IT goes beyond saying that initial public offering (IPO) debutants should count their blessings if they are able to chalk up even the slightest of premium amid the current bearish market sentiment rather than to end their maiden trading day on a deficit note.
Such is the case of Yew Lee Pacific Group Bhd, a manufacturer of industrial brushes-cum-trader of industrial hardware and machinery parts, which made its debut on the ACE Market of Bursa Malaysia today with an IPO price of 28 sen.
The company, which also specialises in latex gloves dipping line, opened at 28.5 sen before managing to climb to an intra-day high of 30 sen at the time of writing. As with most IPO debutants, Yew Lee is currently the day’s most active traded stock with 147.99 million shares exchanged hands.
Incepted in 1992 as Yew Lee Machinery & Industrial Supplies to undertake the trading of industrial hardware and machinery parts, the Perak-based company is raising RM37.27 mil from its IPO exercise.
From the IPO proceeds, RM10.9 mil will be allocated for the purchase of additional machinery and equipment; construction of a new warehouse facility and office building in Pusing, Perak (RM7.3 mil); renovation of new office in Klang Selangor (RM1.8 mil); repayment of bank borrowings (RM8.9 mil); working capital (RM4.57 mil) and listing expenses (RM3.8 mil).
The company will continue to strengthen its market position as one of the key industry players in the industrial brush industry in Malaysia, according to its chairman Mahdzir Othman.
“As such, we have also allocated RM3.6 mil from our IPO to make advance purchases on materials to support the increase in our manufacturing activities in tandem with the rise in demand of our range of brushes,” he pointed out.
“This will improve our inventory and availability levels and shorten overall lead time for delivery. The purchase of additional machinery and equipment is also to automate production processes and reduce labour costs.”
Yew Lee currently has an estimated market share of 12.4% of the total size of the industrial brush industry in Malaysia of RM254.50 mil in 2021. This is based on its revenue from the manufacturing of industrial brushes segment of RM31.60 mil during its financial year ended Dec 31, 2021.
Moving forward, the company plans to automate more of its operations to reduce dependency on labour while expanding its market share in the trading of machinery parts in the central region of Peninsular Malaysia as well as having a bigger presence in Indonesia and Thailand.
Yew Lee has recently declared a first interim dividend of 0.3 sen per ordinary share in respect of financial year ending Dec 31, 2022 which will be paid on July 12.
M&A Securities is the principal adviser, sponsor, underwriter and placement agent for Yew Lee’s IPO while Eco Asia Capital Advisory Sdn Bhd is the IPO’s financial adviser.
At 11.03am, Yew Lee was up 1 sen or 3.57% at 29 sen with 154.53 million shares traded, thus valuing the company at RM154 mil. – June 7, 2022
