Capital markets executive summary | Thu 5 Oct 2023

Capital markets executive summary | Thu 5 Oct 2023

Malakoff signs MOU with MMC ports on 500MW solar power

The company signed a memorandum of understanding (MOU) with MMC-owned ports Northport (Malaysia) Bhd, Johor Port Bhd, Pelabuhan Tanjung Pelepas Sdn Bhd and Penang Port Sdn Bhd, to explore green power initiatives including solar power. Malakoff and the MMC ports will strike a partnership within the Corporate Green Power Programme (CGPP). Under the self-consumption rooftop solar programme, Malakoff will install, operate and maintain the solar photovoltaic system to produce solar power for consumption by the MMC ports. The MOU is a joint commitment of the parties on the development of 500MW solar projects within the Albukhary group of companies. Malakoff has so far completed 67MW solar projects through the large scale solar (LSS) programme and rooftop solar. Construction of its 84MW hydropower project is on-going. The company has readily available land bank close to the grid lines in Perak and Melaka for future projects. Malakoff closed at 60 sen.

Northport’s sukuk AA rating affirmed

MARC Ratings affirmed the rating on the RM1.5b sukuk musharakah programme. The key rating drivers are the company’s track record as a Port Klang operator, cash flow generation and balance sheet, moderated by susceptibility to global trade flows. The company handles conventional cargo and container services through Southpoint and North Port. Container services, which contribute two-thirds of revenue, declined 6.5% year-on-year to 1.5m twenty-foot equivalent units in 1H2023. Conventional cargo services were steady at 5.5m freight weight tonnes in 1H2023. Revenue declined from RM428.5m in 1H2022 to RM379.4m in 1H2023 while pre-tax profit fell from RM105.6m to RM58.2m. Operating profit margin was 30.2% against the 29.9% 5-year average. Northport will spend RM500m on capex until 2025 using internal funds and borrowings, including issuing RM150m sukuk in 1Q2024. Liquidity position was healthy with RM282.3m cash balance at end-Jun 2023. Total borrowings were RM350m for a finance-to-equity ratio of 0.38 times. DRB-Hicom closed at RM1.39.
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No effect of the disposal of Caring Pharmacy to 7-Eleven’s rating

MARC Ratings announced that the proposed disposal of 75% in Caring Pharmacy Group Berhad to BIG Pharmacy Holdings Sdn Bhd will not have a material effect on 7-Eleven Malaysia Holdings Berhad’s credit profile. 7-Eleven’s medium term notes (MTN) programme was affirmed at AA- in May 2023. RM250m of the RM675m proceeds will be utilised to reduce borrowings from RM770m at end-Jun 2023 to RM451m. Adjusted debt-to-equity ratio will improve from 0.46 times at end-2022 to under 0.30 times. The balance of the proceeds will fund business expansion which will offset Caring’s 30% revenue and operating profit contribution in 2022. 7-Eleven will accelerate the rollout of 7-Café stores, currently 144 stores or 5.8% of its total 2,499 stores as at end-Jun 2023, up from 88 7-Café stores or 3.6% of the total at end-2022. The counter closed at RM1.98.

GenZero invests in At One Ventures’ USD375m Fund II

The Temasek subsidiary focussed on decarbonisation investments is participating in the 2nd fund led by a Google X founder, which will back early-stage start-ups with disruptive climate technology. Other investors include the World Wildlife Foundation, the MacArthur Foundation, CalSTRS, New Mexico State Investment Council (NMSIC), and individual investors and family offices, such as One Small Planet, Toba Capital and Valhalla Foundation. 5 of At One Ventures’ 35 portfolio companies centre around biodiversity, and it plans to expand on those investments that address ecosystem health. 11 of its portfolio companies are booking product sales. With Fund I, which raised USD150m in Oct 2021, the company’s total assets under management (AUM) are over USD500m. AT One Ventures’ portfolio includes battery recycling firm Ascend Elements, which raised a USD542m Series D round in Sep, for a total of over USD1b in funding to date. At One backed Colossal Biosciences early, which is currently valued at USD1.5b, and Monarch Tractor, which Forbes called the next billion-dollar start-up.

Intel to make programmable chip division stand-alone prior to IPO

The Programmable Solutions Group was created out of the acquisition of Altera Corp in 2015 for USD14b. It makes field programmable gate arrays or FPGAs that can have their function changed after installation in electronic devices. Mass adoption is difficult because the FPGAs have been difficult to programme. Intel’s programmable unit focused on cloud computing and communications equipment, thereby missing out on growth areas such as industrial and aerospace and causing the business to underperform. The programmable group will deliver mid-priced products soon followed by cheaper chips at the beginning of 2024. Intel will turn it into an independent entity from 1 Jan ahead of an IPO in the next 2-3 years. Intel expects an investor for the business to be announced soon.