KUALA LUMPUR (Dec 28): Kumpulan Kitacon Bhd has set its initial public offering (IPO) price at 68 sen per share, raising RM51.74 million to fund the purchase of construction equipment and construction of a storage and refurbishment facility.

Slated to list on the Main Market of Bursa Malaysia on Jan 17, 2023, the IPO entails a public issue of 76.09 million new shares, as well as an offer for sale of 62.5 million shares valued at RM42.5 million by way of private placement to bumiputera investors approved by the Ministry of International Trade and Industry.

Breaking down the share allocation for the public issue, 10 million shares will be made available for application by the Malaysian public, 8.59 million shares for eligible directors employees and persons who have contributed to the success of the group, and 57.5 million shares by way of private placement to institutional and selected investors.

Of the proceeds of RM51.74 million expected to be raised from the public issue, Kitacon has earmarked RM20 million (38.7%) for the purchase of land and construction of a storage and refurbishment facility, RM18 million (34.8%) for the purchase of aluminium formwork systems, and RM6 million (11.6%) for scaffolding and cabins.

Another RM3.28 million (6.3%) has been allocated for working capital, while the remaining RM4.46 million (8.6%) has been ring-fenced for estimated listing expenses.

“We have earmarked RM24 million, representing 46.4% of the gross proceeds raised from the public issue, for the purchase of construction equipment, comprising aluminium formwork systems, scaffoldings and cabins to cater to our current construction projects and to facilitate the anticipated growth in our construction operations,” Kitacon said in its prospectus, which was launched on Wednesday (Dec 28).

“We intend to acquire a piece of land with an approximate area of three acres to construct a storage and refurbishment facility with an approximate built-up area of 65,000 sq ft which will be used as a centralised storage facility to house all our aluminium formwork systems, scaffoldings and cabins that are not in use at our construction sites,” the company added.

Based on its enlarged issued share capital of 500 million shares and the issue price of 68 sen apiece, Kitacon will have a market capitalisation of RM340 million upon listing.

“Looking ahead, our goal is to broaden our reach and expertise in township construction as we aim to secure more contracts from new clients while conditioning to foster our business relationships with existing clients.

“Additionally, we will continuously explore and adopt progressive construction techniques such as the use of aluminium framework system to improve our productivity and deliver projects within the stipulated time, cost and highest quality standards," Kitacon managing director Tan Ah Kee said.

For the six-month period ended June 30, 2022 (6MFY2022), Kitacon posted a profit after tax (PAT) of RM26.13 million, higher than the RM21.34 million in the same period a year earlier. This was carried by a higher PAT margin of 11.1% for 6MFY2022 as compared to 8.9%, as revenue clocked in lower at RM234.73 million versus RM238.64 million.

Going forward, Tan said the company has an outstanding orderbook of RM853.6 million.

Touching on Kitacon’s dividend policy, the company said it intends to distribute dividends of at least 25% of its annual audited PAT attributable to its shareholders.

“This will allow our shareholders to participate in the profits of our group while leaving adequate reserves for the future of our group,” it added.