Capital markets executive summary | Fri 30 Jun 2023

Capital markets executive summary | Fri 30 Jun 2023

Felda to issue government-guaranteed sukuk for debt restructuring

The government in 2019 had agreed to guarantee the Federal Land Development Authority’s (Felda) financing for its 5-year transformation programme initiated in 2020. On 28 Jun, the finance minister signed the government guarantee for Felda’s sukuk and revolving credit financing. The debt restructuring exercise involves reducing Felda’s principal owed to financial institutions by RM7.9b and lower its financing cost. 80% of the RM8.3b settlers’ debt implemented in 2021 will also be dealt with. The exercise will stabilise Felda’s financial position for a more sustainable business model, which will allow it to continue promoting social mobility for settlers.

MST Golf to raise RM129.6m from IPO

Malaysia’s largest chain of golf equipment specialty retailers will set aside 90% of its initial public offering (IPO) proceeds for expansion in its domestic and foreign markets, namely, Indonesia, Thailand and Vietnam. It believes that golf consumers in Southeast Asia are generally under-served. It plans to enter into joint ventures with a strong local retailers with MST Golf offering business model, retail concept, brands, marketing and operation knowhow and in turn, the local partners will share their infrastructure and knowledge in the retail industry including importation and logistics, human resources management, local regulations compliance. The IPO exercise entails a public issue of 160m new shares and an offer for sale of 68m existing shares. The 81 sen IPO price values the company at a price-to-earnings ratio of 27 times profit after tax of RM29.1m for FY2022. For the remaining IPO proceeds, 2.3% is for upgrading its digital technology facilities and 2.5% for working capital. The company, which has adopted a 30% dividend policy, will be listed on the Main Market on 20 Jul 2023.

Solarvest RM1b sukuk programme assigned A1 and P1 ratings

RAM Ratings assigned the ratings to the company’s proposed Islamic medium-term notes and Islamic commercial papers programme. An initial issuance of RM100m underlie the ratings, which reflect Solarvest’s leadership in the local market for solar engineering, procurement, construction and commissioning, its proven track record, and its positive debt coverage ratios and balance sheet. Solarvest has built a total domestic solar capacity of 464MW or 14.7% market share for the large-scale solar, residential, and commercial and industrial segments. Solarvest’s ability in securing contracts and strong execution will keep its RM550m unbilled order book replenished. The 2.5GW tender book at end-Feb 2023 and offshore expansions support the company’s growth. Revenue rose 107.9% to RM365.5m in FY Mar 2023, driven by LSS4 progress billings. More debt to finance its own solar projects constrained its funds from operations debt coverage (FFODC) to 0.25 times (FY2020-FY2022: 0.36 times to 1.15 times). Gearing increased to 0.66 times (FY2020-FY2022: average 0.18 times). RAM expects FFODC to average 0.22 times in the next 4 years with RM141.4m-RM165.8m more debt per annum. Gearing will average 0.93 times. Separately, MARC Ratings has assigned a “Gold” impact assessment to the company’s sustainability sukuk framework. The counter closed at RM1.16.

Catcha to launch rights issue to raise RM41.04m

This is the final step in the company’s regularisation plan to have its Guidance Note 2 status lifted. Catcha will issue 174,640,020 new shares with a rights share offered for each existing share. The issue price is fixed at 23.5 sen. The counter closed at 24 sen. The company also announced that its wholly-owned subsidiary iMedia Asia Sdn Bhd posted RM10.28m profit before tax (PBT) in FY2022, up 69% year-on-year. PBT for 1QFY2023 grew 28% year-on-year to RM3.89m. In Mar 2023, Catcha completed its acquisition of iMedia for RM43.92m in cash and shares. As at 31 May, iMedia’s reach covers 13.1m Malaysians each month via its portfolio of digital marketing platforms and services.

US 1Q economic growth revised upwards to 2%

The Commerce Department made the revision partly on stronger-than-expected exports and consumer spending. Consumption, in particular, has bumped up the US economy, driving the strong beginning to 2023 in the midst of a banking crisis. The figure, while lower than 2.6% growth in 4Q2022, is double the 1.1% originally estimated. The revised estimates are partly offset by lower figures for other areas including non-residential fixed investment. Inflation and higher interest rates however are suppressing growth.