Capital markets executive summary | Tue 1 Aug 2023

Capital markets executive summary | Tue 1 Aug 2023

Great Eastern in talks to buy AmMetLife

The Oversea-Chinese Banking Corp subsidiary is conducting due diligence on AmMetLife Insurance Bhd and seeking regulatory approval. The transaction could value the company, which US-based MetLife Inc jointly owns with AMMB Holdings Bhd, at USD250m-USD300m. The parties could reach an agreement in the next few months. Great Eastern had been interested in buying the company in 2022, even when Zurich Insurance Group AG became the frontrunner. MetLife and AMMB form the insurance joint venture in 2014. The parties began exploring a disposal in 2020. AmMetLife offers life insurance and wealth protection services at AmBank’s and AmMetLife’s 200 branches. It made RM749m gross earned premiums in FY2023 up 21% from RM617m in FY2022. However, profit after tax fell 13% from RM76m to RM66m. Great Eastern was founded in 1908 and has more than SGD100b (RM339b) in assets and over 14.5 million policyholders. AMMB closed at RM3.86.

reNIKOLA Solar II’s sukuk assigned preliminary AA2 rating

RAM Ratings assigned the preliminary rating to the company’s RM390m ASEAN Green SRI sukuk programme (2023/2041) to refinance the development cost of 2 30MWac solar photovoltaic (PV) plants in Kuala Muda, Kedah and Machang, Kelantan and to reimburse the cost of 3 parcels of land. The Kuala Muda plant started operating on 22 Mar 2022 while the Machang plant started operating on 5 Apr 2023. The rating reflects the favourable power purchase agreements with Tenaga Nasional Berhad (TNB), which must purchase all the energy generated at a fixed energy rate. The minimum finance service coverage ratio (with cash balances, post-distribution) is 1.69 times and average is 1.96 times. The company has 5 solar plants with a total capacity of 123.9 MWac, with the 3 other plants in Arau, Gebeng and Pekan exceeding their energy forecasts. Reputable and financially stable PV module supplier, Hanwha Q Cells, and inverter suppliers, Huawei and Sungrow, minimise operational risks. Moderating factors include solar irradiance uncertainty and regulatory and force majeure risks.

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Petronas Dagangan’s sukuk programmes assigned MARC-1 and AAA final ratings

MARC Ratings assigned the final ratings to the company’s Islamic commercial papers (ICP) programme and Islamic medium term notes (IMTN) programme with a RM10b combined limit. The company’s well-established domestic track record and leadership position in the retail market for petroleum products are key rating drivers. Other factors include its healthy balance sheet with strong liquidity and conservative capital structure, and its strategic importance to Petronas. It has an extensive distribution network of more than 1,000 petrol stations with plans to add 10-15 petrol stations annually nationwide. Its aviation fuel business thrives on longstanding relationships with local carriers. Strong interlinkages with other Petronas companies, for example PETCO Trading Labuan Company Ltd, ensure reliability of supply. The company operated on thin below 5% operating profit margins in the last 5 years. In 2022, revenue jumped 62% to RM36.7b due to higher average selling prices and sales volume. Pre-tax profit climbed 53% to RM1.1b. Gross debt-to-equity ratio is 0.03 times, with a net cash position, as cash and cash equivalents amounted to RM2.9b at end-2022. The counter closed at RM22.96.

SC approves Supercomnet Main Market transfer

Supercomnet Technologies Bhd satisfied the Main Market transfer requirements, amongst others, a minimum cumulative net profit of RM20m in the past 3 years. The company posted total net profit of RM68.1m in FY 2019, 2020 and 2021, and RM32.9m in FY2022. The company manufactures and assembles medical devices, automotive fuel tanks, wires, and cables for electrical appliances, consumer electronics, and automotive markets. The medical segment contributes the bulk of gross profit, with clients comprising established US and European multinationals and emerging device manufacturers. The company plans to exploit its transfer to the Main Market by expanding its existing medical and automotive businesses, including via merger and acquisition. The counter closed at RM1.34.

Singapore tightens money laundering controls on family offices

Singapore’s central bank, the Monetary Authority of Singapore (MAS), is proposing measures to strengthen surveillance of single family offices (SFO), which deal with the investments, taxation, wealth transfer and other financial matters for the wealthy elites. It launched a public consultation on the new measures including requiring the offices to hire an MAS-regulated financial institution to conduct money laundering audits and to report on the total assets at the end of each calendar year. These will offer MAS better monitoring capabilities of the SFOs operating in Singapore and address any money laundering risks. Singapore’s incentives attracted the super rich to its shores, with the number of SFOs surging from 400 at end-2020 to 1,100 at end-2022. The investors looked for a safe haven from turmoil in the global banking system, geopolitical and economic uncertainty, or simply to escape tough anti-covid measures in China.