KUALA LUMPUR: Sapuracrest Petroleum Bhd’s joint venture company, SapuraAcergy Sdn Bhd has secured a US$170mil (RM600mil) contract from Apache Energy Ltd for the transportation and installation of offshore facilities in Australia.
SapuraAcergy is a joint venture company equally owned by SapuraCrest and Acergy S.A.
In a filing with Bursa Malaysia, SapuraCrest said the contract, which was part of the Devil Creek development project involves transporting and installing about 91 km of 16-inch rigid pipeline including a shallow water beach approach, subsea tie-ins and stabilisation works together with a wellhead platform of 1,700 metric tonne four leg jacket and a 450 metric tonne topside processing module.
The works are expected to be performed in water depths of about 60 metres.
SapuraCrest said the engineering and project preparations would commence immediately.
“Offshore installation is scheduled to commence in late 2010 using the Sapura 3000, SapuraAcergy state of the art dynamic positioning heavy lift and pipelay vessel and project specific third party support vessels,” it said.
The works are expected to be completed by early 2011.
SapuraCrest said the contract would have no effect on its issued and paid-up capital of the company.
However, it was expected to contribute positively to the group’s earnings and net tangible assets for the financial year ending Jan 31, 2010 and the financial periods thereafter in the duration of the contract.
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Written by Joseph Chin
Thursday, 24 September 2009 07:52
KUALA LUMPUR: The cautious close on Wall Street overnight, despite the Federal Reserve's upgrading of its assessment of the US economy, is expected to see key Asian markets putting up a lacklustre performance on Thursday, Sept 24.
The Fed said it would slow its purchases of mortgage debt to extend that program's life until the end of March, in a move toward withdrawing the central bank's extraordinary support for the economy and markets during the contraction. It also held its benchmark overnight lending rates at close to zero percent.
The Dow Jones industrial average shed 0.83%, to 9,748.55. The Standard & Poor's 500 Index declined 1.01% to 1,060.87. The Nasdaq Composite Index lost 0.69% to 2,131.42.
At Bursa Malaysia, stocks to watch include MULTI-PURPOSE HOLDINGS BHD [] (MPHB), BERJAYA CORPORATION BHD [] (BCorp), AMDB BHD [] and DIALOG GROUP BHD [].
MPHB's unit Magnum Corporation yesterday launched its jackpot game called 4D Jackpot in a bid to regain market share from its legitimate rivals as well as black market players.
BCorp and a Brunei-based contractor have jointly submitted a joint bid to the Brunei Economic Development Board to undertake a waste management project in that country.
AMDB's unit Walleng Enterprises Sdn Bhd is targeting property in London for investments after subscribing for 60% of British Virgin Islands-incorporated Westlink Global Investments Ltd.
Walleng had on Sept 23 subscribed for 60 shares of 1 sterling pound each in Westlink, or 60% at par cash. After the subscription, Walleng had committed to provide shareholders advances of up to 13.5 million pound sterling (RM80 million) to Westlink.
In Dialog Group, the company has started operations of phase one of Langsat Terminal (One) Sdn Bhd, which is a joint venture between the company, MISC BHD [] and Puma Energy Asia Pacific BV.
HAP SENG CONSOLIDATED BHD [] is selling its wholly owned subsidiary Hap Seng Consolidated Financial Lease & Rental (China) Co Ltd for US$30.29 million (RM105.11 million) cash, booking in a gain of RM36 million, in a related party transaction.
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KUALA LUMPUR: More positive signs of recovery, though at a slow pace, in the US economy could provide an impetus for investors to pick up equities in the regional markets including Bursa Malaysia on Wednesday, Sept 16.
Overnight on Wall Street, the Dow Jones industrial average rose 56.61 points, or 0.59 percent, to close at 9,683.41. The Standard & Poor's 500 Index gained 3.29 points, or 0.31 percent, to 1,052.63. The Nasdaq Composite Index added 10.86 points, or 0.52 percent, to 2,102.64.
