KUALA LUMPUR (Aug 15): Glostrext Bhd closed at 25.5 sen for a 32% premium upon its debut on the ACE Market of Bursa Malaysia on Tuesday (Aug 15) after opening at a sterling 65 sen at the start of trade.
It's 242% gain at the opening over its initial public offering (IPO) price of 19 sen a share placed it as one of the top companies in terms of debut opening price year-to-date. However, the gains could not be sustained and at market close of 25.5 sen, Glostrext's market capitalisation amounted to some RM104 million. A total of 306.62 million shares were traded.
The company has no formal dividend policy and its managing director Dr Lee Sieng Kai said in a speech on Tuesday that going public would give the company greater financial flexibility and visibility.
“The listing will facilitate Glostrext with greater financial flexibility to pursue future growth opportunities and enhance our group’s reputation in the marketing of our services, as well as to retain and attract new, skilled employees in the industry.”
Glostrext is in the business of providing piling, structural and geotechnical-related services, covering instrumentation, testing and monitoring services to construction projects as well as completed buildings and infrastructure.
The company’s key geographical coverage includes Malaysia and Singapore, with its revenue contribution primarily from Singapore at 64.33% and Malaysia at 35.01%.
At 19 sen, its IPO price was based on a price-earnings (PE) multiple of approximately 18.81 times based on its earnings per share (EPS) of one sen for the the financial year 2023 calculated on its estimated profit after tax (PAT) attributable to the company's owners of RM4.12 million.
Apex Securities Bhd had derived a target price of 32 sen for the company with its valuation based on 14 times price-to-earnings ratio (PER) of Glostrext’s FY2025 EPS of 2.3 sen, which is in line with the average forward 12-month PER of the Bursa Malaysia Construction Index.
The public portion of the company’s IPO was oversubscribed by 173.54 times.
Of the RM20.1 million in gross proceeds raised, the company planned to utilise RM11.7 million or 58.2% for working capital and to expand its structural and ground instrumentation and monitoring business into Singapore.
About RM1.8 million (8.95%) was earmarked for research and development, RM3.3 million (16.41%) for repayment of bank borrowings and RM3.3 million (16.41%) for listing expenses.
Glostrext had issued 105.83 million new IPO shares, representing 26% of its enlarged share capital, with 20.35 million shares made available to the Malaysian public.
A total of 10.18 million issue shares were set aside for its eligible directors and employees as well as persons who have contributed to the success of Glostrext, and the remaining 75.3 million issue shares reserved for private placement to selected investors.
Existing shareholders of the company made an offer for sale of 16.3 million existing shares to selected investors by way of private placement.
The company posted a net profit of RM1.46 million, on the back of RM6.43 million in revenue, for the first quarter ended June 30, 2023 (1QFY2024).
For FY2023, it reported a net profit of RM4.12 million on a revenue of RM21.67 million. Over FY2020 to FY2022, its net profit has increased from RM4.09 million to RM6.76 million.
PAT margin fell from 18.47% in FY2020 to 14.12% in FY2021, before rising to 21.61% in FY2022. In FY2023 it was 19.04%.
M&A Securities Sdn Bhd was the adviser, sponsor, underwriter and placement agent for the exercise.
*Note: Paragraph 2 of this story has been amended to correct a typo in the stock's gain over its IPO price at the opening, which is 242% and not as previously reported. The error is regretted.
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