Monday, December 18, 2017

FW: RHB FIC Rates & FX Market Weekly - 18/12/17

 

 

 

18 December 2017

 

 

Rates & FX Market Weekly

 

 

Last G3 Central Bank Meeting Before the Holiday Seasons

 

 

Highlights

 

Global Markets

¨   As December FOMC came with no surprise, full attention will now shift to economic releases (core PCE, personal income and spending, durable goods orders and data for the housing sector will be the highlights of the economic calendar) and political developments. With a razor-thin majority in Senate after losing Alabama, Republicans are now facing internal dissensions as at least two Senators opposed the current bill amid further uncertainties. The clock is ticking as the Christmas recess looms, estimates on economic growth generated by tax cuts do not garner unanimity, while an agreement on a spending level for 2018 has not been reached with the deadline pushed further again to January 19th. We are mildly bearish USD and neutral UST.

¨   In Europe, inflation prints for the Eurozone and Germany will be under the spotlight following ECB Draghi's cautious optimism during ECB December meeting. Some volatility could arise from a regional election in Catalonia as a stress test for both Catalan nationalists and the government; we remain neutral EUR for now as long as the pair holds below 1.20. Over in the UK, uncertainties surrounding Brexit amid political revolt in the Conservative party will remain under focus. However, an expected weaker US Dollar should keep the GBPUSD pair in the 1.30/1.35 range in the near term.

¨   In Japan, BoJ reconvenes and should leave its monetary policy unchanged. No surprise is also expected to arise from BoJ Kuroda's press conference; we continue to expect the USDJPY pair to remain driven by US developments in the foreseeable future. We continue to eye the 111 support as a near term inflection level. With no key data due in Australia in the week ahead, expect trading sentiment to be dominated by global developments and any surprise in Chinese data.

 

AxJ Markets

¨   Expect a relatively quiet week ahead in China as only November property prices are due, with a weak print likely to stoke concerns among Chinese watchers of another downturn in the Chinese property cycle, which has been quite volatile over the preceding few years. Slowdown in the property markets have far-reaching impact on commodities and related sectors, and likely influence the degree of tightening PBoC is likely to pursue; we stay mild underweight CGBs at this juncture, though we exercise some caution towards various risks within the economy, including the property sector.

¨   Elsewhere, Singapore November NODX growth is expected to moderate from October's print, although overall trade activity remains bolstered by strong external sentiment. With the December FOMC a historical detail now, expect little movements in SGD assets in the week ahead, amid low trading activity typical of year-end periods; stay neutral SGD. Over in Thailand, Bank of Thailand is unlikely to deliver any policy surprise when they reconvene on 20 December, amid conflicting low inflation and brighter growth prospects. November trade data are also expected to come in strong, although unlikely to materially move markets; stay neutral THB.

¨   Over in Malaysia, November CPI is expected to moderate to 3.4% y-o-y (Oct: 3.7%), with higher price pressures remaining a not-so-distant threat to the central bank, which has signaled impending normalization of monetary policies. Foreign reserves are likely to stabilize or tick higher slightly as foreign capital continues to return to Malaysia; we are now mildly optimistic on the currency. With no economic data due in Indonesia, asset movements will be driven by dominant trading sentiment in the week ahead, although we do not expect much surprises give the subdued volume ahead of year-end holidays.

  

Weekly Positioning

 

 

Rates

FX

Overweight

 

 

Mild Overweight

 

 

Neutral

UST, GILT, Core EGBs, ACGB, SGS, CGB, ThaiGB, MGS, IndoGB

USD, GBP, EUR, AUD, JPY, MYR, THB, SGD, IDR, CNY

Mild Underweight

KTB

KRW

Underweight

JGB

 

 

 

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FW: RAM Ratings revises loss assumptions for Tan Chong-sponsored Notes Series; AAA ratings of 2013-A, 2014-A and 2015-A Notes reaffirmed; 2016-A Notes still on negative Rating Watch

 

 

Published on 15 Dec 2017.

