KUALA LUMPUR (Oct 17): Westports Holdings Bhd, to be listed tomorrow on the Main Market of Bursa Malaysia, is set to sizzle tomorrow after it successfully raised RM2.03 billion from its IPO.
Reuters had reported earlier this month that foreign and domestic funds had jostled to bid for Westports, taking advantage of the US Federal Reserve’s surprise decision not to withdraw stimulus.
And overseas demand was instrumental in pushing pricing to RM2.50, at the top range of the RM2.30- RM2.50 indicative range for institutional investors.
Westports has received heavy support from domestic pension funds and other “cornerstone” investors, which commit to remaining invested for a period after shares start trading.
The port operator currently has nine cornerstone investors, which have taken up 340 million shares or 41.81% of the total number of shares offered in the IPO – the largest offering so far this year in the country.
For its IPO, the Li Ka-Shing partially-owned port operator had offered for sale 813.9 million shares of 10 sen each, of which 710.89 million were allocated to local and foreign institutional and selected investors.
Reuters said that Westports, which manages the world’s 12th most active port overlooking the Malacca Straits, had its book oversubscribed 30 times and closed two days earlier than scheduled.
The remaining 102.3 million shares of the total IPO shares issued have been given to the Malaysian public, eligible employees and directors of Westports group.
Although Westports has fixed its institutional price at RM2.50 per share and final retail price at RM2.50 for its initial public offering (IPO), Kenanga Research has set its target price for the new stock at RM2.90 and JF Apex Securities has set it at RM2.97.
Hence, Westports is most likely to rise with heavy trades when it gets floated at the local exchange tomorrow.
With the listing tomorrow, Asia’s richest man Li Ka-Shing would see his interest drop to just under 25% from about 32.5%, who via a subsidiary of Hutchison Whampoa owns shares in Westports.
The Gnanalingam family in Malaysia would see its holding fall to 46.8% from 60%, where Ruben Emir Gnanalingam Abdullah is Westports’ CEO.
The port operator, with a 75% dividend policy of net profit on an annual basis, posted a net profit of RM360.9 million in calendar 2012, up from RM316.5 million in 2011. This was achieved on the back of revenue of RM1.5 billion, up from RM1.4 billion in 2011.
In a note yesterday, Kenanga Research said it was positive on the Westports’ upcoming listing.
The research house believes Westports offers a long-term investment proposition as it has a higher than average operational efficiency. Consequently, it also results in superior margins coupled with a favourable shift in the container industry.
“We expect the Far East region and the Southeast Asian container trade to grow above the global growth rate as the ASEAN Economic Community goes on line in 2015,” said Kenanga Research’s team in a report.
“We believe that the change in the container industry is favourable to Westports as higher container volume growth is expected in Port Klang and Malaysian Ports as a whole,” stated the report.
Kenanga said Westports is well poised to grow further in the long term with plans to potentially bump up their capacity to 16 million twenty-foot equivalent units.
Westports operates container facilities at Port Klang. It is one of the largest ports in this region serving container traffic through the busy Straits of Malacca.
Westports has said it expects container volume to grow 7-8 per cent annually for the next five years. Much of such traffic is likely to be driven by increasing trade flows within South East Asia.
Credit Suisse, Goldman Sachs, BofA, HSBC and Malaysian banks Maybank and RHB were advising on the listing of Westports.
Written by Jeffrey Tan of theedgemalaysia.com
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