Investment & Market Trends

KUALA LUMPUR: Kenanga Investment Bank Bhd believes the domestic manufacturing condition will improve further towards the end of the year, mainly driven by the expected upswing in the technology cycle and China’s gradual recovery following a significant stimulus implemented by the country. The research firm said, nevertheless, the manufacturing condition could experience a sluggish recovery in the near term, as reflected by the latest manufacturing purchasing managers’ index (PMI) reading, which fell to 48.4 in March from 49.5 in February and remained at a contraction level since August 2022. “Our assumption is also premise on the positive growth trajectory supported by higher demand from regional peers and better-than-anticipated performance among advanced economies. “With that said, we project the first quarter (Q1) 2024 gross domestic product (GDP) growth to expand to 3.3 per cent and maintain the overall growth forecast at 4.5-5.0 per cent in 2024,” Kenanga said in a note. Malaysia’s industrial production index (IPI) slowed in February at 3.1 per cent year-on-year (YoY) from January’s 4.3 per cent but beat Kenanga Investment Bank Bhd’s expectations of 1.8 per cent and the consensus of 1.8 per cent. The research firm said that overall, the growth was partially weighed down by a slowdown in the manufacturing sector but mitigated by higher growth in the electricity and mining index and partly due to a lower base effect. On a month-on-month (MoM) basis, the IPI was down to -6.3 per cent from January’s 2.0 per cent, a sharp fall to a ten-month low. This was partly attributable to a seasonal factor amid shorter working months and festive holidays. Kenanga noted that the manufacturing index moderated in February at 1.2 per cent YoY from 3.7 per cent in January. Domestic-oriented manufacturing slowed to 3.8 per cent from 8.0 per cent in January. However, it remained supported by fabricated metal products (8.4 per cent), followed by other non-metallic mineral products (5.1 per cent). Export-oriented manufacturing contracted slightly at -0.1 per cent in February from 1.6 per cent in January due to a sharp decline in the manufacture of vegetable and animal oils and fats (-13.5 per cent), followed by chemicals and chemical products (-2.8 per cent) and electrical equipment (-2.2 per cent). On MoM, domestic manufacturing fell to a ten-month low of -6.3 per cent from 1.8 per cent in January, following a positive turnaround in the preceding month. Mining index growth expanded to 8.1 per cent to a 16-month high from 5.0 per cent in January. This is attributable to a higher natural gas output (11.9 per cent), followed by crude oil and natural gas extraction (8.1 per cent). On MoM, the index fell to an eight-month low of -6.9 per cent from 3.1 per cent recorded in January. The electricity index accelerated to an 18-month high, or the highest since August 2022, of 10.9 per cent from 8.3 per cent recorded in January. On a MoM basis, the index fell to a three-month low of -4.5 per cent from January’s 2.0 per cent following two straight months of expansion. Kenanga retained the forecast of the domestic manufacturing index at 4.6 per cent in 2024, as momentum may pick up in the second half (2H) of 2024.

