Capital markets executive summary | Fri 11 Aug 2023

Capital markets executive summary | Fri 11 Aug 2023

IHH buys Bedrock Healthcare for RM245m

Wholly-owned subsidiary Pantai Holdings Sdn Bhd entered into a share purchase agreement with Saravita Holdings Sdn Bhd and 9 individual founders for the entire equity interest in Bedrock Healthcare Sdn Bhd. Bedrock owns Timberland Medical Centre in Kuching, Sarawak and a piece of vacant land in central Kuching earmarked for the construction of a new 200-bed tertiary hospital. The acquisition will be completed 1H2024 subject to regulatory approvals and satisfaction of conditions precedent. The 2 assets will bring the total bed capacity in East Malaysia to almost 500. IHH will invest a further RM400m in the tertiary hospital in central Kuching to target the local market and the fast-growing medical tourism market from Indonesia. Timberland has been operating for almost 30 years and is a reputable 82-bed private medical centre with strong brand recognition across Borneo. The counter closed at RM6.

Guan Chong’s sukuk AA- rating affirmed

MARC Ratings affirmed the rating of the RM800m sukuk wakalah programme. The rating reflects the company’s position as the largest cocoa grinder in Asia and 4th in the world, and its strong operational track record, although cocoa price volatility and the company’s moderate-to-high leverage moderate. Grinding capacity rose 22% to 337k tonnes per annum (mtpa) after the new Côte d’Ivoire 60k mtpa grinding facility was completed in late 2022. Côte d’Ivoire is the largest cocoa bean producer with 44% of annual global cocoa bean production. Apart from strengthening Guan Chong’s sourcing reliability, the country’s proximity to Europe, the largest chocolate-consuming region, also reduces logistics costs and tax expenses from the import duty exemption granted by the European Union. In 1Q2023, overall utilisation rate was 85.4%. Grinding volume gained 12.3% year-on-year due to steady demand, in particular, for cocoa butter which is the largest revenue contributor. Revenue climbed 11.3% to RM1.1b driven by the resolution of logistical issues and higher prices of cocoa powder and cocoa cake, although pre-tax profit fell from RM64.6m to RM30m. Gross debt-to-equity ratio is expected to stay at 0.94 times. The counter closed at RM2.13.

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Islamic Development Bank’s AAA and MARC-1 ratings affirmed

MARC Ratings affirmed the financial institution ratings and rating of the RM400m sukuk wakalah programme established by Tadamun Services Berhad, a trust established by IsDB. The ratings reflect IsDB’s multilateral development bank status with strong shareholder support, solid capitalisation, sound liquidity, and its preferred creditor status which gives the bank priority claim over other creditors in the event of a sovereign default. Mitigating factors are the risk exposures in its financing and investment portfolios. At end-2022, the bank’s overdue instalments were 1.27% of total financing because its credit risk management framework requires full sovereign guarantees for financing and has strict requirements on non-sovereign entities. Concentration risk is minimised through a portfolio of diverse countries. The bank’s strong capitalisation is reflected in equity-to-assets ratio of 37.2%. Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates together hold 45.1% shares. The bank’s liquid assets-to-total borrowings ratio is 49.6%.

Non-Klang Valley property developers plan private placements to fund projects

Axteria Group Bhd is proposing a private placement of 71.68m new shares for enlarged outstanding shares of 788.44m. It may be implemented in tranches within 6 months from the date of Bursa’s approval. This will be the 4th private placement after RM8.5m in 2021, RM8.5m in 2022 and RM26.7m in Feb 2023. The RM11.3m proceeds are to fund the completion of its Asteria Melaka Block C construction (RM9.2m) and working capital (RM2m). Another developer, NCT Alliance Bhd, will privately place 10% of its share base to raise RM54.42m. RM50m will go to fund Grand Ion Majestic in Pahang and RM3.9m for Ion Vivace in Batu Kawan, Penang. Previously, NCT had privately placed 181m new shares on 29 Mar 2023 to raise RM58.3m to fund its mixed development project in Genting Highlands, Pahang. Axteria closed at 17 sen while NCT closed at 34 sen.

Black Spade Acquisition approval sets up VinFast Nasdaq listing

The Vietnam-based electric-vehicle maker will debut on the Nasdaq on 15 Aug after the NYSE American-listed special purpose acquisition company (SPAC) approved their merger valuing the company at USD23b. The equity valuation means VinFast will trade at a premium to most peers including Rivian and Nikola. Black Spade raised USD169m in 2021 but after 84% of shareholders chose to redeem their stock for cash when approving a deadline extension for the SPAC merger, the SPAC was left with less than USD30m. Vinfast currently sells made-in-Vietnam electric cars although it broke ground on a new 150k vehicle per year factory in North Carolina in Jul which should be completed in 2025. Operational problems have been plaguing the company, and in May, it recalled all the electric SUVs shipped to the US due to a software glitch. Its losses have been widening due to the cost of expansion.