☕️ After rejecting Maxis, U Mobile eyes RM2 bil+ IPO

1. MARKET SUMMARY 📈

2. NUMBERS AT A GLANCE 🔢

Penang remains the nation’s top exporter for the period Jan to May 2024, with a value of RM177.99 bil, according to MATRADE. The state was also was the country’s top exporter last year, accounting for 30.5% or RM434.74 bil of the country’s total exports last year. A country as a whole, Malaysia’s exports had exceeded RM1 tril for 3 consecutive years and for the first 6 months of the year, exports increased by 3.9% to RM731.11 bil, with a trade surplus of RM66.12 bil.

Warren Buffett had made his largest annual donation of USD5.3 bil (RM24.8 bil) of Berkshire Hathaway stock to the Bill & Melinda Gates Foundation and 4 family charities, bringing his overall giving to charities to about USD57 bil (RM2.65 tril). Buffett plans to give away 99% of his fortune tied to the USD880 bil conglomerate. He started giving to charity when he was worth USD44 bil. Even after giving so much away, he’s worth USD134.3 bil even after his most recent donations, making him the world’s eighth richest person. The insane magic of compounding. 

Scientists have discovered what they believe to be the world’s oldest painting (view here) created some 51,200 years ago in a new study published in Nature. The discovery was found inside the Leang Karampuang cave in the Maros-Pangkep region of South Sulawesi, Indonesia. The painting depicts 3 people surrounding a wild pig, in a single shade of dark red pigment. The previous record holder was also a picture of a warty pig thought to be at least 45,500 years old.

3. IN MALAYSIA 🇲🇾

Najib Razak, Irwan Serigar’s DNAA request rejected, USD1.2 bil IPIC trial resumes
The High Court dismissed the incarcerated Najib Razak and ex-Treasury secretary general Dr Mohd Irwan Serigar Abdullah’s application to be given a discharge not amounting to an acquittal (DNAA) in the USD1.2 bil International Petroleum Investment Company (IPIC) case. The trial will resume on Nov 12. Najib and Irwan are jointly charged with 6 counts of criminal breach of trust (CBT), following a diversion of government funds to pay IPIC in 2017, after 1MDB borrowed USD1.2 bil from IPIC in 2015. These funds were initially allocated for, among others, Bantuan Rakyat 1Malaysia, the East Coast Rail Link (ECRL) project, and funds for KLIA.

Their reason for DNAA argued by the defence team sounds a lot due to technicalities, at least to the average person — the defence team said the prosecution had yet to furnish them 100+ pages of documentary evidence in order for Najib and Irwan to file their defence, as required by the law. The prosecution team argued that this bundle of documents had yet to be classified, as the prosecution could not control the declassification of documents under the Official Secrets Act. 

Hit and run — sea edition
Malaysia said it had intercepted a large oil tanker, Ceres I, involved in a collision with another ship before fleeing the scene and turning off its tracking system. The incident occurred near Singapore last week and Ceres I was found in Malaysian waters, leading to Malaysian coast guards seizing it. The collision caused both ships to catch fire and fortunately, no casualties were reported though an oil spill of around 17 sq km was identified by the Malaysian coastguards. Ceres I fled the scene immediately after the collision. It’s not known why Ceres I tried to flee.

Ceres I is a very large crude carrier (VLCC) supertanker capable of carrying about 2 mil barrels of oil. Some reports suggest it could be part of a so-called ‘dark fleet’, carrying oil from countries under sanction. A market intelligence service, S&P Global Commodities At Sea, says the ship has previously carried Iranian crude, which is subject to US sanctions.

Deals: Caffeine and Telco

• U-Mobile: After turning down a deal from Maxis, Malaysia’s youngest telco is reported to be working on a domestic IPO to raise USD500 mil (RM2.34 bil) as early as the first half of 2025, which could value the telco close to RM10 bil. If it materialises, this could be Malaysia’s largest IPO in nearly 8 years, after South Korea’s Lotte Chemical Titan Holdings Bhd raised USD879 mil in 2017. 

