Capital markets executive summary | Tue 21 Nov 2023

Capital markets executive summary | Tue 21 Nov 2023

CPE Technology IPO priced at RM1.07

The engineering precision parts manufacturer will raise RM179.58m from the issuance of 167.83m new shares or 25% of the enlarged issued shares of 671.31m upon listing on the Main Market on 7 Dec 2023. The exercise includes an offer for sale of 67.13m existing shares or 10% to selected investors via private placement. CPE manufactures precision-machined parts and components, and provides computer numerical control machining services. Its main customers are in semiconductors, life science and medical devices, and sports equipment, spread across the US, Singapore and Malaysia. Net profit shrank 10.67% from RM33.91m in FY ended 30 Jun 2022 to RM30.29m in FY2023, despite revenue having increased 4.63% from RM138.85m to RM145.28m. RM69.6m or 38.76% of the IPO proceeds is for buying industrial lands to construct an office and a factory with 118,474 square feet built-up area each. RM32.9m (18.31%) is for machinery and equipment, RM17.5m (9.72%) to repay bank borrowings, RM46.9m (26.12%) for working capital, RM1.4m (0.79%) for other capital expenditures and RM11.3m (6.3%) for listing expenses. CPE’s unbilled orderbook is RM69.27m. Applications close on 24 Nov. KAF is the principal adviser, underwriter and placement agent.

Cahya Mata Sarawak commissions study on new clinker line

Cahya Mata Cement Sdn Bhd, the subsidiary of Sarawak’s largest cement and clinker producer, signed technical consultancy agreements with Sinoma Industry Engineering (M) Sdn Bhd to carry out technical assessment and studies on the existing Mambong Line 1 and the new Clinker Line 2. The assessment for Mambong Line 1 will focus on technology transfer to enhance operational and maintenance efficiency to optimise production and manufacturing output. Sinoma Industry will undertake a separate technical assessment and evaluation study for the engineering, procurement, construction and commissioning of Clinker Line 2 in Mambong with a capacity of 6k tonnes per day or 1.9m tonnes a year. Since operations began in 1978, Cahya Mata Cement has been producing cement for ready-mix and precast concrete. Sinoma Industry is wholly-owned by Tianjin Cement Industry Design and Research Institute (TCDRI), China’s 1st large-scale cement industry research and development service provider and the turnkey contractor for Mambong Line 1. The counter closed at RM1.13.
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Taiwan’s Sinyi and InterContinental building RM1b Sabah resort

Sinyi Group and UK-based hospitality company InterContinental Hotels Group will construct a 450-room 5-star resort in Melingsung, Papar. The location is expected to benefit from the construction of the Pengalat-Papar bypass project and the upgrading of the Lok Kawi Road. The RM379m Kogopon water treatment plant upgrade launched 3 months ago will raise capacity to 80m litres daily for the district. Sabah’s target of 2.2m visitor arrivals for 2023 is 86% achieved. Apart from the Intercontinental resort, other hotels ranging from budget to 5 stars with 26,822-room capacity are being built in anticipation of more visitors to Sabah.

WeLab launches Indonesian digital bank

The Hong Kong financial technology company, with investors including Li Ka-shing and Jardine Matheson’s Astra International, started a digital bank in Hong Kong in 2020 and in 2022, jointly bought Bank Jasa Jakarta with Astra. It launched Bank Saqu digital bank yesterday to target the younger generation, including small business owners, freelancers and full-time employees with side incomes. The company seeks to grow its platform from 60m users to 500m users by 2032 and solopreneurs are a fast-growing segment with a Bank Saqu study estimating that 117m Indonesians will have multiple side gigs by 2030. Bank Saqu allows up to 20 accounts per customer for different income streams and plans to offer lending and fee-income products in 2024. WeLab’s cooperation with HSBC Malaysia to co-develop digital offerings could expand elsewhere. In Hong Kong, WeLab Bank lost HKD161.5m (RM96.6m) in 1H2023, down from HKD224m a year ago, although its net interest income doubled. The bank should be profitable in 2024 or 2025. On average, it takes 3-5 years for virtual banks to be profitable. The bank’s digital wealth business which started in Hong Kong in 2022 now has 15k customers and it plans to launch in the Greater Bay Area. WeLab filed for a Hong Kong IPO in 2018, but the plan is postponed given the soft equities market.

China and Saudi Arabia central banks in USD7b currency swap

The 2 countries signed a 3-year local-currency swap agreement for a maximum of CNY50b or SAR26b. China, Saudi Arabia’s biggest trade partner, has been promoting using the yuan in transactions with major energy and commodity exporters. The swap arrangement should help strengthen financial cooperation and facilitate more convenient trade and investment between the countries. Saudi Arabia, which was invited into the Brazil, Russia, India, China and South Africa (BRICS) group in Aug, is expected to join in Jan with Iran, the United Arab Emirates and Argentina. Major oil producers are also exploring non-oil trade using other currencies, making China’s swaps grow in importance. The outstanding balance of China’s foreign-exchange swap lines rose to a high of CNY117.1b at end-Sep. The People’s Bank of China has 29 active swap agreements totalling over CNY4t.