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The Star
a day ago
- Business
- The Star
Global issues cloud 2H25 IPO outlook
PETALING JAYA: The initial public offering (IPO) market, which started the year on a subdued note, faces an uncertain second half (2H25) as weak market sentiment, global headwinds and poor earnings season continue to dampen investor appetite. A market watcher says the outlook for IPOs in 2H25 hinges on several unresolved global issues – including the outcome of potential US reciprocal trade tariffs expected in July, US-China trade tensions and the timing of a US interest rate cut, if any. 'The market sentiment isn't good. Last year, about 80% to 85% of IPOs performed well post-listing. 'This year, it's the complete opposite – nearly 80% have traded below their offer prices,' Tradeview Capital chief executive officer and founder Ng Zhu Hann told StarBiz. 'So, what changed? Largely, to me, it is – of course – market fatigue, fund flows, and also because the global situation has made a lot of investors, whether local, institutional, foreign funds or even local retail investors, very risk-averse. 'A lot of people are holding on to their cash rather than participating in the equity market.' Domestically, Ng said a lacklustre corporate earnings season has added to investor caution. To-date, 28 companies have been listed on Bursa Malaysia this year, with Paradigm Real Estate Investment Trust making its debut yesterday. Another three are expected to list by end-June – Ping Edge Technology Bhd (June 13), Cuckoo International (M) Bhd (June 24) and Pan Merchant Bhd (June 26) – bringing the first-half total to 31 IPOs. This puts Bursa Malaysia slightly past the halfway mark of its full-year target of 60 IPOs, but Ng warned that delays and repricings suggest growing caution among potential debutants. 'We've already seen two or three companies pushing back their listings,' said Ng. 'Several IPOs also revised their offer prices downward.' Cuckoo, which was initially scheduled to list on April 30, deferred its debut to June 24 due to 'near-term market challenges'. Its IPO price was also reported to have been revised to RM1.10 per share from RM1.29 previously, although this has yet to be confirmed by the company. Eco-Shop Marketing Bhd, which has since listed, similarly trimmed its IPO price to RM1.13 from RM1.21 before going public. Whether Bursa Malaysia hits its target of 60 listings this year now depends not just on pipeline readiness – but on whether the broader market gives debutants a reason to come forward. Across the shore, Singapore is taking a markedly different approach to reinvigorate its equity market. In February, the Monetary Authority of Singapore or MAS rolled out a bold S$5bil Equity Market Development Programme to boost liquidity on the Singapore Exchange by investing through selected fund managers focused on actively managed strategies targeting local small and mid-cap stocks. This is complemented by tax exemptions on fund manager income 'derived from funds investing substantially in Singapore-listed equities', a narrowed Global Investor Programme to channel more capital into listed equities, and expanded research grants to improve coverage and investor engagement in the equity market.
Malay Mail
22-05-2025
- Business
- Malay Mail
How a RM2.60 pricing strategy will make Eco-Shop's Lee a billionaire through Malaysia's biggest IPO of 2025
KUALA LUMPUR, May 22 — Eco-Shop Marketing Bhd, a discount chain with over 350 stores across Malaysia, is set to go public in Kuala Lumpur on Friday in the country's largest IPO of the year. The listing will value the company at about RM6.38 billion, giving founder and managing director Datuk Seri Lee Kar Whatt a RM4.9 billion stake, according to the Bloomberg Billionaires Index. The company's rapid growth — with revenue rising over 50 per cent in two years — underscores strong demand for low-cost goods amid rising inflation, Bloomberg reported. 'Fixed-price retailers became a first choice,' said Ng Zhu Hann, founder and chief executive officer of Tradeview Capital, in an interview. He was referring to Eco-Shop's fixed RM2.60 price for all items sold in its Peninsular Malaysia outlets. Lee co-founded the first store in 2003 with his brother and two others, and still operates from the company's headquarters in Jementah, Johor. Ng noted that Eco-Shop competes with established players such as Mr DIY Group (M) Bhd, as well as newer entrants led by entrepreneurs from mainland China. In its prospectus, Eco-Shop stated that it sees ample growth potential and aims to open around 70 new stores each year over the next five years.