• ZUS Coffee: The homegrown coffee chain is said to be close to securing an RM250 mil investment in a private equity round, led by Singapore-based PE firm KV Asia Capital, with participation from an unknown government-linked investment company. The coffee chain is also believed to be considering an IPO. Filipino billionaire Frank Lao took a 35% stake in ZUS in Mar 2023. With currently 478 outlets, ZUS generated revenue of RM204.1 mil in its financial year ended 30 Jun 2023 and a net profit of RM10.15 mil. KV Asia is known for its investments in hypermarket chain TF Value-Mart Sdn Bhd and private education group Asia Pacific Education Holdings Sdn Bhd.

Shorts

1. HRD Corp - the hedge fund human resource development agency’s share portfolio
   The Human Resource Development Corp (HRD Corp), which recently has come under intense scrutiny following the Public Accounts Committee’s (PAC) inquiry, has invested in at least 10 Bursa-listed companies with a value of about RM565.6 mil at the time of reporting, according to data compiled by The Edge. Some of its shareholdings are doing pretty well — but that doesn’t mean it should be dabbling in the stock market. HRD Corp collected more than RM2 bil in levies from over 80,000 employers last year. Its exposure to the capital markets is not limited to the preceding and also includes, amongst others, RM135.5 mil in unit trusts. 
   View table: HRD Corp’s holdings in selected companies

2. Unsweetened tea, coffee to be cheaper - by 10 sen
   A total of 3,500 restaurants under the Malaysian Muslim Restaurant Owners Association (Presma) nationwide have agreed to reduce prices of these unsweetened beverages by 10 sen in line with the “Kurang Gula, Kurang Harga” campaign launched by the Domestic Trade and Living Cost Ministry. This is expected to be effective in 2 weeks. The campaign will kick off with these 2 drinks in the initial phase and will be expanded to other menu items based on cost suitability. Question — will they reduce prices if it’s kurang manis? 

3. Johor allocates RM54.7 mil for housing for hardcore poor
   The allocation made under the 2024 State Budget will see RM22.79 mil going towards house repair, and the remaining RM32 mil or building 328 housing units. A new house would cost around RM65,000 to build an approximately 490 new houses will be built.

4. AROUND THE WORLD 🌎

Biden Out, Harris In
Following his announcement to not run for re-election, US President Joe Biden endorsed his vice president, Kamala Harris. However, this does not mean she has been nominated as the Democrat’s new representative in the race for the White House. Harris, the only Democrat candidate as presidential nominee so far, has been moving to amass support among the Democrats, with the party responding positively. Endorsements have been flowing in, which also means a dwindling list of nominees as potential rivals offer their backing to Harris. This also leaves Harris with the dilemma of choosing a running mate.

New candidate, new gush of donations: Still, the endorsement from Biden alone saw campaign donations for the Democrats surging, even beating Republican presidential nominee Donald Trump’s largest single-day fundraising record. Trump’s campaign raised USD52.8 million in a day after Trump was convicted of a felony at the end of May, but the Democrats’ online donation platform, ActBlue, recorded USD53 mil in donations in less than 12 hours after Biden’s endorsement. However, all of the party funds raised this way are conditional on being for the use of incumbent president Biden or Harris. Should a different candidate be nominated instead, the donations will have to be returned, unless the donors agree for their donations to be transferred to the new nominee.

Team Trump’s response: Trump’s campaign team has been preparing for Harris’ rise “for weeks”, according to sources, with the team looking to tie her to issues with immigration and the cost of living, two areas he is counting on to push him to victory in the coming elections. Still, Trump has expressed confidence, saying Harris “will be easier to beat than Joe Biden”. The play is to highlight her as Biden’s “copilot” in his policies.

