KUALA LUMPUR (Oct 7): Cheeding Holdings Bhd (KL:CHEEDING) surged in its first ever trade on the ACE Market on Tuesday, amid strong demand from investors for a piece of the utilities engineering services firm.
Shares of Cheeding opened at 70 sen compared to its initial public offering (IPO) price of 36 sen per share. Cheeding rose to as high as 78 sen and was trading at 73 sen at 9.05am, after nearly 53 million shares changed hands. At the last price, the company had a market capitalisation of RM581 million.
The strong debut follows overwhelming demand for its shares during its IPO, with the company receiving orders for shares worth over RM600 million from the Malaysian public. The number of shares applied by investors exceeded the available amount for subscription by more than 40 times.
The company also attracted Apex Securities’ attention, which initiated regular coverage of the stock with a “buy” recommendation ahead of the listing.
Cheeding mainly builds electric transmission towers and provides maintenance of overhead and underground infrastructure, as well as substation engineering services and related activities.
The IPO raised RM75 million, of which over RM51 million will accrue to Cheeding, while the rest will go to managing director Ng Kian Chai and his spouse Tan Sook Hoi, who put their existing shares for sale.
Nearly half of the IPO proceeds from the public issue of new shares will be allocated as working capital such as material purchases, subcontractor fees, and other operating and administrative expenses.
One-third of the funds raised will be used as performance bonds in the form of bank guarantees to awarding parties for future projects. The rest will fund towards bank loan repayments and estimated listing expenses.
TA Securities is the principal adviser, sponsor, underwriter and placement agent for the IPO.
WATCH: NEWS: Cheeding sees ‘plenty of projects’ ahead