'Mega' listings to put shine back into IPO market

by **hlk** Tue 28 Jun 2011, 10:16

IPOs such as MSM Malaysia are initiated by companies with good track record and of well-known brand names, say analysts

Kuala Lumpur: Upcoming "mega" listings should buck the trend of lethargic initial public offerings (IPOs) of late, analysts said.

This is because the IPOs such as MSM Malaysia Holdings Bhd's are initiated by companies with good track record and of well-known brand names, they added.

"Given the big size each IPO is offering, they will also garner interest among investors," an analyst said when contacted yesterday.

MSM Malaysia, the sugar refining unit of Felda Global Ventures Holdings Sdn Bhd, will be listed today and analysts agreed that it is set to help revitalise the local capital market, especially after announcing a surge in profit prior to its listing debut.

MSM Malaysia's net profit for the first quarter ended March 31 increased by 416.5 per cent to RM62.2 million, mainly due to the rise in sales and higher prices of refined sugar products.

Group revenue for the quarter rose to RM503.2 million against RM497.8 million previously. The group raised some RM422.5 million from its listing exercise.

MSM Malaysia is the leading sugar refining group in the country with a production capacity of 1.1 million. It controls more than half of the local sugar market.

"Its book-building ended up at higher price as investors were keen to get some shares of the company," said JF Apex Securities analyst.

Book-building is an exercise by which an underwriter attempts to determine at what price to offer an IPO based on the demand from institutional investors.

"The MSM IPO will make investors forget about bad IPOs for a while though no one can prevent it from happening again," the JF Apex analyst said.

The listings of three other companies, namely steel contractor Eversendai Corp Bhd (July 1), food and beverage group OldTown Bhd (July 13) and tycoon T. Ananda Krishnan's shipping firm Bumi Armada, are also expected to be well-received and help buck the local IPO trend this year.

To date, Bursa Malaysia has received 16 new companies.