The tech-driven global business services (GBS) provider saw more than 1.15 million shares changing hands in early trade, making it the second most active counter on Bursa.

The company’s market capitalisation is expected to come up to RM144 million post-IPO, for a 23.1 times valuation based on its net profit of RM6.2 million for the financial year ended Dec 31, 2022 (FY2022).

The company has yet to declare a dividend.

Founder and managing director Raymond Devadass said the listing is part of Daythree Digital’s growth plan.

He said the listing would give it greater financial flexibility to pursue future growth opportunities and to attract new talent in the GBS industry.

Of the 110.4 million new shares issued, 23% of it represented its enlarged share capital of 480 million shares.

A total of 12 million shares each were offered to the Malaysian public and Bumiputera public investors while another 12 million were set aside for eligible directors and employees.

The remaining 74.4 million shares were reserved for private placement.

Tricor Investor and Issuing House Services Sdn Bhd, which acted for Daythree, said applications were received for 3.12 billion new shares — representing a 129.2 times over-subscription rate.

Research houses positive

Early this month, TA Securities valued Daythree Digital’s share at 42 sen, which it said reflected the company’s strong earnings growth prospects based on the rising interest among businesses to pursue digital transformation, which included engaging the services of GBS providers.

It forecast earnings to rise 45.9% in FY2023, 31.9% in FY2024 and 29.6% in FY2025.

PublicInvest Research has valued the company’s share price at 40 sen apiece based on 20-times price-earnings multiple to its FY2024 forecast earnings per share of two sen.

Daythree Digital has raised RM33.12 million from its IPO, of which RM14.7 million has been designated for working capital to hire 380 more customer experience executives.

Additionally, the group will spend RM3.02 million to hire industry specialists to seize growth opportunities in the local GBS market.

Another RM7.1 million will be used to partially finance the expansion of its headquarters and additional office space, RM3 million for capital expenditure in networking infrastructure, RM1.5 million for marketing and promotional activities, and finally, RM3.8 million to cover anticipated listing costs.

For the second quarter ended June 30, 2023 (Q2 2023), the company posted a net profit of RM2.62 million on the back of a quarterly revenue of RM23.04 million.

M&A Securities Sdn Bhd is the adviser, sponsor, underwriter and placement agent for the IPO exercise.