Executive summary for capital markets news | Tue 4 Apr 2023

Executive Summary for Capital Markets News | Tue 4 Apr 2023

Nextgreen in JV to develop 20 oil palm waste centres

Nextgreen Biomass Sdn Bhd – a wholly-owned subsidiary of Nextgreen Global Berhad – signed a shareholders’ agreement with Greentech Malaysia Alliances Sdn Bhd (GMA), Koperasi Sahabat Amanah Ikhtiar Malaysia Berhad (KS) and Koperasi Perkhidmatan Setia Berhad (KP) to establish GTC Biomass Berhad (GBB). Netxgreen will own 65% of the JV company, GMA 10%, KS 18% and KP 7%. Nextgreen’s related company, Nextgreen Pulp & Paper Sdn Bhd, is the offtaker for all the oil palm waste and derivatives from the centres. The company plans to build 4 plants – in Gua Musang, Pekan, Kota Tinggi and Sungai Koyan – in the next 2 years at a cost of RM50m per plant. Each plant will have the capacity to store 450k tonnes of processed empty fruit bunches annually. The Pekan centre – Green Technology Park – will receive 1.8m tonnes of raw materials and produce 400k tonnes of pulp. GMA will help arrange the issuance of sukuk or bonds to raise funds for the development of the 4 centres. KS will lead the crowdfunding for GBB. Altogether, the company will build 10 centres in the peninsula, 5 in Sarawak and 5 in Sabah within 6-7 years. Each plant will cover 15 palm oil mills. The counter closed at 99 sen.

MN Holdings partners Shanghai DC-Science for data centre project

Mutu Nusantara Sdn Bhd – a subsidiary of MN Holdings – signed the memorandum of understanding with Shanghai DC-Science Co Ltd. This will be the 1st data centre for Shanghai DC-Science outside China after having built 300 in its home country. The project – estimated to cost USD600m – will be located in Sedenak Tech Park, Johor with 120MV dual power supply and 5,000 tonnes average daily water supply to support 12,000 racks. Phase 1 will begin construction this year and commence operations in 1H2024. MN Holdings provides infrastructure utilities construction services and solutions and serves the power, gas, sewerage and telecommunications industries. This project will boost the company’s order book currently at RM325.9m. Finalisation of the detailed scope of work is pending the signing of the supplementary agreement. The counter closed at 32 sen.

LTAT talking to Sarawak government on 5% Affin stake sale

Lembaga Tabung Angkatan Tentera (LTAT) currently has a 33.2% shareholding in Affin Bank. LTAT is obligated to inform Affin Bank of any change in its shareholding while the Sarawak government entity that acquires 5% or more equity interest must also alert the bank. The 113.69m shares are speculated to be exchanged at the prevailing price or RM227.35m. The potential sale may be connected to LTAT’s proposed privatisation of Boustead Holdings Berhad. LTAT is attempting to reduce its shareholding in Affin Bank to below 50% post-privatisation from the indicative level of 54.1% in order to avoid having to seek Bank Negara Malaysia’s approval. Separately, the merger between AXA Affin General Insurance (AAGI) and Italy’s Generali Asia NV was completed on 1 Apr. Affin Bank now holds 30% from 47% previously while Generali has 70% in the enlarged AAGI after Generali subscribed for 67.46m new shares. Affin Bank closed at RM2.01.

Ranhill consortium wins 100MW Sabah power plant project

On 28 Feb 2022, the Energy Commission (EC) issued a request for proposal to Ranhill Capital – a subsidiary of Ranhill Utilities Berhad – and Sabah Energy Corporation Sdn Bhd for the proposed development of a combined cycle gas turbine (CCGT) power plant. The proposal was submitted on 29 Apr 2022. The consortium received a letter of notification (LON) on 31 Mar from the EC for the project on a build-own-operate-transfer basis with commercial operation date scheduled for 1 Mar 2026 and the term for the power purchase agreement (PPA) to be 21 years. The consortium must retain its effective shareholding in the project for 10 years. Financial close must be achieved no later than 5 months from the LON date. Ranhill is the largest independent power producer (IPP) in Sabah with 40% of the total installed capacity of IPPs. Ranhill Powertron Sdn Bhd owns the 190MW Teluk Salut CCGT power plant (RP1) while Ranhill Powertron II Sdn Bhd owns the 190MW Rugading CCGT power plant, both at Kota Kinabalu Industrial Park. The existing projects are on build-own-operate basis and the PPAs will expire in 2029 and 2032 respectively. The company is negotiating an extension of 10 years for RP1. Ranhill Utilities closed at 51 sen.

OPEC+ oil cut could drive prices up above USD100

In a surprise move, the Organisation of Petroleum Exporting Countries (OPEC) and its allies including Russia announced further production cuts of 1.16m barrels per day (bpd) from May. Following that, the total volume of cuts since Nov 2022 amounts to 3.66m bpd or 3.7% of global demand. Tightness in the oil market could send the price of Brent to USD110 in the summer. It is believed that OPEC+ decided on the production cut after the US and France made releases from their strategic petroleum reserves and the US refused to refill it in 2023. It appears that OPEC is protecting its profit in view of the global economic slowdown, although Saudi Arabia said that it is to support market stability. If China and India resort to buy more Russian oil, it could push the price of Russian oil above the cap set by the G7 countries.