☕️ The big business of Koperasi

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

Malaysia’s population in the first quarter of 2024 reached 34 mil, a 2.3% increase from 33.2 mil in the same period of 2023, according to the Department of Statistics Malaysia (DOSM). Chief statistician Mohd Uzir Mahidin reported that the population is composed of 90% (30.6 mil) citizens and 10% (3.4 mil) non-citizens. The male population rose to 17.8 mil, and the female population increased to 16.1 mil. The overall sex ratio was 111 males per 100 females, with the ratio for citizens being 103 males per 100 females.

• Malay accounted for 57.9% of the population in the Q1 2024

• Chinese — 22.6%

• Indians — 6.6%

• Other Bumiputera — 12.2%

The cooperative movement in Malaysia recorded revenue of RM64 bil in 2023, surpassing the RM60 bil target set for 2025 under the Malaysia Cooperative Policy 2030, according to Minister of Entrepreneur Development and Cooperatives Ewon Benedick. What are cooperatives? A cooperative is a business or organisation owned and operated jointly by its members, who share the profits or benefits. Members can buy goods or obtain credit facilities from the cooperative. As of Feb 2023, there are 14,975 cooperatives in the country with a total membership of over seven mil.

One of the world’s most skilled climbing guides, Kami Rita, has reached Mount Everest's summit for the 29th time, surpassing his own record for the most ascents, according to expedition organisers. Rita summited the 8,849-meter (29,032-foot) peak early on May 12, as confirmed by Mingma Sherpa from Seven Summits Treks. He has been in a friendly rivalry with fellow Sherpa guide Pasang Dawa, who has reached the summit 27 times. Rita, known as “Everest Man,” first climbed Everest in 1994 and has ascended almost every year since, establishing himself as an essential guide for foreign climbers.

3. IN MALAYSIA 🇲🇾

PM Anwar flexing his foreign policy prowess
During the Nikkei conference in Tokyo, PM Anwar Ibrahim defended his decision to meet Hamas political leader Ismail Haniyeh during his visit to Qatar on May 13. PM Anwar stated that his longstanding relationship with Haniyeh gives him an edge to nudge Haniyeh to accept peace in the region. PM Anwar revealed that during the meeting with Haniyeh, he told them to respect the decisions of their neighbouring states, to release Israeli hostages in exchange for Palestinian prisoners, and to accept the two-state solution. Hamas, the political group that controls Gaza, is designated as a terrorist group by both the United States and the European Union. Other than that, Ismail Haniyeh, apart from Israel Prime Minister Benjamin Netanyahu, was also named in the arrest warrant for alleged war crimes in the ongoing Hamas-Israel genocide.

PM Anwar also told the world that Malaysia does not have a ‘China-phobia’ policy and is open to engaging with both Washington and Beijing. PM Anwar was also telling the United States to start resolving its differences with China and abandon its protectionism policies in return for a more liberal trade policy. Recently, US President Joe Biden announced a laundry list of new tariffs against China that will impact an estimated USD18 bil in imports, including a 100% border tax on electric cars from China and a huge tariff increase on solar cells and steel & aluminium products.

Transport Ministry is not involved in the sale of MAHB
Transport Minister Anthony Loke said that the memorandum objecting against the proposed transaction of Malaysia Airports Holdings Berhad (MAHB) should have been sent to Khazanah Nasional Berhad and not his ministry. Loke stated that his ministry does not and did not have any shares in MAHB and only acts as a regulator for the aviation industry. At the moment, the top two largest shareholders of MAHB are Khazanah Nasional Berhad and the Employees Provident Fund (EPF), holding 33.24% and 7.86% shares, respectively. Both Khazanah and EPF are entities under the purview of the Finance Ministry.

The memorandum of objection that Loke was referring to was the one brought forward by the Palestine Solidarity Secretariat (SSP), which demonstrated in front of the Transport Ministry in Putrajaya over MAHB’s takeover proposal. The demonstration by SSP was also participated by SSP spokesman cum former PKR vice president Tian Chua and Machang MP Wan Ahmad Fahysal Wan Ahmad Kamal. Perhaps both Tian Chua (seasoned politician) and Wan Ahmad Fahysal (current MP) should at least do some background checks so they know the right address to submit the memorandum. Just for their information, Khazanah’s office is at KL Sentral and EPF’s office is at Kwasa Damansara.

Day at the court

• 1Malaysia Development Bhd (1MDB) is suing Patrick Mahony of PetroSaudi International Ltd (PSI) and a law firm in Britain for RM8.61 bil for allegedly misleading 1MDB in an investment it partook in. 1MDB claimed that the company’s board was allegedly defrauded that PSI was owned by King Abdullah of Saudi Arabia. 1MDB was conned so badly that the joint venture it thought it entered with PSI was actually with PetroSaudi Holdings (Cayman) Ltd and not PSI.

• 34 Royal Malaysian Customs Department officers were arrested by the MACC in an operation dubbed Op Samba 2.0 that uncovered tax evasion amounting to RM2 bil from the smuggling of contraband alcohol and tobacco at the Kuala Lumpur International Airport. On top of that, 231 bank accounts linked to individuals, companies and ‘mules’ were frozen, with a total value of approximately RM18 mil. Currently, two Customs officers have been charged under Section 17(a) of the MACC Act 2009 and Section 165 of the Penal Code.

Business

1. Boycott continues to give Starbucks operator Berjaya Food Berhad a beating. The company recorded its second consecutive quarter of net loss of RM29.8 mil in its Q3 ended 31 Mar 2024. Revenue declined 47.85% to RM138.65 mil compared to RM265.85 mil a year ago. Despite the negative performance, the directors of BFood expected a gradual improvement in operating performance for the remainder of FY2024. The current performance is so bad that the board does not recommend any dividend for the current quarter under review. View earnings here.

