Capital markets executive summary | Wed 20 Sep 2023

Capital markets executive summary | Wed 20 Sep 2023

CelcomDigi still talking to government on 5G

On 10 Sep, the Communications and Digital Minister said that all telcos will sign a share subscription agreement (SSA) for interest in Digital Nasional Bhd (DNB). CelcomDigi Bhd prefers that the government announce the outcome of its on-going discussions relating to the company’s participation in Malaysia’s 5G network. The company is hopeful that negotiations will conclude by end-2023. DNB has a target of 80% 5G coverage of populated areas by year-end before a 2nd wholesale network is rolled out in Jan 2024. CelcomDigi is Malaysia’s largest mobile network operator with 20.3m subscribers after Celcom Axiata Bhd and Digi.Com Bhd merged in Dec 2022. CelcomDigi closed at RM4.46.

MRCB’s sukuk AA- rating affirmed

MARC Ratings affirmed the rating of Malaysian Resources Corporation Berhad’s RM5b Islamic medium term notes programme. MRCB’s RM5.4b order book at end-Jun 2023, provides earnings visibility until 2027 and could expand with more projects tendered including the Shah Alam Stadium redevelopment, MRT3 in the Klang Valley, Sabah’s Pan Borneo Highway and flood mitigation in Pahang. There are RM280m gross development value (GDV) ongoing property projects at end-Jun 2023 with overall take-up rate was 55%. The inventory level for unsold completed property increased from RM220.8m at end-2022 to RM582.5m at end-Jun 2023. The company slowed down launches because of the gloomy property market outlook. MRCB has RM43.7m unbilled sales at end-Jun 2023 and plans to launch a new RM372m GVD project soon. The company receives RM15.8m per annum rental earnings from 27.9%-owned Sentral REIT. In Apr 2023, MRCB launched a AUD391m GDV residential project in Gold Coast, Australia to be completed by end-2026. It is planning a NZD452m transit-oriented development in Auckland, New Zealand in 2026. Revenue fell 11.2% to RM1.3b in 1H2023 with the completion of the MRT2 and DASH packages in 2022. Pre-tax profit shrank 40.1% to RM35.8m due to finance and operating costs. Total borrowings rose to RM2.3b at end-Jun 2023 for gross debt-to-equity ratio of 0.50 times and net debt-to-equity ratio of 0.34 times. The counter closed at 46 sen.
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Bursa takes action against Dataprep and 5 directors

On 17 Feb 2021, the company’s board of directors approved in principle the proposed acquisitions of certain companies to undertake contracts to provide Covid-19 screening solutions to the Ministry of Health. On 1 Mar 2021, Bursa made an unusual market activity (UMA) query on Dataprep’s Covid-19 screening contracts. In response, the company denied any corporate development which might account for the UMA. On 12 Mar 2021, the company announced a memorandum of collaboration for the Covid-19 screening contracts followed by the proposed acquisitions on 15 Mar 2021. Bursa deems the UMA response as not factual, inaccurate and did not contain sufficient information for investors to make informed decisions. The action breached the requirement to disclose material information timely and accurately. The exchange reprimanded Dataprep Holdings Bhd while 5 directors were also fined RM100k each. The counter has lost 30.43% since early 2023 to close at 16 sen.

Avanade sets up Malaysian generative AI lab

The company, one of Microsoft Corporation’s solutions providers, announced its 1st generative artificial intelligence (AI) lab for Southeast Asia in Kuala Lumpur. It will foster innovation, enable industry transformation and grow local talent in the region. The lab also acts as a centre of excellence and will help organisations accelerate their AI readiness by experimenting and co-creating generative AI solutions and extracting value from their data. Avanade’s Trendlines research shows that 85% of global organisations expect AI to raise revenue growth by 2025. 9 out of 10 respondents said they would share 1st-party data with other companies for innovation and growth. The immersive workshops and demonstrations at the Kuala Lumpur lab will give clients tangible experiences on generative AI-driven solutions. It is a sandbox to reimagine products and services and the future of work for employees.

Chevron expects oil to reach USD100

Tightening supply and falling inventories are happening gradually in a trend suggesting that prices will hit USD100 per barrel soon. Global growth which remains strong indicates that the underlying economy can withstand the price spike. Brent futures climbed 12% in the last 3 weeks to around USD95 as strong demand meets supply cuts by Saudi Arabia and Russia. The slow Chinese recovery is now gathering pace and is one of the reasons for crude oil prices tightening. The International Energy Agency (IEA) forecasts that oil demand will hit a record 102.2m barrels a day in 2023, 2% more from last year but growth will slow to an additional 1m barrels per day next year as the post-pandemic recovery runs its course and energy transition gains momentum.