Capital markets executive summary | Wed 11 Oct 2023

Capital markets executive summary | Wed 11 Oct 2023

Affin Islamic Bank’s RM1b sukuk issuance oversubscribed

The wholly-owned subsidiary of Affin Bank Bhd received RM2.9b orders for the RM1b issuance. Demand from institutional investors and high net worth individuals oversubscribed 2.1 times for the RM500m AT1 sukuk wakalah and 3.7 times for the RM500m Tier 2 sukuk murabahah. The AT1 sukuk wakalah, which was issued yesterday, was priced at 5.1% per annum. The Tier 2 sukuk murabahah, priced at 4.66% per annum, will be issued on 13 Oct. The transactions complete the bank’s issuances of the AT1 sukuk wakalah and Tier 2 sukuk murabahah from its existing RM5b Islamic medium term notes programme. The proceeds will be used for working capital and business purposes. Affin Hwang Investment Bank was the lead manager. Affin Bank closed at RM2.10.

Eco World Capital’s AA- sukuk rating affirmed

MARC Ratings affirmed the rating on the RM1.2b sukuk wakalah programme guaranteed by Eco World Development Group Berhad. Positive factors are its market position in township development, sales track record and stronger balance sheet, while moderating factors are rising operating cost and the challenging property market conditions. The total gross development value (GDV) of the company’s ongoing projects is RM9.7b and the average 76% take-up rate in 1H ended Apr 2023 is driven by brand name and the Klang Valley, Johor and Penang locations. The company has 3 business parks in Johor and 1 in the Klang Valley. Unbilled sales for domestic projects were RM4.2b at end-May 2023 providing medium term earnings visibility. Its 3,056-acre landbank is in the Klang Valley (60%), Johor (33%) and Penang (7%). The company’s 27%-owned Eco World International handles projects in the UK and Australia, and it will monetise its completed property units and distribute cash to shareholders. Eco World’s operating profit margin was 20.4% in 1HFY2023. Revenue fell 13% year-on-year to RM905.6m in 1HFY2023 with fewer projects completed. Borrowings were lower at RM2.6b for a debt-to-equity (DE) ratio of 0.53 times and net DE ratio of 0.31 times. On 10 Aug, the company issued RM550m sukuk wakalah to partially refinance existing borrowings and for working capital. With debt higher by RM350m, DE ratio should increase to 0.6 times and net DE ratio to 0.39 times. The counter closed at RM1.07.
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AWC obtains financing for purchase of 49% of Stream Group

In Sep, the integrated facilities management system provider announced buying the remaining 49% it does not own in the automated waste collection system provider for RM110m. AWC will also be buying the remaining 51% that Stream Group does not own in Premium Patents Sdn Bhd, which holds the intellectual property rights for assets required by Stream Group, for RM1. The exercise will be completed in 1Q2024. AWC Bhd has accepted RM100m Islamic banking facilities from AmBank Islamic Bhd. RM99m is for the acquisition price and RM1m for the reducing term takaful to cover the life of an AWC key person. The company has RM11.7m short-term borrowings and RM8.72m long-term borrowings at 30 Jun 2023. Total borrowings increased from RM14.82m at 30 Jun 2022 to RM20.42m. Stream Group has been profitable for AWC since the 2004 acquisition and posted RM81.9m revenue and RM23.42m net profit for FY2022 against AWC’s RM21.53m net profit. AWC closed at 57 sen, up 24% year-to-date.

ITMAX wins RM79.6m smart city contract from Pasir Gudang City Council

65%-owned subsidiary Southmax Sdn Bhd received a letter of award for the 15-year project to design, install and maintain a smart command centre, a closed-circuit camera system with artificial intelligence, and a smart traffic lights system. This is the 3rd smart city contract in Johor. On 18 Sep, the company bagged a 15-year contract from the Johor Bahru City Council for the provision of video surveillance services worth RM105.32m. On 22 Sep, ITMAX secured a RM111.2m contract from the Iskandar Puteri City Council to provide video surveillance and smart traffic light system services. The counter closed at RM1.80.

KakaoBank to buy 10% of Indonesia’s Superbank

South Korea’s 1st digital bank, which will subscribe for new Superbank shares, has struck a strategic partnership with the Indonesian bank that is transitioning into a digital-focused bank. Superbank is backed by the Grab, Singtel and Emtek consortium and is expected to launch its app to the public in 2023. KakaoBank plans to collaborate with major partners in Southeast Asia to jointly build a mobile financial technology platform that will underlie a global digital bank network. Superbank sees the partnership as advancing its mission of serving the financial needs of the underbanked communities.