Radium Development BHD IPO: A Promising Investment Opportunity?

Radium Development Bhd, a property development company with a focus on high-rise residential properties in urban Kuala Lumpur. As a property developer, they specialize in developing high-rise residential properties, including condominiums, serviced apartments, suite apartments, and SOHO units. They hold 10% (by value) and 7.03% (by unit) market share of KL’s high-rise residential sales in 2021.

At the same time, they are committed to supporting the Malaysian government's efforts in providing affordable housing to all citizens. To this end, they have developed affordable housing such as Residensi Wilayah (previously known as RUMAWIP) and PPAM (previously known as PPA1M), with a goal of offering affordable housing options while maintaining high standards of quality and design.

Recently they announced its plans to go public through an Initial Public Offering (IPO). The move has generated significant interest among investors, with many seeing Radium Development BHD as a promising investment opportunity.

The company's IPO is expected to raise a significant amount of capital, which will be used to fuel its growth and expansion plans. Radium Development has been growing steadily over the past few years, with an impressive track record of delivering the dream of property ownership and whether it is residential or commercial spaces.

Key Info of the IPO

IPO Price: RM0.50 per share

Important date

Events Dates Issuance of Prospectus/Opening of Application: 27 April 2023

Closing of Application: 5:00 p.m., 16 May 2023

Balloting of Application: 19 May 2023

Allotment of IPO Shares to successful applicants: 26 May 2023

Listing on the Main Market of Bursa Securities: 31 May 2023

Financial Info

Investment Attractiveness

Non-Financial

1)    No offer for sales- We can see commitment from promoters to steer the company forward as they holding more than 70% of shares.

2)    Experienced and capable chairman- Tan Sri Mohd Amin Nordin bin Abdul Aziz served as mayor of Kuala Lumpur from 2015 to 2018. The chairman experience and network will certainly help to boost Radium which focused on Kuala Lumpur development.

3)    Competent and hands on management- Group MD have 17years experience in property development and experience in hotel operations and management since 2016.

4)    Good track records- Radium Development Bhd, an established property developer, has a proven track record of achieving high take-up rates for their projects. This can be attributed to their strategic pricing and prime project locations, which are attractive to potential buyers. As a result, their projects are likely to continue to see strong take-up rates in the future. 

5)    Upcoming projects- The group has entered into a joint venture deal to potentially launch a development in Mukim Batu in the first half of 2024. They also shortlisted three parcels of land in Mukim Petaling to acquire and/or jointly develop with the IPO proceeds. This means that they have on going projects and on the same time, will have a good replenish rate.

Financial

1)    Improved profit margins from FYE2020 to FYE2021 result of higher gross profit for the on-going projects.

2)    Company is on net cash pre IPO.

3)    Attractive dividend policy- They target to distribute no less than 30% out of its consolidated profits after taxation annually.

Conclusion

Radium Development Bhd has demonstrated high-quality management practices and boasts a strong balance sheet. Additionally, their track record with previous projects has been excellent. The majority of the funds raised through their IPO will be allocated towards expanding their landbank, which will contribute to the replenishment rate of their future projects. Overall, these factors indicate that Radium Development Bhd has the potential to become an upcoming star in the property sector.