This article first appeared in The Edge Financial Daily on June 23, 2017 - June 29, 2017

KUALA LUMPUR: Electrical, mechanical and telecommunications contractor Kejuruteraan Asastera Bhd (KAB) has filed a draft prospectus for an initial public offering (IPO) on the ACE Market of Bursa Malaysia.

The IPO will consist of 112 million shares, including a public issuance of 80 million new shares and offer for sale of up to 32 million existing shares, according to the draft on the Securities Commission Malaysia (SC) website. The IPO price of its shares and listing date are undisclosed, and the prospectus has yet to be registered by the SC.

Of the public issue, 16 million shares will be set aside for application by the Malaysian public, eight million will be offered to eligible employees and persons, and 56 million will be available to institutional and selected investors.

“The public issue will increase our issued share capital from RM12 million comprising 240 million shares, to [an unspecified value] comprising 320 million shares,” KAB said.

The offer for sale is made by managing director Datuk Lai Keng Onn, currently holding a 95% stake in the company. His shareholding is expected to be diluted to 61.25% following the IPO, KAB said.

Of the proceeds, a planned 58% is allocated for working capital, including tender deposits, tender bonds and on-site expenses, 17% for listing expenses and 12.5% for capital expenditure.

KAB has also proposed to establish a new branch office in Johor Baru and an additional office in Kuala Lumpur using 3.4% of the proceeds.

The group registered a net profit of RM6.56 million for its financial year 2016 (FY16), giving it a basic and diluted earnings per share of 2.05 sen based on an enlarged share base of 320 million shares planned for its listing. Revenue for FY16 totalled RM93.12 million, resulting in a profit after tax margin of 7%.

“Provision of electrical engineering services is our business’ largest segment, which had consistently accounted for more than 80% of our revenue [from 2014 to 2016],” KAB said in the draft prospectus.

“The second-largest segment of our revenue is [the] sale of goods, which accounted for 12.5%, 7.5% and 7.1% respectively in FY14 to FY16,” it said.

Its order book as at Dec 31, 2016 amounted to RM186.21 million and gives it visibility in earnings until FY19, with RM99.67 million or 53.53% of the aforementioned sum expected to be recognised in FY17.

In April 2015, ConnectCounty Holdings Bhd proposed to acquire KAB for RM25 million, but it was aborted due to the latter’s strategic plans’ realignment and weak market sentiment, executive deputy chairman Ang Chuang Juay told The Edge Financial Daily in an interview last year.