Aneka Jaringan makes weak debut under selling pressure

The ACE Market opened at 35 sen but sustained selling pressure led it to close lower the day at 29 sen a share with some 124m shares traded yesterday


ANEKA Jaringan Bhd closed four sen or 12% below its offer price of 33 sen on its maiden trading on Bursa Malaysia as selling pressure by nervous investors piled pressure on the stock price from the start.

The ACE Market listed piling and foundation specialist opened at 35 sen but sustained selling pressure led it to close lower the day at 29 sen a share with some 123.7 million shares traded yesterday.

Its independent non-executive chairman Datuk Tan Gim Foo said the IPO gave Aneka Jaringan the platform to realise its aspirations and accelerate expansion plans.

“I have every confidence that our team will scale greater heights as we move further into regional opportunities.

“This is just the beginning of a new journey for Aneka Jaringan and we look forward to building more success in years to come,” he said in a statement yesterday.

Aneka Jaringan’s IPO attracted strong interest, with the public portion of the share offering oversubscribed by some 13 times.

Despite the weak debut, Rakuten Trade Sdn Bhd has a “Buy” call on Aneka Jaringan with a target price of 37 sen based on 12 times price-to-earnings ratio to its financial year 2021 (FY21) based on its strong construction sector portfolio.

Rakuten’s head of research Kenny Yee stated Aneka Jaringan is building a stronger foundation as its listing exercise.

Over the years, Aneka Jaringan has taken part in 143 foundation and basement construction projects in Malaysia with high profile clients such as IJM Construction Sdn Bhd, MRCB Builders Sdn Bhd and Indonesia’s PT Waskita Karya (Persero) Tbk.

Among the notable projects involved are foundation construction works for Bukit Bintang City Centre and MET 5@KL Metropolis and basement construction for Platinum Park and Sentral Suites.

The research firm noted a bulk of the revenue is generated from Malaysia (93.9%) and 6.1% is derived from Indonesia while unbilled orderbook stands at RM96.2 million, providing earnings visibility for the next one to two years.

Around RM17.3 million of the IPO fund will be used to enhance facilities and capabilities in Malaysia and with plans for expansion of construction machinery and equipment, the fund will be utilised to purchase two rotary drilling rigs and one crawler cranes.

More than half (52.6%) of the proceeds are allocated for repayment of borrowings that is expected to generate interest savings of RM750,000 per annum.

For regional business strategies, Aneka Jaringan is setting up a new office in Jakarta for expansion.

In view of addressing business opportunities in the country, RM13.9 million will be used to acquire six rotary drilling rigs, six excavators and three crawler cranes from internally generated funds.

This is in light of the Indonesia government’s decision to accelerate infrastructure development as infrastructure spending is projected to reach 423.3 trillion rupiah (RM124 billion) in 2020.

The group also has a branch office in Singapore to start bidding for projects by the first quarter of 2021.

Yee said Aneka Jaringan does not have a formal dividend policy at this juncture and its balance sheet remains healthy as it turns to a net cash position of RM5.9 million.

“Despite business disruption due to the Covid-19 pandemic, we expect construction activities to resume in stages and improvement in orderbook replenishment from FY21 onwards,” he said.