Capital markets executive summary | Mon 3 Jul 2023

Capital markets executive summary | Mon 3 Jul 2023

MYMBN to be listed on ACE Market on 25 Jul

The Melaka-based bird’s nest processor is positive on the growth of the industry and will expand its offerings in the industry’s value chain. Its midstream core business comprises selling raw uncleaned edible bird’s nests (RUCEBN) to the local and China markets. The company plans to expand into processing raw clean edible bird’s nests (RCEBN) and to produce halal ready-to-drink bird’s nest products. RUCEBN involves sorting, separating, drying, weighing, grading and packing, whereas RCEBN is subject to more comprehensive handling and cleaning process to reduce biosecurity risks. The average selling price of RCEBN is RM7k-RM8k per kg which is higher than RUCEBN at RM4.5k per kg. By 2H2023, MYMBN will acquire 80% of a Chinese company which has received the General Administration of Customs China’s (GACC) approval for mandatory food certification for imports into the Chinese market. The initial public offering (IPO) involves a public issue of 98m new shares at 21 sen, raising RM20.58m. Part of the proceeds will be used to double the annual processing capacity for RUCEBN from 32,256kg to 73,728kg while the storage capacity will be increased from 1,848kg to 4,608kg. The company launched its prospectus on 30 Jun.

KGW sets IPO price at 21 sen

The third-party ocean freight company will raise RM16.73m through the issuance of 79.66m new shares or 16.5% of the enlarged shares. Existing shareholders have offered to sell 43.45m existing shares or 9% of the enlarged shares to raise RM9.12m. KGW Group was established in 2005 and is a non-vessel operating common carrier (NVOCC), which is an asset-light model because although it performs all the services of a vessel operating common carrier, it does not own the vessels. 71.8% of the company’s revenue is from export services of Malaysian products to the US. In addition, KGW facilitates imports and exports via ocean freight and air freight services to Asia (10.58% of revenue) and Europe (8.8%), and provides warehousing and distribution of healthcare products and devices in Malaysia. The company plans to expand further into China, the Middle East and parts of Asia, with focus on industrial customers and non-cyclical products. The IPO entails the issuance of 25.85m new shares or 25.5% of the company’s enlarged shares. The company will be listed on the ACE Market in Aug. KGW managing director Datuk Roger Wong is the largest shareholder with 61.05% post-listing. The company launched its prospectus on 30 Jun.

Skyworld IPO slightly oversubscribed

The property developer, which will be listed on the Main Market on 10 Jul, is offering 50m new shares to the public at 80 sen. The issuing house, Tricor Investor & Issuing House Services, said that 3,378 applications for 59.5m shares worth RM47.6m were received for an oversubscription of 0.19 times. 1,644 applications for 30.7m shares were received for the Bumiputera portion, or an oversubscription rate of 0.23 times. 1,734 applications for 28.7m shares were received for the remaining public portion, or an oversubscription rate of 0.15 times. The 25m shares for eligible directors and employees and the institutional offering of 325m shares were fully subscribed. Fair values computed by analysts range from 90 sen to RM1.03.

RCE Marketing’s sukuk murabahah assigned AAA and AA2 preliminary ratings

The company’s financing vehicle, Zamarad Assets Berhad, will be issuing Tranche 9 comprising RM175m Class A sukuk and RM30m Class B sukuk from its RM2b sukuk murabahah programme. The tranche includes a revolving option, which allows Zamarad to utilise excess cash in the transaction to acquire new receivables from RCE if it does not adversely impact the ratings. Tranche 9 will collateralised by RM246.62m personal financing facilities given to civil servants, which will be repaid via non-discretionary salary deductions. The compulsory deductions and low civil service attrition rate minimise the credit risks. The overcollateralisation ratios of 40.93% for Class A and 20.30% for Class B offer sufficient credit enhancement to mitigate stressed losses assumed for AAA and AA2. RAM Rating’s base case assumption for monthly net default rate of 0.09% and low prepayment assumption of 0.035% and high of 0.80% is in line with its review of the historical loss performances of RCE’s 58 static pools updated in 2022.

Singapore says goodbye to Libor

Singapore’s financial markets have replaced the London interbank offered rate by switching to the Singapore Overnight Rate Average (SORA), whose outstanding value of index swaps reached nearly USD2t (RM9.4t) at end-May, 60% more than in Jun 2022. Total outstanding loans jumped to SGD171b (RM589b) in Dec 2022. SORA replaces the Singapore dollar swap offer rate (SOR) which was computed using Libor and published for the last time on 30 Jun. Global policymakers have been introducing new benchmarks to replace Libor after evidence emerged since 2008 of manipulation by contributing banks. Many non-US dollar Libor rates ceased in Jan 2022, and the remaining dollar Libor rates are no longer published after 30 Jun.