Sunday 19 May 2024
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KUALA LUMPUR (Feb 2): Stainless steel products supplier TSA Group Bhd kicked off its ACE Market debut on Bursa Malaysia on Friday by opening at 58 sen, up three sen or 5.5% from its initial public offering (IPO) price of 55 sen.

The stock climbed as much as 7.5 sen or 13.6% to 62.5 sen, before paring gains to close at 57.5 sen, still up 2.5 sen or 4.6% from its IPO price. At Friday’s close, it saw 49.38 million shares traded, making it the ninth most active counter on Bursa.

At 57.5 sen per share, the group's market capitalisation stood at RM177.73 million, with a price-earnings ratio of 4.42 times its net profit of RM39.85 million for the financial year ended Dec 31, 2022 (FY2022).

For the cumulative nine months ended Sept 30, 2023 (9MFY2023), the group reported a net profit of RM11.55 million against revenue of RM249.56 million. Of its 9MFY2023 revenue, RM201 million (80.54%) was derived from Malaysia, with the remaining 19.46% or RM48.55 million coming from overseas. 

Prior to its market debut, the company saw an oversubscription of 8.62 times and successfully raised RM42.53 million in proceeds at 55 sen per share.

According to the group, the proceeds will be used for repayment of bank borrowings (RM20 million), working capital (RM12.33 million), new production facility (RM5.1 million) and listing expenses (RM5.1 million).

The company’s gearing ratio is expected to be lowered to 0.38 times after utilisation of the proceeds, from 0.63 times as of Oct 31, 2023. 

In a statement on Friday, the company announced that construction work on a RM52 million plant in Semenyih, partially funded by its proceeds, is expected to commence in the third quarter of 2024.

It added that the plant, slated to kick off operations in 2026, will manufacture 48,000 tonnes of cold-rolled stainless steel coils annually. 

TSA group managing director Chew Kuan Fah stated that the new facility will primarily cater to local demand. However, he did not rule out the possibility of exporting products to other countries.

“It is good enough to supply to the Malaysian market. [Demand in] Malaysia is easily more than 10,000 tonnes per month, whereby our production [coming from the new facility] is 4,000 tonnes per month, which will partly be for our use also. If we have excess, we will export, but so far, I don’t see we need to export our products,” he told reporters during a press conference for the listing.

Touching on the industry outlook for 2024, the company remains positive, due to resilient demand for stainless steel in the green energy, oil and gas, and food and beverage sectors. 

NEWS: TSA Group upbeat on industry outlook

“For example, the food industry needs to use stainless steel for their equipment to comply with the [food security] standards. The oil and gas [sector] needs low-carbon steel products, and the green energy sector, particularly solar systems, needs a lot of brackets to support their panels, and the brackets are also supplied by us,” said Chew. 

He highlighted that customers prefer stainless steel over mild steel because of its durability and resistance to rust, further fuelling demand for TSA's products. The company's customer base primarily comprises fabricators specialising in transforming stainless steel into various end products. 

Established in 1993, TSA supplies a wide range of metal products, including stainless steel plates, bars, coils and pipes. The group 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. 

AmInvestment Bank Bhd is the principal adviser, sponsor, placement agent and underwriter for the IPO.

Edited ByKamarul Azhar & Surin Murugiah
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