Investment & Market Trends

KUALA LUMPUR: Integrated Facilities Management service provider GFM Services Bhd’s (GSB) wholly-owned subsidiary, Highbase Strategic Sdn Bhd (HSSB) and its joint venture partner, Singapore-Exchange listed Mun Siong Engineering Ltd (MSE), has secured three letters of appointments (LoA) from Petroliam Nasional Bhd (Petronas) operating companies (OPCs). The contract is to deliver operations and maintenance (O&M) services for three facilities within the Pengerang Integrated Complex (PIC) in Johor. These new contracts expand HSSB and MSE’s existing integrated turnaround main mechanical and maintenance mechanical static (TA4MS) contract to provide plant turnaround services to three facilities operated by the Petronas operating companies, namely, PRPC Utilities and Facilities Sdn Bhd, Pengerang Power Sdn Bhd and PRPC Water Sdn Bhd, respectively. The LoAs are for three years, from March 15, 2024, to March 14, 2027, with an option to extend for an additional two years. GSB managing director Ruslan Nordin said these LoAs underscore the company’s proven ability to deliver value and ensure the seamless operations of critical assets within the PIC. “These contract wins are a testament to HSSB’s growing reputation as a reliable partner. We are committed to optimising facility performance and maximising long-term operational efficiencies. “This strategic expansion of collaborative effort reinforces our partnership with Petronas and boosts the TA4MS outstanding contract value to GSB. “This is expected to contribute positively to GFM’s overall profitability and will further solidify our market position in the O&G sector, positioning GSB for sustained growth,” he said in a statement. In addition to maintaining the OPC’s facilities, HSSB and MSE are currently maintaining the facilities of Pengerang Refining Company Sdn Bhd, Pengerang Petrochemical Company Sdn Bhd and Petronas Chemical Isononanol Sdn Bhd. This brings both companies’ maintenance portfolio to a total of six facilities within the PIC, Johor.

KUALA LUMPUR: The Securities Commission (SC) has issued the revised Guidelines on Conduct for Capital Market Intermediaries (Guidelines), aimed at elevating standards of professionalism and integrity of capital market intermediaries (CMIs) in the industry. The revised guidelines, among others, reinforce the role of a CMI’s board and senior management in inculcating a corporate culture where clients’ interests are prioritised. The guidelines also clarify the SC’s expectations regarding CMIs’ duty to act honestly and fairly and avoid misleading and deceiving their clients under any circumstances. SC, in a statement, said the new chapters are introduced to address crucial areas, such as the treatment of vulnerable clients, as well as providing personal advice and capital market-related services, including through online platforms. SC chairman Datuk Seri Dr Awang Adek Hussin said the revised guidelines  signify the SC’s efforts towards fostering trust, integrity and client-centricity in the capital market industry by, amongst others, minimising the risk of mis-selling, avoiding reputational damage, reducing complaints and improving client retention. “Fairness is a cornerstone principle, requiring CMIs to consider the client’s circumstances, including any vulnerabilities that the client may have, communicate clearly and ensure comprehension of product details and associated risks,” he said. “When providing personal advice to a client, a CMI must exercise care, skill and diligence and give due regard to the client’s interests. “We are confident that these  enhancements will elevate standards and reinforce investor confidence in our capital market,” he said. In revising the guidelines, the SC has considered feedback from engagements with, among others, Bank Negara Malaysia, the Federation of Investment Managers Malaysia and relevant capital market intermediaries. The revised guidelines will come into effect on October 1, 2024 to allow sufficient time for capital market intermediaries to familiarise and prepare to meet the new requirements of the revised guidelines.

