Retail News CRM

Author: Mei Ling Tan

  • eHi Car Services Announces Third Quarter 2016 Results

    eHi Car Services Announces Third Quarter 2016 Results

    eHi Car Services Limited rentals and car services provider in China, today announced its unaudited financial results for the third quarter ended September 30, 2016.

    Third Quarter 2016 Highlights

    • Net revenues increased by 47.8% year-over-year to RMB582.1 million (US$87.3 million[1]) for the third quarter of 2016, from RMB393.8 million for the third quarter of 2015.

    Three months ended September 30,

    Year-Over-Year

    (RMB ‘000)

    2015

    2016

    Comparison

    Car rentals

    300,700

    464,271

    54.4%

    Car services

    93,080

    117,783

    26.5%

    Total Net

    Revenues

    393,780

    582,054

    47.8%

    Gross profit[2] increased by 83.9% year-over-year to RMB165.7 million (US$24.8 million) for the third quarter of 2016, from RMB90.1 million for the third quarter of 2015. Gross profit margin[2] increased to 28.5% for the third quarter of 2016, from 22.9% for the third quarter of 2015.

    • Net income increased by 269.5% year-over-year to RMB22.3 million (US$3.3 million) for the third quarter of 2016, from RMB6.0 million for the third quarter of 2015. Net income margin increased to 3.8% for the third quarter of 2016, from 1.5% for the third quarter of 2015.
    • Non-GAAP adjusted EBIT[3] increased by 97.4% year-over-year to RMB80.6 million (US$12.1 million) for the third quarter of 2016, from RMB40.8 million for the third quarter of 2015. Non-GAAP adjusted EBIT margin[3]increased to 13.8% for the third quarter of 2016, from 10.4% for the third quarter of 2015.
    • Non-GAAP adjusted EBITDA[4] increased by 60.0% year-over-year to RMB264.5 million (US$39.7 million) for the third quarter of 2016, from RMB165.3 million for the third quarter of 2015. Non-GAAP adjusted EBITDA margin[4]increased to 45.4% for the third quarter of 2016, from 42.0% for the third quarter of 2015.
    • Total average available fleet size[5] increased by 46.5% year-over-year to 41,742 vehicles for the third quarter of 2016, from 28,499 vehicles for the third quarter of 2015. Total fleet RevPAC[6] increased to RMB152 for the third quarter of 2016, from RMB150 for the third quarter of 2015.

    [1] The Company’s business is conducted in China and substantially all of its revenues are denominated in Renminbi (RMB). However, this earnings announcement contains translations of RMB amounts into U.S. dollars (US$) at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from RMB to U.S. dollars are made at a rate of RMB6.6685 to US$1.00, the effective noon buying rate as of September 30, 2016 in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York.

    [2] Gross profit is defined as net revenues less cost of net revenues (vehicle operating expenses).  Gross profit margin is defined as the percentage representing gross profit divided by net revenues.

    [3] Non-GAAP adjusted EBIT is defined as net income before share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. For more information, refer to “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release. Non-GAAP adjusted EBIT margin is defined as the percentage representing Non-GAAP adjusted EBIT divided by net revenues.

    [4] Non-GAAP adjusted EBITDA is defined as net income before depreciation and amortization, share-based compensation, interest expenses, interest income, provision for income taxes, gains from waiver of warrants and gains from sale of cost method investment. For more information, refer to “About Non-GAAP Financial Measures” and “Reconciliation of GAAP and Non-GAAP Results” at the end of this press release. Non-GAAP adjusted EBITDA margin is defined as the percentage representing Non-GAAP adjusted EBITDA divided by net revenues.

    [5] “Average available fleet size” is calculated by dividing the aggregate number of days in which the Company’s fleet was in operation during a given period by the total number of days during the same period. In determining the size of the Company’s fleet in operation, eHi includes all vehicles in its car rentals and/or car services fleets except for vehicles that have been written off in accordance with its accounting policy and vehicles that have not been consistently made available for rent and that it may consider to dispose of when appropriate opportunities arise.

    [6] “RevPAC” refers to average daily net revenue per available car, which is calculated by dividing the net revenues during a given period by the aggregate number of days in which the Company’s fleet was in operation during the same period.

     

    Average Available

    Fleet Size

    RevPAC

    (RMB)

    2015Q3

    2016Q3

    Year-Over-Year

    Comparison

    2015Q3

    2016Q3

    Year-Over-Year

    Comparison

    Car rentals

    26,200

    39,227

    49.7%

    125

    129

    3.2%

    Car services

    2,299

    2,515

    9.4%

    440

    509

    15.7%

    Total

    28,499

    41,742

    46.5%

    150

    152

    1.3%
    • Fleet utilization rate[7] for car rentals was 71.9% for the third quarter of 2016, compared with 73.8% for the third quarter of 2015.
    • As of September 30, 2016, total period-end fleet size[8] was 48,934 vehicles.

    [7] “Fleet utilization rate” refers to the aggregate transaction days for the Company’s car rental fleet during a given period divided by the aggregate days the car rental fleet was in operation during the same period.

    [8] “Period-end fleet size” refers to the aggregate number of vehicles in the Company’s car rentals and car services fleets as of the last day of a given period which the Company holds legal title to and reflects in its balance sheet, including vehicles that are currently missing but have not been written off in accordance with its accounting policy. The period-end fleet size as of September 30, 2016 excluded 144 vehicles which the Company had written off from its balance sheet in accordance with its accounting policy.

