From left: MST Golf executive director and group CEO Ng Yap, and executive chairman Low Kok Poh at the group's listing ceremony at Bursa Malaysia on Thursday, July 20, 2023. (Photo by Suhaimi Yusuf/The Edge)

KUALA LUMPUR (July 20): MST Golf Group Bhd is the fifth company this year to conclude its maiden trading day on Bursa Malaysia with its share price below its initial public offering (IPO) price.

MST Golf ended its debut trading on Thursday (July 20) at 78 sen, down 3.7% from its IPO price of 81 sen. The Main Market stock, which opened at 70.5 sen and was the fourth most active counter on the local bourse, struggled to rise beyond its IPO price throughout the day, as its share price hovered between 69 sen and 79.5 sen. It saw 75.78 million shares done.

Out of 19 IPOs so far this year, three other Main Market listings and one ACE Market debut had similar fate on their debut days.

The biggest under-performer was Radium Development Bhd, which closed 23% lower than its IPO price, followed by ACE Market listee, Synergy House Bhd.

In response to the lacklustre opening day performance, MST Golf executive director and group chief executive officer Ng Yap said he understood the current weak market sentiment.

“The whole reason for this IPO was to raise enough funds to speed up our expansion. To us, we are just focusing on our fundamentals. We have put ourselves in a position to grow our company to the next phase. Obviously, we hope for better (share price performance) but it is fine,” he said.

Based on its closing price of 78 sen and an enlarged share captal of 820.87 million shares, MST Golf has a market capitalisation of RM640.28 million.

It had expected to have a market capitalisation of RM664.9 million upon listing, which would value the company at 27 times its price-earnings ratio (PER) — based on its earnings per share of three sen in the financial year ended Dec 31, 2022 (FY2022).

The valuation is above the Bursa Malaysia Consumer Index’s PER of 20.02 times, according to Bloomberg. MST Golf’s closest listed retail competitors, such as InNature Bhd, Padini Holdings Bhd and AEON Co (M) Bhd, are trading at lower PERs. InNature's PER stood at 18.97 times, followed by AEON at 14.58 times and Padini at 10.62 times. Mr DIY Group (M) Bhd has the highest PER at 31.02 times.

Prior to the listing, the majority of brokerage firms were positive on the IPO and suggested that investors subscribe for the shares, saying MST Golf would command a premium when the stock starts trading on July 20.

In an interview with The Edge earlier this week, Ng said the valuation for MST Golf is justified, given the group’s strong brand within the golf community.

“A lot of funds are very interested in us because we are a well-known business-to-consumer company with an established brand name and management system. The response from institutional investors has been overwhelming so far. In fact, based on our IPO price of 81 sen, the portion earmarked for institutional offering has been oversubscribed,” he said.

The group previously announced that total demand for its 228 million IPO shares — comprising 160 million new shares and 68 million shares offered for sale by existing shareholders — represented a subscription rate of 5.28 times, with an “overwhelming demand” of RM924 million orders from institutional investors.

The golf equipment retail chain operator had planned to raise RM129.6 million from the issuance issuance of new shares, with proceeds to be mainly be used for local and regional expansion.

RHB Investment Bank Bhd is the principal adviser, sole underwriter, and sole placement agent for the IPO exercise.

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