PETALING JAYA: Just four days after its debut, Malakoff Corp Bhd failed to ignite investors’ interest as the counter fell below its IPO price to RM1.72 yesterday, largely due to a huge sell-off by institutional investors.
It fell 4 sen or 2.27% at the end of trading yesterday, reflecting an overall lacklustre performance from its RM1.80 IPO price despite its stable earnings estimates based on its position as an independent power producer (IPP) to the country’s main power company Tenaga Nasional Bhd (TNB). The energy counter, according to an investment banker, was caught in a “tricky” and tough market condition as foreign brokers quickly shifted their interest back to the US markets which were considered more appealing due to potentially higher interest rates and better market conditions.
The local broker said that nothing much could be done until the overall sentiment improved though the company had good fundamentals with its 70% dividend policy and stable cashflow.
“At RM1.60 it is already yielding returns of above 6%. It is just there is no lock-in period for the institutions, including the local ones, that usually absorb the retail sell-off,” he said,
A local bank is said to have set a margin call of RM1.65. The stock’s retail portion is at about 300 million shares out of a five billion share base.
There are 12 cornerstone investors of Malakoff’s IPO that are not subject to any moratorium on their shares.
The only moratorium is imposed on promoters of the shares MMC Corp Bhd and its subsidiary, Anglo-Oriental (Annuities) Sdn Bhd, who are locked in for a six-month period.
MMC’s stake in Malakoff has been reduced to 37.8% after listing.
It was reported that Malakoff’s stabilising manager, Maybank Investment Bank, would undertake any price stabilisation action if needed.
TA Securities and BIMB Securities both placed “buy” calls on Malakoff with fair value of RM2.09 and RM2 target price accordingly.
TA Securities saw Malakoff as a defensive play.
It explained that in Malaysia, IPPs were assured annual payments from TNB that ensured capital expenditure and operating expenditure recovery as well as certain return on investments as spelt out in the respective power purchase agreements.
Currently, the only other listed counter in the industry is YTL Power International Bhd.