Will there be a repeat of Samaiden’s impressive IPO debut?

Yesterday’s impressive debut by renewable energy (RE) solutions provider Samaiden Group Bhd has given a glimmer of hope to retail investors that the “IPO bulls” are slowly making a comeback to the local bourse.

Beyond that, such performance could serve as a harbinger to how the spate of forthcoming initial public offerings (IPOs) this month will fare, beginning with Southern Cable Group Bhd today.

The cable and wire manufacturer debuted on the ACE Market today at 33.5 sen, posting a high of 38.5 sen (or 4.5 sen above its IPO price of 34 sen) within the first 15 minutes of trading, before consolidating at 35 sen with 2.6 million shares traded at 11.32am.

Drawing comparison between Samaiden and Southern Cable, Rakuten Trade Research vice-president Vincent Lau said no two IPOs are alike with the push factors being “smaller IPOs perceived as having more growth potential”.

“Another criteria is the type of industry the company is in, for example, Samaiden Group is into solar engineering, procurement, construction and commissioning service which boasts growth potential.

“On the contrary, players in the more matured economic sectors like manufacturing and property/construction might generate lesser interest among investors.

“Above all else, don’t forget that the timing or market sentiment at the time of listing also have impact on the stock price” he told FocusM.

Samaiden made an impressive debut on the ACE Market yesterday at RM1 which was 52 sen above its offer price of 48 sen, before closing its maiden day trading at 80.5 sen with 155.3 million shares changing hands.

The company raised RM29.35 mil from its IPO which involved a public issue of 61.155 million new shares.

Meanwhile, Southern Cable’s public issue entailed 209.34 million new shares which enabled it to raise RM71.17 mil.

Apart from Samaiden and Southern Cable, three other pending IPOs slated for listing this month are Aneka Jaringan Holdings Bhd (Oct 20), Mr DIY Group (M) Bhd (Oct 26) and Econframe Bhd (Oct 27).

Of the five IPOs, Mr DIY stands out as the IPO on Bursa Malaysia in three years. Based on the issue price of RM1.60/share, the home improvement products and mass merchandise retailer is valued at a market capitalisation of RM10 bil – higher than several public-listed banks on Bursa Malaysia, including AmBank Bhd and Alliance Bank Bhd.

At a glance, the company’s IPO entails a public issue of 188.4 million shares (3.0% of the group’s enlarged share capital) and an offer for sale of 753.1 million shares (12.0% of the group’s enlarged share capital).

Addressing concerns over Mr DIY’s “excessively high valuation”, TA Securities Research analyst Jeff Lye Zhen Xiong opined that the company should be valued at 25 times its CY2021 price-to-earnings ratio (PER) which is at the lower range of the traded CY2021 PER of big cap regional home improvement retailers.

“At IPO price of RM1.60/share, Mr DIY is priced at a trailing PER of 31.6 times CY2019 earnings,” noted Lye.

“We value the company at 25 times CY2021 earnings per share, arriving at a fair value of RM1.73/share.” – Oct 16, 2020

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