    Mr. Ray Zhang, eHi’s Chairman and Chief Executive Officer, said, “Our business continued to thrive during the third quarter, leading to both strong top-line growth and significant improvement in profitability. As a fast-growing company, we are committed to driving ongoing operating leverage and are well-positioned to capture the growing demand from China’s rapidly rising domestic tourism and business-related travel.”

    “The recent regulations regarding online car-hailing business in China, we believe, provide us with greater potential to explore business and strategic cooperation opportunities to enhance our competitive position. Looking ahead, we remain focused on continuing to execute on our growth plan and achieving our strategic objectives,” Mr. Zhang concluded.

    Mr. Colin Sung, eHi’s Chief Financial Officer, said, “We are pleased to report strong third quarter results with net revenues increasing by 47.8% year-over-year, while recording 269.5% bottom-line growth from the prior-year period. Notably, our continued focus on operating efficiency and cost control measures contributed to broad-based margin improvement. Our gross margin and non-GAAP adjusted EBITDA margin both reached record-highs of 28.5% and 45.4%, respectively. Our financial discipline is well-established, and we remain committed to prudent expansion and a balanced approach between growth and profitability.”

    Third Quarter 2016 Financial Results

    Net revenues for the third quarter of 2016 were RMB582.1 million (US$87.3 million), up 47.8% year-over-year, attributable to increased net revenues from both car rentals and car services.

    Net revenues from car rentals for the third quarter of 2016 were RMB464.3 million (US$69.6 million), up 54.4% year-over-year, primarily driven by the growing average available fleet size for car rentals in response to customer demand.

    Net revenues from car services for the third quarter of 2016 were RMB117.8 million (US$17.7 million), up 26.5% year-over-year, primarily driven by the increased car services RevPAC as we provided services to more business clients.

    Cost of revenues (vehicle operating expenses) for the third quarter of 2016 was RMB416.4 million (US$62.4 million), up 37.1% year-over-year, primarily driven by increased depreciation and labor costs.

    In the third quarter of 2016, 486 used vehicles were disposed of, and 358 used vehicles were under sales contracts pending title transfer. The Company recognized a disposal loss of RMB0.3 million (US$0.04 million) in aggregate for these 844 vehicles. In addition, a disposal gain of RMB0.7 million (US$0.1 million), which was unrecognized in the previous quarters, was recognized in the third quarter of 2016 as a result of the completion of title transfer during such period. The disposal loss and gain were both recognized as adjustments to the vehicle-related depreciation expense as part of the cost of revenues.

    Gross profit for the third quarter of 2016 was RMB165.7 million (US$24.8 million), up 83.9% year-over-year. Gross profit margin for the third quarter of 2016 was 28.5%, compared with 22.9% for the third quarter of 2015. Gross profit margin improvement was due to certain cost controls primarily in vehicle insurance, and to a lesser extent, in vehicle repair and maintenance as well as labor costs, in connection with enhanced economies of scale and operating efficiency.

    Selling and marketing expenses for the third quarter of 2016 were RMB28.5 million (US$4.3 million), up 81.8% year-over-year, primarily due to increased channel marketing and promotion fees as the Company expanded branding and channel promotion activities during such period.

    General and administrative expenses for the third quarter of 2016 were RMB63.1 million (US$9.5 million), up 38.6% year-over-year, primarily due to increased employee-related costs including salaries and welfare expenses as a result of increased headcount, as well as a foreign exchange loss in the third quarter of 2016 compared with a foreign exchange gain in the third quarter of 2015.

    Profit from operations for the third quarter of 2016 was RMB77.0 million (US$11.5 million), up 124.2% year-over-year.

    Interest expense for the third quarter of 2016 was RMB55.7 million (US$8.3 million), up 79.5% year-over-year, primarily attributable to the interest expense associated with the Company’s senior unsecured notes of US$200 million due 2018.

    Net income for the third quarter of 2016 was RMB22.3 million (US$3.3 million), up 269.5% from RMB6.0 millionfor the third quarter of 2015. Net income margin for the third quarter of 2016 was 3.8%, compared with 1.5% for the third quarter of 2015.

    Basic and diluted earnings per ADS for the third quarter of 2016 were RMB0.32 (US$0.05) each, compared with basic and diluted earnings per ADS of RMB0.09 (US$0.01) each for the third quarter of 2015.

    Non-GAAP adjusted EBIT for the third quarter of 2016 was RMB80.6 million (US$12.1 million), up 97.4% year-over-year. Non-GAAP adjusted EBIT margin for the third quarter of 2016 was 13.8%, compared with 10.4% for the third quarter of 2015.

    Non-GAAP adjusted EBITDA for the third quarter of 2016 was RMB264.5 million (US$39.7 million), up 60.0% year-over-year. Non-GAAP adjusted EBITDA margin for the third quarter of 2016 was 45.4%, compared with 42.0% for the third quarter of 2015.

    As of September 30, 2016, the Company’s cash, cash equivalents and restricted cash balance was RMB1.5 billion (US$223.7 million).

    Recent Development

    On August 30, 2016, the Company entered into a US$150 million syndicated loan facility agreement. This loan facility agreement includes an initial facility of US$110 million and a greenshoe facility of US$40 million. The loan facilities have a three-year term and will be repaid in installments. The interest margin is priced at 350 basis points per annum over LIBOR. Deutsche Bank AG, Singapore Branch is acting as the original mandated lead arranger of the loan facilities. The Company had fully drawn down the US$150 million facility as of September 27, 2016, and used part of the proceeds for repaying certain existing indebtedness with high interest rates. The remaining proceeds will be used for funding capital expenditures and other general corporate purposes of the Company.

