Capital markets executive summary | Wed 10 May 2023

Capital markets executive summary | Wed 10 May 2023

Citaglobal bags RM261m KVDT2 rail rehabilitation

The Klang Valley Electrified Double Tracking Phase 2 (KVDT2) is being developed by Dhaya Maju LTAT at a cost of RM4.475b. It was awarded on 19 Aug 2019 but the previous government cancelled it in a press conference on 28 Aug 2020. Subsequently, Dhaya Maju LTAT filed a judicial review application in Sep 2020 which finally resulted in the developer being allowed to continue with the project in Aug 2022. The entire project entails replacing the 25-year-old tracks, an electrification system, and upgrading and maintaining facilities for 2 railways tracks Salak South-Seremban and Simpang Port Klang-Port Klang. The contract awarded to Citaglobal by main contractor Dhaya Maju Infrastructure (Asia) Sdn Bhd will be completed in 3 years from 1 Jun 2023 and covers the supply, delivery, construction, completion and maintenance of bridges, culverts, drainage and fencing works for the 265km network. With the win, Citaglobal’s order book is almost RM1b. The counter closed at RM1.44.

Edelteq prices IPO at 24 sen

The company – which will list on the ACE Market on 30 May – set the price at a multiple of 23.53 times the RM5.44m or 1.02 sen per share net profit for FY ended 31 Dec 2022. Edelteq provides engineering support for integrated circuit assembly and test processes within the semiconductor industry. Of the RM24m IPO proceeds, the company will use RM10.3m to refinance bank borrowings, RM3.7m for the construction of a new factory in Batu Kawan, Penang and RM3.1m for research and development. The remaining RM3.6m is for listing expenses. Its long-term prospects are driven by advancements in electronic products, growing global demand for electronics, rising adoption of internet of things and advances in automotive electronics. Edelteq stands to benefit from the US-China tensions which force companies to relocate to Malaysia and Singapore and the expansion of fabrication facilities in China and the US with its presence in the countries and existing relationships with US semiconductor companies including Infineon. Revenue rose from RM24m in 2021 to RM24.4m in 2022 despite weaker supply and refurbishment segment of integrated circuit assembly and test consumables. The local market accounted for 77.6% of revenues. Profit after tax fell from RM9m in 2021. UOB Kay Hian is the principal adviser, sponsor, underwriter and placement agent.

Manufacturing sector IPI up 4.1% in Mar 2023

Overall, the industrial production index (IPI) – a monthly economic indicator which measures real output in several sectors relative to a base year – increased 3.1% year-on-year. The mining sector staged a rebound of 0.8% although the electricity index turned negative from +1.1% in Feb to -0.3%. Month-on-month, the IPI jumped 8.3% after falling for 3 months straight. The 4.1% year-on-year rise in manufacturing sector output in Mar was contributed by domestic-oriented industries which grew 5%, against 7% in Feb. The domestic-oriented industries were supported by the manufacture of motor vehicles, trailers and semi-trailers +9.8%, and fabricated metal products other than machinery and equipment +5.5%. Export-oriented industries grew 3.6%, underlying which are the manufacture of computers, electronics and optical products +7.1%, and production of vegetable and animal oils and fats +15.2%. Month-on-month, the manufacturing sector rose 7.8% after 3 consecutive months of decline.

Cloudpoint sets IPO price at 38 sen

The company will list on the ACE Market on 29 May – 1 day before Edelteq. It is an information technology solutions provider in enterprise and data centre networking, cybersecurity, cloud services and software application solutions. The IPO entails a total offering of 159.48m shares with 53.16m for institutional and selected investors, 26.58m for the Malaysian public via balloting, 13.29m for eligible directors and employees, and 66.45m for investors approved by the Ministry of Investment, Trade and Industry. It will help raise RM40.4m of which RM13.3m will be used for building a new security operations centre, enhancing the existing network operations centre and establishing a new public cloud infrastructure. The company has earmarked RM15.8m for working capital, RM7.8m for office relocation and RM3.5m for listing expenses. M&A Securities is the adviser, sponsor, underwriter and placement agent.

India’s Mankind Pharma jumps 31% on IPO

The company that makes Manforce brand condoms now has a market capitalisation of INR566.43b (RM30.68b) in the country’s biggest listing this year. The offer price was INR1,080. The company – which also makes India’s best seller home pregnancy test kit Prega News – has grown into the 4th largest domestic pharmaceutical company by addressing affordability, accessibility and quality through lower pricing. Macquarie Research gave the stock an outperform rating. The IPO included the sale of INR43.26b (RM2.34b) existing shares including by founder Ramesh Juneja, and allocated INR12.98b (RM703m) worth of shares to 77 anchor investors including Canada Pension Plan Investment Board, Government of Singapore, Goldman Sachs and Abu Dhabi Investment Authority.