Capital markets executive summary | Thu 14 Sep 2023

Capital markets executive summary | Thu 14 Sep 2023

UUE Holdings Bhd plans IPO

The underground utilities engineering solutions provider is considering a listing on the ACE Market to raise funds to buy machinery and equipment, and for working capital. The company will issue 124.9m new shares. 30.42m shares are for the Malaysian public. 40.59m shares are for directors, employees and contributors. 53.89m shares are for private placement to selected investors including 38.57m shares to bumiputra investors approved by the Ministry of Investment, Trade and Industry. UUE’s existing shareholders will offer for sale 37.46m existing shares via private placement to bumiputra investors approved by Miti. The total IPO shares will be 26.7% of its enlarged 608.29m issued shares. Profit after tax was RM7.37m in FY ended 28 Feb 2021, RM14.57m in FY2022 and RM14.12m in FY2023. Revenue was RM51.71m in FY2021, RM74.89m in FY2022 and RM88.66m in FY2023. The company provides, amongst others, horizontal directional drilling, open cut and micro trenching, and also manufactures and trades high-density polyethylene pipes. The primary business segment contributed 89.9% or RM79.72m of FY2023 revenue. Malaysia contributed 74.2% or RM65.77m of FY2023 revenue while Singapore contributed RM22.89m. Managing director Datuk Dr Ting Kok Hwa owns 69.4% which will be diluted to 50.9% post-IPO. M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent.

PLNG2’s AAA sukuk rating affirmed

MARC Ratings affirmed the rating of Pengerang LNG (Two) Sdn Bhd’s RM3b Islamic medium term notes programme. Under the Incentive-Based Regulation framework, set by the Energy Commission sets the regasification services company’s annual revenue at the beginning of 3-year periods to cover costs and provide reasonable returns. Tariffs are adjusted to cover shortfalls in capacity reservation. It has a long-term usage agreement with Petronas Energy & Gas Trading Sdn Bhd. PLNG2’s rating is 2-notch uplifted based on support from Petronas, which owns 65%. Cashflows from operations (CFO) were RM581m-RM628m in the last 4 years. 1H2023’s CFO of RM271.9m gives interest coverage of 5.90 times and debt coverage of 0.21 times. Cash surged from RM121.8m at end-2022 to RM334.5m at end-June 2023. Dialog which owns 25% closed at RM2.14.
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Tadau Energy’s AA3 sukuk rating affirmed

RAM Ratings affirmed the rating of the company’s RM250m SRI sukuk programme (2017/2033). Tadau has 2 solar photovoltaic plants, 2MWac and 48MWac, in Kudat, Sabah, supplying electricity to Sabah Electricity Sdn Bhd (SESB). In 2022, energy output exceeded the declared annual quantity (DAQ) provided to SESB by 0.2%. Energy output for 5M2023 was 5.7% lower than the DAQ due to seasonally lower solar irradiance, although the DAQ should be met for 2023. Availability was above 99% every month except for Feb and May 2023. For FY Jun 2023, the 10-month revenue inched up 1% year-on-year. Pre-tax profit rose from RM9.8m in FY Jun 2021 to RM13.5m in FY Jun 2022 because of lower finance cost and higher income from permitted investments. Pre-tax profit for 10MFY2023 was RM11.8m. Tadau’s dividend payout fell from RM29.4m in FY Jun 2022 to RM5.5m in FY Jun 2023. MARC’s sensitised cashflows show minimum annual finance service coverage ratio of 1.50 times and average 2.44 times.

AWC to acquire remaining 49% of Stream Group

In 2004, the engineering services group paid RM9.18m or 7.8 times price-earnings ratio for 51% of Stream, which provides automated waste collection and bed linen systems for residential and commercial properties and has been profitable since. It has expanded into Singapore and Abu Dhabi. AWC wants to buy the rest of Stream from Premium NXL Sdn Bhd, potentially at RM90m-RM104m. In 2022, Stream’s net profit was RM23.42m and revenue was RM81.9m. In 2018, AWC bought 60% of Trackwork & Supplies Sdn Bhd, which provides rail track maintenance services and supplies rolling stock, for RM43.5m in cash plus shares or price-to-earnings ratio of 9.06 times. AWC, with a net cash position of RM98.99m, performs facilities management and provides industrial engineering services, including building automation systems, heating, ventilation and air conditioning, rainwater harvesting, and sanitary plumbing. The counter closed at 46 sen.

DNeX plans private placement for O&G fields

Dagang Nexchange Bhd has proposed a private placement of 315.63m shares or 10% of its total issued shares of 3.15b to raise up to RM133.44m. The proceeds are for acquisitions and collaborations in upstream and downstream oil and gas, in particular the development of the Fyne Field in the UK’s North Sea, the Meranti Cluster offshore Terengganu and the A Cluster offshore Miri, Sarawak. 90% owned Ping Petroleum Ltd signed 2 production sharing contracts with Petronas for the Malaysian assets early this year. It owns 60% of the Meranti Cluster and 70% of the A Cluster. The oil and gas segment contributed 27% or RM399.9m of DNeX’ 2022 revenue of RM1.46b. The counter closed at 45 sen.