KUALA LUMPUR (Sept 7): Industrial paint and coating maker Smart Asia Chemical Bhd plans to list on the ACE Market of Bursa Malaysia to fund the establishment of a new factory in Perak to quadruple its annual manufacturing capacity.

The company’s initial public offering (IPO) will involve the issuance of 93.5 million shares, with 62.91 million shares or 67.28% allocated under the institutional offering and 30.59 million shares or 32.72% for the retail offering, according to its draft prospectus exposure released on Bursa Malaysia on Tuesday.

By way of private placement, 46.23 million shares are earmarked for Bumiputera investors as approved by the Ministry of Investment, Trade and Industry, while another 16.68 million are for selected investors.

Under the retail offering, 18.49 million shares would be made available to the Malaysian public, followed by 12.1 million shares for eligible directors, employees and persons who have contributed to the success of the group.

Proceeds garnered from the listing exercise are to be used to establish the new plant in Perak, purchase accompanying equipment, fund working capital, as well as defray the listing exercise expenses.

Smart Asia said the new plant is expected to increase its annual manufacturing capacity for decorative paints and protective coatings by 27 million litres or 309.99% to 35.71 million litres, from 8.71 million litres in the financial year ended Dec 31, 2022 (FY2022).

“Our Perak plant will also allow us to expand our customer base within the central and northern regions of [Peninsular] Malaysia due to closer proximity to our customers,” the company added.

For FY2022, Smart Asia posted a profit after tax (PAT) of RM8.61 million, down from RM10.69 million for FY2021. It logged a PAT of RM7.44 million for FY2020.

Its top line was largely flat at RM79.22 million for FY2022, when compared with the RM79.77 million achieved a year earlier. For FY2020, it posted a revenue of RM71.6 million.

The 93.5 million shares offered under the IPO represent 25.28% of the group’s expected enlarged share base of 369.85 million shares.

The IPO’s promoters, managing director Goh Chye Hin and his wife and non-independent executive director Kee Hui Lang, are expected to have their direct stakes in the company pared to 44.5% for Goh and 7.51% for Kee.

Based on Smart Asia's current share base of 276.35 million shares, Goh currently owns a 59.55% stake in the company, while Kee owns 10.05%.

Meanwhile, the 3.62% indirect stake they hold via their children is expected to be diluted to 2.7%.

Mercury Securities Sdn Bhd is the principal adviser, sponsor, underwriter, and placement agent for the IPO.