☕️ Cow buys ice cream - Farm Fresh Bhd to acquire 65% stake in The Inside Scoop for RM83.9 mil

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

RM21.5 mil - total revenue from the sales of 1.5 mil bottles of Sambal Nyet Berapi achieved since launch 2 years ago by influencer turned sambal entrepreneur Khairul Amin (aka khairulaming). In the first year alone, he recorded an impressive sales of RM7.5 mil and nearly doubled to RM14 mil in the following year. His manufacturing plant receives 1,000 kg of chilli and onions daily and sells 5,000 bottles daily. For 2023, their second manufacturing plant in Kota Bahru, Kelantan, has started operating to focus on its second product, though he did not mention what exactly. Watch the video below of Khairul sharing this achievement and a quick tour of their operations. Check out his Instagram page here (3.5 mil followers) - he usually post recipe videos.

Well played by Khairul - he leveraged his distribution as an influencer to launch products, essentially detaching his personality away from the business - you can sell a business/brand, but a bit harder to sell your personality/name, especially when it doesn’t sound Mat Salleh (to Jimmy Choo, well done).

USD95 mil - James Cameron’s paycheck from “Avatar: The Way of Water” making him the #8 highest-paid entertainer of the past year, according to Forbes. The Avatar sequel has grossed USD2.2 bil globally and is now the fourth highest-grossing movie of all time. His check could be growing larger if his deal includes revenue from streaming, DVD and more. The first Avatar movie itself netted him USD350 mil.

Read: World’s 10 Highest-Paid Entertainers 

57% of American teen girls in 2021 were reported to be feeling “persistently sad or hopeless” in 2021, up from 36% in 2011 and the highest rate seen in the last decade, indicating record high levels of sadness and violence. Suicidal thoughts shot up as well from 19% in 2011 to 30% in 2021. The study conducted by the US Centre for Disease Control, however, did not examine the cause of the spike. The period covered in the report coincided with the rise of social media, especially Instagram, which has been known to affect the psychology of teens.

Read: Youth Risk Behaviour Survey by CDC

3. IN MALAYSIA 🇲🇾

PM8, 9 and 10 slogans and rebranding cost - RM62.7 mil totalA total of RM62,764,107 was spent on rebranding the 3 administrations since Muhyiddin’s time, according to Minister in PM’s Department Armizan Ali in a written parliamentary reply. These expenses included roadshows and tour programmes. 

Who spent the most? Ismail Sabri’s Keluarga Malaysia took the cake for a total of RM62,093,139 over a span of 14 months - that’s an average of RM5.17 mil per month / RM172.5k per day. This is followed by Anwar Ibrahim’s Malaysia Madani for a total of RM489,216 as of 30 Jan 2023 and Muhyiddin Yassin’s Kerajaan Prihatin amounting to RM181,752. 

Before one thinks Muhyiddin was prihatin with his branding expenses, only 1 Kerajaan Prihatin programme was implemented during Muhyiddin’s time as the country was under the movement control order (MCO). 

Muhyiddin had lots to say in Parliament

• On “witch-hunt”: The PN chairman claimed the accusations and investigations against Perikatan Nasional (PN) is nothing more than political persecution in light of the upcoming 6 state elections. He reminded Anwar not to abuse his power and warned him that he will not remain forever as PM. Earlier in the month, Bersatu’s bank accounts were frozen by MACC under money laundering laws. 

• On nepotism: He urged Putrajaya to “walk the talk” on nepotism, which Pakatan Harapan was against in the past but becoming a policy now. He also refuted allegations that he had awarded a contract to his son-in-law during his time as PM as “slander and lies”. The contract in reference is the RM1.2 bil National Integrated Immigration System (NIISe) 

• On EPF withdrawals: Muhyddin repeated PN’s call for targeted EPF withdrawal, saying that it is the rakyat’s wish it is the rakyat’s money, and not the government’s. He also called for loan moratoriums, highlighting the record profits made by banks during the pandemic. 

