☕️ MAS downsizing flight capacity by 20% this year

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

The second-largest diamond ever discovered, a rough 2,492-carat stone, has been found in Botswana at the Karowe mine, operated by the Canadian company Lucara Diamond. This stone is believed to be worth up to GBP30.6 mil (RM175 mil). This find follows the 3,106-carat Cullinan diamond unearthed in South Africa in 1905, which was cut into multiple stones now part of the British Crown Jewels. Previously, the largest diamond found in Botswana was a 1,758-carat stone, also from the Karowe mine in 2019. Botswana remains a leading diamond producer, contributing roughly 20% of global output. FYI, 1 carat = 0.2 grams. The above diamond, in familiar terms, weighs 498.4 grams.

A report from MyPerfectResume reveals that 81% of recruiters admit to posting "ghost jobs," which are positions that either don't exist or have already been filled (view link for their reasons). This practice frustrates job seekers who spend time applying for roles that are not genuinely available. The report also highlights that 17% of recruiters say up to 75% of their job postings are fake, while 21.5% estimate that half of their listings are not real.

Typhoon Shanshan lashed southwest Japan with strong winds of up to 180km/h and torrential rain yesterday. Over 200,000 homes in seven regions lost power in the afternoon, said Kyushu Electric Power Co. They also mentioned that their Sendai Nuclear Power Plant in Satsumasendai city was not affected by the storm, which hit earlier on Thursday. Authorities have told more than 5.2 mil people to evacuate, mostly in Kyushu but also in parts of central Japan. Airlines like ANA Holdings and Japan Airlines have cancelled almost 800 flights.

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3. IN MALAYSIA 🇲🇾

Sinkhole situation in Kuala Lubang Lumpur 

1. Rubbish is in the way of rescue efforts — Fire and Rescue Department director-general Nor Hisham Mohammad told the media that a 15-meter-long obstruction in the sewer pipes, consisting of bottles, tyres, hair and solidified fat is hampering the efforts to locate the lost Indian tourist that fell down a sinkhole at Jalan Masjid India. Nor Hisham added that the rescue team would slowly remove the obstruction using ropes and metal rods. Need to be reminded that the sewer pipes that the rescue team is working on are active, with water levels as high as 1.5 meters and 100 cubic meters of pressure. We salute our heroes who risk their lives day in and day out.

2. Jalan Masjid India is not a disaster zone — IGP Razarudin Husain said that there is no urgency to declare the area around Jalan Masjid India as an unsafe zone. Plus, in order to designate an area as a disaster zone, special permission is needed from the National Security Council. Nonetheless, Razarudin stated that the authorities will perform their duties as if the area is a disaster zone. Unfortunately, even without the no-safe designation, Jalan Masjid India is basically a ghost town now as the public is scared to roam the areas due to the danger of possible sinkholes. View here the current situation of Jalan Masjid India as the public going through this hole-phobia period.

3. DBKL cancelled its Merdeka Eve celebration — The Kuala Lumpur City Hall (DBKL) has cancelled its Merdeka Eve celebration at Dataran Merdeka that is scheduled on Friday. The move is made out of respect to the Ms Vijayaletchumy who fell down the 8-meter sinkhole.

MAG is downsizing capacity by 20% this year
MAG, the parent company of Malaysia Airlines, FireFly and Amal, said that the company will reduce its network capacity by 20% this year. MAG blamed the shortage of planes, labour and parts for yet another period of struggle for the company. The company stated that from the 13 Boeing 737-8 aircraft expected this year, MAG only received four. Similarly, it was scheduled to take delivery of four A330neo planes from Airbus in 2024, but will now receive only three by the end of the year, MAG said. As the supply of aeroplanes seemed to be the main issue, perhaps MAG should look at another supplier, China-made Commercial Aircraft Corporation of China (COMAC) jets. Year to date, a total of 9 COMAC C919 aircraft have been delivered to customers. China Eastern Airlines, the first user of the C919, has been operating the aircraft for 15 months without any issues, completing 3,600 commercial flights and 10,000 flight hours. Nak join BRICs kan?

