Capital markets executive summary | Thu 28 Dec 2023

Capital markets executive summary | Thu 28 Dec 2023

TSA Group prices IPO at 55 sen

The industrial hardware manufacturer launched its prospectus yesterday to raise RM42.53m via a listing on the ACE Market. The price values the company at 4.23 times price-earnings multiple based on RM39.85m net profit for FY2022. The IPO entails the issuance of 77.33m new shares or 25% of its enlarged 309.3m shares. 15.47m new shares are for the public, 15.47m for eligible persons, 38.66m for bumiputra investors and 7.73m for private placement to selected investors. TSA was formed in 1993 and has 3,600 active customers in FY2022 in Malaysia, Singapore, Thailand, Australia, Bangladesh, France, Indonesia, the Maldives, New Zealand, the Philippines, Sri Lanka and the UK. The company manufactures metal products including stainless steel plates, bars, coils and pipes. The company will allocate RM20m (47% of the IPO proceeds) for repayment of bank borrowings, RM12.33m (29%) for working capital, RM5.1m (12%) for building a manufacturing facility in Semenyih and RM5.1m for listing expenses. TSA will be listed on 2 Feb 2024. Aminvestment Bank Bhd is the principal adviser, sponsor, underwriter and placement agent.

Hektar REIT’s guaranteed tranches assigned preliminary AAA(fg) rating

RAM Ratings assigned the preliminary rating to the proposed RM230m medium term notes (MTN) to be issued out of Hektar MTN Satu Sdn Bhd’s proposed RM500m MTN programme. The rating reflects the irrevocable and unconditional guarantee from Credit Guarantee and Investment Facility. Hektar MTN Satu is a wholly owned funding conduit of the 1st retail-focused real estate investment trust (REIT) that was listed in 2006. The REIT’s portfolio comprises Subang Parade, Mahkota Parade, Central Square, Kulim Central, Segamat Sentral, Wetex Parade and the adjoining 156-room hotel, all valued at RM1.21b at end-Dec 2022. The portfolio value will grow to RM1.36b following the acquisition of Kolej Yayasan Saad in Melaka in 1H2024. Leverage ratio should improve to 43% by FY2024, while debt-to-operating profit before depreciation, interest and tax (OPBDIT) ratio should strengthen to 9 times. Fixed charge coverage will average higher at 2.51 times in the following 3 years. Proceeds from the guaranteed tranches are for refinancing existing borrowings and to fund capital expenditure and enhancement initiatives for existing assets. This issuance will also diversify the REIT’s funding profile from floating rate loans. The counter closed at 65 sen.
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Jentayu’s Telekosang Hydro 2 achieves FiTCD

The 16MW hydropower plant in Sabah attained the feed-in-tariff commencement date (FiTCD) on 25 Dec. The 24MW Telekosang Hydro 1 achieved its FiTCD in Feb. The company had made all required submissions to the Sustainable Energy Development Authority (Seda) and SESB, which should issue the certification within 3 months. In Jun 2021, Jentayu proposed to acquire Telekosang Hydro One Sdn Bhd and Telekosang Hydro Two Sdn Bhd. The FiTCD satisfies a condition precedent for the injection of the companies into Jentayu, which will be subject to the approvals of shareholders and regulators. The company plans to focus on the RM2.8b 170MW hydropower plant in Sipitang. The project is expected to be completed by Dec 2027. The counter closed at RM1.28.

Interbank rates close steady after Bank Negara operations

Bank Negara Malaysia (BNM) absorbed surplus liquidity in the financial system to keep short-term interbank rates steady. BNM made 2 conventional money market tenders, 2 reverse repo tenders and a Bank Negara Interbank Bills tender. The central bank announced reverse repo, sale and buy-back agreements and collateralised commodity murabahah facilities with 1-month and 3-month tenors. It also revised the murabahah overnight tender from RM25.8b to RM27.8b. Conventional system liquidity shrank from RM45.31b to RM42.43b. Islamic funds liquidity grew from RM25.80b to RM27.79b. Late yesterday, BNM called for a RM42.40b conventional money market tender and a RM27.80b murabahah money market tender, both for one-day money. The Malaysia Islamic Overnight Rate (MYOR-i) was 3% as at 26 Dec.

Vietnam raises USD73.78m in government bond auction

The State Treasury raised VND1.798t at an auction on the Hanoi Stock Exchange yesterday, lower than the USD146m raised last week. The government sold VND1t 10-year bonds at 2.2% and VND780b 15-year bonds at 3%. There was no interest in the offer of VND1t 5-year bonds and VND3.45t 15-year bonds. So far, Vietnam has raised VND298.5t from government bonds with 12.58 years average tenor and 3.21% average coupon. Data from the Vietnam Bond Market Association shows 26 corporate bond issuances by private placement in Dec worth VND16.78t. For the year to date, VND273t corporate bonds were issued through 283 offerings and 90% of which were private placements. The figure is down from 420 offerings in 2022. Restrictions on bond refinancing imposed by Vietnamese regulators have compelled issuers to redeem securities. This was part of tighter rules to limit risk-taking in the highly unregulated sector.