KUALA LUMPUR, Nov 26 — Petronas Chemicals jumped as much as 10 per cent on its stock market debut today as investors piled into the US$4.1 billion (RM12,7 billion) IPO, Southeast Asia’s largest ever, in a sign that demand for Asian stocks remains firm despite jittery global markets.
Asian capital markets have seen a slew of multi-billion dollar deals in recent months, helped by a flood of liquidity, low interest rates and strong economic growth.
Still, wobbly global markets have taken the edge off IPOs, with shares of palm-oil refiner Mewah International down as much as 13 per cent in their Singapore debut earlier this week.
But analysts said the prospects for Petronas Chemicals, a unit of state oil giant Petronas, were positive as demand for Southeast Asian stocks from foreign investors remains strong.
“The market is hot, there’s lots of money in the Asean region, and it’s the largest IPO in Southeast Asia. These sorts of indicators have made it a good IPO,” said Jalil Rasheed, who helps manage about US$2 billion at Aberdeen Asset Management Malaysia.
“If you look around the region, there are not that many listings of this size, so Petronas has also been appealing for investors,” Jalil added.
Petronas Chemicals, a diversified chemicals maker, rose to a high of RM5.72 before levelling off at RM5.52 at 11.15am, up about six per cent from the institutional offer price of RM5.20, while the broader market was flat. Retail investors paid RM5.04 per share in the IPO.
It was the most heavily traded stock on Malaysia’s bourse today.
Petronas Chemicals’ IPO exceeds Maxis’s US$3.3 billion listing last year. It ranks as Asia’s fifth-biggest IPO this year, according to Thomson Reuters data.
Analysts said that the listing of Petronas Chemicals could trigger a rise in foreign interest in Malaysian shares as investors view the company as a proxy for Petronas.
Malaysia’s benchmark stock index has risen about 17 per cent this year, but underperformed markets in Indonesia and Thailand, which are up 50 per cent and 43 per cent, respectively.
Petronas Chemicals posted an operating profit of US$2.2 billion in fiscal 2010.
Analysts said that at a listing price of RM5.04, Petronas Chemicals is valued at about 18 times 2010 earnings, while its peer, regional petrochemical company Bangkok-listed PTT Chemical , trades at about 23.2 times 2010 earnings.
Petronas Chemicals is expected to trade at 16 times its 2012 earnings according to OSK Research, which has set a target price of RM5.51 for the stock.
The listing comes just a month after a subsidiary of Petronas’s shipping arm, Malaysia Marine and Heavy Engineering , started trading, with the shares soaring as much as 30 per cent on debut.
Petronas Chemical Group’s IPO is part of a response by government-run Petronas to Prime Minister Datuk Seri Najib Razak’s call to reduce state ownership in the private sector and boost liquidity in the stock market.
Petronas Chemicals has said the IPO would fund its business expansion, working capital and corporate needs.
CIMB , Deutsche and Morgan Stanley were joint global coordinators and book runners for the IPO, while Citigroup and UBS were co-bookrunners. — Reuters