Capital markets executive summary | Thu 1 Jun 2023

Capital markets executive summary | Thu 1 Jun 2023

Radium Development ended 23% lower on IPO

The property developer bucked a recent trend of strong debuts by newly listed companies by closing at 38.5 sen from its initial public offering (IPO) price of 50 sen. Observers cite the soft investor interest in property stocks as the reason. The counter entered 30% lower than the IPO price at 35 sen with 12.03m shares traded. The counter was the 2nd most active with 226.67m shares changing hands. Its intraday price range was 31.5 sen to 42 sen. This fell short of TA Securities’ valuation of the stock at 51 sen prior to listing based on forecast earnings per share (EPS) of 3.5 sen for 2024 and price-earnings ratio (PER) of 14.5 times. JF Apex valued the stock at 55 sen based on 2024 EPS of 4.11 sen and PER of 13.5 times. Malacca Securities – the principal adviser, managing underwriter and joint placement agent – valued it at 59.5 sen based on 2024 EPS of 3.3 sen and PER of 15.2 times. If the stockbrokers are correct, then there is a 55% upside to the stock. The IPO generated applications for 279.12m shares compared to the 273m on offer. While fully subscribed, the interest was lower than many recent listings. Radium develops high-rise residential properties in Kuala Lumpur. CIMB also played the role of joint underwriter and joint placement agent.

IHH Healthcare records 1Q net profit of RM1.39b

The one-off gain of RM981m from the sale of IMU Health Sdn Bhd and Gleneagles Chengdu Hospital Company Limited delivered the bulk of net profit. Without the sale, net profit would have been RM409.10m, a 17% fall from the net profit of RM493.26 in 1Q ended 31 Mar 2022. Earnings per share rose from 5.36 sen to 15.79 sen. The company declared a special dividend of 9.6 sen which will be paid on 30 Jun. Revenue climbed 23.6% from RM4.16b to RM5.14b driven by an increase in the number of patients. IHH has 12,159 operational beds, which it plans to raise by 2,000 new beds in Malaysia, India and Turkiye in the next 3 years. Occupancy rate was 71% with 226,105 inpatient admissions. The company performed 23.3m lab tests. The counter closed at RM5.77.

Takaful Malaysia 1Q net profit up 21%

The figure climbed from RM77.14m the previous year to RM93.44m in 1Q ended 31 Mar 2023. Higher income from fixed income investment assets and lower fair value loss on investment assets helped deliver the growth. Profits were however partially offset by higher takaful service expenses and higher net profit expenses from takaful contracts issued. Earnings per share increased from 9.23 sen to 11.15 sen. Revenue grew 18.43% from RM639.52m to RM757.38m. The company did not declare a dividend. Takaful Malaysia will continue to diversify its business portfolio into the retail market with regular contribution offerings. The counter closed at RM3.38.

Indonesia’s Amman to raise USD880m in IPO

The Jakarta-based copper miner launched its prospectus yesterday and targets IDR12.94t in proceeds. The listing scheduled for 28 Jun to 3 Jul will be the biggest initial public offering (IPO) in Southeast Asia this year. Nickel producer Trimegah Bangun Persada raised IDR10t in Apr. Indonesia’s IPO market raised USD1.58b up to Apr 2023, 2nd only to China in Asia Pacific excluding Japan. Book-building has started with an offer price ranging of IDR1,650-IDR1,775 per share. Amman Mineral Internasional will use the proceeds for debt repayment and to fund projects, such as the copper smelter being built in Sumbawa island.

China’s recovery sputters

The manufacturing purchasing managers’ index (PMI) declined from 49.2 in Apr to 48.8 in May. The 50 mark distinguishes between expansion and contraction. The service sector grew at the slowest pace with the non-manufacturing PMI down from 56.4 in Apr to 54.5 in May. The divergent growth data suggests a K-shaped recovery for China with services growing and manufacturing still sluggish. The latest data pulled down regional currencies and stock markets. Weak factory data were also reported in Japan and South Korea. Other economic indicators – lower imports, factory gate prices, property investment, industrial profits, factory output and retail sales – point to the rebound losing steam. The Chinese government is taking a wait-and-see stance while Nomura and Barclays have cut China’s GDP growth forecast.