Capital markets executive summary | Wed 22 Nov 2023

Capital markets executive summary | Wed 22 Nov 2023

SC approves Mestron’s transfer to Main Market

Mestron Holdings Bhd has received the approval from the Securities Commission for the transfer of its shares and warrants from the ACE Market. The company expects the transfer to allow the expansion of its investor base to include those who are specifically interested in investing in Main Market companies. It will open up new avenues of growth and investment opportunities for Mestron. The company will continue to focus on its telecommunications sector offerings, especially its specialty poles, with the roll out of Jendela nationwide. The company is also on the look-out for earnings accretive merger and acquisition opportunities. In 3Q2023, net profit climbed 6.89% to RM3.57m due to the lower cost of raw materials such as steel plates and pipes, and higher demand for specialty poles. Revenue gained 11.5% to RM41.44m. Net profit in 9M2023 jumped 40.2% to RM9.41m while revenue rose 29.28% to RM106.14m. The counter closed at 44 sen.

APM’s sukuk ratings affirmed

RAM Ratings affirmed the AA2 rating of APM Automotive Holdings Berhad’s RM1.5b Islamic medium term notes programme and the P1 rating of its RM1.5b Islamic commercial papers programme with a combined limit of RM1.5b. Revenue increased 42.1% from RM1.22b in FY2021 to RM1.74b in FY2022 due to record-breaking domestic automotive sector total industry volume (TIV), which was up 41.6% to 720,658 units. Pre-tax profit trebled from RM17.1m to RM54.1m. Margin for operating profit before depreciation, interest and tax fell from 5.07% to 4.77% as the result of higher raw material, logistics and manpower costs. In 1HFY2023, revenue rose 16.8% year-on-year to RM937.5m. Pre-tax profit jumped 39.7% from RM22.4m to RM31.3m with higher Indonesia JV contributions and sale of moulds and tooling. TIV for 2023 should exceed 700k units because of robust demand for new car models. For 9M2023, TIV gained 11.1% year-on-year from 514,449 units to 571,767 units. APM had a net cash position at end-Jun 2023 and should deliver a strong FY2023 performance. Funds from operations (FFO) debt cover improved from 0.65 times in FY2021 to 0.72 times in FY2022 to 0.77 times 1HFY2023. The counter closed at RM2.29.
Would you like us to email you when our latest executive summary is available?

Maybank’s AAA financial institution ratings affirmed

RAM Ratings affirmed the AAA and P1 financial institution ratings of Malayan Banking Berhad and its banking subsidiaries. The AAA ratings of the senior sukuk and bonds, AA1 ratings of the subordinated sukuk and bonds, and the AA3 ratings of the additional tier-1 capital have also been affirmed. Loan loss coverage including regulatory reserves was 152% at end-Jun 2023 and gross impaired loan ratio was 1.5% due to recoveries, write-offs and low formation of newly impaired loans. Its guidance for credit cost ratio was revised downwards from 35-40 bps to 30-35 bps for FY2023. In FY2022, profit before tax rose 11.6% year-on-year to RM12.2b as net impairment charges fell and margins widened. Higher cost of funds in 1H2023 tightened margins although the annualised return on risk-weighted assets was 3.1% and return on assets was 1.3%. The counter closed at RM9.11.

MUFG Malaysia’s financial institution ratings and issue rating affirmed

RAM Ratings affirmed MUFG Bank (Malaysia) Berhad’s AA1 and P1 financial institution ratings. RAM also affirmed the AAA(bg) rating of MUFG Malaysia’s USD500m multi-currency sukuk wakalah bi al-istithmar programme, which is irrevocably and unconditionally guaranteed by parent MUFG Bank Ltd (rated AAA and P1). MUFG Bank Ltd is the commercial bank of Mitsubishi UFJ Financial Group, a world’s largest financial group and Japan’s leading banking group. The ratings reflect parental support because of the bank’s strategic importance to and close relationship with MUFG Bank Ltd. In addition, it has strong capitalisation and high asset quality, although its limited scope of operations, concentrated borrowers and depositors, and volatile profitability moderate the ratings. Pre-tax profit jumped from RM346.8m in FY Mar 2022 to RM489.9m in FY Mar 2023 while return on risk-weighted assets improved from 2.9% to 4.2% amid interest rate hikes and larger trading income. 38% of gross income on average in the past 5 years came from trading income. MUFG Malaysia’s focus on Japanese multinationals and highly rated domestic companies keeps its impaired loans negligible. Its common equity tier-1 capital ratio was 30.9% at end-Jun 2023.

Opec+ must deepen production cuts to keep oil prices high

The head of the International Energy Agency’s (IEA) oil markets and industry division projects surplus supply in the global oil market in 2024 even if Opec+ continue their current cuts. Brent is down to USD82 per barrel from a Sep 2023 high of USD98 because demand uncertainties and a potential surplus next year are depressing prices. Since late 2022, Saudi Arabia, Russia and Opec+ members have cut output by 5.16m barrels per day or 5% of daily global demand. At the last policy meeting in Jun, Opec+ agreed to extend it into 2024. Even with the current oil market in deficit and inventories are rapidly declining to low levels, the Opec+ meeting later this month will consider additional supply cuts.