Published July 2, 2009

CIMB to revise 2009 ROE upwards

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(KUALA LUMPUR) Malaysia's No 2 lender CIMB Bank may have been too conservative when it set a return on equity (ROE) target of 12.5 per cent for 2009 and looks set to revise it when it publishes its first-half results.

Greater clarity in outlook: CEO Nazir expects merger and acquisition activity to pick up in the second half

'We may have been a little bit bearish. Based on our first-half results, we will then revise that ROE target,' chief executive officer Nazir Razak told Reuters in an interview on Tuesday.

CIMB Bank, South-east Asia's fifth-largest bank by assets, has an asset base of RM226.9 billion (S$93.5 billion) and a market value of about RM32.6 billion.

Mr Nazir, the son of Malaysia's second prime minister and the younger brother of its current one, grew CIMB to become Malaysia's second-largest bank via a series of acquisitions over the last few years.

State-controlled Maybank, which has RM308.8 billion in assets, is the country's largest lender.

Mr Nazir said that he does not foresee the bank making any more big acquisitions over the next few years.

'We have charted our path for the medium term. We are happy with the platform we have,' Mr Nazir said, adding that the bank could consider a bolt-on acquisition such as a brokerage operation in, for example, Thailand.

'We are very busy with creating value and getting the return from the enlarged platform,' said Mr Nazir, referring to the bank's recent acquisitions in Thailand and Indonesia.

Mr Nazir was instrumental in CIMB's 2005 acquisition of Singapore stockbroking firm GK Goh Securities Pte Ltd and the merger a year later with Southern Bank, a mid-sized Malaysian bank.

Last year, CIMB beat its bigger rivals, including HSBC Holdings plc and Standard Chartered Bank, to win the bid for a controlling stake in Thailand's BankThai.

The Malaysian bank also has a small presence in Indonesia through Bank CIMB Niaga.

Khazanah Nasional, the investment arm of the Malaysian government, is the largest shareholder of the bank with a 20 per cent stake.

The Employees Provident Fund, the largest pension fund in the country, controls another 15.4 per cent.

Mr Nazir said that he expects merger and acquisition activity to pick up in the second half of the year after a lacklustre first half.

'I think there is greater clarity in outlook now,' he said.

The bank's balance sheet remains healthy and does not see the need for new capital raising, he added.

'We redeemed US$300 million in sub-debt recently and replaced it with some hybrids on the holding company,' he said.

'That was just the replacement, so net-net despite the completion of various transactions, I think our capital position is very comfortable.' - Reuters

Published July 2, 2009

Penang CM spells out his vision for the state

In his assessment, Singapore is the toughest competitor around

By PAULINE NG
IN KUALA LUMPUR

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HIGH-WAGE jobs and quality investments are needed if Penang is to successfully transform from an electrical and electronics hub into a leading services player, its chief minister told an investor conference.

Mr Lim: Says state-federal ties might not always be cordial, but it could be workable

Singapore featured in his assessment as the toughest competitor around.

Despite attracting slightly over RM10 billion (S$4.1 billion) in investments last year - including notable ones by Honeywell Aerospace and National Instruments - Penang Chief Minister Lim Guan Eng ranked a decision by the US cardiovascular medical devices maker St Jude Medical to build a US$30 million facility in the state as one his most satisfying achievements in investment drawing in the year past.

'Singapore had almost clinched the deal but somehow we convinced them to come to Penang,' Mr Lim told investors during a panel session on Malaysia's Growth Centres: Johor, Penang & Sabah.

Minnesota-based St Jude Medical plans to put up a 300,000-sq-ft plant to make cardiac products including pacemakers, and upon its completion in 2011 is expected to provide 300 high-income jobs and close to 1,000 jobs later if its expansion goes according to plan.

Johor Chief Minister Ghani Othman said Singapore had always been one of the top three investors in Johor and that there was 'a huge amount of complementaries between the two', given Singapore's strategic location and Johor's vast hinterland and natural resources.

However, he added that Johor was also well located and becoming more competitive as a future destination for investments. Indeed, much has been made of the over RM40 billion in investments that the new growth corridor Iskandar Malaysia in South Johor has managed to attract in the past two to three years.

But it was Mr Lim's vision for Penang that the participants warmed to.

Elected the new chief minister of Penang following victory by the opposition coalition Pakatan Rakyat in five states during last year's general election, Mr Lim spoke of his vision of turning Penang into a vibrant and sustainable international city.

Over the past year, the state has been actively courting investors by highlighting its strengths: Strategic location, big pool of knowledge workers, great heritage, delicious food and hospitable people - all of which make for a grand lifestyle.

But Mr Lim alluded to the fact that Penang's transformation would have been easier if not for the many talents lost, including to Singapore. These include a number of Singapore judges who were Penang-born.

However, because all states are reliant on federal funds for infrastructure development, there are also doubters as to whether the state's political rivals in the federal-led Barisan Nasional coalition would stymie its ambitions.

'Can the federal government allow Penang to fail because if it does it would not serve its interest,' Mr Lim said in reply to a question from a participant. All tax revenues go to the federal coffers, he observed, noting the state accounted for nearly a quarter of Malaysia's total exports and 65 per cent of its medical tourism.

State-federal ties might not always be cordial, but it could be workable, he said, pointing to federal funding for the second Penang bridge and RM250 million for its airport expansion as acknowledgement by the national government that it could not afford to marginalise the state.

Published July 2, 2009

Keppel unit wins 11m euro WTE deal

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KEPPEL Seghers Belgium NV, a wholly owned subsidiary of Keppel Integrated Engineering (KIE), has secured an 11 million euro (S$22.3 million) contract to provide technology to a waste-to-energy plant (WTE) in Hangu, Tianjin Province, China. The contract was awarded by Tianjin Binhai Environmental Industry Development Ltd. KIE is a unit of Keppel Corp.

Located in Binhai Technical & Economic Development Area (TEDA), Tianjin, the plant will have three incineration lines which will be able to treat 1,500 tonnes of municipal waste per day to generate more than 20 MW of green energy. It is expected to be operational in 2011.

Keppel Seghers will provide equipment for the furnace, boiler and flue gas cleaning components of plant.

The KIE group is currently the market leader for imported waste-to-energy solutions in China, with 60 per cent of the market. Earlier in March this year, Keppel Seghers was also awarded a $30 million contract to provide technology to a WTE plant in Jinan, Shandong. That plant will be able to treat 2,000 tonnes of municipal waste per day.

The latest contract is not expected to have material impact on the net tangible assets or earnings per share of Keppel Corp for the current financial year.