Bursa Malaysia Shares Rise in Debut on Excess Demand

Bursa Malaysia Shares Rise in Debut on Excess Demand

Khoo Hsu Chuang Bloomberg/Kuala Lumpur

Shares of Bursa Malaysia Bhd., which manages the nation's stock exchange, rose as much as 19 percent on its debut, as investors bet it will boost profit by linking with Asian exchanges and upgrading trading systems.

Bursa raised US$137 million in its initial public offering on March 4, with fund managers ordering 38 times the stock available to them. The Kuala Lumpur-based exchange operator sold a third of the shares to fund managers at 3.20 ringgit each ($0.84), its adviser CIMB Bhd. said.

"It's a frenzy out there to get the stock," said Chris Wong, who helps manage about $10 billion, including shares of other publicly traded stock exchanges in the region, at Aberdeen Asset Management in Singapore. "It's a strong cash flow business and investors believe that management can restructure the business to be more efficient."

Funds raised from the share sale will help Bursa, the fourth- largest publicly traded stock exchange in Asia, install new trading systems and set up links with exchanges in Singapore, Thailand and Indonesia. The average daily trading of 511 million shares on the Malaysian exchange this year is 17 percent higher last year's daily average, Bloomberg data show. Most-Heavily Traded Bursa gained 56 sen, or 17 percent, to 3.75 ringgit at 12:34 p.m. local time on the Kuala Lumpur Stock Exchange, after earlier gaining as much as 62 sen. It is the most actively traded stock on the exchange, with 76.2 million shares exchanged, almost six times more than the next most-heavily traded stock. "We're very happy with the performance -- it reflects the confidence of investors in our company," said Bursa Chief Executive Officer Yusli Mohamed Yusoff to reporters today. "We will try and live up to their expectations." Bursa's shares were sold at a premium to its regional peers. Based on the retail price of 3 ringgit, Bursa shares are valued at a price-to-earnings ratio of 24.9 times projected 2005 earnings, the company earlier said. Singapore Exchange Ltd., which runs the island state's securities and derivatives market, trades at about 18.5 times estimated 2005 earnings, according to Bloomberg data. Australian Stock Exchange Ltd., which runs that country's biggest exchange, trades at 21.1 times projected June 2005 earnings. Hong Kong Exchanges & Clearing Ltd. is trading at 19.66 projected earnings. Pent Up Demand "Given the allocation to institutions was capped, there's a lot of pent up demand," said Aberdeen's Wong, who declined to say if he was among buyers of the stock today. "The answer to whether today's rise is justifiable at this point is probably a 'no."' Individual investors ordered 11.74 times the shares on offer, Malaysian Issuing House said in a separate statement. Plans to end a seven-year ban on short-selling to increase trading and lure international investors who bet on falling prices may spur trading, Bursa Chief Executive Officer Yusli Mohamed Yusoff said in a Feb. 8 telephone interview. The move is awaiting regulatory approval he said. "Valuations weren't very cheap, but the shares were overwhelmingly subscribed and most people didn't get their full allocations," said Singapore-based Lim Soo Hai, who helps manage $200 million for Daiwa SB Investment Singapore Ltd. "The stock is unique in that it is a monopoly." Lim bought stock in Bursa and didn't get his full allocation. Profit Fell Bursa's profit last year fell 41 percent to 35 million ringgit, after incurring expenses in a voluntary staff separation plan, Bursa chief financial Officer Khairussaleh Ramli said in a statement on Wednesday. Sales were barely changed at 286 million ringgit, he said. Bursa expects net income this year to advance to 60.3 million ringgit, it said in sale documents last month, and plans to pay out at least 75 percent of its profit this year as dividends. That will result in a net payout of at least 9 sen a share, or a yield of 3 percent based on a retail price of 3 ringgit, it said then. Shares of Singapore Exchange Ltd., which runs the island- state's securities and derivatives market, advanced today after the company said it will pay a special interim dividend for the quarter ended March. Singapore Exchange, which gained as much as 3.4 percent today, has said it will pay no less than 80 percent of its annual net income after tax in dividends. Poor Performance Malaysia's is the tenth worst-performing exchange in the world this year, having posted a year-to-date decline of 1.2 percent, Bloomberg Data shows today. The 100-member Kuala Lumpur Stock Exchange Composite Index rose 14.3 percent last year. Malaysia's $118 billion economy expanded 5.6 percent in the fourth quarter, the slowest in more than a year, amid lower overseas demand for semiconductors and electronics parts. Malaysia said in September the economy will probably expand 6 percent this year. UBS AG, Europe's biggest bank by assets, and CIMB Bhd., Malaysia's biggest investment bank, are managing the share sale. Bursa shareholders include the Minister of Finance Inc., the Capital Market Development Fund and member stockbrokers, each with a 30 percent stake. The country's 6,000-odd stock traders hold a 10 percent stake. --With reporting by Adeline Lee and Chan Sue Ling. Editors: S. Collins, Scott, Stewart, Scott, Stewart To contact the reporter on this story: Khoo Hsu Chuang in Kuala Lumpur at (603) 2160 6801 or hckhoo@bloomberg.net To contact the editor responsible for this story: Bill Austin at (81) (3) 3201-8952 or billaustin@bloomberg.net -0- Mar/18/2005 4:39 GMT

GetAPBIZ 1.00 -- MAR 18, 2005 11:34:50