Capital markets executive summary | Mon 25 Sep 2023

Capital markets executive summary | Mon 25 Sep 2023

Chin Hin triggers MGO of Ajiya

The building material specialist will be making a mandatory general offer (MGO) for the remaining shares in Ajiya Bhd, a safety glass and metal products manufacturer, at RM1.53 after signing share sale agreements with How Lian Yeong and Ong Hang Ping for 6.22m Ajiya shares or 2.11% for RM9.51m or RM1.53 per share. Its aggregate shareholding climbs from 32% to 34.1%. Chin Hin intends to maintain Ajiya’s listing on the Main Market. From the earlier acquisition of Ajiya, Chin Hin expanded its building material products from drymix, ready mix concrete, mesh and steel bars to include Ajiya’s products. It also tapped into Ajiya’s orderbook, client base and supply chain. The company can now provide solutions from upstream activities, including building materials manufacturing, construction and engineering, to downstream businesses such as property development and home and living solutions. Chin Hin closed at RM4.07 while Ajiya closed at RM1.54.

Segi Astana’s bonds rating upgraded from A+ to AA-

MARC Ratings upgraded the rating of the RM415m ASEAN green medium term notes (MTN) following Segi Astana’s standalone rating upgrade from A to A+. The AA- MTN rating is uplifted 1 notch given the liquidity support undertaking from WCT Holdings Berhad (rated AA-), which holds 70% of the company, to ensure sufficient funds or refinancing for the final MTN redemption. Segi Astana is the concessionaire for the 380k sq ft net lettable area gateway@klia2. Occupancy rate increased from 60% at end-May 2022 to 78% at end-Jun 2023, and will hit 93% soon with new tenants finalised. Average monthly rental payments grew from RM4.1m in 1H2022 to RM6.4m in 1H2023, while car park fees surged from RM1.7m to RM4m. Operating cash flow doubled year-on-year to RM40m in 1H2023. The rating is moderated by RM135m MTN maturing in Jan 2028 at the end of the programme tenor that must be refinanced or directly paid by WCT. The concession extension from Aug 2037 to Aug 2047 gives room for a refinancing exercise. WCT closed at 58 sen.
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Air Selangor-backed MTN ratings affirmed

RAM Ratings affirmed the AAA ratings of Swirl Assets Berhad’s RM595m, Starbright Capital Berhad’s RM665m and Glacier Assets Berhad’s RM555m asset-backed medium term notes (MTN) facilities. The 3 sole-purpose funding vehicles receive fixed annual instalments from Air Selangor following the share purchase agreement between Syarikat Pengeluar Air Selangor Holdings Bhd (SPLASH) and Pengurusan Air Selangor Sdn Bhd (Air Selangor). The ratings reflect the credit profile of Air Selangor, which is the largest water operator in Malaysia and sole licence holder for water treatment and distribution services in Selangor, Kuala Lumpur and Putrajaya. Air Selangor’s credit strength mirrors Selangor state, which has the highest state implicit strength as assessed by RAM.

MBSB’s A2 and P1 ratings affirmed

RAM Ratings affirmed Malaysia Building Society Berhad’s corporate credit ratings and the financial institution ratings of MBSB Bank Berhad and its sukuk ratings. MBSB’s funding profile has less than 10% current and savings account deposits, small compared to the banking system. The ratings are uplifted from the stand-alone profile as the largest shareholder, the Employees Provident Fund, is believed to provide extraordinary support whenever MBSB requires. RAM has not factored in post MIDF acquisition synergies given minimal business overlaps, although execution risks remain. Gross impaired financing (GIF) weakened from 4.6% at end-Dec 2021 to 6.6% at end-Jun 2023 with large corporate impairments, mainly from the construction sector. The bank’s high proportion of fixed-rate profit earning assets and high-cost shorter-tenor fixed deposits caused net financing margin to fall from the 3.1% 3-year average before FY2022 to an annualised 2% in 1HFY2023 due to the rate hikes. At end-Jun 2023, MBSB’s common equity tier-1 capital ratio was 18.9% and MBSB Bank’s was 16.7%. At the same time, RAM Ratings downgraded the long-term ratings of Malaysian Industrial Development Finance Berhad and MIDF Amanah Investment Bank Berhad from A1 to A2 to align with MBSB. MBSB closed at 73 sen.

Alibaba’s logistics unit to raise USD1b in Hong Kong IPO

Cainiao Network Technology Co will file for its initial public offering (IPO) as early as this week. Alibaba Group Holding Ltd announced in Mar that it would split up its businesses and Cainiao could be the 1st to spin off. Cainiao operates over 300 international routes in partnership with more than 3,000 logistics partners. It was reported earlier this year that the company has been working with Citic Securities, Citigroup and JPMorgan on the listing. China International Capital Corp dropped out because its role as joint sponsor of J&T Global Express Ltd, another logistics firm seeking a Hong Kong listing approval this week, raises a conflict of interests. Separately, Alibaba capital management committee has put aside the Hong Kong IPO of its Freshippo grocery chain until investors warm up to consumer stocks in China.