AirAsia’s venture into China a good sign of global traction

Posted on : 15-05-2017 | By : sabah today | In : National Business

KUCHING: Analysts gave two thumbs up to AirAsia Bhd’s (AirAsia) memorandum of understanding (MOU) with the China Everbright Group (Everbright) and Henan Government Working Group (Henan Government) on Sunday.

In a filing on Bursa Malaysia, AirAsia explained that the MOU is to confirm the parties’ interest in establishing a joint venture (JV) for a low cost airline to be known as AirAsia China either through an acquisition or by obtaining a new airline license.

“In addition to the airline, the JV will also look into developing infrastructure.

“The JV will invest in the development of the following in Zhenzhou; a low cost carrier (LCC) terminal, an aviation academy for pilots, engineers and crew trainng as well as a maintenance, repair and overhaul provider (MRO),” the group said.

“The parties have also expressed interest to incorporate AirAsia China in Zhengzhou which is intended to be AirAsia (China)’s operating base and headquarters. Henan provincial government has been engaged and is fully supportive of the establishment and operations of AirAsia (China) from Zhengzhou.”

While the news of setting up a JV in China did not come as a surprise to the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research), the novelty of tapping into the world’s largest outbound tourist market with one of China’s largest state owned enterprises resonated positively with MIDF Research.

“In addition, the venture would mark Airasia’s first attempt in setting up and operating an LCC terminal, an idea which it had floated before,” the research arm said.

MIDF Research made no changes to its earnings forecast following the news pending further details such as timeline and total investments required.

The research arm noted that China, for its immense size has relatively few LCCs whose focus is mainly on domestic routes, which presents Airasia with opportunities.

However, MIDF Research raised its target price to RM4.06 per share premised on a higher target forward price-to-earnings ratio of 10-fold financial year 2017 (FY17) earnings per share (EPS) (previously 8.5-fold), on par with AirAsia’s regional LCC peers.

“We are removing the discount to peers as AirAsia’s associates are expected to breakeven this year,” it said.

Meanwhile, MIDF Research anticipated further positive newsflow from the sale of AirAsia’s leasing arm, Asia Aviation Capital (AAC) and positive first quarter of FY17 (1QFY17) results with the group’s load factor hitting the elusive 90 per cent mark for its Malaysia operations in its recently released 1QFY17 operating stats.

All in, AirAsia remained as the research arm’s top pick for the aviation sector.


Titijaya formalises collaboration with China’s CREC for RM575 million GDV (Gross Development Value)

Posted on : 15-05-2017 | By : sabah today | In : International Business

BEIJING: Titijaya Land Bhd (Titijaya), a Bursa Malaysia Main Market Listed Company involved in property development, has formalised its collaboration with CREC Development (M) Sdn Bhd (CRECD) to collaborate on a property development project known as The Shore in Kota Kinabalu, Sabah, which has a gross development value (GDV) of RM575 million.

Both parties exchanged the memorandum of understanding, witnessed by the Prime Minister, Dato Seri Najib Abdul Razak in Beijing on Sunday.

CREC is one of the world’s largest construction companies. It is also the JV partner with Titijaya on a project at Embassy Row.

Titijaya group managing director Tan Sri Lim Soon Peng said through the collaboration with CREC, both parties will be leveraging on each other’s capabilities to make this project a success.

“We are honoured to have CREC’s trust to work together for the second project,” he said in a statement.

“Jointly, we will be tapping into the growing property market in Sabah and aim to attract more investors from China, particularly those who favour the commercial and residential property industry, as well as investments in hospitality properties.”

Sabah is a popular tourism location, which is ranked at 6th on the 2016 Overseas Retirement Annual Index for the Best Places in the World to Retire. In recent years, it has become a place of choice as investments for investors and top tourist destination for the Chinese.

Located on the last vacant land in the heart of Kota Kinabalu City Centre, The Shore is a new waterfront premium class hub that entails luxury mixed-use commercial hub docked within a prime waterfront enclave of Kota Kinabalu.

