Capital markets executive summary | Thu 25 May 2023

Capital markets executive summary | Thu 25 May 2023

CelcomDigi 1Q net profit up 34.63%

The figure rose from RM236.15m in 1Q ended 31 Mar 2022 to RM317.92m in 1Q ended 31 Mar 2023. Underlying the results was improved revenue contributions and foreign exchange gains offset by accelerated depreciation. This is the 1st full quarter results post merger of Celcom Axiata and Digi.Com. Free cash flow was RM696m. Even though earnings per share fell from 3.04 sen to 2.71 sen, the company declared a 1st interim dividend of 3.2 sen payable on 28 Jun. Revenue soared 109.21% from RM1.52b to RM3.18b due to larger sales of newly launched smartphone models, a bigger subscriber base and average revenue per user of RM42. The telecommunications segment contributed higher revenue from RM1.31b to RM2.67b. The device segment improved from RM190.28m to RM456.87m. Nonetheless, seasonal and interconnect rate reduction effect on prepaid and postpaid revenue and lower revenue from wholesale partners caused quarter-on-quarter net profit and revenue to fall from RM422m and RM3.31b respectively. The counter closed at RM4.42.

Iris’ NIISe contract extended by 1 year

The National Integrated Immigration System (NIISe) contract is worth RM1.16b and was awarded to Iris Information Technology Systems Sdn Bhd (IITS) in Jan 2021 for a 54-month period from 1 Mar 2021 to 31 Aug 2025. Iris had entered into a share sale agreement to sell 80% of IITS to Tass Tech Technologies Sdn Bhd – which is wholly-owned by Tass Tech (M) Sdn Bhd – for RM70m. The sale will be concluded in Aug. The Minister of Home Affairs was reported to have said that the project had not achieved adequate progress as at Mar 2023. The extension letter dated 23 May was issued by the Ministry of Home Affairs to IITS. The extension will be from 1 Sep 2025 to 31 Aug 2026. IITS is required to extend the performance bond by 12 months to 31 Aug 2027. The counter closed at 10.5 sen.

MISC 1Q net profit up 62.83%

The company’s net profit jumped from RM376.4m in 1Q ended 31 Mar 2022 to RM612.9m in 1Q ended 31 Mar 2023. Earnings per share rose from 8.4 sen to 13.7 sen. The results were driven by the petroleum and product shipping segment and larger share of joint venture (JV) profit. Revenue climbed 7.36% from RM2.87b to RM3.08b. The company declared a 1st interim dividend of 7 sen payable on 22 Jun. Operating profit for the petroleum and product shipping segment grew almost 10 times from RM32.2m to RM312.5m due to higher margin on freight rates. The segment’s revenue increased from RM887.3m to RM1.21b. Share of profits from JVs soared more than 4 times from RM17.5m to RM72m. For the marine and heavy engineering segment, operating profit rose 11% from RM6.3m to RM7m while revenue was up 18.8% from RM417.8m to RM496.2m. For the offshore segment, operating profit jumped 38% from RM120.8m to RM166.7m although the prior year’s 1Q operating profit was affected by higher construction cost due to supply chain issues and lockdowns in China. The offshore segment posted lower revenue by 24.1% from RM770.1m to RM584.6m due to a smaller recognition from the conversion of the floating production storage and offloading (FPSO) vessel. The counter closed at RM7.30.

Apex Healthcare 1Q net profit up 54%

The company’s earnings jumped from RM15.77m in 1Q ended 31 Mar 2022 to RM24.28m in 1Q ended 31 Mar 2023 bumped up by strong demand for pharmaceuticals, consumer healthcare products and medical devices. Earnings per share was up from 3.33 sen to 5.12 sen. Revenue climbed 13.8% from RM215.92m to RM245.8m. The company cautioned that headwinds are emerging with economic slowdown in key markets, global inflation, financial instability and geopolitical tensions. The halal certification obtained by Xepa-Soul Pattinson (Malaysia) Sdn Bhd will facilitate entry into new markets. Associate Straits Apex Group has begun constructing a 237,147 square foot complex of 4 buildings in Batu Kawan Industrial Park to be leased to Straits Orthopaedics (Mfg) Sdn Bhd – its wholly-owned subsidiary. It will be in operation by 1Q2024. The counter closed at RM4.16.

Japan’s Go valued at USD1b with Goldman Sachs investment

The Tokyo-based taxi-hailing app operator pitched directly to financial institutions. Goldman Sachs invested JPY10b (USD72m), while MUFG Bank and Sumitomo Mitsui Trust Bank provided JPY3b (USD22m) and JPY1b (USD7m) respectively in credit lines. The money will be used for acquisitions. The latest investment boosted Go’s valuation by 5% from a previous fundraising round 2 years ago. The company plans for an initial public offering (IPO) in the next few years. Go was launched in 2020 amidst Japan’s ban on the ride-hailing model. Go worked with taxi companies and expanded overall revenue by adding booking and pickup fees. It now commands 70% of the local market. The advantage of the app is that it helps drivers by using artificial intelligence to suggest routes that maximise the likelihood of picking up passengers. The app has been downloaded 14m times and its revenue will grow 70% to JPY18b (USD129m) in the fiscal year ending 31 May 2023. Half of the company’s revenue is contributed by its business partners.