Capital markets news summary for Mon 13 Mar 2023

Capital markets news summary for Mon 13 Mar 2023

Axiata in talks with global investment funds to sell USD1.2b stake in edotco

Global infrastructure funds are interested in Southeast Asian telecommunications assets because of strong growth prospects. Axiata – which owns 63% of edotco – is considering even giving majority control to secure the deal. US-based Stonepeak and Global Infrastructure Partners, and a group led by Japan’s Mitsui are potential buyers. Innovation Network Corp of Japan – which invested USD400m to become the 2nd largest shareholder of edotco with a 20% shareholding 6 years ago – is also looking to sell almost all its stake. edotco operates and manages 55,000 towers in Malaysia, Pakistan, Bangladesh, Myanmar, Cambodia and Indonesia, making it the world’s 6th largest tower company. Axiata’s previous attempts to sell its stake – either directly to selected investors or through an IPO – were foiled by concerns over the political upheaval in Myanmar and muted interest for its tower business in Pakistan and Bangladesh. Axiata closed at RM3.10.

Kulim launches FarmByte Food Hub initiative

The subsidiary of Johor Corporation unveiled the digital-first approach and technology-driven agrifood ecosystem located in Ulu Tiram. The FarmByte Food Hub integrates all of the activities within the value chain – farmers, processors, distributors, retailers and wholesalers – to increase efficiency, transparency and trust via a hybrid setting of physical and digital hubs. The system will equip farmers with simple digital tools, market intelligence, and real-time production. Its mobile app provides farmers with access to personalised advice and analytics and helps to expand their knowledge of expert farming practices. Farmers have complained about difficulties in navigating the agro-food business, relying solely on experience and limited market knowledge on what to produce and when it will be ready. The system helps give certainty on what to plant, and when demand will be the highest to get the best price. A new collection processing packaging centre and two new collection distribution centres will be built to meet the expected increase in production. Kulim was delisted in 2016 and Johor Corporation is considering a re-listing in 2024.

CPO to trade RM3,840-RM4,260 this week

Even with strong Mar export figures and lower Feb production, sentiment remains weak. Malaysia’s palm oil inventory fell 6.56% from 2.26m tonnes in Jan to 2.11m tonnes in Feb. Last week, palm oil traded mostly lower due to weaker soybean oil prices and weaker demand from China, Pakistan, Bangladesh, the US, the Middle East and Africa. Week-on-week, Mar 2023 contract was down RM148 to RM4,170, Apr -RM232 to RM4,111, May -RM259 to RM4,093, Jun -RM272 RM4,060, Jul -RM271 to RM,4019 and Aug -RM260 to RM3,980. Volume last week decreased from 289,336 to 246,680. Physical CPO price for Mar South was lower by RM50 to RM4,250.

Betamek signs MoU with Krakatoa to develop EV battery management system

Singapore-based Krakatoa Technologies Pte Ltd conducts business as a silicon intellectual property provider using open architecture Reduced Instruction Set Computer (RISC-V) instruction set architecture, focusing on power efficiency and customisation and develops system-on-chip design for several verticals. RISC-V is commonly used by the semiconductor industry including AMD, Apple and Nvidia. The memorandum of understanding (MOU) provides space for potential collaboration to develop electric vehicle (EV) battery management system-on-a-chip in line with Krakatoa’s expertise. Both companies have agreed to further discuss and negotiate the terms and conditions of the definitive agreement for the exclusive collaboration. The MOU is for 12 months and is expected to expand Betamek’s vehicle electronics product offerings. The counter closed at 52 sen.

LTKM’s revised RTO deal raises value of poultry and egg business to RM222m

The corporate exercises proposed in Apr 2022 have been adjusted with the valuations of the 6 businesses higher from the previous RM158.83m. The poultry and egg businesses are to be sold to Executive Chairman Datuk Tan Kok and wife Datin Lim Hooi Tin, who altogether own 70.2% of the company. Although the valuation increased, the company will pay a lower capital repayment and special dividend of 90 sen per share or RM128.8m, compared to RM1.1098 per share or RM158.83m previously. The balance RM93.2m cash will part fund the unchanged purchase price of RM336m for Local Assembly Sdn Bhd, an electronic manufacturing services provider. The purchase price will be satisfied via RM100m cash and issuance of new LTKM shares. Local Assembly’s shareholders – Chai Voon Sun 37.5%, Gurmakh Singh Ajmer Singh 22.5%, Wee Thian Song 15%, Divine Inventions Sdn Bhd 20% and Proven Venture Sdn Bhd 5% – will end up with a controlling stake in LTKM. The company will raise RM82.26m cash via the issuance of 63.27m new shares at RM1.30 representing 20% of the enlarged share capital. Only RM6.8m will be used for the Local Assembly acquisition while the bulk will go to working capital. LTKM will change its name to LA Technology. Tan and Lim who will end up with 15% expressed their desire to eventually exit the company. The counter closed at RM1.40.