Capital markets executive summary | Thu 16 Nov 2023

Capital markets executive summary | Thu 16 Nov 2023

Plytec closes 7.1% below IPO price

The company ended its IPO on the ACE Market as the 4th worst performing IPO this year. At the bottom is Radium Development Bhd -23%, Synergy House Bhd -18.6% and SkyWorld Development Bhd -7.5%. It closed at 32.5 sen against the IPO price of 35 sen, despite an intraday high of 36 sen. At the start of trade, 13.04m shares changed hands and the figure hit 70.8m at closing. Earlier, Apex Securities Bhd and Public Invest Research arrived at the same 39 sen valuation for the stock, an 11.4% premium to the IPO price, albeit different computations. Apex’ price-earnings (PE) multiple was 12.5 times projected earnings per share (EPS) of 3.1 sen for FY2024. Public’s PE multiple was 15 times the 2.6 sen projected EPS for FY2024. Plytec provides construction engineering solutions and services, and trades and distributes core and general building materials for construction projects.

Chailease Berjaya’s AA-(cg) rating affirmed

MARC Ratings affirmed its rating of Chailease Berjaya Credit Sdn Bhd’s (CBC) RM1b medium term notes (MTN) programme unconditionally and irrevocably guaranteed by Chailease Holding Company Limited (CHC). The company’s loan book, which expanded annually by double digits from 2017-2022, grew by 9.3% in 1H2023. Gross loans were RM2.3b at end-Jun 2023 and 64% of that was used-car loans. Gross impaired loans (GIL) ratio increased to 2.2% at end-2022, then to 3.2% at end-Jun 2023, but improved to 2.8% in Jul 2023. Loan loss coverage of 119% at end-1H2023 provides buffer against downside and the loans have good collateral cover. Net interest margin stayed at 12% and interest income climbed 28.2% year-on-year to RM182.2m in 1H2023. Larger loan impairment charges of RM71.4m sent pre-tax profit down from RM69.4m in 1H2022 to RM37.5m in 1H2023. CBC depends on bank borrowings for funding, which rose from RM1.7b at end-2022 to RM1.9b at end-1H2023. Debt-to-equity ratio was up from 3.8 times to 4.1 times. CHC’s subsidiary Chailease Finance Co Ltd commands a 40% market share in Taiwanese leasing and also has operations in China and ASEAN. Its loan book was NTD698.2b (RM104.5b) at end-1H2023 with a GIL ratio of 3%.
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Kenanga’s IMR-2 rating affirmed

MARC Ratings affirmed the IMR-2 investment manager rating on Kenanga Investors Berhad (KIB) and wholly-owned subsidiary Kenanga Islamic Investors Berhad (KIIB). KIIB’s integration with parent KIB by sharing resources and brand, and its supporting role in the strategic objectives in Islamic finance, are evidence that KIB’s and KIIB’s credit profiles are tightly linked. KIIB’s rating mirrors its parent’s rating. KIB, whose products focus on domestic investments, had RM19b assets under management (AUM) at end-June 2023, 44.8% of which were equity funds, fixed income funds 30.6%, balanced funds 16.7%, money market funds 6.2% and others 1.7%. KIIB’s AUM climbed from RM2.5b at end-2022 to RM2.8b at end-Jun 2023, with equity funds making up 73.2%. At end-Jun 2023, the performance of most of KIB’s funds was better than the respective benchmarks and were comparable to peers. Revenue was RM142.9m in 1H2023 due to higher management fees and service charges. Pre-tax profit fell from RM32.4m in 1H2022 to RM25.4m in 1H2023 due to higher expenses.

MAA sells 85% of Philippines general insurer

MAA Group Bhd is selling 85% of MAA General Assurance Philippines Inc to Triple P Philippines Pte Ltd for USD49.3m cash, with the option to sell the balance 15% for USD8.7m within 14 months. The agreed USD58m total selling price is 1.64 times price-to-book ratio based on the company’s audited net assets of RM168.44m at end-2022. From the sale proceeds, RM187.7m is for future investment opportunities, RM32.18m for working capital, RM41.8m for repayment of shareholder’s loan, RM13.54m for repayment of intercompany loans and RM1.1m for sale expenses. MAA should realise a RM110.75m gain on disposal above the cost of investment since 2001 of RM78.16m. General insurance contributes 66% of MAA’s revenue for FY ended 30 Jun 2023. UOB Kay Hian is the principal adviser. The counter closed at 34.5 sen.

ByteDance considers selling Mobile Legends gaming studio

The Chinese-based TikTok owner is working with an adviser to seek potential buyers for Shanghai Moonton Technology Co, which it bought in 2021 at a USD4b valuation. ByteDance was started more than a decade ago by Zhang Yiming and Liang Rubo, and became a USD200b company due to its short video apps. The company acquired game studios and exclusive distribution rights in order to disrupt the games industry just like how its apps disrupted social media. The company’s shift towards e-commerce as the new growth driver resulted in cuts on its game creation and publishing teams.