Capital markets executive summary | Fri 22 Sep 2023

Capital markets executive summary | Fri 22 Sep 2023

7-Eleven sells Caring at higher price

On 21 Jul, Convenience Shopping (Sabah) Sdn Bhd (CSSSB), subsidiary of convenience store chain operator 7-Eleven Malaysia Holdings Bhd, announced that it received a binding term sheet from BIG Pharmacy’s subsidiary in Jun. CSSSB signed a sale and purchase agreement with BIG Pharmacy Holdings Bhd to dispose of 75% in Caring Pharmacy Group Bhd at RM675m, higher than the RM637.5m announced previously. The new price is at a price-to-earnings multiple of 20.7 times. BIG Pharmacy is also acquiring the balance 25% from Motivasi Optima Sdn Bhd. 7-Eleven spent RM423.23m on Caring from Feb-Jun 2020, giving it a RM251.16m pro-forma gain on the disposal. RM416.19m or 61.66% of the proceeds will be used for 7-Cafe store expansions and RM250m or 37.04% for repayment of borrowings. 7-Eleven shares closed at RM1.99.

UiTM Solar Power Dua’s AA- sukuk rating affirmed

MARC Ratings affirmed the rating of the company’s RM92m outstanding green sustainable and responsible investment (SRI) sukuk. UiTM Solar Dua owns a 25MWac solar power plant in Pasir Gudang, Johor. The rating reflects the 21-year power purchase agreement (PPA) with Tenaga Nasional Berhad, which eliminates demand risk but moderated by unpredictable solar irradiance and the plant’s operational performance. A longer-than-usual northeast monsoon in early 2023 led to lower irradiance, which caused total energy output to fall 15.9% below the P90 energy production forecast to 16,816MWh in 1H2023. At 19 Sep 2023, cash was RM10.6m, sufficient for RM7m sukuk obligation due on 4 Mar 2024. The base case minimum pre-distribution finance service coverage ratio is 2.57 times and average is 3.08 times. Cash build-up in the earlier years is necessary given the back-loaded sukuk principal payments. Cash flow generation is adequate to withstand a 10% increase in operating expenses, 2.4% plant unavailability or lower P95 energy production.
Would you like us to email you when our latest executive summary is available?

KWAP drives entrepreneurial growth with RM500m fund

The money will be invested via the newly-launched Dana Perintis in the next 18-24 months. The Retirement Fund Inc (KWAP) wants to accelerate growth in line with its sustainability commitment as a signatory of the UN Principles for Responsible Investment (PRI). KWAP has already identified several potential startups, which currently employ more than 1,000 Malaysians from different backgrounds. Dana Perintis will invest RM250m in Malaysia-focused venture capital (VC) funds, which will support the development of a self-sustaining venture ecosystem. VC funds are catalysts, which nurture startups by providing capital and guidance. Dana Perintis will also make RM250m direct investments in early-stage companies to support startups through the growth stage. The investments will cover the startup journey from accelerators to growth managers, thereby contributing to the maturing of the Malaysian venture capital sector.

Worldwide plans more waste-to-energy plants

Worldwide Holdings Bhd sees itself beyond waste management, to also champion a more energy-efficient Selangor with plans for more waste-to-energy (WTE) plants in the next decade. Its ongoing development of the largest and most advanced WTE facility in the country, Jeram Integrated Solid Waste Management Centre (ISWMC), will process 3k tonnes per day (tpd) of solid waste and produce 50 megawatts (MW) of electricity. The Tanjung Dua Belas ISWMC in Kuala Langat will turn 1,800 tpd of solid waste into 38MW of electricity. The technology reduces the solid waste volume by 90%. This reduces the need for engineered landfill disposal methods and resolves the issue of scarcity of land for landfills in Selangor. WTE helps Selangor conserve valuable land resources and ensure a cleaner and healthier environment for its residents, which is one of the goals outlined in Rancangan Selangor Pertama (RS-1).

Bid to privatise Toshiba succeeds

The Tokyo-based conglomerate, established in 1875 and listed 74 years ago, is involved in, amongst others, nuclear power plants, power semiconductors, batteries and hard-disk drives. A consortium led by private equity fund Japan Industrial Partners Inc’s (JIP) successful tendered for and now holds 78.65% of its shares. The JPY2t (USD13.5b) buyout will involve the consortium buying the remaining shares and take full control of Toshiba Corp before delisting from the Tokyo Stock Exchange. Toshiba’s lenders want ousted chief operating officer Goro Yanase to be given a leading management role, despite having stepped down earlier this year for inappropriate entertainment expense claims, because he has experience in the nuclear power business, which is key to any turnaround. Sumitomo Mitsui Banking Corp and other banks giving JPY1.2t in loans for the buyout are pushing for their own representatives in leadership positions instead of Yanase. The privatisation is touted as giving space for Toshiba to focus on longer-term strategy.