Capital markets executive summary | Tue 26 Dec 2023

Capital markets executive summary | Tue 26 Dec 2023

Well Chip to list on Main Market

The Johor-based company is the 2nd pawnbroker seeking a listing in less than 3 months after Evergreen Max Cash Capital raised RM64.2m and debuted in late Sep at 33.33% premium over its IPO price. Well Chip is offering 150m new shares or 25% of its enlarged issued shares. 30m shares will be offered to the Malaysian public via balloting, 45m shares to selected institutional investors and 75m shares for private placement to bumiputra investors approved by MITI. The company, which also sells jewellery, has 22 pawnshops and 4 retail outlets in Johor. The proceeds are for 8 new pawnshops in Johor and Melaka. After Melaka, Well Chip plans to expand into Negri Sembilan. Profit after tax (PAT) climbed 5.79% from RM23.78m in FY2021 to RM25.16m in FY2022. Revenue jumped 55% from RM101.88m to RM158.12m. The dividend policy is 35% of PAT for the 1st three financial years after its listing.

Press Metal issue rating outlook raised to positive

RAM Ratings revised the outlook on the AA2 rating of the company’s RM5b sukuk programme (2019/2049) from stable to positive because of large projected debt reduction in the next 2 years. Press Metal is Southeast Asia’s largest primary aluminium producer. Its higher production capacity and low-cost structure should improve cashflows, thereby lowering the debt levels. The company’s share issuance in FY2022 reduced borrowings by RM1.3b. Annualised debt to operating profit before depreciation, interest and tax (OPBDIT) ratio was 2.03 times and funds from operations debt coverage (FFODC) ratio was 0.48 times at end-Sep 2023. Reduction in debt by RM1b annually up to FY2025 will enlarge its credit buffer against price volatility. After the smelter expansion and alumina refining are complete, Press Metal’s focus on the extrusion business should improve margins while minimising capital expenditure requirements, which limits the risk of heavy borrowings. RAM’s sensitised projections show the debt to OPBDIT ratio at 2 times and FFODC ratio at 0.5 times despite RM1.5b additional debt in the next 2 years. The counter closed at RM4.82.
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Bintulu Port Holdings outlook raised to positive

RAM Ratings revised the outlook on the company’s long-term corporate credit rating of AA1 and short-term corporate credit rating of P1 from stable to positive. RAM considers the company as a government-linked entity with expectation of extraordinary support from the federal government and Sarawak state government following its impending acquisition by the state. The port is a crucial hub for Sarawak’s imports and exports, in particular liquified natural gas (LNG), and has been operating for 30 years under a privatisation agreement (PA) signed in 1993. Pending the extension of the PA by 30 years, the port operates under an interim arrangement. The federal government has approved the renewal of the licence in principle. In FY2022, cargo throughput hit 50.72m tonnes, although the figure should shrink this year because of lower LNG exports and overall trade activity given the global economic slowdown. RAM-adjusted gearing was 0.54 times and funds from operations debt coverage (FFODC) ratio was 0.25 times in FY2022. The company had RM1.23b cash and cash equivalent compared with RM950m external borrowings and RM115.75m short-term lease liabilities at end-Jun 2023. The next debt repayment of RM60m is due this month. The counter closed at RM5.00.

Bursa-RAM JV launched debt fundraising platform

Bursa Malaysia RAM Capital Sdn Bhd, a 51:49 joint venture between Bursa Malaysia and RAM Holdings, has created a platform to assist listed and unlisted companies raise at least RM5m for a minimum tenor of 1 year through the issuance of credit-rated investment notes. The platform gives companies access to a new pool of investors outside of traditional wholesale markets who want to diversify their portfolios. It is aligned with Bursa’s strategy to be a multi-asset exchange, while RAM’s role will be to lend its expertise in credit ratings, ESG ratings and fixed income pricing. The platform is in its initial roll-out with onboarding for selected issuers and investors. Bursa closed at RM6.91.

MRCB buys PJ Sentral office development rights from PKNS

Malaysian Resources Corp Bhd (MRCB) will purchase the rights to implement the development of an office tower in PJ Sentral from the Selangor State Development Corp (PKNS) for RM270m to be satisfied via the disposal of properties to PKNS and the balance RM12.08m in cash through internally generated funds. The properties worth RM257.92m include Plaza Alam Sentral Mall and the adjoining land in Section 14, Shah Alam at RM178m and residential units comprising 11 units of Residensi Vivo, 9 Seputeh and 20 units of Residensi Tria Seputeh at Old Klang Road, and 13 units of The Residences at the St Regis Kuala Lumpur in KL Sentral at RM79.92m. The development rights will enable MRCB to better plan the PJ Sentral project, while the property disposals help the company to divest non-core assets. MRCB closed at 44 sen.