Capital markets executive summary | Fri 29 Sep 2023

Capital markets executive summary | Fri 29 Sep 2023

Sunway and PDC to develop Batu Kawan Industrial Park 2

70%-owned Umech Land Sdn Bhd signed a joint development agreement with Penang Development Corp (PDC) to develop 559 acres in exchange for RM646.02m land entitlement payable via a RM64.6m deposit and the remaining RM581.42m in 4 instalments. Umech Land will pay with internally generated funds and banking facilities. The land is 4km from the Penang Second Bridge, a 20-minute drive from Penang Island or 30 minutes from the Penang Port. It will complement Batu Kawan Industrial Park 1 and Valdor Industrial Park. The gross development value (GDV) is at least RM3.5b comprising factories, industrial lots and commercial components. Sunway has 3,312 acres total landbank with RM53.9b GDV over 15 years. The counter closed at RM1.99.

IJM Land’s A2 sukuk rating affirmed

RAM Ratings affirmed the rating of the RM2b perpetual sukuk programme, which has a subordinated guarantee from parent, IJM Corporation Berhad, rated AA3. The rating is 2 notches down because of the risk of deferrable profit distributions and the sukukholders’ deeply subordinated rights to claims in the event of insolvency. Strong property sales, progress on ongoing projects and industrial land sales boosted revenue from RM1.2b in FYE Mar 2022 to RM1.5b in FYE Mar 2023. Operating profit before depreciation, interest and tax margin improved from 10.9% to 26.8% with higher margins, gain on land sales and finalised costs for completed projects. Unbilled sales grew from RM2.3b to RM3b given the healthy take-up rates. Funds from operations debt coverage (FFODC) surged from 0.04 times to 0.1 times. Although the debt level was steady at RM2.6b, gearing increased from 0.5 times to 0.53 times due to the acquisition of remaining shares in a subsidiary. When unsecured advances from IJM Corporation with no fixed repayment are excluded, FFODC improves to 0.21 times and gearing to 0.26 times. IJM closed at RM1.83.
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Bank Muamalat’s sukuk programme assigned final ratings

MARC Ratings assigned the final ratings to the bank’s RM5b sukuk wakalah programme. The rating of the senior sukuk wakalah is A+, Tier-2 subordinated sukuk wakalah is A- and additional Tier-1 sukuk wakalah is BBB. Financing makes up 77% of total assets at end-2022. Gross impaired financing rose slightly from 0.83% at end-2021 to 0.85% at end-2022 with recoveries. The financing book grew 16.3% to RM24.3b. 60% of the bank’s total financing comprises retail financing with direct salary transfers. Financing loss coverage was 125.5%. Pre-tax profit jumped from RM254.9m in 2021 to RM306.7m in 2022 due to a larger financing base and lower impairment charges. Net financing income gained 21.8% to RM664.5m in 2022 as the result of rate hikes. Return on assets strengthened from 0.6% in 2021 to 0.75% in 2022 while return on equity increased from 5.89% to 7.9%. Common equity tier 1 ratio was 12.5% and total capital ratio was 17.6% at end-2022, in line with peers. 70.1% of Bank Muamalat’s total deposits is wholesale. The 10 largest depositors contribute 35.9% of deposits although they are government-related entities. Liquidity coverage ratio was 127.9% and net stable funding ratio was 109.3%. The bank is 70% owned by DRB-Hicom, which closed at RM1.43, while Khazanah owns 30%.

reNIKOLA Solar II’s green sukuk assigned final AA2 rating

RAM Ratings assigned the final rating to the RM390m ASEAN green SRI sukuk programme (2023/2041). The preliminary rating was assigned on 31 Jul 2023. The sukuk’s use of proceeds is in line with parent reNIKOLA Holdings Sdn Bhd’s green financing framework. The sukuk was certified by the Climate Bonds Initiative on 28 Jul 2023. B.Grimm Power Public Company Limited owns 55% of reNIKOLA Holdings while reNIKOLA Sdn Bhd owns 45%. reNIKOLA Solar II was established to raise funds to refinance the development costs of 2 30MWac solar photovoltaic plants in Kuala Muda, Kedah and Machang, Kelantan, which are already operational. The sukuk proceeds will also be used to reimburse the cost of 3 parcels of land held by Kuala Muda Estate Sdn Bhd, Machang Estate Sdn Bhd and Machang Estate (II) Sdn Bhd. The Kuala Muda plant is on Kuala Muda Estate’s land whereas the Machang plant is on Machang Estate’s land. Machang Estate II’s land is vacant.

Thailand’s Line Man Wongnai plans for IPO

The on-demand delivery app is working with Kasikorn Securities and Kiatnakin Phatra Securities on an initial public offering (IPO) in Bangkok to raise USD300m. The company is interviewing international banks to help arrange the IPO, which could happen as soon as next year. Wongnai was founded in 2010 as an online restaurant review database, and in 2020, it merged with Line Man, Line Corp’s delivery service in Thailand. The company’s food delivery services competitors are Grab and SCB X’s Robinhood app, although it also offers business solutions for retail outlets. In 2022, it raised USD265m in a series B funding round led by GIC and Line, raising its valuation to above USD1b. Other investors include BRV Capital, PTT Oil & Retail Business, Bualuang Ventures and Taiwan Mobile. This year, it acquired FoodStory, a startup that provides point-of-sale systems for restaurants in Thailand. IPOs in Thailand plunged from USD2.3b this time in 2022 to USD744m.