Press Metal makes debut on Forbes Asia’s list

PETALING JAYA: The plantation and services sectors are expected to be most affected by the increase in minimum wage while the impact on other industries will be “manageable”, said analysts.

Maybank Investment Bank Research said while the higher minimum wage would raise the costs of doing business, the impact should be manageable, although relatively higher in the services and plantation sectors.

It, however, made no change to its earnings forecasts and calls for the affected sectors.

The Prime Minister’s Department announced on Wednesday that Malaysia would have a uniformed minimum wage of RM1,050 per month or RM5.05 per hour effective Jan 1, 2019.

This represents a 5% rise in minimum wage for workers in Peninsular Malaysia and 14% for those in Sabah and Sarawak from RM1,000 and RM920 per month currently.

The market had anticipated a higher quantum of increase – to RM1,500 – in line with the pledge in Pakatan Harapan’s election manifesto, but the government decided to implement the hike in stages over a period of five years instead.

“We had earlier expected a RM100 to RM200 rise, with an expected across-theboard ‘ knock-on’ effect on salaries impacting as many as 10.5 million workers, or 72.5% of the 14.45 million workforce.

“The ‘knock-on’ effect, with a smaller increase of RM50 in Peninsular Malaysia and and RM130 in Sabah and Sarawak, would be much lower,” the research house said.

While some sectors – such as automotive, glove and technology – are able to pass on the higher costs in full or in part, others such as the services and plantation sectors will not be able to do this.

CGS-CIMB Research expects the palm oil sector to be one of the worst-hit by the higher minimum wage, especially given the government’s plans to reduce the number of foreign workers in the country.

“This is because of the labour-intensive nature of the industry as well as its inability to pass on the higher costs to its customers, given that it is a price-taker industry.

“The increase will hit planters with high East Malaysian estates exposure more than those with estates predominantly located in West Malaysia and Indonesia,” it said.

The research house estimated that every RM100 per month increase in minimum wage could lift the palm oil industry’s costs by between RM304mil and RM514mil per annum.

It also estimated that every RM100 per month rise in minimum wage would lower its net profit forecasts for consumer companies by up to 4%.

Other sectors that may see earnings being impacted included construction, rubber gloves and technology, it said.

For the rubber glove industry, MIDF Research expected the impact to be negligible.

Aside from a minimal impact of less than 1% on earnings, it noted that manufacturers would be transferring the increase in production costs to their customers, which is an industry-wide practice.

The Federation of Malaysian Manufacturers (FMM) said in a statement while the industry understood that the government is unable to share the burden of the wage increase, it called for other forms of assistance for employers in Sabah and Sarawak to help mitigate the steep rise in costs. PETALING JAYA: Press Metal Aluminium Holdings Bhd has made its debut on the Forbes Asia’s list of the 50 best publicly-traded big companies in the Asia-Pacific.

The aluminium producer, which was included in the 30-stock FBM KLCI in December last year, made it into the Fabulous 50 list with a market capitalisation of US$4.7bil, alongside Batu Kawan Bhd, which is making an appearance on the list for the fourth straight year.

Press Metal is placed at number 45, while Batu Kawan charts at number 44.

Press Metal, started by chief executive officer Tan Sri Koon Poh Keong and his six brothers, generated US$2bil in annual revenue with a net profit of US$138mil last year.

The company is helmed by brothers Tan Sri Lee Oi Hian, who is the CEO, and Lee Hau Hian, who is the managing director.

Forbes said in a statement that China once again topped the 50 best publicly traded big companies in the Asia-Pacific with a record 30 listees, including business giants such as Alibaba and Tencent.

Tencent’s net profit soared 71% last year to US$10.6bil, while Alibaba’s climbed 49% to US$9.7bil.

This would be their 10th and third year appearing on the list, respectively.

“Tencent is currently investing in startups to hatch new services for its core businesses such as the budget-shopping service Pinduoduo, or PDD,” the statement said, adding that the investment would help boost the company-owned WeChat app.

There are 17 new listees this year.

As to the selection, the Fab 50 companies are determined from a pool of 1,744 public companies in the region with at least US$2bil in annual revenue and have been listed for at least a year.

The goal is to highlight well-run entrepreneurial outfits, and the region’s best of the best.

Companies are then analysed according to more than a dozen financial measures.

The list excludes companies that have a high debt ratio, are more than 50% stateowned or more than 50%-owned by listed parents.