KUALA LUMPUR: AEON Credit Service (M) Bhd plans to roll out the digital Islamic bank in the first half of this year, further expanding the AEON Living Zone to bolster financial inclusivity. The AEON Living Zone, an eco-system built on the AEON Group of Companies in Malaysia, aims to provide comprehensive lifestyle and financial services solutions to the local community while fostering app-based customer acquisition. Additionally, the company will also prioritise completing its digital onboarding process for credit cards and launching a new mobile app to transform customer acquisition and experience in the financial year ending February 25, 2025 (FY25). In a statement, AEON Credit said the company will remain cautious given rising geopolitical tension, inflationary pressures and prevailing volatility in the global financial markets. “AEON Credit will continue to be prudent, placing emphasis on growing quality assets while accessing the inherent credit risks within its financial portfolios,” it said. On earnings, AEON Credit’s transaction and financing volume registered an increase of 15.9 per cent to RM1.85 billion for the fourth quarter (Q4) ended February 29 2024 (FY24) compared to RM1.60 billion recorded in the same quarter in FY23. This was primarily driven by vehicle financing, personal financing and payment business, which were also supported by the company’s strategic festive season marketing campaigns. “The expansion of our acquisition channels, including the set up of physical booth and online channels, contributed further to the increase in transaction and financing volume,” AEON Credit noted in the statement. Profit before tax (PBT) for Q4 FY24 increased by 25.3 per cent to RM162.60 million compared to RM129.81 million in Q4 FY23. Profit after tax (PAT) rose by 24.7 per cent to RM118.92 million compared to RM95.34 million recorded in the preceding year’s corresponding quarter. For the full year, AEON Credit’s revenue grew 16.6 per cent to RM1.91 billion in FY24, compared to RM1.64 billion recorded in FY23. This increase was due to higher transaction and financing volume that grew by 16.9 per cent to RM7.30 billion year-on-year (YoY). Profit before tax (PBT) and profit after tax (PAT) grew to RM565.17 million and RM424.02 million, respectively, translating to earnings per share (EPS) at 81.08 sen and a return on average equity (ROE) of 16.7 per cent. AEON Credit said the strong performance was underpinned by robust revenue growth with solid receivable growth across key products. However, this was partially offset by higher impairment losses on financing receivables that reflected an increase of RM122.08 million and increased other operating expenses in line with higher sales and revenue-generated costs. The board has recommended the payment of a final single-tier dividend of 14 sen per share to be paid on July 25 2024, subject to shareholders’ approval at the upcoming annual general meeting. The total dividend payable for FY24 amounted to RM144.25 million compared to RM126.38 million last year, marking a 14.1 per cent increase with a payout ratio of 34.0 per cent. AEON Credit’s gross financing receivables increased by 12.9 per cent to RM12.23 billion YoY, driven by strong demand across our products. The launch of a pre-assessment and digital onboarding processes that are backed by an AI-based scoring model to improve decision-making accuracy and provide a seamless onboarding experience contributed to this growth. Due to the company’s strong asset recovery efforts and implementation of a risk-based collection strategy, the non-performing loans (NPL) ratio reduced to 2.57 per cent in FY24 compared to 2.89 per cent in FY23.

KUALA LUMPUR: Perak-based integrated frozen seafood producer SBH Marine Holdings Bhd (SMH) aims to expand its aquaculture farms further by doubling the shrimp harvest capacity to 1,800 tonnes annually, adding a new 4,000-ton seafood processing plant, and opening its in-house shrimp hatchery centre. Independent non-executive chairman Mohd Salim Dulatti said these measures aim to reduce reliance on external suppliers and cater to the growing demand for sustainable seafood in the future. He said SMH’s facility, which can process up to 4,800 tonnes annually and has a 1,000-tonne cold storage facility, stands as a symbol of growth and capability, and moving forward, the company see immense opportunities for growth and expansion. “For over two decades, SMH has been at the forefront of the frozen seafood market, driven by our unwavering passion for crafting superior seafood products, with a special focus on prawns, shrimp, cuttlefish, squid, and octopus. “Our farms, which span over 440 acres of aquaculture land, are a testament to our dedication to producing fresh, sustainable, and top-quality shrimp. “Presently, our farms, capable of producing up to 900 tonnes of shrimp annually, comply with strict biosecurity and sustainable aquaculture practices, allowing our seafood products to be exported globally, serving dining tables from Europe to the Middle East and throughout Asia,” Mohd Salim said at the listing ceremony in Bursa Malaysia today. SMH debuted as a public listed company on the ACE market of Bursa Malaysia, with shares opened at a price of RM0.25, representing a 15.9 per cent premium over its issue price of RM0.22 per share, with an opening volume of 21.23 million shares. The company raised a total of RM39.6 million through the public issue of 180.0 million shares. More than 70 per cent of this gross amount will be used for business expansion, with 40.4 per cent, or RM16.0 million, channelled for the development of the Selinsing shrimp farm, 16.4 per cent, or RM6.5 million, for the construction of its second seafood processing plant, and another 15.4 per cent, or RM6.1 million, for the purchase of machinery, equipment, and motor vehicles. The remaining proceeds of RM7.0 million and RM4.0 million have been earmarked for working capital and listing expenses, respectively. SMH’s listed shares are classified as Shariah-compliant by the Shariah Advisory Council of the Securities Commission Malaysia. The company’s public issue portion, which was made available to the Malaysian public via balloting, was oversubscribed by a rate of 27.7 times, with a total of over 10,000 applications for over 1.2 billion shares. Besides being the sole underwriter of SMH’s initial public offering (IPO), KAF Investment Bank Bhd is also the principal adviser, sponsor and sole placement agent for this exercise. WYNCORP Advisory Sdn Bhd is the corporate finance adviser of SMH’s IPO.

