Source: Bloomberg

Thailand’s leading automotive parts manufacturer and Malaysian-owned AAPICO Hitech PCL and Japanese trading company Sojitz Group have agreed to establish a joint-venture (JV) to penetrate the motorcycle sector in Thailand with an initial investment of 400 million baht.

The newly established JV, Vroom Co Ltd, has been appointed the authorised importer and distributor of Bajaj, KTM and Husqvarna global motorcycle brands.

President and chief executive officer (CEO) of Stock Exchange of Thailand (SET)-listed AAPICO, Yeap Swee Chuan, said it was a privilege to have been entrusted by Bajaj and KTM Industries AG to further strengthen their world-class motorcycle brands in Thailand.

“AAPICO is extremely excited by the challenge of this new business venture, and we look forward to diversifying from the automotive industry into the motorcycle sector in 2020.

“I believe that with our long-standing partner, Sojitz Group, and our experienced and very capable team at Vroom, AAPICO can achieve another milestone in its history,” he said in a statement here today.

Bajaj is the world’s third-largest motorcycle manufacturer with a global presence in over 70 countries. The India-based company reported two wheeler sales of more than 4.2 million units, out of which 1.7 million units were exported, and generated revenues totalling US$4.6 billion in the 2019 fiscal year.

Meanwhile, Austria-based KTM Industries manufactures and distributes both KTM and Husqvarna motorcycle brands.

As the largest motorcycle manufacturer in Europe and among the leading off-road and sport motorcycle manufacturers in the world, KTM Industries sold a total of 261,454 motorcycles in 2018 — 212,899 KTM and 48,555 Husqvarna — worldwide, a growth of 10 percent compared with the previous year, and recorded a revenue of €1.56 billion, another good performance for eight consecutive years.

Meanwhile, President of Sojitz Autrans Corporation of Sojitz Group, Yoshiaki Ichimura, said the group was planning to introduce sporty models from the three brands into the Thai market.

“We are confident that the sporty models will receive a warm welcome, especially by big bike enthusiasts,” he said.

Vroom will be ably helmed by CEO Hideki Yanagisawa and chief operating officer Varot Kamolchotiros.

Yanagisawa said Vroom would seek qualified partners to join its dealership network to ensure maximum coverage around the country.

“Vroom is committed to becoming a customer-centric company and our top priority is to achieve complete customer satisfaction by offering motorcycle models that are on our customers’ ‘wish list’ and also provide them the best possible after-sales service. This will translate into immediate availability of spare parts and timely maintenance,” he said.

Vroom plans to launch selected Bajaj, KTM and Husqvarna motorcycles at
the Bangkok International Motor Show in March this year.

Source: Bernama

YTL Power International Bhd and its subsidiary has entered into an agreement to acquire the power plant and associated assets of Tuaspring Pte Ltd for S$331.45mil (RM1bil).

Taser Power Pte Ltd, a wholly-owned subsidiary of YTL PowerSeraya Pte Ltd, which in turn is wholly-owned by YTL Power, had entered into a put and call option agreement with Tuaspring.

The assets comprise a land lease over a site located at 90 Tuas South Avenue 3 in Singapore, with a 20-year remaining term and the 396 megawatt combined-cycle power station and stocks and associated assets.

The purchase is to be settled in cash by S$230mil, which will be funded by a bank loan, and the remaining S$101.45mil through the issuance of new ordinary shares and loan notes amounting to 7.54% of the post-acquisition equity in YTL Utilities (S) Pte Ltd, which is the immediate holding company of YTL PowerSeraya.

YTL Power will grant Maybank a put option, exercisable any time within three years from the completion date of the acquisition which is expected to be in the second quarter this year, enabling Maybank to require YTL Power to purchase its 7.54% equity interest in YTL Utilities at a purchase price of S$40mil (RM121.2mil)

The assets were being sold via a receiver and manager process managed by Baker Tilly Reid following an enforcement event under Tuaspring’s banking facilities provided by Maybank’s Singapore branch.

The combined-cycle power plant was commissioned in 2016 and was originally constructed as part of a water desalination project following a tender held by the Public Utilities Board of Singapore (PUB). Following defaults by Tuaspring, the water purchase agreement was terminated by PUB last year.

In a filing with Bursa Malaysia, YTL Power said the assets would form a logical extension of YTL Power’s existing multi-utility operations in Singapore. It said the acquisition would enable the group to integrate the assets into YTL PowerSeraya’s existing business and consolidate its power generation capacity in Singapore.