    Outlook

    The Company estimates that net revenues for the full year of 2016 will range from RMB2.1 billion to RMB2.2 billion, and total period-end fleet size will reach approximately 57,000 vehicles as of December 31, 2016. This outlook reflects the Company’s current and preliminary view, which is subject to change.

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  • 7-Eleven Singapore ups its game

    7-Eleven Singapore ups its game

    7-Eleven Singapore convenience stores are about to have a makeover, with some of them being enlarged by 30 per cent to offer freshly prepared meals and seating.

    COO Steven Lye says the chain will stock premium products, introduce seating areas and create a range of fresh-chilled, ready-to-eat meals delivered to the store daily.

    7-eleven-singapore

    “We want to convey the message that we are no longer just a place for small needs. We want to be at the top of our customers’ minds,” says Lye.

    As well as the ready-to-eat meals, the expanded and elevated product range includes lifestyle items and even IT gadgets. The stores are also adding 7-Connect lockers, self-collection stations where parcels from online shopping can be picked up, and cash-withdrawal machines.

    In July, 7-Eleven invested S$350,000 (US$247,384) in a branding campaign with the tagline “There’s Always 7-Eleven”, seeking to shift customer perception of its outlets from that of a stop for basic needs to a one-stop shop for groceries, toiletries, bill payments, cash withdrawals and more.
    “To accommodate the extensive additions, future 7-Eleven stores will have an area of about 800 sqft [74 sqm] where possible.”

    Vary by location

    He says the items sold at each store will depend on its location. Those in tourist areas such as Marina Bay and Orchard Road will stock backpacks, suitcases and souvenirs while its Marine Parade outlet near East Coast Park will sell kites.

    Tech developments are also in the pipeline, says Lye. One is a loyalty app, 7-Rewards, set to roll out next year. Another new service is the 7-Connect Kiosk, a self-help machine for quicker bill payments. Also, 7-Eleven counters will accept wave-payment methods such as Android Pay, Apple Pay and Visa Paywave.

    “As a brand, we understand the importance of keeping up with the times and constantly evaluating the needs of customers, hence we have made a conscious effort to innovate,” says Lye.
    He says the new range of meals, prepped and delivered upon order to ensure freshness, will replace the store’s frozen-thaw meals by the first quarter of next year.

    “The tech behind the fresh-chilled meals is a strong value proposition we are introducing to the market,” says Lye. “Over the past 18 months we have embarked on a strategy to take these ready-to-eat meals to a whole new level.”

    Flavours will include Hainanese chicken rice, braised duck rice, butter chicken biryani as well as three flavours of Japanese pastas. By next year there will be more than 40 choices.

    Run by Dairy Farm Group, 7-Eleven Singapore has a network of more than 430 outlets.

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  • Bank Indonesia retains benchmark rate amid global uncertainty

    Bank Indonesia retains benchmark rate amid global uncertainty

    Bank Indonesia (BI) decided on Thursday to keep its seven-day reverse repo rate at 4.75 percent in response to global uncertainty following the outcome of the recent US presidential election.

    “BI is responding to the uncertainty in consideration of a stable condition in the domestic economy,” BI governor Agus Martowardojo said in a press conference at the central bank’s office in Jakarta on Thursday.

    Agus added that after the US election, which saw the victory of Republican candidate Donald Trump, global uncertainty as a result of the economic programs of the new government had made the rupiah volatile. A week after the Nov. 8 election, the rupiah depreciated 2.23 percent to Rp 13,340 per US dollar, but the year-to-date figure still shows that the currency appreciated by 2.97 percent.

    “We need to be careful with upcoming US policy, such as expansionary fiscal movement, trade protectionism and a Federal Reserve rate hike,” Agus said.

    Moreover, he added, the US economy had shown signs of recovery with better economic growth, decreasing unemployment and increasing inflation, which increase the odds of the Fed increasing its benchmark rate next month and put pressure on the world economy.

    A Fed rate hike would potentially lead to capital outflow from emerging economies, like Indonesia, as investors would likely move their money in search of better yields.

  • DoCoMo achieves 11.29Gbps in 5G trial

    DoCoMo achieves 11.29Gbps in 5G trial

    NTT DoCoMo and Huawei have achieved a peak speed of 11.29Gbps during a 5G large-scale field trial in the 4.5-GHz band.

    The companies tested a 3GPP 5G New Radio compliant numerology and frame structure using macro cell coverage in a real-world scenario in Yokohama’s busy Minato Mirai 21 commercial district.

    The trial also achieved a sub-0.5ms one way user plane latency. The macro cell was made up of one base station compatible with the 4.5-GHz band and 200 MHz bandwidth, as well as 64 transceivers and 23 user equipment devices.

    According to the test, 11.29Gbps of user throughput was achieved in 24 layers, with each UE receiving two layers. Peak spectrum efficiency reached 79.82bps/Hz/cell.

    “Our success in 5G large-scale field trial in the 4.5 GHz band has brought the whole industry one step closer to 5G commercialization by 2020,” commented Takehiro Nakamura, DoCoMo’s VP and 5G Laboratory managing director.

