Capital markets executive summary | Wed 30 Aug 2023

Capital markets executive summary | Wed 30 Aug 2023

Evergreen Max Cash Capital to raise RM64.2m in IPO

The pawnbroker launched its prospectus to list on the ACE Market on 26 Sep. RM30m of the proceeds is additional capital for the pawnbroking business, RM20m for 5 new pawnshops by end-2024, and RM14.2m for the repayment of bank borrowings, working capital and for listing expenses. The company will issue 267.6m new shares or 24% of its enlarged issued shares and an offer for sale of 43m existing shares. 55.7m shares are for the Malaysian public via balloting, 27.9m shares for directors, employees and contributors, 44.6m shares for private placement to selected investors, and 139.4m shares for selected bumiputra investors approved by the Ministry of Investment, Trade and Industry. Net profit surged 193.3% yearly from RM800k in 2019 to RM20.1m in 2022. Revenue jumped 65.6% per annum from RM14.8m to RM67.2m. Evergreen was established in 2012 and has 22 pawnshops in Kuala Lumpur, Selangor, Negeri Sembilan and Pahang. While sales of gold and luxury products contributed 56% of revenue and pawnbroking 42%, 88% of gross profit is from pawnbroking. The company’s dividend policy is 20% of profit after tax. Applications are open until 12 Sep. Mercury Securities is the principal adviser, sponsor, underwriter and placement agent.

MTT Shipping’s sukuk assigned final AA3 and P1 ratings

RAM Ratings assigned the final ratings the company’s Islamic medium term notes and Islamic commercial papers programme with a RM1.5b combined limit. MTT Shipping provides container liner shipping services to manufacturers, traders and freight forwarders, and feeder services to main line operators. It has a fleet of 17 container vessels with a total capacity of 19,124 20-foot equivalent units (TEU) and 40.5% share of the local market, particularly between Peninsular and East Malaysia. Operating profit before depreciation, interest and tax (OPBDIT) increase 2½ times from RM251.87m in 2021 to RM625.79m in 2022. Debt coverage ratios were above 0.30 times even as debts grew from RM92.37m in 2018 to RM554.47m in 2022 to expand and modernise its fleet in capturing new routes between India, China and Southeast Asia as trade becomes regionalised. Gearing fell from 1.02 times in 2021 to 0.53 times in 2022, while debt to OPBDIT ratio was 0.89 times. Debt will peak at RM940m in 2023 causing gearing to rise to 0.6-0.8 times and debt to OPBDIT below 2 times. In RAM’s stress case, the OPBDIT will moderate to RM450m-RM500m in the next few years, although funds from operations debt cover ratio will strengthen to more than 0.5 times.
Would you like us to email you when our latest executive summary is available?

Thailand’s Big C postpones USD1b IPO

The supermarket and convenience store company controlled by Charoen Sirivadhanabhakdi, Thailand’s richest person, paused its initial public offering (IPO) due to unfavourable market conditions. The subsidiary of listed Berli Jucker Pcl engaged investment banks in Nov 2022 and was supposed to have a dual listing in Hong Kong and Bangkok by 4Q2023. The company bought Hong Kong’s AbouThai chain of 24 stores and will rebrand them as Big C outlets. The delay comes after Siam Cement Pcl, one of the largest industrial groups in Thailand, announced scrapping its chemicals unit’s IPO on Mon claiming weak market conditions.

OCBC Malaysia’s AAA and P1 ratings affirmed

RAM Ratings affirmed OCBC Bank (Malaysia) Berhad’s financial institution ratings. The rating reflects expectations of strong support from parent Oversea-Chinese Banking Corporation Limited given the bank’s strategic role in supporting the group’s regional ambitions and diversification goals. OCBC Malaysia’s franchise, funding capabilities, capitalisation and profit generation were positive factors. Its adjusted gross impaired loans (GIL) ratio increased to 3.5% at end-Mar 2023 from 2.9% at end-Dec 2021, higher than the industry’s 1.7%. Non-retail loans are the cause of the fall in asset quality since 2020. The bank is particularly susceptible due to 67% of corporate and small and medium-size enterprise customers making up its loan book against the industry 41% when the macroeconomic environment weakens. OCBC Malaysia’s adjusted GIL coverage ratio shrank from 115.3% at end-Dec 2021 to 81.4% at end-Mar 2023, lower than the industry 118%. However, the bank’s portfolio is highly collateralised at conservative forced sale valuations which support expectations of good recoveries. Return on risk weighted assets (RoRWA) increased from 1.6% in 2021 to 3.6% in 2022 to 3.8% in 1Q2023 given writebacks. Net interest margin widened from 2.1% in 2021 to 2.3% in 2022 to 2.4% in 1Q2023. With credit cost normalising in 2023-2024, RoRWA should moderate to 2.5%-2.7%.

Indonesia’s TBS Energi buys Singapore’s Asia Medical Enviro Services

Jakarta-based TBS Energi Utama acquired 100% of the largest biohazardous and medical waste treatment services firm in Singapore from Dymon Asia Private Equity at an undisclosed price. The acquisition diverges from TBS Energi’s expansion in renewable energy. The company partnered with local tech group GoTo in 2021 for a joint venture to develop electric motorcycles. It has other businesses including mining and plantation, and Singapore-registered Highland Strategic Holdings is its largest shareholder. Singapore-based Dymon Asia, the seller, was founded in 2012 and focuses on private equity investments in Southeast Asia. Its assets under management total USD1.3b (RM6b).