 

RAM Ratings has reaffirmed the AAA/stable ratings of Premium Commerce Berhad’s (PCB or the Issuer) Class A and Class B Notes under its Notes Series 2013-A, Notes Series 2014-A and Notes Series 2015-A. Concurrently, we have maintained the negative Rating Watch on Notes Series 2016-A, pending the outcome of the Issuer’s proposed resolution (on 28 November 2017) to extend the maturities for 2 of the 5 series under its Class A Notes (at higher coupon rates). The proposed extension is expected to help alleviate the liquidity pressure faced by the 2016-A Notes. 

The negative Rating Watch that was first placed in September 2017 on the 2016-A Notes, reflects the increased liquidity risk follows the marked deviation in performance of the said notes, in terms of both monthly default rates and prepayment behaviour relative to PCB’s earlier securitised portfolios. RAM’s rating actions consider our revised loss assumptions for the respective Notes Series, which are reflective of the trends exhibited by TC Capital Resources Sdn Bhd’s (TCCR) more recently originated loan portfolios as well as the performance of its securitised portfolios.  

Notes Series 2013-A

Rating/

Outlook

Rating Action

Issued Amount

(RM million)

Outstanding Amount^

(RM million)

OC Ratio^

Class A Notes

AAA/Stable

Reaffirmed

176.0

22.0

45.31%

Class B Notes

AAA/Stable

Reaffirmed

5.0

5.0

18.40%

Class C Notes

Not rated

-

13.0

13.0

-

Notes Series 2014-A

Rating / Outlook

Rating Action

Issued Amount

(RM million)

Outstanding Amount^

(RM million)

OC Ratio^

Class A Notes

AAA/Stable

Reaffirmed

182.0

30.0

54.33%

Class B Notes

AAA/Stable

Reaffirmed

4.0

4.0

36.18%

Class C Notes

Not rated

-

12.25

12.25

 

Notes Series 2015-A

Rating / Outlook

Rating Action

Issued Amount

(RM million)

Outstanding Amount^

(RM million)

OC Ratio^

Class A Notes

AAA/Stable

Reaffirmed

166.0

89.0

18.80%

Class B Notes

AAA/Stable

Reaffirmed

5.0

5.0

12.48%

Class C Notes

Not rated

-

10.0

10.0

 

Notes Series 2016-A

Rating / Outlook

Rating Action

Issued Amount

(RM million)

Outstanding Amount^

(RM million)

OC Ratio^

Class A Notes

AAA/RW Negative

204.0

179.0

8.93%

Class B Notes

AA2/RW Negative

4.5

4.5

6.38%

Class C Notes

Not rated

11.25

11.25

 

OC = overcollateralization, including balances in the Collection Account.
^As at 31 August 2017

In this review, RAM has analysed 42 new static pools from January 2014 to June 2017, covering the originator’s entire loan portfolio. Stacked against its earlier historical static pools originated between 2008 and 2009, the more recent pools show defaults accelerating at a faster pace, and peaking at a higher rate than previously observed.

Notably, the loss trend has varied between the newer (i.e. 2015-A and 2016-A) and older (i.e. 2013-A and 2014-A) securitised pools, reflecting the shift in the overall loan portfolio towards a more risky profile. The newer loans have, on average, longer tenures with higher financing margins. While the default rates of the 2013-A and 2014-A pools are still well below our base-case assumptions, the 2015-A and 2016-A pools show steeper and more volatile default rates. We believe that the newer pools reflect this heightened risk as a result of the originator’s strategy of favouring more competitive loan products. The deterioration in default performance may, however, have also been compounded by operational hiccups in executing collections via standing instructions (which we understand have been resolved), as well as a more challenging consumer market after the implementation of the GST in April 2015. 

The 2016-A pool also exhibits a clear divergence in its monthly prepayment trends against the rest of the securitised portfolios. While the performance of the 2013-A, 2014-A and 2015-A pools have remained within RAM’s prepayment assumptions, the 2016-A pool has experienced significantly lower-than-assumed prepayment rates.    

Taking all these factors into consideration, we have maintained the loss assumptions for the 2013-A and 2014-A portfolios, and revised the base default assumptions for the 2015-A and 2016-A Notes Series. Specifically, we have adopted a higher monthly net default rate of 0.07% (from 0.0625%) over a longer ramp-up period of 36 months (from 20 months); our assumed incremental net monthly default rate of 0.02% thereafter remains unchanged. Concurrently, we have also applied a lower prepayment stress on the 2016-A Notes Series, from 0.3% to 0.1% per month. These adjustments are, we believe, more reflective of the recent trends observed and consistent with the risk profiles of the newer securitised pools. 

