Capital markets executive summary | Wed 21 Jun 2023

Capital markets executive summary | Wed 21 Jun 2023

AGX Group to list on ACE Market

The company provides logistics services including sea freight forwarding, airfreight forwarding, aerospace logistics, warehousing, other third-party logistics services and road freight transportation. It has an 18-year track record with presence in Malaysia, the Philippines, South Korea, Myanmar and Singapore. The initial public offering (IPO) entails the public issue of 96.5m new shares comprising 21.65m shares for the Malaysian public, 6.32m shares for eligible directors, employees and persons who have contributed, and 68.53m shares for private placement to selected investors. There is also an offer for sale of 30m existing shares via private placement to selected investors. Chief executive officer Datuk Ponnudorai Periasamy and AGX Malaysia’s managing director Jayasielan Gopal each holds 55.9m or 16.62%, which will fall to 49.96m or 11.54% after the IPO. After the listing, the company will set up a new warehouse and office at the Port of Tanjung Pelepas to improve coverage of southern peninsular and to support warehousing and third-party logistics services in Singapore. It will also establish a new warehouse and office in Penang, and a new office in Busan, South Korea. AGX’s revenue jumped 21.23% from RM193.37m in 2021 to RM234.43m in 2022, with sea freight forwarding contributing 54%. Profit after tax soared 127.96% from RM5.94m to RM13.54m. TA Securities is the principal adviser, sponsor, underwriter and placement agent.

Uzma gets RM225m financing for Kedah solar farm

In Aug 2021, the company signed a power purchase agreement with Tenaga Nasional Berhad (TNB) relating to a 50MWac large-scale solar photovoltaic plant on 73.65 hectares in Bukit Selambau, Kedah. The term was extended to 25 years in Aug 2022 following 30%-50% higher solar panel prices. The original financial close date was extended from 30 Jun to 30 Sep 2022 with commercial operations by 31 Dec 2023. In Mar 2023, Uzma proposed raising RM21.79m via a private placement of 35.2m shares or 10% of outstanding shares to part fund the RM229m project cost. As at end-Apr, the project was 25% completed. Yesterday, Uzma Kuala Muda Sdn Bhd finally obtained the syndicated Islamic financing facilities from Affin Islamic Bank Bhd and Export-Import Bank of Malaysia. Assuming full disbursement of the facilities, the company’s gearing ratio will increase from 0.91 times to 1.27 times based on the shareholders’ funds as at FY2022. Uzma closed at 62 sen.

Skyworld launches prospectus for Main Market listing

The company’s initial public offering (IPO) is scheduled to be completed on 10 Jul. It plans a regional expansion starting with Vietnam in 3 years. Skyworld has been studying land in Vietnam for 3-4 years but has made no purchases yet. The country’s urbanisation of 40%, below Malaysia’s 78%, offers potential. In Malaysia, the company seeks to expand into Subang Jaya, Petaling Jaya, Selayang and Ampang Jaya. It will launch 10 new developments by 2026 with total gross development value of RM4.08b. The issue price is 80 sen per share. The IPO entails a public issue of 208m new shares and offer for sale of 192m existing shares to raise RM320m. RM100m or 60.1% will be allocated for the acquisition of land, RM35m (21.2%) for working capital, RM20m for repayment of bank borrowings and RM11.2m for IPO expenses. Kenanga is the principal adviser, underwriter and placement agent. Newfields is the financial adviser.

TNB Northern’s sukuk AAA rating affirmed

MARC Ratings affirmed the rating on the RM1.22b outstanding sukuk with a stable outlook. TNB Northern is the fundraising vehicle for TNB Prai Sdn Bhd, which operates a 1,071.43MW combined-cycle gas turbine power plant in Seberang Perai Tengah, Penang. TNB Prai is a wholly-owned subsidiary of Tenaga Nasional Berhad (TNB). TNB Prai has a 21-year power purchase agreement (PPA) with TNB. The rating is equalised with TNB’s AAA-rating given the unconditional and irrevocable rolling guarantee extended by TNB to fund shortfalls in the finance service account, and TNB’s undertaking to maintain full ownership of TNB Northern. The rolling guarantee will probably be needed from 2024 because TNB Prai’s operating cash flows may not be enough for its financial obligations. Plant performance in 2022 was affected by 2 months of unplanned outages due to technical issues. Unplanned outage rate (UOR) was 19.39% at end-Nov 2022, above the 4% in the PPA, although it has improved and should fall below 4% by end-Oct 2023. Underperformance in contracted average availability target forced capacity payments lower by 14.6% for 2022. The plant’s heat rate also continued to exceed the PPA threshold due to heat rate degradation, and therefore, the company was not able to fully pass through its fuel costs to TNB. TNB closed at RM9.22.

Morgan Stanley says Baidu will benefit from China’s AI adoption

US-listed Baidu is the best proxy as artificial intelligence (AI) tools help China shift USD7.4t spending from offline to the internet. The company has extensive knowledge in autonomous driving, generative AI and proprietary search data. Ernie bot – Baidu’s version of ChatGPT – gained 200k sign ups. Morgan Stanley expects the company to be among the 1st to receive licences to commercialise AI-generated content. Chinese regulators are drafting rules which require a security review of generative AI services before being allowed to operate. Baidu managed to avoid the US-led ban on chip exports to China by building up inventory before the sanctions came into force. Its shares rose 4.1% against a 3.8% fall for the Nasdaq Golden Dragon China Index.