Capital markets executive summary | Fri 12 Jan 2024

Capital markets executive summary | Fri 12 Jan 2024

Prolintas gets RM2.7b financing for IPO

Prolintas Managers Sdn Bhd, wholly owned by Projek Lintasan Kota Holdings Sdn Bhd, obtained a RM2.7b tawarruq asset financing from Bank Pembangunan Malaysia Bhd. The financing is for the restructuring of the Ampang–Kuala Lumpur Elevated Highway (AKLEH), the Guthrie Corridor Expressway (GCE), Lebuhraya Kemuning–Shah Alam (LKSA) and the Kajang Dispersal Link Expressway (SILK). Prolintas aims to lower tolls by extending the concession period ahead of the listing. The IPO plan, which entails injecting the concession companies into a business trust, was in the draft prospectus lodged in 4Q2023. Permodalan Nasional Bhd plans to raise up to RM1.5b, valuing the highway trust at RM3.5b. The listing had been held back by the government’s approval for changes in the highways’ shareholdings.

LBS Bina’s sukuk programme assigned AA- final rating

MARC Ratings assigned the final rating to the company’s RM750m Islamic medium term notes programme. Take-up rate for ongoing developments with RM7.1b gross development value (GDV) was 76% at end-Aug 2023 due to focus on affordable and mid-range properties in the Klang Valley with resilient demand. Ongoing projects are mostly in the 633-acre KITA@Cybersouth township in Dengkil and the 470-acre LBS Alam Perdana township in Puncak Alam. Medium term earnings will be supported by RM2.5b unbilled sales as at end-Jul 2023. In the next 2-3 years, the company will launch new phases of the existing Klang Valley developments comprising 13k units with RM7.1b GDV. LBS Bina has a 2,900-acre landbank in Kuala Langat and Cyberjaya in the Klang Valley and Batu Pahat and Kota Tinggi in Johor. Inventory levels fell from RM232.2m at end-2021 to RM101.6m at end-1H2023. Operating profit margins were steady at 16%-19% in the last 5 years. Cashflows from operations (CFO) interest coverage was 4.14 times and CFO debt coverage was 0.18 times at end-1H2023. Unencumbered cash was RM136.4m. Gross debt-to-equity ratio was 0.68 times and net was 0.44 times. Borrowings should climb to RM1.25b in 2025. The counter closed at 61 sen.
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MCIS Insurance’s A1 and P1 ratings affirmed

RAM Ratings affirmed its insurer financial strength ratings and the A2 rating of its RM200m tier 2 subordinated debt (2021/2031). The one-notch differential is given the notes’ unsecured and subordinated status. MCIS Life’s market share is less than 2% of annualised premium equivalent in 2022 and 1H 2023 as it focuses on the lower-income segment. Despite being relatively untapped, stiff competition is emerging from takaful players while higher cost of living has depressed demand. Employee benefit plans for corporates make up more than half of total new business (NB) recently. Pre-tax return on assets averaged 0.8% in 2020-2022. The company turned around from a RM44.4m pre-tax loss in 1H2022 to RM33.1m pre-tax profit in 1H2023. Management expense and commission ratio was 35% in 2022, more than the 23% industry average. Capital adequacy ratio was 224% at end-Jun 2023 against the industry’s 216%. Sanlam Limited, the largest non-banking financial services company in Africa, owns 51% of MCIS. The rating does not reflect parental support from Sanlam because MCIS’ contribution is small, although the rating may be reassessed in the event of a divestiture. In Jan 2023, Berjaya Corporation Berhad announced that it is negotiating for a controlling stake.

Another Pixelvest director charged with money-laundering

The Securities Commission charged Chin Wai Lan in 2 separate Sessions Courts with 17 charges of receiving RM164,587,103 in unlawful proceeds in her bank account or through accounts of companies which she was a director of. She pleaded not guilty and claimed trial. The charge sheets named New Straits Ventures Sdn Bhd, SC Wealth Planner Sdn Bhd, Pinetree Field Sdn Bhd, Pixelvest Sdn Bhd, Quarters Venture Sdn Bhd and Quarters Capital PLT. The charges framed under Section 4(1)(b) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001, read together with Section 87(1)(a) were for the alleged offences committed in 2020-2022. The penalty if convicted is up to 15 years’ imprisonment and a fine of at least 5 times the value of the alleged offence or RM5m, whichever is higher. Sessions Court judge Datin Sabariah Othman set bail at RM7m with two sureties, while Sessions Court judge Azrul Darus set similar bail conditions with 1 surety. She presented a flight risk, having been apprehended at KLIA 3 hours after the SC notified her about the warrant for her arrest. The courts ordered her to surrender her passport and to report to the SC once a month.

US inflation rose in Dec

The consumer price index (CPI) climbed 3.4% in Dec 2023 year-on-year, while it was up 0.3% month-on-month, both above forecast. Core CPI excluding food and energy rose 3.9% year-on-year against 3.8% forecast. It gained 0.3% from Nov to Dec. There were increases in shelter, electricity and motor-vehicle insurance. Used-car prices strengthened for a 2nd month against expectations of a decline. For the whole of 2023 however, inflation broadly eased which is driving expectations of lower borrowing costs this year. Although the latest economic projections suggest 3 rate cuts in 2024, the Federal Reserve rubbished the idea that the 1st cut will be in Mar. The Fed will meet on 30-31 Jan and after that on 19-20 Mar.