Source:The Star

Pestech International Bhd is expanding its power generation business in Cambodia with the proposed acquisition of a solar farm project.

The company, in a filing with Bursa Malaysia, said a subsidiary Astoria Solar Farm Sdn Bhd (ASF) has agreed to acquire a 94% stake in Green Sustainable Ventures (Cambodia) Co Ltd (GSV) from two individuals for US$4mil (RM16.3mil).

The proposed acquisition, Pestech said would give the company the “super-majoriy rights” over the development of a 20-year concession of a 20MW large-scale solar farm project in Bavet City, Cambodia.

The project developer, GSV has obtained a long-term power purchase agreement (PPA) with Electricité du Cambodge (EDC) under the built own and operate model with a power purchase price of US$0.076 per kWh.“Upon the proposed acquisition of 94% in GSV, GSV shall be the developer and undertake the project management of all EPC functions, ” Pestech said.

“ASF, being the super majority shareholder in GSV, may determine the appointment of EPC and operations and maintenance (O&M) company to undertake the EPC scope for the entire Project and O&M for the duration of
the PPA.

Pestech expects the proposed acquisition to contribute to the profitability of the group throughout the duration of the PPA.

Souce: The Star

LYC Healthcare Bhd said it is acquiring a 51%-stake in Singapore-based T&T Medical Group Pte Ltd for S$7.29 million (RM22.27 million).

T&T is principally involved in the provision of clinics and other general and specialised medical services, LYC said in a filing to Bursa Malaysia.

The group said it is acquiring the stake from Ting Choon Meng, the sole owner and sole director of T&T.

LYC said it will pay Ting S$5.3 million in cash, and settle the balance S$1.99 million via the issuance of redeemable non-cumulative preference shares in its wholly-owned unit, LYC Medicare.

T&T operates a one-stop chronic disease centre focusing on chronic degenerative joint diseases and spine, and pain management, and metabolic diseases like diabetes mellitus, hypertension and high cholesterol.

It also owns and operates T&T Family Health Clinic & Surgery, a medical centre in Singapore.

LYC said the acquisition is also expected to enhance the group’s earnings base as the deal comes with a profit guarantee of S$3.9 million over three years up to the financial year ending March 31, 2024 (FY24).

For the financial year ended Dec 31, 2019, T&T’s profit after tax jumped 85.5% to RM3.33 million, from RM1.8 million a year earlier, while revenue rose to RM13.36 million from RM10.74 million.

As for LYC, it reported a wider net loss of RM5.59 million for the nine months ended Dec 31, 2019, compared with RM3.63 million a year earlier. This is despite an 81.9% increase in revenue to RM9.34 million, from RM5.13 million last year.

The wider losses were due to the MFRS 16 impact recognised during the quarter, largely contributed by the higher depreciation and finance costs amounting to RM1.92 million, as well as the start-up cost of the group’s Puchong postpartum centre, which opened in July 2019.

LYC said the proposed acquisition provides the group an opportunity to expand its geographical reach outside of Malaysia and inroads into the Singapore healthcare sector.

“This would enable the group to attain a wider market presence and marketability of its range of healthcare services, which can be offered to both local and international customers,” said LYC.

Meanwhile, LYC has proposed to undertake a private placement of up to 30% of its issued shares to raise up to RM26.8 million to finance the acquisition.

The group said it intends to implement the private placement before completion of the proposed acquisition.

As at April 24, LYC’s total issued share capital was 355.36 million shares worth RM67.37 million.

Assuming that all placement shares have been fully placed out, the group will have an enlarged issued share capital of up to 464.56 million shares worth RM94.97 million.

Shares in LYC closed seven sen or 25.45% higher at 34.5 sen today, valuing the group at RM122.6 million. Some 26.85 million shares were traded.

Source: The Edge Markets

Solar photovoltaic (PV) system specialist Solarvest Holdings Bhd has secured two new contracts, involving engineering, procurement, construction and commissioning works, in the Philippines from Vivant Energy Corporation.

This marks its first venture into the Philippines.

In a statement today, Solarvest said the first project is for the development of solar PV systems at 10 designated buildings, with a cumulative capacity of 816.2-kilowatt peak (kWp), located at the University San Agustin, Iloilo City, Philippines, while the second solar project is the development of 377.52 kWp solar PV systems for Bulihan Industrial Park located at Bulacan, Philippines.

To be completed within the year, both the new solar rooftop projects are expected to contribute positively to Solarvest’s financial performance for the financial year ending March 31, 2021 (FY21).

