☕️ 99 Speedmart going IPO, recorded RM8 bil revenue in FY22

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

45 American families are worth at least USD10 bil, according to Forbes’ new ranking of decabillionaire families. Collectively, they are worth about USD1.3 tril. Taking the top spot is the heirs to the Walmart retail empire, owning about 45% of the company, giving them a combined net worth of USD267 bil. The Mars family is a distant second at USD117 bil spread across the confectionary clan. Other well-known families on the list — Koch, Lauder, Carnegie, Vanderbilt and Getty.

54 out of 61 companies that participated in a 6-month trial in 2022 of a four-day working week have continued with the shortened week, with 31 of them making it a permanent decision. This trial in the UK, said to be the world’s largest, involved 2,900 workers from online retailers, animation studios, financial service providers and even a small fish and chip shop whose pay levels were maintained. The trial found that the reduced working time did not cause a loss in company revenue. In fact, an average growth of 1.4% in revenue was observed from the start to the end of the trial. As for the participating workers, it goes without saying they reported increased work-life balance, reduction in stress and anxiety and improved mental and physical health.
View research: Making it stick: The UK 4-Day Week Pilot One Year On

202 cases - the increase in statutory rape cases involving teenagers aged 16 and below in 2023, compared to 2022, based on police records. Reverse-engineering this figure translates to a total of 1,914 cases in 2023. Despite “mutual consent”, such acts are classified as rape because the participants are not adults. Most of these cases involved the B40 group and the lack of parental supervision and easy access to porn online has contributed to the rise in such crimes, according to the police force.
Sik MP Ahmad Tarmizi Sulaiman quoted this figure in Parliament, attributing the increase in sexual crimes involving minors to the inability of civil courts to handle such cases. Home Minister Saifuddin Nasution fired back, saying that Kelantan is among the states with the highest number of cases based on police statistics and sexual crimes against children are on the rise in Kelantan, Terengganu and Kedah and decreasing in Penang when compared to 2022 and 2023.

3. IN MALAYSIA 🇲🇾

SRC International, KWAP and Jibby
In the SRC civil suit trial, a liquidator for one of its subsidiaries (SRC BVI), informed the High Court on Monday that the bulk of KWAP’s loans of RM4bil was not used for its intended purposes; investing in the energy and resource sectors. Angela Barkhouse testified that the loans were diverted to various entities instead, purportedly for investment, but used to obscure the movement of misappropriated funds.

Within the USD1.18 bil misappropriated, Barkhouse clarified that transfers to Cistenique Investment Fund BV (USD357.5 mil), Enterprise Emerging Market Funds BV (USD481 mil), Pacific Rim Global Growth Ltd (USD12.19 mil), Muraset Ltd (USD15 mil), and Gobi Resources Coal Ltd (USD4.5 mil) were part of a convoluted system of money laundering.

Former PM Najib Razak and his stepson benefitted greatly from the KWAP loans; it was testified that USD120mil ended up in Najib's accounts and USD18mil went to Najib's stepson's company, Red Granite Capital (the production company behind The Wolf of Wall Street), through a complex network of transactions involving shell companies controlled by fugitive financier Jho Low. SRC International seeks to hold Najib accountable for losses totalling USD1.18 bil, alleging breach of duties and trust, with an order for USD120mil as compensation.

Let’s hope the compensation will not be halved, as was Najib’s jail sentence.

Govt to widen the scope for 6% service tax exemption
As announced in the 2024 Budget, logistic services are subjected to a 6% service tax beginning March 1st. After feedback from various parties, including MPs, the government announced plans to broaden the scope of the 6% service tax exemption for the logistics sector, particularly for business-to-business (B2B) transactions, to alleviate double taxation issues within the logistics supply chain. The expansion will encompass exemptions for freight services and other related services like warehousing, ports, shipping, and cold chain facilities. Newly-registered logistics service providers will have a one-month preparation period, with the 6% service tax scheduled to be imposed from April 1. The cost of goods sold locally will definitely rise with the 6% tax, so this is neither good nor bad news as of now. Just expect price-hike anyway.

