Capital markets executive summary | Thu 24 Aug 2023

Capital markets executive summary | Thu 24 Aug 2023

KLK is taking over Boustead Plantations

Kuala Lumpur Kepong Bhd (KLK) will buy 33% of Boustead Plantations from Lembaga Tabung Angkatan Tentera (LTAT), which will retain a 35% stake. Boustead Holdings, wholly-owned by LTAT, owns 57.42% of Boustead Plantations while LTAT directly has 10.59%. Upon completion, KLK will make a mandatory general offer for the remaining shares of Boustead Plantations , whose share price rebounded from a low of 64 sen on 8 Jun to RM1.37 yesterday, higher than its RM1.30 net assets per share. The price values Boustead Plantations at a price-to-earnings ratio of 18.56 times and dividend yield is 5.95%. Boustead Plantations owns 16 oil palm plantations in Peninsular Malaysia and 26 in Sabah and Sarawak, and 3 palm oil mills in Peninsular Malaysia, 5 in Sabah and 2 in Sarawak. 74% of its total landbank of 97,400 ha or 72,300 ha (23,300 ha in Peninsular Malaysia, 38,700 ha in Sabah and 10,300 ha in Sarawak) is utilised for oil palm cultivation. Boustead Plantations suffered an 89% net profit contraction in 1Q2023 to RM5.22m from RM435.16m the previous year due to lower prices and adverse effect of fresh fruit bunches valuation. Revenue plunged 38% to RM199.74m from RM324.16m. KLK’s parent Batu Kawan bought Chemical Co of Malaysia from PNB in 2021 while KLK acquired 56.2% of IJM Plantations in the same year. Batu Kawan closed at RM21.02 while KLK closed at RM22.50.

Apex Healthcare’s 2Q net profit surges 14-fold

Despite revenue increasing slightly by 2.76% from RM209.25m to RM215.03m, the company’s net profit grew from RM23.49m to RM329.48m for 2Q ended 30 Jun 2023. Earnings per share rose from 3.3 sen to 46.13 sen. The higher revenue was due to improved sales of pharmaceuticals, consumer healthcare products and medical devices to private and public sector customers, and strong overseas demand for its Xepa product, especially in Singapore. The company declared an interim dividend of 2.5 sen per share payable on 19 Sep. For 6M2023, net profit was up 9-fold from RM39.26m to RM353.77m. Revenue climbed 8.39% from RM425.17m to RM460.83m. The business environment in 2H2023 will be more challenging given the slow economic growth in its key markets of Malaysia, Singapore, Vietnam and Myanmar. The counter closed at RM2.53.
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SC reprimands auditor due to goodwill

The Securities Commission’s Audit Oversight Board (AOB) publicly reprimanded Yean Wai Nye, a partner at TH Kuan & Co, who is the engagement partner responsible for the audit of a public interest entity (PIE). Yean failed to comply with relevant international standards on auditing, especially on the valuation of goodwill. Yean failed to challenge the key assumptions used for the financial projections and assess the appropriateness of the expert’s work as audit evidence in auditing the management’s impairment assessment of goodwill. The AOB said that the impairment assessment of goodwill is important within the context of economic uncertainties and evolving business environment. Therefore, it requires due care and sound judgement. The SC added that compliance with the auditing standards when auditing the financial statements of a PIE is a condition of registration for AOB registrants.

Shell looks to exit Singapore

The company’s only wholly-owned refining and petrochemicals centre in Asia, the Bukom refinery, can process 237k barrels per day of crude. It also has a 1m tonnes per year (tpy) ethylene cracker and a 155k tpy butadiene extraction unit, which are integrated with a monoethylene glycol plant on Jurong Island. Shell hired Goldman Sachs to sell the plants. The company will cut spending in the next 2 years to bump up profitability and at the same time move towards net zero emissions by 2050 by repurposing its energy and chemical parks globally to offer more low-carbon solutions to customers. Interested companies include China’s Sinopec, and traders Vitol and Trafigura. Although Shell continues to see Singapore as a regional trading and marketing hub, it decided against 2 projects to produce biofuels and base oils in Singapore in Mar.

Doosan Robotics plans Korea’s largest IPO

The company, which has Seoul-listed Doosan Co as its biggest shareholder, filed a prospectus yesterday and is looking to raise KRW421.2b (RM1.4b) by offering 16.2m shares at KRW21k-KRW26k each. Orders will be accepted 28 Aug-15 Sept. The final price will be announced on 19 Sept after which individuals can place bids. There was only 1 listing larger than USD100m in 2023 and the listing could stir up South Korea’s IPO market. Total IPO proceeds fell 88% to USD1.6b year-on-year. In 2022, LG Energy Solution completed its USD11b IPO. Growing investments from the government and major local companies turned robotics into one of the hottest sectors in South Korea. Hyundai bought a controlling stake in Boston Dynamics from SoftBank in 2020 while Samsung bought a stake in Kosdaq-listed startup Rainbow Robotics earlier in 2023.