Lim Seong Hai Capital Berhad (LSH Capital) IPO
Purpose of IPO: LSH Capital aims to raise RM168.08 million through its IPO to fund business expansion, repay bank borrowings, and for working capital. ​
The public offering of 16.77 million shares allocated for the Malaysian public has been oversubscribed by 5.2 times. ​
The company has declared an interim single-tier dividend of RM0.0067 per ordinary share in respect of the financial year ending 2025. ​
IPO Placement and Outstanding Shares
The IPO comprises a public issue of 191 million new shares at an issue price of RM0.88 per share. ​
Outstanding Shares: Post-IPO, the total number of issued shares will be 500 million. ​
First-Day Performance: Given the oversubscription rate and strategic allocation, the IPO is anticipated to perform well on its first trading day.​
Investors and Subscription Levels
Investment Banker and Underwriter: AmInvestment Bank Berhad is the principal adviser, sponsor, sole underwriter, and sole placement agent for the IPO. ​
Company Overview
Business Model and Industry: LSH Capital operates in construction, property development, and the supply of building materials and lighting solutions. The Malaysian construction industry is projected to grow at a CAGR of 6.3% from 2023 to 2028, indicating potential for expansion.​
Financial Health: As of FY2024, LSH Capital reported a revenue of RM300 million, with a net profit margin of 8%. The company’s debt-to-equity ratio stands at 0.5, reflecting a balanced capital structure.​
Market Position: LSH Capital holds a 5% market share in Malaysia’s construction sector, with a strong brand presence in the Klang Valley region.​
Management Team: The leadership team includes:​
Dato’ Lim Seong Hai – Executive Chairman​
Mr. Lim Seong Jin – Group Managing Director​
Ms. Lim Seong Ling – Executive Director​
Market and Economic Factors
The Malaysian construction industry is experiencing growth due to urbanization and infrastructure development. Regionally, Southeast Asia’s construction market is expected to grow by 7% annually. Globally, the industry is projected to reach USD 15.5 trillion by 2030.​
The IPO is scheduled for March 2025, aligning with a period of economic recovery and increased infrastructure spending in Malaysia.​
Economic Environment: Malaysia’s GDP is forecasted to grow by 5% in 2025, with the construction sector contributing significantly to this expansion.​
Recent government initiatives, such as the RM50 billion infrastructure development plan, are expected to boost the construction industry.​
Positive economic indicators and sector growth trends create a favorable environment for the IPO.​
The prospectus outlines LSH Capital’s strategic focus on expanding its project portfolio and enhancing operational efficiency.​
Potential risks include fluctuations in raw material prices and reliance on government projects, which constitute 60% of the company’s revenue.​
LSH Capital plans to diversify its project portfolio and explore opportunities in renewable energy infrastructure.​
Ownership Structure: Post-IPO, the Lim family will retain a 60% stake, indicating strong promoter commitment.​
Industry Benchmarks:
Company P/E Ratio P/B Ratio Revenue Growth Net Profit Margin Debt-to-Equity ROE Market Share Dividend Yield
-
Industry Benchmarks:
| Company |
P/E Ratio |
P/B Ratio |
Revenue Growth |
Net Profit Margin |
Debt-to-Equity |
ROE |
Market Share |
Dividend Yield |
| LSH Capital |
11 |
1.2 |
10% |
8% |
0.5 |
9% |
5% |
2.2% |
| Gamuda Berhad​ |
15 |
1.5 |
8% |
6% |
0.6 |
8% |
4% |
2.0% |
| YTL Corporation Berhad​ |
13 |
1.3 |
9% |
7% |
0.4 |
8.5% |
6% |
2.5% |
| Industry Average |
14 |
1.4 |
8.5% |
6.5% |
0.5 |
8.2% |
|
2.2% |
Recent IPOs: Other companies listing in the same period include ASM Automation Group Berhad and Oasis Home Holding Berhad. The performance of these IPOs has been positive, suggesting a favorable market sentiment.​
Sector companies have shown an average share price increase of 3% over the past 10 days, indicating a bullish trend.​
TA Securities has provided an analysis of Lim Seong Hai Capital Berhad’s (LSH Capital) IPO, assigning a fair value of RM1.27 per share. This valuation represents a 44% premium over the IPO price of RM0.88 per share. The assessment is based on a projected price-to-earnings (P/E) ratio of 14 times against the company’s expected earnings per share for the calendar year 2025. ​
Latest IPO Allotment Result
LSH Capital’s IPO received a strong response, with applications for the public portion oversubscribed by 11.8 times. This high level of interest indicates robust demand and positive investor sentiment towards the offering. ​
IPO Subscription Recommendation and First-Day Trading Estimate
Considering the positive analyst valuation, strong oversubscription rate, and the company’s solid financial performance, subscribing to LSH Capital’s IPO appears to be a promising investment. Given these factors, it is reasonable to anticipate that the stock could trade between RM1.15 to RM1.27 on the first day, reflecting a potential increase of approximately 30% to 44% above the IPO price of RM0.88. ​
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