Here comes the reporting szn

1. DRB-Hicom Bhd, the company that owns 50.1% of Proton Holdings Bhd, posted a net loss of RM17.08 mil in 2QFY2024, compared to RM33.71 mil in net profit recorded in the same period last year. DRB Hicom blamed its poor financial performance on the weaker financial performance of Proton and the loss incurred from Pos Malaysia Bhd. However, DRB Hicom is optimistic for the future as Proton will launch a few new models soon — new versions of the X50, and X70 and the sale of Proton’s new electric vehicle, e.MAS 7 at the end of the year.
   View: DRB-Hicom Bhd 2QFY2024 results.

2. Axiata Group Bhd is flying high as the telecommunication company registered RM134.9 mil of net profit for 2QFY2024 compared to a net loss of RM576.22 mil a year earlier. Axiata thanked all of its operating companies for this excellent financial turnover, except for Link Net and Dialog. Earlier this year, Axiata’s Sri Lankan unit, Dialog acquired its local rival, Airtel Lanka in a non-cash transaction. I guess the investment is not bearing fruit yet.
   View: Axiata Group Bhd 2QFY2024 results.

3. Farm Fresh Bhd is milking it as it did an outstanding leap by posting a 308% jump in net profit for 1QFY2025, recording RM26 mil, compared to RM6.37 mil of net profit gained in the same period last year. Although increased sales play a role, the key factor of success is the reduction in the cost in costs of dairy raw materials. Moving forward, Farm Fresh will introduce more products to the market - butter and cultured milk products.
   View: Farm Fresh Bhd 1QFY2025 results.

4. Malaysian fifth-largest bank by assets, Hong Leong Bank Bhd is also not doing too bad as it recorded RM1.03 bil in net profits for 4QFY2024, almost 20% higher than the RM864.68 announced in the same period last year. The bank credited the win to higher operating income and provisions writeback. One interesting thing to note is that the bank’s non-interest income grew by 26.5% due to higher income from wealth management and credit card-related fees.
   View: Hong Leong Bank Bhd 4QFY2024 results.

Shorts

1. First AI-park in the country

   Digital Minister Gobind Singh Deo announced that India-based Immerso AI-IP, which is a part of the Eros Investments Group, is planning to invest USD 1 bil to establish Malaysia’s first artificial intelligence (AI) park and AI movie studio. This planned investment is set to create about 5,000 jobs over the next five years. But, what kind of movie though as Eros is the Greek god of erotic love? Kinky stuff here.

2. Wanna co-host SEA Games? Show Madani the money
   Sports Minister Hannah Yeoh said that only states that are willing to bear the cost of organising the 2027 Southeast Asian (SEA) Games can have the privilege to co-host the Games. At the moment, only three states are willing to pitch in money to cover the RM700 mil price tag placed to host the Games and the said states are - Sarawak, sponsoring 50% of the cost, Sabah bringing in RM100 mil to the table and Penang forking out RM15 mil.

4. AROUND THE WORLD 🌎

In China, its commercial real estate crisis is a boon to hoteliers 

How bad is the crisis?
China’s commercial real estate is facing a supply glut, with vacancies near a two-decade high in some cities. In Shanghai, prime office rent sunk to its lowest in more than a decade and office vacancies hovered around 15% in June.  

The opportunity
China’s real estate crisis is giving hoteliers a bargain opportunity to expand their presence across China by converting empty and unused office buildings into hotels amidst a domestic travel boom. Redeploying office space takes about 18 months, which is a lot quicker than building from scratch which typically takes 3 years in China. Terms are also favourable as some of its franchise partners signed on 15-year leases with the rent-free period. 

Hilton Worldwide Holdings, which recently opened its 700th property in Greater China, is adding about 100 hotels over the next few years and has 900 locations in its pipeline. About 25% of these Hilton hotels that are coming online will be developed using empty office spaces, a model which Hilton terms as “adaptive reuse”. Hilton owns brands such as Conrad, Waldorf Astoria and Double Tree. 

China’s hotel industry landscape
China has a record 3,815 hotels either planned or under construction and accounts for a quarter of the global hotel construction pipeline, behind only to the US. Even with the current rapid hotel development in China, the number of hotel rooms per capita is about 10 times lower than in the US given the sheer size of China’s population.  

