Capital markets executive summary | Thu 21 Sep 2023

Capital markets executive summary | Thu 21 Sep 2023

Minox plans to list on the ACE Market

Established in 1998, Minox International Group Bhd distributes stainless steel sanitary valves, tubes and fittings, installation components and equipment, rubber hoses and related products to customers in Singapore, Bahrain, Cambodia, Denmark, Germany, India, Japan, South Korea, Myanmar, Sri Lanka, Spain and the United Arab Emirates. It will raise RM22.5m by issuing 90m shares at 25 sen, valuing the company at 10.68 times price-earnings ratio based on RM10.3m net profit for FY2022. RM13.01m will be used for product development, the 18,690 sq ft 4th warehouse in Puchong to be completed in 2025 and a new 7,500 sq ft warehouse in Singapore. RM4.5m is for repaying bank borrowings. RM1.59m is for working capital. RM3.4m is for listing expenses. The food and beverage sector contributed 88.8% of revenue in FY2022, semiconductor industry (6.7%) and pharmaceutical (4.5%). After listing, the company will focus on the semiconductor industry. Minox has 3 warehouses in Malaysia, 4 in Indonesia, 3 in Singapore and 2 in Thailand. FY2022 revenue was RM45m with 36.1% from Malaysia, Indonesia (32.4%), Singapore (17.2%), Thailand (9.4%) and others (4.9%). Minox will list on the ACE Market on 17 Oct.

Celcom Networks’ sukuk rating upgraded from AA+ to AAA

MARC Ratings upgraded the rating of the company’s RM5b sukuk murabahah programme. The merger between Celcom Berhad and Digi.Com Berhad to form CelcomDigi Berhad proceeded with minimal issues to operations, lowering execution risks. The rating upgrade reflects CelcomDigi’s stronger credit profile as the largest telco with 42% market share and 20.5m customers. 1H2023 revenue gained 3% year-on-year to RM6.3b. Earnings before interest, tax, depreciation, and amortisation (EBITDA) margin improved from 44% to 48%. Cash flow from operations (CFO) was RM2.6b and cash balances were RM834m, enough for RM360m capex. The merger increased debt to RM7.4b, although CFO-to-debt coverage is 0.6 times in 1H2023. Despite the consolidation supporting long-term price stability and profitability, stiff competition forces telcos to apply tactical pricing strategies to preserve market share. CelcomDigi closed at RM4.42.
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IGB REIT Capital’s bonds AAA rating affirmed

RAM Ratings affirmed the rating of the company’s RM1.2b medium term notes (MTN). This is the 2nd issuance from the RM5b MTN programme, which is secured against Mid Valley Megamall. IGB REIT Capital is a special-purpose vehicle incorporated by IGB Real Estate Investment Trust for the fundraising exercise. The mall, a solid collateral, recorded net property income (NPI) jumping 48.3% year-on-year to RM297m in FY2022, thereby raising its adjusted valuation to RM3.6b. Loan-to-value ratio is 33.1% and stressed debt service coverage ratio is 2.84 times. The mall enjoyed strong growth in base and variable rent with a rebound in consumer spending after covid rules were relaxed. Car park income increased 57.8% to RM25m with higher footfall and parking rates. Operating expenses were up 29.9% with the higher footfall and an imbalance cost-pass through surcharge. In 1H2023, NPI was RM160m. IGB REIT closed at RM1.68 while IGB closed at RM2.16.

Konsortium ProHAWK’s sukuk rating outlook revised from negative to stable

RAM Ratings revised the outlook on the AA2 rating of the company’s RM900m Islamic medium term notes programme (2013/2033). In Aug, the company signed a supplementary concession agreement (SCA) with the government which entitles it to additional revenues from 2019-2028 for the wider scope of information and communications technology operations and maintenance services. Since the start of the asset management services (AMS) period under the concession, the company incurred RM6m additional operational expenses annually for work beyond the original scope. The company received RM27.35m in retrospective revenues on 30 Aug 2023 for the 2019-2022 period. The revision of payments for 2029 onward will be negotiated later. Konsortium ProHAWK’s finance service coverage ratio is projected to be a minimum of 1.5 times commensurate with a AA2 rating. The company’s better debt servicing ability resolves temporary shortfalls in the finance service reserve account, previously supported by standby letters of credit from UEM Group Berhad.

Foodpanda owner wants to sell part of its Asia business

Berlin-based Delivery Hero SE is in talks to sell its business in Malaysia, Singapore, Philippines, Thailand, Cambodia, Myanmar and Laos, where growth has stagnated since covid lockdowns eased. The Asia business is Delivery Hero’s largest revenue driver, although it is struggling to maintain momentum. After years of heavy investments in the region, the company had pulled back a little bit in order to focus on profitability. The company acknowledged that the action makes some customers less excited about what the company can offer. Delivery Hero closed at EUR32.19 (RM160.63) after having fallen 28% this year.