Capital markets executive summary | Mon 14 Aug 2023

Capital markets executive summary | Mon 14 Aug 2023

ACE Market-listed Cnergenz to transfer to Main Market

The electronic manufacturing solutions provider debuted on the ACE Market in May 2022 at an initial public offering (IPO) price of 58 sen. The transfer will enhance the company’s credibility and reputation that reflect its existing institutional shareholding base plus give it greater recognition and appeal among investors. The company claims to have met the profit, financial position and public shareholding spread requirements for the transfer of its 498m share base. The transfer is subject to the approvals of the Securities Commission and Bursa Malaysia, and is expected to be completed by 1Q2024. Executive directors Lye Yhin Choy and Kong Chia Liang hold 44.52% and 23.36% respectively. The counter closed at 76 sen.

F&N Capital’s sukuk AAA and MARC-1 ratings affirmed

MARC Ratings affirmed the ratings of the company’s Islamic medium term notes and Islamic commercial papers programmes with a combined limit of RM3b. Parent Fraser & Neave Holdings Bhd unconditionally and irrevocably guarantees the sukuk. The company’s ratings reflect its market position in Malaysia and Thailand, its track record and healthy balance sheet. Moderating these are rising raw material costs and execution risk from new business ventures. In 1H ended 31 Mar 2023, revenue climbed 9.5% year-on-year to RM2.4b due to higher beverage sales, price and cost management, and contribution from newly acquired Cocoaland. Pre-tax profit marginally improved 1.5% to RM247.8m. Cocoaland manufactures confectionery and savoury snacks and its acquisition in Nov 2022 expands F&N’s geographical presence and product offerings. The acquisition of Ladang Permai Damai Sdn Bhd in Oct 2022 allows the company to vertically integrate with 2,726ha of agricultural land in Gemas, Negri Sembilan. The acquisitions raised outstanding debt to RM710m and finance-to-equity ratio to 0.22 times. Cash flow from operations improved to RM499.6m and free cash flow (FCF) was RM318m, although the expansion plans could bring FCF down. As at 31 Mar, cash was RM652.7m. The counter closed at RM25.10.

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Yinson Holdings’ ratings affirmed

RAM Ratings affirmed the company’s A1 long-term corporate credit rating and the rating of its RM1b Islamic medium term notes programme and the P1 short-term corporate credit rating. The company is a leading global supplier of floating production systems (FPS) and has won significant contracts in recent years. Its newest floating, production, storage and offloading (FPSO) vessel, Anna Nery, was delivered on time and within budget, achieving first oil on 7 May 2023. Revenue surged from RM3.61b to RM6.32b in FY ended Jan 2023 as revenue from engineering, procurement, construction, installation and commissioning (EPCIC) operations doubled thereby raising net profit from RM578m to RM718m. Total debts grew year-on-year from RM10.65b to RM11.48b, although excluding non-recourse loans, gearing strengthened from 2.28 times to 1.74 times due to a RM1.19b rights issuance in Jun 2022. In the next 3 years, gearing should peak at 2.1 times and adjusted operating cash flow debt coverage at 0.05 times before increasing to 0.1 times in 2026. Yinson has RM2.02b cash at end-Apr 2023 against short-term debts of RM1.63b. The company’s FPS leasing contracts of USD17.78b at end Jan 2023 expire in 7-25 years. The counter closed at RM2.54.

WTK buys over Sarawak oil palm for RM132.2m

Subsidiary BioFarm Venture Sdn Bhd entered into a share sale agreement with Ocarina Development Sdn Bhd, which is in liquidation, for 70% or 9.8m shares in Durafarm Sdn Bhd. WTK will fund RM92.54m of the purchase price via bank borrowings and the issuance of debt securities, whereas the balance RM39.66m will come from internally generated funds. At 31 Mar 2023, the company had RM296.25m cash against RM231.63m borrowings. The company’s oil palm planted area will increase by 24.41% from 16,428ha to 20,439ha. Durafarm has oil palm plantations in Betong and Sri Aman, Sarawak, and in FY ended 31 Jul 2022, its net profit surged from RM8.09m to RM13.45m. The counter closed at 46 sen.

FC Barcelona to list media business via SPAC

The Spanish soccer club will list a new USD1b content creation business called Barca Media on Nasdaq via a merger with Mountain & Co I Acquisition Corp. The deal must be approved by club members and the special-purpose acquisition company’s (SPAC) shareholders. It will bring new capital into an important source of future revenue for a club facing an institutional and financial crisis. Barca Media should start trading on Nasdaq after the merger closes in 4Q2023 subject to the US stock market regulator’s approval. Barca Media combines the digital business of existing brand Barca Vision with all audio-visual content. Existing shareholders of Barca Media will retain 80% after the merger with Mountain & Co. Investment funds LIBERO Football Finance and NIPA Capital bought 9.8% and 19.7% respectively in Bridgeburg, Barca Vision’s holding company. LIBERO paid EUR40m while NIPA paid EUR80m.