KUALA LUMPUR (Nov 25): TMK Chemical Bhd, set to list on Bursa Malaysia's Main Market in December, plans to double its annual manufacturing capacity, with its second plant funded by the initial public offering (IPO) proceeds.
TMK Chemical, specialising in chemical management and storage solutions, aims to double its existing capacity of 216,000 metric tons (MT) to a maximum of 432,000 MT of sodium hydroxide at a concentration of 32%, with the new Banting Plant 2, according to deputy general manager Leong Xiao Lung.
The procurement process for the new plant commenced this quarter, and operations are slated to begin in the fourth quarter of 2026.
“We began operations at [Banting Plant 1] in May this year, and it is already operating at 70% capacity. We anticipate the plant to reach full capacity soon,” Leong said during the launch of TMK Chemical’s IPO prospectus, which aims to raise RM385 million.
TMK Chemical has earmarked RM90.2 million, or 23.4% of its IPO proceeds, for the construction of Banting Plant 2 on a 55,900 sq m site adjacent to Plant 1. The total estimated cost of the new plant is RM97.5 million.
Founded in 1989, TMK Chemical specialises in total chemical management services, including the sourcing, processing, and distribution of inorganic chemicals such as acids, alkalis, and salts. The company also offers value-added services to its clients.
TMK Chemical is controlled by Datuk Lee Soon Hian, the youngest of the billionaire Lee brothers behind plantation conglomerate Kuala Lumpur Kepong Bhd (KL:KLK). Soon Hian holds a 50.6% stake in the company.
“Over the past 35 years, we have expanded our service offerings to include chemical terminal services, and this year, we took a major step forward by vertically integrating into the manufacturing of inorganic chemical,” TMK Chemical non-independent executive director and managing director Wong Kin Wah said.
TMK Chemical currently operates 15 facilities across Malaysia, Singapore, and Vietnam, along with two terminals and one manufacturing plant in Malaysia.
Overseas acquisition plans under discussion
TMK Chemical will allocate RM99.1 million from the IPO proceeds for acquisitions and investments in companies to accelerate its expansion and strengthen its regional presence.
“Our focus is on acquisitions that provide complementary value to our existing operations. We are not limiting our choices to domestic opportunities but are also exploring overseas options,” Leong said, adding that TMK Chemical has identified a target business but the acquisition plan is still in a preliminary phase.
The remaining IPO proceeds will be allocated as follows: RM50 million for debt repayment, RM79.4 million for working capital, and the balance for listing-related expenses.
For the financial year ended Dec 31, 2023 (FY2023), TMK Chemical reported a profit after tax (PAT) of RM91.6 million, down nearly 40% from RM150.34 million in FY2022, as revenue fell 12% to RM1.31 billion from RM1.48 billion. The decline was attributed to lower contributions from the total chemical management segment, which faced price fluctuations across various products.
The company recorded a PAT of RM123.09 million on revenue of RM1.12 billion in FY2021.
TMK Chemical’s IPO is available for subscription from Monday, and applications will close on Nov 29, with the company slated to be listed on Dec 12. At the offer price of RM1.75, TMK Chemical would have a market capitalisation of RM1.75 billion based on the enlarged share capital of one billion shares, valuing the company at a price-earnings ratio of 19 times its FY2023 earnings.
The group has also pledged to distribute 30% to 50% of its PAT as annual dividends to shareholders.
Maybank Investment Bank is the principal adviser, sole bookrunner, and underwriter for the IPO.