Capital markets executive summary | Fri 23 Jun 2023

Capital markets executive summary | Fri 23 Jun 2023

Gamuda 3Q net profit almost flat but excitement for Penang reclamation

The company posted net profit of RM223.36m for the quarter ended 30 Apr 2023, up 0.85% against RM221.49m the previous year. Stronger overseas construction earnings held up the numbers. Revenue, nonetheless, jumped 81.22% from RM1.14b to RM2.07b. Earnings per share fell from 8.72 sen to 8.40 sen. A 2nd interim dividend of 6 sen was declared. Total dividends for the year is 50 sen including 38 sen special dividend after the completion of the highway sale to Amanat Lebuhraya Rakyat Berhad. Excluding the one-off gain, cumulative core earnings climbed 10% from RM551m to RM608m. Cumulative revenue surged 58% from RM3.05b to RM4.82b as construction revenue increased from RM333m to RM2.1b from Australian and Taiwanese projects. The company has a RM20b construction order book and RM5.7b unbilled property sales. The Penang South Island reclamation project will begin on 1 Jul. Phase 1 of reclamation works worth RM3.717b, which is awarded to Gamuda Engineering Sdn Bhd, involves 1,260 acres of the total 2,300 acres to be reclaimed for Island A and will be completed by 30 Jun 2030. The project developer Silicon Island Development Sdn Bhd is 70:30 owned by Gamuda and the Penang state government. The counter closed at RM4.25.

Banking problems cause Bintai Kinden’s TNB contact termination

The company clarified that the termination of the 8 contracts was prompted by Kejuruteraan Bintai Kindenko Sdn Bhd’s inability to continue performing its contractual obligations because its banking facilities were suspended or terminated by financial institutions. The contracts awarded for various utilities and substation jobs in 2018-2023 were worth some RM170m. For financial year ended 31 Mar 2023, the company posted a net loss of RM51.99m against a net profit of RM4.27m the prior year. Revenue, however, jumped 20.36% from RM96.26m to RM115.86m. The company blamed the net loss on extraordinary costs in 4Q, including the further impairment of concession receivables on a project related to financing from MBSB Bank Bhd and a default payment. Bintai Kinden closed at 8 sen.

Sabah Credit Corporation’s AA1 and P1 sukuk ratings affirmed

RAM Ratings has affirmed the ratings for RM1b Islamic medium term notes programme (2011/2031), RM3.5b Islamic medium term notes programme (2014/2039) and RM1.75b Islamic commercial papers programme. The ratings reflect RAM’s expectation of ready financial support from the Sabah state government – which wholly owns the company. For example, the company’s borrowings from the state are subordinated to its debt securities and some of these borrowings have even been converted into share capital. Personal financing accounts for 98% of total financing assets as at end-Dec 2022. Almost all of it is given to civil servants and repaid through non-discretionary salary deductions made by Biro Perkhidmatan Angkasa and the Sabah State Treasury, which mitigates repayment risks. Stiff competition from commercial banks has kept the financing book stagnant. The company’s asset quality is good with gross impaired financing (GIF) ratio improving from 3% at end-Dec 2021 to 2.5% at end-Dec 2022. The loss absorption buffer remained strong with GIF coverage of 132%. Refinancing risk for the sukuk is handled by liquidity support from the state government. Pre-tax profit climbed 11% year-on-year to RM102m in 2022.

Malaysian JVs bumped up Eco World 2Q net profit

The company’s net profit for the quarter ended 30 Apr 2023 grew 37.26% from RM45.67m to RM62.69m. Local joint venture projects – Eco Grandeur, Eco Business Park V, Eco Ardence and Eco Horizon – contributed RM24.05m, up 47.41% from a year ago. Earnings per share increased from 1.55 sen to 2.13 sen. Revenue, however, shrunk 16.98% from RM506.89m to RM420.82m as a number of parcels were substantially completed in FY2022. For 6M2023, net profit climbed 9.77% from RM109.04m to RM119.69m. Revenue fell 13% from RM1.04b to RM905.56m. An interim dividend of 2 sen was declared payable on 20 Jul. The company hit 68.5% or RM2.4b of its 2023 sales target. The industrial portfolio outperforms with RM838m sales so far or 11.3% more than 2022 total sales for the segment. The counter closed at 82 sen.

Adnoc and G42 consider listing tech JV

Abu Dhabi National Oil Company (Adnoc) and Abu Dhabi-based artificial intelligence company G42 are in early stages for a potential initial public offering of AIQ by end-2023, which is 60% owned by Adnoc and 40% by G42. AIQ uses artificial intelligence and machine learning to optimise processes, improve planning and increase profitability for Adnoc and the oil and gas industry. The shareholders are discussing whether to market the deal internationally or exclusively to local investors. AIQ recently hired Youssef Salem, who worked at US-based boutique investment bank Moelis & Co, as chief financial officer. Adnoc supplies almost 3% of global oil demand. G42, which is backed by Abu Dhabi state fund Mubadala Investment Co, is a part of the business empire overseen by chairman Sheikh Tahnoon bin Zayed al-Nahyan, who is also the UAE’s national security adviser and brother of President Sheikh Mohammed bin Zayed al-Nahyan.