Federal Reserve Chairman Ben Bernanke declared the worst U.S. recession since the Great Depression was probably over, but the recovery would be slow and it would take time to create new jobs.
At Bursa Malaysia, agrochemicals specialist Halex Holdings Bhd will make its debut on the Main Market of Bursa Malaysia.
Other stocks to watch are PROTON HOLDINGS BHD [], Multi Purpose Holdings Bhd (MPHB, AIRASIA BHD [], MUDAJAYA GROUP BHD [], POS MALAYSIA BHD [] and PETRA ENERGY BHD [].
HwangDBS Vickers Research values the stock at 91 sen based on 7.5 times price-earnings multiple on Halex's calender year 2010 earnings, while OSK Equity Research said its issue price of 78 sen per share was reasonable based on a FY09 PE of 8.3 times, which is lower than that of its peers.
The company is principally involved in the manufacturing, formulation, repackaging, distribution and agency of agrochemicals; propagation of ornamental plants; propagation and sales of foliage cuttings, potted and festive plants; and manufacturing and distribution of healthcare disposable products.
Halex is the sole distributor in Malaysia for several agrochemical products developed by MNCs such as Chemtura Corp, AMVAC Chemical Corp and Sumitomo Chemical.
Proton Holdings Bhd's counter continues to deserve careful scrutiny on market talk the government was looking to pare down its holdings in the national carmaker.
Market buzz has it that Khazanah Nasional Bhd, which owns 43% of Proton, would be willing to let go of a stake in the share should it find a right buyer. The stock closed yesterday among the top 10 gainers, picking up 20 sen to close at RM3.91 per share.
The company's stock has surged since the first week of this month on the back of better-than-expected earnings results following healthy sales of its Exora marque.
Analysts are mostly bullish on the stock with eight out of 13 research houses recommending a buy on the stock. The price of Proton's share has already exceeded Bloomberg consensus target fair price of RM3.77 per share.
MPHB has proposed to buy a 41.63% stake in U Mobile Sdn Bhd -- which had been pledged with AmBank Bhd -- for RM280 million under a put option.
MPHB had entered into a put option agreement with AmBank to purchase the option shares, comprising of 157.95 million shares of RM1 each, at any time during a 13-month period.
The audited net assets of U Mobile as at Dec 31, 2008 was about RM1.44 per share. MPHB said the put option price would be financed by its own funds and/or borrowings.
AirAsia completed its bookbuilding exercise which involved the offer for sale of 380 million new shares, representing 16% of the paid-up as at Sept 10.
The issue price was fixed at RM1.33 per placement share, which was a discount of 6.71% to the five-day volume weighted average market price of AirAsia shares up to and including Sept 14 of RM1.4257 per AirAsia share.
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SINGAPORE: Calyon and Natixis are among seven banks that agreed to lend S$1 billion (RM2.45 billion) to YTL POWER INTERNATIONAL BHD [] for its acquisition of PowerSeraya Ltd.
Maybank Investment Bank, Oversea-Chinese Banking Corp, Bank of Tokyo-Mitsubishi UFJ Ltd, National Australia Bank Ltd and Sumitomo Mitsui Banking Corp also contributed to the three-year loan, which was arranged by DBS Group Holdings Ltd.
YTL is “pleased with the syndication,” managing director Tan Sri Francis Yeoh said in an emailed response to queries from Bloomberg. — Bloomberg
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Stocks which could see trading interest include Goh Ban Huat (GBH), Vastalux Energy, Genting and Magna Prima.
The board of GBH recommended minority shareholders accept low-profile tycoon Tan Sri Robert Tan Hua Choon's revised offer at RM1.50 per share after Tan strengthened his grip on the company with a 54.07% stake.
On Aug 28, Lembaga Tabung Angkatan Tentera ceased to be a shareholder after it disposed of its entire 11.23 million shares at RM1.50 each to Tan.
