Capital markets executive summary | Wed 27 Sep 2023

Capital markets executive summary | Wed 27 Sep 2023

AEON Credit 2Q net profit jumped 59%

Net profit increased from RM75.65m in 2Q ended 31 Aug 2022 (2QFY2023) to RM120.19m in 2Q ended 31 Aug 2023 (2QFY2024) with higher transaction and financing volume. Revenue climbed 18.2% from RM399.17m to RM471.73m due to higher loan and financing growth. With earnings per share up from 27.66 sen to 45.10 sen, the company declared an interim dividend of 28.50 sen to be paid on 2 Nov. For 1HFY2024, net profit shrank 8.03% from RM238.72m to RM219.55m caused by higher impairment losses on financing receivables. Revenue rose by 17.05% from RM789.74m to RM924.40m due to higher transaction and financing volume. The company has a cautious outlook for 2HFY2024 with the economic headwinds, monetary policy tightening to deal with inflation, and the volatile global banking industry and financial markets. The counter closed at RM11.44.

Evergreen Max Cash Capital debuts at 33.33% premium over IPO price

The pawnbroking service provider opened at 32 sen on its debut on the ACE Market, 8 sen above its initial public offering (IPO) price of 24 sen, with an opening volume of 37.7m shares. The company is confident that the pawnbroking industry will keep growing because pawnbroking is the preferred short-term financing solution for the unbanked and underbanked population. From the RM64.2m proceeds, RM20m or 31.1% will be used for the expansion of pawnshops, RM30m (46.7%) for cash capital for its pawnbroking business, RM4m (6.2%) for the repayment of bank borrowings, RM5.6m (8.8%) for working capital and RM4.6m for listing expenses. Mercury Securities is the principal adviser, sponsor, underwriter and placement agent. The counter closed at 31.5 sen with 285.15m shares changing hands.
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VS Industry 4Q net profit surges 86%

Net profit for the electronic manufacturing services (EMS) provider jumped from RM35.59m in 4Q ended 31 Jul 2022 to RM66.08m in 4Q ended 31 Jul 2023. The previous quarter’s net profit was a low base because of the one-off impairment on investment in an associate of RM26.8m and higher impairment loss on plant and equipment of RM12.4m versus RM4.7m in 4Q2023. Revenue increased 15.7% from RM1b to RM1.16b with higher sales orders from existing customers. Full year net profit climbed 7.7% from RM170.76m in FY2022 to RM183.92m in FY2023. Revenue gained 17.6% from RM3.91b to RM4.6b. 4Q earnings per share (EPS) rose from 0.93 sen to 1.72 sen while the annual EPS was up from 4.47 sen to 4.79 sen. The company declared a 0.5 sen 4th interim dividend to be paid on 27 Oct and a final dividend of 0.5 sen. Total dividends for FY2023 are higher at 2.2 sen compared to 2 sen for FY2022. The operating environment in Malaysia will be challenging with heightened cost structure following the increase in labour, utility and financing rates. The counter closed at RM1.02.

GlobalFoundries opens new hub facility in Penang

The semiconductor manufacturer, with presence in 15 global locations and 13k employees, operates fabrication plants in the US, Germany and Singapore, and serves more than 250 customers worldwide. Its new hub in Penang and the existing one in Bangalore will ensure that all global manufacturing sites have round-the-clock support, enabling the company to maintain supply chain resiliency and sustainability for global operations. The Penang hub is part of GlobalFoundries’ strategic hub network that provides engineering resources to supplement operations on a real-time basis through the application of the latest digital manufacturing technologies such as remote access, Industry 4.0 and the company’s factory control tower. The company will be investing USD8m for the control tower and in training engineers and technicians for the next 3 years. The hub has 300 engineers and technicians on 1 floor, and staff numbers may be doubled and occupy 6 floors if demand continues to grow. Penang was chosen for the factory control tower given the availability of semiconductor talent and the semiconductor ecosystem.

CVC considers selling controlling interest in Indian hospital chain

Bangalore-based HealthCare Global, which was established in 1989, owns 24 cancer centres in India and serves more than 200k patients annually. CVC Capital Partners gained control of the company in 2020 by buying new shares and convertible warrants. Afterwards, the private equity firm bought more shares via a mandatory open offer and now holds 60.4%. Shares of the Mumbai-listed company have gained 19% this year for a market capitalisation of USD572m. CVC is identifying buyers for its portion worth at least USD345m, although it may ask for a 20%-50% premium. Asia’s rising middle class and ageing population have bumped up demand for private medical services, stirring up deals in the healthcare sector, including cancer treatment. Elsewhere, Luye Medical Group wants to sell its Singapore oncology business while TE Asia Healthcare Partners is considering disposing of its Hong Kong oncology centres.