Capital markets executive summary | Fri 22 Dec 2023

Capital markets executive summary | Fri 22 Dec 2023

Rimbunan Sawit sells Miri oil palm estates to repay debts

The Sarawak-based planter has proposed to dispose of 5 parcels of land measuring 9,935 hectares to Mahawangsa Sungai Bok Plantation Sdn Bhd for RM165m. Selangor Estate (4,857 hectares) will be sold for RM90m while Jayamax Estate (5,078 hectares) is priced at RM75m. The proceeds will primarily be used to reduce the company’s gearing from 0.99 times to 0.61 times. The balance of the proceeds are for new planting and replanting of oil palm. Pro forma gain on disposal is RM77.94m. The 2 estates are part of Rimbunan Sawit’s 16 oil palm estates in Kuching, Sibu and Miri totalling 69,909 hectares. The total planted area is 42,478 hectares or 60.76% of the land bank. Rimbunan Sawit also owns 3 palm oil mills in Kuching and Miri. The counter closed at 15 sen.

Point Zone’s AA-(cg) rating affirmed and outlook revised to positive

MARC Ratings affirmed the rating on the sukuk wakalah programme guaranteed by KPJ Healthcare Berhad with the rating outlook revised from stable to positive. Point Zone is KPJ’s funding conduit. The positive outlook is due to KPJ’s improving operating performance and stronger leverage. KPJ is the largest private healthcare provider in Malaysia with 29 hospitals and 3,776 licensed beds or 22% market share. In 2022, Malaysia made up 96% of total revenue and hospital operations contributed 98%. The revenue contribution from Bangladesh, Thailand and Australia is small. In 9M2023, outpatient volume shrunk 1.7% annualised to 2,063,630, while inpatient admissions grew 16.3% annualised to 259,172. Revenue jumped 19.4% year-on-year to RM2.55b in 9M2023 because of charges and patient severity. Bed occupancy rate improved by 9 percentage points from 2022 to 67% at end-Sep 2023. The average in the past had been 55%-62%. EBITDA margin was about 25% in 2023. Cash flow from operations (CFO) was RM527.4m in 9M2023 compared to the RM500m annual average in the last 5 years. Total borrowings were RM1.92b at end-Sep 2023 and are projected to be RM1.8b-RM1.9b in 2024-2028. MARC’s sensitised case projects CFO interest coverage at 3.1 times-4.4 times and CFO debt coverage at 0.2 times-0.3 times. Cash balances were RM837m at end-Sep 2023. The counter closed at RM1.43.
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Foundpac buys industrial land in Penang

The precision engineering parts manufacturer has proposed to acquire a leasehold industrial land in Bayan Lepas, Penang from Bluemetal Sdn Bhd for RM41.88m. The company currently has 6 factories in Penang and Kedah, and is planning to move all its production in Penang into a single premise for efficiency and cost savings. The purchase price will be paid for using bank borrowings and internally generated funds. The relocation and consolidation of production operations in Penang will take place after 2Q2026. In Dec 2022, Foundpac announced buying 2 adjoining parcels measuring 8,365 square metres with a double-storey detached factory-cum-office building in the Bayan Lepas Free Industrial Zone in Penang from Zoomic Technology (M) Sdn Bhd, a unit of Iqzan Holding Bhd, for RM25.5m to increase its production capacity. The company began servicing the international semiconductor industry in 2004 by offering precision parts, module assembly and turnkey projects. The counter closed at 42 sen.

South Korea to penalise HSBC and BNP Paribas for naked short selling

The country’s Financial Supervisory Service has recommended imposing at least KRW10b (RM36m) in combined fines on the banks to the Securities and Futures Commission under regulator Financial Services Commission (FSC). Their offence, naked short selling, is a practice of selling shares without borrowing them first, which is illegal. The FSC discussed the fines during a Wed meeting and will meet again today to finalise it. The fines will be the country’s first such penalties on global investment banks for naked short selling. In Nov, the authorities announced a full ban on short selling until end-Jun 2024 after discovering massive illegal naked short selling of local stocks by global investment banks.

Adnoc sweetens bid for Covestro

State-owned Abu Dhabi National Oil Co (Adnoc) increased its offer to EUR60 (RM305.73) per Covestro share, valuing the German chemical company at EUR11.3b. The revised bid came after earlier offers of EUR55 and EUR57, which were too low for Covestro. Adnoc is also guaranteeing jobs for several years and USD8b (RM37.24b) of investments. German fund manager, Union Investment, which is a top 15 investor in Covestro, suggested that the company grant Adnoc access to due diligence. Covestro closed at EUR53.20.