Capital markets executive summary | Tue 16 May 2023

Capital markets executive summary | Tue 16 May 2023

Teo Seng 1Q net profit soars 373%

One of Malaysia’s biggest egg producers saw its net profit increase from RM4.16m in 1Q2022 to RM19.68m in the 1st quarter ended 31 Mar 2023. Revenue increased from RM146.36m to RM183.4m. The performance of the Johor-based company’s farming segment was driven by better egg selling prices, improve sales volumes and higher contribution from sale of old hens. The government’s egg subsidy offset the high feed cost. The investment and trading of poultry-related products segment jumped 17.9% in pre-tax profit. Although revenue increased marginally quarter-on-quarter by 1.5% from RM180.6m in 4Q2022, net profit still recorded a significant jump of 51%. The company behind the Happy Egg brand says that eggs are the cheapest source of protein but the industry is beset with high raw materials cost due to a weak ringgit and global inflation. Earnings per share rose from 1.42 sen to 6.7 sen year-on-year. The company declared a 2 sen dividend, its 1st since 2019. The counter closed at 88 sen.

Cahya Mata Sarawak could pay RM266m if PPA with SESCO terminated

60%-owned Cahya Mata Phosphates Industries Sdn Bhd (CMPI) has a phosphate complex at Samalaju Industrial Park. CMPI signed a take-or-pay power purchase agreement (PPA) with Cahya Mata Sarawak Berhad’s (CMSB) proportionate corporate guarantee for payments to SESCO under the PPA. Despite the complex not achieving commercial operation as at 31 Dec 2022, SESCO billed CMPI RM266m. On 11 May 2023, SESCO issued a default notice stating that the PPA was deemed terminated and that the electricity supply would be terminated on 13 May. Since the emergency arbitrator at the Asian International Arbitration Centre refused to grant interim measures, CMPI sought the Kuching High Court’s injunction on 10 May 2023 to restrain SESCO from terminating the electricity supply. CMSB closed at RM1.04.

Eversendai claims to have RM11b order book

The company said that the figure includes an additional 9 projects worth RM1.1b in Saudi Arabia, India, United Arab Emirates, Qatar and Singapore. The construction engineering company which fabricates structural steel and mechanical components also claims that it has very good chances of securing more projects under Saudi Arabia’s Vision 2030 programme. The country has launched several development projects including the King Salman Park, Red Sea Development, NEOM smart city, Qiddiya entertainment megaproject and AMAALA property megaproject. Eversendai’s existing projects which are on-going include the King Salman Park loop bridges and O&M building and NEOM-Sindalah island cluster 1. The positive outlook for the company comes amidst the weakest financial performance as net loss widened from RM137.08m in FY2021 to RM359.39m in FY2022 with fabrication capacity utilisation at a record low of 30%. Revenue plunged 26.54% from RM1.22b to RM897.93m. The counter closed at 9.5 sen.

China opens onshore interest rate swaps to foreign investors

The Swap Connect programme between mainland China and Hong Kong provides overseas funds with easier access to the USD3t interest rate swap market that will help hedge their exposure to the world’s 2nd-biggest bond market. The new programme comes as China’s sovereign bond market experiences a 7-week rally with traders confident that the central bank will loosen policy to support the economy. The channel helps open up to more global investors after concerns were raised over regulatory crackdowns and geopolitical tensions. The country has set a CNY20b (USD2.9 billion) daily limit for net trading under Swap Connect, and instruments eligible include swaps referencing the 7-day fixing repurchase rate, and the 3-month and overnight Shanghai Interbank Offered Rate. 20 banks have been authorised to structure trades for foreign funds through Hong Kong.

Saudi Arabia’s Jamjoom Pharmaceuticals in USD336m IPO

The company is considering raising SAR1.26b (RM1.51b) in an initial public offering (IPO) in Riyadh, the biggest listing in the country yet. The Jamjoom family are offering 21m shares at SAR56-SAR60 (RM67.16-RM71.96). This implies a valuation of SAR4.2b (RM5.04b). Saudi Economic & Development Holding Co and Al Faisaliah Group have agreed to become cornerstone investors by subscribing for 24.6%. The kingdom’s IPO market in 2023 has only raised USD72m compared to USD4b by this time last year. Jamjoom Pharma’s IPO will be the largest since Saudi Aramco Base Oil Co’s USD1.3b listing in Dec. Morabaha Marina Financing, a non-bank finance institution, is going ahead with its IPO bookbuilding to raise USD83m. Oil and gas related companies like ADES International Holding, an oil and gas driller backed by the country’s wealth fund, delayed its IPO to 2H2023 as it waits for the right window. Jamjoom Pharma’s bookbuilding for institutional investors will run from 15-22 May and the retail offering from 30 May-1 Jun. JPMorgan and Saudi Fransi Capital are financial advisers, bookrunners and underwriters, whereas Al Rajhi Capital is an underwriter.