EVENING 5: 7-11 gets a higher price tag for Caring

The Edge TV

In today’s edition of Evening 5 — 7-Eleven will be getting a higher price tag for its 75% stake in Caring Pharmacy. Meanwhile, KWAP records RM3.8 bil in gross investment income for the first seven months of 2023.

Transcript

00:00 [Music]

00:04 7-Eleven Malaysia Holdings, wholly owned subsidiary, convenience shopping Sabah,

00:08 will now sell its 75% stake in Caring Pharmacy Group to Big Pharmacy Holdings

00:13 at a higher price tag of RM675 million.

00:16 This cash consideration is a premium of RM37.5 million

00:20 from its initial value of RM637.5 million announced on July 21st.

00:26 CSS has signed a sale and purchase agreement with Big Pharmacy for the cash deposit

00:30 which follows a binding term sheet that CSS received from Big Pharmacy subsidiary back in June.

00:36 The new price tag represents an implied P/E multiple of 20.7 times

00:40 vis-a-vis the P/E multiple of pharmacy retailers listed in Asia

00:45 as opposed to the 19.6 times P/E multiple

00:48 incorporated in Caring's 100% equity value of RM850 million.

00:53 Big Pharmacy is also acquiring the remaining 25% in Caring from Motivasi Optima

00:59 which means Caring will be a wholly owned unit of the other pharmacy

01:02 upon completion of the proposals.

01:04 For 7-Eleven, the original cost of investing in the Caring Group

01:08 incurred from February to June 2020 is approximately RM423.2 million.

01:14 It expects RM251.2 million in pro forma gains from the disposal.

01:19 Of the RM675 million proceeds, 62% will be utilized for growing its seven cafe store expansions

01:26 followed by repayment of borrowings of RM250 million.

01:30 7-Eleven says once the proposed disposal is completed,

01:34 the company would be able to focus its resources to grow its convenience store segment

01:38 which is expected to contribute positively to the group's future income.

01:46 Kumpulan Wang Persaraan di Perbadangkan recorded total unaudited gross investment

01:51 income of RM3.8 billion in the seven-month period ended July 2023,

01:56 said Kuop Chief Investment Officer, Husband Hilmi Salahuddin.

02:00 Gross fund size of the civil servant retirement fund stood at RM184.5 billion as at end July,

02:06 Husband said during the launching of a new fund called Dana Perintis on Thursday.

02:10 The fund's last annual report was for the financial year ended December 2020.

02:15 In that year, it recorded a gross investment income of RM6.81 billion,

02:19 up 12.2% from RM6.07 billion in 2019, with a fund size of RM153.82 billion,

02:26 up 4.3% from RM147.48 billion. The return on investment in 2020 was 4.4%,

02:34 which is a marginal improvement compared with 4.39% in 2019.

02:39 Husband said that as a long-term institutional investor, Kuop has consistently outperformed the

02:45 long-term return target of 5% to 6% over a 10-year rolling basis. Dana Perintis will see Kuop allocate

02:51 up to RM500 million and focus on investments into venture capital funds and startups in Malaysia.

02:57 The fund aims to invest up to RM250 million each into selected Malaysia-focused VC funds

03:04 and direct investments into startups over the course of the next 18 to 24 months.

03:09 Husband elaborates that Dana Perintis does not mark the first time Kuop is investing in startups.

03:14 In fact, Kuop has invested in 10 regional VC funds and three direct investments,

03:18 which include the world's number one drone services provider Aerodyne.

03:22 Husband said Kuop is slated to announce the first batch of investments under Dana Perintis

03:27 in the fourth quarter and it's estimated that 5 to 10 VC funds will be selected,

03:31 and each of them will involve an investment of about RM15.25 million.

03:42 Turkey has agreed that Malaysia Airport's holdings will continue to operate the

03:45 Istanbul-Sabiha Gokcen International Airport, according to a Pernamak report.

