Capital markets executive summary | Fri 10 Nov 2023
Capital markets executive summary | Fri 10 Nov 2023
Business management consultancy ex-director charged for not possessing CMSRL
33-year-old Muhammad Fadzli Jamaludin, a former director of Kyaputen Sdn Bhd, was charged at the Kuala Lumpur Sessions Court with 3 counts of unlicensed fund management at 1 venue in Taman Muzaffar Heights, Ayer Keroh, Melaka and 2 venues at Jalan Bemban, Ampang. The offences were allegedly committed between 2 Nov 2018 and 3 Apr 2020. He claimed trial to the charges, which come under Section 58(1) of the Capital Markets and Services Act 2007. Fadzli could face up to RM10m in fines or 10 years imprisonment, or both, for each charge if he is convicted. The prosecution was represented by Securities Commission Deputy Public Prosecutors Mageswary Karoppiah, Jonathan Chin Ter Yang and Low Wen Zhen. Puvarasan Balaiyah appeared for Fadzli. Sessions Court judge Sabariah Othman set bail at RM80k and fixed 11 Dec for mention.
Besraya’s sukuk AA2 rating affirmed
RAM Ratings affirmed the rating of the company’s RM700m sukuk mudharabah (2011/2028). The company has strong debt servicing ability due to the steady traffic volumes and cashflows of the Sungai Besi Highway and Besraya Eastern Extension, despite the toll reduction and concession restructuring without any further compensation. Besraya’s minimum finance service coverage ratio (FSCR) with cash balances (post-distribution) will be 2.0 times and average will be 2.43 times. Notwithstanding, it the company pays dividends to shareholders, the longer-term cashflow profile and debt coverage measures will weaken since its earnings have taken a hit from the supplemental concession agreement on 30 Dec 2022. Average daily traffic was 162,626 vehicles in 5M FY Mar 2024, down from 164,980 vehicles in FY Mar 2023, due to temporary traffic management on surrounding roads. Besraya’s FSCR, which weakened during covid, rebounded to 2.02 times on 28 Jul 2023, above the 2.0 times minimum required for the AA2 rating. IJM closed at RM1.90.
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Exsim’s green sukuk assigned preliminary AA3 rating
RAM Ratings assigned the preliminary rating to the proposed RM390m Tranche 5 issuance out of Exsim Capital Resources Berhad’s RM2b sukuk musharakah programme, the 1st ASEAN Green SRI Sukuk backed by future receipts of green-certified residential projects, namely D’Clover Residences and D’Terra Residences. The projects, located in Damansara Perdana, Selangor, were awarded provisional Gold GreenRE certifications. The proposed RM85m unrated Tranche 5 Islamic commercial papers (ICP) will cover cost overruns, working capital and any shortfalls in payment of the Tranche 5 IMTN profit and senior expenses. The Tranche 5 ICP will be fully underwritten by a AAA-rated financial institution. The future receipts from the projects will fund the remaining construction costs and payments relating to Tranche 5 and the Tranche 5 ICP. RAM’s stress cashflows show timely and full payment of all Tranche 5 obligations by the legal maturity date. The projects plus 2 others are on a master title, which is charged to the financier for a bridging facility. The security for Tranche 5 includes a specific debenture incorporating fixed and floating charges over assets of the projects, including the portion of land the projects are constructed on. The financier will renounce all rights, interest and claims over that portion of land.
YNH’s sukuk programme rating downgraded to A
MARC Ratings downgraded the rating on YNH Property Berhad’s sukuk wakalah programme and revised the rating outlook to negative because of rising concerns about the ability to meet its financial obligations given its weak business profile, modest launches and slow asset monetisation. Borrowings increased from RM1.1b at end-Dec 2021 to RM1.3b on 30 Jun 2023. YNH planned to sell a 5.1-acre land parcel and raise a further RM592.5m from securitising its retail properties, namely 163 Retail Park shopping centre in Mont Kiara and AEON Seri Manjung in Perak, to pay down its debts. Its gearing would have been reduced from 1.48 times to 0.78 times. However, the asset monetisation exercise has been delayed to 1Q2024, while Bursa Malaysia has raised queries on the 5.1-acre land parcel. YNH’s handful of ongoing projects include Solasta Dutamas, a high-rise residential project in Mont Kiara with RM720m gross development value, which only achieved a 50% take up rate. Its Manjung township in Perak with remaining 700 acres of land provides modest income. For 18MFY2023, revenue was RM307.5m, pre-tax profit was RM20.4m and cash flow from operations was RM47.9m. The counter closed at RM5.02.
US Fed should keep rates steady amid signs of economy slowing
Repeat applications for unemployment benefits increased for the 7th consecutive week to 1.83m in the week ended 28 Oct, the highest since mid-Apr, according to Labor Department data. The 4-week moving average for initial claims up to 4 Nov grew to 212,250. The continuing claims figures mean that the unemployed are not finding new jobs and the 3.9% unemployment rate, higher than the Federal Open Market Committee’s 3.8% forecast in 4Q, is the highest in 2 years. According to Bloomberg, the Federal Reserve should be cautious and keep the policy rates unchanged. Economists expect the labour market to gradually cool as high interest rates and tighter lending policies force job cuts among employers. Workers are anxious given the slowing wage growth and the USD154b credit card debt. The Conference Board Consumer Confidence Index fell from 104.3 in Sep to 102.6 in Oct.
