Capital markets executive summary | Tue 6 Jun 2023

Capital markets executive summary | Tue 6 Jun 2023

Yinson buys Netherlands-based AFPS

Yinson Bouvardia Holdings Pte Ltd plans to acquire the entire equity interest in AFPS BV from Atlanta Field BV via a call option for a maximum price of USD87.9m (RM405.6m). AFPS is the owner of floating, production, storage, and offloading (FPSO) Atlanta. The extended option period via a letter of extension dated 26 May 2023 is up to 14 Jul 2023. The acquisition will expand Yinson’s Brazilian FPSO fleet to 3. After FPSO Atlanta is modified and upgraded to extend its design life, it will be moored at the Atlanta deep-water field in the Santos Basin. The charter contract dated 21 Feb 2022 between the charterer – Enauta Energia SA a wholly-owned subsidiary of Enauta Participacoes SA – and AFPS is for a period of 15 years with options to extend up to five years. The estimated value of the time charter agreement is USD1.5b (RM6.92b). The counter closed at RM2.60 on Fri.

EcoCeres invests RM1b in Johor sustainable aviation fuel plant

On 4 Jun, EcoCeres Renewable Fuels Sdn Bhd – a subsidiary of Hong Kong-based EcoCeres – broke ground on a RM1 billion sustainable aviation fuel (SAF) production facility in Tanjung Langsat, Pasir Gudang. EcoCeres – a unit of gas distributor Hong Kong and China Gas – is a biomass utilisation company with businesses in bio-grease utilisation and agricultural waste utilisation. Its 1st waste-oil processing plant in Zhangjiagang, China has the capacity to produce 100k tons of low-carbon aviation fuel and 200k tons of renewable diesel fuel a year. It delivered the 1st shipment of 100% agricultural waste-produced cellulosic ethanol to the European markets on 29 May. It was reported in early Feb that it will start building a 2nd plant in Johor to turn waste oil into low-carbon fuel for aircraft and vehicles. The plant will be able to produce 350k tons of fuel a year from discarded cooking oil and palm oil mill effluent. The construction of the facility will take 2 years.

EPF rejects Mr DIY’s share buyback

The Employees Provident Fund (EPF) is the 3rd largest shareholder of Mr DIY with 5.38% or 507.17m shares. Mr DIY has 9.43b shares in total, of which 1.04b shares or 11% are floating in the open market. The EPF will vote against Mr DIY’s proposed renewal of authority for the company to purchase its own shares in the annual general meeting (AGM) on 8 Jun. The fund said that the company should utilise their cash to pay higher dividends to shareholders instead of a share buyback. Mr DIY has cash and bank balances of RM1.36b as at 31 Mar. It declared an interim single tier dividend of 0.6 sen per ordinary share for a RM56.6m payout after the 1st quarter ended 31 Mar 2023, payable on 23 Jun. The share buyback resolution allows the company to purchase and hold an aggregate number of shares not exceeding 10% of the total number of issued shares of the company at the time of purchase. The counter closed at RM1.59, down 22.82% in the last 6 months.

RCEP is in effect for all member countries

The Regional Comprehensive Economic Partnership (RCEP) agreement came into effect in the Philippines on Fri, the last country to do so. The agreement is now in effect in all its 15 member countries, namely the 10 Asean countries, China, Japan, South Korea, Australia and New Zealand. The RCEP – which was introduced by China as a counterbalance to the Obama-sponsored Trans Pacific Partnership Agreement (TPPA) – was signed in Nov 2020 by the 15 countries after 8 years of negotiations. It entered into force on the 1st day of 2022. The agreement is expected to add momentum to regional economic integration, enhance regional trade and investment liberalisation, and contribute to the long-term development of the regional and global economy. In 2022, trade between China and other RCEP members grew 7.5% to CNY12.95t (RM8.35t), while their actual use investment in China jumped 23.1% to USD23.53b (RM108b). China expects to implement the RCEP in facilitating supply chain and industrial chain cooperation, and in promoting high-quality development.

Sembcorp Industries in talks to sell SembWaste

The company announced that is has begun a process to potentially divest its waste management business and its energy from waste plants. The preliminary discussions with certain parties may not result in any transaction. Sembcorp confirmed that HSBC has been appointed as financial adviser for the sale. In May, Reuters reported that US private equity firm KKR & Co and Australia-based Macquarie Asset Management were bidders which could value SembWaste at USD500m. The first round of non-binding bids would be received by early Jun. Yesterday, Sembcorp shares hit the day’s high of SGD5.365 before closing 16 cents or 3.1% higher at SGD5.35.