Surprisingly, one Democrat heavy-hitter who has not endorsed Harris is Biden’s ol’ pal, Barack Obama — might he be fielding his own candidate? Still, the former president thanked Biden for his service, calling him a “true patriot” for making the difficult decision of exiting the race. Maybe,

Israeli PM to make US trip
Israeli PM Benjamin Netanyahu has pledged that his country will be “America's indispensable and strong ally in the Middle East” regardless of who wins the US Presidential Elections in November. He will be visiting Washington where he is to address the US Congress and meet with President Joe Biden, who is reportedly still recovering from Covid-19.

However, activist groups against Israel’s campaign in Gaza are planning protests at the US Capitol to coincide with Netanyahu’s visit, with police expecting a large number of demonstrators and making additional security arrangements accordingly. More than 200 anonymous Capitol Hill staff have also signed a petition urging Congress Representatives to protest or boycott Netanyahu’s address to Congress.

Extra security arrangements are also being made for Israel’s athletes for the Paris Olympics. French Interior Minister Gérald Darmanin stated that round-the-clock protection will be given to Israel’s athletes during the games, citing “pronounced security concerns” during a time of “heightened political tensions”. This comes 52 years after the 1972 Munich Massacre, when 11 Israelis were killed by Palestinian militants during the Munich Olympics.

Business highlights

• Grab acquires restaurant reservation platform

  The regional ride-hailing giant acquired restaurant reservation platform Chope, aiming to help restaurants on the Grab platform grow and manage their businesses more efficiently. The tech firm believes the addition of Chope’s products and services will provide more synergies to the eateries to better capitalise on online-to-offline opportunities. No details were offered on the value of the deal. Chope was founded in 2011 and claims to have more than 13,000 restaurants across Singapore, Jakarta, Bali, Bangkok, Phuket, Hong Kong, and Shanghai in its network. Chope recorded revenue of USD22.7 mil in 2022.

• LVMH unit buys mall stake in USD1.9 bil deal

  L Catterton, a private equity firm backed by luxury brand LVMH, will be acquiring a stake in outlet mall landlord Value Retail for USD1.9 bil. The stake will be purchased from real estate player Hammerson and will include interests in nine luxury retail properties outside major European cities. Hammerson also claims to benefit from the disposal beyond the USD774 mil cash proceeds, stating it will be better able to focus its portfolio on prime urban real estate.

• China drops sanctions on US communications firm

  Communications and defence firm Viasat Inc. saw its sanctions removed by Beijing, with China’s foreign ministry stating that “the situation has changed” without elaboration. The sanction was initially for Viasat and four other US defence companies, which seemed to be a response for the US approving a possible weapons sale worth USD300 mil to Taiwan. As an aside, China will also be hosting Ukraine’s foreign minister, who will be looking to persuade Beijing to support Ukraine instead of Russia, or at least to support Russia less.

Shorts

1. Protesting Mallorca residents call for limit to tourism 
   The call comes as it highlights a disparity between how only a minority benefits from the tourism industry, which makes up 45% of the island’s economic output, with the majority having to get by on poorly paid jobs while suffering from numerous issues, such as housing shortages, traffic jams, and pollution. Regional government leader Marga Prohens stated she understands the protests but called for the demonstrations to not turn into “vandalism against holidaymakers and residents”. Similar demonstrations in Barcelona, Spain, saw protestors using water pistols on patrons of restaurants favoured by tourists - view here.

2. UK med-tech firm wins funding to conduct research in space
   BiologIC Technologies has been approved by the UK Space Agency to have a part of a USD83.9 mil fund to adapt its vaccine and gene therapy development and production technologies to work in space. They will be working aboard the International Space Station, as microgravity makes some health research, such as age-related diseases and growing human organs for transplant, easier.

5. FOR YOUR EYES 📺

1. One is only a true gold medal Olympic winner if they can practice their craft without spilling chocolate milk.

2. The hidden crowd engineering to prevent stampedes and crowdcrush