Business Times
22-05-2025
- Business
- Business Times
Dollar-store billionaire poised to emerge from Malaysia IPO
[KUALA LUMPUR] A discount chain with signature red storefronts has drawn legions of Malaysians looking for good deals – and made its founder a billionaire. Eco-Shop Marketing, which operates more than 350 dollar stores across Malaysia, is on track to complete its initial public offering (IPO) in Kuala Lumpur on Friday (May 23) – the country's biggest this year. The listing will value the company at about US$1.5 billion, meaning its founder and controlling shareholder, Lee Kar Whatt, will end up with a US$1.15 billion stake, according to the Bloomberg Billionaires Index. Eco-Shop's growth over the last two fiscal years, with revenue increasing more than 50 per cent, reflects the demand for cheap everyday goods at a time of rising inflation, said Zhu Hann Ng, founder and chief executive officer of Tradeview Capital, a fund manager in Kuala Lumpur. 'Fixed-price retailers became a first choice,' Hann said, referring to the RM2.60 (S$0.61) price tag on all products in Eco-Shop stores in peninsular Malaysia. (Products sold in Malaysia's two states on Borneo cost RM2.80.) Lee, who's 51, will remain in charge. He declined to be interviewed. He opened the chain's first store in 2003 with his brother and a pair of other people. He still works out of the company's headquarters in Jementah – a small town that's a three-hour drive southeast of Kuala Lumpur. A NEWSLETTER FOR YOU Friday, 8.30 am Asean Business Business insights centering on South-east Asia's fast-growing economies. Sign Up Sign Up Even before Eco-Shop grew into a nationwide chain, Lee was well-known in the Chinese-Malaysian business community for his charitable engagements, Hann said. In 2023, Lee was captured on a rare photo handing a RM1 million check to the Turkish ambassador to Malaysia, meant for the victims of the earthquakes that devastated parts of southern Turkey. Creador, a private equity firm, took a 10 per cent stake in the company in 2019, at which point it had more than 100 stores. But Eco-Shop faces competition from established rivals, such as Mr DIY Group (M), as well as smaller upstarts run by entrepreneurs from mainland China, Hann said. 'We feel the market in Malaysia is quite saturated' and the company's 'upside is capped', he said. Tradeview declined to buy Eco-Shop shares as part of the offering. For its part, Eco-Shop says in its prospectus that there's significant room to grow. It plans to open approximately 70 new stores annually for the next five years. BLOOMBERG
The Star
07-05-2025
- Business
- The Star
Cautious sentiment likely to prevail
PETALING JAYA: A fluid macro environment and ongoing uncertainty over US trade tariffs negotiations will likely keep investors cautious until further clarity on such issues allow for better informed decisions. That is partly why analysts believe the 150-point rebound momentum from the April 9 low of 1,388 points the local equity market had made may be exhausted. As such, the FBM KLCI could experience range-bound trading in the short term until further details on the tariffs are made known. 'The FBM KLCI is expected to remain range-bound amid a fluid macro environment and ongoing uncertainty over US trade tariffs. While optimism over easing trade tensions and potential deals has supported the recent market rebound, no concrete developments have emerged from China. 'The prolonged delay continues to cloud market sentiment, keeping investors cautious and hesitant to take decisive positions,' Nixon Wong, chief investment officer at Tradeview Capital, told StarBiz. The 90-day reprieve to negotiate a tariff deal with the White House is set to be a catalyst for market trajectory and investors will keenly eye the approaching deadline in July. According to Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Aziz, the United States' four key demands on Malaysia are to address the trade imbalance, non-tariff barriers, technology safeguards and investment alignment. Should the 90-day period end with a proper deal being negotiated between Malaysia and the United States, it might form a catalyst to push the local market higher as investors prefer certainties. 