Category Archives for "Bursa Malaysia & IPO"

Malaysian Franchise Act Simplifies Entrance To Market

Kuala Lumpur, Malaysia – Any U.S. company seeking to sell franchises in Malaysia must write a letter requesting approval from the Registrar of Franchise Ministry of Entrepreneur Development, Malaysia, according to Mahadi Mohd Ibrahim, ministry undersecretary.

The letter must include a statement of the company’s intent to sell a franchise in Malaysia, as well as information on the products, the company and the prospective franchisee. The ministry will reply within seven days after receiving the letter. No request has been rejected since the act was passed.

“This is a significant development for franchise companies that want to tap the Malaysian market,” said Marcel Portmann, International Franchise Association (IFA) vice president of emerging markets and global development. “IFA began discussions in 1999 with Malaysian officials on behalf of our members for simplification of the registration process, and those efforts have paid off with positive results.”

Prior to clarification of the act, U.S. companies wishing to sell franchises in Malaysia were required to submit a disclosure document, the franchise agreement, the operation manual, the training manual, the company’s latest audited financial statements and auditor’s report, and any additional information required by the registrar.

“The registration process was extremely complex and deterred franchise companies from exploring the Malaysian market,” Portmann said. “Now there is a whole section of the global market open to IFA members.” –IFA Insider

-ENTREPRENEUR.COM

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Bursa Malaysia trails behind key Asian markets

KUALA LUMPUR: Malaysian equities trailed behind the key Asian markets at midday on Monday with Petronas Chemicals the main drag on the FBM KLCI while the trading value of total stocks declined, reflecting the poorer buying quality.

However, a rebound in crude oil prices could provide some support to the oil and gas stocks after Saudi Arabia and Russia have agreed to extend crude oil output cuts until March 2018 in their latest effort to rebalance the global crude market.

The FBM KLCI fell 2.2 points or 0.12% to 1,773.67. Turnover was 2.05 billion shares valued at RM1.12bil. There were 364 gainers, 444 losers and 377 counters unchanged.

The ringgit rose against the US dollar but slipped against the other key currencies. It rose 0.26% to 4.3345 from the previous close of 4.3457 but weakened against the pound sterling to 5.5921 from 5.5807; slipped against the Singapore dollar to 3.0891 from 3.0867 and was lower against the euro at 4.7368 from 4.7199.

US light crude oil jumped 77 cents to US$48.61 and Brent gained 78 cents to US$51.62.

Refiner Hengyuan gained 38 sen to RM4.79 with 1.39 million shares done while Petron was flat at RM8.62. Petronas Dagangan added six sen to RM24.06.

Petronas Chemicals fell 11 sen to RM7.12 and erased 1.44 points from the KLCI while Petronas Gas shed two sen to RM18.58.

Among the banks, AmBank fell eight sen to RM5.44, RHB Bank six sen to RM5.48, CIMB she done sen to RM5.94 while Public Bank and Maybank were flat at RM19.98 and RM9.38.

Crude palm oil for third-month delivery rose RM18 to 2,669 per tonne. IOI Corp lost three se to RM4.61, KL Kepong and Sime were flat at RM24.92 and RM9.33 while PPB Group rose four sen to RM17.10.

F&N was the top performer, up 44 sen to RM25.12 and Ajinomoto gained 14 sen to RM19.86 but BAT fell 56 sen to RM45.64 and Dutch Lady lost 26 sen to RM58.

Poultry company CAB Cakaran lost 17 sen to RM2.77 and the warrants were down 15 sen to RM2.17. However, CCK Consolidated added 10 sen to 84.5 sen after CIMB Equities initiate3d coverage of the company.

As for semicon makers, Globetronics gained 14 sen to RM5.90.