“This marks our first expansion beyond Malaysia, and we are thrilled to have received the opportunities and confidence from an established industry player such as Vivant Corporation,” said its group chief executive officer Davis Chong Chun Shiong.

“We aim to make further inroads into the Philippines and are actively in talks with local partners to bid for more projects there. The Philippines is a key focus market for us as we aim to capitalize on the expanding renewable energy investments in the country,” said Chong.

Citing the Institute for Energy Economic and Financial Analysis report in 2018, he added that the potential of the solar industry in the Philippines is robust and the market size is expected to reach about PhP1.5 trillion by 2030.

“Currently, our operations are mainly in Peninsular Malaysia. Our move to the Philippines is in line with our strategic intents to diversify our geographical footprint.

“Over the mid term, we hope to grow our operations in the overseas markets, which include countries such as the Philippines, Taiwan and Vietnam,” he said.

Vivant Energy Corporation’s principal business activities include energy distribution and generation, retail electricity supply, as well as energy related engineering solutions across Luzon, Visayas and Mindanao in the Philippines.

Shares of Solarvest were up three sen or 3.85% at 81 sen at 12.30pm, valuing the company at RM316.41 million. Some 5.93 million shares were traded.

From its peak at RM1.37 on Feb 19, 2020, the counter has fallen 41%. Nonetheless, the counter, which made its debut on Nov 26 last year, grew some 108% from its initial public offering price of 39 sen.

Source: The Edge Markets

MMC Corporation Bhd is looking to expand overseas to enable the group to establish a bigger presence that will lead to more opportunities.

Its group managing director Datuk Seri Che Khalib Mohamad Noh said, however, Malaysia will remain the primary location of operations for the group.

“The management is of the view that replicating the company’s proven business model overseas could be an effective strategic move towards realising greater growth, given suitable opportunity.

“Overseas expansion reduces our dependence on a single geographic location and further diversifies our income. As such, we are constantly on the look-out to venture into industries in which we have existing experience and expertise, and countries where we are already familiar with,” he said in MMC’s 2019 Annual Report.

Besides, the group will also continue to leverage on its inherent strengths towards realising set business goals and targets, while creating value for stakeholders.

Che Khalib said the company’s businesses operate in key sectors of the economy and play vital roles in their respective value chains, nation building and the nation’s economy.

He said there are also new opportunities to tap into and the Alam Flora acquisition has opened the pathway to penetrate into the high potential environmental services niche segment, and in Malaysia, the environmental services sector remains a largely untapped market with considerable potential for growth.

“With regards to energy, the ongoing focus on renewable energy especially solar and small hydro provide opportunities for the group. Having secured the biogas and small hydro projects, we are well-placed to expand further when bids for large-scale solar are called,” he said.

The reintroduction of competitive bidding, opening up of fuel sourcing, access to transmission grids and the liberalisation of the retail segment are likely to enhance efficiency along the value chain and in turn, drive down production costs, and this will generate steady income for the group, he said.

In addition, the water industry also presents encouraging opportunities, given the stronger focus placed by the government towards achieving water security, there has been a growing shift towards addressing water issues, by both the private and public sector.

He said the group’s engineering division may also undertake studies on existing government plans and where possible, recommend more effective alternatives based on its own proposed concepts and designs, whereby operational excellence and cost efficiency will be further prioritised.

Meanwhile, for the industrial development division, industrial property remains comparatively resilient compared to residential or commercial property.

He said foreign direct investment appears to be improving and the group are ready with a vast amount of infra-ready landbank, mainly located in high-growth industrial areas such as Senai, Johor and Kulim, Kedah.

“Our ports and logistics division will continue to serve as the core revenue generator for the group. The focus remains on responding to increasing competition by expanding capabilities, strengthening our partnership with the shipping alliances, and targeting the hinterland to boost cargo volumes. We will continue to focus on optimising the synergistic possibilities between our ports, both commercially and operationally,” he added.

Source: Bernama

Malaysian companies were told to capitalise on the recently-opened investment opportunities in India as the republic is easing the norms for the opening up of foreign direct investment (FDI) in 16 sectors, said the Consortium of Indian Industries in Malaysia (CIIM).

Its chairman, Datuk Umang Sharma, in making the call, said the sectors comprise defence, manufacturing, mining of coal and minerals, space, aviation sector, food, auto, steel, cement, plastics, Maintenance, Repair and Overhaul (MR) hub, health, and education sectors.

“Malaysian companies have an edge in some of these sectors and this could be an ideal time to enter into these sectors at much lower costs.

