Capital markets executive summary | Fri 28 Jul 2023

Capital markets executive summary | Fri 28 Jul 2023

UEM Group spearheads 1GW national solar project

The wholly-owned subsidiary of Khazanah Nasional Bhd has tied up with Itramas Corp Sdn Bhd for the hybrid solar photovoltaic power plant that will be integrated with a renewable energy (RE) industrial park. Khazanah is the champion for the RE zone, a flagship project of the National Energy Transition Roadmap (NETR) launched yesterday. Itramas is a vertically integrated solar plant developer and contractor in Malaysia. UEM Group has signed memoranda of understanding with Blueleaf Energy, China Machinery Engineering Wuxi Co Ltd (CME) and Hexa Renewables. Apart from Itramas and CME as anchor tenants and offtakers, the RE industrial park will attract foreign manufacturers and suppliers in the RE and electric vehicle (EV) value chains. Blueleaf Energy is a portfolio company of Macquarie Asset Management’s Green Investment Group. China state-owned CME is a subsidiary of China Machinery Engineering Co Ltd with presence in over 100 countries. Hexa Renewables, which develops solar and wind projects and is present in Singapore, Malaysia, Taiwan, South Korea, Japan, the Philippines and India, is wholly-owned by I Squared Capital, a USD37b global infrastructure fund, and will rope in the US Development Finance Corporation.

Tanjung Bin Energy’s sukuk AA3 rating affirmed

RAM Ratings affirmed the rating of the company’s RM4.5b Islamic medium term notes programme (2021/2041). The company owns and operates a 1,000MW coal-fired power plant under a 25-year power purchase agreement with Tenaga Nasional Berhad, expiring in Mar 2041. Its debt servicing ability is steady in spite of operational issues at the power plant. The rating is propped up by standby letters of credit procured by sole shareholder, Malakoff Corporation Berhad, to meet the minimum required balances in the finance service reserve account and maintenance reserve account. Outages due to damaged turbine blades caused RM151m available capacity payment losses in FYDec2022, up from RM84.2m in FYDec2021. The turbine blades were fixed in late 2022. The rating accounts for the power plant’s uneven operating history. Tanjung Bin is projected to register minimum finance service coverage ratios (with cash balances, post distribution) of 1.50 times and average of 1.65 times. Malakoff closed at 63 sen.

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MBSB shareholders approve acquisition of MIDF

Malaysia Building Society Berhad (MBSB) received the approval to buy Malaysian Industrial Development Finance Berhad (MIDF) from Permodalan Nasional Bhd (PNB) for RM1.01b to be paid for with 1.05b MBSB shares at 96.52 sen. After the acquisition is completed in Aug, MIDF will become a wholly-owned subsidiary of MBSB and PNB will be a substantial shareholder of MBSB with 12.78%. The Employees Provident Fund’s (EPF) interest will fall from 65.87% to 57.45%. The enlarged group will offer end-to-end banking services comprising consumer banking, stockbroking and asset management, commercial banking for small and medium enterprises (SME), corporate and investment banking, and development finance via a network of 53 branches nationwide. After the acquisition, the integration will take 12-24 months. MBSB closed at 78 sen.

Glostrext targets RM20.1m from ACE Market listing

The geotechnical instrumentation and testing specialist will use RM11.7m (58.2%) of the initial public offering (IPO) proceeds to expand its structural and ground instrumentation and monitoring business into Singapore, and for working capital. Glostrext provides pile instrumentation and static load test services to Malaysian and Singaporean customers, whereas its structural and ground instrumentation and monitoring services are mainly for Malaysian customers. The company will issue 105.8m shares or 26.0% of the enlarged shares at 19 sen. Existing shareholders are offering for sale 16.3m existing shares to selected investors by way of private placement. Applications for subscription are open until 2 Aug 2023. M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent.

China wants to ease mortgage rules to bump up the property market

According to Stanford University, the property sector contributed 22.5% of China’s GDP in 2021. The languishing industry is dragging down the economy and holding back recovery. As a measure to boost the property market, China wants to remove rules that disqualify people who have previously taken out mortgages from benefiting from lower rates enjoyed by first-time buyers. Other initiatives could include relaxing downpayment rules for homebuyers with a mortgage record, reducing mortgage rates for first-home purchasers, and tax and fee relief for housing upgrades and replacement. China has reduced benchmark rates resulting in average mortgage costs falling to a record low. Nonetheless, banks will not reprice existing loans until early 2024.