'We believe investors have already accepted the fact that the trade environment ahead will be exposed in the elevated tariff (10% base rate at this juncture), hence investors are eager to have certainties about how many percent and what products are being excluded. 'Having said that, the short to mid-term market movement is being impacted by the outcome of negotiations and it is extremely tough to gauge the movement ahead,' said Kevin Khaw, assistant research manager at iFAST Capital. While it's still early days, optimists like Maybank Investment Bank are keeping their year-end target of 1,700 points for the index although in the near term, it expects the benchmark could hover around the 1,560-point levels. The foreign exchange (forex) market is where the negotiations between some countries and Washington are being played out live. The Taiwanese dollar and Japanese yen have appreciated against the greenback since talks began which has also seen other Asian currencies like the ringgit to rise to seven-month highs against the US dollar at RM4.22 yesterday. Would this see money inflows after the RM12.7bil in foreign net outflows year-to-date? Maybank noted the ringgit's strengthening against the US dollar has a strong positive correlation with the FBM KLCI and a stronger ringgit tends to add strength to the equities market. 'As such, we believe investors should warm up to Malaysian equities with more clarity on tariff discussions, and not forgetting Malaysia's numerous domestic policy initiatives. 'Positively, we note that equity foreign net selling has moderated in April and has been well absorbed by domestic institutions,' the bank said in a recent Malaysia strategy report. Khaw said the recent movement in the forex market is also driven by investors' expectation of a de-escalation of US-China trade tensions, followed by recent softening tones from both parties. He added despite the lower US dollar, from a ringgit perspective, it is still relatively expensive to import US goods, hence the conspiracy theory of the White House 'purposely' wanting a cheaper dollar to drive exports is untrue. Khaw believes the talk of a slowing global economic growth has led to a market consensus of one rate cut by Bank Negara, which has partly contributed to the recent rally on the local market. 'Investors are pricing in the possibility of recent ringgit strength alongside a possible 'insurance cut' from looming economic uncertainties, not to mention the upcoming subsidies rationalisation impact to consumers,' he said. Other analysts said the tariffs have just triggered a rebalancing in the US dollar, which has had a good run over the past decade with investors long in US assets like equities. The talk of de-dollarisation hence may be misplaced and the recent move in the greenback is more to do with rebalancing of asset allocation with global investors trimming their US dollar positions in US equities and the US treasuries as well. The weakness also coincided with the massive fiscal stimulus from Europe. Tradeview's Wong said any rate cuts by the Federal Reserve and fiscal support could weaken the US dollar, potentially driving capital flows into emerging markets like Malaysia—supporting the longer-term investment thesis. But even this may be quite challenging. 'The Nasdaq, being tech-centric, may see a stronger recovery following a better-than-expected results season. However, mixed corporate guidance and persistent trade uncertainties continue to weigh on investor sentiment, limiting fund inflows for now,' he said. Hence, Wong continues to favour quality, domestically oriented companies with strong fundamentals and attractive yields — particularly real estate investment trusts, financials and selected consumer staples. 'While we prefer clearer visibility before making significant growth allocations, current market levels appear attractive for selective bottom fishing, as much of the negative sentiment seems to be priced in. 'That said, investors should be prepared to endure heightened volatility in the near term, as trade-related news flow is likely to remain active and inconclusive until closer to the end of the 90-day period. Patience and selectivity will be key during this phase of uncertainty,' he warned. With the Trump administration stating it is close to making some deals with some countries on the tariffs issue and the softening stance on auto tariffs all point to the likelihood of another year of two halves for Bursa Malaysia in 2025.
