KUALA LUMPUR (Dec 27): TSA Group Bhd is pricing its shares at 55 sen apiece, seeking to raise some RM42.53 million through an initial public offering (IPO) on Bursa Malaysia’s ACE Market.
At 55 sen per share, the industrial hardware products and stainless steel pipes and metal products manufacturer is expected to have a market capitalisation of RM170.12 million after listing, valuing the company at about 4.23 times its price-earnings multiple — based on a net profit of RM39.85 million for the financial year ended Dec 31, 2022 (FY2022).
At the prospectus launch on Wednesday, the group said RM42.53 million of the proceeds will be raised from the issuance of 77.33 million new shares, representing 25% of its expanded share capital of 309.3 million shares.
Of the 77.33 million new shares, 15.47 million shares will be offered to the public, followed by another 15.47 million shares to eligible persons, 38.66 million shares to Bumiputera investors, and 7.73 million by way of private placement to selected investors.
Established in 1993 and expanding into pipe manufacturing in 2008, TSA has a presence in Malaysia and Singapore, as well as other foreign markets such as Thailand, Australia, Bangladesh, France, Indonesia, the Maldives, New Zealand, the Philippines, Sri Lanka and the UK.
The group supplies a wide range of metal products, including stainless steel plates, bars, coils and pipes.
Through directly selling to a vast network of end buyers, TSA reportedly caters to a diverse set of clients.
In FY2022, the group had 3,600 active customers, followed by 3,300 active customers in the first eight months of 2023, with a purchase of at least RM2,000.
Of the total proceeds to be raised from the public issue shares, the group plans to use RM20 million (47%) for repayment of bank borrowings, followed by RM12.33 million (29%) for working capital.
It will also use RM5.1 million (12%) as capital expenditure to establish a manufacturing premise in Semenyih, and the remaining RM5.1 million for listing expenses.
TSA group managing director Chew Kuan Fah said that the new manufacturing premises in Semenyih will boost the group's production capacity, which will enable business expansion and market penetration.
“This investment is part of our growth strategies. It is slated for use within 24 months post listing, and is a testament to our commitment to scaling our operations and enhancing market reach,” Chew said.
TSA is scheduled to be listed on the ACE Market on Feb 2, 2024.
Aminvestment Bank Bhd is the principal adviser, sponsor, underwriter, and placement agent for the IPO.