Executive summary for capital markets news | Wed 12 Apr 2023

Executive Summary for Capital Markets News | Wed 12 Apr 2023

Citaglobal positive on power supply for ECRL

The company’s consortium with Reneuco Berhad is expected to receive more concrete news in the next few months. The consortium is finalising the presentation and details with Malaysia Rail Link Sdn Bhd, a wholly-owned subsidiary of the Minister of Finance Inc and the East Coast Rail Link (ECRL) project owner. The consortium had bid to supply power to the project and to future industrial developments along the 665-kilometre alignment. China Communications Construction Company Ltd. (CCCC) is the engineering, procurement, construction and commissioning (EPCC) contractor for the project. It will connect Kota Bharu-Kuala Terengganu-Kuantan Port City-ITT Gombak-Port Klang at speeds of up to 160 km/h thereby cutting travel time from Kota Bharu to ITT Gombak to 4 hours. The project being built at a cost of RM74.96b is scheduled to be completed by end of 2026. Citaglobal closed at RM1.45 while Reneuco closed at 22 sen.

KLK completes acquisition of Italy’s Temix Oleo

KLK Oleo – the resource-based manufacturing division of Kuala Lumpur Kepong Berhad (KLK) – bought a controlling stake in the target for an undisclosed sum. Temix is based in Milan, Italy with a production plant in Calderara di Reno, Bologna. It employs over 100 employees and recorded turnover of RM697.4 million in 2022. The parties have received all necessary approvals and fulfilled all customary closing conditions. The acquisition is in line with KLK’s long-term growth strategy through product offering diversification, increasing access to key customers and product specialisation across its European operations. KLK Oleo is a global integrated producer of oleochemical, derivatives and specialty chemicals with manufacturing sites in Malaysia, Indonesia, China, and Europe. KLK closed at RM21.54.

Aeon Credit Service net profit up 14.3%

The company’s net profit grew from RM365.42m in FY2022 ended 28 Feb 2022 to RM417.69m in FY2023. Revenue climbed 7.6% from RM1.52b to RM1.64b. Total transaction and financing volume for the financial year-to-date increased 31% to RM6.25b against the corresponding preceding year. The company achieved higher pre-tax profit of RM546.98m for the financial year-to-date compared to RM526.82m in the same period last year. The increase was contributed primarily by a RM115.37m rise in revenue, RM25.3m higher bad debt recoveries and a reduction in operating expenses of RM28.08m. These were offset by RM144.55m higher impairment losses on financing receivables. Loan loss coverage ratio was 252% as at 28 Feb compared to 289% the prior year, suggesting lower loan loss provision or higher net charge offs. For 4QFY2023, the company’s net profit quadrupled from RM23.38m to RM95.34m, whereas revenue jumped 19.1% from RM362.97m to RM432.66m. It announced a final single-tier dividend of 21 sen per share. Despite being positive of improving business sentiment, Aeon Credit expects to monitor the credit risks of its financing portfolio to maintain the same performance in FY2024. The counter closed at RM11.92.

Asia Gas Hub partners TruMarx for Malaysian natural gas marketplace system

Energy market solutions provider Asia Gas Hub (AGH) will implement a customised version of CG Hub to power GasX which will be launched in June 2023. GasX is intended to open up the natural gas market in Malaysia and will serve as a marketplace for buyers and sellers to post, negotiate and execute transactions. CG Hub is the world’s first platform that offers transparent trading of gas certified by methane emissions generated during production and is part of the COMET energy marketplace system developed by Chicago-based TruMarx Data Partners Inc. CG Hub will equip GasX with a centralised hub for bids and offers, customised details for each transaction, a notification system, click to execute or begin bilateral negotiations, automated transaction confirmation, and audit logs for regulatory compliance.

China polyester makers awaiting Beijing approval for USD10b Indonesia factory

East China-based Tongkun and Xinfengming are planning a refinery-petrchemical complex in North Kalimantan province – their first foreign centure – to produce feedstock for chemical fibre. The complex includes a 200k barrel per day refinery and 800k tonne per year ethylene plant. It will be located at the industrial park nearby a USD2.6b hydropower project meant to attract aluminium, battery and electric vehicle manufacturers. Tongkun has begun feasibility studies for the project. The consortium is also seeking the approval of the National Development and Reform Commission, China’s state planner. While the Chinese government limits approvals for new domestic refineries to cut carbon emissions and a fuel supply overhang, it has also capped capital outflows since 2018.