Capital markets executive summary | Fri 21 Jul 2023

Capital markets executive summary | Fri 21 Jul 2023

Public Investment Bank underwrites Mercury Securities IPO

The company signed the agreement for its initial public offering (IPO) on the ACE Market. The exercise will see the public issuance of 157.1m new shares or 17.59% of the enlarged share base of 893m shares. 44.65m new shares are for the Malaysian public, 22.33m for directors and employees, 45.47m for selected investors via private placement and 44.65m for bumiputra investors approved by the Ministry of Investment, Trade and Industry (MITI). Public Investment Bank will underwrite 66.98m shares for the Malaysian public and for eligible persons. The IPO also entails an offer for sale of 71.51m existing shares or 8.01% via private placement to selected investors and bumiputra investors approved by MITI. Mercury Securities Sdn Bhd provides stockbroking, corporate finance advisory services, margin financing facilities services, underwriting and placement services, and nominee and custodian services. Public Investment Bank is also the principal adviser, sponsor and sole placement agent.

Cagamas’ MARC-1 and AAA ratings affirmed

MARC Ratings affirmed its ratings on the RM20b conventional and Islamic commercial papers and RM60b conventional and Islamic medium term notes programmes. The main drivers of the ratings are Cagamas’ status as the national mortgage corporation, its strategic importance in the domestic financial system, strong capitalisation and stable liquidity position. The company bought RM19.3b loans and financing under its purchase-with-recourse scheme in 2022, above the RM15b target. The amount was pushed higher by financial institutions’ liquidity needs in complying with Bank Negara Malaysia’s requirements. Cagamas’ outstanding loans and financing portfolio increase to RM40.3b from RM36b in 2021. At end-2022, its total capital ratio was 38%, enough for future growth. Its funding and liquidity positions benefitted from easy access to the capital markets with RM24.9b issued in 2022. In addition, Cagamas earned RM300.3m pre-tax profit, up from RM281.4m in 2021.

MST Golf closed below IPO price

The company ended its debut on the Main Market at 78 sen, down 3.7% from its IPO price of 81 sen. It was the 4th most active stock with 75.78m shares changing hands. So far, there have been 19 IPOs, with 3 other Main Market and 1 ACE Market listings closing below their respective IPO prices. Comparatively, MST Golf did not perform badly compared to Radium’s 23% below IPO. The 81 sen price was arrived at based on price-earnings ratio (PER) of 27 times its 3 sen earnings per share for the financial year ended 31 Dec 2022. That ratio was above Bursa Malaysia’s Consumer Index PER of 20.02 times. MST Golf’s peers, for example, InNature is trading at 18.97 times, AEON at 14.58 times and Padini at 10.62 times. Notwithstanding, Mr DIY trades at 31.02 times.

Sime Darby and Ramsay hired BofA and Deutsche for USD1.3b JV sale

The companies hired Bank of America and Deutsche Bank for the sale of Malaysia-based Ramsay Sime Darby Health Care. The exercise will be launched in the next 2 months depending on market conditions. This will be the biggest healthcare deal in Southeast Asia since 2019 amidst investor interest in healthcare assets due to the sector’s ability to stay profitable even during economic downturns. For example, Singapore’s Thomson Medical last week announced the acquisition of Far East Medical Vietnam for USD381.4m. Ramsay is Australia’s largest operator of private hospitals. Ramsay Sime Darby was established in 2013 to expand their healthcare business in Southeast Asia. The company, which employs 4,500 people, has 1,530 licensed beds in 7 hospitals in Malaysia and Indonesia. IHH, one of Asia’s largest private healthcare groups, offered to buy Ramsay Sime Darby for RM5.67b, but the deal was called off in Sep 2022. It came after a KKR-led consortium withdrew a USD15b offer for Ramsay. Sime Darby closed at RM2.07.

Gamuda buys 9.1 acres in HCMC Vietnam

Gamuda Land signed the agreement to acquire the parcel in Thu Duc City in Ho Chi Minh City (HCMC) for USD315.8m (RM1.47b). The mixed-use development site has a gross development value (GDV) of USD1.1b. The company will develop 1,968 apartments, 12 penthouses, 51 podium shops and 21 shophouse units in 6 towers of up to 40 levels. The properties are expected to be fully developed and sold within 5 years. All necessary planning approvals have been obtained. The properties target the high-end category with a price range of USD4k-USD7k per square metre. New launches within this category posted stable absorption rates of over 75% in the last 5 years. Gamuda’s quick turnaround projects strategy aims to deploy capital in projects with 3-5 year exit. It has 4 projects in Vietnam i.e. Gamuda City in Hanoi, Celadon City and Elysian in HCMC, and Artisan Park in Binh Duong. The counter closed at RM4.47.