    “DoCoMo and Huawei have been expanding their collaboration on 5G from R&D to international spectrum harmonization initiatives for 5G since December 2014. Together with Huawei, we will continue to promote 5G both from technical and ecosystem perspective.”

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  • MyRepublic, TPG to bid for Singapore mobile license

    MyRepublic, TPG to bid for Singapore mobile license

    Singapore’s Infocomm and Media Development Authority has pre-qualified ISP MyRepublic and Australian telecoms group TPG Telecom to participate in an auction for a fourth mobile license.

    MyRepublic and TPG will bid for a 60-MHz lot of spectrum in the 900-MHz and 2.3-GHz bands, in an auction expected to be complete by the end of the year.

    A third applicant for the auction, airYotta, has been disqualified for failing to meet the required pre-qualification criteria.

    The auction will be followed by a general spectrum auction open to existing mobile operators M1, Singtel and StarHub, as well as the winner of the new entrant auction. This second auction is expected to commence in the first quarter of next year.

    MyRepublic is a fiber-based ISP with a solid presence in Singapore, and a growing regional reach. The company recently arranged to launch broadband services with speeds of up to 100Mbps in Australia over the national broadband network (NBN), and also has operations in New Zealand and Indonesia.

    TPG Telecom is Australia’s second largest fixed line ISP and largest MVNO. The company has been steadily expanding through acquisitions and organic growth.

    Singapore MVNO Circles.Life has announced it “ welcomes IMDA’s on-going efforts to support competition in the telco space.”

    Circles.Life entered this year as a digital telco and has been aiming to disrupt the market with innovative offers for data-savvy customers, and looks forward to further disruption if a new entrant arrives in the market, the company said in a statement.

  • Dachser India upgrades offices in Mumbai

    Dachser India upgrades offices in Mumbai

    Dachser India has moved to a new regional office in a thriving business area in Mumbai, to be closer to its brand named customers and enable staff from different departments to communicate more effectively.

    “With India’s strong developing manufacturing, automotive, FMCG and e-commerce market, there is an increasing need for quality and integrated logistics solutions. As we focus on India’s positive economic growth and upcoming favorable government reforms, we are very excited about our strategic investment in the new Regional Office in India and look forward to offering more efficient support and promote Dachser’s brand promise to our customers in India,” says Huned Gandhi, Managing Director Air & Sea Logistics India.

    The new open plan office is located in Sakinaka a leading commercial district in the city with easy access to public transport links.

    In another development Dachser incorporated its air, ocean, customs and operations staff under one roof in a new operational office in Mumbai. In total 100 employees will work in the new office which is close to the international airport and its customers in the western region of the city.

    “The western region has always been a consistent market with strong potential and demand. The new office will enable us to gather all our sea and air freight staff in one office thereby strengthen the effectiveness and efficiency of the branch operations. ”

    Dachser now has 25 offices across the subcontinent with one of the largest country wide logistics networks of any international company.

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  • Aussie mobile customers’ private data up for sale

    Aussie mobile customers’ private data up for sale

    Private information on Australian mobile subscribers are being sold off by unscrupulous members of offshore call centers, according to an investigative report.

    The private details of customers from the market’s three operators – Optus, Telstra and Vodafone – are being offered for sale by a call center business named AI Solutions, run by Indian businesman Imran Khan.

    Information including home addresses, dates of birth, alternative numbers, billing statements and call history are being offered for between A$350 ($260) and A$1,000, the report states. Prices are higher for VIPs , politicians, police and celebrities.

    Security industry sources spoken to for the report say the practice of call center workers selling off Australian customer details has been long-standing, and potentially involves more than one company.

    In a press statement, a Vodafone Hutchison Australia spokesperson said the company is “aware there are individuals who do attempt to illegally access data through various channels from companies and organisations which hold customer information,” and has “invested millions of dollars over recent years in security systems and processes, and have a number of safeguards in place to prevent unlawful access of customer information.”

    For offshore call centers, security safeguards include paperless offices, a no mobile phone policy, no access to third party websites, email monitoring, role based systems access, continuous agent training and disciplinary process.

    An Optus spokesperson said the company has referred the matter to federal police, and Telstra said the company does everything it can to protect customer data.

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  • Volkswagen aims to sell 400,000 new energy vehicles a year in China by 2020

    Volkswagen aims to sell 400,000 new energy vehicles a year in China by 2020

    Volkswagen aims to boost new energy vehicle sales in China to 400,000 units a year by 2020, the automaker’s China chief Jochem Heizmann said, as Beijing pushes automakers to sell low-emissions cars via incentives and friendly regulations.

    It aims to eventually sell 1.5 million new energy vehicles (NEVs) annually by 2025, Heizmann told reporters ahead of the Guangzhou auto show, which opens on Friday.

    “We have to do more in the NEV area. The government is pushing, the general environment in China is pushing that,” Heizmann said.

    Overall sales of NEVs in China more than quadrupled last year with rapid growth continuing in 2016.

    Volkswagen will deliver its first locally produced NEVs, as battery electric and plug-in hybrid cars are referred to in China, under its Audi brand this year.

    Audi AG manufactures the vehicles in a joint venture with China FAW Group.

    Volkswagen also has a JV with SAIC Motor (600104.SS), and the two companies have plans to sell plug-in hybrid cars in China in the future.

    Global auto brands are only allowed to manufacture cars domestically in China through ventures with local partners, with automakers typically limited to two JV partners.

