Here's what we have for the week

* Business Presence of Dairy Farm International

Significant Event

• Nestle has entered into a deal to acquire nutritional product firm Wyeth Nutrition (Malaysia) Sdn Bhd for RM165 million. Wyeth Nutrition (Malaysia) Sdn Bhd manufactures and distributes a wide range of infant formula and maternal nutrition products in Malaysia, under the brand name S-26 and Dumex.
• Dairy Farm International Holdings Limited, the retail company that operates in Asia, has announced its decision to sell off its Giant Malaysia operation to a local retailer.
• The recent Malaysia budget includes an announcement allowing for dual class share listing. Dual-class shares listing will allow companies to raise funds while retaining control over their business.

* Land acquired by MCT Berhad

Real Estate Industry 

• MCT Berhad has recently acquired a prime piece of land spanning 1.57 acres in Seputeh, KL for a staggering RM 58 million (equivalent to RM 848 per sqft). Touted to be their next prestigious project, "Aetas Seputeh".  This latest acquisition marks the company's foray into the luxury property market in the area, which already has two existing luxury projects by SP Setia Bhd and Eupe Bhd. With the announcement of MCT Berhad's new project, it will be interesting to see how Seputeh area will transform into.
• EPF's old office building in Tropicana, Petaling Jaya has been sold to LKL International for RM 24 million. The sale of its second office in recent years suggests that EPF is adopting a more agile investment approach, with a focus on return and cash flow instead of capital appreciation potential of assets. This shift in investment strategy could potentially signal a change in the investment landscape, where cash flow could become a more important consideration for investors in the future.

Infrastructure/Logistics

• The Works Ministry plans to upgrade the Johor stretch of the North-South Expressway (NSE) from Yong Peng Utara to Senai Utara to six lanes, from the current four, in stages. The proposed project is estimated to cost RM525 million. The expansion of a highway can have a remarkable impact on the surrounding land prices, particularly in areas that are ideal for industrial development, especially when industrial land prices in the urban area are on the rise. With the increased accessibility and convenience that the expanded highway provides, the area becomes more attractive to developers and investors, resulting in a surge in demand and prices for land surrounding highway intersections.

Cash Call/ Debt restructuring/Restructuring/Proposed Listing

• SATS Ltd, also known as Singapore Airport Terminal Services Limited, is a leading provider of food solutions and gateway services for the aviation industry. The company is raising $798.8 million via a rights issue to help fund the $1.82 billion acquisition of Worldwide Flight Services. Entitled shareholders will be allotted rights to subscribe for 323 rights shares for every 1,000 existing shares held as at March 2. The rights shares are offered at $2.20 each.

Company Expansion Plan/ Capex Plan

• Axiata Group is planning RM7.1 billion worth of capital expenditure in 2023, with the major investment for expansion of its Indonesian venture and its tower business. Companies that provide services and solutions related to tower infrastructure development and maintenance, such as engineering and construction firms, could benefit from the investment in the tower business.

Users can filter the companies' activities via industry or nature of activities via using our tool for Malaysia companies and Singapore companies via the link.
Users can get access to all the major transactions of offices, lands, and factories in Malaysia via this tool.

Companies we are looking at

Teo Seng Capital Bhd, a poultry operator has recently caught our attention as their gross profit has turned from negative to positive. Additionally, the government's plan to uplift the price ceiling in June 2023 is expected to have a positive impact on their business. We will continue to monitor the company's performance and growth potential in the coming quarters.

News we are reading

• Here's a summary of Malaysia's 2023 budget, which is positive and covers a wide range of industries. (The Edge)
• AI generated art is not protected by patent law. (The fashion law)

What we are thinking

From February 14th to 16th, the Iranian President made a three-day successful and fruitful state visit to China, which has significant implications for changing the global geopolitical landscape.

As early as 1997, the well-known American hawkish strategist Brzezinski predicted that three possible alliances would emerge in the 21st century that could undermine the United States' hegemonic status, which were:

1) The alliance of China, Japan, and South Korea
2) The Great European Union alliance, and
3) The China-Russia-Iran alliance.

Brzezinski believed that the China-Japan-South Korea economic alliance had the highest possibility, but the United States only needed to intensify the ethnic conflicts of the three countries to destroy the emergence of this alliance, so it was not a concern. The Great European Union alliance refers to the EU plus Russia. The EU has a developed economy, while Russia has cheap energy. They are naturally complementary. Once they join forces, the United States' hegemonic status will be threatened. The current Russian-Ukrainian war has basically dispelled Brzezinski's concerns.

The third alliance is China, Russia, and Iran. Brzezinski believed that this was the alliance that posed the greatest threat to the US hegemonic status in the first 50 years of the 21st century, but it was highly unlikely to happen because it required the United States to make an extremely short-sighted strategic mistake and adopt hostile policies toward these three countries. Only then can this disastrous geopolitical nightmare occur.

From the unlimited cooperation between China and Russia, to the rapid deepening of Russia-Iran relations, and then to Iran-China deepening ties, the United States' biggest geopolitical nightmare has actually come true!