Capital markets executive summary | Tue 22 Aug 2023

Capital markets executive summary | Tue 22 Aug 2023

Sime Darby Property issues RM600m sukuk

Sime Darby Property Bhd made the 2nd issuance from its RM4.5b sukuk musharakah programme. It comprised 3-year RM200m Asean Sustainability SRI sukuk, 5-year RM300m sukuk and 7-year RM100m sukuk. Malaysian Rating Corporation Bhd affirmed the sukuk musharakah programme’s rating of AA+. The proceeds from the issuance are to finance the company’s future investments, capital expenditure, working capital requirements, for general corporate purposes, and if necessary, to refinance debts, all of which must be shariah-compliant. The utilisation of the proceeds from the Asean Sustainability SRI sukuk will meet the criteria as set out in the sustainability sukuk framework. Maybank Investment Bank, which is the sole principal adviser and lead arranger for the sukuk musharakah programme, are joined by CIMB Investment Bank and Public Investment Bank as joint lead managers for the sukuk issuance. Sime Darby Property closed at 66 sen.

Triplc Medical’s sukuk AA1 rating affirmed

RAM Ratings affirmed the rating of the company’s RM639m senior sukuk murabahah (2017/2035). The company receives monthly availability charges and asset management service charges in return for constructing a teaching hospital and academic complex in Universiti Teknologi MARA’s (UiTM) Puncak Alam campus. After excluding cash reserves for construction-related costs, the finance service coverage ratios (FSCR) with cash balances post-distribution were 1.75 times in Oct 2022 and 1.89 times in Apr 2023. Triplc Medical is allowed to make distributions to shareholders if the post-distribution FSCR is at least 1.65 times. However, past distributions have been large which have reduced the liquidity buffers to a level where any concession payment delays will cause the FSCR to fall below the threshold. UiTM has not fully utilised the teaching hospital which causes the company to receive lower asset management service charges. Any deductions for non-performance are fully passed through to TRIplc FMS Sdn Bhd, the operation and maintenance company. Triplc Medical’s key performance indicator score averaged 90.2% in FYE Dec 2022, with maintenance deductions of 2.5%. Moderating factors include lack experience in hospital maintenance, which is mitigated by contracting experienced 3rd parties and employing skilled staff, and exposure to single-project and regulatory risks.
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YTL Power confirms participation in Rawang waste-to-energy project

The company is partnering KDEB Waste Management Sdn Bhd for the RM4.5b waste-to-energy (WTE) plant. The Sultan Idris Shah Green Energy Plant will be built on a 245-acre site in Rawang. It will process 2,400 tonnes of municipal waste per day from Petaling Jaya, Hulu Selangor, Shah Alam, Subang Jaya, Ampang Jaya and Selayang and generate 58 megawatts (MW) of electricity. Waste materials, such as fly ash and bottom ash, will be use in the production of cement. Aurecon Lestari Sdn Bhd, an engineering design and advisory firm, has been hired to conduct the environmental impact assessment and social impact assessment. YTL Power is 55.57%-owned by YTL Corp Bhd, controlled in turn by the Yeoh family. Shares of YTL Power closed at a record high of RM1.80, up 150% year to-date.

MyEG 2Q net profit jumps 25.85%

The company’s net profit increased from RM88.64m in 2Q2022 to RM111.56m in 2Q2023 bolstered by higher revenues from existing services and from the sale of tokens for its newly launched Zetrix blockchain platform. Earnings per share climbed from 1.2 sen to 1.5 sen. Revenue rose by 14.27% from RM161.79m to RM184.88m. MyEG announced its 1st interim single tier dividend of 0.25 sen per share with a 17 Oct ex-date and payout on 17 Nov. For 6M2023, net profit gained 25.53% from RM173.26m to RM217.49m. Revenue expanded 10.67% from RM323.56m to RM358.09m. The company will continue introducing innovative services by leveraging blockchain or Web 3.0 in Malaysia and globally to drive its growth for this year. The counter closed at 79 sen.

True test for Xi-conomics

China’s past presidents used debt to grow the economy. President Xi Jinping has refused to go on the same path. The result is growth of the USD18t (RM93t) economy is decelerating even after reopening, consumers are losing confidence, exports are sputtering, prices are crashing, major companies are teetering on default, more than a 5th of young people are unemployed and foreign investors are withdrawing. In contrast to US President Biden’s approach of pumping trillions of dollars into household stimulus and infrastructure, Xi is moving away from an economy fuelled by speculative property and other low-return projects funded by blurry local borrowing. China may be undergoing a self-fulfilling recession as the people become more confident that the economy will slow down. A real China slump could force investors to flee from riskier assets around the world and set the US Federal Reserve on a rate cut cycle. But President Xi is not letting things go. Faster infrastructure spending, liquidity support for developers, lower housing purchase restrictions, and the interest rate cut last week will help manage the change towards areas such as electric vehicles, solar and wind power, batteries and other high-tech industries.