Investment & Market Trends

KUALA LUMPUR: Sustainable energy and engineering solutions specialist Kinergy Advancement Bhd (KAB) posted a revenue of RM199.41 million for the financial year ended December 31, 2023 (FY23), marking a 6.6 per cent increase from the previous year. The revenue growth was mainly due to the KAB’s strategic shift towards the sustainable energy segment (SES), which experienced a more than fivefold increase from the previous year. KAB’s net profit stood at RM28.88 million, showcasing a growth of more than tenfold from the RM2.78 million reported in FY22. The surge in the net earnings was mainly driven by an impressive 862.6 per cent growth in its SES segment results to RM36.10 million and further boosted by the substantiated gain from the completion of PT Inpola Mitra Elektrindo, a mini-hydropower plant in Indonesia in the third quarter (Q3) of FY23. Executive deputy chairman and group managing director Datuk Lai Keng Onn said the positive financial performance in FY23 is a testament to KAB’s resilience and strategic pivot towards sustainable energy solutions. “The remarkable performance in our SES segment, coupled with our continuous growth potential, underlines the significance of sustainable energy in meeting the escalating demand for cleaner energy today. “It also reaffirms our expertise in delivering solutions that can shape and contribute to a greener planet and greater positive environmental impact,” he said in a statement. For the fourth quarter (Q4) FY23, KAB’s revenue rose by 35.1 per cent to RM62.95 million, up from RM46.61 million in the same quarter last year. A significant highlight from this quarter’s earnings was the SES segment, surpassing the engineering segment to become KAB’s leading revenue generator, contributing 56.97 per cent to the total revenue. This was mainly due to contributions from new projects and new entities acquired for the SES segment. In line with the strong growth, KAB’s net profit surged by 399.1 per cent to RM2.65 million in Q4 FY23 as compared to RM0.53 million recorded in Q4 FY22. The significant improvement was mainly due to more lucrative tariffs and contributions from new projects. “KAB’s strategy in shifting our focus from engineering works in construction and property projects to higher-margin sustainable energy solutions has yielded a bountiful harvest throughout 2023. “Along with our record earnings, we are also on track to meeting our operational objectives and ESG, sustainability targets,” Lai said. He said KAB is also cautiously optimistic about its outlook going forward, led by the SES segment. The surge of earnings in KAB’s SES segment during FY23 reflects a robust demand for green, clean and renewable energy and the company’s successful integration of profitable projects and new entities in the SES segment. “Our outstanding performance in FY23 solidifies our role as a holistic energy and engineering solutions provider. “It’s gratifying to witness the success of our transformational journey, transitioning from an engineering to an Energy-focused entity. “The shift has proven rewarding, particularly with our expansion into the SES segment,” said Lai. He said FY23 had demonstrated the success of KAB’s strategic diversification into the SES segment, showcasing the significant potential for meeting future energy needs and facilitating energy transition. “Again, I strongly believe that the exceptional performance in FY23 reaffirms our position as a leading energy and engineering solutions provider,” he said.

KUALA LUMPUR: Mestron Holdings Bhd (MHB) achieved a 32.6 per cent year-on-year (YoY) growth in revenue for the financial year ended December 31, 2023 (FY23), reaching RM148.8 million, while net profit was by 17.6 per cent to RM11.8 million. This achievement comes amid various market hurdles, showcasing the company’s robust growth trajectory. According to a filing with Bursa Malaysia, the notable contribution of MHB’s revenue, which is approximately 78.6 per cent, was generated from its manufacturing operations. The increase in revenue was primarily fueled by heightened demand for both standard and specialty poles, particularly within the telecommunications sector. Moreover, the domestic market continues to stand as MHB’s stronghold, contributing to about 95.2 per cent of its total revenue in FY23, further solidifying its position in the domestic market. Managing director Por Teong Eng said this year has been a testament to the company’s strength and adaptability in navigating through market volatilities. “Our significant revenue growth amidst such conditions highlights the unwavering demand for our quality products and our team’s exceptional dedication to meeting our client’s needs,” he said in a statement. As for the fourth quarter (Q4) FY23, MHB’s revenue increased to RM42.51 million, up from RM29.99 million in the same quarter last year, marking a 41.75 per cent growth. This increase is primarily attributed to heightened sales demands across its product range, particularly in standard poles, specialty poles, and solar components. The higher demand in its telco segment, coupled with reduced raw material costs, has contributed to an improved profit for FY23. The manufacturing segment, notably aimed at the telecommunications sector, remained a major revenue driver, contributing approximately 61.0 per cent of the total revenue for the quarter. MHB’s FY23 revenue stood at RM148.8 million with a net profit of RM11.8 million after charging off one-time transfer listing expenses of RM800,000. Looking ahead, MHB remains cautious about the uncertainties in the global and local economy, including foreign exchange volatility and increasing competition with lower-quality products. “While the landscape remains challenging, our focus on vigilant management and exploring new business opportunities positions us well for sustainable growth. “We are committed to diversifying our revenue streams and reinforcing our market presence,” Por said.

