Capital markets executive summary | Wed 3 May 2023

Capital markets executive summary | Wed 3 May 2023

Mulpha’s Australian unit secures AUD160m green construction facility

Mulpha Norwest Quarter Development Pty Ltd accepted the syndicated facility from Australia and New Zealand Banking Group Ltd and Clean Energy Finance Corporation. The facility will be used to finance the construction of Stage 1 of Norwest Quarter – formerly known as The Greens, Norwest City – which is a mixed use residential apartment development in New South Wales. It consists of 9 high-rise towers – 8 to 26 storeys – housing 864 residential apartments. The building will be carbon neutral by incorporating state-of-the-art technology throughout the design and development process. Mulpha’s revenue rose 23.3% from RM787.22m in 2021 to RM970.92m in 2022 driven by the hospitality and investments segments. Net profit, however, fell 80.4% from RM432.9m to RM84.88m due to the one-off gain in 2021 of RM420.9m on disposal of Education Perfect and underperformance of the property division in 2022. The counter closed at RM2.45.

Zelan turns PN17 after external auditors expressed disclaimer of opinion

Nexia SSY PLT was appointed as the company’s external auditors in Dec 2022 after the previous firm Messrs Afrizan Tarmili Khairul Azhar PLT resigned. Messrs Afrizan was sanctioned by the Securities Commission’s audit oversight board for non-compliance with the auditing standards. Nexia said that Zelan Holdings (M) Berhad showed a net balance receivables amounting to RM241.76m at end-Dec 2022. The amount must be fully impaired, which will cause the total liabilities of RM715.72m to exceed total assets of RM559.56m by RM156.16m. Zelan made a net loss of RM5.6m in 2022 compared to a net profit of RM4.06m in 2021 due to discounting of receivables totalling RM23.9m. Revenue fell to RM45.44m from RM45.9m. The counter closed at 4 sen, down 43% year-to-date.

Parlo prices private placement at 20% discount

In Mar 2022, the travel agency proposed a private placement of 131.05m new shares representing 30% of the total issued shares. It said that the issuance will be made in several tranches each with its own price-fixing date and issue price. This would enable the company to secure investors from time to time. Then, Parlo anticipated raising RM14.42m at 11 sen per share. However, the loss-making company fixed the price for the 1st tranche consisting of 98.62m shares at only 7.4 sen or 1.8 sen lower that its 5-day volume weighted average market price. The funds are to be used to support its plan to diversify into medical device consumables and household care products, apart from working capital for its travel services business. The counter closed at 9 sen.

Most economists expect BNM to maintain OPR at 2.75%

16 out of 19 economists believe that Bank Negara Malaysia (BNM) will leave the rate unchanged at the monetary policy committee meeting today. Bank of America, Standard Chartered and UOB anticipate BNM to break the pause since Nov 2022 and tighten monetary policy by 0.25% to 3%. UOB in particular said that the rate hike is necessary to deal with sticky core inflation. RHB said that the challenging external environment and stabilising headline inflation rate weigh heavily on BNM’s decision-making. Inflation eased to a 9-month low of 3.4% in Mar 2023. Kenanga said that the overnight policy rate (OPR) may be adjusted +0.25% if inflationary pressures remain elevated due to strong household spending. Subsidy rationalisation could contribute to the inflationary pressure. Nonetheless, the uncertain global growth outlook and weak external trade and commodity prices offer little probability of any rate hike this year.

IBM replaces workers with AI

The company expects to pause hiring for roles – in particular back-office functions such as human resources – which could be replaced with artificial intelligence in the next 5 years. For IBM, the non-customer facing roles number 26,000 workers, 7,800 or 30% of which could be substituted with artificial intelligence (AI) and automation. Mundane tasks including providing employment verification letters and internal transfers will likely be fully automated. Some human resource functions such as evaluating workforce composition and productivity will not be replaced with AI over the next decade. The company which employs 260,000 workers, will continue to hire for software development and customer-facing roles. New York-based IBM has been working on consolidating its business around software and services.