Background: Malacca Trust (MT) is an Indonesia-based group that provides consumer financing for vehicles, asset management and brokerage services to retail and institutional customers in Indonesia. Its Catalist IPO on 26 July 2011 raised S$16.7m in net proceeds.
Use of proceeds: Almost all of the net proceeds (95%) will go towards the repayment of bank borrowings.
Key ratios…
Price-to-earnings: 14.4x
Price-to-NTA: 1.7x
Dividend per share / yield: na
Net cash/(debt) per share: $0.02
Net cash as % of market cap: 6.6%
Share price S$0.245
Issued shares (m) 347.0
Market cap (S$m) 85.0
Free float (%) 24.5%
Recent fundraising activities July 2011: IPO at $0.22/share; 85m new shares comprising 83m placement and 2m public shares
Financial YE 31 December
Major shareholders Star Malacca (beneficiaries are Kartini Jusup and children) – 51.3%; Irena Istary Iskandar (Chairman) - 6.2%; Rudy Johansen (CEO) – 5.9%
YTD change 11.4%
52-wk price range S$0.22-0.34
Our view
A dual listing. There are three main business segments in MT. The consumer financing segment under the subsidiary, BPF, has been listed in Indonesia since 2009. Hence, the key motivation for a dual listing on the SGX Catalist seems to be the ability to make acquisitions using shares (eg, share swap) on the back of a strong Singapore dollar.
Room for growth in Indonesia. There is ample room for MT to expand its consumer financing, asset management and securities businesses in Indonesia, a high growth market. Bank Indonesia has forecast strong economic growth, driven by domestic demand and investment activities. Competition for these businesses from major financial institutions, however, is intense.
New synergistic business. MT is entering the insurance business with plans to leverage its 25 existing retail branches in Indonesia in order to reach out to more than 10,000 retail customers at present. Due to the low investment outlay for its new business venture, the company will use internal resources for funding. Though it does not have a fixed dividend policy, it has committed to payment of 10% of its net profit in FY11 as dividends.
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