EVENING 5: Bursa fines, reprimands RHB IB for breaching listing requirements

The Edge TV

In today’s edition of Evening 5 — Bursa Malaysia has publicly reprimanded and fined RHB Investment Bank for failing in its duties as an IPO adviser. Meanwhile, there is still cautious optimism for Malaysia’s property market recovery.

Transcript

00:00 [Music]

00:04 Bursa Malaysia Securities has publicly recommended and imposed a fine of

00:08 350,000 on RHB Investment Bank for two breaches of the listing requirements,

00:14 including failing to conduct proper due diligence in relation to the proposed

00:18 listing of an ACE market applicant as its sponsor and principal advisor.

00:22 The second breach is over RHB IB's failure to immediately notify Bursa

00:27 of material developments concerning the applicant's business,

00:30 operations, future plans and prospects after the initial submission.

00:34 In the due diligence breach, Bursa said RHB IB had failed to make reasonable inquiries or

00:39 consider all relevant matters to ensure there was no misstatement or material omission in

00:44 the submission and disclosures made in the initial listing application and draft prospectus

00:50 which were submitted to Bursa for the applicant. This resulted in a material omission pertaining

00:55 to the advance/financing arrangement by the applicant with its major suppliers and the

01:00 credit risk/recoverability of the advances to one major supplier that had been wound up prior

01:06 to the initial submission. Bursa concluded that there was inadequate assessment by RHB IB on the

01:12 applicant's internal controls and risk management systems. The regulator added that there were also

01:18 numerous key shortcomings and deficiencies made in the draft prospectus, leading to Bursa's

01:23 rejection of the proposed listing of the applicant. The regulator also highlighted that RHB IB only

01:29 disclosed the material information in both breaches upon being queried by Bursa on the matter.

01:34 Bursa said that RHB IB had failed in the discharge of its duties and said that it was

01:40 "not acceptable" that the bank had merely relied on the applicant and other advisors

01:44 to highlight the material issues and only undertook the necessary inquiries/assessments

01:49 upon being queried by the regulator. Bursa also pointed out that its finding of the breaches and

01:54 the imposition of the public reprimand and fine on RHB IB were made after taking into consideration

02:00 all facts and circumstances of the matter, adding that this was not the first time the

02:04 investment bank had breached the listing requirements. Besides the fine and reprimand,

02:08 RHB IB had been required to table Bursa's decision to its Board of Directors and conduct a

02:14 comprehensive review and assessment on the adequacy and effectiveness of its internal policies,

02:19 processes and procedures relating to its role as an advisor/sponsor.

02:24 Malaysia's total property transaction value hit $85.37 billion, up 1.1% year-on-year,

02:36 with more than 184,000 transactions recorded in the first half of 2023,

02:42 says a report from the National Property Information Centre.

02:45 During the launch of the NAPIC report, Deputy Finance Minister 1 Datuk Sri Ahmad Mazlan said

02:50 the property market was stable in the first half, despite a number of headwinds such as

02:54 inflationary pressures which limited the sector's growth potential. He adds that the government is

02:59 cautiously optimistic about the outlook for the second half, with the sector expected to continue

03:04 its recovery momentum in line with economic growth and bolstered by initiatives and

03:09 accommodative policies. Residential property saw 114,973 transactions worth $44.78 billion in the

03:19 first half, contracting slightly by 1% in volume and 1.8% in value from a year ago. Homes in

03:25 Kuala Lumpur, Penang, Johor and Selangor accounted for about half the total volume. Meanwhile,

03:31 17,602 transactions were recorded by the commercial property segment, totaling $16.76 billion,

03:38 up 16% in volume and 19.5% in value. The number of new residential property launches fell

03:45 significantly by 50.2% to over 16,000 units during the period from 33,205 units a year ago.

03:53 Residential property overhang recorded an improvement, with a total of 28,286 overhang

03:59 units worth $18.3 billion recorded in the first half, down by 5.3% in volume and 0.6% in value

04:07 against the same period last year. However, the outlook for the office sector remains challenging

04:12 due to high vacancy rates, with the still significant amount of unoccupied office space

04:16 in the country indicating an imbalance between supply and demand in the market, according to

04:21 the minister. He adds that despite an improvement in occupancy rates, there was 5.06 million square

04:27 metres of vacant office space, more than half of which was situated in Kuala Lumpur.

04:37 Teraga Nationals, Indirect's 70%-owned subsidiary Southern Power Generation,

04:42 has been allowed to proceed with its challenge of additional tax assessments from the Inland

04:47 Revenue Board, amounting to $78.49 million via a judicial review. In a boss filing on Thursday,

04:54 TNB said the High Court had granted SPG leave or permission to commence a judicial review against

05:00 the notices of assessment issued by IRB, dated May 26, for additional taxes for the year assessment

05:07 of 2017 and 2021. The court also granted the unit an interim stay of all further proceedings,

05:13 including enforcement of the notices, until a hearing fixed for January 11, 2024. The remaining

05:19 30% of SPG is owned by SIPP Energy, a company linked to the Johor royalty. SPG operates two

05:27 720-megawatt combined cycle gas turbine power plants in Pasir Gudang, Johor.

05:33 Property developer Sensuria has partnered with Australian-integrated cancer care provider Icon

05:43 Group to set up and operate oncology centres in the country. In a boss filing, the group said

05:48 its wholly-owned subsidiary, Sensuria Healthcare, inked a shareholders' agreement with Icon Asia

05:53 Holdings to form a joint venture company called Icon Sensuria. According to Sensuria, the JV is

05:59 focused on the set-up and operation of oncology daycare centres and radiation oncology services,

06:05 as well as the management of such centres for third parties, with a focus on Malaysia.

06:10 Icon holds 70% in the JV, Sensuria holds the rest. Sensuria says the JV is expected to

06:16 enhance future profits of the group. Sensuria is principally involved in property development,

06:21 construction and healthcare businesses. According to the group, Icon is Australia's largest

06:26 dedicated cancer care provider and has expanded to Singapore, China, Hong Kong and New Zealand.

06:32 Further discussions between Malaysia and Singapore to create a Johor-Singapore

06:41 Special Economic Zone will be followed by an agreement on terms of reference next month,

06:46 says MB Datuk On Hafiz Ghazi. Last July, the two countries agreed to create a special task force

06:51 to study the establishment of the SEZ, which is expected to report its progress to the leaders

06:57 at the Malaysia-Singapore Leaders' Retreat, scheduled for October. On Hafiz said the

07:02 Johor-Singapore SEZ could make Johor like the city of Shenzhen, which flourished after four

07:08 decades of being a SEZ, according to a Brenama report. He notes that in just four decades,

07:13 Shenzhen has changed from a small city with a population of around 300,000 people

07:18 to a high-tech international metropolis with a population of over 17 million people. However,

07:23 On Hafiz says that the matter definitely requires help and cooperation from all parties,

07:28 from the Singapore government as well as the Malaysian federal government.

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