Spotlight: 99 Speedmart going IPO
The highly anticipated IPO is here - Malaysia’s largest FMCG retailer has filed its prospectus (view here). Its founder, Lee Thiam Wah and family are letting go of 17% of 99 Speed Mart Retail Holdings Bhd. The draft prospectus proposed a minimum public shareholding spread of 15% vs the usual 25% as required by Bursa Malaysia (another company that received a similar exemption - Mr DIY). 99 Speedmart is the nation’s largest mini-market player and leading grocery retailer, commanding a market share of 37.9% and 11.1% in 2022 and serving 940,000 customers per day based on its 2022 sales.

The prospectus did not provide any valuation-related or share price information. We can make an estimation—taking 7-Eleven Malaysia Holdings Bhd's forward price/earnings ratio of 27x, 99SM’s market cap could be about RM8.8 bil. It was previously reported that the retailer aims to raise RM1.5 bil from its IPO. It currently has 2,542 outlets and aims to have 3,000 outlets nationwide by the end of 2025. In its financial year 2022, its full-year net profit was RM326.67 mil on revenue of RM8.07 bil.

Some interesting highlights from its prospectus below.

Business in Malaysia:

1. Threefold profits for Khazanah Nasional Bhd in 2023

   Khazanah has more than tripled its profits from operations in 2023 due to higher dividends and plans to focus on its home market. Profit from operations was RM5.9 billion in 2023 (from RM1.6 billion in 2022), with dividend income totalling RM2.5bil primarily from Tenaga Nasional Bhd, IHH Healthcare Bhd, and CIMB Group Holdings Bhd. The fund declared an RM1bil dividend for 2023 to the Malaysian government, doubled from 2022. Khazanah's net asset value grew 4.9% to RM85 billion in 2023 from RM81 billion in 2022. The sovereign wealth fund’s investment portfolio size has remained flattish since 2018 - view table here. Its asset class breakdown: >50% in Malaysian public markets, 17.2% in global markets, 14.7% in global private markets, real assets at 9.4% and Malaysian private markets at 5.8%.

2. MyEG acquired a 14.4% stake in HeiTech Padu

   As part of a strategic investment, MyEG Services Bhd acquired a 14.4% stake in HeiTech Padu Bhd for RM31.25mil. 5.16mil shares were bought from the open market for RM11mil cash (RM2.134 per HeiTech share), while 9.42mil shares were acquired via direct business transactions for RM20.25mil (RM2.15 per share). MyEG says that the acquisition will open up potential collaborations with HeiTech in the future.

3. Bank of East Asia (BEA) to sell its 23.93% stake in Affin Bank Bhd

   BEA, Affin Bank’s second-largest shareholder, plans to sell its 23.93% equity interest, albeit in no hurry. On the other hand, Sarawak intends to raise its shareholding in Affin Bank from 4.8% to 30%. The current biggest shareholder is the Armed Forces Fund Board (LTAT) at 28.79%. BEA started as a marginal shareholder in 2005 before raising its stakes and eventually held 20.47% equity interest by Feb 2008. Hong Kong-based BEA is now waiting for the right price level to sell, as they need to be capital-efficient due to property crises and slower economic growth rates facing Mainland China. Last week, ANZ divested a 16.5% stake in Ambank for about RM2.1 bil cash, bringing its stake down to 5.2%.

Shorts

1. RM200,000 fine for using “Palm Oil Free” labels

   Plantations and Commodities Ministry warns against the use of discriminatory “Palm Oil Free” labels on products based on the commodity, with a fine of up to RM250,000.

2. Malaysia, the fifth happiest country? 

   In a “Mental State of the World” report (view here) by the Global Mind Project, Malaysia is listed as the fifth out of the ten happiest countries in the world. Sapiens Lab, a non-profit neuroscience research organisation, anonymously polled 419,175 individuals from 71 countries, assessing the individual’s Mental Health Quotient (MHQ). Take the test and let us know if we really are the fifth happiest country. We doubt it.

