KUALA LUMPUR (April 27): Property developer Radium Development Bhd, en route to a Main Market listing on May 31, has set a price of 50 sen per share for its initial public offering (IPO) exercise that will raise RM434 million.
The exercise comprises a public issuance of 868 million new shares, or 25% of its enlarged share capital of 3.47 billion shares. Its expected market capitalisation is RM1.73 billion upon listing.
The company has also announced a dividend policy of 30% of its consolidated profits after taxation (PAT) attributable to shareholders for each financial year, starting from the financial year ended Dec 31, 2022 (FY2022).
The 50 sen issue price was determined after taking into account the group's diluted earnings per share of 2.93 sen, based on the audited combined PAT attributable to owners of the company of about RM101.59 million for FY2021, and its enlarged issued share capital of 3.47 billion, which translates into a price-to-earnings multiple of approximately 17.06 times.
"Since Radium's products cater to affordable housing for the working class, the issue price takes that into mind," said Malacca Securities Sdn Bhd senior vice-president of corporate finance Tan Poh Lin.
"Also taking into consideration its strengths, future launches, hotel [development] and dividend policies, we believe that in future, Radium will deliver better than this," she said, adding that peer comparisons for the company include UOA Development Bhd.
The company added that there was no offer-for-sale component in the IPO, and all proceeds from the IPO will be channelled to the group.
Radium is a property developer of mostly high-rise residential projects in Kuala Lumpur, in addition to focusing on affordable housing for the working class. The group is currently developing the Vista Sentul Residences and R Suite Chancery Residences.
Its group managing director Datuk Gary Gan Kah Siong said that to date, the company had delivered projects with a total gross development value (GDV) of RM2.1 billion.
"We will also develop our RM1.5 billion GDV new launches in 2023," said Gan, with Residensi Desa Timur in Salak South expected to be unveiled in the third quarter of 2023 with a GDV of RM1 billion.
"This complements the Chancery in Jalan Ampang, the RM 521 million commercial-residential project launched in February 2023.”
From the total proceeds of RM434 million, RM171 million is earmarked for land bank expansion and/or development expenditure, and RM109.30 million for hotel construction. Meanwhile, RM93.87 million is allocated for repayment of bank borrowings, RM39.83 million for working capital, and RM20 million for listing expenses.
Gan added that the proceeds for the land bank will be used in the next five years for three parcels of land in Mukim Petaling, as well as its joint venture with Kadar Jutajaya Sdn Bhd through its subsidiary Rasa Wangi to launch a development in Mukim Batu in the first half of 2024.
Out of the 868 million new shares to be issued, 273 million shares will be made available to the Malaysian public via balloting, including 136.50 million for Bumiputera investors, while 60 million shares will be allocated to its eligible key senior management, employees of the group and business associates, including any other persons who have contributed to the success of the group.
A further 435 million shares will be offered by way of private placement to selected Bumiputera investors approved by the Ministry of Investment, Trade and Industry, followed by the remaining 100 million shares for selected investors by way of private placement.
In terms of financial results, Radium posted a PAT of RM128 million on the back of a revenue of RM472.81 million for FY2019.
This decreased in FY2020 to a PAT of RM87.89 million, against a higher revenue of RM588.07 million, then improved to RM101.59 million in PAT but a lower revenue of RM563.69 million in FY2021.
For the financial period ended Oct 31, 2022, the company posted a PAT of RM89.58 million, underpinned by a revenue of RM302.01 million.
Malacca Securities is the principal adviser, managing underwriter and joint placement agent for the IPO, while CIMB Investment Bank is a joint underwriter and joint placement agent.