KUALA LUMPUR: MKH Oil Palm (East Kalimantan) Bhd (MOP) plans to expand its plantation in East Kalimantan after listing on the main market of Bursa Malaysia. The oil palm plantation player is raising RM136.4 million from its initial public offering (IPO) and allocating RM42.0 million, or 30.8 per cent of the proceeds, for the land acquisition. The additional land is close to the company’s current oil palm plantation estates in Kutai Kartanegara, East Kalimantan. According to the company’s prospectus, which was launched on Friday, MOP has identified companies) with potential land banks for oil palm plantation in the sub-district of Muara Kaman, Kutai Kartanegara, East Kalimantan, with an estimated land area of approximately 5,000.0ha with an estimated area for planting of 4,000.0 to 4,500.0ha. Non-independent non-executive chairman Tan Sri Datuk Chen Kooi Chiew said the IPO proceeds will accelerate growth plans, which include expanding the company’s plantation landbank by acquiring lands located near existing estates to leverage existing processing and jetty facilities. “We will also invest in new machinery and equipment to enhance operational efficiency, increase processing capabilities, and broaden our product offerings,” he said in a statement. Apart from the allocation for the land acquisition, MOP plans to use RM9.0 million, or 6.6 per cent, to set up a palm kernel (PK) crushing facility to generate an additional income stream. RM42.0 million, or 30.8 per cent of the amount raised, will be used for capital expenditures on existing plantation lands, refurbishment and upkeep of the existing palm oil mill, refurbishment and construction of workers and staff housing quarters, and expansion of the electricity supply. Further, RM30.0 million, or 22.0 per cent, of the IPO proceeds will go towards loan repayment, and RM13.4 million, or 9.8 per cent, will be deployed as working capital and listing expenses. According to the prospectus, MOP has oil palm plantations with a maturity and topographical profile that result in high fresh fruit brunche (FFB) yields. As of the latest practicable date (LPD), MOP prime mature oil palms are between 10 and 16 years old, making up approximately 94.9 per cent of the company’s total planted area. As a result of the ideal age profile of MOP’s oil palms, whereby the majority of them are in the early or midyears of the prime mature stage, as well as the topographical profile of its plantation estates, MOP achieved average FFB yields of 29.3mt per ha, 26.7mt per ha, 23.2mt per ha and 24.1mt per ha for FY20 to FY23, respectively. MPO’s IPO exercise comprises a public issue of 220.0 million shares, or 21.5 per cent of share capital, and a private placement of 30.7 million shares, or 3.0 per cent of the enlarged shares, to selected investors. Of the 220.00 million shares, 51.21 million will be made available for application to the Malaysian public via balloting, while the remaining 168.79 million new shares are reserved for private placement to selected investors. With an enlarged issued share capital of 1.02 billion shares and an IPO price of RM0.62 per share, MOP will have a market capitalisation of RM634.6 million upon listing. In terms of dividend policy, MOP intends to recommend and distribute a dividend of at least 50 per cent of its annual net profit. The company is targeted to be listed on the main market of Bursa Malaysia on April 30, 2024.  

KUALA LUMPUR: ACE-market-bound surface decorative products company Topmix Bhd does not anticipate any hike in raw material prices this year as the company has strategic plans to mitigate any fluctuations. Managing director Teo Quek Siang said the company handles the raw materials for its products through its original equipment manufacturer (OEM), and it will only take finished products for customisation to cater to customers from diverse industries. “We do not anticipate any hike on our raw material prices in the medium term as we take all our products from our OEMs. “We expect prices to sustain for the term as we continue to cater our products to diverse industries in Malaysia,” he told reporters at the company’s prospectus launch. According to the prospectus, Topmix OEM suppliers are Zhejiang Rexin Decorative Material Co Ltd and Melatone Group through their Malaysian subsidiaries. Topmix purchases from Zhejiang Rexin and Melatone Group accounted for 75.52 per cent to 81.81 per cent of its total purchases for the financial years 2020, 2021, 2022 and the financial year ended 2023. Topmix markets a wide range of own-brand surface decorative products, including high-pressure laminate (HPL), compact panels, wall panels, PVC edging, decorative boards and PVC plywood used in various commercial and residential interior surface applications. Its customer base spans local hardware product dealers, stockists, interior designers, contractors of residential and commercial properties, and carpenters. “Demand for surface decorative products is growing in popularity as they are durable, cost-effective, have a long shelf life, and enhance the aesthetic appeal of interior spaces. “Our upcoming initial public offering (IPO) will enable us to accelerate our expansion plans and further strengthen our market presence in the industry,” Teo said. Topmix is raising RM25.6 million under its IPO, with RM11.3 million (44.2 per cent) earmarked for general working capital while RM6.0 million (23.3 per cent) is allocated towards business expansion, marketing and sales, including establishing a new sales office and expanding warehouse capacity. The company also plans to allocate RM5.3 million (20.8 per cent) to expand into melamine-faced chipboard (MFC) product assembly. The remaining RM3.0 million (11.7 per cent) will be allocated to defray listing expenses. According to the prospectus, Topmix plans to expand in Malaysia to capture business opportunities in Penang and tap and market its surface decorative solutions by establishing a sales office, including a showroom and warehouse. Topmix intends to utilise RM3.08 million from the IPO proceeds to fund to setup the sales office in Penang, which will include the cost of setting up the sales office including showroom and warehouse (RM1.90 million), purchase of motor vehicles (RM0.34 million) and office equipment (RM0.07 million) and manpower requirement for 12 months (RM0.77 million). “This allows us to maintain a larger inventory, ensuring timely and cost-efficient order fulfilment for our customers,” Teo said. Topmix expects the demand for surface decorative products will grow due to recovery in the property markets, increased foreign and domestic investments, population growth and urbanisation, higher income levels and supportive government initiatives to encourage home ownership. “To capitalise on this trend, we will intensify our marketing and sales activities and strengthen our Topmix HPL mobile application with features such as augmented reality technology and a 360-degree virtual tour of our showroom to increase brand and product awareness,” Teo said. Topmix’s IPO exercise encompasses a public issuance of 82.7 million new ordinary shares, representing 21.0 per cent of its enlarged share capital, an offer for sale of 19.7 million existing shares, or 5.0 per cent of its enlarged share capital by way of private placement to selected investors. Out of the 82.7 million new shares, 19.7 million shares will be made available to the Malaysian public via balloting, 7.9 million shares to its eligible directors, employees and persons who have contributed to the success of Topmix, while the remaining 55.1 million shares are reserved to selected Bumiputera investors approved by the Ministry of Investment, Trade and Industry (MITI) and selected investors via private placement. Based on the IPO price of RM0.31 per share and its enlarged issued shares of 393.9 million, Topmix’s market capitalisation upon listing is approximately RM122.1 million. On earnings, Topmix’s revenue rose from RM27.5 million in FY20 to RM65.8 million in FY22 ended December 31, 2022, representing a two-year compound annual growth rate (CAGR) of 54.7 per cent. Concurrently, net profit surged from RM2.4 million in FY20 to RM8.5 million in FY22, signifying a two-year CAGR of 88.2 per cent. For FY23, Topmix reported a revenue and net profit of RM51.0 million and RM5.6 million, respectively. HPL products segment accounted for 94.1 per cent of the company’s revenue in FY23, while the remaining 5.9 per cent is attributed to the other surface decorative products segment and kitchen and wardrobe accessories segment. The company will be listed on the ACE Market of Bursa Malaysia on April 23, 2024. M&A Securities is the IPO exercise’s principal adviser, sponsor, underwriter, and placement agent.