The rating reaffirmation for the 2013-A, 2014-A and 2015-A Notes Series reflects the available credit enhancement for the rated notes. At the present levels, it continues to provide ample support to their ratings, even after factoring in our revised loss assumptions. The ratings do not, however, address the risk of early redemption associated with these debt facilities. Meanwhile, we expect to lift the Rating Watch on the 2016-A Notes Series within the next month, once and if the bondholders approve the said proposed resolution.  

This transaction involves the securitisation of automobile hire-purchase (HP) receivables originated by TCCR under PCB’s Asset-Backed RM2 billion MTN Programme. TCCR is the HP financing arm of Tan Chong Motor Holdings Berhad, which in turn holds the sole rights for the assembly and distribution of Nissan, Infiniti, Renault and Ultimate Dependability (UD) vehicles in Malaysia.
 

Analytical contact
Tan Han Nee
(603) 7628 1023
hannee@ram.com.my

Media contact 
Padthma Subbiah
(603) 7628 1162 
padthma@ram.com.my

 

 

 

 

 

FW: RHB | Indonesia | November Exports And Imports Remain Robust

 

 

 

 

Economic Research

18 December 2017

Indonesia

 

Economic Update

 

 

 

November Exports And Imports Remain Robust

 

 

Exports remained robust, albeit moderating to a growth of 13.2% YoY in November, following an increase of 19.6% in October. This was led by softer non-oil & gas exports. Moving forward, we envisage the export of goods and services to return to a growth of 18% in 2017, after the -3.5% recorded in 2016. This is on the back of a low-base effect, a pick-up in primary commodity prices and an improvement in global demand. For 2018, we expect exports to grow by 10%, moderating from this year’s level due to a high base effect.

 

Economist:

Arup Raha  | +65 6232 3896

Rizki Fajar| +6221 2970 7065

 

 

To access our recent reports please click on the links below:

15 Dec: BI Still Pauses In December Despite US Rate Hike

05 Dec: November Inflation Continues To Ease; Lowering Forecasts

04 Dec: October M2 Growth Edges Down, Loans Pick Up

17 Nov: BI Continues To Pause In November

16 Nov: October Exports And Imports Accelerated

13 Nov: CAD Narrows In 3Q17, BOP Surplus Surges

 

Economics Team

Arup Raha

Group Chief Economist

arup.raha@rhbgroup.com

+65 6232 3896

Peck Boon Soon

Chief ASEAN Economist

bspeck@rhbgroup.com

+603 9280 2163

Vincent Loo Yeong Hong

Malaysia, Vietnam

vincent.loo@rhgroup.com

+603 9280 2172

Ng Kee Chou

Singapore, Thailand

ng.kee.chou@rhbgroup.com

+603 9280 2179

Rizki Fajar

Indonesia, Philippines

rizki.fajar@rhbgroup.com

+6221 2970 7065

Aris Nazman Maslan

Malaysia, Vietnam

mohd.aris.nazman@rhbgroup.com

+603 9280 2184

 

 

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FW: CIMB Fixed Income Daily - 18 Dec 2017 - Eyes on tax bill vote this week

 

 

US Treasuries. Treasury yield curve further flattened on Friday. UST yields climbed mainly on the front end, boosted by better risk sentiment after the Republicans released the final version of tax bill ahead of the weekend,. Elsewhere, industrial production expanded by 0.2% in Nov, below 0.3% forecasted earlier. The few Republican senators (Rubio, Collins, and Corker) who were initially opposed to the tax reform bill have now switched to supporting the tax legislation. The Republicans' draft of the bill aims to slash the corporate rate to 21%, and is expected to go to the house and senate for a vote by this week.

Malaysia. Malaysian sovereign bonds moved sideways with flows driven by demand in short dated papers, despite USD/MYR settled flat around 4.0800 on Friday. Expect trading activities to remain muted, unless there is significant move in UST driven by tax bill vote. Aside, data on tap this week will be Nov CPI, which is anticipated to slow to +3.4% from +3.7% yoy in Oct. Bonds should remain supported if CPI continues as consensus expectations.

