Capital markets executive summary | Mon 15 May 2023

Capital markets executive summary | Mon 15 May 2023

Malacca Securities to underwrite SYF Resources’ rights issue open portion

SYF Resources – formerly a furniture manufacturer before it disposed of its existing businesses – will enter the financial services industry by acquiring M&A Securities Sdn Bhd via a reverse take-over (RTO) exercise. On 19 Jan 2023, the company obtained shareholders’ approval for the RTO. The exercise also entails a rights issue of 284.44m new shares at 22 sen or RM62.58m in total. Its shareholders under Insas Berhad have undertaken to subscribe for their full entitlement to the rights issue. The company has signed an underwriting agreement with Malacca Securities for the remaining shares under the rights issue. In addition, SYF Resources will issue 157.80m shares at 22 sen totalling RM34.72m to eligible directors and employees of the enlarged group, as well as persons who have contributed to the growth of M&A Securities. The RM97.29m proceeds will be used by M&A Securities to grow its capacity and talent pool as demand for its capital market services grows, in particular its steady pipeline of initial public offerings.

Southern Cable bags RM90.4m contract from TNB

The contract to supply underground cables and conductors follows the addendum contract valued at more than RM30m it won in Apr. The new win raises the company’s total contract value with Tenaga Nasional Berhad (TNB) to RM422.5m from RM332.1m. Southern Cable is a registered supplier of cables and wires with TNB with a 19-year long relationship. The company also supplies to Sarawak Energy Berhad. Its current order book is RM692.7m which will last until 2024. The orders include power cables and wires and related products and services, such as aluminium rods, plus the supply and installation of rectifier systems for the 5G network. The power cables and wires segment contributes more than 80% of annual revenue. From FY2020 to FY2022, sales of power cables and wires grew at a compounded rate of 28% from RM458m to RM749m.

Kitacon wins RM101.5m project in Gombak

Wholly-owned subsidiary Kitacon Sdn Bhd was awarded the construction work by GLM Emerald West (Rawang) Sdn Bhd for the main building and infrastructure of a residential development. The job is divided into two phases. Phase 10A consists of 161 units of two-storey terrace houses and an electrical substation. Phase 10B comprises 139 units of two-storey terrace houses, an electrical substation, and a pond and recreation area. The contract commences on 1 Jun 2023 and will be completed 20 months later. Kitacon listed on the Main Market in Jan 2023 and made a net profit of RM41.88m and revenue of RM488.47m in FY2022. The residential construction services segment contributed RM421.38m or 86.27% of total revenue. The counter closed at 58.5 sen, down 14% since its listing at 68 sen.

Softbank is pitching for USD10b IPO for Arm

Arm Ltd – the UK-based chip designer – filed for a US listing in Apr 2023. Goldman Sachs, JPMorgan, Barclays and Mizuho were named as initial public offering (IPO) banks in the filing. No lead bank had been identified and more banks will join the line up. Bankers pitched a wide-ranging valuation of USD30b-USD70b amidst a semiconductor industry downturn. The share sale could be launched in New York as early as Sep 2023. Arm’s net sales jumped 28% to JPY92.8b (RM3.05b) in the 4th quarter year-on-year, although it lost JPY6.2b (RM204m), down from a net profit of JPY10.1b (RM332m) the prior year.

VinFast to list in US via SPAC

The Vietnamese electric vehicle (EV) manufacturer will list in 2H2023 on the NYSE via a merger with special purpose acquisition company (SPAC) – Black Spade Acquisition Co – a Hong Kong-based company which was listed in Jul 2021. Post-merger, the combined company will have a USD27b enterprise value and a USD23b equity value, assuming Black Spade shareholders do not redeem their shares for cash. Existing VinFast shareholders will end up with 99% of Black Spade. VinFast was established in 2017 and now has capacity for 300,000 EVs with 55,000 orders globally. In Apr, VinFast received a new round of funding pledges worth USD2.5b (RM11.2b) from parent company Vingroup, Vietnam’s biggest conglomerate, and founder Pham Nhat Vuong, Vietnam’s richest man.