KUALA LUMPUR: Integrated engineering solutions provider Kelington Group Bhd (KGB), through its 90.71 per cent owned subsidiary Ace Gases Sdn Bhd (AGSB), has commenced liquid carbon dioxide (LCO2) production at the company’s second plant in Kerteh, Terengganu. The plant has a production capacity of 70,000 tonnes per year. The latest commencement brings KGB’s production capacity of LCO2 to 120,000 tonnes per year. At the LCO2 plant, CO2 waste gas sourced from the Petronas gas processing plant is purified and converted into food-grade LCO2, which is used across diverse applications, particularly in the Food and Beverage (F&B) sector for the production of carbonated drinks and the creation of dry ice for food freezing. KGB chief executive officer Ir Raymond Gan said the company first ventured into LCO2 manufacturing with the commencement of the first plant, with a production capacity of 50,000 tonnes per year, in October 2019. “Having reached its full capacity, this expansion enables us to stay ahead of the growing market demand. “Commencement of the second LCO2 plant will position us for further revenue growth from our industrial gas segment as we now have the capacity to meet rising demand effectively,” he said in a statement. He said the prospects of its LCO2 manufacturing business are promising, especially as the closure of petrochemical plants overseas due to environmental concerns has led to a global shortage of LCO2, which is essential in many industrial processes. “Over 70 per cent of KGB’s LCO2 is currently exported, serving markets in Singapore, Australia, New Zealand, Fiji, Indonesia and the Philippines. “The enhanced capacity allows us to further broaden our market footprint, both within these existing territories and into new regions,” Gan said. In addition to the manufacturing facilities, KGB has a robust support infrastructure, including storage tanks and a fleet of vehicles. This facilitates the secure and efficient distribution of LCO2 both domestically and internationally. KGB’s strategic diversification into engineering services and industrial gas manufacturing ensures a balanced portfolio for long-term sustainability. While engineering services offer project-based revenue, the industrial gas segment promises a steady, recurring income, enhancing KGB’s financial resilience and growth potential across various market conditions and sectors. By balancing across both segments, the company can capitalise on opportunities across different market cycles and sectors.

