Capital markets executive summary | Tue 18 Jul 2023

Capital markets executive summary | Tue 18 Jul 2023

Plytec approved for ACE Market listing

The company will issue 106.06m new shares or 17.5% of its enlarged shares. 30.30m shares are for the Malaysian public and 75.76m shares are for private placement to bumiputra investors approved by the Ministry of Investment, Trade and Industry. Its shareholders are offering 51.52m existing shares or 8.5% of the enlarged shares. 21.21m shares are for eligible directors, employees and persons who have contributed to success, while 30.3m shares are for private placement to selected investors. KAF is the principal adviser, sponsor, underwriter and placement agent. Plytec was established in 1999 and offers construction engineering solutions and distributes building materials.

DC Healthcare up 80% on debut

The aesthetics medical services provider gained 20 sen to close at 45 sen, up from its initial public offering (IPO) price of 25 sen. The IPO entailed a public issuance of 199.26m shares or 20% of the enlarged shares. 49.82m shares are for the public with bumiputra and other public investors split evenly. 99.63m shares are for selected investors. The company received 17,614 applications for 3.01b public shares worth RM759.92m giving an oversubscription of 59.46 times. DC Healthcare will use RM17.01m or 34.15% from the proceeds for working capital, RM6.24m (12.52%) to settle borrowings, RM9.44m (18.95%) to add more clinics and RM13.12m (26.35%) to buy medical equipment. The company is currently present in Negri Sembilan, Selangor, Johor and Kuala Lumpur.

Nasdaq-listed Bujau seeks acquisitions

Bukit Jalil Global Acquisition 1 Ltd (Bujau), a homegrown special purpose acquisition company (SPAC), is aggressively looking for opportunities in the US and Asia in the next 12 months. It has a warchest of USD57.5m (RM265m) from its USD10 per unit IPO. The SPAC is playing off the semiconductor growth story by targeting companies which are able to benefit from the large population and robust economic growth in Asia, the US’ Chips and Science Act, and advances in electric vehicles, artificial intelligence and industry 4.0. Each one must also have a market value of more than USD200m and high growth potential in both the US and Asia. Bujau has received inquiries from US and Malaysian companies for potential mergers. The company has 12-13 months from 28 Jun to identify and complete a merger. Bujau was incorporated in the Cayman Islands on 15 Sep 2022 and was listed on Nasdaq on 28 Jun 2023.

Berjaya sells waste management unit to Naza for RM700m cash

Berjaya Group Berhad and Naza Corp Holdings Sdn Bhd signed a share sale agreement for 100% interest in Berjaya Enviro Holdings Sdn Bhd. The sale is expected to be completed by Feb 2024. The price values Berjaya Enviro at forward 18.4 times price-earnings (PE) ratio based on a profit guarantee of RM38m per year for 3 years and price-to-book value of 3.6 times. Berjaya’s valuer valued the company at RM600m-RM700m. In the 2022 annual report, Berjaya Enviro earned pre-tax profit of RM15.4m, which would translate into 45 times PE ratio. Berjaya Enviro owns the Bukit Tagar Sanitary landfill located in Sungai Tinggi, Hulu Selangor which has a 30-year concession expiring in Jan 2044. The landfill takes in 2,719 tonnes of municipal solid waste every day from Kuala Lumpur, Selayang and Hulu Selangor. The higher valuation accounts for higher tipping fee by RM5 per tonne from the current RM49. Naza Corp deputy group chairman SM Faliq SM Nasimuddin and Berjaya Corp Executive Director Chryseis Tan Sheik Ling are married. Berjaya Corporation closed at 30 sen.

Citigroup commodities head says that oil is bubbling

Crude oil futures climbed more than USD80 per barrel last week the first time after 2 months, driven by oil bulls’ anticipations that growing demand and production cuts by OPEC+ will tighten global markets. The supply reduction by Saudi Arabia and other oil producers belie the lack of recovery in China, which is the world’s biggest importer of oil. Citigroup’s head of commodities research, Ed Morse, says that a real Chinese recovery has not happened, while Europe is already in recession and it is uncertain if the US will have a hard landing. The crude oil market fundamentals continue to be fragile. The OPEC+ 2m barrels per day supply cut have been offset by US oil production hitting a record in March, and Iran, Venezuela and Nigeria increasing output. Morse believes that oil inventories increased in Jun. China’s GDP grew 6.3% year-on-year in 2Q2023 compared with 4.5% in 1Q2023. On quarter-on-quarter basis, the GDP inched up 0.8% in 2Q compared to 2.2% in 1Q.