2. When one chaebol company is sinking down the drain, another chaebol company is thriving. YTL Corp Berhad posted a significant increase in net profit, an improvement of 186% to RM2.8 bil in the first nine months to March 31 (9M24), compared to RM979.7 mil recorded in the same period last year. Executive chairman Francis Yeoh Sock Ping attributed the great performance to the better margins obtained in the power generation segment, securement of new and improved contracts in the water and sewerage segment and stabilisation of the selling price for both domestic cement and ready-mixed concrete, amongst others. View earnings here.

4. AROUND THE WORLD 🌎

God is getting a millennial influencer
Carlo Acutis, a London-born teenager who died in 2006 at the age of 15 due to leukaemia, is set to become a saint. Born in the generation of the millennials, he was well-known for his proficiency in spreading the teachings of the Catholic church online, so much so that he’s being called “God’s influencer”. Acutis will be canonised by Pope Francis after attributing a second miracle to him., which involved the healing of a university student in Florence who was bleeding in the brain after suffering a head trauma. The miracle was approved by the Pope following a meeting with the Vatican’s saint-making department. 

Acutis’ body is on full display in Assisi a year after his death with other relics linked to him. Miracles are typically investigated over a period of few months, with a person eligible for sainthood after they have 2 miracles to their name. A miracle is defined as an act beyond what is possible in nature, such as the sudden healing of a person deemed to be near-death. Learn more about sainthood here.

The picks and shovels of AI

• Nvidia’s blowout Q1 performance
  The poster child of AI continues to report stellar Q1 ended 28 Apr 2024 performance as it recorded revenue of USD26 bil, up 18% from Q4 and 262% year-on-year. Its net income came in at USD15.2 bil, up 19% from the preceding quarter and up a staggering 462% year-on-year. Its stock price pumped upon this news, up 7%, pushing it past USD1,000 for the first time. Looks like the AI frenzy will be extended further as CEO Jensen Huang said that the demand for its graphic processing units (GPUs) “is just so strong” and had to assure shareholders back in February that the company is allocating it fairly. Over the past 12 months, Nvidia share price has surged by 238% and 116% in this year alone, valuing the company at USD2.56 tril, 
  View results: Q1 2024 Company Overview

• Scale AI - the quiet decacorn
  A lesser-known AI company, Scale AI, raised USD1 bil, roughly doubling its valuation to USD13.8 bil in the latest funding round that included corporate backers like Amazon, Meta and the venture arms of Advanced Micro Devices (AMD) and Intel. The company was founded in 2016, years earlier before OpenAI’s ChatGPT propelled AI to the mainstream. Scale AI, like Nvidia, is a supplier to the tech giants pursuing their AI ambitions. Whilst Nvidia provides the hardware, Scale AI helps tech companies improve the data they use to build their AI models by engaging an army of contract workers to clean and label the vast amount of text, images and assorted data. Scale also employs a technique called reinforcement learning from human feedback, which incorporates input from real people to improve the performance of AI models. 

Learn: What is the pick-and-shovel play? 

The big booming business of death
An ageing and shrinking population is no good for any economy, but in any situation, there’s always the opportunity to make some big buck. Such population means more deaths, translating to more business for morticians and crematoriums, especially so in Europe, home to 17 of the top 20 countries with the highest death rates. 1 in 5 Europeans is currently 65 years or older and by 2050, it will be closer to 30% (more deaths, more $$$). Factors such as high cemetery costs, mobility needs and religious secularisation have raised the need for incinerations, especially when Europe has limited space for burials. 

Private equity-funded Funecap has spent around EUR1 bil to acquire more than 300 crematoriums and funeral centres, mainly in Europe. Funecap has also acquired Netherlands’ Facultatieve Technologies - what we would term as deathtech - the world leader of cremation equipment in 2022. Funecap generates over EUR550 mil in revenue and provides services to more than 300,000 families annually. The sector is said to be attractive as cash flow is predictable - people have to die and deaths will accelerate with an ageing population. In the words of Funecap founder and CEO Thierry Gisserot - “it’s an infrastructure play”. 

Interestingly, crematoriums also function, in a way, like a recycling centre. A source of income, albeit controversial, is the sale of metal scraps left over after human bodies have been cremated. Many old people have gold teeth, artificial hips or knee joints, which contain titanium, cobalt or chromium. The metals are removed from the ashes amnd sold to metal recyclers. It’s not illegal as long as relatives are informed. 

Shorts

1. UK’s surprise summer general election
   UK PM Rishi Sunak announced an early UK general section this summer on July 4 in a surprise move that overturned expectations of an autumn poll. The decision even blindsided members of his own Conservative Party (Tories), criticising the decision as benefiting the Labour Party. An autumn poll was expected to give the Tories a better chance to close the gap with Labour, which is posting large leads in national opinion polls. The UK Parliament will be suspended this Friday and the official 5-week election campaign starts next Thursday. 

2. Collapsing structures
   A stage collapsed at a Mexico presidential candidate campaign rally, killing 9 and at least 50 others injured. A gust of wind is said to have caused the incident in the city of San Pedro Garza Garcia. Watch the incident here (warning - graphic). Meanwhile, more than a week ago, a giant billboard in Mumbai, India, collapsed, killing at least 14 people and injuring dozens of others. The 70m x 50m billboard collapsed onto houses and a petrol station due to strong winds. Authorities said the billboard was several times the permitted size. Watch the incident here (warning - graphic).

5. FOR YOUR EYES 📺

1. The journey of Malaysia’s popular burger chain myBurgerLab - an interview with its co-founder Ren Yi by Mr Money TV