Capital markets news summary for Fri 3 Mar 2023

Capital markets news summary for Fri 3 Mar 2023

LTAT wants to privatise Boustead at 85.5 sen per share

Lembaga Tabung Angkatan Tentera (LTAT) has made a voluntary offer for the remaining 822.51m or 40.58% of Boustead shares it does not already own. The offer price is at a 30.5% premium over the last traded price of 65.5 sen, but is a heavy 52% discount to Boustead’s net tangible asset of RM1.64. The offer is not conditional upon any minimum level of acceptance, but is conditional upon the approval from the Minister of Finance and waiver from Bank Negara Malaysia under the Financial Services Act and Islamic Financial Services Act in relation to the acquisition of interest in Affin Bank. This offer comes on the heels of Boustead’s RM402m 4Q2022 loss caused by Pharmaniaga’s RM552m Covid vaccine impairment. The market value of Boustead’s share of Affin Bank and Boustead Plantation alone total RM1.933b, close to 3 times the privatisation cost of RM703.25m.

Sime Darby buys Australia’s Onsite Rental for RM1.92b

Onsite rents out equipment to business customers in Australia involved in the resources, energy, industrial and commercial sectors. The company employs more than 500 people through a network of over 30 branches across Australia, providing dry hire solutions and digital rental management solutions. Onsite has over 60,000 assets which allows Sime Darby to expand its portfolio and position itself to capture growing demand across the resources, infrastructure and energy sectors. Onsite plans to leverage the new relationship with Sime Darby by expanding capacity, offering new products and entering into new markets.

Durioo+ gets USD2.85m seed funds

After its launch in Feb 2022, the Islamic-themed streaming service has managed to strike a total of 27 strategic partnerships with corporates, government agencies, non-governmental organisations, and small and medium sized enterprises. Among the investors are Y Combinator, Uncommon Capital, Gobi Partners, Lynett Capital, New Venture Order and Innate Capital. The goal of the company is to provide a safe streaming platform for Muslim children around the world. This will be achieved by producing, co-producing and licensing entertaining and fun content with good values, virtues and Islamic teachings. It has grown 39% month-on-month in the last 6 months to currently 22,000 local and foreign subscribers. The company has also signed a partnership for the app to be included in Unifi TV’s streaming offerings.

China to inject USD1.9b into local chipmaker

The Chinese government has pledged to invest – via the National Integrated Circuit Industry Investment Fund or commonly known as the Big Fund – USD1.9b in Yangtze Memory Technologies Co (YMTC). The Chinese chip industry is facing the challenge of the US ban on the sale of chips to China and slumping global demand. YMTC is only a few Chinese chipmakers competing against Samsung and SK Hynix to supply memory chips. In 2022, it was placed in the US trade blacklist. The Big Fund was founded in 2014 and drew USD45b in capital. In 2022, senior government officials, frustrated by the lack of progress in local chip technology launched a sweeping corruption campaign that took down senior officials and several executives linked to the Big Fund. Chipmaking technology is dominated by companies in the US, Japan and the Netherlands. China still relies on imports to meet its USD150b annual chip needs. Separately, South Korea’s chip inventory climbed 28% month-on-month, the highest since Feb 1996, underscoring a prolonged tech slump.

Lower US jobless claims point to strong labour market

Initial unemployment claims decreased by 2,000 to 190,000 in the week ended 25 Feb compared against the median forecast of 195,000. Continuing claims – for people who already filed an initial application and are receiving unemployment benefits – eased to 1.66m in the week ended 18 Feb. Although many high profile technology and finance companies have announced job cuts, layoffs across the economy remain historically low. The claims data is being watched closely for the effects of inflation, high labour costs and interest rate hikes. Another report showed that unit labour costs rose an annualised 3.2% in the period, nearly 3 times the preliminary estimate. Productivity, in contrast, grew half of that. Next week, data on Jan job openings and the Feb employment report will provide more insight into the US labour market.