Capital markets executive summary | Thu 6 Jul 2023

Capital markets executive summary | Thu 6 Jul 2023

Public Investment Bank values DC Healthcare at 37 sen

The company will be listed on the ACE Market on 17 Jul. The valuation is at a price-earnings (PE) multiple of 16 times the company’s projected earnings per share of 2.3 sen in FY2024. It is also at a premium of 12 sen or 48% above the initial public offering (IPO) price of 25 sen per share. The bank expects DC Healthcare’s net profit to grow at a compound annual rate of 53.3% over 2 years driven by higher demand for aesthetic services. That projection assumes 3 new clinics will be opened by end-FY2023, followed by 5 more in FY2024, and each clinic will earn RM3.9m revenue on average. The company will raise RM49.81m in the IPO through the issuance of 199.26m shares or 20% of its enlarged shares. RM17.01m is for working capital, RM6.24m to repay borrowings, RM9.44m to set up 8 new aesthetic clinics in Johor, Melaka, Negeri Sembilan, Penang, Perak and Kedah, and RM13.12m will be dedicated to the acquisition of medical machinery and equipment.

Priceworth proposes capital reduction to eliminate accumulated losses

The Sabah-based timber manufacturer will reduce its issued share capital of RM441.85m as at 6 Jun by RM210m. The corresponding credit will be used to eliminate the accumulated losses of RM202.6m as at 31 Dec 2022. Upon completion by 4Q2023, Priceworth will have an enlarged share capital of RM231.85m comprising 1.45b shares. The company expects the exercise to more accurately reflect the value of the underlying assets and the financial position of the company. It will enhance the company’s financial profile with its bankers, customers, suppliers, investors and other stakeholders. The counter closed at 15 sen.

WCT’s ratings affirmed with negative outlook

MARC Ratings affirmed the AA- rating for WCT Holding’s RM1b medium term notes programme and the RM1.5b sukuk murabahah programme and the A rating for the RM1b perpetual sukuk musharakah programme. The revised outlook reflects stubbornly high gearing which the company has been unable to deal with. As at end-Mar 2023, borrowings were RM2.8b for a gross debt-to-equity (DE) ratio of 0.97 times and a net DE ratio of 0.91 times. The original plan to repay RM200m borrowings by end-2022 was hampered by slow collection of construction receivables. Instead, the company will now undertake asset sales but delays have created uncertainty in raising funds to deleverage. Cash reserves have been used for operations recently resulting in a weaker liquidity position. The RM3.3b construction order book at end-Mar 2023 which offers short term earnings visibility and the steady income from investment properties are plus points, although the gradually shrinking construction order book since 2018 is a concern. The counter closed at 42 sen.

Scientex in 2nd attempt to buy SP Setia land for RM548m

In 2021, wholly-owned subsidiary Scientex Quatari Sdn Bhd agreed to buy the 960 acres freehold land in Tebrau, Johor Bahru for RM518.1m, but the purchase was terminated in Mar 2023 after it failed to obtain a waiver of the bumiputera equity condition imposed by the Economic Planning Unit (EPU). The conditional sale and purchase agreement, signed yesterday between Scientex Lestari Sdn Bhd and SP Setia’s wholly-owned Pelangi Sdn Bhd, is for RM547.65m or RM13.10 psf. It is subject to approval by the Estate Land Board, the EPU and, if required, Scientex’ shareholders. The company will launch a new mixed township development project with 12,000 affordable homes. Scientex Lestari is 70% owned by Scientex Quatari and 30% by Datuk Azman Mahmud. The acquisition to be completed by 1H2024 will be paid for with internally generated funds and bank borrowings. At end-Apr, the company had RM621.4m short-term borrowings and RM250m long-term borrowings. Scientex’ landbank will expand to 7,660 acres. SP Setia will book a RM438.3m gain. Scientex closed at RM3.47 while SP Setia closed at 56.5 sen.

World’s 3rd largest IPO raises USD1.8b for Franklin Templeton fund

Hidroelectrica SA, Romania’s biggest producer of electricity, is valued at about RON47b. About 78m shares or 17.3% of Hidroelectrica will be sold at RON104 each in the initial public offering (IPO). The company will begin trading on the Bucharest Stock Exchange on 12 July. Fondul Proprietatea, a fund managed by Franklin Templeton, raised RON8.1b (USD1.8b) in Romania’s largest ever listing and Europe’s biggest IPO in 2023. The proceeds will go to the fund to potentially be distributed to shareholders. Hidroelectrica will benefit from the more visible profile and access to funds for its renewable energy projects.