“With the growing Malaysia-India relations, Malaysian companies can capitalise on the recently-opened investment opportunities in India,” he told Bernama in an email reply.

On the outlook for Malaysia-India business and trade volume this year in the wake of COVID-19, Sharma said the bulk of Malaysia-India trade is on essential goods, and thus ‘CIIM don’t foresee much decline in trade volume this year’.

“Palm oil and rice trade between the countries has already shown an increase in significant numbers,” he said.

He said both Malaysian and Indian governments’ relations have greatly improved recently and both are giving incentives to the industries, mainly to small and medium enterprises (SMEs) and Micro SMEs.

“Taking a mid-term view, this is an excellent opportunity to capitalise on these incentives either by buying companies or investing in promising ones, as they would be available at much lower capital costs.”

Commenting on the Indian business sectors which are affected in Malaysia by the pandemic, Sharma said some Indian businesses which are under the business-to-business (B2B) segment have suffered due to restricted travel and non-movement of goods and logistic issues, especially for exports where the entire supply chain are affected.

He, however, noted that the Ministry of International Trade and Industry (MITI) and Malaysian Investment Development Authority have done a wonderful job in helping the industries open up and disseminating information on a real-time basis.

He also said that financial institutions are not ready to lend even small working capital loans unless there is a local majority shareholding despite some of the CIIM members having been doing business in Malaysia for over 20 years and with 99 per cent local employees.

“So, such members are suffering. Due to Movement Control Order and complying with standard operating procedures, there has been a loss of production for 1-2 months and lower productivity levels by 20-30 per cent, effects of which would reflect in this fiscal year,” he said.

Asked on the economic measures the Malaysian government should put in place in the wake of COVID-19 to attract Indian businesses in Malaysia, Sharma said Malaysia could enhance their policies to enable the ease of setting up of businesses here and allowing the bringing in of talent to develop their Malaysian investment, together with local talent.

He said subsidy on electricity tariff under the Comprehensive Economic Cooperation Agreement (CECA) between Malaysia and India was signed in 2011 and it is time for both the countries to revisit the agreement and iron out some of the kinks to enhance trade and investments.

“Besides that, the Malaysian government could help solve the supply chain disruptions during the COVID situation and look for reshoring some of the industries to India.

“The government could look at allowing foreign labourers for jobs which are labour intensive, reduce the minimum wage for the next 12 months to those industries which can’t recover their losses, and reduce corporate taxes for this financial year,” he added.

Sharma said Malaysia could also look at having a special India desk, headed by a seasoned corporate person who understands business dynamics of both Malaysia and India, to explore and exploit business opportunities in trade and investments.

“Indian companies have invested over RM12 billion in Malaysia and have created over 10,000 direct employment,” he said, adding there are approximately 150-200 Indian companies comprising various sectors currently operating in Malaysia.

Source: Bernama

LYC Healthcare Bhd is acquiring a controlling 51%-stake in Singapore-based HC Orthopaedic Surgery Pte Ltd (HCOS) for S$6.93 million (RM21.29 million).

The deal is LYC Healthcare’s second acquisition involving a Singapore medical firm in less than a month. It announced the acquisition of a 51% stake in T&T Medical Group Pte Ltd for S$7.29 million (RM22.2 million) on May 4.

The group will be acquiring 17,000 shares representing 17% of HCOS from the founder and main operator Dr Chan Ying Ho, and 34,000 shares representing 34% of HCOS from Beyond Wellness Group Pte Ltd (BWG).

Post-completion, its wholly-owned LYC Medicare will have 51% in HCOS, while Dr Chan will be left with 49%.

HCOS is principally involved in orthopaedic specialist treatments including
surgeries. It currently leases and operates a medical centre located at Mount Elizabeth Hospital.

LYC said the deal is expected to be completed by the fourth quarter of the year, and will be funded equally by internal funds and bank borrowings.

When contacted, LYC Healthcare CEO and managing director David Sui Diong Hoe told theedgemarkets.com that the transaction is being carried out at a forward price earnings (PE) multiple of eight times of HCOS’ profit after tax of S$1.7 million. This, he said, is an attractive deal as healthcare companies typically trade at 30-40 times PE multiple.

The acquisition comes with an aggregate profit guarantee totalling S$5.1 million (RM15.65 million) over three years up, to the financial year ending March 31, 2024 (FY2024).

To ensure HCOS’ business continuity, Sui added that Dr Chan will be signing a five-year service contract with the group.

He also said this latest acquisition is synergistic with the group’s earlier
acquisition of a majority stake in T&T Medical Group. With the two medical
companies having a common shareholder — LYC Medicare — their orthopaedic service offering will complete and complement one another, he said.

