PETALING JAYA – The long-speculated listing of the various ports under MMC Corp Bhd is expected to take place next year.
A source close to the matter said the company was exploring the potential listing of its ports again and the target was to get it up next year.
“It is currently in the works, but it won’t happen so soon. It could be next year when sentiments will probably be better,” the source said.
According to previous reports, MMC may be able to raise between RM3bil and RM4bil from the listing of its port assets.
Currently, MMC fetches a market capitalisation of RM6.8bil of which the port business contributes to about 72% of its revenue and the bulk of its profit.
In the first half of this year, MMC saw its revenue and profit drop significantly to RM1.89bil and RM176mil following the listing of Malakoff Bhd.
An investment banker said the port business can fetch high valuations if it were sold on the basis of a yield play or business trust.
“Investors are hungry for high yielding stocks. If MMC can promise yields or more than 5% with some kind of growth proposition, it can command high valuations,” said the banker.
MMC’s stable of ports are Port of Tanjung Pelepas (PTP), Johor Port, NCB Holdings Bhd that operates Northport in Port Klang and a possible 49% stake in Penang Port.
“The consolidation of Penang port in MMC is piecing together its port assets.
“MMC will have port assets located at the northern, central and southern part of Peninsular Malaysia,” an analyst said.
In August, MMC had proposed the purchase of 49% stake in Penang Port that is expected to be completed in the first quarter next year. It is buying the stake from Seaport Terminal (Johore) Sdn Bhd for RM200mil cash.
The deal is considered as a related party transaction as both companies have the same major shareholder.
The spinning off of MMC’s port assets started to gain momentum since the group completed the takeover of NCB Holdings Bhd.
MMC owns a 100% stake in Johor Port in Pasir Gudang and 70% interests in Port of Tanjung Pelepas (PTP). PTP is Malaysia’s largest container terminal.
Apart from the port business, MMC has logistics business, Senai Airport and a construction unit that has among others a 50% interest in the Klang Valley mass rapid transit project.
The appetite for IPOs has gradually gone down in the past one year.
For the first half of this year, about RM760mil of proceeds were raised in Bursa Malaysia compared to about RM3.3bil a year ago, which mainly came from Malakoff Corp Bhd’s IPO of RM2.75bil.
A banker expects the outlook for the IPO market for the second half of 2016 to remain tepid and that the only big offering for this year would be the RM2bil Eco WorldInternational Bhd.
On a year-to-date basis, the FBM KLCI had declined 2.4%.