In Vastalux, there are concerns after a major shareholder and managing director Nor Sabri Hamzah reduced his stake in the supportive service provider to the oil and gas sector to 19.03% on Aug 25 from 21.46%.
Vastalux reported a loss in the second quarter of RM1.65 million from net profit of RM6.28 million a year ago while its share price has fallen to a low of 41.5 sen late last month from its high of 65.5 sen. It was listed just a year ago.
Genting could continue to see some heavy trading interest but there could also be some mild profit taking after two days of rally after it was recently upgraded and speculation it could open earlier than the 2010 deadline.
Macquarie Research had on Sept 2 upped the target price from RM7.50 to RM9.50. It also raised Genting's earnings estimates for FY10 by 20%.
Magna Prima is acquiring two pieces of land, totalling 28,148 sq metres in Petaling Garden from Petaling Garden Sdn Bhd for RM48.48 million. This is at RM160 per sq ft.
The acquisition is to expand its landbank as it prepares to launch new projects with quick turnaround time.
Watta Holding will resume trading on Monday, Sept 7 after Bursa Malaysia Securities uplifted the suspension.
A warrant is a non-dividend paying security giving its owner the right to buy a certain number of shares at a set price directly from the issuing company. These usually have an initial life of between 3 and 5 years.
Characteristics
Warrants are often issued in conjuction with a new debt issue.
Including a warrant with the bond enables the issuing firm to float the bond issue at a lower interest rate than would otherwise be required. This may be the primary motivation for their issuance.
Warrants can be detachable and nondetachable, although the former are more important for our purposes. Detachable warrants may be sold separately from their accompanying debt issue. A nondetachable warrant cannot be sold separately.
Warrants pay no dividends, and they carry no voting rights. Their principal investment attraction is the leverage they provide; the warrant price is less than that of the corresponding common stock, and consequently warrant investments magnify the effect of stock price movements.
Warrants can have unusual exercise terms and conditions. The Standard & Poor's Stock Guide listing for many warrants indicates "terms and trading basis should be checked in detail." The majority of US warrants are from small, relatively risky firms. Newly issued warrants usually originate in conjunction with an initial public offering.
Some warrants are called "B" warrants. These come about from the exercise of an "A" warrant that allows its owner to trade the warrant for shares of stock and a "B" warrant with a higher exercise price than the "A" warrant.
Looking at warrant population by stock price range, the majority are from a firm whose stock price is low. While there may be no inherent reason why a low-priced stock should be risky, it is an empirical observation that a low stock price is frequently associated with higher relative risk.
Written by Joseph Chin
KUALA LUMPUR: Shares of E&O rallied in earlly trade on Sept 3 after CIMB Equities Research initiated coverage of the property developer with a Trading Buy and a target price of RM2.18.
At 9.42am, E&O rose 15 sen to RM1.45 with 6.6 million shares done.
CIMB Research said E&O was a deep-value high-beta property play. It said this former investors' darling had fallen off investors' buy list over the past few years. While E&O's execution track record leaves much to be desired, the share price has over-reacted to the bad news and ignored the company's pluses - its strong brand name recognition and excellent landbank.
The strong response to recent launches attests to the group's marketing prowess, which it will flex with the aggressive launch line-up of over RM4 billion worth of PROPERTIES [] over the next two to four years.
"We initiate coverage on E&O with a Trading Buy recommendation and a target price of RM2.18 as we tag a 30% discount to RNAV/share of RM3.11.
"E&O is not only a highly liquid deep-value stock but is also one of the highest-beta property stocks. It is now our top pick in the sector. Potential re-rating catalysts include 1) the unlocking of the hidden value of its assets, 2) strong earnings momentum, and 3) a return of investor interest in bombed-out liquid developers," it said.
(Read more inside ..)
| Written by Yong Yen Nie |
| Thursday, 03 September 2009 10:50 |
KUALA LUMPUR: ASTRO ALL ASIA NETWORKS PLC [] (Astro) said it has “regular and ongoing discussions with regulators with regard to the development of the local media industry”, and these talks include issues pertaining to the migration of its operating licence.