    Volkswagen said in September that it had signed a preliminary deal to explore making electric vehicles in a new joint venture with China’s Anhui Jianghuai Automobile.

    The deal is not final and is subject to approvals.

    “We are making good progress in our feasibility study with JAC,” Heizmann said.

    He said he was hopeful the government would allow what would be Volkswagen’s third JV in China, with the government pushing for less-polluting vehicles.

    “Normally the legal framework is you are only allowed to have two joint ventures. There is a special chance to have this additional joint venture just on pure battery cars,” Heizmann said.

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  • Indonesia ships first containers of timber under EU legality scheme

    Indonesia ships first containers of timber under EU legality scheme

    Tesso Nilo National Park, Riau Province, Indonesia. This patch of forest is supposed to provide a habitat for tigers and elephants, but is constantly under threat of fire, illegal logging and encroachment. Image:

    The first containers of plywood certified as legal under the EU’s anti-illegal-logging action plan were shipped out of the Indonesian capital on Tuesday, a milestone in the fight against blackmarket timber in one of the world’s most heavily forested countries.

    Of the 15 nations that have agreed to take part in the scheme, Indonesia is first to succeed in establishing a national system for verifying the legality of its timber — a considerable achievement for a country where unscrupulous loggers pocketed a presumed $60.7-81.4 billion from illicit sales between 2003 and 2014, according to the nation’s antigraft agency. Indonesia lost nearly $9 billion in state revenue from unreported timber sales during the same period.

    “This signifies Indonesia’s commitment to combat illegal logging and the illicit timber trade,” said Rufi’ie, a director at the Ministry of Environment and Forestry.

    Rufi’ie, who like many Indonesians goes by one name, added that 36 certifications had already been issued under the scheme, known as Forest Law Enforcement, Governance and Trade (FLEGT). He said he hoped Indonesia’s compliance with the program would increase the value of its exports.

    With the adoption of the scheme, EU timber importers will not have to perform their own due dilligence on certified shipments from the archipelago country, increasing the competitiveness of Indoensian timber vis-a-vis other producers.

    Vietnam appears likely to be the second country receive the EU’s blessing to issue FLEGT licenses.

    A board member of the Indoesian Wood Panel Association (Apkindo), Gunawan Lim, said he expected plywood exports to jump 20 percent next year on the strength of the new certification, largely because not just Europe but other developed countries were also concerned with legality.

    Aida Greenbury, the head of sustainability at Asia Pulp & Paper, Indonesia’s largest pulp and paper company, agreed: “As nations around the world from Japan to Australia look to tackle illegal logging, Indonesia will benefit from major first-mover advantage for buyers looking for legal products.”

    The focus now shifts to maintaining the credibility of Indonesia’s Timber Legality Assurance System (SVLK), on which the issuance of FLEGT licenses is based.

    Indonesia is home to hundreds of thousands of forestry enterprises, many of which operate informally and on a small scale, and which can be difficult to monitor.

    Large companies break the law, too. On Wednesday, the Supreme Court convicted PT Merbau Pelalawan Lestari of logging outside the boundaries of its permit area on Indonesia’s main western island of Sumatra.

    NGOs called on the Indonesian government to make sure the scheme was properly enforced and monitored.

    Faith Doherty, forest campaign leader at London-based the Environment Investigation Agency, urged the EU to “swiftly [follow] up information on illegal timber trade entering the EU, including information submitted by independent investigators.”

    The WWF urged greater transparency, calling on the Indonesian government to ensure that civil society groups “will be granted full access to information including relevant data and planning documents,” Aditya Bayunanda said. “Holding up such information would greatly decrease the credibility and transparency of the system.”

  • Indonesia holds rate steady after six cuts

    Indonesia holds rate steady after six cuts

    Indonesia’s central bank kept its benchmark interest rate unchanged after six cuts this year, seeking to calm financial markets in the wake of the United States presidential election results.

    Governor Agus Martowardojo and his board held the seven-day reverse repurchase rate at 4.75 per cent yesterday. Analysts had said market volatility following Mr Donald Trump’s victory meant Bank Indonesia (BI) could not cut its benchmark rate for a seventh time this year.

    The rate hold “is in line with BI’s cautiousness in responding to the escalating uncertainty in the global financial market after the US election”, the central bank said in a statement.

    The central bank had reason to pause after taking aggressive action this year to boost growth amid a benign inflation environment.

    Expectations of more US interest rate increases caused the rupiah to plunge as much as 3.7 per cent against the US dollar last week, prompting BI to intervene to stabilise the Indonesian currency.

    “While BI is chasing for faster growth, one cannot be too complacent of the risks involved and how the rupiah traded post-US elections is a timely reminder of this,” DBS Group Holdings economist Gundy Cahyadi said before the rate decision.

    BI has cut its main policy rate this year by a total of 150 basis points. Despite the rate cuts, loan growth has continued to weaken.

    As of September, annual expansion of outstanding loans was at 6.47 per cent, its weakest in nearly seven years, as commercial banks grappled with increased levels of bad loans.

    The government is forecasting growth of about 5 per cent for this year, well below the 7 per cent targeted by President Joko Widodo when he came to office two years ago.

    Inflation remained subdued at 3.3 per cent in October, close to the lower end of the bank’s 3 per cent to 5 per cent target.

    “BI faces a difficult balancing act,” Capital Economics said. “Despite having cut interest rates six times this year, the domestic economy could clearly do with some additional support… But the threat of further falls in the rupiah means that BI is likely to act with caution.”

