Capital markets executive summary | Wed 25 Oct 2023

Capital markets executive summary | Wed 25 Oct 2023

Plytec to list on ACE Market

The company, which will be listed on 15 Nov, will raise RM37.1m by issuing 106.1m new shares at 35 sen. Plytec will be valued at 15.49 times price-earnings ratio based on RM13.69m net profit or 2.26 sen earnings per share for FY2022. Plytec will use RM9m to repay borrowings, RM8m for capital expenditure, RM7.8m for constructing factories and labour accommodations on the Olak Lempit land to be completed by 3Q2024, RM6.3m for working capital, RM4m for listing expenses and RM2m for software systems and hardware purchases. The company plans to strengthen its construction method engineering (CME) solutions business by increasing its capacity to provide temporary work equipment such as self-climbing platforms, aluminium platforms, shoring systems and green frameworks that support building structures during construction. It has 3 other business segments, which are building materials trading, digital design and engineering solutions, and prefabricated construction solutions. On 31 Aug, outstanding orders were RM75.53m to last until FY2024. Applications for the IPO will close at 5pm on 31 Oct. KAF Investment Bank is the principal adviser, sponsor, managing underwriter, joint underwriter and joint placement agent. Kenanga Investment Bank is joint underwriter and joint placement agent.

Gentari and Singapore’s City Energy in feasibility study for hydrogen pipeline

The 2 companies signed a memorandum of understanding in Apr 2023. The clean energy solutions provider wholly-owned by Petronas and City Energy Pte Ltd, wholly-owned by Keppel Infrastructure Trust and Singapore’s sole producer and provider of piped town gas, have signed a joint feasibility study agreement to construct a hydrogen pipeline from Malaysia to Singapore. The agreement is in line with Gentari’s goal of producing 1.2m tonnes per annum of clean hydrogen, which will support both countries’ target of net zero emissions by 2050. Hydrogen, a low-carbon energy source, will supply half of Singapore’s power needs by then. The feasibility study that will take a year to complete will explore the design, construction, and operation of the pipeline from Johor to City Energy’s Senoko Gasworks plant in northern Singapore. Afterwards, both parties will collectively decide on the execution of a front-end engineering design agreement.
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Mosti and Bursa Malaysia to identify startups poised for listing

The government’s collaboration with Bursa Malaysia is part of the Ministry of Science, Technology and Innovation’s (Mosti) Fund Funnel programme designed to streamline funding options and offer support to startups throughout their funding journey from seed stage to initial public offering. The ministry will supply market information on the local startup ecosystem to Bursa Malaysia in order to facilitate the early identification of companies with listing potential. The government wants Malaysia to rank in the top 30 in the Global Innovation Index (GII) report by 2025. In 2022-2023, Malaysia was 36th among 132 countries despite the GII score rising from 38.7 to 40.9. In Asean, Malaysia is 2nd to Singapore’s 7th placing. The initiative follows state-owned venture capital fund Cradle Fund Sdn Bhd and Bursa Malaysia’s memorandum of collaboration last month to raise awareness among startups on available funding opportunities including the equity market.

China will issue USD137b debt to support economy

The country’s top parliament body approved a CNY1t sovereign bond issuance and passed a bill allowing local governments to frontload a portion of their 2024 bond quotas. The funds will go to rebuilding disaster-hit areas and improving urban drainage. China’s 2023 budget deficit will widen from 3% to 3.8% of gross domestic product. Analysts have been expecting the fiscal boost to support growth. The economy grew faster in 3Q, which raises the likelihood of hitting 2023’s 5% growth target, although the property sector is still a drag on the economy. The central government rarely revises its fiscal plans earlier than the budget cycle usually in Mar. This suggests concern about short-term growth.

Midea files for Hong Kong listing

China’s largest home appliance maker was established in 1968 and manufactures, among others, air conditioners, refrigerators, washing machines, kitchen appliances and vacuum cleaners using brands including Midea, Comfee, Eureka, Little Swan and Vandelo. It acquired Toshiba’s home appliance business in 2016 and owns German robotics company Kuka AG. The Shenzhen-listed company appointed Bank of America and China International Capital as joint sponsors of the offering in Hong Kong and plans to list as early as 2024. Midea’s market value is USD51b and in Aug, its board approved issuing 10% of its total capital in the IPO. Hong Kong’s IPO market has been dry with the last USD1b listing more than a year ago. The last jumbo IPO was JD Logistics Inc’s USD3.6b in May 2021.