SkyWorld Development opens unchanged at 80 sen on Main Market debut

• The Kuala Lumpur-based company has raised RM320 million through its IPO, making it the third-largest listing exercise on Bursa in 2023 so far. SkyWorld’s IPO entails a public issuance of 208 million new shares and an offer for sale of up to 192 million existing shares.

KUALA LUMPUR (July 10): Property developer SkyWorld Development Bhd made a flat debut on Main Market of Bursa Malaysia on Monday (July 10) with an unchanged open price from its initial public offering (IPO) price of 80 sen.

Before Monday, Inter-Pacific Research had ascribed SkyWorld a fair value of RM1.03 per share, PublicInvest Research and Apex Research at 96 sen, TA Securities Research at 92 sen and RHB Research at 90 sen.

SkyWorld, via its subsidiaries, is mainly involved in property development, property investment, management services, treasury management, e-commerce business, and management consultancy services.

The Kuala Lumpur-based company has raised RM320 million through its IPO, making it the third-largest listing exercise on Bursa in 2023 so far. SkyWorld’s IPO entails a public issuance of 208 million new shares and an offer for sale of up to 192 million existing shares.

Of the RM320 million, RM166.4 million will be raised from the issuance of new shares, with the remaining RM153.6 million from the offer for sale of existing shares by both its founder and non-independent executive chairman Datuk Seri Ng Thien Phing and non-independent executive director Datuk Lam Soo Keong @ Low Soo Keong.

SkyWorld has earmarked RM100 million (60%) for the acquisition of land for development. The group has also allocated RM35 million (21%) for working capital for project development, followed by RM20 million (12%) for the repayment of bank borrowings. The remaining RM11.2 million (7%) will be allocated for IPO-related expenses.

Based on the enlarged issued share of one billion shares, the company had expected to have a market capitalisation of RM800 million. SkyWorld previously reported that its 50 million new shares offered to the public were oversubscribed by 0.19 times.

The group posted a net profit of RM58.21 million on the back of a revenue of RM225.95 million for the fourth quarter of the financial year ended March 31, 2023 (4QFY2023) and announced a first interim dividend of three sen per share, to be paid on Sept 22.

For its full year of 2023 (FY2023), its net profit stood at RM144 million on a revenue of RM841.11 million. According to Ng, the group’s latest performance has achieved the highest revenue and net profit in its history.

According to its revenue segmentation, a total of RM372.47 million (62.66%) was derived from residential and commercial developments while RM242.44 million (37.26%) was from affordable developments.

SkyWorld posted a consolidated profit after tax (PAT) of RM65.25 million for FY2020 on a revenue of RM523.86 million as opposed to a PAT of RM63.31 million for FY2021, when revenue was RM488.8 million. Its PAT for FY2022 then jumped to RM104.29 million, as revenue rose to RM790.45 million.

The group has targeted a dividend payout of 20% based on its profit after tax attributable to owners.

Ng has said that SkyWorld is seeking opportunities to set foot in the Vietnam market in the next three years, with its ultimate goal is to become a regional player.

On the local market, Ng said that the company also intends to expand beyond Kuala Lumpur, into areas in the Klang Valley such as Subang Jaya, Petaling Jaya, Selayang and Ampang Jaya.

It wants to launch 10 new developments by 2026 with a total gross development value (GDV) of RM4.1 billion.

Based on a research note by Apex Research on June 27, the firm said Setapak takes the larger chunk of planned developments with an estimated GDV of RM2.9 billion, while Setiawangsa and Cheras have GDV worth RM970 million and RM618 million respectively.

“We estimate that SkyWorld would garner about RM1.8 billion in gross profit from these projects which will be recognised proportionately throughout the three years,” it wrote.

Kenanga Investment Bank Bhd is the principal adviser, underwriter and placement agent for the offering, while Newfields Advisors Sdn Bhd is the financial adviser.