I like the nature of this company business.
However, I dislike it listing under ACE market.
Hiap Huat climbs from lowest level after IPO
Business & Markets 2012
Written by Mohd Kamarul Azhar of theedgemalaysia.com
Monday, 10 December 2012 11:55
KUALA LUMPUR (Dec 10): Newly-listed scheduled waste recycler Hiap Huat Holdings Corp Bhd added 1 sen to 17.5 sen at 11.48am on Monday from its lowest price of 16.5 en after its listing on Nov 26, 2012, as dealers flock to ACE market stocks for short term gain.
Hiap Huat is in the business of recovering, transporting and recycling schedule waste particularly waste oil, and used halogenated/non-halogenated solvent into fuel oil, grease and lubricant products.
The stock was the second most active counter traded on Bursa Malaysia in the morning session as at 10.30 am with 14.6 million shares done. Last week, Hiap Huat's share price closed 5.5 sen lower than its listing price of 20 sen per share.
At 20 sen per share, investment analysts said it was fairly valued, but according to Alliance Research team, a limited upside is available from that level for the stock price to move.
Value emerges in Hiap Huat after its stock slumped to 16.5 sen, which implies only a 9 times price to earnings ratio, based on an its earnings per share of 1.8 sen for financial year 2011.
However, a stock dealer said the price increase could probably due to investment banks trying to stabilise the stock's price movement and prevent it to slide any further.
"Usually, these new listed stocks have a cooling period of about six months or so to maintain the price level. Probably the investment banks which subscribed to Hiap Huat is buying up," said the dealer.
Hiap Huat's public issue of 5 million new ordinary shares and private placement of 80 million new ordinary shares to selected investors was run by Hong Leong Investment Bank.
Hiap Huat's shares made substantial gains during its debut on the stock exchange, as it rose as much as 85% or 17 sen to its intraday high of 37 sen against its listing price of 20 sen per share. The stock closed at 25 sen per share on its maiden trading day.
"The group's business is interesting because it is the only oil and gas related company in Malaysia which is operating in the green economy. Those investors who want to have an exposure in Malaysia's green economy may be interested in this stock," said an investment banker.
From the RM17 million the group raised from the listing exercise, it plans to use the proceeds to finance its capital needs and repay its bank loans.
By the first quarter next year, Hiap Huat is expected to commission its new production plant in Pulau Indah in Port Klang. The plant is envisaged by the group's management to tap into the marine sector in order to remove the supply constraints it is currently facing.
The RM28 million plant in Pulau Indah will be able to process up to 61.2 million litres of waste oil, 19.68 litres of waste solvents, and 0.42 million litres of used drums/containers per year.
The group is also targeting to export its products to Indonesia, Vietnam, the Philippines and Myanmar as these countries have a high concentration of automobiles and motorcycles and greater price sensitivities.