Capital markets executive summary | Tue 25 Apr 2023

Capital markets executive summary | Tue 25 Apr 2023

MKH Oil Palm to offer 250.7m shares in IPO

PT Maju Kalimantan Hadapan (PT MKH) and PT Sawit Prima Sakti (PT SPS) – subsidiaries of MKH Oil Palm (East Kalimantan) Bhd (MKH Oil Palm) own 18,205 hectares in Kutai Kartanegara, East Kalimantan, Indonesia. The shares represent 24.5% of the company’s enlarged shares of 1.023b upon its listing on the Main Market. It comprises 220m new shares – 25.6m for Bumiputra public investors, 25.61m for other public investors and 168.79m for selected investors – plus 30.7m existing shares also for selected investors. The initial public offering (IPO) proceeds will be used for capital expenditure on its existing plantations and for expanding its land bank in the same vicinity. The company will purchase new machinery and equipment to improve the harvesting of fresh fruit bunches and for its palm oil milling activities. M&A Securities is the principal adviser. MKH Oil Palm is currently owned by MKH Berhad and Metro Kajang (Oversea) Sdn Bhd. MKH Berhad closed at RM1.32.

Lynas shares rise on higher Malaysian output

The Perth-based company’s revenue plummeted 28% from AUD327.7m in 3Q ended Mar 2022 to AUD237.1m in 3Q ended Mar 2023 as average selling prices for heavy rare earths fell from AUD64.7 per kg to AUD48.3 per kg. The company’s total rare earth oxide production volume also fell due to a shortage of hydrochloric acid – a main processing agent. Nonetheless, investors noticed the record output of at its Malaysian plant. Neodymium-praseodymium (NdPr) production rose 2.3% from 1,687 tonnes in 3Q2022 to 1,725 tonnes in 3Q2023, the highest ever quarterly production. Shares of Lynas Rare Earths Limited climbed 5.4% to AUD6.88, the biggest single day gain since 30 Jan. Compared with 2Q2023, revenue rose 9%, contributed by NdPr demand from non-China customers. The company is planning a forced shutdown of the Malaysian plant from 1 Jul and transitioning to using mixed rare earth carbonate produced at Kalgoorlie in Australia as the feedstock for downstream processing. The Kalgoorlie facility is on track for production to start in this quarter.

Australia’s Latrobe Magnesium plans Sarawak plant

The plant will produce 100k tonnes per annum of magnesium. The metal has the best strength-to-weight ratio of all common structural metals and is increasingly used in the manufacture of car parts, laptop computers, mobile phones and power tools. Latrobe is currently conducting a pre-feasibility at the Samalaju Industrial Park, which it considers suitable as the site for the new plant because of the availability of cheap and abundant hydropower. This enables the company to produce magnesium with potential net-zero emissions on a life cycle analysis basis using 100% renewable power. One of Samalaju’s key attractions is the presence of major ferro-silicon producers. Latrobe has discussed with Sarawak authorities on securing a 40-hectare site near port facilities and ferro-silicon producers. The company will kick off Phase B of the pre-feasibility study with US-based engineering company Bechtel on the selected location.

Cagamas issues RM1.7b sukuk and bonds in the local and international markets

The national mortgage corporation issued RM300m 3-month conventional commercial papers, RM410m 3-year conventional medium-term notes (MTN) and RM500m 3-year Islamic MTN in the domestic market via book-building. The international issuances consisted of SGD60m 1-year MTN and SGD90m 2-year MTN and were privately placed. SGD-denominated issuances now total SGD380 million and the total funds raised by the company in 2023 is RM5.84b. The issuance proceeds will be used to fund the purchase of house financing from the domestic financial system.

UK provides GBP100m funding for AI taskforce

The Foundation Model Taskforce – a government-industry collaboration and modelled after the Covid-19 Vaccines Taskforce – will accelerate the UK’s capability in the rapidly-emerging type of artificial intelligence (AI). It will focus on foundation models – including large language models like ChatGPT and Google Bard – which are AI systems trained on massive data sets and can be used for a wide range of tasks across the economy such as healthcare, education and security. The initial start-up funding – which is in addition to the GBP900m budget allocation for compute technology – will be invested by the taskforce in foundation model infrastructure and public service procurement, to create opportunities for domestic innovation. The first pilots targeting public services are expected to launch in the next six months. The investment will build the UK’s sovereign national capabilities so that its public services can benefit from AI’s transformational impact. AI is predicted to raise global GDP by 7% over a decade and the UK sees it as offering enormous opportunities to grow the economy and create better-paying jobs.