3. Indian media claims the “boss” of an alleged drug lord, Jaffer Sadiq is Malaysian

   A journalist from India claimed that the politician and Tamil film producer, Jaffer Sadiq, linked to an RM1.13bil drug bust by India’s Narcotics Control Bureau (NCB), is a Malaysian. No proof of his claims for now. The drug syndicate is said to have a network spread over India, New Zealand, Australia, and Malaysia. In January, a Malaysian was arrested for drug networks across Thailand, Malaysia, China, Singapore, and Laos. Malaysia is creating world champions in the wrong industries.

4. AROUND THE WORLD 🌎

Abu Dhabi’s USD100 bil giga bet on AI
Abu Dhabi, the largest emirate in the United Arab Emirates, unveiled its big AI plan - it is setting up a technology investment firm called MGX to invest in AI that could surpass USD100 bil. The entity will pursue deals across three main verticals - AI infrastructure, semiconductors and AI core technologies and applications. The firm will be led by sovereign wealth fund Mubadala Investment Co and AI firm G42 as foundational partners. MGX will be chaired by UAE’s National Security Adviser, Sheikh Tanoon bin Zayed Al Nahyan. G42 is part of the USD1.5 tril empire controlled by Sheikh Tanoon. Its partnerships include one with OpenAI to expand within the UAE and the broader region. 

Quiz: Dubai is one of the emirates in UAE. How many emirates are there in the UAE? Answer here. 

In a related but not related news, a Saudi robotics company, QSS, unveiled a male humanoid robot called “Muhammad the Humanoid Robot,” but it didn’t go as planned after it appeared to inappropriately touch a female reporter’s backside. QSS told Metro that the robot was “fully autonomous” and operated “independently without direct human control”. It added that after it reviewed the footage of the incident, it found that there were “no deviations from expected behaviour” of the robot. Is their conclusion this is an expected behaviour out of a humanoid? Watch the incident here. 

China’s new spying tool (according to the Americans) - cranes
Chinese cranes used at US ports were installed with communication equipment that could be used for spying activities, according to a congressional investigation reported by The Wall Street Journal. Nearly 80% of ship-to-shore cranes used in US ports were made by Shanghai Zhenhua Heavy Industries (ZPMC), a state-owned Chinese manufacturer that has been widely viewed in the US as posing a security risk. 

More than 12 cellular modems were found in Chinese-made cranes that were used for operational functions for the cranes, such as monitoring and tracking maintenance remotely. The investigations found that some US ports using these cranes did not request these functions and, in one case, knew of the modem’s existence but didn’t know what they were used for. These cranes, by design, could be controlled from remote locations, making them vulnerable to exploitation. This “paranoia” over the cranes, as the Chinese embassy rep in Washington called it, is costing the US tens of billions as the Biden administration in Feb announced that USD20 bil will be invested into replacing foreign-built cranes with US cranes over the next five years.

How to save rape victims - bystander training
In a BBC investigation on UK universities' sexual misconduct data, a rape victim shared that had security staff has been taught bystander training, it could have saved her from being sexually abused. Bystander training teaches people to spot unacceptable behaviour and intervene safely to prevent violence. This training also ensures that the practitioner acts as a mental first aid trainer and can recognise signs of distress and provide appropriate support.
Watch: The 5Ds of Bystander Intervention

Airbnb: No more indoor security cameras
Effective Apr 30, Airbnb will ban any indoor security cameras that could capture guest activities. Currently, cameras are allowed inside Airbnbs if hosts disclose their presence in their online listings and warn guests ahead of time. Hosts have argued that these cameras help hold guests accountable for damage or prevent large parties from being thrown. As for guests, no one likes to be monitored in their private space. 

Canadian billionaire considers picking up The Body Shop’s half-dead body
Businessman Doug Putman, who bought and turned around music retailer HMV, is attempting to repeat the same feat with The Body Shop. The 40-year-old billionaire has reportedly contacted the retailer’s administrators with a view to potentially buying the business. The cosmetic retailer prepares to close half of its 198 British stores and almost 500 workers being made redundant. Putman also owns Sunrise Records and Toy R’ Us in Canada. 

5. FOR YOUR EYES 📺

1. The history of one of Malayisia’s largest conglomerates YTL, brought to you by your investing friend Doitduit.

2. When Batu Caves meet Lego by Legoland Malaysia

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