Capital markets executive summary | Thu 22 Jun 2023

Capital markets executive summary | Thu 22 Jun 2023

Daythree Digital IPO price at 30 sen

The company, which was founded in 2016, is a global business services (GBS) provider that focuses on customer experience (CX) and lifecycle management services enabled by digital tools developed in-house. Its clients are in energy and utilities, telecommunications and media, fintech and financial services, construction, e-commerce and retail, healthcare, and travel and hospitality. While the GBS industry is projected to grow 6.3% annually from RM24.79b in 2023 to RM31.74b in 2027, Daythree Digital only commands less than 1% share. The company will be listed on the ACE Market on 26 Jul. The 30 sen price is at a value of 23.1 times net profit of RM6.2m for the financial year ended 31 Dec 2022. The initial public offering (IPO) entails the issuance of 110.4m new shares or 23% of its enlarged shares, of which 24m will be for the Malaysian public, 12m for directors and employees, and 74.4m for selected investors via private placement. Existing shareholders will sell 12m shares to selected investors via private placement. The company plans to double its staff size from the present 1,800 in the short to medium term so RM14.7m (44.4%) of the IPO proceeds will be used for working capital to recruit 380 CX executives and RM3.02m (9.1%) to recruit industry experts. The company will allocate RM7.1m (21.4%) for headquarters expansion and to set up a training and meeting facility, RM3m (9.1%) for network infrastructure, RM1.5m (4.5%) for branding and marketing, and RM3.8m (11.5%) for listing expenses. Daythree Digital’s revenue for 2020 was RM47.7m, 2021 RM58.1m and 2022 RM65.1m. Its net profit for 2020 was RM5.6m, 2021 RM9.6m and 2020 RM6.2m. Subscription is open until 11 Jul. M&A Securities is the adviser, sponsor, underwriter and placement agent.

Jade Marvel to issue RCPS to Cayman Islands-incorporated company

The company plans to issue the redeemable convertible preference shares (RCPS) to Sycamore Capital SPC, which is incorporated in the Cayman Islands, and is acting on behalf of Sycamore Equity Fund SP. The investor bears a similar name to Sycamore Partners, a New York-based private equity firm. The RCPS to be issued at RM1 per share will raise RM80m for Jade Marvel’s money-lending business and for working capital. The RCPS will be issued in 320 tranches prior to the maturity date, which is 36 months from the 1st tranche issue date. The convertibility of the RCPS is limited to 10% of the enlarged number of issued shares. The conversion price is 80% of the average closing price of 3 straight business days within 45 business days preceding the conversion date subject to a minimum of 12 sen. The RCPS, with no rights to dividends, will be redeemed on the maturity date if not converted. TA Securities is the adviser. The counter closed at 19 sen, down 24% in the last month.

Uzma wins RM450m contracts from Petronas Carigali

Wholly-owned subsidiary Uzma Engineering Sdn Bhd has been awarded 2 contracts for the supply of minimum 1 340K rating hydraulic workover unit (HWU) rig and minimum 1 460K rating HWU rig for Petronas Carigali’s workover and well plug and abandonment operations offshore Malaysia. Each HWU rig includes supporting accommodation work barge and portable crane as part of the scope of works. The duration of the contracts is 3 years from 17 May 2023 to 16 May 2026, with an extension option of 1 year. The counter closed at 62 sen.

Techna-X strikes deal to produce biofuel at microalgae farm

Wholly-owned subsidiary Techna-X Aerobeidou Sdn Bhd (TASB) signed an agreement with technology provider and operator of the 85-acre farm MYKO Global Sdn Bhd and engineering, procurement, construction and commissioning (EPCC) contractor RTA E&C Sdn Bhd. The project is expected produce biofuel for at least 30 years. MYKO will arrange 98% of the USD120m project cost while TASB will help in financing the remaining 2% or USD2.4m via a bank guarantee. MYKO, which will also offer its technology and patents, will manage the facility to produce a minimum of 36k metric tonnes of crude algae oil per annum which is worth USD40m per year. TASB has exclusive right to invest further in MYKO’s Malaysian operations including the option to expand the development agreement at similar terms after the success of the first 85 acres. Lee Byungok, chief executive officer of MYKO and RTA, owns 52% and 30% of the companies respectively. Wan Nurfazilah, a director of MYKO and managing director of RTA, holds 24% and 70% stake in the companies respectively. Techna-X closed at 1.5 sen.

Wirecard scandal hits close to home

Netflix, the streaming service, is offering an inside look into the German company’s rise and fall. Once seen as the future of German industry, Wirecard was a financial technology unicorn. In 2018, it even replaced Commerzbank in the DAX 30. Its global business of facilitating international electronic payments reached every corner of the globe including Singapore, the Philippines and Malaysia. Trouble began when Financial Times journalist Dan McCrum began to investigate the company. A network of shell companies, bogus addresses and fake documents, plus the grit of the investigators, uncovered a global money laundering enterprise and a network for terrorism financing. It eventually led to a special KPMG audit, and finally, after EY revealed that USD2.1b cash allegedly held in 2 Philippines banks was non-existent, the company filed for insolvency in Jun 2020. German authorities arrested the CEO while the COO is a fugitive. The Monetary Authority of Singapore announced yesterday that it has fined DBS SGD2.6m, OCBC SGD600k, Citibank SGD400k and Swiss Life SGD200k for know-your-customer lapses on accounts related to Wirecard.