Capital markets news summary for Mon 6 Mar 2023
Capital markets news summary for Mon 6 Mar 2023
Japan’s Myfarm invests RM210m in PLS Plantations’ durian project
Myfarm will purchase 49% of Akar Barat from PLS-LESB for RM181.8m. The durian plantation is on 1,000 hectares of land in Raub, Pahang and is planted with Musang King durian trees aged up to 3 years old. Akar Barat entered into an offtake agreement with Dulai Fruits Enterprise – a 70%-owned subsidiary of PLS Plantations – for Dulai Fruits Enterprise to buy all the durians produced by Akar Barat. Dulai Fruits has an exclusive distribution agreement with China Oil and Foodstuffs Corp, China’s largest food processing and trading company. PLS Plantations is also considering planting 10,000 hectares of pineapple. The company will invest RM90m in the next 2 years on the durian and pineapple plantations. It expects its oil palm plantation’s revenue contribution to fall from 80% currently to 20% in 5-7 years. The counter closed at RM1.01.
CVC Capital Partners plans to buy minority stake in KPJ Healthcare
The Luxembourg-based private equity firm with USD133b in assets under management is talking to Johor Corporation which holds 35% of KPJ Healthcare and the Employees Provident Fund with 13.2%. The 2 firms plus other Malaysian state-backed institutions altogether own more than 65%. Even after the deal, government-linked institutions will still own more shares than CVC. The private equity firm has reached out to banks to finance the deal. In Oct 2022, rival TPG Capital ended talks with Johor Corporation to privatise KPJ Healthcare over concerns about valuation. KPJ Healthcare closed at RM1.13.
Investor sentiment stays cautious
The FBM KLCI closed at 1,453.55 due to the lack of buying catalyst. Investors are concerned about rate hikes by the US Federal Reserve, although there are some good news on improving China’s purchasing managers’ index. The sentiment is expected to remain this week as investors will be focussed on the overnight policy rate (OPR) to be decided at Bank Negara Malaysia’s (BNM) meeting on 8-9 Mar. The OPR is only expected to be increased in 2Q2023 or later. Other considerations include the domestic inflation data, 2022 BNM Annual Report due in Mar, and the on-going China’s National People’s Congress and the Chinese People’s Political Consultative Conference. Bursa’s turnover for last week declined to 16.13b units worth RM11.85b against 16.79b units worth RM10.89b the prior week. Separately, the Federal Reserve said that further rate hikes are needed to bring inflation down to 2%.
KKR exits Weststar Aviation
Weststar Group bought the remaining 21% in Weststar Aviation it did not own from the US-based global investment firm. KKR bought 40% of Weststar Aviation in 2013 with plans to list in 2015 in an IPO which would raise USD300m-USD600m. More recently in May 2022, the IPO plans returned. The company has 34 helicopters, the largest fleet in Southeast Asia. It entered into new markets such as Africa, Vietnam and the Middle East and began serving the public and sustainable energy sectors, apart from oil and gas.
US to ban investment in advanced technologies in China
Following Oct 2022’s curbs on the export of advanced chips to China, the US government is close to tightening rules on investments by US companies to limit China’s ability in acquiring technologies which could improve its military capabilities. Tensions that began during the Trump administration’s trade war have continued with relations between both countries further strained after the US shot down a Chinese spy balloon. In addition, there are concerns about China’s plans to supply weapons to aid Russia in the Ukraine war and a report on the lab leak origin of Covid. Separately, investor Mark Mobius – formerly of Franklin Templeton – claims that Chinese authorities are refusing to let him take money out of China. He sees the Chinese government gradually taking control of businesses, and is advising that investors place their money in India and Brazil instead.