The company was responding, in a statement issued yesterday evening, to an earlier news report that said the information, communications and culture ministry was reviewing Astro’s exclusive 20-year operating licence, and had wanted Astro to include more government-friendly programmes.
News portal The Malaysian Insider reported earlier yesterday that there was a review on Astro’s licence as it had “several run-ins with the ministry” over its content, with government officials “grumbling that opposition politicians get better airplay in several channels”.
Subsequently, Reuters quoted an unnamed government official, who is familiar with the ministry’s plans, dismissing the political tune in The Malaysian Insider news report. The newswire also quoted a second unnamed government official as saying that talks relating to Astro’s licence were actually “to regulate its operations, not for political control”. The discussions included Astro’s ability to raise prices without reference to the government, the official was quoted as saying.
Separately, Reuters quoted an Astro spokeswoman as saying the company was in talks on migration to a new licence, but added that there had been no pressure to change content.
Astro has an exclusive licence until 2017 for satellite direct-to-home (DTH) transmission in the country. It is understood that the so-called review on Astro’s operating licence came about because the company is required to migrate its licence to the current Communications and Multimedia Act 1998 (CMA). Astro’s licence was issued in 1997 under two Acts— the Telecommunications Act and Broadcasting Act, which were repealed and replaced by the CMA.
In the statement, Astro’s chief executive officer Rohana Rozhan said among Astro’s ongoing talks with regulators was its migration to the CMA “subject to all existing rights and privileges to be retained”.
Other discussions include “enabling under-served markets through initiatives like ‘Kampus Astro bersama Komuniti Sekolah’, the seeding and promotion of local content creation and Malaysian talents, as well as broadening Astro’s products and services”, she said.
Astro fell five sen to RM3.40 yesterday, with 612,500 shares changing hands. (Read more inside ..)
Written by Joseph Chin
Thursday, 03 September 2009 07:49
KUALA LUMPUR: Stocks could find a firmer footing on Sept 3, as selling has eased slightly on Wall Street, with interest seen in key selected stocks including DRB Hicom, UMW, UBG and Bina Darulaman following fresh corporate news.
However, investors would have to watch the performance of key regional markets and the spillover impact. The local stock market has been not that badly impacted compared with the regional peers as it had not run up as much.
On Wall Street, stocks fell on Sept 2 as worries about the economy saw investors unload some shares for a fourth-straight day. This was despite that there were fewer private sector jobs in August than in July while companies planned fewer layoffs, suggesting modest improvement in the beleaguered U.S. labour market.
The Dow Jones industrial average closed down 29.93 points, or 0.32%, at 9,280.67. The Standard & Poor's 500 Index lost 3.29 points, or 0.33%, to 994.75. The Nasdaq Composite Index fell 1.82 points, or 0.09%, to 1,967.07.
Interest in DRB Hicom Bhd could perk up after it said the agreement between the local Chevrolet importer and General Motors Corporation (GM) was still intact, and that the parties are in talks for future distributorship.
DRB Hicom's statement was in response to news report that GM terminated its agreement with the former for the exclusive distribution of Chevrolet vehicles in Malaysia.
UMW is stepping up its steel pipes manufacturing after inking a non-competition and goodwill agreement with several Chinese partners. UMW will undertake a business plan and feasibility study to look into the viability of a JV company.
Meanwhile, UBG BHD [] is venturing into the oil and gas (O&G) sector via the acquisition of Pearl Thailand Holdings for US$19.2 million, which has offshore oil concessions in the Gulf of Thailand.
UBG group is involved in the infrastructure and CONSTRUCTION [] sectors as well as concession-based road maintenance.
BINA DARULAMAN BHD [] has received an interim letter of acceptance from Public Works Department for a RM330 million project to build the permanent campus for Kolej Universiti Insaniah in Kedah.
(Read more inside ..)