KUALA LUMPUR: Kinergy Advancement Bhd’s (KAB) wholly-owned subsidiary, KAB Energy Holdings Sdn Bhd (KEH), has acquired a 9.6MW mini-hydropower plant in Kedah, marking another strategic move forward in our renewable energy (RE) portfolio in the ASEAN region. This acquisition by KEH involves acquiring the entire stake of Tunjang Tenaga Sdn Bhd (TTSB), which owns an 80 per cent stake in SDF Hydro Sdn Bhd (SHSB). A filing with Bursa Malaysia shows that the acquisition deal was signed by KEH and Vizione Energy Sdn Bhd (VESB), a wholly-owned subsidiary of Vizione Holdings Bhd (VHB). SHSB operates a mini-hydropower plant at Pedu Dam, Kedah, underlining KAB’s commitment to environmental sustainability in the ASEAN region. The other 20 per cent is owned by Menteri Besar Incorporated (MBI) Kedah, the state investment arm. The Pedu Dam plant boasts a total approved installed capacity of 9.6MW, with a net export capacity of 8.0MW approved by the Tenaga Nasional Bhd (TNB) substation. This project has a 21-year concession period starting from the feed-in tariff commencement date scheduled on April 30, 2027. KAB executive deputy chairman and group managing director Datuk Lai Keng Onn said  building upon the company’s recent acquisition of the maiden 11MW mini-hydropower plant in North Sumatera, Indonesia, in August 2023, this investment represents a crucial move toward realising KAB’s vision of leading sustainable energy development in the region. “By harnessing the untapped potential of Pedu Dam, we anticipate making substantial advancements in renewable energy generation, furthering Malaysia’s environmental sustainability objectives,” he said in a statement. He said hydropower plants stand out as a key contributor to renewable energy production and generation due to their capacity to deliver stable energy outputs. Establishing itself as dependable energy sources and solutions, hydropower facilities ensure consistent production and generation of renewable energy. Lai also emphasised the minimal environmental, social, and governance (ESG) concerns associated with this hydropower plant, highlighting that Pedu Dam’s completion in 1969 has since served as a cornerstone for the agricultural growth of 96,558 hectares of land in Kedah and Perlis. The strategic location in the district of Padang Terap recognises the dam’s importance in water management and its potential in renewable energy generation. “Adding this new mini-hydropower plant into our renewable energy portfolio strengthens our position as a holistic energy and engineering solutions provider, further expanding our footprint in sustainable energy across ASEAN. “Completing these renewable projects in North Sumatra and Kedah, KAB’s mini-hydropower total installed capacity will be elevated to 20.6MW. “This reflects a beneficial increase in KAB’s long-term recurring income, facilitated by established power purchase agreements in Malaysia and Indonesia,” Lai said.

