Capital markets executive summary | Tue 9 Jan 2024

Capital markets executive summary | Tue 9 Jan 2024

Johor Plantations files IPO prospectus exposure

Johor Corp’s Kulim (M) Bhd will retain 65% after the issuance of 464m new shares and an offer for sale of 411m existing shares. 797.5m shares or 31.9% of the enlarged share base are for institutional investors with 312.5m for bumiputra investors approved by Miti and 485m for selected investors. The retail offering comprises 77.5m shares or 3.1% of the enlarged share base with 50m for the Malaysian public, half of which are for bumiputra investors, and 27.5m for the staff. The oil palm planter will use the proceeds to enter the downstream business, repay bank borrowings and for working capital. At 10 Nov 2023, the company’s planted landbank was 55,982ha out of 59,860ha total in 22 estates in Johor and 1 in Pahang. The company’s dividend policy is 50% of net profit. Net profit plunged 80% from RM292.13m in 7M2022 to RM58.34m 7M2023. Revenue slipped 44% from RM1.11b to RM622.36m. The downstream opportunities being assessed include refinery to manufacture products such as specialty oils and fats, which will help in managing price volatility by giving the company flexibility to channel crude palm oil and palm kernel oil to the downstream segments.

Al Rajhi Malaysia assigned AA1 and P1 ratings

RAM Ratings assigned the financial institution ratings based on support from parent Al Rajhi Banking and Investment Corporation SJSC, the largest Islamic bank in the world by total assets, which injected RM541m equity, subscribed for SAR810m subordinated sukuk and extended a USD600m liquidity line. Al Rajhi Malaysia began in 2006 but has less than 1% of financing and deposits. Its digital bank, Rize, was launched in Dec 2022 and 20k customers have been onboarded and RM250m deposits acquired. Rize’s personal financing product was recently launched. Focus on corporates with higher credit quality helped gross impaired financing ratio at 0.4% at end-Sep 2023 against the industry’s 1.7%. Financing growth was 21% annualised in 9M2023 while deposits climbed 17%, although individual deposits made up 9% of total customer deposits. Moderating factors are its subscale operations and high-cost structure. Return on risk-weighted assets doubled from 0.34% in FY2022 to 0.76% in 9M2023 annualised, but weaker than peers because of digital infrastructure expenditure and deposit competition. Common equity tier-1 capital ratio was 10.1% at end-Sep 2023, among the industry’s lowest. Total capital ratio was 23.3% due to the parent’s sukuk subscription.
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Bumitama’s sukuk AA2 rating affirmed

RAM Ratings affirmed the rating of Bumitama Agri Ltd’s RM2b sukuk musharakah (2014/2029). Even with stressed crude palm oil (CPO) prices of RM3,500 per metric tonne in 2024-2025, funds from operations (FFO) debt coverage should be 0.90 times-0.93 times. Lack of sizeable expansions should keep gearing below 0.30 times. Operating profit before depreciation, interest and tax (OPBDIT) jumped 63.7% in FY2022 because of high fresh fruit bunch (FFB) yields and CPO prices earlier in 2022. OPBDIT margin improved to 36.0% despite high production costs. Margin has moderated in 1H2023 as CPO prices normalised and production fell due to adverse weather. Strong cashflows reduced debts by 19% year-on-year at end-Jun 2023. Gearing strengthened from 0.30 times to 0.23 times. Annualised FFO debt cover fell from 1.61 times to 0.69 times. Bumitama ranks in the top 10 listed plantation firms with 187,132ha cultivated in Indonesia at end-Jun 2023. About 82% of its trees are prime-yielding.

Boost Bank and AEON Bank to commence operations

Boost Bank Bhd, 60% owned by Axiata’s Boost Holdings Sdn Bhd and 40% by RHB, received a letter from Bank Negara Malaysia notifying its satisfaction with the operational readiness of the bank. It also received MOF’s agreement for a physical digital bank licence effective from 15 Jan. The conditions for the regulatory approval require Boost Holdings and RHB to provide adequate funds so that Boost Bank can satisfy its obligations and liabilities including customer deposits in the event of winding down. Boost Bank plans to offer embedded finance, which integrates financial services into non-financial offerings already made available to its over 10m customers. The bank will launch alpha testing for employees, family, friends and selected customers. Separately, AEON Credit received BNM’s and MOF’s approvals to run AEON Bank (M) Bhd, Malaysia’s first Islamic digital bank. The bank will offer shariah-compliant digital banking solutions to AEON retail and wholesale customers, and business partners including auto dealers, merchants, suppliers and tenants. The bank will begin beta testing with AEON group employees and will launch a phased roll-out in 1H2024. Grab’s and Kuok Brothers’ GXBank was the 1st digital bank launched on 30 Nov 2023, which leaves only the Sea Ltd and YTL consortium and the KAF-led consortium yet to begin operations. Axiata closed at RM2.54. RHB Bank closed at RM5.51. AEON Credit closed at RM5.77.

Alphacapital and Nusa Kapital sign MOU for gold manufacturing working capital

Nusa Kapital Sdn Bhd, a shariah-compliant peer-to-peer platform, signed a memorandum of understanding with Alphacapital (M) Bhd to help its subsidiary Alpha Nagara Sdn Bhd set up a RM60m working capital fund. The fund will be overseen by Rakyat Trustee Bhd. Alpha Nagara refines precious metals. RM5m is allocated to small investment notes for Alpha Nagara to raise its production capacity over 12 months and the working capital will be used for manufacturing gold bullion including purchasing raw materials such as used gold, expired bars and dore gold. Nusa Kapital sees this collaboration as an opportunity to promote strategic partnerships and acquire more investors.