KUALA LUMPUR (Jan 16): CBH Engineering Holding Bhd (KL:CBHB) ended its first day on the ACE Market nearly 20% higher following strong demand during the engineering services firm’s initial public offering (IPO).
Shares of CBH opened at 33 sen compared to its IPO price of 28 sen apiece, before climbing to as high as 34.5 sen. CBH ended the day at 33.5 sen, valuing the company at over RM630 million. Trading volume totalled 393 million shares, making it the most active stock on Bursa Malaysia.
CBH is the second company to be listed this year after industrial services firm Swift Energy Technology Bhd (KL:SET), which surged 41% on its ACE Market debut.
Investors snapped up CBH shares during its IPO, with the public tranche oversubscribed by more than 34 times. At the IPO price, the company is valued at nearly 16 times its earnings for the financial year ended Dec 31, 2023 (FY2023).
In a statement, CBH managing director Cheah Boon Hwa said Malaysia's emergence as a hub for global technology players, including leading data centre operators and tech giants such as Microsoft, Google and Amazon, as well as Telekom Malaysia Bhd (KL:TM) creates exciting opportunities for the company.
“We have a solid foundation” with RM83.4 million raised from the IPO, alongside an unbilled order book of RM203.7 million and a tender book of RM559.7 million, said Cheah. The company is confident to secure “even more high-value projects, especially from global clients”, he added.
CBH provides mechanical and engineering services, including the design, installation, testing, and maintenance of electrical systems across various voltage levels, as well as mechanical systems like air conditioning and mechanical ventilation, fire protection, plumbing, and renewable energy.
The company raised RM83.44 million from its public issuance, with 46.2% allocated for the procurement of equipment and components for future projects. About 22.2% was earmarked to pay subcontractors for future projects, 20.7% for bank guarantees on the projects, 4.1% for the recruitment of engineers and other personnel, and the remaining 6.8% for listing expenses.
The offer for sale of existing shares, which grossed about RM52.67 million, accrues entirely to Quay Holdings, controlled by Cheah and his siblings. Post-IPO, Quay's direct stake was diluted to 72.76% from 98.34%.
For the third quarter of 2024, CBH recorded a net profit of RM8.7 million on revenue of RM42.2 million. For the nine-month period, it posted a net profit of RM31.1 million on revenue of RM187.8 million, reflecting a net profit margin of 16.5%.
Mercury Securities Sdn Bhd is the principal adviser, sponsor, sole underwriter and sole placement agent for the IPO.