KUALA LUMPUR: Renewable energy player Sunview Group Bhd (SGB) recently announced that its wholly-owned subsidiary, Fabulous Sunview Sdn Bhd (FSSB), signed a strategic business partnership agreement with the administration of Kashkadarya region. Kashkadarya, also commonly referred to as Qashqadaryo, is one of the regions of Uzbekistan. The collaboration between the two parties will focus on developing a 500 MWac solar photovoltaic plant project in the Kashkadarya region, with the implementation target to be within one year from the agreement’s signing. The project’s total cost is US$1 billion, which will be financed through foreign direct investments. In addition, SGB will send representatives to the Kashkadarya region to explore possibilities of implementing the project, negotiate with local partners, and evaluate existing operational processes. SGB executive director and chief executive officer HP Ong said the collaboration underscores the company’s commitment to advancing renewable energy initiatives and global sustainability. “This project will open new horizons for SGB to extend its geographical presence beyond the local market and accelerate the transition to renewable energy in the Kashkadarya region. “We are optimistic this partnership will yield a positive outcome for us,” he said in a statement. SGB endeavours to ascend as the leading renewable energy provider and will further diversify to various clean energy power other than solar. This complements its role in the vertical integration of the solar energy supply chain. The committed workforce at SGB is geared towards delivering comprehensive solutions in renewable energy, spanning the entire supply chain, from upstream as an aluminium solar mounting manufacturer to midstream activities like engineering, procurement, construction, and commissioning (EPCC) of solar infrastructure, and downstream responsibilities as a solar asset owner.

KUALA LUMPUR: Food producers CAB Cakaran Corporation Bhd (CAB) posted a net profit of RM38.38 million for the first quarter (Q1) ended December 31, 2023 (FY24), a 8.3 per cent decline posted in the same quarter last year. Net profit declined mainly due to a lower year-on-year (YoY) gain on fair value adjustment of the company’s biological assets, coupled with higher tax expenses. For Q1, CAB posted an RM11.27 million gain in the fair value of its biological assets. This, coupled with an increase in the average selling price (ASP) of feed, processed chicken and other processed food products, had sent the company’s net profit for Q1 FY23 to RM41.87 million, the highest on record. In Q1 FY24, CAB recorded an RM1.59 million gain on fair value adjustment of the company’s biological assets. Q1 FY24 tax expenses were RM15.71 million, an increase of 41.9 per cent from a year ago. Q1 revenue dipped 1.6 per cent YoY to RM548.48 million, dragged by a decline in the ASP for chicks and broilers. On a YoY basis, the average selling price of chicks and broilers fell 12.7 per cent and 5.7 per cent, respectively. CAB’s financial position continued to improve, with cash position rising 45.2 per cent YoY to RM202.61 million as of December 31, 2023, up from RM139.58 million a year earlier. Considering its latest results, CAB’s stock trades at a price-to-earnings (P/E) ratio of approximately 5.4x, compared to the peer average of 11.4x. Group managing director Christopher Chuah Hoon Phong said the company is pleased to start FY24 with a strong quarterly performance. “We will continue to pursue operational efficiency, economies of scale, and long-term sustainable growth opportunities. “In the near term, we expect to benefit from the recent shortages of pork and eggs, both staple foods for Malaysians. “These shortages should sustain high demand for chicken meat, which supports the outlook for broiler prices. “We will continue to seek strategic mergers and acquisitions (M&A) opportunities to develop innovative products and create sustainable food solutions. “With our strong cash position, we have the firepower to catalyze our evolution into a world-class food conglomerate,” he said in a statement. On the expansion front, Chuah said CAB continue to work towards launching Phase 1 of its venture in Indonesia with the Salim Group, its partner and shareholder. “We have proven we can win in Malaysia and have now set our eyes on replicating this model globally. “Our planned foray into Indonesia will diversify our revenue and give us a new engine of growth. “With the backing of Salim Group, one of Indonesia’s biggest conglomerates, we are confident that we have a long runway for growth in Indonesia,” he said. In the recent financial year ended September 30, 2023 (FY23), CAB reported a net profit of RM107.25 million, an increase of 85.8 per cent from a year ago. Increased demand, higher selling prices, and lower production costs drove the improved performance. FY23 revenue was RM2.25 billion, a 14.9 per cent YoY increase and the highest in the company’s operating history.