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  • Cashless society push will speed smart city development in Malaysia

    Cashless society push will speed smart city development in Malaysia

    Malaysia’s Malaysian Global Innovation & Creativity Centre (MaGIC), smart city enabler Cyberview and Mastercard have signed an agreement to support the Malaysian government’s push towards a cashless society.

    During the recent signing of the memorandum of agreement at the Smart City Expo World Congress in Barcelona, Cyberview’s managing director Dato’ Faris Yahaya said that a cashless society drive would help to strengthen smart city development in Cyberjaya.

    Faris said the agreement is the latest in a series of milestones achieved by Cyberjaya in its continued evolution as a Smart City.

    Recent achievements include the deployment of a city-wide long range (LoRA) network to offer an IoT lab and the establishment of its City Innovation Council (CIC) to allow startups to test out prototypes.

    “Cyberview has spearheaded the continued development of the city under its Smart City and Living Lab initiatives – development pillars designed to increase its operational efficiency, improve the quality of life for the people of Cyberjaya and contribute to growing the local economy,” added Faris.

    “We continue to do this by incorporating technology into every facet of the township through collaboration with our many partners, and this is eminent from our push in transforming Cyberjaya into a cashless city by working hand in hand with MaGIC and Mastercard,” he said.

    Cyberview, MaGIC, Mastercard
    (From left) Carlos J. Menendez, President Enterprise Partnership, MasterCard; Dato’ Faris Yahaya, Managing Director, Cyberview Sdn Bhd; Tan Sri Dr. Mohd Irwan Serigar, Secretary General of Treasury, Ministry of Finance Malaysia; Perry Ong, Country Manager for Malaysia and Brunei, MasterCard and Mr. Ashran bin Dato’ Ghazi, Chief Executive Officer, Malaysian Global Innovation & Creativity Centre (MaGIC) during the Memorandum of Understanding Ceremony at the Smart City Expo World Congress in Barcelona.

     

    “The reason why we’re doing this is because we understand that payments are the heart of a city’s economic activity – forming the core of every economic flow including salaries, consumer spending, business procurement, and taxes,” said Faris.

    Cashless ecosystem

    This latest agreement lists several initiatives to be rolled out by the partners to develop a cashless ecosystem in Cyberjaya.

    He said some of these include integrating Mastercard’s digital payments service Masterpass to make everyday transactions for consumers faster, simpler and more secure as well as providing city authorities and urban planners actionable data-driven insights into the retail industry and to better inform their marketing campaigns for visitors.

    These activities are in line with the government’s Economic Transformation Programme and Bank Negara Malaysia’s (BNM) vision to transform Malaysia into a cashless society.

    Ashran Dato’ Ghazi, chief executive officer of MaGIC said: “MaGIC will support the Cyberview Smart City initiative in a collaboration with both Cyberview and Mastercard. Through the Corporate Entrepreneurship Responsibility (CER) platform, MaGIC will play a key role to facilitate the partnership between players in the corporate sector like Mastercard and local entrepreneurs to design and build smart city infrastructure, services and solutions in Cyberjaya.”

    Perry Ong, country manager for Malaysia and Brunei of Mastercard, said, “Through the Economic Transformation Program, an electronic payments agenda is embedded through a structural reform known as the Payment Card Reform framework where the payment industry is working together in efforts to broaden market access and to dampen cash transactions. It is imperative that we recognise the great control, transparency and efficiency electronic payments offers to society.”

    Ong added that Mastercard will be providing the horizontal payment construct across all the vertical clusters in the Smart City including urban mobility, lifestyle, finance, health, supply chain and education among others.

    He said this will  ensure an integrated payment ecosystem for a better commerce experience with digital solutions such as “Masterpass,  which helps Malaysians to enjoy simpler, safer and smarter digital payments across any device and channel anywhere  – be it online, in app and in-store with contactless.”

    “By embedding digital payments into our core infrastructure and harnessing the data that electronic payments generate, cities can deliver on their promise to create smarter, more welcoming spaces, and empower their citizens to lead greater, more rewarding lives,” said Cyberview’s Faris.

    He said an AllianceDBS Research report earlier this year projected that the ‘cashless’ system in Malaysia will grow by 15 per cent, five-year compounded annual growth rate (CAGR), as Bank Negara Malaysia (BNM) pushes for reform in the country’s payment system.

    “We will continue to collaboratively work with our numerous ecosystem partners, including MaGIC and Mastercard to enhance the liveability of the city and provide the people of Cyberjaya with everything they will need to improve their lives,” Faris said.

  • Causeway Bay and Tsim Sha Tsui retain allure for retailers in spite of sluggish times

    Causeway Bay and Tsim Sha Tsui retain allure for retailers in spite of sluggish times

    The prime shopping hubs of Causeway Bay and Tsim Sha Tsui, among the most expensive in Hong Kong in terms of rental costs, remain attractive for retailers amid overall sluggishness in the sector.

    Retail rents in Causeway Bay fell 8 per cent in the rental index in the third quarter and 10 per cent in Tsim Sha Tsui, and they are expected to decline further next year, according to a Colliers International report.

    These declines came amid a 19-month drop in retail spending in the city, with overall sales dropping 9.6 per cent year on year in the first nine months of the year.

    Spending in Hong Kong has been depressed by an 8.7 per cent fall in mainland tourist arrivals during the period.

