KUALA LUMPUR (Feb 23): Seng Fong Holdings Bhd has proposed a private placement in a bid to raise up to RM38.92 million for its capital expenditure and working capital.

At the same time, the rubber processor producer and trader also announced a bonus issue of up to 190.28 million shares, on the basis of one bonus share for every three existing shares, held on an entitlement date to be announced later.

In an announcement to Bursa Malaysia, Seng Fong said the private placement entails 51.9 million new shares – representing 10% of the rubber processor and trader’s total number of issued shares to third party investors to be identified later.

The placement shares are assumed to be issued at 75 sen per share, a 2.6% discount to the group’s five-day volume weighted average market of 77.03 sen per share on Feb 22.

Seng Fong said the bulk of the proceeds from the private placement will be allocated for the installation of the Smart Rubber Manufacturing Equipment system across all three factories situated in Gemas, Negeri Sembilan to automate the group’s manufacturing process.

The private placement and bonus issue are expected to be completed by the second quarter of 2024.

Separately, the group announced RM17.4 million net profit for the second quarter ended Dec 31, 2023 (2QFY2024) — its best quarterly earnings since its listing on the Bursa Malaysia Main Market in July 2022 — against RM6.93 million recorded for 2QFY2023 due to higher sales volume.

Revenue for the quarter grew 24.6% to RM287.64 million from RM230.81 million.

For the first half ended Dec 31 (1HFY2024), Seng Fong’s net profit jumped 65% to RM25.7 million from RM15.57 million in the same period a year earlier, while revenue increased by 5.09% to RM507.03 million from RM482.47 million.

“The group will monitor the US Monetary Policy to the exposure on foreign exchange movements on a regular basis for our management's assessment on the need to utilise financial instruments to hedge such currency exposure,” Seng Fong commented on its prospects.

Shares of Seng Fong closed unchanged at 77 sen, valuing the Main-Market listed group at RM399.6 million.