KUALA LUMPUR: Foreign investors have reversed the trend and became net buyers of Malaysia’s debt in March after three months of outflows. Kenanga Investment Bank Bhd said that total foreign debt holdings increased to RM265.8 billion in March from RM264.1 billion in February. However, its share of the total outstanding debt dropped to a 44-month low of 13.10 per cent in March (Feb: 13.11 per cent) due to new issuance and reopening of the government investment issue (GII) amounting to RM10.0 billion and reopening of the Malaysian Government Securities (MGS) amounting to RM5.0 billion. The research firm said initially, during March 13-15, foreign investors divested RM1.0 billion worth of Malaysian government bonds, a move attributed to the unexpectedly robust core inflation reading in the United States (US). However, subsequent actions taken by the government and Bank Negara Malaysia (BNM) to facilitate the repatriation and conversion of foreign investment income of government link investment companies contributed to a strengthening of the ringgit, thereby enticing investors to redirect their funds into the Malaysian debt market. Kenanga said that, as expected, the allure of a potentially strengthening ringgit and expectations of a possible Fed rate cut in June may have revived some interest in Malaysian debt securities. Foreign investors loaded up on long-term bonds, GII and MGS but reduced their exposure to Malaysia Treasury Bills (MTB). The GII, which stood at RM1.4 billion in March, is the largest inflow in four months. It increased the foreign holdings share to 8.9 per cent, which is the second lowest point in a year, partly due to an increase in the total outstanding. The MGS, which stood at RM0.8 billion in March, is the second consecutive month of net foreign buying. However, the foreign holdings share declined to 33.2 per cent in March from 33.3 per cent in February. Kenanga said the domestic equity market experienced its first net foreign outflow in five months, marking the largest net selling since the first wave of the pandemic in June 2020. The offloading of financial services stocks primarily drove this decline. The diminished foreign demand for domestic stocks is partly attributed to subdued sentiment in regional markets, profit-taking activities, and investors’ inclination towards small-cap stocks. Despite reduced hard landing risks for the US economy, the Fed is expected to cut rates this year, likely starting in June, Kenanga noted. This expectation stems from the ongoing disinflationary trend, which is expected to persist as the lag impact of the 525 basis points (bps) cumulative rate hikes take effect. However, the resilient US economy suggests the Fed may now only reduce rates by 75-100 bps, down from as high as 100-125 bps previously. Kenanga said that as such, investors may seek current attractive yields and shift towards high-quality emerging markets with currency appreciation potential once signs of a cooling US economy emerge. “Malaysia stands to gain from this shift, as potential subsidy rationalisation in the second half of 2024 is expected to boost fiscal resilience and credit outlook. “Additionally, BNM’s policy stability and measures for repatriating foreign earnings could support a stable ringgit with an upward bias,” Kenanga said.

