Capital markets executive summary | Mon 4 Sep 2023

Capital markets executive summary | Mon 4 Sep 2023

Hibiscus and DNeX buy interest in UK oil field

Hibiscus Petroleum Bhd and Ping Petroleum UK PLC, a subsidiary of Dagang NeXchange, entered into separate identical farm-in agreements with Rapid Oil Production Ltd for 42.5% equity interest each in Licence P2451. Rapid Oil will keep the balance 15%. The licence holds an undeveloped oil field, Fyne Field, located in the Central North Sea, with an estimated 75m barrels of oil equivalent (MMboe) of stock tank oil. The field has a 90m water depth and is 16km from Anasuria floating production storage and offloading (FPSO) vessel owned 50:50 by Hibiscus and Ping. Upon completion of the acquisition, Anasuria Hibiscus will be appointed the operator. After first oil in 2026, Anasuria Operating Company Ltd, 50:50 owned by Anasuria Hibiscus and Ping Petroleum, will take over as operator. Hibiscus and Ping have 50% interest in Teal, Teal South, Guillemot A fields in the Anasuria cluster through Anasuria Operating Company and a 19.3% interest in the Cook field. The fields are served by Anasuria FPSO. Hibiscus closed at RM1.02 and DNeX closed at 46 sen.

KLK and Batu Kawan’s ratings placed on negative rating watch

RAM Ratings placed the ratings of the companies’ sukuk programmes on negative outlook. Their credit profiles are closely linked since KLK contributes 90% of Batu Kawan’s profits. The action covers Kuala Lumpur Kepong’s RM1.6b multi-currency sukuk programme (2015/2027), RM2b sukuk programme (2019/2039) and RM2b sukuk programme (2022/2052) all rated AA1, plus Batu Kawan’s RM1b sukuk programme (2022/2043) also rated AA1. This follows KLK’s announcement of the strategic collaboration agreement with Boustead Holdings Berhad (BHB) and Lembaga Tabung Angkatan Tentera (LTAT), which entails the acquisition of 33% plus 1 share in Boustead Plantations and mandatory general offer for the remaining shares. RM2.03b of the RM2.25b acquisition cost will be funded by borrowings, raising KLK’s gearing ratio from 0.6 times at end-FY Sep 2022 to 0.7 times at end-FY Sep 2024. Funds from operations debt coverage will fall from 0.38 times to 0.2 times. KLK closed at RM21.44, Batu Kawan at RM20.28 and Boustead Plantations at RM1.50.
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UiTM Solar’s A+ rating affirmed and outlook revised to positive

MARC Ratings affirmed the rating on the company’s RM182.3m Green Sustainable and Responsible Investment Sukuk. The outlook revision reflects the improved performance of the 50MWac solar photovoltaic plant in Gambang, Kuantan as it resumed full operations on 10 Aug 2022 after a long downtime caused by a damaged gas-insulated switchgear and transformer. The plant’s availability was 99.2% in 1H2023. Revenue rose to RM14.7m in 1H2023 and liquidity was RM28.1m at end-Jun 2023. The company received RM20m from its insurance policies against equipment costs of RM7.5m and revenue losses of RM17.8m. Non-delivery payments of RM10.4m payable to Tenaga Nasional Berhad for below minimum threshold energy generation in 2022 should be made on a staggered basis. For 2023-2025, the minimum finance service coverage ratios with cash will be 2.11 times and average will be 2.26 times. The projected cash flows can withstand moderate stress including 2.4% plant unavailability, 20% higher operating expenses and P99 energy generation.

Trusmadi Capital’s MTN and CP ratings affirmed

MARC Ratings affirmed the AAA rating on Trusmadi Capital Sdn Bhd’s Issue 1 RM235m Class A, AA rating on RM40m Class B and A rating on RM25m Class C medium term notes (MTN). The rating agency also affirmed the MARC-1 rating on the company’s Issue 1 RM300m commercial papers (CP). The MTN and CP have a RM300m combined limit. The ratings reflect their loan-to-value (LTV) ratios in line with the benchmarks at the respective levels. The value of Menara Shell, the collateral, via the income capitalisation approach is RM587m, which is 12.4% lower than the RM670m market value estimated by an independent valuer at 31 Dec 2022. Menara Shell’s occupancy rate was 99% at end-Mar 2023 with anchor tenant, Shell Malaysia Trading Sdn Bhd, wholly-owned by Shell plc, taking up 54.7% of net lettable area (NLA) until end-2028. Lease rollover risk is minimal with 76.4% of NLA to roll through at least 2025. Average rent rose with contract renewals at higher rates. Net operating income (NOI) improved to RM47.1m in 2022 and is projected to be RM44.6m in 2023. NOI should average RM44m per year in 2023-2025. The stabilised NOI has been updated from RM41.2m previously to RM44m. Sentral REIT Management Sdn Bhd is the asset manager. Sentral REIT closed at 82 sen.

Philippine water firm seeks IPO

Quezon City-based Maynilad Water Services Inc operates 7,491km of pipelines in providing water and wastewater services for 17 western cities in greater Manila. The company was founded in 1997 and in 2007, DMCI-MPIC Water Co, a joint venture between Metro Pacific Investments Corp and DMCI Holdings Inc gained control of the company. In 2013, Japan’s Marubeni Corp bought 20% in DMCI-MPIC. Maynilad is evaluating proposals from financial advisers for an initial public offering (IPO) in Manila in 2025 to raise USD750m-USD1b valuing it at up to USD4b. This could be the biggest IPO in the Philippines since 2021 when Monde Nissin Corp raised over USD1b in its listing. Manila hosted 3 deals and raised only USD72m so far this year, down from USD352m in the same period in 2022.