KUALA LUMPUR (July 10): Property developer SkyWorld Development Bhd ended its maiden trading day on Monday (July 10) at 74 sen, down 7.5% or six sen from its initial public offering (IPO) price of 80 sen. The counter’s intraday low was at 73 sen, while its intraday high was at 81 sen.
It made a flat debut on the Main Market of Bursa Malaysia at 80 sen, The stock, which stayed the most actively traded stock on the exchange throughout the day, saw a total of 110.51 million shares traded.
At its closing price of 74 sen, the group’s market capitalisation stood at RM740 million.
After the listing ceremony, SkyWorld founder and non-independent executive chairman Datuk Seri Ng Thien Phing told reporters that the stock's opening price signals a "good beginning" in the face of subdued market sentiment caused by various global economic uncertainty, and that the company "will continue to work hard in fulfilling its growth strategy by leveraging on the fund raise from the IPO".
Ng said SkyWorld aims to attract long-term investors as he is confident that SkyWorld is a long-term player that will perform well, especially in the next three to five years.
Prior to its listing, Inter-Pacific Research ascribed SkyWorld a fair value of RM1.03 per share, while PublicInvest Research and Apex Research valued it at 96 sen; TA Securities Research gave it a fair value of 92 sen, while RHB Research gave it 90 sen. Rakuten Trade suggested a "buy" on the stock with a target price of 96 sen, based on its average PER of 8x and P/BV 0.8x.
SkyWorld, via its subsidiaries, is mainly involved in property development and investment, management services, treasury management, e-commerce business, and management consultancy services.
The Kuala Lumpur-based company raised RM320 million through its IPO, making it the third-largest listing exercise on Bursa so far this year. SkyWorld’s IPO entails a public issuance of 208 million new shares and an offer for sale of up to 192 million existing shares.
Of the RM320 million, RM166.4 million was raised from the issuance of new shares, with the remaining RM153.6 million from the offer for sale of existing shares by both Ng and non-independent executive director Datuk Lam Soo Keong @ Low Soo Keong.
SkyWorld has earmarked RM100 million (60%) for the acquisition of land for development, RM35 million (21%) for working capital, and RM20 million (12%) for the repayment of bank borrowings. The remaining RM11.2 million (7%) will be used to defray IPO-related expenses.
Based on its enlarged base of one billion issued shares, the company has a market capitalisation of RM800 million. SkyWorld previously reported that its 50 million new shares offered to the public were oversubscribed by 0.19 times.
The group posted a net profit of RM58.21 million on the back of a revenue of RM225.95 million for the fourth quarter of the financial year ended March 31, 2023 (4QFY2023), with a first interim dividend of three sen per share, to be paid on Sept 22.
For its full FY2023, its net profit stood at RM144 million on a revenue of RM841.11 million — both record highs for the group, according to Ng.
A total of RM372.47 million (62.66%) of its revenue was derived from residential and commercial developments, while RM242.44 million (37.26%) was from affordable developments.
SkyWorld posted a consolidated profit after tax (PAT) of RM65.25 million for FY2020 on a revenue of RM523.86 million, as opposed to a PAT of RM63.31 million for FY2021, when revenue was RM488.8 million. Its PAT for FY2022 then jumped to RM104.29 million, as revenue rose to RM790.45 million.
The group has targeted a dividend payout of 20% of its profit after tax attributable to owners.
Ng said SkyWorld is seeking opportunities to set foot in the Vietnam market in the next three years, with its ultimate goal of becoming a regional player.
"We haven't signed any sales and purchase agreements yet, but it should be soon," he said, adding a detailed plan of SkyWorld's project in Ho Chi Minh City will be provided to shareholders in 2023.
In the local market, Ng said the company intends to expand beyond Kuala Lumpur, into Subang Jaya, Petaling Jaya, Selayang and Ampang Jaya.
It wants to launch 10 new developments by 2026, with a total gross development value (GDV) of RM4.1 billion.
Apex Research, in a note on June 27, said Setapak takes the larger chunk of SkyWorld's planned developments, with an estimated GDV of RM2.9 billion, while Setiawangsa and Cheras have GDVs worth RM970 million and RM618 million respectively.
“We estimate that SkyWorld would garner about RM1.8 billion in gross profit from these projects, which will be recognised proportionately throughout the three years,” it wrote.
Ng on Monday said SkyWorld would consider projects outside the Klang Valley if there are potential projects with about RM3 billion to RM5 billion in GDV.
"If we want to enter into a new market, we want to ensure sustainability so that we can last there for at least 10 years," he said.
In terms of fluctuations in construction material prices, SkyWorld chief executive officer Lee Chee Seng said the company conducts a cost efficiency analysis, especially at the design stage, to help mitigate costs.
Kenanga Investment Bank Bhd is the principal adviser, underwriter and placement agent for the offering, while Newfields Advisors Sdn Bhd is the financial adviser.