SINGAPORE: Asian equities climbed on Tuesday but could not break this month’s highs as mixed messages from US Federal Reserve policymakers left doubts hanging over the timing of interest rate cuts. The risk of Japan intervening to prevent further falls in the yen put a little pressure on the dollar, however it rose against the yuan on speculation that China may tolerate a weaker currency. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.6 per cent, with gains for South Korean chipmakers SK Hynix and Samsung Electronics leading the Kospi up 1.2 per cent. Japan’s rocketing Nikkei was steady, as was the yen at 151.31 per dollar. Overnight, Chicago Fed president Austan Goolsbee said he had pencilled in three rate cuts this year, while Fed governor Lisa Cook urged caution and Atlanta Fed president Raphael Bostic re-iterated Friday remarks trimming his expectations to one cut. The diversity of views throws a few wildcards into the policy outlook while markets wait on the next US inflation indicators due when many markets will be closed for Good Friday. “Comments by FOMC participants suggest to us that four voters – Bostic, Bowman, Mester, and Barkin – see zero, one or two cuts this year,” said Standard Chartered strategist Steve Englander. “We still think (chairman Jerome) Powell has eight votes for easing, but he probably does not want an 8-4 vote on the first cut of the cycle. Rather, he may hope that good inflation outcomes will allow him to swing a couple of votes into the cutting camp in the coming months.” Interest rate futures price about three Fed rate cuts this year and about a three-in-four chance of the first cut in June. US two-year yields, which track short-term interest rate expectations, rose in New York trade overnight then fell 4.5 basis points in the Asia morning to 4.58 per cent. S&P 500 futures rose 0.1 per cent and the cash index closed 0.3 per cent lower overnight. In foreign exchange, Monday’s rhetoric from Japan’s top currency diplomat, Masato Kanda, kept the yen steady as traders weigh the risk of Japan buying heavily. Kanda said the yen’s recent slide was “strange” and “speculative”. The Bank of Japan (BOJ) lifted interest rates last week but the yen has fallen near to three-decade lows on the dollar. “Much like in 2016, when the BOJ cut rates to negative and (dollar/yen) went down, this month’s BOJ decision to exit negative rates is a nothingburger and a red herring for (dollar/yen),” said Spectra Markets President Brent Donnelly. “The pair continues to follow some combination of US yields and Nikkei, with yields the primary driver.” China’s yuan opened steady after a stronger-than-expected fixing of its trading band, but selling pressure soon drove it to the weak side of its 200-day moving average at 7.2165 per dollar. Markets were unsettled by a sharp drop in the yuan on Friday, after months of tight trading, and some speculate China is loosening its grip on the currency to allow it to fall. “Whether this reflects a shift in FX policy remains to be seen but accommodative monetary conditions are necessary in the face of growth headwinds,” said BofA Securities’ strategist Adarsh Sinha. “If (yuan) depreciation sustains and coincides with a weaker credit impulse, Asia FX is vulnerable.” Later on Tuesday, the Reserve Bank of New Zealand’s chief economist is due to speak and US manufacturing, services and consumer confidence figures are due. US core PCE data is due on Friday. Gold and oil prices were broadly steady in commodities trade, with spot gold US$2,169 an ounce and Brent crude futures up 24 cents a barrel to US$86.99. Bitcoin hovered just above US$70,000 after rising sharply on Monday.

KUALA LUMPUR: Building and infrastructure construction services provider TCS Group Holdings Bhd’s (TGH) wholly-owned subsidiary TCS Construction Sdn Bhd (TCSB) has secured a RM140.27 million contract from KLK Retail Centre Sdn Bhd (KRC), a wholly-owned subsidiary of Kuala Lumpur Kepong Bhd (KLK), for the construction of the main building for the Bandar Seri Coalfields Retail Park commercial complex in Bandar Seri Coalfields, Selangor. TGH managing director Datuk Ir Tee Chai Seng said this contract enhances the company’s outstanding order book and strengthens earnings visibility for the coming financial years. “Looking ahead, the company is positive on the outlook of the construction industry. “This is due to strategic infrastructure, utility projects, and the acceleration of projects under the Twelfth Malaysia Plan, 2021-2025,” he said in a statement. He said TGH sees opportunities and is bidding for residential and commercial buildings, infrastructure projects, and institutional buildings. “At the same time, we are also mindful of the demanding business operating landscape, particularly the elevated raw material costs caused by supply chain disruptions arising from the pandemic’s after effects. “All in all, we continue to be cautiously optimistic on the long-term prospects of the Group premised on the aforementioned factors,” Tee said. The contract is for 19 months, commencing in March 2024, with expected completion by October 2025.

