Capital markets executive summary | Thu 13 Jul 2023

Capital markets executive summary | Thu 13 Jul 2023

Lemon Sky Studios plans IPO

The Malaysian art and animation studio was founded in 2006 and had contributed to videogames including Capcom’s Street Fighter 6, Square Enix’ Final Fantasy XVI, Marvel’s Spider-Man, Naughty Dog’s The Last of Us Part I and Part II, and Blizzard Entertainment’s Diablo II: Resurrected and Warcraft3: Reforged. The company now employs 500 artists and its clients include EA Entertainment, Microsoft Studios, Disney, Nickelodeon and Bandai Namco. iCandy Interactive Ltd, which is listed on the Australian Stock Exchange, bought Lemon Sky for AUD44.5m in 2021. The listing will happen as early as end-2023. Proceeds from the initial public offering (IPO) will be used for business expansion.

LEAP Market-listed Steel Hawk to transfer to ACE Market

The company was listed on the LEAP Market on 29 Oct 2021. It has a workforce of 100 and had completed more than 70 projects worth north of RM100m providing technical and engineering support services for the oil and gas industry. Steel Hawk operates in Kerteh, Kemaman, Miri, Bintulu and Brunei. On 10 Jul, the company’s board of directors received a letter from its major shareholders, Radiant Capital Sdn Bhd and Dato’ Sharman Kristy A/L Michael, to propose the transfer to the ACE Market. Yesterday, after deliberations, the board resolved to undertake the transfer. The exercise will entail a public offering of new shares to meet the ACE Market’s public shareholding requirement. The counter’s last trade was on 9 May 2023 with 20,000 shares changing hands at 28 sen apiece. The LEAP Market is accessible only to sophisticated investors as required by the Capital Markets and Services Act 2007, which kept trading volumes low. Trading volumes drive price discovery.

Pharmaniaga gets 7-year concession for medical supply logistics

The Ministry of Health (MOH) issued a letter to Pharmaniaga Logistics Sdn Bhd dated 12 July for the period 1 Jul 2023 to 30 Jun 2030. The services will be governed by the salient terms of the letter leading up to the new medical supply logistics services agreement which the MOH and the company are currently negotiating. This comes after the end-Jun expiry of the 6-month extension to the concession agreement with the government for the provision of medicines and medical supplies. The original concession was granted in 1994. Pharmaniaga’s PN17 status was triggered after it made a RM552.3m provision for its stock of unsold Sinovac vaccines which were nearing expiry resulting in negative equity. The company is 52% owned by Boustead Holdings Berhad, which was recently delisted by parent Lembaga Tabung Angkatan Tentera. The counter closed at 38.5 sen.

Singapore’s Thomson Medical buys Vietnam’s FV Hospital

The USD381.4m acquisition is the biggest healthcare deal in Vietnam. Thomson Medical will pay Quadria Capital USD359.6m upfront plus USD21.8m after FV Hospital meets specific performance milestones. Funds will be sourced internally and from borrowings. FV Hospital was founded by Jean-Marcel Guillon and French doctors in Ho Chi Minh City 2 decades ago. The hospital has 200 beds and offers oncology, cardiology, ophthalmology, maternity and gastroenterology services. The hospital is expanding with a 7-storey structure being built. In addition, the hospital runs an outpatient clinic in the business district. In 2017, Quadria Capital, Neuberger Berman Private Equity and German development finance institution DEG bought a stake in the company. Thomson Medical was founded in 1979 and focuses on women and children healthcare in Singapore. Its shares have depreciated 22% this year.

US inflation falls to 2-year low

The consumer price index (CPI) gained only 3% in Jun 2023 compared to Jun 2022. It was up 0.2% against May 2023. Core CPI, which excludes food and energy, rose 4.8% year-on-year, the lowest level since late 2021 but still higher than the Federal Reserve’s 2% target. The core CPI edged up 0.2% as well month-on-month. The latest data brought the odds down for an additional rate hike to well below 50%. A primary reason for the lower inflation is the comparison with Jun 2022 when energy prices shot up after Russia attacked Ukraine, which propelled inflation to a 4-decade high. The CPI for Jul 2023 onwards will have a lower base to compare against. The Federal Open Market Committee that next meet on 25-26 Jul will also consider producer prices, retail sales and inflation expectations. Separately, the lower inflation reading and anticipated end to the rate hikes prompted optimism in the oil markets with Brent breaching USD80 per barrel for the 1st time since May 2023.