Capital markets executive summary | Wed 3 Jan 2024
Capital markets executive summary | Wed 3 Jan 2024
TA Securities underwrites AGX IPO
The 3rd party logistics company, which will list on the ACE Market, is issuing 96.5m new shares, while its shareholders are offering for sale 30m existing shares. 21.65m new shares are for the public via balloting, 6.32m for directors and employees, and 68.53m for private placement to selected investors. TA Securities, also the principal adviser, sponsor and placement agent, will underwrite the 21.65m for the public. AGX was formed in 2004 and specialises in sea and air freight forwarding, aerospace logistics, warehousing, and road freight transportation. It has presence in Malaysia, the Philippines, South Korea, Myanmar, Singapore and Cambodia. Its aerospace logistics services involves coordinating air freight for aircraft parts, components, and equipment, and makes it distinguishable from other players in the industry. The IPO proceeds are for expanding its domestic and international business, through setting up new warehouses and offices in Penang and Johor Bahru, and a new office in Busan, South Korea. Other uses of the funds are as working capital, repayment of bank borrowings and for listing expenses.
Bermaz’s sukuk programmes P1 and AA3 ratings affirmed
RAM Ratings affirmed the ratings of the company’s Islamic commercial papers and Islamic medium term notes programmes. Total vehicle sales grew in 2022 driven by post-covid demand, tax exemptions that ended on 31 Mar 2023, tax rebates and new launches. Pre-tax profit rose 94.5% year-on-year to RM423.30m in FY Apr 2023 and by 88.6% year-on-year to RM140.67m in 1Q FY Apr 2024. Market share stayed 2%-3% in 2022 and 1H2023, 4th placing among non-national marques after Toyota, Honda and Mitsubishi. The expiry of the agreement with Stellantis to distribute Peugeot vehicles will not have a material effect because it contributed only 2.3% to pre-tax profit in FY Apr 2023 and 8.9% to sales. Financial metrics are stronger than the rated peers. Debt level fell from RM287.84m at end-Apr 2022 to RM181.21m at end-Jul 2023. Cash declined from RM694.41m to RM577.04m, but exceeds short-term obligations of RM112.91m. Funds from operations debt coverage improved from 0.66 times in FY Apr 2022 to 1.93 times in FY Apr 2023. Minor capital expenditure of RM6m per year is expected in the next 3 years to refurbish and expand Mazda and Kia showrooms, funded by internally generated cash. The counter closed at RM2.33.
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OCBC Al-Amin gives USD175m green financing to RHB Islamic
This is the country’s 1st Islamic green foreign currency and bank-to-bank term financing facility. RHB Islamic will use the proceeds to offer environmental, social and governance (ESG) financing to its clients. The facility is part of both banks’ efforts in working towards net-zero decarbonisation in Malaysia by 2050. The Islamic green term financing maintains Shariah standards and utilises the use-of-proceeds method to direct funds towards targeted economic segments in an environmentally and socially responsible manner. The facility contains an embedded Islamic cross-currency swap arrangement, a Shariah-compliant hedging mechanism that protects against currency market fluctuations. In early 2023, Singapore-based OCBC and RHB signed a partnership on 2 sustainability-linked solutions, a 2-year SGD150m sustainability-linked loan and cross-currency swap between OCBC and RHB Bank Malaysia and a SGD100m sustainability-linked loan to RHB Bank Singapore. RHB closed at RM5.45.
Philippine Stock Exchange anticipates IPOs to double in 2024
Citicore Renewable Energy Corp will be the 1st of 6 companies listing this year. In 2023, there were 3 IPOs against the PSE’s target of 14, while 4 companies voluntarily delisted. Capital raising through the exchange should hit PHP175b (RM14.51b) with PHP40b from IPOs. The amount of capital raised climbed 27.8% year-on-year to PHP140.95b in 2023. The PSE projects Manila’s benchmark index to reach 6,800-8,300 points from 6,450.04 last year, which slipped 1.8% from 2022. The expected rate cuts in the US and the Philippines, and increased infrastructure spending drive the optimism. The PSE will push for the stock transaction tax to be reduced from 0.6% to 0.1% and the dividend tax on non-residents from 25% to 10% to boost trading activity. Other initiatives include lowering the minimum investment to buy stocks, algorithmic trading and volume-weighted average price (VWAP) trading.
China injects USD50b into policy banks to support the economy
The People’s Bank of China injected a net amount of CNY350b in low-cost funds via the pledged supplemental lending (PSL) programme into policy-oriented banks in Dec, the largest since Nov 2022, to drive financing for housing and infrastructure projects. The outstanding amount of the PSL programme, an important tool for the government to support the property sector and stabilise growth this year, jumped from CNY2.9t in Nov to CNY3.25t in Dec. The central bank has been expected to use the money to push for public housing construction and bump up the property sector. China Development Bank, a policy bank, gave a CNY10m loan and a CNY202m credit line to a 700-unit affordable housing project in Fujian last month. The PSL was last used heavily in 2014-2019 for the redevelopment of slums, but it caused housing bubbles.
