99 Speed Mart Debuts Strongly with 12% Surge in Shares

In an impressive debut on the Main Market of Bursa Malaysia, shares of 99 Speed Mart Retail Holdings Bhd surged by 12.1%, opening at RM1.85—a 20 sen premium over its initial public offering (IPO) price. This remarkable start resulted in an initial market valuation of RM16.04 billion, driven by its issued capital of 8.4 billion shares. As trading progressed, the stock climbed even higher to RM1.91, marking a 15.76% increase.

The IPO of 99 Speed Mart is noteworthy as it marks Malaysia’s largest in seven years, raising a substantial RM2.36 billion. This includes RM1.7 billion from an offer for sale by the group’s founder and CEO, Lee Thiam Wah, along with his wife Ng Lee Tieng. The public issue component involving 400 million new shares brought in RM660 million, with the proceeds earmarked for strategic business expansion. Specifically, 59% of the funds are allocated to expanding the network of outlets, 15% for new distribution centers, 8.3% for delivery trucks, and 7.2% for upgrading existing outlets. The IPO’s popularity was underscored by its oversubscription by 3.04 times.

CIMB Investment Bank has played a pivotal role as the IPO’s principal adviser, sole bookrunner, sole managing underwriter, and joint underwriter, while Affin Hwang Investment Bank and RHB Investment Bank have acted as joint underwriters.

Analysts have been quick to weigh in on 99 Speed Mart’s market entry. Hong Leong Investment Bank (HLIB) has pegged a fair value between RM1.75 and RM1.98 per share, reflecting the company’s leading market position and ambitious store expansion strategy. This valuation suggests a 30 times price-earnings ratio based on projected earnings for the financial year ending December 31, 2025. HLIB forecasts a compound annual growth rate (CAGR) of 13.1% in revenue and 15.8% in net profit for the financial years 2023 to 2026, driven by the opening of 250 new retail outlets annually and steady same-store sales growth of 2% per year. Furthermore, the firm is committed to a 50% dividend payout policy, supported by a healthy balance sheet and robust cash flow, although its yield is relatively modest at 1.8%.

Inter-Pacific Research echoes similar sentiments, suggesting a fair valuation benchmarked against its closest competitor, Mr DIY Group (M) Bhd. Given 99 Speed Mart’s unique positioning in the mini-market segment, Inter-Pacific considers the target price-earnings ratio of 30 times as fair, acknowledging a slightly smaller market capitalization and lower targeted returns on equity compared to its peers.

As 99 Speed Mart embarks on this new chapter, the company is also contemplating expansion plans across Southeast Asia. With its founder Lee Thiam Wah reaching billionaire status in the thriving Malaysian IPO market, the company looks well-poised to further cement its status in the retail landscape.