Capital markets executive summary | Fri 5 Jan 2024

Capital markets executive summary | Fri 5 Jan 2024

Pharmaniaga executes 7-year concession agreement with MOH

Pharmaniaga Logistic Sdn Bhd signed a concession agreement with the Ministry of Health for the provision of medical supply logistics services from 1 Jul 2023 to 30 Jun 2030. The scope covers procurement, storage, supply and delivery of medical products to public sector customers, pharmacy information system services, and construct or acquire 4 new warehouses for medical products. The contract value was not revealed. The initial concession agreement was signed in 1994 for the supply of medicines and medical supplies to public health facilities for 25 years. The contract was subsequently extended several times until end-Jun 2023. Pharmaniaga announced on 12 Jul 2023 that the MOH issued a letter for the 7-year concession agreement and the company continued providing its services based on agreed salient terms pending the finalisation of the new agreement. Boustead Holdings Bhd, 97.63%-owned by Lembaga Tabung Angkatan Tentera (LTAT), owns 52% of Pharmaniaga, while LTAT owns 8.6% directly. The company has been PN17 since Feb 2023 following losses due to a covid vaccine impairment. The counter closed at 40 sen.

UEM Edgenta’s AA- and MARC-1 ratings affirmed and outlook revised to positive

MARC Ratings affirmed the ratings of the company’s Islamic commercial papers and Islamic medium term notes under the RM1b sukuk murabahah programme and revised the rating outlook from stable to positive. The company provides healthcare support services (HSS) to government and private hospitals in Malaysia and has expanded to private hospitals in Singapore and Taiwan. At end-Sep 2023, it had RM2.3b contracts with 300 hospitals. The contribution of lower margin government contracts has fallen from 82% in 2018 to 54% at end-Jun 2023 as overseas contracts grew. UEM Edgenta has a RM6.3b master maintenance services contract with Projek Lebuhraya Usahasama Berhad (PLUS) that expires in 2038. It maintains more than 3,500km highways and state roads in Malaysia and highways in Indonesia. The company bought 60% of a UAE-based property management company, Kaizen Group, for RM55.1m and 60% of a local facility management company in Saudi Arabia. Revenue grew from RM1.8b in 9M2022 to RM2.1b in 9M2023. Pre-tax profit climbed from RM55.3m to RM62.4m. Operating profit margin strengthened from 2.7% in 2020 to 3.7% in 9M2023. The HSS contract will expire in 2025 and renewal negotiations should begin in early 2024. Borrowings were RM508.7m for a gross debt-to-equity ratio of 0.31 times. Unrestricted cash balances were RM606.0m. The counter closed at RM1.00.
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BNM operations keep short-term interbank rates steady

Bank Negara Malaysia absorbed surplus funds by calling for 2 conventional money market tenders, 2 reverse repo tenders and 1 qard tender. It also announced the availability of reverse repo, sale and buy-back agreements, and collateralised commodity murabahah facilities for 1 and 3-month tenors. Liquidity in the conventional system shrank from RM41.04b to RM37.84b and liquidity in the Islamic system was down from RM33.79b to RM33.12b yesterday morning. BNM called for a RM37.80b conventional money market tender and a RM33.10b murabahah money market tender, both for 1-day money, at 4pm. The Malaysia Islamic Overnight Rate was 3% as at 3 Jan.

AmanahRaya REIT’s sale of Holiday Villa in Langkawi is completed

AmanahRaya Real Estate Investment Trust and Plenitude Gateway Sdn Bhd, wholly owned by Plenitude Bhd, entered into the sale and purchase agreement on 28 Jun 2023 for the sale of the Holiday Villa Beach Resort & Spa Langkawi at a price of RM145m. The property, a 4-star beach resort hotel with 238 rooms on 3 parcels of freehold land, is leased for the period of 13 Jul 2016 to 12 Jul 2026 to Langkawi Holiday Villa Sdn Bhd with an option to extend the lease by 10 years. It was acquired by AmanahRaya REIT at RM55m on 26 Feb 2007 and the sale is to help reduce its borrowings. AmanahRaya-Kenedix REIT Manager says that the gain on disposal will be RM45m to be recognised in FY Dec 2024. Plenitude announced in Jun 2023 that the purchase will diversify its regional risk in the hospitality industry. AmanahRaya REIT closed at 40 sen. Plenitude closed at RM1.40.

Morgan Stanley expects oil prices to fall in 2024

The investment bank predicts that Brent will be USD80 per barrel in 1H2024 before slipping towards end-2024 as supply outstrips demand due to diminishing post-covid recovery. Oil demand growth will fall from 2.2m barrels per day (bpd) in 2023 to 1.2m bpd in 2024. Growth in supply from non-Opec countries will climb by 1.7m bpd driven by the US, Brazil, Guyana and Canada. The Opec production cuts agreed in late Nov 2023 will be extended throughout 2024 and no further deepening is anticipated. Base case projections show inventories building by 0.5m bpd. Angola announced quitting Opec in Dec. Brent traded USD77.73 while US West Texas Intermediate was USD72.31.