“In other words, with T&T Medical Group and HCOS, we have a complete one-stop orthopaedic centre of excellence for advanced orthopaedic services, sports medicine and knee replacement surgeries.

“With this, we will look to set up our one-stop chronic disease centre in Malaysia in the near future and to leverage on their medical expertise to ensure a successful execution of our proposed plan,” Sui said.

As for the impact on profitability with the two deals, LYC Healthcare said it will be able to recognise 51% of the combined S$3 million (RM4.59 million) annual profit guarantee given by both medical companies.

The combined earnings after acquiring the two medical centres will also make LYC Medicare eligible for an IPO in either Malaysia or Singapore stock exchange, Sui noted, though he said the group has no listing plans for now.

As for why the group targets Singapore medical companies, it is because the
country is one of the hottest destinations for medical tourism. “Singapore has a good reputation in attracting high net worth medical tourists from countries such as Indonesia and China, which are seeking treatments like oncology, orthopaedics, ophthalmology, organ transplants and neurological surgeries,” Sui said.

Moving forward, Sui said the group will strategise to attract more medical tourists through partnerships with foreign agents.

On Covid 19’s impact on the healthcare segment, Sui said both T&T Medical and HCOS will focus on serving the local market as of now.

“As the two transactions are expected to be completed only towards September or October, we expect things will be better by then. Nonetheless, we are still protected by our profit guarantee agreements for the next three years for both acquisitions, in the event there are any declines in their businesses in the near future.

“While people may defer their travel plans that are more for pleasure, we believe they may still proceed with medical-based travels [once travel restrictions ease],” he added.

At the time of writing, shares in LYC was up 3 sen at 46 sen, giving the group a market capitalisation of RM156.36 million. The counter saw 39.73 million shares traded.

Source: The Edge Markets

Cocoa processor Guan Chong Bhd has allocated €25 million (approximately RM120 million) in capital expenditure (capex) this year for the ongoing construction of its new cocoa ingredients plant in Côte d’Ivoire.

The new plant is expected to grow the group’s cocoa grinding capacity to 310,000 metric tonnes (MT) per year, compared to 250,000 MT per year currently.

Furthermore, the expansion will place Guan Chong closer to a key raw material source, grant easier access to the key European consumer market, and provide the group significant cost savings.

Group managing director Brandon Tay Hoe Lian said the expansion programme remains in progress despite uncertainties posed by the Covid-19 pandemic, and is supported by resilient and long-term growth in global consumption of cocoa ingredients.

“Despite the moderated demand [for] chocolate currently due to the Covid-19 pandemic, the long-term demand and prospects remain stable. We are therefore confident of our expansions contributing to a stronger footing in the coming years, to be supported by enlarged capacity, expanded sales channels and improved competitiveness.

“While we foresee challenges remaining in the near term, going forward, we will focus on optimising our production process, as well as build our markets through our expansions into Europe and Côte d’Ivoire,” he said in a statement today.

On top of that, Guan Chong has also completed the acquisition of Germany-based industrial chocolate manufacturer Schokinag Holding GmbH earlier in January 2020, which will utilise up to 50% of the grinding capacity in the new plant in Côte d’Ivoire once completed.

“The expansion into both Cote D’Ivoire and Germany will provide the group synergistic benefits as it looks to solidify its position as a key player in the global chocolate industry,” Tay added.

At noon market close, shares of Guan Chong were down 1 sen or 0.39% at RM2.58, with 170,500 shares traded.

Source: The Edge Markets

APM Automotive Holdings Bhd’s unit in Indonesia is teaming up with Hyundai Motor Company to manufacture and supply automobile seats and related components.

In a filing today, APM said the joint venture is to support Hyundai’s automobile manufacturing plant in Cikarang, Indonesia, which is expected to be fully operational in the second half of 2021.

The plant, the group said, will produce 150,000 units of vehicles a year, half of which would be exported to neighbouring countries in Southeast Asia.

The joint venture is between PT APM Automotive Indonesia and Hyundai Transys Inc, a wholly-owned unit of Hyundai Motor Company.

Hyundai Transys is an automotive parts company that produces automobile powertrains and seats with presence in nine countries.

Under the deal, PT APM will acquire a 50% stake in PT Hyundai Transys Indonesia for RM2.17 million cash.

It will also sell a plot of industrial land located in Cikarang to PT Hyundai Transys for RM22.54 million for the purposes of establishing a manufacturing plant.

Source: The Edge Markets