☕️ Opposition has every right to topple the govt, no one can stop us from planning - PAS President Abdul Hadi Awang

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

50 sen — the price of an apam balik for the past 25 years sold by a man fondly known as Pakcik Puzee in Pantai Remis, Lumut. Despite the lower profit margin, the 63-year-old man treats it as giving charity to those who are less able and was also able to raise six children by selling apam balik. And here we have every other business raising prices at the slightest rise in costs. Granted, Puzee’s biz is a lot smaller and simpler, but no price increase in 25 years says a lot about the profit margins one has to absorb inflationary pressures instead of constantly passing it on to consumers — looking at you Chinese uncles and aunties running stalls in kopitiams.

General Electric saw 40 quarters — that’s 10 years — of uninterrupted earnings growth during the 1980s early 1990s under the helm of then-legendary CEO Jack Welch. It involved a lot of accounting shenanigans and manipulation involving its financing arm, GE Capital. GE was fined USD50 mil by the US Securities and Exchange Commission, severely tarnishing its reputation.

Taking on debt to pay oneself lucrative dividends — that’s a signature move of private equity firms. Sounds risky, yet investors are quickly snapping up these loans. USD5.8 bil worth of such deals has been done so far in 2023 in the US and Europe. In Europe, companies have raised USD2 bil in dividend recapitalisations, accounting for 12% of all leveraged loans sold this year.

3. IN MALAYSIA 🇲🇾

The Great Johor Floods

• PM Anwar Ibrahim told the media that the recent allocation of RM50 mil in relation to the floods in Johor was given directly to the victims and not via the state government or MPs. PM Anwar issued the statement in response to Muhyiddin Yassin’s call for the federal government to quickly distribute RM300,000 to each MP in flood-hit states.

• On the other hand, the MP of flood-hit Ayer Hitam Wee Ka Siong cried foul of the poor treatment of the relevant authorities towards the flood victims. On top of the late delivery of food supplies, Wee said that the food quality was dismal, where flood victims were only served plain fried bee hoon for breakfast and Menu Rahmah-like rice with a small portion of cabbage and curry for lunch.

Abdul Hadi Awang says that it is their democratic right to overthrow the governmentPAS president Abdul Hadi Awang reiterated his previous statement in the Parliament that it is the opposition’s democratic right to topple the current unity government either via the general elections or through the Parliament. Abdul Hadi doubled down on his statement and added that this ‘strategic’ planning to overthrow the government is not against the King’s decree for a unity government, as the Constitution also binds the King. Isn’t this derhaka.

Guess who is also interested in toppling the government? The answer is Islamic State-linked Al Malaka Media Centre, which is also allegedly supporting a certain political party in the country. Interestingly, Abdul Hadi also once gave a sermon dubbed Amanat Haji Hadi that allegedly inspired the bloody 1985 Memali Incident.

The anti-hopping law is in action in Penang, leading to the vacancy of four seatsThe Penang state assembly had approved the clear-out of four Perikatan Nasional (PN)-held state seats, namely the Seberang Jaya, Sungai Aceh, Bertam and Teluk Bahang. The justification behind the vacancy of the seats was that the representatives of the seats contested under the Pakatan Harapan (PH) banner in GE14 but then changed allegiance when the Bersatu party changed sides to PN. This decision by the state assembly was condemned by the Bersatu party, which stated that this decision marked a black moment in Penang’s history.

Rafizi calls for the opposition’s help to support his poverty eradication programEconomy Minister Rafizi Ramli had asked for the support of the opposition’s MPs and assemblypersons to support his People’s Income Initiative (IPR). He welcomes the opposition to sit down with the Government and be directly involved in this initiative. Rafizi stated that so far, his ministry had received more than 22,000 applicants, but only 11.8% of the applicants came from low-income states such as Kelantan, Terengganu, Perlis, Sabah and Sarawak.

