Capital markets executive summary | Fri 28 Apr 2023

Capital markets executive summary | Fri 28 Apr 2023

Boost considers up to USD100m fundraising round

Boost Holdings Sdn Bhd – a unit of Axiata Group Berhad, Malaysia’s biggest wireless firm by revenue – has engaged a financial adviser. The fundraising is expected to raise USD50m-USD100m (RM223m-RM446m) thereby giving the start-up a valuation of several hundred million US dollars. The proceeds will help finance the expansion of the company’s digital banking operations. On 31 Mar, it was reported that Boost Holdings and RHB Bank would subscribe for RM60m and RM40m shares respectively in Boost Berhad, the digital bank. Boost is a fintech company offering merchant solutions, artificial intelligence-based lending and a cross-border payment platform. It serves millions of customers in 7 countries in Southeast Asia. When Axiata sold 21.9% of Boost in 2020 to Great Eastern Holdings Ltd – the insurance arm of Singapore’s Oversea-Chinese Banking Corp – for USD70m, the company was valued at USD320m. Axiata closed at RM3.00.

Kelington wins RM102m industrial contracts in Singapore

The ultra-high purity (UHP) contracts are for the designing and building of a chemical delivery system, and designing and installing process utility main line and hookups. The contracts were awarded by an unnamed customer to Kelington Engineering (Singapore) Pte Ltd – a wholly-owned subsidiary of the integrated engineering solutions provider – and a specialist in high-tech filtration, separation and purification. The customer’s solutions are used in many industries including semiconductor, biopharmaceuticals, food and beverage, energy, industrial, and aerospace. This is the company’s first contract to supply a fully customised chemical delivery system. Works are expected to be completed by Mar 2024. The UHP equipment for this project will be fabricated by KE System Integration (Chuzhou) Co Ltd – Kelington’s wholly-owned subsidiary. The company has an outstanding orderbook of RM2.27b including RM569m in new orders secured so far this year. The counter closed at RM1.48.

Radium IPO priced at 50 sen

The property developer which is en route to a Main Market listing on 31 May will raise RM434m from the issuance of 868m new shares or 25% of its enlarged capital of 3.47b shares. The company also announced a dividend policy of 30% of its consolidated profits after tax starting from the financial year ended 31 Dec 2022. The 50 sen issue price was determined after considering the diluted earnings per share of 2.93 sen, giving the company a price-to-earnings ratio of 17.06 times. The company develops high-rise buildings in Kuala Lumpur in addition to affordable housing. Its current projects are Vista Sentul Residences and R Suite Chancery Residences. The company has already delivered projects with gross development value (GDV) of RM2.1b. New projects this year are the Chancery in Jalan Ampang with RM521m GDV launched in Feb 2023 and Residensi Desa Timur in Salak South with GDV of RM1b which will be launched in 3Q2023. The initial public offering (IPO) proceeds will be used for land bank expansion, development expenditure, hotel construction, repayment of existing borrowings and for working capital. Malacca Securities is the principal adviser, managing underwriter and joint placement agent whereas CIMB is the joint underwriter and joint placement agent.

Producer price index down 2.9% in Mar 2023

Malaysia’s producer price index (PPI) for locally produced goods at the factory gate decreased further from -0.8% in Feb. Agriculture, forestry, fishing and mining – which were lower for the 3rd consecutive month – contributed to the decline. Fresh fruit bunch index fell at a record pace of -43.5% from -40.5% in Feb, the biggest component of the 28.7% fall in the agriculture, forestry and fishing index from -26.1% in Feb. Extraction of crude petroleum index plunged 21.2% in Mar leading to a fall of 11.5% in the mining index in Mar from -6.5% in Feb. The manufacturing index was up slightly at 1.4% contributed by an increase in computer, electronic and optical products +8.9% and electrical equipment +5.3%. Month-on-month, the PPI for local production rose 0.3% in Mar compared to a 0.2% decline in Feb.

China’s Sinochem still pushing for Syngenta IPO

Swiss-based Syngenta – which supplies agricultural chemicals and seeds – was acquired by China National Chemical Corp (ChemChina) in 2017 for USD43b. State-owned Sinochem Holdings Corp absorbed ChemChina in 2021 and Syngenta consolidated the agricultural business of Sinochem. The company had been working since 2019 on the USD9.4b initial public offering (IPO) and filed its prospectus to list on Shanghai’s Star board more than a year ago. The exchange called off a scheduled meeting in Mar 2023 abruptly. The Chinese government has set up a new super financial watchdog this year to help maintain stability. Regulators are scrutinising the IPO including Syngenta’s debt levels and the potential use of proceeds. They are concerned that a large initial public offering (IPO) could apply pressure on liquidity in the domestic stock market. Sinochem is discussing about shrinking the fundraising and delaying the listing to late 2023 or even 2024. However, it will not help SinoChem raise as much money as possible to pay down debts.