This article first appeared in The Edge Malaysia Weekly on December 30, 2024 - January 12, 2025

AN investor who forked out RM100,000 to subscribe for shares in ACE Market-listed Master Tec Group Bhd (KL:MTEC), which were priced at 39 sen apiece at its IPO on Jan 29, would be sitting on an unrealised gain of RM202,564 at the price of RM1.18 per share at the time of writing.

With the meteoric rise in share price, Master Tec recorded the strongest year-to-date gain of a whopping 203% among the IPOs this year, valuing it at RM1.2 billion — more than five times its market capitalisation on the first day of trading of RM227.78 million. This makes the wire and cable maker the Best IPO on the ACE Market as at Nov 30. As at the cut-off date on Nov 30, there were 47 companies that were listed this year: 10 on the Main Market, 35 on the ACE Market and two on the LEAP Market.

Established in 2005 at Rembia Industrial Park in Melaka, Master Tec carved a niche in the cable business with products such as power, housing and control cables as well as fire-resistance and flame-­retardant cables. According to its 2023 annual report, the group has three manufacturing plants with a combined annual production capacity of up to 9,500 tonnes of wires and cables.

Master Tec’s market performance is impressive, considering the counter’s flat opening at its debut on Bursa Malaysia at its IPO price of 39 sen, with the opening volume for the stock standing at a decent 11.36 million shares.

The company raised RM61.66 million from the IPO, with RM24.39 million, or 39.55% of the proceeds, allocated for the purchase of new machinery and equipment, and RM16.78 million (27.22%) for the construction of two new medium voltage power cable manufacturing plants in Alor Gajah, Melaka. Meanwhile, RM16.29 million (26.42%) was allocated for general working capital, and the remaining RM4.2 million (6.81%) for listing expenses.

Under the IPO, 51 million shares were made available to the Malaysian public, followed by 2.14 million for eligible group directors and employees, and 104.96 million shares placed out to selected investors.

Of note is the fact that substantial shareholder Datuk Lau Kim San, 52, the company’s managing director, controls the company with a 73.56% stake, putting the counter’s public float at a mere 26.44%. Although the public float is small, it is deemed acceptable because of the company’s vast number of shares on the market.

Master Tec made a net profit of RM5.97 million for its third quarter ended Sept 30, 2024 (3QFY2024), up 3% from RM5.78 million in 3QFY2023, while its quarterly revenue rose to RM87.63 million from RM65.22 million. The group’s operating profit margin dropped to 9% from 14.1%. During the quarter in review, it declared a second interim dividend of 0.18 sen per share, paid on Dec 16. It did not make a payout for the same quarter last year.

The group says it aims to grow its position by venturing into the manufacturing of medium voltage power cables and expanding export sales.

It also says its RM3.74 million share subscription of a 51% stake in Sediacom Sdn Bhd, which was completed on Oct 23, would provide the group with the opportunity to expand into the power infrastructure utilities market.

Other new business opportunities it sees are in drilling and underground cable laying, overhead lines installation, road safety management, back reaming pulling high-density polyethylene pipes, and providing freight transport by road.

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