The earlier EPF withdrawals approved by Muhyiddin’s administration were dangerously myopic - a short-term solution with long-term repercussions. It will come back to bite Malaysia in the coming decades as it pushes the country closer towards a retirement crisis. EPF is a safety net for old age savings, not an emergency piggy bank to dip into. As of 30 Jun 2022, 6.62 mil or 52% of EPF members aged below 55 have less than RM10,00 in their EPF savings. Of this 6.62 mil, 4.99 mil or 75% of them are Bumiputera - so much for championing and protecting the welfare of Bumiputera. 

The new government will have the funds to help the B40 and M40 without us touching our EPF, without taking on new loans or increasing tax - it’s just as simple as plugging the leakages and recovering siphoned funds. For example, in less than 1 month in office, PM Anwar identified nearly RM2 bil savings from re-evaluating flood mitigation projects. And yesterday, the government said it will postpone RM5.7 bil worth of rural development projects under the Jana Wibawa scheme to review its adherence to the procurement process as it was earlier carried out via selective tenders and direct negotiations. 

A few billion here, a few billion here - it adds up. 

Good or bad idea - listing Petronas to pare down national debtSubang MP Wong Chen has floated the idea to list national oil company Petroliam Nasional Bhd (Petronas) to help pare down government debt. The proceeds raised from the initial public offering could reduce national debt to 30% of GDP in 10-15 years, he predicted. Last month, PM Anwar said national debt, including contingencies (ie. guarantees) has exceeded RM1.5 tril, more than 80% of the country’s GDP.

Wong Chen predicted that Petronas’ average annual profit of RM60 bil would rise above RM100 bil if well managed and further utilise the profits to pare down debts. We might have not considered that oil and gas are commodities hence, highly volatile. Not too long ago in 2020, we saw oil prices trading at negative USD37 (yes - negative). That was an extreme case, of course. Then again, good times don’t last forever nor for a long time in the world of commodities. 

View: Petronas Group Bhd historical profit after tax from 2013 to 2021 - definitely not consistent. 

Cow buys ice cream - Farm Fresh Bhd to acquire 65% stake in The Inside ScoopFarm Fresh Bhd (FFB) announced that it will acquire a 65% stake in Malaysia’s largest home-grown ice cream brand The Inside Scoop Sdn Bhd (IS) for RM83.9 mil, valuing the company at RM129 mil. IS’s first outlet was opened in 2013 and now has 37 outlets. 

Of the 65%, 53% will be acquired from the shareholders of IS through a mix of cash and shares in FFB totalling RM68.4 mil (laughing all the way to the bank) and the remaining 12% will be an investment of RM15.5 mil into the company.

 Read FFB’s Bursa announcement here - interesting read as it breaks down the details of the deal - how the valuation was calculated, the rationale for the acquisition, IS past performance.

Shorts:

1. Tengku Mahkota Johor (TMJ) has formally appointed Khairy Jamaluddin as the state’s youth advisor and member of the board of directors of the Johor Darul Ta’zim (JDT) football club. Next, looking forward to KJ combining his DJ skills and be a match commentator during JDT’s game.

2. Shopee has launched its personal loan product, SLoan to selected users. Eligible users can find it under “My Wallet” in their Shopee profile. SLoan’s digital financing solution provides fast approval within 24 hours and credit of up to RM100,000. Though, it doesn’t come cheap - it charges an interest rate of 1.5% per month, or 18% per year.

3. The Mechamato animation series produced by local animation studio Animonsta Studios made history when it became the first non-Japanese animation to win the ‘Anime Fan Award’ at the Tokyo Anime Award Festival 2023. The series shot to fame when it was aired on Netflix Japan in Oct 2022 and is now shown in over 70 countries. Mechamato also has a movie showing across Malaysia since Dec 2022 and now has collected more than RM36 mil. Movie trailer below

4. AROUND THE WORLD 🌎

Just Car Things

• EU Parliament approves ban on petrol, diesel car sales by 2035The European Parliament has voted to approve a ban on carbon-emitting petrol and diesel cars by 2035. The legislation was already approved by member states, despite opposition from conservatives in the body. So far, there are no bans on lorries and buses yet, though these are under consideration as well. The vote passed with 340 ayes to 279 nays, with 21 abstaining.

