Capital markets executive summary | Thu 11 May 2023

Capital markets executive summary | Thu 11 May 2023

Palm oil stock fell to 11-month low in Apr

Inventory declined 10.54% from Mar to 1.5m tonnes, the lowest since May 2022 and down for 3 straight months. It is also lower than the 1.64m tonnes a year ago in Apr 2022. Crude palm oil production in Apr fell 7.13% to 1.2m tonnes, the lowest since Feb 2022 as the result of less harvesting days during the Raya holidays. Palm oil exports decreased 27.78% to 1.07m tonnes, more than cargo surveyors’ estimates of 18%-21%. Imports shrank 15.3%. Traders are factoring in uncertainties surrounding the Black Sea grain corridor in predicting future price movements. If Russia and Ukraine cannot agree to keep the corridor open, sunflower oil supplies may grind to a halt. Separately, the EU ambassador to Malaysia said that Felda had not cleared any forests to plant oil palm since 1990, and that its smallholders will not be subjected to the European Union Deforestation-free Regulation. The rule – which was introduced in Nov 2021 – requires exporting companies to produce due diligence reports with verifiable information that the regulated commodities were not grown on land deforested after 2020. FGV Holdings closed at RM1.46.

Sunview gets RM58.9m additional financing for solar farm project

On 25 Oct 2022, its wholly-owned subsidiary Fabulous Sunview Sdn Bhd received a RM93.83m contract from LSS TPG Sdn Bhd – wholly-owned by Advancecon Holdings Berhad – for engineering, procurement, construction and commissioning services for a 26MW large scale solar photovoltaic plant in Kuala Langat. The contract was for Feb-Nov 2023. Fabulous Sunview accepted the additional banking facilities from UOB which are backed by Sunview’s corporate guarantee. Included in the new facilities are a contract financing line, 2 term loan facilities, foreign exchange facility, and financial and performance guarantees. On 6 Jan 2023, the company accepted RM20m trade facilities and revolving credit from Bank Islam for working capital and invoice financing. Sunview listed on the ACE Market on 17 Oct 2022 at an IPO price of 29 sen. Sunview closed at 68 sen while Advancecon closed at 24 sen.

Impiana signed MOU to buy 70% of SOULed OUT operator

The hotels and resorts operator signed the memorandum of understanding (MOU) with Choo Kok Yeow – a major shareholder of Cafelink (M) Sdn Bhd representing other existing shareholders – to acquire 217,000 shares in the food and beverage (F&B) operator. Choo holds 52% – 33% directly and 19% through Ground Zero (M) Sdn Bhd. After the acquisition, Impiana will own 2 brands under Cafelink – SOULed OUT and WIP – with outlets across the Klang Valley and Sabah. The transaction will help Impiana expand its F&B footprint beyond its current F&B offerings and build on 2 brands. The food service industry is expected to grow at a compound annual growth rate of 8.9% from USD15.2b in 2021 to USD23.5b in 2026. The counter closed at 10 sen.

Swift Haulage 1Q net profit plunged 29%

The figure fell from RM14.31m in the financial year ended Mar 2022 to RM10.13m in the financial year ended Mar 2023. The company blamed higher finance costs and overhead expenses. Earnings per share shrunk from 1.61 sen in FY2022 to 1.15 sen. Revenue however increased from RM160.3m to RM169.4m driven by increased land transport fleet capacity and higher warehousing revenue with 3 new warehouses completed in FY2022. 78.3% of revenues were contributed by container haulage RM69.7m and land transportation RM62.9m. Warehousing and container depot delivered RM22.3m and freight forwarding RM14.4m. The business environment is challenging as its correlates tightly with Malaysia’s economic activities and international trade. The company plans to build 2 more warehouses in Northport and Westport lands which will be completed in 1H2024. The counter closed at 47 sen.

Temasek-backed STT GDC in talks for USD1b pre-IPO round

Singapore’s state-owned investment firm Temasek fully owns Singapore Technologies Telemedia Pte Ltd – the parent of ST Telemedia Global Data Centres (STT GDC). The company is one of Asia’s largest data centre operators, managing more than 170 facilities in Singapore, India, China, Thailand, South Korea, Indonesia, Japan, the Philippines and the UK. It is considering raising as much as USD1b (RM4.45b) in a fundraising round. STT GDC has held talks with potential advisers to bring in strategic investors and help set a valuation benchmark for an initial public offering (IPO) as soon as 2024. The company has been exploring an IPO potentially in Singapore or the US that could raise more than USD1b.