KUALA LUMPUR (Dec 28): Wires and cable manufacturer Master Tec Group Bhd, en route for an ACE Market listing on Jan 29 next year, has set an issue price of 39 sen per share for its initial public offering (IPO) exercise to raise RM111.39 million, of which about 45% or RM49.73 million will go to a selling shareholder via an offer for sale.
The IPO comprises a public offering of 285.6 million new shares, or 28% of the enlarged share base of 1.02 billion.
Of the RM111.39 million to be raised, the remaining RM61.66 million or 55% for the company will come from the public issue portion of 158.1 million new shares.
The 39 sen issue price is at a price-earnings multiple of 20.31 times based on the group's net profit of RM19.56 million or 1.92 sen per share for the financial year ended Dec 31, 2022.
Against the enlarged share base of 1.02 billion shares and the IPO price of 39 sen per share, the group is expected to have a market capitalisation of RM397.8 million.
Breaking down the public issue, 51 million shares will be made available for application by the Malaysian public, followed by 2.14 million for eligible group directors and employees, while 104.96 million shares will be placed to selected investors.
Notably, Master Tec is targeting a dividend payout ratio of 30% of its net profit. The group has declared a dividend of RM9.78 million or 50% of its net profit for FY2022, which was paid to its managing director and sole shareholder Datuk Lau Kim San in April 2023.
After the listing, Lau will left with a 17% direct stake and 55% indirect stake in Master Tec, after he transferred 561 million shares to the group for RM218.79 million.
Master Tec is primarily involved in the manufacturing and distribution of a wide range of safe, quality and high-performance low-voltage power cables, control and instrumentation cables, and solar direct current power cables under its Mastertec trademark since 2009.
It is also involved in the trading and distribution of a wide range of medium-voltage (MV) power cables and fibre optic cables to cater to various end-user markets.
Towards expanding its annual production capacity, Master Tec has earmarked RM24.39 million or 39.55% of proceeds from the public issue to purchase new machineries and equipment, as well as RM16.78 million (27.22%) for construction of two new MV power cable manufacturing plants in in Alor Gajah, Melaka.
Meanwhile, RM16.29 million (26.42%) is for general working capital, followed by the remaining RM4.2 million (6.81%) for listing expenses.
“We aim to increase our annual production capacity to produce approximately 3,600 tonnes of MV power cables per year, and we target to commence the production of MV power cables by the fourth quarter of 2024,” Lau said during the prospectus launch on Thursday.
Master Tec currently produces up to 9,500 tonnes of wires and cables annually, of which it has the capacity to produce up to 4,000 tonnes of copper-cored wires and cables, and up to 5,500 tonnes of aluminium-cored wires and cables per year.
Lau noted that the expansion will enable the group to market its new products to mostly capital-intensive manufacturing industries that demand higher voltage of electricity power transmission.
“For instance, automotive plants, semiconductor fabrication plants, chemical plants, oil and gas facilities, electrical-vehicle charging station facilities and energy-intensive data centres, in addition to power utility companies such as Tenaga Nasional Bhd, Sarawak Energy Bhd and Sabah Electricity Sdn Bhd,” he said.
As of Nov 29, the group’s unbilled purchase orders value stood at RM48.52 million, and its balance supply contract value stood at RM29.44 million.
The group is expected to recognise RM24.41 million by Dec 31, 2023, while the remaining balance is expected to be recognised by May 31, 2024.
It is worth noting that the group had a market share of 3.57% in the Malaysian wires and cable manufacturer industry in 2022.
“We strive to improve our position in Malaysia by actively growing our market share through our expansion into new products and markets,” he said.
SJ Securities Sdn Bhd is the principal adviser, sponsor, underwriter, and placement agent for the IPO, making Master Tec the first company going for such an exercise under SJ Securities.