Thailand. Thai govvies curve bull flattened as yield in belly and far-end went down by 2-3bps due to demand for long-ends following UST curve movement. Demand for front-ends strengthened and the auction of 14D BOT bill stayed firm amid foreign inflows to short-ends at Bt7.53bn  last Fri attributed by the Baht's appreciation   throughout the week .

Indonesia. As widely expected, BI left the 7d reverse repo rate at 4.25% and the bond market has reacted little. Volume was thin but there was domestic interest for 10y and 15y bonds. On Friday, the Nov trade balance data also didn't trigger action on the bond market - trade surplus was $127m, or lower than expected $844m. We expect IndoGB to move to be sideways in tight ranges in the coming week ahead of the holiday period.

Asian Dollar Credits. USD credit market continued to see muted trading interest post several major central banks' meetings, while primary deals are expected to diminish in the coming weeks. In primary space, China Logistics Property was reportedly looking to tap on its existing bond maturing 2020.

Best Regards,

CIMB Treasury & Markets Research-Fixed Income
Tel: +603 2261 8557 | Fax: +603 2261 8705
www.cimb.com
Find us on Bloomberg at CIMR <Go>


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FW: [Maybank IB] Today's Research - Malaysia

 

 

header

break

COMPANY
RESEARCH

Gamuda | Starting the year right
Adrian Wong

Eco World Development | Delivered on its promise
Wei Sum Wong

Eco World International | Rooting in UK
Wei Sum Wong

Mynews Holdings | 4QFY17: Solid results
Liew Wei Han

break

MACRO
RESEARCH

Philippines | Rebound in remittances
Suhaimi Ilias

break

COMPANY RESEARCH

Malaysia

TP Revision

Gamuda (GAM MK)
by Adrian Wong

Share Price:

MYR4.75

Target Price:

MYR5.60

Recommendation:

Buy

Starting the year right

1QFY18 net earnings were within ours/consensus expectations. YoY growth was supported by i) acceleration in KVMRT 2 works and ii) stronger property sales. Gamuda remains a potential beneficiary of contracts from the East Coast Rail Link (ECRL), KVMRT 3, KL-SG HSR and Pan Borneo Sabah Highway (PBSaH). Recent share price weakness presents a buying opportunity. We keep our RNAV-based TP of MYR5.60.

FYE Jul (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

2,121.9

3,211.4

4,031.6

4,032.3

EBITDA

548.5

831.2

804.9

907.5

Core net profit

626.1

700.6

761.9

823.2

Core EPS (sen)

26.0

28.8

31.4

33.9

Core EPS growth (%)

(10.2)

11.0

8.7

8.1

Net DPS (sen)

12.0

12.0

12.0

12.0

Core P/E (x)

18.3

16.5

15.1

14.0

P/BV (x)

1.7

1.6

1.5

1.4

Net dividend yield (%)

2.5

2.5

2.5

2.5

ROAE (%)

9.5

8.4

9.9

10.1

ROAA (%)

4.6

4.7

4.7

4.9

EV/EBITDA (x)

29.0

21.5

21.2

18.1

Net debt/equity (%)

55.2

59.8

60.9

48.7

Malaysia

TP Revision

Eco World Development (ECW MK)
by Wei Sum Wong

Share Price:

MYR1.48

Target Price:

MYR1.71

Recommendation:

Buy

Delivered on its promise

ECW's FY10/17 core net profit was above our expectation but below consensus. FY17's sales target was spot on. Given the challenging property market outlook and the lack of new projects, management targets lower sales of MYR3.5b for FY18 (-12.5% YoY). We adjust our earnings forecasts by -33% to +26% post-results. Our RNAV-TP is lowered to MYR1.71 (-17sen) based on a lower 0.6x P/RNAV peg. BUY.