Its unique U-shape design makes it the first of its kind within the vicinity. With 25 storeys in total, the development shall comprise 561 units in build-up sizes ranging from 409 square feet and 541 square feet. The project is expected to be completed within 48 months from the commencement of construction.


China open huge opportunities for businessmen from Malaysia – PM

Posted on : 15-05-2017 | By : sabah today | In : International Business

BEIJING: China has opened huge opportunities for Malaysian businessmen who want to foster economic cooperation for mutual benefit, said Datuk Seri Najib Abdul Razak.

The prime minister said the trust between Malaysia and China is at the highest level making it easier for Malaysian businessmen to foster economic cooperation than ever before.

“The warmth on the part of China seems to open their door as wide as possible,” he told Malaysian journalists at the end of the One Belt, One Road Forum for Economic Cooperation here, on Monday.

Najib said while here, he met with Malaysian businessmen who told him it is easier to discuss with their counterparts in China.

“They seem to hold the keys to open doors that previously had so many obstacles. The benefits (Malaysia- China close ties) are difficult to describe.”

Najib said Malaysia enjoys economic benefits with China as it is among the early countries to commit to the One Belt, One Road initiative inspired by Chinese President Xi Jinping.

“These are exciting times (for Malaysia). This is why people are jealous of us for having this link. That is why people criticised us for the wrong reasons. It is not rationally based.”

Najib said there is now a paradigm shift in the world economic order in which Malaysians are well-positioned because of the strong links with China.

“This is a wonderful opportunity for us to advance the Malaysian economy together with the Chinese economy. As President Xi said whatever we do it is based on a win-win basis and shared benefits and shared prosperity.”

Najib said the opportunities created by the Belt and Road initiative were enormous.

“Traditionally, the West export their capital to the East and people in the East would be their workers.

“But now, the East (China) is exporting capital to the West and other parts of the world and able to create jobs, provide technology and create markets.”

On the digital economy, Najib said the Digital Free Trade Zone (DFTZ) to be implemented in October was expected to provide double digit growth which would contribute to overall growth of the country’s economy.

“Jack Ma wants to do a lot of things in Malaysia. He has designated Malaysia as the hub for his involvement in the digital economy for the Asean Region.”

Before arriving in Beijing on Thursday, Najib made a brief visit to Hangzhou to meet with Jack Ma, the founder and executive chairman of Alibaba Group, China’s largest e-commerce operator.

While there, Najib visited the headquarters of Alibaba Group and was given a briefing on the mechanism of the company’s e-commerce platform.

He said the communique issued at the end of the two-day forum stressed the importance of people-to-people ties, mutual respect and adherence to the rule of law.

While here, Najib witnessed the signing of nine MoUs between Malaysian and Chinese companies with a total investment estimated at US$7. 22 billion (about RM30 billion).

They include AirAsia’s opportunity to penetrate the Chinese market after several years of trying to establish collaboration in the budget carrier sector.

Najib said Malaysia has the opportunity to benefit from collaboration via the Belt and Road initiative at a time when the world economic situation is uncertain.

For example, the East Coast Rail Line (ECRL) project that will create the infrastructure that will enhance the growth of industry and create jobs for local residents.

On the sidelines of the forum, Najib held discussions with Britain’s Chancellor of the Exchequer, Philip Hammond, International Monetary Fund managing director, Christine Lagarde and Prime Minister of Poland, Beata Szydlo.

The prime minister said China plans to organise another such forum in 2018.


Najib participates in Belt and Road Forum

Posted on : 15-05-2017 | By : sabah today | In : International News

BEIJING: Prime Minister Datuk Seri Najib Abdul Razak Monday participated in the Belt and Road Forum for International Cooperation here.

State and government leaders from 28 nations took part in the round-table discussions of the Belt and Road Initiative, a concept aimed at providing mega infrastructure for international trade.

The meeting took place at Yangi Lake, and was chaired by President Xi Jinping who had come up with the initiative.

Najib also joined in the discussions held over lunch.

Cultural exchanges and people-to-people relations were also a focus of the discussions.

Malaysia is committed to the initiative and had come up with several infrastructure projects such as the East Coast Rail Line, port expansion and modern city construction.