EVENING 5: Axiata, Sinar Mas said to revive Indonesian unit merger talks

The Edge TV

In today’s edition of Evening 5 — Axiata and Sinar Mas are said to be reviving talks to merge their telco operations in Indonesia. Meanwhile, a Reuters poll of economists shows Bank Negara will hold the overnight policy rate at 3% through end-2024.

Transcript

00:00 [Music]

00:04 Axiata Group and Indonesian conglomerate Sinamask Group

00:08 are said to have revived talks that could lead to a merger of their telecommunications operations

00:13 in Indonesia. Citing people familiar with the matter, a Bloomberg report said the owners of

00:18 XL Axiata and Smartfriend Telekom are working with advisors to help weigh a potential transaction.

00:25 Its sources said other options under consideration could include network sharing agreements and

00:30 partnerships. The people also reportedly said that deliberations are preliminary

00:35 and there is no certainty that any deal will take place. According to the report,

00:40 Smartfriend President-Director Merza Farkiz said he would wait and see on the progress of talks,

00:46 and a representative for Sinamask referred the request to Smartfriend. A representative for XL

00:52 Axiata reportedly said they could not comment on speculation, while a spokesperson from Axiata was

00:58 cited as saying that the telco giant is always on the lookout for collaborations and strategic

01:03 partnerships and hopes to grow sustainably throughout its geographic footprint.

01:08 [Music]

01:13 A Reuters poll of economists show Bank Negara Malaysia will hold its key policy rate at 3%

01:20 this Thursday, adopting the same no-change stance as most of its Asian peers amid signs of moderating

01:27 economic growth and cooling inflation. A Reuters report noted inflation in Malaysia dropped to a

01:33 two-year low of 2% in July, and the central bank, which does not particularly target inflation in

01:39 setting monetary policy, said it would cool further. The report said that suggests BNM,

01:46 having raised rates by a modest 125 basis points in the current cycle, has concluded its tightening,

01:53 but will keep rates higher for longer as the weak ringgit may prevent inflation from falling quickly.

01:59 All 27 economists in the August 29 to September 4 Reuters poll forecast the central bank would

02:07 keep its benchmark overnight policy rate unchanged at 3% at this week's meeting,

02:12 while medians showed it there through the next year. Quoting Lavanya Venkatiswaran,

02:17 senior Asian economist at OCBC Bank, the report said BNM has limited reasons to change its slightly

02:24 accommodative policy stance for now. Plus, its rate hiking cycle was less aggressive than regional

02:31 peers, implying that the room to pare back rate hikes is lower.

02:35 [Music]

02:41 PPB Group is cautious of a potential renewal of geopolitical tensions between Ukraine and Russia,

02:47 which along with unpredictable weather conditions, could choke grain and exert

02:51 impact on the performance of its grains and agribusiness segments for the rest of the year.

02:57 PPB's MD Lim Soon-Huat stressed that potential supply risks on the downside could increase

03:03 cost pressures in procuring raw materials. Meanwhile, Jeremy Gun, the CEO of PPB subsidiary

03:10 FFM, said the group is monitoring the collapse of the grain deal between Russia and Ukraine,

03:16 and acknowledged that it is vital to seek alternative grain-producing countries

03:20 due to difficulties of getting global insurers to cover grain ships traveling through Black Sea

03:26 ports. Despite the uncertainty in the grains market, PPB Group expects better earnings

03:32 recognition in the second half of FY2023, mainly supported by its 18.8% owned, agri-based Wilmar

03:39 International. The associate company, which typically contributes about 75 to 80% of PPB's

03:46 earnings, is expected to fare better in the coming months amid more stable consumer spending in China

03:52 and the stabilization in the cost of raw materials.

03:55 [Music]

04:01 The Kuala Lumpur High Court has ordered Protesco's former director, Datuk Teh Poh Yee,

04:06 and his associate, Datuk Uy Kok Ang, to pay the firm RM84.64 million over breach of fiduciary

04:13 and statutory duties related to a sale and purchase agreement signed in 2014.

04:19 Protesco said the judgment sum, awarded on September 1, will include an interest of 5%

04:25 per annum to be calculated from September 22, 2014, the date of the writ of summons,

04:31 until full and final settlement. Protesco sued Teh and Uy on September 22, 2014,

04:38 for breach of fiduciary and statutory duties after the company failed to acquire a 63% stake

04:44 in Anglo-Slavic Indonesia for USD22 million. According to its past filings, it also claimed

04:51 that Teh and Uy had failed to disclose their interest in the transaction and conspired to

04:56 defraud the company and undertake secret profit-making. Shares of Protesco finished

05:01 5.1% lower at RM18.5, with a market capitalization of RM91.65 million.

05:09 [Music]

05:14 Independent advisor Asia Equity Research has deemed KIP Reid's RM80 million acquisition

05:20 of KIP Mall Kota Warisan in Sepang "fair, reasonable and not detrimental to non-interested

05:26 unit holders". Asia Equity Research said the dilutive effect of the proposed RM10 million

05:32 rigged private placement is "minimal and reasonable" for the advantage of a lower

05:36 gearing level at 35.2%, in contrast to 36.2% as at June 30, 2023, in the choice of capital mix.

05:46 It added the number of new units is relatively small, at about 1.98% of the enlarged unit

05:52 holders' capital after completion of the exercise. The proposed acquisition results

05:57 in earnings per unit of S$10.06 from S$10.03 before the proposed placement and dividend

06:04 per unit of S$6.17 from S$6.07, both excluding the one-off expenses. The firm recommended that

06:12 non-interested unit holders vote in favour of the proposed deal at the upcoming meeting.

06:18 KIP Reid's units traded 0.56% lower at S$0.885 today, valuing the REITs at RM533.65 million.

06:27 [Music]

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