This article first appeared in The Edge Financial Daily on October 25, 2017 - October 31, 2017

KUALA LUMPUR: Tri-Mode System (M) Bhd, a freight and logistics service provider, is seeking to list on Bursa Malaysia ACE Market.

In a draft prospectus, Tri-Mode said it intends to issue 43.21 million of new shares, equivalent to 26% of its enlarged share capital.

Of the total shares expected to be issued, Tri-Mode expects to issue 27.39 million shares to institutional investors, with the remaining 15.82 million new shares for the Malaysian public, which include eligible directors, and approved bumiputera investors.

Founded on Nov 19, 1991, Tri-Mode’s principal activities include the provision of sea freight, container haulage, airfreight, freight forwarding, warehousing and marine insurance services.

The initial public offering exercise is to raise fresh capital for its business expansion. The company intends to build a new headquarters (HQ) and distribution hub in Pulau Indah Land which has target built-up area of about 80,000 sq ft, which is expected to cost at RM20 million.

Furthermore, Tri-Mode wants to expand its fleet of prime movers and trailers. Currently it, which commenced its operations in 1992, has 100 prime movers, 517 trailers and three side loaders to support its container haulage services.

“In view of our growing business, we intend to expand our warehousing functions to enhance our efficiency and to extend our existing warehousing services by providing distribution services at the proposed HQ and distribution hub,” it said in a draft prospectus filed with the Securities Commission Malaysia.

For the financial year ended Dec 31, 2016 (FY16), Tri-Mode’s net profit dropped 26% to RM4.22 million from RM5.68 million in FY15. However, the company’s net profit more than doubled in FY15 from RM2.07 million in FY14. Revenue dropped 9% to RM71.38 million in FY16, from RM78.7 million the year before.

Sea freight contributes 55.8% to Tri-Mode’s revenue, while container haulage 38.7%, airfreight (4.2%), freight forwarding (0.4%), warehousing (0.7%) and marine insurance (0.2%).

Geographically, Tri-Mode’s operations in Malaysia account for 91.3% of its revenue, while the remaining of 8.7% is derived from its overseas operations, including European, Middle Eastern and Asian countries. It has a staff force of 233.

As at Dec 31, 2016, its cash pile was at RM2.6 million and total borrowings of RM20.7 million, of which RM6.5 million was short-term liabilities, and RM14.2 million was long-term debts.

Tri-Mode said starting FY18 it will adopt a dividend policy to reward its shareholders in the quantum of 30% of its consolidated profit after taxation attributable to shareholders excluding non-recurring income, in each financial year.

Tri-Mode is controlled by its managing director and chief executive officer Datuk Hew Han Seng with a 67.7% stake, and his wife Datin Sam Choi Lai with a 27.4% stake. Post-listing, it will reduce to 50.1% and 20.3%, respectively.