Capital markets news summary for Thu 30 Mar 2023

Capital markets news summary for Thu 30 Mar 2023

Kim Loong’s revenue for 4Q2023 down 13.05%

As fresh fruit bunch (FFB) and crude palm oil (CPO) prices started falling in late 2022, the Johor-based planter recorded lower revenue of RM431.82m in 4Q ended 31 Jan 2023 compared to RM496.63m in 4Q2022. However, net profit climbed 19.24% from RM30.96m to RM36.92m contributed by better processing margins and higher processing volumes at its mills. Earnings per share rose from 3.21 sen to 3.82 sen. For the full year, net profit jumped 19.02% from RM136.58m in FY2022 to RM162.56m in FY2023, while revenue increased 12.08% from RM1.7b to RM1.91b. Final dividend is 5 sen per share for a total of 15 sen (FY2022: 14 sen). The company projects that CPO prices will stay above RM4,000 per tonne in FY2024, and its FFB production to rise by 15% as more replanted areas become mature and better age profile of young palm trees in the productive areas. Total processing quantity for palm oil mills will remain at 1.5m tonnes. The company’s main challenge is the labour shortage. The company’s biogas plant in Keningau, Sabah started supplying power to the grid in Dec 2022 while the biogas plant in Telupid will commence operations in 2HFY2024. The counter closed at RM1.76.

TNB’s Nenggiri dam sukuk oversubscribed 2.69 times

TNB Power Generation Sdn Bhd has upsized the issuance of the sustainability sukuk wakalah from the initial RM1.5b to RM2b. The issuance is the 2nd from its 30-year Sukuk Wakalah Programme of up to RM10b nominal value. It was made in 4 tranches – RM200m 7 years 4.3% per annum profit rate, RM600m 10 years 4.58%, RM300m 15 years 4.67% and RM900m 20 years 4.84%. The order book of RM4.04b came from 44 accounts of a broad range of investors. The proceeds will be used for refinancing loans taken and for further financing for the development of the 300MW Nenggiri hydroelectric power plant in Kelantan. Construction is slated for completion on 1 Jun 2027. MARC Ratings gave a Gold rating to the sustainability framework. CIMB and Maybank were the joint lead managers and book runners for the issuance. TNB closed at RM9.40.

Reach Energy completes debt settlement exercise

On 15 Dec 2022, shareholders approved the settlement of a RM206.51m debt owed to Hong Kong-based Super Racer Limited (SRL) via the issuance of 1.03b new shares at 20 sen per share representing 48.5% of the enlarged share capital. The interest rate for the remaining RM72.85m debt owed to SRL will be reduced from 14% per annum to 5%. The overall impact to the company is lower gearing from 2.52 times to 1.08 times and interest savings of RM21.17m per annum. In addition, SRL has entered into a new shareholder loan facility agreement to make available up to USD5m (RM22.87m), of which RM20.37m (89%) will be used for working capital and general corporate purposes. At the same time, the company completed the exemption of SRL and Cheung Siu Fai – SRL’s sole director and owner – from the mandatory general offer obligation. The company’s next step is to increase production volume by drilling more development wells. It will also install and replace electrical submersible pumps and continue gas injection measures to improve reservoir pressure. The board of directors saw a reshuffle with 7 resignations and 2 new appointments. The counter closed at 4.5 sen.

MKH proposes to list oil palm plantation on Main Market

Property developer MKH Berhad is considering listing MKH Oil Palm (East Kalimantan) Berhad (MKHOP) by 4Q2023. Prior to the IPO, MKHOP will undertake a 1-to-6 share split from 110.47m shares to 662.81m shares. Then, MKHOP will acquire the remaining 5.67% in PT Maju Kalimantan Hadapan (PT MKH) from MKH’s wholly-owned Metro Kajang (Oversea) Sdn Bhd and PT Hikmat Aliran Sukses for RM53.52m to be satisfied via the issuance of 44.23m new MKHOP shares at RM1.21. MKHOP will also acquire the entire equity interest in PT Sawit Prime Sakti (PT SPS) from MKH Plantation Sdn Bhd, Ivakijaya Sdn Bhd and PT Hikmat for RM27.86m against the issuance of 23.03m new MKHOP shares also at RM1.21. This is followed by taking over borrowings of PT MKH and PT SPS of RM118.97m owing to Metro Kajang and capitalising RM88.97m of the borrowings with the issuance of 73.53m shares again at RM1.21. The remaining RM30m will be paid off with the IPO proceeds. MKH will distribute dividend-in-specie of 82.48m MKHOP shares (10.3%) on a 1-to-7 basis to reduce its shareholding from 94.4% to 84.2%. Finally, the listing will involve 250.71m shares – 220m new shares and 30.71m existing shares offered for sale – or 24.5% of MKHOP’s enlarged share capital at an issue price to be determined later. MKHOP will use the proceeds for capex and to expand its landbank. M&A Securities is the adviser. MKHOP owns 18,205.3 hectares of land in 2 estates of which 17,008.8 hectares is planted. The counter closed at RM1.19.

Nasdaq-listed Enovix accepts LOI from YBS for new battery assembly plant

The proposed development of YBS International Berhad’s existing facility at the Penang Science Park as Enovix’ new 3D lithium ion silicon battery assembly plant in Southeast Asia is subject to YBS’ further due diligence. The letter of interest (LOI) is non-binding. Enovix was listed on the Nasdaq in Jul 2021 and produces silicon-anode lithium ion batteries based on its patented battery architecture. YBS on the other hand is engaged in high precision mould, high precision metal, plastic component and sub-component assembly for, among others, the semiconductor, electrical and electronics, and computer industries. On 22 Feb, the company reported 3Q ended 31 Dec 2022 net profit of RM622k down 65% from RM1.77m a year ago, while revenue fell from RM21.07m to RM20.57m. The counter closed at 70 sen.