Bursa Malaysia Bhd chairman Tan Sri Abdul Wahid Omar (sixth from right), Mega Fortris Bhd chairman Datuk Nick Ng (sixth from left), Mega Fortris group MD cum group CEO Datuk Adrian Ng (fifth from left), and Selangor Investment, Trade and Mobility Committee chairman Ng Sze Han (fourth from left), alongside other board members of the company and dignitaries at Mega Fortis’ Main Market listing on Bursa Malaysia on Monday. (Photo by Suhaimi Yusuf/The Edge)

KUALA LUMPUR (Nov 11): Two companies that made their Main Market debut on Monday — seal security manufacturer Mega Fortris Bhd (KL:MEGAFB) and construction player Azam Jaya Bhd (KL:AZAMJAYA) — saw diverging fates, as one headed south of its initial public offering price, while the other soared.

Mega Fortris, which opened flat at its IPO price of 67 sen, rose only as much as 1.5 sen before stumbling past its IPO price and ended the day 2.24% or 1.5 sen lower at 65.5 sen. It was the eighth most active counter on Bursa Malaysia with 63.72 million shares traded. At its closing price of 65.5 sen, Mega Fortris’ market capitalisation stood at RM553 million, based on its share capital of 845 million shares.

The lacklustre debut made Mega Fortris, backed by Singapore’s Singapore’s Oversea-Chinese Banking Corporation (OCBC), the fourth this year to close below its IPO price on its first trading day. There have been 42 IPOs so far this year.

The three others whose IPO underperformed were ACE Market-listed Sabah-based integrated property developer KTI Landmark Bhd (KL:KTI), which closed 5% below its IPO price of 30 sen; ACE Market-listed Master Tec Group Bhd (KL:MTEC), which closed 7.69% below its IPO price of 39 sen; and Main Market-listed MKH Oil Palm (East Kalimantan) Bhd (KL:MKHOP), which finished 0.81% below its IPO price of 62 sen.

Mega Fortris manufactures up to 530 million pieces of security seals annually, which are used on boxes of playing cards, containers and cables, to prevent tampering and secure goods during transportation and storage.

OCBC has a 9.45% stake in Mega Fortris’ holding company and sole selling shareholder Mega Fortris Global Pte Ltd. The second-largest bank in Southeast Asia by assets also has another 16.54% indirect stake through its vehicle Lion-OCBC Capital Asia I Holding Pte Ltd, which is held for investments and is not involved in day-to-day company operations and management.

At its last close of 65.5 sen, the company was valued at a trailing price-to-earnings ratio (PER) of 25.6 times — based on profit after tax of RM21.6 million for the financial year ended June 30 (FY2024).

Azam Jaya second most active counter

Over at Sabah-based Azam Jaya, the counter opened at RM1 and rose as much as 48.72% to touch an intra-day high of RM1.16, before finishing the day at RM1.09 — for a 39.74% or 31 sen rise from its IPO price of 78 sen.

The construction firm was the second most active counter of the day, after 68.324 million shares changed hands.

At the closing price of RM1.09, the company had a market capitalization of RM545 million, based on its 500 million issued shares post-listing. It was valued at a price-to-earnings ratio (PER) of just under 21 times, based on its profit after tax of RM26 million for the financial year ended Dec 31, 2023 (FY2023).

Azam Jaya mainly builds road infrastructure, including roads, highways, bridges, flyovers and tunnels, in Sabah. The company is currently working on eight projects with an unbilled contract value totalling RM1.08 billion.

Use of proceeds

Out of the total of RM99.07 million raised from its public issue, Mega Fortris plans to use 43% of it to part finance the establishment of new production facilities, including automated production lines for security seals in the UK. It has also earmarked 45% of the funds for its new business to supply playing cards in sealed security boxes in Macau, China. The rest will be used as working capital and to defray listing expenses.

From left: Azam Jaya Bhd independent non-executive directors Chua Chai Hua, Chung Yue Lin @ Erica and Emmeline Michael Paitin, executive director Datuk Lo Vun Che @ Jessica, MD Datuk Jonathan Lo Chaw Loong, alternate director to Tan Sri Joseph and head of sustainability and innovation Datuk Johannes Lo Chaw Jack, and independent non-executive director Datuk Anjin Ajik, Inter-Pacific Securities Sdn Bhd head of capital markets & corporate finance Anuar Omar, and senior adviser, capital markets & corporate finance Denis Lim Seng Huat at Azam Jaya’s listing ceremony on the Main Market of Bursa Malaysia on Monday. (Photo by Patrick Goh/The Edge)

The sale of existing shares under the offer for sale, which raised up to RM99.07 million, was accrued entirely to a private vehicle controlled by Mega Fortris chairman Datuk Nick Ng, and his brother Datuk Adrian Ng, who is also the company’s chief executive.

As for Azam Jaya, the group has allocated RM28.4 million, out of its RM61.5 million proceeds from the sale of new shares, as working capital for construction projects and RM20 million to repay bank borrowings. It has also set aside RM8 million for new machinery and equipment, and for technological upgrades.

Proceeds from the sale of existing shares, amounting to RM39 million, went entirely to chairman Tan Sri Joseph Lo @ Lo Tain Foh and his son Datuk Jonathan Lo Chaw Loong, who is also Azam Jaya’s managing director.

Inter-Pacific is the principal adviser, sole underwriter and sole placement agent for Azam Jaya’s IPO, while RHB Investment Bank is the sole principal adviser for Mega Fortris’ IPO, and the joint underwriter and joint placement agent with AmInvestment Bank.