PETALING JAYA: The financial troubles of Singapore-based Hyflux Ltd may have contributed to the sharp retreat of Malayan Banking Bhd’s (Maybank) share price yesterday.
Shares of the country’s largest bank by assets fell 42 sen or 3.9% to end at RM10.26. The fall in the heavyweight erased 8.23 points from the FBM KLCI.
This fall also saw RM4.59bil being wiped out from its market capitalisation to end at RM112.26bil.
During the day, the stock had hit an intra-day low of RM9.87.
In December 2013, it was announced that Maybank Singapore and Maybank Kim Eng Securites Pte Ltd would provide S$720mil 18-year term loan project financing to Hyflux Ltd subsidiary Tuaspring Pte Ltd for the development of its desalination and power plant facilities.
However, this debt exposure may be turning sour for Maybank, as Hyflux and its subsidiaries are now seeking protection from the Singapore High Court to reorganise its business and debt.
Hyflux posted a net loss of S$22.2mil in the first quarter ended March 31, with significant losses incurred in Tuaspring.
“Excluding results from Tuaspring, profit after tax and minority interest was S$1mil for the first quarter, versus S$27mil in the previous corresponding period, which included a S$16.5mil gain on disposal arising from the group’s divestment of its Galaxy Newspring portfolio in March 2017,” said Hyflux in a statement.
An analyst contacted by StarBiz said the impact of any bad debt provisions may only be reflected in the second quarter.
“Based on my understanding from reports, Hyflux is seeking a moratorium to restructure the debt. In this case, this might impact Maybank’s bottom line as impairment allowances, ie, credit cost will rise.
“However, that impact of higher credit costs would likely be seen in the second quarter of its financial year,” said the analyst.
Bursa Malaysia was battered for a second straight day yesterday with Maybank among the leading decliners.
The market began falling sharply past the critical 1,800-point level in the first few minutes of trading, slipping as much as 36 points before retracing some losses. It ended the session 28.59 points lower at 1,775.66.
Malaysia’s largest banking group, which is allocated the highest weightage on the FBM KLCI, fell as much as 81 sen or 7.5% at its lowest point. At market close, it was 42 sen lower at RM10.26 with 85 million shares traded.
This marked a second day of losses and a reversal of fortune for Maybank, which had closed at a historical high of RM10.88 on May 21 and 22.
The bank’s retreat also looks to be tied to the fortunes of the wider market.
Analysts have attributed the broad-based selldown to a variety of factors, including investor caution over national debt levels and potential escalation of the US-China trade conflict.
“Due to the intense selling pressure, the cumulative net inflow into Malaysia so far this year has been substantially reduced to RM40.2mil from RM2.52bil before the 14th general election,” said MIDF Research in its May 21 fund flow report.
Based on published reports on net outflows this week, Malaysia may have recorded a net outflow for the year of about RM430mil as at Wednesday.
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