Rafizi is confident that IPR would not be another white elephant poverty eradication program, as the program aims to alleviate the livelihood of hardcore poor by giving them means to generate between RM2,000 to RM2,500 monthly, through participation in one of three sectors - food, agriculture, and services. We also hope that IPR can emulate the success of the Razak-era FELDA program, which gave means and tools for the poor to build wealth and break the chain of poverty.

Dear public servants, read this: 

• PM Anwar Ibrahim said to the audience of public servants that wage increment will be a priority of the Government once the country’s income improves as such improvement in wages is not possible at this moment.

• PM Anwar also wanted the power of evaluating and steering projects to be transferred back to the civil servants from the hands of consultants. PM Anwar said that the civil servants are more than capable of being given the task of making assessments and evaluations, evidently with the success of civil servants from the Attorney General’s Chambers and the Malaysian Anti-Corruption Commission to reach a settlement between the Malaysian and Abu Dhabi government in relation to the 1MDB dispute.Which con-sultant con-vinced Home Minister Saifuddin Nasution to use blockchain technology?

Talk dirty business to me:

• Japan-based MYFARM Inc is investing RM210 mil into PLS Plantation Bhd’s 1,000 ha durian cultivation project in Raub, Pahang. Under this deal, MYFARM Inc’s subsidiary will subscribe to a 49% stake in a JV company Akar Barat Jaya Sdn Bhd, while PLS Plantation’s Bhd’s subsidiary will hold the remaining 51% majority stake. PLS Plantation is backed by high-profile entities, with Ekovest Bhd holding a 67% stake in the company and the group chairman of the entity is Nazir Razak.

• Lembaga Tabung Haji, minority-owned Theta Edge Bhd, has participated in a request for proposal (RFP) to acquire a 70% stake in Transit Acquirer Sdn Bhd (TASB). If successful, it could lead to an RM800 mil investment by Theta Edge. TASB is a special-purpose vehicle created by the Government to undertake the integrated payment system of Prasarana Malaysia Bhd-operated public transport systems in the Klang Valley. Theta Edge has a market cap of just RM83 mil, FY2022 revenue of RM97.1 mil and net profit of RM8.1 mil — does it have the experience and the capacity to finance and undertake such a massive investment if successfully selected?

• Touch ‘n Go eWallet stated that its digital wallet is the first digital wallet to adhere to Bank Negara Malaysia (BNM)’s five new security requirements, four months ahead of the June 2023 deadline. The new security measures also included setting up a dedicated hotline for customers to lodge any scam reports. The company also claims that users can expect their calls to be answered within 30 seconds when they contact its dedicated hotline based at the National Scam Response Centre.

4. AROUND THE WORLD 🌎

Huge fire tears through the world’s largest refugee camp in BangladeshA massive fire ravaged a Rohingya refugee camp at Camp 11 in Cox’s Bazar in southern Bangladesh, which destroyed 2,000 shelters and left 12,000 people homeless. Cox’s Bazar is the world’s largest refugee camp, where more than one mil Rohingya refugees live, with most having fled military-led persecution in Myanmar in 2017. Essential services such as health clinics and schools have been destroyed as well.

Bangladeshi authorities are investigating the cause behind the fire. Between Jan 2021 to Dec 2022, there were 222 fire incidents in the campsite, including 60 cases of arson. This isn’t the first time a fire broke out — in Mar 2021, at least 15 people were killed and some 50,000 were displaced after a huge fire tore through a camp in that settlement. 

SoftBank-backed companies going for IPO:

1. Arm Ltd., owned by Japan’s SoftBank Group Corp, is aiming to raise USD8 bil in a blockbuster US stock market launch this year, hoping to be valued at USD50 bil. The company is expected to make its paperwork filing in late April and the listing is expected to happen later this year, subject to market conditions. Arm is a British semiconductor and software design company. Last year, NVIDIA and SoftBank both terminated the sale of Arm to the former as regulators sued over antitrust concerns. SoftBank didn’t lose out too badly - it walked away with the USD1.25 bil deposit prepaid by NVIDIA.NVIDIA, a not-so-common name amongst non-gamers, invented the graphics processing unit (GPU) and is amongst the world’s top 10 largest companies by value with a market cap of USD600.4 bil, ahead of Facebook parent Meta.

