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Share
Price:
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MYR7.15
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Target
Price:
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MYR7.25
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Recommendation:
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Hold
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Fairly valued
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Stronger 1QFY3/18 net profit (+8% QoQ, +72% YoY) was
within expectations, driven by stronger sales volume and lower
effective tax rate. While the NBR cost has weakened (c.-33% from Mar
2017), ASPs have also been adjusted lower accordingly, though we think Hartalega
may still benefit from the time-lag effect. Maintain earnings
forecasts, HOLD call and TP of MYR7.25 (27x 2018 PER, +1SD to mean).
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FYE Mar (MYR m)
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FY16A
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FY17A
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FY18E
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FY19E
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Revenue
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1,498.3
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1,822.1
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2,392.8
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2,618.6
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EBITDA
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386.8
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419.4
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568.6
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645.9
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Core net profit
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257.6
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283.0
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407.1
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455.8
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Core FDEPS (sen)
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15.5
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17.1
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24.4
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27.3
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Core FDEPS growth(%)
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16.3
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9.8
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42.7
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12.0
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Net DPS (sen)
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8.0
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8.0
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11.4
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12.8
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Core FD P/E (x)
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46.0
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41.9
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29.4
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26.2
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P/BV (x)
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7.8
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7.0
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6.2
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5.5
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Net dividend yield (%)
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1.1
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1.1
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1.6
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1.8
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ROAE (%)
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na
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na
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na
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na
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ROAA (%)
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15.1
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13.3
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16.4
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16.2
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EV/EBITDA (x)
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21.0
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19.9
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21.3
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18.8
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Net debt/equity (%)
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10.9
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11.3
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15.5
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13.3
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Share
Price:
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MYR1.29
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Target
Price:
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MYR1.39
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Recommendation:
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Hold
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Better quarters
ahead?
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While the Penang property market is still relatively weak
with rising unsold stocks, TILB’s property sales have improved
recently. Management is keeping its 2017 sales target of MYR180m (-21%
YoY) and has been focusing on clearing the unsold stocks under construction.
We maintain our earnings forecasts but lower our RNAV-TP to MYR1.39 on
a lower P/RNAV peg of 0.45x (from 0.5x). Maintain HOLD on TILB.
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FYE Dec (MYR m)
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FY15A
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FY16A
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FY17E
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FY18E
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Revenue
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367.7
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360.8
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333.5
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219.0
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EBITDA
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129.0
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145.8
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103.5
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58.2
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Core net profit
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94.4
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107.0
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77.1
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43.6
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Core EPS (sen)
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22.3
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25.1
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17.9
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10.1
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Core EPS growth (%)
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(8.3)
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12.6
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(28.7)
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(43.5)
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Net DPS (sen)
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9.7
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9.0
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7.1
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4.0
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Core P/E (x)
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5.8
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5.1
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7.2
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12.8
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P/BV (x)
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1.2
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1.0
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1.0
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0.9
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Net dividend yield (%)
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7.5
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7.0
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5.5
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3.1
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ROAE (%)
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na
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na
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na
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na
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ROAA (%)
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13.2
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14.1
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9.7
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5.3
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EV/EBITDA (x)
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4.7
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4.5
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5.6
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9.9
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Net debt/equity (%)
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1.9
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10.2
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4.1
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2.9
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SECTOR RESEARCH
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Crucial period for soybean
by Chee
Ting Ong
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Weather-driven supply expectations will provide fresh
lead for US soybean prices (and indirectly palm oil) in the immediate
term. August is a key yield-determining period for soybean.
Favourable weather in US coupled with stronger 2H17 palm oil output
outlook will likely add pressure to CPO price in the short term. Stay
NEUTRAL on the sector. Our regional BUYS are BPLANT, SOP, BAL, AALI,
LSIP and TBLA.
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MACRO RESEARCH
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FBMMES INDEX Buying Interest Emerge
by Nik
Ihsan Raja Abdullah
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FBMKLCI gained 3.74pts yesterday, led by gains in
selective index-linked stocks such as MAYBANK, CIMB and Tenaga.
Broader market, however, remained weak with losers outpacing gainers
by 602 to 269. Turnover was at 2.09b shares valued at MYR2.26b. As
Dow snapped its 10-day winning streak amid rising geopolitical
worries, local bourses may take a breather today. Technically,
FBMKLCI could potentially trade between 1,770 and 1,785. Downside
supports are 1,748 and 1,729.
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Nik Ihsan Raja
Abdullah
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Tee Sze Chiah
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NEWS
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Outside Malaysia:
U.S: Job openings surge to record in sign of robust labor
demand. A June surge in U.S. job openings to a record indicates demand
for workers remained strong at the end of the second quarter, a Labor
Department report showed. Number of positions rose by 461k, most in
almost two years, to 6.163m from upwardly revised 5.702m in May. Hiring
fell to 5.36m from 5.46m; hiring rate held at 3.7%. 3.13m Americans quit
their jobs, down from 3.21m; quits rate fell to 2.1% from 2.2%. Layoffs
were up slightly to 1.7m from 1.67m. (Source: Bloomberg)
U.K: Job market is booming, but concern is increasing
about where companies are going to keep finding workers. The number of
permanent jobs grew at the fastest rate in more than two years in July,
while the availability of workers fell sharply, according to a report by
the Recruitment and Employment Confederation published. It said that
helped boost a measure of starting salaries to the highest in 20 months.
