEdge Mon, Feb 26, 2018 03:00pm - 6 years View Original


THE first trading week in the new lunar calendar (Year of the Earth Dog) will see several large and high-profile listed Malaysian companies reporting their results for the quarter and year ended Dec 31, 2017. Attention will also be on Singapore’s Budget 2018 announcement on Feb 19 — it is widely expected to include higher consumption and wealth taxes.

Singapore Prime Minister Lee Hsien Loong said last November that rising public spending requirements for infrastructure, training and social needs meant higher taxes were inevitable as the population ages amid structural changes to employability. Apart from taxing more online shoppers and levelling the playing field between online and traditional businesses, the city state famed for its low-tax model may raise taxes for its top earners (22% versus 28% in Malaysia currently) as well as announce its first Goods and Services Tax (GST) rate hike since 2007 when the rate was increased from 5% to 7%.

A GST rate hike in Singapore would provide more headroom for Malaysia to do the same (while staying as the country with the lowest GST rate in the region), although economists do not expect an increase in consumption taxes here this year. Economists expect Singapore to increase GST by up to 2%, possibly on a staggered basis, to allow individuals and businesses to adjust.

In Malaysia, companies that will be reporting full-year results for 2017 include Axiata Group Bhd, Malaysia Airports Holdings Bhd, AirAsia X Bhd, Media Prima Bhd, Unisem (M) Bhd, GHL Systems Bhd, UOA Development Bhd and Felda Global Ventures Holdings Bhd. Sime Darby Bhd and IOI Corp Bhd, meanwhile, are slated to announce second-quarter results.

Data releases in Kuala Lumpur this week include the Consumer Price Index (CPI) for January on Wednesday (Feb 21) and Bank Negara Malaysia’s latest foreign reserves for mid-February on Thursday (Feb 22). Also on Thursday, the Federation of Malaysian Manufacturers (FMM) and the Malaysian Institute of Economic Research (MIER) will announce the findings of the FMM-MIER Business Conditions Survey for the second half of last year.

France, Hong Kong, Canada and Singapore are expected to release their latest CPI numbers on Feb 22 and 23. The eurozone will see the release of the Harmonised Index of Consumer Prices (HICP), which is an indicator of inflation and price stability for the European Central Bank.

Other economic releases this week include Japan’s export and trade balance (Feb 19), the eurozone’s ZEW Economic Sentiment Index (Feb 20) as well as manufacturing Purchasing Managers Index and services PMI (Feb 21), the UK’s International Labour Organisation unemployment rate (Feb 21) and gross domestic product data, and Germany’s ifo Business Climate Index.

On the Malaysian corporate front, EITA Resources Bhd, Notion VTEC Bhd, Pacific & Orient Bhd and Digistar Corp Bhd are holding their respective annual general meetings (AGMs) on Friday (Feb 23).

D&O Green Technologies Bhd is holding its extraordinary general meeting (EGM) on Wednesday (Feb 21) to seek shareholders’ approval to buy an additional 27.95% stake in Dominant Opto Technologies Sdn Bhd for RM275.21 million worth of 451.17 million irredeemable convertible preference shares (ICPS) at an issue price of 61 sen apiece. Independent adviser Mercury Securities Sdn Bhd said the proposed acquisition is “fair and reasonable” and “not detrimental” to the non-interested shareholders of D&O.

Meanwhile, Focus Dynamics Group Bhd, Tadmax Resources Bhd and Tatt Giap Group Bhd are holding their EGMs on Friday (Feb 23).

Focus Dynamics wants shareholders to approve a 10-to-19 share split as well as a renounceable rights issue of up to 2.12 billion new ICPS, together with 424.6 million free detachable warrant D (five ICPS and one free warrant for every five existing shares). Its largest shareholder — Asiabio Capital Sdn Bhd, which has a 19.16% stake — has given its undertaking to subscribe for its entitlement in full.

Tadmax is seeking shareholders’ approval for a placement of up to 20% of its share base to third-party investors at a price to be determined. According to its circular to shareholders, an indicative issue price of 33 sen will raise gross proceeds of RM35.52 million, with RM18 million earmarked for a power plant project, RM12.5 million for property development and the rest for working capital.

Tatt Giap is proposing to sell a 41% stake in Tatt Giap Steel Centre Sdn Bhd (TGSC) for RM12.3 million to Japan’s Hanwa Co Ltd. Tatt Giap will retain only 10% equity interest in the former subsidiary after the planned disposal, which it said will cut gearing to 2.2 times from 4.21 times and reduce finance cost by RM2.5 million a year. TGSC, which manufactures, processes and trades in stainless steel and other metal products, is loss-making. Tatt Giap expects to see a total gain of RM3.84 million from the proposed disposal, including a reversal of deferred tax liabilities of RM1.42 million. 

 

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