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Malaysia Daily Bulletin – 25/04/12
Malaysia Daily Bulletin | 25 April 2012

Nylex Suffers Huge Drop In 3Q12 Earnings Despite Higher Revenue
Nylex (Malaysia) registered net profit attributable to shareholders of RM128,000 for 3Q12 ending 29 Feb-12, a significant difference from RM3.5 million a year ago. Revenue, on the other hand, increased 16.6 percent on the back of higher sales contribution from its industrial chemical division. “Despite the higher sales, intense competition in both the local and regional markets eroded margins in the divisions and the group recorded a lower profit before tax of RM1.7 million, compared to RM4.4 million achieved in the corresponding period last year,” the company said in a statement. Nylex is a major player in the chemical, plastic and polymer industries and has over 13 subsidiaries operating mainly in Malaysia, Singapore, Indonesia and Vietnam.

Significance: Based on Nylex’s performance forecasts, it expects that the domestic market of film and coated fabrics to remain weak with continued competition from cheap imports; polymer division supported by strong demand in Indonesia; and satisfactory performance in the industrial chemical division on the back of wider product range and diversified customer base.

Bank Deposits Growth Expected To Slow To 11% From 14% In 2011
Alliance Research (AR) projected a slowdown of bank deposits growth to 11 percent this year, in line with the expected moderation of loan growth. Bank deposits grew by 14 percent year-on-year in 2011 to RM1.3 trillion. Deposits growth rate should track the loans growth forecast of 11 percent for the year as long as the loan-to-deposit ratio (LDR) remained at a healthy level and banks’ liquidity position was strong, AR’s banking analyst Cheah King Yoong told StarBiz. Meanwhile, RAM Ratings head of financial institution ratings Wong Yin Ching said with the anticipation of a more moderate loan growth this year, the banking industry’s LDR would likely remain stable at around 76 percent.

Significance: Banks are expected to remain focused on growing their deposits, in particular, retail deposits, given that the recommended Basel III guidelines provided more benefits to retail deposits as opposed to wholesale deposits. Erosion of banks’ profit margin remained a concern should deposits outgrow loans with too much idle deposits on their balance sheets.

Johor Welcomes The Opening Of 40 Hotels To Cater For More Tourists
A staggering 40 new hotels are slated for opening in Johor with almost half are expected to be built within the next five years, prompting oversupply concerns, Business Times reported. A right balance could be achieved if these openings are done in phases, said Chairman of the Malaysian Association of Hotels (MAH) Johor Chapter, Tengku Ahmad Faizal. “Looking at up to 2015, there will be sufficient rooms to cater to the expected increase in tourists,” he added. In addition, more international direct flights are expected to be added into the Senai International Airport to reach out to more tourists.

Significance: The opening of international hotel brands such as Traders Hotel and Sheraton will likely enhance Johor’s visibility in the international scene. Despite more jobs created in the hospitality industry, staff retention is seen as a challenge due to the competition from Singapore as well as job hopping within the domestic sector.

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