Capital markets executive summary | Thu 3 Aug 2023

Capital markets executive summary | Thu 3 Aug 2023

Hibiscus Petroleum gets consent for Teal West field development

Its subsidiary Anasuria Hibiscus UK Limited received development and production works consent for a field development plan (FDP) for the Teal West field from the North Sea Transition Authority (NSTA). It paves the way for the internal final investment decision, following which, the company should hit first oil by late 2024 or early 2025. This approval comes after the 7 Jul 2023 unconditional grant of consent for the environmental statement. The NSTA regulates the oil, gas and carbon storage industries, and plays a crucial role in overseeing and facilitating the development of hydrocarbon resources in the North Sea. The consent is subject to compliance with the FDP and additional approval must be obtained for any incremental development. The counter closed at 94 sen.

SeaMoney Capital’s maiden BNPL securitisation assigned final AA2 rating

RAM Ratings assigned the final rating to the RM218m first tranche senior Class A medium term notes (Senior MTN) to be issued under Poseidon ABS Berhad’s RM3.5b asset-backed MTN programme. Poseidon is a trust-owned special purpose vehicle incorporated to facilitate the securitisation of receivables originated by SeaMoney Capital Malaysia Sdn Bhd. SeaMoney, which is owned by NYSE-listed Sea Limited, offers buy-now-pay-later (BNPL) financing via SPayLater on the Shopee e-commerce platform. RM100.9m Junior MTN will be issued along with the Senior MTN. The proceeds will be used to purchase RM300m eligible BNPL receivables from SeaMoney, defray upfront programme expenses and prefund liquidity reserves. The Junior MTN will be fully subscribed by a Sea Limited group company and are subordinated to the Senior MTN in payment priority and claims at all times. The rating for the Senior MTN is supported by the initial overcollateralisation (OC) rate of 37.61%, providing credit support commensurate with a AA2 rating.

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Genting’s AA1 and P1 ratings affirmed

RAM Ratings affirmed the ratings of Genting Berhad, Genting Malaysia Berhad and the issue ratings of their debt programmes. The group’s performance and financial profile should steadily improve in the next 3 years. Genting met the thresholds for its ratings in FY2022, a year earlier than expected. Despite the outperformance, RAM anticipates slightly slower growth in future with downside risks from the global economic slowdown, stiff competition and capacity constraints. Revenue of RM22.38b (FY2021: RM13.53b) and operating profit before depreciation, interest and tax of RM7.11b in FY2022 (FY2021: RM3.15b) were above expectations, driven by strong performances from Resorts World Sentosa, Resorts World New York City and Resorts World Las Vegas. Genting had net debt of RM19.66b at end-Dec 2022. Net gearing remained at 0.37 times while funds from operations (FFO) net debt coverage improved from 0.14 times in 2021 to 0.35 times. Up to 2025, net gearing should fall to 0.35 times and FFO net debt cover should rise to 0.45 times. Genting Berhad closed at RM4.19 while Genting Malaysia closed at RM2.53.

Alam Flora’s sukuk MARC-1 and AA ratings affirmed

MARC Ratings affirmed the ratings on Alam Flora Sdn Bhd’s RM700m Islamic commercial papers and Islamic medium term notes programmes. The ratings reflect the company’s long-term concession agreement for waste collection and public cleansing with the federal government, the group’s expertise and lengthy operational track record, predictable cash flow generation, and robust liquidity position. Moderating factors include execution risk on its non-concession business, among others, the construction of a material recovery facility in Selangor, port reception facilities in Johor and Penang, and the development of an integrated eco-recovery complex and 2 scheduled waste management facilities. Alam Flora’s moderate equity base relative to the size of the sukuk programme is also a negative factor. Revenue climbed 5.1% year-on-year to RM869.4m in 2022 due to the addition of new developmental areas and ad-hoc services under its concession business. Pre-tax profit shrank slightly to RM140.7m because of higher non-concession fleet costs to operate the transfer station and leachate treatment plant. Revenue should grow 6%-9% in 2024-2026 with the completion of the non-concession projects. The non-concession business is expected to contribute RM259.1m or 24% of revenue in 2026 (2022: RM113.9m or 13%). After the sukuk are issued in 2H2023-2025, cashflow from operations interest coverage will be 8-9 times and cashflow from operations debt coverage will be 0.3-0.4 times in the next 5 years. Its parent, Malakoff, closed at 62 sen.

Chipmaker Arm plans USD60b Sep IPO

The SoftBank Group subsidiary is aiming for an initial public offering (IPO) at a valuation of USD60b-USD70b. The roadshow is scheduled to begin in the 1st week of Sep and the IPO pricing will be set the week after. A shift in the market in favour of generative AI technologies and chips underlie the latest target for the company’s valuation. The company will raise USD10b in the IPO, which could be 2023’s biggest. Arm made a confidential filing for a US listing in Apr. Nvidia and Intel were approached in preliminary talks to become anchor investors. Goldman Sachs, JPMorgan, Barclays and Mizuho were named as IPO banks in the filing.