Written by The Edge Financial Daily
Thursday, 03 September 2009 00:21
KUALA LUMPUR: Success Transformer Corporation Bhd (STB) has proposed to list its wholly owned subsidiary Seremban Engineering Sdn Bhd (SESB) on the Main Market of Bursa Malaysia Securities.
STB told Bursa Malaysia yesterday its board had approved the proposed flotation initiative, which would comprise several proposals to facilitate the listing exercise.
The electrical apparatus and lighting expert said further details on the proposed exercise would be announced in due course.
Although STB did not mention the rationale of the listing, it is fair to assume that the exercise is to facilitate further expansion of SESB, which is in the business of manufacturing and fabrication of process equipment.
SESB qualifies to list if it has an uninterrupted net profit of three to five full financial years (FY), with aggregate of at least RM20 million and a net profit of at least RM6 million for the most recent full year.
Alternatively, to qualify for listing on the Main Market, SESB must have a total market capitalisation of at least RM500 million upon listing and generated operating revenue for at least one full year prior to submission.
SESB's products include unfired pressure vessels, heat exchangers, tanks, silos and other machinery or parts.
It also offers mechanical, maintenance and shutdown services. In addition, the company, through its subsidiary, engages in the supply of labour, and hiring and servicing of machinery equipment.
SESB serves chemical, edible oil, palm oil, biodiesel, oleo chemical, and food and waste management industries. It was incorporated in 1979 and is based in Seremban.
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There is a stock recently recommended by Samgoss through his private blog. Low PE, Higher EPS and fall under Oil n Gas category.Current quarter earning report is better than expected.
I give you a clue here xxxx = P_ R _ S_ I ^V^
(Read more inside ..)
LionCorp posted its latest 4Q09 financial result with a devastating loss of RM406.38 million while its mom Lion Diversified also posted a huge loss of RM 361.49 million . Both of this companies are involved in the metal/steel industry and i reckoned that last quarter had not got any better either although steel price had stabilised abit since last year. With other steel companies such as Kinstel & Perwaja still posted a loss in their latest quarter earning but its better than their previous quarters. What had happened to both Lions? Have they lost their roar? Any recovery for both of this company will not be seen in short term as steel demand still remain low. Perhaps Tan Sri William Cheng who is once call the steel king will shift his attention into his retail business PARKSON and left both Lions to rot?
My advise is becareful when buying into these counters. If any of their share price go up, most probably is being goreng up using rumours. Do your own research first!!Dont be tempted by short term gain but you will end up with long term loss. Just my 2 cents!!
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Proposed Bonus Issue and Proposed Rights Issue of Warrants
Further to our announcement on 25 August 2009, the Company has today submitted
its listing applications to Bursa Malaysia Securities Berhad ("Bursa
Securities") for the following:-
(i) the listing of and quotation for up to 385,519,830 Bonus Shares on the Main
Market of Bursa Securities (Main Market);
(ii) the admission of up to 134,931,940 IJM Warrants to the Official List of
Bursa Securities and the listing of and quotation for such IJM Warrants on the
Main Market;
(iii) the listing of and quotation for up to 8,708,936 additional Warrants
2005/2010 to be issued pursuant to adjustments in accordance with the
provisions of the deed poll dated 22 June 2005 (Additional Warrants 2005/2010)
on the Main Market; and
(iv) the additional listing of and quotation for up to 134,931,940 new IJM
Shares to be issued upon exercise of IJM Warrants and up to 8,708,936 new IJM
Shares to be issued upon exercise of Additional Warrants 2005/2010 on the Main
Market.
Good news IJM shareholder. Bonus Issue mean $$$
(Read more inside ..)
1. The key to investing is found in this rule: buy a share as though you were buying the whole company.
To do that, you have to know what the enterprise is worth. Therefore, the investor should live in the world of companies, never of mathematical formulae.
In the latest annual meeting of Berkshire Hathaway, Buffett's company, his partner Charles Munger put it this way: "The worst decisions are often made with the most formal projections. They look so professional that you begin to believe the numbers are reality.
