Executive summary for capital markets news | Thu 13 Apr 2023

Executive Summary for Capital Markets News | Thu 13 Apr 2023

MAHB’s issue price for dividend reinvestment plan shares at RM6.06

Instead of receiving cash dividends, a dividend reinvestment plan (DRP) gives shareholders the option to purchase additional shares commission-free and at significant discount to the current share price. Malaysia Airports Holdings Berhad (MAHB) said the issue price was fixed based on the 5-day volume weighted average price (VWAP) of MAHB shares of RM6.7631 up to 11 Apr, the last trading day before the price-fixing date. This was considered after adjusting the final dividend for the financial year ended 31 Dec 2022 of 3.91 sen per share to the 5-day ex-dividend VWAP of RM6.7240 plus a discount of 66.40 sen or 9.88%. The book’s closing date for the final dividend and the DRP shares have been fixed on 28 Apr. The DRP statement and notice of election, including the dividend reinvestment form, will be provided to all entitled MAHB shareholders other than overseas shareholders without a Malaysian registered address on 3 May. The election period for the DRP will close on 17 May. The DRP shares will be listed on the Main Market on 26 May. MAHB shares closed at RM6.95.

Maybank issues structured warrants over US banks

Maybank Investment Bank has expanded its coverage by becoming the 1st Malaysian issuer of ringgit-denominated warrants over NYSE-listed companies. The offering comprises 6 new call and put warrants over Bank of America, Citigroup and Wells Fargo. Call warrants give the holder the right to buy the underlying shares at a specified price within a limited time period, while put warrants give the holder the right to sell the underlying shares. The warrants will be tradable in Bursa on 12 Apr, thereby allowing investors to capitalise on their views of 3 of the top 4 banks in the US by total assets. Maybank sees a growing popularity of structured warrants and the situation in the US – inflation, recession fears and banking turmoil – provides opportunity for movements in the share prices of the US banks. The warrants have longer tenor to give more time to investors to potentially profit from movements in the underlying shares. The Live Matrix tool provides investors with the ability to track the potential prices of the structured warrants at various underlying share price levels. The structured warrants over foreign-listed stocks offer exposure to foreign markets with lower capital outlay and without the need for a foreign trading account. Maybank closed at RM8.70.

MMS Ventures expanding original design manufacturing business

As the semiconductor business is on a downcycle, the company is currently talking to customers to capture their original design manufacturing (ODM) and original equipment manufacturer (OEM) business. The ODM and OEM segment contributed 20.5% of the company’s RM52.87m revenue in 2022. MMS Ventures has already managed to get orders from the medical equipment industry in 2023 as part of the diversification of its machine platform. The company expects minimal feature changes in its mainstay smart devices segment as customers maintain their current generation of 5G-enabled products resulting in slow orders for 2023. Demand for automotive and general lighting will also be weak. MMS Ventures’ revenue jumped 39% from RM37.98m in 2021 to RM52.87m in 2022 contributed by higher sales of inspection and testing machines. Net profit grew from RM8.25m to RM9.05m. The counter closed at 66 sen.

ServerOn and Phison sign MOU for enterprise-grade solid state drive

ServerOn Sdn Bhd and Taiwan-based Phison Electronics Corporation will collaborate in the design and engineering of a solid state drive (SSD) under the Neube brand. Phison will provide engineering resources and support for Malaysia’s 1st high-performance enterprise and data-centre grade SSD in various form factors including 2.5”, U.2, M.2 and E1.S. ServerOn – who is responsible for introducing the product to customers – will release variants of the SSD in the Malaysian market from 2Q2023 onwards. Distribution of the SSDs will be through systems integration offerings and in the resellers market. Feedback from users will be routed to Phison for product development. The SSD will eventually be marketed in Southeast Asia – including Indonesia, the Philippines and Thailand – and in Sri Lanka. Phison is also using this venture to potentially build a Malaysian SSD engineering and design team to serve the Asian, Middle Eastern and US markets. ServerOn distributes enterprise and data centre-grade hardware ranging from servers, storage, network switches and backup tape systems to custom-built workstations and servers. It is the 1st Asean company given the Named Server Partner status in 2021 by Microsoft. Separately, Knight Frank reported that Malaysia is the top Southeast Asian destination for data centres with 113MW of take-up in 2022 and 20% forecast supply growth in the next 5 years.

High rents and rising fuel price could force Federal Reserve to raise rates

The US consumer price index (CPI) rose 0.1% in Mar compared to +0.4% in Feb. For the trailing 12 months to Mar 2023, the CPI increased 5%, the smallest year-on-year since May 2021, against 6% in Feb. Since peaking in Jun 2022 at 9.1% – the biggest gain since Nov 1981 – the CPI has been on a downward trend. The increase in CPI for Mar was due to high rents despite fuel prices barely rising. The core CPI – which excludes food and energy – gained 5.6% for 12 months up to Mar compared to 5.5% in Feb ending 5 straight months of lower increases. The employment report on 7 Apr showed that Mar jobs growth was solid and the unemployment rate fell back to 3.5%. The Federal Reserve will consider the inflation, labour market tightness and easing financial market stress when deciding on the monetary policy in its next meeting on 2-3 May. The financial markets are expecting a 0.25% increase from the current 4.75%-5%.