Capital markets news summary for Tue 28 Mar 2023

Capital markets news summary for Tue 28 Mar 2023

Astro’s 4Q2023 net profit down 57%

The company’s net profit for 4Q ended 31 Jan 2023 was RM54.75m compared to RM126.59m in 4Q2022. Revenue also fell from RM1.03b to RM990.67m. The company blamed higher content and broadband costs, which was offset by lower staff-related and merchandise costs. Other causes of the drop in performance include higher amortisation and impairment of tangible assets, increase in depreciation and higher tax expenses. These items were partially offset by lower net financing costs due to the unrealised forex impact arising from unhedged lease liabilities. For the full year, net profit declined from RM460.88m in FY2022 to RM259.04m in FY2023, while revenue also decreased from RM4.18b to RM3.8b. Astro halted further dividend payments to preserve cash after having declared 3 sen per share or 60% payout in FY2023. In contrast, its 2022 dividends were 6.75 sen per share. The company attributes this departure from the dividend policy of 75% to the recognition of a non-cash impairment of RM763m for historical costs of investments in subsidiaries amid macro and industry challenges. The counter closed at 66 sen.

Gamuda partners UK’s Castleforge to buy Winchester House London for RM1.39b

Venta Belgarum II (VB II) – Gamuda 75% and Castleforge Partners 25% – signed a sale and purchase agreement with the vendor – Wessex Winchester – to acquire 100% of the equity interest in Wessex Winchester Propco for GBP257m cash or GBP809 psf. GBD20m will be paid upon signing and the balance within 24 months of exchange. The acquisition is expected to be completed in May 2023. Gamuda’s outlay for its 75% share is GBP52m which will be funded via foreign currency bank borrowings. The remaining funds will be raised through non-recourse debt. Castleforge – a real estate private equity investor – will be the development manager. Gamuda plans to sell down its 75% shareholding in VB II to interested investors within 5 years after locking in pre-lease arrangements with quality tenants. Wessex Winchester Propco owns the 8-storey 317,000 sq ft commercial building called Winchester House London, which houses Deutsche Bank’s London headquarters with the lease set to expire in Apr 2024. Gamuda plans to refurbish the property into a best-in-class, top-rated environmentally sustainable office space that caters to multinational financial institutions, legal firms, and tech companies. The counter closed at RM4.17.

CAB Cakaran plans bonus issue of warrants

This will entail the issuance of 233.96m free warrants for every 3 shares held. The exercise price has been fixed at 63 sen, which is a 10% discount to the 5-day volume weighted average market price of CAB Cakaran’s shares up to 24 Mar of 70.01 sen. The company’s share price closed at 74 sen, up from 53 sen at end-Feb. If the warrants are fully exercised, the company will raise RM147.4m in proceeds to be used for working capital. The company has no other outstanding warrants. It will also enlarge the company’s share capital from RM145.98m comprising 701.89m shares to RM293.38m comprising 935.86m shares. CAB Cakaran expects the exercise to be completed by 2Q2023 after receiving shareholders’ and Bursa’s approvals. For 1Q ended 31 Dec 2022, the company posted net profit of RM41.87m from RM7.68m in 4Q ended 30 Sep 2022, while revenue climbed 12.47% to RM557.31m from RM495.5m.

Strong 2023 start potentially indicates another record new vehicle sales

Total industry volume (TIV) jumped 30% to 112,128 units in the Jan-Feb 2023 period year-on-year. In Feb, TIV rose 27% month-on-month and 39% year-on-year to 62,649 units. This could be the result of accelerated deliveries as the 31 Mar deadline for Penjana tax holiday bookings draws near. Year-on-year sales for Mazda was up 200%, Proton 54%, Toyota 45% and Perodua 43%. Nissan bucked the trend and contracted 12%. The order backlog remains high even 8 months after the Penjana tax holiday expiry in Jun 2022. This seems counter to earlier scepticism of the industry’s sales resilience, although the Apr 2023 numbers will be interesting to see if the momentum continues. MIDF projects 2023’s TIV at 713,000, almost the record high of 721,000 units in 2022.

Sarawak’s SMD Semiconductor bags contract to render chip design services

The Sarawak state-owned company signed a Framework Service Agreement with X-FAB Global Services, a German technology company. The agreement is in line with X-FAB’s expansion plan at the Samajaya High Technology Park to increase its foundry output from 30,000 to 40,000 wafers per month by 2025. The collaboration received the Sarawak state government’s support as the state embraces industry revolution 4.0 – which is characterized by automation and data-driven productivity – in its drive towards a high-value economy. X-FAB is one of the world’s leading specialty foundry groups for analog and mixed-signal semiconductor technologies serving the automotive (50% of manufacturing volume), industrial and medical industries. It provides manufacturing and design support services to customers that design analog and mixed-signal integrated circuits and other semiconductor devices for use in their own products or the products of their customers.