KUALA LUMPUR (Nov 30): Leform Bhd made a subdued debut on the ACE Market of Bursa Malaysia on Wednesday (Nov 30) with its opening share price of 19.5 sen against its initial public offering (IPO) price of 23 sen. The counter closed 5.1% lower than its IPO price, at 18.5 sen.
At the opening bell, the Serendah-based steel product company saw a trading volume of 8.4 million shares, with an expected market capitalisation of RM340.6 million.
Upon market close, Leform’s trading volume stood at 115.62 million shares and was ranked fifth on Bursa’s Top Active list on Wednesday.
Meanwhile, the company’s dividend policies maintain a payout ratio of not less than 20% of its annual audited net earnings.
Leform managing director Law Kok Thye said that the RM71.5 million proceeds raised will enable its business expansion plan.
“Although we currently possess sufficient production capacity, we are constrained by our storage space. Thus, a substantial amount of the proceeds is catered towards solving that bottleneck,” said Law.
“With the new warehouse facility, we can boost our storage area, improve operational efficiency via the consolidation of delivery operations and the adoption of a more systematic storage system, as well as unlock new revenue streams as we reconfigure some of our pipe mills for a greater product variety.
“Meanwhile, the increased working capital and new workers’ accommodations are needed to support the output expansion anticipated.”
In his opening speech at Bursa, Law added that post listing, the company will explore environmental, social and governance (ESG) initiatives.
“We want to decarbonise our process further, including the possibility of using renewable energy at our plant.”
Leform non-independent executive director Phang Yew Cheong @ Phang Yew Choong (Robert) during a press conference further added on ESG that the company had performed soft applications before the listing.
“For example, our scraps are only sold to licensed scrap dealers to ensure no abuse of these materials, nor do we discharge into the drainage system,” said Phang.
“Post listing, we will be looking into installation of solar panels in order to produce electricity, and reduce our carbon usage.
“Our corporate finance team will look into the cost-benefit ratio to ensure our shareholders are taken care off, and ensure everything is above compliance.”
The group’s business segment consists of manufacturing and trading, with 79% of Leform’s revenue last year derived from manufacturing.
Proceeds from the listing will be allocated for the construction of new warehouses, the headquarters and workers’ accomodations at RM30 million, followed by working capital (RM21.9 million), repayment of bank borrowings (RM14.4 million), and estimated listing expenses (RM5.2 million).
MIDF Amanah Investment Bank Bhd is the principal adviser, sponsor, sole underwriter and sole placement agent for the IPO.