FYE Oct (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

2,546.4

2,924.7

3,862.2

4,821.5

EBITDA

595.1

605.6

687.3

883.8

Core net profit

129.3

113.1

169.8

325.3

Core EPS (sen)

5.4

3.9

5.8

11.0

Core EPS growth (%)

105.9

(28.1)

47.5

91.6

Net DPS (sen)

0.0

0.0

0.0

1.1

Core P/E (x)

27.2

37.9

25.7

13.4

P/BV (x)

0.9

1.0

1.0

0.9

Net dividend yield (%)

0.0

0.0

0.0

0.7

ROAE (%)

3.7

5.2

3.9

7.1

ROAA (%)

1.6

1.2

1.6

2.8

EV/EBITDA (x)

9.3

12.4

11.0

8.5

Net debt/equity (%)

60.4

71.4

71.7

67.0

Malaysia

TP Revision

Eco World International (ECWI MK)
by Wei Sum Wong

Share Price:

MYR1.01

Target Price:

MYR1.10

Recommendation:

Hold

Rooting in UK

EWI's FY10/17 core net loss of MYR122m (+16% YoY) was in line but sales were above expectation. 2018 will be the tipping point with the handover of three towers at London City Island and Embassy Garden from April 2018. We are positive on the JV with Dixon where it will enhance EWI's foothold in UK, diversify its product range and for its fair pricing. We estimate a +9sen RNAV enhancement from the six projects. We adjust our earnings forecasts post results. Our RNAV-TP is intact at MYR1.10.

FYE Oct (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

0.7

0.6

0.6

1,693.8

EBITDA

(37.6)

(53.3)

(89.1)

1,602.2

Core net profit

(220.1)

(87.6)

173.7

383.2

Core EPS (sen)

(89.3)

(5.8)

7.2

16.0

Core EPS growth (%)

nm

nm

nm

120.6

Net DPS (sen)

0.0

0.0

0.0

4.0

Core P/E (x)

nm

nm

14.0

6.3

P/BV (x)

2.3

0.6

0.9

0.8

Net dividend yield (%)

0.0

0.0

0.0

4.0

ROAE (%)

na

na

na

na

ROAA (%)

(35.9)

(4.5)

6.2

12.8

EV/EBITDA (x)

na

nm

nm

1.1

Net debt/equity (%)

803.5

net cash

net cash

net cash

Malaysia

TP Revision

Mynews Holdings (BISON MK)
by Liew Wei Han

Share Price:

MYR2.96

Target Price:

MYR3.00

Recommendation:

Hold

4QFY17: Solid results

4QFY17: Solid results4QFY17 results were in line. Store openings are largely on track, having opened 62 stores in FY17 versus Mynews' internal target of 70. We tweak FY18/19 earnings forecasts by +4%/+1%, assuming lower taxes on tax incentives enjoyed by its MSC status subsidiary. Maintain HOLD with a higher TP of MYR3.00 on rolling forward valuations.

FYE Oct (MYR m)

FY16A

FY17A

FY18E

FY19E

Revenue

264.0

326.5

394.9

460.5

EBITDA

27.1

35.0

38.9

55.9

Core net profit

19.3

24.0

30.3

34.4

Core EPS (sen)

6.2

7.8

8.9

10.1

Core EPS growth (%)

42.6

24.6

14.6

13.7

Net DPS (sen)

1.5

2.0

2.5

2.8

Core P/E (x)

47.6

38.2

33.3

29.3

P/BV (x)

6.0

3.8

3.8

3.5

Net dividend yield (%)

0.5

0.7

0.9

0.9

ROAE (%)

17.4

12.2

12.0

12.4

ROAA (%)

12.7

9.8

10.1

10.4

EV/EBITDA (x)

17.2

18.0

24.9

17.3

Net debt/equity (%)

net cash

net cash

net cash

net cash

MACRO RESEARCH

PH: OFWR, Oct 2017

Rebound in remittances
by Suhaimi Ilias

Economics Research

Overseas Filipino workers' remittances (OFWR) rebounded +8.4% YoY in Oct 2017 to USD2.28b (Sep 2017: -8.3% YoY to USD2.19b). OFRW growth in PHP terms surged by +15.1% YoY (Sep 2017: -1.3% YoY) which is supportive of domestic consumption in the final quarter of 2017.

