NOTWITHSTANDING falling corporate earnings, the cash piles of Bursa Malaysia-listed companies ex-financials increased by about RM11 billion, funded mainly by debt financing. There are many reasons why companies saw a big jump in their cash pile, such as gearing up for expansion, proceeds from divestments or simply because of stronger cash flow generation.

Table 4 lists the companies that saw the biggest increase in their cash and cash equivalents from a year ago. Axiata Group Bhd and Genting Bhd accounted for the bulk of the increase in cash pile; large corporations with strong cash flow generation are still able to leverage debt financing to grow their business and expand into other markets.

Axiata has increased its capital expenditure allocation for 2016 to RM5.7 billion from RM4.8 billion last year to expand its regional footprint. In April, the company completed the acquisition of an 80% stake in 

Nepal-based Ncell Private Ltd for US$1.4 billion or RM5.7 billion.

Genting Group, which is in a net cash position, is gearing up to invest in Resorts World Genting and other overseas projects.

The Petronas group of companies too saw their cash pile grow. MISC Bhd has been disposing of its non-core businesses and paid its shareholders bigger dividends. For Petronas Dagangan Bhd and Petronas Gas Bhd, the increase in their cash pile over the last three years was largely due to operating cash flow. Both companies have announced plans to invest domestically in expanding their retail network or in the Refinery and Petrochemical Integrated Development project.

Interestingly, Berjaya Corp Bhd and its subsidiary Berjaya Land Bhd have been monetising their assets, such as Berjaya Auto Bhd, Magni-Tech Industries Bhd or development properties in China. As proceeds from the divestments have not been distributed to the shareholders or used to pare down debt, Berjaya Corp’s cash pile grew by almost RM1 billion. While the company announced its entry into the fast-growing Vietnamese lottery market earlier this month, it is unclear whether the group has intentions to venture into new markets.

Integrated property developer Sunway Bhd’s cash pile increased by RM962 million from a year ago, mostly funded by short-term working capital loans. The company used some of the borrowed funds to expand its landbank and acquire investment properties but has since pared down the borrowings and reduced its net gearing from 50% as at Dec 31, 2015, to 40% as at end-March.

Despite reporting a huge loss of RM1.3 billion in its 4QFY2016, oil and gas service provider SapuraKencana Petroleum Bhd saw its cash pile increase by RM868 million, largely due to the adjustment of non-cash items, such as depreciation charges. Sapura-

Kencana, which has a capital-intensive business model, incurred depreciation and amortisation charges of RM1.4 billion in the past four quarters.

By comparison, offshore drilling service provider UMW Holdings Bhd experienced a sharp decline in its cash pile. Its cash and cash equivalents decreased by a significant RM1.5 billion to RM2.8 billion in the past year.

On July 11, SapuraKencana announced that the company and its partner Petrofac had reached a mutual agreement with Petronas on the cessation of the Berantai risk service contract, which will see Petronas reimbursing them capex of RM1.5 billion to RM2 billion by June 2017. 

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