Capital markets news summary for Mon 27 Mar 2023

Capital markets news summary for Mon 27 Mar 2023

Sunway Healthcare sets up RM5b sustainability sukuk wakalah programme

The programme will be established by its wholly-owned subsidiary Sunway Healthcare Treasury Sdn Bhd. Proceeds from the issuance of the sukuk will be used for the development of new hospitals in Kota Damansara, Iskandar Puteri, Ipoh, Kota Bharu and Paya Terubong. The group will eventually have a capacity of more than 3,000 beds across Malaysia. Maybank Investment Bank is the sole sustainability structuring adviser for establishing the sustainability financing framework, and is also the sole principal adviser, lead arranger and lead manager for the sukuk programme. Malaysian Rating Corporation Berhad (MARC) has issued the highest rating of Gold in the impact bond assessment for the sustainability financing framework. Sunway sold 16% of Sunway Healthcare to Singapore’s GIC in 2021 and is targeting a listing in 2028. Sunway closed at RM1.56.

MAHB average daily passengers up by 1,400 month-on-month

The better average daily figures were driven by the school holidays in Malaysia and increase in flight frequencies by airlines in Turkiye. Total passenger movements at all of the company’s airports fell from 9m in Jan 2023 to 8.3m in Feb due to the shorter month. For Feb 2023, there were 3.9m international passengers (Jan: 4.3m) and 4.4m domestic passengers (Jan: 4.9m). The 39 airports in Malaysia saw 5.8m passengers (Jan: 6.3m) with more travellers for the South Korea, China and Japan sectors. Passenger movements for the China sector jumped 61% in Feb 2023 month-on-month despite it being early in the recovery phase. Domestic passenger movements remained around 112,000 average daily passengers for Feb 2023 equal to Jan due to the school holidays. For Istanbul Sabiha Gokcen airport, international movements for Feb 2023 were 1.3m (Jan: 1.5m) whereas domestic movements were 1.2m (Jan:1.4m) although there was a minor setback when the earthquakes struck. The counter closed at RM6.78.

DNeX in JV with Saudi Arabia’s Ajlan for IT opportunities

Dagang Nexchange Berhad (DNeX) and Ajlan & Bros Holding Group (Ajlan) signed an agreement to establish a joint venture (JV) company to undertake the business of systems integration in smart cities and for large enterprise IT projects in the Middle East and North Africa (MENA) region. Ajlan will be responsible for jointly bidding on Saudi Arabian smart city projects with DNeX and its existing large enterprise IT projects. DNeX will be responsible for the design, supply, delivery, installation, testing and commissioning of information and communication technology infrastructure and applications, and provide subsequent maintenance of the infrastructure and applications. Through Ajlan, DNeX has been registered as one of the vendors participating in the NEOM project, a planned smart city in Tabuk Province in north-western Saudi Arabia. Ajlan is headquartered in Riyadh and is one of the largest private sector conglomerates in the Middle East. It owns 75 companies and employs over 15,000 people in more than 20 sectors including water, power and healthcare, in more than 25 countries. The counter closed at 59 sen.

Bumper soybean harvest potentially brings down CPO prices

The most active soybean contract on the Chicago Board of Trade (CBOT) Sv1 fell 0.7% to USD14.09 a bushel, after dropping earlier to its lowest since end-Oct at USD14.05. Traders said that volatility in financial markets, with the dollar index rallying as investors remained wary of a banking crisis, was also hanging over grains including soybean. The record Brazilian crop offset the drought losses in Argentina, and is expected to capture export demand. The lower soybean prices could result in a fall in the price of soybean oil, and consequently, crude palm oil (CPO) prices which trades at a discount to soybean oil. According to Fitch, spot prices for CPO averaged USD915 (RM4,052) per tonne in 1Q2023 and is expected to weaken to below USD700 per tonne (RM3,100) by end-2023. There is upside risk if the Ukraine war hits the sunflower oil supply. Since late 2022, CPO prices have been supported by market expectations of higher biodiesel consumption, lower exports from Indonesia and the impact of heavy rainfall on output in early 2023. The latest production data from Malaysia and Indonesia indicate that yields are on an uptrend. El Nino which is predicted in 2H2023 will improve soybean output and depress global vegetable oil prices. In 2018-2019, El Nino brought CPO prices down to USD535 (RM2,159 based on 2018-2019 exchange rate).

China’s CATL to begin mass production of M3P batteries this year

Contemporary Amperex Technology Co Ltd (CATL) announced in Jul 2022 that batteries based on its proprietary M3P technology were already in production and will hit the market in 2023. The batteries will enable an electric vehicle (EV) to run 700km per charge when combined with CATL’s next generation of battery pack technology. In comparison, the car with the longest range – Tesla Model S Long Range – can only go 652km on a single charge. In 2021, CATL dominated the global market by supplying 32.6% of EV batteries. Its clients include Tesla, Volkswagen, BMW and Ford. The counter closed at CNY393.58.