Capital markets executive summary | Thu 11 Jan 2024

Capital markets executive summary | Thu 11 Jan 2024

SC charges two individuals for money laundering

The Securities Commission charged Dexter Ang Jen Chuen and Syaiful Riezal Ahmad in the Kuala Lumpur Sessions Court with 11 money-laundering offences involving more than RM119m. Ang was a director of Pixelvest Sdn Bhd and Syaiful Riezal was CEO of Infinity Trustee Bhd. Ang faces 8 charges under Section 4(1)(b) of the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 for allegedly receiving proceeds of unlawful activities. Syaiful Riezal faces 3 charges. The alleged offences occurred between 1 Dec 2020 and 9 Jan 2023 in Kuala Lumpur and Selangor. The penalty if convicted is imprisonment for up to 15 years and a fine of at least 5 times the value of the proceeds of unlawful activities or RM5m, whichever is higher. Both individuals claimed trial. The Sessions Court judge granted bail at RM8.01m with 2 sureties to Ang and RM100k with 1 surety to Syaiful Riezal. They were ordered to surrender their passports to the court and to report monthly to the SC until the trial ends.

Malakoff’s sustainable finance framework assigned Gold impact assessment

The framework sets the guiding principles for the issuance of sustainable financing instruments for projects that benefit the environment and society. Malakoff is Malaysia’s biggest independent power producer with 6,953MW capacity and 151MW renewable energy capacity. Subsidiary Alam Flora Sdn Bhd manages 5,748 tonnes of waste daily. Malakoff has presence in power generation and water desalination in Saudi Arabia, Bahrain, and Oman. It is committed to achieving net zero emissions by 2050. MARC Ratings believes that the use of proceeds provides significant social and environmental benefits that directly support 12 of the 17 United Nations Sustainable Development Goals (UNSDG), namely the green category, social category and transition category. MARC Ratings assessed the framework to be in line with the Sustainable and Responsible Investment Sukuk Framework of the Securities Commission, the Green Bond Standards, Social Bond Standards and Sustainability Bond Standards of the ASEAN Capital Markets Forum, and the Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines and Climate Transition Finance Handbook of the International Capital Market Association. The counter closed at 64 sen.
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Bank Islam’s AA3 and P1 ratings affirmed

RAM Ratings affirmed the bank’s financial institution ratings and the ratings of its sukuk programmes based on asset quality and credit loss absorption buffer. Gross impaired financing (GIF), already among the lowest in the industry, fell further from 1.3% at end-Dec 2022 to 1.0% at end-Sep 2023. Credit deterioration is moderated by retail financing, with salary transfer and deduction, making up 46% of total financing at end-Jun 2023. GIF coverage is 152% and common equity tier-1 capital ratio is 13.8%. Profitability has historically been depressed by high cost-to-income ratio and low non-financing income. Net financing margin weakened from 2.37% in FY2022 to 2.25% in 9MFY2023 given stiff deposit competition. Financing growth was lower at 2.7% and credit cost was higher at 33bps. Pre-tax profit declined to RM543m in spite of more investment income. Lembaga Tabung Haji, which owns 48.9% of Bank Islam, has been supporting with capital injections, dividend reinvestments, subscription of capital securities and deposit placements. The counter closed at RM2.26.

Digital Core-REIT set to expand in Asia-Pacific

The data centre real estate investment trust (REIT) listed on the Singapore Exchange (SGX) Mainboard in 2021 raising USD600m. It has presence in 5 tech hubs in the US, Canada and Germany. In 2022, SunGard, its 5th largest tenant, went bankrupt. In Jun 2023, 2nd largest tenant, Cyxtera, filed for bankruptcy in the US. Although investment manager Brookfield bought some of Cyxtera’s portfolio including data centres held by Digital Core-REIT in Nov, distributable income for 9M ended Sep 30 fell 8.5% year-on-year to USD31.5m, which the REIT blamed on higher interest rates. It currently wants to expand in Asia-Pacific except for Singapore until the investment and financial conditions for data centres become more favourable there. In Nov 2023, it bought 10% of a data centre in Osaka for JPY7.7b because it is an initial entry point for submarine cables connecting the Americas to the Asia-Pacific region. The acquisition will be funded with yen-denominated debt at an interest rate of 1.3% fixed for 3 years versus the 5% yield for the asset.

Vietnam-based ride-hailing company raises USD30m

Be Group, whose ride-hailing and delivery services complete against Grab Holdings Ltd, raised VND739.5b (RM140m) from VPBank Securities, which will subscribe for shares in BE Group’s parent. Greater smartphone usage is increasing demand for ride-hailing and delivery in the country of 100m people. Singapore-based Grab is the market leader while Indonesia’s GoTo entered Vietnam a few years ago. Be Group was launched in 2018 and has operations in 40 cities and provinces in Vietnam. It will use the funds to expand its ride, delivery and digital financial services, and venture into new markets and segments of the consumer and transportation sectors. The company expects its active users to more than double to 20m by 2026 and the number of rides delivered on its platform to surge from 120m in 2023 to 1b by 2026. Annual gross revenue should exceed USD200m in the same period. It targets positive EBITDA in FY2024.