Smart Asia Chemical oversubscribed by 33.8 times ahead of ACE Market listing

Sunday 08 Sep 2024

KUALA LUMPUR (May 16): Industrial paint and coating manufacturer Smart Asia Chemical Bhd (KL:SMART), which is set to be listed on the ACE Market of Bursa Malaysia on May 28, said its initial public offering (IPO), priced at 40 sen apiece, has been oversubscribed by 33.8 times.

By the close of its IPO application on May 24, Smart Asia Chemical said it had received 13,441 applications for 635.7 million new shares from the Malaysian public for the 18.49 million shares it allocated for the public subscription — representing an overall subscription rate of 33.8 times.

Of this, 7,525 applications for 275.24 million shares were received for the Bumiputera portion, representing an oversubscription of 28.77 times. The non-Bumiputera portion drew 5,916 applications for 360.46 million shares, representing an oversubscription rate of 37.98 times.

The 12.1 million shares it made available for eligible directors, employees and other persons who have contributed to the success of the group have been fully subscribed.

The 62.91 million shares that were made available for application by way of private placement to Bumiputera investors approved by the Ministry of Investment, Trade and Industry and selected investors have also been fully placed out.

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.

Of the proceeds it expects to raise, the group plans to use RM16 million to partially finance the construction of a plant in Perak while RM11 million will be used for the purchase and commissioning of an automated paint production system.

In addition, RM5 million of the proceeds will be used for the purchase of 250 sets of smart colour POS tinting machines, and the remaining RM1.3 million will be allocated for working capital, and RM4.1 million to defray listing-related expenses.

At the listing price of 40 sen per share, Smart Asia Chemical will be valued at 14.9 times the profit after tax of RM10 million for the financial year 2023 (FY2023) after adjusting for the listing expenses incurred. The company would be valued at RM147.9 million upon listing.

The IPO will reduce the direct stake of managing director Goh Chye Hin to 44.5% and to 7.51% for his wife Kee Hui Lang, who is also the non-independent executive director.

Based on Smart Asia Chemical’s share base of 276.35 million shares, Goh owns a 59.55% stake in the company, while Kee owns 10.05%. The 3.62% indirect stake they hold via their children is expected to be diluted to 2.7%.

Mercury Securities Sdn Bhd is the IPO’s principal adviser, sponsor, underwriter, and sole placement agent.

Edited ByIsabelle Francis

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