KUALA LUMPUR (May 2): Smart Asia Chemical Bhd, en route to Bursa Malaysia’s ACE Market, expects its new plant in Perak to triple its production capacity while allowing the paint and coating manufacturer to be closer to its clients.
The company could produce up to 27 million litres of decorative paints and protective coatings with the new plant in Sungai Terap, from 8.71 million litres currently, Smart Asia Chemical said. Construction has already begun in July 2022, and the plant is expected to be opened in May.
“Our Perak plant will allow us to expand our customer base within the central and northern region in Malaysia due to the closer proximity to our customers where we can better serve them,” chief operating officer Lim Kok Beng told reporters following the launch of Smart Asia Chemical’s initial public offering (IPO) prospectus.
Smart Asia Chemical’s primary operations involve developing, manufacturing, distributing, and selling a diverse array of decorative paints, protective coatings for both household and industrial use, and other paint-related products.
The group currently has nine wholesalers and 937 dealers in Malaysia, along with 14 authorised distributors in overseas markets, including Singapore, Brunei, Indonesia, Cambodia, Vietnam, and Myanmar.
Smart Asia Chemical expects higher market share
Smart Asia Chemical expects a higher market share compared to around 0.59% currently with the new plant, and the company could raise its market share to 2.6% with full capacity at its Perak facility, Lim said.
“We still have lots of room for future expansion,” he said.
Smart Asia Chemical’s IPO is expected to raise RM37.4 million, and the company has earmarked about RM16 million for the construction of the Perak plant that would cost RM28.20 million. The remaining cost will be funded via bank borrowings and internally generated funds.
The company also plans to spend RM11 million of the proceeds for the purchase and commissioning of an automated paint production system at the same plant.
For the financial year 2023 (FY2023), Smart Asia Chemical posted a profit after tax of RM8.81 million, up 2% from RM8.61 million in FY2022. Revenue rose 15% to RM91.09 million, from the RM79.22 million recorded a year earlier, thanks to higher sales of decorative paint.
Smart Asia Chemical is slated to be listed on the ACE Market on May 28. Based on the IPO price of 40 sen per share, the company is expected to have a market capitalisation of RM147.9 million.
This values the company at about 14.9 times its price-earnings multiple, based on a profit after tax of RM10 million for FY2023 after adjusting for the listing expenses incurred.