• Growth rate of EV sales surging, pushes past USD1 trillion mark within 10 yearsThe ban comes at a time with a surge in interest in electric vehicles (EVs), with sales having grown so fast that the electric passenger vehicle category passed the USD1 trillion mark in total spending since its introduction. This mark was passed about 10 years after the EV was first introduced to the market, while sales look set to continue increasing in the near future. In 2022 alone, EV sales totalled USD388 billion but still a fraction of global auto sales of USD2.5 tril, and projected to pass USD500 billion in 2023. China alone will see EVs form 30% of its national car sales this year, compared to 5% in 2019.

• Tesla to partially halt production of Model 3 at Shanghai plant for upgradesOn the competitive Chinese market, coined the world’s biggest EV market, Tesla has been upgrading its Shanghai plant in stages to begin production of the new Model 3 sedan. Accordion to people familiar with the matter, workers for the first of two phases in vehicle manufacturing at the plant will not be allowed on production lines from Feb 19 onwards until the end of the month. Tesla’s vehicles have seen stiff competition from local EV automakers, which has led to the company resorting to price cuts to buoy sales.

Japan suspects past airspace intrusions to be Chinese spy balloonsJapan’s Defence Ministry now suspects three unidentified objects spotted in its airspace between 2019 to 2021 were Chinese spy balloons, following the shooting down of one such device by the United States earlier this month. The Japanese government has approached China for confirmation, citing the events as violations of airspace and territorial violation. A spokesperson from China’s Ministry of Foreign Affairs has asked for Japan to be “objective and impartial” rather than “dramatising it” like the US.

DBS Digital Exchange seeks HK licence Southeast Asia’s largest bank DBS Group Holdings is looking to apply for a licence in Hong Kong that would allow it to offer crypto trading services to the consumers there at a time when Hong Kong is pushing to become a hub for digital assets. This is followed by DBS Digital Exchange reporting an 80% surge in bitcoin trading in 2022 despite the crypto winter, during which names such as Three Arrows Capital and Sam Bankman-Fried’s FTX have fallen. DBS said this increase is due to the market seeking stability, naming its own exchange as one of the beneficiaries.

Air India aspires to global reach with 470 plane orderAir India has inked an agreement to acquire 470 planes for its fleet, with 220 from Boeing and 250 from Airbus, with the aim of becoming a global carrier to take on domestic and international rivals. The deal took over a year to finalise, and may have a price tag of over USD100 billion. This places the Tata Group-owned airline against domestic carrier IndiGo, though it is anticipated that the Indian market will soon be enough for the both of them as it nears the status of the world’s largest population.

Reddit revives IPO dreamsThe social media platform has plans to go public in 2023, though it will likely be at a lower valuation than its previous target of USD15 billion. The previous target was for an attempt in December 2021, when Reddit announced it had filed confidential papers, following a USD10 billion valuation after a fundraising round in August 2021. However, the platform is currently valued at USD6.6 billion, due to its continued lack of profitability as well as the general cooldown of the tech market in recent times.

Shorts:

1. Pharrell Williams named Louis Vuitton’s new menswear creative director – The musician/fashion icon is now joining Louis Vuitton full-time after two previous collaborations with the brand. Williams is also the second black American to take the role, after Virgil Abloh.

2. Thailand to impose entry fee on foreign visitors – The fee, coming into effect in June this year, will be used to help fund local tourist attractions, as well as provide insurance cover for tourists. With the entry fee set at 300 baht (USD8.74) for air travellers and 150 baht (USD4.37) for land and sea travellers, Thailand is expecting to collect 3.9 billion baht (USD113.6 million) in fees in 2023 alone, due to the rush of post-pandemic tourists.

5. FOR YOUR EYES 👁👁

1. A series of photos of PM Anwar Ibrahim on the ground in Turkey to observe the post-earthquake search and rescue operation carried out by Malaysia’s Special Malaysia Disaster Assistance and Rescue Team (SMART). Bonus: Batang Kali doggo heroes meeting PMX in Turkey

2. Toy giant Mattel Inc is relaunching Barney the Dinosaur franchise and has given the dinosaur a makeover. The new animated series will launch next year followed by a Barney product line in 2025. The Barney brand was launched in 1992 and ran for 18 years - Gen Y grew up with it. Listen to its iconic song - I Love You.

3. Search engine market share of the lain-lain (ex-Google). Microsoft’s Bing is banging its future on ChatGPT to narrow the gap with Alphabet’s Google.