Among the key regional markets,

Japan’s Nikkei 225 fell 0.09% to 19,866.04;

Hong Kong’s Hang Seng Index rose 0.58% to 25,301.50;

CSI 300 gained 0.48% to 3,401.53;

Shanghai’s Composite Index 0.28% to 3,092.28;

Hang Seng China Enterprise jumped 1.23% to 10,409.63;

Taiwan’s Taiex added 0.16% to 10,002.64;

South Korea’s Kospi gained 0.14% to 2,289.15; and

Singapore’s Straits Times Index advanced 0.36% to 3,267.02.

Spot gold  rose US$1.98 to US$1,203.41.

-THE STAR

 

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Bigger IPOs in 2017

THE impending listing of Serba Dinamik Holdings Bhd, an engineering solutions provider in the oil and gas (O&G) and power sectors, will likely pave the way for a bigger initial public offering (IPO) market in 2017, more so if Eco World International Bhd (EWI) joins the fray.

This year, less than RM1bil was raised from the 11 IPOs on Bursa Malaysia, the lowest figure since the global financial crisis in 2008-2009. The figure is a far cry from the RM4.7bil and RM4.1bil raised in 2015 and 2014, respectively.

Serba Dinamik, which has received approval to list, is said to be looking to raise more than RM600mil. EWI, which industry sources say is looking to list in 2017, is expected to raise more than RM2bil.

Serba Dinamik’s core activity is providing engineering solutions to the O&G and power-generation industries with operational facilities in Malaysia, Indonesia, the United Arab Emirates, Bahrain and the United Kingdom.

“Serba Dinamik is seeking to secure between 12 and 14 times its historical financial year 2015 (FY15) earnings in its IPO. Companies such as Deleum Bhd would be a close comparison for Serba Dinamik’s business,” an analyst says.

Deleum is currently trading at a price earnings (PE) multiple of 13.3 times its 2015 earnings with a market capitalisation of RM368mil, according to data by Bloomberg.

When contacted, Serba Dinamik group chief executive officer Datuk Dr M.A. Karim Abdullah says the company is hoping to list on Bursa Malaysia by February next year with a market capitalisation of RM2bil.

“The listing of Serba Dinamik is timely, as we expect the O&G sector to be better by next year on the back of the recent Organisation of the Petroleum Exporting Countries’ decision to cut its crude oil production that would increase the demand for services,” he says.

According to Serba Dinamik’s draft prospectus, the company plans to utilise the bulk of its IPO proceeds to expand its operations in Sarawak and power plant projects in Sabah and Indonesia, and debt repayment.

Serba Dinamik registered revenues of RM532.2mil, RM755.7mil and RM1.4bil for FY13, FY14 and FY15, respectively. Its profit after tax came in at RM61.6mil in FY13, RM67.4mil in FY14 and RM156.6mil in FY15. Its profit margins for FY13, FY14 and FY15 are 11.5%, 8.9% and 11.2%, respectively.

Karim says that about 60% of Serba Dinamik’s revenue is generated from its operations in the Middle East, while the remaining 40% is from local O&G activities.

“During the downtime of the O&G sector, Serba Dinamik was able to maintain its profitability mainly due to our exposure in oil field maintenance services and operations in the Middle East,” he says.

Karim, who is also one of the co-founders, owns about 35% in Serba Dinamik. Post-listing, his stake in the company will be reduced to between 26% and 28%.

The other major shareholder includes Cahya Mata Sarawak Bhd’s private equity arm CMS Opus PE Sdn Bhd, which has about a 16.1% stake in Serba Dinamik. Post-listing, the firm is expected to hold about 6.4% in Serba Dinamik.

Karim says Serba Dinamik’s planned expansion in Sarawak is to tap into various development projects in the state such as in Samalaju and O&G activities.

“We are also looking to establish a new fabrication facility to support our current fabrication jobs for the Refinery and Petrochemical Integrated Development project and tap into potential projects in the Pengerang Integrated Petroleum Complex in Johor,” he adds.

Serba Dinamik is also in the power plant business, of which the company is currently building three power plants with an installed capacity of almost 30MW in Sabah costing about RM218mil. The company owns a 30% stake in the project, which is expected to be completed by the end of 2017.