KUALA LUMPUR: reNIKOLA Holdings Sdn Bhd signed a memorandum of understanding (MoU) with UiTM Energy & Facilities Sdn Bhd (UEFSB) to jointly collaborate on the development and maintenance of rooftop solar systems on various buildings of Universiti Teknologi MARA (UiTM) across Malaysia under a mix of net energy metering (NEM) and self-consumption scheme (SELCO). This MoU will play an important role in promoting solar energy solutions in Malaysia, pursuing net carbon zero for the Ministry of Higher Education and contributing to the National Renewable Energy Policy. The strategic alliance between reNIKOLA and UEFSB sets the stage for innovative clean energy solutions and underlines a joint commitment to driving impactful change in Malaysia’s energy transition. reNIKOLA views the partnership with UEFSB as a significant milestone that contributes towards the strengthening of the company’s commitment to supporting and facilitate renewable energy development in Malaysia. “We laud the Ministry of Higher Education and UiTM’s pursuit of net carbon zero and are honoured to partner with UEFSB in this project,” reNIKOLA managing director Boumhidi Adel said in a statement. “We endeavour to exceed the expectations of UiTM by delivering and maintaining quality solar systems in a timely and efficient manner,” he said.

KUALA LUMPUR: Johor-based Farm Price Holdings Bhd (FPH), a wholesaler and distributor of fresh vegetables, signed an underwriting agreement with Alliance Islamic Bank Bhd (AIS) for its upcoming initial public offering (IPO) on the ACE market of Bursa Malaysia. FPH managing director Dr Tiong Lee Chian said signing this underwriting agreement with AIS brings the company closer to its upcoming listing on the ACE market of Bursa Malaysia. “This unlocks greater resources and flexibility to fuel our expansion plans and explore new avenues for growth. “We firmly believe that the fresh vegetable industry is crucial to Malaysia’s food security, supporting public health, sustenance, and affordability. “As a wholesale distributor, we play a key role in the supply chain. We source fresh vegetables from domestic and foreign growers, distributors, and importers, providing us with a range of vegetables to meet the fresh vegetable requirements of our customers, mainly in Johor and Singapore. “Having started this business with my spouse and business partner, Liew Tsuey Er, twenty years ago, we have built a solid track record in the industry. Today, Farm Price offers a vast selection of fresh vegetables to meet the diverse needs of our customers. In addition to variety, we also provide value-added services such as processing prepacked and fresh-cut vegetables to enhance convenience and reduce preparation time for our customers,” Tiong said in a statement. FPH’s IPO exercise encompasses the public issuance of 102.00 million shares, representing 22.67 per cent of its enlarged share capital, and the offer for sale of 33.00 million existing shares, or 7.33 per cent of its enlarged share capital, via private placement to selected investors. Out of the 102.00 million shares, 22.50 million shares will be made available to the Malaysian public via balloting, 11.25 million shares to its eligible Directors, employees and persons who have contributed to the success of FPH (pink form allocations), while the remaining 68.25 million shares will go towards private placements to selected investors. Under the underwriting agreement, AIS will underwrite 33.75 million new shares made available to the Malaysian public and pink form allocations. FPH, via its subsidiaries, wholesales and distributes fresh vegetables, food and beverage (F&B) products, and other groceries. The company also operates a retail store in Ulu Tiram, Johor, where it directly sells fresh vegetables, F&B products, and other groceries to end-consumers. The wholesale distribution segment was the largest revenue contributor to FPH. Currently, the Senai Centralised Distribution Centre, coupled with the cold chain infrastructure of refrigerated trucks and cold room facilities, enables the Group to deliver fresh vegetables efficiently and promptly to meet the customers’ needs, mainly in the state of Johor in Malaysia and Singapore. Additionally, the company maintains six other regional distribution centres in Johor, Selangor, Perak, and Penang, which focus on the wholesale distribution of F&B products and other groceries. FPH’s processing and packing operations in its Senai Centralised Distribution Centre are ISO 9001, good manufacturing practice (GMP), and hazard analysis and critical control points (HACCP) certified, ensuring stringent quality control measures. At the same facility, it has also obtained Halal certification for prepacked and fresh-cut vegetables, assuring product integrity and opening doors to broader market reach. “Recognising the essential nature of this industry, FPH is committed to long-term growth. As part of our strategies, we plan to construct additional facilities to expand our Senai Centralised Distribution Centre, which is expected to double the size of our current facilities. “We will also establish additional regional distribution centres with cold room facilities in Nilai, Negeri Sembilan and Cameron Highlands, Pahang, and set up a sales and marketing office in Singapore. “These initiatives will allow us to expand our operational facilities and market coverage for business growth,” Tiong said. FPH is scheduled to be listed on the ACE market of Bursa Malaysia by May 2024, with AIS as the principal adviser, sponsor, sole underwriter and placement agent for the IPO exercise.