The Star
02-05-2025
- Business
- The Star
Reduced expectations of IPOs
KUALA LUMPUR: Recent performances of initial public offerings (IPOs) on Bursa Malaysia indicates that there will be no more 'guaranteed' upsides for new listings especially on its debut day anymore. This is the sense that brokers, fund managers and analysts are getting; compared to just last year where IPO outperformance, especially upon its listing on the first day, was almost guaranteed. Negative sentiments following the flare ups in trade tensions and reciprocal tariffs appeared to have reduced expectations of outperformance of new listings. Fundamentals, right business strategy and reasonable valuations would be key to attracting investors to IPO counters, analysts said. 'I don't think there will be anymore of such irrationality for now,' said an analyst. Meanwhile, Tradeview Capital founder and chief executive officer (CEO) Ng Zhu Hann pointed to the recent delays of two planned IPOs that indicate the rather subdued level of risk sentiment now. Cuckoo International (MAL) Bhd had in early April said it was postponing its planned listing by some two months which is expected to complete by June 24. SPB Development Bhd had earlier delayed the launch of its Main Market IPO to an unspecified date on market uncertainties. 'Many new listing's share prices in the first quarter are trading below their IPO price. This is compared to last year where 80% to 90% of new listings had performed better than their reference price. 'The two delayed IPOs of SPB and Cuckoo points to weaker sentiment on the take up rate of these IPOs and risk appetite is quite weak in the first quarter,' Ng told StarBiz. 'If they had proceeded, shareholders could have potentially lost money there. If the uncertainty prolongs, then it is likely that Bursa Malaysia would find it difficult to secure the targeted 60 new listings this year,' he added. However, Bursa Malaysia's CEO Datuk Fad'l Mohamed said earlier in the week that it is on track to meeting its full-year target of 60 IPOs despite the present volatile economic environment. There were 16 IPOs year-to-date. According to Mercury Securities, larger IPOs with bigger market capitalisation tend to benefit from the larger investor pools and greater interests from retail and institutional investors as there are more sell-side coverage and meet funds' investment mandate. These factors contribute to enhanced price discovery and aftermarket support, it said. On the other hand, it noted micro-cap listings or those typically with less than RM100mil in market capitalisation continue to face structural headwinds with weak price momentum post-IPO. These were seen through the thin trading volumes, minimal research coverage and usually limited institutional interest, Mercury Securities said. 'A case in point is Sik Cheong Bhd that has a market cap of RM71.8mil, has since recorded a 46.3% decline in share price. The stock's struggle highlights the liquidity discount often applied to micro-cap names despite of the fundamental strength of the company remain intact,' it said. These appear to reinforce a broader theme that scale is becoming a proxy for investability, it said. 'As volatility and uncertainty remain elevated in broader market, investors tend to favour IPOs offering better market liquidity as this help to facilitate sustained demand interest (retail and institutional flows), while providing greater flexibility to exit positions efficiently in the event of uncertainty,' the research house noted. Moving forward, Ng said he expects appetite for new IPO listings to recover sometime in the second half of this year noting of the meaningful recovery of the FBM KLCI levels from the index's year-to-date lows of 1,386.63 points. The FBM KLCI closed at 1,540.22 points on Wednesday. 'But the market's average daily trading values are still below RM2bil since then and it indicates participation is not yet broad-based. I would suggest investors to be selective in picking IPOs to invest into,' he said. But confidence could be returning sooner than expected as Eco-Shop Marketing Bhd just announced plans to raise RM419.87mil for a planned upcoming listing on the Main Market of Bursa Malaysia. The dollar store retailer plans to use the raised funds to expand its retail footprint and distribution centres nationwide; invest into information technology hardware and software and; repay bank borrowings. This will be the largest IPO to be launched in Malaysia over the past eight months. The retail portion offers about 187 million new shares at RM1.21 each. Ten cornerstone investors have collectively already subscribed 90.31% of Eco-Shop's total institutional offering excluding the bumiputra portion under the Investment, Trade and Industry Ministry, the company said. The cornerstone investors included AHAM Asset Management Bhd, Albizia Capital Pte Ltd, Areca Capital Sdn Bhd, Eastspring Investments Bhd, Kairous Equity Sdn Bhd, Kenanga Investors Bhd, Kenanga Islamic Investors Bhd, Lion Global Investors Ltd and RHB Asset Management Sdn Bhd. In the last six months, Mercury Securities noted there were a total of 42 IPOs on Bursa Malaysia. Among these, it noted of strong first-day performers on the Main Market were Life Water Bhd (44.6%), Azam Jaya Bhd (39.7%), and 99 Speed Mart Retail Holdings Bhd (13.9%). 'There is a huge disparity between the first day performance and the post IPO performance. 'While certain IPOs like Steel Hawk Bhd (130%) and Oriental Kopi Holdings Bhd (98.9%) delivered eye-catching returns, more than 70% of the IPOs are now underperforming and trading below their IPO offering price,' Mercury Securities said. 'The phenomenon of strong first-day pops followed by subdued price action or retracement post listing, indicating a clear signal that investors are increasingly discriminating between quality and hype,' it added. It noted of IPOs which debuted in March and April 2025 was during a time period that was marked by surge in geopolitical and macroeconomic uncertainty had mostly seen lackluster first-day performances and have generally underperformed days after its listing. 'In such an environment, new listings face an uphill battle to attract sustained buying interest, particularly in the absence of strong fundamentals or compelling growth catalysts,' the research house said.
