Malaysian Mini-Market Chain 99 Speed Mart Jumps 16% on Debut

(Bloomberg) -- Shares of convenience-store chain 99 Speed Mart Retail Holdings Bhd rallied more than 16% on their first day of trading after what was Malaysia’s biggest initial public offering in seven years. 

The stock rose to as high as 1.92 ringgit on Monday. The $531 million IPO was priced at 1.65 ringgit per share, valuing the company at about $3.2 billion. 

The debut cements Kuala Lumpur’s position as the busiest location for listings in Southeast Asia this year as Malaysia’s market regained favor among global investors. The company’s shares also offer traders exposure to the nation’s consumer sector, given expectations that the economy will expand about 5% in 2024.

“This stock should do well because they are representing the domestic consumption trend,” said Nixon Wong, chief investment officer of Tradeview Capital Sdn, a Kuala Lumpur-based boutique fund manager.

Several brokerages, including Hong Leong Investment Bank, have initiated coverage on the company with a buy rating. “It’s a simple business model that’s easy to understand,” said analyst Syifaa’ Mahsuri Ismail. 

The chain’s IPO helped mint its founder, Lee Thiam Wah, as a billionaire. Lee started the company in 1987 as a single sundry store in the state of Selangor and grew it into a retail empire with more than 2,600 outlets. It reported an 8.6% increase in revenue for the first half of the year to 4.8 billion ringgit ($1.1 billion), helped by sales at its new outlets and bulk-sales e-commerce platform.

Lee and his wife, Ng Lee Tieng, sold up to 72% of the shares on offer, according to 99 Speed Mart’s listing document. The company raised 660 million ringgit in the offering and will use the proceeds to expand its network of stores, set up new distribution centers and upgrade existing outlets, among other things. 

IPOs in Malaysia have raised $1.29 billion so far this year, almost double the amount for all of 2023, according to data compiled by Bloomberg. The first-day performance of listings that raised $100 million to $500 million in the country have been decent, with an average gain of 7% in the past year through Friday, data show.

Companies that have gone public in Malaysia this year include palm-oil producer Johor Plantations Group Bhd in a $156 million deal, and Alpha IVF Group Bhd, whose listing raised $98 million.

“The Malaysian domestic market has been quite starved of consumer companies that have delivered consistently,” said Philip Wong, an analyst covering consumer stocks at UOB Kay Hian Pte. The chain’s bargaining power over suppliers due to its large presence also bodes well for the group, he said.

CIMB Investment Bank Bhd, Affin Hwang Investment Bank Bhd and RHB Investment Bank Bhd are underwriters in the offering.

(A previous version of the story corrects detail on average first-day IPO gains)

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