2. AI-powered robot developer CloudMinds Inc is considering a HK IPO that could raise USD500 mil. The Shanghai-based company raised USD300 mil back in 2019 from SoftBank’s Vision Fund. What the company does sounds like a precursor to Terminator - founded in 2015, the company developed robots with AI that can be used in restaurants and hotels to do menial, laborious work. The company attempted to list in the US in 2019 but failed as US authorities sanctioned it over US-technology transfer and facial recognition privacy. 

Meet China’s biggest fruit seller worth >USD1 bilFounded in 2001, China’s biggest fruit retailer, Shenzhen Pagoda Industrial, operates about 5,600 stores in 140 cities in 22 provinces and has diversified its selling channels to include online. Most of its outlets are franchised stores. This reminds us of Malaysia’s fruit chain MBG Fruit Shop.

China’s fruit market size estimated by US consultancy firm Frost & Sullivan was estimated to be RMB1.2 tril in 2021 (RM775 bil). Pagoda has the biggest market share - at just a tiny 1%, enough to make it the largest fruit retailer. The market is expected to grow at an annual average of 8% to reach RMB1.77 tril (RM1.14 tril) in 2026. Fruits consumption per capita in China was 52.7 kgs in 2021, lower than Americans and Japanese, suggesting room for growth. 

The company has just recently listed on the Hong Kong stock exchange on 16 Jan this year and has a market cap of USD1.14 bil. Business isn’t too bad — for the first six months of last year, revenue grew 7% YoY to RMB5.9 bil (RM3.81 bil), and net profit jumped by 40% to about RMB200 mil  (RM129.2 mil). 

Selling the most basic of things can make you a fortune in China. 

Another case in point — China’s richest man in 2022, according to Forbes, is Zhong ShanShan, with a net worth of USD65.7 bil. His company Nongfu Spring sells bottled water and tea drinks. 

Shorts:

1. Twitter insiders have told BBC that the company is no longer able to protect users from trolling, state-coordinated disinformation and child sexual exploitation under the chaotic ownership of Elon Musk, as tools and features intended to protect Twitter users from such threats are proving difficult to maintain. Exclusive academic data plus testimony from Twitter users further back up these allegations. 

2. Tesla is on a global sale - the EV maker has now cut prices in the US and Europe to spur demand further. Discounts range from 4% to 20%. Price cuts in China have seen sales rise by 18% in January from a 5-month low in December and a further 12.6% increase in February. BYD, the US-listed Chinese EV maker backed by Warren Buffett’s Berkshire Hathaway, took a beating in its share price, down USD18 bil or 14% since the start of February following Tesla’s price war. Tesla, on the hand, is up 9% during the same period. 

3. Lingerie brand Victoria’s Secret is bringing back its signature annual fashion show after a 4-year hiatus and a brand revamp. The fashion show, which started in 1995, has featured top models Tyra Banks, Gisele Bundchen and Miranda Kerr modelling the brand’s lingerie. There was also the USD2 mil “Fantasy Bra”, which featured real diamonds and gemstones. 

5. FOR YOUR EYES 📺

1. Chris Rock speaks out on stage for the first time about his slapping incident by Will Smith nearly a year ago during the Oscars. He had lots to say.

2. How Budget 2023 will affect businesses — an investing case study by @Doitduit. Check out this Instagram account — they break down investing topics into entertaining and easy-to-understand chunks, useful for those new to investing. Even if you are an expert, it’s still worth a follow for the entertainment value - injecting fun into dry, boring corporate news.

3. A thread by us folks on how EPF makes and invests its money to pay us dividends — what asset classes EPF invests in, the returns of each assets classes etc. Educate yourself so you can learn to manage your expectations from EPF’s returns for the rest of your life.