What are the odds stacked against Econframe tomorrow?

WHILE Mr D.I.Y. Group (M) Bhd, Malaysia’s largest initial public offering (IPO) in three years, has defied the odds to close 15 sen or 9.38% above its offer price of RM1.60 in its maiden day of trading, attention is now turned to Econframe Bhd which is en route to an ACE Market listing tomorrow (Oct 27).

On the eve of its listing, the total door system solution provider rolled out its fourth quarter as well as full-year financial results for its financial year ended Aug 31, 2020.

Despite having to contend with temporary business disruption due to the movement control order, the company managed to raked in a pre-tax profit of RM7.25 mil after deducting a one-off listing expenses of RM800,000.

“Since the resumption of economic activities, we have received encouraging demand for our products and based upon the list of tender invites, we expect the momentum to sustain in the following year,” said its group managing director Lim Chin Horng in a media statement.

“We will expand our manufacturing capabilities to include products such as wooden doors and invest in a new and larger plant to support the expansion activities.”

The above activities will be partly funded by proceeds from the listing exercise and internal generated funds or borrowings, added Lim.

Upon its listing, Econframe will have a market capitalisation of RM91 mil based on its issue price of 28 sen and its enlarged share capital of 325 million shares. Its public issue portion stands at RM18.2 mil.

How the stock market will fare tomorrow is anybody’s guess given the fluid political scenario at this moment in time.

Thus far, the financial markets have been spared further repercussions, thanks to the wisdom of Yang di-Pertuan Agong Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah who foiled an attempt by Prime Minister to declare a state of emergency in Malaysia, purportedly to contain the spread of the COVID-19 pandemic in the country.

Although Mr D.I.Y eventually had a happy ending, its investors would have received a rude shock at the opening bell when its share price dipped as much as 6.25% to hit its intra-day low of RM1.50.

Such a scenario was understandable given the local bourse was besieged by a bearish sentiment for most part of the morning with the FBM KLCI plummeted to 1,482.15 at one point with political uncertainties over the weekend having eroded investors’ confidence.

Fortunately, it was a case of all’s well that ends well for the home improvement retailer. Its shares rebounded to a high of RM1.80 before ended the day’s trading at RM1.75 with 410.15 million shares exchanging hands, thus making it the day’s most active counter. – Oct 26, 2020

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