    The retail industry in the city as a whole is undergoing a consolidation as tourist traffic from the mainland continues to thin, pushing down shop rents in the near term, according to David Ji, the head of research for greater China at Knight Frank.

    In Hong Kong, the four major retail districts of Causeway Bay, Central, Tsim Sha Tsui and Mong Kok had all seen rental corrections, said Terence Chan, the head of Hong Kong retail at JLL.

    While Mong Kok has experienced less pressure from the flight of luxury brands, the property consultancy sees a 15 per cent correction for retail rents in the city as a whole this year.

    The decline was likely to bottom out next year with a correction of about 5 to 10 per cent, Chan added.

    He said that among the four major shopping districts, Tsim Sha Tsui would command the highest average rents in terms of gross floor area, at HK$2,000 per square foot per month. It was followed by Central, with an average monthly rent of HK$1,400 per square foot.

    Causeway Bay ranked third with an average of HK$1,200 per square foot.

    Chan said that while overseas brands would continue to focus on these four districts, established ones might seek to diversify their footprint with outlets in secondary areas such as Yuen Long.

    According to Ji, retailers will continue to favour Causeway Bay and Tsim Sha Tsui, but the trend of high-end luxury brands being ­replaced by sports, lifestyle and food and beverage outlets will continue.

    With Adidas leasing the space formerly occupied by a Coach store in Central and footwear outlet Joy & Mario replacing jewellery store Folli Follie in Causeway Bay, rents will inevitably continue to come under downward pressure.

    “We are now facing a ‘new normal’ trend,” Ji said. “It’s safe to say we are not going to see a drastic improvement. If retailers can hold their ground for the better part of next year, then it’s already a good situation.”

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  • The rise and rise of property management firms in China

    The rise and rise of property management firms in China

    Virginia Huang has amassed nearly 20 years of top-level commercial real estate industry knowledge, and is the longest serving member of the CBRE team in Beijing.

    After joining the firm in 1997, she is now the firm’s managing director, and head of advisory and transaction services for Greater China

    A specialist, particularly, in the office leasing market, Huang has been involved in some of the Chinese capital’s highest profile transactions, dealing with top-tier Chinese and international developers.

    She shares her thoughts on the sea changes that have happened in China’s commercial real estate landscape, the recent rise in the amount of retail space being converted into offices, and the emergence of Beijing’s decentralised markets.

    What major changes have you seen during your 20 years in the commercial real estate sector?

    When I first entered the industry in the late 1990s, Chinese companies basically wouldn’t use our services. Our customers were primarily foreign corporations whose own corporate real estate teams were small and much more used to outsourcing.

    The traditional perception about CBRE as a company was that we were classy but aloof, dealing only with foreign clients. But we set out to convince people that was not the case, that we were straight forward, humble and down to earth, and that we had and in-depth understanding of Chinese companies and the Chinese market.

    Our domestic client base, as a result, has grown rapidly in the past few years, very much in line with the rise in size and number of many Chinese companies. There has also been a change in mindset, that they increasingly recognise the value of a professional international firm, as many are looking overseas for business.

    How can companies ensure their real estate requirements match their overall growth strategy?

    Many Chinese companies, especially technology firms, have grown so fast that often their property planning procedures has failed to keep pace, even if they do have procedures in place. But the same is often true in many mature multinationals, who might not have clear procedures in place to make these types of decision. It’s a universal problem.

    Chinese firms in this aspect do face a gap, especially when it comes to decision making: who, at what stage should they be involved? Often that is unclear. That fits their early-stage nature. But when start-ups grow larger and larger, as some now do, they will naturally shift to see leasing more as a means to attract and retain talent and improve working efficiency. In that way they would be less likely to compromise quality simply for cost.

    Workplace management should be aligned more with other departments from the start, especially with the top management and the overall strategy of the company. In terms of leasehold or freehold, there is no fixed solution. Each company has to make its workplace strategy in line with its overall strategy.

    A lot of companies have reported that finding good office space in Beijing’s central business district(CBD) is becoming increasingly difficult, and expensive – but many are unwilling to locate to less popular and cheaper sites away from the city centre. How can the problem be solved?

    Contrary to popular perception, there is plenty of supply in Beijing CBD, a lot more in fact than in the city’s Financial Street or Zhongguancun, where an office can be really hard to find.

    Also contrary to perception is that emerging markets, such as Wangjing area, have a high vacancy ratio. The vacancy ratio in Wangjing is low, and rents are not low any more.

    The problem some of these areas have in filling their space is to do with infrastructure

    Office workers in Wangjing, particularly, complain it’s hard to get to by public transport. Services and amenities, such as convenience stores, restaurants and hotels are rare.

    These types of out-of-town areas used to attract tenants with cheap rents and favourable policies. But office owners are becoming increasingly aware they cannot attract firms just by offering generous discounts. They have to do more complete the surrounding amenities, the soft environment of their markets, and more will be willing to move into them.

    With an oversupply of retail space in China, many underperforming malls are being converted into offices. Is there a danger of that too becoming oversupplied if the trend continues?

    There are two types of retail space being converted into offices: complementary retail space in bigger complexes, and whole retail buildings that are underperforming due to their poor location or poor management.

    On the first type, often their small size and flaws in design make them difficult to attract tenants. Ideally owners should be converting the second, third and fourth floors into offices, especially if higher floors are already offices.

    Whole underperforming retail buildings can be more be difficult to convert, because of their design, the position of their escalators, windows and so on. It can also be hard for there types of building to attract traditional tenants such as financial and law firms.

