Capital markets executive summary | Mon 11 Sep 2023

Capital markets executive summary | Mon 11 Sep 2023

Mercury Securities’ IPO oversubscribed 45.45 times

The initial public offering (IPO) entails the issuance of 157.1m new shares or 17.59% of the enlarged issued shares and an offer for sale of 71.51m existing shares or 8.01% at 25 sen. For non-bumiputra public, 7,957 applications for 1.51b shares were received, giving a 66.56 times oversubscription. The bumiputra public portion received 4,969 applications for 565.77m shares, or a 24.34 times oversubscription. The 22.33m shares for directors, employees and contributors were fully subscribed. So were the 45.47m shares for private placement to selected investors and 44.65m shares for private placement to bumiputra investors approved by the Ministry of Investment, Trade and Industry. The stockbroking and corporate finance advisory firm will list on the ACE Market on 19 Sep. Public Investment Bank is the principal adviser, sponsor, sole underwriter and sole placement agent.

Sunsuria’s sukuk A+ rating affirmed

MARC Ratings affirmed the rating of the company’s RM500m sukuk wakalah programme. The rating reflects its property development approach, healthy sales, low inventory, low-to-moderate leverage and satisfactory liquidity. Negative factors are the challenging property market outlook, rising cost, and execution risk of overseas projects and other business segments. At end-Mar 2023, total ongoing gross development value (GDV) was RM2.2b with take-up rate of 86.9%. The RM1b unbilled sales provide earnings visibility until 2025. Inventory levels fell from RM113.2m in 2022 to RM67.2m at end-Mar 2023. There are execution risks in its project with Concord College to build an international school, which will commence intake in Sep 2024, and its small projects in London and Melbourne. Revenue climbed 12% year-on-year to RM201.7m in 1H ended 31 Mar 2023, although operating profit declined 4.2% to RM28.5m because of higher construction cost. Group borrowings jumped from RM497.4m in FY2022 to RM612.4m in 1HFY2023 largely for working capital. Debt-to-equity (DE) ratio was 0.57 times and net DE ratio was 0.24 times. The company had RM242m cash excluding Housing Development Act balances and RM208m unutilised credit lines. The counter closed at 52 sen.
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Public Bank’s subordinated MTN assigned AA1 rating

RAM Ratings assigned the rating to the bank’s proposed RM20b subordinated medium term notes (MTN) programme 1 notch below its AAA long-term financial institution rating, while affirming the ratings of the bank’s existing debt facilities. The 3rd-largest Malaysian banking group by asset size is a market leader in residential mortgages, commercial property financing, automobile financing and retail unit trusts. The bank is one of 3 domestic systemically important banks with a 17.5% share of industry loans and 16.5% of deposits at end-Jun 2023. Gross impaired loan (GIL) ratio increased from 0.42% at end-Dec 2022 to 0.55% at end-Jun 2023 because of a fully secured property-related corporate loan in Hong Kong and domestic residential mortgage delinquencies, against the industry’s 1.76%. GIL coverage is 226%. Pre-tax profit gained 7.0% year-on-year to RM4.3b in 1H2023 due to lower credit costs, 5.4% loan growth and bigger foreign exchange income, Net interest margin shrunk from 2.22% in 1H2022 to 2.18% in 1H2023 as deposit rates were repriced upwards and deposit competition became stiffer. The counter closed at RM4.25.

SSF Home sets IPO price at 25 sen

The furniture, home decor and home living retailer is valued at 12.5 times its price-earnings ratio based on RM16m net profit for FY ended 30 Apr 2023. The listing on 12 Oct entails the issuance of 200m new shares or 25% of its enlarged issued shares and an offer for sale of 24m existing shares or 3%. RM14.2m or 28.5% of the IPO proceeds is for capital expenditure, RM21m or 41.9% for new retail outlets, and RM14.8m or 29.6% for repayment of borrowings, marketing, working capital and listing expenses. SSF has 41 outlets with total retail space of more than 1m sq ft and a warehouse in Shah Alam. The company will open 18 new outlets in the Klang Valley, Kedah, Penang, Perak, Negeri Sembilan, Melaka, Johor, Sabah and Sarawak within 3 years. 6 new outlets will be completed by end 2024. SSF’s net profit fell from RM16.8m in FY2022 to RM16m in FY2023, even though revenue climbed 8.39% from RM161m to RM174.5m.

Instacart seeks sub-USD10b valuation in IPO

The US grocery delivery startup will start pitching to investors as early as today a valuation of USD8.6b-USD9.2b, which is substantially less than the USD39b in 2021, amidst the lukewarm investing climate for tech IPOs. Before its shares begin trading on the Nasdaq next week, the valuation could change with investor feedback. The company was founded in 2012 and covid lockdowns sent its business soaring. Its business cooled afterwards, forcing it to cut its workforce of shoppers and change its strategy to store pickups from deliveries. Interest rate hikes have pummelled startup values. Another grocery shopping platform, Maplebear, filed for an IPO on 25 Aug.