17 companies write off RM5.6b due to forex, impairment losses: Maybank-IB
By PAULINE NG
IN KUALA LUMPUR
 | Email this article |
 | Print article |
 | Feedback |
MALAYSIAN companies suffered huge write-downs and impairment losses in the fourth quarter of last year as commodity prices slumped and the US dollar strengthened.
In a snapshot, Maybank-IB says 17 companies in its investment universe recognised write-offs totalling RM5.6 billion (S$2.3 billion), representing 15-20 per cent of its 2008 core profit base. An estimated RM2 billion was for foreign exchange losses. The balance was for write-downs and impairment losses.
With huge outstanding debt of RM24 billion, national utility Tenaga made the biggest single write-down of RM1.4 billion on forex translation losses.
Forex losses of about RM133 million also bogged down IOI Corporation, whose performance was dented further by customer defaults of RM76 million and RM16 million in the diminution of the value of property assets for a Singapore joint venture.
Plantation companies also had their share of problems, with Kuala Lumpur Kepong suffering RM200 million of inventory losses and Hap Seng Consolidated writing down almost RM100 million on fertiliser stocks.
Huge inventory write- downs of over RM300 million were also provided for by steel makers Ann Joo and Kinsteel.
  |
The provisions could be temporary in some cases, since they can be written-back if value is regained when the economic cycle turns or the US dollar weakens.
Phillip Capital chief investment officer Ang Kok Heng says that because of the continuing strength of the greenback, provisions for the current Q1 could remain noticeable.
In Tenaga's case, its loans increased a whopping RM2 billion over a mere three months when the greenback and yen appreciated against the ringgit, as slightly more than half of its debts are in those currencies.
Impairment charges on investments were also a factor in Q4 2008, with examples including Resorts World and Genting's RM781 million impairment charges on Star Cruises. In addition, Genting was saddled with a RM396 million impairment loss on Genting International.
Budget carrier AirAsia was another disappointment. It lost RM145 million unwinding interest rate swaps and RM281 million on fuel derivatives in Q4 - three times more than Maybank-IB anticipated.
Because of front-loading of provisions, corporate earnings were sharply reduced in Q4, as growing dividend cuts indicated companies were moving to conserve cash.
More companies, especially plantation players, could be cutting dividend payouts as earnings shrink. And a rise in cash calls is possible should the economy continue to falter, Maybank-IB says.
'But corporate Malaysia's balance sheet will remain healthy even if gross domestic product contracts this year,' it says. 'The banks' capital base should also stay sound, even if bad debts spike up at some stage.'
No comments:
Post a Comment