    I don’t think there’s an oversupply issue for now, because the trend is exclusively robust in Beijing. There is an acute supply issue in the capital, because it is nearly impossible to find new office projects in the downtown area because of policy regulations. Demand for offices here continues, unabated.

    If retail property owners invest in converting the lower levels of their buildings into office space, they will be able to earn much higher rents, than if for instance the site was leased as a restaurant. So there is a strong incentives to do so.

  • Vietnamese consumers prefer the ‘Made in Thailand’ label

    More than ever, consumers in Vietnam are looking for the ‘Made in Thailand’ label when purchasing consumer goods, and they’re willing to pay a premium for these products, according to experts.

    The high domestic demand for Thai products, they say, was the driving factor that resulted in the Thai Central Group earlier this year acquiring a controlling interest in 33 Big C Vietnam supercenters (and 10 convenience stores) and later Thai BCJ Group’s purchase of 19 Metro Vietnam superstores.

    The majority of Vietnamese consumers are willing to pay more for many key product categories, from baby food and appliances to electronics and apparel, as long as these goods were produced in Thailand, say the experts, reported Thai News Bureau.

    In each of the key categories, they say, at least 50% of domestic consumers are willing to pay a premium of more than 10%.

    More surprising, however, is the fact that the prices of Thai products are often lower than the prices of Vietnamese products of similar size and quality.

    Vu Dieu Thuan, a customer at Metro Ha Dong, says after careful consideration she chose to buy 5kg of Thai rice at US$4.71 (VND105,000) over Dien Bien rice at US$4.93 (VND110,000) because it tastes better.

    Experts say, many Vietnamese consumers report they regularly choose Thai made products over Vietnamese goods regardless of price on a regular basis.

    An assistant at the Metro in Ho Chi Minh City, points out that customers regularly purchase condensed milk from Thailand, which is US$.27 (VND 6,000) less expensive per can than Vietnamese milk.

    Only Thai clothing items are routinely more expensive than similar items made in Vietnam, says the assistant.

    Experts express the view that Thai products are positioned well in the domestic market. On the one hand they are less expensive than Japanese and Korean products of equivalent quality. On the other hand, they are of much better quality than Chinese products.

    To top it all off, they are aesthetically more appealing than Vietnamese products say the experts, adding that domestic consumers on the whole perceive Thai-made products as being of higher quality than local products. In fact, even when comparing Vietnamese and Thai products of similar price and quality, the majority of domestic consumers would still buy the Thailand-made items, they say.

    Still other experts disagree vehemently and say not so fast. Vu Vinh Phu, president of the Hanoi Supermarket Association, says Thai products are benefiting from better placement in stores like Big C and Metro.In these supercenters, says Mr Phu, the placement of retail products on shelves favors Thai products over Vietnamese products. One commonly used phrase in retail is “eye level is buy level”.Meaning that products positioned at eye level are likely to sell better. Stores like Big C and Metro are putting Thai products at eye level or just below, which is the best location and this explains in part why their sales are better.

    The location of goods within an aisle is also important, says Mr Phu. Vietnamese goods are being placed at the start of an aisle and don’t sell as well as Thai products placed in the center of the aisle. As well items placed at the end of aisles sell better because of higher visibility and Thai products are given these choice locations as well, says the Vietnam Association of Seafood Exporters and Producers (VASEP). The battle between supercenters and their placement of Vietnamese produced goods continues, says VASEP, adding they are urging Big C and Metro to give better visibility and placement to Made-in-Vietnam products.

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  • Mazda Unveils the All-New CX-5

    Mazda Unveils the All-New CX-5

    Mazda Motor Corporation today unveiled the all-new Mazda CX-5 crossover SUV. The fully redesigned model, which refines every element of Mazda’s design and technology to offer new dimensions of driving pleasure, will be launched in Japan in February before being rolled out to global markets.

    The slogan for development of the all-new CX-5 was “an SUV all customers will enjoy,” and Mazda aimed to add a new dimension by offering driving pleasure that everyone on board can enjoy—not just the driver. The model is engineered in line with human sensibilities to deliver responsive performance that conforms to the driver’s expectations. It also prioritizes passenger comfort, with a quiet cabin and pleasant ride feel, and adopts G-Vectoring Control, the first of the SKYACTIV-VEHICLE DYNAMICS vehicle motion control technologies. Designed under the KODO—Soul of Motion design theme, the exterior is both bold and sensual, and the interior has been crafted to give occupants a pleasant feeling. The body color lineup includes the newly developed Soul Red Crystal, which highlights the beauty and quality of Mazda’s KODO designs.

    The powertrain lineup comprises the SKYACTIV-G 2.0 and 2.5 gasoline, and SKYACTIV-D 2.2 diesel engines. All three options offer powerful, linear driving performance and outstanding environmental performance.

    The all-new CX-5 will be on display at the Los Angeles Auto Show, open to the public Nov. 18-27.

    Launched in 2012, the CX-5 was the first new-generation model featuring SKYACTIV technology2 and KODO design. It has since grown into a core model that is sold in over 120 countries and accounts for approximately one quarter of Mazda’s global sales volume.3 It has won around 90 awards worldwide, including 2012-2013 Japan Car of the Year.4

    By providing driving pleasure to everybody who drives or rides in one of its vehicles, Mazda aims to enrich people’s lives and become a brand with which customers feel an emotional connection.

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