HONG KONG: Malaysia’s homegrown integrated bereavement care provider Nirvana Asia Ltd’s maiden trading day on the Hong Kong Stock Exchange (HKEx) was hit by the regional weak sentiment yesterday.

The counter opened at a 21.3% discount to its initial public offer (IPO) price of HK$3 (RM1.35) at HK$2.36 per share. Its share price closed at HK$2.10, down 11% from its opening price, with 290.44 million shares traded.

It seemed to be a disappointing start for the company’s listing, but group managing director and chief executive officer Datuk Kong Hon Kong shrugged off concerns, saying the weak debut was within expectations.

“I’m not worried by the lower share price. We have 40% of retail investors and a large number of margin players, so I expected it. The fundamentals of the company have not changed. I’m confident the share price will improve later on,” Kong told reporters after the listing ceremony yesterday.

“We are confident that we will deliver the financial results that we have promised to investors and the share price should improve by then. We are happy that we have managed to raise HK$2.02 billion from the listing.”

Nirvana Asia is the first Malaysian company to have a single listing on the HKEx. The company issued a total of 674.7 million shares at HK$3 each.

Nirvana Asia has allocated 25% of proceeds from the listing for expanding the capacity of its existing cemeteries, columbarium facilities and funeral homes via land acquisition and new construction. About 40% will be used for expansion in new markets through greenfield projects and 10% for working capital. Meanwhile, 25% has been slated for potential mergers and acquisitions (M&A).

Currently, the company has a presence in Malaysia, Singapore and Indonesia where it manages cemeteries, columbarium facilities and funeral homes. Nirvana Asia, the largest bereavement provider in Asia by land bank and revenue, also provides services such as sale of niches and burial plots, and provision of tombstone designs and construction.

When asked if the company is in active talks with parties for a potential M&A deal, Kong declined to comment.

The company recently signed a memorandum of understanding with local land owners in Vietnam and a cemetery operator in Guangdong province, China to establish a greenfield cemetery. Kong is confident of sealing the deal; however, he did not indicate a deadline.

Post-IPO, the company would be in a net cash position of about US$260 million (RM910 million). For the cumulative six months ended June 30, 2014, the company’s revenue grew to US$70.6 million from US$66.1 million but net profit contracted to US$14.86 million from US$17.74 million a year ago.

Currently, more than 80% of Nirvana Asia’s revenue is derived from Malaysia. However, Kong expects  contributions from overseas operations to increase gradually as the company continues its expansion plans.

Nirvana Asia was previously listed on Bursa Malaysia in 2000 under NV Multi Corp Bhd. It was taken private by Kong after 10 years at 78 sen per share amid a lacklustre interest in the company.

This article first appeared in The Edge Financial Daily, on December 18, 2014.