"You are taken in by the false precision. Business schools teach this stuff because they have to teach something."
2. A recent heresy is that market volatility equals risk. Quite the contrary!
For a serious investor, volatility creates opportunity. To use my own language, investment opportunity consists of the difference between reality and perception. High volatility increases that difference, and thus increases opportunity for the knowledgeable investor.
Mr Buffett says sardonically that he favours the dotty "efficient market theory" because it creates more opportunities for him.
3. As to growth versus value, Mr Buffett observes that "value" should include projected growth, notably "growth at a reasonable price" or Garp.
He looks for companies with a business "moat" around them that should have steady, reasonably predictable growth.
Perhaps a better phraseology for the growth versus value dichotomy might be "high growth" versus "bargain hunting". The analytical techniques, and investor temperaments, in the two approaches are quite different. One calls for a futurologist, the other for an accountant.
That said, for a taxpaying investor long-term growth is more convenient and more tax-efficient than seeking one bargain after another.
4. High technology, most emerging markets, leveraged buyouts, real estate and other hard to appraise exotica might as well not exist for Mr Buffett.
He follows the safest approach: stick to what you know best. However, many approaches are valid. Your advantage will be the extent to which your knowledge of a valid situation exceeds the market's.
It makes little difference how broad your knowledge is. One correct investment decision is as valuable as another. Mr Buffett says that one should only seek a handful of really big ideas in one's investing career. The key is to be right when you do decide, not to flutter about spreading yourself thin.
5. Investing in bad industries, or turnarounds, usually doesn't work.
A skilled surgeon can excise a tumour but to revive a moribund patient requires a magician. The princess hopes that when she kisses the toad a beautiful prince will spring up. In fact, alas, she will probably end up awash in toads.
6. Businesses that generate cash that they can reinvest at high rates of return over long periods are particularly attractive holdings.
Low-margin businesses that periodically call for more cash from their investors, which they can only invest at a modest rate of return, are a dismal affair. Differently put, if all else is the same, feel free to marry an heiress rather than a pauper.
It could be better value afterwards than it was before. The greatest stocks may go up 20 or even 100 times in a generation or two.
Peter Lynch, who built up Fidelity's Magellan fund, points out that the deluded policy of "rebalancing" more or less automatically because a stock has risen is a lot like pulling out the flowers in the garden and watering the weeds. Don't do it!
In that scenario, instead of paying 50p for £1 of value, you are paying £1 for 50p of value. Lunacy! Still, such situations are often generated by the megalomania of chief executives.
"We are bound to have inflation, given current policies. There are a lot of incentives for politicians in all countries to inflate their currencies," Mr Buffett says.
10. To do superlatively well, an investor, like a company manager, must be a fanatic.
By relentless concentration, Mr Buffett has moved billions of dollars from other people's pockets into his own. Alas, he doesn't enjoy what money can buy. He's a miser.
Once, offered a glass of good wine at a dinner, he said: "Just hand me the money." So, it may be helpful in business terms to be that focused, but not necessarily in human terms.
Still, to preserve capital, which is difficult, one should understand the principles, and Mr Buffett's are all good ones.
"The Midas Touch" by John Train is published by Harriman House. Mr Train founded Train Smith Investment Counsel and he has written hundreds of columns for the Wall Street Journal, the New York Times and Forbes magazine. Apart from "The Midas Touch", his best-selling books include "The Craft of Investing", "The Money Masters" and "The New Money Masters".
http://www.telegraph.co.uk/finance/personalfinance/investing/5708407/How-to-invest-like-Warren-Buffett.html
Do you know that actually some of Samgoss's pick went Holland? One of the example is Axiata counter(formerly known as TMI). Samgoss had a buy call on this around RM 3.00 . By that time there were heavy seller because Axiata was have right issues of shares. Price drop to more than 70c . When asked by his supporter whether should hold or sell it, Sam replied maybe can hold but the truth is he already sold it RM2.75 when revealing his latest portfolio. So is Sam telling the truth, is he being honest with his follower? I am not blaming him for making the mistake, who does not? even Warren Buffet made investment mistake. But in this case, is Sam being honest?? Hmmm... Just my 2 sen!!
written by Joseph Chin
KUALA LUMPUR:OILCORP BHD []'s subsidiary has secured a two-year fabrication and CONSTRUCTION [] job from Carigali Hess for its brownfield retrofit project, with the first package valued at RM36 million.
