Capital markets executive summary | Thu 21 Dec 2023

Capital markets executive summary | Thu 21 Dec 2023

Jati Tinggi closed 14.8% up on ACE Market listing

The infrastructure utilities engineering services provider hit 34 sen or 25.93% premium before closing lower at 31 sen compared to its IPO price of 27 sen. It was the 3rd most active stock with 141.81m shares traded. The IPO was oversubscribed by 16.11 times. The company provides underground and overhead utility engineering services and solutions, performs engineering, procurement, construction and commissioning services for electricity substations, and trades substation equipment and street lighting. Its major customers are Tenaga Nasional Bhd main contractors for electricity supply projects. From the RM18.04m IPO proceeds, RM7.34m is for working capital, RM7m for repaying bank borrowings, RM3.5m for listing expenses and RM200k for capital expenditure. Rakuten set a target price of 38 sen based on 14 times forecast earnings per share (EPS) of 2.7 sen for FY2024. Public Investment Bank set a fair value of 35 sen at 14 times forecast EPS of 2.5 sen for FY2024. MN Holdings Bhd in comparison is valued at 17.6 times. TA Securities is the principal adviser, sponsor, underwriter and placement agent.

Cerah Sama’s AA- sukuk rating affirmed

MARC Ratings affirmed the rating on the company’s RM420m sukuk, which reflect the Cheras-Kajang highway’s traffic performance and cashflows. Average daily traffic increased 6.7% from 147,502 vehicles in 2022 to 157,420 vehicles in 10M2023. It is 6.2% more than 148,161 vehicles in 2019. Toll revenue before compensation gained 31% year-on-year to RM71.5m in 2022 and rose 6.8% to RM67m year-on-year in 9M2023 or RM75m annualised. Cash and cash equivalents were RM67.6m at end-Sep 2023, enough for RM30m sukuk principal repayment on 31 Jan 2024. Debt-to-equity ratio was 1.9 times. Dividends were RM7.1m in 2022 compared to RM32m-RM40m per year in the preceding 4 years. Pre-distribution finance service cover ratio (FSCR) is projected to be a minimum of 2.9 times in 2028 and average of 4 times in 2024-2030. MARC’s sensitised case shows a minimum of 1 time in 2030 and average of 2.8 times, which may force dividends lower by 1/3 from base case in 2024-2030 to satisfy the 1.75 times post-distribution FSCR covenant.
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LTAT extends Boustead Plantations’ takeover offer deadline to 5 Jan

The Armed Forces Fund Board (LTAT) offer for RM1.55 per share to take Boustead Plantations Bhd private has been extended 2 weeks later than the original 22 Dec closing date after it only managed to accumulate 88.62% of Boustead Plantations’ shares. The company is no longer complying with the 25% minimum spread requirement given a public shareholding of 11.38%, although LTAT will not rectify the shortfall because it does not intend to maintain the company’s listing status. The figure also falls short of the 90% threshold, which will trigger the counter’s trading suspension by Bursa Malaysia 5 days after the closing date and also enable LTAT to compulsorily acquire the remaining shares. Earlier this month, Malacca Securities, the independent adviser, declared that LTAT’s offer is “not fair” but “reasonable”, and recommended that shareholders accept it. Boustead Plantations closed at RM1.55.

Abu Dhabi’s PureHealth gains 69% on IPO

The healthcare platform’s shares traded at AED5.5 (USD1.50) when the Abu Dhabi market opened, above the IPO price of AED3.26. The company raised almost USD1b in the exercise. The country’s largest healthcare provider formerly screened for Covid-19 and now plans for international expansion. PureHealth’s major shareholders are Abu Dhabi sovereign wealth fund ADQ and conglomerates IHC, both chaired by the national security adviser Sheikh Tahnoun bin Zayed Al Nahyan, who is also the brother of the UAE President. A number of IHC subsidiaries have listed previously on the ADX to diversify the economy away from oil and gas.

Last two SGX-listed SPACs to dissolve

Blank cheque companies Pegasus Asia and Novo Tellus Alpha Acquisition will not merge with any target companies due to unfavourable market conditions. Pegasus will make an announcement of its dissolution tomorrow while Novo Tellus should release its announcement next week. The deadline for Singapore Exchange (SGX)-listed special purpose acquisition companies (SPAC) to merge and de-SPAC is Jan 2024, 2 years after listing. Investors will get back their money if the SPACs are dissolved instead. The deal between Pegasus and Singapore-based Kacific, which operates wholesale broadband satellite services, appears to have fallen through. Vertex Technology Acquisition Corp is the only SGX-listed SPAC to have successfully completed a business combination by merging with live-streaming platform 17LIVE following a 1 Dec EGM.