Nvidia: Shining financial performance, disappointing share action
AI-darling Nvidia released its financial performance for Q2 financial year 2025. In short, it’s an impressive set of performance. Highlights:

• Record quarterly revenue of USD30 bil, up 122% year-on-year (yoy) and 15% from the previous quarter

• Net income grew an astounding 168% yoy to USD16.6 bil from USD6.18 bil

• During Q1 and Q2 of FY2025, Nvidia returned USD15.4 bil to shareholders in the form of share buyback and cash dividends. 

• The company has a remaining USD7.5 bil share buyback authorisation and its board of directors approved an additional USD50 bil share repurchase, without expiry.

After the earnings announcement, CEO Jensen Huang in an interview with Bloomberg addressed concerns over its Blackwell chips, which saw production challenges and delays. The chip is the highly-anticipated successor to the company’s Hopper line and has become a key focus for Nvidia investors and analysts. Huang said the chip has entered volume production and will start contributing billions in Q4. Beyond Q4, Huang said: “We will have a great next year as well”.
View: Q2 Fiscal 2025 earnings announcement

US Special Prosecutor’s smart move to charge Donald Trump
A recent ruling last month by the US Supreme Court that presidents have broad immunity from criminal prosecution for official acts made former president Donald Trump, a happy man as he faces a slew of criminal cases which he allegedly committed whilst in office. This is probably short-lived as Special Prosecutor Jack Smith filed a revised charge against Trump in the 2020 electron interference. The charge document, which was slimmed down to 36 pages from 45 pages, changed the language of the allegations in response to the Supreme Court’s ruling.

The rewording argues that Trump acted as a private citizen - and not as a president - when he schemed to sway the election results as Trump “had no official responsibilities related to the certification proceeding, but he did have a personal interest as a candidate in being named the winner of an election”. In short, the revised charge removed all reference to Trump in his official capacity and brought charges against him as a candidate. 

It’s uncertain this move will work but experts think that it minimises the risk that Trump would be immune to these charges. For a start, what exactly is private conduct whilst holding the position of a president was barely defined by the Supreme Court. The dissenting judges (Sonia Sotomayor, Elena Kagan, Ketanji Brown) against this presidential immunity said the ruling effectively creates a “law-free zone around the president”. 

Shorts

1. Israel launches massive assault on West Bank
   Not done with obliterating the Gaza strip, Israel now shifts its attention to the West Bank. Hundreds of Israeli soldiers conducted a massive assault in the occupied West Bank which is populated with refugees and have killed at least 10 Palestinians. The assault is said to be Israel’s largest assault there in 20 years. Israel claimed they are targeting “armed terrorists who posed a threat to its security forces”. Zaid Shuabi, a Palestinian human rights organiser in the West Bank described the West Bank as a “Gaza on a smaller scale”.
   Learn: What is the West Bank and who controls it?

2. OpenAI to join the USD100 bil club
   ChatGPT creator OpenAI is reportedly in talks to raise a massive tranche of new funding at a valuation of more than USD100 bil, up from its previous valuation of USD83 bil. This would make it the most valuable AI startup to date. It’s not known which investors will participate in the round but existing investor Thrive will throw in USD1 bil for its part. Although the company has generated USD3.5 bil in revenue this year, the company could still lose nearly USD5 bil by year-end. The company has already spent USD8.5 bil on AI training and staffing, 

5. FOR YOUR EYES 📺

1. Enjoy your Merdeka with these fantastic offers by F&B outlets.

2. Did you get any 99 Speed Mart IPO shares? The retail offering of the IPO was oversubscribed by 3.04x. The company received 49,354 applications (678.6 mil shares) from the Malaysian public, but only 210 mil was allocated. Below is the allotment table for the non-bumiputra portion (Bumi portion 100% success rate) — you can observe the probability. In general, the bigger you apply, the higher your chance of getting it (i.e. the rich get richer).

   

   Source: Malaysia Issuing House

3. How much can a specialist make? A lot, a lot but to be fair, they dedicated a huge portion of their lives to pursue their medical craft. Pay commensurate with effort and demand — we approve. What we don’t approve — those directors that lack experience and competency yet appointed to these positions and collecting fat paychecks. See poll below.