NEWS

Outside Malaysia:

U.K: Export growth climbs to nine-month high, BDO says. Index of annual U.K. export growth rises to nine-month high of 110.3 in fourth quarter, outperforming the rest of Europe, compared with long-term average rate of 100, accountancy firm BDO says in report published. (Source: Bloomberg)

China: PBOC raises interest rates in open market operations after Fed. The People's Bank of China sells CNY30b of 7-day reverse-repurchase agreements at 2.50%, up from 2.45% in previous operation, central bank says in statement. The CNY20b of 28-day reverse repos offered at 2.80% vs 2.75% previously. (Source: Bloomberg)

Japan: Export recovery stretches to 12th month in November, as external demand fuelled the nation's longest stretch of economic growth since the 1990s. The value of exports rose 16.2% YoY. Imports increased 17.2% YoY. The trade surplus was JPY 113.4b (USD 1b). A yearlong recovery in exports has kicked Japan into higher gear, fuelling record profits and rising capital spending during the longest economic expansion since the mid-1990s. Confidence among the nation's large manufacturers has reached the highest level in a decade, while sentiment is rising even among smaller companies. The wage growth needed to drive a self-sustaining recovery remains elusive, though, even as the labor shortage intensifies, prompting the government to plan to offer tax benefits to encourage higher pay. (Source: Bloomberg)

India: Raises tariffs on electronics to curb imports. India increased the customs duty on some electronics including mobile phones, television sets, and microwave ovens in a bid to curb imports and boost local manufacturing. The levy on mobiles and TVs was raised from 10% to 15%, according to a Ministry of Finance statement. Duty on digital cameras, video cameras and projectors was doubled to 20%. India's electronics imports grew about 31% to USD 29.8b during April to October, the steepest increase after shipments of ores and gems. (Source: Bloomberg)

Other News:

EcoWorld International: Buys into six projects in UK for GBP64.9m. EcoWorld International (EWI) has finalised the first part of a two-stage deal, to jointly develop 12 project sites in Greater London and South East London with Be Living Holdings Ltd, for GBP64.9m (MYR356m). The consideration is for a 70% interest in Be Eco World Holdings Ltd, and another 70% stake in Be Eco World Development Management Co Ltd from Be Living. The purchase will see it work on six projects, namely South Woking, Woking, Kensal Rise and Maida Hill Brent and Westminster, London, Millbrook Park Barnet, London, Barking Abbey Retail Park Barking and Dagenham, London, Barking Site Barking and Dagenham, London, and Nantly House (Lampton) Hounslow, London. The purchase consideration is to be fully funded by the proceeds from its initial public offering. Development costs, which have not been finalised yet are expected to be funded through bank borrowings and/or internally-generated funds. (Source: The Sun Daily)

LBS Bina: To issue MYR500m sukuk murabahah. LBS Bina Group's wholly-owned subsidiary LBS Bina Holdings S/B (LBSH) has made a lodgement to the Securities Commission Malaysia (SC) for the establishment of the sukuk murabahah programme of up to MYR500m. The sukuk murabahah programme has a tenure of up to 20 years from the date of the first issue of sukuk murabahah under the programme. Each sukuk murabahah issued under the programme willl have a tenure of more than one year and up to 20 years. The sukuk murabahah is unrated, non-tradable and nontransferable. The proceeds from the sukuk murabahah programme will be utilised to finance/reimburse future acquisition of properties by LBGB and its subsidiaries; to finance development cost of the projects undertaken by the group; to refinancing existing and/or future borrowings; and to finance working capital requirement. (Source: The Sun Daily)

Eversendai: MYR3.2m lawsuit against Eversendai O&G withdrawn. Eversendai Corp's subsidiary Eversendai Oil and Gas (M) S/B announced that the MYR3.2m lawsuit filed against it by Translift S/B has been withdrawn and the two parties have mutually agreed to resort to arbitration instead. The suit filed in the Shah Alam High Court has been withdrawn by Translift on December 14, which also happened to be the date fixed for case management. (Source: The Sun Daily)

Metronic Global: Eyes turnaround. Metronic Global, which will be shifting its focus to its engineering business, is banking on a new partnership collaboration to develop a global halal hub in China to recognise profit. Metronic entered into a collaboration agreement with MB Longji Group's wholly owned subsidiary MB Longji Holdings S/B last Friday to set up Metronic Global Halal Industrial Hub in Sichuan Province, China. MB Longji has been appointed master developer of land measuring 1,800 acres by the Sichuan provincial government. Of this, 72 acres of infrastructure equipped area has been designated for the development of the halal industrial park, known as Suining International Halal Park. The group is banking on this project, which is touted as a "turnaround project", to rake in a pre-tax profit of MYR12.5m within 12-18 months. (Source: The Sun Daily)

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