KUALA LUMPUR: United Kingdom-born vaping company Airscream, with a presence in more than 80 markets and regions, will invest RM100 million in the next five years in its operations in Malaysia. The company will also invest in expanding its distribution networks, administrative and field staff strength, and research and development facilities, envisioning Malaysia becoming its global headquarters. To date, the company has already set up its administrative, sales and marketing operations and a showroom in Shah Alam, with close to 40 employees locally and 100 globally. Airscream said Malaysia is a destination of choice because the domestic vape industry has grown in value to exceed RM3 billion over the last 10 years and has employed more than 30,000 Malaysians, citing a report by the Malaysian Vape Chamber of Commerce (MVCC) entitled Study on the Malaysian Vaping Industry 2021. Airscream co-founder and chief executive officer Sam Ong said the Malaysian vape industry ecosystem is well established, and the market is poised for further growth. He said this could potentially drive more foreign direct investments into the country and bolster high-income job creation. “We are also encouraged by the passing of the Control of Smoking Products for Public Health Bill 2023, which brings Malaysia on par with other countries around the world, including the UK, Australia, Thailand, and Singapore, which have standalone legislation on tobacco and vape. “Airscream has and will always be supportive of sensible and practical regulations for the e-cigarettes industry to deliver tangible economic growth while at the same time safeguarding consumers from potentially hazardous unregulated products and stopping underaged individuals from accessing these products,” he said in a statement. Airscream was established in 2018 as a manufacturer and retailer of its AirsPop® vape product. Within a short period of time, the company has grown exponentially in terms of sales and presence. AirsPops is currently one of the best-selling brands in markets like South Africa and New Zealand. Airscream’s success has been predicated on its unwavering commitment to product quality and safety, design innovation, and superb user experience. Airscream is also steadfast in its purpose of helping smokers reduce their dependence on cigarettes or even eliminate their use. In Malaysia, Airscream offers a range of high-quality tobacco cessation products, such as the Bottle by AirsPops, AirsPops Pro, AirsPops Pro Lite, AirsPops ONE USE, the nicotine pouch range M13, and more, for adult smokers and vapers. “We welcome the opportunity to collaborate and work hand-in-glove with industry stakeholders, including the authorities and regulators, manufacturers and retailers and industry interest groups to elevate the industry as a whole. “We believe there is much to learn from the Malaysian industry participants, and we hope to add value through our insights and experience in the international markets,” Ong said.

KUALA LUMPUR: Cloud hospital and mobile health services provider UCrest Bhd and MDC Asia Link Bhd (MDC)signed a business partnership agreement to digitalise the iMedic platform with artificial intelligence (AI) and Internet of Medical Things (IoMT). MDC chief executive officer Dr Aslan Bacho said the company is leading the transformation of dental care services with the use of AI, IoT, 3D printing and digital technologies to provide customers with a level of care and services while improving the clinic’s operation efficiency. “We focus on taking care of children’s dental health, developing good dental habits from a young age and continuously managing them, giving them good dental health throughout their lifetime. “With the digital technologies, customers can count on us to manage their dental health,” he said in a statement. MDC is the first dental clinic chain in Malaysia or perhaps Asia to use AI, IoMT and 3D printing technologies to elevate the standard of care and provide better healthcare management services to customers. MDC currently has 25 dental clinics, largely in the Klang Valley area, and is one of the largest dental clinic chains in the country. Its special focus is on paediatric dental care for children and its general dentistry and orthodontic services. The environment of the clinics is designed to be conducive to children with colourful settings and play areas, and the dentist and nurses are specially trained to handle children on the dental chairs. The partnership’s objective is to raise the standard of care in the dental industry and provide patients with the highest level of care. MDC will adopt the iMedic platform as the clinic management system (CMS). MDC will also adopt 3D printing in the clinics to provide higher-quality dental products to its customers. The machine learning of AI technologies in iMedic would help to analyse and diagnose images easily and more accurately. MDC intends to deploy a fundus camera with AILab from UCrest in the clinics connecting to ophthalmologists to provide non-invasion diagnosis of diabetic retinopathy so that patients can seek diabetic treatment while treating periodontal diseases. “With the iMedic platform, dentists and health consultants would be able to develop a personalised dental health plan for each customer and proactively manage and service them,” UCrest chairman Eg Kah Yee said. “The AI technologies will be able to diagnose with high precision and predicting the development of the patient’s dental diseases, allowing early preventive measures to be taken,” he added. iMedic is the leading digital health platform developed by UCrest and is currently used in multiple countries in Asia, the Middle East, and the United States (US). iMedic leads the market with its IoMT and AI, which empower patients to manage their health better and increase the productivity of doctors and clinics through AI and automation. iMedic connects to over 30 wireless medical devices, including ECG, blood pressure monitor, oximeter, ultrasound, BMI machines, CPAP, fundus cameras, etc.

