Capital markets executive summary | Fri 8 Dec 2023

Capital markets executive summary | Fri 8 Dec 2023

Critical Holdings IPO oversubscribed 88.08 times

The mechanical, electrical and process utilities (MEP) engineering company, which will list on the ACE Market on 18 Dec, received 13,038 applications for 1.66b shares for the 18.59m new shares for the public. For the bumiputra portion, 7,379 applications were received for 739.26m shares or 78.55 times oversubscribed. For the other public portion, 5,659 applications for 916.55m shares were received or 97.62 times oversubscribed. 3.72m shares for directors and employees, 46.47m shares for bumiputra investors approved by the Ministry of Investment, Trade and Industry, 5.58m shares for selected investors, and 37.17m existing shares for selected investors were fully placed out. The 35 sen IPO price values the company at a price-earnings multiple of 13.57 times based on the company’s RM9.59m net profit for FY Jun 2023. It will raise RM39.03m for business expansion. The company provides MEP engineering solutions and maintenance for plantrooms, cleanrooms and data centres. MIDF is the underwriter, principal adviser, sponsor and placement agent.

SMBC Malaysia’s AA1 and P1 ratings affirmed

RAM Ratings affirmed Sumitomo Mitsui Banking Corporation Malaysia Berhad’s financial institution ratings. High capitalisation and asset quality are moderated by the bank’s small presence, borrower and depositor concentration, and low profitability compared to peers. Support is expected from parent Sumitomo Mitsui Banking Corporation (SMBC), a member of the Sumitomo Mitsui Financial Group, Inc. as shown in the past through capital injections and allocation of funds. Gross impaired loan (GIL) ratio was 0.4% at end-Sep 2023 because the bank focuses on subsidiaries of Japanese multinationals and highly rated domestic companies. GIL coverage ratio including regulatory reserves was 442%. Loan growth was 5% in FY Mar 2023 and should be the same in FY2024. Pre-tax profit rose from RM244m in FY Mar 2022 to RM272.6m in FY Mar 2023 because of higher net interest margin and better trading income. Return on risk-weighted assets (RoRWA) increased from 1.7% to 1.8%. Annualised RoRWA in 1HFY2024 was 2.6%. At end-Sep 2023, common equity tier-1 capital ratio was 23%.
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CPE Tech falls 14.49% on Main Market listing

The engineering precision parts manufacturer closed at 91.5 sen against its IPO price of RM1.07 despite the public portion being 17.69 times oversubscribed. It was the 3rd worst IPO this year among the 30 new listings after Radium Development (-23%) and Synergy House (-18.6%), and the 3rd most actively traded stock for the day with 76.2m shares changing hands. CPE manufactures precision-machine parts and components, and provides computer numerical control machining services for the semiconductor, life science and medical devices, and sports equipment industries in the US, Singapore and Malaysia with a 1.55% market share. The company raised RM179.58m from issuing 167.83m shares, which will be used for constructing new plants, working capital, buying new machinery and equipment, relocating existing machinery and equipment, repaying bank borrowings, for other capital expenditures, and for listing expenses. KAF is the principal adviser, underwriter and placement agent.

Chin Hin Group to issue RM500m perpetual bonds

The company lodged the documents for the medium term notes programme on 6 Dec 2023 in accordance with the Securities Commission’s lodge and launch guidelines. The programme is not rated and is not subject to shareholders’ approval. The issuance proceeds will be utilised for acquisitions, refinancing borrowings, working capital, other general corporate purposes and for costs related to the programme. AmInvestment Bank is the principal adviser, lead arranger, lead manager and facility agent. The counter closed at RM3.48.

Bursa Malaysia Derivatives to launch first currency futures on 11 Dec

The Mini USD/CNH Futures (FCNH), established through a licensing agreement with Hong Kong Exchanges and Clearing (HKEX), will be Malaysia’s inaugural exchange-traded currency futures contract. It will complement existing currency markets operated by Malaysian financial institutions. FCNH is a smaller-sized cash-settled contract and allows investors to hedge renminbi (RMB) without having to exchange the initial sum invested. SMEs with transactions in China can also hedge their US dollar and offshore RMB risks. The FCNH launch is in line with the licensing agreement with Dalian Commodity Exchange (DCE) on the Bursa Malaysia DCE Soybean Oil Futures Contract, which will be listed on Bursa Malaysia Derivatives in 2024. You can watch the FCNH launch live stream on Bursa Malaysia’s Facebook page at 9am on 11 Dec.