The pace of hiring in recent years has pushed U.K. employment to a record
and sent the jobless rate to the lowest since the 1970s. (Source:
Bloomberg)
Japan: Recorded a 36th consecutive current account surplus
in June, supported by returns on overseas investments and a trade balance
that returned to positive territory. The current account surplus was
JPY934.6b (USD8.44b), versus an estimate of JPY860.5b. The primary income
surplus was JPY507.2b while surplus in goods trade was JPY518.5b. The
return of a trade surplus after a deficit in May supported the current
account. The benefits from Japan’s overseas investments, shown as the
primary income surplus, anchored the account, but Japanese companies
paying dividends overseas in June did somewhat reduce the primary income
surplus during the month. (Source: Bloomberg)
China: Trade surplus widened for a fifth month in July as
export growth remained solid and imports moderated, keeping the spotlight
on a trade gap U.S. President Donald Trump aims to narrow. Exports rose
7.2% YoY in U.S. dollars as imports increased 11% YoY. The trade surplus
widened to USD46.7b. Shipments to the U.S. rose 8.9% YoY versus 19.8% YoY
in June, narrowing the trade surplus with the world’s biggest economy
slightly to USD 25.2b. Demand for Chinese products has remained resilient
as growth in major trading partners continues to recover. At home,
stronger-than-expected output is supporting robust import demand.
(Source: Bloomberg)
India: Service sector takes hit on heels of goods tax
rollout. July PMI survey showed business activity slowed to four-year low
due to confusion surround GST implementation. Practitioners say India GDP
will continue to grow despite short-term setback. Business conditions in
India “deteriorated markedly” in July following implementation of the new
goods and services tax, a survey shows, but practitioners say the
short-term slowdown is nothing to worry about. The Aug. 3 Nikkei India
Services composite Purchasing Managers Index dropped from 53.1 in June to
45.9 in July—hitting its lowest point since September 2013. The index
measures both manufacturing and services activity, contributing 16.5 and
53.8 percent respectively to India's GDP in 2016. (Source: Bloomberg)
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Other News:
Property: China’s Wanda roped in for Langkawi project.
Property developer Cenang Resorts S/B yesterday announced a strategic
partnership with China’s largest five-star hotel management company,
Wanda Hotels & Resorts Co Ltd, which will see the latter manage the
Wanda Realm Resort Langkawi within the Tropicana Cenang mixed development
here. Cenang Resort will develop the Wanda Realm Resort Langkawi, while
Wanda Hotels & Resorts will take over its day-to-day operations.The
Wanda Realm Resort Langkawi is the first Wanda Realm premium hotel in
Malaysia. Construction of the hotel, which has a gross GDV of about
MYR297m, will begin sometime this year. (Source: The Edge Financial
Daily)
Berjaya Assets: To announce venture. Berjaya Assets will
announce a potential venture with a major Asian automaker within six
months to expand its automotive segment following the acquisition of
Oriental Assemblers S/B (OASB). Berjaya Assets signed an NDA
(non-disclosure agreement) with a major Asian brand to represent them in
Malaysia. OASB is ‘sleeping’ and is seeing very low productivity at the
moment, as there is no new business yet. Berjaya Assets is currently
using them to service the companies under the Berjaya Group. (Source: The
Edge Financial Daily)
BIMB: Khairul promoted to BIMB Holdings CEO. BIMB Holdings
(BHB) has appointed Khairul Kamarudin as its CEO effective Wednesday,
about two months after he became CEO of BHB’s unit Bank Islam Malaysia.
His experience in the Malaysian corporate scene spanned more than 21
years, including tenures at PricewaterhouseCoopers (M) S/B and Pengurusan
Danaharta Nasional. Khairul was promoted to deputy CEO of Bank Islam last
year, and was responsible for driving the overall profitability and
growth of all the business divisions. (Source: The Star)
7-Eleven: Sultan of Johor now 7-Eleven Malaysia’s second
largest individual shareholder. Sultan Ibrahim Sultan Iskandar of Johor
is now 7-Eleven Malaysia Holdings’ second largest individual shareholder
with a 8.44% stake after acquiring 93.7m shares in 7-Eleven Malaysia
since July 2017. This truly reflects Tuanku’s confidence in the
performance and future potential of 7-Eleven Malaysia. (Source: The Sun
Daily)
XiDeLang: Poised to get orders worth MYR133.8m. XiDeLang
Holdings Ltd’s wholly-owned subsidiary, HongPeng Fujian Shoes &
Garments Co Ltd, is set to receive original design manufacturer (ODM)
production orders worth about MYR133.8m following the signing of a
memorandum of collaboration (MoC) with YeLi International Ltd. The MoC
was valid for 24 months and served as a framework agreement for both
parties. Through this strategic collaboration, YeLi will be receiving
product development and technical support from HongPeng Fujian, which
will complement the strength of both parties and enhance each other’s
competitiveness with regard to business expansion and market penetration.
(Source: The Star)
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