KUALA LUMPUR (Sept 19): Mercury Securities Group Bhd closed at 30 sen a share on its maiden day of trading on Tuesday, for a 20% premium over its initial public offering price (IPO) of 25 sen.
The ACE Market-listed stock recorded a trading volume of 219.99 million shares, and was the third most active counter on Bursa Malaysia.
Mercury Securities is the first local stockbroker to float its shares in two decades.
Speaking to the press after the listing ceremony, managing director Chew Sing Guan emphasised the importance of digitalisation for the stockbroking industry. To stay competitive, he said the firm needs to adapt and evolve with the changing technological landscape, and will continue with digitalisation integration of its business.
“We have always been in this very competitive market. We have always been able to make a profit every year, despite all the ups and downs. We are resilient because we have the right mix of products and people to compete, not just among ourselves, but also against the technology challenges. [In the face of the] technology wave, there is a need to get more digital, so we tend to do a lot of that,” said Chew.
Against this backdrop, he said the group plans to add more offerings to its trading platform, such as robo-advisors, and algorithmic trading software.
On top of that, it will look to introduce its product offerings and services beyond Malaysian shores.
Chew also said the group will continue to monitor costs and maximise profit.
At the IPO prospectus launch last month, Chew said Mercury Securities is expecting better revenue recognition from the margin financing component of its stockbroking business after the listing. The optimism is driven by confidence in the margin financing business, which enjoyed a compound annual growth rate of 36% from the financial year ended Oct 31, 2019 (FY2019) to FY2022.
Margin financing, which loosely means borrowing money from a brokerage company and using that money to buy stocks, is a credit facility given to individuals, public listed companies and corporations to finance the purchase of shares listed on Bursa Malaysia Securities Bhd.
In a recent interview, Chew said IPOs are more lucrative than other corporate exercises like rights placements or private issuances. And to maintain its earnings momentum, Chew said it needs three to four IPOs a year, with each having a market capitalisation of RM150 million to RM250 million.
Mercury Securities' IPO, aimed at raising RM39.27 million, entailed a public issue of 157.1 million new shares and an offer for sale of 71.51 million existing shares at an offer price of 25 sen per share.
Of the proceeds, RM26.86 million will be used to develop Mercury Securities’ margin financing facility services, followed by RM2.88 million to enhance its digitalisation programme and marketing activities of its stockbroking business and operations, and RM4.63 million for working capital. The balance will be used to cover estimated listing expenses.