Capital markets executive summary | Wed 18 Oct 2023

Capital markets executive summary | Wed 18 Oct 2023

Minox closes at 48% premium to IPO price

The stainless steel sanitary valves, tubes and fittings distributor opened its trading on the ACE Market at 31.5 sen or 26% premium before ending the day at 37 sen, above its initial public offering (IPO) price of 25 sen. Minox International Group Bhd serves industrial end-customers including Malaysia Milk, Unilever, Johnson & Johnson, Dindings, Spritzer, Campbell, Duopharma, Thai Beverage and Nestlé. It will be introducing new vacuum fittings and valves for the semiconductor industry. The RM22.5m IPO proceeds are allocated for product development and deployment (RM4m), Warehouse 4 in Puchong (RM4m), a new warehouse in Singapore (RM5m), repay bank borrowings (RM4.5m), working capital (RM1.6m) and listing expenses (RM3.4). The company earns 26.2% of its sales from the domestic market. The remainder is from exports, namely Indonesia (41.1%), Singapore (20.8%), Thailand (7.5%) and others (4.4%).

IJM Corp’s AA3 sukuk rating affirmed

RAM Ratings affirmed the rating of IJM Corporation Berhad’s RM3b sukuk murabahah programme. The rating agency also assigned a AA3 rating to IJM Treasury Management Sdn Bhd’s proposed Islamic medium term notes programme and a P1 rating to its proposed Islamic commercial papers programme with a RM5b combined limit. The company won RM1.5b new construction contracts in FY Mar 2023 and RM654m in 1Q FY Mar 2024. Its outstanding order book was RM4.75b on 31 Aug 2023 down from RM4.81b on 25 Nov 2022. IJM recently bagged a RM1.26b contract for the JB-Singapore rapid transit system link. Property and land sales grew from RM2.5b in FY2022 to RM2.7b in FY2023. Unbilled sales was steady from RM3.1b at end-Sep 2022 to RM3b at end-Mar 2023. Core pre-tax profit jumped 45% in FY Mar 2023 driven by property and industry, which offset lower construction and infrastructure earnings. IJM’s debts fell from RM6.01b at end-Mar 2022 to RM5.78b at end-Jun 2023. Adjusted funds from operations debt coverage (FFODC) rose from 0.15 times in FY Mar 2022 to 0.19 times in FY Mar 2023. Debt will grow to RM6.6b-RM7.45b to fund land acquisitions, a highway extension and port expansion. Adjusted FFODC should be 0.12-0.15 times in the next 2 years. The counter closed at RM1.89.
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BPMB sets aside RM7.3b for high-impact development projects

Budget 2024 mandates Bank Pembangunan Malaysia Bhd (BPMB) to apportion the amount via 8 strategic schemes to provide equity and working capital to Malaysian companies. RM2b will be allocated towards the Madani Development Scheme that will channel capital for targeted sectors in the 12th Malaysia Plan and the Madani Economic Framework including education, healthcare, affordable housing, urban and rural development, and socio-economic development in Sabah and Sarawak. The balance of the funds will be for other schemes, which are the sustainable development financing scheme, maritime, logistics and transportation scheme, tourism infrastructure scheme, industry digitalisation transformation scheme, rehabilitation and support through equity, working capital scheme, and matching fund investment platform. BPMB, wholly-owned by the Ministry of Finance, completed the acquisition of Danajamin Nasional Berhad in Nov 2021 in a 2-phase merger that may eventually include SME Bank and Exim Bank.

PHB adds 1b units to AHB

Shariah-compliant real estate unit trust fund Pelaburan Hartanah Bhd (PHB) announced the 5th additional issuance since the Amanah Hartanah Bumiputera (AHB) scheme was set up in 2010, bringing the fund to 5b units. The additional units arise from PHB’s recent asset injections, which are KPJ Damansara 2 Specialist Hospital and Marlborough College in Johor, and from the revaluation of Menara 1 Sentrum in Kuala Lumpur, Wisma Consplant in Subang Jaya and Maersk Warehouse in Shah Alam. PHB, which has RM11b assets, also owns Menara Conlay in Kuala Lumpur, Menara Prisma in Putrajaya, Avisena Specialist Hospital in Shah Alam, NU Sentral Shopping Centre and Gleneagles Hospital Block B in Kuala Lumpur. PHB is a subsidiary of Yayasan Amanah Hartanah Bumiputera.

ARB to distribute Nasdaq-listed subsidiary’s shares

The company will distribute 23.52m shares or 88.95% of Nasdaq-listed subsidiary, ARB IOT Group Ltd, to shareholders as dividend-in-specie on the basis of 14 ARB IOT shares for every 1k ARB shares. If none of ARB’s outstanding 463.08m irredeemable convertible preference shares (ICPS) are converted into ordinary shares, the distribution may reduce the company’s ownership of ARB IOT to 30.13%. If all ICPS are converted, ARB’s shareholding of ARB IOT falls to 5.61%. The dividend-in-specie will increase the public spread of ARB IOT from 5.44% to 55.97%-67.26%. ARB IOT was incorporated in the Cayman Islands in Mar 2022 and provides internet-of-things (IoT) solutions including smart home and building solutions, hydroponic systems, industrial building management systems, and marketing and sales of mobile gadget accessories. It was listed on Nasdaq in Apr and its share price has fallen 64% so far to close at USD1.46. ARB closed at 9.5 sen.