03:50 During their bilateral meeting on Thursday, Turkish President Recep Tayyip Erdogan

03:55 conveyed the agreement to PM Datuk Seri Anwar Ibrahim. According to Anwar,

03:59 the Turkish side are satisfied with the success of the company in the first stage,

04:03 and as such they want to extend operations, which includes building a longer runway.

04:08 Anwar, who was in New York to attend the 78th UN General Assembly,

04:12 said Turkey strongly believes that MAHP is best suited and capable of running the ISG operations.

04:18 Although the agreement to continue operations by MAHP has been announced,

04:22 Anwar said it will go through the normal process under the relevant ministries.

04:27 Fully owned by MAHP, the airport is the sixth busiest gateway in Europe,

04:31 with passenger numbers reaching 25 million in 2021, which was 70% of pre-pandemic levels.

04:38 During the meeting, Anwar said they also discussed efforts to increase bilateral

04:42 cooperation in terms of investment and trade. Malaysia is Turkey's largest trading partner in

04:47 ASEAN, with a trade volume of US$4.7 billion in 2022, a 35% growth from 2021.

05:00 EcoWorld Development Group's net profit for the third quarter climbed 43% year-on-year to

05:05 $66.34 million, driven by improved site progress activities and product pricing,

05:10 as well as cost savings upon the finalization of certain completed projects in phases.

05:16 Quality revenue grew by 7.41% year-on-year to $476.85 million from $444 million previously,

05:24 mainly driven by the improved site progress activities.

05:27 EcoWorld declared a second interim dividend of $0.02 per share.

05:31 On prospects, EcoWorld said it is on track to achieve its FY2023 full-year sales target of

05:37 $3.5 billion after the group recorded 3.06 billion sales in 10 months, or 87.4% of its target.

05:44 President and CEO Datuk Chang Kim Wah says that its eco-business parks in Iskandar,

05:49 Malaysia continue to power ahead, with sales of nearly $1 billion achieved in 10 months,

05:54 representing 132.4% of FY2022 full-year sales and making up close to one-third of the group's

06:02 total sales to date in FY2023. He believes that the strong momentum will continue based

06:08 on the sustained interest it has been receiving from both local and international industrialists.

06:13 Malaysia is expected to face continued challenges to policymaking despite the

06:22 conclusion of recent state elections for six of the country's 13 states,

06:26 as the unity government comprises parties with diverse ideologies, which could slow

06:31 reform momentum, according to BMI Country Risk and Industry Research, a unit of Fitch Solutions Group.

06:37 Challenges also arise from the increased influence of opposition Perikatan Nasional,

06:41 BMI said in a report. BMI said that although the composition of state legislatures does not

06:47 directly affect the national legislature, the state elections were a bellwether of the electorate's

06:52 political mood. Nonetheless, BMI expects Malaysia's improved inflationary backdrop

06:57 and resilient labour market to help keep the nation's social stability risks low.

07:01 The research house maintained Malaysia's short-term political risk index score at 71.1

07:06 out of 100, lower than Asia's regional average GDP-weighted of 77.3. BMI said that in light of

07:13 the weaker-than-expected performance of Pakatan Harapan, it believes that the unity government

07:18 will be inclined to roll out race-based policies that favour the Bumiputras to shore up support

07:22 among this core group. However, this would be a backtrack from its commitment to implement

07:27 needs-based policies as opposed to race-based. Second, that while it could prove popular with

07:32 some bases, it could stoke tensions with other members of the coalition. BMI also noted there

07:37 are nascent signs that the unity government could face gridlocks over policy in the future,

07:42 citing MUA MP Saith Sadeq Saith Abdul Rahman's withdrawal for support for the unity government

07:47 following the public prosecutor's decision to temporarily drop corruption charges against

07:51 Deputy PM Datuk Seri Dr Ahmad Zahid Hamidi. Although Saith Sadeq's withdrawal of support

07:56 does not threaten PM Datuk Seri Anwar Ibrahim's position as the country's leader, BMI believes

08:01 that such developments could raise doubt about the PH chairman's commitment to fighting corruption.

08:06 [Music]

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