Capital markets news summary for Thu 2 Mar 2023

Capital markets news summary for Thu 2 Mar 2023

Paramount’s 4Q2022 net profit down 22.4%

The company earned net profit of RM18.89m compared with RM24.35m in 4Q2021. The fall is in tandem with revenue shrinking by 22.72% from RM317.34m to RM245,24m. This seems to be the trend for most companies as an omen of an impending slowdown. Similar to other companies, Paramount benefitted from the low-base effect after recording full year net profit of RM60.2m, more than double the RM28.53m earned in 2021. Full-year revenue was up 24.38% from RM681.35m to RM847.46m. The company had RM1.1b in sales and unbilled sales were RM1.4b. Unlike many property developers surveyed recently by REHDA, Paramount is bullish on the property market and will launch 7 projects worth RM1.5b in 2023. They are Savan Utropolis Batu Kawan, Bukit Banyan, Bukit Banyan 2, Sejati Lakeside 2, Paramount Palmera, Jalan Ampang Hilir and Greenwoods Amaria Salak Perdana. The company’s launches will include industrial property at Paramount Palmera in Penang which is RM157m or 11% of the launch target.

UEM Edgenta’s net profit up 9.23% in 2022

The company earned net profit of RMRM45.88m compared to RM42m in 2021. Revenue climbed 10.09% from RM2.29b to RM2.52b. As at 31 Dec, its order book was RM9.6b comprising infra services RM6.58b, healthcare support RM2.51b, property and facility solutions RM334m and asset consultancy RM178m. The company has net cash of RM247.9m and a gearing ratio of 0.29 times. Moving forward, the company will spend RM80m-RM90m in capex flat for the past 2 years. 40% of the amount will be used for digital and technology developments. It expects headwinds in the form of higher repair and maintenance costs for hospitals and incinerator plants and the effect of minimum wage on the hospital segment. The global supply chain disruption is also forcing margin compression for the property and building solutions segment.

Indonesian President broke ground for USD2.6b hydropower plant

The plant – called Mentarang Induk – is being developed by PT Adaro Energy Indonesia, PT Kayan Patria Pratam Group and Sarawak Energy Berhad. The plant will have a capacity of 1,375 MW which will power an industrial area. The zone will house electric vehicle and battery plants, aluminium smelters and petrochemical facilities. The construction will take 7 years to complete. Indonesia has committed to reach net-zero emissions before 2060. They will increase the proportion of renewables in the energy mix from 12% to 23% by 2025. PT Adaro – Indonesia’s coal giant – was recently in the news for struggling to raise international finance for a USD2b aluminium smelter project. The sticking point for banks is the proposed 2.2 GW coal-fired power plant to be constructed for the smelter.

Ultra-wealthy individuals buy up commercial property

As commercial real estate was hit badly by Covid and work-from-home, many of the world’s richest people are snapping them up. Amancio Ortega – founder of Zara and worth USD63.5b – bought at least 10 properties across the US and the UK in 2022 valued at over USD2b. Altogether, wealthy individuals, family offices and closely-held companies bought USD455b worth of commercial real estate. This is in contrast with institutional investors who sold off their share of offices, logistics sites and rental housing as defaults follow the rate hikes. Private buyers – with small debts and longer investment horizons – are taking advantage of asset repricing and stronger currencies.

China’s manufacturing purchasing managers’ index up to 52.6

This is the highest reading since Apr 2012 and beat economists’ expectations. A non-manufacturing gauge measuring activity in services and construction sectors rose to 56.3, also better than economists had anticipated. The overall trend points to a solid recovery at the beginning of 2023. Next week’s National People’s Congress will likely see the government rolling out further supportive policies. The data drove up the Hang Seng China Enterprises Index by 5.1% and the offshore yuan by 1%. Looking ahead, the pace of recovery may turn sluggish amid the global economic slowdown and as pent up demand fades. Economists warn that exports will contract this year. Other data point to a pick up in domestic demand, for example, home sales rose in Feb year-on-year, the first increase since Jun 2021.