Capital markets executive summary | Wed 4 Oct 2023

Capital markets executive summary | Wed 4 Oct 2023

SSF Home’s IPO oversubscribed 8.25 times

The furniture and home-living product retailer will issue 200m shares or 25% of its enlarged shares at 25 sen to raise RM50m. Shareholders are offering for sale 24m shares or 3% of the enlarged shares. It received 5,348 applications for 370.04m shares from the Malaysian public against 40m being offered. 2,712 non-bumiputra applications for 232.76m shares were received or 10.64 times oversubscribed. 2,636 bumiputra applications for 137.28m shares were received or 5.86 times oversubscribed. The 40m shares for directors, employees and contributors, the 44m shares for private placement to selected investors, and 100m shares for private placement to bumiputra investors approved by the Ministry of Investment, Trade and Industry were fully subscribed. RM21m or 41.9% of the IPO proceeds is for setting up 18 new retail outlets, RM14.2m or 28.5% for capital expenditure, and RM14.8m or 29.6% for repaying bank borrowings, marketing, working capital and for listing expenses. The company will list on the ACE Market on 12 Oct. M&A Securities is the principal adviser, sponsor, sole underwriter and sole placement agent.

ORIX Leasing and ORIX Credit issue ratings affirmed

RAM Ratings affirmed the AA2 ratings of ORIX Leasing Malaysia Berhad’s RM500m medium term notes (MTN) programme (2016/2031) and ORIX Credit Malaysia Sdn Bhd’s RM1.5b MTN programme (2021/2051). The P1 rating of ORIX Credit’s RM500m commercial papers programme (2020/2027) is also affirmed. The credit profiles of ORIX Leasing and ORIX Credit are closely aligned because ORIX Credit is wholly-owned by ORIX Leasing and contributed 87% of pre-tax profit in FY Mar 2023. The ratings reflect continued ready support from Tokyo-based parent ORIX Corporation and ORIX Leasing’s market leadership in hire purchase and leasing. Gross impaired financing (GIF) ratio declined from 3.2% at end-Mar 2022 to 2.1% at end-Mar 2023. The bus and taxi hire purchase rehabilitation scheme, representing 5% of receivables, allows for bus operators to defer payment and reduce instalments, with the government guaranteeing 50%. Pre-tax profit shrank from RM107m in FY Mar 2022 to RM88m in FY Mar 2023 due to writeoffs in the smart device rental business which was launched in 2020. It was temporarily suspended in Sep 2022 to improve monitoring and debt collection. Gearing was 1.5 times at end-Mar 2023. Cash balances and credit lines give 4.3 times short-term debt coverage.
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AirAsia obtains USD150m term loan with Capital A’s guarantee

Capital A Bhd’s aviation unit signed the 5-year term loan with a financial institution secured against a corporate guarantee from Capital A. The loan will be used to fund aircraft and engine maintenance and for working capital. Capital A has a 7 Oct deadline to submit its regularisation plan to Bursa Malaysia. It turned PN17 in Jan 2022 after auditor Ernst & Young questioned its going concern in the audited financial statements for FY2019 and its shareholders’ equity fell below 50% of its share capital. The counter closed at 96 sen, up 47.7% year-to-date.

Banks responsible for 72% surge in 2023 greenwashing

An organisation greenwashes when it makes misleading sustainability-related claims to improve its reputation and profitablity. RepRisk, which analyses environmental, social and governance (ESG) data, recorded 148 such cases from the banking and financial services industry globally in the 12 months to Sep 2023, compared to the 86 detected in the previous 12 months. 106 cases involved European financial institutions. Banking and financial services is 2nd only to the oil and gas industry in greenwashing. Over 50% of the incidents either mentioned fossil fuels or linked a financial institution to an oil and gas company. One in three companies involved in greenwashing was also social washing, where they paint a positive picture of themselves by hiding underlying social issues, such as human rights abuses, to protect their reputation and financial performance.

Indonesia’s GoTo gets USD150m investment

The ride-hailing and e-commerce company issued convertible bonds worth USD125m to the World Bank’s International Finance Corp (IFC) and USD25m to private investment firm Franke & Co to boost its cash reserves as its works towards becoming profitable. The conversion price is IDR135 (4.1 sen) against the share price of IDR84. GoTo and the investors agreed to tackle climate change and get more people to benefit from the digital economy. New CEO Patrick Walujo who is also the managing partner of major shareholder Northstar Group must reduce losses by cutting jobs, tightening promotional spending and expenses in an attempt to convince investors that the company can make money amidst economic uncertainty and gloomy consumer spending.