Capital markets executive summary | Wed 6 Sep 2023

Capital markets executive summary | Wed 6 Sep 2023

QI Group issues sukuk for new university campus in Perak

The company and Bank Pembangunan Malaysia Berhad (BPMB) signed an agreement for the issuance of RM100m sukuk ijarah with BPMB as the primary subscriber. The sukuk will be issued by Silver Formula ABS Bhd, a special purpose company. The issuance proceeds are for the purchase of 4.04 hectares of land and the initial costs for the construction of the Quest International University campus in Ipoh, Perak. Construction will commence in 2H2024 and be completed within 3 years. The total cost, including land, will be RM120m-RM150m. The company will raise funds for the balance of the construction costs.

OCK’s sukuk assigned AA- preliminary rating

MARC Ratings assigned the preliminary rating to the company’s proposed RM400m Tranche 1 to be issued from a proposed RM700m sukuk murabahah programme. OCK provides telecommunication network services comprising tower leasing, turnkey solutions and managed services. The company’s stable operating performance and cash flow visibility, long-term contracts, and predictable expenses are positive factors. In addition, there are strong market growth drivers with mobile telecommunication operators continuing to increase coverage and capacity thereby raising demand for tower infrastructure. At end-2022, OCK had 5,266 towers with 7,027 tenancies. It owns 566 towers in Malaysia with 797 tenancies, and manages 11,300 sites. It owns 3,500 towers in Vietnam with 4,550 tenancies, while in Myanmar it has 1,200 towers with 1,680 tenancies. The company manages 49,200 sites in Indonesia giving a 45% market share. OCK has USD64m foreign-currency loans at end-Jun 2023, which will be refinanced with the proceeds from the RM400m Tranche 1 issuance. MARC projects the finance-to-EBITDA ratio in 2023-2027 to peak at 4.5 times. At end-2022, the average remaining contract life for Malaysia was 7 years, Vietnam 4 years, Myanmar 10 years and Indonesia 1-4 years. The counter closed at 44 sen.
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Hextar Industries pays RM16.5m for customer database

The company manufactures and formulates bulk blend, mixture and compound fertilisers, trades various fertilisers, and provides crop management solutions. It entered into a conditional share sale agreement with the shareholders of Pacific Office (M) Sdn Bhd to acquire 100% of the office supplies distributor for RM16.5m cash. The acquisition will be completed in 4Q2023. The rationale for the acquisition is that Pacific Office has 33 years’ experience in the stationery and office supplies business and had built up a 3,500-customer database nationwide which Hextar can tap into to expand its existing businesses. The counter closed at 44 sen.

Brent touched USD90 after Saudi Arabia and Russia cuts

Oil prices rallied for the first time since Nov 2022 to hit the level as major Opec+ producers continued with supply cuts. Saudi Arabia plans to maintain a reduced output of 9m barrels per day, the lowest in several years, for an additional 3 months in supporting the global market. Russia’s exports will fall by 300k barrels a day until end-2023. The move by Saudi Arabia and Russia helped to reduce global inventories and tighten markets. With higher energy prices, central bankers may have to deal with renewed inflationary pressures as they contemplate a rate downcycle to deal with the slowing global economy.

China planning to launch USD40b state fund for chip industry

With a CNY300b target, the new fund, which was approved by the authorities in recent months, is likely to be the biggest of 3 funds by the China Integrated Circuit Industry Investment Fund, or the Big Fund. The previous funds were launched in 2014 and 2019. The country’s finance ministry will contribute CNY60b. Equipment for chip manufacturing is a main area of investment after the US imposed export control measures in Oct 2022 claiming that China could use advanced chips to enhance its military. The Big Fund is considering hiring at least 2 institutions to manage the investments for the new fund. Despite a number of senior officials at SINO-IC Capital, the sole manager for the first 2 funds, having been under investigation for graft, the firm will remain one of the managers for the 3rd fund. The other company being considered as manager is China Aerospace Investment, the investment arm of state-owned China Aerospace Science and Technology Corporation.