KUALA LUMPUR: Prolintas Infra Business Trust (BT), managed by Prolintas Managers Sdn Bhd (PMSB), made its first listed business trust in Malaysia on the main market of Bursa Malaysia. Based on Prolintas Infra BT’s total issued units of 1.1 billion and the initial public offering (IPO) price of 95 sen per unit, the stock has a market capitalisation of approximately RM1.05 billion. The trading stock of Prolintas Infra BT was up 4.2 per cent and achieved a mid-intraday high of 99 sen, with more than 34.8 million units traded during the first half of the trading session. PMSB chairman Datuk Ikmal Hijaz Hashim said that after years of steadfast dedication, resolute perseverance, and relentless commitment, the company has reached this crucial and remarkable occasion to chart a historic milestone in the highway infrastructure industry. Prolintas Infra BT encompasses four mature and highly resilient highways, including Ampang-Kuala Lumpur Elevated Highway (AKLEH), Guthrie Corridor Expressway (GCE), Lebuhraya Kemuning-Shah Alam (LKSA), and Sistem Lingkaran Lebuhraya Kajang (SILK). These highways generate significant cashflows in toll revenue and have an average remaining concession period of approximately 32 years. These highways are strategically situated across Klang Valley and play a crucial role by providing an alternative route to the highly congested public roads and enhancing the connectivity of urbanised townships. These highways serve almost half a million road users daily, reflecting their importance in promoting the country’s economic and social development. In 2022, the combined traffic volume for the highways under Prolintas Infra BT was approximately 158.2 million, up 44.8 per cent from 109.3 million in 2021. This is attributed to a 15.7 per cent market share by total traffic volume in 2021 for the urban highways in the Klang Valley, excluding the Setiawangsa-Pantai Expressway and the New Klang Valley Expressway. According to PMSB’s distribution policy, the trustee-manager aims to pay out at least 90 per cent of the trust’s distributable income to its unitholders on an annual basis. Specifically, it is targeting to distribute a total of RM70 million for the financial year ending December 31, 2024. “We’re confident that the IPO will enable Prolintas to embark on future strategic infrastructure initiatives. “We look forward to continuing our journey to create a safe, convenient and enriching user experience among all stakeholders,” Ikmal said. AmInvestment Bank Bhd is the IPO’s principal adviser, lead bookrunner, joint bookrunner, managing underwriter and joint underwriter. CIMB Investment Bank Bhd and Maybank Investment Bank Bhd are joint bookrunners and joint underwriters, while RHB Investment Bank Bhd is a joint underwriter for the IPO.

KUALA LUMPUR: Bursa Malaysia Bhd officially welcomed the listing of Business Trusts (BT), an alternative listing structure that facilitates capital raising by listed entities seeking an initial public offering (IPO) on the exchange. This was demonstrated by the debut listing of Prolintas Infra BT on Monday. It was the first BT listed on the exchange’s main market and a Shariah-compliant BT. Introduced under the Securities Commission Malaysia’s (SC) Business Trusts Guidelines (BT Guidelines) 2012, a BT is a hybrid investment structure that blends features of an investment trust and a company. Bursa Malaysia chief executive officer Datuk Muhamad Umar Swift said BTs provide a novel listing structure to raise capital that can facilitate economic development by making infrastructure-type projects more accessible to a broader range of investors, fostering growth and innovation across more capital-intensive sectors. “The listing of Prolintas Business Trust on our exchange exemplifies the successful implementation of the framework by the SC, and we look forward to more BTs following suit,” he said in a statement. Essentially, BTs operate as a unit trust scheme established by a trust deed, wherein a trustee-manager oversees the operation and management of the scheme’s assets. Unitholders in a BT can share in the profits or income generated by these assets through distributions declared by the trustee-manager. BTs undertaking an IPO are destined for the main market, which requires SC’s approval before they are admitted to the exchange for listing. A significant advantage of a BT is that dividend distributions a BT can be made to investors from its operating cash flow without being constrained by conventional accounting profits. Therefore, it is anticipated that a BT will be more attractive for business assets that are capital-intensive but have stable cash flows, such as those in the infrastructure, telecommunications, and energy sectors, supporting key national growth policies and roadmaps. “At Bursa Malaysia, we continue to undertake efforts to make listing on the exchange more appealing. One way to accomplish this is to diversify or expand into new asset classes, which opens up more opportunities. “The introduction of the BT model expands the breadth of Malaysia’s capital market and demonstrates capital market regulators’ earnestness in providing facilitative frameworks and solutions. “This development will augment the ability of the exchange to play its role in facilitating growth plans of listed issuers to benefit our economy at large. “It is also our hope that this will, in turn, enhance the overall competitiveness of the exchange,” Muhamad Umar said.