Capital markets executive summary | Tue 18 Apr 2023

Capital markets executive summary | Tue 18 Apr 2023

CIMB, Maybank and RHB underwrite DXN IPO

Health and wellness product supplier DXN Holdings Berhad will be re-listed in 2Q2023. It signed an underwriting agreement with the banks for the retail offering of 160m shares or 3.2% of the enlarged shares. 60m shares are reserved for DXN’s directors and eligible employees whereas 100m shares are reserved for the Malaysian public via balloting. The company has a distribution network spanning Europe, Latin America, North America, Central Asia, South Asia, Southeast Asia, the Middle East, Africa and Oceania. It plans to enter into new markets as the next stage of growth. Maybank is the principal adviser, joint global coordinator, joint bookrunner, joint managing underwriter and joint underwriter. CIMB is the joint global coordinator, joint bookrunner, joint managing underwriter and joint underwriter. RHB is the joint bookrunner and joint underwriter. CLSA is the joint global coordinator and joint bookrunner. The initial public offering (IPO) also entails the offer for sale of 1,246,250,000 existing shares to Malaysian and foreign institutional investors.

Bursa approves Synergy House listing on ACE Market

The cross-border e-commerce seller and furniture exporter of ready-to-assemble home furniture announced that the IPO will comprise 130m shares including a public issue of 80m new shares or 16% of the enlarged shares. 25m shares allocated to the Malaysian public via balloting and 12.5m shares for eligible directors, employees and persons who have contributed will be underwritten by Kenanga. 30m shares will be placed to selected investors. 12.5m shares will go to Bumiputra investors approved by the Ministry of Investment, Trade and Industry. The IPO will include the offer for sale of 50m existing shares or 10% of the enlarged shares to be placed to Bumiputra investors. The company plans to use part of the IPO proceeds to purchase inventory for the business-to-consumer segment and for e-commerce advertising and promotional activities. This segment has grown from RM1.99m sales in 31 Dec 2019 to RM24.78m in 2021, or 252.88% compound annual growth rate.

Pertama Digital signs MOU with Kridentia Tech on digital ID

Both companies agreed to explore using digital identification (ID) solutions to develop digital products in order to participate in government projects. Kridentia Tech Sdn Bhd’s goal for the 12-month memorandum of understanding (MOU) is to expand beyond providing biometric security systems. The government agencies being engaged include Polis Diraja Malaysia, Jabatan Pendaftaran Negara and the Employees Provident Fund. These organisations will be able to benefit from enhanced levels of security offered by the digital ID project. Pertama Digital sees that industry-approved levels of security could counteract threats from scammers. Its MyPay platform – which facilitates transacting with and making payments to the government – can be further enhanced with the digital ID. Pertama Digital’s other products are eJamin – an online bail payment solution – and mySMS – the government SMS gateway service. The counter closed at RM2.50.

MFM’s Dindings Tyson budgets RM135m for poultry business

Dindings Tyson Sdn Bhd – Malayan Flour Mills’ 51%-owned subsidiary – revealed the allocation for the financial year ending 31 Dec 2023 in the 2022 annual report. The funds will be used to improve the wastewater treatment facility, start phase 2 of the rendering plant and set up a new further processing plant. The company will also upgrade the primary processing plant and machinery to increase the slaughtering capacity to 340k birds per day from the current 280k birds per day. The upgrading works include the auto-cutting and deboning lines which will enable the company to increase the supply volumes to its food manufacturing customers. The counter closed at 76 sen.

Merck buying Prometheus Biosciences for USD10.8b

The acquisition is at USD200 per share or a 75% premium over the USD114.01 closing price on Fri 14 Apr. The target surged to USD193.70 yesterday. California-based Prometheus specialises in treatments for autoimmune diseases. Merck’s motivation for the acquisition is the long patent life which provides earnings potential well into the 2030s. The drug PRA023 – developed to treat ulcerative colitis, Crohn’s disease and other autoimmune conditions – could be a multibillion-dollar seller for Merck. The company has been eyeing the clinical development and the recent release of encouraging Phase II clinical trial results drove the offer. After the deal closes in 3Q2023, Merck will launch a late-stage ulcerative colitis study of the drug in 4Q or 1Q 2024. The company could start earning revenues as the patents for its cancer immunotherapy Keytruda begin to expire in late 2020s. The company reported USD21b Keytruda sales in 2022. Merck closed at USD115.01.