Executive summary for capital markets news | Thu 6 Apr 2023

Executive Summary for Capital Markets News | Thu 6 Apr 2023

Petronas Carigali sells 50% of Samarang PSC to Sabah state-owned company

The Samarang field – 50km offshore Sabah – is producing 36,000 barrels of oil and gas equivalent per day. Gas production of 134 standard cubic feet per day supplies customers in Kota Kinabalu and Labuan. On 7 Dec 2022, Petronas and the Sabah state government signed a commercial collaboration agreement. In Mar 2023, Petronas Carigali Sdn Bhd (PCSB) – a wholly-owned subsidiary of Petronas – and SMJ Sdn Bhd – which is wholly-owned by the Sabah state government – signed a heads of agreement confirming SMJ’s participation in the Samarang production sharing contract (PSC). The parties have now entered into a farm out agreement for SMJ’s non-operating participating interest in the PSC and the transaction is pending regulatory approvals and other conditions precedent. PCSB remains the operator.

G Capital proposes renounceable right issue of RCULS for hydropower project

The company plans to issue RM112.9m nominal value redeemable convertible unsecured loan stocks (RCULS) on the basis of four RCULS for every existing ordinary share. The exercise involves issuing 1,411,039,484 RCULS at the nominal value of 8 sen each. The RCULS have a 5-year tenor and will pay quarterly interest at 8% per annum. The rights issue will raise at least RM17.21m, or RM112.9m if fully subscribed. During the 5-year tenor, the holders may trade the RCULS on Bursa, convert them into new G Capital shares by surrendering 1 RCULS with cash at a conversion price to be determined later or wait for the non-cash conversion option at the end of maturity. The proceeds will be used to part finance the 20MW mini-hydropower projects in Perak – 10MW Sungai Perak Salu, 8MW Sungai Temelong and Sungai Ibul, and 2MW Sungai Geroh. The plants will contribute RM653.62m in total revenues for the entire 21-year term of the power purchase agreement with Tenaga Nasional Berhad. The company also has 26MW hydropower projects in Pahang that the Sustainable Energy Development Authority (SEDA) had given its feed-in approval on 6 Dec 2022. The counter closed at 43 sen.

Pecca’s aviation unit gets EU certification for aircraft upholstery

Pecca Aviation Services Sdn Bhd (PASSB) has received the Production Organisation Approval (POA) certificate from the European Union Aviation Safety Agency (EASA). The approved scope of work is wrapping, cutting and sewing of leather or fabric for aircraft seat dress covers, head rest covers and armrest covers. The company is now authorised to provide upholstery and aircraft interior repair and refurbishment services for all EASA-registered aircraft. The POA is valid indefinitely unless revoked and certifies that PASSB is compliant with the European Union regulations. PASSB is the first and only Malaysian company with an EASA POA C2 certificate. The company’s existing customer base covers Malaysian registered aircraft including private jets and helicopters under the Civil Aviation Authority of Malaysia’s Part 145 AMO C6 rating. The company is expanding its production capacity to 40k seats per month from 20k-22k seats currently with its second manufacturing facility in Serendah. The counter closed at RM1.02.

IILM reissues USD740m short-term sukuk to facilitate liquidity management

The International Islamic Liquidity Management Corporation (IILM) established on 25 Oct 2010 by central banks and a multilateral organisation to create and issue Shariah-compliant financial instruments to facilitate cross-border investment flows, international linkages and financial stability by creating more liquid Shariah-compliant financial instruments for institutions offering Islamic financial services. It supports Islamic banks in the event of a liquidity crisis and potentially provide Islamic financial institutions access to highly-rated liquidity instruments. The Kuala Lumpur-headquartered company has successfully reissued a total of USD740m short-term sukuk – USD200m 1-month tenor at 4.8% per annum, USD320m 3 months at 5% and USD220m 6 months also at 5%. This is the 4th auction for the year and strong demand from primary dealers and investors gave an orderbook of USD1.7b or bid-to-cover ratio of 231%. The issuance is out of IILM’s A-1 (S&P) and F1 (Fitch) rated USD4b short-term sukuk programme. The total outstanding amount of IILM sukuk is USD3.51b.

Proton’s sales grew 50.9% in 1Q2023

The company sold 14,573 vehicles in Mar, up 3.8% against Feb and 11.9% compared to Mar 2022. For 1Q2023, total sales were 40,287 units. Proton’s market share for Mar was 18.7% , 2nd in the sales table rankings. For 1Q2023, its market share was 21.2%. Total industry volume for Mar was 78,000 units, breaking the previous record of 76,657 units in Dec 2022. The Persona has been the B-segment sedan leader for 3 consecutive months with sales of 2,421 units in Mar and total quarterly sales of 6,773 units, up 79.2% year-on-year. The X50 is the best-selling SUV with 3,414 units sold in Mar and 1Q sales of 9,668 units, up 34.7% year-on-year. The Exora is the best-selling C-segment MPV with 426 units sold in Mar. The company’s best-seller continues to be the Saga with 6,313 units sold in Mar and 1Q sales of 17,446 units, up 84.6% from a low base in early 2022 due to floods affecting production. The numbers may be inflated because of the rush to deliver cars by the deadline of 31 Mar for bookings made during the Penjana incentive period. A better reflection of market sentiment should emerge in 2Q2023. The company will launch the X90 soon. The company’s 50.1% shareholder – DRB-Hicom – closed at RM1.43.