Oilcorp said its subsidiary Oilfab Sdn. Bhd would provide the project management team and also the onshore fabrication, logistics support, offshore hook-up and construction and commissioning.
"The project is a unit rate contract based on measurement of work done and agreed unit rates. The contract shall be valid for the initial period of two years followed by an option to renew for another 2 years and thereafter another option for a further one year," it said.
Oilcorp said the contract was expected to contribute positively to the earnings and the net assets of the group for the financial years ending Dec 31, 2009 to 2013, provided both extension options are exercised by Carigali Hess.
(Read more inside ..)
Written by Theedgemalaysia.com
KUALA LUMPUR: The securities of PILECON ENGINEERING BHD [] and GOLDEN PLUS HOLDINGS BHD [] (GPlus) will continue to be suspended, given the companies' failure to submit their quarterly financial results.
Pilecon has failed to submit its quarterly report for the financial period ended June 30, 2009. The company's securities that have been halted for trading since Dec 5, 2008, will continue to be suspended, it said in a statement today.
Meanwhile, trading on GPlus shares has been suspended since Aug 3, 2009, due to the company's earlier failure to issue its annual audited financial statements for the financial year ended Dec 31, 2008.
The suspension of the counter would continue after the company failed to submit its quarterly report for the three-month period ended June 30, 2009, by the Aug 31 deadline.
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BEIJING: Chinese banks' non-performing loan (NPL) ratio could start to rise in two to three years as some of the flood of loans extended in the first half of this year start to turn sour, an industry official said on Tuesday.
Yang Zaiping, executive vice president of the China Banking Association, also said at the Reuters China Investment Summit that he hoped new rules governing banks' capital would be implemented in a gradual way. Those rules would exclude from banks' capital base the subordinated bonds sold to other banks.
Heeding Beijing's call to step up lending in support of the economy, Chinese banks granted a record 7.4 trillion yuan (RM3.82 trillion) in new loans in the first six months of the year, or about one-quarter of the country's annual gross domestic product.
Much of that credit was given out based on relatively lax criteria, presenting the possibility of a rise in the NPL ratio as some of those investments go bad, said Yang.
"We estimate that it may rise by one to two percentage points," he told the summit at the Reuters office in Beijing. "But, of course, we will seek to keep it from rising."
Banks' NPL ratio fell to 1.77% at the end of June from 2.04% at the end of March, largely reflecting the big increase in overall lending.
Yang played down concerns that a drop in lending in the second half of the year will dent economic growth, even though those worries have been one of the reasons for the 23% fall in Shanghai's share index from its peak hit on Aug 4.
Lending slowed considerably in July and August after regulators, worried about NPLs and asset bubbles, leaned on banks to rein in credit growth and drafted rules to tighten their capital requirements.
Lending tends to be bunched in the first part of the year in any case, Yang noted.
Banks also would seek to assure their lending in the rest of the year was more targeted at quality projects, he said.
"We extended many loans in the first half, but a considerable amount of the new loans did not reach the real economy," he said.
"Banks should not simply lend randomly; instead, they need to extend credit selectively to effectively support the economy."
Addressing the tighter capital requirements, Yang said he thought it best if banks were allowed to gradually adjust to the rules, allowing them to count some of their subordinated debt as part of their capital base initially.
"I think banks will prefer to lend in a more cautious way rather than seek to raise more capital, because that would take a longer time," he said, commenting on the likely manner in which banks would comply with the new rules. — Reuters
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