KUALA LUMPUR: Central Global Bhd (CGB) posted revenue of RM222.04 million for the financial year ended December 31, 2023 (FY23), reflecting an increase of RM10.87 million or 5 per cent posted in the same quarter last year, driven by its construction segment. As of December 31, 2023, CGB’s unbilled orderbook stood at RM227.85 million. Despite the significant revenue generation, CGB posted a loss before tax (LBT) of RM31.60 million compared to a profit before tax (PBT) of RM17.01 million recorded in FYE 31 December 2022. This was mainly due to the one-off impairment of trade, other receivables, and contract assets for the Gerbang Bukit Kecil and Sungai Pinang projects, which are under litigation and adjudication proceedings via the Construction Industry Payment and Adjudication Act 2012 (CIPAA) amounting to approximately RM41.91 million. On top of that, the expenses in connection to the shares grant scheme issued by CGB earlier in the year, amounting to RM3.54 million, also contributed to the drop. The adjusted PBT will be recorded at RM10.31 million without the one-off impairment.

KUALA LUMPUR: Texchem Resources Bhd’s (TRB) net loss widens to RM3.59 million for the fourth quarter (Q4) ended December 31, 2023 (FY23) from RM254,000 posted in the same quarter last year, mainly due to weak market demand. Revenue for the quarter stood at RM241.28 million from RM251.76 million posted in Q4 last year. For FY23, TRB reported a revenue of RM993.5 million compared to RM1.14 billion posted in FY22. This was mainly due to lower sales due to high interest rates, inflation, and inventory adjustments in specific industries we serve. The situation was further compounded by a rise in input, operating costs and tax expenses from profitable entities within the company, which led to a net loss of RM10.8 million for FY23, which included share-based payments amounting to RM3.0 million. Executive chairman Tan Sri Fumihiko Konishi said FY23 was an arduous year for the company given the demanding business operating landscape arising from various macroeconomic headwinds. “Nevertheless, we put forth our best effort to minimise the impact. “Moving forward, while we anticipate the market to remain volatile, we are steadfast in our strategy to enhance our capacity and capabilities. “This is to prepare ourselves to seize the opportunities and ride on the recovery of the sectors we serve, especially for the polymer engineering division, which serves end-user international clients in the semiconductor, medical life sciences and memory storage solutions sectors,” he said in a statement. Fumihiko said TRB has continued to pursue strategies for its industrial division, aimed at expanding market share and strengthening long-term relationships with principals and customers while riding on improving petrochemical prices. “In our restaurant and food divisions, acknowledging the lower revenue, we continue to drive operational improvements and streamline supply chain management to reduce costs and remain competitive. “On balance, we maintain our cautious optimism for FY24 and focus on executing our key strategies as we forge ahead,” Fumihiko said. Despite the challenging environment, TRB generated a net operating cash flow for FY23, amounting to RM81.9 million. The company has consistently produced positive net operating cash flow for over 20 years.

