KUALA LUMPUR (May 31): Property developer Radium Development Bhd made a weak debut on the Main Market on Wednesday (May 31), slumping to a close of 38.5 sen, or nearly a quarter lower than its initial public offering (IPO) price of 50 sen, and underscoring softer investor interest in property stocks.
Signs were apparent at the opening gong when the counter made its entrance at 35 sen, 30% lower than its offer price, with 12.03 million shares changing hands. Its intra-day share price ranged between 31.5 sen and 42 sen.
At the close, Radium was the second most-active stock with 226.67 million shares changing hands.
Still, subscribers to its IPO can take some comfort in an impending dividend. In a filing to Bursa Malaysia, Radium declared a dividend of one sen per ordinary share for the financial year ending Dec 31, 2023 (FY2023) with the ex date of July 17, 2023 and payment date of Aug 15, 2023.
Ahead of its listing, TA Securities Research had valued Radium at 51 sen per share, based on an estimated earnings per share (EPS) of 3.5 sen for the financial year ending Dec 31, 2024 (FY2024), and a target price-earnings ratio (PER) of 14.5 times.
Another broker, JF Apex Securities Bhd valued Radium at 55 sen or a 10% potential upside to its IPO price of 50 sen — based on an estimated FY2024 EPS of 4.11 sen for the property developer and its peers’ forward PER of 13.5 times.
Even higher was Malacca Securities Research's fair value of 59.5 sen for the stock, which pegged it at a market-cap weighted P/E of 18.1 times. “Radium’s forward P/E valuation for FY2024 is at 15.2 times, based on our estimated FY2024 EPS of 3.3 sen,” Malacca Securities said.
Radium Development's public tranche of 273 million shares under its IPO was fully subscribed as it received a total of 10,496 applications for 279.12 million shares.
The exercise comprised a public issuance of 868 million new shares or 25% of its enlarged share capital of 3.47 billion shares.
Radium raised RM434 million in proceeds from its IPO, of which RM171 million is earmarked for the acquisition of landbank and development expenditure, and RM109.3 million for hotel construction.
A further RM93.9 million is allocated for repayment of bank borrowings, RM39.8 million for working capital, and the remaining RM20 million to defray listing expenses.
Radium focuses on the development of high-rise residential properties within Kuala Lumpur and its residential properties include condominiums, serviced apartments, suite apartments, and Soho units.
For the first quarter ended March 31, 2023 (1QFY2023) Radium posted a net profit of RM2.94 million or earnings per share of 0.11 sen, on a revenue of RM25.29 million.
Malacca Securities was the principal adviser, managing underwriter, and joint placement agent for the IPO, while CIMB Investment Bank was the joint underwriter and joint placement agent.