Capital markets executive summary | Tue 28 Nov 2023

Capital markets executive summary | Tue 28 Nov 2023

Panda Eco jumps 62.5% on listing

The retail management solutions provider opened at 29 sen or an 81% premium to its 16 sen IPO price on its ACE Market debut. It was the most actively traded counter with 190.37m shares exchanging hands. The stock closed at 26 sen. Phillip Capital valued Panda Eco at 18 times price-earnings (PE) multiple or 22 sen in line with its domestic software peers on estimated FY Dec 2024 earnings per share (EPS) assuming a 10% CAGR for profit from FY2021-FY2024 due to the product stickiness and high switching costs, and niche target market of retailers and grocers. Rakuten set a fair value of 30 sen based on 20 times PE ratio, which is the average of peers with similar market capitalisation, over FY2024 EPS. It projects Panda Eco’s core net earnings to rise from RM8.1m in FY2023 to RM10.2m for FY2024. Separately, Oppstar, which gained 285.71% on its ACE Market listing in Mar 2023, crashed from a high of RM2.42 to RM1.33. The integrated circuit design service provider’s earnings disappointed Kenanga with 1H2024 net profit of RM9.34m, 33% of the full year forecast. The difference was due to smaller contributions from some turnkey projects at their tail ends.

MMC Port’s AA- sukuk rating affirmed

MARC Ratings affirmed the rating on the company’s RM1b sukuk murabahah programme. MMC Port is a top 10 global port operator with concessions for the Port of Tanjung Pelepas (PTP), Northport, Penang Port, Johor Port and Tanjung Bruas Port that have a combined container handling capacity of 21.5m twenty-foot equivalent units (TEUs). MMC Port receives dividends from its port operating subsidiaries and in 1H2023, revenue was RM60.4m. The 1st sukuk repayment of RM200m is in Apr 2027. Container volume fell 3.8% year-on-year to 7.6m TEUs. Throughput volume for conventional services was down 6.7% to 16.7m freight weight tonnage, due to Johor Port’s lower handling volume. Operating profit margin was 30%. Consolidated borrowings were reduced from RM5.6b in 1H2022 to RM5.4b at end-Jun 2023. Gross debt-to-equity ratio strengthened from 1.13 times to 1 time. Net debt-to-equity ratio improved from 0.75 times to 0.69 times. Of the RM1.3b capex for 2024, PTP’s portion is RM630m and Northport’s RM300m, to be funded by the respective port operators.
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Ranhill Solar Ventures AA3 rating affirmed

RAM Ratings affirmed the rating of the company’s RM310m sukuk murabahah programme. Ranhill Solar Ventures issued RM145m Tranche 1, the 1st out of the 3 planned issuances. The proceeds from Tranche 1 was to develop Ranhill Solar I Sdn Bhd’s 50MWac large-scale solar project. The later tranches, which involve Ranhill Sabah Energy I Sdn Bhd’s cashflows, are subject to, among others, RAM confirming that the issuances will not affect the sukuk rating. Presently, Tranche 1 will be serviced by the cashflows from Ranhill Solar I, which achieved 96.86% completion at end-Sep 2023. The plant should commence operations on 15 Dec, earlier than the 31 Dec scheduled commercial operation date in the power purchase agreement (PPA). In RAM’s sensitised case, the company’s minimum annual finance service coverage ratio with cash balances and post-distribution is 1.50 times. Ranhill Solar I waived the liquidated damages from its contractor provided no penalty is payable under the PPA because the delay in financial close was partly to blame. Ranhill Utilities closed at 90 sen.

Kenanga Investment Bank’s ratings affirmed

MARC Ratings affirmed the A+ and MARC-1 financial institution ratings on the bank. Kenanga is a top 3 stockbroker with 748 remisiers. Market share in the retail segment fell from 30.2% in 1H2022 to 29.8% in 1H2023. The bank co-owns the Rakuten online share trading platform with Rakuten Securities Inc, Japan’s second-largest online broker. The number of accounts grew from 257,251 in 2022 to 266,936 at end-Jun 2023. Online trading contributed 14.5% of Kenanga’s trading value in 1H2023. Investment and wealth management segment revenue climbed from RM100.9m in 2019 to RM117.2m in 1H2023. The segment’s contribution to the bank’s total revenue doubled from 16% to 31%. Recurring management fees of RM96.9m contributed 42% of Kenanga’s total non-interest income in 1H2023. Assets under administration were RM20.9b at end-Jun 2023 and contributed 59% of Kenanga’s profits. Trading value fell 13.3% year-on-year to RM53.4b and brokerage fees was down 9.8% to RM80.8m in 1H2023. Non-interest income declined from RM244.1m in 1H2022 to RM232.5m in 1H2023. Pre-tax profit shrunk 14% from RM41.8m to RM35.8m. Common equity Tier 1 ratio weakened from 20.9% at end-2022 to 16.9% at end-1H2023. Total capital ratio slid from 28.9% to 24.8%. Kenanga depends on short-term wholesale customer deposits for funding as deposits from non-bank FIs and business enterprises make up 45.6% of total liabilities at end-Jun 2023. Liquid assets ratio was 52.5% and liquidity coverage ratio rose from 135% at end-2022 to 163% at end-June 2023. The counter closed at 84 sen.

UMediC to transfer from ACE Market to Main Market

The medical equipment supplier, which listed in Jul 2022, claims to have satisfied the Securities Commission’s requirements including profit, public shareholding spread and financial position. Net profit surged fivefold from RM568k in 4Q ended Jul 2022 to RM3.37m in 4Q2023. Revenue increased from RM7.41m to RM12.02m. Full year net profit rose from RM6.43m to RM10.32m in spite of revenue shrinking from RM50.74m to RM45.43m. The proposed listing transfer will give the company greater recognition among institutional investors that reflects its scale of operations, thereby making its shares more marketable and liquid. It will also raise the confidence of the company’s customers, suppliers, business associates, employees, shareholders and banks. The transfer should be completed in 1H2024. The counter closed at 75 sen, 2.3 times its 32 sen IPO price.