Capital markets executive summary | Wed 26 Apr 2023

Capital markets executive summary | Wed 26 Apr 2023

Tokio Marine plans USD1b sale of Southeast Asian business

The Tokyo-listed insurer was founded in 1879 and now offers life and non-life insurance in 47 countries. Its international business contributes 54% to profits. In Asia, it runs 8 property and casualty insurance companies and 5 life insurance companies in 8 countries outside Japan. The life insurance business in Asia excluding Japan recorded net written premium of JPY103b (RM3.42b) – up 38.9% year-on-year – and profit of JPY900m (RM30m) or 7% of Tokio Marine’s profits. It is considering a sale of its life insurance business as it focuses on its core operations. The company is already working with an adviser to gauge investor interest in its Malaysian, Singaporean, Indonesia and Thai units. While the preference is for an outright sale of all the units, the company could sell on piecemeal basis. A formal sale process could commence in the next few months, although at this early stage, the company could decide to hang on to the assets.

Ranhill Utilities bags USD50m contract in Qatar’s North Field

Italian oil major Saipem SpA awarded the contract to Perunding Ranhill Worley Sdn Bhd – 49%-owned by Ranhill Utilities’ 51% subsidiary Ranhill Worley Sdn Bhd – for the detailed engineering design for 2 natural gas compression complexes related to the North Field Production Sustainability Offshore Compression Complexes project located offshore the northeast coast of Qatar. The design works are expected to be completed in 3Q2024. The North Field is the world’s largest natural gas field. On 19 Oct 2022, Saipem announced that it had been awarded a USD4.5b contract by Qatargas for the project which entails engineering, procurement, fabrication and installation of 2 offshore natural gas compression complexes to sustain the production of the North Field, including 2 of the world’s largest fixed steel jacket compression platforms, flare platforms, interconnecting bridges, living quarters and interface modules. Ranhill Utilities closed at 58.5 sen, up 23% in Apr alone.

The Edge owner buys 5.42% of Star Media

Tan Sri Tong Kooi Ong owns a direct interest of 1.84m shares or 0.25% plus an indirect interest of 37.5m shares or 5.17% via The Edge Communications Sdn Bhd. The 5.42% shareholding makes The Edge Communications and Tong substantial shareholders of Star Media. Tong said in an internal memo that the acquisition is purely an investment. His rationale is that the company’s share price has been well below its cash holdings and the value of its property assets. Also, the company has no debt. As at 4Q2022, the company reported net assets per share of 90 sen and full year earnings per share of 95 sen. It announced a first and final dividend of 1 sen per share on 20 Apr. Star Media closed at 51 sen, up 57% this month alone.

Norway’s USD1.4t sovereign wealth fund looks to AI for value appreciation

Oslo-based Norges Bank Investment Management (NBIM) – which owns 1.5% in 9,000 listed stocks worldwide – is the world’s biggest single owner of publicly traded companies. 70% of the company’s investments are in equities which returned an average of 6% for the past 25 years. The fund posted its biggest loss in 2022 as borrowing costs and inflation soared. It believes that inflation will stay elevated, hurting household disposable incomes. Together with climate change induced droughts, corporate margins will come under pressure. It suggests that shareholders will be curious to see how companies use artificial intelligence to deal with challenges and for productivity gains. NBIM itself is considering harnessing AI as an active shareholder to prepare for meetings with investees. Among others, it is allocating resources to weed out bad apples in its portfolio after taking a hit on the collapse of Silicon Valley Bank.

China’s Semiconductor Manufacturing Electronics Shaoxing plans USD1.4b IPO

The chip foundry based in Zhejiang province will be selling 1.69b shares at CNY5.69 (RM3.65) on Shanghai’s STAR board. Subscriptions will begin today. Chinese chip giant Semiconductor Manufacturing International Corp’s subsidiary directly holds 19.6% in Semiconductor Manufacturing Electronics Shaoxing (SMES) apart from indirect interests via SMES’ shareholders. The IPO price suggests a price-to-sales ratio of 8.4 times compared to the industry average 5.4 times and gives the company a market value of CNY38.5b (RM24.69b). SMES earned CNY4.6b (RM2.96b) in 2022. Separately, Changxin Memory Technologies Inc is planning for an IPO this year that could value the company at USD14.5b (RM64.47b).