Capital markets executive summary | Fri 5 May 2023

Capital markets executive summary | Fri 5 May 2023

Petronas to invest USD4.1b in Tamil Nadu

The state government has given its approval for Petronas to build a green hydrogen and ammonia plant at the Cabinet meeting chaired by chief minister MK Stalin in Chennai on 3 May. Petronas has a number of businesses in India such as crude oil trading, liquefied petroleum gas, petrochemicals, lubricants and liquefied natural gas. It is also keen on expanding into the renewable energy sector. In Mar, Petronas was reported to have offered INR38b rupees (USD460m) to buy a 20% equity interest in the green energy unit of NTPC – India’s largest power producer – the first deal of its kind by a state-run company. The renewable energy sector is among the country’s top 5 industries which attracted foreign funds with a 5% share of all inflows in Apr-Sep 2022, up from 3.3% the prior year.

MyEG gets 3-year contract extension for JPJ services

The existing exclusive contract for a 3-year extended period was awarded in 2020 and will expire on 22 May. Although the contract is extended for 3 years, it will no longer be exclusive and other service providers will be able to offer the Road Transport Department (JPJ) online services. MyEG, as with a number of other monopolies, have been under pressure. In Feb, its shares suffered heavy selldown after the government announced that private vehicle owners no longer need to display the road tax stickers on their vehicles and drivers need not carry a physical copy of their driving licences. The company was also battered when the government said that all immigration services – including those managed by 3rd parties such as MyEG – will revert to the Immigration Department by 2025. The counter closed at 82 sen.

CelcomDigi terminates SSA with DNB

Celcom and Digi signed separate Share Subscription Agreements (SSA) to take up 12.5% each in Digital Nasional Berhad (DNB) in Nov 2022. Subsequently, Axiata Group Berhad and Telenor Asia Private Ltd announced that the merger of the companies was completed on 30 Nov 2022. Axiata and Telenor each hold 33.1% in CelcomDigi, the merged entity. The company serves 20m customers and earned proforma revenues of RM13b. Despite the consolidation, the Celcom and Digi brands will be retained while network integration will only be completed in 2025. As the government decided to continue with the rollout of 5G until 80% coverage is achieved and after that to switch to a dual wholesale network model, Celcom and Digi terminated their respective SSAs. The company can now play a more active and direct role in the development of the 5G network. The counter closed at RM4.44.

Singapore’s Bitdeer to set up USD500m green crypto fund with Bhutan

The Himalayan kingdom is carbon-negative and its constitution requires 60% forest cover for the country. Its abundant hydropower – currently exported to India – can supply the electricity to power vast computer farms to mine cryptocurrency. Mining operations often use up power generated by fossil fuel-fired power plants leading to criticism of their impact on climate change. Skyrocketing energy costs are also squeezing crypto companies, forcing the search for cheaper and more sustainable ways to power their mining operations. The industry is notoriously risky and volatile but Standard Chartered projects Bitcoin to hit USD100,000 by end-2024. The Bhutan government’s investment arm Druk and Nasdaq-listed crypto-mining firm Bitdeer – which already run data centres in Norway and the United States – expect to begin raising funds by end-May to construct data centres and invest in renewable energy such as hydropower and hydrogen production. Bitdeer is owned by Chinese crypto billionaire Jihan Wu, and began trading on the Nasdaq in Apr. In 2022, companies united under the Crypto Climate Accord pledged to achieve carbon neutrality by 2030.

Alibaba’s global ecommerce division considers US IPO

Its international online shopping unit – which includes Lazada and AliExpress – is in talks with banks to prepare for the initial public offering (IPO) in 2024. Discussions are in early stages and the IPO size has not been determined. In Mar, Alibaba announced plans to carve itself out into 6 divisions for fundraising or listing. Alibaba has been a target of regulators for years although the Chinese government is easing a sweeping regulatory crackdown in support of its private enterprises. The breakup was intended to further reduce scrutiny over the tech giant’s sprawling business and at the same time boost its share value. However, continued concerns about US-China tensions and stiff competition with Tencent and JD.com caused the earlier optimism about the break up to fizzle out. It now trades at just 10 times forward 1-year earnings compared to 19.3 times for Tencent and 12.3 times for JD.com.