KUALA LUMPUR (March 27): Topmix Bhd, which launched its initial public offering (IPO) prospectus on Wednesday, expects growth in the local residential and commercial property markets to bode well for its surface decorative products.
Topmix derives nearly 100% of its revenue from the domestic market.
The border reopening has revitalised Malaysia’s tourism sector and encouraged investments in the upgrading, refurbishment and construction of hotels, retail as well as food and beverage premises, ultimately driving demand for surface decorative products, its IPO prospectus stated.
According to its prospectus, the value of property transactions in Malaysia has been on an uptrend after the pandemic, increasing from RM85.4 billion in 2020 to RM126.9 billion in 2022.
Topmix managing director Jack Teo also expects further revenue growth from its new products, adding that its in-house brand, such as the Dekowall wall panels, has integrated technologies new to Malaysia.
Teo said the company will increase its warehouse capacity in the central region of Peninsular Malaysia, as well as expand its footprint into the northern region, driven by an increase in foreign direct investment in the area.
“We found that the consumer behaviour in the northern region has changed. In the past, people [in the northern region] did not like trendy designs, but now [there are] many F&B commercial projects that focus a lot on renovation,” he told the press after the IPO prospectus launch.
Commenting on the volatility in raw material prices, Topmix’s financial controller Janice Siow explained that its products were mostly procured from original equipment manufacturers in China.
She said the shortage of raw materials would increase procurement costs, but the company has managed to pass cost increments to its customers.
Furthermore, she said that the company has also adopted hedging strategies to address the fluctuations in foreign exchange. Topmix’s major suppliers hail from China, South Korea and Thailand, according to its prospectus.
IPO price at 31 sen per share
Topmix’s IPO comprises a public issuance of 82.7 million new ordinary shares, which represents 21% of the enlarged share capital, as well as an offer for sale of 19.7 million existing shares, which represents 5% of the enlarged share capital, by way of private placement to selected investors.
Priced at 31 sen per share, Topmix’s shares are valued at a pricing-earnings ratio of 14.3 times, based on its annual net profit of RM8.5 million for the financial year ended Dec 31, 2022 (FY2022). The company’s annual revenue was RM65.8 million against RM38.6 million in FY2021, when it posted a net profit of RM4.4 million.
For the financial period ended Sept 30, 2023 (FY2023), Topmix reported a net profit of RM5.6 million, on revenue of RM51 million.
Upon listing, J and T Resources Malaysia will control 55% direct interest in Topmix. J and T Resources is the investment vehicle of Teo and his spouse Tan Lee Hong, who is an executive director of the company.
Additionally, Teo holds an 11.6% direct stake while Tan holds a 7.36% stake.
Applications for the IPO will close next Thursday, while the listing date is set for April 23.
M&A Securities is the principal adviser, sponsor, underwriter and placement agent for the IPO exercise.