KUALA LUMPUR: Heineken Malaysia Bhd is banking on several strategies this year to navigate challenges, namely the weak ringgit and soft consumer demand. Further, the ongoing global geopolitical tension and the Red Sea crisis have also impacted supply chains and can potentially lead to unpredictable price fluctuations for raw materials. Managing director Roland Bala said these factors combined have created an uncertain business climate for Heineken Malaysia and consumers in Malaysia. “We have faced challenges regarding ringgit depreciation, weak consumer demand and ongoing geopolitical tension. “However, we see some improvements in the fourth quarter (Q4) of 2023, and we are banking on our marketing strategy to mitigate some of our challenges,” he told reporters at a media briefing yesterday. Heineken Malaysia announced its financial results for the full year ended December 31, 2023 (FY23), reporting a decline in revenue and profit as compared to the same period in 2022 (FY22). Revenue decreased by 8 per cent to RM2.64 billion compared to RM2.85 billion posted in FY22, mainly due to weak consumer sentiment attributed to growing macroeconomic concerns in 2023. The brewer had a strong base in 2022 following the re-opening of the economy at the end of the Covid-19 pandemic. Due to the rebound in FY22, Heineken Malaysia views its FY23 performance as a form of market correction. Group profit before tax (PBT) decreased by 14 per cent principally due to lower revenue, while net profit decreased by 6 per cent due to the absence of the one-off Prosperity Tax in 2023. For the fourth quarter (Q4) FY23, Heineken Malaysia’s revenue decreased by 8 per cent to RM728.62 million from RM791.68 posted in the same quarter in FY22. This reflects the lower sales arising from weak consumer sentiment driven by the rising cost of living and macroeconomic concerns. Group PBT also declined by 14 per cent in Q4, primarily driven by lower revenue. Similarly, net profit for the quarter also decreased by 5 per cent to RM99.0 million from RM104.63 million posted in Q4 FY22 due to the absence of the one-off Prosperity Tax. “2023 has been a challenging year, with the market experiencing corrections following the strong rebound observed in 2022. “Despite the challenging environment, we continued to execute and deliver our EverGreen strategy to drive premium growth with a consumer-first mindset whilst accelerating digitalisation, developing our talents, and making progress towards our sustainability ambitions,” Roland said. Heineken Malaysia board has proposed a single-tier final dividend of 88 per share for FY23 compared to 98 sen per share in FY22. The total dividend for the year amounts to 128 sen per share, comprising a single-tier interim dividend of 40 sen per share, which was paid on November 10, 2023. Subject to shareholders’ approval at the forthcoming annual general meeting, the final dividend will be paid on July 25, 2024. “We welcome the stance taken by the government not to increase excise duties on beer in its latest Budget 2024, as any hike in excise rates will drive greater demand for illicit alcohol. “Heineken Malaysia will continue to monitor and support the authorities in addressing this issue through comprehensive efforts and promoting greater awareness in the market,” he said.

KUALA LUMPUR: The Securities Commission Malaysia (SC) and Bursa Malaysia have jointly committed to an expedited three-month approval period for initial public offerings (IPOs) on the Main Market and the ACE Market. The commitment applies to new IPO applications received as of March 1, 2024. In a joint statement, both agencies said the commitment to a prompt decision on regulatory approval within three months would be premised on the principal advisers and sponsors satisfactorily addressing the regulators’ queries and comments on IPO applications within five market days. This will augment the regulators’ current practice since 2021 of issuing queries and comments within ten market days following a complete IPO application and issuing subsequent queries and comments within five market days of each response round. The regulators will continue to maintain rigour in the assessment without compromising investors’ protection and public interests. To leverage a more vital collaboration between the regulators and the industry players to offer a more precise timeline for listing qualified IPO applicants, the regulators look forward to attracting quality companies to list, particularly those in sectors supporting national growth policies, blueprints, and roadmaps. SC chairman Datuk Seri Dr Awang Adek Hussin said the Malaysian equity capital market has remained a cornerstone of funding for companies, with IPOs raising RM3.6 billion in 2023. “We believe our approval timeframe can cater for the dynamic business needs of companies looking to raise funds in the capital market as part of our ongoing efforts to remain competitive and relevant for local and international investors. “This collaborative effort underscores our commitment to fostering a conducive environment for issuers, facilitating their access to capital markets with greater certainty and efficiency,” Dr Awang said. Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift said the more competitive time-to-market will enhance the exchange’s attractiveness to companies seeking to list in Malaysia. “We aim to provide a holistic and customer-friendly facilitation by regulators and principal advisers and sponsors to support better companies that intend to raise capital through IPOs and elevate their status as public listed companies. “Our equities market is ready to support the cycle of fundraising and investing to grow businesses,” he said. The Malaysian Investment Banking Association (MIBA) recognise the critical importance of seamless collaboration between regulators and advisers to ensure a smooth listing process. “By working hand in hand, we can uphold the highest standards of due diligence, corporate governance, and compliance, ultimately facilitating a faster time-to-market for IPO issuers,” MIBA chairman Lee Jim Leng said. “This will not only benefit businesses seeking to raise capital but also enhance the overall credibility and transparency of the capital market,” she added. The SC and Bursa Malaysia said advisers and professionals should uphold due diligence standards to enable the highest quality IPO applications by adhering to guidelines and requirements, ensuring quality disclosures, high standards of corporate governance, as well as timely and satisfactory responses to regulator queries and comments. Further measures, including training modules, will be developed to support market professionals in meeting the unified objective of a smoother journey to IPOs.