It has secured a contract to operate as well as maintain the three hydropower plants for 21 years.

In addition, the company is involved in the development of small gas power plants and water utilities in East Kalimantan.

“Our internal growth plan in the next two to three years is to have a recurring income of 15%-20% of our revenue,” Karim says.

Karim started the company back in 1993, specialising in “plant turnarounds” for the O&G and power sectors.

“After graduating from university in mechanical engineering, I joined a local O&G company as maintenance engineer. But I wasn’t happy because I spent a lot of time in the office planning,” he says.

He then started Serba Dinamik with money raised with two other shareholders, and set up office in Sarawak.

IPO details

Market observers reckon that the listing of Serba Dinamik would be timely, with the better outlook in the O&G sector next year, as well as the company’s exposure to power plant activities in Sabah and Sarawak.

Serba Dinamik is seeking a listing on the Main Market of Bursa Malaysia in February next year. Its IPO will involve 389.4 million shares, of which is an offer for sale of up to 118 million existing shares and 271.4 million new shares.

Large IPOs, raising more than RM500mil, didn’t take off this year in Malaysia. For instance, in Ranhill Holdings Bhd’s case, the IPO was undersubscribed while several planned IPOs such as Ekuiti Nasional Bhd’s education arm Ilmu Education Group were shelved in light of volatile market conditions.

“Among the uncertainties that have loomed over the market, which in turn have deterred IPOs, include volatile crude oil prices, the United States presidential election, Brexit and local political uncertainty. The market has already priced in these factors and we will see a good number of companies looking for IPOs on Bursa Malaysia over the next 12 months,” says an investment banker.

The impact of the softer market has also seen IPOs being priced at lower PE ratios as compared to two years ago.

Notably, some of the IPOs that took place this year were priced at single-digit PEs, such as Dancomech Holdings Bhd and the upcoming listing of Rhone Ma Holdings Bhd, which is lower than previous years when the broader market was better. One exception is Bison Consolidated Bhd, which listed at a PE ratio of 25 times its historical earnings.

“At the current market conditions, some investors would prefer to take the wait-and-see approach while some see it as an opportunity to find better-valued companies whose shares have plummeted as compared to new shares that generally demand higher valuations,” says an analyst.

Despite the sluggish fund-raising activities, interestingly, small-to-medium-sized IPOs have been doing fairly well this year – an indication that the market is hungry for new investment ideas.

“For example, Dancomech, which was listed this year, has significantly outperformed the market. Its share price has doubled from its IPO price. This proves that there is real investor appetite out there for the right stock themes and ideas,” says MIDF Amanah Investment Bank director of corporate investment banking Sherilyn Foong.

– THE STAR 

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Bursa Malaysia, Shanghai Stock Exchange ink MoU to further strengthen cooperation

KUALA LUMPUR, May 14, 2017: Bursa Malaysia Bhd has signed a memorandum of understanding (MoU) with the Shanghai Stock Exchange to explore potential ways for the two exchanges to improve their visibility and accessibility to market participants in Malaysia and China.

Bursa Malaysia in a statement here today said this MoU would further strengthen the already strong cooperation between both exchanges.

China remains an important market in the region, if not globally, and there were many Chinese investors looking for investing opportunities beyond China, particularly in Asean countries, said Bursa Malaysia chief executive officer Datuk Seri Tajuddin Atan.

“We, in Bursa Malaysia, have a lot to offer to this group of investors with our various innovative products and services, including our diverse Syariah-compliant offerings, which are ideal for Chinese investors looking for something different,” he said.

Both exchanges will also explore opportunities presented by China’s Belt and Road Initiative (BRI).

“Already one of Malaysia’s largest trading partners with bilateral trade reaching almost RM100 billion, the potential for further growth between Malaysia and China under the B&R Initiative is expected to be big,” said Tajuddin.

Under the MoU, Bursa Malaysia and the Shanghai Stock Exchange will also closely collaborate to address structural issues that may impede market accessibility, in addition to improving information flow between the two markets.

– BERNAMA

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