Bursa reduces IPO targets to 25 amid pandemic

This comes as companies have to re-evaluate their businesses following the impact of MCO on various businesses


BURSA Malaysia Bhd pared down its IPO target to 25 this year from 40, as companies are taking calculated approaches on listing exercises due to Covid-19 pandemic.

Bursa Malaysia CEO Datuk Muhamad Umar Swift (picture; right) said this comes after the bourse operator observed companies had to re-evaluate their businesses and forecasts following the impact of the Movement Control Order (MCO) on various businesses.

“We anticipate two Main Market, 16 ACE Market and seven Leading Entrepreneur Accelerator Platform Market at this point of time,” he told reporters after the exchange’s first-half (1H) financial results briefing in Kuala Lumpur yesterday.

Muhamad Umar noted that Bursa remains hopeful to see more companies listed this year after having witnessing two IPO listings last week.

Last week saw the IPO listings of Reservoir Link Energy Bhd and Ocean Vantage Holdings Bhd onto the ACE Market.

Muhamad Umar observed that based on the two listings, citing example of the oil and gas stock Reservoir Link, the market responds to value, particularly in healthcare, technology, palm oil, rubber gloves and infrastructure-related stocks.

Muhamad Umar added that Bursa is seeing confidence coming back to the market as trading volumes have been surging recently.

“However, we are also very mindful as confidence can be fragile. If we see an emergence and growth in Covid-19 infections, I believe that would also impact the volatility and confidence of the market,” he said.

Muhamad Umar also said Bursa’s ongoing efforts to increase market vibrancy and liquidity are having a positive impact with strong retail participation seen among millennials in the marketplace.

Bursa recorded the highest trading in the bourse’s history of 12.5 billion on July 20, 2020.

“We will continue to introduce new initiatives and streamlined product offerings, such as expanding the range of trading channels and platforms to improve the seamless digital journey on Bursa for the new generation of investors,” he said.

He added that the stock exchange is strengthening its trading platform by working closely with Nasdaq — the exchange’s service provider — to avoid technical issues that affect investors’ trading activities.

On July 16, trading halted on Bursa since 3.30pm as the bourse regulator confirmed that it encountered a technical issue.

“We are also reviewing all our processing systems, anticipating what we previously though unanticipatable, and looking at testing them virigiously,” he added.

The regulator allocated some RM20 million-RM25 million to upgrade its trading technology and to refresh its underlying system.

The local bourse also reminded investors banking on its dividend payment this year that it will strive to pay at least 90% this year upon board’s approval.

“It will depend on the exchange’s performance for the 2H of the year. Of course, we will have to evaluate in terms of our cash position as well. We will strive to maintain our track record, to pay at least 90% subject to the board’s approval,” said Bursa CFO Rosidah Baharom (left).

Bursa’s net profit for the second quarter ended June 30, 2020, jumped to RM86.23 million compared to RM46.34 million recorded in the same period last year, while revenue was up to RM179.78 million from RM123.96 million previously.

It also declared an interim dividend of 17 sen per share, the highest since its listing in 2005, for the financial year ending Dec 31, 2020, due payable on Aug 26, 2020.

For the 1H20, the company’s net profit increased by 62% to RM151 million from RM93.2 million reported in the previous corresponding half, driven by higher operating revenue, which increased by 33.6% to RM320.7 million from RM240 million.

Bursa Malaysia closed 3.65% or 38 sen lower to RM10.04, valuing the bourse operator at RM8.12 billion.