IUMW
ODL MODULE GUIDE
Faculty: UM-Wales Business School
Module Code: MBOC 7013
Program: Master of Business Administration (MBA)
Module Name: Financial Management
Module Edition Version: 1
Year / Semester: Year 1, Semester 1
Academic Year: 2024
Credits: 3
TASK DESCRIPTION
MODULE GUIDE
FINANCIAL MANAGEMENT (MBOC 7013)
Case Study: Initial Public Offering of Ordinary Shares of 99 Speedmart Holdings Bhd.
This is a case study on a company, 99 Speedmart Holdings Bhd principally engaged in convenience store chain retailing. The company is in the process of raising funds from the capital market through the issuance of new shares and offers for the sale of existing shares. The prospectus was issued on 15th August 2024. To ensure the success of the subscription of the shares, the owners and management intend to conduct a roadshow for all categories of investors as well as to the analyst.
YOUR TASKS:
You are the Chief Investment Officer of an International Investment Firm. You are required to analyze the largest IPO on Bursa for the last 7 years and prepare a recommendation to your management/board to accept or reject the investment for the said IPO. You need to review the prospectus (a summary of the prospectus is attached and please read the full prospectus from Bursa Malaysia or the company’s website) as well as all other available information. Useful information especially from class lectures; news reports, selected reading materials as well as each student’s diversified experience and academic background will definitely help the students to make an informed decision on the investment choices available. The company will be listed on the main market of Bursa Malaysia very soon and all information regarding the prospect and performance of the company is available on Bursa’s website, the business section of major newspapers, and the company’s website.
The purpose of the study is to improve the understanding of students especially on Equity Analysis (stock valuation) and portfolio management as well as the application of finance theories to the fund-raising exercise. The case study will be in a form of an individual project and to ensure that the exercise achieves its intended objective, compulsory participation is required from all the students.
The assignment requires the students to perform the following:
- Understand the business operation, climate, and the economic environment and compare with the competitors;
- Understand the purpose of fund-raising (i.e. IPO);
- Understand the company’s financial position and do a simple financial analysis and comparative evaluation;
- Understand the purpose of making your investment and what is your strategies;
- The return and risk and benchmark against other indicators;
- Indicative valuation of fair value; and
- Broad understanding of the financial markets
Required:
- Each student needs to put up a MEMO (as real and as business-like as possible) on your analysis, findings and recommendation i.e. to subscribe or reject the share offering to your Top Management/Board for approval.
- The MEMO should contain but not limited to the followings:
- Format and Purpose (10 Marks)
- Executive Summary (10 Marks)
- Background (20 Marks)
- Method of Analysis, Findings and Comments (35 Marks)
- Recommendation and Justifications (20 Marks)
- References (5 Marks)
Summary of the IPO’s prospectus 99 Speed Mart IPO to raise RM2.3b, largest IPO in seven years.
99 Speed Mart Retail Holdings Bhd (99 Holdings) which plans to list on the Main Market of Bursa Malaysia Securities on September 9, 2024 will be the biggest initial public offering the country has seen in seven years.
The IPO exercise entails an offer for sale of 1.028 billion existing ordinary shares, and a public issue of 400 million new ordinary shares at RM1.65 each per share, to raise RM660 million.
Based on the enlarged issued share capital of 8.4 million shares and IPO price of RM1.65 per share, the expected market capitalisation would be RM13.9 billion.
The IPO is backed by 14 cornerstone investors including Malaysian government-linked investment companies and asset managers, whose support covers 55 per cent of the IPO deal size.
99 Holdings has earmarked 58.9 per cent of the RM660 million proceeds from the public issue for the expansion of its network of outlets and 15.2 per cent for the establishment of new distribution centres. 8.3 per cent and 7.2 per cent were budgeted for purchasing delivery trucks and upgrading existing outlets respectively. Another 6.8 per cent was allocated for the repayment of bank borrowings, while the remaining proceeds shall be used for expenses related to the listing.
99 Holdings’ founder and chief executive officer Lee Thiam Wah said the company have established a strong foundation with its extensive network of mini-markets, serving about 1.1 million customers daily nationwide based on the sales transactions recorded in the financial year ended 2023.
“This IPO will provide us with the necessary funds to further expand our outreach and enhance our operations.”We are excited to embark on the next phase of our corporate journey, further strengthening ourbrand recognition and our tagline of “Near n’ Save”, emphasising convenience and easy access for our customers, saving them time and money,” he said.
CIMB Investment Bank Bhd is the principal adviser, sole bookrunner, sole managing underwriter, and joint underwriter for this IPO exercise, while Affin Hwang Investment Bank Bhd and RHB Investment Bank Bhd are the other joint underwriters for this IPO exercise.
The company operates the 99 Speedmart mini-market stores, with over 2,600 outlets nationwide.
99 Holdings has a dividend policy which targets a dividend payout ratio of approximately 50.0 per cent of its profit after taxation attributable to its shareholders. The public issue portion of the IPO will be made available for subscription from today and application will close at 5pm on August 23.
By Asila Jalil
Final Assignment Due Date: 10th Week Lecture (30th November, 2024)
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