Capital markets executive summary | Thu 20 Jul 2023

Capital markets executive summary | Thu 20 Jul 2023

Critical Holdings plans ACE Market listing

The engineering company submitted its draft prospectus to Bursa Malaysia on 13 Jul. The initial public offering (IPO) entails the issuance of 74.35m new shares, with 18.59m for the Malaysian public. 3.72m shares are for directors and employees. 46.47m shares are for bumiputra investors approved by the Ministry of Investment, Trade and Industry via private placement. 5.58m shares are for selected investors via private placement. The company’s enlarged shares will be 371.74m shares. 37.17m existing shares will be offered to selected investors via private placement. Critical will use the proceeds for acquiring a new regional office, expanding its sales and technical teams, allocating capital expenditure towards strategic initiatives, and for working capital. The company’s core business is in design and build, project management, supply, installation, testing, commissioning, maintenance and services support of mechanical, electrical and process systems and equipment for critical facilities. MIDF is the principal adviser, sponsor, underwriter and placement agent.

INTI’s MTN programme assigned preliminary AAA(fg) rating

RAM Ratings assigned the enhanced preliminary rating to INTI Universal Holdings Sdn Bhd’s RM300m medium term notes (MTN) programme based on an irrevocable and unconditional guarantee provided by Credit Guarantee and Investment Facility. The company was founded in 1986 and operates a university in Negri Sembilan and a college each in Selangor, Penang and Sabah. There are more than 13k students taking pre-university, undergraduate and postgraduate programmes, and professional certificates. The issuance proceeds are for operating expenditure for the campuses in Nilai, Penang and Subang. INTI is 51% owned by Hope Education Group (Hong Kong) Co Ltd and 49% by Intisari Tadbir Sdn Bhd. The company ranks in the top 10% of public and private higher education institutions in Malaysia. INTI should have better access to the Chinese market, which represents half of foreign students in Malaysia, given its links to Hope. The company’s funds from operations debt coverage ratio will stay healthy at 0.17 times. Once the MTNs are completely issued, dividend payouts will cause the gearing ratio to peak at greater than 2.5 times.

Siab Holdings acquires Taghill Projects for RM122m

The construction company will acquire 2m or 100% ordinary shares in Taghill Projects Sdn Bhd, a project and contract management consultancy company. The purchase price will be satisfied through RM96m cash and the issuance of RM26m shares at 13 sen. The acquisition is part of the company’s long-term business expansion and growth strategy. It will enable both companies to leverage their combined strengths in the construction industry and their respective business relationships with various industry stakeholders. The combined order book is RM1.71b comprising Siab’s RM280.53m and Taghill’s RM1.43b. M&A Securities is the principal adviser and Eco Asia Capital Advisory is the financial adviser and independent valuer. The acquisition will be completed by 4Q2023. Siab also announced a renounceable rights issue of 919,512,111 new shares, together with 459,756,056 free detachable warrants, on the basis of 4 rights shares for every 3 existing shares and 1 warrant for every 2 rights shares subscribed. Siab closed at 14 sen.

Al-Salam REIT could conduct private placement to turnaround Komtar JBCC

Maybank thinks that the real estate investment trust (REIT) is planning a private placement to fund RM35m in enhancements for the complex. The refurbishments include a pedestrian overhead bridge to connect Komtar JBCC to the planned link bridge of the rapid transit system (RTS) link Bukit Chagar Station and an upgrade to the facilities and overall layout. The bank expects the turnaround strategy to be a key re-rating catalyst for Al-Salam because the pedestrian overhead bridge connecting to the RTS’ 10k passengers per hour per direction capacity will drive footfall, higher rental rates and parking occupancy for Komtar JBCC. In addition, Al-Salam will extend Komtar JBCC’s operating hours from 10am-10pm to 6am-12am daily. With the reconfiguration of its tenant mix and entry of premium brands, Komtar JBCC’s total revenue should increase by 30% in 2Q24. The counter closed at 46 sen.

Asia convertible bonds market booms as companies go cheap

With soaring interest rates forcing companies to seek cheaper funding options, the value of convertible and exchangeable bonds issued so far in 2023 in Asia Pacific rose 305%. Last week, LG Chem issued USD2b, the largest exchangeable bond in Korea, that would convert into shares of its subsidiary LG Energy Solution. Equity-linked products issued so far in 2023 reached USD5.56b, up from USD1.37b from the same period in 2022. Apart from interest rates, the upcoming debt refinancing schedules should keep convertible issues elevated for the rest of 2023 and into 2024.