Capital markets executive summary | Wed 8 Nov 2023
Capital markets executive summary | Wed 8 Nov 2023
Columbia Asia is frontrunner for Ramsay Sime Darby Health Care
The Southeast Asian healthcare firm, backed by alternative asset company TPG, could sign a deal as early as this week to buy the Malaysia-based private hospitals operator for USD1.5b. The acquisition will be Southeast Asia’s largest healthcare acquisition since 2019, when Hong Leong and TPG bought Columbia Asia’s assets for USD1.2b. Columbia Asia, which started in 1996, now has 22 medical facilities in Malaysia, Vietnam and Indonesia, and concentrates on building mid-size hospitals in residential areas. It is up against a consortium of Affinity Equity Partners, a Hong Kong private equity firm, and Mitra Keluarga, an Indonesian hospital operator, in the final bidding round. Ramsay and Sime Darby appointed Bank of America and Deutsche Bank as advisers. In Sep 2022, IHH’s USD1.21b offer was aborted when a binding agreement could not be reached. Sime Darby closed at RM2.33.
Morimatsu Dialog to spend RM250m on Pengerang facility expansion
Morimatsu Dialog (M) Sdn Bhd, 51%-owned by Japan’s Morimatsu Technology & Services Company (MTS) and 49% by Dialog Fabricators Sdn Bhd, will expand its engineering and fabrication facilities progressively by 1Q2025. MTS is a subsidiary of Hong Kong-listed Morimatsu International Holdings Co Ltd that provides modular solutions and pressure equipment solutions to the chemical, pharmaceutical, personal care, mining and metallurgical, oil, gas, petrochemical and electronic chemical industries. The 18,245 square metre facility will comprise module production workshops equipped with modern workplace amenities and infrastructure. This will support the company in meeting the demands and opportunities in Southeast Asia and in other regions. The company will focus on manufacturing equipment and modules used to produce raw materials for electric vehicle batteries, semiconductors and green energy. The global demand for the equipment and modules is growing rapidly and it is the overseas business that will drive the company’s growth. Morimatsu Dialog plans to complete a production system in its expansion plan with a RM300m annual revenue target. Dialog Group Berhad shares closed at RM2.13.
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Gas Malaysia sets aside RM1.4b for 700km-800km pipelines
The company will allocate RM1.2b-RM1.4b for the capital expenditure in the next 5 years. The company expects demand for natural gas to continue in spite of the push for renewable energy because it emits less carbon compared to other fossil fuels. More customers are anticipated to subscribe for Gas Malaysia’s long-term contract and in the past 30 years, the company has built more than 2,800km of gas pipelines serving 24k industrial, commercial and residential customers. Gas Malaysia established 2 operational biomethane sites in Johor and plans to build 2 more by 1H2024 at a capital expenditure of RM15m-RM20m per site. The stations extract biomethane, clean up the fuel and then reinject it into the natural gas distribution system or supply directly to end customers residing in the area. Gas Malaysia has a gas purchase agreement with Sedenak Palm Oil Mill and Coronation Palm Oil Mill in Johor for processed biogas produced by the mills. The company projects doubling the number of stations every year. The counter closed at RM3.35.
Shein targets USD90b valuation for US IPO
The fast-fashion company told prospective investors that it is seeking a valuation of USD80b-USD90b although the timing of the IPO has not been decided due to market uncertainty. Secondary market trades value the company at USD50b-USD60b, below the USD66b valuation in a May funding round and USD100b in 2022. Investors are concerned about growing competition with Temu, lawsuits between the 2 companies and accusations of forced labour by the US government, on top of cooling investor interest towards risk assets amidst the global economic slowdown and higher interest rates. Shein, which started ultra-fast fashion and sells new items cheaply, recently moved its headquarters to Singapore to avoid being seen as a China company. In Sep, Temu made double Shein’s sales in the US after beating it first in May. Shein forecasts net income of USD2.5b this year, up from USD137m in 2019. In Aug, the company bought 1/3 of Sparc Group, owner of Forever 21. In Oct, the company took over the UK’s Missguided from Frasers Group Plc.
Intel is not expanding in Vietnam
In Feb, Intel was reported to be investing USD1b more in Vietnam after the USD1.5b factory, the largest Intel factory worldwide for assembling, packaging and testing chips. During President Biden’s visit to Hanoi in Sep, although new investments were unveiled by Amkor, Synopsys and Marvell, Intel was not mentioned. Soon after the visit, US officials revealed to a group of US businessmen and experts that Intel shelved its expansion plan in Jul. Intel and other multinationals requested handouts from the Vietnamese government to offset the new levy on large companies as part of a global tax overhaul. Intel also raised concerns about power supply stability and red tape in 2 recent meetings between US companies and top Vietnamese officials. The decision is a blow to Vietnam, which wants to position itself as an alternative to China and Taiwan, amidst China’s trade tensions with the US. Instead, Intel is expanding its chip packaging in Malaysia.
