Capital markets executive summary | Tue 4 Jul 2023

Capital markets executive summary | Tue 4 Jul 2023

LYC Medicare Singapore lodges preliminary offer document with SGX

LYC Healthcare obtained shareholders’ approval to list LYC Medicare – which it owns 64.5% of – on the SGX on 15 Mar. Upon listing, LYC Medicare will remain a subsidiary of LYC Healthcare. LYC Healthcare’s largest shareholder is Lim Yin Chow with a direct 1.77% interest and 14.68% indirectly held via LYC Capital Sdn Bhd. ZICO Capital Pte Ltd is the sponsor and issue manager for the initial public offering (IPO) and KGI Securities (Singapore) Pte Ltd is the placement agent. The counter closed at 22 sen.

UEM Group to issue RM7b green sukuk

The company, which is wholly-owned by Khazanah Nasional Berhad, is setting up the sustainable and responsible investment sukuk programme to finance the investments in green industries. The ventures will be spearheaded by wholly-owned UEM Lestra. In the next 5 years, the company will expand via strategic partnerships including joint ventures in 4 sectors, namely, renewable energy and storage, integrated energy solutions, green or electric mobility, and waste management and recycling. It identified local and international green energy players with track record and presence in Malaysia that are looking for a strategic investor to expand their operations. In addition, UEM will announce details of collaboration with foreign investors who are interested in renewable energy in Malaysia this year. UEM intends to lead Malaysia’s decarbonisation includes supporting efforts to achieve 70% renewable energy capacity by 2050. On 25 Jun, the Prime Minister announced that the Khazanah Board of Directors Meeting for 2023 had resolved to create a new green investment platform to attract local and foreign direct investments.

Top Glove perpetual sukuk wakalah programme downgraded to A+

MARC Ratings downgraded the rating on TG Excellence Berhad’s RM3b programme from AA-. The corporate credit rating of Top Glove, which provided an irrevocable and unconditional guarantee to the sukukholders, is also lowered from AA+ to AA with a negative outlook. Top Glove’s financials continue to be weak with sales volume and revenue hardly recovering since Nov 2022 (1QFY2023) when the outlook turned negative. In 9M ended 31 May 2023, revenue was RM1.8b compared to RM4.6b a year ago. The company posted a pre-tax loss of RM436.1m against pre-tax profit of RM409.5m previously. Demand stays weak due to excess inventory, overcapacity and intense competition, pushing down the average selling price. The company is reducing cost by decommissioning old production lines, shutting down 17 of its 48 factories and reducing workforce. The adjusted debt-to-equity (DE) and net DE ratios of 0.28 times and 0.10 times provide room to raise more funds if needed. The outstanding perpetual sukuk is RM1.18b. The negative outlook will return to stable if the cash flow metrics improve, including cash flow from operations to debt coverage ratio above 0.2 times.

Hextar Global buys durian wholesale business for RM84m

Hextar Fruits Sdn Bhd, its 51%-owned subsidiary, entered into a share sale agreement with PHG Ever Fresh Group Sdn Bhd to buy 100% equity interest in 3 companies – PHG Ever Fresh Food (M) Sdn Bhd, PHG Ever Fresh Food (TK) Sdn Bhd and PHG Wholesale & Retails Sdn Bhd all located in Raub, Pahang – and 55% equity interest in PHG Ever Fresh Plantation Sdn Bhd. Hextar will use RM34m internally generated funds plus RM50m bank borrowings for the purchase price. As at 31 Mar 2023, Hextar had RM237.46m borrowings and RM67.83m cash. The acquisitions will be completed by 4Q2023. The counter closed at 79 sen.

US factory output shrinks the most in 3 years

After 8 straight months of contraction, manufacturing is at the weakest level as production, employment and input prices fell. The Institute for Supply Management’s manufacturing gauge declined to 46 from 46.9 in May, the lowest since May 2020. Below 50 readings point to activity contracting, and this stretch is the longest since the 2008-2009 sub-prime crisis. The measurement also suggests that demand has stayed weak. The index of new orders shrank for 10 consecutive months and order backlogs decreased. Many Americans are restricting spending on merchandise as they rotate to services and experiences. Others are tightening their belts to cope with inflation. Plastics and rubber products, wood products and textile mills lead 11 industries which reported a contraction in activity in Jun.