KUALA LUMPUR: Engineering solutions provider Kawan Renergy Bhd (KRB) signed an underwriting agreement with M&A Securities Sdn Bhd for its upcoming initial public offering (IPO) on the ACE market of Bursa Malaysia. KRB managing director Ir Lim Thou Lai said this IPO exercise would expedite the company’s expansion plans and allow it to tap into the equity capital market, granting better financial flexibility to capitalise on the upcoming opportunities. “The IPO proceeds will mainly be used as working capital to enable the company to undertake more quality projects, move up the value chain, and strengthen our power generation and energy sale businesses. “The industrial process equipment industry continues to show promising prospects, supported by the improved demands of various sectors that utilise such equipment,” Lim said in a statement. KRB, through its subsidiaries, Kawan Engineering Sdn Bhd and Kawan Green Energy Sdn Bhd, designs, fabricates, installs, and commissions industrial process equipment, process plants, and renewable energy and co-generation plants. Its engineering solutions apply to various industries such as food processing, oleochemical and chemical processing, oil and gas, waste recovery, power plants, and utilities. Apart from the above, the company is also involved in the power generation and sale business through Bercham Plant, a landfill biogas power plant located in Ipoh, Perak, with an installed capacity of 1.2 megawatts of electricity and a net export capacity of 1.0MW. KRB’s IPO involves a public issue of 110.0 million new ordinary shares, which comprise 20.0 per cent of its enlarged share capital. Additionally, there’s an offer for sale of 34.5 million existing shares, accounting for 5.3 per cent of its enlarged share capital. These shares will be offered to selected investors through a placement exercise, with 1.0 per cent allotted to selected Bumiputera investors, as approved by the Ministry of Investment, Trade and Industry (MITI). Out of the 110.0 million new shares, 27.5 million will be made available to the Malaysian public via balloting, while 19.3 million shares will be allocated for eligible directors, employees, and persons who contributed to the success of KRB via pink form allocations. The remaining 63.2 million shares are reserved for selected Bumiputera investors approved by MITI. M&A Securities will also underwrite 46.8 million shares made available to the Malaysian public and the pink form allocations. “Increasing foreign direct investment (FDI) in Malaysia is set to boost our industrial process equipment, especially for sectors like oleochemicals, food industries, utilities, oil and gas, and sustainable fuel. “The weakening of the ringgit also helps make our products more locally and internationally competitive,” Tan said. “Additionally, the transition towards renewable energy and energy-efficient co-generation opens up great opportunities for KRB. “As the world shifts to more sustainable energy solutions, our proven capabilities in the integration of design, fabrication, installation, and project management in these areas position us well to meet the paradigm shift in the energy sector,” Lim said. KRB is scheduled to be listed on the ACE market of Bursa Malaysia by the second quarter of 2024, with M&A Securities as the principal adviser, sponsor, underwriter, and placement agent for its IPO.