Capital markets executive summary | Fri 15 Dec 2023

Capital markets executive summary | Fri 15 Dec 2023

Ranhill wins related party project for Johor non-revenue water reduction

Ranhill SAJ Sdn Bhd, 80%-owned by Ranhill Utilities Bhd, awarded the 3-year RM283.89m project to wholly owned Ranhill Technologies Sdn Bhd in a competitive tender. The project scope covers establishing district meter areas (DMA), non-revenue water (NRW) meter and data logger maintenance, pressure management, reservoir monitoring and maintenance, water supply system monitoring, meter, valve and pressure relief valve installation, DMA monitoring system maintenance, and leakage reduction. This is Ranhill Technologies’ 7th consecutive NRW project in Johor since 2011 and the company has reduced NRW from more than 37% in 2005 to 25.1% at 30 Nov. The company also won NRW reduction projects in Melaka, Kedah, Kelantan, Terengganu, Perlis and Pahang. The counter closed at 88 sen.

MBSB Bank’s A+ rating affirmed

MARC Ratings affirmed the bank’s financial institution rating and its RM5b sustainability sukuk wakalah programme. Despite EPF’s share shrinking from 65.9% to 57.5% after the MIDF acquisition, it should continue providing support to MBSB. Common equity tier 1 ratio was 15.9% and total capital ratio was 20% at end-Sep 2023. Total financing expanded 5.5% to RM40b because of working capital and residential property financing growth. MBSB wants to increase financing to the non-retail segment from 25% to 40% by focusing on SME financing via government guarantee schemes and on GLCs. Gross impaired financing (GIF) increased from RM963m in 2021 to RM2.1b in 2022 to RM2.2b at end-9M2023 because of the construction and non-residential property segments. GIF ratio was 5.48% at end-9M2023 versus the 1.56% average in the Islamic banking industry. Financing loss coverage fell from 66% to 56.4%. Pre-tax profit was down from RM312.4m in 9M2022 to RM309.2m in 9M2023 as net financing income shrunk. Margin narrowed from 2.81% to 2.00% because of quicker repricing of term deposits. Annualised return on assets fell from 0.91% to 0.59%. Return on equity declined from 6.45% to 4.13%. Term deposits makes up 72% of total funding. Current and savings account ratio was 6.9% at end-Sep 2023 against the 26.6% industry average. Retail depositor base was 16.8% versus the 29.7% average. The top 10 depositors, largely government-related, account for 42% of total deposits. The counter closed at 71 sen.
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IOI Properties’ sukuk AA rating affirmed

MARC Ratings affirmed the rating of Fortune Premiere Sdn Bhd’s RM3b multi-currency sukuk murabahah programme, which is unconditionally and irrevocably guaranteed by IOI Properties. At end-Jun 2023, GDV of ongoing domestic projects was RM1.6b. 54% of it is landed residential with 69% take up, while the balance is high-rise residential with 49% take up. Unbilled sales for ongoing domestic projects was RM403m. The IOI Central Boulevard Towers in Singapore will be completed in 1Q2024. Annual rental income will be SGD118m (RM414m) if the occupancy rate is raised from 40% at end-Jun 2023 to 70%. Occupancy rates for IOI City Mall Phase 1, IOI Mall Puchong and the Xiamen mall were over 90%. Group inventory rose from RM2.4b at end-FY2023 to RM2.7b at end-1QFY2024. Revenue was flat at RM2.6b in FY2023, whereas operating profit fell 21.7% to RM687.8m. For 1QFY2024, revenue was RM648.0m and operating profit was RM171.9m. Borrowings were RM17.6b at end-Sep 2023. Debt-to-equity (DE) ratio was 0.79 times and net DE ratio was 0.70 times. The counter closed at RM1.69.

Malaysia is first for auditor quality and audit regulators in Asia Pacific ranking

The Asian Corporate Governance Association (ACGA), which covers 12 Asia Pacific countries, retained Malaysia’s 5th placing in its CG Watch 2023 report with improvements in 6 out of the 7 assessment categories. Malaysia is placed first for quality of auditors and audit regulators at the 11th biennial corporate governance assessment. The country was second, after Australia, in the strength of corporate governance rules and adoption of corporate governance practices by listed companies categories. In the regulator category, the Securities Commission was recognised for effective communication on its enforcement action. ACGA will be releasing the individual country reports later.

Chinese AI startup seeks USD200m

Beijing-based 01.AI is raising fresh capital after hitting a valuation of USD1b in early Nov amidst the global interest in open-source AI models. The company was launched by Google China’s former chief in Jul following a 3-month incubation period. 01.AI’s Yi-34B open-source large language model (LLM) became the 1st Chinese LLM to top the Huggingface leaderboard, a platform for sharing LLMs. Alibaba’s Qwen-72B recently topped the leaderboard, the 2nd model from China to achieve the feat.